Eighth Amendment to Credit Agreement among Lillian Vernon Corporation, Guarantors, and JPMorgan Chase Bank
Summary
This amendment updates the terms of a revolving credit agreement originally dated August 19, 1996, between Lillian Vernon Corporation (the borrower), its affiliates as guarantors, JPMorgan Chase Bank as agent, and participating banks. The amendment reduces the credit facility amount and modifies certain financial covenants, including allowable net losses and required net worth levels for specified periods. It becomes effective once all parties sign and certain documentation and fees are provided. The guarantors reaffirm their obligations, and all other terms of the original agreement remain in effect.
EX-10.1 3 e90728_ex10one.txt EIGHTH ADMENDMENT AGREEMENT EXHIBIT 10.1 EXECUTION COPY ================================================================================ EIGHTH AMENDMENT AGREEMENT DATED AS OF JANUARY 3, 2003 AMONG LILLIAN VERNON CORPORATION, AS BORROWER, LILLIAN VERNON FULFILLMENT SERVICES, INC., LVC RETAIL CORPORATION AND LILLIAN VERNON INTERNATIONAL, LTD. AS GUARANTORS, JPMORGAN CHASE BANK (FORMERLY KNOWN AS THE CHASE MANHATTAN BANK), AS AGENT, AND THE BANKS NAMED HEREIN ------------------------ TO THE CREDIT AGREEMENT DATED AS OF AUGUST 19, 1996 ------------------------- ================================================================================ THIS EIGHTH AMENDMENT AGREEMENT, dated as of January 3, 2003 (this "Amendment"), among LILLIAN VERNON CORPORATION, a Delaware corporation (the "Borrower"), LILLIAN VERNON FULFILLMENT SERVICES, a Virginia corporation ("LVFS"), LVC RETAIL CORPORATION, a Delaware corporation ("LVC"), and LILLIAN VERNON INTERNATIONAL, LTD., a New York corporation ("LVI Inc.", and together with LVFS and LVC, the "Guarantors"), the several banks from time to time parties to the Agreement (as defined below) (the "Banks") and JPMORGAN CHASE BANK (formerly known as The Chase Manhattan Bank), a New York banking corporation, as agent for the Banks hereunder (in such capacity, the "Agent"); W I T N E S S E T H : WHEREAS, the parties hereto have entered into a Revolving Credit Agreement dated as of August 19, 1996 (as amended, restated, supplemented or otherwise modified from time to time, the "Agreement"); WHEREAS, the Borrower has requested the Banks reduce the amount of the credit facility and amend certain financial covenants of the Borrower, effective as of the date hereof (the "Amendment Effective Date"); and WHEREAS, the Borrower and Guarantors desire, and each Bank and the Agent are willing, on the terms and conditions set forth below, to modify certain terms of the Agreement as set forth below; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows: SECTION 1. DEFINED TERMS. Capitalized terms used herein and not defined herein shall have the meanings specified in the Agreement. SECTION 2. AMENDMENT TO THE AGREEMENT. (a) Schedule 2.01 to the Agreement is hereby amended by deleting such schedule in its entirety and inserting in lieu thereof the Schedule 2.01 attached to this Amendment. (b) Section 6.11 of the Agreement is hereby amended by deleting such Section in its entirety and inserting in lieu thereof the following: SECTION 6.11. Consolidated Net Income. Permit Consolidated Net Income to be less than zero for any fiscal year, calculated in accordance with GAAP; provided that for the fiscal periods set forth below the Borrower may have a net loss of up to but not exceeding the Permitted Net Loss set forth opposite such period as follows: Fiscal Period Permitted Net Loss ------------- ------------------ Fiscal Year 2002 ........................... $10,000,000 Fiscal Year 2003, first quarter ............................ $ 6,000,000 first two quarters, year to date ......... $11,000,000 first three quarters, year to date ....... $15,300,000 four quarters, year to date .............. $ 6,750,000 (c) Section 6.14 of the Agreement is hereby amended by deleting such Section in its entirety and inserting in lieu thereof the following: SECTION 6.14. Consolidated Tangible Net worth Plus Subordinated Debt. With respect to each fiscal period set forth below, at any time permit the sum of Consolidated Tangible Net Worth plus Subordinated Debt to be less than the amount set forth opposite such period as follows: Fiscal Period Consolidated Tangible Net Worth plus Subordinated Debt ------------- ------------------------------------------------------ 4th Quarter 2002 $85,000,000 1st Quarter 2003 $80,000,000 2nd Quarter 2003 $75,000,000 3rd Quarter 2003 $74,500,000 4th Quarter 2003 $80,000,000 1st Quarter 2004 $78,000,000 2nd Quarter 2004 $75,000,000 3rd Quarter 2004 $80,000,000 4th Quarter 2004 $80,000,000 1st Quarter 2005 $80,000,000 2nd Quarter 2005 $75,000,000 3rd Quarter 2005 $80,000,000 4th Quarter 2005 $80,000,000 SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective only upon the satisfaction or waiver of all of the following conditions precedent: (A) The parties hereto shall have duly executed and delivered this Amendment. (B) The Agent shall have received certificates of the Secretary or Assistant Secretary of the Borrower and each of the Guarantors dated as of the Amendment Effective Date, certifying: (i) that its respective By-laws either are attached to such certificate, or to the extent not attached have not been amended since the Closing Date, (ii) that its respective charter or certificate, as the case may be, either is attached to such certificate or to the extent not attached has not been amended since the Closing Date, and (iii) as to the incumbency and signatures of each of its respective officers executing this Amendment and any other documents to which it is a party. 2 (C) The Agent shall have received from the Borrower the fees and expense reimbursements referred to under Section 7 hereof. SECTION 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Banks and Agent to enter into this Amendment, the Borrower and the Guarantors hereby jointly and severally represent and warrant to the Agent: (i) that the representations and warranties contained in the Agreement are true and correct on and as of the Amendment Effective Date as though made on and as of such date, except for changes which have occurred and which were not prohibited by the terms of the Agreement; (ii) that no Default or Event of Default has occurred and is continuing, or would result from the execution, delivery and performance by the Borrower and the Guarantors, of this Amendment or the Agreement (as amended by this Amendment); (iii) that the Borrower and the Guarantors have full power, right and legal authority to execute, deliver and perform its obligations under this Amendment; (iv) that the Borrower and Guarantors have taken all action necessary to authorize the execution and delivery of, and the performance of its obligations under this Amendment; and (v) that this Amendment constitutes a legal, valid and binding obligation of the Borrower and the Guarantors enforceable against each of them in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization or moratorium or similar laws affecting the rights of creditors generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). SECTION 5. GUARANTY. The Guarantors each acknowledge receipt of a copy of this Amendment Agreement and hereby ratify and affirm their guaranty of the Obligations of the Borrower under the Agreement as amended hereby. SECTION 6. REFERENCE TO AND EFFECT ON THE DOCUMENTS. Each reference in the Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import, and each reference to the Agreement in documents related to the Agreement, shall mean and be a reference to the Agreement as amended hereby. Except as specifically amended hereby, the Agreement and all such related documents, and all other documents, agreements, instruments or writings entered into in connection therewith, shall remain in full force and effect and are hereby ratified, confirmed and acknowledged by the Borrower. SECTION 7. FEES AND EXPENSES. The Borrower agrees to pay or reimburse the Agent, as stated in Section 10.05 of the Agreement (as amended hereby), for its reasonable out-of-pocket costs and expenses, including, without limitation, the reasonable fees and disbursements of counsel to the Agent incurred by the Agent in connection with the preparation, reproduction, execution and delivery of this Amendment and any other instruments and documents to be delivered hereunder. SECTION 8. GOVERNING LAW. This Amendment and the rights and obligations of the parties hereunder shall be governed by and construed and interpreted in accordance with the substantive laws of the State of New York, without regard to its conflict of laws principles. SECTION 9. COUNTERPARTS. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Amendment by signing any such counterpart. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. JPMORGAN CHASE BANK, As Bank and as Agent, By: /s/ MARGARET NOLAN --------------------------- Name: Margaret Nolan Title: Vice President SUNTRUST BANK By: /s/ VERNON M. TOWLER --------------------------- Name: Vernon M. Towler Title: Senior Vice President 4 SIGNATURE PAGE TO EIGHTH AMENDMENT TO LILLIAN VERNON CREDIT AGREEMENT LILLIAN VERNON CORPORATION By: /s/ RICHARD P. RANDALL --------------------------- Name: Richard P. Randall Title: Executive Vice President Chief Operating Officer Chief Financial Officer LILLIAN VERNON FULFILLMENT SERVICES, INC. By: /s/ SUSAN C. HANDLER --------------------------- Name: Susan C. Handler Title: Secretary LVC RETAIL CORPORATION By: /s/ HARRIET KRAYNIK --------------------------- Name: Harriet Kraynik Title: Secretary-Treasurer LILLIAN VERNON INTERNATIONAL, INC. By: /s/ Susan C. Handler --------------------------- Name: Susan C. Handler Title: Secretary 5 SCHEDULE 2.01 COMMITMENTS TRANCHE 1 TRANCHE 1 COMMITMENT AMOUNT FOR TRANCHE 1 FIRST AND SECOND QUARTERS BANK OF BORROWER'S FISCAL YEAR - --------- ------------------------- JPMORGAN CHASE BANK $ 5,000,000 SUNTRUST BANK $ 5,000,000 ----------- TOTAL (for 1st and 2nd quarters) $10,000,000 TRANCHE 1 COMMITMENT AMOUNT FOR TRANCHE 1 THIRD AND FOURTH QUARTERS BANK OF BORROWER'S FISCAL YEAR - --------- ------------------------- JPMORGAN CHASE BANK $ 7,500,000 SUNTRUST BANK $ 7,500,000 ----------- TOTAL (for 3rd and 4th quarters) $15,000,000 TRANCHE 2 TRANCHE 2 TRANCHE 2 BANK COMMITMENT AMOUNT - --------- ----------------- JPMORGAN CHASE BANK $12,000,000 ----------- TOTAL $12,000,000 6
