FOURTH AMENDMENT TO AMENDED AND RESTATED FINANCING AGREEMENT
EXHIBIT
10.8
FOURTH AMENDMENT
TO
AMENDED AND RESTATED
FINANCING AGREEMENT
This
FOURTH AMENDMENT TO AMENDED AND RESTATED FINANCING AGREEMENT (this “Amendment”)
is entered into as of July 30, 2010, by and among Frederick’s of Hollywood Group
Inc., a New York corporation (“Group”), FOH Holdings, Inc., a Delaware
corporation (the “Parent”), Frederick’s of Hollywood, Inc., a Delaware
corporation (“Frederick’s”), Frederick’s of Hollywood Stores, Inc., a
Nevada corporation (“Stores”), Hollywood Mail Order, LLC, a Nevada limited
liability company (“Mail Order” and collectively with Group, the Parent,
Frederick’s and Stores, individually, a “Borrower”, and collectively, the
“Borrowers”), Xxxxxxxxxx.xxx, Inc., a Nevada corporation (the “Existing
Guarantor”), and Xxxxx Fargo Retail Finance II, LLC, a Delaware limited
liability company, in its capacity as Lender and as arranger and agent for the
Lenders (in such capacity, the “Agent”).
RECITALS
A. WHEREAS,
the Borrowers, the Lenders and the Agent are parties to that certain Amended and
Restated Financing Agreement, dated as of January 28, 2008, as amended by that
certain First Amendment to Amended and Restated Financing Agreement, dated as of
September 9, 2008, as further amended by that certain Second Amendment to
Amended and Restated Financing Agreement, dated as of September 21, 2009, and as
further amended by that certain Third Amendment to Amended and Restated
Financing Agreement, dated as of October 23, 2009 (as so amended, the “Financing
Agreement”);
B. WHEREAS,
Group executed that certain Security Agreement, dated as of January 28, 2008, in
favor of the Agent (the “2008 Security Agreement”);
C. WHEREAS,
the Borrowers (other than Group) and the Existing Guarantor executed that
certain Security Agreement, dated as of January 7, 2003, in favor of the Agent
(the “2003 Security Agreement”, and together with the 2008 Security Agreement,
each a “Security Agreement” and, collectively, the “Security
Agreements”);
D. WHEREAS,
the Borrowers have requested that the Agent and the Lenders agree to certain
further amendments to the Financing Agreement and the Security Agreements;
and
E. WHEREAS,
the Agent and the Lenders are willing to agree to such amendments upon the terms
and subject to the conditions set forth herein.
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
contained, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Agent, the Lenders and the Borrowers agree as
follows:
1. Definitions. Unless
otherwise defined herein, initial capitalized terms have the meanings given to
them in the Financing Agreement.
2. Amendments to Financing
Agreement. Upon the Fourth Amendment Effective Date (as
hereinafter defined) the Financing Agreement is hereby amended as
follows:
a.) Section
1.01 of the Financing Agreement is amended by adding the following new defined
terms (and corresponding definitions) in appropriate alphabetical order
therein:
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(i)
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““Fourth Amendment
Effective Date” means as defined in that certain Fourth Amendment
to Amended and Restated Financing Agreement, dated as of July 30, 2010,
among the Borrowers, the Existing Guarantor, and the
Agent.”
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(ii)
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““Pro Forma Compliance
Certificate” means a Compliance Certificate prepared by the
Borrower on a pro forma basis, certifying that the Borrower has the
requisite Availability after giving effect to the subject
transaction.”
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(iii)
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““Restricted
Payment” as the meaning set forth in Section
7.02(i).”
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(iv)
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““SEC Documents”
as the meaning set forth in Section
5.02(m).”
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(v)
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““Term Loan””
shall mean the loans made to the Borrowers by the lending parties party
to, and pursuant to the terms of, the Term Loan
Agreement.”
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(vi)
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““Term Loan
Agent” means Hilco Brands, LLC, in its capacity as agent under the
Term Loan Agreement, or any successor
thereto.”
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(vii)
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““Term Loan
Agreement” means the Financing Agreement dated as of July 30, 2010,
by and among the Borrowers, the Term Loan Agent, and the lending parties
from time to time party thereto, as amended and modified from time to time
in accordance with the terms of the Term Loan Intercreditor
Agreement.”
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(viii)
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““Term Loan
Intercreditor Agreement” means the Intercreditor Agreement, dated
as of July 30, 2010, by and between the Agent and the Term Loan
Agent.”
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b.) The definition
of “Permitted Indebtedness” in Section 1.01 of the Financing Agreement is
amended by (i) deleting the word “and” at the end of clause (e), (ii) deleting
the “.” at the end of clause (f) and substituting “;” in lieu thereof and (iii)
by adding the following new clauses thereto as follows:
“(g) Indebtedness
owing to the Term Loan Agent under the Term Loan Agreement; and
(h)
Capitalized Lease Obligations to the extent permitted under Section
7.02(g).”
c.) The
definition of “Permitted Liens” in Section 1.01 of the Financing Agreement is
amended by (i) deleting the word “and” at the end of clause (g), (ii) deleting
the “.” at the end of clause (h) and substituting “; and” in lieu thereof, and
(iii) by adding the following new clause thereto as follows:
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“(i) a
first Lien in favor of the Term Loan Agent in respect of the Intellectual
Property (as defined in the Term Loan Intercreditor Agreement) of the Loan
Parties and a Lien on all other Collateral, which Lien on all other Collateral
shall at all times be subordinated to the Lien of the Agent pursuant to the
terms of the Term Loan Intercreditor Agreement.”
d.) Section
1.01 of the Financing Agreement is amended by amending and restating the
following defined terms therein to read as follows:
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(i)
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““Affiliate”
means, as to any Person, any other Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person including all Executive Officers
and/or directors, partners, or limited liability company managers (or
persons who serve in similar capacities) of such Person. For
purposes of this definition, “control” of a Person means the power,
directly or indirectly, either to (i) vote 10% or more of the Capital
Stock having ordinary voting power for the election of directors of such
Person or (ii) direct or cause the direction of the management and
policies of such Person whether by contract or
otherwise. Notwithstanding anything herein to the contrary, in
no event shall the Agent or any Lender be considered an “Affiliate” of any
Loan Party.”
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(ii)
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““Capital Stock”
means (i) with respect to any Person that is a corporation, any and all
shares, interests, participations or other equivalents including options,
warrants or other derivative instruments (however designated and whether
or not voting) of corporate stock, and (ii) with respect to any Person
that is not a corporation, any and all partnership, membership or other
equity interests of such Person including options, warrants or other
derivative instruments.”
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(iii)
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““Collateral”
means (i) all of the Property and assets and all interests therein
and proceeds thereof now owned or hereafter acquired by any Person upon
which a Lien is granted or purported to be granted by such Person as
security for all or any part of the Obligations, and (ii) all
“Collateral” as defined in the Security
Agreement.”
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(iv)
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““Indebtedness”
means, without duplication, with respect to any Person, (i) all
indebtedness of such Person for borrowed money; (ii) all obligations
of such Person for the deferred purchase price of property or services
other than, subject to (iii) below, trade payables, payables to vendors or
other account payables incurred in the ordinary course of such Person’s
business; (iii) trade payables, payables to vendors or other accounts
payable incurred in the ordinary course of such Person’s business which,
for periods commencing after January 29, 2011, are past due for more than
90 days after the date such payable was created; (iv) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments or upon which interest payments are customarily made;
(v) all obligations and liabilities of such Person created or arising
under any conditional sales or other title retention agreement with
respect to property used and/or acquired by such Person, even though the
rights and remedies of the lessor, seller and/or lender thereunder are
limited to repossession or sale of such property; (vi) all Capitalized
Lease Obligations of such Person; (vii) all obligations and
liabilities, contingent or otherwise, of such Person, in respect of
letters of credit, acceptances and similar facilities; (viii) all
obligations and liabilities, calculated on a basis reasonably satisfactory
to the Agent and in accordance with accepted practice, of such Person
under Derivatives; (ix) all Contingent Obligations; (x) liabilities
incurred under Title IV of ERISA with respect to any plan (other than
a Multiemployer Plan) covered by Title IV of ERISA and maintained for
employees of such Person or any of its ERISA Affiliates;
(xi) withdrawal liability incurred under ERISA by such Person or any
of its ERISA Affiliates to any Multiemployer Plan; (xii) all other
items which, in accordance with GAAP, would be included as liabilities on
the liability side of the balance sheet of such Person; and
(xiii) all obligations referred to in clauses (i) through (xii)
of this definition of another Person secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) a Lien upon property owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness. The Indebtedness of any Person shall include the
Indebtedness of any partnership of or joint venture in which such Person
is a general partner or a joint
venturer.”
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(v)
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““Material
Contract” means (i) the Catalog Publishing Contract, the Flagship
Store Lease, the Distribution Center Lease and any Subordinated Loan
Document, (ii) with respect to any Person, (x) each contract or agreement
to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$250,000 or more in any calendar year (other than purchase orders in the
ordinary course of the business of such Person or such Subsidiary and
other than contracts that by their terms may be terminated by such Person
or Subsidiary in the ordinary course of its business upon less than 60
days’ notice without penalty or premium) and (y) all other contracts
or agreements material to the business, operations, condition (financial
or otherwise), performance or properties of a Borrower or of the Loan
Parties taken as a whole, (iii) the Acquisition Documents, (iv) any
agreements which involve, relate to or otherwise cover, the license, sale,
acquisition, disposition or development of any of the Borrowers’
Intellectual Property or rights pertaining thereto, and (v) any employment
or consulting agreement or other agreement with an Executive Officer which
provides for base and bonus compensation, fringe benefits, severance
benefits, Change of Control payments, parachute payments, or
other payments, on a fixed or contingent basis, that could
result in the payment to such Executive Officer of an amount in excess of
$200,000 in any consecutive twelve (12) month
period.”
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(vi)
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““Permitted
Holder” means the shareholders of the Group as of the Fourth
Amendment Effective Date set forth on Schedule 1.01(D), and any Affiliate
of any such Person.”
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(vii)
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““Permitted Priority
Liens” means all Permitted Liens other than any
Permitted Liens on Inventory, Accounts Receivable or any proceeds of the
foregoing.”
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(viii)
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““Required Minimum
Availability Reserve” means
$2,000,000.”
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(ix)
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““SEC” means the
United States Securities and Exchange Commission or any other similar or
successor agency of the Federal government administering the Securities
Act.”
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e.) Section
1.01 of the Financing Agreement is amended by deleting the defined terms “Bridge
Facility Effective Date”, “Bridge Period”, “Commitment Increase” and “Commitment
Increase Date” in their entirety and such deleted defined terms shall no longer
have any meaning or effect with respect to any provision of the Financing
Agreement.
f.) Section
1.01 of the Financing Agreement is amended by deleting clause (a) of the defined
term “Change of Control” in its entirety and “Intentionally Deleted;” shall be
substituted in lieu thereof.
g.) Section
2.01(c) of the Financing Agreement is deleted in its entirety and “Intentionally
Deleted.” shall be substituted in lieu thereof.
h.) Section
2.05(a) of the Financing Agreement is amended by amending and restating the
parenthetical “(but in no event shall the Total Revolving Credit Commitment be
less than $25,000,000)” in the second sentence thereof to read as follows: “(but
in no event shall the Total Revolving Credit Commitment be less than
$20,000,000)”.
i.) Section
2.05(a) of the Financing Agreement is amended by deleting the penultimate
sentence therein in its entirety.
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j.) Section
5.02 of the Financing Agreement is amended by adding the following new clauses
thereto as follows:
“(h) Term Loan
Agreement. No “Default” or “Event of Default” as defined in
the Term Loan Agreement shall have occurred and be continuing
thereunder.
(i) Foreign Corrupt
Practices. Neither the Group nor any of the Borrowers, nor to
the knowledge of the Group, any director, officer, agent, employee or other
Person acting on behalf of Group or any of the Borrowers has, in the
course of its actions for, or on behalf of, Group or any of the Borrowers (i)
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
(j) Xxxxxxxx-Xxxxx
Act. Group is in compliance with any and all applicable
requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the
Fourth Amendment Effective Date, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the
Fourth Amendment Effective Date.
(k) Internal Accounting and
Disclosure Controls. Group maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the Exchange Act)
designed to ensure that are effective in ensuring that information required to
be disclosed by Group in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms of the SEC, including,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by Group in the reports that it files or furnishes
under the 1934 Act is accumulated and communicated to Group's management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure.
(l) Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other
relationship between Group and an unconsolidated or other off balance sheet
entity that is required to be disclosed by Group in its 1934 Act filings and is
not so disclosed or that otherwise would be reasonably likely to have a Material
Adverse Effect.
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(m) SEC Documents; Financial
Statements. Except as disclosed in Schedule 5.02(m),
during the two (2) years prior to the Fourth Amendment Effective Date, Group has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the
Exchange Act (all of the foregoing filed prior to the Fourth Amendment Effective
Date and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, other
than as may have been subsequently restated or amended in an amended or
subsequent report. As of their respective dates, the consolidated
financial statements of Group included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with GAAP, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of Group as of the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of Group
to the Agent which is not included in the SEC Documents, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.”
k.) Section
6.01(e) of the Financing Agreement is amended and restated in its entirety to
read as follows:
“(e) Subsidiaries. Schedule
6.01(e) is a complete and correct description of the name, jurisdiction of
incorporation and ownership of the outstanding Capital Stock of such
Subsidiaries of Group in existence on the Fourth Amendment Effective
Date. All of the issued and outstanding Capital Stock of such
Subsidiaries has been validly issued and are fully paid and nonassessable, and
the holders thereof are not entitled to any preemptive, first refusal or other
similar rights. Except as indicated on such Schedule, all such
Capital Stock is owned by Group or one or more of its wholly-owned Subsidiaries,
free and clear of all Liens. Schedule 6.01(e) identifies all Domestic
Subsidiaries and Foreign Subsidiaries, and includes a brief description of the
nature and type of business conducted by the Foreign Subsidiaries and certain
financial information.”
l.) Section
6.01(l) of the Financing Agreement is amended and restated in its entirety to
read as follows:
“(l) Nature of
Business. None of the Loan Parties is engaged in any business
other than developing, producing and selling specialty apparel and related
products, and entering into licensing arrangements in connection
therewith.”
m.) Section
6.01(v) of the Financing Agreement is amended and restated in its entirety to
read as follows:
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“(v) Intellectual
Property. Each Loan Party owns or licenses or otherwise has
the right to use all licenses, permits, trademarks, trademark applications,
patents, patent applications, service marks, trade names, copyrights, copyright
applications, franchises, authorizations and other intellectual property rights
that are necessary for the operations of its businesses, without infringement
upon or conflict with the rights of any other Person with respect thereto,
except for such infringements and conflicts which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. Set forth on Schedule 6.01(v) is a complete and accurate
list as of the Effective Date of all trademarks, trademark applications, trade
names, material licenses, permits, patents, patent applications, service marks,
copyrights, copyright applications, franchises, authorizations and other
intellectual property rights of each Loan Party. No slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by any Loan Party infringes
upon or conflicts with any rights owned by any other Person, and no claim or
litigation regarding any of the foregoing is pending or threatened, except for
such infringements and conflicts which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the
best knowledge of each Loan Party, no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is pending or
proposed, which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on any license, permit, trademark, trademark
application, patent, patent application, service xxxx, trade name, copyright,
copyright application, franchise, authorization and/or other intellectual
property right owned or used by any of the Loan Parties in or in connection with
its business. As of the Fourth Amendment Effective Date, no
Intellectual Property material to the operation of the business of the Borrowers
or any Affiliate of the Borrowers is owned by any Person not a Loan
Party.”
n.) Section
6.01 of the Financing Agreement is amended by adding the following new clauses
thereto as follows:
“(gg) Transactions with
Affiliates. Except (i) as set forth on Schedule 6.01(gg),
(ii) transactions that are necessary or desirable for the prudent operation
of its business, are for fair consideration and on terms no less favorable to
the Loan Parties or their Subsidiaries than would be obtainable in a comparable
arm’s length transaction with a Person that is not an Affiliate thereof, have
been approved by the audit committee of the Board of Directors of Group and
involve the payment to the Affiliate of not more than $100,000 in any Fiscal
Year or (iii) transactions with another Loan Party, none of the Loan Parties nor
any of their Subsidiaries have entered into, or are parties to, any transaction
or series of transactions (including, without limitation, the purchase, sale,
lease, transfer or exchange of property or assets of any kind or the rendering
of services of any kind) with any Affiliate.
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(hh) Equity
Capitalization. As of the Fourth Amendment Effective Date, the
authorized, issued and outstanding capital stock of Group and shares reserved
for issuance is set forth on Schedule 6.01(hh). All of such shares set forth on
Schedule 6.01(hh) have been, or upon issuance will be, validly issued and are
fully paid and non-assessable. Except as disclosed in Schedule
6.01(hh): (i) none of Group’s share capital is subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
Group; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
share capital of Group or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which Group or any of its Subsidiaries is or
may become bound to issue additional share capital of Group or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any share capital of Group
or any of its Subsidiaries; (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of Group or any of its Subsidiaries or by
which Group or any of its Subsidiaries is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with Group or any of its Subsidiaries;
(v) there are no agreements or arrangements under which Group or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act of 1933, as amended (the “1933 Act”) and for which Group or
any of its Subsidiaries is or could be subject to financial penalties for
failure to either timely file or have declared effective by the SEC, a
registration statement under the 1933 Act; (vi) there are no outstanding
securities or instruments of Group or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which Group or any of its Subsidiaries is or
may become bound to redeem a security of Group or any of its Subsidiaries;
(vii) Group and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of Group's or its
Subsidiaries' respective businesses and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect; and (viii) neither Group nor
any of its Subsidiaries have received or are currently subject to any comment
letters issued by the SEC.”
o.) Section
7.01(b)(i) of the Financing Agreement is amended by deleting the phrase
“forty-five (45)” in its entirety and the phrase “thirty (30)” shall be
substituted in lieu thereof.
p.) Section
7.01(b)(iii) of the Financing Agreement is amended and restated in its entirety
to read as follows:
“(iii) as
soon as available, but in any event within thirty (30) days prior to the start
of each of Group’s Fiscal Years, copies of the Borrowers’ business plan, in form
and substance (including as to scope and underlying assumptions and including
all anticipated Capital Expenditures, store openings, and store closings during
the covered period) satisfactory to the Agent, in its Permitted Discretion (the
“Business Plan”), for the forthcoming year, month by month, certified by the
chief financial officer of Group as being such officer’s good faith best
estimate of the financial performance of Group and its Subsidiaries during the
period covered thereby (it being understood that (A) such information will be
prepared by Group in good faith based upon assumptions believed to be reasonable
at the time and based upon the best information then reasonably available to
Group, and (B) Agent may in its Permitted Discretion, but shall not be under any
obligation to, revise financial covenants set forth in Section 7.02 as a result
of its review of such business plans and/or create or expand Reserves), and to
the extent Borrowers’ results of operations during the period covered by the
Business Plan materially deviate from the Business Plan for the period
covered.”
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q.) Section
7.01(b) of the Financing Agreement is amended by adding the following new clause
thereto as follows:
“(xv) as
soon as available, but in any event within forty-five (45) days after the end of
each quarter during each of Group’s Fiscal Years:
(A) a
company prepared consolidated balance sheet, income statement, and statement of
cash flow covering Group’s and its Subsidiaries’ operations during the previous
month; and
(B) a
certificate signed by the chief financial officer of Group to the effect
that:
(1) the
financial statements delivered hereunder have been reviewed by an independent
certified public accountant reasonably acceptable to the Agent, and have been
prepared in accordance with GAAP (except for the lack of footnotes and being
subject to year-end audit adjustments) and fairly present in all material
respects the financial condition of Group and its Subsidiaries;
(2) the
representations and warranties of the Borrowers contained in this Agreement and
the other Loan Documents are true and correct in all material respects on and as
of the date of such certificate, as though made on and as of such date (except
to the extent that any such representations and warranties expressly relate
solely to an earlier date, in which case such representations and warranties
were true and correct in all material respects on such earlier date);
and
(3) there does
not exist any condition or event that constitutes a Default or Event of Default
(or, to the extent of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action the Borrowers have taken, are
taking, or propose to take with respect thereto).”
r.) Section
7.01(b) of the Financing Agreement is amended by amending and restating the
first sentence in the final paragraph thereof to read in its entirety as
follows:
“In
addition to the financial statements referred to in clauses (i), (ii) and (xv)
above, the Borrowers agree to deliver financial statements prepared on both a
consolidated and consolidating basis.”
s.) Section
7.01(g) of the Financing Agreement is amended and restated in its entirety to
read as follows:
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“(g)
Inspection
Rights. Permit, and cause each of their Subsidiaries to
permit, the Agent or representatives thereof at any time and from time to time
during normal business hours, in the absence of a continuing Event of Default
upon reasonable notice and if an Event of Default exists without notice, and at
the expense of the Borrowers, to examine and make copies of and abstracts from
their corporate and other records, board of directors’ meeting minutes and
accompanying materials, and books of account, to visit and inspect their
properties, to verify materials, leases, notes, accounts receivable, deposit
accounts and other assets of the Loan Parties and their Subsidiaries, to conduct
audits, physical counts, valuations, appraisals, environmental assessments or
examinations and to discuss their affairs, finances and accounts with any of the
directors, officers, managerial employees, independent accountants or other
representatives thereof. The Borrowers agree to pay the reasonable
fees, cost and expenses of such audits, counts, valuations, appraisals,
assessments or examinations including without limitation, travel
expenses.”
t.)
Section 7.01(m) of the Financing Agreement is amended and restated in its
entirety to read as follows:
“(m) Change in Collateral;
Collateral Records. (i) Give the Agent not less
than fifteen (15) days’ prior written notice of any change in the location
of any Collateral (excluding such changes that are in the ordinary course of
business but including, without limitation, the execution and delivery of any
lease of real property), other than to locations set forth on
Schedule 1.01(B) and the retail locations set forth on Schedule 1.01(E) and
with respect to which the Agent has fully perfected its Liens thereon,
(ii) advise the Agent promptly, in sufficient detail, of any material
adverse change relating to the type, quantity or quality of the Collateral or
the Lien granted thereon and (iii) execute and deliver and cause each of their
Subsidiaries to execute and deliver, to the Agent for the benefit of the Lenders
from time to time, solely for the Agent’s convenience in maintaining a record of
Collateral, such written statements and schedules as the Agent may reasonably
require, designating, identifying or describing the Collateral.”
u.) Section
7.01(t) of the Financing Agreement is amended by (i) deleting the “or” at
the end of subsection (D), (ii) deleting the “and” at the end of subsection (E)
and substituting “or” in lieu thereof, and (iii) adding the following new
clause thereto as follows:
“(F) any
claim or action is asserted, threatened, instituted, or filed with respect to
any material portion of the Collateral; and”
v.) Section
7.01 of the Financing Agreement is amended by adding the following new clauses
thereto as follows:
|
“(y)
|
Pro Forma Compliance
Certificate. The Borrowers shall provide the Agent with
any Pro Forma Compliance Certificate that is required to be delivered
pursuant to the terms of either the Term Loan Agreement or the Term Loan
Intercreditor Agreement.
|
11
|
(z)
|
Application of Term
Loan Agreement Proceeds. The Borrowers shall use the
proceeds of the Term Loan, net of all costs, expenses and fees incurred by
the Borrowers in connection with the closing of the Term Loan (which
proceeds, in any event, shall be at least $6,600,000), for the purpose of
(i) first, paying in full in cash the Bridge Loan Facility provided under
the Financing Agreement and (ii) second, at the option of the Borrowers
either (1) prepaying the Revolving Loans or (2) immediately depositing one
hundred percent (100%) of the balance of the proceeds of the Term Loan
into a separate deposit account selected by the Agent, which deposit
account shall cash collateralize the Obligations and be subject to a
Control Agreement (which shall be entered into and executed by and among
the applicable Borrowers, the depositary bank and the Agent and delivered
to the Agent within two (2) Business Days after the Borrowers’ receipt
from the Agent of the initial draft of such Control Agreement), over which
the Agent shall have full dominion and control and a perfected, first
priority security interest. If the Borrowers elect to deposit
such Term Loan proceeds into a deposit account, so long as no Default or
Event of Default has occurred and is continuing, the Borrowers may at any
time direct the Agent to apply such Term Loan proceeds towards prepaying
the outstanding principal of the Revolving Loans, and for no other
purpose. At anytime after a Default or Event of Default has
occurred and is continuing, the Agent shall have the sole discretion and
ability, without notice to, or the consent of, the Borrowers, to apply
such Term Loan proceeds to prepay the outstanding principal of the
Revolving Loans.”
|
w.) The
preamble to Section 7.02(d) of the Financing Agreement is amended and restated
in its entirety to read as follows:
“(d)
Fundamental
Changes. Create any Domestic Subsidiary that does
not simultaneously become a Loan Party and execute a joinder to this Agreement,
or wind-up, liquidate or dissolve (or permit or suffer any thereof) or merge,
consolidate or amalgamate with any Person, convey, sell, lease or sublease,
transfer or otherwise dispose of, whether in one transaction or a series of
related transactions, all or any part of their business, including any units or
divisions thereof and including a conveyance, sale, lease or sublease, transfer
or other disposition of any property or assets, whether now owned or hereafter
acquired, or (agree to do any of the foregoing) or purchase or otherwise
acquire, whether in one transaction or a series of related transactions, all or
substantially all of the assets of any Person (or any division thereof) (or
agree to do any of the foregoing), or permit any of their Subsidiaries to do any
of the foregoing; provided, however,
that”
x.) Section
7.02(g) of the Financing Agreement is amended by deleting the number “$500,000”
in its entirety and the number “$1,000,000” shall be substituted in lieu
thereof.
y.) Section
7.02(i) of the Financing Agreement is amended by amending and restating clause
(vi) thereof to read in its entirety as follows:
“(vi) pay or prepay any
Indebtedness in respect of the Subordinated Loan Agreement or in respect of the
Term Loan Agreement, except to the extent such payment is then permitted
pursuant to the terms of the Subordination Agreement or the Term Loan
Intercreditor Agreement, as applicable; or (vii) make any payments to
an Executive Officer on account of a Change of Control, severance or bonus
arrangement (collectively or individually, a “Restricted Payment”) if at the
time of such Restricted Payment a Default or Event of Default has then occurred
and is continuing.”
12
z.) Section
7.02(k) of the Financing Agreement is amended and restated in its entirety to
read as follows:
“(k)
Transactions with
Affiliates. Except (i) as set forth on Schedule 7.02(k),
(ii) transactions that are necessary or desirable for the prudent operation
of its business, are for fair consideration and on terms no less favorable to
the Loan Parties or their Subsidiaries than would be obtainable in a comparable
arm’s length transaction with a Person that is not an Affiliate thereof, have
been approved by the audit committee of the Board of Directors of Group and
involve the payment to the Affiliate of not more than $100,000 in any Fiscal
Year or (iii) transactions with another Loan Party, enter into, renew,
extend or be a party to, or permit any of their Subsidiaries to enter into,
renew, extend or be a party to any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with
any Affiliate.”
aa.) Section
7.02(m) of the Financing Agreement is amended by adding the following sentence
to the end thereof:
“With
respect to Group only, issue or sell or enter into any agreement or arrangement
for the issuance and sale of any shares of its Capital Stock or any securities
convertible into or exchangeable for its Capital Stock, unless the use of
proceeds related thereto remains consistent with the most recent Business Plan
of Group.”
bb.) Section
9.01(c) of the Financing Agreement is amended by amending and restating clause
(i) to read in its entirety as follows:
“(i) paragraphs
(b)(vi), (c), (e), (g), (i), (p), (q), (s), (x), (y) or (z) of Section 7.01, or
clauses (i)(C), (i)(D) or (i)(E) of paragraph (t) of Section 7.01, or Section
7.02, or any Loan Party shall fail to perform or comply with any negative
covenant contained in Section 6 of any Pledge Agreement to which it is a
party or in Section 5 of any Security Agreement to which it is a
party,”
cc.) Section
9.01(i) of the Financing Agreement is amended and restated in its entirety to
read as follows:
“(i) any
Security Agreement, any Pledge Agreement or any other security document, after
delivery thereof pursuant hereto, shall for any reason fail or cease to create a
valid and perfected (to the extent that Agent or the Lenders have taken steps to
effect perfection) and, except to the extent permitted by the terms hereof or
thereof, first priority Lien in all Collateral (other than Intellectual
Property) and a second priority Lien in any Intellectual Property (subject to
Permitted Liens) in favor of the Agent for the benefit of the Lenders on any
Collateral purported to be covered thereby;”
13
dd.) Section
9.01 of the Financing Agreement is amended by (i) deleting the word “and” at the
end of clause (u), (ii) deleting the “.” at the end of clause (v) and
substituting “;” in lieu thereof and (iii) by adding the following new clauses
thereto as follows:
“(w) any
“Event of Default” (as defined in the Term Loan Agreement or the Term Loan
Intercreditor Agreement) shall occur (without giving effect to any
waivers);
(x) the
suspension from trading or failure of the common stock of Group to be listed on
an Eligible Market for a period of five (5) consecutive trading days or for more
than an aggregate of ten (10) trading days in any 365-day
period. “Eligible Market” means The New York Stock Exchange, Inc.,
the NYSE Amex Exchange, The NASDAQ Global Select Market, The NASDAQ Global
Market or The NASDAQ Capital Market, OTC Bulletin Board or the Pink Sheets, or
any market that is a successor to any of the foregoing;
(y)
any payment of principal (whether scheduled or optional) of
Indebtedness under the Term Loan Agreement that is not permitted by the terms of
the Term Loan Intercreditor Agreement; and
(z)
any provision of the Term Loan Intercreditor Agreement shall at any time
for any reason (other than pursuant to the express terms thereof) cease to be
valid and binding on or enforceable against the parties thereto, or the validity
or enforceability thereof shall be contested by any party thereto, or a
proceeding shall be commenced by any party thereto for any reason.”
ee.) Article
XII of the Financing Agreement is amended by adding the following new Section
thereto as follows:
“Section
12.24 Term Loan Intercreditor
Agreement. Notwithstanding anything herein to the
contrary, the exercise of any right or remedy by the Agent or the Lenders
hereunder with respect to any Collateral is subject to the provisions of the
Term Loan Intercreditor Agreement.”
ff.) Schedule
1.01(C) of the Financing Agreement is deleted in its entirety and the Schedule
1.01(C) attached as Exhibit A to this Agreement shall be substituted in lieu
thereof.
gg.) Schedule
1.01(D) of the Financing Agreement is deleted in its entirety and the Schedule
1.01(D) attached as Exhibit B to this Agreement shall be substituted in lieu
thereof.
3. Amendments to Security
Agreements. Upon the Fourth Amendment Effective Date (as
hereinafter defined) each Security Agreement is hereby amended as
follows:
a.) Section
1 of each Security Agreement is amended by adding the defined term “Customer
Records” (and corresponding definitions) in appropriate alphabetical order
therein:
|
(i)
|
““Customer
Records” means all customer lists, formulae, Website Collateral and
other Records of each Grantor and the other Borrowers relating to the
distribution of products and services in connection with which any of such
Trademarks are used.”
|
14
b.) Section
1 of each Security Agreement is amended by amending and restating the following
defined terms therein to read as follows:
|
(i)
|
““Patents” means
all domestic and foreign letters patent, design patents, utility patents,
industrial designs, inventions, trade secrets, ideas, concepts, methods,
techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like
nature, now hereafter owned, acquired or used by each Grantor or any other
Borrower (including, without limitation, all domestic and foreign letters
patent, design patents, utility patents, industrial designs, inventions,
trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in
Schedule II hereto), all applications, registrations and recordings
thereof (including, without limitation, applications, registrations and
recordings in the United States Patent and Trademark Office, or in any
similar office or agency of the United States or any other country or any
political subdivision thereof), all reissues, divisions, continuations,
continuations-in–part, extensions, renewals and reexaminations thereof,
all income, royalties, damages and payments now and hereafter due or
payable or both with respect to the foregoing, including, without
limitation, damages and payments for past, present or future infringements
or misappropriations thereof, all rights to xxx for past, present and
future infringements or misappropriations thereof, and all other rights
corresponding thereto throughout the
world.”
|
|
(ii)
|
““Trademarks”
means all domestic and foreign trademarks, service marks, collective
marks, certification marks, trade names, corporate names, business names,
d/b/a’s, fictitious names, alternate names, Domain Names and other
Internet domain names, trade dress, trade styles, designs, logos and other
source or business identifiers and all general intangibles of like nature,
now or hereafter owned, adopted, created, acquired or used by each Grantor
or any other Borrower (including, without limitation, all domestic and
foreign trademarks, service marks, collective marks, certification marks,
trade names, corporate names, business names, d/b/a’s, fictitious names,
alternate names, Internet domain names, trade dress, trade styles,
designs, logos and other source or business identifiers described in
Schedule II hereto), all applications, registrations and recordings
thereof (including, without limitation, applications, registrations and
recordings in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any
other country or any political subdivision thereof), and all reissues,
extensions or renewals thereof, together with the entire product lines and
goodwill of the business connected with and symbolized by the foregoing,
all income, royalties, damages and payments now and hereafter due or
payable or both with respect to the foregoing, including, without
limitation, damages and payments for past, present or future infringements
or misappropriations thereof, all rights to xxx for past, present and
future infringements or misappropriations thereof, and all other rights
corresponding thereto throughout the world, and all Customer
Records.”
|
15
c.) The
first paragraph of Section 3 of each Security Agreement is amended and restated
to read in its entirety to read as follows:
“Section
3. Security for
Obligations. This Agreement is intended to grant to the Agent,
on behalf of the Lenders, a first priority lien on and security interest in all
of each Grantor’s Collateral (excluding Intellectual Property and Licenses), and
a second priority lien on and security interest in all of the Intellectual
Property and Licenses as continuing collateral security for all of the following
obligations, in each case subject to Permitted Liens, whether now existing or
hereafter incurred (the “Obligations”):”
4. Conditions to
Effectiveness. This Amendment shall become effective upon the
satisfaction (or waiver by the Agent) of each of the following conditions (the
first date on which said conditions have been so satisfied (or so waived), the
“Fourth Amendment Effective Date”):
a.) The
Agent shall have received the following, each in form and substance satisfactory
to the Agent, and, unless indicated otherwise, dated as of the date
hereof:
|
(i)
|
This
Amendment, duly executed by the Borrowers, the Agent and the Lenders,
together with all Schedules referenced therein;
and
|
|
(ii)
|
The
Term Loan Intercreditor Agreement, duly executed by the Agent and the Term
Loan Agent.
|
b.) On
the Fourth Amendment Effective Date, no Default or Event of Default shall
exist.
c.) The
Borrowers shall have paid all reasonable fees, costs and expenses of the Agent
and the Lenders in connection with this Amendment, including, without
limitation, the fees and expenses of Proskauer Rose LLP.
If the
Fourth Amendment Effective Date shall not have occurred by the close of business
(New York time) on August 1, 2010 (or such later time as the Agent consents to
in writing), this Amendment shall be deemed rescinded, null and
void.
5. Consent and
Waiver. Except as expressly stated herein, nothing herein
shall be deemed to constitute a waiver of compliance with, or other modification
of, any term or condition contained in the Financing Agreement, the Security
Agreements or any other Loan Document and nothing contained herein shall
constitute a course of conduct or dealing among the parties
hereto. Except as expressly stated herein, the Agent and the Lenders
reserve all rights, privileges and remedies under the Loan
Documents.
16
6. Representations. In
order to induce the Agent and the Lenders to execute this Amendment, the
Borrowers hereby represent, warrant and covenant to the Agent and the Lenders
that as of the date hereof and as of the Fourth Amendment Effective Date (which
representations, warranties and covenants shall survive execution and delivery
of this Amendment):
a.) the
Borrowers are duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of formation;
b.) the
Borrowers have the power and authority to execute, deliver and perform their
obligations under this Amendment;
c.) the
execution, delivery and performance by the Borrowers of this Amendment has been
duly authorized by all necessary action and does not and will not require any
registration with, consent or approval of, notice to or action by, any other
Person;
d.) this
Amendment constitutes the legal, valid and binding obligation of the Borrowers,
enforceable against the Borrowers in accordance with its terms;
e.) no
Default or Event of Default exists; and
f.) by
its signature below, each of the Borrowers agrees that it shall constitute an
immediate Event of Default if any representation or warranty made in this Section 6 is untrue
or incorrect in any material respect on and as of the Fourth Amendment Effective
Date, in each case after giving effect to this Amendment.
7. Counterparts. This
Amendment may be executed by the parties hereto in any number of separate
counterparts, each of which when so executed, shall be deemed an original and
all said counterparts when taken together shall be deemed to constitute but one
and the same instrument.
8. Successors and
Assigns. This Amendment shall be binding upon and inure to the
benefit of the Borrowers and their successors and permitted assigns, and the
Lenders and the Agent and their successors and permitted assigns.
9. Further
Assurance. The Borrowers hereby agree from time to time, as
and when requested by the Agent, to execute and deliver or cause to be executed
and delivered, all such documents, instruments and agreements and to take or
cause to be taken such further or other action as the Agent may reasonably deem
necessary or desirable in order to carry out the intent and purposes of this
Amendment.
10. GOVERNING
LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
ITS CONFLICT OF LAWS PROVISIONS OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).
17
11. Severability. Wherever
possible, each provision of this Amendment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Amendment.
12. Reaffirmation. Each
Borrower hereby ratifies and reaffirms all of its payment and performance
obligations, contingent or otherwise, under each of the Loan Documents to which
it is a party (after giving effect hereto). Each Borrower hereby
acknowledges that, except as expressly modified herein, each of the Loan
Documents, remains in full force and effect and is hereby ratified and
reaffirmed.
13. Acknowledgment of Rights;
Release of Claims. Each Borrower hereby acknowledges that:
(a) it has no defenses, claims or set-offs to the enforcement by the Agent
or the Lenders of the liabilities, obligations and agreements of the Borrowers
under the Financing Agreement, the Security Agreements or other Loan Documents
on the date hereof; and (b) to its knowledge, the Agent and the Lenders
have fully performed all undertakings and obligations owed to it as of the date
hereof. In consideration of the Agent and the Lenders entering into
this Amendment, each Borrower hereby irrevocably releases and forever discharges
the Agent, the Lenders and their respective Affiliates, and each such Person’s
respective directors, officers, employees, agents, attorneys and representatives
(each, a “Released
Person”) of and from all damages, losses, claims, demands, liabilities,
obligations, actions or causes of action whatsoever which such Borrower may now
have or claim to have against any Released Person for or because of any matter
or thing done, omitted or suffered to be done or omitted by any of the Released
Persons prior to and including the date hereof and on account of or in any way
concerning, arising out of or founded upon the Financing Agreement, the Security
Agreements or any other Loan Document, whether presently known or unknown and of
every nature and extent whatsoever. This Section 13 shall
survive the termination of the Financing Agreement, the Security Agreements and
payment in full of the Obligations thereunder.
[Signature
Pages Follow]
18
IN WITNESS WHEREOF, the parties hereto
have caused this Fourth Amendment to Amended and Restated Financing Agreement to
be duly executed by their respective duly authorized officers as of the date
first written above.
BORROWERS:
|
|||
FREDERICK’S
OF HOLLYWOOD GROUP INC.
|
|||
By:
|
/s/ Xxxxxx Xxxxx
|
||
Name: Xxxxxx
Xxxxx
|
|||
Title: Chief
Financial Officer
|
|||
FOH
HOLDINGS, INC.
|
|||
By:
|
/s/ Xxxxxx Xxxxx
|
||
Name: Xxxxxx
Xxxxx
|
|||
Title: Chief
Financial Officer
|
|||
FREDERICK’S
OF HOLLYWOOD, INC.
|
|||
By:
|
/s/ Xxxxxx Xxxxx
|
||
Name: Xxxxxx
Xxxxx
|
|||
Title: Chief
Financial Officer
|
|||
FREDERICK’S
OF HOLLYWOOD STORES, INC.
|
|||
By:
|
/s/ Xxxxxx Xxxxx
|
||
Name: Xxxxxx
Xxxxx
|
|||
Title: Chief
Financial Officer
|
|||
HOLLYWOOD
MAIL ORDER, LLC
|
|||
By:
FOH Holdings, Inc., its Manager
|
|||
By:
|
/s/ Xxxxxx Xxxxx
|
||
Name: Xxxxxx
Xxxxx
|
|||
Title: Chief
Financial
Officer
|
[Signature
Page of Fourth Amendment to Amended and Restated Financing
Agreement]
EXISTING
GUARANTOR:
|
||
XXXXXXXXXX.XXX,
INC.
|
||
By:
|
/s/ Xxxxxx Xxxxx
|
|
Name:
Xxxxxx Xxxxx
|
||
Title:
Chief Financial
Officer
|
[Signature
Page of Fourth Amendment to Amended and Restated Financing
Agreement]
AGENT
|
|
XXXXX
FARGO RETAIL FINANCE II, LLC
|
|
By:
|
/s/ Xxxxxx Xxxx
|
Name:
Xxxxxx Xxxx
|
|
Title:
Director
|
|
LENDER
|
|
XXXXX
FARGO RETAIL FINANCE II, LLC
|
|
By:
|
/s/ Xxxxxx Xxxx
|
Name:
Xxxxxx Xxxx
|
|
Title:
Director
|
[Signature
Page of Fourth Amendment to Amended and Restated Financing
Agreement]
Exhibit A to Fourth
Amendment
Schedule
1.01(C)
Lenders and Lenders’
Commitments
Lender
|
Revolving Credit Commitment
|
Percentage
|
||||||
Xxxxx
Fargo Retail Finance II, LLC
|
$ | 20,000,000 | 100.00 | % | ||||
Total
|
$ | 20,000,000 | 100.00 | % |
Exhibit B to Fourth
Amendment
Schedule
1.01(D)
Permitted
Holders
Fursa
Master Rediscovered Opportunities Fund L.P.
Attn:
Xxxxxxx X. Xxxxxx, Chief Investment Officer
x/x Xxxxx
Xxxxxxxxxxx Xxxxxxxxxx LLC
00 Xxxxx
Xxxxxx
Xxxxxxxxxxx,
XX 00000
Fursa
Capital Partners LP
Attn:
Xxxxxxx X. Xxxxxx, Chief Investment Officer
x/x Xxxxx
Xxxxxxxxxxx Xxxxxxxxxx
00 Xxxxx
Xxxxxx
Xxxxxxxxxxx,
XX 00000
Fursa
Master Global Event Driven Fund LP
Attn:
Xxxxxxx X. Xxxxxx, Chief Investment Officer
x/x Xxxxx
Xxxxxxxxxxx Xxxxxxxxxx
00 Xxxxx
Xxxxxx
Xxxxxxxxxxx,
XX 00000
Scotia
Capital (USA) Inc.
Xxx
Xxxxxxx Xxxxx
000
Xxxxxxxx
Xxx Xxxx,
XX 00000
Blackfriars
Master Vehicle LLC – Series 2
Attn:
Xxxxxxx X. Xxxxxx, Chief Investment Officer
x/x Xxxxx
Xxxxxxxxxxx Xxxxxxxxxx
00 Xxxxx
Xxxxxx
Xxxxxxxxxxx,
XX 00000
Xxxxxx
Investments, LLC
000
Xxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
TTG
Apparel, LLC
000
Xxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000