UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM 10-Q
x |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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SECURITIES EXCHANGE ACT OF 1934 |
for the quarterly period ended August 4, 2007 |
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OR |
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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SECURITIES EXCHANGE ACT OF 1934 |
for the transition period from to .
COMMISSION FILE NUMBER: 1-32315
NEW YORK & COMPANY, INC.
(Exact
name of registrant as specified in its charter)
DELAWARE |
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33-1031445 |
(State of incorporation) |
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(I.R.S. Employer Identification No.) |
450 West 33rd Street |
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5th Floor |
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New York, New York 10001 |
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(212) 884-2000 |
(Address of
Principal Executive Offices,
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(Registrants
Telephone Number,
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o |
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Accelerated filer x |
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Non-accelerated filer o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 31, 2007, the registrant had 58,751,621 shares of common stock outstanding.
PART I. FINANCIAL INFORMATION |
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1 |
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Managements Discussion and Analysis of Financial Condition and Results of Operations |
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12 |
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23 |
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23 |
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24 |
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24 |
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24 |
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24 |
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24 |
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25 |
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25 |
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New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
|
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Three months
|
|
Three months
|
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Six months
|
|
Six months
|
|
||||||||||||
|
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(Amounts in thousands, except per share amounts) |
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||||||||||||||||||
Net sales |
|
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$ |
294,402 |
|
|
|
$ |
264,858 |
|
|
|
$ |
578,364 |
|
|
|
$ |
531,995 |
|
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Cost of goods sold, buying and occupancy costs |
|
|
215,571 |
|
|
|
189,277 |
|
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421,090 |
|
|
|
377,311 |
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|
||||
Gross profit |
|
|
78,831 |
|
|
|
75,581 |
|
|
|
157,274 |
|
|
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154,684 |
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||||
Selling, general and administrative expenses |
|
|
72,759 |
|
|
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64,200 |
|
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149,601 |
|
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132,684 |
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Operating income |
|
|
6,072 |
|
|
|
11,381 |
|
|
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7,673 |
|
|
|
22,000 |
|
|
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Interest expense, net of interest income of $500, $335, $959, and $549, respectively |
|
|
219 |
|
|
|
477 |
|
|
|
480 |
|
|
|
967 |
|
|
||||
|
|
5,853 |
|
|
|
10,904 |
|
|
|
7,193 |
|
|
|
21,033 |
|
|
|||||
Provision for income taxes |
|
|
2,354 |
|
|
|
4,405 |
|
|
|
2,892 |
|
|
|
8,477 |
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|
||||
Net income |
|
|
$ |
3,499 |
|
|
|
$ |
6,499 |
|
|
|
$ |
4,301 |
|
|
|
$ |
12,556 |
|
|
Basic earnings per share |
|
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$ |
0.06 |
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|
|
$ |
0.12 |
|
|
|
$ |
0.07 |
|
|
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$ |
0.23 |
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Diluted earnings per share |
|
|
$ |
0.06 |
|
|
|
$ |
0.11 |
|
|
|
$ |
0.07 |
|
|
|
$ |
0.21 |
|
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Weighted average shares outstanding: |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic shares of common stock |
|
|
58,262 |
|
|
|
55,656 |
|
|
|
58,033 |
|
|
|
55,441 |
|
|
||||
Diluted shares of common stock |
|
|
60,954 |
|
|
|
59,852 |
|
|
|
60,911 |
|
|
|
59,798 |
|
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See accompanying notes.
1
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Balance Sheets
|
|
August 4,
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February 3,
|
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July 29,
|
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|||||||||
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(Unaudited) |
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(Audited) |
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(Unaudited) |
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|||||||||
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(Amounts in thousands,
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Assets |
|
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|
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Current assets: |
|
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|
|
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|
|
|
|
|
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|
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Cash and cash equivalents |
|
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$ |
27,749 |
|
|
|
$ |
68,064 |
|
|
|
$ |
36,888 |
|
|
Accounts receivable |
|
|
18,341 |
|
|
|
14,270 |
|
|
|
21,687 |
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|
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Inventories, net |
|
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122,765 |
|
|
|
110,088 |
|
|
|
102,526 |
|
|
|||
Prepaid expenses |
|
|
27,761 |
|
|
|
20,351 |
|
|
|
18,584 |
|
|
|||
Other current assets |
|
|
3,041 |
|
|
|
2,089 |
|
|
|
1,934 |
|
|
|||
Total current assets |
|
|
199,657 |
|
|
|
214,862 |
|
|
|
181,619 |
|
|
|||
Property and equipment, net |
|
|
226,800 |
|
|
|
210,163 |
|
|
|
181,949 |
|
|
|||
Goodwill |
|
|
11,088 |
|
|
|
11,088 |
|
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|
11,088 |
|
|
|||
Intangible assets |
|
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32,053 |
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|
32,053 |
|
|
|
32,053 |
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|||
Other assets |
|
|
1,367 |
|
|
|
1,633 |
|
|
|
1,949 |
|
|
|||
Total assets |
|
|
$ |
470,965 |
|
|
|
$ |
469,799 |
|
|
|
$ |
408,658 |
|
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Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
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|
|||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Current portion, long-term debt |
|
|
$ |
6,000 |
|
|
|
$ |
6,000 |
|
|
|
$ |
6,000 |
|
|
Accounts payable |
|
|
67,661 |
|
|
|
66,631 |
|
|
|
68,944 |
|
|
|||
Accrued expenses |
|
|
52,463 |
|
|
|
61,982 |
|
|
|
49,770 |
|
|
|||
Income taxes payable |
|
|
|
|
|
|
6,391 |
|
|
|
587 |
|
|
|||
Deferred income taxes |
|
|
2,540 |
|
|
|
3,894 |
|
|
|
3,006 |
|
|
|||
Total current liabilities |
|
|
128,664 |
|
|
|
144,898 |
|
|
|
128,307 |
|
|
|||
Long-term debt, net of current portion |
|
|
22,500 |
|
|
|
25,500 |
|
|
|
28,500 |
|
|
|||
Deferred income taxes |
|
|
2,182 |
|
|
|
2,990 |
|
|
|
3,403 |
|
|
|||
Deferred rent |
|
|
65,905 |
|
|
|
55,254 |
|
|
|
48,752 |
|
|
|||
Other liabilities |
|
|
4,594 |
|
|
|
358 |
|
|
|
655 |
|
|
|||
Total liabilities |
|
|
223,845 |
|
|
|
229,000 |
|
|
|
209,617 |
|
|
|||
Stockholders equity: |
|
|
|
|
|
|
|
|
|
|
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|
|||
Common stock, voting, par value $0.001; 300,000 shares authorized; 58,383, 57,538 and 55,938 shares issued and outstanding at August 4, 2007, February 3, 2007, and July 29, 2006, respectively |
|
|
58 |
|
|
|
57 |
|
|
|
56 |
|
|
|||
Additional paid-in capital |
|
|
146,136 |
|
|
|
141,804 |
|
|
|
133,924 |
|
|
|||
Retained earnings |
|
|
101,132 |
|
|
|
99,144 |
|
|
|
65,530 |
|
|
|||
Accumulated other comprehensive loss |
|
|
(206 |
) |
|
|
(206 |
) |
|
|
(469 |
) |
|
|||
Total stockholders equity |
|
|
247,120 |
|
|
|
240,799 |
|
|
|
199,041 |
|
|
|||
Total liabilities and stockholders equity |
|
|
$ |
470,965 |
|
|
|
$ |
469,799 |
|
|
|
$ |
408,658 |
|
|
See accompanying notes.
2
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Six months
|
|
Six months
|
|
||||||
|
|
(Amounts in thousands) |
|
||||||||
Operating activities |
|
|
|
|
|
|
|
|
|
||
Net income |
|
|
$ |
4,301 |
|
|
|
$ |
12,556 |
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
19,115 |
|
|
|
15,651 |
|
|
||
Amortization of deferred financing costs |
|
|
139 |
|
|
|
138 |
|
|
||
Share-based compensation expense |
|
|
931 |
|
|
|
790 |
|
|
||
Deferred income taxes |
|
|
(2,162 |
) |
|
|
(1,330 |
) |
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
||
Accounts receivable |
|
|
(4,071 |
) |
|
|
(8,400 |
) |
|
||
Inventories, net |
|
|
(12,677 |
) |
|
|
7,130 |
|
|
||
Prepaid expenses |
|
|
(7,410 |
) |
|
|
186 |
|
|
||
Accounts payable |
|
|
1,030 |
|
|
|
(22,036 |
) |
|
||
Accrued expenses |
|
|
(9,510 |
) |
|
|
(5,140 |
) |
|
||
Income taxes payable |
|
|
(8,704 |
) |
|
|
587 |
|
|
||
Deferred rent |
|
|
10,651 |
|
|
|
13,638 |
|
|
||
Other assets and liabilities |
|
|
3,352 |
|
|
|
(1,849 |
) |
|
||
Net cash (used in) provided by operating activities |
|
|
(5,015 |
) |
|
|
11,921 |
|
|
||
Investing activities |
|
|
|
|
|
|
|
|
|
||
Capital expenditures |
|
|
(35,638 |
) |
|
|
(38,057 |
) |
|
||
Net cash used in investing activities |
|
|
(35,638 |
) |
|
|
(38,057 |
) |
|
||
Financing activities |
|
|
|
|
|
|
|
|
|
||
Net proceeds from public offering |
|
|
|
|
|
|
2,294 |
|
|
||
Payment of offering costs related to public offering |
|
|
|
|
|
|
(439 |
) |
|
||
Repayment of debt |
|
|
(3,000 |
) |
|
|
(3,000 |
) |
|
||
Proceeds from exercise of stock options |
|
|
162 |
|
|
|
840 |
|
|
||
Excess tax benefit from exercise of stock options |
|
|
3,240 |
|
|
|
5,893 |
|
|
||
Other |
|
|
(64 |
) |
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
338 |
|
|
|
5,588 |
|
|
||
Net decrease in cash and cash equivalents |
|
|
(40,315 |
) |
|
|
(20,548 |
) |
|
||
Cash and cash equivalents at beginning of period |
|
|
68,064 |
|
|
|
57,436 |
|
|
||
Cash and cash equivalents at end of period |
|
|
$ |
27,749 |
|
|
|
$ |
36,888 |
|
|
See accompanying notes.
3
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Statement of Stockholders Equity
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|||||||||
|
|
|
|
|
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Additional |
|
|
|
Other |
|
|
|
|||||||||
|
|
Common Stock |
|
Paid-in |
|
Retained |
|
Comprehensive |
|
|
|
|||||||||||
|
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Shares |
|
Amount |
|
Capital |
|
Earnings |
|
Loss |
|
Total |
|
|||||||||
|
|
(Amounts in thousands) |
|
|||||||||||||||||||
Balance at February 3, 2007 |
|
57,538 |
|
|
$ |
57 |
|
|
$ |
141,804 |
|
$ |
99,144 |
|
|
$ |
(206 |
) |
|
$ |
240,799 |
|
Stock options exercised |
|
845 |
|
|
1 |
|
|
161 |
|
|
|
|
|
|
|
162 |
|
|||||
Excess tax benefit from exercise of stock options |
|
|
|
|
|
|
|
3,240 |
|
|
|
|
|
|
|
3,240 |
|
|||||
Share-based compensation expense |
|
|
|
|
|
|
|
931 |
|
|
|
|
|
|
|
931 |
|
|||||
Cumulative effect of adoption of FIN 48 |
|
|
|
|
|
|
|
|
|
(2,313 |
) |
|
|
|
|
(2,313 |
) |
|||||
Net income |
|
|
|
|
|
|
|
|
|
4,301 |
|
|
|
|
|
4,301 |
|
|||||
Balance at August 4, 2007 |
|
58,383 |
|
|
$ |
58 |
|
|
$ |
146,136 |
|
$ |
101,132 |
|
|
$ |
(206 |
) |
|
$ |
247,120 |
|
See accompanying notes.
4
New York & Company, Inc.
Notes to Condensed Consolidated Financial Statements
August 4, 2007
(Unaudited)
1. Organization and Basis of Presentation
New York & Company, Inc. (together with its subsidiaries, collectively the Company) is a leading specialty retailer of fashion-oriented, moderately-priced womens apparel. The Company designs and sources its proprietary branded New York & Company merchandise sold exclusively through its national network of New York & Company retail stores and on-line at www.nyandcompany.com. The target customers for the Companys New York & Company merchandise are fashion-conscious, value-sensitive women between the ages of 25 and 45. On July 19, 2005, the Company acquired Jasmine Company, Inc. (JasmineSola), a Boston-based, privately held womens retailer of upscale and contemporary apparel, footwear and accessories sold through its chain of JasmineSola branded retail stores. As of August 4, 2007, the Company operated 580 retail stores in 44 states, including 23 JasmineSola stores. Trademarks referenced in this Quarterly Report on Form 10-Q appear in italic type and are the property of the Company.
The accompanying condensed consolidated financial statements include the accounts for New York & Company, Inc. and all of its subsidiaries, including Lerner New York Holding, Inc. (Lerner Holding); Lerner New York, Inc.; Lernco, Inc.; Nevada Receivable Factoring, Inc. and JasmineSola. On a stand alone basis, without the consolidation of its subsidiaries, New York & Company, Inc. has no significant independent assets or operations. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the financial condition, results of operations and cash flows for the interim periods. Certain amounts in the prior periods have been reclassified to conform to the current period presentation.
The condensed consolidated financial statements as of August 4, 2007 and July 29, 2006 and for the thirteen weeks (three months) and twenty-six weeks (six months) ended August 4, 2007 and July 29, 2006 are unaudited and are presented pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC). Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the 53-week fiscal year ended February 3, 2007 (fiscal year 2006), which were filed with the Companys Annual Report on Form 10-K with the SEC on April 6, 2007. The 52-week fiscal year ending February 2, 2008 is referred to herein as fiscal year 2007. The Companys fiscal year is a 52 or 53 week year that ends on the Saturday closest to January 31.
Due to seasonal variations in the retail industry, the results of operations for any interim period are not necessarily indicative of the results expected for the full fiscal year.
2. Public Offering of Common Stock
On January 25, 2006, the Company completed a public offering of 8,050,000 shares of common stock, including the underwriters over-allotment option, of which 130,000 shares were offered by the Company and 7,920,000 shares were offered by certain selling stockholders at a price to the public of $18.50 per share. Upon consummation of the public offering on January 31, 2006, net proceeds of $2.3 million and $139.8 million were distributed to the Company and selling stockholders, respectively.
The net proceeds received by the Company were used to pay the fees and expenses of the offering, as well as for general corporate purposes.
5
New York & Company, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
August 4, 2007
(Unaudited)
On July 19, 2005, the Company entered into a Stock Purchase Agreement to acquire all of the outstanding common stock of JasmineSola for $22.5 million in cash and 350,000 shares of New York & Company, Inc. common stock, $0.001 par value, valued at $8.1 million based upon the closing stock price of New York & Company, Inc. on July 19, 2005. In addition, the Company will issue up to 200,000 shares of its common stock as additional consideration for the acquisition of JasmineSola contingent upon the achievement of certain growth targets over the three full fiscal years, and on a cumulative basis, following the acquisition. No shares were issued for fiscal year 2006. These contingent shares, if issued, will be recorded as an adjustment to the purchase price and goodwill.
The acquisition was accounted for under the purchase method of accounting. The purchase price allocation resulted in goodwill of $11.1 million and indefinite-lived intangible assets related to trademarks of $17.2 million.
In April 2007, the Company completed an arbitration proceeding related to the JasmineSola Stock Purchase Agreement and as a result recorded $3.3 million of charges in selling, general and administrative expenses, which consists primarily of legal costs related to the arbitration. The arbitration had no impact on the purchase price or goodwill.
Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share are calculated based on the weighted average number of shares of common stock outstanding plus the dilutive effect of stock options as if they were exercised and unvested restricted stock as if it were vested. A reconciliation between basic and diluted earnings per share is as follows:
|
|
Three months
|
|
Three months
|
|
Six months
|
|
Six months
|
|
||||||||||||
|
|
(Amounts in thousands, except per share amounts) |
|
||||||||||||||||||
Net income |
|
|
$ |
3,499 |
|
|
|
$ |
6,499 |
|
|
|
$ |
4,301 |
|
|
|
$ |
12,556 |
|
|
Basic EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic shares of common stock |
|
|
58,262 |
|
|
|
55,656 |
|
|
|
58,033 |
|
|
|
55,441 |
|
|
||||
Basic EPS |
|
|
$ |
0.06 |
|
|
|
$ |
0.12 |
|
|
|
$ |
0.07 |
|
|
|
$ |
0.23 |
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic shares of common stock |
|
|
58,262 |
|
|
|
55,656 |
|
|
|
58,033 |
|
|
|
55,441 |
|
|
||||
Plus impact of stock options and restricted stock |
|
|
2,692 |
|
|
|
4,196 |
|
|
|
2,878 |
|
|
|
4,357 |
|
|
||||
Diluted shares of common stock |
|
|
60,954 |
|
|
|
59,852 |
|
|
|
60,911 |
|
|
|
59,798 |
|
|
||||
Diluted EPS |
|
|
$ |
0.06 |
|
|
|
$ |
0.11 |
|
|
|
$ |
0.07 |
|
|
|
$ |
0.21 |
|
|
6
New York & Company, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
August 4, 2007
(Unaudited)
4. Earnings Per Share (Continued)
The calculation of diluted earnings per share for the three and six months ended August 4, 2007 excludes options to purchase 965,426 and 979,506 shares, respectively, due to their antidilutive effect. The calculation of diluted earnings per share for the three and six months ended July 29, 2006 excludes options to purchase 886,836 and 855,336 shares, respectively, due to their antidilutive effect.
In December 2004, the Financial Accounting Standards Board (FASB) published Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004), Share-Based Payment (SFAS 123-R). SFAS 123-R retains certain of the requirements of the original SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123) and requires that the cost resulting from all share-based payment transactions be treated as compensation and recognized in the consolidated financial statements. The Company adopted SFAS 123-R in December 2004, utilizing the modified prospective method. Prior to the Companys adoption of SFAS 123-R, the Company followed SFAS 123 and treated all forms of share-based payments as compensation recognized in the consolidated statement of income. Therefore, the adoption of SFAS 123-R did not have a material impact on the Companys consolidated financial statements.
In connection with the consummation of the public offering of common stock on January 31, 2006, BSMB/NYCG, LLC, an affiliate of Bear Stearns Merchant Banking, LLC and the controlling stockholder of the Company, realized a cash return in excess of 3.0 times its investment in the Company; at which point, 2,777,311 outstanding stock options vested in accordance with the terms of the respective stock option agreements.
The Company recorded share-based compensation expense in the amount of $0.5 million and $0.2 million for the three months ended August 4, 2007 and July 29, 2006, respectively, and $0.9 million and $0.8 million for the six months ended August 4, 2007 and July 29, 2006, respectively. Included in the $0.8 million of share-based compensation expense for the six months ended July 29, 2006 is $0.2 million of expense related to the 2,777,311 stock options that vested on January 31, 2006.
The Company issued 844,992 shares of common stock upon exercise of stock options during the six months ended August 4, 2007.
The Company sponsors a single-employer defined benefit pension plan (the plan) covering substantially all union employees. Employees covered by collective bargaining agreements are primarily non-management store associates, representing approximately 10% of the Companys total employees. The Companys collective bargaining agreement with the Local 1102 unit of the Retail, Wholesale and Department Store Union (RWDSU) AFL-CIO is set to expire on October 31, 2007 and is currently under renegotiation.
The plan provides retirement benefits for union employees who have attained the age of 18 and completed 425 hours of service in the twelve-month period following the date of employment. The plan
7
New York & Company, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
August 4, 2007
(Unaudited)
6. Pension Plan (Continued)
provides benefits based on length of service. The Companys funding policy for the pension plan is to contribute annually the amount necessary to provide for benefits based on accrued service. The Company does not anticipate the need for a material contribution to the plan for the remainder of the current fiscal year. Net periodic benefit cost includes the following components:
|
|
Three months
|
|
Three months
|
|
Six months
|
|
Six months
|
|
||||||||||||
|
|
(Amounts in thousands) |
|
||||||||||||||||||
Service cost |
|
|
$ |
90 |
|
|
|
$ |
99 |
|
|
|
$ |
180 |
|
|
|
$ |
166 |
|
|
Interest cost |
|
|
137 |
|
|
|
135 |
|
|
|
274 |
|
|
|
270 |
|
|
||||
Expected return on plan assets |
|
|
(179 |
) |
|
|
(179 |
) |
|
|
(358 |
) |
|
|
(359 |
) |
|
||||
Net periodic benefit cost |
|
|
$ |
48 |
|
|
|
$ |
55 |
|
|
|
$ |
96 |
|
|
|
$ |
77 |
|
|
The effective tax rates for the three months ended August 4, 2007 and July 29, 2006 were 40.2% and 40.4%, respectively. The effective tax rates for the six months ended August 4, 2007 and July 29, 2006 were 40.2% and 40.3%, respectively.
The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions. Effective February 4, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109. In accordance with the Interpretation, the Company recognized a cumulative-effect adjustment of $2.3 million, increasing its liability for unrecognized tax benefits, interest, and penalties and reducing the February 4, 2007 balance of retained earnings. At February 4, 2007, the Company reported a total liability of $4.5 million for unrecognized tax benefits, including interest and penalties, all of which would impact the Companys effective tax rate if recognized. The Company does not anticipate any significant increases or decreases to the balance of unrecognized tax benefits during the next twelve months.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. At February 4, 2007, the Company had accrued $1.4 million and $0.6 million for the potential payment of interest and penalties, respectively. As of February 4, 2007, the Company is subject to U.S. federal income tax examinations and state and local income tax examinations for the tax years 2003 through 2006.
During the six months ended August 4, 2007, the Company recorded an additional $0.2 million for the potential payment of interest related to its unrecognized tax benefits. As of August 4, 2007, the Company reported a total liability of $4.7 million for unrecognized tax benefits, interest, and penalties, of which $0.8 million is reported as a reduction to prepaid income taxes included within prepaid expenses and $3.9 million is reported in other liabilities on the condensed consolidated balance sheet.
8
New York & Company, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
August 4, 2007
(Unaudited)
8. Long-Term Debt and Credit Facilities
On August 22, 2007, Lerner New York, Inc., Lernco, Inc. and Jasmine Company, Inc. entered into a Second Amended and Restated Loan and Security Agreement (the Loan Agreement) with Wachovia Bank, National Association, as Agent for itself and the other lender party to the Loan Agreement. The obligations under the Loan Agreement are guaranteed by New York & Company, Inc. and its other subsidiaries. The Loan Agreement amended and restated the Amended and Restated Loan and Security Agreement (the Existing Agreement), dated March 16, 2004, among Lerner New York, Inc. and Lernco, Inc., as borrowers, together with the Agent and the lenders party thereto, as amended. The Loan Agreement is attached to this Quarterly Report on Form 10-Q as Exhibit 10.1.
The amendments to the Existing Agreement provide for, among other things: (i) an extension of the term of the Companys existing $90.0 million revolving credit facility and existing $37.5 million term loan to March 17, 2012; (ii) a reduction of certain interest rates and fees under the revolver; (iii) a change in the borrowing base calculation under the Existing Agreement providing additional availability; (iv) the reduction of restrictions on, among other things, incurring indebtedness, transactions with affiliates, investments, stock repurchases, and sales of assets; and (v) the elimination of a minimum EBITDA covenant and the addition of a minimum fixed charge coverage ratio, as described further below.
The Companys credit facilities currently consist of a $37.5 million term loan (January 4, 2006 term loan), of which $28.5 million was outstanding at August 4, 2007, and a $90.0 million revolving credit facility (which includes a sub-facility available for issuance of letters of credit of up to $75.0 million), both having a maturity date of March 17, 2012.
As of August 4, 2007, the Company had availability under its revolving credit facility, as amended by the Loan Agreement, of $66.1 million, net of letters of credit outstanding of $6.9 million, as compared to availability of $44.7 million, net of letters of credit outstanding of $9.7 million, as of July 29, 2006.
The revolving loans under the credit facilities bear interest, at the Companys option, either at a floating rate equal to the Eurodollar rate plus a margin of between 1.00% and 1.25% per year, depending upon the Companys financial performance, or the Prime rate. The Company pays the lenders under the revolving credit facility a monthly fee on outstanding commercial letters of credit at a rate of 0.625% per year and on standby letters of credit at a rate of between 1.00% and 1.25% per year, depending upon the Companys financial performance, plus a monthly fee on a proportion of the unused commitments under that facility at a rate of 0.20% per year. The term loan bears interest at a floating rate equal to the Eurodollar rate plus 2.50% per year. If any default were to exist under the revolving credit facility and for so long as such default were to continue, at the option of the agent or lenders, the monthly fee on outstanding standby letters of credit may increase to 3.25% per year, interest on the revolving loans may increase to 3.25% per year above the Eurodollar rate for Eurodollar rate loans and 2.00% per year above the Prime rate for all Prime rate loans, and interest on the term loan may increase to the Eurodollar rate plus 4.50% per year.
The Companys credit facilities contain certain covenants, including restrictions on the Companys ability to pay dividends on its common stock, incur additional indebtedness and to prepay, redeem, defease or purchase other debt. Subject to such restrictions, the Company may incur more debt for working capital, capital expenditures, stock repurchases, acquisitions and for other purposes. The terms of the Companys
9
New York & Company, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
August 4, 2007
(Unaudited)
8. Long-Term Debt and Credit Facilities (Continued)
credit facilities also subject it to certain maintenance covenants until the Companys existing term loan is paid in full, which require the Company to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00 and a leverage ratio of not greater than 2.75 to 1.00. Should the Company fully repay its existing term loan, the Company will no longer be subject to the maximum leverage ratio and will only be subject to the minimum fixed charge coverage ratio in the event that the Companys borrowing availability under its revolving credit facility falls below $10.0 million. In addition, in the event that the Companys borrowing availability under its revolving credit facility, plus cash on-hand, falls below $50.0 million and the Company fails to maintain a minimum trailing twelve-month EBITDA, then the outstanding principal amount of the Companys existing term loan must be prepaid down to $25.0 million, subject to certain restrictions. These ratios and the calculation of EBITDA, as defined under the Companys Loan Agreement, are not necessarily comparable to other similarly titled ratios and measurements of other companies due to inconsistencies in the method of calculation. The Company is currently in compliance with the financial covenants referred to above.
The lenders have been granted a pledge of the common stock of Lerner Holding and certain of its subsidiaries, and a first priority security interest in substantially all other tangible and intangible assets of New York & Company, Inc. and its subsidiaries, as collateral for the Companys obligations under the credit facilities. In addition, New York & Company, Inc. and certain of its subsidiaries have fully and unconditionally guaranteed the credit facilities, and such guarantees are joint and several.
9. New Accounting Pronouncements
In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109. This Interpretation clarifies the accounting for uncertain tax positions recognized in a companys financial statements in accordance with the provisions of FASB Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition of uncertain positions, financial statement classification, accounting for interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of this Interpretation on February 4, 2007, as described further in footnote 7, Income Taxes in these Notes to Condensed Consolidated Financial Statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 establishes a common definition for fair value to be applied to US GAAP guidance requiring the use of fair value, establishes a framework for measuring fair value, and expands the disclosure about such fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact, if any, that the adoption of this Statement will have on its financial position and results of operations.
10
New York & Company, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
August 4, 2007
(Unaudited)
9. New Accounting Pronouncements (Continued)
In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB statements No. 87, 88, 106, and 132(R) (SFAS No. 158). SFAS No. 158 requires recognition of the overfunded or underfunded status of defined benefit postretirement plans as an asset or liability in the statement of financial position and requires companies to recognize changes in that funded status in comprehensive income in the year in which the changes occur. SFAS No. 158 also requires measurement of the funded status of a plan as of the date of the statement of financial position. SFAS No. 158 is effective for recognition of the funded status of benefit plans for fiscal years ending after December 15, 2006 and is effective for the measurement date provisions for fiscal years ending after December 15, 2008. The adoption of the recognition provisions of this Statement at February 3, 2007 did not have an impact on the Companys financial position and results of operations. The Company does not anticipate that the adoption of the measurement date provisions of this Statement will have a material impact on its financial position and results of operations.
On August 22, 2007, Lerner New York, Inc., Lernco, Inc. and Jasmine Company, Inc. entered into the Loan Agreement, which amended and restated the Existing Agreement. The terms of this Loan Agreement are set forth in footnote 8, Long-Term Debt and Credit Facilities in these Notes to Condensed Consolidated Financial Statements.
11
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS
(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)
This Quarterly Report on Form 10-Q includes forward-looking statements. Certain matters discussed in Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q are forward-looking statements intended to qualify for safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as anticipate, believe, intend, estimate, expect, continue, could, may, plan, project, predict and similar expressions and include references to assumptions that the Company believes are reasonable and relate to its future prospects, developments and business strategies. Factors that could cause the Companys actual results to differ materially from those expressed or implied in such forward-looking statements, include, but are not limited to those discussed under the heading Item 3. Quantitative and Qualitative Disclosures About Market Risk in this Quarterly Report on Form 10-Q and:
· the Companys ability to open and operate stores successfully and the possible lack of availability of suitable store locations on acceptable terms;
· seasonal fluctuations in the Companys business;
· the Companys ability to anticipate and respond to fashion trends, develop new merchandise and launch new product lines successfully;
· general economic conditions, consumer confidence and spending patterns;
· the Companys dependence on mall traffic for its sales;
· the Companys dependence on the success of its brand;
· competition in the Companys market, including promotional and pricing competition;
· the Companys reliance on the effective use of customer information;
· the Companys ability to service any debt it incurs from time to time as well as its ability to maintain the requirements that the agreements related to such debt impose upon the Company;
· the susceptibility of the Companys business to extreme and/or unseasonable weather conditions;
· the Companys ability to retain, recruit and train key personnel;
· the Companys reliance on third parties to manage some aspects of its business;
· changes in the cost of raw materials, distribution services or labor, including federal and state minimum wage rates;
· the potential impact of national and international security concerns on the retail environment, including any possible military action, terrorist attacks or other hostilities;
· the Companys reliance on foreign sources of production, including the disruption of imports by labor disputes, political instability, legal and regulatory matters, duties, taxes, other charges and quotas on imports, local business practices, potential delays in shipping and related pricing impacts and political issues and fluctuation in currency and exchange rates;
· the potential impact of natural disasters and health concerns relating to outbreaks of widespread diseases, particularly on manufacturing operations of the Companys vendors;
12
· the ability of the Companys manufacturers to manufacture and deliver products in a timely manner while meeting its quality standards;
· the Companys ability to successfully integrate acquired businesses into its existing business;
· the Companys reliance on manufacturers to maintain ethical business practices;
· the Companys ability to protect its trademarks and other intellectual property rights;
· the Companys ability to maintain, and its reliance on, its information systems infrastructure;
· the effects of government regulation;
· the control of the Company by its sponsors; and
· risks and uncertainties as described in the Companys documents filed with the SEC, including its Annual Report on Form 10-K, as filed on April 6, 2007.
The Company undertakes no obligation to revise the forward-looking statements included in this Quarterly Report on Form 10-Q to reflect any future events or circumstances. The Companys actual results, performance or achievements could differ materially from the results expressed or implied by these forward-looking statements.
The Company is a leading specialty retailer of fashion-oriented, moderately-priced womens apparel. The Company designs and sources its proprietary branded New York & Company merchandise sold exclusively through its national network of New York & Company retail stores and on-line at www.nyandcompany.com. The target customers for the Companys New York & Company merchandise are fashion-conscious, value-sensitive women between the ages of 25 and 45. On July 19, 2005, the Company acquired JasmineSola, a Boston-based, privately held womens retailer of upscale and contemporary apparel, footwear and accessories sold through its chain of JasmineSola branded retail stores. As of August 4, 2007, the Company operated 580 retail stores in 44 states, including 23 JasmineSola stores.
The Company views the retail apparel market as having two principal selling seasons: spring (first and second quarter) and fall (third and fourth quarter). The Companys business experiences seasonal fluctuations in net sales and operating income, with a significant portion of its operating income typically realized during fourth quarter. Seasonal fluctuations also affect inventory levels. The Company must carry a significant amount of inventory, especially before the holiday season selling period.
Net sales for the three months ended August 4, 2007 increased 11.2% to $294.4 million, as compared to $264.9 million for the three months ended July 29, 2006. Net sales for the six months ended August 4, 2007 increased 8.7% to $578.4 million, as compared to $532.0 million for the six months ended July 29, 2006. Comparable store sales increased 4.7% for the three months ended August 4, 2007, as compared to a comparable store sales decrease of 4.0% for the three months ended July 29, 2006. Comparable store sales increased 1.7% for the six months ended August 4, 2007, as compared to a comparable store sales decrease of 6.7% for the six months ended July 29, 2006. Net income for the three months ended August 4, 2007 decreased to $3.5 million, or $0.06 per diluted share, as compared to $6.5 million, or $0.11 per diluted share, for the three months ended July 29, 2006. Net income for the six months ended August 4, 2007 decreased to $4.3 million, or $0.07 per diluted share, as compared to $12.6 million, or $0.21 per diluted share, for the six months ended July 29, 2006. For a discussion of the more significant factors impacting these results, see Results of Operations below.
Capital spending for the six months ended August 4, 2007 was $35.6 million, as compared to $38.1 million for the six months ended July 29, 2006. The $35.6 million of capital spending represents $32.8 million related to the construction of new stores and the remodeling of existing stores and
13
$2.8 million related to non-store capital projects, which principally represent information technology enhancements. During the six months ended August 4, 2007, the Company opened 25 new stores, closed five stores and completed 14 remodels, ending the period operating 580 stores, as compared to 537 stores as of July 29, 2006. During the six months ended July 29, 2006, the Company opened 24 new stores, closed six stores and remodeled 19 stores. Total selling square footage as of August 4, 2007 was 3.357 million, as compared to 3.280 million as of July 29, 2006.
The Companys business is impacted by economic conditions which affect the level of consumer spending on the merchandise the Company offers. These economic factors include interest rates, economic growth, wage rates, unemployment levels, energy prices, consumer confidence and consumer spending, among others. Consumer preferences, competition and economic conditions may change from time to time in the markets in which the Company operates and may negatively impact the Companys net sales, profitability and future growth and expansion plans. As these economic conditions change, there can be no assurance that future trends and fluctuations in economic factors will not have a material adverse effect on the Companys financial condition and results of operations. The Companys strategy is to focus on its customers, current fashion trends, merchandise testing, value pricing and responsive inventory management to enable it to react to changes as they occur.
General
Net Sales. Net sales consist of sales from comparable and non-comparable stores and the Companys e-commerce website. A store is included in the comparable store sales calculation after it has completed 13 full fiscal months of operation from the stores original opening date or once it has been reopened after remodeling. Non-comparable store sales include stores which have not completed 13 full fiscal months of operations, sales from closed stores, and sales from stores closed or in temporary locations during periods of remodeling. In addition, in a year with 53 weeks, sales in the last week of the year are not included in determining comparable store sales. Net sales from the sale of merchandise at the Companys stores are recognized when the customer takes possession of the merchandise and the purchases are paid for, primarily with either cash or credit card. Net sales from the sale of merchandise on the Companys e-commerce website are recognized when the merchandise is shipped to the customer. A reserve is provided for projected merchandise returns based on prior experience.
The Company issues gift cards which do not contain provisions for expiration or inactivity fees. The portion of the dollar value of gift cards that ultimately is not used by customers to make purchases is known as breakage. The Company estimates gift card breakage and records such amounts as revenues as gift cards are redeemed. The Companys estimate of gift card breakage is based on analysis of historical redemption patterns as well as the remaining balance of gift cards for which the Company believes the likelihood of redemption to be remote.
Cost of Goods Sold, Buying and Occupancy Costs. Cost of goods sold, buying and occupancy costs is comprised of direct inventory costs for merchandise sold, distribution, payroll and related costs for design, sourcing, production, merchandising, planning and allocation personnel, and store occupancy and related costs.
Gross Profit. Gross profit represents net sales less cost of goods sold, buying and occupancy costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses include selling, store management and corporate expenses, including payroll and employee benefits, employment taxes, management information systems, marketing, insurance, legal, store pre-opening and other corporate level expenses. Store pre-opening expenses include store level payroll, grand opening event marketing, travel, supplies and other store opening expenses.
14
The following tables summarize the Companys results of operations as a percentage of net sales and selected store operating data for the three and six months ended August 4, 2007 and July 29, 2006:
|
|
Three months
|
|
Three months
|
|
Six months
|
|
Six months
|
|
||||||||
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
Cost of goods sold, buying and occupancy costs |
|
|
73.2 |
% |
|
|
71.5 |
% |
|
|
72.8 |
% |
|
|
70.9 |
% |
|
Gross profit |
|
|
26.8 |
% |
|
|
28.5 |
% |
|
|
27.2 |
% |
|
|
29.1 |
% |
|
Selling, general and administrative expenses |
|
|
24.7 |
% |
|
|
24.2 |
% |
|
|
25.9 |
% |
|
|
25.0 |
% |
|
Operating income |
|
|
2.1 |
% |
|
|
4.3 |
% |
|
|
1.3 |
% |
|
|
4.1 |
% |
|
Interest expense, net |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
Income before income taxes |
|
|
2.0 |
% |
|
|
4.1 |
% |
|
|
1.2 |
% |
|
|
3.9 |
% |
|
Provision for income taxes |
|
|
0.8 |
% |
|
|
1.6 |
% |
|
|
0.5 |
% |
|
|
1.5 |
% |
|
Net income |
|
|
1.2 |
% |
|
|
2.5 |
% |
|
|
0.7 |
% |
|
|
2.4 |
% |
|
|
|
Three months
|
|
Three months
|
|
Six months
|
|
Six months
|
|
||||||||||||
|
|
(Dollars in thousands, except square foot data) |
|
||||||||||||||||||
Selected operating data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net sales growth |
|
|
11.2 |
% |
|
|
4.0 |
% |
|
|
8.7 |
% |
|
|
1.4 |
% |
|
||||
Comparable store sales increase (decrease) |
|
|
4.7 |
% |
|
|
(4.0 |
)% |
|
|
1.7 |
% |
|
|
(6.7 |
)% |
|
||||
Net sales per average selling square foot(1) |
|
|
$ |
88 |
|
|
|
$ |
81 |
|
|
|
$ |
173 |
|
|
|
$ |
163 |
|
|
Net sales per average store(2) |
|
|
$ |
512 |
|
|
|
$ |
496 |
|
|
|
$ |
1,015 |
|
|
|
$ |
1,008 |
|
|
Average selling square footage per store(3) |
|
|
5,789 |
|
|
|
6,108 |
|
|
|
5,789 |
|
|
|
6,108 |
|
|
(1) Net sales per average selling square foot is defined as net sales divided by the average of beginning and end of period selling square feet.
(2) Net sales per average store is defined as net sales divided by the average of beginning and end of period number of stores.
(3) Average selling square footage per store is defined as end of period selling square feet divided by end of period number of stores.
|
|
Three months
|
|
Three months
|
|
Six months
|
|
Six months
|
|
||||||||||||||||||||||||
|
|
Store
|
|
Selling
|
|
Store
|
|
Selling
|
|
Store
|
|
Selling
|
|
Store
|
|
Selling
|
|
||||||||||||||||
Store count and selling square feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores open, beginning of period |
|
|
569 |
|
|
|
3,352,471 |
|
|
|
530 |
|
|
|
3,282,333 |
|
|
|
560 |
|
|
|
3,313,437 |
|
|
|
519 |
|
|
|
3,254,465 |
|
|
New stores |
|
|
14 |
|
|
|
58,167 |
|
|
|
10 |
|
|
|
43,317 |
|
|
|
25 |
|
|
|
110,464 |
|
|
|
24 |
|
|
|
107,629 |
|
|
Closed stores |
|
|
(3 |
) |
|
|
(23,535 |
) |
|
|
(3 |
) |
|
|
(17,409 |
) |
|
|
(5 |
) |
|
|
(36,798 |
) |
|
|
(6 |
) |
|
|
(35,556 |
) |
|
Net impact of remodeled stores on selling square feet |
|
|
|
|
|
|
(29,737 |
) |
|
|
|
|
|
|
(28,166 |
) |
|
|
|
|
|
|
(29,737 |
) |
|
|
|
|
|
|
(46,463 |
) |
|
Stores open, end of period |
|
|
580 |
|
|
|
3,357,366 |
|
|
|
537 |
|
|
|
3,280,075 |
|
|
|
580 |
|
|
|
3,357,366 |
|
|
|
537 |
|
|
|
3,280,075 |
|
|
15
Three Months Ended August 4, 2007 Compared to Three Months Ended July 29, 2006
Net Sales. Net sales for the three months ended August 4, 2007 increased 11.2% to $294.4 million, as compared to $264.9 million for the three months ended July 29, 2006. The increase is primarily driven by a 4.7% increase in comparable store sales for the three months ended August 4, 2007, as compared to a decrease of 4.0% for the three months ended July 29, 2006. Also contributing to the increase in net sales are sales from new stores not yet included in the comparable store base. In the comparable store base, average dollar sales per transaction increased by 4.1% and the number of transactions per average store increased by 0.6%, as compared to the same period last year.
Gross Profit. Gross profit increased $3.3 million to $78.8 million, or 26.8% of net sales, for the three months ended August 4, 2007, as compared to $75.6 million, or 28.5% of net sales, for the three months ended July 29, 2006. As a percentage of net sales, gross profit decreased for the three months ended August 4, 2007, due in large part to a decrease in merchandise margin in both the New York & Company and JasmineSola brands. While apparel margins for the New York & Company brand remained stable, as compared to last year, a decrease in accessory sales and increased accessory markdowns led to a decrease in merchandise margin for the Company. In addition, buying and occupancy costs for the Company increased slightly as a percentage of net sales primarily due to increases in real estate costs related to new and remodeled stores.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $8.6 million to $72.8 million, or 24.7% of net sales, for the three months ended August 4, 2007, as compared to $64.2 million, or 24.2% of net sales, for the three months ended July 29, 2006. The increase as a percentage of net sales during the three months ended August 4, 2007, as compared to the three months ended July 29, 2006, is primarily due to higher store selling expenses resulting from an increase in wage rates and store labor support partially offset by improved leverage on corporate expenses.
Operating Income. For the reasons discussed above, operating income decreased $5.3 million to $6.1 million, or 2.1% of net sales, for the three months ended August 4, 2007, as compared to $11.4 million, or 4.3% of net sales, for the three months ended July 29, 2006.
Interest Expense, Net. Net interest expense decreased $0.3 million to $0.2 million for the three months ended August 4, 2007, as compared to $0.5 million for the three months ended July 29, 2006. The decrease in net interest expense for the three months ended August 4, 2007, as compared to the three months ended July 29, 2006, is primarily related to a decrease in borrowings and fluctuations in interest rates.
Provision for Income Taxes. The effective tax rate for the three months ended August 4, 2007 was 40.2%, as compared to 40.4% for the three months ended July 29, 2006.
Net Income. For the reasons discussed above, net income decreased $3.0 million to $3.5 million, or 1.2% of net sales, for the three months ended August 4, 2007, as compared to $6.5 million, or 2.5% of net sales, for the three months ended July 29, 2006.
Six Months Ended August 4, 2007 Compared to Six Months Ended July 29, 2006
Net Sales. Net sales for the six months ended August 4, 2007 increased 8.7% to $578.4 million, as compared to $532.0 million for the six months ended July 29, 2006. The increase is primarily driven by an 1.7% increase in comparable store sales for the six months ended August 4, 2007, as compared to a 6.7% decrease for the six months ended July 29, 2006. Also contributing to the increase in net sales are sales from new stores not yet included in the comparable store base. In the comparable store base, average dollar sales per transaction increased by 0.3% and the number of transactions per average store increased by 1.4%, as compared to the same period last year.
16
Gross Profit. Gross profit increased $2.6 million to $157.3 million, or 27.2% of net sales, for the six months ended August 4, 2007, as compared to $154.7 million, or 29.1% of net sales, for the six months ended July 29, 2006. As a percentage of net sales, gross profit decreased for the six months ended August 4, 2007, due in large part to a decrease in merchandise margin in both the New York & Company and JasmineSola brands. While apparel margins for the New York & Company brand remained stable, as compared to last year, a decrease in accessory sales and increased accessory markdowns led to a decrease in merchandise margin for the Company. Also contributing to the decrease in merchandise margin was $1.8 million of charges incurred during the first three months of fiscal year 2007 in connection with the liquidation of inventory resulting from the termination of a JasmineSola lease and the exiting of that store, coupled with an overall modification of the JasmineSola closeout strategy. In addition, buying and occupancy costs for the Company increased as a percentage of net sales primarily due to low comparable store sales and increases in real estate costs related to new and remodeled stores.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $16.9 million to $149.6 million, or 25.9% of net sales, for the six months ended August 4, 2007, as compared to $132.7 million, or 25.0% of net sales, for the six months ended July 29, 2006. The increase as a percentage of net sales during the six months ended August 4, 2007, as compared to the six months ended July 29, 2006, is primarily due to $3.3 million of expenses, primarily legal costs, incurred in connection with the completion of the arbitration proceeding related to the JasmineSola Stock Purchase Agreement in April 2007. Also contributing to the increase in selling, general and administrative expenses as a percentage of net sales, as compared to last year, was an increase in store selling expenses resulting from an increase in wage rates and store labor support.
Operating Income. For the reasons discussed above, operating income decreased $14.3 million to $7.7 million, or 1.3% of net sales, for the six months ended August 4, 2007, as compared to $22.0 million, or 4.1% of net sales, for the six months ended July 29, 2006.
Interest Expense, Net. Net interest expense decreased $0.5 million to $0.5 million for the six months ended August 4, 2007, as compared to $1.0 million for the six months ended July 29, 2006. The decrease in net interest expense for the six months ended August 4, 2007, as compared to the six months ended July 29, 2006, is primarily related to a decrease in borrowings and fluctuations in interest rates.
Provision for Income Taxes. The effective tax rate for the six months ended August 4, 2007 was 40.2%, as compared to 40.3% for the six months ended July 29 2006.
Net Income. For the reasons discussed above, net income decreased $8.3 million to $4.3 million, or 0.7% of net sales, for the six months ended August 4, 2007, as compared to $12.6 million, or 2.4% of net sales, for the six months ended July 29, 2006.
The Company has provided a non-GAAP financial measure to adjust net income for the three and six months ended August 4, 2007 and July 29, 2006. This information reflects, on a non-GAAP adjusted basis, the Companys net income before interest expense, net; provision for income taxes; and depreciation and amortization (EBITDA). The calculation for EBITDA is provided to enhance the users understanding of the Companys operating results. EBITDA is provided because management believes it is an important measure of financial performance commonly used to determine the value of companies and to define standards for borrowing from institutional lenders. The non-GAAP financial information should be considered in addition to, not as an alternative to, net income, as an indicator of the Companys operating performance, and cash flows from operating activities, as a measure of the Companys liquidity, as determined in accordance with accounting principles generally accepted in the United States. The Company may calculate EBITDA differently than other companies.
17
Reconciliation of Net Income to EBITDA
|
|
Three months ended
|
|
Three months ended
|
|
Six months ended
|
|
Six months ended
|
|
||||||||||||||||||||||||||||
|
|
Amounts
|
|
As a
|
|
Amounts
|
|
As a
|
|
Amounts
|
|
As a
|
|
Amounts
|
|
As a
|
|
||||||||||||||||||||
Net income |
|
|
$ |
3,499 |
|
|
|
1.2 |
% |
|
|
$ |
6,499 |
|
|
|
2.5 |
% |
|
|
$ |
4,301 |
|
|
|
0.7 |
% |
|
|
$ |
12,556 |
|
|
|
2.4 |
% |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
219 |
|
|
|
0.1 |
% |
|
|
477 |
|
|
|
0.2 |
% |
|
|
480 |
|
|
|
0.1 |
% |
|
|
967 |
|
|
|
0.2 |
% |
|
||||
Provision for income taxes |
|
|
2,354 |
|
|
|
0.8 |
% |
|
|
4,405 |
|
|
|
1.6 |
% |
|
|
2,892 |
|
|
|
0.5 |
% |
|
|
8,477 |
|
|
|
1.5 |
% |
|
||||
Depreciation and amortization |
|
|
10,065 |
|
|
|
3.4 |
% |
|
|
7,975 |
|
|
|
3.0 |
% |
|
|
19,115 |
|
|
|
3.3 |
% |
|
|
15,651 |
|
|
|
2.9 |
% |
|
||||
EBITDA |
|
|
$ |
16,137 |
|
|
|
5.5 |
% |
|
|
$ |
19,356 |
|
|
|
7.3 |
% |
|
|
$ |
26,788 |
|
|
|
4.6 |
% |
|
|
$ |
37,651 |
|
|
|
7.0 |
% |
|
Liquidity and Capital Resources
The Companys primary uses of cash are to fund working capital, operating expenses, debt service and capital expenditures related primarily to the construction of new stores, remodeling of existing stores and development of the Companys information systems infrastructure. Historically, the Company has financed these requirements from internally generated cash flow. The Company intends to fund its ongoing capital and working capital requirements, as well as debt service obligations, primarily through cash flows from operations, supplemented by borrowings under its credit facilities, if needed. The Company is in compliance with all debt covenants as of August 4, 2007.
The following tables contain information regarding the Companys liquidity and capital resources:
|
|
August 4,
|
|
February 3,
|
|
July 29,
|
|
|||||
|
|
(Amounts in thousands) |
|
|||||||||
Cash and cash equivalents |
|
$ |
27,749 |
|
|
$ |
68,064 |
|
|
$ |
36,888 |
|
Working capital |
|
$ |
70,993 |
|
|
$ |
69,964 |
|
|
$ |
53,312 |
|
|
|
Six months
|
|
Six months
|
|
||||||
|
|
(Amounts in thousands) |
|
||||||||
Net cash (used in) provided by operating activities |
|
|
$ |
(5,015 |
) |
|
|
$ |
11,921 |
|
|
Net cash used in investing activities |
|
|
$ |
(35,638 |
) |
|
|
$ |
(38,057 |
) |
|
Net cash provided by financing activities |
|
|
$ |
338 |
|
|
|
$ |
5,588 |
|
|
Net cash used in operating activities was $5.0 million for the six months ended August 4, 2007, as compared to net cash provided by operating activities of $11.9 million for the six months ended July 29, 2006. The change in cash flow from operating activities for the six months ended August 4, 2007, as compared to the six months July 29, 2006, is primarily related to the decrease in net income, and changes in inventories, prepaid expenses, accrued expenses, income taxes payable, and deferred rent, partially offset by changes in accounts receivable, accounts payable, and other assets and liabilities.
Net cash used in investing activities was $35.6 million for the six months ended August 4, 2007, as compared to $38.1 million of net cash used in investing activities for the six months ended July 29, 2006.
18
The $35.6 million and the $38.1 million reflect capital expenditures primarily related to the construction of new stores and the remodeling of existing stores.
The Company opened 25 new stores and completed 14 remodels in the six months ended August 4, 2007, as compared to 24 new stores and 19 remodels in the six months ended July 29, 2006. The Company currently plans to open 50 to 60 stores, close approximately 11 stores and remodel 25 to 30 stores in fiscal year 2007, ending the fiscal year with 599 to 609 stores. The Companys future capital requirements will depend primarily on the number of new stores it opens, the number of existing stores it remodels and the timing of these expenditures.
Net cash provided by financing activities was $0.3 million for the six months ended August 4, 2007, as compared to net cash provided by financing activities of $5.6 million for the six months ended July 29, 2006. Net cash provided by financing activities for the six months ended August 4, 2007 primarily consists of quarterly payments against the January 4, 2006 term loan totaling $3.0 million and $3.4 million of proceeds from the exercise of stock options and the related excess tax benefit to the Company. Net cash provided by financing activities for the six months ended July 29, 2006 represents proceeds of $2.3 million from the public offering of common stock, consummated on January 31, 2006; the payment of $0.4 million in fees and expenses related to the offering; quarterly payments against the January 4, 2006 term loan totaling $3.0 million; and $6.7 million of proceeds from the exercise of stock options and the related excess tax benefit to the Company.
Long-Term Debt and Credit Facilities
On August 22, 2007, Lerner New York, Inc., Lernco, Inc. and Jasmine Company, Inc. entered into the Loan Agreement, which amended and restated the Existing Agreement. See footnote 8, Long-Term Debt and Credit Facilities in the Notes to Condensed Consolidated Financial Statements.
The amendments to the Existing Agreement provide for, among other things: (i) an extension of the term of the Companys existing $90.0 million revolving credit facility and existing $37.5 million term loan to March 17, 2012; (ii) a reduction of certain interest rates and fees under the revolver; (iii) a change in the borrowing base calculation under the Existing Agreement providing additional availability; (iv) the reduction of restrictions on, among other things, incurring indebtedness, transactions with affiliates, investments, stock repurchases, and sales of assets; and (v) the elimination of a minimum EBITDA covenant and the addition of a minimum fixed charge coverage ratio, as described further below.
The Companys credit facilities currently consist of a $37.5 million term loan, of which $28.5 million was outstanding at August 4, 2007, and a $90.0 million revolving credit facility (which includes a sub-facility available for issuance of letters of credit of up to $75.0 million), both having a maturity date of March 17, 2012.
As of August 4, 2007, the Company had availability under its revolving credit facility, as amended by the Loan Agreement, of $66.1 million, net of letters of credit outstanding of $6.9 million, as compared to availability of $44.7 million, net of letters of credit outstanding of $9.7 million, as of July 29, 2006.
The revolving loans under the credit facilities bear interest, at the Companys option, either at a floating rate equal to the Eurodollar rate plus a margin of between 1.00% and 1.25% per year, depending upon the Companys financial performance, or the Prime rate. The Company pays the lenders under the revolving credit facility a monthly fee on outstanding commercial letters of credit at a rate of 0.625% per year and on standby letters of credit at a rate of between 1.00% and 1.25% per year, depending upon the Companys financial performance, plus a monthly fee on a proportion of the unused commitments under that facility at a rate of 0.20% per year. The term loan bears interest at a floating rate equal to the
19
Eurodollar rate plus 2.50% per year. If any default were to exist under the revolving credit facility and for so long as such default were to continue, at the option of the agent or lenders, the monthly fee on outstanding standby letters of credit may increase to 3.25% per year, interest on the revolving loans may increase to 3.25% per year above the Eurodollar rate for Eurodollar rate loans and 2.00% per year above the Prime rate for all Prime rate loans, and interest on the term loan may increase to the Eurodollar rate plus 4.50% per year.
The Companys credit facilities contain certain covenants, including restrictions on the Companys ability to pay dividends on its common stock, incur additional indebtedness and to prepay, redeem, defease or purchase other debt. Subject to such restrictions, the Company may incur more debt for working capital, capital expenditures, stock repurchases, acquisitions and for other purposes. The terms of the Companys credit facilities also subject it to certain maintenance covenants until the Companys existing term loan is paid in full, which require the Company to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00 and a leverage ratio of not greater than 2.75 to 1.00. Should the Company fully repay its existing term loan, the Company will no longer be subject to the maximum leverage ratio and will only be subject to the minimum fixed charge coverage ratio in the event that the Companys borrowing availability under its revolving credit facility falls below $10.0 million. In addition, in the event that the Companys borrowing availability under its revolving credit facility, plus cash on-hand, falls below $50.0 million and the Company fails to maintain a minimum trailing twelve-month EBITDA, then the outstanding principal amount of the Companys existing term loan must be prepaid down to $25.0 million, subject to certain restrictions. These ratios and the calculation of EBITDA, as defined under the Companys Loan Agreement, are not necessarily comparable to other similarly titled ratios and measurements of other companies due to inconsistencies in the method of calculation. The Company is currently in compliance with the financial covenants referred to above.
The lenders have been granted a pledge of the common stock of Lerner Holding and certain of its subsidiaries, and a first priority security interest in substantially all other tangible and intangible assets of New York & Company, Inc. and its subsidiaries, as collateral for the Companys obligations under the credit facilities. In addition, New York & Company, Inc. and certain of its subsidiaries have fully and unconditionally guaranteed the credit facilities, and such guarantees are joint and several.
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that impact the amounts reported on the Companys consolidated financial statements and related notes. On an ongoing basis, management evaluates its estimates and judgments, including those related to inventories, long-lived assets, goodwill and other intangible assets. Management bases its estimate and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ materially from these judgments. Management believes the following estimates and assumptions are most significant to reporting the Companys results of operations and financial position.
Inventory Valuation. Inventories are principally valued at the lower of average cost or market, on a weighted average cost basis, using the retail method. The Company records a charge to cost of goods sold, buying and occupancy costs for all inventory on-hand when a permanent retail price reduction is reflected in its stores. In addition, management makes estimates and judgments regarding, among other things, initial markup, markdowns, future demand and market conditions, all of which significantly impact the ending inventory valuation. If actual future demand or market conditions are different than those projected by management, future period merchandise margin rates may be unfavorably or favorably affected. Other significant estimates related to inventory include shrink and obsolete and excess inventory which are also based on historical results and managements operating projections.
20
Impairment of Long-Lived Assets. The Company evaluates long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). Long-lived assets are evaluated for recoverability in accordance with SFAS 144 whenever events or changes in circumstances indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flow expected to result from the use of the asset and eventual disposition. If the sum of the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. An impairment loss could have a material adverse impact on the Companys financial condition and results of operations. The Companys evaluation for the six months ended August 4, 2007 resulted in no material asset impairment charge.
Goodwill and Other Intangible Assets. SFAS No. 142, Goodwill and Other Intangible Assets, prohibits the amortization of goodwill and intangible assets with indefinite lives. The Companys intangible assets relate primarily to the New York & Company trademarks, the JasmineSola trademarks and goodwill associated with the acquisition of JasmineSola on July 19, 2005. The trademarks were initially valued using the relief from royalty method and were determined to have indefinite lives by an independent appraiser. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired.
The Company tests for impairment of goodwill and other intangible assets at least annually in the fourth quarter, or more frequently if events or circumstances indicate that the asset may be impaired, by comparing the fair value with the carrying amount for each individual asset. Goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is to identify a potential impairment by comparing the fair value of a reporting unit with its carrying amount, including the goodwill assigned to the reporting unit. The estimate of fair value of a reporting unit is determined using a discounted cash flow model. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not deemed to be impaired and the second step of the impairment test is not performed. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting units goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting units goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. In other words, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.
The impairment test for other intangible assets not subject to amortization consists of a comparison of the fair value of the intangible asset with its carrying value. The estimates of fair value of intangible assets not subject to amortization, specifically trademarks, are determined using the relief from royalty method. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
The calculation of estimated fair values used in the evaluation of goodwill and other intangible assets requires estimates of future cash flows, growth rates, discount rates and other variables, that are based on managements historical experience, knowledge, and market data. If actual experience differs materially from managements estimates or if changes in strategic direction occur, an impairment charge may be required. Managements estimates may be affected by factors such as those outlined in the section of this report entitled MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSSPECIAL NOTE REGARDING FORWARD-LOOKING
21
STATEMENTS AND RISK FACTORS. An impairment loss could have a material adverse impact on the Companys results of operations.
Income Taxes. Income taxes are calculated in accordance with SFAS No. 109, Accounting for Income Taxes, which requires the use of the liability method. Deferred tax assets and liabilities are recognized based on the difference between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Inherent in the measurement of deferred balances are certain judgments and interpretations of enacted tax laws and published guidance with respect to applicability to the Companys operations. Deferred tax assets are believed to be fully realizable as management expects future taxable income will be sufficient to recover the asset values and, as such, no related valuation allowance has been provided for. The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109 on February 4, 2007, as described further in footnote 7, Income Taxes in the Notes to Condensed Consolidated Financial Statements.
Adoption of New Accounting Standards
In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109. This Interpretation clarifies the accounting for uncertain tax positions recognized in a companys financial statements in accordance with the provisions of FASB Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition of uncertain positions, financial statement classification, accounting for interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of this Interpretation on February 4, 2007, as described further in footnote 7, Income Taxes in the Notes to Condensed Consolidated Financial Statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 establishes a common definition for fair value to be applied to US GAAP guidance requiring the use of fair value, establishes a framework for measuring fair value, and expands the disclosure about such fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact, if any, that the adoption of this Statement will have on its financial position and results of operations.
In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB statements No. 87, 88, 106, and 132(R). SFAS No. 158 requires recognition of the overfunded or underfunded status of defined benefit postretirement plans as an asset or liability in the statement of financial position and requires companies to recognize changes in that funded status in comprehensive income in the year in which the changes occur. SFAS No. 158 also requires measurement of the funded status of a plan as of the date of the statement of financial position. SFAS No. 158 is effective for recognition of the funded status of benefit plans for fiscal years ending after December 15, 2006 and is effective for the measurement date provisions for fiscal years ending after December 15, 2008. The adoption of the recognition provisions of this Statement at February 3, 2007 did not have an impact on the Companys financial position and results of operations. The Company does not anticipate that the adoption of the measurement date provisions of this Statement will have a material impact on its financial position and results of operations.
22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rates. The Companys market risks relate primarily to changes in interest rates. The Companys credit facilities carry floating interest rates that are tied to the Eurodollar rate and the Prime rate and therefore, the consolidated statements of income and the consolidated statements of cash flows will be exposed to changes in interest rates. A 1.0% interest rate increase would increase interest expenses by approximately $0.3 million annually. The Company historically has not engaged in interest rate hedging activities.
Currency Exchange Rates. The Company historically has not been exposed to currency exchange rate risks with respect to inventory purchases as such expenditures have been, and continue to be, denominated in U.S. Dollars. The Company purchases some of its inventory from suppliers in China, for which the Company pays U.S. Dollars. Since July 2005, China has been slowly increasing the value of the Chinese Yuan, which is now linked to a basket of world-currencies. If the exchange rate of the Chinese Yuan to the U.S. Dollar continues to increase, the Company may experience fluctuations in the cost of inventory purchased from China and the Company would adjust its supply chain accordingly.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. The Company carried out an evaluation, as of August 4, 2007, under the supervision and with the participation of the Companys management, including the Companys Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Companys disclosure controls and procedures are effective in ensuring that all information required to be filed in this Quarterly Report on Form 10-Q was (i) recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commissions rules and forms (ii) and that the disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Companys management, including its Principal Executive and Principal Financial Officers, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting. There has been no change in the Companys internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 or 15d-15 that occurred during the Companys last fiscal quarter (the Companys fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
23
There have been no material changes in the Companys legal proceedings from what was reported in its Annual Report on Form 10-K filed with the SEC on April 6, 2007.
There have been no material changes in the Companys risk factors from what was reported in its Annual Report on Form 10-K filed with the SEC on April 6, 2007.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In accordance with the Companys notice and proxy statement dated May 24, 2007, the Company held its Annual Meeting of Stockholders on June 27, 2007. Holders of 55,539,308 shares of the Companys common stock were present in person or by proxy, representing approximately 95.7% of the Companys 58,043,382 shares outstanding on the record date. The matters set forth below were submitted to a vote of the Companys stockholders:
(a) The election of eleven directors of the Company to hold office until the next Annual Meeting of Stockholders or until their respective successors are duly elected and qualified. The following persons were elected as members of the Board of Directors:
Name of Nominee |
|
|
|
Votes
|
|
Votes
|
|
Bodil M. Arlander |
|
42,268,706 |
|
13,270,602 |
|
||
Philip M. Carpenter III |
|
47,475,785 |
|
8,063,523 |
|
||
Richard P. Crystal |
|
46,382,953 |
|
9,156,355 |
|
||
David H. Edwab |
|
54,973,437 |
|
565,871 |
|
||
John D. Howard |
|
42,138,322 |
|
13,400,986 |
|
||
Louis Lipschitz |
|
54,989,942 |
|
549,366 |
|
||
Edward W. Moneypenny |
|
55,016,412 |
|
522,896 |
|
||
Richard L. Perkal |
|
46,018,077 |
|
9,521,231 |
|
||
Arthur E. Reiner |
|
54,887,107 |
|
652,201 |
|
||
Ronald W. Ristau |
|
45,210,543 |
|
10,328,765 |
|
||
Pamela Grunder Sheiffer |
|
55,015,432 |
|
523,876 |
|
(b) The proposal to ratify the selection of Ernst & Young LLP to serve as the Companys independent registered public accounting firm for the fiscal year ending February 2, 2008:
Votes For |
|
Votes Against |
|
Abstentions |
55,391,865 |
|
145,784 |
|
1,659 |
24
None.
The following exhibits are filed with this report and made a part hereof.
10.1 |
|
Second Amended and Restated Loan and Security Agreement by and among Lerner New York, Inc., Lernco, Inc., Jasmine Company, Inc., Wachovia Bank, National Association, as Agent for itself and the other Lender named therein, dated as of August 22, 2007. |
10.2 |
|
Second Amended and Restated Guarantee made by New York & Company, Inc., Lerner New York Holding, Inc., Nevada Receivable Factoring, Inc., Associated Lerner Shops of America, Inc. and Lerner New York GC, LLC in favor of Wachovia Bank, National Association, as Agent for itself and the other Lender named in the Second Amended and Restated Loan and Security Agreement, dated as of August 22, 2007. |
10.3 |
|
Second Amended and Restated Collateral Assignment of Trademarks made among Lernco, Inc. and Jasmine Company, Inc. in favor of Wachovia Bank, National Association, as Agent for itself and the other Lender named in the Second Amended and Restated Loan and Security Agreement, dated as of August 22, 2007. |
10.4 |
|
Amended and Restated Collateral Assignment of Trademarks made among Lerner New York, Inc. in favor of Wachovia Bank, National Association, as Agent for itself and the other Lender named in the Second Amended and Restated Loan and Security Agreement, dated as of August 22, 2007. |
10.5 |
|
Second Amended and Restated Stock Pledge Agreement by and between Lerner New York, Inc. and Wachovia Bank, National Association, as Agent for itself and the other Lender named in the Second Amended and Restated Loan and Security Agreement, dated as of August 22, 2007. |
10.6 |
|
Second Amended and Restated Stock Pledge Agreement by and between Lerner New York Holding, Inc. and Wachovia Bank, National Association, as Agent for itself and the other Lender named in the Second Amended and Restated Loan and Security Agreement, dated as of August 22, 2007. |
10.7 |
|
Second Amended and Restated Stock Pledge Agreement by and between New York & Company, Inc. and Wachovia Bank, National Association, as Agent for itself and the other Lender named in the Second Amended and Restated Loan and Security Agreement, dated as of August 22, 2007. |
10.8 |
|
Second Amended and Restated Intercompany Subordination Agreement made among the Obligors, as defined in the Second Amended and Restated Loan and Security Agreement, and Wachovia Bank, National Association, as Agent for itself and the other Lender named in the Second Amended and Restated Loan and Security Agreement, dated as of August 22, 2007. |
31.1 |
|
Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. |
31.2 |
|
Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. |
32.1 |
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
25
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
New York & Company, Inc. |
|
|
/s/ Ronald W. Ristau |
|
|
By: |
Ronald W. Ristau |
|
Its: |
President and Chief Financial Officer |
|
|
(Principal Financial Officer) |
|
Dated: |
September 7, 2007 |
26
Exhibit 10.1
[Execution]
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
LERNER NEW YORK, INC.,
LERNCO, INC. and
JASMINE COMPANY, INC.,
as Borrowers,
NEW YORK & COMPANY, INC.,
NEVADA RECEIVABLE FACTORING, INC.,
LERNER NEW YORK HOLDING, INC.,
LERNER NEW YORK GC, LLC and
ASSOCIATED LERNER SHOPS OF AMERICA, INC.,
as Guarantors
WACHOVIA BANK, NATIONAL
ASSOCIATION,
as Agent,
WACHOVIA CAPITAL MARKETS, LLC,
as Sole Lead Arranger and Sole Bookrunner,
LASALLE RETAIL FINANCE, A DIVISION
OF LASALLE BUSINESS CREDIT, LLC, AS
AGENT FOR LASALLE BANK MIDWEST, NATIONAL ASSOCIATION,
as Documentation Agent
and
THE PERSONS NAMED HEREIN,
as Lenders
Dated: August 22, 2007
TABLE OF CONTENTS
SECTION 1. |
DEFINITIONS |
|
|
2 |
|||
|
|
|
|
|
|||
SECTION 2. |
CREDIT FACILITIES |
|
|
41 |
|||
|
|
|
|
|
|||
2.1 |
Revolving Loans |
|
|
41 |
|||
2.2 |
Letter of Credit Accommodations |
|
|
42 |
|||
2.3 |
Existing Term Loan |
|
|
46 |
|||
2.4 |
Commitments |
|
|
49 |
|||
2.5 |
Bank Products |
|
|
49 |
|||
|
|
|
|
|
|||
SECTION 3. |
INTEREST AND FEES |
|
|
50 |
|||
|
|
|
|
|
|||
3.1 |
Interest |
|
|
50 |
|||
3.2 |
Fees |
|
|
51 |
|||
3.3 |
Changes in Laws and Increased Costs of Loans |
|
|
52 |
|||
|
|
|
|
|
|||
SECTION 4. |
CONDITIONS PRECEDENT |
|
|
53 |
|||
|
|
|
|
|
|||
4.1 |
Conditions Precedent to Effectiveness of Agreement |
|
|
53 |
|||
4.2 |
Conditions Precedent to All Loans and Letter of Credit Accommodations |
|
|
54 |
|||
|
|
|
|
|
|||
SECTION 5. |
GRANT AND PERFECTION OF SECURITY INTEREST |
|
|
55 |
|||
|
|
|
|
|
|||
5.1 |
Grant of Security Interest |
|
|
55 |
|||
5.2 |
Perfection of Security Interests |
|
|
57 |
|||
|
|
|
|
|
|||
SECTION 6. |
COLLECTION AND ADMINISTRATION |
|
|
61 |
|||
|
|
|
|
|
|||
6.1 |
Borrowers Loan Accounts |
|
|
61 |
|||
6.2 |
Statements |
|
|
61 |
|||
6.3 |
Collection of Accounts |
|
|
62 |
|||
6.4 |
Payments |
|
|
63 |
|||
6.5 |
Authorization to Make Loans |
|
|
66 |
|||
6.6 |
Use of Proceeds |
|
|
67 |
|||
6.7 |
Pro Rata Treatment |
|
|
67 |
|||
6.8 |
Sharing of Payments, Etc. |
|
|
67 |
|||
6.9 |
Settlement Procedures |
|
|
68 |
|||
6.10 |
Obligations Several; Independent Nature of Lenders Rights |
|
|
70 |
|||
|
|
|
|
|
|||
SECTION 7. |
COLLATERAL REPORTING AND COVENANTS |
|
|
71 |
|||
|
|
|
|
|
|||
7.1 |
Collateral Reporting |
|
|
71 |
|||
7.2 |
Accounts Covenants |
|
|
72 |
|||
7.3 |
Inventory Covenants |
|
|
73 |
|||
7.4 |
Equipment Covenants |
|
|
74 |
|||
i
7.5 |
Bills of Lading and Other Documents of Title |
|
|
75 |
|
7.6 |
Power of Attorney |
|
|
75 |
|
7.7 |
Right to Cure |
|
|
76 |
|
7.8 |
Access to Premises |
|
|
77 |
|
|
|
|
|
|
|
SECTION 8. |
REPRESENTATIONS AND WARRANTIES |
|
|
77 |
|
|
|
|
|
|
|
8.1 |
Corporate Existence, Power and Authority |
|
|
77 |
|
8.2 |
Name; State of Organization; Chief Executive Office; Collateral Locations |
|
|
78 |
|
8.3 |
Financial Statements; No Material Adverse Change |
|
|
78 |
|
8.4 |
Priority of Liens; Title to Properties |
|
|
78 |
|
8.5 |
Tax Returns |
|
|
79 |
|
8.6 |
Litigation |
|
|
79 |
|
8.7 |
Compliance with Other Agreements and Applicable Laws |
|
|
79 |
|
8.8 |
Environmental Compliance |
|
|
80 |
|
8.9 |
Employee Benefits |
|
|
80 |
|
8.10 |
Bank Accounts, etc. |
|
|
81 |
|
8.11 |
Intellectual Property |
|
|
81 |
|
8.12 |
Subsidiaries; Affiliates; Capitalization; Solvency |
|
|
82 |
|
8.13 |
Labor Disputes |
|
|
83 |
|
8.14 |
Restrictions on Subsidiaries |
|
|
83 |
|
8.15 |
Material Contracts |
|
|
83 |
|
8.16 |
Credit Card Agreements |
|
|
83 |
|
8.17 |
Payable Practices |
|
|
84 |
|
8.18 |
Accuracy and Completeness of Information |
|
|
84 |
|
8.19 |
No Defaults |
|
|
84 |
|
8.20 |
Transition Services |
|
|
84 |
|
8.21 |
Survival of Warranties; Cumulative |
|
|
84 |
|
|
|
|
|
|
|
SECTION 9. |
AFFIRMATIVE AND NEGATIVE COVENANTS |
|
|
85 |
|
|
|
|
|
|
|
9.1 |
Maintenance of Existence |
|
|
85 |
|
9.2 |
New Collateral Locations |
|
|
85 |
|
9.3 |
Compliance with Laws, Regulations, Etc. |
|
|
85 |
|
9.4 |
Payment of Taxes and Claims |
|
|
87 |
|
9.5 |
Insurance |
|
|
87 |
|
9.6 |
Financial Statements and Other Information |
|
|
87 |
|
9.7 |
Sale of Assets, Consolidation, Merger, Dissolution, Etc. |
|
|
89 |
|
9.8 |
Encumbrances |
|
|
92 |
|
9.9 |
Indebtedness |
|
|
93 |
|
9.10 |
Prepayments and Amendments; Loans, Investments, Etc. |
|
|
96 |
|
9.11 |
Dividends and Redemptions |
|
|
98 |
|
9.12 |
Transactions with Affiliates |
|
|
99 |
|
9.13 |
Compliance with ERISA |
|
|
99 |
|
9.14 |
End of Fiscal Years; Fiscal Quarters |
|
|
100 |
|
9.15 |
Change in Business |
|
|
100 |
|
9.16 |
Limitation of Restrictions Affecting Subsidiaries |
|
|
100 |
|
9.17 |
Minimum Excess Availability |
|
|
100 |
|
ii
9.18 |
Financial Covenants |
|
|
101 |
|
9.19 |
License Agreements |
|
|
101 |
|
9.20 |
After Acquired Real Property |
|
|
102 |
|
9.21 |
Costs and Expenses |
|
|
103 |
|
9.22 |
Credit Card Agreements |
|
|
103 |
|
9.23 |
Further Assurances |
|
|
104 |
|
9.24 |
Private Label Credit Cards |
|
|
104 |
|
9.25 |
Termination of Transition Services Agreement |
|
|
104 |
|
9.26 |
Cash Collateral Account |
|
|
105 |
|
9.27 |
Foreign Assets Control Regulations, Etc. |
|
|
105 |
|
|
|
|
|
|
|
SECTION 10. |
EVENTS OF DEFAULT AND REMEDIES |
|
|
106 |
|
|
|
|
|
|
|
10.1 |
Events of Default |
|
|
106 |
|
10.2 |
Remedies |
|
|
108 |
|
|
|
|
|
|
|
SECTION 11. |
JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW |
|
|
112 |
|
|
|
|
|
|
|
11.1 |
Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver |
|
|
112 |
|
11.2 |
Waiver of Notices |
|
|
114 |
|
11.3 |
Amendments and Waivers |
|
|
114 |
|
11.4 |
Waiver of Counterclaims |
|
|
116 |
|
11.5 |
Indemnification |
|
|
116 |
|
|
|
|
|
|
|
SECTION 12. |
THE AGENT |
|
|
117 |
|
|
|
|
|
|
|
12.1 |
Appointment, Powers and Immunities |
|
|
117 |
|
12.2 |
Reliance by Agent |
|
|
118 |
|
12.3 |
Events of Default |
|
|
118 |
|
12.4 |
Wachovia in its Individual Capacity |
|
|
118 |
|
12.5 |
Indemnification |
|
|
119 |
|
12.6 |
Non Reliance on Agent and Other Lenders |
|
|
119 |
|
12.7 |
Failure to Act |
|
|
119 |
|
12.8 |
Additional Revolving Loans |
|
|
120 |
|
12.9 |
Concerning the Collateral and the Related Financing Agreements |
|
|
120 |
|
12.10 |
Field Audit, Examination Reports and other Information; Disclaimer by Lenders |
|
|
120 |
|
12.11 |
Collateral Matters |
|
|
121 |
|
12.12 |
Agency for Perfection |
|
|
123 |
|
12.13 |
Successor Agent |
|
|
123 |
|
|
|
|
|
|
|
SECTION 13. |
JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS |
|
|
123 |
|
|
|
|
|
|
|
13.1 |
Independent Obligations; Subrogation |
|
|
123 |
|
13.2 |
Authority to Modify Obligations and Security |
|
|
124 |
|
13.3 |
Waiver of Defenses |
|
|
124 |
|
13.4 |
Exercise of Agents and Lenders Rights |
|
|
124 |
|
13.5 |
Additional Waivers |
|
|
125 |
|
13.6 |
Additional Indebtedness |
|
|
125 |
|
iii
13.7 |
Notices, Demands, Etc. |
|
|
126 |
|
13.8 |
Revival |
|
|
126 |
|
13.9 |
Understanding of Waivers |
|
|
126 |
|
|
|
|
|
|
|
SECTION 14. |
TERM; MISCELLANEOUS |
|
|
126 |
|
|
|
|
|
|
|
14.1 |
Term |
|
|
126 |
|
14.2 |
Interpretative Provisions |
|
|
127 |
|
14.3 |
Notices |
|
|
129 |
|
14.4 |
Partial Invalidity |
|
|
129 |
|
14.5 |
Confidentiality |
|
|
130 |
|
14.6 |
Successors |
|
|
131 |
|
14.7 |
Assignments; Participations |
|
|
131 |
|
14.8 |
Entire Agreement |
|
|
134 |
|
14.9 |
USA Patriot Act |
|
|
134 |
|
14.10 |
Counterparts, Etc. |
|
|
134 |
|
|
|
|
|
|
|
SECTION 15. |
ACKNOWLEDGMENT AND RESTATEMENT |
|
|
134 |
|
|
|
|
|
|
|
15.1 |
Existing Obligations |
|
|
134 |
|
15.2 |
Acknowledgment of Security Interests |
|
|
135 |
|
15.3 |
Acknowledgment of Security Interests |
|
|
135 |
|
15.4 |
Existing Financing Agreements |
|
|
135 |
|
15.5 |
Restatement |
|
|
135 |
|
15.6 |
Release |
|
|
135 |
|
iv
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Second Amended and Restated Loan and Security Agreement (this Agreement), dated as of August 22, 2007, is entered into by and among Lerner New York, Inc., a Delaware corporation (Lerner), Lernco, Inc., a Delaware corporation (Lernco), and Jasmine Company, Inc., a Massachusetts corporation (Jasmine and together with Lerner and Lernco, collectively, Borrowers and individually each a Borrower), New York & Company, Inc., a Delaware corporation, formerly known as NY & Co. Group, Inc. (NY&Co), Lerner New York Holding, Inc., a Delaware corporation (Parent), Nevada Receivable Factoring, Inc., a Nevada corporation (Nevada Factoring), Associated Lerner Shops of America, Inc., a New York corporation (Associated Lerner), and Lerner New York GC, LLC, an Ohio limited liability company (Lerner GC and together with NY&Co, Parent, Nevada Factoring and Associated Lerner, collectively, Guarantors and each a Guarantor), the Lenders (as defined herein), Wachovia Bank, National Association, a national banking association, in its capacity as agent for the Lenders and the Bank Product Providers (in such capacity, Agent), LaSalle Retail Finance, a division of LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest, National Association, in its capacity as documentation agent for Lenders (in such capacity, Documentation Agent), and Wachovia Capital Markets, LLC, as sole lead arranger and sole bookrunner.
W I T N E S S E T H :
WHEREAS, Lerner, Lernco, the persons party thereto as lenders (the Existing Lenders), and Agent have previously entered into that certain Amended and Restated Loan and Security Agreement, dated as of March 16, 2004, as amended by the First Amendment to Amended and Restated Loan and Security Agreement, dated May 19, 2004, the Second Amendment to Amended and Restated Loan and Security Agreement, dated as of December 17, 2004, the Third Amendment to Amended and Restated Loan and Security Agreement, dated as of July 19, 2005, and the Fourth Amendment to Amended and Restated Loan and Security Agreement, dated as of January 4, 2006 (as amended, the Existing Loan Agreement as hereinafter further defined), pursuant to which, among other things, the Existing Lenders have provided certain loans and other financial accommodations to Lerner and Lernco;
WHEREAS, Borrowers are wholly-owned Subsidiaries of Parent, and together they are inter-related entities which collectively constitute an integrated clothing retailer;
WHEREAS, the directors of each Borrower view the entities as sufficiently dependent upon each other and so inter-related that any advance made hereunder to any Borrower would benefit each of the Borrowers as a result of their consolidated operations and identity of interests;
WHEREAS, each Borrower has requested that Agent and the Lenders treat them as co-borrowers hereunder, jointly and severally responsible for the obligations of each other hereunder;
WHEREAS, Borrowers have also requested that certain amendments be made to the Existing Loan Agreement, all as more fully set forth herein;
WHEREAS, each Lender is willing (severally and not jointly) to continue to make loans
and other financial accommodations to Borrowers, in each case on a pro rata basis according to its commitments provided for herein on the terms and conditions set forth therein, and Agent is willing to continue to act as agent for the Lenders on the terms and conditions set forth herein; and
WHEREAS, the parties hereto have agreed to amend and restate, in their entirety, the agreements contained in the Existing Loan Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto amend and restate the Existing Loan Agreement and agree as follows:
For purposes of this Agreement, the following terms shall have the respective meanings given to them below:
1.1 Accounts shall mean all present and future rights of each Borrower and Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit or charge card or information contained on or for use with any such card.
1.2 ACH Transactions shall mean any cash management or related services, including the automatic clearing house transfer of funds by Agent or any of its Affiliates for the account of a Borrower or a Guarantor pursuant to agreement, or overdrafts.
1.3 Additional Appraisal/Field Exam Period shall mean the period commencing after either (a) upon the occurrence of a Default or an Event of Default or (b) either (i) at any time the Obligations related to the Existing Term Loan are outstanding, Compliance Excess Availability shall be less than $30,000,000 for a period of five (5) consecutive Business Days or (ii) at any time after the Obligations related to the Existing Term Loan shall have been repaid in full in immediately available funds in accordance with the terms of this Agreement, Compliance Excess Availability shall be less than $20,000,000 for a period of five (5) consecutive Business Days (either (a) or (b) being referred to herein as an Additional Appraisal/Field Exam Trigger Event); provided , that , at any time after an Additional Appraisal/Field Exam Trigger Event has occurred, if (i) no Default or Event of Default shall exist or have occurred and be continuing, and (ii) either (A) during the time any of the Obligations related to the Existing Term Loan are outstanding, Compliance Excess Availability shall be not less than $30,000,000 for a period of thirty (30) consecutive days or (B) if all of the Obligations related to the Existing Term Loan have been paid in full in accordance with the terms of this Agreement, Compliance Excess Availability shall be not less than $20,000,000 for a period of not less than thirty (30) consecutive days, then such Additional Appraisal/Field Exam Period shall terminate upon the written acknowledgment of Agent to Borrowers. An Additional Appraisal/Field Exam Period
2
may thereafter be in effect if another Additional Appraisal/Field Exam Trigger Event occurs or reoccurs.
1.4 Adjusted Eurodollar Rate shall mean, with respect to each Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of one percent (1%)) determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, Reserve Percentage shall mean the reserve percentage, expressed as a decimal, prescribed by any United States or foreign banking authority for determining the reserve requirement which is or would be applicable to deposits of United States dollars in a non-United States or an international banking office of the Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether or not the Reference Bank actually holds or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.
1.5 Affiliate shall mean, with respect to a specific Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person. For the purposes of this definition, the term control (including with correlative meanings, the terms controlled by and under common control with), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.
1.6 Agent shall mean Wachovia Bank, National Association, a national banking association, successor by merger to Congress Financial Corporation, in its capacity as agent on behalf of Lenders pursuant to the terms hereof, and any replacement or successor agent hereunder.
1.7 Agent Payment Account shall mean account no. 5000000030279 of Agent at Wachovia Bank, National Association, located in Charlotte, North Carolina, ABA no. 053000219, or such other account of Agent as Agent may from time to time designate to Borrowers as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.
1.8 Applicable Margin shall mean
3
Tier |
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EBITDA/ Average Excess
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Applicable
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Applicable
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|
Applicable
|
|
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|
|
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|
|
|
1 |
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EBITDA greater than or equal to $100,000,000 and Average Excess Availability greater than or equal to $25,000,000 |
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0 |
% |
1.00 |
% |
1.00 |
% |
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|
|
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2 |
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EBITDA less than $100,000,000 or Average Excess Availability less than $25,000,000 |
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0 |
% |
1.25 |
% |
1.25 |
% |
1.9 Approved Fund shall mean with respect to any Lender that is a fund or similar investment vehicle that makes or invests in commercial loans, any fund or similar investment vehicle that invests in commercial loans which is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.
1.10 Assignment and Acceptance shall mean an Assignment and Acceptance substantially in the form of Exhibit A-1 or Exhibit A-2 attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lenders interest hereunder in accordance with the provisions of Section 14.7 hereof.
1.11 Associated Lerner shall mean Associated Lerner Shops of America, Inc., a New York corporation.
1.12 Authorized Officer shall mean Richard Crystal, Ronald Ristau, Sheamus Toal
4
or such other person as the Board of Directors of each Borrower or both Richard Crystal and Ronald Ristau may designate by written notice to Agent.
1.13 Availability Compliance Period shall mean the period commencing after either (a) upon the occurrence of a Default or an Event of Default or (b) if Compliance Excess Availability shall at any time be less than $15,000,000; provided , that , if at any time the Compliance Excess Availability is less than $15,000,000 and all of the following conditions are, and continue to be, satisfied, a Compliance Triggering Event shall not be deemed to have occurred: (a) the outstanding balance of the Revolving Loans is $10,000,000 or less, (b) the Borrowers have $50,000,000 or more in Qualified Cash, as determined by Agent, and (c) the Compliance Excess Availability is equal to at least $10,000,000. (either (a) or (b) being referred to herein as an Availability Compliance Trigger Event); provided , that , at any time after an Availability Compliance Trigger Event has occurred, if (i) Borrowers have thereafter either (A) maintained a daily average Compliance Excess Availability of not less than $15,000,000 for a period of not less than thirty (30) consecutive days or (B) satisfied all of the following conditions: (1) the outstanding balance of the Revolving Loans is $10,000,000 or less, (B) the Borrowers have $50,000,000 or more in Qualified Cash, as determined by Agent, and (C) the Compliance Excess Availability is equal to at least $10,000,000 and (ii) no Default or Event of Default shall exist or have occurred and be continuing, then such Availability Compliance Period shall terminate upon the written acknowledgment of Agent to Borrowers. An Availability Compliance Period may thereafter be in effect if another Availability Compliance Trigger Event occurs or reoccurs.
1.14 Average Excess Availability shall mean the average daily amount, as determined by Agent for the immediately preceding fiscal quarter, of Excess Availability.
1.15 Average Compliance Excess Availability shall mean the average daily amount, as determined by Agent for the immediately preceding fiscal quarter, of Compliance Excess Availability.
1.16 Bank Products shall mean any one or more of the following types of services or facilities extended to a Borrower or a Guarantor by a Bank Product Provider: (a) credit cards, (b) ACH Transactions, (c) Hedging Transactions, and (d) foreign exchange contracts.
1.17 Bank Product Providers shall mean Agent and any of its Affiliates that may, from time to time, provide any Bank Products to any Borrower or Guarantor or any of their respective Subsidiaries.
1.18 Bank Product Reserve shall mean any and all reserves that Agent may establish from time to time, in its sole discretion, for the Bank Products then provided and outstanding so long as such reserve was established by Agent at the time the Bank Product related thereto was provided by a Bank Product Provider.
1.19 Blocked Accounts shall have the meaning set forth in Section 6.3(a) hereof.
1.20 Borrowing Base shall mean, at any time, the amount equal to:
(a) the lesser of:
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(i) the amount equal to:
(A) the lesser of (a) the sum of (x) ninety percent (90%) of the Net Amount of Eligible Sell-Off Vendors Receivables of Borrowers, plus (y) ninety percent (90%) of the Net Amount of Eligible Damaged Goods Vendors Receivables of Borrowers, and (b) $4,000,000, plus
(B) ninety percent (90%) of the Net Amount of the Eligible Credit Card Receivables of Borrowers, plus
(C) the lesser of:
(a) the Inventory Loan Limit or
(b) the lesser of:
(y) the sum of:
(i) ninety percent (90%) multiplied by the sum of (A) the Value of the Eligible Landed Inventory of Lerner and Lernco minus (B) the amount of shrinkage and/or material variances in Inventory counts with respect to Eligible Landed Inventory of Lerner and Lernco as determined by Agent, plus
(ii) seventy-five percent (75%) multiplied by the sum of (A) the Value of the Eligible Landed Inventory of Jasmine minus (B) the amount of shrinkage and/or material variances in Inventory counts with respect to Eligible Landed Inventory of Jasmine as determined by Agent, plus
(iii) the lesser of (aa) the sum of (I) ninety (90%) multiplied by the Landed Value of Eligible In-Transit Inventory of Lerner and Lernco, plus (II) seventy-five percent (75%) multiplied by the Landed Value of Eligible In-Transit Inventory of Jasmine, plus (III) ninety percent (90%) multiplied by the Landed Value of Eligible In-Transit LC Inventory of Lerner and Lernco, plus (IV) seventy-five percent (75%) multiplied by the Landed Value of Eligible In-Transit LC Inventory of Jasmine, or (bb) $30,000,000, or
(z) ninety percent (90%) (or ninety two and one-half percent (92.5%) during the Seasonal Advance Period) of the Net Recovery Percentage applicable to such categories of Inventory of Lerner and Lernco multiplied by the Value of such Eligible Inventory of Lerner and Lernco, plus ninety percent (90%) of the Net Recovery Percentage applicable to such categories of Inventory of Jasmine multiplied by the Value of such Eligible Inventory, in each case as reflected on the most recent appraisal of the Inventory received and accepted by Agent prior to the date of calculation, plus
(D) one hundred percent (100%) of Eligible Cash Collateral; or
(ii) the Revolving Loan Limit, minus ,
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(b) the Reserves and the Bank Product Reserves.
Notwithstanding the foregoing, (a) as to Jasmine, in no event will the amount of Revolving Loans available exceed $7,500,000; provided, that, if Jasmine delivers an opinion of Massachusetts counsel, in form and substance acceptable to Agent, with respect with respect to such matters as Agent may reasonably require, such $7,500,000 sublimit shall no longer be effective, and (b) each of the percentages specified in clauses (a)(i)(A) through (C) of this definition shall be five percent (5%) less than the amounts set forth in such clauses until such time as the Existing Term Loan and all Obligations related thereto are indefeasibly paid and satisfied in full in immediately available funds.
For purposes of this definition, the advance rates set forth in subparagraph (a)(i)(C)(2) above will be subject to be decreased, upon Agent providing not less than ten (10) Business Days prior telephonic or electronic notice only to Borrowers, based on the results satisfactory to Agent of appraisals of the Inventory conducted in accordance with Section 7.3 hereof and to be conducted on a going out of business sale basis, net of liquidation expenses, at the expense of Borrowers, conducted by appraisers acceptable to Agent. For purposes only of applying the Inventory Loan Limit, Agent may treat the then undrawn amounts of outstanding Letter of Credit Accommodations for the purpose of purchasing Eligible Inventory as Revolving Loans to the extent Agent is in effect basing the issuance of the Letter of Credit Accommodations on the Value of the Eligible Inventory being purchased with such Letter of Credit Accommodations. In determining the actual amounts of such Letter of Credit Accommodations to be so treated for purposes of the sublimit, the outstanding Revolving Loans and Reserves shall be attributed first to any components of the lending formulas set forth above that are not subject to such sublimit, before being attributed to the components of the lending formulas subject to such sublimit. The amounts of Eligible Inventory shall be determined based on the lesser of the amount of Inventory set forth in the general ledgers of Borrowers or the perpetual inventory records maintained by Borrowers. Agent shall have the right to establish Reserves against or sublimits in the Borrowing Base in such amounts and with respect to such matters as Agent in its sole discretion shall deem necessary or appropriate, at all times and after Agent has completed its updated field audits, examinations and appraisals of the Collateral; provided, however, that, so long as an Availability Compliance Period does not exist, Agent shall only give to Borrowers ten (10) Business Days telephonic or electronic notice if (a) Agent establishes Reserves relating to new categories of Reserves, (b) Agent changes the methodology of calculating Reserves, or (c) Agent establishes sublimits in the Borrowing Base. The foregoing notwithstanding, in the event Agent is required to establish Reserves to preserve or protect or maximize the value of the Collateral, Agent shall only provide Borrowers with notice at the time such Reserve is established.
1.21 Borrowers shall mean, collectively, the following (together with their respective successors and assigns): (a) Lerner, (b) Lernco, and (e) Jasmine; each sometimes being referred to herein individually as Borrower.
1.22 Borrowing Base Certificate shall have the meaning given in Section 7.1(a)(i)(c) hereof.
1.23 BSMB shall mean BSMB/NYCG, LLC, a Delaware limited liability company.
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1.24 Business Day shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, or the State of North Carolina, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.
1.25 Capital Expenditures shall mean, with respect to any Person and its Subsidiaries, all expenditures made and liabilities incurred for the acquisition of equipment, software, fixed assets, real property or improvements, or replacements or substitutions therefor, which are not, in accordance with GAAP, treated as expense items for such Person and its Subsidiaries in the year made or incurred or as a prepaid expense applicable to a future year or years.
1.26 Capital Leases shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person.
1.27 Capital Stock shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Persons capital stock or partnership, limited liability company or other equity interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).
1.28 Cash Collateral Account shall mean a deposit account: (a) maintained by a Borrower as a collateral account with either Wachovia or LaSalle National Bank, and otherwise mutually satisfactory to Lerner, Agent and Lenders; (b) that is a money market account which does not contain stocks, bonds, other investment property or interests in such investment property; (c) used by such Borrower to deposit cash collateral for the purpose of supporting advances described in clause (a)(i)(E) of the definition of Borrowing Base; (d) which contains readily available funds sufficient to support any and all advances that may be requested by Borrowers pursuant to clause (a)(i)(E) of the definition of Borrowing Base, as determined by Agent; and (e) which is subject to the Cash Collateral Account Control Agreement. For purposes of clarification, there is no dollar limit on the amount of cash, Cash Equivalents or investment property that may be deposited in or credited to a Cash Collateral Account at any time.
1.29 Cash Collateral Account Control Agreement means a Deposit Account Control Agreement, which, among other things, (a) prohibits the Borrowers from withdrawing or transferring any amounts or investment property from such account except upon the conditions set forth in Section 9.26(f) hereof, (b) provides that the bank at which such account is maintained will provide to Agent a daily report as to the balance of such account, and (c) and is otherwise satisfactory to Agent in form and substance.
1.30 Cash Equivalents shall mean, at any time, (a) any evidence of Indebtedness with a maturity date of ninety (90) days or less issued or directly and fully guaranteed or insured
8
by the United States of America or any agency or instrumentality thereof; provided, that, the full faith and credit of the United States of America is pledged in support thereof; (b) certificates of deposit or bankers acceptances with a maturity of ninety (90) days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $250,000,000; (c) commercial paper (including variable rate demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an Affiliate of any Borrower) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poors Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least P-1 by Moodys Investors Service, Inc.; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $250,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; (f) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above; and (g) other investments as agreed by Agent in writing.
1.31 Central Collection Deposit Account shall mean any deposit account established by Borrowers that is used by Borrowers to receive deposits from local retail store deposit accounts or from sales of Inventory or other proceeds of Collateral arising from transactions other than sales at local retail stores.
1.32 Change of Control shall mean, as of any date of determination, the occurrence of any of the following: (a) any Person and/or one or more of its Affiliates, other than BSMB and/or one or more of its Affiliates, or group (within the meaning of the Securities Exchange Act of 1934, as amended) of Persons shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of twenty percent (20%) or more of the issued and outstanding Voting Stock of NY&Co, unless either (i) BSMB and/or one or more of its Affiliates, collectively, own more of the Voting Stock of NY&Co than such Person and/or its Affiliates or (ii) BSMB and/or one or more of its Affiliates has the right to elect, or cause to be elected, and has elected, or caused to be elected, a majority of the members of the Board of Directors of NY&Co, (b) during any period of twelve (12) consecutive calendar months, individuals who at the beginning of such period constituted the board of directors of NY&Co (together with any new directors whose election by the board of directors of NY&Co or whose nomination for election by the shareholders of NY&Co was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose elections or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office; or (c) except as permitted under the terms of Section 9.7 hereof, NY&Co shall cease to own (directly or indirectly) one hundred percent (100%) of the Capital Stock of each Borrower and each other Guarantor; or (d) any Borrower or Guarantor other than NY&Co does not own 100% of the Capital Stock of any of its Subsidiaries.
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1.33 Code shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.
1.34 Collateral shall have the meaning set forth in Section 5 hereof.
1.35 Collateral Access Agreement shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, from any lessor of premises to any Borrower or Guarantor, or any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, pursuant to which such lessor, consignee or other person, among other things, acknowledges the first priority security interest of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, in such Collateral, agrees to waive or subordinate any and all claims such lessor, consignee or other person may, at any time, have against such Collateral, whether for processing, storage or otherwise, and agrees to permit Agent access to, and the right to remain on, the premises of such lessor, consignee or other person so as to exercise Agents rights and remedies and otherwise deal with such Collateral and in the case of any consignee or other person who at any time has custody, control or possession of any Collateral, acknowledges that it holds and will hold possession of the Collateral for the benefit of Agent, the Lenders and the Bank Product Providers and agrees to follow all instructions of Agent with respect thereto.
1.36 Compliance Excess Availability shall mean the amount, as determined by Agent, calculated at any date, equal to: (a) the lesser of: (i) the Borrowing Base (calculated, for this purpose, without giving effect to the Total LC Reserve Amount) and (ii) the Revolving Loan Limit, minus (b) the sum of: (i) the amount of all then outstanding and unpaid Obligations (but not including for this purpose the then outstanding Letter of Credit Accommodations or the outstanding balance of the Existing Term Loan), which, for purposes of clarification, may be a credit balance arising from the overpayment of the Obligations, plus (ii) the Total LC Reserve Amount.
1.37 Covered Taxes shall have the meaning set forth in Section 6.4(d) hereof.
1.38 Credit Card Acknowledgments shall mean, collectively, the agreements by Credit Card Issuers or Credit Card Processors who are parties to Credit Card Agreements in favor of Agent acknowledging Agents first priority security interest, for and on behalf of Lenders, in the monies due and to become due to any Borrower or Guarantor (including, without limitation, credits and reserves) under the Credit Card Agreements, and agreeing to transfer all such amounts to the Blocked Accounts, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, sometimes being referred to herein individually as a Credit Card Acknowledgment.
1.39 Credit Card Agreements shall mean all agreements now or hereafter entered into by any Borrower or Guarantor with any Credit Card Issuer or any Credit Card Processor, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, including, but not limited to, the agreements set forth on Schedule 8.16 hereto.
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1.40 Credit Card Issuer shall mean any person (other than a Borrower or Guarantor) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc.
1.41 Credit Card Processor shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any Borrowers or Guarantors sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.
1.42 Credit Card Receivables shall mean all domestic Accounts consisting of the present and future rights of any Borrower or Guarantor, but excluding the Private Label Credit Card Receivables, to payment by any Credit Card Processor or Credit Card Issuer and all information contained on or for use with a credit, charge or debit card issued by a Credit Card Issuer.
1.43 Credit Facility shall mean the Revolving Loan Facility and the Existing Term Loan.
1.44 Default shall mean an act, condition or event that with notice or passage of time or both would constitute an Event of Default.
1.45 Defaulting Lender shall have the meaning set forth in Section 6.9(c) hereof.
1.46 Deposit Account Control Agreement shall mean an agreement in writing, in form and substance satisfactory to Agent, by and among Agent, a Borrower or Guarantor with a deposit account at any bank, and the bank at which such deposit account is at any time maintained which provides that such bank will comply with instructions originated by Agent directing disposition of the funds in the deposit account without further consent by such Borrower or Guarantor and such other terms and conditions as Agent may require, including as to any such agreement with respect to any Blocked Account, providing that all items received or deposited in the Blocked Accounts are the property of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, that the bank has no lien upon, or right to setoff against, the Blocked Accounts, the items received for deposit therein, or the funds from time to time on deposit therein and that the bank will wire, or otherwise transfer, in immediately available funds, on a daily basis to the Agent Payment Account all funds received or deposited into the Blocked Accounts.
1.47 Documentation Agent shall mean LaSalle Retail Finance, a division of LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest, National Association.
1.48 Domestic In-Transit Inventory shall mean Inventory owned by a Borrower that is located in the continental United States of America which is in transit to one of the locations set forth on Exhibit E (as such schedule may be updated from time to time by Borrowers to
11
exclude locations which have been closed and/or include additional locations of Inventory which Borrowers are permitted to establish under the terms of this Agreement) being the premises of such Borrower in the United States of America which are either owned and controlled by such Borrower or leased by such Borrower.
1.49 EBITDA shall mean, for any period, without duplication, the total of the following for the Borrowers and Guarantors on a consolidated basis, each calculated for such period: Net Income plus (i) preferred dividends, plus (ii) income tax expense, plus (iii) Interest Expense (including all charges owed with respect to letters of credit), plus (iv) depreciation expense, plus (v) amortization expense, plus (vi) management fees and expenses, as permitted hereunder, paid or accrued, plus (vii) non-cash losses from any sale or disposition of assets, and minus (viii) non-cash gains from any sale or disposition of assets, plus (ix) any other non-cash charges, non-cash expenses (including non-cash straight line rent), non-cash losses or non-cash restructuring charges, minus (x) the amortization of construction or landlord tenant allowances of the Borrowers or any Subsidiary of a Borrower for such period, all of the foregoing determined in accordance with GAAP, adjusted as provided in Schedule 1.49(a) hereto; provided , however , for purposes of determining EBITDA for any fiscal month ending prior to the expiration of the twelve (12) months after the date hereof, EBITDA for each fiscal month ending prior to the date hereof shall be the amount set forth in Schedule 1.49(b) hereto. For purposes of calculating EBITDA for any Measurement Period, (A) acquisitions that have been made by such Person and its Subsidiaries, including through mergers or consolidated and including any related financing transactions, during the Measurement Period shall be deemed to have occurred on the first day of the Measurement Period; provided, however, that only the actual historical results of operations of the Persons so acquired, without adjustment for pro forma expense savings or revenue increases, shall be used for such calculation; and (B) the EBITDA of such Person and its Subsidiaries attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the end of such Measurement Period, shall be excluded.
1.50 Eligible Cash Collateral shall mean the cash or Cash Equivalents, in each case denominated in United States Dollars, of a Borrower which are: (a) pledged by such Borrower to Agent pursuant to the Cash Collateral Control Agreement, in form and substance reasonably satisfactory to Agent and duly authorized, executed and delivered by such bank or financial intermediary and such Borrower; (b) free and clear of any lien, security interest, claim or other encumbrance or restriction, except for (i) liens in favor of Agent and (ii) liens of the financial intermediary holding such cash or Cash Equivalents that are expressly permitted by the Cash Collateral Control Agreement; (c) subject to the first priority, valid and perfected security interest and pledge in favor of Agent, except (as to priority) for liens in favor of the financial intermediary holding such cash or Cash Equivalents to the extent such liens are expressly permitted to have priority by the Cash Collateral Control Agreement; and (d) available to such Borrower without condition or restriction except those arising pursuant to the pledge in favor of Agent; provided , that , no cash or Cash Equivalents shall constitute Eligible Cash Collateral prior to the date (if any) on which Agent shall have consented to the request by Borrowers to include Eligible Cash Collateral in the Borrowing Base.
1.51 Eligible Credit Card Receivables shall mean the gross amount of all Credit Card Receivables that are subject to a valid, exclusive, first priority and fully perfected security
12
interest in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, which conform to all applicable warranties contained herein less, without duplication, the sum of all Credit Card Receivables: (a) for which Agent has not received a Credit Card Acknowledgment within sixty (60) days after the date hereof if the Credit Card Agreement exists on the date hereof (or if the Credit Card Agreement is entered into after the date hereof, no later than sixty (60) days after the date of such Credit Card Agreement or such later date as is acceptable to Agent), and (b) which are unpaid more than ten (10) days after the date submitted to the appropriate Credit Card Processor for payment.
1.52 Eligible Damaged Goods Vendors Receivables shall mean Accounts, other than Credit Card Receivables or Eligible Sell-Off Vendors Receivables, created by any Borrower which are and continue to be acceptable to Agent based on the criteria set forth below. In general, Accounts shall be Eligible Damaged Goods Vendors Receivables if:
(a) such Accounts arise from the actual and bona fide sale and delivery of damaged Inventory by such Borrower to a third-party off-price wholesaler satisfactory to Agent, in the ordinary course of such Borrowers business, which transactions are completed in accordance with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to such Accounts is located in the United States of America or Canada;
(f) such Accounts do not consist of progress billings (such that the obligation of the account debtors with respect to such Accounts is conditioned upon such Borrowers satisfactory completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Agent shall have received an agreement in writing from the account debtor, in form and substance satisfactory to Agent, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute and does not have, and does not engage in transactions which may give rise to any right of setoff or recoupment against such Accounts (but the portion of the Accounts of such account debtor in excess of the amount at any time and from time to time owed by such Borrower to such account debtor or claimed to be owed by such account debtor may be deemed Eligible Damaged Goods Vendors Receivables);
(h) there are no facts, events or occurrences which would impair the validity,
13
enforceability or collectability of such Accounts or reduce the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and perfected security interest of Agent and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any liens except those of Agent or those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent;
(j) neither the account debtor nor any officer or employee of the account debtor with respect to such Accounts is an officer, employee, agent or other Affiliate of any Borrower or Guarantor;
(k) the account debtors with respect to such Accounts are not any foreign government, the United States of America, any State, political subdivision, department, agency or instrumentality thereof, unless, if the account debtor is the United States of America, any State, political subdivision, department, agency or instrumentality thereof, upon Agents request, the Federal Assignment of Claims Act of 1940, as amended or any similar State or local law, if applicable, has been complied with in a manner satisfactory to Agent;
(l) there are no proceedings or actions which are threatened or pending against the account debtors with respect to such Accounts which are likely to result in any material adverse change in any such account debtors financial condition (including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or similar proceeding);
(m) such Accounts are not evidenced by or arising under any instrument or chattel paper;
(n) such Accounts are not owed by an account debtor who has Accounts unpaid more than ninety (90) days after the original invoice date for them which constitute more than thirty-five percent (35%) of the total Accounts of such account debtor;
(o) the account debtor is not located in a state requiring the filing of a Notice of Business Activities Report or similar report in order for such Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year or such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost; and
(p) such Accounts do not constitute amounts which have been invoiced by such Borrower but with respect to which goods so invoiced have not been delivered to the account debtor.
The criteria for Eligible Damaged Goods Vendors Receivables set forth above may only be changed and any new criteria for Eligible Damaged Goods Vendors Receivables may only be established by Agent in good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from Borrowers prior to the date hereof,
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in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Accounts in the good faith determination of Agent. Any Accounts which are not Eligible Damaged Goods Vendors Receivables shall nevertheless be part of the Collateral.
1.53 Eligible Inventory shall mean Eligible Landed Inventory, Eligible In-Transit Inventory and Eligible In-Transit LC Inventory.
1.54 Eligible In-Transit Inventory shall mean Domestic In-Transit Inventory and Foreign In-Transit Inventory owned by a Borrower that otherwise satisfies the criteria for Eligible Landed Inventory; provided , that :
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copy of the certificate of evidence of marine cargo insurance in connection therewith in which it has been named as an additional insured and lenders loss payee in a manner acceptable to Agent;
(a) work-in-process;
(b) raw materials;
(c) spare parts for equipment;
(d) packaging and shipping materials;
(e) supplies used or consumed in Borrowers business;
(f) Inventory at premises other than those owned or leased and controlled by a Borrower unless Agent has either (i) received a Collateral Access Agreement in form and substance satisfactory to Agent with respect to such location or (ii) established a Reserve in an
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amount in accordance with the terms hereof with respect to such location;
(g) Inventory subject to a perfected security interest or lien in favor of any person other than Agent except those permitted in this Agreement including those that are subordinate to the security interest of Agent pursuant to an intercreditor agreement in form and substance satisfactory to Agent between Agent and the holder of such other security interest or lien;
(h) bill and hold goods;
(i) obsolete, out-of-season or slow moving Inventory;
(j) damaged and/or defective Inventory;
(k) Inventory returned by customers and not held for resale;
(l) Inventory consisting of samples or displays;
(m) Inventory held for return to vendors; and
(n) Inventory purchased or sold on consignment.
General criteria for Eligible Landed Inventory may only be made more restricted and any new criteria for Eligible Landed Inventory may only be established by Agent in good faith, based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) existing on the date hereof to the extent Agent has no written notice thereof from Borrowers prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Inventory in the good faith determination of Agent. Any Inventory which is not Eligible Landed Inventory shall nevertheless be part of the Collateral.
1.57 Eligible Sell-Off Vendors Receivables shall mean Accounts, other than Credit Card Receivables or Eligible Damaged Goods Vendor Receivables, created by any Borrower which are and continue to be acceptable to Agent based on the criteria set forth below. In general, Accounts shall be Eligible Sell-Off Vendors Receivables if:
(a) such Accounts arise from the actual and bona fide sale and delivery of out-of-season or slow moving Inventory by such Borrower to a third-party off-price wholesaler, including Ben Elias and Value City (or any other Person engaged in substantially the same business as Ben Elias or Value City and permitted by Agent), in the ordinary course of such Borrowers business, which transactions are completed in accordance with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in Section 7.2(b) of this Agreement;
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(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to such Accounts is located in the United States of America or Canada;
(f) such Accounts do not consist of progress billings (such that the obligation of the account debtors with respect to such Accounts is conditioned upon such Borrowers satisfactory completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Agent shall have received an agreement in writing from the account debtor, in form and substance satisfactory to Agent, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute and does not have, and does not engage in transactions which may give rise to any right of setoff or recoupment against such Accounts (but the portion of the Accounts of such account debtor in excess of the amount at any time and from time to time owed by such Borrower to such account debtor or claimed to be owed by such account debtor may be deemed Eligible Sell-Off Vendors Receivables),
(h) there are no facts, events or occurrences which would impair the validity, enforceability or collectability of such Accounts or reduce the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and perfected security interest of Agent and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any liens except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent;
(j) neither the account debtor nor any officer or employee of the account debtor with respect to such Accounts is an officer, employee, agent or other Affiliate of any Borrower or Guarantor;
(k) the account debtors with respect to such Accounts are not any foreign government, the United States of America, any State, political subdivision, department, agency or instrumentality thereof, unless, if the account debtor is the United States of America, any State, political subdivision, department, agency or instrumentality thereof, upon Agents request, the Federal Assignment of Claims Act of 1940, as amended or any similar State or local law, if applicable, has been complied with in a manner satisfactory to Agent;
(l) there are no proceedings or actions which are threatened or pending against the account debtors with respect to such Accounts which are likely to result in any material adverse change in any such account debtors financial condition (including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or similar proceeding);
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(m) such Accounts are not evidenced by or arising under any instrument or chattel paper;
(n) such Accounts are not owed by an account debtor who has Accounts unpaid more than ninety (90) days after the original invoice date for them which constitute more than thirty-five (35%) of the total Accounts of such account debtor;
(o) the account debtor is not located in a state requiring the filing of a Notice of Business Activities Report or similar report in order for such Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year or such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost; and
(p) such Accounts do not constitute amounts which have been invoiced by such Borrower but with respect to which goods so invoiced have not been delivered to the account debtor.
The criteria for Eligible Sell-Off Vendors Receivables set forth above may only be changed and any new criteria for Eligible Sell-Off Vendors Receivables may only be established by Agent in good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from Borrowers prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Accounts in the good faith determination of Agent. Any Accounts which are not Eligible Sell-Off Vendors Receivables shall nevertheless be part of the Collateral.
1.58 Eligible Transferee shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty percent (50%) owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case (unless otherwise provided herein with regard to the Existing Term Loan) is approved by Agent; and (d) any other commercial bank, financial institution or accredited investor (as defined in Regulation D under the Securities Act of 1933) approved by Agent, provided, that, (i) no Borrower, Guarantor, Affiliate of any Borrower or Guarantor, BSMB or any Affiliate of BSMB shall qualify as an Eligible Transferee, (ii) no Person to whom any Indebtedness which is in any way subordinated in right of payment to any other Indebtedness of any Borrower or Guarantor shall qualify as an Eligible Transferee, except as Agent may otherwise specifically agree and (iii) no Person that is organized under the laws of a jurisdiction other than the United States or any state thereof shall qualify as an Eligible Transferee.
1.59 Environmental Laws shall mean all foreign, Federal, State and local laws
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(including common law), rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between any Borrower or Guarantor and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to occupational health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. The term Environmental Laws includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws and (iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials.
1.60 Equipment shall mean all of each Borrowers and each Guarantors now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment (whether owned or licensed and including embedded software), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.
1.61 ERISA shall mean the United States Employee Retirement Income Security Act of 1974, as amended, together with all rules, regulations and interpretations thereunder or related thereto.
1.62 ERISA Affiliate shall mean any person required to be aggregated with any Borrower or any Guarantor under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.63 ERISA Event shall mean (a) any reportable event, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan, except for any such event with respect to which notice has been waived pursuant to applicable regulations; (b) the adoption of any amendment to a Pension Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Pension Plan of an accumulated funding deficiency (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (e) the occurrence of a non-exempt prohibited transaction with respect to which any Borrower or Guarantor, or any of their respective Subsidiaries is a disqualified person (within the meaning of Section 4975 of the Code); (f) a complete or partial withdrawal by any Borrower, any Guarantor or any ERISA
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Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; and (i) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower, any Guarantor or any ERISA Affiliate in an amount that could reasonably be expected to have a Material Adverse Effect.
1.64 Eurodollar Rate shall mean with respect to the Interest Period for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic average of the rates of interest per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of one percent (1%)) at which the Reference Bank is offered deposits of United States dollars in the London interbank market (or other Eurodollar Rate market selected by Borrowers and approved by Agent) on or about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement of such Interest Period in amounts substantially equal to the principal amount of the Eurodollar Rate Loans requested by and available to Borrowers in accordance with this Agreement, with a maturity of comparable duration to the Interest Period selected by or on behalf of Borrowers.
1.65 Eurodollar Rate Loans shall mean the Loans or portions thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.
1.66 Event of Default shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof.
1.67 Excess Availability shall mean, the amount, as determined by Agent, calculated at any date, equal to: (a) the Borrowing Base (calculated, for this purpose, without giving effect to the Total LC Reserve Amount), minus (b) the sum of: (i) the amount of all then outstanding and unpaid Obligations (but not including for this purpose the then outstanding Letter of Credit Accommodations or the outstanding balance of the Existing Term Loan), which, for purposes of clarification, may be a credit balance arising from the overpayment of the Obligations, plus (ii) the Total LC Reserve Amount, plus (iii) the aggregate amount of all outstanding and unpaid trade payables and other obligations of any Borrower which, as reported on the most recent Borrowing Base Certificate for the most recent month end, are outstanding more than forty-five (45) days past due as of such time (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), plus (iv) without duplication, the amount of checks issued by any Borrower to pay trade payables and other obligations which, as reported on the most recent Borrowing Base Certificate for the most recent month end, are more than forty-five (45) days past due as of such time (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), but not yet sent.
1.68 Exchange Act shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.
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1.69 Existing Financing Agreements shall mean, collectively, the Existing Loan Agreement, the Existing Guarantor Security Agreements, and all other documents, certificates, instruments, notes, guarantees, mortgages and agreements executed and delivered by Borrowers and Guarantors in connection therewith, whether or not specifically mentioned herein or therein as heretofore, amended and as in effect immediately prior to the date hereof.
1.70 Existing Guarantor Security Agreements shall mean, collectively, the Amended and Restated Guaranty and Security Agreement, dated March 16, 2004, by NY&Co in favor of Agent, the Amended and Restated Guaranty and Security Agreement, dated March 16, 2004, by Parent in favor of Agent, the Amended and Restated Guaranty and Security Agreement, dated March 16, 2004, by Nevada Factoring in favor of Agent, the Amended and Restated Guaranty and Security Agreement, dated March 16, 2004, by Associated Lerner in favor of Agent, Associated Lerner, and the Amended and Restated Guaranty and Security Agreement, dated March 16, 2004, by Lerner GC in favor of Agent as heretofore amended and as in effect immediately prior to the date hereof.
1.71 Existing Loan Agreement shall have the meaning set forth in the recitals hereof as heretofore amended and as in effect immediately prior to the date hereof.
1.72 Existing Term Loan shall have the meaning set forth in Section 2.3 hereof.
1.73 Existing Term Loan Commitment shall mean that portion of the Existing Term Loan made by and owing to Existing Term Loan Lender, as the same may be adjusted from time to time in accordance with the terms hereof.
1.74 Existing Term Loan Interest Rate shall mean, for any month during which any Obligations related to the Existing Term Loan are outstanding, a per annum rate equal to two and one-half (2.50%) percent per annum in excess of the Adjusted Eurodollar Rate (when calculated using the Eurodollar Rate existing as of the last day of the month ended immediately prior to such month and an Interest Period of one month); provided, that, (a) at Agents option or, upon the written direction of Existing Term Loan Lender, the Existing Term Loan Interest Rate shall be increased by two (2.0) percentage points either (i) for the period on and after the date of termination or non-renewal hereof until such time as all Obligations arising under the Existing Term Loan are indefeasibly paid and satisfied in full in immediately available funds, or (ii) for the period from and after the date of the occurrence of any Event of Default, and for so long as such Event of Default is continuing and (b) notwithstanding anything to the contrary contained herein, if any of the conditions described in Sections 3.3(b)(i), 3.3(b)(ii) or 3.3(b)(iii) hereof exist with respect to Eurodollar Rate Loans, or if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof, in each case, occurring after the date hereof shall make it unlawful for Existing Term Loan Lender to maintain loans based on the Adjusted Eurodollar Rate, then Existing Term Loan Lender may, at its option, after notice to Agent and Borrowers, convert the interest rate on the Existing Term Loan on the last day of the then-current Interest Period to the Prime Rate (or at the option of Existing Term Loan Lender, after notice to Agent, for the period from and after the date of the occurrence of any Event of Default, and for so long as such Event of Default is continuing as determined by Agent, to two (2%) percent per annum in excess of the Prime Rate).
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1.75 Existing Term Loan Lender shall mean Wachovia.
1.76 Existing Term Loan Maturity Date shall mean March 17, 2012.
1.77 Fee Letter shall mean that certain confidential letter agreement, captioned Fee Letter, dated as of the date hereof, among Borrowers and Agent.
1.78 Financing Agreements shall mean, collectively, this Agreement, any and all notes, the Fee Letter, the Guarantee, the Stock Pledge Agreements, the Collateral Access Agreements, the Credit Card Acknowledgments, the Deposit Account Control Agreements (together with all other agreements necessary for Agent to take (conditionally or otherwise) dominion of all cash receipts and payments on credit card receivables of each Borrower and Guarantor), the Investment Property Control Agreements, any other security agreements, the Intellectual Property Security Agreements, the Intercompany Subordination Agreement, and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or any Obligor in connection with this Agreement.
1.79 Fiscal Year-End shall mean the dates denoted as Fiscal Year-End dates on Exhibit F hereto.
1.80 First Quarter-End shall mean the dates denoted as First Quarter-End dates on Exhibit F hereto.
1.81 Fixed Charge Coverage Ratio shall mean, as to any Person and their Subsidiaries, calculated on a consolidated basis, for any applicable measurement period, measured as of the end of such, the ratio of: (a) the amount equal to sum of (i) EBITDA plus (ii) Qualified Cash to (b) Fixed Charges.
1.82 Fixed Charges shall mean, with respect to any Person and its Subsidiaries for any period, the sum of, without duplication, (a) all cash Interest Expense paid during such period (net of interest income of such Person during such Period and excluding, to the extent taken into account in the calculation of Interest Expense, upfront fees, costs and expenses in respect of this Agreement, the New Term Loan Documents and the transactions contemplated hereby and thereby), plus (b) all regularly scheduled mandatory principal payments with respect to Indebtedness for borrowed money (excluding payments in respect of Revolving Loans) paid or payable for such period, and Indebtedness with respect to Capital Leases paid during such period in cash (excluding the interest component with respect to Indebtedness under Capital Lease), plus (c) all income taxes paid during such period in cash (net of refunds or tax credits to such Person in respect to income taxes, and excluding income tax on extraordinary or non-recurring gains or gains from asset sales outside of the ordinary course of business), plus (d) all Capital Expenditures paid in cash during such period net of applicable construction or landlord tenant allowances during such period (other Capital Expenditures of such Person, made with the proceeds of Indebtedness permitted for such purpose hereunder), all of the foregoing as determined in accordance with GAAP.
1.83 Fourth Quarter-End shall mean the dates denoted as Fourth Quarter-End dates on Exhibit F hereto.
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1.84 Foreign In-Transit Inventory shall mean Inventory owned by a Borrower that is not located in the continental United States of America and which is in transit to one of the locations set forth on Exhibit E hereto (as such schedule may be updated from time to time by Borrowers to exclude locations which have been closed and/or include additional locations of Inventory which Borrowers are permitted to establish under the terms of this Agreement) being either the premises of a Freight Forwarder in the United States of America or the premises of such Borrower in the United States of America which are either owned and controlled by such Borrower or leased by such Borrower.
1.85 Foreign Subsidiary shall mean any Subsidiary of any Borrower or Guarantor that is a corporation (or is treated as a corporation under the Code) and is not organized under the laws of the United States or a state thereof.
1.86 Freight Forwarders shall mean the persons listed on Schedule 1.86 hereto or such other person or persons as may be selected by Borrower after the date hereof and after written notice by Borrower to Agent who are reasonably acceptable to Agent to handle the receipt of Inventory within the United States of America and/or to clear Inventory through the Bureau of Customs and Border Protection (formerly the Customs Service) or other domestic or foreign export control authorities or otherwise perform port of entry services to process Inventory imported by Borrower from outside the United States of America (such persons sometimes being referred to herein individually as a Freight Forwarder), provided , that , as to each such person, (a) Agent shall have received a Collateral Access Agreement by such person in favor of Agent (in form and substance satisfactory to Agent) duly authorized, executed and delivered by such person, (b) such agreement shall be in full force and effect and (c) such person shall be in compliance in all material respects with the terms thereof.
1.87 Funding Bank shall have the meaning set forth in Section 3.3(a) hereof.
1.88 GAAP shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, except that, for purposes of Section 9.18 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered to Agent prior to the date hereof.
1.89 Gift Certificate and Store Credit Reserve shall mean, as of any date of determination, a Reserve equal to the amount of fifty-one percent (51%) of all (i) accrued and outstanding gift certificates which any Borrower is obligated to honor and (ii) the aggregate amount of outstanding store credit to be honored by any Borrower.
1.90 Goods in Progress LC shall mean a documentary Letter of Credit Accommodation (a) initially requested for the purpose of ordering and ultimately purchasing Inventory which, upon its completion and deposit with a shipper who has executed a Collateral Access Agreement, in form and substance satisfactory to Agent, is reasonably anticipated to be deemed Eligible In-Transit Inventory or Eligible In-Transit LC Inventory, (b) which has not been
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issued and outstanding for more than seventy-five (75) days and (c) which does not relate to Inventory which has in fact become finished goods which have been deposited for shipment to a Borrower with a Freight Forwarder who has executed a Collateral Access Agreement, in form and substance satisfactory to Agent; provided , that , after such goods become finished goods and have been so deposited with such a Freight Forwarder, then such Letter of Credit Accommodation shall no longer be deemed a Goods in Progress LC.
1.91 Governmental Authority shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.
1.92 Guarantee shall mean the Amended and Restated Guarantee executed and delivered by each Borrower and Guarantor in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, in form and substance satisfactory to Agent, as the same may be amended, modified or supplemented from time to time, and any other guaranty from time to time executed by any Guarantor in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.93 Guarantors shall mean collectively, the following (together with their respective successors and assigns): (a) NY&Co, (b) Parent, (c) Nevada Factoring, (d) Associated Lerner, and (e) Lerner GC; each sometimes being referred to herein individually as Guarantor.
1.94 Hazardous Materials shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants, sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become classified as hazardous or toxic under any Environmental Law.
1.95 Hedging Transactions shall mean (a) any and all rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options, forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transaction, currency options or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, or (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms or conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., or any other master agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time to time, including but not limited to, any such obligations or liabilities under any such agreement.
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1.96 In Store Payment shall have the meaning set forth in the Private Label Credit Card Agreement.
1.97 Indebtedness shall mean, with respect to any Person and without duplication, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (except any such balance that constitutes an account payable to a trade creditor (whether or not an Affiliate) created, incurred, assumed or guaranteed by such Person in the ordinary course of business of such Person in connection with obtaining goods, materials or services that is not overdue by more than ninety (90) days, unless the trade payable is being contested in good faith); (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition of another Person; (e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, bankers acceptances, drafts or similar documents or instruments issued for such Persons account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values; and (i) all obligations owed by such Person under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments.
1.98 Indemnitee shall have the meaning set forth in Section 11.5 hereof.
1.99 Information Certificates shall mean the Information Certificates, dated the date hereof, of Borrowers and Guarantors collectively constituting Exhibit D hereto, containing material information with respect to such Person and such Persons businesses and assets provided by or on behalf of such Person to Agent in connection with the preparation of this Agreement and the other Financing Agreements and the financing arrangements provided for herein.
1.100 Insolvency Event shall mean, the commencement of any of the following with respect to any Borrower or Guarantor: (i) any case or proceeding with respect to such person under the Bankruptcy Code, or any other Federal, State or other bankruptcy, insolvency,
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reorganization or other law affecting creditors rights or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of all or substantially all of the obligations and indebtedness of such person or (ii) any proceeding seeking the appointment of any receiver, trustee, administrator, liquidator, custodian or other insolvency official with similar powers with respect to such person or all or substantially all of its assets or (iii) any proceeding for liquidation, dissolution or other winding up of the business of such person or (iv) any general assignment for the benefit of creditors or any general marshaling of all or substantially all of the assets of such person.
1.101 Intellectual Property shall mean any Borrowers or any Guarantors now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright registrations, trademarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or the license of any trademark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.
1.102 Intellectual Property Security Agreements shall mean, collectively, the Lerner Trademark Agreement, the Lernco Trademark Agreement and any other security agreement concerning any Intellectual Property of any Borrower or Guarantor at any time delivered to Agent in connection with this Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.103 Intercompany Subordination Agreement shall mean the Second Amended and Restated Intercompany Subordination Agreement, in form and substance satisfactory to Agent, dated of even date herewith, by and among Borrowers, certain of their Affiliates and Agent, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.104 Interest Expense shall mean, for any period, total interest expense in accordance with GAAP of Borrowers and Guarantors on a consolidated basis with respect to all outstanding Indebtedness.
1.105 Interest Period shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2), three (3) or six (6) months duration as Borrowers may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market; provided, that, Borrowers may not elect an Interest Period which will end after the last day of the then-current term of this Agreement.
1.106 Inventory shall mean all of each Borrowers and each Guarantors now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower or Guarantor as lessor; (b) are held by such Borrower or Guarantor for sale or lease or
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to be furnished under a contract of service; (c) are furnished by such Borrower or Guarantor under a contract of service; (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business; or (e) are goods in transit to such Borrower or Guarantor.
1.107 Inventory Loan Limit shall mean $90,000,000.
1.108 Investment Property Control Agreement shall mean an agreement in writing, in form and substance satisfactory to Agent, by and among Agent, any Borrower or Guarantor (as the case may be) and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Borrower or Guarantor acknowledging that such securities intermediary, commodity intermediary or other person has custody, control or possession of such investment property on behalf of Agent, that it will comply with entitlement orders originated by Agent with respect to such investment property, or other instructions of Agent, or (as the case may be) apply any value distributed on account of any commodity contract as directed by Agent, in each case, without the further consent of such Borrower or Guarantor and including such other terms and conditions as Agent may require.
1.109 Jasmine shall mean Jasmine Company, Inc., a Massachusetts corporation.
1.110 Landed Value shall mean, with respect to Eligible In-Transit Inventory or Eligible In-Transit LC Inventory, the sum of (a) the face amount of all documentary Letter of Credit Accommodations issued under this Agreement for purposes of purchasing such Inventory from a Person who is not an Affiliate of any Borrower plus (b) the amount of freight, customs, taxes and duty and other amounts which Agent estimates must be paid upon the arrival and in connection with the delivery of such Inventory to a Borrowers location for Eligible Landed Inventory within the United States of America.
1.111 LC Reserve Amount shall mean, with respect to each Letter of Credit Accommodation provided under this Agreement, the amount equal to:
(a) if such Letter of Credit Accommodation is a Goods in Progress LC and the Non-Reserved LC Amount does not then exceed $20,000,000, the sum of (i) twenty-five percent (25%) (or twenty percent (20%) during the Seasonal Advance Period) of the face amount of such Goods in Progress LC plus (ii) freight, taxes, duty, and other amounts which Agent estimates must be paid in connection with the delivery of the Inventory ordered thereunder to a Borrowers location for Eligible Landed Inventory within the United States of America; or
(b) if such Letter of Credit Accommodation is for any other purpose, including, if it does not meet any of the conditions for being a Goods in Progress LC or if the Non-Reserved LC Amount does then exceed $20,000,000, the sum of (i) one hundred percent (100%) of the face amount of the proposed Letter of Credit Accommodation plus (ii) if such Letter of Accommodation is for the purchase of Inventory, freight, taxes, duty, and other amounts which Agent estimates must be paid in connection with the delivery of such Inventory to a Borrowers location for Eligible Landed Inventory within the United States of America, plus (iii) all other commitments and obligations made or incurred by Agent with respect thereto.
1.112 Lender Register shall have the meaning given in Section 14.7(b) hereof.
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1.113 Lenders shall mean the Persons who are signatories hereto as Lenders and other Persons made a party to this Agreement as a Lender in accordance with Section 14.7 hereof, and their respective successors and assigns; each sometimes being referred to herein individually as a Lender.
1.114 Lernco shall have the meaning set forth in the introduction hereto.
1.115 Lernco Trademark Agreement shall mean the Second Amended and Restated Collateral Assignment of Trademarks (Security Agreement), dated of even date herewith, by Lernco and Jasmine in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, as the now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.116 Lerner shall have the meaning set forth in the preamble hereto.
1.117 Lerner GC shall mean Lerner New York GC, LLC, an Ohio limited liability company.
1.118 Lerner Stock Pledge Agreement shall mean the Second Amended and Restated Stock Pledge Agreement, dated of even date herewith, by Lerner in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, with respect to the pledge of 100% of the Capital Stock of Associated Lerner, Lernco, Lerner GC and Jasmine, owned by Lerner, as the now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.119 Lerner Trademark Agreement shall mean the Amended and Restated Collateral Assignment of Trademarks (Security Agreement), dated of even date herewith, by Lerner in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.120 Letter of Credit Accommodations shall mean, collectively, the letters of credit, merchandise purchase or other guaranties, or acceptances of drafts relating to letters of credit, which are from time to time either (a) issued or opened by Agent or any Revolving Loan Lender for the account of any Borrower or any Obligor or for which Agent or any Revolving Loan Lender is the confirming bank or in respect of which it has otherwise agreed to make any payment or (b) with respect to which Agent or Revolving Loan Lenders have agreed to indemnify the issuer or guaranteed to the issuer the performance by any Borrower or any Obligor of its obligations to such issuer; sometimes being referred to herein individually as a Letter of Credit Accommodation.
1.121 Letter of Credit Fee shall have the meaning set forth in Section 2.2(b) hereof.
1.122 Leverage Ratio shall mean, at the end of any fiscal month, the ratio computed for the period consisting of twelve (12) consecutive fiscal months ended on such date of (a) the principal amounts of the Loans and any other secured Indebtedness of any Borrower or Guarantors that are outstanding as of the last day of such period, to (b) EBITDA of Borrowers and Guarantors for such period.
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1.123 License Agreements shall have the meaning set forth in Section 8.11 hereof.
1.124 Loan Parties means the Borrowers, the Guarantors and the other Obligors.
1.125 Loans shall mean the Revolving Loans, the Special Agent Advances, the Existing Term Loan and the Letter of Credit Accommodations.
1.126 Material Adverse Effect shall mean a material adverse effect on (a) the financial condition, business, performance or operations of the Borrowers taken as a whole or the Loan Parties taken as a whole; (b) the legality, validity or enforceability of this Agreement or any of the other Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Agent upon the Collateral; (d) the Collateral or its value; (e) the ability of the Borrowers, taken as a whole, to repay the Obligations or of the Borrowers, taken as a whole, or the Loan Parties, taken as a whole, to perform their obligations under this Agreement or any of the other Financing Agreements as and when to be performed; or (f) the ability of Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Agent and Lenders under this Agreement or any of the other Financing Agreements.
1.127 Material Contract shall mean (a) any contract or other agreement (other than the Financing Agreements), written or oral, of any Borrower or Obligor involving liability for $5,000,000 or more of Indebtedness owed to any Person (other than another Loan Party) or (b) any other contract or other agreement (other than the Financing Agreements), whether written or oral, to which any Borrower is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.
1.128 Maximum Credit shall mean (a) prior to the repayment in full of the Existing Term Loan and all Obligations related thereto, the amount equal to $118,500,000, less the then outstanding principal amount of the Existing Term Loan, and (b) upon the repayment in full of the Existing Term Loan and all Obligations related thereto, the amount of $90,000,000.
1.129 Measurement Period shall mean the twelve-month period ending on the last day of any month in which EBITDA is to be measured, taken as a single accounting period.
1.130 Multiemployer Plan shall mean a multi-employer plan as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by any Borrower or any ERISA Affiliate.
1.131 Net Amount of Eligible Credit Card Receivables shall mean, the gross amount of the Eligible Credit Card Receivables less returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto.
1.132 Net Amount of Eligible Damaged Goods Vendors Receivables shall mean the gross amount of the Eligible Damaged Goods Vendors Receivables less returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto.
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1.133 Net Amount of Eligible Sell-Off Vendors Receivables shall mean, the gross amount of the Eligible Sell-Off Vendors Receivables less returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto.
1.134 Net Cash Proceeds shall mean the aggregate cash proceeds received by any Borrower or Guarantor (i) in respect of any sale, lease, transfer or other disposition of any assets or properties, or interest in assets and properties, in each case outside the ordinary course of business of such Borrower or Guarantor, or (ii) as proceeds of any loans or other financial accommodations provided to any Borrower or Guarantor (either of clause (i) or (ii) of this definition, a Specified Disposition), in each case net of (A) the reasonable costs relating to such Specified Disposition (including, without limitation, legal, accounting and investment banking fees, and sales commissions), (B) the portion of such proceeds deposited in an escrow account or otherwise required to be reserved pursuant to the purchase agreements related to such Specified Disposition for purchase price adjustments or indemnification payments payable by such Borrower or Guarantor to the purchaser thereof (but only until such time as such portion of such proceeds is received by such Borrower or Guarantor), (C) taxes paid or estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and (D) amounts applied to the repayment of Indebtedness secured by a valid and enforceable lien on the asset or assets that are the subject of such Specified Disposition required to be repaid in connection with such transaction. For purposes of this definition, a Specified Disposition described in clause (i) above shall exclude (x) sales, leases, transfers and other dispositions of Inventory permitted under Section 9.7(b)(vi) or Section 9.7(b)(x) hereof, and (y) sales and other dispositions of defective, obsolete, out-of-season or slow moving Inventory to a third-party off-price wholesaler, including Ben Elias and Value City, or any other Person engaged in substantially the same business as Ben Elias or Value City and permitted by Agent. Net Cash Proceeds shall exclude any non-cash proceeds received by any Borrower or Guarantor from any Specified Disposition, but shall include such proceeds when and as converted by any Borrower or Guarantor to cash or other immediately available funds.
1.135 Net Income shall mean, for any period, the net income (or loss) of the Borrowers and Obligors on a consolidated basis for such period taken as a single accounting period as determined in accordance with GAAP; provided, however, there shall be excluded therefrom (i) unrealized gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP and (ii) items classified as a cumulative effect of an accounting change or as extraordinary items, in accordance with GAAP; provided, further, for clarification purposes, stores openings and closings in ordinary course shall not be considered extraordinary for the purposes hereof.
1.136 Net Recovery Percentage shall mean the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the amount of the recovery in respect of the Inventory at such time a net orderly liquidation value basis as set forth in the most recent acceptable appraisal of Inventory received by Agent in accordance with Section 7.3 hereof, net of operating expenses, liquidation expenses and commissions, and (b) the denominator of which is the applicable Value of the aggregate amount of the Inventory subject to such appraisal.
1.137 Nevada Factoring shall mean Nevada Receivable Factoring, Inc., a Nevada
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corporation.
1.138 New Term Loan Agent shall mean Wachovia Bank, National Association, a national banking association, or such other financial institution reasonably acceptable to Agent, in its capacity as administrative agent acting for and on behalf of the New Term Loan Lenders pursuant to the New Term Loan Agreement and any replacement or successor agent thereunder.
1.139 New Term Loan Agreement shall mean a credit agreement among New Term Loan Agent, New Term Loan Lenders, Borrowers and Guarantors to evidence the terms and condition of the New Term Loan, as such agreement will exist upon the execution and delivery thereof, and as may be thereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.140 New Term Loan Documents shall mean, collectively, the following: (a) the New Term Loan Agreement and (b) all agreements, documents and instruments to be executed and delivered in connection therewith and related thereto, as such agreements, documents and instruments will exist upon the execution and delivery thereof, and as may be thereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.141 New Term Loan Intercreditor Agreement shall mean the intercreditor agreement to be executed and delivered between Agent and New Term Loan Agent, as acknowledged and agreed to by Borrowers and Guarantors, in connection with the New Term Loan, as such agreement will exist upon the execution and delivery thereof, and as may be thereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.142 New Term Loan Lenders shall mean, collectively, the financial institutions from time to time party to the New Term Loan Agreement as lenders, and their respective successors and assigns; each sometimes being referred to herein individually as a New Term Loan Lender.
1.143 New Term Loan shall mean the term loan made by New Term Loan Lenders to Borrowers on or after the date hereof pursuant to the New Term Loan Agreement.
1.144 Non-Borrower Receivables shall mean those receivables owned by World Bank, Nevada Factoring or any Person other than a Borrower, with respect to which the proceeds thereof are, at any time, in the possession of a Borrower or in a deposit account of a Borrower and such Borrower maintains possession or control of such proceeds for the benefit of World Bank, Nevada Factoring or any other such Person pursuant to the Private Label Credit Card Agreement or any other agreement.
1.145 Non-Consenting Lender shall have the meaning set forth in Section 11.3(d) hereof.
1.146 Non-Recourse Agreement shall mean that certain agreement dated as of November 27, 2002 and entered into by and among Lerner, Nevada Factoring and World Bank.
1.147 Non-Reserved LC Amount shall mean, as of any date of determination, seventy-five percent (75%) (or eighty percent (80%) during the Seasonal Advance Period) of the
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face amount of each Goods in Progress LC then outstanding.
1.148 Non-Seasonal Advance Period shall mean those periods during any calendar year other than the Seasonal Advance Period.
1.149 Notice of Default or Failure of Condition shall have the meaning set forth in Section 12.3(a) hereof.
1.150 NY&Co shall have the meaning set forth in the preamble hereto.
1.151 NY&Co Stock Pledge Agreement shall mean that certain Second Amended and Restated Stock Pledge Agreement, dated of even date herewith, by NY&Co in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, with respect to the pledge of 100% of the Capital Stock of Parent owned by NY&Co, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced.
1.152 Obligations shall mean the Existing Term Loan, any and all Revolving Loans, Letter of Credit Accommodations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any Borrower or any Guarantor to Agent or any Lender and/or any of their Affiliates, including all obligations arising under or in connection with Bank Products, whether consisting of principal, interest, charges, fees, costs and expenses, fees relating to Letters of Credit, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements, whether now existing or hereafter arising, in each case under this Agreement or the other Financing Agreements, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to any Borrower or any Guarantor or Obligor under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured.
1.153 Obligor shall mean any guarantor, endorser, acceptor, surety or other person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations (including, without limitation, Guarantors, other than Borrowers).
1.154 Parent shall have the meaning set forth in the preamble hereof.
1.155 Parent Stock Pledge Agreement shall mean that certain Second Amended and Restated Stock Pledge Agreement, dated of even date herewith, by Parent in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, with respect to the pledge of 100% of the Capital Stock of Lerner, Lernco and Nevada Factoring owned by Parent, as the same may be amended, modified or supplemented from time to time.
1.156 Participant shall mean any Person that acquires and holds a participation in the interest of any Lender in any of the Revolving Loans, Letter of Credit Accommodations or the Existing Term Loan in conformity with the provisions of Section 14.7 of this Agreement governing participations.
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1.157 Pension Plan shall mean a Plan that is subject to Title IV of ERISA.
1.158 Person or person shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.
1.159 Plan shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower or Guarantor or, solely with respect to an employee benefit plan subject to Title IV of ERISA, an ERISA Affiliate sponsors or to which it contributes, or a Multiemployer Plan.
1.160 Prime Rate shall mean the rate from time to time publicly announced by Wachovia Bank, National Association, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank.
1.161 Prime Rate Loans shall mean the Loans or any portion thereof on which interest is payable based on the Prime Rate in accordance with the terms thereof.
1.162 Priority Event shall mean the occurrence of any one or more of the following: (a) the occurrence and continuance of an Event of Default under Section 10.1(a)(i) hereof with respect to any Borrowers failure to pay any of the Obligations related to the Revolving Loans (including principal, interest, fees and expenses attributable thereto); (b) the occurrence and continuance of an Event of Default under Sections 10.1(g) or 10.1(h) hereof; or (c) the occurrence of any other Event of Default and the acceleration by Agent of the payment of all or a material portion of the Obligations related to the Revolving Loans.
1.163 Private Label Credit Card Agreement shall mean that certain Private Label Credit Card Program Agreement, dated as of August 8, 2002 as amended, and as may be further amended from time to time in accordance with the terms hereof, and entered into by and among Lerner, Nevada Factoring, and World Bank.
1.164 Private Label Credit Card Receivables shall mean those Accounts and other indebtedness owed to Lerner arising under Lerners private label credit card program and sold or otherwise assigned or transferred by Lerner to Nevada Factoring or World Bank, directly or indirectly.
1.165 Pro Rata Share shall mean:
(a) with respect to a Revolving Loan Lenders obligation to make Revolving Loans and right to receive payments relative thereto, the fraction (expressed as a percentage) the numerator of which is such Lenders Revolving Loan Commitment and the denominator of which is the aggregate amount of all of the Revolving Loan Commitments of all Revolving Loan Lenders; and
(b) with respect to all other matters (including the indemnification obligations arising under Section 12.5 hereof), the fraction (expressed as a percentage) the numerator of
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which is such Lenders Total Commitment and the denominator of which is the aggregate amount of all of the Total Commitments of all Lenders.
1.166 Provision for Taxes shall mean an amount equal to all taxes imposed on or measured by net income, whether Federal, State, Provincial, county or local, and whether foreign or domestic, that are paid or payable by any Person in respect of any period in accordance with GAAP.
1.167 Qualified Cash shall mean, as of any date of determination, the amount of cash carried by any Borrower on its balance sheet, other than cash in the Cash Collateral Account, cash constituting Eligible Cash Collateral or cash in any Blocked Account, which is in an account subject to a Deposit Account Control Agreement and with respect to which Agent has received statements of the available balances thereof from the bank or other financial institution at which such account is maintained which confirm such amounts.
1.168 Real Property shall mean all now owned and hereafter acquired real property of any Borrower and Guarantor, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located.
1.169 Receivables shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and Guarantor: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to such Borrower or Guarantor or otherwise in favor of or delivered to such Borrower or Guarantor in connection with any Account; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to such Borrower or Guarantor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by such Borrower or Guarantor or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated with any Accounts, Inventory or general intangibles of such Borrower or Guarantor (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to such Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to such Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which such Borrower or Guarantor is a beneficiary).
1.170 Records shall mean all of each Borrowers or Guarantors present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or
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on which the foregoing are stored (including any rights of such Borrower or Guarantor with respect to the foregoing maintained with or by any other person).
1.171 Reference Bank shall mean Wachovia Bank, National Association, or such other bank as Agent may from time to time designate.
1.172 Register shall have the meaning set forth in Section 14.7(b) hereof.
1.173 Renewal Date shall have the meaning set forth in Section 14.1(a) hereof.
1.174 Report or Reports shall have the meaning set forth in Section 12.10(a) hereof.
1.175 Required Lenders shall mean, at any time, those Lenders whose Pro Rata Shares aggregate sixty-six and two-thirds percent (66⅔%) or more of the aggregate of the Total Commitments of all Lenders.
1.176 Required Revolving Loan Lenders shall mean, at any time, those Revolving Loan Lenders whose Pro Rata Shares aggregate sixty-six and two-thirds percent (66⅔%) or more of the aggregate of the Revolving Loan Commitments of all Revolving Loan Lenders.
1.177 Reserves shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in good faith reducing the amount of Revolving Loans and Letter of Credit Accommodations which would otherwise be available to Borrowers under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in good faith, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral or any other property which is security for the Obligations or its value or (ii) the assets or business of any Borrower or any Obligor or (iii) the security interests and other rights of Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agents good faith belief that any collateral report or financial information furnished by or on behalf of any Borrower or any Obligor to Agent is or may have been incomplete, inaccurate or misleading in any material respect. To the extent Agent may decrease the lending formulas used to determine the Borrowing Base or establish new criteria or revise existing criteria for Eligible Sell-Off Vendors Receivables, Eligible Damaged Goods Vendors Receivables, Eligible Credit Card Receivables or Eligible Inventory so as to address any circumstances, condition, event or contingency in a manner satisfactory to Agent, Agent shall not establish a Reserve for the same purpose. The amount of any Reserve established by Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such reserve as determined by Agent in good faith. For purposes of this definition, and without limiting the foregoing, Reserves shall include: (u) the Total LC Reserve Amount, (v) the Gift Certificate and Store Credit Reserve, (w) such amounts, as determined by Agent, for amounts at any time due or to become past due in the good faith judgment of Agent to the owner, lessor or operator of any facility at which Eligible Inventory may be located with respect to which Agent has not received a Collateral Access Agreement, in form and substance satisfactory to Agent, provided that, with respect to facilities leased by a Borrower or Guarantor which are located in a jurisdiction which affords the lessor thereof a lien, or other such rights, on any of the Collateral for unpaid rent or other amounts, which lien may have priority over Agents liens on or rights to the Collateral,
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such amount shall equal three (3) months rent for such facility plus any amounts past due, (x) such amounts, as determined by Agent, for sales, excise or similar taxes that are (i) past due and (ii) not being contested in good faith and not subject to liens filed against any Borrower or Guarantor with respect thereto, (y) such amounts, as determined by Agent, for payments owed by any Borrower or Guarantor to bailees, customs brokers or freight forwarders for the services provided by such bailees, customs brokers or freight forwarders in an amount not to exceed $1,000,000, plus such freight, customs, taxes and duty and other amounts which Agent estimates must be paid upon the arrival and in connection with the delivery to a Borrowers location for Eligible Inventory within the United States of America of any Inventory ordered or purchased by any Borrower under a documentary Letter of Credit Accommodation or which constitutes any portion of the Borrowing Base, and (z) upon an Event of Default or if Borrowers Compliance Excess Availability is less than $10,000,000, such amounts, as determined by Agent, for Service Costs owed to Limited Brands, Inc. or any of its Affiliates and payable by any Borrower or any of their Affiliates arising from logistic or information technology services to be provided by Limited Brands, Inc. for the benefit of any Borrower or its Affiliates pursuant to the Transition Services Agreement in an amount not to exceed $1,000,000.
1.178 Revolving Loan Commitment shall mean, as to any Lender: (a) at any time prior to the termination of the Revolving Loan Commitments, the amount of such Lenders revolving loan commitment as set forth on Schedule 1.196 or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender under this Agreement, as such amount may be adjusted from time to time in accordance with the provisions of Section 14.7 hereof, and (b) after the termination of the Revolving Loan Commitments, the unpaid amount of Revolving Loans and Special Agent Advances made by such Lender and such Lenders interest in the outstanding Letter of Credit Accommodations, in each case as the same may be adjusted from time to time in accordance with the terms hereof.
1.179 Revolving Loan Credit Facility shall mean the Revolving Loans and Letter of Credit Accommodations provided to or for the benefit of Borrowers pursuant to the terms of this Agreement.
1.180 Revolving Loan Interest Rate shall mean:
(a) Subject to clause (b) of this definition below:
(i) as to Revolving Loans that are Prime Rate Loans, a rate equal to the Prime Rate plus the Applicable Margin for Prime Rate Loans,
(ii) as to Revolving Loans that are Eurodollar Rate Loans, a rate equal to the Adjusted Eurodollar Rate plus the Applicable Margin for Eurodollar Rate Loans (in each case, based on the Eurodollar Rate applicable for the Interest Period selected by Borrowers as in effect two (2) Business Days after the date of receipt by Agent of the request of or on behalf of Borrowers for such Eurodollar Rate Loans in accordance with the terms hereof, whether such rate is higher or lower than any rate previously quoted to Borrowers).
(b) Notwithstanding anything to the contrary contained in clause (a) of this definition, the Applicable Margin otherwise used to calculate the Interest Rate for Prime Rate
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Loans and Eurodollar Rate Loans shall be the percentage set forth in the definition of the term Applicable Margin for each category of Loans that is then applicable plus two (2.00%) percent per annum, at Agents option, or, upon the written direction of Required Revolving Loan Lenders (i) either (A) for the period from and after the effective date of termination or non-renewal hereof until such time as all Obligations are indefeasibly paid and satisfied in full in immediately available funds, or (B) for the period from and after the date of the occurrence of any Event of Default, and for so long as such Event of Default is continuing as determined by Agent and (ii) on the Revolving Loans at any time outstanding in excess of the Borrowing Base or the Revolving Loan Limit (whether or not such excess(es) arise or are made with or without Agents or any Lenders knowledge or consent and whether made before or after an Event of Default).
1.181 Revolving Loan Lender shall mean any Lender having a Revolving Loan Commitment.
1.182 Revolving Loan Limit shall mean $90,000,000 unless Borrowers shall have exercised their right to reduce such amount pursuant to Section 2.1(e) hereof, in which event Revolving Loan Limit shall mean such reduced amount.
1.183 Revolving Loans shall mean the loans now or hereafter made by or on behalf of any Revolving Loan Lender or by Agent for the account of any Revolving Loan Lender on a revolving basis (involving advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.184 Seasonal Advance Period shall mean the period commencing on May 1 and ending on November 30 of each calendar year.
1.185 Second Quarter-End shall mean the dates denoted as Second Quarter-End dates on Exhibit F hereto.
1.186 Service Costs shall have the meaning set forth in the Transition Services Agreement.
1.187 Settlement Period shall have the meaning set forth in Section 6.9(b) hereof.
1.188 Solvent shall mean, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability).
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1.189 Special Agent Advances shall have the meaning set forth in Section 12.11 hereof.
1.190 Specified Amounts shall have the meaning set forth in Section 6.4(b)(i) hereof.
1.191 Specified Excess Availability Amount shall mean (a) until such time as the Existing Term Loan and all Obligations related thereto are indefeasibly paid and satisfied in full in immediately available funds, the amount of $30,000,000, and (b) upon the indefeasible payment and satisfaction in full of the Existing Term Loan and all Obligations related thereto in immediately available funds, the amount of $20,000,000.
1.192 Stock Pledge Agreements shall mean, collectively, the NY&Co Stock Pledge Agreement, the Parent Stock Pledge Agreement, the Lerner Stock Pledge Agreement and any other stock pledge agreement at any time made in favor of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers, in connection with this Agreement.
1.193 Subsidiary or subsidiary shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.
1.194 Taxes shall have the meaning set forth in Section 6.4(d) hereof.
1.195 Third Quarter-End shall mean the dates denoted as Third Quarter-End dates on Exhibit F hereto.
1.196 Total Commitment shall mean, as to each Lender, the sum of such Lenders Revolving Loan Commitment, if any, plus such Lenders Existing Term Loan Commitment, if any, in each case as set forth on Schedule 1.196 hereto, or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender under this Agreement, as such amounts may be adjusted from time to time in accordance with the provisions of Section 14.7 hereof.
1.197 Total LC Reserve Amount shall mean, as of any date of determination, the aggregate amount of all LC Reserve Amounts for all Letter of Credit Accommodations then outstanding.
1.198 Transition Services Agreement shall mean collectively, those certain transition services agreements, dated as of November 27, 2002, and entered into by and among Seller, NY&Co and Lerner.
1.199 UCC shall mean the Uniform Commercial Code as in effect in the State of New York and any successor statute, as in effect from time to time (except that terms used herein
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which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agent may otherwise determine); provided, that, if, with respect to any financing statement or by reason of any provisions of law, the perfection or the effect of perfection or non-perfection of the security interests granted to the Agent pursuant to the applicable Financing Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than the State of New York, then UCC means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of each Financing Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.
1.200 Unused Line Fee shall have the meaning set forth in Section 3.2(a) hereof.
1.201 Value shall mean, as determined by Agent in good faith, with respect to Inventory, the lower of (a) cost computed on a specific identification basis in accordance with GAAP or (b) market value; provided, that, for purposes of the calculation of the Borrowing Base, (i) the Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the profit earned by a Borrower or any Affiliate of any Borrower on the sale thereof to any Borrower or (B) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be computed in the same manner and consistent with the most recent appraisal of the Inventory received and accepted by Agent prior to the date hereof, if any.
1.202 Voting Stock shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.
1.203 Wachovia shall mean Wachovia Bank, National Association, a national banking association, in its individual capacity, and its successors and assigns.
1.204 World Bank shall mean World Financial Network National Bank.
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faith that: (i) the number of days of the turnover of the Inventory for any period has adversely changed or (ii) the liquidation value of the Eligible Inventory, or any category thereof, has decreased, including any decrease attributable to a material change in the nature, quality or mix of the Inventory. The amount of any decrease in the lending formulas shall have a reasonable relationship to the event, condition or circumstance which is the basis for such decrease as determined by Agent in good faith. In determining whether to reduce the lending formula(s), Agent may consider events, conditions, contingencies or risks which are also considered in determining Eligible Sell-Off Vendors Receivables, Eligible Damaged Goods Vendors Receivables, Eligible Credit Card Receivables, Eligible Inventory or in establishing Reserves.
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generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed issuer of such Letter of Credit Accommodation refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit Accommodation; and (iii) after giving effect to the LC Reserve Amount applicable to such requested Letter of Credit Accommodation, the aggregate amount of the Obligations then outstanding would not exceed the Borrowing Base. Effective on the issuance of each Letter of Credit Accommodation, a Reserve shall be established in an amount equal to the LC Reserve Amount for such Letter of Credit Accommodation.
(g) At any time during an Availability Compliance Period, in connection with Inventory purchased pursuant to Letter of Credit Accommodations during such Availability Compliance Period, each Borrower and Guarantor shall, at Agents request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver them to Agent and/or subject to Agents order, and if they shall come into such Borrowers or Guarantors possession, to deliver them, upon Agents request, to Agent in their original form. Each Borrower and Guarantor shall also, at Agents request, designate Agent as the consignee on all bills of lading and other negotiable and non-negotiable documents.
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by such Borrower to Agent for the ratable benefit of Revolving Loan Lenders and to apply in all respects to such Borrower.
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unconditionally owing by Lerner and Lernco to Agent and Lenders, without offset, defense or counterclaim of any kind, nature and description whatsoever.
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money described in clause (a) of the definition of Indebtedness on or after the date hereof (which shall exclude for purposes of this Section 2.3(e) the Indebtedness permitted under Sections 9.9(e), (f), (g), (h) and (i) hereof), Borrowers shall, absolutely and unconditionally and without notice or demand, prepay the then outstanding principal amount of the Existing Term Loan in an amount equal to fifty (50%) percent of the amount by which such Net Cash Proceeds exceed $20,000,000; provided , that , in the event that all or a portion of the Net Cash Proceeds from the incurrence or issuance of such Indebtedness is used by Borrowers to build a distribution center, such prepayment shall be in an amount equal to fifty (50%) percent of the amount by which such Net Cash Proceeds exceed the sum of (x) the amount of such Net Cash Proceeds used by Borrowers to build such distribution center (up to $45,000,000), and (y) $20,000,000. Notwithstanding the foregoing, immediately upon the receipt by Borrowers of the Net Cash Proceeds from the New Term Loan, Borrowers shall, absolutely and unconditionally and without notice or demand, prepay in full the then outstanding balance of the Existing Term Loan and all Obligations related thereto.
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required to) request that the Agent provide or arrange for such Person to obtain Bank Products from Agent or its Affiliates, and Agent may, in its sole discretion, provide or arrange for such Person to obtain the requested Bank Products. Any Borrower or Guarantor that obtains Bank Products shall indemnify and hold Agent, each Lender and their respective Affiliates harmless from any and all obligations now or hereafter owing to any other Person by Agent or its Affiliates in connection with any Bank Products. Each Borrower and Guarantor acknowledges and agrees that the obtaining of Bank Products from the Agent and its Affiliates (a) is in the sole discretion of the Agent or such Affiliate, as the case may be, and (b) is subject to all rules and regulations of the Person that provides the Bank Product.
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market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate Loans.
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connection therewith, such documents where requested by Agent or its counsel to be certified by appropriate corporate officers or Governmental Authority;
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earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);
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Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and no Borrower or Guarantor shall be deemed to have granted a security interest in, (i) any personal and real property, fixtures and interests of such Borrower or Guarantor which are not assignable or are incapable of being encumbered as a matter of law, except for the products and proceeds thereof, (ii) such Borrowers or Guarantors rights or interests in any license, contract or agreement to which such Borrower or Guarantor is a party or any of its rights or interests thereunder to the extent, but only to the extent, that such a grant would, under the terms of such license, contract or agreement, applicable laws or otherwise, result in a breach of the terms of, or constitute a default under any license, contract or agreement to which such Borrower or Guarantor is a party (except for the products and proceeds thereof); provided, however, upon the
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ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and such Borrower or Guarantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect, and (iii) the Capital Stock of any Foreign Subsidiary to the extent that such Capital Stock constitutes more than sixty-five percent (65%) of the Voting Stock of all classes of the Capital Stock of such Foreign Subsidiary that are entitled to vote, except for the products and proceeds thereof. In addition, the Collateral shall exclude any rights to any Intellectual Property, License Agreements or software that would be rendered invalid or unenforceable under the terms thereof or under applicable laws by the grant of a security interest created pursuant to the terms of this Agreement, for as long as such prohibition or reason for invalidity exists, except for the products and proceeds thereof.
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or on behalf of such Borrower or Guarantor (including by any agent or representative), such Borrower or Guarantor shall deliver, or cause to be delivered to Agent, all tangible chattel paper and instruments that such Borrower or Guarantor has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify, in each case except as Agent may otherwise agree. At Agents option, such Borrower or Guarantor shall, or Agent may at any time on behalf of such Borrower or Guarantor, cause the originals of any such instruments and chattel paper that have a fair market value in excess of $100,000 individually or in the aggregate, to be conspicuously marked in a form and manner acceptable to Agent with the following legend referring to chattel paper or instruments as applicable: This [chattel paper][instrument] is subject to the security interest of Wachovia Bank, National Association, and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party.
(d) No Borrower or Guarantor has any deposit accounts as of the date hereof, except as set forth in such Borrowers or Guarantors Information Certificate. No Borrower or Guarantor shall, directly or indirectly, after the date hereof open, establish or maintain any Central Collection Deposit Account unless each of the following conditions is satisfied: (i) Agent shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity acceptable to Agent the name of the Central Collection Deposit Account, the owner of the Central Collection Deposit Account, the name and address of the bank at which such Central Collection Deposit Account is to be opened or established, the individual at such bank with whom such Borrower or Guarantor is dealing and the purpose of the Central Collection Deposit Account, (ii) the bank where such Central Collection Deposit Account is opened or maintained shall be reasonably acceptable to Agent, and (iii) on or before the opening of such Central Collection Deposit Account, such Borrower or Guarantor shall as Agent may specify either (A) deliver to Agent a Deposit Account Control Agreement with respect to such Central Collection Deposit Account duly authorized, executed and delivered by such Borrower or Guarantor and the bank at which such deposit account is opened and maintained or (B) arrange for Agent to become the customer of the bank with respect to the deposit account on terms and conditions reasonable acceptable to Agent. The terms of this subsection (d) shall not apply to deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of such Borrowers or Guarantors salaried employees. Agent shall not exercise its right to require
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amounts in such accounts to be sent to the Agent Payment Account except as provided by Section 6.3 hereof.
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a fair market value in excess of $100,000 are at any time after the date hereof in the custody, control or possession of any other person not referred to in a Borrowers or Guarantors Information Certificate or such carriers, such Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agents request, such Borrower or Guarantor shall deliver to Agent a Collateral Access Agreement duly authorized, executed and delivered by such person and such Borrower or Guarantor.
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Loans then outstanding (whether or not then due) until paid in full;
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and Revolving Loans shall receive payment in full of the Specified Amounts (but not the items excluded from Specified Amounts above) before any payment of the Existing Term Loan or any Obligations related to the Existing Term Loan; provided, that nothing herein shall prevent Agent or the Revolving Loans from recovering any default interest charged during the existence of an Event of Default from any Borrower or Guarantor not subject to an Insolvency Event, which amounts shall be payable to Agent and Revolving Loans before any payment of the Existing Term Loan or any Obligations related to the Existing Term Loan;
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Borrowers shall be liable to pay to Agent and Lenders, and do hereby indemnify and hold Agent and Lenders harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4(c) shall remain effective notwithstanding any contrary action which may be taken by Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4(c) shall survive the payment of the Obligations and the termination of this Agreement.
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amount of the requested Loan. Requests received after 12:00 p.m. New York time on any day shall be deemed to have been made as of the opening of business on the immediately following Business Day. All Loans under this Agreement shall be conclusively presumed to have been made to, and at the request of and for the benefit of, Borrowers or when deposited to the credit of any Borrower or otherwise disbursed or established in accordance with the instructions of Borrowers or in accordance with the terms and conditions of this Agreement.
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due hereunder or thereunder by Borrowers to such Lender than the percentage thereof received by any other Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a participation in the Loans or such other amounts, respectively, owing to such other Lenders (or such interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise agreed by Lenders. To such end all Lenders shall make appropriate adjustments among themselves (by the resale of participation sold or otherwise) if such payment is rescinded or must otherwise be restored.
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time, then such Lender shall make the settlement transfer described in this Section by no later than 3:00 p.m. New York time on the same Business Day and if received by a Lender after 12:00 p.m. New York time, then such Lender shall make the settlement transfer by no later than 3:00 p.m. New York time on the next Business Day following the date of receipt. If, as of the end of any Settlement Period, the amount of a Lenders Pro Rata Share of the outstanding Loans is more than such Lenders Pro Rata Share of the outstanding Loans as of the end of the previous Settlement Period, then such Lender shall forthwith (but in no event later than the time set forth in the preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of the increase. Alternatively, if the amount of a Lenders Pro Rata Share of the outstanding Loans in any Settlement Period is less than the amount of such Lenders Pro Rata Share of the outstanding Loans for the previous Settlement Period, then, if the summary statement is prepared and delivered to Lenders by Agent prior to 12:00 p.m. New York time, then Agent shall make the transfer described in this Section by no later than 3:00 p.m. New York time on the same Business Day and if prepared and delivered to Lenders by Agent after 12:00 p.m. New York time, then Agent shall make the transfer by no later than 3:00 p.m. New York time on the next Business Day following the date of receipt, by wire transfer in immediately available funds the amount of the decrease. The obligation of each of the Lenders and the Agent to transfer such funds and effect such settlement shall be irrevocable. Agent and each Lender agrees to mark its books and records at the end of each Settlement Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations. Each Lender shall only be entitled to receive interest on its Pro Rata Share of the Loans to the extent such Loans have been funded by such Lender. Because the Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and/or be repaid such Loans, interest with respect to Loans shall be allocated by Agent in accordance with the amount of Loans actually advanced by and repaid to each Lender and the Agent and shall accrue from and including the date such Loans are so advanced to but excluding the date such Loans are either repaid by Borrowers or actually settled with the applicable Lender as described in this Section.
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corresponding amount available to Borrowers and such corresponding amount is not in fact made available to Agent by such Lender, Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agents option based on the arithmetic mean determined by Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of Federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agents demand, at the highest interest rate provided for in Section 3.1 hereof applicable to such Loans. During the period in which such Lender has not paid such corresponding amount to Agent, notwithstanding anything to the contrary contained in this Agreement or any of the other Financing Agreements, the amount so advanced by Agent to or for the benefit of Borrowers shall, for all purposes hereof, be a Loan made by Agent for its own account. Upon any such failure by a Lender to pay Agent, Agent shall promptly thereafter notify Borrowers of such failure and Borrowers shall pay such corresponding amount to Agent for its own account within five (5) Business Days of Borrowers receipt of such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans made available by the Agent on such Lenders behalf, or any Lender who fails to pay any other amount owing by it to Agent, in each case within two (2) Business Days after the date such payment is due, is a Defaulting Lender. Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lenders benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, relend to Borrowers the amount of all such payments received or retained by it for the account of such Defaulting Lender. For purposes of voting or consenting to matters with respect to this Agreement and the other Financing Agreements and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a Lender and such Lenders Total Commitment shall be deemed to be zero (0). This Section shall remain effective with respect to a Defaulting Lender until such default is cured. The operation of this Section shall not be construed to increase or otherwise affect the Revolving Loan Commitment or Existing Term Loan Commitment of any Lender, or relieve or excuse the performance by any Borrower or any Obligor of their duties and obligations hereunder.
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necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.
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lessors of retail store locations, (b) copies of all bank statements, (c) copies of shipping and delivery documents, and (d) copies of purchase orders, invoices and delivery documents for Inventory and Equipment acquired by any Borrower or Guarantor;
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any account debtor, Credit Card Issuer or Credit Card Processor except in the ordinary course of such Borrowers or Guarantors business in accordance with the current practices of such Borrower or Guarantor as in effect on the date hereof. So long as an Event of Default exists or has occurred and is continuing, no Borrower or Guarantor shall, without the prior consent of Agent, settle, adjust or compromise any material claim, offset, counterclaim or dispute with any account debtor, Credit Card Issuer, Credit Card Processor. At any time that an Event of Default exists or has occurred and is continuing, Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors, Credit Card Issuers or Credit Card Processors or grant any credits, discounts or allowances.
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except for sales of Inventory in the ordinary course of such Borrowers or Guarantors business and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agents request, Borrowers and Guarantors shall, at their expense, no more than one (1) time in any twelve (12) month period, but at any time or times as Agent may request at Agents expense, or at any time or times as Agent may reasonably request at Borrowers expense during an Additional Appraisal/Field Exam Period, deliver or cause to be delivered to Agent written reports or appraisals as to the Inventory in form, scope and methodology acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent and upon which Agent and Lenders are expressly permitted to rely; (e) upon Agents request, Borrowers and Guarantors shall, at their expense, conduct through RGIS Inventory Specialists, Inc. or another inventory counting service acceptable to Agent, a physical count of the Inventory in form, scope and methodology acceptable to Agent no more than one (1) time in any twelve (12) month period, and at a time to coincide with Borrowers and or Guarantors physical count of the Inventory, so long as no Availability Compliance Period exists, the results of which shall be reported directly by such inventory counting service to Agent and Borrowers and Guarantors shall promptly deliver confirmation in a form reasonably satisfactory to Agent that appropriate adjustments have been made to the inventory records of Borrowers and Guarantors to reconcile the inventory count to Borrowers and Guarantors inventory records; (f) each Borrower and Guarantor shall produce, use, store and maintain the Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (g) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (h) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory; (i) no Borrower or Guarantor shall sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate such Borrower or Guarantor to repurchase such Inventory except for the right of return given to retail customers of any Borrower or Guarantor in the ordinary course of the business of such Borrower or Guarantor in accordance with the then current return policy of such Borrower; (j) each Borrower and Guarantor shall keep the Inventory in good and marketable condition; and (k) no Borrower or Guarantor shall, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by such Borrower or Guarantor to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval.
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Guarantors and not for personal, family, household or farming use; (e) Borrowers and Guarantors shall not remove any Equipment from the locations set forth or permitted herein, except to the extent necessary to have any Equipment repaired or maintained in the ordinary course of its business or to move Equipment directly from one location set forth or permitted herein to another such location and except for the movement of motor vehicles used by or for the benefit of Borrowers and Guarantors in the ordinary course of business; (f) the Equipment is now and shall remain personal property and Borrowers and Guarantors shall not permit any of the Equipment to be or become a part of or affixed to real property; and (g) Borrowers and Guarantors assume all responsibility and liability arising from the use of the Equipment.
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dispose of all mail addressed to such Borrower or Guarantor and handle and store all mail relating to the Collateral, (ix) do all acts and things which are necessary, in Agents determination, to fulfill such Borrowers or Guarantors obligations under this Agreement and the other Financing Agreements, (x) take control in any manner of any item of payment in respect of Receivables or constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or otherwise received by Agent or any Lender, (xi) have access to any lockbox or postal box into which remittances from account debtors or other obligors in respect of Receivables or other proceeds of Collateral are sent or received, (xii) endorse such Borrowers or Guarantors name upon any items of payment in respect of Receivables or constituting Collateral or otherwise received by Agent and any Lender and deposit the same in Agents account for application to the Obligations, (xiii) endorse such Borrowers or Guarantors name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Receivable or any goods pertaining thereto or any other Collateral, including any warehouse or other receipts, or bills of lading and other negotiable or non-negotiable documents, (xiv) clear Inventory the purchase of which was financed with Letter of Credit Accommodations through U.S. Customs or foreign export control authorities in such Borrowers or Guarantors name, Agents name or the name of Agents designee, and to sign and deliver to customs officials powers of attorney in such Borrowers or Guarantors own name for such purpose, and to complete in such Borrowers or Guarantors or Agents name, any order, sale or transaction, obtain the necessary documents in connection therewith and collect the proceeds thereof, and (xv) sign such Borrowers or Guarantors name on any verification of Receivables and notices thereof to account debtors or any secondary obligors or other obligors in respect thereof. Each Borrower and Guarantor hereby releases Agent and Lenders and their respective officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Agents or any Lenders own gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.
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Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letter of Credit Accommodations to Borrowers:
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appropriate documents (including UCC financing statements and filings with the U.S. Patent and Trademark Office and the U.S. Copyright Office), but only if and to the extent that a security interest may be so perfected under applicable laws, constitute valid and perfected first priority liens and security interests in and upon the Collateral subject only to the liens indicated on the Information Certificates and the other liens permitted under Section 9.8 hereof.
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of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any such Pension Plan.
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method, substance or other Intellectual Property or goods bearing or using any Intellectual Property presently contemplated to be sold by or employed by any Borrower or Guarantor infringes any patent, trademark, servicemark, tradename, copyright, license or other Intellectual Property owned by any other Person presently, (ii) and no claim or litigation is pending or threatened against or affecting any Borrower or Guarantor contesting its right to sell or use any such Intellectual Property. Each Borrowers and Guarantors Information Certificate sets forth all of the agreements of such Borrower or Guarantor pursuant to which such Borrower or Guarantor has a license or other right to use any material trademarks, logos, designs or other material Intellectual Property owned by another person as in effect on the date hereof and the dates of the expiration of such agreements (collectively, together with such agreements or other arrangements as may be entered into by any Borrower or Guarantor after the date hereof, collectively, the License Agreements and individually, a License Agreement). No trademark, servicemark, copyright or other Intellectual Property at any time used by any Borrower or Guarantor which is owned by another person, or owned by such Borrower or Guarantor subject to any security interest, lien, collateral assignment, pledge or other encumbrance in favor of any person other than Agent, is affixed to any Eligible Inventory, except (a) as set forth on such Borrowers or Guarantors Information Certificate, (b) to the extent permitted under the term of the License Agreements listed on such Borrowers or Guarantors Information Certificate, and (c) to the extent the sale of Inventory to which such Intellectual Property is affixed is permitted to be sold by such Borrower or Guarantor under applicable law (including the United States Copyright Act of 1976).
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transaction contemplated hereunder.
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such Borrower or Guarantor has entered into a Credit Card Agreement in accordance with Section 9.22 hereof. Each of the Credit Card Agreements constitutes the legal, valid and binding obligations of the Borrower or Guarantor that is party thereto and to the best of each Borrower and Guarantors knowledge, the other parties thereto, enforceable in accordance with their respective terms and is in full force and effect. Except as could not reasonably (i) be expected to have a Material Adverse Effect or (ii) result in the cessation of the transfer of payments under any Credit Card Agreement to the Blocked Accounts as required under this Agreement, no default or event of default, or act, condition or event which after notice or passage of time or both, would constitute a default or an event of default under any of the Credit Card Agreements exists or has occurred. The applicable Borrower and Guarantors and the other parties thereto have complied with all of the terms and conditions of the Credit Card Agreements to the extent necessary for such Borrower or Guarantor to be entitled to receive all payments thereunder which constitute proceeds of Eligible Credit Card Receivables. Borrowers and Guarantors have delivered, or caused to be delivered to Agent, true, correct and complete copies of all of the Credit Card Agreements.
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Agent or any Lender.
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and orders promulgated thereunder), all Federal, State and local statutes, regulations, rules and orders pertaining to sales of consumer goods (including, without limitation, the Consumer Products Safety Act of 1972, as amended, and the Federal Trade Commission Act of 1914, as amended, and all regulations, rules and orders promulgated thereunder) and all statutes, rules, regulations, orders, permits and stipulations relating to environmental pollution and employee health and safety, including all of the Environmental Laws.
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misconduct of Agent or any Lender. All representations, warranties and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.
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operations of Borrowers and Guarantors, and Borrowers and Guarantors shall notify their auditors and accountants that Agent is authorized to obtain such information directly from them. Without limiting the foregoing, Borrowers and Guarantors shall furnish or cause to be furnished to Agent, the following: (i) within thirty (30) days after the end of each fiscal month, monthly unaudited consolidated financial statements, and unaudited consolidating financial statements (including in each case balance sheets, statements of income and loss, statements of cash flow, and statements of shareholders equity), all in reasonable detail, fairly presenting the financial position and the results of the operations of NY&Co and its Subsidiaries as of the end of and through such fiscal month, certified to be correct by either the chief accounting officer or the or chief financial officer of each Borrower, subject to normal year-end adjustments and accompanied by a compliance certificate substantially in the form of Exhibit C hereto, along with a schedule in a form reasonably satisfactory to Agent of the calculations used in determining, as of the end of such month, whether Borrowers and Guarantors are in compliance with the covenants set forth in Sections 9.17 and 9.18 of this Agreement for such month, (ii) during any Availability Compliance Period or any Additional Appraisal/ Field Exam Period, on the last Business Day of any month therein, Borrowers will deliver to Agent a compliance report, in form and substance reasonably satisfactory to Agent, along with a schedule of the calculations used in determining, as of the end of such month and such other date determined by Borrowers in their sole discretion, whether either or both an Availability Compliance Period and an Additional Appraisal/Field Exam Period has ceased to exist, and (iii) without duplication within ninety (90) days after each Fiscal Year-End, audited consolidated financial statements and unaudited consolidating financial statements of NY&Co and its Subsidiaries (including in each case balance sheets, statements of income and loss, statements of cash flow, and statements of shareholders equity), and the accompanying notes thereto, all in reasonable detail, fairly presenting the financial position and the results of the operations of NY&Co and its Subsidiaries as of the Fiscal Year-End of and for such fiscal year, together with the unqualified opinion of independent certified public accountants with respect to the audited consolidated financial statements, which accountants shall be an independent accounting firm selected by NY&Co and reasonably acceptable to Agent, that such audited consolidated financial statements have been prepared in accordance with GAAP, and present fairly the results of operations and financial condition of NY&Co and its Subsidiaries as of the Fiscal Year-End then ended.
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securities exchange or the National Association of Securities Dealers, Inc. Borrowers shall, in addition to the foregoing, promptly after the sending of all material business reports which any Borrower or Guarantor sends to its stockholders generally furnish or cause to be furnished to Agent copies thereof.
(iii) a Guarantor may merge into or with or consolidate with a Borrower so long as (A) such Borrower is the surviving entity with respect thereto and continues to be an organization of the type, domiciled in the state and bearing the same corporate name as existed prior to such merger or consolidation, (B) no Default or Event of Default then exists or would occur, (C) no liens, other than those permitted under the terms of this Agreement with regard to a Borrower, on the assets of such Guarantor then exist, and (D) such Borrower would not, as a result of such transaction, be liable for any Indebtedness or other obligations of such Guarantor, other than Indebtedness or other obligations which are permitted under the terms of this Agreement with regard to a Borrower;
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exclusively and directly to the operations of such store; provided , that , as to each and all such sales and closings, on the date of, and after giving effect to, any such closing or sale, (A) the number of retail store locations closed or sold by such Borrower in any fiscal year minus the number of retail stores opened by such Borrower in such fiscal year, shall not exceed the amount equal to fifteen percent (15%) of the number of retail store locations of such Borrower as of the end of the immediately preceding fiscal year, (B) Agent shall have received not less than ten (10) Business Days prior written notice of such sale or closing, which notice shall set forth in reasonable detail satisfactory to Agent, the parties to such sale or other disposition, the assets to be sold or otherwise disposed of, the purchase price and the manner of payment thereof and such other information with respect thereto as Agent may request, (C) as of the date of such sale or other disposition and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (D) such sale shall be on commercially reasonable prices and terms in a bona fide arms length transaction, and (E) any and all proceeds payable or delivered to such Borrower or any Guarantor in respect of such sale or other disposition shall be paid or delivered, or caused to be paid or delivered, to Agent in accordance with the terms of this Agreement (except to the extent such proceeds reflect payment in respect of Indebtedness secured by a properly perfected first priority security interest in the assets sold, in which case, such proceeds shall be applied to such Indebtedness secured thereby),
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No Borrower or Guarantor shall, nor shall it permit any of its Subsidiaries to, create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets or properties, including the Collateral, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any security interest or lien with respect to any such assets or properties, except:
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interest in, any of the Collateral in an agreement, in form and substance satisfactory to Agent;
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amend, modify, alter or change the terms of such Indebtedness or any of the New Term Loan Documents in any manner prohibited by the New Term Loan Intercreditor Agreement; and
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by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to such Borrower or Guarantor in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person; provided, that, the original of any such stock or instrument evidencing such obligations shall be promptly delivered to Agent, upon Agents request, together with such stock power, assignment or endorsement by such Borrower or Guarantor as Agent may request;
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No Borrower or Guarantor shall, directly or indirectly, declare or pay any dividends on account of any shares of class of any Capital Stock of such Borrower or Guarantor now or hereafter outstanding, or set aside or otherwise deposit or invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock (or set aside or otherwise deposit or invest any sums for such purpose) for any consideration or apply or set apart any sum, or make any other distribution (by reduction of capital or otherwise) in respect of any such shares or agree to do any of the foregoing, except that:
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law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (c) not terminate any Pension Plan so as to incur any material liability to the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any non-exempt prohibited transaction which would be reasonably likely to subject any Borrower or Guarantor or any ERISA Affiliate to a material tax or penalty or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA; (e) make all required contributions to any Pension Plan under Section 302 of ERISA, Section 412 of the Code or the terms of such Pension Plan; (f) not allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any Pension Plan; or (g) allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any Pension Plan that is a single employer plan, which termination could result in any material liability to any Borrower or Guarantor.
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Availability of at least $7,500,000, subject to adjustment pursuant to Section 2.3(g) hereof.
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Agreement in the ordinary course of the business of such Borrower or Guarantor; provided, that, such Borrower or Guarantor shall give Agent not less than thirty (30) days prior written notice of its intention to so cancel, surrender and release any such material License Agreement, (iv) give Agent prompt written notice of any material License Agreement entered into by such Borrower or Guarantor after the date hereof, together with a true, correct and complete copy thereof and such other information with respect thereto as Agent may request (subject to any obligation of confidentiality contained therein), (v) give Agent prompt written notice of any notice of default sent to another party to a material License Agreement by such Borrower or Guarantor of any material breach of any obligation, or any default, by such party under any material License Agreement, and deliver to Agent (promptly upon the receipt thereof by such Borrower or Guarantor in the case of a notice to such Borrower or Guarantor and concurrently with the sending thereof in the case of a notice from such Borrower or Guarantor) a copy of each notice of default and every other notice and other communication received or delivered by such Borrower or Guarantor in connection with any material License Agreement which relates to the right of such Borrower or Guarantor to continue to use the property subject to such License Agreement, and (vi) furnish to Agent, promptly upon the request of Agent, such information and evidence as Agent may reasonably require from time to time concerning the observance, performance and compliance by such Borrower or Guarantor or the other party or parties thereto with the material terms, covenants or provisions of any material License Agreement.
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determine, in form and substance satisfactory to Agent and as to any provisions relating to specific state laws satisfactory to Agent and in form appropriate for recording in the real estate records of the jurisdiction in which such Real Property or other property is located granting to Agent a first and only lien and mortgage on and security interest in such Real Property, fixtures or other property (except as such Borrower or Guarantor would otherwise be permitted to incur hereunder or under its Guaranty, as applicable, or as otherwise consented to in writing by Agent ) and such other agreements, documents and instruments as Agent may reasonable require in connection therewith. Notwithstanding any provisions to the contrary herein, no Borrower or Guarantor shall be required to deliver to Agent a mortgage, deed of trust or deed to secure debt if the Real Property to be secured thereby is a leasehold interest, and the granting of such security interest is prohibited under the lease and the landlord has withheld its consent to such security interest. Except as provided in Section 9.8 hereof or if Agents prior written consent shall have been obtained, no Borrower shall grant to any Person other than Agent a lien on or security interest in the Real Property located on 466-472 53rd Street, Brooklyn, New York.
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suffer or refrain from doing anything, as a result of which there could be a default under or breach of any of the terms of any of the Credit Card Agreements and at all times maintain in full force and effect the Credit Card Agreements and not terminate, cancel, surrender, modify, amend, waive or release any of the Credit Card Agreements, or consent to or permit to occur any of the foregoing; except, that, any Borrower or Guarantor may terminate or cancel any of the Credit Card Agreements in the ordinary course of the business of such Borrower or Guarantor; provided, that, such Borrower or Guarantor shall give Agent not less than ten (10) Business Days prior written notice of its intention to so terminate or cancel any of the Credit Card Agreements; (c) not enter into any new Credit Card Agreements with any new Credit Card Issuer unless Agent shall have received not less than ten (10) Business Days prior written notice of the intention of such Borrower or Guarantor to enter into such agreement (together with such other information with respect thereto as Agent may request) and such Borrower or Guarantor delivers, or causes to be delivered to Agent, a Credit Card Acknowledgment in favor of Agent; (d) give Agent immediate written notice of any Credit Card Agreement entered into by such Borrower or Guarantor after the date hereof, together with a true, correct and complete copy thereof and such other information with respect thereto as Agent may reasonably request; (e) furnish to Agent, promptly upon the request of Agent, such information and evidence as Agent may require from time to time concerning the observance, performance and compliance by such Borrower or Guarantor or the other party or parties thereto with the terms, covenants or provisions of the Credit Card Agreements; and (f) not modify any instructions given by Agent to any Credit Card Issuer or Credit Card Processor provided for in any Credit Card Acknowledgement or otherwise direct the remittance of payments under any Credit Card Agreement to any account other than the Blocked Account.
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Credit Card Issuer or Credit Card Processor such that in the aggregate all of such funds in the reserve account, other amounts held as collateral and the amount of such letters of credit, guarantees, indemnities or similar instruments shall exceed an aggregate for Borrowers and Guarantors of $5,000,000 at any one time or (iv) debits or deducts any amounts from any deposit account of any Borrower or Guarantor;
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remedies and powers granted to Agent and Lenders hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in Agents discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by any Borrower or any Obligor of this Agreement or any of the other Financing Agreements. Subject to Section 12 hereof, Agent may, and at the direction of the Required Lenders shall, at any time or times, proceed directly against any Borrower or any Obligor to collect the Obligations without prior recourse to the Collateral.
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that Agent may exercise all rights and remedies provided to Agent under, and in accordance with, the terms of the Financing Agreements and applicable law (including, without limitation, with respect to the liens granted to Agent).
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license (exercisable upon the occurrence of and during the continuation of an Event of Default) without payment of royalty or other compensation to any Borrower or Guarantor, to use, assign, license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other Intellectual Property and general intangibles now owned or hereafter acquired by such Borrower, wherever the same maybe located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.
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matters shall be heard only in the courts described above (except that Agent and Lenders shall have the right to bring any action or proceeding against any Borrower or Guarantor or its or their property in the courts of any other jurisdiction which Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against any Borrower or Guarantor or its or their property).
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waivers and certifications set forth in this Section 11.1 and elsewhere herein and therein.
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above, in connection with any amendment, waiver, discharge or termination, in the event that any Lender whose consent thereto is required shall fail to consent or fail to consent in a timely manner (such Lender being referred to herein as a Non-Consenting Lender), but the consent of any other Lenders to such amendment, waiver, discharge or termination that is required is obtained, if any, then Wachovia shall have the right, but not the obligation, at any time thereafter, and upon the exercise by Wachovia of such right, such Non-Consenting Lender shall have the obligation, to sell, assign and transfer to Wachovia or such Eligible Transferee as Wachovia may specify, the Total Commitment of such Non-Consenting Lender and all rights and interests of such Non-Consenting Lender pursuant thereto. Wachovia shall provide the Non-Consenting Lender with prior written notice of its intent to exercise its right under this Section, which notice shall specify on the date on which such purchase and sale shall occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not executed by the Non-Consenting Lender), except that on the date of such purchase and sale, Wachovia, or such Eligible Transferee specified by Wachovia, shall pay to the Non-Consenting Lender the amount equal to: (i) the principal balance of the Loans held by the Non-Consenting Lender outstanding as of the close of business on the business day immediately preceding the effective date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Non-Consenting Lender to the effective date of the purchase, minus (iii) if such Non-Consenting Lender is a Revolving Loan Lender, the amount of any closing fee received by such Non-Consenting Lender in connection with the Existing Loan Agreement and any closing, consent or amendment fee received by such Non-Consenting Lender in connection with this Agreement, multiplied by the fraction, the numerator of which is the number of months remaining, in the then current term of the Revolving Loan Facility and the denominator of which is the total number of months in the then current term of the Revolving Loan Facility. Such purchase and sale shall be effective on the date of the payment of such amount to the Non-Consenting Lender and the Total Commitment of the Non-Consenting Lender shall terminate on such date.
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related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto, including amounts paid in settlement, court costs, and the fees and expenses of counsel except that no Borrower or Guarantor shall not have any obligation under this Section 11.5 to indemnify an Indemnitee with respect to a matter covered hereby resulting from the gross negligence or willful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of any Borrower or Guarantor as to any other Indemnitee). To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Borrowers and Guarantors shall pay the maximum portion which they are permitted to pay under applicable law to Agent and Lenders in satisfaction of indemnified matters under this Section. To the extent permitted by applicable law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or transaction contemplated hereby. All amounts due under this Section shall be payable upon demand. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.
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generally engage in any kind of business with any Borrower or Guarantor (and any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and Wachovia and its Affiliates may accept fees and other consideration from any Borrower or any Guarantor and any of its Subsidiaries and Affiliates for services in connection with this Agreement or otherwise without having to account for the same to Lenders.
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any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.
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day by each of the three leading brokers of Federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agents demand, at the highest Revolving Loan Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans.
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appropriate, in its discretion, given Agents own interest in the Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any other Lender.
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against the other Borrowers and Guarantors with respect to the Obligations until the Obligations are fully paid and finally discharged. Each Borrower and Guarantor also hereby waives any rights of recourse to or with respect to any asset of the other Borrowers and Guarantors until the Obligations are fully paid and finally discharged.
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hereby authorizes and empowers Agent and Lenders in their sole discretion, without any notice or demand to such Borrower or Guarantor whatsoever and without affecting the liability of such Borrower or Guarantor hereunder, to exercise any right or remedy which Agent or any Lender may have available to them against the other Borrowers and Guarantors.
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at any time upon ten (10) days prior written notice to Agent (which notice shall be irrevocable) and Agent may, at its option, and shall at the direction of Required Revolving Loan Lenders, terminate this Agreement at any time on or after the occurrence and during the continuance of an Event of Default, subject to any cure periods specified in Section 10.1 hereof. Upon the Renewal Date or any other effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations (other than contingent indemnification obligations and other contingent Obligations which expressly survive the termination of this Agreement and the other Financing Agreements) and shall furnish cash collateral to Agent (or at Agents option, a letter of credit issued for the account of Borrowers and at Borrowers expense, in form and substance satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts as Agent determines are reasonably necessary to secure Agent, Lenders and any Revolving Lender that is an issuing bank from loss, cost, damage or expense, including attorneys fees and expenses, in connection with any contingent Obligations, including issued and outstanding Letter of Credit Accommodations and checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final payment and any continuing obligations of Agent or any Lender pursuant to any Deposit Account Control Agreement. The amount of such cash collateral (or letter of credit, as Agent may determine) as to any Letter of Credit Accommodations shall be in the amount equal to one hundred five (105%) percent of the amount of the Letter of Credit Accommodations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of the letters of credit giving rise to such Letter of Credit Accommodations. Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in Federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Borrowers for such purpose. Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 12:00 noon, New York time.
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Agreement.
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of reference only and shall not affect the interpretation of this Agreement.
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If to any Borrower or Guarantor: |
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Lerner New York, Inc. |
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450 West 33rd Street |
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New York, NY 10001 |
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Attention: Chief Financial Officer |
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Telephone No.: (212) 884-2110 |
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Telecopy No.: (212) 884-2103 |
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with a copy to: |
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Kirkland & Ellis LLP |
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Citigroup Center |
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153 East 53rd Street |
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New York, NY 10022 |
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Attention: Binta Niambi Brown, Esq. |
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Telephone No.: (212) 446-4800 |
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Telecopy No.: (212) 446-4900 |
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If to Agent: |
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Wachovia Bank, National Association, as Agent |
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1133 Avenue of the Americas |
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New York, New York 10036 |
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Attention:Portfolio Manager-Lerner New York, Inc. |
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Telephone No.: (212) 545-4280 |
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Telecopy No.: (212) 545-4283 |
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held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.
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purposes of this Agreement. The Register and Lender Register shall be available for inspection by Borrowers and any Lender at any reasonable time and from time to time upon reasonable prior notice.
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to the other parties hereto for the performance of such obligations, and Borrowers, the other Lenders and Agent shall continue to deal solely and directly with such Lender in connection with such Lenders rights and obligations under this Agreement and the other Financing Agreements, (iii) the Participant shall not have any rights under this Agreement or any of the other Financing Agreements (the Participants rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by Borrowers or any Guarantor hereunder (including any amounts payable under Sections 3.3 or 6.4(d) hereof) shall be determined as if such Lender had not sold such participation.
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for, and the participation of relevant management in meetings and conference calls with, potential Lenders or Participants. Borrowers shall certify the correctness, completeness and accuracy, in all material respects, of all descriptions of Borrowers and their affairs provided, prepared or reviewed by Borrowers that are contained in any selling materials and all other information provided by it and included in such materials.
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Providers, and their respective officers, directors, agents and employees and their respective predecessors, successors and assigns harmless from all claims, demands, debts, sums of money, accounts, damages, judgments, financial obligations, actions, causes of action, suits at law or in equity, of any kind or nature whatsoever, whether or not now existing or known, which any Borrower, any Guarantor or their respective successors or assigns has had or may now or hereafter claim to have against Agent, any Lender, any Bank Product Provider or their respective officers, directors, agents and employees and their respective predecessors, successors and assigns in any way arising from or connected with the Existing Financing Agreements or the arrangements set forth therein or transactions thereunder up to and including the date hereof, except to the extent Borrowers shall notify Agent in writing of any specific exceptions to charges for interest, fees, costs and expenses set forth in the most recent monthly statement of Borrowers loan accounts sent by Agent to Borrowers prior to the date hereof pursuant to the Existing Financing Agreements within thirty (30) days after the date hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
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LERNER NEW YORK, INC. |
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/s/Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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LERNCO, INC. |
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President |
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President |
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NEW YORK & COMPANY, INC. |
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President, Chief Financial Officer and Secretary |
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NEVADA RECEIVABLE FACTORING, INC. |
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Title: |
Secretary |
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[SIGNATURES CONTINUED ON NEXT PAGE]
Signature Page
to Second Amended and
Restated Loan and Security Agreement
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
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LERNER NEW YORK HOLDING, INC. |
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By: |
/s/Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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LERNER NEW YORK GC, LLC |
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/s/Ronald W. Ristau |
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Title: |
President |
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ASSOCIATED
LERNER SHOPS OF
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/s/Ronald W. Ristau |
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Title: |
Secretary |
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AGENT |
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WACHOVIA
BANK, NATIONAL
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/s/ Larry Forte |
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Managing Director |
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[SIGNATURES CONTINUED ON NEXT PAGE]
Signature Page
to Second Amended and
Restated Loan and Security Agreement
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
LENDERS |
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WACHOVIA BANK, NATIONAL ASSOCIATION |
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/s/ Larry Forte |
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Managing Director |
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LASALLE
RETAIL FINANCE, a division of
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Signature Page
to Second Amended and
Restated Loan and Security Agreement
Exhibit 10.2
EXECUTION
SECOND AMENDED AND RESTATED GUARANTEE
THIS SECOND AMENDED AND RESTATED GUARANTEE (Guarantee), dated August 22, 2007, is made by New York & Company, Inc., a Delaware corporation (NY&Co), Lerner New York Holding, Inc., a Delaware corporation (Parent), Nevada Receivable Factoring, Inc., a Nevada corporation (Nevada Factoring) Associated Lerner Shops of America, Inc., a New York corporation (Associated Lerner), and Lerner New York GC, LLC, an Ohio limited liability company (Lerner GC and together with NY&Co, Parent, Nevada Factoring and Associated Lerner, collectively, Guarantors and each a Guarantor) each having an address at 450 West 33 rd Street, New York, New York 10001, in favor of Wachovia Bank, National Association, a national banking association, in its capacity as agent for the Lenders and the Bank Product Providers (in such capacity, Agent), having an office at 1133 Avenue of the Americas, New York, New York 10036.
W I T N E S S E T H :
WHEREAS, NY&Co previously guaranteed the obligations of Lerner New York, Inc. (Lerner and together with Lernco, Inc. (Lernco) pursuant to the Amended and Restated Guaranty and Security Agreement, dated as of March 16, 2004, by and between NY&Co and Agent (as in effect on the date hereof, the Existing Guaranty).
WHEREAS, Lerner, Lernco and Jasmine Company, Inc. (Jasmine and together with Lerner and Lernco, each individually a Borrower and collectively, Borrowers), Agent and the persons from time to time party to the Loan Agreement (as hereinafter defined) as lenders (collectively, Lenders), have amended and restated or are about to amend and restate the existing financing arrangements of Agent and Lenders. Borrowers and Guarantors pursuant to which Lenders (or Agent on behalf of Lenders) may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated as of the date hereof, by and among Agent, Lenders, Borrowers and Guarantors (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the Loan Agreement) and other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Guarantee (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the Financing Agreements).
WHEREAS, in order to induce Agent and the Lenders to enter into the Loan Agreement and to continue to make loans and other credit accommodations under the Loan Agreement, Guarantors desire to amend and restate the Existing Guaranty in its entirety as set forth herein.
WHEREAS, due to the close business and financial relationships between Borrowers and each Guarantor, in consideration of the benefits which will accrue to each Guarantor and as an inducement for and in consideration of Lenders (or Agent on behalf of Lenders) making loans and advances and providing other financial accommodations to Borrowers pursuant to the Loan Agreement and the other Financing Agreements each Guarantor has agreed to guarantee the payment and performance of the Guaranteed Obligations (as hereinafter defined) on the terms set
forth herein;
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby jointly and severally agrees in favor of Agent and Lenders as follows:
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If to a Guarantor: |
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Lerner New York Holding, Inc. |
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450 West 33 rd Street |
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New York, New York 10001 |
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Attention: Chief Financial Officer |
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Telephone No.: (212) 884-2110 |
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Telecopy No.: (212) 884-2103 |
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If to Agent and Lender: |
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Wachovia Bank, National Association, as Agent |
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1133 Avenue of the Americas |
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New York, New York 10036 |
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Attention: Portfolio Manager |
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Telephone No.: (212) 545-4280 |
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[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Guarantor has executed and delivered this Guarantee as of the day and year first above written.
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NEW YORK & COMPANY, INC. |
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By: |
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/s/ Ronald Ristau |
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Title: |
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President, Chief Financial Officer and Secretary |
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NEVADA RECEIVABLE FACTORING, INC. |
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By: |
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/s/ Ronald Ristau |
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Title: |
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Secretary |
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LERNER NEW YORK HOLDING, INC. |
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By: |
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/s/ Ronald Ristau |
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Title: |
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President, Chief Financial Officer and Secretary |
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LERNER NEW YORK GC, LLC |
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By: |
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/s/ Ronald Ristau |
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Title: |
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President |
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ASSOCIATED LERNER SHOPS OF AMERICA, INC. |
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By: |
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/s/ Ronald Ristau |
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Title: |
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Secretary |
[SIGNATURES CONTINUE ON NEXT PAGE]
11
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
ACKNOWLEDGED AND AGREED:
WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent
By: |
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/s/ Laurence Forte |
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Name: |
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Laurence Forte |
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Title: |
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Managing Director |
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12
Exhibit 10.3
Executed
SECOND AMENDED AND
RESTATED
COLLATERAL ASSIGNMENT OF TRADEMARKS
(SECURITY AGREEMENT)
THIS SECOND AMENDED AND RESTATED COLLATERAL ASSIGNMENT OF TRADEMARKS (SECURITY AGREEMENT) (this Agreement ), dated August 22, 2007, is made among LERNCO, INC., a Delaware corporation (Lernco), and Jasmine Company, Inc., a Massachusetts corporation (Jasmine and together with Lernco, each individually a Pledgeor and collectively, Pledgors ), each with offices at 450 West 33 rd Street, New York, New York 10001, in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, with an office at 1133 Avenue of the Americas, New York, New York 10036, in its capacity as agent (in such capacity, Pledgee ), for the Lenders and Bank Product Providers (as defined in the Loan Agreement).
W I T N E S S E T H :
WHEREAS, Lernco has previously entered into the Amended and Restated Collateral Assignment of Trademarks (Security Agreement), dated as of March 16, 2004 (the Existing Security Agreement ), in order to further evidence Lerncos grant in favor of Pledgee, of a security interest in the Trademarks (as defined herein) and the goodwill and certain other assets with respect to the Trademarks, as further set forth therein.
WHEREAS, Pledgee, Pledgors, Lerner New York, Inc. ( Lerner and together with Pledgors, collectively, Borrowers), Guarantors, and the Persons from time to time party thereto as lenders ( Lenders ), have amended and restated or are about to amend and restate the existing financing arrangements of Pledgee, Lenders, Borrowers and Guarantors pursuant to which Lenders (or Pledgee on behalf of Lenders) may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated as of the date hereof, by and among Pledgee, Lenders, Borrowers and Guarantors (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the Loan Agreement ) and other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Guarantee (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the Financing Agreements ).
WHEREAS, Lernco owns all right, title, and interest in and to, among other things, all the trademarks, United States trademarks and trademark registrations, and the trademark applications and tradenames, set forth on Exhibit A-1 hereto (the Lernco Trademarks ) and Jasmine owns all right, title, and interest in and to, among other things, all the trademarks, United States trademarks and trademark registrations, and the trademark applications and tradenames, set forth on Exhibit A-2 hereto (the Jasmine Trademarks , and collectively, together with the Lernco Trademarks, the Trademarks); and
WHEREAS, in furtherance of the terms of the Financing Agreements and in consideration of Pledgee and the Lenders entering into the Loan Agreement, Pledgors and Pledgee wish to amend and restate the Existing Security Agreement.
NOW THEREFORE, for valuable consideration received and to be received, and as security for the full payment and performance of the Obligations (as defined in the Loan Agreement) arising from the Loan Agreement, and to induce Pledgee and the Lenders to make and continue to make loans and advances to the Borrowers under the Loan Agreement, Pledgors and Pledgee hereby amend and restate the Existing Security Agreement in its entirety as set forth in this Agreement and Pledgors hereby grant to Pledgee, for itself and the ratable benefit of the Lenders and Bank Product Providers, a security interest in:
All of the foregoing items set forth in clauses (a) through (h) are hereinafter referred to collectively as the Collateral .
AND Pledgors hereby covenants with Pledgee as follows:
1. Pledgors Obligations . Each Pledgor agrees that, notwithstanding this Agreement, it will perform and discharge and remain liable for all its covenants, duties, and obligations arising in connection with the Collateral and any licenses and agreements related thereto. Pledgee shall have no obligation or liability in connection with the Collateral or any licenses or
2
agreements relating thereto by reason of this Agreement or any payment received by Pledgee or any Lender relating to the Collateral, nor shall Pledgee or any Lender be required to perform any covenant, duty, or obligation of each Pledgor arising in connection with the Collateral or any license or agreement related thereto or to take any other action regarding the Collateral or any such licenses or agreement.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above.
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PLEDGORS |
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LERNCO, INC., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President |
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JASMINE COMPANY, INC., |
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a Massachusetts corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President |
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PLEDGEE |
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WACHOVIA BANK, NATIONAL ASSOCIATION, as |
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Agent |
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By: |
/s/ Laurence Forte |
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Name: |
Laurence Forte |
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Title: |
Managing Director |
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Exhibit 10.4
[Execution]
AMENDED AND RESTATED
COLLATERAL ASSIGNMENT OF
TRADEMARKS
(SECURITY AGREEMENT)
THIS AMENDED AND RESTATED COLLATERAL ASSIGNMENT OF TRADEMARKS (SECURITY AGREEMENT) (this Agreement ), dated August 22, 2007, is made among LERNER NEW YORK, INC., a Delaware corporation ( Pledgor ), with an office at 450 West 33 rd Street, New York, New York 10001, in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, with an office at 1133 Avenue of the Americas, New York, New York 10036, in its capacity as agent (in such capacity, Pledgee ), for the Lenders and Bank Product Providers (as defined in the Loan Agreement).
W I T N E S S E T H :
WHEREAS, Pledgor has previously entered into the Collateral Assignment of Trademarks (Security Agreement), dated as of November 27, 2002 (the Existing Security Agreement ), in order to further evidence Pledgors grant in favor of Pledgee, of a security interest in the Trademarks (as defined herein) and the goodwill and certain other assets with respect to the Trademarks, as further set forth therein.
WHEREAS, Pledgee, Pledgor, Lernco, Inc. ( Lernco ) and Jasmine Company, Inc. ( Jasmine and together with Pledgor, and Lernco, collectively, Borrowers), Guarantors, and the Persons from time to time party thereto as lenders ( Lenders ), have amended and restated or are about to amend and restate the existing financing arrangements of Pledgee, Lenders, Borrowers and Guarantors pursuant to which Lenders (or Pledgee on behalf of Lenders) may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated as of the date hereof, by and among Pledgee, Lenders, Borrowers and Guarantors (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the Loan Agreement ) and other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Guarantee (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the Financing Agreements ).
WHEREAS, Pledgor owns all right, title, and interest in and to, among other things, all the trademarks, United States trademarks and trademark registrations, and the trademark applications and tradenames, set forth on Exhibit A hereto (the Trademarks ); and
WHEREAS, in furtherance of the terms of the Financing Agreements and in consideration of Agent and the Lenders entering into the Loan Agreement, Pledgor and Pledgee wish to amend and restate the Existing Security Agreement.
NOW THEREFORE, for valuable consideration received and to be received, and as security for the full payment and performance of the Obligations (as defined in the Loan Agreement) arising from the Loan Agreement, and to induce Pledgee and the Lenders to make and continue to make loans and advances to the Borrowers under the Loan Agreement, Pledgor and Pledgee hereby amend and restate the Existing Security Agreement in its entirety as set forth in this Agreement and Pledgor hereby grants to Pledgee, for itself and the ratable benefit of the Lenders and Bank Product Providers, a security interest in:
All of the foregoing items set forth in clauses (a) through (h) are hereinafter referred to collectively as the Collateral .
AND Pledgor hereby covenants with Pledgee as follows:
1. Pledgors Obligations . Pledgor agrees that, notwithstanding this Agreement, it will perform and discharge and remain liable for all its covenants, duties, and obligations arising in connection with the Collateral and any licenses and agreements related thereto. Pledgee shall have no obligation or liability in connection with the Collateral or any licenses or agreements relating thereto by reason of this Agreement or any payment received by Pledgee or any Lender relating to the Collateral, nor shall Pledgee or any Lender be required to perform any covenant, duty, or obligation of Pledgor arising in connection with the Collateral or any license or
2
agreement related thereto or to take any other action regarding the Collateral or any such licenses or agreement.
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6
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above.
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PLEDGORS |
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LERNER NEW YORK, INC., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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PLEDGEE |
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WACHOVIA BANK, NATIONAL ASSOCIATION, as |
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Agent |
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By: |
/s/ Laurence Forte |
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Name: |
Laurence Forte |
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Title: |
Managing Director |
Exhibit 10.5
EXECUTED VERSION
SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
THIS SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this Agreement ), dated as of August 22, 2007, is entered into by and between LERNER NEW YORK, INC., a Delaware corporation ( Pledgor ), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent (in such capacity, Pledgee) for the Lenders (as hereinafter defined) and Bank Product Providers (as defined in the Loan Agreement).
RECITALS
WHEREAS, Pledgor and Pledgee entered into the Amended and Restated Stock Pledge Agreement, dated as of March 16, 2004, as in effect on the date hereof (the Existing Pledge Agreement ) and the other agreements, documents and instruments executed or delivered in connection therewith as heretofore amended (the Existing Financing Agreements ).
WHEREAS, Pledgor owns one hundred percent (100%) of the issued and outstanding Capital Stock (as defined in the Loan Agreement) of each of Associated Lerner Shops of America, Inc., a New York corporation ( Associated Lerner ), Lerner New York GC, LLC, an Ohio limited liability company ( Lerner GC ), and Jasmine Company, Inc., a Massachusetts corporation (Jasmine, and together with Lerner GC, Associated Lerner, each a Company and collectively, the Companies ), and may from time to time in the future, subject to the terms and conditions set forth in the Financing Agreements, acquire one or more additional Subsidiaries (as defined in the Loan Agreement) ( Future Subsidiaries ).
WHEREAS, Pledgor, Jasmine, and Lernco, Inc. (Lernco and together with Pledgor and Jasmine, each individually a Borrower and collectively Borrowers), Pledgee and the persons from time to time party to the Loan Agreement (as hereinafter defined) as lenders (collectively, Lenders ), have amended and restated or are about to amend and restate the existing financing arrangements of Pledgee, Lenders, Borrowers and Guarantors pursuant to which Lenders (or Pledgee on behalf of Lenders) may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated as of the date hereof, by and among Pledgee, Lenders, Borrowers and Guarantors (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the Loan Agreement ) and other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Agreement (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the Financing Agreements ).
WHEREAS, Pledgor desires to pledge to Pledgee, for its benefit and the ratable benefit of the Lenders and Bank Product Providers (as defined in the Loan Agreement), a continuing security interest in all of the Capital Stock of the Companies, any and all of the Future Subsidiaries organized under the laws of any jurisdiction within the United States of America ( Domestic Future Subsidiaries ) and 65% of the Capital Stock of all Future Subsidiaries
organized under the laws of any jurisdiction outside of the United States of America ( Foreign Future Subsidiaries ), in each case as collateral security for the Obligations (as defined below).
WHEREAS, in order to induce Pledgee and the Lenders to enter into the Loan Agreement, Pledgor and Pledgee desire to amend and restate the Existing Pledge Agreement in its entirety as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing facts the parties hereto agree as follows:
2
3
4
Notwithstanding any such circumstances, Pledgor acknowledges and agrees that such compliance shall not result in any such private sale for such reason alone being deemed to have been made in a commercially unreasonable manner. Pledgee shall not be liable or accountable to Pledgor for any discount allowed by reason of the fact that the Collateral is sold in compliance with any such limitation or restriction. Pledgee shall not be under any obligation to delay a sale of any of the Collateral for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the federal securities laws, or under applicable state securities laws, even if the issuer desires, requests or would agree to do so.
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7
IN WITNESS WHEREOF, this Agreement is executed as of the date first written above.
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Pledgor |
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LERNER NEW YORK, INC., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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Pledgee |
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WACHOVIA BANK, NATIONAL |
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ASSOCIATION, as Agent |
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By: |
/s/ Laurence Forte |
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Name: |
Laurence Forte |
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Title: |
Managing Director |
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8
Exhibit 10.6
EXECUTED VERSION
SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
THIS SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this Agreement ), dated as of August 22, 2007, is entered into by and between LERNER NEW YORK HOLDING, INC., a Delaware corporation ( Pledgor ), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent (in such capacity, Pledgee ) for the Lenders (as hereinafter defined) and Bank Product Providers (as defined in the Loan Agreement).
RECITALS
WHEREAS, Pledgor and Pledgee entered into the Amended and Restated Stock Pledge Agreement, dated as of March 16, 2004, as in effect on the date hereof (the Existing Pledge Agreement ) and the other agreements, documents and instruments executed or delivered in connection therewith as heretofore amended (the Existing Financing Agreements ).
WHEREAS, Pledgor owns one hundred percent (100%) of the issued and outstanding Capital Stock (as defined in the Loan Agreement) of Lerner New York, Inc., Lerner, Inc. and Nevada Receivable Factoring, Inc. (each a Company and collectively, the Companies ), and may from time to time in the future, subject to the terms and conditions set forth in the Financing Agreements, acquire one or more additional Subsidiaries (as defined in the Loan Agreement) ( Future Subsidiaries ).
WHEREAS, the Company, Jasmine Company, Inc., and Lernco, Inc. (each individually a Borrower and collectively Borrowers), Pledgee and the persons from time to time party to the Loan Agreement (as hereinafter defined) as lenders (collectively, Lenders ), have amended and restated or are about to amend and restate the existing financing arrangements of Pledgee, Lenders, Borrowers and Guarantors pursuant to which Lenders (or Pledgee on behalf of Lenders) may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated as of the date hereof, by and among Pledgee, Lenders, Borrowers and Guarantors (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the Loan Agreement ) and other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Agreement (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the Financing Agreements ).
WHEREAS, Pledgor desires to pledge to Pledgee, for its benefit and the ratable benefit of the Lenders and Bank Product Providers (as defined in the Loan Agreement), a continuing security interest in all of the Capital Stock of the Companies, any and all of the Future Subsidiaries organized under the laws of any jurisdiction within the United States of America ( Domestic Future Subsidiaries ) and 65% of the Capital Stock of all Future Subsidiaries organized under the laws of any jurisdiction outside of the United States of America ( Foreign Future Subsidiaries ), in each case as collateral security for the Obligations (as defined below).
WHEREAS, in order to induce Pledgee and the Lenders to enter into the Loan Agreement, Pledgor and Pledgee desire to amend and restate the Existing Pledge Agreement in its entirety as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing facts the parties hereto agree as follows:
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IN WITNESS WHEREOF, this Agreement is executed as of the date first written above.
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Pledgor |
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Lerner New York Holding, Inc., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Pledgee |
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WACHOVIA BANK, NATIONAL |
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ASSOCIATION, as Agent |
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Managing Director |
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8
Exhibit 10.7
EXECUTED VERSION
SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
THIS SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this Agreement ), dated as of August 22, 2007, is entered into by and between NEW YORK & COMPANY, INC., a Delaware corporation ( Pledgor ), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent (in such capacity, Pledgee) for the Lenders (as hereinafter defined) and Bank Product Providers (as defined in the Loan Agreement).
RECITALS
WHEREAS, Pledgor and Pledgee entered into the Amended and Restated Stock Pledge Agreement, dated as of March 16, 2004, as in effect on the date hereof (the Existing Pledge Agreement ) and the other agreements, documents and instruments executed or delivered in connection therewith as heretofore amended (the Existing Financing Agreements ).
WHEREAS, Pledgor owns one hundred percent (100%) of the issued and outstanding Capital Stock (as defined in the Loan Agreement) of Lerner New York Holding, Inc. (the Company ), and may from time to time in the future, subject to the terms and conditions set forth in the Financing Agreements, acquire one or more additional Subsidiaries (as defined in the Loan Agreement) ( Future Subsidiaries ).
WHEREAS, Lerner New York, Inc., Jasmine Company, Inc., and Lernco, Inc. (each individually a Borrower and collectively Borrowers), Pledgee and the persons from time to time party to the Loan Agreement (as hereinafter defined) as lenders (collectively, Lenders ), have amended and restated or are about to amend and restate the existing financing arrangements of Agent, Lenders, Borrowers and Guarantors pursuant to which Lenders (or Pledgee on behalf of Lenders) may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated as of the date hereof, by and among Pledgee, Lenders, Borrowers and Guarantors (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the Loan Agreement ) and other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Agreement (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the Financing Agreements ).
WHEREAS, Pledgor desires to pledge to Pledgee, for its benefit and the ratable benefit of the Lenders and Bank Product Providers (as defined in the Loan Agreement), a continuing security interest in all of the Capital Stock of the Company, any and all of the Future Subsidiaries organized under the laws of any jurisdiction within the United States of America ( Domestic Future Subsidiaries ) and 65% of the Capital Stock of all Future Subsidiaries organized under the laws of any jurisdiction outside of the United States of America ( Foreign Future Subsidiaries ), in each case as collateral security for the Obligations (as defined below).
WHEREAS, in order to induce Pledgee and the Lenders to enter into the Loan Agreement, Pledgor and Pledgee desire to amend and restate the Existing Pledge Agreement in its entirety as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing facts the parties hereto agree as follows:
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IN WITNESS WHEREOF, this Agreement is executed as of the date first written above.
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Pledgor |
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NEW YORK & COMPANY, INC., |
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a Delaware corporation |
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By: |
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/s/ Ronald W. Ristau |
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Name: |
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Ronald W. Ristau |
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Title: |
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President, Chief Financial Officer and Secretary |
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Pledgee |
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WACHOVIA BANK, NATIONAL
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/s/ Laurence Forte |
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Laurence Forte |
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Managing Director |
8
Exhibit 10.8
SECOND AMENDED AND RESTATED INTERCOMPANY
SUBORDINATION
AGREEMENT
THIS SECOND AMENDED AND RESTATED INTERCOMPANY SUBORDINATION AGREEMENT (this Agreement ), dated as of August 22, 2007, is made among the Obligors (as defined below), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as agent (in such capacity, Agent ) for the Lenders (as defined below) and Bank Product Providers (as defined in the Loan Agreement (as defined below)).
WHEREAS, Lerner New York, Inc. ( Lerner ), Lernco, Inc. ( Lernco ), NY & Co. Group, Inc. ( NY&Co ), Lerner New York Holdings, Inc. ( Parent ), Nevada Receivable Factoring, Inc. ( Nevada Factoring ), Jasmine Company, Inc. ( Jasmine ), Associated Lerner Shops of America, Inc. ( Associated Lerner ) and Lerner New York GC, LLC ( Lerner GC and together with Lerner, Lernco, NY&Co, Parent, Nevada Factoring, Jasmine, Associated Lerner and any other Borrower, or Guarantor or Obligor under the Loan Agreement (as defined below), Obligors and each an Obligor ), and Agent have previously entered into the Amended and Restated Intercompany Subordination Agreement, dated March 16, 2004 (the Existing Intercompany Agreement ).
WHEREAS, Lerner, Lernco and Jasmine (each a Borrower and collectively, Borrowers ), Agent and the persons from time to time party to the Loan Agreement (as hereinafter defined) as lenders (collectively, Lenders ), have amended and restated or are about to amend and restate the existing financing arrangements of Agent, Lenders, Borrowers and Guarantors pursuant to which Lenders (or Agent on behalf of Lenders) may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated as of the date hereof, by and among Agent, Lenders, Borrowers and Guarantors (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the Loan Agreement ) and other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Agreement (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the Financing Agreements );
WHEREAS, the Obligors, other than Borrowers, have each entered into a Second Amended and Restated Guarantee, dated as of the date hereof (as amended, modified, supplemented, renewed, extended, or replaced from time to time, the Guarantees and each a Guarantee );
WHEREAS, the Obligors have or may from time to time enter into certain transactions with one another pursuant to which certain sums are or may be owing from one Obligor to another;
WHEREAS, in connection with the Loan Agreement and in order to induce Agent and the Lenders to enter into the Loan Agreement, Agent and the Obligors now wish to amend and
restate the Existing Intercompany Agreement, in its entirety, on the terms and conditions set forth herein in order to subordinate all such intercompany indebtedness upon the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions, representations, and warranties set forth herein and for other good and valuable consideration, the parties hereto agree as follows:
Agent has the meaning set forth in the preamble to this Agreement.
Agreement has the meaning set forth in the preamble to this Agreement.
Insolvency Event has the meaning set forth in Section 3 .
Lenders has the meaning set forth in the recitals to this Agreement.
Obligors has the meaning set forth in the recitals to this Agreement.
Senior Debt means the Obligations and other indebtedness and liabilities of the Borrowers to Agent or the Lenders under or in connection with the Loan Agreement, the Guaranteed Obligations and other indebtedness and liabilities of the Guarantors under or in connection with the Guarantees and all other indebtedness and liabilities of any Obligor to Agent or the Lenders under or in connection with any other Financing Agreements, including all unpaid principal of the Loans, all interest accrued thereon (including all interest that, but for the provisions of the United States Bankruptcy Code, would have accrued), all fees due under the Loan Agreement and the other Financing Agreements (including all fees that, but for the provisions of the United States Bankruptcy Code, would have accrued), and all other amounts payable by the Obligors, or any of them, to Agent or the Lenders thereunder or in connection therewith, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined.
Subordinated Debt means, with respect to each Obligor, all indebtedness, liabilities, and other obligations of any other Obligor owing to such Obligor in respect of any and all loans or advances made by such Obligor to such other Obligor whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including all fees and all other amounts payable by any other Obligor to such Obligor under or in connection with any documents or instruments related thereto.
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Subordinated Debt Payment means any payment or distribution by or on behalf of the Obligors, directly or indirectly, of assets of the Obligors of any kind or character, whether in cash, property, or securities, including on account of the purchase, redemption, or other acquisition of Subordinated Debt, as a result of an collection, sale, or other disposition of collateral, or by setoff, exchange, or in any other manner, for or on account of the Subordinated Debt.
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[Signatures follow on next page]
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IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as of the date first written above.
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LERNER NEW YORK, INC., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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NY & CO. GROUP, INC., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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JASMINE COMPANY, INC., |
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a Massachusetts corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Wistau |
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Title: |
President |
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LERNER NEW YORK HOLDING, INC., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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LERNCO, INC., |
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a Delaware corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President |
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
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NEVADA RECEIVABLE FACTORING, INC., |
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a Nevada corporation |
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/s/ Ronald W. Ristau |
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Ronald W. Ristau |
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Secretary |
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ASSOCIATED LERNER SHOPS OF AMERICA, INC., |
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a New York corporation |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
Secretary |
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LERNER NEW YORK GC, LLC, |
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an Ohio limited liability company |
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By: LERNER NEW YORK, INC., |
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Its: Sole Member |
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By: |
/s/ Ronald W. Ristau |
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Name: |
Ronald W. Ristau |
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Title: |
President, Chief Financial Officer and Secretary |
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WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent |
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By: |
/s/ Laurence Forte |
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Name: |
Laurence Forte |
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Title: |
Managing Director |
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Exhibit 31.1
I, Richard P. Crystal, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of New York & Company, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Dated: September 7, 2007 |
/s/ Richard P. Crystal |
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Richard P. Crystal |
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Chairman and Chief Executive Officer |
Exhibit 31.2
I, Ronald W. Ristau, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of New York & Company, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Dated: September 7, 2007 |
/s/ RONALD W. RISTAU |
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Ronald W. Ristau |
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President and Chief Financial Officer |
Exhibit 32.1
Certification
Pursuant to 18 U.S.C. Section 1350
As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Solely for the purposes of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chairman and Chief Executive Officer, and President and Chief Financial Officer of New York & Company, Inc. (the Company), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended August 4, 2007 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: September 7, 2007 |
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/s/ RICHARD P. CRYSTAL |
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Richard P. Crystal |
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Chairman and Chief Executive Officer |
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/s/ RONALD W. RISTAU |
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Ronald W. Ristau |
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President and Chief Financial Officer |