EXHIBIT 10.15
SECOND AMENDMENT AGREEMENT
This SECOND AMENDMENT AGREEMENT entered into at Boston, Massachusetts, as of
March 21, 2000, between PAPER WAREHOUSE, INC. and PAPER WAREHOUSE FRANCHISING,
INC. (hereinafter, collectively, the "Borrower"), each a Minnesota corporation
with its principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and FLEET RETAIL FINANCE INC. f/k/a BankBoston Retail Finance
Inc., with an address of ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Lender").
WHEREAS, Lender established a revolving line of credit (the "Revolving Credit")
pursuant to a Loan and Security Agreement dated as of June 7, 1999 (as amended
and modified from time to time, the "Loan Agreement") for the Borrower under
which the Lender agreed to make advances to, and other financial accommodations
for the benefit of, the Borrower until the Maturity Date subject to the terms
and conditions of the Loan Agreement. All initially capitalized terms shall have
the definitions ascribed to them in the Loan Agreement, unless otherwise defined
herein.
WHEREAS, the Borrower has requested that the Lender permit the Borrower to
borrow up to $1,200,000 in excess of the existing Borrowing Base, to waive the
Borrower's failure to achieve certain financial covenants, and to amend the
advance rates under the Borrowing Base.
WHEREAS, subject to the terms and conditions in this Agreement, the Lender is
willing to modify the terms of the Loan Agreement in order to accommodate the
Borrower's request.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lender and the Borrower mutually agree as
follows:
1. EFFECTIVE DATE: The "Effective Date" of this Agreement shall be the
date upon which the Lender receives each of the following items: (i)
this Second Amendment Agreement, duly executed by the Borrower;
(ii)the irrevocable letter of credit of Norwest Bank Minnesota,
National Association in the face amount of $1,200,000 issued to the
Lender; and (iii) the letter agreement between Yale ▇. ▇▇▇▇▇▇▇▇ and
the Lender, respecting such letter of credit, each in form and
substance satisfactory to the Lender and executed and delivered by all
parties required by the Lender.
2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby amended as
follows:
a) Article I shall be amended to add the following definitions, in
appropriate alphabetical order:
"ACCEPTABLE CREDIT CARD RECEIVABLES": Those Accounts that from
time to time are due and owing to each Borrower on a non-recourse
basis from major credit card processors that are acceptable to
the Lender, which processors include, without limitation, Visa,
MasterCard, Discover, and American Express."
"CREDIT CARD ADVANCE RATE": Seventy-Five Percent (75%).
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"EBITDA": The Borrower's earnings before interest, taxes,
depreciation and amortization, each as determined in accordance
with GAAP.
"EXCELSIOR PROCEEDS": The net cash proceeds, after reduction for
the payment of all closing fees and taxes paid or arising in
connection therewith and payments made to discharge any liens,
which are received by the Borrower and delivered to the Lender
for application to the principal balance of the Loan Account in
connection with the sale of the real estate and improvements
thereon at the premises known as ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"LETTER OF CREDIT RELEASE DATE": as defined in that letter
agreement re: Irrevocable Letter of Credit No. S407544, by and
between Yale ▇. ▇▇▇▇▇▇▇▇ and Lender.
"LETTER OF CREDIT VALUE": The lesser of:
(a) the undrawn face amount of that certain standby letter
of credit of Norwest Bank Minnesota, National Association, dated
March 21, 2000, in the original amount of $1,200,000 and numbered
S407544 held by the Lender, as amended, extended, replaced,
substituted, or modified, but only so long as such letter of
credit remains a valid and binding obligation of ▇▇▇▇▇ Fargo,
N.A. and has not expired or terminated, or been rescinded,
cancelled, or withdrawn, or amended, replaced, substituted, or
modified without the prior written consent of the Lender; or
(b) the lesser of (1) $1,200,000, prior to the date on which
the Lender receives the Excelsior Proceeds, or (2) the sum of (A)
$1,200,000, minus (B) the Excelsior Proceeds, from and after the
date on which the Beneficiary receives the Excelsior Proceeds.
"OVERADVANCE": Any loan or advance, or other credit extended by
the Lender for the benefit of the Borrower such that the balance
of the Loan Account is greater than the sum of (a) the Borrowing
Base minus (b) the Temporary Overadvance.
"TEMPORARY OVERADVANCE": As defined in Section 2.2 hereof.
"TOTAL STOCKHOLDERS' EQUITY": The stockholders' equity of the
Borrower (determined in accordance with GAAP, consistently
applied, except the balance of the Loan Account shall in all
events be treated as current).
b) The definition of "Inventory Advance Rate" in Article I shall be
amended to replace the date "September 30th" with the date "August
31st" and to replace the date "October 1st" with the date "September
1st."
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c) Section 2.1(b)(ii)(B)(I) shall be amended to replace the period at
the end thereof with the following: "PLUS the Credit Card Advance Rate
of the Acceptable Credit Card Receivables."
d) Section 2.1(b)(ii)(B) shall be amended to add, after the end of
clause 2.1(b)(ii)(B)(II) thereof, the following:
"PLUS
(III) The Temporary Overadvance."
e) The following sentence shall be added to Section 2.2: "Through the
Letter of Credit Release Date, the Lender agrees to establish a
Temporary Overadvance, so referred to herein, of up to the amount of
the Letter of Credit Value."
d) Section 5.12.1 shall be amended by replacing it with the following:
"5.12.1 TOTAL STOCKHOLDERS' EQUITY. The Borrower shall not permit or
suffer to exist Total Stockholders' Equity to be less than the
following amounts at the end of any of the following fiscal months:
(a) February 2000: $7,503,798; (b) March 2000: $7,623,477; (c) April
2000: $7,492,017; (d) May 2000: $7,800,535; (e) June 2000: $8,249,225;
(f) July 2000: $8,028,271; (g) August 2000: $7,935,907; (h) September
2000: 8,164,244; (i) October 2000: $8,668,752; (j) November 2000:
$8,515,338; (k) December 2000: $9,377,942; and (l) January 2001:
$8,740,589. These amounts are based on the Business Plan set forth on
EXHIBIT 5-12(a)-1 to the Second Amendment Agreement."
e) Section 5.12.2 shall be amended by replacing it with the following:
"5.12.2 (a) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit
or suffer to exist the ratio of its Cash Flow to its Contractual
Obligations, calculated on a cumulative basis for the period January
30, 2000 through February 2, 2001, to be less than 1.10:1.00; and (b)
EBITDA. The Borrower shall not permit or suffer to exist EBITDA of
less than the following amounts for the fiscal quarters ending in any
of the following fiscal months (where parenthesis indicate a
negative): (a) April 2000: ($700,000); (b) July 2000: $1,500,000; (c)
October 2000: $1,700,000. These amounts are based on the Business Plan
set forth on EXHIBIT 5-12(b)-1 to the Second Amendment Agreement."
3. LIMITED WAIVER. The Borrower has requested that the Lender waive its
rights and remedies in connection with the Borrower's failure to
comply with Section 5.12.1 of the Loan Agreement as of January 28,
2000, and the Borrower's failure to comply with Section 5.12.2 of the
Loan Agreement as of the fiscal year ending as of January 28, 2000.
The Lender has agreed to waive its rights and remedies arising solely
from the Borrower's failure to comply with Section 5.12.1 of the Loan
Agreement as of January 28, 2000, and the Borrower's failure to comply
with Section 5.12.2 of the Loan Agreement as of the fiscal year ending
as of January 28, 2000. This waiver is limited to this specific
request and shall not be deemed or construed to be a consent to any
other or future action or as a waiver of any Event of Default that may
exist under the Loan Agreement.
4. EXCELSIOR PROPERTY. Immediately upon receipt thereof, the Borrower
covenants and agrees to deliver to the Lender, for application to the
principal balance of the Loan Account, the net cash proceeds, after
reduction for the payment of all closing fees and
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taxes paid or arising in connection therewith and payments made to
discharge any liens, received by the Borrower in connection with the
sale of the real estate and improvements thereon at the premises known
as ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Further,
the Borrower covenants and agrees that, upon or before the transfer of
such real estate, the Borrower shall deliver, or shall cause to be
delivered, to Lender a waiver or subordination (in form satisfactory
to Lender) executed by the Borrower's landlord with respect to such
premises.
5. AMENDMENT FEE. Upon the Borrower's execution of this Second Amendment
Agreement, Borrower agrees to pay to Lender an amendment fee of
$5,000.00, which fee shall be fully earned and nonrefundable upon
Lender's signing of this Second Amendment Agreement.
6. ENFORCEABILITY, ETC. Except as otherwise expressly provided herein,
the Loan Agreement and the other Loan Documents are, and shall
continue to be, in full force and effect and are hereby ratified and
confirmed in all respects, except that on and after the Effective Date
hereof (i) all references in the Loan Agreement to "this Agreement",
"hereto", "hereof", "hereunder", or words of like import referring to
the Loan Agreement shall mean the Loan Agreement as amended by this
Agreement and (ii) all references in the other Loan Documents to the
"Loan Agreement", "thereto", "thereof", "thereunder" or words of like
import referring to the Loan Agreement shall mean the Loan Agreement
as amended by this Agreement. Except as expressly provided herein, the
execution, delivery and effectiveness of this Agreement shall not
operate as an amendment of any right, power or remedy of the Lender
under the Loan Agreement or any other Loan Document, nor constitute an
amendment of any provision of the Loan Agreement or any other Loan
Documents.
7. GENERAL PROVISIONS
a) INTEGRATION; AMENDMENT; WAIVERS. This Agreement and Loan
Documents set forth in full are terms of agreement between the
parties and are intended as the full, complete and exclusive
contract governing the relationship between the parties,
superseding all other discussions, promises, representations,
warranties, agreements and the understandings between the parties
with respect thereto. No term of the Loan Documents may be
modified or amended, nor may any rights thereunder be waived,
except in a writing signed by the party against whom enforcement
of the modification, amendment or waiver is sought. Any waiver of
any condition in, or breach of, any of the foregoing in a
particular instance shall not operate as a waiver of other or
subsequent conditions or breaches of the same or a different
kind. The Lender's exercise or failure to exercise any rights
under any of the foregoing in a particular instance shall not
operate as a waiver of its right to exercise the same or
different rights in subsequent instances. Except as expressly
provided to the contrary in this Agreement, or in another written
agreement, all the terms, conditions, and provisions of the Loan
Documents shall continue in full force and effect. If in this
Agreement's description of an agreement between the parties,
rights and remedies of Lender or obligations of the Borrower are
described which also exist under the terms of the other Loan
Documents, the fact that this Agreement may omit or contain a
briefer description of any rights, remedies and obligations shall
not be deemed to limit
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any of such rights, remedies and obligations contained in the
other Loan Documents.
b) PAYMENT OF EXPENSES. Without limiting the terms of the Loan
Documents, the Borrower shall pay all costs and expenses
(including reasonable attorneys' fees) arising under or in
connection with the Loan Documents, including without limitation,
in connection with the negotiation, preparation, execution,
delivery, and enforcement of this Agreement and any and all
consents, waivers or other documents or instruments relating
thereto.
c) NO THIRD PARTY BENEFICIARIES. Except as may be otherwise
expressly provided for herein, this Agreement does not create,
and shall not be construed as creating, any rights enforceable by
any person not a party to this Agreement.
d) SEPARABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal or
unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, which together shall constitute one and the same
agreement.
f) TIME OF ESSENCE. Time is of the essence in each of the
Liabilities of the Borrower and with respect to all conditions
to be satisfied by the Borrower.
g) CONSTRUCTION; VOLUNTARY AGREEMENT; REPRESENTATION BY COUNSEL.
This Agreement has been prepared through the joint efforts of all
the parties. Neither its provisions nor any alleged ambiguity
shall be interpreted or resolved against any party on the ground
that such party's counsel was the draftsman of this Agreement.
Each of the parties declares that such party has carefully read
this Agreement and the agreements, documents and instruments
being entered into in connection herewith and that such party
knows the contents thereof and sign the same freely and
voluntarily. The parties hereto acknowledge that they have been
represented in negotiations for and preparation of this Agreement
and the agreements, documents and instrument being entered into
in connection herewith by legal counsel of their own choosing,
and that each of them has read the same and had their contents
fully explained by such counsel and is fully aware of their
contents and legal effect.
h) GOVERNING LAW; FORUM SELECTION. This Agreement has been entered
into and shall be governed by the laws of the Commonwealth of
Massachusetts.
i) FURTHER ASSURANCES. The Borrower agrees to take all further
actions and execute all further documents as the Lender may from
time to time reasonably request to carry out the transactions
contemplated by this Agreement.
j) NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be given in accordance with the
Loan Agreement.
k) MUTUAL WAIVER OF RIGHT TO JURY TRIAL. THE LENDER AND BORROWER
EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
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ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO: (I) THIS AGREEMENT, OR ANY OF THE AGREEMENTS,
INSTRUMENTS OR DOCUMENTS REFERRED TO HEREIN; OR (II) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN THEM; OR
(III) ANY CONDUCT, ACTS OR OMISSIONS OF THE LENDER OR OF THE
BORROWER OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH THEM; IN EACH OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.
l) COPIES AND FACSIMILES. This Agreement and all documents which
have been or may be hereinafter furnished by the Borrower to the
Lender may be reproduced by the Lender by any photographic,
photostatic, microfilm, xerographic or similar process, and any
such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such
reproduction was made in the regular course of business).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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This Second Amendment Agreement is executed under seal as of the date
written above.
Witness Borrower:
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Paper Warehouse, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO By: /s/ Yale ▇. ▇▇▇▇▇▇▇▇
---------------------------------- --------------------------------
Yale ▇. ▇▇▇▇▇▇▇▇, Chairman and Chief
Executive Officer
Witness Borrower:
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Paper Warehouse Franchising, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO By: /s/ Yale ▇. ▇▇▇▇▇▇▇▇
---------------------------------- --------------------------------
Yale ▇. ▇▇▇▇▇▇▇▇, Chairman and Chief
Executive Officer
Witness Accepted:
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Fleet Retail Finance Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------- --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Director
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EXHIBIT 5.12(a)-1
[Attach Stockholders Equity Spreadsheet]
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EXHIBIT 5.12(b)-1
[Attach EBITDA and Fixed Charge Coverage Ratio Spreadsheet]
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