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EXHIBIT
10.18
FORM OF AMENDED TRADE
VENDOR EXTENSION AGREEMENT
AGREEMENT, made as of November 15, 2006 among Whitehall
Jewellers, Inc. (the “Company”), Prentice Capital
Management, LP (together with its affiliates, the
“Investor”), and the undersigned suppliers (each a
“Participating Supplier,” and, collectively, the
“Participating Suppliers”) of memo goods (“Memo
Goods”) and/or asset goods (“Asset Goods”) to the
Company; and
WHEREAS, the Company and the Investor are parties to a
Bridge Term Loan Credit Agreement dated October 3, 2005 (as amended
on or about February 1, 2006, the “Bridge Loan”),
pursuant to which the Company has borrowed funds from the Investor;
and
WHEREAS, the Company represents that, to the best of its
knowledge, the aggregate amount due and owing to all of the
suppliers of Memo Goods and Asset Goods to the Company
(collectively, the “Suppliers”) who hold claims against
the Company as of September 23, 2005 with respect to those asset
merchandise invoices and memo merchandise invoices that remain
unpaid per the Company's records (the “Trade Debt”),
was approximately $44,533,950 (less the aggregate amount of the
Settlement Payments (as defined below) that have been paid prior to
the effective date of this Agreement); and
WHEREAS, the Company has offered to satisfy the Trade Debt
in accordance with the terms contained in this Agreement;
and
WHEREAS, the Investor has provided to the Company the
Bridge Loan, the proceeds of which has been used by the Company to
pay, among other things, a portion of the Trade Debt;
and
WHEREAS, each of the Participating Suppliers has entered
into that certain agreement entitled Terms for Treatment of Trade
Indebtedness of Whitehall Jewellers, Inc. (the “Term
Sheet”) in exchange for (i) the Company and the Investor
entering into the Term Sheet, (ii) the Investor agreeing to provide
the Bridge Loan to the Company to pay, among other things, a
portion of the Trade Debt, and (iii) the Company agreeing to pay
the Trade Debt as set forth in the Term Sheet; and
WHEREAS, the Company, the Investor and the Participating
Suppliers wish to enter into this Agreement in furtherance of the
agreements made in the Term Sheet.
NOW, THEREFORE, it is agreed:
1.
PAYMENT TERMS FOR TRADE
DEBT
1.1. Payment
Schedule . The Company shall satisfy
the Trade Debt on the following basis:
(a)
Twenty-five (25%) of the Trade Debt due and
owing each Participating Supplier has previously been paid by the
Company to each Participating Supplier on or about November 2, 2005
(the “First Payment”);
(b)
Twelve and one-half percent (12.5%) of the Trade
Debt due and owing each Participating Supplier has previously been
paid by the Company in cash to such Participating Supplier on or
about December 23, 2005 (the “Second
Payment”);
(c)
Twelve and one-half percent (12.5%) of the Trade
Debt due and owing each Participating Supplier has previously been
paid by the Company in cash to such Participating Supplier on or
about January 16, 2006 (the “Third Payment”);
and
(d)
Fifty percent (50%) of the Trade Debt due and
owing each Participating Supplier plus all accrued Interest
(defined below) shall be paid by the Company in cash to such
Participating Supplier on or before September 30, 2007 (the
“Final Payment” and collectively with the First
Payment, Second Payment and Third Payment, the “Settlement
Payments”), which Final Payment shall be collectively
evidenced by the Notes (as defined below).
1.2. Return Of The
Notes . To the extent that the
Company satisfies the Final Payment through payments to the
Participating Suppliers, the Company’s obligations under the
corresponding Notes issued to such Participating Suppliers will be
credited accordingly. Promptly upon receiving its appropriate share
of the Final Payment, each Participating Supplier shall return the
applicable Note to the Company marked, and the Note shall be deemed
to be, “satisfied in full.”
1.3. Trade Debt Deemed Fully
Satisfied . The Company's payment
obligations under Section 1.1 of this Agreement shall supersede and
replace its obligations to pay the Trade Debt, as reconciled under
Section 7 below, under any other applicable agreements or
applicable laws. Upon the Company's completion of the Settlement
Payments, (i) the Trade Debt of each Participating Supplier shall
be deemed satisfied in full, and (ii) each Participating Supplier
shall forgive and shall be deemed to have released the Company
from, any and all other debts due or owing to them by the Company
as of September 23, 2005, including any and all amounts in excess
of such Participating Supplier's Trade Debt that could have or
should have been invoiced to the Company prior to or on September
23, 2005 (subject only to Section 4.2 herein).
1.4. Withdrawal of Pending
Notices of Default . To the extent
that any Participating Supplier has previously issued or served a
notice of default, breach, termination, or other similar notice, or
a demand for return of goods, to the Company with respect to the
Trade Debt or such Participating Supplier's willingness to supply
goods to the Company, the execution of this Agreement shall
constitute such Participating Supplier's withdrawal and waiver of
any such notice or demand.
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2.
NOTES
2.1. Collective
Amount . The Final Payment shall be
evidenced by unsecured promissory notes
(the “Notes”) issued to each of the Participating
Suppliers in an aggregate original principal amount equal to fifty
percent (50%) of the Trade Debt due and owing to all of the
Participating Suppliers. Each of the Notes shall be in
substantially the form of the Promissory Note annexed hereto
as Exhibit I
.
2.2. Issuance And Amount Of
Individual Notes . The Company shall
issue the Notes to the Participating Suppliers on a rolling basis
as soon as practicable after the Trade Debts of Participating
Suppliers are reconciled in accordance with Section 7 below. The
original principal amount of each Note issued to a Participating
Supplier shall be equal to fifty percent (50%) of the amount of the
Trade Debt due and owing to that Participating Supplier as
reconciled in accordance with Section 7 below.
2.3. Maturity
. The Notes shall have a maturity date of
September 30, 2007 (the “Maturity Date”), with the
principal balance of the Notes payable on the Maturity
Date.
2.4. Interest
. Starting retroactively to January 17, 2006,
the Notes shall accrue interest on the unpaid principal amounts
thereof at the rate of six percent (6%) per annum through the date
the Notes are paid in full (“Interest”), payable on the
Maturity Date or such earlier date on which the Notes are paid in
full.
3.
ASSET GOODS
3.1. Payment Terms For
Deliveries Made After December 15, 2005 . The Company shall pay each
Participating Supplier for Asset Goods delivered by such
Participating Supplier and received by the Company, after December
15, 2005, within ninety (90) days after receipt by the Company of
an invoice for such Asset Goods.
3.2. Commercially Reasonable
Efforts . Each Participating Supplier
shall use its commercially reasonable efforts to satisfy all
shipping deadlines for Asset Goods set forth in its purchase orders
placed on or after September 26, 2005 that are hereafter accepted
by the respective Participating Supplier in its sole and absolute
discretion.
4.
MEMO GOODS
4.1. Payment Terms
. From and after January 16, 2006, the Company
shall reconcile its Memo Goods sales
balances to its general ledger every Monday for transactions
occurring during the previous week (through Sunday). The Company
shall then issue Memo Goods sales reports based on such
reconciliations to applicable Participating Suppliers every
Tuesday, and pay applicable Participating Suppliers for such Memo
Goods (by wire transfer to the extent timely requested by
applicable Participating Suppliers) within fifteen (15) days after
such goods are reported as sold.
4.2. Unreported Sales Of Memo
Goods . Notwithstanding anything to
the contrary contained in this Agreement, (a) each Participating
Supplier shall have the right until September
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30, 2007 to reconcile reported
sales of its Memo Goods delivered to the Company prior to such
date, and (b) no unreported sales of Memo Goods shall be subject to
the provisions of Section 1.3 above.
4.3. Commercially Reasonable Efforts . Each
Participating Supplier shall use its commercially reasonable
efforts to satisfy all shipping deadlines for Memo Goods set forth
in the Company's outstanding purchase orders, as amended and agreed
to by the Company and the respective Participating Supplier, and in
all purchase orders placed on or after September 26, 2005, which
are hereafter accepted by the respective Participating Supplier in
its sole and absolute discretion.
4.4. Recognition of Security
Interests.
(a) Each of the
Participating Suppliers agrees not to challenge the valid
and perfected security interests of the
Investor and the Senior Lenders in the Company's assets.
(b)
Each of the Participating Suppliers disclaims
any interest in the collateral of the Senior Lenders.
4.5. Store Closing/Going Out
Of Business Sales . In the event of a
store closing or going out of business sale at any of the
Company’s stores where Memo Goods of Participating Suppliers
have been delivered and remain unsold, the Company may, at its
option and in its sole and absolute discretion, (a) keep Memo Goods
in place at the applicable stores provided that the Company pays to
the Participating Suppliers the regularly invoiced amount for any
sales of such Memo Goods, (b) return Memo Goods to Participating
Suppliers, or (c) move Memo Goods to other Company
stores.
5.
SENIOR CREDIT
FACILITIES
Between the period from
September 23, 2005 through September 30, 2007 (or such later date
upon which the Notes are satisfied in full), the senior credit
facilities (“Senior Credit Facilities”) of the
Company's existing senior secured lenders (collectively, the
“Senior Lenders”) shall contain no financial
performance covenants by the Company other than a minimum excess
availability covenant.
6.
EXECUTION OF AGREEMENT AFTER
EFFECTIVE DATE
6.1. Rights
. Any Supplier that executes this Agreement
after the effective date hereof, but not
later than January 15, 2007 (each a “Subsequent Participating
Supplier”), shall be entitled to the rights and be bound by
the obligations conferred herein to the Participating
Suppliers.
6.2. Payment Terms
. To the extent that a Subsequent Participating
Supplier did not receive its applicable share of the First Payment,
the Second Payment, or the Third Payment, the Company shall
promptly pay the Subsequent Participating Supplier its applicable
share of those Payments promptly upon its execution of this
Agreement.
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7.
RECONCILIATION OF TRADE
DEBT
7.1. Trade Debt Amount Per
Company's Records . The Trade Debt
due and owing to a Participating Supplier
or Subsequent Participating Supplier, as the case may be, according
to the Company's books and records (and after crediting the accrued
marketing and purchase rebates earned by the Company as of
September 23, 2005 (“Rebate Credit”)) is reflected
in Schedule II
attached hereto. The Company acknowledges,
confirms and agrees that for the purposes of calculating the
Settlement Payments, (i) such amount reflected on
Schedule II is due and owing to the respective Participating Supplier
(or Subsequent Participating Supplier) without offset, defense or
counterclaim, (ii) the Rebate Credit has been applied on a
proportionate basis according to the percentage of the Trade Debt
that each Settlement Payment represents, and (iii) to the extent
that the Company fails to make any Settlement Payment to a
Participating Supplier (or a Subsequent Participating Supplier),
the portion of the Rebate Credit that was previously applied to
such Settlement Payment shall become due and owing to such
Participating Supplier (or Subsequent Participating
Supplier).
7.2. Objection
Deadline . Unless a Participating
Supplier (or Subsequent Participating Supplier) timely submits to
the Company a written objection (“Trade Debt
Objection”) to the amount set forth in
Schedule II , such Participating Supplier (or Subsequent Participating
Supplier) shall be deemed to have agreed and acknowledged that the
amount reflected on Schedule
II is the total Trade Debt owed
to that Participating Supplier (or Subsequent Participating
Supplier). Any Trade Debt Objections must be delivered to the
Company in writing and in the manner specified for notices to the
Company pursuant to Section 14.1(a) below. Participating
Supplier
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