FORM OF AMENDED TRADE VENDOR EXTENSION AGREEMENTExtension Agreement |
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LASALLE BANK NATIONAL ASSOCIATION | Prentice Capital Management, LP | Whitehall Jewellers, Inc. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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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 Suppliers must submit any Trade Debt Objections so that they are delivered, placed with an overnight courier, or postmarked for certified or registered mail no later than January 15, 2007. Subsequent Participating Suppliers must submit any Trade Debt Objections so that they are delivered, placed with an overnight courier, or postmarked for certified or registered mail no later than January 30, 2007.
7.3. Trade Debt Amount for Payment Purposes. Unless and until the Company and the applicable Participating Supplier (or Subsequent Participating Supplier) settle, adjust or otherwise resolve any timely Trade Debt Objection submitted to the Company pursuant to Section 7.2 hereof, the Trade Debt amount set forth by the Company on Schedule II shall be used, without prejudice (subject to Section 7.4 below), to calculate the Settlement Payments due to the Participating Supplier (or Subsequent Participating Supplier).
7.4. Dispute Resolution Process.
(a) If a Participating Supplier (or Subsequent Participating Supplier) timely submits a Trade Debt Objection under Section 7.2 hereof with regard to the Trade Debt amount reflected on Schedule II, and such dispute is not consensually resolved within 30 days after the Company's receipt of such Participating Supplier's (or Subsequent Participating Supplier's) Trade Debt Objection, then the Trade Debt Objection shall be resolved by submission to Anchin Block & Anchin, LLP (“ABA”) provided that ABA has no conflict of interest due to its connections with either party. If ABA has such a conflict of interest and the conflict is not waived by the Company and the Participating Supplier (or Subsequent Participating Supplier), a third party accounting firm (the “Trade Debt Accountants”) located in the United States and selected jointly
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by the Company and the Participating Supplier (or Subsequent Participating Supplier) shall resolve the Trade Debt Objection.
(b) If a Trade Debt Objection is submitted to ABA or the Trade Debt Accountants for resolution: (i) each party shall furnish to ABA or the Trade Debt Accountants such work papers and other documents and information relating to the disputed issues as ABA or the Trade Debt Accountants may request and are available to that party, and shall be afforded the opportunity to present to ABA or the Trade Debt Accountants any material relating to the determination and to discuss the determination with ABA or the Trade Debt Accountants; (ii) the determination by ABA or the Trade Debt Accountants, as set forth in a notice delivered to the Company and the objecting Participating Supplier (or Subsequent Participating Supplier) by ABA or th
