SECOND AMENDMENT AND WAIVER TO
CREDIT AGREEMENT
This SECOND
AMENDMENT AND WAIVER TO CREDIT AGREEMENT , dated as of
June 22, 2011 (this “ Amendment ”), by and
among (i) BORDERS GROUP, INC. , a Michigan corporation, as a
debtor-in-possession (“ BGI ”), (ii) BORDERS,
INC. , a Colorado corporation, as a debtor-in-possession
(“ Borders ” and, collectively with BGI, the
“ Borrowers ”, and each individually a “
Borrower ”), (iii) each other Credit Party from
time to time party to the Credit Agreement (as defined herein),
each as a debtor-in-possession, (iv) GENERAL ELECTRIC CAPITAL
CORPORATION , a Delaware corporation, in its individual
capacity and as Working Capital Agent (the “ Working
Capital Agent ”) for the Secured Parties (as defined in
the Credit Agreement referred to below), (v) GA CAPITAL, LLC
, a Delaware limited liability company, as Term B Agent (the
“ Term B Agent ”) for the Term B Lenders (as
defined in the Credit Agreement), and (vi) each lender party
to the Credit Agreement (collectively, the “ Lenders
” and individually, a “ Lender ”), amends
that certain Senior Secured, Super-Priority Debtor-in-Possession
Credit Agreement, dated as of February 16, 2011 (as amended,
restated, supplemented or otherwise modified from time to time, the
“ Credit Agreement ”), among the Borrowers and
the other Credit Parties, the Working Capital Agent, the Term B
Agent and the Lenders.
WHEREAS , the Borrowers have requested that the Agents and
the Lenders agree to amend certain of the terms and provisions of
the Credit Agreement, as specifically set forth in this Amendment;
and
WHEREAS , Agents and the Lenders are prepared to amend the
Credit Agreement on the terms, subject to the conditions and in
reliance on the representations set forth herein.
NOW THEREFORE , in consideration of the mutual agreements
contained in the Credit Agreement and herein and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
§1.
Defined Terms . Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in
Section 11.1 of the Credit Agreement.
§2.
Amendments to the Credit Agreement . Subject to the
satisfaction of the conditions set forth in Section 3
of this Amendment, the Credit Agreement is hereby amended as
follows:
(a)
Section 5.2 of the Credit Agreement is hereby amended by
(1) deleting the “and” at the end of clause (d),
(2) replacing the period at the end of clause (e) with a
semicolon, and (3) adding new clauses (f) and (g) at
the end thereof to read as follows:
“(f) dispositions
in connection with the Small-Format Store Liquidations;
and
(g)
dispositions in connection with a Sale Transaction (x) in the
case of a Full Chain Liquidation, commencing not later than
July 22, 2011, or (y) in the case of a GC Sale,
consummated not later than July 29, 2011 as to the GC Sale
portion of the Sale Transaction, with any related Remainder Chain
Liquidation commencing not later than July 22, 2011, and in
either case resulting in the repayment in full in cash at the
closing of such Sale Transactions of all Obligations (including the
cash collateralization of all L/C Reimbursement Obligations and the
funding of the Working Capital Indemnity Account and Term B
Indemnity Account) pursuant to Section 1.10(c)(ii) and
(iii) .”
(b)
Section 5.21 of the Credit Agreement is hereby amended by
replacing “$25,000,000” in clause (iii) therein
with “$30,000,000”.
(c) Subsections
7.1(m)(ii)-(v) of the Credit Agreement are hereby deleted in their
entirety and replaced with the following:
”(ii) on
or before June 17, 2011, the Credit Parties shall have failed
to distribute to all interested parties informational packages and
solicitations for bids in connection with a Full Chain Liquidation
(other than as to the Credit Parties’ intellectual property
and interest in leases), and any informational packages sent for
solicitations of bids for a Full Chain Liquidation shall fail to
contain such supporting due diligence documentation as necessary to
enable the solicitation of bids for the liquidation of Inventory on
an equity basis, and as to furniture, fixtures and equipment, on an
equity or commission basis;
(iii) (I) on
or before July 1, 2011, (x) the Credit Parties shall have
failed to file a motion, in form and substance reasonably
acceptable to Agents, seeking approval of bidding procedures, in
form and substance reasonably acceptable to Agents, including bid
protections (the “ Sales Procedure Motion ”),
for one or more binding stalking horse bids (collectively, the
“ Stalking Horse Bid ”) and seeking approval of
the related stalking horse bidder (the “ Stalking Horse
Bidder ”), or (y) the Credit Parties shall fail to
have received and accepted (subject only to Bankruptcy Court
approval), after consultation with the Agents, a Stalking Horse Bid
that is reasonably acceptable to Agents.
Without limiting
the requirement that a Stalking Horse Bid be reasonably acceptable
to Agents, in the event the Stalking Horse Bid is a bid for a GC
Sale, such Stalking Horse Bid shall either:
(A)
(1) contain no conditions other than approval of the GC Sale
by the Bankruptcy Court and such other conditions reasonably
acceptable to Agents,
(2) include a good
faith deposit in an amount reasonably acceptable to Agents,
and
(3) if the
Stalking Horse Bid for a GC Sale on a stand alone basis is in an
amount insufficient to effect at the closing of such GC Sale the
repayment in full in cash of all Obligations (including the cash
collateralization of all L/C Reimbursement Obligations and the
funding of the Working Capital Indemnity Account and Term B
Indemnity Account) in accordance with
Section 1.10(c)(ii) and (iii) , it shall be
combined with a Stalking Horse Bid for a Remainder Chain
Liquidation such that, on a combined basis, both Stalking Horse
Bids shall result in payment in full in cash at the closing of such
Sale Transactions of all Obligations (including the cash
collateralization of all L/C Reimbursement Obligations and the
funding of the Working Capital Indemnity Account and Term B
Indemnity Account) in accordance with
Section 1.10(c)(ii) and (iii) ; or
(B) be accompanied
by a binding backup bid for a Full Chain Liquidation (including
without limitation, bids as to inventory, furniture, fixtures and
equipment and substantially all other assets of the Credit Parties,
but excluding intellectual property and leases) in support of a GC
Sale, as evidenced by an Approved Liquidation Agreement and such
other applicable documentation
and on other
terms reasonably acceptable to Agents and in form and substance
reasonably acceptable to Agents, and providing for the repayment in
full in cash at the closing of such Sale Transaction of all
Obligations (including the cash collateralization of all L/C
Reimbursement Obligations and the funding of the Working Capital
Indemnity Account and Term B Indemnity Account) pursuant to
Section 1.10(c)(ii) and (iii) and which binding
bid shall remain open and not subject to modification or
termination until August 1, 2011.
In the event no
reasonably acceptable Stalking Horse Bid for a GC Sale is received
and accepted, the Credit Parties shall have failed to receive and
accept, on or before July 1, 2011, a Stalking Horse Bid for a
Full Chain Liquidation (including without limitation, bids as to
inventory, furniture, fixtures and equipment and substantially all
other assets of the Credit Parties but excluding intellectual
property and leases), as evidenced by an Approved Liquidation
Agreement and such other applicable documentation and on other
terms reasonably acceptable to Agents and in form and substance
reasonably acceptable to Agents;
(II)
in the event that the Stalking Horse Bid for the Sale Transaction
(A) does not provide for payment in full in cash at the
closing of such Sale Transaction of all Obligations (including the
cash collateralization of all L/C Reimbursement Obligations and the
funding of the Working Capital Indemnity Account and Term B
Indemnity Account) pursuant to Section 1.10(c)(ii) and
(iii) or (B) is not acceptable to the Agents in their
reasonable discretion, then by July 1, 2011 (x) the
Credit Parties shall have failed to distribute to all interested
parties informational packages and solicitations for bids in
connection with the sale of the Credit Parties’ intellectual
property and interests in leases, or any informational packages
sent for solicitations of bids for such sale shall fail to contain
such supporting due diligence documentation as reasonably requested
by Agents, or (y) the Credit Parties’ intellectual
property assets and interest in leases shall fail to be included in
the auction applicable to the balance of the Sale Transaction;
provided , that, in the event that the Bankruptcy Court
later approves a Sale Transaction that is a GC Sale that provides
for payment in full in cash of all Obligations (including the cash
collateralization of all L/C Reimbursement Obligations and the
funding of the Working Capital Indemnity Account and Term B
Indemnity Account) pursuant to Section 1.10(c)(ii) and
(iii) , then the Credit Parties shall be permitted to
withdraw the solicitations for bids for their intellectual property
assets and interest in leases at such time; and
(III)
on or before July 15, 2011, the Bankruptcy Court shall not
have entered an order, in form and substance reasonably acceptable
to Agents, approving the Sales Procedure Motion and Stalking Horse
Bid(s);
(iv) on or before
July 22, 2011, the Credit Parties shall have failed to receive
approval from the Bankruptcy Court of a Sale Transaction (which
Sale Transaction, for the avoidance of doubt, in the case of the
application of Section 7.1(m)(iii)(II) above, shall
include the Credit Parties’ intellectual property and
interests in leases) in an amount sufficient to result in the
repayment in full in cash of all Obligations (including the cash
collateralization of all L/C Reimbursement Obligations and the
funding of the Working Capital Indemnity Account and Term B
Indemnity Account) pursuant to Section 1.10(c)(ii) and
(iii) herein, and the order approving such Sale Transaction
shall be in form and substance reasonably satisfactory to the
Agents and shall provide for the payment in
full in cash of
all Obligations (including cash collateralization of contingent
obligations) pursuant to Section 1.10(c)(ii) and
(iii) ;
(v) in the event
the approved Sale Transaction (i) is a Full Chain Liquidation,
on or before July 22, 2011, the Credit Parties shall have
failed to have executed all of the agency documents or other
relevant documents to be executed to effect the Full Chain
Liquidation and the Full Chain Liquidation shall not have
commenced; or (ii) includes a GC Sale, (x) on or before
July 22, 2011, the Credit Parties shall have failed to have
executed all of the agency documents or other relevant documents to
be executed to effect the Remainder Chain Liquidation occurring on
a parallel basis with such GC Sale, and such Remainder Chain
Liquidation, if any, shall not have commenced, and (y) on or
before July 29, 2011, the Debtor shall have failed to have
executed all purchase agreements and other relevant documents in
connection with the GC Sale and the GC Sale shall not have been
consummated;”
(d)
Section 7.1(m)(vi) of the Credit Agreement is hereby amended
by (1) inserting “(I)” at the beginning thereof, and
(2) inserting the following at the end thereof:
“or (II)
(x) the Credit Parties shall fail to comply with the terms of
the Stalking Horse Bid(s) or backup bid for the Sale Transaction
and any of the documents or agreements executed in connection
therewith, including without limitation the Approved Liquidation
Agreement, in any manner which results in a decrease in proceeds
from the Sale Transaction of more than $500,000, (y) the
Credit Parties shall fail to consummate the Sale Transaction
strictly in accordance with the terms of such Approved Liquidation
Agreement or purchase agreement, as applicable (in each case of
clauses (x) and (y) without any waiver or amendment to
the Approved Liquidation Agreement or purchase agreement unless
consented to by Agents), or (z) the Credit Parties shall take any
action, or an event shall occur, that could reasonably be expected
to adversely affect the value of the Stalking Horse Bid(s) or
backup bid or any Credit Party’s ability to comply with the
terms of the Approved Liquidation Agreement or purchase agreement,
as applicable;”
(e) The definition
of “Eligible Inventory” in Section 11.1 of the
Credit Agreement is hereby amended by deleting clause
(u) within such definition in its entirety and replacing such
clause with the following:
”(u) Inventory
at any Store that is the subject of (i) a Permitted Store
Closing or (ii) a Small-Format Store Liquidation,
provided with respect to this subclause (ii) that such
Inventory shall be ineligible upon the earlier of (x) the Credit
Parties’ receipt of notice from the related landlord of the
exercise of rights to compel the Credit Parties to vacate such
Store, or (y) the commencement of the liquidation sale at such
Store; or”
(f) The definition
of “Lease Assumption Reserve Commencement Date” in
Section 11.1 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
“ Lease
Assumption Reserve Commencement Date ” means (i) as
to Inventory at any leased locations with respect to which the
period for lease rejection/assumption has not been extended past
October 31, 2011 or with respect to which the lease shall
expire on or prior to October 31, 2011, July 29, 2011;
and (ii) as to Inventory at all other locations, the date that
is twelve (12) weeks prior to the Lease Rejection
Date.
(g) The definition
of “Minimum Excess Availability Amount” in
Section 11.1 of the Credit Agreement is hereby amended by
replacing “$25,000,000” in clause (ii) therein
with “$30,000,000”.
(h) The following
definitions shall be added to Section 11.1 of the Credit
Agreement, in their respective appropriate alphabetical
locations:
“ Full
Chain Liquidation ” means a liquidation, in one or a
series of related transactions, of (x) substantially the
entire chain of store locations of the Credit Parties and
substantially all of the Inventory of the Credit Parties, and
furniture, fixtures and equipment, with an Approved Liquidator, and
(y) substantially all of the other assets of the Credit Parties
(including without limitation intellectual property, leases and
substantially all other assets
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