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SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT

Waiver Agreement

SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT | Document Parties: BORDERS GROUP INC | 1903 OFFSHORE LOANS SPV LIMITED | ACA HOLDINGS LLC | ALADDIN CREDIT INTERMEDIATE FUND LTD | Aladdin Credit Partners, LLC | ALADDIN INTERMEDIATE FUND (IRELAND) II LTD | BORDERS DIRECT, LLC | BORDERS GROUP, INC | BORDERS INTERNATIONAL SERVICES, INC | BORDERS PROPERTIES, INC | BORDERS, INC | BURDALE CAPITAL FINANCE, INC | CIT BANK | CIT GROUP/BUSINESS CREDIT, INC | CITIZENS BANK | CRYSTAL FINANCIAL SPV LLC | FIFTEENTH INVESTMENT SPONSOR LIMITED | GA CAPITAL, LLC | GB Merchant Partners, LLC | RB INTERNATIONAL FINANCE (USA) LLC | SPECIAL VALUE CONTINUATION PARTNERS | SUN LIFE ASSURANCE COMPANY OF CANADA | TD BANK, NA | Tennenbaum Capital Partners, LLC | TENNENBAUM OPPORTUNITIES PARTNERS You are currently viewing:
This Waiver Agreement involves

BORDERS GROUP INC | 1903 OFFSHORE LOANS SPV LIMITED | ACA HOLDINGS LLC | ALADDIN CREDIT INTERMEDIATE FUND LTD | Aladdin Credit Partners, LLC | ALADDIN INTERMEDIATE FUND (IRELAND) II LTD | BORDERS DIRECT, LLC | BORDERS GROUP, INC | BORDERS INTERNATIONAL SERVICES, INC | BORDERS PROPERTIES, INC | BORDERS, INC | BURDALE CAPITAL FINANCE, INC | CIT BANK | CIT GROUP/BUSINESS CREDIT, INC | CITIZENS BANK | CRYSTAL FINANCIAL SPV LLC | FIFTEENTH INVESTMENT SPONSOR LIMITED | GA CAPITAL, LLC | GB Merchant Partners, LLC | RB INTERNATIONAL FINANCE (USA) LLC | SPECIAL VALUE CONTINUATION PARTNERS | SUN LIFE ASSURANCE COMPANY OF CANADA | TD BANK, NA | Tennenbaum Capital Partners, LLC | TENNENBAUM OPPORTUNITIES PARTNERS

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Title: SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT
Governing Law: New York     Date: 6/27/2011
Industry: Retail (Specialty)     Sector: Services

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Exhibit 10.1

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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