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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Date of Report (Date of earliest event reported): October 22, 1999
LAMONTS APPAREL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-15542 #75-2076160
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
12413 Willows Road N.E., Kirkland, Washington 98034
(Address of Principal Executive Offices)
(425) 814-5700
(Registrant's Telephone Number, including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
1
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ITEM 5 - OTHER EVENTS.
Lamonts Apparel, Inc. and certain financial institutions and
BankBoston, N.A., as agent, have entered into a Seventh Amendment, dated October
13, 1999, to the Amended and Restated Debtor in Possession and Exit Financing
Loan Agreement, dated September 26, 1997. Among other things, the Seventh
Amendment provides for (i) renewal of the revolving credit facility through
January 31, 2002, (ii) extension of the term loan through January 31, 2001 with
an option to further extend the term loan to January 31, 2002 if certain
requirements are met, (iii) an increase in the working capital facility to a
maximum of $38.0 million in the months of October and November to accommodate
seasonal inventory requirements, and (iv) changes in the borrowing base formula
to allow Lamonts to borrow up to 70 percent of eligible inventory from January
15th through June 30th and up to 65 percent of eligible inventory from July 1st
through January 14th. Immediately prior to entering into the Seventh Amendment,
BankBoston assigned its interest as a lender under the revolving credit facility
and the term loan to its affiliate, BankBoston Retail Finance, Inc. However,
BankBoston will continue to serve as agent under the credit facility.
As a result of the extension of the term loan, Lamonts anticipates that
it will reclassify approximately $9.7 million of its current liabilities as
long-term debt. This reclassification would reduce approximately 45% of Lamonts'
working capital deficit of $21.5 million as of July 31, 1999, included in the
Prospectus Supplement dated September 20, 1999.
The foregoing summary of certain provisions of the Seventh Amendment is
qualified in its entirety by reference to the full text of the Seventh
Amendment, which is filed as Exhibit 10.1 hereto and is incorporated by
reference herein. Reference is also made to (i) the Amended and Restated Debtor
in Possession and Exit Financing Loan Agreement dated September 26, 1997 among
the Company, certain financial institutions and BankBoston, as agent (the "Loan
Agreement"), filed as Exhibit 10.27 of Quarterly Report on Form 10-Q of the
Company as filed with the Commission on December 16, 1997, (ii) the First
Amendment dated January 8, 1998 to the Loan Agreement, filed as Exhibit 10.24 of
Quarterly Report on Form 10-Q filed with the Commission on December 16, 1998,
(iii) the Second Amendment dated April 1, 1998 to the Loan Agreement, filed as
Exhibit 10.25 of Quarterly Report on Form 10-Q of the Company as filed with the
Commission on December 16, 1998, (iv) the Third Amendment dated September 23,
1998 to the Loan Agreement, filed as Exhibit 10.26 of Quarterly Report on Form
10-Q of the Company as filed with the Commission on December 16, 1998, (v) the
Fourth Amendment dated April 13, 1999 to the Loan Agreement, filed as Exhibit
10.19 of Annual Report on Form 10-K of the Company as filed with the Commission
on April 30, 1999, (vi) the Fifth Amendment dated July 9, 1999 to the Loan
Agreement, filed as Exhibit 10.28 of Quarterly Report on Form 10-Q of the
Company as filed with the Commission on September 14, 1999, and (vii) the Sixth
Amendment dated July 31, 1999 to the Loan Agreement, filed as Exhibit 10.29 of
Quarterly Report on Form 10-Q of the Company as filed with the Commission on
September 14, 1999.
2
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ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Seventh Amendment dated October 13, 1999 to Amended and
Restated Debtor in Possession and Exit Financing Loan
Agreement dated September 26, 1997 among the Registrant,
certain financial institutions and BankBoston, as agent.
99.1 Press Release issued by the Company on October 12, 1999.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant: LAMONTS APPAREL, INC.
Date: October 22, 1999 BY: /s/ Debbie A. Brownfield
-----------------------------
Debbie A. Brownfield
Executive Vice President,
Chief Financial Officer, Treasurer,
and Secretary
4
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SEVENTH AMENDMENT
SEVENTH AMENDMENT dated as of October 13, 1999 (this "AMENDMENT"), is
made by and among LAMONTS APPAREL, INC., a Delaware corporation (the
"BORROWER"), having its principal place of business at 12413 Willows Road N.E.,
Kirkland, WA 98034, BANKBOSTON RETAIL FINANCE INC., a Delaware corporation
("BBRF"), THE CIT GROUP/BUSINESS CREDIT, INC. and the other lending institutions
that are or may become party to the Loan Agreement referred to below (together,
the "BANKS"), and BANKBOSTON, N.A., as agent for the Banks (the "AGENT")
amending certain provisions of the Amended and Restated Debtor in Possession and
Exit Financing Loan Agreement by and among the Borrower, the Banks, and the
Agent dated as of September 26, 1997, as previously amended by a First Amendment
dated as of January 8, 1998, a Second Amendment dated as of April 1, 1998, a
Third Amendment dated as of September 23, 1998, a Fourth Amendment dated as of
April 13, 1999, a Fifth Amendment dated as of July 9, 1999 and a Sixth Amendment
dated as of July 31, 1999 (as so amended, the "LOAN AGREEMENT"). Terms not
otherwise defined herein which are defined in the Loan Agreement shall have the
respective meanings herein as assigned to such terms in the Loan Agreement.
WHEREAS, the Borrower has requested that the Banks and the Agent agree to
amend the terms of the Loan Agreement in order, among other things, to extend
the respective maturity dates of the loan facilities set forth therein; and
WHEREAS, the Banks and the Agent are willing to amend the terms of the
Loan Agreement to provide for such extension, among other things, upon the terms
and subject to the conditions contained herein;
NOW, THEREFORE, in consideration of the mutual agreements contained in
the Loan Agreement and this Amendment and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. AMENDMENTS TO THE LOAN AGREEMENT. Subject to the satisfaction of
the conditions set forth in Section 4 of this Amendment, the Loan Agreement is
hereby amended as follows:
1.1. AMENDMENTS TO DEFINITIONS.
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(a) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Borrowing Base" in its entirety and by replacing it with the
following new definition:
"BORROWING BASE: At the relevant time of reference thereto, an
amount determined by the Agent by reference to the most recent Borrowing
Base Report delivered to the Banks and the Agent pursuant to Section
10.1(a)(iv), which is equal to:
(a) Except as otherwise provided in paragraph (b)
hereof, at any time on or after the Exit Facility Date:
(i) 65% of the result of (A) Eligible Inventory at such
time, MINUS (B) the Inventory Shrink Reserve; MINUS
(ii) the aggregate amount of any Landlord Lien Reserves
with respect to all Specified Leases at such time; MINUS
(iii) the Layaway Deposit Reserve.
(b) During the period commencing on January 15 of each
year and ending on June 30 of such year and during such portion of such
period in which no Event of Default has occurred and is continuing
(unless such requirement has been waived by the Term Loan Lender):
(i) the Adjusted Advance Rate of the result of (A)
Eligible Inventory at such time, MINUS (B) the Inventory Shrink
Reserve; MINUS
(ii) the aggregate amount of any Landlord Lien Reserves
with respect to all Specified Leases at such time; MINUS
(iii) the Layaway Deposit Reserve.
PROVIDED, however, that the Agent shall be entitled to make reasonable
adjustments from time to time to the Borrowing Base formula and
components thereof, including without limitation the Adjusted Advance
Rate or any other applicable advance rate, on the basis of inventory
liquidation analyses, commercial finance examinations, or collateral
audits."
(b) Section 1.1 of the Loan Agreement is hereby further amended by
deleting the definitions of "Additional Closing Fee Calculation Date" and
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"Additional Closing Fee Prepayment Amount" in their entirety and by replacing
them with the following new definitions:
"ADDITIONAL CLOSING FEE CALCULATION DATE: The earlier of January
31, 2000 or payment in full of the Term Loan."
"ADDITIONAL CLOSING FEE PREPAYMENT AMOUNT: An aggregate amount
equal to $660,549.66, which shall be payable in two installments, with
the first such installment payable on the first anniversary of the
Effective Date in the amount of $500,000 (which the parties agree has
been paid prior to the Seventh Amendment Date) and with the second such
installment payable on the Seventh Amendment Date in the amount of
$160,549.66."
(c) Section 1.1 of the Loan Agreement is hereby further amended by
deleting the definition of "Exit Commitment" set forth therein in its entirety
and by replacing it with the following:
"EXIT COMMITMENT: With respect to each Revolving Credit Bank, the
amount of such Revolving Credit Bank's commitment to make Exit Revolving
Credit Loans to, and to participate in the issuance, extension and
renewal of Letters of Credit for the account of, the Borrower up to such
Revolving Credit Bank's Commitment Percentage of an aggregate amount not
to exceed $32,000,000; PROVIDED THAT (i) during the period commencing on
October 1 of each year and ending on December 1 of such year such
aggregate amount shall be increased to $38,000,000 (and shall
automatically decrease to $32,000,000 again on December 2 of such year);
(ii) such aggregate amount may be reduced from time to time or terminated
hereunder as provided in this Agreement; and (iii) so long as any
Derivative Contract is in effect, the aggregate amount of the Exit
Commitments shall be reduced by any amount by which the sum of all
Derivative Contract Termination Obligations exceeds $600,000."
(d) Section 1.1 of the Loan Agreement is hereby further amended by
deleting the definition of "Exit Maturity Date" set forth therein in its
entirety and by replacing it with the following:
"EXIT MATURITY DATE: January 31, 2002; PROVIDED THAT, in the
event that the Exit Maturity Date is otherwise scheduled to extend beyond
the Term Loan Maturity Date, the Exit Maturity Date shall be concurrent
with the Term Loan Maturity Date."
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(e) Section 1.1 of the Loan Agreement is hereby further amended by
deleting the definition of "Extension Fee" set forth therein in its entirety and
by replacing it with the following:
"EXTENSION FEE: See Section 6.1(h)."
(f) Section 1.1 of the Loan Agreement is hereby further amended by
deleting the definition of "Extension Period" set forth therein in its entirety
and by replacing it with the following:
"EXTENSION PERIOD: As applicable, (a) the period from January 31,
2000 through January 31, 2001 or (b), if the Term Loan Maturity Date is
extended for a one year period upon satisfaction of the conditions set
forth in Section 9.4, the period from February 1, 2001 through January
31, 2002."
(g) Section 1.1 of the Loan Agreement is hereby amended by deleting
the last sentence of the definition of "Inventory Shrink Reserve" in its
entirety and by replacing it with the following new sentence:
"The parties acknowledge and agree that as of the Seventh
Amendment Date, the Inventory Shrink Reserve Percentage is 2.32%."
(h) Section 1.1 of the Loan Agreement is hereby further amended by
deleting the definition of "Majority Revolving Credit Banks" in its entirety and
by replacing it with the following:
"MAJORITY REVOLVING CREDIT BANKS: As of any date, (a) if there
are two (2) or fewer Revolving Credit Banks, all Revolving Credit Banks,
and (b) if there are three (3) or more Revolving Credit Banks, (i) the
Revolving Credit Banks holding at least 51% of the outstanding principal
amount of the Revolving Credit Notes on such date, and (ii) if no such
principal is outstanding, the Revolving Credit Banks whose aggregate Exit
Commitments constitute at least 51% of the Total Exit Commitment."
(i) Section 1.1 of the Loan Agreement is hereby further amended by
deleting the definition of "Term Loan Maturity Date" set forth therein in its
entirety and by replacing it with the following:
"TERM LOAN MATURITY DATE: January 31, 2001, or, if the conditions
to the extension of the Term Loan Maturity Date for a one year period set
forth in Section 9.4 have been satisfied, January 31, 2002."
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1.2. NEW DEFINITIONS. Section 1.1 of the Loan Agreement is hereby
amended by adding to Section 1.1 in the appropriate location in the alphabetical
sequence the following new definitions:
"ADJUSTED ADVANCE RATE: A percentage equal to the lesser of (i)
70% and (b) 0.85 multiplied by the Net Appraised Value Percentage then in
effect; PROVIDED THAT the Adjusted Advance Rate determined in accordance
with the foregoing formula shall not be less than 65%."
"ADVANCE RATE INCREASE FEE: See Section 6.1(i)."
"COLLATERAL MONITOR: BankBoston Retail Finance Inc., a Delaware
corporation."
"EXCESS AVAILABILITY: As of any date, (a) the lesser of (i) the
Total Exit Commitment and (ii) the Borrowing Base, MINUS (b) the Total
Revolver Outstandings, MINUS (c) the aggregate amount of all accounts
payable of the Borrower that have not been paid in the ordinary course of
business consistent with past practices and which are overdue in
accordance with the trade terms comprising such practices."
"INTERNATIONAL STANDBY PRACTICES: With respect to any standby
Letter of Credit, International Standby Practices (ISP98) as promulgated
by the Institute of International Banking Law and Practice, Inc., or any
successor code of standby Letter of Credit Practices among banks adopted
by the Agent in the ordinary course of its business as a standby Letter
of Credit issuer and in effect at the time of issuance of such Letter of
Credit."
"LAYAWAY DEPOSIT RESERVE: At any time, the aggregate amount of
all deposits and other payments made to the Borrower by its customers in
respect of inventory being held on "layaway" for such customers pending
full payment of the purchase price thereof."
"NET APPRAISED VALUE PERCENTAGE: The net recovery value of the
Borrower's inventory expressed as a percentage of the cost thereof, as
set forth in the liquidation analysis most recently conducted (at the
time of reference) by The Nassi Group, following the same practices that
The Nassi Group has utilized in the preparation of inventory liquidation
analyses for the Agent prior to the Seventh Amendment Date. If the Agent
elects to use a liquidation specialist other than The Nassi Group, the
Net Appraised Value Percentage shall be such percentage as determined by
such other liquidation specialists utilizing, to the extent
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practicable, the practices utilized by The Nassi Group prior to the
Seventh Amendment Date."
"SEVENTH AMENDMENT DATE: The first date on which the conditions
to the effectiveness of the Seventh Amendment to this Agreement have been
satisfied."
1.3 AMENDMENT TO CLEAN-DOWN PROVISION. Section 2.4(d) of the Loan
Agreement is hereby amended by deleting the amount "$20,500,000" where it
appears in the seventh line thereof and by replacing it with the amount
"$22,500,000".
1.4 AMENDMENT TO LETTER OF CREDIT PROVISIONS. Section 4.1.2 of the
Loan Agreement is hereby amended by inserting, at the end of the last sentence
thereof, the words "or, in the case of a standby Letter of Credit, either the
Uniform Customs or the International Standby Practices".
1.5 AMENDMENT TO FEE PROVISIONS. Section 6.1 of the Loan Agreement is
hereby amended by deleting subsections (g) and (h) thereof in their entirety and
by replacing them with the following new subsections:
"(g) if the Term Loan has not been paid in full prior to the
first anniversary of the Effective Date, to the Agent for the account of
the Term Loan Lender the Additional Closing Fee. The Borrower shall pay
the Additional Closing Fee in installments on the first anniversary of
the Effective Date and on the Seventh Amendment Date in the respective
amounts equal to the portion of the Additional Closing Fee Prepayment
Amount payable on each such date in accordance with the definition of
Additional Closing Fee Prepayment Amount, PROVIDED THAT promptly
following the Additional Closing Fee Calculation Date, any amount by
which the Additional Closing Fee Prepayment Amount exceeds the Additional
Closing Fee shall be refunded by the Term Loan Lender to the Borrower or
applied to any Extension Fee, if applicable, in each case without
interest;
(h) to the Agent for the account of the Term Loan Lender on
each applicable Extension Date a fee in an amount equal to the principal
amount of the Term Loan outstanding on such date multiplied by 5% (each,
an "Extension Fee"); PROVIDED THAT promptly following the earlier to
occur of (A) the last day of the applicable Extension Period, or (B)
payment in full of the Term Loan, the Borrower shall be entitled to a
refund from the Term Loan Lender of any Extension Fee previously paid to
the extent that such Extension Fee exceeded an amount equal to the
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average daily balance of the Term Loan during the applicable Extension
Period multiplied by 5% (PRO RATED for the actual number of days in such
period). Any such refund shall be without interest and shall be credited
against any further Extension Fee, if applicable, or shall otherwise be
reimbursed to the Borrower upon payment in full of the Term Loan; and
(i) to the Agent for the account of the Term Loan Lender on
January 15 of each year occurring after the Seventh Amendment Date (other
than any year in which the Term Loan Maturity Date has not been extended
beyond January 31 of such year) a fee in the amount of $50,000 (each an
"Advance Rate Increase Fee"); PROVIDED THAT promptly following June 30 of
each year in which an Advance Rate Increase Fee has been paid, the
Borrower shall be entitled to a refund from the Term Loan Lender of a
portion of the Advance Rate Increase Fee determined by multiplying such
fee by a fraction, the denominator of which is the number of days in the
period from January 15 to June 30, and the numerator of which is the
number of days during such period in which (A) clause (b) of the
definition of Borrowing Base did not apply by reason of the occurrence
and continuance of an Event of Default or (B) clause (b) of such
definition does apply but the Adjusted Advance Rate is 65%."
1.6. AMENDMENT TO REPRESENTATIONS AND WARRANTIES. Section 8 of the
Loan Agreement is hereby amended by inserting, immediately after subsection (x)
thereof, the following new subsection:
"(y) The Borrower and its Subsidiaries have reviewed the areas
within their businesses and operations which could be adversely affected
by, and have developed or are developing a program to address on a timely
basis, the "Year 2000 Problem" (i.e. the risk that computer applications
used by the Borrower or any of its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999). Based upon such
review, each of the Borrower and its Subsidiaries reasonably believes
that the "Year 2000 Problem" will not have any materially adverse effect
on the business or financial condition of the Borrower or any of its
Subsidiaries."
1.7. AMENDMENT TO CONDITIONS PRECEDENT. Section 9.4 of the Loan
Agreement is hereby amended by deleting in its entirety the phrase "for two (2)
consecutive one year periods subject to the satisfaction, for each such
extension" where it appears in the second and third lines thereof and by
replacing it with the phrase "for a single one year period ending on January 31,
2002, subject to the satisfaction".
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1.8 AMENDMENTS TO AFFIRMATIVE COVENANTS.
(a) Section 10.1(a) of the Loan Agreement is hereby amended by
deleting the date "January 29, 2000" appearing in the fifth line of clause (vi)
thereof and replacing it with the date "February 2, 2002".
(b) Section 10.1(a) of the Loan Agreement is hereby further amended by
deleting the word "and" at the end of the clause (viii) thereof, by deleting the
period at the end of clause (ix) thereof and replacing it with a semicolon and
the word "and", and by inserting the following new clause (x) immediately after
clause (ix) thereof:
"(x) the reports, notices, materials or other information
concerning the Borrower or its Subsidiaries set forth on SCHEDULE 10.1(a)
attached hereto at the times set forth on such schedule, each to be in
form reasonably acceptable to the Agent."
(c) Section 10.1(b) of the Loan Agreement is hereby amended by
deleting each reference therein to the "Agent" and by replacing each such
reference with a reference to the "Agent and/or the Collateral Monitor".
Section 10.1(b) of the Loan Agreement is further amended by deleting the phrase
"two (2)" set forth in the sixteenth line thereof and by replacing such phrase
with the phrase "three(3)".
(d) Section 10.1 of the Loan Agreement is hereby further amended by
deleting the period at the end of subsection (l) thereof and by replacing such
period with a semicolon and the word "and", and by inserting, immediately after
subsection (l) thereof, the following two new subsections:
"(m) the Agent or the Collateral Monitor may from time to time
conduct "mystery shopping" visits to any or all of the Borrower's
business premises, shall provide to the Borrower a copy of any written
report of the results of such "mystery shopping" issued by any third
party "mystery shopper" engaged by the Agent or the Collateral Monitor,
and all reasonable expenses incurred by the Administrative Agent with
respect to such visits shall be reimbursed by the Borrower pursuant to
Section 16.1; and
(n) the Borrower shall perform all acts reasonably necessary to
ensure that the Borrower and its Subsidiaries shall become "Year 2000
Compliant" (i.e., that all software, hardware, firmware, equipment, goods
or systems utilized by such Person in its business or operations will
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properly perform date sensitive functions before, during and after
December 31, 1999) in a timely manner, including performing a
comprehensive review and assessment of all material systems of the
Borrower and its Subsidiaries and, if and as reasonably necessary or
appropriate, adopting a plan, with itemized budget, if appropriate, for
the remediation, monitoring and testing of such systems."
1.9. AMENDMENT TO NEGATIVE COVENANT. The Loan Agreement is hereby
amended by deleting Section 10.2(l) thereof in its entirety and by replacing it
with the following new section:
"(l) permit the aggregate number of stores or other retail
outlets of the Borrower (i) to exceed thirty-eight (38) stores or other
retail outlets during the Borrower's fiscal year ending January 29, 2000,
or (ii) to increase by more than four (4) stores or other retail outlets
during any subsequent fiscal year of the Borrower;"
1.10. AMENDMENTS TO FINANCIAL COVENANTS.
(a) The Loan Agreement is hereby amended by deleting Section 10.3(a)
thereof in its entirety and by replacing it with the following new section:
"(a) Make Capital Expenditures in any period described in the
table below that exceed, in the aggregate, the amount set forth opposite
such period in such table:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
January 31, 1999 - January 29, 2000 $5,500,000
January 30, 2000 - February 3, 2001 $6,000,000
February 4, 2001 - February 2, 2002 $6,000,000
</TABLE>
PROVIDED, THAT the Borrower may make additional Capital Expenditures, in
an aggregate amount not to exceed $3,000,000 in any fiscal year of the
Borrower (together, "Additional Capital Expenditures") in accordance with
the following provisions:
(i) in the event that the Borrower (x) issues equity securities
in a transaction otherwise permitted by the Agreement or
(y) receives payments arising out of a settlement or other
resolution of the Hickel Litigation, the Borrower may make
additional Capital Expenditures in an amount not to exceed
the net proceeds (after deduction of all costs, fees and
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expenses related thereto) thereof, so long as the Borrower
has demonstrated to the satisfaction of the Agent that,
after giving effect to all Additional Capital Expenditures
on a PRO FORMA basis, Excess Availability exceeds
$5,000,000;
(ii) in the event that Excess Availability exceeds $7,500,000
for a period of ninety (90) or more consecutive days, the
Borrower may make additional Capital Expenditures, so long
as the Borrower has demonstrated to the satisfaction of the
Agent that, after giving effect to all Additional Capital
Expenditures on a PRO FORMA basis, Excess Availability
exceeds $5,000,000; and
(iii) in the event that the cost to the Borrower of "building
out" any single new store or other retail outlet is less
than $450,000, the Borrower may make additional Capital
Expenditures consisting of expenditures related to such
build outs with respect to no more than two stores in any
fiscal year of the Borrower, so long as the Borrower has
demonstrated to the satisfaction of the Agent that, after
giving effect to all Additional Capital Expenditures on a
PRO FORMA basis, Excess Availability exceeds $2,500,000."
(b) The Loan Agreement is hereby amended by deleting Section 10.3(d)
thereof in its entirety and by replacing it with the following new Section
10.3(d):
"(d) Permit, as at the end of any of the fiscal quarters ending on the
dates set forth in the table below, (x) the aggregate amount of the
Borrower's inventory wherever located (so long such location is permitted
by the terms of this Agreement), valued at Book Value, DIVIDED BY (y)
the aggregate number of stores or other retail outlets of the Borrower on
such date, (i) to be less than the minimum amount set forth opposite such
date in such table, or (ii) to exceed the maximum amount set forth
opposite such date in such table:
<TABLE>
<CAPTION>
Date Minimum Amount Maximum Amount
---- -------------- --------------
<S> <C> <C>
October 30, 1999 $1,550,000 $1,781,000
January 29, 2000 $1,073,000 $1,284,000
April 29, 2000 $1,111,000 $1,321,000
July 29, 2000 $1,163,000 $1,374,000
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October 28, 2000 $1,550,000 $1,761,000
February 3, 2001 $1,045,000 $1,255,000
May 5, 2001 $1,171,000 $1,382,000
August 4, 2001 $1,226,000 $1,436,000
November 3, 2001 $1,632,000 $1,842,000
February 2, 2002 $1,103,000 $1,313,000"
</TABLE>
(c) Section 10.3(e) of the Loan Agreement is hereby amended by
deleting the table set forth therein in its entirety and by replacing it with
the following new table:
<TABLE>
<CAPTION>
"Date Minimum Ratio
---- -------------
<S> <C>
October 30, 1999 1.00 to 1.00
January 29, 2000 1.20 to 1.00
April 29, 2000 1.15 to 1.00
July 29, 2000 1.15 to 1.00
October 28, 2000 1.20 to 1.00
February 3, 2001 1.20 to 1.00
May 5, 2001 1.15 to 1.00
August 4, 2001 1.15 to 1.00
November 3, 2001 1.20 to 1.00
February 2, 2002 1.20 to 1.00"
</TABLE>
1.11. AMENDMENT TO EXPENSE PROVISIONS. Section 16.1 of the Loan
Agreement is hereby amended by inserting the phrase "mystery shoppers (absent
the continuance of a Default or an Event of Default, not to exceed $1,500 in the
aggregate for each fiscal year of the Borrower)" between the words "independent
appraiser)," and the words "and other potential advisors" in the tenth line
thereof.
1.12. AMENDMENT TO SCHEDULES. The Loan Agreement is hereby amended by
attaching, as SCHEDULE 10.1(a) thereto, SCHEDULE 10.1(a) attached to this
Amendment.
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2. AMENDMENT FEE. The Borrower agrees to pay to the Agent, for the
respective accounts of the Revolving Credit Banks in accordance with their
respective Commitment Percentages, an amendment fee in respect of this Amendment
in the amount of $160,000. The Borrower agrees to pay such amendment fee on the
effective date of this Amendment, and hereby authorizes the Agent to debit the
Operating Account to pay such amendment fee on such date.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS; NO DEFAULT;
AUTHORIZATION. The Borrower hereby represents, warrants and covenants to the
Banks and the Agent as follows:
(a) Each of the representations and warranties of the Borrower contained
in the Loan Agreement or in any other Loan Documents was true and correct as of
the date as of which it was made and is true and correct in all material
respects as of the date of this Amendment except to the extent such
representations and warranties expressly related to a prior date (in which case
they shall be true and correct as of such earlier date). No Default or Event of
Default has occurred and is continuing as of the date of this Amendment (after
giving effect to this Amendment).
(b) This Amendment has been duly authorized, executed and delivered by
the Borrower.
(c) This Amendment constitutes the legal, valid and binding obligation
of the Borrower, enforceable in accordance with its terms.
4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment
shall be subject to satisfaction of the following conditions on or prior to
October 31, 1999:
(a) This Amendment shall have been duly executed and delivered by the
Borrower, the Banks, and the Agent.
(b) The Agent shall have received Exit Notes or amended and restated
Exit Notes, as the case may be, payable to the order of each of the Banks, duly
completed with appropriate insertions, duly executed and delivered by the
Borrower and otherwise in form and substance satisfactory to the Agent.
(c) The Agent shall have received copies, certified by a duly
authorized officer of the Borrower as of the date hereof, of the resolutions of
the board of directors of the Borrower approving the transactions contemplated
hereby and the execution and delivery of this Amendment, and as to the titles,
<PAGE>
-13-
incumbency, and specimen signatures of the officers signing this Amendment and
the documents relating thereto.
(d) The Agent shall have received a copy, certified by a duly
authorized officer of the Borrower to be true and complete, of each of its
Charter Documents as in effect on the date of this Amendment.
(e) The Agent shall have received from the Borrower an update of the
Perfection Certificate delivered by the Borrower on the Effective Date certified
to be true, correct and complete by a duly authorized officer of the Borrower
and the results of UCC searches with respect to the Collateral located in any
new locations referred to therein, indicating no liens other than Permitted
Liens and otherwise in form and substance satisfactory to the Agent.
(f) All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the opinion of the Agent to perfect, protect
and preserve the security interest of the Agent in any Collateral located at any
new locations referred to in the updated Perfection Certificate shall have been
duly effected, and the Agent shall have received evidence thereof in form and
substance satisfactory to the Agent.
(g) The Agent shall have received a favorable legal opinion addressed
to the Banks and the Agent, dated as of the date hereof, in form and substance
satisfactory to the Agent, from Heller Ehrman White & McAuliffe, counsel to the
Borrower.
(h) The Agent shall have received the amendment fee referred to in
Section 2 above and the portion of the Additional Closing Fee Prepayment Amount
payable on the Seventh Amendment Date in accordance with the definition of
Additional Closing Fee Prepayment Amount.
(i) The Agent shall have received written confirmation of approval of
this Amendment executed by the Surety and written ratification of the
Supplemental Guaranty (as defined in the Purchase and Guaranty Agreement)
executed by the Guarantor (as defined in the Purchase and Guaranty Agreement),
each in form and substance satisfactory to the Agent.
(j) The Agent shall have received such other documents or instruments
relating hereto as the Agent shall have reasonably requested.
5. AMENDMENT AND RESTATEMENT. The Borrower, the Banks and the Agent
hereby covenant and agree to enter into an amendment and restatement of the Loan
Agreement in order to incorporate therein this Amendment and any
<PAGE>
-14-
other amendments thereof to date and to eliminate therefrom provisions relating
specifically to the Case.
6. CONSENT TO ASSIGNMENT. Immediately prior to the execution of this
Amendment, BankBoston, N.A. ("BkB") transferred and assigned to BBRF its entire
interest in and its rights, benefits, indemnities and obligations under the Loan
Agreement (other than in its capacity as Agent for the Banks under the Loan
Agreement) pursuant to (a) an Assignment and Acceptance (Revolving Credit)
between BkB and BBRF of even date herewith and (b) an Assignment and Acceptance
(Term Loan) between BkB and BBRF of even date herewith (together, the
"Assignment and Acceptances"). Each of the Borrower and the Banks hereby
acknowledges that it has received a copy of the Assignment and Acceptances and
consents to such transfer and assignment on the terms set forth therein. The
foregoing consent and any consent set forth in such Assignment and Acceptances
shall not be deemed to constitute a waiver of any applicable requirement of the
Loan Agreement that any other assignee of a Bank be an Eligible Assignee.
7. RATIFICATION, ETC. Except as expressly amended hereby, the Loan
Agreement, the other Loan Documents, and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects.
All references in the Loan Agreement or any related agreement or instrument to
the Loan Agreement shall hereafter refer to the Loan Agreement as amended
hereby.
8. NO OTHER CHANGES; NO IMPLIED WAIVER. Except as expressly provided
herein, the Loan Agreement and the other Loan Documents shall be unaffected
hereby and shall continue in full force and effect, and nothing contained herein
shall constitute a waiver by the Agent or any Bank of any right, remedy,
Default, or Event of Default, or impair or otherwise affect any Obligations, any
other obligations of the Borrower, or any right of the Agent or any Bank
consequent thereon. The Borrower acknowledges that the Loan Agreement as
amended hereby contains provisions giving the Agent the right to modify or
adjust certain provisions thereof, including without limitation the Borrowing
Base formula and components thereof, and hereby acknowledges and agrees that
neither the Agent nor any of the Banks has waived its right to enforce such
provisions, whether through course of dealing or otherwise.
9. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
<PAGE>
-15-
10. GOVERNING LAW. THIS AMENDMENT SHALL FOR ALL PURPOSES BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW).
<PAGE>
-16-
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as
a sealed instrument as of the date first above written.
LAMONTS APPAREL, INC.
By:/s/ Debbie Brownfield
Name: Debbie Brownfield
Title: EVP & CFP
BANKBOSTON, N.A., as Agent
By:/s/ Betsy Ratto
Name: Elizabeth A. Ratto
Title: VP
BANKBOSTON RETAIL FINANCE INC.,
in its respective capacities as a Revolving Credit
Bank and as Term Loan Lender
By: /s/ Joseph V. Balsamo
Name: Joseph V. Balsamo
Title: VP
THE CIT GROUP/BUSINESS CREDIT,
INC., as a Revolving Credit Bank
By: /s/ Cecil Chinery
Name: Cecil Chinery
Title: VP
<PAGE>
-17-
CONFIRMATION OF THE SURETY
AND
OF THE GUARANTOR
The Surety hereby confirms approval of the foregoing amendment in all
respects and directs the Term Loan Lender to give its consent thereto. The
Guarantor (as defined in the Purchase and Guaranty Agreement) hereby ratifies
and confirms the Supplemental Guaranty (as defined in the Purchase and Guaranty
Agreement) in all respects, and agrees that the Supplemental Guaranty, after
giving effect to foregoing amendment, shall continue in full force and effect.
SPECIALTY INVESTMENT I LLC
By: /s/ Alan R. Goldstein
Name: Alan R. Goldstein
Title: CFO & Mgr
GORDON BROTHERS PARTNERS,
INC.
By: /s/ Alan R. Goldstein
Name: Alan R. Goldstein
Title: CFO / EVP
<PAGE>
-18-
SCHEDULE 10.1(a)
ADDITIONAL REPORTING REQUIREMENTS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
REPORT FREQUENCY
--------------------------------------------------------------------------
<S> <C>
--------------------------------------------------------------------------
Sales Audit Reconciliation Weekly, on each Wednesday for the
(BBRF Form) immediately preceding week
--------------------------------------------------------------------------
Stock Ledger by Zone Monthly, within twenty (20) days after
the end of each month for the month
then ended
--------------------------------------------------------------------------
Store Activity Monthly, within thirty-five (35) days
(reported with Compliance after the end of each month for the
Certificate) month then ended
--------------------------------------------------------------------------
Inventory Reconciliation Monthly, within thirty-five (35) days
after the end of each month for the
month then ended
--------------------------------------------------------------------------
Inventory Aging Monthly, within thirty-five (35) days
after the end of each month for the
month then ended
--------------------------------------------------------------------------
</TABLE>
Reports should be sent to:
Daniel J. Williams
BankBoston Retail Finance Inc.
40 Broad Street
Boston, Massachusetts 02109
Tel: 617 434 4045
Fax: 617 434 4339
<PAGE>
Exhibit 99.1
Contact: Rivian Bell
(310) 827-2327
(888) 477-4319 (24 hours)
[email protected]
FOR IMMEDIATE RELEASE
LAMONTS RENEWS $42 MILLION FINANCING PACKAGE
WITH BANKBOSTON RETAIL FINANCE, INC.
KIRKLAND, WASH. - Oct.12, 1999 - Lamonts Apparel, Inc. (OTC:LMNT),
which operates 38 family apparel stores in five Northwestern states, announced
today that its $32.0 million working capital revolving credit facility with
BankBoston, N.A., which was due to mature Jan. 31, 2000, has been renewed
through Jan. 31, 2002. In connection with this renewal, Lamonts has exercised
the first of its two one-year options to extend its $10.0 million term loan. The
term loan, which was due to mature Dec. 26, 1999, was extended through Jan. 31,
2001.
Under the terms of the agreement, the working capital facility can be
increased to a maximum of $38.0 million in October and November to accommodate
seasonal inventory requirements. Additionally, the borrowing base formula now
allows Lamonts to borrow up to 70 percent of eligible inventory from Jan. 15 to
June 30, and 65 percent from July 1 through Jan. 14. Concurrent with these
changes, BankBoston, N.A. assigned the agreement to its affiliate, BankBoston
Retail Finance, Inc.
Alan R. Schlesinger, chairman, president, and chief executive officer
of Lamonts, affirmed that the company is "very pleased with the bank's continued
support of Lamonts, as demonstrated by BankBoston Retail Finance not only
extending but enhancing the total financing package."
Lamonts Apparel, Inc. operates 38 family apparel stores in Alaska,
Idaho, Oregon, Utah and Washington. The company is well-known in the Northwest
as a retailer of such brand name apparel as Alfred Dunner, Byer of California,
Bugle Boy, Lee, Levi, Liz Claiborne, Nike, Ocean Pacific, OshKosh,
<PAGE>
Rafaella, Sag Harbor, and Woolrich. Lamonts is headquartered in Kirkland,
Wash. in the greater Seattle area and employs approximately 1,500 people.
# # #
