Exhibit 10.1

 

Execution Version

 

THIS AMENDMENT NO. 2 is made as of June 11, 2018 (the “Amendment Date”)

 

 

 

AMONG:

DAVIDSTEA INC., as borrower

 

 

 

(the “Borrower”)

 

 

AND:

BANK OF MONTREAL, as lender

 

 

 

(the “Lender”)

 

RECITALS

 

WHEREAS the Borrower and the Lender have entered into a credit agreement dated
as of April 24, 2015 in connection with the establishment of certain credit
facilities, as amended by amendment no. 1 dated September 15, 2016
(collectively, the “Credit Agreement”);

 

AND WHEREAS the Borrower has requested to make certain changes to the Credit
Agreement and the Lender has agreed to the Borrower’s request;

 

AND WHEREAS the parties wish to amend the Credit Agreement as set out below;

 

NOW THEREFORE, the parties have agreed as follows:

 

ARTICLE 1

INTERPRETATION

 

1.1        Definitions

 

In this amendment no. 2 (the “Amendment”), unless otherwise specifically
provided herein or unless there is something in the subject matter or context
inconsistent therewith, capitalized terms and expressions shall have the
meanings ascribed thereto in the Credit Agreement.

 

1.2        Interpretation

 

(a)         The terms “this Amendment”, “hereof”, “therein”, “thereunder” and
similar expressions refer, unless otherwise specified, to this amendment no. 2
taken as a whole and not to any particular Article, Section, or subdivision, as
the same may be amended, supplemented or restated from time to time.

 

(b)         The division of this Amendment into Articles, Sections, and other
subdivisions, the insertion of headings and the provision of a table of contents
are for convenience of reference only and shall not affect the construction or
interpretation hereof.

 

(c)         All references to Articles and Sections refer, unless otherwise
specified, to articles and sections of this Amendment. All underlines in this
Amendment are for reference purposes only.

 

(d)         Words and terms denoting inclusiveness (such as “include” or
“includes” or “including”), whether or not so stated, are not limited by and do
not imply limitation of their context or the words or phrases which precede or
succeed them.

 

(e)         In case of conflict between this Amendment and the Credit Agreement,
the provisions of this Amendment shall prevail.

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ARTICLE 2

AMENDMENTS

 

2.1        The following definitions are added to Section 1.1 of the Credit
Agreement (in alphabetic order):

 

“Borrowing Base” means, as of any particular date of determination, an amount
equal to the aggregate of (without duplication):

 

(a)         75% of the face value (exclusive of all sales Taxes, excise Taxes
and similar Taxes) of all Eligible Receivables; plus

 

(b)         50% of the estimated value (computed at the lower of market or cost
using the first- in/first-out method of inventory valuation applied in
accordance with GAAP) of all Eligible Inventory; less

 

(c)         any Priority Payables.

 

“Borrower Base Certificate and Compliance Certificate” a certificate of a senior
officer of the Borrower required from time to time pursuant to paragraph (i) of
Article 9, the form of which is attached hereto as Schedule 9(i).

 

“Cash Management Agreements” means any agreement entered into between the Lender
and/or its Affiliates (including, without limitation, BMO Harris Bank) with any
of the Credit Parties for the provision to such Credit Party with cash
management services for collections, treasury management services (including
controlled disbursement, overdraft, automated clearing house fund transfer
services, return items and interstate depository network services), any demand
deposit, payroll, trust or operating account relationships, commercial credit
cards, merchant card, purchase or debit cards, non-card e-payables services, and
other cash management services, including electronic funds transfer services,
lockbox services, stop payment services and wire transfer services, as the same
may be amended, restated, renewed or replaced from time to time.

 

“Eligible Inventory” means all raw materials and finished goods inventory of the
Credit Parties held in leased Real Property or warehouses of third party service
providers in Canada and in the United States of America, as listed in Schedule
8.1(g), that is subject to a valid, enforceable and perfected first-priority
Security (other than Priority Payables deducted in the calculation of the
Borrowing Base) in favour of the Lender pursuant to the Security, which the
Lender in its reasonable judgment determines to be “Eligible Inventory”,
including work in progress, but excluding, without limitation (i) inventory held
or sold on consignment, (ii) inventory subject to any Lien in favour of a third
Person or to a right of repossession by the supplier thereof (i.e. 30-day goods)
other than the Priority Payables deducted in the calculation of the Borrowing
Base, and (iii) inventory consisting of packaging or office supplies.

 

“Eligible Receivables” means any receivable arising from the sale of assets or
performance of a service in the ordinary course of a Credit Party’s business
that is subject to a valid, enforceable and perfected first-priority Security
(other than Priority Payables deducted in the calculation of the Borrowing Base)
in favour of the Lender, which the Lender in its reasonable judgment determines
to be an “Eligible Receivable”, but will exclude, without limitation, doubtful
accounts, intercompany accounts, holdbacks, progress billings, contra accounts
and accounts in dispute.

 

“Excess Availability” means, as at any particular date of determination, (i) the
lesser of the total commitment of the Revolving Facility and the Borrowing Base,
minus (ii) the aggregate amount of outstanding Borrowings thereunder as of the
close of business on such date, plus (iii) the total amount of cash as stated in
the most recent monthly unaudited consolidated financial statements

 

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of the Borrower attached to the Borrowing Base Certificate and Compliance
Certificate.

 

“Governmental Authority” means any domestic or foreign government including any
federal, provincial, state, territorial or municipal government and any
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government or any Person, body, department, bureau, agency,
board, tribunal, commission branch or office thereof or having or claiming to
have jurisdiction over the Credit Parties or any of their respective property or
assets.

 

“Maintenance Capital Expenditures” means all Capital Expenditures incurred for
the maintenance or refurbishment of its information technology systems and
infrastructure, for existing retail stores and other premises occupied by the
Credit Parties, but excluding, for greater certainty, (i) Capital Expenditures
incurred for the material upgrade, improvement or expansion of any information
technology system or infrastructure, and (ii) Capital Expenditures incurred for
the full renovation of any existing retail stores, it being understood that the
combined amount of (i) and (ii) must in no event exceed $4,000,000.

 

“Priority Payables” means, as at any particular time of determination, any
amount due and payable at such time by a Credit Party that is secured by a Lien
(whether choate or inchoate) or a statutory right in favour of a Governmental
Authority, that encumbers any asset of a Credit Party and that ranks, or is
capable of ranking, prior to or pari passu with any Lien on such asset granted
in favour of the Lender, including amounts due, deducted or withheld, as
applicable, and not yet paid, contributed or remitted, as applicable, by any
Credit Party in respect of  salaries, commissions or compensation for services
rendered, vacation pay, realty, municipal or similar Taxes, or pursuant to any
legislation relating to workers’ compensation, employment insurance, the Income
Tax Act (Canada) and any successor thereto and any regulations promulgated
thereunder, any pension plan or any similar legislation, in each case to the
extent the Lien securing such obligation ranks, or is capable of ranking, prior
to pasi passu with the Liens granted in favour of the Lender.

 

“Tax” and “Taxes” include, at any time, all taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings, dues and other charges of any
nature imposed by any Governmental Authority (including income, capital
(including large corporations), withholding, consumption, sales, use, transfer,
goods and services or other value-added, excise, customs, anti-dumping,
countervail, net worth, stamp, registration, franchise, payroll, employment,
health, education, business, school, property, local improvement, development,
education development and occupation taxes, together with all fines, interest,
penalties on or in respect of, or in lieu of or for non-collection of, those
taxes, surtaxes, duties, levies, imposts, rates, fees, assessments,
withholdings, dues and other charges.

 

2.2        The following definitions in Section 1.1 of the Credit Agreement are
deleted and replaced in their entirety with the following:

 

“Credit Documents” means this Agreement, the Security Documents, any Hedge
Contract, any Cash Management Agreement and all agreements, deeds, instruments
and other documents entered into by the Credit Parties from time to time
pursuant hereto or thereto, the whole as amended, supplemented or restated from
time to time.

 

“Credit Obligations” means all obligations, indebtedness and liabilities of the
Borrower and each of the other Credit Parties under or in connection with the
Credit Documents, including all obligations, indebtedness and liabilities under
the Revolving Facility, Hedge Contracts and Cash Management Agreements, and
whether present or future, direct or indirect, absolute or contingent, matured
or not, and wherever and however incurred.

 

“Fixed Charge Coverage Ratio” means, in respect of any period, for the Borrower,
on a consolidated basis, the ratio obtained by deducting Maintenance Capital
Expenditures and cash taxes from EBITDAR for that period, and dividing the
result by the aggregate of (a) Interest Expense, plus (b) rent expenses, plus
(c) all scheduled repayments of Debt during such period (but, for greater
certainty, excluding any voluntary repayments and any final balloon payments
which have become current Debt) plus (d) Distributions (other than Distribution
from a Credit Party to another Credit Party).

 

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“Revolving Period” means the period commencing on the Closing Date and ending at
the earliest of: (i) two years from the Amendment Date (subject to any extension
as provided under Section 2.2), and (ii) the date on which the Revolving
Facility is terminated and cancelled in its entirety in accordance with the
terms hereof.

 

“Tangible Net Worth” means, at any date of determination thereof, the
consolidated Shareholders’ Equity of the Borrower, plus debt-like preferred
shares of the Borrower duly subordinated and postponed to the prior repayment of
the Credit Obligations pursuant to terms and conditions satisfactory to the
Lender, less goodwill and any other intangible assets including deferred costs
and intellectual property; the whole as reflected in the last quarterly or
annual financial statements, whichever were most recently submitted, calculated
in accordance with GAAP.

 

2.3        The following definitions in Section 1.1 of the Credit Agreement are
deleted in their entirety:

 

“Preferred Shares” means all preferred shares of the Borrower that are issued
and outstanding on the Closing Date.

 

“Shareholders’ Loan” means the loan in the initial principal amount of
$2,951,599 made available to the Borrower by Rainy Day Investments Ltd.

 

2.4        Section 2.1 of the Credit Agreement is deleted and replaced in its
entirety with the following:

 

“2.1 The Revolving Facility

 

On the terms and subject to the conditions set out in this Agreement and, in
particular, subject to the conditions precedent set out in the Credit Agreement
and Article 4 of this Amendment, the Lender agrees to make available to the
Borrower a revolving term facility in the principal amount of $15,000,000 (the
“Revolving Facility”) or the Equivalent Amount in US Dollars to refinance
existing debt, for general working capital requirements and general corporate
purposes of the Borrower in the course of the DAVIDsTEA Business.

 

Each use of the Revolving Facility as well as any renewal or the conversion of
one use into another is a “Borrowing” and all such usages outstanding at any
time are “Borrowings”.”

 

2.5        Section 2.2 of the Credit Agreement is deleted and replaced in its
entirety with the following:

 

“No more than 90 days and no less than 60 days prior to the New Stated Maturity
Date (as such term is defined below), the Borrower may request an extension of
the Revolving Period from the Lender for a further period to a specified
Business Day which is 364 days after the New Stated Maturity Date (as such term
is defined below) by delivering to the Lender a written notice of such request
(the “Request for an Extension”). The parties confirm and agree that the Term as
extended by the amendment no. 1 in respect of the Credit Agreement to October
31, 2019 is hereby further extended to June 11, 2020 (the “New Stated Maturity
Date”).

 

No later than 30 days following the receipt by the Lender of the Request for an
Extension, the Lender will have informed the Borrower of its decision to extend
or not the Revolving Period. If the Lender consents to the extension of the
Revolving Period, and provided that no Default or Event of Default will have
occurred and remain outstanding, the then current Revolving Period will be
extended. Notwithstanding the foregoing, the Lender will not be required to
inform the Borrower of its decision to extend or not the Revolving Period prior
to receiving (i) the annual, audited and consolidated financial statements
required to be delivered to the Lender pursuant to Article 9(c) of the Credit
Agreement, and (ii) the budget and financial projections required to be
delivered to the Lender pursuant to Article 9(e) of the Credit Agreement.”

 

2.6        Section 2.3 of the Credit Agreement with respect to the Accordion
Feature is deleted and replaced in its entirety with “[Intentionally Deleted]”.

 

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2.7        Section 2.5(a) of the Credit Agreement is deleted and replaced in its
entirety with the following:

 

“2.5         Limits on Borrowings and Credit

 

(a)         Revolving Facility. Borrowings under the Revolving Facility may be
repaid and reborrowed at any time, subject to the terms and conditions of this
Agreement, including the applicable notice requirements.

 

At no time will the outstanding Borrowings under the Revolving Facility exceed
the lesser of (i) the total commitment for the Revolving Facility, and (ii) the
Borrowing Base, as calculated in the most recent Borrowing Base Certificate and
Compliance Certificate delivered to the Lender in accordance with Section 9(i).”

 

2.8        The following sentence is added at the end of Section 3.3 of the
Credit Agreement:

 

“The Borrower will make such prepayments as may be necessary to ensure that the
aggregate amount of the outstanding Borrowings under the Revolving Facility will
not at any time exceed the aggregate amount of the commitment under the
Revolving Facility.”

 

2.9        Section 4.1(e) of the Credit Agreement is deleted and replaced in its
entirety with the following:

 

“(e)  Applicable Margins  and Rates. The Applicable Margins, Applicable Rates
and Standby Fees vary as a function of the level of the Adjusted Leverage Ratio
as follows:

 

 

 

 

 

 

Level

Adjusted
Leverage Ratio

Applicable
Margin
(US Base
Rate and
Prime
Rate)

Applicable
Rate:
BAs, LIBOR,
LCs and LGs

Standby
Fees

I

R   3.0

0.50%

1.50%

0.30%

II

3.0 < R  4.0

0.75%

1.75%

0.35%

III

4.0 < R  5.0

1.25%

2.25%

0.45%

IV

R > 5.0

1.50%

2.50%

0.50%

 

2.10      Section 8.1(g) of the Credit Agreement is deleted and replaced in its
entirety with the following:

 

“(g) 
Owned   and   Leased   Real   Property   and   Third   Party   Warehouse   Service   Providers.
Schedule 8.1(g) contains a full and accurate description of all immovable
property and real estate owned by each Credit Party, if any, and the name and
address of the landlord of any leased premises used by any of the Credit Parties
in the course of the DAVIDsTEA Business (collectively, the “Real Property”), as
well as all third party warehouse service providers in Canada and in the United
States of America with whom any of the Credit Parties has entered into an
agreement (which is in effect on the date hereof) to store or hold its Eligible
Inventory. For greater certainty, the Real Property does not include any
existing retail stores of any Credit Party.”

 

2.11      The following paragraph (i) is added to Article 9 of the Credit
Agreement with respect to Reporting Covenants:

 

“(i) Monthly  Borrowing  Base  Certificate  and  Compliance  Certificate –
a  monthly Borrower Base Certificate and Compliance Certificate with respect to
the Borrowing Base and Excess Availability, substantially in the form of
Schedule 9(i), within 30 days of each month-end, certifying

 

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compliance with this Agreement and including the calculations necessary to
demonstrate the Borrowing Base and compliance with the financial covenants
provided for herein.”

 

2.12      Paragraph (o) of Article 10 of the Credit Agreement with respect to
Shareholders’ Loan and Preferred Shares is deleted in its entirety.

 

2.13      Paragraph (d) of Article 11 of the Credit Agreement is deleted and
replaced in its entirety with the following:

 

“(d)      Dividends and other Distributions. No Credit Party will pay any
dividend, redeem, retract, retire or purchase any share or interest in the
capital of such Credit Party or make any other payment to a shareholder or a
Related Party of a Credit Party (each a “Distribution”) other than (i)
Distributions by a Credit Party to another Credit Party, and (ii) any
Distribution where the payment is made by the issuance of common shares of the
Borrower.”

 

2.14      Subparagraphs (iii) and (iv) of Paragraph (b) (Limitation on Debt) of
Article 11 of the Credit Agreement are deleted and replaced in their entirety
with the following:

 

“(iii)       intentionally deleted;

 

(iv)       intentionally deleted;”

 

2.15      Paragraph (o) of Article 11 of the Credit Agreement is deleted and
replaced in its entirety with the following:

 

“(o)        Capital Expenditures. None of the Credit Parties will make Capital
Expenditures, other than Capital Expenditures representing in the aggregate for
all Credit Parties not more than (i) $15,000,000 for Fiscal Year 2018, and (ii)
$15,000,000 for Fiscal Year 2019.”

 

2.16      Section 12.1 of the Credit Agreement is deleted and replaced in its
entirety with the following:

 

“12.1 Financial Ratios and Minimum Excess Availability

 

The Borrower will maintain on a consolidated basis (calculated and tested at the
end of each Fiscal Year quarter on a rolling four-quarter basis):

(a)         Leverage Ratio - a Leverage Ratio that does not exceed 3.00:1.00 at
all times;

 

(b)         Tangible Net Worth - a minimum Tangible Net Worth of $65,000,000 at
all times; and

 

(c)         Fixed Charge Coverage Ratio - a minimum Fixed Charge Coverage Ratio
of 1.10:1.00 at all times.

 

In addition, the Borrower will maintain on a consolidated basis (calculated and
tested as of the last day of each calendar month):

(d)         Minimum Excess Availability - Excess Availability of not less than
$15,000,000 at all times.”

 

2.17      Section 13.1(b) of the Credit Agreement is deleted and replaced in its
entirety with the following:

 

“(b) Financial Covenants – a Credit Party defaults in
the  performance  of  the  financial  covenants contained in Article 12 or the
reporting covenants contained in Section 9(a), Section 9(b), Section 9(c) and
Section 9(i);”

 

2.18      Schedule 2.3 of the Credit Agreement with respect to Form of Increase
Request is deleted in its entirety.

 

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2.19      Schedule 8.1(g) of the Credit Agreement with respect to the Real
Property is deleted and replaced in its entirety with Schedule 8.1(g) attached
hereto.

 

2.20      Schedule 9(b) of the Credit Agreement with respect to Form of
Compliance Certificate is deleted and replaced in its entirety with Schedule
9(b) attached hereto.

 

2.21      Schedule 9(i) of this Amendment is added to the Credit Agreement as
Schedule 9(i) of the Credit Agreement.

 

2.22      The list of schedules to the Credit Agreement is deleted and replaced
in its entirety with the following:

 

“List of Schedules

 

Schedule 2.4(b) – Borrowing Request

 

Schedule 6.3 – Post-closing Undertakings

 

Schedule 8.1(c) – Litigation

 

Schedule 8.1(g) – Real Property and Third Party Warehouse Service Providers

 

Schedule 8.1(h) – Material Contracts

 

Schedule 8.1(i) – Intellectual Property

 

Schedule 8.1(j) – Licences and Permits

 

Schedule 8.1(k) – Subsidiaries

 

Schedule 9(b) – Form of Compliance Certificate

 

Schedule 9(i) – Form of Borrowing Base Certificate and Compliance Certificate”

 

ARTICLE 3

CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE AMENDMENT

 

Notwithstanding the execution of this Amendment, the provisions hereof will come
into force only upon the fulfillment of the following conditions to the
satisfaction of the Lender provided that once the provisions hereof have come
into effect, the amendment to Section 12.1(c) of the Credit Agreement shall, on
an exceptional basis, be deemed to have been in effect as of April 30, 2018 and
the Borrower will be deemed to have been in compliance therewith as of such date
given that the Fixed Charge Coverage Ratio calculated as of April 30, 2018 was
1.33:1, which is greater than the minimum Fixed Charge Coverage Ratio as
required in Section 2.16 hereof:

 

3.1        Delivery of Documents. The Credit Parties will have delivered to the
Lender, in form and substance satisfactory to the Lender:

 

(a)         a  pro-forma Compliance Certificate confirming compliance with the
financial covenants;

 

(b)         a bring-down certificate issued by a senior officer of the Borrower
confirming no changes have been made to the constating documents and by-laws of
the Borrower since the Closing Date, accompanied by good standing or equivalent
certificates issued by the appropriate governmental body of the Borrower’s
jurisdiction of incorporation and principal place of business, and specimen
signatures of the individuals authorized to sign on its behalf this Amendment
and the instruments, agreements, certificates and other documents provided for
or contemplated by this Amendment;

 

(c)         a duly certified copy of a resolution or resolutions of the board of
directors of the Borrower

 

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relating to its authority to execute and deliver and perform its obligations
under this Amendment and all other instruments, agreements, certificates and
other documents provided for or contemplated by this Amendment and the manner in
which and by whom the foregoing documents are to be executed and delivered,
certified by a senior officer of the Borrower; and

 

(d)         legal opinions from counsel to the Borrower relating to such matters
as the Lender may reasonably require.

 

3.2        Payment of all fees and expenses. The Lender shall have received
payment in full of all fees and expenses owing by the Borrower to the Lender at
the time of execution of this Amendment, including the extension fee of ten
thousand dollars ($10,000 CDN).

 

ARTICLE 4

POST-CLOSING UNDERTAKING

 

4.1        The Borrower shall use commercially reasonable efforts to deliver to
the Lender within ninety (90) calendar days of the Amendment Date, the consent
or waiver from each landlord and, if required further to review by legal counsel
to the Lender, third party warehouse service provider as listed in Schedule
8.1(g) (other than those which have been delivered to the Lender in accordance
with the Credit Agreement prior to this Amendment), including with respect to
the following addresses: (1) 8301 Place Lorraine, Anjou, Quebec, H1J 1E4,
Canada, (2) 3160, Boulevard Industriel Sherbrooke, Quebec, J1L 1V8, Canada, and
(3) 123 West Service Road, Champlain, New York, 12919 USA. Any failure to
satisfy this post-closing undertaking within such time period will constitute an
Event of Default.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

 

The Borrower hereby represents and warrants to the Lender that:

 

5.1        the representations and warranties set out in Section 8 of the Credit
Agreement remain true and correct in all material respects as of the date
hereof;

 

5.2        it and each of the intervening parties hereto has the corporate power
and authority to enter into this Amendment and to do all such acts and things
required hereunder to be done, observed or performed by it in accordance with
the terms of this Amendment; and

 

5.3        no Default has occurred which is continuing as of the date hereof.

 

ARTICLE 6

GENERAL

 

6.1        Subject to the conditions precedent set forth in Article 3 being met
in their entirety, this Amendment shall take effect as of the date hereof.

 

6.2        The Credit Documents, save as amended hereby in the case of the
Credit Agreement, and the security constituted thereby continue in full force
and effect, and this Amendment shall not constitute novation of the Credit
Agreement or the other Credit Documents.

 

6.3        This Amendment shall be governed by and interpreted in accordance
with the laws of the Province of Québec and the federal laws of Canada
applicable therein.

 

6.4        The parties hereto have expressly required that this Amendment be
drafted in English. Les parties aux présentes ont expressément exigé que le
présent amendement soit rédigée en anglais.

 

[SIGNATURE PAGES FOLLOWS]

 

 

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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by
their respective representatives or officers hereunto duly authorized.

 

 

 

 

 

DAVIDsTEA INC.,  as borrower

 

 

 

 

 

 

Per:

/s/ Howard Tafler

 

 

Name:

Howard Tafler

 

 

Title:

CFO

 

 

 

 

 

 

 

BANK OF MONTREAL, as lender

 

 

 

 

 

 

Per:

 

 

 

Name:

Jennifer Alarie

 

 

Title:

Vice President, Corporate Banking

 

 

 

 

[Signature page to Amendment No. 2]

 

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IN WITNESS WHEREOF,  the Parties have caused this Amendment to be executed by
their respective representatives or officers hereunto duly authorized.

 

 

 

 

 

 

 

 

 

DAVIDsTEA INC.,  as borrower

 

 

 

 

 

 

Per:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

BANK OF MONTREAL, as lender

 

 

 

 

 

 

Per:

/s/ Jennifer Alarie

 

 

Name:

Jennifer Alarie

 

 

Title:

Vice President, Corporate Banking

 

 

 

 

[Signature page to Amendment No. 2]

 

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By executing this Amendment,  the undersigned acknowledges having taken
cognizance of the foregoing and recognizes and confirms that the Security and
other Credit Documents provided by it is not affected or reduced by this
Amendment and that they are and will remain liable under such Security and
Credit Documents.

 

 

 

 

 

DAVIDsTEA INC.,  as guarantor

 

 

 

 

 

 

Per:

/s/ Howard Tafler

 

 

Name:

Howard Tafler

 

 

Title:

CFO

 

 

 

 

[Signature page to Amendment No. 2]

 

 

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-11-

 

 

Schedule 8.1(g)

 

REAL PROPERTY AND THIRD PARTY WAREHOUSE SERVICE PROVIDERS

 

1.    DTX Logistics Inc.

8301 Place Lorraine

Anjou, Quebec, H1J 1E4 Canada

 

2.    WIPTEC

3160, Boulevard Industriel Sherbrooke, Quebec, J1L 1V8 Canada

 

3.    Beeline Logistics

123 West Service Road Champlain, New York 12919 USA

 

4.    Olymbec

5690,5692 and 5700 Pare Street

Mount Royal, Quebec, H4P 2M2 Canada

 

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-12-

 

 

SCHEDULE 9(b)

 

Compliance Certificate

 

Reference is made to the credit agreement dated as of April 24, 2015 between the
Borrower and Bank of Montreal (the “Lender”), as amended by an amendment no. 1
dated as of September 15, 2016 and amendment no. 2 dated as of June 11, 2018 (as
the same may be further amended, supplemented or restated from time to time, the
“Credit Agreement”). All terms and expressions used herein but not otherwise
defined will have the same meanings herein as are ascribed thereto in the Credit
Agreement.

 

I,                                                                        ,  the  [insert  title]  of  DAVIDsTEA  Inc.
(the “Borrower”) hereby certify the matters set out below, without personal
liability, on behalf of the Credit Parties, as of [insert last day of fiscal
quarter]:

 

1.    I have examined and am familiar with the provisions of the Credit
Agreement and I have made such investigations of the financial and business
affairs of the Credit Parties and such inquiries of other officers and senior
personnel of the Credit Parties as are necessary or useful as a basis of the
matters certified herein.

 

2.    The representations and warranties contained in the Credit Agreement are
true and correct, except to the extent such representations and warranties
specifically relate to a different date, in which case such representations and
warranties shall be true and correct as of such date. The Material Contracts are
in full force and effect and the Credit Parties are not aware of any material
default thereunder or any event or circumstance that, with the giving notice,
the lapse of time or otherwise, is susceptible of becoming a material default.
All rental payments under leases governing all leased Real Property have been
made when due.

 

3.    No Default or Event of Default exists.

 

4.    The Adjusted Leverage Ratio (calculated at the end of the most recently
completed fiscal quarter on a rolling four-quarter basis) is .

 

5.    The Leverage Ratio (calculated at the end of the most recently completed
fiscal quarter on a rolling four-quarter basis) is , which is not more than
3.00:1.00, the maximum permitted ratio.

 

6.    The Fixed Charge Coverage Ratio (calculated at the end of the most
recently completed fiscal quarter on a rolling four-quarter basis) is , which
is not less than 1.10:1.00, the minimum permitted ratio.

 

7.    The Tangible Net Worth (calculated at the end of the most recently
completed fiscal quarter on a rolling four-quarter basis) is , which is not
less than $65,000,000, the minimum permitted Tangible Net Worth.

 

8.    The detailed calculations made in determining the foregoing ratios and
values are set out in the documents accompanying this certificate and are true
and correct in all respects.

 

9.    The aggregate amount of Debt of the Credit Parties under Purchase Money
Obligations is $, which is not more than $500,000, the maximum permitted under
the Credit Agreement.

 

10.  The aggregate amount of investments, guarantee and financial assistance
made or granted the Credit Parties (other than investments by a Credit Party in
another Credit Party or any financial assistance by a Credit Party in favour of
another Credit Party or investments in Cash Equivalents) is $, which is less
than $500,000, the maximum permitted under the Credit Agreement.

 

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-13-

 

 

11.  The aggregate consideration for any sale, transfer, conveyance, lease or
other disposition of property or assets of the Credit Parties received in the
current Fiscal Year (other than any sale, transfer, conveyance, lease or other
disposition made by a Credit Party to another Credit Parties or in the ordinary
course of the DAVIDsTEA Business, or the sale or other disposition of obsolete
or damaged equipment or inventory that is of nominal value) is $, which is less
than $500,000, the maximum permitted under the Credit Agreement.

 

12.  The aggregate consideration paid in respect of acquisitions of business
(either by way of purchase of assets or shares or otherwise) by the Credit
Parties in the current Fiscal Year is $, which is less than $2,500,000, the
maximum permitted under the Credit Agreement.

 

13.  The aggregate amount of Capital Expenditures made by the Credit Parties in
the current Fiscal Year is $, which is less than $15,000,000.

 

[Remainder of page intentionally left blank.]

 

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-14-

 

 

IN WITNESS HEREOF, the Borrower has executed this Compliance Certificate as of
the date first written above.

 

 

 

DAVIDsTEA INC.

 

 

 

 

 

 

 

Per:

 

 

 

 

 

 

Name:

 

 

Title:

 

 

I have authority to bind the corporation

 

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-15-

 

 

SCHEDULE 9 (i)

 

BORROWING BASE CERTIFICATE AND COMPLIANCE CERTIFICATE

 

Reference is made to the credit agreement dated as of April 24, 2015 between the
Borrower and Bank of Montreal (the “Lender”), as amended by an amendment no. 1
dated as of September 15, 2016 and an amendment no. 2 dated as of June 11, 2018
(as the same may be further amended, supplemented or restated from time to time,
the “Credit Agreement”). All terms and expressions used herein but not otherwise
defined will have the same meanings herein as are ascribed thereto in the Credit
Agreement.

 

I,                                                                        ,  the  [insert  title]  of  DAVIDsTEA  Inc.
(the “Borrower”) hereby certify the matters set out below, without personal
liability, on behalf of the Credit Parties, as of [insert last day of preceding
calendar month]:

 

1.          I have reviewed the terms of the Credit Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Credit Parties and have made such inquiries
of other officers and senior persons as are sufficient to enable me to make an
informed statement herein.

 

2.          Based on the foregoing and as of [insert relevant date]:

 

(a)         the examinations described in paragraph 1 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of any
event which constitutes a Default, except as set forth below.

 

(b)         described below are the exceptions, if any, to paragraph (a) above
by listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, are taking, or
propose to take with respect to each such condition or event:

[insert details]

 

(c)         the representations and warranties made under the Credit Agreement
are true  and correct as if made on the date hereof, except to the extent such
representations and warranties specifically relate to a different date, in which
case such representations and warranties shall be true and correct as of such
date.

(d)         I am not aware of any financial or other information which leads me
to believe that any of the covenants contained in the Credit Agreement will be
breached by the Borrower during the next month.

 

3.          The Borrowing Base is $                             , calculated in
accordance with Appendix  “A” attached hereto and, for greater certainty, taking
into account the appropriate sections of the Credit Agreement, including but not
limited to the definitions of Eligible Receivables, Eligible Inventory and
Priority Payables.

 

4.          The Excess Availability
is                                            .

 

5.          The reports and information provided herewith are accurate and
complete in all respects and all amounts certified as Priority Payables are
current amounts owing and not in arrears.

 

The foregoing certifications, together with the computations, amounts and
financial information set forth in the attachments hereto and delivered with
this Borrowing Base Certificate and Compliance Certificate in support hereof,
are made and delivered
this                                                                      day
of                                   ,            .

 

[Remainder of page intentionally left blank.]

 

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-16-

 

 

IN WITNESS HEREOF, the Borrower has executed this Borrowing Base Certificate and
Compliance Certificate as of the date first written above.

 

 

 

DAVIDsTEA INC.

 

 

 

 

 

 

 

Per:

 

 

 

 

 

 

Name:

 

 

Title:

 

 

I have authority to bind the corporation

 

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-17-

 

 

APPENDIX A

 

CALCULATIONS

 

(See attached)

 

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-18-

 

 

APPENDIX B

 

MONTHLY FINANCIAL STATEMENTS

 

(See attached)

 

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