43470.0000143470.00001

4827-4352-9353 

Dennis F. Dunne, Esq. (admitted pro hac vice) Michael A. Condyles, Esq. (VA 27807) 

Evan R. Fleck, Esq. (admitted pro hac vice) Peter J. Barrett, Esq. (VA 46179) 

Michael W. Price, Esq. (admitted pro hac vice) 

MILBANK LLP

Jeremy S. Williams, Esq. (VA 77469) 

Brian H. Richardson, Esq. (VA 92477) 

55 Hudson Yards KUTAK ROCK LLP 

New York, New York 10001 901 East Byrd Street, Suite 1000

Telephone: (212) 530-5000 Richmond, Virginia 23219-4071 

Facsimile: (212) 530-5219 Telephone: (804) 644-1700 

Facsimile: (804) 783-6192 

Co-Counsel to Debtors in Possession 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

RICHMOND DIVISION 

) 

In re: ) Chapter 11 

) 

GYMBOREE GROUP, INC., et al.,

1

) Case No. 19-30258 (KLP) 

) 

Debtors. ) (Jointly Administered) 

) 

STIPULATION BY AND AMONG THE DEBTORS, THE DIP AGENT, AND THE OFFICIAL 

COMMITTEE OF UNSECURED CREDITORS WITH RESPECT TO THE DIP BUDGET AND 

RELATED MATTERS 

This stipulation (the “Stipulation”) is made and entered into, through their respective 

undersigned counsel, by and among (i) the above-captioned debtors-in-possession (the “Debtors”), 

(ii) Special Situations Investing Group, Inc., as administrative agent and collateral agent (the “DIP 

Agent”), for and on behalf of itself and the DIP Lenders, and (iii) the Official Committee of 

 

1

 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: 

Gymboree Group, Inc. (6587); Gymboree Intermediate Corporation (1473); Gymboree Holding Corporation 

(0315); Gymboree Wholesale, Inc. (6588); Gym-Mark, Inc. (6459); Gymboree Operations, Inc. (6463); 

Gymboree Distribution, Inc. (8669); Gymboree Manufacturing, Inc. (6464); Gymboree Retail Stores, LLC 

(6461); Gym-Card, LLC (5720); and Gymboree Island, LLC (1215). The Debtors’ service address is 71 

Stevenson Street, Suite 2200, San Francisco, California 94105. 

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Unsecured Creditors (the “UCC” and collectively with the Debtors and the DIP Agent, the 

“Parties”). 

Recitals

WHEREAS, on January 16, 2019 (the “Petition Date”), the Debtors filed voluntary 

petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 

(as amended, the “Bankruptcy Code”). 

WHEREAS, on January 17, 2019, the Court entered the Interim Order (I) Authorizing the 

Debtors to Obtain Postpetition Financing, (II) Authorizing the Debtors to Use Cash Collateral, 

(III) Granting Liens and Providing Superpriority Administrative Expense Status, (IV) Granting 

Adequate Protection to the Prepetition Lenders, (V) Modifying Automatic Stay, (VI) Scheduling a 

Final Hearing, and (VII) Granting Related Relief [Docket No. 81] (the “Interim DIP Order”). 

WHEREAS, on February 15, 2019, the Court entered the Final Order (I) Authorizing the 

Debtors to Obtain Postpetition Financing, (II) Authorizing the Debtors to Use Cash Collateral, 

(III) Granting Liens and Providing Superpriority Administrative Expense Status, (IV) Granting 

Adequate Protection to the Prepetition Lenders, (V) Modifying Automatic Stay, (VI) Scheduling a 

Final Hearing, and (VII) Granting Related Relief [Docket No. 348] (the “Final DIP Order”). 

WHEREAS, on March 4, 2019, the Court entered the Order (I) Approving the Sale of 

Certain J&J Assets Free and Clear of Liens, Claims, Interests and Encumbrances and 

(II) Approving the Assumption and Assignment of Executory Contracts and Unexpired Leases in 

Connection Therewith, and (III) Granting Related Relief [Docket No. 484] (the “JJ Sale Order”). 

WHEREAS, on March 4, 2019, the Court entered the Order (I) Approving the Sale of 

Certain Gymboree and Crazy 8 Assets Free and Clear of Liens, Claims, Interests and 

Encumbrances and (II) Approving the Assumption and Assignment of Executory Contracts and 

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Unexpired Leases in Connection Therewith, and (III) Granting Related Relief [Docket No. 487] 

(the “Gym/Crazy 8 Sale Order”, and together with the JJ Sale Order, the “Sale Orders”). 

WHEREAS, on March 5, 2019, the Debtors filed Notice of Closing Date of J&J Sale

[Docket No. 494] (the “J&J Sale Closing Notice”). 

WHEREAS, on or before March 9, 2019, the Debtors (with the permission of the DIP 

Lender) used cash collateral and/or sale proceeds to “true up” the Professional Fee Escrow (as 

defined below) for any unpaid amounts budgeted and/or incurred by the Case Professionals (as 

defined in the Final DIP Order) as of such date less $1.5 million with respect to the fees earned 

and expenses incurred by the Debtors’ professionals. 

WHEREAS, on April 4, 2019, the Debtors filed Notice of Closing Date of Sale of 

Gymboree and Crazy 8 Assets to TCP Brands, LLC [Docket No. 614] (the “Gym/Crazy 8 Sale 

Closing Notice”, and together with the J&J Sale Closing Notice, the “Sale Closing Notices”). 

WHEREAS, the Parties wish to memorialize their understanding regarding certain 

matters with respect to the use of estate cash, the DIP Budget and related matters. 

NOW THEREFORE, THE PARTIES HEREBY STIPULATE AND AGREE AS 

FOLLOWS:

1. Attached hereto as Exhibit A shall constitute the approved budget (“Approved 

Budget”) in the manner contemplated by DIP Agreement (as defined herein). 

2. The DIP Loans will be paid down by $100 million from the proceeds of the sales 

approved pursuant to the Sale Orders within one business day (the “Payment Date”) following the 

date on which this Stipulation has been fully executed. The Debtors may make additional 

payments of principal on the DIP Loan, subject to the Debtors’ prior satisfaction of the Specified 

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Obligations and the monetization of the Debtors’ lease at 71 Stevenson Street, San Francisco, 

California 94105. 

3. The DIP Agent2 will utilize its best efforts (and the Debtors will support the DIP 

Agent in such efforts) to provide (or to cause an affiliate of the DIP Agent to provide, including 

from a regulated bank affiliate) back-to-back and/or replacement letters of credit (or a substantially 

similar structure) (the “Replacement Letters of Credit”) with respect to the letters of credit issued 

by Bank of America, National Association (the “Prepetition ABL Agent”), which were cash 

collateralized pursuant to the Interim DIP Order and supported by the Debtors’ customs bonds (the 

“Subject Letters of Credit”), such that the cash collateral securing the Subject Letters of Credit can 

be released for the benefit of the estates (the “LC Monetization”) on or before April 19, 2019. The 

Replacement Letters of Credit shall not be secured by cash collateral. Without limiting the 

foregoing, after May 9, 2019, the Debtors shall have discretion (to the extent the LC Monetization 

has not yet occurred) to engage in efforts and, upon three (3) business days’ written notice to the 

DIP Agent and the UCC (with copy by email to counsel of record for each), enter into transactions 

to monetize the Subject Letters of Credit for the benefit of the estates, and the DIP Lender agrees 

to support such efforts and transactions unless the DIP Agent believes the Debtors are acting 

unreasonably (including, without limitation, by entering into a transaction that results in the estates 

receiving less than reasonable value in connection with such monetization), in which case the DIP 

Agent may seek relief from the Court on an expedited basis to prevent the Debtors from 

consummating any transaction; provided, however, that nothing herein shall relieve the Debtors of 

any obligation under the Bankruptcy Code (including, without limitation, under Section 363) to 

 

2

 Each capitalized term used but not defined herein has the meaning set forth in the Superiority Secured Debtor-inPossession Credit Agreement dated as of January 18, 2019 (as the same may be amended, extended, restated, 

supplemented, waiver or otherwise modified from time to time, the “DIP Agreement”). 

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5 

seek and receive Court approval with respect to any transaction entered into outside of the ordinary 

course of business. 

4. Upon the occurrence of the LC Monetization, the Debtors shall pay all outstanding 

WARN Act obligations and fully fund the Professional Fee Escrow, including the deferred 

amounts discussed in the foregoing paragraph (the “Specified Obligations”).3 The DIP Agent 

acknowledges and agrees that upon the occurrence of the LC Monetization (whether before or after 

the date specified in paragraph 3 above), the Debtors may use cash collateral to satisfy the 

Specified Obligations and that the DIP Agent consents to, and shall not object to or otherwise 

oppose, the use of cash collateral for such purpose. 

5. As soon as practicable following the Payment Date, the Debtors shall pay all 

outstanding amounts of “stub rent” for the period from the Petition Date through the end of January 

31, 2019 in the amount set forth in the Approved Budget (the “January Rent”). The Challenge 

Deadline (as defined in the Final DIP Order) shall be extended to April 30, 2019, unless further 

extended by agreement of the parties hereto or by Order of Court. Upon the timely payment of 

the January Rent, the Challenge Deadline (as defined in the Final DIP Order) with respect to the 

UCC will be deemed to have terminated. In exchange for the promises set forth herein, the UCC 

agrees that (a) it will not bring a Challenge (as defined in the Final DIP Order) on or before April 

12, 2019, and (b) it will not bring a Challenge at any time after the budgeted January Rent has 

been paid in full. 

6. The DIP Agent, on behalf of itself and the DIP Lenders, confirms that (i) it supports 

the Debtors’ payment of the outstanding fees of the Debtors’ and UCC’s professionals that have 

 

3

 The Debtors hereby represent and warrant that, to the best of their knowledge, the amount set forth in the 

Approved Budget is sufficient to satisfy, among other things, any and all existing WARN Act related liabilities 

and amounts that are owed or otherwise payable by the Debtors or their estates. 

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6 

been submitted to the Court and (ii) the success and transaction fees as contemplated by the 

respective engagement letters of Miller Buckfire & Co., LLC and its affiliate, Stifel, Nicolaus & 

Co., Inc. (collectively, “Miller Buckfire”) and Berkeley Research Group, LLC (“BRG”) and as 

delineated in the Approved Budget have been fully earned. 

7. All professional fees to be escrowed or reserved hereunder or under the Final DIP 

Order shall be maintained in an escrow account maintained at Citibank (the “Professional Fee 

Escrow”), which shall serve as the Fee Reserve Account (as such term is defined in the Final DIP 

Order) and shall not be property of the estates. 

8. The DIP Agent confirms that overages and underages (as compared to the amounts 

contained in the Approved Budget) with respect to Case Professional’s fees and expenses can be 

applied during any Testing Period and will be tested on a cumulative basis across all Case 

Professionals for variance testing purposes. 

9. The DIP Agent, for and on behalf of the DIP Lenders, hereby waives all Events of 

Default occurring on or prior to the date hereof under the Credit Agreement (collectively, the 

“Existing Defaults”). For avoidance of doubt, the waiver of the Existing Defaults shall not 

constitute a waiver of any future Events of Default occurring after the date hereof. 

10. Any actual savings realized against the amounts set forth in the Approved Budget, 

together with any excess cash that is not necessary to pay budgeted expenses set forth in the 

Approved Budget (as determined by the parties in good faith), in each case, as measured at the end 

of the Store Closing Sale period, shall be used to pay down the DIP Loan immediately upon 

reconciliation. 

11. The DIP Agreement and the Final DIP Order shall be deemed amended by this 

Stipulation to provide for the foregoing. Notwithstanding anything in the Sale Orders or Final DIP 

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7 

Order, the Parties consent to the terms of this Stipulation, including with respect to the use of the 

proceeds of the sales. 

12. The UCC agrees to use commercially reasonable efforts to negotiate and support a 

mutually acceptable plan of reorganization with the Parties. 

13. This Stipulation constitutes the entire agreement among the parties hereto regarding 

the subject matter hereof. 

14. This Stipulation may be executed in one or more counterparts and by facsimile or 

electronic copy, all of which shall be considered effective as an original signature. 

15. The parties acknowledge that this Stipulation is their joint work product and that, 

accordingly, in the event of ambiguities in this Stipulation, no inferences shall be drawn against 

either party on the basis of authorship of this Stipulation. 

16. The Bankruptcy Court shall retain exclusive jurisdiction with respect to all matters 

arising from or related to the implementation or interpretation of this Stipulation. 

[Remainder of page intentionally left blank] 

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 IN WITNESS WHEREOF and in agreement herewith, by and through the undersigned, 

the Parties have executed and delivered this Stipulation as of the date first set forth below. 

Dated: April 9, 2019 

 /s/ Evan R. Fleck 

Dennis F. Dunne, Esq. (admitted pro hac vice) 

 /s/ W. Austin Jowers 

W. Austin Jowers (admitted pro hac vice) 

Evan R. Fleck, Esq. (admitted pro hac vice) Christopher G. Boies (admitted pro hac vice) 

Michael W. Price, Esq. (admitted pro hac vice) 

MILBANK LLP 

Michael R. Handler (admitted pro hac vice) 

KING & SPALDING LLP 

55 Hudson Yards 1185 Avenue of the Americas 35th Floor 

New York, New York 10001 New York, New York 10036 

Telephone: (212) 530-5000 Telephone: (212) 556-2100 

and 

Michael A. Condyles, Esq. (VA 27807) 

and 

Dion W. Hayes (VSB No. 34304) 

Peter J. Barrett, Esq. (VA 46179) Douglas M. Foley (VSB No. 34364) 

Jeremy S. Williams, Esq. (VA 77469) 

Brian H. Richardson, Esq. (VA 92477) 

Sarah B. Boehm (VSB No. 45201) 

KUTAK ROCK LLP MCGUIREWOODS LLP 

901 East Byrd Street, Suite 1000 Gateway Plaza 

Richmond, Virginia 23219-4071 800 East Canal Street 

Telephone: (804) 644-1700 Richmond, Virginia 23219 

Facsimile: (804) 783-6192 Telephone: (804) 775-1000 

Counsel to the Debtors Counsel to the DIP Lender 

 /s/ Bradford J. Sandler 

Robert J. Feinstein, Esq. (admitted pro hac vice) 

Bradford J. Sandler, Esq. (admitted pro hac vice) 

PACHULSKI STANG ZIEHL & JONES LLP 

780 Third Avenue, 34th Floor 

New York, New York 10017-2024 

Telephone: (212) 561-7700 

and 

Christopher A. Jones (VSB # 40064) 

Vernon E. Inge, Jr. (VSB # 32699) 

Michael E. Hastings (VSB # 36090) 

Jennifer E. Wuebker (VSB # 91184) 

WHITEFORD, TAYLOR & PRESTON, LLP 

901 E. Cary Street, Suite 500 

Richmond, Virginia 23219-4063 

Telephone: (804) 977-3300 

Counsel to the UCC 

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Exhibit A 

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Project Gemstone

Cash Flow Summary

($ in 000's)

01/19 01/26 02/02 02/09 02/16 02/23 03/02 03/09 03/16 03/23 03/30 04/06 04/13 04/20 04/27 Total Weekly Wind Remaining Grand Total

Forecast / Actual Act Act Act Act Act Act Act Act Act Act Act Fcst Fcst Fcst Fcst Forecast Down Claims

Collections

JJ Sale (Excl. Direct Wire to JV) - - - - - - 1,645 43,915 - - - - - - - 45,560 - - 45,560

GYM & C8 IP Sale - - - - - - - - 11,100 - - 64,900 - - - 76,000 - - 76,000

Stores and E-Commerce 2,597 - - - - - - - - - - - - - - 2,597 - - 2,597

Inventory Liquidation Proceeds 136,796 - - - - - - - - - - - 9,271 - - 146,067 - - 146,067

Augment 2,000 - - - - - - - - - - - - - - 2,000 - - 2,000

FF&E Proceeds 1,000 - - - - - - - - - - - - - - 1,000 750 - 1,750

LC Recovery / Monetization - - - - - - - - - - - - - 5,500 - 5,500 9,280 - 14,780

Liquidator Expense Funding 12,353 - 1,823 5,670 1,593 7,384 2,990 3,474 3,789 5,489 4,830 3,526 3,112 2,799 1,396 60,229 222 - 60,451

Other Receipts 593 178 631 6 296 128 67 59 4 - 58 - - - - 2,020 500 - 2,520

Total Collections 155,339 178 2,454 5,676 1,889 7,512 4,702 47,448 14,893 5,489 4,888 68,426 12,383 8,299 1,396 340,972 10,752 - 351,725

Operating Disbursements

Freight, Duty, Shipping & DC Processing (1) (1,478) (3,550) (1,196) (211) (4,557) (1,342) (669) (675) (2,491) - (431) (102) - - (16,702) - - (16,702)

Payroll & Related (17) (7,152) (688) (6,857) (812) (6,996) (1,784) (5,557) (427) (4,372) (316) (3,858) (1,185) (3,037) (1,618) (44,673) (1,501) - (46,174)

Other Operating Disbursements (9) (225) (425) (628) (247) (109) (902) (273) (961) (1,189) (1,660) (605) (929) (454) (1,318) (9,932) (5,679) - (15,611)

Occupancy (Stores, HQ, & DC) - - (9,179) (1) - (43) (461) (3,373) (146) (2,016) (2,908) (1,362) (1,288) (1,049) (1,404) (23,230) (1,200) - (24,430)

Sales & Other Taxes - (1,709) - - - (2,500) (2,937) (84) (381) - - - - - (1,500) (9,111) - - (9,111)

Total Operating Disbursements (28) (10,563) (13,842) (8,682) (1,269) (14,204) (7,427) (9,956) (2,590) (10,067) (4,883) (6,256) (3,504) (4,539) (5,839) (103,648) (8,380) - (112,028)

Non-Operating Disbursements

Professional Fees & Escrow Funding (2,280) - (1,325) (2,451) (1,321) (1,126) (1,126) (7,266) (910) - (1,474) (652) (652) (2,161) (1,111) (23,855) (3,488) - (27,343)

Donation Liability - - - - (618) - - - - - - - - - - (618) - - (618)

Inventory Taking - - - - - - - - - - - - - - - - - -

Utility Deposits - - (410) - - - - - - - - - - - - (410) 410 - -

Stub Rent - - - - - - - - - - - - (3,015) - - (3,015) - - (3,015)

503(b)(9) - - - - - - - - - - - - - - - - - (9,000) (9,000)

Employee Programs - - - - - - - - - (1,535) - (86) (581) (4,822) (680) (7,704) - - (7,704)

Return Canada Proceeds Funded to US - - (1,900) - - - - - - - - (712) - - - (2,612) - - (2,612)

Total Non-Operating Disbursements (2,280) - (3,635) (2,451) (1,938) (1,126) (1,126) (7,266) (910) (1,535) (1,474) (1,450) (4,249) (6,983) (1,791) (38,214) (3,078) (9,000) (50,292)

Net Book Cash Flow Before Financing 153,032 (10,385) (15,023) (5,457) (1,319) (7,819) (3,851) 30,226 11,394 (6,113) (1,469) 60,720 4,631 (3,223) (6,234) 199,110 (706) (9,000) 189,404

Financing Activity

GS DIP Tranche A - Funding / (Pay Down) 10,000 - - - - - - - - - - - (10,000) - - - - - -

GS DIP Tranche B - 7,475 4,863 1,923 479 4,620 641 - - - - - (955) - - 19,044 - (19,044) -

GS Roll Up - - - - - - - - - - - - (89,045) - - (89,045) - - (89,045)

Revolver Pay Down (80,702) - - - - - - - - - - - - - - (80,702) - - (80,702)

Cash Collateralize LCs (105% of Face Value) (44,632) - - - - - - - - - - - - - - (44,632) - - (44,632)

Other Fees and Reserves (877) - - - - - - - - - - - - - - (877) - - (877)

DIP Fees & Interest (700) - - - - (1,236) - - - - - - - - - (1,936) - (2,015) (3,951)

Net Book Cash Flow After Financing 36,121 (2,910) (10,161) (3,534) (840) (4,435) (3,209) 30,226 11,394 (6,113) (1,469) 60,720 (95,369) (3,223) (6,234) 963 (706) (30,059) (29,802)

Cash Balance

Beginning Book Cash Balance 1,332 37,453 34,543 24,382 20,848 20,008 15,573 12,364 42,590 53,984 47,871 46,915 107,635 12,266 9,043 1,332 2,808 2,102 1,332

Net Cash Flow 36,121 (2,910) (10,161) (3,534) (840) (4,435) (3,209) 30,226 11,394 (6,113) (1,469) 60,720 (95,369) (3,223) (6,234) 963 (706) (30,059) (29,802)

Cash Flow True Up - - - - - - - - - - 513 - - - - 513 - - 513

Ending Cash Balance 37,453 34,543 24,382 20,848 20,008 15,573 12,364 42,590 53,984 47,871 46,915 107,635 12,266 9,043 2,808 2,808 2,102 (27,957) (27,957)

Anticipated Ordinary Business Expense Shortfalls

Corporate Rent - - 461 33 - - 371 - - - 353 - - - 109 1,326 - - 1,326

Non Reimburseable Corp Personnel Exp. - 5,824 449 1,216 169 995 641 - - 767 304 361 - 384 - 11,111 - - 11,111

Customs & Freight - 1,277 3,459 315 210 3,618 - - - - - - - - - 8,879 - - 8,879

Prepetition AP (OpEx) - 373 468 360 125 5 - - - - - - - - - 1,330 - - 1,330

Other (Suntrust Banking Fee) - - - - - 2 - - - - - - - - - 2 - - 2

Total - 7,475 4,838 1,923 504 4,620 1,012 - - 767 657 361 - 384 109 22,649 - - 22,649

Note: excludes Gap TSA funding and disbursement and collections / pass through of collections for liquidating stores

DRAFT - PRIVILEGED AND CONFIDENTIAL 

 SUBJECT TO MATERIAL CHANGE

4/9/2019

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