exv10w1






EXHIBIT 10.1




FIRST AMENDMENT TO CREDIT AGREEMENT




          This FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of August 31, 2010 (this
“Amendment”), modifies that certain Credit Agreement, dated as of April 7, 2010 (as
amended, restated, extended, supplemented or otherwise modified in writing from time to time, the
“Credit Agreement”), among THE TALBOTS, INC., a Delaware corporation (the
“Company”), THE TALBOTS GROUP, LIMITED PARTNERSHIP, a Massachusetts limited partnership
(“Talbots Group”), TALBOTS CLASSICS FINANCE COMPANY, INC., a Delaware corporation
(“Talbots Finance”, and, together with the Company and Talbots Group, collectively, the
“Borrowers”, and, each, individually, a “Borrower”), the Company, as Borrower
Representative, each other Person from time to time party thereto as a “Credit Party”, GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, “GE
Capital”), as Agent for the several financial institutions from time to time party to thereto
(collectively, the “Lenders” and individually each a “Lender”) and for itself as a
Lender (including as Swingline Lender), and such Lenders. Capitalized terms used herein and not
defined shall have the meaning assigned to such terms in the Credit Agreement.




RECITALS




          WHEREAS, the Borrowers have requested that Agent and the Lenders agree to amend certain of the
terms and provisions of the Credit Agreement, as specifically set forth in this Amendment; and




          WHEREAS, Agent and the Lenders are prepared to amend the Credit Agreement on the terms,
subject to the conditions and in reliance on the representations set forth herein.




          NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the
parties hereto hereby agree as follows:




          Section 1. Amendments to Credit Agreement.




          (a) Section 1.9(c) (Letter of Credit Fee) of the Credit Agreement is hereby amended by
restating such Section 1.9(c) in its entirety as follows:





     “(c) Letter of Credit Fee. The Borrowers agree to pay to Agent for the
ratable benefit of the Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (i) without duplication of costs and expenses
otherwise payable to Agent or Lenders hereunder or fees otherwise paid by the
Borrowers, all reasonable costs and expenses incurred by Agent or any Lender on
account of such Letter of Credit Obligations, and (ii) for each calendar month
during which any Letter of Credit Obligation shall remain outstanding, a fee (the
“Letter of Credit Fee”) (A) for all documentary Letters of Credit, in an
amount equal to the product of the average daily undrawn face amount of all such
commercial Letters of Credit issued, guaranteed or supported by risk participation
agreements multiplied by a per annum rate equal to one-half (1/2) of the
Applicable Margin with respect to Revolving Loans which are LIBOR Rate Loans and (B)



 









 






for all standby Letters of Credit, in an amount equal to the product of the
average daily undrawn face amount of all such standby Letters of Credit issued,
guaranteed or supported by risk participation agreements multiplied by a per
annum rate equal to the Applicable Margin with respect to Revolving Loans which are
LIBOR Rate Loans; provided, however, at Agent’s or Required Lenders’
option, while an Event of Default exists (or automatically while an Event of Default
under subsection 7.1(f) or 7.1(g) exists), each such rate shall be
increased by two percent (2.00%) per annum. Such fee shall be paid to Agent for the
benefit of the Lenders in arrears, on the second day of each Fiscal Month and on the
date on which all Letter of Credit Obligations have been discharged. In addition,
the Borrowers shall pay to any L/C Issuer, on demand, its customary fees at then
prevailing rates, without duplication of fees otherwise payable hereunder (including
all per annum fees (including any fronting fees agreed to by the Borrowers and the
applicable L/C Issuer)), charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of such Letter of
Credit or otherwise payable pursuant to the application and related documentation
under which such Letter of Credit is issued.”



          (b) Section 1.9(d) (Prepayment Fee) of the Credit Agreement is hereby amended by
restating such Section 1.9(d) in its entirety as follows:





     “(d) Prepayment Fee. If the Revolving Loan Commitments are reduced or
terminated on or prior to the second anniversary of the Closing Date (whether
voluntarily or involuntarily and whether before or after acceleration), the
Borrowers shall pay to Agent, for the pro rata benefit of the Lenders, as liquidated
damages and compensation for the costs of being prepared to make funds available
hereunder an amount equal to one percent (1.00%) multiplied by the amount of the
reduction of the Aggregate Revolving Loan Commitment or the amount of the Aggregate
Revolving Loan Commitment so terminated. The Credit Parties agree that the amounts
payable hereunder are a reasonable calculation of Lenders’ lost profits in view of
the difficulties and impracticality of determining actual damages resulting from an
early reduction or termination of the Revolving Loan Commitments.”



          (c) Section 11.1 (Defined Terms) of the Credit Agreement is hereby amended by:





     (i) restating clause (a) of the definition of the term “Applicable Margin” in
its entirety as follows:




(a) for the period commencing on (i) the Closing Date through (but
excluding) the First Amendment Effective Date, (1) if a Base Rate Loan,
three and one half of one percent (3.50%) per annum and (2) if a LIBOR Rate
Loan, four and one half of one percent (4.50%) per annum, and (ii) the First
Amendment Effective Date through the last day of first full calendar month
following the six month anniversary of the Closing Date,



 









 






(1) if a Base Rate Loan, two and one half of one percent (2.50%) per annum
and (2) if a LIBOR Rate Loan, three and one half of one percent (3.50%) per
annum; and




     (ii) restating the table entitled “Revolving Loans and Swing Loans” contained
in the definition of the term “Applicable Margin” in its entirety as follows:



	 	 	 	 	 	 	 
	 	 	Revolving Loans and Swing Loans
	 	 	 	 	LIBOR Rate	 	Base Rate Loan
	Level	 	Average Availability	 	Loan Margin	 	Margin
	I
	 	Less than or equal to
$66,500,000
	 	3.50%
	 	2.50%
	II
	 	Greater than $66,500,000
but less than or equal
to $133,000,000
	 	3.25%
	 	2.25%
	III
	 	Greater than $133,000,000
	 	3.00%
	 	2.00%







     (iii) restating the definition of the term “Interest Payment Date” in its
entirety as follows:




“Interest Payment Date” means, (a) with respect to any LIBOR Rate
Loan, the last day of each Interest Period applicable to such Loan and (b)
with respect to Base Rate Loans (including Swing Loans) the second day of
each Fiscal Month




     (iv) restating the table contained in the definition of the term “Unused
Commitment Fee Rate” in its entirety as follows:



	 	 	 	 	 
	Level	 	Total Facility Unused Ratio	 	Unused Commitment Fee Rate
	I
	 	Greater than 50%
	 	0.75%
	II
	 	Less than or equal to 50%
	 	0.50%







     (v) inserting the following new definition of “First Amendment Effective Date”
in the appropriate alphabetical order:




“First Amendment Effective Date” means August 31, 2010.



 









 





          Section 2. Condition Precedent. This Amendment shall become effective as of the date
first written above (the “Effective Date”) upon the satisfaction of the following
conditions precedent:





     (a) Documentation. Agent shall have received all of the following, in form and
substance satisfactory to Agent:




     (i) a fully-executed and effective Amendment by the Borrowers, the Guarantors,
Agent and each of the Lenders; and




     (ii) such additional documents, instruments and information as Agent may
reasonably request to effect the transactions contemplated hereby.




     (b) No Default. On the Effective Date and after giving effect to this
Amendment, no event shall have occurred and be continuing that would constitute a Default or
an Event of Default.



          Section 3. Representations and Warranties; Reaffirmation of Grant. Each Credit Party
hereby represents and warrants to Agent and the Lenders that, as of the date hereof and after
giving effect to this Amendment, (a) all representations and warranties of the Credit Parties set
forth in the Credit Agreement and in any other Loan Document are true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text thereof) on and as of
the date hereof to the same extent as though made on and as of such date, except to the extent such
representations and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) on and as of such earlier
date, (b) no Default or Event of Default has occurred and is continuing, (c) the Credit Agreement
and all other Loan Documents are and remain legally valid, binding obligations of the Credit
Parties party thereto, enforceable against each such Credit Party in accordance with their
respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors’ rights generally or by equitable principles
relating to enforceability and (d) each of the Collateral Documents to which such Credit Party is a
party and all of the Collateral described therein do and shall continue to secure the payment of
all Obligations as set forth in such respective Collateral Documents. Each Credit Party that is a
party to the Guaranty and Security Agreement or any of the other Collateral Documents hereby
reaffirms its grant of a security interest in the Collateral to Agent for the ratable benefit of
the Secured Parties, as collateral security for the prompt and complete payment and performance
when due of the Obligations.




          Section 4. Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Loan Document shall survive the execution and
delivery of this Amendment, and no investigation by Agent or the Lenders shall affect the
representations and warranties or the right of Agent and the Lenders to rely upon them.







 









 








          Section 5. Amendment as Loan Document. This Amendment constitutes a “Loan Document”
under the Credit Agreement. Accordingly, it shall be an immediate Event of Default under the
Credit Agreement if any Credit Party fails to perform, keep or observe any term, provision,
condition, covenant or agreement contained in this Amendment or if any representation or warranty
made by any Credit Party under or in connection with this Amendment shall have been untrue, false
or misleading when made.




          Section 6. Costs and Expenses. The Borrowers shall pay on demand all reasonable
out-of-pocket costs and expenses of Agent (including the reasonable fees, charges and disbursements
of counsel to Agent) incurred in connection with the preparation, negotiation, execution and
delivery of this Amendment.




          Section 7. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE
THE APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER STATE).




          Section 8. Execution. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier
(or electronic mail (including in PDF format)) shall be effective as delivery of a manually
executed counterpart of this Amendment.




          Section 9. Limited Effect. This Amendment relates only to the specific matters
expressly covered herein, shall not be considered to be an amendment or waiver of any rights or
remedies that Agent or any Lender may have under the Credit Agreement, under any other Loan
Document (except as expressly set forth herein) or under Law, and shall not be considered to create
a course of dealing or to otherwise obligate in any respect Agent or any Lender to execute similar
or other amendments or waivers or grant any amendments or waivers under the same or similar or
other circumstances in the future.




          Section 10. Ratification by Guarantors. Each of the Guarantors acknowledges that its
consent to this Amendment is not required, but each of the undersigned nevertheless does hereby
agree and consent to this Amendment and to the documents and agreements referred to herein. Each
of the Guarantors agrees and acknowledges that notwithstanding the effectiveness of this Amendment,
such Guarantor’s obligations under the Loan Documents shall remain in full force and effect and
nothing herein shall in any way limit such obligations, all of which are hereby ratified, confirmed
and affirmed in all respects. Each of the Guarantors hereby further acknowledges that the
Borrowers, Agent and any Lender may from time to time enter into any further amendments,
modifications, terminations and/or amendments of any provisions of the Loan Documents without
notice to or consent from such Guarantor and without affecting the validity or enforceability of
such Guarantor’s obligations under the Loan Documents or giving






 









 







rise to any reduction, limitation, impairment, discharge or termination of such Guarantor’s
obligations under the Loan Documents.




[Remainder of page intentionally blank.]




 









 





          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
as of the date first above written.




	 	 	 	 	 
	 	BORROWERS:



THE TALBOTS, INC.

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Chief Operating Officer,

Chief Financial Officer and Treasurer 	 
	 
	 	THE TALBOTS GROUP, LIMITED PARTNERSHIP.

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Chief Operating Officer,

Chief Financial Officer and Treasurer 	 
	 
	 	TALBOTS CLASSICS FINANCE COMPANY, INC.

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Vice President, Chief Financial Officer
and Treasurer 	 
	 



Signature Page to First Amendment to TLB Credit Agreement





 









 








	 	 	 	 	 
	 	OTHER CREDIT PARTIES:



TALBOTS CLASSICS, INC.

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	TALBOTS IMPORT, LLC

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	BIRCH POND REALTY CORPORATION

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	TALBOTS INTERNATIONAL RETAILING LIMITED, INC.

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 



Signature Page to First Amendment to TLB Credit Agreement




 









 








	 	 	 	 	 
	 	OTHER CREDIT PARTIES (cont’d):



TALBOTS (U.K.) RETAILING LIMITED

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	TALBOTS (CANADA), INC.

 	 
	 	By:  	/s/ Michael Scarpa
 	 
	 	 	Name:  	Michael Scarpa 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 



Signature Page to First Amendment to TLB Credit Agreement





 









 








	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION,
 as Agent,
Swingline Lender and as a Lender

 	 
	 	By:  	/s/ Mark Forti
 	 
	 	 	Name:  	Mark Forti 	 
	 	 	Title:  	Duly Authorized Signatory 	 
	 



Signature Page to First Amendment to TLB Credit Agreement




 









 








	 	 	 	 	 
	 	Lenders:



HSBC BUSINESS CREDIT (USA) INC.

 	 
	 	By:  	/s/ Robert Mello
 	 
	 	 	Name:  	Robert Mello 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to First Amendment to TLB Credit Agreement




 









 








	 	 	 	 	 
	 	Lenders (Cont’d):



TD BANK, N.A.

 	 
	 	By:  	/s/ Jeffrey Saperstein
 	 
	 	 	Name:  	Jeffrey Saperstein 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to First Amendment to TLB Credit Agreement




 









 








	 	 	 	 	 
	 	Lenders (Cont’d):



SIEMENS FINANCIAL SERVICES, INC.

 	 
	 	By:  	/s/  Uri Sky
 	 
	 	 	Name:  	Uri Sky 	 
	 	 	Title:  	Vice President Credit 	 
	 








	 	 	 	 	 
	 	By:  	/s/ Anthony Casciano
 	 
	 	 	Name:  	Anthony Casciano	 
	 	 	Title:  	Senior Vice President	 
	 








Signature Page to First Amendment to TLB Credit Agreement