Exhibit 10.1


 


FIFTH AMENDMENT TO CREDIT
AGREEMENT


 


This Fifth Amendment to Credit Agreement (this “Fifth
Amendment”) is made as of this 18th day of August, 2010 by and among:


 


THE CHILDREN’S PLACE RETAIL STORES, INC., a
Delaware corporation, for itself and as agent (in such capacity, the “Lead
Borrower”) for the other Borrowers party hereto;


 


the BORROWERS party hereto;


 


the GUARANTORS party hereto;


 


the LENDERS party hereto; and


 


WELLS FARGO RETAIL FINANCE, LLC, as Administrative
Agent, Collateral Agent, and Swing Line Lender.


 


BACKGROUND:


 


Reference is made to that certain Credit Agreement
(as amended, modified, supplemented or restated and in effect from time to
time, the “Credit Agreement”) dated as of July 31, 2008 by and among (i)
the Borrowers, (ii) the Guarantors, (iii) the Lenders, and (iv) Wells Fargo
Retail Finance, LLC, as Administrative Agent, Collateral Agent, and Swing Line
Lender.  The Loan Parties, the Agents,
and the Lenders desire to amend certain terms and conditions of the Credit Agreement
as set forth herein.  Accordingly, it is
hereby agreed as follows:


 


1.                                       Definitions.  All capitalized terms used herein and not
otherwise defined shall have the same meaning herein as in the Credit
Agreement.


 


2.                                       Amendments to Article I.  The provisions of Article I of the Credit
Agreement are hereby amended as follows:


 


(a)                                  The definition of “Payment Conditions” in Article I of the Credit
Agreement is deleted in its entirety and replaced with the following:


 


“Payment Conditions” means:


 


(a)           at the time of determination with
respect to any payment or prepayment of Indebtedness, that (i) no Default or
Event of Default has occurred and is continuing or would arise as a result of
making such payment or prepayment, and (ii) at least five (5) days prior to making
such payment or prepayment, the Lead Borrower shall have provided to the
Administrative Agent a certificate signed by a Responsible Officer of the Lead
Borrower, in form and substance reasonably satisfactory to the Administrative
Agent, certifying that (A) 


 


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in the case of any payment or prepayment of
Indebtedness in an aggregate amount not to exceed $20,000,000 in any Fiscal
Year, Excess Availability immediately prior to, and projected pro forma Excess
Availability (measured as of the end of each Fiscal Month) for the six Fiscal
Months immediately following, and after giving effect to, such payment or
prepayment shall be equal to or greater than $50,000,000, (B) in the case of
any payment or prepayment of Indebtedness in an aggregate amount in excess of
$20,000,000 in any Fiscal Year, the sum of Excess Availability plus Cash
on Hand immediately prior to, and the sum of projected pro forma Excess
Availability plus projected pro forma Cash on Hand (in each case,
measured as of the end of each Fiscal Month) for the twelve Fiscal Months
immediately following, and after giving effect to, such payment or prepayment
shall be equal to or greater than $75,000,000, and (C) the Loan Parties, on a
Consolidated basis, are, and will continue to be, Solvent after giving effect
to such payment or prepayment; and


 


(b)           at the time of determination with
respect to any Stock Repurchase Transaction, that (i) no Default or Event of
Default has occurred and is continuing or would arise as a result of entering
into such Stock Repurchase Transaction, and (ii) at least five (5) days prior
to entering into such Stock Repurchase Transaction (or, in the case of a Stock
Repurchase Transaction consisting of a series of related transactions, at least
five (5) days prior to the commencement of the first in the series of such
transactions), the Lead Borrower shall have provided to the Administrative
Agent a certificate signed by a Responsible Officer of the Lead Borrower, in
form and substance reasonably satisfactory to the Administrative Agent,
certifying that (A) Excess Availability immediately prior to, and projected pro
forma Excess Availability (measured as of the end of each Fiscal Month) for the
twelve Fiscal Months immediately following, and after giving effect to, such
Stock Repurchase Transaction shall be equal to or greater than twenty-five
percent (25%) of the Revolving Credit Ceiling, and (B) the Consolidated Fixed
Charge Coverage Ratio immediately prior to, and the projected pro forma
Consolidated Fixed Charge Coverage Ratio (measured as of the end of each Fiscal
Month) for the twelve Fiscal Months immediately following, and after giving
effect to, such Stock Repurchase Transaction, shall be equal to or greater than
1.00:1.0.  Prior to undertaking any Stock
Repurchase Transaction, the Lead Borrower shall have delivered to the
Administrative Agent forecasts prepared in good faith by management of the Lead
Borrower of Consolidated balance sheets, statements of income or operations and
cash flows, and Excess Availability projections on a Fiscal Month basis for the
immediately following twelve Fiscal Months, which projected financial
information shall give due consideration to results for prior Fiscal Months,
shall give effect to the proposed Stock Repurchase Transaction and shall be in
a form and based upon assumptions reasonably satisfactory to the Administrative
Agent.


 


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(b)                                 The following new definitions are hereby added to Article I of the
Credit Agreement in appropriate alphabetical order:


 


(i)                                     “Consolidated EBITDA” means, at any date of determination, an
amount equal to Consolidated Net Income of the Lead Borrower and its
Subsidiaries on a Consolidated basis for the most recently completed
Measurement Period, plus (a) the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Interest Charges,
(ii) the provision for federal, state, local and foreign income Taxes, (iii)
depreciation and amortization expense, (iv) non-cash stock-based compensation
expense and (v) other non-recurring expenses reducing such Consolidated Net
Income which do not represent a cash item in such period or any future period
(in each case of or by Lead Borrower and its Subsidiaries for such Measurement
Period), minus (b) the following to the extent included in calculating
such Consolidated Net Income: (i) federal, state, local and foreign income tax
credits and (ii) all non-cash items increasing Consolidated Net Income (in each
case of or by the Lead Borrower and its Subsidiaries for such Measurement
Period), all as determined on a Consolidated basis in accordance with GAAP.


 


(ii)                                  “Consolidated Fixed Charge Coverage Ratio” means, at any date of
determination, the ratio of (a) (i) Consolidated EBITDA minus (ii)
Capital Expenditures, minus (iii) the aggregate amount of federal,
state, local and foreign income Taxes paid in cash to (b) the sum of (i) Debt
Service Charges plus (ii) the aggregate amount of all Restricted
Payments made in cash, in each case, of or by the Lead Borrower and its
Subsidiaries for the most recently completed Measurement Period, all as
determined on a Consolidated basis in accordance with GAAP.


 


(iii)                               “Consolidated Group” means the Lead Borrower and its Subsidiaries
which are Consolidated for financial reporting purposes in accordance with
GAAP.


 


(iv)                              “Consolidated Interest Charges” means, for any Measurement
Period, the sum of (a) all interest, premium payments, debt discount, fees,
charges and related expenses in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Swap Contracts, but excluding any non-cash or
deferred interest financing costs, and (b) the portion of Capital Lease
Obligations with respect to such period that is treated as interest in
accordance with GAAP, in each case of or by the Lead 


 


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Borrower
and its Subsidiaries for the most recently completed Measurement Period, all as
determined on a Consolidated basis in accordance with GAAP.


 


(v)                                 “Consolidated Net Income” means, as of any date of determination,
the net income of the Lead Borrower and its Subsidiaries for the most recently
completed Measurement Period, all as determined on a Consolidated basis in
accordance with GAAP; provided, however, that there shall be
excluded (a) extraordinary gains and extraordinary losses for such Measurement
Period, (b) any income (or loss) included in the Consolidated net income of the
Lead Borrower during such Measurement Period in which any other Person has a
joint interest, except to the extent actually paid in cash to the Lead Borrower
or any of its Subsidiaries during such period, (c) with respect to any Person
which was not a member of the Consolidated Group throughout such Measurement
Period, the income (or loss) of such Person accrued prior to the date it became
a member of the Consolidated Group, and (d) the income of any Subsidiary of the
Lead Borrower during such Measurement Period to the extent that such Subsidiary
is prohibited by its Organization Documents or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Subsidiary from making a Restricted Payment in cash during such
Measurement Period, except that the Lead Borrower’s equity in any net loss of
any such Subsidiary for such Measurement Period shall be included in
determining Consolidated Net Income.


 


(vi)                              “Debt Service Charges” means, for any Measurement Period, the sum
of (a) Consolidated Interest Charges paid or required to be paid for such
Measurement Period, plus (b) principal payments made or required to be
made on account of Indebtedness (excluding the Obligations but including,
without limitation, Capital Lease Obligations) for such Measurement Period, in
each case of or by the Lead Borrower and its Subsidiaries for such Measurement
Period, all as determined on a Consolidated basis in accordance with GAAP.


 


(vii)                           “Measurement Period” means, at any date of determination, the
most recently completed trailing twelve (12) Fiscal Months.


 


(viii)                        “Stock Repurchase Transaction” has the meaning provided in Section
7.06(c).


 


3.                                       Amendment to Article VII.  The provisions of Section 7.06, “Restricted Payments”, are hereby amended by deleting
subparagraph (c) in its entirety and inserting the following in its place:


 


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“(c)         the Lead Borrower may repurchase its
capital stock in any transaction or series of related transactions which are
part of a common plan completed on or at any time within sixty (60) days after
the commencement thereof (each, a “Stock Repurchase Transaction”) so
long as the Payment Conditions are satisfied;”


 


4.                                       Ratification of Loan Documents; Waiver of Claims.


 


(a)                                  Except as otherwise expressly provided herein, all terms and conditions
of the Credit Agreement and the other Loan Documents remain in full force and
effect.  The Loan Parties hereby ratify,
confirm, and reaffirm that all representations and warranties of the Loan
Parties contained in the Credit Agreement or any other Loan Document are true
and correct in all material respects on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects
as of such earlier date.


 


(b)                                 Each of the Loan Parties hereby acknowledges and agrees that there is no
basis or set of facts on the basis of which any amount (or any portion thereof)
owed by the Loan Parties under the Loan Documents could be reduced, offset,
waived, or forgiven, by rescission or otherwise; nor is there any claim,
counterclaim, offset, or defense (or other right, remedy, or basis having a
similar effect) available to the Loan Parties with regard thereto; nor is there
any basis on which the terms and conditions of any of the Obligations could be
claimed to be other than as stated on the written instruments which evidence
such Obligations.


 


(c)                                  Each of the Loan Parties hereby acknowledges and agrees that it has no
offsets, defenses, claims, or counterclaims against the Agents or any Lender,
or any of their respective affiliates, predecessors, successors, or assigns, or
any of their respective officers, directors, employees, attorneys, or
representatives, with respect to the Obligations, or otherwise, and that if the
any Loan Party now has, or ever did have, any offsets, defenses, claims, or
counterclaims against the Agents or any Lender, or their respective affiliates,
predecessors, successors, or assigns, or their respective officers, directors,
employees, attorneys, or representatives, whether known or unknown, at law or
in equity, from the beginning of the world through this date and through the
time of execution of this Fifth Amendment, all of them are hereby expressly WAIVED, and the each of the Loan Parties
hereby RELEASES the Agents and
each Lender and their respective officers, directors, employees, attorneys,
representatives, affiliates, predecessors, successors, and assigns from any
liability therefor.


 


5.                                       Conditions to Effectiveness.  This Fifth Amendment shall not be effective
until each of the following conditions precedent has been fulfilled to the
reasonable satisfaction of the Administrative Agent:


 


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(a)                                  The Administrative Agent shall have received counterparts of this Fifth
Amendment duly executed and delivered by each of the parties hereto.


 


(b)                                 All corporate and shareholder action on the part of the Loan Parties
necessary for the valid execution, delivery and performance by the Loan Parties
of this Fifth Amendment shall have been duly and effectively taken and evidence
thereof reasonably satisfactory to the Administrative Agent shall have been
provided to the Administrative Agent.


 


(c)                                  After giving effect to this Fifth Amendment, no Default or Event of
Default shall have occurred and be continuing.


 


6.                                       Miscellaneous.


 


(a)                                  This Fifth Amendment may be executed in several counterparts and by each
party on a separate counterpart, each of which when so executed and delivered
shall be an original, and all of which together shall constitute one
instrument.  Delivery of an executed
counterpart of a signature page to this Fifth Amendment by telecopy or other
electronic transmission shall be effective as delivery of a manually executed
counterpart of this Fifth Amendment.


 


(b)                                 This Fifth Amendment expresses the entire understanding of the parties
with respect to the transactions contemplated hereby.  No prior negotiations or discussions shall
limit, modify, or otherwise affect the provisions hereof.


 


(c)                                  Any determination that any provision of this Fifth Amendment or any
application hereof is invalid, illegal or unenforceable in any respect and in
any instance shall not affect the validity, legality, or enforceability of such
provision in any other instance, or the validity, legality, or enforceability
of any other provisions of this Fifth Amendment.


 


(d)                                 The Loan Parties represent and warrant that they have consulted with
independent legal counsel of their selection in connection with this Fifth
Amendment and are not relying on any representations or warranties of the
Agents or the Lenders or their counsel in entering into this Fifth Amendment.


 


(e)                                  The Loan Parties shall pay all reasonable costs and expenses of the
Agents (including, without limitation, reasonable attorneys’ fees) in
connection with the preparation, negotiation, execution, and delivery of this
Fifth Amendment and related documents. 
The Loan Parties hereby acknowledge and agree that the Administrative
Agent may charge the Loan Account to pay such costs and expenses.


 


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(f)                                    THIS FIFTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.


 


[Signature Pages Follow]


 


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IN WITNESS WHEREOF, the parties have hereunto
caused this Fifth Amendment to be executed and their seals to be hereto affixed
as of the date first above written.


 


	
   

  	
  THE CHILDREN’S PLACE RETAIL STORES, INC., as Lead Borrower and as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Susan J. Riley

  
	
   

  	
  Name:

  	
  Susan J. Riley

  
	
   

  	
  Title: 

  	
  Executive Vice President, Finance &
  Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE CHILDREN’S PLACE SERVICES COMPANY, LLC, as a Borrower

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Susan J. Riley

  
	
   

  	
  Name:

  	
  Susan J. Riley

  
	
   

  	
  Title: 

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE CHILDRENSPLACE.COM, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Adrienne Urban

  
	
   

  	
  Name:

  	
  Adrienne Urban

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE CHILDREN’S PLACE (VIRGINIA),
  LLC, as a Guarantor

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Susan J. Riley

  
	
   

  	
  Name:

  	
  Susan J. Riley

  
	
   

  	
  Title: 

  	
  President

  



 


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  THE CHILDREN’S PLACE CANADA
  HOLDINGS, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Susan J. Riley

  
	
   

  	
  Name:

  	
  Susan J. Riley

  
	
   

  	
  Title: 

  	
  President

  



 


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  WELLS FARGO RETAIL FINANCE, LLC,

  
	
   

  	
  as Administrative Agent, Collateral Agent,
  Swingline Lender and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Michele Ayou

  
	
   

  	
  Name: 

  	
  Michele
  Ayou

  
	
   

  	
  Title: 

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Kathleen Dimock

  
	
   

  	
  Name: 

  	
  Kathleen
  Dimock

  
	
   

  	
  Title: 

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HSBC BUSINESS CREDIT (USA) INC.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Kysha A. Pierre-Louis

  
	
   

  	
  Name: 

  	
  Kysha
  A. Pierre-Louis

  
	
   

  	
  Title: 

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Nisha Gupta

  
	
   

  	
  Name: 

  	
  Nisha Gupta

  
	
   

  	
  Title: 

  	
  Account
  Executive

  



 


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