Item 1.01Entry into a Material Definitive Agreement.
On March 23, 2021, Revolve Group, Inc. (the “Company”) entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), by and among Alliance Apparel Group, Inc., Eminent, Inc. and Advance Development, Inc., as borrowers (each a “Borrower” and together, the “Borrowers”), and the Company, Twist Holdings, LLC, and FWRD, LLC, as guarantors (the “Guarantors” and together with the Borrowers, the “Loan Parties”), the lenders party thereto (the “Lenders”) and Bank of America, N.A., as administrative agent and collateral agent for the Lenders (the “Agent”), which amends and restates the Company’s existing Credit Agreement, dated as of March 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the effectiveness of the Amended and Restated Credit Agreement, the “Existing Credit Agreement”), by and among the Loan Parties, the Lenders and the Agent. The Amended and Restated Credit Agreement amends and restates the Existing Credit Agreement to, among other things, provide for a new senior secured revolving credit facility (including a letter of credit sub-facility) (the “ABL Facility”) in an initial aggregate principal amount of up to $75,000,000 (the “Total Commitments”). As of March 23, 2021, there were no revolving loans outstanding under the Amended and Restated Credit Agreement.
Subject to certain conditions, the Borrowers may request (but the Lenders are not required to provide) an increase of the Total Commitments from $75,000,000 to $100,000,000. Advances under the ABL Facility may not exceed a borrowing base equal to (a) 90.0% of eligible inventory (which amount shall be increased to 92.5% of eligible inventory during the months of July, August and October), plus (b) 90.0% of eligible credit card receivables, plus (c) 85.0% of eligible wholesale accounts receivable, subject, in each case, to applicable reserves. The commitments under the revolving facility terminate, and all outstanding revolving loans become due and payable, on March 23, 2026. Proceeds of the revolving loans under the Amended and Restated Credit Agreement may be used to refinance existing indebtedness under the Existing Credit Agreement, to pay fees and expenses incurred in connection with the Amended and Restated Credit Agreement and for general corporate purposes. The Borrowers may repay the revolving loans in whole or in part at any time without premium or penalty.
Outstanding borrowings under the ABL Facility will accrue interest at the Company’s option, at a rate per year of either (a) the base rate (the “Base Rate”), which is defined as a fluctuating rate per year equal to the greatest of (i) the prime rate then in effect, (ii) the federal funds rate then in effect, plus 0.50%, and (iii) an adjusted LIBO rate determined on the basis of a one-month interest period, plus 1.0%, or (b) an adjusted LIBO Rate for the applicable interest period, subject to a floor of 0.0% (the “LIBO Rate”), in each case, plus an applicable margin of 0.25% to 0.75% per year in the case of Base Rate loans and 1.25% to 1.75% per year in the case of LIBOR Rate loans, depending upon availability under the ABL Facility as of the most recently ended fiscal quarter. The Amended and Restated Credit Agreement provides for payment of a commitment fee equal to 0.20% per year of the average daily unused portion of the Total Commitments. The Amended and Restated Credit Agreement also requires the payment of other customary fees and costs.
The obligations under the Amended and Restated Credit Agreement are secured by substantially all of the Loan Parties’ assets (the “Collateral”) pursuant to that certain Security Agreement, dated as of March 23, 2016, by and among the Loan Parties and the Agent.
The Amended and Restated Credit Agreement contains customary affirmative covenants, including financial statement reporting requirements and delivery of borrowing base certificates. The Amended and Restated Credit Agreement also contains customary negative covenants that limit the ability of the Loan Parties and their subsidiaries to, among other things, incur debt, create liens and encumbrances, engage in certain fundamental changes, dispose of assets, prepay certain indebtedness, make restricted payments, make investments, and engage in transactions with affiliates. The Amended and Restated Credit Agreement also contains a financial maintenance covenant that requires the Borrowers to maintain a minimum consolidated fixed charge coverage ratio of 1.00 to 1.00 for any twelve consecutive fiscal month period, determined as of the last date of each fiscal quarter.
The Amended and Restated Credit Agreement contains customary events of default, including, without limitation, the failure to pay obligations when due, a material breach of representations and warranties or covenants, the entry of material judgments against the Loan Parties or their subsidiaries, the initiation of bankruptcy or insolvency proceedings of the Loan Parties or their subsidiaries, cross-defaults with respect to certain other material indebtedness, and any change in control. During the existence of an event of default, interest on the obligations under the ABL Facility may be increased to 2.0% above the otherwise applicable rate. During the existence of an event of default, the Lenders may require the immediate payment of all or a portion of any amounts outstanding under the ABL Facility and may exercise any other rights and remedies available to them under the Amended and Restated Credit Agreement, including, without limitation, initiating foreclosure proceedings with respect to any Collateral.
Agent and the Lenders and/or their respective affiliates have from time to time provided and may in the future provide commercial banking and other banking and/or financial services to the Company and its affiliates, for which they received or may receive customary compensation and expense reimbursement.
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The foregoing description of the Amended and Restated Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.