Express 2010 Annual Report Download - page 65

liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, and prepayment of
other debt; distributions, dividends, and the repurchase of capital stock; transactions with affiliates; the ability to
change the nature of our business or our fiscal year; the ability to amend the terms of the Opco term loan; and
permitted activities of Express Holding. All obligations under the Opco revolving credit facility are guaranteed
by Express Holding and its subsidiaries and secured by a lien on substantially all of the assets of Express Holding
and its subsidiaries; provided that the liens on certain assets of Express Holding and its subsidiaries shall be
junior in priority to the liens securing the Opco term loan.
The Opco revolving credit facility requires Express Holding and its subsidiaries to maintain a fixed charge
coverage ratio of 1.00 to 1.00 if excess availability plus eligible cash collateral is less than $30.0 million. Our
excess availability was $163.6 million as of January 29, 2011. We were not subject to this covenant as of
January 29, 2011 because excess availability plus eligible cash collateral was greater than $30.0 million.
Opco Term Loan
On July 6, 2007, we entered into a $125.0 million secured term loan. The proceeds of these borrowings were
used to finance, in part, the Golden Gate Acquisition and to pay transaction fees and expenses related to the
Golden Gate Acquisition. Borrowings under the Opco term loan bear interest at a rate equal to LIBOR plus an
applicable margin rate or the higher of The Wall Street Journal’s prime lending rate and 0.50% per annum above
the federal funds rate, plus an applicable margin rate.
On February 5, 2010, we entered into an amendment to the Opco term loan that became effective March 5, 2010
in connection with the Senior Notes offering. The amendment, among other things, (1) permitted the issuance of
the Senior Notes and the guarantees thereof by Express Holding and its subsidiaries, (2) increased the applicable
interest rate margins (subject to a further increase in the event Express, LLC’s corporate family rating is not B2
or better by Moody’s Investors Service, Inc. (“Moody’s”) and Express, LLC’s corporate credit rating is not B or
better by Standard & Poor’s Rating Services (“S&P”), (3) permitted a distribution by Express, LLC to allow
Express Topco to prepay the Term C Loan under the Topco credit facility in its entirety (plus any applicable
prepayment penalties and accrued and unpaid interest thereon), and Express Parent to make a cash distribution to
its equity holders in an aggregate amount equal to approximately $230.0 million, (4) permitted Express, LLC to
pay distributions to allow Express Topco to make regularly scheduled interest payments on the Term B Loan
under the Topco credit facility, and (5) permits Express Holding to own the equity interests of Express Finance,
the co-issuer of the Senior Notes. We paid customary amendment fees to consenting lenders in connection with
the amendment.
The applicable margin rate is determined by Express Holding’s leverage ratio of consolidated debt for borrowed
money (net of cash and cash equivalents provided that no more than $75.0 million of cash and cash equivalents
may be netted against consolidated debt for borrowed money for this purpose), including amounts drawn under
letters of credit and any synthetic debt, to Adjusted EBITDA (“Leverage Ratio”), in effect on the first day of each
interest period with respect to LIBOR-based advances and by the Leverage Ratio in effect from time to time with
respect to base rate-based advances. As a result of the amendment described above, effective March 5, 2010, the
applicable margin rate for LIBOR-based advances is 4.25% per annum, or 4.00% if the Leverage Ratio is less
than 1.00 to 1.00, and for base rate-based advances is 3.25% per annum, or 3.00% if the Leverage Ratio is less
than 1.00 to 1.00. Additionally, these rates may be further increased by 50 basis points per annum in the event
that Express, LLC fails to maintain, at the time of determination, a corporate family rating of B2 or better by
Moody’s and a corporate credit rating of B or better by S&P. As of January 29, 2011, the interest rate under the
Opco term loan was 4.54%.
Interest payments under the Opco term loan are due quarterly on the last calendar day of each April, July,
October, and January for base rate-based advances and on the last day of the applicable interest period for
LIBOR-based advances for interest periods of one, two, three, and six months (or if available to all lenders, nine
or twelve months), and additionally every three months after the first day of the interest period for LIBOR-based
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