Restoration Hardware 2014 Annual Report Download - page 99

and Bank of America, N.A. as administrative agent and collateral agent. The amended and restated credit
agreement increased the existing revolving line of credit by $182.5 million, while eliminating the $15.0 million
term loan facility under the existing revolving line of credit. Under the amended and restated credit agreement,
the Company has the option to increase the amount of the revolving line of credit by up to an additional $200.0
million, subject to satisfaction of certain customary conditions at the time of such increase. As a result of the
amended and restated credit agreement, unamortized deferred financing fees of $0.2 million related to the
previous facility were expensed in fiscal 2014 and $0.9 million related to the previous facility will be amortized
over the life of the new revolving line of credit, which has a maturity date of November 24, 2019.
The availability of credit at any given time under the amended and restated credit agreement is limited by
reference to a borrowing base formula based upon numerous factors, including the value of eligible inventory and
eligible accounts receivable. As a result of the borrowing base formula, the actual borrowing availability under
the revolving line of credit could be less than the stated amount of the revolving line of credit (as reduced by the
actual borrowings and outstanding letters of credit under the revolving line of credit). All obligations under the
amended and restated credit agreement are secured by substantially all of the Company’s assets, including
accounts receivable, inventory, intangible assets, property, equipment, goods and fixtures.
Borrowings under the revolving line of credit are subject to interest, at the borrowers’ option, at either the
bank’s reference rate or LIBOR (or the Bank of America “BA” Rate or the Canadian Prime Rate, as such terms
are defined in the credit agreement, for Canadian borrowings denominated in Canadian dollars or the United
States Index Rate or LIBOR for Canadian borrowings denominated in United States dollars) plus an applicable
margin rate, in each case.
The credit agreement contains various restrictive covenants, including, among others, limitations on the
ability to incur liens, make loans or other investments, incur additional debt, issue additional equity, merge or
consolidate with or into another person, sell assets, pay dividends or make other distributions, or enter into
transactions with affiliates, along with other restrictions and limitations typical to credit agreements of this type
and size. As of January 31, 2015, the Company was in compliance with all covenants contained in the credit
agreement.
Borrowings under the revolving line of credit are subject to interest, at the borrowers’ option, at either the
bank’s reference rate or LIBOR (or the BA Rate or the Canadian Prime Rate, as such terms are defined in the
credit agreement, for Canadian borrowings denominated in Canadian dollars or the United States Index Rate or
LIBOR for Canadian borrowings denominated in United States dollars) plus an applicable margin rate, in each
case. The amended and restated credit agreement contains various restrictive covenants, including, among others,
limitations on the ability to grant liens, make loans or other investments, incur additional debt, issue additional
equity, merge or consolidate with or into another person, sell assets, pay dividends or make other distributions or
enter into transactions with affiliates, along with other restrictions and limitations typical to credit agreements of
this type and size. The amended and restated credit agreement does not contain any significant financial or
coverage ratio covenants unless the domestic availability under the revolving line of credit is less than the greater
of (i) $20.0 million and (ii) 10% of the lesser of (A) the aggregate domestic commitments under the amended and
restated credit agreement and (B) the domestic borrowing base. If the availability under the amended and restated
credit agreement is less than the foregoing amount, then the Company is required to maintain a consolidated
fixed charge coverage ratio of at least one to one. Such ratio is approximately the ratio on the last day of each
month on a trailing twelve-month basis of (a) (i) consolidated EBITDA (as defined in the amended and restated
credit agreement) minus (ii) capital expenditures, minus (iii) the income taxes paid in cash to (b) the sum of
(i) debt service charges plus (ii) certain dividends and distributions paid. The amended and restated credit
agreement requires a daily sweep of cash to prepay the loans under the agreement while (i) an event of default
exists or (ii) the availability under the revolving line of credit for extensions of credit to the Company is less than
the greater of (A) $20.0 million and (B) 10% of the lesser of the domestic commitments and the domestic
borrowing base.
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