AMENDMENT NO. 1
This Amendment No. 1 dated as of November 15 1996 ("Amendment") is between
Garden Ridge Corporation, a Delaware corporation ("Borrower"), and NationsBank
of Texas, N.A. ("Bank").
A. The Borrower and the Bank are parties to the Second Amended and
Restated Credit Agreement dated as of October 26, 1995 ("Credit Agreement").
B. The Borrower and the Bank wish to amend the Credit Agreement in order
to (i) increase and extend the revolving credit facility evidenced by the Credit
Agreement and (ii) amend certain covenants under the Credit Agreement.
THEREFORE, the Borrower and the Bank hereby agree as follows:
Section 1. DEFINITIONS: REFERENCES. Unless otherwise defined in this
Amendment, each term used in this Amendment which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement.
Section 2. AMENDMENTS.
(a) DELETION OF CERTAIN DEFINITIONS. The definitions of "Borrowing
Base", "Borrowing Base and Compliance Certificate", "Clean-Up Period", "Eligible
Inventory", "QRS", "QRS Note", "Real Property Loan Agreement", "Real Property
Loan Documents", "Subordinated Debt", and "Subordination Agreement" contained in
Sections 1.1 are deleted in their entirety.
(b) AMENDMENTS TO CERTAIN DEFINITIONS. The following definitions
contained in Section 1.1 of the Credit Agreement are deleted and replaced with
the following:
"COMMITMENT" means the obligation of the Bank to make the Advances
and issue the Letters of Credit in an amount not to exceed $15,000,000 as
such amount may be reduced pursuant to Section 2.4 or terminated pursuant
to Section 7.
"GUARANTORS" means (a) Garden Ridge Finance Corporation, (b) Garden
Ridge Management, Inc., (c) Garden Ridge Investments, Inc., (d) Garden
Ridge, L.P., and (e) any other Subsidiary of the Borrower.
"MATURITY DATE" means the earlier of (A) June 20, 1998, and (B) the
earlier termination in whole of the Commitment pursuant to Section 2.4 or
Section 7.
"NOTE" means the $15,000,000 Promissory Note dated as of November
15, 1996 by the Borrower payable to the order of the Bank, as the same may
be increased, extended, rearranged or otherwise amended from time-to-time.
"TANGIBLE NET WORTH" means, for any Person and time, such Person's
Net Worth minus the amount of any such Net Worth attributable to goodwill,
patents, trademarks, copyrights, non-competition covenants, deferred
charges, consulting agreements and all other intangible assets (as
determined in accordance with GAAP).
(c) NEW DEFINITIONS. The following new definitions of "Compliance
Certificate" and Net Worth are added to Section 1.1 of the Credit Agreement in
alphabetical order.
"COMPLIANCE CERTIFICATE" means a compliance certificate in the form
of the Compliance Certificate attached as EXHIBIT A.
"NET WORTH" means, for any Person and time, the sum of the assets of
the Person less the total liabilities of the Person except any preferred
stock of such Person to the extent such preferred stock is classified as a
"liability" on such Person's financial statements, as set forth on its
consolidated balance sheet as of such date and determined in accordance
with GAAP consistently applied.
(d) SECTION 2.1. The first sentence of Section 2.1 is deleted and
replaced with the following:
The Bank agrees, on the terms and conditions set forth in this
Agreement, to make Advances to the Borrower from time-to-time on any
Business Day during the period from the date of this Agreement until the
Maturity Date in an aggregate outstanding amount not to exceed the
Commitment LESS the aggregate outstanding principal amount of the Advances
and the Letter of Credit Exposure at such time.
(e) SECTION 2.5. Section 2.5 of the Credit Agreement is deleted and
replaced with the following:
2.5 REPAYMENT. The Borrower shall repay the outstanding principal
amount of each Advance on the Maturity Date.
(f) SECTION 2.7. The first sentence of Clause (c) of Section 2.7 is
deleted and replaced with the following:
If at any time during the term of this Agreement, the
aggregate outstanding amount of the Advances plus the Letter of Credit
Exposure exceeds the Commitment, the Borrower shall immediately without
notice or demand pay the
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Bank an amount equal to the amount of such excess, including any unpaid
accrued interest on the principal amount prepaid.
(g) SECTION 2.12. Clause (b)(i) of Section 2.12 is deleted and
replaced with the following:
(i) if such issuance, increase, or extension would cause the
Letter of Credit Exposure to exceed the lesser of (A) $3,500,000 and
(B) the Commitment LESS the aggregate outstanding principal amount
of all Advances;
(h) SECTION 5.2. Section 5.2 is amended by (i) deleting the phrase
"Borrowing Base and Compliance Certificate" in clause (a) and replacing it with
the phrase "Compliance Certificate", (ii) deleting clause (b) in its entirety
and replacing it with the new clause (b) set forth below and (iii) deleting
clause (c) in its entirety and re-lettering each clause appearing after such
deleted clause.
(b) QUARTERLY FINANCIAL REPORTS. As soon as available and in any
event not later than 45 days after the end of each fiscal quarter, the
consolidated balance sheet of Borrower and its Subsidiaries as of the end
of such quarter and the consolidated statements of income, retained
earnings, and cash flow for the Borrower and its Subsidiaries as of the
end of such quarter, all in reasonable detail and duly certified by the
chief financial officer of the Borrower as having been prepared in
accordance with GAAP. The above financial reports shall be accompanied by
a duly completed Compliance Certificate and shall also include same store
sales information.
(i) SECTION 5.4. Section 5.4 is amended by (i) deleting the phrase
"minus Subordinated Debt" in clause (a) and (ii) deleting clause (c) in its
entirety and replacing it with the following:
(c) TANGIBLE NET WORTH. The Borrower shall not permit, at the end of
any fiscal quarter, its Tangible Net Worth to be less than (i) for each
fiscal quarter occurring during the fiscal year ended January 26, 1997,
$90,000,000 and (ii) for each fiscal quarter occurring during any
subsequent fiscal year, an amount equal to (A) the required Tangible Net
Worth for the prior fiscal year plus (B) an amount equal to 75% of the
cumulative amount of positive Net Income of the Borrower and its
Subsidiaries since the prior fiscal year plus (C) an amount equal to the
net proceeds received after giving effect to any associated transaction
costs (including, without limitation, underwriting discount, brokerage
fees, attorney fees and financial advisory fees) from the issuance by the
Borrower or any of its Subsidiaries of any
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equity to the extent that such issuance would be included in, and
therefore increase, the Borrower's Net Worth.
(j) SECTION 5.5. Section 5.5 is deleted in its entirety and replaced
with the following:
5.5 DEBT. None of the Borrower or any of its Subsidiaries shall
create, assume, incur, suffer to exist, or in any manner become liable,
directly or indirectly, or contingently in respect to, any Debt other than
all of the following:
(a) Debt owed to the Bank, including the Obligations and the
Equipment Loan.
(b) Debt existing on the date of this Agreement that is listed in
Schedule 4.6 (Debt), and any rearrangements, extensions, or refinancing
thereof which do not increase the amount thereof;
(c) Debt in the form of accounts payable to trade creditors for
goods or services which are not aged more than 60 days from the date due
and current operating liabilities (other than for borrowed money) which
are not more than 60 days past due, in each case incurred in the ordinary
course of business, as presently conducted, and paid within the specified
time, unless contested in good faith and by appropriate proceedings;
(d) Debt not otherwise permitted by this Section 5.5 in an aggregate
amount not to exceed 10% of the Borrower's Net Worth.
(e) Debt secured by Liens described in Section 5.6 (c),(d) or (e);
and
(f) Debt arising as a result of any guaranty of any operating leases
by the Borrower or Subsidiary.
(k) SECTION 5.6. Section 5.6 is deleted in its entirety and replaced
with the following:
5.6 LIENS. None of the Borrower or any of its Subsidiaries shall
create, assume, incur, or suffer to exist any Lien on any of its property
whether now owned or hereafter acquired, or assign any right to receive
income, except all of the following:
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(a) Liens securing Debt owed to the Bank, including, without
limitation, the Obligations and the Equipment Loan.
(b) Liens disclosed to the Bank in SCHEDULE 5.6 (Liens) provided
that the indebtedness secured by such Liens shall not be increased so that
the amount of such Debt becomes greater than the outstanding amount of
such Debt on the date of this Agreement;
(c) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens, landlord's liens (whether
statutory or contractual), and other similar liens arising in the ordinary
course of business securing obligations which are not overdue for a period
or more than 30 days;
(d) Liens arising in the ordinary course of business out of pledges
or deposits under workers compensation laws, unemployment insurance, old
age pensions, or other social security or retirement benefits, or similar
legislation to secure public or statutory obligations;
(e) Liens for taxes, assessment or other governmental charges and
which are not yet due or which are being actively contested in good faith
by appropriate proceedings;
(f) Liens arising in the ordinary course of business which are not
incurred in connection with the borrowing of money or obtaining of
advances or credit and which do not materially detract from the value of
the Borrower's or its Subsidiaries' Property or assets or materially
interfere with their business; and
(g) Liens securing purchase money indebtedness (including Capital
Lease obligations) to the extent such Debt is permitted to be incurred
pursuant to Section 5.5 (d); PROVIDED that, Liens on accounts receivable
and inventory of the Borrower and its Subsidiaries (other than Liens
securing the Obligations) are expressly prohibited.
(l) SECTION 5.8. Section 5.8 is amended by deleting the phrase "or
the sale of the QRS Note" in clause (b) of such Section.
(m) SECTION 5.9. Section 5.9 is deleted in its entirety and replaced
with the following:
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5.9 DISTRIBUTIONS, ETC. Without prior approval of the Bank, the
Borrower and its subsidiaries shall not make any Restricted Payments;
PROVIDED that, the Borrower may pay dividends on its capital stock
(whether common or preferred) if no Default has occurred and is continuing
or would occur after giving effect to the payment of such dividends.
(n) SECTION 5.11. Section 5.11 is deleted in its entirety and
replaced with the following:
5.11 INVESTMENTS AND CAPITAL EXPENDITURES. None of the Borrower or
any of its Subsidiaries shall make or hold any investment in any Person,
including capital contributions to the Person, investments in the debt or
equity securities of the Person, loans guaranties, or other extensions of
credit to the Person (including trade credit), or make any capital
expenditures or capital investments (each of the foregoing investments or
capital expenditures being referred to as an "Investment") except
(a) intercompany loans or advances among the Borrower and its
Subsidiaries;
(b) Liquid Investments;
(c) capital expenditures during any fiscal year in an amount not to
exceed 20% of the Borrower's Net Worth determined as of the last day
of the preceding fiscal year; and
(d) as permitted by the Bank.
(o) SECTION 6.6. Section 6.6 is deleted in its entirety and replaced
with the following:
6.6 CROSS DEFAULT. (a) Any breach by the Borrower or any Subsidiary
of any contract related to any Debt (except intercompany loans and
advances) of the Borrower in excess of $100,000 and such breach is not
cured within any applicable grace period; (b) any breach by the Borrower
or any Subsidiary of any contract related to any Lien securing any Debt
(except intercompany loans and advances) in excess of $100,000 on the
Borrower's or any Subsidiary's Property and such breach is not cured
within any applicable grace period; or (c) any breach by the Borrower or
any Subsidiary of any contract where such breach could have a material
adverse effect on the ability of the Borrower to perform its duties under
this Agreement or
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any other Credit Document and such breach is not cured within any
applicable grace period;
(p) SCHEDULE 4.5 AND 4.8. Schedule 4.5 is deleted in its entirety
and replaced by the attached Schedule 4.5 Schedule 4.8 is deleted in its
entirety and replaced by the attached Schedule 4.8.
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants that (a) the execution, delivery and performance of this Agreement are
within the corporate power and authority of the Borrower and have been duly
authorized by the appropriate proceedings and (b) this Agreement constitutes a
legal, valid and binding obligation of the Borrower enforceable in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity.
Section 4. EFFECTIVENESS. The Amendment shall be effective on the date
first set forth above when:
(a) the Borrower and the Bank shall have duly and validly executed
originals of this Agreement and delivered them to the Bank;
(b) the Borrower shall have executed and delivered, or caused to be
executed or delivered, originals of (i) its $15,000,000 Promissory Note
dated as of November 15, 1996 payable to the order of the Bank, and (ii)
Guaranties executed by Garden Ridge Finance Corporation ("Finance"),
Garden Ridge Management, Inc. ("Management"), Garden Ridge Investments,
Inc. ("Investments"), and Garden Ridge, L.P. ("Partnership");
(c) the Borrower shall have delivered an opinion of its counsel in
form and substance satisfactory to the Bank;
(d) each of the Borrower, Finance, Management, and Investments shall
have delivered a certificate of its Secretary or Assistant Secretary
certifying its certificate of incorporation, bylaws, resolutions and
incumbency and in form and substance satisfactory to the Bank; and
(e) the Partnership shall have delivered a copy of its Agreement of
Limited Partnership certified by the Secretary or Assistant Secretary of
Management, its general partner.
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Section 5. CHOICE OF LAW. This Amendment shall be governed by and
construed and enforced in accordance with the laws of the State of Texas.
Section 6. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original.
PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, A
CREDIT AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE CREDIT AGREEMENT EXCEEDS
$50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE CREDIT AGREEMENT IS IN WRITING
AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY'S AUTHORIZED REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN CREDIT
AGREEMENT, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY
AND MERGED INTO THE CREDIT AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first above written.
BORROWER:
GARDEN RIDGE CORPORATION
/s/ XXXX XXXXXXXXX
Xxxx Xxxxxxxxx
Chief Financial Officer
BANK:
NATIONSBANK OF TEXAS, N.A.
/s/ XXXXXXX X. XXXXXXX, XX.
Xxxxxxx X. Xxxxxxx, Xx.
Vice President
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