EXHIBIT 10.12
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "Amendment") is entered
into as of June 1, 1996, between Bank of America National Trust and Savings
Association ("Bank") and Strouds, Inc. ("Borrower"), with reference to the
following:
RECITALS
--------
A. Bank and Borrower are parties to that certain Credit Agreement dated
as of September 22, 1995, as modified by an amendment dated as of March 5,
1996 (as amended, the "Credit Agreement").
B. The parties hereto now desire to further amend the Credit Agreement
on the terms and conditions set forth below.
AGREEMENT
---------
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meanings ascribed to them in the Credit Agreement.
2. AMENDMENTS. The Credit Agreement shall be amended as follows:
(a) In Paragraph 1.1 of the Credit Agreement, the definition
"Availability Period" is amended in full to read as follows:
"'Availability Period' means the period commencing on the date of the
Agreement and ending on August 31, 1998."
(b) In Paragraph 1.1 of the Credit Agreement, the definition "Credit
Limit" is amended in full to read as follows:
"'Credit Limit' means Thirty Million Dollars ($30,000,000); provided,
however, that the Credit Limit shall increase to the amounts set forth below
if (i) Borrower's Debt Coverage Ratio is not less than the ratio set forth
below, and (ii) Inventory Days do not exceed the number of days set forth
below, on each respective date set forth below; provided, further, that the
calculation of the Credit Limit shall differ if and when Borrower incurs the
Term Debt, all as further set forth below:
(4051168.04)wsd8/6/96 -1-
CREDIT LIMIT DEBT COVERAGE RATIO INVENTORY
WITHOUT TERM DEBT 8/96 11/96 2/97 5/97 & THEREAFTER DAYS
----------------- ---------------------------------------- ---------
$32,500,000 1.45 1.35 1.30 1.30 200
$35,000,000 1.50 1.40 1.40 1.40 200
$40,000,000 N/A 1.50 1.50 1.50 200
CREDIT LIMIT WITH DEBT COVERAGE RATIO INVENTORY
TERM DEBT 8/96 11/96 2/97 5/97 & THEREAFTER DAYS
----------------- ---------------------------------------- ---------
$32,500,000 1.35 1.25 1.20 1.20 200
$35,000,000 1.40 1.30 1.30 1.30 200
$40,000,000 N/A 1.40 1.40 1.40 200
(c) Paragraph 1.1 of the Credit Agreement is amended to add the
definition "Debt Coverage Ratio" in alphabetical order as follows:
"'Debt Coverage Ratio' means the ratio calculated pursuant to
Paragraph 8.5 below."
(d) Paragraph 1.1 of the Credit Agreement is amended to add the
definition "Inventory Days" in alphabetical order as follows:
"'Inventory Days' means the product of the aggregate value of the
average value of Inventory (net of goods in transit) as set forth on
Borrower's balance sheet for each of the twelve (12) months immediately
preceding and including the last day of each quarterly accounting period,
DIVIDED BY the cost of sales (excluding occupancy expense) for the twelve (12)
months immediately preceding and including the last day of such quarterly
accounting period MULTIPLIED BY 365 days."
(e) Paragraph 1.1 of the Credit Agreement is amended to add the
definition "Term Debt" in alphabetical order as follows:
"'Term Debt' means additional term indebtedness from Lyon Credit
Corporation in an amount not to exceed Four Million Dollars ($4,000,000)."
(f) The first paragraph of subparagraph 2.3(e) of the Credit
Agreement is amended in full to read as follows:
"(e) In lieu of the interest rate related to the Reference Rate,
Borrower may elect to have all or portions of advances under the Revolving
Facility bear interest during each calendar quarter at the Offshore Rate plus
the percentage points set forth below corresponding to Borrower's Debt
Coverage Ratio as of the end of the immediately preceding quarterly accounting
period; and further subject to the following requirements:
(4051168.04)wsd8/6/96 -2-
DEBT COVERAGE RATIO DEBT COVERAGE RATIO PERCENTAGE POINTS
WITH TERM DEBT WITHOUT TERM DEBT
------------------- ------------------- -----------------
>1.60 >1.60 1.25
>1.30 1.40 1.10 1.20 1.60 >1.60 1.25
>1.30 1.40 1.10 1.20 1.60 >1.60 .25%
>1.30 1.40 1.10 1.20
