XXXX-XXXXX COMPANY
FOURTH AMENDMENT TO CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank,
as Administrative Agent
Chicago, Illinois
Other Banks party to the
Credit Agreement
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of October 8, 1996 (such Credit
Agreement, as heretofore amended and as may be amended from time to time, being
hereinafter referred to as the "CREDIT AGREEMENT") and currently in effect
between you and us. Capitalized terms used without definition below shall have
the same meanings herein as they have in the Credit Agreement.
The Borrower has requested that the Banks make certain modifications to the
borrowing arrangements provided for in the Credit Agreement and the Banks have
agreed to accommodate such request by the Borrower on the terms and conditions
set forth herein.
1. AMENDMENTS.
Upon satisfaction of the conditions precedent to effectiveness set forth
below, the Credit Agreement shall be amended (effective as of January 1, 1999)
as follows:
SECTION 1.01. NEW APPLICABLE MARGIN. (a) Section 1.3(c) of the Credit
Agreement shall be amended by deleting the text appearing before the proviso
therein and inserting the following in lieu therefor:
"(c) APPLICABLE MARGIN. With respect to Committed Loans and the
facility fee payable under Section 4.1 hereof, the "Applicable Margin"
shall mean the rate specified for such Obligation below, subject to
adjustment as hereinafter provided:
When Following Applicable Applicable Applicable
Status Exists Margin Margin Margin
For Base Rate For Eurodollar Loans Is: For Facility Fee Is:
Loans Is:
Level I Status 0.00% .625% 0.125%
Level II Status 0.00% 1.000% 0.250%
Level III Status 0.00% 1.125% 0.375%
Level IV Status 0.250% 1.25% 0.500%
Level V Status 0.50% 1.50% 0.500%"
(b) Section 1.3(c) of the Credit Agreement shall be further amended by
striking each of subsections (ii) and (iii) appearing after the proviso therein
and substituting therefor the phrase "[intentionally omitted]."
SECTION 1.02. NEW DEFINITIONS. Section 6.1 of the Credit Agreement shall
be amended by inserting the following new definition in the appropriate
alphabetical location:
"FISCAL 1998 CHARGES" means the following non-recurring cash and
non-cash charges recorded by the Borrower in accordance with GAAP
during the fourth fiscal quarter of the Borrower's 1998 fiscal
year against the Borrower's earnings for its 1998 fiscal year in
an aggregate amount not to exceed $108,500,000: (i) a special
charge of not more than $72,500,000 of which not less than
$50,000,000 consists of non-cash charges, relating to the
consolidation and closure of distribution centers and retail
stores, the abandonment of assets (such as the SAP software) and
the impairment of assets (such as the writedown of asset values);
(ii) up to $1,000,000 of miscellaneous financing and other
expenses relating to the above special charge; (iii) up to
$27,500,000 of charges relating to the discontinuance of Xxxx
XxXxxx and other operations; and (iv) up to $7,500,000 of charges
related to running operating expenses through the balance sheet
(such as the writedown of the accounts and notes receivable).
"YEAR 2000 PROBLEM" means any significant risk that computer
hardware, software, or equipment containing embedded microchips
essential to the business or operations of the Borrower or any of
the Subsidiaries will not in the case of dates or time periods
occurring after December 31, 1999, function at least as
reasonably adequately as in the case of times or time periods
occurring before January 1, 2000, including the making of
accurate leap year calculations.
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SECTION 1.03. REVISED DEFINITIONS. The definitions of "LEVEL I STATUS",
"LEVEL II STATUS", "LEVEL III STATUS ", "LEVEL IV STATUS ", "LEVEL V STATUS "
and "TANGIBLE NET WORTH " appearing in Section 6.1 of the Credit Agreement shall
be amended and restated in their entirety to read as follows:
"LEVEL I STATUS" means the S&P Rating is at least BBB- or higher AND the
Xxxxx'x Rating is at least Baa3 or higher.
"LEVEL II STATUS" means Level I Status does not exist, but the S&P Rating
is at least BB+ or higher AND the Xxxxx'x Rating is at least Bal or higher.
"LEVEL III STATUS" means neither Level I Status nor Level II Status exists,
but the S&P Rating is at least BB or higher AND the Xxxxx'x Rating is at least
Ba2 or higher.
"LEVEL IV STATUS" means none of Level I Status, Level II Status, and Level
III Status exist, but the S&P Rating is at least BB- AND the Xxxxx'x Rating is
at least Ba3 or higher.
"LEVEL V STATUS" means none of Level I Status, Level II Status, Level III
Status or Level IV Status exist.
"NET WORTH" means as of any time the same is to be determined, the excess
of total assets of the Borrower and its Subsidiaries over total liabilities of
the Borrower and its Subsidiaries, total assets and total liabilities each to be
determined on a consolidated basis in accordance with GAAP.
SECTION 1.04. LEVERAGE RATIO. The definition of "LEVERAGE RATIO"
appearing in Section 6.1 of the Credit Agreement shall be amended by inserting
the following sentence immediately at the end thereof
"The foregoing to the contrary notwithstanding, for purposes of
determining the Leverage Ratio, EBITDA for any period which
includes the fourth fiscal quarter of the Borrower's 1998 fiscal
year shall be computed so as not to give effect to the Fiscal
1998 Charges."
SECTION 1.05. SENIOR LEVERAGE RATIO. The definition of "SENIOR LEVERAGE
RATIO" appearing in Section 6.1 of the Credit Agreement shall be amended by
inserting the following sentence immediately at the end thereof:
"The foregoing to the contrary notwithstanding, for purposes of
determining the Senior Leverage Ratio, EBITDA for any period
which includes the fourth fiscal quarter of the Borrower's 1998
fiscal year shall be computed so as not to give effect to the
Fiscal 1998 Charges."
SECTION 1.06. INTEREST COVERAGE RATIO. The definition of "INTEREST
COVERAGE RATIO" appearing in Section 6.1 of the Credit Agreement shall be
amended by inserting the following immediately at the end thereof:
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"The foregoing to the contrary notwithstanding, for purposes of
determining the Interest Coverage Ratio, EBITDA for any period
which includes the fourth fiscal quarter of the Borrower's 1998
fiscal year shall be computed so as not to give effect to the
Fiscal 1998 Charges."
SECTION 1.07. NEW NET WORTH COVENANT. Section 9.8 of the Credit Agreement
shall be amended and as so amended shall be restated in its entirety to read as
follows:
"SECTION 9.8. NET WORTH. The Borrower shall not at any
time permit Net Worth to be less than the Minimum Required
Amount. For purposes hereof, the term "MINIMUM REQUIRED AMOUNT"
shall mean (a) $150,000,000 through January 2, 1999 and (b) shall
increase (but never decrease) on a cumulative basis as of March
27, 1999 and as of the last day of each fiscal quarter of the
Borrower thereafter, by an amount equal to 50% of Consolidated
Net Income for the fiscal quarter of the Borrower then ended (if
positive for such quarter)."
SECTION 1.08. ACQUISITION LIMIT. Subsection (h) of Section 9.14 of the
Credit Agreement shall be amended by inserting the following immediately at the
end thereof:
"and (v) either (1) the aggregate amount of cash and cash
equivalents expended by the Borrower and its Subsidiaries as
consideration for such acquisition, when taken together with the
aggregate amount of cash and cash equivalents expended by the
Borrower and its Subsidiaries as consideration for all other
acquisitions on or at any time after January 1, 1999 on a
cumulative basis (the aggregate of the consideration for the
acquisition in question and all such other acquisitions being
hereinafter referred to the "AGGREGATE CUMULATIVE ACQUISITION
CONSIDERATION"), does not exceed $50,000,000 or (2) if the
Aggregate Cumulative Acquisition Consideration exceeds
$50,000,000, both (A) the aggregate amount of cash and cash
equivalents expended as consideration for the acquisition in
question is less than $5,000,000 and (B) the aggregate purchase
price due from the Borrower and its Subsidiaries as consideration
for such acquisition (including the assumption of indebtedness
but excluding any such consideration in the form of capital stock
of the Borrower) does not exceed the product of 4.5 and EBITDA
reasonably attributable to the Person (in the case of an
acquisition of such Person's Voting Stock) or the Property so
acquired (in the case of an acquisition of such Person's
Property), in each case for such Person's twelve most recently
completed monthly accounting periods ("EBITDA" for such purposes
to mean EBITDA as such term is defined herein, but with such
Person and its subsidiaries substituted in such definition and
all ancillary definitions in the place and stead of the Borrower
and its Subsidiaries)."
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SECTION 1.09. YEAR 2000. Section 7 of the Credit Agreement shall be
amended by adding a new Section 7.17 at the end thereof which shall be stated to
read as follows:
"SECTION 7.17. YEAR 2000 COMPLIANCE. The Borrower and its
Subsidiaries are conducting a comprehensive review and assessment
of their computer applications, and are making such inquiry of
their respective material suppliers, service vendors (including
data processors) and customers as the Borrower or relevant
Subsidiary (as the case may be) deem appropriate, with respect to
any material defect in computer software, data bases, hardware,
controls and peripherals related to the occurrence of the year
2000 or the use of any date after December 31, 1999, in
connection therewith. The Company is not aware of any Year 2000
Problem which would reasonably be expected to have a material
adverse effect on the business, operations, Properties, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole."
SECTION 1.10. YEAR 2000 COMPLIANCE. Section 9 of the Credit Agreement
shall be amended by adding a new Section 9.23 which shall be stated to read as
follows:
"SECTION 9.23. YEAR 2000 COMPLIANCE. At the reasonable
request of the Administrative Agent or any Bank, the Borrower
will provide the Administrative Agent (which shall promptly
furnish each Bank) with reasonable evidence (including, but not
limited to, the results of internal or external audit reports
prepared in the ordinary course of business) of the capability of
the Borrower and its Subsidiaries to conduct its and their
businesses and operations before, on and after January l, 2000,
without experiencing a Year 2000 Problem."
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all of the
following conditions precedent:
(a) The Borrower and the Required Banks shall have executed this
Amendment.
(b) Each Guarantor shall have accepted this Amendment in the space
provided for that purpose below.
(c) Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Required Banks and their counsel.
Upon the satisfaction of such conditions precedent, this Amendment shall take
effect as of January 1, 1999.
3. REPRESENTATIONS REAFFIRMED.
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In order to induce the Banks to execute and deliver this Agreement, the
Borrower hereby represents to the Banks that as of the date hereof and as of the
time that this Amendment becomes effective, each of the representations and
warranties set forth in Section 7 of the Credit Agreement, after giving effect
to the amendments made hereby, are and shall be true and correct (except that
the representations contained in Section 7.4 shall be deemed to refer to the
most recent financial statements of the Borrower delivered to the Banks).
4. MISCELLANEOUS.
This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which when so
executed shall be an original but all of which shall constitute one and the same
instrument. Except as specifically amended and modified hereby, all of the terms
and conditions of the Credit Agreement shall stand and remain unchanged and in
full force and effect. No reference to this Amendment need be made in any note,
instrument or other document making reference to the Credit Agreement, any
reference to the Credit Agreement in any such note, Instrument or other document
to be deemed to be a reference to the Credit Agreement as amended hereby. The
Borrower confirms its agreement to pay the reasonable fees and disbursements of
Messrs. Xxxxxxx and Xxxxxx, counsel to the Administrative Agent, in connection
with the preparation, execution and delivery of this Amendment and the
transactions and documents contemplated hereby. This instrument shall be
construed and governed by and in accordance with the laws of the State of
Illinois (without regard to principles of conflicts of laws).
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Dated as of this ___ day of February, 1999, but effective as of January 1,
1999.
XXXX-XXXXX COMPANY
By
---------------------------------
Name:
-------------------------
Title:
------------------------
Accepted and agreed to as of the date last above written.
XXXXXX TRUST AND SAVINGS BANK, in its
individual capacity as a Bank and as
Administrative Agent
By
---------------------------------
Its Vice President
PNC BANK, NATIONAL ASSOCIATION
By ----------------------------
Its
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ABN AMRO BANK N.V.
By
---------------------------------
Its
---------------------------
By
---------------------------------
Its
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THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By
---------------------------------
Its
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CIBC-WOOD GUNDY
By
---------------------------------
Its
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XXXXXXXX XXXXXXXX XXXXXXXX Xx
TORINO SPA
By
---------------------------------
Its
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KEYBANK, N.A.
By
--------------------------------
Its
----------------------------
COMMERZBANK AKTIENGESELLSCHAFT
CHICAGO BRANCH
By
--------------------------------
Its
--------------------------------
By
---------------------------------
Its
-----------------------------
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THE FUJI BANK, LIMITED
By
---------------------------------
Its
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CREDIT AGRICOLE INDOSUEZ
By
---------------------------------
Its
----------------------------
FIRST BANK NATIONAL ASSOCIATION
By
---------------------------------
Its
---------------------------
MELLON BANK, N.A.
By
---------------------------------
Its
-----------------------------
SUNTRUST BANK, ATLANTA
By
---------------------------------
Its
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THE MITSUBISHI TRUST AND BANKING
CORPORATION
By
---------------------------------
Its
----------------------------
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NATIONAL CITY BANK OF COLUMBUS
By
---------------------------------
Its
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THE SANWA BANK, LIMITED
By
--------------------------------
Its
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THE SUMITOMO BANK, LIMITED
By
--------------------------------
Its
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BANKERS TRUST COMPANY
By
---------------------------------
Its
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THE BANK OF NEW YORK
By
---------------------------------
Its
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MITSUI TRUST AND BANKING COMPANY,
LIMITED
By
---------------------------------
Its
--------------------------
CRESTAR BANK
By
---------------------------------
Its
-----------------------------
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