FOURTH AMENDMENT
This Fourth Amendment (this "Amendment") is entered into as of
October 31, 1998 by and among Xxxxxx May Holdings, Inc., a Delaware
corporation ("Holdings"), Xxxxxxxxx Xxxxx Corporation, an Illinois
corporation, as successor by merger to FMCAN Acquisition Corp. (the
"Company"), and the persons named on the signature pages hereof (the
"Purchasers"), and amends the Securities Purchase Agreement entered into as
of October 30, 1991 among Holdings, the Company and the Purchasers (as
amended by the First Amendment thereto dated as of September 18, 1992, the
Second Amendment thereto dated as of August 12, 1994, and the Third Amendment
thereto dated as of July 2, 1997, and as otherwise amended, modified and
supplemented prior to the date hereof, the "Securities Purchase Agreement").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Securities Purchase Agreement.
RECITALS
A. The Company intends to enter into a Stock Purchase Agreement
(the "SFG Stock Purchase Agreement") with Sweet Factory Group, Inc.
("Group"), Sweet Factory, Inc. ("SFI"), SF Candy Company ("SFC"), SF
Properties, Inc. ("SFP"; each of SFI, SFC and SFP are directly, wholly-owned
subsidiaries of Group) (Group, SFC, SFP and SFI are referred to herein,
collectively, as the "SFG Entities"), and the selling stockholders of Group
named therein, pursuant to which the Company, or a wholly-owned subsidiary
thereof, will acquire all of Group's outstanding capital stock for
approximately $30,000,000 (the "SFG Acquisition").
B. Concurrently with the SFG Acquisition, the Company intends to
issue an additional $30,000,000 in principal amount of 101/4% Senior Secured
Notes due 2004 ("Additional Notes") initially in transactions that comply
with Rule 144A and other available exemptions under the Securities Act (the
"Additional Offering"); the Company intends to subsequently exchange (the
"Additional Exchange") the Additional Notes for substantially identical
Company 101/4% Senior Secured Notes due 2004 that the Company will have
registered with the Securities and Exchange Commission (the "Additional
Exchange Notes"); and the Additional Exchange Notes will be identical to the
Original Exchange Notes (as defined below).
C. The net proceeds of the Additional Offering will be used,
together with other cash available to the Company, (i) to fund the SFG
Acquisition, (ii) for certain cost savings initiatives related to the SFG
Acquisition and (iii) for fees, costs and expenses incurred in connection
with the SFG Acquisition and the Additional Offering.
D. On July 2, 1997, the Company issued $100,000,000 in principal
amount of its 101/4% Senior Secured Notes due 2004 (the "Original Notes")
pursuant to the Indenture.
E. On November 13, 1997, the holders of the Original Notes
exchanged the Original Notes for substantially identical Company 101/4%
Senior Secured Notes due 2004 that the Company registered with the Securities
and Exchange Commission (the "Original Exchange Notes").
F. The Original Notes were secured by, and the Original Exchange
Notes currently are secured by, (i) security interests in certain of the
Company's equipment, fixtures and general intangibles, including trademarks,
and mortgages on certain of the Company's owned real property, and the
proceeds of the foregoing, and (ii) a security interest in and a pledge of
all of the capital stock of the Company's future subsidiaries (collectively,
the "Original Indenture Collateral").
G. The Additional Notes (and, upon the completion of the
Additional Exchange, the Additional Exchange Notes) also will be secured by
the Original Indenture Collateral.
H. In addition, upon the consummation of the SFG Acquisition, the
Original Exchange Notes and the Additional Notes (and, upon the completion of
the Additional Exchange, the Additional Exchange Notes) also will be secured
by (i) security interests in certain of the SFG Entities' equipment, fixtures
and general intangibles, including trademarks, and the proceeds of the
foregoing, and (ii) a security interest in and a pledge of all of the capital
stock of each of the SFG Entities and all of the capital stock of any of the
SFG Entities' future subsidiaries.
I. Concurrently with the Additional Offering, the Company is
soliciting the consent of the holders of the Original Exchange Notes to
certain amendments to the Indenture in order to permit, among other things,
the sale of the Additional Notes and the consummation of the SFG Acquisition;
and the Company intends to pay a reasonable consent fee to all holders that
grant their consent to such amendment of the Indenture.
J. Concurrently with the SFG Acquisition and the Additional
Offering, the Company may amend its Credit Facility to increase the aggregate
amount which the Company may borrow from time to time thereunder from
$20,000,000 to $25,000,000 (the "First Amendment to Credit Facility").
K. Whether or not the Company amends the Credit Facility to
increase the maximum amount available thereunder, the Company will, upon the
consummation of the SFG Acquisition, grant, as additional security under the
Credit Facility, a security interest in the SFG Entities' accounts, raw
materials and finished goods inventory.
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the undersigned hereby agree as follows:
1. Section 1 of the Securities Purchase Agreement is hereby
amended by adding the following definitions:
"Additional Exchange" has the meaning ascribed to such term in Recital
B of the Fourth Amendment.
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"Additional Exchange Notes" has the meaning ascribed to such term in
Recital B of the Fourth Amendment.
"Additional Notes" has the meaning ascribed to such term in Recital B
of the Fourth Amendment.
"Additional Offering" has the meaning ascribed to such term in Recital
B of the Fourth Amendment.
"Fourth Amendment" means the Fourth Amendment to this Agreement, dated
as of October 31, 1998.
"Original Exchange Notes" has the meaning ascribed to such term in
Recital E of the Fourth Amendment.
"Original Notes" has the meaning ascribed to such term in Recital D of
the Fourth Amendment.
"SFG Acquisition" has the meaning ascribed to such term in Recital A
of the Fourth Amendment.
"SFG Entities" has the meaning ascribed to such term in Recital A of
the Fourth Amendment.
"SFG Stock Purchase Agreement" has the meaning ascribed to such term
in Recital A of the Fourth Amendment.
2. Section 1 of the Securities Purchase Agreement is hereby
further amended by deleting the definitions of "Bank Collateral" and
"Indenture Collateral" in their entirety.
3. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating the definition of "EBITDA" set
forth therein in its entirety as follows:
"EBITDA" means, for any period, Consolidated Net Income for such
period (a) PLUS all amounts deducted in determining such Consolidated
Net Income on account of (i) Consolidated Interest Expense, (ii) taxes
based on or measured by income, (iii) depreciation expense, (iv)
amortization expense (including, without limitation, amortization
expense related to the write-up in the Book Value of any assets due to
goodwill or unallocated purchase price and other amortization or
depreciation arising out of the transactions related to Holdings'
acquisition of the Company, to the extent such adjustments are made
pursuant to APB Nos. 16 and 17 and are deducted in determining
Consolidated Net Income for such period), (v) all Management Fees
accrued during such period, (vi) the non-cash portion of expenses
under the SAR Agreements and any Permitted Stock Option Plan and (vii)
non-capital expenditures made in connection with the SFG Acquisition
and the consolidation of the SFG Entities' operations into the
Company's operations (provided that such non-capital
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expenditures are not in excess of the amounts therefor described in
that certain Memorandum dated September 11, 1998 (the "SFG Acquisition
Memorandum") from Xxxx X. Max and Xxx X. Xxxxxxxx to Xxxx X. Xxxxxx
XX, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx III and Xxxxxxx X. Xxxxx), (b)
MINUS all Management Fees paid or (to the extent all covenants
restricting the payment of Management Fees will be satisfied) to be
paid with respect to such period, all as determined for Holdings and
its Subsidiaries on a consolidated basis in accordance with GAAP.
4. Section 1 of the Securities Purchase Agreement is hereby further
amended by amending and restating the definition of "Fixed Charges" set forth
therein in its entirety as follows:
"Fixed Charges" shall mean, for any period, without duplication,
Consolidated Interest Expense for such period, (a) PLUS (i) scheduled
payments of principal of all Indebtedness for borrowed money of
Holdings and its Subsidiaries during such period, (ii) capital
expenditures made during such period (reduced by the aggregate amount
of Net Cash Proceeds received by the Company and its Subsidiaries
during such period in respect of sales of capital assets), and (iii)
payments actually paid in cash with respect to such period with
respect to the SAR Agreements, or notes issued pursuant thereto, and
preferred stock, (b) MINUS all capital expenditures made in connection
with the SFG Acquisition and the consolidation of the SFG Entities'
operations into the Company's operations (provided that such capital
expenditures are not in excess of the amounts therefor described in
the SFG Acquisition Memorandum) all as determined for Holdings and its
Subsidiaries on a consolidated basis in accordance with GAAP.
5. Section 1 of the Securities Purchase Agreement is hereby further
amended by amending and restating the definition of "Senior Notes" in its
entirety as follows:
"Senior Notes" means, collectively, (i) the Original Exchange Notes,
(ii) the Additional Notes, if any, that are not exchanged for
Additional Exchange Notes pursuant to the Additional Exchange, and
(iii) upon the consummation of the Additional Exchange, the Additional
Exchange Notes.
6. The second paragraph of Section 6.11 of the Securities Purchase
Agreement is hereby amended by replacing the word "direct" where it appears
therein with "directly or indirectly, wholly-owned".
7. Clause (f) of Section 7.4 of the Securities Purchase Agreement is
hereby amended by deleting the reference therein to "permitted by Section 7.7".
8. Section 7.6 of the Securities Purchase Agreement is hereby
amended by adding the following to the end thereof:
"Notwithstanding the foregoing, there shall be excluded from the
prohibition on Investments under this Section 7.6 the consummation of
the SFG Acquisition and the transactions contemplated by the SFG Stock
Purchase Agreement."
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9. Effective as of the Effective Date (as hereinafter defined), in
consideration of the representations, warranties, covenants and agreements of
Holdings and the Company set forth in this Amendment, the Purchasers hereby (a)
consent to each of the following:
(i) the consummation of the SFG Acquisition and the execution,
delivery and performance by the Company of the SFG Stock
Purchase Agreement;
(ii) the consummation of the Additional Offering of the
Additional Notes, the amendment of the Indenture required
in connection therewith and the granting of the additional
security interests contemplated by the Additional Offering
(including the incurrence of indebtedness, the granting of
security interests, the creation of Liens and the payment
of fees and expenses related thereto (including the
consent fees paid in connection with the solicitation of
the holders of the Original Exchange Notes)) and the
subsequently contemplated Additional Exchange Offer; and
(iii) the execution, delivery and performance of, and the
consummation of the transactions contemplated by, the
First Amendment to Credit Facility (including the
incurrence of indebtedness, the granting of security
interests, the creation of Liens and the payment of fees
and expenses related thereto); and
(b) waive any Event of Default under the provisions of the
Securities Purchase Agreement that would be deemed to result
exclusively from such execution, delivery, performance and
consummation of the transactions described in clause (a) of this
paragraph 9.
10. To induce the Purchasers to enter into this Amendment, Holdings
and the Company, jointly and severally, represent and warrant to each Purchaser
that the following statements are true, correct and complete as of the date
hereof:
(a) Each of Holdings and the Company has all requisite
corporate power and authority to enter into this Amendment and to
perform its obligations under the Securities Purchase Agreement as
amended by this Amendment (the "Amended Agreement").
(b) The execution and delivery of this Amendment has been duly
authorized by all necessary corporate action by Holdings and the
Company.
(c) The execution and delivery by each of Holdings and the
Company of this Amendment and the performance by Holdings and the
Company of their
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respective obligations under the Amended Agreement do not and will
not (i) violate any provision of any law, rule or regulation
applicable to Holdings, the Company or any of their respective
Subsidiaries, the organizational documents of Holdings, the Company
or any of their respective Subsidiaries or any order, judgment or
decree of any court or any agency or government binding on
Holdings, the Company or any of their respective Subsidiaries, (ii)
conflict with, result in a breach of, or constitute a default
under, any contractual obligation of Holdings, the Company or any
of their respective Subsidiaries, (iii) result in or require the
creation or imposition of any Lien upon any of their properties or
assets (other than Liens created pursuant to the Senior Financing
Documents or the Indenture), or (iv) require any approval of
stockholders or any approval or consent of any Person under any
contractual obligation of Holdings, the Company or any of their
respective Subsidiaries, except approvals and consents which have
been obtained on or before the Effective Date.
(d) This Amendment and the Amended Agreement are the legally
valid and binding obligations of each of Holdings and the Company
enforceable against such entity in accordance with their respective
terms.
(e) No event has occurred and is continuing which would
constitute an Event of Default.
11. This Amendment will become effective upon the consummation of
the SFG Acquisition and the Additional Offering (the "Effective Date").
12. Except as specifically amended by this Amendment, the
Securities Purchase Agreement shall remain in full force and effect and is
hereby ratified and confirmed. The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein, constitute a
waiver of any provisions of, or operate as a waiver of any right, power or
remedy of the Purchasers under, the Securities Purchase Agreement.
13. This Amendment may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of
which together shall constitute one and the same instrument.
14. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment to the Securities Purchase Agreement as of the date first above
written.
XXXXXX MAY HOLDINGS, INC.
By: /s/ Xxx X. Xxxxxxxx
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Its: President and Chief Operating Officer
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XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxx X. Xxxxxxxx
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Its: President and Chief Operating Officer
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TCW SPECIAL PLACEMENTS FUND III
By: TCW Capital
Its: Managing General Partner
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Its: Managing Director
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TCW CAPITAL, as Investment Manager
pursuant to an Investment Management
Agreement dated as of June 19, 1989
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Its: Managing Director
---------------------------------
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TCW CAPITAL, as Investment Manager
pursuant to an Investment Management
Agreement dated as of April 18, 1990
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Its: Managing Director
--------------------------------
MEZZANINE CAPITAL
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Its: Managing Director
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JZ EQUITY PARTNERS PLC
(f/k/a MCIT (EXISTING POOL) LIMITED)
By: /s/ Xxxxx Xxxxxx
--------------------------------
Its: Director
--------------------------------
WCT INVESTMENT PTE. LTD
By: /s/Xxx Xxxx Tsung
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Its: Director
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JORDAN INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
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Its: Director
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