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EXHIBIT 10.1.5
FIFTH AMENDMENT TO
CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Fifth Amendment"),
dated as of March 30, 2001, is entered into among HOME INTERIORS & GIFTS, INC.,
a Texas corporation (the "Borrower"), the institutions listed on the signature
pages hereof that are parties to the Credit Agreement defined below
(collectively, the "Lenders"), THE CHASE MANHATTAN BANK, as syndication agent
(in said capacity, the "Syndication Agent"), NATIONAL WESTMINSTER BANK, PLC , as
documentation agent (the "Documentation Agent"), THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, as a co-agent, SOCIETE GENERALE, as a co-agent, CITICORP
USA. INC., as a co-agent (collectively, the "Co-Agents"), and BANK OF AMERICA,
N.A., formerly known as NationsBank, N.A., as administrative agent (in said
capacity, the "Administrative Agent").
BACKGROUND
A. The Borrower, the Lenders, the Documentation Agent, the Syndication
Agent, the Co-Agents, and the Administrative Agent are parties to that certain
Credit Agreement, dated as of June 4, 1998, as amended by that certain First
Amendment to Credit Agreement, dated as of December 18, 1998, that certain
Second Amendment to Credit Agreement dated as of March 12, 1999, that certain
Third Amendment to Credit Agreement, dated as of November 19, 1999 and that
certain Fourth Amendment to Credit Agreement dated as of July 26, 2000, but
effective as of July 3, 2000 (as the same has been or may be amended, restated
or modified from time to time, the "Credit Agreement").
B. The Borrower, the Lenders, the Documentation Agent, the Syndication
Agent, the Co-Agents, and the Administrative Agent desire to make certain
amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the Borrower, the
Lenders, the Documentation Agent, the Syndication Agent, the Co-Agents, and the
Administrative Agent covenant and agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. Capitalized terms used in this Fifth Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Credit Agreement, as amended hereby.
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ARTICLE II
Amendments
Section 2.1 Amendment to Defined Terms in Section 1.1. Effective as of
the date hereof, the following definitions in Section 1.1 of the Credit
Agreement are amended and restated to read in their entirety as follows:
"Applicable Base Rate Margin" means (a) for Facility A Term
Loan Advances and Revolving Loans, 1.5% and (b) for Facility B Term
Loan Advances, 2.0%.
"Applicable Law" means (a) in respect of any Person, all
provisions of constitutions, statutes, rules, regulations and orders of
governmental bodies or regulatory agencies applicable to such Person
and its properties, including, without limiting the foregoing, all
orders and decrees of all courts and arbitrators in proceedings or
actions to which the Person in question is a party, and (b) in respect
of contracts relating to interest or finance charges that are made or
performed in the State of Texas, "Applicable Law" shall mean the laws
of the United States of America, including, without limitation, 12 USC
xx.xx. 85 and 86(a), as amended from time to time, and any other
statute of the United States of America now or at any time hereafter
prescribing the maximum rates of interest on loans and extensions of
credit, and the laws of the State of Texas, including, without
limitation, Chapter 303 of the Texas Finance Code, as amended, and any
other statute of the State of Texas now or at any time hereafter
prescribing maximum rates of interest on loans and extensions of
credit; provided that the parties hereto agree that the provisions of
Chapter 346 of the Texas Finance Code, as amended, shall not apply to
the Advances, this Agreement, the Notes or any other Loan Documents.
"Applicable LIBOR Rate Margin" means (a) for Facility A Term
Loan Advances and Revolving Advances, 2.75% and (b) for Facility B Term
Loan Advances, 3.25%.
"EBITDA" means, for any period, determined in accordance with
GAAP on a consolidated basis for the Borrower and its Subsidiaries, the
sum of (without duplication) (a) Pretax Net Income (excluding
therefrom, to the extent included in determining Pretax Net Income, any
items of extraordinary gain, including net gains on the sale of assets
other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any
items of extraordinary loss, including net losses on the sale of assets
other than asset sales in the ordinary course of business), plus (b) to
the extent included in determining Pretax Net Income, interest expense
(including the amortization or write-off of debt discount and issuance
costs and commissions and discounts and other fees and charges
associated with Indebtedness), plus (c) to the extent included in
determining Pretax Net Income, depreciation and amortization, plus (d)
to the extent included in determining Pretax Net Income, other non-cash
charges, minus (e) to the extent included in determining Pretax Net
Income, interest and investment income for any period after December
31, 2000, minus (f) to the extent included in determining Pretax Net
Income, other non-cash credits, minus (g) cash payments made with
respect to non-cash charges added back in determining EBITDA in any
prior period which would otherwise be excluded in determining EBITDA,
plus (h) to the extent included in
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determining Pretax Net Income, reorganization related expenses
previously disclosed to the Lenders (regardless of the line items on
which such expenses are reported in the Borrower's financial
statements) taken or incurred in the fiscal quarters ending March 31,
2001, June 30, 2001, and September 29, 2001, not to exceed $13,500,000
in the aggregate for all three (3) such quarters (including that
portion of the reorganization related expenses relating to the
write-off of deferred financing costs). For purposes of this
definition, EBITDA shall be computed utilizing the Borrower's revenue
recognition policy in place prior to the adoption of SEC staff
Accounting Bulletin No. 101 ("SAB 101"). The Borrower's Compliance
Certificate shall disclose the adjustment to GAAP operating results
taking into account the effect of the adoption of SAB 101. The
Borrower's quarterly filings with the SEC on Form 10-Q and its annual
filings on Form 10-K will continue to include a reconciliation of
EBITDA to income before income taxes in accordance with the Borrower's
GAAP financial statements. This reconciliation will include an
adjustment for the effect of adoption of SAB 101 on the Borrower's
operating results.
"Interest Period" means the period beginning on the day any
LIBOR Advance is made and ending one, two or three months thereafter
(as the Borrower shall select); provided, however, that all of the
foregoing provisions are subject to the following:
(a) if any Interest Period which would otherwise end
on a day which is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day, unless
the result of such extension would be to extend such Interest
Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding
Business Day;
(b) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(c) the Borrower may not select any Interest Period
in respect of Advances having an aggregate principal amount
not less than $2,000,000; and
(d) there shall be outstanding at any one time no
more than ten Interest Periods in the aggregate.
"Leverage Ratio" means, for any date of determination, the
ratio of (a) Total Debt as of the date of determination to (b) EBITDA
for the immediately preceding four consecutive fiscal quarters. For
purpose of calculation of the Leverage Ratio only, with respect to
assets not owned at all times during the four fiscal quarters
immediately preceding the date of calculation of EBITDA, there shall be
(i) included in EBITDA, the pro forma EBITDA of any assets acquired
during any such four fiscal quarters as if acquired at the beginning of
the four fiscal quarters preceding the date of calculation and (ii)
excluded from EBITDA the EBITDA of any assets disposed of during any of
such fiscal quarters as if disposed of at the beginning of the four
fiscal quarters preceding the date of calculation.
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"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of the Lenders or the
Administrative Agent to secure the Obligations hereunder;
(b) (i) Liens on real estate for ad valorem taxes not
yet delinquent, (ii) Liens on leasehold interests created by
the lessor in favor of any mortgagee of the leased premises,
and (iii) Liens for taxes, assessments, governmental charges,
levies or claims not yet delinquent, or in each case for
clauses (i) and (iii) that are being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on such Person's books in
accordance with GAAP, but only so long as no foreclosure,
restraint, sale or similar proceedings have been commenced
with respect thereto that has not been stayed;
(c) Liens of carriers, landlords, warehousemen,
mechanics, laborers and materialmen and other similar Liens
incurred in the ordinary course of business for sums not
overdue for a period of more than 60 days or being contested
in good faith, if such reserve or appropriate provision, if
any, as shall be required by GAAP shall have been made
therefor;
(d) (i) Liens incurred in the ordinary course of
business in connection with worker's compensation,
unemployment insurance or similar legislation and (ii)
deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory
obligations, insurance contracts, surety and appeal bonds,
performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) Easements, right-of-way, restrictions and other
similar encumbrances on the use of real property which do not
materially interfere with the ordinary conduct of the business
of such Person or which are set forth in any title policy or
"marked up" commitment thereof delivered pursuant hereto and
reasonably acceptable to the Administrative Agent;
(f) Liens created to secure the purchase price of
assets acquired by such Person or created to secure
Indebtedness permitted by Section 7.1(c) hereof, which is
incurred solely for the purpose of financing the acquisition
of such assets and incurred at the time of acquisition or
within 90 days thereafter, so long as each such Lien shall at
all times be confined solely to the asset or assets so
acquired (and proceeds thereof), and refinancings thereof so
long as any such Lien remains solely on the asset or assets
acquired and the amount of Indebtedness related thereto is not
increased;
(g) Liens in respect of judgments or awards for which
appeals or proceedings for review are being prosecuted and in
respect of which a stay of execution upon any such appeal or
proceeding for review shall have been secured not constituting
an Event of Default under Section 8.1(h) hereof, provided that
(i) such Person shall have established adequate reserves for
such judgments or
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awards, (ii) such judgments or awards shall be fully insured
and the insurer shall not have denied coverage, or (iii) such
judgments or awards shall have been bonded to the satisfaction
of the Determining Lenders;
(h) Any Liens which are described on Schedule 3
hereto, and Liens resulting from the refinancing, renewal, or
extension of the related Indebtedness, provided that the
Indebtedness secured thereby shall not be increased and the
Liens shall not cover additional assets of the Borrower (other
than after-acquired title in or on such property and proceeds
of the existing collateral in accordance with the document
creating such Lien);
(i) Liens arising from precautionary Uniform
Commercial Code financing statements with respect to operating
leases or consignment arrangements in the ordinary course of
business;
(j) Liens in favor of banking institutions arising by
operation of law encumbering deposits (including the right of
setoff) held by such banking institution incurred in the
ordinary course of business and which are within the general
parameters customary in the banking industry;
(k) Liens existing on any property or asset at the
time of acquisition thereof by the Borrower and its
Subsidiaries or existing on the property or assets of any
Person that becomes a Subsidiary after the Agreement Date at
the time such Person becomes a Subsidiary (provided, that (x)
such Lien is not created in contemplation of or in connection
with such acquisition or such Person becoming a Subsidiary, as
the case may be, (y) such Lien shall not apply to any other
property or assets of the Borrower or its Subsidiaries and (z)
such Lien shall secure only those obligations which it secures
on the date of such acquisition or the date such Person
becomes a Subsidiary, as the case may be);
(l) any obligations or duties affecting any of the
property of the Borrower or its Subsidiaries to any
municipality or public authority with respect to any
franchise, grant, license or permit which do not materially
impair the use of such property for the purposes for which it
is held and do not materially impair the value of the
Collateral;
(m) Statutory (but, with respect to licenses,
subleases and leases executed and effective on or after March
31, 2001, not contractual) liens on property of the Borrower
and its Subsidiaries in favor of landlords securing licenses,
subleases and leases permitted hereunder and not interfering
with the business of the Borrower or any of its Subsidiaries;
and
(n) Licenses, leases or subleases permitted hereunder
granted to others but not interfering in any material respect
with any rights to the Collateral or with the business of the
Borrower or any of its Subsidiaries.
"Revolving Credit Commitment" means $30,000,000 as reduced or
terminated pursuant to Sections 2.6 or 8.2 hereof.
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Section 2.2 Addition to Defined Terms in Section 1.1. Effective as of
the date hereof, the following definitions are added to Section 1.1 of the
Credit Agreement in alphabetical order to read in their entirety as follows:
"Capital Expenditure Adjustment" means the amount, if any, by
which Capital Expenditures incurred for the fiscal period beginning
January 1, 2001, through and including April 28, 2001, October 27,
2001, and April 27, 2002, as applicable, is less than 85% of the amount
of Capital Expenditures projected to be incurred for such period in
Borrower's business plan dated February 21, 2001, heretofore delivered
to the Lenders.
"Xxxxxx Family" means Xxxxxx X. Xxxxxx, Xx., his lineal
descendants whether by adoption or otherwise, their respective spouses,
any trusts for the benefit of the foregoing persons, and the respective
Affiliates of all of the foregoing.
"Committed Capital Investment" means an irrevocable commitment
by Xxxxx Muse, the Xxxxxx Family and their respective Affiliates to
provide cash equity to the Borrower within a period of time and upon
terms and conditions satisfactory to Determining Lenders.
"Equityholders LC" means that certain irrevocable letter of
credit issued for the account of the Existing Equityholders or their
Affiliates for the benefit of the Administrative Agent for the benefit
of the Lenders, such letter of credit to be capable of being drawn upon
the occurrence of any Event of Default described in Section 8.1(f) or
(g) (but excluding (a) any commencement of an involuntary proceeding or
petition filed by the Lenders under Title 11 of the United States Code
and (b) any prepackaged voluntary proceeding or petition filed under
Title 11 of the United States Code upon the prior written consent by
any combination of the Lenders whose Total Specified Percentages
aggregate at least 66 2/3% or, in the event that all of the Commitments
have been terminated, any combination of Lenders having at least 66
2/3% of the Advances then outstanding).
"Existing Equityholders" means Xxxxx Muse and the Xxxxxx
Family and their respective Affiliates.
"Liquidity Amount" means the sum of (a) the lesser of (i) Cash
and Cash Equivalents or (ii) $10,000,000, minus (b) the Capital
Expenditure Adjustment, minus (c) the Working Capital Adjustment, plus
(d) the Revolving Credit Availability, plus (e) the Committed Capital
Investment, plus (f) the amount available to be drawn under the
Equityholders LC.
"Revolving Credit Availability" means, without duplication, an
amount equal to (a) the Revolving Credit Commitment, minus (b) the
outstanding Revolving Credit Advances, minus (c) the Reimbursement
Obligations, minus (d) the outstanding Swing Line Advances.
"Working Capital Adjustment" means the sum of (a) the amount,
if any, by which the accounts receivable and accounts payable on the
balance sheet of the Borrower and its Subsidiaries at April 28, 2001,
October 27, 2001, and April 27, 2002, as applicable, differ
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from the amounts projected for such accounts on such dates in the
Borrower's business plan dated February 21, 2001, heretofore delivered
to the Lenders, and such difference represents a source of cash to the
Borrower and its Subsidiaries in excess of $3,000,000, and (b) the
amount, if any, by which inventory on the balance sheet of the Borrower
and its Subsidiaries at April 28, 2001, October 27, 2001, and April 27,
2002, is less than $29,000,000, $33,000,000, and $33,000,000
respectively.
Section 2.3 Amendments to Sections 2.2(a), (b) and (c).
Effective as of the date hereof, Sections 2.2(a), (b) and (c) of the
Credit Agreement are amended and restated to read in their entirety as
follows:
(a) Base Rate Advances. In the case of Base Rate Advances
(other than Swing Line Advances), the Borrower, through an Authorized
Signatory, shall give the Administrative Agent prior to 11:00 a.m.,
Dallas, Texas time, on the date of any proposed Base Rate Advance
irrevocable written notice in substantially the form of Exhibit K
hereto (a "Notice of Borrowing") of its intention to borrow or reborrow
a Base Rate Advance hereunder. Such Notice of Borrowing shall (i)
specify the requested funding date, which shall be a Business Day, the
amount of the proposed aggregate Base Rate Advances to be made by the
Lenders, and whether such Advance is a Revolving Credit Advance,
Facility A Term Loan Advance or Facility B Term Loan Advance, and (ii)
confirm that no Default or Event of Default has occurred and is
continuing.
(b) LIBOR Advances. In the case of LIBOR Advances, the
Borrower, through an Authorized Signatory, shall give the
Administrative Agent at least three Business Days' irrevocable written
notice pursuant to a Notice of Borrowing, of its intention to borrow or
reborrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order
for such Business Day to count toward the minimum number of Business
Days required. LIBOR Advances shall in all cases be subject to
availability and to Article 9 hereof. For LIBOR Advances, the Notice of
Borrowing shall (i) specify the requested funding date, which shall be
a Business Day, the amount of the proposed aggregate LIBOR Advances to
be made by Lenders, whether such Advance is a Revolving Credit Advance,
Facility A Term Loan Advance or Facility B Term Loan Advance, and the
Interest Period selected by the Borrower, provided that no such
Interest Period shall extend past the Revolving Commitment Maturity
Date, the Facility A Term Loan Maturity Date or the Facility Term B
Loan Maturity Date, as appropriate, or prohibit or impair the
Borrower's ability to comply with Section 2.5 or 2.8 hereof and (ii)
confirm that no Default or Event of Default has occurred and is
continuing.
(c) Swing Line Advances. In the case of Swing Line Advances,
the Borrower, through an Authorized Signatory, shall give the Swing
Line Bank and the Administrative Agent prior to 1:00 p.m., Dallas,
Texas time, on the date of any proposed Swing Line Advance irrevocable
written notice pursuant to a Notice of Borrowing, of its intention to
borrow or reborrow a Swing Line Advance. Such Notice of Borrowing shall
(i) specify the requested funding date, which shall be a Business Day
and the amount of the proposed Swing Line Advance and (ii) confirm that
no Default or Event of Default has occurred and is continuing.
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Section 2.4 Amendment to Section 2.2(d). Effective as of the date
hereof, the second sentence of Section 2.2(d) of the Credit Agreement is amended
and restated to read in its entirety as follows:
Not later than 11:00 a.m., Dallas, Texas time on the date of any
proposed continuation of or a conversion to a Base Rate Advance and not
later than 11:00 a.m., Dallas, Texas time at least three Business Days
prior to any proposed continuation of or conversion to a LIBOR Advance,
the Borrower, through an Authorized Signatory, shall give the
Administrative Agent irrevocable written notice in substantially the
form of Exhibit L hereto (a "Notice of Continuation/Conversion"),
stating (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Advance to be
converted/continued, (iii) in the case of a conversion to, or a
continuation of, a LIBOR Advance, the requested Interest Period, and
(iv) in the case of a conversion of a Base Rate Advance to a LIBOR
Advance or a continuation of a LIBOR Advance, stating that no Event of
Default has occurred and is continuing.
Section 2.5 Amendment to Section 2.3(a)(ii). Effective as of the date
hereof, Section 2.3(a)(ii) of the Credit Agreement is amended and restated to
read in its entirety as follows:
(ii) Interest on the Base Rate Advances shall be computed on
the basis of a year of 365 or 366 days, as applicable, for the number
of days actually elapsed and shall be payable in arrears on March 30,
2001, on the 15th day of each calendar month thereafter, on the last
day of the Interest Period for any LIBOR Advance, and on the Revolving
Commitment Maturity Date, the Facility A Term Loan Maturity Date or the
Facility B Term Loan Maturity Date, as appropriate.
Section 2.6 Amendment to Section 2.3(b)(ii). Effective as of the date
hereof, Section 2.3(b)(ii) of the Credit Agreement is amended and restated to
read in its entirety as follows:
(ii) Subject to Section 11.9 hereof, interest on each LIBOR
Advance shall be computed on the basis of a 360-day year for the actual
number of days elapsed, and shall be payable in arrears on March 30,
2001, on the 15th day of each calendar month thereafter, on the last
day of the Interest Period therefor, and on the Revolving Commitment
Maturity Date, the Facility A Term Loan Maturity Date and the Facility
B Term Loan Maturity Date, as appropriate.
Section 2.7 Amendment to Section 2.3(e)(i). Effective as of the date
hereof, the reference to the phrase "Event of Default specified in Section
8.1(b) hereof" in Section 2.3(e)(i) of the Credit Agreement is deleted and the
reference to the phrase "Event of Default has occurred" is inserted in lieu
thereof.
Section 2.8 Addition to Section 2.4. Effective as of the date hereof, a
new subsection (c) is added to
Section 2.4 of the Credit Agreement to read in its entirety as follows:
(c) Additional Fee. Subject to Section 11.9 hereof, the
Borrower agrees to pay to the Administrative Agent, for the ratable
account of the Lenders, an additional fee in an amount equal to
$3,000,000, which fee shall be earned and due and payable on March 30,
2001; provided however, the payment of such fee shall be deferred until
September 30, 2001. Notwithstanding anything to the contrary contained
herein, if the Existing Equityholders make an equity contribution in an
amount not less than $40,000,000 to the Borrower on or before September
30, 2001, such additional fee shall be forgiven and shall not be due
and payable.
Section 2.9 Amendment to Sections 2.5(c), (e), (f) and (g). Effective
as of the date hereof, Sections 2.5(c), (e), (f) and (g) of the Credit Agreement
are amended and restated to read in their entirety as follows:
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(c) Prepayments from Sales of Assets. Within 10 Business Days
of the receipt of Net Cash Proceeds from the sale or disposition by the
Borrower or any of its Subsidiaries of any assets (including the
Capital Stock of any Subsidiary) (other than any such sales or
dispositions permitted under Sections 7.5(a), (c), (e), (g), (h), (i)
and (j) and such sales or dispositions permitted under Section 7.5(b)
and (d) to the extent not reinvested in accordance with such Section),
the Borrower shall prepay Facility A Term Loan Advances and Facility B
Term Loan Advances in an aggregate principal amount equal to the lesser
of (A) 100% of such Net Cash Proceeds received, or (B) an amount, if
any, which would result in the Leverage Ratio being less than 3.50 to
1.00 after such prepayment. Each such prepayment shall be applied as
provided in Section 2.5(g) hereof.
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(e) Prepayment from Recovery Events. Within 10 Business Days
after receipt of Net Cash Proceeds by the Borrower or any of its
Subsidiaries from any Recovery Event, unless a Reinvestment Notice
shall have been delivered in respect thereof, the Borrower shall prepay
Facility A Term Loan Advances and Facility B Term Loan Advances in an
aggregate principal amount of 100% of such Net Cash Proceeds received,
provided that (i) no Reinvestment Notice may be delivered when an Event
of Default has occurred and is continuing, (ii) if a Reinvestment
Notice shall be delivered in respect thereof, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied to payment of the Advances on the
Reinvestment Prepayment Date, and (iii) the aggregate amount of Net
Cash Proceeds outstanding and pending reinvestment pursuant to this
clause (iii) and Sections 7.5(b) and (d) shall not exceed $5,000,000 at
any one time. Each such prepayment shall be applied as provided in
Section 2.5(g) hereof.
(f) Prepayment from Sales of Capital Stock. Concurrently with
the receipt of Net Cash Proceeds from the sale or disposition by the
Borrower or any of its Subsidiaries to any Person (other than to the
Borrower or any of its Subsidiaries) of any Capital Stock of the
Borrower (other than those set forth in subsections (a), (b), (c), (d),
(e) or (f) of the definition of Permitted Issuance in Section 1.1), the
Borrower shall prepay the Facility A Term Loan Advances and the
Facility B Term Loan Advances in an aggregate principal amount equal to
the lesser of (A) 100% of such Net Cash Proceeds received, or (B) an
amount, if any, which would result in the Leverage Ratio being less
than 3.50 to 1.00 after such prepayment. Each such prepayment shall be
applied as provided in Section 2.5(g) hereof.
(g) Payments, Generally. Any partial payment of a (i) Base
Rate Advance shall be in a principal amount which is at least $100,000
and which is an integral multiple of $100,000 and (ii) a LIBOR Rate
Advance shall be in a principal amount which is at least $1,000,000 and
which is an integral multiple of $500,000, and to the extent that any
payment of a LIBOR Advance is made on a date other than the last day of
its Interest Period, the Borrower shall reimburse each Lender (to the
extent required) in accordance with Section 2.9 hereof. Any voluntary
prepayment of any Term Loan Advance shall be allocated among the
Facility A Term
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Loan Advances and the Facility B Term Loan Advances pro rata based on
the outstanding principal amount of the Facility A Term Loan Advances
and the Facility B Term Loan Advances and applied to the then remaining
installments of the Facility A Term Loan Advances and the Facility B
Term Loan Advances pro rata based on the number of then remaining
installments in respect of the Facility A Term Loan Advances and the
Facility B Term Loan Advances (i.e. each then remaining installment of
the applicable Term Loan Advance shall be reduced by an amount equal to
the aggregate amount to be applied to such Term Loan Advances divided
by the number of the then remaining installments for such Term Loan
Advances), provided that if the amount to be applied to any installment
required by this Agreement would exceed the then remaining amount of
such installment, then an amount equal to such excess shall be applied
to the remaining installments in the order of maturity after giving
effect to all prior reductions thereto (including the amount of
prepayments theretofore allocated pursuant to the preceding portion of
this sentence); provided further, however, notwithstanding the
foregoing, until the aggregate amount of voluntary prepayments of Term
Loan Advances exceeds $20,000,000, voluntary prepayments of Term Loan
Advances may be applied to any scheduled installment payments of
Facility A Term Loan Advances or Facility B Term Loan Advances, at the
Borrower's discretion, so long as applied to the Facility A Term Loan
Advances and the Facility B Term Loan Advances pro rata based on the
outstanding principal amount of the Facility A Term Loan Advances and
the Facility B Term Loan Advances then outstanding. Any prepayments
required to be made pursuant to Sections 2.5(c), (d), (e) or (f) hereof
shall (i) include and be applied to accrued interest to the date of
such prepayment on the principal amount prepaid, (ii) be allocated
among the Facility A Term Loan Advances and the Facility B Term Loan
Advances, pro rata based on the outstanding principal amount of the
Facility A Term Loan Advances and the Facility B Term Loan Advances and
applied to the then remaining installments of the Facility A Term Loan
Advances and the Facility B Term Loan Advances pro rata based on the
number of then remaining installments in respect of the Facility A Term
Loan Advances and the Facility B Term Loan Advances (i.e. each then
remaining installment of the applicable Term Loan Advance shall be
reduced by an amount equal to the aggregate amount to be applied to
such Term Loan Advances divided by the number of the then remaining
installments for such Term Loan Advance), provided that if the amount
to be applied to any installment required by this Agreement would
exceed the then remaining amount of such installment, then an amount
equal to such excess shall be applied to the remaining installments in
the order of maturity after giving effect to all prior reductions
thereto (including the amount of prepayments theretofore allocated
pursuant to the preceding portion of this sentence), (iii) not be
subject to the notice and minimum payment provisions of this Section
2.5; provided, however, the Borrower shall be required to reimburse
each Lender for any loss, cost or expense incurred by each Lender in
connection with any such prepayment as set forth in Section 2.9 hereof
if any prepayment results in a LIBOR Advance being paid on a day other
than the last day of an Interest Period for such LIBOR Advance, and
(iv) be applied first to Base Rate Advances, if any, and then to LIBOR
Advances. With respect to any voluntary payment of Term Loan Advances
made by the Borrower within fifteen days of any Quarterly Date on which
amortization of any Term Loan Advance is required, the Borrower shall
have the right to designate such payment as a prepayment or as payment
of the Term Loan Advances required to be made on such Quarterly Date.
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Section 2.10 Amendments to Section 2.8(b). Effective as of the date
hereof, Section 2.8(b) of the Credit Agreement is amended as follows: the
reference to the dates "June 30, 2001" and "December 31, 2001" are deleted and
the reference to the dates "May 15, 2001" and "November 15, 2001," respectively,
are inserted in lieu thereof.
Section 2.11 Amendment to Section 2.8(c). Effective as of the date
hereof, Section 2.8(c) of the Credit Agreement is amended as follows: the
reference to the dates "June 30, 2001" and "December 31, 2001" are deleted and
the reference to the dates "May 15, 2001" and "November 15, 2001," respectively,
are inserted in lieu thereof.
Section 2.12 Amendments to Section 2.16(a). Effective as of the date
hereof, Section 2.16(a) of the Credit Agreement is amended as follows: (a) the
reference to the dollar amount $30,000,000" is deleted and the dollar amount
"$15,000,000" is inserted in lieu thereof; and (b) the last sentence of such
Section is amended and restated to read in its entirety as follows:
Within the limits of the Letter of Credit Facility and subject to the
limits referred to above, the Borrower may request the issuance of
Letters of Credit under this Section 2.16(a) and request the issuance
of additional Letters of Credit under this Section 2.16(a).
Section 2.13 Amendment to Section 2.16(c). Effective as of the date
hereof, the first sentence of Section 2.16(c) of the Credit Agreement is amended
and restated to read in its entirety as follows:
The Borrower will pay to the Issuing Bank an amount equal to each draft
drawn under any Letter of Credit (x) on the Business Day of such
drawing if presented by noon (Dallas, Texas time) and (y) by 11:00
a.m.(Dallas, Texas time) on the first Business Day thereafter if
presented after noon (Dallas, Texas time).
Section 2.14 Amendment to Section 2.16(g)(i). Effective as of the date
hereof, the reference to the number "thirty" in Section 2.16(g)(i) of the Credit
Agreement is deleted and the reference to the number "five" is inserted in lieu
thereof.
Section 2.15 Amendment to Section 2.17. Effective as of the date
hereof, Section 2.17 of the Credit Agreement is hereby amended to read as
follows: Intentionally omitted.
Section 2.16 Amendment to Article 4. Effective as of the date hereof, a
new Section 4.1(y) is hereby added to the Agreement to read as follows:
(y) Collateral. Pursuant to the Loan Documents, the Borrower
and its Subsidiaries have granted to the Administrative Agent for the
benefit of the Lenders perfected Liens upon substantially all of their
assets other than those assets specifically excluded from the
Administrative Agent's Lien pursuant to the Loan Documents.
Section 2.17 Amendment to Section 5.7. Effective as of the date hereof,
Section 5.7 of the Credit Agreement is amended and restated to read in its
entirety as follows:
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Section 5.7 Visits and Inspections. The Borrower shall, and
shall cause each of its Subsidiaries to, permit representatives of the
Administrative Agent or any Lender from time to time after reasonable
notice by the Administrative Agent or any Lender to (a) visit and
inspect the properties of the Borrower and its Subsidiaries (i) as
often as the Administrative Agent or any Lender shall reasonably deem
advisable, and (ii) at reasonable times, (b) audit, inspect and make
extracts from and copies of the Borrower's and each such Subsidiary's
books and records, and (c) discuss with the Borrower's and each such
Subsidiary's directors, officers, employees and auditors its business,
assets, liabilities, financial positions, results of operations and
business prospects. The Borrower shall pay the reasonable expenses
related to inspections and audits performed by the Administrative
Agent. Prior to the occurrence of an Event of Default, all such visits
and inspections shall be conducted during normal business hours and,
other than visits and inspections by the Administrative Agent and/or
any financial advisor to the Administrative Agent, shall not be
conducted more often than once per fiscal quarter. Following the
occurrence and during the continuance of an Event of Default, such
visits and inspections shall be conducted at any time requested by the
Administrative Agent or any Lender without any requirement for advance
notice.
Section 2.18 Amendment to Section 5.11. Effective as of the date
hereof, Section 5.11 of the Credit Agreement is amended and restated to read in
its entirety as follows:
Section 5.11 Further Assurances. At any time or from time to
time upon reasonable request by the Administrative Agent, the Borrower
or any of its Subsidiaries shall execute and deliver such further
documents and do such other acts and things as the Administrative Agent
may reasonably request in order to effect fully the purposes of this
Agreement and the other Loan Documents and to provide for payment of
the Obligations in accordance with the terms of this Agreement and the
other Loan Documents. At the time of delivery of the financial
statements set forth in Sections 6.1 and 6.2 hereof, if the information
provided therein has changed since the last delivery thereof, the
Borrower agrees to update and deliver to the Administrative Agent
Schedule 5 hereto (with respect to the identities, jurisdictions of
organization and ownership of the Borrower's Subsidiaries). The
Borrower agrees to update the information on Schedule 2 to the Security
Agreements promptly upon discovery that the information provided
therein is not complete and correct. On or before May 31, 2001, the
Borrower agrees to execute and deliver, or cause its Subsidiaries to
execute and deliver, to the Administrative Agent Deeds of Trust, in
substantially the form of Exhibit I hereto with respect to any fee
owned real property hereafter acquired by the Borrower or any
Subsidiary, as applicable, with a fair market value in excess of (a)
$500,000 at any time or (b) $2,000,000 in the aggregate at any time,
together with any existing surveys and environmental reports in form
reasonably satisfactory to the Administrative Agent and title insurance
thereon in form and amount (not to exceed the fair market value
thereof) reasonably satisfactory to the Administrative Agent, and such
board resolutions, officer's certificates, corporate and other
documents and opinions of counsel as the Administrative Agent shall
reasonably request with respect thereto.
Section 2.19 Addition to Article 5. Effective as of the date hereof, a
new Section 5.15 is added to Article 5 of the Credit Agreement to read in its
entirety as follows:
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Section 5.15 Deposit and Operating Accounts. The Borrower and
its Subsidiaries shall (a) except as set forth in the proviso below,
maintain all of their operating, deposit and all other accounts with
any Lender which is a financial institution and (b) execute such
documents, instruments and agreements as shall be reasonably necessary
to confirm the first priority perfected security interest of the
Administrative Agent for the benefit of the Lenders in such accounts
and all amounts on deposit therein, including without limitation, all
amounts which constitute proceeds of Collateral, such documents,
instrum ents and agreements to provide that the Lenders maintaining
such accounts shall provide not less than five Business Days prior
written notice of any setoff to the Borrower and Administrative Agent;
provided, however, the Borrower may maintain accounts with financial
institutions which are not Lenders, so long as the balance in such
accounts does not exceed $10,000,000 in the aggregate at any time.
Section 2.20 Amendment to Section 6.3. Effective as of the date hereof,
Section 6.3 of the Credit Agreement is amended and restated to read in its
entirety as follows:
Section 6.3 Compliance Certificate. At the time financial
statements are furnished pursuant to Sections 6.1, 6.2 and 6.8 hereof
and, with respect to the calculation of the Liquidity Amount, on or
before May 18, 2001, November 16, 2001 and May 17, 2002, the Compliance
Certificate, completed as provided therein.
Section 2.21 Amendment to Section 6.4(a)(i). Effective as of the date
hereof, Section 6.4(a)(i) of the Credit Agreement is amended and restated to
read in its entirety as follows:
(i) all final management letters submitted to any Obligor by
accountants in connection with any annual, interim or special audit;
Section 2.22 Addition to Article 6. Effective as of the date hereof,
new Sections 6.8 and 6.9 are added to Article 6 to read in their entirety as
follows:
Section 6.8 Monthly Financial Statements and Other Reports.
Within 30 days after the end of each calendar month (or within such
shorter period of time as may be necessary to timely provide the
calculation of the Liquidity Amount on the dates required by Section
6.3), (a) unaudited consolidated financial statements of the Borrower
and its Subsidiaries as of the end of such fiscal month and for the
elapsed portion of the year ended with the last day of such fiscal
month, setting forth in comparative form the figures for the
corresponding period of the budget, all in reasonable detail certified
by the chief executive officer or chief financial officer or other
officer of the Borrower reasonably acceptable to the Administrative
Agent, to be, in his or her opinion acting solely in his or her
capacity as an officer of the Borrower, complete and correct in all
material respects and to present fairly, in accordance with GAAP, the
financial position, results of operations, and cash flows of the
Borrower and its Subsidiaries as of the end of and for such fiscal
month, and for the elapsed portion of the year ended with the last day
of such fiscal month, subject only to the absence of footnotes and
normal year-end adjustments; and (b) a flash report including the
number of orders shipped, the fulfillment rate, the number of active
displayers, the average order size, and the number of orders per
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displayer for such calendar month, all in form and substance reasonably
satisfactory to the Administrative Agent.
Section 6.9 Due Diligence. The Borrower and its Subsidiaries
will at all times cooperate with the reasonable due diligence efforts
of E&Y Capital Advisors LLC and legal counsel for the Administrative
Agent.
Section 2.23 Amendment to Section 7.1(c). Effective as of the date
hereof, the reference to the dollar amount "$30,000,000" in Section 7.1(c) of
the Credit Agreement is deleted and the reference to the dollar amount
"$15,000,000" is inserted in lieu thereof.
Section 2.24 Amendment to Section 7.1(l). Effective as of the date
hereof, Section 7.1(l) of the Credit Agreement is amended and restated to read
in its entirety as follows:
(l) Indebtedness of all Foreign Subsidiaries of the Borrower
for working capital purposes and overdraft facilities in an aggregate
amount not to exceed $5,000,000 at any one time outstanding; and
Section 2.25 Amendment to Section 7.1(m). Effective as of the date
hereof, Section 7.1(m) of the Credit Agreement is amended and restated to read
in its entirety as follows:
(m) Other unsecured Indebtedness not to exceed $20,000,000 in
the aggregate at any time so long as no Default or Event of Default has
occurred or will occur as a result of the incurrence of such
Indebtedness;
Section 2.26 Amendment to Section 7.3(j). Effective as of the date
hereof, Section 7.3(j) of the Credit Agreement is amended and restated to read
in its entirety as follows:
(j) Loans and advances by the Borrower and any of its
Subsidiaries to its suppliers in an aggregate principal amount not
exceeding $2,000,000 at any one time outstanding;
Section 2.27 Amendment to Section 7.3(m). Effective as of the date
hereof, Section 7.3(m) of the Credit Agreement is amended and restated to read
in its entirety as follows:
(m) Acquisitions completed on or before March 30, 2001.
Section 2.28 Amendment to Section 7.5. Effective as of the date hereof,
Section 7.5 of the Credit Agreement is amended and restated to read in its
entirety as follows:
Section 7.5 Sale of Assets. The Borrower shall not, and shall
not permit any of its Subsidiaries to, sell (including for discount or
otherwise), lease, transfer or otherwise dispose of assets, except (a)
sales of inventory sold in the ordinary course of business, (b) so long
as no Default has occurred and is continuing, sales or other
dispositions of worn-out or obsolete assets or assets no longer useful
in the conduct of the Borrower's business in the ordinary course of
business in which the Net Cash Proceeds thereof are used within 365
days of such sale to purchase assets of similar value and quality and
business utility to those assets sold, provided that the aggregate
amount of Net Cash Proceeds outstanding and pending reinvestment
pursuant to this clause (b) and Sections 7.5(d) and Section 2.5(e)
shall not exceed $5,000,000 at any one time, (c) sales of Cash and Cash
Equivalents in the ordinary course of business, (d) so long as no
Default has occurred and is continuing, sales of assets (excluding the
Xxxxxx Equities Properties) in which the Net Cash Proceeds thereof are
used within 365 days of such sale to purchase assets of similar value
and quality and business utility to those assets sold, provided that
the aggregate amount of Net Cash
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Proceeds outstanding and pending reinvestment pursuant to this clause
(d) and Sections 7.5(b) and Section 2.5(e) shall not exceed $5,000,000
at any time, (e) sales and dispositions (i) from any Domestic
Subsidiary to the Borrower or any other Domestic Subsidiary and (ii)
from any Foreign Subsidiary to the Borrower or any of its Subsidiaries,
(f) transfers resulting from any casualty or condemnation of property
or assets, (g) the sale or discount of overdue accounts receivable in
the ordinary course of business, in connection with the compromise or
collection thereof, (h) licenses or sublicenses of intellectual
property and general intangibles and licenses, leases or subleases of
other property in each case in the ordinary course of business and
which do not materially interfere with the business of the Borrower and
its Subsidiaries, (i) the sale of assets in respect of the Candle
Making Joint Venture prior to March 30, 2001, not to exceed $2,500,000
in aggregate amount, and (j) such other sales or dispositions described
in Schedule 12.
Section 2.29 Amendment to Section 7.6. Effective as of the date hereof,
Section 7.6 of the Credit Agreement is amended and restated to read in its
entirety as follows:
Section 7.6 Restricted Payments. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly
declare, pay or make any Restricted Payments, except (a) Dividends
payable by a Subsidiary to the Borrower or another Subsidiary, (b)
Dividends payable in stock and not cash, (c) regularly scheduled
payments of interest on the Senior Subordinated Notes, (d) Restricted
Payments as a result of a purchase of Capital Stock made in order to
fulfill the obligations of the Borrower or its Subsidiaries under an
employee stock purchase plan or similar plan covering employees of the
Borrower or any Subsidiary as from time to time in effect in an
aggregate net amount not to exceed $10,000,000 during the term of this
Agreement, (e) Permitted Issuances, and (f) Restricted Payments made
pursuant to the Home Interiors Recapitalization and the Home Interiors
Merger; provided, further, however, the Borrower shall not pay or make
any Restricted Payments permitted by this Section 7.6 unless there
shall exist no Default prior to or after giving effect to any such
proposed Restricted Payment. Management, advisory, consulting and
similar fees to any Affiliate of the Borrower or any of its
Subsidiaries other than an Obligor, including, without limitation, the
Consulting Agreement, may be accrued but shall not be paid to such
Affiliate or Subsidiary.
Section 2.30 Amendment to Section 7.8. Effective as of the date hereof,
Section 7.8 of the Credit Agreement is amended and restated to read in its
entirety as follows:
Section 7.8 Leverage Ratio. The Borrower will not permit the
Leverage Ratio (tested at the end of each fiscal quarter) to be greater
than (a) 6.65 to 1.00 for the fiscal quarter ending Xxxxx 00, 0000, (x)
7.10 to 1.00 for the fiscal quarter ending June 30,
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2001, (c) 7.90 to 1.00 for the fiscal quarter ending September 30,
2001, (d) 6.75 to 1.00 for the fiscal quarter ending December 31, 2001,
and (e) 3.90 to 1.00 at March 31, 2002, and at the end of any fiscal
quarter thereafter.
Section 2.31 Amendment to Section 7.9. Effective as of the date hereof,
Section 7.9 of the Credit Agreement is amended and restated to read in its
entirety as follows:
Section 7.9 Interest Coverage Ratio. The Borrower shall not
permit the Interest Coverage Ratio (tested at the end of each fiscal
quarter) to be less than (a) 1.65 to 1.00 for the fiscal quarter ending
Xxxxx 00, 0000, (x) 1.50 to 1.00 for the fiscal quarter ending June 30,
2001, (c) 1.30 to 1.00 for the fiscal quarter ending September 30,
2001, (d) 1.45 to 1.00 for the fiscal quarter ending December 31, 2001,
and (e) 2.40 to 1.00 at March 31, 2002, and at the end of any fiscal
quarter thereafter.
Section 2.32 Amendment to Section 7.11. Effective as of the date
hereof, Section 7.11 of the Credit Agreement is amended and restated to read in
its entirety as follows:
Section 7.11 Capital Expenditures. The Borrower shall not
permit the Capital Expenditures to be paid or incurred by it and its
Subsidiaries to exceed at any time in the aggregate (a) $3,900,000
during the fiscal quarter ending Xxxxx 00, 0000, (x) $7,350,000 during
the portion of the fiscal year 2001 ending June 30, 2001, (c)
$11,850,000 during the portion of the fiscal year 2001 ending September
30, 2001, (d) $16,100,000 during the portion of the fiscal year 2001
ending December 31, 2001, and (e) 1.50% of cumulative net revenues of
the Borrower and its Subsidiaries from and after January 1, 2002.
Section 2.33 Addition to Article 7. Effective as of the date hereof,
new Sections 7.14 and 7.15 are added to Article 7 of the Credit Agreement to
read in their entirety as follows:
Section 7.14 Liquidity Amount. The Borrower shall maintain a
Liquidity Amount of not less than (a) $30,000,000 as of April 28, 2001,
and (b) $35,000,000 as of October 27, 2001, and as of April 27, 2002.
Section 7.15 EBITDA. The Borrower shall maintain an EBITDA
(tested at the end of each fiscal quarter) of not less than (a)
$9,900,000 for the fiscal quarter ending Xxxxx 00, 0000, (x)
$12,500,000 for the fiscal quarter ending June 30, 2001, (c)
$15,600,000 for the fiscal quarter ending September 30, 2001, (d)
$25,900,000 for the fiscal quarter ending December 31, 2001, and (e)
thereafter, calculated for each of the then most recently ended four
fiscal quarters, $75,000,000.
Section 2.34 Amendment to Sections 8.1(d) and (k). Effective as of the
date hereof, Sections 8.1(d) and (k) of the Credit Agreement are amended and
restated to read in their entirety as follows:
(d) The Borrower or any of its Subsidiaries shall default in
the performance or observance of any other agreement or covenant
contained in this Agreement not specifically referred to elsewhere in
this Section 8.1, and such default shall not be cured within a period
of 30 days after the earlier of (i) the date on which such failure or
neglect
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first becomes known to the Borrower or (ii) the delivery of notice of
such breach by the Administrative Agent;
. . .
(k) The Borrower or any of its Subsidiaries shall default in
any payment in respect of Indebtedness beyond any grace period provided
with respect thereto, or shall default in the performance of any
agreement or instrument under which such Indebtedness is created or
evidenced beyond any applicable grace period, or any other event or
condition shall occur in respect of such Indebtedness, if the effect of
such default, event or condition is to permit or cause the holder of
such Indebtedness (or a trustee on behalf of any such holder) to cause
such Indebtedness to become due, repurchased or redeemed prior to its
date of maturity, provided that a default, event or condition of the
type described above in this Section 8.1(k) shall not constitute an
Event of Default under this Agreement unless, at such time, one or more
defaults, events or conditions of the type described above in this
Section 8.1(k) shall have occurred and be continuing with respect to
Indebtedness the outstanding amount of which exceeds in the aggregate
$5,000,000;
Section 2.35 Amendment to Section 8.2(c). Effective as of the date
hereof, the reference to the number "30" in Section 8.2(c) of the Credit
Agreement is deleted and the reference to the number "5" is inserted in lieu
thereof.
Section 2.36 Amendment to Section 11.1(a)(ii). Effective as of the date
hereof, Section 11.1(a)(ii) of the Credit Agreement is amended and restated to
read in its entirety as follows:
(ii) If to the Administrative Agent, at:
Bank of America, N.A.
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. X'Xxxxx
With a copy to: Bank of America, N.A.
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Agency Services
Section 2.37 Amendment to Section 11.2(a). Effective as of the date
hereof, Section 11.2(a) of the Credit Agreement is amended to add at the end
thereof the following:
(a) and financial advisors to the Administrative Agent.
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Section 2.38 Addition of Schedule 12. Effective as of the date hereof,
all references to "Schedule 12" in the Credit Agreement are deemed to be
references to the "Schedule 12" attached hereto as Schedule 12.
Section 2.39 Amendment to Exhibit K. Effective as of the date hereof,
all references to "Exhibit K" in the Credit Agreement are deemed to be
references to the "Exhibit K" attached hereto as Exhibit K.
ARTICLE III
Representations and Warranties
Section 3.1 By its execution and delivery hereof, the Borrower
represents and warrants that, as of the date hereof and after giving effect to
the amendments contemplated by the foregoing Article II:
(a) the representations and warranties contained in the Credit
Agreement and the other Loan Documents (other than those
representations and warranties that specifically relate to an earlier
date) are true and correct in all material respects on and as of the
date hereof as made on and as of such date;
(b) no event has occurred and is continuing which constitutes
a Default or an Event of Default;
(c) the Borrower has full corporate power and authority to
execute and deliver this Fifth Amendment, and this Fifth Amendment
constitutes the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable Debtor Relief Laws and by
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and except as rights to
indemnity may be limited by federal or state securities laws;
(d) neither the execution, delivery and performance of this
Fifth Amendment nor the consummation of any transactions contemplated
herein will conflict with any material Applicable Law, the articles of
incorporation, bylaws or other governance document of the Borrower or
any of its Subsidiaries, or any material indenture, agreement or other
instrument to which the Borrower or any of its Subsidiaries or any of
their respective property may be bound;
(e) no authorization, approval, consent, or other action by,
notice to, or filing with, any governmental authority or other Person
(other than the Board of Directors of the Borrower or any Guarantor),
is required for the execution, delivery or performance by the Borrower
of this Fifth Amendment or the acknowledgment of this Fifth Amendment
by any Guarantor other than (i) those approvals and consents already
obtained, and (ii) consents under immaterial contractual obligations;
(f) the Borrower and its Subsidiaries have granted to the
Administrative Agent for the benefit of the Lenders a first priority
perfected security interest and Lien
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upon substantially all of the real property and personal property of
the Borrower and its Subsidiaries, except for Permitted Liens (except
as otherwise provided herein and in the Loan Documents); and
(g) attached hereto as Schedule 3.1(g) is a listing of all
deposit accounts of the Borrower and its Subsidiaries and the amounts
on deposit therein as of a date no earlier than February 28, 2001.
ARTICLE IV
Conditions Of Effectiveness
Section 4.1 Conditions. The effectiveness of this Fifth Amendment is
subject to the satisfaction of the following conditions precedent:
(a) the Administrative Agent shall receive counterparts of
this Fifth Amendment executed by the Determining Lenders;
(b) the Administrative Agent shall receive counterparts of
this Fifth Amendment executed by the Borrower and acknowledged by each
Guarantor;
(c) the Administrative Agent shall have received a certified
resolution of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Fifth Amendment;
(d) the Administrative Agent shall have received an opinion of
counsel to the Borrower, in form and substance satisfactory to the
Administrative Agent, with respect to the matters set forth in Sections
3.1(c), (d) and (e) of this Fifth Amendment;
(e) the Administrative Agent for the pro rata benefit of the
Lenders shall have received payment of all accrued and unpaid interest
on the outstanding Advances;
(f) the Administrative Agent shall receive payment of all
outstanding fees and expenses of counsel and consultants for the
Administrative Agent, including without limitation, the fees and
expenses of E&Y Capital Advisors LLC, Xxxxxxx Xxxxxxx and Xxxxxxx P.C.
and Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.;
(g) the Administrative Agent shall receive copies of the
amendments to the Consulting Agreements which amend the Consulting
Agreement to reflect the provisions of Section 7.6 of the Credit
Agreement, as amended by this Amendment; and
(h) the Administrative Agent shall receive, in form and
substance satisfactory to the Administrative Agent and its counsel,
such other documents, certificates and instruments as the
Administrative Agent shall reasonably require.
Section 4.2 Amendment Fee. Provided this Fifth Amendment becomes
effective, the Borrower covenants and agrees to pay an amendment fee to the
Administrative Agent on behalf of the Lenders which execute and deliver this
Fifth Amendment to the Administrative Agent (or
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its counsel) not later than one (1) Business Day after this Fifth Amendment
becomes effective in an amount equal to the product of (a) 0.25% multiplied by
(b)(i) with respect to each Lender having a portion of the Revolving Credit
Commitment, an amount equal to such Lender's portion of the Revolving Credit
Commitment and (ii) with respect to each Lender which is owed Facility A Term
Loan Advances or Facility B Term Loan Advances, the aggregate principal amount
of Facility A Term Loan Advances and Facility B Term Loan Advances owed to such
Lender on the date of this Fifth Amendment. Such amendment fee shall be paid in
immediately available funds. The Borrower agrees that the failure to pay the
amendment fee provided in this Section 4.2 shall be an Event of Default under
Section 8.1(b)(ii) of the Credit Agreement.
Section 4.3 Guarantor Acknowledgment. By signing below, each of the
Guarantors (i) acknowledges, consents and agrees to the execution and delivery
of this Fifth Amendment, (ii) acknowledges and agrees that its obligations in
respect of its Subsidiary Guaranty are not released, diminished, waived,
modified, impaired or affected in any manner by this Fifth Amendment or any of
the provisions contemplated herein, (iii) ratifies and confirms its obligations
under its Subsidiary Guaranty, and (iv) acknowledges and agrees that it has no
claims or offsets against, or defenses or counterclaims to, its Subsidiary
Guaranty solely as a result of the execution and delivery of this Fifth
Amendment.
ARTICLE V
Limited Waiver
The Borrower has informed the Administrative Agent, the Syndication
Agent, the Documentation Agent, the Co-Agents and the Lenders that certain
Events of Default would have occurred on March 31, 2001, under the Credit
Agreement solely by reason of the Borrower's failure to comply with Sections 7.8
and 7.9 of the Credit Agreement for the fiscal quarter ending December 31, 2000
(collectively the "Specified Defaults"), but for the effectiveness of this Fifth
Amendment. By execution of this Fifth Amendment, the Administrative Agent, the
Syndication Agent, the Documentation Agent, the Co-Agents and the Lenders hereby
waive the Specified Defaults. Except as otherwise specifically provided for in
this Article V, nothing contained herein shall be construed as a waiver by the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agents and the Lenders of any covenant or provision of the Credit Agreement,
the other Loan Documents, this Fifth Amendment, or of any other contract or
instrument among the Borrower, the Administrative Agent, the Syndication Agent,
the Documentation Agent, the Co-Agents and the Lenders, and the failure of the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agents or any Lender at any time or times hereafter to require strict
compliance by the Borrower of any provision thereof shall not waive, affect or
diminish any right of the Administrative Agent, the Syndication Agent, the
Documentation Agent, the Co-Agents and the Lenders to thereafter demand strict
compliance therewith. The Administrative Agent, the Syndication Agent, the
Documentation Agent, the Co-Agents and the Lenders hereby reserve all rights
granted under the Credit Agreement, the other Loan Documents, this Fifth
Amendment and any other contract or instrument among the Borrower, the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agents and the Lenders.
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ARTICLE VI
Miscellaneous
Section 6.1 Reference To The Credit Agreement.
(a) Upon the effectiveness of this Fifth Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder", or
words of like import shall mean and be a reference to the Credit
Agreement, as amended by this Fifth Amendment.
(b) The Credit Agreement, as amended by this Fifth Amendment,
and all other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
Section 6.2 Costs and Expenses. The Borrower hereby agrees to pay when
due the fees and expenses provided for in Section 11.2 of the Credit Agreement.
Section 6.3 Indemnification. THE BORROWER AND EACH GUARANTOR HEREBY
AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE
DOCUMENTATION AGENT, THE CO-AGENTS AND EACH LENDER AND EACH AFFILIATE THEREOF
AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM,
AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (a) THE NEGOTIATION, EXECUTION,
DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS, (b) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (c)
ANY BREACH BY THE BORROWER OR ANY GUARANTOR OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (d) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES
OR ASSETS OF THE BORROWER, ANY GUARANTOR OR ANY OF THEIR SUBSIDIARIES, (e) THE
USE OR PROPOSED USE OF ANY LETTER OF CREDIT, (f) ANY AND ALL TAXES, LEVIES,
DEDUCTIONS, AND CHARGES IMPOSED ON THE ADMINISTRATIVE AGENT, OR ANY OF THE
ADMINISTRATIVE AGENT'S CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (g)
ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING
RELATING TO ANY OF THE FOREGOING AND ANY LEGAL PROCEEDING RELATING TO ANY COURT
ORDER, INJUNCTION OR OTHER PROCESS OR DECREE RESTRAINING OR SEEKING TO RESTRAIN
THE ADMINISTRATIVE AGENT FROM PAYING ANY AMOUNT UNDER ANY LETTER OF CREDIT.
WITHOUT LIMITING ANY PROVISION OF THE CREDIT AGREEMENT OR OF ANY OTHER LOAN
DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO
BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED
-21-
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FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON; PROVIDED HOWEVER, NO PERSON SHALL BE INDEMNIFIED
HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The provisions of
this Section 6.3 shall survive the termination of the Credit Agreement and this
Fifth Amendment.
Section 6.4 Waiver and Release. IN ADDITION, TO INDUCE THE
ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE DOCUMENTATION AGENT, THE
CO-AGENTS AND THE LENDERS TO AGREE TO THE TERMS OF THIS FIFTH AMENDMENT, THE
BORROWER AND EACH GUARANTOR (BY THEIR EXECUTION BELOW) REPRESENT AND WARRANT
THAT AS OF THE DATE OF THEIR EXECUTION OF THIS FIFTH AMENDMENT THERE ARE NO
CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO THEIR RESPECTIVE
OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH THEY:
(a) WAIVER. WAIVE ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES
OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE
OF THEIR EXECUTION OF THIS FIFTH AMENDMENT AND
(b) RELEASE. RELEASE AND DISCHARGE ADMINISTRATIVE AGENT, THE
SYNDICATION AGENT, THE DOCUMENTATION AGENT, THE CO-AGENTS AND THE
LENDERS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE "RELEASED
PARTIES") FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES,
CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN
OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH THE
BORROWER AND EACH GUARANTOR EVER HAD, NOW HAVE, CLAIMS TO HAVE OR MAY
HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF AND
FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
The provisions of this Section 6.4 shall survive termination of the Credit
Agreement and this Fifth Amendment.
Section 6.5 Execution in Counterparts. This Fifth Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument. Signatures transmitted by facsimile shall be
effective as originals.
-22-
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Section 6.6 Governing Law; Binding Effect. This Fifth Amendment shall
be governed by and construed in accordance with the Laws of the State of Texas
without regard to the principles of the conflicts of Laws and the applicable
federal Laws and shall be binding upon the Borrower, the Administrative Agent,
the Syndication Agent, the Documentation Agent and each Lender and their
respective successors and assigns.
Section 6.7 Headings. Section headings in this Fifth Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Fifth Amendment for any other purpose.
Section 6.8 Entire Agreement. THE CREDIT AGREEMENT, AS AMENDED BY THIS
FIFTH AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
================================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
================================================================================
-23-
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IN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment as the date first above written.
HOME INTERIORS & GIFTS, INC.
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-24-
25
BANK OF AMERICA, N.A., as Administrative
Agent and as a Lender
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-25-
26
THE CHASE MANHATTAN BANK, as Syndication
Agent and as a Lender
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-26-
27
SOCIETE GENERALE, as Co-Agent and as a Lender
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-27-
28
CITICORP USA, INC., as Co-Agent and as a Lender
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-28-
29
BANK ONE, NA (successor by merger to Bank
One, Texas, NA)
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-29-
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BANKERS TRUST COMPANY
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-00-
00
XXX (XXX) CAPITAL CORPORATION
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-31-
32
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-32-
33
XXXXXX FINANCIAL, INC.
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-33-
00
XXXXXXXX XXXX XXXX XX XXXXXXXX
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-34-
35
BALANCED HIGH-YIELD FUND I LTD.
By: BHF (USA) CAPITAL CORPORATION,
acting as attorney-in-fact
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-35-
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KZH ING-2 LLC
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-36-
37
DELANO COMPANY
By: Pacific Investment Management Company,
as its Investment Advisor
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-37-
38
XXX XXXXXX CLO II, LIMITED
By: Xxx Xxxxxx Management, Inc.,
as Collateral Manager
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-38-
39
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisers (Bermuda), Ltd.,
as General Partner
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By: TCW Investment Management Company,
as Investment Manager
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (XXXX XX), L.P.,
as General Partner
By: TCW Advisers (Bermuda), Ltd.,
as General Partner
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By: TCW Investment Management Company,
as Investment Manager
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-39-
40
TCW Shared Opportunity Fund III, L.P.
By: TCW Asset Management Company
Its Investment Adviser
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-40-
41
TCW LEVERAGED INCOME TRUST IV, L.P.
By: TCW Asset Management Company,
as its Investment Adviser
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By: TCW (XXXX XX), L.L.C.,
as General Partner
By: TCW Asset Management Company,
as its Managing Member
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-41-
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CAPTIVA III FINANCE LTD., as advised by
Pacific Investment Management Company
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-42-
43
ARCHIMEDES FUNDING, L.L.C.
By: ING Capital Advisors LLC
as Collateral Manager
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-43-
44
SEQUILS-ING I (HBDGM), LTD.
By: ING Capital Advisors LLC
as Collateral Manager
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-44-
45
ARCHIMEDES FUNDING III LTD.
By: ING Capital Advisors LLC
as Collateral Manager
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
-45-
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CREDIT SUISSE FIRST BOSTON
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-46-
47
ATHENA CDO LIMITED
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-47-
48
ROYALTON COMPANY
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-48-
49
XXXXXX HIGH YIELD ADVANTAGE FUND
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-49-
50
XXXXXX HIGH YIELD TRUST
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-00-
00
XXXXXX XXXXX XXXXX - XXXXXX HIGH YIELD TRUST II
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-51-
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COMPASS BANK
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-52-
53
AGREED AND ACCEPTED:
DALLAS WOODCRAFT, INC., a Texas corporation
GIA, INC., a Nebraska corporation
HOMCO, INC., a Texas corporation
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
HOMCO PUERTO RICO, INC., a Delaware corporation
SPRING VALLEY SCENTS, INC., a Texas corporation
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
LAREDO CANDLE COMPANY, L.P., a Texas
limited partnership
By: Spring Valley Scents, Inc., its
general partner
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-53-
54
SCHEDULE 12
Sales of Assets
[See Attached]
55
EXHIBIT E
Compliance Certificate
[See Attached]
56
EXHIBIT K
Notice of Borrowing
[See Attached]
57
SCHEDULE 3.1(g)
Deposit Accounts
