AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 7 TO CREDIT AGREEMENT, dated as of April 29, 1998 (this
"AMENDMENT"), among GANTOS, INC., a Michigan corporation (the "BORROWER"), the
lenders named therein (each individually, a "LENDER" and collectively, the
"LENDERS"), and FLEET BANK, N.A. (formerly known as Natwest Bank N.A.) as
agent for the Lenders (in such capacity, the "AGENT").
WHEREAS, the Borrower, the Lenders, and the Agent are party to the
Revolving Credit Agreement, dated as of March 10, 1995 (as amended by amendment
no. 1, dated April 25, 1996, amendment no. 2, dated March 18, 1997, amendment
no. 3, dated October 8, 1997, amendment no. 4, dated as of February 1, 1998,
amendment no. 5, dated as of February 27, 1998 and amendment no. 6, dated as of
March 30, 1998 and as otherwise and/or further amended, supplemented or
modified from time to time in accordance with its terms, the "CREDIT
AGREEMENT"); and
WHEREAS, subject to the terms and conditions hereof, the parties
hereto desire to amend certain provisions of the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:
1. DEFINED TERMS. Unless otherwise specifically defined herein,
all capitalized terms used herein shall have the respective meanings ascribed
to such terms in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. Subject to the conditions as to
effectiveness set forth in Paragraph 4 of this Amendment, the Credit Agreement
is hereby amended effective as of April 29, 1998, as follows:
(a) The definition of "Borrowing Base" appearing in Article I of the
Credit Agreement is amended and restated in its entirety as follows:
"BORROWING BASE" shall mean an amount equal to:
(a) ninety percent (90%) of the Net Amount of Eligible Receivables,
PLUS
(b) the excess of:
(i) the lesser of (A) (1) at any time during the period com
mencing on October 1, 1997 and ending on January 31, 1999, and
each four month period occurring thereafter commencing on
October 1 and ending on January 31, fifty-five percent (55%) of
the Eligible Inventory valued at the lower of cost (on a FIFO
basis) and current market value and (2) at any time during the
period commencing on February 1, 1999 and ending on September
30, 1999, and each eight month period occurring thereafter
commencing on February 1 and ending on September 30, forty-five
percent (45%) of the Eligible Inventory valued at the lower of
cost (on a FIFO basis) and current market value and (B) thirty-
five percent (35%) of the Retail Value of Eligible Inventory,
OVER
(ii) the aggregate amount of all outstanding gift
certificates sold by the Borrower.
3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants as follows (which representations and warranties shall survive the
execution and delivery of this Amendment) as of the date hereof that:
(a) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof with the same force and effect as if
made on such date (except to the extent that any such representation or
warranty relates expressly to an earlier date).
(b) The Borrower has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Amendment and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Amendment.
(c) This Amendment has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Borrower, and is
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and by
general equity principles.
(d) No registration or filing with, consent or approval of, or
other action by, any Federal, State or other governmental agency, authority
or regulatory body is or will be required on behalf of the Borrower in
connection with the execution, delivery, performance, validity or enforcement
of this Amendment other than any such registration or filing which has been
made or any such consent, approval or other action which has been obtained
and remains in full force and effect and other than the filing of a Form 10-Q
or a Form 10-K with the Securities and Exchange Commission.
(e) The execution, delivery and performance of this Amendment by
the Borrower will not violate any provision of the certificate or articles of
incorporation or bylaws of the Borrower or any of its subsidiaries or any
law, statute, rule or regulation, or any order or decree of any court or
governmental instrumentality applicable to the Borrower or any of its
subsidiaries, or violate, result in the breach of or constitute a default
under any indenture, agreement or other instrument to which the Borrower or
any of its subsidiaries or any of their respective properties or assets are
or may be bound.
(f) After giving effect to this Amendment, the Borrower is in
compliance with all of the various covenants and agreements applicable to it
set forth in the Credit Agreement and each of the other Loan Documents.
(g) After giving effect to this Amendment, no event has occurred
and is continuing which constitutes or would constitute, with the giving of
notice or the lapse of time or both, an Event of Default under the Credit
Agreement or any of the other Loan Documents, or an Event of Default (as
defined in the Indenture) under the Indenture.
(h) The Borrower has no defense to or setoff, counterclaim or
claim against payment of the Obligations or enforcement of the Loan Documents
based upon a fact or circumstance existing or occurring on or prior to the
date hereof.
4. CONDITIONS PRECEDENT. Notwithstanding any term or provision
of this Amendment to the contrary, the amendments set forth in Paragraph 2
hereof shall become effective as of April 29, 1998 if, and only if, the Agent
shall have determined that each of the following conditions precedent shall
have been satisfied, such determination to be conclusively evidenced by the
Agent's execution and delivery of this Amendment:
(a) All required corporate actions in connection with the
execution and delivery of this Amendment shall have been taken, and each
shall be satisfactory in form and substance to the Agent, and the Agent shall
have received all information and copies of all documents, including, without
limitation, records of requisite corporate action that the Agent may
reasonably request, to be certified by the appropriate corporate person or
government authorities.
(b) All representations and warranties made by the Borrower
contained in Paragraph 3 hereof shall be true and correct with the same
effect as though such representations and warranties had been made on the
date of effectiveness of the amendments contained in this Amendment after
giving effect to such amendments (unless any such representation or warranty
speaks expressly to an earlier date).
(c) Counterparts of this Amendment shall have been duly executed
and delivered on behalf of the Borrower, the Lenders and the Agent.
5. CONTINUED EFFECTIVENESS. The term "Agreement", "hereof",
"herein" and similar terms as used in the Credit Agreement, and references in
the other Loan Documents to
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the Credit Agreement, shall mean and refer to, from and after the effective
date of the amendments contained herein as determined in accordance with
Paragraph 4 hereof, the Credit Agreement as amended by this Amendment. Each
of the parties hereto agrees that, as amended by this Amendment, all of the
covenants and agreements and other provisions contained in the Credit
Agreement and the other Loan Documents are hereby ratified and confirmed in
all respects and shall remain in full force and effect from and after the
date of this Amendment.
6. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
8.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
GANTOS, INC., as Borrower
By:
-----------------------------------
Name:
Title:
FLEET BANK, N.A. (formerly known as Natwest
Bank N.A.), as Agent and as a Lender
By:
-----------------------------------
Name:
Title:
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