1
EXHIBIT 4.N
April 14, 2000
TruServ Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer Controller
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Note Purchase and
Private Shelf Agreement dated as of November 13, 1997 (as amended from time to
time, the "NOTE AGREEMENT") between TruServ Corporation, a Delaware corporation
(the "COMPANY"), and The Prudential Insurance Company of America and each
Prudential Affiliate which pursuant to the terms thereof becomes bound thereby
("PRUDENTIAL"). Reference is also made to that certain Note Agreement, dated as
of April 13, 1992, between the Company (then known as Xxxxxx & Company) and
Prudential (the "1992 NOTE AGREEMENT"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Note Agreement.
Pursuant to the request of the Company and in accordance with the
provisions of paragraph 11C of the Note Agreement and paragraph 11C of the 1992
Note Agreement, the parties hereto agree as follows:
SECTION 1. Amendment to Note Agreement. From and after the date this letter
becomes effective in accordance with its terms, the Note Agreement is amended as
follows:
1.1. Xxxxxxxxx x0X of the Note Agreement is amended to delete the terms "BA
Credit Agreements", "Debt", "Fixed Charge Coverage Ratio", "Ratio Compliance
Date", "Subsidiary", "Supplemental Coupon Elimination Date", "Total Senior Debt"
and "Total Senior Debt to EBITDA Ratio" presently appearing therein and to add
the following defined terms thereto in appropriate alphabetical order:
"APRIL 2000 MODIFICATION" shall mean that certain letter agreement,
dated April 14, 2000, between the Company and the Purchasers amending this
Agreement.
"BENEFITED OBLIGATIONS" has the meaning given in the Intercreditor
Agreement.
"BENEFITED PARTIES" has the meaning given in the Intercreditor
Agreement.
2
"BA" shall mean a draft drawn by the Company on, and accepted and
discounted by, BofA, in its capacity as an accepting lender under the BofA
Credit Agreement, or by any successor in such capacity, pursuant to the
BofA Credit Agreement.
"BOFA" shall mean Bank of America, N.A., a national banking
association.
"BA CREDIT AGREEMENTS" shall mean the Amended and Restated Credit
Agreement dated as of April 14, 2000 among the Company, BofA, as agent, and
the various financial institutions party thereto, as amended from time to
time, and (ii) any refinancings, renewals or replacements of the credit
agreement referred to in clause (i) above.
"COLLATERAL AGENT" shall mean BofA in its capacity as collateral agent
under the Intercreditor Agreement, together with any successor thereto in
such capacity.
"COLLATERAL DOCUMENTS" shall mean the Security Agreement, the
Trademark Security Agreement, the Pledge Agreement, each Mortgage and any
other document or instrument pursuant to which the Company or any Guarantor
grants to the Collateral Agent, for the benefit of the Benefited Parties, a
security interest in any of its property to secure the payment of any of
the Benefited Obligations.
"DEBT" shall mean Short Term Debt and Funded Debt.
"EFFECTIVE DATE" shall have the meaning given in the April 2000
Modification.
"FINANCING AGREEMENTS" shall have the meaning given in the
Intercreditor Agreement.
"FIXED CHARGE COVERAGE RATIO" shall mean, as of the last day of any
fiscal quarter, the ratio of:
(a) the sum, for the period of four consecutive fiscal quarters ending
on such day, of (i) Consolidated Net Earnings plus (ii) to the extent
deducted in determining such Consolidated Net Earnings, interest
expense, taxes, operating lease expense, depreciation and
amortization, plus (iii) for the period of four fiscal quarters ending
March 31, 2000, June 30, 2000 and September 30, 2000, Special 1999
Charges (to the extent taken in such period), plus (iv) for the period
of four fiscal quarters ending March 31, 2000 and June 30, 2000,
Special A/P Charges (to the extent taken in such period),
to
(b) the sum for such period of (i) operating lease expense and (ii)
interest expense;
each as determined for the Company and its Subsidiaries on a consolidated
basis.
2
3
"FOREIGN SUBSIDIARY" shall mean each Subsidiary of the Company which
is organized under the laws of any jurisdiction other than, and which is
conducting the majority of its business outside of, the United States or
any state thereof.
"GUARANTOR" shall mean, on any day, each Subsidiary that has executed
a counterpart of the Guaranty on or prior to that day (or is required to
execute a counterpart of the Guaranty on that day).
"GUARANTY" shall mean the Guaranty executed by various Subsidiaries,
substantially in the form as delivered pursuant to Section 4(b)(i) of the
April 2000 Modification.
"INACTIVE SUBSIDIARY" means any Subsidiary which does not actively
conduct business and which has less than $100,000 of assets.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement dated
as of April 14, 2000 among BofA, as agent under the BofA Credit Agreement,
the Collateral Agent, the Purchasers and various other parties.
"INVESTMENTS" shall mean any loan or advance to, or ownership,
purchase or acquisition of any security (including stock) or obligations
of, or any other interest in, or any capital contribution made to, any
Person.
"MEMBER" shall mean any Person which is a member of the Company.
"MORTGAGE" shall mean a mortgage, deed of trust, leasehold mortgage or
similar instrument granting the Collateral Agent a Lien on real property
owned or leased by the Company or any Subsidiary.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement among the Company,
various Subsidiaries of the Company and the Collateral Agent, substantially
in the form as delivered pursuant to Section 4(b)(iv) of the April 2000
Modification.
"RATIO COMPLIANCE DATE" shall mean the first date to occur after the
Effective Date on which financial statements of the Company have been
delivered pursuant to Section 5A showing that for each of the four most
recent fiscal quarters of the Company, as reported in such financial
statements, the Total Senior Debt to EBITDA Ratio has been below 3.0 to 1.0
as of the last day of each of such fiscal quarters.
"RESTRICTED INVESTMENTS" shall mean any Investment prohibited by
xxxxxxxxx 0X.
"SECURITY AGREEMENT" means the Security Agreement among the Company,
various Subsidiaries and the Collateral Agent, substantially in the form as
delivered pursuant to Section 4(b)(iii) of the April 2000 Modification.
3
4
"SHORT TERM DEBT" shall mean, as of any date of determination with
respect to any Person, (i) all Indebtedness of such Person for borrowed
money other than Funded Debt of such Person and (ii) Guarantees by such
Person of Short Term Debt of Persons other than Members.
"SPECIAL A/P CHARGES" means, at any time, the first $15,000,000 of
accounts payable charges taken by the Company during the fiscal quarters
ending March 31, 2000 and June 30, 2000.
"SPECIAL 1999 CHARGES" means up to $100,000,000 of accounting
adjustments taken by the Company during the 1999 fiscal year.
"SUBSIDIARY" shall mean any corporation all of the stock of every
class of which, except directors' qualifying shares, shall, at the time as
of which any determination is being made, be owned by the Company either
directly or through Subsidiaries. Notwithstanding the foregoing, for
purposes of calculating the financial covenants, each of Xxxxxx Canada
Hardware and Variety Company, Inc. and TruServ Canada Cooperative Inc. will
be deemed a Subsidiary of the Company if, in accordance with generally
accepted accounting principles, it is consolidated in the financial
statements of the Company required to be delivered pursuant to clauses (i)
and (ii) of paragraph 5A hereof.
"SUPPLEMENTAL COUPON ELIMINATION DATE" shall mean the first January
1st or July 1st to occur after the Ratio Compliance Date.
"SUPPLEMENTAL INTEREST RATE" shall mean (a) to (but excluding) the
Supplemental Coupon Elimination Date, 3.25% per annum, and (b) on and after
the Supplemental Coupon Elimination Date, 2.40% per annum.
"TOTAL SENIOR DEBT" means the sum of (a) all Debt of the Company and
its Subsidiaries other than Subordinated Debt and (b) the principal or face
amount of all outstanding "LC Obligations" under and as defined in the
Intercreditor Agreement.
"TOTAL SENIOR DEBT TO EBITDA RATIO" shall mean, as of the last day of
any fiscal quarter, the ratio of (a) the remainder of (i) the daily average
of the amount of Total Senior Debt outstanding during the last fiscal month
of such fiscal quarter minus (ii) the daily average of cash and marketable
securities during the last fiscal month of such fiscal quarter to (b) the
sum of (i) EBITDA for the period of four consecutive fiscal quarters then
ending, plus (ii) for the period of four fiscal quarters ending March 31,
2000, June 30, 2000 and September 30, 2000, Special 1999 Charges (to the
extent taken in such period), plus (iii) for the period of four fiscal
quarters ending March 31, 2000 and June 30, 2000, Special A/P Charges (to
the extent taken in such period).
4
5
"TRADEMARK SECURITY AGREEMENT" shall mean the Trademark Security
Agreement between the Company and the Collateral Agent, substantially in
the form as delivered pursuant to Section 4(b)(vi) of the April 2000
Modification.
1.2 The paragraph at the end of paragraph 1 of the Note Agreement is
amended in its entirety to read as follows:
The Company shall pay to each holder of Notes supplemental interest on
the unpaid balance of the aggregate principal amount of the Notes held by
it at the rate equal to the Supplemental Interest Rate. Such supplemental
interest shall be computed on the basis of a 360 day year of twelve 30 day
months and shall be payable on the interest payment due dates for the
applicable Notes to which such supplemental interest relates, commencing
with the first such interest payment due date on or after the Effective
Date. To the extent permitted by law, any overdue payment of principal on
any Note, interest on any Note and supplemental interest shall bear
interest (payable on demand) at a rate per annum from time to time equal to
the greater of (i) the sum of (x) 2%, plus (y) the Supplemental Interest
Rate as from time to time in effect, plus (z) the interest rate per annum
which such Note bears other than during the period in which an Event of
Default is in existence or (ii) 2% over the rate of interest publicly
announced by Xxxxxx Guaranty Trust Company of New York from time to time as
its "base" or "prime" rate. For the avoidance of doubt, all references in
this Agreement to interest shall be deemed to include the supplemental
interest payable pursuant to this paragraph (including, without limitation,
the references to interest in paragraphs 4, 7A(ii), and 10A). The Company
further agrees that, during any period that an Event of Default shall be in
effect, to the extent permitted by law the entire outstanding principal
amount of each Note shall bear interest at a rate per annum which is equal
to the sum of (x) 2%, plus (y) the Supplemental Interest Rate as from time
to time in effect, plus (z) the interest rate per annum which such Note
would otherwise bear.
The Purchasers acknowledge that the forgoing provisions added to the Note
Agreement by this Section 1.1 replace and are in lieu of the requirement to pay
supplemental interest at the rate of .50% per annum previously added to the Note
Agreement by amendment.
1.3 Paragraph 5A of the Note Agreement is amended by (a) deleting the word
"and" immediately after clause 5A(vi), (b) renumbering clause (vii) as clause
(ix), and (c) inserting the following new clauses (vii) and (viii):
(vii) as soon as practicable and in any event within 45 days after the
end of each month in each fiscal year, consolidated statements of
operations, capital stock and retained earnings and cash flows of the
Company and its Subsidiaries for such month, and a consolidated balance
sheet of the Company and its Subsidiaries as of the end of such month, all
in reasonable detail and satisfactory in form to the Required Holder(s) and
certified by an authorized financial officer of the Company, subject to
change resulting from year-end adjustments;
5
6
(viii) simultaneously with sending the same to the agent or any lender
under the BofA Credit Agreement, a copy of any notice, report or other
written information delivered to the agent or any lender under the BofA
Credit Agreement; and
1.4 Paragraph 5 of the Note Agreement is amended by adding the following
new paragraphs 5G, 5H, 5I and 5J thereto:
5G. COLLATERAL/ACCOUNTING SYSTEMS EXAMINATION. The Company
covenants that it will (a) cooperate with the holders of the Notes and
their respective representatives in commencing a collateral and accounting
systems examination within 60 days following the Effective Date and
completing such examination as promptly as practicable thereafter and (b)
pay all reasonable costs and expenses in connection with such examination.
5H. REAL ESTATE DOCUMENTS. (a)(i)The Company shall, and shall
cause each applicable Guarantor to, promptly (and, in any event, no later
than April 26, 2000) execute and deliver a Mortgage providing for a fully
perfected Lien, in favor of the Collateral Agent, in all right, title and
interest of the Company or such Guarantor in each parcel of real property
listed on Part 1 of Schedule 6.16 to the BA Credit Agreement (as in effect
on the Effective Date) (each a "PRIMARY PROPERTY").
(ii) The Company shall, and shall cause each applicable Guarantor
to, promptly (and in any event, no later than May 10, 2000) execute and
deliver a Mortgage providing for a fully perfected Lien, in favor of the
Collateral Agent, in all right, title and interest of the Company or such
Guarantor in each parcel of real property listed on Part 2 of Schedule 6.16
to the BA Credit Agreement, as in effect on the Effective Date (each a
"SECONDARY PROPERTY"; the Primary Properties and the Secondary Properties
are collectively referred to as the "PROPERTIES").
(b) The Company shall, and shall cause each Guarantor to, promptly
(and, in any event, no later than May 15, 2000 for each Primary Property
and May 31, 2000 for each Secondary Property) provide the following
documents in connection with each Mortgage referred to above:
(i) an ALTA Loan Title Insurance Policy, issued by an insurer
acceptable to the Required Holder(s), insuring the Collateral Agent's
Lien on the Property subject to such Mortgage and containing such
endorsements as the Collateral Agent may reasonably require (it being
understood that the amount of coverage, exceptions to coverage and
status of title set forth in such policy shall be acceptable to the
Required Holder(s));
(ii) copies of all documents of record concerning such
Property as shown on the commitment for the ALTA Loan Title Insurance
Policy referred to above;
6
7
(iii) original or certified copies of all insurance policies
required to be maintained with respect to such Property by this
Agreement or the applicable Mortgage; and
(iv) a flood insurance policy covering such Property,
reasonably satisfactory to the Required Holder(s), if required by the
Flood Disaster Protection Act of 1973.
Additionally, in the case of any real property leased by the Company
or any Guarantor, the Company shall use its best efforts to, or shall cause
such Guarantor to use its best efforts to, provide a consent, in form and
substance satisfactory to the Required Holder(s), from the owner and each
mortgagee of such property (a) consenting to the Mortgage in favor of the
Collateral Agent with respect to such property and (b) waiving any
landlord's Lien in respect of personal property kept at the premises
subject to such lease.
5I. FURTHER ASSURANCES. The Company shall (a) cause all Subsidiaries
to guarantee the obligations of the Company hereunder pursuant to the
Guaranty (and in furtherance of the foregoing, immediately upon the
creation or acquisition of any Subsidiary, cause such Subsidiary to execute
and deliver a counterpart of the Guaranty, together with such other
documents, including resolutions and opinions of counsel, as the holder of
a Note may reasonably request), provided neither TruServ Specialty Company,
LLC nor any Inactive Subsidiary or Foreign Subsidiary (other than Xxxxxx
Canada Hardware and Variety Company, Inc.) shall have an obligation to
execute a counterpart of the Guaranty; and (b) take, and cause each of
Guarantors to take, such actions as are necessary or as the Required
Holder(s) may reasonably request from time to time (including the execution
and delivery of security agreements, pledge agreements, financing
statements, mortgages, deeds of trust and other documents, the filing or
recording of any of the foregoing, the delivery of stock certificates and
other collateral with respect to which perfection is obtained solely by
possession, the notation of the Collateral Agent's Liens on certificates of
title for vehicles and the delivery of opinions of counsel) to ensure that
the obligations of the Company and each Guarantor hereunder and under the
Guaranty, as applicable, are secured by perfected security interests in
substantially all of the personal property of each such entity, and
provided further that neither the Company nor any Guarantor shall be
required to pledge more than 65% of the stock of any Foreign Subsidiary
(other than Xxxxxx Canada Hardware and Variety Company Inc.).
5J. WAIVER OF NEGATIVE PLEDGE. The Company will, not later than June
30, 2000, cause The Industrial Development Authority of the State of New
Hampshire (the "XXX") to waive the negative pledge set forth in Section 8.1
of the Loan Agreement dated as of October 1, 1982 between the XXX and the
Company (then known as Cotter&Company) to permit a Lien in favor of the
Collateral Agent on the Project (as defined in the Loan Agreement referred
to above).
7
8
1.5 Paragraph 6B(1) of the Note Agreement is amended by renumbering clause
(x) thereof as clause (xi) and adding new clause (x) thereto, to read as
follows:
(x) Liens in favor of the Collateral Agent, provided that the
Intercreditor Agreement shall be in full force and effect;
1.6 Paragraph 6B(2) of the Note Agreement is amended in its entirety to
read as follows:
6B(2). DEBT. The Company will not and will not permit any Subsidiary
to create, incur, assume or suffer to exist any Debt, except:
(a) Senior Funded Debt,
(b) Subordinated Debt,
(c) Debt under the Guaranty, and
(d) Short Term Debt of the Company;
provided that the ratio of (x) the sum of (i) the aggregate amount (without
duplication) of all Senior Funded Debt plus (ii) an amount equal to (A) the
remainder of the lowest daily average amount of Short Term Debt outstanding
for any period of 30 consecutive days during the 12-month period ending on
the most recently completed month minus (B) the daily average of cash and
marketable securities for such 30-day period to (y) the sum of (i)
Consolidated Capitalization plus (ii) Special 1999 Charges plus (iii)
Special A/P Charges plus (iv) the amount determined pursuant to clause
(x)(ii) above shall not at any time exceed the ratio set forth below during
any period set forth below:
Specified
Period Ending Percentage
------------- ----------
Through 12/31/01 60%
Thereafter 55%
For purposes of this paragraph 6B(2), Debt represented by the loans
under the BofA Credit Agreement or arising under the BAs shall be
considered Short Term Debt.
Without limiting the foregoing provisions of this paragraph, the
Company will not permit the aggregate principal amount of all Debt of the
Company and its Subsidiaries (other than (i) Debt under the BofA Credit
Agreement and under the other Loan Documents (as defined in the BofA credit
Agreement), (ii) Debt referred to on Schedule 6B(2) which was outstanding
on March 31, 2000 and (iii) Subordinated Debt owed to Members) to exceed
$35,000,000 at any time prior to the Supplemental Coupon Elimination Date.
8
9
1.7 Paragraph 6B(4)(i) of the Note Agreement is amended by deleting
clause (z) therefrom.
1.8 Xxxxxxxxx 0X of the Note Agreement is amended in its entirety to read
as follows:
6C. RATIO OF ASSET BASE TO DEBT. The Company will not permit the ratio
of (a) the Asset Base as of the last day of any fiscal month to (b) the
remainder of (i) the daily average of the amount of Total Senior Debt
outstanding during the fiscal month ending on such date minus (ii) the
daily average of cash and marketable securities during the fiscal month
ending on such date to be equal to or less than the applicable ratio set
forth below:
Fiscal Month(s) Ending Ratio
---------------------- -----
04/3/99 through 05/29/99 1.10 to 1
07/3/99 through 10/2/99 1.15 to I
10/30/99 through 12/31/99 1.20 to 1
01/29/00 1.10 to 1
2/26/00 through 12/31/00 1.20 to 1
01/27/01 1.10 to 1
2/24/01 through 12/31/01 1.20 to 1
01/26/02 1.10 to 1
2/23/02 and thereafter 1.20 to 1
1.9 Paragraph 6H of the Note Agreement is amended in its entirety to read
as follows:
6H. FIXED CHARGE COVERAGE RATIO. The Company shall not permit the
Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less
than the applicable ratio set forth below:
Fiscal Quarter(s) Ending Ratio
------------------------ -----
3/31/00 through 6/30/00 1.20 to 1.00
9/30/00 1.40 to 1.00
12/31/00 through 12/31/01 1.75 to 1.00
3/31/02 and thereafter 1.85 to 1.00.
1.10 Paragraph 6 of the Note Agreement is amended to add the following new
paragraphs 6I, 6J, 6K, 6L and 6M:
6I. RESTRICTED INVESTMENTS. The Company will not and will not permit
any Subsidiary to make any Investment except the Company and any Subsidiary
may:
(i) make or permit to remain outstanding loans or advances to any
Subsidiary other than an Inactive Subsidiary,
9
10
(ii) after the Supplemental Coupon Elimination Date, own, purchase
or acquire stock, obligations or securities of a Subsidiary or of a
corporation which immediately after such purchase or acquisition will be a
Subsidiary,
(iii) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to
the Company or any Subsidiary,
(iv) own, purchase or acquire prime commercial paper, banker's
acceptances and certificates of deposit in United States and Canadian
commercial banks (having combined capital and surplus of not less than U.S.
$100,000,000) and repurchase agreements with respect to the foregoing, in
each case due within one year from the date of purchase and payable in the
United States in United States dollars, obligations of the government of
the United States or any agency thereof, and obligations guaranteed by the
government of the United States,
(v) make or permit to remain outstanding travel and other similar
advances to officers and employees in the ordinary course of business,
(vi) permit to remain outstanding Investments existing on the
Effective Date and described on Schedule 6I,
(vii) maintain deposit accounts with financial institutions in the
ordinary course of business; provided that the amount maintained in deposit
accounts with financial institutions other than the lenders under the BofA
Credit Agreement shall not exceed (x) in the case of any one such account,
$200,000 for more than three consecutive Business Days; and (y) in the case
of all such accounts in the aggregate, $600,000 for more than two
consecutive Business Days, and
(viii) to the extent applicable, make Investments permitted under
paragraph 6J below.
Notwithstanding the foregoing, the Company will not permit the aggregate amount
of Investments in TruServ Specialty Company, LLC to exceed $1,500,000 at any
time.
6J. RESTRICTED PAYMENTS. The Company will not and will not permit any
Subsidiary to pay or declare cash dividends, cash patronage dividends or
dividends on any class of its stock (other than dividends in kind) or redeem,
purchase or otherwise acquire, or make any redemptions, purchase, or other
acquisition of any of its stock or apply miscellaneous deductions in lieu of
patronage dividends, or make or permit any Subsidiary to make any Restricted
Investment (each a "Restricted Payment") except, if Consolidated Net Earnings
for any fiscal year are positive, to the extent that the aggregate amount of all
such Restricted Payments made in such fiscal year does not exceed 40% of
Consolidated Net Earnings for such fiscal year. Notwithstanding the foregoing,
the Company will not and will not permit any Subsidiary to make or pay any
Restricted payment (a) prior to
10
11
January 1, 2001, or (b) if at the time such Restricted Payment is made or paid,
or after giving effect thereto, a Default or an Event of Default would exist.
6K. AMENDMENTS TO FINANCING AGREEMENTS OR SUBORDINATED DEBT; NO
OPTIONAL PREPAYMENTS. The Company covenants that, without the consent of
the Required Holder(s), it will not amend, modify, supplement or restate
any Financing Agreement. The Company will not, and will not permit any
Subsidiary to, (a) amend, alter or otherwise change any provision of any of
the notes evidencing any Subordinated Debt now or hereafter issued by the
Company or take any other action (or refrain from taking an action) which
would have the effect of eliminating or altering in any way the effect of
the subordination language appearing in such notes or any agreement
relating thereto or the rights of the holders of the Notes arising as a
result thereof or (b) make any optional or voluntary prepayment, in whole
or in part, of any Subordinated Debt. The Company will not, and will not
permit any Subsidiary to, make any optional or voluntary prepayment, in
whole or in part, of any Benefited Obligations, other than (i) optional or
voluntary prepayments, in whole or in part, of loans under the BA Credit
Agreements that do not trigger a reduction in any commitments of the
lenders thereunder and (ii) optional or voluntary prepayments, in whole or
in part, of the Shelf Obligations (as defined in the Intercreditor
Agreement) pursuant to the terms hereof.
6L. MINIMUM EBITDA. The Company will not permit the sum of (i) EBITDA
as of the end of any four consecutive fiscal quarters, plus (ii) for the
period of four fiscal quarters ending March 31, 2000, June 30, 2000 and
September 30, 2000, Special 1999 Charges (to the extent taken during such
period), plus (iii) for the period of four fiscal quarters ending March 31,
2000 and June 30, 2000, Special A/P Charges (to the extent taken during
such period), to be less than $85,000,000.
6M. INACTIVE SUBSIDIARIES. The Company will not at any time permit its
Inactive Subsidiaries, taken as a whole, to have more than $200,000 of
assets (based on fair market value) or to generate more than $5,000 of
revenues in any fiscal quarter.
1.11 Paragraph 7A of the Note Agreement is amended by adding the following
new clauses (xiv), (xv), (xvi), (xvii) and (xviii) thereto, to read as follows:
(xiv) an Event of Default exists under and as defined in the
Intercreditor Agreement; or
(xv) the Guaranty shall cease to be in full force and effect with
respect to any Guarantor (other than as a result of a transaction permitted
hereunder), any Guarantor shall fail (subject to any applicable grace
period) to comply with or to perform any applicable provision of the
Guaranty, or any Guarantor (or any Person by, through or on behalf of such
Guarantor) shall contest in any manner the validity, binding nature or
enforceability of the Guaranty with respect to such Guarantor; or
11
12
(xvi) any Collateral Document shall cease to be in full force and
effect with respect to the Company or any Guarantor (other than as a result
of a transaction permitted hereunder), the Company or any Guarantor shall
fail (subject to any applicable grace period) to comply with or to perform
any applicable provision of any Collateral Document to which such entity is
a party, or the Company or any Guarantor (or any Person by, through or on
behalf of the Company or such Guarantor) shall contest in any manner the
validity, binding nature or enforceability of any Collateral Document; or
(xvii) the lenders under the BA Credit Agreement shall at any time
refuse to make revolving loans available to the Company thereunder when
requested by the Company; or
(xviii) the Company shall, on any date, not have in effect a BA Credit
Agreement providing for a revolving loan facility to the Company in the
amount of at least $250,000,000 for a period expiring at least 6 months
after such date;
SECTION 2. From and after the date this letter becomes effective in
accordance with its terms, the 1992 Note Agreement is amended as follows:
2.1 Paragraphs 5, 6 and clauses (i) through (xiii) of paragraph 7A of the
1992 Note Agreement are amended in their entirety to read as set forth in
paragraphs 5, 6 and clauses (i) through (xviii) of paragraph 7A, respectively,
of the Note Agreement, as amended by Section 1 hereof.
2.2 Each of the definitions in paragraph 10B of the 1992 Note Agreement
which is used in paragraphs 1, 5, 6 or clauses (i) through (xviii) of paragraph
7A of the 1992 Note Agreement, as amended by Section 2.1 hereof, other than the
definition of the term "Notes", which shall remain unchanged, is amended to read
as set forth in paragraph 10B of the Note Agreement, as amended by Section 1
hereof.
2.3 Paragraph 1 of the 1992 Note Agreement is amended to add at the end
thereof the following paragraph:
The Company shall pay to each holder of Notes supplemental interest on
the unpaid balance of the aggregate principal amount of the Notes held by
it at the rate equal to the Supplemental Interest Rate. Such supplemental
interest shall be computed on the basis of a 360 day year of twelve 30 day
months and shall be payable on the interest payment due dates for the
applicable Notes to which such supplemental interest relates, commencing
with the first such interest payment due date on or after the Effective
Date. To the extent permitted by law, any overdue payment of principal on
any Note, interest on any Note and supplemental interest shall bear
interest (payable on demand) at a rate per annum from time to time equal to
the greater of (i) the sum of (x) 2%, plus (y) the Supplemental Interest
Rate as from time to time in effect, plus (z) the interest rate per annum
which the such Note bears other than during the period in which an Event of
Default is in existence or (ii) 2% over the rate of interest publicly
announced by Xxxxxx
12
13
Guaranty Trust Company of New York from time to time as its "base" or
"prime" rate. For the avoidance of doubt, all references in this Agreement
to interest shall be deemed to include the supplemental interest payable
pursuant to this paragraph (including, without limitation, the references
to interest in paragraphs 4, 7A(ii), and 10A). The Company further agrees
that, during any period that an Event of Default shall be in effect, to the
extent permitted by law the entire outstanding principal amount of each
Note shall bear interest at a rate per annum which is equal to the sum of
(x) 2%, plus (y) the Supplemental Interest Rate as from time to time in
effect, plus (z) the interest rate per annum which such Note would
otherwise bear.
The Purchasers acknowledge that the foregoing provisions added to the 1992 Note
Agreement by this Section 2.3 replace and are in lieu of the requirement to pay
supplemental interest at the rate of .50% per annum previously added to the 1992
Note Agreement by amendment.
SECTION 3. Representations and Warranties. The Company represents and
warrants to each of the undersigned that, after giving effect hereto (a) each
representation and warranty set forth in paragraph 8 of the Note Agreement is
true and correct as of the date of the execution and delivery of this letter by
the Company with the same effect as if made on such date (except to the extent
such representations and warranties expressly refer to an earlier date, in which
case they were true and correct as of such earlier date) and (b) except for the
Specified Defaults (as defined below), no Event of Default or Default exists.
SECTION 4. Effectiveness.. The amendments described in Section 1 above
shall become effective on the date when (the "EFFECTIVE DATE") each Purchaser
has received:
(a) the fees referred to in Section 5 below and all costs and
expenses of such Purchaser (including reasonable fees and disbursements of
special counsel to the Purchasers) in connection with this letter;
(b) the following documents, each (including, with limitation,
those referred to in clause (vii) below) in a form and substance
satisfactory to the Purchasers:
(i) counterparts of this letter agreement executed by the
Company and the Purchasers;
(ii) the Guaranty, signed by each Guarantor;
(iii) The Security Agreement signed by the Company and each
Guarantor, together with evidence, satisfactory to the Purchasers,
that the Company and each Guarantor have delivered to the Collateral
Agent all financing statements and other documents necessary to
perfect the Collateral Agent's Lien on all collateral granted under
the Security Agreement;
(iv) the Pledge Agreement, executed by the Company and each
Guarantor that as of the Effective Date has one or more Subsidiaries,
together with
13
14
all stock certificates, stock powers and other items required to be
delivered in connection therewith;
(v) the Intercreditor Agreement, signed by the parties
thereto and consented to by the Company and the Guarantors;
(vi) the Trademark Security Agreement, signed by the Company;
(vii) evidence that each of the "Operative Documents" as
defined in the Synthetic Lease Guaranty, the Private Placement
Agreement (each as defined in the Intercreditor Agreement) and the
Amended and Restated Credit Agreement, dated as of July 1, 1997, among
the Company, various financial institutions, and BofA, as agent, has
been amended to conform in all material respects with the
representations, warranties, covenants and defaults contained in this
Agreement; and
(viii) an opinion of counsel to the Company and the Guarantors
in form and substance reasonably acceptable to the Purchasers;
(c) All corporate and other proceedings in connection with the
transactions contemplated by this letter agreement shall be satisfactory to
the Purchasers and their counsel, and the Purchasers shall have received
all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
SECTION 5. Fees. In consideration of the Purchasers entering into this
letter agreement, the Company agrees to pay, on or before the Effective Date,
ratably to Prudential and the Prudential Affiliates who are holders of notes
issued by the Company, an aggregate fee of $920,000.
SECTION 6. Reference to and Effect on Note Agreements. Upon the
effectiveness of this letter, each reference to the Note Agreement or the 1992
Note Agreement in any other document, instrument or agreement shall mean and be
a reference to the Note Agreement or the 1992 Note Agreement, as the case may
be, as modified by this letter. Except as specifically set forth in Section 1 or
2 hereof, each of the Note Agreement and the 1992 Note Agreement shall remain in
full force and effect and is hereby ratified and confirmed in all respects.
SECTION 7. Waiver. Effective on the Effective Date, the Purchasers hereby
waive any Default or Event of Default under paragraph 7A(v) of the Note
Agreement or the 1992 Note Agreement resulting solely from a failure to comply
with paragraph 6B(2) and 6H of the Note Agreement for the periods ended December
31, 1999 and March 31, 2000, with paragraph 6C of the Note Agreement for the
periods ended December 31, 1999, January 31, 2000, February 29, 2000 and March
31, 2000, or with paragraphs 6A(ii), 6A(iii) and 6B(2) of the 1992 Note
Agreement for the periods ended December 31, 1999 and March 31, 2000
(collectively, the "Specified Defaults"). Except as specifically set forth in
the preceding sentence, nothing contained in the letter shall be construed as a
waiver of or consent to any other violation of the
14
15
Note Agreement or the 1992 Note Agreement or any other Default or Event of
Default under the Note Agreement or the 1992 Note Agreement.
SECTION 8. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE WHICH WOULD OTHERWISE CAUSE THIS
LETTER TO BE CONSTRUED OR ENFORCED OTHER THAN IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
15
16
SECTION 9. Counterparts; Section Titles. This letter 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. The section titles contained in this letter are and shall be without
substance, meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
----------------------------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
By:
----------------------------------------------
Vice President
U.S. PRIVATE PLACEMENT FUND
By: Prudential Private Placement Investors, L.P.,
Investment Advisor
By: Prudential Private Placement Investors,
Inc., its General Partner
By:
--------------------------------------
Vice President
AGREED AND ACCEPTED:
TRUSERV CORPORATION
By:
-----------------------
Title:
By:
-----------------------
Title:
16
17
Schedule 6B(2)
Debt
Shelf Agreement (as defined in the Intercreditor Agreement)
Senior Note Agreements (as defined in the Intercreditor Agreement)
"Operative Documents" referred to in the Synthetic Lease Guaranty (as
defined in the Intercreditor Agreement)
17
18
Schedule 6I
Investments
None
18
