EXHIBIT 10.2
THIRD AMENDMENT
TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDMENT dated as of September 11, 1996 (this "Amendment")
to the AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 15, 1995 (as
modified by the Waiver and First Amendment thereto dated as of February 16,
1996 and by the Second Amendment thereto dated as of May 10, 1996, the
"Credit Agreement"), each among THE GRAND UNION COMPANY, a Delaware
corporation (the "Borrower"), the institutions from time to time party
thereto as lenders (the "Banks") and BANKERS TRUST COMPANY, as agent (the
"Agent"). Capitalized terms used herein and not defined herein shall have
the respective meanings set forth for such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Trefoil Capital Investors II, L.P., a
Delaware limited partnership ("Trefoil"), and GE Investment Private Placement
Partners II, A Limited Partnership, a Delaware limited partnership (together
with Trefoil, the "Purchasers") have entered into a Stock Purchase Agreement
dated as of July 30, 1996 (the "Stock Purchase Agreement"), pursuant to which
the Borrower desires to issue and sell from time to time to the Purchasers,
on the terms and conditions set forth therein and the exhibits thereto,
convertible preferred stock of the Borrower for an aggregate purchase price
of $100,000,000 (such transaction, the "Convertible Preferred Stock Sale");
WHEREAS, in connection therewith, the Borrower has requested that
the Credit Agreement be amended to, among other things:
(a) make the mandatory prepayment obligations of the Borrower
under Section 4.2(A)(e) of the Credit Agreement inapplicable to the Net
Equity Issuance Proceeds received from time to time by the Borrower
pursuant to the Convertible Preferred Stock Sale (Section 1(a) hereof);
(b) modify certain of the obligations of the Borrower under the
Further Assurances Agreement dated as of June 15, 1995, as amended,
supplemented or otherwise modified, between the Borrower and the Agent, and
the consequences of the failure of the
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Borrower to comply with such obligations (Sections 1(c), (d) and (z)
hereof);
(c) clarify certain possible ambiguities in the Credit Agreement
relating to (i) the number of stores the Borrower is permitted to close in
connection with the opening of Replacement Stores (Section 1(f) hereof),
(ii) the Borrower's ability to obtain releases of liens on sold assets
(Section 1(g) hereof), and (iii) the definitions of the terms "Additional
Mortgage" and "Additional Security Documents" (Section 1(s) hereof);
(d) increase the amount of Consolidated Capital Expenditures that
the Borrower is permitted to make from time to time pursuant to Section
8.4(a) of the Credit Agreement (Section 1(h) hereof);
(e) increase (i) the amount of advances the Borrower can make to
developers of stores (Section 1(j) hereof), and (ii) the amount of notes
the Borrower can receive in connection with dispositions of stores (Section
1(k) hereof);
(f) permit the Borrower to make certain payments to the
Convertible Preferred Stock Purchasers (as defined in the Credit Agreement
after giving effect to this Amendment) and their Affiliates (Section 1(l)
hereof);
(g) adjust certain of the financial covenants of the Borrower
contained in the Credit Agreement and the method of calculating the
Borrower's compliance with the same (Sections 1(m), (n), (t), (v), (w), (x)
and (y) hereof);
(h) permit the Borrower to issue convertible preferred stock to
the Convertible Preferred Stock Purchasers pursuant to the Stock Purchase
Agreement (Section 1(o) hereof);
(i) make the mandatory prepayment obligations of the Borrower
under Section 4.2(A)(g) of the Credit Agreement and the Event of Default
described in Section 9.10 (iii) of the Credit Agreement inapplicable to any
Change of Control Event resulting from the Convertible Preferred Stock Sale
(Sections 1(q) & (u) hereof); and
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(j) permit the Borrower to make certain amendments to its
Certificate of Incorporation and By-Laws and to the Senior Note Documents
(Section 2 hereof); and
WHEREAS, subject to and upon the terms and conditions hereinafter set
forth and in the Credit Agreement as amended hereby (including Sections 1(b),
(e), (i), (p), & (r), 3, 4, 5 & 6 hereof), the Banks party hereto are agreeable
to the foregoing;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. AMENDMENTS. Subject to the satisfaction of the conditions
precedent set forth in Section 4 hereof, the Credit Agreement is hereby amended
effective as of the date hereof as follows:
(a) Section 4.2(A)(e) of the Credit Agreement is amended by (i)
deleting the word "and" before clause (y) of the parenthetical commencing in the
fifth line of such Section; and (ii) inserting the following at the end of such
clause (y):
", and (z) issuances of convertible preferred stock and issuances of common
stock on conversion of such convertible preferred stock (but only so long
as no consideration (other than the preferred stock being converted) is
received by the Company or any of its Subsidiaries in connection with such
conversion), in each case pursuant to the Convertible Preferred Stock
Documents as in effect on the Amendment No. 3 Effective Date".
(b) Section 7.1 of the Credit Agreement is amended by (i) relettering
paragraph (j) thereof as paragraph "(l)"; and (ii) inserting the following after
paragraph (i) thereof as new paragraphs (j) and (k):
"(j) CONVERTIBLE PREFERRED STOCK DOCUMENTS. Promptly upon, but in
any event within three Business Days of, obtaining knowledge thereof,
copies of (i) each notice received or delivered by the Borrower after the
Amendment No. 3 Effective Date pursuant to the Convertible Preferred Stock
Documents, and (ii) each amendment or other modification entered into
after the Amendment No. 3 Effective Date to any Convertible Preferred
Stock Document and each agree-
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ment or other instrument entered into by the Borrower after the Amendment
No. 3 Effective Date with or for the benefit of any Convertible Preferred
Stock Purchaser or any Affiliate thereof (other than any product or
similar agreement entered into in the ordinary course of business).
(k) ADDITIONAL MONTHLY REPORTS. As soon as practicable, and in any
event within 30 days, after the end of each fiscal month of the Borrower, a
certificate of an Authorized Officer of the Borrower setting forth (i) a
complete list of each Additional Mortgage delivered to the Collateral Agent
during such fiscal month, (ii) a complete list of each Leasehold and other
Real Property acquired by the Borrower or any of its Subsidiaries during
such fiscal month, together with a description of the proposed use of each
such Leasehold and other Real Property, (iii) the respective aggregate
amounts of Adjusted Consolidated Capital Expenditures made during such
fiscal month and during the period from the beginning of the fiscal year in
which such fiscal month occurs to the end of such fiscal month, and (iv)
the respective aggregate amounts of Consolidated Capital Expenditures made
and incurred during the period from the Amendment No. 3 Effective Date
through the end of such fiscal month (A) in total pursuant to Section
8.4(a), and (B) in reliance on the proviso to Section 8.4(h)."
(c) Section 7.11(a) of the Credit Agreement is amended by replacing
the first sentence thereof with the following:
"The Borrower shall (i) by no later than December 31, 1996, grant the
Collateral Agent security interests in and mortgages on its Leaseholds,
fixtures and improvements relating to the Berlin, VT store (Store #1923),
the Malta, NY store (Store #1990) and the Xxxxxxxxxxx, NJ store (Store
#3197), and take all actions with respect thereto required by this Section
7.11(a); (ii) by no later than August 31, 1997, grant the Collateral Agent
security interests in and mortgages on its Leaseholds, fixtures and
improvements relating to the Designated Stores, and take all actions with
respect thereto required by this Section 7.11(a); and (iii) within 30 days
of a request therefor from the Agent, grant, or cause its Subsidiaries to
grant, as the case may be, to the
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Collateral Agent security interests in and mortgages on such other assets
and properties of the Borrower or its Subsidiaries as are not covered by
original Security Documents."
(d) Section 7.11(b) of the Credit Agreement is amended by inserting
"the validity, perfection, priority or enforcement of the Liens on" after the
words "relating to" in the ninth line of such section; and Section 7.11(d) of
the Credit Agreement is amended in its entirety to read as follows:
"(d) The Borrower agrees that each action required by this Section
7.11 shall be completed as soon as possible, but in no event later than (i)
in the case of paragraph (a) hereof, the applicable dates set forth
therein, (ii) in the case of clause (b) hereof, 30 days after such action
is requested to be taken by the Agent or the Required Banks, and (iii) in
the case of clause (c) hereof, 60 days after such action is requested to be
taken by the Agent or the Required Banks; PROVIDED that in no event shall
the Borrower be required to take any action, other than using commercially
reasonable efforts, to obtain consents from third-parties with respect to
its compliance with clause (iii) of paragraph (a) of this Section 7.11 or
paragraph (b) of this Section 7.11. Until August 31, 1997 and thereafter
if the Borrower complies with clauses (i) and (ii) of paragraph (a) of this
Section 7.11 within the applicable time periods required thereby, and
notwithstanding anything to the contrary contained herein or in the Further
Assurances Agreement dated as of June 15, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Further Assurances Agreement")
between the Borrower and the Agent, but without excusing or otherwise
minimizing the obligations of the Borrower to comply therewith, the failure
of the Borrower to comply with clause (iii) or the last sentence of
paragraph (a) of this Section 7.11 or Section 1(a), (b) or (c) of the
Further Assurances Agreement shall not constitute a Default or Event of
Default."
(e) Section 7 of the Credit Agreement is further amended by inserting
the following after Section 7.13 thereof as new Section 7.14:
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"7.14 MINIMUM ADJUSTED CONSOLIDATED CAPITAL EXPENDITURES. During
each period specified below, the Borrower shall cause store-related
Adjusted Consolidated Capital Expenditures to be made in an aggregate
amount that is at least equal to 85% of the amount set forth below opposite
such period:
Fiscal Year ending 1997 $62,964,000
Fiscal Year ending 1998 $87,100,000
Fiscal Year ending 1999 $70,400,000
Fiscal Year ending 2000 $64,000,000
Fiscal Year ending 2001 $74,000,000;
PROVIDED that: (a) with respect to the fiscal year of the Borrower
ending in 1997 only, the percentage specified above shall be reduced to (i)
75% if the Borrower has not received at least $40,000,000 of gross proceeds
from the sale of convertible preferred stock of the Borrower pursuant to
the Convertible Preferred Stock Documents on or prior to September 30,
1996, (ii) 65% if the Borrower has not received such proceeds on or prior
to October 31, 1996, and (iii) 55% if the Borrower has not received such
proceeds on or prior to November 30, 1996; and (b) the aggregate amount of
Adjusted Consolidated Capital Expenditures that are otherwise required to
be made during any fiscal year of the Borrower pursuant to this Section
7.14 shall be reduced by the Section 7.14 Credit Amount, if any, for such
fiscal year."
(f) Section 8.1(d) of the Credit Agreement is amended by substituting
the proviso thereto with the following:
"; PROVIDED that no more than 13 stores in any fiscal year of the
Borrower, and 69 stores in the aggregate, will be permitted to be closed
under this clause (d); and, PROVIDED FURTHER, that the number of stores
that are permitted to be closed under this clause (d) other than in
connection with the replacement of such stores with Replacement Stores
shall be limited to 8 stores in any fiscal year of the Borrower, and 45
stores in the aggregate;".
(g) Section 8.1 of the Credit Agreement is further amended by
substituting the parenthetical commencing in the fourth line, and ending in the
sixth line, of the last sentence of such Section with the following:
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"(and all requirements, if any, of such waiver and/or the Credit Documents,
as the case may be, to a release of such Collateral from the Liens created
by the respective Security Document are satisfied)".
(h) Section 8.4(a) of the Credit Agreement is amended by substituting
the table of allowable Consolidated Capital Expenditures contained therein (but
not the proviso following such table) with the following:
"Period Amount
------ ------
Fiscal Year ending 1996 $53,500,000
Fiscal Year ending 1997 $75,000,000
Fiscal Year ending 1998 $95,000,000
Fiscal Year ending 1999 $90,000,000
Fiscal Year ending 2000 $90,000,000
Fiscal Year ending 2001 $100,000,000
Fiscal Year ending 2002 $90,000,000
Thereafter to and including
the Final Maturity Date $25,000,000".
(i) Section 8.4 of the Credit Agreement is further amended by
inserting the following after paragraph (g) thereof as a new paragraph (h):
"(h) Notwithstanding anything to the contrary contained herein, from
and after the Amendment No. 3 Effective Date, no Consolidated Capital
Expenditures (other than Consolidated Capital Expenditures effected through
the incurrence of Capitalized Lease Obligations (Equipment) or Indebtedness
secured by Liens permitted pursuant to Section 8.2(i) or (j)) may be made
in respect of any existing, replacement or new store or committed to be
made in respect of any store then owned or leased by the Borrower or any of
its Subsidiaries unless, in each such case, to the extent the following
have not been waived by the Agent with respect thereto (which waiver may be
given or withheld by the Agent in its sole discretion): (i) the Collateral
Agent has been granted, for the benefit of the Secured Parties, security
interests and mortgages, as applicable, in respect of such store and all
real and personal property owned or leased by the Borrower or any of its
Subsidiaries that is related thereto, and (ii) in the case of any such
mortgages and security interests granted on or after the Amendment No. 3
Effective
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Date, (A) such security interests and mortgages, and the documentation
evidencing the same, meet the requirements set forth in Section 7.11(a)
(other than the first sentence thereof) to the same extent as if such
store was a Designated Store, and (B) all other actions that must be
taken pursuant to Section 7.11(a) (other than the first sentence thereof)
in respect of security interests, mortgages and related documentation for
Designated Stores and assets related thereto shall have been taken with
respect to such security interests, mortgages and documentations; PROVIDED
that Consolidated Capital Expenditures may be made or committed to be made
in respect of existing (but not replacement or new) stores on which the
Collateral Agent does not have a Mortgage or Additional Mortgage in an
aggregate amount for all such Consolidated Capital Expenditures made or
committed to be made after the Amendment No. 3 Effective Date not to
exceed $40,000,000 at any time prior to April 3, 1999 or $60,000,000
at any time."
(j) Section 8.5(g) of the Credit Agreement is amended by substituting
the following for the phrase "not exceeding $10,000,000 at any time outstanding"
contained therein:
"not exceeding $20,000,000 at any time outstanding; PROVIDED that such
advances are evidenced by notes in favor of the Borrower and such notes are
pledged to the Collateral Agent for the benefit of the Secured Parties
pursuant to the Security Documents".
(k) Section 8.5(i) of the Credit Agreement is amended by substituting
the following for the phrase "shall not exceed $500,000 and (y) the aggregate
amounts of all such notes hereunder shall not exceed $4,000,000" contained
therein:
"shall not exceed $1,000,000, (y) the aggregate amounts of all such notes
hereunder shall not exceed $8,000,000, and (z) all such notes are pledged
to the Collateral Agent for the benefit of the Secured Parties pursuant to
the Security Documents".
(l) Section 8.7 of the Credit Agreement is amended by inserting the
following at the end of such Section:
"; PROVIDED that (i) the Borrower may reimburse the Convertible
Preferred Stock Purchasers for
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up to $1,000,000 of costs and expenses incurred by the Convertible
Preferred Stock Purchasers in connection with the consummation of the
transactions contemplated by the Convertible Preferred Stock Purchase
Agreement as in effect on the Amendment No. 3 Effective Date, (ii) to the
extent the payment of any transaction fee by the Borrower to Shamrock
Capital Advisors, Inc. or GE Investment Management Incorporated is a
condition precedent under the Convertible Preferred Stock Purchase
Agreement as in effect on the Amendment No. 3 Effective Date to the
closing of any sale of convertible preferred stock of the Borrower
pursuant thereto, the Borrower may pay such fee in connection with the
consummation of such sale if, after giving effect to such payment, the
aggregate amount of all such fees paid by the Borrower does not exceed
$4,000,000, (iii) so long as no Default or Event of Default has occurred
and is continuing at the time of the payment thereof, the Borrower may
pay management fees to Shamrock Capital Advisors, Inc. from time to time
on and after the Principal Closing Date (as defined below) in accordance
with the terms of the Management Agreement (as defined in the Convertible
Preferred Stock Purchase Agreement) as in effect on the Amendment No. 3
Effective Date in an aggregate amount not to exceed (A) $300,000 at any
time prior to the first anniversary of the Principal Closing Date, (B)
$700,000 at any time prior to the second anniversary of the Principal
Closing Date or (C) $1,200,000 at any time, and (iv) the Borrower may pay
the costs and expenses from time to time required to be paid by it under
the terms of the Registration Rights Agreement (as defined in the
Convertible Preferred Stock Purchase Agreement) as in effect on the
Amendment No. 3 Effective Date. For purposes of this Section 8.7,
"Principal Closing Date" shall mean the first date on which the Borrower
has received at least $40,000,000 of gross proceeds from the sale of
convertible preferred stock of the Borrower pursuant to the Convertible
Preferred Stock Purchase Agreement."
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(m) Section 8.9 of the Credit Agreement is amended by
substituting the following table of minimum EBITDA for the table contained
therein:
Fiscal Quarter Amount
-----------------------------------------
October 1996 $135,000,000
January 1997 135,000,000
March 1997 140,000,000
July 1997 140,000,000
October 1997 140,000,000
January 1998 140,000,000
March 1998 150,000,000
July 1998 150,000,000
October 1998 150,000,000
January 1999 150,000,000
March 1999 165,000,000
July 1999 165,000,000
October 1999 165,000,000
January 2000 165,000,000
March 2000 165,000,000
July 2000 165,000,000
October 2000 165,000,000
January 2001 165,000,000
March 2001 165,000,000
July 2001 165,000,000
October 2001 165,000,000
January 2002 165,000,000
March 2002 165,000,000
(n) Section 8.11 of the Credit Agreement is amended by substituting
the following table of minimum ratio of EBITDA to Total Cash Interest Expense
for the table contained therein:
Period Ratio
---------------------------------------------
Fiscal Quarter ending in October 1996 to and including Fiscal Quarter ending in
January 1997
1.3:1
Fiscal Quarter ending in March 1997 to and including Fiscal Quarter ending in
January 1998
1.3:1
Fiscal Quarter ending in March 1998 to and including Fiscal Quarter ending in
January 1999
1.4:1
Fiscal Quarter ending in March 1999 to and including Fiscal
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Quarter ending in January 2000
1.5:1
Fiscal Quarter ending in March 2000 to and including Fiscal Quarter ending in
January 2001
1.7:1
Fiscal Quarter ending in March 2001 to and including Fiscal Quarter ending in
January 2002
1.7:1
Thereafter
1.7:1
(o) Section 8.13 of the Credit Agreement is amended by (i) deleting
the word "or" before the beginning of clause (iv) thereof, and (ii) inserting
the following at the end of such clause (iv):
"(other than convertible preferred stock of the Borrower issued
pursuant to the Convertible Preferred Stock Documents as in effect on the
Amendment No. 3 Effective Date), (v) at any time on or after the Amendment
No. 3 Effective Date, amend or otherwise modify (including, without
limitation, by granting any consent or waiver under, or entering into any
agreement with the Convertible Preferred Stock Purchasers or any of their
Affiliates that is inconsistent with), or permit the amendment or other
modification of, any Convertible Preferred Stock Document or consent or
otherwise agree to the termination of any Convertible Preferred Stock
Document if such amendment, modification or termination would in the
reasonable judgment of the Agent be adverse to the Banks (it being
understood that a termination of the Convertible Preferred Stock Purchase
Agreement or a modification of the obligations of the Convertible Preferred
Stock Purchasers to purchase convertible preferred stock pursuant thereto
would be adverse to the Banks) or (vi) make any payment pursuant to Article
VII ('Termination') of the Convertible Preferred Stock Purchase Agreement
in cash to the extent such agreement permits the same to be paid in a form
other than cash. Promptly, but in any event within two Business Days of
each sale of convertible preferred stock of the Borrower pursuant to the
Convertible Preferred Stock Documents, the Borrower shall deliver to the
Agent (i) a
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notice of such sale setting forth the number of shares sold and
the aggregate gross proceeds received by the Borrower in connection
therewith, and (ii) a copy of each certificate and legal opinion delivered
to or by or on behalf of the Borrower in connection therewith".
(p) Section 9.3 of the Credit Agreement is amended by (i) inserting
"or (c)" after "clause (a)" in the parenthetical contained in clause (b) of such
Section; and (ii) inserting the following before the word "or" ending such
Section as a new clause (c) thereof:
"or (c) default for more than 60 consecutive days in the due
performance and observance by it of Section 7.14 and the Agent or the
Required Banks shall have delivered a notice of such default to the
Borrower;".
(q) Section 9.10 of the Credit Agreement is amended by (i) deleting
the word "or" at the end of clause (iii) thereof; and (ii) inserting the
following at the end of clause (iv) thereof:
"or (v) the failure at any time of at least 200,000 shares of Borrower
Common Stock or Borrower Common Stock having an aggregate market value of
at least $1,000,000 to be held by Persons who are neither an officer or
director of the Borrower or a beneficial owner of more than 10% of the
total outstanding shares of Borrower Common Stock; PROVIDED that the
occurrence of any event described in the foregoing clause (ii) or (iii)
shall not constitute an Event of Default so long as such event arises
solely as a direct result of the acquisition of Voting Stock by the
Convertible Preferred Stock Purchasers pursuant to the Convertible
Preferred Stock Documents as in effect on the Amendment No. 3 Effective
Date;".
(r) Section 9 of the Credit Agreement is further amended by inserting
the following at the end of Section 9.11 thereof:
"or
9.12 CONVERTIBLE PREFERRED STOCK DOCUMENT RELATED MATTERS. (i) The
Borrower shall fail to receive on or prior to December 31, 1996 at least
$40,000,000 of gross proceeds from sales pursuant to
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the Convertible Preferred Stock Documents of convertible preferred stock
of the Borrower, (ii) the Borrower shall fail to receive from sales
pursuant to the Convertible Preferred Stock Documents of convertible
preferred stock of the Borrower gross proceeds (A) of at least
$60,000,000 on or prior to February 25, 1997, (B) of at least $80,000,000
on or prior to August 25, 1997, or (C) of at least $ 100,000,000 on or
prior to February 25, 1998, and the Agent or the Required Banks shall
have delivered a notice to the Borrower that such failure constitutes an
Event of Default, (iii) unless otherwise consented to by the Required
Banks, any holder of Senior Notes shall be paid or required to be paid
any fee or other amounts in connection with any consent or waiver under,
or other modification to, any provision of any Senior Note Document that,
in any such case, relates to (or is entered into in contemplation of) the
Convertible Preferred Stock Documents or any of the transactions
contemplated thereby, or (iv) the Board of Directors of the Borrower
shall fail, at any time prior to the receipt by the Borrower of at least
$100,000,000 of gross proceeds from the sale of convertible preferred
stock of the Borrower pursuant to the Convertible Preferred Stock
Documents, to include at least three individuals (other than Xx. Xxxxx X.
Xxxxxxxxxx) that are Disinterested Directors (as such term is defined in
the Convertible Preferred Stock Purchase Agreement as in effect on the
Amendment No. 3 Effective Date); PROVIDED that the occurrence of any
failure described in the foregoing clause (iv) shall not constitute an
Event of Default so long as such Default is cured within 90 days after
the later of the occurrence thereof or the Borrower's discovery thereof;".
(s) The respective definitions of the terms "Additional Mortgage" and
"Additional Security Documents" contained in Section 10 of the Credit Agreement
are hereby amended in their entirety to read as follows:
"'Additional Mortgages' shall mean each mortgage entered into by the
Borrower or any of its Subsidiaries after the Closing Date purporting to
xxxxx x Xxxx in favor of the Collateral Agent on any Leasehold or other
Real Property of the Borrower or any of its Subsidiaries."
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"'Additional Security Documents' shall mean each security agreement or
similar document (including any Additional Mortgage) entered into by the
Borrower or any of its Subsidiaries after the Closing Date purporting to
xxxxx x Xxxx in favor of the Collateral Agent on any asset of the Borrower
or any of its Subsidiaries."
(t) The definition of the term "Adjusted Capitalized Lease
Obligations (Other)" contained in Section 10 of the Credit Agreement is amended
by substituting the following for the phrase "(i) $8,000,000 for each of the
fiscal years ending in 1996 and 1997 and (ii) $10,000,000 for each of the fiscal
years ending thereafter" contained therein:
"(i) $8,000,000 for the fiscal year ending in 1996, (ii) $15,000,000 for
the fiscal year ending in 1997 and (iii) $25,000,000 for each of the fiscal
years ending thereafter".
(u) The definition of the term "Change of Control Event" contained in
Section 10 of the Credit Agreement is amended by:
(i) inserting the following at the end of clause (i) of such
definition:
"(other than solely as a direct result of any such acquisition of
Voting Stock by the Convertible Preferred Stock Purchasers pursuant to the
Convertible Preferred Stock Documents as in effect on the Amendment No. 3
Effective Date or the execution and delivery of the Ratification and Voting
Agreements (as defined in the Convertible Preferred Stock Purchase
Agreement as in effect on the Amendment No. 3 Effective Date))"; and
(ii) modifying clause (ii) of such definition to read as follows:
"(ii) any Change of Control under and as defined in the Senior Note
Documents shall occur (including, without limitation, any such Change of
Control which occurs as a result of the consummation of any of the
transactions contemplated by the Convertible Preferred Stock Documents),
except to the extent, and only for so long as, there is an effective waiver
by the requisite holders of the Senior Notes of the
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obligations and rights of the Borrower and the holders of the Senior Notes
arising as a result thereof under the Indenture for the Senior Notes".
(v) The definition of the term "Cumulative EBITDA Minus Adjusted
Cumulative Consolidated Capital Expenditures" contained in Section 10 of the
Credit Agreement is amended by adding the following after the phrase "(ii)
Adjusted Consolidated Capital Expenditures made during such period" contained
therein:
"plus (iii) Net Equity Issuance Proceeds received by the Borrower during
such period from sales of convertible preferred stock of the Borrower
pursuant to the Convertible Preferred Stock Documents as in effect on the
Amendment No. 3 Effective Date".
(w) The definition of the term "EBITDA" contained in Section 10 of
the Credit Agreement is amended by (i) inserting "(a)" before the word "adding"
in the second line of such definition, and (ii) inserting the following before
the first proviso to such definition:
", and (b) (i) to the extent included as a deduction in calculating
Consolidated Net Income for such period, adding back the aggregate amount
of fees, costs and expenses paid by the Borrower during such period in
connection with the consummation of the transactions contemplated by the
Convertible Preferred Stock Documents; PROVIDED that the aggregate amount
of such fees, costs and expenses which may be so added back during the term
of this Agreement shall be limited to $11,500,000; and (ii) to the extent
not included as a deduction in calculating Consolidated Net Income for such
period or any prior period, deducting an amount equal to the excess, if
any, of the aggregate amount of all such fees, costs and expenses paid by
the Borrower prior to or during such period over $11,500,000;".
(x) The definition of the term "Fixed Charge Coverage Ratio"
contained in Section 10 of the Credit Agreement is amended by substituting the
following for the phrase "(i) EBITDA for such period" contained therein:
"(i) the sum of (A) EBITDA for such period, plus (B) the Net Equity
Proceeds Carryover Amount for such period plus (C) Net Equity Issuance
Proceeds re-
14
ceived by the Borrower during such period from sales of convertible
preferred stock of the Borrower pursuant to the Convertible Preferred
Stock Documents as in effect on the Amendment No. 3 Effective Date".
(y) The following definitions of new terms are inserted in Section 10
of the Credit Agreement in alphabetical order:
"'Amendment No. 3 Effective Date' shall mean the 'Effective Date', as
such term is defined in Section 4 of Amendment No. 3 dated as of September
11, 1996 to this Agreement."
"'Convertible Preferred Stock Documents' shall mean (a) the
Convertible Preferred Stock Purchase Agreement, and (b) the Certificate of
Designation of Class A Convertible Preferred Stock, stated value $50.00 per
share, of the Borrower; as each of the same may from time to time be
amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof."
"'Convertible Preferred Stock Purchase Agreement' shall mean the Stock
Purchase Agreement dated as of July 30, 1996 among the Borrower and the
Convertible Preferred Stock Purchasers."
"'Convertible Preferred Stock Purchasers' shall mean Trefoil Capital
Investors II, L.P., a Delaware limited partnership, GE Investment Private
Placement Partners II, A Limited Partnership, a Delaware limited
partnership, and any affiliate of either of the foregoing Persons, as
permitted under Section 5.12(iii) of the Convertible Preferred Stock
Purchase Agreement."
"'Designated Stores' shall mean the stores identified on Schedule XV
hereto, as any such store may from time to time be substituted by a
different store that is designated by the Borrower with the consent of the
Agent (such consent not to be unreasonably withheld)."
"'Net Equity Proceeds Carryover Amount' shall mean (a) for the fiscal
years of the Borrower ending in 1995 and 1996, zero, and (b) for any fiscal
year of the Borrower to occur thereafter, the lesser of
15
(i) the amount by which the sum of (A) the EBITDA for the immediately
preceding fiscal year, (B) the Net Equity Proceeds Carryover Amount for
the immediately preceding fiscal year and (C) the aggregate amount of Net
Equity Issuance Proceeds received by the Borrower during the immediately
preceding fiscal year pursuant to the Convertible Preferred Stock
Documents as in effect on the Amendment No. 3 Effective Date exceeds the
Fixed Charges for the immediately preceding fiscal year, and (ii) the sum
of (A) the aggregate amount of Net Equity Issuance Proceeds received by
the Borrower during the immediately preceding fiscal year pursuant to the
Convertible Preferred Stock Documents as in effect on the Amendment No. 3
Effective Date and (B) the Net Equity Proceeds Carryover Amount for the
immediately preceding fiscal year."
"'Section 7.14 Credit Amount' shall mean, for any fiscal year of the
Borrower ending in 1998 or thereafter, the excess, if any, of (a) the
aggregate amount of Adjusted Consolidated Capital Expenditures made during
the immediately preceding fiscal year, over (b) the sum of (i) the amount
set forth opposite the immediately preceding fiscal year in Section 7.14,
plus (ii) the Cure Amount (as defined below), if any, for such fiscal year.
"Cure Amount" shall mean, for any fiscal year of the Borrower, the excess,
if any, of (a) the sum of (i) the aggregate amount of Adjusted
Consolidated Capital Expenditures required to be made pursuant to Section
7.14 (after giving effect to the proviso thereto) during the immediately
preceding fiscal year of the Borrower, plus (ii) the aggregate amount of
Adjusted Consolidated Capital Expenditures required to be made during such
immediately preceding fiscal year in order to cure Defaults or Events of
Defaults under Section 7.14 that existed as of the beginning of such
immediately preceding fiscal year, over (b) the aggregate amount of
Adjusted Consolidated Capital Expenditures actually made during the
immediately preceding fiscal year."
(z) The Credit Agreement is further amended by making Annex I hereto
Schedule XV to the Credit Agreement.
Section 2. CONSENT TO AMENDMENTS TO CERTAIN DOCUMENTS.
Notwithstanding anything to the contrary con-
16
tained in clause (iii) of Section 8.13 of the Credit Agreement, but subject
to the satisfaction of the conditions precedent set forth in Section 4
hereof, in connection with the initial closing under the Stock Purchase
Agreement: (a) the Certificate of Incorporation and By-Laws of the Borrower
may be amended as set forth in the forms of amendments thereto previously
delivered to the Agent; (b) the Borrower may file with the Secretary of State
of the State of Delaware a Certificate of Designation in respect of the
convertible preferred stock to be issued and sold pursuant to the Stock
Purchase Agreement that is in form and substance substantially similar to the
form thereof previously delivered to the Agent; and (c) the indenture
governing the Senior Notes may be amended pursuant to a Supplemental
Indenture that is in form and substance substantially similar to the form
thereof previously delivered to the Agent.
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Agent and each Bank that:
(a) no Default or Event of Default has occurred and is continuing on
and as of the date hereof;
(b) the Stock Purchase Agreement constitutes the valid and binding
agreement of the Purchasers enforceable against the Purchasers in accordance
with the terms thereof, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought; and
(c) the representations and warranties of the Borrower and the other
Credit Parties contained in the Credit Agreement and the other Credit Documents
are true and correct on and as of the date hereof as if made on and as of the
date hereof after giving effect to the amendments contemplated hereby, except to
the extent such representations and warranties expressly relate to a different
specific date.
Section 4. EFFECTIVENESS. The amendments to the Credit Agreement set
forth in Section 1 hereof and the consents set forth in Section 2 hereof shall
become
17
effective on the date (the "Effective Date") that each of the following
conditions precedent has been satisfied:
(a) the Agent shall have executed and delivered a counterpart of this
Amendment and received duly executed counterparts of this Amendment from the
Borrower, each Subsidiary of the Borrower that is a party to any Credit Document
and as many of the Banks as shall be necessary to comprise the "Required Banks"
or the "Required Class Creditors", as the case may be;
(b) (i) the Stock Purchase Agreement and all agreements, instruments
and other documents entered into by the Borrower and/or the Purchasers in
connection therewith (including, without limitation, the Certificate of
Designation for the preferred stock to be issued pursuant to the Stock Purchase
Agreement, collectively, the "Equity Documents"), and all amendments to, and
other deviations in the Equity Documents from, the execution copies of the
Equity Documents delivered to the Agent prior to the Agent's execution of this
Amendment either shall not have an adverse effect on the Banks in any way or
shall be reasonably satisfactory in form and substance to the Agent; (ii) the
Stock Purchase Agreement and all of the other Equity Documents shall be in full
force and effect; (iii) the aggregate amount of fees (other than termination and
management fees and reimbursements of costs and expenses) required to be paid
from time to time by the Borrower to investment banks, brokers, finders, the
Purchasers and the Purchasers' respective Affiliates in connection with the
consummation of the Convertible Preferred Stock Sale shall not exceed
$9,250,000; (iv) the Purchasers shall have executed and delivered to the
Borrower a written consent, in the form thereof previously approved by the
Agent, to the payment by the Borrower of the fees described in clause (f) below;
and (v) an initial sale of convertible preferred stock of the Borrower pursuant
to the Stock Purchase Agreement shall have occurred, and the Borrower shall have
received gross proceeds of at least $14,999,900 from such sale;
(c) the Borrower shall have delivered to the Agent an executed
certificate of the Borrower, dated as of the Effective Date, stating that: (i)
the representations and warranties of the Borrower set forth in Section 3 hereof
and in the Stock Purchase Agreement and the other Equity Documents were true and
correct when made and, subject to the qualifications contained in Section 6.4(a)
of the Stock Purchase Agreement in the case of the
18
representations and warranties contained therein, are true and correct on and
as of the Effective Date as if made on the Effective Date; (ii) all
projections and pro forma financial information provided by the Borrower to
the Agent or any Bank in connection with this Amendment, the Convertible
Preferred Stock Sale and the other transactions contemplated hereby and by
the Equity Documents are based on good faith estimates and assumptions
believed by the Borrower to be reasonable at the time made; (iii) the
conditions precedent set forth in clause (b) above are satisfied on and as of
the Effective Date; (iv) attached thereto are true and complete copies of
each of the Equity Documents as in effect on the Effective Date, and, except
as noted in such certificate or otherwise disclosed to the Agent in writing,
such documents do not vary in any material respect from the execution
versions thereof provided to the Agent prior to its execution hereof; and (v)
attached thereto is a true and complete copy of the consent referred to in
paragraph (b)(iv) above, and such consent is in full force and effect;
(d) the Agent shall have received from Ropes & Xxxx, special counsel
to the Borrower, a legal opinion, dated the Effective Date, substantially in the
form thereof provided by the Agent to the Borrower prior to the Agent's
execution hereof;
(e) the Borrower shall have delivered to the Agent a copy of each
certificate and legal opinion delivered to, or by or on behalf of, the Borrower
pursuant to the Stock Purchase Agreement in connection with the initial closing
thereunder;
(f) the Borrower shall have paid to the Agent, for the account of the
applicable Banks, in immediately available funds: (i) the fees required by
Section 5 hereof, and (ii) for each Bank that holds any outstanding Term Loans,
an extension fee in an amount equal to 15 basis points on the product of (A)
$65,000,000, and (B) a fraction, the numerator of which is the aggregate
outstanding principal amount of Term Loans held by such Bank and the denominator
of which is the aggregate outstanding principal amount of all of the Term Loans;
(g) the Agent shall have received a letter, addressed to the Agent
and the Banks and dated the Effective Date, from the Purchasers, substantially
similar to the form thereof provided to the Borrower by the Agent
19
prior to the date hereof, and containing: (i) a consent of the Purchasers to
the collateral assignment to the Collateral Agent pursuant to the Borrower
Security Agreement of all of the Borrower's rights under the Stock Purchase
Agreement; and (ii) an agreement of the Purchasers that, until such time as
the Borrower has received gross proceeds of $100,000,000 pursuant to the
Convertible Preferred Stock Sale, the Purchasers will not, without the
consent of at least two Disinterested Directors (as defined in the Stock
Purchase Agreement) other than Xx. Xxxxx X. Xxxxxxxxxx, cause or permit the
Borrower to commence a voluntary case concerning itself under the Bankruptcy
Code or commence any other proceeding relating to the Borrower under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction;
(h) the Borrower shall have executed and/or delivered to the Agent
such other certificates and documents, and shall have furnished such other legal
opinions, as the Agent may reasonably request prior to the Effective Date as a
result of the existence of any facts or the occurrence of any condition or event
that, in any such case, was unknown to the Agent prior to August 30, 1996 or
occurred after August 30, 1996 and which, in the reasonable judgment of the
Agent, did or could have an adverse effect on the Banks, the Borrower or the
transactions contemplated hereby; and
(i) the Agent shall have delivered a certificate to the Borrower and
the Banks (which the Agent shall be obligated to do if the foregoing conditions
have been satisfied) stating that the Effective Date has occurred and specifying
the calendar date thereof, it being understood that the delivery of such
certificate shall not in any manner be deemed to be a representation or other
certification by the Agent as to the satisfaction of paragraph (a) of this
Section 4.
Section 5. AMENDMENT FEES. The Borrower shall pay to the Agent, in
immediately available funds, for the account of each Bank that executes and
delivers (by facsimile or otherwise) a signature page to this Amendment on or
prior to the date of this Amendment, an amendment fee equal to 12.5 basis points
on the sum of (a) such Bank's Revolving Loan Commitment, and (b) the aggregate
outstanding principal amount of Term Loans held by
20
such Bank. Each such fee shall be paid by the Borrower within five Business
Days of the date of this Amendment.
Section 6. STATUS OF CREDIT DOCUMENTS. (a) This Amendment is limited
solely for the purposes and to the extent expressly set forth herein, and,
except as expressly modified hereby, (i) the terms, provisions and conditions of
the Credit Documents, (ii) the terms and provisions of the Further Assurances
Agreement dated as of June 15, 1995, as modified in writing prior to the date
hereof and herein, between the Borrower and the Agent, and (iii) the Liens
granted under the Credit Documents shall continue in full force and effect and
are hereby ratified and confirmed in all respects.
(b) Without limiting the foregoing, neither this Amendment
(including, without limitation, the consents granted in Section 2 hereof and the
confirmations made pursuant to paragraph (c) below) nor the deeming by the Agent
pursuant hereto of any Equity Document as being satisfactory to it shall be
construed in any respect as, and is not intended to be: (i) a consent by the
Agent or any Bank to the consummation by the Borrower of any of the transactions
contemplated by the Equity Documents (other than the entering into or filing, as
applicable, by the Borrower of the documents referred to in Section 2 hereof) or
the performance by the Borrower of any term or provision of any Equity Document
(including, without limitation, the Certificate of Designation for the preferred
stock to be issued and/or sold pursuant to the Equity Documents), in any such
case that is prohibited by the Credit Agreement, as expressly amended hereby, or
(ii) a waiver by the Agent or any Bank of (A) any violation of the Credit
Agreement, as expressly amended hereby, or any Default or Event of Default
thereunder that in any such case arises as a result of the performance or
observance by the Borrower of any of its covenants, agreements and obligations
under, or the consummation of any transaction (other than those expressly
consented to pursuant Section 2 hereof) contemplated by, any Equity Document
(including, without limitation, any such violation, Default or Event of Default
that would arise under Section 8.6 of the Credit Agreement, as expressly amended
hereby, as a result of the performance by the Borrower of any obligation of the
Borrower under the Equity Documents to pay cash dividends on, or redeem, any
shares of stock issued and/or sold pursuant to the Equity Documents), or (B) any
rights and remedies arising in favor of the Agent or any Bank under the Credit
Documents or otherwise as a
21
result of the occurrence of any such violation, Default or Event of Default.
(c) The Borrower acknowledges that the performance by the Borrower of
its following obligations under the Equity Documents will, unless consented to
in writing by the requisite Banks after the Effective Date, result in a
violation of, and constitute an Event of Default under, the Credit Agreement as
amended hereby: (i) any obligation of the Borrower under the Equity Documents to
pay cash dividends (in whole or in part) on, or purchase, redeem or otherwise
acquire (in whole or in part) for cash, any shares of convertible preferred
stock issued from time to time pursuant to the Equity Documents, and (ii) any
obligation of the Borrower under the Equity Documents to pay to any Purchaser or
any of their respective Affiliates any management or similar fee at any time
that a Default or an Event of Default has occurred and is continuing. Each of
the Agent and the Borrower confirms to each other on the terms set forth in
paragraph (b) above that it does not have any actual knowledge that any other
term or provisions of the Equity Documents conflicts (or that the performance
thereof could conflict) with the terms and provisions of the Credit Agreement as
amended hereby.
(d) No amendment made to the Credit Agreement pursuant to this
Amendment shall relieve the Borrower from complying with any other term or
provision of the Credit Agreement as amended hereby.
Section 7. COUNTERPARTS. This Amendment may be executed and
delivered in any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged with the Borrower
and the Agent.
Section 8. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
22
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers to execute and deliver this Waiver and Third Amendment
to the Amended and Restated Credit Agreement as of the date first above written.
THE GRAND UNION COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and
Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Xxxx Xxx Xxxxx
----------------------------
Name: Xxxx Xxx Xxxxx
Title: Managing Director
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: VP
BANK POLSKA KASA OPIEKI, SA
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
Senior Lending Officer
23
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: First Vice President
By: /s/ Xxxxx X' Xxxxx
----------------------------
Name: Xxxxx X'Xxxxx
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxx X.Xxxxx
----------------------------
Name: Xxx X. Xxxxx
Title: Division Executive
FLEET BANK N.A.
By: /s/ Xxxx Xxxxx
----------------------------
Name: Xxxx Xxxxx
Title: Vice President
XXXXXX FINANCIAL, INC.
By: /s/ Xxxxxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: AVP
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By:________________________
Name:
Title:
24
XXXXXX COMMERCIAL PAPER INC.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxx
Title: Authorized Signatry
Nations Banc Capital Markets, Inc. as Agent for
NATIONSBANK, N.A.
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: Director
PROTECTIVE LIFE INSURANCE CO.
By: /s/ Xxxx X. Xxxxx CFA
----------------------------
Name: Xxxx X. Xxxxx CFA
Title: Principal Protective Asset
Management Co.
QUANTUM PARTNERS LDC
By: /s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: Attorney-in-fact
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Assistant Treasurer
25
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President
XXX XXXXXX AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and
Director
The foregoing Third Amendment to the Amended and Restated Credit
Agreement is hereby consented and agreed to, and the Liens and guaranties under
the Credit Documents are hereby confirmed, by:
MERCHANDISING SERVICES, INC.
GRAND UNION STORES, INC. OF VERMONT
GRAND UNION STORES OF NEW HAMPSHIRE, INC.
SPECIALTY MERCHANDISING SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
of each of the above listed
entities
26
ANNEX I
to
THIRD AMENDMENT
SCHEDULE XV
to
CREDIT AGREEMENT
DESIGNATED STORES
1. Sayville, NY (Store #82)
2. New Canaan, CT (Store #207)
3. Newtown, CT (Store #231)
4. Port Xxxxx, NY (Store #1153)
5. Brattleboro, VT (Store #1861)
6. Xxxxxx Landing, NY (Store #1941)
7. Willsboro, NY (Store #1942)
8. Highland Falls, NY (Store #3277)
9. Mt. Ivy, NY (Store #3491)
10. Flemington, NJ (Store #3563)
27
