AMENDMENT NO. 3 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this "Agreement") is made and
entered into as of this 20th day of June, 1997 among THE TOPPS COMPANY, INC., a
Delaware corporation ("Borrower"), NATIONSBANK, N.A., a national banking
association formerly known as NationsBank, N.A. (Carolinas), each other lender
signatory hereto (each individually, a "Lender" and collectively, the
"Lenders"), and NATIONSBANK, N.A., a national banking association formerly known
as NationsBank, N.A. (Carolinas), in its capacity as agent for the Lenders (in
such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent have entered into a
Credit Agreement dated as of June 30, 1995, as amended pursuant to that certain
Amendment No. 1 to Credit Agreement dated as of June 5, 1996, and as further
amended pursuant to that certain Amendment No. 2 to Credit Agreement dated as of
December 6, 1996 (as amended hereby and as from time to time further amended,
supplemented or replaced, the "Credit Agreement"), pursuant to which the Lenders
agreed to make certain revolving credit, term loan and letter of credit
facilities available to the Borrower; and
WHEREAS, the Borrower, the Lenders and the Agent have entered into a
letter agreement dated as of March 26, 1997 (the "Letter Agreement"), which
Letter Agreement temporarily modifies certain terms and conditions of the Credit
Agreement up to and including its date of expiration, June 30, 1997 (the
"Expiration Date"); and
WHEREAS, the Borrower has requested that the Credit Agreement be
amended in the manner set forth herein and the Agent and the Lenders are willing
to agree to such amendment;
NOW, THEREFORE, in consideration of the mutual covenants and the
fulfillment of the conditions set forth herein, the parties hereto do hereby
agree as follows:
1. Definitions. Any capitalized terms used herein without
definition shall have the meaning set forth in the Credit Agreement.
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2. Amendment of Definitions. Subject to the terms and conditions
set forth herein, Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definition:
"Consolidated Capital Stock Repurchase Ratio" means,
with respect to the Borrower and its Subsidiaries for any
Four-Quarter Period ending on the date of computation thereof,
the ratio of (i) Consolidated EBITDA for such period less
(without duplication) Capital Expenditures for such period
less all income taxes accrued during such period to (ii) the
sum of, without duplication, (y) Consolidated Fixed Charges
for such period and (z) Share Repurchase Expenditures.
3. Amendment of Definitions. Subject to the terms and conditions
set forth herein, Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definition:
"Share Repurchase Expenditures" means, with respect
to the Borrower and its Subsidiaries for any Four-Quarter Period
ending on the date of computation thereof, the aggregate purchase
price of all repurchases of the Borrower's common capital stock
made by the Borrower during such Four-Quarter Period, and made
pursuant to Section 10.16 hereof, but in no event to include
any such repurchases made prior to March 1, 1997.
4. Amendment of Affirmative Covenant of Financial Reports, Etc.
Subject to the terms and conditions set forth herein, Section 9.1(a) of the
Credit Agreement is hereby deleted in its entirety and replaced by the
following:
(a) As soon as practical and in any event within 95
days after the end of each Fiscal Year of the Borrower, deliver
or cause to be delivered to the Agent and each Lender (i)
consolidated balance sheets of the Borrower and its Subsidiaries,
and the notes thereto, consolidating balance sheets of the Borrower
and its Principal Subsidiaries, and the notes thereto, the related
consolidated and consolidating statements of operations,
stockholders' equity and cash flows, and the respective notes
thereto, for such Fiscal Year, setting forth in the case of the
statements comparative
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financial statements for the preceding Fiscal Year (except with
respect to the Fiscal Year ended February 25, 1995), all prepared
in accordance with Generally Accepted Accounting Principles applied
on a consistent basis and showing the results of operations of eac
product segment and containing, with respect to the consolidated
financial reports, opinions of Deloitte & Touche, L.L.P., or other
such independent certified public accountants selected by the
Borrower and approved by the Agent which approval shall not be
unreasonably withheld or delayed and shall be deemed given as to
any "big six" accounting firm, which are unqualified as to the
scope of the audit performed and as to the "going concern"
status of the Borrower and without any exception not acceptable
to the Lenders, (ii) a certificate of an Authorized Representative
demonstrating compliance with Sections 10.1, 10.2, 10.3 and 10.4
hereof, which certificate shall be in the form of Exhibit K hereto,
and (iii) a certificate of an Authorized Representative
demonstrating the Consolidated Capital Stock Repurchase Ratio
and the maximum value of repurchases of the Borrower's common
capital stock that the Borrower and its Subsidiaries may make in
the next upcoming fiscal quarter under the conditions of
Section 10.16 hereof;
5. Amendment of Affirmative Covenant of Financial Reports, Etc.
Subject to the terms and conditions set forth herein, Section 9.1(b) of the
Credit Agreement is hereby deleted in its entirety and replaced by the
following:
(b) as soon as practical and in any event within 45
days after the end of each fiscal quarter (except the last
fiscal quarter of the Fiscal Year), deliver to the Agent
and each Lender (i) consolidated balance sheets of the Borrower
and its Subsidiaries and consolidating balance sheets of the
Borrower and its Principal Subsidiaries, each as of the end of
such fiscal quarter, and the related consolidated and
consolidating statements of operations, stockholders' equity
and cash flows for such fiscal quarter and for the period from
the beginning of the Fiscal Year through the end of such
reporting period, and showing the results of operations of each
product segment and accompanied by a certificate of an Authorized
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Representative to the effect that such financial statements
present fairly the financial position of the Borrower and its
Subsidiaries as of the end of such fiscal period and the
results of their operations and the changes in their financial
position for such fiscal period, in conformity with the standards
set fort in Section 8.6(a) hereof with respect to interim
financials, (ii) a certificate of an Authorized Representative
containing the computations for such quarter comparable to that
required pursuant to Section 9.1(a)(ii) hereof, (iii) a certificate
of an Authorized Representative containing the computations for
such fiscal quarter comparable to that required pursuant to
Section 9.1(a)(iii) hereof, and (iv) a schedule of licenses,
other than Principal Licenses, which have generated more than
$10,000,000 in sales during the immediately preceding Four-Quarter
Period and listing parties thereto and applicable expiration or
termination dates, such schedule being delivered for informational
purposes only and creating no obligation on the Borrower or its
Subsidiaries to maintain or preserve the license so listed;
6. Amendment of Negative Covenant of Consolidated Fixed Charge
Ratio. Subject to the terms and conditions set forth herein, Section 10.2 of the
Credit Agreement is hereby deleted in its entirety and replaced by the
following:
10.2. Consolidated Fixed Charge Ratio. Permit the
Consolidated Fixed Charge Ratio:
(i) as of the end of the Four Quarter Period ending
May 31, 1997 to be less than 1.00 to 1.00;
(ii) as of the end of the Four Quarter Period ending
August 30, 1997 to be less than 0.85 to 1.00;
(iii) as of the end of the Four Quarter Period ending
November 29, 1997 to be less than 1.00 to 1.00;
(iv) as of the end of the Four Quarter Period ending
February 28, 1998 to be less than 0.85 to 1.00;
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(v) as of the end of the Four Quarter Period ending
May 30, 1998 to be less than 1.00 to 1.00;
(vi) as of the end of the Four Quarter Period ending
August 29, 1998 to be less than 1.15 to 1.00;
(vii) as of the end of the Four Quarter Period ending
November 30, 1998 to be less than 1.25 to 1.00;
(viii) as of the end of the Four Quarter Period ending
February 27, 1999 and thereafter to be less than 1.35 to 1.00.
7. Amendment of the Negative Covenant of Cash Balances. Subject to
the terms and conditions set forth herein, Section 10.4 of the Credit
Agreement is hereby deleted in its entirety and replaced by the following:
10.4. Cash Balances. Permit, at the close of any
fiscal quarter, the aggregate amount of cash and cash equivalents
of the Borrower and its Subsidiaries on a consolidated basis, as
evidenced in the balance sheets delivered pursuant to Section
9.1 hereof, to be less than an amount equal to the amount of
any Revolving Loan Outstandings at such time plus $11,500,000
(the "Required Cash Balance"); provided, however, that the Required
Cash Balance will be reduced to any Revolving Loan Outstandings
at such time plus $5,000,000 in the event either (i) the
outstanding principal balance of the Term Loan is less than
$15,000,000 or (ii) the Consolidated Fixed Charge Ratio is at
least 1.35 to 1.00 for two consecutive fiscal quarters, provided,
however, that should the Consolidated Fixed Charge Ratio for any
quarter thereafter be less than 1.00 to 1.00, the terms of this
Section 10.4 shall be in full force and effect as if the
requirements of this Section 10.4(ii) had never been met.
8. Amendment of Negative Covenant of Indebtedness. Subject to the
terms and conditions set forth herein, Section 10.7(h) of the Credit Agreement
is hereby deleted in its entirety and replaced by the following:
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(h) Indebtedness of a Subsidiary represented by an
Investment of the Borrower or any Subsidiary in such Subsidiary
permitted under Section 10.9 hereof;
9. Amendment of Negative Covenant of Investments; Acquisitions.
Subject to the terms and conditions set forth herein, Section 10.9(e) of the
Credit Agreement is hereby deleted in its entirety and replaced by the
following:
(e) loans and advances to Subsidiaries who are not
Guarantors by the Borrower or any Guarantor provided (i) the
aggregate outstanding principal amount of such loans and advances
shall not at any time exceed $7,000,000 and (ii) all evidence of
such Indebtedness or equity investment, including any promissory
notes, shall be pledged to the Agent for the benefit of the Lenders.
10. Amendment of Negative Covenant of Investments; Acquisitions.
Subject to the terms and conditions set forth herein, Section 10.9(f) of the
Credit Agreement is hereby deleted in its entirety and replaced by the
following:
(f) other loans, advances and investments in an aggregate
principal amount at any time outstanding not to exceed $7,000,000.
11. Amendment of Negative Covenant of Investments; Acquisitions.
Subject to the terms and conditions set forth herein, the Credit Agreement
is hereby amended by inserting the following Section 10.9(g):
(g) loans, advances to and investments in (i) the Borrower
or any Guarantor by the Borrower or any Subsidiary, without
limitation and (ii) any Subsidiary who is not a Guarantor by
any Subsidiary who is not a Guarantor, without limitation.
12. Amendment of Negative Covenant of Restricted Payments. Subject
to the terms and conditions set forth herein, Section 10.16 of the Credit
Agreement is hereby deleted in its entirety and replaced by the following:
10.16. Restricted Payments. Make any
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Restricted Payments or apply or set apart any of their assets
therefore or agree to do any of the foregoing, other than each
of the following, providing that at the time thereof and
immediately after giving thereto no Default or Event of Default
shall exist or occur and be continuing: (i) the negotiated or
open market repurchase by the Borrower of shares of its common
capital stock for an aggregate purchase price not to exceed
$8,500,000 ("Permitted Stock Repurchases"), provided that cash
balances (other than those derived from proceeds of Loans) are
available to fund such purchases, and (ii) additional negotiated
or open market repurchase by the Borrower of its common capital
stock for an aggregate purchase price in any Fiscal Year not to
exceed the positive difference, if any, resulting from subtracting
from Excess Cash Flow in the immediately preceding Fiscal Year the
amount thereof required to be applied to prepayment of the Term
Loan pursuant to Section 2.7(d) ("Remaining Excess Cash Flow");
amounts of Remaining Excess Cash Flow not so expended for such
additional stock repurchases in any Fiscal Year (the "Carryover
Fiscal Year") may only be so expended in the immediately subsequent
Fiscal Year (the "Subsequent Carryover Fiscal Year") to the extent
that (y) at the time of such subsequent expenditure, the Borrower
has cash and cash equivalents, as evidenced on the balance sheet
delivered pursuant to Section 9.1(a) hereof for the Carryover
Fiscal Year, in an amount equal to the Excess Cash Flow for the
Carryover Fiscal Year, net of Revolving Loan Outstandings as shown
on such balance sheet, plus the amount of Remaining Excess Cash
Flow to be so expended for such additional stock repurchases in the
Subsequent Carryover Fiscal Year and (z) no violation of Section
10.4 hereof will occur as a result of expending such Remaining
Excess Cash Flow; provided, however, that at any time the
Consolidated Fixed Charge Ratio was less than 1.35 to 1.00 for
either of the two immediately previous fiscal quarters, in addition
to the foregoing limitations, the following conditions must be met:
(A) a purchase of the Borrower's common capital stock may be
undertaken only if at the time of such repurchase the Consolidated
Capital Stock Repurchase Ratio reported in the most recently
delivered certificate prepared pursuant to Sections 9.1(a)(iii) and
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9.1(b)(iii) is at least 1.00 to 1.00, and (B) the total aggregate
repurchase allowed in any fiscal quarter is limited to 100,000
shares not to exceed an aggregate purchase price of $400,000.
13. Effectiveness. This Agreement shall become effective as of the
date hereof upon receipt by the Agent of (a) twelve (12) fully executed
copies of this Agreement (which may be signed in counterparts) and (b) an
amendment fee in the amount of $59,312.50 paid in immediately available funds
and to be distributed by the Agent to the Lenders based on their Applicable
Commitment Percentages.
14. Representations and Warranties. In order to induce the Agent and
the Lenders to enter into this Agreement, the Borrower represents and warrants
to the Agent and the Lenders as follows:
(a) There has been no material adverse change in the
condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole, since the date of the most recent
financial reports of the Borrower received by the Agent and the Lenders
under Section 9.1(a) of the Credit Agreement, other than changes in the
ordinary course of business;
(b) The business and properties of the Borrower and its
Subsidiaries, taken as a whole, are not, and since the date of the most
recent financial report of the Borrower and its Subsidiaries received
by the Agent and the Lenders under Section 9.1(a) of the Credit
Agreement, have not been, adversely affected in any substantial way as
the result of any fire, explosion, earthquake, accident, strike,
lockout, combination of workers, flood, embargo, riot, activities of
armed forces, war or acts of God or the public enemy, or cancellation
or loss of any major contracts; and
(c) No event has occurred and is continuing which constitutes,
and no condition exists which upon the consummation of the transaction
contemplated hereby would constitute, a Default or an Event of Default
under the Credit Agreement, either immediately or with the lapse of
time or the giving of notice, or both.
15. Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to
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the subject matter hereof and supersedes any prior negotiations and agreements
among the parties relative to such subject matter.
16. Full Force and Effect of Agreement. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and shall remain in
full force and effect according to their respective terms.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument.
18. Governing Law. This Agreement shall in all respects be governed
by the laws and judicial decisions of the State of New York.
19. Enforceability. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable as to one or more of the
parties hereto, all other provisions nevertheless shall remain effective and
binding on the parties hereto.
20. Credit Agreement. All references in any of the Loan Documents to
the Credit Agreement shall mean the Credit Agreement as amended hereby.
21. Effect on Letter Agreement. As of the effective date of this
Agreement, as set forth in paragraph 8 above, the Letter Agreement will expire
immediately and will no longer have any force or effect whatsoever,
notwithstanding the Expiration Date or any other terms or conditions contained
in the Letter Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
BORROWER:
THE TOPPS COMPANY, INC.
By:________________________________
Name: _____________________________
Title:_____________________________
AGENT:
NATIONSBANK, N.A., as Agent for the Lenders
By:________________________________
Name:______________________________
Title:_____________________________
LENDERS:
NATIONSBANK, N.A.
By:________________________________
Name:______________________________
Title:_____________________________
CHASE MANHATTAN BANK (as successor in
interest to Chemical Bank)
By: _______________________________
Name:______________________________
Title:_____________________________
[Signature Page 1 of 3]
FLEET BANK N.A. (formerly known as
Natwest Bank, N.A.)
By:________________________________
Name:______________________________
Title:_____________________________
THE BANK OF NEW YORK
By:________________________________
Name:______________________________
Title:_____________________________
CREDITANSTALT CORPORATE FINANCE, INC.
By:________________________________
Name:______________________________
Title:_____________________________
THE SUMITOMO BANK LIMITED, CHICAGO BRANCH
By:________________________________
Name:______________________________
Title:_____________________________
TORONTO DOMINION (NEW YORK), INC.
By:________________________________
Name:______________________________
Title:_____________________________
[Signature Page 2 of 3]
THE MITSUBISHI BANK, LIMITED-
NEW YORK BRANCH
By:________________________________
Name:______________________________
Title:_____________________________
[Signature page 3 of 3]
