SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated
as of November 7, 1997 by and among HOMEBASE, INC., THE FIRST NATIONAL BANK OF
CHICAGO, BANKBOSTON, N.A., XXXXX FARGO BANK, N.A. and THE SUMITOMO BANK,
LIMITED.
RECITALS
WHEREAS, the parties hereto are parties to that certain Credit
Agreement dated as of July 9, 1997 (as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"; capitalized terms
used but not otherwise defined herein having the definitions provided therefor
in the Credit Agreement); and
WHEREAS, the parties hereto desire to amend the Credit
Agreement on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Amendment to Credit Agreement. Subject to the terms and conditions set forth
in Section 2 of this Amendment, upon the Effective Date (as hereinafter
defined), the Credit Agreement shall be hereby amended as follows:
(i) The definition of "Borrowing Base" set forth in Article I
of the Credit Agreement is hereby amended by deleting such definition in its
entirety and inserting the following in its stead:
"Borrowing Base" means, at any time, an amount equal
to (a) the sum of (i) the Advance Rate applicable to
Eligible Accounts multiplied times the book value of
all Eligible Accounts at such time, plus (ii) the
Advance Rate applicable to Eligible Inventory
multiplied times the amount of the Eligible Inventory
at such time minus (b) fifty percent (50%) of the
aggregate amount of Rentals for the prior twelve
months.
(ii) The definition of "Change in Control" set forth in
Article I of the Credit Agreement is hereby amended by inserting the
following at the end of such definition:
or a Change in Control as defined in the Subordinated
Note Indenture.
(iii) The definition of "Subordinated Indebtedness" set forth
in Article I of the Credit Agreement is hereby amended by deleting such
definition in its entirety and inserting the following in its stead:
"Subordinated Indebtedness" of a Person means any
Indebtedness of such Person the payment of which is
subordinated to payment of the Obligations to the
written satisfaction of the Required Lenders.
Subordinated Indebtedness shall include, without
limitation, the Indebtedness of the Borrower in
respect of the Subordinated Notes.
(iv) The definitions set forth in Article I of the Credit
Agreement are hereby amended by inserting the following definitions
alphabetically in such Article:
"Subordinated Debt Documents" means the Subordinated
Notes, the Purchase Agreement dated as of the
November ___, 1997 by and among the Borrower and the
other parties signatory thereto and the Subordinated
Note Indenture.
"Subordinated Note Indenture" means that certain
Indenture entered into between the Borrower and State
Street Bank and Trust Company of California, N.A., as
trustee, dated as of November ___, 1997, as the same
may be amended or modified after the date hereof as
permitted hereby.
"Subordinated Notes" means those certain Convertible
Subordinated Notes due 2004 issued by the Borrower
pursuant to the Subordinated Note Indenture in the
aggregate principal amount of up to $115,000,000.
(v) Section 5.3 of the Credit Agreement is hereby amended by
inserting the words "and Subordinated Debt Documents" after the words
"Transaction Documents" in the third line thereof and inserting a new
sentence at the end of such Section which shall read as follows:
No order, consent, approval, license, authorization,
or validation of, or filing, recording or
registration with, or exemption by, any governmental
or public body or authority, or any subdivision
thereof, is required to authorize, or is required in
connection with the execution, delivery and
performance of, or the legality, validity, binding
effect or enforceability of, any of the Subordinated
Debt Documents other than a "shelf registration" of
the Subordinated Notes under the Securities and
Exchange Act of 1933, as amended, appropriate
filings, qualifications or approvals with state
securities regulators, appropriate NASD filings and
approvals, appropriate filings and approvals required
by the Trust Indenture Act of 1939 and appropriate
filngs required by the Securities and Exchange Act of
1934.
(vi) Article V of the Credit Agreement is hereby amended by
inserting a new Section 5.21 which shall read as follows:
5.21 Subordinated Indebtedness. The Borrower has the
corporate power and authority to incur the
Indebtedness evidenced by the Subordinated Notes. The
subordination provisions of the Subordinated Note
Indenture and the Subordinated Notes will be
enforceable against the holders of the Subordinated
Notes by the holder of any Notes which has not
effectively waived the benefits thereof. All
Obligations, including the Obligations to pay
principal of and interest on the Loans, constitute
senior Indebtedness entitled to the benefits of
subordination created by the Subordinated Note
Indenture and the Subordinated Notes. The principal
of and interest on the Notes and all other
Obligations will constitute "senior debt" as that or
any similar term is or may be used in any other
instrument evidencing or applicable to any other
Subordinated Indebtedness of the Borrower. The
Borrower acknowledges that the Agent and each Lender
is amending the Credit Agreement and continuing to
extend the Aggregate Commitment in reliance upon the
subordination provisions of the Subordinated Notes
and this Section 5.21.
(vii) Section 6.11 of the Credit Agreement is hereby amended
by inserting an additional paragraph at the end of such Section which
shall read as follows:
(m) Indebtedness of the Borrower in an aggregate
principal amount not to exceed $115,000,000 evidenced
by the Subordinated Notes and incurred pursuant to,
and having the terms, including without limitation
the subordination provisions, set forth in the
Subordinated Note Indenture.
(viii) Section 6.20.1 of the Credit Agreement is hereby
amended by deleting the last three lines of such Section and inserting
the following in its stead:
01/30/1999 67%
01/29/2000 67%
01/27/2001 67%.
(ix) Section 6.21 of the Credit Agreement is hereby amended by
deleting such Section in its entirety and inserting the following in
its stead:
6.21 Capital Expenditures. The Borrower will not, nor
will it permit any Subsidiary to, expend, or be
committed to expend for Capital Expenditures
(including, without limitation, for the acquisition
of fixed assets) during the indicated fiscal year of
the Borrower on a non-cumulative basis in the
aggregate for the Borrower and its Subsidiaries in
excess of the aggregate amounts set forth below:
Fiscal Year Ending Amount
01/31/1998 $45,000,000
01/30/1999 $65,000,000
01/29/2000 $82,000,000
01/27/2001 $82,000,000
(x) Article VI of the Credit Agreement is hereby amended by
inserting a new Section 6.24 and Section 6.25 into such Article which
shall read as follows:
6.24 Subordinated Indebtedness. The Borrower will
not, and will not permit any Subsidiary to, make any
amendment or modification to the indenture, note or
other agreement evidencing or governing any
Subordinated Indebtedness or any Subordinated Debt
Documents (other than amendments or modifications
which would extend the maturity, reduce the amount of
any payment of principal thereof, reduce the rate or
extend the date for payment of interest thereon), or
directly or indirectly voluntarily prepay, defease or
in substance defease, purchase, redeem, retire or
otherwise acquire, any Subordinated Indebtedness
prior to the date when due.
6.25 Collateral Value Report. Upon the request of the
Agent, which may be made not more than once each year
prior to an Event of Default, and at any time while
and so long as an Event of Default should have
occurred and be continuing, the Borrower will obtain
and deliver to the Agent a report of an independent
collateral auditor satisfactory to the Agent (which
may be or be affiliated with a Lender) to perform an
audit, using customary procedures and scope, of the
accounts and inventory components included in the
Borrowing Base, which report shall indicate whether
or not, in the opinion of such auditor based on such
audit, the information set forth in the Borrowing
Base Certificate most recently delivered is accurate
and complete in all material respects based upon a
review by such auditors of the Accounts (including
verification with respect to the amount, aging,
identity and credit of the respective account debtors
and the billing practices of the Borrower) and
Inventory (including verification as to the value,
location and respective types).
(xi) Section 9.7 of the Credit Agreement is hereby amended by
inserting the words "the Subordinated Debt Documents," after the words
"Transaction Documents" where such words appear.
(xii) Exhibit B to the Credit Agreement is hereby replaced by
the document attached hereto as Exhibit B.
2. Conditions. The effectiveness of the amendments stated in this Amendment is
subject to on or prior to the date hereof, that the following conditions shall
have been satisfied in a manner, and in form and substance, as the case may be,
reasonably acceptable to Requisite Lenders:
(i) Amendment. This Amendment shall have been duly executed by
the Requisite Lenders and the Borrower and delivered to Agent.
(ii) No Default. No Default or Event of Default under the
Credit Agreement, as amended hereby, shall have occurred and be
continuing.
(iii) Warranties and Representations. The warranties and
representations of the Borrower contained in this Amendment, the Credit
Agreement, as amended hereby, and the other Loan Documents shall be
true and correct as of the date hereof, with the same effect as though
made on such date, except to the extent that such warranties and
representations expressly relate to an earlier date, in which case such
warranties and representations shall have been true and correct as of
such earlier date.
(iv) Subordinated Debt. The Borrower shall have consummated
the transactions contemplated by that certain Purchase Agreement dated
as of November , 1997 (the "Subordinated Note Agreement") by and
between the Borrower and Prudential Securities Incorporated, and have
received not less than $75,000,000 and not more than $115,000,000 (in
each case before deduction of discounts, commissions and offering
expenses) from the issuance of the securities pursuant to the
Subordinated Note Indenture which shall have terms and conditions
acceptable to the Required Lenders, including, without limitation, an
interest rate not exceeding five and three quarters percent (5.75%) per
annum, and the Borrower shall have delivered to the Agent a copy of the
Subordinated Note Agreement and the Subordinated Note Indenture.
(v) Reaffirmation of Guaranty. Each Real Estate Subsidiary and
Operating Subsidiary shall have executed the Reaffirmation of Guaranty
in the form of Exhibit A hereto.
The date on which all of the above events have occurred is the "Effective Date".
If the Effective Date has not occurred by November 13, 1997, this Amendment
shall be of no force and effect.
3. Continuing Credits. Notwithstanding this Amendment, the Loans owing to
Lenders by Borrower under the Credit Agreement that remain outstanding as of the
date hereof shall constitute continuing Obligations of the Borrower under the
Credit Agreement and this Amendment shall not be deemed to evidence or result in
a novation, or a repayment or reborrowing, of such Loans.
4. Miscellaneous.
(a) Captions. Section captions used in this Amendment are for
convenience only, and shall not affect the construction of this Amendment.
(b) Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. Whenever possible each provision of
this Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be prohibited
by or invalid under such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Amendment.
(c) Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
(d) Successors and Assigns. This Amendment shall be binding upon, and
shall inure to the sole benefit of the Borrower, Agent and Lenders, and their
respective successors and assigns.
(e) References. Any reference to the Credit Agreement contained in any
notice, request, certificate, or other document executed concurrently with or
after the execution and delivery of this Amendment shall be deemed to include
this Amendment unless the context shall otherwise require.
(f) Continued Effectiveness. Notwithstanding anything contained herein,
the terms of this Amendment are not intended to and do not serve to effect a
novation of the Credit Agreement; instead, it is the express intention of the
parties hereto to reaffirm the Obligations created under the Credit Agreement
which is evidenced by the Notes. The Credit Agreement, as amended hereby, and
each of the other Loan Documents remain in full force and effect.
(g) Costs and Expenses. Borrower affirms and acknowledges that Section
9.7 of the Credit Agreement applies to this Amendment and the transactions and
agreements and documents contemplated hereunder.
5. Representations and Warranties. The Borrower represents and warrants to Agent
and Lenders that the execution, delivery and performance by the Borrower of this
Amendment are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action (including, without limitation, all necessary
shareholder approval) of the Borrower, do not require any governmental
approvals, consents or filings and do not and will not contravene or conflict
with any provision of law applicable to the Borrower, the certificate of
incorporation or bylaws of the Borrower or any order, judgment or decree of any
court or other agency of government or any contractual obligation binding upon
the Borrower, and this Amendment, the Credit Agreement, as amended hereby, and
each Loan Document is the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and that the conditions
set forth in Sections 2(ii) and (iii) hereof are true, correct and complete as
of the Effective Date.
[signature pages follow]
IN WITNESS WHEREOF, this Second Amendment to Credit Agreement has been
duly executed and delivered as of the day and year first above written.
HOMEBASE, INC.
By:________________________________
Print Name: _________________________
Title: ______________________________
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By:________________________________
Print Name: _________________________
Title: ______________________________
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx,
Managing Director
BANKBOSTON, N.A.,
Individually and as Syndication Agent
By: _________________________
Print Name: Xxxxx Xxxxxx
Title: Managing Director
000 Xxxxxxx Xxxxxx
Mail Stop 01-09-05
Xxxxxx, Xxxxxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
XXXXX FARGO BANK, N.A.
Individually and as Documentation Agent
By:
Print Name: Xxxxxxxx Xxxxxx
Title: Vice President
By:_______________________________
Name:_____________________________
Title:______________________________
000 Xxxxxxxx Xxxxxxxxx, 16th Floor
MAC 2818-163
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
THE SUMITOMO BANK, LIMITED
By:
Print Name:__________________
Title:
By:
Print Name:__________________
Title:
EXHIBIT A
REAFFIRMATION OF GUARANTY
Each of the undersigned acknowledges receipt of a copy of the
Second Amendment to the Credit Agreement (the "Amendment") dated as of
November 7, 1997, consents to such amendment, and each of the transactions
referenced therein and hereby reaffirms its obligations under the Subsidiary
Guaranty dated as of July 9, 1997 in favor of The First National Bank of
Chicago, as Agent, and the Lenders (as defined in the Amendment).
Dated as of November 7, 1997
[GUARANTOR]
By:
Title:
EXHIBIT B
FORM OF
BORROWING BASE CERTIFICATE
AS OF _________, ____ FOR HOMEBASE, INC.
(Capitalized terms have the meaning ascribed thereto in the Credit
Agreement dated as of July 9, 1997 by and among the undersigned, as
Borrower, and the Agent and the Lenders defined therein)
I. Accounts
---------- -------------------------------------------------------------------------------- ------------------------
X. Xxxxx Accounts (include only those Accounts created in the ordinary
course of business arising out of the sale of goods)
$-----------
---------- -------------------------------------------------------------------------------- ------------------------
---------- -------------------------------------------------------------------------------- ------------------------
B. Ineligible Accounts: Each Account which fails to meet any of the
following criteria [List dollar amount of accounts which do
not meet these criteria]:
---------- -------------------------------------------------------------------------------- ------------------------
---------- ----------------------------------------------------------------------------- ---------------------
(a) Which is an "account" within the meaning of Section 9-106 of the UCC;
-------------
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
(b) Which is denominated and payable only in United States dollars
in
the United States; and ______________
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
(c) In which the Agent, on behalf of the Lenders, has after the
Collateralization Date, a first priority fully perfected
Lien,
subject to no other Liens (other than Permitted Liens). ______________
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
Total Ineligible Accounts ______________
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
C. Total Eligible Accounts (A less B) ______________
----
---------- ----------------------------------------------------------------------------- ---------------------
II. Inventory
---------- -------------------------------------------------------------------------------- ------------------------
X. Xxxxx Inventory (include only that Inventory which is held for sale)
$-----------
---------- -------------------------------------------------------------------------------- ------------------------
---------- -------------------------------------------------------------------------------- ------------------------
B. Ineligible Inventory: All Inventory which meets any of the following
criteria:
---------- -------------------------------------------------------------------------------- ------------------------
---------- ----------------------------------------------------------------------------- ---------------------
(a) Inventory in which the Agent, on behalf of the Lenders, does not
have, subsequent to the Collateralization Date, a first priority
fully perfected Lien, subject to no other Liens (other than
Permitted Liens); ____________
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
(b) Inventory classified by a Borrower or Subsidiary as
"obsolete" or which, in the Agents' reasonable judgment,
should be so classified;
------------
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
(c) Supplies, nonsaleable goods, goods to be returned to
suppliers, goods in transit to third persons (other than
the Borrower's agents or warehouses); and ____________
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
(d) Any reserves required by the Agent in its reasonable
discretion for special order goods, goods which are
"slow-moving", goods whose market value has declined and
goods on lay away sales.
------------
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
Total Ineligible Inventory ____________
---------- ----------------------------------------------------------------------------- ---------------------
---------- ----------------------------------------------------------------------------- ---------------------
C. Total Eligible Inventory (A less B) ____________
----
---------- ----------------------------------------------------------------------------- ---------------------
III. Availability
--------------- --------------------------------------------------------------------------- ------------------------
A. Total Availability: ____________
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------
(a) (I.C) multiplied by 70% ____________
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------
(b) (II.C) multiplied by 60% ____________
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------
(c) 50% of Rentals for prior twelve months
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------
(d) Sum of (i) (a) plus (b) (ii) minus (c) $___________
---- -----
--------------- --------------------------------------------------------------------------- ------------------------
--------------- ----------------------------------------------------------------------- --------------------
B. Total Outstanding Revolving Advances and Facility Letter of Credit $___________
Obligations
--------------- ----------------------------------------------------------------------- --------------------
--------------- ----------------------------------------------------------------------- --------------------
C. Total Outstanding amount of letters of credit obligations (excluding $___________
amounts included in (III. B above))
--------------- ----------------------------------------------------------------------- --------------------
--------------- ----------------------------------------------------------------------- --------------------
D. Excess (Deficit) (III.A less III.B) $___________
--------------- ----------------------------------------------------------------------- --------------------
HOMEBASE, INC.
By:______________________________
Title:_____________________________
