EXHIBIT 10.1
EXECUTION COPY
AMENDMENT NO. 2 AND WAIVER TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 22, 2000
AMENDMENT NO. 2 AND WAIVER (this "Amendment and Waiver") to the Credit
Agreement (as defined herein) among Quality Stores, Inc., a Delaware corporation
(formerly known as "Central Tractor Farm & Country, Inc.") (the "Borrower"), QSI
Holdings, Inc., a Delaware corporation (formerly known as "CT Holding, Inc.")
("Holding"), certain of the banks, financial institutions and other
institutional lenders listed on the signature pages hereof, and Fleet National
Bank ("Fleet"), as administrative agent (the "Administrative Agent") for the
Lender Parties (as defined in the Credit Agreement).
PRELIMINARY STATEMENTS
(1) The Borrower, Holding, the Initial Lenders, the Initial Issuing
Bank, the Swing Line Bank and the Agents have entered into a Second Amended and
Restated Credit Agreement dated as of May 7, 1999, as amended by Amendment No. 1
dated as of March 31, 2000 ("Amendment No. 1") (as so amended, the "Credit
Agreement"). Capitalized terms defined in the Credit Agreement and not otherwise
defined in this Amendment and Waiver are used herein as therein defined.
(2) An Event of Default has occurred and is in existence under Section
5.04(d) of the Credit Agreement. The Borrower has requested that the Lenders
waive this Event of Default as well as the requirements of Sections 5.04(a), (b)
and (c) for the period of four fiscal quarters ending July 31, 2000.
(3) In order to carry out an expansion of the catalog business of the
Borrower and its Subsidiaries into certain areas, including electronic commerce,
the Borrower has entered into a Contribution Agreement (the "Contribution
Agreement") with XxxxxxxXxxxxxx.Xxx LLC ("F&X.xxx"), a Delaware limited
liability company organized by Internet Venture Works, an internet accelerator
firm ("IVW"), pursuant to which the Borrower has agreed to contribute office
furniture, computer equipment and related software, and the trademark and domain
name "XXXXXXXXXXXXXX.XXX". The fair market value of these assets (as determined
in good faith by the Borrower's Board of Directors) does not exceed $1,000,000.
In anticipation of and in return for this contribution, the Borrower has
received units of membership interest in F&X.xxx constituting 90% of the
outstanding units of membership interest at the time of the agreement. IVW holds
the balance of the membership interests. The Borrower holds its investment in
F&X.xxx through two new Delaware corporations: QSI Newco, Inc. ("QSI Newco"),
which is wholly-owned by an indirect wholly-owned subsidiary of the Borrower,
and FandC Holding, Inc. ("F&C, Inc."), which is wholly-owned by QSI Newco. F&C,
Inc. holds the F&X.xxx membership interests issued in anticipation and
consideration of the Borrower's contribution.
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(4) At the time it makes its contribution to F&X.xxx, the Borrower and
certain of its Subsidiaries will enter into a License Agreement (the "License
Agreement") with F&X.xxx, pursuant to which F&X.xxx will receive an exclusive
royalty-bearing license to market sell and provide goods and services via
electronic channels (including the internet) and to use the trademarks,
tradenames and similar intellectual property of the Borrower and certain of its
Subsidiaries to conduct the Borrower's catalog business and expand it into
electronic commerce. In return, F&X.xxx will pay the Borrower a royalty equal to
the greater of (a) $750,000 for each fiscal year and (b) 1.5% of F&X.xxx
revenues in that fiscal year. The royalty will be payable at the end of the
first fiscal year (the amount of which will be pro rated for the remaining
portion of such first fiscal year) and on a quarterly basis thereafter. The
license agreement provides that if F&X.xxx fails to meet certain annual
performance criteria, the Borrower may terminate the license. These performance
criteria consist of (x) payment of all royalty payments and payments under the
Operating Agreement (referred to below) within 30 days of due date and (y)
F&X.xxx's continuing solvency. Upon an IPO or a sale or change of control of
F&X.xxx, F&X.xxx would have the option to "buy out" the obligation to make
ongoing cash royalty payments.
(5) At the time it makes its contribution to F&X.xxx, the Borrower and
certain of its Subsidiaries will also enter into an Operating Agreement (the
"Operating Agreement") with F&X.xxx which sets out terms relating to retail and
transfer pricing, promotions and advertising, returns, cross marketing
(including installation by the Borrower of kiosks in stores to access the
F&X.xxx website), customer service and customer information, a short term rental
by F&X.xxx of Borrower office and warehouse space (terminable by either party on
60 days' notice), warehousing, shipping and other logistics and related
operational matters. Transfer prices for goods F&X.xxx buys from the Borrower
are equal to the Borrower's purchase order cost plus freight and handling costs.
The price for "special orders" that the Borrower buys from F&X.xxx, is (a) 105%
of F&X.xxx's "landed cost" (that is, purchase order cost, inbound freight cost
and handling (i.e., distribution center) cost) plus (b) 100% of F&X.xxx's
outbound freight cost. Sales at store kiosks are for F&X.xxx's account, but
F&X.xxx will pay the Borrower a fee for such sales equal to 5% of the retail
price. The rental rate for Borrower office and warehouse space is a pass-through
of the Borrower's cost.
(6) The Borrower has requested that the Lenders agree to modify certain
of the provisions of the Credit Agreement in order to permit the transactions
described in paragraphs (3) through (5) above (the "F&X.xxx Transaction").
(7) The Lenders have agreed to amend and waive the Credit Agreement as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
SECTION 1. Amendments of Certain Provisions of the Credit Agreement.
The Credit Agreement is, upon the Effective Date (as hereinafter defined),
hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended as
follows:
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(i) The definition of "Applicable Margin" is amended by
deleting the table set forth therein and replacing it with the
following:
Tranche A Term Facility/ Tranche B Term Facility
Revolving Credit Facility
----------------------------------------------------------------------------------------------------------------
Prime Rate Advances Eurodollar Rate Prime Rate Advances Eurodollar Rate
Advances Advances
----------------------------------------------------------------------------------------------------------------
Level I .625% 1.875% 2.00% 3.25%
less than 2.5:1
Level II .875% 2.125% 2.00% 3.25%
2.5:1 or greater,
but less than 3.0:1
Level III 1.125% 2.375% 2.25% 3.50%
3.0:1 or greater,
but less than 3.5:1
Level IV 1.75% 3.00% 2.50% 3.75%
3.5:1 or greater,
but less than 4.0:1
Level V 2.00% 3.25% 2.50% 3.75%
4.0:1 or greater prior to
July 31, 2001
Level VI 2.25% 3.50% 2.75% 4.00%
4.0:1 or greater on and
after July 31, 2001
(ii) The definition of the term "Consolidated" is amended by
inserting, before the period at the end thereof, the following proviso:
"; provided, however, that as applied to the accounts of any
Loan Party and its Subsidiaries, such term shall expressly
exclude the accounts of QSI Newco, F&C, Inc., F&X.xxx and all
subsidiaries thereof".
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(iii) The definition of "EBITDA" is amended in full to read as
follows:
" 'EBITDA' means, for any period, the sum, determined on a
Consolidated basis, of (a) net income (or net loss), (b)
interest expense, (c) income tax expense, (d) depreciation
expense, (e) amortization expense, (f) all extraordinary,
unusual or non-recurring losses (and in any event including
all write-offs resulting from SFAS 121 adjustments, and all
non-cash losses, and including without limitation, costs
associated with closing the Iowa facility, severance payments,
stay bonuses, and other integration costs) deducted in
determining such net income (or net loss) less all
extraordinary, unusual or non-recurring gains added in
determining the net income (or net loss) for such Period, (g)
all expenses relating to the Merger (including without
limitation, costs associated with closing the Iowa facility,
severance payments, stay bonuses, and other integration costs)
to the extent deducted from such net income (or net loss) for
such Period, and (h) all cash and non-cash restructuring
charges incurred prior to January 31, 2001 in connection with
the closure of the stores listed on Schedule A hereto in an
aggregate amount not to exceed $8,000,000, in each case of
Holding and its Subsidiaries (including, without limitation,
for all calculations of EBITDA, the Company and its
Subsidiaries), determined in accordance with GAAP for such
period.
(iv) The definition of the term "Fixed Charge Coverage Ratio"
is amended in full to read as follows:
" 'Fixed Charge Coverage Ratio' means, at any date of
determination, the ratio of (a) (i) Consolidated EBITDA for
the most recently completed four fiscal quarters of Holding or
its Subsidiaries less (ii) the amount of cash Capital
Expenditures made by Holding and its Subsidiaries during such
fiscal period less (iii) the amount of cash income taxes paid
by Holding and its Subsidiaries during such four fiscal
quarter period to (b) the sum of (i) cash interest payable on
all Debt for Borrowed Money plus (ii) scheduled principal
amounts of all Debt for Borrowed Money required to be repaid
(in the case of Advances other than Advances under the Term
Facilities, only to the extent accompanied by a permanent
reduction in the related Commitments), in the case of each
item specified in this clause (b), by Holding and its
Subsidiaries during such four fiscal quarters.".
(v) The definition of "Net Cash Proceeds" is amended by:
(A) inserting immediately after the word "interest" where
first occurring the parenthetical "(except the sale
of capital stock of Holding to some or all of the
Equity Investors and other persons for $15,000,000 in
accordance with Section 4(d) of the Amendment No. 2
and Waiver to the Second Amended and Restated Credit
Agreement ("Amendment No. 2") and the
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additional sale of capital stock of Holding to some
or all of the Equity Investors and other persons for
$5,000,000, such additional sale to take place no
later than 30 days after the Effective Date of
Amendment No. 2)",
(B) inserting immediately after the word "Person" where
first occurring the words, "any royalty payments made
by F&X.xxx to the Borrower pursuant to the License
Agreement, any proceeds received by any Loan Party
from (i) an IPO, sale or change of control of F&X.xxx
or (ii) the buy out of the obligation to make ongoing
cash royalty payments pursuant to the License
Agreement following an IPO, sale or change of
control,",
(C) deleting the proviso at the end of the definition in
its entirety and replacing it with the following
proviso:
"provided, however, that (A) the Net Cash
Proceeds from the sale of the distribution
center at Fostoria, Ohio pursuant to Section
5.02(e)(viii) shall be 50% only of the first
$8,000,000 of the cash received in
connection with the transaction and 30% only
of the cash in excess of $8,000,000 received
in connection with the transaction, after
making the deductions specified in clauses
(a), (b) and (c), (B) the Net Cash Proceeds
from the sale of any other real property
pursuant to Section 5.02(e)(ix) shall be 70%
only of the cash received in connection with
the transaction after making the deductions
specified in clauses (a), (b) and (c) and
(C) the Net Cash Proceeds from (i) any
royalty payments made by F&X.xxx to the
Borrower pursuant to the License Agreement,
(ii) an IPO, sale or change of control of
F&X.xxx, or (iii) the buy out of the
obligation to make ongoing cash royalty
payments pursuant to the License Agreement
following an IPO, sale or change of control
shall be 50% only of the cash received in
connection with these transactions after
making the deductions specified in clauses
(a), (b) and (c)".
(vi) The definition of "Subsidiary" is hereby amended
by inserting, before the period at the end thereof, the
following proviso:
"; provided, however, that neither QSI Newco, F&C,
Inc., F&X.xxx nor any of their subsidiaries shall be
considered a "Subsidiary" of any Loan Party".
(b) Section 1.01 of the Credit Agreement is further amended by
adding the following definitions thereto:
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"Contribution Agreement" means the Contribution
Agreement dated as of July 13, 2000 between F&X.xxx and the
Borrower, as the same may be amended, modified or otherwise
supplemented from time to time in accordance with the
provisions of this Agreement.
"F&X.xxx" means XxxxxxxXxxxxxx.Xxx LLC, a Delaware
limited liability company.
"F&X.xxx Documents" means, collectively, the
Contribution Agreement, the License Agreement and the
Operating Agreement.
"F&C, Inc." means FandC Holding, Inc., a Delaware
corporation.
"IVW" means Internet Venture Works, Inc., a Delaware
corporation.
"License Agreement" means the License Agreement to be
entered into among the Borrower and certain Subsidiaries
thereof, as licensors, and F&X.xxx, as licensee, as
contemplated by the Contribution Agreement, as such License
Agreement may be amended, modified or otherwise supplemented
from time to time in accordance with the provisions of this
Agreement.
"Operating Agreement" means the Operating Agreement
to be entered into among the Borrower, certain Subsidiaries
thereof and F&X.xxx, as contemplated by the Contribution
Agreement, as such Operating Agreement may be amended,
modified or otherwise supplemented from time to time in
accordance with the provisions of this Agreement.
"Permitted Closed Store " means (i) a store which is
closed upon the expiration of the lease for such store in
accordance with its terms, (ii) through the period commencing
on the Effective Date and ending on January 31, 2001, any
stores listed on Schedule A hereto, and (iii) for the Fiscal
Year commencing in 2001 and each subsequent Fiscal Year until
the Termination Date, the first 10 stores closed in any such
Fiscal Year (not including stores closed pursuant to clause
(i) above).
"Positive EBITDA" means, for each period listed in
Section 5.02(p), 75% of the amount by which the actual EBITDA
for the preceding Fiscal Year exceeds the amount listed in
Section 5.04(f) for the preceding Fiscal Year.
"QSI Newco" means QSI Newco, Inc., a Delaware
corporation.
"Senior Debt" means the aggregate amount of the
Advances and the Available Amount of Letters of Credit
Outstanding."
"Senior Debt to Inventory Ratio" means, for any given
date, a ratio of (A) Senior Debt of Holding and its
Subsidiaries as of such date to (B) Inventory of Holding and
its Subsidiaries on such date."
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(c) Section 2.06(b)(ii) of the Credit Agreement is amended by:
(i) inserting at the end of the parenthetical in
clause (A) thereof the words, "except the sale, lease,
transfer or other disposition of assets following the closure
of a store which is not a Permitted Closed Store", and
(ii) deleting the proviso at the end thereof in its
entirety and replacing it with the following proviso:
"provided, however, that 100% of the amount of such
prepayment in respect of a Term Facility shall be
applied to the installments of such Term Facility in
inverse order of maturity (with the exception of (i)
28.57% of the Net Cash Proceeds received in
connection with the sale of any other real property
pursuant to Section 5.02(e)(ix) and (ii) the Net Cash
Proceeds received from any royalty payments made by
F&X.xxx to the Borrower pursuant to the License
Agreement, which shall be applied to the installments
of such Term Facility in direct order of maturity).
Upon the payment in full of the Term Advances, there
shall be no further mandatory prepayments pursuant to
this Section 2.05(b)(ii)."
(d) Section 2.07(a)(i) of the Credit Agreement is amended by
replacing the words, "March, June, September and December" with the
word "month";
(e) Section 2.08(a) of the Credit Agreement is amended by
replacing the words, "March, June, September and December" with the
word "month";
(f) Section 2.08(b)(i) of the Credit Agreement is amended by
replacing the words, "March, June, September and December" with the
word "month";
(g) Section 5.01(k) of the Credit Agreement is amended in full
to read as follows:
"(k) Cash Management. Maintain main cash concentration
accounts with Comerica Bank or one or more other banks acceptable to
the Administrative Agent that have accepted the assignment of such
accounts to the Administrative Agent pursuant to the Security Agreement
and have executed a blocked account agreement in respect of each such
account in form and substance satisfactory to the Administrative Agent,
provided, however, that upon written request of the Administrative
Agent, the Borrower will within 30 days (i) move the main cash
concentration account to Fleet, (ii) close any cash concentration
account maintained at banks other than Fleet and (iii) execute and
deliver all amendments and other documents, in such form as is required
by the Administrative Agent, necessary to amend the Loan Documents so
that Advances are made and receipts applied to repay or prepay the
Advances daily on a fully followed basis."
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(h) Section 5.01(m) of the Credit Agreement is amended in full
to read as follows:
"(m) Deposit Accounts. In the case of the Borrower and its
Subsidiaries, use their reasonable efforts to deliver, on or prior to
October 31, 2000, consents, in the form attached hereto as Exhibit K,
from each bank at which a deposit account is maintained, which consents
shall provide that each such bank agrees to transfer to a cash
concentration account maintained at Comerica Bank of Detroit at the
beginning of each Business Day, in same day funds, an amount equal to
the credit balance of such deposit account."
(i) Section 5.01(n) of the Credit Agreement is amended as
follows:
(i) by deleting the words in the first sentence prior to the
beginning of clause (A) thereof and replacing those words with the
following:
"(n) Mortgages. At the expense of the Borrower,
deliver to the Administrative Agent deeds of trust, trust
deeds, mortgages, leasehold mortgages and leasehold deeds of
trust in form and substance reasonably satisfactory to the
Administrative Agent (as amended, supplemented or otherwise
modified from time to time in accordance with their terms, the
"Mortgages") and covering (i) all of the owned real property
of the Borrower and its Subsidiaries (the "Owned Real
Property") on or prior to December 31, 2000, provided that
such Mortgages will be delivered in the order of priority
directed by the Administrative Agent in the exercise of its
reasonable discretion, and at least 50% of the Mortgages
covering the Owned Real Property will be delivered by November
15, 2000 with the remainder to be delivered by December 31,
2000, provided further that if, following the use of its
reasonable best efforts, the Borrower fails to deliver
Mortgages on no more than 5 of the Owned Real Properties by
December 31, 2000, the Borrower shall have until January 31,
2001 for delivery of such Mortgages or such later date as the
Administrative Agent may determine in the exercise of its
reasonable discretion, and (ii) the leased properties that the
Administrative Agent determines, in its reasonable judgment,
to be necessary or desirable in connection with the
Facilities, together with, in the case of each of the
Mortgages referenced in clauses (i) through (ii) above, the
following additional documents (provided, however, that in
lieu of the requirements of clauses (B) and (C) below, within
30 days of the delivery of each of the Mortgages referred to
above, the Borrower and each other Loan Party providing a
Mortgage may deliver to the Administrative Agent a certificate
of the Secretary of the Borrower and such other Loan Parties
setting forth the Liens which have priority over the Liens in
favor of the Lender Parties on the properties described in the
Mortgages):", and
(ii) by deleting from clause (A) thereof the words, "on or
before August 7, 1999".
(j) Section 5.01(o) of the Credit Agreement is amended by
deleting the words "on or prior to August 7, 1999" and substituting
therefor the words "on or prior to October 31, 2000".
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(k) Section 5.02(b)(iv) of the Credit Agreement is amended by
inserting at the end thereof the proviso, "provided, however, that such
Debt shall be evidenced by promissory notes delivered to the
Administrative Agent on or prior to October 31, 2000 in such form as is
satisfactory to the Administrative Agent, and such promissory notes
shall be pledged to the Administrative Agent to secure the payment of
all Obligations of the Loan Parties under the Loan Documents".
(l) Section 5.02(e)(i) of the Credit Agreement is hereby
amended in full to read as follows:
"(i) (A) sales of Inventory by the Borrower and its
Subsidiaries in the ordinary course of its business, (B) sales
or other disposals of obsolete, damaged or unmarketable
inventory including sales of inventory resulting from store
closures, provided that upon the sale of inventory resulting
from the closure of a store which is not a Permitted Closed
Store, the Borrower shall, to the extent required by Section
2.06(b)(ii), prepay Advances pursuant to and in the amount and
order of priority set forth in, Section 2.06(b)(ii), (C) the
contribution of assets to F&X.xxx pursuant to the Contribution
Agreement, and the licensing of certain of the intellectual
property of the Borrower and its Subsidiaries to F&X.xxx
pursuant to the License Agreement, and (D) the sale of
inventory and other assets by the Borrower and its
Subsidiaries pursuant to the Operating Agreement";
(m) Section 5.02(e) of the Credit Agreement is amended by
deleting clause (viii) and inserting at the end thereof the following
new clauses (viii) and (ix) as follows:
"(viii) the sale of the distribution center located at
Fostoria, Ohio by Quality Farm & Fleet, Inc. solely for cash
and for fair value, provided that the Borrower shall, to the
extent required by Section 2.06(b)(ii), prepay Advances
pursuant to, and in the amount and order of priority set forth
in, Section 2.06(b)(ii).
(ix) the sale of any real property by the Borrower or any
Subsidiary of the Borrower solely for cash and for fair value,
provided that the Borrower shall, to the extent required by
Section 2.06(b)(ii), prepay Advances pursuant to, and in the
amount and order of priority set forth in, Section
2.06(b)(ii)."
(n) Section 5.02(f) of the Credit Agreement is hereby amended
by (i) deleting the word "and" after the semicolon in paragraph (ix)
thereof, (ii) inserting "; and" in lieu of the period at the end of
paragraph (x) thereof, and (iii) adding thereto a new paragraph (xi) to
read as follows:
"(xi) Investments by the Borrower and its Subsidiaries in QSI
Newco, F&C, Inc. and F&X.xxx in an aggregate outstanding
amount not to exceed $1,000,000; provided that with respect to
Investments made under this clause (xi): (1) the Borrower and
Quality Stores Services, Inc., a Michigan corporation ("QSS"),
shall execute supplements to the Security Agreement in form
and substance satisfactory to the Administrative Agent,
assigning and pledging to the Administrative Agent each Loan
Parties' rights under the F&X.xxx Documents,
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duly pledging the capital stock of QSI Newco to the
Administrative Agent under the Security Agreement, and QSS
shall deliver to the Administrative Agent certificates
representing the shares of capital stock of QSI Newco
accompanied by undated stock powers executed in blank; (2)
immediately before and after giving effect thereto, no Default
shall have occurred and be continuing or would result
therefrom; (3) the Borrower shall not, and shall not permit
any of its Subsidiaries to, extend credit to F&X.xxx other
than credit in the amount of $500,000 or less at any time and
on terms of 30 days or less; (4) the transfer prices for goods
F&X.xxx buys from the Borrower or any of its Subsidiaries
shall not be less than the Borrower's fully allocated cost
which will be calculated according to the methodology used in
the valuation of the Borrower's other inventory;"
(o) Section 5.02(l) of the Credit Agreement is hereby amended
in full to read as follows:
"(l) Amendment, Etc. of Related Documents and F&X.xxx
Documents. Cancel or terminate any Related Document or F&X.xxx
Document or consent to or accept any cancellation or
termination thereof, amend, modify or change in any manner any
term or condition of any such Related Document or F&X.xxx
Document or give any consent, waiver or approval thereunder,
waive any default under or any breach of any term or condition
of any such Related Document or F&X.xxx Document, agree in any
manner to any other amendment, modification or change of any
term or condition of any such Related Document or F&X.xxx
Document or take any other action in connection with any such
Related Document or F&X.xxx Document that could, in any such
case, reasonably be expected to have a Material Adverse Effect
or that would have a material adverse effect on the rights or
interests of the Administrative Agent or any Lender Party, or
permit any of its Subsidiaries to do any of the foregoing."
(p) Section 5.02(p) of the Credit Agreement is hereby amended
by deleting the table set forth in that section and substituting
therefor the following:
Period Amount
-------------------------------------------------------------
August 30, 2000 - January 31, $3,500,000
2001
Fiscal Year Ending in 2002 $17,500,000
Fiscal Year Ending in 2003 $20,000,000
plus Positive
EBITDA
Fiscal Year Ending in 2004 $20,000,000
plus Positive
EBITDA
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Fiscal Year Ending in 2005 $20,000,000
plus Positive
EBITDA
Fiscal Year Ending in 2006 $20,000,000
plus Positive
EBITDA
(q) Section 5.02 of the Credit Agreement is hereby amended by
adding new subsections (q), (r) and (s) at the end thereof as follows:
"(q) Open New Stores. Through the period commencing on the
Effective Date and ending on July 31, 2001, open, or permit
any of its Subsidiaries to open, any new stores, other than
the stores listed on Schedule B hereto, without the written
consent of the Administrative Agent.
(r) Open New Deposit Accounts. Open, or permit any of its
Subsidiaries to open, any new deposit accounts (other than
deposit accounts opened at a bank which has delivered a
consent, in the form attached hereto as Exhibit K) without the
written consent of the Administrative Agent.
(s) Equity and Management Fees. Make, or permit any of its
Subsidiaries to make, any cash payment of equity fees or
management fees (other than reasonable out of pocket expenses)
to the Equity Investors or other persons, other than equity
and management fees not to exceed in any one month $30,000
paid while ever there shall not exist a Default or an Event of
Default pursuant to Section 6.01(e) or resulting from the
failure of any Loan Party to perform or observe any term,
covenant or agreement contained in Section 5.01(n) or 5.04;";
(r) Section 5.03(b) of the Credit Agreement is amended by
inserting at the end thereof the following:
"together with (i) an operations report setting forth the
variance from plan for the Borrower and its Subsidiaries of
(A) revenues, (B) gross margin, (C) operating expenses, (D)
inventory levels, (E) the outstanding balance of the Revolving
Credit Facility, (F) accounts payable and (G) any other item
requested by the Administrative Agent, (ii) a report in form
satisfactory to the Administrative Agent setting forth the
aging of accounts payable, (iii) a certificate of said officer
stating that no Default or Event of Default has occurred and
is continuing and (iv) a schedule in form satisfactory to the
Administrative Agent of the computations used by the Borrower
in determining compliance with the covenants contained in
Sections 5.04(d) and (e), provided that in the event of any
change in GAAP used in the preparation of such financial
statements, the Borrower shall also provide, if necessary for
the determination of compliance with Section 5.04,
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a statement of reconciliation conforming such financial
statements to GAAP in effect as of the Effective Date."
(s) Section 5.03(c) and (d) of the Credit Agreement are
amended by deleting the reference "5.04(a) through (d)" immediately
before the proviso to each of those Sections and substituting therefor
the reference "5.04(a) through (f)".
(t) Section 5.03(p) of the Credit Agreement is hereby amended
in full to read as follows:
"(p) Borrowing Base Certificate. As soon as available and in
any event by 12:00 Noon (Boston, Massachusetts time) on the Thursday of
each alternate week, a Borrowing Base Certificate, as at the end of the
previous week, certified by the chief financial officer of the
Borrower, provided that the Borrower shall also deliver a Borrowing
Base Certificate by 12:00 Noon (Boston, Massachusetts time) on the 5th
Business Day following the last day of each month which shall include a
statement that the Borrower is in compliance with the covenant
contained in Section 5.04(e), or if a Default has occurred and is
continuing under Section 5.04(e), a statement to that effect, and a
schedule in form satisfactory to the Administrative Agent of the
computations used by the Borrower in determining compliance with the
covenant contained in Section 5.04(e)."
(u) Section 5.04 of the Credit Agreement is amended by
deleting the Section in its entirety and substituting therefor the
following:
"SECTION 5.04. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, Holding will:
(a) Fixed Charge Coverage Ratio. Maintain at the end of each
fiscal quarter of Holding a Fixed Charge Coverage Ratio for the most
recently completed four fiscal quarters of Holding and its Subsidiaries
of not less than the amount set forth below for such period.
Four Fiscal Quarters Ending Closest To Ratio
-----------------------------------------------------------------------
October 31, 2000 0.65
January 31, 2001 0.65
April 30, 2001 0.87
July 31, 2001 1.03
October 31, 2001 1.05
January 31, 2002 1.05
April 30, 2002 1.05
July 31, 2002 1.07
October 31, 2002 1.09
January 31, 2003 1.10
13
April 30, 2003 1.10
July 31, 2003 1.10
October 31, 2003 1.10
January 31, 2004 1.10
April 30, 2004 1.10
July 31, 2004 1.10
October 31, 2004 1.10
January 31, 2005 1.00
April 30, 2005 1.00
July 31, 2005 1.00
October 31, 2005 1.00
January 31, 2006 1.00
April 30, 2006 1.00
(b) Interest Coverage Ratio. Maintain at the end of each
fiscal quarter of Holding a ratio of Consolidated EBITDA for the most
recently completed four fiscal quarters of Holding and its Subsidiaries
to cash interest payable on all Debt of the Borrower and its
Subsidiaries during such four fiscal quarter period of not less than
the ratio set forth below for such fiscal quarter:
Four Fiscal Quarters Ending Closest To Ratio
------------------------------------------------------------------------------
October 31, 2000 1.85
January 31, 2001 1.85
April 30, 2001 1.85
July 31, 2001 1.85
October 31, 2001 1.95
January 31, 2002 2.05
April 30, 2002 2.10
July 31, 2002 2.15
October 31, 2002 2.15
January 31, 2003 2.20
April 30, 2003 2.25
July 31, 2003 2.30
October 31, 2003 2.35
January 31, 2004 2.40
April 30, 2004 2.45
July 31, 2004 2.50
October 31, 2004 2.55
January 31, 2005 2.60
April 30, 2005 2.65
July 31, 2005 2.70
October 31, 2005 2.75
January 31, 2006 2.80
14
April 30, 2006 2.85
(c) Debt to EBITDA Ratio. Maintain at the end of each fiscal
quarter of Holding a Debt to EBITDA Ratio of Holding and its
Subsidiaries of not more than the ratio set forth below for each period
set forth below.
Four Fiscal Quarters Ending Closest To Ratio
------------------------------------------------------------------------
October 31, 2000 5.25
January 31, 2001 5.25
April 30, 2001 5.15
July 31, 2001 5.00
October 31, 2001 4.60
January 31, 2002 4.20
April 30, 2002 4.20
July 31, 2002 4.10
October 31, 2002 4.00
January 31, 2003 3.90
April 30, 2003 3.90
July 31, 2003 3.85
October 31, 2003 3.70
January 31, 2004 3.55
April 30, 2004 3.50
July 31, 2004 3.45
October 31, 2004 3.40
January 31, 2005 3.20
April 30, 2005 3.00
July 31, 2005 3.00
October 31, 2005 3.00
January 31, 2006 3.00
April 30, 2006 3.00
(d) Revolver Paydown. Maintain outstanding, for any period of
30 consecutive calendar days (or, for the entire period or date set
forth below if that period is less than 60 days), Revolving Credit
Advances of not more than the amount set forth below for each
corresponding period or date set forth below:
Period Amount
-----------------------------------------------------------------
September 22, 2000 - October 31, 2000 $147,150,000
November 1, 2000 - December 3, 2000 $143,000,000
December 4, 2000 - January 1, 2001 $126,000,000
January 2, 2001 - January 30, 2001 $96,000,000
January 31, 2001 $93,500,000
June 15, 2001 - August 15, 2001 $115,000,000
15
December 15, 2001 - February 15, 2002 $95,000,000
June 15, 2002 - August 15, 2002 $105,000,000
December 15, 2002 - February 15, 2003 $85,000,000
June 15, 2003 - August 15, 2003 $100,000,000
December 15, 2003 - February 15, 2004 $80,000,000
June 15, 2004 - August 15, 2004 $100,000,000
(e) Senior Debt to Inventory Ratio. Maintain on the dates set
forth below, a Senior Debt to Inventory Ratio of Holding and its
Subsidiaries of not more than the ratio set forth below for each such
date set forth below, provided that, for the dates from February 28,
2001 until December 31, 2001, Holding will not be in breach of this
covenant unless it fails to maintain the necessary Senior Debt to
Inventory Ratio for two consecutive dates set forth below.
Date Ratio
------------------------------------------------
January 31, 2001 0.87
February 28, 2001 0.90
March 31, 2001 0.87
April 30, 2001 0.86
May 31, 2001 0.85
June 30, 2001 0.83
July 31, 2001 0.82
August 31, 2001 0.84
September 30, 2001 0.82
October 31, 2001 0.82
November 30, 2001 0.82
December 31, 2001 0.80
January 31, 2002 0.82
April 30, 2002 0.79
July 31, 2002 0.75
October 31, 2002 0.74
January 31, 2003 and thereafter 0.70
(f) Minimum EBITDA. Maintain at all times EBITDA of Holding
and its Subsidiaries not less than the amount set forth below for each
period set forth below:
Period Amount
--------------------------------------------------------
Fiscal Year Ending 2001 $83,000,000
Fiscal Year Ending 2002 $97,000,000
Fiscal Year Ending 2003 $100,000,000
Fiscal Year Ending 2004 $104,000,000
Fiscal Year Ending 2005 $109,000,000
Fiscal Year Ending 2006 $115,000,000"
16
(v) Section 6.01 is amended by adding immediately before the
paragraph commencing "then" the following subsection:
"(p) any Loan Party shall be in default under any contract,
lease or other instrument, binding on or affecting any Loan Party, any
of its Subsidiaries or any of their properties other than contracts,
leases or other instruments evidencing Debt, and the consequence of
such default is to confer rights upon any person against the Borrower
or any of its Subsidiaries which, if exercised, can be reasonably
expected to have a Material Adverse Effect;";
(w) A new Section 7.07 is inserted as follows:
"SECTION 7.07. Inspection and Verification. Once per
year at the Borrower's own cost and expense not to exceed $25,000, and,
once per quarter at the Administrative Agent's cost and expense if the
Administrative Agent, in the exercise of its reasonable judgment,
considers such inspection necessary, the Administrative Agent and such
persons as the Administrative Agent may reasonably designate shall have
the right, to inspect the Collateral, all records related thereto (and
to make extracts and copies of such records) and the premises upon
which any of the Collateral is located, to discuss the Borrower's
affairs with the officers of the Borrower and their independent
accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other
matter relating to, the Collateral. The Administrative Agent shall have
the absolute right to share any information it gains from such
inspection or verification with any Secured Party."
(x) Schedule I to the Credit Agreement is amended by deleting
the figure "$100,000,000" under the heading "Letter of Credit
Commitment" and replacing it with the figure "$20,000,000".
(y) A new Exhibit K is added to the Credit Agreement as set
forth on Exhibit K hereto.
SECTION 2. Acknowledgement of Lenders. Subject to the occurrence of the
Effective Date, the Lenders hereby agree and acknowledge that the provisions of
Section 5.01(j) of the Credit Agreement ("Transactions with Affiliates") will
not be violated by the F&X.xxx Transaction.
SECTION 3. Waiver. Subject to the occurrence of the Effective Date each
Lender hereby agrees to waive (i) the requirements of Section 5.04(a), (b) and
(c) for the period of four fiscal quarters ending closest to July 31, 2000 and
(ii) the Event of Default that has occurred and is in existence under Section
5.04(d) of the Credit for the period ending August 15, 2000.
SECTION 4. Conditions of Effectiveness of this Amendment and Waiver.
This Amendment and Waiver shall become effective as of the date first above
written on the Business Day when, and only when, the following conditions shall
have been satisfied (such date being, for purposes hereof, the "Effective
Date"), provided, however, that if all of the following
17
conditions are not satisfied by 5:00 P.M. on September 22, 2000 this Amendment
and Waiver will become null and void and have no effect unless the
Administrative Agent consents otherwise:
(a) The Administrative Agent shall have received counterparts
of (i) this Amendment and Waiver executed by the Borrower, Holding and
the Required Lenders or, as to any of the Lender Parties, advice
satisfactory to the Administrative Agent that such Lender Party has
executed this Amendment and Waiver (ii) the Consent dated as of the
date hereof (a copy of which is attached hereto), executed by each of
the Loan Parties and (iii) the Consent dated as of the date hereof (a
copy of which is attached hereto), executed by X.X. Childs Associates,
L.P. and Fenway Partners, Inc..
(b) The Administrative Agent shall have received:
(i) counterparts duly executed by QSS, in form and
substance satisfactory to the Administrative Agent, of a
Supplement to the Subsidiary Guaranty, and a Supplement to the
Security Agreement (the "QSS Supplements") pledging the
capital stock of QSI Newco to the Administrative Agent under
the Security Agreement , together with certificates
representing the shares of capital stock of QSI Newco referred
to in the Supplement accompanied by undated stock powers
executed in blank;
(ii) counterparts of a Supplement to the Security
Agreement in form and substance satisfactory to the
Administrative Agent (the "F&C Supplement" and together with
this Amendment and Waiver, the Consents and the QSS
Supplements, collectively, the "Amendment Documents"), duly
executed by the Borrower and the Subsidiary Guarantors
pledging the F&X.xxx Documents to the Administrative Agent
under the Security Agreement
(iii) an updated list of locations at which each
Grantor keeps Equipment and Inventory identifying those
locations at which a Grantor has commenced to keep Equipment
and Inventory since the date of execution of Amendment No. 1;
(iv) signed originals of proper financing statements,
to be filed on or before the Effective Date under the Uniform
Commercial Code of all jurisdictions that the Administrative
Agent may deem necessary or desirable in order to perfect and
protect the first priority liens and security interests
created under the Security Agreement, covering the Collateral
described in the Security Agreement, as supplemented by the
QSS Supplements and the F&C Supplement; and
(v) evidence that all other action that the
Administrative Agent may deem necessary or desirable in order
to perfect and protect the first priority liens and security
interests created under the Security Agreement, as
supplemented by the Supplement has been taken, including any
filings with the U.S. Patent and Trademark Office or the
United States Copyright Office.
18
(c) The Administrative Agent shall have received a favorable
opinion of Xxxxxxxx & Worcester, counsel for the Borrower and Holding,
in form and substance satisfactory to the Administrative Agent.
(d) The Administrative Agent shall have received written
evidence that some or all of the Equity Investors along with other
persons, have invested in Holding not less than $15,000,000 through the
purchase for cash of common stock of Holding to be used for the
operation of the business of the Loan Parties.
(e) The Administrative Agent shall have received certified
copies of each of the F&X.xxx Documents in existence on such date, duly
executed by the parties thereto and in form and substance satisfactory
to the Lender Parties, in each case certified by a Responsible Officer.
(f) On the Effective Date, and after giving effect to the
effectiveness of this Amendment and Waiver and the consummation of the
F&X.xxx Transaction, (i) the representations and warranties contained
in each of the Loan Documents (including, without limitation, in
Section 6 of this Amendment and Waiver) shall be correct in all
material respects as though made on and as of the Effective Date (other
than any such representations or warranties that, by their terms, refer
to a specific date other than the Effective Date, in which case as of
such specific date) and (ii) no event shall have occurred and be
continuing that would constitute a Default.
(g) The Administrative Agent shall have received a certificate
of the Chief Financial Officer of the Borrower confirming satisfaction
of the conditions specified in paragraph (f) above.
(h) The Administrative Agent shall have received from the
Borrower, on or before the Effective Date, an amendment fee equal to
0.15% of the Commitments of the Lenders who have signed this Amendment
and Waiver by the later of (i) 12:00 Noon on September 22, 2000 and
(ii) the date on which the Required Lenders have signed this Amendment
and Waiver, payable to those Lenders who sign this Amendment and Waiver
according to the pro rata share of the Commitments of each such Lender.
(i) All of the reasonable accrued and unpaid fees and expenses
of counsel and accountants for the Administrative Agent shall have been
paid in full, including, without limitation, the fees and expenses of
FTI/Xxxxxxxx & Xxxxx, L.L.C. and Shearman & Sterling.
The effectiveness of this Amendment and Waiver is further conditioned
upon the accuracy of all of the factual matters described herein. This Amendment
and Waiver is further subject to the provisions of Section 9.01 of the Credit
Agreement.
SECTION 5. Condition Subsequent. On or prior to October 31, 2000 the
Borrower shall have delivered to the Administrative Agent an Intellectual
Property Security Agreement, duly executed by the Borrower and the Subsidiary
Guarantors, in form and substance satisfactory to the Administrative Agent.
19
SECTION 6. Representations and Warranties. Each of Holding and the
Borrower hereby represents and warrants as follows:
(a) The execution, delivery and performance by each Loan Party
of any of the Amendment Documents to which it is or is to be a party,
and the consummation of the transactions contemplated hereby and
thereby, are within such Loan Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene
such Loan Party's charter or bylaws, (ii) violate any law (including,
without limitation, the Securities Exchange Act of 1934), rule,
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award applicable to such Loan
Party, (iii) conflict with or result in the breach of, or constitute a
default under, any contract, loan agreement, indenture (including
without limitation the Indenture), mortgage, deed of trust, lease or
other instrument binding on or affecting any Loan Party, any of its
Subsidiaries or any of their properties other than as specified in the
Credit Agreement, or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of
any Loan Party or any of its Subsidiaries. No Loan Party or any of its
Subsidiaries is in violation of any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which is
reasonably expected to have a Material Adverse Effect.
(b) Other than those that would not reasonably be expected to
have a Material Adverse Effect, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority
or regulatory body or any other third party is required to be obtained
by the Loan Parties in connection with the execution and delivery, or
performance by any Loan Party of any of its obligations under, any
Amendment Document to which it is a party.
(c) Each Amendment Document has been duly executed and
delivered by each Loan Party party thereto, and is the legal, valid and
binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its terms except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or limiting creditors' rights or by equitable principles
generally.
(d) No Loan Party has an existing claim against any Lender
Party arising out of, relating to or in connection with the Loan
Documents.
(e) No Loan Party is in breach of, or in default under, the
10-5/8% Senior Notes due 2007 issued by the Borrower, any contract,
loan agreement, indenture, mortgage, deed of trust, lease or other
instrument, binding on or affecting any Loan Party, any of its
Subsidiaries or any of their properties, where the consequence of such
default is to confer rights upon any person against the Borrower or any
of its Subsidiaries which, if exercised, can be reasonably expected to
have a Material Adverse Effect.
20
(f) Set forth on Schedule C hereto is a complete and accurate
list of all real property owned by any Loan Party or any of its
Subsidiaries, showing as of the date hereof the street address, county
or other relevant jurisdiction, state, record owner and book and
estimated fair value thereof. Each Loan Party or such Subsidiary has
good, marketable and insurable fee simple title to such real property,
free and clear of all Liens, other than Liens created or permitted by
the Loan Documents.
(g) Set forth on Schedule D hereto is a complete and accurate
list of all leases of real property under which any Loan Party or any
of its Subsidiaries is the lessee, showing as of the date hereof the
street address, county or other relevant jurisdiction, state, lessor,
lessee, expiration date and annual rental cost thereof. To the best of
the knowledge of the Loan Party or Subsidiary which leases the
property, each such lease is the legal, valid and binding obligation of
the lessor thereof, enforceable in accordance with its terms.
SECTION 7. Waiver and Release. The Borrower and Holding hereby waive
and agree not to assert any claims or causes of action against the
Administrative Agent, the Syndication Agent, the Documentation Agent, any Lender
Party or any of their Affiliates, or any of their respective officers,
directors, employees, attorneys and agents, on any theory of liability, whether
known or unknown, matured or contingent, including, without limitation, for
special, indirect, consequential or punitive damages, arising out of or
otherwise relating to, or in connection with, this Amendment and Waiver, the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions entered into in
connection therewith.
SECTION 8. Reference to and Effect on the Loan Documents.
(a) On and after the Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof" or words of
like import referring to the Credit Agreement, and each reference in
the Notes and the other Loan Documents to "the Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement, as
amended and otherwise modified hereby.
(b) The Credit Agreement, the Notes and each of the other Loan
Documents, except to the extent of the amendments and other
modifications specifically provided above, are and shall continue to be
in full force and effect and are hereby in all respects ratified and
confirmed. Without limiting the generality of the foregoing, the
Collateral Documents and all of the Collateral described therein do and
shall continue to secure the payment of all Obligations of the Loan
Parties under and in respect of the Loan Documents, as amended and
otherwise modified by this Amendment and Waiver.
(c) The execution, delivery and effectiveness of this
Amendment and Waiver shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lender Party
or any Agent under any of the Loan Documents, nor constitute a waiver
of any provision of any of the Loan Documents.
21
SECTION 9. Costs and Expenses. The Borrower hereby agrees to pay, upon
demand, all costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and expenses of counsel and financial advisors
for the Administrative Agent) in connection with the preparation, execution,
delivery, administration, syndication, modification and amendment of this
Amendment and Waiver and the other documents, instruments and agreements to be
delivered hereunder, all in accordance with the terms of Section 9.04 of the
Credit Agreement.
SECTION 10. Execution in Counterparts. This Amendment and Waiver may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment and Waiver by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment and Waiver.
SECTION 11. Governing Law. This Amendment and Waiver shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 12. Waiver of Jury Trial. Each of the Borrower, the Subsidiary
Guarantors, the Administrative Agent and the Lender Parties irrevocably waives
all right to trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating to this
Amendment and Waiver or the actions of the Administrative Agent or any Lender
Party in the negotiation, administration, performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be executed by their respective officers thereunto duly authorized, as
of the date first above written.
QUALITY STORES, INC. (FORMERLY KNOWN
AS CENTRAL TRACTOR FARM & COUNTRY,
INC.)
By: /s/ Xxxxx X. Xxxxx
Title: CFO
QSI HOLDINGS, INC. (FORMERLY KNOWN AS
CT HOLDING, INC.)
By: /s/ Xxxxx X. Xxxxx
Title: CFO
FLEET NATIONAL BANK, as Administrative Agent
and as Lender)
By: /s/
Title: Vice President
LENDERS
BANK OF AMERICAN. N.A.
By: /s/
Title: Principal
XXXXX XXX & XXXXXXX CLO I LTD.
By: Xxxxx Xxx & Farnham Incorporated
as Portfolio Manager
By: /s/ Xxxxx X. Xxxxxxx
Title: Sr. Vice President and Portfolio Manager
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxxxx
Title: Senior Vice President/Director
U.S. BANK NATIONAL ASSOCIATION
By: /s/
Title: Senior Vice President
THE HUNTINGTON NATIONAL BANK
By: /s/ X. X. XxXxxx
Title: Vice President
XXXXXX FINANCIAL, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
Title: Vice President
COMERICA BANK
By: /s/
Title: Vice President
KEY CORPORATE CAPITAL
By: /s/ Xxxx Xxxxxxxxxx
Title: Vice President
BHF (USA) CAPITAL CORPORATION
By: /s/ Xxxx Xxxx
Title: Associate
By: /s/ Xxxxxxxxxxx X. Xxxxx
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ J. Xxxxxxx Xxxxxx
Title: Vice President
FIRSTAR BANK, NATIONAL ASSOCATION
By: /s/ Xxxxx X. Xxxxxxxxx
Title: Vice President
NATIONAL CITY BANK
By: /s/ Xxxxxx X. Xxxxxx
Title: Assistant Vice President
SEQUILS PILGRIM I LTD.
By: Pilgrim Investments, Inc. as its Investment Manager
By: /s/ Xxxxxxx X. XxXxxxx
Title: Vice President
SAAR HOLDINGS CDO LIMITED
By: Massachusetts Mutual Life Insurance Company
as its Collateral Manager
By: /s/ Xxxxxx X. Xxxx
Title: Second Vice President and
Associate General Counsel
PERSEUS CDO I, LIMITED
By: Massachusetts Mutual Life Insurance Company
as its Collateral Manager
By: /s/ Xxxxxx X. Xxxx
Title: Second Vice President and
Associate General Counsel
XXXXX XXX FLOATING RATE LIMITED
LIABILITY COMPANY
By: /s/ Xxxxx X. Xxxxxxx
Title: Senior Vice President
KZH CYPRESSTREE - 1 LLC
By: /s/ Xxxxxxxx Xxxx
Title: Authorized Agent
ML CBO IV (CAYMAN) LTD.
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxxx Xxxxxxx
Title: President
BALANCED HIGH YIELD FUND II, LTD
By: BHF (USA) Capital Corporation, as its
attorney-in-fact
By: /s/ Xxxx Xxxx
Title: Associate
By: /s/ Xxxxxxxxxxx X. Xxxxx
Title: Vice President
CYPRESSTREE INSTITUTIONAL FUND, LLC
By: CypressTree Investment Management Company,
as Portfolio Manager
By: /s/ Xxxxxx X. Xxxxxxx
Title: Principal
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company,
as Portfolio Manager
By: /s/ Xxxxxx X. Xxxxxxx
Title: Principal
Sankaty Advisors, Inc. as Collateral Manager for
XXXXX POINT CBO 1999-1, LTD., as Term Lender
By: /s/
Title: E.V.P.
Sankaty Advisors, Inc. as Collateral Manager for
GREAT POINT CLO 1999-1, LTD., as Term Lender
By: /s/
Title: E.V.P.
MONUMENT CAPITAL LTD., as Assignee
By: Allliance Capital Management L.P., as
Investment Manager
By: Alliance Capital Management Corporation, as
General Partner
By: /s/ Svarker M.M. Johansson
Title: Vice President
KZH WATERSIDE LLC
By: /s/ Xxxxxxxx Xxxx
Title: Authorized Agent
ELC CAYMAN LTD. 1999-II
By: /s/
Title: S. V. P.
PILGRIM CLO 1999-1 LTD.
By: Pilgrim Investments, Inc. as its Investment
Manager
By: /s/ Xxxxxxx X. XxXxxxx
Title: Vice President
GLEANEAGLES TRADING LLC.
By: /s/ Xxx X. Xxxxxx
Title: Asst. Vice President
BANKERS TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
Title: Vice President
FIFTH THIRD BANK
By: /s/
Title:
XXXXXX TRUST AND SAVINGS BANK
By: /s/ Xxxxxx X. Walsken
Title: Vice President
CONSENT
Reference is made to (a) Amendment No. 2 and Waiver to the Second
Amended and Restated Credit Agreement dated as of May 7, 1999 (the "Credit
Agreement") among Quality Stores, Inc., a Delaware corporation (formerly known
as "Central Tractor Farm & Country, Inc.") (the "Borrower"), QSI Holdings, Inc.,
a Delaware corporation (formerly known as "CT Holding, Inc.") ("Holding"), the
banks, financial institutions and other institutional lenders listed on the
signature pages thereof, and Fleet National Bank ("Fleet"), as administrative
agent (the "Administrative Agent") for the Lender Parties (as defined in the
Credit Agreement) and (b) the other Loan Documents referred to therein.
Capitalized terms defined in the Credit Agreement and not otherwise defined in
this Consent are used herein as therein defined.
Each of the undersigned, in its capacity as (a) a Grantor under the
Security Agreement, (b) a Pledgor under the Pledge Agreement, and/or (c) a
Subsidiary Guarantor under the Subsidiary Guaranty, as the case may be, hereby
consents to the execution and delivery of the Amendment and Waiver and the
performance of the Amendment and Waiver and agrees that:
(A) each of the Security Agreement, the Pledge Agreement and
the Subsidiary Guaranty to which it is a party is, and shall continue
to be, in full force and effect and is hereby in all respects ratified
and confirmed on the Effective Date, except that, on and after the
Effective Date, each reference to "the Credit Agreement", "thereunder",
"thereof", "therein" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement, as
amended and otherwise modified by the Amendment and Waiver; and
(B) as of the Effective Date, the Security Agreement and the
Pledge Agreement to which it is a party and all of the Collateral of
such Person described therein, and the Subsidiary Guaranty and the
guaranty provided thereunder, do, and shall continue to, secure the
payment of all of the Secured Obligations.
This Consent shall be governed by, and construed in accordance with,
the laws of the State of New York.
Delivery of an executed counterpart of a signature page of this Consent
by telecopier shall be effective as the delivery of a manually executed
counterpart of this Consent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
QUALITY STORES, INC. (FORMERLY KNOWN
AS CENTRAL TRACTOR FARM & COUNTRY,
INC.)
By: /s/ Xxxxx X. Xxxxx
Title: CFO
QSI HOLDINGS, INC. (FORMERLY KNOWN AS
CT HOLDING, INC.)
By: /s/ Xxxxx X. Xxxxx
Title: CFO
COUNTRY GENERAL, INC.
By: /s/ Xxxxx X. Xxxxx
Title: CFO
QUALITY FARM & FLEET, INC.
By: /s/ Xxxxx X. Xxxxx
Title: CFO
QUALITY INVESTMENTS, INC.
By: /s/ Xxxxx X. Xxxxx
Title: CFO
QSI TRANSPORTATION, INC.
By: /s/ Xxxxx X. Xxxxx
Title: CFO
VISION TRANSPORTATION, INC.
By: /s/ Xxxxx X. Xxxxx
Title: CFO
Amendment No. 2 and Waiver
CONSENT OF EQUITY INVESTORS
Reference is made to (a) Amendment No. 2 and Waiver to the Second
Amended and Restated Credit Agreement dated as of May 7, 1999 (the "Credit
Agreement") among Quality Stores, Inc., a Delaware corporation (formerly known
as "Central Tractor Farm & Country, Inc.") (the "Borrower"), QSI Holdings, Inc.,
a Delaware corporation (formerly known as "CT Holding, Inc.") ("Holding"), the
banks, financial institutions and other institutional lenders listed on the
signature pages thereof, and Fleet National Bank ("Fleet"), as administrative
agent (the "Administrative Agent") for the Lender Parties (as defined in the
Credit Agreement) and (b) the other Loan Documents referred to therein.
Capitalized terms defined in the Credit Agreement and not otherwise defined in
this Consent are used herein as therein defined.
Each of the undersigned, in its capacity as (a) an Equity Investor
and/or (b) a provider of management and consultancy services to Holding, the
Borrower and its Subsidiaries hereby consents to the limitations placed on the
payment of equity fees and management fees to the Equity Investors by Holding
and the Borrower pursuant to Section 1(q) of the Amendment and Waiver and agrees
that:
(A) Each of Holding and the Borrower may not make, or permit
any of its Subsidiaries to make, any cash payment of equity fees or
management fees (other than reasonable out of pocket expenses) to the
Equity Investors or other persons ,other than equity and management
fees not to exceed in any one month $30,000 paid while ever there shall
not exist a Default or an Event of Default pursuant to Section 6.01(e)
or resulting from the failure of any Loan Party to perform or observe
any term, covenant or agreement contained in Section 5.01(n) or 5.04.
This Consent shall be governed by, and construed in accordance with,
the laws of the State of New York.
Delivery of an executed counterpart of a signature page of this Consent
by telecopier shall be effective as the delivery of a manually executed
counterpart of this Consent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
X.X. CHILDS ASSOCIATES, L.P.
By: /s/ Xxxx Xxxxxx
Title: Managing Director
FENWAY PARTNERS, INC.
By: /s/
Title:
Schedule A
Stores to be Closed by January 31, 2001
[To be provided by Borrower]
Schedule B
Stores to be Opened by July 31, 2001
[To be provided by Borrower]
Schedule C
Owned Real Property
[To be provided by Borrower]
Schedule D
Leased Real Property
[To be provided by Borrower]
EXHIBIT K
FORM OF LOCAL BANK LETTER
September __, 2000
[Name and Address of
Bank at which the Borrower
maintains account]
Attention: _______________
Quality Stores, Inc.
Gentlemen/Women:
Reference is made to the deposit accounts listed on Schedule I hereto
(collectively, the "Deposit Accounts") maintained with you by Quality Stores,
Inc. (the "Company"). Pursuant to Section 5.01(m) of the Second Amended and
Restated Credit Agreement dated as of as of May 7, 1999 (the "Credit Agreement";
the terms defined therein being used herein as therein defined) among Central
Tractor Farm & Country (now known as "Quality Stores, Inc."), CT Holding, Inc.
(now known as "QSI Holdings, Inc.")("Holding"), and Fleet National Bank
("Fleet"), as administrative agent, the Company and Holding have agreed to
instruct each bank at which a deposit account is maintained to transfer to a
main cash concentration account at the end of each Business Day, in same day
funds, an amount equal to the credit balance of such deposit account.
It is a condition to the continued maintenance of the Deposit Accounts with you
that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of, and
consent to the terms and provisions of Section 5.01(m) of the Credit Agreement
and confirm to the Administrative Agent that the description of the Deposit
Accounts set forth on Schedule I hereto is correct and that you have received no
notice of any pledge or assignment of the Deposit Accounts. Further, you hereby
agree with the Administrative Agent that:
(a) Until you receive a written notice from the Company and signed by
Fleet with contrary instructions, you will transfer, in same day funds,
on each of your business days, an amount equal to the credit balance of
the Deposit Accounts on such day to the following account (the "Cash
Concentration Account"):
Quality Stores, Inc.
Account No. _______
Comerica Bank,
000 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxx
Each such transfer of funds shall neither comprise only part of a
remittance nor reflect the rounding off of any funds so transferred.
(b) All transfers referred to in paragraph (a) above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and
the undersigned will not seek to recover from the Administrative Agent
for any reason any such payment once made.
(c) All service charges and fees with respect to the Deposit Accounts
shall be payable by the Company, and deposited checks returned for any
reason shall not be charged to the Deposit Accounts.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Administrative Agent, the Lenders
and their successors, transferees and assigns. You may terminate this letter
agreement only upon thirty days' prior written notice to the Company and the
Administrative Agent. Upon such termination you shall close the Deposit Accounts
and transfer all funds in the Deposit Accounts to the Cash Concentration
Account. After any such termination, you shall nonetheless remain obligated
promptly to transfer to the Cash Concentration Account all funds and other
property received in respect of the Deposit Accounts.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Very truly yours,
QUALITY STORES, INC.
By:
Title:
FLEET NATIONAL BANK, as Administrative Agent
By:
Title:
Acknowledged and agreed to as of
the date first above written:
[NAME OF BANK]
By:
Title:
Schedule I
[Name of Bank]
Account: [ ]
