Execution Copy
AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment No. 3 (this "Amendment") to the "Credit Agreement"
(defined below) is entered into as of July 30, 1999 by and among XXXXXXXXX
XXXXX CORPORATION, an Illinois corporation (the "Borrower"), the financial
institutions party to the Credit Agreement (collectively, the "Lenders") and
THE FIRST NATIONAL BANK OF CHICAGO, as one of the Lenders and in its capacity
as contractual representative (the "Agent") on behalf of itself and the other
Lenders.
RECITALS:
WHEREAS, the Borrower, the Lenders and the Agent have entered into that
certain Amended and Restated Credit Agreement dated as of July 2, 1997, as
amended (the "Credit Agreement");
WHEREAS, the Borrower has notified the Lenders and the Agent that the
Borrower wishes to amend the Credit Agreement in certain respects, including,
without limitation, increasing each Lender's "Revolving Loan Commitment"
thereunder; and
WHEREAS, the Lenders and the Agent are willing to amend the Credit
Agreement on the terms and conditions herein set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to such terms in the Credit
Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. Upon the effectiveness of this
Amendment in accordance with the provisions of SECTION 3 below, the Credit
Agreement is hereby amended as follows:
(a) SECTION 1.1 of the Credit Agreement is hereby amended as
follows:
(i) The following new defined terms are hereby added
alphabetically therein:
'AMENDMENT NO. 3' means Amendment No. 3 to this
Agreement, dated as of July 30, 1999, among the Borrower,
the Lenders and the Agent.
'AMENDMENT NO. 3 EFFECTIVE DATE' means the "Effective
Date" as defined in Amendment No. 3.
'CANADIAN ACCOUNT DEBTOR' means and includes the
account debtor or obligor with respect to any of the
Canadian Receivables and/or the prospective purchaser with
respect to any contract right, and/or any party who enters
into or proposes to enter into any contract or other
arrangement with the Canadian Subsidiary.
'CANADIAN CREDIT AGREEMENT' means the Credit
Agreement, dated as of July 30, 1999, by and between the
Canadian Subsidiary and FNBC Canada, as amended, restated,
supplemented or otherwise modified from time to time.
'CANADIAN DOLLAR' means the lawful currency of Canada.
'CANADIAN ELIGIBLE INVENTORY' means the Canadian
Inventory of the Canadian Subsidiary which is held for sale
or lease or furnished under any contract of service by the
Canadian Subsidiary, other than the Canadian Inventory
described in the next sentence. The following Canadian
Inventory is not Canadian Eligible Inventory:
(i) Canadian Inventory which is obsolete, not in good
condition, not either currently usable or currently saleable
in the ordinary course of the Canadian Subsidiary's business
or does not meet all material standards imposed by any
Governmental Authority having regulatory authority over such
item of Canadian Inventory, its use or its sale;
(ii) Canadian Inventory consisting of packaging
material (other than packaging material constituting a part
of finished goods), supplies, freezers, trade name
superstructures and work-in-process;
(iii) Canadian Inventory which (a) is consigned to a
third party for sale unless each of the Agent and FNBC
Canada shall have received from such consignee a lien waiver
agreement, or such other documentation (including UCC-1
financing statements and/or the equivalent thereof under the
laws of Canada or any province thereof naming such consignee
as consignee and the Canadian Subsidiary as consignor)
reasonably deemed necessary by each of the Agent and FNBC
Canada, so that each of the Agent and FNBC Canada has a
valid and perfected Lien, pursuant to the terms of the
Agreement and the Canadian Credit Agreement, respectively,
in such consigned Canadian Inventory, or (b) is on
consignment from a third party to the Canadian Subsidiary
for sale;
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(iv) Canadian Inventory which consists of goods in
transit (other than Canadian Inventory in transit on trucks
of the Canadian Subsidiary or the Borrower);
(v) Canadian Inventory which is subject to a Lien in
favor of any Person other than the Agent or FNBC Canada,
other than a Customary Permitted Lien or unperfected Liens
created pursuant to agreements existing on the effective
date of the Canadian Credit Agreement;
(vi) Canadian Inventory (a) with respect to which
each of the Agent and FNBC Canada does not have a valid and
perfected security interest subject only to non-consensual
landlord's and warehousemen's Liens arising by operation of
law and Liens permitted pursuant to SECTION 6.3(C)(III) and
(b) which is not subject to rights of revindication of third
parties;
(vii) Canadian Inventory which is not located either
(a) on the Canadian Subsidiary's owned premises or at its
leased retail stores in Canada located in the jurisdictions
referenced in the Canadian Subsidiary Security Agreement or
the Canadian Credit Agreement, on the Canadian Subsidiary's
or the Borrower's trucks in transit, or on the premises of
consignees of the Canadian Subsidiary and such Canadian
Inventory is not ineligible under CLAUSE (III) above or (b)
in other owned or leased premises, warehouses or with
bailees in Canada permitted to be established under the
Canadian Subsidiary Security Agreement and the Canadian
Credit Agreement, in each case in connection with which each
of the Agent and FNBC Canada shall have received landlord,
mortgagee, bailee and/or warehousemen's access and lien
waiver agreements, as applicable, in each case in form and
substance acceptable to each of the Agent and FNBC Canada,
unless the Agent and FNBC Canada shall have established
reserves for such locations in accordance with the
definition of Borrowing Base, in which case such Canadian
Inventory shall remain Canadian Eligible Inventory;
(viii) Canadian Inventory which is evidenced by a
Canadian Receivable;
(ix) Canadian Inventory held for sale or lease by, or
furnished under any contract of service to, the Hallmark
Joint Venture; PROVIDED, HOWEVER, that such Canadian
Inventory, so long as the Hallmark Joint Venture is in
existence, shall be considered Canadian Eligible Inventory
upon delivery of satisfactory evidence to each of the Agent
and FNBC Canada that each of them holds a perfected Lien
against such Canadian Inventory; and
(x) Canadian Inventory which is not in conformity
with the representations and warranties made by the Canadian
Subsidiary to each of the Agent and FNBC Canada with respect
thereto whether contained in this Agreement,
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the Canadian Credit Agreement or the Canadian Subsidiary
Security Agreement.
'CANADIAN ELIGIBLE RECEIVABLES' means Canadian
Receivables created by the Canadian Subsidiary in the
ordinary course of its business arising out of the sale of
goods or rendition of services by the Canadian Subsidiary,
other than the Canadian Receivables described in the next
sentence. The following Canadian Receivables are not
Canadian Eligible Receivables:
(i) Canadian Receivables which remain unpaid ninety
(90) days after the date of the original applicable invoice;
(ii) all Canadian Receivables owing by a single
Canadian Account Debtor (including a Canadian Receivable
which remains unpaid fewer than ninety (90) days after the
date of the original applicable invoice) if ten percent
(10%) of the balance owing by such Canadian Account Debtor,
calculated without taking into account any credit balances
of such Canadian Account Debtor, remains unpaid ninety (90)
days after the date of the original applicable invoice or
has otherwise become, or has been determined by each of the
Agent and FNBC Canada to be, ineligible;
(iii) Canadian Receivables from any single Canadian
Account Debtor and its Affiliates which otherwise constitute
Canadian Eligible Receivables comprising more than
twenty-five percent (25%) of all Canadian Eligible
Receivables;
(iv) Canadian Receivables with respect to which the
Canadian Account Debtor is a director, officer, employee,
Subsidiary or Affiliate of the Canadian Subsidiary or the
Borrower;
(v) Canadian Receivables with respect to which the
Canadian Account Debtor is any Governmental Authority, or,
in each case, any department, agency or instrumentality
thereof, unless with respect to the accounts of any such
Canadian Account Debtor, the Canadian Subsidiary has
complied to each of the Agent's and FNBC Canada's
satisfaction with the provisions of the Financial
Administration Act (Canada) or other applicable statutes,
including, without limitation, executing and delivering to
Agent and/or FNBC Canada, as applicable, all statements of
assignment and/or notification which are in form and
substance acceptable to Agent and/or FNBC Canada, as
applicable, and which are deemed necessary by Agent and/or
FNBC Canada, as applicable, to effectuate the assignment to
the Agent on behalf of the Lenders or to FNBC Canada, as
applicable, of such accounts;
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(vi) Canadian Receivables not denominated in Canadian
Dollars or with respect to which the Canadian Account Debtor
is not a resident of Canada unless the Canadian Account
Debtor has supplied the Canadian Subsidiary with an
irrevocable letter of credit, issued by a financial
institution, the deposits of which are (or the senior debt
securities of the holding company of such financial
institution are) rated A or better by Standard & Poor's
Ratings Services, a division of The XxXxxx-Xxxx Companies,
Inc. or A1 or better by Xxxxx'x Investors Service, Inc., in
an amount sufficient to cover such Canadian Receivable, in
form and substance reasonably satisfactory to each of the
Agent and FNBC Canada;
(vii) Canadian Receivables with respect to which the
Canadian Account Debtor has (a) asserted a counterclaim, (b)
a right of setoff or (c) a receivable owing from the
Canadian Subsidiary but only to the extent of such
counterclaim, setoff or receivable;
(viii) Canadian Receivables for which the prospect of
payment or performance by the Canadian Account Debtor is
materially impaired;
(ix) Canadian Receivables with respect to which each
of the Agent and FNBC Canada does not have a valid and
perfected Lien subject to no prior lien in favor of any
party other than the Agent or FNBC Canada; provided,
however, that such Canadian Receivables may be subject only
to non-consensual landlord's and warehousemen's Liens
arising by operation of law and Liens permitted pursuant to
SECTION 6.3(C)(III);
(x) Canadian Receivables with respect to which the
Canadian Account Debtor is the subject of a bankruptcy or
similar insolvency proceeding or has made an assignment for
the benefit of creditors or whose assets have been conveyed
to a receiver or trustee;
(xi) Canadian Receivables with respect to which the
Canadian Account Debtor's obligation to pay the Canadian
Receivable is conditional upon the Canadian Account Debtor's
approval or is otherwise subject to any repurchase
obligation or return right, as with sales made on a
xxxx-and-hold, guaranteed sale, sale-and-return, sale on
approval (except with respect to Canadian Receivables in
connection with which Canadian Account Debtors are entitled
to return Canadian Inventory on the basis of the quality of
such Canadian Inventory) or consignment basis, unless, in
any such case, such Canadian Receivables are created in the
ordinary course of the Canadian Subsidiary's business and in
a manner consistent with its past practices;
(xii) Canadian Receivables with respect to which the
Canadian Account Debtor is located in any jurisdiction which
adopts a statute or other
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requirement with respect to which any Person that obtains
business from within such jurisdiction or is otherwise
subject to such jurisdiction's tax law requiring such Person
to adhere to provincial licensing requirements or make any
required filings in a timely manner in order to enforce its
claims in such jurisdiction's courts or arising under such
jurisdiction's laws; PROVIDED, HOWEVER, such Canadian
Receivables shall nonetheless be eligible if the Canadian
Subsidiary has satisfied such provincial licensing
requirements or is qualified to do business in such
jurisdiction and, at the time the Canadian Receivable was
created, was qualified to do business in such jurisdiction
or had already satisfied such provincial licensing
requirements;
(xiii) Canadian Receivables with respect to which the
Canadian Account Debtor's obligation does not constitute its
legal, valid and binding obligation, enforceable against it
in accordance with its terms;
(xiv) Canadian Receivables with respect to which the
Canadian Subsidiary has not yet shipped the applicable goods
or performed the applicable service;
(xv) any Canadian Receivable which is not in
conformity with the representations and warranties made by
the Canadian Subsidiary to each of the Agent and FNBC Canada
with respect thereto whether contained in this Agreement,
the Canadian Credit Agreement or the Canadian Subsidiary
Security Agreement;
(xvi) Canadian Receivables in connection with which
the Canadian Subsidiary has not complied with all material
requirements contained in the charter and by-laws or other
organizational or governing documents of the Canadian
Subsidiary, and any law, rule or regulation, or
determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or
binding upon the Canadian Subsidiary or any of its property
or to which the Canadian Subsidiary or any of its property
is subject, including, without limitation, all laws, rules,
regulations and orders of any Governmental Authority or
judicial authority relating to truth in lending, billing
practices, fair credit reporting, equal credit opportunity,
debt collection practices and consumer debtor protection,
applicable to such Canadian Receivable (or any related
contracts) or affecting the collectability of such Canadian
Receivables;
(xvii) Canadian Receivables created by the Hallmark
Joint Venture in the ordinary course of its business,
arising out of the sale of goods or rendition of services by
the Hallmark Joint Venture; PROVIDED, HOWEVER, that such
Canadian Receivables, so long as the Hallmark Joint Venture
is in existence, shall be considered Canadian Eligible
Receivables upon
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delivery of satisfactory evidence to each of the Agent and
FNBC Canada that each of them holds a perfected Lien against
such Canadian Receivables.
(xviii) Canadian Receivables in connection with which
the Canadian Subsidiary or any other party to such Canadian
Receivable is in default in the performance or observance of
any of the terms thereof in any material respect.
'CANADIAN GOODS' means tangible personal property, but
excluding chattel paper, documents of title, instruments,
money, and securities (as these terms are defined in the
PERSONAL PROPERTY SECURITY ACT (Ontario) from time to time).
'CANADIAN INVENTORY' means all inventory now owned or
hereafter acquired by the Canadian Subsidiary, including (i)
finished Canadian Goods, raw materials, new and unused
production, packing and shipping supplies, (ii) work in
progress, (iii) all new and unused maintenance items, and
(iv) all other materials and supplies on hand to be used or
consumed or which might be used or consumed in the
manufacture, packing, shipping, advertising, selling, or
furnishing of Canadian Goods.
'CANADIAN REVOLVING LOAN OBLIGATIONS' means, at any
particular time, the Dollar Amount of the "Accommodations
Outstanding" under the Canadian Credit Agreement at such
time.
'CANADIAN RECEIVABLE(S)' means and includes all of the
Canadian Subsidiary's presently existing and hereafter
arising or acquired accounts, accounts receivable, and all
present and future rights of the Canadian Subsidiary to
payment for goods sold or leased or for services rendered
(except those evidenced by instruments, security or chattel
paper), whether or not they have been earned by performance,
and all rights in any merchandise or goods which any of the
same may represent, and all rights, title, security and
guaranties with respect to each of the foregoing, including,
without limitation, any right of stoppage in transit.
'CANADIAN SUBSIDIARY' means Xxxxxxxxx Xxxxx (Canada)
Corporation, a federally chartered Canadian corporation,
together with its successors and assigns.
'CANADIAN SUBSIDIARY GUARANTY' means the Guaranty,
dated as of the date of Amendment No. 3, executed by the
Canadian Subsidiary in favor of the Agent on behalf of the
Holders of Secured Obligations, as amended, restated,
supplemented, or otherwise modified from time to time.
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'CANADIAN SUBSIDIARY SECURITY AGREEMENT' means that
certain Security Agreement, dated as of the date of
Amendment No. 3, executed by the Canadian Subsidiary
pursuant to the Canadian Subsidiary Guaranty in favor of the
Agent for the benefit of the Holders of Secured Obligations,
as amended, restated, supplemented, or otherwise modified
from time to time.
'DOLLAR AMOUNT' means, in relation to any Indebtedness
(i) denominated in US Dollars, the amount of such
Indebtedness, and (ii) denominated in Canadian Dollars, the
amount of US Dollars required to purchase the amount of such
Indebtedness at the Transaction Exchange Rate on the day
such Dollar Amount is determined.
'FNBC CANADA' means First Chicago NBD Bank, Canada,
together with its successors and assigns.
'GROSS AMOUNT OF CANADIAN ELIGIBLE INVENTORY' means
Canadian Eligible Inventory valued at the lower of cost
determined on an average cost basis (determined in
accordance with Agreement Accounting Principles,
consistently applied) or market value less (without
duplication) the value of reserves which have been recorded
by the Canadian Subsidiary with respect to obsolete,
slow-moving or excess Canadian Inventory.
'GROSS AMOUNT OF CANADIAN ELIGIBLE RECEIVABLES' means
the face amount outstanding under the Canadian Eligible
Receivables, determined in accordance with Agreement
Accounting Principles, consistently applied, less all
finance charges, late fees and other fees that are unearned.
'HALLMARK JOINT VENTURE' means the joint venture
between the Canadian Subsidiary and Xxxxxxx X. Xxxxxx
Company, Limited, pursuant to which, among other things, the
Canadian Subsidiary and Xxxxxxx X. Xxxxxx Company, Limited
jointly sell products and merchandise bearing the "Hallmark"
and "Xxxxx Xxxxxx" brand names.
'PARTICIPATION AGREEMENT' means the Participation
Agreement, dated as of the date of Amendment No. 3, among
FNBC Canada, the Lenders, the Borrower and the Canadian
Subsidiary, as amended, restated, supplemented or otherwise
modified from time to time.
'SWEET FACTORY GUARANTY' means the Guaranty, in favor
of the Agent, executed by each Sweet Factory Subsidiary,
dated as of December 7, 1998, as amended, restated,
supplemented or otherwise modified from time to time.
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'TRANSACTION EXCHANGE RATE' means in relation to the
purchase of Canadian Dollars with US Dollars on a given
date, FNBC Canada's spot rate of exchange, for the amount in
question, at or about 11:00 a.m. Toronto time on such date
for the purchase of Canadian Dollars with US Dollars, for
delivery two Business Days later.
'US DOLLAR' means the lawful currency of the United
States of America.
'YEAR 2000 ISSUES' means anticipated costs, problems
and uncertainties associated with the inability of certain
computer applications to effectively handle data including
dates on and after January 1, 2000, as such inability
affects the business, operations, and financial condition of
the Borrower and its Subsidiaries and of the Borrower's or
its Subsidiaries' material customers, suppliers and vendors.
(ii) The definition of "BORROWING BASE" is amended in
its entirety to read as follows:
"'BORROWING BASE' means, as of any date of
calculation, an amount, calculated in US Dollars, as set
forth on the most current Borrowing Base Certificate
delivered to the Agent and FNBC Canada, equal to (i) the sum
of 85% of the Gross Amount of Eligible Receivables and 85%
of the Gross Amount of Canadian Eligible Receivables; PLUS
(ii) the sum of 50% of the Gross Amount of Eligible
Inventory consisting of finished goods and 50% of the Gross
Amount of Canadian Eligible Inventory consisting of finished
goods; PLUS (iii) the sum of 60% of the Gross Amount of
Eligible Inventory consisting of raw materials and 60% of
the Gross Amount of Canadian Eligible Inventory consisting
of raw materials; PLUS (iv) 70% of the Approved Value of
real estate MINUS (v) such reserves as each of the Agent and
FNBC Canada reasonably deems necessary and are consistent
with existing reserves, including without limitation,
reserves (a) in amounts equal to any Indebtedness secured by
a Lien permitted by SECTION 6.3(C)(III) and (b) in amounts
equal to up to two (2) months rent or other applicable
storage/processing fees at any location (other than the
Borrower's leased retail store locations), including any
Sweet Factory Subsidiary's or the Canadian Subsidiary's
leased retail store locations, where the Borrower or any
Sweet Factory Subsidiary maintains Inventory or where the
Canadian Subsidiary maintains Canadian Inventory, in either
case on leased premises, or stores Inventory or Canadian
Inventory, as applicable, with any third party, for which
the Agent and/or FNBC Canada, as
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applicable, has not received, as applicable, a landlord,
mortgagee, bailee and/or warehousemen's access and lien
waiver agreement and related Uniform Commercial Code
financing statements or the Canadian equivalent thereof, in
form and substance reasonably acceptable to each of the
Agent and FNBC Canada (the "RENT RESERVE"); PROVIDED,
HOWEVER, that for each Sweet Factory Subsidiary and the
Canadian Subsidiary, the reserve requirement contemplated
above shall equal the lesser of (x) the Rent Reserve or (y)
the Gross Amount of Eligible Inventory or Gross Amount of
Canadian Eligible Inventory, as applicable, at such
location; PROVIDED FURTHER, that, for the period beginning
on the Amendment No. 3 Effective Date and ending one hundred
twenty days after the Amendment No. 3 Effective Date, the
Rent Reserve shall equal one (1) month's rent or other
applicable storage/processing fees at any location. The
Agent and FNBC Canada shall give the Borrower and the
Canadian Subsidiary notice prior to establishing any reserve
hereunder."
(ii) The definition of "CLOSING DATE" is hereby amended
to delete therefrom the date "July 2, 1997" and to
substitute therefor the date "July 30, 1999".
(iii) The definition of "COLLATERAL DOCUMENTS" is hereby
amended to insert the phrase "each Sweet Factory
Subsidiary Security Agreement, the Canadian
Subsidiary Security Agreement," after the phrase
"the Borrower Security Agreement".
(iv) The definition of "LOAN DOCUMENTS" is hereby
amended to insert the phrase "the Sweet Factory
Guaranty, the Canadian Subsidiary Guaranty, the
Canadian Credit Agreement, the 'Credit Documents'
(as defined in the Canadian Credit Agreement)"
after the phrase "the Guaranty,".
(v) The definition of "MATERIAL SUBSIDIARY" is hereby
amended in its entirety as follows:
"'MATERIAL SUBSIDIARY' shall mean (i) the Canadian
Subsidiary and (ii) any other Subsidiary of the
Borrower that has assets or annual sales equal to
or greater than $1,000,000.00."
(vi) The definition of "OVERADVANCE AMOUNT" is hereby
deleted.
(vii) The definition of "REVOLVING LOAN OBLIGATIONS" is
hereby amended to delete the period at the end
thereof and to insert the phrase "PLUS (iii) the
Canadian Revolving Loan Obligations at such time."
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and
(viii) The definition of "TERMINATION DATE" is hereby
amended to delete therefrom the date "July 1, 2000"
and to substitute therefor the date "April 15,
2001".
(b) SECTION 2.2 is hereby amended to delete from the third
sentence contained therein the phrase "the Closing Date" and to
substitute therefor the date "July 2, 1997".
(c) SECTION 2.5(B) of the Credit Agreement is hereby amended in
its entirety as follows:
"(B) If, at any time and for any reason (including, without
limitation, a change in the Transaction Exchange Rate), the
Revolving Loan Obligations shall exceed the Maximum Revolving Loan
Amount, then the Borrower shall promptly repay such excess to the
Agent for the ratable account of the Lenders; PROVIDED, HOWEVER,
that the Borrower's obligation to repay such excess shall be
satisfied to the extent that the Canadian Subsidiary makes a
corresponding payment to FNBC Canada."
(d) SECTION 2.14(C)(1) of the Credit Agreement is hereby amended
in its entirety as follows:
"(1) The Borrower shall pay to the Agent, for the account of each
of the Lenders, in accordance with their Pro Rata Shares, a
commitment fee equal to 0.75% of each such Lender's undrawn
Revolving Loan Commitment payable quarterly in arrears beginning
August 31, 1999 and continuing on the last calendar day of each
February, May, August, and November until the Termination Date;
PROVIDED, HOWEVER, that at any time the Revolving Loan Obligations
exceed fifty percent (50%) of the Aggregate Revolving Loan
Commitment, such commitment fee shall equal the Applicable
Commitment Fee Rate TIMES each such Lender's undrawn Revolving
Loan Commitment."
(e) SECTION 2.20 is hereby amended to delete therefrom the
amount "$2,000,000" and to substitute therefor the amount "$3,000,000".
(f) ARTICLE V is hereby amended as follows:
(i) The first paragraph of ARTICLE V is hereby
amended and restated as follows:
" In order to induce the Agent and the Lenders (x) to
enter into this Agreement and to make the Loans and
the other financial accommodations to the Borrower
and to issue the Letters of Credit described herein,
and (y)
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to amend the Agreement pursuant to the terms of Amendment
No. 3, the Borrower hereby makes each representation and
warranty set forth in this ARTICLE V to each Lender and the
Agent as of the Closing Date or any other date specifically
referred to in any representation or warranty. The Borrower
shall reaffirm such representations and warranties
thereafter on each date as required by SECTION 4.2."
(ii) SECTION 5.1 is hereby amended to delete
therefrom the word "Agreement" and to substitute therefor
the phrase "Agreement and the other Loan Documents".
(iii) SECTION 5.2 is hereby amended to delete each
occurrence of the phrase "this Agreement" and to substitute
therefor the phrase "this Agreement or the Canadian Credit
Agreement".
(iv) SECTION 5.5 is hereby amended to delete
therefrom the phrase "August 31, 1996;" and to substitute
therefor the phrase "February 27, 1999,".
(v) SECTION 5.8 is hereby amended to delete
therefrom the fourth sentence contained therein and to
substitute therefor the following sentence: "As of the
Closing Date, the Borrower's only Material Subsidiaries are
the Canadian Subsidiary and Sweet Factory Group, Inc."
(vi) The following SECTION 5.23 is hereby inserted
into Article V:
5.23 YEAR 2000. Each of the Borrower and each of its
Subsidiaries (other than the Canadian Subsidiary), as of the
Amendment No. 3 Effective Date, has made a full and complete
assessment of the Year 2000 Issues and has a realistic and
achievable program for remediating the Year 2000 Issues on a
timely basis. The Canadian Subsidiary has a realistic and
achievable program for remediating its Year 2000 Issues on a
timely basis. Based on the foregoing, each of the Borrower
and each of its Subsidiaries does not reasonably anticipate
that Year 2000 Issues will have a material adverse effect on
its operations, business or financial condition.
(vii) The following SECTION 5.24 is hereby inserted
into ARTICLE V:
5.24 SENIOR NOTE INDENTURE. As of the Amendment No. 3
Effective Date, execution, delivery and performance of each
of Amendment No. 3 and the Canadian Credit Agreement do not
and will not conflict with the terms and conditions of the
Senior Note Indenture and do not and will not trigger an
"Event of Default" under the Senior Note Indenture.
(f) SECTION 6.2(J) is hereby amended in its entirety as follows:
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"Each of the Parent and the Borrower shall, and shall cause
each of their respective Subsidiaries to, maintain and keep
in good condition, repair and working order all property
necessary to the conduct of its business; PROVIDED, HOWEVER,
that nothing in this Section shall prevent the Parent or the
Borrower, as applicable, from discontinuing the operation or
maintenance of any of such property if such discontinuance
is, in the judgment of the Parent or the Borrower, as
applicable, desirable in the conduct of its business or the
business of any of their respective Subsidiaries and not
disadvantageous in any material respect to the Agent or the
Lenders.
(g) SECTION 6.2 is hereby amended to insert therein the
following paragraph (O):
(O) YEAR 2000. Each of the Borrower and each of its
Subsidiaries, as of the Amendment No. 3 Effective Date, will take
all actions reasonably necessary to assure that the Year 2000
Issues will not have a material adverse effect on the business,
operations or financial condition of the Borrower or any
Subsidiary. Upon the Agent's request, the Borrower will provide
Lender a description of its and its Subsidiaries' Year 2000
programs, including updates and progress reports. Each of the
Borrower and each of its Subsidiaries will advise the Agent of any
reasonably anticipated material adverse effect as a result of Year
2000 Issues.
(h) SECTION 6.3(A)(ii) of the Credit Agreement is hereby amended
in its entirety as follows:
"(ii) Indebtedness existing as of June 8, 1999 and described on
SCHEDULE 6.3(A) as attached to Amendment No. 3 and Indebtedness
under the Canadian Credit Agreement"
(i) SECTION 6.3(C) is hereby amended to insert the following
clause (v):
"(v) Liens securing the Canadian Credit Agreement and the
Canadian Subsidiary Guaranty."
(j) SECTION 6.3(D)(vii) is hereby amended in its entirety as
follows:
"(vii) other Investments so long as the aggregate amount of such
Investments does not exceed $7,500,000; PROVIDED, HOWEVER, that
(x) the Borrower may acquire each Sweet Factory Subsidiary
pursuant to the Agreement and Plan of Reorganization, dated as of
November 24, 1998, among the Borrower, Sweet Factory Acquisition
Corp., a Delaware corporation, and each Sweet Factory Subsidiary
and (y) the Canadian Subsidiary may acquire all or substantially
all of the assets of Nestle Canada Inc.'s Xxxxx Xxxxxx retail
business (other than its
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manufacturing, warehouse and distribution facilities) pursuant to
that Asset Purchase Agreement dated May 26, 1999 (and the Borrower
may acquire certain of such assets from the Canadian Subsidiary),
with both such Acquisitions excluded from the aforementioned
$7,500,000 limitation on other Investments."
(k) SECTION 6.3(J) of the Credit Agreement is hereby amended in
its entirety as follows:
"(J) RESTRICTION ON FUNDAMENTAL CHANGES. None of the Borrower or
any of its Subsidiaries shall enter into any merger or
consolidation, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Borrower's or any
such Subsidiary's business or property, whether now or hereafter
acquired; PROVIDED, HOWEVER, that (i) the Borrower may merge with
any of its Subsidiaries, so long as (x) the Borrower is the
surviving entity in any such merger, (y) the Borrower provides
written notice to the Agent of such merger not less than thirty
(30) days prior thereto, and (z) the Borrower executes any UCC
financing statements or amendments or any applicable Governmental
Authority's equivalent thereof in connection with such merger in
order to maintain the Agent's first priority perfected security
interest in the Collateral and (ii) any wholly-owned Subsidiary
may merge with any other wholly-owned Subsidiary so long as (x)
the surviving Subsidiary is a guarantor of the "Guaranteed
Obligations" as such term is defined in the Sweet Factory Guaranty
(y) the Borrower provides written notice to the Agent of such
merger between Subsidiaries not less than thirty (30) days prior
thereto, and (z) the surviving Subsidiary executes any UCC
financing statements or amendments or any Governmental Authority's
equivalent thereof in connection with such merger in order to
maintain the Agent's first priority perfected security interest in
the Collateral and, if applicable, second-priority perfected
security interest in the "Collateral" of the Canadian Subsidiary
(as defined in the Canadian Subsidiary Security Agreement)."
(l) SECTIONS 6.4(B), (C), and (D) are hereby amended in their
entirety as follows:
"(B) FIXED CHARGE COVERAGE RATIO. The Borrower shall maintain a
Fixed Charge Coverage Ratio of not less than the following for
each four Fiscal Quarter period ending on the last day of each
Fiscal Quarter during the following periods:
Minimum
Fiscal Quarter Ending in Fixed Charge Coverage Ratio
------------------------ ---------------------------
August, 1999 1.05 to 1.00
November, 1999 1.05 to 1.00
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February, 2000 1.15 to 1.00
May, 2000 and thereafter 1.20 to 1.00
(C) LEVERAGE RATIO. The Borrower shall not permit the Leverage
Ratio to be greater than 6.00 to 1.00 at the end of each Fiscal
Quarter ending after the Amendment No. 3 Effective Date.
(D) RENTALS. The Borrower will not nor will it permit any of its
Subsidiaries to incur obligations for Rentals in excess of
$35,000,000 during any four consecutive Fiscal Quarter period on a
non-cumulative basis, in the aggregate, for the Borrower and all
of its Subsidiaries."
(m) SECTION 7.1 is hereby amended to insert therein the
following clause (s):
"(s) Any 'Event of Default', as defined in the Canadian Credit
Agreement, shall occur."
(n) EXHIBITS A, B, and C to the Credit Agreement are hereby
deleted therefrom and the attached EXHIBITS A, B, and C are substituted
therefor.
(o) SCHEDULES 5.8, 5.17, 5.18, 6.3(A), and 6.3(D) to the Credit
Agreement are hereby deleted therefrom and the attached SCHEDULES 5.8,
5.17, 5.18, 6.3(A), and 6.3(D) are substituted therefor.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
and be deemed effective as of the date hereof (the "Effective Date") if, and
only if, the Agent shall have received each of the following:
(a) four (4) duly executed originals of this Amendment from the
Borrower, the Agent and the Lenders;
(b) four (4) duly executed originals of each of the Canadian
Subsidiary Security Agreement and the Canadian Subsidiary Guaranty;
(c) the $10,000 amendment fee, for the benefit of the Lenders,
as described in that certain Term Sheet dated as of June 8, 1999, among
the Borrower, the Agent, First Chicago NBD Bank, Canada, and the Lenders;
(d) Copies of the Articles of Incorporation of the Borrower,
together with all amendments, and a certificate of good standing, each
certified by the Secretary of State of Illinois;
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(e) Copies, certified by the Secretary or Assistant Secretary of
the Borrower, of the Borrower's By-laws and resolutions of its Board of
Directors authorizing the execution of this Amendment and all documents
to be executed in connection herewith;
(f) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify the name and
title and bear the signature of the officers of the Borrower,
respectively, authorized to sign this Amendment and all documents to be
executed in connection herewith, and, to make borrowings under the
Credit Agreement, upon which certificate the Lenders shall be entitled
to rely until informed of any change in writing by the Borrower;
(g) A certificate, signed by the chief financial officer of the
Borrower, stating that on the effective date of this Amendment, no
Default or Unmatured Default has occurred and is continuing;
(h) A written opinion of Winston & Xxxxxx, counsel to the
Borrower, addressed to the Lenders in form and substance satisfactory to
the Agent and the Lenders;
(i) Amended and Restated Revolving Notes payable to the order of
each of the Lenders;
(j) a fully executed copy of each of the Canadian Credit
Agreement, the Participation Agreement, and each other instrument and
agreement executed in connection therewith;
(k) Copies of the charter of the Canadian Subsidiary, together
with all amendments, and the appropriate certificates of good standing,
each certified by the appropriate governmental officer in the Canadian
Subsidiary's jurisdiction of incorporation or in which it is qualified
to do business, as applicable;
(l) Copies, certified by the Secretary or Assistant Secretary of
the Canadian Subsidiary, of the Canadian Subsidiary's By-laws and
resolutions of its Board of Directors authorizing the execution of the
Canadian Subsidiary Guaranty and all documents to be executed in
connection herewith;
(m) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Canadian Subsidiary, which shall identify the
name and title and bear the signature of the officers of the Canadian
Subsidiary, respectively, authorized to sign the Canadian Subsidiary
Guaranty and all documents to be executed in connection therewith, upon
which certificate the Lenders shall be entitled to rely until informed
of any change in writing by the Canadian Subsidiary;
(n) amended EXHIBITS A, B, and C to the Credit Agreement, as
attached hereto, and amended SCHEDULES 5.8, 5.17, 5.18, 6.3(A), and
6.3(D) to the Credit Agreement, as attached hereto;
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(o) satisfactory evidence of the Borrower's issuance, under the
Senior Note Indenture, of additional Senior Notes in an aggregate
principal amount of $40,000,000 which accrue interest at a rate no
greater than 10.25% per annum; PROVIDED, HOWEVER, that such evidence
shall include, without limitation, an executed copy of the supplement to
the Senior Note Indenture which allowed the aforementioned issuance;
(p) Reaffirmation of Guaranty executed by Xxxxxx May Holdings,
Inc., Sweet Factory, Inc., Sweet Factory Group, Inc., SF Candy Company
and SF Properties, Inc.; and
(q) such other documents, instruments and agreements, including,
without limitation, UCC-1 financing statements or their Canadian
equivalent, as the Agent may reasonably request.
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
4.1 The Borrower represents and warrants as of the date hereof
that:
(a) Its execution, delivery and performance of this Amendment are
within its corporate powers, have been duly authorized by all necessary
corporate action and do not require any consent or approval which has
not been obtained and
(b) This Amendment and the Credit Agreement as amended hereby
are its legal, valid and binding obligations, enforceable in accordance
with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by general equitable principles.
4.2 The Borrower affirms that the representations and warranties
contained in the Credit Agreement are true and correct as of the Amendment
No. 3 Effective Date.
4.3 The Borrower affirms that each of the Collateral Documents
is in full force and effect as of the date hereof and that the Collateral
Documents secure the payment in full of the Secured Obligations as such
Secured Obligations may increase as a result of this Amendment No. 3.
5. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
5.1 Upon the effectiveness of this Amendment pursuant to SECTION
3 hereof, on and after the Effective Date each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import and each reference to the Credit Agreement in each Loan Document
shall mean and be a reference to the Credit Agreement as modified hereby.
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5.2 Except as specifically waived or amended herein, all of the
terms, conditions and covenants of the Credit Agreement and the other Loan
Documents shall remain in full force and effect and are hereby ratified and
confirmed.
5.3 The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of (a)
any right, power or remedy of any Lender or the Agent under the Credit
Agreement or any of the Loan Documents, or (b) any Default or Unmatured
Default under the Credit Agreement.
6. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE
WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original and
all of which taken together shall constitute one and the same agreement.
8. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have
executed this Amendment No. 3 as of the date first above written.
XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President - Finance and Accounting
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Agent
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
FLEET BUSINESS CREDIT CORPORATION, formerly
known as Sanwa Business Credit Corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
