Exhibit 10.14
FOURTH AMENDMENT TO REVOLVING CREDIT,
TERM LOAN AND GOLD CONSIGNMENT AGREEMENT
Fourth Amendment dated as of November 27, 1998 (the "Amendment")
amending that certain Revolving Credit, Term Loan and Gold Consignment
Agreement dated as of December 16, 1996 (as amended and in effect from time
to time, the "Credit Agreement"), by and among COMMEMORATIVE BRANDS, INC.
(f/k/a Scholastic Brands, Inc.), a Delaware corporation (the "Borrower"),
BANKBOSTON, N.A. (f/k/a The First National Bank of Boston and successor by
merger to Xxxxx Xxxxxx Xxxxxxxx Xxxxx Xxxxxxxx Xxxx), XXXXX XXXXXX HOSPITAL
TRUST NATIONAL BANK, a national banking association, and the other financial
institutions listed on SCHEDULE 1 to the Credit Agreement (collectively, the
"Banks"); and BANKBOSTON, N.A. as agent for itself and the Banks.
Capitalized terms used herein and which are not otherwise defined shall have
the respective meanings ascribed thereto in the Credit Agreement.
WHEREAS, the Borrower and the Banks have agreed to modify certain terms
and conditions of the Credit Agreement as specifically set forth in this
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. AMENDMENT TO SECTION 1 OF THE CREDIT AGREEMENT. SECTION
1.1 of the Credit Agreement is hereby amended as follows:
(a) The definition of "Consolidated EBITDA" is hereby amended in
its entirety to read as follows:
"CONSOLIDATED EBITDA. With respect to the Borrower and its
Subsidiaries and any particular fiscal period, the consolidated
earnings (or loss) from operations of the Borrower and its
Subsidiaries for such period determined in accordance with generally
accepted accounting principles, after eliminating therefrom all
extraordinary nonrecurring items of income (including gains on the
sale of assets and earnings from the sale of discontinued business
lines), and after all expenses (including, without limitation, all CH
Management Fees only to the extent paid in cash) and other proper
charges but before payment or provision for (a) any income taxes,
Consolidated Total Interest Expense or Consignment Fees or Gold
Fronting Fees for such period, (b) depreciation for such period, (c)
amortization for such period, (d) all other noncash charges for such
period, (e) the aggregate amount of all noncash extraordinary losses
(not to exceed $1,000,000 in the aggregate for all such noncash
extraordinary losses during any fiscal year) during such period, (f)
the aggregate amount of any reductions to consolidated earnings from
operations during such period attributable to any write-up of the
Borrower's current assets consisting of inventory in connection with
the Acquisitions, and (g) a portion of all
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extraordinary nonrecurring losses during such period relating to the
Acquisitions not to exceed $500,000 in the aggregate for all such
amounts during all fiscal periods and not to exceed in any such period
the aggregate amount of any extraordinary nonrecurring items of cash
income during such period, if any, all determined in accordance with
generally accepted accounting principles. Each of the parties hereto
agrees that the amount of Consolidated EBITDA for specified periods
prior to the Closing Date shall be as set forth on SCHEDULE 3 hereto for
all purposes under this Credit Agreement."
(b) The definition of "Permitted Common Stock Repurchases" is hereby
deleted in its entirety and replaced with the following definition of "Permitted
Capital Stock Repurchases":
"PERMITTED CAPITAL STOCK REPURCHASES. Repurchases of the Borrower's
capital stock which are made concurrently with the issuance by the Borrower
of additional capital stock of the same class to employees or sales
representatives so long as the Borrower receives a cash purchase price in
respect of any such additional capital stock from such employees or sales
representatives in an amount equal to the aggregate amount of cash to be
paid in order to effect such repurchases of capital stock."
(c) The definition of "Permitted Employee Stock Repurchases" is
hereby amended in its entirety to read as follows:
"PERMITTED EMPLOYEE STOCK REPURCHASES. Repurchases of capital stock
of the Borrower theretofore issued to employees or independent sales
representatives of the Borrower so long as the aggregate amount paid by the
Borrower in cash with respect thereto shall not exceed $500,000 during any
fiscal year. Notwithstanding the foregoing, (a) any unused portion of any
such amount for capital stock repurchases in any fiscal year may be used in
the succeeding fiscal year (but not any other fiscal year) and any such
amounts carried forward to a succeeding fiscal year shall be used for
capital stock repurchases in such succeeding fiscal year prior to using any
portion of the amount permitted for such succeeding fiscal year, and (b)
after using the entire permitted cash amount available for such capital
stock repurchases in any fiscal year, the Borrower may also issue
promissory notes to employees and sales representatives to effect such
repurchases of capital stock so long as such promissory notes are issued on
terms which are subordinate in all respects to the Obligations and so long
as no payments, redemptions or repurchases of any kind may be made with
respect to any such promissory notes prior to the irrevocable payment in
full in cash of all of the Obligations and the termination of all of the
Commitments, Gold Commitments and the Gold Fronting Commitment."
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(d) SECTION 1.1 of the Credit Agreement is hereby further amended by
inserting the following definitions in the appropriate alphabetical order:
"CONSOLIDATED DEBT SERVICE. With respect to the Borrower and its
Subsidiaries on a consolidated basis for any period, an amount equal
to the sum of (i) Consolidated Total Interest Expense of the Borrower
and its Subsidiaries for such period, PLUS (ii) all regularly
scheduled payments of principal of Indebtedness of the Borrower and
its Subsidiaries (including payments of the principal component of
Capitalized Leases and payments of principal on any purchase money
Indebtedness) made or (without duplication) required to be made during
such period.
CONSOLIDATED NET WORTH. The excess of Consolidated Total Assets
minus Consolidated Total Liabilities, LESS, to the extent otherwise
includable in the computations of Consolidated Net Worth, any
subscriptions receivable."
CONSOLIDATED OPERATING CASH FLOW. With respect to the Borrower
and its Subsidiaries on a consolidated basis for any period, an amount
equal to (i) the sum of (A) Consolidated EBITDA for such period, LESS
(ii) the sum of (A) cash payments for all taxes paid during such
period, PLUS (B) to the extent not already deducted in the
determination of Consolidated EBITDA, Capital Expenditures made during
such period.
CONSOLIDATED TOTAL ASSETS. All assets of the Borrower and its
Subsidiaries determined on consolidated basis in accordance with
generally accepted accounting principles.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrower
and its Subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles.
MODIFIED FUNDED DEBT RATIO. The ratio of (a) Consolidated EBITDA
for the four fiscal quarters of the Borrower ended immediately prior
to the date of any CH Management Fee payment LESS the CH Management
Fee proposed to be made TO (b) Consolidated Debt Service for the four
fiscal quarters of the Borrower ended immediately prior to the date of
any CH Management Fee payment."
SECTION 3. AMENDMENT TO SECTION 12.1 OF THE CREDIT AGREEMENT. Section
12.1(k) of the Credit Agreement is hereby amended in its entirety to read as
follows:
"(k) Indebtedness consisting of Permitted Employee Stock
Repurchases (including any promissory notes issued by the Borrower to
repurchase capital stock of employees and sales representatives of the
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Borrower solely to the extent permitted in the definition of Permitted
Employee Stock Repurchases);"
SECTION 4. AMENDMENT TO SECTION 12.12 OF THE CREDIT AGREEMENT. Section
12.12 of the Credit Agreement is hereby amended in its entirety to read as
follows:
"12.12 TRANSACTIONS WITH AFFILIATES. The Borrower will not, nor
will the Borrower permit or suffer any of its Subsidiaries to, conduct
any transactions among themselves or with any Affiliates of the
Borrower, other than (a) payment of the CH Management Fee in an
aggregate amount not to exceed $1,500,000 during any fiscal year of
the Borrower so long as the Agent has received certificates from the
Borrower, in form and substance satisfactory to the Agent, evidencing
that (i) no Event of Default shall have occurred and be continuing and
none would result from the making thereof and (ii) the Short Term
Revolving Credit Note has been paid in full and (iii) the Modified
Funded Debt Ratio is greater than 1.10:1.00, PROVIDED that any portion
of such amount not paid during any fiscal year may be paid in any
subsequent fiscal year, (b) transactions with Oakley Insurance Group
regarding the Borrower's insurance policies and coverage upon terms
not materially less favorable to the Borrower or such Subsidiary than
it could obtain in a comparable arm's-length transaction with a party
other than Oakley Insurance Group, (c) a Permitted Preferred Stock
Replacement, (d) transactions among the Borrower and its Subsidiaries,
(e) any Permitted Employee Stock Repurchases, (f) any Permitted
Capital Stock Repurchase, (g) transactions constituting Investments
permitted by Sections 12.3(h) or (o) hereof, (h) transactions in the
ordinary course of the Borrower's or such Subsidiary's business,
consistent with past practices, and upon terms not materially less
favorable to the Borrower or such Subsidiary than it could obtain in a
comparable arm's-length transaction with a party other than the
Borrower, such Subsidiary or such Affiliate and (i) entering into an
Indemnification Agreement."
SECTION 5. AMENDMENT TO SECTION 13.1 OF THE CREDIT AGREEMENT. SECTION
13.1 of the Credit Agreement is hereby amended by replacing the table appearing
therein with the following table:
PERIOD RATIO
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11/30/98 3.50:1.00
2/28/99 3.50:1.00
5/31/99 - 8/31/99 3.10:1.00
11/30/99 and thereafter 2.25:1.00
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SECTION 6. AMENDMENT TO SECTION 13.2 OF THE CREDIT AGREEMENT. SECTION
13.2 of the Credit Agreement is hereby amended by replacing the table appearing
therein with the following table:
PERIOD AMOUNT
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11/30/98 $15,750,000
2/28/99 $16,500,000
5/31/99 $19,000,000
8/31/99 $20,000,000
11/30/99 - 8/31/00 $22,700,000
11/30/00 - 8/31/01 $23,500,000
11/30/01 - 8/31/02 $24,000,000
11/30/02 - 8/31/03 $24,500,000
11/30/03 and thereafter $25,000,000
SECTION 7. AMENDMENT TO SECTION 13.3 OF THE CREDIT AGREEMENT. SECTION
13.3 of the Credit Agreement is hereby amended in its entirety to read as
follows:
"13.3. CAPITAL EXPENDITURES. (a) The Borrower will not make, or
permit any Subsidiary of the Borrower to make, Capital Expenditures
(other than Computer Conversion Capital Expenditures) during any
fiscal year set forth in the table below (or the portion thereof, in
the case of the fiscal year in which the Closing Date occurs) that
exceed, in the aggregate, the amount set forth opposite such fiscal
year in such table:
FISCAL YEAR AMOUNT
----------- ------
1998 $4,500,000
1999 $5,500,000
2000 $3,500,000
2001 $3,500,000
2002 $3,500,000
2003 $3,500,000
2004 $3,500,000
(b) The Borrower will not make, or permit any Subsidiary of the
Borrower to make, Computer Conversion Capital Expenditures (i) during
the period consisting of fiscal years 1998 and 1999 and the first
fiscal quarter of fiscal year 2000 that exceed, in the aggregate,
$6,500,000 or (ii) during any fiscal period other than fiscal years
1998 and 1999 and the first fiscal quarter of fiscal year 2000;
PROVIDED, HOWEVER, that if during any fiscal year the amount of
Capital Expenditures permitted by Section 13.3(a) above for such
fiscal year is not so utilized, such unutilized amount may be utilized
during such fiscal year only (and not during any other fiscal year) to
make Computer Conversion Capital Expenditures."
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SECTION 8. AMENDMENT TO SECTION 13.4 OF THE CREDIT AGREEMENT. SECTION
13.4 of the Credit Agreement is hereby amended by replacing the table appearing
therein with the following table:
PERIOD RATIO
------ -----
11/30/98 1.05:1.00
2/28/99 1.05:1.00
5/31/99 1.15:1:00
8/31/99 1.20:1:00
11/30/99-8/31/00 1.50:1.00
11/30/00 - 8/31/01 1.60:1.00
11/30/01 and thereafter 1.75:1.00
SECTION 9. ADDITION TO SECTION 13 OF THE CREDIT AGREEMENT. The
following new SECTION 13.5 is hereby added to the Credit Agreement:
"SECTION 13.5 CONSOLIDATED NET WORTH. The Borrower will not
permit Consolidated Net Worth on March 30, 1999 to be less than $42,000,000.
On March 31, 1999 the Borrower will deliver a certificate setting forth in
reasonable detail computations evidencing compliance with this Section 13.5
in form and substance satisfactory to the Agent."
SECTION 10. CONDITIONS TO EFFECTIVENESS. This Amendment shall not
become effective until the Agent receives the following:
(a) a counterpart of this Amendment, executed by the each of the
Borrower, the Agent and the Majority Banks; and
(b) an amendment fee of $150,000 paid by the Borrower for the PRO
RATA account of each Bank based on such Bank's percentage of the Total
Commitment.
SECTION 11. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrower contained in the Credit Agreement were true and
correct when made and continue to be true and correct on and as of the date
hereof as if made on the date hereof except to the extent of changes
resulting from transactions contemplated or permitted by the Credit Agreement
and to the extent that such representations and warranties relate expressly
to an earlier date. No Default or Event of Default has occurred and is
continuing.
SECTION 12. RATIFICATION, ETC. Except as expressly amended hereby,
the Credit Agreement and all documents, instruments and agreements related
thereto, including, but not limited to the Security Documents, are hereby
ratified and confirmed in all respects and shall continue in full force and
effect. The Credit Agreement and this Amendment shall be read and construed
as a single agreement. All references in the Credit Agreement or any related
agreement or instrument to the Credit Agreement shall hereafter refer to the
Credit Agreement as amended hereby.
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SECTION 13. NO WAIVER. Nothing contained herein shall constitute a
waiver of, impair or otherwise affect any Obligations, any other obligation
of the Borrower or any rights of the Agent or the Banks consequent thereon.
SECTION 14. COUNTERPARTS. This Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.
SECTION 15. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a
document under seal as of the date first above written.
COMMEMORATIVE BRANDS, INC. (f/k/a Scholastic
Brands, Inc.)
BY:
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NAME:
TITLE:
BANKBOSTON, N.A. (f/k/a The First National Bank
of Boston and successor by merger to Rhode
Island Hospital Trust National Bank), individually
and as Agent
BY:
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NAME:
TITLE:
LASALLE NATIONAL BANK
BY:
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NAME:
TITLE:
CREDITANSTALT CORPORATE
FINANCE, INC.
BY:
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NAME:
TITLE:
BY:
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NAME:
TITLE:
FLEET PRECIOUS METALS INC.
BY:
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NAME:
TITLE:
BY:
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NAME:
TITLE:
XXXXXX FINANCIAL, INC.
BY:
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NAME:
TITLE:
SANWA BUSINESS CREDIT
CORPORATION
BY:
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NAME:
TITLE:
UNION BANK OF CALIFORNIA, N.A.
BY:
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NAME:
TITLE:
