EXHIBIT 4-AA
(PRUDENTIAL FINANCIAL LOGO)
Corporate and Project Workouts
7th Floor Gateway Center Four
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
March 13, 2003
TruServ Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Re: Sixth Amendment of Note Agreement and Private Shelf Agreement
Ladies and Gentlemen:
Reference is made to that certain Xxxxxxx and Restated Private Shelf Agreement
dated as of November 13, 1997, as amended by letter agreements dated September
9, 1998, May 12, 1999, April 14, 2000, April 11, 2002, and December 30, 2002
(the "Shelf Note Agreement") between TruServ Corporation, a Delaware corporation
("TruServ"), and The Prudential Insurance Company of America ("Prudential") and
each affiliate of Prudential which is bound thereby pursuant to the terms
thereof (Prudential together with its affiliates, the "Purchasers").
Reference is also made to that certain Note Agreement dated as of April 13,
1992, as amended through the date hereof, between Xxxxxx & Company, the
predecessor to TruServ, and Prudential (the "Xxxxxx Note Agreement" and,
together with the Shelf Note Agreement, the "Note Agreements"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Shelf Note Agreement.
Pursuant to the request of TruServ and in accordance with the provisions of (i)
Paragraph 11C of the Shelf Note Agreement and (ii) Paragraph 11C of the Xxxxxx
Note Agreement, the parties hereto consent to the amendment of the Note
Agreements and agree as follows:
SECTION 1. Amendment. From and after the date this letter agreement
becomes effective in accordance with its terms, the Note Agreements shall be
respectively amended as follows:
1.1 Paragraph 6H Minimum Fixed Charge Coverage Ratio of the Note
Agreements is amended in its entirety to read as follows:
6H. FIXED CHARGE COVERAGE RATIO. The Company shall not permit
the Fixed Charge Coverage Ratio as of the end of any fiscal period set
forth below to be less than the applicable ratio set forth below for
such period:
Fiscal Period(s) ending on or about Ratio
----------------------------------------- -----------
four quarters ending December 2002 0.70:1.0
four quarters ending March 2003 0.76:1.0
four quarters ending June 2003 0.73:1.0
four quarters ending September 2003 0.68:1.0
four quarters ending December 2003 1.01:1.0
four quarters ending March 2004 1.10:1.0
four quarters ending June 2004 1.00:1.0
each four quarter period thereafter 1.00:1.0
1.2 Paragraph 6L Minimum Adjusted EBITDA of the Note Agreements is
amended in its entirety to read as follows:
6L. MINIMUM ADJUSTED EBITDA. The Company shall not permit the
sum of Adjusted EBITDA as of the end of any fiscal period set forth
below to be less than the respective amount set forth below:
Fiscal Period(s) ending on or about Amount
------------------------------------- ----------------
twelve months ended 12/31/02 $100,000,000
twelve months ended 1/31/03 $ 97,200,000
twelve months ended 2/28/03 $ 92,400,000
twelve months ended 3/31/03 $ 87,400,000
twelve months ended 4/30/03 $ 87,100,000
twelve months ended 5/31/03 $ 83,900,000
twelve months ended 6/30/03 $ 78,400,000
twelve months ended 7/31/03 $ 72,900,000
twelve months ended 8/31/03 $ 70,300,000
twelve months ended 9/30/03 $ 68,200,000
twelve months ended 10/31/03 $ 67,100,000
twelve months ended 11/30/03 $ 66,000,000
twelve months ended 12/31/03 $ 68,800,000
twelve months ended 1/31/04 $ 69,400,000
twelve months ended 2/29/04 $ 70,100,000
twelve months ended 3/31/04 $ 73,700,000
twelve months ended 4/30/04 $ 71,600,000
twelve months ended 5/31/04 $ 71,700,000
twelve months ended 6/30/04 $ 73,000,000
each twelve month period ended on
the last day of each month thereafter $ 73,000,000
1.3 Paragraph 6N Minimum Gross Sales of the Note Agreements is amended
in its entirety to read as follows:
6N. MINIMUM GROSS SALES. The Company shall not permit the
Gross Sales as of the end of any fiscal period set forth below to be
less than the applicable amount set forth below:
Fiscal Period(s) ending on or about Amount
------------------------------------- -------------------
twelve months ended 12/31/02 $1,975,000,000
twelve months ended 1/31/03 $1,834,400,000
twelve months ended 2/28/03 $1,795,700,000
twelve months ended 3/31/03 $1,750,700,000
twelve months ended 4/30/03 $1,737,300,000
twelve months ended 5/31/03 $1,750,900,000
twelve months ended 6/30/03 $1,737,600,000
twelve months ended 7/31/03 $1,728,800,000
2
twelve months ended 8/31/03 $1,724,800,000
twelve months ended 9/30/03 $1,725,400,000
twelve months ended 10/31/03 $1,728,000,000
twelve months ended 11/30/03 $1,709,100,000
twelve months ended 12/31/03 $1,702,900,000
twelve months ended 1/31/04 $1,700,000,000
twelve months ended 2/29/04 $1,697,600,000
twelve months ended 3/31/04 $1,694,500,000
twelve months ended 4/30/04 $1,690,300,000
twelve months ended 5/31/04 $1,682,900,000
twelve months ended 6/30/04 $1,676,300,000
each twelve month period ended on
the last day of each month thereafter $1,670,000,000
1.4 Paragraph 6O Minimum Interest Coverage Ratio of the Note Agreements
is amended in its entirety to read as follows:
6O. MINIMUM INTEREST COVERAGE RATIO. The Company shall not
permit the Interest Coverage Ratio as of the end of any fiscal period
set forth below to be less than the applicable ratio set forth below:
Fiscal Period(s) Ratio
----------------------------------- ----------
four quarters ending December 2002 1.75:1.0
four quarters ending March 2003 1.65:1.0
four quarters ending June 2003 1.75:1.0
four quarters ending September 2003 1.85:1.0
four quarters ending December 2003 2.32:1.0
four quarters ending March 2004 2.58:1.0
four quarters ending June 2004 2.74:1.0
each twelve month period ended on the
last day of each month thereafter 3.00:1.0
1.5 Paragraph 8B Financial Statements of the Note Agreements is amended
to replace the date therein of " December 30, 2002" with "March 13, 2003".
1.6 Paragraph 10B Other Terms of the Note Agreements is amended to
delete the following defined term: "Business Plan".
1.7 Paragraph 10B Other Terms of the Note Agreements is amended to add
the following defined terms in the appropriate alphabetical order:
"BUSINESS PLAN" shall mean the business plan of the Company,
which was delivered by the Company to the Purchasers on February 14,
2003; provided, with respect to Paragraph 5A(v) and financial reports
relating to the periods prior to 2003, the Business Plan shall mean the
Business Plan of the Company dated March 20, 2002, which was delivered
by the Company to the Purchasers.
"SIXTH AMENDMENT" shall mean the Sixth Amendment of the Note
Agreement and the
Private Shelf Agreement dated March 13, 2003
between the Company and the Purchasers.
3
SECTION 2. Representations and Warranties. TruServ represents and
warrants to each of the Purchasers that, after giving effect hereto as though
all conditions of effectiveness have been met, (a) each and every representation
and warranty set forth in paragraph 8 of each of the Note Agreements (other than
paragraphs 8H, 8I, and 8O) is true and correct as of the date of execution and
delivery of this letter agreement by TruServ with the same effect as if made on
such date, subject to in the case of the representations and warranties
contained in Paragraphs 8B and 8N to the matters disclosed in that Consent to
Waiver dated August 26, 2002 executed by the Purchasers, (b) no Event of Default
or Default exists, and (c) no fee has been paid or is payable to the Lenders or
the Agent (each as defined under the Intercreditor Agreement) in connection with
the execution and effectiveness of the Second Amendment to the BA Credit
Agreements.
SECTION 3. Effectiveness. The amendments described in Section 1 above
shall become effective as of the date upon which each Purchaser has received the
following (the "Amendment Effective Date"):
(a) To the extent due and payable, payment of all costs and expenses of
such Purchaser (including the reasonable fees and disbursements of legal counsel
(Xxxx, Gotshal & Xxxxxx LLP) to the Purchasers) in connection with this letter
agreement and all prior negotiations and documentation;
(b) A copy of this letter agreement duly executed by each party
hereto;
(c) A copy of each of the amendments to:
(1) the BA Credit Agreements (Exhibit A);
(2) the Private Placement Agreements (Exhibit B); and
(3) the "Operative Documents" (as defined in the Intercreditor
Agreement), including, without limitation, the extension of the "Synthetic
Lease" (Exhibit C);
each certified as being in full force and effect and each being in form and
substance reasonably satisfactory to the Purchasers;
(d) Such other documents or certificates as any Purchaser may
reasonably request; and
(e) Evidence reasonably satisfactory to the Purchasers that all
corporate and other proceedings shall have occurred.
SECTION 4. Affirmation of Guaranties. Each of the Guarantors hereby
consents to the terms of this Sixth Amendment in its capacity as a guarantor and
agrees that the terms of this Sixth Amendment shall not affect in any way its
obligations and liabilities under its Guaranty or any other Collateral Document
to which it is a party, all of which obligations and liabilities shall remain in
full force and effect and each of which is hereby reaffirmed.
SECTION 5. Further Assurances. Upon the request of the Purchasers, the
Company agrees to provide or cause its Subsidiaries to provide to the Purchasers
such additional amendments, consents, reaffirmations and ancillary documentation
as necessary or advisable, in the sole reasonable discretion of the Required
Holders, to ensure that the Collateral Documents (as defined in the
Intercreditor Agreement) are in full force and effect in all respects.
SECTION 6. Reference to and Effect on Note Agreements. Upon the
effectiveness of this letter agreement as set forth in Section 3 above, each
reference to the Shelf Note Agreement and the Xxxxxx Note Agreement in any other
document, instrument or agreement shall mean and be a reference to such
agreement as modified by this letter agreement. Except as specifically set
4
forth in and in conformity with Section 1 above, each Note Agreement shall
remain in full force and effect and each is hereby ratified and confirmed in all
respects.
SECTION 7. Waiver. Nothing contained herein shall be construed as a
waiver of or consent to any violation of the Note Agreements or any Default or
Event of Default under the Note Agreements.
SECTION 8. Governing Law. THIS LETTER AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE WHICH WOULD OTHERWISE CAUSE THIS
LETTER TO BE CONSTRUED OR ENFORCED OTHER THAN IN ACCORDANCE WITH THE LAWS OF THE
STATE OF
ILLINOIS.
SECTION 9. Counterparts; Section Titles. This letter agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which when taken together shall constitute
but one and the same instrument. The section titles contained in this letter
agreement are and shall be without substance, meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
SECTION 10.Consents and Waiver. Notwithstanding any provision in the
Note Agreements to the contrary, the Purchasers consent to the amendments to the
Financing Agreements set forth as Exhibits A, B and C hereto.
[SIGNATURES ON FOLLOWING PAGE]
5
Very truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ XXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ XXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
U.S. PRIVATE PLACEMENT FUND
By: PRUDENTIAL PRIVATE PLACEMENT
INVESTORS, L.P., Investment
Advisor
By: PRUDENTIAL PRIVATE PLACEMENT
INVESTORS, INC.,
its General Partner
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Accepted and Agreed:
TRUSERV CORPORATION
By: /s/ XXXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
6
GENERAL PAINT & MANUFACTURING COMPANY,
as a Guarantor
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
TRUSERV ACCEPTANCE COMPANY,
as a Guarantor
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
TRUSERV LOGISTICS COMPANY,
as a Guarantor
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
MARYGREEN, LLC,
as a Guarantor
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
TRUE XXXXX.XXX CORPORATION,
as a Guarantor
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
ADVOCATE SERVICES, INC., as a Guarantor
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
SERVISTAR PAINT COMPANY, as a Guarantor
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
7
