EXHIBIT 10.1
FOURTH AMENDMENT TO CREDIT AGREEMENT
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This Fourth Amendment to Credit Agreement (the "Amendment") is made on this
16th day of September, 1998 by and among Converse Inc. (the "Borrower"), BT
Commercial Corporation, as Agent (in such capacity, the "Agent") and BT
Commercial Corporation (in its capacity as lender, "BTCC"), Sanwa Business
Credit Corporation ("Sanwa"), LaSalle National Bank ("LaSalle"), BankBoston,
N.A. ("BankBoston"), FINOVA Capital Corporation ("FINOVA"), BNY Financial
Corporation ("BNY"), Fleet Capital Corporation ("Fleet"), NationsBank of Texas,
N.A. ("NationsBank"), Xxxxxx Financial, Inc. (BT, Sanwa, LaSalle, BankBoston,
FINOVA, BNY, Fleet, NationsBank, and Xxxxxx referred to collectively as
"Lenders").
W I T N E S S E T H:
WHEREAS, the Agent, the Lenders and the Borrower are parties to that
certain Credit Agreement dated as of May 21, 1997, as amended by that certain
First Amendment to Credit Agreement dated as of June 26, 1997, and that certain
Second Amendment to Credit Agreement dated as of November 21, 1997, and that
certain Third Amendment to Credit Agreement dated as of January 29, 1998
(collectively, the "Credit Agreement"); and
WHEREAS, Borrower has requested the consent of the Lenders to allow it to
enter into several substantially identical Note Purchase Agreements, each dated
as of the date hereof, pursuant to which Borrower will issue secured notes in an
aggregate principal amount of up to $38,785,000, and in connection with which
Borrower proposes to grant to BT Commercial Corporation, in its capacity as the
Collateral Agent for the holders of the secured notes, a junior security
interest in the Collateral to secure Borrower's obligations under such notes;
and
WHEREAS, it is necessary to amend the Credit Agreement to allow for the
various transactions contemplated by the Borrower pursuant to the Note Purchase
Agreements.
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the adequacy is hereby acknowledged,
and subject to the terms and conditions hereof, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein, all capitalized
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terms shall have the meaning given to them in the Credit Agreement.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT.
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2.1 REDUCTION OF THE COMMITMENTS. Pursuant to the direction of Borrower,
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the Total Commitments are hereby reduced from $150,000,000 to $120,000,000, and
Annex I to the Credit Agreement is hereby deleted and the form of Annex I
attached hereto is hereby substituted in its stead.
2.2 DEFINITIONS. Section 1.1 of the Credit Agreement is hereby amended by
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inserting the following new defined terms in proper alphabetical sequence:
"INFORMATION SYSTEMS AND EQUIPMENT" means all computer
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hardware, firmware and software, as well as other financial
processing systems, or any equipment containing imbedded
microchips, whether directly owned, licensed, leased,
operated or otherwise controlled by the Borrower or any of
its Subsidiaries, including through third party service
providers, and which are integral to the Borrower's or any
of its Subsidiaries' conduct of their respective
businesses."
"NOTEHOLDERS shall mean DDJ Canadian High Yield Fund, B III
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Capital Partners, L.P., Foothill Partners III, L.P., Libra
Investments, Inc., such other parties with which Borrower
enters into Note Purchase Agreements from time to time, and
any successors thereto or assignees thereof."
"NOTE PURCHASE AGREEMENTS shall mean the Note Purchase
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Agreements dated as of September 16, 1998 between Borrower
and each of the Noteholders, and such other Note Purchase
Agreements entered into between Borrower and a Noteholder
after such date, pursuant to which Borrower has issued or
will issue its secured notes in an aggregate principal
amount of up to $38,785,000."
"YEAR 2000 COMPLIANT means that all Information Systems and
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Equipment accurately process date data (including, but not
limited to, calculating, comparing and sequencing), before,
during and after the year 2000, as well as same and multi-
century dates, or between the years 1999 and 2000, taking
into account all leap years, including the fact that the
year 2000 is a leap year, and further, that when used in
combination with, or interfacing with, other Information
Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects
continue
to function in the same manner as it performs today and
shall not otherwise impair the accuracy or functionality of
Information Systems and Equipment."
Section 1.1 of the Credit Agreement is hereby further amended by deleting
from the definition "Borrowing Base" subsection (D) thereof in its entirety and
inserting the following in its stead:
"(D) $10,000,000 during the period from the date hereof
through and including September 30, 1997; thereafter,
on the first Business Day of each October, January,
April and July of each year during the term hereof,
such amount shall automatically reduce by $360,000;
provided, however, that such amount shall automatically
be reduced from time to time during the term hereof by
an amount equal to the Net Cash Proceeds in excess of
$1,000,000 from any Asset Disposition of any fixed
asset during any fiscal year during the term hereof,
plus"
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Section 1.1 of the Credit Agreement is hereby further amended by inserting
the following new provision immediately following the definition "Borrowing
Base":
"So long as the Borrower remains indebted to any Noteholder
pursuant to any Note Purchase Agreement, the advance rate
set forth in (A), (B) and (C) above shall not be increased."
2.3 USE OF PROCEEDS. Section 6.14 of the Credit Agreement is hereby
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amended by deleting the phrase "and the proceeds of any subsequent
advances made hereunder shall be used by the Borrower solely for
working capital and general corporate purposes." appearing at the end
of the first sentence thereof, and inserting "and the proceeds of any
subsequent advances made hereunder shall be used by the Borrower
solely for working capital and general corporate purposes, but shall
not be used for the purpose of making repayments of principal
indebtedness to any Noteholder pursuant to the terms of any Note
Purchase Agreement, except for any prepayment required pursuant to
Section 7.2 of the Note Purchase Agreements, and then only to the
extent the Borrower has complied with Sections 3.5(c), (d) and 7.5(a)
hereof." in its stead.
2.4 YEAR 2000. Section 6 of the Credit Agreement is hereby amended by
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adding the following new Section 6.19:
"6.19 YEAR 2000. All reprogramming, remediation, or any
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other corrective action, including the internal testing of
the Borrower's or any of its Subsidiaries Information
Systems and Equipment, are being developed on a timely basis
so as to avoid any Default or a Material Adverse Effect
arising from the so-called Year 2000 problem (that is, the
risk that computer applications and imbedded microchips in
non-computing devices use by the Borrower or any of its
Subsidiaries may be unable to recognize and perform properly
date sensitive functions following certain dates prior to
and any date after December 31, 1999)."
2.5 INDEBTEDNESS. Section 7.1 of the Credit Agreement is hereby amended
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by deleting subsection (iii) thereof and inserting the following in its stead:
"(iii) Debt up to $38,785,000 in principal amount incurred
pursuant to the terms of the Note Purchase
Agreements;"
Section 7.1 of the Credit Agreement is hereby further amended by
deleting subsection (vi) in its entirety and inserting the following in its
stead:
"(vi) Any other Funded Debt not described in clauses (i)
through (iv) above (the "Additional Permitted Debt")
which, when aggregated with the Funded Debt of
Borrower under clauses (i), (ii), and (iii) above
then outstanding, shall not exceed the principal sum
of $225,000,000;"
Section 7.1 of the Credit Agreement is hereby further amended by
deleting subsection (v) in its entirety.
2.6 RESTRICTED PAYMENTS. Section 7.2 is hereby amended by deleting the
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grammatical period at the end thereof, and inserting the following new
text:
", except for the retirement of Subordinated Notes with a
face value of up to $5,735,000, in exchange for promissory
notes issued by the Borrower in favor of one or more of the
Noteholders pursuant to the terms of the Note Purchase
Agreements in an aggregate amount of up to $3,785,100."
2.7 LIENS. Section 7.4 of the Credit Agreement is hereby amended by
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deleting subsection (g) thereof in its entirety and inserting the following in
its stead:
"(g) Liens securing Debt incurred pursuant to Section 7.1(iii);"
2.8 FINANCIAL RATIOS. Section 7.7 of the Credit Agreement is hereby
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deleted in its entirety, and the following is inserted in its stead:
"7.7 MINIMUM EBITDA. The Borrower shall maintain a minimum EBITDA
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for each of the periods ending on the dates set forth below of not
less than the amount set forth for such period:
Period Ending Minimum EBITDA
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The 12 month period ending ($2,000,000)
December 31, 1998
The 3 month period ending $ 2,250,000
March 31, 1999
The 6 month period ending $ 5,250,000
June 30, 1999
The 9 month period ending $ 9,250,000
September 30, 1999
The 12 month period ending $ 14,000,000
December 31, 1999
The 12 month period ending $ 15,100,000
March 31, 2000
The 12 month period ending $ 16,000,000
June 30, 2000
The 12 month period ending $ 17,250,000
September 301, 2000
The 12 month period ending $ 18,500,000
December 31, 2000
The 12 month ending $ 21,000,000
March 31, 2001
The 12 month period ending $23,500,000
June 30, 2001
The 12 month period ending $26,500,000
September 30, 2001
The 12 month period ending $28,000,000
December 31, 2001."
2.9 YEAR 2000 COMPLIANCE REPORTS. Section 7.11 of the Credit Agreement is
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hereby deleted in its entirety and the following is inserted in its stead:
"7.11 YEAR 2000 COMPLIANCE REPORTS. The Borrower shall
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provide the Agent and any Lender with such information about
its Year 2000 computer readiness (including, without
limitation, information as to contingency plans, budgets and
testing results) as the Agent shall reasonably request."
2.10 COLLATERAL MANAGEMENT FEE. Section 8.10(a) of the Credit Agreement
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is hereby amended by deleting the reference to "$100,000" and inserting
"$125,000" in its stead.
SECTION 3. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
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expressly conditioned upon satisfaction of the following conditions precedent:
3.1 AMENDMENT FEE. Borrower shall have paid to Agent for the benefit of
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the Lenders an amendment fee in the amount of $150,000.
3.2 COLLATERAL MANAGEMENT FEE. Borrower shall have paid to Agent, for its
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own account, the prorated portion of the Collateral Management Fee for the
period from September 16, 1998, through and including May 20, 1999, based on a
Collateral Management Fee in the amount of $125,000, after crediting to Borrower
the Collateral Management Fee paid as of May 21, 1998.
3.3 INTERCREDITOR AGREEMENT. A form of Collateral Agency and
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Intercreditor Agreement, acceptable to the Agent in its sole discretion, shall
have been executed and delivered among the Agent and the Noteholders.
3.4 AMENDMENT. Agent shall have received copies of this Amendment duly
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executed by Borrower and Lenders constituting Required Lenders.
3.5 NOTE PURCHASE DOCUMENTS. Agent shall have received certified copies
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of the executed Note Purchase Agreements, and all related documents.
3.6 ADDITIONAL DOCUMENTS. Agent shall have received such other documents,
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certificates and assurances as it shall reasonably request.
SECTION 4. CONSENT TO COLLATERAL AGENCY. By their signatures hereon, the
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Lenders hereby consent to BTCC accepting the appointment and acting as
Collateral Agent for the benefit of the Noteholders pursuant to terms of the
Collateral Agency and Intercreditor Agreement.
SECTION 5. REAFFIRMATION OF BORROWER. Borrower hereby represents and
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warrants to Agent and Lender that (i) the representations and warranties set
forth in Section 5 of the Credit Agreement are true and correct on and as of the
date hereof, except to the extent (a) that any such representations or
warranties relate to a specific date, or (b) of changes thereto as a result of
transactions for which Agent and Lender have granted their consent; (ii)
Borrower is on the date hereof in compliance with all of the terms and
provisions set forth in the Credit Agreement as hereby amended; and (iii) upon
execution hereof no Default or Event of Default has occurred and is continuing
or has not previously been waived.
SECTION 6. FULL FORCE AND EFFECT. Except as herein amended, the Credit
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Agreement and all other Credit Documents shall remain in full force and effect.
SECTION 7. COUNTERPARTS. This Amendment may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
day and year specified above.
BORROWER:
CONVERSE INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Sr. Vice President
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AGENT:
BT COMMERCIAL CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Sr. Vice President
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LENDER:
BT COMMERCIAL CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Sr. Vice President
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LENDER:
SANWA BUSINESS CREDIT
CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
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Title: Vice President
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LENDER:
LASALLE NATIONAL BANK
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxxxxx X. Xxxxxxxx
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Title: Sr. Vice President
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LENDER:
BANKBOSTON, N.A.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Vice President
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LENDER:
FINOVA CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
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Title: Asst. Vice President
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LENDER:
BNY FINANCIAL CORPORATION
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
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Title: Vice President
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LENDER:
FLEET CAPITAL CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
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Title: Vice President
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LENDER:
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
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Title: Vice President
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LENDER:
XXXXXX FINANCIAL, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Vice President
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ANNEX I
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LENDERS AND COMMITMENT AMOUNTS
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Lender Revolving Credit Commitment
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BT Commercial Corporation $12,800,000
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Sanwa Business Credit Corporation $16,000,000
Xxx Xxxxx Xxxxxx Xxxxx, 00/xx/ Xxxxx
Xxxxxxx, XX 00000
LaSalle National Bank $12,800,000
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
BankBoston, N.A. $ 8,000,000
000 Xxxxxxx Xxxxxx
Mail Stop: MA BOS 01-05-07
Xxxxxx, XX 00000
FINOVA Capital Corporation $12,800,000
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
BNY Financial Corporation $16,000,000
0000 Xxxxxx xx xxx Xxxxxxxx, 0/xx/ Xxxxx
Xxx Xxxx, XX 00000
Fleet Capital Corporation $12,800,000
000 Xxxxxxxxxxx Xxxx.
Xxxxxxxxxxx, XX 00000
NationsBank of Texas, N.A. $12,800,000
c/o NationsBank Business Credit
000 Xxxxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxx Financial, Inc. $16,000,000
000 Xxxx Xxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxx, XX 00000
