Exhibit 10.14
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
"First Amendment"), dated as of August 6, 1997 is entered into among PETsMART,
INC., a Delaware corporation (the "Company"), the banks listed on the signature
pages hereof (the "Lenders") and NATIONSBANK OF TEXAS, N.A., as Administrative
Lender (in said capacity, the "Administrative Lender").
BACKGROUND
A. The Company, the Lenders and the Administrative Lender heretofore
entered into that certain Third Amended and Restated Credit Agreement, dated as
of April 18, 1997, (the "Credit Agreement"). The terms defined in the Credit
Agreement and not otherwise defined herein shall be used herein as defined in
the Credit Agreement.
B. The Company, the Lenders and the Administrative Lender desire to
amend the Credit Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the Company, the
Lenders and the Administrative Lender covenant and agree as follows:
1. AMENDMENTS.
(a) The definition of "APPLICABLE MARGIN" set forth in Section 1.1
of the Credit Agreement is hereby amended to read as follows:
"'APPLICABLE MARGIN' shall mean the following per annum
percentages, applicable in the following situations:
Non-Investment Grade Investment Grade
Applicability LIBOR Margin LIBOR Margin
------------- ------------ ------------
(i) If the Fixed Charges 0.375% 0.375%
Coverage Ratio is equal
to or greater than 2.5
to 1
(ii) If the Fixed Charges 0.500% 0.500%
Coverage Ratio is less
than 2.5 to 1 but is
equal to or greater
than 2.0 to 1
(iii) If the Fixed Charges 0.625% 0.500%
Coverage Ratio is less
than 2.0 to 1 but is
equal to or greater than
1.75 to 1
(iv) If the Fixed Charges 0.750% 0.625%
Coverage Ratio is less
than 1.75 to 1 but is
greater than or equal
to 1.50 to 1
(v) If the Fixed Charges 0.875% 0.875%
Coverage Ratio is less
than 1.50 to 1
The Applicable Margin payable by the Company on the Advances
outstanding hereunder shall be subject to reduction or increase, as
applicable and as set forth in the table above, on a quarterly basis
according to the Fixed Charges Coverage Ratio; PROVIDED, that each
adjustment in the Applicable Margin shall be effective as of the
fifth day following the date of receipt by the Administrative Lender
of the financial statements required pursuant to Section 6.14(a) or
6.14(b) hereof, as appropriate. If financial statements of the
Company (and corresponding Quarterly Compliance Certificate setting
forth the Fixed Charges Coverage Ratio) are not received by the
Administrative Lender by the fifth day following the date required
pursuant to Section 6.14(a) or 6.14(b) hereof, as appropriate, the
Applicable Margin shall be determined as if the Fixed Charges
Coverage Ratio is less than 1.50 to 1 until such time as such
financial statements and Quarterly Compliance Certificate are
received. The Applicable Margin from and including August 4, 1997 to
the date of the initial adjustment to be made therein as provided
above shall be 0.750%. During any period in which the Company has a
rating of BBB- or better from S&P or Baa3 or better from Xxxxx'x, the
Applicable Margin shall be equal to the applicable LIBOR Margin set
forth above in the column designated Investment Grade LIBOR Margin.
At all other times the Applicable Margin shall be equal to the
applicable LIBOR Margin set forth above in the column designated Non-
Investment Grade LIBOR Margin. Any decrease or increase in the LIBOR
Margins based on a change in the Company's rating by S&P or Xxxxx'x
shall be effective as of the fifth day following any such change in
the rating which requires a change in the LIBOR Margin used to
calculate the Applicable Margin."
(b) The definition of "EBITDA" set forth in Section 1.1 of the
Credit Agreement is hereby amended to read as follows:
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"'EBITDA' means, for the Company and its Subsidiaries,
calculated on a consolidated basis in accordance with GAAP, the sum
of (a) Net profit before Taxes (but excluding from the calculation
thereof the effect of (i) one-time charges to operating income with
respect to the costs related to Pooling Acquisitions by the Company;
provided that such costs shall not, together with the aggregate
Acquisition Consideration (other than capital stock of the Company)
and Capital Expenditures paid or incurred in connection with
Acquisitions during each fiscal year, exceed 15% of Tangible Net
Worth during each fiscal year, and (ii) the one-time operating charge
and restructuring charge of the Company for the fiscal quarter ending
August 3, 1997, not to exceed $65,000,000), plus (b) depreciation and
amortization expense, and other non-cash items deducted in the
calculation of net operating income, plus (c) interest expense
(including interest expense pursuant to Capital Leases), net of
interest and other investment income, plus (d) any net extraordinary
losses included in the calculation of net operating income, minus
(e) any net extraordinary gains included in the calculation of net
operating income."
(c) The definition of "NET WORTH" set forth in Section 1.1 of the
Credit Agreement is duly amended to read as follows:
"NET WORTH" means, for the Company and its Subsidiary
on a consolidated basis, determined in accordance with
GAAP, the sum of (a) capital stock taken at stated or par
value, plus (b) capital surplus, plus (c) retained earnings
less treasury stock, plus or minus, as the case may be (d)
the effect of foreign currency translation.
(d) Section 2.3(a) of the Credit Agreement is hereby amended to read
as follows:
"(a) COMMITMENT FEE. Subject to Section 10.9 hereof, the
Company agrees to pay to the Administrative Lender, for the ratable
account of the Lenders, a commitment fee (which shall be payable
quarterly in arrears on each Quarterly Date and on the Maturity Date)
based on the daily average unused portion of the Commitment (subject
to Section 10.9 hereof, computed on the basis of a year of 360-day
year for the actual number of days elapsed) at the following per
annum percentages, applicable in the following situations:
Applicability Percentage
------------- ----------
(A) If the Fixed Charges Coverage Ratio is 0.175%
greater than or equal to 2.5 to 1
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(B) If the Fixed Charges Coverage Ratio is 0.200%
less than 2.5 to 1 but is equal to or
greater than 2.0 to 1
(C) If the Fixed Charges Coverage Ratio is 0.250%
less than 2.0 to 1 but is equal to or
greater than 1.75 to 1
(D) If the Fixed Charges Coverage Ratio is 0.300%
less than 1.75 to 1 but is greater than
or equal to 1.50 to 1
(E) If the Fixed Charges Coverage Ratio is 0.350%
less than 1.50 to 1
For purposes of calculation of the commitment fee, Letters of
Credit outstanding from time to time will reduce the unused portion
of the Commitment. The commitment fee shall be subject to reduction
or increase, as applicable and as set forth above, on a quarterly
basis according to the performance of the Company as tested by the
Fixed Charges Coverage Ratio. Any such increase or decrease in such
fee shall be effective on the fifth day following the date of receipt
by the Administrative Lender of the financial statements required
pursuant to Section 6.14(a) or 6.14(b) hereof, as appropriate. If
such financial statements are not received by the fifth day following
the date required, the commitment fee shall be determined as if the
Fixed Charges Coverage Ratio is less than 1.50 to 1 until such time
as such financial statements are received. From and including
August 4, 1997 to the date of the initial adjustment of the
commitment fee to be made as provided above, the percentage shall be
0.300%."
(e) Section 6.1(b) of the Credit Agreement is hereby amended to read
as follows:
"(b) FIXED CHARGES COVERAGE RATIO. The Fixed Charges
Coverage Ratio shall not be less than (i) 1.45 to 1.00 at the end of
any fiscal quarter of the Company until and including the last fiscal
quarter of fiscal year 1998, (ii) 1.50 to 1 at the end of any fiscal
quarter of the Company during fiscal year 1999, (iii) 1.60 to 1 at
the end of any fiscal quarter of the Company during fiscal year 2000,
and (iv) 1.75 to 1 at the end of any fiscal quarter of the Company
thereafter."
(f) Section 6.5 of the Credit Agreement is hereby amended by adding
the following language to the end of subsection (a) thereof:
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"or (iii) the Company's Xxxxx warehouse and
underperforming or replacement stores listed on
Schedule 6.5 hereto and related inventory and inventory and
fixtures related to the discontinuance of Discovery Centers
and 3 Dog Bakeries."
(g) The Credit Agreement is hereby amended to add a Schedule 6.5
thereto in the form of Schedule 6.5 to this First Amendment.
(h) The Quarterly Compliance Certificate is hereby amended to be in
the form of EXHIBIT B to this First Amendment.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, Company represents and warrants that, as of the
date hereof and after giving effect to the amendments contemplated by the
foregoing Section 1:
(a) the representations and warranties contained in the Credit
Agreement are true and correct on and as of the date hereof as made on and
as of such date;
(b) no event has occurred and is continuing which constitutes a
Default or an Event of Default;
(c) The Company has full power and authority to execute and deliver
this First Amendment, and this First Amendment and the Credit Agreement,
as amended hereby, constitute the legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms, except
as enforceability may be limited by applicable debtor relief laws and by
general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and except as rights to indemnity may
be limited by federal or state securities laws; and
(d) no authorization, approval, consent, or other action by, notice
to, or filing with, any governmental authority or other Person (other than
the Board of Directors of the Company) is required for the execution,
delivery or performance by Company of this First Amendment.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be effective
as of the date first above written, subject to the following:
(a) The Administrative Lender shall have received counterparts of
this First Amendment executed by the Lenders comprising the Majority
Lenders;
(b) The Administrative Lender shall have received counterparts of
this First Amendment executed by the Company and acknowledged by each
Guarantor (as hereinafter defined);
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(c) The Administrative Lender shall have received a certified
corporate resolution of the Board of Directors of the Company authorizing
the execution, delivery and performance of this First Amendment;
(d) The Administrative Lender shall have received for the account of
each Lender executing this First Amendment a consent fee in an amount
equal to the product of (i) 0.075% multiplied by (ii) such Lender's
Commitment; and
(e) The Administrative Lender shall have received, in form and
substance satisfactory to the Administrative Lender and its counsel, such
other documents, certificates and instruments as the Administrative Lender
shall require.
4. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", or words of like
import shall mean and be a reference to the Credit Agreement, as affected
and amended hereby.
(b) The Credit Agreement, as amended by the amendments referred to
above, shall remain in full force and effect and is hereby ratified and
confirmed.
5. COSTS, EXPENSES AND TAXES. The Company agrees to pay on demand all
costs and expenses of the Administrative Lender in connection with the
preparation, reproduction, execution and delivery of this First Amendment and
the other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Lender with respect thereto).
6. GUARANTOR'S ACKNOWLEDGMENT. By signing below, each Subsidiary
executing a Subsidiary Guaranty (a "Guarantor") (i) acknowledges, consents and
agrees to the execution, delivery and performance by Borrowers of this First
Amendment, (ii) acknowledges and agrees that its obligations in respect of its
Guaranty are not released, diminished, waived, modified, impaired or affected
in any manner by this First Amendment or any of the provisions contemplated
herein, (iii) ratifies and confirms its obligations under its Guaranty, and
(iv) acknowledges and agrees that it has no claims or offsets against, or
defenses or counterclaims to, its Guaranty.
7. EXECUTION IN COUNTERPARTS. This First Amendment 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.
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8. GOVERNING LAW; BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas and
shall be binding upon the Company and each Lender and their respective
successors and assigns.
9. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of
this First Amendment for any other purpose.
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST
AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, this First Amendment is executed as of the date first
set forth above.
COMPANY: PETsMART, INC.
By: /s/ C. Xxxxxx Xxxxxx
----------------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A., as
Administrative Lender
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
ISSUING BANK: NATIONSBANK OF TEXAS, N.A., as
Issuing Bank
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A.,
Individually
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
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XXXXX FARGO BANK, N.A.
By: /s/ Xxxxx X. Xxx
----------------------------------------
Name: Xxxxx X. Xxx
Title: Vice President
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Assistant Vice President
NORWEST BANK COLORADO, N.A.
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxx Xxxxx
----------------------------------------
Name: Xxx Xxxxx
Title: Senior Credit Officer
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ABN AMRO BANK N.V., LOS ANGELES
INTERNATIONAL BRANCH
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President/Director
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Group Vice President/Director
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President/Senior
Manager
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/ T. Xxxxxx Xxxxxxx XX
----------------------------------------
Name: T. Xxxxxx Xxxxxxx XX
Title: Deputy General Manager
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XXXXXX XXXXXX
XXXXXXXX XXXX XX XXXXXX
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Vice President
FLEET NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
THE SUMITOMO BANK OF CALIFORNIA
By: /s/ Xxxxxxx X. Xxx Xxxxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxx Xxxxxxxxxx
Title: Vice President
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XXX XXXX XX XXXX XXXXXX
By: /s/ Xxxx Xxxxx
----------------------------------------
Name: Xxxx Xxxxx
Title: Senior Relationship Manager
THE SAKURA BANK, LIMITED
By: /s/ Xxxxx Xxxx
----------------------------------------
Name: Xxxxx Xxxx
Title: Assistant General Manager
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President and Manager
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Xxxxxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title:Sr. Vice President & Joint GM
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BANK OF MONTREAL
By: /s/ Xxxxx X. Buthma
----------------------------------------
Name: Xxxxx X. Buthma
Title: Managing Director
ACKNOWLEDGED AND AGREED TO:
THE WEISHEIMER COMPANIES, INC.
By: /s/ C. Xxxxxx Xxxxxx
---------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
PETSTUFF, INC.
By: /s/ C. Xxxxxx Xxxxxx
---------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
SPORTING DOG SPECIALTIES, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Chief Financial Officer
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THE PET FOOD GIANT, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice Presient
PETSTUFF CANADA (USA) HOLDINGS, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
PETSTUFF NOVA SCOTIA, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
STATE LINE TACK, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
PETSMART VETERINARY SERVICES INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
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XXXXXXX XXXXX DISTRIBUTING, INC.
By: /s/ C. Xxxxxx Xxxxxx
---------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
STATE LINE TACK OF TEXAS, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
NATIONAL BRIDLE SHOP, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
SPAT PRODUCTIONS, INC.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
3003300 NOVA SCOTIA COMPANY
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------
Name: C. Xxxxxx Xxxxxx
Title: Executive Vice President
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