EXHIBIT 4.3
GANTOS, INC.
AND
STATE STREET BANK AND TRUST COMPANY
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SUPPLEMENTAL INDENTURE NO. 1 TO INDENTURE
Dated as of April 1, 1995
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SERIES A PROMISSORY NOTES
SERIES B PROMISSORY NOTES
Dated as of December 15, 1997
SUPPLEMENTAL INDENTURE NO. 1
Supplemental Indenture No. 1 (the "Supplemental Indenture"), dated
as of December 15, 1997, between Gantos, Inc., a Michigan corporation (the
"Company"), and State Street Bank and Trust Company, a national banking
association and successor to Fleet Bank N.A. (successor to Shawmut Bank
Connecticut, National Association, a national banking association) (the
"Trustee").
RECITALS
A. The Company and the Trustee are the parties to the Indenture,
dated as of April 1, 1995 between Company and Trustee, as successor trustee
(the "Indenture").
B. The Company has been in violation of financial covenants
contained in the Indenture since November 1, 1997, and the parties to this
Supplemental Indenture desire to eliminate certain of the financial covenants
in the Indenture for the third fiscal quarter of 1997, and to revise such
financial covenants, in exchange for a cash payment by the Company for the
benefit of the Holders of the Notes.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, for and in
consideration of the premises, it is mutually agreed and consented, for the
equal and proportionate benefit of the respective Holders from time to time
of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used in this
Supplemental Indenture and not defined in this Supplemental Indenture have
the meanings given them in the Indenture.
2. ELIMINATION OF COVENANTS. Effective on the Effective Date,
Sections 6.12(c) and (d) of the Indenture are eliminated from, and shall not
apply to, the Indenture or the Notes with respect to the third fiscal quarter
of the Company's 1997 fiscal year.
3. ADDITIONAL DEFINITIONS. Effective on the Effective Date, the
following definitions are added to Section 1.01 of the Indenture in their
applicable alphabetical order:
"ADJUSTED INTEREST EXPENSE:
The term "Adjusted Interest Expense" shall mean, for any
period, the greater of (a) zero and (b) Interest Expense for such
period, less, the amount by which (i) Interest Expense for such
period attributable to the Notes exceeds (ii) an amount equal to
Interest Expense, for such period, attributable to a portion of the
Revolving Loan (as defined in the Revolving Credit Agreement, as
amended from time to time) equal to the outstanding principal
amount of Notes outstanding during such period (or if no such
portion of the Revolving Loan (as defined in the Revolving Credit
Agreement, as amended from time to time) was outstanding during
such period, what Interest Expense, for such period, attributable
to such portion of the Revolving Loan (as defined in the Revolving
Credit Agreement, as amended from time to time) would have been,
assuming such portion of the Revolving Loan (as defined in the
Revolving Credit Agreement, as amended from time to time) had been
outstanding).
AVAILABILITY:
The term "Availability" shall have the meaning given that term
in the Revolving Credit Agreement, as amended from time to time.
FISCAL PERIOD:
The term "Fiscal Period" shall mean any four or five week fiscal
period (as applicable) of the Company.
INTEREST COVERAGE RATIO:
The term "Interest Coverage Ratio" shall mean, for any
four-quarter period, the ratio of (i) EBITDA of the Company and its
subsidiaries for the four most recent consecutive fiscal quarters
ending on or prior to the date of determination, to (ii) Adjusted
Interest Expense for such four-quarter period.
TRIGGER DATE:
The term "Trigger Date" means the last day of any Fiscal
Period (i) for which the average amount (calculated on a daily
basis for each Business Day (as defined in the Revolving Credit
Agreement, as amended from time to time) in such Fiscal Period) of
Availability was less than $5,000,000 OR (ii) during which the
amount of Availability (calculated at the close of business of each
day during such Fiscal Period) was less than $3,500,000 at the end
of any Business Day; PROVIDED, that in the event that a default
occurs under Section 6.05(j)(ii) of the Revolving Credit Agreement
or if the Company fails to deliver to the Trustee a copy of the
certificate required to be delivered pursuant to Section
6.05(j)(ii) of the Revolving Credit Agreement at the times it is
required to be delivered pursuant to Section 6.05(j)(ii) of the
Revolving Credit Agreement, the Trigger Date shall for all purposes
of this Indenture be deemed to have occurred as of the last day of
the Fiscal Period immediately preceding the date such default
occurs."
4. AMENDMENT OF FINANCIAL COVENANTS. Effective as of the
Effective Date, Sections 6.12(c) and (d) of the Indenture are amended and
restated to read as follows:
"(c) EBITDA. From and after the Trigger Date, not permit
EBITDA of the Company and its subsidiaries at the end of each
fiscal quarter ending on or after the Trigger Date for the
four-quarter period then ending to be less than the respective
amounts set forth below for the periods indicated:
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FOUR FISCAL QUARTERS MINIMUM
ENDING ON OR ABOUT EBITDA
January 31, 1998 $7,000,000
April 30, 1998 $6,800,000
July 31, 1998 $6,200,000
October 31, 1998 $6,400,000
January 31, 1999 $7,600,000
April 30, 1999 $8,600,000
July 31, 1999 $8,700,000
October 31, 1999 and
the last day of each
fiscal quarter thereafter $8,600,000
(d) INTEREST COVERAGE RATIO. From and after the Trigger
Date, not permit or suffer the Interest Coverage Ratio of the
Company and its subsidiaries at the end of each fiscal quarter
ending on or after the Trigger Date for the four quarter period
then ending to be less than the respective amounts set forth below
for the periods indicated:
FOUR FISCAL QUARTERS MINIMUM
ENDING ON OR ABOUT RATIO
January 31, 1998 3.8:1
April 30, 1998 3.9:1
July 31, 1998 3.5:1
October 31, 1998 3.4:1
January 31, 1999 4.1:1
April 30, 1999 4.4:1
July 31, 1999 4.4:1
October 31, 1999 and
the last day of each
fiscal quarter thereafter 4.1:1"
5. ELECTION TO APPLY REVISIONS TO REVOLVING CREDIT AGREEMENT
COVENANTS. If the EBITDA or Interest Coverage Ratio covenants contained in
Sections 7.10 and 7.11 of the Revolving Credit Agreement (or any related
definitions) are revised after the date of this Agreement, the Holders of at
least a majority in principal amount of the Outstanding Notes may elect to
amend the corresponding financial covenants (and any related definitions)
contained in Sections 6.12(c) and (d) of the Indenture, by Act of such
Holders, effective when evidence of such Act shall have been delivered to the
Trustee and the Company. Any such election must apply to all or none of the
changes to Section 7.10 of the Revolving Credit Agreement (and any related
definitions), and it must apply to all or none of the changes to Section 7.11
of the Revolving Credit Agreement (and any related definitions). Any such
election must be made and received by the
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Trustee and the Company within 90 days after Holders of the Notes are sent a
copy of any such amendment to the Revolving Credit Agreement.
6. DELIVERY OF CERTIFICATES. Effective as of the Effective Date,
the following is added as a new Section 6.16 of the Indenture:
"SECTION 6.16. CERTIFICATES.
The Company covenants and agrees with the Trustee that, so
long as any Notes shall remain Outstanding, it will furnish to the
Trustee (i) no later than the Wednesday next following the end of
each week, a certificate substantially in the form of SCHEDULE
6.05(j) to the Revolving Credit Agreement (or in such other form as
is mutually agreed to by the Company and the Agent under the
Revolving Credit Agreement) executed by the chief financial officer
of the Company (or another duly authorized financial officer of the
Company) demonstrating compliance as at the close of business on
Saturday of the previous week with the Borrowing Base (as defined
in the Revolving Credit Agreement) and (ii) no later than the third
Business Day of each Fiscal Period, a certificate substantially in
the form of SCHEDULE 6.05(j)(ii) to the Revolving Credit Agreement
(or in such other form as is mutually agreed to by the Company and
the Agent under the Revolving Credit Agreement) executed by the
chief financial officer of the Company (or another duly authorized
financial officer of the Company) setting forth with respect to the
immediately preceding Fiscal Period (A) the average amount
(calculated on a daily basis for each Business Day in such prior
Fiscal Period) of Availability and (B) the actual amount of
Availability as of the close of business of each day during such
Fiscal Period. A copy of current SCHEDULES 6.05(j) AND 6.05(j)(ii)
to the Revolving Credit Agreement are attached, and the Company
will provide the Trustee with any other forms of such Schedules as
are mutually agreed to by the Company and the Agent under the
Revolving Credit Agreement. In addition, if the Trigger Date has
occurred, each of these certificates delivered thereafter shall
contain a statement to that effect. The Trustee is not required to
forward these certificates to the Holders of Outstanding Notes.
However, the Trustee will notify the Holders of the Outstanding
Notes (i) if it has not received either of these certificates when
due, and (ii) if the Trigger Date occurs."
7. AMENDMENT TO EBITDA EVENT OF DEFAULT. Effective as of the
Effective Date, Section 8.01(a)(iv) of the Indenture are amended and restated
to read as follows:
"(iv) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a covenant
or warranty, a default in the performance or breach of which is
elsewhere in this Section 8.01 specifically dealt with), and
continuance of such default or breach for a period of 30 calendar
days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in principal amount of the Outstanding
Notes a written notice specifying such default or breach and
requiring it to be remedied and stating
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that such notice is a "Notice of Default" hereunder;"
8. CONSIDERATION FOR EFFECTING AMENDMENT. Upon the Effective
Date, the Company shall pay to the Trustee for the benefit of the holders of
the Outstanding Notes, 4.5% of the principal amount of the Outstanding Notes
as of the date of this Supplemental Indenture as consideration for effecting
this Supplemental Indenture. The payment of such consideration shall not
change the amount of principal and interest due with respect to the
Outstanding Notes.
9. REPRESENTATIONS AND WARRANTIES. The Company hereby represents
and warrants as follows (which representations and warranties shall survive
the execution and delivery of this Supplemental Indenture) as of the date
hereof that:
a. All representations and warranties contained in the
Indenture are true and correct in all material respects as of the date of
this Supplemental Indenture with the same force and effect as if made on such
date (except to the extent that any such representation or warranty relates
expressly to an earlier date).
b. The Company has the corporate power and authority to
execute, deliver and carry out the terms and provisions of this Supplemental
Indenture and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Supplemental Indenture.
c. This Supplemental Indenture has been duly executed and
delivered and constitutes the legal, valid and binding obligation of the
Company, and is enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles.
d. No registration or filing with, consent or approval of,
or other action by, any Federal, State or other governmental agency,
authority or regulatory body is or will be required on behalf of the Company
in connection with the execution, delivery, performance, validity or
enforcement of this Supplemental Indenture other than any such registration
or filing which has been made or any such consent, approval or other action
which has been obtained and remains in full force and effect and other than
the filing of a Form 10-Q or a Form 10-K with the Securities and Exchange
Commission.
e. The execution, delivery and performance of this
Supplemental Indenture by the Company will not violate any provision of the
certificate or articles of incorporation or bylaws of the Company or any of
its subsidiaries or any law, statute, rule or regulation, or any order or
decree of any court of governmental instrumentality applicable to the Company
or any of its subsidiaries, or, after the Effective Date, violate, result in
the breach of or constitute a default under any indenture, agreement or other
instrument to which the Company or any of its subsidiaries or any of their
respective properties or assets are or may be bound.
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f. After giving effect to this Supplemental Indenture after
the Effective Date, the Borrower is in compliance with all of the various
covenants and agreements applicable to it set forth in the Indenture.
g. After giving effect to this Supplemental Indenture after
the Effective Date, no event has occurred and is continuing which constitutes
or would constitute, with the giving of notice or the lapse of time or both,
an Event of Default under the Indenture.
h. The Company has no defense to or setoff, counterclaim or
claim against payment of the Notes or enforcement of the Indenture or the
Notes based upon a fact or circumstance existing or occurring on or prior to
the date of this Supplemental Indenture.
10. CONDITIONS PRECEDENT. Notwithstanding any term or provision
of this Supplemental Indenture to the contrary, no amendment set forth in
this Supplemental Indenture shall become effective until the Trustee shall
have determined that each of the following conditions precedent shall have
been satisfied:
a. The Company shall have delivered to the Trustee a copy of
the resolution of the Company, certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, that
this Supplemental Indenture has been authorized by the Company. The Company
shall have also delivered to the Trustee a certification of an officer of the
Company that all of the conditions precedent to the effectiveness of this
Indenture Supplement shall have been met as of the date of such certificate.
b. The Trustee shall have received an Opinion of Counsel
stating that the execution of this Supplemental Indenture is authorized or
permitted by the Indenture.
c. Counterparts of the separate Agreement, dated the date of
this Supplemental Indenture, between the Company and Xxxxxxx Associates, L.P.
("Xxxxxxx"), pursuant to which Xxxxxxx is consenting to the amendments
contained in this Supplemental Indenture, shall have been duly executed and
delivered on behalf of the Company and Xxxxxxx and such agreement shall be in
full force and effect.
d. Counterparts of this Supplemental Indenture shall have
been duly executed and delivered on behalf of the Company and the Trustee.
e. The consideration described in Section 8 shall have been
paid to the Trustee.
11. "EFFECTIVE DATE". The Effective Date shall be the later of
(i) the date the Company obtains the consent of Fleet Bank N.A. under the
Revolving Credit Agreement to this Supplemental Indenture, and (ii) the date
this Supplemental Indenture is executed and delivered by the parties to
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this Supplemental Indenture.
12. ADDITIONAL EVENT OF DEFAULT. It shall constitute an Event of
Default under the Indenture if any of the representations and warranties of
the Company under this Supplemental Indenture shall prove to have been
incorrect in any material respect when made.
13. NO OTHER CHANGE. Except as modified by this Supplemental
Indenture, the Indenture shall continue in full force according to its terms
and is hereby ratified.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
GANTOS, INC.
By:
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Its:
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Attest:
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Name:
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Title:
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STATE STREET BANK AND TRUST COMPANY
By:
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Its:
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STATE OF )
) ss.:
COUNTY OF )
On this __ day of December, 1997, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he/she is _______________ of GANTOS, INC., one of the entities described
in and which executed the above instrument; and that he/she signed his/her
name thereto by authority of the Board of Directors of said entity.
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Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
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Notary Public
8
STATE OF )
) ss.:
COUNTY OF )
On this __ day of December, 1997, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he/she is _______________ of STATE STREET BANK AND TRUST COMPANY, one of
the entities described in and which executed the above instrument; and that
he/she signed his/her name thereto by authority of the Board of Directors of
said entity.
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Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
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Notary Public
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AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of December 15, 1997
between Xxxxxxx Associates, L.P. ("Xxxxxxx") and Gantos, Inc. ("Gantos").
RECITALS
X. Xxxxxx and State Street Bank and Trust (as successor to Fleet
Bank N.A., formerly known as Shawmut Bank Connecticut, National Association)
(the "Trustee") have entered into the Indenture, dated as of April 1, 1995
(the "Indenture").
B. Pursuant to the Indenture, Gantos issued six-year notes
bearing interest payable quarterly at 12.75% (the "Notes").
X. Xxxxxxx currently owns $5,022,271.58 in principal amount of
the Outstanding Notes.
X. Xxxxxx has been in violation of one or more of the financial
covenants contained in the Indenture since November 1, 1997.
X. Xxxxxx and the Trustee propose to enter into a Supplemental
Indenture, dated the same date as this Agreement, a copy of which is attached
to this Agreement (the "Supplemental Indenture"), to amend the financial
covenants contained in the Indenture.
F. In exchange for the consideration payable to the Trustee for
the benefit of the Holders of Outstanding Notes, Xxxxxxx is willing to waive
past violations under the Indenture and consent to the Indenture Supplement
on the terms and conditions set forth in this Agreement.
THEREFORE, the parties agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used in this Agreement
and not defined in this Agreement have the meanings given them in the
Indenture.
2. WAIVER OF DEFAULTS. Xxxxxxx represents and warrants that it
is the Holder of $5,022,271.58 in principal amount of the Outstanding Notes.
Effective on the "Effective Date" (defined below), pursuant to Section
8.01(d) of the Indenture, on behalf of the Holders of all the Notes, Xxxxxxx
hereby waives any past default by the Company under Sections 6.12(c) or (d)
of the Indenture for the second and third fiscal quarters of fiscal 1997, and
any related notice defaults under other provisions of the Indenture for such
periods with respect to such defaults, including under Sections 6.07 and 8.08.
3. CONSENT AND ACT OF THE HOLDERS. Xxxxxxx acknowledges that
this Agreement embodies its consent to the provisions set forth in the
Supplemental Indenture as the Holder of a majority in principal amount of the
Outstanding Notes, and that it is executing and delivering this Agreement to
the Company and to the Trustee, and that its execution and delivery of this
Agreement to the Company and the Trustee constitutes its "Act" as defined in
Section 14.11 of the Indenture.
4. PAYMENT OF LEGAL FEES. The Company will pay Xxxxxxx'x
reasonable legal fees in connection with negotiation, execution and delivery
of this Agreement, including, without limitation, the negotiation of the
terms and provisions of the Supplemental Indenture, up to a maximum of
$50,000, based upon billing records to the nearest half hour, with a
description of the service provided.
5. ENTIRE AGREEMENT. This Agreement represents the entire
agreement of the parties to this Agreement with respect to the subject matter
of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date set forth in the introductory paragraph of this
Agreement.
XXXXXXX ASSOCIATES, L.P.
By:
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Its:
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GANTOS, INC.
By:
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Its:
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