Exhibit 4.2
-1-
FIFTH AMENDMENT
TO REVOLVING CREDIT AGREEMENT
Fifth Amendment to Revolving Credit Agreement dated as of July 7, 1995
(the "FIFTH AMENDMENT"), by and among SPECIALTY RETAILERS, INC., a Delaware
corporation ("SRI"), PALAIS ROYAL, INC., a Texas corporation (the "BORROWER"),
THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions listed on
SCHEDULE 1 to the Credit Agreement (as hereinafter defined) (the "BANKS") and
THE FIRST NATIONAL BANK OF BOSTON, as agent for the Banks (in such capacity, the
"AGENT"), amending certain provision of the Revolving Credit Agreement dated as
of January 28, 1994 (as amended and in effect from time to time, the "CREDIT
AGREEMENT") by and among SRI, the Borrower, the Banks and the Agent. Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, SRI, the Borrower, the Banks and the Agent have agreed to
modify certain terms and conditions of the Credit Agreement as specifically set
forth in this Fifth 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:
ss.1. AMENDMENT TO ss.1 OF THE CREDIT AGREEMENT. Section 1.1 of the
Credit Agreement is hereby amended by inserting the following definitions in the
appropriate alphabetical order:
"SZOLDS. Szolds, Inc., a ____________ corporation."
"SZOLDS ACQUISITION. The acquisition by the
Borrower of certain of the assets of Szolds pursuant to the
terms of the Szolds Purchase Agreement."
"SZOLDS PURCHASE AGREEMENT. The [Purchase and Sale
Agreement] dated as of May 5, 1995 between Szolds and the
Borrower, which agreement shall be in form and substance
satisfactory to the Agent."
ss.2. AMENDMENT TO ss.9 OF THE CREDIT AGREEMENT. Section 9 of the
Credit Agreement is hereby amended by deleting ss.9.5.1 in its entirety and
restating it as follows:
"9.5.1. MERGERS AND ACQUISITIONS. Neither SRI nor the
Borrower will become a party to any merger or consolidation, or agree
to or effect any asset
-2-
acquisition or stock acquisition (other than the acquisition of assets
in the ordinary course of business consistent with past practice or the
merger of SRI and the Borrower) except the Borrower may effect the
Acquisition, the Xxxxx Acquisition, the Mammoth Acquisition and the
Szolds Acquisition, PROVIDED, that (a) no Default or Event of Default
has occurred or is continuing or would exist after giving effect
thereto; (b) the Borrower has provided the Agent with prior written
notice of each of the Acquisition, the Xxxxx Acquisition, the Mammoth
Acquisition and the Szolds Acquisition; (c) the aggregate total
consideration for (i) the Acquisition does not exceed, in the
aggregate, $21,400,000, and the consideration for assets acquired in
the Acquisition other than the Purchased Receivables does not exceed
$5,000,000 in the aggregate; (ii) the Xxxxx Acquisition does not
exceed, in the aggregate, $200,000; (iii) the Mammoth Acquisition does
not exceed, in the aggregate, $1,800,000; and (iv) the Szolds
Acquisition does not exceed, in the aggregate, $500,000, and (d) the
Borrower has demonstrated to the Agent based on a PRO FORMA Compliance
Certificate covenant compliance with ss.10 on a PRO FORMA basis
immediately prior to and after giving effect to each of the
Acquisition, the Xxxxx Acquisition, the Mammoth Acquisition and the
Szolds Acquisition on the assumption that each such acquisition
occurred at the beginning of the covenant calculations period.
In the event any new Subsidiary is formed as a result of or in
connection with the Acquisition, the Xxxxx Acquisition, the Mammoth
Acquisition or the Szolds Acquisition, the Loan Documents shall be
amended and/or supplemented as necessary to make the terms and
conditions of the Loan Documents applicable to such Subsidiary, and
such Subsidiary shall be required to execute and deliver to the Agent
(a) a guaranty satisfactory to the Agent guaranteeing the Obligations
of the Borrower to the Agent and the Banks and (b) a security agreement
and such other security documents as the Agent and the Banks shall
require in order to grant to the Agent for the benefit of the Agent and
the Banks a first priority perfected security interest in all of such
new Subsidiary's assets.
ss.3. AMENDMENT TO ss.10 OF THE CREDIT AGREEMENT. Section 10 of the
Credit Agreement is hereby amended as follows:
(a) Section 10.1 of the Credit Agreement is hereby amended by
deleting the table set forth in ss.10.1 in its entirety and restating its as
follows:
Period Ratio
------ -----
Fiscal Quarters ending April 29, 1995
through October 28, 1995............................ 0.90:1.00
Fiscal Quarter ending February 3, 1996................ 1.25:1.00
Fiscal Quarters ending May 4, 1996
through February 1, 1997............................ 1.30:1.00
-3-
each fiscal quarter thereafter........................ 1.40:1.00
(b) Section 10 of the Credit Agreement is further amended by inserting
immediately after the text of ss.10.1 the following:
ss.10.2 CAPITAL EXPENDITURES. The Borrower will not make,
or permit any Subsidiary to make, Capital Expenditures (including any
expenditures made in connection with any permitted acquisitions) in
the fiscal year ending February 3, 1996 that exceed, in the aggregate,
$28,000,000 for such fiscal year.
ss.4. CONDITIONS TO EFFECTIVENESS. This Fifth Amendment shall not
become effective until the Agent receives the following:
(a) a counterpart of this Fifth Amendment executed by SRI,
the Borrower, the Banks and the Agent;
(b) a copy of the Szolds Purchase Agreement, pursuant to which
the Borrower will be acquiring certain assets of Szolds (the "Proposed
Szolds Acquisition"), which Szolds Purchase Agreement shall be in form
and substance satisfactory to the Agent and the Banks;
(c) a PRO FORMA Compliance Certificate demonstrating
compliance with ss.10 of the Credit Agreement on a PRO FORMA basis
immediately prior to and after giving effect to the Proposed Szolds
Acquisition on the assumption that such acquisition occurred at the
beginning of the covenant calculations period;
(d) a letter from the Borrower and SRI detailing any changes
to the Perfection Certificate of the Borrower or SRI as a result of the
Proposed Szolds Acquisition;
(e) evidence satisfactory to the Agent that the assets to be
acquired pursuant to the Proposed Szolds Acquisition will be acquired
free and clear of any and all liens and encumbrances, which evidence
shall include but not be limited to, copies of filed UCC-3 termination
statements and mortgage discharges; and
(f) any UCC-1 financing statements and other documents and
instruments requested by the Agent in order to grant to the Agent,
for the benefit of the Banks and the Agent, a perfected first priority
security interest in the assets acquired pursuant to the Proposed
Szolds Acquisition which constitute general intangibles; and
ss.5. REPRESENTATIONS AND WARRANTIES. Each of SRI and the Borrower
hereby repeats, on and as of the date hereof, each of the representations and
warranties made by it in ss.7 of the Credit Agreement, PROVIDED, that all
references therein to the Credit Agreement shall refer to such Credit Agreement
as amended hereby.
ss.6. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the
-4-
Security Documents, are hereby ratified and confirmed in all respects and shall
continue in full force and effect. The Credit Agreement and this Fifth 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.
ss.7. NO WAIVER. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of SRI, the
Borrower or any rights of the Agent or the Banks consequent thereon.
ss.8. COUNTERPARTS. This Fifth 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.
ss.9. GOVERNING LAW. THIS FIFTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment as a document under seal as of the date first above written.
SPECIALTY RETAILERS, INC.
By: XXXXX X. XXXX
Title: Senior Vice President,
Secretary and Treasurer
PALAIS ROYAL, INC.
By: XXXXX X. XXXX
Title: Senior Vice President,
Secretary and Treasurer
THE FIRST NATIONAL BANK
OF BOSTON, individually and
as Agent
By: XXXXX XXXXXXX
Title: Vice President
UNION BANK
By: XXXXX XXXXXXXXXXXXX
Title: Vice President
-6-
RATIFICATION OF GUARANTY
The undersigned guarantor (the "Guarantor") hereby acknowledges and
consents to the foregoing Fifth Amendment as of July 7, 1995 and agrees that the
Guaranty dated as of January 28, 1994, in favor of the Agent for the benefit of
the Agent and the Banks, and all other Loan Documents to which the Guarantor is
a party remain in full force and effect, and the Guarantor confirms and ratifies
all of its obligations thereunder.
SPECIALTY RETAILERS, INC.
By: XXXXX X. XXXX
Title: Senior Vice President,
Secretary and Treasurer
