THIRD AMENDMENT
THIRD AMENDMENT dated as of December 16, 1997 (this
"Amendment") to the Amended and Restated Credit Agreement dated
as of February 17, 1995 (as in effect immediately prior to the
date hereof, the "Credit Agreement") among D 56, INC., a
Minnesota corporation (the "Company"), the several banks and
other financial institutions party thereto (the "Banks") and The
CHASE MANHATTAN BANK (as successor to Chemical Bank), a New York
banking corporation, as agent for the Banks (in such capacity,
the "Agent").
W I T N E S S E T H :
WHEREAS, the Company, the Banks, the Co-Agents named
therein and the Agent are parties to the Credit Agreement;
WHEREAS, the Company has requested that the Agent and
the Banks amend the Credit Agreement and the Holding Guarantee
(as defined in the Credit Agreement) in certain respects in order
to permit Holding to create two new Subsidiaries and to permit
the Company and its Subsidiaries to enter into certain
transactions with such two new Subsidiaries; and
WHEREAS, the Agent and the Banks are willing to enter
into this Amendment on the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the parties hereto agree
as follows:
1. Defined Terms. Unless otherwise defined herein,
capitalized terms used herein which are defined in the Credit
Agreement are used herein as so defined.
2. Amendments to Subsection 1.1. (a) Subsection
1.1 of the Credit Agreement is hereby amended by inserting the
following new definitions:
"Retail Subsidiary": Department 56 Retail, Inc., a
Minnesota corporation, or any other direct wholly-owned
Subsidiary of Holding created principally to make retail
sales of the Company's inventory;
"Sales Subsidiary": Department 56 Sales, Inc., a
Minnesota corporation, or any other direct wholly-owned
Subsidiary of Holding created principally to employ sales
representatives for the Company's inventory.
(b) Subsection 1.1 of the Credit Agreement is hereby
further amended by deleting the phrase "its Debt Ratio and its
Fixed Charge Coverage Ratio" each time it appears in the
definition of "Applicable Level" and substituting therefor each
such time the phrase "the Debt Ratio and the Fixed Charge
Coverage Ratio".
(c) Subsection 1.1 of the Credit Agreement is hereby
further amended by deleting from the definitions of "Applicable
Level", "Capital Expenditures", " Consolidated Current Assets",
"Consolidated Current Liabilities", Consolidated EBITDA",
"Consolidated Net Income", "Consolidated Net Worth", "Debt
Ratio", "Excess Cash Flow", "Fixed Charge Coverage Ratio",
"Indebtedness", "Lease Obligations", "Net Interest Expense", "Net
Proceeds" and "Working Capital", the phrase "the Company" each
time it appears therein and substituting therefor each such time
the phrase "Holding".
(d) Subsection 1.1 of the Credit Agreement is hereby
further amended by deleting from the definition of "Fixed Charge
Coverage Ratio" the phrase ",plus, for any period, Holding Net
Interest Expense".
(e) Subsection 1.1 of the Credit Agreement is hereby
further amended by deleting therefrom the definition of "Holding
Net Interest Expense".
(f) Subsection 1.1 of the Credit Agreement is hereby
amended by deleting from paragraph (b) of the definition of "Net
Proceeds" the word "Borrower" and substituting therefor the word
"Company".
(g) Subsection 1.1 of the Credit Agreement is hereby
further amended by inserting, at the end of the definition of
"Subsidiary", the following phrase:
, and Retail Subsidiary and Sales Subsidiary shall be deemed
to be Subsidiaries of the Company for purposes of the Credit
Documents (except for purposes of computing the Borrowing
Base).
3. Amendment to Subsection 7.1. Subsection 7.1 of the
Credit Agreement is hereby amended by adding the phrase "each of
Holding and its Subsidiaries and" immediately before the phrase
"the Company and its Subsidiaries" each time such latter phrase
appears.
4. Amendment to Subsection 7.2. Subsection 7.2 of the
Credit Agreement is hereby amended by deleting each reference to
"the Company" (except for references therein to officers of the
Company) and substituting therefor each such time a reference to
"Holding".
5. Amendment to Subsection 7.9. Subsection 7.9 of the
Credit Agreement is hereby amended by deleting each reference to
"the Company" (except for references therein to officers of the
Company) and substituting therefor each such time a reference to
"Holding".
6. Amendment to Subsection 8.5. Subsection 8.5 of the
Credit Agreement is hereby amended by (i) deleting the word "and"
appearing at the end of clause (f) thereof, (ii) replacing the
period at the end of clause (g) thereof with the phrase "; and"
and (iii) adding at the end of such subsection the following new
clause (h):
(h) the Company and its Subsidiaries may transfer
assets to Retail Subsidiary and Sales Subsidiary of the type
and having values as set forth on Schedule I to the Third
Amendment to this Agreement dated as of December 16, 1997.
7. Amendment to Subsection 8.6. Subsection 8.6 of the
Credit Agreement is hereby amended by adding at the end of clause
(b) the following:
and provided further that the Company and its Subsidiaries
may also transfer assets to Retail Subsidiary and Sales
Subsidiary in accordance with subsection 8.5(h).
8. Amendment to Subsection 8.11. Subsection 8.11 of
the Credit Agreement is hereby amended by (i) deleting the word
"and" appearing at the end of clause (c) thereof, (ii) replacing
the period at the end of clause (d) thereof with the phrase ";
and" and (iii) adding at the end of such subsection the following
new clause (e):
(e) the Company may declare and pay dividends to EBI
and Intermediate Co., EBI may declare and pay dividends to
Intermediate Co. and Intermediate Co. may declare and pay
dividends to Holding, in each case consisting of assets
which the Company is permitted to transfer to Retail
Subsidiary and Sales Subsidiary pursuant to subsection
8.5(h).
9. Amendment to Section 9. Section 9 of the Credit
Agreement is hereby amended by adding at the end the proviso
clause in clause (j) the following:
and (iii) create and own Retail Subsidiary and Sales
Subsidiary as its direct Subsidiaries and permit Retail
Subsidiary to engage in the business of retail sales of the
inventory of the Company and activities related thereto and
the Sales Subsidiary to engage in the business of the
employment of sales representatives for the Company's
inventory and activities related thereto and make
investments in Retail Subsidiary and Sale Subsidiary
consisting of (a) assets permitted to be transferred to
Retail Subsidiary and Sales Subsidiary pursuant to
subsection 8.5(h) and (b) capital contributions of up to
$1,000,000 in the aggregate in Retail Subsidiary and Sales
Subsidiary;
10. Amendment to Holding Guarantee. Section 10 of the
Holding Guarantee is hereby amended by adding immediately before
the phrase "; provided that . . ." the following:
and (iii) create and own Retail Subsidiary and Sales
Subsidiary as its direct Subsidiaries and permit Retail
Subsidiary to engage in the business of retail sales of the
inventory of the Company and activities related thereto and
the Sales Subsidiary to engage in the business of the
employment of sales representatives for the Company's
inventory and activities related thereto and make
investments in Retail Subsidiary and Sale Subsidiary
consisting of (a) assets permitted to be transferred to
Retail Subsidiary and Sales Subsidiary pursuant to
subsection 8.5(h) and (b) capital contributions of up to
$1,000,000 in the aggregate in Retail Subsidiary and Sales
Subsidiary;
11. Special Provisions Relating to Retail Subsidiary
and Sales Subsidiary. Notwithstanding any provisions to the
contrary set forth in the Credit Documents (a) Holding and the
Company will cause Retail Subsidiary and Sales Subsidiary to be
owned as direct wholly-owned Subsidiaries of Holding, and the
capital stock of such Subsidiaries shall be free of Liens; (b)
Retail Subsidiary and Sales Subsidiary shall not be permitted to
make any investment of the type permitted by clauses (h) or (i)
of subsection 8.6; (c) for purposes of the Credit Documents,
Subsidiaries of the Company shall include Retail Subsidiary and
Sales Subsidiary except for purposes of computing the Borrowing
Base; and (d) Retail Subsidiary and Sales Subsidiary shall not be
permitted to create, incur, assume or suffer to exist any
Indebtedness of the type permitted by clause (f) of subsection
8.1, any Liens of the type permitted by clause (h) of subsection
8.2 to secure Indebtedness permitted by clause (f) of subsection
8.1 or any Liens of the type permitted by clause (k) of
subsection 8.2.
12. Representations and Warranties. The Company
hereby confirms that, after giving effect to the amendments
provided for herein, the representations and warranties contained
in Section 5 of the Credit Agreement are true and correct in all
material respects on and as of the date hereof and no Default or
Event of Default has occurred and is continuing.
13. No Other Amendments. Except as expressly amended
hereby, the Credit Documents shall continue to be, and shall
remain, in full force and effect in accordance with its terms.
14. Counterparts. This Amendment may be executed by
the parties hereto in any number of separate counterparts and all
of such counterparts taken together shall be deemed to constitute
one and the same instrument.
15. Conditions to Effectiveness. This Amendment shall
become effective as of the date first written above when each of
the following conditions to effectiveness shall have been
satisfied:
(i) the Agent shall have received counterparts to this
Amendment, duly executed by the Company, the Required Banks
and the Agent;
(ii) the Agent shall have received the Acknowledgement
and Consent, attached to each counterpart hereof, duly
executed by each of the Credit Parties (other than the
Company);
(iii) the Agent shall have received an amendment to the
Holding Pledge Agreement, satisfactory in form and substance
to the Agent, which has the effect of pledging the capital
stock of each of Retail Subsidiary and Sales Subsidiary to
the Agent thereunder, accompanied by the share certificates
evidencing such capital stock and duly executed stock powers
therefor;
(iv) the Agent shall have received a Subsidiary
Guarantee, duly executed by each of Retail Subsidiary and
Sales Subsidiary; and
(v) the Agent shall have received an opinion from
counsel to the Company with respect to the amendment to the
Holding Pledge Agreement delivered pursuant to clause (iii)
above and the Subsidiary Guarantee delivered pursuant to
clause (iv) above, such opinion to be in form and substance
satisfactory to the Agent.
16. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the date set forth above.
D 56, INC.
By: /s/ XXXXXXX X. XXXXXXX
Title: Vice President
THE CHASE MANHATTAN BANK, as Agent
and as a Bank
By: /s/ XXXXXX XXXXXX
Title: Managing Director
BANK OF AMERICA ILLINOIS
By: /s/ XXXXXX XXXXXXXX
Title: Vice President
FIRST BANK NATIONAL ASSOCIATION
By: /s/ XXXXXXX XXXXXXX
Title: Vice President
XXXXXX TRUST AND SAVINGS BANK
By: /s/ XXXXXX X. XXXXX
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. XXXXX
Title: Senior Manager Loan Operations
SUMITOMO BANK, LIMITED
By: /s/ XXXX XXXXXX
Title: Vice President
By: /s/ XXXX X. XXXXXX, XX.
Title: Vice President & Manager
NBD BANK
By: /s/ XXXXXXXXXX XXXXX
Title: Authorized Signatory
SOCIETE GENERALE
By:
Title:
ABN-AMRO BANK N.V.
By: /s/ XXXXX XXXXXXXX
Title: Authorized Signatory
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
By: /s/ XXXXXX X. XXXXXX, XX.
Title: Authorized Signatory
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned Credit Parties (as defined in
the Amended and Restated Credit Agreement dated as of February
17, 1995; as amended, supplemented and otherwise modified prior
to the execution and delivery of the Amendment, the "Credit
Agreement") among D 56, INC., a Minnesota corporation (the
"Company"), the banks and other financial institutions parties
thereto (collectively, the "Banks") and THE CHASE MANHATTAN BANK
(as successor to Chemical Bank), a New York banking corporation,
as agent for the Banks (in such capacity, the "Agent") hereby
acknowledges, and consents to, the execution and delivery of the
Second Amendment dated as of December 16, 1997 to the Credit
Agreement, and agrees to remain bound by each Credit Document to
which it is a party.
DEPARTMENT 56, INC.
By: /s/ XXXXXXX X. XXXXXXX
Title: Vice President
FL 56 INTERMEDIATE CORP.
By: /s/ XXXXXXX X. XXXXXXX
Title: Vice President
xx xxxxxxx international, inc.
By: /s/ XXXXXXX X. XXXXXXX
Title: Vice President
DEPARTMENT 56 TRADING CO., LTD.
By: /s/ XXXXXXX X. XXXXXXX
Title: Vice President
