First Amendment to Credit Agreement
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of November 5, 1997, by and
among General Housewares Corp., a Delaware Corporation, Xxxxxx Trust and
Savings Bank, in its capacity as agent (the "Agent") for the Banks and the
Banks party to the Credit Agreement (as hereinafter defined). Terms which are
defined in the Credit Agreement shall have the same meaning herein as defined
in the Credit Agreement.
Witnesseth that:
WHEREAS, the Borrower, the Agent and the Banks are party to that certain Credit
Agreement dated as of November 13, 1996 (together with all exhibits,
schedules, attachments and appendices thereto, the "Credit Agreement"); and
WHEREAS, the Borrower has requested that certain provisions of the Credit
Agreement be amended and the Banks and the Agent are agreeable to so amending
the Credit Agreement on the terms and subject to the conditions hereof;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Borrower, the Agent and the Banks hereby
agree as follows:
1. Section 1.1(c)(iv)(a) of the Credit Agreement is hereby amended in its
entirety to be and to read as follows :
(a) in the case of a draft payable in U.S. Dollars, at the rate per annum
determined by adding 2% to the sum of the Domestic Rate as from time to time
in effect and the Applicable Domestic Rate Margin for Domestic Rate Loans
under the Revolving Credit and
2. Section 2.1(a) of the Credit Agreement is hereby amended in its entirety
to be and to read as follows:
(a) Domestic Rate Loans. Each Domestic Rate Loan made by a Bank (including
Loans made pursuant to Section 1.1(c) hereof) shall bear interest (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid
principal amount thereof from the date such Loan is made until maturity
(whether by acceleration or otherwise) at a rate per annum equal to the sum of
the Applicable Domestic Rate Margin plus the Domestic Rate from time to time
in effect, payable on the last day of the applicable Interest Period and at
maturity (whether by acceleration or otherwise).
"Domestic Rate" means for any day the greater of:
(i) the rate of interest announced by the Agent from time to time as its
prime commercial rate, or equivalent, with any change in the Domestic Rate
resulting from a change in said prime commercial rate to be effective as of
the date of the relevant change in said prime commercial rate; and
(ii) the sum of (x) the rate for that day set forth opposite the caption
"Federal Fund (Effective)" in the daily statistical release designated as
"Composite 3:30 P.M. Quotations for U.S. Government Securities", or any
successor publication, published by the Federal Reserve Bank of New York or,
if such publication shall be suspended or terminated, the arithmetic average
of the rates quoted to the Agent as the prevailing rates per annum (rounded
upward, if necessary, to the next higher 1/100 of 1%) bid at approximately
10:00 A.M. (Chicago time) (or as soon thereafter as is practicable) on such
day by two or more New York or Chicago Federal funds dealers of recognized
standing selected by the Agent for the purchase at face value of Federal funds
in the secondary market in an amount comparable to the principal amount owed
to the Banks for which such rate is being determined, plus (y)1/2 of 1%
(0.50%).
"Domestic Rate Margin" means 0% subject to adjustment as provided in Section
2.11 hereof.
3. Section 2.7(a) and (b) of the Credit Agreement are hereby amended in their
entirety to be and to read as follows :
(a) with respect to any Domestic Rate Loan, the sum of two percent (2%) plus
the Applicable Domestic Rate Margin plus the Domestic Rate from time to time
in effect;
(b) with respect to any Eurocurrency Loan denominated in U.S. Dollars the sum
of two percent (2%) plus the rate of interest in effect thereon at the time of
such default until the end of the Interest Period applicable thereto and,
thereafter, at a rate per annum equal to the sum of two percent (2%) plus the
Applicable Domestic Rate Margin plus the Domestic Rate from time to time in
effect; and
4. Section 2.11 of the Credit Agreement is hereby amended in its entirety to
be and to read as follows:
Section 2.11. Margin Adjustments. The applicable Eurocurrency Margin and the
applicable Domestic Rate Margin shall be subject to quarterly adjustment based
upon the ratio of (a) average monthly Consolidated Funded Debt for the
immediately preceding four fiscal quarters ended on each such fiscal quarter
end to (b) Consolidated Income Before Interest, Taxes and Depreciation for the
immediately preceding four fiscal quarters ended on each such fiscal quarter
end (the "Cash Flow Ratio") as follows (the margins from time to time
applicable to the Eurocurrency Loans being hereinafter referred to as the
"Applicable Eurocurrency Margin" and the margins from time to time applicable
to the Domestic Rate Loans being hereinafter referred to as the "Applicable
Domestic Rate Margin"), provided that from the date of the First Amendment
until the Agent's first determination subsequent to the date of the First
Amendment of the Cash Flow Ratio pursuant to the last paragraph of this
Section 2.11, the Applicable Eurocurrency Margin shall be 1.75% and the
Applicable Domestic Rate Margin shall be 0.25%:
If as of the last day of any fiscal
quarter:
The Applicable
Eurocurrency Margin
Shall Be:
The Applicable
Domestic Rate
Margin Shall Be:
LEVEL VI:
Cash Flow Ratio is equal to or greater
than 3.50 to 1.00
2.00%
0.50%
LEVEL V:
Cash Flow Ratio is equal to or greater
than 3.00 to 1.00 but less than to 3.50 to
1.00
1.75%
0.25%
LEVEL IV:
Cash Flow Ratio is equal to or greater
than 2.50 to 1.00 but less than to 3.00 to
1.00
1.50%
0%
LEVEL III:
Cash Flow Ratio is equal to or greater
than 2.00 to 1.00 but less than to 2.50 to
1.00
1.00%
0%
LEVEL II:
Cash Flow Ratio is equal to or greater
than 1.50 to 1.00 but less than to 2.00 to
1.00
0.75%
0%
LEVEL I:
Cash Flow Ratio is less than 1.50 to 1.00
0.625%
0%
Not later than five Business Days after receipt by the Agent of the financial
statements and the compliance certificate called for by Section 8.5 hereof for
the applicable quarter, the Agent shall determine the Cash Flow Ratio for the
applicable period based on the information contained in such financial
statements and compliance certificate and shall promptly notify the Borrower
and the Banks of such determination and of any change in the Applicable
Eurocurrency Margin and/or the Applicable Domestic Rate Margin resulting
therefrom, any such change in the Applicable Eurocurrency Margin and/or the
Applicable Domestic Rate Margin to be effective as of the date the Agent so
notifies the Borrower, with such new Applicable Eurocurrency Margin and/or
Applicable Domestic Rate Margin to continue in effect until the effective date
of the next quarterly redetermination in accordance with the foregoing. Each
determination of the Cash Flow Ratio, the Applicable Eurocurrency Margin and
the Applicable Domestic Rate Margin by the Agent in accordance with this
Section shall be conclusive and binding on the Borrower and the Banks absent
manifest error. The foregoing to the contrary notwithstanding, in the event
the Borrower shall have failed to deliver the financial statements for the
applicable quarter within the times provided by Section 8.5 hereof, the
highest applicable margins shall apply until delivery of such financial
statements.
5. Section 3.1 of the Credit Agreement is hereby amended in its entirety to
be and to read as follows:
Section 3.1. Commitment Fee. The Borrower shall pay to the Agent for the
ratable account of the Banks a commitment fee at the rate of one-fourth of one
percent (0.25%) per annum (computed on the basis of a year of 360 days and the
actual number of days elapsed) on the average daily Unused Amount of the
Revolving Credit Commitments hereunder, provided however, that for the period
from the date of the First Amendment until the Agents first determination
subsequent to the date of the First Amendment of the Cash Flow Ratio pursuant
to the last paragraph of Section 2.11 hereof, the rate of the commitment fee
payable pursuant hereto shall be three-eighths of one percent (.375%) computed
as aforesaid, and thereafter (i) at all times during which Level I, II or III
pricing is in effect pursuant to Section 2.11 hereof, the rate of the
commitment fee payable pursuant hereto shall be one-quarter of one percent
(.25%) per annum computed as aforesaid, (ii) at all times during which Level
IV or V pricing is in effect pursuant to Section 2.11 hereof, the rate of the
commitment fee payable pursuant hereto shall be three-eighths of one percent
(.375%) per annum computed as aforesaid and (iii) at all times during which
Level VI pricing is in effect pursuant to Section 2.11 hereof (including the
times provided for by the last sentence of such Section), the rate of the
commitment fee payable pursuant hereto shall be one-half of one percent (.50%)
per annum computed as aforesaid. Such commitment fee is payable in arrears on
the last day of each March, June, September and December occurring after the
date hereof and on the Termination Date, unless the Revolving Credit
Commitments are terminated in whole on an earlier date, in which event the
fees for the period to the date of such termination in whole shall be paid on
the date of such termination.
6. Clause (1) of the definition of "Permitted Investments" in Section 5.1 of
the Credit Agreement is hereby amended in its entirety to be and to read as
follows:
(1) Existing Investments in foreign Consolidated Subsidiaries, other
Investments existing as of December 31, 1993 and disclosed on the audited
financial statements herefore delivered to the Banks, Investments in domestic
Consolidated Subsidiaries and Investments in any Person which concurrently
with such Investment becomes a Consolidated Subsidiary, provided, that (i)
prior to making any such Investment during the period from the date of the
First Amendment through September 30, 1998 the Borrower (x) delivers pro forma
financial statements (prepared in accordance with Agreement Accounting
Principles) demonstrating that after giving effect to such Investment the
Borrower will be in compliance with all the provisions of this Credit
Agreement and no Default or Event of Default will exist and (y) can
demonstrate to the reasonable satisfaction of the Required Banks that at the
time such Investment is made the Borrower will, after giving effect to the
total amount of consideration paid by the Borrower and its Subsidiaries in
making such Investment plus the aggregate projected working capital needs of
such Person for the twelve months following the making of such Investment,
have unused availability under this Credit Agreement immediately following
such Investment of at least $7,000,000 and (ii) from the period from the date
of the First Amendment through September 30, 1998 the aggregate amount of such
Investments may not exceed $5,000,000 and;
7. The definition of "Funded Debt" appearing in Section 5.1 of the Credit
Agreement is hereby amended by deleting the phrase "(a) all Indebtedness of
such Person for borrowed money" appearing in such definition and replacing it
with the phrase ", without duplication, (a) all Indebtedness of such Person".
8. The following definitions in Section 5.1 of the Credit Agreement are
hereby deleted in their entirety: "Earnings Available For Fixed Charges",
"Fixed Charge Coverage Ratio" and "Fixed Charges".
9. The following definitions are hereby inserted into Section 5.1 of the
Credit Agreement in their proper alphabetical order:
"Applicable Domestic Rate Margin" is defined in Section 2.11 hereof.
"Domestic Rate Margin" is defined in Section 2.1(a) hereof.
"First Amendment" means that certain First Amendment to Credit Agreement dated
as of October 30, 1997 among the Borrower, the Agent and the Banks.
10. Section 8.7 of the Credit Agreement is hereby amended by deleting the
ratio ".45 to 1.0" at the end of such Section and replacing it with the ratio
".50 to 1.0".
11. Section 8.8 of the Credit Agreement is hereby amended in its entirety to
be and to read as follows:
Section 8.8. Funded Debt Coverage Ratio. As of the end of each fiscal
quarter of the Borrower, the Borrower will maintain a ratio of Consolidated
Funded Debt as of the last day of such fiscal quarter to Consolidated Income
Before Interest, Taxes and Depreciation for the four fiscal quarters ending on
the last day of such quarter (taken as a single accounting period) (the
"Funded Debt Coverage Ratio") equal to or less than the ratio set forth next
to the last day of such fiscal quarter in the chart below:
September 30, 1997 4.00 to 1.00
December 31, 1997 4.00 to 1.00
March 31, 1998 4.50 to 1.00
June 30, 1998 4.00 to 1.00
September 30, 1998 3.50 to 1.00
December 31, 1998 and the last
day of each fiscal quarter thereafter 3.00 to 1.00
12. Section 8.10 of the Credit Agreement is hereby amended in its entirety to
be and to read as follows:
Section 8.10. Distributions. The Borrower will not, except as hereinafter
provided:
(a) declare or pay any dividends, either in cash or property on any class of
its stock (except dividends payable solely in common stock of the Borrower);
or
(b) directly or indirectly, or through any Subsidiary, purchase, redeem or
retire any of its stock or any warrants, rights or options to purchase or
otherwise acquire any shares of its stock (other than payments to any officer
of the Borrower in connection with the exercise of such officers stock
appreciation rights granted pursuant to stock purchase plans of the Borrower
to the extent such payments are required to be deducted in the calculation of
Consolidated Net Earnings and so long as a Default or Event of Default shall
not have occurred and be continuing at the time of any such payment or would
occur as a result thereof, the Borrower acknowledging and agreeing that all
agreements relating to any such payments shall provide that the Borrowers
obligation to make such payments shall be subject to satisfaction of the
foregoing conditions); or
(c) make any other distribution, either directly or indirectly or through any
Subsidiary, in respect of its stock;
(such declarations and payments of dividends (computed without duplication),
purchases, redemptions or retirements of stock, warrants, rights or options
and all such other distributions being herein collectively called
"Distributions"), if after giving effect to any such Distribution, the
aggregate amount of Distributions declared or made outstanding (x) during any
fiscal quarter ending on or prior to June 30, 1998 would exceed the lesser of
(i) 8 cents per share or (ii) $320,000 and (y) during the period from and
after July 1, 1998 to and including the date of the declaration or making of
the Distribution would exceed 50% of Consolidated Net Earnings from and after
April 1, 1998 (or, if such Consolidated Net Earnings is a deficit figure,
then minus 100% of such deficit) for such period computed on a cumulative
basis for said entire period.
The Borrower will not declare any dividend payable more than 90 days after the
date of the declaration thereof and will not declare or make any Distribution
if a Default has occurred and is continuing or if, on the date thereof and
after giving effect thereto the payment would create a Default or Event of
Default.
For the purposes of this Section 8.10 the amount of any Distribution declared
or paid or distributed in property shall be deemed to be the greater of book
or fair market value as determined in good faith by the board of directors of
the Borrower (in each case after deducting any liabilities relating thereto,
which are, concurrently with the receipt of such Distribution, assumed by the
recipient thereof), of such property at the time of the making of the
Distribution in question.
13. Each reference in the Credit Agreement to "Consolidated Income Before
Interest, Taxes and Depreciation" (including the definition set forth in
Section 5.1 of the Credit Agreement) is hereby amended to be a reference to
"Consolidated Income Before Interest, Taxes, Depreciation and Amortization"
and each reference in the Credit Agreement to "Consolidated Income Before
Interest, Taxes, Depreciation and Rentals" (including the definition set forth
in Section 5.1 of the Credit Agreement) is hereby amended to be a reference to
"Consolidated Income Before Interest, Taxes, Depreciation, Amortization and
Rentals".
14. Schedule I of Exhibit D of the Credit Agreement is hereby amended in its
entirety to be and to read the same as Schedule I attached hereto.
The amendment to the Credit Agreement specified in Section 6, 10, 11 and 12
above shall for all purposes be deemed to be effective as of September 29,
1997. All other amendments contained herein shall be effective as of the
Closing Date (as hereinafter defined).
Except as expressly amended hereby, the Credit Agreement and all other
documents executed in connection therewith shall remain in full force and
effect. The Credit Agreement, as amended hereby, and all rights and powers
created thereby and thereunder or under such other documents are in all
respects ratified and confirmed. From and after the date hereof, the Credit
Agreement shall be deemed to be amended and modified as herein provided, but,
except as so amended and modified, the Credit Agreement shall continue in full
force and effect and the Credit Agreement and this Amendment shall be read,
taken and construed as one and the same instrument. On and after the date
hereof the term "Agreement" as used in the Credit Agreement and all other
references to the Credit Agreement in the Credit Agreement, the Loan Documents
and the other documents executed in connection therewith and/or herewith or
any other instrument, document or writing executed by the Borrower or any
other person or furnished to the Agent or the Banks by the Borrower, or any
other person in connection herewith or therewith shall mean the Credit
Agreement as hereby amended.
On and as of the date hereof (the "Closing Date") (i) the Borrower represents
and warrants to the Agent and the Banks that (x) this Amendment has been duly
authorized, executed and delivered on its behalf, and both the Credit
Agreement, both before being amended and supplemented hereby and as amended
and supplemented hereby, and this Amendment constitutes its legal, valid and
binding obligation enforceable against it in accordance with its terms, except
to the extent that a remedy or default may be determined by a court of
competent jurisdiction to constitute a penalty and except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights or by general
principles of equity and (y) since June 30, 1997 there has been no material
adverse change in the condition, financial or otherwise, or business prospects
of the Borrower and the Consolidated Subsidiaries taken as a whole and (ii)
the Borrower shall cause to be delivered an opinion of counsel opining on the
due authorization and execution of this Amendment by the Borrower and is
validity and enforceability against the Borrower, subject to customary opinion
exceptions.
The Borrower hereby agrees to pay on the Closing Date to the Agent, for the
ratable account of the Banks based upon their share of the Commitments in
effect on the Closing Date, an amendment fee in an amount equal to one-fourth
of one percent (0.25%) of such Commitments.
This Amendment may be signed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
Except as otherwise specified herein, this Amendment embodies the entire
agreement and understanding between the Borrower, the Agent and the Banks with
respect to the subject matter hereof and supersedes all prior agreements,
consents and understandings relating to such subject matter.
This Amendment shall be binding upon and inure to the benefit of the Agent and
the Banks and their successors and assigns and the Borrower and its permitted
successors and assigns.
Except as herein specifically set forth, the Credit Agreement shall be
unaffected hereby and remain in full force and effect as hereby amended and
any reference to the Credit Agreement after the date hereof shall mean the
Credit Agreement as amended hereby.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Borrower, the Agent and the Banks have caused this
Amendment to be duly executed as of the date first hereinabove written.
GENERAL HOUSEWARES CORP.
By Xxxxxxx X. Xxxxx
Its Vice President
XXXXXX TRUST AND SAVINGS BANK, in its individual capacity as a Bank and as Agent
By Xxxxx Xxxxxxxxx
Its Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By Xxxxxxx X. Xxxx
Its Vice President
THE NORTHERN TRUST COMPANY
By Xxxxxxxxxx Xxxxxxxx
Its Second Vice President
Schedule I
General Housewares Corp.
COMPLIANCE CALCULATIONS FOR CREDIT AGREEMENT
DATED AS OF NOVEMBER13, 1996
CALCULATIONS AS OF , 19
A. Leverage Ratio (Section 8.7)
1. Obligations for Borrowed Money $
2. Conditional Sale Obligations
3. Guaranties
4. Take or pay (and similar) contract obligations
5. Debt (to the extent not otherwise included
above) secured by liens or security
interests
6. Capitalized Lease Obligations (to the extent
not otherwise included above)
7. Obligations with respect to letters of credit and
bankers acceptances
8. Add Lines 1 through 7 (Total Indebtedness)
9. Short term Indebtedness (other than current
maturities of long term Indebtedness) and
Indebtedness with respect to commercial L/Cs
10. Line 8 minus Line 9
(Consolidated Adjusted Funded Debt)
11. Total Stockholders Equity (Consolidated
Net Worth)
12. Consolidated Adjusted Funded Debt (Line 9 above)
13. Add Line 11 and Line 12 (or subtract Line 11
from Line 12 if Line 12 is a negative
number)
14. Ratio of Line 10 to Line 13 : 1.0
15. Line 14 ratio must not be in an amount greater
than: .50:1.0
B. Consolidated Net Worth (Section 8.6).
1. Consolidated Net Worth
(Line A.11. above) $
2. Line 1 must not be less than $45,000,000 (to be
increased as provided in Section 8.6)
C. Current Ratio (Section 8.9).
1. Consolidated current assets $
2. Consolidated current liabilities $
3. Ratio of Line 1 to Line 2 : 1.0
4. Line 3 ratio must not be in an
amount less than 1.5 : 1.0
D. Funded Debt Coverage Ratio (Section 8.8).
1. Obligations for Borrowed Money $
2. Conditional Sale Obligations
3. Guaranties
4. Take or pay (and similar) contract obligations
5. Debt (to the extent not otherwise included
above) secured by liens or security
interests
6. Capitalized Lease Obligations (to the extent
not otherwise included above)
7. Obligations with respect to letters of credit and
bankers acceptances
8. Add Lines 1 through 7 (Total Indebtedness)
9. Short term Indebtedness (other than current
maturities of long term Indebtedness)
10. Line 8 minus Line 9
(Consolidated Funded Debt)
11. Consolidated Net Earnings (including non-
operating losses to the extent cash is reduced
and excluding non-operating gains) $
12. Consolidated Interest Expense $
13. Federal, state and local income taxes $
14. Depreciation for fixed assets $
15. Amortization of Intangible Assets $
16. Add Lines 11 through 15 (EBITDA) $
17. Ratio of Line 10 to Line 16 : 1.0
18. Is Line 17 ratio equal to or less than
applicable ratio specified in Section 8.8? Yes/No
