AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment No. 1 (this "Amendment") is entered into as of December
7, 1998 by and among XXXXXXXXX XXXXX CORPORATION, an Illinois corporation (the
"Borrower"), the financial institutions from time to time party thereto
(collectively, the "Lenders") and THE FIRST NATIONAL BANK OF CHICAGO, as one of
the Lenders and in its capacity as contractual representative (the "Agent") on
behalf of itself and the other Lenders.
RECITALS:
WHEREAS, the Borrower, the Lenders and the Agent have entered into
that certain Amended and Restated Credit Agreement dated as of July 2, 1997 (the
"Credit Agreement");
WHEREAS, the Borrower has notified the Lenders and the Agent that the
Borrower wishes to acquire Sweet Factory Group, Inc., a Delaware corporation,
Sweet Factory, Inc., a Delaware corporation, SF Candy Company, a Delaware
corporation, and SF Properties, Inc., a Delaware corporation (the "Sweet Factory
Acquisition");
WHEREAS, the Borrower seeks to amend the Credit Agreement; and
WHEREAS, the Lenders and the Agent are willing to amend the Credit
Agreement on the terms and conditions herein set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to such terms in the Credit
Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. Upon the effectiveness of this
Amendment in accordance with the provisions of SECTION 3 below, the Credit
Agreement is hereby amended as follows:
(a) SECTION 1.1 of the Credit Agreement is hereby amended as
follows:
(i) The following new defined terms are hereby added
alphabetically therein:
""AMENDMENT NO. 1" shall mean Amendment No. 1 to this
Agreement, dated as of December 7, 1998, among the Borrower,
the Lenders and the Agent.";
""SWEET FACTORY SUBSIDIARY" shall mean any of Sweet
Factory Group, Inc., a Delaware corporation, Sweet Factory,
Inc., a Delaware corporation, SF Candy Company, a Delaware
corporation, and SF Properties, Inc., a Delaware
corporation."; and
""SWEET FACTORY SUBSIDIARY SECURITY AGREEMENT" shall
mean any security agreement, substantially in the form
attached to Amendment No. 1 as EXHIBIT 1, executed by any
Sweet Factory Subsidiary in favor of the Agent for the
benefit of the Holders of Secured Obligations, as amended,
restated, supplemented or modified from time to time.".
(ii) The definition of "BORROWING BASE" is amended in its
entirety to read as follows:
""BORROWING BASE" means, as of any date of calculation,
an amount, as set forth on the most current Borrowing
Base Certificate delivered to the Agent, equal to (i)
85% of the Gross Amount of Eligible Receivables; PLUS
(ii) 50% of the Gross Amount of Eligible Inventory
consisting of finished goods; PLUS (iii) 60% of the
Gross Amount of Eligible Inventory consisting of raw
materials; PLUS (iv) 70% of the Approved Value of real
estate; PLUS (v) the Overadvance Amount, MINUS (vi)
such reserves as the Agent reasonably deems necessary
and are consistent with existing reserves, including
without limitation, reserves (a) in amounts equal to
any Indebtedness secured by a Lien permitted by SECTION
6.3(C)(iii) and (b) in amounts equal to up to two (2)
months rent or other applicable storage/processing fees
at any location (other than the Borrower's leased
retail store locations), including any Sweet Factory
Subsidiary's leased retail store locations, where the
Borrower or any Sweet Factory Subsidiary maintains
Inventory on leased premises or stores Inventory with
any third party, for which the Agent has not received,
as applicable, a landlord, mortgagee, bailee and/or
warehousemen's access and lien waiver agreement and
related Uniform Commercial Code financing statements,
in form and substance reasonably acceptable to the
Agent (the "RENT RESERVE"); PROVIDED, HOWEVER, that for
each Sweet Factory Subsidiary, the reserve requirement
contemplated above shall equal the lesser of (x) the
Rent Reserve or (y) the Gross Amount of Eligible
Inventory at such location. The Agent shall give the
Borrower notice prior to establishing any reserve
hereunder.".
(iii) The definition of "ELIGIBLE INVENTORY" is hereby
amended as follows:
(A) Each reference therein to "Borrower" or
"Borrower's" is deleted therefrom and the phrase
"Borrower or any Sweet Factory Subsidiary" or
"Borrower's or any Sweet Factory Subsidiary's", as
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applicable, is substituted therefor; PROVIDED, HOWEVER,
that the reference to "Borrower" contained in the
parenthetical in clause (iii) shall be replaced with
the phrase "Borrower or the applicable Sweet Factory
Subsidiary";
(B) Each reference therein to "Security Agreement" is
deleted therefrom and the phrase "Borrower Security
Agreement or any Sweet Factory Subsidiary Security
Agreement, as applicable," is substituted therefor;
(C) Clause (vi) therein is hereby amended to delete
therefrom the phrase "SECTION 6.3(C)(v)" and substitute
therefor the phrase "SECTION 6.3(C)(iii);
(iv) The definition of "ELIGIBLE RECEIVABLES" is hereby
amended to delete therefrom each reference to "Borrower" and
substitute therefor the phrase "Borrower or any Sweet
Factory Subsidiary, as applicable".
(v) The definition of "GROSS AMOUNT OF ELIGIBLE INVENTORY"
is hereby amended to delete therefrom each reference to
"Borrower" and substitute therefor the phrase "Borrower or
any Sweet Factory Subsidiary, as applicable";
(vi) The definition of "INVENTORY" is hereby amended to
delete therefrom each reference to "Borrower" or
"Borrower's" and to substitute therefor "Borrower or any
Sweet Factory Subsidiary" or "Borrower's or any Sweet
Factory Subsidiary's", respectively;
(vii) The definition of "RECEIVABLES" is hereby amended in
its entirety as follows:
""RECEIVABLE(S)" means and includes all of the
Borrower's and, subject to an initial audit and review
by the Agent, each Sweet Factory Subsidiary's presently
existing and hereafter arising or acquired accounts,
accounts receivable, and all present and future rights
of the Borrower and each Sweet Factory Subsidiary, as
applicable, to payment for goods sold or leased or for
services rendered (except those evidenced by
instruments or chattel paper), whether or not they have
been earned by performance, and all rights in any
merchandise or goods which any of the same may
represent, and all rights, title, security and
guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in
transit.";
(viii) The definition of "SENIOR NOTES" is hereby amended in
its entirety as follows:
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""SENIOR NOTES" means those certain notes issued
pursuant to the Senior Note Indenture in the aggregate
principal amount of $130,000,000 with a maturity of
July 1, 2004."
and;
(ix) The definition of "SENIOR NOTE INDENTURE" is hereby
amended in its entirety as follows:
""SENIOR NOTE INDENTURE" means that certain Indenture,
dated on or about July 2, 1997, as amended by that
certain First Supplemental Indenture, dated as of
December 7, 1998, by and among the Borrower, the Sweet
Factory Subsidiaries, and The Bank of New York, as
Trustee, pursuant to which the Senior Notes are to be
or have been issued.".
(b) SECTION 5.8 of the Credit Agreement is hereby amended to
insert immediately at the beginning of the second sentence contained therein the
following:
"Except for a single existing Stock Option Plan under which
certain officers of the Borrower may receive, in the aggregate,
no more than thirty-four shares of stock in the Parent,"
(c) SECTION 5.9 of the Credit Agreement is hereby amended to
delete therefrom the phrases "Except as set forth on SCHEDULE 5.9 hereto" and
"Except as set forth on "SCHEDULE 5.9" and to substitute therefor the phrase
"Except as set forth on SCHEDULE 5.9 as amended and attached to Amendment
Xx. 0,"
(x) SECTION 6.2(J) of the Credit Agreement is hereby amended in
its entirety as follows:
"(J) RESTRICTION ON FUNDAMENTAL CHANGES. None of the Borrower
or any of its Subsidiaries shall enter into any merger or
consolidation, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Borrower's or any
such Subsidiary's business or property, whether now or hereafter
acquired; PROVIDED, HOWEVER, that (i) the Borrower may merge with
any of its Subsidiaries, so long as (x) the Borrower is the
surviving entity in any such merger, (y) the Borrower provides
written notice to the Agent of such merger not less than thirty
(30) days prior thereto, and (z) the Borrower executes any UCC
financing statements or amendments in connection with such merger
in order to maintain the Agent's first priority perfected
security interest in the Collateral and (ii) any wholly-owned
Subsidiary may merge with any other
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wholly-owned Subsidiary so long as (x) the surviving Subsidiary
is a guarantor of the "Guaranteed Obligations" as such term is
defined in the Guaranty dated as of December 7, 1998 executed
by the Sweet Factory Subsidiaries, (y) the Borrower provides
written notice to the Agent of such merger between Subsidiaries
not less than thirty (30) days prior thereto, and (z) the
surviving Subsidiary executes any UCC financing statements or
amendments in connection with such merger in order to maintain
the Agent's first priority perfected security interest in the
Collateral.".
(e) SECTION 6.3(A)(ii) of the Credit Agreement is hereby amended
in its entirety as follows:
"(ii) Indebtedness existing as of December 7, 1998 and described
on Schedule 6.3(A) as attached to Amendment No. 1.".
(f) SECTION 6.3(C) of the Credit Agreement is hereby amended to
insert immediately at the end of clause (i) the phrase "or Liens upon the
Collateral in favor of the Agent".
(g) SECTION 6.3(D) of the Credit Agreement is hereby amended to
delete the period at the end of clause (vii) contained therein and insert the
following: "; PROVIDED FURTHER, HOWEVER, that the Borrower may acquire each
Sweet Factory Subsidiary pursuant to the Agreement and Plan of Reorganization,
dated as of November 24, 1998, among the Borrower, Sweet Factory Acquisition
Corp., a Delaware corporation, and each Sweet Factory Subsidiary, with such
Acquisition excluded from the aforementioned $7,500,000 limit on other
Investments."
(h) SECTION 6.3(E) of the Credit Agreement is hereby amended to
insert, at the beginning of clause (ii) therein, the following: "except for the
Acquisition of the Sweet Factory Subsidiaries,".
(i) Section 6.4 of the Credit Agreement is hereby amended as
follows:
(i) Paragraph (B) is hereby amended in its entirety as
follows:
"(B) FIXED CHARGE COVERAGE RATIO. The Borrower shall
maintain a Fixed Charge Coverage Ratio of not less than the
following for each four Fiscal Quarter period ending on the
last day of each Fiscal Quarter during the following
periods:
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Minimum
Fiscal Quarter Ending in Fixed Charge Coverage Ratio
------------------------ ---------------------------
August, 1997 through
November, 1997 1.15 to 1.00
February, 1998 through
August, 1998 1.20 to 1.00
November, 1998 through 1.10 to 1.00
August, 1999
November, 1999 1.05 to 1.00
February, 2000 1.20 to 1.00
May, 2000 and thereafter 1.30 to 1.00"
(ii) Paragraph (C) is hereby amended in its entirety as
follows:
"(C) LEVERAGE RATIO. The Borrower shall not permit its
Leverage Ratio to be greater than the ratio set forth below
at the end of the Fiscal Quarter ending during the following
periods:
Fiscal Quarter Ending In Maximum Leverage Ratio
------------------------ ----------------------
August, 1997 through
November, 1998 6.00 to 1.00
February, 1999 through
May, 1999 5.50 to 1.00
August, 1999 through
November, 1999 6.00 to 1.00
February, 2000 and
thereafter 5.50 to 1.00"
(iii) Paragraph (D) is hereby amended to delete therefrom
the number "$12,500,000.00" and to substitute therefor the
number "$25,000,000.00".
(j) The Exhibits to the Credit Agreement are hereby amended to
delete therefrom EXHIBIT C and substitute therefor Exhibit C as attached to
Amendment No. 1.
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3. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective and be deemed effective as of the date hereof (the "Effective Date")
if, and only if, the Agent shall have received each of the following:
(a) four (4) duly executed originals of this Amendment from the
Borrower, the Agent and the Lenders;
(b) four (4) duly executed originals of each Sweet Factory
Subsidiary Security Agreement and a guaranty, in favor of the Agent,
executed by each Sweet Factory Subsidiary;
(c) an amendment fee as described in that certain Mandate Letter
dated as of November 24, 1998 between the Borrower and the Agent;
(d) payout letters in form and substance satisfactory to the
Agent from any holders of Sweet Factory indebtedness together with,
upon receipt thereof, evidence that any liens against or security
interests in any Accounts or Inventory of any Sweet Factory Subsidiary
have been or will be terminated, unless such liens are permitted under
the Credit Agreement; PROVIDED, HOWEVER, that any lien held by
Imperial Bank - Lending Services or Xxxxx Fargo Bank, N.A. shall not
be considered a permitted lien for purposes of this paragraph;
(e) a form of Sweet Factory Subsidiary Security Agreement
attached hereto as EXHIBIT 1, an amended SCHEDULE 6.3(A) to the Credit
Agreement attached hereto, and an amended SCHEDULE 5.9 to the Credit
Agreement attached hereto; and
(f) such other documents, instruments and agreements, including,
without limitation, UCC-1 financing statements, as the Agent may
reasonably request.
4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
4.1 Upon the effectiveness of this Amendment pursuant to SECTION 3
hereof, on and after the Effective Date each reference in the Credit Agreement
to "this Agreement," "hereunder," "hereof," "herein" or words of like import and
each reference to the Credit Agreement in each Loan Document shall mean and be a
reference to the Credit Agreement as modified hereby.
4.2 Except as specifically waived or amended herein, all of the
terms, conditions and covenants of the Credit Agreement and the other Loan
Documents shall remain in full force and effect and are hereby ratified and
confirmed.
4.3 The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of (a) any right,
power or remedy of any Lender or
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the Agent under the Credit Agreement or any of the Loan Documents, or (b) any
Default or Unmatured Default under the Credit Agreement.
5. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original and all
of which taken together shall constitute one and the same agreement.
7. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have
executed this Amendment No. 1 as of the date first above written.
XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxx X. Xxxxxxxx
-------------------------------------
Name: Xxx X. Xxxxxxxx
Title: President and Chief Operating Officer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
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SANWA BUSINESS CREDIT CORPORATION
By: /s/ Xxxxxxx X. Xxx
-------------------------------------
Name: Xxxxxxx X. Xxx
Title: 1st Vice President
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