EXHIBIT 10.vv
AMENDMENT NO. 7
THIS AMENDMENT NO. 7 (the "Amendment") dated as of April 15, 1999, to
the Credit Agreement referenced below, is by and among MACSAVER FINANCIAL
SERVICES, INC., a Delaware corporation, (the "Borrower"), XXXXXX-XXXXXX COMPANY,
a Virginia corporation (the "Company"), the Lenders identified therein, WACHOVIA
BANK, N.A. (formerly, Wachovia Bank of Georgia, N.A.), as Administrative Agent,
NATIONSBANK, N.A., as Documentation Agent, and CRESTAR BANK and FIRST UNION
NATIONAL BANK (formerly, First Union National Bank of Virginia), as Co-Agents.
Terms used but not otherwise defined shall have the meanings provided in the
Credit Agreement.
W I T N E S S E T H
WHEREAS, the Lenders have established a $400 million credit facility for
the benefit of the Borrower pursuant to the terms of that Credit Agreement dated
as of July 18, 1995 (as amended and modified, the "Credit Agreement") among the
Borrower, the Company, the Lenders identified therein and Wachovia Bank of
Georgia, N.A., as Administrative Agent;
WHEREAS, the Required Lenders agreed pursuant to that Term Sheet for
Amendment No. 7 to the Bank Credit Agreement dated March 23, 1999 (the "Term
Sheet for the Bank Credit Agreement (Amendment No. 7)"), (i) to certain
modifications to the Credit Agreement (including extension of the waiver
relating to the Fixed Charge Coverage Ratio, permanent reduction in the
aggregate Commitments to $325 million and modification of the Applicable
Percentage) and (ii) in principle to the general terms of Amendment No. 7;
WHEREAS, this Amendment is intended to evidence the agreement of the
parties pursuant to the terms of the Term Sheet for the Bank Credit Agreement
(Amendment No. 7);
WHEREAS, the modifications requested hereby require the consent of the
Required Lenders; and
WHEREAS, the Required Lenders have consented to the requested modifications
on the terms and conditions set forth herein and have authorized the
Administrative Agent to enter into this Amendment on their behalf to give effect
to this Amendment;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendment. The Credit Agreement is amended and modified in the following
respects:
1.1 The following definitions are amended or added in Section 1.1 to
read as follows:
"Applicable Percentage" means for any day (from March 23, 1999),
(a) in the case of Eurodollar Loans, two percent (2.0%), (b) in the
case of Base Rate Loans, one percent (1.0%), and (c) in the case of
the Facility Fee, one-quarter of one percent (0.25%).
"Xxxxxxx" means the assets and business operations of HMPR, Inc.,
a Puerto Rico corporation, and MacManufacturing, Inc., a Delaware
corporation.
"Consolidated Adjusted Fixed Charge Coverage Ratio" means the
ratio of Consolidated EBITR to Consolidated Adjusted Fixed Charges.
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"Consolidated Adjusted Fixed Charges" means for the Company and
its Subsidiaries for any period, the sum of (i) Consolidated Interest
Expense plus (ii) rent expense, in each case on a consolidated basis
determined in accordance with GAAP. Except as otherwise expressly
provided, the applicable period shall be the four consecutive fiscal
quarters ending as of the date of determination; provided that for the
first annual period following February 28, 1999, Consolidated Adjusted
Fixed Charges and its components shall be determined by a roll-up on a
quarter-by-quarter basis from February 28, 1999, such that (i) for the
first fiscal quarter ending thereafter (May 31, 1999), the applicable
period shall be the fiscal quarter then ending, (ii) for the second
fiscal quarter ending thereafter (August 31, 1999), the applicable
period shall be for the two (2) consecutive fiscal quarters then
ending, (iii) for the third fiscal quarter ending thereafter (November
30, 1999), the applicable period shall be for the three (3)
consecutive fiscal quarters then ending, and (iv) for the fourth
fiscal quarter ending thereafter (February 29, 2000) and each fiscal
quarter thereafter, the applicable period shall be for the four (4)
consecutive fiscal quarters then ending.
"Consolidated EBIT" means for the Company and its Subsidiaries
for any period, the sum of (i) Consolidated Net Income plus (ii), to
the extent deducted in determining net income, (A) Consolidated
Interest Expense and (B) any Federal, state or other income taxes, in
each case on a consolidated basis determined in accordance with GAAP.
Except as otherwise expressly provided, the applicable period shall be
for the four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated EBITDA" means for the Company and its Subsidiaries
for any period, the sum of (i) Consolidated EBIT plus (ii), to the
extent deducted in determining net income, depreciation, amortization
and non-recurring non-cash charges and expenses associated with a sale
of assets (subject to the limitations on such exclusion for certain
losses as provided in the definition of "Consolidated Net Income") or
refinancing of Indebtedness or leases permitted hereunder, in each
case on a consolidated basis determined in accordance with GAAP.
Except as otherwise expressly provided, the applicable period shall be
for the four consecutive fiscal quarters ending as of the date of
determination; provided that for the first annual period following
February 28, 1999, (A) Consolidated EBITDA shall be determined by
annualization from February 28, 1999 to provide for a
quarter-by-quarter roll-up on a Pro Forma Basis, and (B) in the case
of the sale or disposition for value of all or any portion of Xxxxxxx,
Mattress Discounters or Xxxxxx, Consolidated EBITDA and its components
shall be adjusted to exclude for the applicable period provided in the
foregoing clause (A), income statement items directly attributable to
the assets, property and/or operations which were the subject of such
sale or disposition.
"Consolidated EBITR" means for the Company and its Subsidiaries
for any period, the sum of (i) Consolidated EBIT plus (ii), to the
extent deducted in determining net income, rent expense, in each case
on a consolidated basis determined in accordance with GAAP. Except as
otherwise expressly provided, the applicable period shall be the four
consecutive fiscal quarters ending as of the date of determination;
provided that for the first annual period following February 28, 1999,
Consolidated EBITR and its components shall be determined by a roll-up
on a quarter-by-quarter basis from February 28, 1999, such that (i)
for the first fiscal quarter ending thereafter (May 31, 1999), the
applicable period shall be the fiscal quarter then ending, (ii) for
the second fiscal quarter ending thereafter (August 31, 1999), the
applicable period shall be for the two (2) consecutive fiscal quarters
then ending, (iii) for the third fiscal quarter ending thereafter
(November 30, 1999), the applicable period shall be for the three (3)
consecutive fiscal quarters then ending, and (iv) for the fourth
fiscal quarter ending thereafter (February 29, 2000) and each fiscal
quarter thereafter, the applicable period shall be for the four (4)
consecutive fiscal quarters then ending.
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"Consolidated Funded Debt" means Funded Debt of the Company and
its Subsidiaries on a consolidated basis determined in accordance with
GAAP.
"Consolidated Interest Expense" means for the Company and its
Subsidiaries for any period, all interest expense, including the
amortization of debt discount and premium, the interest component
under Capital Leases (including interest payments on Subordinated
Debentures), determined in each case on a consolidated basis in
accordance with GAAP. Except as otherwise expressly provided, the
applicable period shall be for the four consecutive fiscal quarters
ending as of the date of determination.
"Consolidated Leverage Ratio" means the ratio of Consolidated
Funded Debt to Consolidated EBITDA.
"Consolidated Net Income" means for the Company and its
Subsidiaries for any period, consolidated net income determined in
accordance with GAAP, provided that, (i) for purposes of determining
compliance with the Consolidated Leverage Ratio covenant in Section
7.9(b) and the Consolidated Adjusted Fixed Charge Coverage Ratio
covenant in Section 7.9(c), there shall be excluded from Consolidated
Net Income the net after-tax amount of any gain realized from the sale
or disposition of Xxxxxx, Xxxxxxx or Mattress Discounters, and any
charge to earnings on account of the sale or disposition at a loss of
up to $160 million in the case of Xxxxxx and up to $60 million in the
case of Xxxxxxx; provided, that additional charges in respect of store
closings may also be excluded after the sale or disposition of Mattress
Discounters in an amount up to 5% of the gain realized from the sale or
disposition of Mattress Discounters, but only if, and to the extent
that, the gain realized from the sale or disposition of Mattress
Discounters exceeds the aggregate charges taken in connection with any
such store closings and with the sale or disposition of Xxxxxx and (ii)
for purposes of determining compliance with the Consolidated Net Worth
covenant in Section 7.9(a), there shall be included the amount of any
gain, but there shall be excluded the amount of any loss, realized from
the sale or disposition of Xxxxxx, Xxxxxxx or Mattress Discounters.
Except as otherwise expressly provided, the applicable period shall be
the four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated Net Worth" means for the Company and its
Subsidiaries on any day, consolidated shareholders' equity or net
worth determined in accordance with GAAP.
"Credit Documents" means this Credit Agreement, the Note, the Fee
Letter, the Sharing Agreement and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant
hereto or thereto.
"LTCB Term Loan" means that $35 million term loan made to the
Borrower pursuant to a Term Loan Agreement dated as of February 28,
1995, as amended, among the Borrower, the Company, The Long-Term Credit
Bank of Japan, Limited and the other lenders named therein.
"Mattress Discounters" means the assets and business operations
of Mattress Discounters Corporation, a Delaware corporation, Bedding
Experts, Inc., an Illinois corporation, and T.J.B., Inc., a Maryland
corporation.
"Pro Forma Basis" means, with regard to determination of
Consolidated EBITDA for the first annual period following February 28,
1999, annualization of such items and their respective components to
provide that (i) for the first fiscal quarter ending thereafter (May
31, 1999) such items and their respective components for the one
quarter period then ending shall be multiplied by four (4); (ii) for
the second fiscal quarter ending thereafter (August 31, 1999) such
items and their respective components for the two (2) consecutive
fiscal quarters then ending shall be multiplied by two (2); (iii) for
the third fiscal quarter ending thereafter (November 30, 1999) such
items and their respective components for the three (3) consecutive
fiscal quarters then ending shall be multiplied by one and one-third
(1-1/3rd); and (iv) for the fourth fiscal quarter ending thereafter
(February 29, 2000) and each fiscal quarter thereafter, such items and
their respective components shall be for the four (4) consecutive
fiscal quarters then ending.
"Xxxxxx" means the assets and business operations of Xxxxxx,
Inc., a Georgia corporation.
"Senior Notes" means those $80 million 6.91% Senior Notes
originally due April 28, 1999, those $15 million 8.84% Senior Notes
originally due April 28, 1999, those $25 million 7.62% Senior Notes
originally due April 28, 1999 and those $10 million 8.31% Senior Notes
originally due April 28, 1999, as more particularly described in the
Sharing Agreement.
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"Sharing Agreement" means that Intercreditor and Sharing
Agreement dated as of April 16, 1999 (being the date of Amendment No.
7), as amended and modified, among Wachovia Bank, N.A., as
Administrative Agent for and on behalf of the Lenders under this
Credit Agreement; First Union National Bank; as issuer of the FUNB
Letter of Credit (as referenced and defined therein); The Long-Term
Credit Bank of Japan, Limited, as lender under the LTCB Term Loan (as
referenced and defined therein); The Prudential Insurance Company of
America, Metropolitan Life Insurance Company and the other holders of
the Senior Notes (as referenced and defined therein); and the Company
and the Borrower.
1.2 Section 3.3(c) regarding Mandatory Prepayments is amended to read
as follows:
(c) Mandatory Prepayments.
(i) In respect of Commitments. If at any time (i) the sum of the
aggregate principal amount of Committed Loans plus the aggregate
principal amount of Competitive Loans shall exceed the aggregate
Revolving Committed Amount, (ii) the aggregate principal amount of LOC
Obligations shall exceed the LOC Committed Amount, (iii) the aggregate
principal amount of Swingline Loans shall exceed the Swingline
Committed Amount, or (iv) the aggregate principal amount of
Competitive Loans shall exceed the Competitive Loan Maximum Amount,
the Borrower shall immediately make payment on the Loans and/or to a
cash collateral account in respect of the LOC Obligations in an amount
sufficient to eliminate the difference.
(ii) In respect of Asset Sales, Excess Cash Flow and Debt or
Equity Offerings. The Borrower will make, or cause to be made,
prepayments on the loans and obligations hereunder in respect of asset
sales, excess cash flow and debt or equity offerings as provided in
the Sharing Agreement and the Commitments hereunder will be reduced as
provided in the Sharing Agreement.
1.3 Section 6.11 is amended in its entirety to read as follows:
6.11 Purpose of Loans and Extensions of Credit.
Extensions of credit hereunder (including the proceeds of
Loans and issuance or extension of Letters of Credit) may be used
only (i) for general working capital purposes (which general
working capital purposes shall not include acquisitions (except
to the extent permitted by subclause (ii) hereof) or the payment
of dividends (other than regular quarterly dividends on common
stock) or any other similar payments), and (ii) to repay the LTCB
Term Loan at maturity. Extensions of credit hereunder may not be
used to repay or prepay in whole or in part the principal amount
of any other Funded Debt having an outstanding principal balance
in excess of $5,000,000.
1.4 Section 7.9 is amended in its entirety to read as follows:
7.9 Financial Covenants.
(a) Consolidated Net Worth. There shall be maintained at all
times a Consolidated Net Worth of not less than the sum of an amount
equal to eighty-five percent (85%) of Consolidated Net Worth as of
February 28, 1999 plus, on the last day of each fiscal quarter
thereafter, an amount equal to fifty percent (50%) of Consolidated Net
Income for the fiscal quarter then ending (but not less than zero),
such increases to be cumulative.
(b) Consolidated Leverage Ratio. As of the end of each fiscal
quarter to occur after February 28, 1999, there shall be maintained a
Consolidated Leverage Ratio of not greater than (i) 5.0:1.0, for the
first two fiscal quarters of fiscal year 1999 ending May 31, 1999 and
August 31, 1999; and (ii) 4.5:1.0, for each fiscal quarter thereafter.
(c) Consolidated Adjusted Fixed Charge Coverage Ratio. As of the
end of each fiscal quarter to occur after February 28, 1999, there
shall be maintained a Consolidated Adjusted Fixed Charge Coverage
Ratio of not less than (i) 1.1:1.0, for the first two fiscal quarters
of fiscal year 1999 ending May 31, 1999 and August 31, 1999; and (ii)
1.15:1.0, for each fiscal quarter thereafter.
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1.5 A new subsection (m) is added to Section 9 to read as
follows:
(m) The Borrower shall fail to repay the Senior Notes in full by
September 30, 1999 (or any later maturity date as to which the holders
of the Senior Notes may agree) with the proceeds from excess cash flow
or proceeds from asset sales or offerings as provided in the Sharing
Agreement.
2. The Lenders, pursuant to the terms of the Term Sheet for the Bank Credit
Agreement (Amendment No. 7), and the holders of the Senior Notes, pursuant to
the terms of the Senior Noteholder Term Sheet (as hereafter referenced and
defined), agreed with the Company and the Borrower as to sharing of the proceeds
from asset sales and certain other amounts. The Required Lenders hereby request
and direct the Administrative Agent, for and on behalf of the Lenders hereunder,
to enter into an intercreditor agreement with the holders of the Senior Notes
giving effect to the agreements set forth in the respective Term Sheets
referenced above, in substantially the form attached.
3. The Borrower and the Company hereby acknowledge and agree that (i) the
aggregate Commitments under the Credit Agreement were permanently reduced to
$325 million and were further permanently reduced to $298,063,003 in connection
with the application of the $65 million in excess cash on hand to the loans and
obligations owing under the Credit Agreement, to the Senior Notes and to the
FUNB LOC Obligations (as defined in the Sharing Agreement), and the Applicable
Percentage modified as of March 23, 1999 pursuant to the terms of the Term Sheet
for the Bank Credit Agreement (Amendment No. 7), and (ii) the aggregate
Commitments under the Credit Agreement will be permanently reduced on a
dollar-for-dollar basis by amounts received from the excess cash or the net
proceeds from asset sales and debt or equity offerings, for application to the
loans and obligations under the Bank Credit Agreement until the aggregate
Commitments shall be permanently reduced to $200 million, as provided in Section
4 of the Sharing Agreement.
4. This Amendment shall be effective upon satisfaction of the following
conditions:
(a) execution of this Amendment by the Borrower, the Company, the
Administrative Agent and the Required Lenders;
(b) receipt of the amendment and modification documentation relating to the
Senior Notes giving effect to the provisions of Term Sheet dated March 23, 1999
(the "Senior Noteholder Term Sheet") among the Company, the Borrower and the
holders of the Senior Notes, in form and substance satisfactory to the
Administrative Agent; and
(c) receipt of a fully executed copy of the Sharing Agreement.
5. Except as modified hereby, all of the terms and provisions of the Credit
Agreement (including Schedules and Exhibits) shall remain in full force and
effect.
6. The Borrower agrees to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and delivery
of this Amendment, including without limitation the reasonable fees and expenses
of Xxxxx & Xxx Xxxxx, PLLC.
7. This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
8. This Amendment shall be deemed to be a contract made under, and for all
purposes shall be construed in accordance with the laws of the State of North
Carolina.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed under seal and delivered as of the date
and year first above written.
BORROWER: MACSAVER FINANCIAL SERVICES, INC.,
a Delaware corporation
By:_______________________________
Name:
Title:
COMPANY: XXXXXX-XXXXXX COMPANY,
a Virginia corporation
By:_______________________________
Name:
Title:
ADMINISTRATIVE
AGENT: WACHOVIA BANK, N.A., as Administrative Agent
for and on behalf of the Lenders
By:_______________________________
Name:
Title:
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CONSENT TO AMENDMENT NO. 7
Wachovia Bank, N.A., as Administrative Agent
000 Xxxxxxxxx Xxxxxx, X.X.
29th Floor, MC-3490
Xxxxxxx, Xxxxxxx 00000
Attn: Syndication Services
Re:
Credit Agreement dated as of July 18, 1995 (as amended and modified,
the "Credit Agreement") among MacSaver Financial Services, Inc.,
Xxxxxx-Xxxxxx Company, Inc., the Lenders identified therein and
Wachovia Bank of Georgia, N.A. (now known as Wachovia Bank, N.A.), as
Administrative Agent. Terms used but not otherwise defined shall have
the meanings provided in the Credit Agreement.
Amendment No. 7 dated April 15, 1999 (the "Subject Amendment")
relating to the Credit Agreement
Ladies and Gentlemen:
This should serve to confirm our receipt of, and consent to, the
Subject Amendment. We hereby authorize and direct you, as Administrative Agent
for the Lenders, to enter into the Subject Amendment on our behalf in accordance
with the terms of the Credit Agreement upon your receipt of such consent and
direction from the Required Lenders, and agree that the Borrower and the Company
may rely on such authorization.
Sincerely,
-----------------------------
[Name of Lender]
By:__________________________
Name:
Title:
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