1
EXHIBIT 10.8
FIRST AMENDMENT
Dated as of December 12, 1997
THIS FIRST AMENDMENT dated as of December 12, 1997 (this "Amendment")
amends the Credit Agreement dated as of February 11, 1997 (the "Credit
Agreement") among VIDEO UPDATE, INC. (the "Company"), VIDEO UPDATE CANADA INC.
("VUCI"), various financial institutions (the "Lenders"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION (successor by merger to Bank of America
Illinois), as U.S. Agent (the "U.S. Agent"), and BANK OF AMERICA CANADA, as
Canadian Agent (the "Canadian Agent"). Terms not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
WHEREAS, the parties hereto have entered into the Credit Agreement which
provides for the Lenders to make Loans to the Company and VUCI from time to
time; and
WHEREAS, the parties hereto desire to amend, and the Required Lenders have
agreed to waive, certain provisions of the Credit Agreement as set forth below;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:
SECTION 1 AMENDMENTS. Effective on (and subject to the occurrence of) the
First Amendment Effective Date (as defined below), the Credit Agreement is
amended in accordance with Sections 1.1 through 1.5 below:
1.1 Replacement of Certain Definitions. Section 1.1 is amended by deleting
the existing definitions of "Computation Period" and "Funded Debt Ratio" in
their entirety and substituting the following therefor, respectively:
Computation Period means any period of three consecutive calendar
months ending on the last day of calendar month; provided that for
purposes of calculating the Funded Debt Ratio and the Fixed Charge Ratio,
(i) during the period from February 28, 1998, to October 31, 1998,
"Computation Period" shall mean each period beginning on November 1, 1997
and ending on the last day of a calendar month and (ii) after the period
specified in clause (i), "Computation Period" shall mean any period of 12
consecutive calendar months ending on the last day of a calendar month.
2
Funded Debt Ratio means, as of any date of calculation, the ratio of
(x) Funded Debt as of such date to (y) the product of (i) the total of (a)
EBITDA for the Computation Period most recently ended minus (b) 26% (or,
for any Computation Period ending after September 30, 1997, 25%) of the
revenues of the Company and its Subsidiaries multiplied by (ii) a
fraction, the numerator of which is the 12 and the denominator of which is
the number of months in such Computation Period.
1.2 Amendment of Section 6.2(d). Section 6.2(d) is amended in its entirety
to read as follows:
(d) Funded Debt Ratio. Unless the Required Lenders otherwise
consent in writing, the Funded Debt Ratio shall not be greater than 1.75
to 1; provided that this condition shall not apply to any Borrowing
pursuant to Section 4.3(b) under any of the Letters of Credit issued by
BAI on January 17, 1997 in favor of (i) Ontario Municipal Employees
Retirement Board, (ii) Allstate Life Insurance Company of Canada or (iii)
BT-TR Realty Holding Inc. so long as the aggregate amount of all such
Borrowings does not exceed $1,500,000.
1.3 Amendment of Section 8.6.2. Section 8.6.2 is amended in its
entirety to read as follows:
8.6.2 Fixed Charge Ratio. Not permit the Fixed Charge Ratio to
be less than (a) 2.20 to 1.00 as of the last day of any month ending on or
before November 30, 1997 and (b) 2.50 to 1.00 as of the last day of any
month thereafter.
1.4 Amendment of Section 8.6.3. Section 8.6.3 is amended in its entirety
to read as follows:
8.6.3 Funded Debt Ratio. Not permit the Funded Debt
Ratio at any time during the periods set forth below to exceed the
applicable ratio set forth below:
Ratio Period
----- ------
3.00:1 12/31/97 - 06/30/98
2.75:1 07/31/98 and thereafter
1.5 Amendment to Exhibit C. Exhibit C to the Credit Agreement is deleted
in its entirety and replaced by the Exhibit C attached hereto.
2
3
SECTION 2 WAIVERS. Effective on (and subject to the occurrence of) the
First Amendment Effective Date, the Required Lenders hereby waive:
(a) the Company's non-compliance with Section 8.6.3 of the Credit
Agreement for the Computation Period ended September 30, 1997.
(b) any non-compliance with Section 8.6.3 of the Credit Agreement for the
Computation Periods ending October 31, 1997 and November 30, 1997, so long as
the remainder of EBITDA minus 25% of the revenues of the Company and its
Subsidiaries is (i) at least $1.25 million for the Computation Period ending
October 31, 1997 and (ii) at least $1.00 million for the Computation Period
ending November 30, 1997; and
(c) any non-compliance with Section 8.6.4 of the Credit Agreement for the
Computation Periods ending October 31, 1997 and November 30, 1997, so long as
the Mature Store Contribution Margin for each such Computation Period is not
less than 0.15 to 1.
SECTION 3 REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Agent and the Lenders that each warranty set forth in Article
VII of the Credit Agreement is true and correct as if made on the date hereof,
except (i) for such changes as are specifically permitted under the Credit
Agreement and (ii) to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct as of
such earlier date.
SECTION 4 EFFECTIVENESS. The amendments set forth in Section 1 above and
the waivers set forth in Section 2 above shall become effective, as of the day
and year first above written, on such date (herein called the "First Amendment
Effective Date") when the Agent shall have received each of the following
documents, each in form and substance satisfactory to the Agent:
(a) Amendment. Counterparts of this Amendment executed by the parties
hereto.
(b) Resolutions. Certified copies of resolutions of the Board of Directors
of the Company and VUCI, or any authorized committee thereof, authorizing the
execution and delivery of this Amendment and the performance by the Company and
VUCI of their obligations under the Credit Agreement as amended by this
Amendment (the "Amended Credit Agreement").
(c) Opinion. An opinion, addressed to the Agent and all Lenders,
from counsel to the Company in form satisfactory to the Agent.
3
4
SECTION 5 MISCELLANOUS.
5.1 Continuing Effectiveness, etc. As herein amended, the Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed in
all respects. After the First Amendment Effective Date, all references in the
Credit Agreement and any Note to "Credit Agreement", "Agreement" or similar
terms shall refer to the Amended Credit Agreement.
5.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.
5.3 Governing Law. This Amendment shall be a contract made under
and governed by the internal laws of the State of Illinois.
5.4 Successors and Assigns. This Amendment shall be binding upon the
Company and the Bank and their respective successors and assigns, and shall
inure to the benefit of the Company and the Bank and the successors and assigns
of the Bank.
Delivered at Chicago, Illinois, as of the day and year first above
written.
VIDEO UPDATE, INC.
/s/ Xxxxxxxxxxx X. Xxxxxxx
By:________________________________________
Chief Financial Officer
Title:_____________________________________
VIDEO UPDATE CANADA INC.
/s/ Xxxxxx X. Xxxxxx
By:________________________________________
Chief Operating Officer
Title:_____________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
U.S. Agent
/s/ Xxxxx X. Xxxxxxx
By:________________________________________
Vice President
Title:_____________________________________
4
5
BANK OF AMERICA CANADA,
as Canadian Agent
By: /s/
----------------------------------------
Title: VP
-------------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Lender
By: /s/
----------------------------------------
Title: Vice President
-------------------------------------
BANK OF AMERICA CANADA, as a Canadian Lender
designated by Bank of America National Trust
and Savings Association
By: /s/
----------------------------------------
Title: VP
-------------------------------------
BANK LEUMI TRUST COMPANY OF
NEW YORK
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Title: Vice President
-------------------------------------
BANK ONE, CHICAGO, NA
By:
----------------------------------------
Title:
-------------------------------------
XXXXXX TRUST AND SAVINGS BANK
By: /s/
----------------------------------------
Title: Vice President
-------------------------------------
LASALLE NATIONAL BANK
By: /s/
----------------------------------------
Title: Vice President
-------------------------------------
5
6
MICHIGAN NATIONAL BANK
a National Banking Association
By: /s/ Xxxxxxx X. Read III
----------------------------------------
Title: Vice President
-------------------------------------
THE SUMITOMO BANK, LIMITED, CHICAGO
BRANCH
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
-------------------------------------
By: /s/ Xxxx X. Xxxxxx, Xx.
----------------------------------------
Title: Vice President & Manager
-------------------------------------
6
