EXHIBIT 4.1
FIRST AMENDMENT
TO AMENDED AND RESTATED
CREDIT AGREEMENT
FIRST AMENDMENT, dated as of August 13, 1998 (the "Amendment"), to the
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 2, 1997, among
PAYLESS CASHWAYS, INC., a Delaware corporation (the "Borrower"), each of the
financial institutions from time to time party thereto as lenders (together with
their successors and assigns, the "Lenders"), the Underwriters (as therein
defined), CANADIAN IMPERIAL BANK OF COMMERCE (acting through one or more of its
agencies, branches, or affiliates, "CIBC"), as the issuer of standby letters of
credit, U.S. BANK NATIONAL ASSOCIATION, in its capacity as the issuer of
documentary letters of credit and CIBC, as coordinating and collateral agent (in
such capacity, the "Agent") for the Lenders, the Fronting Banks (as therein
defined), the Underwriters and the other Secured Parties (as therein defined):
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Underwriters and the Agent are
parties to that certain Amended and Restated Credit Agreement, dated as of
December 2, 1997 (as the same may be further amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement");
and
WHEREAS, the Borrower, the Lenders, the Underwriters and the Agent have
agreed, on the terms and conditions set forth herein, to certain modifications
to the Credit Agreement; and
WHEREAS, from and after the Effective Date (as hereinafter defined) of this
Amendment, the Credit Agreement shall be amended, subject to and upon the terms
and conditions set forth herein, as follows:
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Unless otherwise defined herein, all terms that are defined in the Credit
Agreement shall have the same meanings when used herein.
2. The definition of the term "Required Inventory" set forth in Section 1.1 of
the Credit Agreement is hereby amended in its entirety to read as follows:
"Required Inventory" shall mean Inventory in the Borrower's
possession and not subject to any Liens (except Liens in favor of
the Agent and other Liens permitted by Section 6.1) (such
Inventory hereafter being referred to as the "Qualifying Required
Inventory") which shall have a minimum aggregate FIFO Value, at
least equal to $325
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million, after deduction of all amounts secured by such other
Liens permitted by Section 6.1; provided, that no Inventory
subject to Liens created pursuant to the GE Credit Program
Documents or Liens on Inventory subject to a purchase money
security interest of the type described in clause (v) of the
definition of Permitted Liens shall have any value ascribed to it
for purposes of calculating Required Inventory; and provided,
further, that the $325 million Required Inventory amount referred
to herein shall be reduced by $1.5 million for each store the
Borrower permanently closes; provided, however, that regardless
of the number of stores closed by the Borrower, the Qualifying
Required Inventory shall have a minimum aggregate FIFO value, at
least equal to $300 million, after deduction of all amounts
secured by other Liens permitted by Section 6.1.
3. Section 1.1 of the Credit Agreement is hereby amended by inserting the
following new definition in the appropriate alphabetical order:
"Qualifying Required Inventory" shall have the meaning set forth
in the definition of the term "Required Inventory."
4. The first sentence of Section 2.1(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
The outstanding principal amount of New Term Loans shall be
payable in semi-annual installments of $5 million each on
September 15 and May 15 of each year, commencing September 15,
1998.
5. Section 2.4 of the Credit Agreement is hereby amended by (i) changing
subsection (c) to subsection (e) and (ii) replacing subsections (a) and (b) in
their entirety with the following new subsections (a), (b), (c) and (d):
(a) Subject to the provisions of Section 2.8, each New Term Loan
which is an ABR Loan shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at
a rate per annum equal to the Alternate Base Rate plus 1-1/2%.
(b) Subject to the provisions of Section 2.8, each New Term Loan
which is a Eurodollar Loan shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal, during each Interest Period
applicable thereto, to the Adjusted LIBOR Rate for such Interest
Period in effect for such New Term Loan plus 2-1/2%.
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(c) Subject to the provisions of Section 2.8, each New Revolving
Loan which is an ABR Loan shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Alternate Base Rate plus
2%.
(d) Subject to the provisions of Section 2.8, each New Revolving
Loan which is a Eurodollar Loan shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal, during each Interest Period
applicable thereto, to the Adjusted LIBOR Rate for such Interest
Period in effect for such New Revolving Loan plus 3%.
6. Section 2.8(a) of the Credit Agreement is hereby amended by replacing clauses
(x) and (y) appearing in lines eight through eleven therein in their entirety
with the following:
(w) in the case of (i) Borrowings which are both New Term Loans
and ABR Loans, and (ii) all other amounts due hereunder, the
Alternate Base Rate plus 3-1/2%, (x) in the case of Borrowings
which are both New Term Loans and Eurodollar Loans, the Adjusted
LIBOR Rate in effect for such Borrowings plus 4-1/2%, (y) in the
case of (i) Borrowings which are both New Revolving Loans and ABR
Loans, and (ii) Letter of Credit Outstandings, the Alternate Base
Rate plus 4%, and (z) in the case of Borrowings which are both
New Revolving Loans and Eurodollar Loans, the Adjusted LIBOR Rate
in effect for such New Revolving Loan plus 5%.
7. Section 2.12 of the Credit Agreement is hereby amended by (a) changing
subsection (i) to subsection (j) and (b) inserting the following as a new
subsection (i):
(i) Notwithstanding any of the foregoing, the Total Commitments
shall be automatically and irrevocably reduced by (x) $10 million
upon the expiration of the Unsupported Trade Standby Letter of
Credit and (ii) $5 million on May 15, 1999.
8. Section 5.1(f) of the Credit Agreement is hereby amended by adding the
following immediately following the words "balance of such fiscal year"
appearing in the seventh line thereof:
"and quarterly balance sheet, income statement and cash flow
projections for such period"
9. Section 6.7(a) of the Credit Agreement is hereby amended in its
entirety to read as follows:
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(a) Permit cumulative EBITDA for the four consecutive fiscal
quarters ending nearest to the last day of the months listed
below to be less than the amount specified opposite such month
(increased, in the case of the first three periods set forth
below, by the amount, if any, by which EBITDA for the fourth
quarter of the Borrower's 1997 fiscal year exceeds $11.5
million):
Fiscal Quarter Ending EBITDA
February 1998 $43,200,000
May 1998 $33,600,000
August 1998 $39,200,000
November 1998 $44,600,000
February 1999 $47,400,000
May 1999 $44,300,000
August 1999 $44,900,000
November 1999 $59,000,000
February 2000 $78,800,000
May 2000 $87,000,000
August 2000 $95,700,000
November 2000 $101,000,000
February 2001 $103,000,000
May 2001 $106,200,000
August 2001 $109,100,000
November 2001 $113,400,000
February 2002 $113,700,000
May 2002 $113,100,000
August 2002 $115,800,000.
10. Section 6.7(b) of the Credit Agreement is hereby amended in its
entirety to read as follows:
(b) Permit the Debt to EBITDA Ratio to be more, on the last day
of any fiscal quarter of the Borrower ending during any month set
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forth below, than the ratio set forth opposite the applicable
month below:
Month Ratio
February 1998 11.9 to 1
May 1998 15.0 to 1
August 1998 11.9 to 1
November 1998 9.0 to 1
February 1999 9.8 to 1
May 1999 10.5 to 1
August 1999 10.2 to 1
November 1999 7.5 to 1
February 2000 5.6 to 1
May 2000 4.9 to 1
August 2000 4.2 to 1
November 2000 3.7 to 1
February 2001 4.0 to 1
May 2001 3.9 to 1
August 2001 3.6 to 1
November 2001 3.3 to 1
February 2002 3.7 to 1
May 2002 3.7 to 1
August 2002 3.4 to 1.
11. Section 9.10 of the Credit Agreement is hereby amended by adding the
following sentence at the end thereof:
Notwithstanding any of the foregoing provisions of this Section
9.10 or anything to the contrary contained in this Agreement, any
Lender which has requested that it not receive material,
non-public information concerning the Borrower and which is
therefore unable or unwilling to vote with respect to an issue
arising under the Credit Agreement will agree to vote and will be
deemed to have voted its
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Loans and Participating Interests under the Credit Agreement pro
rata in accordance with the percentages of Loans and
Participating Interests in favor of and the percentages of Loans
and Participating Interests against any such issue under the
Credit Agreement.
12. The Credit Agreement is hereby further amended by replacing Exhibit M (form
of Inventory Compliance Certificate) to the Credit Agreement with Schedule M1
hereto.
13. The Borrower hereby agrees to pay an amendment fee in connection with the
execution of this Amendment in an amount equal to $1,500,000 (the "Amendment
Fee"), which fee shall be payable to the Agent for the account of the New
Revolving Lenders (or their respective successors and assigns, as the case may
be). The Borrower also agrees that its obligations set forth in Section 9.5 of
the Credit Agreement shall extend to the preparation, execution and delivery of
this Amendment, including the reasonable fees and disbursements of counsel to
the Agent.
14. The Borrower represents and warrants to the Agent and the Lenders
that:
(a) the execution, delivery and performance by the Borrower of this
Amendment and the performance by the Borrower of the Credit Agreement as amended
by this Amendment (i) have been duly authorized by all requisite corporate
action on the part of the Borrower; and (ii) will not (x) violate (A) any
provision of any statute, rule or regulation or the Certificate of Incorporation
or By-laws (or similar governing documents) of the Borrower, (B) any applicable
order of any court or any rule, regulation or order of any other agency of
government or (C) any indenture, agreement or other instrument to which the
Borrower is a party or by which it or any of its property is bound, (y) be in
conflict with, result in a breach of or constitute (with notice or lapse of time
or both) a default under any such indenture, agreement or other instrument (z)
result in the creation or imposition of any Lien upon any property or assets of
the Borrower except as contemplated by the Security and Pledge Agreement or any
of the other Security Documents executed in connection with the Credit Agreement
in favor of the Agent or the Lenders;
(b) upon the occurrence of the Effective Date (as hereinafter defined),
this Amendment will constitute the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and by general
equitable principles (regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law);
(c) the representations and warranties set forth in Article 3 of the Credit
Agreement are true and correct in all material respects on and as of the date
hereof, as if made on and as of the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date; and
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(d) after giving effect to this Amendment, the Borrower is in compliance
with all of the terms and provisions set forth in the Credit Agreement to be
observed and performed and no Default or Event of Default has occurred and is
continuing.
15. This Amendment shall not become effective until the date (the " Effective
Date") on which this Amendment shall have been executed by the Borrower, the
Agent and the Majority Lenders and the following conditions precedent shall have
been satisfied:
(i) Receipt by the Agent of fully executed original counterparts of this
Amendment, together with delivery of other closing documentation, all in form
and substance satisfactory to the Agent and the Majority Lenders.
(ii) Payment by the Borrower (x) to the Agent (for the account of the New
Revolving Lenders) of the Amendment Fee and (y) of the costs and expenses of the
Agent (including reasonable attorneys' fees and expenses) incurred in connection
with the negotiation and preparation of this Amendment.
(iii) The Borrower shall have delivered to the Agent and the Lenders its
quarterly balance sheet, income statement and cash flow projections through
December 1999 in form satisfactory to the Agent and the Majority Lenders.
(iv) After giving effect to this Amendment, the Borrower shall be in compliance
with all of the terms and provisions set forth in the Credit Agreement to be
performed and no Default or Event of Default shall have occurred and be
continuing.
(v) All representations and warranties contained in this Amendment, the Credit
Agreement and the documents executed in connection herewith and therewith shall
be true and correct in all material respects on and as of the Effective Date,
except to the extent that such representations and warranties relate to an
earlier date.
(vi) The Agent shall have received such other instruments, documents and
assurances as the Agent or its counsel may reasonably request.
16. Except to the extent hereby amended, the Credit Agreement and each of the
Loan Documents remain in full force and effect and are hereby ratified and
affirmed.
17. This Amendment shall be limited precisely as written and shall not be deemed
(a) to be a consent granted pursuant to, or a waiver or modification of, any
other term or condition of the Credit Agreement or any of the instruments or
agreements referred to therein or (b) to prejudice any right or rights which the
Agent or the Lenders may now have or have in the future under or in connection
with the Credit Agreement or any of the instruments or agreements referred to
therein.
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Whenever the Credit Agreement is referred to in the Credit Agreement or any of
the instruments, agreements or other documents or papers executed or delivered
in connection therewith, such reference shall be deemed to mean the Credit
Agreement as modified by this Amendment.
18. This Amendment may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
19. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and the year first above written.
PAYLESS CASHWAYS, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Title: Sr. V.P. Finance
CANADIAN IMPERIAL BANK OF COMMERCE,
as Coordinating and Collateral Agent
By: /s/ X. X. Xxxxxx
---------------------------------
Title: General Manager
By:_/s/ Xxxxxx X. Xxxxx
Title: Assistant General Manager
CIBC INC., as a New Term Lender and a New
Revolving Lender
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Title: Executive Director
Nationsbank, N.A. f/k/a
NATIONSBANK OF TEXAS, N.A., as a New Term
Lender and a New Revolving Lender
By: /s/ Xxx X. Xxxxxxx
---------------------------------
Title: Senior Vice President
XXXXXX COMMERCIAL PAPER INC. , as a
New Term Lender and a New Revolving Lender
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Title: Authorized signatory
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XXXXXXX SACHS CREDIT PARTNERS L.P.,
as a New Term Lender and a New Revolving Lender
By: /s/ Xxxx Xxxxx
---------------------------------
Title: Authorized signatory
FREMONT FINANCIAL CORPORATION,
as a New Revolving Lender
By: /s/ Xxxx X. Xxxxx
---------------------------------
Title: SVP
XXX XXXXXX AMERICAN CAPITAL PRIME
RATE INCOME TRUST, as a New Term
Lender and a New Revolving Lender
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Title: Sr. Vice Pres. & Director
U.S. BANK NATIONAL ASSOCIATION,
as a New Term Lender
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------
Title: Vice President
ABN AMRO BANK N.V., as a New Term Lender
By: /s/
---------------------------------
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a New Term Lender
By: /s/
---------------------------------
Title:
00
XXX XXXX XX XXXX XXXXXX, as a New Term Lender
By: /s/
---------------------------------
Title:
BEAR, XXXXXXX & CO. INC., as a New Term Lender
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Title: Senior Managing Director
NATIONAL CITY BANK, INDIANA,
as a New Term Lender
By: /s/
---------------------------------
Title:
MORGENS WATERFALL DOMESTIC
PARTNERS II, L.L.C., a New Term Lender
By: /s/
---------------------------------
Title:
NATIONSBANK, N.A., as a New Term Lender
By: /s/ Xxx X. Xxxxxxx
---------------------------------
Title: Senior Vice President
OAKTREE CAPITAL MANAGEMENT, LLC,
as a New Term Lender
By: /s/
---------------------------------
Title:
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TRANSAMERICA BUSINESS CREDIT CORPORATION,
as a New Revolving Lender
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Title: SVP
WAYLAND INVESTMENT FUND, LLC., as a New Term
Lender and a New Revolving Lender
By: CFSC Wayland Advisers, INC., its Manager
By: /s/ Xxxxxx Xxxxx
---------------------------------
Title: A.V.P.
