Exhibit 10.2.2
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
March 19, 1999, is by and among Xxxxxx American Corp. (the "Borrower"), Xxxxxx
American Investment Corp. (the "Parent"), Xxxxxx American Group, Inc.
("Interco") and the certain subsidiaries of the Parent identified on the
signature pages hereto (together with the Parent and Interco, the "Guarantors"),
the lenders identified on the signature pages hereto (the "Lenders"),
NationsBank, N.A., as agent for the Lenders (in such capacity, the "Agent") and
Gleacher NatWest Inc., as documentation agent (the "Documentation Agent").
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders, the Agent and the
Documentation Agent have entered into that certain Credit Agreement dated as of
May 18, 1998 and as amended as of May 27, 1998 and December 18, 1998 (as so
amended the "Existing Credit Agreement");
WHEREAS, the parties to the Existing Credit Agreement have agreed to amend
the Existing Credit Agreement as provided herein;
NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
PART 1
DEFINITIONS
SUBPART 1.1 Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"Amended Credit Agreement" means the Existing Credit
Agreement as amended hereby.
"Amendment No. 3 Effective Date" is defined in Subpart 3.1.
SUBPART 1.2 Other Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Amendment, including its preamble and
recitals, have the meanings provided in the Amended Credit Agreement.
PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 3 Effective
Date, the Existing Credit Agreement is hereby amended in accordance with this
Part 2. Except as so amended, the Existing Credit Agreement and all other Credit
Documents shall continue in full force and effect.
SUBPART 2.1 Amendments to Section 1.1.
(a) The pricing grid contained in the definition of "Applicable Percentage"
appearing in Section 1.1 of the Existing Credit Agreement is hereby amended and
replaced with the pricing grid set forth below:
-----------------------------------------------------------------------------------------
Applicable
Percentage For Applicable
Revolving Percentage
Loans and For Tranche B
Tranche A Term Loan
Term Loan
-------------------------------
Applicable Applicable Applicable
Senior Percentage Percentage Percentage
Pricing Leverage For Eurodollar Base Eurodollar Base For for
Level Ratio Unused Loans Rate Loans Rate Standby Trade
Fee Loans Loans Letter of Letter
Credit Fee of Credit Fee
I >2.50 1/2% 2-1/2% 1-1/2% 3% 2% 2-1/4% 1-1/8%
to
1.00
------------------------------------------------------------------------------------------
II <2.50 1/2% 2-1/4% 1-1/4% 2-3/4% 1-3/4% 2% 1%
-
to
1.00
but >
-
2.00
to
1.00
-----------------------------------------------------------------------------------------
III <2.00 3/8% 2% 1% 2-1/2% 1-1/2% 1-3/4% 7/8%
to
1.00
but >
-
1.75
to
1.00
----------------------------------------------------------------------------------------
IV < 3/8% 1-3/4% 3/4% 2-1/2% 1-1/2% 1-1/2% 3/4%
1.75
to
1.00
========================================================================================
(b) The definition of "Consolidated EBITDA" appearing in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Consolidated EBITDA" means, for any period, the sum of (i) Consolidated
Net Income for such period, plus (ii) an amount which, in the determination
of Consolidated Net Income for such period, has been deducted for (A)
Consolidated Interest Expense, (B) total federal, state, local and foreign
income, value added and similar taxes, (C) depreciation and amortization
expense, (D) letter of credit fees, (E) non-cash expenses resulting from
the grant of, or the obligation to grant, stock and stock options to
employees of the Parent, the Borrower or any of their respective
Subsidiaries pursuant to a written plan or agreement and (F) step-ups in
inventory valuation as a result of purchase accounting for Permitted
Acquisitions, all as determined in accordance with GAAP; provided, however,
that Consolidated EBITDA for the fiscal quarters ending June 30, 1998,
September 30, 1998 and December 31, 1998 shall be equal to the sum of (i)
the amount determined pursuant to the first clause of this definition for
the one-quarter period, two-quarter period or three-quarter period,
respectively, then ended plus (ii) the aggregate Consolidated EBITDA
Adjustment for each fiscal quarter occurring during such period.
(c) The definition of "Consolidated EBITDA Adjustment" appearing in Section
1.1 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
"Consolidated EBITDA Adjustment" means (i) the sum of (A) for each of the
fiscal quarters ending September 30, 1997, December 31, 1997 and March 28,
1998, the amount indicated for Consolidated EBITDA for such fiscal quarter
on Schedule 1.1A, plus (B) for each of the fiscal quarters ending December
31, 1997, March 28, 1998, June 27, 1998, September 26, 1998 and December
31, 1998, the amount indicated for such fiscal quarter on Schedule 1.1A-1
in respect of losses for such period associated with the discontinuance of
the Burberrys and Xxxx Xxxxx Xxxxxxx licensed product lines, and (ii) for
any fiscal quarter after March 28, 1998, the sum of (A) the amount, if any,
of reorganization charges taken during such fiscal quarter in respect of
(1) up to $3.3 million of facility closing and re-engineering costs accrued
by the Borrower and its Subsidiaries prior to the Closing Date, (2) up to
$550,000 of losses accrued by the Borrower and its Subsidiaries on or prior
to December 31, 1998 associated with (x) the Canadian retail operations of
the Borrower and its Subsidiaries and (y) the Mexican and Guatemalan
operations of the Borrower and its Subsidiaries, (3) up to $4.0 million of
bankruptcy reorganization costs incurred by the Borrower and its
Subsidiaries on or prior to the Closing Date, (4) the costs and expenses of
the Parent, the Borrower and its Subsidiaries incurred in connection with
the Recapitalization and (5) up to $700,000 for non-cash facility closing
and re-engineering costs accrued by the Borrower and its Subsidiaries on or
prior to December 31, 1998, plus (B) the amount, if any, of charges taken
during such fiscal quarter in respect of (1) the establishment on or prior
to December 31, 1998 of a litigation reserve of up to $1.6 million and (2)
failed deal costs of up to $500,000 incurred by the Borrower and its
Subsidiaries on or prior to December 31, 1998, in each case calculated in
accordance with GAAP.
(d) The definition of "Excess Cash Flow" appearing in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Excess Cash Flow" means, with respect to any fiscal year period of the
Consolidated Parties on a consolidated basis, an amount equal to (a)
Consolidated EBITDA for such period minus (b) Consolidated Capital
Expenditures for such period minus (c) Consolidated Interest Expense for
such period minus (d) Federal, state and other income taxes payable by the
Consolidated Parties on a consolidated basis in respect of such period
minus (e) Consolidated Scheduled Funded Debt Payments made during such
period minus (f) prepayments applied to the permanent reduction of Funded
Debt of any Consolidated Party; provided that in the case of any revolving
Funded Debt, such prepayment shall correspondingly permanently reduce
commitments with respect thereto, plus/minus (g) changes in non-cash
working capital for such period minus (h) without duplication of any item
included under clause (c) above, Restricted Payments made by the Parent and
the Consolidated Parties during such period to the extent permitted by the
terms of Section 8.7 minus (i) for each of the fiscal quarters ending
December 31, 1997, March 28, 1998, June 27, 1998, September 26, 1998 and
December 31, 1998, the Consolidated EBITDA adjustment referred to in clause
(i)(B) in the definition of "Consolidated EBITDA Adjustment".
SUBPART 2.2 Amendments to Section 7.11. Section 7.11 of the Existing Credit
Agreement is hereby amended and restated in its entirety to read as follows:
7.11 Financial Covenants.
The Credit Parties shall cause:
(a) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of the
last day of each fiscal quarter of the Consolidated Parties, to be at
least:
(i) for the period from the Closing Date to and
including December 31, 1998, 1.00 to 1.00;
(ii) for the period from January 1, 1999 to and including December
30, 1999, 0.75 to 1.00; and
(iii) for the period from December 31, 1999 and at all times
thereafter, 1.00 to 1.00.
(b) Interest Coverage Ratio. The Interest Coverage Ratio, as of the last
day of each fiscal quarter of the Consolidated Parties, to be greater than
or equal to:
(i) for the period from the Closing Date to and
including December 31, 1998, 1.65 to 1.00;
(ii) for the period from January 1, 1999 to and including December
30, 1999, 1.45 to 1.00;
(iii) for the period from December 31, 1999 to and including March
30, 2000, 1.65 to 1.00;
(iv) for the period from March 31, 2000 to and including December
30, 2000, 1.85 to 1.00;
(v) for the period from December 31, 2000 to and
including December 30, 2001, 2.00 to 1.00;
(vi) for the period from December 31, 2001 to and including
December 30, 2002, 2.25 to 1.00; and
(vii) for the period from December 31, 2002 and at all
times thereafter, 2.50 to 1.00.
(c) Senior Leverage Ratio. The Senior Leverage Ratio, as of the last day of
each fiscal quarter of the Consolidated Parties, to be less than or equal
to:
(i) for the period from the Closing Date to and
including December 31, 1998, 3.25 to 1.00;
(ii) for the period from January 1, 1999 to and including December
30, 1999, 3.75 to 1.00;
(iii) for the period from December 31, 1999 to and including
December 30, 2001, 3.50 to 1.00;
(iv) for the period from December 31, 2001 to and including
December 30, 2002, 3.00 to 1.00;
(v) for the period from December 31, 2002 to and
including December 30, 2003, 2.75 to 1.00; and
(vi) for the period from December 31, 2003 and at all times
thereafter, 2.50 to 1.00.
(d) Total Leverage Ratio. The Total Leverage Ratio, as of the last day of
each fiscal quarter of the Consolidated Parties, to be less than or equal
to:
(i) for the period from the Closing Date to and
including December 31, 1998, 6.50 to 1.00;
(ii) for the period from January 1, 1999 to and including December
30, 1999, 7.00 to 1.00;
(iii) for the period from December 31, 1999 to and including March
30, 2000, 6.25 to 1.00;
(iv) for the period from March 31, 2000 to and including December
30, 2000, 5.50 to 1.00;
(iv) for the period from December 31, 2000 to and including
December 30, 2001, 4.75 to 1.00; and
(v) for the period from December 31, 2001 and at all times
thereafter, 4.00 to 1.00.
SUBPART 2.3 Amendments to Section 7.14. Section 7.14 of the Existing Credit
Agreement is hereby amended and restated in its entirety to read as follows:
7.14Furtherance Assurances.
The Borrower shall use its reasonable best efforts to deliver to the Agent
on or before April 30, 1999 with respect to the leasehold or other
ownership interest of the Borrower in the Austell Property at such time,
such real property documents, instruments and other items of the types
required to be delivered pursuant to Section 5.1(e), in each case in form
and substance reasonably acceptable to the Agent.
SUBPART 2.4 Amendments to Section 8.7. Section 8.7 of the Existing Credit
Agreement is hereby amended and restated in its entirety to read as follows:
8.7 Restricted Payments.
The Credit Parties will not permit the Parent or any Consolidated Party to,
directly or indirectly, declare, order, make or set apart any sum for or
pay any Restricted Payment, except (i) payments and distributions to
consummate the Recapitalization pursuant to the Recapitalization Documents
(a) on the Closing Date or (b) to the extent consisting of the distribution
of the Parity Notes (and interest thereon) and cash in lieu of fractional
amounts thereof, (ii) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests in the Parent held by any
member of the executive management of the Parent and its Subsidiaries,
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Capital Stock shall not exceed $1,000,000 in any fiscal
year, (iii) any payment by the Parent in connection with the repurchase of
outstanding shares of Employee Preferred Stock (or any class of Equity
Interests into which such shares of Employee Preferred Stock are converted)
following the death, termination, disability, retirement or termination or
other separation of employment of any employee that is the beneficial
holder thereof, (iv) payments by any Consolidated Parties to the Parent
pursuant to a tax sharing agreement under which each such Consolidated
Party is allocated its proportionate share of the tax liability of the
affiliated group of corporations that file consolidated federal income tax
returns (or that file state or local income tax returns on a consolidated
basis), (v) the repurchase of Equity Interests of the Parent with the
proceeds of any issuance by the Parent to the Sponsor or its Affiliates or
designated co-investors or any of the officers, directors or employees of
the Parent or a Consolidated Party of any Equity Interests of the Parent,
(vi) to the extent not permitted pursuant to the immediately preceding
clause (v), payments made to or for the benefit of beneficiaries of the
Consolidated Parties' employee bonus plan in lieu of the issuance to or for
the benefit of such beneficiaries of Employee Preferred Stock, provided
that such payments are made with the proceeds of any issuance by the Parent
to the Sponsor or its Affiliates or designated co-investors or any of the
officers, directors or employees of the Parent or a Consolidated Party of
any Equity Interests of the Parent, and (vii) provided that no Default or
Event of Default exists either before or after giving effect thereto, (A)
loans, advances, dividends or distributions by any Consolidated Party to
the Parent not to exceed an amount necessary to permit the Parent to pay
its costs (including all professional fees and expenses) incurred to comply
with its reporting obligations under federal or state laws or in connection
with reporting or other obligations under this Credit Agreement and the
Credit Documents, (B) loans or advances by any Consolidated Party to the
Parent not to exceed an amount necessary to permit the Parent to pay its
interim expenses incurred in connection with any public offering of equity
securities the net proceeds of which are specifically intended to be
received by or contributed or loaned to the Borrower, which, unless such
offering shall have been terminated by the board of directors of the
Parent, shall be repaid to the Borrower promptly out of the proceeds of
such offering and (C) loans, advances, dividends or distributions by any
Consolidated Party to the Parent to pay for corporate, administrative and
operating expenses in the ordinary course of business.
PART 3
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 Amendment No. 3 Effective Date. This Amendment shall
be and become effective December 30, 1998 (the "Amendment No. 3
Effective Date") when all of the conditions set forth in this Part 3
shall have been satisfied, and thereafter this Amendment shall be
known, and may be referred to, as "Amendment No. 3."
SUBPART 3.1.1 Execution of Counterparts of Amendment. The Agent shall
have received counterparts of this Amendment, which collectively shall have
been duly executed on behalf of each of the Borrower, the Guarantors and
the Required Lenders.
SUBPART 3.1.2 Other Items. The Agent shall have received such other
documents, agreements or information which may be reasonably requested by
the Agent.
PART 4
MISCELLANEOUS
SUBPART 4.1 Representations and Warranties. Borrower hereby represents and
warrants to the Agent and the Lenders that, after giving effect to this
Amendment, (a) no Default or Event of Default exists under the Credit Agreement
or any of the other Credit Documents and (b) the representations and warranties
set forth in Section 6 of the Existing Credit Agreement are, subject to the
limitations set forth therein, true and correct in all material respects as of
the date hereof (except for those which expressly relate to an earlier date).
SUBPART 4.2 Reaffirmation of Credit Party Obligations. Each Credit Party
hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it
is bound by all terms of the Credit Agreement applicable to it and (b) that it
is responsible for the observance and full performance of its respective Credit
Party Obligations.
SUBPART 4.3 Amendment Fee. By its execution of this Amendment, the Borrower
agrees to pay an amendment fee (the "Amendment Fee") equal to 0.15% of the
Commitment of each Lender which executes this Amendment on or prior to March 19,
1999. The Amendment Fee shall be due and payable on or before March 30, 1999.
SUBPART 4.4 Cross-References. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 4.5 Instrument Pursuant to Existing Credit Agreement. This Amendment
is a Credit Document executed pursuant to the Existing Credit Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered
and applied in accordance with the terms and provisions of the Existing Credit
Agreement.
SUBPART 4.6 References in Other Credit Documents. At such time as this
Amendment No. 3 shall become effective pursuant to the terms of Subpart 3.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment No. 3.
SUBPART 4.7 Counterparts/Telecopy. This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement. Delivery of executed counterparts of this Amendment by telecopy shall
be effective as an original and shall constitute a representation that an
original shall be delivered.
SUBPART 4.8 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
SUBPART 4.9 Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
10
IN WITNESS WHEREOF the Borrower, the Guarantors and the Required Lenders have
caused this Amendment to be duly executed on the date first above written.
BORROWER: XXXXXX AMERICAN Corp.
By:
Name:
Title:
GUARANTORS: Xxxxxx American Investment Corp.,
a Delaware corporation
By:
Name:
Title:
Xxxxxx American Group, Inc.,
a Delaware corporation
By:
Name:
Title:
CONSUMER DIRECT CORPORATION,
a Delaware corporation
By:
Name:
Title:
ARROW FACTORY STORES, INC.,
a Delaware corporation
By:
Name:
Title:
GAKM RESOURCES CORPORATION,
a Delaware corporation
By:
Name:
Title:
XXXXXX XXXXXXX RESOURCES CORPORATION,
a Delaware corporation
By:
Name:
Title:
XXXXXX PEABODY HOLDING CORP.,
a Delaware corporation
By:
Name:
Title:
XXXXXX, XXXXXXX & CO., INC.,
a Delaware corporation
By:
Name:
Title:
BIDERTEX SERVICES INC.,
a Delaware corporation
By:
Name:
Title:
GREAT AMERICAN KNITTING XXXXX, INC.,
a Delaware corporation
By:
Name:
Title:
XXXXXX DESIGNER GROUP, INC.,
a Delaware corporation
By:
Name:
Title:
BIDERMANN TAILORED CLOTHING, INC.,
a Delaware corporation
By:
Name:
Title:
LENDERS: NATIONSBANK, N. A.
By:
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
By:
Name:
Title:
FLEET BANK, N.A.
By:
Name:
Title:
BANKBOSTON, N.A.
By:
Name:
Title:
FLEET BUSINESS CREDIT CORPORATION
(successor in interest to Sanwa Business Credit
Corporation)
By:
Name:
Title:
[Signatures Continued]
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By:
Name:
Title:
By:
Name:
Title:
FIRST SOURCE FINANCIAL LLP,
By: First Source Financial Inc., its manager
By:
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By:
Name:
Title:
SUMMIT BANK
By:
Name:
Title:
MARINE MIDLAND BANK
By:
Name:
Title:
AG CAPITAL FUNDING PARTNERS, L.P.
By: Xxxxxx Xxxxxx & Co., L.P. as Investment
Advisor
By:
Name:
Title:
NEW YORK LIFE INSURANCE COMPANY
By:
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By:
Name:
Title:
ML CLO XX PILGRIM AMERICA (CAYMAN) LTD.
By:
Name:
Title:
STRATA FUNDING LTD.
By:
Name:
Title:
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By:
Name:
Title:
XXXXXXX XXXXX SENIOR FLOATING
RATE FUND, INC.
By:
Name:
Title:
XXXXX XXXXX SENIOR INCOME TRUST
By:
Name:
Title:
