EXHIBIT 10.16
FIRST AMENDMENT AND WAIVER
TO REVOLVING CREDIT AGREEMENT
FIRST AMENDMENT AND WAIVER dated as of April 28, 1998, (this "Amendment
and Waiver"), with respect to the Revolving Credit Agreement dated as of January
17, 1997 (the "Credit Agreement"), by and among XXXXXXXX DRUG STORES, INC., as
Borrower; FLEET BANK, NATIONAL ASSOCIATION ("Fleet"), THE BANK OF NEW YORK
("BNY") and STATE STREET BANK AND TRUST COMPANY ("State Street"; collectively,
with Fleet and BNY, the "Banks"); FLEET BANK, NATIONAL ASSOCIATION, as
administrative agent for the Banks (in such capacity, the "Agent") and THE BANK
OF NEW YORK, as documentation agent (in such capacity, the "Document Agent").
RECITALS
The Borrower has requested and the Banks have agreed, subject to the
terms and conditions of this Amendment and Waiver, to waive and amend certain
provisions of the Credit Agreement as herein set forth. Capitalized terms used
herein and not defined herein shall have the meanings given to them in the
Credit Agreement.
Accordingly, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
I. Waiver
Section 1.1. The Banks hereby waive compliance with the provisions of
Sections 9.1, 9.3 and 9.4 of the Credit Agreement for the period ending January
30, 1998.
Section 1.2. The waivers set forth in Section 1.1 are limited
specifically to the matters set forth above and for the specific instance
referred to above and do not constitute directly or by implication a waiver of
any other provision of the Credit Agreement. Furthermore, the waivers granted
pursuant to Section 1.1 shall not entitle the Borrower to any further or future
waivers whatsoever.
II. Amendments.
Section 2.1. The definition of the term "Margin" contained in Section
1.1 of the Agreement is hereby amended and restated to provide in its entirety
as follows:
"Margin" means, with respect to Loans and the Commitment Fee:
RATIO OF CONSOLIDATED MARGIN
FUNDED DEBT TO CONSOLIDATED LIBOR LOANS AND
EBITDA PURSUANT TO STANDBY LETTERS COMMITMENT
SECTION 9.4 OF CREDIT FEE
(a) Greater than 2.25:1.00 1.10 0.25
(b) Greater than 1.75:1.00 but
less than or equal to 2.25:1.00 0.85 0.20
(c) Less than or equal to 1.75:1.00 0.55 0.15
Section 2.2. Article 9 of the Credit Agreement is hereby amended and
restated to provide in its entirety as follows:
ARTICLE 9. FINANCIAL COVENANTS.
So long as any of the Notes or other Obligations shall remain
unpaid, or any Bank shall have any Commitment under this Agreement the
Borrower and its Subsidiaries shall:
Section 9.1. Minimum Consolidated Tangible Net Worth. Maintain at
all times a Consolidated Tangible Net Worth of not less than
$65,000,000 during the first fiscal quarter of the Borrower's fiscal
year ending January 29, 1999, $65,400,000 during the second, third and
through the fourth fiscal quarters of the Borrower's fiscal year ending
January 29, 1999, $68,100,000 at all times from January 29, 1999
through January 27, 2000, $72,000,000 at all times from January 28,
2000 through February 1, 2001, and $78,000,000 from February 2, 2001
and thereafter. This covenant shall be tested quarterly.
Section 9.2. Maximum Consolidated Effective Leverage. Maintain at all
times during the periods set forth below a ratio of (A) Consolidated
Total Liabilities (excluding for purposes of this covenant, deferred
income and deferred taxes) to (B) Consolidated Tangible Net Worth of
not more than the ratio set forth opposite such period:
Period Ratio
------ -----
January 31, 1998 - August 14, 1998 2.40:1.00
August 15, 1998 - November 6, 1998 2.70:1.00
November 7, 1998 - January 29, 1999 2.45:1.00
January 30, 1999 - January 28, 2000 2.40:1.00
January 29, 2000 and thereafter 2.30:1.00
Notwithstanding the foregoing, during the periods of August 14, 1999 through
November 5, 1999, August 12, 2000 through November 3, 2000 and August 18, 2001
through November 9, 2001, such ratio shall not be more than 2.60:100.
Section 9.3. Minimum Fixed Charge Coverage Ratio. Maintain at all times
during the periods specified below, on a consolidated basis, a ratio of
(A) Consolidated EBITDA plus Consolidated Operating Rents to (B)
Consolidated Interest Expenses plus Consolidated Current Portion of
Long Term Debt plus Capital Expenditures, on a consolidated basis, plus
Consolidated Operating Rents of not less than amounts set forth below:
Period Ratio
------ -----
January 31, 1998 - May 22, 1998 0.96:1.00
May 23, 1998 - August 14, 1998 0.98:1.00
August 15, 1998 - November 6, 1998 1.00:1.00
November 7, 1998 - January 29, 1999 1.08:1.00
January 30, 1999 - January 28, 2000 1.10:1.00
January 29, 2000 and thereafter 1.13:1.00
For purposes of calculating compliance with this covenant, Consolidated
EBITDA shall be calculated without giving effect to a $9,500,000
restructuring charge for the first three quarters of the Borrower's
fiscal year ending January 29, 1999.
This covenant shall be tested quarterly on a rolling four quarters
basis.
Section 9.4. Consolidated Funded Debt to Consolidated EBITDA. Maintain
at all times during the periods specified below, on a consolidated
basis, a ratio of (A) Consolidated Funded Debt to (B) Consolidated
EBITDA of not more than the ratios specified below:
Fiscal Year Ratio
----------- ------
1999 2.61:1.00
2000 2.16:1.00
2001 2.00:1.00
In addition, on each of the following dates, the Borrower and its
Subsidiaries, on a consolidated basis, shall maintain a ratio of (A)
Consolidated Funded Debt to (B) Consolidated EBITDA of not more than
the ratios specified below:
Date Ratio
---- -----
5/22/98 2.61:1.00
8/14/98 2.31:1.00
11/6/98 2.56:1.00
1/29/99 1.74:1.00
5/21/99 2.00:1.00
8/13/99 1.84:1.00
11/5/99 2.16;1.00
1/28/00 1.66:1.00
5/19/00 1.90:1.00
8/11/00 1.73:1.00
11/3/00 2.00:1.00
2/2/01 1.49:1.00
For purposes of calculating compliance with this covenant, Consolidated
EBITDA shall be calculated without giving effect to a $9,500,000
restructuring charge for the first three quarters of the Borrower's
fiscal year ending January 29, 1999.
This covenant shall be tested quarterly on a rolling four quarters
basis.
Section 9.5 Capital Expenditures. Not make Capital Expenditures in any
fiscal year on a consolidated basis in excess of the amounts listed below for
such fiscal year.
Maximum Consolidated
Fiscal Year Capital Expenditures
----------- --------------------
1997 $25,000,000
1998 and thereafter $24,000,000
The maximum Capital Expenditures in any fiscal year may be increased by an
amount equal to the net proceeds, but in no event more than $5,000,000 in any
fiscal year, of any sales of assets other than in the ordinary course of
business of the Borrower or the Guarantor, on a consolidated basis. Up to 25% of
any unused Capital Expenditure allowance (before giving effect to the proviso of
the preceding sentence) may be carried over to the following fiscal year;
however, in no event shall any amount be carried over for more than one fiscal
year. For purposes of calculating compliance with this covenant, that portion of
the consideration paid by the Borrower in connection with any Pharmacy Buyout
that is allocable to the purchase of inventory shall not be considered a Capital
Expenditure.
Section 9.6. Limitation on Capital Expenditures and Dividends. The
Borrower shall not permit the sum of Capital Expenditures plus cash
Dividends of the Borrower, determined on a consolidated basis, to
exceed the following percentages of Consolidated EBITDA on an annual
basis: for the Borrower's fiscal year ending January 29, 1999, eighty
(80%) percent, for the Borrower's fiscal year ending January 28, 2000,
seventy (70%) percent and for the Borrower's fiscal year ending
February 2, 2001 and each fiscal year thereafter, sixty-five (65%)
percent. For purposes of calculating compliance with this covenant, the
portion of the consideration paid by the Borrower in connection with
any Pharmacy Buyout that is allocable to the purchase of inventory
shall not be considered a Capital Expenditure.
III. Miscellaneous.
(a) This Amendment and Waiver shall be governed by and construed
in accordance with the laws of the State of New York.
(b) All terms used herein shall have the same meaning as in the
Credit Agreement, as amended hereby, unless specifically defined herein.
(c) This Amendment and Waiver shall constitute a Facility
Document.
(d) As expressly amended hereby, the Credit Agreement remains in
full force and effect in accordance with the terms thereof. The Credit Agreement
is ratified and confirmed in all respects by the Borrower.
(e) The Borrower hereby represents and warrants that (i) the
representations and warranties by the Borrower and each Guarantor pursuant to
the Credit Agreement and each other Facility Document are true and correct on
the date hereof, and (ii) after giving effect to this Amendment and Waiver, no
Default or Event of Default exists under the Credit Agreement or any other
Facility Document.
(f) This Amendment and Waiver may be executed in one or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one Amendment and Waiver.
IN WITNESS WHEREOF, the Borrower, the Banks, the Agent and the
Documentation Agent have caused this Amendment and Waiver to be duly executed by
their duly authorized officers as of the day and year first above written.
XXXXXXXX DRUG STORES, INC.
By: /s/ Xxxxxxxxxxx Xxxxxx
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Name: Xxxxxxxxxxx Xxxxxx
Title: Controller
FLEET BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: Assistant Vice President
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxxx X. Xxxxxxx, Xx.
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Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President
