AMENDMENT NO. 1 TO AMENDED, MODIFIED AND RESTATED
MASTER LEASE AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED, MODIFIED AND RESTATED MASTER LEASE
AGREEMENT is dated as of April 22, 1996 (the "AMENDMENT NO. 1"), is between
JACKSONVILLE FUNDING ENTERPRISES, LLC, a Delaware limited liability company
and successor in interest to Jacksonville Funding Corporation (the "LESSOR") ;
and
MICHAELS STORES, INC., a Delaware corporation (the "LESSEE"); and
amends that certain Amended, Modified and Restated Master Lease Agreement
dated as of December 18, 1995 (the "ORIGINAL LEASE AGREEMENT") between
Jacksonville Funding Corporation (a corporation which merged into the Lessor
with the Lessor being the surviving entity of such merger) and the Lessee.
NOW, THEREFORE, the parties hereto agree as follows:
1. The second line of the first paragraph in the Original Lease Agreement
is amended by deleting "December , 1995" therefrom and inserting "December 18,
1995" in place of such deleted reference.
2. Section 11.02(b) in the Original Lease Agreement is deleted in its
entirety and replaced by the following:
"(b) FIXED CHARGES COVERAGE RATIO. Lessee will not permit the Fixed
Charges Coverage Ratio at any time during the first three fiscal quarters
in fiscal year 1996 to be less than 1.00 to 1.00, and, in the fourth fiscal
quarter in fiscal year 1996 and at all times thereafter, to be less than
1.15 to 1.00. $64,400,000 of the provision established in the fiscal
quarter ending July 30, 1995 for inventory markdowns and other charges
shall be added to pretax consolidated income of the Lessee for the fiscal
quarter ending July 30, 1995 only for purposes of determining compliance
with the covenant contained in this Section for the fiscal quarter ending
April 28, 1996 only."
3. Section 11.02(d) in the Original Lease Agreement is deleted in its
entirety and replaced by the following:
"(d) MODIFIED LEVERAGE RATIO. Lessee will not permit the ratio,
measured at the end of each quarter, of (i) Adjusted Total Debt to (ii) the
sum of (A) consolidated income of Lessee and its Subsidiaries before income
taxes for the preceding twelve month period (excluding extraordinary cash
gains or losses for the preceding twelve month period), plus
(B) interest expense or the preceding twelve month period, plus (C)
operating lease expense for the preceding twelve month period, plus (D)
depreciation and amortization expense for the preceding twelve month
period, at any time to be greater than six (6) to one (l). $64,400,000 of
the provision established in the fiscal quarter ending July 30, 1995 for
inventory markdowns shall be added to pretax consolidated income of the
Lessee for fiscal quarter ending July 30, 1995 only for purposes of
determining compliance with the covenant contained in this Section for the
fiscal quarter ending April 28, 1996 only."
4. The definition of "Fixed Charges" in APPENDIX A to the Original Lease
Agreement is deleted in its entirety and replaced by the following:
""Fixed Charges" shall mean for Lessee and its Subsidiaries as of any
determination date for the preceding 12-month period, the sum of (a)
interest expense for such period plus (b) operating lease expense for such
period all as determined and consolidated in accordance with GAAP, plus (c)
capital expenditures (other than capital lease obligations incurred from
time to time for point-of-sale equipment and store systems, and services
and equipment supporting this equipment and systems not to exceed
$32,000,000 in the aggregate throughout the term of this Lease)."
5. The definition of "Fixed Charges Coverage Ratio" in APPENDIX A to the
Original Lease Agreement is deleted in its entirety and replaced by the
following:
""Fixed Charges Coverage Ratio" shall mean for Lessee and its
Subsidiaries as of any determination date for the preceding 12-month
period, the ratio of (a) the sum of (i) consolidated income of Lessee and
its Subsidiaries before income taxes for such period (excluding
extraordinary cash gains or losses for such period), plus (ii) interest
expense for such period plus (iii) operating lease expense for such period,
plus (iv) depreciation and amortization for such period to (b) Fixed
Charges."
6. The definition of "LIBOR Rate" in APPENDIX A to the Original Lease
Agreement is deleted in its entirety and replaced by the following:
""LIBOR Rate" shall mean the sum of (a) the applicable percentage
referenced in the pricing grid set forth immediately after this paragraph
plus (b) the interest rate per annum (rounded upwards, if necessary to the
nearest one-sixteenth of one percent) which is the quotient of (A) the rate
per annum at which dollar deposits in immediately available funds are
offered to NationsBank two Business Days
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before the first day of such applicable Payment Period by prime banks in
the interbank Eurodollar market as at or about 11:00 A.M., Dallas, Texas
time, for delivery on the first day of such applicable Rent Payment Period,
for the number of days comprised therein and in an amount equal to the
aggregate amount bearing such interest rate to be outstanding for such
applicable Rent Payment Period, divided by (3) the remainder of 1.00 MINUS
the Eurodollar Reserve Percentage applicable to such amounts.
PRICING GRID FOR LIBOR RATE
Per Annum Spread for
subsection (a) of "LIBOR Rate"
Fixed Charges Coverage Ratio definition
Less than 1.75 to 1.00 1.40%
Greater than or equal to 1.75
to 1.00 0.90%"
7. The definition of "Total Debt" in APPENDIX A to the Original Lease
Agreement is deleted in its entirety and replaced by the following:
""Total Debt" shall mean, as of the date of any determination thereof,
with respect to Lessee and its Subsidiaries, (i) all indebtedness, direct
or indirect, whether or not represented by bonds, debentures, notes or
other securities, for the repayment of money borrowed, (ii) all deferred
indebtedness for the payment of the purchase price of property or assets
purchased, (iii) all indebtedness under any lease which, under GAAP, is
required to be capitalized for balance sheet purposes provided that
notwithstanding the reporting requirements of GAAP, in no event will any
tax retention operating lease which is provided for in the Operative
Documents be considered a capital lease for financial or other covenant
compliance and provided, further, that this definition of "Total Debt"
shall also exclude capital lease obligations incurred from time to time for
point-of-sale equipment and store systems, and services and equipment
supporting this equipment and systems not to exceed $32,000,000 in the
aggregate throughout the term of this Lease, (iv) all guaranties,
endorsements, assumptions or other contingent obligations, in respect of,
or to purchase or otherwise acquire, indebtedness of others, (v) all
contingent obligations (as defined in accordance with GAAP) of any type
whatsoever and (vi) all indebtedness secured by any mortgage, pledge,
security interest or lien existing on property owned by any of Lessee and
its Subsidiaries, whether or not the indebtedness secured thereby shall
have been assumed by any of Lessee and its Subsidiaries; provided that
under no
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circumstances shall trade payables of Lessee and its Subsidiaries incurred
in the ordinary course of business be included in this definition of "Total
Debt"."
8. The definition of "Total Liabilities" in APPENDIX A to the Original
Lease Agreement is deleted in its entirety and replaced by the following:
""Total Liabilities" shall mean, as of the date of any determination
thereof, the aggregate (after eliminating intercompany items) of all
liabilities of Lessee and its Subsidiaries determined in accordance with
GAAP (including capitalized leases). Notwithstanding anything contained
herein or in the other Operative Documents to the contrary, such term shall
include all guaranties and liabilities relating to letters of credit (other
than commercial letters of credit) without duplication for liabilities
related to workmen's compensation."
9. The Lessee represents and warrants that (a) this Amendment No. 1
constitutes its legal, valid, and binding obligations, enforceable in accordance
with the terms hereof (subject as to enforcement of remedies to any applicable
bankruptcy, reorganization, moratorium, or other laws or principles of equity
affecting the enforcement of creditors' rights generally), (b) there exists no
Lease Event of Default after giving effect to this Amendment No. 1, (c) its
representations and warranties set forth in the Original Lease Agreement and the
other Operative Documents are true and correct on the date hereof after giving
effect to this Amendment No. 1, (d) it has complied with all agreements and
conditions to be complied with by it under the Original Lease Agreement and the
other Operative Documents by the date hereof, (e) the Original Lease Agreement,
as amended hereby-and the other Operative Documents remain in full force and
effect, and (f) no notice to, or consent of, any Person is required under the
terms of any agreement of the Lessee in connection with the execution of this
Amendment No. 1.
10. The Lessee shall execute and deliver such further agreements,
documents, instruments, and certificates in form and substance satisfactory to
the Lessor, the Agent to the Lenders and the Co-Agent to the Lenders as any such
Person or any Lender may deem reasonably necessary or appropriate in connection
with this Amendment No. 1.
11. Except as hereby modified, the terms and conditions of the Original
Lease Agreement remain in full force and effect.
12. This Amendment No. 1 has been delivered in, and shall in all respects
be governed by, and construed in accordance with, the laws of the State of Texas
applicable to agreements made and to be performed entirely within such State,
including all matters of
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construction, validity and performance; PROVIDED, notwithstanding the foregoing,
to the extent relating to the creation and perfection of liens on real estate in
the State of Florida or any other state, this Amendment No. 1 shall be governed
by, and construed in accordance with, the laws of the State of Florida or such
other state.
13. This Amendment No. 1 may be executed in any number of counterparts,
each of which shall be deemed an original and all of which taken together shall
constitute but one and the same instrument.
14. All capitalized terms used but not otherwise defined herein shall have
the meanings set forth therefor in the Original Lease Agreement and/or APPENDIX
A thereto.
(Signature page follows)
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
as of the above-written date.
JACKSONVILLE FUNDING ENTERPRISES,
LLC, as a successor in interest to
Jacksonville Funding Corporation,
by its members
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-1
By /s/ Xxx X. Xxxxx
---------------------------------
Title Vice President
------------------------------
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-2
By /s/ Xxx X. Xxxxx
---------------------------------
Title Vice President
------------------------------
MICHAELS STORES, INC.
By
---------------------------------
Title
------------------------------
ACKNOWLEDGED AND AGREED:
NATIONSBANK OF TEXAS, N.A., as Agent
to the Lenders and as a Lender
By
---------------------------------
Title
------------------------------
CREDIT LYONNAIS NEW YORK BRANCH, as Co-Agent
to the Lenders and as a Lender
By
---------------------------------
Title
------------------------------
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
as of the above-written date.
JACKSONVILLE FUNDING ENTERPRISES,
LLC, as a successor in interest to
Jacksonville Funding Corporation,
by its members
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-1
By
---------------------------------
Title
------------------------------
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-2
By
---------------------------------
Title
------------------------------
MICHAELS STORES, INC.
By /s/ X.X. Xxxxxxxx
---------------------------------
Title Vice President
------------------------------
ACKNOWLEDGED AND AGREED:
NATIONSBANK OF TEXAS, N.A., as Agent
to the Lenders and as a Lender
By
---------------------------------
Title
------------------------------
CREDIT LYONNAIS NEW YORK BRANCH, as Co-Agent
to the Lenders and as a Lender
By
---------------------------------
Title
------------------------------
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
as of the above-written date.
JACKSONVILLE FUNDING ENTERPRISES,
LLC, as a successor in interest to
Jacksonville Funding Corporation,
by its members
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-1
By
---------------------------------
Title
------------------------------
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-2
By
---------------------------------
Title
------------------------------
MICHAELS STORES, INC.
By
---------------------------------
Title
------------------------------
ACKNOWLEDGED AND AGREED:
NATIONSBANK OF TEXAS, N.A., as Agent
to the Lenders and as a Lender
By /s/ Xxxxxxx Xxxxxxxxxxx
---------------------------------
Title VP
------------------------------
CREDIT LYONNAIS NEW YORK BRANCH, as Co-Agent
to the Lenders and as a Lender
By
---------------------------------
Title
------------------------------
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
as of the above-written date.
JACKSONVILLE FUNDING ENTERPRISES,
LLC, as a successor in interest to
Jacksonville Funding Corporation,
by its members
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-1
By
---------------------------------
Title
------------------------------
By First Security Bank of Utah,
N.A., as Owner Trustee for Michaels
Stores Trust 1995-2
By
---------------------------------
Title
------------------------------
MICHAELS STORES, INC.
By
---------------------------------
Title
------------------------------
ACKNOWLEDGED AND AGREED:
NATIONSBANK OF TEXAS, N.A., as Agent
to the Lenders and as a Lender
By
---------------------------------
Title
------------------------------
CREDIT LYONNAIS NEW YORK BRANCH, as Co-Agent
to the Lenders and as a Lender
By Xxxxxx Xxxxxxxxx
---------------------------------
Title XXXXXX XXXXXXXXX
SENIOR VICE PRESIDENT
------------------------------
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