EXECUTION COPY
THIRD AMENDMENT, dated as of November 19, 1998 (this "AMENDMENT"),
to the CREDIT AND GUARANTEE AGREEMENT, dated as of August 14, 1996 (as
amended pursuant to the First Amendment thereto, dated as of June 19, 1997,
the Second Amendment thereto, dated as of September 30, 1997, and as the same
may be further amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), among DAL-TILE INTERNATIONAL INC., a Delaware
corporation ("HOLDINGS"), DAL-TILE GROUP INC., a Delaware corporation (the
"BORROWER"), the several banks and other financial institutions from time to
time parties thereto (collectively, the "LENDERS"), CREDIT SUISSE FIRST
BOSTON, as documentation agent (in such capacity, the "DOCUMENTATION AGENT"),
and THE CHASE MANHATTAN BANK ("CHASE"), a New York banking corporation, as
administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE
AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Lenders amend the
Credit Agreement in the manner provided for herein; and
WHEREAS, the Lenders are willing to amend the Credit Agreement in
the manner and on the terms and conditions provided for herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
1. SECTION DEFINITIONS AND SECTION REFERENCES
2.
2.1 DEFINED TERMS. Unless otherwise defined herein, terms which
are defined in the Credit Agreement and used herein are so used as so defined.
2.2
2.3 SECTION REFERENCES. Unless otherwise indicated, all Section
and subsection references are to the Credit Agreement.
2.4
2.5
3. SECTION AMENDMENTS TO CREDIT AGREEMENT
1.1 AMENDMENT TO SUBSECTION 4.1(b). Subsection 4.1 of the
Credit Agreement is hereby amended by deleting the reference to the amount
"$10,000,000" in paragraph (b) of such subsection and inserting in lieu thereof
a reference to the amount "$20,000,000".
1.2
1.3 AMENDMENT TO SUBSECTION 8.1(c). Subsection 8.1 of the
Credit Agreement is hereby amended by deleting paragraph (c) of such subsection
in its entirety and inserting in lieu thereof the following new paragraph:
1.4
"(c) MAINTENANCE OF CONSOLIDATED ADJUSTED INTEREST COVERAGE RATIO.
Permit for any period of four consecutive fiscal quarters ending on the
last day of any fiscal quarter set forth below the Consolidated Adjusted
Interest Coverage Ratio for such period to be less than the ratio set forth
opposite such fiscal quarter below:
Fiscal Quarter Interest Coverage Ratio
-------------- -----------------------
3rd Fiscal Quarter of 1998 Fiscal Year 1.00 to 1
4th Fiscal Quarter of 1998 Fiscal Year 1.50 to 1
2
1st and 2nd Fiscal Quarters of 1999 Fiscal Year 1.20 to 1
3rd and 4th Fiscal Quarters of 1999 Fiscal Year 1.30 to 1
1st and 2nd Fiscal Quarters of 2000 Fiscal Year 1.35 to 1
3rd Fiscal Quarter of 2000 Fiscal Year 1.40 to 1
4th Fiscal Quarter of 2000 Fiscal Year 1.65 to 1
1st Fiscal Quarter of 2001 Fiscal Year 1.85 to 1
2nd Fiscal Quarter of 2001 Fiscal Year 2.15 to 1
3rd and 4th Fiscal Quarters of 2001 Fiscal Year 2.25 to 1
1st and 2nd Fiscal Quarters of 2002 Fiscal Year 2.50 to 1
3rd and 4th Fiscal Quarters of 2002 Fiscal Year 2.75 to 1
All Fiscal Quarters thereafter 3.00 to 1"
1.1 AMENDMENT TO SUBSECTION 8.1(d). Subsection 8.1 of the
Credit Agreement is hereby amended by deleting paragraph (d) of such subsection
in its entirety and substituting in lieu thereof the following new paragraph:
1.2
"(d) MAINTENANCE OF CONSOLIDATED LEVERAGE RATIO. Permit at the end
of any fiscal quarter set forth below the Consolidated Leverage Ratio for
such fiscal quarter to be greater than the ratio set forth opposite such
fiscal quarter below:
Fiscal Quarter Consolidated Leverage Ratio
-------------- ---------------------------
3rd Fiscal Quarter of 1998 Fiscal Year 8.00 to 1
4th Fiscal Quarter of 1998 Fiscal Year 7.50 to 1
1st and 2nd Fiscal Quarters of 1999 Fiscal Year 6.50 to 1
3rd Fiscal Quarter of 1999 Fiscal Year 6.25 to 1
4th Fiscal Quarter of 1999 Fiscal Year and
1st Fiscal Quarter of 2000 Fiscal Year 5.75 to 1
2nd Fiscal Quarter of 2000 Fiscal Year 5.50 to 1
3rd Fiscal Quarter of 2000 Fiscal Year 5.25 to 1
4th Fiscal Quarter of 2000 Fiscal Year 4.75 to 1
1st Fiscal Quarter of 2001 Fiscal Year 4.25 to 1
2nd Fiscal Quarter of 2001 Fiscal Year 4.00 to 1
3rd and 4th Fiscal Quarters of 2001 Fiscal Year 3.75 to 1
3
1st Fiscal Quarter of 2002 Fiscal Year 3.50 to 1
2nd, 3rd and 4th Fiscal Quarters of 2002 Fiscal Year 3.25 to 1
All Fiscal Quarters thereafter 3.00 to 1"
1.1 AMENDMENT TO SUBSECTION 8.1(e). Subsection 8.1 of the
Credit Agreement is hereby amended by deleting paragraph (e) of such subsection
in its entirety and substituting in lieu thereof the following new paragraph:
1.2
"(e) MAINTENANCE OF CONSOLIDATED EBITDA. Permit at the end of any
fiscal quarter set forth below Consolidated EBITDA for the period of four
consecutive fiscal quarters ended at the end of such fiscal quarter to be
less than the amount set forth opposite such fiscal quarter below:
Fiscal Quarter Amount
-------------- ------
3rd Fiscal Quarter of 1998 Fiscal Year $70,000,000
4th Fiscal Quarter of 1998 Fiscal Year 90,000,000
1st, 2nd and 3rd Fiscal Quarters of 1999 Fiscal Year 85,000,000
4th Fiscal Quarter of 1999 Fiscal Year and
1st Fiscal Quarter of 2000 Fiscal Year 90,000,000
2nd and 3rd Fiscal Quarters of 2000 Fiscal Year 95,000,000
4th Fiscal Quarter of 2000 Fiscal Year 100,000,000
All Fiscal Quarters thereafter 110,000,000".
1.1 AMENDMENT TO SUBSECTION 8.7. Subsection 8.7 is hereby
amended deleting such subsection in its entirety and substituting in lieu
thereof the following new subsection:
1.2
1.3 "8.7 LIMITATION ON LEASES. Permit Consolidated Lease Expense for
any fiscal year of the Borrower to exceed (a) for any such fiscal year prior to
1999, $35,000,000, (b) for each of the 1999 and 2000 fiscal years of the
Borrower, $40,000,000, and (c) for any such fiscal year thereafter,
$50,000,000."
1.4
1.5 AMENDMENT TO SUBSECTION 8.9. Subsection 8.9 of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting in lieu thereof the following new subsection:
1.6
"8.9 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make
Capital Expenditures in the aggregate for the Borrower and its Subsidiaries
during any of the Fiscal Years of the Borrower set forth below, in excess
of the amount set forth opposite such Fiscal Year below:
Fiscal Year Ending Amount
------------------ ------
12/31/98 $25,000,000
12/31/99 30,000,000
12/31/00 35,000,000
12/31/01 40,000,000
12/31/02 45,000,000
4
12/31/03 50,000,000
PROVIDED, that, (a) if the Borrower shall issue or incur at least
$100,000,000 in Subordinated Debt, each of the amounts set forth above for
Fiscal Years ending on or after December 31, 1999 shall be increased by
$5,000,000, (b) up to 100% of any amount permitted to be expended in any
Fiscal Year (without giving effect to this clause (b)) if not so expended
in the Fiscal Year for which it is permitted above, may be carried over for
expenditure in the next following Fiscal Year and (c) any Capital
Expenditures which are financed with the Net Proceeds of any Asset Sale and
which are not required to prepay Loans and/or reduce Revolving Credit
Commitments pursuant to subsection 4.1(b) shall not be included for
purposes of determining compliance with this subsection so long as such
Capital Expenditures are made within 12 months after the consummation of
the relevant Asset Sale, and PROVIDED FURTHER, that, if the Consolidated
Adjusted Interest Coverage Ratio for any period of four consecutive fiscal
quarters exceeds 5.00 to 1.00, this covenant shall cease to be of any
further force and effect."
1.1 AMENDMENT TO ANNEXES TO THE CREDIT AGREEMENT. ANNEX A-1
and ANNEX A-3 to the Credit Agreement are hereby amended by replacing each such
Annex in its entirety with ANNEX A-1 and ANNEX A-3 to this Amendment,
respectively.
1.2
1.3
2. SECTION MISCELLANEOUS
3.
3.1 REPRESENTATIONS AND WARRANTIES. On and as of the date
hereof, Holdings and the Borrower hereby confirm, reaffirm and restate the
representations and warranties set forth in Section 5 of the Credit Agreement
MUTATIS MUTANDIS (after giving effect to any amendments thereto pursuant to this
Amendment), except to the extent that such representations and warranties
expressly relate to a specific earlier date in which case Holdings and the
Borrower hereby confirm, reaffirm and restate such representations and
warranties as of such earlier date.
3.2 EFFECTIVENESS. This Amendment shall become effective as of
the date upon which the conditions set forth below shall first be satisfied (the
"EFFECTIVE DATE"):
3.3
(a) AMENDMENT. The Administrative Agent shall have received this
Amendment, executed and delivered by a duly authorized officer of Holdings,
the Borrower and the Required Lenders with a counterpart for the
Administrative Agent and a counterpart or a conformed copy for each Lender.
(a) AMENDMENT FEE. The Administrative Agent shall have received
for each Lender which executes this Amendment an amendment fee in an amount
equal to 0.20% of the sum of (a) such Lender's Revolving Credit Commitment
and (b) the aggregate principal amount of the then outstanding Term Loans
of such Lender. The Administrative Agent shall have received all other
fees and other amounts payable in connection with this Amendment.
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Borrower and the other Loan Parties in or
pursuant to the Loan Documents shall be true and correct in all material
respects on and as of the Effective Date, except to the extent such
representations and warranties expressly relate to an earlier date in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date.
(a) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on the Effective Date.
1.1 CONTINUING EFFECT; NO OTHER AMENDMENTS. Except as expressly
amended hereby, all of the terms and provisions of the Credit Agreement are and
shall remain in full force and effect. The amendments provided for herein are
limited to the specific subsections of the Credit Agreement specified herein and
shall not constitute an amendment of, or an indication of the Administrative
Agent's or the Lenders' willingness to amend, any other provisions of the Credit
Agreement or the same subsection for any other date or time period (whether or
not such other provisions or compliance with such subsections for another date
or time period are affected by the circumstances addressed in this Amendment).
1.2
5
1.3 EXPENSES. The Borrower agrees to pay and reimburse the
Administrative Agent for all reasonable costs and out-of-pocket expenses
incurred by the Administrative Agent in connection with the preparation and
delivery of this Amendment, including, without limitation, the reasonable fees
and disbursements of counsel to the Administrative Agent.
1.4
1.5 COUNTERPARTS. This Amendment may be executed in any number
of counterparts by the parties hereto (including by facsimile transmission),
each of which counterparts when so executed shall be an original, but all the
counterparts shall together constitute one and the same instrument.
1.1 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their respective duly authorized officers as of the
date first above written.
DAL-TILE INTERNATIONAL INC.
By: /s/ W. Xxxxxxxxxxx Xxxxxxxx
---------------------------------------
Name: W. Xxxxxxxxxxx Xxxxxxxx
Title: Executive Vice President and CFO
DAL-TILE GROUP INC.
By: /s/ W. Xxxxxxxxxxx Xxxxxxxx
---------------------------------------
Name: W. Xxxxxxxxxxx Xxxxxxxx
Title: Executive Vice President and CFO
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Lender
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
CHASE BANK OF TEXAS, N.A.
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
CREDIT SUISSE FIRST BOSTON
(formerly CREDIT SUISSE)
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: Associate
ALLIED IRISH BANKS, P.L.C., CAYMAN ISLANDS
BRANCH
7
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
THE BANK OF NEW YORK
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Xxxxx
---------------------------------------
Name: F.C.H. Xxxxx
Title: Senior Manager Loan Operations
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
BANK LEUMI
By: /s/ Xxxx Xxxx
---------------------------------------
Name: Xxxx Xxxx
Title: Vice President
BANKERS TRUST COMPANY
By: /s/ Xxxxx Xxxxxx
---------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CIBC, INC.
By: /s/ E. Xxxxxxx Xxxxxx
---------------------------------------
Name: E. Xxxxxxx Xxxxxx
Title: Executive Director
CIBC Xxxxxxxxxxx Corp., as Agent
8
CREDIT LYONNAIS
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Senior Vice President
CRESTAR BANK
By: /s/ Xxxxx Xxxxx, Jr.
---------------------------------------
Name: Xxxxx Xxxxx, Jr.
Title: Vice President
CYPRESS TREE INVESTMENT PARTNERS I, LTD.
By: CYPRESS TREE INVESTMENT MANAGEMENT
COMPANY, INC., AS PORTFOLIO MANAGER
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
FC CBO LIMITED
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name: Xxxxx Xxxxx
Title: Director
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
FLEET BANK, N.A.
By: /s/ Xxxxxxx X. X'Xxxx
---------------------------------------
Name: Xxxxxxx X. X'Xxxx
Title: Senior Vice President
9
FOOTHILL INCOME TRUST L.P.
By: /s/ M.E. Xxxxxxx
---------------------------------------
Name: M.E. Xxxxxxx
Title: Managing Member
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Takuya Honjo
---------------------------------------
Name: Takuya Honjo
Title: Senior Vice President
KZH SOLEIL LLC
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Authorized Agent
XXXXXXX XXXXX SENIOR FLOATING RATE FUND,
INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Authorized Signatory
XXXXXXX XXXXX DEBT STRATEGIES FUND, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Authorized Signatory
10
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: First Vice President
ML CBO IV (CAYMAN) LTD.
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx, CFA, CPA
Title: President
Highland Capital Managment X.X.
XXXXXX XXXXXXX SENIOR FUNDING INC.
By: /s/ Xxxxxxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxxxxxx Xxxxxxx
Title: Vice President
XXX CAPITAL FUNDING
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
Highland Capital Management L.P.
11
SENIOR DEBT PORTFOLIO
By: Boston Management Research,
as Investment Advisor
By: /s/ Xxxxx X. Page
---------------------------------------
Name: Xxxxx X. Page
Title: Vice President
12
SENIOR HIGH INCOME PORTFOLIO, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Authorized Signatory
13
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Director
14
XXX XXXXXX AMERICAN CAPITAL SENIOR INCOME
TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President & Director
15
XXX XXXXXX AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President & Director
16
CYPRESSTREE INVESTMENT MANAGEMENT
COMPANY, INC.
As: Attorney-in-Fact and on behalf of FIRST
ALLMERICA FINANCIAL LIFE INSURANCE
COMPANY as PORTFOLIO MANAGER
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
17
CONSENT
The undersigned hereby acknowledges receipt of a copy of and consents
to the execution and delivery by Holdings and the Borrower of the Third
Amendment to which this Consent is attached (the "AMENDMENT"). The undersigned
further confirms and agrees that, after giving effect to the Third Amendment,
each Loan Document to which it is a party shall continue in full force and
effect in accordance with its terms.
DAL-TILE CORPORATION
By: /s/ W. Xxxxxxxxxxx Xxxxxxxx
---------------------------------------
Name: W. Xxxxxxxxxxx Xxxxxxxx
Title: Executive Vice President and CFO
2
ANNEX A-1
PRICING GRID FOR REVOLVING CREDIT LOANS AND TERM LOANS
Eurodollar ABR
Leverage Ratio Level Applicable Margin Applicable Margin Commitment Fee
-------------------- ----------------- ----------------- --------------
Leverage Ratio Xxxxx 0X 2.25% 1.25% 0.50%
Leverage Ratio Level 1B 2.00% 1.00% 0.50%
Leverage Ratio Level IA 1.75% 0.75% 0.375%
Leverage Ratio Level I 1.50% 0.50% 0.375%
Leverage Ratio Level II 1.25% 0.25% 0.30%
Leverage Ratio Level III 1.00% 0% 0.25%
Leverage Ratio Level IV 0.875% 0% 0.225%
Leverage Ratio Level V 0.75% 0% 0.20%
Leverage Ratio Level VI 0.625% 0% 0.175%
3
ANNEX A-3
PRICING GRID FOR TRANCHE B TERM LOANS
Eurodollar ABR
Leverage Ratio Level Applicable Margin Applicable Margin
-------------------- ----------------- -----------------
Leverage Ratio Xxxxx 0X 2.75% 1.75%
Leverage Ratio Xxxxx 0X 2.50% 1.50%
Leverage Ratio Level IA 2.25% 1.25%
Leverage Ratio Level I 2.00% 1.00%
Leverage Ratio Level II - VI 1.75% 0.75%
