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EXHIBIT 99.2
SECOND AMENDMENT TO
POST-PETITION CREDIT AGREEMENT
SECOND AMENDMENT (this "Amendment"), dated as of September 29,
1999, to POST-PETITION CREDIT AGREEMENT dated as of March 29, 1999, among
SERVICE MERCHANDISE COMPANY, INC., a Tennessee corporation and a debtor and
debtor-in-possession under chapter 11 of the Bankruptcy Code (as defined in the
Credit Agreement referenced below) (the "Borrower"), the financial institutions
and other entities identified from time to time parties thereto as Lenders (as
defined in the Credit Agreement referenced below), CITICORP USA, INC., a
Delaware corporation ("Citicorp"), as collateral agent and administrative agent
for the Lenders (in such capacities, the "Administrative Agent"), and
BANKBOSTON, N.A., a national banking association ("BankBoston"), as
documentation agent and collateral monitoring agent for the Lenders (in such
capacities, the "Collateral Monitoring Agent"), as amended by that certain First
Amendment to Post-Petition Credit Agreement and Master Security Agreement dated
as of May 6, 1999.
W I T N E S S E T H:
WHEREAS, pursuant to the above-referenced Post-Petition Credit
Agreement (as, supplemented or otherwise modified from time to time, the "Credit
Agreement") the Lenders have agreed to make, and have made, Loans to the
Borrower and have issued Letters of Credit for the account of the Borrower; and
WHEREAS, pursuant to the requirements of subsection 7.1(e) of
the Credit Agreement, the Borrower has delivered the Business Plan to the
Administrative Agent and the Administrative Agent has reviewed and accepted the
Business Plan as provided by subsection 11.19 of the Credit Agreement; and
WHEREAS, pursuant to subsection 11.20 of the Credit Agreement,
the Borrower and the Agents have agreed to amend the Credit Agreement to
establish certain covenants for the credit facility as a result of the
acceptance of the Business Plan, and to make other amendments to the Credit
Agreement as provided in this Amendment, all upon the terms and subject to the
conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and provisions hereinafter contained, the parties hereto hereby
agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not
defined herein but defined in the Credit Agreement are used herein as defined in
the Credit Agreement.
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2. AMENDMENT TO SUBSECTION 1.1.
(a) The definition of "EBITDA" in subsection 1.1 of the Credit
Agreement is hereby amended by deleting the definition thereof in its entirety
and inserting in its place the following definition:
"EBITDA": with respect to any period, Consolidated Net
Income of the Borrower and its Consolidated Subsidiaries for such
period plus (a) in each case to the extent deducted in determining
such Consolidated Net Income for such period, the sum of the following
(without duplication): (i) Consolidated Interest Expense of the
Borrower and its Consolidated Subsidiaries, (ii) consolidated income
tax expense of the Borrower and its Consolidated Subsidiaries, (iii)
consolidated depreciation and amortization expense of the Borrower and
its Consolidated Subsidiaries, including, without limitation,
depreciation and amortization included in selling, general and
administrative expenses of the Borrower and its Consolidated
Subsidiaries, (iv) any non-cash expenses, non-cash losses or other
non-cash charges resulting from the impairment or write-down in the
valuation of any assets, (v) any non-recurring charge, reorganization
cost or restructuring charge which was deducted in determining
Consolidated Net Income for such period, plus or minus the amount of
cash received or expended in such period in respect of any amount
which was taken into account in determining EBITDA for such or any
prior period, (vi) losses, expenses and other charges, including
related severance payments, in respect of store and distribution
center closures and related going-out-of-business sales, to the extent
such cash losses, expenses and other charges (other than cost of goods
sold) do not exceed the cash proceeds received from such sales, (vii)
Permitted Expenses, (viii) expenses, losses and other charges in
respect of employee retention bonuses and other payments approved by
the Bankruptcy Court, (ix) non-cash losses or gains arising from the
freezing or termination of any Plan or other employee benefit or
welfare plan, and (x) losses or gains arising from asset dispositions,
minus (b) to the extent added in determining such Consolidated Net
Income for such period, any non-cash gains resulting from the write-up
in the valuation of any assets.
(b) The definition of "Permitted Prepetition Claim Payment" in
subsection 1.1 of the Credit Agreement is hereby amended by deleting the
definition thereof in its entirety and inserting in its place the following
definition:
"Permitted Prepetition Claim Payment": a payment (as
adequate protection or otherwise) on account of any Claim arising or
deemed to have arisen prior to the commencement of the Reorganization
Cases, which is made (i) pursuant to authority granted by a First Day
Order of the Bankruptcy Court, (ii) in connection with (A) pre-petition
Consignment Inventory Claims, (B) reclamation Claims up to
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$15,000,000, (C) pre-petition sales tax and payroll tax Claims, (D)
Claims in respect of the assumption of leases and other contractual
obligations, (E) in respect of pre-petition secured Indebtedness, in
amounts pursuant to this clause (E) that do not exceed (x) for the
month of September, 1999, $4,200,000 and (y) for any fiscal quarter
from and after the fiscal quarter ending December 31, 1999,
$4,000,000, (F) pursuant to an effective order of the Bankruptcy
Court, unless the Administrative Agent has filed with the Bankruptcy
Court and not withdrawn an objection to such authorization and (G)
additional payments in respect of pre-petition Claims of up to
$15,000,000, or (iii) in satisfaction of secured Indebtedness by
application of the Proceeds received from the sale of the specific
assets securing such Indebtedness.
(c) The following new definitions are hereby added to
subsection 1.1 of the Credit Agreement in the proper alphabetical order:
"Cumulative EBITDA": for any fiscal month, Consolidated
EBITDA for the period beginning October 4, 1999 through and including
the end of such fiscal month.
"Excess Availability": as of the date of determination,
the excess of the Borrowing Base on such date as reflected on the most
recently delivered Borrowing Base Certificate over the Aggregate
Outstanding Extensions of Credit on such date.
"Rolling 12-Month EBITDA": for any fiscal month,
Consolidated EBITDA for the consecutive twelve-fiscal month period
ending with the end of such fiscal month.
3. AMENDMENT TO SUBSECTION 7.1(C). Subsection 7.1(c) of the
Credit Agreement is hereby amended and restated in its entirety as follows:
(c) as soon as available, but in any event not later
than 30 days after the end of each fiscal month, (i) for each fiscal
month other than a fiscal month which is also the end of a quarterly
period, an unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries in summary form as at the end of such fiscal
month and the related unaudited consolidated statement of income of the
Borrower and its Consolidated Subsidiaries in summary form for such
fiscal month, certified by a Responsible Officer as being fairly stated
in all material respects (subject to normal year-end audit adjustments)
and (ii) for each fiscal month a statement setting forth the
Consolidated EBITDA, Cumulative EBITDA or Rolling 12-Month EBITDA, as
applicable, of the Borrower and its Consolidated Subsidiaries for such
fiscal month;
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4. AMENDMENT TO SUBSECTION 7.2(B). Subsection 7.2(b) of the
Credit Agreement is hereby amended and restated in its entirety as follows:
(b) (i) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) and (b), a certificate of
a Responsible Officer stating that such Responsible Officer has
obtained no knowledge of any Default or Event of Default with respect
to the period covered by such financial statements except as specified
in such certificate and (ii) concurrently with the delivery of the
financial statements referred to in subsections 7.1(a), (b) and (c), a
certificate of a Responsible Officer setting forth, in reasonable
detail, a calculation of the financial covenants set forth in
subsection 8.1 for the period corresponding to such financial
statements;
5. AMENDMENT TO SUBSECTION 8.1(A). Subsection 8.1(a) of the
Credit Agreement is hereby amended and restated in its entirety as follows:
(a) EBITDA. Permit Excess Availability to be less than
$50,000,000 at any time or alternatively, in the event Excess
Availability is less than $50,000,000, permit Consolidated EBITDA,
Cumulative EBITDA or Rolling 12-Month EBITDA, as applicable, for the
most recently ended fiscal month for which financial statements have
been delivered pursuant to subsection 7.1(c), to be less than the
amount set forth below opposite such fiscal month:
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MINIMUM
FISCAL MONTH ENDING CONSOLIDATED EBITDA
------------------- -------------------
--------------------------------------------------------
October 3, 1999 $(16,000,000)
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MINIMUM
FISCAL MONTH ENDING CUMULATIVE EBITDA
------------------- -----------------
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October 31, 1999 $(21,000,000)
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November 28, 1999 $(24,000,000)
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January 2, 2000 $26,000,000
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January 30, 2000 $18,000,000
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February 27, 2000 $22,000,000
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April 2, 2000 $21,000,000
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April 30, 2000 $21,000,000
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May 28, 2000 $39,000,000
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July 2, 2000 $35,000,000
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MINIMUM
FISCAL MONTH ENDING CUMULATIVE EBITDA
------------------- -----------------
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July 30, 2000 $27,000,000
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August 27, 2000 $25,000,000
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October 1, 2000 $18,000,000
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ROLLING 12-MONTH
FISCAL MONTH ENDING EBITDA
------------------- ------
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October 29, 2000 $30,000,000
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November 26, 2000 $35,000,000
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December 31, 2000 $40,000,000
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January 28, 2001 $40,000,000
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February 25, 2001 $40,000,000
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April 1, 2001 $40,000,000
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April 29, 2001 $40,000,000
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May 27, 2001 $40,000,000
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July 1, 2001 $40,000,000
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6. AMENDMENT TO SUBSECTION 8.1(B). Subsection 8.1(b) of the
Credit Agreement is hereby amended and restated in its entirety as follows:
(c) Capital Expenditures. Make aggregate Capital
Expenditures in any Fiscal Year in excess of the sum of (i)(x) in the
case of the 1999 and 2000 Fiscal Years, $50,000,000 per Fiscal Year and
(y) in the case of the first six months of the 2001 Fiscal Year,
$25,000,000 plus (ii) 50% of any unused permitted Capital Expenditures
for the immediately preceding Fiscal Year, plus (iii) to the extent
Consolidated EBITDA for the immediately preceding Fiscal Year exceeds
$50,000,000, 50% of such excess over $50,000,000. Notwithstanding the
foregoing, no Capital Expenditures shall be made if, before or after
giving effect to the making of such Capital Expenditure, an Event of
Default then exists or thereafter would exist.
7. AMENDMENT TO SUBSECTION 9(M). Subsection 9(m) of the Credit
Agreement is hereby amended by inserting the following immediately before the
words "pari passu" in the fourth line thereof:
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, other than pursuant to the First Day Orders and obligations in
respect of permitted adequate protection payments,
8. AMENDMENT TO SECTION 11.19. Section 11.19 of the Credit
Agreement is hereby deleted in its entirety.
9. AMENDMENT TO SECTION 11.20. Section 11.20 of the Credit
Agreement is hereby deleted in its entirety.
10. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
AMENDMENT. This Amendment shall become effective as of the date hereof on the
date (the "Amendment Effective Date") when the following conditions precedent
have been satisfied:
(a) Certain Documents. The Administrative Agent shall have
received, on or before the Amendment Effective Date, all of the following, all
of which shall be in form and substance satisfactory to the Administrative
Agent, in sufficient originally executed copies for each of the Lenders:
(i) this Amendment, executed by the Borrower and the
Lenders constituting the Majority Lenders;
(ii) the Acknowledgment attached hereto executed by
each Subsidiary Guarantor; and
(iii) such additional documentation as the Agents or
the Majority Lenders may reasonably require.
(b) Representations and Warranties. Each of the
representations and warranties made by the Borrowers or the Subsidiary
Guarantors in or pursuant to the Credit Agreement, as amended hereby, and the
other Loan Documents to which the Borrower or any of the Subsidiary Guarantors
is a party or by which the Borrower or any of the Subsidiary Guarantors is
bound, shall be true and correct in all material respects on and as of the
Amendment Effective Date (other than representations and warranties in any such
Loan Document which expressly speak as of a specific date, which shall have been
true and correct in all material respects as of such specific date).
(c) Corporate and Other Proceedings. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Amendment shall be
satisfactory in all respects in form and substance to the Administrative Agent
and the Majority Lenders.
(d) No Event of Default. No Event of Default or Default shall
have occurred and be continuing on the Amendment Effective Date.
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11. REPRESENTATIONS AND WARRANTIES. On and as of the date
hereof after giving effect to this Amendment, the Borrower hereby represents and
warrants to the Lenders as follows:
(a) Each of the representations and warranties contained in
Section 5 of the Credit Agreement or in any certificate, document or financial
or other statement furnished at any time under or in connection therewith are
true and correct in all material respects on and as of the such date as if made
on and as of such date, except to the extent that such representations and
warranties specifically relate to a specific date, in which case such
representations and warranties shall be true and correct in all material
respects as of such specific date; provided that references therein to the
"Credit Agreement" shall be deemed to include this Amendment;
(b) No Default or Event of Default has occurred and is
continuing.
12. CONTINUING EFFECT; NO OTHER AMENDMENTS. Except as
expressly amended hereby, all of the terms and provisions of the Credit
Agreement and the other Loan Documents are and shall remain in full force and
effect. The amendments contained herein shall not constitute an amendment of any
other provision of the Credit Agreement or the other Loan Documents or for any
other purpose except as expressly set forth herein.
13. GOVERNING LAW; COUNTERPARTS; MISCELLANEOUS.
(a) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, each of
which counterparts when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
(c) Section captions used in this Amendment are for
convenience only and shall not affect the construction of this Amendment.
(d) From and after the effective date hereof, all references
in the Credit Agreement to the "Agreement" shall be deemed to be references to
such Agreement as modified hereby.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned parties have executed this SECOND
AMENDMENT TO POST-PETITION CREDIT AGREEMENT to be effective for all purposes as
of the Amendment Effective Date.
SERVICE MERCHANDISE COMPANY, INC.,
as the Borrower
By: /s/ Xxxxxx Xxxxxxx, Jr.
---------------------------------------------
Name: Xxxxxx Xxxxxxx, Jr.
Title:
CITICORP USA, INC.,
as Administrative Agent, as a Lender
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------------
Xxxxxxx Xxxxxx
Vice President
CITIBANK, N.A.,
as an Issuing Bank
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Vice President
BANKBOSTON, N.A.,
as Documentation Agent and Collateral Monitoring
Agent, as a Lender, and as an Issuing Bank
By: /s/ Xxxxx Xxxxx
---------------------------------------------
Xxxxx Xxxxx
Vice President
SIGNATURE PAGE TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
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NATIONAL CITY COMMERCIAL FINANCE, INC.,
as a Lender
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
XXXXXX FINANCIAL, INC.
as a Lender
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
FOOTHILL CAPITAL CORPORATION
as a Lender
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
XXXXXXX NATIONAL LIFE INSURANCE COMPANY,
as a Lender
By: PPM FINANCE, INC.,
its Attorney-in-Fact
By: /s/ Xxxxxxx X. Podwik
---------------------------------------
Name: Xxxxxxx X. Podwik
Title: Attorney-in-Fact
SIGNATURE PAGE TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
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FINOVA CAPITAL CORPORATION, as a Lender
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
SOVEREIGN BANK, as a Lender
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
LASALLE BUSINESS CREDIT, INC., as a Lender
By: /s/ Xxxxx Scler
---------------------------------------
Name: Xxxxx Scler
Title: Vice President
SENIOR DEBT PORTFOLIO, as a Lender
By: Boston Management and Research, as
Investment Advisor
By:
---------------------------------------
Name:
Title:
SIGNATURE PAGE TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
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DEBIS FINANCIAL SERVICES, INC., as a Lender
By: /s/ Xxxxx X. Van Ogwalk
---------------------------------------
Name: Xxxxx X. Van Ogwalk
Title: Group Leader
By:
---------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
---------------------------------------
Name:
Title:
ORIX BUSINESS CREDIT, INC., as a Lender
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name: Xxxxx Xxxxx
Title: President
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as a Lender
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: Assistant Vice President
SIGNATURE PAGE TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
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BANK OF AMERICA, NATIONAL ASSOCIATION,
as a Lender
By: /s/ May X. Xxxxxxx
---------------------------------------
Name:
Title:
THE PROVIDENT BANK, as a Lender
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
KZH STERLING LLC, as a Lender
By: /s/ Xxxxx Xxxx
---------------------------------------
Name: Xxxxx Xxxx
Title: Authorized Agent
GREEN TREE FINANCIAL SERVICING CORP.,
as a Lender
By: /s/
---------------------------------------
Name:
Title:
SIGNATURE PAGE TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
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FOOTHILL INCOME TRUST, L.P.
as a Lender
By: FIT GP, LLC, its general partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
SIGNATURE PAGE TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
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BHF-BANK AKTIENGESELLSCHAFT, as a Lender
By: /s/ Xxxx Xxxx
---------------------------------------
Name: Xxxx Xxxx
Title: Associate
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
SIGNATURE PAGE TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
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ACKNOWLEDGMENT
Reference is hereby made to the Master Security Agreement (as
defined in the Credit Agreement) to which each of the undersigned is a party.
Each of the undersigned hereby consents to the terms of the foregoing Second
Amendment to Post-Petition Credit Agreement and agrees that the terms thereof
shall not affect in any way its obligations and liabilities under the Master
Security Agreement or any other Loan Document, all of which obligations and
liabilities shall remain in full force and effect and each of which is hereby
affirmed.
X.X. XXXXX, INC.
X.X. XXXXXX CO., INC.
X.X. XXXXXX CO. REALTY, INC.
HOMEOWNERS WAREHOUSE, INC.
SERVICE MERCHANDISE CO. BROAD, INC.
SERVICE MERCHANDISE COMPANY OF IOWA, INC.
SERVICE MERCHANDISE COMPANY OF KANSAS, INC.
SERVICE MERCHANDISE CO. NO 30, INC.
SERVICE MERCHANDISE CO. NO 34, INC.
SERVICE MERCHANDISE CO. NO 35, INC.
SERVICE MERCHANDISE CO. NO 51, INC.
SERVICE MERCHANDISE CO. NO 93, INC.
SERVICE MERCHANDISE CO. NO 99, INC.
SERVICE MERCHANDISE FINANCIAL CO., INC.
SERVICE MERCHANDISE INDIANA PARTNERS (by its
Partners, Service Merchandise Co. No. 34, Inc.,
and Service Merchandise Co. No. 35, Inc.)
SERVICE MERCHANDISE OF TENNESSEE LIMITED PARTNERSHIP
(by its General Partner, Service Merchandise
Company. Inc.)
SERVICE MERCHANDISE OF TEXAS LIMITED PARTNERSHIP (by
its General Partner, Service Merchandise
Company. Inc.)
SMC-HC, INC.
THE TOY STORE, INC.
WHOLESALE SUPPLY COMPANY, INC.
A.F.S. MARKETING SERVICES, INC.
SERVICE MERCHANDISE OF NEW YORK, INC.
SERVICE MERCHANDISE OFFICE SUPPLY, INC.
SERVICE MERCHANDISE SHOWROOMS, INC.
SERVICE MERCHANDISE RM, INC.
THE XxXXXXX SUPPLY COMPANY
TRAVEL MANAGEMENT CONSULTANTS, INC.
PROMOTABLES, INC.
as Guarantors
By: /s/ Xxxxxx Xxxxxxx, Jr.
------------------------------------------------
Name:
Title:
ACKNOWLEDGMENT TO
SECOND AMENDMENT TO POST-PETITION CREDIT AGREEMENT
