AMENDMENT NO. 2 TO CREDIT AGREEMENT
This Amendment No. 2 to Credit Agreement (the "Amendment") dated as
of September 27, 1995 is among Brown Group, Inc. (the "Borrower"), the
undersigned Lenders and The First National Bank of Chicago, as agent for
the Lenders (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are parties to
that certain Credit Agreement dated as of December 22, 1993, as amended
by Amendment No. 1 dated as of February 15, 1995 (as so amended, the
"Agreement"); and
WHEREAS, the Borrower, the undersigned Lenders and the Agent desire
to amend the Agreement in certain respects as more fully described
hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise herein defined shall have meanings attributed to such terms in
the Agreement.
2. Amendments to the Agreement.
2.1. The definition of "Alternate Base Rate" set forth in Article
I of the Agreement is hereby amended by deleting the first sentence of
such definition and inserting in lieu thereof the following:
" 'Alternate Base Rate' means, on any date and with respect to
all Floating Rate Advances, a fluctuating rate of interest
per annum equal to sum of (a) the higher of (i) the Federal
Funds Effective Rate most recently determined by the
Agent plus 1/2% per annum and (ii) the Corporate Base Rate
plus (b) on any day that the Borrower's Long-Term Debt
Rating is below Baa3 (Moody's) and BBB- (S&P), .15%."
2.2. The definition of "Long-Term Debt" set forth in Article I of
the Agreement is hereby amended to read in its entirety as follows:
" 'Long-Term Debt' means, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (i)
Capitalized Lease Obligations, plus (ii) all indebtedness for
borrowed money with a final maturity in excess of one year
from the date of the creation thereof (including current
maturities thereof), plus (iii) Contingent Obligations, minus
(a) aggregate Contingent Obligations in respect of Cloth World
store leases permitted by the terms of Section 6.15(iv), (b)
aggregate Contingent Obligations of up to (but not in excess
of ) $32,000,000 in respect of store leases permitted by the
terms of Section 6.15 (iii) and (c) guaranties permitted by
the terms of Section 6.15 (v), plus (iv) net liabilities in
respect of Rate Hedging Obligations having a tenor in excess
of one year from the date of the creation thereof, to the
extent that the aggregate amount of all such net liabilities
exceeds $5,000,000."
2.3. The Applicable Margin Table set forth in Section 2.2.5 of the
Agreement is hereby amended to read in its entirety as follows:
"Applicable Margin Table
Applicable
Margin for Applicable
Eurodollar Margin for
Committed Commitment
Long-Term Debt Rating Advance Fees
- --------------------- ---------- ----------
A3 (Moody's) and .40% 0%
A- (S&P) or better
Baa2 (Moody's) and .45% .05%
BBB (S&P) or better
Baa3 (Moody's) and .65% .125%
BBB- (S&P) or better
Ba1 (Moody's) and 1.00% .125%
BB+ (S&P) or better
Any other case 1.25% .125%"
2.4. Section 2.3.4(i)(a) of the Agreement is hereby amended by (i)
deleting the time "12:45 p.m." where it appears therein and inserting
the time "8:45 a.m." in lieu thereof and (ii) deleting the time "1:00
p.m." where it appears therein and inserting the time "9:00 a.m." in
lieu thereof.
2.5. Section 2.3.6 of the Agreement is hereby amended by deleting
the time "2:00 p.m." where it appears therein and inserting the time
"10:00 a.m." in lieu thereof.
2.6. Section 2.4.3 of the Agreement is deleted in its entirety and
the following is inserted in lieu thereof:
"2.4.3. Excess Usage Fees. In the event that during any calendar
quarter (i) the average daily principal amount of the Committed
Advances outstanding hereunder is greater than an amount equal to
50% of the Aggregate Commitment and (ii) the Borrower's Long-Term
Debt Rating was Baa3 (Moody's) and BBB-(S&P) or better at any
time during such calendar quarter, the Borrower agrees to pay to
the Agent for the ratable account of each Lender an excess usage
fee on the average daily principal amount of the Committed
Advances outstanding during such calendar quarter equal to
(a) .10% if the Borrower's Long-Term Debt Rating is at least Baa2
(Moody's) and BBB (S&P) or better at all times during such
calendar quarter, or (b) .15% if clause (a) of this Section 2.4.3
does not apply, in each case payable quarterly in arrears on each
Payment Date and on the Termination Date."
2.7. Section 6.10 of the Agreement is hereby amended (a) by
deleting the parenthetical contained in clause (i) of such Section and
inserting in lieu thereof the following parenthetical: "(exclusive of
Indebtedness permitted under clauses (ii), (iii) and (iv) of this
Section 6.10)" and (b) by adding the following new clause (iv) at the
end of such Section to read as follows: "(iv) Rate Hedging Obligations
having a tenor not in excess of one year as of the date of creation
thereof."
2.8. Section 6.14(v) of the Agreement is hereby amended to read
in its entirety as follows:
"(v) Investments in existing and hereafter created
Subsidiaries."
2.9. Section 6.15 of the Agreement is hereby amended by inserting,
immediately after clause (iv) thereof, the following new clause (v):
"(v) Guaranties by the Borrower of Indebtedness of
Subsidiaries permitted by the terms of Section
6.10."
2.10. Section 6.22 of the Agreement is hereby amended to read in
its entirety as follows:
"6.22. Fixed Charge Coverage. The Borrower will maintain,
as at the end of each of its fiscal quarters ending during the
periods set forth below, a ratio of (i) Cash Flow to (ii) Fixed
Charges, for the period of the four then most recently ended fiscal
quarters, of not less than the ratio set forth below opposite each
such period:
Period Ratio
------ -----
On and prior to July 29, 1995 1.25 : 1.0
July 30, 1995 through and including February 3, 1996 1.10 : 1.0
February 4, 1996 through and including August 3, 1996 1.15 : 1.0
August 4, 1996 through and including February 1, 1997 1.20 : 1.0
Thereafter 1.25 : 1.0"
2.11. Schedule "1" to the Agreement is hereby amended by
deleting it in its entirety and inserting in lieu thereof the
Schedule "1" attached to this Amendment.
3. Representations and Warranties. In order to induce the Agent
and the Lenders to enter into this Amendment, the Borrower represents
and warrants that:
3.1. The representations and warranties set forth in Article V of
the Agreement, as hereby amended, are true, correct and complete on the
date hereof as if made on and as of the date hereof and that there
exists no Default or Unmatured Default on the date hereof.
3.2. The execution and delivery by the Borrower of this Amendment
has been duly authorized by proper corporate proceedings of the Borrower
and this Amendment, and the Agreement, as amended by this Amendment,
constitute legal, valid and binding obligations of the Borrower.
3.3. Neither the execution and delivery by the Borrower of this
Amendment, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding
on the Borrower or any Subsidiary or the Borrower's or any Subsidiary's
articles of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower or any Subsidiary is a
party or is subject, or by which it or its property is bound, or
conflict with or constitute a default thereunder.
4. Effective Date. This Amendment shall become effective as of
the date first above written upon receipt by the Agent of (i)
counterparts of this Amendment duly executed by the Borrower and the
Required Lenders, (ii) an amendment fee in the amount of $170,000 to be
shared ratably among the Lenders, and (iii) such other documents as the
Agent or any Lender may reasonably request.
5. Ratification. The Agreement, as amended hereby, is hereby
ratified, approved and confirmed in all respects.
6. Reference to Agreement. From and after the effective date
hereof, each reference in the Agreement to "this Agreement", "hereof",
or "hereunder" or words of like import, and all references to the
Agreement in any and all agreements, instruments, documents, notes,
certificates and other writings of every kind and nature shall be deemed
to mean the Agreement, as amended by this Amendment.
7. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the Borrower, the undersigned Lenders and the
Agent have executed this Amendment as of the date first above written.
BROWN GROUP, INC.
By: /s/ Andrew M. Rosen
Title: Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ The First National Bank of Chicago
Title: Vice President
THE BOATMENS NATIONAL BANK OF ST. LOUIS,
Individually and as Co-Agent
By: /s/ the Boatmens National Bank of St. Louis
Title: Vice President
CITIBANK, N.A.,
Individually and as Co-Agent
By: /s/ Citibank, N.A.
Title: Assistant Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By: /s/ Mercantile Bank of St. Louis
National Association
Title: Vice President
NBD BANK, N.A.
By: /s/ NBD Bank, N.A.
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Royal Bank of Canada
Title: Senior Manager
SHANGHAI COMMERCIAL BANK LTD.
By: /s/ Shanghai Commercial Bank Ltd.
Title: Vice President and Manager
TRUST COMPANY BANK
By: /s/ Trust Company Bank
Title: Banking Officer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Morgan Guaranty Trust Company
of New York
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD.
CHICAGO BRANCH
By: /s/ The Yasuda Trust & Banking Co., Ltd.
Chicago Branch
Title: First Vice President and Manager