EIGHTH AMENDMENT TO REVOLVING
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CREDIT AND TERM LOAN AGREEMENT
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This Eighth Amendment To Revolving Credit And Term Loan Agreement ("Eighth
Amendment") is made by and among TANDYCRAFTS, INC., a Delaware corporation
("Company"), THE DEVELOPMENT ASSOCIATION, INC., a Texas corporation, SAV-ON,
INC., a Texas corporation, DAVID JAMES MANUFACTURING, INC., a Texas corporation,
BRAND NAME APPAREL, INC., a Texas corporation, PLC LEATHER COMPANY, a Nevada
corporation, TANDYARTS, INC., a Nevada corporation, and COLLEGE FLAGS AND
MANUFACTURING, INC., a South Carolina corporation (hereinafter collectively
referred to as the "Guarantors"), and WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION (formerly First Interstate Bank of Texas, N.A.), BANK ONE, TEXAS,
N.A. and NBD BANK (collectively, the "Banks") and WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, as agent for the Banks ("Agent"); and
WHEREAS, the Company, certain of Guarantors and Agent entered into that
certain Revolving Credit and Term Loan Agreement dated September 29, 1993 (the
"Loan Agreement"); and
WHEREAS, the Company, certain of Guarantors, certain of Banks and Agent
entered into that certain First Amendment to Revolving Credit and Term Loan
Agreement dated December 3, 1993 ("First Amendment"); and
WHEREAS, the Company, the Guarantors, certain of Banks and Agent entered
into that certain Second Amendment To Revolving Credit and Term Loan Agreement
dated September 26, 1994 ("Second Amendment"); and
WHEREAS, the Company, Guarantors, certain of Banks and Agent entered into
that certain Third Amendment to Revolving Credit and Term Loan Agreement dated
December 31, 1994 ("Third Amendment"); and
WHEREAS, the Company, Guarantors, certain of Banks and Agent entered into
that certain Fourth Amendment to Revolving Credit and Term Loan Agreement dated
July 6, 1995 ("Fourth Amendment"); and
WHEREAS, the Company, Guarantors, certain of Banks and Agent entered into
that certain Fifth Amendment to Revolving Credit and Term Loan Agreement dated
December 31, 1995 ("Fifth Amendment"); and
WHEREAS, the Company, Guarantors, certain of Banks and Agent entered into
that certain Sixth Amendment to Revolving Credit and Term Loan Agreement dated
October 31, 1996 ("Sixth Amendment"); and
WHEREAS, the Company, Guarantors, certain of Banks and Agent entered into
that certain Seventh Amendment to Revolving Credit and Term Loan Agreement dated
December 31, 1996 ("Seventh Amendment"); and
WHEREAS, the Company, Guarantors, certain of Banks and Agent desire to
amend the Loan Agreement in certain respects; and
WHEREAS, capitalized terms used herein shall have the meaning assigned to
them in the Loan Agreement unless the context otherwise requires or provides.
NOW, THEREFORE, it is agreed by and among the Company, Guarantors, Banks
and Agent as follows:
I.
The definition of "Applicable Margin" in Article I of the Loan Agreement is
amended to read in its entirety as follows:
"Applicable Margin" shall mean the percentage set forth below
determined by reference to the Funded Debt EBITDA Ratio in effect from
time to time:
Funded Debt Adjusted InterBank Unused
EBITDA Ration Rate Fee
------------ ---- --
<2.5 .75 .225
2.5 to 3.0 .875 .25
3.0 to 3.0 1.00 .25
3.5 to 4.0 1.25 .25
4.0 to 4.5 1.75 .25
>4.5 2.00 .25
2.
Section 8.19 of the Loan Agreement is amended to read in its entirety as
follows:
8.19 Pledge of Stock. Company agrees to promptly pledge to
Agent for the benefit of Banks all of the capital stock of its
Subsidiaries in the event of the occurrence of any of the following on
or after March 31, 1996: (1) the Funded Debt to EBITDA Ratio is at
any time greater than 4.5 to 1.0 prior to May 1, 1997 or is greater
than 4.0 to 1.0 on or after May 1, 1997, (2) Company's Account Payable
Turndays is greater than forty-five (45) days, or (3) Company fails to
comply with Section 9.17 of this Loan Agreement at any time on or
after June 30, 1996. In calculating EBITDA for purposes of this
Section 8.19, the charges in March 1997 for the restructuring of The
Development Association, Inc., shall be excluded.
3.
Sections 9.03 and 9.04 of the Loan Agreement are amended to read in their
entirety as follows:
9.03 Funded Debt to EBITDA. Permit the ratio of Funded Debt
to EBITDA to be greater than 4.75 to 1.0 prior to May 1, 1997 or
greater than 4.5 to 1.0 thereafter. In calculating EBITDA for
purposes of this Section 9.03, the charges in March 1997 for the
restructuring of The Development Association Inc. shall be
excluded.
9.04 EBITDA to Interest Expense. Permit the ratio of the
sum of EBITDA for the four preceding fiscal quarters to interest
expense incurred during the four preceding fiscal quarters to be
less than 3.0 to 1.0. In calculating EBITDA for purposes of this
Section 9.04, the charges in March 1997 for the restructuring of
The Development Association, Inc. shall be excluded.
4.
Company and Guarantors warrant and represent to Banks that no Event of
Default exists. By their execution hereof, each of the Guarantors ratify and
confirm the terms of the Guaranty Agreement dated August 17, 1994, agree that
the Guaranty Agreement shall remain in full force and effect and unconditionally
agree that the Guaranty Agreement is enforceable against each of them in
accordance with its terms.
5.
Except as amended by the First Amendment, the Second Amendment, the Third
Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the
Seventh Amendment and this Eighth Amendment, the Loan Agreement is ratified and
confirmed and shall remain in full force and effect.
6.
This Eighth Amendment shall be governed by and construed in accordance with
the laws of the State of Texas.
7.
Company agrees to pay all expenses incurred by Agent and Banks in
connection with the negotiation and preparation of this Eighth Amendment,
including reasonable attorney's fees.
8.
This Eighth Amendment may be executed in any number of multiple
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.
9.
Banks, Company, and Guarantors agree to be bound by the current Arbitration
Program of Agent which is incorporated by reference herein and is acknowledged
as received by the parties pursuant to which any and all disputes shall be
resolved by mandatory binding arbitration upon the request of any party.
10.
This Eighth Amendment shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
11.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
Executed to be effective as of March 31, 1997.
TANDYCRAFTS, INC., a Delaware
corporation
By: /s/ James D. Allen
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James D. Allen, Executive
Vice President
COMPANY
SAV-ON, INC., a Texas corporation
By: /s/ Russell Price
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Russell Price, Secretary
DAVID JAMES MANUFACTURING,
INC., a Texas corporation
By: /s/ Russell Price
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Russell Price, Secretary
BRAND NAME APPAREL, INC.
a Texas corporation
By: /s/ Russell Price
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Russell Price, Secretary
THE DEVELOPMENT ASSOCIATION,
INC.,
a Texas corporation
By: /s/ Russell Price
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Russell Price, Secretary
PLC LEATHER COMPANY,
a Nevada corporation
By: /s/ Russell Price
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Russell Price, Secretary
TANDYARTS, INC., a Nevada
corporation
By: /s/ Russell Price
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Russell Price, Secretary
COLLEGE FLAGS AND
MANUFACTURING, INC.,
a South Carolina corporation,
By: /s/ Russell Price
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Russell Price, Secretary
GUARANTORS
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
(formerly First Interstate Bank of Texas, N.A.)
By: /s/ John Peloubet
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John Peloubet, Vice President
BANK ONE, TEXAS, N.A.
By: /s/ Michael D. Palmer
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Michael D. Palmer, Senior
Vice President
NBD BANK
By: /s/ Jenny Gilpin
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Jenny Gilpin, Vice President
BANKS