Exhibit 10.40
AMENDMENT No. 1 TO DEBTOR-IN-POSSESSION
CREDIT AGREEMENT
This Amendment No. 1 to the Debtor-In-Possession Credit Agreement
is dated as of July 30, 1996 (the "Amendment") and entered into by and among
Wherehouse Entertainment, Inc., a Delaware corporation, as debtor and debtor-in-
possession (the "Borrower"), WEI Holdings, Inc., a Delaware corporation, as
debtor and debtor-in-possession ("Holdings"), the lenders from time to time
parties to the Credit Agreement (as hereinafter defined) as amended hereby (the
"Lenders"), and Bankers Trust Company, as agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Agent").
RECITALS
WHEREAS, the Borrower, Holdings, the Agent and the Lenders are
parties to the Debtor-in-Possession Credit Agreement dated as of September 25,
1995 (the "Credit Agreement") under which the Lenders provide a revolving credit
facility (including a letter of credit subfacility) to the Borrower in
accordance with and on the terms and conditions set forth therein; and
WHEREAS, the Borrower has requested that the Lenders amend certain
covenants in the Credit Agreement and the Lenders are willing to do so under the
terms and on the conditions set forth herein;
NOW THEREFORE, in consideration of the premises and agreements,
provisions and covenants contained herein, the parties hereto agree as follows:
Section 1. DEFINED TERMS
Unless otherwise defined in this Amendment, defined terms used
herein shall have the meanings assigned to such terms in the Credit Agreement.
Section 2. AMENDMENT TO CREDIT AGREEMENT
Section 6.6A of the Credit Agreement is hereby amended and restated in its
entirety as follows:
Section 6.6 Financial Covenants
A. Minimum Consolidated Adjusted EBITDAV
Holdings and Borrower shall not permit Consolidated Adjusted EBITDAV as of
the last day of each of the Fiscal Quarters shown below for the applicable
Fiscal Quarter ended on such date to be less than the correlative amount
indicated:
Minimum Consolidated
Fiscal Quarter Adjusted EBITDAV
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FISCAL YEAR 1996
Third Fiscal Quarter ($3,000,000)
Fourth Fiscal Quarter 6,300,000
FISCAL YEAR 1997
First Fiscal Quarter 1,100,000
Second Fiscal Quarter (2,000,000)
Third Fiscal Quarter (1,500,000)
Fourth Fiscal Quarter 4,000,000
FISCAL YEAR 1998
First Fiscal Quarter 500,000
Second Fiscal Quarter 500,000
Section 3. REPRESENTATIONS AND WARRANTIES
Each of the Borrower and Holdings represents and warrants that:
(a) the execution and delivery of this Amendment by such Loan
Party (i) have been duly authorized by all necessary corporate action of such
Loan Party; (ii) have been duly authorized by the Court; and (iii) will not (A)
violate any provision of law applicable to Holdings or any of its Subsidiaries,
or any order, judgement or decree of any court or other agency of government
binding on Holdings or any of its Subsidiaries, or (B) conflict with, result in
a breach of, constitute (with due notice or lapse of time or both) a default
under, any Contractual Obligation of Holdings or any of its Subsidiaries
(performance or enforceability of which has not been excused by the Bankruptcy
Code or an applicable order of the Court); and
(b) after giving effect to this Amendment, (i) the representations
and warranties of each Loan Party contained in the Credit Agreement and in each
other Loan Document are true, correct and complete in all material respects as
if made on and as of the date of execution of this Amendment except to the
extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier date;
and (ii) no POTENTIAL EVENT OF DEFAULT OR EVENT OF DEFAULT has occurred and is
continuing.
Section 4. EFFECTIVENESS
(a) This Amendment shall become effective as of July 30, 1996 when
this Amendment has been executed by the parties hereto and the Agent has
received the following:
(i) a counterpart of this Amendment executed by the parties
hereto;
(ii) an arrangement fee in the amount of $75,000 for
distribution (as appropriate) to the Lenders and the Agent;
(iii) (A) payment of all reasonable fees, expenses and
reimbursements of counsel to the Agent, not to exceed $10,000, incurred by the
Agent in connection with the preparation and execution of this Amendment, and
(B) all other reasonable fees, expenses and reimbursements due and payable to
the Agent and the Lenders under the Credit Agreement; and
(iv) a copy of an order approving the Amendment, entered by the
Court and such order shall be in full force and effect and shall not be stayed.
(b) Upon the effectiveness of this Amendment (i) each reference in
the Credit Agreement to "this Agreement", "hereunder," "hereof," "herein," or
words of like import shall mean and be a reference to the Credit Agreement as
amended hereby and (ii) each reference in each other Loan Document to the Credit
Agreement shall mean and be a reference to the Credit Agreement as amended
hereby.
(c) Except as specifically amended above, the Credit Agreement
shall remain in full force and effect.
(d) The execution, delivery, and effectiveness of this Amendment
shall not operate as a wavier of any right, power, or remedy of the Agent or the
Lenders under the Credit Agreement, as amended hereby, or any of the other Loan
Documents, nor constitute a wavier of any provision of any of the Loan
Documents.
Section 5. MISCELLANEOUS
(a) This Amendment may be executed in separate counterparts by the
different parties hereto, each of which when executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
(b) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND, TO THE EXTENT APPLICABLE,
THE BANKRUPTCY CODE.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to
be executed and delivered by their respective duly authorized officers on August
23, 1996.
WHEREHOUSE ENTERTAINMENT, INC.,
As debtor and debtor-in-possession
By: /s/ Henry Del Castillo
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Title: CFO
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WEI HOLDINGS, INC.,
As debtor and debtor-in-possession
By: /s/ Henry Del Castillo
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Title: CFO
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BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/
Title: