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EXHIBIT 4.6
FOURTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
This FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"AMENDMENT") is dated as of August __, 1996 by and among The Rug Barn, Inc., a
South Carolina corporation ("RUG BARN"), Home Innovations, Inc., a Delaware
corporation ("HII"), Calvin Klein Home, Inc., a Delaware corporation ("CALVIN
KLEIN"), Draymore Mfg. Corp., a North Carolina corporation ("DRAYMORE"), R.A.
Briggs and Company, an Illinois corporation ("R.A. BRIGGS") (each of Rug Barn,
HII, Calvin Klein, Draymore and R.A. Briggs a "BORROWER" and collectively the
"BORROWERS"), LaSalle National Bank, as Agent and Lender, and General Electric
Capital Corporation, as Co-Agent and Lender. All capitalized terms used but
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement (as hereinafter defined).
WITNESSETH
WHEREAS, Rug Barn, Home Innovations, Inc., a Delaware corporation, Home
Curtain Corp., a New York corporation, Calvin Klein, Draymore and R.A. Briggs,
the Agent, the Co-Agent and the Lenders have entered into that certain Amended
and Restated Credit Agreement dated as of July 13, 1995, as amended by the
First Amendment to Amended and Restated Credit Agreement dated as of November
17, 1995, by the Second Amendment to Amended and Restated Credit Agreement
dated as of December 31, 1995 (the "Second Amendment") and by the Third
Amendment to Amended and Restated Credit Agreement dated as of March 31, 1996
(the "Third Amendment") (as the same may hereafter be further amended,
supplemented or otherwise modified, the "CREDIT AGREEMENT"); and
WHEREAS, the Lenders are willing to amend the Credit Agreement as herein
set forth, to, among other things, modify the financial covenants, all on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Borrowers hereby agree with the Agent, the Co-Agent and the
Lenders as follows:
Section 1. Amendments to the Credit Agreement. The parties hereto agree
that the Credit Agreement is amended as follows:
A. Exhibit B to the Credit Agreement is hereby amended and replaced
in its entirety with the form attached to this Amendment as Exhibit 1.
B. Section 1.5(a) of the Credit Agreement is hereby amended and
replaced in its entirety with the following:
" (a) Effective as of July __, 1996, Borrowers shall pay
interest to Agent, for the ratable benefit of Lenders in
accordance with the
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various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at a per annum rate equal
to the Index Rate plus one-half percent (0.5%), based on the
amounts outstanding from time to time under the Revolving
Credit Loan."
C. Subsection (i) of Section 1.8(b) of the Credit Agreement is
hereby amended and replaced in its entirety with the following:
" (i) in arrears, on the first Business Day of each
quarter prior to the Commitment Termination Date and on
the Commitment Termination Date, a fee for Borrowers'
non-use of available funds (the "Non-use Fee") in an
amount equal to one-quarter of one percent (0.25%) per
annum (calculated on the basis of a 360 day year for
actual days elapsed) of the difference between (i)
$50,000,000 and (ii) the respective daily averages of
the amount of the Revolving Credit Loan outstanding
during the period for which the Non-use Fee is due,
and"
D. Subsection (a) of Schedule I to the Credit Agreement is hereby
amended and replaced in its entirety with the following:
" (a) Maximum Total Liabilities Coverage Ratio. Holdings and
each of its Subsidiaries on a consolidated basis shall have
at the end of each Fiscal Quarter after the Closing Date, a
Total Liabilities Coverage Ratio for the 12-month period then
ended (or with the Fiscal Quarters ending on or before June
30, 1996, the period from the Closing Date to the last day of
such Fiscal Quarter) of not greater than 6.5 to 1.0 for the
Fiscal Quarters ending before (but not including the Fiscal
Quarter ending on) December 31, 1995 or after (but not
including the Fiscal Quarter ending on) June 30, 1996;
provided, however, that for each Fiscal Quarter ending on or
before June 30, 1996, the calculation of EBITDA of Holdings
used in determining the Total Liabilities Coverage Ratio for
the period from the Closing Date through such Fiscal Quarter
end shall be made by taking the actual amount of EBITDA
("ACTUAL EBITDA") that would otherwise be calculated for such
period in accordance with the Agreement and (i) dividing such
Actual EBITDA by the number of days in the period then being
tested and then (ii) multiplying such product in clause (i)
by 365."
E. The first sentence of subsection (b) of Schedule I to the Credit
Agreement is hereby amended and replaced in its entirety with the
following sentence:
"Holdings and its Subsidiaries shall have on a consolidated
basis at the end of each Fiscal Quarter beginning with June
30, 1995, a Debt Service Coverage Ratio for the 12-month
period then ended of not less
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than 1.15 to 1.0 for the Fiscal Quarters ending before
September 30, 1995, 1.05 to 1.0 for the Fiscal Quarter ending
on September 30, 1995, 1.0 to 1.0 for the Fiscal Quarter
ending on December 31, 1995 and 1.25 to 1.0 for the Fiscal
Quarters ending after (but not including the Fiscal Quarter
ending on) June 30, 1996; provided, however, that
notwithstanding anything to the contrary herein, this
paragraph (b) shall not directly or indirectly prohibit
Holdings from paying in cash the interest due on the Senior
Notes and the dividends due on the Preferred Stock in
January, 1996, if the Debt Service Coverage Ratio for the
trailing 12 month period ending on September 30, 1995 is not
less than 1.15 to 1.0; provided, further, that for Fiscal
Quarters ending on or before June 30, 1996 the Debt Service
Coverage Ratio shall be calculated using historical EBITDA
before the Closing Date of Holdings and Borrowers (on a
consolidated basis) to the extent necessary to complete a
twelve month period, and Debt Service shall be calculated
assuming (i) for all periods prior to the Closing Date, the
Senior Notes, Preferred Stock, Subordinated Notes and
Revolving Credit Facility (with debt service calculated as
described in the next sentence) were the only Indebtedness
and Preferred Stock outstanding during such periods (ii) that
the Subordinated Debt and Senior Notes accrued interest in
accordance with their terms during such periods; (iii) that
cash dividends on the Preferred Stock were paid in full
during each Fiscal Quarter of such period, and (iv) that no
Revolving Credit Loans were outstanding on June 30, 1995, and
for each Fiscal Quarter end thereafter for purposes of
calculating Debt Service on the Revolving Credit Facility,
Interest Expenses actually incurred by Borrowers subsequent
to the Closing Date shall be annualized as if such Interest
Expenses had been incurred during such period."
F. Subsection 6.14(b)(iii) of the Credit Agreement is hereby amended
and replaced in its entirety as follows:
" (iii) to pay equal monthly installments in advance of the
management fee ("Management Fee") then due under the
Management Agreement in a per annum amount not in excess of
$375,000; provided, however, that all amounts due under such
Management Agreement may continue to accrue for any part of
the Management Fee which is not otherwise paid; provided
further, that if Borrowers are prohibited from paying all or
any portion of such $375,000 of the Management Fee due to the
existence of a Default or Event of Default, the Borrowers
may pay any accrued portion of such $375,000 of the
Management Fee at such time in the future as no Default or
Event of Default then exists and is continuing or would
result from such payment;"
G. Subsection (c) of Schedule I to the Credit Agreement is hereby
deleted.
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H. Subsection (a) of Schedule J to the Credit Agreement is hereby
amended and replaced in its entirety with the following:
" (a) If to Agent or LaSalle, at
LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Charles E. Schroeder, Jr.
Telecopier No.: (312) 904-4364
Telephone No.: (312) 904-5415
with a copy to:
Goldberg, Kohn, Bell, Black,
Rosenbloom & Moritz, Ltd.
55 East Monroe Street, Suite 3700
Chicago, Illinois 60603
Attention: Douglas P. Taber
Telecopier No.: (312) 332-2196
Telephone No.: (312) 201-3930"
I. Subsection (b) of Schedule J to the Credit Agreement is hereby
amended and replaced in its entirety with the following:
" (b) If to Lender (copies should also be sent
in accordance with paragraph (a) above)
General Electric Capital Corporation
105 West Madison Street - Suite 1600
Chicago, Illinois 60602
Attention: Decorative Home Accents Account
Manager
Telecopier No.: (312) 419-5992
Telephone No.: (312) 419-0985
with a copy to:
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927
Attention: Corporate Counsel
Telecopier No.: (203) 316-7889
Telephone No.: (203) 316-7500"
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Section 2. Covenant Modification Fee. In order to induce the Agent,
the Co-Agent and the Lenders to enter into this Amendment and to amend the
Credit Agreement in the manner set forth in subsections E AND F of Section 1 of
this Amendment, the Borrowers shall pay to Agent, on behalf of Lenders, a
covenant modification fee of $25,000.
Section 3. Borrowers' Representations and Warranties. In order to induce
the Agent, the Co-Agent and the Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, the Borrowers
represent and warrant to the Agent, the Co-Agent and the Lenders that the
following statements are true, correct and complete:
A. Corporate Power and Authority. The Borrowers have all requisite
corporate power and authority to enter into this Amendment, and to carry
out the transactions contemplated by, and to perform their obligations
under, the Credit Agreement as amended by this Amendment (the "AMENDED
AGREEMENT").
B. Authorization of Agreements. The execution, delivery and
performance of this Amendment, and the performance of the Amended
Agreement have been duly authorized by all necessary corporate action by
the Borrowers.
C. No Conflict. The execution, delivery and performance by the
Borrowers of this Amendment, and the performance by the Borrowers of the
Amended Agreement do not and will not (i) violate any provision of any
law, rule or regulation applicable to the Borrowers or Holdings, the
Certificate or Articles of Incorporation or Bylaws of the Borrowers or
Holdings or any order, judgment or decree of any court or other agency or
government binding on any Borrower or Holdings, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a default under any contract, agreement, mortgage or obligation of
any Borrower or Holdings except where the Borrowers or Holdings, as the
case may be, shall have obtained waivers or consents from the other
parties to such agreements and disclosed the same to the Agent, (iii)
result in or require the creation or imposition of any lien upon any of
the Borrowers' or Holdings' properties or assets (other than Permitted
Encumbrances) or (iv) require any approval of stockholders or any
approval or consent of any Person under any contract, agreement, mortgage
or obligation to which any Borrower or Holdings is a party (or by which
its assets or properties are bound) except for the approvals or consents
which will be obtained on or before the date hereof and disclosed in
writing to the Agent.
D. Governmental Consents. The execution, delivery and performance
by the Borrowers of this Amendment, and the performance by the Borrowers
of the Amended Agreement do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or
by, any Federal, state or other governmental authority or regulatory body
or other governmental Person.
E. Binding Obligation. This Amendment and the Amended Agreement are
legally valid and binding obligations of the Borrowers, enforceable
against the
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Borrowers in accordance with their respective terms except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to or limiting
creditors' rights generally or general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law, and
subject to the discretion of the court before which any proceeding
therefor may be brought.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 3 of
the Amended Agreement are and will be true, correct and complete in all
material respects on and as of the effective date of this Amendment to
the same extent as though made on and as of that date, except to the
extent that such representations and warranties specifically relate to an
earlier date, in which case they are true, correct and complete in all
material respects as of such earlier date.
G. Absence of Default. No event has occurred and is continuing or
will result after giving effect to the consummation of the transactions
contemplated by this Amendment which would constitute a Default or an
Event of Default.
H. Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of Borrowers to the Agent,
the Co-Agent or any Lender for purposes of or in connection with this
Amendment or any transaction contemplated hereby is true, complete and
accurate in every material respect on the date as of which such
information is dated or certified and as of the date of execution and
delivery of this Amendment by the Agent and the Lenders and such
information is not incomplete by omitting to state any material fact
necessary to make such information not misleading.
I. Material Adverse Change. Except as disclosed in the financial
statements that have heretofore been delivered to Agent, the Co-Agent and
the Lenders, there has been no material adverse change in the business,
assets, operations, operating properties, prospects or financial or other
condition of the Borrowers since the Closing Date.
Section 4. Borrowing Base Amendment. The parties hereto agree that the
results and recommendations of the certain field audit completed on March 7,
1996 indicate the need and desirability of an additional field audit to assist
Agent and Co-Agent in determining whether any revisions are necessary with
respect to the method of calculation of the Borrowing Base, including but not
limited to revisions with respect to: (a) the definition of "BORROWING BASE"
set forth in Schedule A to the Credit Agreement, (b) the definition of
"ELIGIBLE ACCOUNT" set forth in Schedule C to the Credit Agreement, (c) the
definition of "ELIGIBLE INVENTORY" set forth in Schedule D to the Credit
Agreement and (d) Exhibit B to the Credit Agreement. Borrowers hereby agree
that Agent and Co-Agent's determination to establish a reserve of $2,000,000
against the Borrowing Base pending completion of an
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additional field audit is a reasonable and appropriate exercise of Agent and
Co-Agent's rights under Section 9.10(g) of the Credit Agreement.
Notwithstanding the determination of Agent and Co-Agent not to make further
revisions with respect to the method of calculation of Borrowing Base at the
present time as a result of the March 7, 1996 field audit, Agent and Co-Agent
shall retain all of their respective rights at any time hereafter to make
determinations with respect to the calculation of the Borrowing Base and any
reserves applicable thereto, as well as their respective rights to make
determinations as to which Accounts and Inventory should be included as
Eligible Accounts and Eligible Inventory, in accordance with the terms and
provisions of the Credit Agreement. Notwithstanding any prior failure of all
parties to this Agreement to either execute an amendment to the Credit
Agreement setting forth revisions to the method of calculation of the Borrowing
Base or to acknowledge in writing that no revisions were necessary with respect
to the method of calculation of the Borrowing Base, the Second Amendment and
Third Amendment have been and will remain in full force and effect, except to
the extent specifically amended by this Amendment or hereafter specifically
amended.
Section 5. Conditions to Effectiveness. This Amendment shall become
effective only upon the satisfaction of all of the following conditions
precedent on the date hereof:
A. Amendment. Fully executed copies of this Amendment signed by the
Borrowers, each Lender, the Agent and the Co-Agent shall have been
delivered to the Agent.
B. Payment of Covenant Modification Fee. Payment by Borrowers to
Agent, on behalf of Lenders, of the covenant modification fee specified
in Section 2 of this Amendment shall have been made.
C. Opinion of Borrowers' Counsel. The Agent shall have received an
opinion of the Borrowers' counsel in form and substance satisfactory to
the Agent and its counsel covering, without limitations, (i) the due
incorporation, valid existence, good standing and corporate power and
authority to conduct business of Holdings, (ii) each Borrower's due
incorporation, valid existence and good standing, corporate power and
authority to conduct business, due authorization, execution and delivery
of this Amendment, (iii) enforceability of this Amendment and (iv) no
conflicts with laws generally or Holding's or each Borrower's certificate
or articles of incorporation, by-laws and other material contracts.
D. Other Documents. The Agent shall have received copies of such
other documents as the Agent may reasonably request.
Section 6. Miscellaneous.
A. Effect upon the Credit Agreement. Except as specifically amended
hereunder, the Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed. The execution, delivery and
effectiveness of this Amendment
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shall not operate as a waiver of any right, power or remedy of the Agent
or any Lender under any Loan Document, nor constitute a waiver of any
provision of any Loan Document or any Default or Event of Default.
B. Section Headings. All section headings are inserted for
convenience of reference only and shall not affect any construction or
interpretation of this Amendment or the Amended Agreement.
C. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties in separate counterparts,
each of which when so executed and delivered shall be deemed to be an
original, but all of which taken together shall constitute one and the
same agreement.
D. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAWS, AS OPPOSED TO THE CONFLICT OF
LAWS PROVISIONS, AND DECISIONS OF THE STATE OF ILLINOIS. This Amendment
and the other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and
supersede any prior agreements, written or oral, with respect thereto.
E. Severability. Whenever possible, each provision of this
Amendment shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Amendment shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions
of this Amendment or the Amended Agreement.
F. Binding Agreement. This Amendment shall be binding upon the
Borrowers, the Agent, the Co-Agent and the Lenders and their respective
successors and assigns, and shall inure to the benefit of the Borrowers,
the Agent, the Co-Agent and each Lender and the successors and assigns of
the Borrowers, the Agent, the Co-Agent and the Lenders.
G. JURY TRIAL WAIVER. THE BORROWERS, THE AGENT, THE CO-AGENT AND
THE LENDERS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AMENDMENT, THE LOAN
DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH
OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AMENDMENT OR ANY LOAN DOCUMENT, AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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H. Costs, Expenses and Taxes. As provided in Section 11.3 of the
Credit Agreement, the Borrowers agree to pay on demand all fees, costs
and expenses incurred by the Agent, the Co-Agent and the Lenders in
connection with the preparation, execution and delivery of this Amendment
(including, without limitation, all attorneys fees). In addition, the
Borrowers shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution and delivery of
this Amendment and agree to hold the Agent and the Lenders harmless from
and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes or fees.
I. Reaffirmation of Guaranty. Each of the Borrowers as a guarantor
under Section 12 of the Credit Agreement hereby (i) acknowledges and
reaffirms all of its obligations and undertakings under the guaranty
under Section 12 of the Credit Agreement, and (ii) acknowledges and
agrees that subsequent to, and taking into account this Amendment, the
guaranty under Section 12 of the Credit Agreement is and shall remain in
full force and effect in accordance with the terms thereof.
J. Releases. In further consideration of the execution of this
Amendment by the Agent, the Co-Agent and the Lenders, the Borrowers and
Holdings hereby release the Agent, the Co-Agent and the Lenders and all
current and future holders of assignments of or participations in the
Obligations and their respective affiliates, officers, employees,
directors, agents and attorneys (collectively, the "RELEASEES") from any
and all claims, demands, liabilities, responsibilities, disputes, causes
of action (whether at law or in equity) and obligations of every nature
whatsoever, whether liquidated or unliquidated, known or unknown, matured
or unmatured, fixed or contingent (collectively, "CLAIMS") that any
Borrower or Holdings may have against the Releasees which arise from or
relate to any actions which the Releasees may have taken or omitted to
take on or prior to the date hereof with respect to the Obligations, any
Collateral, the Credit Agreement, any other Loan Document and any third
parties liable in whole or in part for the Obligations. For purposes of
the release contained in this paragraph, the term "BORROWERS" and
"HOLDINGS" shall mean and include the Borrowers, Holdings and their
successors and assigns, including, without limitation, any trustees
acting on behalf of such parties and any debtor-in-possession in respect
of any such party.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their duly authorized officers on the date first
above written.
BORROWERS: HOME INNOVATIONS, INC.
By
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Title
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THE RUG BARN, INC.
By
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Title
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DRAYMORE MFG. CORP.
By
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Title
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CALVIN KLEIN HOME, INC.
By
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Title
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R.A. BRIGGS AND COMPANY
By
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Title
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LENDERS: LASALLE NATIONAL BANK,
as Agent and Lender
By
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Title
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GENERAL ELECTRIC CAPITAL
CORPORATION, as Co-Agent and Lender
By
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Title
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ACKNOWLEDGED AND AGREED TO
DECORATIVE HOME ACCENTS, INC.
By
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Title
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11
EXHIBIT 1
(FORM OF BORROWING BASE CERTIFICATE)