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EXHIBIT 10.25
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
is made and dated as of August 10, 1994 (the "FIRST AMENDMENT") among MAC
FRUGAL'S BARGAINS - CLOSE-OUTS INC., a Delaware corporation, WEST COAST
LIQUIDATORS, INC., a California corporation, PNS STORES, INC., a California
corporation (individually a "BORROWER" and collectively the "BORROWERS"), the
lenders named on the signature pages hereof (the "LENDERS"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BOFA"), as administrative agent for the
Lenders and the Issuing Banks (in such capacity, the "ADMINISTRATIVE AGENT") and
CONTINENTAL BANK N.A. as co-agent (in such capacity, the "CO-AGENT"), and amends
that certain Amended and Restated Credit Agreement dated as of October 5, 1993,
among the Borrowers, the Lenders, the Administrative Agent and the Co-Agent (the
"CREDIT AGREEMENT").
RECITAL
WHEREAS, the Borrowers have requested that the Lenders, the
Administrative Agent and the Co-Agent amend certain provisions of the Credit
Agreement to increase the Revolving Commitments, extend the maturity, amend
certain financial covenants, and certain other amendments and modifications to
the Credit Agreement, all as more fully set forth hereinafter, and the Lenders,
Administrative Agent and the Co-Agent are willing to do so on the terms and
conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereby agree
as follows:
1. Terms. All terms used herein shall have the same meanings as
in the Credit Agreement unless otherwise defined herein. All references to the
Credit Agreement shall mean the Credit Agreement as hereby amended.
2. Amendments to Credit Agreement.
2.1 The definition of "Applicable Margin" set forth in Section
1.1 of the Credit Agreement shall be amended by inserting "Consolidated" before
"Fixed Charge Coverage Ratio" each time such phrase is used therein.
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2.2 The definition of "Applicable Margin Certificate" set forth
in Section 1.1 of the Credit Agreement shall be amended by inserting
"Consolidated" before "Fixed Charge Coverage Ratio" each time such phrase is
used therein.
2.3 Clause (iii) of the definition of "Clean-Down Debt" set
forth in Section 1.1 of the Credit Agreement shall be amended and restated in
entirety as follows:
(iii) outstanding Indebtedness of the Borrowers permitted under
subsections 6.1(x) and (xi); provided that only the Net
Cash Proceeds of sale and leaseback transactions shall be
included for purposes of determining compliance with Section
2.1A."
2.4 The definition of "Revolving Commitment" set forth in
Section 1.1 of the Credit shall be amended and restated in entirety as follows:
"'REVOLVING COMMITMENT' means the commitment or
commitments of a Lender or the Lenders to make Revolving Loans
as set forth in subsection 2.1A. The amount of the original
Commitment of each Lender is set forth on Schedule L hereto."
2.5 The definition of "Revolver Maturity Date" set forth in
Section 1.1 of the Credit Agreement shall be amended by deleting "October 5,
1996" and inserting "August 10, 1997" in lieu thereof.
2.6 Section 1.1 of the Agreement is amended by inserting the
following new definitions in proper alphabetical order:
"'CUMULATIVE STOCK BUYBACK AMOUNT' means, on any date,
the aggregate purchase price of the Company's common stock from
the date of the First Amendment to such date of determination,
which amount shall not exceed $60,000,000."
"'FIRST AMENDMENT' means that certain First Amendment
to Amended and Restated Credit Agreement dated as of August 10,
1994 among the Borrowers, the Lenders, the Administrative Agent
and the Co-Agent."
2.7 The second sentence of Section 2.1A of the Credit Agreement
shall be amended by deleting "$150,000,000" and inserting "$200,000,000" in lieu
thereof.
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2.8 Section 2.1A of the Credit Agreement shall be amended by
deleting the last paragraph thereof in its entirety and inserting the following
in lieu thereof:
"Notwithstanding the foregoing provisions of this subsection
2.1A, (i) at no time shall the Total Utilization of Revolving
Commitments exceed the aggregate Revolving Commitments then in
effect, and (ii) for 45 consecutive days during each twelve
consecutive month period (a "CLEAN-DOWN PERIOD") following the
date of the First Amendment, the Clean-Down Debt shall not
exceed the sum of (x) $70,000,000, plus (y) the
Cumulative Stock Buyback Amount, minus (z) for the
period ending 9/30/95, zero; for the period ending 9/30/96,
$15,000,000; and for the period ending on the Revolver Maturity
Date, $20,000,000."
2.9 Section 2.6B of the Credit Agreement shall be amended by
adding the following at the end thereof:
"In addition, the Borrowers shall immediately prepay Loans in
an amount equal to any cash payments received by any Loan Party
from any transaction permitted pursuant to Section 6.1(xi) that
is entered into after the date of the First Amendment,
less (A) the amount of any fees and commissions payable
to persons other than any Loan Party or any Affiliate of any
Loan Party in connection with such transaction, (B) other costs
and expenses related to such transaction that are to be paid in
cash, in each case only to the extent customarily borne by an
issuer/obligor in an arm's-length transaction or reasonable in
light of the applicable circumstances, and (C) in the case of
sale and leaseback transactions only, the related amount
described in clause (i) of the definition of Net Cash Proceeds
(collectively, the "net proceeds"), and the Revolving
Commitments shall be reduced by an amount equal to such net
proceeds, up to an aggregate reduction not exceeding
$50,000,000; provided, that up to $10,000,000 in the
aggregate of such net proceeds received by the Borrowers in
respect of sale and leaseback transactions only shall be
excluded from such prepayment or Commitment reduction
requirement."
2.10 Section 2.16B of the Credit Agreement shall be amended by
inserting "or amendment" after the word "issuance," "or amended" after the word
"issued," and "or amend" after the word "issue" wherever they appear.
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2.11 Section 2.21 of the Credit Agreement shall be amended by
deleting "September 30, 1994" and inserting "August 10, 1995" in lieu thereof.
2.12 The first paragraph of Section 3.3 of the Credit Agreement
shall be amended by inserting the following after the word "hereunder:"
", amending any Letter of Credit to extend the maturity thereof
or to increase the amount of any drawing thereunder"
2.13 Sections 3.3B and 3.3C of the Credit Agreement shall be
amended by inserting "or amendment" after the word "issuance" wherever it
appears.
2.14 Section 3.3 of the Credit Agreement shall be amended by
inserting the following at the end thereof:"
"The Issuing Bank shall have the right, at the
direction of the Requisite Lenders, to deliver a notice to the
beneficiary of any 'evergreen' Letter of Credit terminating
such Letter of Credit in accordance with the terms thereof, if
on any notice date, or at any time within a 30-day period
preceding any such notice date, the conditions precedent set
forth in Section 3.2B (with reference to the continuation of
such Letter of Credit) are not satisfied. For purposes of this
paragraph, "notice date" means any date on or by which a notice
may be given under a Letter of Credit notifying the beneficiary
that such Letter of Credit is being terminated."
2.15 Section 6.1 of the Credit Agreement shall be amended by
(a) deleting "and" at the end of clause (ix) thereof, (b) deleting "$30,000,000"
and inserting "$40,000,000" in lieu thereof in clause (x) thereof, (c) deleting
the period at the end of clause (x) and inserting "; and " in lieu thereof, and
(d) inserting a new clause (xi) immediately following clause (x) as follows:
"(xi) In addition to the foregoing Indebtedness
permitted by clauses (i)-(x) above, the Borrowers may become
and remain liable with respect to (a) deed of trust/mortgage
financing or sale and leaseback transactions relating to
properties utilized in the ordinary course of the Borrowers'
business, having a maturity or an initial lease term of not
less than 15 years, and/or (b) unsecured Indebtedness having an
average life and final maturity date after the Revolver
Maturity Date; provided, however, that the sum
of (A)
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the Net Cash Proceeds of sale and leaseback transactions plus (B) the
amount of other Indebtedness described in clauses (a) and (b) above, in
all cases resulting from transactions entered into after the date of
the First Amendment, shall not exceed $60,000,000 in the aggregate at
any time outstanding; provided, further, that the Loans are prepaid,
and the Revolving Commitments are reduced, as required by Section 2.6B
in connection with any such transaction."
2.16 Section 6.2 of the Credit Agreement shall be amended by (a)
deleting "and" at the end of clause (ii) thereof, (b) deleting the period at the
end of clause (iii) thereof and inserting "; and" in lieu thereof, and (c)
adding a new clause (iv) as follows:
"(iv) Liens securing Indebtedness permitted pursuant to subsection
6.1(xi)(a); provided, that such Liens shall extend only to the property
financed."
2.17 Section 6.3 of the Credit Agreement shall be amended by (a)
deleting "and" at the end of clause (vii) and (b) inserting a new clause (viii)
immediately following clause (vii) as follows:
"(viii) The Borrowers may make and own Investments in the common
or preferred stock of Persons primarily engaged in the business of
discount retailing, the aggregate consideration for which shall not
exceed $15,000,000; and"
2.18 Section 6.3 of the Credit Agreement shall be further amended by
(a) renumbering clause (viii) as clause (ix) and (b) deleting "(vii) above"
where it appears in such clause and inserting "(viii) above" in lieu thereof.
2.19 Section 6.5 of the Credit Agreement shall be amended and restated
in its entirety as follows:
"6.5 RESTRICTED JUNIOR PAYMENTS
"The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any
sum for (by way of defeasance or otherwise) any Restricted Junior
Payment; provided, that so long as no Event of Default or Potential
Event of Default has occurred and is continuing, (i) the Subsidiaries
of the Company may make Restricted Junior Payments to the Company and
(ii) the Company may make Restricted Junior Payments to purchase
outstanding capital stock of the Company in
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open market purchases or otherwise or to pay cash dividends to its
shareholders so long as after giving effect to such proposed Restricted
Junior Payments, the aggregate of all such Restricted Junior Payments
made pursuant to this clause (ii) since the date of the First Amendment
does not exceed $60,000,000."
2.20 Section 6.6A of the Credit Agreement shall be amended by deleting
such section in its entirety and inserting the following in lieu thereof:
"A. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrowers will
not permit, on any Fiscal Quarter End during the period from the date
of the First Amendment until the Revolver Maturity Date, Consolidated
Tangible Net Worth to be less than the sum of $230,000,000, plus 50% of
Consolidated Net Income (with no deduction for losses) from August 1,
1994 to such Fiscal Quarter End, minus the Cumulative Stock Buyback
Amount."
2.21 Section 6.6C of the Credit Agreement shall be amended by deleting
such section in its entirety and inserting the following in lieu thereof:
"C. MAXIMUM LEVERAGE RATIO. The Borrowers will not permit, on any
Fiscal Quarter End occurring during the periods set forth below, the
Leverage Ratio to be greater than the corresponding ratio set forth in
such table:
"Fiscal Quarters Ending in Leverage Ratio
-------------------------- --------------
8/01/94 through 1/27/96 0.60 to 1.00
1/28/96 through 1/31/97 0.55 to 1.00
2/01/97 and thereafter 0.50 to 1.00"
2.22 Section 6.9 of the Credit Agreement shall be amended by deleting
the last proviso thereof in its entirety and inserting the following in lieu
thereof:
"provided that the Net Cash Proceeds of each such Asset Sale described
in this Section 6.9 will not cause the limit set forth in Section
6.1(xi) to be exceeded."
2.23 The table in Section 6.13 of the Credit Agreement shall be amended
and restated in its entirety as follows:
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Maximum Consolidated
"Fiscal Year Capital Expenditures
1994 $50,000,000
1995 50,000,000
1996 60,000,000
1997 60,000,000"
2.24 All references to the Revolving Commitment and Pro Rata Share of
each Lender on the signatures pages to the Credit Agreement are deleted, and a
new Schedule L is inserted as an exhibit to the Credit Agreement in the form of
Schedule L hereto.
3. Representations and Warranties. The Borrowers represent and warrant
to Lenders, Administrative Agent and Co-Agent that, on and as of the date
hereof, and after giving effect to this First Amendment:
3.1 Authorization. The execution, delivery and performance of this
First Amendment have been duly authorized by all necessary corporate action by
the Borrowers and this First Amendment has been duly executed and delivered by
the Borrowers.
3.2 Binding Obligation. This First Amendment is the legal, valid and
binding obligation of Borrowers, enforceable against the Borrowers in accordance
with its terms.
3.3 No Legal Obstacle to Credit Agreement. The execution, delivery and
performance of this First Amendment will not (a) contravene the terms of the
Borrowers' certificate of incorporation, by-laws or other organization document;
(b) conflict with or result in any breach or contravention of the provisions of
any contract to which the Borrowers are a party, or the violation of any law,
judgment, decree or governmental order, rule or regulation applicable to
Borrowers, or (c) result in the creation under any agreement or instrument of
any security interest, lien, charge, or encumbrance upon any of the assets of
the Borrowers. No approval or authorization of any governmental authority is
required to permit the execution, delivery or performance by the Borrowers of
this First Amendment, or the transactions contemplated hereby.
3.4 Incorporation of Certain Representations. The representations and
warranties of the Borrowers set forth in Section 4 of the Credit Agreement are
true and correct in all respects on and as of the date hereof as though made on
and as of the date hereof, except as to such representations made as of an
earlier specified date.
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3.5 Default. No Potential Event of Default or Event of Default under
the Credit Agreement has occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of this First Amendment
shall be subject to the compliance by the Borrowers with their agreements herein
contained, and to the delivery of the following to the Administrative Agent in
form and substance satisfactory to the Administrative Agent, Co-Agent and the
Lenders:
4.1 Secretary's Certificate. A certificate, signed by the Secretary or
an Assistant Secretary of each Borrower and dated the date of this First
Amendment, attaching a certified copy of corporate resolutions authorizing the
execution, delivery and performance of this First Amendment, and as to the
incumbency and specimen signature of the person or persons authorized to execute
and deliver this First Amendment and any instrument or agreement required
hereunder on behalf of each Borrower.
4.2 Payment of Fees. Receipt of the fee described in the letter between
the Borrowers, BofA and BA Securities, Inc., dated July 14, 1994.
4.3 Other Evidence. Such other evidence with respect to each Borrower
or any other person as the Administrative Agent or any Lender may reasonably
request in connection with this First Amendment and the compliance with the
conditions set forth herein.
5. Miscellaneous.
5.1 Effectiveness of the Credit Agreement and the Loan Documents.
Except as hereby expressly amended, the Credit Agreement and each other Loan
Document shall each remain in full force and effect, and are hereby ratified and
confirmed in all respects on and as of the date hereof.
5.2 Waivers. This First Amendment is limited solely to the matters
expressly set forth herein and is specific in time and in intent and does not
constitute, nor should it be construed as, a waiver or amendment of any other
term or condition, right, power or privilege under the Credit Agreement or under
any agreement, contract, indenture, document or instrument mentioned therein;
nor does it preclude or prejudice any rights of the Administrative Agent,
Co-Agent or the Lenders thereunder, or any exercise thereof or the exercise of
any other right, power or privilege, nor shall it require the Requisite Lenders
to agree to an amendment, waiver or consent for a similar transaction or on a
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future occasion, nor shall any future waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Credit Agreement, constitute a waiver of any other
default of the same or of any other term or provision.
5.3 Counterparts. This First Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. This First Amendment shall not become
effective until the Borrowers, the Lenders, Administrative Agent and the
Co-Agent shall have signed a copy hereof and the same shall have been delivered
to the Administrative Agent.
5.4 Jurisdiction. This First Amendment shall be governed by and
construed under the laws of the State of New
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York.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed and delivered as of the date first written above.
MAC FRUGAL'S BARGAINS - CLOSE-OUTS
INC.
By: /s/ PHILIP L. CARTER
----------------------------------------
Name: Philip L. Carter
Title: EVP & CFO
WEST COAST LIQUIDATORS, INC.
By: /s/ PHILIP L. CARTER
----------------------------------------
Name: Philip L. Carter
Title: EVP & CFO
PNS STORES, INC.
By: /s/ PHILIP L. CARTER
----------------------------------------
Name: Philip L. Carter
Title: EVP & CFO
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ L. CHENEVERT, JR.
----------------------------------------
Vice President
CONTINENTAL BANK, N.A.,
individually and as Co-Agent
By: /s/ ANDREW J. SUTHERLAND
----------------------------------------
Name: Andrew J. Sutherland
Title: Vice President
(Signatures continue)
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
BY: /s/ YVONNE DENNIS
--------------------------------------
Yvonne Dennis
Vice President
By: /s/ SABUR MOINI
--------------------------------------
Sabur Moini
Assistant Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ TED A. DUNN
--------------------------------------
Title: Assistant Vice President
-----------------------------------
THE BANK OF CALIFORNIA, N.A.
By: /s/ SCOTT LANE
--------------------------------------
Title: Vice President
-----------------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD. LOS ANGELES AGENCY
By: /s/ CURT M. BIREN
--------------------------------------
Title: Vice President
----------------------------------
UNITED STATES NATIONAL BANK OF
OREGON
By: /s/ JOYCE P. DORSETT
--------------------------------------
Title: Corporate Booking Credit Officer
-----------------------------------
BANQUE PARIBAS
By: /s/ ALAN McLINTOCK
--------------------------------------
Title: General Manager, Western Region
-----------------------------------
By: /s/ STEVE LI
--------------------------------------
Title: Associate
-----------------------------------
(Signatures continue)
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MELLON BANK, N.A.
By: GARY SEGAL
----------------------------------------
Title: Vice President
-------------------------------------
UNION BANK
By: ANN M. YASUDA
----------------------------------------
Title: Vice President
-------------------------------------
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EXHIBIT L
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Bank Commitment Share
---- ---------- ---------
Bank of America National
Trust and Savings
Association $ 40,000,000 20.0000000%
Continental Bank N.A. 40,000,000 20.0000000
Banque Paribas 13,333,333 6.6666667
Mellon Bank, N.A. 13,333,333 6.6666667
PNC Bank, National Association 20,000,000 10.0000000
The Bank of California, N.A. 20,000,000 10.0000000
The Long-Term Credit Bank
of Japan, Ltd.
Los Angeles Agency 20,000,000 10.0000000
Union Bank 13,333,334 6.6666667
United States National Bank
of Oregon 20,000,000 10.0000000
------------ -----------
TOTAL $200,000,000 100.000000%
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