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EXHIBIT 10.6
FIRST AMENDMENT dated as of October 5, 2001 (this
"Amendment"), to the Amended and Restated Credit Agreement
dated as of April 27, 2001 (the "Credit Agreement"), among
MTS, INCORPORATED, a California corporation ("MTS"); TOWER
RECORDS KABUSHIKI KAISHA, a Japanese corporation ("TRKK" and,
together with MTS, the "Borrowers"); the LENDERS party thereto
(the "Lenders"); and THE CHASE MANHATTAN BANK, as
Administrative Agent (the "Agent").
WHEREAS the Borrowers have requested that certain provisions
of the Credit Agreement be amended in the manner provided for in this Amendment,
and the Lenders are willing to agree to such amendments on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used and not defined
herein shall have the meanings given to them in the Credit Agreement, as amended
hereby.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of "EBITDA" to replace the reference therein to "US$10,500,000" with
a reference to "US$12,500,000".
(b) Paragraph (b) of Section 2.09 of the Credit Agreement is
hereby amended and restated in its entirety as follows:
"(b) The Commitments will be automatically reduced, pro rata
as between Facility A and Facility B (based on the respective aggregate
amounts of the Facility A Commitments and the Facility B Commitments and on
Exchange Rates prevailing on the dates of such Commitment reductions), (i)
on July 31, 2001, by US$15,000,000, (ii) on October 5, 2001, by an
additional US$5,000,000 and (iii) on December 31, 2001, by an additional
US$10,000,000, in each case in addition to any reductions made pursuant to
paragraph (d) below (other than any such reductions resulting from the
receipt of net cash proceeds from the monetization of the cash surrender
value of life insurance maintained by the Parent, MTS or any Subsidiary,
which shall be credited against the reductions required to be made under
this paragraph), and the Facility A Borrowings and Facility B Borrowings
will be prepaid to the extent required under paragraph (c) below after
giving effect to such reductions."
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(c) Section 5.01 of the Credit Agreement is hereby further
amended by (i) in the lead-in sentence to the Section, adding the words
"(except in the case of paragraph (l))" immediately after the words "The
Borrowers' Agent will furnish to the Administrative Agent and",
(ii)deleting the word "and" appearing at the end of paragraph (k), (iii)
relettering existing paragraph (l) as paragraph (m) and (iv) adding a new
paragraph (l) as follows:
"(l) promptly (on a basis acceptable to the Administrative
Agent) after receipt thereof, delivery to the Administrative Agent
(which shall not be under any obligation to forward such information
to the Lenders) of any bids received in connection with any proposed
sale of the businesses, operations and/or assets of MTS and the
Subsidiaries; and"
(d) Section 5.13 of the Credit Agreement is hereby amended by
deleting paragraphs (d) and (e)thereof.
(e) Section 6.13 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"SECTION 6.13. EBITDA. The Borrowers will not permit EBITDA of
MTS and the Subsidiaries for any period set forth below to be less
than the amount set forth below opposite such period:
Period Min EBITDA
------ ----------
02/01/01 - 04/30/01 US$ 7,580,000
03/01/01 - 05/31/01 11,410,000
04/01/01 - 06/30/01 11,330,000
05/01/01 - 07/31/01 11,500,000
08/01/01 - 08/31/01 2,000,000
08/01/01 - 09/30/01 4,225,000
08/01/01 - 10/31/01 6,350,000
09/01/01 - 11/30/01 7,750,000
10/01/01 - 12/31/01 17,500,000
11/01/01 - 01/31/02 19,600,000
12/01/01 - 02/28/02 18,320,000
01/01/02 - 03/31/02 10,050,000"
(f) Section 6.14 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"SECTION 6.14. Leverage Ratio. The Borrowers will not
permit the Leverage Ratio as of any date during any period set forth
below to be greater than the ratio set forth below opposite such
period:
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Period Ratio
------ -----
04/27/01 - 05/30/01 11.17:1.00
05/31/01 - 06/29/01 7.37:1.00
06/30/01 - 07/30/01 7.08:1.00
07/31/01 - 08/30/01 7.10:1:00
08/31/01 - 09/29/01 N/A
09/30/01 - 10/30/01 N/A
10/31/01 - 11/29/01 12.75:1.00
11/30/01 - 12/30/01 10.60:1.00
12/31/01 - 01/30/02 4.25:1:00
01/31/02 - 02/27/02 4.00:1:00
02/28/02 - 03/30/02 4.35:1.00
03/31/02 - 04/23/02 7.80:1.00"
(g) Clause (iv) of Section 9.02(b) is hereby amended by
deleting the reference therein to "5.13".
3. Effect of Amendments. Except as expressly set forth herein,
this Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights or remedies of the Lenders, the
Collateral Agent or the Administrative Agent under the Credit Agreement, as
amended by this Amendment, or any other Loan Document, and shall not alter,
modify, amend or in any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement, as amended by this
Amendment, or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect. Nothing herein shall
be deemed to entitle the Borrower to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement, as amended by this
Amendment, or any other Loan Document in similar or different circumstances.
This Amendment shall apply and be effective only with respect to the provisions
of the Credit Agreement set forth herein. After the date hereof, any reference
to the Credit Agreement shall mean the Credit Agreement as modified hereby. This
Amendment shall constitute a "Loan Document" for all purposes of the Credit
Agreement and the other Loan Documents. The date referred to in Section
2.09(b)(ii), as amended by Section 2(b) hereof, shall mean October 5, 2001, New
York City time.
4. Representations and Warranties. The Borrower hereby
represents and warrants to the Agent and the Lenders as of the date hereof as
follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to
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or action by, any person (including any governmental agency) in order to be
effective and enforceable. The Credit Agreement as amended by this Amendment
constitutes the legal, valid and binding obligation of the Borrower, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
(c) All representations and warranties of the Borrower
contained in Article III of the Credit Agreement (other than representations or
warranties expressly made only on and as of the Restatement Effective Date) are
true and correct in all material respects as of the date hereof.
5. Effectiveness. This Amendment shall become effective (the
"Amendment Effective Date") only upon satisfaction of the following conditions
prior to 5:00 p.m., New York time, on October 5, 2001:
(i) the Agent shall have received counterparts hereof duly
executed and delivered by the Borrower and the Lenders; and
(ii) the Borrower shall have paid an amendment fee to each
Lender that has delivered an executed counterpart of this Amendment to the
Agent by the Amendment Effective Date, equal to 0.375% of the aggregate
amount of such Lender's Loans and unused Commitments (such payment to be
made by wire transfer of immediately available funds to the Agent for the
respective accounts of such Lenders).
Once effective, the amendments set forth in this Amendment shall be retroactive
to September 30, 2001.
6. Expenses. The Borrower agrees to reimburse the Agent for
its out-of-pocket expenses in connection with this Amendment, including the
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel
for the Agent.
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7. GOVERNING LAW; COUNTERPARTS. (a) THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES.
(b) This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which together shall constitute a single instrument. Delivery of an executed
counterpart of a signature page of this Amendment by facsimile transmission
shall be as effective as delivery of a manually executed counterpart hereof.
8. Submission to Jurisdiction. The provisions of Section 9.09
of the Credit Agreement shall apply mutatis mutandis to this Amendment and any
action or proceeding in respect hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
MTS, INCORPORATED,
By /s/ Russell Solomon
-------------------------------------
Name: Russell Solomon
Title: Chairman
TOWER RECORDS KABUSHIKI KAISHA,
By /s/ Michael Solomon
-------------------------------------
Name: Michael Solomon
Title: Director
THE CHASE MANHATTAN BANK,
Individually and as Administrative Agent
By /s/ Susan E. Atkins
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Name: Susan E. Atkins
Title: Managing Director
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: BNP Paribas
By: /s/ Edward V. Canale
-------------------------------
Name: Edward V. Canale
Title: Managing Director
By: /s/ Barbara Eppolito
-------------------------------
Name: Barbara Eppolito
Title: Vice President
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: California Bank & Trust
By: /s/ Thomas C. Paton, Jr.
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Name: Thomas C. Paton, Jr.
Title: Senior Vice President & Manager
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: First Union National Bank
By: /s/ M. G. Hyde
-----------------------------
Name: M. G. Hyde
Title: Director
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: The Fuji Bank, Limited
By: /s/ Masahito Fukuda
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Name: Masahito Fukuda
Title: Senior Vice President
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: Lloyds TSB Bank PLC
By: /s/ David Rodway
----------------------------------------
Name: David Rodway
Title: Vice President, Credit Services, USA
By: /s/ Mark Grant
---------------------------------------
Name: Mark Grant
Title: Senior V.P. & Chief Credit Officer
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: The Mitsubishi Trust and Banking Corporation
By: /s/ Makoto Ueno
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Name: Makoto Ueno
Title: Joint General Manager
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: Sanwa Bank Ltd
By: /s/ Patrick Mansoorian
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Name: Patrick Mansoorian
Title: Vice President
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: Societe Generale
By: /s/ R. Wayne Hutton
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Name: R. Wayne Hutton
Title: Director, Corporate Banking
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: Sumitomo Mitsui Banking Corporation
By: /s/ William M. Ginn
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Name: William M. Ginn
Title: General Manager
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: Union Bank of California, N.A.
By: /s/ Cecilia M. Valente
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Name: Cecilia M. Valente
Title: Senior Vice President
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SIGNATURE PAGE to
FIRST AMENDMENT dated as of
October 5, 2001
to MTS, INCORPORATED/
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
To approve the First Amendment:
Name of Institution: U.S. Bank National Assoc.
By: /s/ Mark A. Esnoz
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Name: Mark A. Esnoz
Title: Vice President