EXHIBIT 99.1
SECOND AMENDMENT TO
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CREDIT AGREEMENT
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This Second Amendment to Credit Agreement (the "Second Amendment") is made
as of the 10th day of December, 2004 by and among
ZALE DELAWARE, INC., a corporation organized under the laws of the State of
Delaware having a place of business at 901 W. Walnut Hill Lane, Irving,
Texas 75038-1003
ZALE CORPORATION, a corporation organized under the laws of the State of
Delaware having a place of business at 901 W. Walnut Hill Lane, Irving,
Texas 75038-1003;
DDCC, INC., a corporation organized under the laws of the State of Delaware
having a place of business at 101 Convention Center Drive, Suite 850, Las
Vegas, Nevada 89109;
TXDC, L.P., a limited partnership organized under the laws of the State of
Texas having a place of business at 901 W. Walnut Hill Lane, Irving, Texas
75038-1003; and
the LENDERS party hereto; and
FLEET NATIONAL BANK, as Administrative Agent and Issuing Bank, a national
banking association, having a place of business at 40 Broad Street, Boston,
Massachusetts 02109; and
FLEET RETAIL GROUP, INC. (f/k/a Fleet Retail Finance Inc.), as Collateral
Agent, a Delaware corporation, having a place of business at 40 Broad
Street, Boston, Massachusetts 02109; and
JPMORGAN CHASE BANK successor to BANK ONE, NA and CONGRESS FINANCIAL
CORPORATION (SOUTHWEST), as Co-Syndication Agents
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH
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WHEREAS, the Borrowers, the Agents, the Lenders, and the Co-Syndication
Agents have entered into a Credit Agreement dated as of July 23, 2003 (as
amended and in effect, the "Credit Agreement"); and
WHEREAS, the Borrowers, the Agents, the Lenders, and the Co-Syndication
Agents have agreed to amend certain provisions of the Credit Agreement as set
forth herein.
NOW THEREFORE, it is hereby agreed as follows:
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1. Definitions: All capitalized terms used herein and not otherwise defined
shall have the same meaning herein as in the Credit Agreement.
2. Amendments to Article I. The provisions of Article I of the Credit
Agreement are hereby amended as follows:
a. By deleting the table appearing in the definition of "Applicable
Margin" and substituting the following in its stead:
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LIBOR Base Rate
Level Excess Availability Loans Loans
----------------- --------------------------- ----------- -----------
I greater than or equal to
$250,000,000 1.25% 0.00%
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II greater than or equal to
$100,000,000
and less than $250,000,000 1.375% 0.00%
----------------- --------------------------- ----------- ------------
III less than $100,000,000 1.50% 0.00%
----------------- --------------------------- ----------- ------------
b. By deleting the number "0.375%" appearing in the definition of "Line
Fee" and substituting the number "0.25%" in its stead.
c. By deleting the definition of "Maturity Date" in its entirety and
substituting the following in its stead:
"Maturity Date" means August 11, 2009.
3. Amendments to Article II. The provisions of Section 2.12 of the Credit
Agreement are hereby amended by deleting the number "0.375%" appearing
therein and substituting the number "0.25%" in its stead.
4. Amendments to Article VI. The provisions of Article VI of the Credit
Agreement are hereby amended as follows:
a. The provisions of Section 6.1(e) of the Credit Agreement are hereby
deleted in their entirety and the following substituted in their
stead:
(e) Guaranties of Indebtedness of Zale Canada Co. which, when
combined with other loans, advances, guarantees and other
investments in Zale Canada Co. permitted by Section 6.4(k)(iii)
hereof, do not exceed an aggregate amount of $12,000,000;
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b. The provisions of Section 6.4(c) of the Credit Agreement are hereby
deleted in their entirety and the following substituted in their
stead:
(c) loans, advances, and investments by any Borrower to or in, and
guaranties by any Borrower of the obligations of, any other
Borrower or purchases by a Borrower of stock of another Borrower
(other than Zale) or of assets constituting a business unit from
another Borrower;
c. The provisions of Section 6.4(d) of the Credit Agreement are hereby
deleted in their entirety and the following substituted in their
stead:
(d) loans, advances, or other investments by any of the Borrower to
or in, and guaranties by any Borrower of the obligations of, any
of its respective Subsidiaries or purchases by a Borrower of
stock of any Subsidiary or of assets constituting a business unit
of a Subsidiary, all in an amount not to exceed $50,000,000 in
the aggregate for all such loans, advances, guaranties, stock or
asset purchases or other investments;
d. The provisions of Section 6.4(k) of the Credit Agreement are hereby
deleted in their entirety and the following substituted in their
stead:
(k) investments consisting of (i) Indebtedness permitted by Sections
6.1(c), (d), (e), (i), and (j); (ii) guaranties of Indebtedness
or other obligations permitted by Sections 6.1(e), (f), and (g);
and (iii) other loans, advances, guarantees or other investments
in Zale Canada Co. which, when combined with Guaranties permitted
by Section 6.1(e), do not exceed $12,000,000 in the aggregate
principal amount;
e. Section 6.4 of the Credit Agreement is further amended by deleting the
word "and" at the end of subsection (o) thereof, by changing the
period at the end of subsection (p) thereof to "; and" and by adding a
new subsection (q) to read as follows:
(q) loans and advances by a Borrower to consignment vendors, secured
by a Lien on the inventory which has been, or will be, consigned
to a Borrower, in a principal amount not to exceed the value of
such consigned inventory, and which are repayable out of the
proceeds of the sale of such consigned inventory or upon the
return of such consigned inventory to the consignment vendor.
5. Amendments to Article IX. The provisions of Section 9.1 of the Credit
Agreement are hereby amended as follows:
a. By deleting the provisions of Section 9.1(b) of the Credit Agreement
in their entirety and substituting the following in their stead:
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(b) If to the Administrative Agent or the Swingline Lender to Fleet
National Bank, 40 Broad Street, Boston, Massachusetts 02109,
Attention: Sally A. Sheehan (Telecopy No. (617) 434-4339), with a
copy to Riemer & Braunstein, LLP, Three Center Plaza, Boston,
Massachusetts 02108, Attention: David S. Berman, Esq. (Telecopy
No. (617) 880-3456);
b. By deleting the provisions of Section 9.1(c) of the Credit Agreement
in their entirety and substituting the following in their stead:
(c) If to the Collateral Agent to Fleet Retail Group, Inc., 40 Broad
Street, Boston, Massachusetts 02109, Attention: Betsy Ratto
(Telecopy No. (617) 434-4339), with a copy to Riemer &
Braunstein, LLP, Three Center Plaza, Boston, Massachusetts 02108,
Attention: David S. Berman, Esq. (Telecopy No. (617) 880-3456);
6. Amendments to Schedules. The Credit Agreement is hereby amended by deleting
all of the Schedules thereto in their entirety and substituting therefor
new Schedules in the form attached hereto.
7. Conditions to Effectiveness. This Second Amendment shall not be effective
until each of the following conditions precedent have been fulfilled to the
satisfaction of the Administrative Agent:
a. This Second Amendment shall have been duly executed and delivered by
the Borrowers, the Agents and the Lenders. The Administrative Agent
shall have received a fully executed copy hereof and of each other
document required hereunder.
b. All action on the part of the Borrowers necessary for the valid
execution, delivery and performance by the Borrowers of this Second
Amendment shall have been duly and effectively taken. The
Administrative Agent shall have received from the Borrowers true
copies of their respective certificate of the resolutions authorizing
the transactions described herein, each certified by their secretary
or other appropriate officer to be true and complete.
c. The Borrowers shall have paid to the Administrative Agent, for the
account of the Lenders, an amendment fee equal to 0.05% of the Total
Commitment. Such amendment fee shall be fully earned on the effective
date of this Second Amendment and shall not be subject to refund or
rebate under any circumstances.
d. The Borrowers shall have reimbursed the Administrative Agent for all
expenses incurred in connection herewith, including, without
limitation, reasonable attorneys' fees.
e. No Default or Event of Default shall have occurred and be continuing.
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f. The Borrowers shall have provided such additional instruments and
documents to the Administrative Agent as the Administrative Agent and
their counsel may have reasonably requested.
8. Miscellaneous.
a. Except as provided herein, all terms and conditions of the Credit
Agreement and the other Loan Documents remain in full force and
effect. The Borrowers each hereby ratify, confirm, and reaffirm all of
the representations, warranties and covenants therein contained.
Without limiting the generality of the foregoing, each Borrower hereby
acknowledges, confirms and agrees that all Collateral shall continue
to secure the Obligations as modified and amended pursuant to this
Second Amendment, and any future modifications, amendments,
substitutions or renewals thereof.
b. The Borrowers shall pay all costs and expenses incurred by the
Administrative Agent in connection with this Second Amendment,
including, without limitation, all reasonable attorneys' fees.
c. This Second Amendment may be executed in several counterparts and by
each party on a separate counterpart, each of which when so executed
and delivered, each shall be an original, and all of which together
shall constitute one instrument. Delivery of an executed counterpart
of a signature page hereto by telecopy or by electronic email in .pdf
format shall be effective as delivery of a manually executed
counterpart hereof.
d. This Second Amendment expresses the entire understanding of the
parties with respect to the matters set forth herein and supersedes
all prior discussions or negotiations hereon. Any determination that
any provision of this Second Amendment or any application hereof is
invalid, illegal or unenforceable in any respect and in any instance
shall not effect the validity, legality, or enforceability of such
provision in any other instance, or the validity, legality or
enforceability of any other provisions of this Second Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed and their seals to be hereto affixed as the date first above
written.
ZALE DELAWARE, INC.
By: /s/ David H. Sternblitz
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Print Name: David H. Sternblitz
Title: Vice President & Treasurer
ZALE CORPORATION
By: /s/ David H. Sternblitz
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Print Name: David H. Sternblitz
Title: Vice President & Treasurer
DDCC, INC.
By: /s/ David H. Sternblitz
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Print Name: David H. Sternblitz
Title: Vice President & Treasurer
TXDC, L.P.
By: Zale Delaware, Inc., Its
General Partner
By: /s/ David H. Sternblitz
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Print Name: David H. Sternblitz
Title: Vice President & Treasurer
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FLEET NATIONAL BANK, as
Administrative Agent and Issuing Bank
By: /s/ Sally A. Sheehan
---------------------------------
Print Name: Sally A. Sheehan
Title: Managing Director
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FLEET RETAIL GROUP, INC., as
Collateral Agent and Lender
By: /s/ Betsy Ratto
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Print Name: Betsy Ratto
Title: Managing Director
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CONGRESS FINANCIAL
CORPORATION (SOUTHWEST)
By: /s/ Paul Truax
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Print Name: Paul Truax
Title: Vice President
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JPMORGAN CHASE BANK
By: /s/ Lavea Eisenberg
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Print Name: Lavea Eisenberg
Title: Vice President
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GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Kristina M. Miller
----------------------
Print Name: Kristina M. Miller
Title: Its Duly Authorized Signatory
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ABN/AMRO BANK, N.V.
By: /s/ Frederick G. Jennings
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Print Name: Frederick G. Jennings
Title: Vice President
By: /s/ Ron C. Spurga
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Print Name: Ron C. Spurga
Title: Vice President
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THE CIT GROUP/BUSINESS CREDIT,
INC.
By: /s/ Mike Richman
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Print Name: Mike Richman
Title: Vice President
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NATIONAL CITY BUSINESS CREDIT,
INC.
By: /s/ Kathryn C. Ellero
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Print Name: Kathryn C. Ellero
Title: Vice President
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WELLS FARGO RETAIL FINANCE, LLC
By: /s/ Michael P. Baranowski
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Print Name: Michael P. Baranowski
Title: Vice President
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KEYBANK NATIONAL ASSOCIATION
By: /s/ Jason T. Sylvester
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Print Name: Jason T. Sylvester
Title: Assistant Vice President
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THE BANK OF NEW YORK
By: /s/ Lucille C. Madden
---------------------------------
Print Name: Lucille C. Madden
Title: Vice President
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HIBERNIA NATIONAL BANK
By: /s/ Mary Jo Hoch
---------------------------------
Print Name: Mary Jo Hoch
Title: Senior Vice President
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SOVEREIGN BANK
By: /s/ Judith C.E. Kelly
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Print Name: Judith C.E. Kelly
Title: Senior Vice President
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ROYAL BANK OF CANADA
By: /s/ Suzanne Kaicher
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Print Name: Suzanne Kaicher
Title: Attorney-In-Fact
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ROYAL BANK OF SCOTLAND
By: /s/ Maria Amaral-LeBlanc
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Print Name: Maria Amaral-LeBlanc
Title: Senior Vice President
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COMERICA BANK
By: /s/ Jeff Geisbauer
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Print Name: Jeff Geisbauer
Title: Corporate Banking Officer
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UBS AG, STAMFORD BRANCH
By: /s/ Wilfred V. Saint
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Print Name: /s/ Wilfred V. Saint
Title: Director, Banking Products
Services, US
By: /s/ Joselin Fernandes
------------------------------
Print Name: Joselin Fernandes
Title: Associate Director, Banking
Products Services, US
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