SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT.
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 1996
--------------------------------------------------------------------
(January 12, 1996)
Ames Department Stores, Inc.
--------------------------------------------------------
(Exact Name of Registrant As Specified In Its Charter)
Delaware
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(State Or Other Jurisdiction Of Incorporation)
1-5380 04-2269444
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
2418 Main Street; Rocky Hill, Connecticut 06067-0801
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(Address Of Principal Executive Offices) (Zip Code)
(203) 257-2000
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
--------------------------------------------------------------
(Former Name Or Former Address, If Changed Since Last Report)
Exhibit Index on Page 3
Page 1 of 26 (Including Exhibits)<PAGE>
Item 5: OTHER EVENTS
On January 12, 1996, Ames Department Stores, Inc. ("Ames"
or the "Company") issued a press release regarding fiscal
December, 1995 profitability, the adoption of certain cost-reduction
initiatives and the amendment to certain covenants and provisions
of the Company's $300 million revolving credit agreement (the
"Credit Agreement") with a group of banks and financial
institutions led by BankAmerica Business Credit, as agent. A
copy of the press release is attached hereto as Exhibit 20 and is
incorporated by reference herein. A copy of the amendment to
the Credit Agreement is attached hereto as Exhibit 4 and is
incorporated by reference herein.
The amendment modifies, among other things, the definition
of EBITDA (earnings before interest expense, income taxes,
depreciation and amortization, gains or losses on the sale of
facilities after January 28, 1996 and certain other noncash
charges); adjusts the minimum EBITDA covenant and the
minimum EBITDA to cash interest expense ratio required
beginning with the quarter ended January 27, 1996; and permits
borrowings under the Credit Agreement of up to $15 million during
the period beginning November 15, 1995 and ending February 15,
1996 (the "Clean-up Period"). As of the date of the filing of this
Form 8-K, the Company did not incur any borrowings under the
Credit Agreement for 30 consecutive days during the Clean-up
Period.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
Exhibit: 4 Fourth Amendment and Waiver Agreement dated as
of January 12, 1996 between BankAmerica Business
Credit, Inc., as Agent, and Ames Department
Stores, Inc.
Exhibit 20 Press Release dated January 12, 1996
Page 2 of 26<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
4 Fourth Amendment and Waiver Agreement 5
dated as of January 12, 1996 between
BankAmerica Business Credit, Inc., as
Agent and Ames Department Stores, Inc.
20 Press Release dated January 12, 1996 25
Page 3 of 26<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMES DEPARTMENT STORES, INC.
-------------------------------------
Registrant
Dated: January 24, 1996 By: /s/ John F. Burtelow
-----------------------------
John F. Burtelow
Executive Vice President,
Chief Financial Officer
Dated: January 24, 1996 By: /s/ William C. Najdecki
------------------------------
William C. Najdecki
Senior Vice President,
Finance
Page 4 of 26
EXHIBIT 4
FOURTH AMENDMENT AND WAIVER AGREEMENT
FOURTH AMENDMENT AND WAIVER AGREEMENT,
dated as of January 12, 1996 (this "Amendment and Waiver") among ZAYRE
NEW ENGLAND CORP., a Delaware corporation ("Zayre New England"),
AMES STORES, a Delaware general partnership ("Ames Stores"; each of
Ames Stores and Zayre New England being referred to herein as the
"Borrowers"), AMES DEPARTMENT STORES, INC., a Delaware corporation
("Ames"), AMD, INC., a Delaware corporation, AMES REALTY II, INC., a
Delaware corporation, AMES TRANSPORTATION SYSTEMS, INC., a
Delaware corporation, ZAYRE CENTRAL CORP., a Delaware corporation,
the Lenders (as defined in the Credit Agreement which is defined below),
BANKAMERICA BUSINESS CREDIT, INC., a Delaware corporation, as
administrative agent for the Lenders (in such capacity the "Administrative
Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, as co-agent for each of the Lenders (in such capacity, a
"Co-Agent") and CONGRESS FINANCIAL CORPORATION, a California
corporation, as co-agent for each of the Lenders (in such capacity, a
"Co-Agent").
WHEREAS, the Borrowers, Ames, the Lenders, the
Administrative Agent, the Co-Agents and the other Credit Parties named above
are party to the U.S. $300,000,000 Credit Agreement, dated as of April 28,
1994 (as heretofore or hereafter amended, supplemented or modified from time
to time in accordance with its terms, the "Credit Agreement"); and
WHEREAS, subject to the terms and conditions hereof, the
parties hereto desire to waive and amend certain provisions of the Credit
Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise specifically defined
herein, all capitalized terms used herein shall have the respective
meanings ascribed to such terms in the Credit Agreement.
<PAGE>
2. Amendments to Credit Agreement. Subject to the
conditions as to effectiveness set forth in Paragraph 5 of this Amendment
and Waiver, the Credit Agreement is hereby amended as follows:
(a) Section 1.1 is amended as follows:
(i) The definition of "EBITDA" is amended and
restated in its entirety as follows:
"EBITDA" shall mean, for Ames and its
Subsidiaries, on a consolidated basis for any period, the
sum of:
(i) the net income (or net loss) of Ames
and its Subsidiaries on a consolidated basis (determined
in accordance with GAAP) for such period, without
giving effect to any GAAP extraordinary gains or losses
(other than restructuring charges); plus (or minus)
(ii) to the extent that any of the items
referred to in any of clauses (A) through (E) below
were deducted (or added) in calculating such net
income:
(A) Interest Expense of Ames
and its Subsidiaries, on a consolidated basis for
such period;
(B) income tax expense of Ames
and its Subsidiaries, on a consolidated basis with
respect to operations for such period;
(C) the amount of all
depreciation, amortization, LIFO inventory
expense, stock appreciation right accruals,
restructuring charges and other noncash charges
in accordance with GAAP, in each case of Ames
and its Subsidiaries on a consolidated basis for
such period;
<PAGE>
(D) the amount of non-recurring
charges in connection with the Lease Acquisition
(which amount shall not exceed $400,000 per
retail store lease acquired pursuant thereto) and
the closing of up to nineteen stores (including,
without limitation, related home office or field
expenses), which charges require or receive
separate disclosure in the financial statements
(including the footnotes thereto) of Ames and its
Subsidiaries on a consolidated basis for such
period; and
(E) gains or losses (other than
those described in clause (ii)(D) above) of Ames
and its Subsidiaries on a consolidated basis for
such period on the sales of Facilities, to the
extent permitted under this Agreement, which
are completed on or after January 28, 1996; plus
(or minus)
(iii) the amount of cash received or
expended in such period in respect of any amount
which, under clause (ii)(C) above, was taken into
account in determining EBITDA for such or any prior
period."
(ii) The definition of "EBITDA Test" is amended and
restated in its entirety as follows:
"EBITDA Test" shall mean that, for any
single period of four consecutive fiscal quarters ending
on or after the EBITDA Test Trigger Date, EBITDA
shall, subject to Section 9.16(c) hereof, equal or exceed
$35,000,000."
<PAGE>
(iii) The definition of "Lease Acquisition" is added
as follows:
"Lease Acquisition" shall mean the
acquisition on or before June 30, 1996 of up to nine
leases of retail stores and related assets directly from
Jamesway Corporation or, with respect to leases of
retail stores and related assets that have been rejected in
the bankruptcy proceedings to which Jamesway
Corporation is subject as debtor, from the landlords
party to such leases and all costs associated with the
reopening of such stores (including, without limitation,
remodeling expenditures and the cost of initial stocking
of inventory), all upon terms and conditions and
pursuant to agreements acceptable to the Administrative
Agent."
(b) Section 2.4(a) is amended by replacing the reference to
"five (5) Eurodollar Advances" in the twentieth line thereof with a
reference to "seven (7) Eurodollar Advances".
(c) Section 2.6(e) is amended and restated in its entirety as
follows:
"(e) Step-Down/Step-Up Pricing Adjustments.
In the event that the financial statements as of the end of any
of the first three fiscal quarters of any Fiscal Year delivered
pursuant to Section 9.1(a) hereof (which for purposes of this
Section 2.6(e) shall mean Quarterly Reports on Form 10-Q) or
the financial statements for any Fiscal Year delivered pursuant
to Section 9.1(b) hereof demonstrate compliance for the period
of four consecutive fiscal quarters of Ames ending on the date
of such financial statements with "Level 2", "Level 3", "Level
4" or "Level 5" of each of the financial tests set forth in
Schedule 2.6(e) hereto, then the Applicable Margin with respect
to Tranche A Advances and the fees payable to the
Administrative Agent pursuant to Section 4.7 hereof shall be
<PAGE>
adjusted to the applicable amounts set forth in said
Schedule 2.6(e) (in each case subject to Section 2.6(c) hereof).
Each such adjustment shall take effect (if at all) as of the latest
date the quarterly or annual (as applicable) financial statements
described in the immediately preceding sentence were required
to be delivered under Section 9.1 hereof and shall remain in
effect until the latest date the quarterly or annual (as applicable)
financial statements are required to be delivered pursuant to
Section 9.1 hereof that demonstrate either compliance with a
higher "Level" of each of the financial tests set forth in said
Schedule 2.6(e) or the failure to maintain compliance with the
"Level" of each such test achieved as of the end of the
immediately prior fiscal quarter, whereupon (subject to Section
2.6(c) hereof) such amounts shall be decreased or increased, as
the case may be, to the applicable amounts set forth in said
Schedule 2.6(e)."
(d) Schedule 2.6(e) is amended and restated in its entirety
to read as Schedule 2.6(e) attached hereto.
(e) Schedule 4.1(b) is amended and restated in its entirety
to read as Schedule 4.1(b) attached hereto.
(f) Section 4.6(b) is amended and restated in its entirety as
follows:
"(b) The Borrowers shall pay to the
Administrative Agent for the account of the Lenders (to be
distributed to the Lenders in accordance with Schedule 4.6
hereof) a facility fee of $3,000,000 in respect of the Tranche B
Commitment Amount (the "Tranche B Facility Fee"), payable
as follows: (i) on the Closing Date, the sum of $1,000,000; and
(ii) on the first anniversary of the Closing Date and at the end
of each period of three months thereafter, a payment of
$250,000; provided, however, that the Borrowers' obligation to
continue to make payments under this clause (ii) shall cease
from and after the date, if any, that the Tranche B Commitment
Amount has been reduced to zero in accordance with Section
<PAGE>
2.5(c) hereof; provided, further, however, that from and after
the date, if any, that the Tranche B Commitment Amount has
been reduced in part in accordance with Section 2.5(c) hereof,
each remaining payment of $250,000 to be made under this
clause (ii) shall be reduced by an amount equal to the product
of (x) the percentage by which the Tranche B Commitment
Amount has been reduced and (y) $250,000."
(g) Section 5.9 is deleted in its entirety.
(h) Section 9.1(a) is amended by replacing the word "test"
in the last line thereof with the word "tests" and by adding the words "and
Schedule 2.6(e) hereto" immediately after the word "hereto" in the last line
thereof.
(i) Section 9.14 is amended by replacing the amount
"$40,000" in the last line thereof with the amount "$20,000".
<PAGE>
(j) Section 9.16(a) is amended and restated in its entirety
as follows:
"(a) EBITDA. The Credit Parties shall cause
EBITDA to be, for each period of four consecutive fiscal
quarters of Ames ending on or about the dates set forth below
(subject to Section 9.16(c) hereof), not less than the amount
set forth below opposite such date:
Fiscal Quarters Ending On or About: Amount
---------------------------------- --------------
July 31, 1994 $26,900,000
October 31, 1994 35,500,000
January 31, 1995 35,400,000
April 30, 1995 37,100,000
July 31, 1995 39,900,000
October 31, 1995 43,000,000
January 31, 1996 40,000,000
April 30, 1996 42,000,000
July 31, 1996 44,000,000
October 31, 1996 44,000,000
January 31, 1997
and thereafter 44,000,000"
<PAGE>
(k) Section 9.16(b) is amended and restated in its entirety
as follows:
"(b) EBITDA to Cash Interest Expense. The
Credit Parties shall cause the ratio of EBITDA to Cash Interest
Expense to be, as of the end of and for each period of four
consecutive fiscal quarters of Ames ending on or about the
dates set forth below (subject to Section 9.16(c) hereof), not
less than the ratio set forth below opposite such date:
Fiscal Quarter Ending On or About: Ratio
--------------------------------- -------
July 31, 1994 1.10:1
October 31, 1994 1.47:1
January 31, 1995 1.49:1
April 30, 1995 1.63:1
July 31, 1995 1.76:1
October 31, 1995 1.92:1
January 31, 1996 1.95:1
April 30, 1996 2.05:1
July 31, 1996 2.15:1
October 31, 1996 2.15:1
January 31, 1997
and thereafter 2.10:1"
(l) Section 9.16(c) is amended by replacing the amount
"$40,000,000" in the fourteenth line thereof with the amount "$35,000,000."
(m) Section 10.2(d) is amended by replacing the amount
"$61,400,000" in the last line thereof with the amount "$66,400,000".
3. Waiver. Subject to the conditions as to effectiveness set
forth in Paragraph 5 of this Amendment and Waiver, compliance with the
following provisions of the Credit Agreement are hereby waived to the
limited extent set forth below:
<PAGE>
(a) Notwithstanding anything to the contrary in Section
4.1(d) of the Credit Agreement, the Majority Lenders hereby waive, to the
following limited extent only, the requirement that during the Cleanup
Period designated by the Borrowers pursuant to Section 4.1(d) the Borrowers
shall cause the aggregate outstanding principal balance of the Revolving
Loan not to exceed the lesser of $20,000,000 or the Acquisition Costs after
June 30, 1995 in connection with a Qualified Acquisition: for the Cleanup
Period designated by the Borrowers during the three month period commencing
on November 15, 1995 and ending on February 15, 1996, the Borrowers shall
cause the aggregate outstanding principal balance of the Revolving Loan not
to exceed $15,000,000.
(b) Notwithstanding anything to the contrary in clause (i) of
Section 2.4(b) of the Credit Agreement, the Majority Lenders hereby waive,
to the following limited extent only, the restriction against the making of
a borrowing request under the Credit Agreement during any Cleanup Period:
for the Cleanup Period designated by the Borrowers during the three month
period commencing on November 15, 1995 and ending on February 15, 1996, the
Borrowers may make borrowing requests subject to the condition that during
such period the aggregate outstanding principal balance of the Revolving
Loan may not exceed $15,000,000.
4. Representations and Warranties. Each of the Credit
Parties hereby represents and warrants as follows (which representations
and warranties shall survive the execution and delivery of this Amendment
and Waiver) as of the date hereof that:
(a) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof with the same force and effect as if
made on such date (except to the extent that any such representation or
warranty speaks as of a particular date, in which case it shall be deemed
repeated as of such date).
(b) Each of the Borrowers and the other Credit Parties has
the power and authority to execute, deliver and carry out the terms and
provisions of this Amendment and Waiver and the transactions contemplated
hereby and has taken all necessary action to authorize the execution,
delivery and performance of this Amendment and Waiver.
<PAGE>
(c) This Amendment and Waiver has been duly executed
and delivered and constitutes the valid and legally binding obligation of
the Borrowers and the other Credit Parties, and is enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, reorganization, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and by general
equity principles.
(d) No consent or approval of any person, firm, corporation
or entity, and no consent, license, approval or authorization or other action
of, or filing with, any governmental authority or public body is or will be
required in connection with the execution, delivery, performance, validity
or enforcement of this Amendment and Waiver or the consummation of the
transactions contemplated hereby other than any such filing which has been
made or any such consent, approval, license or authorization or other action
which has been obtained and remains in full force and effect or where the
failure to make such filing or to obtain such consent, approval, license or
authorization or other action would not result in a Material Adverse Effect.
(e) The execution, delivery and performance of this
Amendment and Waiver will not violate any provision of the certificate or
articles of incorporation or bylaws or partnership agreement, as the case
may be, of any Borrower or other Credit Party or any law, statute or
regulation, or any order or decree of any court or governmental
instrumentality applicable to any of the Borrowers or other Credit Parties,
or conflict with, or result in the breach of, or constitute a default under
any Borrower's or other Credit Party's contractual obligations.
(f) After giving effect to this Amendment and Waiver, each
of the Borrowers and the other Credit Parties is in compliance with all of
the various covenants and agreements applicable to them set forth in the
Credit Agreement and each of the other Loan Documents.
(g) No event has occurred and is continuing which
constitutes or would constitute, with the giving of notice or the lapse of
time or both, an Event of Default under the Credit Agreement or any of the
other Loan Documents.
(h) No Borrower or other Credit Party has any defense to
or setoff, counterclaim or claim against payment of the Lender Debt or
enforcement of the Loan Documents based upon a fact or circumstance
existing or occurring on or prior to the date hereof.
<PAGE>
5. Conditions Precedent. Notwithstanding any term or
provision of this Amendment and Waiver to the contrary, no amendment,
waiver or other agreement contained herein shall become effective until the
Administrative Agent shall have determined that each of the following
conditions precedent specified as applicable to such amendment, waiver or
other agreement shall have been satisfied:
(a) With respect to any amendment, waiver or other
agreement contained herein:
(i) All required corporate and partnership action and
proceedings in connection with the execution and delivery of this
Amendment and Waiver shall have been taken, and each shall be
satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received all information and
copies of all documents, including, without limitation, records of
requisite corporate and partnership action and proceedings that the
Administrative Agent may reasonably request, to be certified by the
appropriate corporate person or partner or government authorities.
(ii) All reasonable fees, costs and expenses in
connection with this Amendment and Waiver, including, without
limitation, reasonable fees, costs and expenses of counsel to the
Agents which have been invoiced and the fees described in Paragraph 6
hereof, shall have been paid in full to the Persons entitled thereto
in immediately available funds.
(iii) All representations and warranties made by the
each of the Credit Parties contained in Paragraph 4 hereof shall be true
and correct with the same effect as though such representations and
warranties had been made on and as of the date of effectiveness of the
applicable provision or provisions hereof (unless any such
representation or warranty speaks as of a particular date, in which case
it shall be deemed repeated as of such date).
(b) With respect to Paragraphs 2(a), (b), (c), (d), (e), (g), (h),
(j), (k), (l) and (m) of this Amendment and Waiver and Paragraphs 3(a) and
(b) of this Amendment and Waiver, counterparts of this Amendment and
Waiver shall have been duly executed and delivered on behalf of each of the
Borrowers, the other Credit Parties party hereto and the Majority Lenders.
<PAGE>
(c) With respect to Paragraphs 2(f) and (i) of this
Amendment and Waiver, counterparts of this Amendment and Waiver shall
have been duly executed and delivered on behalf of the Borrowers, the
other Credit Parties party hereto, the Administrative Agent, the Co-Agents
and each of the Lenders.
(d) With respect to Paragraph 2(i) of this Amendment and
Waiver, the appraisal of the Borrowers' Inventory being performed during
January 1996 shall have been completed and the costs associated therewith
shall have been paid in full in cash by the Borrowers.
6. Fees. The Borrowers shall pay to the Administrative
Agent for the account of the Lenders, to be distributed to the Lenders in
accordance with Exhibit A attached hereto, a fee of $500,000 with respect
to this Amendment and Waiver.
7. Continued Effectiveness. The term "Agreement",
"hereof", "herein" and similar terms as used in the Credit Agreement, and
references in the other Loan Documents to the Credit Agreement, shall mean
and refer to, from and after the effective date of any provision hereof in
accordance with Paragraph 5 hereof, the Credit Agreement as amended by this
Amendment and Waiver, but only to the extent of the effectiveness of the
provisions of this Amendment and Waiver in accordance with Paragraph 5
hereof. Each of the parties hereto agrees that, as amended by this
Amendment and Waiver, all of the covenants and agreements and other
provisions contained in the Credit Agreement and the other Loan Documents
are hereby ratified and confirmed in all respects and shall remain in full
force and effect from and after the date hereof.
8. Counterparts. This Amendment and Waiver may be
executed in two or more counterparts, each of which shall be an original,
and all of which, taken together, shall constitute a single instrument.
Delivery of an executed counterpart of a signature page to this Amendment
and Waiver by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment and Waiver.
9. Governing Law. This Amendment and Waiver shall be
construed in accordance with and governed by the laws of the State of New
York (without giving effect to the conflicts of laws principles thereof).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment and Waiver to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above
written.
ZAYRE NEW ENGLAND CORP.
By: /s/ William C. Najdecki
--------------------------
Name: William C. Najdecki
Title: President
By: /s/ John F. Burtelow
---------------------------
Name: John F. Burtelow
Title: Vice President
AMES STORES
By: Zayre New England Corp.,
its general partner
By: /s/ William C. Najdecki
------------------------
Name: William C. Najdecki
Title: President
By: /s/ John F. Burtelow
------------------------
Name: John F. Burtelow
Title: Vice President
<PAGE>
By: Zayre Central Corp.,
its general partner
By: /s/ William C. Najdecki
------------------------
Name: William C. Najdecki
Title: President
By: /s/ John F. Burtelow
-------------------------
Name: John F. Burtelow
Title: Vice President
AMES DEPARTMENT STORES, INC.
By: /s/ William C. Najdecki
------------------------
Name: William C. Najdecki
Title: Sr. Vice President
By: /s/ John F. Burtelow
------------------------
Name: John F. Burtelow
Title: Executive Vice President
<PAGE>
ZAYRE CENTRAL CORP.
By: /s/ William C. Najdecki
-----------------------
Name: William C. Najdecki
Title: President
By: /s/ John F. Burtelow
------------------------
Name: John F. Burtelow
Title: Vice President
AMD, INC.
By: /s/ William C. Najdecki
------------------------
Name: Wiiliam C. Najdecki
Title: President
By: /s/ John F. Burtelow
------------------------
Name: John F. Burtelow
Title: Vice President
AMES REALTY II, INC.
By: /s/ William C. Najdecki
------------------------
Name: William C. Najdecki
Title: President
<PAGE>
By: /s/ John F. Burtelow
------------------------
Name: John F. Burtelow
Title: Vice President
AMES TRANSPORTATION
SYSTEMS, INC.
By: /s/ William C. Najdecki
------------------------
Name: William C. Najdecki
Title: President
By: /s/ John F. Burtelow
------------------------
Name: John F. Burtelow
Title: Vice President
BANKAMERICA BUSINESS
CREDIT, INC.,
Individually and as
Administrative Agent
By: /s/ Louis Alexander
------------------------
Name: Louis Alexander
Title: Senior Account Executive
<PAGE>
GENERAL ELECTRIC
CAPITAL CORPORATION,
Individually and as Co-Agent
By: /s/ Timothy Morris
------------------------
Name: Timothy Morris
Title: Duly Authorized Signatory
CONGRESS FINANCIAL
CORPORATION,
Individually and as Co-Agent
By: /s/ Anna M. Karcinsky
------------------------
Name: Anna M. Karcinsky
Title: Assistant Vice President
SANWA BUSINESS
CREDIT CORPORATION
By: /s/ Peter L. Skavla
------------------------
Name: Peter L. Skavla
Title: Vice President
CHEMICAL BANK
By: /s/ George L. McKinley
------------------------
Name: George L. McKinley
Title: Vice President
<PAGE>
TRANSAMERICA BUSINESS
CREDIT CORPORATION
By: /s/ Michael S. Burns
------------------------
Name: Michael S. Burns
Title: Vice President
LASALLE BUSINESS CREDIT, INC.
By: /s/ Calvin Neider
------------------------
Name: Calvin Neider
Title: Senior Vice President
FLEET NATIONAL BANK
OF CONNECTICUT
By: /s/ W. H. Creaser
------------------------
Name: W. H. Creaser
Title: Vice President
<PAGE>
SCHEDULE 4.1(b)
Inventory Leverage Ratio. The ratio of (i) the aggregate
amount of accounts payable of Ames and its Subsidiaries on a
consolidated basis to (ii) the aggregate amount of Inventory of the
Borrowers on a combined basis shall not,
(a) as of the last day of each fiscal quarter of each Fiscal
Year set forth below, be less than the ratio set forth below opposite
such day:
Fiscal Quarter Ending
On or About Ratio
--------------------- ------
July 31, 1994 0.128:1
October 31, 1994 0.216:1
January 31, 1995 0.179:1
April 30, 1995 0.119:1
July 31, 1995 0.140:1
October 31, 1995 0.238:1
<PAGE>
(b) as of the last day of each fiscal month of each Fiscal
Year set forth below, be less than the ratio set forth below opposite
such day:
Fiscal Month Ending
On or About Ratio
---------------------- ------
January 31, 1996 0.193:1
February 29, 1996 0.193:1
March 31, 1996 0.193:1
April 30, 1996 0.141:1
May 31, 1996 0.141:1
June 30, 1996 0.141:1
July 31, 1996 0.169:1
August 31, 1996 0.169:1
September 30, 1996 0.169:1
October 31, 1996 0.258:1
November 30, 1996 0.258:1
December 31, 1996 0.258:1
January 31, 1997 0.229:1
February 28, 1997 0.229:1
March 31, 1997 0.229:1
<PAGE>
<TABLE> Schedule 2.6(e)
<CAPTION>
The ratio as of the date of The ratio as of the
the applicable financial date of the applicable
statements of (i) the sum of financial statements
EBITDA plus the aggregate of (i) EBITDA to (ii)
amount of Rentals of Ames the sum of Cash
and its Subsidiaries on a Interest Expense of
consolidated basis to (ii) Ames plus Capital
the sum of Cash Interest Expenditures of Ames
Expense of Ames plus and its Subsidiaries
Rentals of Ames and its on a consolidated
Subsidiaries on a basis, in each case for Applicable Quarterly credit earned each
consolidated basis, in each the previous four Margin for Applicable quarter to reduce annual
case for the previous four fiscal quarters ending Tranche A Margin for fees of the Administrative
fiscal quarters ending on on such date, equals Reference Rate LIBOR Agent under Section 4.7
such date, equals or exceeds or exceeds Loans Loans hereof
<S> <C> <C> <C> <C> <C>
Level 1 0 to 1 0 to 1 2% 3-3/4% -0-
Level 2 1.25 to 1 1.10 to 1 1-3/4% 3-1/2% -0-
Level 3 1.50 to 1 1.25 to 1 1-1/2% 3-1/4% 30,000
Level 4 1.75 to 1 1.50 to 1 1-1/4% 3% 60,000
Level 5 2.00 to 1 1.75 to 1 1% 2-3/4% 60,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
TO FOURTH AMENDMENT AND WAIVER AGREEMENT
Distribution of Amendment Fee to Lenders
Approximate %
Lender Amount of Fee of Revolving Commitments
- -------- ------------- ------------------------
<S> <C> <C>
BankAmerica Business Credit, Inc. $125,012.50 25%
General Electric Capital Corporation $ 83,358.34 16.67%
Congress Financial Corporation $125,012.50 25%
Sanwa Business Credit Corporation $ 50,005.00 10%
Transamerica Business Credit Corporation $ 41,654.16 8.33%
Chemical Bank $ 41,654.16 8.33%
LaSalle Business Credit, Inc. $ 16,651.67 3.33%
Fleet National Bank of Connecticut $ 16,651.67 3.33%
-----------
TOTAL $500,000.00
</TABLE>
<PAGE>
EXHIBIT 20
January 12, 1996
NEWS RELEASE
AMES REPORTS DECEMBER PROFITABILITY;
IMPLEMENTS STRATEGIC COST-REDUCTION INITIATIVES;
BANK GROUP AGREES TO NEW COVENANTS
ROCKY HILL, Conn. -- Ames Department Stores, Inc. (NASDAQ: AMES),
in a Form 8-K filed today with the Securities and Exchange Commission,
reported a net income of $30.4 million for the five weeks ended December
30, 1995, $1.8 million better than the net income for the period projected in
the company's business plan filed on a Form 8-K filed on August 18, 1995.
The net income was $34.6 million for fiscal December 1994. While
December 1995 net sales were $21.2 million below plan, the impact on net
income results was minimized by a higher-than-planned gross margin rate;
lower-than-planned expenses; and a $3 million, earlier-than-planned, gain
from the sale and leaseback of a property.
Net income for the 48-week year-to-date period was $25.5 million, compared
with the business plan projection of $25.3 million. The net income was
$28.2 million in the same period last year.
President and Chief Executive Officer Joseph R. Ettore, said, "We are pleased
that through the use of strong controls, year-to-date total expenses were
$18.8 million below plan and December month-end merchandise inventories were
$4.9 million below plan and $24.8 million lower than last year."
Ames also said that it will implement a series of strategic cost-reduction
initiatives, in part, to enable it to pursue potential growth opportunities.
Among other things, the company will close 17 underperforming Ames stores
by early March; reduce headcount at headquarters by eliminating 71
positions; and improve distribution center efficiencies. The company plans to
take a one-time charge of approximately $20 million in the fourth quarter of
fiscal 1995 to provide for the store closings and staffing reductions.
[EDITOR'S NOTE SEE LIST OF THE 17 AMES STORES BELOW.]
Under the terms of its $300 million revolving credit agreement, the
company's bank group, led by BankAmerica Business Credit as agent, has
agreed to amend certain covenants and provisions of the agreement, enabling
Ames to pursue potential growth opportunities.
-more-
Page 25 of 26<PAGE>
Ettore said, "We are positioning the company so that it may actively pursue
growth opportunities arising in the regional discount industry. Such
opportunities would allow Ames to increase sales and improve the
productivity of the store base -- and benefit from the resulting operating
leverage -- while upgrading fundamentals, such as store locations,
merchandise assortments and technology. The closing of these
underperforming stores is one step in the execution of this strategy. At the
same time, we are actively evaluating a number of available locations for
potential new store openings."
Ames, which operates 307 stores in 14 Northeastern states and the District of
Columbia, is the nation's fifth-largest discount retailer, with annual total
sales of $2.2 billion.
17 CLOSING AMES STORES
MAINE: Caribou
Houlton
Madawaska
Presque Isle
Skowhegan
NEW YORK: Batavia
Greece
Lockport
Niagara Falls
Ogdensburg
Rochester (2 stores)
Rome
Warsaw
Waterloo
Webster
PENNSYLVANIA: Mansfield
###
Contacts:
Marge Wyrwas - (203) 257-2659
Bill Roberts - (203) 257-2666
Lynn Riemer - (203) 257-2655
FOR FAX COPIES OF AMES' MOST-RECENT NEWS RELEASES, DIAL 800-758-5804,
Ext. 036787.
Page 26 of 26
