SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF
1934
For the transition period from to
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Commission File Number 1-05380
AMES DEPARTMENT STORES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2269444
-------- ----------
(State or other jurisdiction of (I.R.S.Employer Identification Number)
incorporation or organization)
2418 Main Street, Rocky Hill, Connecticut 06067
----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (860) 257-2000
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
29,407,557 shares of Common Stock were outstanding on August 25, 2000.
Exhibit Index on page 15
Page 1 of 105 (including exhibits)
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AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JULY 29, 2000
<TABLE>
I N D E X
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Page
<S> <C> <C>
Part I: FINANCIAL INFORMATION
Item 1. Consolidated Condensed Statements of Operations 3
for the Thirteen and Twenty-Six Weeks ended July 29,
2000 and July 31, 1999
Consolidated Condensed Balance Sheets as of 4
July 29, 2000, January 29, 2000, and July 31,
1999
Consolidated Condensed Statements of Cash Flows 5
for the Twenty-Six Weeks ended July 29, 2000
and July 31, 1999
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
Part II: OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
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PART I
Item 1.
<TABLE>
FINANCIAL INFORMATION
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited) (Unaudited)
For the Thirteen For the Twenty-Six
Weeks Ended Weeks Ended
------------------------------- -----------------------------------
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Ames net sales $ 872,034 $ 731,800 $ 1,702,691 $ 1,299,017
Hills net sales - 128,175 - 377,117
------------- -------------- ---------------- ---------------
Total net sales 872,034 859,975 1,702,691 1,676,134
Leased department and other income 10,544 11,570 19,803 19,970
------------- -------------- ---------------- ---------------
Total revenue 882,578 871,545 1,722,494 1,696,104
Cost and expenses:
Ames cost of merchandise sold 630,881 517,260 1,233,805 926,510
Hills cost of merchandise sold - 83,762 - 252,085
Ames selling, general and
administrative expenses 248,166 221,366 495,581 397,537
Hills operating expenses and agency
fees - 52,790 - 142,047
Depreciation and amortization
expense, net 17,240 16,304 34,937 30,687
Interest and debt expense, net 21,953 13,621 40,745 25,543
------------- -------------- ---------------- ---------------
Net loss before income taxes (35,662) (33,558) (82,574) (78,305)
Income tax benefit 13,551 12,080 31,378 28,188
------------- -------------- ---------------- ---------------
Net loss before cumulative effect
adjustment (22,111) (21,478) (51,196) (50,117)
Cumulative effect adjustment, net of tax - - - (1,107)
------------- -------------- ---------------- ---------------
Net loss $ (22,111) $ (21,478) $ (51,196) $ (51,224)
============= ============== ================ ===============
Basic net loss per common share:
Before cumulative effect adjustment $ (0.75) $ (0.78) $ (1.74) $ (1.94)
Cumulative effect adjustment - - - (0.04)
------------- -------------- ---------------- ---------------
Net loss per share $ (0.75) $ (0.78) $ (1.74) $ (1.98)
============= ============== ================ ===============
Basic weighted average number of
common shares outstanding 29,404 27,706 29,365 25,914
============= ============== ================ ===============
(The accompanying Notes are an integral part of these consolidated condensed financial statements.)
</TABLE>
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<TABLE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
(Unaudited) (Unaudited)
-------------- -------------- --------------
July 29, January 29, July 31,
2000 2000 1999
-------------- -------------- --------------
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and short-term investments $ 31,305 $ 30,612 $ 36,404
Receivables 32,262 25,302 32,771
Merchandise inventories 885,894 831,387 807,357
Deferred taxes, net 60,232 28,854 28,188
Prepaid expenses and other current assets 41,402 36,772 31,147
-------------- -------------- --------------
Total current assets 1,051,095 952,927 935,867
Fixed Assets 706,522 629,979 527,345
Less - Accumulated depreciation and amortization (167,245) (128,229) (95,737)
-------------- -------------- --------------
Net fixed assets 539,277 501,750 431,608
-------------- -------------- --------------
Other assets and deferred charges 60,850 57,256 63,232
Deferred taxes, net 346,055 346,055 102,406
Beneficial lease rights, net 54,899 56,280 57,507
Goodwill, net 59,750 61,026 197,471
-------------- -------------- --------------
$2,111,926 $ 1,975,294 $ 1,788,091
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable:
Trade $ 227,834 $ 325,356 $ 343,981
Other 93,152 96,224 72,315
-------------- -------------- --------------
Total accounts payable 320,986 421,580 416,296
-------------- -------------- --------------
Current portion of capital lease and financing
obligations 22,057 22,086 19,801
Self-insurance reserves 28,346 29,827 29,085
Accrued expenses and other current liabilities 112,144 133,110 229,101
Store closing reserves 52,667 55,468 56,130
-------------- -------------- --------------
Total current liabilities 536,200 662,071 750,413
-------------- -------------- --------------
Long-term debt 752,761 421,769 257,085
Capital lease and financing obligations 170,220 180,404 183,559
Other long-term liabilities 52,761 57,916 115,020
Excess of revalued net assets over equity under
fresh-start reporting 14,791 17,868 20,944
Commitments and contingencies (see Note 8)
Stockholders' Equity:
Preferred stock (3,000,000 shares authorized; no shares issued or
outstanding at July 29, 2000, January 29, 2000 and July 31, 1999;
par value per share $.01) - - -
Common stock (40,000,000 shares authorized; 29,404,587; 29,233,650 and
29,166,639 shares outstanding at July 29, 2000, January 29, 2000
and July 31, 1999, respectively; par value per share $.01) 296 293 292
Additional paid-in capital 531,872 530,744 424,900
Retained earnings 53,947 105,143 36,792
Treasury stock, at cost (922) (914) (914)
-------------- -------------- --------------
Total stockholders' equity 585,193 635,266 461,070
-------------- -------------- --------------
$2,111,926 $1,975,294 $ 1,788,091
============== ============== ==============
(The accompanying Notes are an integral part of these consolidated condensed financial statements.)
</TABLE>
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<PAGE>
<TABLE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
For the Twenty-Six
Weeks Ended
----------------------------------------
July 29, July 31,
2000 1999
------------------ --------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (51,196) $ (51,224)
Expenses not requiring the outlay of cash:
Income tax benefit (31,378) (28,188)
Depreciation and amortization of fixed and other assets 38,988 32,008
Amortization of debt discounts and deferred financing costs 2,400 2,610
------------------ --------------------
Cash used by operations before changes in working capital and
store closing activities (41,186) (44,794)
Changes in working capital:
Increase in receivables (6,960) (2,527)
Increase in merchandise inventories (54,507) (157,516)
(Decrease) increase in accounts payable (100,594) 15,539
(Decrease) increase in accrued expenses and other current liabilities (22,447) 3,782
Increase in other working capital and other, net (9,072) (13,984)
Changes due to store closing activities:
Payments of store closing costs (2,801) (3,386)
------------------ --------------------
Net cash used for operating activities (237,567) (202,886)
------------------ --------------------
Cash flows from investing activities:
Purchases of fixed assets (76,574) (83,614)
Purchases of leases (7,026) (42,835)
------------------ --------------------
Net cash used for investing activities (83,600) (126,449)
------------------ --------------------
Cash flows from financing activities:
Borrowings (payments) under the revolving credit facility, net 333,844 (38,725)
Payments on debt and capital lease obligations (10,256) (12,854)
Repurchase of Hills Senior Notes (2,852) -
Purchase of treasury stock (8) -
Proceeds from the issuance of senior notes - 200,000
Proceeds from the issuance of common stock, net - 187,484
Payments of deferred financing costs - (6,712)
Proceeds from the exercise of options and warrants 1,132 802
------------------ --------------------
Net cash provided by financing activities 321,860 329,995
------------------ --------------------
Increase in cash and short-term investments 693 660
Cash and short-term investments, beginning of period 30,612 35,744
------------------ --------------------
Cash and short-term investments, end of period $ 31,305 $ 36,404
================== ====================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest and debt fees not capitalized $ 35,882 $ 19,305
Income taxes 1,654 1,735
(The accompanying Notes are an integral part of these consolidated condensed financial statements.)
</TABLE>
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<PAGE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation :
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements of Ames Department Stores, Inc. (a
Delaware corporation) and subsidiaries (collectively "Ames" or the
"Company") contain all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of such financial
statements for the interim periods. Due to the seasonality of the
Company's operations, the results of its operations for the interim
period ended July 29, 2000 may not be indicative of total results for
the full year. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations promulgated by the Securities and Exchange
Commission (the "SEC"). Certain prior year amounts have been
reclassified to conform to the presentation used for the current year.
Pursuant to the indenture governing the Ames Senior Notes (as defined
in Note 5), all of Ames' subsidiaries have jointly and severally
guaranteed the Ames Senior Notes on a full and unconditional basis.
Separate financial statements of those subsidiaries have not been
included herein because management has determined that they are not
material to investors.
The consolidated condensed balance sheet at January 29, 2000 was
obtained from audited financial statements previously filed with the
SEC in the Company's Annual Report on Form 10-K for the fiscal year
ended January 29, 2000 (the "1999 Form 10-K"). The accompanying
unaudited consolidated condensed financial statements should be read in
conjunction with the financial statements and Notes thereto included in
the 1999 Form 10-K.
In the fourth quarter of the year ended January 29, 2000 ("Fiscal
1999"), the Company adopted Staff Accounting Bulletin ("SAB") No. 101
"Revenue Recognition" as promulgated by the staff of the SEC, effective
retroactively to the first quarter of Fiscal 1999. Therefore, the
consolidated condensed financial statements for the thirteen and
twenty-six weeks ended July 31, 1999 have been adjusted accordingly.
Reference can be made to the 1999 Form 10-K for additional discussion
of the adoption of SAB No. 101 by the Company.
2. Acquisition and Agency Agreement:
Acquisition of Hills Stores Company
On December 31, 1998, HSC Acquisition Corp. ("HSC"), a wholly owned
subsidiary of the Company, acquired in excess of 80% of the outstanding
voting stock of Hills Stores Company ("Hills") and approximately 74% of
the outstanding Hills 12 1/2% senior notes. Subsequently, Hills was
merged with HSC and became a wholly owned subsidiary of Ames Department
Stores, Inc. In April 1999, Hills was merged with and into Ames
Department Stores, Inc. The acquisition has been recorded under the
purchase method of accounting.
Total cash consideration for the acquisition of Hills was $129 million.
Reference can be made to the 1999 Form 10-K for further discussion of
the Hills acquisition.
At the time of the acquisition, Hills operated 155 discount department
stores. During 1999, the Company remodeled and converted 151 of the
Hills stores to Ames stores. The four remaining Hills stores, along
with seven other Ames stores, were closed because they were in
locations that were either competitive with or were under-performing
other Hills or Ames stores. The remodeling and conversion process was
conducted in three stages, each stage involving approximately one third
of the Hills stores. The first stage was completed in late April 1999;
the second stage was completed in late July 1999; and the third stage
was completed in late September 1999.
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<PAGE>
Concurrent with the Hills acquisition, the Company entered into a
transition and agency agreement (the "Agency Agreement") with Gordon
Brothers Retail Partners, LLC and The Nassi Group, LLC (collectively
the "Agent"), which provided that the Agent serve for a period of time
to operate all of the acquired Hills stores and to conduct inventory
liquidation sales at each of those stores prior to its scheduled
remodeling or final closure. Accordingly, the Agent managed the sale of
the inventory acquired in the Hills acquisition as well as certain
other inventory identified in the Agency Agreement. The Agency
Agreement entitled the Company to receive out of the sale proceeds a
minimum amount equal to 40% of the initial retail value or ticketed
selling price of the merchandise (the "Guaranteed Return"), with the
possibility of a greater return if the sale proceeds exceeded a target
percentage of initial retail value.
The results of operations of Hills for the thirteen and twenty-six
weeks ended July 31, 1999 have been included in the accompanying
consolidated condensed financial statements. During the thirteen and
twenty-six weeks ended July 31, 1999, the accounting treatment
described below has been applied to recognize the results of the Hills
stores prior to their conversion to Ames stores during Fiscal 1999.
Hills net sales have been recorded as "Hills Net Sales" and represent
net sales achieved by the Hills stores prior to their conversion to
Ames stores. "Hills Cost of Merchandise Sold" represents the cost of
merchandise sold in connection with the above referenced sales as
adjusted for the Guaranteed Return. "Hills Operating Expenses and
Agency Fees" include the following: the associated store expenses
incurred while operating the Hills stores prior to their conversion to
Ames stores, which were reimbursable to the Company out of the proceeds
of Hills merchandise sales per the Agency Agreement; the Agency Fee due
to the Agent for the period presented; and other expenses (e.g.
non-store payroll, non-store rent, etc.) associated with supporting the
Hills stores prior to their conversion to Ames stores, which were not
reimbursable under the Agency Agreement.
Acquisition of Goldblatt's Leases
In April 2000, the Company consummated its purchase of the leases for
seven stores from Goldblatt's Department Stores, Inc. for a cash
purchase price of $7.0 million.
Reference can be made to the 1999 Form 10-K for additional discussion
of the Hills acquisition.
3. Net Loss Per Common Share:
Net loss per share was determined using the weighted average number of
common shares outstanding. Diluted net loss per share was equal to
basic net loss per share because inclusion of common stock equivalents
would have been anti-dilutive. During the quarter ended July 29, 2000,
options representing 1,600 shares were exercised. During the quarter
ended July 31, 1999, 28,690 options were exercised.
4. Inventories:
Inventories are valued at the lower of cost, using the first-in,
first-out (FIFO) method, or market and include the capitalization of
transportation and distribution center costs.
5. Debt:
Credit Agreement
On December 31, 1998, in connection with the acquisition of Hills,
certain of the Company's subsidiaries entered into an agreement (the
"Credit Agreement") with a syndicate of banks and financial
institutions for which Bank of America, N.A. is serving as agent. As of
July 25, 2000, the Company entered into a Seventh Amendment and Waiver
Agreement (the "Seventh Amendment") with its lenders which provided,
among other things, for increasing the bank credit facility revolving
line of credit to up to $705 million and which increased the advance
rate on inventory.
The Credit Agreement is in effect until June 30, 2002 and is secured by
substantially all of the assets of the Company. Reference can be made
to the 1999 Form 10-K and Part II, Item 5 of this Form 10-Q for
additional discussion of the Credit Agreement and applicable amendments
as well as descriptions of the Company's other obligations not
discussed herein.
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<PAGE>
As of July 29, 2000, borrowings of $508.4 million were outstanding
under the Credit Agreement. These borrowings are included in long-term
debt in the accompanying consolidated condensed balance sheet as of
July 29, 2000. In addition, $21.7 and $3.0 million of standby and trade
letters of credit, respectively, were outstanding under the Credit
Agreement. The weighted average interest rate on the borrowings for the
twenty-six weeks ended July 29, 2000 was 7.94%. The peak borrowing
level through July 29, 2000 was $519.0 million and occurred in July
2000.
Senior Notes due 2006
On April 27, 1999, the Company completed the sale of $200 million of
its 10% seven-year senior notes (the "Ames Senior Notes"). The net
proceeds from the sale of the Ames Senior Notes, approximately $193.4
million, were used to reduce outstanding borrowings under the Credit
Agreement. The Ames Senior Notes pay interest semi-annually in April
and October and mature April 2006.
Senior Notes due 2003
The 12.5% Senior Notes due 2003 (the "Hills Senior Notes") were, at the
time of the acquisition of Hills, an unsecured obligation of Hills. The
Hills Senior Notes pay interest in January and June and mature July
2003.
Reference can be made to the 1999 Form 10-K for additional discussion
of the Ames Senior Notes and Hills Senior Notes.
6. Stock Options:
The Company has four stock option plans (the "Option Plans"): the 1994
Management Stock Option Plan, the 1994 Non-Employee Directors Stock
Option Plan, the 1998 Management Stock Incentive Plan, as amended and
restated and the 2000 Store Manager Stock Option Plan.
In October 1995, the Financial Accounting Standard Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 123
"Accounting for Stock Based Compensation," which established a
fair-value based method of accounting for stock-based compensation.
SFAS No. 123 did, however, allow entities to continue accounting for
employee stock based compensation under the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees." The Company elected to account for the
Option Plans under APB Opinion No. 25, under which no compensation cost
has been recognized and adopt SFAS No. 123 through disclosure.
If the Company had elected to recognize compensation cost for the
Option Plans based on the fair value at the grant dates for awards
under those plans, consistent with the method prescribed by SFAS No.
123, net loss and basic net loss per common share would have
approximated the pro forma amounts indicated below:
<TABLE>
For the Thirteen For the Twenty-Six
Weeks Ended Weeks Ended
---------------------------- -----------------------------
------------ -- ------------ ----------- -- --------------
(In Thousands) July 29, July 31, July 29, July 31,
2000 1999 2000 1999
------------ ------------ ----------- --------------
<S> <C> <C> <C> <C>
Net loss:
As reported $(22,111) $(21,478) $(51,196) $(51,224)
Pro forma $(24,645) $(23,812) $(56,097) $(54,941)
Basic net loss per common share: (a)
As reported $(0.75) $(0.78) $(1.74) $(1.98)
Pro forma $(0.84) $(0.86) $(1.91) $(2.12)
<FN>
(a) Common stock equivalent shares have not been included because the effect would be anti-dilutive.
</FN>
</TABLE>
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<PAGE>
The fair value of stock options used to compute pro forma net income
and net income per diluted common share is the estimated present value
as of the grant date using the Black-Scholes option-pricing model with
the following weighted average assumptions: no dividend yield, expected
option volatilities, a risk-free interest rate equal to U.S. Treasury
securities with a maturity equal to the expected life of the option and
an expected life from date of grant until option expiration date.
7. Income Taxes:
The Company's estimated annual effective income tax rate for each year
was applied to the loss before income taxes for the thirteen and
twenty-six weeks ended July 29, 2000 and July 31, 1999 to compute a
non-cash income tax benefit. The income tax benefit is included in
current deferred taxes in the accompanying consolidated condensed
balance sheet as of July 29, 2000 and July 31, 1999.
In Note 8 to the Notes to Consolidated Financial Statements in the 1999
Form 10-K, the Company reported it had filed a $20 million refund claim
under Section 172 (f) of the Internal Revenue Code and that the claim
was under review by the Internal Revenue Service ("IRS"). The Company
has recently received from the IRS an adverse Technical Advice
Memorandum ("TAM"). The positions set forth in the TAM would have the
effect of denying all or virtually all of the refund claim. The Company
is presently considering what further action to take.
8. Commitments and Contingencies:
Reference can be made to the 1999 Form 10-K (Item 3 - Legal
Proceedings) for various litigation involving the Company, for which
there were no material changes since the filing date of the 1999 Form
10-K.
9. Recently Issued Accounting Pronouncements:
In June 1998, the FASB issued SFAS No. 133, "Accounting for derivative
instruments and Hedging Activities." In June 2000, the FASB issued SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities," an amendment of SFAS No. 133. These statements
establish accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either
an asset or liability measured at its fair value. The statements also
require that changes in a derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are
met. The statements are effective, prospectively, for all fiscal
quarters of all fiscal years beginning after June 15, 2000. Management
is currently analyzing the impact of this new pronouncement on the
Company's financial position and results of operations.
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<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
consolidated condensed financial statements and footnotes presented in this
report.
Results of Operations
---------------------
The consolidated results of operations for the thirteen weeks and twenty-six
weeks ended July 31, 1999 include the results of the former Hills stores during
the period they were operated by Gordon Brothers, LLC and The Nassi Group, LLC
under an agency agreement. These firms were engaged to operate the Hills stores
until their closure and to liquidate the merchandise inventories.
During the quarter ended July 31, 1999, Gordon Brothers, LLC and The Nassi
Group, LLC completed the merchandise liquidation sales in 103 of the Hills
stores. Subsequent to the liquidation sales, we closed two of the stores and
began remodeling the remaining 101 stores. In July of 1999, 54 of the 101 stores
were re-opened as Ames stores. The remaining 47 stores were re-opened as Ames
stores in September of 1999.
The following tables illustrate the results of Ames' operations for the thirteen
and twenty-six weeks ended July 29, 2000, as compared to the separate
contributions of Ames' and Hills' operations and the other costs described below
to the consolidated results of operations for the thirteen and twenty-six weeks
ended July 31, 1999.
<TABLE>
For the
Thirteen
Weeks Ended For The Thirteen Weeks Ended
July 29, 2000 July 31, 1999
------------- ---------------------------------------------
(In Thousands) Consolidated Ames Hills Other Total
------------ ---- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales $872,034 $731,800 $128,175 $- $859,975
Leased department and other income 10,544 10,228 1,342 - 11,570
------------------ ---------------------------------------------
Total revenue 882,578 742,028 129,517 - 871,545
Costs and expenses:
Cost of merchandise sold 630,881 517,260 83,762 - 601,022
Selling, general and administrative expenses 248,166 191,266 52,790 30,100 274,156
Depreciation and amortization expenses, net 17,240 10,606 3,813 1,885 16,304
Interest and debt expense, net 21,953 11,439 1,388 794 13,621
------------------ ---------------------------------------------
(Loss) income before income taxes (35,662) 11,457 (12,236) (32,779) (33,558)
Income tax benefit (provision) 13,551 (4,124) 4,404 11,800 12,080
------------------ ---------------------------------------------
Net (loss) income $(22,111) $7,333 $(7,832) $(20,979) $(21,478)
================== =============================================
</TABLE>
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<TABLE>
For the
Twenty-Six
Weeks Ended For The Twenty-Six Weeks Ended
July 29, 2000 July 31, 1999
------------- ----------------------------------------------
(In Thousands) Consolidated Ames Hills Other Total
------------ ---- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales $1,702,691 $1,299,017 $377,117 $- $1,676,134
Leased department and other income 19,803 16,602 3,368 - 19,970
------------------------------------------------------------------
Total revenue 1,722,494 1,315,619 380,485 - 1,696,104
Costs and expenses:
Cost of merchandise sold 1,233,805 926,510 252,085 - 1,178,595
Selling, general and administrative expenses 495,581 350,865 142,047 46,672 539,584
Depreciation and amortization expenses, net 34,937 16,523 10,393 3,771 30,687
Interest and debt expense, net 40,745 19,417 4,162 1,964 25,543
------------------------------------------------------------------
Loss before income taxes and cumulative effect (82,574) 2,304 (28,202) (52,407) (78,305)
Income tax benefit (provision) 31,378 (829) 10,151 18,866 28,188
------------------------------------------------------------------
Loss before cumulative effect of accounting
change (51,196) 1,475 (18,051) (33,541) (50,117)
Cumulative effect of accounting change, net of
tax - - - (1,107) (1,107)
------------------------------------------------------------------
Net loss $(51,196) $1,475 $(18,051) $(34,648) $(51,224)
==================================================================
</TABLE>
The Ames column, represents (a) the results of the Ames store base, (b) the
results of the converted Hills stores and (c) certain expenses associated with
the acquisition of Hills, including the interest expense on the acquired Hills
senior notes and a pro-rata share of the amortization of the goodwill recorded
in connection with the acquisition.
The Hills column represents (a) the results of operations for the Hills stores
during the period that these stores were operated pursuant to the Gordon
Brothers/Nassi agency agreement, including depreciation and interest expense
directly associated with such stores and (b) Hills corporate overhead expenses,
principally the Canton, MA facility.
The other column represents the expenses incurred during the period of
remodeling the Hills stores (for example, pre-opening expenses incurred during
the conversion or "dark" period) as well as certain other expenses.
The unique circumstances under which Hills operations were conducted through the
thirteen and twenty-six weeks ended July 31, 1999 distort any direct comparison
of the principal components of Ames consolidated results for the thirteen and
twenty-six weeks ended July 29, 2000 and July 31, 1999. In the discussion that
follows, the Ames net sales, gross margin, and selling, general and
administrative expenses for the thirteen and twenty-six weeks ended July 29,
2000 are compared to the Ames results for the thirteen and twenty-six weeks
ended July 31, 1999, exclusive of the Hills results and other expenses. The
comparison of the depreciation and amortization expense and interest and debt
expense is on a consolidated basis.
Ames' net sales increased $140.2 million or 19.2% during the second quarter of
2000 compared to the second quarter of 1999. Ames' net sales for the twenty-six
weeks ending July 29, 2000 increased $403.7 million or 31.1% compared to the
first half of 1999. Both increases are primarily the result of the inclusion of
all 151 of the converted Hills stores in the Ames store base for the periods in
fiscal 2000 compared to fifty-one stores for the entire second quarter in fiscal
1999 and an additional 54 stores for a portion of July in 1999. Comparable store
sales decreased 2.5% for the second quarter and 0.9% for the twenty-six weeks
ended July 29, 2000.
Gross margin increased $26.6 million during the second quarter and $96.4 million
for the twenty-six weeks ended July 29, 2000 compared to the same period in
1999. The increase is a result of the increased Ames store base as previously
discussed. Gross margin as a percentage of sales declined from 29.3% to 27.7%
during the second quarter and from 28.7 % to 27.5 % for the year-to-date period
compared to the same period in 1999. The decrease is the result of higher
markdowns and a lower markup percentage, partially reflecting changes in the
merchandise mix.
-11-
<PAGE>
Selling, general and administrative expenses increased $56.9 million and $144.7
million for the thirteen and twenty-six weeks ended July 29, 2000, respectively,
primarily as a result of the expanded Ames store base. Expenses as a percentage
of sales increased from 26.1% to 28.5% and 27.0% to 29.1 % for those periods
versus the comparable periods in fiscal 1999. The increase was primarily a
result of sales falling short of planned levels and $12.1 million of pre-opening
expense included in this year's expense amount.
Depreciation and amortization expense increased $0.9 million and $4.2 million
for the thirteen and twenty-six weeks ended July 29, 2000, respectively,
compared to the same periods in 1999. The increase was primarily the result of
additional depreciation associated with the remodeling expenditures incurred
during the conversion of the former Hills stores.
Interest expense increased $8.3 million and $15.2 million for the thirteen and
twenty-six weeks ended July 29, 2000, respectively, compared to the same periods
in 1999. The increase is mainly attributable to a higher level of borrowings
under our revolving credit facility as well as interest expense associated with
the Ames Senior Notes issued in April of 1999.
Our estimated annual effective income tax rate for each year was applied to
the loss before income taxes for each period to compute a non-cash income tax
benefit. The income tax benefits are included in current deferred taxes in the
consolidated condensed balance sheet as of July 29, 2000 and July 31, 1999.
Liquidity and Capital Resources
-------------------------------
Our principal sources of operating funds are our bank credit facility, cash from
operations and cash on hand. As of July 25, 2000, we entered into a Seventh
Amendment and Waiver Agreement (the "Seventh Amendment") with our lenders which
provided, among other things, for increasing the bank credit facility revolving
line of credit to up to $705 million and which increased the advance rate on
inventory. The Seventh Amendment was designed to give us increased flexibility
and additional operating funds during the seasonal inventory build-up period
beginning August and ending in November. Borrowings under the bank credit
facility are secured by substantially all of our assets. The bank credit
facility expires on June 20, 2002. Our borrowing rates for the credit facility
are based on either the London Interbank Offered Rate or a reference rate
announced by Bank of America, San Francisco, with an interest margin added to
both. The interest rate margin was changed by the amendment and a fee of $0.8
million was charged. Under the terms of the agreement, we are required to meet
certain covenants if our available borrowing power falls below specified levels.
During the quarter ended July 29, 2000, our borrowings increased under the
credit facility by approximately $79.1 million. As of the end of the second
quarter, we were in compliance with the terms of the credit agreement. The peak
borrowing level under the facility during the quarter was $519.0 million. We
believe the company will have sufficient sources of cash to meet our financial
obligations for the foreseeable future.
Merchandise inventories decreased $102.0 million during the second quarter as we
sold off an inventory build-up created by the below plan sales in the first
quarter. Merchandise inventories increased $54.5 million from January 29, 2000
due to a seasonal merchandise build-up. Merchandise inventories increased $78.5
million from July 31, 1999 primarily as a result of fully stocking all of the
converted Hills stores.
Trade accounts payable decreased $97.5 million from January 29, 2000 and $116.1
million from July 31, 1999 primarily as a result of a slowdown in merchandise
purchases in response to the first half sales shortfall.
Purchases of property and equipment for the thirteen and twenty-six weeks ended
July 29, 2000 totaled $36.2 million and $76.6 million, respectively. Such
purchases for the balance of the year are estimated to be approximately $40
million. We adjust our plans for making such expenditures based on the amount of
internally generated funds.
Net fixed assets increased $37.5 million from January 29, 2000 as a result
of $76.6 million in capital expenditures offset by $39.0 million in depreciation
expense. Net fixed assets increased $107.7 million from July 31,1999 due
primarily to capital expenditures associated with the converted Hills stores and
other new stores.
-12-
<PAGE>
Beneficial lease rights represent the excess of the fair market value of the
acquired Hills leases over contract value of those leases. We are amortizing
this amount over the terms of the related leases (which average approximately 25
years) using the straight-line method. Goodwill is being amortized over 25 years
using the straight-line method.
Long-term debt as of July 29, 2000 consisted of borrowings under our bank credit
facility of $508.4 million, $200.0 million of the Ames senior notes issued in
April 1999 and $44.4 million of the Hills senior notes that remained outstanding
after the acquisition. The Hills senior notes became direct obligations of Ames
as a result of the merger of Hills.
Capital lease and financing obligations decreased $10.2 million from January 29,
2000 to July 29, 2000 due primarily to payments made on capital lease
obligations. Capital lease and financing obligations decreased $11.1 million
from July 31, 1999 to July 29, 2000, primarily as a result of payments exceeding
new capital lease commitments.
Federal income tax law allows taxpayers, including corporations, to use net
operating losses in future years to reduce taxable income ("net operating loss
carryovers"). Our net operating loss carryovers remaining after fiscal 1999
should offset income on which taxes would otherwise be payable in the next
several years, subject to any limitations from federal income tax law (i.e.,
Internal Revenue Code Sec. 382).
Note Concerning Forward-looking Statements
------------------------------------------
Statements other than those based on historical facts which address activities,
events, or developments that we expect or anticipate may occur in the future are
forward-looking statements which are based upon a number of assumptions
concerning further conditions that may ultimately prove to be inaccurate. Actual
events and results may differ materially from anticipated results described in
any forward-looking statements. Our ability to achieve such results is subject
to certain risks and uncertainties. Consequently, these cautionary statements
qualify all of the forward-looking statements and there can be no assurance that
the results or developments anticipated by us will be realized or that they will
have the expected effects on Ames or its business or operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have exposure to interest rate volatility primarily relating to interest rate
changes applicable to revolving loans under our bank credit facility. These
loans bear interest at rates which vary with changes in (i) the London Interbank
Offered Rate (LIBOR) or (ii) a rate of interest announced publicly by Bank of
America, N.A.
We do not speculate on the future direction of interest rates. As of July 29,
2000 approximately $508.4 million of our debt bore interest at variable rates.
We believe that the effect, if any, of reasonably possible near term changes in
interest rates on our consolidated financial position, results of operations or
cash flows would not be significant.
-13-
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
Reference can be made to Item 3 - Legal Proceedings included
in the Company's most recent Form 10-K for various litigation
involving the Company, for which there were no material
changes since the filing date of the Form 10-K.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders was held Wednesday, June
21, 2000, to consider and act upon the following matters:
(a) The stockholders elected for one-year terms all persons
nominated for directors as set forth in the Company's
proxy statement filed May 18, 2000. Each nominee for
director was elected as follows:
<TABLE>
For Withheld
---------------- ----------------
<S> <C> <C>
Election of directors as a slate
Francis X. Basile 25,409,543 908,473
Paul Buxbaum 25,015,320 1,302,696
Alan Cohen 25,408,023 909,993
Joseph R. Ettore 25,409,063 908,953
Richard M. Felner 25,410,593 907,423
Sidney S. Pearlman 25,408,358 909,658
</TABLE>
(b) The stockholders ratified and approved the appointment of Arthur Andersen
LLP as independent certified public accountants and auditors for the Company
for the fiscal year ending February 3, 2001 as follows:
For Against Abstentions
----------------------- ------------------- -------------------
26,206,639 96,271 15,106
======================= =================== ===================
(c) The stockholders ratified and approved the adoption of the Associate Stock
Purchase Plan as set forth in the Company's proxy statement filed
May 18, 2000 as follows:
For Against Abstentions
----------------------- ------------------- -------------------
19,823,184 890,351 544,049
======================= =================== ===================
(d) The stockholders ratified and approved the amendment and restatement of
the 1998 Management Stock Incentive Plan (as amended and restated, the
"1998 Incentive Plan") as set forth in the Company's proxy statement
filed May 18, 2000 as follows:
For Against Abstentions
----------------------- ------------------- -------------------
16,624,308 4,327,043 306,233
======================= =================== ===================
Item 5. Other Information.
As of April 16, 1999, June 1, 1999, October 15, 1999, January 18,
2000, January 27, 2000, May 8, 2000 and July 25, 2000, the
Company amended the Credit Agreement with Bank of America,
N.A., as agent, and a syndicate consisting of nineteen other
banks and financial institutions, copies of which are filed as
Exhibits hereto.
-14-
<PAGE>
On August 21, 2000, the Company announced the election of
Joseph A. Pollicino to its Board of Directors. Mr. Pollicino
has served as Vice Chairman of the CIT Group, Inc.; President
of the former CIT Factoring and Finance Group; President of
the CIT Group/Business Credit unit; and, as a Vice President
with Manufacturers Hanover.
Item 6. Exhibits and Reports on Form 8-K.
<TABLE>
(a) Index to Exhibits
Exhibit No. Exhibit Page No.
<S> <C> <C>
11 Schedule of computation of basic and diluted net income (loss) 17
per share
12 Ratio of Earnings to Fixed Charges 18
21 Subsidiaries of the Registrant 19
10.1 Credit Agreement amendment ("Amendment Agreement") dated April 20
16, 1999 among certain financial institutions, as lenders,
Bank of America NT&SA, as Administrative agent, and Ames
Merchandising Corporation ("AMC"), Ames FS, Inc. ("AFS"),
Hills Department Store Company ("HDSC").
10.2 Second Amendment, dated June 1, 1999, to the Second Amended 36
and Restated Credit Agreement, dated December 31, 1998 among
Ames Department Stores, Inc. ("ADS"), AFS, AMC, and certain
lenders including Bank of America NT&SA, as agent.
10.3 Third Amendment to the Credit Agreement, dated as of October 42
15, 1999, among certain lenders and Bank of America NT&SA, as
agent, and AFS and AMC.
10.4 Fourth Amendment to the Credit Agreement, dated as of January 53
18, 2000, among certain lenders and Bank of America, N.A., as
agent, and AFS and AMC.
10.5 Fifth Amendment to the Credit Agreement, dated as of January 65
27, 2000, among certain lenders and Bank of America, N.A., as
agent, and AFS and AMC.
10.6 Sixth Amendment and Waiver to the Credit Agreement, dated as 79
of May 8, 2000, among certain lenders and Bank of America,
N.A., as agent, and AMC.
10.7 Seventh Amendment and Waiver, dated as of July 25, 2000, among 91
certain lenders, Bank of America, N.A., as agent, and AMC,
AmesPlace.com, Inc., Ames Realty II, Inc., Ames Transportation
Systems, Inc., and ADS.
</TABLE>
(b) Reports on Form 8-K
On May 19, 2000, the Company filed an employment agreement between the
Company and Grant C. Sanborn, Executive Vice President - Operations, on Form
8-K. There were no other reports on Form 8-K filed with the Securities and
Exchange Commission during the second quarter.
-15-
<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.
<TABLE>
AMES DEPARTMENT STORES, INC.
(Registrant)
<S> <C> <C>
Dated: September 11, 2000 /s/ Joseph R. Ettore
----------------------------------------------------
Joseph R. Ettore, Chairman, Chief Executive
Officer, and Director
Dated: September 11, 2000 /s/ Rolando de Aguiar
----------------------------------------------------
Rolando de Aguiar, Senior Executive Vice
President, Chief Financial and Administrative Officer
</TABLE>
-16-
<PAGE>
<TABLE>
Exhibit 11
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE
(In Thousands, Except Per Share Amounts)
For the Thirteen For the Twenty-Six
Weeks Ended Weeks Ended
--------------------------- -----------------------------
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Loss before Cumulative Effect adjustment $(22,111) $(21,478) $(51,196) $(50,117)
Cumulative Effect adjustment, net of tax - - - (1,107)
----------- ------------ ------------- ------------
Net loss (22,111) (21,478) (51,196) (51,224)
=========== ============ ============= ============
For Basic Earnings Per Share:
Weighted average number of common shares outstanding
during the period (b) 29,404 27,706 29,365 25,914
Basic net loss per share:
Basic net loss per share before Cumulative Effect
adjustment (0.75) (0.78) (1.74) (1.94)
Cumulative Effect Adjustment, net of tax - - - (0.04)
----------- ------------ ------------- ------------
Basic net loss per share $(0.75) $(0.78) $(1.74) $(1.98)
=========== ============ ============= ============
For Diluted Earnings Per Share:
Weighted average number of common shares outstanding
during the period (b) 29,404 27,706 29,365 25,914
Add common stock equivalent shares represented by:
Series B Warrants (a) (a) (a) (a)
Series C Warrants (a) (a) (a) (a)
Options under 1994 Management Stock Option
Plan, 1998 Stock Incentive Plan, 1994 Non-
Employee Director Stock Option Plan and 2000
Store Manager Stock Option Plan (a) (a) (a) (a)
----------- ------------ ------------- ------------
Weighted average number of common and common equivalent
shares (b) 29,404 27,706 29,365 25,914
=========== ============ ============= ============
Diluted net loss per share before Cumulative Effect
adjustment (0.75) (0.78) (1.74) (1.94)
Cumulative Effect Adjustment, net of tax - - - (0.04)
----------- ------------ ------------- ------------
Diluted net loss per share $(0.75) $(0.78) $(1.74) $(1.98)
=========== ============ ============= ============
<FN>
(a) Common stock equivalents have not been included, because the effect would be anti-dilutive.
(b) The weighted average number of common shares outstanding is net of treasury stock.
</FN>
</TABLE>
-17-
<PAGE>
<TABLE>
Exhibit 12
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands, Except Ratio Data)
Twenty-Six
Weeks Ended Fiscal Year Ended
------------- -------------------------------------------------------------------------
July 29, January 29, January 30, January 31, January 25, January 27,
2000 2000 1999 1998 1997 1996
------------- ------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before income
taxes, extraordinary item
and cumulative effect
adjustment (82,574) (31,355) 52,605 53,633 26,804 (1,618)
Add:
Interest expense 40,745 60,843 15,253 11,600 19,043 24,116
Interest component of
rental expense 19,133 29,253 21,121 18,409 16,541 16,208
------------- ------------ ------------ ------------- ------------ ------------
Earnings available for fixed
charges (22,696) 58,741 88,979 83,642 62,388 38,706
Fixed Charges:
Interest expense 40,745 60,843 15,253 11,600 19,043 24,116
Interest component of
rental expense 19,133 29,253 21,121 18,409 16,541 16,208
------------- ------------ ------------ ------------- ------------ ------------
Total fixed charges 59,878 90,096 36,374 30,009 35,584 40,324
Ratio of earnings to fixed
charges (0.4)x 0.7x 2.4x 2.8x 1.8x 1.0x
<FN>
For the purpose of calculating the ratio of earnings to fixed charges, earnings
consist of income before income taxes, extraordinary item and cumulative effect
adjustment plus fixed charges (net of capitalized interest). Fixed charges
consist of interest expense on all indebtedness and capitalized interest,
amortized premiums, discounts and capitalized expenses related to indebtedness,
and one-third of rent expense on operating leases representing that portion of
rent expense deemed by us to be attributable to interest. For the twenty-six
weeks ended July 29, 2000 and the fiscal year ended January 29, 2000, the amount
of additional earnings that would have been required to cover fixed charges for
these periods was $82.3 million and $31.4 million, respectively.
</FN>
</TABLE>
-18-
<PAGE>
Exhibit 21
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
As of July 29, 2000, the subsidiaries of the Company were as follows:
Name State of Incorporation
---- ----------------------
AmesPlace.com, Inc. .............................................. Delaware
Ames Transportation Systems, Inc.................................. Delaware
Ames Realty II, Inc............................................... Delaware
Ames Merchandising Corporation.................................... Delaware
-19-
<PAGE>
Exhibit 10.1
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT, dated as of April 16, 1999 (the
"Amendment Agreement"), among the financial institutions named in the Credit
Agreement (as defined below) (such financial institutions, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), Bank of America NT&SA
(formerly BankAmerica Business Credit, Inc. ("BABC")) as administrative agent
for the Lenders (in its capacity as administrative agent, together with any
successor in such capacity, the "Administrative Agent"), Ames FS, Inc. ("AFS"),
Ames Merchandising Corporation ("AMC"), and Hills Department Store Company
("HDSC", and together with AFS and AMC, each a "Borrower" and collectively, the
"Borrowers"), and the other Credit Parties named in and signatory to the Second
Amended and Restated Credit Agreement, dated as of December 31, 1998, (as
previously amended and as further amended, restated, modified and supplemented
from time to time, the "Credit Agreement") among the Lenders, the Administrative
Agent, the Borrowers, and the other Credit Parties named therein and signatories
thereto. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Credit Agreement.
WHEREAS, the Borrowers have informed the Administrative Agent
and the Lenders that they would like to effect a corporate reorganization
pursuant to which the following will occur sequentially: (1) each of Hills
Distributing Company, Canton Advertising, Inc., Corporate Vision, Inc., and HDS
Transport, Inc. will be merged with and into HDSC and, as a result of such
merger, the separate corporate existence of each of Hills Distributing Company,
Canton Advertising, Inc., Corporate Vision, Inc., and HDS Transport, Inc. will
cease, and HDSC shall assume all of the Obligations of each of Hills
Distributing Company, Canton Advertising, Inc., Corporate Vision, Inc., and HDS
Transport, Inc.; (2) HDSC will be merged with and into Hills Stores Company
("Hills"), and as a result of such merger, the separate corporate existence of
HDSC will cease, and Hills shall assume all of the Obligations of HDSC; and (3)
Hills will be merged with and into Ames Department Stores, Inc. ("Parent"), and
as a result of such merger, the separate corporate existence of Hills will
cease, and Parent shall assume all of the Obligations of Hills in addition to
being a "Credit Party" and "Guarantor" under the Credit Agreement and a
"Grantor" and "Pledgor", as such terms are defined in the Security Documents;
WHEREAS, the Parent shall reaffirm the prior granting to the
Administrative Agent of a security interest in all of its assets and in those
assets it acquires as a result of the merger, and will execute and deliver such
other documents and instruments necessary to carry out the terms of the Credit
Agreement and the Security Documents;
WHEREAS, after consummation of the mergers, the Parent will
contribute all of the inventory and certain of the other assets of the former
Hills Credit Parties to AMC, with all other assets of the former Hills Credit
Parties to be distributed to other Credit Parties thereafter (all as set forth
on Schedule I attached hereto), and the Credit Parties shall each reaffirm the
prior granting to the Administrative Agent of a security interest in all of its
assets, including (without limitation) those assets contributed, or to be
contributed, to it by the Parent;
WHEREAS, the Parent has informed the Administrative Agent and
the Lenders that it proposes to issue up to $275,000,000 in unsecured senior
debt under an Indenture among the Parent, the Credit Parties, and The Chase
Manhattan Bank as trustee (such Indenture as attached hereto as Annex A, the
"Ames Indenture") to be pari passu in right of payment with the Obligations and
debt under the Indenture (as defined in the Credit Agreement) and to be
guaranteed by the Credit Parties;
WHEREAS, Section 9.2 of the Credit Agreement requires the
Parent to, and to cause its Subsidiaries to, maintain their corporate existence
(except for mergers permitted under Section 9.9);
WHEREAS, Section 9.9 of the Credit Agreement prohibits the
Parent or any of its Subsidiaries from, among other things, entering into any
transaction of merger, reorganization, or consolidation, or transferring,
selling, assigning, leasing, or otherwise disposing of all or any part of its
property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except under certain circumstances enumerated in such section;
-20-
<PAGE>
WHEREAS, Sections 9.12 and 9.13 of the Credit Agreement
prohibits the incurrence or guarantee of the Debt proposed by the Ames
Indenture;
WHEREAS, Section 9.30 of the Credit Agreement prohibits the
Parent and any Credit Party from entering into, or being subject to, any
agreement prohibiting or restricting (1) incurrence, creation or assumption of
any Debt, (2) incurrence or creation of any Lien, and (3) sale, disposition or
pledge of any asset, all of the foregoing being negative covenants contained in
the Ames Indenture; and
WHEREAS, the Borrowers have requested that the Lenders agree
to amend certain provisions of the Credit Agreement and the Security Documents
to permit the mergers, the assumption of the Obligations, the contribution of
assets to AMC, the issuance, guarantee and exchange of the notes under the Ames
Indenture, and the change to the definition of Fiscal Year.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree hereby as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Each reference in the Credit Agreement to the Borrowers
shall mean each of AFS and AMC, jointly and severally (unless otherwise
specifically required by the context of such usage). The Parent shall remain a
"Guarantor" and a "Credit Party", as such terms are defined in the Credit
Agreement. Each reference to a Hills Credit Party in the Credit Agreement and
the Security Documents shall be deemed a reference to AMC (unless otherwise
required by the context).
1.2 The definition of "Change in Control" on Section 1.1 is
hereby amended by adding immediately prior to the period at the end thereof the
following:
or (vi) there occurs any "Change of Control" as defined in the Ames Indenture
1.3 The definition of "Fiscal Year" in Section 1.1 is hereby
amended by deleting the word "last" where it appears therein and adding the
words "closest to the thirty-first" immediately following the word "Saturday"
where it appears therein.
1.4 Section 1.1 is hereby amended by adding the following definitions in
the proper alphabetical order therein:
"Amendment Agreement" means that certain Amendment
Agreement dated as of April 16, 1999 among the Borrowers, the
Lenders, the Administrative Agent and the other Credit
Parties.
"Ames Indenture" means that certain Indenture, dated
as of April 27, 1999, among the Parent, the Credit Parties,
and The Chase Manhattan Bank as trustee, in the form attached
as Annex A to the Amendment Agreement.
"Subsidiaries Merger Documents" means any and all
merger agreements, Certificates of Ownership and Merger,
Certificates of Merger, Articles of Merger, and all
agreements, documents and instruments pursuant to or in
connection with the mergers of the Hills Credit Parties
executed and delivered between March 30, 1999 and May 15,
1999.
"Subsidiaries Merger Transaction" means the mergers
of the Hills Credit Parties with and into the Parent with the
Parent being the surviving corporation, all pursuant to the
Subsidiaries Merger Documents.
1.5 Section 9.6 is hereby amended by replacing "Leases" with the word
"leases" in the seventh line thereof.
-21-
<PAGE>
1.6 Section 9.9 is hereby amended by adding at the beginning
of clause (e) therein the words "the mergers in connection with the Subsidiaries
Merger Transaction and," immediately prior to the words "subject to compliance".
1.7 Section 9.12 is hereby amended by (1) replacing the word
"and" in the third line thereof with a comma, and (2) adding the phrase "and,
(iii) Guaranties by any Credit Party of the Debt under the Ames Indenture"
immediately prior to the period at the end thereof.
1.8 Section 9.13 is hereby amended by (1) adding ", landlords"
to clause (b) immediately after the word "suppliers" therein; and (2) replacing
clause (i) therein with the following new clause (i):
(i) Debt under the Ames Indenture in a principal
amount not to exceed $275,000,000, but not any increase in or
refinancings, extensions, renewals, exchanges or replacements
of such Debt, other than the exchange of Exchange Notes for
Initial Notes and Additional Notes (all as defined in the Ames
Indenture) in the limited circumstances and pursuant to the
terms and conditions set forth in the Ames Indenture;
1.9 Section 9.14 is hereby amended by: (1) adding an "and"
immediately before "(y)" therein and adding a closing parenthesis immediately
after the first reference to "Section 9.13 therein; (2) replacing "(g)," with
"or" in the tenth line thereof; (3) deleting "or (i)" in the tenth line thereof;
(4) replacing the closing parenthesis and the word "and" in the eleventh line
with a comma; and (5) adding immediately prior to the ending period thereof the
following:
, and (iv) regularly scheduled payments of interest under the
Debt permitted by Section 9.13(i), in each case to the extent
due and payable and permitted to be paid by the terms thereof
1.10 Section 9.30 is hereby amended by adding the words "(x)
to the extent set forth in the Ames Indenture, and (y)" immediately after the
word "except" where it appears in both clauses (i) and (ii) therein.
1.11 Clause (e) of Section 11.1 of the Credit Agreement is hereby amended
by deleting the word "or" appearing at the very end thereof.
1.12 Clause (o) of Section 11.1 of the Credit Agreement is
hereby amended by replacing the semi-colon that appears at the end thereof with
a period.
1.13 Exhibit A to the Credit Agreement is hereby amended by
deleting such exhibit in its entirety and by substituting, in lieu thereof the
Exhibit A attached hereto as Annex B.
1.14 The schedules to the Credit Agreement are hereby amended
to include the information on the schedules attached hereto as Annex C.
SECTION 2. AMENDMENTS TO THE AMENDED AND RESTATED
PATENT AND TRADEMARK AGREEMENT
2.1 Schedules A, B and C to the Amended and Restated Patent
and Trademark Agreement are hereby amended by deleting such schedules in their
entirety and by substituting, in lieu thereof, Schedules A, B and C attached
hereto as Annex D.
-22-
<PAGE>
SECTION 3. AMENDMENTS TO THE AMENDED AND RESTATED
STOCK PLEDGE AGREEMENT
3.1 Schedules I and II to the Amended and Restated Stock
Pledge Agreement are hereby amended by deleting such schedules in their entirety
and by substituting, in lieu thereof, Schedules I and II attached hereto as
Annex E.
SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVE DATE
This Amendment Agreement shall be deemed effective as of the
date hereof on such date (the "Effective Date") that the following conditions
have been satisfied in full or waived by the Administrative Agent in writing:
4.1 This Amendment Agreement shall have been executed by the
Credit Parties, the Administrative Agent and the Majority Lenders, and the
Credit Parties shall have performed and shall be in compliance with all
covenants, agreements and conditions contained herein, in the Credit Agreement
and in the other Loan Documents each as amended hereby.
4.2 The Administrative Agent shall have received:
4.2.1 Executed copies of proper financing statements,
ready to be filed by the Administrative Agent on or before the
Effective Date under the UCC of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order to
perfect the Administrative Agent's Lien on the Collateral;
4.2.2 Stock certificates, together with stock powers
executed in blank, and instruments, duly endorsed to the Administrative
Agent, pledged and not previously delivered under the relevant Security
Documents or reissued as a result of the Subsidiaries Merger
Transaction (as defined in Section 1.4 hereinabove);
4.2.3 Such opinions of counsel for the Parent and its
Subsidiaries as the Administrative Agent or any Lender shall request,
each such opinion to be in a form, scope, and substance satisfactory to
the Administrative Agent, the Lenders, and their respective counsel;
4.2.4 (x) a certificate of the Secretary or Assistant
Secretary of each Credit Party dated within three Business Days prior
to the date hereof and certifying that (A) the copy of its By-laws
attached to the certificate of its Secretary or Assistant Secretary
delivered on the Closing Date is a true and complete copy of its
By-laws as in effect on the date of the certificate delivered pursuant
to this subsection and such By-laws have not been amended since the
Closing Date, (B) attached thereto is a true and complete copy of the
resolutions adopted by its Board of Directors authorizing the
execution, delivery and performance of this Amendment Agreement, the
Ames Indenture and the Subsidiaries Merger Transaction (as defined in
Section 1.4 hereinabove), if applicable, and that such resolutions have
not been modified, rescinded or amended and are in full force and
effect, (C) its certificate or articles of incorporation has not been
amended since the date of the last amendment thereto shown on the
certificate of good standing from the Secretary of State of the state
of its incorporation delivered on the Closing Date, and (D) the
officers executing this Amendment Agreement or any other document to
which it is a party delivered in connection herewith or therewith are
the incumbent officers and their signatures are as set forth thereto;
and (y) a certificate of another officer thereof attesting to the
incumbency and signature of its Secretary or Assistant Secretary, as
the case may be;
4.2.5 Such other approvals, opinions or documents as
the Administrative Agent may reasonably request.
4.3 To the extent invoiced, the Borrowers shall have paid all
fees and expenses of the Administrative Agent and the Attorney Costs incurred in
connection with this Amendment Agreement and the transactions contemplated
hereby.
-23-
<PAGE>
4.4 All proceedings taken in connection with the execution of
this Amendment Agreement, the Subsidiaries Merger Documents (as defined in
Section 1.4 hereinabove) and all documents and papers relating hereto and
thereto shall be satisfactory in form, scope, and substance to the
Administrative Agent and the Majority Lenders.
4.5 All representations and warranties contained in this
Amendment Agreement or otherwise made in writing to the Administrative Agent or
the Lenders in connection herewith shall be true and correct in all material
respects.
4.6 No unwaived event has occurred and is continuing which
constitutes a Default or an Event of Default under the Credit Agreement.
The execution and delivery to the Administrative Agent by the Borrowers
of a counterpart of this Amendment Agreement shall be deemed to be a
representation and warranty made by the Credit Parties to the effect that the
conditions precedent to the Effective Date set forth in 4.5 and 4.6 above have
been satisfied, with the same effect as delivery to the Administrative Agent and
the Lenders of a certificate signed by a Responsible Officer of the Parent or
the Borrowers, dated the Effective Date, to such effect.
SECTION 5. ADDITIONAL COVENANTS
5.1 Within five Business Days of the consummation of the
Subsidiaries Merger Transaction (as defined in Section 1.4 hereinabove), the
Credit Parties shall deliver to the Administrative Agent executed copies of the
Subsidiaries Merger Documents (as defined in Section 1.4 hereinabove) and
evidence of the consummation of the Subsidiaries Merger Transaction.
5.2 Within two Business Days after execution of the Ames
Indenture, the Credit Parties shall deliver to the Administrative Agent executed
copies of the Ames Indenture.
5.3 Within two Business Days after the note issuance under the
Ames Indenture, the Credit Parties shall deliver to the Administrative Agent
copies of opinions of counsel for the Parent and its Subsidiaries delivered in
connection with the issuance of the notes (such opinions to be in a form, scope,
and substance satisfactory to the Administrative Agent and its counsel),
accompanied by a letter of reliance thereon addressed to the Administrative
Agent and the Lenders, and copies of certificates, government filings and
consents required in connection therewith.
SECTION 6. MISCELLANEOUS
6.1 Each Credit Party reaffirms and restates the
representations and warranties set forth in Articles 6 and 8 of the Credit
Agreement, as amended by this Amendment Agreement, and all such representations
and warranties shall be true and correct on the date hereof with the same force
and effect as if made on such date. Each Credit Party represents and warrants
(which representations and warranties shall survive the execution and delivery
hereof) to the Agent that:
(a) It has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Amendment
Agreement and the transactions contemplated hereby and has taken or
caused to be taken all necessary corporate action to authorize the
execution, delivery and performance of this Amendment Agreement and the
transactions contemplated hereby;
(b) No consent of any other person (including, without
limitation, shareholders or creditors of any Credit Party), and no
action of, or filing with any governmental or public body or authority
is required to authorize, or is otherwise required in connection with
the execution, delivery and performance of this Amendment Agreement and
the other instruments and documents contemplated hereby, other than the
filings contemplated by Section 4.2.1 hereof and the consents hereunder
and filings in connection with the Subsidiaries Merger Transaction;
(c) This Amendment Agreement and the other instruments and
documents contemplated hereby have been duly executed and delivered by
a duly authorized officer on behalf of such party, and constitutes a
legal, valid and binding obligation of such party enforceable against
such party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and the exercise of
judicial discretion in accordance with general principles of equity;
and
(d) The execution, delivery and performance of this Amendment
Agreement and the other instruments and documents contemplated hereby
will not violate any law, statute or regulation, or any order or decree
of any court or governmental instrumentality, or conflict with, or
result in the breach of, or constitute a default under any contractual
obligation of such party.
-24-
<PAGE>
6.2 Nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and each Credit Party
hereby agrees that all of the covenants and agreements 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 in accordance with their
respective terms. Each Credit Party reaffirms its prior grant under the Credit
Agreement of a continuing first priority security interest in, lien on, and
right of set-off against, all of the Collateral of such Credit Party, whether
now owned or existing or hereafter acquired or arising, regardless of where
located, and each of them shall enter into any confirmatory documentation
requested by the Administrative Agent.
6.3 All references to the Credit Agreement in the Credit
Agreement or any other Loan Document and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such agreement as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time.
6.4 This Amendment Agreement may be executed by the parties
hereto individually or in combination, in one or more counterparts, each of
which shall be an original and all of which shall constitute one and the same
agreement.
6.5 Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
6.6 This Amendment Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
6.7 The parties hereto shall, at any time and from time to
time following the execution of this Amendment Agreement, execute and deliver
all such further instruments and take all such further action as may be
reasonably necessary or appropriate in order to carry out the provisions of this
Amendment Agreement.
-25-
<PAGE>
IN WITNESS WHEREOF, each Borrower, the Majority Lenders, the
Administrative Agent, each Co-Agent and the other Credit Parties have caused
this Amendment Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
BANK OF AMERICA NT&SA
(formerly BANKAMERICA BUSINESS CREDIT, INC.),
as the Administrative Agent
By: /s/ William J. Wilson
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
AMES MERCHANDISING CORPORATION, as a Borrower
and Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES FS, INC., as a Borrower and Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
-26-
<PAGE>
HILLS DEPARTMENT STORE COMPANY, as a Borrower
and Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES DEPARTMENT STORES, INC., as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President and CFO
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
HILLS STORES COMPANY, as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
-27-
<PAGE>
AMD, INC., as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES REALTY II, INC., as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES TRANSPORTATION SYSTEMS, INC.,
as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
-28-
<PAGE>
CANTON ADVERTISING, INC.,
as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
HDS TRANSPORT, INC.,
as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
CORPORATE VISION INC.,
as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
-29-
<PAGE>
HILLS DISTRIBUTING COMPANY,
as a Guarantor
By: /s/ Rolando de Aguiar
---------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
Commitment: $50,000,000
BANK OF AMERICA NT&SA
(formerly BANKAMERICA BUSINESS CREDIT, INC.),
as a Lender
By: /s/ William J. Wilson
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
Commitment: $50,000,000
CONGRESS FINANCIAL CORPORATION,
as a Lender
By: /s/ Cindy B. Dennbaum
---------------------------------
Name: Cindy B. Dennbaum
Title: Vice President
Address: 1133 Avenue of the Americas
New York, New York 10036
Attn: Ms. Cindy Dennbaum
Telecopy No.: (212) 545-4283
Commitment: $50,000,000
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By: /s/ Charles D. Chiodo
-----------------------------------------
Name: Charles D. Chiodo
Title: Authorized Signatory
Address: 201 High Ridge Road
Stamford, Connecticut 06927
Attn: Vice President - Portfolio
Telecopy No.: (203) 316-7893
-30-
<PAGE>
Commitment: $50,000,000
TRANSAMERICA BUSINESS CREDIT CORPORATION, as a Lender
By: /s/ Michael S. Burns
-----------------------------------------
Name: Michael S. Burns
Title: Vice President
Address: 555 Theodore Fremd Avenue
Suite 301
Rye, New York 10580
Attn: Mr. Jon Oldham
Telecopy No.: (914) 921-0110
Commitment: $30,000,000
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ James M. Dailey
-----------------------------------------
Name: James M. Dailey
Title: Vice President
Address: 633 Third Avenue
New York, New York 10017
Attn: Credit Deputy
Telecopy No.: (212) 622-5218
Commitment: $25,000,000
FLEET BUSINESS CREDIT CORPORATION,
as a Lender
By:
-----------------------------------------
Name: John P. Masotti
Title: Vice President
Address: 200 Glastonbury Blvd.
Glastonbury, CT 06033
Attn: Mr. John Masotti
Telecopy No.: (860) 657-7759
Commitment: $25,000,000
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Lawrence P. Garni
-----------------------------------------
Name: Lawrence P. Garni
Title: First Vice President
Address: 477 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mr. Corey Sclar
Telecopy No.: (212) 371-2966
-31-
<PAGE>
Commitment: $25,000,000
FLEET NATIONAL BANK, as a Lender
By: /s/ Linda Smyth
---------------------------------
Name: Linda Smyth
Title: Vice President
Address: 777 Main Street
MSN 240
Hartford, Connecticut 06115
Attn: Linda Smyth
Telecopy No.: (860) 986-6919
Commitment: $25,000,000
NATIONAL CITY COMMERCIAL FINANCE, INC.,as a Lender
By: /s/ Matthew D. Sheets
-----------------------------------------
Name: Matthew D. Sheets
Title:Account Executive
Address: 1965 East 6th Street, Suite 400
Cleveland, Ohio 44114
Attn: Ms. Carla Kehres
Telecopy No.: (216) 575-9486
Commitment: $25,000,000
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Janeann Fehrle
-----------------------------------------
Name: Janeann Fehrle
Title: Vice President
Address: 1600 Market Street
31st Floor F2-F070-31-2
Philadelphia, Pennsylvania 19103
Attn: Ms. Janeann Fehrle
Telecopy No.: (215) 585-4749
Commitment: $20,000,000
CITIZENS BUSINESS CREDIT COMPANY,
as a Lender
By: /s/ William H. Creaser
-----------------------------------------
Name: William H. Creaser
Title: Vice President
Address: 237 Main Street
Middletown, Connecticut
Attn: Mr. William Creaser
Telecopy No.: (860) 368-4444
-32-
<PAGE>
Commitment: $30,000,000
FOOTHILL CAPITAL CORPORATION, as a Lender
By: /s/ Todd Nakamuto
---------------------------------
Name: Todd Nakamuto
Title: Vice President
Address: 11111 Santa Monica Blvd.
Los Angeles, California 90025
Attn: Mr. Todd Nakamoto
Telecopy No.: (310) 479-8952
Commitment: $20,000,000
AMSOUTH BANK, as a Lender
By: /s/ Kevin P. Rogers
-----------------------------------------
Name: Kevin P. Rogers
Title: Attorney in Fact
Address: c/o AmSouth Capital Corp.
350 Park Avenue
19th Floor
New York, New York 10022
Attn: Mr. Joseph B. Huston
Telecopy No.: (212) 935-7548
Commitment: $15,000,000
IBJ WHITEHALL BUSINESS CREDIT CORPORATION, as a Lender
By: /s/ James M. Steffy
-----------------------------------------
Name: James M. Steffy
Title: Vice President
Address: One State Street
New York, New York 10004
Attn: Mr. James Steffy
Telecopy No.: (212) 858-2151
Commitment: $50,000,000
BANKBOSTON RETAIL FINANCE INC.,
as a Lender
By: /s/ Betsy Ratto
---------------------------------
Name: Betsy Ratto
Title: Managing Director
Address: 40 Broad Street
11th Floor
Boston, Massachusetts 02109
Attn: Ms. Betsy Ratto
Telecopy No.: (617) 434-4339
-33-
<PAGE>
Commitment: $50,000,000
CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By: /s/ Kevin O'Hara
---------------------------------
Name: Kevin O'Hara
Title: Vice President
Address: 1211 Avenue of the Americas
New York, New York 10036
Attn: Mr. Kevin O'Hara
Telecopy No.: (212) 536-1295
Commitment: $25,000,000
TEXTRON FINANCIAL CORPORATION, as a Lender
By: /s/ John M. Parrott
-----------------------------------------
Name: John M. Parrott
Title: Vice President
Address: 4550 North Point
Suite 400
Alpharetta, Georgia 30022
Attn: Ms. Christine MacKay
Telecopy No.: (770) 360-1672
Commitment: $50,000,000
HELLER FINANCIAL, INC., as a Lender
By: /s/ John Buff
---------------------------------
Name: John Buff
Title: Senior Vice President
Address: 150 East 42nd Street
7th Floor
New York, New York 10017
Attn: Mr. Thomas Bukowski
Telecopy No.: (212) 880-2960
Commitment: $10,000,000
FREMONT FINANCIAL CORPORATION, as a Lender
By: /s/ Ruth Yang
-----------------------------------------
Name: Ruth Yang
Title: Portfolio Administrator
Address: 2020 Santa Monica Boulevard
Suite 500
Santa Monica, California 90404
Attn: Ms. Ruth Yang
Telecopy No.: (310) 264-7401
-34-
<PAGE>
Commitment: $25,000,000
BNY FINANCIAL CORPORATION, as a Lender
By: /s/ Robert E. Nuytkens
-----------------------------------------
Name: Robert E. Nuytkens
Title: Vice President
Address: 1290 Avenue of the Americas
3rd Floor
New York, New York 10004
Attn: Mr. Frank Imperato
Telecopy No.: (212) 408-4317
SCHEDULE I
DISPOSITION OF ASSETS OF HILLS CREDIT PARTIES
All inventory, fixtures, equipment and leasehold improvements of the Hills
Credit Parties will be transferred to AMC.
All leases and real property of the Hills Credit Parties will be transferred to
Ames Realty II, Inc.
All other assets of the Hills Credit Parties will remain as property of the
Parent.
-35-
<PAGE>
Exhibit 10.2
SECOND AMENDMENT TO THE SECOND AMENDED AND
RESTATED CREDIT AGREEMENT
SECOND AMENDMENT, dated as of June 1, 1999 (this "Amendment"), to the
Second Amended and Restated Credit Agreement, dated as of December 31, 1998 (as
heretofore amended, supplemented or otherwise modified, the "Credit Agreement")
among Ames Department Stores, Inc., Ames FS, Inc., Ames Merchandising
Corporation and certain Affiliates thereof, the lenders listed on the signature
pages hereto, who are parties to the Credit Agreement (the "Lenders"), and Bank
of America National Trust and Savings Association as administrative agent (the
"Administrative Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrowers (as that term is defined in the Credit
Agreement), the Lenders and the Agent are parties to the Credit Agreement;
WHEREAS, the Borrowers have requested that the Credit Agreement be
amended and the Lenders are willing to amend the Credit Agreement as hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein have the meanings set forth in the Credit Agreement. 2. Amendment to
Section 3.5 of the Credit Agreement. Section 3.5 of the Credit Agreement is
hereby amended by adding the following immediately before the period at the end
of the first sentence thereof:
"; provided, however, that so long as the outstanding amount
of Loans and undrawn face amount of all outstanding Letters
of Credit do not exceed $350,000,000 in any month, the unused
line fee for such month shall be determined as if the Maximum
Revolver Amount were $450,000,000."
3. Representations and Warranties. To induce Agent and Lenders to enter
into this Amendment, each of the Credit Parties hereby represents and warrants
as follows, with the same effect as if such representations and warranties were
set forth in the Credit Agreement:
(a) Each Credit Party has the power and authority to
enter into this Amendment, and has taken all
corporate action required to authorize its execution,
delivery and performance of this Amendment. This
Amendment has been duly executed and delivered by
such Credit Party and the Credit Agreement, as
amended hereby, constitutes the valid and binding
obligation of such Credit Party, enforceable against
such Credit Party in accordance with its terms. The
execution, delivery, and performance of this
Amendment and the Credit Agreement, as amended
hereby, by such Credit Party, will not violate its
certificate of incorporation or by-laws or any
agreement or legal requirement binding on such Credit
Party.
(b) On the date hereof and after giving effect to the
terms of this Amendment, (i) the Credit Agreement and
the other Loan Documents are in full force and effect
and, to the extent that a Credit Party is a party
thereto, constitutes its binding obligation,
enforceable against it in accordance with their
respective terms; (ii) no Default or Event of Default
has occurred and is continuing; and (iii) no Credit
Party has any defense to or setoff, counterclaim or
claim against payment of the Lender Debt and
enforcement of the Loan Documents based upon a fact
or circumstance existing or occurring on or prior to
the date hereof.
-36-
<PAGE>
(c) Each of the Credit Parties hereby restates, repeats,
and reaffirms each of the representations and
warranties contained in the Credit Agreement,
provided that each reference in such representations
and warranties to "this Agreement" shall be deemed to
be a reference to the Credit Agreement as amended by
this Amendment.
4. Conditions
(a) Notwithstanding any term or provision of this
Amendment to the contrary, no amendment, consent or
other agreement contained herein shall become
effective until the Administrative Agent shall have
determined that each of the following conditions
precedent shall have been satisfied:
(i) All required corporate proceedings in
connection with the execution and delivery
of this Amendment 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 action and proceedings
that the Administrative Agent may reasonably
request, to be certified by the appropriate
corporate person .
(ii) All representations and warranties made by
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 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).
(iii) counterparts of this Amendment shall have
been duly executed and delivered on behalf
of each of the Borrowers, the other Credit
Parties party hereto and the Majority
Lenders.
5. Limited Effect. Except as expressly amended hereby, all of the terms,
covenants and provisions of the Credit Agreement and all liens, security
interests and collateral granted by the Credit Parties are and shall continue to
be unmodified and in full force and effect.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF
LAWS PROVISIONS) OF THE STATE OF NEW YORK.
7. Counterparts; Effectiveness. This Amendment may be executed by the
parties hereto in any number of separate counterparts, each of which shall be an
original, and all of which taken together shall be deemed to constitute one and
the same instrument. This Amendment shall not become effective unless and until
Administrative Agent has received an executed counterpart of this Amendment from
each of the Credit Parties and each of the Lenders.
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.
-37-
<PAGE>
"BORROWERS"
AMES MERCHANDISING CORPORATION
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
AMES FS, INC.
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
"OTHER CREDIT PARTIES"
AMES DEPARTMENT STORES, INC.
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
AMD, INC.
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
AMES REALTY II, INC.
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
AMES TRANSPORTATION SYSTEMS, INC.
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
"ADMINISTRATIVE AGENT"
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Administrative Agent
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
-38-
<PAGE>
"LENDERS"
AMSOUTH BANK
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
BNY FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
CITIZENS BUSINES CREDIT COMPANY,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
-39-
<PAGE>
FLEET CAPITAL CORP.,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
FLEET NATIONAL BANK,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
FOOTHILL CAPITAL CORPORATION
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
FREMONT FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
HELLER FINANCIAL, INC.
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
-40-
<PAGE>
IBJ SCHRODER BUSINESS CREDIT
CORPORATION
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
NATIONAL CITY COMMERCIAL
FINANCE, INC.
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
TEXTRON FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
THE CHASE MANHATTAN BANK,
as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as a Lender
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
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<PAGE>
Exhibit 10.3
THIRD AMENDMENT
THIRD AMENDMENT, dated as of October 15, 1999 (the "Third
Amendment"), among the financial institutions named in the Credit Agreement (as
defined below) (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), Bank of America NT&SA (formerly
BankAmerica Business Credit, Inc. ("BABC")) as administrative agent for the
Lenders (in its capacity as administrative agent, together with any successor in
such capacity, the "Administrative Agent"), Ames FS, Inc. ("AFS") and Ames
Merchandising Corporation ("AMC", and together with AFS, each a "Borrower" and
collectively, the "Borrowers"), and the other Credit Parties named in and
signatory to the Second Amended and Restated Credit Agreement, dated as of
December 31, 1998 and amended as of April 16, 1999 and as of June 1, 1999, (as
previously amended and as further amended, restated, modified and supplemented
from time to time, the "Credit Agreement") among the Lenders, the Administrative
Agent, the Borrowers, and the other Credit Parties named therein and signatories
thereto. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Credit Agreement.
WHEREAS, the Parent has informed the Administrative Agent and
the Lenders that it proposes to repurchase up to $50,880,000 in face amount of
12.5% Senior Notes due 2003 (the "Hills Notes") under an Indenture dated as of
April 19, 1996 between Hills Stores Company and Fleet National Bank, as trustee
(the "Indenture");
WHEREAS, Section 9.14 of the Credit Agreement prohibits the
Parent or any of its Subsidiaries from making any payment or prepayment of
principal or interest on account of, or purchase, defease, acquire or redeem,
any Debt for Borrowed Money;
WHEREAS, the Borrowers have requested that the Lenders agree
to amend Section 9.14 of the Credit Agreement to permit the repurchase of the
Hills Notes in an aggregate purchase amount not to exceed $54,500,000 plus
accrued and unpaid interest.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree hereby as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Section 1.1 is hereby amended by adding the following definitions in
the proper alphabetical order therein:
"Hills Notes" means the 12.5% Senior Notes due 2003
issued under the Indenture.
"Second Amendment" means that certain Second
Amendment dated as of June 1, 1999 among the Borrowers, the
Lenders, the Administrative Agent and the other Credit
Parties.
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"Third Amendment" means that certain Third Amendment
dated as of October 15, 1999 among the Borrowers, the Lenders,
the Administrative Agent and the other Credit Parties.
1.2 Section 9.14 is hereby amended by replacing it in its
entirety with the following new Section 9.14:
Redemptions and Other Payments. Neither the Parent nor any of
its Subsidiaries shall make any payment or prepayment of
principal or interest on account of, or purchase, defease,
acquire or redeem, any Debt for Borrowed Money (or give any
notice thereof or establish a sinking fund, reserve or like
set aside of funds or other property therefor), except (i) the
prepayment of Obligations in accordance with the terms of this
Agreement, (ii) payments (other than (x) prepayments, except
to the extent that Net Cash Proceeds with respect to any asset
sales permitted by Section 9.9 are available therefor, and (y)
prepayments in connection with the termination in the ordinary
course of business of any real or personal property leases
listed on Schedule 9.13) of Debt of any Credit Party permitted
under clause (b), (d), or (h) of Section 9.13, in each case,
to the extent due and payable, (iii) regularly scheduled
payments of Debt of any Credit Party permitted under clause
(c) of Section 9.13, in each case to the extent due and
payable and permitted to be paid by the terms thereof, (iv)
regularly scheduled payments of interest under the Debt
permitted by Section 9.13(i), in each case to the extent due
and payable and permitted to be paid by the terms thereof, and
(v) repurchase of outstanding Hills Notes provided that the
average weighted purchase price for all such repurchases shall
not exceed 107% of the face amount thereof and the aggregate
amount spent will not exceed $54,500,000 plus accrued and
unpaid interest.
SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVE DATE
This Third Amendment shall be deemed effective as of the date
hereof on such date (the "Effective Date") that the following conditions have
been satisfied in full or waived by the Administrative Agent in writing:
2.1 This Third Amendment shall have been executed by the
Credit Parties, the Administrative Agent and the Majority Lenders, and the
Credit Parties shall have performed and shall be in compliance with all
covenants, agreements and conditions contained herein, in the Credit Agreement
and in the other Loan Documents each as amended hereby.
2.2 The Administrative Agent shall have received:
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<PAGE>
2.2.1 Such opinions of counsel for the Parent and the
Borrowers as the Administrative Agent or any Lender shall request, each
such opinion to be in a form, scope, and substance satisfactory to the
Administrative Agent, the Lenders, and their respective counsel;
2.2.2 (x) a certificate of the Secretary or Assistant
Secretary of each Credit Party, except in the case of (C) and (D)
hereinafter in which case the Parent only, dated within three Business
Days prior to the date hereof and certifying that (A) the copy of its
By-laws attached to the certificate of its Secretary or Assistant
Secretary delivered on the Closing Date is a true and complete copy of
its By-laws as in effect on the date of the certificate delivered
pursuant to this subsection and such By-laws have not been amended
since the Closing Date, (B) its certificate or articles of
incorporation has not been amended since the date of the last amendment
thereto shown on the certificate of good standing from the Secretary of
State of the state of its incorporation delivered on the Closing Date,
(C) attached thereto is a true and complete copy of the resolutions
adopted by its Board of Directors authorizing the execution, delivery
and performance of this Third Amendment and the repurchase of the
Senior Notes and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, and (D) the
officers executing this Third Amendment or any other document to which
it is a party delivered in connection herewith or therewith are the
incumbent officers and their signatures are as set forth thereto; and
(y) a certificate of another officer of the Parent and each Credit
Party, as the case may be, attesting to the incumbency and signature of
its Secretary or Assistant Secretary, as the case may be;
2.2.3 Such other approvals, opinions or documents as
the Administrative Agent may reasonably request.
2.3 To the extent invoiced, the Borrowers shall have paid all
fees and expenses of the Administrative Agent and the Attorney Costs incurred in
connection with this Third Amendment and the transactions contemplated hereby.
2.4 All proceedings taken in connection with the execution of
this Third Amendment and all documents and papers relating hereto and thereto
shall be satisfactory in form, scope, and substance to the Administrative Agent
and the Majority Lenders.
2.5 All representations and warranties contained in this Third
Amendment or otherwise made in writing to the Administrative Agent or the
Lenders in connection herewith shall be true and correct in all material
respects.
2.6 No unwaived event has occurred and is continuing which
constitutes a Default or an Event of Default under the Credit Agreement.
The execution and delivery to the Administrative Agent by the Borrowers
of a counterpart of this Third Amendment shall be deemed to be a representation
and warranty made by the Credit Parties to the effect that the conditions
precedent to the Effective Date set forth hereinabove have been satisfied, with
the same effect as delivery to the Administrative Agent and the Lenders of a
certificate signed by a Responsible Officer of the Parent or the Borrowers,
dated the Effective Date, to such effect.
SECTION 3. MISCELLANEOUS
3.1 Each Credit Party reaffirms and restates the
representations and warranties set forth in Articles 6 and 8 of the Credit
Agreement, as amended by this Third Amendment, and all such representations and
warranties shall be true and correct on the date hereof with the same force and
effect as if made on such date. Each Credit Party represents and warrants (which
representations and warranties shall survive the execution and delivery hereof)
to the Agent that:
(a) It has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Third Amendment
and the transactions contemplated hereby and has taken or caused to be
taken all necessary corporate action to authorize the execution,
delivery and performance of this Third Amendment and the transactions
contemplated hereby;
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<PAGE>
(b) No consent of any other person (including, without
limitation, shareholders or creditors of any Credit Party), and no
action of, or filing with any governmental or public body or authority
is required to authorize, or is otherwise required in connection with
the execution, delivery and performance of this Third Amendment;
(c) This Third Amendment and the other instruments and
documents contemplated hereby have been duly executed and delivered by
a duly authorized officer on behalf of such party, and constitutes a
legal, valid and binding obligation of such party enforceable against
such party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and the exercise of
judicial discretion in accordance with general principles of equity;
and
(d) The execution, delivery and performance of this Third
Amendment and the other instruments and documents contemplated hereby
will not violate any law, statute or regulation, or any order or decree
of any court or governmental instrumentality, or conflict with, or
result in the breach of, or constitute a default under any contractual
obligation of such party.
3.2 Nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and each Credit Party
hereby agrees that all of the covenants and agreements 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 in accordance with their
respective terms. Each Credit Party reaffirms its prior grant under the Credit
Agreement of a continuing first priority security interest in, lien on, and
right of set-off against, all of the Collateral of such Credit Party, whether
now owned or existing or hereafter acquired or arising, regardless of where
located, and each of them shall enter into any confirmatory documentation
requested by the Administrative Agent.
3.3 All references to the Credit Agreement in the Credit
Agreement or any other Loan Document and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such agreement as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time.
3.4 This Third Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.
3.5 Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
3.6 This Third Amendment shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.
3.7 The parties hereto shall, at any time and from time to
time following the execution of this Third Amendment, execute and deliver all
such further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Third
Amendment.
IN WITNESS WHEREOF, each Borrower, the Majority Lenders, the Administrative
Agent, each Co-Agent and the other Credit Parties have caused this Third
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
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<PAGE>
BANK OF AMERICA NT&SA,
as the Administrative Agent
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
AMES MERCHANDISING CORPORATION, as a Borrower and Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES FS, INC., as a Borrower and Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES DEPARTMENT STORES, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President and CFO
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
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<PAGE>
AMD, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES REALTY II, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES TRANSPORTATION SYSTEMS, INC.,
as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
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<PAGE>
Commitment: $50,000,000
BANK OF AMERICA NT&SA
(formerly BANKAMERICA BUSINESS CREDIT, INC.),
as a Lender
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
Commitment: $50,000,000
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------
Name: Cindy B. Dennbaum
Title: Vice President
Address: 1133 Avenue of the Americas
New York, New York 10036
Attn: Ms. Cindy Dennbaum
Telecopy No.: (212) 545-4283
Commitment: $50,000,000
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Steven Metivier
Title: Authorized Signatory
Address: 201 High Ridge Road
Stamford, Connecticut 06927
Attn: Vice President - Portfolio
Telecopy No.: (203) 316-7893
Commitment: $50,000,000
TRANSAMERICA BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Michael S. Burns
Title: Vice President
Address: 555 Theodore Fremd Avenue
Suite 301
Rye, New York 10580
Attn: Mr. Jon Oldham
Telecopy No.: (914) 921-0110
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<PAGE>
Commitment: $30,000,000
THE CHASE MANHATTAN BANK,
as a Lender
By:
-----------------------------------------
Name: James M. Dailey
Title: Vice President
Address: 633 Third Avenue
New York, New York 10017
Attn: Credit Deputy
Telecopy No.: (212) 622-5218
Commitment: $25,000,000
FLEET BUSINESS CREDIT CORPORATION,
as a Lender
By:
-----------------------------------------
Name: John P. Masotti
Title: Vice President
Address: 200 Glastonbury Blvd.
Glastonbury, CT 06033
Attn: Mr. John Masotti
Telecopy No.: (860) 657-7759
Commitment: $25,000,000
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By:
-----------------------------------------
Name: Lawrence P. Garni
Title: First Vice President
Address: 477 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mr. Corey Sclar
Telecopy No.: (212) 371-2966
Commitment: $25,000,000
FLEET NATIONAL BANK, as a Lender
By:
-----------------------------------------
Name: Linda Smyth
Title: Vice President
Address: 777 Main Street
MSN 240
Hartford, Connecticut 06115
Attn: Linda Smyth
Telecopy No.: (860) 986-6919
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Commitment: $25,000,000
NATIONAL CITY COMMERCIAL FINANCE, INC., as a Lender
By:
-----------------------------------------
Name: Matthew D. Sheets
Title:Account Executive
Address: 1965 East 6th Street, Suite 400
Cleveland, Ohio 44114
Attn: Ms. Carla Kehres
Telecopy No.: (216) 575-9486
Commitment: $25,000,000
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-----------------------------------------
Name: Janeann Fehrle
Title: Vice President
Address: 1600 Market Street
31st Floor F2-F070-31-2
Philadelphia, Pennsylvania 19103
Attn: Ms. Janeann Fehrle
Telecopy No.: (215) 585-4749
Commitment: $20,000,000
CITIZENS BUSINESS CREDIT COMPANY,
as a Lender
By:
-----------------------------------------
Name: John Palermo
Title: Vice President
Address: 237 Main Street
Middletown, Connecticut
Attn: Mr. John Palermo
Telecopy No.: (860) 368-4444
Commitment: $30,000,000
FOOTHILL CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Nakamoto
Title: Vice President
Address: 11111 Santa Monica Blvd.
Los Angeles, California 90025
Attn: Mr. Todd Nakamoto
Telecopy No.: (310) 479-8952
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Commitment: $20,000,000
AMSOUTH BANK, as a Lender
By:
-----------------------------------------
Name: Kevin P. Rogers
Title: Attorney in Fact
Address: c/o AmSouth Capital Corp.
350 Park Avenue
19th Floor
New York, New York 10022
Attn: Mr. Joseph B. Huston
Telecopy No.: (212) 935-7548
Commitment: $15,000,000
IBJ WHITEHALL BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Andrew Sepe
Title: Vice President
Address: One State Street
New York, New York 10004
Attn: Mr. Andrew Sepe
Telecopy No.: (212) 858-2151
Commitment: $50,000,000
BANKBOSTON RETAIL FINANCE INC.,
as a Lender
By:
-----------------------------------------
Name: Betsy Ratto
Title: Managing Director
Address: 40 Broad Street
11th Floor
Boston, Massachusetts 02109
Attn: Ms. Betsy Ratto
Telecopy No.: (617) 434-4339
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Commitment: $50,000,000
CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:
-----------------------------------------
Name: Evelyn Kusold
Title: Vice President
Address: 1211 Avenue of the Americas
New York, New York 10036
Attn: Ms. Evelyn Kusold
Telecopy No.: (212) 536-1295
Commitment: $25,000,000
TEXTRON FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Runge
Title: Vice President
Address: 4550 North Point
Suite 400
Alpharetta, Georgia 30022
Attn: Ms. Christine MacKay
Telecopy No.: (770) 360-1672
Commitment: $50,000,000
HELLER FINANCIAL, INC., as a Lender
By:
-----------------------------------------
Name: John Buff
Title: Senior Vice President
Address: 150 East 42nd Street
7th Floor
New York, New York 10017
Attn: Mr. Thomas Bukowski
Telecopy No.: (212) 880-2960
Commitment: $10,000,000
FREMONT FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Ruth Yang
Title: Portfolio Administrator
Address: 2020 Santa Monica Boulevard
Suite 500
Santa Monica, California 90404
Attn: Ms. Ruth Yang
Telecopy No.: (310) 264-7401
Commitment: $25,000,000
GENERAL MOTORS ACCEPTANCE CORPORATION, as a Lender
By:
-----------------------------------------
Name: Robert E. Nuytkens
Title: Vice President
Address: 1290 Avenue of the Americas
3rd Floor
New York, New York 10004
Attn: Mr. Frank Imperato
Telecopy No.: (212) 408-4317
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<PAGE>
Exhibit 10.4
FOURTH AMENDMENT
FOURTH AMENDMENT, dated as of January 18, 2000 (the "Fourth
Amendment"), among the financial institutions named in the Credit Agreement (as
defined below) (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), Bank of America, N.A. (formerly
BankAmerica Business Credit, Inc. ("BABC")) as administrative agent for the
Lenders (in its capacity as administrative agent, together with any successor in
such capacity, the "Administrative Agent"), Ames FS, Inc. ("AFS") and Ames
Merchandising Corporation ("AMC", and together with AFS, each a "Borrower" and
collectively, the "Borrowers"), and the other Credit Parties named in and
signatory to the Second Amended and Restated Credit Agreement, dated as of
December 31, 1998 and amended as of April 16, 1999, as of June 1, 1999 and as of
October 15, 1999, (as previously amended and as further amended, restated,
modified and supplemented from time to time, the "Credit Agreement") among the
Lenders, the Administrative Agent, the Borrowers, and the other Credit Parties
named therein and signatories thereto. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.
WHEREAS, the Borrowers have requested that the Lenders agree
to amend certain sections of the Credit Agreement to reduce the interest rate,
replace the minimum availability and fixed charge coverage ratio covenants and
permit the repurchase of public debt and equity in an aggregate purchase amount
not to exceed $100,000,000 annually.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree hereby as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Section 1.1 is hereby amended by adding the following
definitions in the proper alphabetical order therein:
"Fourth Amendment" means that certain Fourth
Amendment dated as of January 18, 2000 among the Borrowers,
the Lenders, the Administrative Agent and the other Credit
Parties.
1.2 The definition of "Applicable Margin" in Section 1.1 is
hereby amended by replacing it in its entirety with
the following new definition:
"Applicable Margin" means, with respect to any Loan,
the amount set forth below which corresponds to the then
current senior unsecured debt rating of the Parent by Moody's
Investors Service (the "Debt Rating") set forth below.
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<TABLE>
Applicable Margin
Debt Applicable Margin for for
Rating LIBOR Rate Loans Base Rate Loans
<S> <C> <C>
B2 (or higher) 1.50% zero (0)
B3 1.75% .125%
Caa1 2.00% .375%
Caa2 (or lower) 2.25% .625%
</TABLE>
; provided, however, that
-------- -------
(i) on the Effective Date of the Fourth Amendment (as
defined therein) the Applicable Margin for LIBOR Rate Loans
shall be 1.50% and the Applicable Margin for Base Rate Loans
shall be 0%;
(ii) each increase in the Applicable Margin shall be
automatically effective as of the date any downgrade to the
Debt Rating is publicly announced by Moody's Investors
Service;
(iii) no decrease in the Applicable Margin shall
occur in connection with any upgrade in the Debt Rating unless
one or more downgrades have occurred; and
(iv) if at any time no Debt Rating is provided by
Moody's Investors Service, then the Administrative Agent and
the Borrowers shall agree upon (x) a rating agency of similar
status that provides debt ratings which are the equivalent of
the Debt Ratings set forth above and (y) the Applicable Margin
applicable to each such debt rating. Should no such debt
rating agency be available or if the Administrative Agent and
the Borrowers do not agree on a rating agency, the debt
ratings or the Applicable Margins applicable thereto, then the
Applicable Margin, immediately and without notice or further
action, shall be the highest Applicable Margin provided
herein.
1.3 Clause (D) in the definition of "EBITDA" in Section 1.1 is
hereby amended by replacing it in its entirety with the following new clause
(D):
(D) all expenses and revenue relating to or resulting
from the liquidation of Inventory of any Hills Credit Party or
the conversion of Hills stores to Ames stores;
1.4 The definition of "EBITDA" in Section 1.1 is hereby
further amended by replacing the phrase "The October 28, 1998
Projections." with the phrase "Fiscal 2000 Projections." where
it appears in the proviso.
1.5 The definition of "Fixed Charges" in Section 1.1 is hereby
amended by replacing it in its entirety with the following new definition:
"Fixed Charges" means, with respect to the Parent and
its consolidated Subsidiaries for any period, the sum of (i)
Cash Interest Expense for such period, (ii) Capital
Expenditures made in such period (excluding all Capital
Expenditures relating to or resulting from the conversion of
Hills stores to Ames stores), (iii) all payments made in such
period on account of the principal amount of Debt for Borrowed
Money (other than the Obligations), (iv) all payments made in
such period on account of repurchases of stock of the Parent
permitted pursuant to Section 9.10 and (v) all payments made
in such period on account of repurchases of publicly issued
Debt for Borrowed Money permitted pursuant to Section 9.14.
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1.6 The definition of "Individual Availability" in Section 1.1
is hereby amended by deleting the phrase "at any time during each period
commencing on July 1 and ending on November 30 in each year, seventy five
percent (75%), and at any other time" from clause (a)(ii)(x) of such definition.
1.7 Paragraph (c) of Section 7.2 is hereby amended by adding
the following immediately prior to the period at the end
thereof:
and either (x) stating that because the Combined Availability
was not less than $100,000,000 at any time during the month
then ended Section 9.26 was not applicable during such month
or (y) setting forth in reasonable detail the calculations
required to establish that the Credit Parties were in
compliance with the covenants set forth in Section 9.26 at the
end of such month
1.8 Paragraph (d) of Section 7.2 is hereby amended by
replacing it in its entirety with the following new
paragraph (d):
(d) With each of the annual audited Financial
Statements delivered pursuant to Section 7.2(a), and within
forty-five (45) days after the end of each fiscal quarter (or
ninety (90) days in the case of the fourth quarter), a
certificate of the chief financial officer of the Parent (i)
stating that, except as explained in reasonable detail in such
certificate, (A) all of the representations and warranties of
the Credit Parties contained in this Agreement and the other
Loan Documents are correct and complete in all material
respects as at the date of such certificate as if made at such
time, (B) each Credit Party is, at the date of such
certificate, in compliance in all material respects with all
of its respective covenants and agreements in this Agreement
and the other Loan Documents, (C) no Default or Event of
Default then exists or existed during the period covered by
such Financial Statements, and (D) describing and analyzing in
reasonable detail all material trends, changes, and
developments in each and all Financial Statements, and (ii)
with respect to the financial statements delivered for each
fiscal quarter, stating that all such statements have been
prepared in accordance with GAAP and present fairly, subject
to normal year-end adjustments, the financial position of the
Parent and its consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then
ended. If such certificate discloses that a representation or
warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default
existed or exists, such certificate shall set forth what
action the Parent has taken or proposes to take with respect
thereto.
1.9 Section 9.10 is hereby amended by replacing the last
sentence thereof in its entirety with the following new
sentence:
In addition, the Parent may repurchase shares of its publicly
traded common stock at market prices in one or more
transactions; provided, that (a) the Fixed Charge Coverage
Ratio for the rolling twelve month period most recently ended
prior to any such repurchase is not less than 1.00:1.00; (b)
after giving effect to any such repurchase the Combined
Availability is not less than $100,000,000; and (c) the
aggregate repurchase price of the shares, together with the
repurchase of Debt permitted to be made pursuant to clause
(vi) of Section 9.14 (excluding accrued interest), does not
exceed $25,000,000 in the aggregate in any fiscal quarter or
$100,000,000 in the aggregate in any Fiscal Year; provided,
however, if such repurchases are less than the amount
permitted in any fiscal quarter, then an amount equal to the
unused portion may be carried forward and added to the
$25,000,000 permitted for the immediately succeeding fiscal
quarter; provided further that the amount spent in such
immediately succeeding fiscal quarter shall not exceed
$50,000,000 in the aggregate.
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<PAGE>
1.10 Section 9.14 is hereby amended by replacing it in its
entirety with the following new Section 9.14:
Redemptions and Other Payments. Neither the Parent nor any of
its Subsidiaries shall make any payment or prepayment of
principal or interest on account of, or purchase, defease,
acquire or redeem, any Debt for Borrowed Money (or give any
notice thereof or establish a sinking fund, reserve or like
set aside of funds or other property therefor), except (i) the
prepayment of Obligations in accordance with the terms of this
Agreement, (ii) payments (other than (x) prepayments, except
to the extent that Net Cash Proceeds with respect to any asset
sales permitted by Section 9.9 are available therefor, and (y)
prepayments in connection with the termination in the ordinary
course of business of any real or personal property leases
listed on Schedule 9.13) of Debt of any Credit Party permitted
under clause (b), (d), or (h) of Section 9.13, in each case,
to the extent due and payable, (iii) regularly scheduled
payments of Debt of any Credit Party permitted under clause
(c) of Section 9.13, in each case to the extent due and
payable and permitted to be paid by the terms thereof, (iv)
regularly scheduled payments of interest under the Debt
permitted by Section 9.13(i), in each case to the extent due
and payable and permitted to be paid by the terms thereof, and
(v) repurchase of outstanding publicly issued Debt for
Borrowed Money provided that (a) the Fixed Charge Coverage
Ratio for the rolling twelve month period most recently ended
prior to any such repurchase is not less than 1.00:1.00 (after
giving effect to the cash interest to be paid in connection
with each such repurchase); (b) after giving effect to any
such repurchase the Combined Availability is not less than
$100,000,000; and (c) the aggregate amount spent for all such
repurchases (excluding accrued interest), together with the
aggregate repurchase price of shares of the Parent repurchased
pursuant to Section 9.10, does not exceed $25,000,000 in the
aggregate in any fiscal quarter or $100,000,000 in the
aggregate in any Fiscal Year; provided, however, if such
repurchases are less than the amount permitted in any fiscal
quarter, then an amount equal to the unused portion may be
carried forward and added to the $25,000,000 permitted for the
immediately succeeding fiscal quarter; provided further that
the amount spent in such immediately succeeding fiscal quarter
shall not exceed $50,000,000 in the aggregate.
1.11 Section 9.25 is hereby amended by replacing it in its
entirety with the following new Section 9.25:
[Intentionally Omitted]
---------------------
1.12 Section 9.26 is hereby amended by replacing it in its
entirety with the following new Section 9.26:
Fixed Charge Coverage Ratio. If during any month the Combined
Availability is less than $100,000,000, the Parent shall
maintain a Fixed Charge Coverage Ratio of not less than
1.20:1.00 for the twelve month period ending with the last day
of such month.
1.13 Section 9.27 is hereby amended by replacing it in its
entirety with the following new Section 9.27:
[Intentionally Omitted]
---------------------
1.14 Paragraph (b) of Section 10.2 is hereby amended by
replacing it in its entirety with the following new
clause (b):
(b) the amount of the Individual Availability of the
relevant Borrower shall equal or exceed the amount of such
Loan or cause the issuance or provision of such Letter of
Credit or Credit Support; provided, however, that the
foregoing conditions precedent are not conditions to each
Lender participating in or reimbursing BABC or the
Administrative Agent for such Lenders' Pro Rata Share of any
BABC Loan or Administrative Agent Advance as provided in
Sections 2.2(h), (i) and (j).
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<PAGE>
SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVE DATE
This Fourth Amendment shall be deemed effective as of the date
hereof on such date (the "Effective Date") that the following conditions have
been satisfied in full or waived by the Administrative Agent in writing:
2.1 This Fourth Amendment shall have been executed by the
Credit Parties, the Administrative Agent and the Lenders, and the Credit Parties
shall have performed and shall be in compliance with all covenants, agreements
and conditions contained herein, in the Credit Agreement and in the other Loan
Documents each as amended hereby.
2.2 All required corporate actions in connection with the
execution and delivery of this Fourth Amendment 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 action
that the Administrative Agent may reasonably request, to be certified by the
appropriate corporate person or government authorities.
2.3 To the extent invoiced, the Borrowers shall have paid all
fees and expenses of the Administrative Agent and the Attorney Costs incurred in
connection with this Fourth Amendment and the transactions contemplated hereby.
2.4 All proceedings taken in connection with the execution of
this Fourth Amendment and all documents and papers relating hereto and thereto
shall be satisfactory in form, scope, and substance to the Administrative Agent
and the Lenders.
2.5 All representations and warranties contained in this
Fourth Amendment or otherwise made in writing to the Administrative Agent or the
Lenders in connection herewith shall be true and correct in all material
respects.
2.6 No unwaived event has occurred and is continuing which
constitutes a Default or an Event of Default under the Credit Agreement.
The execution and delivery to the Administrative Agent by the Borrowers
of a counterpart of this Fourth Amendment shall be deemed to be a representation
and warranty made by the Credit Parties to the effect that the conditions
precedent to the Effective Date set forth hereinabove have been satisfied, with
the same effect as delivery to the Administrative Agent and the Lenders of a
certificate signed by a Responsible Officer of the Parent or the Borrowers,
dated the Effective Date, to such effect.
SECTION 3. MISCELLANEOUS
3.1 Each Credit Party reaffirms and restates the
representations and warranties set forth in Articles 6 and 8 of the Credit
Agreement, as amended by this Fourth Amendment, and all such representations and
warranties shall be true and correct on the date hereof with the same force and
effect as if made on such date. Each Credit Party represents and warrants (which
representations and warranties shall survive the execution and delivery hereof)
to the Agent that:
(a) It has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Fourth Amendment
and the transactions contemplated hereby and has taken or caused to be
taken all necessary corporate action to authorize the execution,
delivery and performance of this Fourth Amendment and the transactions
contemplated hereby;
(b) No consent of any other person (including, without
limitation, shareholders or creditors of any Credit Party), and no
action of, or filing with any governmental or public body or authority
is required to authorize, or is otherwise required in connection with
the execution, delivery and performance of this Fourth Amendment;
-57-
<PAGE>
(c) This Fourth Amendment and the other instruments and
documents contemplated hereby have been duly executed and delivered by
a duly authorized officer on behalf of such party, and constitutes a
legal, valid and binding obligation of such party enforceable against
such party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and the exercise of
judicial discretion in accordance with general principles of equity;
and
(d) The execution, delivery and performance of this Fourth
Amendment and the other instruments and documents contemplated hereby
will not violate any law, statute or regulation, or any order or decree
of any court or governmental instrumentality, or conflict with, or
result in the breach of, or constitute a default under any contractual
obligation of such party.
3.2 Nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and each Credit Party
hereby agrees that all of the covenants and agreements 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 in accordance with their
respective terms. Each Credit Party reaffirms its prior grant under the Credit
Agreement of a continuing first priority security interest in, lien on, and
right of set-off against, all of the Collateral of such Credit Party, whether
now owned or existing or hereafter acquired or arising, regardless of where
located, and each of them shall enter into any confirmatory documentation
requested by the Administrative Agent.
3.3 All references to the Credit Agreement in the Credit
Agreement or any other Loan Document and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such agreement as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time.
3.4 This Fourth Amendment may be executed by the parties
hereto individually or in combination, in one or more counterparts, each of
which shall be an original and all of which shall constitute one and the same
agreement.
3.5 Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
3.6 This Fourth Amendment shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.
3.7 The parties hereto shall, at any time and from time to
time following the execution of this Fourth Amendment, execute and deliver all
such further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Fourth
Amendment.
IN WITNESS WHEREOF, each Borrower, each Lender, the
Administrative Agent, each Co-Agent and each other Credit Party has caused this
Fourth Amendment to be duly executed by its respective authorized officers as of
the day and year first above written.
BANK OF AMERICA NT&SA,
as the Administrative Agent
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
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<PAGE>
AMES MERCHANDISING CORPORATION, as a Borrower and Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES FS, INC., as a Borrower and Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES DEPARTMENT STORES, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President and CFO
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMD, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
-59-
<PAGE>
AMES REALTY II, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES TRANSPORTATION SYSTEMS, INC.,
as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
Commitment: $50,000,000
BANK OF AMERICA NT&SA
(formerly BANKAMERICA BUSINESS CREDIT, INC.),
as a Lender
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
Commitment: $50,000,000
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------
Name: Cindy B. Dennbaum
Title: Vice President
Address: 1133 Avenue of the Americas
New York, New York 10036
Attn: Ms. Cindy Dennbaum
Telecopy No.: (212) 545-4283
-60-
<PAGE>
Commitment: $50,000,000
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Steven Metivier
Title: Authorized Signatory
Address: 201 High Ridge Road
Stamford, Connecticut 06927
Attn: Vice President - Portfolio
Telecopy No.: (203) 316-7893
Commitment: $50,000,000
TRANSAMERICA BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Michael S. Burns
Title: Vice President
Address: 555 Theodore Fremd Avenue
Suite 301
Rye, New York 10580
Attn: Mr. Jon Oldham
Telecopy No.: (914) 921-0110
Commitment: $30,000,000
THE CHASE MANHATTAN BANK,
as a Lender
By:
-----------------------------------------
Name: James M. Dailey
Title: Vice President
Address: 633 Third Avenue
New York, New York 10017
Attn: Credit Deputy
Telecopy No.: (212) 622-5218
Commitment: $25,000,000
FLEET BUSINESS CREDIT CORPORATION,
as a Lender
By:
-----------------------------------------
Name: John P. Masotti
Title: Vice President
Address: 200 Glastonbury Blvd.
Glastonbury, CT 06033
Attn: Mr. John Masotti
Telecopy No.: (860) 657-7759
-61-
<PAGE>
Commitment: $25,000,000
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By:
-----------------------------------------
Name: Lawrence P. Garni
Title: First Vice President
Address: 477 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mr. Corey Sclar
Telecopy No.: (212) 371-2966
Commitment: $25,000,000
FLEET NATIONAL BANK, as a Lender
By:
-----------------------------------------
Name: Linda Smyth
Title: Vice President
Address: 777 Main Street
MSN 240
Hartford, Connecticut 06115
Attn: Linda Smyth
Telecopy No.: (860) 986-6919
Commitment: $25,000,000
NATIONAL CITY COMMERCIAL FINANCE, INC., as a Lender
By:
-----------------------------------------
Name: Matthew D. Sheets
Title: Account Executive
Address: 1965 East 6th Street, Suite 400
Cleveland, Ohio 44114
Attn: Ms. Carla Kehres
Telecopy No.: (216) 575-9486
Commitment: $25,000,000
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-----------------------------------------
Name: Janeann Fehrle
Title: Vice President
Address: 1600 Market Street
31st Floor F2-F070-31-2
Philadelphia, Pennsylvania 19103
Attn: Ms. Janeann Fehrle
Telecopy No.: (215) 585-4749
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<PAGE>
Commitment: $20,000,000
CITIZENS BUSINESS CREDIT COMPANY,
as a Lender
By:
-----------------------------------------
Name: John Palermo
Title: Vice President
Address: 237 Main Street
Middletown, Connecticut
Attn: Mr. John Palermo
Telecopy No.: (860) 368-4444
Commitment: $30,000,000
FOOTHILL CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Nakamoto
Title: Vice President
Address: 11111 Santa Monica Blvd.
Los Angeles, California 90025
Attn: Mr. Todd Nakamoto
Telecopy No.: (310) 479-8952
Commitment: $20,000,000
AMSOUTH BANK, as a Lender
By:
-----------------------------------------
Name: Kevin P. Rogers
Title: Attorney in Fact
Address: c/o AmSouth Capital Corp.
350 Park Avenue
19th Floor
New York, New York 10022
Attn: Mr. Joseph B. Huston
Telecopy No.: (212) 935-7548
Commitment: $15,000,000
IBJ WHITEHALL BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Andrew Sepe
Title: Vice President
Address: One State Street
New York, New York 10004
Attn: Mr. Andrew Sepe
Telecopy No.: (212) 858-2151
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<PAGE>
Commitment: $50,000,000
BANKBOSTON RETAIL FINANCE INC.,
as a Lender
By:
-----------------------------------------
Name: Betsy Ratto
Title: Managing Director
Address: 40 Broad Street
11th Floor
Boston, Massachusetts 02109
Attn: Ms. Betsy Ratto
Telecopy No.: (617) 434-4339
Commitment: $50,000,000
CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:
-----------------------------------------
Name: Evelyn Kusold
Title: Vice President
Address: 1211 Avenue of the Americas
New York, New York 10036
Attn: Ms. Evelyn Kusold
Telecopy No.: (212) 536-1295
Commitment: $25,000,000
TEXTRON FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Runge
Title: Vice President
Address: 4550 North Point
Suite 400
Alpharetta, Georgia 30022
Attn: Ms. Christine MacKay
Telecopy No.: (770) 360-1672
Commitment: $50,000,000
HELLER FINANCIAL, INC., as a Lender
By:
-----------------------------------------
Name: John Buff
Title: Senior Vice President
Address: 150 East 42nd Street
7th Floor
New York, New York 10017
Attn: Mr. Thomas Bukowski
Telecopy No.: (212) 880-2960
Commitment: $10,000,000
FREMONT FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Ruth Yang
Title: Portfolio Administrator
Address: 2020 Santa Monica Boulevard
Suite 500
Santa Monica, California 90404
Attn: Ms. Ruth Yang
Telecopy No.: (310) 264-7401
-64-
<PAGE>
Commitment: $25,000,000
GMAC COMMERCIAL CREDIT LLC, as a Lender
By:
-----------------------------------------
Name: Robert E. Nuytkens
Title: Vice President
Address: 1290 Avenue of the Americas
3rd Floor
New York, New York 10004
Attn: Mr. Robert E. Nuytkens
Telecopy No.: (212) 408-4317
Exhibit 10.5
FIFTH AMENDMENT
FIFTH AMENDMENT, dated as of January 27, 2000 (the "Fifth
Amendment"), among the financial institutions named in the Credit Agreement (as
defined below) (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), Bank of America, N.A. (formerly
BankAmerica Business Credit, Inc. ("BABC")) as administrative agent for the
Lenders (in its capacity as administrative agent, together with any successor in
such capacity, the "Administrative Agent"), Ames FS, Inc. ("AFS") and Ames
Merchandising Corporation ("AMC", and together with AFS, each a "Borrower" and
collectively, the "Borrowers"), and the other Credit Parties named in and
signatory to the Second Amended and Restated Credit Agreement, dated as of
December 31, 1998, and amended as of April 16, 1999, as of June 1, 1999, as of
October 15, 1999, and as of January 18, 2000, (as previously amended and as
further amended, restated, modified and supplemented from time to time, the
"Credit Agreement") among the Lenders, the Administrative Agent, the Borrowers,
and the other Credit Parties named therein and signatories thereto. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Credit Agreement.
WHEREAS, the Borrowers have informed the Administrative Agent
and the Lenders that they would like to effect a corporate reorganization
pursuant to which the following will occur sequentially: (1) AMD, Inc. will be
merged with and into AFS and, as a result of such merger, the separate corporate
existence of AMD, Inc. will cease, and AFS shall assume all of the Obligations
of AMD, Inc.; (2) all assets of AFS will be transferred to AMC; and (3) AFS will
be merged with and into Ames Department Stores, Inc. ("Parent"), and as a result
of such merger, the separate corporate existence of AFS will cease, and Parent
shall assume all of the Obligations of AFS in addition to being a "Credit Party"
and "Guarantor" under the Credit Agreement and a "Grantor" and "Pledgor", as
such terms are defined in the Security Documents;
WHEREAS, AMC shall reaffirm the prior granting to the
Administrative Agent of a security interest in all of its assets and in those
assets it acquires from AFS, and will execute and deliver such other documents
and instruments necessary to carry out the terms of the Credit Agreement and the
Security Documents;
WHEREAS, the Borrowers and the Administrative Agent desire to
enter into an interest rate protection agreement; and
WHEREAS, the Borrowers have requested that the Lenders agree
to amend certain provisions of the Credit Agreement and the Security Documents
to permit the mergers, the transfer of assets, the assumption of the
Obligations, and the inclusion of the interest rate agreement in the definition
of Obligations.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree hereby as follows:
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<PAGE>
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Each reference in the Credit Agreement to the Borrower or
the Borrowers shall mean AMC (unless otherwise specifically required by the
context of such usage). The Parent shall remain a "Guarantor" and a "Credit
Party", as such terms are defined in the Credit Agreement. Each reference to AFS
in the Credit Agreement and the Security Documents shall be deemed a reference
to AMC (unless otherwise required by the context).
1.2 The definition of "Administrative Agent's Liens" in
Section 1.1 is hereby amended by replacing it in its entirety with the following
new definition:
"Administrative Agent's Liens" means the Liens granted to the
Administrative Agent, for the ratable benefit of the Lenders,
BABC, the Administrative Agent and any other holder of an
Obligation pursuant to this Agreement and the other Security
Documents.
1.3 The definition of "Obligations" in Section 1.1 is hereby
amended by replacing the last sentence thereof in its entirety with the
following new sentence:
"Obligations" includes, without limitation, all debts,
liabilities, and obligations now or hereafter owing from any
Borrower to the Administrative Agent and/or any Lender under
or in connection with (i) the Letters of Credit and (ii) the
Rate Protection Agreements.
1.4 The definition of "Rate Protection Agreements" in Section
1.1 is hereby amended by replacing it in its entirety with the following new
definition:
"Rate Protection Agreements" means (a) any and all rate swap
transactions, basis swaps, forward rate transactions,
commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions,
interest rate options, forward foreign exchange transactions,
cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap
transactions, currency options, or any other similar
transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject
to any master agreement, or (b) any and all transactions of
any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of
master agreement published by the International Swaps and
Derivatives Associations, Inc., or any other master agreement
(any such master agreement, together with any related
schedules, as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, a "Master
Agreement", including but not limited to any such obligations
or liabilities under any Master Agreement.
1.5 Section 1.1 is hereby amended by adding the following
definitions in the proper alphabetical order therein:
"Fifth Amendment" means that certain Fifth Amendment
dated as of January 27, 2000 among the Borrowers, the Lenders,
the Administrative Agent and the other Credit Parties.
"AFS Merger Documents" means any and all merger
agreements, Certificates of Ownership and Merger, Certificates
of Merger, Articles of Merger, asset sale agreements, bills of
sale and all other agreements, documents and instruments
executed and/or delivered pursuant to or in connection with
the merger of AMD, Inc. into AFS, the transfer of all assets
of AFS to AMC and the merger of AFS into the Parent.
"AFS Merger Transaction" means collectively, (i) the
merger of AMD, Inc. with and into AFS with AFS being the
surviving corporation, (ii) the transfer of all assets of AFS
to AMC and (iii) the merger of AFS with and into the Parent
with the Parent being the surviving corporation, all pursuant
to the AFS Merger Documents.
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<PAGE>
1.6 Paragraph (b) of Section 2.2 is hereby amended by deleting
the phrase "and no less than $100,000,000 of Combined Availability" where it
appears therein.
1.7 Paragraph (d) of Section 2.4 is hereby amended by deleting
the phrase "or cause the Combined Availability to be less than $100,000,000"
where it appears in clause (ii) thereof.
1.8 Section 4.1 is hereby amended by (1) deleting "(i)"
where it appears therein and (2) deleting clause (ii)thereof in its entirety.
1.9 Section 6.8 is hereby amended by (1) deleting clause
(y) thereof in its entirety and (2) renumbering clause (z) to be clause (y).
1.10 Section 9.9 is hereby amended by (1) deleting the word
"and" before clause (g) and (2) adding the following new clause (h) immediately
prior to the period at the end thereof:
(h) the mergers and asset transfers consummated in connection
with the AFS Merger Transaction
1.11 Section 9.15 is hereby amended by adding the following
new sentence at the end thereof:
Notwithstanding the foregoing, the Parent and its Subsidiaries
may consummate the transfer of assets to be made in connection
with the AFS Merger Transaction.
1.12 Exhibit A to the Credit Agreement is hereby amended by
deleting such exhibit in its entirety and by substituting, in lieu thereof the
Exhibit A attached hereto as Annex A.
1.13 The schedules to the Credit Agreement are hereby amended
to include the information on the schedules attached hereto as Annex B.
SECTION 2. AMENDMENTS TO THE AMENDED AND RESTATED
STOCK PLEDGE AGREEMENT
2.1 Schedules I and II to the Amended and Restated Stock
Pledge Agreement are hereby amended by deleting such schedules in their entirety
and by substituting, in lieu thereof, Schedules I and II attached hereto as
Annex C.
SECTION 3. CONDITIONS PRECEDENT TO EFFECTIVE DATE
This Fifth Amendment shall be deemed effective as of the date
hereof on such date (the "Effective Date") that the following conditions have
been satisfied in full or waived by the Administrative Agent in writing:
3.1 This Fifth Amendment shall have been executed by the
Credit Parties, the Administrative Agent and the Majority Lenders, and the
Credit Parties shall have performed and shall be in compliance with all
covenants, agreements and conditions contained herein, in the Credit Agreement
and in the other Loan Documents each as amended hereby.
3.2 The Administrative Agent shall have received:
3.2.1 Executed copies of proper financing statements,
ready to be filed by the Administrative Agent on or before the
Effective Date under the UCC of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order to
perfect the Administrative Agent's Lien on the Collateral;
3.2.2 Stock certificates, together with stock powers
executed in blank, and instruments, duly endorsed to the Administrative
Agent, pledged and not previously delivered under the relevant Security
Documents or reissued as a result of the AFS Merger Transaction (as
defined in Section 1.5 above);
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<PAGE>
3.2.3 Such opinions of counsel for the Parent and its
Subsidiaries as the Administrative Agent or any Lender shall request,
each such opinion to be in a form, scope, and substance satisfactory to
the Administrative Agent, the Lenders, and their respective counsel;
3.2.4 (x) a certificate of the Secretary or Assistant
Secretary of each Credit Party certifying that (A) the copy of its
By-laws attached to the certificate of its Secretary or Assistant
Secretary delivered on the Closing Date is a true and complete copy of
its By-laws as in effect on the date of the certificate delivered
pursuant to this subsection and such By-laws have not been amended
since the Closing Date, (B) all required corporate actions in
connection with the execution, delivery and performance of this Fifth
Amendment and the AFS Merger Transaction (as defined in Section 1.5
above), if applicable, have been taken and, if resolutions have been
adopted by its Board of Directors or shareholders, that attached
thereto is a true and complete copy of such resolutions and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) its certificate or articles of incorporation
has not been amended since the date of the last amendment thereto shown
on the certificate of good standing from the Secretary of State of the
state of its incorporation delivered on the Closing Date, and (D) the
officers executing this Fifth Amendment or any other document to which
it is a party delivered in connection herewith or therewith are the
incumbent officers and their signatures are as set forth thereto; and
(y) a certificate of another officer thereof attesting to the
incumbency and signature of its Secretary or Assistant Secretary, as
the case may be;
3.2.5 Such other approvals, opinions or documents as
the Administrative Agent may reasonably request.
3.3 To the extent invoiced, the Borrowers shall have paid all
fees and expenses of the Administrative Agent and the Attorney Costs incurred in
connection with this Fifth Amendment and the transactions contemplated hereby.
3.4 All proceedings taken in connection with the execution of
this Fifth Amendment, the AFS Merger Documents (as defined in Section 1.5 above)
and all documents and papers relating hereto and thereto shall be satisfactory
in form, scope, and substance to the Administrative Agent.
3.5 All representations and warranties contained in this Fifth
Amendment or otherwise made in writing to the Administrative Agent or the
Lenders in connection herewith shall be true and correct in all material
respects.
3.6 No unwaived event has occurred and is continuing which
constitutes a Default or an Event of Default under the Credit Agreement.
The execution and delivery to the Administrative Agent by the Borrowers
of a counterpart of this Fifth Amendment shall be deemed to be a representation
and warranty made by the Credit Parties to the effect that the conditions
precedent to the Effective Date set forth in 3.5 and 3.6 above have been
satisfied, with the same effect as delivery to the Administrative Agent and the
Lenders of a certificate signed by a Responsible Officer of the Parent or the
Borrowers, dated the Effective Date, to such effect.
SECTION 4. ADDITIONAL COVENANTS
4.1 Within five Business Days of the consummation of the AFS
Merger Transaction (as defined in Section 1.5 above), the Credit Parties shall
deliver to the Administrative Agent executed copies of the AFS Merger Documents
(as defined in Section 1.5 above) and evidence of the consummation of the AFS
Merger Transaction.
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SECTION 5. MISCELLANEOUS
5.1 Each Credit Party reaffirms and restates the
representations and warranties set forth in Articles 6 and 8 of the Credit
Agreement, as amended by this Fifth Amendment, and all such representations and
warranties shall be true and correct on the date hereof with the same force and
effect as if made on such date. Each Credit Party represents and warrants (which
representations and warranties shall survive the execution and delivery hereof)
to the Agent that:
(a) It has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Fifth Amendment
and the transactions contemplated hereby and has taken or caused to be
taken all necessary corporate action to authorize the execution,
delivery and performance of this Fifth Amendment and the transactions
contemplated hereby;
(b) No consent of any other person (including, without
limitation, shareholders or creditors of any Credit Party), and no
action of, or filing with any governmental or public body or authority
is required to authorize, or is otherwise required in connection with
the execution, delivery and performance of this Fifth Amendment and the
other instruments and documents contemplated hereby, other than the
filings contemplated by Section 3.2.1 hereof and the consents hereunder
and filings in connection with the AFS Merger Transaction;
(c) This Fifth Amendment and the other instruments and
documents contemplated hereby have been duly executed and delivered by
a duly authorized officer on behalf of such party, and constitutes a
legal, valid and binding obligation of such party enforceable against
such party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and the exercise of
judicial discretion in accordance with general principles of equity;
and
(d) The execution, delivery and performance of this Fifth
Amendment and the other instruments and documents contemplated hereby
will not violate any law, statute or regulation, or any order or decree
of any court or governmental instrumentality, or conflict with, or
result in the breach of, or constitute a default under any contractual
obligation of such party.
5.2 Nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and each Credit Party
hereby agrees that all of the covenants and agreements 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 in accordance with their
respective terms. Each Credit Party reaffirms its prior grant under the Credit
Agreement of a continuing first priority security interest in, lien on, and
right of set-off against, all of the Collateral of such Credit Party, whether
now owned or existing or hereafter acquired or arising, regardless of where
located, and each of them shall enter into any confirmatory documentation
requested by the Administrative Agent.
5.3 All references to the Credit Agreement in the Credit
Agreement or any other Loan Document and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such agreement as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time.
5.4 This Fifth Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.
5.5 Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
5.6 This Fifth Amendment shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.
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<PAGE>
5.7 The parties hereto shall, at any time and from time to
time following the execution of this Fifth Amendment, execute and deliver all
such further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Fifth
Amendment.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, each Borrower, the Majority Lenders, the
Administrative Agent and the other Credit Parties have caused this Fifth
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
BANK OF AMERICA, N.A., as the Administrative Agent
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
AMES MERCHANDISING CORPORATION, as a Borrower and Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES FS, INC., as a Borrower and Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES DEPARTMENT STORES, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President and CFO
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
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<PAGE>
AMD, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES REALTY II, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES TRANSPORTATION SYSTEMS, INC.,
as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
Commitment: $50,000,000
BANK OF AMERICA, N.A.
(formerly BANKAMERICA BUSINESS CREDIT, INC.),
as a Lender
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
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<PAGE>
Commitment: $50,000,000
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------
Name: Cindy B. Dennbaum
Title: Vice President
Address: 1133 Avenue of the Americas
New York, New York 10036
Attn: Ms. Cindy Dennbaum
Telecopy No.: (212) 545-4283
Commitment: $50,000,000
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Sean McWhinnie
Title: Authorized Signatory
Address: 800 Connecticut Avenue, 2 North
Norwalk, Connecticut 06854
Attn: Vice President - Portfolio
Telecopy No.: (203) 316-7893
Commitment: $50,000,000
TRANSAMERICA BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Michael S. Burns
Title: Vice President
Address: 555 Theodore Fremd Avenue
Suite 301
Rye, New York 10580
Attn: Mr. Jon Oldham
Telecopy No.: (914) 921-0110
Commitment: $30,000,000
THE CHASE MANHATTAN BANK,
as a Lender
By:
-----------------------------------------
Name: James M. Dailey
Title: Vice President
Address: 633 Third Avenue
New York, New York 10017
Attn: Credit Deputy
Telecopy No.: (212) 622-5218
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<PAGE>
Commitment: $25,000,000
FLEET BUSINESS CREDIT CORPORATION,
as a Lender
By:
-----------------------------------------
Name: John P. Masotti
Title: Vice President
Address: 200 Glastonbury Blvd.
Glastonbury, CT 06033
Attn: Mr. John Masotti
Telecopy No.: (860) 657-7759
Commitment: $25,000,000
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By:
-----------------------------------------
Name: Lawrence P. Garni
Title: First Vice President
Address: 477 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mr. Corey Sclar
Telecopy No.: (212) 371-2966
Commitment: $25,000,000
FLEET NATIONAL BANK, as a Lender
By:
-----------------------------------------
Name: Linda Smyth
Title: Vice President
Address: 777 Main Street
MSN 240
Hartford, Connecticut 06115
Attn: Linda Smyth
Telecopy No.: (860) 986-6919
Commitment: $25,000,000
NATIONAL CITY COMMERCIAL FINANCE, INC., as a Lender
By:
-----------------------------------------
Name: Matthew D. Sheets
Title: Account Executive
Address: 1965 East 6th Street, Suite 400
Cleveland, Ohio 44114
Attn: Ms. Carla Kehres
Telecopy No.: (216) 575-9486
-75-
<PAGE>
Commitment: $25,000,000
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-----------------------------------------
Name: Janeann Fehrle
Title: Vice President
Address: 1600 Market Street
31st Floor F2-F070-31-2
Philadelphia, Pennsylvania 19103
Attn: Ms. Janeann Fehrle
Telecopy No.: (215) 585-4749
Commitment: $20,000,000
CITIZENS BUSINESS CREDIT COMPANY,
Commitment: $30,000,000
FOOTHILL CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Nakamoto
Title: Vice President
Address: 11111 Santa Monica Blvd.
Los Angeles, California 90025
Attn: Mr. Todd Nakamoto
Telecopy No.: (310) 479-8952
Commitment: $20,000,000
AMSOUTH BANK, as a Lender
By:
-----------------------------------------
Name: Kevin P. Rogers
Title: Attorney in Fact
Address: c/o AmSouth Capital Corp.
350 Park Avenue
19th Floor
New York, New York 10022
Attn: Mr. Joseph B. Huston
Telecopy No.: (212) 935-7548
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<PAGE>
Commitment: $15,000,000
IBJ WHITEHALL BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Andrew Sepe
Title: Vice President
Address: One State Street
New York, New York 10004
Attn: Mr. Andrew Sepe
Telecopy No.: (212) 858-2151
Commitment: $50,000,000
FLEET RETAIL FINANCE INC.,
as a Lender
By:
-----------------------------------------
Name: Betsy Ratto
Title: Managing Director
Address: 40 Broad Street
11th Floor
Boston, Massachusetts 02109
Attn: Ms. Betsy Ratto
Telecopy No.: (617) 434-4339
Commitment: $50,000,000
CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:
-----------------------------------------
Name: Evelyn Kusold
Title: Vice President
Address: 1211 Avenue of the Americas
New York, New York 10036
Attn: Ms. Evelyn Kusold
Telecopy No.: (212) 536-1295
Commitment: $25,000,000
TEXTRON FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Runge
Title: Vice President
Address: 4550 North Point
Suite 400
Alpharetta, Georgia 30022
Attn: Ms. Christine MacKay
Telecopy No.: (770) 360-1672
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<PAGE>
Commitment: $50,000,000
HELLER FINANCIAL, INC., as a Lender
By:
-----------------------------------------
Name: John Buff
Title: Senior Vice President
Address: 150 East 42nd Street
7th Floor
New York, New York 10017
Attn: Mr. Thomas Bukowski
Telecopy No.: (212) 880-2960
Commitment: $10,000,000
FREMONT FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Ruth Yang
Title: Portfolio Administrator
Address: 2020 Santa Monica Boulevard
Suite 500
Santa Monica, California 90404
Attn: Ms. Ruth Yang
Telecopy No.: (310) 264-7401
Commitment: $25,000,000
GMAC COMMERCIAL CREDIT LLC, as a Lender
By:
-----------------------------------------
Name: Robert E. Nuytkens
Title: Vice President
Address: 1290 Avenue of the Americas
3rd Floor
New York, New York 10004
Attn: Mr. Robert E. Nuytkens
Telecopy No.: (212) 408-4317
-78-
<PAGE>
Exhibit 10.6
SIXTH AMENDMENT
SIXTH AMENDMENT AND WAIVER, dated as of May 8, 2000 (the
"Sixth Amendment"), among the financial institutions named in the Credit
Agreement (as defined below) (such financial institutions, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), Bank of America, N.A.
(formerly BankAmerica Business Credit, Inc. ("BABC")) as administrative agent
for the Lenders (in its capacity as administrative agent, together with any
successor in such capacity, the "Administrative Agent"), Ames Merchandising
Corporation ("AMC" and "Borrower"), and the other Credit Parties named in and
signatory to the Second Amended and Restated Credit Agreement, dated as of
December 31, 1998, and amended as of April 16, 1999, as of June 1, 1999, as of
October 15, 1999, as of January 18, 2000, and as of January 27, 2000 (as
previously amended, the "Original Agreement", and as further amended, restated,
modified and supplemented from time to time, the "Credit Agreement") among the
Lenders, the Administrative Agent, the Borrower, and the other Credit Parties
named therein and signatories thereto. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Original
Agreement.
WHEREAS, the Borrower has informed the Administrative Agent
and the Lenders that a new Subsidiary of the Parent has been formed, namely
AmesPlace.com, Inc., a Delaware corporation ("AP.com");
WHEREAS, pursuant to Section 9.21 of the Credit Agreement, no
new Subsidiaries are permitted to be formed and the creation of AP.com is a
violation thereof;
WHEREAS, the Borrower has requested that the Lenders agree to
waive the violation of Section 9.21 and to amend the Original Agreement for the
inclusion of AP.com as a Credit Party and Guarantor thereunder and AP.com is
desirous of becoming a Credit Party and Guarantor; and
WHEREAS, AP.com shall grant to the Administrative Agent a
security interest in all of its assets and will execute and deliver such other
documents and instruments necessary to carry out the terms of the Credit
Agreement and the Security Documents and to fulfill all its obligations as a
Credit Party and a Guarantor;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree hereby as follows:
SECTION 1. AMENDMENTS TO THE ORIGINAL AGREEMENT
1.1 Each reference in the Original Agreement to a Credit Party
or a Guarantor shall include AP.com (unless otherwise specifically required by
the context of such usage).
1.2 Section 1.1 is hereby amended by adding the following
definition in the proper alphabetical order therein:
"Sixth Amendment" means that certain Sixth Amendment
dated as of May 8, 2000 among the Borrower, the Lenders, the
Administrative Agent and the other Credit Parties.
1.3 The schedules to the Original Agreement are hereby amended
to include the information on the schedules attached hereto as Annex A.
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<PAGE>
SECTION 2. AMENDMENTS TO THE AMENDED AND RESTATED
STOCK PLEDGE AGREEMENT
2.1 Schedules I and II to the Amended and Restated Stock
Pledge Agreement are hereby amended by deleting such schedules in their entirety
and by substituting, in lieu thereof, Schedules I and II attached hereto as
Annex B.
SECTION 3. CONDITIONS PRECEDENT TO EFFECTIVE DATE
This Sixth Amendment shall be deemed effective as of the date
hereof on such date (the "Effective Date") that the following conditions have
been satisfied in full or waived by the Administrative Agent in writing:
3.1 This Sixth Amendment shall have been executed by the
Credit Parties, the Administrative Agent and the Majority Lenders, and the
Credit Parties shall have performed and shall be in compliance with all
covenants, agreements and conditions contained herein, in the Original Agreement
and in the other Loan Documents each as amended hereby.
3.2 The Administrative Agent shall have received:
3.2.1 Executed copies of proper financing statements
showing AP.com as debtor, ready to be filed by the Administrative Agent
on or before the Effective Date under the UCC of all jurisdictions that
the Administrative Agent may deem necessary or desirable in order to
perfect the Administrative Agent's Lien on the Collateral;
3.2.2 Stock certificates issued by AP.com, together
with stock powers executed in blank, and instruments, duly endorsed to
the Administrative Agent, pledged and not previously delivered under
the relevant Security Documents;
3.2.3 Such opinions of counsel for the Parent and the
other Credit Parties as the Administrative Agent or any Lender shall
request, each such opinion to be in a form, scope, and substance
satisfactory to the Administrative Agent, the Lenders, and their
respective counsel;
3.2.4 (x) a certificate of the Secretary or Assistant
Secretary of each Credit Party certifying that (A) the copy of its
By-laws attached to the certificate of its Secretary or Assistant
Secretary delivered on the Closing Date, or in the case of AP.com as
delivered in connection herewith, is a true and complete copy of its
By-laws as in effect on the date of the certificate delivered pursuant
to this subsection and such By-laws have not been amended since the
Closing Date, (B) all required corporate actions in connection with the
execution, delivery and performance of this Sixth Amendment have been
taken and, if resolutions have been adopted by its Board of Directors
or shareholders, that attached thereto is a true and complete copy of
such resolutions and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) its
certificate or articles of incorporation has not been amended since the
date of the last amendment thereto shown on the certificate of good
standing from the Secretary of State of the state of its incorporation
delivered on the Closing Date and in the case of AP.com, the date of
the good standing certificate delivered in connection herewith and (D)
the officers executing this Sixth Amendment or any other document to
which it is a party delivered in connection herewith or therewith are
the incumbent officers and their signatures are as set forth thereto;
and (y) a certificate of another officer thereof attesting to the
incumbency and signature of its Secretary or Assistant Secretary, as
the case may be;
3.2.5 Such other approvals, opinions or documents as
the Administrative Agent may reasonably request.
3.3 To the extent invoiced, the Borrower shall have paid all
fees and expenses of the Administrative Agent and the Attorney Costs incurred in
connection with this Sixth Amendment and the transactions contemplated hereby.
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<PAGE>
3.4 All proceedings taken in connection with the execution of
this Sixth Amendment and all documents and papers relating hereto and thereto
shall be satisfactory in form, scope, and substance to the Administrative Agent.
3.5 All representations and warranties contained in this Sixth
Amendment or otherwise made in writing to the Administrative Agent or the
Lenders in connection herewith shall be true and correct in all material
respects.
3.6 After the effectiveness of this Sixth Amendment, no
unwaived event has occurred and is continuing which constitutes a Default or an
Event of Default under the Credit Agreement.
The execution and delivery to the Administrative Agent by the Credit
Parties of a counterpart of this Sixth Amendment shall be deemed to be a
representation and warranty made by each Credit Party to the effect that the
conditions precedent to the Effective Date set forth in 3.5 and 3.6 above have
been satisfied, with the same effect as delivery to the Administrative Agent and
the Lenders of a certificate signed by a Responsible Officer of each Credit
Party, dated the Effective Date, to such effect.
SECTION 4. AGREEMENTS BY AP.COM
4.1 AP.com hereby agrees to each and every provision of
Article 15 of the Credit Agreement and assumes all responsibilities, duties and
obligations of a Guarantor under the Credit Agreement. This Sixth Amendment
shall constitute a counterpart to the Credit Agreement and AP.com's execution
and delivery hereof shall effectuate its Guaranty under Article 15 of the Credit
Agreement.
4.2 As security for all present and future Obligations, AP.com
as a Guarantor and Credit Party, hereby grants to the Administrative Agent, for
the ratable benefit of the Administrative Agent and the Lenders, a continuing
first priority security interest in, lien on, and right of set-off against, all
of its Collateral whether now owned or existing or hereafter acquired or
arising, regardless of where located.
4.3 As security for all the Obligations, Ap.com shall
simultaneously herewith execute a counterpart signature page to the Amended and
Restated Security Agreement and Mortgage - Trademarks, Patents and Copyrights
dated as of December 31, 1998 and agrees to be a Grantor thereunder, assumes all
of the responsibilities, duties and obligations of a Grantor thereunder, and
covenants to perform as set forth therein.
SECTION 5. MISCELLANEOUS
5.1 Each Credit Party affirms, reaffirms and restates the
representations and warranties set forth in Articles 6 and 8 of the Original
Agreement, as amended by this Sixth Amendment, and all such representations and
warranties shall be true and correct on the date hereof with the same force and
effect as if made on such date. Each Credit Party represents and warrants (which
representations and warranties shall survive the execution and delivery hereof)
to the Agent that:
(a) It has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Sixth Amendment
and the transactions contemplated hereby and has taken or caused to be
taken all necessary corporate action to authorize the execution,
delivery and performance of this Sixth Amendment and the transactions
contemplated hereby;
(b) No consent of any other person (including, without
limitation, shareholders or creditors of any Credit Party), and no
action of, or filing with any governmental or public body or authority
is required to authorize, or is otherwise required in connection with
the execution, delivery and performance of this Sixth Amendment and the
other instruments and documents contemplated hereby;
(c) This Sixth Amendment and the other instruments and
documents contemplated hereby have been duly executed and delivered by
a duly authorized officer on behalf of such party, and constitutes a
legal, valid and binding obligation of such party enforceable against
such party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and the exercise of
judicial discretion in accordance with general principles of equity;
and
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<PAGE>
(d) The execution, delivery and performance of this Sixth
Amendment and the other instruments and documents contemplated hereby
will not violate any law, statute or regulation, or any order or decree
of any court or governmental instrumentality, or conflict with, or
result in the breach of, or constitute a default under any contractual
obligation of such party.
5.2 Nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Original Agreement, and each Credit Party
hereby agrees that all of the covenants and agreements contained in the Original
Agreement and the other Loan Documents are hereby ratified and confirmed in all
respects and shall remain in full force and effect in accordance with their
respective terms. Each Credit Party affirms its prior grant under the Original
Agreement of a continuing first priority security interest in, lien on, and
right of set-off against, all of the Collateral of such Credit Party, whether
now owned or existing or hereafter acquired or arising, regardless of where
located, and each of them shall enter into any confirmatory documentation
requested by the Administrative Agent.
5.3 All references to the Credit Agreement in the Credit
Agreement or any other Loan Document and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such agreement as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time.
5.4 This Sixth Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.
5.5 Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
5.6 This Sixth Amendment shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.
5.7 The parties hereto shall, at any time and from time to
time following the execution of this Sixth Amendment, execute and deliver all
such further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Sixth
Amendment.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Borrower, the Majority Lenders, the
Administrative Agent and the other Credit Parties have caused this Sixth
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
BANK OF AMERICA, N.A., as the Administrative Agent
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
BORROWER: AMES MERCHANDISING CORPORATION
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES DEPARTMENT STORES, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Executive Vice President and CFO
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMESPLACE.COM, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
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<PAGE>
AMES REALTY II, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES TRANSPORTATION SYSTEMS, INC.,
as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
Commitment: $50,000,000
BANK OF AMERICA, N.A.
(formerly BANKAMERICA BUSINESS CREDIT, INC.),
as a Lender
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
Commitment: $50,000,000
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------
Name: Cindy B. Dennbaum
Title: Vice President
Address: 1133 Avenue of the Americas
New York, New York 10036
Attn: Ms. Cindy Dennbaum
Telecopy No.: (212) 545-4283
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<PAGE>
Commitment: $50,000,000
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Sean McWhinnie
Title: Authorized Signatory
Address: 800 Connecticut Avenue, 2 North
Norwalk, Connecticut 06854
Attn: Vice President - Portfolio
Telecopy No.: (203) 316-7893
Commitment: $50,000,000
TRANSAMERICA BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Michael S. Burns
Title: Vice President
Address: 555 Theodore Fremd Avenue, Suite 301
Rye, New York 10580
Attn: Mr. Jon Oldham
Telecopy No.: (914) 921-0110
Commitment: $30,000,000
THE CHASE MANHATTAN BANK,
as a Lender
By:
-----------------------------------------
Name: James M. Dailey
Title: Vice President
Address: 633 Third Avenue
New York, New York 10017
Attn: Credit Deputy
Telecopy No.: (212) 622-5218
Commitment: $25,000,000
FLEET BUSINESS CREDIT CORPORATION,
as a Lender
By:
-----------------------------------------
Name: John P. Masotti
Title: Vice President
Address: 200 Glastonbury Blvd.
Glastonbury, CT 06033
Attn: Mr. John Masotti
Telecopy No.: (860) 657-7759
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<PAGE>
Commitment: $25,000,000
LASALLE BUSINESS CREDIT, INC.,
Commitment: $25,000,000
FLEET NATIONAL BANK, as a Lender
Commitment: $25,000,000
NATIONAL CITY COMMERCIAL FINANCE, INC., as a Lender
By:
-----------------------------------------
Name: Matthew D. Sheets
Title: Account Executive
Address: 1965 East 6th Street, Suite 400
Cleveland, Ohio 44114
Attn: Ms. Carla Kehres
Telecopy No.: (216) 575-9486
Commitment: $25,000,000
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-----------------------------------------
Name: Janeann Fehrle
Title: Vice President
Address: 1600 Market Street, 31st Floor F2-F070-31-2
Philadelphia, Pennsylvania 19103
Attn: Ms. Janeann Fehrle
Telecopy No.: (215) 585-4749
-86-
<PAGE>
Commitment: $20,000,000
CITIZENS BUSINESS CREDIT COMPANY,
as a Lender
By:
-----------------------------------------
Name: John Atanasoff
Title: Vice President
Address: 40 Court Street
Boston, Massachusetts 02108
Attn: Mr. John Atanasoff
Telecopy No.: (617) 695-4748
Commitment: $30,000,000
FOOTHILL CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Nakamoto
Title: Vice President
Address: 11111 Santa Monica Blvd.
Los Angeles, California 90025
Attn: Mr. Todd Nakamoto
Telecopy No.: (310) 479-8952
Commitment: $20,000,000
AMSOUTH BANK, as a Lender
By:
-----------------------------------------
Name: Kevin P. Rogers
Title: Attorney in Fact
Address: c/o AmSouth Capital Corp.
350 Park Avenue, 19th Floor
New York, New York 10022
Attn: Mr. Joseph B. Huston
Telecopy No.: (212) 935-7548
Commitment: $15,000,000
IBJ WHITEHALL BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Andrew Sepe
Title: Vice President
Address: One State Street
New York, New York 10004
Attn: Mr. Andrew Sepe
Telecopy No.: (212) 858-2151
-87-
<PAGE>
Commitment: $50,000,000
FLEET RETAIL FINANCE INC.,
as a Lender
By:
-----------------------------------------
Name: Betsy Ratto
Title: Managing Director
Address: 40 Broad Street, 11th Floor
Boston, Massachusetts 02109
Attn: Ms. Betsy Ratto
Telecopy No.: (617) 434-4339
Commitment: $50,000,000
CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:
-----------------------------------------
Name: Evelyn Kusold
Title: Vice President
Address: 1211 Avenue of the Americas
New York, New York 10036
Attn: Ms. Evelyn Kusold
Telecopy No.: (212) 536-1295
Commitment: $25,000,000
TEXTRON FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Runge
Title: Vice President
Address: 4550 North Point, Suite 400
Alpharetta, Georgia 30022
Attn: Ms. Christine MacKay
Telecopy No.: (770) 360-1672
Commitment: $50,000,000
HELLER FINANCIAL, INC., as a Lender
By:
-----------------------------------------
Name: John Buff
Title: Senior Vice President
Address: 150 East 42nd Street, 7th Floor
New York, New York 10017
Attn: Mr. Thomas Bukowski
Telecopy No.: (212) 880-2960
-88-
<PAGE>
Commitment: $10,000,000
FREMONT FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Ruth Yang
Title: Portfolio Administrator
Address: 2020 Santa Monica Boulevard, Suite 500
Santa Monica, California 90404
Attn: Ms. Ruth Yang
Telecopy No.: (310) 264-7401
Commitment: $25,000,000
GMAC COMMERCIAL CREDIT LLC, as a Lender
By:
-----------------------------------------
Name: Robert E. Nuytkens
Title: Vice President
Address: 1290 Avenue of the Americas, 3rd Floor
New York, New York 10004
Attn: Mr. Robert E. Nuytkens
Telecopy No.: (212) 408-4317
-89-
<PAGE>
<TABLE>
ANNEX B
Replacement Schedules for the Pledge Agreement
Amended Schedule I to Amended and Restated Pledge Agreement (Capital Stock)
---------------------------------------------------------------------------
Attached to and forming part of that certain
Amended and Restated
Pledge Agreement (Capital Stock) dated as of December 31, 1998 by
List and Description of Pledged Securities
Description of Pledged Securities:
Issuer Class of Certificate Number of Percentage of
of Stock Stock Number Shares total shares
-------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Ames Merchandising common 2 1,000 100%
Corporation
Ames Realty II, Inc. common 1 1,000 100%
Ames Transportation common 1 1,000 100%
Systems, Inc.
AmesPlace.com, Inc. common 1 _____ 100%
</TABLE>
Amended Schedule II to Amended and Restated Pledge Agreement (Capital Stock)
----------------------------------------------------------------------------
Attached to and forming part of that certain
Amended and Restated
Pledge Agreement (Capital Stock) dated as of December 31, 1998 by
AMES DEPARTMENT STORES, INC., as Pledgor
to BANKAMERICA BUSINESS CREDIT, INC., as Administrative Agent
Jurisdiction of Organization of Issuers
Jurisdiction of
Name of Issuer Organization
Ames Merchandising Corporation Delaware
(formerly known as Zayre Central Corp.
and successor-in-interest to Ames Stores
and Zayre New England Corp.)
Ames Realty II, Inc. Delaware
Ames Transportation Delaware
Systems, Inc.
AmesPlace.com, Inc. Delaware
-90-
<PAGE>
Exhibit 10.7
SEVENTH AMENDMENT
SEVENTH AMENDMENT AND WAIVER, dated as of July 25, 2000 (the
"Seventh Amendment"), among the financial institutions named in the Credit
Agreement (as defined below) (such financial institutions, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), Bank of America, N.A.
(formerly BankAmerica Business Credit, Inc. ("BABC")) as administrative agent
for the Lenders (in its capacity as administrative agent, together with any
successor in such capacity, the "Administrative Agent"), Ames Merchandising
Corporation ("AMC" and "Borrower"), and the other Credit Parties named in and
signatory to the Second Amended and Restated Credit Agreement, dated as of
December 31, 1998, and amended as of April 16, 1999, as of June 1, 1999, as of
October 15, 1999, as of January 18, 2000, as of January 27, 2000, and as of May
8, 2000 (as previously amended, the "Original Agreement", and as further
amended, restated, modified and supplemented from time to time, the "Credit
Agreement") among the Lenders, the Administrative Agent, the Borrower, and the
other Credit Parties named therein and signatories thereto. Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Original Agreement.
WHEREAS, the Credit Parties wish to amend and waive certain
provisions of the Original Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree hereby as follows:
SECTION 1. AMENDMENTS TO THE ORIGINAL AGREEMENT
1.1 Section 1.1 is hereby amended by adding the following
new definitions in the proper alphabetical order therein:
"Inventory Appraisal" means an appraisal of the
Borrower's Inventory performed by Gordon Brothers which
appraisal shall be in form and substance satisfactory to the
Administrative Agent.
"Seventh Amendment" means that certain Seventh
Amendment dated as of July 25, 2000 among the Borrower, the
Lenders, the Administrative Agent and the other Credit
Parties.
1.2 The definition of "Applicable Margin" in Section 1.1 is
hereby amended by replacing it in its entirety with the following new
definition:
"Applicable Margin" means, with respect to any Loan,
the amount set forth below which corresponds to the then
current senior unsecured debt rating of the Parent by Moody's
Investors Service (the "Debt Rating") set forth below.
<TABLE>
Applicable Margin
Debt Applicable Margin for for
Rating LIBOR Rate Loans Base Rate Loans
<S> <C> <C>
B1 (or higher) 1.75% 0.125%
B2 2.00% .375%
B3 2.25% .625%
Caa1 (or lower) 2.50% .750%
-91-
<PAGE>
<FN>
; provided, however, that
-------- -------
(i) as of the "Effective Date" of the Seventh
Amendment (as defined therein), the Applicable Margin for
LIBOR Rate Loans shall be 1.75% and the Applicable Margin for
Base Rate Loans shall be 0.125%;
(ii) each increase in the Applicable Margin shall be
automatically effective as of the date any downgrade to the
Debt Rating is publicly announced by Moody's Investors
Service; each decrease in the Applicable Margin shall be
automatically effective as of the date any upgrade to the Debt
Rating is publicly announced by Moody's Investors Service;
(iii) no decrease in the Applicable Margin shall
occur in connection with any upgrade in the Debt Rating unless
one or more downgrades have occurred;
(iv) if at any time no Debt Rating is provided by
Moody's Investors Service, then the Administrative Agent and
the Borrower shall agree upon (x) a rating agency of similar
status that provides debt ratings which are the equivalent of
the Debt Ratings set forth above and (y) the Applicable Margin
applicable to each such debt rating; should no such debt
rating agency be available or if the Administrative Agent and
the Borrower do not agree on a rating agency, the debt ratings
or the Applicable Margins applicable thereto, then the
Applicable Margin, immediately and without notice or further
action, shall be the highest Applicable Margin provided
herein; and
(v) if at any time and for so long as the Debt Rating
is B1 or higher and the Fixed Charge Coverage Ratio for the
twelve month period ended as at the last day of the most
recently ended month for which financial statements were
required to be submitted to the Administrative Agent pursuant
to Section 7.2 hereunder is equal to or greater than
1.50:1.00, the Applicable Margin for LIBOR Rate Loans shall be
1.50% and the Applicable Margin for Base Rate Loans shall be
zero (0.0%); provided, that any such decrease in the
Applicable Margin shall only take effect upon the Borrower's
delivery of both notification of the Debt Rating and the
applicable Fixed Charge Coverage Ratio Certificate.
</FN>
</TABLE>
1.3 The definition of "Commitment" in Section 1.1 is hereby
amended by replacing it in its entirety with the following new definition:
"Commitment" means, at any time with respect to a
Lender, the principal amount for such time set forth beside
such Lender's name under the heading "Commitment" on Schedule
I attached to the Seventh Amendment and made a part thereof
or, on the signature page of the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.3, as such
Commitment may be adjusted from time to time in accordance
with the provisions of Section 13.3, and "Commitments" means,
collectively, the aggregate amount of the commitments of all
the Lenders.
1.4 The first paragraph contained in the definition of
"Individual Availability" in Section 1.1 is hereby amended by replacing it in
its entirety with the following new paragraph:
-92-
<PAGE>
"Individual Availability" means at any time with
respect to the Borrower:
(a) the least of: (i) the Maximum Revolver Amount minus the
Individual Outstandings of the Borrower at such time; or
(ii) the sum of: (x) at any time, (1) seventy percent (70%) of the Book
Value of Eligible Inventory of the Borrower (excluding Inventory referred to in
clause (y) below) or (2) during the period commencing on the "Effective Date" of
the Seventh Amendment (as defined therein) and ending on October 31, 2000,
seventy five percent (75%) of the Book Value of Eligible Inventory of the
Borrower, (in each case, excluding Inventory referred to in clause (y) below),
plus (y) fifty percent (50%) of the Book Value of finished goods Inventory of
the Borrower not in the possession of such Borrower as to which a merchandise or
documentary Letter of Credit has been issued and which, if in possession of the
Borrower, would be treated as Eligible Inventory of the Borrower, but only if
such Inventory is covered by insurance with recognized insurers on terms
(including, without limitation, types of coverage, policy limits and deductible
amounts) not materially different from those of the insurance maintained by the
Borrower with respect to such Inventory on the Closing Date or is otherwise
deemed adequate by the Administrative Agent; or (iii) the maximum amount of
indebtedness under the Credit Agreement (as defined in the Ames Indenture) then
permitted to be outstanding pursuant to Section 4.09 of the Ames Indenture;
minus
-----
(b) the sum of: (i) the unpaid balance of Loans of the Borrower at such
time, (ii) the aggregate amount of Pending Loans of the Borrower at such time,
(iii) the aggregate undrawn amount of all outstanding Letters of Credit issued
for the account of Borrower at such time, (iv) the aggregate amount of any
unpaid reimbursement obligations of the Borrower in respect of the Letters of
Credit, (v) reserves for accrued interest on the Obligations established with
respect to the Borrower, (vi) the Environmental Compliance Reserve established
with respect to the Borrower, and (vii) all other reserves which the
Administrative Agent deems necessary or appropriate in its sole discretion to
maintain with respect to the Borrower's account, including, without limitation,
reserves for any amounts which the Administrative Agent or any Lender may be
obligated to pay in the future for the account of the Borrower.
1.5 The definition of "Maximum Revolver Amount" in Section 1.1 is hereby
amended by replacing it in its entirety with the following new definition:
"Maximum Revolver Amount" means: (i) from August 1, 2000 until close of business
on November 30, 2000, $705,000,000; and (ii) at all times prior to August 1,
2000 and from and after December 1, 2000, $650,000,000; provided that such
amount may be reduced from time to time pursuant to Section 4.2.
1.6 Paragraph (c) of Section 7.2 is hereby amended by replacing
clause (x) therein with the following new clause (x):
-93-
<PAGE>
(x) stating that Section 9.26 was not applicable during such month because
the Combined Availability was not less than the minimum monthly Combined
Availability amount specified in Section 9.26 for such month, or 1.7 Section
9.26 is hereby amended by replacing it in its entirety with the following new
Section 9.26: Fixed Charge Coverage Ratio. If at any time during any month that
occurs in the time periods below the Combined Availability is less than the
respective amount set forth below for such time period:
Time Period Minimum Combined Availability
----------- -----------------------------
7/25/00 through 8/31/00 $ 90,000,000
9/01/00 and thereafter $100,000,000
the Parent shall maintain a Fixed Charge Coverage
Ratio of not less than the respective amount set
forth below for the appropriate time period for the
most recently ended twelve month period for which
financial statements were required to be submitted to
the Administrative Agent pursuant to Section 7.2
hereunder:
Time Period Fixed Charge Coverage Ratio
----------- ---------------------------
5/31/00 through 8/31/00 .50:1.00
9/01/00 through 10/31/00 .60:1.00
11/1/00 through 11/30/00 .70:1.00
12/01/00 through 2/28/01 .85:1.00
3/01/01 through 3/31/01 .90:1.00
4/01/01 through 4/30/01 .95:1.00
and thereafter, the Parent shall maintain a Fixed
Charge Coverage Ratio of not less than 1.00:1.00.
SECTION 2. AGREEMENTS OF THE PARTIES HERETO
2.1 Waiver. (a) Subject to the satisfaction
of all the conditions set forth in Section 3 below, the Lenders hereby
waive compliance by the Borrower with Section 9.26 of the Original Agreement
through the date hereof and any Event of Default under clause (c) of Section
11.1 of the Original Agreement resulting solely from such failure to comply.
(b) Except as expressly waived hereby, all of the
representations, warranties, terms, covenants and conditions of the
Original Agreement shall remain in full force and effect in accordance with
their respective terms. The waiver set forth herein shall be limited precisely
as provided for herein and shall not be deemed to be waivers of, amendments of,
consents to or modifications of any term or provision of the Credit Agreement or
any other document or instrument referred to therein or of any transaction or
further or future action on the part of the Borrower requiring the consent of
the Lenders except to the extent specifically provided for herein. Except as
expressly set forth herein, the Lenders have not and shall not be deemed to have
waived any of their rights and remedies against the Borrower for any existing or
future Events of Default.
2.2 Amendment Fee. The Borrower agrees to
pay to the Administrative Agent, for the account of the Lenders as set
forth in Schedule II attached hereto, a nonrefundable fee in consideration of
the special accommodations made hereunder of $808,462, payable as follows:
$202,115.50 on August 1, 2000, September 1, 2000, October 2, 2000 and November
1, 2000. The total amendment fee payable hereunder shall be earned in full upon
execution and delivery of this Seventh Amendment by the parties hereto. Upon the
occurrence of an Event of Default or termination of the Credit Agreement all
remaining unpaid installments of such fee shall be immediately due and payable.
-94-
<PAGE>
SECTION 3. CONDITIONS PRECEDENT TO EFFECTIVE DATE
This Seventh Amendment shall be deemed effective as
of the date hereof on such date (the "Effective Date")
that the following conditions have been satisfied in full or waived by the
Administrative Agent in writing:
3.1 This Seventh Amendment shall have been
executed by the Credit Parties, the Administrative Agent and all the
Lenders, and the Credit Parties shall have performed and shall be in compliance
with all covenants, agreements and conditions contained herein, in the Original
Agreement and in the other Loan Documents each as amended hereby.
3.2 The Administrative Agent shall have received:
3.2.1 The Inventory Appraisal;
3.2.2 Such opinions of counsel for the
Parent and the other Credit Parties as the Administrative
Agent or any Lender shall request, each such opinion to be in
a form, scope, and substance satisfactory to the
Administrative Agent, the Lenders, and their respective
counsel;
3.2.3 (x) a certificate of the Secretary or
Assistant Secretary of each Credit Party certifying that (A)
the copy of its By-laws attached to the certificate of its
Secretary or Assistant Secretary delivered on the Closing
Date, or in the case of AmesPlace.com as delivered in
connection with the Sixth Amendment, is a true and complete
copy of its By-laws as in effect on the date of the
certificate delivered pursuant to this subsection and such
By-laws have not been amended since the Closing Date, (B) all
required corporate actions in connection with the execution,
delivery and performance of this Seventh Amendment have been
taken and, if resolutions have been adopted by its Board of
Directors or shareholders, that attached thereto is a true and
complete copy of such resolutions and that such resolutions
have not been modified, rescinded or amended and are in full
force and effect, (C) its certificate or articles of
incorporation has not been amended since the date of the last
amendment thereto shown on the certificate of good standing
from the Secretary of State of the state of its incorporation
delivered on the Closing Date and in the case of
AmesPlace.com, the date of the good standing certificate
delivered in connection with the Sixth Amendment and (D) the
officers executing this Seventh Amendment or any other
document to which it is a party delivered in connection
herewith or therewith are the incumbent officers and their
signatures are as set forth thereto; and (y) a certificate of
another officer thereof attesting to the incumbency and
signature of its Secretary or Assistant Secretary, as the case
may be;
3.2.4 Such other approvals, opinions or documents as the Administrative
Agent may reasonably request; and
3.2.5 Such amendments and modifications to the
other Loan Documents as the Administrative Agent may reasonably request.
3.3 To the extent invoiced, the Borrower shall have paid all fees and
expenses of the Administrative Agent and the Attorney Costs incurred in
connection with this Seventh Amendment and the transactions contemplated hereby.
3.4 All proceedings taken in connection with the execution of this Seventh
Amendment and all documents and papers relating hereto and thereto shall be
satisfactory in form, scope, and substance to the Administrative Agent.
3.5 All representations and warranties contained in this Seventh Amendment
or otherwise made in writing to the Administrative Agent or the Lenders in
connection herewith shall be true and correct in all material respects.
3.6 After the effectiveness of this Seventh Amendment, no unwaived event
has occurred and is continuing which constitutes a Default or an Event of
Default under the Credit Agreement.
-95-
<PAGE>
The execution and delivery to the Administrative Agent by the
Credit Parties of a counterpart of this Seventh Amendment shall be deemed to be
a representation and warranty made by each Credit Party to the effect that the
conditions precedent to the Effective Date set forth in 3.5 and 3.6 above have
been satisfied, with the same effect as delivery to the Administrative Agent and
the Lenders of a certificate signed by a Responsible Officer of each Credit
Party, dated the Effective Date, to such effect.
SECTION 4. MISCELLANEOUS
4.1 Each Credit Party affirms, reaffirms and restates the representations
and warranties set forth in Articles 6 and 8 of the Original Agreement, as
amended by this Seventh Amendment, and all such representations and warranties
shall be true and correct on the date hereof with the same force and effect as
if made on such date.
4.2 Each Credit Party represents and warrants that the Borrower is and at
all times will continue to be the sole Credit Party which owns Inventory and
that all such Inventory is subject to no Liens except Permitted Liens.
4.3 Each Credit Party represents and warrants (which representations and
warranties shall survive the execution and delivery hereof) to the Agent that:
(a) It has the corporate power and authority to
execute, deliver and carry out the terms and provisions of
this Seventh Amendment and the transactions contemplated
hereby and has taken or caused to be taken all necessary
corporate action to authorize the execution, delivery and
performance of this Seventh Amendment and the transactions
contemplated hereby;
(b) No consent of any other person (including,
without limitation, shareholders or creditors of any Credit
Party), and no action of, or filing with any governmental or
public body or authority is required to authorize, or is
otherwise required in connection with the execution, delivery
and performance of this Seventh Amendment and the other
instruments and documents contemplated hereby;
(c) This Seventh Amendment and the other instruments
and documents contemplated hereby have been duly executed and
delivered by a duly authorized officer on behalf of such
party, and constitutes a legal, valid and binding obligation
of such party enforceable against such party in accordance
with its terms, subject to bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and the exercise of
judicial discretion in accordance with general principles of
equity; and
(d) The execution, delivery and performance of this
Seventh Amendment and the other instruments and documents
contemplated hereby will not violate any law, statute or
regulation, or any order or decree of any court or
governmental instrumentality, or conflict with, or result in
the breach of, or constitute a default under any contractual
obligation of such party.
4.4 Other than as expressly set forth herein,
nothing herein shall be deemed to be a waiver of any covenant or agreement
contained in the Original Agreement, and each Credit Party hereby agrees that
all of the covenants and agreements contained in the Original Agreement and the
other Loan Documents are hereby ratified and confirmed in all respects and shall
remain in full force and effect in accordance with their respective terms. Each
Credit Party affirms its prior grant under the Original Agreement of a
continuing first priority security interest in, lien on, and right of set-off
against, all of the Collateral of such Credit Party, whether now owned or
existing or hereafter acquired or arising, regardless of where located, and each
of them shall enter into any confirmatory documentation requested by the
Administrative Agent.
4.5 All references to the Credit Agreement in
the Credit Agreement or any other Loan Document and the other documents and
instruments delivered pursuant to or in connection therewith shall mean such
agreement as amended hereby and as each may in the future be amended, restated,
supplemented or modified from time to time.
-96-
<PAGE>
4.6 This Seventh Amendment may be executed by
the parties hereto individually or in combination, in one or more
counterparts, each of which shall be an original and all of which shall
constitute one and the same agreement.
4.7 Delivery of an executed counterpart of a
signature page by telecopier shall be effective as delivery of a manually
executed counterpart.
4.8 This Seventh Amendment shall be governed by,
and construed and interpreted in accordance with, the laws of the State of
New York.
4.9 The parties hereto shall, at any time
and from time to time following the execution of this Seventh Amendment,
execute and deliver all such further instruments and take all such further
action as may be reasonably necessary or appropriate in order to carry out the
provisions of this Seventh Amendment.
IN WITNESS WHEREOF, the Borrower, the Majority
Lenders, the Administrative Agent and the other Credit Parties have caused
this Seventh Amendment to be duly executed by their respective authorized
officers as of the day and year first above written.
BANK OF AMERICA, N.A., as the Administrative Agent
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
BORROWER: AMES MERCHANDISING CORPORATION
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES DEPARTMENT STORES, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Senior Executive Vice President and CFO
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
-97-
<PAGE>
AMESPLACE.COM, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES REALTY II, INC., as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
AMES TRANSPORTATION SYSTEMS, INC.,
as a Guarantor
By:
-----------------------------------------
Name: Rolando de Aguiar
Title: Vice President
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Rolando de Aguiar
Telecopy No.: (860) 563-8560
BANK OF AMERICA, N.A.,
as a Lender
By:
-----------------------------------------
Name: William J. Wilson
Title: Senior Account Executive
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
-98-
<PAGE>
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:
-----------------------------------------
Name: Cindy B. Dennbaum
Title: Vice President
Address: 1133 Avenue of the Americas
New York, New York 10036
Attn: Ms. Cindy Dennbaum
Telecopy No.: (212) 545-4283
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Sean McWhinnie
Title: Authorized Signatory
Address: 800 Connecticut Avenue, 2 North
Norwalk, Connecticut 06854
Attn: Vice President - Portfolio
Telecopy No.: (203) 316-7893
TRANSAMERICA BUSINESS CREDIT CORPORATION, as a Lender
By:
------------------------------------
Name: Michael S. Burns
Title: Vice President
Address: 555 Theodore Fremd Avenue, Suite 301
Rye, New York 10580
Attn: Mr. Jon Oldham
Telecopy No.: (914) 921-0110
THE CHASE MANHATTAN BANK,
as a Lender
By:
-----------------------------------------
Name: James M. Dailey
Title: Vice President
Address: 633 Third Avenue
New York, New York 10017
Attn: Credit Deputy
Telecopy No.: (212) 622-5218
-99-
<PAGE>
FLEET CAPITAL CORPORATION,
as a Lender
By:
-----------------------------------------
Name: John P. Masotti
Title: Vice President
Address: 200 Glastonbury Blvd.
Glastonbury, CT 06033
Attn: Mr. John Masotti
Telecopy No.: (860) 657-7759
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By:
-----------------------------------------
Name: Lawrence P. Garni
Title: First Vice President
Address: 477 Madison Avenue, 12th Floor
New York, New York 10022
Attn: Mr. Corey Sclar
Telecopy No.: (212) 371-2966
FLEET NATIONAL BANK, as a Lender
By:
-----------------------------------------
Name: Linda Smyth
Title: Vice President
Address: 777 Main Street
MSN 240
Hartford, Connecticut 06115
Attn: Linda Smyth
Telecopy No.: (860) 986-6919
NATIONAL CITY COMMERCIAL FINANCE, INC., as a Lender
By:
-----------------------------------------
Name: Matthew D. Sheets
Title: Account Executive
Address: 1965 East 6th Street, Suite 400
Cleveland, Ohio 44114
Attn: Ms. Carla Kehres
Telecopy No.: (216) 575-9486
-100-
<PAGE>
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-----------------------------------------
Name: Janeann Fehrle
Title: Vice President
Address: 1600 Market Street, 31st Floor F2-F070-31-2
Philadelphia, Pennsylvania 19103
Attn: Ms. Janeann Fehrle
Telecopy No.: (215) 585-4749
CITIZENS BUSINESS CREDIT COMPANY,
as a Lender
By:
-----------------------------------------
Name: John Atanasoff
Title: Vice President
Address: 40 Court Street
Boston, Massachusetts 02108
Attn: Mr. John Atanasoff
Telecopy No.: (617) 695-4748
FOOTHILL CAPITAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Nakamoto
Title: Vice President
Address: 11111 Santa Monica Blvd.
Los Angeles, California 90025
Attn: Mr. Todd Nakamoto
Telecopy No.: (310) 479-8952
AMSOUTH BANK, as a Lender
By:
-----------------------------------------
Name: Kevin P. Rogers
Title: Attorney in Fact
Address: c/o AmSouth Capital Corp.
350 Park Avenue, 19th Floor
New York, New York 10022
Attn: Mr. Joseph B. Huston
Telecopy No.: (212) 935-7548
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<PAGE>
IBJ WHITEHALL BUSINESS CREDIT CORPORATION, as a Lender
By:
-----------------------------------------
Name: Andrew Sepe
Title: Vice President
Address: One State Street
New York, New York 10004
Attn: Mr. Andrew Sepe
Telecopy No.: (212) 858-2151
FLEET RETAIL FINANCE INC.,
as a Lender
By:
-----------------------------------------
Name: Betsy Ratto
Title: Managing Director
Address: 40 Broad Street, 11th Floor
Boston, Massachusetts 02109
Attn: Ms. Betsy Ratto
Telecopy No.: (617) 434-4339
CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:
-----------------------------------------
Name: Evelyn Kusold
Title: Vice President
Address: 1211 Avenue of the Americas
New York, New York 10036
Attn: Ms. Evelyn Kusold
Telecopy No.: (212) 536-1295
TEXTRON FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Todd Runge
Title: Vice President
Address: 4550 North Point, Suite 400
Alpharetta, Georgia 30022
Attn: Ms. Christine MacKay
Telecopy No.: (770) 360-1672
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<PAGE>
HELLER FINANCIAL, INC., as a Lender
By:
-----------------------------------------
Name: John Buff
Title: Senior Vice President
Address: 150 East 42nd Street, 7th Floor
New York, New York 10017
Attn: Mr. Thomas Bukowski
Telecopy No.: (212) 880-2960
FINOVA FINANCIAL CORPORATION, as a Lender
By:
-----------------------------------------
Name: Bruce Mettle
Title: Portfolio Administrator
Address: 311 South Wacker Drive, Suite 4400
Chicago, IL 60606
Attn: Mr. Bruce Mettle
Telecopy No.: (312) 322-7250
GMAC COMMERCIAL CREDIT LLC, as a Lender
By:
-----------------------------------------
Name: Robert E. Nuytkens
Title: Vice President
Address: 1290 Avenue of the Americas, 3rd Floor
New York, New York 10004
Attn: Mr. Robert E. Nuytkens
Telecopy No.: (212) 408-4317
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<PAGE>
<TABLE>
SCHEDULE I
COMMITMENTS
-------------------------------------------------------------------------- ------------------------- --------------------
Name of Lender Commitment Commitment
to 11/30/00 thereafter
-------------------------------------------------------------------------- ------------------------- --------------------
-------------------------------------------------------------------------- ------------------------- --------------------
<S> <C> <C>
BANK OF AMERICA, N.A. $57,432,000 $50,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
CONGRESS FINANCIAL CORPORATION $50,000,000 $50,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
GENERAL ELECTRIC CAPITAL CORPORATION $57,432,000 $50,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
TRANSAMERICA BUSINESS CREDIT CORPORATION $50,000,000 $50,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
THE CHASE MANHATTAN BANK $34,460,000 $30,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
FLEET CAPITAL CORPORATION $28,716,000 $25,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
LASALLE BUSINESS CREDIT, INC. $25,000,000 $25,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
FLEET NATIONAL BANK $11,487,000 $10,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
NATIONAL CITY COMMERCIAL FINANCE, INC. $28,716,000 $25,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
PNC BANK, NATIONAL ASSOCIATION $25,000,000 $25,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
CITIZENS BUSINESS CREDIT COMPANY $20,000,000 $20,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
FOOTHILL CAPITAL CORPORATION $57,432,000 $50,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
AMSOUTH BANK $22,973,000 $20,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
IBJ WHITEHALL BUSINESS CREDIT CORPORATION $17,230,000 $15,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
FLEET RETAIL FINANCE INC. $40,203,000 $35,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
CIT GROUP/BUSINESS CREDIT, INC. $50,000,000 $50,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
TEXTRON FINANCIAL CORPORATION $28,716,000 $25,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
HELLER FINANCIAL, INC. $50,000,000 $50,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
FINOVA FINANCIAL CORPORATION $10,000,000 $10,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
GMAC COMMERCIAL CREDIT LLC $40,203,000 $35,000,000
-------------------------------------------------------------------------- ------------------------- --------------------
</TABLE>
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<PAGE>
<TABLE>
SCHEDULE II
FEES
--------------------------------------------------------------------------------- ------------------------
Name of Lender Amendment Fee
--------------------------------------------------------------------------------- ------------------------
<S> <C>
BANK OF AMERICA, N.A. $74,324
--------------------------------------------------------------------------------- ------------------------
CONGRESS FINANCIAL CORPORATION $46,154
--------------------------------------------------------------------------------- ------------------------
GENERAL ELECTRIC CAPITAL CORPORATION $74,324
--------------------------------------------------------------------------------- ------------------------
TRANSAMERICA BUSINESS CREDIT CORPORATION $46,154
--------------------------------------------------------------------------------- ------------------------
THE CHASE MANHATTAN BANK $44,596
--------------------------------------------------------------------------------- ------------------------
FLEET CAPITAL CORPORATION $37,162
--------------------------------------------------------------------------------- ------------------------
LASALLE BUSINESS CREDIT, INC. $23,077
--------------------------------------------------------------------------------- ------------------------
FLEET NATIONAL BANK $14,865
--------------------------------------------------------------------------------- ------------------------
NATIONAL CITY COMMERCIAL FINANCE, INC. $37,162
--------------------------------------------------------------------------------- ------------------------
PNC BANK, NATIONAL ASSOCIATION $23,077
--------------------------------------------------------------------------------- ------------------------
CITIZENS BUSINESS CREDIT COMPANY $18,461
--------------------------------------------------------------------------------- ------------------------
FOOTHILL CAPITAL CORPORATION $74,324
--------------------------------------------------------------------------------- ------------------------
AMSOUTH BANK $29,730
--------------------------------------------------------------------------------- ------------------------
IBJ WHITEHALL BUSINESS CREDIT CORPORATION $22,297
--------------------------------------------------------------------------------- ------------------------
FLEET RETAIL FINANCE INC. $52,027
--------------------------------------------------------------------------------- ------------------------
CIT GROUP/BUSINESS CREDIT, INC. $46,154
--------------------------------------------------------------------------------- ------------------------
TEXTRON FINANCIAL CORPORATION $37,162
--------------------------------------------------------------------------------- ------------------------
HELLER FINANCIAL, INC. $46,154
--------------------------------------------------------------------------------- ------------------------
FINOVA FINANCIAL CORPORATION $9,231
--------------------------------------------------------------------------------- ------------------------
GMAC COMMERCIAL CREDIT LLC $52,027
--------------------------------------------------------------------------------- ------------------------
</TABLE>
-105-
<PAGE>
