Exhibit 4.1
SECOND AMENDMENT
THIS SECOND AMENDMENT (this "Amendment") dated as of July 12, 2001, to
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the Credit Agreement referenced below, is by and among SCHOOL SPECIALTY, INC., a
Wisconsin corporation (the "Borrower"), the Subsidiaries of the Borrower
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identified as "Guarantors" on the signature pages hereto, the Lenders identified
herein, and BANK OF AMERICA, N.A., a national banking association formerly known
as NationsBank, N.A., as Administrative Agent. Capitalized terms used herein
but not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $350 million credit facility has been extended to the
Borrower pursuant to the terms of that Amended and Restated Credit Agreement (as
amended, modified, supplemented and extended, the "Credit Agreement") dated as
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of September 30, 1998 by and among the Borrower, the Subsidiaries of the
Borrower identified as "Guarantors" therein, the Lenders identified therein,
Bank One Wisconsin (now known as Bank One, NA) and U.S. Bank National
Association, as Documentation Agents, and NationsBank, N.A. (now known as Bank
of America, N.A.), as Administrative Agent;
WHEREAS, the Borrower has requested certain modifications to the
Credit Agreement; and
WHEREAS, the Required Lenders have consented to the requested
modifications on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments. The Credit Agreement is amended in the following
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respects:
1.1 In Section 1.1 of the Credit Agreement, the pricing grid in the
definition of "Applicable Percentage" is amended to read as follows:
Consolidated Base Eurodollar Margin
Pricing Leverage Rate and Commitment
Level Ratio Margin Letter of Credit Fee Fee
----- ----- ------ -------------------- ---
I ** 2.25 0.00% 1.00% 0.275%
II * 2.25 but ** 2.75 0.00% 1.25% 0.325%
III * 2.75 but ** 3.25 0.25% 1.50% 0.375%
IV * 3.25 but ** 3.75 0.50% 1.75% 0.425%
V * 3.75 but ** 4.25 0.75% 2.00% 0.475%
VI * 4.25 1.00% 2.25% 0.500%
* Denotes greater than
** Denotes less than or equal to
1.2 In Section 1.1 of the Credit Agreement, the following definitions
are amended or added to read as follows:
"Consolidated Senior Funded Debt" means Consolidated Funded Debt
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that is not Subordinated Debt.
"Consolidated Senior Leverage Ratio" means, as of the last day of
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any fiscal quarter, the ratio of Consolidated Senior Funded Debt
on such day to Consolidated EBITDA for the period of four
consecutive fiscal quarters ending as of such day.
"Senior Subordinated Note Documents" means the Senior
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Subordinated Notes, the indenture or note purchase agreement(s)
relating thereto and all other documents, instruments and
agreements relating thereto.
"Senior Subordinated Notes" means those Senior Subordinated Notes
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of the Borrower substantially as described on Exhibit A to the
Second Amendment to this Credit Agreement.
"Subordinated Debt" means (a) the Senior Subordinated Notes and
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(b) any Indebtedness of a member of the Consolidated Group which
by its terms is expressly subordinated in right of payment to the
prior payment of the obligations under the Credit Documents on
terms and conditions satisfactory to the Required Lenders.
1.3 Clause (a) of Section 7.9 of the Credit Agreement is amended to
read as follows:
(a) Consolidated Leverage Ratio. As of the end of each fiscal
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quarter set forth below, the Consolidated Leverage Ratio shall
not be greater than:
Each fiscal quarter ending on the last
Saturday in July of each year 5.15:1.0
Each fiscal quarter (other than the fiscal
quarter ending on the last Saturday in July)
of each year 4.40:1.0
1.4 A new clause (e) is added to Section 7.9 of the Credit Agreement
to read as follows:
(a) Consolidated Senior Leverage Ratio. As of the end of each
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fiscal quarter set forth below, the Consolidated Senior
Leverage Ratio shall not be greater than:
Each fiscal quarter ending on the last
Saturday in July of each year 3.75:1.0
Each fiscal quarter (other than the fiscal quarter
ending on the last Saturday in July) of each year 3.00:1.0
1.5 A new clause (c) is added to Section 7.11 of the Credit Agreement
to read as follows:
(c) Guaranties Given in respect of Other Indebtedness.
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Notwithstanding anything to the contrary contained herein, if at
any time any Subsidiary that is not a Guarantor hereunder shall
provide a guaranty in respect of the Senior Subordinated Notes,
then the Borrower shall (i) promptly notify the Administrative
Agent thereof and promptly (and in any event within fifteen (15)
days) cause such Subsidiary to become a Guarantor by execution of
a Joinder Agreement and (ii) deliver with the Joinder Agreement,
supporting resolutions, incumbency certificates, corporate
formation and organizational documentation and opinions of
counsel as the Administrative Agent may reasonably request.
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1.6 Clause (g) of Section 8.1 of the Credit Agreement is amended to as
follows:
(g) Subordinated Debt consisting of:
(i) the Senior Subordinated Notes in an aggregate principal
amount of up to $115,00,000 (and renewals, refinancing and refundings
of the then outstanding principal amount thereof, provided that the
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terms of subordination therefor shall be identical in all material
respects to the terms of subordination contained in the Senior
Subordinated Note Documents and on other terms and conditions no less
favorable to the Lenders than the terms and conditions contained in
the Senior Subordinated Note Documents; and
(ii) other Subordinated Debt, provided that (A) the Borrower
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shall demonstrate it will be in compliance with the financial
covenants in Section 7.9 on a Pro Forma Basis for the period of four
consecutive fiscal quarters immediately preceding the date of such
issuance and (B) no Default or Event of Default shall exist after
giving effect to the issuance thereof;
1.7 Section 8.9 of the Credit Agreement is amended to read as follows:
8.9 Actions With Respect To Other Indebtedness.
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(a) After the issuance thereof, amend or modify (or permit the
amendment or modification of) any of the terms of any other
Indebtedness if such amendment or modification would add or change any
terms in a manner adverse to the Consolidated Group, or shorten the
final maturity or average life to maturity thereof or require any
payment to be made sooner than originally scheduled or increase the
interest rate or fees applicable thereto, or, in the case of
Subordinated Debt, change any subordination provision thereof; or
(b) (i) Make any prepayment, redemption, defeasance or
acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect
thereto before due for the purpose of paying when due), or
refund, refinance or exchange of any Subordinated Debt other than
(A) regularly scheduled payments of interest (provided that such
payment of interest does not violate the subordination provisions
of the Subordinated Debt Documents) and (B) the conversion of the
Senior Subordinated Notes into equity; or
(ii) Make any prepayment, redemption, defeasance or
acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect
thereto before due for the purpose of paying when due), or
refund, refinance or exchange of any other Funded Debt (other
than the Obligations or intercompany Indebtedness permitted
hereunder) other than (a) regularly scheduled payments of
principal and interest, (b) Funded Debt having an interest rate
in excess of the Base Rate, and (c) provided no Default or Event
of Default shall exist immediately prior or after giving effect
thereto on a Pro Forma Basis, other Funded Debt not exceeding
$250,000 in any instance and $500,000 in the aggregate in any
calendar year.
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(c) Enter into any agreement, instrument or other document
creating, evidencing or relating to any Indebtedness which provides
that such Indebtedness is "Designated Senior Debt" for purposes of the
Senior Subordinated Note Documents.
1.8 Section 8.11 of the Credit Agreement is amended to read as follows:
8.11 No Further Negative Pledges.
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Except for (a) prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular
Indebtedness (which Indebtedness relates solely to such specific
Property, and improvements and accretions thereto, and is otherwise
permitted hereby) and (b) the Senior Subordinated Note Documents, no
member of the Consolidated Group will enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its material properties or
assets, whether now owned or hereafter acquired, or requiring the
grant of any material security for such obligation if security is
given for some other obligation.
2. Consent to Senior Subordinated Notes. As required in the definition
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of "Subordinated Debt", the Lenders hereby consent to the terms of
subordination, and the other terms and conditions, of the Senior Subordinated
Note Documents substantially as described in Exhibit A attached hereto.
3. Repayment of Term Loan. The Borrower hereby covenants and agrees that
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immediately upon receipt by the Borrower of the cash proceeds from the issuance
of the Senior Subordinated Notes, the Borrower shall make payment on the Term
Loan in the amount of $25,000,000, such payment to be applied to the principal
amortization installments ratably.
4. Change of Notice Address. Pursuant to Section 11.1 of the Credit
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Agreement, the Borrower hereby gives notice to the Administrative Agent and the
Lenders that all notices and other communications to the Borrower or any
Guarantor shall be made to the following address:
School Specialty, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
5. Conditions Precedent. This Amendment shall be effective as of the
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date set forth above upon satisfaction of the following conditions:
(a) execution of this Amendment by the Credit Parties and the
Required Lenders;
(b) receipt by the Administrative Agent, for the ratable benefit
of the Lenders that execute this Amendment (the "Approving Lenders"), of an
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amendment fee equal to ten basis points (0.10%) on the sum of the aggregate
Revolving Commitments of the Approving Lenders plus the aggregate
outstanding Term Loans of the Approving Lenders (after giving effect to the
repayment of the Term Loan set forth in Section 3 of this Amendment); and
(c) receipt by the Administrative Agent, for its own account, of
all fees and other amounts owing to the Administrative Agent in connection
with this Amendment.
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6. No Other Changes. Except as expressly modified hereby, all of the
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terms and provisions of the Credit Documents (including schedules and exhibits
thereto) shall remain in full force and effect.
7. Reaffirmation of Representations and Warranties. The Credit
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Parties hereby affirm that the representations and warranties set out in Section
6 of the Credit Agreement are true and correct as of the date hereof (except
those that expressly relate to an earlier period).
8. Reaffirmation of Guaranty. Each of the Guarantors (i)
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acknowledges and consents to all of the terms and conditions of this Amendment,
(ii) affirms all of its obligations under the Credit Documents and (iii) agrees
that this Amendment and all documents executed in connection herewith do not
operate to reduce or discharge such Guarantor's obligations under the Credit
Agreement or the other Credit Documents.
9. Counterparts. This Amendment may be executed in any number of
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counterparts, each of which when so executed and delivered shall be deemed an
original and it shall not be necessary in making proof of this Amendment to
produce or account for more than one such counterpart.
10. Governing Law. This Amendment shall be deemed to be a contract
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made under, and for all purposes shall be construed in accordance with the laws
of the State of New York.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
BORROWER: SCHOOL SPECIALTY, INC.
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a Wisconsin corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
GUARANTORS: CHILDCRAFT EDUCATION CORP.,
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a New York corporation
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC,
a Delaware limited liability company
BIRD-IN-HAND WOODWORKS, INC.,
a New Jersey corporation
SPORTIME, LLC,
a Delaware limited liability company
▇▇▇▇▇▇▇.▇▇▇, INC.,
a Wisconsin corporation
GLOBAL VIDEO, LLC,
a Wisconsin limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Treasurer
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LENDERS: BANK OF AMERICA, N.A.,
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individually as a Lender and in its capacity as
Administrative Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
BANK ONE, NA (main office, Chicago)
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Director, Capital Markets
U.S. BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Commercial Banking Associate
THE BANK OF NEW YORK
By: /s/ ▇. ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Commercial Banking Associate
CITIZENS BANK OF MASSACHUSETTS
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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LASALLE NATIONAL BANK
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President & Senior Lender
ST. ▇▇▇▇▇▇▇ BANK, F.S.B.
By: /s/ ▇▇▇▇ ▇. Tans
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Name: ▇▇▇▇ ▇. Tans
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ Royalty
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Name: R. ▇▇▇▇ Royalty
Title: Vice President
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ BANK
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
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