Exhibit 10.1
Execution Copy
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THIRD AMENDMENT AND SECOND WAIVER, dated as of September 28,
2005
(this "Amendment and Waiver"), to and under
the CREDIT AGREEMENT, dated as of
March 31, 2004 (as heretofore amended,
supplemented or otherwise modified, the
"Credit Agreement"), among HOME INTERIORS
& GIFTS, INC., a Texas corporation
(the "Borrower"), the several banks and
other financial institutions from time
to time parties thereto (the "Lenders"),
BEAR STEARNS CORPORATE LENDING INC., as
syndication agent (in such capacity, the
"Syndication Agent") and JPMORGAN CHASE
BANK, N.A. (formerly known as JPMorgan
Chase Bank), as administrative agent for
the Lenders (in such capacity, the
"Administrative Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders, the Syndication Agent and
the
Administrative Agent are parties to the
Credit Agreement;
WHEREAS, the Borrower has requested that the Lenders agree to
(a)
waive until November 28, 2005 compliance
with the financial covenants contained
in Section 7.1 of the Credit Agreement and
(b) amend certain provisions of the
Credit Agreement; and
WHEREAS, the Lenders are willing to agree to such requested
waivers
and amendments, but only upon the terms of
this Amendment and Waiver;
NOW, THEREFORE, in consideration of the premises and of the
mutual
agreements herein contained, the parties
hereto agree as follows:
SECTION 1 Definitions. Unless otherwise defined herein,
capitalized
terms which are defined in the Credit
Agreement shall be used as so defined.
SECTION 2 Waiver to the Credit Agreement. The Lenders hereby
waive
during the period from and including June
30, 2005 to but excluding November 28,
2005 compliance by the Borrower with the
Consolidated Leverage Ratio set forth
in Section 7.1(a) of the Credit Agreement
and the Consolidated Interest Coverage
Ratio set forth in Section 7.1(b) of the
Credit Agreement, in each case for the
period ending on each of June 30, 2005 and
September 30, 2005 (it being
understood that such waiver shall expire on
November 28, 2005 such that any
Default or Event of Default that would have
occurred during the period from and
including June 30, 2005 to but excluding
November 28, 2005 (without giving
effect to any waiver by the Lenders of such
Default or Event of Default) shall
be deemed to have occurred on November 28,
2005 and shall be continuing
thereafter).
SECTION 3 Amendments to the Credit Agreement.
(a) Amendment to
Section 1.1 of the Credit Agreement. Section 1.1 of
the Credit Agreement is hereby amended
by:
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(i) adding thereto the following definitions in their
appropriate alphabetical order:
"Supermajority Lenders": at any time, the holders of more
than 66-2/3% of the sum of (a) the aggregate unpaid principal
amount
of the Term Loans then outstanding and (b) the Total Revolving
Commitments then in effect or, if the Revolving Commitments have
been
terminated, the Total Revolving Extensions of Credit then
outstanding. Defaulting Lenders shall not be included in the
calculation of Supermajority Lenders.
"Third
Amendment": the Third Amendment and Second Waiver,
dated as of September 28, 2005, to and under this Agreement.
"Third Amendment Effective Date": the date on which the
conditions to the effectiveness of the Third Amendment shall
have
been satisfied, which date is September 28, 2005.
(ii) adding "or Section 7.5(k)" at the end of the
definition of "Asset Sale" immediately before the period therein;
and
(iii) adding at the following at the end of the definition
of "Interest Payment Date" immediately before the period
therein:
", provided, however, that during the Waiver Period, (x) as to
any
ABR Loan, the last day of each calendar month, (y) as to any
Eurodollar Loan having an Interest Period of one month, the last
day
of such Interest Period and (z) as to any Eurodollar Loan having
an
Interest Period longer than one month, each day that is one month,
or
a whole multiple thereof, after the first day of such Interest
Period
and the last day of such Interest Period".
(iv) deleting the definition of Waiver Period in its
entirety and substituting in lieu thereof the following
definition:
"Waiver Period": the period from and including September
29, 2005 to but excluding November 28, 2005.
(b) Amendment to Section 2.1 of the Credit Agreement. Section
2.1(b)
of the Credit Agreement is hereby amended
by adding the following new sentence
at the end thereof:
"Notwithstanding the foregoing, during the Waiver Period this
Section
2.1(b) shall be inoperative.".
(c)
Amendment to Section 2.11 of the Credit Agreement. Section 2.11
of the Credit Agreement is hereby amended
by:
(i) inserting the words "(provided that any such Net Cash
Proceeds excluded during the Waiver Period shall not exceed
$1,000,000)" immediately after the amount "$5,000,000" where it
appears therein;
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(ii) deleting the words "this Section 2.11" in the first
sentence of Section 2.11(d) and replacing in lieu thereof the
words
"Sections 2.11(a), (b) or (c)"; and
(iii) adding the following new Section 2.11(e):
"(e) If, after giving effect to any Revolving Extension of
Credit made during the Waiver Period and the anticipated use
thereof
within three Business Days of the date of such Revolving Extension
of
Credit, Available Cash exceeds $7,500,000 (any such excess,
"Excess
Available Cash"), the Borrower shall, on such third Business
Day,
apply such Excess Available Cash toward the prepayment of any
outstanding Revolving Loans (without a concurrent reduction of
the
Revolving Commitments)."
(d) Amendment to Section 4.2 of the Credit Agreement. Section 4.2
of
the Credit Agreement is hereby amended by
adding the following proviso at the
end of such Section immediately before the
period therein:
"; provided, however, that during the Waiver Period, the
foregoing
representation as to a material adverse effect on the business,
property, operations or condition (financial or otherwise) of
the
Group Members taken as a whole shall be made since June 30,
2005".
(e) Amendment to Section 5.2 of the Credit Agreement. Section 5.2
of
the Credit Agreement is hereby amended by
deleting Section 5.2(c) in its
entirety and replacing in lieu thereof the
following paragraph:
"(c)
Post Third Amendment Effective Date Conditions to
Revolving Extensions of Credit. After the Third Amendment
Effective
Date, (i) after giving effect to any proposed Revolving Extension
of
Credit, the Total Revolving Extensions of Credit shall not
exceed
$35,000,000 and (ii) after giving effect to any proposed
Revolving
Extension of Credit and the anticipated use thereof within
three
Business Days of the date of such Revolving Extension of
Credit,
Available Cash shall not exceed $7,500,000.".
(f) Amendment to Section 6.2 of the Credit Agreement. Section 6.2
of
the Credit Agreement is hereby amended by
(i) deleting the word "and" at the end
of Section 6.2(e), (ii) renaming Section
6.2(f) as Section 6.2(g) and (iii)
inserting the following new Section
6.2(f):
"(f) On or before November 15, 2005, a detailed business
and balance sheet recapitalization plan for fiscal years
2005-2010
and a written analysis of the business prospects of the Borrower
and
its Subsidiaries for the period from 2005 through 2010, in each
case
in form and substance reasonably satisfactory to the
Administrative
Agent; and".
(g) Amendment to Section 7.2 of the Credit Agreement. Section 7.2
of
the Credit Agreement is hereby amended
by:
(i) in
