WAIVER AGREEMENT dated as of July 31, 1997 (this "WAIVER"), among
GANTOS, INC., a Michigan corporation (the "BORROWER"), FLEET BANK, N.A.
(formerly known as Natwest Bank N.A.) and LASALLE NATIONAL BANK as lenders
(each individually, a "LENDER" and collectively, the "Lenders"), and FLEET
BANK, N.A. (formerly known as Natwest Bank N.A.) as agent for the Lenders (in
such capacity, the "AGENT"). Reference is made to the Revolving Credit
Agreement dated as of March 10, 1995 (as heretofore and hereafter amended,
supplemented or modified from time to time in accordance with its terms, the
"CREDIT AGREEMENT") among the Borrower, the Lenders, and the Agent. Unless
otherwise specifically defined herein, all capitalized terms used herein
shall have the respective meanings ascribed to such terms in the Credit
WHEREAS, Section 7.10 of the Credit Agreement requires that EBITDA of
the Borrower and its subsidiaries for the four fiscal quarter period ended
July 31, 1997 shall have been no less than $6,800,000.
WHEREAS, the Borrower has informed the Agent and the Lenders that EBITDA
of the Borrower and its subsidiaries for such period exceeded $6,000,000 but
was less than $6,800,000; and
WHEREAS, the Borrower has requested that the Agent and the Lenders waive
the requirement under said Section 7.10 that EBITDA of the Borrower and its
subsidiaries for such period shall have been no less than $6,800,000.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions and
fulfillment of the conditions set forth below, the parties hereto agree as
1. CONDITIONAL WAIVER OF SECTION 7.10 OF THE CREDIT AGREEMENT. Subject
to the conditions as to effectiveness set forth in Paragraph 3 of this
Waiver, so long as EBITDA of the Borrower and its subsidiaries for the four
fiscal quarter period ended July 31, 1997 exceeded $6,000,000 the Agent and
the Lenders waive the requirement under Section 7.10 of the Credit Agreement
that EBITDA of the Borrower and its subsidiaries for such period shall have
been no less than $6,800,000.
2. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants as follows (which representations and warranties shall survive the
execution and delivery of this Waiver) as of the date hereof that:
(a) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of
the date hereof with the same force and effect as if made on such date
(except to the extent that any such representation or warranty relates
expressly to an earlier date).
(b) No registration or filing with, consent or approval of, or
other action by, any Federal, State or other governmental agency, authority
or regulatory body is or will be required on behalf of the Borrower in
connection with the execution, delivery, performance, validity or enforcement
of this Waiver other than any such registration or filing which has been made
or any such consent, approval or other action which has been obtained and
remains in full force and effect and other than the filing of a Form 10-Q or
a Form 10-K with the Securities and Exchange Commission.
(c) The execution, delivery and performance of this Waiver by the
Borrower will not violate any provision of the certificate or articles of
incorporation or bylaws of the Borrower or any of its subsidiaries or any
law, statute, rule or regulation, or any order or decree of any court or
governmental instrumentality applicable to the Borrower or any of its
subsidiaries, or violate, result in the breach of or constitute a default
under any indenture, agreement or other instrument to which the Borrower or
any of its subsidiaries or any of their respective properties or assets are
or may be bound.
(d) After giving effect to this Waiver, the Borrower is in
compliance with all of the various covenants and agreements applicable to it
set forth in the Credit Agreement and each of the other Loan Documents.
(e) After giving effect to this Waiver, no event has occurred and
is continuing which constitutes or would constitute, with the giving of
notice or the lapse of time or both, an Event of Default under the Credit
Agreement or any of the other Loan Documents, or an Event of Default (as
defined in the Indenture) under the Indenture.
(f) The Borrower has no defense to or setoff, counterclaim or
claim against payment of the Obligations or enforcement of the Loan Documents
based upon a fact or circumstance existing or occurring on or prior to the
3. CONDITIONS PRECEDENT. Notwithstanding any term or provision
of this Waiver to the contrary, the waiver set forth in Paragraph 1 hereof
shall become effective until the Agent shall have determined that each of the
following conditions precedent shall have been satisfied:
(a) All representations and warranties made by the Borrower
contained in Paragraph 2 hereof shall be true and correct with the same
effect as though such representations and warranties had been made on the
date of effectiveness of this Waiver after giving effect to such Waiver
(unless any such representation or warranty speaks expressly to an earlier
(b) Counterparts of this Waiver shall have been duly executed and
delivered on behalf of the Borrower, the Lenders and the Agent.
4. CONTINUED EFFECTIVENESS. Each of the parties hereto agrees that,
except as expressly supplemented by this Waiver, all of the covenants and
agreements and other provisions contained in the Credit Agreement and the
other Loan Documents are hereby ratified and confirmed in all respects and
shall remain in full force and effect from and after the date of this Waiver.
5. COUNTERPARTS. This Waiver may be executed in two or more
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. Delivery of an executed
counterpart of a signature page to this Waiver by telecopier shall be
effective as delivery of a manually executed counterpart of this Waiver.
6. GOVERNING LAW. THIS WAIVER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF).
IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
GANTOS, INC., as Borrower
By: /s/ Arlene H. Stern
Name: Arlene H. Stern
Title: President & CEO
FLEET BANK, N.A. (formerly known as
Natwest Bank N.A.), as Agent and as
By: /s/ Thomas B. Joyce
Name: Thomas B. Joyce
Title: V.P. & Portfolio Manager
LASALLE NATIONAL BANK, as a Lender
By: /s/ Mary S. Joseph