exv10w1



 





EXHIBIT 10.1




Execution Copy




               FIRST AMENDMENT, dated as of December 6, 2004 (this “First Amendment”), to
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; and



               WHEREAS, the Borrower has requested, and, upon this First Amendment
becoming effective, the Lenders have agreed, that certain provisions of the
Credit Agreement shall be amended in the manner provided for in this First
Amendment;



               NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:



               1. Definitions. Unless otherwise defined herein, capitalized terms which
are defined in the Credit Agreement shall be used as so defined.



               2. Amendment to Section 1.1 of the Credit Agreement. Section 1.1 of the
Credit Agreement is hereby amended as follows:



               (a) by adding thereto the following definitions in their appropriate
alphabetical order:




                    “First Amendment”: the First Amendment to this Agreement, dated as
of December 6, 2004.




                    “First Amendment Effective Date”: the date on which the conditions
to effectiveness set forth in Section 5 of the First Amendment shall have
been satisfied, which date is December 6, 2004.



               (b) by deleting the definition of “Applicable Margin” in its entirety and
substituting in lieu thereof the following definition:




                    “Applicable Margin”: (a) for each Type of Loan (other than
Incremental Term Loans), the rate per annum set forth under the relevant
column heading below:



 









 





	 	 	 	 	 
	 	 	ABR Loans	Eurodollar Loans
	Revolving Loans and
Swingline Loans

Initial Term Loans

	 	2.25%
3.25%
	 	3.25%
4.25%








and (b) for Incremental Term Loans, such per annum rates as shall be
agreed to by the Borrower and the applicable Incremental Term Lenders as
shown in the applicable Incremental Term Facility Activation Notice;
provided, that (i) on and after the First Amendment Effective Date, the
Applicable Margin with respect to Revolving Loans and Swingline Loans
will be determined pursuant to the Pricing Grid, (ii) on and after the
First Amendment Effective Date, the Applicable Margin with respect to the
Initial Term Loans will be determined pursuant to the Pricing Grid and
(iii) if the Applicable Margin (which, for such purposes only, shall be
deemed to include all upfront or similar fees or original issue discount
payable to all Lenders providing the Incremental Term Loans) relating to
the Incremental Term Loans exceeds the Applicable Margin (which, for such
purposes only, shall be deemed to include all upfront or similar fees or
original issue discount payable to all Lenders providing the Initial Term
Loans) relating to the Initial Term Loans by more than 0.50% per annum,
the Applicable Rate relating to the Initial Term Loans shall be adjusted
to be equal to the Applicable Margin (which, for such purposes only,
shall be deemed to include all upfront or similar fees or original issue
discount payable to all Lenders providing the Incremental Term Loans)
relating to the Incremental Term Loans minus 0.50% per annum.



               (c) by deleting the definition of “Consolidated Interest Expense” in its
entirety and substituting in lieu thereof the following definition:




                    “Consolidated Interest Expense”: for any period, the total interest
expense, net of interest income (including that attributable to Capital
Lease Obligations), all as determined in accordance with GAAP, of the
Group Members for such period with respect to all outstanding
Indebtedness of the Group Members (including all commissions, discounts
and other fees and charges owed with respect to letters of credit).



               (d) by amending the definition of “Consolidated EBITDA” (i) by deleting
the word “and” at the end of clause (b)(xiii), (ii) by deleting the word
“minus” at the end of clause (b)(xiv) and substituting “and” in lieu thereof,
and (iii) by adding the following clause (b)(xv) at the end thereof:




                    “(xv) realized gains and losses in respect of Swap Agreements, all
as determined in accordance with GAAP, minus”



               (e) by deleting the definition of “Pricing Grid” in its entirety and
substituting in lieu thereof the following definition:




                    “Pricing Grid”: (a) with respect to Revolving Loans and Swingline
Loans, the table set forth below:



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	 	 	Applicable Margin	 	 	 	 
	Consolidated Leverage	 	for Eurodollar	 	Applicable Margin	 	 
	              Ratio
	 	Loans
	 	for ABR Loans
	 	Commitment Fee Rate

	Greater than or equal
to 5.00 to 1
	 	 	4.00	%	 	 	3.00	%	 	 	0.5	%
	 
	 	 	
 	 	 	 	
 	 	 	 	
 	 
	Greater than or equal
to 4.00 to 1.00 but
less than 5.00 to 1
	 	 	3.25	%	 	 	2.25	%	 	 	0.5	%
	 
	 	 	
 	 	 	 	
 	 	 	 	
 	 
	Greater than or equal
to 3.50 to 1.00 but
less than 4.00 to
1.00
	 	 	3.00	%	 	 	2.00	%	 	 	0.5	%
	 
	 	 	
 	 	 	 	
 	 	 	 	
 	 
	Greater than or equal
to 3.00 to 1.00 but
less than 3.50 to
1.00
	 	 	2.75	%	 	 	1.75	%	 	 	0.5	%
	 
	 	 	
 	 	 	 	
 	 	 	 	
 	 
	Less than 3.00 to 1.00
	 	 	2.50	%	 	 	1.50	%	 	 	0.5	%
	 
	 	 	
 	 	 	 	
 	 	 	 	
 	 








and (b) with respect to Initial Term Loans, the table set forth below:



	 	 	 	 	 	 	 	 	 
	Consolidated Leverage	 	Applicable Margin for	 	Applicable Margin for
	              Ratio
	 	Eurodollar Loans
	 	ABR Loans

	Greater than or
equal to 5.00
to 1.00
	 	 	5.00	%	 	 	4.00	%
	 
	 	 	
 	 	 	 	
 	 
	Less than 5.00
to 1.00
	 	 	4.25	%	 	 	3.25	%
	 
	 	 	
 	 	 	 	
 	 








                    For the purposes of the Pricing Grid, changes in the Applicable
Margin resulting from changes in the Consolidated Leverage Ratio shall
become effective on the date (the “Adjustment Date”) that is three
Business Days after the date on which financial statements are delivered
to the Lenders pursuant to Section 6.1 (a) and (b) and shall remain in
effect until the next change to be effected pursuant to this paragraph.
If any financial statements referred to above are not delivered within
the time periods specified in Section 6.1 (a) and (b), then, until the
date that is three Business Days after the date on which such financial
statements are delivered, the highest rate set forth in each column of
the Pricing Grid shall apply. In addition, at all times while an Event
of Default shall have occurred and be continuing, the highest rate set
forth in each column of the Pricing Grid shall apply. Each determination
of the Consolidated Leverage Ratio pursuant to the Pricing Grid shall be
made in a manner consistent with the determination thereof pursuant to
Section 7.1.



               3. Amendment to Section 2.10 of the Credit Agreement. Section 2.10 of the
Credit Agreement is hereby amended by deleting the words “Closing Date” where
they appear therein and substituting in lieu thereof the words “First Amendment
Effective Date”.



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               4. Amendment to Section 2.11 of the Credit Agreement. Section 2.11(b) of
the Credit Agreement is hereby amended by deleting the amount “$10,000,000”
where it appears therein and substituting in lieu thereof “$5,000,000”.



               5. Amendment to Section 6.1 of the Credit Agreement. Section 6.1 of the
Credit Agreement is hereby amended by (1) deleting the word “and” at the end of
Section 6.1(b), (2) renaming Section 6.1(c) as Section 6.1(d), and (3)
inserting the following new Section 6.1(c):




                    ”(c) as soon as available and in any event within 30 days after the
close of each of the monthly accounting periods (other than a monthly
accounting period ending on the same date as a fiscal quarter) in each
fiscal year of the Borrower, the unaudited consolidated balance sheets of
the Borrower and its consolidated Subsidiaries as at the end of such
monthly period and the related unaudited consolidated statements of
operations and of cash flows for such monthly period and the portion of
the fiscal year through the end of such monthly period, setting forth in
each case in comparative form the figures for the related periods in the
prior fiscal year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and”



               6. Amendment to Section 7.1 of the Credit Agreement. Section 7.1 of the
Credit Agreement is hereby amended as follows:




               (a) by deleting the portion of the schedule appearing in Section 7.1(a)
relating to fiscal quarters ending on December 31, 2004, March 31, 2005, June
30, 2005, September 30, 2005 and December 31, 2005 and substituting in lieu
thereof the following schedule:



	 	 	 	 	 
	 	 	Consolidated
	Fiscal Quarter
	 	Leverage Ratio

	December 31, 2004
	 	 	6.75 to 1.00	 
	March 31, 2005
	 	 	7.00 to 1.00	 
	June 30, 2005
	 	 	7.00 to 1.00	 
	September 30, 2005
	 	 	6.75 to 1.00	 
	December 31, 2005
	 	 	6.00 to 1.00	 








               (b) by deleting the schedule appearing in Section 7.1(b) and substituting
in lieu thereof the following schedule:



	 	 	 	 	 
	 	 	Consolidated Interest
	Fiscal Quarter
	 	Coverage Ratio

	December 31, 2004
	 	 	1.75 to 1.00	 
	March 31, 2005
	 	 	1.50 to 1.00	 
	June 30, 2005
	 	 	1.50 to 1.00	 
	September 30, 2005
	 	 	1.75 to 1.00	 
	December 31, 2005
	 	 	2.00 to 1.00	 
	March 31, 2006
	 	 	2.75 to 1.00	 
	June 30, 2006
	 	 	2.75 to 1.00	 
	September 30, 2006
	 	 	2.75 to 1.00	 







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	December 31, 2006
	 	 	2.75 to 1.00	 
	March 31, 2007
	 	 	2.75 to 1.00	 
	June 30, 2007
	 	 	2.75 to 1.00	 
	September 30, 2007
	 	 	2.75 to 1.00	 
	December 31, 2007
	 	 	3.25 to 1.00	 
	March 31, 2008
	 	 	3.25 to 1.00	 
	June 30, 2008
	 	 	3.25 to 1.00	 
	September 30, 2008
	 	 	3.25 to 1.00	 
	Every quarter thereafter
	 	 	3.50 to 1.00	 







               7. Amendment to Section 7.6 of the Credit Agreement. Section 7.6(e) of
the Credit Agreement is hereby amended by deleting the amount “$10,000,000”
where it appears therein and substituting in lieu thereof “$1,000,000”.



               8. Amendment to Section 7.7 of the Credit Agreement. Section 7.7 of the
Credit Agreement is hereby amended by deleting the words “$25,000,000 in any
fiscal year” and substituting in lieu thereof the following:




                    “$25,000,000 during the fiscal years ending December 31, 2004 and
December 31, 2005 and $20,000,000 during any fiscal year thereafter.”



               9. Amendment to Section 7.8 of the Credit Agreement. Section 7.8 of the
Credit Agreement is hereby amended as follows:



               (a) by deleting the amount “$50,000,000” where it appears in Section
7.8(f) and substituting in lieu thereof “$10,000,000”.



               (b) by deleting the amount “$15,000,000” where it appears in Section
7.8(i) and substituting in lieu thereof “$5,000,000”.



               10. Amendment to Section 7.9 of the Credit Agreement. Section 7.9 of the
Credit Agreement is hereby amended by deleting the words “, Incremental Term
Loans or an Initial Public Offering (so long as the Consolidated Senior
Leverage Ratio, determined after giving pro forma effect to such Initial Public
Offering and the use of the proceeds thereof, shall be 2.75 to 1.00 or lower)”
in the proviso to clause (a).



               11. Amendment to Section 7.11 of the Credit Agreement. Section 7.11 of
the Credit Agreement is hereby amended by deleting the exception therein in its
entirety and substituting in lieu thereof the following:




                    “except for any such sale-leaseback promptly following which an
amount equal to 100% of the Net Cash Proceeds of such sale-leaseback is
used to make a prepayment of the Loans in accordance with Section
2.11(b);”



               12. Amendment to Section 7.17 of the Credit Agreement. Section 7.17 of
the Credit Agreement is hereby amended by deleting the amount “$15,000,000”
where it appears therein and substituting in lieu thereof “$5,000,000”.



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               13. Representations and Warranties. The Borrower represents and warrants
to each Lender that (a) the Credit Agreement as amended by this First Amendment
constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, (b) the
representations and warranties made by the Borrower and the other Loan Parties
in or pursuant to the Loan Documents are true and correct in all material
respects on and as of the date hereof after giving effect to this First
Amendment (except to the extent that such representations and warranties are
expressly made only as of an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects on and
as of such earlier date) and (c) after giving effect to this First Amendment,
no Default or Event of Default has occurred and is continuing on the date
hereof.



               14. Conditions to Effectiveness. This First Amendment shall become
effective as of the date hereof upon receipt by the Administrative Agent of (i)
counterparts of this First Amendment duly executed and delivered by a duly
authorized officer of each of the Borrower and the Required Lenders, and (ii)
for the account of each Lender that executes and delivers this First Amendment
on or before December 6, 2004, an amendment fee equal to 0.25% of the
outstanding principal amount of such Lender’s Term Loans and Revolving
Commitments.



               15. Consent. The parties hereto hereby agree that Sections 2(b) and 2(e)
of this First Amendment shall be applicable to any interest accruing on an ABR
Loan or Eurodollar Loan, as applicable, from and after the effective date of
this First Amendment.



               16. Continuing Effect; No Other Amendments or Waiver. Except as expressly
amended or waived hereby, all of the terms and provisions of the Credit
Agreement and the other Loan Documents are and shall remain in full force and
effect in accordance with their terms.



               17. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



               18. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this First Amendment by facsimile shall be
effective as delivery of a manually executed counterpart of this First
Amendment.



               19. Costs and Expenses. The Borrower shall pay on demand all reasonable
and documented out-of-pocket costs and expenses of the Administrative Agent
incurred in connection with the development, preparation and execution of this
First Amendment, including the reasonable fees and disbursements of counsel for
the Administrative Agent with respect thereto.



[Rest of page left intentionally blank]




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               IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.



	 	 	 	 	 
	 	 	HOME INTERIORS & GIFTS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ KENNETH J. CICHOCKI
	

	 	 	 	

	

	 	 	 	Name: Kenneth J. Cichocki
	

	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A. (formerly
known as JPMorgan Chase Bank), as
Administrative Agent and as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ WILLIAM J. CAGGIANO
	

	 	 	 	

	

	 	 	 	Name: William J. Caggiano
	

	 	 	 	Title: Managing Director
	 
	 	 	 	 
	 	 	BEAR STEARNS CORPORATE LENDING INC., as Syndication Agent and as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ VICTOR BULZACCHELLI
	

	 	 	 	

	

	 	 	 	Name: Victor Bulzacchelli
	

	 	 	 	Title: Vice President







 









 







	 	 	 	 	 
	

	 	 	 	FIRST AMENDMENT, dated as of December 6
2004 to the CREDIT AGREEMENT, dated as of
March 31, 2004 (as amended, supplemented or
otherwise modified from time to time, 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”).
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	[NAME OF LENDER]
	

	 	 	 	By:
	

	 	 	 	

	

	 	 	 	    Name:
	

	 	 	 	    Title