FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of March __, 1997, is made and entered into by and among Bank One,
Texas, N.A. and the Debtor Group.
RECITALS
A. Secured Party and the Debtor Group entered into that certain Loan
and Security Agreement, dated June 7, 1996 (the "Loan Agreement").
B. Secured Party and the Debtor Group desire to amend the Loan
Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same definitions
assigned to such terms in the Loan Agreement, as amended hereby.
ARTICLE II
Amendments to the Loan Agreement
Section 2.01. Amendment to Definitions. From and after the date hereof
Section 1 of the Loan Agreement is amended by deleting Sections 1 (d), (i) and
(gg) in their entirety and, in place thereof, adding new Sections 1 (d), (i) and
(gg) which shall read as follows:
"(d) 'Borrowing Base' shall mean, as of any date of
determination, the lesser of (i) $8,000,000, or (ii) the sum of (1) the
product of (A) the Inventory Advance Rate, and (B) Borrower's Eligible
Inventory, less (2) the Reserve, and less (3) the Letter of Credit
Exposure, all determined as of such date of determination.
(i) 'Contract Rate' shall mean a rate calculated on the basis
of actual days elapsed but computed as if each year consisted of 360
days, equal to the sum of (i) the Base Rate (the "Base Rate") of
interest as established from time to time by Bank as its commercial
base rate of interest publicly announced from time to time (which may
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not be the lowest, best or most favorable rate of interest which Bank
may charge on loans to its customers), plus (ii) one percent (1.0 %)
per annum.
(gg) 'Revolving Line' means $8,000,000.00."
Section 2.02 New Definitions. Section 1 of the Loan Agreement is hereby
amended by the addition of a new Section 1 (oo) which shall read as follows:
"(oo) 'Intercreditor Agreement' means that certain
Intercreditor Agreement dated the __ day of November, 1996, by
and between Xxxxxxxx'x Train Depot, Inc., a Florida
corporation, Bank and Borrower."
Section 2.03. Amendment to Section 11 (s) of the Loan Agreement. From
and after the date hereof Section 11(s) of the Loan Agreement is deleted in its
entirety and in place thereof shall be a new Section 11(s) which shall read as
follows:
"(s) Company shall maintain, as of each date set
forth below, a consolidated Tangible Net Worth equal to or
greater than the amount set forth opposite such date below:
Period Tangible Net Worth
June 29, 1996 $ 3,600,000.00
September 28, 1996 $ 3,400,000.00
December 28, 1996 $10,000,000.00
March 29, 1997 $ 8,000,000.00
June 28, 1997 $ 7,000,000.00
September 27, 1997 $ 6,000,000.00
December 27, 1997 $10,000,000.00 plus the net
proceeds for any stock
offering of Company
conducted after December
28, 1996, and plus 50% of
Adjusted Net Income (but
not losses) of Company for
Company's fiscal year
ending December 27, 1997
March 28, 1998 75% of Tangible Net Worth
Covenant as of December 27,
1997"
Section 2.04. Amendment to Section 11 (w) (11) of the Loan Agreement.
From and after the date hereof Section 11 (w) (11) of the Loan Agreement is
deleted in its entirety and in place thereof shall be a new Section 11 (w) (11)
which shall read as follows:
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"(11) Daily during any periods in which any Revolving
Loans or Letters of Credit are outstanding and monthly (within
7 days after the end of each month) at all other times, an
activity report setting forth (i) inventory by store, (ii)
inventory by type, (iii) inventory received in dollars and
units by store, and (iv) inventory sold in dollars and units
by store. Such report shall be in form and substance
reasonably acceptable to Secured Party."
Section 2.05. Amendment to Section 12 (a) of the Loan Agreement. From
and after the date hereof Section 12 (a) of the Loan Agreement is deleted in its
entirety and replaced with a new Section 12 (a) which shall read as follows:
"(a) Borrower shall not permit any financing statement
regarding the Collateral to be filed other than (i) a financing
statement or statements in favor of Secured Party, (ii) those described
on Schedule 10 (g), and (iii) financing statements that evidence the
"Xxxxxxxx Liens" (as defined in the Intercreditor Agreement)."
Section 2.06. Amendment to Section 12 (d) of the Loan Agreement. From
and after the date hereof Section 12 (d) of the Loan Agreement is deleted in its
entirety and replaced with a new Section 12 (d) which shall read as follows:
"(d) Borrower shall not grant, create, incur, assume or permit
to exist any security interest, lien or encumbrance on any of its
assets or properties, including the Collateral, except (i) with respect
to capital leases and liens to secure indebtedness for tenant
finish-out of retail stores, not to exceed $2,400,000.00 in the
aggregate in any fiscal year, and (ii) the Xxxxxxxx Liens."
Section 2.07. Amendment to Section 12 (e) of the Loan Agreement. From
and after the date hereof Section 12 (e) of the Loan Agreement is deleted in its
entirety and replaced with a new Section 12 (e) which shall read as follows:
"(e) Borrower shall not create, incur or assume any
indebtedness for borrowed money or issue or assume any other note,
debenture, bond or other evidences of indebtedness, or enter into any
operating or capital leases, or guarantee any such indebtedness or such
evidences of indebtedness of others, other than (i) borrowing from
Secured Party, (ii) capital leases and indebtedness for tenant
finish-out of retail stores, not to exceed $2,400,000.00 in the
aggregate in any fiscal year, (iii) other indebtedness (the
"Subordinated Debt") that has been subordinated to the Obligations
pursuant to subordination agreements in form and substance acceptable
to Secured Party in its sole discretion, and (iv) the Xxxxxxxx Debt (as
defined in the Intercreditor Agreement)."
Section 2.08. Amendment to Section 17 (b) of the Loan Agreement. From
and after the date hereof Section 17 (b) of the Loan Agreement is deleted in its
entirety and replaced with a new Section 17 (b) which shall read as follows:
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"(b) If Borrower terminates this Agreement prior to the end of
the Initial Term, Borrower acknowledges that (i) such termination would
result in the loss to Secured Party of the benefits of this Agreement
and that the damages incurred by Secured Party as a result of such
termination are and would be difficult of ascertainment, and (ii) no
such termination shall be effective until Borrower has paid to Secured
Party all of the Obligations in immediately available funds, together
with a sum certain as liquidated damages, being Borrower's and Secured
Party's best and fairest estimate of Secured Party's damages caused by
such termination, equal to one half of one percent (0.5%) of the
Revolving Line."
Section 2.09. Exhibit A to the Loan Agreement. From and after the date
hereof (i) Exhibit A to the Loan Agreement is deleted in its entirety and
replaced with a new Exhibit A in the form of Exhibit A-1 attached hereto, and
(ii) all references in the Loan Agreement to Exhibit A shall refer to Exhibit
A-1 attached hereto.
ARTICLE III
Conditions Precedent
Section 3.01. Conditions Precedent. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by Investor:
(a) The representations and warranties contained herein and in
each of the other Loan Documents shall be true and correct as of the
date hereof as if made on the date hereof.
(b) Unless waived by Bank, no Event of Default shall have
occurred and be continuing and no event or condition shall have
occurred that with the giving of notice or lapse of time or both would
be an Event of Default.
(c) The Debtor Group and each of the other parties listed on
the signature pages to this Amendment shall have executed this
Amendment.
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be
reasonably satisfactory to Secured Party and its legal counsel.
(e) Borrower shall have delivered to Secured Party a
certificate signed by the corporate secretary of the general partner of
Borrower (i) certifying to Secured Party that Borrower's partnership
agreement has not been amended since Borrower's certification thereof
under Certificate of Corporate Secretary dated June 7, 1996 previously
delivered to Secured Party in connection with the Loan Agreement, and
that the officers of the general partner of Borrower specified therein
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are duly elected, qualified and acting in the capacities therein
stated, as of the effective date hereof, and (ii) attaching and
certifying resolutions duly adopted by the board of directors of the
general partner of Borrower authorizing and directing one or more named
officers of the general partner of Borrower to execute and deliver this
Amendment, and all related documentation required by Secured Party, on
behalf of Borrower, which certificate shall be in form satisfactory to
Secured Party.
(f) All conditions precedent set forth in the Loan Agreement
shall have been satisfied.
(g) Borrower has delivered to Bank the inventory reports for
January and February, 1997, and the financial statements for January,
1997, that Borrower is required to deliver in accordance with Section
11 (w) of the Loan Agreement.
ARTICLE IV
Ratifications, Representations, and Warranties
Section 4.01. Ratifications by Borrower and Debtor Group. The terms and
provisions set forth in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Loan Agreement and, except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Loan Agreement are ratified and confirmed and shall continue in full force
and effect. The Loan Agreement as amended by this Amendment shall continue to be
legal, valid, binding and enforceable in accordance with its terms.
Section 4.02. Renewal and Extension of Security Interests and Liens.
Borrower and each Guarantor hereby renews, affirms and ratifies all security
interests created and granted in the Loan Documents. Borrower and each Guarantor
agrees that this Amendment shall in no manner affect or impair the liens and
security interests securing the Obligations, and that such liens and security
interests shall not in any manner be waived, the purposes of this Amendment
being to modify the Loan Agreement as herein provided, and to carry forward all
liens and security interest securing same, which are acknowledged by Borrower
and each Guarantor to be valid and subsisting.
Section 4.03. Ratification by Guarantors. Each Guarantor and each
Validity Guarantor (i) consents, acknowledges, and agrees to the execution,
delivery, and performance by Borrower of this Amendment, (ii) acknowledges and
agrees that this Amendment does not affect, diminish, waive, or release
his/her/its obligations under guaranty agreement delivered by him/her/it to
Bank, and (iii) ratifies and confirms his/her/its obligations pursuant to such
guaranty agreement. Further, each Guarantor covenants, acknowledges, and agrees
that such Guarantor guaranties the repayment of the "Guaranteed Indebtedness" as
provided in the guaranty agreement executed by such Guarantor.
Section 4.04. Representations and Warranties. Borrower and each
Guarantor represents and warrants to Bank as follows: (i) the execution,
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delivery and performance of this Amendment and any and all Loan Documents
executed and/or delivered in connection herewith have been authorized by all
requisite corporate action on the part of Borrower and each Guarantor and will
not violate the partnership agreement, articles or bylaws, as appropriate, of
Borrower or any Guarantor or any agreement to which Borrower or any Guarantor is
a party; (ii) the representations and warranties contained in the Loan Agreement
as amended hereby and in each of the other Loan Documents are true and correct
on and as of the date hereof as though made on and as of the date hereof; (iii)
no Event of Default under the Loan Agreement has occurred and is continuing; and
(iv) Borrower is in full compliance with all covenants and agreements contained
in the Loan Agreement, as amended hereby.
Section 4.05. Ratification by Subordinated Lenders. Company (i)
consents, acknowledges, and agrees to the execution, delivery, and performance
by Borrower of this Amendment, (ii) acknowledges and agrees that this Amendment
does not affect, diminish, waive, or release its obligations under Subordination
Agreement dated June 7, 1996, executed and delivered by it to Bank, and (iii)
ratifies and confirms the Subordination Agreement executed by it and its
obligations pursuant to such Subordination Agreement.
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All
representations and warranties made in the Loan Agreement or any other Loan
Document, including without limitation, any Loan Document furnished in
connection with this Amendment, shall survive the execution and delivery of this
Amendment and the other Loan Document, and no investigation by Secured Party or
any closing shall affect such representations and warranties or the right of
Secured Party to rely thereon.
Section 5.02. Reference to Loan Agreement. Each of the Loan Documents
and the Loan Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Loan Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Loan Agreement shall
mean a reference to the Loan Agreement as amended hereby.
Section 5.03. Expenses of Secured Party. Borrower agrees to pay on
demand all reasonable costs and expenses incurred by Secured Party directly in
connection with the preparation, negotiation and execution of this Amendment and
the other Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including, without limitation, the costs
and fees of Secured Party's legal counsel, and all costs and expenses incurred
by Secured Party in connection with the enforcement or preservation of any
rights under the Loan Agreement, as amended hereby, or any other Loan Document,
including, without limitation, the reasonable costs and fees of Secured Party's
legal counsel.
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Section 5.04. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
SECTION 5.05. APPLICABLE LAW. THIS AMENDMENT SHALL BE DEEMED TO HAVE
BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 5.06. Successors and Assigns. This Amendment is binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, executors, and legal representatives, except that
none of the parties hereto other than Secured Party may assign or transfer any
of its rights or obligations hereunder without the prior written consent of
Secured Party.
Section 5.07. Counterparts. This Amendment may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument.
Section 5.08. Effect of Waiver. No consent or waiver, express or
implied, by Bank to or for any breach of or deviation from any covenant,
condition or duty by Borrower, shall be deemed a consent to or waiver of any
other breach of the same or any other covenant, condition or duty.
Section 5.09. Headings. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.10. Conflicting Provisions. If any provision of the Loan
Agreement as amended hereby conflicts with any provision of any other Loan
Document, the provision in the Loan Agreement shall control.
SECTION 5.11. RELEASE. BORROWER AND EACH GUARANTOR HEREBY ACKNOWLEDGES
THAT NEITHER BORROWER NOR ANY GUARANTOR HAS ANY DEFENSE, COUNTERCLAIM, OFFSET,
CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE
ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF BORROWER'S OR ANY GUARANTOR'S
LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM SECURED PARTY. BORROWER AND EACH GUARANTOR HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES SECURED PARTY, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
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LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH BORROWER OR ANY GUARANTOR MAY NOW OR HEREAFTER HAVE AGAINST
SECURED PARTY, ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF
ANY, AND IRRESPECTIVE OR WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE OR ARISE FROM ANY LOAN, INCLUDING,
WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING
OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE, THE EXERCISE OF ANY
RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS, AND NEGOTIATION AND EXECUTION OF
THIS AMENDMENT.
SECTION 5.12. ENTIRE AGREEMENT. THIS AMENDMENT, THE LOAN AGREEMENT AND
ALL OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH AND PURSUANT
TO THIS AMENDMENT AND THE LOAN AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 5.13. Waivers. Borrower failed to provide to Bank certain of
the monthly and weekly reports required by Section 11 (w) of the Loan Agreement
to be delivered by Borrower to Bank during November and December, 1996 and
January, 1997. Borrower has requested that Bank waive such failure and any Event
of Default caused thereby. Bank hereby consents to the failure of Borrower to
deliver such reports and waives any Event of Default caused thereby. Such waiver
and consent is expressly limited to as set forth in this Section 5.13 and does
not, and shall not, constitute a consent or waiver to any other, additional or
future breach of Section 11(w) or any other provision of the Loan Agreement or
any other Loan Document. Except as set forth in this Section 5.13, Bank is not
aware of the occurrence and continuation of any Events of Default under the Loan
Agreement.
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EXECUTED as of the date first written above.
BANK:
Bank One, Texas, N.A.
By:__________________________________
Xxxxxxxx X. Xxxxxxxxx, Vice President
BORROWER:
The Great Train Store Partners, L.P.
By: GTS Partner, Inc.
By:____________________________
Xxxxxx Xxxxxx, Vice President
ADDITIONAL MEMBERS OF THE DEBTOR GROUP
and GUARANTORS:
The Great Train Store Company
By:_________________________________
Xxxxxx Xxxxxx, Vice President
GTS Partner, Inc.
By:__________________________________
Xxxxxx Xxxxxx, Vice President
GTS Limited Partner, Inc.
By:__________________________________
Xxxxxx Xxxxxx, Vice President
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VALIDITY GUARANTORS: The undersigned have executed
this Amendment for the purpose of consenting,
acknowledging and agreeing to the terms of Section
4.03 hereof
------------------------------------
Xxxxx X. Xxxx
-------------------------------------
Xxxxxx Xxxxxx
SUBORDINATED LENDER: The undersigned haS executed
this Amendment for the purpose of consenting,
acknowledging and agreeing to the terms of Section
4.05 hereof
The Great Train Store Company
By:_________________________________
Xxxxxx Xxxxxx, Vice President
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