FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is
entered into as of October 23, 1997 by and between XXX XXXXXX, INC., a
Washington corporation ("Borrower"), J.J. DISTRIBUTION COMPANY, a Washington
corporation ("Distribution"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation ("Lender"), with respect to the following facts:
RECITALS
A. Borrower, Distribution and Lender have entered into that certain Loan
and Security Agreement dated as of August 29, 1997 (the "Loan Agreement"),
pursuant to which Lender agreed to make certain financial accommodations to or
for the benefit of Borrower upon the terms and conditions contained therein.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Loan Agreement.
B. Borrower and Distribution have requested that Lender make certain
modifications to the Loan Agreement, and Lender is willing to make such
modifications upon the terms and conditions set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals which are hereby
incorporated into this Amendment, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Acknowledgment of Debt. Borrower and Distribution acknowledge and agree
that, as of October 22, 1997, Borrower was indebted to Lender for outstanding
Revolving Credit Advances in the aggregate amount of $7,211,895.72 and
outstanding Letter of Credit Obligations in the aggregate amount of $175,114,
plus accrued interest and all fees and costs incurred by Lender but not billed.
Each of Borrower and Distribution confirm and represent that it has no offset,
defense, counterclaim, dispute or disagreement of any kind or nature whatsoever
with respect to the amount of such indebtedness or to its obligations arising
under the Loan Documents, including, with respect to Distribution, its Guaranty,
which Guaranty Distribution hereby ratifies and reaffirms.
2. Amendment to Loan Agreement.
2.1 The following definition of "Additional Advance" is hereby added
to Schedule A to the Loan Agreement:
"Additional Advance" shall mean $500,000; provided, that upon the
earlier of (i) December 19, 1997 and (ii) the date that Borrower receives
an aggregate
cash equity contribution (net of any customary fees or expenses, including
fees to investment bankers) of $500,000 or more, in each case including all
times thereafter, the "Additional Advance" shall mean $0.00.
2.2 The definition of "Borrowing Availability" set forth in Schedule A
to the Loan Agreement is hereby deleted in its entirety and the following is
substituted therefor:
"Borrowing Availability" shall mean, at any time, the lesser of (i)
the Borrowing Base plus the Additional Advance or (ii) the Maximum Amount,
in each case less reserves established by Lender from time to time.
3. Amendment to Open Items Letter. We refer to the letter agreement between
Borrower and Lender dated August 29, 1997, wherein Lender waived immediate
delivery of certain documents and other information (collectively, the "Open
Items") as a condition to the effectiveness of the Loan Agreement and the other
Loan Documents. Lender hereby agrees to further extend the time for performance
of the Open Items as follows:
Borrower will deliver to Lender, on or before November 28, 1997, the
Bank Direction Letters as required under Item 3.7(c) of the Schedule
of Documents.
Borrower's failure to deliver such documents by November 28, 1997 such
constitute an Event of Default.
4. In-Transit Inventory. Borrower has informed Lender that it has not
satisfied all of the conditions set forth in clause (i) of paragraph (d) of
Schedule 1.6 to the Loan Agreement with respect to Inventory in transit outside
of the United States that is currently in the Borrowing Base. At Borrower's
request, Lender hereby agrees to waive satisfaction of such conditions until
November 7, 1997. The failure to satisfy such conditions by November 7, 1997
shall constitute and Event of Default; provided, that Lender reserves it right
to establish reserves with respect to such Inventory in transit in accordance
with Section 1.6 of the Loan Agreement.
5. Amendment Fee. In consideration of the agreements of Lender set forth in
this Amendment, Borrower shall pay to Lender an amendment fee of $50,000 (the
"Amendment Fee"), which fee shall be fully earned upon Borrower's execution of
this Amendment and payable in two $25,000 installments. The first such
installment shall be payable upon Borrower's execution of this Amendment, and
the second installment shall be payable upon the earlier of (a) December 1, 1997
and (b) the date that Borrower receives an aggregate cash equity contribution
(net of any customary fees or expenses, including fees to investment bankers) of
$500,000 or more. Borrower and Distribution agree that Lender is expressly
authorized to pay each installment of the Amendment Fee with a Revolving Credit
Advance in accordance with Section 1.10 of the Loan Agreement.
6. Conditions of Effectiveness. This Amendment shall become effective upon
Lender's receipt of (a) this Amendment executed by Borrower and Distribution and
(b) the first installment of the Amendment Fee described in paragraph 5 above.
7. Representations and Warranties. Each of Borrower and Distribution
represent and warrant as follows: (a) its representations and warranties
contained in the Loan Agreement were true and correct in all material respects
when made and, except to the extent that a particular representation and
warranty by its terms expressly applies only to an earlier date, are true and
correct in all material respects as of the date hereof after giving effect to
this Amendment; and (b) this Amendment, the Loan Agreement as amended hereby,
and the other Loan Documents constitute the legal, valid and binding obligations
of each of Borrower and Distribution, enforceable against such Person in
accordance with their respective terms.
8. Miscellaneous.
8.1 Complete Agreement. The Loan Agreement, as amended by this
Amendment, together with the other Loan Documents, constitute the complete
agreement between the parties, and supersede any prior written or oral
agreements, writings, communications or understandings of the parties with
respect to the subject matter thereof.
8.2 Counterparts. This Amendment may be executed in identical
counterpart copies, each of which shall be an original, but all of which shall
constitute one and the same agreement.
8.3 Governing Law. This Amendment shall be governed by, and construed
and enforced in accordance with, the laws of the State of Washington applicable
to contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws.
8.4 Effect of Amendment. Borrower, Distribution and Lender hereby
acknowledge and agree to the following:
(a) upon the effectiveness of this Amendment, on and after the
date hereof, each reference in the Loan Agreement to "this Agreement,"
"hereunder," "hereof" or words of similar import shall mean and be a reference
to the Loan Agreement as amended hereby, and each reference in the other Loan
Documents to the Loan Agreement, "thereunder," "thereof," or words of similar
import shall mean and be a reference to the Loan Agreement as amended hereby;
(b) the execution, delivery and effectiveness of this Amendment
shall not, except to the extent specifically set forth herein, operate as a
waiver of any right, power or remedy by Lender under the Loan Agreement or any
other Loan Document, or constitute a waiver of any provision in the Loan
Agreement or in any of the other Loan Documents;
(c) except to the extent specifically amended by the terms of
this Amendment, all of the provisions of the Loan Agreement shall remain in full
force and effect to the extent in effect on the date hereof; and
(d) in the event of any inconsistency between the provisions of
this Amendment and any other provision of the Loan Agreement, the terms and
provisions of this Amendment shall govern and control.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Loan and Security Agreement as of the date first written above.
"Borrower"
XXX XXXXXX, INC.
By:
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Its:
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"Distribution"
J.J. DISTRIBUTION COMPANY
By:
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Its:
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"Lender"
GENERAL ELECTRIC CAPITAL CORPORATION
By:
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Xxxxx Xxxxx
Duly Authorized Signatory
