Exhibit 10.1
WAIVER AND AMENDMENT NO. 3
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS WAIVER AND AMENDMENT NO. 3 TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT ("Amendment") is dated as of June 15, 2004 and
is by and among FLEET CAPITAL CORPORATION, a Rhode Island corporation, and
the other parties identified as Lenders on the signature pages hereto
(collectively, "Lenders"), on the one hand, and FALCON PRODUCTS, INC., a
Delaware corporation, XXXXXX XXXXXXXX INDUSTRIES, INC., a Delaware
corporation and SELLERS & XXXXXXXXX INC., a New Jersey corporation
(collectively, "Borrowers"), on the other hand. Capitalized terms used
herein but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Loan Agreement referred to below.
W I T N E S S E T H:
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WHEREAS, Lenders, Borrowers, Fleet Capital Corporation, as
Agent, and OCM Principal Opportunities Fund II, L.P., as Tranche B Agent,
are parties to an Amended and Restated Loan and Security Agreement, dated as
of January 15, 2004 (as the same has been and may be amended or modified
from time to time, the "Loan Agreement"), pursuant to which the Lenders have
agreed to make certain loans and other financial accommodations to or for
the account of Borrowers;
WHEREAS, Borrowers have informed Agent and Tranche B Agent
of the existence of the Events of Default listed on Exhibit A (the "Existing
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Events of Default");
WHEREAS, Borrowers have requested that Lenders waive the
Existing Events of Default;
WHEREAS, Lenders have agreed to waive the Existing Events
of Default, subject to the terms and conditions hereinafter set forth; and
WHEREAS, Borrowers and Lenders have agreed to amend the
Loan Agreement on the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the respective parties hereto hereby agree as follows:
1. Waiver. Subject to the satisfaction of the conditions
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set forth in Section 4 below, the undersigned Lenders waive the Existing
Events of Default. Other than as expressly set forth above, the foregoing
waivers shall not constitute waivers of any Events of Default or Defaults
that are now in existence or that may hereafter occur or any rights or
remedies that Agent, Tranche B Agent and Lenders may have under the Loan
Agreement, the
other Loan Documents or applicable law with respect thereto, all of which
rights and remedies Agent, Tranche B Agent and Lenders specifically reserve.
2. Amendments. Subject to the satisfaction of the
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conditions set forth in Section 4 below, and in reliance upon the
representations and warranties of Borrowers set forth herein, the Loan
Agreement is hereby amended as follows:
(a) Section 1.3.2 of the Loan Agreement is amended and
restated to read as follows:
1.3.2. Term Loan B. On the Closing Date, Term Loan B
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Lenders, severally and not jointly, made term loans in the
aggregate amount of $50,000,000 to Borrowers. Each Term Loan B
Lender, severally and not jointly, further agrees to make an
additional term loan in the amount appearing below such Term Loan B
Lender's signature to the Waiver and Amendment No. 3 as the
Additional Term Loan B Commitment on the Amendment No. 3 Effective
Date. The term loans described in the two immediately preceding
sentences are collectively referred to herein as "Term Loan B").
Term Loan B shall be repayable in accordance with the terms of the
Term B Notes and shall be secured by all of the Collateral. The
aggregate amount of the Term Loan B Commitments, including those
funded on the Closing Date and those to be funded on the Amendment
No. 3 Effective Date, is $60,000,000. Borrowers represent and
warrant that the proceeds of Term Loan B advanced on the Closing
Date were used solely for the purposes of paying in full on the
Closing Date all principal, interest and fees owing in connection
with the Original Term Loan B, paying fees and expenses incurred in
connection with this Agreement and repaying Revolving Credit Loans.
The proceeds of Term Loan B advanced on the Amendment No. 3
Effective Date shall be used solely for purposes of paying fees and
expenses incurred in connection with Amendment No. 3 and for
general working capital purposes.
(b) Section 2.1.1.(b) of the Loan Agreement is amended and
restated to read as follows:
(b) Interest shall accrue on the principal amount of Term
Loan B outstanding at the end of each day at a rate per annum equal
to 18.0%, and shall be payable as follows: a portion of such
interest equal to 7.0% per annum (the "Term Loan B Current Pay
Interest") shall be paid on a current basis as provided in
subsection 3.2.2(iii) and the balance of such interest equal to
11.0% per annum (the "Term Loan B PIK Interest") shall be added to
the outstanding principal balance of Term Loan B on the first day
of each month hereafter and shall be paid as provided in subsection
3.2.2. For avoidance of doubt, Borrowers and Term Loan B Lenders
agree that prior to the Amendment No. 3 Effective Date, interest
shall accrue and be paid on Term Loan B at the rates from time to
time applicable to Term Loan B under the Loan Agreement before
giving effect to Amendment No. 3, and that on and
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after the Amendment No. 3 Effective Date, interest shall accrue and
be paid on Term Loan B at the rates applicable to Term Loan B after
giving effect to Amendment No. 3.
(c) Section 2.6(a) of the Loan Agreement is amended and
restated to read as follows:
(a) At the effective date of termination of this Agreement
for any reason, any prepayment of Term Loan A pursuant to
subsection 3.3.5 or any reduction of the Revolving Loan Commitments
pursuant to subsection 3.3.6, Borrowers shall jointly and severally
pay to Agent, for the ratable benefit of Revolving Credit and Term
Loan A Lenders (in addition to the then outstanding principal,
accrued interest and other charges then due and owing under the
terms of this Agreement and any of the other Loan Documents and any
amounts then due and owing pursuant to subsection 3.2.5), as
liquidated damages for the loss of the bargain and not as a
penalty, an amount equal to 1.5% of the sum of the aggregate amount
of the Revolving Loan Commitments then being reduced or terminated
and the outstanding amount of Term Loan A then being prepaid, if
such termination, prepayment or reduction occurs prior to the
scheduled end of the Term.
(d) Section 7.1.4 of the Loan Agreement is amended and
restated in its entirety to read as follows:
7.1.4. Capital Structure. Exhibit 7.1.4 hereto states, as
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of the Amendment No. 3 Effective Date, (i) the correct name of each
of the Subsidiaries of each Borrower, its jurisdiction of
incorporation or organization and the percentage of its Voting
Stock owned by such Borrower, (ii) the name of each Borrower's and
each of its Subsidiaries' corporate or joint venture Affiliates and
the nature of the relationship, (iii) the number, nature and holder
of all outstanding Securities of each Borrower and of each
Subsidiary of such Borrower, (iv) the number of authorized, issued
and treasury Securities of each Borrower and (v) the number of
shares of Voting Stock of each Borrower reserved for issuance upon
exercise of warrants, options or other rights to acquire Voting
Stock. Each Borrower has good title to all of the Securities it
purports to own of each of such Subsidiaries, free and clear in
each case of any Lien other than Permitted Liens. All such
Securities have been duly issued and are fully paid and
non-assessable. Exhibit 7.1.4 hereto states, as of the Amendment
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No. 3 Effective Date, all outstanding options to purchase, all
equity appreciation and phantom equity rights or plans, all rights
and warrants to subscribe for, all commitments and agreements to
issue or sell any Securities or obligations convertible into, and
any powers of attorney relating to any Securities of any Borrower
or any of its Subsidiaries, including the holder, the number of
shares covered, the exercise price and the expiration date. Except
as set forth on Exhibit 7.1.4, as of the Amendment No. 3 Effective
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Date, there are no outstanding agreements or instruments binding
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upon any of any Borrower's or any of its Subsidiaries' partners,
members or shareholders, as the case may be, relating to the
ownership of its Securities. As of the Amendment No. 3 Effective
Date, none of the Borrowers or any of their Subsidiaries will be
subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any of its shares of capital stock
or other securities. As of the Amendment No. 3 Effective Date,
except as set forth on the attached Exhibit 7.1.4, there are no
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statutory or contractual preemptive rights or rights of first offer
or refusal with respect to the issuance of the Warrant or the
Voting Stock issuable upon exercise of the Warrant, or with respect
to any other issuance of capital stock, or other equity securities,
of any Borrower or any of their Subsidiaries. None of the Borrowers
or any of their Subsidiaries has violated any applicable securities
laws in connection with the offer, sale or issuance of any of its
shares of capital stock; the offer, sale and issuance of the
Warrant and the Voting Stock issuable upon exercise of the Warrant,
do not and will not require registration under any applicable
securities laws. The Warrant represents 15%, on a fully-diluted
basis, of all outstanding shares of Voting Stock of Falcon. There
are no agreements among any of the stockholders of Falcon with
respect to the voting or transfer of Falcon's Voting Stock or with
respect to any other aspect of Falcon's affairs, except as set
forth on the attached Exhibit 7.1.4.
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(e) Sections 8.1.10, 8.1.11 and 8.1.12 of the Loan
Agreement are amended and restated in their entirety to read as follows:
8.1.10. Amendment to Czech Stock Pledge. Within thirty
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(30) days of the Amendment No. 3 Effective Date, execute, deliver
and register with the Czech Securities Centre an amendment, in form
and substance reasonably satisfactory to Agent and Tranche B Agent,
to the pledge of the Securities of Falcon Mimon A/S.
8.1.11. Amendments to Mexican and Danish Stock Pledges.
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Within thirty (30) days of the Amendment No. 3 Effective Date,
execute and deliver amendments, in form and substance reasonably
satisfactory to Agent and Tranche B Agent, to the pledges of the
Securities of Xxxx Europe A/S and Falcon xx Xxxxxx, X.X. de C.V.
8.1.12. Title Insurance Date Downs. Within thirty (30) days
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of the Amendment No. 3 Effective Date, deliver "date down"
endorsements to the title insurance policies relating to the
Mortgages, in form and substance reasonably satisfactory to Agent
and Tranche B Agent.
(f) Section 8.1 of the Loan Agreement is amended by
inserting the following new subsection 8.1.14 as follows:
8.1.14. New Equity/Junior Securities. Borrowers shall
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obtain net cash proceeds in an amount of at least $2,500,000 no
later than September 30,
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2004 from the issuance of new equity or other junior securities
(such equity or other junior securities being herein referenced to
as "Junior Securities") that are on terms satisfactory to Agent,
Tranche B Agent and Required Lenders in their sole discretion
(including subordination terms).
(g) Section 10.1.16 of the Loan Agreement is amended and
restated to read as follows:
10.1.16. Key Officer. If (a) the employment of any of
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Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxx shall be
terminated by Falcon without the consent of Agent and Tranche B
Agent, such consent not to be unreasonably withheld, or (b) any of
Xxxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx
X. Xxxx shall otherwise cease to function in his current capacity
as an executive officer of Falcon and shall not be replaced with a
Person or Persons reasonably satisfactory to Agent and Tranche B
Agent within one hundred twenty (120) days thereafter.
(h) The definition of Term Loan B Commitment in Appendix A
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to the Loan Agreement is amended and restated in its entirety to read as
follows:
Term Loan B Commitment - with respect to each Term Loan B
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Lender, the amount of such Term Loan B Lender's Term Loan B
Commitment pursuant to subsection 1.3.2 of the Agreement, as set
forth below such Term Loan B Lender's name on the signature page
hereof and the signature page of Amendment No. 3 or any Assignment
and Acceptance Agreement executed by such Term B Lender, minus all
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Term Loan B payments paid to such Term Loan B Lenders.
(i) The definition of Term Loan B Prepayment Fee in
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Appendix A to the Loan Agreement is amended and restated in its entirety to
read as follows:
Term Loan B Prepayment Fee - with respect to any
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prepayment of Term Loan B that is made prior to the scheduled end
of the Term, an amount equal to 10% of the amount prepaid.
(j) Appendix A to the Loan Agreement is amended by
inserting the following defined terms in proper alphabetical order:
Amendment No. 3 - the Waiver and Amendment No. 3 to
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Amended and Restated Loan and Security Agreement dated as of June
15, 2004 among Borrowers, Guarantors, Lenders, Agent and Tranche B
Agent.
Amendment No. 3 Effective Date - the date on which the
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amendments set forth in Amendment No. 3 become effective pursuant
to the terms of Amendment No. 3.
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Warrant - the Stock Purchase Warrant in the form attached
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to Amendment No. 3.
(k) Exhibit 7.1.4 to the Loan Agreement is amended and
restated to read as set forth on Exhibit 7.1.4 attached to this Amendment.
(l) Clause (b) of the definition of EBITDA in Exhibit 8.3
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of the Loan Agreement is amended by deleting the "and" immediately before
clause (v) and inserting the following immediately after clause (v):
and, (vi) for the fiscal quarters ending on or about April
30, 2004, July 31, 2004 and October 31, 2004, cash restructuring
costs related to the closing of Borrowers' Canton, Mississippi
plant in an aggregate amount not to exceed $825,000 for such fiscal
quarters.
(m) Section I (Fixed Charge Coverage) of Exhibit 8.3 to
the Loan Agreement is amended by (i) deleting the reference to "0.60" that
appears opposite "4 fiscal quarter period ended on or about 7/31/04" and
inserting "0.35" in its place, and (ii) deleting the reference to "1.05"
that appears opposite "4 fiscal quarter period ended on or about 10/31/04"
and inserting "0.65" in its place.
(n) Section II (EBITDA) of Exhibit 8.3 to the Loan
Agreement is amended by (i) deleting the reference to "$17,000,000" that
appears opposite "4 fiscal quarter period ended on or about 7/31/04" and
inserting "$12,000,000" in its place, and (ii) deleting the reference to
$25,000,000" that appears opposite "4 fiscal quarter period ended on or
before 10/31/04" and inserting "$19,000,000" in its place.
(o) Section III (Consolidated Secured Funded Debt to
EBITDA) of Exhibit 8.3 to the Loan Agreement is amended by (i) deleting the
reference to "4.00" that appears opposite "Period ended 7/31/04" and
inserting "7.4" in its place, and (ii) deleting the reference to "4.20" that
appears opposite "Period ended 10/31/04" and inserting "4.7" in its place.
(p) Exhibit 8.3 to the Loan Agreement is amended by
inserting the following Section IV:
IV. MAXIMUM CURRENT LIABILITIES AND MAXIMUM INVENTORY
Borrowers shall not permit (a) Net Current Liabilities to
exceed $36,500,000 as of the end of the fiscal quarter ending
nearest October 31, 2004, and (b) the amount of Borrowers' and
their Subsidiaries' Inventory to exceed $67,500,000 as of the end
of the fiscal quarter ending nearest October 31, 2004 (which amount
shall be calculated in a manner consistent with the projections
previously delivered to Agent and Tranche B Agent). "Net Current
Liabilities" for purposes of this Section IV shall mean the
outstanding principal balance of Revolving Loans as of the date of
computation plus the accounts payable of Borrowers and their
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Subsidiaries as of the date of
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computation minus cash of Borrowers and their Subsidiaries as of
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the date of computation.
3. Scope of Amendment. Subject to the satisfaction of the
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conditions set forth in Section 4 below and in reliance upon the
representations and warranties of Borrowers set forth therein, this
Amendment shall have the effect of amending the Loan Agreement as
appropriate to express the agreements contained herein. In all other
respects, the Loan Agreement and the other Loan Documents shall remain in
full force and effect in accordance with their respective terms.
4. Conditions to Effectiveness. The effectiveness of the
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waivers contained in Section 1 hereof and the amendments contained in
Section 2 hereof is subject to the satisfaction of the conditions precedent
that:
(a) Agent shall have received counterparts of this
Amendment executed by each Borrower and each Lender and each Guarantor;
(b) Tranche B Agent shall have received a $750,000
commitment fee relating to the additional amount of the Term Loan B;
(c) Agent shall have received a $25,000 amendment fee;
(d) Tranche B Agent shall have received the Warrant (as
defined in Section 11 below);
(e) Tranche B Agent shall have received a replacement Term
B Note in form and substance satisfactory to Agent and Tranche B Agent;
(f) Agent and Tranche B Agent shall have received legal
opinions, secretary's certificates and good standing certificates with
respect to Borrowers and Guarantors, in each case in form and substance
satisfactory to Agent and Tranche B Agent; and
(g) Agent and Tranche B Agent shall have received
amendments to the Mortgages in form and substance satisfactory to Agent and
Tranche B Agent.
5. Representations, Warranties and Covenants. To induce
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Lenders to execute and deliver this Amendment, Borrowers hereby represent
and warrant to Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the
Loan Agreement and the other Loan Documents are true and correct in all
material respects on and as of the date of this Amendment, in each case as
if then made, other than representations and warranties that expressly
relate solely to an earlier date (in which case such representations and
warranties remain true and correct in all material respects on and as of
such earlier date).
(b) No Default or Event of Default has occurred which is
continuing.
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(c) This Amendment, the Loan Agreement, as amended hereby,
and the Warrant constitute legal, valid and binding obligations of Borrowers
and are enforceable against Borrowers in accordance with their respective
terms.
(d) The execution and delivery by Borrowers of this
Amendment and the Warrant does not require the consent or approval of any
Person, except such consents and approvals as have been obtained.
6. Governing Law. THE VALIDITY, INTERPRETATION AND
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ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
7. Headings. Section headings in this Amendment are
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included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
8. Counterparts. This Amendment may be executed in any
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number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. Any such counterpart which may be delivered by facsimile
transmission shall be deemed the equivalent of an originally signed
counterpart and shall be fully admissible in any enforcement proceedings
regarding this Amendment.
9. Guarantor Reaffirmation. Each Guarantor hereby
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reaffirms that the Loan Documents and such Guarantor's obligations
thereunder shall continue in full force and effect after giving effect to
this Amendment.
10. Expenses. Borrowers shall pay all reasonable expenses
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(including reasonable legal fees and expenses) incurred by Agent and Tranche
B Agent in connection with this Amendment.
11. Authorization of Warrant. On or prior to the Amendment
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No. 3 Effective Date, Falcon shall authorize the issuance and sale to the
Tranche B Agent of a warrant to purchase shares of Common Stock, par value
$0.02 per share, of Falcon ("Common Stock"), in the form attached hereto
(together with any warrants issued in respect of such warrant, the
"Warrant"), which shall be exercisable initially into 1,841,715 fully paid
and nonassessable shares of Common Stock at an initial exercise price of
$0.02 per share.
12. Purchase and Sale of Warrant. Subject to the terms and
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conditions set forth herein, on the Amendment No. 3 Effective Date, Falcon
shall issue to the Tranche B Agent, and the Tranche B Agent shall purchase
from Falcon, the Warrant. Each Borrower, Tranche B Agent and each Term B
Lender hereby acknowledge and agree that the fair market value of the
Warrant issued pursuant hereto as of the Amendment No. 3 Effective Date is
$____________ and that a portion of the additional term loan made hereunder
by the
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Tranche B Agent on the Amendment No. 3 Effective Date equal to such fair
market value shall be allocated, for all purposes (including tax and
accounting), as consideration for the issuance of the Warrant. Each
Borrower, Tranche B Agent and each Term B Lender shall file their respective
federal, state and local tax returns in a manner which is consistent with
such valuation and allocation and shall not take any action or position
(whether in preparation of tax returns, financial statements or otherwise)
which is inconsistent with any of the above.
[Signature pages to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly
authorized officers as of the date first set forth above.
LENDERS:
FLEET CAPITAL CORPORATION,
as Agent and as sole Revolving Credit and
Term Loan A Lender
By:_________________________________________
Title:______________________________________
OCM PRINCIPAL OPPORTUNITIES FUND II,
L.P., as sole Term Loan B Lender and as
Tranche B Agent
By: Oaktree Capital Management, LLC
Its General Partner
By_____________________________________
Title__________________________________
By_____________________________________
Title__________________________________
Additional Term Loan B Commitment: $10,000,000
Signature Pages to Amendment No. 3 to A/R Loan Agreement
BORROWERS:
FALCON PRODUCTS, INC.
By_________________________________________
Title:_____________________________________
XXXXXX XXXXXXXX INDUSTRIES, INC.
By_________________________________________
Title:_____________________________________
SELLERS & XXXXXXXXX INC.
By_________________________________________
Title:_____________________________________
Signature Pages to Amendment No. 3 to A/R Loan Agreement
GUARANTORS:
XXXX FURNITURE CORPORATION
By__________________________________________
Title:______________________________________
FALCON HOLDINGS, INC.
By__________________________________________
Title:______________________________________
THE FALCON COMPANIES INTERNATIONAL, INC.
By__________________________________________
Title:______________________________________
MADISON FURNITURE INDUSTRIES, INC.
By__________________________________________
Title:______________________________________
XXXXXXX INDUSTRIES, INC.
By__________________________________________
Title:______________________________________
EPIC FURNITURE GROUP, INC.
By__________________________________________
Title:______________________________________
Signature Pages to Amendment No. 3 to A/R Loan Agreement
EXHIBIT A
EXISTING EVENTS OF DEFAULT
1. Borrowers' permitting the Fixed Charge Coverage Ratio, determined
as of January 31, 2004, for the period of four consecutive fiscal
quarters then ending, to be less than 0.50 to 1.0.
2. Borrowers' failure to have Consolidated EBITDA of at least
$14,000,000 for the 4 fiscal quarter period ended on or about April
30, 2004.
3. Borrowers' failure to have a ratio of Consolidated Secured Funded
Debt as of January 31, 2004 to Consolidated EBITDA for the period
of four consecutive fiscal quarters ended April 30, 2004 of not
more than 5.10.
EXHIBIT 7.1.4
WARRANT
See Attached.
