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Exhibit 10.8
THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
("Amendment") is dated as of the ___ day of April, 1998, between LANCETTI
COSMETICS CORPORATION, a Florida corporation ("Borrower") and FIRST UNION
NATIONAL BANK, a national banking association, successor by merger to FIRST
UNION NATIONAL BANK OF FLORIDA ("Bank").
R E C I T A L S:
A. Borrower and Bank entered into that certain Credit and Security
Agreement dated September 28, 1995, as amended by Amendment to Credit and
Security Agreement dated April 1, 1997, and further amended by Second Amendment
to Credit and Security Agreement dated December 17, 1997 (collectively the
"Agreement").
B. Bank has agreed to advance additional sums to Borrower and to renew
Borrower's existing Revolving Loan.
C. Borrower and Bank desire to modify and amend certain provisions of
the Agreement pursuant to this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and to induce the Bank to extend the additional credit to the Borrower,
the parties, each intending to be legally bound, do hereby agree as follows:
1. The foregoing recitals are true and are incorporated in this
Amendment by this reference.
2. Capitalized terms as used herein shall have the same meanings as set
forth in the Agreement unless the context indicates a different meaning.
3. Paragraph 1.1 of the Agreement is hereby amended by adding the
following definitions:
"$500,000 NOTE" shall mean that certain Demand Revolving
Promissory Note from Borrower to Bank of even date in the
original principal amount of FIVE HUNDRED THOUSAND DOLLARS
($500,000)."
"SECOND ADDITIONAL TERM LOAN" shall mean that certain THREE
HUNDRED THOUSAND DOLLAR ($300,000) term loan made by Bank to
Borrower as evidenced by the Second Additional Term Note.
"SECOND ADDITIONAL TERM NOTE" shall mean that certain THREE
HUNDRED THOUSAND DOLLAR ($300,000) Term Promissory
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Note made by Bank to Borrower dated of even date, and all
modifications and renewals thereto.
"CONSOLIDATED NOTE" shall mean that certain Demand Renewal and
Consolidated Revolving Promissory Note made by Bank to
Borrower dated of even date herewith, in the original
principal amount of THREE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($3,500,000), which Consolidated Note consolidates,
amends, and restates and renews the Notes described therein.
4. Section 1.1 is further modified to amend the definitions as follows:
""MAXIMUM LOAN AMOUNT" shall mean THREE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($3,500,000) as to the Revolving Loan, TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000) as to the Term Loan,
and THREE HUNDRED THOUSAND DOLLARS ($300,000) as to the Second
Additional Term Loan or such other amount as the Bank may
consent to from time to time.
"NOTE" shall mean collectively the Consolidated Note, the Term
Note, the Second Additional Term Note, and any other
promissory note now or hereafter evidencing the indebtedness,
and all modifications, extensions or renewals thereto."
5. Paragraph 3.1 of the Agreement is hereby amended to change the
definition of "Maximum Revolving Loan Amount" from THREE MILLION DOLLARS
($3,000,000) to THREE MILLION FIVE HUNDRED DOLLARS ($3,500,000).
6. Paragraph 3.2 of the Agreement is hereby modified by deleting
subparagraph 2 thereof and substituting the following:
"(2) The "Borrowing Base" which shall equal seventy-five
percent (75%) of Eligible Accounts Receivable. At least
monthly, Borrower shall provide a certificate as to Eligible
Accounts Receivable (including an aging analysis), eligible
inventory and such other management and/or collateral
information as Bank may require. Advances shall be limited to
sixty percent (60%) of eligible inventory and shall be capped
at TWO MILLION DOLLARS ($2,000,000).
Concentration caps on eligible accounts receivable shall be
waived for "opening orders" defined as the initial order for a
new customer certified to Bank by Borrower. Concentration caps
for other accounts receivable shall be limited to ten percent
(10%) except for the following companies:
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Wal-Mart 35%
Rite Aide 35%
CVS 35%
Target 35%
American Drug Stores 35%
Eckerd 35%
K-Mart 20%
Sears 35%
Gryphon 35%
7. Exhibit 5.26 of the Agreement is deleted in its entirety and Exhibit
5.26 attached hereto and made a part hereof is hereby inserted in lieu thereof.
8. Paragraph 5.6(c) is hereby amended to delete the words "Within 90
days after the end of each calender year" and insert in lieu thereof the words
"Within one hundred twenty (120) days after Borrower's Fiscal year"
9. In case of any conflict or ambiguity between the terms and
provisions of this Amendment and the terms and provisions of the Agreement, the
terms and provisions of this Amendment shall control to the extent of such
conflict or ambiguity.
10. Except as modified hereby, the terms and provisions of the
Agreement are hereby ratified and confirmed.
BORROWER:
LANCETTI COSMETICS CORPORATION,
a Florida corporation
By:
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Xxxxxxx Xxxxx, President
LENDER:
FIRST UNION NATIONAL BANK, a national
banking association, successor by merger to
FIRST UNION NATIONAL BANK OF FLORIDA
By:
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Printed Name:
Title:
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EXHIBIT 5.26
FINANCIAL COVENANTS
(a) Borrower shall, on a consolidated basis, if required, at all times
maintain a "Current Ratio" (as hereafter defined in this subparagraph)
equal to or in excess of 1.0 to 1.0.
"Current Ratio" means the ratio of "Current Assets" to "Current
Liabilities".
"Current Assets" means current assets under the standard practice of
generally accepted accounting principles, but excluding all amounts due
from affiliates.
"Current Liabilities" means current liabilities determined in
accordance with generally accepted accounting principles ("GAAP").
(b) Borrower shall, on a consolidated basis, if required, maintain a ratio
of "Total Liabilities" to "Tangible Net Worth" (as such terms are
hereafter defined) which shall not exceed 4.0 to 1.0. For purposes of
this subparagraph, the term "Total Liabilities" means all obligations
of Borrower, howsoever created, arising or evidenced, whether direct or
indirect, joint or several, absolute or contingent, or now or hereafter
existing, or due or to become due determined in accordance with GAAP;
"Tangible Net Worth" means, (upon a consolidated basis) the excess of
all assets of Borrower which, in accordance with GAAP, are tangible
assets, over all debts and liabilities of Borrower. In no event shall
there be included as tangibles any patents, trademarks, trade names,
copyrights, licenses, good will, advances to stockholders, affiliates
or subsidiaries. Subordinated Shareholder Debt shall be treated as
equity and shall be subtracted from Total Liabilities and added to
Tangible Net Worth.
(c) Minimum Tangible Net Worth of TWO MILLION DOLLARS ($2,000,000) shall be
maintained at fiscal year end (December 31, 1997) and shall increase
annually by fifty percent (50%) of net income.
(d) Borrower will maintain, at all times on a consolidated basis (if
required), a debt service coverage ratio of at least 1.5 to 1.0. The
numerator of the debt service coverage ratio shall be calculated as
follows: earnings before interest, tax, depreciation and amortization
(EBITDA). The denominator of the debt service coverage ratio shall be
interest expense plus scheduled current maturities of long term debt
plus dividends plus income taxes paid. Scheduled current maturities of
long term debt will be prorated for the quarter being tested (e.g.,
when testing June 30th, use seventy-five percent [75%] of scheduled
current maturities of long term debt as classified on balance sheet of
previous fiscal year end). Each quarterly test will be based on fiscal
year to date results (not quarterly results).
(e) The Maximum Dividend payable annually with respect to Borrower's common
or preferred stock shall not exceed fifty percent (50%) of Net Income.
Borrower shall pay no other dividends nor distributions of money.
Borrower shall not redeem or repurchase any of its common or preferred
stock so long as the Line shall remain outstanding and unpaid.
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(f) Borrower shall not make or permit to exist any advances or loans to, or
guaranty or become contingently liable, directly or indirectly, in
connection with the obligations, leases, stock or dividends of, or own,
purchase or make any commitment to purchase any stock, bonds, notes,
debentures or other securities of, or any interest in, or make any
capital contributions to (all of which are sometimes collectively
referred herein as "Investments") any person except for (i) purchase of
direct obligations of the Federal Government; (ii) deposits in
commercial banks having a TIER ONE capital ratio of not less than six
percent (6%) and then in an amount not exceeding ten percent (10%) of
the issuing bank's unimpaired capital and surplus; (iii) existing
investments in Borrower's subsidiaries; (iv) endorsement of negotiable
instruments for collection in the ordinary course of business; or (v)
loans which do not exceed FIFTY THOUSAND DOLLARS ($50,000) in the
aggregate.
(g) Subordinated Debt shall not be less than SEVEN HUNDRED FIFTY THOUSAND
DOLLARS ($750,000), on going.
(h) Capital Expenditures, during each fiscal year, shall not exceed SEVEN
HUNDRED FIFTY THOUSAND DOLLARS ($750,000).
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STATE OF FLORIDA )
) SS:
COUNTY OF BROWARD )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by XXXXXX
XXXXXXXX, the Vice President of FIRST UNION NATIONAL BANK, a national banking
association, successor by merger to FIRST UNION NATIONAL BANK OF FLORIDA, freely
and voluntarily under authority duly vested in her by said association and that
the seal affixed thereto is the true corporate seal of said association. She is
personally known to me or who has produced ______________________ as
identification.
WITNESS my hand and official seal in the County and State last
aforesaid this ____ day of _________________, 1998.
Notary Public
Typed, printed or stamped name of Notary Public
My Commission Expires:
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SWORN ACKNOWLEDGMENT OF
THIRD AMENDMENT TO CREDIT & SECURITY AGREEMENT
STATE OF ____________________)
) ss:
COUNTY OF __________________)
I HEREBY CERTIFY that on this date, before me, a Notary Public duly
authorized in the jurisdiction named above to administer oaths and take
acknowledgments, personally appeared XXXXXXX XXXXX, the President of LANCETTI
COSMETICS CORPORATION, a Florida corporation, to me well known and to me known
to be the person described above, and known to me to be the person who signed
the foregoing Third Amendment to Credit and Security Agreement, dated as of
____________________, 1998, in the City of ___________________________, County
of ________________, State of ________________, and he first being duly sworn
did depose and say as follows:
I am XXXXXXX XXXXX and I have a street address of
______________________________ ______________________________________________. I
acknowledge the execution of the foregoing instrument by me on behalf of the
corporation at said place, and the physical delivery of the instrument at said
place to a representative of the Bank by manual delivery to be my free act and
deed on behalf of the corporation for the purposes and uses therein expressed.
XXXXXXX XXXXX
SWORN to at City of ___________________________, County of
_________________, State of ________________________, this _____ day of
__________________, A.D., 1998.
Notary Public
Printed Name
My Commission Expires:
My Commission No. is:
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AFFIDAVIT FOR EXECUTION OF THIRD AMENDMENT TO CREDIT
AND SECURITY AGREEMENT WITHOUT THE STATE OF FLORIDA
STATE OF ______________________)
) ss:
COUNTY OF ____________________)
BEFORE ME, the undersigned Notary Public, duly authorized in the City
of _________________, County of ____________________, State of
______________________, to administer oaths and take acknowledgments, personally
appeared ______________________________________, having a street address of
____________________ ____________________________________, and
___________________________________, having a street address of
_________________________________________________________, to me well known and
to me known to be the persons described as witnesses to the foregoing Third
Amendment to Credit and Security Agreement ("Agreement"), and who witnessed the
execution and delivery of the foregoing Third Agreement, and who, first being
duly sworn by me did each depose, say and acknowledge before me that they were
present at the time that the said Agreement was executed, that they saw the same
executed and delivered by XXXXXXX XXXXX, as President of LANCETTI COSMETICS
CORPORATION, a Florida corporation, at the City of _____________________, County
of ____________________, State of _______________, and that the subscribing
witnesses were likewise present and witnessed the execution and delivery of the
foregoing Agreement, to a representative of First Union National Bank at the
City of ________________________, County of __________________, State of
____________________, on the date written below via Federal Express addressed to
said representative at such place by delivery to Federal Express in the State
and County above written in accordance with the Sender's copy/receipt of a
Federal Express air xxxx attached as EXHIBIT "A" hereto.
Subscribing Witness
Printed Name
Subscribing Witness
Printed Name
SWORN TO at City of ______________________, County of
____________________, State of ______________________, this ____ day of
______________________, 1998.
Notary Public
Printed Name
My Commission Expires:
My Commission No. is:
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EXHIBIT "A" TO AFFIDAVIT FOR EXECUTION OF
AMENDMENT TO CREDIT & SECURITY AGREEMENT
WITHOUT THE STATE OF FLORIDA
Attach Air Xxxx
