EXHIBIT 10.15
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") dated as of February 25, 1997
is by and between DIPLOMAT AMBASSADOR, INC. ("Borrower") and CORESTATES BANK,
N.A. ("Lender")
BACKGROUND
Borrower and Lender are parties to a certain Loan Agreement dated as
of June 7, 1996 (the "Original Loan Agreement").
Borrower has requested certain amendments to the Loan Agreement.
Lender is willing to amend the Loan Agreement upon the terms and conditions set
forth herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined in this
Amendment will have the meanings given to such terms in the Loan Agreement.
2. Amendments to Loan Agreement. The Loan Agreement is hereby amended
as follows:
a. The definition for "Credit Limit" in Section 1.01 is hereby
amended to read in its entirety as follows:
"Credit Limit" means the lesser of (A) the Borrowing Base or (B)
$12,000,000.
b. The definition for "Borrowing Base" in Section 1.01 is hereby
amended to read in its entirety as follows:
"Borrowing Base" means (A) the Account Advance Rate multiplied by the
face amount of Borrower's Eligible Accounts, plus (B) the Renaissance
Account Advance Rate multiplied by the face amount of Borrower's
Eligible Renaissance Accounts, plus (C) the lesser of (1) 50% of
Eligible Inventory, valued at the lower of cost or market, less an
Inventory reserve of $45,000, or (2) the Inventory Sublimit, minus (D)
Borrower's Letter of Credit Liability, minus (E) Borrower's Acceptance
Liability.
c. The following definitions are hereby added:
"Eligible Renaissance Account" means any Purchased Renaissance Account
created in an arm's length transaction which meets all of the
following specifications at the time of determination of Eligible
Renaissance Accounts: (A) the Account is lawfully owned by Borrower
free and clear of all liens, security interests and assignments except
as set forth in clause (B), and Borrower has the right of assignment
thereof and the power to grant a security interest therein; (B) the
Account is subject to a first priority perfected security interest in
favor of Lender; (C) the Account is valid and enforceable,
representing the undisputed indebtedness of the Purchaser to Borrower;
(D) the Account is not subject to any claim of defense, set off,
counterclaim, warranty claim, credit, allowance or adjustment; (E) if
the Account arises from the sale of goods, such sale was an
absolute sale and not on consignment or on approval basis, and such
goods have been shipped or otherwise made available to the Purchaser
in accordance with the Borrower's agreements with such Purchaser; (F)
if the Account arises from the performance of services, such services
have actually been performed; (G) the Account arose in the ordinary
course of business of Borrower; (H) no notice of the bankruptcy,
receivership, reorganization or insolvency of the Purchaser owing such
Account has been received by Lender or Borrower; (I) the Account has
remained unpaid for less than 90 days from the date of original
invoice; (J) the Purchaser is not any federal, state or local
government or governmental agency; (K) the Account does not arise out
of the shipment of goods outside of the United States; (L) the
Account does not arise out of transactions between Borrower and (1) a
non-United States government, governmental agency or
government-controlled business or (2) a Person who is not subject to
the jurisdiction of the court system of the United States or any state
of the United States; (M) the Purchaser for such Account is not
otherwise in default pursuant to the terms underlying the agreement
creating such Account; (N) the Purchaser owing such Account is not
Borrower or an Affiliate of Borrower; (0) the Account is net of any
amounts owed to the Purchaser thereof; (P) the Account is not owed by
a Delinquent Purchaser or any Subsidiary or Affiliate of a Delinquent
Purchaser; and (Q) such Account is otherwise acceptable to Lender in
its reasonable discretion.
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"Inventory Sublimit" shall be determined in accordance with the
following table:
No. of days after the Inventory Sublimit
date of this Amendment Shall equal:
0-60 $6,000,000
61-90 $5,500,000
91-120 $5,250,000
thereafter $5,000,000
"Purchased Renaissance Account means any Account purchased by Borrower
from Summit Bank pursuant to that certain Collateral Sale Agreement
dated February 25, 1997.
"Renaissance Account Advance Rate" means 70%.
d. The definition for "Eligible Accounts" is hereby amended by
(i) insetting the following text: ", excluding Purchased Renaissance Accounts,"
after the word "Account" where it first appears in said definition and (ii)
amending clause (0) to read in its entirety as follows:
(O) the Account is net of any amounts owed to the Purchaser thereof;
e. Effective on and after the date of this Amendment, the term
"Applicable Margin" shall mean zero.
3. Conditions Precedent to Amendment. Lender's obligations
hereunder shal1 be conditioned upon Borrower delivering to Lender:
a. A replacement Demand Note in the principal amount of
$12,000,000.
b. Satisfactory written proof that Xxxx Xxxxxxx has loaned to
Borrower $250,000 February 3, 1997 (the "Shareholder Acquisition Loan").
c. A Second Rider to the Subordination Agreement dated June 7,
1996 duly executed by Xxxx Xxxxxxx, which subordinates the Shareholder
Acquisition Loan to Borrower's indebtedness to Lender.
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d. A Second Rider to the Guaranty duly executed by Xxxx Xxxxxxx
and Xxxxx Xxxxxxx in form and substance acceptable to Lender.
e. A Second Rider to the Guaranty duly executed by Xxxxx Xxxxxxx
and Xxxxxx Xxxxxxx in form and substance acceptable to Lender.
f. An Explanation and Waiver of Rights Regarding Confession of
Judgment duly executed by each of the Budilovs and each of the Sluckers.
g. An Explanation and Waiver of Rights Regarding Confession of
Judgment duly executed by Borrower.
h. A copy, certified in writing as of the date hereof by the
Secretary or Assistant Secretary of Borrower, of resolutions of the Board of
Directors of Borrower evidencing approval or ratification of this Amendment and
the matters contemplated hereby.
i. A certificate dated as of the date hereof by the Secretary or
Assistant Secretary of Borrower as to the names and signatures of the officers
of Borrower authorized to sign this Amendment and the other documents and
certificates to be executed and delivered pursuant to the Loan Agreement, as
amended hereby.
j. An opinion of counsel to Borrower satisfactory to Lender
regarding the validity of the sale of assets by Renaissance Eyewear, Inc. to
Borrower free and clear of all liens, claims and encumbrances pursuant to
Section 9504 of the Pennsylvania Uniform Commercial Code.
k. A proforma Borrowing Base Certificate, inclusive of all
Collateral acquired by Borrower from Renaissance Eyewear, Inc., dated as of the
date of this Amendment.
l. A payoff letter from Summit Bank dated as of the date of this
Amendment satisfactory to Lender.
m. A proforma balance sheet of Borrower as of December 31, 1996,
which includes the assets and liabilities (if any) acquired and assumed by
Borrower from Renaissance Eyewear, Inc. as of the date of this Amendment.
4. Condition Subsequent. On or before May 31, 1997, Borrower shall
execute a Warrant and Registration Rights Agreement, pursuant to which
Borrower will grant to Lender the right to purchase from Borrower a number of
shares of Borrower's capital stock (the "Warrant Shares") which will yield
Lender a net gain of not less than $300,000 after Lender disposes of the
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Warrant Shares. If Borrower fails to execute such Warrant and Registration
Rights Agreement, such failure shall constitute an Event of Default under the
Loan Agreement.
5. Confirmation of Representations and Warranties. In order to induce
Lender to enter into this Amendment, Borrower hereby confirms, represents and
warrants that:
a. the representations and warranties set forth in the Loan
Agreement are accurate on and as of the date hereof as though made on and as of
this date (or, to the extent any such representation or warranty expressly
relates to a specific date, as of such specific date); and
b. no Default or Event of Default shall have occurred and be
continuing or will result from the execution by Borrower of this Amendment or
any other document contemplated herein.
6. No Waiver; Acknowledgment of Borrower. No Default or Event of
Default existing on the date hereof or having occurred prior hereto shall be
deemed to have been waived by Lender by reason of entering into this Amendment.
Borrower acknowledges the indebtedness presently owed by Borrower to Lender and
hereby reaffirms its obligation to pay such indebtedness to Lender in full
according to the terms of the Loan Agreement. Borrower confirms that it has no
defenses, setoffs, or counterclaims to the exercise by Lender of its remedies
under the Loan Agreement or applicable law.
7. Payment of Fees and Expenses. Borrower agrees to pay on demand or
to reimburse Lender, and to save Lender harmless against liability for payment
of, all the reasonable out-of-pocket expenses arising in connection with the
review, preparation and enforcement of this Amendment (including, without
limitation, the reasonable fees and expenses of counsel to Lender).
8. Continuation of Provisions. The Loan Agreement shall remain in full
force and effect except to the extent amended hereby. From and after the date
that this Amendment becomes effective, any reference to the Loan Agreement or
similar term, shall be and mean a reference to the Loan Agreement as amended
hereby and as the same may be further amended, modified or supplemented from
time to time.
9. Miscellaneous
a. This Amendment contains all of the modifications to the Loan
Agreement. No further modifications shall be deemed effective, unless in writing
executed in accordance with the Agreement.
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b. This Amendment shall be binding upon the parties hereto, their
successors and assigns.
c. This Amendment shall be construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania.
10. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original agreement, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to
be duly executed by their respective duly authorized officers as of the date
first above written.
(Corporate Seal) DIPLOMAT AMBASSADOR, INC.
Attest:
By /s/ Xxxxx Xxxxxxx
/s/ R Slucker -------------------------
------------------------ Title: President
Secretary
CORESTATES BANK, N.A.,
By /s/ Xxxxx X. Xxxxx, VP
-------------------------
Title: Vice President
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