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EXHIBIT NO. 10.10
AMENDMENT NO. 5
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 5 ("Amendment No. 5") is entered into as of October
17, 1996, by and between NATIONAL RECORD MART, INC. ("Borrower") and FLEET
CAPITAL CORPORATION ("Lender").
BACKGROUND
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Borrower and Lender are parties to a Loan and Security Agreement dated
June 11, 1993 (as amended by that certain (a) letter agreement dated January
12, 1995; (b) letter agreement dated February 24, 1995; (c) letter agreement
dated September 8, 1995; (d) Waiver and Amendment No. 4 dated July 19, 1996 and
as same may be further amended, modified, restated or supplemented from time to
time, the "Loan Agreement") pursuant to which Lender provides Borrower with
certain financial accommodations.
Borrower has requested that Lender amend the Loan Agreement to (i)
increase the total credit facility and (ii) amend certain financial covenants
and Lender is willing to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrower by
Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement.
(a) Section 1.1 of the Loan Agreement is hereby amended by
deleting the following definitions in their entirety to provide as follows:
Bank - Fleet National Bank.
Capital Expenditures - expenditures made and liabilities
incurred for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions
thereto which have a useful life of more than one year,
including the total principal portion of Capitalized
Lease Obligations.
Cash Flow - for any period, an amount equal to (i)
Adjusted Net Earnings from Operations of Borrower, plus
(ii) amounts
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attributable to depreciation and amortization which were
deducted in determining Adjusted Net Earnings form
Operations for such fiscal period; plus (iii) amounts
contributed to the equity of Borrower during such fiscal
period; plus (iv) any subordinated loans or advances
made to Borrower during such fiscal period, minus (v)
any non-financed Capital Expenditures made during such
fiscal period, minus (vi) all Distributions paid during
such fiscal period and minus (vii) scheduled repayments
of principal on Indebtedness for Money Borrowed other
than Revolving Credit Loans for such fiscal period.
Maximum Revolving Amount - Twenty-Six Million Dollars
($26,000,000).
Note - the secured promissory note executed by Borrower
in favor of Lender in substantially the form of Exhibit
A to this Agreement.
(b) The introductory paragraph of Section 2 of the
Loan Agreement is hereby amended by deleting "SEVENTEEN MILLION DOLLARS
($17,000,000)" and inserting "TWENTY-SIX MILLION DOLLARS ($26,000,000)" in its
place and stead.
(c) Section 3.1(B) of the Loan Agreement is hereby
deleted in its entirety and "Intentionally Omitted" is inserted in its place
and stead.
(d) Section 9.2(L) of the Loan Agreement is hereby
amended in its entirety to provide as follows:
(L) Capital Expenditures - Make Capital
Expenditures in any Fiscal Year commencing with
Fiscal Year ending March 31, 1998 (including,
without limitation, by way of capitalized
leases) in excess of the lesser of (a) 50% of
projected EBITDA (as defined under GAAP) for
such Fiscal Year as set forth in the Projections
for such Fiscal Year or (b) 60% of actual EBITDA
(as defined under GAAP) for the preceding Fiscal
Year as set forth in the audited financial
statements of Borrower and its Subsidiaries as
at the end of such Fiscal Year.
(e) A new subsection (Z) is hereby added to Section
9.2 of the Loan Agreement at the end thereof:
(Z) Retail Store Openings. Open more than six
(6) new retail store locations during the period
commencing on October 1, 1996 through and
including the last day of the Fiscal Year ended
March 31, 1997.
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(f) Section 9.3 of the Loan Agreement is hereby amended in its entirety to
provide as follows:
During the term of this Agreement, and thereafter for so long as there are
any Obligations to Lender, Borrower covenants that, unless otherwise consented
to in writing, it shall:
(A) Minimum working Capital - Maintain Working Capital of not less
than (a) $250,000 during the period commencing September 1, 1996
through and including November 30, 1996 and (b) $1,500,000 at all
times thereafter.
(B) Minimum Adjusted Tangible Net Worth - Maintain at the end of each
month commencing with the month ended December 31 1996, a Minimum
Adjusted Tangible Net Worth of not less than $10,000,000 during the
Fiscal Year ended March 31, 1997, which amount shall be increased by
$250,000 on the last day of such Fiscal Year and on the last day of
each Fiscal Year thereafter.
(C) Current Ratio. Maintain at the end of each month commencing with
the month ended December 31, 1996, a ratio of Current Assets to
Current Liabilities of not less than 1.03 to 1.00.
(D) Cash Flow. Achieve Cash Flow of not less than $250,000 for (i)
the fiscal quarter ended December 31, 1996, (ii) for the two fiscal
quarters ended Xxxxx 00, 0000, (xxx) for the three fiscal quarters
ended June 30, 1997 and (iv) for each fiscal quarter thereafter,
measured on a rolling four quarter basis ending on the last day of
such fiscal quarter.
(g) Exhibit a to this Amendment No. 5 is hereby added to the Loan
Agreement.
3. Conditions of Effectiveness. This Amendment No. 5 shall become
effective upon satisfaction of the following conditions precedent: (i) Lender
shall have received (a) four (4) copies of this Amendment No. 5 executed by
Borrower; (b) a duly executed Second Amended and Restated Revolving Credit Note;
(c) evidence of the authorization by the Board of Directors of Borrower of the
execution of this Amendment No. 5; (d) an acknowledgement from NRM Investment,
Inc. ("NRM") of the continuing validity of the Subordination Agreement dated May
9, 1996 between Lender and NRM; and (e) such other certificates, instruments,
documents and agreements as may be required by Lender or its counsel, each of
which shall be in form and substance satisfactory to Lender and its counsel, and
(ii) Lender
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shall have received (a) payment of a $20,000 line increase fee from Borrower
and (b) payment of all legal fees and expenses incurred by Lender in connection
with the preparation and negotiation of this Amendment No. 5.
4. Representations and Warranties. Borrower hereby represents and
warrants as follows:
(a) This Amendment No. 5 and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment No. 5, Borrower hereby
reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all
such covenants, representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment No. 5.
(c) Borrower has no defense, counterclaim or offset with respect to
the Loan Agreement.
(d) No Default or Event of Default would exist after giving effect to
this Amendment No. 5.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import shall mean and be a reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment No. 5
shall not operate as a waiver of any other right, power or remedy of Lender, nor
constitute a waiver of any other provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
6. Governing Law. This Amendment No. 5 shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
7. Headings. Section headings in this Amendment No. 5 are included herein
for convenience of reference only and shall not constitute a part of this
Amendment No. 5 for any other purpose.
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8. Counterparts. This Amendment No. 5 may be executed by the parties
hereto in one or more counterparts, each of which taken together shall be deemed
to constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment No. 5 has been duly executed as of the
day and year first written above.
NATIONAL RECORD MART, INC.
By: /s/XXXXXXX XXXXXXX
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Name: Xxxxxxx Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
FLEET CAPITAL CORPORATION
By: /s/XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
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