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EXHIBIT 10.55
August 25, 1997
Empire Industries, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx
RE: FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
Gentlemen:
Reference is made to that certain Loan and Security Agreement (as amended,
the "Loan Agreement") dated as of May 29, 1996 among Empire Industries, Inc.,
LaSalle National Bank as collateral agent ("Collateral Agent") for itself
("LaSalle"), BT Commercial Corporation, as a lender ("BTCC") and each other
lender now or hereafter a party to the Loan Agreement (LaSalle, BTCC and each
such other lender are sometimes collectively referred to as "Lenders"), BTCC as
administrative agent for all Lenders ("Administrative Agent") and all other
Lenders. Borrower has requested that Collateral Agent, Administrative Agent and
Lenders agree to amend the Loan Agreement in certain respects. Agents and
Lenders are willing to do so on the terms and subject to the conditions set
forth herein. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. The Loan Agreement is hereby amended as follows:
(a) Paragraph 12(o) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(o) Borrower's Tangible Net Worth shall not at any time be
less than the "Minimum Tangible Net Worth"; Minimum Tangible Net
Worth being defined for purposes of this subparagraph as (i)
$2,000,000 for the period beginning June 30, 1997 and ending
September 30, 1997, (ii) $4,000,000 for the period beginning October
1, 1997 and ending December 31, 1997 and (iii) $5,000,000 for the
period beginning January 1, 1998 and ending February 15, 1998;
provided, that in all cases Minimum Tangible Net Worth shall
automatically be adjusted as follows: (A) it shall be increased
dollar-for-dollar by the amount of any equity raised by Borrower's
Parent after August 1, 1997 and (B) it shall be decreased by the
amount of any write-offs with respect to the sale of Xxxxxxxx
Button, Inc., the discontinuation of the Power Driver product line
or the discount or settlement of any Accounts owing by Centrex;
"Tangible Net Worth" being defined for purposes of this subparagraph
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as Borrower's shareholders' equity (including retained earnings)
LESS the book value of all intangible assets as determined solely by
Collateral Agent on a consistent basis PLUS the amount of LIFO
reserve plus the amount of any debt subordinated to Agents and
Lenders on the date hereof, all as determined under generally
accepted accounting principles applied on a basis consistent with
the financial statement most recently presented to Collateral Agent
prior to the date hereof except as set forth herein;"
2. The covenant contained in Paragraph 12(p) of the Loan
Agreement is hereby suspended until February 28, 1998. Commencing in
January, 1998, Borrower, Agents and Lenders shall negotiate in good faith to
set new covenant levels for Paragraphs 12(o) and 12(p) beginning February 16,
1998. In connection with such negotiations, Borrower hereby agrees to
deliver financial projections of Borrower for its fiscal year ending December
31, 1998 no later than January 15, 1998, which projections shall reflect the
results of Borrower's 1997 fiscal year end financial statements, a draft of
which shall be included with such projections. In the event that such good
faith negotiations do not result in an agreement of the parties, commencing
February 15 the covenants contained in Paragraphs 12(o) and 12(p) prior to
this Amendment shall be reinstated until such time as the parties agree to
reset such covenants.
3. This Amendment shall not become effective until this Amendment
is fully executed by all parties hereto.
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Except as expressly consented to and amended hereby, the Loan
Agreement and Exhibit A thereto remain unchanged and of full force and effect in
accordance with the terms thereof.
LASALLE NATIONAL BANK, as Collateral Agent and Lender
By /s/ Xxxxxx Xxxxxxxxxx
----------------------------
Its Senior Vice President
Consented and agreed to this 25th day of August, 1997.
BT COMMERCIAL CORPORATION, as Administrative Agent and a Lender
By /s/ Xxxxx Xxxxxxx
-------------------------
Its Senior Vice President
CONGRESS FINANCIAL CORPORATION (CENTRAL), as a Lender
By /s/ Xxxxx Xxxx
-----------------------
Its Vice President
THE CIT GROUP/CREDIT FINANCE, INC., as a Lender
By /s/ Xxxxxxxx Xxxxx
---------------------
Its Vice President
FINOVA CAPITAL CORPORATION, as a Lender
By /s/ Xxxxx Xxxxxxxx
-----------------------
Its
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Accepted and agreed to this 25th day of August, 1997.
EMPIRE INDUSTRIES, INC.
By /s/ Xxxxxxx X. Xxxxx
--------------------------
Its Chief Financial Officer
The undersigned Guarantor hereby acknowledges that it has read the foregoing
amendment and all previous amendments and hereby reaffirms its guaranty of the
obligations of Borrower this 25th day of August, 1997.
EMPIRE OF CAROLINA, INC.
By /s/ Xxxxxxx X. Xxxxx
--------------------------
Its Chief Financial Officer
1301852.01
Attachment
cc: American Stock Exchange
