EXHIBIT 10.26
FIRST AMENDMENT AND CONSENT AGREEMENT
This FIRST AMENDMENT AND CONSENT AGREEMENT (this Agreement") dated as
of December 31, 1997 is entered into by and among XXXX/USA West, Inc., a
Delaware corporation ("West"), XXXX/USA Chicago, Inc., a Delaware corporation
("Chicago"), XXXX/USA New York, Inc., a Delaware corporation ("New York") (West,
Chicago and New York are collectively referred to herein as the "Original
Borrowers" and individually as an "Original Borrower") , Xxxxxxx & Xxxxx, Inc.,
a Texas corporation ("FKP") (FKP and the Original Borrowers referred to herein
collectively as "Borrowers" and individually as a "Borrower") and SANWA BUSINESS
CREDIT CORPORATION, for itself, as Lender, and as Agent for the Lenders, and the
other Lenders signatory to the Loan Agreement as defined below. Terms used
herein and not otherwise defined herein shall have the same meanings as
specified in the Loan Agreement.
RECITALS:
A. The Original Borrowers, the Lenders and the Agent have heretofore
entered into that certain Loan and Security Agreement dated as of October 28,
1997 (as amended, restated, supplemented or otherwise modified from time to
time, the "Loan Agreement").
B. Parent desires to enter into that certain Stock Purchase Agreement,
(the "FKP Acquisition Agreement"), dated December 17, 1997, by and among Parent
and Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx, Xxxxx Xxxxxxxxx,
Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxx, certain of which provisions are or may be
prohibited by the Loan Agreement and the Parent Guaranty.
C. Parent has executed the Parent Guaranty guarantying the Obligations
of the Original Borrowers under the Loan Agreement.
D. Parent has executed the Parent Pledge Agreement pursuant to which
Parent pledged to Agent all of the capital stock of each of its Subsidiaries.
E. Parent and the Original Borrowers deem it in their best interest
for FKP to become a Borrower under the Loan Agreement for the purpose, among
other things, of obtaining Revolving Loans and other financial accommodations
under the Loan Agreement to be used for, among other things, the consummation of
the FKP Acquisition Agreement.
F. Pursuant to the FKP Acquisition Agreement Parent has agreed to
incur monetary obligations as part of the purchase price under the FKP
Acquisition Agreement.
G. Original Borrowers have requested that Agent and Lenders consent to
the consummation of the FKP Acquisition Agreement and the transactions
contemplated thereby, and Agent and Lenders are willing to consent, subject to
the terms and conditions of this Agreement.
H. Original Borrowers and Parent wish, and Lenders and Agent are
willing, to amend the Loan Agreement, the Parent Guaranty and the Parent Pledge
Agreement, subject to the terms and conditions of this Agreement.
I. This Agreement constitutes a Financing Agreement and these Recitals
shall be construed as part of this Agreement.
NOW, THEREFORE, in consideration of the recitals herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF FINANCING AGREEMENTS
1.1 AMENDMENT OF LOAN AGREEMENT.
1.1(a) The definition of "Borrower" and "Borrowers" contained in the
preamble to the Loan Agreement is hereby amended to include FKP
therein. Each reference to "Borrower" or "Borrowers" contained in
any Financing Agreement shall be deemed to include FKP therein
for all purposes under the Financing Agreements; provided that
until the Accounts of FKP are included in the Borrowing Base
pursuant to the terms of Section 8.20, (x) FKP may not directly
incur advances under the Revolving Loan pursuant to Section
2.1(a) or obtain the benefits of any Lender Guaranty pursuant to
Section 2.1(c) and (y) no other Borrower shall make any
intercompany loan to FKP pursuant to Section 8.20(a). By its
execution of this Agreement, FKP agrees, from and after the date
hereof, to be a Borrower under the Loan Agreement, to assume all
of the obligations of a Borrower thereunder and to make and be
bound by all of the representations, warranties, covenants, terms
and conditions thereof as if it were a direct signatory thereto,
all of which representations, warranties, covenants, terms and
conditions are acknowledged. Each of the Original Borrowers and
the Parent acknowledges and agrees that FKP shall hereafter be a
Borrower and shall be bound by the terms and conditions of the
Loan Agreement.
1.1(b) Section 1.1 of the Loan Agreement is hereby amended by adding
the following definitions in their proper alphabetical order:
"FKP Acquisition Agreement" shall mean that certain Stock Purchase
Agreement, dated December 17, 1997, by and among the Parent and the FKP Sellers,
together with all schedules, exhibits, certificates, opinions of counsel, side
letters, bills of sale and other documents incorporated therein or delivered in
connection therewith.
"FKP Obligations" shall mean those certain unsecured contractual
monetary obligations of Parent in favor of the FKP Sellers incurred by Parent
under the FKP Acquisition Agreement including, without limitation, those arising
under Sections 2.3, 2.4, 2.6 and 10.4 thereof.
"FKP Sellers" shall mean Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx
X. Xxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxx and Xxxxx Xxxxxx.
1.1(c) The Loan Agreement is hereby amended by deleting the Revolving
Loan Note attached thereto as Exhibit 2.3 and replacing it with
the Amended and Restated Revolving Loan Note attached to this
Agreement as Exhibit 2.3. All references in the Financing
Agreements to "Revolving Loan Note," "Revolving Loan Notes,"
Note," or "Notes," shall be deemed references to the Amended and
Restated Revolving Loan Note.
1.2 AMENDMENT OF PARENT GUARANTY.
1.2(a) Section 6 of the Parent Guaranty hereby amended by adding the
following subsection at the end thereof:
(l) REPRESENTATIONS AND WARRANTIES INCORPORATED FROM FKP ACQUISITION
AGREEMENT. The Guarantor has delivered to Agent a complete and
correct copy of the FKP Acquisition Agreement and each of the
representations and warranties given by Guarantor therein is true
and correct in all material respects. Notwithstanding anything in
the FKP Acquisition Agreement to the contrary, the
representations and warranties incorporated into this Guaranty by
this SUBSECTION 6(L) shall for the purposes of this Guaranty and
the benefit of the Agent and the Lenders, survive both the
consummation of the transactions contemplated by the FKP
Acquisition Agreement and the termination of the FKP Acquisition
Agreement.
1.2(b) Section 7(c) of the Parent Guaranty is hereby amended by
deleting it in its entirety and replacing it with the following:
Guarantor shall not (i) engage in any business activity other
than the ownership and management of the Borrowers and Persons
with respect to Permitted Acquisitions and the related activities
incidental thereto; (ii) directly or indirectly incur or assume
or suffer to exist any Indebtedness other than (x) the Seller
Obligations, (y) the FKP Obligations and (z) Indebtedness to any
Borrower in connection with a Permitted Acquisition, Investments
(other than its Investment in the Borrowers and Persons with
respect to Permitted Acquisitions and Investments in cash and
Cash Equivalents in an aggregate amount not to exceed 100,000 at
any one time) or Guaranty (other than this Guaranty or guaranties
of Indebtedness of Borrowers permitted under the Loan Agreement);
(iii) incur on behalf of Guarantor or its Subsidiaries
obligations with respect to management or consulting or similar
fees to non-affiliates in excess of $350,000 in the aggregate in
any Fiscal Year; (iv) create or permit to exist any Lien on its
assets, other than Permitted Liens; (v) merge or consolidate
with, acquire any assets or Stock of, or otherwise combine with
any Person other than with respect to Permitted Acquisitions;
(vi) make any change in its capital structure (other than the
issuance of the Warrants, the Shares and the Underlying Shares
(as such terms are defined in the FKP Acquisition Agreement)
pursuant to the terms of the FKP Acquisition Agreement); (vii)
amend its articles of incorporation or bylaws other than any
amendment that is not, in the reasonable judgment of the Agent,
adverse in any material respect to the value of the interests or
rights of the Agent or the Lenders thereunder or the rights or
interests of the Agent or the Lenders; (viii) except as otherwise
permitted by the Loan Agreement with respect to the Borrowers,
sell, transfer, convey, assign or otherwise dispose of any of its
Property; (ix) execute any agreements or contracts that would be
prohibited by the Financing Agreements; or (x) change its Fiscal
Year. Notwithstanding the foregoing sentence, Guarantor may
engage in any activity incidental to the maintenance of the
existence of Guarantor and may enter into and perform the
obligations of Guarantor under this Agreement.
1.2(c) Section 7 of the Parent Guaranty is hereby amended by adding
the following subsection at the end thereof:
(h) Guarantor shall not (i) make any payment of principal or interest
on, or any redemption, prepayment, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any of the FKP
Obligations or (ii) amend, waive, modify, restate or otherwise supplement any
provision of the FKP Acquisition Agreement or waive any cause of action arising
therefrom or related thereto without the consent of the Lenders; PROVIDED that
so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, Guarantor may make regularly scheduled payments on the
FKP Obligations in accordance with the terms of the FKP Acquisition Agreement.
3. AMENDMENT TO PARENT PLEDGE AGREEMENT.
EXHIBIT 1 to the Parent Pledge Agreement is hereby deleted in its
entirely and replaced by EXHIBIT 1 attached to this Agreement.
SECTION 2. CONSENT. Subject to the terms and conditions of this
Agreement, Agent and Lenders hereby consent to the consummation of the FKP
Acquisition Agreement.
SECTION 3 REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders
to enter into this Agreement, Borrowers and Parent represent and warrant that:
3.1 NO DEFAULT. After giving effect to this Agreement and the consent
set forth in Section 2 hereof, no Default or Event of Default shall have
occurred or be continuing (which has not been waived or cured);
3.2 REPRESENTATIONS AND WARRANTIES. As of the date hereof and, after
giving effect to this Agreement and the transactions contemplated hereby, the
representations and warranties of the Borrowers and the Parent contained in the
Financing Agreements are true, accurate and complete in all respects on and as
of the date hereof to the same extent as though made on and as of such date
except to the extent such representations and warranties specifically relate to
an earlier date; and
3.3 CORPORATE AUTHORITY; ENFORCEABILITY. (i) The execution, delivery
and performance by the Borrowers and the Parent of this Agreement and each of
the documents and agreements described herein or contemplated hereby to which
such Person is a party, are within its corporate powers and have been duly
authorized by all necessary corporate action on the part of such Person, (ii)
this Agreement and such documents and agreements are the legal, valid and
binding obligation of the Borrowers and the Parent enforceable against such
Person in accordance with their terms and (iii) neither the execution, delivery
or performance by the Borrowers and the Parent of this Agreement or any such
other document or agreement nor by the Parent of the FKP Acquisition Agreement
(1) violates any law or regulation, or any order or decree of any Governmental
Authority, (2) conflicts with or results in the breach or termination of,
constitutes a default under or accelerates any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound, (3) results in the creation or imposition of any Lien (other than
Permitted Liens) upon any of the Collateral, (4) violates or conflicts with the
articles of incorporation or bylaws of such Person, or (5) requires the consent,
approval or authorization of, or declaration or filing with, any other Person,
except for those already duly obtained.
SECTION 4. CONDITIONS PRECEDENT TO AMENDMENTS. The effectiveness of
this Agreement shall be conditioned upon the satisfaction of the conditions set
forth in this Section 4 and the delivery of the following documents to Agent on
or prior to the date hereof (unless another date shall be specified), in form
and substance satisfactory to Agent, and consummation of all of the transactions
or the satisfaction of each condition contemplated by each such document in a
manner satisfactory to Agent and its counsel.
4.1 DOCUMENTATION. Borrowers shall have delivered to Agent all of the
following documents:
4.1(a) This Agreement duly executed by all parties hereto and the
Parent, as Guarantor.
4.1(b) An original Revolving Loan Note in the form attached hereto
as EXHIBIT 2.3, duly executed by each Borrower.
4.1(c) All necessary UCC financing statements perfecting security
interests in favor of Agent in the Collateral of FKP and
copies of searches of financing statements filed under the
Code, together with tax lien and judgment searches with
respect to the assets of FKP in Texas.
4.1(d) Duly executed copies of Blocked Account Agreements necessary
with respect to additional Blocked Accounts, if any,
delivered to Agent on or prior to January 16, 1998.
4.1(e) To the extent necessary to reflect the FKP Acquisition, the
Borrowers shall have provided to Agent revised Exhibits to
the Financing Agreements on or prior to January 9, 1998.
4.1(f) A certified copy of the resolutions of each Borrower and the
Parent authorizing or ratifying the execution and delivery
of, and the consummation of the transactions contemplated
by, this Agreement and all other documents or instruments to
be executed and delivered in connection herewith and the
performance of its obligations hereunder, delivered to Agent
on or prior to January 9, 1998.
4.1(g) An incumbency certificate with respect to the officers of
each Borrower and the Parent executing this Agreement and
the other Financing Agreements contemplated hereby,
certified as of the date hereof by such Person's secretary
or assistant secretary as being accurate, delivered to Agent
on or prior to January 9, 1998.
4.1(h) An opinion of Stroock & Stroock & Xxxxx LLP, counsel to
Borrowers and Parent, addressed to the Agent and the
Lenders, delivered to Agent on or prior to January 9, 1998.
4.1(i) OTHER DOCUMENTS. All other documents, certificates and
agreements as Lender may reasonably request to accomplish
the purposes of this Agreement.
4.2 PERMITTED ACQUISITION REQUIREMENTS. Borrowers shall have delivered
to Agent evidence of consummation of the FKP Acquisition and compliance with
each of the requirements of Section 8.20(b) of the Loan Agreement; provided
that:
4.2(a) the intercompany note issued by Parent in favor of Chicago
referenced in Section 8.20(b)(iv) shall be delivered to
Agent on or prior to January 9, 1998, which Note shall not
be subordinated to the Obligations under the Loan Agreement;
4.2(b) notwithstanding the terms of Section 9.20(b)(xi), Parent may
incur the unsubordinated Indebtedness under the FKP
Obligations;
4.2(c) the stock certificate representing the capital stock of FKP
shall be delivered to the Agent on or prior to January 9,
1998;
4.2(d) the monthly Acquisition Projections required to be delivered
pursuant to Section 8.20(b)(xvii) shall be delivered on or
prior to January 30, 1998; and
4.2(e) a copy of the FKP Acquisition Agreement certified by the
secretary or assistant secretary of the Parent shall be
delivered to Agent on or prior to January 9, 1998.
4.3 NO DEFAULT. As of the date hereof after giving effect to this
Agreement and the consent set forth in Section 2 hereof, no Default or Event of
Default under any Financing Agreement shall have occurred and be continuing .
4.4 NO LITIGATION. No litigation, investigation, proceeding,
injunction, restraint or other action shall be pending or threatened against any
Borrower or the Parent or any Affiliate of any such Person, which restrains,
prevents or imposes adverse conditions upon, or which otherwise relates to, the
execution, delivery or performance of this Agreement or the FKP Acquisition
Agreement.
4.5 CONSENTS AND ACKNOWLEDGMENTS. Borrowers shall have obtained all
consents, approvals and acknowledgments which may be required with respect to
the execution, delivery and performance of this Agreement.
SECTION 5. FURTHER ASSURANCES. Borrowers and Parent hereby agree, at
their expense, to duly execute, acknowledge and deliver to Agent all agreements,
certificates, instruments, opinions and other documents, and take all such
actions, as Agent may request in order to further effectuate the purposes of
this Agreement and to carry out the terms hereof.
SECTION 6. REFERENCE TO AND EFFECT ON FINANCING AGREEMENTS.
6.1 RATIFICATION. Except as specifically amended above, the Loan
Agreement and the other Financing Agreements shall remain in full force and
effect. Notwithstanding anything contained herein, the terms of this Agreement
are not intended to and do not effect a novation of the Loan Agreement or any
other Financing Agreement. Each of the Borrowers and the Parent ratify and
reaffirm each of the terms and conditions of the Financing Documents to which it
is a party and all of its obligations thereunder.
6.2 NO WAIVER. The execution, delivery and effectiveness of this
Agreement shall not operate as a waiver of any right, power or remedy of Lenders
or Agent under the Loan Agreement or any of the other Financing Agreements, or,
except as set forth in Section 2 and 4.2 hereof, constitute a waiver of any
provision of the Loan Agreement or any of the other Financing Agreements.
6.3 REFERENCES. Upon the effectiveness of this Agreement each
reference in (a) the Loan Agreement to "this Agreement," "hereunder," "hereof,"
or words of similar import or to the "Parent Guaranty" or the "Parent Pledge
Agreement" and (b) any other Financing Agreement to "the Agreement" or "the Loan
Agreement" or to the "Parent Guaranty" or the "Parent Pledge Agreement" shall,
in each case and except as otherwise specifically stated therein, mean and be a
reference to the Loan Agreement, the Parent Guaranty and the Parent Pledge
Agreement as amended hereby.
SECTION 7. MISCELLANEOUS.
7.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of Borrowers, Parent, Agent, Lenders and their
respective successors and assigns. The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of
Borrowers, Parent, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries of any of
the terms and provisions of this Agreement. Neither any Borrower nor the Parent
shall assign its rights and duties hereunder.
7.2 ENTIRE AGREEMENT. This Agreement and all schedules, exhibits and
other documents attached hereto or incorporated by reference herein constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all other understandings, oral or written, with respect to
the subject matter hereof.
7.3 FEES AND EXPENSES. In accordance with Section 2.13 of the Loan
Agreement, Borrowers agree to pay on demand all fees, costs and expenses
incurred by Agent and Lenders in connection with the preparation, execution and
delivery of this Agreement.
7.4 HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
7.5 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in any number of
separate original counterparts (or telecopied counterparts with original
execution copy to follow) and by the different parties on separate counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
7.7 CONFLICT OF TERMS. Except as otherwise provided in this Agreement,
if any provision contained in this Agreement is in conflict or is inconsistent
with any provision in any of the other Financing Agreements, the provision
contained in this Agreement shall govern and control.
7.8 INCORPORATION OF LOAN AGREEMENT. The provisions contained in
SECTIONS 10.7 and 10.8 of the Loan Agreement are incorporated herein by
reference to the same extent as if reproduced herein in their entirety.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
XXXX/USA WEST, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Title: CFO / EVP
XXXX/USA CHICAGO, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Title: CFO / EVP
XXXX/USA NEW YORK, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Title: CFO / EVP
SANWA BUSINESS CREDIT
CORPORATION, as Agent and as a Lender
By: /s/ Xxxxxx X. Xxxxxxx
Title: CFO / EVP
Acknowledged and Accepted:
XXXXXXX & XXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Title: CFO / EVP
Acknowledged and Agreed:
XXXX/USA, INC., as Guarantor
By:/s/ Xxxxxx X. Xxxxxxx
Title: CFO / EVP
