EXHIBIT 10.11.1
As of September 19, 1997
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Amendment No. 1 to Financing Agreements
Gentlemen:
Reference is made to the financing arrangements between CONGRESS
FINANCIAL CORPORATION (CENTRAL) ("Lender") and NAVARRE CORPORATION ("Borrower"),
pursuant to which Lender may extend loans, advances and other financial
accommodations to Borrower pursuant to the terms and provisions of the Loan and
Security Agreement dated June 12, 1997 between Borrower and Lender (the "Loan
Agreement"). All capitalized terms used herein and not otherwise defined herein
shall have their respective meanings as defined in the Loan Agreement.
Borrower has requested that the Lender amend the Loan Agreement and
make additional loans, advances and other financial accommodations to Borrower
under the Loan Agreement, which Lender is willing to make, on and subject to the
terms and conditions of the Loan Agreement and the terms and conditions set
forth in this Letter Re: Amendment No. 1 to Financing Agreements ("Amendment").
In consideration of the foregoing, the parties hereto hereby agree as follows:
1. (a) In addition to the loans and advances as set forth in the
Loan Agreement, Lender agrees to make, subject to the terms hereof and as a
one-time financial accommodation to Borrower, a supplemental loan to Borrower in
the principal amount of $3,000,000 (the "Supplemental Loan"). The proceeds from
the Supplemental Loan shall be used by Borrower in connection with the purchase
of goods from American Gramaphone, L.L.C. The Supplemental Loan shall be a
Revolving Loan under the Loan Agreement and all references in the Loan Agreement
to "Revolving Loans" are hereby amended to include, within the definition
thereof, the Supplemental Loan. The Supplemental Loan shall accrue interest at
the rate set forth in the Loan Agreement with such interest being payable in
accordance with the terms of the Loan Agreement and the Supplemental Loan shall
be repaid on or prior to the date which is sixty (60) days from the date that
the Supplemental Loan is disbursed by Lender to Borrower (such sixtieth (60th)
day being the "Repayment Date"). Notwithstanding the foregoing, from the date
hereof up to and including the Repayment Date, the outstanding amount of the
Supplemental Loan shall not be included in the calculation, from time to time,
of Borrower's availability under the lending formulas as set forth in the Loan
Agreement. The outstanding principal amount of the Supplemental Loan plus the
aggregate amount
of the Loans (excluding the Supplemental Loan) and the Letter of Credit
Accommodations outstanding at any time shall not exceed the Maximum Credit.
(b) The Supplemental Loan may be prepaid in whole or in part
without penalty or premium.
(c) At Lender's option, all payments required hereunder, together
with interest thereon, may be charged to any loan account of Borrower maintained
by Lender.
(d) Borrower hereby acknowledges, confirms and agrees that Lender
shall have no obligation to make the Supplemental Loan to Borrower until such
time as (i) Lender shall have received, to its satisfaction, evidence that all
disputes between Borrower and American Gramaphone, L.L.C., including the issues,
allegations and damages which are the subject to any lawsuit between Borrower
and American Gramaphone, L.L.C., have been settled or otherwise resolved; (ii)
Lender shall have received a Limited Guarantee duly executed by each of Xxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxxx, respectively; and (iii) Lender shall have
received evidence that Lender has a perfected security interest in the Pledged
Securities (as said term is defined in those certain Collateral Assignment and
Pledge of Pledged Securities Agreements dated as of the date hereof and executed
and delivered in favor of Lender by each of Xxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxx, respectively).
2. Section 1.20 of the Loan Agreement is hereby amended and restated
in its entirety as follows:
"1.20 "INTEREST RATE" shall mean: (a) From the date of
that certain Letter Re: Amendment No. 1 to Financing
Agreements between Borrower and Lender dated as of September
__, 1997 ("Amendment No. 1"), up to and including June 30,
1998, and at any time from and after June 30, 1998 that Lender
declares an Event of Default hereunder or Borrower fails to
maintain an Adjusted Net Worth equal to or greater than
$5,000,000, "Interest Rate" shall mean as to Prime Rate Loans,
a rate of one (1%) percent per annum in excess of the Prime
Rate and, as to Eurodollar Rate Loans, a rate of three and
one-quarter (3 1/4%) percent per annum in excess of the
Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Borrower as in
effect three (3) Business Days after the date of receipt by
Lender of the request of Borrower for such Eurodollar Rate
Loans in accordance with the terms hereof, whether such rate
is higher or lower than any rate previously quoted to
Borrower); provided, that, the Interest Rate shall mean the
rate of three (3%) percent per annum in excess of the Prime
Rate as to Prime Rate Loans and the rate of five and one
quarter (5 1/4%) percent per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Lender's
option, without notice, (i) for the period (1) from and after
the date of termination or non-renewal hereof until Lender has
received full and final
payment of all obligations (notwithstanding entry of a
judgment against Borrower) and (2) from and after the date of
the occurrence of an Event of Default for so long as such
Event of Default is continuing as determined by Lender, and
(ii) on the Revolving Loans at any time outstanding in excess
of the amounts available to Borrower under Section 2 (whether
or not such excess(es), arise or are made with or without
Lender's knowledge or consent and whether made before or after
an Event of Default); and
(b) From and after June 30, 1998, so long as Borrower
maintains an Adjusted Net Worth of $5,000,000 or greater and
no Event of Default has been declared by Lender hereunder,
"Interest Rate" shall mean as to Prime Rate Loans, a rate of
one-half (1/2%) percent per annum in excess of the Prime Rate
and, as to Eurodollar Rate Loans, a rate of two and
three-quarter (2 3/4%) percent per annum in excess of the
Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Borrower as in
effect three (3) Business Days after the date of receipt by
Lender of the request of Borrower for such Eurodollar Rate
Loans in accordance with the terms hereof, whether such rate
is higher or lower than any rate previously quoted to
Borrower); provided, that, the Interest Rate shall mean the
rate of two and one-half (2 1/2%) percent per annum in excess
of the Prime Rate as to Prime Rate Loans and the rate of four
and three-quarters (4 3/4%) percent per annum in excess of the
Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at
Lender's option, without notice, (i) for the period (1) from
and after the date of termination or non-renewal hereof until
Lender has received full and final payment of all obligations
(notwithstanding entry of a judgment against Borrower) and (2)
from and after the date of the occurrence of an Event of
Default for so long as such Event of Default is continuing as
determined by Lender, and (ii) on the Revolving Loans at any
time outstanding in excess of the amounts available to
Borrower under Section 2 (whether or not such excess(es),
arise or are made with or without Lender's knowledge or
consent and whether made before or after an Event of
Default)."
3. In further consideration of Lender's willingness to make
additional loans to Borrower as set forth herein, in addition to all other fees
due and payable by Borrower under the Loan Agreement, Borrower agrees to pay to
Lender a fee in the amount of $20,000. Such fee shall be fully earned as of the
date hereof and shall be payable in two (2) installments, with the first
installment in the amount of $10,000 payable contemporaneously with the
execution of this Amendment, and the second installment in the amount of $10,000
payable on the date which is thirty (30) days from the date of this Amendment.
Such fee may be charged by Lender to any loan account(s) of Borrower maintained
by Lender.
4. This Amendment shall not constitute a waiver or amendment of any
provision of the Loan Agreement not expressly referred to herein. Except as
expressly
set forth herein, no other changes or modifications to the Loan Agreement are
intended or implied and the Loan Agreement shall remain in full force and effect
in accordance with its terms.
5. This Amendment may be executed in counterparts, each of which,
when executed, shall be deemed to constitute one and the same Amendment.
6. This Amendment shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Illinois.
Very truly yours,
NAVARRE CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: President
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ACCEPTED AND AGREED TO:
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Title: Vice President
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ACKNOWLEDGED AND AGREED TO:
/s/ Xxxx X. Xxxxxxx
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XXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
