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FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT ("First
Amendment") made this 28th day of February, 2000 by and between XXXXXX XXXXXXXX,
INC., a corporation organized under the laws of the State of Delaware
("Borrower"), the financial institutions which are now or which hereafter become
a party hereto (collectively, the "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL ASSOCIATION, a national banking association, ("PNC"), as agent
for Lenders (PNC, in such capacity, the "Agent").
WITNESSETH
WHEREAS, the Bank and the Borrower have previously entered into a
commercial lending arrangement in accordance with the terms and provisions of a
certain Loan and Security Agreement dated March 30, 1998 (the "Agreement"); and
WHEREAS, the parties desire to amend this Agreement pursuant to the
terms set forth in this First Amendment and memorialize the amendments to the
Agreement by this writing.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is agreed as follows:
1. The definitions of the terms "Indenture" and "Maximum Revolving
Advance Amount" are hereby deleted from the Agreement and new definitions are
substituted therefor to read as follows:
"Indenture" shall mean a certain Indenture dated February 15,
2000 with respect to the issuance by the Borrower of
$200,000,000 aggregate principal amount of its Senior Notes
Due 2008.
"Maximum Revolving Advance Amount" shall mean $10,000,000.
2. A new definition is hereby added to Subsection 1.2 of the
Agreement to read as follows:
"Warner PLC Guaranty" shall mean the Continuing Guaranty in
the form attached hereto as Exhibit A.
3. Subsection 2.1(a) of the Agreement is hereby deleted and a new
Subsection 2.1(a) is substituted therefor to read as follows:
2.1 (a) Revolving Advances. Subject to the terms and
conditions set forth in this Agreement, each Lender, severally
and not jointly, will make Revolving Advances to Borrower in
aggregate amounts outstanding at any time equal to such
Lender's Commitment Percentage of the lesser of(x) the Maximum
Revolving Advance Amount or (y) an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b)
hereof ("Receivables Advance Rate"), of Eligible Receivables,
plus
(ii) up to the lesser of (A) 60%, subject to the provisions of
Section 2.1(b) hereof ("Inventory Advance Rate"), of the value
of the Eligible Inventory (the Receivables Advance Rate and
the Inventory Advance Rate shall be referred to collectively,
as the "Advance Rates") or (B) $5,000,000 in the aggregate at
any one time, plus
(iii) up to 95% of cash or Cash Equivalents maintained at the
Agent and in form and substance acceptable to the Agent, minus
(iv) such reserves as Agent may reasonably deem proper and
necessary from time to time.
In no event shall Revolving Advances against Eligible
Receivables of Schering-Plough exceed $2,500,000 at any time,
in the aggregate.
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The amount derived from the sum of(x) Sections 2.1(a)(y)(i),
(ii) and (iii) minus (y) Section 2.1 (a)(y)(iv) at any time
and from time to time shall be referred to as the "Formula
Amount". The Revolving Advances shall be evidenced by the
amended revolving credit note ("Revolving Credit Note")
substantially in the form attached hereto as Exhibit A.
4. Subsection 2.11 of the Agreement is hereby deleted and a new
Subsection 2.11 is substituted therefor to read as follows:
2.11 Use of Proceeds. Borrower shall apply the proceeds of
Advances to (i) repay existing indebtedness owed to the
Lenders, (ii) pay fees and expenses relating to this
transaction, and (iii) to provide for the working capital
needs of the Borrower.
5. Subsections 3.2 and 3.3 of the Agreement are hereby deleted and
new Subsections 3.2 and 3.3 are substituted therefor to read as follows:
3.2.(a) Closing Fee. Upon the execution of this First
Amendment, Borrower shall pay to Agent a Closing Fee as in the
amount of $225,000.
(b) Unused Line Fee. If, for any month during the Term, the
average daily unpaid balance of the Advances for each day of
such month does not equal the Maximum Revolving Advance
Amount, then Borrower shall pay to Agent for the ratable
benefit of Lenders a fee at a rate equal to three-eighths of
one percent (3/8%) per annum on the amount by which the
Maximum Revolving Advance Amount exceeds such average daily
unpaid balance. Such fee shall be payable to Agent in arrears
on the last day of each month.
(c) Facility Fee. The Borrower shall pay to the Agent on or
before the first day of January of each year during the Term
the sum of $50,000.
3.3. Collateral Monitoring Fee. Borrower shall pay to Agent on
the first day of each month a collateral monitoring fee in an
amount equal to $1,500 per month. In addition, the Borrower
shall pay to Agent, for each person employed to perform field
examinations, collateral analysis and/or other business
analysis, an amount equal to $750 per day for each person
performing such examinations or analysis, plus all costs and
disbursements incurred by Agent in the performance of such
examinations or analysis.
6. The following sentence is hereby added at the end of Subsection 4.2:
The Lenders agree to release their lien and security interest
with respect to Borrower's trademarks and trade names
provided:
(a) the Borrower has secured additional financing from other
sources which require the granting of a security interest in
Borrower's trademarks and trade names to such other sources;
and
(b) such other sources agree to grant to the Lenders a license
which would allow the Lenders to utilize the trademarks and
trade names in connection with the sale of assets in a
liquidation of the Borrower by the Lenders. The term of such
license shall be satisfactory to the Lenders in their sole
discretion.
7. Subsections 7.7, 7.11 and 7.18 of the Agreement are hereby deleted and
new Subsections 7.7, 7.11 and 7.18 are substituted therefor to read as follows:
7.7. Dividends. Declare, pay or make any dividend or
distribution on any shares of the common stock or preferred
stock of Borrower (other than dividends or distributions
payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any common or
preferred stock, or of any options to purchase or acquire any
such shares of common or preferred stock of Borrower except:
(i) that so long as (a) a notice of termination with regard to
this Agreement shall not be outstanding, (b) no Event of
Default or Default shall have occurred, and (c) the purpose
for such purchase,
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redemption or dividend shall be as set forth in writing to Agent at
least ten (10) days prior to such purchase, redemption or dividend
and such purchase, redemption or dividend shall in fact be used for
such purpose, Borrower shall be permitted to pay dividends to Parent
to pay interest accrued under the Indenture, to the extent permitted
provided, however, that after giving effect to the payment of such
dividends there shall not exist any Event of Default or Default;
(ii) for cash dividends not to exceed $1,000,000 in the aggregate
per fiscal year.
7.11 Leases. Enter as lessee into any new lease arrangement for real
or personal property (unless capitalized and permitted under Section
7.6 hereof) if after giving effect thereto, aggregate annual rental
payments for all new leased property would exceed $750,000 in any
one fiscal year.
7.18 Subordinated Debt Payment. At any time, directly or indirectly,
pay, prepay, repurchase, redeem, retire or otherwise acquire or make
any payment on account of any principal of, interest on, or premium
payable, in connection with the repayment or redemption of the
Subordinated Debt Payment, except as expressly required by the terms
of the Indenture.
8. A new Subsection 7.20 is hereby added to the Agreement to read as
follows:
7.20 Interest Coverage Ratio. Cause, suffer or permit the Borrower's
Interest Coverage Ratio to be less than 1 to 1. For the purposes
hereof, the term "Interest Coverage Ratio" shall be deemed to mean
the ratio of EBITDA to total interest payable on all of Borrower's
Debt as determined in accordance with GAAP.
9. Subsection 13.1 of the Agreement is hereby deleted and a new Subsection
13.1 is substituted therefor to read as follows:
13.1. Term. This Agreement, which shall inure to the benefit
of and shall be binding upon the respective successors and
permitted assigns of Borrower, Agent and each Lender, shall
become effective on the date hereof and shall continue in full
force and effect until February 28, 2002 (the "Term") unless
sooner terminated as herein provided. Borrower may terminate
this Agreement at any time upon ninety (90) days' prior
written notice upon payment in full of the Obligations. In the
event the Obligations are prepaid in full prior to the last
day of the Term (the date of such prepayment hereinafter
referred to as the "Early Termination Date"), Borrower shall
pay to Agent for the benefit of Lenders an early termination
fee in the amount of $50,000.
10. Simultaneously with the execution of this First Amendment and as a
condition precedent to the consummation of the transaction evidenced by this
First Amendment, the Borrower shall deliver to the Bank the following: (a)
Evidence of the completion and funding of the indebtedness evidenced by the
Indenture; (b) Evidence of the acquisition by Borrower from Xxxxxxx-Xxxxx Squibb
of the project known as Excalibur; (c) Receipt and satisfactory review of the
audited financial statements of the Excalibur product lines; (d) Delivery of a
borrowing base certificate satisfactory to the Lenders evidencing Undrawn
Availability of at least $5,000,000; (e) The executed Revolving Credit Note; (f)
Resolutions and a certificate from the Borrower's corporate secretary indicating
approval of the transactions contemplated by this First Amendment; (g) Opinion
of Borrower's counsel with respect to due execution, delivery and performance of
the transactions evidenced by this First Amendment and related documents; (h)
the Warner PLC Guaranty; (i) Resolutions and a Certificate from Warner PLC's
corporate secretary indicating approval of the Warner PLC Guaranty; (j) Opinion
of Warner PLC's counsel with respect to due execution, delivery and performance
of the transaction evidenced by the Warner PLC Guaranty; and (k) payment of the
Closing Fee.
11. The Agent and the Lenders acknowledge that the Financial Support
Undertaking is hereby released and has no further force or effect.
12. Notwithstanding any term or provision contained herein, or in the
Agreement or the Other Documents, to the contrary, in connection with the
acquisition by Borrower from Xxxxxxx-Xxxxx Squibb of the project known as
Excalibur, the Lenders are not being granted a security interest in any
Intellectual Property (as such term is defined in the Asset Purchase Agreement
dated as of January 26, 2000, between Xxxxxxx-Xxxxx Squibb Company and Xxxxxx
Xxxxxxxx, Inc.) or any other General Intangibles acquired by the Borrower on or
after January 26, 2000 as part of the acquisition of a business or business
entity. However, (a) by this writing the Borrower hereby grants the
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Lenders a license to utilize the trademarks and trade names referred to above in
connection with the sale of assets in a liquidation of the Borrower by the
Lenders; and (b) the Borrower shall not grant a security interest or assign to
any other party the trademarks and trade names referred to above unless such
other party provides the Lenders with documentation satisfactory to the Lenders
in their sole discretion, such documentation to provide the Lenders with a
license which would allow the Lenders to utilize the trademarks and trade names
in connection with the sale of assets in a liquidation of the Borrower by the
Lender. In the event that the Borrower at any time in the future acquires any
other business entity that includes inventory subject to trade names or
trademarks, the Lenders shall not include the value of any such inventory within
the Borrowing Base.
13. The Borrower hereby affirms and/or makes the representations and
warranties contained in Section V of the Agreement as amended herein, and
represents that said representations and warranties are true as of the date of
this First Amendment.
14. The Borrower hereby affirms and/or agrees to comply with the
covenants contained in Sections VI and VII of the Agreement as amended herein.
15. All the remaining terms and conditions of the Agreement and all
other Loan Documents (including any amendments thereto) except as specifically
modified herein or in connection herewith shall remain in full force and effect,
and any term not otherwise defined herein shall have the meaning described
thereto in the Agreement or the other Loan Documents.
16. This First Amendment may be executed in counterpart originals.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals or caused these presents to be signed by their respective corporate
officers and the proper corporate seal to be affixed hereto the day and year
first above written.
XXXXXX XXXXXXXX, INC.
ATTEST:
By /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxx Title: Executive Vice President & Chief Financial Officer
Name: Xxxx X. Xxxxx
Title: Senior Vice President & General Counsel
[SEAL]
PNC BANK, NATIONAL ASSOCIATION, as Lender and as Agent
By: /s/ Xxxxxxxx Xxxxxxx-Nurse
Name: XXXXXXXX XXXXXXX-NURSE
Title: Vice President
Xxx Xxxxx Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Commitment Percentage: 100%
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