EXHIBIT 10.117
AMENDMENT NO. 4
TO
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 (this "Amendment") is entered into as of March 17,
2003, by and among DISCOVERY TOYS, INC., a California corporation ("Borrower"),
PNC BANK, NATIONAL ASSOCIATION ("PNC"), the undersigned financial institutions
which are now or which hereafter become a party to the Loan Agreement
(collectively, the "Lenders" and individually, a "Lender"), and PNC as agent for
Lenders (PNC, in such capacity, "Agent").
BACKGROUND
Borrower, Agent and Lenders are parties to a Revolving Credit and
Security Agreement dated as of June 1, 1999 (as amended by Amendment No. 3 dated
as of July 29, 2002, Amendment No. 2 dated as of April 25, 2002, Amendment No. 1
dated as of June 1, 2001 and as same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement")
pursuant to which Agent and Lenders provide Borrower with certain financial
accommodations.
Borrower has requested that Agent and Lenders amend provisions of the
Loan Agreement as hereafter provided. Agent and Lenders are 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 Agent
and Lenders, 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. Subject to satisfaction of the
conditions precedent set forth in Section 3, the Loan Agreement is hereby
amended as follows:
(a) Section 1.2 of the Loan Agreement is amended as follows:
(i) the following defined terms are added in the
appropriate alphabetical order:
"Amendment No. 4" shall mean Amendment No. 4 dated as of
March 17, 2003.
"Amendment No. 4 Effective Date" shall mean the date
when the conditions of effectiveness set forth in
Amendment No. 4 have been met to Agent's satisfaction.
"Eligible On-Water Inventory" shall mean Inventory
located on the water so long as (i) such Inventory is
insured and covered under a marine cargo insurance
policy held by Borrower and Lender is named as lender
loss payee thereon and (ii) would otherwise constitute
Eligible Inventory.
(ii) the following defined terms are amended in their
entirety to provide as follows:
"Advance Rate" shall mean, collectively, the Receivables
Advance Rate and the Inventory Advance Rate.
"Seasonal Overadvance Amount" shall mean during the
Seasonal Overadvance Period the amount set forth below
opposite the period corresponding thereto:
May 1, 2003 - May 31, 2003 $ 300,000
June 1, 2003 - June 30, 2003 $ 400,000
July 1, 2003 - July 31, 2003 $ 1,000,000
August 1, 2003 - August 31, 2003 $ 1,300,000
September 1, 2003 - September 30, 2003 $ 1,400,000
"Seasonal Overadvance Period" shall mean the period
commencing on May 1, 2003 and ending on September 30,
2003.
"Tangible Net Worth" shall mean, at a particular date,
(a) the aggregate amount of all assets of Borrower as
may be properly classified as such in accordance with
GAAP consistently applied excluding such other assets as
are properly classified as intangible assets under GAAP,
less (b) the aggregate amount of all liabilities of the
Borrower (including, without limitation, the
Subordinated Note).
"Term" shall mean the Closing Date through December 31,
2004.
(b) Section 2.1(a)(y)(ii) is hereby amended in its entirety
to provide as follows:
"(ii) the sum of (a) 55%, subject to the provisions of
Section 2.1(b) hereof ("Inventory Advance Rate") of the
value of Eligible Inventory in the aggregate at any time
(other than Eligible On-Water Inventory) plus (b) the
lesser of (x) $1,800,000 or (y) the Inventory Advance
Rate of the value of Eligible On-Water Inventory in the
aggregate at any time;"
(c) A new Section 6.10 is hereby added to the Loan Agreement
to provide as follows:
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"6.10. Tangible Net Worth. Maintain Tangible Net Worth
at the end of each fiscal quarter set forth below of not
less than the amount set forth opposite such quarter:
FISCAL QUARTER ENDING AMOUNT
-------------------------------------------------------
March 31, 2003 $ 2,100,000
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June 30, 2003 $ 1,400,000
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September 30, 2003 $ 350,000
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December 31, 2003 $ 3,400,000
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The Tangible Net Worth Covenant shall be reset by Agent
for the fiscal quarters during the calendar year ending
December 1, 2004 based upon the Operating Budget for
such year delivered by Borrower in accordance with
Section 9.11 of the Loan Agreement."
(d) Section 9.2 of the Loan Agreement is hereby amended by
inserting the following sentence at the end thereof:
"Additionally, on the fifteenth and last day of each
month during the Seasonal Overadvance Period, Borrower
shall deliver to Agent an Inventory report that
indicates how much Inventory is located on the water to
be included in the calculation of the Formula Amount as
Eligible On-Water Inventory."
(e) Section 13.1 of the Loan Agreement is hereby amended by
amending clauses (x) and (y) in their entirety to provide as follows:
"(x) $100,000 if the Early Termination Date occurs on or
after the Amendment No. 4 Effective Date and prior to
December 31, 2003 and (y) $50,000 if the Early
Termination Date occurs on or after December 31, 2003
and prior to the last day of the Term."
3. Conditions of Effectiveness. This Amendment shall become
effective upon satisfaction of the following conditions precedent: Agent shall
have received (i) four (4) copies of this Amendment executed by Borrower and
Lenders; (ii) an amendment fee in the amount of $50,000, which amount shall be
paid by Agent charging Borrower's loan account with a Revolving Advance for such
amount; (iii) a copy of the marine cargo insurance policy maintained by Borrower
together with an endorsement naming Agent as lender loss payee; and (iv) such
other certificates, instruments, documents, agreements and opinions of counsel
as may be required by Agent or its counsel, each of which shall be in form and
substance satisfactory to Agent and its counsel.
4. Representations and Warranties. Borrower hereby represents and
warrants as follows:
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(a) This Amendment 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, Borrower
hereby reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
(c) Borrower has no defense, counterclaim or offset with
respect to the Loan Agreement.
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 shall not operate as a waiver of any right, power or remedy of Agent
or Lenders, nor constitute a waiver of any 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 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 are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts; Facsimile. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed an
original and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
DISCOVERY TOYS, INC., as Borrower
By: /s/ XXXX X. XXXX
----------------------------
Name: Xxxx X. Xxxx
Title: CFO
PNC BANK, NATIONAL ASSOCIATION, as
Agent and Lender
By: /s/ XXXXX X. XXXXXXX, VP
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
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