EXHIBIT 10.01
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FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
Fourth Amendment dated as of April 19, 2006 to Loan and Security
Agreement (the "Fourth Amendment"), by and between SWANK, INC., a Delaware
corporation (the "Borrower") and XXXXX FARGO FOOTHILL, INC. (the "Lender"),
amending certain provisions of the Loan and Security Agreement dated as of June
30, 2004 (as amended and in effect from time to time, the "Agreement") by and
between the Borrower and the Lender. Terms not otherwise defined herein which
are defined in the Agreement shall have the same respective meanings herein as
therein.
WHEREAS, the Borrower and the Lender have agreed to modify certain
terms and conditions of the Agreement as specifically set forth in this Fourth
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SS.1. AMENDMENT TO SECTION 1 OF THE AGREEMENT. Section 1 of the
Agreement is hereby amended as follows:
(a) The definition of "Eligible Accounts" contained in Section 1.1 of
the Agreement is hereby amended by deleting paragraph (i) of such definition in
its entirety and restating it as follows:
(i) Accounts with respect to (i) an Account Debtor other than
The Marmaxx Group, Federated and The May Department Stores Company on a
combined basis (hereinafter referred to on such combined basis as
"Federated/May"), Target and Kohls, whose total obligations owing to
Borrower exceed 10% (such percentage, as applied to a particular
Account Debtor, being subject to reduction by Lender in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates)
of all Eligible Accounts, to the extent of the obligations owing by
such Account Debtor in excess of such percentage;; and (ii) an Account
Debtor which is (x) any of The Marmaxx Group, Target and/or Kohls,
whose total obligations owing to Borrower exceed 20% (such percentage,
as applied to a particular Account Debtor, being subject to reduction
by Lender in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Accounts, to the extent of
the obligations owing by such Account Debtor in excess of such
percentage; or (ii) an Account Debtor which is Federated/May, whose
total obligations owing to Borrower exceed 30%(such percentage, as
applied to a particular Account Debtor, being subject to reduction by
Lender in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Accounts, to the extent of
the obligations owing by such Account Debtor in excess of such
percentage;
provided, however, that, in each case, the amount of Eligible Accounts
that are excluded because they exceed the foregoing percentage shall be
determined by Lender based on all of the otherwise Eligible Accounts
prior to giving effect to any eliminations based upon the foregoing
concentration limit
(b) The definition of "Permitted Investments" contained in Section 1.1
of the Agreement is hereby amended by deleting paragraph (j) of such definition
in its entirety and restating is as follows: "(j) so long as no Default or Event
of Default has occurred and is continuing, Investments by Borrower (i) in The
New Swank Inc. Retirement Plan consisting of advances made by Borrower to The
New Swank Inc. Retirement Plan, the proceeds of which are used by The New Swank
Inc. Retirement Plan to repurchase from employees of Borrower shares of the
Stock of Borrower owned by such employee and (ii) consisting of advances to
employees of Borrower to repurchase from such employees shares of the Stock of
Borrower owned by such employee, provided, (x) the aggregate amount of any such
Investment made pursuant to this paragraph (j) shall be deducted from the
calculation of EBITDA in the applicable period in which such Investment was made
(whether such deduction is a result of such Investment being expensed or
otherwise deducted); (y) the aggregate amount of such Investment together with
any Restricted Payment permitted hereunder shall not exceed $500,000 in any
calendar year; and (z) the Borrower's Availability both before and after making
such Investment is not less than $1,850,000".
SS.2. AMENDMENT TO SECTION 6 OF THE AGREEMENT. Section 6.8 of the
Agreement is hereby amended by deleting the amount "$2,500,000" which appears in
Section 6.8(d) of the Agreement and substituting in place thereof the amount
"$1,500,000".
SS.3. AMENDMENT TO SECTION 7 OF THE AGREEMENT. Section 7 of the
Agreement is hereby amended as follows:
(a) Section 7.1(h) of the Agreement is hereby amended by deleting the
amount "$2,500,000" which appears in Section 7.1(h) and substituting in place
thereof the amount "$1,500,000".
(b) Section 7.10 of the Agreement is hereby amended by deleting Section
7.10 in its entirety and restating it as follows:
7.10. RESTRICTED PAYMENTS. Make any Restricted Payment,
provided, however, so long as no Default or Event of Default has
occurred and is continuing or would exist as a result thereof, Borrower
shall be permitted to make a Restricted Payment either (a) to The New
Swank Inc. Retirement Plan consisting of advances or other
Distributions made by Borrower to The New Swank Inc. Retirement Plan,
the proceeds of which are used by The New Swank Inc. Retirement Plan to
repurchase from employees of Borrower shares of the Stock of Borrower
owned by such employee or (b) to employees of the Borrower to
repurchase from such employees shares of the Stock of Borrower owned by
such employee, provided, in each case (i) the aggregate amount of all
such Restricted Payments made pursuant to this Section 7.10 shall be
deducted from the calculation of EBITDA in the applicable period in
which such Restricted Payment was made (whether such deduction is a
result of such Restricted
Payment being expensed or otherwise deducted); (b) the aggregate amount
of all such Restricted Payments and the Permitted Investments set forth
in paragraph (j) of such definition shall not exceed $500,000 in any
calendar year; and (c) the Borrower's Availability both before and
after making such Restricted Payment is not less than $1,850,000.
(c) Section 7.18(a) of the Agreement is hereby amended by deleting the
table which appears in Section 7.18(a) of the Agreement and restating it in its
entirety as follows:
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Applicable Amount Applicable Period
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($487,000) For the 1 month
period ended
April 30, 2004
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($212,000) For the 2 month
period ending
May 31, 2004
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($872,000) For the 3 month
period ending
June 30, 2004
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($1,252,000) For the 4 month
period ending
July 31, 2004
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($462,000) For the 5 month
period ending
August 31, 2004
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$464,000 For the 6 month period
ending September 30, 2004
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$1,455,000 For the 7 month period
ending October 31, 2004
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$2,616,000 For the 8 month period
ending November 30, 2004
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$2,611,000 For the 9 month period
ending December 31, 2004
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$1,953,500 For the 10 month period
ending January 31, 2005.
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$1,919,400 For the 11 month period
ending February 28, 2005.
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$1,742,500 For the 12 month period
ending March 31, 2005.
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$1,990,300 For the 12 month period
ending April 30, 2005.
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$906,500 For the 12 month period
ending May 31, 2005.
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$781,000 For the 12 month period
ending June 30, 2005.
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$884,600 For the 12 month period
ending July 31, 2005.
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$1,091,900 For the 12 month period
ending August 31, 2005.
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$1,370,800 For the 12 month period
ending September 30, 2005.
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$1,501,000 For the 12 month period
ending October 31, 2005.
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$1,519,500 For the 12 month period
ending November 30, 2005.
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$1,806,200 For the 12 month period
ending December 31, 2005.
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$3,951,800 For the 12 month period
ending January 31, 2006.
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$4,073,900 For the 12 month period
ending February 28, 2006.
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$3,768,300 For the 12 month period
ending March 31, 2006.
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$3,762,800 For the 12 month period
ending April 30, 2006.
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$3,555,200 For the 12 month period
ending May 31, 2006.
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$3,151,100 For the 12 month period
ending June 30, 2006.
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$3,164,100 For the 12 month period
ending July 31, 2006.
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$3,173,000 For the 12 month period
ending August 31, 2006.
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$3,213,700 For the 12 month period
ending September 30, 2006.
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$2,412,500 For the 12 month period
ending October 31, 2006.
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$2,785,800 For the 12 month period
ending November 30, 2006.
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$1,989,500 For the 12 month period
ending December 31, 2006.
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An amount determined by
Lender based upon the
Projections delivered pursuant
to Section 6.3(c); provided that
if Lender does not receive
such Projections or Borrower
and Lender cannot agree (for For the 12 month period
any reason) on covenants ending January 31, 2007 and each
acceptable to Borrower and calendar month thereafter.
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SS.4. CONDITIONS TO EFFECTIVENESS. This Fourth Amendment shall not
become effective until the Lender receives the following:
(a) a counterpart of this Fourth Amendment, executed by the Borrower
and the Lender; and
(b) payment in cash of an amendment fee of $20,000.
SS.5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby repeats, on
and as of the date hereof, each of the representations and warranties made by it
in Section 5 of the Agreement (except to the extent of changes resulting from
transactions contemplated or permitted by the Agreement and the other Loan
Documents and changes occurring in the ordinary course of business that singly
or in the aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date), provided,
that all references therein to the Agreement shall refer to such Agreement as
amended hereby. In addition, the Borrower hereby represents and warrants that
the execution and delivery by the Borrower of this Fourth Amendment and the
performance by the Borrower of all of its agreements and obligations under the
Agreement as amended hereby are within the authority of the Borrower and have
been duly authorized by all necessary action on the part of the Borrower.
SS.6. RATIFICATION, ETC. Except as expressly amended hereby, the
Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. The Agreement
and this Fourth Amendment shall be read and construed as a single agreement. All
references in the Agreement or any related agreement or instrument to the
Agreement shall hereafter refer to the Agreement as amended hereby.
SS.7. NO WAIVER. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of the Borrower
or any rights of the Lender consequent thereon.
SS.8. COUNTERPARTS. This Fourth Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
SS.9. GOVERNING LAW. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment as a document under seal as of the date first above written.
SWANK, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Lender
By: /s/ Xxxxxx X. Xxxxxxx, III
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Name: Xxxxxx X. Xxxxxxx, III
Title: Vice President
