Exhibit 10.15
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
WHEREAS, The Millbrook Press Inc., a Delaware corporation, with its
chief executive office located at 0 Xxx Xxx Xxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxxxx 00000 (referred to herein as "Borrower") entered into a Loan and
Security Agreement with People's Bank, a Connecticut banking corporation with a
place of business located at Bridgeport Center, 000 Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxx 00000 (referred to herein as "Lender") dated as of December 14, 1995
(the Loan and Security Agreement being herein referred to as the "Loan
Agreement"); and
WHEREAS, Borrower and Lender entered into a First Amendment to Loan
and Security Agreement dated as of June 17, 1997 and a Second Amendment to Loan
and Security Agreement dated as of June 10, 1998 and a Letter Amendment dated
January 8, 1999 to provide Borrower with a LIBOR interest rate option and a
Third Amendment to the Loan and Security Agreement dated as of January 31, 2000
(the Loan and Security Agreement, as amended by all of the prior Amendments and
the Letter Amendment shall be referred to herein as the "Amended Agreement");
and
WHEREAS, Borrower and Lender have agreed to further amend the terms
and provisions of the Amended Agreement effective as of the date stated herein
by the provisions set forth below;
NOW, THEREFORE, Borrower and Lender hereby agree that effective as
of October 23, 2001, the Amended Agreement shall be further amended to contain
the provisions set forth below and the applicable provisions of the Amended
Agreement shall be superseded to the extent necessary to give effect to the
provisions set forth below:
1. The definitional term "Working Capital" shall be deleted.
2. Section 3.3 of the Amended Agreement shall be deleted in its
entirety and the following inserted in lieu thereof:
3.3 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrower and People's and shall continue in full force
and effect for a term ending on December 31, 2004. The foregoing
notwithstanding, People's shall have the right to terminate its obligations
under this Agreement immediately and without notice upon the occurrence and
during the continuation of an Event of Default.
3. Section 2.3(d) of the Amended Agreement shall be deleted in its
entirety and the following inserted in lieu thereof:
(d) Computation. The Reference Rate as of the date of this
Agreement is five and one-half percent (5.50%) per annum. In the event the
Reference Rate is changed from time to time hereafter, the applicable rate of
interest hereunder automatically and immediately shall be increased or decreased
by an amount equal to such change in the Reference Rate. All interest and fees
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.
4. Section 6.13(a) shall be deleted in its entirety and the
following substituted in lieu therefor:
6.13(a) Current Ratio. Compliance with the ratio of Consolidated
Current Assets divided by Consolidated Current Liabilities (exclusive of Term
Promissory Note-1 and Term Promissory Note-2) of at least 1.50 to 1.0 at all
times shall be waived and suspended through January 30, 2002. From and after
January 31, 2002 Borrower shall maintain a ratio of Consolidated Current Assets
divided by Consolidated Current Liabilities of at least 1.35 to 1.0 at all times
measured on a fiscal quarter-end basis;
5. Section 6.13(b) shall be deleted in its entirety and the
following substituted in lieu therefor:
6.13(b) Total Liabilities to Tangible Net Worth Ratio. Compliance
with the ratio of Borrower's total liabilities (exclusive of Term Promissory
Note-1 and Term Promissory Note-2) divided by Tangible Net Worth of not more
than 2.0 to 1.0 at all times shall be waived and suspended through January 30,
2002. From and after January 31, 2002 Borrower shall maintain a ratio of
Borrower's total liabilities divided by Tangible Net Worth of not more than 2.5
to 1.0 at all times from measured on a fiscal quarter-end basis;
6. Section 6.13(c) shall be deleted in its entirety.
7. Section 6.13(d) shall be deleted in its entirety.
8. Borrower and Lender agrees that the following Loan and Security
Agreement Provisions Addressing Revised Article 9 shall be added to and
incorporated into the Amended Loan Agreement as a new Section 15.10:
15.10(a) CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL
CODE. The parties acknowledge and agree to the following provisions of this
Agreement as a consequence of the revised Article 9 of the Uniform Commercial
Code being adopted and becoming effective ("Revised Article 9").
15.10 (b) ATTACHMENT. Collateral shall include all assets of the
Borrower. The Collateral shall include, without limitation, the following
categories of assets as defined in Revised Article 9: goods (including
inventory, equipment and any accessions thereto), instruments (including
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promissory notes), documents, accounts (including health-care-insurance
receivables), chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
general intangibles (including payment intangibles and software), supporting
obligations and any and all proceeds of any thereof, wherever located, whether
now owned and hereafter acquired. If the Borrower shall at any time acquire a
commercial tort claim, as defined in Revised Article 9, the Borrower shall
immediately notify the Lender in writing signed by the Borrower of the brief
details thereof and grant the Lender in such writing a security interest therein
and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance satisfactory to the Lender.
15.10 (c) ADDITIONAL GRANT OF SECURITY INTEREST IN SPECIFIED
PROPERTY. Borrower acknowledges and agrees that in addition to the items
previously described as constituting Collateral hereby gives, grants, bargains,
assigns and confirms that it has granted a security interest in the following
now owned or hereafter acquired and wherever located properties, assets and
rights of the Borrower:
All other goods, rights to payment of money, insurance refund claims
and all other insurance claims and proceeds, tort claims, electronic chattel
paper, securities and other investment property, rights to proceeds of letters
of credit, letter of credit rights, supporting obligations of every nature, all
tax refund claims, license fees, rights to xxx and recover for past infringement
of patents, trademarks and copyrights, computer programs, computer software,
engineering drawings, customer lists, goodwill and all licenses, permits,
agreements of any kind or nature pursuant to which (i) the Borrower operates or
has authority to operate, (ii) the Borrower possesses, uses or has authority to
possess or use property (whether tangible or intangible) of others, or (iii)
others possess, use or have authority to possess or use property (whether
tangible or intangible) of the Borrower, and all recorded data of any kind or
nature, regardless of the medium of recording, including without limitation, all
software, writings, plans, specifications and schematics.
The Borrower further acknowledges and agrees that the grant of
Collateral in this Loan and Security Agreement covers, and is intended to cover,
all assets of the Borrower.
15.10 (d) PERFECTION BY FILING. The Lender may at any time and from
time to time, file financing statements, continuation statements and amendments
thereto that describe the Collateral as all assets of the Borrower or words of
similar effect and which contain any other information required by Revised
Article 9 for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including whether the Borrower
is an organization, the type of organization and any organization identification
number issued to the Borrower. The Borrower agrees to furnish any such
information to the Lender promptly upon request. Any such financing statements,
continuation statements or amendment may be signed by the Lender on behalf of
the Borrower and may be filed at any time in any jurisdiction.
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15.10 (e) OTHER PERFECTION, ETC. The Borrower shall at any time, and
from time to time, take such steps as the Lender may reasonably request for the
Lender (a) to obtain an acknowledgment, in form and substance satisfactory to
the Lender, of any bailee having possession of any of the Collateral that the
bailee holds such Collateral for the Lender, (b) to obtain "control" of any
investment property, deposit accounts, letter-of-credit rights or electronic
chattel paper (as such terms are defined in Revised Article 9 with corresponding
provisions in Rev. xx.xx. 9-104, 9-105, 9-106 and 9-107 relating to what
constitutes "control" for such items of Collateral), with any agreements
establishing control to be in form and substance satisfactory to the Lender, and
(c) otherwise to insure the continued perfection and priority of the Lender's
security interest in any of the Collateral and of the preservation of its rights
therein, whether in anticipation and following the effectiveness of Revised
Article 9 in any jurisdiction.
15.10 (f) OTHER PROVISIONS. In applying the law of any jurisdiction
in which Revised Article 9 is in effect, the following references to sections of
former Article 9 of that jurisdiction shall be to the Revised Article 9 Section
of that jurisdiction as indicated below:
Existing Article 9 Revised Article 9
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ss.9-103(3) Rev.ss.9-102(a)(34)
ss.9-207 Rev.ss.9-207
ss.ss.8-106 and 9-115 (1994) Rev.ss.ss.8-106 and 9-106
ss.9-504(1)(c) Rev.ss.ss.9-608(a)(1)(C) and 9-615(a)(3)
15.10 (g) SAVINGS CLAUSE. Nothing contained in this Section shall
be construed to narrow the scope of the Lender's security interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the rights, powers, privileges or remedies of the Lender hereunder except
(and then only to the extent) mandated by Revised Article 9 to the extent then
applicable.
9. Borrower acknowledges that Lender has filed with the Connecticut
Secretary of State a Uniform Commercial Code Financing Statement on 12/7/95 as
Filing #139937, and has filed a Uniform Commercial Code Financing Statement on
12/8/95 as Filing #0001662056 with the New York Secretary of State and has filed
a Uniform Commercial Code Financing Statement on 12/7/95 as Filing #245595 with
the Kings County Recorder. Borrower hereby authorizes Lender to file amendments
to such filings containing the following language:
Debtor and Secured Party acknowledge and agree that as a consequence
of the adoption and effectiveness of revised Article 9 of the Uniform Commercial
Code ("Revised Article 9") that the following now owned or hereafter acquired
and wherever located properties, assets and rights of the Debtor shall also be
covered:
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In addition to the items specified above, all other goods, rights to
payment of money, insurance refund claims and all other insurance claims and
proceeds, tort claims, electronic chattel paper, securities and other investment
property, rights to proceeds of letters of credit, letter of credit rights,
supporting obligations of every nature, all tax refund claims, license fees,
rights to xxx and recover for past infringement of patents, trademarks and
copyrights, computer programs, computer software, engineering drawings, customer
lists, goodwill and all licenses, permits, agreements of any kind or nature
pursuant to which (i) the Debtor operates or has authority to operate, (ii) the
Debtor possesses, uses or has authority to possess or use property (whether
tangible or intangible) of others, or (iii) others possess, use or have
authority to possess or use property (whether tangible or intangible) of the
Debtor, and all recorded data of any kind or nature, regardless of the medium of
recording, including without limitation, all software, writings, plans,
specifications and schematics.
The Debtor further acknowledges and agrees that the grant of collateral and this
financing statement covers, and is intended to cover, all assets of the Debtor.
10. Pursuant to Section 8 (Amending the Amended Loan Agreement to
include Section 15.10(d)) above, Borrower authorizes Lender to file a new
Uniform Commercial Code Financing Statement with the Secretary of State of
Delaware to perfect and continue the perfection of the security interest granted
to Lender by Debtor under the Amended Loan Agreement and Revised Article 9 and
the Uniform Commercial Code Financing Statements set forth in Section 19 above.
11. Except as herein amended, all of the terms and provisions of the
Amended Agreement shall remain in full force and effect.
12. All of the representations and warranties made by the Obligors
in Section 5 of the Amended Agreement are true and correct on the date hereof as
if made on and as of the date hereof, except to the extent that any of such
representations and warranties relate by their terms to a prior date.
13. Borrower and Lender agree that this Fourth Amendment to Loan and
Security Agreement has been prepared by the mutual effort of both parties and
that in the event of a conflict or interpretive question with respect to any
term, provision or section contained in this Fourth Amendment to Loan and
Security Agreement or the First, Second , Third or Letter Amendments, that this
Fourth Amendment to Loan and Security Agreement shall not be construed more
strictly against any one party than any other party; it being agreed that both
Borrower and Lender have equally negotiated the terms hereof and thereof.
14. The revisions and amendments recited herein shall not become
effective and shall be of no force or effect until:
(a) Borrower has executed this Fourth Amendment to Loan and
Security Agreement; and
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(b) Borrower has provided Lender with a current certificate of
the Secretary of Borrower attesting to the adoption and/or passage of applicable
corporate resolutions authorizing and approving the revisions and amendments
contained in this Fourth Amendment to Loan and Security Agreement which such
certificate shall also contain an acceptable form of incumbency certificate
attesting to the current officers and directors of Borrower.
15. Borrower hereby agrees to pay to Lender a Modification Fee in
the amount of $37,500.00 and hereby authorizes Lender to debit its loan account
for the amount of $3,125.00 per month commencing on November 1, 2001 and
continuing on the first day of each month thereafter until such fee is paid in
full. Borrower understands and agrees that in the event of an Early Termination
of the financing relationship, the Modification Fee is fully earned as of this
date and shall be included in the definition of Obligations in calculating any
payoff amounts.
16. Borrower acknowledges that it has delivered to Lender a draft of
its most recent annual financial statements which are to be issued subsequent to
the effective date of this Fourth Amendment to Loan and Security Agreement.
Borrower further acknowledges that in the event the financial statement for the
fiscal year ended July 31, 2001 is different in any material respect, in the
sole determination of Lender or in the event that the financial statement is
issued with any qualification, Lender may declare an Event of Default to exist
and avail itself of all available remedies under the Amended Loan Agreement.
The date of execution of this Third Amendment to Loan and Security
Agreement by Borrower is as of October 23, 2001.
LENDER: BORROWER:
PEOPLE'S BANK THE MILLBROOK PRESS INC.
By:/s/Xxxxx Xxxxxx By:/s/Xxxxx Xxxxx
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Xxxxx Xxxxxx Xxxxx Xxxxx
Vice President Chief Operating Officer
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