AMENDMENT NO. 5
TO
SECOND AMENDED AND RESTATED
REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 5 ("Amendment") is entered into as of February 28, 2000
among THE XXXXX GROUP, INC., a corporation organized under the laws of the State
of Delaware ("Borrower"), the undersigned financial institutions (collectively,
the "Lenders" and individually a "Lender") and IBJ WHITEHALL BUSINESS CREDIT
CORPORATION ("IBJWBCC") (F/K/A IBJ XXXXXXXX BUSINESS CREDIT CORPORATION), as
successor to IBJ XXXXXXXX BANK & TRUST COMPANY, as agent for Lenders (IBJWBCC,
in such capacity, the "Agent").
BACKGROUND
Borrower, Agent and Lenders are parties to a Second Amended and Restated
Revolving Credit and Security Agreement dated as of February 27,1997 (as the
same has been and may further be amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement") pursuant to which Lenders
provided Borrower with certain financial accommodations.
Borrower has requested that Agent and Lenders amend the Loan Agreement to,
inter alia, revise the financial covenants, amend the definition of Eligible
Receivables, increase the inventory sub-limit contained in the definition of
Formula Amount, include certain Receivables due and owing from Sweetheart Cup
Company, Inc. to Borrower as Eligible Receivables and increase the number of
permitted Eurodollar Rate Loans and 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 or
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 4 below, the Loan Agreement is hereby amended as
follows:
(a) Section 1.2 of the Loan Agreement is hereby amended as follows:
(i) the following defined terms are hereby added in their appropriate
alphabetical order to provide as follows:
"Sweetheart" shall mean Sweetheart Cup Company, Inc. a Delaware
corporation.
"Net Worth" at a particular date, shall mean all amounts which would
be included under shareholders' equity on a balance sheet of Borrower
determined in accordance with GAAP as at such date.
(ii) subclauses (a) and (b) in the definition of Eligible Receivables
are hereby amended in their entirety to provide as follows:
"(a) it arises out of a sale made by Borrower to an Affiliate of
Borrower or to a Person controlled by an Affiliate of Borrower
provided, however, Receivables arising out of sales made by Borrower
to Sweetheart or Fibre Marketing in an aggregate amount not to exceed
$5,000,000 at any one time outstanding and which otherwise meet the
eligibility criteria for Eligible Receivables shall be deemed to
constitute Eligible Receivables;
(b) (i) with respect to Receivables due and owing to Borrower from
Customers which were account debtors of CEG on or before December 6,
1999 which are maintained on the sales journal at Xxxxx'x offices in
Indianapolis, Indiana and historically were maintained on CEG's sales
journals (collectively, the "Special Customer Receivables"), it is due
or unpaid more than (A) one hundred and twenty (120) days after the
original invoice date or (B) sixty (60) days after the stated due
date] and (ii) with respect to Receivables which are not Special
Customer Receivables, it is due or unpaid more than ninety (90) days
after the original invoice date."
(b) The following definition is hereby amended in its entirety to provide
as follows:
"Permitted Investments" shall mean (i) any Investment in Borrower or
in a Wholly Owned Restricted Subsidiary of Borrower; (ii) any
Investment in Cash Equivalents; (iii) any Investment by Borrower or
any of its Restricted Subsidiaries in a Person if, as a result of such
Investment, (a) such Person becomes a Wholly Owned Restricted
Subsidiary of Borrower or a Wholly Owned Restricted Subsidiary or (b)
such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, Borrower or a Wholly Owned Restricted Subsidiary of
Borrower; and (iv) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 7.1 hereof."
(c) Section 2.1(a) of the Loan Agreement is hereby amended in its entirety
to provide 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 less the aggregate amount
of outstanding Letters of Credit or (y) an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b)
hereof, of Eligible Receivables ("Receivables Advance Rate"),
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
"Revolving Advance Rates") or (B) (I) at any time on or before
April 30, 2000, $30,000,000 in the aggregate at any one time and
(II) at any time on or after May 1, 2000, $27,500,000 in the
aggregate at any one time, minus
(iii) the aggregate amount of outstanding Letters of Credit,
minus
(iv) such reserves as Agent may reasonably deem proper and
necessary from time to time.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
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 secured promissory notes in substantially the
form attached hereto as Exhibit 2.1(a) executed and delivered by
Borrower to each Lender (collectively, "Revolving Credit Notes")."
(d) Clause (d) of Section 2.2 of the Loan Agreement is hereby amended in
its entirety to provide as follows:
"(d) Provided, that, no Event of Default shall have occurred and be
continuing, Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or
on any day with respect to Domestic Rate Loans convert any such loan
into a loan of another type in the same aggregate principal amount
provided, that, any conversion of a Eurodollar Rate Loan shall be made
only on the last Business Day of the then current Interest Period
applicable to such Eurodollar Rate Loan. If Borrower desires to
convert a loan, it shall give Agent not less than three (3) Business
Days' prior written notice to convert from a Domestic Rate Loan to a
Eurodollar Rate Loan or one (1) Business Days' prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan,
specifying the date of such conversion, the loans to be converted and
if the conversion is from a Domestic Rate Loan to any other type of
loan, the duration of the first Interest Period therefor. After giving
effect to each such conversion, there shall not be outstanding more
than five (5) Eurodollar Rate Loans, in the aggregate."
(e) Sections 6.5 and 6.6 of the Loan Agreement are hereby amended in their
entirety to provide as follows:
"6.5 Interest Coverage Ratio. Cause to be maintained for each fiscal
quarter an Interest Coverage Ratio of not less than 1.15 to 1.00 for
the (a) two fiscal quarters ending Xxxxx 00, 0000, (x) three fiscal
quarters ending June 30, 2000, (c) four fiscal quarters ending
September 30, 2000 and (d) for each fiscal quarter ending thereafter
measured on a rolling four quarter basis.
6.6 Net Worth. Cause to be maintained at all times during each period
set forth below a Net Worth in an amount not less than the amount set
forth opposite such period:
Period Net Worth
------ ---------
January 1, 2000 through September 30, 2000 $11,000,000"
October 1, 2000 through September 30, 2001 The sum of (x) $11,000,000 plus
(y) 80% of the net income of
Borrower on a consolidated basis
for the fiscal year ended
September 30, 2000 (the "2000 Net
Worth")
(f) Section 7.5 of the Loan Agreement is hereby amended in its entirety to
provide as follows:
"7.5. Loans. Make advances, loans or extensions of credit to any
Person except with respect to (a) the extension of commercial trade
credit in connection with the sale of Inventory in the ordinary course
of its business and (b) loans to its employees in the ordinary course
of business not to exceed the aggregate amount of $350,000 at any time
outstanding."
(g) Section 7.10 of the Loan Agreement is hereby amended in its entirety
to provide as follows:
"7.10. Transactions with Affiliates. Make payments to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to,
or purchase any property or assets from, or enter into or make or
amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to Borrower or the
relevant Restricted Subsidiary than those that would have been
obtained in comparable transaction with an unrelated Person and (ii)
Borrower delivers to the Agent (a) with respect to any Affiliate
transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying
that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect
to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0
million, an opinion as to the fairness to the holders of such
Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing with total assets in
excess of $1.0 billion, except with respect to transactions in the
ordinary course of business and consistent with past practice between
Borrower of any of its Restricted Subsidiaries and Four M, or any of
their respective subsidiaries, provided, that, (1) the Indenture of
Lease dated as of January 1, 1995, between Xxxxxx Xxxxxx, as Landlord,
and Borrower, as tenant, relating to Borrower's Jacksonville, Florida
facility except for any purchases of property by Borrower that may
arise thereunder; (2) any employment agreement entered into between
any Person and Borrower or any of its Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of
Borrower or such Restricted Subsidiary in an amount not to exceed
$500,000 per annum; (3) transactions between or among Borrower and its
Restricted Subsidiaries and (4) Restricted Payments and Permitted
Investments that are permitted by the provisions of this Agreement in
each case shall not be deemed Affiliate Transactions."
3. Amendment Fee. Borrower shall pay to Agent for the ratable benefit of
Lenders an amendment fee in an amount equal to $40,000 (the "Amendment Fee")
immediately prior to the effective date of this Agreement. Agent shall charge
the Amendment Fee to Borrower's loan account. The Amendment Fee shall not be
subject to reduction, proration, rebate of any kind.
4. Conditions of Effectiveness. This Amendment shall become effective
as of February 29, 2000 upon satisfaction of the following conditions precedent:
(i) Agent shall have received four (4) copies of this Amendment executed by
Lenders and Borrower, (ii) Agent shall have charged the Amendment Fee to
Borrower's loan account and (iii) Agent shall have received 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.
5. Representations and Warranties.Borrower hereby represents and warrants
as follows:
(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 agree that all such covenants,
representations and warranties shall be deemed to have been remade as of the
effective date of this Amendment.
(c) No Event of Default or Default has occurred and is continuing or would
exist after giving effect to this Amendment.
(d) Borrower has no defense, counterclaim or offset with respect to the
Loan Agreement.
6. 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 any Lender,
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.
7. 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.
8. 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.
9. Counterparts. 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 taken together shall constitute one and the same agreement. Any signature
delivered by telecopy shall be deemed to be an original signature hereto.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
THE XXXXX GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION, as Lender and as Agent
By: /s/
-------------------
Name:
Title:
NATIONAL CITY COMMERCIAL FINANCE,
INC., as Lender
By: /s/
-------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION, as
successor to
BTM CAPITAL CORPORATION
(F/K/A BOT FINANCIAL CORPORATION),
as Lender
By: /s/
-------------------
Name:
Title:
FIRST UNION NATIONAL BANK successor by
merger to SIGNET BANK, as Lender
By: /s/
-------------------
Name:
Title:
