Exhibit 10.109
[Execution]
AMENDMENT NO. 1 AND WAIVER TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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AMENDMENT NO. 1 AND WAIVER TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Amendment"), dated as of March 31, 2003, by and between I.C.
Xxxxxx & Company L.P., a Delaware limited partnership ("Borrower"), and Congress
Financial Corporation, a Delaware corporation ("Lender").
W I T N E S S E T H:
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WHEREAS, Borrower has entered into certain financing arrangements pursuant
to which Lender may make loans and advances and provide other financial
accommodations to Borrower as set forth in the Amended and Restated Loan and
Security Agreement, dated December 20, 2002, by and between Borrower and Lender
(as the same may be further amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement"), and other agreements, documents and
instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto, including this Amendment (all of the
foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, are collectively referred to herein as the "Financing Agreements");
WHEREAS, Borrower has requested that Lender (i) waive certain Events of
Default under the Loan Agreement existing as of the date hereof and (ii) amend
certain provisions of the Loan Agreement;
WHEREAS, Lender, subject to the terms and conditions contained herein, is
willing to agree to effect such waivers and amendments; and
WHEREAS, by this Amendment, Lender and Borrower desire and intend to
evidence such waivers and amendments.
NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements, warranties and covenants contained herein, and other good and
valuable consideration, the adequacy and sufficiency of which are hereby
acknowledged, the parties hereto agree, covenant and warrant as follows:
1. Definitions.
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(a) Additional Definitions. As used herein, the following terms shall have
the meanings given to them below, and the Loan Agreement and each of the other
Financing Agreements is hereby amended to include, in addition and not in
limitation, the following definitions:
(i) "Applicable Margin" shall mean, at any time, the
applicable percentage (on a per annum basis) set forth below
determined based on the Consolidated Net Income of Borrower and
its Subsidiaries for the immediately preceding fiscal year:
Consolidated Net Income Applicable Margin
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Less than or equal to $0 2%
Greater than $0 1%
provided, that, (1) the Applicable Margin shall be calculated and
established once each fiscal year and shall be determined based on
the Consolidated Net Income of Borrower and its Subsidiaries for
each fiscal year, commencing with the fiscal year ending on or
about December 31, 2003, as set forth in the audited financial
statements of Xxxxxx Inc. and its Subsidiaries for such fiscal
year delivered to Lender, together with the unqualified opinion of
the independent certified accountants of Xxxxxx and its
Subsidiaries, in accordance with Section 9.6(a) hereof; and (2)
each change in the Applicable Margin shall be effective on the
first day of the month immediately following Lender's receipt of
such audited financial statements and unqualified opinion.
(ii) "Consolidated Net Income" shall mean, with respect to
any Person for any period, the aggregate of the net income (loss)
of such Person and its Subsidiaries, on a consolidated basis, for
such period (excluding to the extent included therein any
extraordinary or non-recurring gains and extraordinary non-cash
charges to property, plant and equipment or goodwill) after
deducting all charges which should be deducted before arriving at
the net income (loss) for such period and after deducting the
Provision for Taxes for such period, all as determined in
accordance with GAAP; provided, that, (a) the net income of any
Person that is not a wholly-owned Subsidiary or that is accounted
for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid or
payable to such Person or a wholly-owned Subsidiary of such
Person; (b) except to the extent included pursuant to the
foregoing clause, the net income of any Person accrued prior to
the date it becomes a wholly-owned Subsidiary of such Person or is
merged into or consolidated with such Person or any of its
wholly-owned Subsidiaries or that Person's assets are acquired b
such Person or by any of its wholly-owned Subsidiaries shall be
excluded; (c) the effect of any change in accounting principles
adopted by such Person or its Subsidiaries after the date hereof
shall be excluded; net income shall exclude interest accruing, but
not paid on indebtedness owing to a Subsidiary or parent
corporation of such Person, which is subordinated in right of
payment to the payment in full of the Obligations, on terms and
conditions acceptable to Lender; and (d) the net income (if
positive) of any wholly-owned Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by
such wholly-owned Subsidiary to such Person or to any other
wholly-owned Subsidiary of such Person is not at the time
permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such wholly-owned Subsidiary
shall be excluded. For the purposes of this definition, net income
excludes any gain and non-cash loss (but not any cash loss)
together with any related Provision for Taxes for such gain and
non-cash loss (but not any cash loss) realized upon the sale or
other disposition of any assets that are not sold in the ordinary
course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any capital
stock of such Person or a Subsidiary of such Person and any net
income realized as a result of changes in accounting principles or
the application thereof to such Person.
(iii) "Provision for Taxes" shall mean an amount equal to
all taxes imposed on or measured by net income, whether Federal,
State, Provincial, county or local, and whether foreign or
domestic, that are paid or payable by any Person in respect of any
period in accordance with GAAP.
(b) Amendment to Definitions.
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(i) Domestic Inventory Loan Limit. Section 1.16 of the Loan
Agreement is hereby amended by deleting such Section in its entirety and
replacing it with the following:
"1.16 `Domestic Inventory Loan Limit' shall mean (a) $400,000
during the Seasonal Period and (b) $0 at all other times."
(ii)I nterest Rate. Effective as of March 1, 2003, Section 1.38
of the Loan Agreement is hereby amended by deleting such Section in its entirety
and replacing it with the following:
"1.38 `Interest Rate' shall mean,
(a) subject to clauses (b) and (c) of this definition
below, until the date that is the first day of the month
immediately following Lender's receipt of the audited financial
statements of Xxxxxx Inc. and its Subsidiaries for the fiscal year
ending on or about December 31, 2003, together with the
unqualified opinion of the independent certified accountants of
Xxxxxx Inc. and its Subsidiaries, delivered to Lender in
accordance with Section 9.6(a) hereof (the "Adjustment Date"), a
rate equal to two (2%) percent per annum in excess of the Prime
Rate;
(b) subject to clause (c) of this definition below,
from and after the Adjustment Date (as defined in clause (a)
above), a rate per annum equal to the Applicable Margin in excess
of the Prime Rate;
(c) notwithstanding anything to the contrary
contained in this definition, the Interest Rate shall mean a rate
equal to four (4%) percent per annum in excess of the Prime Rate,
at Lender's option, without notice, (i) either (A) for the period
from and after the date of termination or non-renewal hereof until
such time as all Obligations are indefeasibly paid and satisfied
in full in immediately available funds, or (B) for the period from
and after the date of the occurrence of any Event of Default, and
for so long as such Event of Default is continuing as determined
by Lender and (ii) on the Revolving Loans at any time outstanding
in excess of the amounts available to Borrower under Section 2
hereof (whether or not such excess(es) arise or are made with or
without Lender's knowledge or consent and whether made before or
after an Event of Default)."
(iii) Inventory Loan Limit. Section 1.40 of the Loan Agreement
is hereby amended by deleting such Section in its entirety and replacing it with
the following:
"1.40 `Inventory Loan Limit' shall mean $3,000,000 at all
times."
(iv) Seasonal Period. Section 1.68 of the Loan Agreement is
hereby amended by deleting such Section in its entirety and replacing it with
the following:
"1.68 `Seasonal Period' shall mean for each calendar year,
the period commencing April 1st to and including July 31st of the same calendar
year."
(c) Interpretation. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to such terms in the Loan
Agreement.
2. Inventory Covenants. Section 7.3(d) of the Loan Agreement is hereby
amended by deleting the words "two (2) times" and substituting therefor "four
(4) times".
3. Net Worth. Section 9.17 of the Loan Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the following:
"9.17 Net Worth. Borrower shall at all times during each
fiscal month set forth below maintain Net Worth of not less than the amount set
forth below opposite such fiscal month end:
Period Minimum Net Worth
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March 2003 $1,500,000
April 2003 $1,750,000
May 2003 $2,000,000
June 2003 $2,000,000
July 2003 $2,500,000
August 2003 $2,750,000
September 2003 $2,750,000
October 2003 $3,000,000
November 2003 $3,000,000
December 2003 and at all times thereafter $2,300,000"
4. Working Capital. Section 9.18 of the Loan Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the following:
"9.18 Working Capital. Borrower shall at all times during
each fiscal month set forth below maintain Working Capital of not less than the
amount set forth below opposite such fiscal month end:
Period Minimum Working Capital
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March 2003 $5,000,000
April 2003 $5,000,000
May 2003 $5,000,000
June 2003 $5,000,000
July 2003 $5,000,000
August 2003 $6,000,000
September 2003 $6,000,000
October 2003 $6,000,000
November 2003 $6,000,000
December 2003 and at all times thereafter $4,750,000"
5. Waiver of Events of Default.
(a) Subject to the satisfaction of each of the conditions precedent
set forth in Section 8 hereof, Lender hereby waives the following Events of
Default (collectively, the "Existing Defaults"):
(i) any Event of Default under Section 10.1(a)(iii) of the Loan
Agreement arising as a result of the failure of Borrower to comply with the
terms of Section 9.17 of the Loan Agreement with respect to the months ending
December 31, 2002, January 31, 2003 and February 28, 2003 and the period from
March 1, 2003 to and including the date hereof; and
(ii) any Event of Default under Section 10.1(a)(iii) of the Loan
Agreement arising as a result of the failure of Borrower to comply with the
terms of Section 9.18 of the Loan Agreement with respect to the months ending
December 31, 2002, January 31, 2003 and February 28, 2003 and the period from
March 1, 2003 to and including the date hereof.
(b) Lender has not waived, is not by this Amendment waiving, and
has no intention of waiving any Event of Default which may have occurred on or
prior to the date hereof, whether or not continuing on the date hereof, or which
may occur after the date hereof (whether the same or similar to the Events of
Default referred to in Section 5(a) above or otherwise), other than the Existing
Defaults (subject to the terms and conditions set forth in Section 5(a) above).
The foregoing waiver shall not be construed as a bar to or a waiver of any other
or further Event of Default on any future occasion, whether similar in kind or
otherwise and shall not constitute a waiver, express or implied, of any of the
rights and remedies of Lender arising under the terms of the Loan Agreement or
any other Financing Agreements on any future occasion or otherwise.
6. Amendment Fee. In addition to all other fees, charges, interest and
expenses payable by Borrower to Lender, Borrower shall pay to Lender, an
amendment fee in an amount equal to $75,000 (the "Amendment Fee"), which shall
be fully earned and nonrefundable as of the date of this Amendment and shall be
due and payable on the date hereof. Lender may, at its option, charge the
Amendment Fee directly to the loan account of Borrower.
7. Representations, Warranties and Covenants. Borrower represents, warrants
and covenants with and to Lender as follows, which representations, warranties
and covenants are continuing and shall survive the execution and delivery
hereof, the truth and accuracy of, or compliance with each, together with the
representations, warranties and covenants in the other Financing Agreements,
being a continuing condition to the making or providing of any Loans or Letter
of Credit Accommodations by Lender to Borrower:
(a) Representations in Financing Agreements. Each of the
representations and warranties made by or on behalf of Borrower to Lender in any
of the Financing Agreements was true and correct when made and in all material
respects is true and correct on and as of the date of this Amendment with the
same full force and effect as if each of such representations and warranties had
been made by Borrower on the date hereof and in this Amendment.
(b) No Event of Default. No Event of Default or act, condition or
event which with notice or passage or time or both would constitute an Event of
Default exists on the date of this Amendment or has occurred and is continuing
(after giving effect to the amendments and waivers set forth in this Amendment).
(c) Binding Effect of Documents. This Amendment and the other
Financing Agreements have been duly authorized, executed and delivered to Lender
by Borrower, and are in full force and effect, as modified hereby and the
agreements and obligations of Borrower contained herein constitute the legal,
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms.
(d) No Conflict, Etc. Neither the execution and delivery of this
Amendment nor the other Financing Agreements contemplated by this Amendment by
Borrower, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof or thereof are in contravention of any law
or regulation or any order or decree of any court or governmental authority
applicable to Borrower in any respect, or conflicts with or results in the
breach of, or constitutes a default in any respect under any mortgage, deed of
trust, security agreement, agreement, instrument or other contractual obligation
to which Borrower is a party or may be bound, or violates any provision of the
Certificate of Limited Partnership or Limited Partnership Agreement of Borrower
or will result in, or require, the creation or imposition of any lien or
encumbrance on any properties or revenues of Borrower, except in favor of
Lender.
8. Conditions to Effectiveness of this Amendment. The effectiveness of this
Amendment shall be subject to the satisfaction of the following conditions:
(a) Lender shall have received, in form and substance satisfactory
to Lender, an original of this Amendment, duly authorized, executed and
delivered by Borrower;
(b) Lender shall have received, in form and substance satisfactory
to Lender, evidence of (i) the forgiveness of not less than $745,000 of royalty
payments and other Indebtedness of Borrower to License Creditor under the
License Agreements and (ii) the deferral of not less than $810,000 of royalty
payments and other Indebtedness of Borrower to License Creditor under the
License Agreements until the third quarter of fiscal year 2003;
(c) Lender shall have received the Amendment Fee; and
(d) Lender shall have received any and all such further instruments
and documents as Lender may require to obtain the full benefits of this
Amendment and to protect, preserve and maintain Lender's rights in the
Collateral;
9. Provisions of General Application
(a) Effect of this Amendment. Except as modified pursuant hereto,
no other changes or modifications to the Financing Agreements are intended or
implied and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment shall
control. The Loan Agreement and this Amendment shall be read and construed as
one agreement.
(b) Further Assurances. The parties hereto shall execute and
deliver such additional documents and take such additional action as may be
necessary or desirable to effectuate the provisions and purposes of this
Amendment.
(c) Binding Effect. This Amendment shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
(d) Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other document
furnished in connection with this Amendment shall survive the execution and
delivery of this Amendment and the other documents, and no investigation by
Lender or any closing shall affect the representations and warranties or the
right of Lender to rely upon them.
(e) Expenses. Borrower agrees to pay on demand all out of pocket
costs and expenses of Lender in connection with the preparation, execution and
delivery of this Amendment and all other agreements, documents and instruments
executed and/or delivered in connection therewith or related thereto, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for Lender with respect thereto.
(f) Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
(g) Governing Law. This Amendment shall be governed by, construed
and enforced in accordance with the laws of the State of New York but excluding
any conflicts of law or other rules of law that would cause the application of
the laws of any jurisdiction other than the laws of the State of New York.
(h) Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart hereof signed by each of the
parties hereto. This Amendment may be executed and delivered by telecopier with
the same force and effect as if it were a manually executed and delivered
counterpart.
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IN WITNESS WHEREOF, Lender and Borrower have caused these presents to
be duly executed as of the day and year first above written.
I.C. XXXXXX & COMPANY L.P.
By: I.C. Xxxxxx & Company, Inc., general partner
By: /s/ Xxxxxx Xxxxxxxxx
Title: EVP/COO & CEO
CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxxx X Xxxxxx
Title: Vice President
