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Exhibit 10.10(d)
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This Fourth Amendment to Loan and Security Agreement (the "Fourth
Amendment") is made as of this ___ day of March, 2000 by and between
Fleet Retail Finance Inc., formerly known as BankBoston Retail
Finance Inc. (in such capacity, herein the "Agent"), a Delaware
corporation with offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, as agent for the ratable benefit of the "Lenders", who are party
to the Agreement (defined below)
and
Back Bay Capital Funding LLC, a Delaware Limited Liability
Company with offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(the "Term Lender")
and
Drug Emporium, Inc. (hereinafter, the "Borrower"), a Delaware
corporation with its principal executive offices at 000 Xxxxxx Xxxxxxx
Xxxxx, Xxxxxx, Xxxx 00000
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T N E S S E T H:
WHEREAS, on October 28, 1998 the Agent, the Lenders and the Borrower
entered in a certain Loan and Security Agreement, as amended by a First
Amendment to Loan and Security Agreement dated May 11, 1999 a Second Amendment
to Loan and Security Agreement dated September __, 1999, and a Third Amendment
to Loan and Security Agreement dated December 10, 1999 (the "Agreement"); and
WHEREAS, the Borrower, the Agent, and the Lenders desire to amend
certain of the provisions of the Agreement to include a Term Loan in the amount
of $7,500,000.00 to be funded by the Term Lender;
NOW, THEREFORE, it is hereby agreed among the Agent, the Lenders, the
Term Lender, and the Borrower as follows:
1. Capitalized Terms. All capitalized terms used herein and not
otherwise defined shall have the same meaning herein as in the Agreement.
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2. Amendment to Article 1. Article 1 of the Loan Agreement is hereby
amended by the addition of the following defined terms:
"APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) the Cost of
Acceptable Inventory (net of Inventory Reserves) multiplied by
(b) that percentage determined by the then most recent
appraisal of the Borrower"s Inventory undertaken at the
request of the Agent as reflecting that appraiser's estimate
of the net realization on the liquidation of the Borrower"s
Inventory expressed as a percent of the Cost of Acceptable
Inventory.
"BASELINE COVENANT BREACH": For three (3) consecutive days,
(A) The aggregate of (i) the unpaid principal balance of
the Loan Account plus (ii) Availability Reserves plus
(iii) the Stated Amount of all then outstanding
L/C's, plus (iv) the then unpaid principal balance of
the Term Loan
exceeds
(B) the lesser of
(i) 63% of the Cost of Acceptable Inventory, or
(ii) 94% of the Appraised Inventory Liquidation Value
plus
(C) 80% of the face amount of Acceptable Accounts (net of
A/R Reserves).
"CURRENT PAY INTEREST": Is defined in Section 2(A)-4(a)(i).
"E-COMMERCE SALE": The sale of all or substantially all of the assets
of the assets of or Borrower"s equity interest in E-Commerce.
"PIK INTEREST": Defined in Section 2(A)-4(a)(ii).
"TERM LENDER": Defined in the Preamble.
"TERM LOAN": Defined in Section 2A-1.
"TERM LOAN COMMITMENT FEE": Described in Section 2A-5.
"TERM LOAN EARLY TERMINATION FEE": Defined in Section 2A-3.
"TERM LOAN FEES": The Term Loan Commitment Fee, the Term Loan Early
Termination Fee, and all other fees (such as a fee (if any) on
account of the execution of an amendment of any Loan Document)
payable by the Borrower in respect of the Term Loan other than
any amount payable to an Agent as reimbursement for any cost
or expense incurred by the Agent on account of the discharge
of the Agent's duties under the Loan Documents.
"TERM LOAN MATURITY DATE": One (1) year from the date of this
Agreement.
"TERM NOTE": Defined in Section 2A-2.
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3. Amendments to Article 1. The following definitions in Article 1 of
the Loan Agreement are hereby amended to read as follows:
"FIXED CHARGE RATIO": The decimal equivalent (determined on a
trailing/rolling 12 month basis) of a fraction, the numerator
of which is the result of EBITDA minus cash outlays on account
of capital expenditures and the denominator of which is the
aggregate of cash payments of: interest, principal (inclusive
of any principal payments made to the Term Lender less any
amounts deemed capital expenditures for the purpose of the
calculation of the numerator above), capital leases, income
taxes, dividends, and capital stock repurchases.
"LENDER":Collectively and each individually, each Revolving Credit
Lender and the Term Lender, except that all references to the
"Lenders" in Article 2 of the Loan Agreement (exclusive of
Article 2A) mean and refer to the Revolving Credit Lenders.
4. Amendment to Article 2. Article 2 of the Loan Agreement is hereby
amended by the addition of the following Article 2A:
Article 2A. The Term Loan:
2A-1. Commitment to Make Term Loan.
(1) Subject to satisfaction of all conditions precedent by on
or prior to the date of this Agreement, the Borrower shall borrow from
the Term Lender and the Term Lender shall lend to the Borrower the sum
of $7,500,000.00 (the "TERM LOAN"), repayable with interest as provided
herein.
(2) The proceeds of the Term Loan shall be used to provide
working capital support for E-Commerce and for general working capital
purposes.
2A-2. The Term Note. The obligation to repay the Term Loan, with
interest as provided herein, shall be evidenced by a Note (the "TERM NOTE") in
the form of EXHIBIT 2A-2, annexed hereto, executed by the Borrower. Neither the
original nor a copy of the Term Note shall be required, however, to establish or
prove any Liability. In the event that the Term Note is ever lost, mutilated, or
destroyed, the Borrower shall execute a replacement thereof and deliver such
replacement to the Agent.
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2A-3. Payment of Principal of the Term Loan.
(3) Except as provided in Section 2A-3(b), the Borrowers may
not repay all or any portion of the principal balance of the Term Loan
prior to the repayment in full of all Liabilities under the Revolving
Credit and the termination of any obligation, under the Revolving
Credit, of the Agent, or any Working Capital Lender to make any loans
or to provide any financial accommodations.
(4) The Term Loan may be repaid as follows:
(1) On the Term Loan Maturity Date or earlier at the
Borrower"s option, at any time after the sale of E-Commerce,
provided that in either event each of the following conditions
is met:
(1) Availability, immediately following the
making of such prepayment, is not less than $25
Million.
(2) The Agent shall have been provided with
the following:
(1) A Certificate of the Borrower's
President or Chief Financial Officer that,
with the exception of those accounts which
are the subject of a good faith dispute, all
accounts payable by the Borrower are within
usual and customary trade terms.
(2) A forecast, prepared in a
manner which is consistent with those
previously provided to the Agent, which
reflects that Availability, for the shorter
of the then next 12 months or the period
through the Maturity Date will not be less
than $15 Million.
(3) EBITDA for the then most recent 12 month
period, shall not be less than $12 Million, excluding
E-Commerce for the entire period if E-Commerce was
sold at the time of calculation, or $5 Million if
E-Commerce was not sold at the time of calculation.
(4) No Suspension Event is then extant and
no Event of Default shall have occurred or will occur
by reason of the making of such prepayment.
(5) The Borrower shall pay the Agent, for the account of the
Term Lender, the "TERM LOAN EARLY TERMINATION FEE" (so referred to
herein) equal to $750,000.00 less the
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Commitment Fee, and all paid and accrued and unpaid (but only if paid
when due and payable) Current Pay Interest, and PIK Interest (but only
if paid when due and payable), not to be less than $0.
(6) The Borrower shall repay the then entire unpaid balance of
the Term Loan and all accrued and unpaid interest and fees thereon on
or before the earlier of (i) the Term Loan Maturity Date, or (ii) the
Termination Date.
2A-4. Interest On The Term Loan.
(7) The unpaid principal balance of the Term Loan shall bear
interest, until repaid, fixed at 14% per annum, payable as follows:
(1) Interest on the unpaid principal balance of the
Term Loan, equal to 11.5% per annum ("CURRENT PAY INTEREST")
shall be payable monthly in arrears, on the first day of each
month, and on the Maturity Date.
(2) Accrued Interest on the unpaid principal balance
of the Term Loan, equal to 2.5% per annum ("PIK INTEREST") ,
shall be added to the then unpaid principal balance of the
Term Note quarterly, on the first day of each April, July,
October, and January hereafter.
(8) Following the occurrence of any Event of Default (and
whether or not Acceleration has taken place), at the direction of the
Term Lender, Current Pay Interest shall be 13.5% per annum and PIK
Interest shall remain at 2.5% per annum.
2A-5. Term Loan Commitment Fee. As compensation for the Term Lender's
having committed to make the Term Loan, the Term Lender has earned the Term Loan
Commitment Fee of $225,000.00, payable at closing.
2A-6. Payments On Account of Term Loan. The Borrower authorizes the
Agent to determine and to pay over directly to the Term Loan Lender any and all
amounts due and payable from time to time under or on account of the Term Loan
as advances under the Revolving Credit it being understood, however, that the
authorization of the Agent provided in this Section 2A-6 shall
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not excuse the Borrower from fulfilling its obligations to the Term Lender on
account of the Term Loan nor place any obligation on the Agent to do so. The
Agent shall provide prompt advice to the Borrower of any amount which is so paid
over by the Agent to the Term Lender pursuant to this Section 2A-6.
5. Amendment to Article 5. Article 5 of the Loan Agreement is hereby
amended by the addition of the following Section 5-13:
5-13. Inventory. The value of the Borrower"s Inventory
calculated at Cost shall at all times be equal to or greater than
$140,000,000.00.
6. Revisions to Exhibits. Exhibit 2-21 (Acceptable Voting Rights) and
Exhibit 5-4 (Borrowing Base Certificate) are hereby replaced with Exhibit 2-21
and Exhibit 5-4 annexed hereto.
7. Ratification of Loan Documents. Except as provided herein, all terms
and conditions of the Agreement and of the other Loan Documents remain in full
force and effect. Furthermore, except as provided herein, all warranties and
representations made in the Agreement and in the other Loan Documents remain in
full force and effect. The Borrower hereby ratifies and confirms that the grant
of security interest set forth in Article 8 of the Loan Agreement is intended to
constitute a grant of security interest in favor of the Agent on behalf of all
Lenders, including, without limitation, the Term Lender.
8. Conditions to Effectiveness. This Fourth Amendment shall not be
effective until each of the following conditions precedent have been fulfilled
to the satisfaction of the Agent and the Lenders:
(1) This Fourth Amendment shall have been duly executed and
delivered by the respective parties hereto.
(2) No Suspension Event shall have occurred and be continuing.
(3) The Borrower shall have provided such additional
instruments and documents to the Agent as the Agent and the Agent's
counsel may have reasonably requested.
(4) The Agent shall promptly notify the Borrower when such
conditions are satisfied.
(5) The Borrower shall have paid to the Agent for the account
of the Term Lender, the Term Loan Commitment Fee.
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9. Miscellaneous.
(1) This Fourth Amendment may be executed in several
counterparts and by each party on a separate counterpart, each of which
when so executed and delivered shall be an original, and all of which
together shall constitute one instrument.
(2) This Fourth Amendment expresses the entire understanding
of the parties with respect to the transactions contemplated hereby. No
prior negotiations or discussions shall limit, modify, or otherwise
affect the provisions hereof.
(3) Any determination that any provision of this Fourth
Amendment or any application hereof is invalid, illegal or
unenforceable in any respect and in any instance shall not effect the
validity, legality, or enforceability of such provision in any other
instance, or the validity, legality or enforceability of any other
provisions of this Fourth Amendment.
(4) The Borrower shall pay on demand all costs and expenses of
the Agent, including, without limitation, reasonable attorneys' fees,
in connection with the preparation, negotiation, execution and delivery
of this Fourth Amendment.
(5) The Borrower warrants and represents that the Borrower has
consulted with independent legal counsel of the Borrower's selection in
connection with this Fourth Amendment and is not relying on any
representations or warranties of any Lender or the Agent or their
respective counsel in entering into this Fourth Amendment.
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IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to
Loan and Security Agreement to be executed by their duly authorized officers as
a sealed instrument as of the date first above written.
DRUG EMPORIUM, INC.
("Borrower")
By:_____________________________________
Name:___________________________________
Title:__________________________________
FLEET RETAIL FINANCE INC.
("Agent")
By:_____________________________________
Name:___________________________________
Title:__________________________________
The "LENDERS"
FLEET RETAIL FINANCE INC.
By:______________________________________
Print Name:______________________________________
Title:______________________________________
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NATIONAL CITY COMMERCIAL FINANCE, INC.
By:______________________________________
Print Name:______________________________________
Title:______________________________________
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AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By:______________________________________
Print Name:______________________________________
Title:______________________________________
LASALLE BUSINESS CREDIT, INC.
By:______________________________________
Print Name:______________________________________
Title:______________________________________
BACK BAY CAPITAL FUNDING LLC
By:______________________________________
Print Name:______________________________________
Title:______________________________________
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