EXHIBIT 10.3
FIRST AMENDMENT TO LOAN AGREEMENT
As of November 12, 2001
THIS FIRST AMENDMENT TO THE LOAN AGREEMENT dated as of April 30, 2001
(the "Amendment") is entered into as of November 12, 2001 by and among Xxxxxxx
Jewelers, Inc. as Borrower (the "Borrower"), the lenders party thereto (the
"Lenders") and DDJ Capital Management LLC as agent for the Lenders (the
"Agent"). All capitalized terms used in this Amendment shall have the meanings
given to them in the Loan Agreement (as defined below) unless specifically
defined herein.
WHEREAS, Borrower, Lenders and Agent are parties to that certain Loan
Agreement, dated as of April 30, 2001 (the "Loan Agreement"), pursuant to which
Lenders have made certain credit available to and on behalf of Borrower and to
secure the obligations outstanding under the Loan Agreement;
WHEREAS, the obligations of Borrower to Lenders are secured by a lien
in substantially all of the assets of Borrower pursuant to that certain Security
Agreement by and between Borrower and Agent on behalf of Lenders (the "Security
Agreement" and, together with the Loan Agreement and the other documents and
instruments executed in connection therewith, the "Loan Documents");
WHEREAS, Borrower, Lenders and Agent are also parties to that certain
Loan and Security Agreement dated as of October 1, 2001 (the "Senior Loan
Agreement"), pursuant to which Lenders have made certain credit available to and
on behalf of Borrower and to secure the obligations outstanding under the Senior
Loan Agreement;
WHEREAS, Lenders executed that certain Intercreditor and Subordination
Agreement, dated as of October 1, 2001 (the "Subordination Agreement"), whereby
Lenders agreed that the obligations incurred pursuant to the Loan Agreement are
subordinate in right of payment to the prior payment in full of all of the
obligations incurred pursuant to the Senior Loan Agreement;
WHEREAS, Borrower intends to enter into supply agreements (the "Supply
Agreements") with certain suppliers of inventory and their affiliates (the
"Suppliers");
WHEREAS, in consideration for the Supply Agreements, Borrower intends
to grant the Suppliers a security interest in substantially all of the assets of
Borrower;
WHEREAS, the Suppliers and Lenders intend to enter into an
Intercreditor and Subordination Agreement dated as of November 12, 2001, which
will govern the priorities of the Lenders and the Suppliers;
WHEREAS, Section 10.1 permits any term of the Loan Agreement or of any
other instrument related thereto to be amended upon the written consent of
Borrower and the Majority Lenders, except as otherwise expressly set forth in
the Loan Agreement which exception or exceptions do not exist as it relates to
this Amendment;
WHEREAS, Borrower, Lenders and Agent wish to amend the Loan Agreement
to authorize Borrower to enter into certain Supply Agreements and Security
Agreements with the Suppliers, substantially in the form of the agreements
attached hereto as Exhibits A and B, respectively, and any other necessary
documents related thereto;
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby amend the Loan Agreement as follows:
1. AMENDMENTS
1.1. The definition of "Permitted Indebtedness" set forth in Section
1.1 of the Loan Agreement is hereby amended to delete the punctuation from the
end of the last clause of that definition and add the following:
"; and (v) Indebtedness as set forth in Schedule P-1."
1.2. Section 5.11(a) is hereby amended by deleting clause (iii) therein
and replacing it with the following:
"(iii) liens, charges, and encumbrances described in Schedule
5.11(a) or Schedule P-1 and permitted by Section 8.2 hereof,"
1.3 Section 8.2 is hereby amended by adding subsection (g) thereto to
permit the following liens and security interests:
"(g) liens and security interests with respect to Indebtedness
described in Schedule P-1"
1.4 Schedule P-1, attached hereto as Exhibit C, is hereby included as
an additional Schedule to the Loan Agreement.
2. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Lenders
and Agent that all of Borrower's representations and warranties set forth in the
Loan Agreement are true, complete and accurate in all respects as of the date
hereof (except to the extent such representations and warranties relate solely
to an earlier date).
3. DEFAULTS. Borrower hereby affirms to Lenders and Agent that no
Default or Event of Default exists as of the date hereof.
4. COSTS AND EXPENSES. Borrower shall pay to Agent all of Agent's
out-of-pocket costs and expenses (including, without limitation, the reasonable
fees and expenses of its counsel, which counsel may include any local counsel
reasonably deemed necessary, search fees,
2
filing and recording fees, documentation fees, appraisal fees, travel expenses,
and other fees) arising in connection with the preparation, execution, and
delivery of this Amendment and any related documents.
5. EFFECTIVENESS; CONDITION TO EFFECTIVENESS. This Amendment shall
become effective as of the date first set forth above, upon execution hereof by
the Lenders, the Agent and the Borrower.
6. OBLIGATIONS IN FULL FORCE AND EFFECT Except as herein amended and
modified, the Loan Agreement and the Subordination Agreement shall remain in
full force and effect.
7. COUNTERPARTS. This Amendment may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same document.
3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and year first written above.
XXXXXXX JEWELERS, INC.
By: /s/ Xxxxx XxXxxxxxxx
-------------------------------------------
Name: Xxxxx XxXxxxxxxx
Title: President & CEO
DDJ CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Member
B III CAPITAL PARTNERS:
By: DDJ Capital III, LLC, its General Partner
By: DDJ Capital Management, LLC, Manager
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Member
B III-A CAPITAL PARTNERS, L.P.
By: GP III-A, LLC, its General Partner
By: DDJ Capital Management, LLC, Manager
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Member
4
