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EXHIBIT 10.1
AMENDMENT AGREEMENT NUMBER FIVE
TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT AGREEMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT (this
"Amendment"), dated as of April 17, 2000, is entered into between U.S. BANK
NATIONAL ASSOCIATION, FORMERLY KNOWN AS SANTA XXXXXX BANK ("Bank"), on the one
hand, and INTERVISUAL BOOKS, INC., a California corporation ("IBI"), and FAST
FORWARD MARKETING, INC., a California corporation formerly known as FFM
ACQUISITION CORP. ("FFM"), on the other hand, and amends that certain Loan and
Security Agreement, dated as of May 12, 1999, between Bank and Borrower, as
amended by that certain Amendment Agreement Number One to Loan and Security
Agreement, dated as of September 30, 1999, and as further amended by that
certain Amendment Agreement Number Two to Loan and Security Agreement, dated as
of November 17, 1999, and as further amended by that certain Amendment Agreement
Number Three to Loan and Security Agreement dated as of May 1, 2000, and as
further amended by that certain Amendment Agreement Number Four to Loan and
Security Agreement dated as of September 29, 2000 (collectively, the
"Agreement"). IBI and FFM are sometimes individually and collectively referred
to as "Borrower." All terms which are defined in the Agreement shall have the
same definition when used herein unless a different definition is ascribed to
such term under this Amendment, in which case, the definition contained herein
shall govern. This Amendment is entered into in light of the following facts:
RECITALS
WHEREAS, Borrower has requested that Bank extend the maturity date of the
Agreement to June 30, 2002;
WHEREAS, Bank has agreed to honor Borrower's request on the condition that
Borrower agree to convert the line of credit into an amortizing term loan and to
amend certain financial covenants as set forth in this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following new definition shall be added to Section 1:
"1.2.1 "Bank" means U.S. BANK NATIONAL ASSOCIATION, formerly known as
Santa Xxxxxx Bank."
All references to "SMB" in the Agreement and all other Loan Documents
shall be and mean, and shall be revised to say, Bank.
2. The Agreement shall be amended by deleting Section 1.27 and replacing
it with a new Section 1.27 as follows:
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1.27 "Note" means that certain Amended and Restated Secured Promissory
Note, dated as of April 17, 2001, in the original principal amount of
Two Million Four Hundred Seventy Five Thousand and 00/100 Dollars
($2,475,000.00) executed by Borrower to the order of Bank, and any
renewals, amendments, restatements or extensions of such Amended and
Restated Secured Promissory Note.
3. Notwithstanding anything to the contrary in Section 2 or any other
provision of the Agreement, effective immediately, no further advances or other
extensions of credit will be made to Borrower under the Agreement. The total
outstanding principal amount of all advances under the Agreement, or
$2,475,000.00, is hereby converted into an amortizing term loan, which shall be
further evidenced by the Note and amortized pursuant to the terms thereof.
4. The Agreement shall be amended by deleting Section 3.1A and replacing it
with a new Section 3.1A as follows:
"A. This Agreement shall have a term commencing on the date
hereof and concluding on June 30, 2002."
5. The Agreement shall be amended by deleting the first sentence of Section
2.4 and replacing it with a new sentence as follows:
"All Obligations owed by Borrower to Bank shall bear interest, on the
average Daily Balance owing, at a rate four (4) percentage points
above the Prime Rate (the "Governing Rate")."
6. Retroactive to and effective as of March 30, 2001, Bank hereby extends
to June 30, 2001 the due date for delivery of Borrower's audited financial
statements for its fiscal year 2000 pursuant to Section 7.9B(iii) of the
Agreement.
7. The Agreement shall be amended by deleting Section 7.10 and replacing it
with a new Section 7.10, retroactive to and effective as of December 31, 2000,
as follows:
"7.10 Financial Covenants. Borrower shall be in compliance with
the following financial covenants which shall be measured on a
quarterly basis:
A. A Debt to Tangible Effective Net Worth Ratio of not more than
the following:
Time Period Maximum Ratio
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As of December 31, 2000 3.50 to 1.0
As of March 31, 2001 3.55 to 1.0
As of June 30, 2001 4.30 to 1.0
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As of September 30, 2001 3.95 to 1.0
As of December 31, 2001 3.60 to 1.0
As of March 31, 2002 3.70 to 1.0
B. Working Capital of not less than the following:
Time Period Minimum Amount
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As of December 31, 2000 ($1,450,000)*
As of March 31, 2001 $400,000
As of June 30, 2001 ($2,100,000)*
As of September 30, 2001 ($1,300,000)*
As of December 31, 2001 ($1,200,000)*
As of March 31, 2002 ($1,400,000)*
*THIS INCLUDES THE RECLASSIFICATION OF SENIOR DEBT TO
CURRENT DEBT.
C. Tangible Net Worth of not less than the following:
Time Period Minimum Amount
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As of December 31, 2000 $2,800,000
As of March 31, 2001 $2,300,000
As of June 30, 2001 $2,000,000
As of September 30, 2001 $2,500,000
As of December 31, 2001 $2,600,000
As of March 31, 2002 $2,300,000"
8. Borrower shall execute and deliver to Bank the Amended and Restated
Secured Promissory Note, dated as of April 17, 2001, in the original principal
amount of $2,475,000, and in the form of Exhibit A attached hereto (the "New
Note"). Upon the Bank's receipt of the New Note, properly executed by Borrower,
Bank shall deliver to Borrower the Amended and Restated Secured Promissory Note,
in the amount of $2,500,000, dated May 1, 2000, executed by Borrower to Bank in
accordance with the Agreement, marked "paid by substitution."
9. As a condition to the effectiveness of this Amendment, Borrower shall
pay:
(a) Extension Fee. A fully earned, nonrefundable extension fee of
$25,000 due concurrently with the execution of this Amendment;
and
(b) Bank Expenses. All Bank Expenses (including, but not limited to
attorneys' fees and costs) incurred in connection with the
preparation, documentation, and negotiation of this Amendment.
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10. This Amendment shall be deemed effective as of the date first
hereinabove written. Except as specifically amended herein, the Agreement shall
remain in full force and effect without any other changes, amendments or
modifications.
IN WITNESS WHEREOF, Bank and Borrower have executed this Amendment.
INTERVISUAL BOOKS, INC.,
a California corporation
By /s/ Xxxxx X. Xxxx
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Title: Chairman
FAST FORWARD MARKETING, INC.,
a California corporation
By /s/ Xxx X. Xxxxxx
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Title: President
U.S. BANK NATIONAL ASSOCIATION
By /s/ Xxxx Xxxxxxx
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Title: Vice President
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