Exhibit 10.29
FIRST MODIFICATION TO LOAN AND SECURITY AGREEMENT
AND REVOLVING LINE OF CREDIT NOTE
Now comes Xxxxx & Wesson Corp., a Delaware corporation having a
principal place of business at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx
(the "Borrower") and Banknorth, N.A. f/k/a First Massachusetts Bank, N.A., a
national banking association organized under the laws of the United States of
America, having a principal place of business at 0000 Xxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxxx (the "Lender").
WHEREAS, Borrower and Lender have heretofore executed a Loan and
Security Agreement dated July 12, 2001 (the "Loan Agreement").
WHEREAS, pursuant to the Loan Agreement, the Borrower executed inter
alia, a Revolving Line of Credit Note on July 12, 2001, in the original
principal amount of Ten Million and 00/100 Dollars ($10,000,000.00) (the
"Note").
WHEREAS, Borrower and its parent corporation, Xxxxx & Wesson Holding
Corporation, have entered into a related transaction of even date herewith
whereby Lender has loaned Xxxxx & Wesson Holding Corporation, Fifteen Million
and 00/100 Dollars ($15,000,000.00) and as part of a coordinated transaction,
Borrower has agreed to guaranty all obligations of Xxxxx & Wesson Holding
Corporation and reduce the Maximum Amount of availability pursuant to the Note
to Eight Million and 00/100 Dollars ($8,000,000.00), which Lender has agreed to
do, subject to the execution of these presents.
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
parties agree as follows:
1. The principal balance due under the Note is $6,227,025.46, as of
March 26, 2002, in the form of Letters of Credit issued and ACH credit exposure.
2. The Borrower as of the date hereof, acknowledges its undisputed and
liquidated liability to the Lender under the Loan Agreement and Note, without
any counterclaims, rights of set-off and other defenses, without exception, the
terms and conditions of which shall remain in full force and effect, except to
the limited extent of the modification contemplated hereby, with this
Modification Agreement being incorporated by reference into the Loan Agreement
and the Note, as if restated therein.
3. That all terms, conditions and covenants of the Loan Agreement, Note
and other Loan Documents and instruments heretofore executed by the Borrower
concerning its financing transactions, shall remain in full force and effect in
their original tenor, except as provided for hereby and not otherwise.
4. That Borrower represents, warrants and confirms that all
"Collateral" pledged, secured or mortgaged in connection with its Obligations to
Lender is, and shall continue to remain as collateral security for the Note, as
modified hereby, as well as any and all other "Future Advances" and its
unlimited guaranty of all Obligations of Xxxxx & Wesson Holding Corporation.
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THE MODIFICATIONS
5. That the definition of "Available Amount" in the Loan Agreement is
deleted and replaced with the following:
" `Available Amount' means up to an aggregate outstanding
principal amount not to exceed the lesser of: (i) Eight
Million and 00/100 Dollars ($8,000,000.00) (the "Maximum
Amount"); or (ii) the aggregate market value of the
"Collateral" (a) discounted by the following percentages and
(b) reduced by the amount of any margin or other liability due
from Borrower to the broker or other securities intermediary
holding the Collateral:
Type of Security Discount Factor
---------------- ---------------
Money Market Account 0%
Annuities 0%
United States Government Securities 10%
Corporate Securities and Commercial Paper 30%
Corporate and Municipal Bonds 20%
Provided, however, the Available Amount shall be reduced by
the aggregate of issued Letters of Credit and ACH Credit
Risk."
6. That the definition "Maximum Amount" is deleted in its entirety and
replaced with the following:
" `Maximum Amount' means Eight Million and 00/100 Dollars
($8,000,000.00)."
7. That the phrase "Prime Loan" in the Loan Agreement is deleted and
replaced with the phrase "Base Loan" throughout the Loan Agreement.
8. That the phrase "Prime Rate" in the Loan Agreement is deleted and
replaced with the phrase "Base Rate" throughout the Loan Agreement.
9. That Section 2.01 in the Loan Agreement is deleted in its entirety
and replaced with the following:
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"2.01 REVOLVING LINE OF CREDIT FACILITY
An Eight Million and 00/100 Dollar ($8,000,000.00) discretionary Demand
Revolving Line of Credit (the "Revolving Line of Credit") will be made
available, repayable ON DEMAND, at any time, with Loans made from time-to-time
during the period from the date of this Agreement up to, but not including, the
date when demand is made for repayment of the Revolving Line of Credit. Loans
may be in any amount within the limits of the Available Amount, and within such
limits, the Borrower may borrow and repay pursuant to Section 3.02 and re-borrow
under this Section 2.01 on such terms and conditions as are contained herein.
Each Loan shall be made and maintained at the Lender's Lending office for such
Loan. At all times, advances against the Revolving Line of Credit shall remain
solely within the discretion of the Lender. The Borrower shall pay interest to
the Lender, which shall be calculated daily and payable monthly, in arrears, on
the outstanding and unpaid principal amount of the Revolving Line of Credit
Loans made under this Agreement during the preceding month at a rate per annum
equal to the Base Rate."
10. That Section 2A.01 of the Loan Agreement shall be deleted in its
entirety and replaced with the following:
"2A.01 Lender agrees, subject to the terms and conditions hereinafter
set forth, to incur Letter of Credit Obligations with respect to the
issuance of Letters of Credit issued on terms acceptable to Lender and
supporting obligations of Borrower incurred in the ordinary course of
Borrower's business, in order to support the payment of Borrower's
inventory purchase obligations, insurance premiums, or utility or other
operating expenses and obligations, as Borrower shall request by
written notice to Lender that is received by Lender not less than two
(2) Business Days prior to the requested date of issuance of any such
Letter of Credit; provided, that: (a) that the aggregate amount of all
Letter of Credit Obligations at any one time outstanding (whether or
not then due and payable) shall not exceed Seven Million Five Hundred
Eighty Thousand and 00/100 Dollars ($7,580,000.00); and (b) Lender
shall be under no obligation to incur any Letter of Credit Obligation
if after giving effect to the incurrence of such Letter of Credit
Obligation, the Available Amount would be less than zero."
11. That Section 2.06 of the Loan Agreement is deleted in its entirety
and replaced with the following:
"2.06 USE OF PROCEEDS
The proceeds of the Revolving Line of Credit Facility may be used by
the Borrower (i) to support standby and commercial letters of credit,
(ii) allocated against an ACH Credit Risk Exposure of $420,000 (20% of
$2,100, 000 ACH Batch Limit) and (iii) for working capital. The
Revolving Line of Credit will be reduced by $420,000 and held by the
Lender as a reserve for ACH batch limit transactions.
The Borrower will not, directly or indirectly, use any part of such
proceeds for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or to extend credit to any Person for the
purpose of purchasing or carrying any such margin stock, or for any
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purpose which violates, or is inconsistent with, Regulation X of such
Board of Governors."
12. That Section 4.00 of the Loan Agreement shall be deleted in its
entirety and replaced with the following:
"4.00 SECURITY INTEREST
Borrower, for valuable consideration received, hereby pledges, assigns,
transfers and grants to Lender as security for the Obligations, a
continuing lien and security interest in all of Borrower's right, title
and interest in and to, the following investment property and general
intangibles consisting of annuity contracts, Securities, stocks, bonds,
United States government securities, commercial paper and all income
therefrom, increases therein and proceeds thereof maintained at and/or
by: (1) PRIME VEST FINANCIAL SERVICES, INC., ACCOUNT NO. 00000000,(the
"Account"); (2) Pacific Life Insurance Company Annuity - $1,000,000 -
Contract No. SP01001834; (3) Pacific Life Insurance Company Annuity -
$500,000 - Contract No. VR01050237; (4) Pacific Life Insurance Company
Annuity - $9,000,000 - Contract No. SP01001732; (5) Keyport Insurance
Trust I Annuity - $950,000 - Contract No. 0212493926-01; and (6) MFS
Regatta Insurance Trust Annuity - $2,000,000 - Contract No.
00-0000-000000, together with products and proceeds thereof and all
accessions and additions thereto and all replacements and substitutions
therefore (hereinafter called the "Collateral"). The term "proceeds"
shall include, without limitation, all types of classifications of
non-cash proceeds acquired with cash proceeds.
The Borrower shall at all times maintain Collateral having an
aggregate market value (on a discounted basis subject to the Discount
Factors set forth in the definition of Available Amount) of not less
than the sum of any applicable surrender charges, prepayment fees,
early withdrawal fees and/or similar charges required in connection
with any of the Annuities and/or Securities, and the Obligations of the
Borrower to the Lender hereunder. Additional units or shares of
investment securities (or other unrestricted, registered securities
publicly traded on a nationally recognized stock exchange, or other
additional collateral acceptable to the Lender) may from time to time
be required by the Lender to be transferred to the Account, and the
Borrower agrees to do so within three (3) business days of notice and
request from the Lender stating that the then aggregate market value of
Collateral is less than the sum of any applicable surrender charges,
prepayment fees, early withdrawal fees and/or similar charges required
in connection with any of the Annuities and/or Securities, and the
Obligations of the Borrower to the Lender hereunder. Failure by the
Borrower to provide additional collateral having an aggregate market
value (on a discounted basis subject to the Discount Factors set forth
in the definition of Available Amount) equal to the difference between
(i) the sum of any applicable surrender charges, prepayment fees, early
withdrawal fees and/or similar charges required in connection with any
of the Annuities and/or Securities, and (ii) the Obligations and the
then aggregate market value of the Collateral shall constitute an Event
of Default, and the Lender shall be entitled to liquidate the
Collateral for application to the Obligations without further notice to
the Borrower.
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Provided that no Default or Event of Default has occurred and
is continuing hereunder, the Lender, upon request of the Borrower or its
authorized representatives, shall promptly make or cause to be made trades of
investment securities held in the Account as Collateral for the Obligations. In
addition, so long as no Default or Event of Default has occurred and is
continuing hereunder, the Lender, upon request of the Borrower or its authorized
representatives, shall promptly transfer or withdraw or cause to be transferred
or withdrawn from the Account and placed in an alternative account designated by
the Borrower or delivered to the Borrower, as the case may be, cash or
securities in such amounts up to that amount by which the then current aggregate
market value of the Collateral (on a discounted basis subject to the Discount
Factors set forth in the definition of Available Amount) exceeds the sum of any
applicable surrender charges, prepayment fees, early withdrawal fees and/or
similar charges required in connection with any of the Annuities and/or
Securities, and the Obligations."
13. That Section 6.02 of the Loan Agreement is deleted in its entirety
and replaced with the following:
"6.02 NO SALE OF COLLATERAL
Without prior written consent of Lender, which will not be unreasonably
withheld, Borrower, during the tenure of this Agreement, will not sell,
assign, or dispose of any Collateral, nor create or permit to be
created, any lien, encumbrance or security interest of any kind on any
Collateral other than for the benefit of Lender, and if such lien or
encumbrance is created or permitted, Borrower will effect a discharge
of the same within ten (10) days following written notice from Lender.
Notwithstanding the foregoing, the Borrower may dispose of Investment
Collateral in accordance with the terms of the Control Agreement."
14. That Section 6.04 of the Loan Agreement is deleted in its entirety
and replaced with the following:
"6.04 NOTICE OF MERGER OR ACQUISITION
Borrower and/or Guarantor will not wind up, liquidate, or dissolve
itself, reorganize, merge or consolidate with, or into, or convey,
sell, assign, transfer, lease, or otherwise dispose of (whether in one
transaction or a series of transactions) all or substantially all of
its assets and/or the Guarantor's (whether now owned or hereafter
acquired) to any Person or acquire all or substantially all of the
assets or the business of any Person or permit any subsidiary to do so
without providing notice of such event to Lender within thirty (30)
days of such occurrence, together with financial information necessary
for the Lender to evaluate the capital structure and debt service
ability of the Borrower after giving effect to such occurrence;
provided that such notice and information shall be solely for
informational purposes and Lender shall have no right to approve or
disapprove such transaction."
15. That Section 6.07 of the Loan Agreement is deleted in its entirety
and replaced with the following:
"6.07 FINANCIAL STATEMENTS
The Borrower will deliver, at its sole expense, to the Lender, the
following:
A. Within one hundred twenty (120) days after the close of each fiscal
year, its consolidated financial statements, including the Guarantor,
audited by certified public accountants servicing the corporations,
along with the accountant's management letter and an accounts
receivable aging as of the end of each fiscal year.
B. Within forty-five (45) days after the close of each of the first
three (3) fiscal quarters, Borrower will provide to Lender, its
internally prepared financial statements, including the Guarantor,
including, without limitation, consolidated income statement and
balance
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sheet, accounts receivable aging, and consolidated statement of cash
flow prepared according to GAAP consistently applied.
C. The Borrower shall provide Lender with a true and correct copy of
all filings made with the Securities Exchange Commission as and when
filed.
D. The Borrower and Guarantor shall deliver to the Lender by March 31st
of each fiscal year, a true and correct copy of their consolidated
projections for that fiscal year, to include an income statement,
balance sheet and cash flow statement.
E. From time-to-time, such additional information regarding the
financial condition or business of the Borrower and Guarantor as the
Lender may request.
MODIFICATION TO REVOLVING LINE OF CREDIT NOTE
16. That the opening paragraph of the Revolving Line of Credit Note is
deleted in its entirety and replaced with the following:
"REVOLVING LINE OF CREDIT
MAXIMUM AMOUNT: $8,000,000.00
REVOLVING LINE OF CREDIT NOTE
AFTER DATE, FOR VALUE RECEIVED, XXXXX & WESSON CORP., a Delaware
corporation having a principal place of business at 0000 Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx (the "Borrower"), promises to pay to
the order, of BANKNORTH, N.A. F/K/A FIRST MASSACHUSETTS BANK, N.A., a
national banking association duly organized under the laws of the
United States of America ("Lender"), having a usual place of business
at 0000 Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx, XX DEMAND, the maximum
principal sum of EIGHT MILLION AND 00/100 DOLLARS ($8,000,000.00), or
the (then) current balance of Borrower's loans now existing, refinanced
hereby, or made to it on or after the date hereof, by the Lender, from
time-to-time ("Principal Sum"), as reflected by the books, records and
ledgers of the Lender ("Loan Account") with respect to those loans made
on or after the date hereof pursuant to a Loan and Security Agreement
of even date herewith (the "Loan Agreement"), as well as all other
obligations of Borrower pursuant to this Note which may at any time be
due to Lender (if such balances or obligations are other than Eight
Million and 00/100 Dollars ($8,000,000.00)), together with interest
thereon in arrears, calculated daily and payable monthly on the
outstanding and unpaid principal amount of the Revolving Line of Credit
Loans during the preceding month at a rate per annum equal to Lender's
Base Rate. The term "Base Rate" shall mean that rate of interest
established and announced as such by the Lender from time-to-time as
the Base Rate."
17. That for valuable consideration received, including but not limited
to, a Fifteen Million and 00/100 Dollar ($15,000,000.00) Term Loan of even date
herewith, Xxxxx & Wesson Holding Corporation does hereby guaranty payment and
performance of all Obligations of the Borrower, all as more fully described in
Exhibit "1" attached hereto.
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18. That any ambiguities, contradictions, discrepancies as between or
among the Loan Agreement, the Note and this Modification Agreement shall at all
times, and in each instance, be resolved in favor of this Modification
Agreement.
19. Except for the modifications made hereby, this Modification is in
addition to, and not in substitution of, the Loan Agreement and the Note.
Executed under seal this ___ day of March, 2002 by the parties set
forth below by their duly authorized officers.
XXXXX & WESSON CORP.
__________________________________ By:______________________________________
Witness Its duly authorized
BORROWER
XXXXX & WESSON HOLDING CORPORATION
__________________________________ By:______________________________________
Witness Its duly authorized
GUARANTOR
BANKNORTH, N.A. F/K/A FIRST
MASSACHUSETTS BANK, N.A.
__________________________________ By:______________________________________
Witness Its duly authorized
LENDER
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