THIRD AMENDMENT TO DEBTOR IN POSSESSION
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO DEBTOR IN POSSESSION LOAN AND SECURITY
AGREEMENT (this "Third Amendment") is entered into and effective as of September
24, 1999, by and among Factory Card Outlet of America Ltd., an Illinois
corporation and a debtor and debtor in possession (the "Borrower"), on the one
hand, and Foothill Capital Corporation, as Agent ("Foothill") and the financial
institutions listed on the signature page of the Loan Agreement referred to
below (such financial institutions, together with their respective successors
and assigns, are collectively referred to herein as the "Lenders"), on the other
hand. This Third Amendment amends certain provisions of the Debtor in Possession
Loan and Security Agreement dated as of March 23, 1999 by and among the Borrower
and Foothill, as Agent, and the Lenders (as amended by and through the date of
this Third Amendment, and as hereafter amended and/or restated from time to
time, the "Loan Agreement"). Capitalized terms used herein and not otherwise
defined shall have the same meanings herein as in the Loan Agreement.
BACKGROUND
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This Third Amendment is entered into to amend certain of the provisions
governing the availability of "Special Sub-Line Advances" under the Loan
Agreement, in accordance with the terms and conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Agent and the
Lenders hereby agree as follows:
1. Amendments to Loan Agreement.
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(a) Amendment to Subsection 2.2(a). Subsection 2.2(a)(ii) of the Loan
Agreement is hereby amended by deleting such subsection in its entirety and
inserting in lieu thereof the following:
"(ii) the aggregate amount of all undrawn or
unreimbursed Letters of Credit would exceed the lower
of: (x) the Maximum Revolving Amount minus the amount
of outstanding Advances (including any Agent Advances
and Agent Loans); or (y)(1) for the period September
24, 1999 through November 23, 1999, $12,500,000, or
(2) at all other times during the term of this
Agreement, $10,000,000;"
2. Representations and Warranties; Confirmation of
Representations, Warranties.
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This Third Amendment has been duly authorized, executed and delivered
by the Borrower. The Loan Agreement, as amended hereby, and each of the other
Loan Documents, as amended by and through the date hereof, constitute legal,
valid and binding obligations of
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the Borrower, enforceable against the Borrower in accordance with their
respective terms. The Borrower, by execution of this Third Amendment, certifies
to the Agent and each of the Lenders that each of the representations and
warranties set forth in the Loan Agreement and the other Loan Documents is true
and correct as of the date hereof, except to the extent such representations and
warranties expressly relate to an earlier date, as if fully set forth in this
Third Amendment, and that, as of the date hereof, no Default or Event of Default
has occurred and is continuing under the Loan Agreement or any other Loan
Document. The Borrower acknowledges and agrees that this Third Amendment shall
become a part of the Loan Agreement and shall be a Loan Document.
3. Amendment Fee. Prior to or concurrently with the execution by the
Agent and the Lenders of this Third Amendment, and as a condition to the
obligation of the Lenders to execute this Third Amendment and make the
accomodations to the Borrower described herein:
(a) This Third Amendment shall have been executed and delivered by each
of the parties hereto; and
(b) The Borrower shall have paid to the Agent for the ratable benefit
of the Lenders an amendment fee of $12,500. Such fee shall be fully earned when
paid to the Agent and shall not be refunded to the Borrower under any
circumstances.
4. No Novation; Effect; Counterparts; Governing Law.
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Except to the extent specifically amended hereby, the Loan Agreement
and each of the other Loan Documents shall be unaffected hereby and shall remain
in full force and effect; this Third Amendment shall not be deemed a novation of
the Loan Agreement or any other Loan Document. The Borrower hereby acknowledges,
confirms and ratifies its obligations under the Loan Agreement and each of the
other Loan Documents. This Third Amendment may be executed in any number of
counterparts, and by the different parties on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all the
counterparts shall together constitute one instrument. This Third Amendment
shall be governed by the internal laws of The Commonwealth of Massachusetts
(without reference to conflicts of law principles) and the United States
Bankruptcy Code and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
Borrower acknowledges that the reasonable out-of-pocket expenses of the Agent
and the Lenders incurred in connection with the preparation, execution and
delivery of this Third Amendment shall be "Lender Group Expenses," as such term
is defined in the Loan Agreement.
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4. Construction.
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The Borrower, by execution hereof, acknowledges and confirms that for
all purposes of the Loan Agreement and the other Loan Documents, the term "Loan
Agreement" shall mean the Loan Agreement as amended by and through the date of
this Third Amendment and as further amended and/or restated from time to time
hereafter.
IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment to Loan and Security Agreement as a sealed instrument as of the date
first above written.
FACTORY CARD OUTLET OF AMERICA,
LTD.
By:
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Name:
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Title:
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FOOTHILL CAPITAL CORPORATION, for
itself and as Agent for the Lenders
By:
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(Title)
PARAGON CAPITAL, LLC, as a Lender
By:
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(Title)
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