Exhibit 10.1
SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED
SENIOR REVOLVING CREDIT AGREEMENT
This SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR REVOLVING CREDIT
AGREEMENT (the "Amendment") is made as of the 29th day of March, 2005, by and
among ENESCO GROUP, INC., an Illinois corporation (the "Borrower"), the
Borrowing Subsidiaries that may from time to time become a party to the Second
Amended and Restated Senior Revolving Credit Agreement, the Lenders, and FLEET
NATIONAL BANK, a national banking association, as Agent.
RECITALS
The Borrower, the Borrowing Subsidiaries, the Lenders and the Agent are
parties to a certain Second Amended and Restated Senior Revolving Credit
Agreement dated as of June 16, 2003, as amended by a First Amendment dated as of
March 5, 2004; a Second Amendment dated as of August 10, 2004; a Third Amendment
dated as of November 2, 2004; a Fourth Amendment dated as of November 22, 2004;
and a Fifth Amendment dated as of January 28, 2005, as amended by a letter
agreement dated as of February 7, 2005 (as the same may be further amended or
restated from time to time, collectively, the "Credit Agreement"), pursuant to
which the Lenders have, subject to the terms and conditions set forth therein,
made certain credit facilities available to the Borrower and the Borrowing
Subsidiaries including those evidenced by the Notes executed and delivered
pursuant to the Credit Agreement. The parties hereto have agreed to further
modify the Credit Agreement as set forth herein. All capitalized terms used
herein and not otherwise defined herein shall have their meanings as defined in
the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Upon satisfaction in full, on or prior to March 31, 2005, of the
conditions precedent set forth in Section 2 below, the Credit Agreement is
amended as follows:
(a) The following definition for the term "Applicable Percentage" is added
in alphabetical order to ARTICLE I:
"Applicable Percentage" means, with respect to the participation of each
Lender in Letters of Credit and Bankers' Acceptances, 40% with respect to
LaSalle Bank National Association and 60% with respect to Fleet National Bank.
(b) The definition of "Borrowing Capacity" which appears in ARTICLE I is
deleted in its entirety and replaced with the following:
"Borrowing Capacity" means the lesser of:
(x) the Maximum Borrowing Amount, and
(y) the sum of (i) eighty-five percent (85%) of Consolidated Accounts
Receivable of the Borrower which are not Ineligible Accounts, (ii) the lesser of
(A) thirty-three and two-tenths percent (33.2%) of the Eligible Inventory of the
Borrower, and (B) $11,000,000, and (iii) seventy percent (70%) of the appraised
fair market value of the real estate owned by the Borrower on the Sixth
Amendment Date and located in Itasca, Illinois, such appraised fair market value
to be determined by the Agent based on an appraisal (or, if updated by the Agent
in its sole discretion from time to time, the most recent appraisal) in form and
substance, and by an appraiser, acceptable to the Agent in its sole discretion.
(c) The definition of "Commitment" which appears in ARTICLE I is deleted in
its entirety and replaced with the following:
"Commitment" means the obligations of each Lender, subject to Borrowing
Capacity, to make Advances not exceeding the aggregate principal amount (or,
with respect to Letters of Credit and Bankers Acceptances, face amount)
outstanding at any time as set forth below, or as set forth in any Notice of
Assignment relating to any assignment that has become effective pursuant to
Section 12.3.2, as such amount may be modified from time to time pursuant to the
terms hereof:
Between Sixth Amendment Date and May 31, 2005:
Fleet National Bank LaSalle Bank National Association
$25,800,000 Loans $17,200,000 Loans
$ 4,200,000 L/C and B/A Facility $ 2,800,000 L/C and B/A Facility
Between June 1, 2005 and June 30, 2005:
Fleet National Bank LaSalle Bank National Association
$28,800,000 Loans $19,200,000 Loans
$ 4,200,000 L/C and B/A Facility $ 2,800,000 L/C and B/A Facility
Between July 1, 2005 and July 31, 2005:
Fleet National Bank LaSalle Bank National Association
$31,800,000 Loans $21,200,000 Loans
$ 4,200,000 L/C and B/A Facility $ 2,800,000 L/C and B/A Facility
2
Between August 1, 2005 and September 30, 2005:
Fleet National Bank LaSalle Bank National Association
$34,800,000 Loans $23,200,000 Loans
$ 4,200,000 L/C and B/A Facility $ 2,800,000 L/C and B/A Facility
Between October 1, 2005 and October 31, 2005:
Fleet National Bank LaSalle Bank National Association
$37,800,000 Loans $25,200,000 Loans
$ 4,200,000 L/C and B/A Facility $ 2,800,000 L/C and B/A Facility
Between November 1, 2005 and January 1, 2006:
Fleet National Bank LaSalle Bank National Association
$34,800,000 Loans $23,200,000 Loans
$ 4,200,000 L/C and B/A Facility $ 2,800,000 L/C and B/A Facility
(d) The following definition for the term "Consolidated Tangible Net Worth"
is added in alphabetical order to ARTICLE I:
"Consolidated Tangible Net Worth" means the result of (a) Consolidated Net
Worth, minus (b) the sum of (i) the total book value of all assets of the
Borrower and its Subsidiaries properly classified as intangible assets under
Agreement Accounting Principles, including without limitation such items as
goodwill, the purchase price of acquired assets in excess of the fair market
value thereof, trademarks, trade names, service marks, brand names, copyrights,
patents and licenses, and rights with respect to the foregoing; plus (ii) all
amounts representing any write-up in the book value of any assets of the
Borrower or its Subsidiaries resulting from a revaluation thereof.
(e) Clause (x) of the definition of "Eligible Inventory" which appears in
ARTICLE I is amended and restated in its entirety to read as follows:
(x) (i) it is not Precious Moments Inventory which is produced and sold
pursuant to the Borrower's license agreement with Precious Moments, Inc. and
United Media, and (ii) it is not any other Inventory which has been produced or
is being sold pursuant to a license agreement, unless the license agreement
referred to in this clause (ii) is in form and substance acceptable to the Agent
and the licensor has entered into an agreement with the Agent in form and
substance satisfactory to the Agent which provides, among other things, for the
Agent to have the right, if the Agent obtains possession of such inventory, to
sell the licensed inventory for a period of time, and on terms and conditions,
acceptable to the Agent, provided that clause (ii) of this clause (x) shall not
take effect until April 30, 2005;
3
(f) The definition of "Facility Termination Date" which appears in ARTICLE
I is deleted in its entirety and replaced with the following:
"Facility Termination Date" means January 1, 2006.
(g) The definition of "Maximum Borrowing Amount" which appears in ARTICLE I
is deleted in its entirety and replaced with the following:
"Maximum Borrowing Amount" means (a) between the Sixth Amendment Date and
May 31, 2005, $43,000,000 for Loans (excluding Letters of Credit and Bankers
Acceptances) and $7,000,000 for Letters of Credit and Bankers Acceptances; (b)
between June 1, 2005 and June 30, 2005, $48,000,000 for Loans (excluding Letters
of Credit and Bankers Acceptances) and $7,000,000 for Letters of Credit and
Bankers Acceptances; (c) between July 1, 2005 and July 31, 2005, $53,000,000 for
Loans (excluding Letters of Credit and Bankers Acceptances) and $7,000,000 for
Letters of Credit and Bankers Acceptances; (d) between August 1, 2005 and
September 30, 2005, $58,000,000 for Loans (excluding Letters of Credit and
Bankers Acceptances) and $7,000,000 for Letters of Credit and Bankers
Acceptances; (e) between October 1, 2005 and October 31, 2005, $63,000,000 for
Loans (excluding Letters of Credit and Bankers Acceptances) and $7,000,000 for
Letters of Credit and Bankers Acceptances; and (f) between November 1, 2005 and
January 1, 2006, $58,000,000 for Loans (excluding Letters of Credit and Bankers
Acceptances) and $7,000,000 for Letters of Credit and Bankers Acceptances.
(h) The following definition for the term "Sixth Amendment Date" is added
in alphabetical order to ARTICLE I:
"Sixth Amendment Date" means the date that the Sixth Amendment to this
Agreement takes effect.
(i) The sentence added to the end of Section 2.10 pursuant to the Fifth
Amendment to this Agreement is deleted.
(j) The following paragraphs (f) and (g) are added to the end of Section
2.15:
(f) By the issuance of a Letter of Credit or Bankers Acceptance (or an
amendment to a Letter of Credit or Bankers Acceptance increasing the amount
thereof) by the Issuing Bank, and without any further action on the part of the
Issuing Bank, the Issuing Bank hereby grants to each Lender, and each Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit
or Bankers Acceptance equal to such Lender's Applicable Percentage of the
aggregate amount available to be drawn under such Letter of Credit or paid on
such Bankers Acceptance. For the avoidance of doubt, this subsection (f) and
subsection (g) of this Section 2.15 apply to Letters of Credit and Bankers
Acceptances (and each Lender agrees to acquire a participation interest in each
Letter of Credit and Bankers Acceptance) regardless of whether they were issued
prior to, on or after the Sixth Amendment Date. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Agent, for the account of the Issuing Bank, such Lender's
Applicable Percentage of each payment made by the Issuing Bank pursuant to a
Letter of Credit or Bankers Acceptance and not reimbursed by the Borrower on the
date due as provided in paragraph (a)(i) of this Section 2.15, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender's unconditional agreement herein to pay to the Issuing Bank such
Lender's Applicable Percentage of each payment made by the Issuing Bank pursuant
to a Letter of Credit or Bankers Acceptance shall remain in effect, and continue
to be an obligation of each Lender to the Issuing Bank, regardless of whether an
Event of Default is continuing hereunder, or the conditions for the Borrower to
receive Loans or Letters of Credit hereunder have been satisfied, or any other
reason or condition.
4
(g) If the Borrower does not pay on the due date thereof any amount payable
pursuant to clause (a)(i) of this Section 2.15, the Agent shall notify each
Lender of the applicable amount that is owed and such Lender's Applicable
Percentage thereof. Promptly following receipt of such notice, each Lender shall
pay to the Agent its Applicable Percentage of the unreimbursed portion of such
amount, together with an amount equal to the product of (i) the average,
computed for the period referred to in clause (iii) below, of the weighted
average interest rate paid by the Agent for federal funds acquired by the Agent
during each day included in such period, times (ii) the amount payable by such
Lender pursuant to this Section 2.15, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including the date the Issuing
Bank made the payment on the Letter of Credit or Bankers Acceptance to the date
on which such Lender paid such amount pursuant to this paragraph, and the
denominator of which is 365. The responsibility of the Issuing Bank to the
Borrower and the Lenders shall be only to determine that the documents
(including each draft) delivered under each Letter of Credit or Bankers
Acceptance shall be in conformity in all material respects with such Letter of
Credit or Bankers Acceptance and the Agent shall promptly pay to the Issuing
Bank the amounts so received by it from the Lenders. Any payment made by a
Lender pursuant to this Section 2.15 to purchase a participation interest in any
payment made on a Letter of Credit or Bankers Acceptance shall not constitute a
Loan and shall not relieve the Borrower of its obligation to reimburse such
amount.
(k) Section 2.24 is amended and restated in its entirety to read as
follows:
5
2.24 Usage Fee and Extension Fees. In addition to the Facility Fee,
Commitment Fee, and all other amounts payable hereunder, the Borrower shall pay
to the Agent for the account of each Lender, (a) on the first Business Day in
each month, commencing on February 1, 2005 and continuing until the Facility
Termination Date, a fee in the amount of 0.10% (10 basis points) of the highest
amount of Loans that were outstanding on any day in the immediately preceding
month, (b) on May 16, 2005, a fee in the amount of $700,000, (c) on June 30,
2005, a fee in the amount of $700,000, and (d) on the date that the Obligations
are paid in full and the Commitment hereunder is terminated, a fee in the amount
of $1,750,000, provided that, (i) the fee payable under clause (b) of this
paragraph will be waived by the Lenders if, prior to May 16, 2005, the
Obligations are paid in full and all Letters of Credit and Bankers Acceptances
expire, are returned to the Agent for cancellation or are secured with cash
collateral in a manner satisfactory to the Agent (except that such return and
such cash collateral will not be required if the Obligations are paid in full
with the proceeds of a refinancing as to which Fleet National Bank is one of the
parties that may issue letters of credit thereunder) and the Commitment
hereunder is terminated, (ii) the fee payable under clause (c) of this paragraph
will be waived by the Lenders if, prior to June 30, 2005, the Obligations are
paid in full and all Letters of Credit and Bankers Acceptances expire, are
returned to the Agent for cancellation or are secured with cash collateral in a
manner satisfactory to the Agent (except that such return and such cash
collateral will not be required if the Obligations are paid in full with the
proceeds of a refinancing as to which Fleet National Bank is one of the parties
that may issue letters of credit thereunder) and the Commitment hereunder is
terminated, and (iii) the fee payable under clause (d) of this paragraph will be
waived by the Lenders if, prior to the Facility Termination Date, all Letters of
Credit and Bankers Acceptances expire, are returned to the Agent for
cancellation or are secured with cash collateral in a manner satisfactory to the
Agent (except that such return and such cash collateral will not be required if
the Obligations are paid in full with the proceeds of a refinancing as to which
Fleet National Bank is one of the parties that may issue letters of credit
thereunder) and the Commitment hereunder is terminated and the Obligations are
paid in full in cash with the proceeds from a refinancing provided by lenders
that include the Agent or an affiliate of the Agent, it being understood that
nothing herein is intended to or shall constitute a commitment by the Agent or
any affiliate of the Agent to provide any such financing and that any such
subsequent financing by the Agent or any affiliate of the Agent shall be
provided solely in such Person's sole and absolute discretion or in accordance
with any binding commitment letter that may (but need not) be hereafter issued
by any such Person.
(l) Section 6.12.1 is amended and restated in its entirety to read as
follows:
6.12.1 Ratio of Consolidated Indebtedness to Consolidated Tangible Net
Worth. The Borrower and its Subsidiaries shall maintain a ratio of Consolidated
Indebtedness to Consolidated Tangible Net Worth that is less than or equal to
2.25 to 1.00 at all times.
6
(m) Section 6.12.3 is amended and restated in its entirety to read as
follows:
6.12.3 Minimum EBITDA. The Borrower and its Subsidiaries shall have
consolidated EBITDA for the period commencing on January 1, 2005 and ending on
the last day of each of the following months that is not less than (i.e. shall
not be negative by more than) the following amounts: ($9,400,000) through March
31, 2005; ($9,900,000) through April 30, 2005; ($9,450,000) through May 31,
2005; ($8,225,000) through June 30, 2005; ($7,475,000) through July 31, 2005;
($3,450,000) through August 31, 2005; ($5,700,000) through September 30, 2005;
($3,250,000) through October 31, 2005; ($1,850,000) through November 30, 2005;
and ($2,850,000) through December 31, 2005.
(n) Section 6.12.7 is amended and restated in its entirety to read as
follows:
6.12.7 Capital Expenditures. During the period commencing on January 1,
2005 and ending on the last day of each of the following months, the Borrower
and its Subsidiaries shall not make cumulative capital expenditures (including
Capitalized Lease Obligations incurred during such period, whether or not
payable in such period) of more than the following amounts in the aggregate:
$2,000,000 through March 31, 2005; $2,500,000 through April 30, 2005; $3,000,000
through May 31, 2005; $3,500,000 through June 30, 2005; $4,000,000 through July
31, 2005; $4,500,000 through August 31, 2005; $5,250,000 through September 30,
2005; $5,750,000 through October 31, 2005; $6,250,000 through November 30, 2005;
and $6,750,000 through December 31, 2005.
(o) The following Section 6.22 is added after Section 6.21:
6.22 Mortgage Modification. On or before April 10, 2005, the Borrower shall
(a) execute and deliver to the Agent a modification of the Mortgage in form and
substance acceptable to the Agent, which modification will reflect the changes
made to the Commitments by the Sixth Amendment hereto, and (b) cause to be
delivered to the Agent a title insurance endorsement insuring that the Mortgage
continues to be valid and enforceable after the recording of such mortgage
modification, with the same priority that it had prior to the execution of the
Sixth Amendment hereto.
(p) The form of Exhibit C-1 is deleted in its entirety and replaced with
Exhibit C-1 attached to this Amendment.
2. The amendments set forth in Section 1 hereof shall become effective as
of the date that the following conditions shall have been satisfied (the date
that such amendments take effect being the "Amendment Effective Date"),
provided, however, that the amendments set forth in Section 1 hereof shall not
take effect unless such conditions have been satisfied on or before March 31,
2005.
7
(a) The Lenders shall have executed this Amendment and shall have received
a copy of this Amendment duly executed by the Borrower, the Borrowing
Subsidiaries and the Guarantors.
(b) The Borrower shall have paid to counsel for the Agent the amount of
reasonable fees and disbursements owed to such counsel in connection with the
Credit Agreement, this Agreement and matters related hereto and thereto, and the
Borrower shall have paid the fees and disbursements owed to any consultants
retained by the Agent in connection with the Credit Agreement and the Loans.
3. Except as amended, modified or supplemented by this Amendment, all of
the terms, conditions, covenants, provisions, representations, warranties and
conditions of the Credit Agreement shall remain in full force and effect and are
hereby acknowledged, ratified, confirmed and continued as if fully restated
hereby.
4. The invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or provision hereof
or contained in the Credit Agreement.
5. It is the intention of the parties hereto that this Amendment shall not
constitute a novation and shall in no way adversely affect or impair performance
of the obligations of the Borrower under the Credit Agreement.
6. Regardless of whether the conditions in Section 2 hereof are satisfied
and whether or not the amendments in Section 1, the Borrower hereby confirms and
ratifies the Obligations incurred by it and the Borrowing Subsidiaries under the
Credit Agreement and the other Loan Documents, and acknowledges that the
Borrower has no defense, offset, counterclaim, or right of recoupment against
the Agent or any Lender with respect to any of such Obligations or any other
matter.
7. This Amendment is to be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts (without regard to it conflict of laws
or choice of law principles).
8. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
thereto may execute this Agreement by signing any such counterpart. This
Amendment shall be effective when it has been executed by the Borrower, each of
the Borrowing Subsidiaries, the Guarantors, the Agent and the each of the
Lenders.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
8
IN WITNESS WHEREOF, the foregoing has been executed as an instrument under
seal as of the date first above written.
ENSESCO GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxxx-XxXxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxx-XxXxxxxxxx
Title: President & CEO
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
FLEET NATIONAL BANK
By: /s/ C. Xxxxxxxxxxx Xxxxx
-----------------------------
Name: C. Xxxxxxxxxxx Xxxxx
Title: Senior Vice President
LASALLE BANK NATIONAL
ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: First Vice President
Acknowledged and agreed to:
Guarantor ENESCO INTERNATIONAL LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxxx X . Xxxxxxx
Title: Treasurer
9
Acknowledged and agreed to:
(Borrowing Subsidiaries)
ENESCO INTERNATIONAL (H.K.)
LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Director
XXXXX MANUFACTURING, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer & Treasurer
10
