EXHIBIT 10.35
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This Third Amendment to Loan and Security Agreement (the "AMENDMENT")
is made on July 9, 2001 by GMAC Business Credit, LLC ("LENDER") and ROCKY SHOES
& BOOTS, INC. and LIFESTYLE FOOTWARE, INC. ("BORROWERS").
RECITALS
A. Borrowers and Lender entered into a Loan and Security Agreement
dated September 18, 2000 (as amended from time to time, including by this
Amendment, the "LOAN AGREEMENT"). Capitalized terms used in this Amendment shall
have the meanings set forth in the Loan Agreement unless otherwise defined in
this Amendment.
B. Borrowers and Lender wish to amend the Loan Agreement as set forth
below.
THEREFORE, in consideration of the mutual promises and agreements of
the parties hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which is acknowledged, the parties agree as
follows:
TERMS AND CONDITIONS
1. Section 1(a) of the Loan Agreement is amended in its entirety to
read as follows:
(a) A revolving line of credit (the "REVOLVING LOANS") up to the
lesser of the "Borrowing Base" (defined below) or $56,000,000.00
minus the from time-to-time principal balance of the Term Loan
(the "REVOLVING ADVANCE LIMIT"). The Borrowing Base is initially
(i) 80% of the aggregate outstanding amount of Eligible Accounts
PLUS (ii) 41% of the aggregate value of raw materials that are
Eligible Inventory PLUS (iii) from May 1 through October 31 of
each year, 82% of the aggregate value of Retail Inventory which is
Eligible Inventory and 76% of the aggregate value of finished
goods that are Eligible Inventory; PLUS (iv) from November 1 of
each year through April 30 of the succeeding year, 75% of the
aggregate value of Retail Inventory which is Eligible Inventory
and 72% of the aggregate value of finished goods that are Eligible
Inventory, PLUS (v) 18% of the aggregate value of work in process
which is Eligible Inventory, MINUS (vi) the Dilution Reserve MINUS
(vii) the Availability Reserve. Notwithstanding the
foregoing, (A) aggregate advances against Eligible Inventory shall
not exceed $27,500,000 during the period of May through October of
each year and $23,000,000 during other periods, (B) aggregate
advances against Eligible Inventory in Puerto- Rico shall not
exceed $2,000,000 at any time, (C) aggregate advances against raw
materials that are Eligible Inventory shall not exceed $10,000,000
at any time, (D) aggregate advances against Proprietary Boxes
(which are part of raw materials) which are Eligible Inventory
shall not exceed the lesser of 5% of the aggregate value of raw
material Inventory or $350,000, (E) aggregate advances against
work in process that is Eligible Inventory shall not exceed
$1,000,000, (F) during the period June I through September 30 of
each year, In-transit Inventory that otherwise qualifies as
Eligible Inventory will be treated for Borrowing base purposes as
if the same were finished goods in a Borrower's possession;
provided that advances against In-transit Inventory shall not
exceed $4 million, and (G) advance rates against Eligible
Inventory will be adjusted semi-annually in September and March of
each year upon Lender's receipt of updated appraisals such that
the applicable advance rate is equal to 90% of the appraised net
orderly liquidation value of the applicable type or category of
Inventory, based on appraisals reasonably acceptable to Lender.
2. The definition of Availability Reserve in Section 2 of the Loan
Agreement is amended in its entirety to read as follows:
"Availability Reserve" means $1,5 million through October 31, 2001
and $3 million thereafter; PROVIDED, HOWEVER, if after receipt of
Borrower's fiscal 2001 audited financial statement, no Event of
Default has occurred and is continuing, the Availability Reserve
will be reduced to zero.
3. The following definition is added to Section 2 of the Loan
Agreement:
"In-transit Inventory" means finished goods Inventory for which a
Borrower has paid the full purchase price (or issued a letter of
credit for the full purchase price), which is in the possession of
a common carrier or other shipper acceptable to Lender and which
is evidenced by documentation acceptable to Lender.
4. Subsection 5 of the definition of Eligible Inventory in Section
2 of the Loan Agreement is amended in its entirety to read as
follows:
(5) Except for In-transit Inventory, the Inventory is in a
Borrower's possession, and if the Inventory is located on promises
not owned by a Borrower, the landlord or owner of such premises
must have waived its distraint, lien, and similar rights with
respect to such Inventory and must have agreed in a written
agreement in form reasonably satisfactory to Lender.
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5. The following is added as subpart 14 of the definition of Eligible
Inventory:
(14) If the Inventory is In-transit Inventory, the Inventory is
insured on terms acceptable to Lender and all such insurance
policies and proceeds. are assigned to Lender.
6. Upon execution of this Amendment, Borrowers shall pay Lender an
amendment fee of $25,000.00 which will be fully earned on the date
of this Amendment and may be charged to Borrowers' Revolving
Loans.
7. Except as amended by this Amendment, all the terms and conditions
in the Loan Agreement remain in full force and effect.
8. This Amendment constitutes the entire agreement of the parties in
connection with the subject matter of this Amendment and cannot be
changed or terminated orally. All prior agreements,
understandings, representations, warranties and negotiations
regarding the subject matter hereof, if any, are merged into this
Amendment.
9. Borrowers and the signatory noted below represent that all
necessary corporate action to authorize Borrowers to enter into
this Amendment has been taken, including, without limitation,
board of directors approval and resolutions necessary to authorize
Borrowers' execution of this Amendment.
10. This Amendment may be executed in counterparts, each of which when
so executed and delivered shall be deemed an original, and all of
such counterparts together shall constitute but one and the same
agreement.
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11. This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of Michigan.
GMAC BUSINESS CREDIT, LLC ROCKY SHOES & BOOTS, INC.
By: /S/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
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Print Name: Xxxxxxx Xxxxxxxx Xxxxx Xxxxxxxxx
------------------------ Executive Vice President
Title: Vice President
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LIFESTYLE FOOTWEAR, INC.
By: /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
Executive Vice President
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