AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT
Exhibit
10.24
AMENDMENT NUMBER FOUR
TO
THIS AMENDMENT NUMBER FOUR TO LOAN
AND SECURITY AGREEMENT (this “Amendment”), dated as of March 27, 2009, is
entered into between FIRST
CAPITAL WESTERN REGION, LLC (“Lender”), and XXXX’X, INC., a Delaware
corporation (“Borrower”), in light of the following facts:
RECITALS
WHEREAS,
Borrower and Lender have previously entered into certain Loan and Security
Agreement, dated as of May 30, 2008, as amended by that certain Amendment Number
One to Loan and Security Agreement dated July 30, 2008 , as amended by that
certain Amendment Number Two to Loan and Security Agreement dated September 3,
2008, and as amended by that certain Amendment Number Three to Loan and Security
Agreement dated September 24, 2008 (the “Agreement”).
WHEREAS,
Borrower has requested that Lender reset the minimum tangible net worth and
revise the numerator of the fixed charge coverage ratio in Item 21(a) of the
Schedule to include stock option expenses and stock payments in lieu of
cash payments.
WHEREAS,
Lender has agreed to Borrower's request subject to the terms and conditions
contained in this Amendment.
WHEREAS,
Borrower and Lender wish to amend the Agreement as set forth in this
Amendment.
NOW,
THEREFORE, the parties agree as follows:
1. DEFINITIONS. 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.
2. AMENDMENTS. Effective
as of the date of this Amendment, the Agreement is amended in the following
respects:
(a) Modification
of Advance Rate for Eligible Inventory. Item 1(a)(ii)(B) of
the Schedule to
the Agreement is deleted in its entirety and is replaced with a new Item 1(a)(ii)(B) as
follows:
(B) An
amount equal to the least of:
1. $1,000,000,
2. For
the period from June 1 through November 30 of each calendar year, an amount
equal to 125% of amount calculated pursuant to Item 1(a)(ii)(A), and
for the period from December 1 through May 31 of each calendar year, an amount
equal to 150% of amount calculated pursuant to Item 1(a)(ii)(A),
and
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3. An
amount equal to (x) 50% of the dollar value (determined at the lower of cost or
market value) of Eligible Inventory located at Borrower’s premises located at
12930 and 00000 Xxxxx Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
plus (y) 50% of
the dollar value (determined at the lower of cost or market value) of Eligible
Inventory consisting of finished goods (and not raw materials) located at Valley
Distributing & Storage Company’s warehouse in Xxxxxx-Xxxxx, Pennsylvania,
plus (z) 50% of
the dollar value (determined at the lower of cost or market value) of Eligible
Inventory consisting of finished goods (and not raw materials) located at United
Warehouses in Seattle, Washington,
(b) Increase
Interest Margin. Item 8 of the Schedule to the
Agreement is deleted in its entirety and is replaced with a new Item 8 as
follows:
8. Interest
Margin: 7.75%
(c) Change in
Fixed Charge Coverage Ratio Covenant. Item 21(a) of the
Schedule to the
Agreement is deleted in its entirety and is replaced with a new Item 21(a) as
follows:
(a) Borrower
shall maintain a Fixed Charge Coverage Ratio (1) for the one month period ending
April 30, 2009, (2) for each of the three-month periods ending on the last day
of each calendar month from May 2009 through November 2009, and (3)
for each of the twelve-month periods ending on the last day of each calendar
month thereafter for the balance of the term of this Agreement, of at least 1.0
to 1.0. As used herein, “Fixed Charge Coverage
Ratio” means the ratio of Borrower’s (i) net income (excluding
extraordinary gains) before provision for interest expense, taxes, depreciation
and amortization, less cash taxes paid and unfinanced capital expenditures
during such period, plus stock option expenses and stock payments in lieu of
cash during the applicable period; to (ii) interest expense, plus payments of
principal actually made or scheduled to be made with respect to indebtedness
(other than scheduled but unpaid payments on Subordinated Debt and principal
payments on revolving loans under this Agreement), plus payments with respect to
capitalized leases, plus dividends and distributions during such
period.
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(d) Change in
Minimum Tangible Net Worth Covenant. Item 21(b) of the
Schedule to the
Agreement is deleted in its entirety and is replaced with a new Item 21(b) as
follows:
(b) As
of February 28, 2009, Borrower shall have a Tangible Net Worth of at least
$2,700,000. Thereafter, as of the last day of each month, Borrower’s
required minimum Tangible Net Worth shall be increased by 50% of the Borrower’s
net income for the calendar month then ended (without reduction for any losses
during any such calendar month). As used herein, “Tangible Net Worth”
means, as of any date, the total assets of Borrower minus the total liabilities
of Borrower calculated in conformity with GAAP, less all amounts due from
Borrower’s Affiliates and the amount of all intangible items reflected
therein.
(e) Addition
of New Maximum Negative EBITDA Covenant. Item 21(c) of the
Schedule to the
Agreement is deleted in its entirety and is replaced with a new Item 21(c) as
follows:
(c) Borrower’s
net loss (excluding extraordinary gains) before provision for interest expense,
taxes, depreciation and amortization, less cash taxes paid and unfinanced
capital expenditures for the one month period ending February 28, 2009, shall
not exceed $50,000, and for the one month period ending March 31, 2009, shall
not exceed $50,000.
3. WAIVER OF COVENANT
VIOLATIONS. Lender hereby agrees to waive the Defaults that
resulted from the failure of Borrower to be in compliance with the Fixed Charge
Coverage Ratio for the periods ending November 30, 2008, December 31, 2008 and
January 2009, and from the failure of Borrower to have the minimum Tangible Net
Worth as of November 30, 2008, December 31, 2008, and January 31,
2009. Borrower acknowledges and agrees that the waiver contained
herein is a one time waiver and that Borrower must be in compliance with all
terms and conditions of the Agreement, including all financial
covenants.
4. FEE FOR
WAIVER. Upon execution of this Amendment, in consideration of
Lender’s agreeing to waive the Defaults pursuant to Section 3 of this Amendment,
Borrower agrees to pay Lender a fee in the amount of $10,000 (of which $7,500
has already been charged to Borrower), which will be fully earned on the date of
this Amendment and shall be non-refundable. Lender is authorized to
charge Borrower’s loan account for the remaining balance of such
fee.
5. REPRESENTATIONS AND
WARRANTIES. Borrower hereby affirms to Lender that all of
Borrower's representations and warranties set forth in the Agreement are true,
complete and accurate in all respects as of the date hereof.
6. LIMITED
EFFECT. Except for the specific amendments contained in this
Amendment, the Agreement shall remain unchanged and in full force and
effect.
7. COUNTERPARTS;
EFFECTIVENESS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so executed and delivered shall be deemed to be an original. All
such counterparts, taken together, shall constitute but one and the same
Amendment. This Amendment shall become effective upon the execution
of this Amendment by each of the parties hereto.
[Signatures
are on the next page]
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IN
WITNESS WHEREOF, Lender and Borrower have executed this Amendment.
XXXX’X,
INC.,
a
Delaware corporation
By /s/
Xxxxx Xxxx
Name:
Xxxxx Xxxx
Title:
CEO
FCC, LLC, a Florida limited
liability company
doing
business as First Capital Western Region, LLC
By /s/
Xxxx X. Xxxxx
Name:
Xxxx X. Xxxxx
Title:
Vice President
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ACKNOWLEDGMENT AND
REAFFIRMATION OF GUARANTOR
The
undersigned hereby acknowledges that he executed a Continuing Guaranty, dated on
or around May 30, 2008 (the “Guaranty”), with respect to the present and future
obligations of Borrower owing to Lender. The undersigned hereby
acknowledges the foregoing Amendment, consent to its terms, and reaffirms his
Guaranty. The undersigned further acknowledges that nothing in the
Guaranty obligates Lender to notify the undersigned of any changes in the
financial accommodations made available to Borrower or to seek future
reaffirmations of the Guaranty, even if the Agreement is further amended; and no
requirement to so notify the undersigned or to seek reaffirmations in the future
shall be implied by the execution of this reaffirmation.
/s/
Xxxxxxxxxxx Xxxx
Xxxxxxxxxxx
Xxxx, an individual
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