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Exhibit 4.7
AMENDMENT NO. 7
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 7 ("Amendment No. 7") is entered into as of
February 17, 1998, by and between NATIONAL RECORD MART, INC. ("Borrower") and
FLEET CAPITAL CORPORATION ("Lender").
BACKGROUND
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Borrower and Lender are parties to a Loan and Security Agreement dated
June 11, 1993 (as amended by that certain (a) letter agreement dated January
12, 1995; (b) letter agreement dated February 24, 1995; (c) letter agreement
dated September 8, 1995; (d) Waiver and Amendment No. 4 dated July 19, 1996
(e) Amendment Xx. 0 xxxxx Xxxxxxx 00, 0000, (x) Letter Agreement dated June 25,
1997 (g) Amendment No. 6 to Loan and Security Agreement dated October 20, 1997
and as same may be further amended, modified, restated or supplemented from
time to time, the "Loan Agreement") pursuant to which Lender provides Borrower
with certain financial accommodations.
Borrower has requested that Lender amend the Loan Agreement to, among
other things, (i) extend the term of the Loan Agreement, (ii) increase the
total credit facility (iii) reduce the interest rates and Lender is willing to
do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrower by
Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. AMENDMENT TO LOAN AGREEMENT
(a) Section 1.1 of the Loan Agreement is hereby amended by
deleting the definition "Borrowing Base," "Maximum Revolving Amount" and "Note"
in their entirety and inserting the following:
BORROWING BASE - as at any date of determination
thereof, an amount equal to the lesser of:
(a) the Maximum Revolving Amount; or
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(b) an amount equal to:
(i) sixty-five (65%) or such lesser
percentage as Lender may, in the good faith exercise
of its business judgment, determine from time to
time) of the value of Eligible Inventory at such date
consisting of finished goods, calculated on the basis
of the lower of cost or market with the cost of
finished goods calculated on an average cost basis:
PLUS (ii) an amount equal to $1,500,000 solely
during the period commencing on October 1 in each
year of the term hereof and ending on December 31 of
each such year;
MINUS (iii) in Lender's sole and absolute
discretion, an amount equal to forty percent (40%)
of all gift certificates issued by Borrower and then
outstanding;
MINUS (iv) in Lender's sole and absolute
discretion, an amount equal to one hundred percent
(100%) of Eligible Inventory subject to recorded
Liens (other than Permitted Liens); and
MINUS (v) any amounts which Lender may pay pursuant
to any of the Loan Documents for the account of
Borrower.
MAXIMUM REVOLVING AMOUNT - Twenty-Eight Million
Dollars ($28,000,000).
NOTE - the secured promissory note executed by
Borrower in favor of Lender to evidence the
Revolving Loans as some may be amended and restated
from time to time.
(b) The introductory paragraph of Section 2 of the Loan
Agreement is hereby amended by deleting the words and figures "Twenty Seven
Million Five Hundred Thousand Dollars ($27,500,000) for the period of October
20, 1997 through December 18, 1997 and Twenty-six Million Dollars ($26,000,000)
at all other times" and inserting "TWENTY-EIGHT MILLION DOLLARS ($28,000,000)"
in their place and stead.
(c) Section 3.1 of the Loan Agreement is hereby amended by
(1) deleting subsections (C) and (E) in their entirety and inserting the words
"Intentionally Omitted" in their place, and (ii) amending subsections (A) and
(B) in their entirety as follows:
(A) INTEREST. Interest shall accrue on the
principal amount of Prime Loans outstanding at the
end of each day (computed on the actual days elapsed
over a year of 360 (days) at a fluctuating rate per
annum equal to the one quarter of one percent (.25%)
above the Base Rate. After the date hereof, the
foregoing rate of interest shall be
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increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Base
Rate, with such adjustments to be effective as of
the opening of business on the day that any such
change in the Base Rate becomes effective. The Base
Rate in effect on the date hereof shall be the Base
Rate effective as of the opening of business on the
date hereof, but if this Agreement is executed on a
day that is not a Business Day, the Base Rate in
effect on the date hereof shall be the Base Rate
effective as of the opening of business on the last
Business Day immediately preceding the date hereof.
Eurodollar Loans shall bear interest on the
principal amount thereof owing, at a rate per annum
equal to two and three eighths percentage points
(2.375%) above the Eurodollar Rate. Notwithstanding
the above, interest on any Prime Loan with a balance
of less than zero at the end of any day, at a time
when all loans in total are greater than zero, shall
accrue at a fluctuating rate per annum equal to
three (3%) below the Base Rate.
(B) RATE REDUCTIONS. Provided that no Default or
Event of Default has occurred which is then
continuing and following receipt by Lender ("Receipt
Date") of Borrower's annual financial statements in
accordance with Section 9.1(J)(i) hereof ("Annual
Statements") indicating Cash Flow for such Fiscal
year of not less than $500,000 then, as of the first
day of the next succeeding Fiscal Year [or "as of
the Receipt Date"] (a "Rate Reduction Condition"):
interest shall accrue (a) on Prime Loans at a
fluctuating rate per annum equal to the Base Rate
and (b) on Eurodollar Loans at a rate per annum
equal to two percentage points (2%) above the
Eurodollar Rate ((a) and (b) above are collectively
referred to as the "Rate Reduction"); PROVIDED,
HOWEVER, in no event shall any Eurodollar Loan then
outstanding be affected by the Rate Reduction.
(d) Section 3.1(E) of the Loan Agreement is hereby deleted
in its entirety and the words "Intentionally Omitted" are inserted in its place.
(e) Section 3.1(K) of the Loan Agreement is hereby amended
in its entirety as follows:
(K) EXAMINATION AND INSPECTION. Borrower shall pay
to Lender on demand in connection with Lender's
examination of Borrower's books and records
out-of-pocket costs and expenses for loan analysts
and loan administrators. Lender, in its sole
discretion, may engage outside consultants for any
such examination and inspection.
(f) Section 3.2 of the Loan Agreement is hereby amended in
its entirety as follows:
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3.2. TERM OF AGREEMENT. Subject to Lender's right
to cease making Loans to Borrower at any time upon
the occurrence and during the continuance of a
Default or Event of Default, this Agreement shall be
in effect for a period of ten (10) years from June
11, 1993 through and including June 10, 2003 (the
"Original Term").
(g) Section 3.3(B) is hereby amended in its entirety as
follows:
(B) At the effective date of any voluntary such
termination by Borrower, Borrower shall pay to
Lender (in addition to the then outstanding
principal, accrued interest and other charges owing
under the terms of this Agreement and any of the
other Loan Documents including prepayment premiums
under any promissory note from Borrower to Lender),
as liquidated damages for the loss of the bargain
and not as a penalty, an amount equal to two percent
(2%) of the Maximum Revolving Amount if during the
period February 17, 1998 through February 16, 1999;
one percent (1%) of the Maximum Revolving Amount if
termination occurs during the period February 17,
1999 through February 16, 2000; and one half of one
percent (.50%) of the Maximum Revolving Amount
during the period February 17, 2000 through February
16, 2001. If termination occurs after the last of
such periods, no termination charge shall be payable.
(h) Section 9.1(J)(iv) is hereby amended in its entirety as
follows:
as soon as available, and in any event no later than
thirty (30) days following the commencement of each
Fiscal Year of Borrower, a merchandising plan for
such Fiscal Year; and
(i) Section 9.3 of the Loan Agreement is hereby amended by
deleting subparagraphs (A) and (C) in their entirety and inserting in their
place in each instance the words "Intentionally Omitted."
(j) Exhibit A to this Amendment No. 7 is hereby added to the
Loan Agreement.
3. CONDITIONS OF EFFECTIVENESS. This Amendment No. 7 shall become
effective upon satisfaction of the following conditions precedent: Lender shall
have received (a) four (4) copies of this Amendment No. 7 executed by Borrower;
(b) a duly executed Fourth Amended and Restated Revolving Credit Note; (c)
evidence of the authorization by the Board of Directors of Borrower of the
execution of this Amendment No. 7; (d) an acknowledgement from NRM Investment,
Inc. ("NRM") of the continuing validity of the Subordination Agreement dated
May 9, 1996 between Lender and NRM; and (e) such other certificates,
instruments, documents and agreements as may be required by Lender or its
counsel, each of which shall be in form and substance satisfactory to Lender
and its counsel.
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4. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants as follows:
(a) This Amendment No. 7 and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrower and are enforceable
against Borrower in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment No. 7, Borrower hereby
reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have been remade
as of the effective date of this Amendment No. 7.
(c) Borrower has no defense, counterclaim or offset with respect to
the Loan Agreement.
(d) No Default or Event of Default would exist after giving effect to
this Amendment No. 7.
5. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) Except as specifically amended herein, the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment No. 7
shall not operate as a waiver of any other right, power or remedy of Lender,
nor constitute a waiver of any other provision of the Loan Agreement, or any
other documents, instruments or agreements executed and/or delivered under or
in connection therewith.
6. GOVERNING LAW. This Amendment No. 7 shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the laws of
the State of New York.
7. HEADINGS. Section headings in this Amendment No. 7 are included
herein for convenience of reference only and shall not constitute a part of
this Amendment No. 7 for any other purpose.
8. COUNTERPARTS. This Amendment No. 7 may be executed by the parties
hereto in one or more counterparts, each of which taken together shall be
deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF, this Amendment No. 7 has been duly executed as of
the day and year first written above.
NATIONAL RECORD MART, INC.
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
FLEET CAPITAL CORPORATION
By: /s/ Xxx Xxxxxx
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Name: Xxx Xxxxxx
Title: Vice President
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EXHIBIT A
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$28,000,000.00 New York, New York
as of February 17, 1998
This Fourth Amended and Restated Revolving Credit Note is executed and
delivered under and pursuant to the terms of that certain Loan and Security
Agreement dated June 11, 1993 (as amended by a letter agreement dated January
12, 1995, a letter agreement dated February 24, 1995, a letter agreement dated
September 8, 1995, Waiver and Amendment No. 4 dated July 19, 1996, Amendment
No. 5 dated October 17, 1996, Letter Agreement dated June 25, 1997, Amendment
No. 6 to Loan and Security Agreement dated October 20, 1997 and as same may be
further amended, supplemented or modified from time to time, the "Loan
Agreement") by and between National Record Mart, Inc., a Delaware corporation
having its chief executive office at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxx
00000 and Fleet Capital Corporation (the "Lender"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Loan
Agreement.
FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of
Lender at Lender's offices located at 000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxx 00000 or at such other place as the holder may from time to time
designate:
(i) the principal sum of TWENTY EIGHT MILLION AND 00/100 DOLLARS,
($28,000,000.00) or, if different from such amount, the unpaid principal
balance of the Revolving Credit Loan as may be due and owing from time to time
under the Loan Agreement, payable in accordance with the provisions of the
Loan Agreement and subject to acceleration upon the occurrence of an Event of
Default under the Loan Agreement or earlier termination of the Loan Agreement
pursuant to the terms thereof; and
(ii) interest on the principal amount of this Note from time to
time outstanding until such principal amount is paid in full at such interest
rates and at such times as are specified in the Loan Agreement. In no event,
however, shall interest hereunder exceed the maximum interest rate permitted by
law. Upon and after the declaration of an Event of Default, and during the
continuation thereof, interest shall be payable at the Default Rate.
This Note is the Note referred to in the Loan Agreement and is
secured, INTER ALIA, by the Liens granted to Lender in the Collateral pursuant
to the Loan Agreement and the Loan Documents and the various other agreements
related thereof delivered by the Borrower to the Lender, is entitled to the
benefits of the Loan Agreement and the Loan Documents and is subject to all of
the agreements, terms and conditions therein contained.
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This Note may be prepaid, in whole or in part, on the terms and
conditions set forth in the Loan Agreement.
If an Event of Default under Section 11.1(I) of the Loan Agreement
shall occur, then this Note shall immediately become due and payable, without
notice, together with reasonable attorneys' fees if the collection hereof is
placed in the hands of an attorney. If any other Event of Default shall occur
under the Loan Agreement which is not cured within any applicable grace period,
then this Note may, as provided in the Loan Agreement, be declared to be
immediately due and payable, without notice, together with reasonable
attorneys' fees if the collection hereof is placed in the hands of an attorney.
This Note is being delivered in the State of New York, and shall be
construed and enforced in accordance with the laws of such State for contracts
to be fully performed within the State of New York. Any judicial proceeding by
the Borrower against the Lender involving, directly or indirectly, any matter or
claim in any way arising out of, related to or connected with this Amended and
Restated Note or any related agreement, shall be brought only in federal or
state court located in the City of New York, State of New York. Any judicial
proceeding brought against Borrower with respect to any of the Obligations, or
with respect to this Note or any related agreement may be brought in any court
of competent jurisdiction in the City of New York, State of New York, United
States of America, and, by execution and delivery of this Amended and Restated
Note, Borrower accepts, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Note or any related agreement.
Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of the Lender to bring proceedings against the
Borrower in the courts of any other jurisdiction. Borrower waives any objection
to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon FORUM
NON CONVENIENS.
BORROWER EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AMENDED AND RESTATED
NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR (B) IN NAY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE HOLDER AND THE BORROWER HERETO OR ANY OF THEM WITH
RESPECT TO THIS AMENDED AND RESTATED NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE HOLDER OR
THE BORROWER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT TO THE WAIVER OF THE RIGHT TO
TRIAL BY JURY.
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This Note restates in its entirety and is given in substitution for and in
replacement of (but not in satisfaction of) that certain Third Amended and
Restated Revolving Credit Note dated as of October 20, 1997 from Borrower to
Lender in the original principal amount of $27,500,000.
Borrower expressly waives any presentment, demand, protest, notice of
protest, or notice of any kind except as expressly provided in the Loan
Agreement.
Witness: NATIONAL RECORD MART, INC.
/s/ Xxxxx Xxxxxxxxxx By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Its: Senior Vice President and
Chief Financial Officer
STATE OF PENNSYLVANIA )
:ss.:
COUNTY OF ALLEGHENY )
On the 12th day of February, 1998, before me personally came Xxxxxxx
Xxxxxxx, to me known, who being by me duly sworn, did depose and say that she is
the Senior V.P./CFO of National Record Mart, Inc., the corporation described in
and which executed the foregoing instrument, and that she was authorized to sign
her name thereto.
NOTARIAL SEAL /s/ Xxxx X. Xxxxxxxx
XXXX X. XXXXXXXX, Notary Public -----------------------
Pittsburgh, Allegheny County Notary Public
My Commission Expires June 27, 1998
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