SECOND AMENDMENT TO CREDIT AGREEMENT
Exhibit 4.26
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this “Amendment”) is made as of March 20, 2009, and entered
into by and among KIDS LINE, LLC, a Delaware limited liability company (“Kids Line”),
SASSY, INC., an Illinois corporation (“Sassy”), LAJOBI, INC., a Delaware corporation
(“LaJobi”), I & J HOLDCO, INC., a Delaware corporation (“I & J”), COCALO, INC., a
California corporation (“CoCaLo” and together with Kids Line, Sassy, LaJobi and I & J
collectively, the “Borrowers” and each individually, a “Borrower”), XXXX XXXXXX AND
COMPANY, INC., a New Jersey corporation (“Parent”), as a Guarantor (in such capacity, a
“Guarantor”, and together with the Borrowers, the “Loan Parties”) and as the Loan
Party Representative for the Borrowers (in such capacity, the “Loan Party Representative”),
the Lenders (as defined in the Credit Agreement referred to below) party hereto and BANK OF
AMERICA, N.A., as successor by merger to LASALLE BANK NATIONAL ASSOCIATION (in its individual
capacity, together with its successors and assigns, “Bank of America”), as administrative
agent (in such capacity, together with its successors and assigns, the “Administrative
Agent”) for the Lenders party to the Credit Agreement defined below.
RECITALS
WHEREAS, the Borrowers, Loan Party Representative, the Lenders, certain other financial
institutions as Lenders and the Administrative Agent have entered into the Amended and Restated
Credit Agreement, dated as of April 2, 2008 (as amended, restated or otherwise modified from time
to time, the “Credit Agreement”; capitalized terms used in this Amendment and not defined
in this Amendment shall be defined in accordance with the Credit Agreement), pursuant to which the
Lenders have agreed to make loans and other financial accommodations, all upon the terms and
conditions set forth in the Credit Agreement;
WHEREAS, as of the date hereof, the Parent has become a Guarantor, and thus a Loan Party,
under the Credit Agreement and the Guaranty and Collateral Agreement pursuant to that certain
Joinder to Credit Agreement and Guaranty and Collateral Agreement, dated as of the date hereof,
among the Parent, as Guarantor, grantor, and Loan Party Representative, and the Administrative
Agent (the “Joinder Agreement”); and
WHEREAS, the Loan Parties have requested that the Administrative Agent and the Required
Lenders amend certain provisions of the Credit Agreement, all on the terms and subject to the
conditions of this Amendment.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:
ARTICLE I
AMENDMENTS
AMENDMENTS
Subject to the terms and conditions set forth in Article II of this Amendment, the
Credit Agreement is hereby amended as follows:
1.1 Section 1.1 is hereby amended to add the following definitions in appropriate
alphabetical order:
IP Sub means RB Trademark Holdco, LLC, a Delaware limited liability company.
IP Sub IP means the intellectual property owned by IP Sub.
IP Sub License Agreement means the License Agreement dated as of December 23, 2008
between IP Sub and The Xxxx Companies, Inc., as amended, restated or otherwise modified from
time to time, pursuant to which IP Sub licenses the IP Sub IP to The Xxxx Companies, Inc.
Net Parent Corporate Expenses means (1) for the Computation Period ending March 31,
2009, an amount equal to (A) 3.0 times the aggregate amount of cash corporate
expenses incurred by Parent during the Fiscal Quarter ending March 31, 2009 (as determined
consistent with past practices), to the extent deducted in determining EBITDA for such
Fiscal Quarter, minus (B) $3,000,000, (2) for the Computation Period ending June 30,
2009, an amount equal to (A) 1.0 times the aggregate amount of cash corporate
expenses incurred by Parent during the year to date period ending June 30, 2009 (as
determined consistent with past practices), to the extent deducted in determining EBITDA for
such period, minus (B) $1,750,000 and (3) for the Computation Period ending
September 30, 2009, an amount equal to (A) 0.33 times the aggregate amount of cash
corporate expenses incurred by Parent during the year to date period ending September 30,
2009 (as determined consistent with past practices), to the extent deducted in determining
EBITDA for such period, minus (B) $875,000; provided that the Net Parent Corporate
Expenses shall not be less than zero. The calculation of the Net Parent Corporate Expenses
for any period shall be set forth in a writing (in reasonable detail) delivered by Parent to
the Administrative Agent concurrently with delivery by Parent of the Compliance Certificate
relating to such period.
Xxxx Xxxxxx B Purchase Agreement means that certain Purchase Agreement dated as of
December 23, 2008 between the Parent and The Xxxx Companies, Inc. pursuant to which the
Parent sold its interests in the Xxxx Xxxxxx B Entities and related assets to The Xxxx
Companies, Inc.
Second Amendment Effective Date means March 20, 2009.
1.2 The definitions of Acquired Debt, Base Rate, Consolidated Net Income,
Domestic Wholly-Owned Subsidiary, EBITDA, Fiscal Year, Fixed Charge
Coverage Ratio, Interest Expense, Loan Documents, Loan Party,
Subsidiary, Total Debt and Wholly-Owned Subsidiary set forth in Section 1.1
are each hereby replaced in their entirety with the following, respectively:
Acquired Debt means mortgage Debt or Debt with respect to Capital Leases of a Person
existing at the time such Person became a Subsidiary or assumed by any Loan Party or a
Domestic Wholly-Owned Subsidiary of a Loan Party pursuant to a Permitted Acquisition (and
not created or incurred in connection with or in anticipation of such Permitted Acquisition)
which would be permitted pursuant to Section 11.4(d).
Base Rate: for any day, a per annum rate equal to the greater of (a) the Prime Rate
for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR Rate for a
30 day interest period as determined on such day, plus 1.0%.
Consolidated Net Income means, with respect to the Parent and its consolidated
Subsidiaries, on a consolidated basis, for any period, the net income (or loss) of the
Parent and its consolidated Subsidiaries for such period, in each case, determined in
accordance with GAAP, but excluding any extraordinary after-tax gains and losses, any
non-recurring gains or losses, or any non-cash gains or losses from Asset Dispositions, any
non-cash restructuring charges, any tax refunds, net operating losses or other net tax
benefits and any after-tax gains and losses from discontinued operations.
Domestic Wholly-Owned Subsidiary means any wholly-owned direct or indirect
Subsidiary of a Loan Party which is organized under the laws of any state in the United
States of America. Unless the context otherwise requires, each reference to a Domestic
Wholly-Owned Subsidiary herein shall be a reference to a Domestic Wholly-Owned Subsidiary of
the Parent.
EBITDA means, with respect to the Parent and its consolidated Subsidiaries, (1) for
any period (or portion thereof) including any Fiscal Quarter ending on or prior to December
31, 2008, the following amount as calculated on a consolidated basis for Kids Line, Sassy,
I&J and their respective consolidated Subsidiaries for such period (or such portion thereof)
and (2) for any period (or portion thereof) including any Fiscal Quarter ending after
December 31, 2008, the following amount as calculated on a consolidated basis for the Parent
and its consolidated Subsidiaries for such period (or such portion thereof): (A)
Consolidated Net Income for such period (as adjusted as set forth below where applicable),
plus (B) with respect to any period which includes the Fiscal Quarter ended on
December 31, 2008, $651,000, plus (minus) (C) to the extent deducted (added)
in determining such Consolidated Net Income, (i) Interest Expense, (ii) income tax expense,
(iii) depreciation, (iv) amortization, (v) other non-cash charges (gains), (vi) if expensed,
reasonable costs, expenses and fees incurred in connection with the negotiation, execution
and delivery of the Loan Documents and the financings contemplated thereby, (vii) if
expensed, reasonable costs, expenses and fees incurred in connection with the negotiation,
execution and delivery of the Acquisition Documents and the transactions contemplated
thereby, but not to exceed $5,000,000, in aggregate, (viii) if expensed, the reasonable fees
and expenses paid to any Independent Director required to be retained by the Borrowers
pursuant to the terms of this Agreement and incremental auditor’s fees and expenses relating
to the preparation of separate audited financial statements of the Borrowers (distinct from
those of the Parent) as required pursuant to Section 10.1.1(a), (ix) non-cash transaction
losses (gains) due solely to fluctuations in currency values, in each case, during such
period, and (x) if expensed and incurred prior to March 31, 2009, severance, termination and
other similar payments made by the Parent in connection with the reductions in force
effected in connection with the sale of the Xxxx Xxxxxx B Entities pursuant to the Xxxx
Xxxxxx B Purchase Agreement in an amount not to exceed $500,000 in the aggregate for all
periods. It being agreed however that (X) for purposes of calculating the Total Debt to
EBITDA Ratios for Section 11.13.2, EBITDA of I&J and its consolidated Subsidiaries for the
Computation Period ending
December 31, 2008 shall be deemed to equal actual EBITDA of I&J and its consolidated
Subsidiaries for the nine (9) month period ending December 31, 2008 multiplied by 1.33 and
(Y) with respect to the Computation Periods ending March 31, 2009, June 30, 2009 and
September 30, 2009, EBITDA shall be reduced (but not increased) by the amount of the Net
Parent Corporate Expenses for such period.
Fiscal Year means the fiscal year of the Parent and its consolidated Subsidiaries,
which period shall be the 12-month period ending on December 31st of each calendar year.
References to a Fiscal Year with a number corresponding to any calendar year (e.g.,
“Fiscal Year 2007”) refer to the Fiscal Year ending on December 31st of such
calendar year.
Fixed Charge Coverage Ratio means, with respect to the Parent and its consolidated
Subsidiaries on a consolidated basis as of the last day of any Fiscal Quarter for the
Computation Period (or such shorter period as set forth below) then ending, the ratio of (a)
EBITDA for such period minus the sum of (i) all unfinanced Capital Expenditures of
such Persons incurred during such period, (ii) all cash taxes paid by the Parent on or after
the Second Amendment Effective Date on behalf of itself and its consolidated Subsidiaries
during such period, (iii) all cash dividends or distributions made prior to the Second
Amendment Effective Date by Borrowers to the Parent during such period for the sole purpose
of permitting the Parent to pay income taxes on behalf of Borrowers and (iv) all cash
dividends paid on or after the Second Amendment Effective Date by the Parent during such
period, to (b) the sum for such period for the Parent and its consolidated Subsidiaries on a
consolidated basis of all scheduled interest and principal payments of Debt, including the
principal component of any Capital Lease (in each case, whether or not in fact paid during
such period), paid (or which should have been paid) in cash. It being agreed however that
with respect to Fiscal Quarters ending on or prior to December 31, 2008, the Fixed Charge
Coverage Ratio shall be calculated using a Computation Period commencing as of April 2, 2008
and running through and including the last day of such Fiscal Quarter then ending.
Interest Expense means for any period the consolidated interest expense of the
Parent and its consolidated Subsidiaries, on a consolidated basis, for such period
(including all imputed interest on Capital Leases).
Loan Documents means this Agreement, the Notes, the Letters of Credit, the Master
Letter of Credit Agreement, the L/C Applications, the Agent Fee Letter, the Perfection
Certificate, the Collateral Documents, the Environmental Indemnity, the Post-Closing Letter,
the subordination agreements, if any, relating to any Subordinated Debt, any Joinder
Agreement substantially in the form of Exhibit G hereto pursuant to which any Person
becomes a Borrower or Guarantor and all other documents, instruments and agreements
delivered in connection with any of the foregoing, in each case, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
Loan Party means, collectively, each Borrower and each Guarantor (including the
Parent in its capacity as a Guarantor), and Loan Parties means all such Persons,
collectively. So long as the Loan Parties are in compliance in all material respects with
each of the provisions hereof and of the other Loan Documents, solely as such provisions
relate to IP Sub, IP Sub shall not be or be required to become a Loan Party.
Subsidiary means, with respect to any Person, a corporation, partnership, limited
liability company or other entity of which such Person owns, directly or indirectly, such
number of outstanding Capital Securities as have more than 50% of the ordinary voting power
for the election of directors or other managers of such corporation, partnership, limited
liability company or other entity. Unless the context otherwise requires, each reference to
Subsidiaries herein shall be a reference to Subsidiaries of the Parent.
Total Debt means the outstanding principal amount of all Debt (including Debt of
Capital Leases plus undrawn face amount of all Letters of Credit) of the Parent and its
consolidated Subsidiaries on a consolidated basis.
Wholly-Owned Subsidiary means, as to any Person, a Subsidiary all of the Capital
Securities of which (except directors’ qualifying Capital Securities) are at the time
directly or indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such
Person. Unless the context otherwise requires, each reference to a Wholly-Owned Subsidiary
herein shall be a reference to a Wholly-Owned Subsidiary of the Parent.
1.3 The pricing grid set forth in the definition of Applicable Margin in Section
1.1 is hereby replaced in its entirety with the following grid:
| Level | Total Debt | LIBOR | Base Rate | Non-Use | L/C Fee | |||||||||||||
| Status | to EBITDA Ratio | Margin | Margin | Fee Rate | Rate | |||||||||||||
I |
Greater than or equal to 3.75:1 | 4.25 | % | 3.25 | % | .80 | % | 4.25 | % | |||||||||
II |
Greater than or equal to 3.25:1 but less than 3.75:1 | 4.00 | % | 3.00 | % | .75 | % | 4.00 | % | |||||||||
III |
Greater than or equal to 2.75:1 but less than 3.25:1 | 3.75 | % | 2.75 | % | .70 | % | 3.75 | % | |||||||||
IV |
Greater than or equal to 2.25:1 but less than 2.75:1 | 3.25 | % | 2.25 | % | .65 | % | 3.25 | % | |||||||||
V |
Greater than or equal to 1.50:1 but less than 2.25:1 | 2.75 | % | 1.75 | % | .60 | % | 2.75 | % | |||||||||
VI |
Less than 1.50:1 | 2.00 | % | 1.00 | % | .55 | % | 2.00 | % | |||||||||
1.4 The definition of Applicable Margin in Section 1.1 is hereby further amended by
adding the following sentence immediately after the pricing grid:
Until the financial statements and corresponding Compliance Certificate shall have been
delivered to the Administrative Agent pursuant to Section 10.1.2(a) and Section
10.1.3 for the Fiscal Quarter ending September 30, 2009, the Applicable Margin shall not
be more favorable than Level II, and may, if applicable, be Level I.
1.5 Clause (d) of the definition of Change of Control set forth in Section 1.1 is
hereby replaced it in its entirety with the following:
(d) the Parent ceases to own and control, directly or indirectly, 100% of the shares of the
Capital Securities of the Loan Parties (other than the Parent), unless otherwise permitted
hereunder,
1.6 The definition of Material Adverse Effect set forth in Section 1.1 is hereby
amended by adding the following clause at the end thereof immediately preceding the period:
; it being agreed that none of (x) the sale of the Xxxx Xxxxxx B Entities pursuant to the
Xxxx Xxxxxx B Purchase Agreement, (y) the termination of the distribution agreement between
Sassy and MAM Babyartikel GmbH of Vienna, Austria, effective as of March 26, 2008 and the
non-cash charge related thereto taken in the Fiscal Quarter ended December 31, 2008 or (z)
the non-cash goodwill impairment charge of up to $140,000,000 taken in the Fiscal Quarter
ended December 31, 2008 shall be considered in the determination as to whether a Material
Adverse Effect has occurred.
1.7 Section 6.2.2(a) (Mandatory Prepayments) is hereby amended to replace clause (iv)
thereof with the following:
(iv) Concurrently with the receipt by IP Sub of Net Cash Proceeds from any Asset
Disposition, in an amount equal to 100% of such Net Cash Proceeds. For purposes of this
clause (iv), the definition of Net Cash Proceeds relating to Asset Dispositions of any
property of any Loan Party shall be deemed to apply to Asset Dispositions of any property of
IP Sub.
1.8 The first sentence of Section 6.4.3 (Term Loan) is hereby replaced in its entirety with
the following:
The principal amount of the Term Loan shall be repaid in quarterly installments equal to (i)
$3,600,000 on the last day of each Fiscal Quarter beginning with the Fiscal Quarter ended
June 30, 2008 and ending with the Fiscal Quarter ended December 31, 2008 and (ii) $3,250,000
on the last day of each Fiscal Quarter beginning with the Fiscal Quarter ended March 31,
2009, and the final installment in the aggregate amount of the unpaid principal balance of
the Term Loan shall be repaid on the Scheduled Termination Date.
1.9 The representation and warranty set forth in clause (i) of the second sentence of Section
9.7 (Ownership of Properties; Liens) is hereby replaced in its entirety with the following:
(i) The Parent owns good title to the Capital Securities of Kids Line, Sassy, I & J and IP
Sub.
1.10 Section 9 (Representations and Warranties) is hereby amended by adding a new Section
9.27 at the end thereof which reads as follows:
9.27 Activities of IP Sub. IP Sub does not (a) own any material properties or
assets other than the IP Sub IP and its rights under the License Agreement, (b) have any
Subsidiaries, Investments, Debt or other material liabilities, (c) have any Liens on its
assets or (d) conduct any operations or business other than activities related to its
corporate existence, activities relating to the maintenance and licensing of the IP Sub IP
including the payment of registration fees for the IP Sub IP, maintenance and renewal of
registrations of the IP Sub IP, defending or initiating claims relating to the IP Sub IP,
receiving royalties under IP Sub License Agreement, conducting other activities permitted by
the License Agreement, defending, asserting or enforcing its rights under IP Sub License
Agreement and any other activities relating to the foregoing in this clause (d).
1.11 The interim financial reports required to be delivered to the Administrative Agent pursuant to
Section 10.1.2 (Interim Reports) shall be required with respect to the Parent and its
consolidated Subsidiaries, thus Section 10.1.2 is hereby replaced in its entirety with the
following:
Interim Reports. (a) Promptly when available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year (or such earlier or
later date as Form 10-Qs of the Parent are required to be filed by the SEC taking into
account any extension granted by the SEC, provided the Loan Party Representative gives the
Administrative Agent prompt written notice of such extension), unaudited consolidated
financial statements of the Parent and its Subsidiaries for such Fiscal Quarter, including
therein consolidated balance sheets and statements of operations and cash flows as of the
end of such Fiscal Quarter and for the period beginning with the first day of such Fiscal
Year and ending on the last day of such Fiscal Quarter, in each case, prepared in accordance
with GAAP, consistently applied and certified by the Chief Financial Officer as fairly
presenting in all material respects the financial condition of the Parent and its
Subsidiaries as at the date thereof, together with (i) a comparison with the corresponding
period of the previous Fiscal Year and a comparison with the budget for such period of the
current Fiscal Year and (ii) a consolidating balance sheet of the Parent and its
Subsidiaries as of the end of such Fiscal Quarter and consolidating statement of earnings
and cash flows for the Parent and its Subsidiaries for such Fiscal Quarter, in each case,
prepared in accordance with GAAP (other than with respect to the absence of footnotes and
normal year end audit adjustments) certified by the Chief Financial Officer as fairly
presenting in all material respects the financial condition of such entities as at the date
and for the period covered; and (b) promptly when available and in any event within 45 days
after the end of the first two fiscal months of each Fiscal Year, and 30 days after the end
of each other fiscal month of the Parent (other than the end of a fiscal month which is also
a Fiscal Quarter or Fiscal Year end), unaudited consolidated financial statements of the
Parent and its Subsidiaries for such fiscal month, including therein consolidated balance
sheets and statements of earnings and cash flows as of the end of such fiscal month and for
the period beginning with the first day of such Fiscal Year and ending on the last day of
such fiscal
month, in each case, prepared in accordance with GAAP, consistently applied and certified by the Chief Financial Officer as fairly presenting in
all material respects the financial condition of the Parent and its Subsidiaries as at the
date thereof, together with (i) a comparison with the corresponding period of the previous
Fiscal Year and a comparison with the budget for such period of the current Fiscal Year and
(ii) a consolidating balance sheet of the Parent and its Subsidiaries as of the end of such
month and consolidating statement of earnings and cash flows for the Parent and its
Subsidiaries for such month, in each case, prepared in accordance with GAAP (other than with
respect to the absence of footnotes and normal year-end audit adjustments) certified by the
Chief Financial Officer as fairly presenting in all material respects the financial
condition of such entities as at the date and for the period covered; provided that with
respect to the foregoing relating to any Fiscal Quarter ending prior to the Closing Date, to
the extent the Parent’s quarterly report on Form 10-Q for such quarter shall satisfy the
requirements of Section 10.1.2, the Administrative Agent will accept such Form 10-Q
in lieu of such item.
1.12 Section 10.1.3 (Compliance Certificates) is hereby amended by replacing clause (ii)
thereof in its entirety with the following:
(ii) a written statement of the Parent’s management setting forth a discussion of the
financial condition of the Parent and its Subsidiaries and any material changes in their
financial condition and/or results of operations.
1.13 Clauses (e) and (f) of Section 10.1.5 are each hereby replaced in their entirety with
the following, respectively, and new clause (g) is added as follows:
(e) any Asset Disposition;
(f) any cancellation, any material change or any increase (which increase is as a result of
deterioration in the risk profile of any Loan Party or Subsidiary) in the deductible in any
insurance policy or coverage maintained by any Loan Party or Subsidiary; or
(g) promptly following receipt, copies of any notices of default, termination or
acceleration or any other material notices received from any holder or trustee of, under or
with respect to any Subordinated Debt or the Acquisition Documents.
1.14 Section 10.1.7 and Section 10.1.8 are each hereby replaced in their entirety
with the following, respectively:
10.1.7 Management Reports. Promptly upon receipt thereof, copies of all detailed
financial and management reports submitted to any Loan Party by its independent auditors in
connection with each annual or interim audit made by such auditors of the books of the
Parent and its Subsidiaries.
10.1.8 Projections. As soon as practicable, and in any event not later than 45 days
after the commencement of each Fiscal Year (commencing with Fiscal Year 2009), financial
projections for the Parent and its Subsidiaries for such Fiscal Year (including
monthly operating and cash flow budgets) prepared in a manner consistent with the
projections delivered by the Loan Party Agent to the Administrative Agent prior to the
Closing Date or otherwise in a manner reasonably satisfactory to the Administrative Agent,
accompanied by a certificate of the Chief Financial Officer on behalf of the Parent and its
Subsidiaries to the effect that (a) such projections were prepared by the Parent and its
Subsidiaries in good faith, (b) the Parent and its Subsidiaries had a reasonable basis for
the assumptions contained in such projections and (c) such projections have been prepared in
accordance with such assumptions (it being recognized that any projections provided
hereunder by any Loan Party are subject to uncertainties and contingencies, are based on
good faith estimates and assumptions believed by such Loan Party to be reasonable as of the
date of the applicable projections and upon the best information then reasonably available
to the Loan Parties and that actual results during the period or periods covered by any such
projections may differ materially from projected results; provided however
that if, during the period or periods covered by any such projections, management of any
Loan Party determines that the projections no longer accurately reflect in any material
respect the projected financial results for such period or periods, as the case may be, the
Chief Financial Officer shall, as soon as practicable, provide to the Administrative Agent
revised projections for such period or periods).
1.15 Section 10.1 (Reports, Certificates and Other Information) is hereby amended by adding
a new Section 10.1.11 at the end thereof which reads as follows:
10.1.11 Deposit Accounts. Contemporaneously with the furnishing of a copy of each
Compliance Certificate, (a) a schedule of all lock boxes, collection accounts, deposit
accounts, securities accounts, operating accounts, checking accounts, disbursement accounts
and other accounts of the Loan Parties (other than payroll accounts and accounts maintained
by the Loan Parties for the sole benefit of their employees as listed on Schedule
10.11 attached hereto), the financial institutions at which such accounts are maintained
and the balances thereof as set forth on the most recent statements of all such accounts,
(b) a listing or identification of all such accounts referenced in clause (a) of this
Section 10.1.11 which are not subject to an Account Control Agreement, (c) a
certificate of the Chief Financial Officer certifying that the aggregate balances as set
forth on the most recent statements of all such accounts which are not subject to Account
Control Agreements do not exceed $2,000,000 and (d) upon the Administrative Agent’s request,
satisfactory documentation, including account statements, with respect to any accounts
referenced in clause (b) of this Section 10.1.11.
1.16 The last sentence of Section 10.10 (New Subsidiaries) is hereby replaced in its
entirety with the following:
Without limiting the foregoing, the Loan Parties shall have no obligations pursuant to this
Section 10.10 with respect to any Second-Tier Foreign Subsidiary or, so long as the
Loan Parties are in compliance in all material respects with each of the provisions hereof
and of the other Loan Documents solely as such provisions relate to IP Sub, IP Sub shall not
be or be required to become a Loan Party.
1.17 Clause (iii) of the second sentence of Section 10.11 (Deposit Accounts) is hereby
replaced in its entirety with the following:
(iii) it is hereby acknowledged and agreed that the Loan Parties may (and shall only be
permitted to) maintain and operate Subject Accounts (other than any such Subject Account to
which Accounts are deposited or remitted) to the extent not having at any time deposits in
excess of $2,000,000, in aggregate among all such Subject Accounts, in respect of which no
Account Control Agreements are in effect.
1.18 Section 10.12 (Independent Directors) is hereby replaced in its entirety with the
following:
10.12 [Reserved].
1.19 Section 11 (Negative Covenants) is hereby amended by adding new Section 11.18 at the
end thereof which reads as follows:
11.18 Activities of IP Sub. No Loan Party shall permit IP Sub to (a) own any
material properties or assets other than the IP Sub IP and its rights under the License
Agreement, (b) have any Subsidiaries, Investments, Debt or other material liabilities, (c)
grant any Liens on or dispose of its assets other than in accordance with the terms of IP
Sub License Agreement or (d) conduct any operations or business other than, activities
related to its corporate existence, activities relating to the maintenance and licensing of
the IP Sub IP, including the payment of registration fees for the IP Sub IP, maintenance and
renewal of registrations of the IP Sub IP, defending or initiating claims relating to the IP
Sub IP, receiving royalties under IP Sub License Agreement, conducting other activities
permitted by the License Agreement, defending, asserting or enforcing its rights under IP
Sub License Agreement and any other activities relating to the foregoing in this clause (d).
1.20 Section 11.3 (Restricted Payments) is hereby replaced in its entirety with the
following:
11.3 Restricted Payments. Except as permitted pursuant to the following sentence,
not, and not permit any other Loan Party or Subsidiary to (a) make any distribution to any
holders of its Capital Securities, (b) purchase or redeem any of its Capital Securities, (c)
pay any management fees or similar fees to any of its direct or indirect equityholders or
any Affiliate thereof, (d) pay, redeem, prepay, defease, purchase, repurchase or make any
other payment on or in respect of any Subordinated Debt or the CoCaLo Note, including under
any guaranty thereof, (e) make any payment which would result in an Earnout Default or (f)
set aside funds for any of the foregoing. Notwithstanding the foregoing:
(i) IP Sub may make cash or non-cash distributions to the Parent and any Subsidiary may pay
dividends or make other distributions in cash or other property in respect of its Capital
Securities to the Loan Parties or, if a Wholly-Owned Subsidiary to its parent company;
(ii) (1) so long as no Event of Default or Unmatured Event of Default exists or would result
therefrom, the Loan Parties may make regularly scheduled payments of interest in respect of
Subordinated Debt (other than Subordinated Debt owing to any Affiliate) to the extent
permitted under the subordination provisions thereof, and (2) the Loan Parties shall be
permitted to accrue all non-cash interest (i.e., PIK interest) on its Subordinated Debt and
non-cash dividends on its Capital Securities consisting of preferred stock;
(iii) [Reserved];
(iv) any Loan Party or Subsidiary thereof may pay dividends or make other distributions of
its common stock in non-redeemable, non-preferential and non-convertible common stock
payable ratably to all of the holders of its common stock;
(v) so long as all of the Earnout Consideration Conditions Precedent have been fully
satisfied and no Earnout Default has occurred and is continuing or would result therefrom,
the Loan Parties may pay the Earnout Consideration (or any portion thereof that may be paid
at such time in accordance with this clause (v)) as and when due and payable in accordance
with the terms of the Acquisition Documents;
(vi) so long as (x) the Earnout Consideration has been paid in full and (y) both before and
immediately after giving effect to the payments described in this clause (vi), (1) no Event
of Default or Unmatured Event of Default exists or would result therefrom, (2) Excess
Revolving Loan Availability will equal or exceed $4,000,000, (3) no violation of the
financial covenants set forth in Sections 11.13.1, 11.13.2 or
11.13.3 would then exist or would, on a pro forma basis result therefrom and (4) the
Total Debt to EBITDA Ratio calculated for the Computation Period ending on the last day of
each of the two Fiscal Quarters most recently ended as set forth in the Compliance
Certificates delivered to the Administrative Agent pursuant to Section 10.1.3 for
such Fiscal Quarters shall have been less than 2.00: 1.00, upon no less than 10 days’ prior
written notice to the Administrative Agent, accompanied by a certificate of the Chief
Financial Officer delivered to the Administrative Agent setting forth the calculations of
pro forma Excess Revolving Loan Availability and the pro forma calculations of such
financial covenants (after giving effect to such payments) in detail reasonably acceptable
to the Administrative Agent, Parent may pay a regular quarterly dividend payment payable out
of legally available funds on the outstanding common stock of the Parent;
(vii) so long as (x) the Earnout Consideration has been paid in full and (y) both before and
immediately after giving effect to the payments described in this clause (vii), (1) no Event
of Default or Unmatured Event of Default exists or would result therefrom, (2) Excess
Revolving Loan Availability will equal or exceed $5,000,000, (3) no violation of the
financial covenants set forth in Sections 11.13.1, 11.13.2 or
11.13.3 would then exist or would, on a pro forma basis result therefrom and (4) the
Total Debt to EBITDA Ratio calculated for the Computation Period ending on the last day of
each of the two Fiscal Quarters most recently ended as set forth in the Compliance
Certificates delivered to the Administrative Agent pursuant to Section 10.1.3 for
such Fiscal Quarters shall have been less than 2.00: 1.00, upon no less than 10 days’ prior
written notice to the Administrative Agent, accompanied by a certificate of the Chief
Financial Officer delivered to the Administrative Agent setting forth the calculations of pro forma Excess Revolving Loan
Availability and the pro forma calculations of such financial covenants (after giving effect
to such payments) in detail reasonably acceptable to the Administrative Agent, Parent may:
(A) repurchase or redeem Capital Securities of the Parent held by employees, officers and
directors in the ordinary course of business and consistent with past practice and (B) make
repurchases or redemptions of Capital Securities from employees, officers and directors that
die, retire or otherwise terminate their employment; provided, that notwithstanding
the prior repayment of the Earnout Consideration (but subject to the other conditions set
forth in this clause (vii)), Parent may make Contractual Redemptions as and when required to
be made in accordance with the agreements relating thereto, in an amount not to exceed
$1,000,000, in aggregate, per Fiscal Year;
(viii) [Reserved]; and
(ix) so long as no Event of Default or Unmatured Event of Default exists or would result
therefrom, the Loan Parties may pay regularly scheduled principal and interest payments (but
not prepayments) on the CoCaLo Note, including under any guaranty thereof.
1.21 Clauses (iv), (vii) and (viii) of Section 11.4(d) are hereby replaced in their
entirety with the following, respectively:
(iv) immediately after giving effect to such Acquisition, the Parent and its
Subsidiaries are in pro forma compliance with all the financial ratios and restrictions set
forth in Section 11.13; provided however that immediately after giving effect to
such Acquisition, Excess Revolving Loan Availability shall not be less than $7,500,000;
(vii) reasonably prior to such Acquisition, the Administrative Agent shall have
received (A) an acquisition summary with respect to the Person and/or business or division
to be acquired, such summary to include a reasonably detailed description thereof (including
financial information) and operating results (including financial statements for the most
recent 12 month period for which they are available and as otherwise available), the terms
and conditions, including economic terms, of the proposed Acquisition, and the Parent’s
calculation of pro forma compliance with the financial ratios and restrictions set forth in
Section 11.13 relating thereto including, without limitation, the Parent’s
calculation of EBITDA, (B) due diligence materials with respect to the business, legal, tax
and environmental aspects of the Person and/or business or division to be acquired and the
Administrative Agent shall be satisfied with results of its due diligence and (C) unless the
Administrative Agent otherwise consents, in the case of the Acquisition of any Person
and/or business or division, evidence that the EBITDA of such Person and/or business or
division for the most recent 12 month period for which financial statements are available,
as adjusted by such add-backs with respect to cash expenses not related to operations which
are acceptable to the Administrative Agent or which are permitted under Article 11 of
Regulation S-X promulgated under the Securities Act of 1933, as amended, is not less than
zero;
(viii) the Administrative Agent shall have approved (which approval shall not
unreasonably be withheld) the Parent’s computation of pro forma compliance with the
financial ratios and restrictions set forth in Section 11.13 including, without
limitation, the Parent’s calculation of pro forma EBITDA, and the Parent’s calculation of
Excess Revolving Loan Availability as set forth in clause (iv) above;
1.22 Sections 11.13.1 (Fixed Charge Coverage Ratio) and 11.3.2 (Total Debt to
EBITDA Ratio) are hereby replaced in their entirety with the following, respectively:
11.13.1 Fixed Charge Coverage Ratio. Not permit the Fixed Charge Coverage
Ratio as calculated as of the last day of each Fiscal Quarter set forth below with respect
to the Computation Period ending on such date to be less than the ratio set forth below
opposite such date:
| Fiscal Quarter Ending | Fixed Charge Coverage Ratio | |||
Each Fiscal Quarter ending on after June 30,
2008 through and including December 31, 2008 |
1.25 : 1.00 | |||
Each Fiscal Quarter ending on or after March
31, 2009 through and including June 30, 2009 |
1.20 : 1.00 | |||
Fiscal Quarter ending September 30, 2009 |
1.15 : 1.00 | |||
Fiscal Quarters ending December 31, 2009 and
March 31, 2010 |
1.25 : 1.00 | |||
Each Fiscal Quarter ending on or after June
30, 2010 |
1.35 : 1.00 | |||
11.13.2 Total Debt to EBITDA Ratio. Not permit the Total Debt to EBITDA
Ratio as calculated as of the last day of each Fiscal Quarter set forth below with respect
to the Computation Period ending on such date to be greater than the ratio set forth below
opposite such date:
| Fiscal Quarter Ending | Total Debt to EBITDA Ratio | |||
Each Fiscal Quarter ending on or after June
30, 2008 through and including June 30, 2009 |
4.00 : 1.00 | |||
Fiscal Quarter ending on September 30, 2009 |
3.75 : 1.00 | |||
Fiscal Quarter ending on December 31, 2009 |
3.50 : 1.00 | |||
Fiscal Quarter ending on or after March 31,
2010 through and including September 30, 2010 |
3.25 : 1.00 | |||
Each Fiscal Quarter ending on or after
December 31, 2010 |
2.75 : 1.00 | |||
1.23 Section 11.16 (Commingling) is hereby replaced in its entirety with the following:
11.16. [Reserved].
1.24 Annex A to the Credit Agreement is hereby replaced in its entirety with Annex
A attached hereto.
1.25 Schedules 9.6, 9.8, 9.9, 9.15, 9.16, 9.17, 9.19, 9.21, 9.26, 10.11, 11.2, 11.10 and
12.1 of the Credit Agreement are hereby amended solely to add the information relating to
the Parent as set out on Schedules 9.6, 9.8, 9.9, 9.15, 9.16, 9.17, 9.19, 9.21, 9.26, 10.11,
11.2, 11.10 and 12.1 respectively, to the Joinder Agreement.
ARTICLE II
CONDITIONS TO EFFECTIVENESS
CONDITIONS TO EFFECTIVENESS
Section 2.1 Conditions Precedent. This Amendment shall become effective (the
“Effective Date”) on the date when all of the following conditions have been satisfied:
(a) this Amendment shall have been signed by the Loan Parties, the Loan Party
Representative, the Administrative Agent and the Required Lenders;
(b) the Loan Parties shall have delivered each other instrument, document or agreement
set forth on the List of Closing Documents attached hereto as Exhibit A;
(c) Administrative Agent shall have received all fees required to be paid by the Loan
Parties pursuant to that certain Fee Letter dated as of March 1, 2009;
(d) Administrative Agent shall have received a prepayment of the Term Loans in the
aggregate amount of $9,200,000;
(e) as of the Effective Date, all representations and warranties of the Loan Parties
set forth herein shall be true and correct in all material respects, and all representations
and warranties of the Loan Parties set forth in the Credit Agreement and the other Loan
Documents, in each case, as amended hereby, shall be true and correct in
all material respects (or, with respect to those representations and warranties
expressly limited by their terms by materiality or material adverse effect qualifications,
all respects) and shall be deemed remade on such date, except to the extent any such
representation and warranty expressly relates to an earlier date, in which case such
representation and warranty shall be true and correct in all material respects (or, with
respect to those representations and warranties expressly limited by their terms by
materiality or material adverse effect qualifications, all respects) as to the date to which
it relates;
(f) all proceedings taken in connection with the transactions contemplated by this
Amendment and all documents, instruments and other legal matters incident thereto shall be
reasonably satisfactory to the Administrative Agent; and
(g) the Loan Parties shall have provided such other items and shall have satisfied such
other conditions as may be reasonably required by the Administrative Agent.
ARTICLE III
REAFFIRMATION
REAFFIRMATION
The Loan Party Representative and each Loan Party hereby expressly reaffirms and assumes all
of their obligations and liabilities to the Administrative Agent and the Lenders as set forth in
the Credit Agreement and the other Loan Documents and agrees to be bound by and abide by and
operate and perform under and pursuant to and comply fully with all of the terms, conditions,
provisions, agreements, representations, undertakings, warranties, indemnities, grants of security
interests and covenants contained in the Credit Agreement and the other Loan Documents, as such
obligations and liabilities may be modified by this Amendment, as though the Credit Agreement and
the other Loan Documents were being re-executed on the date hereof, except to the extent that such
terms expressly relate to an earlier date. The Loan Party Representative and each Loan Party
hereby ratifies, confirms and affirms without condition, all liens and security interests granted
to the Administrative Agent pursuant to the Credit Agreement and the other Loan Documents and such
liens and security interests shall continue to secure the Obligations under the Credit Agreement as
amended by this Amendment, and all extensions, renewals, refinancings, amendments or modifications
of any of the foregoing.
ARTICLE IV
MISCELLANEOUS
MISCELLANEOUS
Section 4.1 Representations and Warranties. The Loan Parties hereby jointly and
severally represent and warrant to the Administrative Agent that:
(a) the Loan Parties and the Loan Party Representative have the legal power and
authority to execute and deliver this Amendment;
(b) the officers of the Loan Party Representative and each of the Loan Parties
executing this Amendment have been duly authorized to execute and deliver the same and bind
the Loan Party Representative and each of the Loan Parties with respect to the provisions
hereof;
(c) the execution, delivery and performance by the Loan Party Representative and each
Loan Party of this Amendment do not and will not (a) require any consent or approval of any
governmental agency or authority (other than any consent or approval which has been obtained
and is in full force and effect, except such as would not have and reasonably could not be
expected to have a Material Adverse Effect), (b) conflict with (i) any provision of law,
(ii) the charter, by laws or other organizational documents of such Person or (iii) any
material agreement, indenture, instrument or other material document, or any judgment, order
or decree, which is binding upon the such Person or any of their respective properties or
(c) require, or result in, the creation or imposition of any Lien on any asset of any Loan
Party (other than Permitted Liens and Liens in favor of the Administrative Agent created
pursuant to the Collateral Documents);
(d) no Unmatured Event of Default or Event of Default exists under the Credit
Agreement, nor will any occur immediately after the execution and delivery of this Amendment
or by the performance or observance of any provision hereof;
(e) neither the Loan Party Representative nor any of the Loan Parties is aware of any
claim or offset against, or defense or counterclaim to, the Loan Party Representative’s and
each of the Loan Parties’ obligations or liabilities under the Credit Agreement or any Loan
Document; and
(f) this Amendment and each document executed by the Loan Party Representative and each
of the Loan Parties in connection herewith constitute valid and binding obligations of the
Loan Party Representative and the Loan Parties, respectively, enforceable in accordance with
their terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors’ rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
Section 4.2 Parent as a Loan Party. No references in the Credit Agreement to “the
Parent and each Loan Party”, “the Parent or any Loan Party”, “the Parent, any Loan Party or any of
their respective properties” shall be deemed to imply or shall be interpreted to mean that the
Parent is not a Loan Party.
Section 4.3 Loan Documents Unaffected. Except as herein otherwise specifically
provided, all provisions of the Credit Agreement and the Loan Documents shall remain in full force
and effect and are hereby affirmed, confirmed and ratified in all respects. As of the Effective
Date, all references to the Credit Agreement in the Credit Agreement or any other Loan Document
shall be deemed to refer to the Credit Agreement as amended hereby.
Section 4.4 No Course of Dealing. The Loan Party Representative and each of the Loan
Parties acknowledge and agree that (a) this Amendment is not intended to, nor shall it, establish
any course of dealing between the Loan Party Representative, the Loan Parties, the Administrative
Agent and the Lenders that is inconsistent with the express terms of the Credit Agreement or any
other Loan Document, and (b) notwithstanding any course of dealing between the Loan Party
Representative, the Loan Parties, the Administrative Agent and the Lenders prior to the date
hereof, except as set forth herein, the Lenders shall not be obligated to make any
Loan, except in accordance with the terms and conditions of this Amendment and the Credit
Agreement.
Section 4.5 Attorney’s Fees and Costs. The Loan Parties hereby agree to reimburse the
Administrative Agent for all of its reasonable out-of-pocket documented legal fees and expenses
incurred in the preparation and documentation of this Amendment and related documents.
Section 4.6 Survival. All representations, warranties, covenants, agreements,
releases and waivers made by or on behalf of the Loan Party Representative and the Loan Parties
under this Amendment shall survive the execution and delivery of this Amendment.
Section 4.7 No Waiver of Rights. No waiver shall be deemed to be made by any party
hereunder of any of its rights hereunder unless the same shall be in writing signed on behalf of
such party.
Section 4.8 Governing Law. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
Section 4.9 Entire Agreement. This Amendment sets forth the entire agreement and
understanding among the parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements, and undertakings of every kind and nature among them with respect to the
subject matter hereof.
Section 4.10 Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts and by facsimile
signature, and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the same Amendment.
Section 4.11 Severability Of Provisions; Captions; Attachments. Wherever possible
each provision of this Amendment shall be interpreted in such manner as to be effective and valid
under applicable law. Any provision of this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. The several captions to Sections and
subsections herein are inserted for convenience only and shall be ignored in interpreting the
provisions of this Amendment. Each schedule or exhibit attached to this Amendment shall be
incorporated herein and shall be deemed to be a part hereof.
Section 4.12 JURY TRIAL WAIVER. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AMENDMENT AND
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to be duly executed and
delivered by their duly authorized officers as of the date first set forth above.
| LOAN PARTIES: KIDS LINE, LLC, a Delaware limited liability company, as a Borrower |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Vice President and Secretary | |||
| SASSY, INC., an Illinois
corporation, as a Borrower |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Vice President and Secretary | |||
| LAJOBI, INC., a Delaware corporation, as a Borrower |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Assistant Secretary | |||
| I & J HOLDCO, INC., a Delaware corporation, as a Borrower |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Assistant Secretary | |||
| COCALO, INC., a California corporation, as a Borrower |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Vice President and Assistant Secretary | |||
| XXXX XXXXXX AND COMPANY, INC., a New Jersey corporation, as a Guarantor and as Loan Party Representative |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Senior Vice President, General Counsel and Secretary | |||
| ADMINISTRATIVE AGENT: | BANK OF AMERICA, N.A., as successor by merger to LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent |
|||
| By: | /s/ Xxxx X. Xxxx | |||
| Name: | Xxxx X. Xxxx | |||
| Title: | Vice President | |||
| REQUIRED LENDERS: | BANK OF AMERICA, N.A., as successor by merger to LASALLE BANK NATIONAL ASSOCIATION |
|||
| By: | /s/ Xxxx X. Xxxx | |||
| Name: | Xxxx X. Xxxx | |||
| Title: | Vice President | |||
| SOVEREIGN BANK | ||||
| By: | /s/ Xxxxxxxxx Xxxxxx | |||
| Name: | Xxxxxxxxx Xxxxxx | |||
| Title: | Senior Vice President | |||
| WACHOVIA BANK, N.A. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxxxx | |||
| Title: | Senior Vice President | |||
| XX XXXXXX CHASE BANK, N.A. |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
| TD BANK, N.A., formerly known as TD BANKNORTH, N.A. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxx | |||
| Title: | Senior Vice President | |||
| HSBC BANK USA, N.A. |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Name: | Xxxxxxx X. Xxxxx | |||
| Title: | Vice President | |||
| CITIZENS BANK OF PENNSYLVANIA |
||||
| By: | /s/ Xxxx X. Frame | |||
| Name: | Xxxx X. Frame | |||
| Title: | Banking Officer | |||
| BANK OF THE WEST |
||||
| By: | /s/ Xxxxxx Xxxxx | |||
| Name: | Xxxxxx Xxxxx | |||
| Title: | Vice President | |||
