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Exhibit 10.1
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of August 27, 1999 (this "Amendment"), is among XXXXXX GREETINGS, INC., a
Delaware corporation (the "Borrower"), the lenders party to the Credit Agreement
described below (each a "Lender" and, collectively, the "Lenders") and BANK ONE,
INDIANA, NATIONAL ASSOCIATION, a national banking association formerly known as
NBD Bank, N.A., as agent (in such capacity, the "Agent") for the Lenders.
INTRODUCTION
The Borrower, the Lenders, and the Agent have entered into the Amended
and Restated Credit Agreement, dated as of May 11, 1999, as amended by the First
Amendment to Amended and Restated Credit Agreement, dated as of July 27, 1999
(the "Credit Agreement"). The Company now desires that the Credit Agreement be
further amended in certain respects, and the Lenders and the Agent are willing
to so amend the Credit Agreement on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein and in the Credit Agreement contained, the parties hereto
agree as follows:
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT
Effective upon the date that the conditions precedent set forth in
Article 2 of this Amendment are satisfied, which date (the "Amendment Date")
shall be determined by the Agent in its sole discretion, the Credit Agreement is
amended as follows:
1.1 The following definitions of the terms "Borrowing Base" and
"Borrowing Base Certificate", respectively are added to Section 1.1 in
alphabetical order:
"Borrowing Base": as of any date, the sum of (a) an amount equal to 35%
of the value of Eligible Accounts Receivable, plus (b) an amount equal
to 15% of the value of Eligible Inventory, less (c) the face amount of
any standby or commercial letters of credit then outstanding for the
account of the Borrower, whether issued by Fifth Third Bank or
otherwise.
"Borrowing Base Certificate": for any date, an appropriately completed
report as of such date in substantially the form of Exhibit H hereto,
certified as true and correct as of such date by a duly authorized
officer of the Borrower.
1.2 The definition of the term "Commitment Amount" in Section 1.1 is
amended and restated in full as follows:
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"Commitment Amount": as of any date prior to the end of the Review
Period and with respect to any Lender, the amount set forth below
opposite each such Lender's name:
Lender Commitment Amount
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Bank One, Indiana, National Association $ 8,333,333.33
Xxxxxx Trust and Savings Bank $ 6,666,666.67
Fifth Third Bank $ 5,000,000.00
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Total $20,000,000.00
and, as of any date during the portion of the Commitment Period, if
any, after the Review Period and with respect to any Lender, the amount
set forth adjacent to its name under the heading "Commitment Amount" in
Exhibit A on such date or, in the event that such Lender is not listed
on Exhibit A, the "Commitment Amount" which such Lender shall have
assumed from another Lender in accordance with Section 11.7 on or prior
to such date, as all of the same may be adjusted from time to time
pursuant to Sections 2.4 and 11.7(c).
1.3 The definition of the term "Disposition" is amended and restated in
full as follows:
"Disposition": with respect to any Person, any sale, assignment,
transfer or other disposition by such Person, by any means, of (a) the
Stock of, or other equity interests of, any other Person, (b) any
business, Operating Entity or division or segment thereof, or (c) any
other Property of such Person other than in the ordinary course of
business, provided, however, that no such sale, assignment, transfer or
other disposition of Property shall be deemed to be in the ordinary
course of business (i) if it is the sale, assignment, transfer or
disposition of (1) all or substantially all of the Property of such
Person, or (2) any Operating Entity, (ii) if the fair market value of
the Property is in excess of $2,000,000, or (iii) to the extent that
the aggregate fair market value of all sales, assignments, transfers
and other dispositions of Property made by such Person within the same
fiscal year which are individually equal to or less than $2,000,000,
would exceed $10,000,000, and provided, further, that, notwithstanding
anything to the contrary contained in this definition, (I) all sales of
inventory (other than in connection with bulk transfers of Property in
connection with a liquidation or similar disposition of the Property of
such Person) shall be deemed to be in the ordinary course of business,
and (II) any sale, assignment, transfer or other disposition of any
obsolete tangible personal Property shall each be deemed to be in the
ordinary course of business.
1.4 The following definitions of the terms "Eligible Accounts
Receivable" and "Eligible Inventory", respectively, are added to Section 1.1 in
alphabetical order:
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"Eligible Accounts Receivable": as of any date, those trade accounts
receivable owned by the Borrower which are payable in Dollars and in
which the Borrower has granted to the Agent for the benefit of the
Lenders and the Agent a first-priority perfected security interest
pursuant to the Security Agreement, valued at the face amount thereof
less sales, excise or similar taxes and less returns, discounts,
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed, but shall not include any
such account receivable (a) that is not a bona fide existing obligation
created by the sale and actual delivery of inventory, goods or other
property or the furnishing of services or other good and sufficient
consideration to customers of the Borrower in the ordinary course of
business, (b) that is more than 90 days past due, (c) that is subject
to any dispute, contra-account, defense, offset or counterclaim or any
Lien (except those in favor of the Agent for the benefit of the Lenders
and the Agent under the Security Documents), or the inventory, goods,
property, services or other consideration of which such account
receivable constitutes proceeds is subject to any such Lien, (d) in
respect of which the inventory, goods, property, services or other
consideration have been rejected or the amount is in dispute, (e) that
is due from any Affiliate or Subsidiary of the Borrower, (f) that has
been classified by the Borrower as doubtful or has otherwise failed to
meet established or customary credit standards of the Borrower, (g)
that is payable by any person located outside the United States (which
shall not be deemed to include any territories of the United States)
and is not supported by a letter of credit issued to the Agent by a
commercial bank, and in form and substance, acceptable to the Agent,
(h) with respect to which any representation or warranty contained in
Section 5.13 is incorrect at any time, (i) that is payable by the
United States or any of its departments, agencies or instrumentalities
or by any state or other governmental entity, (j) that is payable by
any person as to which 50% or more of the aggregate amount of such
accounts receivable payable by such person to the Borrower do not
otherwise constitute Eligible Accounts Receivable, (k) that is payable
by any person that is the subject of any proceeding seeking to
adjudicate it a bankrupt or insolvent or seeking liquidation, winding
up or reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or
seeking the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or
that is not generally paying its debts as they become due or has
admitted in writing its inability to pay its debts generally or has
made a general assignment for the benefit of creditors, (l) that is
evidenced by a promissory note or other instrument, (m) that is
subordinate or junior in right or priority of payment to any other
obligation or claim, or (n) that for any other reason is at any time
reasonably deemed by the Agent to be ineligible.
"Eligible Inventory": as of any date, that inventory owned by the
Borrower that constitutes raw materials or finished goods in which the
Borrower has granted to the Agent for the benefit of the Lenders and
the Agent a first-priority perfected security interest pursuant to the
Security Agreement, valued at the lower of cost or market on a FIFO
basis, but shall not include any such inventory (a) that does not
constitute raw materials or finished goods readily salable or usable in
the business of the
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Borrower, (b) that is located outside the United States (which shall
not be deemed to include any territories of the United States), (c)
that is subject to, or any accounts or other proceeds resulting from
the sale or other disposition thereof could be subject to, any Lien
(except those in favor of the Lenders and the Agent under the Security
Documents), including any sale on approval or sale or return
transaction or any consignment, (d) that is not in the possession of
the Borrower, (e) that is held for lease or is the subject of any
lease, (f) that is subject to any trademark, trade name or licensing
arrangement, or any law, rule or regulation, that could limit or impair
the ability of the Lenders and the Agent to promptly exercise all
rights of the Lenders and the Agent under the Security Documents, (g)
if, after October 1, 1999, such inventory is located on premises not
owned by the Borrower and the landlord or other owner of such premises
shall not have waived its distraint, lien and similar rights with
respect to such inventory and shall not have agreed to permit the Agent
to enter such premises pursuant to a waiver and agreement of such
person in favor of and in form and substance acceptable to the Agent,
(h) with respect to which any insurance proceeds are not payable to the
Agent as a loss payee or are payable to any loss payee other than the
Agent or the Borrower, or (i) that for any other reason is at any time
reasonably deemed by the Agent to be ineligible.
1.5 The definition of the term "Review Period" in Section 1.1 is
amended and restated in full as follows:
"Review Period": the period from and including the First Amendment
Effective Date to and including September 27, 1999.
1.6 The following sentence is added to the end of Section 2.1:
Notwithstanding anything in this Agreement or any other Loan Document
to the contrary, the aggregate outstanding principal balance of all of
the Loans at any time shall not exceed the amount of the Borrowing Base
as shown on the latest Borrowing Base Certificate delivered under
Section 7.7(i).
1.7 The first sentence of Section 2.7 is amended and restated in full
as follows:
To secure the payment when due of the Notes and all other
obligations of the Borrower under this Agreement, the Notes and the
other Loan Documents, on or before the First Amendment Effective Date,
the Borrower, and each of its Domestic Subsidiaries, if any, shall
execute and deliver a Security Agreement granting a first-priority,
perfected security interest in all present and future accounts
receivable, inventory and general intangibles, including without
limitation, tax refunds and tax refund claims, of the Borrower and such
Domestic Subsidiaries and all related assets as described in the
Security Agreement.
1.8 The following subpart (d) is added to Section 2.7:
(d) The Borrower agrees that if at any time any trade account
receivable or any inventory of the Borrower fails to constitute
Eligible Accounts
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Receivable or Eligible Inventory, as the case may be, for any reason,
the Agent may, at any time and notwithstanding any prior classification
of eligibility, classify such asset or property as ineligible and
exclude the same from the computation of the Borrowing Base without in
any way impairing the rights of the Banks and the Agent in and to the
same under the Security Agreement.
1.9 The following subpart (iii) is added to Section 2.5(b):
(iii) If at any time the aggregate outstanding principal
amount of the Loans shall exceed the lesser of the Borrowing Base or
the Aggregate Commitment Amount, the Borrower shall forthwith pay to
the Banks, without demand, an amount not less than the amount of such
excess for application to the outstanding principal amount of the
Loans.
1.10 Section 4.19 is added immediately following Section 4.18, as
follows:
4.19 Borrowing Base.
All trade accounts receivable and inventory of the Borrower
represented or reported by the Borrower to be, or otherwise included
in, Eligible Accounts Receivable and Eligible Inventory comply in all
respects with the requirements therefor set forth in the definitions
thereof, and the computation of the Borrowing Base set forth in each
Borrowing Base Certificate is true and correct.
1.11 Section 6.4 is added immediately following Section 6.3, as
follows:
6.4 Borrowing Base Certificate
The Agent shall have received the Borrowing Base Certificate
required pursuant to Section 7.7(i) as of the Borrowing Date.
1.12 Subpart (i) of Section 7.7 is relabeled as subpart (j), and new
subpart (i) is added to Section 7.7, as follows:
(i) No later than the tenth Business Day following the end of each
month, a Borrowing Base Certificate prepared as of the close of
business on the last day of such month, together with supporting
schedules, in form and detail satisfactory to the Agent, setting forth
such information as the Agent may request with respect to (i) the
aging, value, location, and other information relating to computing the
Borrowing Base, (ii) the eligibility of any property or assets included
in such computation, and (iii) the face amount and beneficiary of any
outstanding letters of credit, certified as true and correct by the
chief financial officer of the Borrower; and
1.13 Exhibit H is added to the Credit Agreement in the form of Exhibit
H attached hereto.
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ARTICLE 2. CONDITIONS PRECEDENT
As conditions precedent to the effectiveness of the amendments to the
Credit Agreement set forth in Article 1 of this Amendment, the Agent shall
receive the following documents and the following matters shall be completed,
all in form and substance satisfactory to the Agent and the Required Banks:
2.1 This Amendment duly executed on behalf of the Borrower, the Agent
and the Required Lenders.
2.2 An amendment to the Security Agreement duly executed on behalf of
the Borrower and completion of the other matters contemplated by Section 2.7 of
the Credit Agreement, as amended by this Amendment.
2.3 A Borrowing Base Certificate prepared as of the close of business
on August 25, 1999, together with such other information as is required under
Section 7.7(i), as amended hereby.
2.4 An incumbency certificate, and such documents evidencing necessary
corporate action of the Borrower with respect to this Amendment and the
transactions contemplated hereby as the Agent may request.
2.5 Payment to each Lender executing this Amendment of a fee for this
Amendment in the amount equal to one-quarter percent (1/4%) of the difference
between such Lender's Commitment Amount for the Review Period pursuant to the
First Amendment referenced above and such Lender's Commitment Amount for the
Review Period pursuant to this Amendment, and payment to the Agent (for its own
account) of such fees to which the Agent and the Borrower may agree in
connection with this Amendment.
2.6 Such other documents, and completion of such other matters, as the
Agent and the Required Banks may reasonably request.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Amendment, the Borrower represents and warrants that:
3.1 The execution, delivery and performance by the Borrower of this
Amendment are within its corporate powers, have been duly authorized by all
necessary corporate action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Borrower's
charter or by-laws, or of any contract or undertaking to which the Borrower is a
party or by which the Borrower or its property is or may be bound or affected.
3.2 This Amendment is a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
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3.3 No consent, approval or authorization of or declaration,
registration or filing with any governmental or nongovernmental person or
entity, including without limitation any creditor, stockholder or lessor of the
Borrower, is required on the part of the Borrower in connection with the
execution, delivery and performance of this Amendment or the transactions
contemplated hereby or as a condition to the legality, validity or
enforceability of this Amendment.
3.4 Excluding the effect of the Known Default (as defined in the First
Amendment referenced above), (a) after giving effect to the Amendments contained
in Article 1 of this Amendment, the representations and warranties contained in
Section 4 of the Credit Agreement are true on and as of the date hereof with the
same force and effect as if made on and as of the date hereof, and (b) no
Default or Event of Default has occurred and is continuing under the Credit
Agreement.
ARTICLE 4. MISCELLANEOUS
4.1 If the Borrower shall fail to perform or observe any term, covenant
or agreement in this Amendment, or any representation or warranty made by the
Borrower in this Amendment shall prove to have been incorrect in any material
respect when made, such occurrence shall be deemed to constitute an Event of
Default. Upon the occurrence of any such Event of Default, any other Event of
Default (other than the Known Default) under the Credit Agreement and the other
Loan Documents or the Commitment Termination Date (whether before, at or after
the end of the Review Period), notwithstanding anything in this Amendment to the
contrary, the Agent and the Lenders shall be entitled to exercise any and all
rights and remedies available to the Agent and the Lenders under the Credit
Agreement and the other Loan Documents and by law and the temporary waiver under
Article 2 of the First Amendment referenced above shall automatically be
terminated and have no further force or effect.
4.2 All references to the Credit Agreement in any document, instrument
or certificate referred to in the Credit Agreement or delivered in connection
therewith or pursuant thereto, hereafter shall be deemed references to the
Credit Agreement, as amended hereby.
4.3 Subject to the amendments herein provided and the other terms and
conditions of this Amendment, the Credit Agreement shall in all respects
continue in full force and effect.
4.4 Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
4.5 This Amendment shall be governed by and construed in accordance
with the laws of the State of Indiana.
4.6 The Borrower agrees to pay the reasonable fees and expenses of
Xxxxxxxxx Xxxxxx PLLC, counsel for the Agent, in connection with the negotiation
and preparation of this Amendment and the documents referred to herein and the
consummation of the transactions contemplated hereby.
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4.7 This Amendment may be executed upon any number of counterparts with
the same effect as if the signatures thereto were upon the same instrument.
4.8 The Borrower hereby represents and warrants that it is aware of no
claims or causes of action against the Agent, the Lenders or any of them.
Notwithstanding such representation and warranty, and as further consideration
for the agreements set forth in this Amendment, the Borrower, for itself and its
successors and assigns, hereby releases the Agent and each Lender, and their
respective officers, directors, employees, agents, attorneys, affiliates,
subsidiaries, and successors and assigns, from any liability, claim, right or
cause of action which now exists or hereafter arises, whether known or unknown,
arising from or in any way related to facts in existence as of the date hereof.
4.9 Each party hereto, after consulting or having had the opportunity
to consult with counsel, knowing, voluntarily, and intentionally waives any
right any of them may have to a trial by jury in any litigation based upon or
arising out of this Amendment, or any agreement referenced herein or other
related instrument or agreement, or any of the transactions contemplated by this
Amendment, or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. None of the parties hereto shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury trial
has been waived with any other action in which a jury trial cannot be or has not
been waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by any party hereto except by a written instrument
executed by all of them.
4.10 The Borrower agrees to execute any and all documents reasonably
deemed necessary or appropriate by the Agent to carry out the intent of, and/or
to implement, this Amendment.
4.11 This Amendment constitutes the entire understanding of the parties
with respect to the subject matter hereof. This Amendment is binding on the
parties hereto and their respective successors and assigns, and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
If any of the provisions of this Amendment are in conflict with any applicable
statute or rule or law or otherwise unenforceable, such offending provisions
shall be null and void only to the extent of such conflict or unenforceability,
but shall be deemed separate from and shall not invalidate any other provision
of this Amendment.
4.12 No course of dealing on the part of the Agent or any Lender, nor
any delay or failure on the part of the Agent or any Lender in exercising any
right, power or privilege hereunder shall operate as a waiver of such right,
power or privilege or otherwise prejudice the Agent's or any Lender's rights and
remedies hereunder or under any Loan Document or any other agreement or
instrument of the Borrower with or in favor of the Agent and the Lenders; nor
shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Agent and the Lenders under this
Amendment or under any Loan Document or any other agreement or instrument of the
Borrower with or in favor of the Agent and the Lenders is intended to be
exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy granted thereunder or
now or hereafter existing under any applicable law. Every right and remedy
granted by this Amendment or under any Loan
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Document or any other agreement or instrument of the Borrower with or in favor
of the Agent and the Lenders or by applicable law to the Agent and the Lenders
may be exercised from time to time and as often as may be deemed expedient by
the Agent and the Lenders.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first-above written.
XXXXXX GREETINGS, INC.
By: /s/ Xxxxx X. Xxxxxx
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Its: CFO
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BANK ONE, INDIANA, NATIONAL ASSOCIATION,
in its capacity as a Lender and in its
capacity as the Agent
By: /s/ Xxxxxx X. Xxxxxx
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Its: Vice President
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XXXXXX TRUST AND SAVINGS BANK
By:
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Its:
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FIFTH THIRD BANK
By: /s/ Xxxxx Xxxxxxx
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Its: Vice President
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