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EXHIBIT 10.1
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is made as of the 3lst day of March, 1999, by and between
INTEGRITY INCORPORATED, a Delaware corporation (hereinafter referred to as
"Borrower"), and BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC., f/k/a
Creditanstalt Corporate Finance, Inc., a Delaware corporation (hereinafter
referred to as the "Lender").
WITNESSETH:
WHEREAS, Borrower and the Lender are party to that certain Loan and
Security Agreement dated as of August 2, 1996 (as amended, modified,
supplemented and restated from time to time, the "Loan Agreement") pursuant to
which the Lender made available to Borrower a revolving credit facility
permitting advances of up to Six Million Dollars ($6,000,000) at any one time
outstanding and a term loan in the principal amount of Thirteen Million Dollars
($13,000,000); and
WHEREAS, Borrower has requested that the Lender modify certain of the
financial covenants set forth in Article 8 of the Loan Agreement, and
WHEREAS, Borrower and the Lender desire to modify the Loan Agreement
according to the terms and conditions more particularly described in this
Amendment;
NOW, THEREFORE, in consideration of the foregoing premises, the terms
and conditions herein stated, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINED TERMS. Defined terms used herein, as indicated by the
initial capitalization thereof, shall have the meanings ascribed to such terms
in the Loan Agreement.
2. DEFINITION OF NET WORTH. The Loan Agreement is hereby amended by
deleting the definition of Net Worth in its entirety and by substituting
therefore a new definition of Net Worth to read as follows:
"Net Worth" shall mean, as to any Person, at any time, the excess of
such Person's total assets over Total Liabilities, excluding, however,
from the definition of assets (a) the amount of any write-up in the
book value of any asset resulting from a revaluation thereof
subsequent to the later to occur of (i) the Closing Date and (ii) the
date any such Person acquired such asset; (b) the amount of treasury
stock of such Person; (c) the
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amount of receivables from Affiliates of such Person; (d) unamortized
debt discount and expense of such Person, and (e) with respect to
Borrower and its consolidated Subsidiaries, for purposes of the Net
worth covenant in Section 8.1 only, the effect of any write-down of
select 1995 product masters not to exceed $2,000,000 for the fiscal
year ending December 31, 1999; in each case as determined in
accordance with GAAP on a consolidated basis for such Person and its
Subsidiaries.
3. FINANCIAL COVENANTS. The Loan Agreement is hereby further amended
by deleting Sections 8.1, 8.2, and 8.5 thereof in their entirety and by
substituting therefore new Sections 8.1, 8.2, and 8.5 to read as follows:
8.1 NET WORTH. Borrower and its consolidated Subsidiaries
shall maintain at all times during the applicable periods set forth
below, a Net Worth, on a consolidated basis, of not less than the
amount set forth opposite each such applicable period:
Applicable Period Amount
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01/01/99 - 03/31/99 $11,000,000
04/01/99 - 06/30/99 $11,500,000
07/01/99 - 09/30/99 $12,000,000
10/01/99 - 12/31/99 $12,500,000
01/01/00 - 12/31/00 $13,000,000
At all times thereafter $15,000,000
8.2 CASH FLOW. Borrower and its Subsidiaries shall maintain as
of the end of each fiscal quarter of Borrower during the applicable
periods set forth below, a Cash Flow for the four fiscal quarter
period then ended of not less than the amount set forth opposite each
such applicable period:
Applicable Period Amount
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01/01/99 - 06/30/99 $6,000,000
07/01/99 - 12/31/99 S6,500,000
01/01/00 - 12/31/00 $7,000,000
At all times thereafter $7,500,000
8.5 FIXED CHARGE COVERAGE RATIO. Borrower and its consolidated
Subsidiaries shall maintain, on a consolidated basis, as of the end of
each fiscal quarter of Borrower during the applicable period set forth
below, a Fixed Charge Coverage Ratio for the four fiscal quarter period
then ended of not less than the ratio set forth opposite each such
applicable period:
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Applicable Period Amount
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01/01/99-06/30/99 0.65:1.00
07/01/99-09/30/99 0.90:1.00
10/01/99-12/31/99 1.10:1.00
01/01/00 -12/31/00 1.20:1.00
At all times thereafter 1.25:1.00
4. AMENDMENT FEE. In consideration of the amendments set forth herein,
Borrower agrees to pay to Lender an amendment fee (the "Amendment Fee") in the
amount of $5,000, which shall be due and payable on the date of execution
hereof. Such fee shall be fully earned on payment thereof and shall not be
subject to proration or rebate for any reason.
5. CONDITIONS PRECEDENT. Subject to the terms and conditions hereof,
this Amendment and the amendments set forth herein shall not become effective
unless and until (a) this Amendment has been executed by both the Borrower and
the Lender and (b) Borrower shall have paid to Lender the Amendment Fee
described in Section 4 hereof.
6. REPRESENTATIONS AND WARRANTIES; NO DEFAULT.
(a) Borrower hereby represents and warrants to the Lender that
as of the date hereof, and after giving effect to this Amendment, (i) all of
Borrower's representations and warranties contained in the Loan Agreement, as
amended hereby, and the other Loan Documents are true and correct on and as of
the date hereof, and (ii) no Default or Event of Default has occurred and is
continuing as of such date under any Loan Document.
(b) Borrower hereby further represents and warrants to the
Lender that (i) Borrower has the power and authority to enter into this
Amendment and to perform all of its obligations hereunder; (ii) the execution
and delivery of this Amendment has been duly authorized by all necessary action
(corporate or otherwise) on the part of Borrower; and (iii) the execution and
delivery of this Amendment and performance thereof by Borrower does not and
will not violate the Certificate of Incorporation, By-laws or other
organizational documents of Borrower and does not and will not violate or
conflict with any law, order, writ, injunction, or decree of any court,
administrative agency or other governmental authority applicable to Borrower or
its properties.
7. NO CLAIMS; OFFSET. Borrower hereby represents, warrants,
acknowledges and agrees to and with the Lender that (a) Borrower does not hold
or claim any right of action, claim, cause of action or damages, either at law
or in equity, against the Lender which arises from, may arise from, allegedly
arise from, are based upon or are related in any manner whatsoever to the Loan
Agreement and the Loan Documents or which are
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based upon acts or omissions of the Lender in connection therewith and (b) the
Obligations are absolutely owed to the Lender, without offset, deduction or
counterclaim.
8. LIMITATION OF AMENDMENT. Except as expressly set forth herein, this
Amendment shall not be deemed to waive, amend or modify any term or condition
of the Loan Agreement or any other Loan Documents, each of which is hereby
ratified and reaffirmed and which shall remain in full force and effect, nor to
serve as a consent to any matter prohibited by the terms and conditions
thereof.
9. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which when fully executed shall be deemed to constitute
one and the same agreement. Any signature page to this Amendment may be
witnessed by a telecopy or other facsimile of any original signature page and
any signature page of any counterpart hereof may be appended to any other
counterpart hereof to form a completely executed counterpart hereof.
10. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the successors and permitted assigns of the parties
hereto.
11. SECTION REFERENCES. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties hereto
evidenced hereby.
12. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand all
costs and expenses of the Lender in connection with the preparation, execution,
delivery and enforcement of this Amendment and all other Amendment Documents
executed in connection herewith, and any other transactions contemplated
hereby, including, without limitation, reasonable attorneys' fees.
13. GOVERNING LAW. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed under seal as of the day and year first above written.
"BORROWER"
INTEGRITY INCORPORATED
By: /s/ P. Xxxxxxx Xxxxxxx
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Name: P. Xxxxxxx Xxxxxxx
Title: President
Attest:/s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Secretary
[CORPORATE SEAL]
"LENDER"
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
Title: Vice President
By: /s/ Xxxxxxx Xxxx
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Name: Xxxxxxx Xxxx
Title: Sr. Associate
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