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Exhibit 10.10(e)
FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This Fifth Amendment to Loan and Security Agreement (the "Fifth
Amendment") is made as of this 10th day of May, 2000 by and between
Fleet Retail Finance Inc., formerly known as BankBoston Retail
Finance Inc. (in such capacity, herein the "Agent"), a Delaware
corporation with offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, as agent for the ratable benefit of the "Lenders", who are party
to the Agreement (defined below)
and
Back Bay Capital Funding LLC, a Delaware Limited Liability
Company with offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(the "Term Lender")
and
Drug Emporium, Inc. (hereinafter, the "Borrower"), a Delaware
corporation with its principal executive offices at 000 Xxxxxx Xxxxxxx
Xxxxx, Xxxxxx, Xxxx 00000
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T N E S S E T H:
WHEREAS, on October 28, 1998 the Agent, the Lenders and the Borrower
entered in a certain Loan and Security Agreement, as amended by a First
Amendment to Loan and Security Agreement dated May 11, 1999, a Second Amendment
to Loan and Security Agreement dated September 15, 1999, a Third Amendment to
Loan and Security Agreement dated December 10, 1999, and a Fourth Amendment to
Loan and Security Agreement dated March 8, 2000, 1999 (the "Agreement"); and
WHEREAS, the Borrower, the Agent, the Lenders, and the Term Lender
desire to amend certain of the provisions of the Agreement;
NOW, THEREFORE, it is hereby agreed among the Agent, the Lenders, the
Term Lender, and the Borrower as follows:
1. Capitalized Terms. All capitalized terms used herein and not
otherwise defined shall have the same meaning herein as in the Agreement.
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2. Amendment to Article 1. The definition of "Availability Reserves"
contained in Article 1 of the Agreement is hereby amended by the addition of the
following subparagraphs thereto:
(ix) all Accounts processed by McKesson Corporation,
McKesson Pay Systems, Inc., or any entity related
thereto.
(x) If the value of the Borrower"s Acceptable Inventory,
valued at cost, falls below $180,000,000.00, 10
percent of the amount of Acceptable Inventory less
then $180,000,000.00.
(xi) If the value of the Borrower"s Acceptable Accounts
falls below $12,000,000.00, 80 percent of the Amount
of Acceptable Accounts less than $12,000,000.00.
3. Amendment to Article 1: Article 1 of the Agreement is hereby amended
by deleting the definition of "EBITDA" and replacing it with the following:
"EBITDA":The Borrower's earnings (exclusive of one time noncash
nonrecurring gains or losses arising subsequent to February
27, 2000), before interest, taxes, depreciation, and
amortization, each as determined in accordance with GAAP,
applying a FIFO convention to the cost of goods sold provision
within earnings. Any increase in an asset investment account
(or reduction in a liability investment account) related to
E-Commerce shall be subtracted from EBITDA, to the extent that
the Borrower"s calculation of EBITDA does not otherwise make
such subtraction.
4. Amendment to Article 1. Article 1 of the Agreement is hereby amended
by deleting the definition of "Libor Margin" and replacing it with the
following:
"LIBOR MARGIN": (a) Until Section (b) of this Definition is in
effect: 200 basis points.
(b) Commencing June 2000, the Libor Margin
shall be reset monthly (commencing with the Business
Day after the Agent"s receipt of the Pricing
Certificate (Section 5-6(a)(i)(E)) for loans
initiated on or after the date when so set, that is
to say Libor contracts in effect at the time of
increases/decreases in margin will remain at the
margin originally utilized when the contract was
opened. The margin in effect at a given time will
apply to contracts opened at that time, and shall be
based upon the following pricing grid: LIBOR MARGIN
PRICING GRID
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MARGIN
TRAILING/ROLLING 12 MONTH (BASIS
TIER FIXED CHARGE RATIO AVERAGE EXCESS AVAILABILITY POINTS)
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I Equal or Greater than 1.7 Equal or Greater than 125
$20,000,000.00
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II Equal or Greater than 1.7 Less than $20,000,000.00 150
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III less than 1.7 and greater than N/A 150
1.25
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IV less than 1.25 and greater N/A 200
than 1.0
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V less than or equal to 1.0 N/A 225
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5. Amendment to Article 1. Article 1 of the Agreement is hereby amended
by deleting the definition of "Term Loan Maturity Date" and replacing it with
the following:
"Term Loan Maturity Date": May 1, 2002.
6. Amendment to Article 2A. Section 2A-1 of the Agreement is hereby
amended to read as follows:
2A-1. Commitment to Make Term Loan.
(1) Subject to satisfaction of all conditions precedent by on
or prior to the date of this Agreement, the Borrower shall borrow from
the Term Lender and the Term Lender shall lend to the Borrower the sum
of $12,500,000.00 (the "TERM LOAN"), repayable with interest as
provided herein.
(2) The proceeds of the Term Loan shall be used to provide
working capital support for E-Commerce and for general working capital
purposes.
7. Replacement of Term Note. The Term Note annexed to the Agreement as
EXHIBIT 2A-2 is replaced with the Term Note annexed hereto as EXHIBIT 2A-2.
8. Amendment to Article 2A. Section 2A-3(b)(i)(3) of the Agreement is
hereby amended to read as follows:
(3) EBITDA for the then most recent 12 month period, shall not
be less than (i) $18 Million, excluding E-Commerce for the entire
period if E-Commerce was sold at the time of calculation, or (ii) $7
Million if E-Commerce was not sold at the time of calculation.
9. Amendment to Article 2A. Section 2A-3(c) of the Agreement is hereby
amended to read as follows:
(c) The Borrower shall pay the Agent, for the account of the
Term Lender, the "TERM LOAN EARLY TERMINATION FEE" (so referred to
herein) equal to $1,375,000.00 less the Additional Term Loan Commitment
Fee (as defined herein), and, with respect to all payments made after
May 10, 2000, all paid and accrued and unpaid (but only if paid when
due and payable) Current Pay Interest, and PIK Interest (but only if
paid when due and payable), not to be less than $0. To the extent of
any partial prepayments of the
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Term Loan, which shall only be made in the amount of $2,500,000 or
greater, such Term Loan Early Termination Fee shall be paid on a pro
rata basis at the time of partial prepayment, based upon the percentage
of the Term Loan prepaid. In no event shall the Term Loan be prepaid
prior to December10, 2000.
10. Amendment to Article 2A. Section 2A-4(a) of the Agreement is hereby
amended to read as follows:
2A-4. Interest On The Term Loan.
(1) The unpaid principal balance of the Term Loan shall bear
interest, until repaid, fixed at 15% per annum, payable as follows:
(i) Interest on the unpaid principal balance of the
Term Loan, equal to 12.5% per annum ("CURRENT PAY INTEREST")
shall be payable monthly in arrears, on the first day of each
month, and on the Term Loan Maturity Date.
(ii) Accrued Interest on the unpaid principal balance
of the Term Loan, equal to 2.5% per annum ("PIK INTEREST") ,
shall be added to the then unpaid principal balance of the
Term Note quarterly, on the first day of each April, July,
October, and January hereafter.
(b) Following the occurrence of any Event of Default (and
whether or not Acceleration has taken place), at the direction of the
Term Lender, Current Pay Interest shall be 14.5% per annum and PIK
Interest shall remain at 2.5% per annum.
11. Amendment to Article 2A. Article 2A of the Agreement is hereby
amended by the addition of the following Section 2A-7:
2A-7. Term Loan Annual Fee. As compensation for the Term
Lender's having committed to increase and extend the term of the Term
Loan, on May 10, 2000 the Term Lender shall have earned and the
Borrower shall pay the Term Loan Annual Fee of 2.5% of the principal
balance of the Term Loan outstanding on May 10, 2001.
12. Amendment to Article 5. Effective as of February 26, 2000, Section
5-12 of the Agreement is hereby amended to read as follows:
(a) EBITDA: The Borrower shall not permit or suffer its
EBITDA, tested as of the last day of each fiscal quarter on the basis
set forth below, to be less than the following:
MINIMUM CONSOLIDATED EBITDA:
"()" Denotes Negative
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BASIS TESTED MINIMUM EBITDA
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Quarter Ending February, 2000 ($10,200,000)
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Two Quarters Ending May, 2000 ($15,994,362)
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Three Quarters Ending August, 2000 ($18,089,773)
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Four Quarters Ending November, 2000 ($20,965,521)
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Four Quarters Ending February, 2001 ($5,956,307)
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For fiscal quarters thereafter, minimum EBITDA shall be established based upon
reasonable projections prepared by the Borrower and agreed upon by the Agent.
In the event that E-Commerce is not consolidated with the Borrower for the
purpose of calculating EBITDA then the covenants described above shall be reset
at a minimum of 80 percent of reasonable projections to be prepared by the
Borrower and agreed upon by the Agent.
In the event that the Borrower fails to furnish projections to the Agent or, if
furnished, the Agent and the Borrower fail to agree to any proposed projections,
then until the Borrower and the Agent reach agreement as to any projections the
Borrower shall at all times maintain minimum Availability, after giving effect
to all then held checks (if any); accounts payable which are beyond credit terms
then accorded the Borrower and overdrafts of not less than $10,000,000.00.
13. CAPITAL EXPENDITURES The Borrower will not suffer or permit its
Capital Expenditures to exceed the following:
CAPITAL EXPENDITURES
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Fiscal Year Ending Maximum for fiscal Year
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February, 2001 $8,500,000
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February, 2002 9,000,000
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February, 2003 9,500,000
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14. Amendment to Article 5. Section 5-13 of the Agreement is hereby
amended to read as follows:
5-13. Value of Collateral. The value of the Borrower"s
Acceptable Inventory calculated at Cost shall at all times be equal to
or greater than $170,000,000.00. The value of the Borrower"s Acceptable
Accounts shall at all times be equal to or greater than $10,000,000.00
15. Amendment to Article 5. Article 5 is hereby amended by the addition
of the following Section 5-14 thereto:
5-14. Minimum Excess Availability. Availability after giving
effect to all then held checks (if any); accounts payable which are
beyond credit terms then accorded the Borrower and overdrafts shall not
be less than $15,000,000.00, measured on a rolling thirty (30) day
average basis.
16. Waiver of Compliance with Sections 4-18, 4-19, 4-20 and 4-23. The
Lenders waive compliance by the Borrower with the terms of Sections 4-18, 4-19,
4-20 and 4-23 of the Agreement in connection with the investments in and/or
loans to be made in connection with the continued operation
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of Borrower's commerce business ("E-Commerce", which term includes
XxxxXxxxxxxx.xxx Inc. and the business to be carried on by it), including
without limitation, any amount invested in, advanced to or paid or incurred by
or on behalf of E-Commerce up to a maximum aggregate amount of $30,500,00.00. No
further amounts shall be advanced to E-COMMERCE directly or indirectly,
including by way of any additional trade support.
17. Additional Tem Loan Commitment Fee. As compensation for the Term
Lender's having committed to increase the Term Loan from $7,500,000.00 to
$12,500,000.00, the Term Lender has earned the Additional Term Loan Commitment
Fee (so referred to herein) of $150,000.00, payable at closing.
18. Amendment Fee. As compensation for the Revolving Credit Lenders'
having committed to enter into this Fifth Amendment the Borrower shall pay to
the Agent for the benefit of the Revolving Credit Lenders, at closing, an
amendment fee in the amount of $165,000.00.
19. Ratification of Loan Documents. Except as provided herein, all
terms and conditions of the Agreement and of the other Loan Documents remain in
full force and effect. Furthermore, except as provided herein, all warranties
and representations made in the Agreement and in the other Loan Documents remain
in full force and effect. The Borrower hereby ratifies and confirms that the
grant of security interest set forth in Article 8 of the Agreement is intended
to constitute a grant of security interest in favor of the Agent on behalf of
all Lenders, including, without limitation, the Term Lender.
20. Conditions to Effectiveness. This Fifth Amendment shall not be
effective until each of the following conditions precedent have been fulfilled
to the satisfaction of the Agent and the Lenders:
(1) This Fifth Amendment shall have been duly executed and
delivered by the respective parties hereto.
(2) No Suspension Event shall have occurred and be continuing.
(3) The Borrower shall have provided such additional instruments
and documents to the Agent as the Agent and the Agent's
counsel may have reasonably requested.
(4) The Agent shall promptly notify the Borrower when such
conditions are satisfied.
(5) The Borrower shall have paid to the Agent for the account of
the Term Lender, the Additional Term Loan Commitment Fee.
(6) Availability after giving effect to all then held checks (if
any); accounts payable which are beyond credit terms then
accorded the Borrower, any overdrafts, and the funding of the
Term Loan, shall not be less than $25,000,000.00.
(7) The Borrower shall have furnished the Agent with
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corporate resolutions authorizing the execution of this
Amendment and the documents contemplated herein.
21. Miscellaneous.
(8) This Fifth Amendment may be executed in several counterparts
and by each party on a separate counterpart, each of which
when so executed and delivered shall be an original, and all
of which together shall constitute one instrument.
(9) This Fifth Amendment expresses the entire understanding of the
parties with respect to the transactions contemplated hereby.
No prior negotiations or discussions shall limit, modify, or
otherwise affect the provisions hereof.
(10) Any determination that any provision of this Fifth Amendment
or any application hereof is invalid, illegal or unenforceable
in any respect and in any instance shall not effect the
validity, legality, or enforceability of such provision in any
other instance, or the validity, legality or enforceability of
any other provisions of this Fifth Amendment.
(11) The Borrower shall pay on demand all costs and expenses of the
Agent, including, without limitation, reasonable attorneys'
fees, in connection with the preparation, negotiation,
execution and delivery of this Fifth Amendment.
(12) The Borrower warrants and represents that the Borrower has
consulted with independent legal counsel of the Borrower's
selection in connection with this Fifth Amendment and is not
relying on any representations or warranties of any Lender or
the Agent or their respective counsel in entering into this
Fifth Amendment.
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IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to
Loan and Security Agreement to be executed by their duly authorized officers as
a sealed instrument as of the date first above written.
DRUG EMPORIUM, INC.
("Borrower")
By:_____________________________________
Name:___________________________________
Title:__________________________________
FLEET RETAIL FINANCE INC.
("Agent")
By:_____________________________________
Name:___________________________________
Title:__________________________________
The "LENDERS"
FLEET RETAIL FINANCE INC.
By:_________________________________
Print Name:_________________________________
Title:_________________________________
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NATIONAL CITY COMMERCIAL FINANCE, INC.
By:_________________________________
Print Name:_________________________________
Title:_________________________________
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By:_________________________________
Print Name:_________________________________
Title:_________________________________
LASALLE BUSINESS CREDIT, INC.
By:_________________________________
Print Name:_________________________________
Title:_________________________________
BACK BAY CAPITAL FUNDING LLC
By:_________________________________
Print Name:_________________________________
Title:_________________________________
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