AMENDMENT NO. 5 to SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Exhibit 10.1
AMENDMENT NO. 5
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 5 TO SECOND AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this “Amendment”) is entered into as of September 24, 2020, by and among XCEL BRANDS, INC., a Delaware corporation (“Initial Borrower”), each other signatory hereto that is a Credit Party under the Loan Agreement (as hereinafter defined), BANK HAPOALIM B.M., as a Lender (“BHI”), and BHI as collateral and administrative agent for Lenders (in such capacity “Agent”).
BACKGROUND
Initial Borrower, IM Brands, LLC (“IM Brands”), JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing, LLC, Xcel Design Group, LLC, Xxxxxx Xxxxx Fine Jewelry, LLC, H Heritage Licensing, LLC and Xcel-CT MFG, LLC (other than Initial Borrower, collectively, “Guarantors”), Lenders and Agent are parties to a Second Amended and Restated Loan and Security Agreement dated as of February 11, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lenders made term loans to Initial Borrower secured by a Lien on substantially all of the assets of Initial Borrower. Guarantors have guaranteed the payment and performance of Initial Borrower’s obligations to Lenders and Agent under the Loan Agreement which guarantee obligations are secured by a Lien on substantially all of the assets of Guarantors.
Initial Borrower has requested that Lenders amend the Loan Agreement and Lenders and Agent have agreed to amend the Loan Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the financial accommodations provided to Initial Borrower by Lenders, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
“EBITDA” means, for the applicable period, for a Person, an amount equal to (a) Net Income for Initial Borrower and the Included Subsidiaries on a consolidated basis for such period, minus, (b) to the extent included in calculating Net Income for Initial Borrower and the Included Subsidiaries on a consolidated basis, the sum of, without duplication, (i) interest income (whether cash or non- cash) for such period, (ii) income tax credits for such period, (iii) gain from extraordinary or non-recurring items for such period (including, without limitation,
non-cash items related to purchase accounting) and (iv) deferred compensation payments (regardless of when accrued), plus (c) the following to the extent deducted in calculating such Net Income, (i) interest charges for such period, (ii) the provision for all federal, state, local and foreign taxes payable for such period and the amount of payments permitted pursuant to Section 9(h)(ii), (iii) the amount of depreciation and amortization expense for such period, (iv) the transaction fees, costs and expenses incurred in connection with (A) the negotiation and execution of this Agreement and the other Loan Documents and any amendments thereto and
(B) Permitted Acquisitions, (v) all other extraordinary or non-recurring non-cash charges (including, without limitation, non-cash items related to purchase accounting), (vi) deferred management salaries (accrued but not paid), (vii) all non- cash compensation (including without limitation, stock or equity compensation) in such period and (viii) the amount of the non-cash bad debt reserve taken during the Fiscal Years ending December 31, 2020 and December 31, 2021 relating to the bankruptcy of Lord & Xxxxxx.
“Fixed Charge Coverage Ratio” means for any period, as respects any Person, the ratio of (a) EBITDA of such Person for such period plus a decrease in cash in the amount of up to $925,000 expended in connection with the Longaberger Acquisition to (b) the Fixed Charges for such period.
| (b) | Section 3.6 is amended in its entirety to provide as follows: |
“3.6 Voluntary Prepayments. Borrowing Representative shall have the right, at any time upon thirty (30) day’s prior written notice to Agent to
“(a) If for any Fiscal Quarter, commencing with Fiscal Quarter ending on March 31, 2021, there shall be Excess Cash Flow for such Fiscal Quarter, then Borrowers shall pay to Agent for the benefit of Lenders holding a portion of the Term Loans an amount equal to fifty percent (50%) of such Excess Cash Flow until the aggregate amount paid for all such Fiscal Quarters equals $4,450,000 (the “Deferred Amount”). If for any Fiscal Year commencing with the Fiscal Year in which Borrowers paid to Agent the entire Deferred Amount, there shall be Excess Cash Flow for such Fiscal Year, then Borrowers shall pay to Agent for the benefit of such Lenders an amount equal to ten percent (10%) of Excess Cash Flow at the end of each Fiscal Year (collectively with the Deferred Amount, the “Cash Flow Recapture Requirement”). The Cash Flow Recapture Requirement for any such Fiscal Quarter or Fiscal Year, as applicable, shall be received by Agent no later than the date that is seven (7) days after the delivery of the Financial Statements for such Fiscal Quarter or Fiscal Year, as applicable, required pursuant to Section 8.1 and, in the event that the Cash Flow Recapture Requirement paid to Agent for all Fiscal Quarters commencing with the Fiscal Quarter ending on March 31, 2021 and ending with the Fiscal Quarter ending March 31, 2022 is less than the Deferred Amount, then Borrower shall pay to Agent the shortfall no later than the date that is seven (7) days after the delivery of the Financial Statements for the Fiscal Quarter ending March 31, 2022 required pursuant to Section 8.1. The Cash Flow Recapture requirement shall be applied to the principal amount of the Term Loan B first in the reverse order of maturity, then to the principal amount of Term Loan A in the reverse order of maturity and after the Term Loans have been paid in full, to the outstanding principal balance of the Incremental Term Loans pro rata with any balance going to pay the outstanding principal balance of the Revolving Loan. Borrowers shall not be required to pay an Early Termination Fee on any amount repaid due to the Cash Flow Recapture Requirement. To the extent applicable, amounts prepaid shall be applied first to any Base Rate Loans then outstanding and then to outstanding LIBOR Rate Loans with the shortest Interest Periods remaining. Together with each prepayment of a LIBOR Rate Loan or a Fixed Rate Loan, Borrowers shall pay any amounts due and payable pursuant to Section 3.12.”
Amendment.
| (d) | Exhibit B-1 (Form of Term Loan Note A) is replaced with Exhibit A to this |
| 3. | Conditions of Effectiveness.This Amendment shall become effective upon |
| 5. | Effect on the Loan Documents. |
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first written above.
XCEL BRANDS, INC.
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
IM BRANDS, LLC
By:XCEL BRANDS, INC.,
Its Manager
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
JR LICENSING, LLC
By:XCEL BRANDS, INC.,
Its Manager
Chief Financial Officer
H LICENSING, LLC
By:XCEL BRANDS, INC.,
Its Manager
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
C WONDER LICENSING, LLC
By:XCEL BRANDS, INC.,
Its Manager
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
XCEL DESIGN GROUP, LLC By:XCEL BRANDS, INC.,
Its Manager
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
XXXXXX XXXXX FINE JEWELRY, LLC By:XCEL BRANDS, INC.,
Its Manager
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
H HERITAGE LICENSING, LLC By:XCEL BRANDS, INC.,
Its Manager
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
XCEL-CT MFG, LLC
By:XCEL BRANDS, INC.,
Its Manager
By: /s/ Xxxxx Xxxxx
Chief Financial Officer
BANK HAPOALIM B.M., a Lender and as Agent
By:
Name: Title:
By:
Name: Title:
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
First Vice President
/s/ Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx Senior Vice President
EXHIBIT B-1
[See Attached]
AMENDED AND RESTATED TERM LOAN NOTE A
$7,250,000September 24, 2020
This Amended and Restated Term Loan Note A (this “Note”) is executed and delivered under and pursuant to the terms of that certain Second Amended and Restated Loan and Security Agreement dated as of February 11, 2019 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”) by and among BANK HAPOALIM B.M. (“Lender”), XCEL BRANDS, INC. (“Initial Borrower” and together with each Person who hereafter becomes a Borrower, collectively “Borrowers”), and any other Credit Party executing or becoming a party to the Loan Agreement, the financial institutions party thereto as Lenders and BANK HAPOALIM B.M., as agent for Lenders (in such capacity, “Agent”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement.
FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender at the offices of Agent located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as the holder hereof may from time to time designate to Borrower in writing:
and
This Note is the Term Loan Note A referred to in the Loan Agreement and is secured, inter alia, by the liens granted pursuant to the Loan Agreement and the other Loan Documents, is entitled to the benefits of the Loan Agreement and the other Loan Documents, and is subject to all of the agreements, terms and conditions therein contained.
Payments received by Lender shall be applied against principal and interest as provided for in the Loan Agreement. This Note may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Loan Agreement.
If an Event of Default under Section 12.1(f) of the Loan Agreement shall occur, then this Note shall immediately become due and payable, without notice, together with attorneys’ fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof. If any other Event of Default shall occur under the Loan Agreement or any of the other Loan Documents which is not cured within any applicable grace period, then this Note may, as provided in the Loan Agreement, be declared to be immediately due and payable, without notice, together with attorneys’ fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.
This Note shall be governed by and construed in accordance with the laws of the State of New York.
To the fullest extent permitted by applicable law, Borrower waives: (a) presentment, demand and protest, and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all of the Obligations, the Loan Agreement, this Note or any other Loan Documents; (b) all rights to notice and a hearing prior to Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Agent to exercise any of its remedies; and (c) the benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that this Note is executed as part of a commercial transaction and that the proceeds of this Note will not be used for any personal or consumer purpose.
This Note amends and restates and is given in partial substitution for but not in satisfaction of the Amended and Restated Term Loan Note A dated April 13, 2020 executed by Borrower in favor of Lender, in the original principal amount of $7,250,000.
Borrower agrees to pay to Agent all fees and expenses described in the Loan Agreement and the other Loan Documents.
XCEL BRANDS, INC.
By:
Name: Title:
19415930SIGNATURE PAGE TO
AMENDED AND RESTATED TERM LOAN NOTE A
EXHIBIT B-2
[See Attached]
AMENDED AND RESTATED TERM LOAN NOTE B
$14,750,000September 24, 2020
This Amended and Restated Term Loan Note B (this “Note”) is executed and delivered under and pursuant to the terms of that certain Second Amended and Restated Loan and Security Agreement dated as of February 11, 2019 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”) by and among BANK HAPOALIM B.M. (“Lender”), XCEL BRANDS, INC. (“Initial Borrower” and together with each Person who hereafter becomes a Borrower, collectively “Borrowers”), and any other Credit Party executing or becoming a party to the Loan Agreement, the financial institutions party thereto as Lenders and BANK HAPOALIM B.M., as agent for Lenders (in such capacity, “Agent”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement.
FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender at the offices of Agent located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as the holder hereof may from time to time designate to Borrower in writing:
and
This Note is the Term Loan Note B referred to in the Loan Agreement and is secured, inter alia, by the liens granted pursuant to the Loan Agreement and the other Loan Documents, is entitled to the benefits of the Loan Agreement and the other Loan Documents, and is subject to all of the agreements, terms and conditions therein contained.
Payments received by Lender shall be applied against principal and interest as provided for in the Loan Agreement. This Note may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Loan Agreement.
If an Event of Default under Section 12.1(f) of the Loan Agreement shall occur, then this Note shall immediately become due and payable, without notice, together with attorneys’ fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof. If any other Event of Default shall occur under the Loan Agreement or any of the other Loan Documents which is not cured within any applicable grace period, then this Note may, as provided in the Loan Agreement, be declared to be immediately due and payable, without notice, together with attorneys’ fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.
This Note shall be governed by and construed in accordance with the laws of the State of New York.
To the fullest extent permitted by applicable law, Borrower waives: (a) presentment, demand and protest, and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all of the Obligations, the Loan Agreement, this Note or any other Loan Documents; (b) all rights to notice and a hearing prior to Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Agent to exercise any of its remedies; and (c) the benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that this Note is executed as part of a commercial transaction and that the proceeds of this Note will not be used for any personal or consumer purpose.
This Note amends and restates and is given in partial substitution for but not in satisfaction of the Amended and Restated Term Loan Note B dated April 13, 2020 executed by Borrower in favor of Lender, in the original principal amount of $14,750,000.
Borrower agrees to pay to Agent all fees and expenses described in the Loan Agreement and the other Loan Documents.
XCEL BRANDS, INC.
By:
Name: Title:
19419585SIGNATURE PAGE TO
AMENDED AND RESTATED TERM LOAN NOTE B
SCHEDULE II
FINANCIAL COVENANTS
Fiscal QuarterFixed Charge
Coverage Ratio
December 31, 2020 and each Fiscal
Quarter end thereafter1.25 to 1.00
Fiscal Year EndCapital Expenditures
December 31, 2020$1,600,000
All other times$700,000
Fiscal QuarterMaximum Leverage Ratio
September 30, 20204.00 to 1.00
December 31, 20203.50 to 1.00
March 31, 20213.15 to 1.00
June 30, 20213.00 to 1.00
September 30, 20212.75 to 1.00
December 31, 20212.50 to 1.00 March 31, 2022 and each Fiscal Quarter
end thereafter1.50 to 1.00
Fiscal Quarter EndMinimum EBITDA
September 30, 2020$5,000,000
