Exhibit 10.59
March 30, 1998
Empire Industries, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx
RE: SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
Gentlemen:
Reference is made to that certain Loan and Security Agreement
(as amended, the "Loan Agreement") dated as of May 29, 1996 among Empire
Industries, Inc., LaSalle National Bank as collateral agent and administrative
agent ("Agent") for itself ("LaSalle") and each other lender now or hereafter a
party to the Loan Agreement (LaSalle and each such other lender are sometimes
collectively referred to as "Lenders") and all other Lenders. Borrower has
requested that Agent and Lenders agree to amend the Loan Agreement in certain
respects. Agent and Lenders are willing to do so on the terms and subject to the
conditions set forth herein. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals,
the mutual covenants and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. The Loan Agreement is hereby amended as follows:
(a) The first sentence of Paragraph 10 of the Loan Agreement
is hereby amended to replace the reference to "May 29, 1999" with "April 1,
2001."
(b) The fourth sentence of Paragraph 10 of the Loan Agreement
is hereby amended and restated in its entirety, as follows:
"If, during the term of this Agreement, Borrower prepays all of the
Liabilities and terminates this Agreement, Borrower agrees to pay to
Collateral Agent, for the benefit of Lenders, as a prepayment fee, in
addition to the payment of all other Liabilities, an amount equal to
(i) three percent (3%) of the Aggregate Maximum Loan Amount if such
event occurs on or before Xxxxx 0, 0000, (xx) two percent (2%) of the
Aggregate Maximum Loan Amount if such event occurs after April 1, 1999
but on or before April 1, 2000 and (iii) one percent (1%) of the
Aggregate Maximum Loan Amount if such event occurs after April 1, 2000,
but before the end of the Original Term or any Renewal Term."
Notwithstanding the provisions of the prior sentence of this Paragraph
10, Borrower may prepay, without any prepayment fee, the Loans
outstanding at any time against the availability under subparagraph (h)
of Paragraph 1 of Exhibit A to this Agreement; provided that Collateral
Agent, for the benefit of Agents and Lenders, shall retain a lien upon
Borrower's real property located at 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx with priority junior only to that of the lender which provides
refinancing of such real property, the proceeds of which refinancing
are used by Borrower to prepay the Loans outstanding against the
availability under subparagraph (h) of Paragraph 1 of Exhibit A to this
Agreement.
(c) Paragraphs 12(o) and 12(p) of the Loan Agreement are
hereby amended and restated in their entirety, as follows:
"(o) Borrower's Tangible Net Worth shall not at any time be
less than the "Minimum Tangible Net Worth"; Minimum Tangible Net Worth
being defined for purposes of this subparagraph as (i) negative
Fourteen Million Four Hundred Fifty-Five Thousand Dollars
(-$14,455,000) for the period beginning March 31, 1998 and ending
September 29, 1998, (ii) negative Twelve Million Four Hundred
Fifty-Five Thousand Dollars (-$12,455,000) for the period beginning
September 30, 1998 and ending December 31, 1998, (iii) negative
Fourteen Million Four Hundred Fifty-Five Thousand Dollars
(-$14,455,000) for the period beginning January 1, 1999 and ending
September 29, 1999, (iv) negative Twelve Million Four Hundred
Fifty-Five Thousand Dollars (-$12,455,000) for the period beginning
September 30, 1999 and ending September 29, 2000, (v) negative Ten
Million Four Hundred Fifty-Five Thousand Dollars (-$10,455,000) for the
period beginning September 30, 2000 and ending December 30, 2000, (vi)
negative Nine Million Four Hundred Fifty-Five Thousand Dollars
(-$9,455,000) for the period beginning December 31, 2000 and ending
September 29, 2001, and (vii) negative Seven Million Four Hundred
Fifty-Five Thousand Dollars (-$7,455,000) for the period beginning
September 30, 2001 and at all times thereafter; "Tangible Net Worth"
being defined for purposes of this Agreement as Borrower's
shareholders' equity (including retained earnings) less the book value
of all intangible assets as determined solely by Collateral Agent on a
consistent basis plus the amount of LIFO reserve plus the amount of any
debt subordinated to Agents and Lenders on the date hereof, all as
determined under generally accepted accounting principles applied on a
basis consistent with the financial statement most recently presented
to Collateral Agent prior to the date hereof except as set forth
herein;
(p) The ratio during each period of (i) the sum of Borrower's
Net Income before provision for amortization and depreciation expense
reducing Net Income during such period, to (ii) the sum of all
scheduled payments of
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principal during such period with respect to indebtedness for borrowed
money (including, without limitation, all curtailments of availability
under Paragraph 3 of Exhibit A of this Agreement other than
curtailments of availability under subparagraph (f) of Paragraph (3) of
Exhibit A of this Agreement), purchase money indebtedness and
capitalized lease obligations, shall not be not less than 1.2 to 1.0 as
of the last day of each fiscal quarter, commencing with the fiscal
quarter ending December 31, 1998, for the four (4) fiscal quarter
period ending on such date, all as determined under generally accepted
accounting principles applied on a basis consistent with the financial
statement most recently presented to Collateral Agent prior to the date
hereof except as set forth herein;"
(d) Paragraph 12 of the Loan Agreement is hereby amended to
add a new subparagraph (u), as follows:
"(u) Borrower will not permit its Net Income for the 1998
fiscal year to be less than negative Three Million Dollars
(-$3,000,000) (i.e. Borrower will not permit its net loss for the 1998
fiscal year to exceed Three Million Dollars ($3,000,000)); Borrower
will not permit its Net Income for the 1999 fiscal year to be less than
Two Million Dollars ($2,000,000); and Borrower will not permit its Net
Income for the 2000 fiscal year to be less than Three Million Dollars
($3,000,000)."
(e) Paragraph (1) of Exhibit A to the Loan Agreement is hereby
amended and restated in its entirety, as follows:
"(1) LOAN LIMIT: Each Lender, severally and not jointly, agrees to make
its Pro Rata Share of such Loans as Borrower shall request from
time to time from the date hereof, subject to the terms and
conditions set forth in this Agreement, up to the sum of the
following sublimits (the "Loan Limit"):
(a) Up to eighty-five percent (85%) of the face amount (less
maximum discounts, credits and allowances which may be taken
by or granted to Account Debtors in connection therewith) of
Borrower's Eligible Accounts; plus
(b) Up to sixty-five percent (65%) of the lower of the cost or
market value of Borrower's Eligible Inventory consisting
solely of finished goods (other than finished goods which are
in transit); plus
(c) Up to fifty percent (50%) of the lower of the cost or market
value of Borrower's Eligible Inventory consisting solely of
finished goods or finished components of goods which are in
transit or Five Hundred Thousand Dollars ($500,000), whichever
is less; plus
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(d) Up to fifty percent (50%), of the lower of the costs or market
value of Borrower's Eligible Inventory consisting solely of
raw materials less than one (1) year old; plus
(e) Up to forty percent (40%) of the lower of the cost or market
value of Borrower's Eligible Inventory consisting solely of
work-in-process or Two Million Dollars ($2,000,000), whichever
is less; plus
(f) Subject to Paragraph (2) of this Exhibit A, up to fifty
percent (50%) against the face amount of commercial Letters of
Credit issued by Issuing Bank for the purpose of purchasing
Inventory, provided that such commercial Letters of Credit are
in form and substance satisfactory to Collateral Agent; plus
(g) Subject to Paragraphs (3)(a) and (3)(c) hereof, up to Five
Million Dollars ($5,000,000) with respect to Borrower's
Equipment; plus
(h) Subject to Paragraphs (3)(b) and (3)(d) hereof, up to Three
Million Dollars ($3,000,000) with respect to Borrower's real
property located at 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx; plus
(i) Subject to Paragraph (3)(f) hereof, up to (i) for the period
from April 1, 1998 through August 30, 1998, Nine Million
Dollars ($9,000,000) as a special accommodation, (ii) subject
to the consent of Lenders as described below for the period
from April 1, 1999 through August 30, 1999, Five Million
Dollars ($5,000,000) as a special accommodation, and (iii)
subject to the consent of Lenders as described below for the
period from April 1, 2000 through August 30, 2000, Three
Million Dollars ($3,000,000) as a special accommodation; minus
(j) Such reserves as Collateral Agent elects, in its reasonable
discretion, to establish from time to time, including, without
limitation, a reserve to pay royalties or other licensee fees
with respect to patents, trademarks and copyrights licensed by
Borrower in connection with the production or sale of
Inventory, in the event that Collateral Agent becomes aware
that such license fees or royalties are not being paid in a
timely fashion or following the occurrence and during the
continuance of an Event of Default;
provided that the advances at subparagraphs (b), (c), (d), (e) and (f)
above shall in no event exceed the aggregate amount of Twenty-Five
Million Dollars ($25,000,000); and
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further provided, that the aggregate amount of Loans outstanding at any
time shall in no event exceed Fifty-Seven Million Dollars ($57,000,000)
(the "Aggregate Maximum Loan Amount"); and
further provided, that the special accommodation advances set forth in
subparagraphs (i)(ii) and (i)(iii) shall only be made if, on or before
the last day of the calendar year before each such special
accommodation is to go into effect, each Lender specifically agrees in
writing to make its Pro Rata Share of each such special accommodation
advance; but provided further, that if any Lender fails by such date to
agree in writing to make its Pro Rata Share of any such special
accommodation advance, Borrower shall have one hundred twenty (120)
days from such date to prepay all of the Liabilities and terminate this
Agreement without paying the prepayment fee set forth in Paragraph 10
of this Agreement; but provided further, that if Borrower fails to
prepare all of the Liabilities within such one hundred twenty (120) day
period, Borrower shall be obligated to pay the prepayment fee pursuant
to the terms of Paragraph 10 of this Agreement.
(f) Paragraph (3) of Exhibit A to the Loan Agreement is hereby
amended to amend and restate subparagraphs (a) and (b) in their entirety, as
follows:
"(a) The availability described in Paragraph (1)(g) of
this Exhibit A shall be automatically curtailed by an
amount equal to Eighty-Three Thousand Three Hundred
Thirty-Three and 33/100 Dollars ($83,333.33) per
month, commencing on April 30, 1998, and continuing
on the last day of each month thereafter, until the
earlier to occur of (i) the date on which said
availability shall be reduced in full and (ii) the
date upon which this Agreement terminates pursuant to
Paragraph 10 of the Agreement.
(b) The availability described in Paragraph (1)(h) of
this Exhibit A shall be automatically curtailed by an
amount equal to Fifty Thousand Dollars ($50,000.00)
per month, commencing on April 30, 1998, and
continuing on the last day of each month thereafter
until the earliest to occur of (i) the date on which
said availability shall be reduced in full, (ii) the
date on which Borrower refinances the Loans made with
respect to the availability described in Paragraph
(1)(g) of this Exhibit A, at which time such
availability will be reduced in full, and (iii) the
date upon which this Agreement terminates pursuant to
Paragraph 10 of the Agreement."
(g) Paragraph (3) of Exhibit A to the Loan Agreement is hereby
amended to amend and restate subparagraph (e) in its entirety, as follows:
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"(e) The availability reductions set forth in Paragraphs
(3)(a), (3)(b), (3)(c) and (3)(d) above shall not reduce the Maximum
Loan Amount of any Lender or reduce the aggregate Loan Limit of
Fifty-Seven Million Dollars ($57,000,000) set forth in Paragraph (1) of
this Exhibit A."
(h) Paragraph (3) of Exhibit A is hereby amended to amend and
restate subparagraph (f) in its entirety, as follows:
"(f) The availability described in Paragraph (1)(i) above as a
special accommodation for any year shall be automatically curtailed by
an amount equal to twenty-five percent (25%) of the maximum amount of
the special accommodation in effect for such year, commencing on the
fifteenth (15th) day of September of such year, and continuing on the
corresponding day of each month thereafter until the earliest to occur
of (i) the date on which said availability for such year shall be
reduced in full and (ii) the date upon which this Agreement terminates
pursuant to Paragraph 10 of the Agreement. The availability reductions
described in this Paragraph (3)(f) shall not reduce the Maximum Loan
Amount of any Lender or reduce the aggregate Loan Limit of Fifty-Seven
Million Dollars ($57,000,000) set forth in Paragraph 1 of this
Exhibit A."
(i) Paragraph (4) of Exhibit A to the Loan Agreement is hereby
amended and restated in its entirety as follows:
"(4) INTEREST RATE: Subject to the terms and conditions set forth
below, (a) all Loans made pursuant to subparagraphs (1)(a),
(1)(b), (1)(c), (1)(d), (1)(e), (1)(f), and (1)(g) of this
Exhibit A shall bear interest at the rate of one and one-half
percent (1.5%) per annum in excess of LaSalle's publicly
announced prime rate (which is not intended to be LaSalle's
lowest or most favorable rate in effect at any time) (the
"Prime Rate") in effect from time to time, and (b) all Loans
made pursuant to subparagraphs (1)(h) and (1)(i) of this
Exhibit A shall bear interest at the rate of two percent
(2.00%) per annum in excess of the Prime Rate. Interest shall
be payable on the last business day of each month, in arrears.
Each rate of interest set forth herein shall increase or
decrease with each increase or decrease in the Prime Rate,
effective on the effective date of each such change in the
Prime Rate; provided, that each rate of interest set forth
herein shall be adjusted based on changes in Borrower's
Tangible Net Worth and Net Income as evidenced by Borrower's
audited year end financial statements, all as determined under
generally accepted accounting principles applied on a basis
consistent with the financial statement most recently
presented to Collateral Agent prior to the date hereof except
as set forth herein, as follows: (i) if Borrower's Tangible
Net Worth as of December 31, 1998
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exceeds Borrower's Tangible Net Worth as of December 31, 1997
by up to Two Million Dollars ($2,000,000), and if Borrower's
Net Income for the 1998 fiscal year is more than Zero Dollars
($0) but not more than Two Million Dollars ($2,000,000), then
each rate of interest set forth herein shall be reduced by
one-half of one percent (0.50%) effective April 1, 1999; (ii)
if Borrower's Tangible Net Worth as of December 31, 1998
exceeds Borrower's Tangible Net Worth as of December 31, 1997
by more than Two Million ($2,000,000) but by not more than
Four Million Dollars ($4,000,000), and if Borrower's Net
Income for the 1998 fiscal year is more than Two Million
Dollars ($2,000,000) but not more than Four Million Dollars
($4,000,000), then each rate of interest set forth herein
shall be reduced by three-quarters of one percent (0.75%)
effective Xxxxx 0, 0000, (xxx) if Borrower's Tangible Net
Worth as of December 31, 1998 exceeds Borrower's Tangible Net
Worth as of December 31, 1997 by more than Four Million
Dollars ($4,000,000), and if Borrower's Net Income for the
1998 fiscal year is more than Four Million Dollars
($4,000,000), then each rate of interest set forth herein
shall be reduced by one percent (1.00%) effective April 1,
1999, (iv) if Borrower's Tangible Net Worth as of December 31,
1999 exceeds Borrower's Tangible Net Worth as of December 31,
1998 by more than Two Million Five Hundred Thousand Dollars
($2,500,000) but by not more than Five Million Dollars
($5,000,000), and if Borrower's Net Income for the 1999 fiscal
year is more than Two Million Five Hundred Thousand Dollars
($2,500,000) but not more than Five Million Dollars
($5,000,000), then each rate of interest then in effect shall
be reduced by one-quarter of one percent (0.25%) effective
April 1, 2000; (v) if Borrower's Tangible Net Worth as of
December 31, 1999 exceeds Borrower's Tangible Net Worth as of
December 31, 1998 by more than Five Million Dollars
($5,000,000) but by not more than Seven Million Five Hundred
Thousand Dollars ($7,500,000), and if Borrower's Net Income
for the 1999 fiscal year is more than Five Million Dollars
($5,000,000) but not more than Seven Million Five Hundred
Thousand Dollars ($7,500,000), then each rate of interest then
in effect shall be reduced by one-half of one percent (0.50%)
effective April 1, 2000, and (vi) if Borrower's Tangible Net
Worth as of December 31, 1999 exceeds Borrower's Tangible Net
Worth as of December 31, 1998 by more than Seven Million Five
Hundred Thousand Dollars ($7,500,000), and if Borrower's Net
Income for the 1999 fiscal year is more than Seven Million
Five Hundred Thousand Dollars ($7,500,000), then each rate of
interest then in effect shall be reduced by three-quarters of
one percent (0.75%) effective April 1, 2000." For purposes of
calculating interest payable hereunder, Loans shall be deemed
to be outstanding first against the availability
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under subparagraphs (h) and (i) of Paragraph 1 of this Exhibit
A and then against the availability under the remaining
subparagraphs of Paragraph 1 of this Exhibit A.
(j) Each Lender's Maximum Loan Amount is hereby amended to be
as follows:
LaSalle National Bank $22,000,000
Congress Financial Corporation (Central) $15,000,000
The CIT Group/Credit Finance, Inc. $10,000,000
FINOVA Capital Corporation $10,000,000
2. This Amendment shall not become effective until (i) this
Amendment is fully executed by all parties hereto, (ii) BT Commercial
Corporation has resigned as Administrative Agent and LaSalle has been
appointed successor Administrative Agent, (iii) each of BT and
NationsCredit Commercial Corporation, through its NationsCredit
Commercial Funding Division, has assigned its respective interest in
the Loans to LaSalle, and (iv) Borrower executes replacement Secured
Promissory Notes in favor of each Lender in an amount equal to each
such Lender's new Maximum Loan Amount.
3. Except as expressly consented to and amended hereby, the
Loan Agreement and Exhibit A thereto remain unchanged and of full force
and effect in accordance with the terms thereof.
LASALLE NATIONAL BANK, as Collateral Agent,
Administrative Agent and Lender
By /s/ Xxxxxx Xxxxxxxxxx
------------------------------------------
Its SVP
------------------------------------------
Consented and agreed to this 27th day of March, 1998.
CONGRESS FINANCIAL CORPORATION (CENTRAL), as a Lender
By /s/ Xxxxx Xxxx
------------------------------------
Its VP
-----------------------------------
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THE CIT GROUP/CREDIT FINANCE, INC., as a Lender
By /s/ Xxxxxx Xxxxx
-----------------------------------
Its VP
-----------------------------------
FINOVA CAPITAL CORPORATION, as a Lender
By /s/ Xxxxxx Xxxxxxx
------------------------------------
Its VP
------------------------------------
Accepted and agreed to this 30th day of March, 1998.
EMPIRE INDUSTRIES, INC.
By /s/ Xxxxxxx Xxxxx
-----------------------------------
Its CFO
----------------------------------
The undersigned Guarantor hereby acknowledges that it has read the foregoing
amendment and all previous amendments and hereby reaffirms its guaranty of the
obligations of Borrower this ____ day of March, 1998.
EMPIRE OF CAROLINA, INC.
By__________________________________
Its_________________________________
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