Exhibit 10.1
EIGHTH AMENDMENT TO AMENDED AND RESTATED
SENIOR REVOLVING CREDIT AGREEMENT
This EIGHTH AMENDMENT TO AMENDED AND RESTATED SENIOR REVOLVING CREDIT
AGREEMENT (the "Amendment") is made as of this 15th day of May, 2002, by and
among ENESCO GROUP, INC., a Massachusetts corporation (the "Borrower"), the
Borrowing Subsidiaries who may from time to time become a party to the Amended
and Restated Senior Revolving Credit Agreement, FLEET NATIONAL BANK, a national
banking association ("Fleet") and LASALLE BANK NATIONAL ASSOCIATION ("LaSalle"
and together with Fleet, the "Banks").
`
RECITALS
The Borrower and the Banks are parties to a certain Amended and
Restated Senior Revolving Credit Agreement dated as of August 23, 2000, as
amended by a First Amendment to Amended and Restated Senior Revolving Credit
Agreement dated as of November 27, 2000, as further amended by a Second
Amendment to Amended and Restated Senior Revolving Credit Agreement dated as of
November 30, 2000, as further amended by a Third Amendment to Amended and
Restated Senior Revolving Credit Agreement dated as of March 23, 2001, as
further amended by a Fourth Amendment to Amended and Restated Senior Revolving
Credit Agreement dated as of April 6, 2001, as further amended by a Fifth
Amendment to Amended and Restated Senior Revolving Credit Agreement dated as of
June 18, 2001, as further amended by a Sixth Amendment to Amended and Restated
Senior Revolving Credit Agreement dated as of August 2, 2001, and as further
amended by a Seventh Amendment to Amended and Restated Senior Credit Agreement
dated as of September 7, 2001 (the "Credit Agreement"), pursuant to which the
Banks have extended certain financial accommodations to the Borrower including
those evidenced by a Borrower Note dated August 3, 2000 in the face amount of
$50,000,000 payable to Fleet, a Borrower Note dated June 26, 2001 in the face
amount of $10,000,000 payable to LaSalle, a Back-Up L/C and B/A Demand Note
dated June 18, 2001 in the face amount of $15,000,000 payable to Fleet and a
Back-Up F/X Demand Note dated November 27, 2000 in the face amount of
$10,000,000 payable to Fleet. Payment and performance of all Obligations of the
Borrower to the Banks are secured by a Security Agreement dated April 6, 2001
(the "Security Agreement"), by a certain Mortgage, Assignment of Leases and
Rents and Security Agreement dated June 18, 2001 with respect to certain
properties located in DuPage County and Xxxx County, Illinois (the "Mortgages")
and by the other Loan Documents (as defined in the Credit Agreement). The
Borrower and the Banks have agreed to further modify the terms and provisions of
the Credit Agreement and to ratify and confirm that all Obligations of the
Borrower to the Banks continue to be evidenced and secured by the Loan
Documents, all as more fully described and set forth hereinbelow. Capitalized
terms not otherwise defined in this Amendment shall have their meanings as
defined in the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Borrower and the Banks agree
that the Credit Agreement is further amended as follows:
1. The definition of "Applicable Margin" which appears in ARTICLE I
is deleted in its entirety and replaced with the following:
"Applicable Margin" means (i) that number of basis points over the
LIBOR Base Rate, the Cost of Funds or the Alternative Base Rate, as applicable,
and (ii) the Facility Fee, (both (i) and (ii) as determined based upon the
Borrower's year to date Consolidated Operating Profit in accordance with the
pricing grid which appears below):
Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0
------- ------- ------- -------
Year to Date Less than Greater than or Greater than Greater than or
Consolidated $0 million or equal to $0 or equal to $5 equal to $8.7
Operating Profit million to Less million to Less million
than $5 million than $8.7 million
Facility Fee 25 bps 25 bps 20 bps 20 bps
LIBOR Base Rate 175 bps 150 bps 125 bps 100 bps
Cost of Funds 175 bps 150 bps 125 bps 100 bps
Alternate Base Rate 0 bps 0 bps 0 bps 0 bps
*bps = basis points
The Applicable Margin shall be established by the Banks based upon the
Borrower's year to date Consolidated Operating Profit as of the date of a
request for an Advance or as of the date of continuation or conversion of any
outstanding Advance pursuant to Section 2.9, as the case may be, using the
Borrower's most recently delivered financial statement under Section 6.1, with
such Applicable Margin remaining in effect until expiration of any applicable
Interest Period. Pricing, effective May 15, 2002, shall be in accordance with
Level 3 and shall be subject to change upon receipt by the Banks of the
Borrower's financial statements for the quarterly periods ending September 30,
2002, December 31, 2002 and March 30, 2003, respectively.
2. The definition of "Borrowing Capacity" which appears in ARTICLE I
is deleted in its entirety and replaced with the following:
"Borrowing Capacity" means the lesser of:
(x) Fifty Million Dollars ($50,000,000), or
(y) the sum of (i) eighty percent (80%) of Accounts
Receivable of the Borrower, which Accounts
Receivable are not Ineligible Accounts of the
Borrower, plus (ii) eighty percent (80%) of the
current market value of the property in which the
Banks hold a first priority mortgage or security
interest pursuant to the Mortgages, or
$19,400,000, such current market value to be
subject to adjustment in the commercially
reasonable discretion of the Banks for
environmental, title or other matters which may
affect such current market value.
2
3. The definition of "Commitment" which appears in ARTICLE I is
deleted in its entirety and replaced with the following:
"Commitment" means the obligation of the Banks, subject to
Borrowing Capacity, to make Loans not exceeding an aggregate
principal amount of $40,000,000 for all such Loans outstanding at
any time, or as set forth in any Notice of Assignment relating to
any assignment that has become effective pursuant to Section
12.3.1, as such amount may be modified from time to time pursuant
to the terms hereof. Notwithstanding the foregoing, Fleet shall,
subject to Borrowing Capacity, make Loans of up to $5,000,000
Dollars in excess of the Commitment based upon availability under
the L/C and B/A Facility Limit in an amount sufficient to fully
cover, Dollar for Dollar, the amount of any such Loan in excess of
the Commitment. Availability under the L/C and B/A Facility Limit
shall be reduced, Dollar for Dollar, in an amount equal to any
such Loan made by Fleet in excess of the Commitment. Loans of up
to $5,000,000 Dollars in excess of the Commitment shall be
evidenced by the Borrower Note dated August 3, 2000 in the
original principal amount of $50,000,000 payable to Fleet and
shall be subject to the interest rate provisions and other terms
contained in ARTICLE II of the Agreement.
4. The following definition is added to ARTICLE I:
"Consolidated Scheduled Principal Payments" means, as of the
date of any determination thereof, the amount of scheduled
principal payments shown on the consolidated balance sheet of the
Borrower and its Subsidiaries on and as of such date, determined
on a consolidated bases in accordance with Agreement Accounting
Principles.
5. The definition of "EBITDA" which appears in ARTICLE I is deleted
in its entirety and replaced with the following:
"EBITDA" means, as of the date of any determination thereof,
Consolidated Operating Profit for such period, plus Consolidated
Depreciation, plus Consolidated Amortization.
6. The definition of "Facility Termination Date" which appears in
ARTICLE I is deleted in its entirety and replaced with the
following:
"Facility Termination Date" means May 15, 2003.
7. The definition of "L/C and B/A Facility Limit" which appears in
ARTICLE I is deleted in its entirety and replaced with the
following:
"L/C and B/A Facility Limit" means the obligation of Fleet
pursuant to Section 2.1.B, subject to Borrowing Capacity (dollar
for dollar based upon the aggregate stated amount of all such
Letters of Credit and Bankers' Acceptances outstanding), to issue
Letters of Credit and permit Bankers' Acceptances
3
up to an aggregate stated amount of all such Letters of Credit and
Bankers' Acceptances outstanding at any given time of $10,000,000,
minus the aggregate outstanding amount of any Loan or Loans made
by the Banks in excess of the Commitment based upon availability
under the L/C and B/A Facility Limit. Notwithstanding the
foregoing, Fleet shall, subject to Borrowing Capacity, issue
Letters of Credit and permit Bankers' Acceptances of up to
$5,000,000 in excess of the L/C and B/A Facility Limit based upon
availability under the Commitment in an amount sufficient to fully
cover, Dollar for Dollar, the amount of any such Letter of Credit
or Bankers' Acceptance in excess of the L/C and B/A Facility
Limit. Availability under the Commitment shall be reduced, Dollar
for Dollar, in an amount equal to any such Letter of Credit issued
or Bankers' Acceptance permitted by Fleet in excess of the L/C and
B/A Facility Limit. Obligations of up to $5,000,000 in excess of
the L/C and B/A Facility Limit shall be evidenced by the Back-Up
L/C and B/A Demand Note dated June 18, 2001 in the original
principal amount of $15,000,000 payable to Fleet.
8. The first paragraph of Section 2.1.B is deleted in its entirety
and replaced with the following:
2.1.B. Letter of Credit/Bankers' Acceptance Facility. From
and including the date of this Agreement and prior to the Facility
Termination Date, Fleet agrees, on the terms and conditions set
forth in this Agreement, upon request of the Borrower, to (i)
issue Letters of Credit, subject to the L/C and B/A Facility
Limit, with Letter of Credit expiration dates of not more than 90
days beyond the Facility Termination Date, and (ii) permit
Bankers' Acceptances, subject to the L/C and B/A Facility Limit,
with expiration dates of not more than 90 days beyond the Facility
Termination Date, and with any such Bankers' Acceptances obtained
in connection with Letters of Credit issued hereunder having
expiration dates of not more than 150 days beyond the Facility
Termination Date (the "L/C and B/A Facility").
9. Subsection 6.1(xv) is deleted in its entirety and replaced with
the following:
(xv) within 30 days after the close of each fiscal quarter of
the Borrower, a complete schedule of Inventory of the Borrower by
location, and including a summary of the inventory reserve, all in
form and substance acceptable to the Bank, and certified as true
and correct by the Chief Financial Officer or the Assistant
Treasurer of the Borrower.
10. An additional subsection 6.1(xvi) is added to the end of Section
6.1 as follows:
(xvi) within 15 days following the end of each month, a
Borrowing Base Certificate in the form of Exhibit C-1 hereto
showing the calculations necessary to determine Borrowing Capacity
signed by the Borrower's Chief Financial Officer or the Assistant
Treasurer.
4
11. Section 6.12.1 is deleted in its entirety and replaced with the
following:
6.12.1. Fixed Charge Coverage Ratio. The Borrower shall
maintain a Fixed Charge Coverage Ratio of not less than 1.25 to
1.00 as of the fiscal quarter ending September 30, 2002, and not
less than 2.25 to 1.00 as of the fiscal year ending December 31,
2002, with such Fixed Charge Coverage Ratio to be calculated on a
year to date basis. For the purposes of this covenant: (1) the
term "Fixed Charge Coverage Ratio" means the ratio of (i) the
Borrower's year to date Consolidated Operating Profit, plus
Consolidated Depreciation, plus Consolidated Amortization, minus
Consolidated Capital Expenditures, minus dividends paid by the
Borrower; to (ii) the Borrower's Consolidated Interest Expense,
plus the Borrower's Consolidated Scheduled Principal Payments for
such period.
12. Section 6.12.2 is deleted in its entirety and replaced with the
following:
6.12.2. Funded Debt/EBITDA Ratio. The Borrower shall maintain
a ratio of funded Consolidated Indebtedness, excluding Letters of
Credit issued in the ordinary course of business, to the
Borrower's EBITDA for the four most recent consecutive fiscal
quarters ending June 30, 2002 of not greater than 2.75 to 1.00,
for the four most recent consecutive fiscal quarters ending
September 30, 2002 of not greater than 3.75 to 1.00, and for the
four most recent consecutive fiscal quarters ending December 31,
2002 of not greater than 1.75 to 1.00. For the purposes of
calculation of this covenant for the fiscal quarters ending June
30, 2002 and September 30, 2002, the $8,700,000 inventory
write-down taken by the Borrower during fiscal year 2001 shall be
excluded from the calculation of the Consolidated Operating Profit
component of EBITDA.
13. Section 6.12.3 is deleted in its entirety and replaced with the
following:
6.12.3. Minimum Year to Date Operating Profit (Loss). The
Borrower shall have a minimum year to date Consolidated Operating
Profit (Loss) for the six month period ending June 30, 2002 of not
more than ($3,000,000), for the nine month period ending September
30, 2002 of not less than $3,200,000, and for the fiscal year
ending December 31, 2002 of not less than $5,500,000.
14. Section 6.12.5 is deleted in its entirety and replaced with the
following:
6.12.5. Consolidated Total Assets/Revenues Limitation. At no
time shall more than forty percent (40%) in the aggregate of the
Borrower's Consolidated Total Assets be owned by Subsidiaries, or
more than forty percent (40%) in the aggregate of the Borrower's
Consolidated Total Revenue be generated by Subsidiaries unless
such Subsidiaries have either guaranteed the Obligations or, in
the case of Foreign Subsidiaries, not less than sixty-five (65%)
of the total issued and outstanding capital stock of such Foreign
Subsidiaries has been pledged to the Bank as security for the
Obligations upon terms acceptable to the Bank.
5
15. EXHIBIT C attached as a part of the Credit Agreement is deleted in
its entirety and replaced with EXHIBIT C attached as a part of
this Amendment.
16. EXHIBIT C-1 attached as a part of the Credit Agreement is deleted
in its entirety and replaced with EXHIBIT C-1 attached as a part
of this Amendment.
17. The Borrower shall pay to the Banks upon execution of this
Amendment an up front fee of $40,000 in connection with extension
of the credit facilities, and all other reasonable costs and
expenses, including attorneys' fees, incurred by the Banks in
connection with the preparation and execution of this Amendment.
18. The Borrower and Enesco plc have requested and the Banks have
agreed to release the Shares (of Enesco plc) as defined in that
certain Shares Mortgage dated August 23, 2000 between the Borrower
and the Banks upon execution of this Amendment by the Borrower and
the Banks, and payment by the Borrower of all fees and expenses as
provided for hereunder.
19. By executing this Amendment, the Borrower hereby consents to
amendment of the assignment by Fleet to LaSalle with respect to
any Loan or Loans made by the Banks in excess of the Commitment,
or with respect to any Letter of Credit or Bankers' Acceptance or
Letters of Credit or Bankers' Acceptances made by Fleet in excess
of the L/C and B/A Facility Limit.
20. Except as amended, modified or supplemented by this Amendment, all
of the terms, conditions, covenants, provisions, representations,
warranties and conditions of the Credit Agreement shall remain in
full force and effect and are hereby acknowledged, ratified,
confirmed and continued as if fully restated hereby.
21. The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term
or provision hereof or contained in the Credit Agreement.
22. It is the intention of the parties hereto that this Amendment
shall not constitute a novation and shall in no way adversely
affect or impair the validity or priority of any lien on any
collateral granted, pledged or mortgaged as security for the
payment and performance of the liabilities and obligations of the
Borrower under the Credit Agreement and other Loan Documents.
23. The Borrower hereby confirms and ratifies the obligations
established under the Credit Agreement and other Loan Documents,
as amended hereby, and the continuing and continuous security
interests, pledges and mortgages in, of and to all collateral
granted pursuant to the Credit Agreement and other Loan Documents.
6
24. This Amendment is to be governed and construed in accordance with
the laws of the Commonwealth of Massachusetts.
25. This Amendment may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and any of
the parties thereto may execute this Agreement by signing any such
counterpart. This Amendment shall be effective when it has been
executed by the Borrower and the Banks.
[SIGNATURES ON THE FOLLOWING PAGE]
7
IN WITNESS WHEREOF, the foregoing has been executed as an instrument
under seal as of the date first above written.
WITNESS: ENESCO GROUP, INC.
By: /s/ /Xxxxxx XxxxxXxxxx
------------------------- ------------------------------------
Print Name: Xxxxxx XxxxxXxxxx
------------------------
Title: President and Chief
Executive Officer
-----------------------------
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Print Name: Xxxxxxx X. Xxxxxxxx
------------------------
Title: Chief Financial Officer
-----------------------------
FLEET NATIONAL BANK
By: /s/ Xxxxxx XxXxxxx
------------------------- ------------------------------------
Its Vice President
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxx
------------------------- ------------------------------------
Its Assistant Vice President
8
