EXHIBIT 10.1(c)
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
As of May 31, 2002
THIS SECOND AMENDMENT TO THE LOAN AND SECURITY AGREEMENT dated as of
October 1, 2001 (the "Second Amendment") is entered into as of May 31, 2002 by
and among Xxxxxxx Jewelers, Inc. as Borrower (the "Borrower"), the lenders party
thereto (the "Lenders") and DDJ Capital Management LLC as agent for the Lenders
(the "Agent"). All capitalized terms used in this Amendment shall have the
meanings given to them in the Loan and Security Agreement (as defined below)
unless specifically defined herein.
WHEREAS, Borrower, Lenders and Agent are parties to that certain Loan
and Security Agreement, dated as of October 1, 2001, as amended pursuant to the
First Amendment dated as of November 12, 2001 (the "Loan and Security
Agreement"), pursuant to which Lenders have made certain credit available to the
Borrower and to secure the obligations outstanding under the Loan Agreement and
the documents and instruments executed in connection therewith (collectively,
the "Loan Documents");
WHEREAS, pursuant to the Loan and Security Agreement, dated as of
October 1, 2001, the Lenders agreed to commit an aggregate principal amount of
$20,000,000 to the Borrower;
WHEREAS, Borrower, Lenders and Agent are also parties to that certain
Loan Agreement dated as of April 30, 2001, as amended and modified from time to
time (the "Subordinated Loan Agreement"), pursuant to which Lenders have made
certain credit available to and on behalf of Borrower;
WHEREAS, Lenders executed that certain Intercreditor and Subordination
Agreement, dated as of October 1, 2001 (the "Subordination Agreement"), whereby
Lenders agreed that the obligations incurred pursuant to the Subordinated Loan
Agreement are subordinate in right of payment to the prior payment in full of
all of the obligations incurred pursuant to the Loan and Security Agreement;
WHEREAS, on or about November 12, 2001, Borrower entered into supply
agreements (the "Supply Agreements") with certain suppliers of inventory and
their affiliates (the "Suppliers") and in consideration for the Supply
Agreements, Borrower granted the Suppliers a security interest in substantially
all of the assets of Borrower;
WHEREAS, the Suppliers and Lenders entered into an Intercreditor and
Subordination Agreement dated as of November 12, 2001, which governs the
priorities of Lenders and the Suppliers;
WHEREAS, the Borrower has requested certain modifications to the terms
of the Loan Documents, and the Lenders have agreed to modify certain terms under
which the Lenders may
advance the funds committed to the Borrower; provided, however, that this
amendment shall in no way be construed to increase the $20,000,000 commitment
made by the Lenders.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby amend and modify the Loan and Security
Agreement as follows:
1. AMENDMENTS
1.1 The following definition of "Capital Expenditures" shall be added
to Section 1 of the Loan and Security Agreement:
"Capital Expenditure" means, for any period, the aggregate of all
expenditures of Borrower made during such period which in
conformity with GAAP, are required to be included in or reflected
by the purchase of property, plant or equipment or similar fixed
asset reflected on the statement of cash flow of the Borrower.
1.2 The following definition of "Obligations" shall replace the
definition of such term as used in the Loan and Security Agreement:
"Obligations" means all loans, Advances, Overadvances, debts,
principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), premiums,
liabilities (including all amounts charged to Borrower's Loan
Account pursuant hereto), obligations, fees, charges, costs, or
Lender Group Expenses (including any fees or expenses that, but for
the provisions of the Bankruptcy Code, would have accrued), lease
payments, guaranties, covenants, and duties owing by Borrower to
the Lender Group of any kind and description (pursuant to or
evidenced by the Loan Documents irrespective of whether for the
payment of money), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter
arising, and further including all interest not paid when due and
all Lender Group Expenses that Borrower is required to pay or
reimburse by the Loan Documents, by law, or otherwise.
1.3 Section 2.1(e) of the Loan and Security Agreement is hereby deleted
in its entirety and replaced with the following:
(e) Notation. The Agent shall record on its books the principal
amount of the Advances and Overadvances (if any) owing to each
Lender and the interests therein of each Lender, from time to time.
In addition, each Lender is authorized, at such Lender's option, to
note the date and amount of each payment or prepayment of principal
of such Lender's Advances and Overadvances (if any) in its books
and records, including computer records, such books and records
constituting rebuttably presumptive evidence, absent
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manifest error, of the accuracy of the information contained
therein.
1.4 Section 2.2(b) of the Loan and Security Agreement is hereby deleted
in its entirety and replaced with the following:
(b) Apportionment and Application of Payments. Aggregate principal
and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Advances
and Overadvances (if any) held by each Lender) and payments of the
fees (other than fees designated for Agent's separate account)
shall, as applicable, be apportioned ratably among the Lenders. All
payments shall be remitted to Agent and all such payments not
relating to principal or interest on specific Advances (or
Overadvances, if any) or not constituting payment of specific fees
and all proceeds of collateral received by Agent, shall be applied,
first, to pay any Overadvances outstanding (including interest
accrued thereon); second, to pay any fees or expense reimbursements
then due to Agent from Borrower; third, to pay any fees or expense
reimbursements then due to the Lenders from Borrower; fourth, to
pay interest due in respect of all Advances; fifth, ratably to pay
principal of Advances; and sixth ratably to pay any other
Obligations due to Agent or any Lender by Borrower. Agent shall
promptly distribute to each Lender, pursuant to the applicable wire
transfer instructions received from each Lender in writing, such
funds as it may be entitled to receive.
1.5 Section 2.3 of the Loan and Security Agreement is hereby deleted in
its entirety and replaced with the following:
2.3 OVERADVANCES.
(a) If, at any time or for any reason, the amount of Obligations
owed by Borrower to the Lender Group pursuant to Sections 2.1 and
2.3 is greater than either the Dollar or percentage limitations set
forth in Section 2.1(a), Borrower shall, upon request of Agent, pay
to Agent no later than the third Business Day following such
request, in cash, the amount of such excess (the "Overage"), to be
used by Agent to reduce the Obligations. The Borrower shall
promptly notify Agent in the event of any increase in the Overage
and shall, upon request of Agent, promptly provide Agent with a
calculation of the Overage. For avoidance of doubt, Overage is not
an Overadvance.
(b) The Lenders may make additional Advances to Borrower in excess
of the Borrower's Availability (each additional advance made by the
Lenders pursuant to this Section 2.3, is referred to as
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an "Overadvance"); provided that (i) the amount the Overage
(including the requested Overadvance) does not exceed $7,000,000
and (ii) the aggregate amount of the Revolving Facility Usage and
all Overadvances (including the requested Overadvance) do not
exceed the Maximum Amount. Nothing herein shall create an
obligation on the Lenders to make an Overadvance and each such
Overadvance made by the Lenders shall be in their sole and absolute
discretion.
(c) Any Overadvance outstanding shall be repaid to the Lenders upon
three (3) Business Days notice from the Agent to the Borrower that
such Overadvance must be repaid to reduce the Obligations.
(d) Interest on any Overadvance shall bear interest at a per annum
rate of 12.0%; provided that upon the occurrence and during the
continuation of an Event of Default, any Overadvance outstanding
shall bear interest at a per annum rate of 15%.
1.6 Section 2.8 of the Loan and Security Agreement is hereby deleted in
its entirety and replaced with the following:
2.8 MAINTENANCES OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrower (the
"Loan Account") on which Borrower will be charged with all Advances
and Overadvances (if any) made by the Lender Group to Borrower or
for Borrower's account, including, accrued interest, Lender Group
Expenses, and any other payment Obligations of Borrower. In
accordance with Section 2.5, the Loan Account will be credited with
all payments received by Agent from Borrower or for Borrower's
account. Agent shall render statements regarding the Loan Account
to Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting the Lender
Group Expenses owing and of all expenses, charges, and costs
provided for in Section 2.9(c) and attaching detailed invoices in
respect of any such material charge, expense, or cost not otherwise
set forth in detail on such statement, and such statements shall be
conclusively presumed to be correct and accurate and constitute an
account stated between Borrower and the Lender Group unless, within
30 days after receipt thereof by Borrower, Borrower shall deliver
to Agent written objection thereto describing the error or errors
contained in any such statements.
1.7 Section 3.3 of the Loan and Security Agreement is hereby deleted in
its entirety and replaced with the following:
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TERM. This Agreement shall terminate on June 30, 2003 (the
"Termination Date").
1.8 Section 7.19 of the Loan and Security Agreement is hereby deleted
it its entirety and replaced with the following:
7.19. FINANCIAL COVENANTS. Tangible Net Worth: On the dates set
forth below, the Borrower shall have Tangible Net Worth equal to or
greater than the amount set forth in the corresponding column of
such date:
===================================================
Testing Date Minimum Tangible Net Worth
===================================================
09/30/02 $ 6,500,000
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12/31/02 $11,000,000
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02/28/03 $10,000,000
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05/31/03 $ 8,000,000
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1.9 Section 7.20 of the Loan and Security Agreement is hereby deleted
in its entirety and replaced with the following:
7.20. CAPITAL EXPENDITURES. The Borrower shall not make Capital
Expenditures greater than $1.1 million in the aggregate for the
period beginning May 31, 2002 and ending May 31, 2003.
1.10 Section 7.21 of the Loan and Security Agreement is hereby deleted
in its entirety and replaced with the following:
7.21. MINIMUM EBITDA. The Borrower shall not permit EBITDA for
each of the periods ending on the dates set forth below to be less
than the amount set forth for such period.
====================================================
Period Ended Minimum EBITDA
====================================================
12 months (trailing) ended $(8,900,000)
8/31/02
----------------------------------------------------
12 months (trailing) ended $(3,900,000)
12/31/02
----------------------------------------------------
12 months (trailing) ended $ 2,600,000
5/31/03
----------------------------------------------------
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1.11 Article 8 of the Loan and Security Agreement is hereby amended to
delete the punctuation from the end of clause (a) and add the following:
", including, without limitation, any Overadvances that the
Lenders have given notice must be repaid pursuant to Section
2.3(c);"
2. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Lenders
and Agent that all of Borrower's representations and warranties set forth in the
Loan and Security Agreement are true, complete and accurate in all respects as
of the date hereof (except to the extent such representations and warranties
relate solely to an earlier date).
3. RATIFICATION OF EXISTING AGREEMENTS. The Borrower hereby ratifies
and confirms the enforceability in all respects of the Loan Documents and the
Borrower's Obligations thereunder. The Borrower acknowledges that the Agent on
behalf of the Lenders has a valid first-priority perfected lien security for the
repayment of the Obligations against substantially all of the assets of the
Borrower, except as may be limited by the Supply Agreements.
4. COSTS AND EXPENSES. Borrower shall pay to Agent all of Agent's
out-of-pocket costs and expenses (including, without limitation, the reasonable
fees and expenses of its counsel, which counsel may include any local counsel
reasonably deemed necessary, search fees, filing and recording fees,
documentation fees, appraisal fees, travel expenses, and other fees) arising in
connection with the preparation, execution, and delivery of this Amendment and
any related documents.
5. EFFECTIVENESS; CONDITION TO EFFECTIVENESS. This Amendment shall
become effective as of the date first set forth above, upon execution hereof by
the Lenders, the Agent and the Borrower.
6. COUNTERPARTS. This Amendment may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and year first written above.
XXXXXXX JEWELERS, INC.
By: /s/ XXXXX XXXXXXXXXX
------------------------------------------
Name: Xxxxx XxXxxxxxxx
Title: President & C.E.O.
DDJ CAPITAL MANAGEMENT, LLC
By: /s/ X. X. XXXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Authorized Signatory
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Signatory
B III CAPITAL PARTNERS:
By: DDJ Capital III, LLC, its General Partner
By: DDJ Capital Management, LLC, Manager
By: /s/ X. X. XXXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Authorized Signatory
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Signatory
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B III-A CAPITAL PARTNERS, L.P.
By: GP III-A, LLC, its General Partner
By: DDJ Capital Management, LLC, Manager
By: /s/ X. X. XXXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Authorized Signatory
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Signatory
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