1
EXHIBIT 10.1
AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT
This Amendment Number Three to Loan and Security Agreement
("Amendment") is entered into as of November 24, 1999, among XXXXXXX JEWELERS,
INC., a Delaware corporation (the "Borrower"), on the one hand, and the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), and FOOTHILL CAPITAL CORPORATION, as Agent ("Agent"), on the other
hand.
RECITALS
A. Borrower, Lenders and Agent have previously entered into that
certain Loan and Security Agreement, dated as of October 2, 1998, as amended as
of April 15, 1999 and August 30, 1999 (the "Agreement").
B. Borrower has entered into that certain Stock Purchase Agreement,
dated October 20, 1999, with Xxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxx (as amended,
the "Purchase Agreement") pursuant to which Borrower is acquiring all of the
outstanding shares of capital stock of C&H Xxxxx, Inc., a Kentucky corporation
("Xxxxx").
C. Concurrently with the closing of Borrower's purchase of Xxxxx
pursuant to the Purchase Agreement, Borrower intends to merge Xxxxx with and
into Borrower (the "Merger").
D. Borrower, Lenders and Agent desire to consent to Borrower's purchase
of Xxxxx and the Merger and to further amend the Agreement as provided for and
on the conditions herein.
NOW, THEREFORE, Borrower, Lenders and Agent hereby amend certain
provisions of the Agreement as follows:
1. DEFINITIONS. All initially capitalized terms used in this Amendment
shall have the meanings given to them in the Agreement unless specifically
defined herein.
2. AMENDMENTS.
2.1 The following new definitions are added to Section 1.1 of
the Agreement in appropriate alphabetical order:
"Excess Availability" means, as of the date of
determination: Borrower's unrestricted cash and cash
equivalents, plus Availability, less accounts payable that are
aged in excess of levels approved by Foothill.
1
2
"Permitted Xxxxx Notes Payments" means payments of
regularly scheduled interest under the Xxxxx Notes as provided
under the terms of such notes in effect on November 24, 1999,
plus payments of principal pursuant to the terms of such notes
(including at the regularly scheduled maturity thereof) in
effect on November 24, 1999, so long as at the time of such
payment (a) no Event of Default is currently in existence, and
(b) after taking such payment into account Borrower would have
(and would have had at all times during the 30 days preceding
such payment) Excess Availability of not less than $5,000,000.
"Xxxxx Notes" means, collectively, those certain 3
promissory notes, each dated as of November 24, 1999, by
Borrower in favor of Xxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxx,
in the aggregate outstanding principal amounts of
[$6,000,000].
2.2 Section 7.1 (b) of the Agreement is amended to read as
follows:
"(b) Indebtedness set forth on Schedule 7.1 and the
Xxxxx Notes;"
2.3 Section 7.8 (a) of the Agreement is amended to read as
follows:
"(a) Prepay, redeem, retire, defease, purchase or
otherwise acquire any Indebtedness owing to any third Person
other than (i) Permitted Xxxxx Notes Payments, and (ii) the
Obligations, in accordance with this Agreement, and"
2.4 Section 7.20 (b) of the Agreement is amended to read as
follows:
"(b) Tangible Net Worth. A Tangible Net Worth of at
least the following amounts as of the last day of the fiscal
quarters of Borrower ending on or about the last day of the
following months:
Month Minimum Tangible Net Worth
----- --------------------------
November 1999 $14,500,000
February 2000 $24,000,000
May 2000 $23,000,000
August 2000 $21,000,000
November 2000 $20,000,000
February 2001 $31,500,000
May 2001 $31,500,000
August 2001 $29,500,000
2
3
2.5 Section 7.21 of the Agreement is amended to read as
follows:
7.21 CAPITAL EXPENDITURES. Make capital expenditures
in any fiscal year in excess of the following amounts for the
following Fiscal Years (each a "Capital Budget"):
(a) $11,500,000 in Borrower's Fiscal Year
ending 2000; and
(b) for each of Borrower's Fiscal Years
commencing with its Fiscal Year ending 2001, $7,500,000 plus
50% of the unused portion of the prior Fiscal Year's Capital
Budget.
2.6 Section 8.11 of the Agreement is hereby amended to read as
follows:
"If Borrower makes any payment on the Xxxxx Notes
other than a Permitted Xxxxx Notes Payment, or if Borrower
makes any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the payment
of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions
applicable to such Indebtedness;"
2.7 Schedule E-1 of the Agreement is amended in its entirety
as set forth on Schedule E-1 to this Amendment.
2.8 Agent and Lenders hereby consent to Borrower's purchase of
Xxxxx in accordance with the terms of the Purchase Agreement and the Merger of
Xxxxx into Borrower.
2.9 Borrower agrees to do each of the following within 45 days
of the completion of the Merger of Xxxxx into Borrower: (i) deliver to Agent a
reviewed opening balance sheet for the Borrower reflecting the combined
entities; and (ii) terminate any depositary or cash collection accounts
maintained with BankBoston respecting Collections for any of the X. X. Xxxxx
retail store locations, and commence forwarding all such Collections through the
cash management system currently in place with respect to the other retail store
locations of Borrower, and in conformity with Section 2.8 of the Loan Agreement.
Failure to comply with either of these conditions shall be an Event of Default
under the Loan Agreement.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Lenders
and Agent that all of Borrower's representations and warranties set forth in the
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).
4. DEFAULTS; WAIVER. Borrower hereby affirms to Lenders and Agent that
no Default or Event of Default exists as of the date hereof.
3
4
5. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon the following:
(a) Receipt by Agent of fully executed copies of this
Amendment;
(b) Receipt by Agent of evidence satisfactory to Agent that:
(i) the purchase of Xxxxx by Borrower has been consummated in accordance with
the Purchase Agreement and (ii) the Merger has been completed; and
(c) Payment of a fee to Agent, for the pro rata account of
Lenders, in the amount of $50,000.
6. 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.
7. LIMITED EFFECT. In the event of a conflict between the terms and
provisions of this Amendment and the terms and provisions of the Agreement, the
terms and provisions of this Amendment shall govern. In all other respects, the
Agreement, as amended, modified, and supplemented hereby, shall remain in full
force and effect.
4
5
8. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which when so executed and delivered shall be deemed to be an original. All
such counterparts, taken together, shall constitute but one and the same
Amendment. This Amendment shall become effective upon the execution of a
counterpart of this Amendment by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.
XXXXXXX JEWELERS, INC.,
a Delaware corporation
By: /s/ XXXX XXXXXXX
--------------------------------------------
Title: Vice President
--------------------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a Lender
By: /s/ XXXXXX XXXXXXX
--------------------------------------------
Title: Vice President
--------------------------------------------
LASALLE BUSINESS CREDIT, INC.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXX, XX
--------------------------------------------
Title: S. V. P.
--------------------------------------------
SUNROCK CAPITAL CORP.,
a Delaware corporation
By: /s/ XXXX X. XXXXX
--------------------------------------------
Title: S. V. P.
--------------------------------------------
5