EXHIBIT 10.4
SECOND AMENDMENT
TO
FINANCING AGREEMENT
Second Amendment, dated as of January 30, 1998 to the Financing
Agreement, dated as of September 25, 1997, as amended and supplemented prior to
the date hereof, (as so amended and supplemented, the "Financing Agreement"), by
and among Norton XxXxxxxxxx, Inc., a Delaware corporation (the "Company"),
Norton XxXxxxxxxx of Xxxxxx, Inc., a New York corporation ("Squire"), Miss
Xxxxx, Inc., a Delaware corporation formerly known as ME Acquisition Corp.
("Miss Xxxxx" and together with Squire, each a "Borrower" and collectively, the
"Borrowers"), the lenders listed on Schedule I to the Financing Agreement (each
a "Lender" and collectively the "Lenders"), NationsBanc Commercial Corporation,
as collateral agent for the Lenders (in such capacity, the "Collateral Agent")
and The CIT Group/Commercial Services, Inc., as administrative agent for the
Lenders (in such capacity, the "Administrative Agent" and together with the
Collateral Agent, each an "Agent" and collectively, the "Agents").
The Company, the Borrowers, the Lenders and the Agents desire to amend
the Financing Agreement on the terms and conditions hereafter set forth.
Accordingly, the Company, the Borrowers, the Agents and the Lenders hereby agree
as follows:
1. Definitions. All capitalized terms used herein and not otherwise
-----------
defined herein are used herein as defined in the Financing Agreement.
2. Schedule. After giving effect to all assignments made prior to
--------
the date of this Second Amendment, Schedule 1.01A to the Financing Agreement now
reads as set forth in Annex I to this Amendment.
3. Financial Covenants. Section 7.02(p)(ii) of the Financing
-------------------
Agreement is hereby amended to read in its entirety as follows:
"(ii) Leverage Ratio. Permit the ratio of Consolidated
--------------
Total Liabilities to Consolidated Tangible Net Worth of the Company and its
Consolidated Subsidiaries as of the end of each Fiscal Quarter to be
greater than the amount set forth below opposite each such Fiscal Quarter
end:
Fiscal Maximum
Quarter End Leverage Ratio
----------- --------------
November 1, 1997 2.70:1.0
January 31, 1998 2.25:1.0
May 2, 1998 2.55:1.0
August 1, 1998 2.20:1.0
October 31, 1998 1.90:1.0
provided that, upon receipt of the financial projections required to be
delivered to the Lenders pursuant to Section 7.01(a)(vi) hereof for each
Fiscal Year, the Company and the Agents shall negotiate in good faith to
determine the ratio of Consolidated Total Liabilities to Consolidated
Tangible Net Worth of the Company and its Consolidated Subsidiaries as of
the end of each Fiscal Quarter covered by such financial projections and,
in the event that the Company and the Required Lenders are unable to agree
upon such ratio on or before the date that is 30 days after the date that
the Lenders have received such projections, such ratio as of the end of
each Fiscal Quarter of the Fiscal Year covered by such financial
projections shall not be greater than the ratio set forth for the last
Fiscal Quarter end set forth above."
4. Assignments. Paragraph (d) of Section 12.08 of the Financing
-----------
Agreement is hereby amended by adding the following new sentence at the end of
such paragraph.
"Promptly after each such Assignment and Acceptance becomes
effective, the Administrative Agent shall prepare and distribute to each
Lender and the Borrower a revised Schedule 1.01A hereto after giving effect
to such assignment, which revised Schedule 1.01A shall replace the prior
Schedule 1.01A and become part of this Agreement."
5. Waivers and Consents. (a) Pursuant to the request of the Company
--------------------
and the Borrowers and in accordance with Section 12.03 of the Financing
Agreement, the Agents and the Lenders hereby consent to, and waive any Event of
Default that would otherwise arise under Section 10.01 of the Financing
Agreement from, any non-compliance by the Company and the Borrowers with the
provisions of (i) Section 7.01(a)(i) of the Financing Agreement by reason of the
failure of the Company and the Borrowers to provide to the Lenders the balance
sheets, statements of income and statements of retained earnings and cash flow
for the Fiscal Quarter of the Company ended November 1, 1997, provided that such
financial statements are delivered to the Lenders on or before February 15,
1998, (ii) Section 7.01(a)(iii) of the Financing Agreement by reason of the
failure of the Company and the Borrowers to provide to the Lenders the balance
sheets and statements of income for the Fiscal Months of the Company ended
November 1, 1997, November 29, 1997 and December 27, 1997, provided that such
financial statements are delivered to the Lenders on or before February 15,
1998, (iii) Section 7.01(a)(iv) of the Financing Agreement by reason of the
failure of the Company and the Borrowers to provide to the Lenders a certificate
of the chief financial officer of the Company in connection with the financial
-2-
statements required to be delivered to the Lenders pursuant to Sections
7.01(a)(i) and 7.01(a)(iii) of the Financing Agreements for the Fiscal Quarter
of the Company ended November 1, 1997 and for the Fiscal Months of the Company
ended November 1, 1997, November 29, 1997 and December 27, 1997, provided that
such certificates are delivered to the Lenders on or before February 15, 1998,
(iv) Section 7.01(a)(v) of the Financing Agreement by reason of the failure of
the Company and the Borrowers to provide to the Lenders the Inventory breakdowns
and Borrowing Base Certificates for the Fiscal Months of the Company ended
November 29, 1997 and December 27, 1997, provided that such Inventory breakdowns
and Borrowing Base Certificates are delivered to the Lenders on or before
February 15, 1998, (vi) Section 7.01(k) of the Financing Agreement by reason of
the failure of the Company to provide to the Agents evidence of and to maintain
key man life insurance policies on the lives of Xxxxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxxxx and Xxxxxx Xxxxxxxx in accordance with the terms of such Section on or
before November 25, 1997, provided that evidence of such insurance is provided
to the Agents on or before February 15, 1998; and (vii) Section 7.02(p)(ii) of
the Financing Agreement by reason of the failure of the Company and its
Consolidated Subsidiaries to maintain a ratio of Consolidated Total Liabilities
to Consolidated Tangible Net Worth of less than or equal to 1.8:1.0 for the
Fiscal Quarter ended November 1, 1997, provided that such ratio is not greater
than 2.70 to 1.0.
(b) The Agents and the Lenders hereby agree that, for purposes of
the financial covenants contained in paragraph (ii) (Leverage Ratio) and (iv)
(Fixed Charge Coverage Ratio) of Section 7.02(p) of the Financing Agreement, the
Fiscal Quarter ended November 1, 1997 shall be the period from September 28,
1997 through and including November 1, 1997.
(c) The waivers and consents in this Section 5 shall be effective
only in this specific instance and for the specific purposes set forth herein
and do not allow for any other or further departure from the terms and
conditions of the Financing Agreement or any other Loan Document, which terms
and conditions shall continue in full force and effect.
6. Conditions to Effectiveness. This Amendment shall become
---------------------------
effective only upon satisfaction in full of the following conditions precedent
(the first date upon which all such conditions shall have been satisfied being
herein called the "Amendment Effective Date"):
(i) The representations and warranties contained in this
Amendment and in Article VI of the Financing Agreement shall be correct in
all material respects on and as of the Amendment Effective Date as though
made on and as of such date (except where such representations and
warranties relate to an earlier date in which case such representations and
warranties shall be true and correct as of such earlier date); no Event of
Default or Default shall have occurred and be continuing on the Amendment
Effective Date, or result from this Amendment becoming effective in
accordance with its terms.
-3-
(ii) The Agents shall have received counterparts of this
Amendment which bear the signatures of the Company, the Borrowers and each
of the Lenders.
(iii) All legal matters incident to this Amendment shall be
satisfactory to the Agents and their counsel.
7. Representations and Warranties. Each of the Company and the
------------------------------
Borrowers represents and warrants to the Lenders as follows:
(a) The Company and each Borrower (i) is duly organized, validly
existing and in good standing under the laws of the state of its organization
and (ii) has all requisite power, authority and legal right to execute, deliver
and perform this Amendment, and to perform the Financing Agreement, as amended
hereby.
(b) The execution, delivery and performance by the Company and
the Borrowers of this Amendment and the performance by the Company and the
Borrowers of the Financing Agreement as amended hereby (i) have been duly
authorized by all necessary action, (ii) do not and will not violate or create a
default under the Company's or any Borrower's organizational documents, any
applicable law or any contractual restriction binding on or otherwise affecting
the Company or any Borrower or any of the Company's or such Borrower's
properties, and (iii) except as provided in the Loan Documents, do not and will
not result in or require the creation of any Lien, upon or with respect to the
Company's or any Borrower's property.
(c) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or other regulatory body is
required in connection with the due execution, delivery and performance by the
Company or any of the Borrowers of this Amendment and the performance by the
Company and the Borrowers of the Financing Agreement as amended hereby.
(d) This Amendment and the Financing Agreement, as amended
hereby, constitute the legal, valid and binding obligations of the Company and
the Borrowers party thereto, enforceable against such Persons in accordance with
their terms except to the extent the enforceability thereof may be limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect affecting generally the enforcement of
creditors' rights and remedies and by general principles of equity.
(e) The representations and warranties contained in Article VI of
the Financing Agreement are correct on and as of the Amendment Effective Date as
though made on and as of the Amendment Effective Date (except to the extent such
representations and warranties expressly relate to an earlier date), and no
Event of Default or Default, has occurred and is continuing on and as of the
Amendment Effective Date.
-4-
8. Continued Effectiveness of Financing Agreement. Each of the
----------------------------------------------
Company and the Borrowers hereby (i) confirms and agrees that each Loan Document
to which it is a party is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects except that on and after
the Amendment Effective Date of this Amendment all references in any such Loan
Document to "the Financing Agreement", "thereto", "thereof", "thereunder" or
words of like import referring to the Financing Agreement shall mean the
Financing Agreement as amended by this Amendment, and (ii) confirms and agrees
that to the extent that any such Loan Document purports to assign or pledge to
the Collateral Agent, or to grant to the Collateral Agent a Lien on any
collateral as security for the Obligations of the Company and the Borrowers from
time to time existing in respect of the Financing Agreement and the Loan
Documents, such pledge, assignment and/or grant of a Lien is hereby ratified and
confirmed in all respects.
9. Miscellaneous.
-------------
a. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one
and the same agreement.
b. Section and paragraph headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
c. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
d. The Borrowers will pay on demand all reasonable out-of-pocket
costs and expenses of the Agents in connection with the preparation, execution
and delivery of this Amendment, including, without limitation, the reasonable
fees, disbursements and other charges of Xxxxxxx Xxxx & Xxxxx LLP, counsel to
the Agents.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NORTON XXXXXXXXXX, INC.
By:________________________________
Title:_____________________________
NORTON XXXXXXXXXX OF XXXXXX, INC.
By:________________________________
Title:_____________________________
MISS XXXXX, INC.
By:________________________________
Title:_____________________________
AGENTS AND LENDERS
------------------
THE CIT GROUP/COMMERCIAL SERVICES,
INC., as Administrative Agent and Lender
By:________________________________
Title:_____________________________
NATIONSBANC COMMERCIAL
CORPORATION, as Collateral Agent and Lender
By:________________________________
Title:_____________________________
-6-
LENDERS
BANKBOSTON, N.A.
By:________________________________
Title:_____________________________
FLEET BANK, N.A.
By:________________________________
Title:_____________________________
PNC BANK, NATIONAL ASSOCIATION
By:________________________________
Title:_____________________________
-7-
ANNEX I
-------
Schedule 1.01A
--------------
Lenders and Lenders' Commitments
Revolving
Credit Term Loan
Lender Commitment Commitment Percentage
------ ------------ ----------- ----------
NationsBanc Commercial Corporation $ 50,595,000 $ 6,071,400 40.476%
The CIT Group/Commercial Services, Inc. $ 38,691,250 $ 4,642,950 30.953%
BankBoston, N.A. $ 13,392,500 $ 1,607,100 10.714%
Fleet Bank, N.A. $ 13,392,500 $ 1,607,100 10.714%
PNC Bank, National Association $ 8,928,750 $ 1,071,450 7.143%
------------ ----------- ------
$125,000,000 $15,000,000 100%