XXXXX XXXXX & SONS INC.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
RE: AMENDED AND RESTATED ACCOUNTS RECEIVABLE MANAGEMENT, LOAN & SECURITY
AGREEMENT
Gentlemen:
Reference is made to that certain "Amended and Restated Accounts
Receivable Management, Loan & Security Agreement" bearing effective date of July
1, 2004 by and between you and us ("GMACCF"), as amended pursuant to an
amendment letter dated October 22, 2004 and July 21, 2005 (collectively, the
"Loan Agreement"). All of the defined words and terms under the Loan Agreement
shall have the same meanings as therein set forth whenever utilized herein, save
as expressly stipulated herein to the contrary.
The Loan Agreement is hereby amended as follows:
1. The following definitions are hereby added as Sections 1.1.10 (a) through
1.1.10(f) hereof:
"1.1.10(a) "BA ADVANCE" means any Advance(s), in Dollars only, in minimum
increments of $500,000 made to Borrower hereunder, on which interest is
payable based upon the BA Equivalent Rate;
1.1.10(b) "BA EQUIVALENT RATE" means, for the BA Interest Period of each BA
Advance, the rate of interest per annum equal to the annual rate of
interest quoted on the Business Day which is the first day of such BA
Interest Period quoted on Reuters Service Page CDOR as of approximately
10:00 a.m. (Montreal time) as being the rate of interest for bankers'
acceptances in Dollars for a face amount similar to the amount of the BA
Advance and for a term similar to the applicable BA Interest Period;
1.1.10(c) "BA INTEREST" means all interest payable by Borrower as herein
set forth on all Outstandings under the Credit Facilities consisting of BA
Advances as set forth in the Contract Data Sheet;
1.1.10(d) "BA INTEREST PERIOD(S)" means the period(s) commencing on the
date of each particular BA Advance and ending on the date which is 30, 60
or 90 days thereafter (as selected by the Borrower in the applicable BA
Notice) provided that:
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(a) if any BA Interest Period would otherwise end on a day that is not
a Business Day, such BA Interest Period shall be extended to the
following Business Day, unless the result of such extension would be
to carry such BA Interest Period into another calendar month, in which
event such BA Interest Period shall end on the preceding Business Day;
(b) any BA Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such BA Interest
Period) shall end on the last Business Day of the calendar month at
the end of such BA Interest Period; and,
(c) no BA Interest Period shall extend beyond the expiry of the Term;
1.1.10(e) "BA LOAN RATE" has the meaning set forth in the Contract Data
Sheet;
1.1.10(f) "BA NOTICE" means written notification (in such manner as
determined by the Agent from time to time) given by Borrower to Lender and
received by Lender no more than 3 Business Days and no less than two
Business Days prior to the Business Day of the relevant BA Advance,
specifying:
(a) the amount of such BA Advance; and,
(b) the BA Interest Period applicable to such BA Advance,
all in form and substance as Lender shall, from time to time hereunder,
determine. Any BA Notice given by Borrower to Lender shall be irrevocable
by Borrower;"
2. Section 1.1.16 ("Borrowing Base") of the Credit Agreement is hereby amended
and replaced by the following:
"1.1.16 "BORROWING BASE" means:
(a) the aggregate of:
(i) the percentage of Eligible Accounts set forth in the Contract
Data Sheet; and
(ii) the lesser of (x) the percentage of Eligible Credit Card
Accounts set forth in the Contract Data Sheet; and (y) the
Eligible Credit Card Accounts Sublimit; and
(iii) the lesser of (a) the aggregate of (i) the percentage of
NOLV of eligible Finished Goods Inventory set forth in the
Contract Data Sheet and (ii) the percentage of NOLV of Eligible
Raw Materials Inventory set
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forth in the Contract Data Sheet and (b) the Eligible Inventory
Availability Limit;
LESS:
(b) the aggregate of:
(i) the face amount of all Accepted Letters of Credit;
(ii) the amount of all Letter of Credit Reserves;
(iii) the amount of all Reserves;
(iv) the amount of all Priority Claims;
(v) the amount of any Surplus Reserve; and,
(vi) such portion of the Non-Revolving Loan the repayment of
which has not been guaranteed pursuant to a guarantee
granted in favour of Lender by Garantie Quebec."
3. Section 1.1.21 "Collateral Stretch Facility" is hereby deleted;
4. Section 1.1.35 ("Early Termination Fee") of the Credit Agreement is hereby
amended and replaced by the following:
"1.1.35 "EARLY TERMINATION FEE" means a payment by Borrower to Lender in
the event of (i) Borrower's terminating this Agreement pursuant to Clauses
14.1.2 hereof, or (II) Lender's terminating this Agreement upon occurrence
of an event of Default pursuant to Clause 14.1.3 hereof, calculated as
follows:
(a) if such termination occurs on or prior to the end of December 31,
2006, the greater of the sum of $750,000 or 1.15% of the prevailing
Maximum Amount as at the date of termination;
(b) if such termination occurs at any time subsequent to December 31,
2006 but prior to July 1, 2007 an amount equal to 0.75% of the Maximum
Amount; or,
(c) if such termination occurs on or subsequent to July 1, 2007 but
prior to June 30, 2008, an amount equal to 0.50% of the Maximum
Amount;"
5. Section 1.1.39 ("Eligible Accounts") is hereby amended and replaced by the
following:
"1.1.39 "ELIGIBLE ACCOUNTS" means the aggregate of the Net Face Amount of
all Accounts (other than Eligible Credit Card Accounts) created by Borrower
or any Credit Party in the ordinary course of business which Lender, in its
sole discretion, determines
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to be acceptable for purposes of advances hereunder. Without limiting
Lender's discretion, the following shall not be Eligible Accounts:
(a) Accounts which are outstanding for a period exceeding 90 days
immediately following the earlier of (i) delivery of the relevant
Inventory or performance of the relevant services or (ii) the date of
the relevant invoice;
(b) Accounts in respect of which Lender (if specifically requested by
Lender) has not been provided with both (i) the Account Debtor's
purchase order therefor and (ii) proof of delivery of the merchandise
and/or services forming the object thereof, both in form and substance
satisfactory to Lender;
(c) any portion of any Accounts (to the extent not already deducted in
arriving at the Net Face Amount thereof) which may reduce the amount
of such Accounts and/or may be deducted therefrom by the relevant
Account Debtor including, without limitation, all discounts, rebates,
allowances, credits or any other deductions applicable thereto;
(d) Accounts owed by an Account Debtor which is a Related Person;
(e) Accounts with respect to which goods are placed on a consignment,
guaranteed sale, "xxxx and hold", sale or return, sale on approval, or
other terms by reason of which the payment by the Account Debtor may
be conditional;
(f) Accounts, the collection of which Lender, in its reasonable credit
judgment, believes to be doubtful by reason of the Account Debtor's
financial condition;
(g) Accounts with respect to which goods have not been shipped and
billed to the Account Debtor, the services have not been performed and
accepted by the Account Debtor or does otherwise not represent a final
sale;
(h) Accounts that represent progress payments or other advance
xxxxxxxx that are due prior to the completion of performance by
Borrower of the subject contract for goods or services; and,
(i) Accounts which are the object of any Dispute, to the extent of
such Dispute (if such extent is clearly ascertainable);"
6. The following definition of "Eligible Credit Card Accounts" is hereby added
as Section 1.1.40 (a):
"1.1.40(a) "ELIGIBLE CREDIT CARD ACCOUNTS" means Accounts (other than
Eligible Accounts) generated by means of the sale of Inventory by Borrower,
the payment of which has been made by means of a credit card issued by any
major credit card issuers
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such as Visa, Mastercard or American Express, provided that same are
outstanding for no more than five days from the date of sale in question;"
7. The following definition of "Eligible Credit Card Accounts Sublimit" is
hereby added as Section 1.1.40(b):
"1.1.40(b) "ELIGIBLE CREDIT CARD ACCOUNTS SUBLIMIT" means the amount set
forth on the Contract Data Sheet;"
8. Section 1.1.56 ("Interest") is hereby amended and replaced by the
following:
"1.1.56 "INTEREST" means all interest payable by Borrower to Lender on
Outstandings under the Credit Facilities consisting of Loan Advances
pursuant to Clause 7.1 hereof and as set forth in the Contract Data Sheet;"
9. The following definition of "Loan Advance(s)" is hereby added as Section
1.1.64(a):
"1.1.64(a) "LOAN ADVANCE(S)" means any Advance(s) other than BA
Advance(s);"
10. Section 1.1.74 ("Obligations") is hereby amended and replaced by the
following:
"1.1.74 "OBLIGATIONS" means the aggregate at any given time of all present
and future amounts, of any nature or source whatsoever, owing to Lender by
Borrower including:
(a) all amounts under the Credit Agreement (including, without
limitation, all Outstandings under the Credit Facilities, the face
amount of all outstanding Letters of Credit as well as all Interest,
BA Interest, Fees and Expenses);
(b) all amounts under any other Credit Documents;
(c) all amounts under any other contract, agreement, arrangement,
occurrence, non-occurrence or operation of law, of any nature
whatsoever, whereby Lender becomes a creditor of Borrower; and,
(d) the full amount, from time to time, of the Other Indebtedness;"
11. Section 1.1.76 ("Outstandings") is hereby amended and replaced by the
following:
"1.1.76 "OUTSTANDINGS" means the full amount of all Loan Advances and BA
Advances and the face amount of any Bankers' Acceptances owing and
outstanding under all of the Credit Facilities or the relevant Credit
Facility (as the case may be), any US Dollar amount of which, for the
purpose of calculating Outstandings, may (at Lender's discretion) be
converted to Canadian dollars at the then prevailing selling rate of US
Dollar to Canadian Dollar exchange of the Bank;"
12. The following definition of "Seasonal Advances" is hereby added as Section
1.1.88(a):
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"1.1.88(a) "SEASONAL ADVANCES" means either Loan Advances or BA Advances
made to the Borrower under the Revolving Loan which are directly
attributable to that portion of the percentage of NOLV of Eligible Finished
Goods Inventory which exceeds 92%;"
13. The following definition of "Seasonal Advance Interest Rate" is hereby
added as Section 1.1.88(b):
"1.1.88(b) "SEASONAL ADVANCE INTEREST RATE" means:
(a) for Loan Advances which constitute Seasonal Advances in Dollars,
a rate equal to the Prime Rate plus 4.0% per annum;
(b) for Loan Advances which constitute Seasonal Advances in US
Dollars, a rate equal to the Prime Rate plus 4.0% per annum; and
(c) for BA Advances which constitute Seasonal Advances, a rate equal
to the BA Equivalent Rate for a BA Interest Period of 30 days,
plus 5.5% per annum;"
14. Section 3.1 is hereby amended and replaced by the following:
"SECTION 3.1 Subject to the terms and conditions of the Credit Documents,
Lender may, in its discretion, make loans and re-make loans to Borrower on
a revolving basis in Dollars and/or US Dollars (collectively the "REVOLVING
LOAN(S)") by:
3.1.1 making Advances;
3.1.2 issuing or causing the issuance of Letters of Credit;
3.1.3 if specifically permitted in the Contract Data Sheet and subject
to the provisions of Section 7.6 hereof, making BA Advances (which BA
Advances shall be made in Dollars only); and/or
3.1.4 if specifically permitted in the Contract Data Sheet, accepting
or causing the acceptance of Bankers' Acceptances."
15. Section 7 is hereby amended and replaced by the following:
"7. INTEREST, BA INTEREST, BA ADVANCES, FEES AND EXPENSES
7.1 All Outstandings under the Credit Facilities consisting of Loan
Advances shall bear Interest and any overdue interest shall in turn bear
Interest at the hereafter described rates, calculated and payable as
hereinafter set forth. All Outstandings under the Credit Facilities
consisting of BA Advances shall bear BA Interest and any overdue BA
Interest shall in turn bear Interest at the hereafter described rates,
calculated and payable as hereafter set forth.
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7.2 All Interest shall be payable by Borrower to Lender in arrears on the
last Business Day of each month, calculated on the average daily
Outstandings resulting from Advances under the Revolving Loan and the
Non-Revolving Loan (as the case may be) at the rates hereafter set forth,
commencing with the first payment of Interest by Borrower to Lender on the
last Business Day of the month during which the initial Advance occurs
hereunder. Interest on overdue Interest will be calculated on the same
basis but will be compounded monthly and payable upon demand. All Interest
shall be payable both before as well as after any demand for payment, any
Default or any judgment.
7.3 The rates of Interest on all Outstandings consisting of Loan Advances
under:
7.3.1 the Revolving Loan (other than any Authorized Overadvance) shall
be:
(a) for Dollars, a rate equal to the Revolving Loan Rate for
Dollars (and, to the extent applicable, a rate equal to the
Seasonal Advance Interest Rate); and,
(b) for US Dollars, a rate equal to the Revolving Loan Rate for
US Dollars (and, to the extent applicable, a rate equal to the
Seasonal Advance Interest Rate);
7.3.2 any Authorized Overadvance shall be:
(a) for Dollars, a rate equal to the Authorized Overadvance Rate
for Dollars: and,
(b) for US Dollars, a rate equal to the Authorized Overadvance
Rate for US Dollars; and
7.3.3 any Non-Revolving Loan(s) shall be:
(a) for Dollars, a rate equal to the Non-Revolving Loan Rate for
Dollars: and,
(b) for US Dollars, a rate equal to the Non-Revolving Loan Rate
for US Dollars,
based upon the weighted average of Prime Rate during each month
for which the foregoing rates of Interest are calculated.
7.4 All BA Interest shall be payable by Borrower to Lender on each
particular BA Advance in arrears on the earlier of:
7.4.1 the Business Day upon which the applicable BA Interest
Period ends; or,
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7.4.2 the 90th day immediately following the commencement of the
applicable BA Interest Period (or, if such day is not a Business
Day, the nearest Business Day immediately preceding such day).
All BA Interest shall be payable both before as well as after any demand
for payment, any Default or any judgment.
7.5 The rate of BA Interest on all Outstandings consisting of BA Advances
under the Revolving Loan shall be the BA Loan Rate (and the Seasonal
Advance Interest Rate, to the extent applicable).
7.6 In the event that, from time to time hereunder, Lender makes or
re-makes BA Advances under the Revolving Loan, then:
7.6.1 each BA Advance shall be made only after Lender shall have
received the applicable BA Notice;
7.6.2 each BA Advance shall be made for the amount stipulated in the
applicable BA Notice and for and during the BA Interest Period
stipulated in the applicable BA Notice;
7.6.3 each BA Advance shall be made only to the extent that the Bank
is able to furnish to Lender:
(a) the BA Equivalent Rate for the BA Interest Period requested
by the Borrower in the applicable BA Notice;
(b) funds are available to Lender from the Bank based on the BA
Equivalent Rate for the BA Interest Period requested by Borrower
in the applicable BA Notice;
7.6.4 the full amount of each BA Advance shall be completely repaid by
Borrower to Lender at the end of each applicable BA Interest
Period by either:
(a) another BA Advance (in accordance with the provisions hereof
in general and Clauses 7.6.1, 7.6.2 and 7.6.3 hereof in
particular); or,
(b) a Loan Advance; and,
7.6.5 in the absence of the full amount of a BA Advance being
completely repaid by Borrower at the end of the applicable BA
Interest Period by another BA Advance, then same shall be
completely repaid by a Loan Advance and Borrower shall be
deemed, for all purposes, to have
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irrevocably instructed and authorized Lender to make such Loan
Advance in order to fully repay the particular BA Advance.
7.7 In the event that, from time to time hereunder, Lender makes loans or
re-makes loans to Borrower under the Revolving Loan and/or the
Non-Revolving Loan by Lender's accepting or arranging for the acceptance of
Bankers' Acceptances, then:
7.7.1 any such Bankers' Acceptances so accepted shall be in multiples
of CDN$100,000.00 or US$100,000.00 (as the case may be) and
shall be for terms equal to multiples of 30 days and not to
exceed 90 days;
7.7.2 upon acceptance of any Bankers' Acceptance, the face value of
each such accepted Bankers' Acceptance shall be deemed, for all
purposes to constitute Outstandings under the Revolving Loan or
the Non-Revolving Loan (as the case may be), repayable by
Borrower to Lender in accordance with the provisions of the
present Credit Agreement;
7.7.3 upon acceptance of any Bankers' Acceptances, Borrower shall
immediately pay to Lender all Bankers' Acceptance Costs
applicable thereto; and,
7.7.4 in addition to all Bankers' Acceptance Costs, upon acceptance of
any Bankers' Acceptances, Borrower shall immediately pay to
Lender the Bankers' Acceptance Fee applicable thereto;
7.8 All rates of Interest, BA Interest and Bankers' Acceptance Fees under
the Revolving Loan, any Authorized Overadvance and any Non-Revolving
Loan(s) hereunder may be computed either on the basis of a year (ie. 365
days or 366 days in a leap year) or on the basis of a 360 day period. In
the event computed on the basis of 360 day period, then the applicable
Revolving Loan Rate, BA Loan Rate, Authorized Overadvance Rate,
Non-Revolving Loan Rate, and/or Bankers' Acceptance Fees, as the case may
be, shall constitute rates on a per annum (ie. yearly) basis equivalent to
such rates divided by 360 and multiplied by the number of days in any given
year (being .01389 times greater than such rates in any ordinary year and
.01667 times greater than such rates in any leap year).
7.9 In the event of occurrence of Default, each of the Revolving Loan Rate,
the BA Loan Rate, the Authorized Overadvance Rate, the Non-Revolving Loan
Rate and the Bankers' Acceptance Fees shall be automatically increased and
set at the highest Revolving Loan Rate designated herein, as further
increased by two percentage points (2%) effective as of the occurrence of
such Default and continuing for so long as such Default is outstanding. In
the event of existence of any Unauthorized Overadvance, Borrower shall
immediately pay to Lender (and Lender shall be entitled to charge to
Borrower's account as part of the Revolving Loans) the Overadvance Fee.
Such
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Overadvance Fee shall be in addition to and not constitute part of the
Interest and the BA Interest payable hereunder.
7.10 In addition to, and not constituting part of, the Interest and the BA
Interest, Borrower shall pay to Lender:
7.10.1 the Arrangement Fee, which shall be paid in full by Borrower to
Lender immediately upon the making of the first Advance
hereunder;
7.10.2 the Monitoring Fee, which shall be paid, on a monthly basis on
the last day of each calendar month, by Borrower to Lender
during each calendar month (with a part of any calendar month
being counted as a full calendar month) commencing at the end of
the first calendar month immediately following the Effective
Date and thereafter, until both the Obligations shall have been
fully paid and discharged and Borrower is no longer entitled to
avail itself of the Credit Facilities;
7.10.3 the Standby Fee, which shall be paid on a monthly basis on the
last day of each calendar month, by Borrower to Lender during
each calendar month (with a part of any calendar month being
counted as a full calendar month) commencing at the end of the
first calendar month immediately following the Effective Date
and thereafter until both the Obligations shall have been fully
paid and discharged and Borrower is no longer entitled to avail
itself of the Credit Facilities;
7.10.4 the Overadvance Fee for and during each calendar month during
which the Overadvance Fee is applicable (with a part of any
calendar month being counted as a full calendar month); and,
7.10.5 all other Fees hereunder as and when due hereunder; and,
7.10.6 all Expenses as and when due hereunder.
7.11 None of the Fees or Expenses shall, under any circumstances, be deemed
to constitute part of the Interest or BA Interest. All Fees and Expenses,
on the one hand, and all Interest, on the other hand, shall operate and be
paid by Borrower to Lender independently of one another."
16. Sections 8.2 and 8.3 are hereby amended and replaced by the following:
"8.2 The receipt of any Collections by Lender shall be applied on the
Settlement Date to reduce the Outstandings under the Revolving Loan only to
the extent that such Collection is honoured for payment. Should any
Collection not be honoured for payment, then Borrower shall be deemed not
to have made such payment on the Settlement Date and all Interest and BA
Interest will be re-calculated accordingly.
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8.3 The Loan Account will be charged with all Advances, Interest, BA
Interest, Fees and Expenses and any other payment obligation of Borrower
hereunder. In accordance with Clause 8.2 hereof, the Loan Account will be
credited with all payments received by Lender from Borrower or for
Borrower's account, including all Collections."
17. Section 12.1.2 is hereby amended and replaced by the following:
"12.1.2 Borrower shall pay all Interest and BA Interest to Lender on the
respective due dates therefor hereunder."
18. Section 12.3 is hereby amended and replaced by the following:
"12.3 Should Borrower or any Credit Party fail to pay when due any amounts
hereunder (other than repayment of Outstandings under the Credit
Facilities, Interest, BA Interest, Fees and Expenses) or fail to perform
any of their obligations hereunder, Lender may do so, after Notice thereof
to Borrower. In such event, Borrower shall pay to Lender, upon Lender's
simple demand therefor, all amounts so paid by Lender together with
Interest thereon. Any such payments made by Lender shall not negate or
remedy any Default which may have existed as a result of any of the
foregoing."
19. Sections 13.1.3 and 13.1.6 are hereby amended and replaced by the
following:
"13.1.3 the failure by Borrower to pay, as and when due hereunder, any
Interest and any BA Interest where same remains unremedied following the
expiry of five (5) days immediately following Notice thereof by Lender to
Borrower;"
"13.1.6 the failure by Borrower to fully repay any other amounts which may
become owing by Borrower to Lender under any of the Credit Documents (other
than Outstandings, the face amount of all outstanding Letters of Credit,
Interest, BA Interest, Fees, Expenses or periodic capital repayments of the
Non-Revolving Loan) and same remaining unpaid for a period of 14 days
immediately following Notice thereof by Lender to Borrower;"
20. Section 14.2 is hereby amended and replaced by the following:
"14.2 Borrower expressly acknowledges that the nature, calculation and
amount of the Early Termination Fee as well as the Minimum Term have been
agreed to by Lender and Borrower as part of the overall agreement as to the
Credit Facilities to be made available by Lender to Borrower hereunder and
the pricing of such Credit Facilities (which pricing includes the rate(s)
of Interest and BA Interest as well as the nature and amounts of Fees and
Expenses hereunder). Borrower furthermore acknowledges that the nature,
calculation and amount of the Early Termination Fee and the Minimum Term
are an integral part of and partial consideration for Lender's making the
Credit Facilities Available to Borrower and the pricing thereof and that,
in such context, the nature, calculation and amount of the Early
Termination Fee and the Minimum Term are fair and reasonable in all
respects;"
21. Lender and Borrower hereby confirm that the business plan of Borrower for
the period of April 1, 2005 through March 31, 2006 annexed as Exhibit I
hereto, will constitute the
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sole business plan to serve as the basis of Borrower's projections and
covenants for the purposes of the Loan Agreement for the period in
question.
22. The Contract Data Sheet is hereby amended and replaced by the contract data
sheet annexed to the present letter agreement and initialed and signed by
Lender, Borrower and the Guarantor.
Concurrently with the execution hereof, Borrower shall pay to GMACCF an
extension fee of $81,250.00, which fee shall be deemed fully earned by us upon
receipt thereof and which may be immediately debited from of the Borrower's
account as constituting part of the Obligations; Borrower's execution hereof
constituting GMACCF's authority to do so.
As a further condition to the implementation of the present amendment
letter, Borrower shall deliver to GMACCF three (3) originals of a duly completed
and executed Security Agreement governed by the laws of the State of New York.
Save and except as expressly stipulated herein, the Credit Agreement shall
be and remain in full force and effect in accordance with the terms, conditions
and contents thereof. Nothing herein contained shall be deemed to constitute a
waiver or renunciation by us to any of the Borrower's undertakings, covenants,
representations, warranties or Obligations other than as expressly set out
herein.
The parties hereto acknowledge that they have requested and are satisfied
that the foregoing, as well as all notices, actions and legal proceedings be
drawn up in the English language./Les parties a cette convention reconnaissent
qu'elles ont exige que ce qui precede ainsi que tous avis, actions et procedures
legales soient rediges et executes en anglais et s'en declarent satisfaites.
EXECUTED AT THE CITY OF MONTREAL, PROVINCE OF QUEBEC, THIS 13TH DAY OF
SEPTEMBER, 2005.
GMAC COMMERCIAL FINANCE CORPORATION-
CANADA/SOCIETE FINANCIERE
COMMERCIALE GMAC-CANADA
Per: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxx, authorized representative
AGREED AND ACCEPTED:
XXXXX XXXXX & SONS INC./XXXXX XXXXX & FILS INC.
Per:
/s/ Xxxxxx X. Xxxxxxxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: President and Chief Executive Officer
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XXXXX XXXXX & SONS HOLDINGS INC./XXXXX XXXXX & FILS SOCIETE DE PORTEFEUILLE INC.
Per:
/s/ Xxxxx Xxxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Operating Officer
XXXXX XXXXX & SONS U.S., INC.
Per:
/s/ Xxxxxx X. Xxxxxxxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: President and Chief Executive Officer
CONTRACT DATA SHEET
This is the Amended Contract Data Sheet to and forming part of the Amended and
Restated Accounts Receivable Management, Loan & Security Agreement between GMAC
Commercial Finance Corporation - Canada, as Lender, and Xxxxx Xxxxx & Sons Inc.,
as Borrower, bearing formal date July 1, 2004, as amended pursuant to amendment
letters dated October 22, 2004, July 21, 2005 and the amendment letter executed
concurrently herewith. This Contract Data Sheet replaces the former Contract
Data Sheet in its entirety.
1. CREDIT FACILITIES
1.1. REVOLVING LOAN:
1.1.1. Maximum Amount: $65,000,000.00
1.1.2. Eligible Accounts: 80 %
1.1.3. Eligible Credit Card Accounts: 85%
1.1.4. Eligible Credit Card Accounts Sublimit: $2,000,000.00
1.1.5. NOLV of Eligible Finished Goods Inventory:
(a) 85 % during the period of December 21 through February 15;
(b) 92% during the periods of August 16 through December 20 and
February 16 through March 15;
(c) 95% during the period of March 16 through August 15, 2006;
(d) 94% during the period of March 16 through August 15, 2007; and
(e) 93% during the period of March 16 through June 30, 2008.
1.1.6. NOLV of Eligible Raw Materials Inventory: 100 %
1.1.7. Eligible Inventory Availability Limit: N/A
1.1.8. Value of Additional Collateral: Not Applicable
1.1.9. Overadvance Availability: Not Applicable
1.2. NON-REVOLVING LOAN(s):
1.2.1. Loan corresponding to Loan number 7015-82 in the principal amount of
$400,000.00, first disbursed on October 16, 2000 maturing on October 1,
2005, repayable in equal
Page 2
consecutive monthly installments of $6,666.66 and bearing interest at the
annual rate equal to the Prime Rate plus 2.50% per annum, the balance of
which was $20,000.37 as at July 26, 2005;
1.2.2. Loan corresponding to Loan number 7015-83 in the principal amount of
$2,567,353.14, first disbursed on April 18, 2001 maturing on January 1,
2006, repayable in equal consecutive monthly installments of $50,000.00 and
bearing interest at the annual rate equal to the Prime Rate plus 2.50% per
annum, the balance of which was $295,613.14 as at July 26, 2005;
1.2.3. Loan corresponding to Loan number 7015-84 in the principal amount of
$2,901,730.75, first disbursed on May 14, 2001 maturing on September 1,
2006, repayable in equal consecutive monthly installments of $50,000.00 and
bearing interest at the annual rate equal to the Prime Rate plus 0.625% per
annum, the balance of which was $699,816.23 as at July 26, 2005;
2. INTEREST
2.1. REVOLVING LOAN RATE:
2.1.1. As and from July 31, 2005, with effect retroactive to July 1, 2005
and subject to both section 2.1.2 hereof and, where applicable, the
Seasonal Advance Rate, all Outstandings resulting from Advances under the
Revolving Loan in Dollars, shall bear interest at the following annual
interest rates based on the corresponding Borrowing Base Surplus as
verified on a quarterly basis, based on the average Borrowing Base Surplus
for the immediately preceding quarter, as set forth in the table below:
BORROWING BASE SURPLUS APPLICABLE REVOLVING LOAN RATE
---------------------- ------------------------------
$4,000,000 or more Prime Rate
less than $4,000,000 Prime Rate plus 0.25%
2.1.2. All Outstandings resulting from Advances under the Revolving Loan in
Dollars shall bear interest at the following annual interest rates based on
the corresponding Borrowing Base Surplus as verified on a quarterly basis,
based on the average Borrowing Base Surplus for the immediately preceding
quarter, as set forth in the table below, in the event of the occurrence of
either of the following events, effective as at the corresponding dates
indicated below:
(a) in the event that the majority of the minority group of public
shareholders of Mayor's vote to reject the proposed transaction
whereby the outstanding shares held by the minority public
shareholders of Mayor's Jewelers, Inc. ("Mayor's") are
Page 3
exchanged for shares in the capital stock of Borrower (the "Merger"),
in which case such interest rates shall be effective as and from the
occurrence of such event, unless such event occurs prior to October
31, 2005, in which case such interest rates shall be effective as and
from October 31, 2005; or
(b) the Merger is not completed on or before December 31, 2005, in
which case such interest rates shall be effective as and from January
1, 2006;
BORROWING BASE SURPLUS APPLICABLE REVOLVING LOAN RATE
---------------------- ------------------------------
Greater than $15,000,000 Prime Rate
$3,000,000 - $15,000,000 Prime Rate plus 0.25%
Less than $3,000,000 Prime Rate plus 0.50%
2.1.3. As and from July 31, 2005 and subject to section 2.1.4 hereof and,
where applicable, the Seasonal Advance Rate, all Outstandings resulting
from Advances under the Revolving Loan in US Dollars, shall bear interest
at the following annual interest rates based on the corresponding Borrowing
Base Surplus as verified on a quarterly basis, based on the average
Borrowing Base Surplus for the immediately preceding quarter, as set forth
in the table below:
BORROWING BASE SURPLUS APPLICABLE REVOLVING LOAN RATE
---------------------- ------------------------------
$4,000,000 or more Prime Rate
less than $4,000,000 Prime Rate plus 0.25%
2.1.4. All Outstandings resulting from Advances under the Revolving Loan in
US Dollars shall bear interest at the following annual interest rates based
on the corresponding Borrowing Base Surplus as verified on a quarterly
basis, based on the average Borrowing Base Surplus for the immediately
preceding quarter, as set forth in the table below, in the event of the
occurrence of either of the following events, effective as at the
corresponding dates indicated below:
(a) in the event that the majority of the minority group of public
shareholders of Mayor's vote to reject the Merger, in which case such
interest rates shall be effective as and from the occurrence of such
event, unless such event occurs prior to October 31, 2005, in which
case such interest rates shall be effective as and from October 31,
2005; or
(b) the Merger is not completed on or before December 31, 2005, in
which case such interest rates shall be effective as and from January
1, 2006;
BORROWING BASE SURPLUS APPLICABLE REVOLVING LOAN RATE
---------------------- ------------------------------
Greater than $15,000,000 Prime Rate
$3,000,000 - $15,000,000 Prime Rate plus 0.25%
Less than $3,000,000 Prime Rate plus 0.50%
Page 4
2.2. AUTHORIZED OVERADVANCE RATE: Not Applicable
2.3. NON-REVOLVING LOAN RATE:
2.3.1. Loan 7015-81: annual rate equal to the Prime Rate plus 0.375%;
2.3.2. Loan 7015-82: annual rate equal to the Prime Rate plus 2.50%
2.3.3. Loan 7015-83: annual rate equal to the Prime Rate plus 2.50%
2.3.4. Loan 7015-84: annual rate equal to the Prime Rate plus 0.625%
3. BANKERS' ACCEPTANCES
3.1. Permitted
-----
X Not Permitted
-----
3.2. BANKERS' ACCEPTANCE FEES: Not Applicable
4. BA ADVANCES/BA INTEREST
BA ADVANCES:
X Permitted
-----
Not Permitted
-----
4.1. BA LOAN RATE:
4.1.1. As and from July 31, 2005 and subject to section 4.1.2 hereof
and, where applicable, the Seasonal Advance Rate, all Outstandings
resulting from Advances under the Revolving Loan in Dollars, shall
bear interest at the following annual interest rates based on the
corresponding Borrowing Base Surplus as verified on a quarterly basis,
based on the average Borrowing Base Surplus for the immediately
preceding quarter, as set forth in the table below:
Page 5
BORROWING BASE SURPLUS APPLICABLE REVOLVING LOAN RATE
---------------------- ------------------------------
Greater than $13,000,000 BA Equivalent Rate plus 1.25% per annum
$9,000,000 - $13,000,000 BA Equivalent Rate plus 1.50% per annum
$4,000,000 - <$9,000,000 BA Equivalent Rate plus 1.75% per annum
Less than $4,000,000 BA Equivalent Rate plus 2.00% per annum
4.1.2. All Outstandings resulting from Advances under the Revolving
Loan in Dollars shall bear interest at the following annual interest
rates based on the corresponding Borrowing Base Surplus as verified on
a quarterly basis, based on the average Borrowing Base Surplus for the
immediately preceding quarter, as set forth in the table below, in the
event of the occurrence of either of the following events, effective
as at the corresponding dates indicated below:
(a) in the event that the majority of the minority group of
public shareholders of Mayor's vote to reject the Merger, in
which case such interest rates shall be effective as and from the
occurrence of such event, unless such event occurs prior to
October 31, 2005, in which case such interest rates shall be
effective as and from October 31, 2005; or
(b) the Merger is not completed on or before December 31, 2005,
in which case such interest rates shall be effective as and from
January 1, 2006;
BORROWING BASE SURPLUS APPLICABLE REVOLVING LOAN RATE
---------------------- ------------------------------
Greater than $15,000,000 BA Equivalent Rate plus 1.75% per annum
$3,000,000 - $15,000,000 BA Equivalent Rate plus 2.00% per annum
Less than $3,000,000 BA Equivalent Rate plus 2.25% per annum
5. LETTERS OF CREDIT
5.1. LETTER OF CREDIT LIMIT: N/A
5.2. LETTER OF CREDIT RESERVES: 50 % of the face amount of all
Unaccepted Letters of Credit
5.3. LETTER OF CREDIT FEE: 0.25 % per month, calculated on the
average daily balance of outstanding
Letters of Credit for each month
6. FEES
Page 6
6.1. ARRANGEMENT FEE: N/A
6.2. MONITORING FEE: $7,500.00 per month plus an additional
amount of $5,000.00 per month during the
months of February through June,
inclusive
6.3. STANDBY FEE: 0.25 % per annum
7. CREDIT PARTIES Xxxxx Xxxxx & Sons U.S., Inc.
8. GUARANTOR Xxxxx Xxxxx & Sons U.S., Inc.
Xxxxx Xxxxx & Sons Holdings Inc.
(formerly Borgosesia Acquisitions Corp.)
9. TERM
9.1. EFFECTIVE DATE: July 1, 2005
9.2. MINIMUM TERM: 3 consecutive Contract Years as and from
the Effective Date.
10. ADDRESS FOR BORROWER AND ANY CREDIT PARTIES:
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
11. PERMITTED CHARGES:
- Rights in favour of vendors having sold goods to the Borrower by way
of consignment or conditional sale;
- Rights in favour of lessors of equipment and/or machinery which have
been leased by lease or capital lease to the Borrower;
Page 7
- Movable Hypothec in the amount of $3,120,000 registered in favour of
Scojen Limited Partnership and Rhode Island Industrial Recreational
Building Authority on April 6, 2005 under number 00-0000000-0000, on
strict condition that Scojen Limited Partnership and Rhode Island
Industrial Recreational Building Authority cede priority of all such
hypothecary rights in favour of the Lender on terms and conditions
satisfactory to the Lender;
- Movable hypothec in the amount of $5,400,000 registered in favour of
La Financiere du Quebec on April 24, 2003 under number
00-0000000-0000, on strict condition that La Financiere du Quebec cede
priority of all such hypothecary rights in favour of the Lender on
terms and conditions satisfactory to the Lender;
- Movable hypothec in the amount of $1,500,000 registered in favour of
National Bank Trust Inc. on August 21, 2002 under number
00-0000000-0000, on strict condition that National Bank Trust Inc.
cede priority of all such hypothecary rights in favour of the Lender
on terms and conditions satisfactory to the Lender;
12. SURPLUS REQUIREMENTS: For the purposes of establishing the
applicable Revolving Loan Rate and
applicable BA Loan Rate, the Borrowing
Base Surplus shall be calculated by
applying the advance rate of 85% of NOLV
of Eligible Finished Goods Inventory.
13. SURPLUS RESERVE: N/A
14. FINANCIAL COVENANTS:
Borrower shall maintain the following financial covenants, each to be calculated
on a non-consolidated basis:
14.1. The aggregate of all Capital Expenditures during any Fiscal Year shall be
limited to 120% of the projected amount as set forth in the business plan
which has been (and which shall on an annual basis be) submitted to and
approved by Lender (the "PLAN"). Based on the foregoing, the aggregate of
all capital expenditures for the Fiscal Year ending March 31, 2006 shall
not exceed $6,820,000; and
14.2. Borrower shall have and maintain EBITDA, tested quarterly on a Rolling
Basis, of not less than 80% of the projected EBITDA as set forth in the
Plan.
Page 8
15. SPECIAL COVENANTS:
Borrower and the Guarantor, Xxxxx Xxxxx & Sons Holdings Inc. shall not
amalgamate nor shall Xxxxx Xxxxx & Sons Holdings Inc. distribute any of its
assets outside of the ordinary course of business or be the object of any
winding-up, dissolution, restructuring or corporate reorganization of any kind
or nature unless and until both:
15.1. Lender shall have received a detailed written outline regarding any such
proposed transaction no less than thirty (30) days prior to the intended
date of such transaction; and
15.2. Lender shall have consented to such proposed transaction no less than at
least fifteen (15) days prior to the conclusion thereof, which consent
will not be unreasonably withheld by Lender.
16. REPORTING:
Borrower shall provide the following financial information to Lender:
16.1. For the Fiscal Year ends of March 2005 and March 2006 only, in lieu of
audited financial statements of Borrower prepared in accordance with GAAP,
Borrower shall provide to Lender, on an annual basis and within 120 days
of each Fiscal Year end, the following:
(a) annual audited consolidating financial statements of Borrower and
Mayor's Jewellers, Inc. prepared in accordance with generally
accepted accounting principles, as in effect from time to time in
the United States, consistently applied ("US GAAP");
(b) annual unaudited unconsolidated financial statements of Borrower,
prepared in accordance with GAAP; and
(c) a reconciliation pursuant to which the unaudited financial
statements of Borrower referred to in subparagraph (b) hereof are
to be referenced and compared to the annual audited consolidated
financial statements referred to in subparagraph (a) hereof.
Notwithstanding the foregoing, in the event that the Merger prior to the
March 2006 Fiscal Year end of Borrower, then, in such event, Borrower
shall deliver audited annual financial statements prepared in accordance
with US GAAP for the March 2006 and subsequent Fiscal Year ends. It is
further understood and agreed that, in the event that the Merger is not
concluded prior to the March 2007 Fiscal Year end of Borrower, Borrower
shall deliver to Lender annual audited consolidated and unconsolidated
financial statements for the March 2007 Fiscal Year End and for all
subsequent Fiscal Year end;
16.2. On a quarterly basis, Compliance Certificates signed by the chief
financial officer, attesting to financial covenant requirements;
Page 9
16.3. On a monthly basis, as at the end of each accounting month, to be
delivered no later than 30 days following each accounting month end:
16.3.1. financial statements prepared by management and signed by the
chief financial officer of Borrower;
16.3.2. a report of the chief financial officer, signed by the chief
financial officer of Borrower;
16.3.3. a detailed aged listing of Accounts in form and substance
satisfactory to Lender within 15 days of each month end; and
16.3.4. a detailed aged listing of accounts payable, to be delivered to
Lender within 15 days of each month end;
16.4. On a weekly basis, detailed Inventory Declaration in form and substance
satisfactory to Lender within 3 days of each weekly period;
16.5. A month by month projected operating budget and cashflow for borrower in a
form and substance satisfactory to Lender, at such intervals Lender may
from time to time request; and
16.6. Such other additional information and documents as Lender may, from time
to time and at such intervals, request from Borrower.
17. SECURITY:
17.1. The hypothecation (in such amount as may be designated by Lender from time
to time) and security interests in favour of Lender of all of Borrower's
and each Credit Party's present and future movable and personal property,
whether corporeal or incorporeal, tangible or intangible, of any nature
whatsoever, wherever situated, properly perfected in all jurisdictions
where any such property is or may hereafter be situated, creating a
first-ranking hypothec and security interest in Lender's favour thereon
except for the Permitted Charges;
17.2. An unlimited Guarantee executed by Xxxxx Xxxxx & Sons U.S., Inc. in favour
of the lender, with respect to any and all obligations due from time to
time by Borrower to Lender supported by a general security agreement in
favour of Lender charging all of such guarantor's present and future
personal property, tangible and intangible, wherever situated, properly
perfected in all jurisdictions where any such property is or may hereafter
be situated, creating a first-ranking hypothec and security interest in
Lender's favour thereon except for the Permitted Charges.
Page 10
LENDER: GMAC COMMERCIAL FINANCE CORPORATION -
CANADA/SOCIETE FINANCIERE COMMERCIALE GMAC -
CANADA
Per:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx, authorized representative
BORROWER: XXXXX XXXXX & SONS INC.
Per:
/s/ Xxxxxx X. Xxxxxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
President and Chief Executive Officer
CREDIT PARTY: XXXXX XXXXX & SONS U.S., INC.
Per:
/s/ Xxxxxx X. Xxxxxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
President and Chief Executive Officer
GUARANTOR: XXXXX XXXXX & SONS U.S., INC.
Per:
/s/ Xxxxxx X. Xxxxxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
President and Chief Executive Officer
XXXXX XXXXX & SONS HOLDINGS INC./XXXXX XXXXX
ET FILS, SOCIETE DE PORTEFEUILLE INC.
Per:
/s/ Xxxxx Xxxxxxxx
----------------------------------------
Xxxxx Xxxxxxxx
Chief Operating Officer
