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EXHIBIT 4.1(c)
THIRD AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment"), dated as of November 25, 1996, is entered into by and between
CONGRESS FINANCIAL CORPORATION (WESTERN), a California corporation ("Lender"),
with a place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇'▇ SOFA FACTORY, a California corporation, and its
wholly owned subsidiary, ▇▇▇▇▇▇ CONVERTIBLE CORPORATION, a New York corporation
(jointly and severally, "Borrower"), with its chief executive office located at
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
A. Borrower and Lender have previously entered into that certain
Loan and Security Agreement dated as of January 20, 1995, as amended by that
certain First Amendment to Loan and Security Agreement dated as of May 10,
1996, and as further amended by that certain Second Amendment to Loan and
Security Agreement dated as of August 26, 1996 (collectively, the "Loan
Agreement"), pursuant to which Lender has made certain loans and financial
accommodations available to Borrower. Terms used herein without definition
shall have the meanings ascribed to them in the Loan Agreement.
B. Borrower has requested Lender to extend a $2,500,000 letter of
credit subline under the Loan Agreement.
C. Lender is willing to further amend the Loan Agreement under
the terms and conditions set forth in this Amendment. Borrower is entering
into this Amendment the understanding and agreement that, except as
specifically provided herein, none of Lender's rights or remedies as set forth
in the Loan Agreement is being waived or modified by the terms of this
Amendment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants here contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Defined Terms. Any and all initially capitalized terms used in this
Amendment without definition shall have the meaning ascribed thereto in the
Loan Agreement.
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2. New Definition. Section 1 of the Loan Agreement is hereby
amended to add the following definition in alphabetical and numerical order:
"1. 'Letter of Credit Accommodations' shall mean the
standby letters of credit or guarantees of standby letters of
credit which are from time to time either (i) issued or opened
by Lender for the account of Borrower or (ii) with respect to
which Lender has agreed to indemnify the issuer or guaranteed
to the issuer the performance by Borrower of its obligations
to such issuer."
3. Amendment of Definition of "Availability Reserves". The
definition of "Availability Reserves" shall be amended in its entirety to read
as follows:
1.3 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time
establish and revise in good faith reducing the amount of
Revolving Loans, Letter of Credit Accommodations and advances
under the Equipment Acquisition Facility which would otherwise
be available to Borrower under the lender formula(s) provided
for herein: (a) to reflect events, conditions, contingencies
or risks which, as determined by Lender in good faith, do or
may affect either (i) the Collateral or any other property
which is security for the Obligations or its value, (ii) the
assets, business or prospects of Borrower or any Obligor or
(iii) the security interests and other rights of Lender in the
Collateral (including the enforceability, perfection and
priority thereof) or (b) to reflect Lender's good faith belief
that any collateral report or financial information furnished
by or on behalf of Borrower or any Obligor to Lender is or may
have been incomplete, inaccurate or misleading in any material
respect or (c) in respect of any state of facts which Lender
determines in good faith constitutes an Event of Default or
may, with notice or passage of time or both, constitute an
Event of Default or (d) an amount equal to two (2) months
gross rent for each leased premises of Borrower which is
located in a state where a landlord may be entitled to a
priority lien on Collateral to secure unpaid rent and with
respect to each such property the landlord has not executed a
form of waiver and consent acceptable to Lender. The amount
of any Availability Reserves established by Lender shall have
a reasonable relationship as determined by Lender to the
matter which is the basis for it."
4. Amendment of Definition of "Obligations". Section 1.25 of the Loan
Agreement is hereby amended to read in its entirety as follows:
"1.25 'Obligations' shall mean any and all Revolving Loans,
Letter of Credit Accommodations and advances under the
Equipment Acquisition
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Facility, and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by
Borrower to Lender and/or its affiliates, including principal,
interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or
otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal
term of this Agreement or after the commencement of any case
with respect to Borrower under the United States Bankruptcy
Code or any similar statute (including, without limitation,
the payment of interest and other amounts which would accrue
and become due but for the commencement of such case), whether
direct or indirect, absolute or contingent, joint or several,
due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, and however acquired by
Lender."
5. Amendment of Section 2.1. Section 2.1 of the Loan Agreement
is hereby amended to add the following new paragraph (c):
"(c) Except in Lender's discretion, the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding
at any time shall not exceed the Maximum Credit. In the event
that the outstanding amount of any component of the Loans and
Letter of Credit Accommodations, exceed the amounts available
under the lending formulas, the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(c) or the Maximum
Credit, as applicable, such event shall not limit, waive or
otherwise affect any rights of Lender in that circumstance or
on any future occasions and Borrower shall, upon demand by
Lender, which may be made at any time or from time to time,
immediately repay to Lender the entire amount of any such
excess(es) for which payment is demanded.
6. New Section 2.4. Existing Section 2.3 of the Loan Agreement is
hereby renumbered as Section 2.4 and revised to read in its entirety as
follows:
"2.4. Except in Lender's discretion, the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding
under Sections 2.1 through 2.3 at any time shall not exceed
the Maximum Credit. In the event that the outstanding amount
of any component of the Loans, or the aggregate amount of the
outstanding Loans and Letter of Credit Accommodations, exceed
the amounts available under the lending formulas, the sublimit
or Letter of Credit Accommodations set forth in Section 2.3(d)
or the Maximum Credit, as applicable, such event shall not
limit, waive or otherwise affect any rights of Lender in that
circumstance or on any future occasions and Borrower shall,
upon demand by Lender, which may be made at any time or from
time to
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time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded."
7. Letter of Credit Accommodations. The Loan Agreement is
hereby amended to add a new Section 2.3 as follows:
"Section 2.3 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions
contained herein, at the request of Borrower, Lender agrees to
provide or arrange for Letter of Credit Accommodations for the
account of Borrower containing terms and conditions acceptable
to Lender and the issuer thereof. Any payments made by Lender
to any issuer thereof and/or related parties in connection
with the Letter of Credit Accommodations shall constitute
additional Loans to Borrower pursuant to this Section 2.
(b) In addition to any charges, fees or expenses
charged by any bank or issuer in connection with the Letter of
Credit Accommodations, Borrower shall pay to Lender a letter
of credit fee at a rate equal to one and one-half percent
(1-1/2%) per annum on the daily outstanding balance of the
Letter of Credit Accommodations for the immediately preceding
month (or part thereof), payable in arrears as of the first
day of each succeeding month. Such letter of credit fee shall
be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed and the obligation of Borrower to
pay such fee shall survive the termination or non-renewal of
this Agreement.
(c) No Letter of Credit Accommodations shall be
available unless on the date of the proposed issuance of any
Letter of Credit Accommodations, the Loans available to
Borrower under this Section 2 (subject to the Maximum Credit
and Availability Reserves) are equal to or greater than one
hundred (100%) percent of the face amount of such Letter of
Credit Accommodations and all other commitments and obligations
made or incurred by Lender with respect thereto. Effective on
the issuance of each Letter of Credit Accommodation, the
amount of Loans which might otherwise be available to Borrower
shall be reduced by one hundred percent (100%) of the face
amount of the Letter of Credit Accommodation.
(d) Except in Lender's discretion, (i) the amount
of all outstanding Letter of Credit Accommodations and all
other commitments and obligations made or incurred by Lender
in connection therewith, shall not at any time exceed
$2,500,000. At any time an Event of Default exists or has
occurred and is continuing, upon Lender's request. Borrower
will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to
Lender
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for the Letter of Credit Accommodations, and in either case,
the Revolving Loans otherwise available to Borrower shall not
be reduced as provided in Section 2.3(c) to the extent of such
cash collateral.
(e) Borrower shall indemnify and hold Lender
harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Lender may suffer or
incur in connection with any Letter of Credit Accommodations
and any documents, drafts or acceptances relating thereto,
including, but not limited to, any losses, claims, damages,
liabilities, costs and expenses due to any action taken by
any issuer or correspondent with respect to any Letter of
Credit Accommodation. Borrower assumes all risks with respect
to the acts or omissions of the drawer under or beneficiary of
any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed Borrower's agent.
Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds Lender
harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by Borrower, by any issuer or
correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation. The provisions of this
Section 2.3(e) shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or
construed to grant Borrower any right or authority to pledge
the credit of Lender in any manner. Lender shall have no
liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Lender unless
Lender has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with
respect to such Letter of Credit Accommodation. Borrower
shall be bound by any interpretation made in good faith by
Lender, or any other issuer, or correspondent under or in
connection with any Letter of Credit Accommodation or any
documents, drafts or acceptances thereunder, notwithstanding
that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and
exclusive right and authority to, and Borrower shall not: (i)
at any time an Event of Default exists or has occurred and is
continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to
acceptance or rejection of any documents or goods or (C)
execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders, and (ii) at all
times. (A) grant any extensions of the maturity of, time of
payment for, or time or presentation of, any drafts,
acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations
of any of the terms or conditions of any of the
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applications, Letter of Credit Accommodations, or documents,
drafts or acceptances thereunder or any letters of credit
included in the Collateral. Lender may take such actions
either in its own name or in Borrower's name.
(g) Any rights, remedies, duties or obligations
granted or undertaken by, Borrower to any issuer or
correspondent in any application for any Letter of Credit
Accommodation, or any other agreement in favor of any issuer
or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or
undertaken by Borrower to Lender. Any duties or obligations
undertaken by Lender to any issuer or correspondent in any
application for any Utter of Credit Accommodation, or any
other agreement by Lender in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrower to Lender
and to apply in all respects to Borrower.
8. Amendment of Section 4.2. Section 4.2 is hereby amended to
read in its entiretv as follows:
"4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations. Each of the following is an additional
condition precedent to Lender making Loans and/or providing
Letter of Credit Accommodations to Borrower:
(a) all representations and warranties
contained herein and in the other Financing
Agreements shall be true and correct in all material
respects with the same effect as though such
representations and warranties had been made on and
as of the date of the making of each such Loan or
providing each such Letter of Credit Accommodation or
providing each such advance under the Equipment
Acquisition Facility and after giving effect thereto;
and
(b) no Event of Default and no event or
condition which, with notice or passage of time or
both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of
the date of the making of such Loan or providing each
such Letter of Credit Accommodation or providing each
such advance under the Equipment Acquisition Facility
and after giving effect thereto."
9. Amendment of Section 6.1. Section 6.1 of the Loan Agreement
is hereby amended to read in its entirety as follows:
"6.1 Borrower's Loan Account. Lender shall maintain
one or more loan account(s) on its books in which shall be
recorded (a) all Loans, Letter of Credit Accommodations,
advances under the Equipment Acquisition Facility and other
Obligations and the Collateral, (b) all payments made by or on
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behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All
entries in the loan account(s) shall be made in accordance
with Lender's customary practices as in effect from time to
time."
10. Amendment of Section 6.5. Section 6.5 of the Loan Agreement is
hereby amended to read in its entirety as follows:
"6.5 Authorization to Make Loans. Lender is
authorized to make the Loans and provide the Letter of Credit
Accommodations based upon telephonic or other instructions
received from anyone purporting to be an officer of Borrower or
other authorized person or, at the discretion of Lender, if
such Loans are necessary to satisfy any Obligations. All
requests for Loans, Letter of Credit Accommodations or advances
under the Equipment Acquisition Facility hereunder shall
specify the date on which the requested advance is to be made
or Letter of Credit Accommodations established (which day shall
be a business day) and the amount of the requested Loan. Lender
is authorized to provide a Letter of Credit Accommodation based
upon written instruction from Borrower specifying (i) the date
on which the Letter of Credit Accommodation is to be
established (which day shall be a business day), (ii) the face
amount of the Letter of Credit Accommodation, (iii) the
expiration date of the Letter of Credit Accommodation; (iv) the
name and address of the beneficiary, (v) the verbatim text of
the proposed Letter of Credit Accommodation or the proposed
terms and conditions thereof, including a precise description
of any documents and the verbatim text of any certificates to
be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of
Credit Accommodation, would require Lender or the issuer of the
Letter of Credit Accommodation to make payment under the Letter
of Credit Accommodation, and (vi) such other documents and
information as Lender or any issuer of the Letter of Credit
Accommodation may reasonably require in connection with the
issuance of such Letter of Credit Accommodation. Requests
received after 10:30 a.m. Los Angeles time on any day shall be
deemed to have been made as of the opening of business on the
immediately following business day. All Loans, Letter of
Credit Accommodations and advances under the Equipment
Acquisition Facility under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for
the benefit of, Borrower when deposited to the credit of
Borrower or otherwise disbursed or established in accordance
with the instructions of Borrower or in accordance with the
terms and conditions of this Agreement. Borrower agrees to
establish and maintain a single designated deposit account for
the purpose of receiving the proceeds of advances requested by
Borrower and made by Lender hereunder. Unless otherwise agreed
in writing by Lender and Borrower, any advances requested by
Borrower and made by Lender shall be made to such designated
deposit account."
11. Amendment of Section 6.6. The second sentence of
Section 6.6 of the Loan Agreement is hereby amended to read in its entirety as
follows:
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"All other Loans or Letters of Credit Accommodations
made or advances under the Equipment Acquisition
Facility provided by Lender to Borrower pursuant to
the provisions hereof shall be used by Borrower only
for general operating, working capital and other
proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof."
12. Amendment of Section 8. The preamble of Section 8 of the Loan
Agreement is hereby amended to read in its entirety as follows:
"Borrower hereby represents and warrants to Lender
the following (which shall survive the execution and delivery
of this Agreement), the truth and accuracy of which are a
continuing condition of the making of Loans and providing
Letter of Credit Accommodations and providing advances under
the Equipment Acquisition Facility by Lender to Borrower:'
13. Amendment of Section 9.16. Section 9.16 of the Loan Agreement
is hereby amended to redesignate existing clause (g) as clause (h) and to add a
new clause (g) as follows:
"(g) charges, fees or expenses changed by any bank
or issuer in connection with the Letter of Credit Accommodations;"
14. Amendment of Section 9.17. Section 9.17 is hereby amended to
read in its entirety as follows:
"9.17 Further Assurances. At the request of Lender
at any time and from time to time, Borrower shall, at its
expense, duly execute and deliver, or cause to be duly
executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as
may be necessary or proper to evidence, perfect, maintain and
enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing
Agreements. Lender may at any time and from time to time
request a certificate from an officer of Borrower representing
that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are
satisfied. In the event of such request by Lender. Lender
may, at its option, cease to make any further Loans or
provide any further Letter of Credit Accommodations until
Lender has received such certificate and, in addition, Lender
has determined that such conditions are satisfied. Where
permitted by law, Borrower hereby authorizes Lender to execute
and file one or more UCC financing statements signed only by
Lender."
15. Amendment of Section 10.2(d). Section 10.2(d) is hereby
amended to read in its entirety as follows:
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"(d) Without limiting the foregoing, upon the
occurrence of an Event of Default or an event which with
notice or passage of time or both would constitute an Event of
Default, Lender may, at its option, without notice, (i) cease
making Loans or arranging for Letter of Credit Accommodations
or reduce the lending formulas or amounts of Revolving Loans
and Letter of Credit Accommodations available to Borrower
and/or (ii) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit
Accommodations to be made by Lender to Borrower."
16. Amendment of Section 12.1(a). The third sentence of Section
12.1(a) of the Loan Agreement is hereby amended to read in its entirety as
follows:
"Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrower shall pay to Lender, in full,
all outstanding and unpaid Obligations and shall furnish cash
collateral to Lender in such amounts as Lender determines are
reasonably necessary to secure Lender from loss, cost, damage
or expense, including attorneys' fees and legal expenses, in
connection with any contingent Obligations, including issued
and outstanding Letter of Credit Accommodations and checks or
other payments provisionally credited to the Obligations
and/or as to which Lender has not yet received final and
indefeasible payment."
17. Amendment of Section 12.4. The second sentence of Section 12.4
of the Loan Agreement is hereby amended to read in its entirety as follows:
"Lender may, after notice to Borrower, assign its rights and
delegate its obligations under this Agreement and the other
Financing Agreements and further may assign, or sell
participations in, all or any part of the Loans, the Letter of
Credit Accommodations or any other interest herein to another
financial institution or other person, in which event, the
assignee or participant shall have, to the extent of such
assignment or participation, the same rights and benefits as
it would have if it were the Lender hereunder, except as
otherwise provided by the terms of such assignment or
participation.
18. Effectiveness of this Amendment. Lender must have received
the following items, in form and substance acceptable to Lender, or evidence of
the occurrence thereof, before this Amendment is effective and before Lender is
required to extend any credit to Borrower as provided for by this Amendment.
The date on which all of the following conditions have been satisfied is the
"Closing Date".
(a) Amendment. This Amendment fully executed in
a sufficient number or counterparts for distribution to Lender
and Borrower.
(b) Authorizations. Evidence that the execution,
delivery and performance by Borrower and each guarantor or
subordinating creditor of this
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Amendment and any instrument or agreement required under this
Amendment have been duly authorized.
(c) Representations and Warranties. The
Representations and Warranties set forth in the Loan Agreement
must be true and correct.
(d) Other Required Documentation. All other
documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been
delivered or executed or recorded and shall be in form and
substance satisfactory to Lender.
19. Choice of Law. The validity of this Amendment, its
construction, interpretation and enforcement, and the rights of the parties
hereunder, shall be determined under, governed by, and construed in accordance
with the laws of the State of California governing contracts wholly to be
performed in that State.
20. Counterparts. 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 an original, and all of which,
when taken together, shall constitute but one and the same instrument.
21. Due Execution. The execution, delivery and performance of
this Amendment are within the powers of the Borrower, have been duly authorized
by all necessary corporate action, have received all necessary governmental
approval, if any, and do not contravene any law or any contractual restrictions
binding on Borrower.
22. Otherwise Not Affected. In the event of any conflict or
inconsistency between the Loan Agreement and the provisions of this Amendment,
the Provisions of this Amendment shall govern. Except to the extent set forth
herein, the Loan Agreement shall remain in full force and effect.
23. Ratification. Borrower hereby restates, ratifies and
reaffirms each and every term and condition set forth in the Loan Agreement, as
amended hereby, and the Financing Agreements effective as of the date hereof.
24. Estoppel. To induce Lender to enter into this Amendment and
to continue to make advances to Borrower under the Loan Agreement, Borrower
hereby acknowledges and agrees that, after giving effect to this Amendment, as
of the date hereof, there exists no Event of Default and no right of offset,
defense, counterclaim or objection in favor of Borrower as against Lender with
respect to the Obligations.
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IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
▇▇▇▇▇▇'▇ SOFA FACTORY,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: General Counsel, Secretary
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▇▇▇▇▇▇ CONVERTIBLE
CORPORATION,
a New York corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: General Counsel, Secretary
--------------------------
CONGRESS FINANCIAL
CORPORATION (WESTERN),
a California corporation
By:
-----------------------------
Title:
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ACKNOWLEDGMENT
The undersigned ▇▇▇▇▇▇ Furniture, Inc., a Delaware corporation, parent
of ▇▇▇▇▇▇'▇ Sofa Factory ("▇▇▇▇▇▇"), in consideration of Congress Financial
Corporation (Western) ("Congress") continued extension of credit to ▇▇▇▇▇▇ and
▇▇▇▇▇▇ Convertible Corporation, hereby consents to the foregoing Third
Amendment to Loan and Security Agreement and acknowledges and confirms that its
Guarantee dated November 25, 1996 (the "Guarantee") in favor of Congress
remains in full force and effect. Although Congress informed us of the matters
set forth above, and we have acknowledged same, we understand and agree that
Congress has no duty under the Loan Agreement as defined above, the Guarantee
or any other agreement with us to so notify us or to seek such an
acknowledgment, and nothing contained herein is intended to or shall create
such a duty as to any advances or transactions hereafter.
Dated: November 25, 1996 ▇▇▇▇▇▇'▇ FURNITURE INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: General Counsel, Secretary
--------------------------
Title: General Counsel, Secretary
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