EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AGREEMENT
As of June 15, 2002
THIS SECOND AMENDMENT TO THE LOAN AGREEMENT (the "Second Amendment") is
entered into as of June 15, 2002 by and among ▇▇▇▇▇▇▇ Jewelers, Inc. as Borrower
(the "Borrower"), the lenders party thereto (the "Lenders") and DDJ Capital
Management LLC as agent for the Lenders (the "Agent").
WHEREAS, Borrower, Lenders and Agent are parties to that certain Loan
Agreement dated as of April 30, 2001, as amended pursuant to that certain
amendment dated November 12, 2001 (the "Loan Agreement"), pursuant to which
Lenders have made certain credit available to and on behalf of Borrower.
WHEREAS, the obligations of Borrower to Lenders under the Loan
Agreement are secured by a lien on substantially all of the assets of Borrower
pursuant to that certain Junior Security Agreement by and between Borrower and
Agent on behalf of Lenders (the "Security Agreement" and, together with the Loan
Agreement and the other documents and instruments executed in connection
therewith, the "Loan Documents");
WHEREAS, Borrower, Lenders and Agent are also parties to that certain
Loan and Security Agreement, dated as of October 1, 2001, as amended through the
date hereof (the "Senior Loan Agreement"), pursuant to which Lenders have made
certain credit available to and on behalf of Borrower and to secure the
obligations outstanding under the Senior Loan Agreement;
WHEREAS, the obligations of Borrower to Lenders under the Senior Loan
Agreement are secured by a first priority lien in substantially all of the
assets of Borrower;
WHEREAS, Lenders executed that certain Intercreditor and Subordination
Agreement, dated as of October 1, 2001 (the "Subordination Agreement"), whereby
Lenders agreed that the obligations incurred pursuant to the Loan Agreement are
subordinate in right of payment to the prior payment in full of all of the
obligations incurred pursuant to the Senior Loan Agreement;
WHEREAS, the Lenders and the Borrower desire to amend the Loan
Agreement in order to confirm the Borrower's obligations under the Loan
Documents and in the order to amend and confirm certain provisions of the Loan
Agreement, as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms shall have the meaning ascribed to them in the Loan Agreement.
SECTION 2. ACKNOWLEDGMENT OF DEBT. The Borrower acknowledges that as of
the date of this Second Amendment:
(a) The principal amount outstanding under the Tranche B Loans is
$14,000,000.00.
(b) The accrued but unpaid interest under the Tranche B Loans is
$2,396,355.00 (the "Accrued Tranche B Interest").
(c) The principal amount outstanding under the Tranche C Loans is
$14,335,431.01.
(d) The accrued but unpaid interest under the Tranche C Loans is
$2,367,038 (the "Accrued Tranche C Interest").
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Borrower has adequate
corporate power and authority to execute and deliver this Second Amendment and
to perform its obligations hereunder. This Second Amendment has been duly
authorized, executed and delivered by the Borrower and does not contravene any
law, rule or regulation applicable to the Borrower or any of the terms of the
Borrower's charter documents, by-laws or other governing document or any
indenture, agreement or undertaking to which the Borrower is a party. The
obligations of the Borrower under this Second Amendment and the Loan Documents
constitute its legal, valid and binding obligations enforceable against it in
accordance with their respective terms except to the extent such enforceability
(a) may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to creditors' rights generally and (b) is subject to
general principles of equity. All of the representations and warranties made by
or on behalf of the Borrower in the Loan Documents are true and correct on the
date hereof as if made on and as the date hereof, unless such representation or
warranty is true only as of a specified date in the Loan Agreement.
SECTION 4. AMENDMENTS. The Borrower, the Agent and the Lenders agree to
amend the Loan Agreement as follows:
(1) The definition of "Interest Rate" in Section 1.1 of the Loan
Agreement shall be deleted in its entirety and replaced with the following:
"Interest Rate" shall mean 20% per annum.
(2) The definition of "Maturity Date" in Section 1.1 of the Loan
Agreement shall be amended by deleting "June 15, 2002" and replacing the same
with "June 30, 2003".
(3) The definition of "Overadvance" in Section 1.1 of the Loan
Agreement shall be deleted in its entirety.
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(4) The definition of "Senior Loan Agreement" in Section 1.1 of
the Loan Agreement shall be deleted in its entirety and replaced with the
following:
"Senior Loan Agreement" shall have the meaning ascribed to it in
the third WHEREAS clause of the Second Amendment.
(5) The definition of "Tranche B Loans" shall be deleted in its
entirety and replaced with the following:
"Tranche B Loans" shall mean the Initial Tranche B Loan and any
Additional Tranche B Loans made by Lender's to the Borrower under
Article 2 hereof, plus any other principal due to the Lenders
pursuant to the terms of the Loan Agreement, including amounts
due pursuant to Sections 2.5(c) and 2.5(d) hereof.
(6) The definition of "Tranche C Loans" shall be deleted in its
entirety and replaced with the following:
"Tranche C Loans" shall mean the $14,335,431.01 Tranche C Loan
arising out of the Lender's purchase from various trade vendors
of certain of the Borrower's accounts payable, each of which is
evidenced by an Assignment of Claim, plus any other principal due
to Lenders pursuant to the terms of the Loan Agreement, including
amounts due pursuant to Sections 2.5(c) and 2.5(d) hereof.
(7) Section 2.2 of the Loan Agreement (Permitted Additional
Tranche B Loans) shall be amended by adding the following subsection 2.2(c):
(c) Notwithstanding anything to the contrary contained in the
Loan Agreement, the Borrower shall have no right to any
Additional Tranche B Loans from and including the date of the
Second Amendment through the Maturity Date.
(8) Section 2.4 of the Loan Agreement (Overadvances) shall be
deleted in its entirety and replaced with the following:
Section 2.4 [Intentionally Omitted].
(9) Section 2.5 of the Loan Agreement (Interest on Loans) shall
be amended by adding the following subsections (c) and (d):
(c) The Accrued Tranche B Interest and the Accrued Tranche C
Interest due and payable to the Lenders as of the date of the
Second Amendment shall be capitalized and added to the principal
amount outstanding under the Tranche B Loans and the Tranche C
Loans, respectively.
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(d) For any month following the date of the Second Amendment, the
Borrower may elect not to make a cash payment of interest on the
Loans as required by Section 2.5(a) by providing the Agent with
three (3) Business Days' notice prior to the first Business Day
of such month that they elect not to make the monthly cash
interest payment due pursuant to Section 2.5(a) of the Loan
Agreement (an "Election"). In the event that the Borrower makes
an Election, the monthly interest payment for which the Borrower
made an Election shall be capitalized and added to the principal
amount outstanding under the Tranche B or Tranche C Loans, as the
case may be.
(10) Section 2.7 (Fees and Additional Compensation) of the Loan
Agreement shall be amended by deleting Section 2.7(b) in its entirety.
(11) Section 9.1 (Events of Default) of the Loan Agreement shall
be amended by deleting Section 9.1(j) in its entirety and replacing it with the
following:
(j) [Intentionally Omitted].
SECTION 5. 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 Second
Amendment and any related documents.
SECTION 6. EFFECTIVENESS; CONDITION TO EFFECTIVENESS. This Second
Amendment shall become effective as of the date first set forth above, upon
execution hereof by the Lenders, the Agent and the Borrower.
SECTION 7. OBLIGATIONS IN FULL FORCE AND EFFECT Except as herein
amended and modified, the Loan Agreement and the other Loan Documents shall
remain in full force and effect.
SECTION 8. COUNTERPARTS. This Second Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Second Amendment as
of the date and year first written above.
▇▇▇▇▇▇▇ JEWELERS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Secretary
DDJ CAPITAL MANAGEMENT, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name:
Title:
B III CAPITAL PARTNERS:
By: DDJ Capital III, LLC, its General
Partner
By: DDJ Capital Management, LLC,
Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Member
B III-A CAPITAL PARTNERS, L.P.
By: GP III-A, LLC, its General Partner
By: DDJ Capital Management, LLC,
Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Member
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