Exhibit 10.01
SECOND MODIFICATION AGREEMENT
BY THIS SECOND MODIFICATION AGREEMENT, made and entered into as of the
15th day of May, 2003, MATRIXX INITIATIVES, INC., a Delaware corporation, f/k/a
Gum Tech International, Inc., and ZICAM, LLC, an Arizona limited liability
company, f/k/a Gel Tech, L.L.C. (collectively, the "Borrower"), and COMERICA
BANK, successor by merger to Comerica Bank - California (the "Lender"), confirm
and agree as follows:
SECTION 1. RECITALS.
1.1 Borrower and Lender entered into a Credit Agreement dated May 29,
2002 (as amended from time to time, the "Credit Agreement"), which provides for
a revolving line of credit facility (the "RLC") in the original principal amount
of FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) for the purpose of funding
Borrower's short-term working capital.
1.2 The Loan is evidenced by the Note, dated May 29, 2002, executed by
Borrower, payable to the order of Lender.
1.3 Borrower and Lender desire to modify the Credit Agreement and the
other Credit Documents as set forth herein. All undefined capitalized terms used
herein shall have the meaning given them in the Credit Agreement.
SECTION 2. MODIFICATIONS OF CREDIT DOCUMENTS.
2.1 Section 1.1 of the Credit Agreement is hereby amended to include
the following definition:
"Debt to Tangible Net Worth Coverage Ratio" means all
Indebtedness divided by Tangible Net Worth, at the end of any fiscal
quarter.
2.2 The following definitions in Section 1.1 of the Credit Agreement
are hereby amended to read as follows:
"Interest Coverage Ratio" means Net Income plus income taxes,
depreciation, amortization and interest expense, all divided by
interest expense, calculated in accordance with GAAP at each fiscal
quarter end of the Borrower for the prior four fiscal quarters.
"RLC Maturity Date" means July 2, 2005.
"Variable Rate" means the rate per annum equal to the sum of
three-quarters percent (0.75%) and the Prime Rate per annum as in
effect from time to time. The Variable Rate will change on each day
that the "Prime Rate" changes.
2.3 The following definitions in Section 1.1 of the Credit Agreement
are hereby deleted:
Borrowing Base
Borrowing Base Certificate
Eligible Accounts Amount
Eligible Inventory
Eligible Inventory Amount
2.4 Section 2.1 of the Credit Agreement is hereby amended to read as
follows:
2.1 RLC Commitment. Subject to the conditions herein set
forth, Lender agrees to make the RLC available to or for the benefit of
Borrower, and Borrower agrees to draw upon the RLC, in the manner and
upon the terms and conditions herein expressed, amounts that, in the
aggregate, shall not exceed the RLC Commitment, less the Outstanding LC
Balance (the "Maximum RLC Loan Amount").
2.5 Section 7.1 of the Credit Agreement is hereby amended to read as
follows:
7.1 Financial Statements, Reports and Documents. It shall
deliver, or cause to be delivered, to Lender each of the following:
(a) Annual Statements of Matrixx. As soon as
available and in any event within one hundred twenty (120)
days after the close of each fiscal year of Matrixx, audited
financial statements of Matrixx on a consolidating and
consolidated basis, including its balance sheet as of the
close of such fiscal year and statements of income of Matrixx
for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year,
all in reasonable detail and accompanied by an unqualified
opinion thereon of independent public accountants of
recognized national standing selected by Matrixx and
acceptable to Lender, to the effect that such financial
statements have been prepared in accordance with GAAP.
(b) Quarterly Statements of Matrixx. As soon as
available, and in any event within thirty (30) days after the
end of each fiscal quarter of Matrixx, company-prepared
financial statements of Matrixx on a consolidating and
consolidated basis, including its balance sheet as of the
close of such fiscal quarter and statements of income of
Matrixx for such fiscal quarter, in each case setting forth in
comparative form the figures for the preceding fiscal quarter,
all in reasonable detail and prepared in accordance with GAAP.
(c) Compliance Certificate of Borrower. As soon as
available, and in any event within thirty (30) days after the
close of each fiscal quarter, a certificate signed by the
Authorized Person of the Borrower, substantially in the form
of Exhibit "B" attached hereto
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certifying that after a review of the activities of Borrower
during such period, Borrower has observed, performed and
fulfilled each and every obligation and covenant contained
herein and no Event of Default exists under any of the same
or, if any Event of Default shall have occurred, specifying
the nature and status thereof, and stating that all financial
statements of Matrixx or Borrower delivered to Lender during
the respective period pursuant to Sections 7.1(a) and 7.1(b)
hereof, to his/her knowledge, fairly present in all material
respects the financial position of Matrixx and the results of
its operations at the dates and for the periods indicated, and
have been prepared in accordance with GAAP, together with a
calculation of the Financial Covenants.
(d) Other Information. Such other information
concerning the business, properties or financial condition of
Borrower as Lender shall reasonably request.
2.6 Section 8.9 of the Credit Agreement is hereby amended to read as
follows:
8.9 Financial Covenants. Permit, calculated on the basis of
the financial statements of Matrixx:
(a) Its Interest Coverage Ratio at the end of any
fiscal quarter, on a rolling four quarter basis, to be less
than 1.50 to 1.00.
(b) Its Debt to Tangible Net Worth Coverage Ratio to
be greater than 1.00 to 1.00.
(c) Its Quick Ratio to be less than 1.50 to 1.00
until all long-term debt is paid off, then 1.00 to 1.00.
(d) Its quarterly Net Income to be less than $0 for
any two consecutive fiscal quarters, and its Net Income to be
less than $0 for any fiscal year.
2.7 Exhibit "B" to the Credit Agreement is hereby amended to read as
attached hereto as Exhibit "B".
2.8 Exhibit "C" to the Credit Agreement is hereby amended to read as
follows:
EXHIBIT "C"
[INTENTIONALLY LEFT BLANK]
2.9 All references to Gel Tech in the Credit Agreement and the other
Credit Documents are hereby amended to refer to Zicam, LLC (or "Zicam").
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2.10 All references to Gum Tech in the Credit Agreement and the other
Credit Documents are hereby amended to refer to Matrixx Initiatives, Inc.(or
"Matrixx").
2.11 All references to Comerica Bank-California in the Credit Agreement
and the other Credit Documents are hereby amended to refer to Comerica Bank.
2.12 The following terms of the Note are hereby amended as follows:
The "Variable Rate" means the rate per annum equal to the sum
of three-quarters percent (0.75%) and the Prime Rate per annum as in
effect from time to time; the Variable Rate shall change on each day
that the "Prime Rate" changes. The "RLC Maturity Date" means July 2,
2005.
SECTION 3. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.
3.1 All references to the Credit Agreement and the Note in the Credit
Documents and Security Documents are hereby amended to refer to the Credit
Agreement and the Note as hereby amended.
3.2 Borrower acknowledges that the indebtedness evidenced by the Note
is just and owing, and Borrower agrees to pay the indebtedness evidenced by the
Note and the indebtedness secured by the Security Documents, according to the
terms thereof, as herein modified.
3.3 Borrower hereby reaffirms to Lender each of the representations,
warranties, covenants and agreements of Borrower set forth in the Note, the
Credit Agreement and the other Credit Documents as herein modified, with the
same force and effect as if each were separately stated herein and made as of
the date hereof.
3.4 Borrower hereby ratifies, reaffirms, acknowledges, and agrees that
the Note, the Credit Agreement and the other Credit Documents represent valid,
enforceable and collectible obligations of Borrower, and that there are no
existing claims, defenses, personal or otherwise, or rights of setoff whatsoever
with respect to any of these documents or instruments. In addition, Borrower
hereby expressly waives, releases and absolutely and forever discharges Lender
and its present and former shareholders, directors, officers, employees and
agents, and their separate and respective heirs, personal representatives,
successors and assigns, from any and all liabilities, claims, demands, damages,
action and causes of action, whether known or unknown and whether contingent or
matured, that Borrower may now have, or has had prior to the date hereof, or
that may hereafter arise with respect to acts, omissions or events occurring
prior to the date hereof and, without limiting the generality of the foregoing,
from any and all liabilities, claims, demands, damages, actions and causes of
action, known or unknown, contingent or matured, arising out of, or in any way
connected with, the Loan. Borrower further acknowledges and represents that,
except as acknowledged above, no event has occurred and no condition exists
that, after notice or lapse of time, or both, would constitute a default under
this Agreement, the Note, the Credit Agreement or any other Credit Documents.
3.5 All terms, conditions and provisions of the Note, the Credit
Agreement and the other Credit Documents are continued in full force and effect
and shall remain unaffected and unchanged
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except as specifically amended hereby. The Note, the Credit Agreement and the
other Credit Documents, as amended hereby, are hereby ratified and reaffirmed by
Borrower, and Borrower specifically acknowledges the validity and enforceability
thereof.
SECTION 4. GENERAL.
4.1 This Agreement in no way acts as a release or relinquishment of
those liens, security interests and rights securing payment of the Loan. Such
liens, security interests and rights are hereby ratified, confirmed, renewed and
extended by Borrower in all respects.
4.2 The modifications contained herein shall not be binding upon Lender
until Lender shall have received all of the following:
(a) An original of this Agreement fully executed by the
Borrower; and
(b) Such other documents as Lender may reasonably require.
4.3 Borrower shall execute and deliver such additional documents and do
such other acts as Lender may reasonably require to fully implement the intent
of this Agreement.
4.4 Borrower shall pay Lender a commitment fee of $2,000.00 and all
costs and expenses incurred by Lender in connection herewith, whether or not all
of the conditions described in Paragraph 4.2 above are satisfied. Lender, at its
option, but without any obligation to do so, may advance funds to pay any such
costs and expenses that are the obligation of the Borrower, and all such funds
advanced shall bear interest at the contract rate provided in the Note, shall be
due and payable within ten (10) days after written notice from Lender to
Borrower and shall be secured by the Security Documents.
4.5 Notwithstanding anything to the contrary contained herein or in any
other instrument executed by Borrower or Lender, or in any other action or
conduct undertaken by Borrower or Lender on or before the date hereof, the
agreements, covenants and provisions contained herein shall constitute the only
evidence of Lender's and Borrower's consent to modify the terms and provisions
of the Note, the Credit Agreement or any other Credit Documents. Accordingly, no
express or implied consent to any further modifications involving any of the
matters set forth in this Agreement or otherwise shall be inferred or implied by
Lender's or Borrower's execution of this Agreement. Further, Lender's and
Borrower's execution of this Agreement shall not constitute a waiver (either
express or implied) of the requirement that any further modification of the Loan
or of the Note, the Credit Agreement or any other Credit Document shall require
the express written approval of Lender and Borrower; no such approval (either
express or implied) has been given as of the date hereof.
4.6 Notwithstanding this or any prior forbearance, actual or implied,
of any nature by Lender, time is hereby declared to be of the essence hereof, of
the Loan, of the Note, of the Credit Agreement and of all other Credit
Documents, and Lender requires, and Borrower agrees to, strict performance of
each and every covenant, condition, provision and agreement hereof, of the Note,
of the Credit Agreement and of all other Credit Documents.
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4.7 This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their heirs, personal representatives,
successors and assigns.
4.8 This Agreement is made for the sole protection and benefit of the
parties hereto, and no other person or entity shall have any right of action
hereon.
4.9 This Agreement shall be governed by and construed according to the
laws of the State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the date
indicated above.
MATRIXX INITIATIVES, INC., a Delaware
corporation, f/k/a Gum Tech International, Inc.
By:
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and Chief
Financial Officer
ZICAM, LLC, an Arizona limited liability
company, f/k/a Gel Tech, L.L.C.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Manager
BORROWER
COMERICA BANK, N.A., successor by merger to
Comerica Bank - California
By:
---------------------------------------
Name:
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Its:
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LENDER
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EXHIBIT "B"
COMPLIANCE CERTIFICATE
FOR PERIOD ENDING
Comerica Bank
000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier: (000) 000-0000 Date: ____________
Dear Ladies and Gentlemen:
This Compliance Certificate refers to the Credit Agreement dated as of
May 29, 2002 (as it may hereafter be amended, modified, extended or restated
from time to time, the "Credit Agreement"), between Matrixx Initiatives, Inc., a
Delaware corporation, f/k/a Gum Tech International, Inc., and Zicam, LLC, an
Arizona limited liability company, f/k/a Gel Tech, L.L.C. (collectively, the
"Borrower"), and Comerica Bank, successor by merger to Comerica Bank-California
(the "Lender"). Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 7.1(d) of the Credit Agreement, the undersigned,
hereby certifies that:
1. To the best of the undersigned's knowledge, after a review of the
activities of Borrower during the most recently ended fiscal quarter or most
recently ended four-quarter period, as appropriate (the "Reporting Period"),
Borrower has observed, performed and fulfilled each and every obligation and
covenant contained in the Credit Agreement and no "Event of Default" thereunder
exists [or if so, specifying the nature and extent thereof and any corrective
actions taken or to be taken].
2. All financial statements of Borrower delivered to Lender during the
Reporting Period, if any, to the undersigned's knowledge, fairly present in all
material respect the financial position of the Borrower and the results of its
operations at the dates and for the periods indicated and have been prepared in
accordance with GAAP.
3. As of the last day of the Reporting Period, the computations below
were true and correct:
Section 8.9 - Financial Covenants:
(a) Interest Coverage Ratio
Numerator: Net Income $___________
plus income taxes $___________
plus Depreciation and Amortization $___________
plus Interest Expense $___________
Equals A$___________
Denomimator: Interest Expense B$___________
A divided by B equals __________x
Minimum 1.50:1.00
(b) Debt to Tangible Net Worth Coverage Ratio
Total Indebtedness A$___________
Total Shareholder/Member Equity $___________
Less Aggregate Book Value of Intangible Assets ($___________)
Equals B$___________
A divided by B equals __________x
Maximum 1.00:1.00
(c) Quick Ratio
Numerator: Total Cash Held by Borrower $___________
Plus Eligible Accounts $___________
Equals A$___________
Denominator: Current Liabilities of Borrower B$___________
Minimum until LTD paid off: 1.50:1.00
Then: 1.00:1.00
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(d) Minimum Net Income
Net Income (Loss) for quarter ended ______________ $___________
Net Income (Loss) for next quarter $___________
Limits:
Minimum Net Income for one quarter $0
Net Income for year $___________
Minimum $0
MATRIXX INITIATIVES, INC., a Delaware
corporation, f/k/a Gum Tech International, Inc.
By:
---------------------------------------
Name:
-----------------------------------
Title:
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ZICAM, LLC, an Arizona limited liability
company, f/k/a Gel Tech, L.L.C.
By:
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Name:
-----------------------------------
Title:
-----------------------------------
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