AMENDMENT NO. 1 and WAIVER to LOAN AND SECURITY AGREEMENT
Exhibit 10.1
AMENDMENT NO. 1 and WAIVER
to
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 AND WAIVER TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of August 12, 2021, by and among XCEL BRANDS, INC., a Delaware corporation (“Borrower”), each other signatory hereto that is a Credit Party under the Loan Agreement (as hereinafter defined), the financial institutions from time to time party to the Loan Agreement (collectively, “Lenders” and individually, each a “Lender”), BANK HAPOALIM B.M., (“BHI”) as administrative agent and collateral agent for Lenders (BHI in such capacity together with its successors and assigns in such capacity, “Administrative Agent”) and FEAC Agent, LLC (“FEAC”), as co-collateral agent (FEAC in such capacity together with its successors and assigns in such capacity, “Co-Collateral Agent”).
BACKGROUND
Borrower, IM Brands, LLC (“IM Brands”), JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing, LLC, Xcel Design Group, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇ Fine Jewelry, LLC, H Heritage Licensing, LLC, Xcel-CT MFG, LLC and Gold Licensing, LLC (other than Borrower, collectively, “Guarantors”), Lenders and Agents are parties to a Loan and Security Agreement dated as of April 12, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lenders made term loans to Borrower secured by a Lien on substantially all of the assets of Borrower. Guarantors have guaranteed the payment and performance of Borrower’s obligations to Lenders and Agents under the Loan Agreement which guarantee obligations are secured by a Lien on substantially all of the assets of Guarantors.
Borrower has requested that Lenders waive compliance with certain financial covenants, and make certain amendments to the Loan Agreement. Lenders and Agents have agreed to provide such waiver and amend the Loan Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the financial accommodations provided to Borrower by Lenders, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
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135944.00102/126596093v.1
“Maximum Revolving Loan Amount” means (a) until Borrower delivers a Compliance Certificate in accordance with Section 8.1(d) which shows compliance with the financial covenants set forth on Schedule V for the applicable periods ending December 31, 2021, $1,500,000 and (b) at all times thereafter, $4,000,000; provided that, if Borrower fails to comply with the financial covenants set forth on Schedule V as calculated in any Compliance Certificate delivered in accordance with Section 8.1(d), then from and after the date of such Compliance Certificate to the date of the Compliance Certificate next delivered in accordance with Section 8.1(d) showing compliance with the financial covenants set forth on Schedule V, the Maximum Revolving Loan Amount shall be $1,500,000.
“(d)together with the Financial Statements delivered pursuant to Sections 8.1(a) and 8.1(c), a Compliance Certificate executed by a Responsible Officer of Borrower which shall include in reasonable detail (i) the calculations used in determining compliance with the financial covenants set forth on Schedule II and Schedule V, (ii) the exclusions with respect to changes in operating assets and liabilities as set forth on the cash flow statement of Borrower and the Included Subsidiaries as reported in the calculation of the Fixed Charge Coverage Ratio and (iii) detail with respect to the tax benefits of redemptions of Equity Interests in such period;”
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first written above.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: CFO
IM BRANDS, LLC
JR LICENSING, LLC
H LICENSING, LLC
C WONDER LICENSING, LLC
XCEL DESIGN GROUP, LLC
▇▇▇▇▇▇ ▇▇▇▇▇ FINE JEWELRY, LLC
H HERITAGE LICENSING, LLC
XCEL-CT MFG, LLC
GOLD LICENSING, LLC
By: | XCEL BRANDS, INC., |
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: CFO
21070539 | | SIGNATURE PAGE TO |
BANK HAPOALIM B.M., as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: First Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
Title: First Vice President
[additional signature pages follow]
FEAC AGENT, LLC, as Co-Collateral Agent.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
[additional signature pages follow]
BANK HAPOALIM B.M., as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: First Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
Title: First Vice President
[additional signature pages follow]
FIRST EAGLE ALTERNATIVE CAPITAL BDC, INC., as a Lender
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
FIRST EAGLE DIRECT LENDING FUND IV, LLC, as a Lender
By: | First Eagle Alternative Credit, LLC |
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
FIRST EAGLE DIRECT LENDING IV CO-INVEST, LLC, as a Lender
By: | First Eagle Alternative Credit, LLC |
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
FIRST EAGLE DIRECT LENDING LEVERED FUND IV SPV, LLC, as a Lender
By: | First Eagle Direct Lending Levered Fund IV, LLC |
Its: | Manager |
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
SCHEDULE II
FINANCIAL COVENANTS
Fiscal Period | Minimum EBITDA |
April 1, 2021 to September 30, 2021 | $3,000,000 |
April 1, 2021 to December 31, 2021 | $4,400,000 |
For the trailing twelve month period ending March 31, 2022 | $6,000,000 |
For the trailing twelve month periods ending June 30, 2022 and September 30, 2022 | $6,500,000 |
For the trailing twelve month periods ending December 31, 2022, March 31, 2023, June 30, 2023 and September 30, 2023 | $7,000,000 |
For the trailing twelve month periods ending December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025 | $7,500,000 |
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SCHEDULE V
FINANCIAL COVENANTS
Fiscal Period | Minimum EBITDA |
April 1, 2021 to December 31, 2021 | $6,500,000 |
For the trailing twelve month periods ending March 31, 2022, June 30, 2022 and September 30, 2022 | $6,500,000 |
For the trailing twelve month periods ending December 31, 2022, March 31, 2023, June 30, 2023 and September 30, 2023 | $7,000,000 |
For the trailing twelve month periods ending December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025 | $7,500,000 |
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EXHIBIT D
FORM OF CERTIFICATE OF COMPLIANCE
[Date]
This Compliance Certificate (this “Certificate”) is given by Xcel Brands, Inc., a Delaware corporation (the “Borrower”), pursuant to that certain Loan and Security Agreement, dated as of April 12, 2021, among Borrower, the other Credit Parties party thereto from time to time, Lenders party thereto from time to time, Bank Hapoalim B.M., as administrative agent and collateral agent for such Lenders and FEAC Agent, LLC, as co-collateral agent for such Lenders (as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Loan Agreement”). Capitalized terms used herein without definition shall have the meanings set forth in the Loan Agreement.
The undersigned is a Responsible Officer of Borrower and is duly authorized to execute and deliver this Certificate on behalf of Credit Parties. By executing this Certificate, such officer of Borrower hereby certifies to the Agents and Lenders on behalf of Credit Parties that:
1.The Financial Statements attached hereto for the Fiscal [Quarter][Year] ending ____________________ are true and complete in all material respects and fairly present in all material respects the financial condition of Borrower and the Included Subsidiaries as at the end of such Fiscal [Quarter][Year].
2.The calculations set forth in Annex 1 are computations of the financial covenants set forth on Schedule II and Schedule V of the Loan Agreement calculated from the Financial Statements in accordance with the terms of the Loan Agreement.
3. Attached as Annex 2 is the calculation of revenue from the Revenue Licenses and no Trigger Event has occurred
4.Based upon a review of the activities of Borrower and the Included Subsidiaries and the Financial Statements during the period covered thereby, as of the date hereof, [no Default or Event of Default has occurred under the Credit Agreement][a Default or Event of Default has occurred, as described on Annex 3 hereto, and the action proposed to be taken with respect thereto is described on Annex 3 hereto].
5.Annex 4 sets forth a list of each new Material Contract entered into by any Credit Party since the date of the last Compliance Certificate delivered pursuant to the Loan Agreement. Except as set forth on Annex 4, there has been no termination of, any amendment to or other modification of or any default under, any QVC Agreement.
6.Except as set forth on Annex 4, there has been no amendment to or other modification of any Employment Agreement, any termination of any Employment Agreement or any breach of any Employment Agreement which is not cured in any applicable grace period.
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7.Except as set forth on Annex 4, there has been no termination of any other Material Contract which the applicable Credit Party has not replaced within sixty (60) days of such termination, with a similar agreement which generates revenue at least equivalent to the agreement which was terminated.
▇.▇▇ Credit Party has formed or acquired any Subsidiary except for: [List new Subsidiaries, including Excluded Subsidiaries, Exempt Subsidiaries and Equity Funded Subsidiaries].
9..The following is a list of Outside Financing obtained by each Excluded Subsidiary: [List Outside Financing].
10.The following is a list of Seller Financing and Take Back Financing obtained by each Exempt Subsidiary: [List Seller Financing and Take Back Financing].
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be executed as of the date first above written.
XCEL BRANDS, INC.,
as Borrower
By:
Name:
Title:
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