AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (this "Amendment"), dated as
of April 30, 2004, by and among ▇▇▇▇▇▇ International Corp., a Delaware
corporation ("Borrower"), HAPL Leasing Co., Inc. ("HAPL"), ▇▇▇▇▇▇ Business
Concepts, LLC ("HBC"), Sedeco, Inc. ("Sedeco") and Hometown Threads, LLC
("Hometown", and together with HAPL, HBC and Sedeco, individually, each a
"Guarantor" and collectively, "Guarantors") and Congress Financial Corporation,
a Delaware corporation ("Lender").
W I T N E S S E T H :
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WHEREAS, Lender and Borrower have entered into financing arrangements
pursuant to which Lender has made and may make loans and advances and provide
other financial accommodations to Borrower as set forth in the Loan and Security
Agreement, dated as of November 26, 2002, as amended by Amendment No. 1 to Loan
and Security Agreement, dated as of April 28, 2003, and Amendment No. 2 to Loan
and Security Agreement, dated as of July 16, 2003, among Lender, Borrower and
Guarantors (as amended hereby and as the same may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement"), and the agreements, documents and instruments at any time executed
and/or delivered in connection therewith or related thereto (collectively,
together with the Loan Agreement, the "Financing Agreements");
WHEREAS, Borrower and Guarantors have requested that Lender amend certain
provisions of the Loan Agreement.
WHEREAS, Lender is willing to agree to such amendments, subject to the
terms and conditions set forth herein.
WHEREAS, by this Amendment, Lender, Borrower and Guarantors desire and
intend to evidence such amendments.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
and covenants contained herein, the parties hereto agree as follows:
1. Definitions. For purposes of this Amendment, unless otherwise defined
herein, all terms used herein, including, but not limited to, those terms used
and/or defined in the recitals above, shall have the respective meanings
assigned to such terms in the Loan Agreement.
2. Collection of Accounts. Section 6.3(b)(ii) of the Loan Agreement is
hereby amended by deleting the reference to "Excess Availability is less than
$5,000,000" and replacing it with "Excess Availability is less than $2,000,000."
3. Minimum EBITDA. Section 9.17 of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:
"9.17 Minimum EBITDA.
(a) As of the last day of each fiscal quarter of Borrower set
forth below, the EBITDA of Borrower and its Subsidiaries for the
immediately preceding four (4) consecutive fiscal quarters (treated as
a single accounting period) shall be not less than the amount set
forth below for such date:
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Four Fiscal Quarters Ending Minimum EBITDA
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January 31, 2003 ($1,840,000)
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April 30, 2003 ($1,420,000)
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July 31, 2003 ($1,450,000)
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October 31, 2003 ($875,000)
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January 31, 2004 ($2,000,000)
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(b) Commencing on the first day of fiscal year 2005 of Borrower
and ending on the last day of each fiscal quarter of Borrower during
fiscal year 2005 set forth below, the EBITDA of Borrower and its
Subsidiaries for each period set forth below on a cumulative
year-to-date basis (treated as a single accounting period) shall not
be less than the amount set forth below for such fiscal quarter end
year-to-date period:
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Period Minimum EBITDA
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February 1, 2004 through April 30, 2004 ($1,300,000)
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February 1, 2004 through July 31, 2004 ($1,200,000)
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February 1, 2004 through October 31, 2004 ($600,000)
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February 1, 2004 through January 31, 2005 $500,000
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(c) As of the last day of the fiscal quarter of Borrower ending
on April 30, 2005 and as of the last day of each fiscal quarter of
Borrower thereafter, the EBITDA of Borrower and its Subsidiaries for
the immediately preceding four (4) consecutive fiscal quarters
(treated as a single accounting period) shall be not less than
$500,000.
The numbers in parenthesis above are to indicate that they are negative
numbers."
4. Amendment Fee. In addition to all other fees, charges, interest and
expenses payable by Borrower to Lender under the Loan Agreement and the other
Financing Agreements, Borrower shall pay to Lender, contemporaneously with the
effectiveness of this Amendment, an amendment fee in the amount of $10,000,
which fee shall be fully earned and nonrefundable as of the date hereof and may
be charged to any loan account of Borrower.
5. Additional Representations, Warranties and Covenants. Borrower and each
Guarantor represents, warrants and covenants with and to Lender as follows,
which representations, warranties and covenants are continuing and shall survive
the execution and delivery hereof, and the truth and accuracy of, or compliance
with each, together with the representations, warranties and covenants in the
other Financing Agreements, being a continuing condition of the making of Loans
or Letter of Credit Accommodations by Lender to Borrower:
(a) After giving effect to the provisions of this Amendment, no
Event of Default exists or has occurred as of the date of this
Amendment.
(b) This Amendment has been duly executed and delivered by
Borrower and each Guarantor and is in full force and effect as of the
date hereof and the agreements and obligations of Borrower and each
Guarantor contained herein constitute legal, valid and binding
obligations of Borrower and each Guarantor enforceable against each of
them in accordance with their respective terms.
6. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the receipt by Lender of this Amendment duly
authorized, executed and delivered by the parties hereto.
7. Effect of this Amendment. Except as expressly set forth herein, no other
amendments, consents, changes or modifications to the Financing Agreements are
intended or implied, and in all other respects the Financing Agreements are
hereby specifically ratified, restated and confirmed by all parties hereto as of
the effective date hereof and Borrower and Guarantors shall not be entitled to
any other or further amendment or consent by virtue of the provisions of this
Amendment or with respect to the subject matter of this Amendment. To the extent
of conflict between the terms of this Amendment and the other Financing
Agreements, the terms of this Amendment shall control. The Loan Agreement and
this Amendment shall be read and construed as one agreement.
8. Governing Law. The validity, interpretation and enforcement of this
Amendment and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of New York.
9. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
10. Headings. The headings listed herein are for convenience only and do
not constitute matters to be construed in interpreting this Amendment.
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto. Delivery of an executed counterpart of this Amendment by
telefacsimile shall have the same force and effect as delivery of an original
executed counterpart of this Amendment. Any party delivering an executed
counterpart of this Amendment by telefacsimile also shall deliver an original
executed counterpart of this Amendment, but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Amendment as to such party or any other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their authorized officers as of the day and year
first above written.
CONGRESS FINANCIAL CORPORATION
By: /s/
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Title:
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▇▇▇▇▇▇ INTERNATIONAL CORP.
By: /s/
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Title:
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HAPL LEASING CO., INC.
By: /s/
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Title:
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SEDECO, INC.
By: /s/
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Title:
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▇▇▇▇▇▇ BUSINESS CONCEPTS, LLC
By: /s/
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Title:
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HOMETOWN THREADS, LLC
By: /s/
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Title:
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