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EXHIBIT 4.1(G)
SIXTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of March 15, 1999, is entered into by and between CONGRESS FINANCIAL
CORPORATION (WESTERN), a California corporation ("Lender"), with a place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇'▇ CUSTOM CRAFTED FURNITURE CORP., a California corporation (formerly
known as ▇▇▇▇▇▇'▇ Sofa Factory), 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, that
certain Second Amendment to Loan and Security Agreement dated as of August 26,
1996, that certain Third Amendment to Loan and Security Agreement dated as of
November 25, 1996, that certain Fourth Amendment to Loan and Security Agreement
dated as of August 14, 1997 and that certain Fifth Amendment to Loan and
Security Agreement dated as of December 11, 1997 (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 that Lender extend the term of the Loan
Agreement to March 31, 2002 and in connection therewith (i) increase the Maximum
Credit, (ii) increase the sub-limit for Eligible Raw Materials, (iii) decrease
the sub-limit for Letter of Credit Accommodations, (iv) adjust the rate of
interest, (v) adjust the calculation of the unused line fee, (vi) amend the
Adjusted Net Worth and EBITDA financial covenants and (vii) adjust the early
termination fee provision.
C. Lender is willing to extend the term of and further amend the Loan
Agreement under the terms and conditions set forth in this Amendment. Borrower
is entering into this Amendment with the understanding and agreement that 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 herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
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1. Amendments to Loan Agreement.
(a) The following definition shall hereby be added to Section 1 of
the Loan Agreement (entitled "Definitions") in its proper
alphabetical and numerical order:
"1.__ `Applicable Margin' shall mean, as of the date of
determination, one (1) percentage point per annum; provided,
however, (a) if Borrower as of any date set forth below has
EBITDA for the trailing four fiscal quarter period ending on
such date of not less than the amount set forth below next
to such date, the Applicable Margin shall be reduced to
three-quarters of one (0.75) percentage point per annum or
(ii) if Borrower as of any date set forth below has EBITDA
for the trailing four fiscal quarter period ending on such
date of not less than Seven Million Dollars ($7,000,000),
the Applicable Margin shall be reduced to one-half of one
(0.5) percentage point per annum; and further, provided,
however, if the Applicable Margin has been reduced as
provided above and EBITDA of Borrower, as of any date set
forth below for the trailing four fiscal quarter period
ending on such date is less than the amount set forth next
to such date, the Applicable Margin shall be increased to
one (1) percentage point per annum:
Four Quarter
Period Ending Amount
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May 2, 1999 $2,750,000
August 1, 1999 $4,500,000
October 31, 1999 $6,500,000
January 30, 2000 and thereafter $7,000,000
Such adjustments to the Applicable Margin (whether upwards or downwards)
shall be effective as of the first day of the next calendar month following
receipt by Lender of Borrower's financial statements for the fiscal periods
ended on the specified dates."
(b) The definition of "Maximum Credit" set forth in Section 1.24
is hereby amended in its entirety to read as follows:
"1.24 `Maximum Credit' shall mean the amount of Fifteen Million Dollars
($15,000,000)."
(b) Clause (ii) of Paragraph (a) of Section 2.1 of the Loan
Agreement (entitled "Revolving Loans") is hereby amended in its entirety
to read as follows:
"(ii) notwithstanding the exclusion of raw materials from
the definition of Eligible Inventory, the lesser of (x)
fifty percent (50%) of the Value of Borrower's raw
materials consisting of fabric and leather (`Eligible Raw
Materials') or (y) One Million Five Hundred Thousand
Dollars ($1,500,000); less"
(c) Paragraph (d) of Section 2.3 of the Loan Agreement (entitled "Letter of
Credit Accommodations") is hereby amended in its entirety to read as
follows:
"(d) Except in Lender's discretion, 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
One Million Dollars ($1,000,000). 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 obligation to
the issuer in connection with any Letter of Credit Accommodations or
furnish cash collateral of Lender 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 extent of such cash collateral."
(d) Paragraph (a) of Section 3.1 of the Loan Agreement (entitled, "Interest")
is hereby amended in its entirety to read as follows:
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"(a) Borrower shall pay to Lender interest on the
outstanding principal amount of the non-contingent
Obligations at the rate equal to the Prime Rate plus the
Applicable Margin, except that Borrower shall pay to
Lender interest, at Lender's option, without notice, at
the rate of three(3) percentage points per annum in excess
of the Prime Rate (i) on the non-contingent Obligations
for the period from and after the date of termination or
non-renewal hereof, or the date of the occurrence of an
Event of Default, and for so long as such Event of Default
is continuing as determined by Lender or until such time
as the Event of Default has been cured by Borrower or
waived by Lender or Lender has received full and final
payment of all such Obligations (notwithstanding entry of
any judgement against Borrower) and (ii) on the Loans at
any time outstanding in excess of the amounts available to
Borrower under Section 2 (whether or not such excess(es),
arise or are made with or without Lender's knowledge or
consent and whether made before or after an Event of
Default). All interest accruing hereunder on and after the
occurrence of any of the events referred to in Section
3.1(a)(i) or Section 3.1(a)(ii) above shall be payable on
demand."
(e) Section 3.4 of the Loan Agreement (entitled "Unused
Line Fee") is hereby amended in its entirety to read as follows:
"3.4 Unused Line Fee. Borrower shall pay to Lender monthly an unused line fee at
a rate equal to one-quarter of one percent (.25%) per annum calculated
upon the amount by which Ten Million Dollars ($10,000,000) exceeds the
average daily principal balance of the outstanding Revolving Loans and
Letter of Credit Accommodations during the immediately preceding months
(or part thereof) while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears."
(f) Section 9.14 of the Loan Agreement (entitled "Adjusted Net Worth") is hereby
amended in its entirety to read as follows:
"9.14 Adjusted Net Worth. Borrower shall at all times maintain Adjusted Net
Worth of not less than Ten Million Dollars ($10,000,000)."
(g) Section 9.15 of the Loan Agreement (entitled "Minimum EBITDA") is hereby
amended in its entirety to read as follows:
"9.15 Minimum EBITDA. Borrower shall for each trailing four fiscal quarter
period ending on the dates set forth below, measured on and as of each
such dates, have EBITDA of not less than the amount set forth next to
such ending date:
Four Quarter
Period Ending Amount
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May 2, 1999 $2,500,000
August 1, 1999 $4,000,000
October 31, 1999 $5,000,000
January 30, 2000 $8,000,000
April 30, 2000 $9,000,000
July 30, 2000 and thereafter $10,000,000."
(h) The first sentence of Paragraph (a) of Section 12.1 of the Loan Agreement
(entitled "Term") is hereby amended in its entirety to read as follows:
"This Agreement and the other Financing Agreements shall become effective as of
the date set forth on the first page hereof and shall continue in full
force and effect for a term ending on March 31, 2002 (the "Renewal
Date"), and from year to year thereafter, unless sooner terminated
pursuant to the terms hereof."
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(i) The first sentence of Paragraph (c) of Section 12.1 of the Loan Agreement
(entitled "Term") is hereby amended in its entirety to read as follows:
"If for any reason this Agreement is terminated, except by Lender in bad faith,
prior to the end of the then current term or renewal term of this
Agreement, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to
a reasonable calculation of Lender's lost profits as a result thereof,
Borrower agrees to pay to Lender, upon the effective date of such
termination, an early termination fee in the amount of two percent (2%)
of the Maximum Credit if such termination occurs on or before July 20,
2000 or in the amount of one percent (1%) of the Maximum Credit if such
termination occurs thereafter."
2. 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 of 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 Amendment and any instrument or agreement required under this
Amendment have been duly authorized.
(c) Representations and Warranties. The representations and
warranties of Borrower 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.
(f) Payment of Modification Fee. Lender shall have received from
Borrower a modification fee of Fifteen Thousand Dollars ($15,000) for
the processing and approval of this Amendment, which fee shall be fully
earned as of and payable on the Closing Date.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
▇▇▇▇▇▇'▇ CUSTOM CRAFTED FURNITURE CORP.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Executive Vice President/CFO
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▇▇▇▇▇▇ CONVERTIBLE CORPORATION,
a New York corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Executive Vice President/CFO
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CONGRESS FINANCIAL CORPORATION (WESTERN),
a California corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇▇▇
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Title: Vice President
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ACKNOWLEDGMENT
The undersigned ▇▇▇▇▇▇ Furniture, Inc., a Delaware corporation ("KFI"),
parent of ▇▇▇▇▇▇'▇ Custom Crafted Furniture Corp. ("▇▇▇▇▇▇'▇"), in consideration
of Congress Financial Corporation (Western) ("Congress") continued extension of
credit to ▇▇▇▇▇▇'▇ and ▇▇▇▇▇▇ Convertible Corporation, hereby consents to the
foregoing Sixth 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 has informed KFI
of the matters set forth above, and KFI has acknowledged the same, KFI
understands and agrees that Congress has no duty under the Loan Agreement as
defined above, the Guarantee or any other agreement with KFI to so notify KFI 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: March 15, 1999 ▇▇▇▇▇▇'▇ CUSTOM CRAFTED FURNITURE CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Executive President/CFO
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