EXHIBIT 10.32
AMENDMENT NUMBER TWO TO LOAN AGREEMENT
(TOWN & COUNTRY CORPORATION AND SUBSIDIARIES)
THIS AMENDMENT NUMBER TWO TO LOAN AGREEMENT (this "Amendment"), dated as of
June 24, 1994, is entered into between Town & Country Corporation, a
Massachusetts corporation, Town & Country Fine Jewelry Group, Inc., a
Massachusetts corporation, Gold Lance, Inc., a Massachusetts corporation, L.G.
Balfour Company, Inc., a Delaware corporation (which aforesaid corporations,
individually and collectively, jointly and severally, and together with their
successors and assigns, are herein referred to as "Borrower"), and Foothill
Capital Corporation, a California corporation ("Foothill"), in light of the
following:
WHEREAS, Borrower and Foothill are parties to that certain Loan Agreement
dated as of May 14, 1993 (as from time to time amended, modified, supplemented,
renewed, extended, or restated, the "Loan Agreement"); and
WHEREAS, Borrower has requested that certain provisions of the Loan
Agreement be amended, and Foothill has agreed to amend such provisions in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
conditions, and provisions as hereinafter set forth, the parties hereto agree as
follows:
1. Initially capitalized terms used herein have the meanings defined in the
Loan Agreement unless otherwise defined herein.
2. The following definitions contained in Section 1.1 of the Loan Agreement
hereby are amended and restated in their entirety as follows:
"Eligible Accounts" means those Accounts created by a Debtor in the
ordinary course of business that arise out of such Debtor's sale of goods or
rendition of services, that strictly comply with all of Borrower's
representations and warranties to Foothill, and that are and at all times shall
continue to be acceptable to Foothill in all respects (in the reasonable
exercise of its discretion); provided, however, that standards of eligibility
may be fixed and revised from time to time by Foothill (in the reasonable
exercise of its discretion). Eligible Accounts shall not include the following:
(a) Accounts that are more than thirty one (31), but less than
sixty (60) days past due from the due date of the applicable invoices, to the
extent that the aggregate amount of all such Accounts of all of the Debtors
exceeds Five Million Dollars ($5,000,000);
(b) Accounts that the Account Debtor has failed to pay
within sixty (60) days, or more, of the due date of the
applicable invoice;
(c) Accounts originated by Feature or by the EPG division of
Balfour;
(d) Accounts owing by Ames Department Stores, Inc., or Best
Products Co., Inc.; provided, however, that if any of such Persons shall confirm
a plan of reorganization in their respective cases filed under the Bankruptcy
Code, Foothill will, in the reasonable exercise of its discretion, analyze
whether Accounts owed from such Account Debtors should continue to be excluded
under this clause;
(e) Accounts with selling terms of more than ninety (90) days
from the date of the applicable invoice, with the exception of Accounts as to
which Montgomery Ward is the Account Debtor in which case the Accounts will be
ineligible if they contain selling terms of more than one hundred twenty (120)
days from the date of the applicable invoice;
(f) Accounts with respect to which the Account Debtor is an
officer, employee, Affiliate, or agent of any Debtor;
(g) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
so-called 'special event sales', or other terms by reason of which the payment
by the Account Debtor may be conditional;
(h) Accounts with respect to which the Account Debtor is not a
resident of the United States or Canada, and that are not either (1) covered by
credit insurance in form and amount, and by an insurer, satisfactory to
Foothill, or (2) supported by one or more letters of credit that are assignable
and have been delivered to Foothill in an amount and of a tenor, and issued by a
financial institution, acceptable to Foothill;
(i) Accounts with respect to which the Account Debtor is the
United States or any department, agency, or instrumentality of the United States
and with respect to which Borrower has not complied with the provisions of the
Federal Assignment of Claims Act to assign the right to payment to Foothill, or
Accounts with respect to which the Account Debtor is any state of the United
States or any city, town, municipality, or division thereof;
(j) Accounts with respect to which such Debtor is or is
reasonably likely to become liable to the Account Debtor for goods sold or
services rendered by the Account Debtor to such Debtor; provided, however, that
such Accounts only shall be deemed ineligible under this clause to the extent of
the actual or likely offsetting amount as reasonably determined by Foothill;
(k) Accounts with respect to an Account Debtor whose total
obligations to Borrower exceed ten percent (10%) of all Eligible Accounts owed
to Borrower, to the extent of the obligations of such Account Debtor in excess
of such percentage; provided, however, that, (1) in the case of K-Mart
Corporation, HSN Broadcasting of Illinois, Inc., Wal-Mart Stores, Inc., Sears
Roebuck & Company, and Montgomery Ward, and such other highly creditworthy
Account Debtors as to which Foothill has agreed to in writing, the foregoing
percentage may, in Foothill's reasonable discretion, be increased to up to
twenty percent (20%) before the excess would be deemed ineligible, and (2) in
the case of Zale Corporation and Gordon Jewelry Corporation (collectively with
their respective successors hereinafter "Zale/Gordon"), the foregoing percentage
for Zale/Gordon, on a combined basis, may, in Foothill's reasonable discretion,
be increased to up to fifteen percent (15%) before the excess would be deemed
ineligible;
(l) Accounts with respect to which the Account Debtor disputes
liability or makes any claim with respect thereto, or is subject to any
Insolvency Proceeding, or become insolvent, or goes out of business; provided,
however, that disputed Accounts or Accounts subject to claims only shall be
deemed ineligible under this clause to the extent of the actual or likely
offsetting amount as reasonably determined by Foothill unless Foothill, in the
exercise of its reasonable judgment, believes that the dispute or claim will
jeopardize the repayment of all or substantially all of the Account in a timely
manner;
(m) Accounts which are payable in other than United States
Dollars;
(n) Accounts the collection of which Foothill, in the reasonable
exercise of its judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(o) Accounts owed by an Account Debtor that has failed to pay
fifty percent (50%), or more, of its Accounts owed to such Debtor within sixty
(60) days of the due date of the applicable invoices; and
(p) Accounts arising from the sale of Inventory that is proceeds
of the Zale Bankruptcy Claim.
"Eligible Inventory Availability Component means, as of the date any
determination thereof is to be made, and for each individual Debtor, an amount
equal to the lesser of:
(i) seventy-five percent (75%) of the amount of
credit availability created by such Debtor's Net Eligible
Accounts; and
(ii) the sum of:
(y) forty percent (40%) of such Debtor's Eligible Finished
Goods Inventory, plus
(z) forty percent (40%) of such Debtor's Raw Materials
Inventory.
"Maximum Amount" means Thirty Million Dollars ($30,000,000) during
December, January, February, March, April, May, June, and July of any year, and
Thirty Five Million Dollars ($35,000,000) during August, September, October, and
November of any year.
"Maximum Foothill Amount" means that portion of the Maximum Amount for
which Foothill is responsible, exclusive of any participations with
Participants, which amount is Seventeen Million Five Hundred Thousand Dollars
($17,500,000) during December, January, February, March, April, May, June, and
July of any year, and Twenty Million Four Hundred Sixteen Thousand Six Hundred
Sixty Seven Dollars ($20,416,667) during August, September, October, and
November of any year; provided, however, that each time the Maximum Aount [sic]
is reduced pursuant to Section 2.3 hereof, the Maximum Foothill Amount shall be
reduced proportionately.
3. Section 2.1 of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:
"2.1 Revolving Advances. Subject to the terms and conditions of
this Agreement, and so long as no Event of Default has occurred and is
continuing, Foothill agrees to make revolving advances to Borrower in an amount
not to exceed the Borrowing Base.
Anything to the contrary in the definition of Borrowing Base, the
definition of Net Eligible Accounts Availability Component, or the definition of
Eligible Inventory Availability Component notwithstanding, Foothill may reduce
its advance rates based upon Net Eligible Accounts and Eligible Inventory
without declaring an Event of Default if it determines, in its reasonable
discretion, that there is a material impairment of the prospect of repayment of
all or any portion of the Obligations or a material impairment of the value or
priority of the security interests held by, or for the benefit of, Foothill in
and to the Collateral.
Foothill shall have no obligation to make advances hereunder to the
extent they would cause the outstanding Obligations to exceed the lesser of: (i)
the Maximum Amount, or (ii) the Maximum Foothill Amount plus the Syndicated
Amount.
Foothill is authorized to make advances under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Officer of Borrower or, without instructions, if in Foothill's
discretion such advances are necessary to meet Obligations. Borrower agrees to
establish and maintain a single designated deposit account for the purpose of
receiving the proceeds of the advances requested by Borrower and made by
Foothill hereunder. Unless otherwise agreed by Foothill and Borrower, any
advance requested by Borrower and made by Foothill hereunder shall be made to
such designated deposit account. Amounts borrowed pursuant to this Section 2.1
may be repaid and, so long as no Event of Default has occurred and is
continuing, reborrowed at any time during the term of this Agreement."
4. Foothill immediately shall charge Borrower's account a facility fee in
the amount of $30,000. This facility fee shall be in addition to any other fees,
expenses, or compensation payable to Foothill under any Loan Document, shall be
compensation to Foothill for entering into this Amendment, shall be fully earned
at the time it is so charged, and shall be nonrefundable.
5. Borrower hereby represents and warrants to Foothill as
follows:
(a) The execution, delivery, and performance by Borrower of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
or notice to or action by, any Person in order to be effective and enforceable.
(b) The Loan Agreement, as amended by this Amendment, constitutes the
legal, valid, and binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, without defense, counterclaim, or offset.
6. Foothill and Borrower also agree that:
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Loan Agreement are and shall remain in full force and effect
and all references therein to the Loan Agreement shall henceforth refer to the
Loan Agreement as amended by this Amendment. This Amendment shall be deemed
incorporated into, and a part of, the Loan Agreement.
(b) This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
(c) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, and all such counterparts together shall
constitute but one and the same instrument. This Amendment shall become
effective when each party has executed and delivered a counterpart hereof. Upon
this Amendment becoming effective, the changes to the provisions of the Loan
Agreement provided for in this Amendment shall operate prospectively and not
retroactively.
(d) This Amendment, together with the Loan Agreement and the other
Loan Documents, contains the entire and exclusive agreement of the parties
hereto with reference to the matters discussed herein and therein. This
Amendment supersedes all prior drafts and communications with respect thereto.
This Amendment may not be amended except in writing executed by both of the
parties hereto.
(e) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Loan Agreement, respectively.
IN WITNESS HEREOF, this Amendment has been executed and delivered as of the
date first set forth of above.
TOWN & COUNTRY CORPORATION,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Sr. Vice President & CFO_ _________
TOWN & COUNTRY FINE JEWELRY GROUP, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer, Director & V.P._________
GOLD LANCE, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer/Director_________________
L.G. BALFOUR COMPANY, INC.,
a Delaware corporation
By__/s/ Francis X. Correra_____________
Its_Exec. V.P., & Treasurer, Director__
FOOTHILL CAPITAL CORPORATION,
a California corporation
By__/s/ Beth A. Pease__________________
Its_Assistant Vice President___________
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