1
EXHIBIT 10.19
FIRST AMENDMENT TO FIRST AMENDED AND RESTATED
REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
This First Amendment to First Amended and Restated Revolving Credit
Loan and Security Agreement ("First Amendment") is entered into as of the 23rd
day of October, 2000, by and among KeyBank National Association ("Bank") and
Brookwood Companies Incorporated ("Brookwood"), Kenyon Industries, Inc.
("Kenyon"), Brookwood Laminating, Inc. ("Laminating"), Ashford Bromley, Inc.
("Ashford"), XtraMile, Inc. ("Xtra"), and Land and Ocean III, Inc. ("Land" and,
together with Brookwood, Kenyon, Laminating, Ashford and Xtra, being sometimes
hereinafter collectively referred to as "Borrower").
RECITALS:
WHEREAS, Borrower and Bank entered into a certain First Amended and
Restated Revolving Credit Loan and Security Agreement dated as of June 6, 2000
(the "Existing Agreement"); and
WHEREAS, Borrower has requested Bank to make certain changes to the
Existing Agreement, all as more particularly set forth in this First Amendment;
PRELIMINARY STATEMENT:
A. Unless otherwise defined herein, capitalized terms as used herein
shall have the meanings ascribed to them in the Existing Agreement.
B. Unless otherwise indicated, all section and subsection numbers
correspond with those in the Existing Agreement.
C. In the event of a conflict between the terms and conditions of the
Existing Agreement and the terms and conditions of this First Amendment, the
terms and conditions of this First Amendment shall prevail and the Existing
Agreement shall be interpreted and construed so as to give maximum effect to the
intent and terms and conditions of this First Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Borrower and Bank, the parties
hereto agree that the Existing Agreement is hereby amended as follows:
1. This First Amendment is being entered into in connection with a
certain letter between Bank and Borrower dated October 23, 2000, a copy of which
is attached hereto as Exhibit A (the "Waiver Letter").
2
2. Section 2.3, et seq. of the Existing Agreement is hereby amended to
permit Borrower to open two (2) new Uzzi retail store locations in Sarasota,
Florida and Key West, Florida; provided, however, that Borrower will not be
permitted to use Advances under the Acquisition Revolver to finance the second
store opening at the Key West location; provided, further, that Borrower may not
open a third Uzzi retail store location without the express written consent of
Bank.
3. Section 2.6, et seq. is hereby amended to increase the spread on the
Tier I LIBOR pricing option by 50 basis points for both the Working Capital
Revolving Credit Loans and the Acquisition Revolving Credit Loans. Pricing on
all other Tiers will remain the same. Pricing for the Prime Rate Option is
unchanged.
The pricing grid under Section 2.6.1 is revised as follows:
TOTAL FUNDED DEBT
TIER TO EBITDA PRIME RATE + LIBOR +
- ---- -------------------- ------------ -------
1 > or = 3.00x 0.25% 3.00%
2 > or = 2.50x < 3.00x 0.25% 2.25%
3 > or = 2.00x < 2.50x 0.25% 2.00%
4 < 2.00x 0.25% 1.75%
The pricing grid under Section 2.6.2 is revised as follows:
TOTAL FUNDED DEBT
TIER TO EBITDA PRIME RATE + LIBOR +
- ---- -------------------- ------------ -------
1 > or = 3.00x 0.25% 3.25%
2 > or = 2.50x < 3.00x 0.25% 2.50%
3 > or = 2.00x < 2.50x 0.25% 2.25%
4 < 2.00x 0.25% 2.00%
Section 2.6.3 of the Existing Agreement is hereby amended to increase
the initial pricing for the Acquisition Revolving Credit Loans to Prime Rate
plus 100 basis points.
4. Section 8.4 of the Existing Agreement is hereby amended to restrict
payments to Hallwood for dividends and federal income taxes until Bank's receipt
and satisfactory review of budget projections with monthly cash flow analysis by
division for the remainder of FYE 2000 and FYE 2001.
2
3
5. Except as expressly amended by this First Amendment, the terms and
conditions of the Existing Agreement shall remain in full force and effect and
Borrower acknowledges and confirms that its representations and warranties
contained in the Existing Agreement are true, correct and complete in all
material respects as of the date hereof and there exists no Default or Event of
Default under the Existing Agreement as of the date hereof except as set forth
in the Waiver Letter.
IN WITNESS WHEREOF, the undersigned have duly executed this First
Amendment as a sealed instrument as of the date first set forth above.
ATTEST: BORROWER:
BROOKWOOD COMPANIES INCORPORATED
By:
- ------------------------------ ------------------------------
Witness Name: Duane O. Schmidt
Title: Vice President Finance
Chief Financial Officer
KENYON INDUSTRIES, INC.
By:
- ------------------------------ ------------------------------
Witness Name: Duane O. Schmidt
Title: Treasurer and Secretary
BROOKWOOD LAMINATING, INC.
By:
- ------------------------------ ------------------------------
Witness Name: Duane O. Schmidt
Title: Treasurer and Secretary
ASHFORD BROMLEY, INC.
By:
- ------------------------------ ------------------------------
Witness Name: Duane O. Schmidt
Title: Assistant Treasurer
3
4
XTRAMILE, INC.
By:
- ------------------------------ ------------------------------
Witness Name: Duane O. Schmidt
Title: Assistant Treasurer
LAND AND OCEAN III, INC.
By:
- ------------------------------ ------------------------------
Witness Name: Duane O. Schmidt
Title: Treasurer
ACCEPTED BY BANK:
KEYBANK NATIONAL ASSOCIATION
/s/ [ILLEGIBLE] By: /s/ KAREN L. CUMMINGS
- ------------------------------ ------------------------------
Witness Name: Karen L. Cummings
Title: Vice President
4
5
[KEY BANK LETTERHEAD]
October 23, 2000
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Duane O. Schmidt, Treasurer
Kenyon Industries, Inc.
36 Sherman Avenue
Kenyon, RI 02836
Re: NOTICE AND WAIVER OF DEFAULT
First Amended and Restated Revolving Credit Loan and Security
Agreement dated June 6, 2000 (the "Loan Agreement")
Dear Duane:
The purpose of this letter is to formally notify the Borrower (as that
and all other capitalized terms used herein are defined in the Loan Agreement)
that a Default has arisen under the Loan Agreement and all Loan Documents
(including, but not limited to, the Notes). As of today's date, KeyBank is aware
of the following Default:
The EBITDA to Total Fixed Charge Ratio for the period ending
6/30/00 was 1.1:1 and the minimum requirement is 1.25:1.
The primary purpose of this letter is to advise the Borrower in writing
of this Default, and to indicate our agreement to waive said Default upon the
terms and conditions hereinafter set forth. The continuation of any advances by
KeyBank under the Revolving Loans does not waive or impair any of KeyBank's
rights and remedies under the Loan Agreement, nor does it establish a course of
conduct on which Borrower should or could rely. You should not assume that, if
further Defaults under the Loan Agreement occur, we will also agree to waive any
such future Defaults.
In consideration of our agreement to waive this Default and in
recognition of the potential default for the period ending 9-30-00, we will
require you to execute an amendment to the Loan Agreement incorporating the
following terms and conditions: (i) the LIBOR pricing option for Tier I only for
both the Working Capital Revolving Credit Loans and the Acquisition Revolving
Credit Loans shall be increased by 50 basis points; (ii) initial pricing for the
Acquisition Revolving Credit Loans shall be increased to the Prime Rate plus 100
basis points; (iii) We will permit you to open Uzzi retail store locations in
Sarasota and Key West, but you will not be permitted to use Advances under the
Acquisition Revolver to finance the second store opening and Borrower may not
open a third Uzzi retail store without the prior written consent of the Bank;
(iv) payments to Hallwood for
6
Duane O. Schmidt
October 23, 2000
Page 2
dividends and federal income taxes are restricted until the receipt and
satisfactory review of budget projections for the remainder of FYE 2000 and FYE
2001 by division with monthly cash flow analysis. We will instruct our counsel
to prepare the necessary legal documentation to amend the Loan Agreement to
incorporate these changes.
Please call me if you have any questions concerning this letter.
Sincerely yours,
/s/ KAREN L. CUMMINGS
------------------------------------------
Karen L. Cummings
Vice President
SEEN AND AGREED:
BROOKWOOD COMPANIES INCORPORATED
By: /s/ DUANE O. SCHMIDT
--------------------------------------
Name: Duane O. Schmidt
Title: Vice President Finance
Chief Financial Officer
KENYON INDUSTRIES, INC.
By: /s/ DUANE O. SCHMIDT
--------------------------------------
Name: Duane O. Schmidt
Title: Treasurer and Secretary
BROOKWOOD LAMINATING, INC.
By: /s/ DUANE O. SCHMIDT
--------------------------------------
Name: Duane O. Schmidt
Title: Treasurer and Secretary
7
Duane O. Schmidt
October 23, 2000
Page 3
ASHFORD BROMLEY, INC.
By: /s/ DUANE O. SCHMIDT
------------------------------
Name: Duane O. Schmidt
Title: Assistant Treasurer
XTRAMILE, INC.
By: /s/ DUANE O. SCHMIDT
------------------------------
Name: Duane O. Schmidt
Title: Assistant Treasurer
LAND AND OCEAN III, INC.
By: /s/ DUANE O. SCHMIDT
------------------------------
Name: Duane O. Schmidt
Title: Treasurer
CC: Dennis C. Sbrega, Esq.
Preti, Flaherty, Beliveau, Pachios & Haley, LLC
One City Center
P.O. Box 9546
Portland, ME 04112-9546
Roger M. Barzun, Esq.
60 Hubbard Street
Concord, MA 01742