EXHIBIT 10.2
SEVENTH AMENDMENT TO AMENDED AND RESTATED
SENIOR REVOLVING CREDIT AGREEMENT
This SEVENTH AMENDMENT TO AMENDED AND RESTATED SENIOR REVOLVING CREDIT
AGREEMENT (the "Amendment") is made as of this 7th day of September, 2001, by
and among ENESCO GROUP, INC., a Massachusetts corporation (the "Borrower"), the
Borrowing Subsidiaries who may from time to time become a party to the Amended
and Restated Senior Revolving Credit Agreement, and FLEET NATIONAL BANK, a
national banking association ("Fleet") and LaSalle Bank National Association
("LaSalle" and together with Fleet, the "Banks").
RECITALS
The Borrower and the Banks are parties to a certain Amended and Restated
Senior Revolving Credit Agreement dated as of August 23, 2000, as amended by a
First Amendment to Amended and Restated Senior Revolving Credit Agreement dated
as of November 27, 2000, as further amended by a Second Amendment to Amended and
Restated Senior Revolving Credit Agreement dated as of November 30, 2000, as
further amended by a Third Amendment to Amended and Restated Senior Revolving
Credit Agreement dated as of March 23, 2001, as further amended by a Fourth
Amendment to Amended and Restated Senior Revolving Credit Agreement dated as of
April 6, 2001, as further amended by a Fifth Amendment to Amended and Restated
Senior Revolving Credit Agreement dated as of June 18, 2001, and as further
amended by a Sixth Amendment to Amended and Restated Senior Revolving Credit
Agreement dated as of August 2, 2001 (the "Credit Agreement"), pursuant to which
the Banks have extended certain financial accommodations to the Borrower
including those evidenced by a Borrower Note dated August 3, 2000 in the face
amount of $50,000,000 payable to Fleet, a Borrower Note dated June 18, 2001 in
the face amount of $10,000,000 payable to LaSalle, a Back-Up L/C and B/A Demand
Note dated June 18, 2001 in the face amount of $15,000,000 payable to Fleet and
a Back-Up F/X Demand Note dated November 27, 2000 in the face amount of
$10,000,000 payable to Fleet. The Borrower and the Banks have agreed to further
modify the terms and provisions of the Credit Agreement, all as more fully
described and set forth hereinbelow. Capitalized terms not otherwise defined in
this Amendment shall have their meanings as defined in the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Borrower and the Banks agree
that the Credit Agreement is further amended as follows:
1. The definition of "Applicable Margin" which appears in ARTICLE I is
deleted in its entirety and replaced with the following:
"Applicable Margin" means (i) that number of basis points over the LIBOR
Base Rate, the Cost of Funds or the Alternative Base Rate, as applicable, and
(ii) the Facility Fee, (both (i) and (ii) as determined based upon the
Borrower's Funded Debt/EBITDA Ratio in accordance with the pricing grid which
appears below):
Level 1 Level 2 Level 3 Level 4
------- ------- ------- -------
Funded Less than or Greater than Greater than or Greater than
Debt/EBITDA equal to 1:60:1 1:60:1 to Less equal to 2.50:1 3.50:1
Ratio than 2.50:1 to Less than or
equal to 3.50:1
Facility Fee 20 bps 25 bps 25 bps 30 bps
LIBOR Base 125 bps 150 bps 200 bps 250 bps
Rate
Cost of Funds 125 bps 150 bps 200 bps 250 bps
Alternate Base 0 bps 0 bps 0 bps 0 bps
Rate
*bps = basis points
The Applicable Margin shall be established by the Bank based upon the Borrower's
Funded Debt/EBITDA Ratio calculated as of the date of a request for an Advance
or as of the date of continuation or conversion of any outstanding Advance
pursuant to Section 2.9, as the case may be, using the Borrower's most recently
delivered financial statement under Section 6.1, with such Applicable Margin
remaining in effect until expiration of any applicable Interest Period.
2. The definition of "Borrowing Capacity" which appears in ARTICLE I is
deleted in its entirety and replaced with the following:
"Borrowing Capacity" means the lesser of:
(x) Fifty Million Dollars ($50,000,000), or
(y) the sum of (i) eighty percent (80%) of Accounts
Receivable of the Borrower, which Accounts Receivable are
not Ineligible Accounts of the Borrower, plus (ii) eighty
percent (80%) of the current market value of the property in
which the Bank holds a first priority mortgage or security
interest pursuant to the Mortgages, such current market
value to be subject to adjustment in the commercially
reasonable discretion of the Bank for environmental, title
or other matters which may affect such current market value.
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3. The definition of "Commitment" which appears in ARTICLE I is deleted
in its entirety and replaced with the following:
"Commitment" means the obligation of the Bank, subject to
Borrowing Capacity, to make Loans not exceeding an aggregate
principal amount of $40,000,000 for all such Loans outstanding at
any time, or as set forth in any Notice of Assignment relating to
any assignment that has become effective pursuant to Section
12.3.1, as such amount may be modified from time to time pursuant
to the terms hereof. Notwithstanding the foregoing, the Bank
shall, subject to Borrowing Capacity, make Loans of up to
$5,000,000 Dollars in excess of the Commitment based upon
availability under the L/C and B/A Facility Limit in an amount
sufficient to fully cover, Dollar for Dollar, the amount of any
such Loan in excess of the Commitment. Availability under the L/C
and B/A Facility Limit shall be reduced, Dollar for Dollar, in an
amount equal to any such Loan made by the Bank in excess of the
Commitment. Loans of up to $5,000,000 Dollars in excess of the
Commitment shall be evidenced by the Borrower Note dated August
3, 2000 in the original principal amount of $50,000,000 payable
to the Bank and shall be subject to the interest rate provisions
and other terms contained in ARTICLE II of the Agreement.
4. The following definitions are added to ARTICLE I:
"Consolidated Amortization" means, as of the date of any
determination thereof, the amount of amortization of the Borrower
and its Subsidiaries as shown on the consolidated statement of
income and expenses of the Borrower and its Subsidiaries on and
as of such date, determined on a consolidated basis in accordance
with Agreement Accounting Principles.
"Consolidated Capital Expenditures" means, as of the date of
any determination thereof, the amount of capital expenditures of
the Borrower and its Subsidiaries as shown on the consolidated
statement of cash flow of the Borrower and its Subsidiaries on
and as of such date, determined on a consolidated basis in
accordance with Agreement Accounting Principles.
"Consolidated Depreciation" means, as of the date of any
determination thereof, the amount of depreciation of the Borrower
and its Subsidiaries as shown on the consolidated statement of
income and expenses of the Borrower and its Subsidiaries on and
as of such date, determined on a consolidated basis in accordance
with Agreement Accounting Principles.
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"Consolidated Non-Cash Compensation Expense" means, as of
the date of any determination thereof, the amount of non-cash
compensation which is paid in treasury stocks of the Borrower or
its Subsidiaries on and as of such date, determined on a
consolidated basis in accordance with Agreement Accounting
Principles.
"Consolidated Operating Profit" means, as of the date of any
determination thereof, the amount of operating profit of the
Borrower and its Subsidiaries as shown on the consolidated
statement of income and expenses of the Borrower and its
Subsidiaries on and as of such date, determined on a consolidated
basis in accordance with Agreement Accounting Principles.
5. The definition of "EBITDA" which appears in ARTICLE I is deleted in
its entirety and replaced with the following:
"EBITDA" means, as of the date of any determination thereof,
Consolidated Operating Profit for such period, plus Consolidated
Depreciation, plus Consolidated Amortization, plus Consolidated
Non-Cash Compensation Expense.
6. The definition of "Facility Fee" which appears in ARTICLE I is deleted
in its entirety and replaced with the following:
"Facility Fee" means a per annum fee in basis points payable
quarterly in arrears by the Borrower to the Bank on the amount of
the Commitment, not including any Loans by the Bank in excess of
the Commitment, irrespective of Borrowing Capacity or aggregate
outstanding Advances, pursuant to the pricing grid which appears
in the definition of the term Applicable Margin in this Article
I.
7. The definition of "Facility Termination Date" which appears in ARTICLE
I is deleted in its entirety and replaced with the following:
"Facility Termination Date" means May 15, 2002.
8. The definition of "L/C and B/A Facility Limit" which appears in
ARTICLE I is deleted in its entirety and replaced with the following:
"L/C and B/A Facility Limit" means the obligation of the
Bank pursuant to Section 2.1.B, subject to Borrowing Capacity
(dollar for dollar based upon the aggregate stated amount of all
such Letters of Credit and Bankers' Acceptances outstanding), to
issue Letters of Credit and permit Bankers' Acceptances up to an
aggregate stated amount of all such Letters
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of Credit and Bankers' Acceptances outstanding at any given time
of $10,000,000, minus the aggregate outstanding amount of any
Loan or Loans made by the Bank in excess of the Commitment based
upon availability under the L/C and B/A Facility Limit.
9. The first paragraph of Section 2.1.B is deleted in its entirety and
replaced with the following:
2.1.B. Letter of Credit/Bankers' Acceptance Facility. From
and including the date of this Agreement and prior to the
Facility Termination Date, Fleet agrees, on the terms and
conditions set forth in this Agreement, upon request of the
Borrower, to (i) issue Letters of Credit, subject to the L/C and
B/A Facility Limit, with expiration dates of not more than 90
days beyond the Facility Termination Date, and (ii) permit
Bankers' Acceptances, subject to the L/C and B/A Facility Limit,
with expiration dates for Bankers' Acceptances obtained in
connection with Letters of Credit issued hereunder of not more
than 150 days beyond the Facility Termination Date (the "L/C and
B/A Facility").
10. Subsection (ii) of Section 6.1 is deleted in its entirety and replaced
with the following:
(ii) Within 45 days after the close of the first three
quarterly periods of each of its fiscal years, for itself and the
Subsidiaries, consolidated unaudited balance sheets as at the
close of each such period and consolidated, condensed statements
of income and retained earnings and a consolidated, condensed
statement of cash flows for the period from the beginning of such
fiscal year to the end of such quarter, all certified by its
Chief Financial Officer.
11. Subsection (iii) of Section 6.1 is deleted in its entirety and
replaced with the following:
(iii) Together with the annual and quarterly financial
statements required hereunder, a Compliance Certificate in
substantially the form of Exhibit "C" hereto signed by the
Borrower's Chief Financial Officer showing the calculations
necessary to determine compliance with the requirements of
Section 6.12 of this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof, and within 15 days
after the end of each month a Borrowing Base Certificate in the
form of Exhibit "C-1" hereto signed by the Borrower's Chief
Financial Officer.
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12. Subsection (xiv) of Section 6.1 is deleted in its entirety and
replaced with the following:
(xiv) within 15 days after the end of each month, a summary
schedule of Accounts Receivable of the Borrower, with aging, and
such other information for Account Debtors as may be reasonably
requested by the Bank, all in form and substance acceptable to
the Bank, and certified as true and correct by the Chief
Financial Officer of the Borrower.
13. Section 6.12.1 is deleted in its entirety and replaced with the
following:
6.12.1. Fixed Charge Coverage Ratio. The Borrower shall
maintain a Fixed Charge Coverage Ratio of not less than 1.25 to
1.00 as of the fiscal quarter ending September 30, 2001, and not
less than 1.60 to 1.00 as of the fiscal year ending December 31,
2001, with such Fixed Charge Coverage Ratio to be calculated
based upon financial results of the Borrower for the four most
recent consecutive fiscal quarters then ended. For the purposes
of this covenant: (1) the term "Fixed Charge Coverage Ratio"
means the ratio of (i) the Borrower's Consolidated Operating
Profit, plus Consolidated Depreciation, plus Consolidated
Amortization, plus Non-Cash Compensation Expense, minus
Consolidated Capital Expenditures, minus dividends paid by the
Borrower for the four most recent consecutive fiscal quarters
then ended to (ii) the Borrower's Consolidated Interest Expense
for such period.
14. Section 6.12.2 is deleted in its entirety and replaced with the
following:
6.12.2. Funded Debt/EBITDA Ratio. The Borrower shall
maintain a ratio of funded Consolidated Indebtedness, excluding
letters of credit issued in the ordinary course of business, to
the Borrower's EBITDA for the four most recent consecutive fiscal
quarters ending September 30, 2001 of not greater than 3.55 to
1.00, and for the four most recent consecutive fiscal quarters
ending December 31, 2001 of not greater than 2.10 to 1.00.
15. Section 6.12.3 is deleted in its entirety and replaced with the
following:
6.12.3. Minimum Operating Profit. The Borrower shall have a
Minimum Consolidated Operating Profit for the three month period
ending September 30, 2001 of not less than $3,830,000, and for
the six month period ending December 31, 2001 of not less than
$9,787,000.
16. Section 6.12.4 is deleted in its entirety.
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17. EXHIBIT C attached as a part of the Credit Agreement is deleted in its
entirety and replaced with EXHIBIT C attached as a part of this
Amendment.
18. EXHIBIT C-1 attached as a part of the Credit Agreement is deleted in
its entirety and replaced with EXHIBIT C-1 attached as a part of this
Amendment.
19. The Borrower shall pay to the Bank upon execution of this Amendment an
agent fee of $10,000 and an up front fee in connection with extension
of the credit facilities pursuant to the Credit Agreement of $75,000.
20. By executing this Amendment, the Borrower hereby consents to
assignment by the Bank to LaSalle of an additional $5,000,000 Dollar
interest in and to the Commitment, excluding any Loan or Loans made by
the Bank in excess of the Commitment.
21. Except as amended, modified or supplemented by this Amendment, all of
the terms, conditions, covenants, provisions, representations,
warranties and conditions of the Credit Agreement shall remain in full
force and effect and are hereby acknowledged, ratified, confirmed and
continued as if fully restated hereby.
22. The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or
provision hereof or contained in the Credit Agreement.
23. It is the intention of the parties hereto that this Amendment shall
not constitute a novation and shall in no way adversely affect or
impair the validity or priority of any lien on any collateral granted,
pledged or mortgaged as security for the payment and performance of
the liabilities and obligations of the Borrower under the Credit
Agreement and other Loan Documents.
24. The Borrower hereby confirms and ratifies the obligations established
under the Credit Agreement and other Loan Documents, as amended
hereby, and the continuing and continuous security interests, pledges
and mortgages in, of and to all collateral granted pursuant to the
Credit Agreement and other Loan Documents.
25. This Amendment is to be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
26. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the
parties thereto may execute this Agreement by signing any such
counterpart. This Amendment shall be effective when it has been
executed by the Borrower and the Banks.
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IN WITNESS WHEREOF, the foregoing has been executed as an instrument under
seal as of the date first above written.
WITNESS: ENESCO GROUP, INC.
By: /s/ Daniel DalleMolle
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Print Name: Daniel DalleMolle
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Title: President and CEO
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By: /s/ Jeffrey W. Lemajeur
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Print Name: Jeffrey W. Lemajeur
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Title: Treasurer and CFO
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FLEET NATIONAL BANK
By: /s/Rick Zilewicz
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Its Regional President
LASALLE BANK NATIONAL ASSOCIATION
By: Tracy L. Harper
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Its Assistant Vice President