Exhibit 10(r)
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
SENIOR REVOLVING CREDIT AGREEMENT
This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR REVOLVING
CREDIT AGREEMENT (the "Amendment") is made as of this 5th day of March, 2004, by
and among ENESCO GROUP, INC., an Illinois corporation (the "Borrower"), the
Borrowing Subsidiaries that may from time to time become a party to the Second
Amended and Restated Senior Revolving Credit Agreement, FLEET NATIONAL BANK, a
national banking association, as Agent and a Lender ("Fleet") and LaSalle Bank
National Association, a national banking association ("LaSalle" and together
with Fleet, the "Lenders").
RECITALS
The Borrower and the Lenders are parties to a certain Second Amended and
Restated Senior Revolving Credit Agreement dated as of June 16, 2003 (the
"Credit Agreement"), pursuant to which the Lenders have extended certain
financial accommodations to the Borrower including those evidenced by a Borrower
Note in the face amount of $25,000,000 payable to Fleet, a Borrower Note in the
face amount of $15,000,000 payable to LaSalle, a Back-Up L/C and B/A Demand Note
in the face amount of $10,000,000 payable to Fleet and a Back-Up F/X Demand Note
in the face amount of $10,000,000 payable to Fleet, all such promissory notes
dated as of June 16, 2003, and a Borrowing Subsidiary Note dated as of September
10, 2003 made by Enesco International (H.K.) Limited payable to Fleet in the
face amount of $5,000,000 (collectively, the "Notes"). The Borrower and the
Lenders have agreed to modify the terms and provisions of the Credit Agreement
and to ratify and confirm that all Obligations of the Borrower to the Lenders
continue to be evidenced by the Loan Documents, 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 Lenders agree
that the Credit Agreement is amended as follows:
1. The definition of "Advance" that appears in Article I is deleted in
its entirety and replaced with the following:
"Advance" means a borrowing hereunder consisting of (i) the
aggregate amount of the several Loans of the same Type and, in the
case of LIBOR Advances or Cost of Funds Advances, for the same
Interest Period and, in the case of LIBOR Advances, in the same
currency, made by the Lenders to a Credit Party pursuant to Section
2.1, (ii) reimbursement obligations arising in connection with
foreign exchange transactions pursuant to Section 2.1.A, (iii)
reimbursement obligations arising as a result of Letters of Credit
and Bankers' Acceptances issued pursuant to Section 2.1.B, or (iv)
the aggregate amount of Term Loan made available pursuant to Section
2.1.C.
2. The following definition is added to Article I:
"Aggregate Term Loan Commitment" means the aggregate of the
Term Loan Commitments of all Lenders to make Term Loans, as may be
in effect from time to time.
3. The definition of "Agreement" that appears in Article I is deleted
in its entirety and replaced with the following:
"Agreement" means this Second Amended and Restated Senior
Revolving Credit Agreement, as it may be amended or modified and in
effect from time to time.
4. The definition of "Applicable Margin" that 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 (each of (i) and (ii) as
determined based upon the Borrower's Fixed Charge Coverage Ratio in
accordance with the pricing grid that appears immediately below):
PRICING GRID
LEVEL 1 LEVEL 2 LEVEL 3
Fixed Charge 3.75 to 1.00 or 3.50 to 1.00 to Less Less than 3.50
Coverage Ratio Greater than 3.75 to 1.00 to 1.00
I. REVOLVING LOANS
Facility Fee 25 bps 25 bps 25 bps
LIBOR Base Rate 100 bps 140 bps 175 bps
Cost of Funds 100 bps 140 bps 175 bps
Alternate Base Rate 0 bps 0 bps 0 bps
II. TERM LOAN
LIBOR Base Rate 115 bps 155 bps 190 bps
Cost of Funds 115 bps 155 bps 190 bps
Alternate Base Rate 0 bps 0 bps 0 bps
*bps = basis points
The Applicable Margin shall be established by the Agent based upon
the Borrower's Fixed Charge Coverage Ratio using the Borrower's most
recently
delivered financial statement pursuant to Section 6.1. Pricing,
effective March 5, 2004 and until delivery by the Borrower of a
Compliance Certificate for the fiscal quarter ending March 31, 2004,
shall be in accordance with Level 1. Notwithstanding anything to the
contrary with respect to any determination of Applicable Margin, for
the period following delivery of its financial statement for the
fiscal year ending December 31, 2004 until delivery of its financial
statement for the fiscal quarter ending March 31, 2005 only, the
Borrower shall qualify for Level 1 pricing if the Consolidated
Operating Profit of the Borrower for such fiscal year ending
December 31, 2004 is not less than $13,267,000.
5. The definition of "Borrower" that appears in Article I is deleted in
its entirety and replaced with the following:
"Borrower" means Enesco Group, Inc., an Illinois corporation
and its permitted successors and assigns.
6. The following definition is added to Article I:
"Borrower Term Note" means a promissory note in substantially
the form of Exhibit A-5 hereto duly executed by the Borrower and
payable to the order of a Lender or any Purchaser pursuant to
Section 12.3 of this Agreement in the amount of such Lender's Term
Loan Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
7. The following definition is added to Article I:
"Commitments" means, collectively, the Commitment and the Term
Loan Commitment.
8. The following definition is added to Article I:
"Consolidated Principal Payments Made on Long-Term
Indebtedness" means as of the date of any determination thereof, the
amount of principal payments made by the Borrower and its
Subsidiaries as shown on the consolidated statement of cash flow of
the Borrower and its Subsidiaries on and as of each date, determined
on a consolidated basis in accordance with Agreement Accounting
Principals.
9. The following definition is added to Article I:
"Net Consolidated Cash Taxes Paid" means, as of the date of
any determination thereof, the amount of taxes paid with cash net of
any refunds determined on a consolidated basis in accordance with
Agreement Accounting Principles and certified to by the Borrower on
the Compliance Certificate.
10. The following definition is added to Article I:
"Non-Cash Compensation" means, as of the date of any
determination thereof, the amount of compensation other than cash
paid to officers or employees as determined on a consolidated basis
in accordance with Agreement Accounting Principles and certified to
by the Borrower on the Compliance Certificate.
11. The definition of "Notes" that appears in Article I is deleted in
its entirety and replaced with the following:
"Notes" means, collectively, the Borrower Notes, the Borrowing
Subsidiary Notes, the Back-up F/X Demand Note, the Back-up L/C and
B/A Demand Note and the Borrower Term Notes.
12. The following definition is added to Article I:
"Term Loan" is defined in Section 2.1.C.
13. The following definition is added to Article I:
"Term Loan Commitment" means the obligation of each Lender to
make a Term Loan not exceeding the aggregate principal amount
outstanding at any time as set forth opposite its signature below,
or as set forth in any Notice of Assignment relating to any
assignment that has become effective pursuant to Section 12.3.2, as
such amount may be modified from time to time pursuant to the terms
hereof.
14. A new Section 2.1.C is added as follows:
2.1.C. Term Loan. Each Lender agrees, on the terms and
conditions set forth in this Agreement, to make a term loan to the
Borrower in the Dollar Amount of its Term Loan Commitment (the "Term
Loan"). The Term Loan shall be evidenced by Borrower Term Notes.
Beginning April 1, 2004 and on the first day of each quarter
beginning respectively on each July 1, October 1, January 1 and
April 1 thereafter, principal shall be paid based upon a six (6)
year straight line amortization schedule, plus accrued interest on
the outstanding balance payable as provided hereinbelow. The entire
then outstanding balance of the Term Loan, together with all accrued
interest and other charges, shall be due and payable in full on the
Facility Termination Date.
15. Section 2.2 is deleted in its entirety and replaced with the
following:
2.2. Required Payments; Termination. Any outstanding Advances
made pursuant to Section 2.1 or Section 2.1.C, and all other related
unpaid Obligations shall be paid in full by the Credit Party that
incurred such Obligations on the Facility Termination Date. Any
outstanding Advances pursuant to Section 2.1.A or Section 2.1.B
shall be payable on demand, and if demand is not sooner made, on the
latter of (i) Facility Termination Date, or (ii) the expiration date
of the underlying Obligation.
16. Subsection 2.16(i) is deleted in its entirety and replaced with the
following:
(i) The aggregate cash purchase price for all Permitted
Acquisitions and Joint Ventures in any calendar year shall not
exceed $15,000,000. The balance of such amount available for
Permitted Acquisitions and Joint Ventures for calendar year 2004
following the Permitted Acquisition to be financed with the proceeds
of the Term Loan shall not exceed $7,300,000.
17. 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 3.00 to 1.00
as of the end of each fiscal quarter ending respectively March 31,
2004, June 30, 2004 and September 30, 2004, and 2.50 to 1.00 for the
fiscal quarter ending December 31, 2004, with such Fixed Charge
Coverage Ratio to be calculated on a rolling four quarter basis for
the most recent four fiscal quarter period then ended. For the
purposes of this covenant, the term "Fixed Charge Coverage Ratio"
means, as calculated based upon the four most recent consecutive
fiscal quarters then ended, the ratio of (i) the Borrower's EBITDA,
minus Consolidated Capital Expenditures (including Acquisition
investments net of amounts paid for with balance sheet cash and
borrowings under the Commitments), minus Net Consolidated Cash Taxes
Paid, minus Dividend Payments and Stock Repurchases, plus Non-Cash
Compensation; to Consolidated Interest Expense, plus Consolidated
Principal Payments Made on Long-Term Indebtedness.
18. 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 as of the end of each fiscal quarter of the Borrower's
funded Consolidated Indebtedness, (excluding obligations to
reimburse under Letters of Credit, Banker's Acceptances or in
connection with other trade services obtained by the Borrower in the
ordinary course of business) at the end of each such quarter; to the
Borrower's EBITDA as calculated based upon the four most recent
consecutive fiscal quarters then ended of not greater than 2.25 to
1.00 for the fiscal quarters ending March 31, 2004, June 30, 2004
and September 30, 2004, and 2.00 to 1.00 for the fiscal quarter
ending December 31, 2004.
19. Section 6.12.3 is deleted in its entirety and replaced with the
following:
6.12.3. Minimum Year End Operating Profit. The Borrower shall
have a minimum Consolidated Operating Profit for the fiscal year
ending December 31, 2004 of not less than $11,000,000.
20. The Commitments of each Lender as set forth opposite its signature
on this Amendment shall supercede and replace those amounts as set
forth opposite its signature on the Credit Agreement.
21. A new EXHIBIT A-5 of the Credit Agreement is attached hereto as
EXHIBIT A-5.
22. 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.
23. 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.
24. The Borrower shall pay to the Agent upon execution of this Amendment
an up front fee of $30,000 in connection with extension of the Term
Loan, such amount to be allocated among the Lenders in accordance
with each Lender's pro-rata share of the Term Loan, and all other
costs and expenses, including reasonable attorneys' fees, incurred
by the Agent in connection with the preparation and execution of
this Amendment and any related Loan Documents.
25. 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.
26. 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.
27. 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.
28. 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.
29. This Amendment is to be governed and construed in accordance with
the laws of the Commonwealth of Massachusetts.
30. 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 Lenders.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the foregoing Amendment has been executed as an
instrument under seal as of the date first above written.
ENESCO GROUP, INC.
By: /s/ Thomas F. Bradley
-----------------------------------
Print Name: /s/ Thomas F . Bradley
Title: Chief Financial Officers
& Treasurer
By: /s/ Charles E. Sanders
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Print Name: Charles E. Sanders
Title: Assistant Treasurer
COMMITMENTS: FLEET NATIONAL BANK
$25,000,000 Loans
10,000,000 L/C and B/A Facility
5,390,000 Term Loan By: /s/ Sheryl L. McQuade
- ----------- -----------------------------------
$40,390,000 Total Its Senior Vice President
COMMITMENTS: LASALLE BANK NATIONAL ASSOCIATION
$15,000,000 Loans
0 L/C and B/A Facility
2,310,000 Term Loan By: /s/ Hollis J. Griffin
- ----------- -----------------------------------
$17,310,000 Total Its Vice President
Acknowledged and agreed to:
(Borrowing Subsidiaries)
ENESCO INTERNATIONAL (H.K.) LIMITED
By: /s/ M. Frances Durden
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Its Director
GREGG MANUFACTURING, INC.
By: /s/ Charles E. Sanders
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Its Treasurer