|
|
|
Exhibit 10.2
|
|
|
|
WAIVER AND AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
This
Waiver and Amendment No. 2 to Loan and Security Agreement (this
“ Amendment ”) dated as of May 11, 2005, by and
among LaSalle Business Credit, LLC, for itself, as a lender, and as
Agent (“ Agent ”) for the lenders (“
Lenders ”) from time to time party to the Loan
Agreement (as defined below), the Lenders party hereto, Easy
Gardener Products, Ltd., a Texas limited Partnership (“
Borrower ”), EYAS International, Inc., a Texas
corporation (“ EYAS ”), EG Product Management,
L.L.C., a Texas limited liability company (“ EG
Product ”), EG, L.L.C., a Nevada limited liability
company (“ EG ”), Weatherly Consumer Products
Group, Inc., a Delaware corporation (“ WCP Group
”), Weatherly Consumer Products, Inc., a Delaware corporation
(“ WCP ”), and NBU Group, LLC, a Texas limited
liability company (“ NBU ”; Borrower, EYAS, EG
Product, EG, WCP Group, WCP and NBU are collectively referred to
herein as the “ Credit Parties ” and each
individually as a “ Credit Party ”).
Preliminary Statements
Agent,
Lenders and Credit Parties entered into that certain Loan and
Security Agreement dated as of April 27, 2004 (as amended, restated
or otherwise modified from time to time, the “ Loan
Agreement ”). Capitalized terms used but not defined in
this Amendment shall have the meanings ascribed to such terms in
the Loan Agreement.
The
Credit Parties have requested that Agent and Lenders waive the
Event of Default that exists under the Loan Agreement as a result
of Borrower’s failure to comply with subsection 14(c) of the
Loan Agreement for the 12 month period ending March 31, 2005 (the
“ March 2005 Leverage Default ”).
The
Credit Parties have further requested that Agent and Lenders amend
the Loan Agreement in certain respects, as set forth
below.
NOW,
THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
1.
Amendments to Loan Agreement . Subject to the satisfaction
of the conditions set forth herein, the Loan Agreement hereby is
amended as follows:
(a)
The definition of “Eligible Inventory“ set forth in
Section 1 of the Loan Agreement is amended and restated in its
entirety, as follows:
|
|
|
|
|
“
Eligible Inventory ” shall mean Inventory of a
Borrowing Base Company which is acceptable to Agent in its sole but
reasonable discretion for lending purposes. Without limiting
Agent’s discretion, Agent shall, in general,
|
|
|
consider
Inventory of a Borrowing Base Company to be Eligible Inventory if
it meets, and so long as it continues to meet, the following
requirements:
|
|
|
|
|
|
(i) it
is owned by such Borrowing Base Company, such Borrowing Base
Company has the right to subject it to a security interest in favor
of Agent and it is subject to a first priority perfected security
interest in favor of Agent and to no other claim, lien, security
interest or encumbrance whatsoever, other than Permitted
Liens;
|
|
|
|
|
|
(ii) it
is located on one of the premises listed on Exhibit A (or
other locations of which Agent has been advised in writing pursuant
to subsection 12(b)(i) hereof) and, except as set forth in
clause (ix) below, is not in transit;
|
|
|
|
|
|
(iii) if
held for sale or lease or furnishing under contracts of service, it
is (except as Agent may otherwise consent in writing) manufactured
and saleable in accordance with applicable laws and new and unused
and free from defects which would, in Agent’s sole
determination, affect its market value;
|
|
|
|
|
|
(iv) it
is not stored with a bailee, consignee, warehouseman, processor or
similar party unless Agent has given its prior written approval and
such Borrowing Base Company has caused any such bailee, consignee,
warehouseman, processor or similar party to issue and deliver to
Agent, in form and substance acceptable to Agent, such Uniform
Commercial Code financing statements, warehouse receipts, waivers
and other documents as Agent shall require;
|
|
|
|
|
|
(v) Agent
has determined, in accordance with Agent’s customary business
practices, that it is not unacceptable due to age, type, category
or quantity;
|
|
|
|
|
|
(vi) it
is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are
untrue; or (B) which violates any of the covenants of any
Company contained in this Agreement;
|
|
|
|
|
|
(vii)
it is not Excess Inventory;
|
|
|
|
|
|
(viii) it
is not Inventory consisting of work-in-process, promotional items
or packaging materials; and
|
|
|
|
|
|
(ix) Inventory
which otherwise satisfies the criteria for Eligible Inventory but
is in transit from Asia and Europe to the United States shall be
deemed Eligible Inventory so long (A) as such Borrowing Base
Company has received adequate bills of lading representing such
Inventory, as determined by Agent in its sole discretion,
(B) the Inventory is fully insured in
|
|
|
a manner
satisfactory to Agent, (C) no Letter of Credit issued to the
seller thereof in connection with the purchase of such Inventory is
undrawn or outstanding, (D) such Borrowing Base Company has
title to such Inventory (and the seller thereof has no retention of
title or other claims to such Inventory), and (E) such
Borrowing Base Company has taken such steps as Agent shall require
to perfect Agent’s security interest therein (including
without limitation, (1) if such Inventory is evidenced and
deliverable pursuant to negotiable bills of lading, such negotiable
bills of lading have been delivered to Agent or a customs broker
that has agreed to hold such bills of lading for the benefit of
Agent pursuant to an agreement satisfactory to Agent, and
(2) if such Inventory is evidenced and deliverable pursuant to
non-negotiable bills of lading issued by a bailee in the possession
of such Inventory, (x) such non-negotiable bills of lading
each name Agent as the consignee of the Inventory evidenced
thereby, and (y) the bailee or other agent of such Borrowing
Base Company in possession of such non-negotiable bills of lading
has agreed, in writing, to act as Agent’s agent with respect
to such non-negotiable bills of lading and the Inventory evidenced
thereby).
|
|
|
|
(b)
The definition of “Excess Availability” set forth in
Section 1 of the Loan Agreement is amended and restated in its
entirety, as follows:
|
|
|
|
|
“
Excess Availability ” shall mean, as of any date of
determination by Agent, the excess, if any, of the lesser of (i)
the Maximum Revolving Loan Limit less the sum of the outstanding
Revolving Loans and Letter of Credit Obligations, and (ii) the
Revolving Loan Limit less the sum of the outstanding Revolving
Loans and Letter of Credit Obligations, in each case as of the
close of business on such date and assuming, for purposes of
calculation, that all accounts payable which remain unpaid more
than thirty (30) days after the due dates thereof as the close of
business on such date are treated as additional Revolving Loans
outstanding on such date.
|
|
|
|
(c)
The definition of “Letter of Credit“ is added to
Section 1 of the Loan Agreement, in appropriate alphabetical order,
as follows:
|
|
|
|
|
“
Letter of Credit ” shall mean any letter of credit
issued on behalf of Borrower in accordance with this
Agreement.
|
|
|
|
(d)
The definition of “Letter of Credit Obligations” is
added to Section 1 of the Loan Agreement, in appropriate
alphabetical order, as follows:
|
|
|
|
|
“
Letter of Credit Obligations ” shall mean, as of any
date of determination, the sum of (i) the aggregate undrawn
face amount of all Letters of Credit, and (ii) the aggregate
unreimbursed amount of all drawn Letters of Credit not already
converted to Loans hereunder.
|
|
|
(e)
The first two paragraphs of Section 2(a) of the Loan Agreement are
amended and
|
|
|
restated in its
entirety, as follows:
|
|
|
|
|
|
(a)
Revolving Loans .
|
|
|
|
|
|
Subject
to the terms and conditions of this Agreement and the Other
Agreements, during the Original Term and any Renewal Term, each
Lender, severally and not jointly, shall, absent the occurrence of
an Event of Default, make its Pro Rata Share of revolving loans and
advances (the ” Revolving Loans ”) requested by
Borrower up to such Lender’s Revolving Loan Commitment so
long as after giving effect to such Revolving Loans, the sum of the
aggregate unpaid principal balance of the Revolving Loans and the
Letter of Credit Obligations does not exceed an amount up to the
sum of the following sublimits (the “ Revolving Loan
Limit ”):
|
|
|
|
|
|
(i) Up
to eighty-five percent (85%), or such lesser percentage as
determined by Agent in its sole but reasonable discretion, of the
face amount (less maximum discounts, credits and allowances which
may be taken by or granted to Account Debtors in connection
therewith in the ordinary course of a Borrowing Base
Company’s business) of the Borrowing Base Companies’
Net Eligible Accounts; plus
|
|
|
|
|
|
(ii) The
lesser of (a) the sum of up to sixty percent (60%) of the
lower of cost or market value of the Borrowing Base
Companies’ Eligible Inventory consisting of finished goods,
plus up to fifty percent (50%) of the lower of cost or
market value of the Borrowing Base Companies’ Eligible
Inventory consisting of raw materials, and (b) Four Million and
No/100 Dollars ($4,000,000), whichever is less;
plus
|
|
|
|
|
|
(iii) Up
to fifty percent (50%) against the face amount of commercial
Letters of Credit issued or guaranteed by Agent for the purpose of
purchasing Eligible Inventory; provided, that such commercial
Letters of Credit are in form and substance satisfactory to Agent;
plus
|
|
|
|
|
|
(iv)
The Seasonal Amount; minus
|
|
|
|
|
|
(v) Such
reserves as Agent elects, in its sole but reasonable discretion to
establish from time to time;
|
|
|
|
|
|
provided, that
(v) the amount of advances against Net Eligible Accounts that are
Regular Datings and Extended Datings shall at no time exceed
$6,000,000 in the aggregate, (w) the amount of advances against Net
Eligible Accounts that are Extended Datings shall at no time exceed
$2,000,000 in the aggregate, (x) the amount of advances
against WCP’s Net Eligible Accounts and WCP’s Eligible
Inventory
|
|
