SECOND MODIFICATION OF REVOLVING
CREDIT AGREEMENT
This Second
Modification of Revolving Credit Agreement (the
“Modification”) is entered into and made effective as
of June 26, 2009 (the “Effective Date”) by and
between R.G. Barry Corporation, an Ohio corporation (the
“Borrower”), and The Huntington National Bank, a
national banking association (the “Bank”).
A. The
Borrower and the Bank entered into a Revolving Credit Agreement,
dated as of March 29, 2007, as modified by the First
Modification of Revolving Credit Agreement dated as of
April 16, 2007 (the Revolving Credit Agreement, as so
modified, the “Agreement”), pursuant to which the Bank
agreed to provide Loans to the Borrower and issue Letters of Credit
for the account of the Borrower, upon and subject to the terms and
conditions as set forth in the Agreement.
B. The
Borrower and the Bank desire to modify certain terms and provisions
of the Agreement, upon and subject to the terms and conditions as
hereinafter set forth.
NOW, THEREFORE,
the Bank and the Borrower acknowledge and agree to the statements
set forth in the Background Information set forth above, and in
consideration of the foregoing, the agreements and covenants
hereinafter contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Section 1.
Capitalized Terms . Except as otherwise defined herein, the
capitalized terms used herein shall have the same meanings as set
forth in the Agreement.
Section 2.
Modification of the Agreement .
(a)
Modification of the Commitment . The maximum principal
amount of the Commitment, subject to the terms of the Agreement, is
modified to be $12,000,000, and in that connection:
(i)
The references to $20,000,000.00 in Section 1.1 of the
Agreement are modified, from and after the Effective Date, to be
$12,000,000.00.
(ii)
Section 1.2 of the Agreement is modified to provide as
follows:
1.2
Commitment Limitations . Notwithstanding the foregoing and
subject to the other terms hereof, during the following periods in
each year occurring during the term of this Agreement the
Commitment of the Bank shall be in an amount equal to the lesser of
the following amounts or the amount to which the Commitment has
been reduced pursuant to Section 3.6 hereof:
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PERIOD
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COMMITMENT
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From
June 26, 2009 through December 31, 2009
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$
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12,000,000.00
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From
January 1, 2010 through June 30, 2010
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$
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5,000,000.00
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From
July 1, 2010 through December 31, 2010
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$
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10,000,000.00
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PERIOD
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COMMITMENT
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From
January 1, 2011 through June 30, 2011
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$
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5,000,000.00
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From
July 1, 2011 through December 31, 2011
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$
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8,000,000.00
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(iii)
Section 7.8 of the Agreement is modified, from and after the
Effective Date, to provide as follows:
7.8
Limitation on Outstanding Balance of Loans . Permit the
outstanding principal balance of Loans under the Commitment to
exceed the lesser of the Borrowing Base or the Commitment at any
time. As used herein, “Borrowing Base” means, on any
date, the sum of (i) 80% of Eligible Accounts Receivable plus
(ii) 50% of Eligible Inventory. Notwithstanding any term
contained herein to the contrary, if the outstanding principal
balance of Loans exceeds the Borrowing Base or the Commitment then
in effect at any time, the Borrower shall prepay the Loans
immediately to the extent of the excess.
(b)
Borrowing Base Certificate . The Borrower shall provide,
from and after the Effective Date, to the Bank each month a
certificate calculating the Borrowing Base, and in that connection
the following new Section 6.13 is added to the Agreement in
numerical order:
6.13
Borrowing Base Certificate . Not later than the 20th day of
each month, beginning with July 20, 2009, furnish to the Bank
a certificate, in the form attached here as Exhibit A or such
other form which is satisfactory to the Bank, setting forth the
calculation of the Borrowing Base as of the last day of the
previous month, which certificate shall be signed by the chief
financial officer or controller of the Borrower.
(c)
Extension of Termination Date . The Termination Date is
extended from March 31, 2010 to December 31, 2011, and in
that connection the definition of “Termination Date”
set forth in 12.31 of the Agreement is modified to provide as
follows:
12.31
“Termination Date” means December 31, 2011 or such
later date(s) to which the Commitment may be extended from time to
time pursuant to the provisions of this Agreement.
(d)
Modification of Interest Rate . The Variable Interest Rate
is modified, from and after the Effective Date, to be the rate per
annum equal to the sum of the LIBO Rate plus 2.75%, and in that
connection the definition of “Variable Rate” set forth
in Section 12.32 of the Agreement is modified to provide as
follows:
12.32
“Variable Rate” means a rate per annum equal to the sum
of the LIBO Rate plus 2.75%.
(e)
Modification of Payment of Certain Fees .
(i)
From and after the Effective Date, the obligation of the Borrower
to pay an annual facility fee in the amount of $2,500 as set forth
in Section 3.3 of the Agreement is terminated.
(ii)
The Unused Line Fee required to be paid by the Borrower to the Bank
as set forth in Section 3.3 of the Agreement is modified to
be, from and after the Effective Date, 3/8% per annum.
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(f)
Modification of Tangible Net Worth . The calculation of
Consolidated Tangible Net Worth is modified, from and after the
Effective Date, to add back certain pension plan adjustments and
the minimum Consolidated Tangible Net Worth to be maintained by the
Borrower on a consolidated basis shall be modified to be
$44,000,000 as of June 30, 2009, and increasing by 50% of
Consolidated Net Income (without deduction for any net loss) for
each fiscal year thereafter, and in that connection:
(i)
Section 7.2 of the Agreement is modified, from and after the
Effective Date, to provide as follows:
7.2
Maintenance of Consolidated Tangible Net Worth . Permit
Consolidated Tangible Net Worth to be less than $44,000,000 as of
June 30, 2009, with such amount to be increased on each
June 30 thereafter by the amount equal to 50% of Consolidated
Net Income for each fiscal year ending on such June 30, but
without any deduction for any consolidated net loss for any such
fiscal year.
(ii)
The definition of “Consolidated Tangible Net Worth” set
forth in Section 12.9 of the Agreement is modified, from and
after the Effective Date, to provide as follows:
12.9
“Consolidated Tangible Net Worth” means at any time the
sum of the consolidated shareholders’ equity of the Borrower
and its Subsidiaries, plus (to the extent not included in
shareholders’ equity) preferred stock, minus assets properly
classified as intangible assets, plus the amount of any pension
plan related adjustments and charges made in accordance with
accounting rules for the fiscal year ending June 27, 2009 and
each fiscal year thereafter during the term of this Agreement, all
determined in accordance with GAAP for the Borrower and its
Subsidiaries on a consolidated basis.
Section 3.
Conditions to Bank’s Obligations . The agreement of
the Bank to enter into this Modification and be bound by the terms
(x) hereof, and (y) of the Agreement as modified by this
Modification is subject to the satisfaction of the following
conditions precedent:
(a) Delivery of
Documents . The Bank shall have rec
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