Document:

Consent & Amendment No. 1 to the Loan & Security Agreement

 Exhibit 10.1(b) 
  
 CONSENT AND AMENDMENT NO. 1 
 TO LOAN AND SECURITY AGREEMENT 
  
 CONSENT AND AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (“Amendment No. 1”), dated as of December 29, 2004, by and among Congress Financial Corporation, in its capacity as agent pursuant to the Loan Agreement (as hereinafter
defined) acting for and on behalf of the financial institutions which are parties thereto as lenders (in such capacity, “Agent”), the financial institutions which are parties to the Loan Agreement as lenders (individually, each a
“Lender” and collectively, “Lenders”), Catalina Industries, Inc., Catalina Merchandising, Inc., Ring Lamp Company Limited, BMAC Limited, Lancer Products Limited, Grove Products (Caravan Accessories) Limited, Lighten Point
Corporation Europe Limited, Arctic Products Limited, Van-Line Limited and Catalina International Limited (individually, each a “Borrower” and collectively, “Borrowers”), British Syphon Industries Limited, Graystone Ring Limited,
Ring Group Limited, Ring Parts Limited, Marshall’s Universal Limited, Hovekey Limited, Newton Mill Limited, Ring Limited, Catalina Lighting, Inc. and Meridian Lamps, Inc. (individually, each a “Guarantor” and collectively,
“Guarantors”). 
  
 W I T N
E S S E T H : 
  
 WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into financing arrangements pursuant to which Lenders (or Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to
Borrowers as set forth in the Loan and Security Agreement, dated December 23, 2003, by and among Agent, Lenders, Borrowers and Guarantors (as the same may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced the
“Loan Agreement”) and the other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto, including, but not limited to, this Amendment No. 1 (all of the
foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”);

  
 WHEREAS, Borrowers have requested that Agent, Required Lenders
and UK Term B Loan Lenders consent to the amendment and restatement of the Restated Holding Note for the purpose of permitting additional advances in the aggregate principal amount of up to $3,500,000 to be advanced by International to Holding and
agree to amend the Loan Agreement as hereinafter provided and Agent, Required Lenders and UK Term B Loan Lenders are agreeable to such request, but only on the terms and subject to the conditions contained herein; and 
  
 WHEREAS, by this Amendment No. 1, Agent, Required Lenders, UK Term B Loan
Lenders, Borrowers and Guarantors wish and intend to evidence such consent and amendments. 
  
 NOW, THEREFORE, in consideration of the foregoing, the mutual agreements and 

 
covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows: 
  
 1. Definitions. 
  
 1.1 Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definitions: 
  
 (a) “Amendment No. 1” shall mean Consent and Amendment No. 1 to
Loan and Security Agreement by and among Borrower, Guarantors, Agent and Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 
  
 (b) “Second Restated Holding Note” shall mean the Restated Holding
Note as restated to permit additional advances (in excess of the amount permitted as of the date hereof) of up to $3,500,000 to be advanced by International to Holding, as the same now exists and may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. 
  
 1.2
Interpretation. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed to them in the Loan Agreement. 
  
 2. Consent. Agent, Required Lenders and UK Term B Loan Lenders hereby consent, subject to the terms and conditions
set forth in this Amendment No. 1, to the making by International of additional loan(s) to Holding in an aggregate amount of up to $3,500,000 as evidenced by the Second Restated Holding Note; provided, that, (i) each of the conditions
set forth in Section 9.10(g) of the Loan Agreement shall have been satisfied with respect to such loan and the Second Restated Holding Note, in each case as determined by Agent, (ii) on and after the date hereof, each reference in the Loan Agreement
and the other Financing Agreements to the “Restated Holding Note” shall refer, and shall be deemed to refer, to the Second Restated Holding Note and (iii) as of the date of the making by International of such loan to Holding and after
giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing. 
  
 3. Indebtedness. Section 9.9(l) is hereby amended by adding the following at the end thereof: 
  
 “(b) of Catalina Asia Ltd. under the “Banking Facilities: Catalina
Asia Ltd.” with Standard Chartered Bank, dated December 2, 2003, in the maximum principal amount of HK $41,600,000 and in respect of which the outstanding principal balance as of December 29, 2004 is HK $24,845,658.” 
  
 4. Adjusted Tangible Net Worth. Schedule 9.18(a) of the Loan Agreement
is hereby deleted in its entirety and Schedule 9.18(a) to the Loan Agreement as appended hereto is substituted therefor. 
  

 2 

 5. Leverage Ratio. Schedule 9.19(a) of the Loan Agreement is hereby deleted in its entirety and
Schedule 9.19(a) to the Loan Agreement as appended hereto is substituted therefor. 
  
 6. Additional Representations, Warranties and Covenants. Borrowers and Guarantors represent, warrant and covenant with and to Agent and Lenders as follows, which representations, warranties and covenants are
continuing and shall survive the execution and delivery hereof, the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the
making of Loans by Lenders (or Agent on behalf of Lenders) to Borrowers: 
  
 6.1 neither the execution, delivery and performance of this Amendment No. 1, or any other Financing Agreements in connection herewith, nor the consummation of the transactions herein or therein contemplated, are in
contravention of law or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound, or violates any provision of the Certificate of Incorporation or By-Laws
(or similar governing documents) of any Borrower or Guarantor; 
  
 6.2 no consent, approval or other action of, or filing with, or notice to any Governmental Authority is required in connection with the execution, delivery and performance of this Amendment No. 1; 
  
 6.3 this Amendment No. 1 has been duly executed and delivered by each
Borrower and Guarantor and the agreements and obligations of each Borrower and Guarantor contained herein constitute legal, valid and binding obligations of each Borrower and Guarantor enforceable against each Borrower and Guarantor in accordance
with the terms hereof; 
  
 6.4 all of the representations and
warranties set forth in the Loan Agreement and the other Financing Agreements, each as amended hereby, are true and correct in all material respects on and as of the date hereof as if made on the date hereof, except to the extent any such
representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects as of such date; and 
  
 6.5 After giving effect to the terms of this Amendment No. 1, no Default or Event of Default exists or has occurred and is
continuing. 
  
 7. Conditions. The amendments contained
herein shall only be effective upon the satisfaction of each of the following conditions in a manner satisfactory to Agent: 
  
 7.1 Agent shall have received an executed original or executed counterparts of this Amendment No. 1, duly authorized, executed and delivered by each of
the respective parties hereto; and 
  
 7.2 After giving effect to
the terms of this Amendment No. 1, no Default or Event of Default shall exist or have occurred and be continuing. 
  
 8. Fees. In consideration of the consent and amendments set forth herein, Borrowers shall on the date hereof pay to Agent: (a) for its individual
benefit, a fee in the amount of 

  

 3 

 
$25,000 and (b) for the benefit of Burdale Financial Limited, a fee in the amount of £25,000, or Agent, at its option, may charge the account(s) of
Borrowers maintained by Agent the amount of such fees, all of which fees are earned as of the date hereof and shall constitute part of the Obligations. 
  
 9. Effect of this Amendment. This Amendment No. 1 constitutes the entire agreement of the parties with respect to the subject matter hereof and
thereof, and supersedes all prior oral or written communications, memoranda, proposals, negotiations, discussions, term sheets and commitments with respect to the subject matter hereof and thereof. Except as expressly amended pursuant hereto, no
other changes or modifications or waivers to the Financing Agreements are intended or implied, and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date
hereof. To the extent that any provision of the Loan Agreement or any of the other Financing Agreements are inconsistent with the provisions of this Amendment, the provisions of this Amendment shall control. 
  
 10. Further Assurances. Borrowers and Guarantors shall execute and
deliver such additional documents and take such additional action as may be requested by Agent to effectuate the provisions and purposes of this Amendment No. 1. 
  
 11. Governing Law. The rights and obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the
State of New York. 
  
 12. Binding Effect. This Amendment
No. 1 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns. 
  
 13. Counterparts. This Amendment No. 1 may be executed in any number of counterparts, but all of such counterparts shall together constitute but
one and the same agreement. In making proof of this Amendment No. 1, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. Delivery of an executed counterpart of this Amendment
No. 1 by telecopier shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 1. Any party delivering an executed counterpart of this Amendment No. 1 by telecopier also shall deliver an original
executed counterpart of this Amendment No. 1, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment No. 1 as to such party or any other party. 
  
 [ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK ] 
  

 4 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered
by their authorized officers as of the day and year first above written. 
  

			
	BORROWERS
	
	CATALINA INDUSTRIES, INC.
		
	By:	 	 /s/ Gary Rodney

	Title:	 	CFO
	
	CATALINA MERCHANDISING, INC.
		
	By:	 	 /s/ Gary Rodney

	Title:	 	CFO
	
	RING LAMP COMPANY LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	BMAC LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director

  
 [SIGNATURES
CONTINUE ON NEXT PAGE] 

 [SIGNATURES CONTINUED FROM PREVIOUS PAGE] 
  

			
	 LANCER PRODUCTS LIMITED

		
	 By:
	 	 /s/ John Hall

	 Title:
	 	 Director

		
	 By:
	 	 /s/ Anthony Welham

	 Title:
	 	 Director

	
	GROVE PRODUCTS (CARAVAN ACCESSORIES) LIMITED
		
	 By:
	 	 /s/ John Hall

	 Title:
	 	 Director

		
	 By:
	 	 /s/ Anthony Welham

	 Title:
	 	 Director

	
	LIGHTEN POINT CORPORATION EUROPE LIMITED
		
	 By:
	 	 /s/ John Hall

	 Title:
	 	 Director

		
	 By:
	 	 /s/ Anthony Welham

	 Title:
	 	 Director

	
	CATALINA INTERNATIONAL LIMITED
		
	 By:
	 	 /s/ Gary Rodney

	 Title:
	 	 Director

		
	 By:
	 	 /s/ Robert Varakian

	 Title:
	 	 Director

  
 [SIGNATURES
CONTINUE ON NEXT PAGE] 

 [SIGNATURES CONTINUED FROM PREVIOUS PAGE] 
  

			
	ARCTIC PRODUCTS LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	VAN-LINE LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	GUARANTORS
	
	CATALINA LIGHTING, INC.
		
	By:	 	 /s/ Gary Rodney

	Title:	 	CFO
	
	MERIDIAN LAMPS, INC.
		
	By:	 	 /s/ Gary Rodney

	Title:	 	CFO

  
 [SIGNATURES
CONTINUED ON NEXT PAGE] 

 [SIGNATURES CONTINUED FROM PREVIOUS PAGE] 
  

			
	BRITISH SYPHON INDUSTRIES LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	GRAYSTONE RING LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	RING GROUP LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	RING PARTS LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director

  
 [SIGNATURES
CONTINUE ON NEXT PAGE] 

 [SIGNATURES CONTINUED FROM PREVIOUS PAGE] 
  

			
	MARSHALL’S UNIVERSAL LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	HOVEKEY LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	NEWTON MILL LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director
	
	RING LIMITED
		
	By:	 	 /s/ John Hall

	Title:	 	Director
		
	By:	 	 /s/ Anthony Welham

	Title:	 	Director

  
 [SIGNATURES
CONTINUE ON NEXT PAGE] 

 [SIGNATURES CONTINUED FROM PREVIOUS PAGE] 
  

			
	AGREED AND ACCEPTED:
	
	AGENT
	
	 CONGRESS FINANCIAL CORPORATION (FLORIDA), as Agent

		
	By:	 	 /s/ Josephine Norris

	Title:	 	SVP
	
	LENDERS
	
	 CONGRESS FINANCIAL CORPORATION (FLORIDA)

		
	By:	 	 /s/ Josephine Norris

	Title:	 	SVP
	
	BURDALE FINANCIAL LIMITED
		
	By:	 	 /s/ Ian Conway

	Title:	 	Vice President
	
	SABERASU JAPAN INVESTMENTS II B.V.
		
	By:	 	 /s/ B. S. Hummel

	Title:	 	Man. Director
		
	By:	 	 /s/ Daj Hoogenkamp

	Title:	 	Managing Director

 Schedule 9.18(a) 
 to Loan and Security Agreement 
  

				
	 Period

	  	Adjusted Tangible
Net Worth

	 from the date hereof through and including March 31, 2004
	  	US$	19,000,000
	 April 1, 2004 through and including June 30, 2004
	  	US$	20,000,000
	 July 1, 2004 through and including September 30, 2004
	  	US$	21,000,000
	 October 1, 2004 through and including December 31, 2004
	  	US$	21,000,000
	 January 1, 2005 through and including March 31, 2005
	  	US$	22,000,000
	 April 1, 2005 through and including June 30, 2005
	  	US$	23,000,000
	 July 1, 2005 through and including September 30, 2005
	  	US$	24,000,000
	 October 1, 2005 through and including December 31, 2005
	  	US$	26,000,000
	 January 1, 2006 through and including March 31, 2006
	  	US$	27,000,000
	 April 1, 2006 through and including June 30, 2006
	  	US$	28,000,000
	 July 1, 2006 through and including September 30, 2006
	  	US$	29,000,000
	 October 1, 2006 and at all times thereafter
	  	US$	30,000,000

 Schedule 9.19(a) 
 to Loan and Security Agreement 
  

			
	 Period

	  	Leverage
Ratio

	 from the date hereof through and including December 31, 2003
	  	2.75:1.0
	 from January 1, 2004 through and including March 31, 2004
	  	2.9:1.0
	 from April 1, 2004 through and including June 30, 2004
	  	2.75:1.0
	 from July 1, 2004 through and including December 31, 2004
	  	3.75:1.0
	 from January 1, 2005 through and including March 31, 2005
	  	3.50:1.0
	 from April 1, 2005 through and including June 30, 2005
	  	3.0:1.0
	 from July 1, 2005 through and including September 30, 2005
	  	2.5:1.0
	 from October 1, 2005 and at all times thereafter
	  	2.5:1.0Letter Agreement, dated January 13, 2005

 Exhibit 10.1(c) 
 [ON NOTEPAPER OF CATALINA LIGHTING INC] 
  

	To:	Congress Financial Corporation (Florida) 

 777 Brickell
Avenue 
 Miami 
 Florida 33131

  
 And 
  
 Burdale Financial Limited 
 53 Queen Anne Street 
 London W1G 9HP 
  
 13 January 2005 
  
 Dear Sirs 
  
 LOAN AND SECURITY AGREEMENT DATED 23 DECEMBER 2003 
  

	1.	We refer to the Loan and Security Agreement referenced above (the “Agreement”). Terms defined in the Agreement have the same meaning where used in this letter.

  

	2.	We are writing to confirm the terms upon which we would propose to vary the terms of the “material adverse change” provisions in the Agreement. 

 

	3.	We would request that the following paragraph should be inserted at the end of Section 1.83 of the Agreement: 

  
 “Provided that, in relation to a UK Borrower, an event, development or
condition shall only have a Material Adverse Effect if it involves the occurrence of any of the following: (1) any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy or other casualty loss or force majeure occurs
resulting in the cessation or substantial curtailment of production or distribution or other revenue producing activities at any facility of Borrowers for more than thirty (30) days or which affects twenty (20%) percent or more of the workforce of
Borrowers for 5 (five) working days or more, (2) the loss, suspension, revocation or failure to renew any Permit or License now held or hereafter acquired by a Borrower required or desirable in connection with the sale or distribution of goods the
sale of which gave rise to revenues of more than ten (10%) percent in the immediately preceding fiscal year, (3) within a three month time period, £1,000,000 or more of Inventory (valued at the lower of cost or market) shall be subject to a
product recall or similar product defect occurrence, (4) contingent liabilities are incurred in excess of £1,000,000 which would be required to be reflected in the footnotes to a balance sheet prepared in accordance with GAAP excluding pension
liabilities and guarantee liabilities under this Agreement, (5) operations are suspended or terminated for ten (10) working days or more at any facility of a Borrower generating more than five (5%) percent of the consolidated revenues of Borrowers
for the immediately preceding fiscal year, (6) any customer or group of customers representing more than twenty (20%) percent of the consolidated revenues of Borrowers for the preceding fiscal year terminate or suspend purchases of Inventory from
Borrowers for any reason (whether on account of insolvency or for any other reason whatsoever).” 

	4.	In return for Burdale’s agreement to this amendment, we agree to pay to Burdale a fee of £50,000. This fee will be payable no later than 29 January 2004.

  

	5.	The amendments contemplated by this letter will take effect on the date on which Burdale and Congress countersign this letter to confirm their agreement to its terms.

  

	6.	We have signed this letter on behalf of all of the Borrowers and the other Obligors, and confirm that we are duly authorised to do so. 

  

	7.	This letter is Financing Agreement. 

  
  

	
	Yours faithfully
	
	 /s/ Gary Rodney
  

	 For and on behalf of
 CATALINA LIGHTING
INC.

  
  
  

	
	We agree
	
	 /s/ Josephine Norris
  

	 For and on behalf of
 CONGRESS FINANCIAL CORPORATION
(FLORIDA)

  
 Dated: 13 January 2005

  

	
	We agree
	
	 /s/ Brian Gitland
  

	 For and on behalf of
 BURDALE FINANCIAL
LIMITED

  
 Dated: 13 January 2005

  
  

	
	We agree
	
	 
	 For and on behalf of
 SABERASU JAPAN INVESTMENTS II
B.V.

  
 Dated: 13 January 2005

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