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EXHIBIT 10.1
SECOND PROMISSORY NOTE MODIFICATION AGREEMENT
This Agreement is made and entered into on July 20, 1998 ("Agreement Date"), to
be effective as of June 30, 1998 ("Effective Date"), by and between Xxxxxxx,
Inc. ("Maker") and Bank One, NA, successor by merger of Bank One, Dayton, NA
("Bank One")
WHEREAS, Maker heretofore executed an Amended and Restated Business Purpose
Revolving Promissory Note in the amount of $45,000,000.00 dated December 31,
1996 in favor of Bank One, as amended as of June 30, 1997 to reduce the amount
to $35,000,00.00 ("Promissory Note");
WHEREAS, the Promissory Note has at all times been, and is now, continuously and
without interruption outstanding in favor of Bank One;
WHEREAS, Maker has requested that the Promissory Note be modified to the limited
extent as hereinafter set forth; and,
WHEREAS, Bank One has agreed to such modification;
NOW THEREFORE, by mutual agreement of the parties and in mutual consideration of
the agreements contained herein and for good and valuable considerations, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree that the Promissory Note is modified as hereinafter indicated.
1. ACCURACY OF RECITALS.
Maker acknowledged the accuracy of the Recitals, stated above.
2. MODIFICATION OF PROMISSORY NOTE.
2.1 The Promissory Note is hereby amended and restated to read as
follows:
2.1.1 The principal amount of the Promissory Note shall be
reduced by FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), thereby affording
Maker with a credit availability of THIRTY MILLION AND NO/100 DOLLARS
($30,000,000.00).
2.1.2 Except to the $20,000,000.00 of Principal outstanding as
of the effective date which shall continue to bear interest at
the LIBOR Rate until the scheduled maturity date of that draw,
for any advances or readvances on or after June 30, 1998, such
advances or readvances shall bear interest as set forth
herein, and with respect to such advances or readvances, the
paragraphs entitled "Rate of Interest and Interest Payments,"
"Interest Rate Options," "Prime Rate Option," and "LIBOR Rate
Option" and all reference to "Interest Rate Options," "LIBOR
Rate," "LIBOR Rate Option," and "LIBOR" are deleted in their
entirety and in substitution therefor the following paragraph
is added:
"Rate of Interest and Interest Payments. The
outstanding principal sum shall bear interest at the
rate of the Prime Rate plus one percent (1%) per
annum, which shall be adjusted from time to time to
reflect the change in the Prime Rate on the same day
as the Prime Rate changes. "Prime Rate" means the
amount announced from time to time by Bank One as its
Prime Rate. Interest shall be calculated on a 360-day
year basis and shall be calculated by dividing the
actual number of days which elapse during the period
interest accrued by a year of 360
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days times the interest rate in effect.
The outstanding principal sum and all accrued and
unpaid interest shall be due and payable on January
31, 2000 (the "Maturity Date"). Interest shall be due
and payable on January 1, 1997 and on the first day
of each and every month thereafter until the Maturity
Date, at which time all accrued and unpaid interest,
however calculated, shall be immediately due and
payable. If any interest rate period would otherwise
expire, or any payment would be due, on any date
other than a Business Day (defined as any day other
than a Saturday, Sunday or any other day on which
banks in Dayton, Ohio are authorized by law or
governmental actions to close), then such payment
shall be due on the next Business Day."
2.2 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Maker shall fail to comply with
any of the covenants of Maker herein or if any representation or warranty by
Maker or by any guarantor herein is materially incomplete, incorrect, or
misleading as of the date hereof. As used in this Agreement, "Loan Documents"
shall include the Promissory Note and all documents executed by Maker(s) or
others in connection with the Loan which is represented by the Promissory Note.
2.3 Each reference in the Loan Documents to any of the Loan Documents
shall be a reference to such document as modified herein.
3. RATIFICATION OF LOAN DOCUMENT AND COLLATERAL.
The Loan Documents are ratified and affirmed by Maker and shall remain in full
force and effect as modified herein. Any property or rights to or interest in
property granted as security in the Loan Documents shall remain as security for
the loan and the obligations of Maker in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
Maker represents and warrants to Bank One:
4.1 No default or event of default under any of the Loan Documents as
modified hereby, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
conditions of Maker or any other person whose financial statement has been
delivered to Bank in connection with the Promissory Note from the most recent
financial statement received by Bank.
4.3 Each and all representations and warranties of Maker in the Loan
Documents are accurate on the date hereof.
4.4 Maker has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.
4.5 The Promissory Note and Loan Documents as modified herein are the
legal, valid, and binding obligation of Borrower, enforceable against Maker in
accordance with their terms.
4.6 Maker is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Maker. This Agreement has been duly executed and delivered on
behalf of Maker.
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5. BORROWER COVENANTS.
Maker covenants with Bank One:
5.1 Maker shall execute, deliver, and provide to Bank One such
additional agreements, documents, and instruments as reasonably required by Bank
One to effectuate the intent of this Agreement.
5.2 Maker fully, finally, and forever releases and discharges Bank One
and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations and suits, of whatever kind or nature, in law
or equity of Maker, whether now known or unknown to Maker, (i) in respect of the
Loan, the Loan Documents, or the actions of omissions of Bank One in respect of
the Loan or the Loan Documents and (ii) arising from events occurring prior to
the date of this Agreement. As used in this Agreement, "Loan Documents" shall
include the Promissory Note and all documents executed by Maker(s) in connection
with the Loan which is represented by the Promissory Note.
5.3 Contemporaneously with the execution and delivery of this
Agreement, Maker has paid to Bank:
5.3.1 All accrued and unpaid interest under the Promissory
Note and all amounts, other than interest and principal, due and payable by
Maker under the Loan Documents as of the date hereof.
5.3.2 A modification fee of $75,000.00.
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank One shall not be bound by this Agreement until (i) Bank One has executed
and delivered this Agreement, and (ii) Maker has executed this Agreement and has
performed all of the obligations of Maker under this Agreement to be performed
contemporaneously with the execution and delivery of this Agreement.
7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION OR
WAIVER.
The Loan Documents as modified herein contain the complete understanding and
agreement of Maker and Bank One in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall inure to
the benefit of Maker and Bank One and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of Maker, provided, however, Maker may not assign any of its
rights or delegate any of its obligations under the Loan Documents and any
purported assignment or delegation shall be void.
9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Ohio without giving effect to conflicts of law principles.
10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
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11. NOT A NOVATION.
This Agreement is a modification only and not a novation. Except for the
above-quoted modification(s), the Promissory Note, any agreement or security
document, and all the terms and conditions thereof, shall be and remain in full
force and effect with the changes herein deemed to be incorporated therein. This
Agreement is to be considered attached to the Promissory Note and made a part
thereof. This Agreement shall not release or affect the liability of any
guaranty, surety or endorser of the Promissory Note or release any owner of
collateral securing the Promissory Note. The validity, priority and
enforceability of the Promissory Note shall not be impaired hereby.
12. REAFFIRMATION OF COGNOVIT PROVISION.
Maker continues to authorize any attorney at law to appear in an action on the
Promissory Note, as modified, at any time after the same becomes due, whether by
acceleration or otherwise, in any court of record in or of the State of Ohio, or
of elsewhere, and to waive the issuing and service of process against Maker,
enter an appearance and to confess judgment in favor of Bank One against Maker
for the amount that may be due under the Promissory Note, as modified, together
with costs of suit, and to release all errors and waive all rights of appeal and
stay of execution from the judgment rendered.
WARNING: BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.
XXXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
Its: Executive Vice President
BANK ONE'S ACCEPTANCE
The foregoing Promissory Note Modification Agreement is hereby agreed to and
acknowledged this 30th day of June, 1998.
BANK ONE, NA successor by merger of
Bank One, Dayton, NA
By: /s/ Xxxxx Xxxxxxx
Its: Vice President
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THIRD AMENDMENT TO SECOND AMENDED
AND RESTATED BUSINESS LOAN AGREEMENT
This Amendment ("Amendment") is made as of the 30th day of June, 1998,
by and between Xxxxxxx, Inc. (the "Borrower") and Bank One, NA successor by
merger of Bank One, Dayton, NA (the "Bank").
WHEREAS, the Borrower and the Bank entered into a Second Amended and
Restated Business Loan Agreement dated December 31, 1996, as amended on February
27, 1997 and June 30, 1997 (the "Credit Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as set
forth below:
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms not defined herein shall have the meaning ascribed
in the Credit Agreement.
2. Section 6.3 of the Credit Agreement bearing the heading Funded Debt
to EBITDA, Current Ratio is hereby amended and restated to read as follows:
6.3 FUNDED DEBT TO EBITDA. Borrower agrees to maintain a ratio of
Funded Debt to EBITDA of not more than the ratio set forth for the
following periods measured at each quarter's end on a rolling four
quarter basis.
Periods Ratios
------- ------
04/01/98 through 06/30/98 8.50:1.00
07/01/98 through 9/30/98 7.25:1.00
10/01/98 through 12/31/98 7.25:1.00
"Funded Debt" shall be determined in accordance with GAAP and shall be
deemed to include all interest bearing borrowings plus capitalized
leases.
"EBITDA" shall be defined as earnings before interest expense, taxes
and depreciation/amortization.
3. Section 6.5 of the Credit Agreement bearing the heading Fixed Charge
Coverage is hereby amended by deleting the words and figures "and June 30, 1998
and beginning fiscal quarter ending September 30, 1998 and at each fiscal
quarter-end thereafter of not less than 1.20 to 1.00 measured on a rolling four
quarter basis" and by inserting in substitution therefore the words and figures
"of not less than 1.10 to 1.00 at fiscal quarter end June 30, 1998, September
30, 1998 and December 31, 1998 and beginning fiscal quarter ending March 31,
1999 and at each fiscal quarter-end thereafter of not less than 1.20 to 1.00
measured on a rolling four quarter basis."
4. The Business Loan Agreement "Borrowing Base" Addendum attached to
the Credit Agreement is hereby amended and restated as follows:
(a) This "Borrowing Base" Addendum to the Business Loan Agreement
governs the $30,000,000.00 Promissory Note, as amended (the
"Note"), set forth in the Agreement as an Obligation.
Borrower agrees so long as the Note or the indebtedness
represented thereby is outstanding or so long as the Agreement
is in effect, the following shall apply:
1. Note Advance Formula. The proceeds of the
Note may be advanced, repaid and readvanced an
unlimited number of times with Borrower's right to
borrowing
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under the Note limited in that the total principal
balance at any time outstanding on the Note shall not
exceed, prior to request for a draw or advance or
after a draw of advance, the borrowing base formula
as hereinafter set forth. The "Borrowing Base"
formula as of any date shall mean the lesser of:
(a) the Note amount, or
(b) the total amount of one or more of the
following:
(a) 80% of Borrower's Eligible Accounts
Receivable, plus
(b) 60% of Borrower's Eligible
Inventory, except for appliances and
electronics which shall be 55% of
Eligible Inventory of appliances and
electronics,
(c) minus the Excess Customer Deposits.
(b) Paragraph 4 is deleted in its entirety, and in substitution
the following is added:
"Excess Customer Deposits" means an amount equal to
the aggregate amount of liability to the customers of
Borrower as reflected as a current liability on its
financial statements and books and records (x) for
the period from June 30, 1998 through September 29,
1998 in excess of $11,000,000.00; (y) for the period
from September 30, 1998 through December 30, 1998 in
excess of $9,500,000.00; and (z) beginning on
December 31, 1998 and thereafter in excess of
$8,000,000.00.
(c) The words "Eligible Leasehold Improvements" are deleted from
Paragraph 5.
(d) Paragraph 6 is deleted in its entirety and in substitution
therefor the following is inserted:
6. Reporting. Not later than thirty (30) calendar days from
the end of each month and more frequently, if requested by
Bank One, Borrower will supply a compliance certificate in a
form and format acceptable to Bank One, certifying Borrower's
compliance with the Loan Documents and such other reports as
Bank One may reasonably request.
(e) Paragraph 8 is deleted in its entirety.
5. The Borrower represents and warrants that (a) the
representations and warranties contained in the Credit Agreement are true and
correct in all material respects as of the date of this Amendment, (b) no
condition, act or event which could constitute an Event of Default under the
Credit Agreement exists, and (c) no condition, event, act or omission has
occurred, which, with the giving of notice or passage of time, would constitute
an Event of Default under the Credit Agreement.
6. This Amendment shall become effective only after it is fully
executed by the Borrower and the Bank. Except as amended by this Amendment, the
Credit Agreement shall remain in full force and effect in accordance with its
terms.
7. This Amendment is a modification only and not a novation.
Except for the above- quoted modification(s), the Credit Agreement, any
agreement or security document, and all the terms and conditions thereof, shall
be and remain in full force and effect with the changes herein deemed to be
incorporated herein. This Amendment is to be considered attached to the Credit
Agreement and made a part hereof. This Amendment shall not release or affect the
liability of any guarantor, surety or endorser of the Credit Agreement or
release any owner of collateral securing the Credit Agreement. The validity,
priority and enforceability of the Credit Agreement shall not be impaired
hereby. To the extent that any provision of this Amendment conflicts with any
term or condition set forth in the Credit Agreement, or any agreement or
security document executed in conjunction therewith, the provision of this
Amendment shall supersede and control. Borrower acknowledges
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that as of the date of this Amendment it has no offsets with respect to all
amounts owned by Borrower to Bank and Borrower waives and releases all claims
which it may have against Bank arising under the Credit Agreement on or prior to
the date of this Amendment.
8. The Borrower acknowledges and agrees that this Amendment is limited
to the terms outlined above, and shall not be construed as an amendment of any
other terms or provisions of the Credit Agreement; the Borrower hereby
specifically ratifies and affirms the terms and provisions of the Credit
Agreement. Borrower releases Bank from any and all claims which may have arisen,
known or unknown, in connection with the Credit Agreement on or prior to the
date hereof. This Amendment shall not establish a course of dealing or be
construed as evidence of any willingness on the Bank's part to grant other or
future amendments, should any be requested.
9. In substitution for the Borrowing Base Compliance Certificate dated
as of May 31, 1998 previously delivered to the Bank and contemporaneous with the
execution of this Amendment, Borrower has delivered to the Bank a Borrowing Base
Compliance Certificate dated as of May 31, 1998, restating the Borrowing Base
consistent with the amended Borrowing Base as set forth in this Amendment.
IN WITNESS WHEREOF, the parties have entered into the Agreement as of
the day and year first above written.
BANK ONE, NA BORROWER
XXXXXXX, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
Title: Vice President Title: Executive Vice President
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SECOND AMENDED AND RESTATED
BUSINESS LOAN AGREEMENT
BORROWING BASE COMPLIANCE CERTIFICATE
1. Total Eligible Accounts Receivable (AR) $_________________________
2. Total Eligible Inventory (INV) $_________________________
(excluding appliances and electronics)
3. Total Eligible Inventory - Appliances and Electronics (Excluding INV
as set forth in line 2)
(INV - A+E)
4. Available borrowing advance
A. AR 80% of line 1 $_________________________
B. INV 60% of line 2 $_________________________
C. INV - A+E 55% of line 3 $_________________________
5. Total Eligible Collateral (lines 4A thru 4C) $_________________________
6. Less: Amount of Revolver O/S $_________________________
7. Less: Standby Letters of Credit $_________________________
8. Less: Excess Customer Deposits $_________________________
9. Line 6 plus line 7 plus line 8 $_________________________
10. Lesser of line 5 or line 9 $_________________________
11. Principal Balance available for borrowing $_________________________
(line 5 minus line 10)
(If line 11 is a negative number, then a "pay down"
in accordance with the Borrowing Base Addendum is required)
===============================================================================
Withholding Taxes and FICA Taxes due have been paid in full as of the date
hereof.
______ Yes ______ No
===============================================================================
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For the purpose of inducing Bank One, NA to advance money to Borrower against
the balance of funds available under Borrower's $30,000,000.00, Promissory Note
dated December 31, 1996, as amended, and pursuant to the terms and provisions of
Borrower's Second Amended and Restated Business Loan Agreement ("Agreement")
dated December 31, 1996, as amended, Borrower hereby certifies and affirms that
this Borrowing Base Compliance Certificate is true, complete and correct
according to the books and records of Borrower and is available as acceptable
Collateral for advances in accordance with the representations and warranties
set forth in the Agreement. As of today's date, Borrower was in full compliance
with all terms, conditions, covenants and provisions of the Agreement. To the
best of Borrower's knowledge, Borrower is not aware of any Event of Default
under the Agreement or any facts or circumstances which by itself, with the
passage of time, or the giving of notice, might give rise to any Event of
Default.
XXXXXXX, INC.
Date: _____________________ By: __________________
Its: _________________
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