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Exhibit 10(q)
PROMISSORY NOTE MODIFICATION AGREEMENT
This Agreement is made and entered into on July _____, 1999, by and between DMI
FURNITURE, INC., a Delaware corporation, (the "Maker") and BANK ONE, INDIANA,
N.A. (the "Bank").
WITNESSETH:
WHEREAS, Maker heretofore executed a promissory note in the amount of
$20,000,000.00 dated July 2, 1998, in favor of Bank as same may have been
amended or modified from time to time ("Promissory Note"); and, WHEREAS, Maker
hereby acknowledges, agrees, verifies, ratifies and affirms that as of July 16,
1999, the outstanding principal balance on the Promissory Note is FOURTEEN
MILLION EIGHT HUNDRED FIFTY THREE HUNDRED THIRTY SEVEN AND 71/100 DOLLARS
($14,850,337.71) plus accrued interest and charges; and, WHEREAS, the Promissory
Note has at all times been, and is now, continuously and without interruption
outstanding in favor of Bank; and WHEREAS, Maker has requested that the
Promissory Note be modified to the limited extent as hereinafter set forth; and,
WHEREAS, Bank has agreed to such modification; NOW THEREFORE, by mutual
agreement of the parties and in mutual consideration of the agreements contained
herein and for other 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 acknowledges the accuracy of the Recitals, stated above.
2. MODIFICATION OF PROMISSORY NOTE.
2.1. The principal amount of the Promissory Note shall be increased by
THREE MILLION AND NO/DOLLARS ($3,000,000), thereby affording Maker with a
credit availability of TWENTY-THREE MILLION AND NO/DOLLARS ($23,000,000.00)
until February 27, 2000, at which time the principal amount of the Promissory
Note shall be reduced by THREE MILLION AND NO/DOLLARS ($3,000,000), thereby
affording Maker with credit availability of TWENTY MILLION AND NO/DOLLARS
($20,000,000.00) until December 31, 2000.
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 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
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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:
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.
5. BORROWER COVENANTS.
Maker covenants with Bank:
5.1 Maker shall execute, deliver, and provide to Bank such additional
agreements, documents, and instruments as reasonably required by Bank to
effectuate the intent of this Agreement.
5.2 Maker fully, finally, and forever releases and discharges Bank and
its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, cause 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 or omissions of Bank 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 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 the date hereof.
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6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank shall not be bound by this Agreement until (i) Bank has executed and
delivered this Agreement, (ii) Maker has performed all of the obligations of
Maker under this Agreement to be performed contemporaneously with the execution
and delivery of this Agreement, (iii) each guarantor of the Loan, if any, has
executed this Agreement and (iv) if required by Bank, Maker and any guarantor
have executed and delivered to Bank an arbitration resolution, and an
environmental questionnaire, and an environmental certification and indemnity
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 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 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 right
or delegate any of its obligation 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 Indiana 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.
11. NOT A NOVATION.
This Agreement is a modification only and not a novation. Except for the above
quoted modification, 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 guarantor,
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.
DMI FURNITURE, INC.
By: ______________________________
Xxxxxx X. Xxxx, VP/CFO
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BANK'S ACCEPTANCE
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The foregoing Second Modification Agreement to Promissory Note is hereby agreed
to and acknowledged this _____ day of July, 1999.
BANK ONE, INDIANA, N.A.
By: ____________________________
Xxxxx X. Little, Vice President
ACKNOWLEDGMENT AND AGREEMENT BY GUARANTOR AND
OWNER OF COLLATERAL SECURING THE PROMISSORY NOTE.
The undersigned (i) consent to the modification of the Loan Documents and all
other matters in the foregoing Agreement and, if a guarantor (ii) reaffirm the
Guaranty Agreement dated June 9, 1994, and any other agreements, documents and
instruments securing or otherwise relating thereto ("Guarantor Documents"),
(iii) acknowledge that the Guarantor Documents continue in full force and
effect, remain unchanged, except as specifically modified hereby, and are valid,
binding and enforceable in accordance with their respective terms, (iv) agree
that all references, if any, in the Guarantor Documents to any of the Loan
Documents are modified to refer to those documents as modified by the Agreement,
and (v) agree to be bound by the release of Bank set forth in the Agreement.
DMI MANAGEMENT, INC.
By: ______________________________________
Xxxxxx X. Xxxx, CFO
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