RENEWAL AND EXTENSION AGREEMENT
EXHIBIT 10.1
THIS
RENEWAL AND EXTENSION AGREEMENT (“Agreement”) is
entered into effective as of the
31st day of December, 2005, by and between THE FROST NATIONAL BANK, a national banking association
(“Lender”), and CRAFTMADE INTERNATIONAL, INC., a Delaware corporation (“Borrower”).
RECITALS:
A. Lender is the sole owner and holder of that one certain Revolving Promissory Note (the
“$20,000,000.00 Note”), dated November 6, 2001, executed by Borrower and payable to the order of
Lender in the original principal amount of Twenty Million and No/100 Dollars ($20,000,000.00), as
modified by a Modification, Renewal and Extension Agreement entered into October 27, 2003, and as
further modified by a Modification, Renewal and Extension Agreement entered into October 31, 2005
(collectively, the “Modification”).
B. Borrower and Lender entered into a Loan Agreement, dated November 6, 2001, as amended by a
First Amendment to Loan Agreement, dated effective as of August 13, 2003, as modified by the
Modification, as further amended by the Second Amendment to Loan Agreement, dated June 14, 2004, as
further amended by a Third Amendment to Loan Agreement, dated February 25, 2005, as further amended
by the Modification, Renewal and Extension Agreement, dated effective as of May 31, 2005 (the “2005
Modification”), and as further amended by the Amended and Restated Loan Agreement, dated October
31, 2005 (collectively, the “Loan Agreement”).
C. Lender is the sole owner and holder of that one certain Promissory Note (the “$3,000,000.00
Note”) dated February 25, 2005, executed by Borrower and payable to the order of Lender in the
original principal amount of Three Million and No/100 Dollars ($3,000,000.00), as renewed and
extend by a Renewal and Extension Agreement, dated effective March 31, 2005, and as amended by the
2005 Modification.
D. The $20,000,000.00 Note and $3,000,000.00 Note are secured by a Security Agreement dated
November 6, 2001, between Borrower and Lender, covering certain collateral as more particularly
described therein; a Security Agreement dated November 6, 2001, between Trade Source International,
Inc., a Delaware corporation, and Lender, covering certain collateral as more particularly
described therein; a Security Agreement dated November 6, 2001, between Durocraft International,
Inc., a Texas corporation, and Lender, covering certain collateral as more particularly described
therein; and a Security Agreement dated November 6, 2001, between Design Trends, LLC, a Delaware
limited liability company, and Lender, covering certain collateral as more particularly described
therein (collectively, the “Security Agreements”). The $20,000,000.00 Note, $3,000,000.00 Note,
Loan Agreement, Security Agreements and all modifications, renewals and extensions described below
are hereafter collectively referred to as the “Loan Documents.”
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E. Borrower has requested that Lender modify certain provisions of the $3,000,000.00
Note, all as hereinafter provided, and in consideration thereof Borrower has made certain
agreements with Lender as hereinafter more fully set forth.
G.
Lender has agreed to such requests, subject to the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, Borrower
and Lender hereby agree as follows:
1. Acknowledgment of Outstanding Balance. The parties hereto acknowledge that the outstanding
principal balance of the $3,000,000.00 Note as of December 27, 2005 is ZERO AND NO/100 DOLLARS
($0.00) and $3,000,000.00 is available for draw and the outstanding principal balance of the
$20,000,000.00 Note is THIRTEEN MILLION EIGHT HUNDRED TWENTY EIGHT THOUSAND AND NO/100 DOLLARS
($13,828,000.00) and $6,172,000.00 is available for draw.
2. Renewal and Extension of Maturity. The $3,000,000.00 Note is hereby renewed and the
maturity of the $3,000,000.00 Note is hereby extended to January 15, 2007.
3. Required Payments. From and after the effective date of this Agreement, principal and
interest under the $3,000,000.00 Note shall be due and payable as follows:
Interest only on amounts outstanding hereunder shall be due and payable monthly as it
accrues, on the last day of each and every calendar month, beginning January 31, 2006, and
continuing regularly and monthly thereafter until January 15, 2007, when the entire amount
hereof, principal and interest then remaining unpaid, shall be then due and payable;
interest being calculated on the unpaid principal each day principal is outstanding and all
payments made credited to any collection costs and late charges, to the discharge of the
interest accrued and to the reduction of the principal, in such order as Lender shall
determine.
6. Usury. No provisions of this Agreement or the Loan Documents shall require the payment or
permit the collection, application or receipt of interest in excess of the maximum permitted by
applicable state or federal law. If any excess of interest in such respect is herein or in any such
other instrument provided for, or shall be adjudicated to be so provided for herein or in any such
instrument, the provisions of this paragraph shall govern, and neither Borrower nor any endorsers
of the $20,000,000.00 Note or $3,000,000.00 Note nor their respective successors, assigns or
personal representatives shall be obligated to pay the amount of such interest to the extent it is
in excess of the amount permitted by applicable law. It is expressly stipulated and agreed to be
the intent of Borrower and Lender to at all times comply with the usury and other laws relating to
the Loan Documents and any subsequent revisions, repeals or judicial interpretations thereof, to
the extent applicable thereto. In the event Lender or other holder of the $20,000,000.00 Note or
$3,000,000.00 Note ever receives, collects or applies as interest any such excess, such amount
which would be excessive interest shall be applied to the reduction of the unpaid principal
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balance of the $20,000,000.00 Note or $3,000,000.00 Note and, if upon such application the
principal balance of the $20,000,000.00 Note or $3,000,000.00 Note is paid in full, any remaining
excess shall be forthwith paid to Borrower and the provisions of the Loan Documents shall
immediately be deemed reformed and the amounts thereafter collectible thereunder reduced, without
the necessity of execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for thereunder. In determining
whether or not the interest paid or payable under any specific contingency exceeds the maximum
interest allowed to be charged by applicable law, Borrower and Lender or other holder hereof shall,
to the maximum extent permitted under applicable law, amortize, prorate, allocate and spread the
total amount of interest throughout the entire term of the $20,000,000.00 Note or $3,000,000.00
Note so that the amount or rate of interest charged for any and all periods of time during the term
of the $20,000,000.00 Note or $3,000,000.00 Note is to the greatest extent possible less than the
maximum amount or rate of interest allowed to be charged by law during the relevant period of time.
Notwithstanding any of the foregoing, if at any time applicable laws shall be changed so as to
permit a higher rate or amount of interest to be charged than that permitted prior to such change,
then unless prohibited by law, references in the $20,000,000.00 Note or $3,000,000.00 Note to
“applicable law” for purposes of determining the maximum interest or rate of interest that can be
charged shall be deemed to refer to such applicable law as so amended to allow the greater amount
or rate of interest.
7. Release
and Waiver of Claims. In consideration of (i) the modification of certain
provisions of the Note, as herein provided, and (ii) the other benefits received by Borrower
hereunder, Borrower hereby RELEASES, RELINQUISHES and forever DISCHARGES Lender, as well as its
predecessors, successors, assigns, agents, officers, directors, employees and representatives, of
and from any and all claims, demands, actions and causes of action of any and every kind or
character, past or present, which Borrower may have against Lender and its predecessors,
successors, assigns, agents, officers, directors, employees and representatives arising out of or
with respect to (a) any right or power to bring any claim against Lender for usury or to pursue any
cause of action against Lender based on any claim of usury, and (b) any and all transactions
relating to the Loan Documents occurring prior to the date hereof, including any loss, cost or
damage, of any kind or character, arising out of or in any way connected with or in any way
resulting from the acts, actions or omissions of Lender, and its predecessors, successors, assigns,
agents, officers, directors, employees and representatives, including any breach of fiduciary duty,
breach of any duty of fair dealing, breach of confidence, breach of funding commitment, undue
influence, duress, economic coercion, conflict of interest, negligence, bad faith, malpractice,
intentional or negligent infliction of mental distress, tortious interference with contractual
relations, tortious interference with corporate governance or prospective business advantage,
breach of contract, deceptive trade practices, libel, slander or conspiracy, but in each case
only to the extent permitted by applicable law.
8. Reaffirmation
of Representations, Etc. Borrower hereby reaffirms to Lender each
of the representations, warranties, covenants and agreements of Borrower set forth in the Loan
Documents.
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9. Enforceable Obligations. Borrower hereby ratifies, affirms, reaffirms, acknowledges,
confirms and agrees that the Loan Documents represent valid and enforceable obligations of
Borrower, and Borrower further acknowledges that there are no existing claims, defenses, personal
or otherwise, or rights of setoff whatsoever with respect to the $20,000,000.00 Note and
$3,000,000.00 Note, and Borrower further acknowledges and represents that no event has occurred and
no condition exists which would constitute a default under the Loan Documents or this Agreement,
either with or without notice or lapse of time, or both.
10. No Release of Liens. This Agreement in no way acts as a release or relinquishment of the
liens, security interests and rights (the “Liens”) created or evidenced by the Security
Agreements. The Liens are hereby ratified and confirmed by Borrower in all respects and are
extended to secure (i) the principal amount of the $20,000,000.00 Note and $3,000,000.00 Note, (ii)
all interest, charges and other sums payable with respect thereto, and (iii) the performance of all
other obligations under the Security Agreements.
11. Additional Renewals and Extensions. Notwithstanding anything to the contrary contained
herein or inferred hereby or in any other instrument executed by Borrower or in any other action or
conduct undertaken by Borrower on or before the date hereof, the agreements, covenants and
provisions contained herein shall constitute the only evidence of Lender’s consent to extend the
terms and provisions of the Loan Documents in the manner set forth herein. No express or implied
consent to any further extensions and/or modifications involving any of the matters set forth in
this Agreement or otherwise, shall be inferred or implied from Lender’s execution of this
Agreement. Further, Lender’s execution of this Agreement shall not constitute a waiver (either
express or implied) of the requirement that any further extensions and/or modifications of the Loan
Documents shall require the express written approval of Lender, no such approval (either express or
implied) having been given as of the date hereof.
12. Miscellaneous. (a) As modified hereby, the provisions of the $20,000,000.00 Note and
$3,000,000.00 Note and the Security Agreements shall continue in full force and effect, and the
Borrower acknowledges and reaffirms its liability to Lender thereunder. In the event of any
inconsistency between this Agreement and the terms of the Loan Documents, this Agreement shall
govern.
(b) Borrower hereby agrees to pay all costs and expenses incurred by Lender in connection with
the execution and administration of this Agreement and the modification of the Loan Documents
including, but not limited to, all appraisal costs, title insurance costs, legal fees incurred by
Lender and filing fees.
(c) Any default by Borrower in the performance of its obligations herein contained shall
constitute a default under the Loan Documents and shall allow Lender to exercise all of its
remedies set forth in the Loan Documents.
(d) Lender does not, by its execution of this Agreement, waive any rights it may have against
any person not a party to this Agreement.
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(e) In case any of the provisions of this Agreement shall for any reason be held to be
invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
(f) This Agreement and the Loan Documents shall be governed and construed according to the
laws of the State of Texas (without regard to any conflict of laws principles) and the applicable
laws of the United States.
(g) This Agreement shall be binding upon and inure to the benefit of Lender, Borrower and
their respective successors, assigns and legal representatives.
(h) Borrower hereby acknowledges and agrees that it has entered into this Agreement of its own
free will and accord and in accordance with its own judgment after advice of its own legal counsel,
and states that it has not been induced to enter into this Agreement by any statement, act or
representation of any kind or character on the part of the parties hereto, except as expressly set
forth in this Agreement.
(i) This Agreement may be executed in multiple counterparts, each of which shall constitute an
original instrument, but all of which shall constitute one and the same agreement.
(j) Except as modified herein, all other terms, conditions and provisions of Loan Documents
shall remain in full force and effect as of the date thereof and Borrower acknowledges and
reaffirms its liability to Lender thereunder.
EXECUTED as of the day and year first above written.
| BORROWER: | ||||
| CRAFTMADE INTERNATIONAL, INC., | ||||
| a Delaware corporation | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice President | ||||
| LENDER: | ||||
| THE FROST NATIONAL BANK, | ||||
| a national banking association | ||||
| By: | /s/ D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President | ||||
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Guarantor Ratification of Agreement
By executing this Agreement, DUROCRAFT INTERNATIONAL, INC., a Texas corporation; TRADE
SOURCE INTERNATIONAL, INC., a Delaware corporation; DESIGN TRENDS, LLC, a Delaware limited
liability company; and C/D/R INCORPORATED, a Delaware corporation, as Guarantors of the
indebtedness evidenced by the $20,000,000.00 Note and $3,000,000.00 Note, as set forth in Guaranty
Agreements (collectively, the “Guarantys”) dated November 6, 2001, hereby expressly agree (a) to
all of the terms and provisions of this Agreement, (b) to the continuing validity of the Guarantys
and all duties and obligations thereunder, (c) that their liability under the Guarantys shall not
be reduced, altered, limited, lessened or in any way affected by the execution and delivery of this
Agreement by the parties hereto, and (d) that the Guarantys shall remain in full force and effect
and enforceable in accordance with their terms.
| DUROCRAFT INTERNATIONAL, INC., | ||||
| a Texas corporation | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇▇▇▇▇▇▇, Secretary | ||||
| TRADE SOURCE INTERNATIONAL, INC., | ||||
| a Delaware corporation | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇▇▇▇▇▇▇, Secretary | ||||
| DESIGN TRENDS, LLC, | ||||
| a Delaware limited liability company | ||||
| By: Craftmade International, Inc., | ||||
| a Delaware corporation, its Manager | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice President | ||||
| C/D/R INCORPORATED, | ||||
| a Delaware corporation | ||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||
| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, V.P. Marketing | ||||
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