Exhibit 10.10
FIRST AMENDMENT OF BUSINESS LOAN AGREEMENT
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AND RELATED DOCUMENTS
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THIS FIRST AMENDMENT OF BUSINESS LOAN AGREEMENT AND RELATED
DOCUMENTS (the "First Amendment") is made effective as of the
28th day of August, 2003, between PETMED EXPRESS, INC., a Florida
corporation (the "Borrower"), and SOUTHTRUST BANK, an Alabama
banking corporation (the "Lender"). Capitalized terms used
herein but not defined shall have the meanings as set forth in
the Loan Agreement (as hereinafter defined).
WHEREAS, pursuant to the terms of that certain Business Loan
Agreement (Asset Based) dated March 18, 2003 (the "Loan
Agreement"), Lender extended to Borrower a line of credit loan
(the "Loan") in the amount of up to $2,000,000.00, which Loan is
evidenced by that certain Promissory Note dated March 18, 2003
given by Borrower in favor of Lender in the principal amount of
$2,000,000.00 (the "Note"), and which Loan is secured by that
certain Commercial Security Agreement dated March 18, 2003 given
by Borrower in favor of Lender (the "Security Agreement"); and
WHEREAS, Borrower and Lender have agreed to amend the Loan
Agreement, the Note, the Security Agreement and the other Related
Documents in order to, among other things, (i) increase the
maximum principal amount of the Loan, (ii) extend the maturity
date of the Loan from July 22, 2004 until August 28, 2004, (iii)
amend the interest rate, (iv) amend the Borrowing Base, and (v)
amend certain of the financial covenants, all as more
specifically hereinafter set forth.
NOW, THEREFORE, in consideration of One Dollar ($1.00) and
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree that the Loan
Agreement, the Note, the Security Agreement and the other Related
Documents are hereby amended as follows:
The Loan Agreement is hereby amended by deleting in their
entirety the sections of the Loan Agreement entitled "TERM" and
"LINE OF CREDIT", and by substituting in lieu thereof the
following:
TERM. This Agreement shall be effective as of March
18, 2003, and shall continue in full force and effect
until such time as all of Borrower's Loans in favor of
Lender have been paid in full, including principal,
interest, costs, expenses, attorneys' fees and other
fees and charges, or until August 28, 2004.
LINE OF CREDIT. Lender agrees to make Advances to
Borrower from time to time from the date of this
Agreement to the Expiration Date, provided that the
aggregate amount of such Advances outstanding at any
time shall not exceed during any consecutive 365-day
period, the lesser of (i) $5,000,000.00 for 150
consecutive days during any applicable consecutive 365-
day period, or (ii) the Borrowing Base; and (B) at all
other times, the lesser of $3,000,000.00, or (ii) the
Borrowing Base. Within the foregoing limits, Borrower
may borrow, partially or wholly prepay, and reborrow
under this Agreement as follows:
The Loan Agreement is hereby amended by deleting in their
entirety the financial covenants and ratios relating to minimum
Tangible Net Worth and the Maximum Liability to Tangible Net
Worth ratio, and by substituting in lieu thereof the following:
TANGIBLE NET WORTH REQUIREMENTS. Borrower shall
maintain a Tangible Net Worth of not less than
$5,000,000.00.
MAXIMUM LIABILITY TO TANGIBLE NET WORTH RATIO.
Borrower shall maintain a ratio of Maximum Liability to
Tangible Net Worth of not more than 1.5 to 1.0
The Loan Agreement is hereby amended by deleting in its
entirety the definition of "Borrowing Base" and by substituting
in lieu thereof the following:
Borrowing Base. The words "Borrowing Base" mean forty-
five percent (45%) of Borrower's Eligible Inventory.
The Loan Agreement, the Note, the Security Agreement and the
other Related Documents are hereby amended by changing all
references to the principal amount of the Note or the maximum
amount of the Loan from Two Million and 00/100 Dollars (or
$2,000,000.00) to Five Million and 00/100 Dollars or
($5,000,000.00).
The Note is hereby amended by deleting in their entirety the
sections of the Note entitled "PAYMENT" and "VARIABLE INTEREST
RATE" and by substituting in lieu thereof the following:
PAYMENT. Borrower will pay this loan in one payment of
all outstanding principal plus all accrued unpaid
interest on August 28, 2004. In addition, Borrower
will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning April
22, 2003, with all subsequent interest payments to be
due on the same day of each month after that. Unless
otherwise agreed or required by applicable law,
payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount
to any unpaid collection costs and late charges. The
annual interest rate for this Note is computed on a
365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal
balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as
Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note
is subject to change from time to time based on changes
in an independent index which is the published thirty
(30) day London Interbank Offered Rate ("LIBOR") (the
"Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes
unavailable during the term of this loan, Lender may
designate a substitute index after notice to Borrower.
Lender will tell Borrower the current Index rate upon
Borrower's request. The interest rate change will not
occur more often than each day. The frequency of the
rate change is further defined below in paragraph
titled "VARIABLE RATE CHANGE FREQUENCY". Borrower
understands that Lender may make loans based on other
rates as well. The interest rate to be applied to the
unpaid principal balance of this Note will be at a rate
of 2.4 percentage points over the Index. Under no
circumstances will the effective rate of interest on
this Note be more than the maximum rate allowed by
applicable law.
The last sentence of the section in the Note entitled
"INTEREST AFTER DEFAULT" is amended to read as follows:
Upon default the total sum due under this Note
will bear interest from the date of acceleration or
maturity at the highest rate allowed by applicable law.
The Loan Agreement, the Note, the Security Agreement and the
other Related Documents are hereby amended by deleting any
reference to a 45-day "clean-up period".
Borrower hereby grants, bargains, sells, transfers, assigns,
sets over, conveys, re-grants, re-bargains, re-sells, re-
transfers, re-assigns, re-sets over and re-conveys to Lender, its
successors and assigns, a lien and security interest in the
Collateral (as defined in the Security Agreement), and Borrower
hereby ratifies and affirms the Loan Agreement, the Note, the
Security Agreement and each other Related Document. Borrower
authorizes Lender to prepare and file UCC financing statements in
such form and in such jurisdictions as may be reasonably required
by Lender.
Except as may be modified or waived by Lender, in its sole
discretion, the effectiveness of this First Amendment shall be
subject to full and complete satisfaction of the following
conditions:
Resolutions. Lender shall have received appropriate
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resolutions of Borrower's directors, in form and
substance satisfactory to Lender, authorizing
Borrower to enter into this First Amendment and
any other documentation required by Lender in
connection with this First Amendment.
Incumbency and Bringdown Certificate. Lender shall have received
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a Bringdown and Incumbency Certificate of Borrower, in form and
substance satisfactory to Lender.
Payment of Fees and Expenses. Lender shall have
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received from Borrower a $14,000.00 commitment
fee, together with the payment of all fees and
expenses required by the Loan Agreement, the Note,
the Security Agreement and the other Related
Documents, including, but not limited to, taxes
and other recording charges in connection with the
recording of any UCC financing statements and the
fees and expenses of Lender's legal counsel.
Borrower represents and warrants to Lender that all
representations and warranties given by Borrower in the Loan
Agreement, the Note, the Security Agreement and the other Related
Documents and any amendments thereto are true and correct as of
the date hereof, except to the extent affected by this First
Amendment. Borrower represents and warrants to Lender that
Borrower is in full compliance with all of the covenants of
Borrower contained in the Loan Agreement, the Note, the Security
Agreement and the other Related Documents and the amendments
thereto, except to the extent affected by this First Amendment.
Except as heretofore or herein expressly modified, or as may
otherwise be inconsistent with the terms of this First Amendment
(in which case the terms and conditions of this First Amendment
shall govern), all terms of the Loan Agreement, the Note, the
Security Agreement and the other Related Documents, and all
documents and instruments executed and delivered in furtherance
thereof shall be and remain in full force and effect, and the
same are hereby ratified and confirmed in all respects.
IN WITNESS WHEREOF, this First Amendment has been duly
executed as of the day and year first above written.
PETMED EXPRESS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
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Its: CFO
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SOUTHTRUST BANK
By: /s/ Xxxxxx Xxxxxx
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Its: Commercial Loan Officer
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