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FIFTH AMENDMENT TO
LOAN AND CO-LENDER CREDIT AGREEMENT
EXHIBIT 10.4
THIS FIFTH AMENDMENT TO LOAN AND CO-LENDER CREDIT AGREEMENT
("Amendment") is made as of the 28th day of October, 1998, among D.I.Y. HOME
WAREHOUSE, INC., an Ohio corporation, with its principal place of business
located at 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxx 00000 (the "Borrower"),
as borrower, NATIONAL CITY BANK, formerly known as National City Bank of
Columbus, a national banking association, with its principal office located at
000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000 ("NCB"), and OLD KENT BANK, formerly
known as Old Kent Bank and Trust Company, a Michigan banking corporation, with
its principal office located at Xxx Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx
00000 ("Old Kent"), as lenders (NCB and Old Kent each herein, separately, called
a "Bank" and, collectively, called the "Banks"), and NCB, as agent for itself
and Old Kent (the "Agent").
RECITALS
A. The Banks and the Borrower entered into a certain Loan and Co-Lender
Credit Agreement dated as of December 23, 1994, as amended by the First
Amendment to Loan and Co-Lender Credit Agreement dated as of December 22, 1995,
as further amended by the Second Amendment to Loan and Co-Lender Credit
Agreement dated as of December 23, 1996, as further amended by the Third
Amendment to Loan and Co-Lender Credit Agreement dated as of October 24, 1997,
and as further amended by the Fourth Amendment to Loan and Co-Lender Credit
Agreement dated as of April 4, 1998 (collectively, the "Loan Agreement"),
pursuant to which the Banks loaned to the Borrower an aggregate amount not to
exceed Nine Million Dollars ($9,000,000.00) (the "Loan").
B. The Loan is evidenced by two (2) Mortgage Notes dated December 23,
1994, by the Borrower to each of NCB and Old Kent, each in the original
principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000.00).
C. The Banks and the Borrower hereby agree that the Borrower shall pay
Old Kent all amounts owed to Old Kent under the Loan.
D. As a result of the payoff to Old Kent, the Banks, the Agent and the
Borrower agree that the services of the Agent are no longer required under the
Loan.
E. NCB and the Borrower hereby agree to certain other amendments with
respect to the Loan.
NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Agent and the Banks agree as follows:
1. Certain Definitions. Section 1.1 of the Loan Agreement is hereby
amended as follows:
"Agent" means NCB, its successors and assigns.
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"Bank" or "Banks" means NCB, its successors and assigns.
"Fiscal Month" means any of the twelve consecutive monthly fiscal
accounting periods collectively forming a Fiscal Year of the Borrower.
"Fiscal Year" means the Borrower's regular annual accounting period for
federal income tax purposes ending on the Saturday closest to December
31.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board, the
American Institute of Certified Public Accountants and the Financial
Accounting Standards Board or in such other statements by such other
entity as may be in general use by significant segments of the
accounting profession applied in the preparation of the financial
statements referred to in this Agreement and otherwise consistently
applied.
"Inventory" means all "inventory" (as defined in the UCC) now owned or
hereafter acquired by the Borrower including, without limitation, all
goods, merchandise, work-in-process, raw materials, finished goods, and
inventory held for lease to other persons, all other materials,
supplies, and tangible personal property of any kind, nature, or
description held for sale or lease or for display or demonstration, or
furnished or to be furnished under contracts of service, or which are
or which might be used or consumed in connection with the
manufacturing, packing, shipping, advertising, selling, leasing, or
furnishing of such goods, merchandise, or other personal property, all
documents of title or other documents pertaining thereto, and all
proceeds of the foregoing.
"Line of Credit Loan" means the certain loan from NCB to the Borrower
evidenced by that certain Line of Credit Agreement dated April 28,
1995, as amended, in the principal amount of $1,687,500 and any and all
other documents executed in relation to the loan, including, without
limitation, all documents executed and provided as security for the
repayment of the loan.
"Loan" or "Loans" means the that certain loan from NCB to the Borrower
in the amount of Four Million Five Hundred Thousand Dollars
($4,500,000.00).
"Loan Amount" means Four Million Five Hundred Thousand Dollars
($4,500,000.00).
"Mortgage Note" means that certain Mortgage Note executed by Borrower
in favor of NCB dated December 23, 1994 in the amount of Four Million
Five Hundred Thousand Dollars ($4,500,000.00), as amended.
"Net Losses" means, for any period, net losses of the Borrower for such
period (before taxes and before giving effect to losses incurred in
connection with discontinued business operations and extraordinary
items and without giving effect to any gain from re-appraisal or
write-up of assets after January 3, 1998), as determined in accordance
with GAAP.
"Note" or "Notes" means the Mortgage Note.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, limited liability company,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
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"Revolving Credit Agreement" is hereby deleted.
"Trade Payable" means any account payable owed by the Borrower to
vendors for the purchase of Inventory, including checks held and
Inventory received but not yet invoiced.
"UCC" means the Uniform Commercial Code in effect in the State of Ohio
from time to time.
2. Maturity Date. Section 2.4(b) of the Loan Agreement is deleted in
its entirety.
3. Negative Covenants. Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6 and 7.7 of
the Loan Agreement are deleted in their entirety and the following is inserted
in lieu thereof:
7.1 Fiscal Year Net Looses. Permit its Net Losses: (i) as at
the end of Fiscal Year 1998 to exceed $2,000,000 and (ii) as at the end
of Fiscal Years 1999 and 2000 to exceed $2,500,000.
7.2 Trade Payables. Permit its Trade Payables for any two (2)
consecutive Fiscal Months, as measured at the end of each Fiscal Month,
to be less than or equal to fifteen percent (15%) of the cost or market
value (whichever is lower) of Borrower's Inventory.
7.3 INTENTIONALLY DELETED.
7.4 INTENTIONALLY DELETED.
7.5 INTENTIONALLY DELETED.
7.6 INTENTIONALLY DELETED.
7.7 Indebtedness. Create, incur or suffer to exist any
Indebtedness other than (a) Bank Indebtedness hereunder, (b)
indebtedness incurred in connection with normal trade credit and other
accounts payable in the ordinary course of business and in accordance
with customary trade forms, (c) indebtedness owed to National City
Commercial Finance, Inc. pursuant to that certain Credit and Security
Agreement (U.S. $20,000,000) dated as of October 27, 1998 (the "NCCF
Credit Agreement"), (d) Indebtedness incurred in connection with liens
permitted pursuant to Section 7.8 and (e) existing indebtedness
identified in Exhibit A attached to this Amendment and incorporated
herein.
4. Security for Loan. Section 3.1 of the Loan Agreement is amended to
add the following sentence at the end of the Section:
The Loan is also secured by the security interests granted to NCB by
the Borrower to secure the Line of Credit Loan.
5. NCCF Loan. Section 8.12 is hereby inserted into the Loan Agreement.
8.12 NCCF Loan. The loans made by National City Commercial
Finance, Inc. to Borrower pursuant to the NCCF Credit Agreement are
paid in full.
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6. Cross Collateralization. Section 9.4 is hereby inserted into the
Loan Agreement:
9.4 Cross-Collateralization. The Loan evidenced by the
Mortgage Note is hereby cross-collateralized with the Line of Credit
Loan and all other present or future loans or indebtedness owed by
Borrower to NCB (the "Other Loans"). An event of default under the
terms and conditions of the Line of Credit Loan or Other Loans shall
constitute an Event of Default under this Loan and an Event of Default
under this Loan shall constitute an event of default under the Line of
Credit Loan and Other Loans. The Borrower hereby spreads the lien of
the Line of Credit Loan documents to this Loan and the Other Loans, and
for that purpose the Borrower hereby irrevocably grants, remises,
bargains, transfers, conveys and mortgages unto NCB the property
described in the Line of Credit Loan documents as security for (a) the
payment of this Loan and the Other Loans and (b) the performance of the
obligations of the Borrower under the Loan Documents and the Other Loan
documents. Upon an Event of Default under this Loan, the Line of Credit
Loan or the Other Loans, NCB may exercise any or all of the remedies
and rights granted to NCB under the Loan Documents, the Line of Credit
Loan documents or the Other Loan documents. Nothing herein shall
require NCB to proceed against all or any one of the properties or
collateral of the Borrower. NCB, at its option, may proceed against any
or all of Borrower's property or collateral in such order as NCB , in
its sole discretion, deems appropriate.
7. The Agent. Section 10 of the Loan Agreement is hereby deleted in its
entirety except that the provisions of Section 10 shall inure to the benefit of
Agent in respect to any actions taken or omitted to be taken by the Agent while
it was Agent under the Loan Agreement.
8. Partial Releases. Section 13.7 of the Loan Agreement is deleted in
its entirety and the following inserted in lieu thereof:
13.7 Partial Releases. Borrower shall have the right to obtain
partial releases of one or more of the Properties from the liens of
the. Mortgages subject to the following terms and conditions:
(a) At time of release, there shall not exist any Event of
Default; and
(b) Borrower shall submit a prepared partial release
instrument (the "Partial Release") in form and substance
satisfactory to NCB together with a legal description of the
Properties to be released. In addition, the Partial Release
should be accompanied with information necessary for NCB to
process the Partial Release, including the name and address of
the title insurance company, if any, to whose attention the
Partial Release should be directed, and
(c) At time of release, Borrower shall pay off and satisfy the
Notes evidencing the subject Loan relating to the Property
sought to be released from the lien of the subject Mortgage.
Borrower shall further pay at time of paydown any prepayment
premium due and owing pursuant to the terms of Section 4.01 of
the Note. Borrower shall pay all reasonable legal costs and
expenses of NCB arising in connection with each Partial
Release.
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Notwithstanding the foregoing, Bank hereby agrees to permit
Borrower to sell the North Canton Property subject to the provisions of this
paragraph. The date Borrower receives the proceeds from the sale of the North
Canton Property, Borrower shall be obligated in the amount of $2,000,000 through
the Real Estate Reserve, as that term is defined in the NCCF Credit Agreement,
pursuant to the terms of this paragraph and Section 2.3(b)(iii) of the NCCF
Credit Agreement. Borrower's obligation to fund the Real Estate Reserve shall be
at the Bank's sole discretion and shall occur upon the earlier of an Event of
Default or February 1, 2000. If the Bank requires the Borrower to fund all or a
portion of the Real Estate Reserve, the Bank shall notify National City
Commercial Finance, Inc. and Borrower in writing pursuant to Section 2.3(b)(iii)
of the NCCF Credit Agreement (the "NCCF Notification"). After sending the NCCF
Notification, the Bank, at Bank's sole discretion, may apply the Real Estate
Reserve to the payment of all or a portion of the Line of Credit Loan or Other
Loans.
9. Payment of Old Kent Note. Old Kent hereby acknowledges the payment
in full by Borrower of the Mortgage Note in favor of Old Kent. Old Kent also
hereby releases any and all security interest held by Old Kent in regard to the
repayment of the Mortgage Note in favor of Old Kent. Old Kent hereby agrees to
execute any and all reasonable documents necessary to effectuate such payment
and release of security interests.
10. Release of Agent. NCB, Old Kent, Borrower and Agent hereby agree
that the services of Agent under the Loan are no longer necessary. Therefore,
subject to the terms of Paragraph 7 of this Amendment, Agent is hereby released
from any and all obligations under the Loan Agreement arising after the date of
this Amendment.
11. Ratification and Certification as to Representations and
Warranties. The Loan Agreement is in all respects ratified and confirmed by the
parties hereto, and the Loan Agreement and this Amendment shall be read, taken
and construed as one and the same instrument. Except as modified herein, the
Loan Agreement remains unchanged and in full force and effect. Except as
otherwise defined herein, all capitalized terms shall have the meanings ascribed
to them in the Loan Agreement. The Borrower hereby acknowledges and certifies
that all other representations and warranties made in the Loan Agreement
continue to be true and correct as of the date hereof and that there are no
defaults existing under the covenants or other terms of the Loan Agreement. The
Borrower hereby ratifies and confirms the Borrower's obligations and all
liability to the Banks under the terms and conditions of the Loan Agreement and
the Mortgage Notes, and acknowledges that the Borrower has no defenses to or
rights of setoff against the Borrower's obligations and all liability to the
Banks thereunder. The Borrower hereby further acknowledges that the Banks have
performed all of the Banks' obligations to date under the Loan Agreement.
12. References to Loan Agreement. All references in each of the
Mortgage Notes to the Loan Agreement shall mean and refer to the Loan Agreement,
as amended by this Amendment.
13. Counterparts. This Amendment may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by each in manner and form sufficient to bind them and duly authorized
in the premises as of the day and year first above written.
NATIONAL CITY BANK, formerly known D.I.Y. HOME WAREHOUSE, INC.
as National City Bank of Columbus
By: /s/ XXXXXX XXXXXX By: /s/ XXXX X. XXXXXXXX
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Name: Xxxxxx Xxxxxx Name: Xxxx X. Xxxxxxxx
Its: Vice President Its: V.P. - Chief Financial Officer
OLD KENT BANK, formerly known NATIONAL CITY BANK, formerly known
as Old Kent Bank and Trust Company as National City Bank of Columbus,
as Agent
By: /s/ XXXXXX X. XXXXX By: /s/ XXXXXX XXXXXX
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Name: Xxxxxx X. Xxxxx Name: Xxxxxx Xxxxxx
Its: Senior Vice President Its: Vice President
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