Southwest Bank An M&I Bank April 2, 2008 Siboney Learning Group, Inc. and Siboney Corporation Mr. William D. Edwards, President St. Louis, MO 63122 Dear Mr. Edwards:
Exhibit 10(i)
Southwest Bank
An M&I
Bank
April 2,
2008
Siboney
Learning Group, Inc. and
Siboney
Corporation
Xx.
Xxxxxxx X. Xxxxxxx, President
000 X.
Xxxxxxxx Xx., #000
Xx.
Xxxxx, XX 00000
Dear Xx.
Xxxxxxx:
This
Letter Agreement (the “Agreement”) is made and entered into as of this
2nd day of
April 2008 by and between Siboney Learning Group, Inc.
and Siboney Corporation
(the “Borrower”) and Southwest Bank, an M&I Bank (the
“Lender”).
Borrower
covenants that so long as any obligation is owed to Lender or Lender has any
outstanding commitment to lend to Borrower, under the terms and conditions of
(i) that certain Promissory Note dated as of April 2, 2008 in the principal
amount of up to $1,500,000.00 (the “Revolving
Credit Limit”) executed by Borrower in favor of Lender (the “Revolving Loan”),
and (ii) that certain Promissory Note dated as of April 2, 2008, in
the principal amount of $709,197.92, executed by
Borrower in favor of Lender (the “Term Loan”) or under any note(s) evidencing a
loan, (the “Note(s)”) and all extensions, renewals or modifications of the
Note(s). The Revolving Loan(s) and Term Loan collectively are called (the
“Loan(s)”):
Note(s) and all indebtedness (the “Obligations”) include, without
limitation all obligations, indebtedness and liabilities arising pursuant to or
in connection with any interest rate swap transaction, basis swap, forward rate
transaction, interest rate option, price risk hedging transaction or any similar
transaction between the Borrower and Lender:
|
1.
|
Lender
shall have received the following security documents (the “Security
Documents”) in form and substance satisfactory to
Lender:
|
|
|
|
(i)
|
The
Note(s);
|
|
|
(ii)
|
General
Business Security Agreements from Siboney Learning Group, Inc. and Siboney
Corporation, dated as of June 1, 2003;
|
|
|
(iii)
|
UCC
Financing Statements as required by Lender;
|
|
|
(iv)
|
Organization
Perfection Certificates from Siboney Learning Group, Inc. and Siboney
Corporation;
|
|
|
(v)
|
Subordination
Agreement signed by Xxxxxxx X. Xxxxxxx; and
|
|
|
(vi)
|
Subordination
Agreement signed by Xxxxx X. Xxxxxxx.
|
|
2.
|
Borrower
shall furnish to Lender, as soon as available, such financial information
respecting Borrower as Lender from time to time requests, and without
request furnish to Lender:
|
|
|
|
(i)
|
Within
120 days after the end of each fiscal year of Borrower, a consolidated
balance sheet of Siboney Corporation and its subsidiaries as of the close
of such fiscal year and related consolidated statements of income and
retained earnings and cash flow for such year all in reasonable detail and
satisfactory in scope to Lender, prepared in accordance with generally
accepted accounting principles applied on a consistent basis, audited by
an independent
certified public accountant of Borrower, selected by borrower and
acceptable to Lender.
|
|
|
(ii)
|
Within
45 days after the end of each quarter, a balance sheet of Borrower as of
the end of such quarter and related statements of income and retained
earnings and cash flow for the period from the beginning of the fiscal
year to the end of such quarter, prepared in accordance with generally
accepted accounting principles applied on a consistent basis certified,
subject to normal year-end adjustments, by a financial representative of
Borrower.
|
|
3.
|
Borrower
shall timely perform and observe the following financial covenant(s),
calculated in accordance with generally accepted accounting principles
applied on a consistent basis:
|
|
|
|
(i)
|
Maintain
at all times an EBITDA of not less than $1,075.00 on March 31, 2008,
$620,000.00 on June 30, 2008, $890,000.00 on September 30, 2008 and
$1,256,000.00 on December 31, 2008, tested quarterly. “EBITDA” shall mean,
for any period, operating income for such period plus all amounts deducted
in arriving at such operation income in respect of (i) all interest
expense with respect to all indebtedness, (ii) all taxes imposed on or
measured by income or excess profits (whether deferred or paid), (iii) all
charges for depreciation of fixed assets and (iv) charges for amortization
of intangibles.
|
|
4.
|
This
Letter Agreement amends and restates in its entirety a Letter Agreement
dated April 2, 2007 between Siboney Learning Group, Inc. and Siboney
Corporation (the “Borrower”) and Southwest Bank of St. Louis (the
“Lender”).
|
|
|
5.
|
As
required by the terms of the Subordination Agreements referenced above,
Lender hereby consents to the form, terms, provisions and conditions of,
and arrangements contemplated by (i) that certain Note and Warrant
Purchase Agreement dated as of March 21, 2007 to be executed by and among
Borrower, Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx, in the form attached
hereto as Exhibit
A,
(ii) the 10% Subordinated Secured Note to be executed by Borrower in favor
of Xxxxxxx X. Xxxxxxx in form attached hereto as Exhibit
B,
(iii) the 10% Subordinated Secured Note to be executed by Borrower in
favor of Xxxxx X. Xxxxxxx in the form attached hereto as Exhibit
C,
(iv) the Warrant to be given by Siboney Corporation in favor of Xxxxxxx X.
Xxxxxxx in the form attached hereto as Exhibit
D,
(v) the Warrant to be given by Siboney Corporation in favor of Xxxxx X.
Xxxxxxx in the form attached hereto as Exhibit
E
and (vi) the Security Agreement to be executed by Borrower in favor of
Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx in the form attached hereto as
Exhibit
F
(collectively, the “Subordinated
Debt Documents”).
|
A breach
of any term or condition in this Agreement or Obligations shall constitute an
additional event of default under the Note(s) and Lender may, at its option,
declare the Note(s) due and payable, and may pursue all remedies available to it
with regard to the Note(s). The undersigned shall reimburse Lender for all
expenses incurred by it in protecting or enforcing its rights under this
Note(s), including without limitation, costs of administration of the Note(s)
and costs of collection before and after judgment, including reasonable
attorney’s fees and legal expenses.
In the case of any ambiguity or conflict between this Agreement, any
note evidencing a Loan, or any Security Document, this Agreement will
govern.
Please
confirm your acknowledgment and acceptance of the terms and conditions of this
Agreement by signing and dating below.
Very truly yours, | Very truly yours, |
By: /s/ Xxxxx Xxxxxx
|
By: /s/ Xxxxx
Xxxxxx
|
Xxxxx Xxxxxx
|
Title: Senior Vice
President
|
Accepted
and Agreed as of March 28, 2008
|
|
Siboney Learning Group,
Inc.
|
Siboney
Corporation
|
By: /s/ Xxxxxxx X.
Xxxxxxx,
Xx.
|
By: /s/ Xxxxxxx X.
Xxxxxxx,
Xx.
|
Xxxxxxx
X. Xxxxxxx, President
|
Xxxxxxx
X. Xxxxxxx, Executive Vice President
|
By: /s/ Xxxxxxx X.
Xxxxxxxx
|
By: /s/
Xxxxxxx X.
Xxxxxxxx
|
Xxxxxxx
Xxxxxxxx, Secretary
|
Xxxxxxx
Xxxxxxxx, Secretary
|