EXHIBIT 10.40
SIXTH LOAN MODIFICATION AGREEMENT
THIS SIXTH LOAN MODIFICATION AGREEMENT (the "Agreement") is made this 27th
day of December, 2002, by and among:
CADLEROCK JOINT VENTURE, LP ("CadleRock"), an Ohio limited partnership with
a principal place of business at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxx, XX
00000-0000;
SIGHT RESOURCE CORPORATION (hereinafter, "Sight Resource"), a Delaware
corporation with a principal place of business at 0000 Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxx 00000;
CAMBRIDGE EYE ASSOCIATES, INC. (hereinafter, "Cambridge Eye"), a Delaware
corporation with a principal place of business at Xxx Xxxxxxxx Xxxxxx, Xxxx 0X,
Xxxxxx, Xxxxxxxxxxxxx;
XXXXXXX VISION WORLD, INC. (hereinafter, "Douglas Vision"), a Delaware
corporation with a principal place of business at Xxx Xxxxxxxx Xxxxxx, Xxxx 0X,
Xxxxxx, Xxxxxxxxxxxxx;
X. X. XXXXX OPTICIANS, INC. (hereinafter, "X. X. Xxxxx"), a Delaware
corporation with a principal place of business at 0000 X. 00xx Xxxxxx,
Xxxxxxxxx, Xxxx;
EYEGLASS EMPORIUM, INC. (hereinafter, "Eyeglass Emporium"), a Delaware
corporation with a principal place of business at c/o Sight Resource
Corporation, 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000;
KENT OPTICAL COMPANY, f/k/a KENT ACQUISITION CORP. (hereinafter, "Kent
Optical"), a Delaware corporation with a principal place of business at c/o
Sight Resource Corporation, 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000;
SHAWNEE OPTICAL, INC. (hereinafter, "Shawnee Optical"), a Delaware
corporation with a principal place of business at 0000 X. 00xx Xxxxxx, Xxxx,
Xxxxxxxxxxxx;
VISION PLAZA, CORP. (hereinafter, "Vision Plaza"), a Delaware corporation
with a principal place of business at 0000 Xxxxxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx
00X, Xxxxxxxx, Xxxxxxxxx; and
KENT OPTOMETRIC PROVIDERS, P.C. (hereinafter, "Kent PC"), a Michigan
professional corporation with a principal place of business at 000 Xxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000.
Hereinafter, Sight Resource, Cambridge Eye, Xxxxxxx Vision, X. X. Xxxxx,
Eyeglass Emporium, Kent Optical, Shawnee Optical, Vision Plaza, and Kent PC and
shall be referred to individually and collectively, jointly, and severally, as
the "Obligors" or the "Obligor."
R E C I T A L S
A. Reference is hereby made to certain loan arrangements (hereinafter,
the "Loan Arrangements") entered into by and between Sight Resource,
Cambridge Eye, Xxxxxxx Vision, X. X. Xxxxx, Eyeglass Emporium, Kent
Optical, Shawnee Optical, Vision Plaza (hereinafter, individually and
collectively, the "Original Borrowers") and Fleet National Bank (as
successor-in-interest to Sovereign Bank, as successor-in-interest to Fleet
National Bank, and hereinafter referred to as "Fleet"), evidenced by, among
other things, the following documents, instruments, and agreements
(hereinafter collectively, together with this Agreement and all documents,
instruments, and agreements executed incidental hereto, and contemplated
hereby, the "Loan Documents"):
1. Loan Agreement (hereinafter, as amended, the "Loan Agreement")
dated April 15, 1999, entered into by and between Fleet and the
Original Borrowers;
2. Secured Revolving Line Note (hereinafter, the "Revolving
Note") dated April 15, 1999 in the maximum principal amount of
$3,000,000.00 made by the Original Borrowers payable to Fleet;
3. Secured Term Note (hereinafter, the "Term Note") dated April
15, 1999 in the original principal amount of $7,000,000.00 made by the
Original Borrowers payable to Fleet;
4. (i) Eight (8) Security Agreements (All Assets) dated April 15,
1999 respectively, by each of the Original Borrowers, as amended and
confirmed by certain Ratifications and Amendments of Security
Agreements dated January 31, 2002, and (ii) Security Agreement (All
Assets) dated July 31, 2002 by Kent PC (hereinafter, collectively, the
"Security Agreements"), pursuant to which each of the Obligors granted
Fleet a security interest in the Collateral (as defined in the
Security Agreements);
5. Security Agreement (Pledged Collateral) dated April 15, 1999,
pursuant to which Sight Resource assigned, transferred, and delivered
to Fleet all of the Collateral (as defined therein);
6. Modification Agreement (hereinafter, the "Modification
Agreement") dated March 31, 2000 entered into by Fleet and the
Original Borrowers;
7. Second Modification Agreement (hereinafter, the "Second
Modification Agreement") dated November 30, 2000 entered into by Fleet
and the Original Borrowers;
8. Amended and Restated Third Modification Agreement
(hereinafter, the "Third Modification Agreement") dated May 14, 2001
entered into by Fleet and the Original Borrowers;
9. Fourth Modification Agreement (hereinafter, the "Fourth
Modification Agreement") dated July 31, 2002 entered into by Fleet and
the Obligors, pursuant to which, among other things, Kent PC became
co-borrower with the Original Borrowers under the Loan Documents, as
amended, and became jointly and severally liable with the Original
Borrowers for all Obligations under the Loan Documents, as amended;
and
10. Fifth Modification Agreement (hereinafter, the "Fifth
Modification Agreement") dated November 15, 2002 entered into by Fleet
and the Obligors.
11. Common Stock Purchase Warrant dated March 31, 2000 issued by
Sight Resource in favor of Fleet.
B. The outstanding principal balance owing by Obligors to Fleet under
the Loan Documents as of the date hereof is $7,170,002. 01, of which
$2,500,000.00 represents the principal balance owing under the Revolving
Note, and $4,670,002.01 represents the principal balance owing under the
Term Note. Such outstanding principal balance plus all accrued interest,
late charges, penalties, fees, expenses and other amounts owing by Obligors
or any of them under or in respect of the Loan Documents are collectively
hereinafter referred to as the "Total Indebtedness."
C. Obligors and CadleRock have determined that it would be in their
mutual best interests (i) for CadleRock to purchase and take an assignment
of all right, title and interest of Fleet in, to and under the Loan
Documents so that the Total Indebtedness ceases to be an obligation to
Fleet and becomes an obligation to CadleRock, and (ii) for Sight Resource
to arrange for a capital infusion (the "Investment") from certain investors
(the "Investors") so as to permit Sight Resource to make a payment to
CadleRock in the amount of $1,560,000 in consideration of the reduction by
CadleRock of the remaining amount of the Total Indebtedness to $2,000,000
(after application of the $1,560,000 payment).
D. The Investors are willing to make the Investment only if CadleRock
is willing to reduce the Total Indebtedness as contemplated by the
preceding paragraph.
NOW, THEREFORE, the parties hereby agree as follows:
1. LOAN ACQUISITION. CadleRock shall use reasonable efforts to acquire, on
or before December 31, 2002, all right, title and interest of Fleet in, to and
under the Loan Documents (the "Loan Acquisition") such that CadleRock is the
party to whom the Total Indebtedness is owing.
2. LOAN REDUCTION PAYMENT. Sight Resource will pay to CadleRock or Fleet
$1,560,000 for application against the Total Indebtedness (the "Loan Reduction
Payment"). The Loan Reduction Payment shall be made by wire transfer pursuant to
such wire transfer instructions as may be furnished by CadleRock to Sight
Resource.
3. ADJUSTED TOTAL INDEBTEDNESS. Effective upon receipt by CadleRock or
Fleet of the Loan Reduction Payment, the amount of the Total Indebtedness (after
application of the Loan Reduction Payment), shall be reduced to $2,000,000 (the
"Adjusted Total Indebtedness"). Notwithstanding anything to the contrary
contained in the Loan Documents, the following shall apply:
i. The Adjusted Total Indebtedness shall be payable in full on June
30, 2004.
ii. Interest shall be charged on the Adjusted Total Indebtedness at
the rate of twelve percent (12%) per annum, and such interest shall be computed
on the basis of the actual number of days elapsed over a year of 360 days;
iii. Interest on the Adjusted Total Indebtedness shall be payable
monthly in arrears commencing on February 3, 2003 and continuing on the 1st
business day of each month thereafter, with the final payment of interest due on
June 30, 2004;
iv. At such time as the Adjusted Total Indebtedness becomes payable in
full (whether on June 30, 2004, by acceleration, upon voluntary prepayment, or
otherwise), the undersigned shall pay to CradleRock a termination fee of Two
Hundred Thousand Dollars ($200,000); and
v. If Adjusted Total Indebtedness is not paid in full when it becomes
due and payable in full, interest on unpaid balance of the Adjusted Total
Indebtedness shall thereafter be payable at an interest rate of 16% per annum.
4. ACKNOWLEDGEMENT BY OBLIGORS. Subject to and as modified by this
Agreement, the Obligors each hereby (i) acknowledge the validity and
enforceability of the Loan Documents, and (ii) acknowledge and agree that they
have no offsets, defenses, claims or counterclaims against either Fleet or
CadleRock as holder of the Loan Documents. The Obligors each hereby ratifies and
confirms the Loan Documents and agrees that, except as modified by this
Agreement, all terms and conditions of the Loan Documents shall remain in full
force and effect.
5. FURTHER ASSURANCES. The Obligors shall, upon request by CadleRock from
time to time after execution of this Agreement, execute and deliver to CadleRock
such additional documents, instruments and agreements as CadleRock may
reasonably request in order to vest or perfect the Loan Documents (as modified
hereby) and the collateral granted therein more securely in CadleRock.
6. Obligors shall defend and indemnify CadleRock and their partners,
directors, officers and stockholders (collectively the "Indemnitees") from,
against and in respect of any claim by Obligors or any other person to the
effect that, Obligors, or any person claiming by, through or under any of them,
has any claim of any type against the Indemnitees for any action taken or not
taken by Fleet prior to the Loan Acquisition. Obligors hereby release and
discharge Indemnitees from any and all such claims, and Indemnitees further
agree to indemnify Indemnitees against any and all such claims and to pay
Indemnitees' attorney fees and costs in the defense of same.
7. MODIFICATION OF LOAN COVENANTS. Notwithstanding anything to the contrary
contained in this Agreement, upon the making of the Loan Reduction Payment, the
Loan Documents shall be, and the same are hereby amended in the following
respects:
i. The Adjusted Total Indebtedness may be prepaid at any time or times
without premium or penalty.
ii. Article VII of the Loan Agreement (including any amendments of
Article VII contained in any Modification Agreement) is hereby deleted in its
entirely.
iii. Notwithstanding anything contained in the Loan Documents to the
contrary, Obligors shall be permitted to sell assets from time to time and use
the proceeds of such sales for general corporate purposes provided immediately
prior to any such sale of assets and immediately after giving effect to any such
sale of assets, the Borrowing Base exceeds the amount of the Adjusted Total
Indebtedness then outstanding.
8. WAIVER OF EXISTING DEFAULTS. Any defaults, events of defaults or
existing matters that with the passage of time would mature into a default under
the Loan Documents existing on the date of this Agreement are hereby waived and
shall be of no force and effect
9. MISCELLANEOUS. (a) This Agreement and the other documents referred to
herein contain the entire Agreement among the parties with respect to the
transactions contemplated hereby, and supersede all negotiations,
representations, warranties, commitments, and offers whether oral or written,
prior to the date hereof.
(b) No modification or amendment of any provision of this Agreement
shall be effective unless made in a written instrument, duly executed by
the party to be bound thereby, which refers specifically to this Agreement
and states that an amendment or modification is being made in the respects
set forth in such instrument.
(c) If any term, provision, covenant or condition of this Agreement is
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. This
Agreement is, and shall be deemed to be, the product of joint drafting by
the parties hereto and shall not be construed against any of them as the
drafter hereof.
(d) This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. No assignment of this Agreement shall, however,
relieve the assigning party of its obligations hereunder.
(e) This Agreement shall be governed by and construed and enforced
with accordance with the laws of the State of Ohio as applicable to
contracts executed and fully performed in the State of Ohio.
(f) No waiver of any provision of this Agreement shall be effective
unless in writing. The waiver by any party of a breach of this Agreement
shall not operate or be construed as a waiver of any subsequent breach.
(g) The captions contained in this Agreement have been inserted for
convenience of reference only and shall not affect the interpretation of
this Agreement.
(h) This Agreement may be executed simultaneously in two or more
counterparts each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument. With regard to
this Agreement, and any other document
relating to the transactions to be consummated under this Agreement, a party's
execution may be evidenced by, and a party's delivery may be effected by,
facsimile transmission.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated above.
CADLEROCK JOINT VENTURE, LP SIGHT RESOURCE CORPORATION1
By CadleRock, Inc.,
its general partner
By /s/ Xxxxxx X. Xxxxx By /s/ Xxxxxx Xxxxxxx
-------------------------------- ------------------------------------
Print Name: Xxxxxx X. Xxxxx Xxxxxx Xxxxxxx
Title: President President
CAMBRIDGE EYE ASSOCIATES, INC. XXXXXXX VISION WORLD, INC.
By /s/ Xxxxxx Xxxxxxx By /s/ Xxxxxx Xxxxxxx
-------------------------------- ------------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx
President President
X. X. XXXXX OPTICIANS, INC. EYEGLASS EMPORIUM, INC.
By /s/ Xxxxxx Xxxxxxx By /s/ Xxxxxx Xxxxxxx
-------------------------------- ------------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx
President President
KENT OPTICAL COMPANY, SHAWNEE OPTICAL, INC.
f/k/a KENT ACQUISITION CORP.
By /s/ Xxxxxx Xxxxxxx By /s/ Xxxxxx Xxxxxxx
-------------------------------- ------------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx
President President
VISION PLAZA, CORP. KENT OPTOMETRIC PROVIDERS, P.C.
By /s/ Xxxxxx Xxxxxxx By /s/ Xxxxxx X. Xxxxxx
-------------------------------- ------------------------------------
Xxxxxx Xxxxxxx Print Name: Xxxxxx X. Xxxxxx
President Title: President
