EXHIBIT 10(b)
October 22, 2001
Xxxxxx Industries, Inc.
Attention: Xx. Xxxxx X. Xxxxxx
Vice President and Chief Financial Officer
X.X. Xxx 000
Xxxxxxxx, Xxxxxxx 00000
Re: Line of Credit (Account #120435-524769); Term Loan (Account
#120435-087445 and #120435-087452); Loan Agreement dated January 7,
1993, as amended April 5, 1994, February 17, 1995, March 15, 1995,
March 28, 1996, August 28, 1997, January 1, 2000, December 29, 2000,
January 31, 2001, March 15, 2001, May 15, 2001, June 15, 2001 and
September 1, 2001 (collectively "Loan Agreement") by and among Xxxxxx
Industries, Inc. ("Xxxxxx Industries") and AmSouth Bank ("the Bank").
In this letter capitalized terms shall be given the meanings indicated
in the Loan Agreement and/or in this letter.
Dear Xx. Xxxxxx:
I am writing this letter to you concerning the indebtednesses ("Indebtednesses")
referenced above of Xxxxxx Industries to the Bank and your recent request that
the Loan Agreement be amended to effect certain amendments to the Loan
Agreement, an increase in the amount of funds available under the Line of Credit
and a waiver by the Bank of compliance by Xxxxxx Industries with certain of the
covenants contained therein. In response to that request, the Bank hereby amends
the Loan Agreement as follows:
A. The term "Borrowing Base" in Section 1.02 is amended as
follows:
"BORROWING BASE" shall mean, from September 1, 2001 through October 31,
2001, the sum of (a) 90% of the Net Outstanding Amount of Eligible Accounts
other than Eligible Dating Accounts, plus (b) 80% of the Net Outstanding Amount
of Eligible Dating Accounts, plus (c) 35% of the collateral value of Eligible
Finished Goods Inventory, plus (d) 28% of the collateral value of Eligible Raw
Material Inventory. The foregoing notwithstanding, the Borrower shall be
entitled to overadvance the Line of Credit in the amount of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) (the "Overadvance Amount") in excess
of the Borrowing Base until the earlier to occur of (i) October 31, 2001, or
(ii) the consummation of the sale of substantially all of the assets
constituting the Broilmaster gas barbeque grill product line of the Borrower.
From November 1, 2001 until the Line of Credit Termination Date, "Borrowing
Base" shall mean the sum of (a) 80% of the Net Outstanding Amount of Eligible
Accounts, plus (b) 80% of the Net Outstanding Amount of Eligible Dating
Accounts, plus (c) 35% of the collateral value of Eligible Finished Goods
Inventory, plus (d) 28% of the collateral value of Eligible Raw Material
Inventory.
1
B. The definition of "Maximum Line of Credit" in Section 1.02 is
amended as follows:
MAXIMUM LINE OF CREDIT shall mean the lesser of (i)
the Borrowing Base then in effect and (ii)
$9,500,000.
C. The figure "$15,000,000" that appears in the fourth line of
Section 3.02, which was previously amended to "$10,000,000", and then further
amended to "$11,000,000", is further amended hereby to read "$9,500,000".
D. Section 3.03(a) is amended to read as follows:
(a) Commencing effective October 15, 2001, and continuing
until payment in full, interest shall accrue on the Line of
Credit Note at the rate per annum equal to one percentage
point (100 basis points) in excess of the Prime Rate in effect
from time to time; provided, however, that interest shall
accrue on the Overadvance Amount at the rate per annum equal
to three percentage point (300 basis points) in excess of the
Prime Rate in effect from time to time. All interest shall be
computed on an Actual/360 Basis and shall be payable monthly
in arrears on the 15th day of each month in each year for the
period ending on the last day of the immediately preceding
calendar month, commencing on June 15, 2001, and on the Line
of Credit Termination Date. Any change in the interest rate on
the Line of Credit Note because of a change in the Prime Rate
shall take effect on the effective date of such change in the
Prime Rate as announced by the Lender without notice to the
Borrower and without any further action by the Lender.
Effective as of October 15, 2001, all references in the Loan Documents to the
"Loan Agreement" shall mean the Loan Agreement, as heretofore modified and
amended and as further modified and amended hereby. Effective as of October 15,
2001, the words "fifteen million dollars" and figure "$15,000,000" as used in
any of the Loan Documents to refer to the maximum principal amount of the Line
of Credit Master Note, as amended to "ten million dollars" and "$10,000,000", as
further amended to read "thirty million dollars" and $30,000,000", as further
amended to read "ten million dollars" and "$10,000,000", and as further amended
to read "eleven million dollars" and "$11,000,000", are further amended to read
"nine million five hundred thousand dollars" and "$9,500,000", respectively.
In all other respects, the Loan Agreement shall remain in full force and effect
in accordance with its terms.
Xxxxxx Industries agrees to execute and deliver to the Bank an amended Modified,
Amended and Restated Line of Credit Note to reflect the decrease in the maximum
principal amount of the Line of Credit to Nine Million Five Hundred Thousand and
No/100 Dollars ($9,500,000).
2
In addition to the foregoing, the Bank waives with respect to the periods ended
September 1, 2001 and September 29, 2001, any default or Event of Default
arising out of the Borrower's failure to comply with Section 8.20 of the Loan
Agreement.
The Bank also hereby waives payment of the monthly installment of principal and
interest in the amount of One Hundred Fifty-Eight Thousand Nine Hundred
Fifty-Nine and 68/100 Dollars ($158,959.68) due under the Term Note on October
15, 2001, said waiver to effect an increase in the final payment due under the
Term Note on September 15, 2002.
The Bank and Xxxxxx Industries further agree that upon the consummation of the
Proposed Asset Sale, Xxxxxx Industries shall pay to the Bank the full amount
then outstanding under the Term Note in retirement of such Term Note. In the
event Xxxxxx Industries desires to obtain additional financing that is to be
secured by the real property of Xxxxxx Industries that currently secures the
Term Loan, the Bank shall release its security interest in the real property in
connection with the closing of such additional financing. Xxxxxx Industries
agrees that one-half of the proceeds of any such financing it obtains that is
secured by the real property collateral shall be applied to reduce the
indebtedness then outstanding under the Line of Credit.
Upon the consummation of the Proposed Asset Sale (a) proceeds of the Proposed
Asset Sale in excess of the amount applied to retire the Term Note shall be
applied by Xxxxxx Industries to the indebtedness outstanding under the Line of
Credit Note in order to reduce such indebtedness outstanding to an amount not
more than Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000),
and (b) the Bank and Xxxxxx Industries shall amend the Loan Agreement and the
Line of Credit Note, as previously amended, to reflect that the maximum
available amount under the Line of Credit is Seven Million Five Hundred Thousand
and No/100 Dollars ($7,500,000).
To evidence the acceptance of the foregoing amendment and waiver on the terms
and conditions set forth herein, please sign and return to me the enclosed copy
of this letter agreement. By so signing the enclosed copy of this letter
agreement, Xxxxxx Industries acknowledges and agrees to the following terms and
conditions of such amendment and waiver:
1. This letter agreement shall not be deemed to be an accord and
satisfaction of the Indebtednesses or any other obligation owed to the
Bank.
2. All collateral that now secures all or any of the Indebtednesses shall
continue to secure same. Nothing in this letter agreement diminishes
any security interest or lien that the Bank has in any assets securing
the Indebtednesses. All of the collateral, rights, security, and
guarantees that the Bank now has to secure any of the Indebtednesses
due from Xxxxxx Industries shall remain in full force and effect and
are hereby ratified and confirmed.
3. Except as provided by the waiver contained in this letter agreement
with respect to Section 8.20 of the Loan Agreement (the "Waiver"), the
Bank reserves all of its rights and remedies under the Loan Agreement,
the Security Documents, any other Loan Documents, and/or applicable
law, in respect of any Event(s) of Default. The current non-exercise by
the Bank of any rights and remedies which it may have shall not
constitute a release or waiver of any of its rights and/or remedies or
a release or waiver of any Event(s) of Default under the Loan
Agreement, the Security Documents, or any other Loan Documents, except
for the Waiver
3
provided in this letter agreement. The Bank specifically reserves the
right to invoke any and all rights and remedies at any time in its sole
discretion.
4. Xxxxxx Industries hereby releases, satisfies, cancels, waives, acquits,
and forever discharges the Bank, its directors, officers, employees,
agents, attorneys, successors and assigns, of and from any and all
claims, demands, actions, or causes of action of any kind or character,
arising at any time in the past, up to and including the date of this
letter agreement, which relate or pertain in any way to the
Indebtednesses and/or collection of them.
5. The Indebtednesses are owed by Xxxxxx Industries to the Bank for the
amounts (exclusive of outstanding letters of credit, ACH exposures and
the Bank's attorneys fees) herein stated and there are no defenses,
setoffs, or counterclaims with respect to any of them:
Payoff as of
General Description Obligation No. 10/15/01
------------------------ ----------------------- ------------------
Term Loan #1 #087452 $1,918,988.03
Line of Credit #524769 $7,053,068.89
6. Xxxxxx Industries agrees to pay the Indebtednesses strictly and
promptly in accordance with the terms of the applicable promissory
notes or other debt instruments, as specifically modified by the Loan
Agreement and this letter agreement.
7. Xxxxxx Industries shall pay to the Bank a fee in the amount of Five
Thousand and No/100 Dollars ($5,000.00) upon the execution of this
letter agreement.
8. Xxxxxx Industries agrees to pay to the Bank's counsel, Xxxxxx, Xxx &
Xxxx, P.A., on or before October 31, 2001, all of its attorney's fees
incurred in connection with this amendment and/or the collection of the
Indebtednesses.
Very truly yours,
/s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Vice President
cc: Xxxxxx X. Xxxxxxxx III, Esq.
S. Dagnal Xxxx, Esq.
4
ACCEPTED AND AGREED TO BY:
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------------------
Xxxxx X. Xxxxxx
Its Vice President and Chief Financial Officer
5