Exhibit 10.1 Amendment to Credit Agreement
AMENDMENT TO CREDIT AGREEMENT
THIS AMENDMENT is entered into as of June 30, 1999 by and between
FUNCO, INC., a Minnesota corporation (the "Borrower"), and MARQUETTE CAPITAL
BANK, N.A. (the "Bank"). In consideration of the mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the Borrower and the
Bank agree as follows:
1. The Credit Agreement dated June 20, 1995, by and between the
Borrower and the Bank, as amended by an Amendment to Credit Agreement dated
February 5, 1996 and by an Amendment to Credit Agreement and Security Agreement
dated June 30, 1996 and by an Amendment to Credit Agreement dated June 30, 1997
and by an Amendment to Credit Agreement dated June 30, 1998 (the "Credit
Agreement"), is amended as follows:
a. Section 2.01 of the Credit Agreement is amended to read as follows:
Section 2.01 Advances. Subject to the provisions of this
Agreement, the Bank shall make Advances to the Borrower from time to
time during the period from the date hereof to June 30, 2000, or the
earlier date of termination of the Line of Credit pursuant to Section
6.02, in an aggregate amount not exceeding at any time outstanding
$10,000,000.00 during the period from September 15, 1999 through
December 15, 1999, and in an aggregate amount not exceeding at any time
outstanding $5,000,000.00 at all other times (the "Line of Credit").
Each Advance shall be in the amount of $10,000.00 or an integral
multiple thereof. Within the limits of the Line of Credit, the Borrower
may borrow, prepay, and reborrow under this Section 2.01. During the
period from January 3, 2000 through April 2, 2000 the Borrower shall
cause the aggregate outstanding amount of Advances to be zero for 45
consecutive days.
b. Section 2.03 of the Credit Agreement is amended to read as follows:
Section 2.03 Revolving Note. The obligation to repay the
Advances and to pay interest and other charges, fees and expenses
thereon is evidenced by the Borrower's $10,000,000.00 Amended and
Restated Promissory Note dated June 30, 1999 in favor of the Bank
(together with any amendments, extensions, renewals and replacements
thereof, called the "Revolving Note").
c. All references to June 30, 1999 are changed to June 30, 2000 in
Section 2.08 of the Credit Agreement.
1
d. The reference to $4,000,000.00 is changed to $7,000,000.00 in
Section 5.10 of the Credit Agreement.
e. Section 5.15 of the Credit Agreement is amended to read as follows:
Section 5.15 Capital Expenditures. The Borrower shall not
permit the aggregate amount of Capital Expenditures of the Borrower and
the Subsidiaries in the Borrower's fiscal year ending April 2, 2000 to
exceed $10,000,000.00.
f. Section 5.16 of the Credit Agreement is amended to read as follows:
Section 5.16 Consolidated Tangible Net Worth. The Borrower
shall not permit the Consolidated Tangible Net Worth of the Borrower
and the Subsidiaries to be less than (a) $32,000,000.00 at any time
during the period from March 28, 1999 through April 1, 2000; or (b)
$38,000,000.00 at any time during the period after April 1, 2000.
g. Section 5.17 of the Credit Agreement is amended to read as follows:
Section 5.17 Consolidated Current Ratio. The Borrower shall
not permit the ratio of Consolidated Current Assets to Consolidated
Current Liabilities of the Borrower and the Subsidiaries to be less
than: (a) 2.00 to 1 at any time during the period from March 29, 1999
through August 29, 1999; or (b) 1.50 to 1 at any time during the period
from August 30, 1999 through November 28, 1999; or (c) 1.60 to 1 at any
time during the period from November 29, 1999 through April 1, 2000; or
(d) 2.50 to 1 on April 2, 2000; or (e) 2.00 to 1 at any time after
April 2, 2000.
h. Section 5.18 of the Credit Agreement is amended to read as follows:
Section 5.18 Consolidated EBITDA. The Borrower shall not at
any time permit the consolidated earnings before interest, taxes,
depreciation and amortization expense of the Borrower and the
Subsidiaries in any period of 12 consecutive fiscal months of the
Borrower designated below to be less than the amount set forth below
for such period:
12-Fiscal Month Period Ending: Minimum Amount
------------------------------ --------------
From 3/28/99 through 4/1/00 $13,000,000.00
After 4/1/00 $15,000,000.00
i. Section 5.19 of the Credit Agreement is amended to read as follows:
2
Section 5.19 New Stores. In the Borrower's fiscal year ending
April 2, 2000, the Borrower shall not permit the number of new stores
opened by the Borrower minus the number of stores closed by the
Borrower to exceed 93.
j. Exhibit D to the Credit Agreement is amended to read as stated in
Exhibit D attached hereto.
2. The Bank waives the Borrower's failure to comply with Section 5.15
of the Credit Agreement in the Borrower's fiscal year ending March 28, 1999.
Such waiver is limited to such fiscal year, and such Section 5.15, as amended
herein, remains in full force and effect.
3. Except as amended or terminated herein or herewith, all provisions
of the Credit Agreement and all other agreements of the parties remain in full
force and effect. No provision of this Amendment can be amended, modified,
waived or terminated, except by a writing executed by the Borrower and the Bank.
The Borrower shall pay to the Bank on demand all of the Bank's costs and
expenses, including but not limited to reasonable attorneys' fees and legal
expenses, in connection with this Amendment, the writings executed herewith, and
the transactions described herein and therein. This Amendment shall bind and
benefit the parties and their respective successors and assigns; provided, the
Borrower shall not assign any of its rights or obligations under this Amendment
without the prior written consent of the Bank, and any assignment in violation
of this sentence shall be null and void. This Amendment and the Credit Agreement
as amended herein shall be governed by and construed in accordance with the
internal laws of the State of Minnesota (excluding conflict of law rules).
Executed as of the date first above written.
FUNCO, INC.
By /s/ Xxxxxx X. Xxxxx
--------------------------------------
Title CFO
------------------------------------
MARQUETTE CAPITAL BANK, N.A.
By /s/ Xxxxxxxx Xxxx Xxxxx
--------------------------------------
Title Vice President
------------------------------------
3
EXHIBIT D
FUNCO, INC.
COVENANT COMPLIANCE CERTIFICATE
The undersigned chief financial officer of Funco, Inc., pursuant to the
Credit Agreement dated June 20, 1995, as amended (the "Agreement"), hereby
certifies to Marquette Capital Bank, N.A. as follows:
As of the close of business on _____________, _____, the following
amounts and ratios were true and correct:
1. Section 5.16 Consolidated Tangible Net Worth:
a. Actual Consolidated Tangible Net Worth $
----------------
b. Minimum Consolidated Tangible Net Worth $
----------------
2. Section 5.17 Consolidated Current Ratio:
a. Consolidated Current Assets $
----------------
b. Consolidated Current Liabilities $
----------------
c. Actual Ratio of Consolidated Current
Assets to Consolidated Current Liabilities to 1
---------
d. Minimum Ratio to 1
---------
3. Section 5.18 Consolidated EBITDA
for 12-Fiscal Month Period Ending _____________, ____:
a. Earnings: Net Income or (Loss) $
----------------
b. Interest Expense $
----------------
c. Taxes Expense $
----------------
d. Depreciation Expense $
----------------
e. Amortization Expense $
----------------
f. Actual EBITDA (a + b + c + d + e) $
----------------
g. Minimum EBITDA $
----------------
As of the date of this Certificate, no event has occurred which
constitutes an Event of Default under the Agreement or would constitute an Event
of Default under the Agreement with notice or the passage of time or both.
Date of Certificate: _________________, ___
-----------------------------------------
Signature
4
AMENDED AND RESTATED PROMISSORY NOTE
Date: June 30, 1999
For valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, the $10,000,000.00 Amended and Restated
Promissory Note of Funco, Inc. dated June 30, 1998, payable to the order of
Marquette Capital Bank, now known as Marquette Capital Bank, N.A., is amended
and restated to read as follows:
$10,000,000.00 Minneapolis, Minnesota
FOR VALUE RECEIVED, on June 30, 2000, the undersigned, FUNCO, INC.,
promises to pay to the order of MARQUETTE CAPITAL BANK, N.A. (the "Bank"), at
its office in Minneapolis, Minnesota, or at such other place as any present or
future holder of this Note may designate from time to time, the principal sum of
(i) $10,000,000.00, or (ii) the aggregate unpaid principal amount of all
advances of credit made by the Bank to the undersigned pursuant to this Note as
shown in the records of any present or future holder of this Note, whichever is
less, plus interest thereon from the date of each advance in whole or in part
included in such amount until this Note is fully paid, computed on the basis of
the actual number of days elapsed and a 360-day year, at an annual rate that
shall always be 2.00% per annum in excess of the Index Rate and that shall
change when and as the Index Rate shall change. Interest is due and payable on
the last day of each month and at maturity. In each calendar month, "Index Rate"
means the average 1-month LIBOR Rate published in The Wall Street Journal in the
previous calendar month. If the Index Rate is no longer available, the Bank may
select a comparable rate to be used as the Index Rate under this Note. The Bank
may lend to its customers at rates that are equal to, greater than, or less than
the Index Rate. Notwithstanding the foregoing, after an Event of Default this
Note shall bear interest until paid at 2% per annum in excess of the rate
otherwise then in effect, which rate shall continue to vary based on further
changes in the Index Rate. The undersigned shall not permit the unpaid principal
balance of this Note to exceed $5,000,000.00, except during the period from
September 15, 1999 through December 15, 1999.
All or any part of the unpaid balance of this Note may be prepaid at
any time without penalty. At the option of the then holder of this Note, any
payment under this Note may be applied first to the payment of other charges,
fees and expenses under this Note and any other agreement or writing in
connection with this Note, second to the payment of interest accrued through the
date of payment, and third to the payment of principal. Also, at the option of
the holder of this Note, if there is any overpayment of interest under this
Note, the holder may hold the excess and apply it to future interest accruing
under this Note. Amounts may be advanced and readvanced under this Note,
provided the principal balance outstanding shall not exceed $10,000,000.00
during the period from September 15, 1999 through December 15, 1999, and shall
not exceed $5,000,000.00 at any other time.
The occurrence of an Event of Default under the Credit Agreement dated
June 20, 1995 by and between the undersigned and the Bank, as it may be amended
from time to time, shall constitute an Event of Default under this Note.
5
Upon the commencement of any proceeding under any bankruptcy law by or
against any maker of this Note, this Note automatically shall become immediately
due and payable for the entire unpaid principal balance of this Note plus
accrued interest and other charges, fees and expenses under this Note without
any declaration, presentment, demand, protest, or other notice of any kind. Upon
the occurrence of any other Event of Default and at any time thereafter, the
then holder of this Note may, at its option, declare this Note to be immediately
due and payable and thereupon this Note shall become immediately due and payable
for the entire unpaid principal balance of this Note plus accrued interest and
other charges on this Note without any presentment, demand, protest or other
notice of any kind.
The undersigned (i) waives demand, presentment, protest, notice of
protest, notice of dishonor and notice of nonpayment of this Note; and (ii)
agrees that when or at any time after this Note becomes due the then holder of
this Note may offset or charge the full amount owing on this Note against any
account then maintained by the undersigned with such holder of this Note without
notice. Interest on any amount under this Note shall continue to accrue, at the
option of any present or future holder of this Note, until such holder receives
final payment of such amount in collected funds in form and substance acceptable
to such holder.
The extensions of credit under this Note are made under Section 47.59
of the Minnesota Statutes. No waiver of any right or remedy under this Note
shall be valid unless in writing executed by the holder of this Note, and any
such waiver shall be effective only in the specific instance and for the
specific purpose given. All rights and remedies of all present and future
holders of this Note shall be cumulative and may be exercised singly,
concurrently or successively. This Note shall bind the undersigned and the
successors and assigns of the undersigned. This Note shall be governed by and
construed in accordance with the internal laws of the State of Minnesota
(excluding conflict of law rules).
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE
UNDERSIGNED HAS READ ALL OF THIS NOTE AND UNDERSTANDS ALL OF THE PROVISIONS OF
THIS NOTE.
Executed as of June 30, 1999.
FUNCO, INC.
By /s/ Xxxxxx X. Xxxxx
--------------------------------------
Title CFO
-----------------------------------
6
Marquette Capital Bank, N.A. agrees to this Amended and Restated Promissory
Note.
Executed as of June 30, 1999.
MARQUETTE CAPITAL BANK, N.A.
By /s/ Xxxxxxxx Xxxx Xxxxx
--------------------------------------
Title Vice President
-----------------------------------
7
