EXHIBIT 10.13
THIRD AMENDMENT TO LOAN AGREEMENT
(and Modification of Notes)
This Third Amendment to Loan Agreement (this "Third Amendment") is
executed as of December 1, 1996, by and among Campo Electronics, Appliances
and Computers, Inc. (the "Borrower") and Hibernia National Bank, as agent
for the Banks (in such capacity, the "Agent"), and Central Bank, Hibernia
National Bank and Liberty Bank & Trust Company of Tulsa, N.A. (the
"Banks").
RECITALS
A. The Borrower and the Banks entered into that certain Loan
Agreement dated as of August 30, 1995 (the "Loan Agreement"), pursuant to
which the Banks extended to Borrower a term loan in the principal amount of
$17,000,000 and a line of credit in the maximum aggregate principal amount
of $10,000,000 (collectively, the "Loan").
B. The Borrower has requested that the Banks (i) waive the
Borrower's non-compliance with certain financial covenants imposed on the
Borrower by the Loan Agreement for the fiscal year ended August 31, 1996
and for each subsequent month end through and including November 30, 1996,
and (ii) suspend the effectiveness of all of the financial covenants
imposed on the Borrower by the Loan Agreement for the period from December
1, 1996 through September 1, 1997.
C. The Banks are willing to grant the Borrower's requests upon the
Borrower's agreement (i) to shorten the maturity date of the Loan to
September 1, 1997, (ii) to grant certain additional collateral, (iii) to
add certain financial covenants in place of the suspended financial
covenants, (iv) to make certain other modifications, and (v) to pay a
waiver fee.
D. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, the parties hereto amend the Loan Agreement
as follows:
AGREEMENT
1. Section 2.01 (Term Loan) of the Loan Agreement is hereby amended
to change the maturity date of the term loan from August 31, 1998 to
September 1, 1997. Each of the term notes is hereby modified to change
their maturity date from August 31, 1998 to September 1, 1997.
2. Section 2.02(a) (Line of Credit) of the Loan Agreement is hereby
amended to read as follows:
Section 2.02 Line of Credit. (a) Subject to and upon the
terms and conditions contained in this Agreement, and relying on the
representations and warranties contained in this Agreement, each Bank
severally (in the proportions of 29.6296% for Central Bank, 37.0370%
for Hibernia National Bank and 33.3333% for Liberty Bank) agree to
make line of credit Advances to the Borrower from time to time on any
Business Day in such amounts as the Borrower may request up to the
aggregate principal amount of (i) $10,000,000 at any one time
outstanding through and including December 31, 1996 and (ii)
$5,000,000 at any one time outstanding from January 1, 1997 through
maturity on September 1, 1997. The line of credit Advances shall be
represented by promissory notes of the Borrower in the principal
amounts set forth below:
Bank Principal Amount
---- ----------------
Central Bank $2,962,963.00
Hibernia National Bank 3,703,704.00
Liberty Bank & Trust Company of Tulsa, N.A. 3,333,333.00
Interest on the line of credit notes shall accrue at the rate
described in Section 2.03 hereof and shall be payable in arrears on
the first day of each month following the execution of the line of
credit notes. Principal on the line of credit notes shall be payable
at maturity on September 1, 1997.
Each of the line of credit notes is hereby modified to change their
maturity date from August 31, 1998 to September 1, 1997, and to change the
face amounts thereof to $5,000,000 on January 1, 1997.
3. Section 2.03(e) (Interest Rate; Fees - Commitment Fee) of the
Loan Agreement is hereby amended to read as follows:
(e) Commitment Fee. On the first day of each December, March,
June and September, beginning March 1, 1997, the Borrower shall pay a
commitment fee on the line of credit to the Agent (to be shared pro
rata among the Banks) in an amount equal to (i) 0.125% per annum of
the difference between $10,000,000 (through December 31, 1996) or
$5,000,000 (beginning January 1, 1997) and the average aggregate
amounts outstanding on the line of credit during the preceding fiscal
quarter; and (ii) 1% per annum of the average aggregate amounts
outstanding on the line of credit during said preceding fiscal
quarter.
4. Section 2.09 (Security) of the Loan Agreement is hereby amended
to read as follows:
Section 2.09 Security. (a) The Loan shall be secured by a
first priority mortgage or deed of trust on nine (9) properties owned
by the Borrower and located as follows:
Birmingham, Alabama
Dothan, Alabama
Mobile, Alabama
Baton Rouge, Louisiana
Harahan, Louisiana (two properties)
Monroe, Louisiana
Shreveport, Louisiana
Chattanooga, Tennessee
The foregoing are all of the real estate properties currently owned
by the Borrower. All other of Borrower's remaining stores are leased
from unaffiliated third parties. At the request of the Lender, the
Borrower shall execute such other instruments, including amendments
or supplements to the existing mortgages and deeds of trust to
further evidence the foregoing.
(b) The Loan shall be further secured by a first priority
security interest in all new and used inventory of the Borrower, now
owned or hereafter acquired, wherever located, bearing the trademarks
or trade names set forth on Schedule 1 hereto. In the event that the
Borrower acquires new product lines on open account (not subject to
floor plan financing) having inventory values in excess of $25,000,
the Borrower shall promptly notify the Agent thereof and execute
supplements to the Collateral Documents to permit the Banks to obtain
first perfected security interests therein.
(c) The Loan shall be further secured by a first priority
security interest in all of the Borrower's rights to or claims for
income tax refund monies due and/or to become due from the Internal
Revenue Service and all state taxing authorities, including, without
limitation, income tax refund monies resulting from applications for
carryback adjustments for loss years. In the event that the Borrower
receives a tax refund prior to December 31, 1996, the Borrower shall
immediately notify the Agent of such receipt, in which case the
$10,000,000 maximum aggregate amount of the line of credit shall be
reduced by the amount of the tax refund received. Furthermore, in
the event that the maximum amount outstanding on the line of credit
is $5,000,000 or less as of January 1, 1997, the Lender agrees to
release its security interest in the tax refund upon request of the
Borrower. Furthermore, the Lender agrees not to perfect its security
interest in the tax refund by filing a UCC-1 Financing Statement
prior to January 1, 1997 unless a Default occurs under the Loan
Agreement.
5. Section 4.02 (Financial Statements and Reports) of the Loan
Agreement shall amended to read as follows:
(e) Monthly Reports of Borrower - as soon as available and in
any event within 25 days after the end of each month, (i) the
unaudited balance sheet of the Borrower as at the end of such month,
the unaudited statement of profit and loss of the Borrower for such
month and the unaudited statement of cash flow of the Borrower for
such month, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding
fiscal year, together with a certificate showing the calculation of
all financial covenants for such month and quarter to date, in each
case certified correct by both the Chief Executive Officer of the
Borrower and either the President or Chief Financial Officer of the
Borrower, and (ii) an inventory report relating to the inventory that
is collateral for the Loan as of the last day of such month.
6. The effectiveness of the provisions of Section 4.03(a) through
4.03(g) (Financial Covenants) of the Loan Agreement shall be suspended
during the period from December 1, 1996 through September 1, 1997.
However, Section 4.03 (Financial Covenants) of the Loan Agreement shall be
amended to add two additional financial covenants, which financial
covenants shall be effective beginning December 1, 1996, to read as
follows:
(h) Minimum Working Capital. The Borrower shall maintain working
capital (defined as current assets less current liabilities,
excluding the term loan) of not less than $10,000,000 as of
December 31, 1996 and $7,000,000 as of the end of each
subsequent month.
(i) Minimum EBITDA. The Borrower shall maintain earnings before
interest, income taxes, depreciation and amortization (exclusive
of any write-offs associated with any store closures) of not
less than the following:
Quarterly Period Ending Minimum EBITDA
----------------------- --------------
February 28, 1997 $2,326,499
May 31, 1997 794,402
August 31, 1997 2,282,582
7. Section 4.04 (Certificates of Compliance) of the Loan Agreement
is hereby amended to require that the compliance certificates be executed
by both the Chief Executive Officer and either the President or Chief
Financial Officer of the Borrower.
8. Section 4.05 (Taxes and Other Liens) of the Loan Agreement is
hereby amended to exclude therefrom the requirement that the Borrower pay
all ad valorem property taxes on its leased stores.
9. Section 5.01 (Debts, Guaranties and Other Obligations) of the
Loan Agreement is hereby amended to add a new clause (i) to read as
follows:
(i) Debt to refinance a portion of the term loan in accordance
with the release provisions in Section 5.05(b) of this Agreement.
10. Section 5.02 (Liens) of the Loan Agreement is hereby amended to
add a new clause (g) to read as follows:
(g) Liens on leased stores to secure Debt permitted by Section
5.01(i) hereof.
11. Section 7.01(e) Events of Default) of the Loan Agreement is
hereby amended to read as follows:
(e) Other Debt to Other Lenders. The Borrower defaults in the
payment of any amounts due to any Person (other than the Banks) or in
the observance or performance of any of the covenants or agreements
contained in any credit agreements, notes, equipment leases,
collateral or other documents (excluding store leases) relating to
any Debt of the Borrower to any Person (other than the Banks) in
excess of $250,000 and such Debt has been accelerated or otherwise
become due and payable.
12. Section 7.03 (Sharing of Set-Offs) of the Loan Agreement is
hereby amended so that the term "Default" as used therein shall mean only a
Default in the payment of principal and interest on the Loan when due;
thus, the Banks shall not be able to exercise contractual or statutory
rights of set-off unless the Borrower fails to make a payment of principal
or interest when due.
13. The Borrower hereby reaffirms all the representations and
warranties contained in Article 3 of the Loan Agreement and certifies that
all such representations and warranties are true and correct as of the date
of this Third Amendment, except that the Borrower acknowledges that it is
not currently in compliance with all of the provisions of its financing
agreements with Whirlpool Financial Corporation. The Borrower will
promptly obtain all waivers or modifications necessary to cure any such
non-compliance and provide the Agent with copies thereof.
14. The Borrower further certifies that no Default (other than as
relates to the financial covenants set forth in Section 4.03 of the Loan
Agreement and certain provisions of its financing agreements with Whirlpool
Financial Corporation) has occurred and is continuing under the Loan
Agreement as of the date of this Third Amendment.
15. The Borrower hereby specifically reaffirms the mortgage, pledge,
assignment, security agreement and other hypothecation of all collateral as
security for the Loan, including, without limitation, the following:
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property
of the Borrower located in Jefferson County, Alabama.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property
of the Borrower located in Houston County, Alabama.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property
of the Borrower located in Mobile County, Alabama.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property
of the Borrower located in East Baton Rouge Parish,
Louisiana.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property
of the Borrower located in Jefferson Parish,
Louisiana.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property
of the Borrower located in Ouachita Parish,
Louisiana.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property
of the Borrower located in Caddo Parish, Louisiana.
Deed of Trust by the Borrower in favor of the Agent
dated August 30, 1995, covering certain immovable
property of the Borrower located in Hamilton County,
Tennessee.
Security Agreement (Inventory and Proceeds) by the
Borrower in favor of the Agent dated December 4,
1996, covering certain inventory and proceeds.
Security Agreement (Tax Refund) by the Borrower in
favor of the Agent dated December 4, 1996, covering
certain federal and state tax refunds.
The Borrower acknowledges and agrees that the Borrower may, from time to
time, one or more times, enter into additional mortgages, pledges,
assignments, security agreements and other hypothecations with the Banks
under which the Borrower may mortgage, pledge, assign, grant a security
interest in and hypothecate the same collateral. The Borrower further
acknowledges and agrees that the execution of such additional agreements
will not have the effect of cancelling, novating or otherwise modifying
said agreements, it being the Borrower's intent that all such agreements
shall be cumulative in nature and shall each and all remain in full force
and effect until expressly cancelled by the Banks under written
cancellation instrument delivered to the Borrower.
16. Except as modified and amended hereby, the Loan Agreement shall
remain in full force and effect.
17. The effectiveness of this Third Amendment shall be conditioned
upon the satisfaction of the following conditions:
a. Third Amendment. The Borrower and all of the Banks shall
have executed this Third Amendment.
b. Resolutions. The Borrower shall have adopted corporate
resolutions regarding the authorization of execution of this Third
Amendment and all documents related thereto, certified correct by the
secretary or assistant secretary of the Borrower.
c. Fees. The Banks shall have received a waiver fee in the
amount of $18,500 to be shared equally among the Banks.
d. Security Agreements. The Agent shall have received the
security agreements referred to in Paragraph 10 of this Third Amendment.
18. Borrower further hereby and forever settles, compromises,
transacts, satisfies, waives, releases, acquits, discharges, surrenders and
cancels any and all Claims (as defined hereinafter) against the Banks,
their predecessors, insurers or insureds, subrogors or subrogees, assignors
or assignees, nominees, representatives, joint venturers, directors,
officers, agents, employees, attorneys, shareholders, principals, parent
companies, subsidiary companies, other affiliates, and any other person or
entity which has or might have derivative, secondary or vicarious liability
for their acts or omissions whose rights are derived from them (all of such
released parties being collectively referred to as the "Released Parties"),
it being hereby specifically agreed and understood that this Third
Amendment constitutes a compromise of rights and claims and the execution
of this Third Amendment is not to be construed as an acknowledgment or
admission of any fact of any liability or responsibility by the Banks, and
the Banks hereby expressly deny any liability to the Borrower. For the
purpose of this Third Amendment, "Claims" shall mean (i) any and all
claims, demands, losses, damages, causes of action, and rights of action
whatsoever, liquidated or unliquidated, choate or inchoate, matured or
unmatured, contingent or exigible, asserted or unasserted, direct or
indirect, known or unknown, anticipated or unanticipated, arising before or
on the date of the Borrower's execution hereof whether based upon tort,
negligence, intentional conduct, contract, equity, bankruptcy, indemnity,
contribution, reimbursement, unjust enrichment, and/or any other legal
theory, which any party may be entitled to in any way, and (ii) arising out
of or relating to the Loan and the loan and security documentation from
time to time executed in connection therewith, but (iii) excluding any
Claims (as defined in preceding clauses (i) and (ii)) against the Released
Parties based upon fraudulent or dishonest acts of the Banks, and Claims to
require the Released Parties to perform any contractual undertakings under
the loan and security documentation relating to the Loan.
19. This Third Amendment may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.
BORROWER: CAMPO ELECTRONICS, APPLIANCES AND
COMPUTERS, INC.
By: /s/ Anthony P. Campo
____________________________________
Name: Anthony P. Campo
Title: Chairman and Chief
Executive Officer
AGENT: HIBERNIA NATIONAL BANK
By: /s/ Douglas Staley
____________________________________
Name: Douglas Staley
Title: Senior Vice President
BANKS: CENTRAL BANK
By: /s/ Fenton M. Davison
____________________________________
Name: Fenton M. Davison
Title: Senior Vice President
Percent: 29.6296%
HIBERNIA NATIONAL BANK
By: /s/ Douglas Staley
____________________________________
Name: Douglas Staley
Title: Senior Vice President
Percent: 37.0370%
LIBERTY BANK & TRUST COMPANY OF TULSA, N.A.
By: /s/ Gary C. King
____________________________________
Name: Gary C. King
Title: Asst. Vice President
Percent: 33.3333%