June 4, 1996
Mr. Joseph Altomonte, Sr.
Mr. Joseph Altomonte, Jr.
c/o Dynacraft Golf Products, Inc.
Pal Joey Custom Golf, Inc.
Dynacraft Real Estate Holdings, Inc.
71 Maholm Street
Newark, Ohio 43055
Gentlemen:
Please accept this letter as Bank One, Columbus, NA's ("Bank One") agreement to
release its security interest in the accounts receivable and inventory of
Dynacraft Golf Products, Inc. ("Dynacraft") and Pal Joey Custom Golf, Inc. ("Pal
Joey") and subordinate its mortgage on the residence of Joseph Altomonte, Jr. to
a $250,000 mortgage to be recorded by Huntington National Bank, provided that
the following conditions have been met:
1) Bank One has received payment in full on or before June 30, 1996 on the
Business Purpose Revolving Promissory Notes dated as of December 13, 1994, as
amended, executed by Dynacraft and Pal Joey in the original amounts of
$1,800,000 and $650,000 respectively. As of today's date, the combined payoff
amounts of these notes are $2,387,431.31 with an interest per diem of $705.34.
2) The Dynacraft ESOP loan and the J & J Enterprises loans are modified with the
following terms and conditions:
FACILITY I
Borrowers: Dynacraft Golf Products, Inc. and Pal Joey Custom Golf, Inc.
Type: ESOP Term Loan
Principal: $729,331.71 as of the date of this letter
Rate: As set forth in the Term Loan Cognovit Promissory Note dated
January 30, 1991
Maturity: As set forth in the Term Loan Cognovit Promissory Note dated
January 30, 1991
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Amortization:As set forth in the Term Loan Cognovit Promissory Note dated
January 30, 1991 plus $7,861.11 additional principal per month
following repayment of Facility II and Facility III
Collateral: - A first lien on all equipment of Dynacraft and Pal Joey,
whether now owned or hereafter acquired
- First mortgage position in the following properties
comprising the Dynacraft complex:
71 Maholm St., Newark, Ohio
88 James St., Newark, Ohio
84 James St., Newark, Ohio
85 S. Pine St., Newark, Ohio
77 S. Pine St., Newark, Ohio
99 S. Pine St., Newark, Ohio
100 James St., Newark, Ohio
92 James St., Newark, Ohio
99 James St., Newark, Ohio
85 James St., Newark, Ohio
FACILITY II
Borrower: Dynacraft Real Estate Holdings, Inc. ("DREHI"), as successor
to J & J Enterprises, which took title to the real estate
subject to Bank One's valid mortgages and the obligations
set forth therein.
Type: Term Note.
Principal: $282,734.36 as of the date of this letter
Rate: Bank One, Columbus, NA Prime Rate plus one percent (1% ),
floating
Maturity: March 30, 1998
Amortization: $2,027.78 principal plus interest monthly, increasing to
$7,861.11 principal plus interest following repayment of
Facility III
Collateral: - A first lien on all equipment of Dynacraft and Pal Joey,
whether now owned or hereafter acquired
- First mortgage position in the following properties
comprising the Dynacraft complex:
71 Maholm St., Newark, Ohio
88 James St., Newark, Ohio
84 James St., Newark, Ohio
85 S. Pine St., Newark, Ohio
77 S. Pine St., Newark, Ohio
99 S. Pine St., Newark, Ohio
100 James St., Newark, Ohio
92 James St., Newark, Ohio
99 James St., Newark, Ohio
85 James St., Newark, Ohio
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FACILITY III
Borrower: Dynacraft Real Estate Holdings, Inc., as successor to J & J
Enterprises, which took title to the real estate subject to
Bank One's valid mortgages and the obligations set forth
therein.
Type: Term Note.
Principal: $82,085.62 as of the date of this letter
Rate: Bank One, Columbus, NA Prime Rate plus one percent (1% ),
floating
Maturity: August 31, 1997
Amortization: $5,833.33 principal plus interest monthly
Collateral: - A first lien on all equipment of Dynacraft and Pal Joey,
whether now owned or hereafter acquired
- First mortgage position in the following properties
comprising the Dynacraft complex:
71 Maholm St., Newark, Ohio
88 James St., Newark, Ohio
84 James St., Newark, Ohio
85 S. Pine St., Newark, Ohio
77 S. Pine St., Newark, Ohio
99 S. Pine St., Newark, Ohio
100 James St., Newark, Ohio
92 James St., Newark, Ohio
99 James St., Newark, Ohio
85 James St., Newark, Ohio
The above Facilities will be further subject to the following additional
requirements:
TAX REFUND: In addition to the principal payments required above, Borrowers
shall make an additional $276,000 principal payment upon receipt of tax refund
proceeds, but no later than July 31, 1996, which will be applied to repayment of
Facility III with the balance applied to Facility II.
GUARANTORS: Joseph Altomonte, Sr. and Joseph Altomonte, Jr. will provide joint
and several unlimited guarantees of all Dynacraft/Pal Joey/DREHI obligations to
Bank One, Columbus, NA. The guarantees shall be secured with the following:
- - Second mortgages on the residences of Joseph Altomonte, Sr. in Granville, Ohio
and Naples, Florida
- - Fourth mortgage on the residence of Joseph Altomonte, Jr. in Granville, Ohio
- - Assignment of brokerage account #06-01028-2-9 of Joseph Altomonte, Sr.
maintained at The Ohio Company in the net amount of no less than $120,000. No
additional margin loans will be permitted.
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Dynacraft Golf Products, Inc. and Pal Joey Custom Golf, Inc. shall remain
guarantors of Facility II and Facility III.
AFFIRMATIVE COVENANTS: Until all indebtedness of Borrowers have been paid:
MINIMUM TANGIBLE NET WORTH: Dynacraft Golf Products, Inc. and
subsidiaries will maintain a consolidated tangible net worth of at least
$1,100,000 at all times prior to maturity. Tangible Net Worth is defined in
accordance with GAAP and deemed to include the amount of total assets, excluding
the amount of intangible assets, minus the amount of total liabilities,
exclusive of Subordinated debt.
CURRENT RATIO: Dynacraft Golf Products, Inc. and subsidiaries will
maintain a minimum consolidated current ratio of 1.0:1.0 at all times.
Current Ratio is defined in accordance with GAAP as total Current Assets
divided by total Current Liabilities. "Current assets" shall be deemed to
include inventory at lower of cost or current market value less any amount
due from any officer, employee, director, shareholder or related person.
LIABILITIES TO TANGIBLE NET WORTH: Dynacraft Golf Products, Inc. and
subsidiaries agree to maintain a ratio of Debt to Tangible Net Worth of not
more than 5.00:1.0 prior to maturity. "Debt" shall be determined in
accordance with GAAP and shall be deemed to include all liabilities of
Dynacraft Golf Products, Inc. and subsidiaries including but not limited to
accruals, deferrals, capitalized leases.
FINANCIAL STATEMENTS: Dynacraft Golf Products, Inc. and subsidiaries will
submit a consolidated Income Statement and Balance Sheet within 45 days of each
month end.
Dynacraft Golf Products, Inc. and subsidiaries will submit an annual
accountant- prepared reviewed financial statement within 90 days of each fiscal
year end.
Guarantors, Joseph Altomonte, Sr. and Joseph Altomonte, Jr., will submit
updated personal financial statements on not less than an annual basis.
APPROVAL OF DOCUMENTATION: This agreement is subject to the approval of all
documentation in connection with the credit facilities by Bank One and Bank
One's legal counsel. All notes will be cross-defaulted and
cross-collateralized.
OTHER TERMS AND CONDITIONS: This agreement is subject to such other terms and
conditions as Bank One may deem appropriate, and is not intended to set forth
each and every term and condition of the financing transactions.
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BENEFIT: The agreements set forth in this letter are issued for the benefit of
Dynacraft, Pal Joey, DREHI, Joseph Altomonte, Sr. and Joseph Altomonte, Jr. only
and shall not be deemed or construed to create rights in any third person as a
third party beneficiary or otherwise.
EXPIRATION DATE: Bank One's agreements set forth in this letter shall expire if
not accepted by Dynacraft, Pal Joey, DREHI, Joseph Altomonte, Sr., individually,
and Joseph Altomonte, Jr., individually, on or before June 17, 1996.
CLOSING DATE: The financing transaction contemplated hereby shall be closed on
or before June 30, 1996, or Bank One's agreements set forth in this letter shall
terminate.
PREVENTION AND RESOLUTION OF DISPUTES: With respect to any claim arising out of
this letter, Dynacraft Golf Products, Inc., Pal Joey Custom Golf, Inc., DREHI,
Joseph Altomonte, Sr., individually, and Joseph Altomonte, Jr., individually
(jointly and severally the "Obligors") submit, for themselves and their
property, to the nonexclusive jurisdiction and to the laying of venue of the
courts of competent jurisdiction in Franklin County, Ohio. This letter shall in
all respects be construed in accordance with and governed by the laws of the
State of Ohio. This letter constitutes the ONLY agreement and understanding
among Bank One and the Obligors and supersedes any and all prior agreements and
understandings, oral or written, relating to the extension of the credit
facilities described herein. Obligors acknowledge that they have not relied on
any oral promises or representations by Bank One other than those set forth in
this letter. No change in the terms, amendment, modification or waiver of any
provision of this letter shall be effective unless the same shall be in writing
and signed by the Obligors and Bank One.
BANK ONE AND THE OBLIGORS HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN BANK ONE AND ANY OF THE
OBLIGORS ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN ANY OF THE OBLIGORS AND BANK ONE IN CONNECTION
WITH THIS LETTER, OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT TO BANK ONE TO ENTER INTO THE FINANCING TRANSACTION. IT
SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO
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PURSUE ITS REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED IN ANY OTHER DOCUMENT RELATED HERETO.
Please contact me at (614) 248-5177 with any questions.
Sincerely,
Geoffrey A. Huber
Vice President
Managed Assets
The above terms and conditions are acknowledged and accepted this __________
day of , 1996.
Dynacraft Golf Products, Inc.
By: _______________________________ By: __________________________________
Joseph Altomonte, Sr. Joseph Altomonte, Jr.
Chairman of the Board Chief Executive Officer
Pal Joey Custom Golf, Inc.
By: _________________________________ By: __________________________________
Joseph Altomonte, Sr. Joseph Altomonte, Jr.
Chairman of the Board Chief Executive Officer
Individually Individually
Dynacraft Real Estate Holdings, Inc.
By: _________________________________ By: __________________________________
Joseph Altomonte, Sr. Joseph Altomonte, Jr.
Chairman of the Board Chief Executive Officer
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