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SECOND AMENDMENT TO
SECURITY AGREEMENT
EXHIBIT 10.2
THIS SECOND AMENDMENT TO SECURITY AGREEMENT ("Amendment") is made as of
the 28th day of October, 1998, by and among D.I.Y. HOME WAREHOUSE, INC., an Ohio
corporation, with its principal place of business located at 5811 Canal Road,
Suite 180, Valley View, Ohio 44125 (herein called the "Debtor"), as debtor,
NATIONAL CITY BANK, a national banking association, formerly known as National
City Bank, Columbus, with its principal office located at 155 East Broad Street,
Columbus, Ohio 43251 (herein called "NCB"), and OLD KENT BANK, formerly known as
Old Kent Bank and Trust Company, a Michigan banking corporation, with its
principal office located at One Vandenberg Center, Grand Rapids, Michigan 49503
(herein called "Old Kent"), as lenders, (NCB and Old Kent each herein separately
called a "Bank" and collectively called the "Banks"), and NCB, as agent for
itself and Old Kent (herein called the "Agent").
WITNESSETH THAT:
WHEREAS, Banks and Debtor originally entered into a certain Revolving
Credit Agreement dated December 7, 1994, pursuant to which Banks agreed to loan
to Debtor on a revolving credit basis ("Loan") an aggregate amount not to exceed
Fifteen Million Dollars $15,000,000.00);
WHEREAS, in order to secure the Loan and all other obligations of
Debtor to Banks, Debtor executed and delivered to Agent for the benefit of Banks
a certain Security Agreement dated December 7, 1994 as amended by the First
Amendment to Security Agreement dated December 22, 1995 (collectively, "Security
Agreement"), granting to Banks a security interest in Debtor's inventory and
receivables as more particularly described in the Security Agreement;
WHEREAS, Banks and Debtor agreed to increase the amount of the Loan to
Twenty-Three Million Dollars ($23,000,000.00) pursuant to the terms and
conditions of the Revolving Credit Agreement as amended by a certain First
Amendment to Revolving Credit Agreement dated December 22, 1995 (collectively,
the "Credit Agreement"); and
WHEREAS, Banks and Debtor hereby agree that Debtor shall pay NCB and
Old Kent all amounts owed under the Loan and Credit Agreement;
WHEREAS, as a result of the payoff to NCB and Old Kent, Agent and
Debtor agree that the services of Agent are no longer required under the Loan;
WHEREAS, Banks, Agent and Debtor now desire to further amend the
Security Agreement to confirm that the security interest granted thereby
continues to secure all of the Obligations (as herein defined) of Debtor to NCB
including, without limitation, all indebtedness owed by Debtor to NCB by reason
of credit extended or to be extended to Debtor in (i) the principal amount
$4,500,000.00 pursuant to that certain Loan and Co-Lender Agreement dated
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December 23, 1994, as amended, (the "Credit Loan Agreement") and (ii) the
principal amount of $3,987,500.00 pursuant to that certain Line of Credit
Agreement dated April 28, 1995, as amended (the "Line of Credit Agreement");
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor, NCB, Old Kent and Agent agree as follows:
1. Secured Obligations. The first paragraph of the second page of the
Security Agreement is hereby deleted and replaced with the following:
The security interest hereby granted is to secure the prompt
and full payment and complete performance of all Obligations of Debtor
under the Credit Loan Agreement and the Line of Credit Agreement
(hereinafter collectively called the "Existing Loans"), under any Loan
Documents (as defined in the Credit Loan Agreement and the Line of
Credit Agreement, respectively) or otherwise existing or arising. The
word "Obligations" is used in its most comprehensive sense and
includes, without limitation, all indebtedness, debts and liabilities
(including principal, interest, late charges, collection costs,
attorneys' fees to the extent permitted by law and the like) of Debtor
to NCB, including, without limitation, the Existing Loans, whether now
existing or hereafter arising, either created by Debtor alone or
together with another or others, primary or secondary, secured or
unsecured, absolute or contingent, liquidated or unliquidated, direct
or indirect, whether evidenced by note, draft, application for letter
of credit or otherwise, and any and all renewals of or substitutes
therefor. The word "Obligations" shall include, BUT NOT BE LIMITED TO,
all indebtedness owed by Debtor to Banks by reason of credit extended
or to be extended to Debtor in the principal amount of $8,487,500.00,
pursuant to one or more instruments of indebtedness and related Loan
Documents.
2. Parties. All reference in the Security Agreement to "Bank," "Banks"
or Agent" shall mean NCB. Old Kent and Agent hereby terminate their respective
security interests in the Collateral (as defined in the Security Agreement).
3. Ratification. The Security Agreement is in all respects ratified and
confirmed by the parties hereto, and the Security Agreement and this Amendment
shall be read, taken and construed as one and the same instrument. Except as
modified hereby, the Security Agreement remains unchanged and in full force and
effect.
4. Counterparts. This Amendment may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by each in manner and form sufficient to bind them and duly authorized
in the premises as of the day and year first above written.
NATIONAL CITY BANK, formerly D.I.Y. HOME WAREHOUSE, INC.
known as National City Bank, Columbus
By: /s/ JOSEPH KWASNY By: /s/ ERIC I. GLASSMAN
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Name: Joseph Kwasny Name: Eric I. Glassman
Its: Vice President Its: V.P. - Chief Financial Officer
OLD KENT BANK, formerly known as NATIONAL CITY BANK, formerly
Old Kent Bank and Trust Company known as National City Bank, Columbus,
as Agent
By: /s/ ROBERT F. GRANT By: /s/ JOSEPH KWASNY
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Name: Robert F. Grant Name: Joseph Kwasny
Its: Senior Vice President Its: Vice President
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