EXHIBIT 10.1
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (the "Amendment") is made as of
June 27, 1997 by and among Phoenix Gold International, Inc. ("Borrower") and
United States National Bank of Oregon ("Bank").
Borrower and Bank are parties to an agreement entitled Loan Agreement
dated as of February 4, 1997 ("the Loan Agreement"). Borrower and Bank now wish
to modify certain terms and provisions of the Loan Agreement.
For valuable consideration, Borrower and Bank agree as follows:
1. DEFINITIONS. Except as otherwise provided in this Amendment, terms which
are capitalized in this Amendment and defined in the Loan Agreement shall have
the meaning provided in Loan Agreement.
2. ELIGIBLE ACCOUNTS ADVANCE RATE. Section 2.3 of the Loan Agreement is
amended by replacing "80 percent" with "75 percent".
3. INTEREST RATE. The chart at the end section 2.4 of the Loan Agreement is
replaced in its entirety with the following:
"Tangible Net Worth Interest Rate
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Greater than or equal to $11,400,000 Prime Rate
Greater than or equal to $11,100,000 but
less than $11,400,000 Prime Rate plus .75 percent
Greater than or equal to $10,700,000 but
less than $11,100,000 Prime Rate plus 1.50 percent
Greater than or equal to $10,400,000 but
less than $10,700,000 Prime Rate plus 2.0 percent
Less than $10,400,000 Default Rate"
4. FINANCIAL COVENANTS. Section 8 of the Loan Agreement is replaced in its
entirety with the following:
"(a) CURRENT RATIO. Borrower shall maintain as of each month-end set
forth below, a Current Ratio of at least the following:
Month End Current Ratio
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June 1997 1.95:1
July 1997 2.00:1
August 1997 2.05:1
September 1997 2.10:1
October 1997 2.10:1
November 1997 2.10:1
December 1997 2.10:1
(b) Minimum Tangible Net Worth. Borrower shall maintain as of each
month-end set forth below Tangible Net Worth of at least the following:
Month End Tangible Net Worth
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June 1997 $10,575,000
July 1997 $10,700,000
August 1997 $10,825,000
September 1997 $10,950,000
October 1997 $10,950,000
November 1997 $10,950,000
December 1997 $10,950,000
(c) Maximum Inventory. Borrower shall maintain inventory, valued
at the lower of cost or market, not to exceed the following amounts during the
following time periods:
Month-End Maximum Inventory
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July 1997 $8,100,000
August 1997 $8,000,000
September 1997 $8,000,000
October 1997 $8,000,000
November 1997 $8,000,000
December 1997 $8,000,000
(d) Debt Service Coverage Ratio. Borrower shall maintain as of each
fiscal quarter year-end set forth below a minimum Debt Service Coverage Ratio
commencing October 1, 1996, measured quarterly on a cumulative basis through the
fiscal quarter ending September 1997 and thereafter on a rolling four-quarter
basis, of at least the ratios set forth below:
Quarter-Ending Debt Service Coverage Ratio
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June 1997 1.10:1
September 1997 1.25:1
December 1997 1.25:1
5. BORROWER'S CERTIFICATE. Subsection 9(e) of the Loan Agreement is
replaced in its entirety with the following: "By 4:00 p.m. each Monday a
borrower's certificate in form sufficient to allow Bank to determine the amount
of credit available under the Revolving Loan as of the last business day of the
preceding week."
6. CASH FLOW PROJECTION. Subsection 9(f) of the Loan Agreement is deleted.
7. WHOLE AGREEMENT. This Amendment and the other Loan Documents (each as it
may have been or is amended in writing) represent the complete and final
understanding of the parties with respect to the matters addressed in those
documents.
8. WAIVER. Borrower waives and discharges any and all defenses, claims,
counterclaims and offsets which Borrower may have against Bank and which have
arisen or accrued through the date of this Amendment. Borrower acknowledges that
Bank and Bank's employees, agents and attorneys have made no representations or
promises to Borrower except as specifically reflected in this Amendment and in
the written agreements which have been previously executed.
9. GENERAL PROVISIONS. To induce Bank to accept this Amendment, Borrower
makes the following representations, warranties and covenants:
(a) Each and every recital, representation and warranty contained in
this Amendment, the Loan Agreement and the other Loan Documents is correct as of
the date of this Amendment.
(b) No Event of Default or event which with the giving of notice of
the passage of time (or both) would constitute an Event of Default has occurred
under the Loan Agreement or the other Loan Documents.
(c) To induce Bank to enter into this Amendment, Borrower will pay
all expenses, including reasonable attorney fees, that Bank incurs in connection
with the preparation of this Amendment and any related documents.
10. EFFECT OF AMENDMENT. Except as specifically provided above, the
Agreement and the other Loan Documents remain fully valid, binding, and
enforceable according to their terms.
11. DISCLOSURE. BY OREGON STATUTE (ORS 41.580), THE FOLLOWING DISCLOSURE IS
REQUIRED:
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
LENDERS AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE, MUST BE IN WRITING, EXPRESS CONSIDERATION, AND BE SIGNED
BY THE LENDER TO BE ENFORCEABLE.
UNITED STATES NATIONAL BANK OF OREGON PHOENIX GOLD INTERNATIONAL, INC.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
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TITLE: Vice President TITLE: Chief Financial Officer