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EXHIBIT 10.1
COMBINED AMENDMENT NUMBER ONE TO
LOAN AND SECURITY AGREEMENT
This Combined Amendment Number One to Loan and Security
Agreement ("Amendment") is entered into as of April 16, 2001, by and between
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), and SOUND
ADVICE, INC., a Florida corporation ("Borrower"), in light of the following:
A. Borrower and Foothill have previously entered into that
certain Loan and Security Agreement, dated as of April 11, 1996 (the
"Agreement"), as amended by Amendment Number One dated as of December 8, 1997
and Amendment Number Two dated as of January 31, 1999 (the "Prior Amendments").
B. Borrower and Foothill desire to amend the Agreement and to
supersede the Prior Amendments as provided for herein.
NOW, THEREFORE, Borrower and Foothill hereby amend the
Agreement as follows:
1. DEFINITIONS. All initially capitalized terms used in this
Amendment shall have the meanings given to them in the Agreement unless
specifically defined herein.
2. AMENDMENTS.
2.1 Section 1.1 of the Agreement is amended by adding
the following definitions:
"EBITDA" means, with respect to any fiscal
period, Borrower's and its Subsidiaries consolidated net earnings (or
loss), MINUS extraordinary gains, PLUS interest expense, income taxes,
and depreciation and amortization for such period, as determined in
accordance with GAAP.
"EFFECTIVE DATE" has the meaning set forth
in SECTION 2.8(c).
"EURODOLLAR SUPPLEMENT" means that certain
Eurodollar Supplement to Loan and Security Agreement, dated as of
December 8, 1997, between Foothill and Borrower.
"REFERENCE RATE MARGIN" means 0.50% per
annum.
"SOUND ADVICE ARIZONA" means Sound Advice of
Arizona Inc., a Florida corporation.
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2.2 Section 1.1 of the Agreement is amended by
revising the following definitions:
(a) The definition of "Average Unused
Portion of Maximum Amount" is amended to read as follows:
"AVERAGE UNUSED PORTION OF MAXIMUM AMOUNT"
means (a) (i) $20,000,000 on or before July 31, 2001, and (ii) on or
after August 1, 2001, (A) $20,000,000 if the average Daily Balance of
the Obligations in the immediately preceding month was less than
$20,000,000, (B) $30,000,000 if the average Daily Balance of the
Obligations in the immediately preceding month was $20,000,000 or more,
but less than $30,000,000 and (C) $40,000,000 if the average Daily
Balance of the Obligations in the immediately preceding month was
$30,000,000 or more; LESS (b) the sum of: (i) the average Daily Balance
of advances made by Foothill under SECTION 2.1 that were outstanding
during the immediately preceding month; PLUS (ii) the average Daily
Balance of the undrawn L/Cs and L/C Guarantees issued by Foothill under
SECTION 2.2 that were outstanding during the immediately preceding
month.
(b) The definition of Eligible Landed
Inventory shall include Inventory of Sound Advice Arizona so long as Foothill
has (1) received Collateral Access Agreements for Sound Advice Arizona's leased
properties and (2) received acceptable intercreditor agreements from suppliers
of Sound Advice Arizona.
(c) The definition of "Foothill Expenses" is
amended to read as follows:
"FOOTHILL EXPENSES" means all: costs or
expenses (including taxes, photocopying, notarization,
telecommunication and insurance premiums) required to be paid by
Borrower under any of the Loan Documents that are paid or advanced by
Foothill; documentation, filing, recording, publication, appraisal
(including periodic Collateral appraisals), real estate survey,
environmental audit, and search fees assessed, paid, or incurred by
Foothill in connection with Foothill's transactions with Borrower;
costs and expenses incurred by Foothill in the disbursement of funds to
Borrower (by wire transfer or otherwise); charges paid or incurred by
Foothill resulting from the dishonor of checks; costs and expenses paid
or incurred by Foothill to correct any default or enforce any provision
of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale,
or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated; costs and expenses paid
or incurred by Foothill in examining Borrower's Books; costs and
expenses of third party claims or any other suit paid or incurred by
Foothill in enforcing or defending the Loan Documents; and Foothill's
reasonable attorneys fees and expenses incurred in advising,
structuring, drafting, reviewing, administering, amending, terminating,
enforcing, defending, or concerning the Loan Documents (including
attorneys fees and expenses incurred in connection with a "workout," a
"restructuring," or
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an Insolvency Proceeding concerning Borrower or any guarantor of the
Obligations), irrespective of whether suit is brought.
(d) The definition of "Loan Documents" is
amended to read as follows:
"LOAN DOCUMENTS" means this Agreement, the
Eurodollar Supplement, the Lock Box Agreement, the Continuing Guaranty
and Security Agreement from Sound Advice Arizona, any other note or
notes executed by Borrower and payable to Foothill, and any other
agreement entered into in connection with this Agreement.
(e) The definition of "Maximum Amount" is
amended to read as follows:
"MAXIMUM AMOUNT" means $40,000,000.
(f) The definition of "Orderly Liquidation"
is amended to read as follows:
"ORDERLY LIQUIDATION VALUE" means the
orderly liquidation value of Borrower's Inventory as determined by
Foothill from time to time based upon the most recent Inventory
appraisal by a third party appraiser acceptable to Foothill.
2.3 Section 2.1(a)(x) of the Agreement is amended to
read as follows:
(x) the least of: (i) 70% of Borrower's Cost
of Eligible Landed Inventory; (ii) 55% of the retail selling price of
Eligible Landed Inventory; and (iii) 85% of the Orderly Liquidation
Value of Eligible Landed Inventory as may be determined by Foothill;
plus
2.4 Section 2.1(c) of the Agreement is amended to
read as follows:
(c) Foothill shall have no obligation to
make advances hereunder to the extent they would cause the outstanding
Obligations to exceed the Maximum Amount.
2.5 Section 2.2(a)(ii) and Section 2.2(d) of the
Agreement are amended to read as follows:
(ii) $5,000,000.
(d) Any and all service charges,
commissions, fees, and costs incurred by Foothill relating to the L/Cs
guaranteed by Foothill shall be considered Foothill Expenses for
purposes of this Agreement and immediately shall be reimbursable by
Borrower to Foothill. On the first day of each month on or before April
15, 2001, Borrower will pay Foothill a fee equal to one and 1.50%
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per annum times the actual Daily Balance of the undrawn L/Cs and L/C
Guarantees that were outstanding during the immediately preceding
month, and such fee shall be equal to 1.25% per annum on or after April
16, 2001. Service charges, commissions, fees, and costs may be charged
to Borrower's loan account at the time the service is rendered or the
cost is incurred.
2.6 Section 2.5(a) of the Agreement is amended to
read as follows:
(a) Interest Rate. Except as provided in
clause (b) below and except for Obligations as to which Borrower has
elected to have interest charged based upon the Eurodollar Supplement,
all Obligations, except for undrawn L/Cs and L/C Guarantees, shall bear
interest at a per annum rate equal to the Reference Rate PLUS the
Reference Rate Margin.
2.7 Section 2.5(c) of the Agreement is deleted in its
entirety.
2.8 Section 2.8(b) of the Agreement is amended to
read as follows:
(b) Unused Line Fee. On the first day of
each month through April 15, 2001, a fee in an amount equal to 0.375%
times the Average Unused Portion of the Maximum Amount and on the first
day of each month thereafter a fee in an amount equal to 0.30% times
the Average Unused Portion of the Maximum Amount.
2.9 The last sentence of Section 2.8(d) of the
Agreement is amended to read as follows:
So long as no Event of Default occurs, (i) an annual appraisal will be
conducted which appraisal will be seasonably updated by desk top
appraisals twice each year, and (ii) such financial analysis and
examinations will not be conducted more frequently than quarterly.
2.10 Section 2.8(c) of the Agreement is amended to
read as follows:
(c) Amendment and Agent Fees. In conjunction
with Combined Amendment Number One to the Agreement, Borrower agrees to
pay to Foothill the following fees that shall be fully-earned as of
April 15, 2001 and are payable as follows:
(i) An amendment fee in the amount
of $50,000, one-half of which shall be payable on April 16, 2001,
(ii) An agent's fee in the amount of
$50,000, which shall be payable with the remaining $25,000 of the
amendment fee which shall be payable in three equal monthly payments of
$25,000 each commencing June 1, 2001 and continuing on the first day of
each subsequent month, including August 1, 2001.
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2.11 The first sentence of Section 3.3 of the
Agreement is amended to read as follows:
This Agreement shall become effective upon
the execution and delivery hereof by Borrower and Foothill and shall
continue in full force and effect for a term ending on July 31, 2004
(the "Renewal Date"), and automatically shall be renewed for successive
one year periods thereafter, unless sooner terminated pursuant to the
terms hereof.
2.12 Section 3.5 of the Agreement is hereby revised
to read as follows:
3.5 EARLY TERMINATION BY BORROWER. The
provisions of SECTION 3.3 that allow termination of this Agreement by
Borrower only on the Renewal Date and certain anniversaries thereof
notwithstanding, Borrower has the option, at any time upon 60 days
prior written notice to Foothill, to terminate this Agreement by paying
to Foothill, in cash, the Obligations (including an amount equal to the
full amount of the outstanding L/Cs or L/C Guarantees), together with a
premium (the "Early Termination Premium") equal to: (a) 0.40% of the
Maximum Amount, if terminated on or before ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) 1.0% of
the Maximum Amount if terminated after April 16, 2001 and on or before
April 15, 2003 and (c) 0.50% of the Maximum Amount if terminated after
April 15, 2003, but before the Renewal Date; PROVIDED, HOWEVER, that no
Early Termination Premium will be charged in the event that
substantially all of Borrower's assets are acquired by an unrelated
Person, Borrower merges into an unrelated Person or Borrower is
acquired by an unrelated Person and Foothill or one of its Affiliates
provides financing to the acquiring Person.
2.13 Section 5.2 of the Agreement is hereby amended
by deleting therefrom any references to Sound Advice Electronics of Maryland,
Inc., Sound Advice of Virginia, Inc., and SAI Realty Investments, Inc.
2.14 Section 6.13 of the Agreement is amended to read
as follows:
(a) Minimum EBITDA. Borrower shall have
EBITDA, measured on a fiscal quarter end basis, of not less then the
required amount set forth in the following table:
12 Month Period Ending
Applicable Amount on or About
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$ 11,000,000 April 30, 2001 and July 31, 2001
$ 12,000,000 October 31, 2001
$ 12,500,000 January 31, 2002 and all subsequent quarters
(b) Minimum Availability. At all times,
Borrower shall have unused borrowing availability under this Agreement
of not less $3,000,000.
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2.15 Section 7.10 of the Agreement is amended to read
as follows:
7.10 CAPITAL EXPENDITURES. Make any capital
expenditure, or any commitment therefor, where the aggregate amount of
such capital expenditures, made or committed in any fiscal year exceeds
$8,000,000.
2.16 Section 7.14 of the Agreement is amended to read
as follows:
7.14 INVESTMENTS. Directly or indirectly
make or acquire any beneficial interest in (including stock,
partnership interest, or other securities of), or make any loan,
advance, or capital contribution to, any Person except for employee
advances and loans made in the ordinary course of business which in the
aggregate do not exceed $2,000,000 outstanding at any one time.
2.17 Section 12 of the Agreement is amended to read
as follows:
12. NOTICES.
Unless otherwise provided in this Agreement,
all notices or demands by any party relating to this Agreement or any
other Loan Document shall be in writing and (except for financial
statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or
sent by registered or certified mail, postage prepaid, return receipt
requested, or by prepaid telex, TWX, telefacsimile, or telegram (with
messenger delivery specified) to Borrower or to Foothill, as the case
may be, at its address set forth below:
If to Borrower: SOUND ADVICE, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chief Financial Officer
Telefacsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ TRAURIG, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telefacsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Foothill: FOOTHILL CAPITAL CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
Telefacsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: BUCHALTER, NEMER, FIELDS &
YOUNGER
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefacsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto may change the address at
which they are to receive notices hereunder, by notice in writing in
the foregoing manner given to the other. All notices or demands sent in
accordance with this Section 12, other than notices by Foothill in
connection with Sections 9504 or 9505 of the Code, shall be deemed
received on the earlier of the date of actual receipt or three (3) days
after the deposit thereof in the mail. Borrower acknowledges and agrees
that notices sent by Foothill in connection with Sections 9504 or 9505
of the Code shall be deemed sent when deposited in the mail or
transmitted by telefacsimile or other similar method set forth above.
2.18 The definition of "Eurodollar Rate Margin" in
the Eurodollar Supplement is amended to read as follows:
"EURODOLLAR RATE MARGIN" means 2.00% per
annum for Interest Periods commencing on or before April 15, 2001 and
1.75% per annum for Interest Periods commencing on or after April 16,
2001.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to
Foothill that all of Borrower's representations and warranties set forth in the
Agreement are true, complete and accurate in all respects as of the date hereof,
except to the extent expressly modified hereby.
4. NO DEFAULTS. Borrower hereby affirms to Foothill that no
Event of Default has occurred and is continuing as of the date hereof.
5. COSTS AND EXPENSES. Borrower shall pay to Foothill all of
Foothill's out-of-pocket costs and expenses (including, without limitation, the
fees and expenses of its counsel, which counsel may include any local counsel
deemed necessary, search fees, filing and recording fees, title insurance
premiums, documentation fees, appraisal fees, travel expenses, and other fees)
arising in connection with the preparation, execution, and delivery of this
Amendment and all related documents.
6. CONDITIONS PRECEDENT. The effectiveness of this Amendment
is expressly conditioned upon:
(a) the receipt by each of the parties of a
counterpart of this Amendment and the Eurodollar Supplement, executed by the
other party;
(b) the receipt by Foothill of a portion of the
amendment and extension fee in the amount of $25,000 which shall be fully earned
and due and payable on the
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effective date of this Amendment and shall be charged to Borrower's loan account
pursuant to Section 2.5(d) of the Agreement; and
(c) Sound Advice Arizona shall execute and deliver to
Foothill: (i) a Continuing Guaranty of Borrower's Obligations, (ii) a Security
Agreement securing the Continuing Guaranty, and (iii) UCC-1 Financing
Statements.
7. AMENDMENT. This Amendment amends and supersedes the Prior
Amendments in their entirety.
8. LIMITED EFFECT. In the event of a conflict between the
terms and provisions of this Amendment and the terms and provisions of the
Agreement, the terms and provisions of this Amendment shall govern. In all other
respects, the Agreement, as amended and supplemented hereby, shall remain in
full force and effect.
9. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which when so executed and delivered shall be deemed to be an original.
All such counterparts, taken together, shall constitute but one and the same
Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment in
Boston, Massachusetts as of the date first set forth above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Vice President
SOUND ADVICE, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: CFO & Treasurer
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