Exhibit 10.13
FOURTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
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This Fourth Amendment to Loan and Security Agreement ("Third
Amendment")is made effective the 31st day of August, 2003, by and among
SOVEREIGN BANK (the "Bank"), a federally-chartered, SAIF-insured savings
institution with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; ▇. ▇. ▇▇▇▇ CO., INC., a Delaware corporation ("▇.▇. ▇▇▇▇ Co."); ▇▇▇▇▇ ▇.
and ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Menards," together with ▇.▇. ▇▇▇▇ Co. sometimes
hereinafter referred to as "Borrowers"), with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and MORO CORPORATION, a
Delaware corporation ("Guarantor").
BACKGROUND
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A. Borrowers and the Bank entered into a Loan and Security Agreement
dated March 31, 2000, as amended (the "Agreement").
B. Borrowers have requested the Bank to extend the Line of Credit
Facility and to loan ▇. ▇. ▇▇▇▇ Co. (i) an additional $150,000 pursuant to an
equipment line of credit facility (the "Equipment Line of Credit Loan") to
permit ▇. ▇. ▇▇▇▇ Co. to finance ongoing equipment purchases, and (ii) an
additional $400,000 pursuant to a term loan to permit ▇.▇. ▇▇▇▇ Co. to refinance
its existing term loan with the Bank (the "Additional Term Loan") and the Bank
has agreed to extend the Line of Credit Facility, make the Equipment Line of
Credit Loan and make the Additional Term Loan, all as more particularly set
forth in this Fourth Amendment.
C. The Bank and Borrowers desire to enter into this Fourth Amendment to
extend the Line of Credit Facility, make the Equipment Line of Credit Loan to ▇.
▇. ▇▇▇▇ Co. and make the Additional Term Loan to ▇. ▇. ▇▇▇▇ Co. pursuant to the
terms hereof.
D. The Agreement shall remain in full force and effect, without
modification or amendment, except as specifically set forth below. All terms not
otherwise defined herein shall have the meanings set forth in the Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the aforementioned Background which is
incorporated herein by reference, and in consideration of the terms and
conditions set forth herein, agree as follows:
1. Confirmation of Existing Loans. Borrowers hereby ratify, confirm and
acknowledge that the statements contained in the foregoing Background are true,
accurate and correct and that the Loan Documents, as that term is defined in the
Agreement, are valid, binding and in full force and effect as of the date
hereof. Borrowers further acknowledge, confirm, represent and warrant that they
have no defenses, set-offs, counterclaims, or challenges to or against the
payment of any sums owing under the Loan Documents, or to the enforceability or
validity of the terms thereof. Borrowers further acknowledge, confirm, represent
and warrant that they have no claims, suits or causes of action against the Bank
and hereby remise, release and forever discharge the Bank, its officers,
directors, shareholders, representatives and their successors and assigns, and
any of them, from any claims, causes of action, suits, or demands whatsoever in
law and equity, which they have or may have from the beginning of the world to
the date of this Fourth Amendment. Neither this Fourth Amendment nor any of the
documents executed in connection herewith, is in any way intended to constitute
a novation of or to the Loan Documents.
2. Confirmation of Indebtedness. Borrowers confirm and acknowledge that
the outstanding principal balance of the indebtedness as evidenced by the Loan
Documents was ____________________________ Dollars ($_________) as of July 31,
2003.
3. All references in the Agreement and/or any of the Loan Documents to
"the Agreement" or "this Agreement" shall be understood to refer to the Loan and
Security Agreement, as amended by this Fourth Amendment, and as the same may
hereafter be amended from time to time. All terms not defined herein shall have
the meanings given to them in the Agreement.
4. The following definitions are hereby added to Section 1.1 of the
Agreement:
Additional Term Loan. The meaning provided at Section 2.9 hereof.
Additional Term Note. The term note executed by ▇. ▇. ▇▇▇▇ Co. in
the principal amount specified in Section 2.10 hereof and in the form of Exhibit
"B" attached hereto and made a part hereof.
Equipment Line of Credit or Equipment Line of Credit Facility. The
meaning provided at Section 2.7 hereof.
Equipment Line of Credit Note. The equipment line of credit note
executed by ▇. ▇. ▇▇▇▇ Co. in the principal amount specified in Section 2.8
hereof and in the form of Exhibit "A" attached hereto and made a part hereof.
Equipment Line of Credit Loan Termination Date. The meaning provided
at Section 2.7 hereof.
5. Section 2.1 (a) of the Agreement is hereby amended to read in its
entirety as follows:
(a) Subject to, and in accordance with, the terms and conditions of
this Agreement, the Bank agrees to make advances in integral multiples of
$1,000.00 (the "Advances") to ▇.▇. ▇▇▇▇ Co. upon request at any time and from
time to time during the period commencing on the date hereof and ending on the
earlier of (i) the occurrence of an Event of Default (as defined in Section 8.1
hereof), or (ii) June 30, 2004 (the "Loan Termination Date") unless extended in
writing by the Bank in its sole discretion, in an amount which in the aggregate
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shall not exceed the lesser of (A) the Borrowing Base, or (B) $2,000,000.00, in
all cases less the sum of the then unpaid principal amount of all previous
Advances.
6. A new Section 2.7 is added to the Agreement to read in its entirety
as follows:
2.7 Equipment Line of Credit Facility.
(a) Subject to, and in accordance with, the terms and conditions
of this Agreement, the Bank agrees to make advances in integral multiples of
$1,000 (the "Advances") to ▇. ▇. ▇▇▇▇ Co. upon request at any time and from time
to time during the period commencing on the date hereof and ending on the
earlier of (i) the occurrence of an Event of Default (as defined in Section 8.1
hereof), or (ii) June 30, 2004 (the "Equipment Line of Credit Loan Termination
Date") unless extended in writing by the Bank in its sole discretion, in an
amount which, in each instance, shall not exceed eighty percent (80%) of the
lesser of the net book value or the current market value of the specific
equipment being purchased and, in the aggregate, shall not exceed $150,000 (the
"Equipment Line of Credit" or the "Equipment Line of Credit Facility").
(b) ▇. ▇. ▇▇▇▇ Co. may request an Advance by notice to the Bank
not later than 2:00 P.M., Philadelphia, Pennsylvania time, on the Business Day
on which ▇. ▇. ▇▇▇▇ Co. wishes the Bank to make the Advance.
(c) ▇. ▇. ▇▇▇▇ Co., subject to the terms and conditions of this
Agreement, may reborrow any amount repaid by ▇. ▇. ▇▇▇▇ Co. at any time and from
time to time on or before the termination of the Bank's commitment under this
Section 2.7.
(d) The term of this Equipment Line of Credit shall commence on
the date hereof and, unless earlier terminated, shall terminate on the earlier
to occur of (i) an Event of Default, or (ii) the Equipment Line of Credit Loan
Termination Date, unless extended in writing by the Bank in its sole discretion.
7. A new Section 2.8 is added to the Agreement to read in its entirety
as follows:
2.8 Equipment Line of Credit Note. The obligation of ▇. ▇. ▇▇▇▇ Co.
to pay the principal of, and accrued interest on, the Line of Credit shall be
evidenced by its promissory note dated this date (the "Equipment Line of Credit
Note"):
(a) payable to the order of the Bank in the face amount of One
Hundred Fifty Thousand Dollars ($150,000);
(b) bearing interest on its unpaid principal amount of all
Advances at an annualrate equal to the Prime Rate plus one quarter percent
(.25%). Interest shall fluctuate with changes in the Prime Rate, shall be
computed on the actual number of days elapsed on the basis of a 360-day year and
shall be payable monthly on the first day of each month;
(c) payable as to interest monthly in arrears on the first day
of each calendarmonth commencing September 1, 2003 through and including the
first day on which:
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(i) the Equipment Line of Credit shall have been terminated,
and
(ii) ▇. ▇. ▇▇▇▇ Co. shall have repaid in full the Line of
Credit (it being understood that interest shall again accrue upon any subsequent
borrowing under this Equipment Line of Credit);
(d) payable as to principal as follows:
(i) if the unpaid balance of the Line of Credit exceeds the
limitations set forth in Section 2.7(a) hereof, at any time, then within three
(3) Business Days after notification from the Bank, but only as to such excess;
or
(ii) in full on the earlier to occur of an Event of Default
or the Equipment Line of Credit Loan Termination Date, unless extended in
writing by the Bank in its sole discretion;
(e) secured by the Collateral and the Surety Agreement;
(f) prepayable by ▇. ▇. ▇▇▇▇ Co. without penalty or premium but
with accrued interest to the date of such prepayment on the amount prepaid, at
any time and from time to time, in whole or in part, upon notification to the
Bank of such prepayment not later than 10:00 a.m. on the date of such
prepayment; and
(g) substantially in the form of Exhibit "A" attached hereto and
made a part hereof.
8. A new Section 2.9 is added to the Agreement to read in its entirety
as follows:
2.9 Additional Term Loan. Subject to, and in accordance with, the
terms and conditions of this Agreement, the Bank agrees to loan ▇. ▇. ▇▇▇▇ Co.
the principal amount of Four Hundred Thousand Dollars ($400,000.00) (the
"Additional Term Loan").
9. A new Section 2.10 is added to the Agreement to read in its entirety
as follows:
2.10 Term Note. The obligation of ▇.▇. ▇▇▇▇ Co. to pay the principal
of, and accrued interest on, the Additional Term Loan shall be evidenced by its
promissory note dated this date (the "Additional Term Note"):
(a) payable to order of the Bank in the face amount of Four
Hundred Thousand Dollars ($400,000.00);
(b) bearing interest on the unpaid principal amount at an annual
rate equal to the Prime Rate plus one-half percent (.50%);
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(c) with interest payable on a monthly basis in arrears on the
first day of each calendar month commencing September 1, 2003;
(d) with principal payable in seventy-one (71) equal,
consecutive monthly installments in the amount of $5,556.00 each, plus interest
thereon, commencing on September 1, 2003 and continuing on the first day of each
month thereafter until August 1, 2009, at which time the remaining unpaid
principal balance, plus all accrued interest thereon, shall be paid in full, or
due in full upon the occurrence of an Event of Default;
(e) prepayable by ▇.▇. ▇▇▇▇ Co. without penalty or premium but
with accrued interest to the date of such prepayment on the amount prepaid, at
any time and from time to time, in whole or in part, upon notification to the
Bank of such prepayment not later than 10:00 a.m. on the date of such
prepayment;
(f) secured by the Collateral and the Surety Agreement; and
(g) in the form of Exhibit "B" attached hereto and made a part
hereof.
10. Sections 2.7, 2.8, 2.9 and 2.10 of the Agreement are hereby
renumbered as Sections 2.11, 2.12, 2.13 and 2.14, respectively.
11. Representations and Warranties. Borrowers hereby represent and
warrant that, as of the date hereof:
(a) Borrowers have the authority and have taken all action
necessary to enter into this Fourth Amendment;
(b) The representations and warranties of Borrowers set forth in
Article 4 of the Agreement are true and correct as of the date of this Fourth
Amendment as if made on the date hereof; and
(c) As of the date of this Fourth Amendment there does not exist
any Event of Default under the Agreement nor does there exist any event which
with the passage of time, the giving of notice, or both, would constitute an
Event of Default under the Agreement.
12. Certificate(s) of Insurance. Certificate(s) of insurance evidencing
that Borrowers are in compliance with Section 6.10 of the Agreement as of the
date hereof shall be presented to the Bank prior to or concurrently with the
signing of this Fourth Amendment.
13. Expenses. Borrowers agrees to reimburse the Bank for its
out-of-pocket expenses, including but not limited to attorney's fees and other
costs of preparation and filing concerning this Fourth Amendment and other
documents as required by law or deemed necessary by Bank, including, but not
limited to, the cost of all lien searches deemed necessary by the Bank. Such
costs and expenses shall be paid simultaneously with the execution of this
Fourth Amendment and all such expenses hereafter incurred shall be paid within
fifteen (15) days after notice by the Bank.
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14. Additional Events of Default. Without limiting the generality of
the terms and conditions of the Agreement or this Fourth Amendment, the
occurrence of any one or more of the following events shall constitute
additional Events of Default under the Agreement:
(a) The failure of either Borrower to duly perform or observe
any obligation, covenant or agreement set forth in this Fourth Amendment;
(b) Any representation or warranty of either Borrower set
forth herein is discovered to be materially untrue as of the date of this Fourth
Amendment, or any statement, certificate or data furnished by Borrowers to the
Bank heretofore is discovered to be materially untrue as of the date as of which
the facts therein set forth were stated or certified to be true.
15. Inconsistencies and Integration. All of the terms, conditions and
covenants, to the extent not expressly inconsistent with those set forth herein,
of the Agreement or other Loan Documents are incorporated herein by reference
and shall remain in full force and effect unaffected or unaltered by the terms
of this Fourth Amendment. To the extent there is any inconsistency with the
terms of this Fourth Amendment and any of the other Loan Documents, the terms of
this Fourth Amendment shall control.
16 Miscellaneous.
(a) Further Assurances. From time to time Borrowers shall
execute and deliver to the Bank such additional documents and will provide such
additional information as the Bank may reasonably request to carry out the
intent of this Fourth Amendment.
(b) Governing Law. This Fourth Amendment, and the rights and
obligations of the parties under this Fourth Amendment, shall be governed by,
and construed and interpreted in accordance with, the domestic, internal laws,
but not the law of conflicts of law, of the Commonwealth of Pennsylvania.
(c) Binding Effect and Assignment. This Fourth Amendment shall
inure to the benefit of, and shall be binding upon, the respective successors,
heirs and assigns of the parties hereto. Neither Borrower shall assign any of
its rights or delegate any of its obligations hereunder without the prior
written consent of the Bank.
(d) Severability. If any provision of this Fourth Amendment
shall be invalid under applicable laws, such invalidity shall not affect any
other provision of this Fourth Amendment that can be given effect without the
invalid provision, and to this end, the provisions hereof are severable.
(e) Counterparts and Headings. This Fourth Amendment may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument. Section headings contained herein are for convenience of reference
only and shall in no way affect or be used to construe or interpret this Fourth
Amendment.
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IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment to Loan and Security Agreement as of the day and year first above
written.
BORROWERS:
▇. ▇. ▇▇▇▇ CO. INC.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually, on a joint and
several basis with ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually, on a
joint and several basis with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SOVEREIGN BANK
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
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The undersigned, Moro Corporation, surety to the Bank with respect to
all obligations of Borrowers to the Bank, has read the above Fourth Amendment to
Loan and Security Agreement, understands the terms and conditions thereof and
the effect of said Fourth Amendment on Borrowers and on itself as surety to the
Bank. The undersigned hereby consents to the execution and delivery of the
foregoing Fourth Amendment to Loan and Security Agreement by Borrowers to the
Bank and further agrees that its guaranty and suretyship of all obligations of
Borrowers to the Bank shall remain in full force and effect undiminished by the
foregoing Fourth Amendment to Loan and Security Agreement.
The undersigned further acknowledges, agrees, confirms and certifies
that the Surety Agreement to which it is a party remains in full force and
effect, enforceable in accordance with its terms and that it has no defenses,
set-offs or counterclaims to the Bank's full enforcement of the terms of said
agreement.
MORO CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President