Exhibit 10.1
FIRST AMENDMENT TO LOAN AGREEMENT
FIRST AMENDMENT TO LOAN AGREEMENT ("First Amendment") made as of December
22, 2004 by and among XXXX XXXXXXX AUCTIONS, INC., a Delaware corporation (the
"Borrower"), XXXX XXXXXXX AUCTIONS REAL ESTATE, LLC, a Delaware limited
liability company (the "Mortgage Borrower") and PNC BANK, NATIONAL ASSOCIATION
("Bank").
W I T N E S S E T H:
WHEREAS, the Borrower and the Bank are parties to a certain Loan Agreement
dated as of May 28, 2004;
WHEREAS, the Borrower is sole member of the Mortgage Borrower which was
formed by the Borrower to acquire the commercial office and warehouse facility
occupied by the Borrower commonly known as 000 Xxxxxxx Xxx., Xxxx Xxxxxxxx, Xxx
Xxxxxx;
WHEREAS, the Bank is willing to provide to the Borrower and the Mortgage
Borrower a commercial mortgage loan to finance, in part, the Borrower's
acquisition of such facility;
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. Definitions.
(a) Capitalized terms used in this First Amendment without
definition shall have the respective meanings assigned to such terms in
the Agreement.
(b) New defined terms, are added to Section 1.1 as follows:
"Mortgage Borrower" shall mean Xxxx Xxxxxxx Auctions Real Estate,
LLC, a Delaware limited liability company.
"Mortgage Loan" shall mean the credit facility extended by the Bank
to the Borrower and the Mortgage Borrower under Article 2A of this
Agreement.
"Mortgage Note" shall have the meaning set forth in Section 2A.1.
"Property" shall mean the real property and improvements located
thereon commonly known as 000 Xxxxxxx Xxx., Xxxx Xxxxxxxx, Xxx Xxxxxx,
block 1402, lot 14 on the Tax Map of West Xxxxxxxx.
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"Security Documents" shall mean the Security Agreements, the
Mortgage and Security Agreement given by the Mortgage Borrower and all
other documents granting security for the Obligations.
(c) The following defined terms are amended and restated as follows:
"Guarantor" shall mean each of Spectrum Numismatics International,
Inc., a California corporation ("Spectrum"), Spectrum Auction Services,
LLC, a Delaware limited liability company, Teletrade, Inc., a Delaware
corporation ("Teletrade") Spectrum Numismatic Auctions, Inc., a California
corporation, Ivy & Xxxxx Philatelic Auctions, Inc., a Texas corporation,
Xxxx Xxxxxxx Galleries, Inc., a New York corporation, Kensington
Associates, LLC, a California limited liability company, North American
Certified Trading, LLC, a California limited liability company, Kingswood
Coin Auctions, LLC, a Delaware limited liability company, Superior Sports
Auctions, LLC, a Delaware limited liability company, Xxxxxx & Xxxxxx
Auctions, LLC, a Delaware limited liability company, Xxxx Xxxxxxx Nutmeg
Auctions, Inc., a Delaware corporation and, as to the Obligations other
than the Mortgage Loan, the Mortgage Borrower.
"Interest Payment Date" shall mean (i) as to the outstanding
principal amount of the Line of Credit or the Mortgage Loan bearing
interest based upon Prime Rate, the first day of each calendar month, and
(ii) as to the outstanding principal amount of the Line of Credit or the
Mortgage Loan constituting LIBOR Rate Loans, the last day of the LIBOR
Rate Interest Period with respect thereto.
"LIBOR Rate Interest Period" shall mean (1) the period of one month
as to the portion, if any, as to which the Borrower has elected the LIBOR
Rate Option with respect to the Mortgage Loan and each successive one
month period thereafter and (2) the period of one, two, three or six
months selected by the Borrower commencing on the date of the exercise of
the LIBOR Rate Option as to any portion of the Line of Credit and each
successive period selected by the Borrower thereafter; provided, that (i)
if a LIBOR Rate Interest Period would end on a day which is not a Business
Day, it shall end on the next succeeding Business Day; unless such day
falls in the succeeding calendar month in which case the LIBOR Rate
Interest Period shall end on the next preceding Business Day; (ii) the
Borrower may not select a LIBOR Rate Interest Period that would end on a
day after the end of the Line of Credit Term, and; (iii) any LIBOR Rate
Interest Period that begins on the last business day of a calendar month
(or a day for which there is no numerically corresponding day in the last
calendar month of such LIBOR Rate Interest Period) shall end in the last
business day of the last calendar month of such LIBOR Rate Interest
Period.
"LIBOR Rate Loan" shall mean (i) the portions of the outstanding
principal balances of the Line of Credit as to which the LIBOR Rate Option
is exercised and (ii) in the case of the exercise of the LIBOR Rate Option
as to the Mortgage Loan, the entire outstanding principal balance of the
Mortgage Loan.
"LIBOR Rate Option" shall have the meaning set forth in Section
3.1(b).
"Obligor" shall mean the Borrower, the Mortgage Borrower and each
Guarantor.
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"Prime Rate Loan" shall mean (i) the entire principal balance of the
Mortgage Loan and (ii) the portions of the outstanding principal balance
of the Line of Credit which, at any time, bear interest at the Prime-based
Rate.
2. New Article 2A. The Agreement is amended by the addition of a new
Article 2A as follows:
2A.1 Amount of Loan. Subject to the terms and conditions wet forth
in this Agreement, on the date of the First Amendment the Bank will make a
term loan to the Borrower and the Mortgage Borrower, jointly and
severally, in the amount of $1,312,500 (the "Mortgage Loan"). The Mortgage
Loan shall be evidenced by a note in the form of Exhibit E attached hereto
(the "Mortgage Note").
2A.2 Use of Proceeds. The proceeds of the Mortgage Loan shall be
used to finance, in part, the acquisition by the Mortgage Borrower of the
Property.
2A.3 Repayment. The Mortgage Loan shall be repaid in fifty nine (59)
equal monthly principal payments of $7,291.67, commencing on February 1,
2005 and continuing on 1st day of each month thereafter until December 1,
2009 and a final payment of $882,291.47 on January 1, 2010; provided,
however, that the Bank may call the Mortgage Loan at any time, whether or
not a Default or an Event of Default has occurred and is continuing (the
"Call Option"), in which case the Mortgage Loan will be due and payable in
full on the date one year and one day following the exercise of the Call
Option; and, provided, further, if the Borrower terminates the Line of
Credit, the Mortgage Loan will be payable in full on the date one year and
one day following such termination.
2A.4 Interest. The unpaid principal balance of the Mortgage Loan
shall bear interest at a rate or rates selected by the Mortgage Borrower,
from time to time, from the interest rate options set forth in Section
3.1. The Mortgage Borrower may fix the interest rate on the Mortgage Loan
by entering into an interest rate swap agreement for the full term of the
loan with a counterparty reasonably satisfactory to the Bank. If the Bank
is the counterparty to such a swap, all obligations of the Mortgage
Borrower to the Bank arising therefrom shall be secured by the Collateral.
If the Bank is not the counterparty, the swap shall be unsecured.
3. Amendments of Article 3. Article 3 of the Agreement is amended as
follows:
(a) Section 3.1 of the Agreement is amended and restated as
follows:
3.1 Interest Rates.
(a) Prime Rate. The outstanding principal amounts under the Line of
Credit and the Mortgage Loan shall bear interest at a rate per annum equal
to the Prime-based Rate, determined on the basis of a year of 360 days for
the actual number of days elapsed, unless, as to a portion thereof, the
Borrower elects the LIBOR Rate Option provided for in paragraph (b) below.
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(b) LIBOR Rate Option. The Borrower shall have the option to elect,
from time to time, that interest on portions of the outstanding principal
amounts under the Line of Credit and the entire principal balance of the
Mortgage Loan be calculated on the basis of the LIBOR rate (the "LIBOR
Rate Option"). Each LIBOR Rate Loan shall bear interest at a rate of
interest per annum (computed on the basis of a year of 360 days and the
actual number of days elapsed) equal to the sum of (A) the LIBOR rate plus
(B) (i) 250 basis points (2.50%) per annum in the case of the Line of
Credit and (ii) 225 basis points (2.25%) per annum in the case of the
Mortgage Loan, for the applicable LIBOR Rate Interest Period in an amount
equal to the principal amount of the LIBOR Rate Loan and having a
comparable maturity as determined at or about 11:00 a.m. (London time) two
Business Days prior to the commencement of the LIBOR Rate Interest Period.
In order to exercise the LIBOR Rate Option, the Borrower shall supply to
the Bank, by 10:00 a.m. (Eastern time), at least two (2) Business Days
prior to the date of a desired LIBOR Rate Loan or any renewal or
conversion of a LIBOR Rate Interest Period, a completed and signed Notice
of Conversion / Continuation substantially in the form of Exhibit B
attached hereto, subject in each case to the following:
(i) a LIBOR Rate Loan may not be converted into a Prime Rate Loan or
continued as a new LIBOR Rate Loan at a time other than the last day of
the LIBOR Rate Interest Period applicable thereto;
(ii) no LIBOR Rate Loan may be continued as a new LIBOR Rate Loan
and no Prime Rate Loan may be converted to a LIBOR Rate Loan when any
Event of Default has occurred and is continuing;
(iii) any portion of a LIBOR Rate Loan that cannot be converted into
or continued as a LIBOR Rate Loan by reason of a provision of this
Agreement or otherwise, automatically shall be converted at the end of the
LIBOR Rate Interest Period in effect for such LIBOR Rate Loan to a Prime
Rate Loan;
(iv) on the last day of any LIBOR Rate Interest Period for a LIBOR
Rate Loan, if the Borrower has failed to give notice of conversion or
continuation as described in this section, such LIBOR Rate Loan shall
automatically be converted to a Prime Rate Loan on the last day of such
then expiring LIBOR Rate Interest Period;
(v) a LIBOR Rate Loan with respect to the Line of Credit must be at
least $500,000 or a whole multiple of $10,000 in excess thereof; and
(vi) at no time shall more than four (4) LIBOR Rate Loans be
outstanding with respect to the Line of Credit.
4. Conditions Precedent.
The Bank shall have no obligation to make the Mortgage Loan unless
the events set forth in (a) below shall have occurred and the Borrower and
the Mortgage Borrower shall have delivered to the Bank, in form and
substance satisfactory to the Bank and its counsel, the documents set
forth in (b) below:
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(a) Events.
(i) All proceedings taken in connection with the execution of this
First Amendment and the execution and delivery of all other Loan Documents
relating thereto shall be satisfactory to the Bank and its counsel;
(ii) The Bank shall have received all reasonable fees and
out-of-pocket expenses which are payable to the Bank or its counsel; and
(iii) The Bank and its counsel shall have received such documents
and papers as the Bank or counsel may reasonably request in connection
therewith, all in form and substance satisfactory to the Bank and its
counsel.
(b) Closing Documents.
(i) The Mortgage Note, a Mortgage and Security Agreement, an
Assignment of Rents and Leases and an Environmental Indemnity Agreement,
duly executed by the Borrower and/or the Mortgage Borrower, as applicable.
(ii) A Certificate of the Secretary of the Borrower certifying as to
resolutions of the Board of Directors of the Borrower duly adopted and in
full force and effect authorizing (a) the consummation of the transactions
contemplated by this First Amendment and (b) officers to execute and
deliver the applicable Loan Documents.
(iii) Evidence of limited liability company authorization, certified
by an appropriate person on behalf of the Mortgage Borrower, as being duly
adopted and in full force and effect authorizing (a) the consummation of
the transactions contemplated by this First Amendment and (b) officers to
execute and deliver the applicable Loan Documents.
(iv) Certificates of the appropriate Governmental Authorities, dated
the most recent practicable date, showing that the Borrower and the
Mortgage Borrower is organized and in good standing in its jurisdiction of
organization and, in the case of the Mortgage Borrower, is qualified, and
in good standing, as a foreign limited liability company in the State of
New Jersey.
(v) Copies of the Certificate of Formation and operating agreement
of the Mortgage Borrower, certified by an appropriate person as true and
complete.
(vi) Evidence that the insurance policies provided for in Section
7.6 of the Agreement and as required by the Mortgage and Security
Agreement with respect to the Property are in full force and effect, with
an appropriate loss payable clause in favor of the Bank.
(vii) An opinion of Xxxxx Xxxxxxx, Esq., counsel to the Borrower and
the Mortgage Borrower.
(viii) A consent and waiver agreement from Capital Coin Fund.
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(ix) A copy of the lease agreement in effect between the Borrower
and the Mortgage Borrower having a term expiring no earlier than three
months following the scheduled maturity date of the Mortgage Loan.
(x) A phase I environmental site assessment of the Property.
(xi) An appraisal of the Property performed by a licensed appraiser
selected by the Bank reflecting a loan to value ratio of no greater than
75%.
(xii) A marked-up title insurance commitment and /or a pro forma
title insurance policy with respect to the Lien in favor of the Bank.
(xiii) A current ATLA survey relative to the Property certified to
the Bank.
(xiv) Evidence of the closing of the acquisition of the Property by
the Mortgage Borrower.
(xv) UCC-1 Financing Statements identifying the Mortgage Borrower as
the debtor.
(xvi) Such additional information and documents and the Bank may
request.
5. Representations and Warranties.
(a) Section 5.1 of the Agreement is amended and restated as follows:
5.1 Corporate Existence; Compliance with Law. Each Obligor (i) is a
corporation or limited liability company duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation; (ii) is duly qualified as a foreign corporation or foreign
limited liability company and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification (except for jurisdictions in
which such failure so to qualify or to be in good standing would not have
a Material Adverse Effect); (iii) has the requisite corporate or limited
liability company power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease, and to conduct its business as now,
heretofore and proposed to be conducted; (iv) has all material licenses,
permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (v) is in compliance with its
certificate of incorporation and by-laws or certificate of formation and
operating agreement, as applicable; and (vi) is in compliance with all
applicable provisions of law and all of its contracts with third parties
where the failure to comply would have a Material Adverse Effect.
(b) The Borrower represents and warrants as follows:
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(i) As of this date, no Event of Default has occurred and is
continuing and no uncured Default exists. The Borrower (A) makes the
representations and warranties set forth in Article 5 of the Agreement as
to the Mortgage Borrower and (B) affirms same as to the other Obligors, as
if set forth at length herein.
(ii) Since February 2, 2004, there has been no material adverse
change in the financial condition, operations, business or prospects of
the Borrower taken as a whole.
(iii) Each of the Borrower and the Mortgage Borrower has the power
and authority to enter into this First Amendment and the execution hereof
has been duly authorized by all requisite corporate or limited liability
company action.
(iv) The Mortgage Borrower was formed solely for the purpose of
taking title to the Property, becoming a borrower of the Mortgage Loan and
leasing the Property to the Borrower. Prior to the date hereof, the
Mortgage Borrower has not engaged in any business. The Borrower is the
only member of the Mortgage Borrower.
6. Counterparts. This First Amendment may be executed in
counterparts, all of which taken together shall constitute one and the
same agreement.
7. Affirmation. Except as amended hereby, in all respects, the
Agreement is ratified and confirmed.
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IN WITNESS WHEREOF, this First Amendment has been duly executed as of the
date first above written.
XXXX XXXXXXX AUCTIONS, INC.
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President
XXXX XXXXXXX AUCTIONS REAL ESTATE, LLC
By: XXXX XXXXXXX AUCTIONS, INC., SOLE MEMBER
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President
PNC BANK, NATIONAL ASSOCIATION
By:_____________________________________
Name: Xxxx X. Xxxx
Title: Vice President
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