Exhibit 10.1

 

 

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Amendment to Credit Agreement

 

This agreement is dated as of September 26, 2008, by and between Supreme
Corporation (the “Borrower”) and JPMorgan Chase Bank, N.A. (the “Bank”), and its
successors and assigns. The provisions of this agreement are effective on the
date that this agreement has been executed by all of the signers and delivered
to the Bank (the “Effective Date”).

 

WHEREAS, the Borrower and the Bank entered into a credit agreement dated
January 5, 2004, as amended (if applicable) (the “Credit Agreement”); and

 

WHEREAS, the Borrower has requested and the Bank has agreed to amend the Credit
Agreement as set forth below;

 

NOW, THEREFORE, in mutual consideration of the agreements contained herein and
for other good and valuable consideration, the parties agree as follows:

 

1.             DEFINED TERMS. Capitalized terms not defined herein shall have
the meaning ascribed in the Credit Agreement.

 

2.             MODIFICATION OF CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:

 

2.1          From and after the Effective Date, Section 1.2 of the Credit
Agreement captioned “Facility  (Line of Credit ).” is hereby amended and
restated to read as follows:

 

1.2  Facility A (Line of Credit). The Bank has approved a credit facility to the
Borrower in the principal sum not to exceed $40,000,000.00 in the aggregate at
any one time outstanding (“Facility A”). Credit under Facility A shall be
repayable as set forth in a Line of Credit Note executed concurrently with this
agreement, and any renewals, modifications, extensions, rearrangements,
restatements thereof and replacements or substitutions therefor.

 

Non Usage Fee. The Borrower shall pay to the Bank a non-usage fee (the
“Non-usage Fee”) on the average daily unused portion of Facility A at a rate per
annum set forth below opposite the applicable Funded Debt to EBITDA Ratio,
payable in arrears within fifteen (15) days of the end of each fiscal quarter
for which the fee is owing.

 

Funded Debt to EBITDA Ratio

 

Non Usage Fee

 

Greater than 4.00 to 1.00

 

0.40

%

Greater than or equal to 3.51 to 1.00 but less than or equal to 4.00 to 1.00

 

0.35

%

Greater than or equal to 3.01 to 1.00 but less than or equal to 3.50 to 1.00

 

0.30

%

Greater than or equal to 2.51 to 1.00 but less than or equal to 3.00 to 1.00

 

0.25

%

Less than or equal to 2.50 to 1.00

 

0.20

%

 

Borrowing Base. The aggregate principal amount of advances outstanding at any
one time under the Line of Credit Note (and any and all renewals, modifications,
extensions, rearrangements, restatements thereof and replacements or
substitutions therefor) evidencing Facility A (the “Aggregate Outstanding
Amount”) shall not exceed the Borrowing Base or the maximum principal amount
then available under Facility A, whichever is less (the “Maximum Available
Amount”). If at any time the Aggregate Outstanding Amount exceeds the Maximum
Available Amount, the Borrower shall immediately pay the Bank an amount equal to
such excess. “Borrowing Base” means the aggregate of:

 

A.    80% of the book value of all Eligible Accounts; plus

 

B.    50% of the lower of cost (determined using the first-in, first-out method
of inventory accounting) or wholesale market value, as determined by the Bank,
of all raw material and finished goods Eligible Inventory.

 

2.2          From and after the Effective Date, the following Definitions are
hereby added to Section 2 of the Credit Agreement;

 

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2.7          “Eligible Accounts” means, at any time, all of the Borrower’s
Accounts in which the Bank has a first priority continuing perfected Lien and
which are earned and invoiced within thirty (30) days of being earned and which
contain selling terms and conditions satisfactory to the Bank, are payable on
ordinary trade terms, and are not evidenced by a promissory note, other
instrument or chattel paper. The net amount of any Eligible Account against
which the Borrower may borrow shall exclude all returns, discounts, credits, and
offsets of any nature. Unless otherwise agreed to by the Bank in writing,
Eligible Accounts do not include Accounts: (1) which are not owned by the
Borrower free and clear of all Liens, constructive trust, statutory priorities
not in favor of the Bank, and claims of Persons other than the Bank; (2) with
respect to which the Account Debtor is an Affiliate of the Borrower or otherwise
affiliated with or related to the Borrower, including without limitation, any
employee, officer, director, Equity Owner or agent of the Borrower; (3) with
respect to which goods are placed on consignment, guaranteed sale,
bill-and-hold, sale-and-return, sale on approval, cash-on-delivery or other
terms by reason of which the payment by the Account Debtor may be conditional;
(4) with respect to which the Account Debtor is not a resident of the United
States, except to the extent such Accounts are otherwise Eligible Accounts and
are supported by insurance, bonds or other assurances satisfactory to the Bank;
(5) subject to the U.S. Office of Foreign Asset Control Special Designated
Nationals and Blocked Person’s List, or with respect to which the Account Debtor
is otherwise a Person with whom the Borrower or the Bank is prohibited from
doing business by any applicable Legal Requirement; (6) which are not payable in
U.S. Dollars; (7) with respect to which the Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account Debtor to
the Borrower; (8) which are subject to dispute, counterclaim, deduction,
withholding, defense, or setoff; (9) with respect to which the goods have not
been shipped or delivered, or the services have not been rendered, to the
Account Debtor, or which otherwise constitute pre-billed Accounts; (10) which
constitute retainage, or are bonded Accounts; (11) with respect to which the
Bank determines the creditworthiness, financial or business condition of the
Account Debtor to be unsatisfactory; (12) of any Account Debtor who is the
subject of any state or federal bankruptcy, insolvency, or debtor-in-relief
acts, or who has had appointed a trustee, custodian, or receiver for the assets
of such Account Debtor, or who has made an assignment for the benefit of
creditors or has become insolvent or fails generally to pay its debts (including
its payrolls) as such debts become due; (13) with respect to which the Account
Debtor is the United States government or any department or agency of the United
States; (14) otherwise determined to be ineligible by the Bank and (15) which
have not been paid in full within ninety (90) days from the invoice date. In no
event will the balance of any Account of any single Account Debtor be eligible
whenever the portion of the Accounts of such Account Debtor which have not been
paid within ninety (90) days from the invoice date is in excess of 25% of the
total amount outstanding on all Accounts of such Account Debtor.

 

2.8          “Eligible Inventory” means, at any time, all of the Borrower’s
Inventory in which the Bank has a first priority continuing perfected Lien
except Inventory which is: (1) not owned by it free and clear of all Liens
except in favor of the Bank, and claims of Persons other than the Bank; (2) slow
moving, obsolete, unsalable, damaged, defective, perishable, or unfit for
further processing; (3) work in process; (4) subject to consignment or otherwise
in the possession of another Person, unless otherwise agreed to by the Bank in
writing; (5) in transit or located outside of the United States; (6) identified
to be purchased under a contract under which it has received, or is entitled to
receive, an advance payment; (7) determined by the Bank to be ineligible due to
licensing, intellectual property, or any Legal Requirements that would make it
difficult to sell, lease or use such Inventory; (8) comprised of samples,
returns, rejected items, re-work items, non-standard items, odd-lots, or
repossessed goods; (9) produced in violation of applicable Legal Requirements,
including the Fair Labor Standards Act and the regulations and orders of the
Department of Labor; or (10) otherwise determined ineligible by the Bank;
provided, however, that transportation and storage charges shall be excluded
from amounts otherwise included in Eligible Inventory.

 

2.9          “Inventory” means raw materials, work in process, finished goods,
merchandise, parts and supplies, of every kind and goods held for sale or lease
or furnished under contracts of service and all documents of title, warehouse
receipts, bills of lading, and all other documents of every type covering all or
any part of the foregoing.

 

2.10        Intangible Assets” means the aggregate amount of: (1) all assets
classified as intangible assets under GAAP, including, without limitation,
goodwill, trademarks, patents, copyrights, organization expenses, franchises,
licenses, trade names, brand names, mailing lists, catalogs, excess of cost over
book value of assets acquired, and bond discount and underwriting expenses; and
(2) loans or advances to, investments in, or receivables from (i) any Affiliate,
officer, director, employee, Equity Owner or agent of the Borrower or

 

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(ii) any Person if such loan, advance, investment or receivable is outside the
Borrower’s ordinary course of business.

 

2.3          From and after the Effective Date, Section 5.2 of the Credit
Agreement captioned “K. Debt Service Coverage Ratio” and “L. Funded Debt to
EBITDA Ratio” are hereby deleted in their entirety.

 

3.             RATIFICATION. The Borrower ratifies and reaffirms the Credit
Agreement and the Credit Agreement shall remain in full force and effect as
modified herein.

 

4.             BORROWER REPRESENTATIONS AND WARRANTIES. The Borrower represents
and warrants that (a) the representations and warranties contained in the Credit
Agreement are true and correct in all material respects as of the date of this
agreement, (b) no condition, act or event which could constitute an event of
default under the Credit Agreement or any promissory note or credit facility
executed in reference to the Credit Agreement exists, and (c) no condition,
event, act or omission has occurred, which, with the giving of notice or passage
of time, would constitute an event of default under the Credit Agreement or any
promissory note or credit facility executed in reference to the Credit
Agreement.

 

5.             FEES AND EXPENSES. The Borrower agrees to pay all fees and
out-of-pocket disbursements incurred by the Bank in connection with this
agreement, including legal fees incurred by the Bank in the preparation,
consummation, administration and enforcement of this agreement.

 

6.             EXECUTION AND DELIVERY. This agreement shall become effective
only after it is fully executed by the Borrower and the Bank.

 

7.             ACKNOWLEDGEMENTS OF BORROWER. The Borrower acknowledges that as
of the date of this agreement it has no offsets with respect to all amounts owed
by the Borrower to the Bank arising under or related to the Credit Agreement on
or prior to the date of this agreement. The Borrower fully, finally and forever
releases and discharges the Bank and its successors, assigns, directors,
officers, employees, agents and representatives from any and all claims, causes
of action, debts and liabilities, of whatever kind or nature, in law or in
equity, of the Borrower, whether now known or unknown to the Borrower, which may
have arisen in connection with the Credit Agreement or the actions or omissions
of the Bank related to the Credit Agreement on or prior to the date hereof. The
Borrower acknowledges and agrees that this agreement is limited to the terms
outlined above, and shall not be construed as an agreement to change any other
terms or provisions of the Credit Agreement. This agreement shall not establish
a course of dealing or be construed as evidence of any willingness on the Bank’s
part to grant other or future agreements, should any be requested.

 

(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)

 

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8.             NOT A NOVATION. This agreement is a modification only and not a
novation. Except for the above-quoted modification(s), the Credit Agreement, any
loan agreements, credit agreements, reimbursement agreements, security
agreements, mortgages, deeds of trust, pledge agreements, assignments,
guaranties, instruments or documents executed in connection with the Credit
Agreement, and all the terms and conditions thereof, shall be and remain in full
force and effect with the changes herein deemed to be incorporated therein. This
agreement is to be considered attached to the Credit Agreement and made a part
thereof. This agreement shall not release or affect the liability of any
guarantor of any promissory note or credit facility executed in reference to the
Credit Agreement or release any owner of collateral granted as security for the
Credit Agreement. The validity, priority and enforceability of the Credit
Agreement shall not be impaired hereby. To the extent that any provision of this
agreement conflicts with any term or condition set forth in the Credit
Agreement, or any document executed in conjunction therewith, the provisions of
this agreement shall supersede and control. The Bank expressly reserves all
rights against all parties to the Credit Agreement.

 

 

 

Borrower:

 

 

Supreme Corporation

 

 

 

By:

 

 

 

 

 

 

 

 

 

Robert W. Wilson

President  

 

 

Printed Name

Title  

 

 

Date Signed:

9-26-2008

 

 

 

Bank:

 

 

JPMorgan Chase Bank, N.A.

 

 

By:

 

 

 

 

 

 

 

 

Authorized Signer

 

 

 

Date Signed:

9-26-2008

 

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