EXHIBIT 10.01

 

SIXTH AMENDMENT LOAN AGREEMENT

 

THIS SIXTH AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered
into as of September l, 2017 (the "Effective Date"), by and between EDUCATIONAL
DEVELOPMENT CORPORATION, a Delaware corporation ("Borrower"), and MIDFIRST BANK,
a federally charted savings association ("Lender").

 

BACKGROUND RECITALS

 

A.                 Borrower and Lender are parties to that certain Loan
Agreement dated as of December 1, 2015, as amended by that certain First
Amendment to Loan Agreement dated as of March 10, 2016, as amended by that
certain Second Amendment to Loan Agreement dated as of June 15, 2016, as further
amended by that certain Third Amendment to Loan Agreement dated as of June 28,
2016, as further amended by that certain Fourth Amendment to Loan Agreement
dated as of February 7, 2017, and as further amended by that certain Fifth
Amendment to Loan Agreement dated as of June 15, 2017 (the "Fifth Amendment")
(as amended, the "Loan Agreement"). Unless the context otherwise requires,
capitalized terms used in this Amendment and not otherwise defined herein have
the respective meanings assigned to them in the Loan Agreement.

 

B.                 Borrower has submitted a "Request for Increase" pursuant to
the Fifth Amendment and has requested that Lender increase the Maximum Revolving
Principal Amount from $10,000,000 to $15,000,000, and Lender has agreed to such
request, but only upon the terms and conditions set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Parties agree as
follows:

 

1.                   INCREASE OF REVOLVING LOAN.

 

1.1.    Maximum Revolving Principal Amount. Subject to the terms and conditions
set forth in this Amendment, and the terms and conditions for a "Request for
Increase" set forth in Section 1.4 of the Fourth Amendment (including, without
limitation, that no Event of Default shall exist), Lender hereby agrees to
increase the Maximum Revolving Principal Amount from $10,000,000 to $15,000,000.
Accordingly, the definition of Maximum Revolving Principal Amount appearing in
Exhibit A of the Loan Agreement is hereby amended in its entirety to read as
follows:

 

"Maximum Revolving Principal Amount" means $15,000,000.00, or if the Termination
Date has occurred (and has not been extended by Lender in writing in its sole
discretion), $0.

 

1.2.    Replacement Revolving Note. Borrower shall make, execute and deliver a
replacement Promissory Note (Revolving Loan) in the form of Exhibit A attached
hereto (the "Replacement Revolving Note") payable to Lender in the principal
amount of $15,000,000. From and after the Effective Date, all references in the
Loan Agreement or any other Loan Documents to the Promissory Note evidencing the
Revolving Loan or the Revolving Note shall be deemed references to the
Replacement Revolving Note, together with any and all renewals, extensions or
replacements thereof, amendments or modifications thereto or substitutions
therefor.

 

2.OTHER MODIFICATIONS TO LOAN AGREEMENT.

 

2.1.    Eligible Inventory. The definition of "Eligible Inventory" appearing in
Exhibit A of the Loan Agreement is hereby amended in its entirety to read as
follows:

 

"Eligible Inventory" means all inventory of Borrower, except for any Inventory:

 

 

 

 

 (i)Inventory classified as "long term" or "noncurrent" on Borrower's balance
sheet;      (ii)Inventory classified as Supplies, Displayers, Racks or Kits;    
 (iii)Inventory older than one year;      (iv)Inventory classified as obsolete
goods, damaged goods and/or goods not readily marketable;     (v)Inventory in
transit;    

(vi)Inventory held by Borrower on consignment;    

(vii)Inventory subject to any floor planning arrangement;      (viii)Inventory
in which any Person other than Lender has a purchase money security interest or
any other security interest, lien or claim;      (ix)Inventory produced in
violation of the Fair Labor Standards Act and subject to the "hot goods"
provisions contained in Title 29 U.S.C. § 215;      (x)Inventory that is subject
to any agreement which would restrict Lender's ability to sell or otherwise
dispose of the same;    

(xi)Inventory located outside the United States of America;    

(xii)To the extent Inventory is in the custody of third party venders; and    

(xiii)Inventory consisting of returned or repossessed goods.

 

2.2.

Appraisals. A new subsection (z) is hereby added to Section 4.1 of the Loan
Agreement to read as follows:

 

(z)       Appraisals. Permit Lender, through its authorized agents and
representatives (who need not be employees of Lender), to conduct periodic
appraisals or reappraisals of Borrower's properties (including, without
limitation, the Property). Except during any Event of Default Period, such
appraisals or reappraisals will be conducted no more than once per calendar
year. Borrower will pay all costs and expenses incurred by Lender in connection
with each appraisal or reappraisal.

 

2.3.    Additional Covenants. A new subsection (aa) is hereby added to Section
4.1 of the Loan Agreement to read as follows:

 

(aa) Information Technology. Maintain an adequately trained and staffed
information technology {IT) department capable of maintaining and updating
Borrower's e-commerce website and accounting systems, including in the event
Lender exercises any of its remedies under any Loan Document, including any the
sale of any Collateral, and Borrower agrees that any online sale where Lender or
its agent uses Borrower's domain name, e-commerce website and accounting systems
for a period of eight weeks is commercially reasonable. Borrower further
covenants and agrees that upon request by Lender, Borrower shall promptly (but
in any event not later than IO days) provide Lender with access to its
information technology systems (including domain names, website hosting,
e-commerce systems, accounting software and access to applicable staff and
contractors), including without limitation administrator credentials and other
relevant information, and not make any change thereto without first notifying
Lender in writing.

 

3.CONDITIONS TO EFFECTIVENESS. This Amendment will be effective as of the
Effective Date, but subject to satisfaction of each of the following conditions
precedent:

 

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3.1.    Execution of Amendment Documents. The following documents (collectively,
the "Amendment Documents") shall have been executed by the applicable parties
and delivered to Lender, each in form and substance satisfactory to Lender:

 

(a)this Amendment; and    

(b)the Replacement Revolving Note.

 

3.2.    Opinion of Counsel. Lender shall have received a favorable opinion of
counsel, in form and substance satisfactory to Lender and its counsel, covering
the matters requested by Lender.

 

3.3.Legal Matters. All legal matters incident to this Amendment shall be
satisfactory to Lender and its counsel.

 

4.REPRESENTATIONS AND WARRANTIES.

 

4.1.    Reaffirmation. Borrower confirms that all representations and warranties
made by it in the Loan Agreement and the other Loan Documents are, and as of the
Effective Date will be, true and correct in all material respects, and all of
such representations and warranties are hereby remade and restated as of the
Effective Date and shall survive the execution and delivery of this Amendment.

 

4.2.Additional Representations and Warranties.

 

4.2.1.        Power; Transactional Authority; Enforceability. Borrower has the
requisite power and authority to execute, deliver and carry out the terms and
provisions of this Amendment, and has taken all necessary action to authorize
its execution, delivery and performance of this Amendment. Borrower has duly
executed and delivered this Amendment. This Amendment constitutes Borrower's
legal, valid and binding obligations, enforceable in accordance with the terms
of the Loan Documents, as amended by this Amendment, subject to (i) the effect
of any Applicable Bankruptcy Law, or (ii) general principles of equity.

 

4.2.2.        No Violation; No Consent. Borrower's execution, delivery and
performance of this Amendment, and compliance with the terms and provisions of
the Loan Documents, as amended by this Amendment, will not (i) contravene any
Applicable Law, (ii) conflict or be inconsistent with or result in any breach of
any term, covenant, condition or provision of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any lien upon any of the Property or Borrower's other assets pursuant to the
terms of any indenture, mortgage, deed of trust, agreement or other instrument
to which Borrower is a party or by which Borrower or any of the Property or
Borrower's other assets is bound or may be subject, or (iii) violate any term of
Borrower's certificate of incorporation or other documents and agreements
governing Borrower's existence, management or operation. Borrower is not
required to obtain the consent of any other party, including any Governmental
Authority, in connection with the execution, delivery, performance, validity or
enforceability of the Loan Documents, as amended by the Amendment Documents.

 

4.2.3.        Financial Matters. Each Borrower Party financial statement
previously delivered to Lender was prepared in accordance with GAAP and
completely, correctly and fairly present the financial condition and the results
of operations of each Borrower Party on the date and for the period covered by
the financial statements. All other reports, statements and other data that any
Borrower Party furnished to Lender in connection with the Loan are true and
correct in all material respects and do not omit any fact or circumstance
necessary to ensure that the statements are not misleading. Each Borrower Party
(i) is solvent, (ii) is not bankrupt, and (iii) has no outstanding liens, suits,
garnishments, bankruptcies or court actions which may render such Borrower Party
insolvent or bankrupt. Since the date of the last financial statements each
Borrower Party delivered to Lender, no event, act, condition or liability has
occurred or exists, which has had, or may reasonably be expected to have, a
material adverse effect upon (A) such Borrower Party's business, condition
(financial or otherwise) or operations, or (B) such Borrower Party's ability to
perform or satisfy, or Lender's ability to enforce, any of the Indebtedness.

 

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4.2.4.        Litigation. There are no suits or proceedings (including
condemnation) pending or (to Borrower's knowledge, after reasonable inquiry)
threatened against or affecting any Borrower Party or the Property or involving
the validity, enforceability or priority of any of the Loan Documents. Borrower
has not received notice from any Governmental Authority alleging that any
Borrower Party or the Property is violating any Applicable Law.

 

4.2.5.        No Default. No Event of Default currently exists or would exist
after giving effect to the transactions contemplated by this Amendment.

 

5.MISCELLANEOUS.

 

5.1.    Effect of Amendment. The terms of this Amendment shall be incorporated
into and form a part of the Loan Agreement. Except as expressly amended,
modified and supplemented by this Amendment, the Loan Agreement shall continue
in full force and effect in accordance with its original stated terms, all of
which are hereby reaffirmed in every respect as of the Effective Date. In the
event of any irreconcilable inconsistency between the terms of this Amendment
and the terms of the Loan Agreement, the terms of this Amendment shall control
and govern, and the agreements shall be interpreted so as to carry out and give
full effect to the intent of this Amendment. All references to the Loan
Agreement appearing in any of the Loan Documents shall hereafter be deemed
references to the Loan Agreement as amended, modified and supplemented by this
Amendment.

 

5.2.    No Course of Dealing; Past Acceptance. This Amendment shall not
establish a course of dealing or be construed or relied upon as evidence of any
willingness on Lender's part to grant any future consent or amendment, should
any be requested. Lender acknowledges that Lender and its agents in the past may
have accepted, without exercising the remedies to which Lender was entitled,
payments and performance by Borrower that constituted Events of Default under
the Loan Documents. Borrower acknowledges that no such acceptance or grace
granted by Lender or its agents in the past, or Lender's agreement to the
modifications evidenced hereby, has in any manner diminished Lender's right in
the future to insist that Borrower Parties strictly comply with the terms of the
Loan Documents, as modified by the terms of this Amendment. Furthermore,
Borrower specifically acknowledges that any future grace or forgiveness of any
Events of Default shall not constitute a waiver or diminishment of any right of
Lender with respect to any future Event of Default, whether or not similar to
any Event of Default with respect to which Lender has in the past chosen, or may
in the future choose, not to exercise all of the rights and remedies granted to
it under the Loan Documents.

 

5.3.    Release. Borrower hereby releases, remises, acquits and forever
discharges Lender and any co-lender or loan participant, together with their
respective employees, agents, representatives, consultants, attorneys,
fiduciaries, servants, officers, directors, partners, predecessors, successors
and assigns, subsidiary corporations, parent corporations, and related corporate
divisions (all of the foregoing the "Released Parties"), from any and all
actions and causes of action, judgments, executions, suits, liens, debts,
claims, counterclaims, defenses, demands, liabilities, obligations, damages and
expenses of any and every character (collectively, "Claims"), known or unknown,
direct or indirect, at law or in equity, of whatsoever kind or nature, whether
heretofore or hereafter accruing, for or because of any matter or things done,
omitted or suffered to be done by any of the Released Parties prior to and
including the Effective Date, and in any way directly or indirectly arising out
of or in any way connected to this Amendment or the other Loan Documents, or any
of the transactions associated therewith, or the Property, including
specifically but not limited to claims of usury, lack of consideration,
fraudulent transfer and lender liability, that it now has or may hereafter have
against any Released Party, and hereby agrees to indemnify and hold harmless
Lender and each other Released Party for all Claims that any Person may bring
against any such Released Party that arise under or in connection with the Loan
Agreement based on facts existing on or before the Effective Date. THE FOREGOING
RELEASE INCLUDES ACTIONS AND CAUSES OF ACTION, JUDGMENTS, EXECUTIONS, SUITS,
DEBTS, CLAIMS, DEMANDS, LIABILITIES, OBLIGATIONS, DAMAGES AND EXPENSES ARISING
AS A RESULT OF THE NEGLIGENCE OR STRICT LIABILITY OF ONE OR MORE OF THE RELEASED
PARTIES.

 

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5.4.    Ratification and Affirmation. Borrower hereby acknowledges the terms of
this Amendment and ratifies and affirms its obligations under, and acknowledges,
renews and extends its continued liability under, each Loan Document to which it
is a party and agrees that each Loan Document to which it is a party remains in
full force and effect.

 

5.5.    No Modification. This Amendment along with the Loan Documents supersedes
and merges all prior and contemporaneous promises and agreements. No
modification of this Amendment or any other Loan Document, or any waiver of
rights under any of the foregoing, shall be effective unless made by
supplemental agreement, in writing, executed by the Parties. The Parties further
agree that the Loan Agreement, as amended by this Amendment, may not in any way
be explained or supplemented by a prior, existing or future course of dealings
between the Parties or by any prior, existing, or future performance between the
Parties pursuant to this Amendment, the Loan Agreement or otherwise.

 

5.6.    Headings. The headings of the sections and subsections of this Amendment
are for convenience of reference only and will not affect the scope or meaning
of the sections of this Amendment.

 

5.7.    Applicable Law. The Amendment Documents and the rights and obligations
of Borrower and Lender are in all respects governed by, and construed and
enforced in accordance with the Governing Law (without giving effect to its
principles of conflicts of law), except for those terms of the Security
Instruments pertaining to the creation, perfections, validity, priority or
foreclosure of the liens or security interests on the Property located within
the State, which terms will be governed by, and construed and enforced in
accordance with the laws of the State (without giving effect to its principles
of conflicts oflaw).

 

5.8.    Counterparts; Misceilaneous. This Amendment may be executed in any
number of counterparts with the same effect as if all signers executed the same
instrument. All counterparts of this Amendment must be construed together and
will constitute one instrument. This Amendment is a Loan Document. Time is of
the essence with respect to this Amendment. The Parties acknowledge and confirm
that each of their respective attorneys has participated or has had the
opportunity to participate jointly in the review and revision of this Amendment
and that it has not been written solely by counsel for one party. The Parties
therefore stipulate and agree that the rule of construction to the effect that
any ambiguities are to or may be resolved against the drafting Party will not
favor either Party against the other. The terms and provisions of this Amendment
are binding upon and inure to the benefit of the Parties and their successors
and assigns.

 

5.9.    Reimbursement of Expenses. Borrower agrees to pay or reimburse Lender
for all reasonable out-of-pocket expenses, including Attorneys' Fees, incurred
by Lender in connection with the negotiation, preparation, execution and
delivery of this Amendment and the other Amendment Documents and the
consummation of the transactions contemplated hereby.

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
effective as of the Effective Date.

 

 

Borrower:   EDUCATIONAL DEVELOPMENT CORPORATION,     a Delaware corporation    
      By:  Name: Randall W. White     Title:  Chairman, President and CEO

 

 

 

 

 

 

 

 

BORROWER'S SIGNATURE PAGE
TO

SIXTH AMENDMENT TO LOAN AGREEMENT

 

 

 

 

Lender:   MIDFIRST BANK, a federally chartered savings association              
  By:      Name        Title:  Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

 

LENDER'S SIGNATURE PAGE
TO

SIXTH AMENDMENT TO LOAN AGREEMENT

 

 

 

 

EXHIBIT A

 

 

REPLACEMENT REVOLVING NOTE

 

 

(See attached.)