Document:

DRAFT 12/07/01

 

FIRST

AMENDMENT TO LOAN AGREEMENT

 

This First

Amendment to Loan Agreement, dated as of May 28, 2002 (“Amendment”), amends the

Loan Agreement (“Agreement”) dated as of June 16, 2000 between American

National Bank and Trust Company of Chicago (“Bank”), Boss Holdings, Inc. and

Boss Manufacturing Company (collectively, “Borrowers”).

 

The parties agree

that the Agreement shall be amended as follows:

 

1.             The definition of “Borrowing Base”

set forth in Section 1.1 of the Agreement shall be deleted in its entirety and

the following definition shall be substituted in its place:

 

“Borrowing

Base” means, as of any time the same is to be determined, 80% of Eligible

Receivables and 40% of Eligible Inventory provided, however, that (i) advances

relying upon Eligible Inventory shall not exceed a maximum of $4,000,000; (ii)

advances relying upon Eligible Receivables and Eligible Inventory included in

the Borrowing Base from Boss Balloon Company shall not exceed $1,000,000 and

(iii) advances relying upon the Eligible Inventory and Eligible Receivables

included in the Borrowing Base from Boss Manufacturing Holdings, Inc. shall not

exceed $1,500,000.

 

2.             The definition of “Revolving Credit

Commitment” set forth in Section 1.1 of the Agreement shall be deleted in its

entirety and the following definition shall be substituted in its place:

 

“Revolving

Credit Commitment” means the revolving credit facility in an amount not to

exceed $8,000,000.

 

3.             The definition of “Revolving Credit

Termination Date” set forth in Section 1.1 of the Agreement shall be deleted in

its entirety and the following definition shall be substituted in its place:

 

“Revolving

Credit Termination Date” means May 30, 2004, as such date may be amended

upon the written consent of all of the parties hereto.

 

4.             Section 7.3(f) of the Agreement

shall be deleted in its entirety, and the following Section 7.3(f) shall be

substituted in its place:

 

(f)             Loans, Investments and

Guaranties.  Make any loans or other

advances of money to or make any investments in any Person, including without

limitation, any of Borrowers’ Affiliates or Subsidiaries or guarantee, assume,

endorse or otherwise, in any way, become directly or contingently liable with

respect to the Debt of any Person, including Borrowers’ Subsidiaries and Affiliates,

other than loans, advances, investments, guaranties, as follows:  (i) Loans to its Subsidiary Boss

Manufacturing Holdings, Inc. not to exceed $1,500,000 at any one time; (ii)

loans to its Subsidiary Boss Balloon Company; (iii) in all other cases, investments

or advances after the Closing Date to wholly owned Subsidiaries not to exceed

$750,000; (iv) guaranties or endorsements in favor of Bank; and (v) Stocks

traded on a major U.S. exchange or the national market system of a nationally

recognized automated quotation system, provided amounts advanced to the

Borrowers under the revolving credit commitment total less than $3 million.

 

 

5.             Section 7.4 of the Agreement shall

be deleted in its entirety and the following Section 7.4 shall be substituted

in its place:

 

7.4            Financial Covenants.  At all times prior to the earlier of the

Revolving Credit Termination Date and the Early Termination Date and thereafter

for so long as any amount is due and owing to this Bank hereunder, Borrowers

hereby covenant to meet the requirements of the following financial covenants.

 

(a)            The Debt Service Coverage Ratio of

Parent on a consolidated basis (measured quarterly commencing the end of

December 30, 2000 and measured each quarter thereafter on a rolling

four-quarter basis) shall be not less than 1.20:1.

 

(b)            The Current Ratio (measured

quarterly beginning June 30, 2000) shall be not less than 1.15:1.

 

(c)            Tangible Net Worth shall not be less

than $17,000,000 plus 25% of the Parent’s Net Income on a consolidated basis

for the year ended December 31, 2002.

 

(d)            Debt to Tangible Net Worth Ratio

(measured as of June 30 and December 31 of each year commencing June 30, 2000)

shall not be greater than 1.50:1.

 

6.             Section 7.6 of the Agreement shall

be deleted in its entirety and the following Section 7.6 shall be substituted

in its place:

 

7.6            Clean Down Requirement.  Borrowers covenant and agree that in each of

the Borrowers’ fiscal years, all Revolving Loans outstanding throughout one

consecutive sixty-day period (the “Clean Down Period”) will not exceed

$4,000,000 for any Clean Down Period exclusive of Letters of Credit.

 

7.             Except as specifically amended

herein the Agreement shall continue in full force and effect in accordance with

its original terms.  Reference to this

specific Amendment need not be made in any note, document, letter, certificate,

the Agreement itself, or any communication issued or made pursuant to or with

respect to the Agreement, any reference to the Agreement being sufficient to

refer to the Agreement as amended hereby. 

All terms used herein which are defined in the Agreement shall have the

same meaning herein as in the Agreement. 

In the event of any conflict between the terms of the Agreement and the

terms of this Amendment, this Amendment shall control.

 

2

 

IN WITNESS

WHEREOF, the parties have caused this Amendment to be executed as of the day

and year first above written.

 

	

  AMERICAN NATIONAL BANK AND TRUST
 COMPANY OF CHICAGO

  	

   

  	

  BOSS HOLDINGS, INC.

  
	

   

  
	

   

  
	

  By:

  	

  /s/  James M. Corkery

  	

   

  	

  By:

  	

  /s/  J. Bruce Lancaster

  	

   

  
	

   

  
	

   

  	

  Its:

  	

  First V.P.

  	

   

  	

   

  	

  Its:

  	

  Exec V.P.

  	

   

  
	

   

  
	

   

  
	

   

  	

  BOSS MANUFACTURING COMPANY

  
	

   

  
	

   

  
	

   

  	

  By:

  	

  /s/ J. Bruce

  Lancaster

  	

   

  
	

   

  
	

   

  	

   

  	

  Its:

  	

  Exec V.P.

  	

   

  
																	

 

The undersigned

Guarantors of the obligations of Borrowers under the Agreement consent to this

First Amendment, acknowledge and agree that the Guaranty Agreement between them

and Bank dated as of June 16, 2000 shall remain in full force and effect and

apply to the obligations of Borrowers

as amended by this First Amendment. 

Guarantors further agree that the term “Guaranteed Obligations” as used

in the above-described Guaranty Agreement shall mean, among other things,

obligations of Borrowers under the Agreement as amended by this First

Amendment.

 

	

  BOSS MANUFACTURING HOLDINGS, INC

  	

  BOSS BALLOON

  COMPANY

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   /s/ J. Bruce Lancaster

  	

   

  	

  By:

  	

   /s/ J. Bruce Lancaster

  
	

   

  	

   

  
	

   

  	

  Its:

  	

  President

  	

   

  	

   

  	

  Its:

  	

  President

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Date: 5/23, 2002

  	

  Date: 5/23 , 2002

  
											

 

3

 

FIRST AMENDMENT TO SECURITY AGREEMENT

 

This First

Amendment to Security Agreement, dated as of May 28, 2002 (“Amendment”), amends

the Security Agreement (“Agreement”) dated as of June 16, 2000 between American

National Bank and Trust Company of Chicago (“Bank”), Boss Holdings, Inc., a Delaware

corporation (“BH”), Boss Manufacturing Company, a Delaware corporation (“BMC”)

(BH and BMC being each referred to individually as a “Borrower” and

collectively as “Borrowers”), Boss Balloon Company, an Illinois corporation

(BBC”) and Boss Manufacturing Holdings, Inc., a Delaware corporation (“BMH”)

(“BBC and BMH are each referred to herein as a “Guarantor” and collectively as

the “Guarantors”).

 

The parties agree

that the Agreement shall be amended as follows:

 

1.             Section 2.2 of the Agreement shall

be deleted in its entirety, and the following Section 2.2 shall be substituted

in its place:

 

2.2           Security for the Obligations.  The foregoing grant is made and given to

secure, and shall secure, the prompt payment and performance when due of (i)

the Borrowers’ Liabilities to Bank under the Loan Agreement; (ii) any and all

indebtedness, obligations and liabilities of the Debtors, and of any of them

individually, to the Bank, whether now existing or hereafter arising under the

Guaranty; (iii) any and all liabilities of the Debtors and of any of them

individually to the Bank under any of the Other Agreements; (iv) any

obligations of Boss Holdings, Inc. and Boss Manufacturing Company under lease

documents from Boss Holdings, Inc. and Boss Manufacturing Company, as lessees,

to Bank One Leasing, as lessor, and all documents executed in connection

therewith; and (v) all expenses and charges, legal or otherwise, suffered or

incurred by Bank, in collecting or enforcing any of such indebtedness

obligations and liabilities or in relying on or protecting or preserving any

security therefore, including, without limitation, the Lien and security

interest granted hereby, (all of such indebtedness, obligations, liabilities,

expenses and charges described above being hereinafter referred to as the

“Obligations”).  Notwithstanding

anything in this Security Agreement to the contrary, the right of recovery

against BBC under this Agreement shall not exceed $1.00 less than the lowest

amount which would render such obligations under this Agreement void or

voidable under applicable law, including fraudulent conveyance law.

 

2.             Except as specifically amended

herein the Agreement shall continue in full force and effect in accordance with

its original terms.  Reference to this

specific Amendment need not be made in any note, document, letter, certificate,

the Agreement itself, or any communication issued or made pursuant to or with

respect to the Agreement, any reference to the Agreement being sufficient to

refer to the Agreement as amended hereby. 

All terms used herein which are defined in the Agreement shall have the

same meaning herein as in the Agreement. 

In the event of any conflict between the terms of the Agreement and the

terms of this Amendment, this Amendment shall control.

4

 

IN WITNESS

WHEREOF, the parties have caused this Amendment to be executed as of the day

and year first above written.

 

 

	

  AMERICAN NATIONAL BANK AND TRUST
 COMPANY OF CHICAGO

  	

   

  	

  BOSS HOLDINGS, INC.

  
	

   

  
	

   

  
	

  By:

  	

  /s/  James M. Corkery

  	

   

  	

  By:

  	

  /s/  J. Bruce Lancaster

  	

   

  
	

   

  
	

  Its:

  	

  First V.P.

  	

   

  	

  Its:

  	

  Exec V.P

  	

   

  
	

   

  
	

   

  
	

  BOSS MANUFACTURING COMPANY

  	

   

  	

  BOSS BALLOON COMPANY

  
	

   

  
	

  By:

  	

  /s/  J. Bruce Lancaster

  	

   

  	

  By:

  	

  /s/  J. Bruce Lancaster

  	

   

  
	

   

  
	

  Its:

  	

  Exec V.P

  	

   

  	

  Its:

  	

  President

  	

   

  
	

   

  
	

  BOSS MANUFACTURING HOLDING, INC.

  
	

   

  
	

  By:

  	

  /s/  J. Bruce Lancaster

  	

   

  
	

   

  
	

  Its:

  	

  President

  	

   

  
															

 

5EXHIBIT 10.1

 

Employment

Agreement

 

June 13, 2002

 

 

Ken Kay

1015 Wallace Ridge

Beverly Hills, CA  90210

 

Dear Ken:

 

Congratulations on your new opportunity with CB Richard Ellis!  We hope you will find challenge and

satisfaction as an employee of our Company.  

This letter serves to confirm the full and complete terms of our

employment offer.

 

Position:                                                                                               Chief

Financial Officer

 

Start Date:                                                                                     To

be determined.

 

Base Salary:                                                                            $17,307.69

per bi-weekly pay period ($450,000 annual equivalency)

 

Sign-on Bonus:                                                             You

will receive a sign-on bonus of $300,000, to be paid within15 days of your

employment date.  If you should leave

the company for any reason prior to the one-year anniversary of your Start

Date, then you will return the entire unprorated sign-on bonus to CB Richard

Ellis.   (If you prefer to have this

payment in the form of a loan, which is forgivable on the first anniversary of

your Start Date, we can prepare the appropriate promissory note.)

 

Bonus:                                                                                                           You

will be eligible to receive a discretionary performance bonus pursuant to the

terms of the bonus plan applicable to your position, which currently is the

Executive Bonus Plan (“EBP” or “the Plan”). 

The EBP is the replacement for the former bonus plan, which was referred

to as the “RPA Bonus Plan.”  I have enclosed

a copy of the EBP for your review.  Your

Target Bonus pursuant to the EBP shall be 66 2/3 % of your Base Salary.  The amount of your bonus will be determined

by profitability targets for the company, line of business and individual

performance.  Each of the three factors

is weighted based on your position with the total weighting being 100%.  The weightings that apply to your position

are 50% company performance, 30% line of business, and 20% individual performance.   Further detail is available in the enclosed

EBP plan.  For calendar year 2002 only,

your bonus amount will solely be based on individual performance, as discussed

with and evaluated by the CEO, and be pro-rated against your Start Date.  Bonus payments are contingent upon Company

profitability and in all cases, are paid at the sole discretion of the

Company.  An express condition of

earning this bonus is your continued employment through the date bonuses are

paid.  This date is presently in March

of the succeeding year, but the Company reserves the right to change this date

as it deems appropriate.  Should you

leave our employment for any reason prior to the date on which bonuses are

paid, no bonus will have been earned and none will be payable.

 

Equity:                                                                                                         You

will be eligible, for up to six months after your effective date of employment,

to purchase up to 23,000 shares of CB Richard Ellis stock at $16 a share.   You will be eligible to participate in our

existing loan program to borrow cash equal to 50% of the cash requirement to

purchase these shares under standard company terms and conditions for such

loans.   These shares do not have any

additional options attached to them.  In

addition, you will be granted an option to purchase 62,000 shares of CB Richard

Ellis stock at a $16 per share exercise price, vesting 20% over the next five

years on the anniversary date of the grant.

 

Benefits:                                                                                                  Participation

in the corporate fringe benefits package including medical, dental, disability,

 

 

 

dependent care, life and AD&D insurance commences on the first day

of the month following 31 days of continuous employment with CB Richard

Ellis.  During the second week of the

month following your first day of employment, a personalized benefit enrollment

work sheet and instructions for enrolling via the web will be sent to your home

address.

 

You are eligible to participate in the 401(K) Plan on

your date of hire.  However, your active

participation begins with the first pay period after you have called Vanguard

to designate your contribution percentage and make your investment

selections.  You will receive a personal

identification number (PIN) and an enrollment kit under separate cover from

Vanguard within four weeks from your date of hire.  You may then call Vanguard at 800/523-1188 to enroll.

 

Severance:                                                                                     If

you are terminated for any reason in the first twenty-four (24) months of your

employment, you will be eligible to receive a severance payment equal to 100%

of one year’s Base Salary.  Should you

voluntarily resign as an employee within twenty-four (24) months of your Start

Date, you would not be eligible for this severance payment.  You will no longer be eligible for this

severance payment after the second anniversary of your Start Date.

 

Termination from 

Change of Control:                                      In the event that

your employment with CB Richard Ellis is terminated as the result of a “Change

of Control”, as defined in the attached Exhibit “A”, you will be eligible to

receive a payment equal to one hundred fifty percent (150%) of one year’s base

salary as a severance payment.  This

severance payment is in lieu of any other severance payment that you would be

entitled to under this Offer Letter or by company policy.  If a new company policy or plan results in a

more favorable change of control termination arrangement than reflected here,

you will be eligible to replace this arrangement with the more favorable one.

 

Paid Time Off (PTO):                              You will be subject to

the company’s standard HCE/PTO policy, which provides that highly compensated

employees earning a base salary of $75,000 and above are eligible to take

unlimited Paid Time Off (“PTO”) subject to the prior authorization of their

manager and so long as the employee is performing satisfactorily and meeting

employee’s performance priorities.  You

have indicated that you plan to take time off during August 8th-15th

and August 21st – 26th, which is fine.  As part of the HCE/PTO Program, employees

within this income category are also entitled to enhanced Severance and Leave

of Absence benefits as outlined by Company policy.

 

Confidentiality:                                                          The

protection of confidential information and trade secrets is essential for CB

Richard Ellis, its companies and employees’ future security.  To protect such information, employees may

not disclose any trade secrets of confidential information (defined further in

the Employee Handbook). The Company’s Confidentiality Policy is ongoing even

after employment with the Company terminates.

 

Right to Work:                                                                 This

offer is contingent upon our verification of your employment eligibility as

required by Federal Immigration law. 

Upon your start date, you will be required to provide us with

documentation establishing identification and employment eligibility.  Acceptable forms of identification are

listed on the back of the I-9 form.

 

Termination:                                                                          CB

Richard Ellis is an “at will” employer, which means that either you or CB

Richard Ellis may terminate the employment agreement at any time with or

without notice or cause.

 

A New Hire Packet containing information for you to read prior to your

first day of employment will be sent to you separately.  Please take time to read this information

thoroughly and bring it with you, as you will be asked to complete paperwork

regarding this information.

 

Your signature on this letter indicates your acknowledgment and

acceptance of these as the full and complete terms 

 

2

 

of our employment agreement. 

Please return the signed original to me.

 

On behalf of all of us at CB Richard Ellis, we are excited that you

have joined us and we hope that you find your association with our Company to

be challenging and fulfilling in every respect!

 

Very truly yours,

 

 

	

  /s/ RAY WIRTA

  	

   

  
	

  Ray Wirta

  
	

  Chief

  Executive Officer

  

 

3

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