<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 4, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 0-21768
D.I.Y. Home Warehouse, Inc.
---------------------------
(Exact name of registrant as specified in its charter)
State of Ohio 38-2560752
(State of Incorporation) (I.R.S. Employer I.D. No.)
5811 Canal Road
Valley View, Ohio 44125
(216) 328-5100
(Address of principal executive offices and telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 4, 1998
- -------------------------- ---------------------------
Common Stock, no par value 7,633,859
<PAGE> 2
DIY HOME WAREHOUSE, INC.
<TABLE>
<CAPTION>
INDEX PAGE NO.
----- --------
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Condensed Balance Sheet -
July 4, 1998 and
January 3, 1998......................................................................... 3
Condensed Statement of Income -
Three and Six Months Ended July 4, 1998
and June 28, 1997....................................................................... 4
Condensed Statement of Shareholders'
Equity - Six Months Ended
July 4, 1998............................................................................ 5
Condensed Statement of Cash Flows -
Six Months Ended July 4, 1998
and June 28, 1997....................................................................... 6
Notes to Condensed Financial Statements................................................. 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.............................................................................. 8 - 11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................................ 12 - 13
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
DIY HOME WAREHOUSE, INC.
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
July 4, 1998 January 3, 1998
------------ ---------------
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 480,777 $ 141,401
Accounts receivable, trade 116,811 100,389
Refundable federal income taxes -- 365,963
Merchandise inventories 39,543,213 40,156,756
Deferred income taxes 278,565 278,565
Prepaid expenses and other assets 605,625 745,961
------------ -----------
Total current assets 41,024,991 41,789,035
------------ -----------
Property and equipment, at cost 53,620,967 52,326,680
------------ -----------
Less accumulated depreciation and amortization 15,328,509 13,381,396
Property and equipment, net 38,292,458 38,945,284
Other assets 421,627 474,888
------------ -----------
Total assets $ 79,739,076 $81,209,207
============ ===========
Liabilities and Shareholders' Equity
Current liabilities:
Note payable, affiliate $ 300,000 $ 600,000
Current maturities of long-term debt 989,321 946,183
Accounts payable 14,677,287 10,615,039
Accrued expenses and other 5,672,229 5,776,915
Total current liabilities 21,638,837 17,938,137
Revolving credit 1,775,000 6,375,000
Long-term debt 13,635,333 14,208,586
Deferred income taxes 2,462,002 2,547,927
Shareholders' equity:
Preferred stock, authorized 1,000,000 shares,
none issued -- --
Common stock, no par value, authorized
10,000,000 shares, 7,633,859 shares
outstanding as of July 4, 1998
and January 3, 1998 22,955,462 22,955,462
Retained earnings 17,272,442 17,184,095
------------ -----------
Total shareholders' equity 40,227,904 40,139,557
------------ -----------
Total liabilities and shareholders' equity $ 79,739,076 $81,209,207
============ ===========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
DIY HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 56,334,029 $ 66,857,265 $ 93,746,202 $106,509,276
Cost of sales 41,875,355 49,473,971 68,603,276 77,464,552
------------ ------------ -------------- ------------
Gross profit 14,458,674 17,383,294 25,142,926 29,044,724
Store operating, general
and administrative expenses 12,418,294 13,425,796 23,689,726 24,911,579
Store development costs 99,747 137,225 305,517 137,225
------------ ------------ -------------- ------------
Operating income 1,940,633 3,820,273 1,147,683 3,995,920
Other expense, net 439,964 498,699 997,943 826,298
------------ ------------ -------------- ------------
Income before income taxes 1,500,669 3,321,574 149,740 3,169,622
Income taxes 615,275 1,352,270 61,393 1,289,986
------------ ------------ -------------- ------------
Net income $ 885,394 $ 1,969,304 $ 88,347 $ 1,879,636
============== ============= ================= =============
Earnings per common
share, basic and diluted $ 0.12 $ 0.26 $ 0.01 $ 0.25
============== ============= ================= =============
Weighted average
common shares outstanding 7,633,859 7,633,859 7,633,859 7,633,859
============== ============= ================= =============
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 5
DIY HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JULY 4, 1998
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Total
----------------------------------- Retained Shareholders'
Shares Amount Earnings Equity
-------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Balances, January 3, 1998 7,633,859 $22,955,462 $17,184,095 $40,139,557
Net income 88,347 88,347
------------- ----------- ----------- -----------
Balances, July 4, 1998 7,633,859 $22,955,462 $17,272,442 $40,227,904
============= =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE> 6
DIY HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
July 4, 1998 June 28, 1997
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 88,347 $ 1,879,636
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,955,051 1,664,351
Shares issued under retainer stock plan - 13,457
Loss (gain) on sale of property 2,752 (262,668)
Deferred income taxes (85,925) -
Changes in operating assets and liabilities:
Accounts receivable, trade (16,422) (23,708)
Refundable federal income taxes 365,963 248,688
Merchandise inventories 613,543 (8,170,821)
Prepaid expenses and other assets 193,597 197,397
Accounts payable 4,062,248 6,035,083
Accrued expenses and other current liabilities (104,686) 1,513,139
Net cash provided by operating activities 7,074,468 3,094,554
Cash flows from investing activities:
Acquisition of property and equipment (1,304,977) (760,740)
Proceeds from sale of property - 850,911
---------------- --------------
Net cash (used in) provided by investing
activities (1,304,977) 90,171
---------------- --------------
Cash flows from financing activities:
Principal payments under capital lease
obligations (83,116) (69,284)
Principal payments of note payable, affiliate (300,000) (300,000)
Proceeds from revolving credit 3,625,000 6,000,000
Principal payments of revolving credit (8,225,000) (8,500,000)
Principal payments of long-term debt (446,999) (323,137)
---------------- --------------
Net cash (used in) financing activities (5,430,115) (3,192,421)
---------------- --------------
Net increase (decrease) in cash and cash
equivalents 339,376 (7,696)
Cash and cash equivalents, beginning of period 141,401 161,360
---------------- --------------
Cash and cash equivalents, end of period $ 480,777 $ 153,664
=============== ===============
</TABLE>
See accompanying notes to condensed financial statements.
6
<PAGE> 7
D.I.Y. HOME WAREHOUSE, INC.
Notes to Condensed Financial Statements
(Unaudited)
1. Basis of Presentation:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position as of
July 4, 1998 and the results of operations for the three and six months ended
July 4, 1998 and June 28, 1997 and cash flows for the six months ended July 4,
1998. The condensed financial statements should be read in conjunction with the
financial statements and notes contained in the Company's Annual Report filed on
Form 10-K. The results of operations for any interim period should not
necessarily be considered indicative of the results of operations for the full
year.
2. Earnings Per Share:
Earnings per share are computed using the weighted average number of
shares of common stock outstanding for the periods. Basic and fully diluted
earnings per common share are identical.
COMPUTATION OF EARNINGS PER COMMON SHARE
(BASIC AND DILUTED)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 4, 1998 June 28, 1997 July 4, 1998 June 28, 1997
------------ ------------- ------------ -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income applicable to common $ 885,394 $1,969,304 $ 88,347 $1,879,636
shares ================ ================= ================= =================
Weighted average common shares
outstanding for the period 7,633,859 7,633,859 7,633,859 7,633,789
Dilutive effect of exercise of stock
options
- - - -
---------------- ----------------- ----------------- ----------------
Weighted average common shares,
assuming issuance of the above
securities 7,633,859 7,633,859 7,633,859 7,633,789
================ ================= ================= =================
Earnings per common share:
Basic $0.12 $0.26 $0.01 $0.25
Diluted $0.12 $0.26 $0.01 $0.25
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATIONS - Three Months Ended July 4, 1998
Compared to Three Months Ended June 28, 1997
Net sales for the quarter ended July 4, 1998 decreased by $10,523,000,
or 15.7%, to $56,334,000 for the quarter ended July 4, 1998 from $66,857,000 for
the comparable quarter in fiscal 1997. Comparable store sales were impacted by
additional national warehouse competition in a majority of the Company's
markets.
Gross profit decreased by $2,924,000, or 16.8%, from $17,383,000 in the
second quarter of fiscal 1997 to $14,459,000 in the second quarter of fiscal
1998. Gross profit, as a percentage of net sales, was 25.7% in the second
quarter of fiscal 1998 compared to 26.0% in the second quarter of fiscal 1997.
This decrease in gross profit percentage is due to a decrease in vendor rebates
and discounts resulting from decreased inventory purchases in the second quarter
of fiscal 1998 compared to the comparable quarter of fiscal 1997. During the
second quarter of fiscal 1998, the Company continued to focused on enhancing the
balance sheet by reducing inventory levels. As a result, inventory purchases in
the second quarter of fiscal 1998 were approximately $8,500,000 lower than
purchases during the second quarter fiscal of 1997.
Store operating, general and administrative expenses decreased
$1,008,000, or 7.5%, to $12,418,000 in the quarter ended July 4, 1998 from
$13,426,000 in the quarter ended June 28, 1997. This decrease is due to the
Company's ongoing efforts to reduce operating costs. As a percentage of net
sales, store operating, general and administrative expenses increased to 22.0%
in the second quarter of fiscal 1998 compared to 20.0% in the comparable quarter
of fiscal 1998 due to lower sales on which to leverage these expenses.
Other expense, net, was $440,000 for the quarter ended July 4, 1998
compared to $499,000 for the quarter ended June 28,1997. The net decrease of
$59,000 is due to a decrease in interest expense of $108,000 primarily
associated with the benefits of reduced debt level as average amounts
outstanding under the revolving credit facility were approximately $5,095,000
and $8,941,000 in the second quarter of 1998 and 1997, respectively. The
interest expense decrease of $108,000 was offset by the gain of $45,000 on sale
of property in the second quarter of fiscal 1997.
8
<PAGE> 9
OPERATIONS - Six Months Ended July 4, 1998
Compared to Six Months Ended June 28, 1997
Net sales decreased $12,763,000, or 12.0% from $106,509,000 for the six
month ended June 28, 1997 to $93,746,000 for the six months ended July 4, 1998
due to additional national warehouse competition in a majority of the Company's
markets.
Gross profit decreased by $3,902,000, or 13.4%, to $25,143,000 for the
six months ended July 4, 1997 from $29,045,000 for the six months ended June 28,
1997. As a percentage of net sales, gross profit decreased to 26.8% in the first
half of fiscal 1998 compared to 27.3% in the first half of fiscal 1997. The
Company focused on enhancing the balance sheet by reducing inventory levels This
decrease in gross profit percentage is due to a decrease in vendor rebates and
discounts resulting from decreased inventory purchases of approximately
$18,500,000 in the first half of 1998 compared to the comparable quarter of
fiscal 1997.
Store operating, general and administrative expenses decreased
$1,222,000, or 4.9% to $23,690,000 in the first half of fiscal 1998 from
$24,912,000 for the first half of fiscal 1997. The decrease is due to the
Company's on-going effort to reduce operating expenses. As a percentage of
sales, operating expenses were 25.3% for the first half of 1998 compared to
23.4% for the first half of 1997 due to lower sales on which to leverage
expenses.
The Company incurred $306,000 related to store development costs for
the six months ended July 4, 1998 compared to $137,000 for the same period of
fiscal 1997. During the first half of fiscal 1997, management assessed the
business strategies and opportunities of the Company to differentiate itself in
the warehouse-format home improvement retail market. This process resulted in
development of new merchandising, marketing and other strategic initiatives to
strengthen the Company's market position.
Other expense, net, increased by $172,000, to $998,000 for the six
months ended July 4, 1998 from $826,000 for the comparable period of fiscal
1997. This increase is primarily due to a $263,000 gain on sale of parcels of
property in the first half of fiscal 1997 and a decrease in interest expense
from the Mortgage Loans and Revolving Credit Agreement of $58,000 and $50,000,
respectively in the first half of fiscal 1998. Mortgage interest expense
decreased primarily due to the principal reduction on the variable mortgage loan
in the third quarter of 1997 from the proceeds on the sale of property. The
Revolving Credit Agreement interest expense decreased due to the benefits of
reduced debt levels as average amounts outstanding were approximately $7,495,000
and $9,206,000 in the first half of fiscal 1998 and 1997, respectively.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended July 4, 1998 and June 28, 1997, operating
activities provided net cash of approximately $7,074,000 and $3,095,000,
respectively. The primary source of cash from operating activities for the six
months ended July 4, 1998 was $1,955,000 from deprecation and amortization and
$614,000 from reducing inventories, combined with an increase of $4,062,000 in
accounts payable. The primary source of cash from operating activities for the
six months ended June 28, 1997 was $3,544,000 from net income plus depreciation
and amortization and an increase of $6,035,000 in accounts payable. The primary
use of cash for same period in 1997 included $8,171,000 to fund seasonal
increases in inventories. The Company continued to focus on enhancing its
balance sheet during fiscal 1998 which included inventory reductions of
approximately $7,205,000 compared to the same period of fiscal 1997.
Net cash used in investing activities was $1,305,000 for the six months
ended July 4, 1998 due to store development capital expenditures associated with
the comprehensive renovation of certain store locations. Net cash provided by
investing activities was $90,000 for the six months ended June 28, 1997, due
primarily to the proceeds of $851,000 from the sales of several parcels of
property offset by cash used of $761,000 for the acquisition of property and
equipment.
Net cash used in financing activities increased by $2,238,000 to
$5,430,000 for the six months ended July 4, 1998 from $3,192,000 for the
comparable period in fiscal 1997. The increase is due to a reduction in the net
borrowings under the revolving credit facility as a result of lower inventory
purchases.
Management believes cash on hand, cash from operations and cash
available through the Company's financing agreements will be sufficient to meet
short-term and long-term working capital requirements.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain statements that are
forward-looking, as that term is defined by the Private Securities Litigation
Reform Act of 1995 or by the Securities and Exchange Commission in its rules,
regulations and releases. The Company intends that such forward-looking
statements be subject to the safe harbors created thereby. All forward-looking
statements are based on current expectations regarding important risk factors.
Accordingly, actual results may differ materially from those expressed in the
forward-looking statements and the making of such statements should not be
regarded as a representation by the Company or any other person that the results
expressed therein will be achieved. Important risk factors include, but are not
limited to, the following: general economic conditions; consumer spending and
debt levels; housing turnover; weather; impact on sales and margins from both
existing and new competition; changes in operating expenses; changes in product
mix; interest rates; changes in and the application of accounting policies and
practices; adverse results in significant litigation matters; adverse state and
federal regulations and legislation; the occurrence of extraordinary
10
<PAGE> 11
events including events and acts of nature or accidents; and the risks described
from time to time in the Company's Securities and Exchange Commission filings.
Competition
The home improvement, hardware and garden businesses are all highly
competitive. The Company competes against traditional hardware, plumbing,
electrical and home supply retailers, as well as warehouse-format and discount
retail stores and many of the Company's competitors have substantially greater
resources than the Company. Builders Square and Lowe's Company have had stores
in the Company's markets since 1985 and 1994, respectively. Lowe's continued to
expand with additional locations in 1996 and 1997. In the fourth quarter of
1997, Home Depot began operations in several of the Company's markets. Home
Depot continued to expand in the first half of 1998 and has announced further
expansion plans in the second half 1998 and first quarter of 1999. Lowe's has
announced further expansion plans in 1998. In addition, there has been
increasing consolidation within the home improvement industry, which may provide
certain entities increased competitive advantages. Specifically, increased
competition including, but not limited to, additional competitors' store
locations, price reductions, and advertising and marketing campaigns could have
a material adverse effect on the Company's business, recoverability of asset
values, financial condition and operating results.
Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four digits to define the applicable year. Any of
the Company's computer programs that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in similar normal business activities. The Company has assessed the Year
2000 Issue with regard to its internal financial and operational systems as well
as its external financial vendors and determined that the costs to complete the
related compliance will not materially affect future financial results. The
Company anticipates its Year 2000 Issues to be completed and tested by the end
of fiscal year 1998.
11
<PAGE> 12
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
A list of the exhibits required by Item 601 of Regulation S-K to
be filed as a part of this Form 10-Q is shown on the "Exhibit
Index" filed herewith.
(b) Reports on Form 8-K:
None
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
D.I.Y. HOME WAREHOUSE, INC.
(Registrant)
DATED: August 3, 1998
--------------
By: Eric I. Glassman
----------------------------------
Vice President and Chief Financial
Officer
13
<PAGE> 13
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
10 Material Contracts
------------------
10.1 Fourth Amendment to Revolving Credit Agreement dated
April 4, 1998 between D.I.Y. Home Warehouse, Inc.,
National City Bank of Columbus and Old Kent Bank
10.2 Fourth Amendment to Loan and Co-Lender Agreement dated
April 4, 1998 between D.I.Y. Home Warehouse, Inc.,
National City Bank of Columbus and Old Kent Bank
10.3 Fifth Amendment to Line of Credit Agreement dated
April 4, 1998 between D.I.Y. Home Warehouse, Inc.,
National City Bank of Columbus and Old Kent Bank
10.4 Amended and Restated Employment Agreement between
Clifford L. Reynolds and D.I.Y. Home Warehouse, Inc.
10.5 Amended and Restated Employment Agreement between
R. Scott Eynon and D.I.Y. Home Warehouse, Inc.
10.6 Amended and Restated Employment Agreement between
Dennis C. Hoff and D.I.Y. Home Warehouse, Inc.
10.7 Employment Agreement between Eric I. Glassman and
D.I.Y. Home Warehouse, Inc.
10.8 Transaction Bonus Agreement between Clifford L. Reynolds
and D.I.Y. Home Warehouse, Inc.
10.9 Transaction Bonus Agreement between R. Scott Eynon
and D.I.Y. Home Warehouse, Inc.
10.10 Transaction Bonus Agreement between Dennis C. Hoff
and D.I.Y. Home Warehouse, Inc.
10.11 Transaction Bonus Agreement between Eric I. Glassman
and D.I.Y. Home Warehouse, Inc.
27 Financial Data Schedule:
------------------------
27.1 Financial Data Schedule for the quarter ended
July 4, 1998
13
<PAGE> 1
Exhibit 10.1
FOURTH AMENDMENT TO
REVOLVING CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT ("Amendment") is
made as of the 4th day of April, 1998, among D.I.Y. HOME WAREHOUSE, INC., an
Ohio corporation, with its principal place of business located at 5811 Canal
Road, Suite 180, Valley View, Ohio 44125 (the "Borrower"), as borrower, NATIONAL
CITY BANK, formerly known as National City Bank of Columbus, a national banking
association, with its principal office located at 155 East Broad Street,
Columbus, Ohio 43251 ("NCB"), and OLD KENT BANK, formerly known as Old Kent Bank
and Trust Company, a Michigan banking corporation, with its principal office
located at One Vandenberg Center, Grand Rapids, Michigan 49503 ("Old Kent"), as
lenders (NCB and Old Kent each herein, separately, called a "Bank" and,
collectively, called the "Banks"), and NCB, as agent for itself and Old Kent
(the "Agent").
RECITALS
A. The Banks and the Borrower have entered into a certain Revolving
Credit Agreement dated December 7, 1994, as amended by the First Amendment to
Revolving Credit Agreement dated as of December 22, 1995, as further amended by
the Second Amendment to Revolving Credit Agreement dated as of December 23, 1996
and as further amended by the Third Amendment to Revolving Credit Agreement
dated as of October 24, 1997 (collectively, the "Loan Agreement"), pursuant to
which the Banks have agreed to loan to the Borrower on a revolving credit basis
(the "Loan") an aggregate amount not to exceed Twenty-Three Million Dollars
($23,000,000.00).
B. The Loan is evidenced by two (2) Amended and Restated Revolving
Notes dated December 22, 1995, by the Borrower to each of NCB and Old Kent, each
in the principal amount of Ten Million Dollars ($10,000,000.00) and two (2)
Amended and Restated Revolving Notes dated December 22, 1995, by the Borrower to
each of NCB and Old Kent, each in the principal amount of One Million Five
Hundred Thousand Dollars ($1,500,000.00) (collectively, the "Revolving Credit
Notes").
C. The Banks and the Borrower have agreed to certain amendments with
respect to the Loan.
NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Banks agree as follows:
1. ACKNOWLEDGMENT OF EXTENSION OF MATURITY. The Borrower and the Banks
hereby acknowledge that, pursuant to the terms of the Loan Agreement, the
Original Commitment Maturity Date is extended to January 1, 2002, and the
Supplemental Commitment Maturity Date is extended to December 1, 1999. The
Original Commitment Maturity Date and the Supplemental Commitment Maturity Date
may be further extended pursuant to the terms of the Loan Agreement as provided
for therein.
<PAGE> 2
2. CERTAIN DEFINITIONS. Effective as of the date of this Amendment, the
original term "Domestic Loans" is deleted in its entirety and the following
terms are added to the defined terms contained in Section 1.1 of the Loan
Agreement:
"Domestic Loans" means Prime Loans, CD Loans or Standby Letter
of Credit Loans whether issued and outstanding individually or
collectively.
"Standby Letter of Credit Loan" means a Loan to be made as a
Standby Letter of Credit pursuant to the applicable Letter of
Credit Notice.
3. INTEREST RATES. Effective as of the date of this Amendment, Section
2.13(c) of the Loan Agreement is deleted in its entirety and the following
inserted in lieu thereof:
(c) The Borrower shall pay to the Agent (i) fees ("Documentary
Letters of Credit Fees") with respect to Documentary Letters of Credit
in amount of 0.25% per annum times the average daily Documentary Letter
of Credit Outstandings and (ii) fees ("Standby Letters of Credit Fees")
with respect to Standby Letters of Credit, in the applicable amount per
annum set forth in the pricing schedule in Section 2.4(e) of this
Agreement times the average daily Standby Letter of Credit
Outstandings. The Agent shall pay to NCB one hundred percent (100%) of
the Documentary Letters of Credit Fees and fifty percent (50%) of the
Standby Letters of Credit Fees and shall pay Old Kent fifty percent
(50%) of the Standby Letters of Credit Fees. All Documentary Letters of
Credit Fees and Standby Letters of Credit Fees (collectively, "Letters
of Credit Fees") shall be computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed and shall be payable
quarterly in arrears commencing with the first (1st) Domestic Business
Day after the end of each fiscal quarter following issuance of each
Letter of Credit and on the earlier of the Original Commitment Maturity
Date or the acceleration of the Revolving Credit Notes.
4. PRICING OPTIONS. Effective as of the date of this Amendment,
paragraph 3(d) in the Second Amendment to Revolving Credit Agreement is deleted
in its entirety and the following Section 2.4(e) is inserted into the Loan
Agreement:
(e) For the purposes of determining the pricing of any Prime
Loan, Euro-Dollar Loan, CD Loan and/or Standby Letter of Credit Loan,
the Fixed Charge Coverage Ratio of the Borrower at the date such Loan
is made shall be deemed to be the fixed charge coverage ratio as shown
on the compliance certificate last delivered to the Banks. Any change
in the Fixed Charge Coverage Ratio shall be effective sixty (60) days
after the end of the fiscal quarter during which such change occurs;
provided, however, that if the compliance certificate evidencing the
computation of the Fixed
2
<PAGE> 3
Charge Coverage Ratio is not delivered on a date that is on or before
sixty (60) days after the end of a fiscal quarter, the interest rate on
any Loan made between, and the interest rate on any Prime Loan,
Euro-Dollar Loan, CD Loan or Standby Letter of Credit Loan the Interest
Period for which commences between, the date that is sixty (60) days
after the end of such fiscal quarter and the date on which such
compliance certificate is delivered to the Banks shall be determined as
if the Fixed Charge Coverage Ratio during such period were 1.25x
[EQUALS TO OR GREATER THAN] 1.29x; provided, further, that any change
in the Fixed Charge Coverage Ratio shall affect only (i) Loans made
subsequent to such date and (ii) the interest rate on any Prime Loan,
Euro-Dollar Loan, CD Loan or Standby Letter of Credit Loan the Interest
Period for which commences subsequent to such date.
The pricing schedule is as follows:
<TABLE>
<CAPTION>
Pricing Options
Fixed Charge Ratio Prime LIBOR CD Rate Standby L/C's
<S> <C> <C> <C> <C>
[EQUALS TO OR GREATER THAN] 1.95x +0 bp +125 bp +137.5 bp +100 bp
1.75x [EQUALS TO OR GREATER THAN] 1.94x +0 bp +145 bp +157.5 bp +120 bp
1.50x [EQUALS TO OR GREATER THAN] 1.74x +35 bp +160 bp +172.5 bp +135 bp
1.40x [EQUALS TO OR GREATER THAN] 1.49x +45 bp +170 bp +182.5 bp +145 bp
1.30x [EQUALS TO OR GREATER THAN] 1.39x +55 bp +180 bp +192.5 bp +155 bp
1.25x [EQUALS TO OR GREATER THAN] 1.29x +75 bp +200 bp +212.5 bp +175 bp
</TABLE>
bp = basis points
5. CASH FLOW. Section 7.1 of the Loan Agreement is deleted in its
entirety and the following inserted in lieu thereof:
7.1 CASH FLOW. Permit the ratio of (a) the sum of its net
income for the preceding twelve (12) month period plus its depreciation
expense and amortization expense for the same period to (b) the sum of
scheduled principal payments of Indebtedness for the same period plus
one hundred percent (100%) of its total capital expenditures for the
same period to be less than 1.0 to 1.0 as measured at the end of the
fiscal quarter ending April 4, 1998 through the last fiscal quarter of
1998. For each fiscal quarter thereafter, such ratio shall not be less
than 2.0 to 1.0.
6. FIXED CHARGE COVERAGE. Section 7.2 of the Loan Agreement is deleted
in its entirety and the following inserted in lieu thereof:
7.2 FIXED CHARGE COVERAGE. Permit the ratio of (a) the sum of
its net income before taxes for the preceding twelve (12) month period
plus its interest, rent and lease expense for the same period to (b)
the sum of its interest, rent and lease expense for the same period to
be less than 1.25 to 1.0 effective at the end of the fiscal quarter
ending April 4, 1998 and at the end of each fiscal quarter of the
Borrower thereafter.
3
<PAGE> 4
7. MINIMUM TANGIBLE NET WORTH. Section 7.3 of the Loan Agreement is
deleted in its entirety and the following inserted in lieu thereof:
7.3 MINIMUM TANGIBLE NET WORTH. Permit its tangible net worth
to be less than $37,000,000.00 PLUS the sum of all Net Income
Adjustments as calculated quarterly commencing with the fiscal quarter
ending April 4, 1998. As used herein, "Net Income Adjustment" shall
mean an amount equal to fifty percent (50%) of the Borrower's net
income as measured at the end of each fiscal quarter commencing with
the fiscal quarter ending April 4, 1998. For purposes of this
Agreement, losses shall be considered zero (0) net income for the
determination of a change in the required minimum tangible net worth
and tangible net worth shall be defined as shareholders' equity minus
intangible assets such as goodwill, Restricted Investments, capitalized
loan fees, underwriters' discounts, non-compete agreements and deferred
costs.
8. CAPITAL EXPENDITURES. Section 7.4 of the Loan Agreement is deleted
in its entirety and the following inserted in lieu thereof:
7.4 CAPITAL EXPENDITURES. Make capital expenditures for real
estate, machinery, equipment, vehicles, furniture, fixtures, leasehold
improvements or any other fixed assets in an aggregate amount greater
than Five Million Dollars ($5,000,000.00) during any one (1) fiscal
year commencing with fiscal year 1998. No unused portion of any capital
expenditure allowance provided for in this Section 7.4 for any fiscal
year shall be available to the Borrower for use in any subsequent
fiscal year.
9. RATIFICATION AND CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES.
The Loan Agreement is in all respects ratified and confirmed by the parties
hereto, and the Loan Agreement and this Amendment shall be read, taken and
construed as one and the same instrument. Except as modified herein, the Loan
Agreement remains unchanged and in full force and effect. Except as otherwise
defined herein, all capitalized terms shall have the meanings ascribed to them
in the Loan Agreement. The Borrower hereby acknowledges and certifies that all
other representations and warranties made in the Loan Agreement continue to be
true and correct as of the date hereof and that there are no defaults existing
under the covenants or other terms of the Loan Agreement. The Borrower hereby
ratifies and confirms the Borrower's obligations and all liability to the Banks
under the terms and conditions of the Loan Agreement and the Revolving Credit
Notes, and acknowledges that the Borrower has no defenses to or rights of setoff
against the Borrower's obligations and all liability to the Banks thereunder.
The Borrower hereby further acknowledges that the Banks have performed all of
the Banks' obligations to date under the Loan Agreement.
10. REFERENCES TO CREDIT AGREEMENT. All references in each of the
Revolving Credit Notes to the Credit Agreement shall mean and refer to the Loan
Agreement, as amended by this Amendment.
11. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together constitute one and the same
instrument.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by each in manner and form sufficient to bind them and duly authorized
in the premises as of the day and year first above written.
NATIONAL CITY BANK, formerly known D.I.Y. HOME WAREHOUSE, INC.
as National City Bank of Columbus
By: /s/ Joseph L. Kwasny By: /s/ Clifford L. Reynolds
----------------------------- ---------------------------------
Name: Joseph L. Kwasny Name: Clifford L. Reynolds
--------------------------- -------------------------------
Its: Vice President Its: President
---------------------------- --------------------------------
OLD KENT BANK, formerly known as NATIONAL CITY BANK, formerly known
Old Kent Bank and Trust Company as National City Bank of Columbus, as Agent
By: /s/ Timothy O'Rourke By: /s/ Joseph L. Kwasny
----------------------------- ---------------------------------
Name: Timothy O'Rourke Name: Joseph L. Kwasny
--------------------------- -------------------------------
Its: Vice President Its: Vice President
---------------------------- --------------------------------
5
<PAGE> 1
Exhibit 10.2
FOURTH AMENDMENT TO
LOAN AND CO-LENDER CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AND CO-LENDER CREDIT AGREEMENT
("Amendment") is made as of the 4th day of April, 1998, among D.I.Y. HOME
WAREHOUSE, INC., an Ohio corporation, with its principal place of business
located at 5811 Canal Road, Suite 180, Valley View, Ohio 44125 (the "Borrower"),
as borrower, NATIONAL CITY BANK, formerly known as National City Bank of
Columbus, a national banking association, with its principal office located at
155 East Broad Street, Columbus, Ohio 43251 ("NCB"), and OLD KENT BANK, formerly
known as Old Kent Bank and Trust Company, a Michigan banking corporation, with
its principal office located at One Vandenberg Center, Grand Rapids, Michigan
49503 ("Old Kent"), as lenders (NCB and Old Kent each herein, separately, called
a "Bank" and, collectively, called the "Banks"), and NCB, as agent for itself
and Old Kent (the "Agent").
RECITALS
A. The Banks and the Borrower have entered into a certain Loan and
Co-Lender Credit Agreement dated as of December 23, 1994, as amended by the
First Amendment to Loan and Co-Lender Credit Agreement dated as of December 22,
1995, as further amended by the Second Amendment to Loan and Co-Lender Credit
Agreement dated as of December 23, 1996, and as further amended by the Third
Amendment to Loan and Co-Lender Credit Agreement dated as of October 24, 1997
(collectively, the "Loan Agreement"), pursuant to which the Banks have loaned to
the Borrower an aggregate amount not to exceed Nine Million Dollars
($9,000,000.00) (the "Loan").
B. The Loan is evidenced by two (2) Mortgage Notes dated December 23,
1994, by the Borrower to each of NCB and Old Kent, each in the original
principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000.00)
(collectively, the "Mortgage Notes").
C. The Banks and the Borrower have agreed to certain amendments with
respect to the Loan.
NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Banks agree as follows:
1. CASH FLOW. Section 7.1 of the Loan Agreement is hereby deleted in
its entirety and the following inserted in lieu thereof:
7.1 CASH FLOW. Permit the ratio of (a) the sum of its net income for
the preceding twelve (12) month period plus its depreciation expense
and amortization expense for the same period to (b) the sum of
scheduled principal payments of Indebtedness for the same period plus
one hundred percent (100%) of its total capital expenditures for the
same period to be less than 1.0 to 1.0 as measured at the end of the
fiscal quarter ending April 4, 1998 through the last fiscal quarter of
1998. For each fiscal quarter thereafter, such ratio shall not be less
than 2.0 to 1.0.
2. FIXED CHARGE COVERAGE. Section 7.2 of the Loan Agreement is deleted
in its entirety and the following inserted in lieu thereof:
7.2 FIXED CHARGE COVERAGE. Permit the ratio of (a) the sum of its net
income before taxes for the preceding twelve (12) month period plus its
interest, rent and lease
<PAGE> 2
expense for the same period to (b) the sum of its interest, rent and
lease expense for the same period to be less than 1.25 to 1.0 effective
at the end of the fiscal quarter ending April 4, 1998 and at the end of
each fiscal quarter of the Borrower thereafter.
3. MINIMUM TANGIBLE NET WORTH. Section 7.3 of the Loan Agreement is
deleted in its entirety and the following inserted in lieu thereof:
7.3 MINIMUM TANGIBLE NET WORTH. Permit its tangible net worth
to be less than $37,000,000.00 PLUS the sum of all Net Income
Adjustments as calculated quarterly commencing with the fiscal quarter
ending April 4, 1998. As used herein, "Net Income Adjustment" shall
mean an amount equal to fifty percent (50%) of the Borrower's net
income as measured at the end of each fiscal quarter commencing with
the fiscal quarter ending April 4, 1998. For purposes of this
Agreement, losses shall be considered zero (0) net income for the
determination of a change in the required minimum tangible net worth
and tangible net worth shall be defined as shareholders' equity minus
intangible assets such as goodwill, Restricted Investments, capitalized
loan fees, underwriters' discounts, non-compete agreements and deferred
costs.
4. CAPITAL EXPENDITURES. Section 7.4 of the Loan Agreement is deleted
in its entirety and the following inserted in lieu thereof:
7.4 CAPITAL EXPENDITURES. Make capital expenditures for real
estate, machinery, equipment, vehicles, furniture, fixtures, leasehold
improvements or any other fixed assets in an aggregate amount greater
than Five Million Dollars ($5,000,000.00) during any one (1) fiscal
year commencing with fiscal year 1998. No unused portion of any capital
expenditure allowance provided for in this Section 7.4 for any fiscal
year shall be available to the Borrower for use in any subsequent
fiscal year.
5. RATIFICATION AND CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES.
The Loan Agreement is in all respects ratified and confirmed by the parties
hereto, and the Loan Agreement and this Amendment shall be read, taken and
construed as one and the same instrument. Except as modified herein, the Loan
Agreement remains unchanged and in full force and effect. Except as otherwise
defined herein, all capitalized terms shall have the meanings ascribed to them
in the Loan Agreement. The Borrower hereby acknowledges and certifies that all
other representations and warranties made in the Loan Agreement continue to be
true and correct as of the date hereof and that there are no defaults existing
under the covenants or other terms of the Loan Agreement. The Borrower hereby
ratifies and confirms the Borrower's obligations and all liability to the Banks
under the terms and conditions of the Loan Agreement and the Mortgage Notes, and
acknowledges that the Borrower has no defenses to or rights of setoff against
the Borrower's obligations and all liability to the Banks thereunder. The
Borrower hereby further acknowledges that the Banks have performed all of the
Banks' obligations to date under the Loan Agreement.
6. REFERENCES TO LOAN AGREEMENT. All references in each of the Mortgage
Notes to the Loan Agreement shall mean and refer to the Loan Agreement, as
amended by this Amendment.
7. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by
2
<PAGE> 3
each in manner and form sufficient to bind them and duly authorized in the
premises as of the day and year first above written.
NATIONAL CITY BANK, formerly known D.I.Y. HOME WAREHOUSE, INC.
as National City Bank of Columbus
By: /s/ Joseph L. Kwasny By: /s/ Clifford L. Reynolds
----------------------------- ---------------------------------
Name: Joseph L. Kwasny Name: Clifford L. Reynolds
--------------------------- -------------------------------
Its: Vice President Its: President
---------------------------- --------------------------------
OLD KENT BANK, formerly known as NATIONAL CITY BANK, formerly known as
Old Kent Bank and Trust Company National City Bank of Columbus, as Agent
By: /s/ Timothy O'Rourke By: /s/ Joseph L. Kwasny
----------------------------- ---------------------------------
Name: Timothy O'Rourke Name: Joseph L. Kwasny
--------------------------- -------------------------------
Its: Vice President Its: Vice President
---------------------------- --------------------------------
3
<PAGE> 1
Exhibit 10.3
FIFTH AMENDMENT TO
LINE OF CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO LINE OF CREDIT AGREEMENT ("Amendment") is made
as of the 4th day of April, 1998, among D.I.Y. HOME WAREHOUSE, INC., an Ohio
corporation, with its principal place of business located at 5811 Canal Road,
Suite 180, Valley View, Ohio 44125 (the "Borrower"), as borrower, NATIONAL CITY
BANK, formerly known as National City Bank of Columbus, a national banking
association, with its principal office located at 155 East Broad Street,
Columbus, Ohio 43251 ("NCB"), and OLD KENT BANK, formerly known as Old Kent Bank
and Trust Company, a Michigan banking corporation, with its principal office
located at One Vandenberg Center, Grand Rapids, Michigan 49503 ("Old Kent"), as
lenders (NCB and Old Kent each herein, separately, called a "Bank" and,
collectively, called the "Banks"), and NCB, as agent for itself and Old Kent
(the "Agent").
RECITALS
A. The Banks and the Borrower have entered into a certain Line of
Credit Agreement for Real Estate Loans dated as of April 28, 1995, as amended by
the First Amendment to Line of Credit Agreement dated as of September 15, 1995,
as further amended by the Second Amendment to Line of Credit Agreement dated as
of December 22, 1995, as further amended by the Third Amendment to Line of
Credit Agreement dated as of December 23, 1996 and as further amended by the
Fourth Amendment to Line of Credit Agreement dated as of October 24, 1997
(collectively, the "Loan Agreement"), pursuant to which the Banks have loaned to
the Borrower an aggregate principal amount of Seven Million Nine Hundred
Seventy-Five Thousand Dollars ($7,975,000.00) (the "Loan").
B. The Loan is evidenced by two (2) Mortgage Notes dated April 28,
1995, by the Borrower to each of NCB and Old Kent, each in the original
principal amount of One Million Six Hundred Eighty-Seven Thousand Five Hundred
Dollars ($1,687,500.00) and two (2) Mortgages Notes dated September 15, 1995, by
the Borrower to each of NCB and Old Kent, each in the original principal amount
of Two Million Three Hundred Thousand Dollars ($2,300,000.00) (collectively, the
"Notes").
C. The Banks and the Borrower have agreed to certain amendments with
respect to the Loan.
NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Banks agree as follows:
1. CASH FLOW. Section 7.1 of the Loan Agreement is deleted in its
entirety and the following inserted in lieu thereof:
2
<PAGE> 2
7.1 CASH FLOW. Permit the ratio of (a) the sum of its net
income for the preceding twelve (12) month period plus its depreciation
expense and amortization expense for the same period to (b) the sum of
scheduled principal payments of Indebtedness for the same period plus
one hundred percent (100%) of its total capital expenditures for the
same period to be less than 1.0 to 1.0 as measured at the end of the
fiscal quarter ending April 4, 1998 through the last fiscal quarter of
1998. For each fiscal quarter thereafter, such ratio shall not be less
than 2.0 to 1.0.
2. Fixed Charge Coverage. Section 7.2 of the Loan Agreement is deleted
in its entirety and the following inserted in lieu thereof:
7.2 FIXED CHARGE COVERAGE. Permit the ratio of (a) the sum of
its net income before taxes for the preceding twelve (12) month period
plus its interest, rent and lease expense for the same period to (b)
the sum of its interest, rent and lease expense for the same period to
be less than 1.25 to 1.0 effective at the end of the fiscal quarter
ending April 4, 1998 and at the end of each fiscal quarter of the
Borrower thereafter.
3. Minimum Tangible Net Worth. Section 7.3 of the Loan Agreement is
deleted in its entirety and the following inserted in lieu thereof:
7.3 MINIMUM TANGIBLE NET WORTH. Permit its tangible net worth
to be less than $37,000,000.00 PLUS the sum of all Net Income
Adjustments as calculated quarterly commencing with the fiscal quarter
ending April 4, 1998. As used herein, "Net Income Adjustment" shall
mean an amount equal to fifty percent (50%) of the Borrower's net
income as measured at the end of each fiscal quarter commencing with
the fiscal quarter ending April 4, 1998. For purposes of this
Agreement, losses shall be considered zero (0) net income for the
determination of a change in the required minimum tangible net worth
and tangible net worth shall be defined as shareholders' equity minus
intangible assets such as goodwill, Restricted Investments, capitalized
loan fees, underwriters' discounts, non-compete agreements and deferred
costs.
4. CAPITAL EXPENDITURES. Section 7.4 of the Loan Agreement is deleted
in its entirety and the following inserted in lieu thereof:
7.4 CAPITAL EXPENDITURES. Make capital expenditures for real
estate, machinery, equipment, vehicles, furniture, fixtures, leasehold
improvements or any other fixed assets in an aggregate amount greater
than Five Million Dollars ($5,000,000.00) during any one (1) fiscal
year commencing with fiscal year 1998. No unused portion of any capital
expenditure allowance provided for in this Section 7.4 for any fiscal
year shall be available to the Borrower for use in any subsequent
fiscal year.
2
<PAGE> 3
5. RATIFICATION AND CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES.
The Loan Agreement is in all respects ratified and confirmed by the parties
hereto, and the Loan Agreement and this Amendment shall be read, taken and
construed as one and the same instrument. Except as modified herein, the Loan
Agreement remains unchanged and in full force and effect. Except as otherwise
defined herein, all capitalized terms shall have the meanings ascribed to them
in the Loan Agreement. The Borrower hereby acknowledges and certifies that all
other representations and warranties made in the Loan Agreement continue to be
true and correct as of the date hereof and that there are no defaults existing
under the covenants or other terms of the Loan Agreement. The Borrower hereby
ratifies and confirms the Borrower's obligations and all liability to the Banks
under the terms and conditions of the Loan Agreement and the Notes, and
acknowledges that the Borrower has no defenses to or rights of setoff against
the Borrower's obligations and all liability to the Banks thereunder. The
Borrower hereby further acknowledges that the Banks have performed all of the
Banks' obligations to date under the Loan Agreement.
6. REFERENCES TO LOAN AGREEMENT. All references in each of the Notes to
the Loan Agreement shall mean and refer to the Loan Agreement, as amended by
this Amendment.
7. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by each in manner and form sufficient to bind them and duly authorized
in the premises as of the day and year first above written.
NATIONAL CITY BANK, formerly known D.I.Y. HOME WAREHOUSE, INC.
as National City Bank of Columbus
By: /s/ Joseph L. Kwasny By: /s/ Clifford L. Reynolds
----------------------------- ---------------------------------
Name: Joseph L. Kwasny Name: Clifford L. Reynolds
--------------------------- -------------------------------
Its: Vice President Its: President
---------------------------- --------------------------------
OLD KENT BANK, formerly known as NATIONAL CITY BANK, formerly known
Old Kent Bank and Trust Company as National City Bank of Columbus, as Agent
By: /s/ Timothy O'Rourke By: /s/ Joseph L. Kwasny
----------------------------- ---------------------------------
Name: Timothy O'Rourke Name: Joseph L. Kwasny
--------------------------- -------------------------------
Its: Vice President Its: Vice President
---------------------------- --------------------------------
3
<PAGE> 1
Exhibit 10.4
AMENDMENT NO.2 TO AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
---------------------------------
This Amendment No. 2 to Amended and Restated Employment Agreement is
executed as of May 28, 1998 by CLIFFORD L. REYNOLDS (the "Executive") and D.I.Y.
HOME WAREHOUSE, INC., an Ohio corporation (the "Company").
RECITALS:
---------
A. Executive and the Company are parties to a certain Amended and
Restated Employment Agreement dated as of January 1, 1995 (the "Agreement").
B. The parties desire to amend the Agreement as set forth below.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Section 6(d) of the Agreement is hereby amended to read, in its
entirety, as follows:
(d) If Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(vi) above, and Executive was
not offered employment after the change of control of the
Company at substantially the same compensation and contract
terms for the performance of substantially the same
responsibilities as is set forth in this Agreement (other
than corporate title), in addition to paying Executive his
Earned Compensation, the Company shall pay the Executive an
additional amount per month, as severance pay, equal to
one-twelfth (1/12th) of the Executive's current base salary
for each month during the Severance Period. In addition,
during the Severance Period, the Company shall provide
Executive with the same medical and insurance benefits, but
no other fringe benefits, which it provided to Executive
immediately prior to the actual termination date of this
Agreement. The foregoing notwithstanding, the Executive shall
use his good faith efforts to obtain reasonable replacement
employment from and after such termination and any
compensation and medical and insurance benefits received by
the Executive from such replacement employing during the
Severance Period shall reduce the amount of severance pay and
medical and insurance benefits due to Executive from the
Company hereunder.
<PAGE> 2
2. As modified above, the Agreement shall continue in full force and
effect and is hereby ratified and confirmed. This Amendment No. 2 may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one in the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2
as of the date set forth above.
/s/ Clifford L. Reynolds
----------------------------------------
Cliff L. Reynolds
D.I.Y. HOME WAREHOUSE, INC.,
an Ohio corporation
By: /s/ Fred A. Erb
------------------------------------
Fred A. Erb
Its: Chairman
2
<PAGE> 1
Exhibit 10.5
AMENDMENT NO. 1 TO AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
---------------------------------
This Amendment No. 1 to Amended and Restated Employment Agreement is
executed as of May 28, 1998 by R. SCOTT EYNON (the "Executive") and D.I.Y. HOME
WAREHOUSE, INC., an Ohio corporation (the "Company").
RECITALS:
---------
A. Executive and the Company are parties to a certain Amended and
Restated Employment Agreement dated as of January 1, 1995 (the "Agreement").
B. The parties desire to amend the Agreement as set forth below.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Section 6(d) of the Agreement is hereby amended to read, in its
entirety, as follows:
(d) If Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(vi) above, and Executive was
not offered employment after the change of control of the
Company at substantially the same compensation and contract
terms for the performance of substantially the same
responsibilities as is set forth in this Agreement (other
than corporate title), in addition to paying Executive his
Earned Compensation, the Company shall pay the Executive an
additional amount per month, as severance pay, equal to
one-twelfth (1/12th) of the Executive's current base salary
for each month during the Severance Period. In addition,
during the Severance Period, the Company shall provide
Executive with the same medical and insurance benefits, but
no other fringe benefits, which it provided to Executive
immediately prior to the actual termination date of this
Agreement. The foregoing notwithstanding, the Executive shall
use his good faith efforts to obtain reasonable replacement
employment from and after such termination and any
compensation and medical and insurance benefits received by
the Executive from such replacement employing during the
Severance Period shall reduce the amount of severance pay and
medical and insurance benefits due to Executive from the
Company hereunder.
<PAGE> 2
2. As modified above, the Agreement shall continue in full force and
effect and is hereby ratified and confirmed. This Amendment No. 1 may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one in the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of the date set forth above.
/s/ R. Scott Eynon
---------------------------------------
R. Scott Eynon
D.I.Y. HOME WAREHOUSE, INC.,
an Ohio corporation
By: /s/ Fred a. Erb
------------------------------------
Fred A. Erb
Its: Chairman
2
<PAGE> 1
Exhibit 10.6
AMENDMENT NO. 1 TO AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
---------------------------------
This Amendment No. 1 to Amended and Restated Employment Agreement is
executed as of May 28, 1998 by DENNIS C. HOFF (the "Executive") and D.I.Y. HOME
WAREHOUSE, INC., an Ohio corporation (the "Company").
RECITALS:
---------
A. Executive and the Company are parties to a certain Amended and
Restated Employment Agreement dated as of January 1, 1995 (the "Agreement").
B. The parties desire to amend the Agreement as set forth below.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Section 6(c) of the Agreement is hereby amended to read, in its
entirety, as follows:
(c) If Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(vi) above, and Executive was
not offered employment after the change of control of the
Company at substantially the same compensation and contract
terms for the performance of substantially the same
responsibilities as is set forth in this Agreement (other
than corporate title), in addition to paying Executive his
Earned Compensation, the Company shall pay the Executive an
additional amount per month, as severance pay, equal to
one-twelfth (1/12th) of the Executive's current base salary
for each month during the Severance Period. In addition,
during the Severance Period, the Company shall provide
Executive with the same medical and insurance benefits, but
no other fringe benefits, which it provided to Executive
immediately prior to the actual termination date of this
Agreement. The foregoing notwithstanding, the Executive shall
use his good faith efforts to obtain reasonable replacement
employment from and after such termination and any
compensation and medical and insurance benefits received by
the Executive from such replacement employing during the
Severance Period shall reduce the amount of severance pay and
medical and insurance benefits due to Executive from the
Company hereunder.
<PAGE> 2
2. As modified above, the Agreement shall continue in full force and
effect and is hereby ratified and confirmed. This Amendment No. 1 may be
executed in two or more counterparts, each of which shall be deemed an original.
but all of which together shall constitute one in the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of the date set forth above.
/s/ Dennis C. Hoff
----------------------------------------
Dennis C. Hoff
D.I.Y. HOME WAREHOUSE, INC.,
an Ohio corporation
By: /s/ Fred a. Erb
------------------------------------
Fred A. Erb
Its: Chairman
2
<PAGE> 1
Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of July 1, 1998, by and between
ERIC I. GLASSMAN ("Executive") and D.I.Y. HOME WAREHOUSE, INC., an Ohio
corporation (the "Company").
RECITALS:
A. The Company operates warehouse-format home improvement centers that
sell products primarily to do-it-yourself home repair and remodeling customers.
B. Executive is presently employed by the Company as its Vice President
and Chief Financial Officer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. EMPLOYMENT. From the date of this Agreement (the "Effective Date")
until December 31, 1999, unless sooner terminated as provided below or extended
upon mutual agreement of the parties, the Company will employ Executive as Vice
President and Chief Financial Officer of the Company, to perform such services
for and on behalf of the Company as the Company's Board of Directors may from
time to time direct consistent with Executive's title and position, and
Executive hereby accepts such employment, upon the terms and conditions set
forth in this Agreement. Executive's principal place of business will be located
within a fifty (50) mile radius of downtown Cleveland, Ohio.
2. COMPENSATION. As full compensation and consideration for
the services to be rendered by him under this Agreement, the Company
shall compensate Executive as follows:
(a) The Company shall pay Executive a base salary at the
annual rate of One Hundred Thousand and 00/100 Dollars
($100,000.00), payable in installments not less often than
bi-monthly. The foregoing notwithstanding, the Company's
Board of Directors, or its Compensation Committee, shall
review the performance of Executive annually and may, in its
sole discretion, increase Executive's base salary for any
period during the term of this Agreement.
(b) The Company's Board of Directors or its Compensation
Committee may, in its sole discretion, award Executive a
bonus in an amount to be determined by the Board of Directors
or such Compensation Committee for each fiscal year
throughout the term of this Agreement; provided that
Executive must be employed by the Company on the last day of
its fiscal year to be entitled to any such bonus.
-1-
<PAGE> 2
(c) The Company shall provide Executive with such other
benefits as it now provides him and as it may from time to
time provide other employees of Executive's rank. Executive
acknowledges and agrees that the Company, in its sole and
absolute discretion and without any liability whatsoever to
Executive, may change, modify or delete any benefits it
provides employees of Executive's rank, including Executive,
so long as such changes, modifications or deletions are
uniform in respect of all, or substantially all, employees of
such rank.
3. REIMBURSEMENT OF EXPENSES. The Company shall reimburse Executive for
all necessary and reasonable business expenses incurred by him in the
performance of his duties under this Agreement in accordance with practices
established from time to time by the Company, upon presentation by Executive of
vouchers, receipts or other evidence of such expenditures, satisfactory to the
Company.
4. SERVICES.
(a) Executive shall perform his duties under this Agreement
faithfully, diligently and to the best of his ability. He shall serve
subject to the policies and instruction of the Company 5 Board of
Directors, and shall devote his full business time, attention, energies
and loyalty to the Company.
(b) During the term of this Agreement, Executive will not engage
in any activities in conflict with the best interests of the Company or
of any Affiliate. As used in this Agreement, the term "Affiliate" shall
mean at any time (a) each corporation or other business entity directly
or indirectly controlling, controlled by, or under common control with
the Company, including all corporations and other business entities now
or hereafter owned or acquired by the controlling shareholders of the
Company, and (b) each corporation or other business entity in which at
least fifty percent (50%) of the voting or non-voting stock or other
interest therein is owned beneficially and/or of record directly or
indirectly by the Company or its controlling shareholders.
5. TERMINATION.
(a) Executive's employment under this Agreement may be terminated:
(i) by Executive at any time for any reason or for no
reason whatsoever, upon not less than thirty (30) days
written notice;
(ii) by the Company at any time "for cause" (as
defined below), without prior notice;
(iii) by the Company at any time for any reason or for
no reason whatsoever, without prior notice;
(iv) by the Company if Executive is unable to perform
his duties under this Agreement by reason of illness or
physical or mental incapacity for an aggregate period of
sixty (60) days within any period of 365 consecutive days,
upon thirty (30) days prior written notice;
-2-
<PAGE> 3
(v) upon Executive's death; or
(vi) by the Company or the Executive at any time upon
a "change of control" (as defined below) of the Company.
(b) As used in this Agreement, the term "for cause" shall mean any
of the following:
(i) any action of Executive (or any failure to act
by Executive), which, in the reasonable determination of
the Company's Board of Directors, involves malfeasance,
fraud, embezzlement, dishonesty or moral turpitude, or
which, if generally known, would or might have a material
adverse effect on the Company and/or its reputation; or
(ii) the impairment of Executive's ability, in the
reasonable belief of the Company, to carry out the duties
and responsibilities set forth in this Agreement by reason
of his use of alcohol and/or legal or illegal drugs or
substances.
(c) As used in this Agreement, the term "change of control" shall
mean either of the following:
(i) an event or series of events by which any person or other
entity or group (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended the "Securities
Exchange Act") of persons or other entities acting in concert as a
partnership or other group (a "Group of Persons") shall, as a result
of a tender or exchange offer or offers, an open market purchase or
purchases, a privately negotiated purchase or purchases or
otherwise, become the beneficial owner (within the meaning of Rule 1
3d-3 under the Securities Exchange Act), directly or indirectly, of
50% or more of the then outstanding voting stock of the Company; or
(ii) the Company consolidates with, or merges with or into,
another person or entity or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its
assets to any person or entity, or any person or entity consolidates
with, or merges with or into the Company, in any such event pursuant
to a transaction in which 50% or more of the outstanding voting
stock of the Company is converted into or exchanged for cash,
securities or other property.
6. COMPENSATION PAYABLE UPON TERMINATION.
(a) If Executive's employment is terminated pursuant to the
provisions of subsections 5(a)(i), (ii), (iv) or (v) above, the
Company shall pay Executive all sums due Executive hereunder through
the date of such termination ("Earned Compensation").
-3-
<PAGE> 4
(b) If the Company terminates Executive's employment pursuant to the
provisions of subsection 5(a)(iii) above, then, in addition to paying
Executive his month, as severance pay, equal to one-twelfth (1/12th) of
the Executive's current base salary for each month of the next
succeeding six (6) months following termination (the "Severance
Period"). In addition, during the Severance Period, the Company shall
provide Executive with the same medical and insurance benefits, but no
other fringe benefits, which it provided to Executive under this
Agreement immediately prior to the actual termination date. The
foregoing notwithstanding, Executive shall use his good faith efforts
to obtain reasonable replacement employment from and after such
termination and any compensation and medical and insurance benefits
received by Executive from any such replacement employment during the
Severance Period shall reduce the amount of severance pay and medical
and insurance benefits due to Executive from the Company hereunder.
(c) If Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(vi) above, and Executive was not offered
employment after the change of control of the Company at substantially
the same compensation and contract terms for the performance of
substantially the same responsibilities as is set forth in this
Agreement (other than corporate title), in addition to paying Executive
his Earned Compensation, the Company shall pay the Executive an
additional amount per month, as severance pay, equal to one-twelfth
(1/12th) of the Executive's current base salary per month for each
month of the next succeeding twelve (12) months following termination
(the "Termination Severance Period"). In addition, during the
Termination Severance Period, the Company shall provide Executive with
the same medical and insurance benefits, but no other fringe benefits,
which it provided to Executive immediately prior to the actual
termination date of this Agreement. The foregoing notwithstanding,
Executive shall use his good faith efforts to obtain reasonable
replacement employment from and after such termination and any
compensation and medical and insurance benefits received by the
Executive from such replacement employment during the Termination
Severance Period shall reduce the amount of severance pay and medical
and insurance benefits due to Executive from the Company hereunder.
7. RESTRICTIVE COVENANTS.
(a) Executive acknowledges that the services to be performed by him
are unique, and, by reason of such employment, Executive will acquire
confidential information and trade secrets concerning the operations of
the Company and of one or more Affiliates concerning their respective
methods of doing business and future plans. Accordingly, Executive
agrees that:
(i) During the Restricted Period (as defined in subsection 7(b)
below), Executive will not, directly or indirectly, engage in, or
have an interest in or be associated with (whether as an officer,
director, stockholder, partner, associate, employee, consultant,
owner or otherwise) any corporation, firm or enterprise which is
engaged in any business which is competitive with the business
conducted or, to the knowledge of Executive, planned to be conducted
at any time during the term of this Agreement or the Restricted
Period by the Company, anywhere in the
-4-
<PAGE> 5
continental United States; except that Executive may invest in
any publicly held corporation engaged in such business, if such
investment does not exceed I % in value of the issued and
outstanding capital stock of such corporation;
(ii) For so long as any Confidential Information (as defined
below) shall remain confidential or otherwise remain wholly or
partially protectable, either during the course of the Executive's
employment or thereafter, Executive will not use or disclose,
directly or indirectly, to any person outside of the Company any
Confidential Information;
(iii) Promptly upon the termination of Executive's employment
for any reason, Executive (or if Executive has died, his personal
representative) shall return to the Company any and all copies
(whether prepared or copied by, or at the direction of, the Company
or Executive) of all records, drawings, materials, memoranda and
other data constituting or pertaining to Confidential Information;
(iv) During the Restricted Period, Executive shall not directly
or indirectly divert, or by aid to others do anything which would
tend to divert, from the Company any trade or business with any
customer with whom Executive had any contact or association during
the term of Executive's employment with the Company or with any
party whose identity or potential - as a customer was confidential
or learned by Executive during his employment by the Company; and
(v) During the course of Executive's employment hereunder or at
any time thereafter, Executive shall not, either directly or
indirectly, induce or attempt to induce any person to leave the
employment of the Company or any Affiliate.
(b) As used in this Agreement, the term "Confidential Information"
shall mean all business information of any nature and in any form which
at the time or times concerned is not generally known to those persons
engaged in business similar to that conducted or contemplated by the
Company (other than by the act or acts of an employee not authorized by
the Company to disclose such information) and which relates to any one
or more of the aspects of the present or past business of the Company
or any Affiliate or any of their respective predecessors, including,
without limitation, patents and patent applications, inventions and
improvements (whether or not patentable), development projects,
policies, processes, formulas, techniques, know-how, and other facts
relating to sales, advertising, promotions, financial matters,
customers, customer lists, customer purchases or requirements, and
other trade secrets. As used in this Agreement, the term "Restricted
Period" shall mean:
(i) if Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(i) or subsection 5(a)(ii), the period
commencing on the Effective Date and ending upon the expiration of
three (3) years from the date of such termination;
-5-
<PAGE> 6
(ii) if Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(iii) or subsection 5(a)(iv), and the
Company, in its sole and absolute discretion, continues to pay
Executive his base salary in the amount and manner set forth in
subsection 2(a) above and provide Executive with the same medical
and insurance benefits, but no other fringe benefits, which it
provided to Executive under this Agreement immediately prior to the
actual termination date, the period commencing on the Effective Date
and ending on the first to occur of (1) the date the Company ceases
to pay Executive such base salary or provide Executive such medical
and insurance benefits, or (2) December 31, 1999;
(iii) if Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(vi), the period commencing on the
Effective Date and ending upon the expiration of twelve (12) months
from the date of such termination.
(c) Executive understands that the Company would not have an
adequate remedy at law for the breach or threatened breach by Executive
of any one or more of the covenants set forth above, and agrees that if
there is any such breach or threatened breach the Company may, in
addItion to the other legal or equitable remedies which may be
available to it, obtain an injunction or restraining order to enjoin or
restrain Executive from the breach or threatened breach of such
covenants.
(d) Executive acknowledges and agrees that the covenants set forth
above are reasonable and valid in geographical and temporal scope and
in all other respects. If any court determines that any of the
covenants, or any part of any covenant, is invalid or unenforceable,
the remainder of the covenants shall not be affected and shall be given
full effect, without regard to the invalid portion. If any court
determines that any of the covenants, or any part of any covenant, is
unenforceable because of its duration or geographic scope, such court
shall have the power to reduce the duration or scope, as the case may
be, and, enforce such provision in such reduced form. Executive and the
Company intend to and hereby confer jurisdiction to enforce the
covenants upon the courts of any jurisdiction within the geographical
scope of such covenants. If the courts of any one or more of such
jurisdictions hold the covenants, or any part of the covenants,
unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of Executive and the Company that such determination
not bar or in any way affect the right of the Company to the relief
provided above in the courts of any other jurisdiction within the
geographical scope of such covenants as to breaches of such covenants
in. such other respective jurisdictions. For this purpose, such
covenants as they relate to each jurisdiction shall be severable into
diverse and independent covenants.
8. NOTICES. Any notice, demand or request which is permitted, required
or desired to be given in connection with this Agreement or Executive's
employment by the Company shall be deemed given if personally delivered, or
delivered by telegram or facsimile, or mailed, by first class mail, postage
prepaid, certified, return receipt
-6-
<PAGE> 7
requested, to the parties at the following addresses, or at such other address
as they may hereafter indicate by written notice given as herein provided:
If to Executive:
----------------
Eric I. Glassman
25276 Cardington Drive
Beachwood, Ohio 44122
If to the Company: With a Required Copy to:
------------------ ------------------------
D.I.Y. Home Warehouse, Inc. Jaffe, Raitt, Heuer & Weiss
c/o Edgemere Enterprises Professional Corporation
P.O. Box 458 One Woodward Ave., Suite 2400
Bloomfield Hills, Michigan 48305 Detroit, Michigan 48226
Attn: Fred A. Erb, Chairman Attn: Ira J. Jaffe, Esq.
9. MISCELLANEOUS.
(a) The terms and conditions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs,
successors and personal representatives.
(b) This Agreement shall be governed by, and be construed and
enforced in accordance with, the laws of the State of Ohio.
(c) This Agreement may not be modified except by written instrument
executed by each of the parties.
(d) This Agreement sets forth the entire understanding and agreement
of the parties with respect to its subject matter and supersede all
prior understandings and agreements, whether written or oral, in
respect thereof.
(e) This Agreement is personal to Executive and may not be assigned
by him in any manner whatsoever.
(f) The headings and captions used herein are for convenience of
reference only and shall not be considered in construing this
Agreement.
(g) If any provision of this Agreement shall be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be modified so as to be enforceable to the fullest
extent permitted by applicable law, and the validity, legality and
enforceability of the remaining provisions hereof shall not in any way
be affected or impaired thereby.
(h) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
-7-
<PAGE> 8
(i) The Company and Executive acknowledge and agree that there may
be a constitutional right to a jury trial in connection with any claim,
dispute or lawsuit arising between them, but that such right may be
waived. Accordingly, the parties agree that notwithstanding such
constitutional right, in this matter, the parties believe and agree
that it shall be in their best interest to waive such right, and
accordingly, hereby waive such right to a jury trial, and further agree
that the best forum for hearing any claim, dispute or lawsuit, if any,
arising in connection with this Agreement or the relationship between
Executive and the Company, shall be a court of competent jurisdiction
sitting without a jury.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
/s/ Eric I. Glassman
----------------------------------------
ERIC I. GLASSMAN
D.I.Y. HOME WAREHOUSE, INC.
By: /s/ Fred A. Erb
-------------------------------------
Fred A. Erb, Chairman of the Board
-8-
<PAGE> 1
Exhibit 10.8
D.I.Y. HOME WAREHOUSE, INC.
5811 Canal Road
Valley View, Ohio 44125
July 1, 1998
Clifford L. Reynolds
5811 Canal Road
Valley View, OH 44125
Dear Cliff:
This letter will confirm with you the terms and conditions upon which
the Compensation Committee (the "Committee") of the Board of Directors of D.I.Y.
Home Warehouse, Inc. (the "Company") at its meeting held on February 19, 1998
granted to you the right to receive a bonus under certain circumstances.
If you participate in bringing about a transaction resulting in a change
of control of the Company (as defined Below) (a "Transaction") and (i) are still
employed by the Company immediately prior to the closing of the Transaction, or
(ii) your employment has been terminated by the Company without cause (as
defined in your current employment agreement), after the execution of the
definitive agreement governing the Transaction, you will be entitled to receive
a bonus (the "Transaction Bonus") equal to the greater of (i) one (1) year of
your base salary, or (ii) 1.11% of the value received by the shareholders of the
Company as a result of the Transaction, as determined by an independent
evaluation obtained by the Company.
The Company confirms that any Transaction Bonus is in addition to any
payment which you may be entitled to receive pursuant to the terms of any
employment agreement which you may have with the Company as a result of
termination of your employment due to a change of control of the Company.
As used in this letter, the term "change of control" shall mean either
of the following:
(i) An event or series of events by which any person or other
entity or group (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
("Securities Exchange Act") of persons or other entities
acting in concert as a partnership or other group (a "Group of
Persons") shall. as a result of a tender or exchange offer or
offers, an open market purchase or purchases, a privately
negotiated purchase or purchases or otherwise, become the
beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act), directly or indirectly, of fifty
percent (50%) or more of the then outstanding voting stock of
the Company: or
<PAGE> 2
D.I.Y. Home Warehouse, Inc.
July 1, 1998
Page 2
(ii) The Company consolidates with, or merges with or into,
another person or entity or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or
substantially all of its assets to any person or entity, or
any person or entity consolidates with, or merges with or into
the Company, in any such event pursuant to a transaction in
which fifty percent (50%) or more of the outstanding voting
stock of the Company is converted into or exchanged for cash,
securities, or other property.
This letter agreement shall only apply to a Transaction which is closed
by December 31, 1999.
This agreement shall be governed by and be construed and enforced in
accordance with the laws of the State of Ohio. This agreement is personal to the
addressee and may not be assigned in any manner whatsoever.
This Agreement may be executed in two or more counterparts, each of
which are to be deemed an original, but all of which together shall constitute
one and the same instrument.
Very truly yours,
D.I.Y. HOME WAREHOUSE, INC.
By: /s/ Fred A. Erb,
--------------------------------
Fred A. Erb,
Chairman of the Board
ACKNOWLEDGED AND AGREED
TO ON JULY 15, 1998
/s/ Clifford L. Reynolds
- -------------------------
Clifford L. Reynolds
<PAGE> 1
Exhibit 10.9
D.I.Y. HOME WAREHOUSE, INC
5811 Canal Road
Valley View, Ohio 44125
July 1, 1998
R. Scott Eynon
5811 Canal Road
Valley View, OH 44125
Dear Scott:
This letter will confirm with you the terms and conditions upon which
the Compensation Committee (the "Committee") of the Board of Directors of D.I.Y.
Home Warehouse, Inc. (the "Company") at its meeting held on February 19, 1998
granted to you the right to receive a bonus under certain circumstances.
If you participate in bringing about a transaction resulting in a change
of control of the Company (as defined below) (a "Transaction") and (i) are still
employed by the Company immediately prior to the closing of the Transaction, or
(ii) your employment has been terminated by the Company without cause (as
defined in your current employment contract) after the execution of the
definitive agreement governing the Transaction, you will be entitled to receive
a bonus (the "Transaction Bonus") equal to the greater of (i) one (1) year of
your base salary, or (ii) 0.64% of the value received by the shareholders of the
Company as a result of the Transaction, as determined by an independent
evaluation obtained by the Company.
The Company confirms that any Transaction Bonus is in addition to any
payment which you may be entitled to receive pursuant to the terms of any
employment agreement which you may have with the Company as a result of
termination of your employment due to a change of control of the Company.
As used in this letter, the term "change of control" shall mean either
of the following:
(i) An event or series of events by which any person or other
entity or group (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934. as amended
("Securities Exchange Act") of persons or other entities
acting in concert as a partnership or other group (a "Group of
Persons") shall. as a result of a tender or exchange offer or
offers, an open market purchase or purchases. a privately
negotiated purchase or purchases or otherwise. become the
beneficial owner (within the meaning of Rule 1 3d-3 under the
Securities Exchange Act), directly or indirectly, of fifty
percent (50%) or more of the then outstanding voting stock of
the Company; or
<PAGE> 2
D.I.Y. Home Warehouse, Inc.
July 1, 1998
Page 2
(ii) The Company consolidates with, or merges with or into,
another person or entity or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or
substantially all of its assets to any person or entity, or
any person or entity consolidates with, or merges with or into
the Company, in any such event pursuant to a transaction in
which fifty percent (50%) or more of the outstanding voting
stock of the Company is converted into or exchanged for cash,
securities, or other property.
This letter agreement shall only apply to a Transaction which is closed
by December 31, 1999.
This agreement shall be governed by and be construed and enforced in
accordance with the laws of the State of Ohio. This agreement is personal to the
addressee and may not be assigned any manner whatsoever.
This Agreement may be executed in two or more counterparts, each of
which are to be deemed an original, but all of which together shall constitute
one and the same instrument.
Very truly yours,
D.I.Y. HOME WAREHOUSE, INC.
By: /s/ Fred A. Erb.
--------------------------------
Fred A. Erb,
Chairman of the Board
ACKNOWLEDGED AND AGREED
TO ON JULY 15, 1998
/s/ R. Scott Eynon
- ------------------------------------
R. Scott Eynon
<PAGE> 1
Exhibit 10.10
D.I.Y. HOME WAREHOUSE, INC.
5811 Canal Road
Valley View, Ohio 44125
July 1, 1998
Dennis C. Hoff
5811 Canal Road
Valley View, OH 44125
Dear Dennis:
This letter will confirm with you the terms and conditions upon which
the Compensation Committee (the "Committee") of the Board of Directors of D.I.Y.
Home Warehouse, Inc. (the "Company") at its meeting held on February 19, 1998
granted to you the right to receive a bonus under certain circumstances.
If you participate in bringing about a transaction resulting in a change
of control of the Company (as defined below) (a "Transaction") and (i) are still
employed by the Company immediately prior to the closing of the Transaction, or
(ii) your employment has been terminated by the Company without cause (as
defined in your current employment agreement) after the execution of the
definitive agreement governing the Transaction, you will be entitled to receive
a bonus (the "Transaction Bonus") equal to the greater of (i) one (1) year of
your base salary, or (ii) 0.64% of the value received by the shareholders of the
Company as a result of the Transaction, as determined by an independent
evaluation obtained by the Company.
The Company confirms that any Transaction Bonus is in addition to any
payment which you may be entitled to receive pursuant to the terms of any
employment agreement which you may have with the Company as a result of
termination of your employment due to a change of control of the Company.
As used in this letter, the term "change of control" shall mean either
of the following:
(i) An event or series of events by which any person or other
entity or group (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
("Securities Exchange Act") of persons or other entities
acting in concert as a partnership or other group (a "Group of
Persons") shall, as a result of a tender or exchange offer or
offers. an open market purchase or purchases. a privately
negotiated purchase or purchases or otherwise. become the
beneficial owner (within the meaning of Rule 13d-3 under the
Securities
<PAGE> 2
D.I.Y. Home Warehouse, Inc.
July 1, 1998
Page 2
Exchange Act), directly or indirectly, of fifty percent (50%)
or more of the then outstanding voting stock of the Company;
or
(ii) The Company consolidates with, or merges with or into,
another person or entity or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or
substantially all of its assets to any person or entity, or
any person or entity consolidates with, or merges with or into
the Company, in any such event pursuant to a transaction in
which fifty percent (50%) or more of the outstanding voting
stock of the Company is converted into or exchanged for cash,
securities, or other property.
This letter agreement shall only apply to a Transaction which is closed
by December 31 , 1999.
This agreement shall be governed by and be construed and enforced in
accordance with the laws of the State of Ohio. This agreement is personal to the
addressee and may not be assigned in any manner whatsoever.
This Agreement may be executed in two or more counterparts, each of
which are to be deemed an original. but all of which together shall constitute
one and the same instrument.
Very truly yours,
D.I.Y. HOME WAREHOUSE, INC.
By: /s/ Fred A. Erb
-------------------------------
Fred A. Erb,
Chairman of the Board
ACKNOWLEDGED AND AGREED
TO ON 7/15, l998
/s/ Dennis C. Hoff
- -------------------------------
Dennis C. Hoff
<PAGE> 1
Exhibit 10.11
D.I.Y. HOME WAREHOUSE, INC.
5811 Canal Road
Valley View, Ohio 44125
July 1, 1998
Mr. Eric I. Glassman
Vice-President and Chief Financial
Officer
5811 Canal Road, Suite 180
Valley View, OH 44125
Dear Mr. Glassman:
This letter will confirm with you the terms and conditions upon which
the Compensation Committee (the "Committee") of the Board of Directors of D.I.Y.
Home Warehouse, Inc., an Ohio corporation (the "Company") in its Action Without
Meeting taken as of July 1, 1998, granted to you the right to receive a bonus
under certain circumstances.
If you participate in bringing about a transaction resulting in a change
of control of the Company (as defined below) (a "Transaction") and (i) you are
still employed by the Company immediately prior to the closing of the
Transaction, or (ii) your employment has been terminated by the Company without
cause after the execution of the definitive agreement governing the Transaction,
you will be entitled to receive a bonus (the "Transaction Bonus") equal to
$50,000.
You shall be entitled to received a Transaction Bonus hereunder with
respect to a Transaction which is closed by December 31, 1999.
The Company confirms that any Transaction Bonus is in addition to any
payment which you may be entitled to receive pursuant to the terms of any
employment agreement you may have with the Company as a result of termination of
your employment due to a change of control of the Company.
As used herein, the term "change of control" shall mean any of the
following:
(i) an event or series of events by which any person or other
entity or group (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act") of persons or other entities acting
in concert as a partnership or other group (a "Group of
Persons") shall, as a result of a tender or exchange offer or
offers, an open market purchase or purchases, a privately
negotiated purchase or purchases or otherwise, become the
beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act),
<PAGE> 2
Mr. Eric I. Glassman
July 1, 1998
Page 2
directly or indirectly, of 50% or more of the then outstanding
voting stock of the Company; or
(ii) the Company consolidates with. or merges with or into,
another person or entity or sells. assigns. conveys,
transfers. leases or otherwise disposes of all or
substantially all of its assets to any person or entity, or
any person or entity consolidates with, or merges with or into
the Company, in any such event pursuant to a transaction in
which 50% or more of the outstanding voting stock of the
Company is converted into or exchanged for cash, securities or
other property.
Very truly yours,
D.I.Y. HOME WAREHOUSE, INC.
By: /s/ Fred A. Erb
-----------------------------
Fred A. Erb,
Chairman of the Board
ACKNOWLEDGED AND AGREED
TO N JULY 30, 1998
/s/ Eric I. Glassman
- ----------------------------------
Eric I. Glassman
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0
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