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Exhibit 10
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
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BUSINESS LOAN AGREEMENT
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This Amendment ("Amendment") is made as of the 30th day of June, 1997,
by and between Xxxxxxx, Inc. (the "Borrower") and Bank One, NA successor by
merger of Bank One, Dayton, NA (the "Bank").
WHEREAS, the Borrower and the Bank entered into a Second Amended and
Restated Business Loan Agreement dated December 31, 1996, as amended (if
applicable) (the "Credit Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as set
forth below:
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms not defined herein shall have the meaning
ascribed in the Credit Agreement.
2. Sections 6.2, 6.3, and 6.5 bearing the headings Funded Debt to
Tangible Net Worth, Funded Debt to EBITDA, Current Ratio and Fixed Charge
Coverage of the Credit Agreement is hereby amended and restated to read as
follows:
6.2 FUNDED DEBT TO TANGIBLE NET WORTH Borrower agrees to maintain a
ratio of Funded Debt to Tangible Net Worth of not more than the ratios
set forth for the following periods measured at each quarter's end on
a rolling four quarter basis:
Periods Ratios
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06/30/97 2.10:1.00
07/01/97 through 09/30/97 2.30:1.00
10/01/97 through 03/31/98 2.20:1.00
04/01/98 and thereafter 2.10:1.00
"Tangible Net Worth" shall be determined in accordance with GAAP and
shall be deemed to include the amount of total assets of Borrower
excluding the amount of Intangible Assets of Borrower plus
$2,600,000.00 related to the exposure with the Ohio Bureau of Workers'
Compensation that was recorded by the Borrower the fourth quarter of
1996 minus the amount of total liabilities of Borrower, exclusive of
Subordinated Debt, if any.
"Intangible Assets" shall be determined in accordance with GAAP and be
deemed to include at book value, without limitation, goodwill, patents,
copyrights, secret processes, deferred expenses relating to sales,
general administrative, research and development expense. "Funded Debt"
shall be determined in accordance with GAAP and shall be deemed to
include all interest bearing borrowings plus capitalized leases.
6.3 FUNDED DEBT TO EBITDA. Borrower agrees to maintain a ratio of
Funded Debt to EBITDA of not more than the ratios set forth for the
following periods measured at each quarter's end on a rolling four
quarter basis.
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Periods Ratios
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06/30/97 6.00:1.00
07/01/97 through 09/30/97 7.50:1.00
10/01/97 through 12/31/97 7.00:1.00
01/01/98 through 03/31/98 6.25:1.00
04/01/98 through 06/30/98 5.50:1.00
07/01/98 through 09/30/98 4.75:1.00
10/01/98 through 12/31/98 4.00:1.00
"EBITDA" shall be defined as earnings before interest expense, taxes
and depreciation/amortization plus $2,600,000.00 related to the
exposure with the Ohio Bureau of Workers' Compensation that was
recorded by the Borrower the fourth quarter of 1996.
6.5 FIXED CHARGE COVERAGE. Borrower agrees to maintain a Fixed Charge
Coverage (net income after taxes minus dividends plus $2,600,000.00
related to the exposure with the Ohio Bureau of Workers' Compensation
that was recorded by the Borrower the fourth quarter of 1996 plus
interest expense plus rent expense plus depreciation/amortization
divided by current maturities of long-term debt (including capitalized
leases but not including any amount outstanding on the $35,000,000.00
(as amended) Amended and Restated Business Purpose Revolving Promissory
Note dated December 31, 1996 from Borrower to the order of Bank One
which may be considered current due to the maturity date of such
promissory note) plus interest expense plus rent expense of not less
than 1.20 to 1.0 at fiscal quarter-end June 30, 1997, of not less than
1.10 to 1.00 at fiscal quarter-end September 30, 1997 and December 31,
1997, of not less than 1.15 to 1.00 at fiscal quarter-end March 31,
1998 and June 30, 1998 and beginning fiscal quarter ending September
30, 1998 and at each fiscal quarter-end thereafter of not less than
1.20 to 1.00 measured on a rolling four quarter basis.
3. The Business Loan Agreement "Borrowing Base" Addendum attached to
the Credit Agreement is hereby amended and restated in its entirety to read as
follows in Exhibit "A" attached hereto and made a part hereof.
4. The Borrower represents and warrants that (a) the representations
and warranties contained in the Credit Agreement are true and correct in all
material respects as of the date of this Amendment, (b) no condition, act or
event which could constitute an Event of Default under the Credit Agreement
exists, and (C) no condition, event, act or omission has occurred, which, with
the giving of notice or passage of time, would constitute an Event of Default
under the Credit Agreement.
5. The Borrower agrees to pay all fees and out-of-pocket disbursements
incurred by the Bank in connection with this Agreement, as set forth in section
5.3.2 of that certain Promissory Note Modification Agreement executed on even
date herewith, including legal fees incurred by the Bank in the preparation,
consummation, administration and enforcement of this Amendment.
6. This Amendment shall become effective only after it is fully
executed by the Borrower and the Bank. Except as amended by this Amendment, the
Credit Agreement shall remain in full force and effect in accordance with its
terms.
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7. This Amendment is a modification only and not a novation. Except
for the above-quoted modification(s), the Credit Agreement, any agreement or
security document, and all the terms and conditions thereof, shall be and
remain in full force and effect with the changes herein deemed to be
incorporated herein. This Amendment is to be considered attached to the Credit
Agreement and made a part hereof. This Amendment shall not release or affect
the liability of any guarantor, surety or endorser of the Credit Agreement or
release any owner of collateral securing the Credit Agreement. The validity,
priority and enforceability of the Credit Agreement shall not be impaired
hereby. To the extent that any provision of this Amendment conflicts with any
term or condition set forth in the Credit Agreement, or any agreement or
security document executed in conjunction therewith, the provisions of this
Amendment shall supersede and control. Borrower acknowledged that as of the
date of this Amendment it has no offsets with respect to all amounts owned by
Borrower to Bank and Borrower waives and releases all claims which it may have
against Bank arising under the Credit Agreement on or prior to the date of this
Amendment.
8. The Borrower acknowledges and agrees that this Amendment is limited
to the terms outlined above, and shall not be construed as an amendment of any
other terms or provisions of the Credit Agreement; the Borrower hereby
specifically ratifies and affirms the terms and provisions of the Credit
Agreement. Borrower releases Bank from any and all claims which may have
arisen, known or unknown, in connection with the Credit Agreement on or prior
to the date hereof. This Amendment shall not establish a course of dealing or
be construed as evidence of any willingness on the Bank's part to grant other
or future amendments, should any be requested.
IN WITNESS WHEREOF, the parties have entered into the Agreement as of
the day and year first above written.
BANK ONE, NA successor by BORROWER
merger of Bank One, Dayton, XX
XXXXXXX, INC.
By: R. Xxxxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
Title: Vice President Title: Treasurer
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EXHIBIT "A"
BUSINESS LOAN AGREEMENT
"BORROWING BASE" ADDENDUM
This "Borrowing Base" Addendum to the Business Loan Agreement additionally
governs the $35,000,000.00, as amended, Promissory Note ("Note") of Borrower,
set forth in the Agreement as an Obligation.
Borrower agrees so long as the Note or the indebtedness represented thereby is
outstanding or so long as the Agreement is in effect, the following shall apply:
1. Note Advancement Formula. The proceeds of the Note may be advanced,
repaid and readvanced an unlimited number of times with Borrower's
right to borrowing under the Note limited in that the total
principal balance at any time outstanding on the Note shall not
exceed, prior to request for a draw or advance or after a draw or
advance, the borrowing base formula as hereinafter set forth. The
"Borrowing Base" formula as of any date shall mean the lesser of:
(a) the Note amount, or
(b) the total amount of one or more of the following:
(a) 80% of Borrower's Eligible Accounts Receivable
(b) 50% of Borrower's Eligible Inventory
(C) 100% of LHI for the quarter ending March 31,
1997, and reducing by 5.00% (of the original
LHI amount) on June 30, 1997 and further
reducing by 7.50% beginning September 30, 1997
and on each calendar quarter thereafter
2. "Eligible Account Receivable" means an account receivable of
Borrower from a party (the "Account Debtor"), now existing or
hereafter arising, which meets all the following requirements at
the time it came into existence and continues to meet the same
until it is collected in full:
The account is due and payable in full and is less than ninety (90)
days old from the due date shown on the original invoice date
(which first due date is not to be greater than sixty (60) days
from invoice date); The account arose in the ordinary course of
Borrower's business from the performance of services or any
outright and lawful sale of goods by Borrower. If goods are
involved, all such goods having been lawfully shipped to Account
Debtor, and Borrower has possession of (and will deliver as
required hereunder within thirty (30) days of receipt of written
request, but no more than once each calendar year. Notwithstanding
the foregoing to the contrary, Bank One has the right to make this
request upon the occurrence of an event of default.) or has
delivered to Bank One copies of all invoices, shipping documents
and delivery receipts evidencing such shipments; The right to
payment has been fully earned by completed performance; There has
not been a progress billing nor has Borrower extended the time for
payment without the consent of Bank One; for the purposes hereof,
"progress billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which
the Account Debtor's obligation to pay such invoice is conditioned
upon the Borrower's completion of any further performance under the
contract or agreement; The account is not subject to any prior
assignment, claim, lien or security interest; The true record of
the amount owed is reflected on Borrower's books and on any invoice
or statement delivered to Bank One
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relating to the account is owing to Borrower; The account is not
subject to any setoff, counterclaim, credit, allowance,
adjustment or discount (excepting only any applicable discount
for prompt payment); Borrower has not received any notice of nor
of any liquidation, reorganization, dissolution, termination of
existence, insolvency, business failure, appointment of a
receiver for all or any part of the property of, assignment for
the benefit of creditors mde by, or filing of a petition under
any bankruptcy or insolvency statute by or against, Account
Debtor; The account did not arise from a transaction with a
Person, or entity affiliated with Borrower; The account is not
owed by the government of the United States of America, or any
department, agency, public corporation, or other instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as
amended, and any other steps necessary to perfect Bank One's
security interest therein, have been complied with to the Bank
One's satisfaction with respect to such account; The account(s)
in amount(s) which exceeds $500,000.00 is not owed by any state,
municipality or other political subdivision of the United States
of America, or any department, agency, public corporation or
other instrumentality thereof and as to which Bank One determines
that its security interest therein is not or cannot be perfected;
Bank One has not informed Borrower that in Bank One's reasonable
credit judgment that the prospect of collection of such account
is impaired or that the Account may not be paid by reason of the
Account Debtor's financial inability to pay or which is owed by
an Account Debtor which Bank One, in its reasonable credit
judgment, otherwise deems to be uncreditworthy; The account did
not arise out of a contract or purchase order prohibiting any
assignment thereof or the creation of any security interest
therein and Borrower has not received any account acceptance,
chattel paper, promissory note, trade, payment instrument, draft
or written agreement (other than invoices, shipping documents and
delivery receipts) with respect to such account or payment
thereof; and The account did not arise from an Account Debtor
whose mailing address or executive offices are located outside
the United States or is not organized under the laws of the
United States or any state, unless the obligation is secured or
payable by an irrevocable letter of credit or acceptance in form
and substance satisfactory to Bank One.
In the event that more than ten percent (10%) of the accounts
receivable from any one Account Debtor shall at any time become
more than ninety (90) days past due, none of the accounts
receivable outstanding from that Account Debtor shall be included
in calculating Borrower's Eligible Accounts Receivable, until
such time, if any, as Bank One may, in its sole discretion,
determine otherwise.
3. "Eligible Inventory" means all tangible personal property, goods,
merchandise and other personal property now owned or hereafter
acquired by Borrower, wheresoever located in the United States,
which is leased or furnished, or held to be furnished, under
contracts of sale or service, and all finished goods which meet
all of the following specifications: (a) the inventory is
lawfully owned by Borrower, is not subject to any lien, claim,
consignment, security interest or prior assignment; (b) Borrower
has the right of assignment thereof and the power to grant
security interests therein; (c) the inventory arose or was
acquired in the ordinary course of Borrower's business and no
substantial portion thereof represents returned, rejected or
damaged goods; (d) no account receivable or document of title has
been created or issued with respect to such inventory; (e) the
inventory does not represent work-in-process, spare parts,
packaging and shipping materials, supplies, or returned or
defective inventory; and (f) the inventory is not otherwise
regarded by Bank One as unsuitable collateral; "Eligible
Inventory" shall be valued in accordance with GAAP based on FIFO
cost or lower of cost or market, excluding, however, (g) the
amount of progress payments, predelivery payments, deposits and
any other sums received by the Borrower in anticipation of the
sale and delivery of Eligible Inventory, and (h) all Eligible
Inventory on lease to others.
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4. "Eligible Leasehold Improvements" ("LHI") shall be valued in
accordance with GAAP. The original LHI amount shall be TEN
MILLION AND NO/100 DOLLARS ($10,000,000.00)
5. "Eligible Collateral" shall mean all Eligible Accounts
Receivable, Eligible Leasehold Improvements and Eligible
Inventory.
6. Reporting. Borrower will supply no later than thirty (30)
calendar days from the end of each quarter until April 30, 1997
and no later than thirty (30) calendar days from the end of each
month thereafter or more frequently, if requested by Bank One a
compliance certificate in a form and format accept able to Bank
One, certifying Borrower's compliance and the requirements
hereof.
7. Borrowing Base Deficiency. In the event the amount outstanding
under the Note exceeds the Borrowing Base at any time, then
Borrower shall be required to immediately reduce the outstanding
principal balance to comply with the Borrowing Base. Borrower
shall pay to Bank One with its compliance certificate by
certified check, cashier's check or cash, the deficiency. If the
deficiency is not paid down as herein called for, the Note may be
declared in default, cancelled and terminated.
8. Notwithstanding anything in the foregoing Paragraph 7 to the
contrary, Borrower may be permitted to be out-of-compliance with
the Borrowing Base Advancement Formula (paragraph 1 hereof) in an
amount not to exceed TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) (the " Non-Compliance Amount") provided that the
Borrower (a) has expended funds up to the Non-Compliance Amount
for real estate and (b) to Bank One's satisfaction that it has a
commitment for permanent financing and scheduled for closing
within six (6) months with respect to real estate.
9. Change of Note Advancement Formula. In the event of a covenant
breach Bank One retains the sole discretion to reduce the
allowable percentage of any Eligible Collateral to be used in
calculating the Borrowing Base formula based upon the Eligible
Collateral changing in length, type or term from the Eligible
Collateral originally presented to and agreed upon between Bank
One and Borrower prior to the signing of this Agreement and/or
based upon the present or projected operating or financial
condition of Borrower.
10. Audits. Borrower agrees that Bank One shall have the right to
make audits to verify the Eligible Collateral reports that have
been submitted to Bank One from time to time. Such audits will be
reasonably made at the request of Bank One and shall be
determined as to frequency solely by Bank One. Borrower also
agrees to make copies available to Bank One of all audits
performed by state or federal regulatory agencies. Audit costs,
expenses and monitoring costs will be either paid directly by
Borrower or reimbursed to Bank One if Bank One has paid such
costs and expenses.
11. Draws by Borrower. No draw or advance shall be permitted unless
Borrower shall have timely provided Bank One with additional
information and certifications required hereunder, and unless
Borrower shall be in compliance with all terms of this Agreement.
However, failure to provide on a timely basis that information
requested in paragraph number 2 shall only cause the total
Eligible Account Receivable to reduce to a $0 (zero) amount.
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