THIRD AMENDMENT TO
CREDIT AGREEMENT
This Third Amendment is made as of May 14, 2002 among FIRETECTOR INC.,
a Delaware corporation (the "Company"); GENERAL SOUND (TEXAS) COMPANY, a
Delaware corporation ("General"); XXXXX SYSTEMS INC., a New York corporation
("Xxxxx"); and PYROTECH SERVICE INC., a New York corporation ("Pyrotech" and
collectively with the Company, General and Xxxxx, the "Borrowers") as
co-borrowers and CITIZENS BUSINESS CREDIT COMPANY, a division of Citizens
Leasing Corporation, a Rhode Island corporation (hereinafter referred to as
"Citizens") as lender.
WHEREAS, the Borrowers and Citizens are parties to a Credit Agreement dated
as June 28, 1998 (as amended, the "Credit Agreement").
WHEREAS, Borrowers have requested certain modifications to financial
covenants;
NOW, THEREFORE, the parties agree as follows:
1. Section 4.21 Cash Flow is amended in its entirety to read as follows:
"The ratio of EBITDA to Interest Charges of the Company
computed at the end of each fiscal quarter shall be not less than:
Ratio Quarter
----- -------
0.56 to 1.00 March 31, 2002
(3.05) to 1.00 June 30, 2002
(4.25) to 1.00 September 30, 2002
2.20 to 1.00 thereafter
"EBITDA" shall mean (a) all net income before interest and
taxes, plus (b) depreciation and amortization of assets
deducted in determining net income and (c) excluding any
extraordinary gains or losses. "Interest Charges" shall mean
(a) all interest on the Revolving Credit, plus (b) all
interest on money borrowed from any sources other than the
Revolving Credit, plus (c) the interest component on all
capitalized assets. For fiscal quarters through September 30,
2002 and for the fiscal quarter ending on September 30, 2003
and thereafter, EBITDA and Interest Charges shall be computed
on a retroactive basis for the prior four fiscal quarters. For
fiscal quarters ending December 31, 2002, March 31, 2003 and
June 30, 2003, EBITDA and Interest Charges shall be computed
on a retroactive basis from October 1, 2002 to the date of
computation. In addition, for the three-month period ending
September 30, 2002, the ratio of EBITDA to Interest Charges
for the Company shall be not less than 2.20 to 1.00. All
computations will be on a consolidated basis for the Company
and all Subsidiaries."
2.
The following section is added after Section 4.28:
Section 4.29 Minimum Availability. The Borrowers shall at all
times maintain minimum Availability of $250,000. "Availability" shall
mean the ability to borrow such amount under Section 1.02(a).
3. This Third Amendment shall be effective upon signature by the parties and
payment to Citizens by the Borrowers of an amendment fee of $7,500.
4. Except as set forth in this Third Amendment, the Second Amendment dated as
of October 1, 2001 and the First Amendment dated as of October 10, 2000,
the Credit Agreement remains in full force and effect.
5. Citizens waives any default arising as of March 31, 2002 for violation of
Section 4.21 as it read prior to this Third Amendment, but does not waive
any violation of the covenant as amended.
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
under seal as of the date first above written.
BORROWERS:
FIRETECTOR INC.
By:
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Xxxx X. Xxxxxxxx
Chief Financial Officer
GENERAL SOUND (TEXAS) COMPANY
By:
--------------------------------------
Xxxx X. Xxxxxxxx
Chief Financial Officer
XXXXX SYSTEMS INC.
By:
---------------------------------------
Xxxx X. Xxxxxxxx
Chief Financial Officer
PYROTECH SERVICE INC.
By:
----------------------------------------
Xxxx X. Xxxxxxxx
Chief Financial Officer
LENDER:
CITIZENS BUSINESS CREDIT COMPANY
By:
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Xxxxxxx X. X'Xxxxx
Senior Vice President