ARROW AUTOMOTIVE INDUSTRIES, INC.
WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT
THIS WAIVER AND SECOND AMENDMENT (this "Amendment"), dated as of March
29, 1997, by and among Arrow Automotive Industries, Inc. (the "Borrower"),
BankBoston, N.A., f/k/a The First National Bank of Boston, a national banking
association ("BKB"), the other lending institutions listed on SCHEDULE 1 to the
Credit Agreement (together with BKB, the "Banks"), and BankBoston, N./A., f/k/a
The First National Bank of Boston as agent for the Banks (the "Agent"), as
parties to a certain Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of December 3, 1996 (as amended by the Waiver and First
Amendment to Amended and Restated Revolving Credit and Term Loan Agreement,
dated as of December 28, 1996, the "Credit Agreement"). Capitalized terms not
otherwise defined herein shall have the same meanings ascribed thereto in the
Credit Agreement.
WHEREAS, the Borrower has requested the Banks to make certain amendments
to, and waive certain provisions of, the Credit Agreement; and
WHEREAS, the Banks are willing to make such amendments to, and waive
certain provisions of, the Credit Agreement subject to the terms and conditions
set forth herein.
NOW THEREFORE, the Borrower and the Agent and the Banks hereby covenant
and agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT.
(a) The definition of Borrowing Base contained in Section
1.1 of the Credit Agreement is amended by deleting the amount
"$13,500,000" set forth in the proviso contained in such
definition and substituting $13,000,000" therefor.
(b) The definition of Revolving Credit Loan Maturity Date
contained in Section 1.1 of the Credit Agreement is amended
by deleting the date "December 31, 1997" contained in such
definition and substituting the date "March 31, 1998" therefor.
(c) Section 6 of the Credit Agreement is amended by adding
the following new Section 6.10:
6.10 Prepayment and Termination. If the Borrower prepays all of
the Obligations and terminates each Bank's Commitment in full prior to
the Revolving Credit Loan Maturity Date or Term Loan Maturity Date, the
Borrower shall pay a premium equal to one percent (1%) of the sum of (i)
the Total Commitment with respect to the Revolving Credit Loans PLUS
(ii) the outstanding amount of the Term Loan, on the date immediately
prior to the date of prepayment (the "Total Prepayment Amount")'
PROVIDED, HOWEVER, in the event that the Banks request the Borrower to
refinance with a third party and repay all of the Obligations and all of
the Obligations are repaid in full in cash within ninety (90) days of
such request, the premium to be paid by the Borrower shall be equal to
one-half percent (0.5%) of the Total Repayment Amount.
(d) Section 11.1 of the Credit Agreement is amended by
deleting such Section 11.1 and restating it in its entirety as
follows:
11.1 Capital Expenditures. The Borrower will not make Capital
Expenditures that exceed in the aggregate (a) $575,000 during the 1997
fiscal year (excluding amounts capitalized in connection with the closing
of the Borrower's manufacturing facility located in Santa Maria,
California up to an aggregate amount of $250,000) and (b) $500,000 during
any fiscal year thereafter.
(e) Section 11.2 of the Credit Agreement is amended by deleting
such Section 11.2 and restating it in its entirety as follows:
11.2 Debt Service. The Borrower will not permit, as at the end of each
fiscal quarter (commencing with the fiscal quarter ending on September
27, 1997), the ratio of (a) the sum of (i) Net Income plus (ii) Total
Interest Expense, plus (iii) depreciation, plus (iv) amortization to (b)
Total Debt Service to be less than 1.0:1.0.
(f) Section 11.3 of the Credit Agreement is amended by deleting
such Section 11.3 and restating it in its entirety as follows:
11.3 Liabilities to Worth Ratio. The Borrower will not permit the ratio
of Total Liabilities to Tangible Net Worth to exceed (a) 1.50:1.100 as at
the end of each of fiscal quarter Q1, 1997 and Q2, 1997 and (b) 2.00:1.00
as at the end of each fiscal quarter ending thereafter.
(g) Section 11.4 of the Credit Agreement is amended by deleting
such Section 11.4 and restating it in its entirety as follows:
11.4 Tangible Net Worth. The Borrower will not permit Tangible Net
Worth to be less than $22,250,000 at any time.
(h) Section 11.5 of the Credit Agreement is amended by deleting
such Section 11.5 and restating it in its entirety as follows:
11.5 Minimum Profitability. The Borrower will not permit, as at the end of
each fiscal quarter described in the table set forth below, its Net Income to
be less than the amount set forth opposite such quarter in such table:
XXXXXX XXXXXXX XXXXXX
X0, 0000 -$750,000
Each fiscal quarter thereafter, $1.00
commencing with the fiscal quarter
ending on the last day of Q1, 1998.
2. WAIVER. The Banks hereby waive the provisions of Sections 11.2 and
11.5 of the Credit Agreement solely to the extent necessary to permit non-
compliance with such Sections 11.2 and 11.5, and only for the fiscal quarter
ended March 31, 1997.
3. AMENDMENT FEE. The Borrower shall pay to the Agent for the PRO
RATA accounts of the Banks on or prior to May 12, 1997 an amendment fee of
$25,000.
4. CONDITIONS TO EFFECTIVENESS. This Amendment shall be effective
upon satisfaction of the following condition:
(a) this Amendment shall have been duly and properly executed and
delivered to the Agent by the Borrower, the Banks and the Agent;
(b) all corporate action necessary for the valid execution,
delivery and performance by the Borrower of this Amendment and the Credit
Agreement as amended hereby shall have been duly and effectively taken,
and evidence thereof satisfactorily to the Agent shall have been provided
to the Agent; and
(c) the Borrower shall have paid to the Agent, for the benefit of
the Banks, the Amendment Fee.
5. REPRESENTATIONS AND WARRANTIES. The Borrower, hereby represents
and warrants to the Bank and the Agent as follows:
(a) REPRESENTATIONS AND WARRANTIES IN CREDIT AGREEMENT. The
representations and warranties of the Borrower contained in the Credit
Agreement (i) were true and correct in all material respects when made, and
(ii) except to the extent such representations and warranties by their terms
are made solely as of a prior date, continue to be true and correct in all
material respects on the date hereof.
(b) RATIFICATION, ETC. Except as expressly provided by this
Amendment, the Credit Agreement and all documents, instruments and agreements
related thereto, including, but not limited to the Security Documents, are
hereby ratified and confirmed in all respects and shall continue in full force
and effect. The Credit Agreement and this Amendment shall be read and
construed as a single agreement. All references in the Credit Agreement or any
related agreement or instrument to the Credit Agreement shall hereafter refer
to the Credit Agreement as amended hereby.
(c) AUTHORITY, ETC. The execution and delivery by the Borrower
of this Amendment and the performance by the Borrower of all of its agreements
and obligations under the Credit Agreement as amended hereby are within the
corporate authority of the Borrower and have been duly authorized by all
necessary corporate action on the part of the Borrower.
(d) ENFORCEABILITY OF OBLIGATIONS. This Amendment and the Credit
Agreement as amended hereby constitute the legal, valid and binding obligations
of the Borrower, enforceable against the Borrower in accordance with their
terms.
(e) NO DEFAULT. After giving effect to this Amendment, no
Default or Event of Default has occurred and is continuing.
6. NO OTHER AMENDMENTS OR WAIVERS. Except as expressly provided in
this Amendment, all of the terms and conditions of the Credit Agreement and the
other Loan Documents remain in full force and effect.
7. EXPENSES. Pursuant to Section 17 of the Credit Agreement, all
costs and expenses incurred or sustained by the Agent in connection with this
Amendment, including the fees and disbursements of legal counsel for the Agent
in producing, reproducing and negotiating the Amendment, will be for the
account of the Borrower whether or not the transactions contemplated by this
Amendment are consummated.
8. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall be deemed an original, but which
together shall constitute one instrument.
9. MISCELLANEOUS. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
The captions in this Amendment are for the convenience of reference only and
shall not define or limit the provisions hereof.
(THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK)
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
under seal as of the date first set forth above.
ARROW AUTOMOTIVE INDUSTRIES, INC.
By: /S/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
BANKBOSTON, N.A., f/k/a THE FIRST NATIONAL
BANK OF BOSTON, individually and as Agent
By: /S/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
BTM CAPITAL CORPORATION
By: /S/ XXXXXX X. XXX
Name: Xxxxxx X. Xxx
Title: Assistant Managing Director
