EXHIBIT 10(i)
AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT
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April 25, 1997
The Xxxx Company
000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Gentlemen:
Reference is made to the Loan and Security Agreement (as heretofore
amended, the "Loan Agreement"), dated as of September 12, 1996, by and among
Congress Financial Corporation (Southern), as agent (the "Agent"), the Lenders
parties thereto and The Xxxx Company ("Borrower"), together with all other
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto (as the same now exist, are being
amended hereby and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, collectively, the "Financing Agreements"). All
capitalized terms used herein and not herein defined shall have the meanings
given to them in the Loan Agreement.
Borrower has requested that Agent and Lenders agree to amend certain
provisions of the Loan Agreement, including, among other things, provisions with
respect to certain Availability Reserves, financial covenants and the Interest
Rate, and Agent and the Lenders or Required Lenders, as applicable, are willing
to agree to such amendments, subject to the terms and conditions set forth
herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Supplemental Capital Expenditures. Effective as of December 31,
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1996, the definitions of "Supplemental Capital Expenditures Allowance" and
"Supplemental Capital Expenditures Reserve" contained in Sections 1.93 and 1.94
of the Loan Agreement, respectively, shall each be deemed amended by deleting
the references therein to "$6,000,000" and replacing such references in each
instance with the following: "$16,000,000."
2. Term Loan Reserve. Notwithstanding any contrary terms or
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unfulfilled conditions for the release of the Term Loan Reserve set forth in the
Loan Agreement, the Term Loan Reserve shall be released by Agent as of the date
hereof.
3. Interest Rate. Section 3.1(f) of the Loan Agreement is hereby
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deleted in its entirety and replaced with the following:
"(f) The Interest Rate with respect to Eurodollar Rate Loans is
subject to adjustment as follows:
(i) if Borrower's Pre-Tax Profit is at least $2,275,000
for its fiscal year ending December 31, 1997, then the pre-default
Interest Rate for Eurodollar Rate Loans will be reduced to three
(3%) percent per annum above the Adjusted Eurodollar Rate.
(ii) The adjustment in the Interest Rate for Eurodollar
Rate Loans shall be effective as to each Interest Period that
commences on or after the tenth (10th) day after the delivery to
Agent of audited financial statements of Borrower for the fiscal
year ending December 31, 1997 showing that the required financial
results were achieved and accompanied by the unqualified audit
report and opinion thereon of independent certified public
accountants acceptable to Agent.
(iii) No adjustment in the pre-default Interest Rate for
Eurodollar Rate Loans as described in this Section 3.1(f) shall
become effective if, at the time an adjustment would otherwise be
made under this Section 3.1(f), a Default or Event of Default
exists or has occurred and is continuing."
4. Strategic Plan. Effective December 31, 1996, Section 9.19(b) of
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the Loan Agreement is deemed amended in a manner such that on or before May 29,
1997, Borrower shall deliver, or cause to be delivered to, Agent and Lenders (i)
a written final report from the Consultant setting forth the Consultant's advice
and recommendations regarding the Strategic Plan, (ii) a copy of the Strategic
Plan and (iii) evidence of the adoption of the Strategic Plan by the Board of
Directors of Borrower.
5. Financial Covenants Schedule. Effective as of December 31, 1996,
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the Financial Covenants Schedule to the Loan Agreement is hereby deleted and
replaced with the Financial Covenants Schedule attached to this Amendment.
6. Working Capital Ratio. Effective as of December 31, 1996, Section
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9.13 of the Loan Agreement is hereby deleted in its entirety and replaced with
the following:
"9.13 Working Capital Ratio. Borrower shall, at all times,
maintain a Working Capital Ratio of not less than 2.0 to 1.0."
7. Condition Precedent. The effectiveness of the amendments contained
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herein shall be subject to the satisfaction of the following condition: the
receipt by Agent of an original of this Amendment, duly authorized, executed and
delivered by Borrower and each of the Lenders.
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8. Effect of this Amendment.
(a) Entire Agreement; Ratification and Confirmation of the
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Financing Agreements. This Amendment contains the entire agreement of the
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parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous term sheets, proposals, discussions, negotiations,
correspondence, commitments and communications between or among the parties
concerning the subject matter hereof. This Amendment may not be modified or any
provision waived, except in writing signed by the party against whom such
modification or waiver is sought to be enforced. Except as specifically amended
pursuant hereto, the Financing Agreements are hereby ratified, restated and
confirmed by the parties hereto as of the effective date hereof. No Events of
Default have been or are being waived hereby. To the extent of conflict between
the terms of this Amendment and the other Financing Agreements, the terms of
this Amendment shall control.
(b) Governing Law. This Amendment and the rights and obligations
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hereunder of each of the parties hereto shall be governed by and interpreted and
determined in accordance with the laws of the State of Georgia.
(c) Binding Effect. This Amendment shall be binding upon and
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inure to the benefit of each of the parties hereto and their respective
successors and assigns.
(d) Counterparts. This Amendment may be executed in any number of
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counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
By the signatures hereto of their duly authorized officers, each of the
parties hereto covenants and agrees as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
(SOUTHERN), as Agent and Lender
By: /s/ Xxxxxx X. Xxxxxxxx
Title: First Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Lender
By: /s/ Xxxxxxx X. Xxxxxx
Title: Vice President
AGREED AND ACCEPTED:
THE XXXX COMPANY
By: /s/ A. Xxxxxxx Xxx
Title: Vice President and Chief
Financial Officer
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FINANCIAL COVENANTS SCHEDULE
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Minimum Minimum Minimum Maximum
FIFO After-Tax Change in Base
Basis Fixed Charge Tangible Capital
EBITDA* Coverage To 1.00 Net Worth* Expenditures*
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1 month through January 1997 (1,000) N/A (2,000) 667
2 months through February 1997 0 N/A (2,000) 1,333
3 months through March 1997 0 N/A (2,500) 2,000
4 months through April 1997 1,000 N/A (3,000) 2,666
5 months through May 1997 2,000 N/A (3,000) 3,333
6 months through June 1997 3,000 N/A (3,000) 4,000
7 months through July 1997 4,000 N/A (3,000) 4,666
8 months through August 1997 6,000 N/A (2,500) 5,333
9 months through September 1997 7,500 0.20 (1,500) 6,000
10 months through October 1997 10,500 0.50 (500) 6,666
11 months through November 1997 12,500 0.60 -0- 7,333
12 months through December 1997 13,500 0.70 -0- 8,000
12 months through January 1998 14,500 0.80 500 8,000
12 months through February 1998 14,500 0.90 1,000 8,000
12 months through March 1998 15,500 1.00 1,500 8,000
12 months through April 1998 16,500 1.10 2,000 8,000
12 months through May 1998 17,500 1.10 2,500 8,000
12 months through June 1998 18,000 1.10 2,500 8,000
12 months through July 1998 18,500 1.10 2,500 8,000
12 months through August 1998 19,500 1.10 2,500 8,000
12 months through September 1998 20,500 1.10 2,500 8,000
12 months through October 1998 21,000 1.10 2,500 8,000
12 months through November 1998 21,000 1.10 2,500 8,000
12 months through December 1998 21,000 1.10 2,500 8,000
Each 12 month period thereafter 21,000 1.10 2,500 8,000
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* In Thousands of Dollars
