[Execution Copy]
FOURTH AMENDMENT TO AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT
FOURTH AMENDMENT TO AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
("Fourth Amendment") dated as of March 11, 1998 among DEVLIEG XXXXXXX, INC. (the
"Borrower"), THE CIT GROUP/BUSINESS CREDIT, INC. ("CITBC"), BNY FINANCIAL
CORPORATION ("BNYFC") (each of CITBC and BNYFC referred to as a "Lender" and
collectively, the "Lenders") and THE CIT GROUP/BUSINESS CREDIT, INC., as agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Lenders Agent").
PRELIMINARY STATEMENT. Reference is made to the Amended and Restated
Financing and Security Agreement dated as of January 17, 1997 among the
Borrower, CITBC, each other lender which may thereafter execute and deliver an
instrument of assignment under the Financing Agreement pursuant to Section 9(18)
(each a "Lender" and collectively, the "Lenders") and the Lenders Agent ("1997
Agreement"), as amended by a First Amendment to Amended and Restated Financing
and Security Agreement dated as of April 1, 1997, as amended by a Second
Amendment to Amended and Restated Financing and Security Agreement dated as of
September 17, 1997 and as amended by a Third Amendment to Amended and Restated
Financing and Security Agreement dated as of December 29, 1997 (as it may be
further amended, supplemented or modified from time to time, the "Financing
Agreement"). Any term used in this Fourth Amendment and not otherwise defined in
this Fourth Amendment shall have the meaning assigned to such term in the
Financing Agreement.
The parties hereto have agreed to amend certain terms and provisions of the
Financing Agreement as hereinafter set forth.
SECTION 1. Amendments to Financing Agreement. The Financing Agreement is,
subject to the satisfaction of the conditions precedent set forth in Section 2
hereof, hereby amended as follows:
(a) The listing of Exhibits A1 to A5 is amended in full to read as
follows:
Exhibit A1 - Form of Term Loan Promissory Note
Exhibit A5 - Form of Revolving Loans Promissory Note
(b) Each of the Schedules is replaced by each of the Schedules
attached to the Fourth Amendment.
(c) The following definitions shall be added in their proper
alphabetical order:
"'Quarterly Date' means each January 31, April 30, July 31 and
October 31."
"'Term Loan' have the meaning specified in Section 4(1)."
"'Term Loan Promissory Note' shall mean the note, in the form of
Exhibit A1 attached hereto, delivered by the Borrower to each Lender
to evidence each such Lender's respective portion of the Term Loan
pursuant to, and repayable in accordance with, the provisions of
Section 4 of this Financing Agreement."
"'Fourth Amendment Fee' means a fee equal to Fifty Thousand
Dollars ($50,000)."
"'Third Closing Date' means March 11, 1998."
(c) The definition of "Consolidated Fixed Charge Coverage Ratio" is
amended in full to read as follows:
"'Consolidated Fixed Charge Coverage Ratio' shall mean, for any
period, a ratio determined as of the relevant calculation date by
dividing (a) Consolidated EBITDA by (b) the sum for such period of (i)
Consolidated Interest Expense (other than any such Expenses incurred
under the Seller Note (Xxxxxxxx)), plus (ii) payments made on the Term
Loan pursuant to Section 4 of this Financing Agreement, plus (iii)
Capital Expenditures, plus (iv) income taxes of the Borrower and its
Consolidated Subsidiaries determined in accordance with GAAP."
(d) The definition of "Early Termination Fee" is amended in full to
read as follows:
"'Early Termination Fee' shall: i) mean the fee the Lenders are
entitled to charge the Borrower in the event the Borrower terminates
the Revolving Line of Credit or this Financing Agreement on a date
prior to the Final Maturity Date; and ii) be an amount equal to (x)
$400,000 if the Early Termination Date is a date after the Third
Closing Date but prior to the first anniversary of the Third Closing
Date; (y) $300,000 if the Early Termination Date is a date on or after
the first anniversary of the Third Closing Date but prior to the
second anniversary of the Third Closing Date; and (z) $200,000 if the
Early
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Termination Date is a date on or after the second anniversary of the
Third Closing Date."
(e) The definition of "Final Maturity Date" is amended in full to read
as follows:
"'Final Maturity Date' means October 31, 2001.
(f) The definition of "Mandatory Prepayment" is amended in full to
read as follows:
"'Mandatory Prepayment' shall mean (i)the amount by which the
Borrower must prepay the Revolving Loans immediately upon demand as
provided in Section 3, paragraph 1(c) or (d) of this Financing
Agreement or (ii) the amount by which the Borrower must prepay the
Term Loan pursuant to Section 4, paragraph 4 of this Financing
Agreement, or any or all of the foregoing, all as the context may
require."
(g) In each of the Loan Documents each of "any Term Loan", "any of the
Term Loans", "such Term Loan", "the Term Loans" and "Term Loans" is changed
to "the Term Loan".
(h) In each of the Loan Documents each of "the Term Loan I Promissory
Note, the Term Loan II Promissory Note, the Term Loan III Promissory Note,
[and/or] the Term Loan IV Promissory Note" is changed to "the Term Loan
Notes".
(i) The following definitions are deleted in their entirety "Term Loan
I", "Term Loan II", Term Loan III", "Term Loan IV", "Term Loan I Promissory
Note", "Term Loan II Promissory Note", Term Loan III Promissory Note" and
"Term Loan IV Promissory Note".
(j) Section 4, Term Loans, is amended in full to read as follows:
SECTION 4. Term Loans.
1. The Lenders and the Borrower acknowledge that Two Million Six
Hundred Eighty-Five Thousand Seven Hundred Thirteen Dollars and Ninety
Cents ($2,685,713.90) of Term Loan I made pursuant to and as defined in the
1997 Agreement remains outstanding, One Million Three Hundred Thirty-Three
Thousand Three Hundred Thirty-Three Dollars and Forty Cents ($1,333,333.40)
of Term Loan II made pursuant to and as defined in the 1997 Agreement
remains outstanding, the Term Loan III made pursuant to
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and as defined in the 1997 Agreement has been repaid in full and One
Million Sixty-Six Thousand Six Hundred Sixty-Six Dollars and Seventy-One
Cents ($1,066,666.71) of Term Loan IV made pursuant to and as defined in
the 1997 Agreement remains outstanding and the Lenders agree on the terms
and conditions set forth in this Fourth Amendment, to make a loan to the
Borrower on the Third Closing Date in the principal amount of Two Million
Five Hundred Fourteen Thousand Two Hundred Eighty-Five Dollars and
Ninety-Nine Cents ($2,514,285.99). The Lenders and the Borrower agree to
combine the loans in the preceding sentence to make one loan in the
principal amount of Seven Million Six Hundred Thousand Dollars ($7,600,000)
("Term Loan"). Amounts prepaid on Term Loan cannot be reborrowed."
2. The Borrower hereby agrees to execute and deliver to each Lender
the Term Loan Promissory Note, in the form of Exhibit A1 attached hereto,
to evidence the Term Loan made by such Lender on the Third Closing Date.
3. The principal amount of the Term Loan shall be repaid to the
Lenders by the Borrower in thirty-eight (38) consecutive, monthly
installments each in the amount of $200,000 with the first installment due
on March 31, 1998, and with subsequent installments due on each Monthly
Date thereafter to and including April 30, 2001.
4. Mandatory Prepayments shall be made with respect to the Term Loan
within 90 days after the end of each fiscal year of the Borrower,
commencing with the fiscal year ended July 31, 1998, in an amount equal to
fifty percent (50%) of Excess Cash Flow of the Borrower for such fiscal
year. The proceeds of all of these prepayments shall be applied to the
scheduled installments of principal in the inverse order of maturity.
5. The Borrower may prepay any or all of the Term Loan in whole or in
part at any time, at its option; provided, however, that on each such
prepayment, the Borrower shall pay accrued interest on the principal so
prepaid to the date of such prepayment. Each optional prepayment made
pursuant to this paragraph 5 shall be applied to the last maturing
installment(s) of principal on the Term Loan.
6. In the event this Financing Agreement and the Revolving Line of
Credit are terminated by either the Lenders or the Borrower for any reason
whatsoever, the Term Loan shall become due and payable on the effective
date of such termination notwithstanding any provision to the contrary in
the Term Loan Promissory Note.
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7. The Borrower hereby authorizes Lenders Agent to charge its
Revolving Loan account with the amount of all amounts due under this
Section 4 as such amounts become due. The Borrower confirms that any
charges which Lenders Agent may so make to its account as herein provided
will be made as an accommodation to the Borrower and solely at Lenders
Agent's discretion.
(k) Section 7(16), Application of Proceeds, is amended in full to read as
follows:
"16. Application of Proceeds. The Borrower does not own any "margin
security" within the meaning of Regulation G (12 CFR Part 207) of the Board
of Governors of the Federal Reserve System (herein called a "margin
security"). The Borrower represents and warrants that the proceeds of the
Revolving Loans and Term Loan I (as defined in the 1997 Agreement) were
used at the First Closing Date to (i) refinance all Indebtedness owed by
DeVlieg to Shawmut Bank N.A., (ii) make loans or advances to the Borrower
to enable the Borrower to finance the Acquisition (National Acme). The
Borrower represents and warrants that the proceeds of the Term Loan II (as
defined in the 1997 Agreement) were used by the Borrower to make payments
in connection with each of the Xxxxxx Xxxxxx Judgment and the Xxxxxxxxx
Litigation. The proceeds of the Revolving Loans up to an aggregate amount
of $1,300,000 and the proceeds of the Term Loan III (as defined in the 1997
Agreement) and Term Loan IV (defined in the 1997 Agreement) were used by
Borrower to finance the Acquisition (Xxxxxxxx). The proceeds of the Term
Loan made on the Third Closing Date will be used to repay outstanding
Revolving Loans. The other proceeds of the Revolving Loans will be used for
working capital and other general corporate purposes. Neither the Borrower
nor any agent acting on its behalf has taken or will take any action which
might cause this Financing Agreement, the Term Loan Promissory Notes, the
Revolving Loans Promissory Note or any other Loan Document to violate
Regulation G, Regulation T, Regulation U, Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the same
hereafter may be in effect."
(l) Section 8(5)(b)(i) is amended in full to read as follows:
"(b) In the event of any loss or damage by fire or other casualty,
insurance proceeds relating to Inventory shall first reduce the Borrower's
Revolving Loan, and then the Term Loan and such
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payments will be applied to the Term Loan in the inverse order of
maturity."
(m) Section 8(10), Minimum Consolidated Net Worth, is amended in full to
read as follows:
"10. Minimum Consolidated Net Worth. The Borrower and its Consolidated
Subsidiaries shall have as of each date specified below a Consolidated Net
Worth of not less than the amount specified below for such date:
Date Amount
---- ------
April 30, 1998 $25,000,000
July 31, 1998 $25,000,000
October 31, 1998 $25,000,000
January 31, 1999 $25,000,000
April 30, 1999 $27,500,000
July 31, 1999 $27,500,000
October 31, 1999 $27,500,000
January 31, 2000 $27,500,000
April 30, 2000 $27,500,000
July 31, 2000 $27,500,000
October 31, 2000 and each
Quarterly Date thereafter $30,000,000"
(n) Section 8(11), Consolidated Interest Coverage Ratio, is amended in full
to read as follows:
"11. Consolidated Interest Coverage Ratio. The Borrower and its
Consolidated Subsidiaries will have for each period specified below a
Consolidated Interest Coverage Ratio of not less than the ratio specified
below for such period:
Period Ratio
------ -----
Four quarters ended
January 31, 1998 2.50 to 1.00
February 1, 1998 to
April 30, 1998 2.50 to 1.00
February 1, 1998 to
July 31, 1998 2.50 to 1.00
February 1, 1998 to
October 31, 1998 2.50 to 1.00
February 1, 1998 to
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January 31, 1999 2.50 to 1.00
Four quarters ended
April 30, 1999 3.00 to 1.00
Four quarters ended
July 31, 1999 3.00 to 1.00
Four quarters ended
October 31, 1999 and each
four quarters ended on each
Quarterly Date thereafter 4.00 to 1.00"
(o) Section 8(12), Consolidated Total Liabilities to Consolidated Net
Worth, is amended in full to read as follows:
"12. Consolidated Total Liabilities to Consolidated Net Worth. The
Borrower and its Consolidated Subsidiaries will not as of any date
specified below have a ratio of Consolidated Total Liabilities to
Consolidated Net Worth of greater than the ratio specified below for such
date:
Date Ratio
---- -----
April 30, 1998 3.80 to 1.00
July 31, 1998 3.80 to 1.00
October 31, 1998 3.80 to 1.00
January 31, 1999 3.80 to 1.00
April 30, 1999 3.50 to 1.00
July 31, 1999 3.50 to 1.00
October 31, 1999 and each
Quarterly Date thereafter 3.00 to 1.00"
(p) Section 8(13), Consolidated Current Ratio, is amended in full to read
as follows:
"13. Consolidated Current Ratio. The Borrower and its Consolidated
Subsidiaries will have on each date specified below a ratio of Consolidated
Current Assets to Consolidated Current Liabilities of not less than the
ratio specified below for such date:
"Date Ratio
----- -----
April 30, 1998 1.20 to 1.00
July 31, 1998 1.20 to 1.00
October 31, 1998 1.20 to 1.00
January 31, 1999 1.20 to 1.00
April 30, 1999 1.20 to 1.00
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July 31, 1999 1.30 to 1.00
October 31, 1999 1.30 to 1.00
January 31, 2000 1.30 to 1.00
April 30, 2000 1.30 to 1.00
July 31, 2000 and each Quarterly
Date thereafter 1.40 to 1.00"
(q) Section 8(14), Consolidated Fixed Charge Coverage Ratio, is amended in
full to read as follows:
"14. Consolidated Fixed Charge Coverage Ratio. The Borrower and its
Consolidated Subsidiaries shall have for the period from February 1, 1998
to April 30, 1998, for the period from February 1, 1998 to July 31, 1998,
for the period from February 1, 1998 to October 31, 1998, for the period
from February 1, 1998 to January 31, 1999, for the Rolling Period ended on
April 30, 1999 and for each Rolling Period ending on a Quarterly Date
thereafter, a Consolidated Fixed Charge Coverage Ratio for such period of
not less than 1.10 to 1.00."
(r) Section 8(15), Consolidated EBITDA, is amended in full to read as
follows:
"15. Consolidated EBITDA. The Borrower and its Consolidated
Subsidiaries shall have for each period specified below an amount of
Consolidated EBITDA of not less than the amount specified below for such
period:
Period Amount
------ ------
For the four quarters ended
on January 31, 1998 $12,000,000
February 1, 1998 to
April 30, 1998 $ 2,500,000
February 1, 1998 to
July 31, 1998 $ 5,500,000
February 1, 1998 to
October 31, 1998 $ 8,500,000
February 1, 1998 to
January 31, 1999 $12,000,000
For the four quarters
ended on April 30, 1999 $13,500,000
For the four quarters
ended on July 31, 1999 $13,500,000
For the four quarters
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ended on October 31, 1999 $13,500,000
For the four quarters
ended January 31, 2000 $13,500,000
For the four quarters
ended on April 30, 2000 $13,500,000
For the four quarters
ended July 31, 2000
and for the four quarters
ended on each Quarterly
Date thereafter $15,000,000
(s) Subsection (c) of Section 8(16), Certain Adjustments, is deleted in its
entirety.
(t) A new Section 8(23), Updated Appraisals, is added after Section 8(22),
Certain Notices, and such new Section reads as follows:
23. Updated Appraisals. Within sixty (60) days from the Third Closing
Date the Borrower agrees to deliver to Lenders Agent a current appraisal of
all of Borrower's Equipment and Real Estate. The Borrower agrees to bear
the cost of such an appraisal.
(u) Section 9(2), Interest on Term Loan, is amended in full to read as
follows:
"2. Interest on Term Loan. Interest on the Term Loans shall be payable
monthly on each Monthly Date on the unpaid balance or on payment in full
prior to maturity in an amount equal to (a) the Chase Bank Rate plus one
and one-quarter of one percent (1.25%) per annum or, (b) the LIBOR Rate for
the applicable LIBOR Rate Period(s) elected by the Borrower plus three and
one-quarter of one percent (3.25%) per annum. In the event of any change in
said Chase Bank Rate, the rate applicable to the Term Loan under clause (a)
above shall change, as of the first day of the month following any change,
so as to remain one and one-quarter percent (1.25%) above the Chase Bank
Rate. All rates applicable to the Term Loan under clause (a) above shall be
calculated based on a 360-day year for the actual number of days elapsed.
Lenders Agent shall be entitled to charge the Borrower's account at the
rate provided for herein when due until all Obligations have been paid in
full."
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SECTION 2. Conditions of Effectiveness. This Fourth Amendment shall become
effective as of the date on which each of the following conditions has been
fulfilled:
(a) Fourth Amendment. The Borrower, CITBC, BNYFC, and the Lenders
Agent shall each have executed and delivered this Fourth Amendment;
(b) The Term Loan Promissory Notes. Each of CITBC and BNYFC shall have
received their respective Term Loan Promissory Note payable to it and each
duly executed and delivered by the Borrower with all blanks appropriately
filled in.
(c) Fourth Amendment Fee. Payment in full by the Borrower of the
Fourth Amendment Fee.
(d) Board Resolution. Lenders Agent shall have received a copy of the
resolutions of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of (i) this Fourth Amendment and (ii)
any related agreements, in each case certified by the Secretary or
Assistant Secretary of such Person as of the date hereof, together with a
certificate of the Secretary or Assistant Secretary of such Person as to
the incumbency and signature of the officers of such Person executing this
Fourth Amendment and any certificate or other documents to be delivered by
it pursuant hereto, together with evidence of the incumbency of such
Secretary or Assistant Secretary.
(e) Mortgages/Deeds of Trust. The Borrower shall have executed and
delivered to either CITBC or an agent of CITBC or of a title insurance
company acceptable in form and substance satisfactory to CITBC such
Mortgage Modifications as CITBC may reasonably require and such Mortgage
Modifications shall have been recorded in each jurisdiction where it is
necessary to appropriate to secure the interest of the Lenders and the
Lenders Agent.
(f) Title Continuations. Lenders Agent shall have received, in respect
of each Mortgage, a title search indicating that no Liens have been filed
or recorded against any of the properties covered by the Mortgages after
the date of filing each Mortgage.
(g) Subordinated Debt. Lenders Agent shall have received copies of
amendments to all documents evidencing or related to the Subordinated Debt
which amend such agreements and documents to provide that the financial
covenants in such agreements and documents are no more onerous than those
set forth in this Fourth Amendment.
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(h) Opinions. The Borrower shall have delivered to Lenders Agent a
favorable opinion of Xxxx Xxxxx & Xxxx satisfactory to Lenders and their
special counsel dated the Third Closing Date.
(i) Fees and Expenses. On the Third Closing Date, subject to the
credit presently available to the Borrower, the Borrower shall have
reimbursed Lenders and Lenders Agent for all Out-of-Pocket Expenses for
which a request for payment shall have been made at or prior to the Third
Closing Date.
(j) Officer's Certificate. The following statements shall be true and
the Lenders Agent shall have received a certificate signed by a duly
authorized officer of the Borrower dated the date hereof stating that,
after giving effect to this Fourth Amendment and the transactions
contemplated hereby:
(i) The representations and warranties contained in each of the Loan
Documents are true and correct on and as of the date hereof as
though made on and as of such date; and
(ii) no Default or Event of Default has occurred and is continuing;
and
(k) Legal Bills. Xxxxx Xxxxxxxxxx has been paid in full for all past
due legal fees, costs and expenses and for all fees, costs and expenses in
connection with this Fourth Amendment.
(l) Other Documents. The Bank shall have received such other
approvals, opinions or documents as the Bank may reasonably request.
SECTION 3. Reference to and Effect on the Loan Documents. (a) Upon the
effectiveness of Section 1 hereof, on and after the date hereof each reference
in the Financing Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import, and each reference in the other Loan Documents to the
Financing Agreement, shall mean and be a reference to the Financing Agreement as
amended hereby.
(b) The execution, delivery and effectiveness of this Fourth Amendment
shall not operate as a waiver of any right, power or remedy of the Bank under
any of the Loan Documents, nor constitute a waiver of any provision of any of
the Loan Documents, and, except as specifically provided herein, the Financing
Agreement and each other Loan Document shall remain in full force and effect and
are hereby ratified and confirmed.
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SECTION 4. Governing Law. This Fourth Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5. Headings. Section headings in this Fourth Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Fourth Amendment for any other purpose.
SECTION 6. Counterparts. This Fourth Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Fourth Amendment by
signing any such counterpart.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
be duly executed as of the day and year first above written.
DEVLIEG XXXXXXX, INC.
By /s/ WO Xxxxxx
--------------------------------
Name: WO Xxxxxx
Title: President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Lender
By /s/ Xxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Secretary
BNY FINANCIAL CORPORATION,
as Lender
By /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Lenders Agent
By /s/ Xxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Secretary
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