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EIGHTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER OF DEFAULTS
This Amendment, dated as of December 26, 2000, is made by and among
XXXXXXXX, INC., a Minnesota corporation (the "Borrower"), XXXXX FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION f/k/a Norwest Bank Minnesota, National
Association, a national banking association ("Xxxxx Fargo"; in its separate
capacity as administrative agent for the Lenders, the "Agent"), and each of the
financial institutions appearing on the signature pages hereof.
Recitals
The Borrower, the Agent and the Lenders are parties to a Credit and
Security Agreement dated as of June 19, 1998, as amended by a First Amendment to
Credit and Security Agreement dated as of November 25, 1998, a Second Amendment
to Credit and Security Agreement dated as of March 31, 1999, a Third Amendment
to Credit and Security Agreement dated as of April 5, 1999, a Fourth Amendment
to Credit and Security Agreement dated as of November 9, 1999, a Fifth Amendment
to Credit and Security Agreement dated as of June 16, 2000, a Sixth Amendment to
Credit and Security Agreement dated as of June 27, 2000, and a Seventh Amendment
to Credit and Security Agreement dated as of November 7, 2000 (as so amended,
the "Credit Agreement"). Capitalized terms used in these recitals have the
meanings given to them in the Credit Agreement unless otherwise specified.
The Borrower has requested that the Lenders and the Agent consent to
certain transactions, waive certain Events of Default and that certain
amendments be made to the Credit Agreement. The Agent and the Lenders are
willing to grant the Borrower's requests pursuant to the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:
"`Accounts', of any Person, means all accounts owned by that
Person, as such term is defined in the UCC, including without limitation
the aggregate unpaid obligations of customers and other account debtors
to that Person arising out of the sale or lease of goods or rendition of
services by that Person on an open account or deferred payment basis."
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"`Cash Flow Available for Debt Service' as of a given date means
the sum of (i) Pre-tax Net Income, (ii) Interest Expense, (iii)
depreciation and amortization, (iv) operating lease payments, and (v)
Net Equity Proceeds, less (v) Capital Expenditures not financed with
long-term debt, determined on a consolidated basis, for the fiscal
year-to-date period ending on such date."
"`Debt Service' as of a given date means the sum of (i) all
payments of principal on Debt of the Borrower, whether scheduled or
unscheduled, (ii) Interest Expense, (iii) operating lease payments, (iv)
cash paid for restructuring charges or against restructuring reserves,
and (v) all installments of rent under capitalized lease obligations of
the Borrower (determined in accordance with GAAP on consolidated basis)
incurred during the fiscal year-to-date period ending on such date."
"`Debt Service Coverage Ratio' means the ratio of (i) Cash Flow
Available for Debt Service to (ii) Debt Service determined on a
consolidated basis."
"`Eligible Accounts' means all unpaid Accounts owed to the
Borrower or IFT, net of any credits, except the following shall not in
any event be deemed Eligible Accounts:
(i) that portion of Accounts (other than dated Accounts)
unpaid 60 days or more after the due date, and that portion of
dated Accounts unpaid 30 days or more after the stated due date
or 120 days or more after the shipping date;
(ii) that portion of Accounts that is disputed or
subject to a claim of offset or a contra account;
(iii) that portion of Accounts not yet earned by the
final delivery of goods or rendition of services, as applicable,
by the Borrower or IFT to the customer;
(iv) Accounts owed by any unit of government, whether
foreign or domestic (provided, however, that there shall be
included in Eligible Accounts that portion of Accounts owed by
such units of government for which the Borrower or IFT (as
applicable) has provided evidence satisfactory to the Agent that
(A) the Agent has a first priority perfected security interest
and (B) such Accounts may be enforced by the Agent directly
against such unit of government under all applicable laws);
(v) Accounts owed by an account debtor located outside
the United States which are not backed by a bank letter of
credit assigned to the Agent (if such assignment is required by
the Agent), in the possession of the Agent and acceptable to the
Agent in all respects, in its sole discretion; provided,
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however, that, Accounts due and owing from Siemens, Bosch,
Delco, Ford, Texas Instruments, Polaroid, 3M, Hewlett Packard
and Motorola which satisfy all other requirements of this
definition (including without limitation clause (xiii)), shall
not be deemed ineligible because of this clause;
(vi) Accounts owed by an account debtor that is
insolvent, the subject of bankruptcy proceedings or has gone out
of business;
(vii) Accounts owed by a shareholder, Subsidiary,
Affiliate, officer or employee of the Borrower or IFT;
(viii) Accounts not subject to a duly perfected security
interest in the Agent's favor or which are subject to any lien,
security interest or claim in favor of any Person other than the
Agent including without limitation any payment or performance
bond;
(ix) Accounts owned by IFT until the Agent has received
evidence satisfactory to it of the perfection and priority of
its security interest in such Accounts;
(x) that portion of Accounts that has been restructured,
extended, amended or modified;
(xi) that portion of Accounts that constitutes
advertising, finance charges, service charges or sales or excise
taxes;
(xii) Accounts owed by an account debtor, regardless of
whether otherwise eligible, if 10% or more of the total amount
due under Accounts from such debtor is ineligible under clauses
(i), (ii) or (x) above, provided, however, that the Agent may
from time to time in its sole discretion exclude from the
operation of this clause (xii) those Accounts that the Agent
designates; and;
(xiii) Accounts, or portions thereof, otherwise deemed
ineligible by the Agent in its sole discretion."
"`Eligible Equipment' means all Equipment owned by the Borrower
or IFT for which the Agent has evidence satisfactory to it that such
Equipment is free and clear of any other lien, security interest or
encumbrance other than the Security Interest in favor of the Agent and
the security interest granted by IFT."
"`Eligible Inventory' means all Inventory of the Borrower or
IFT, at the lower of cost or market value as determined in accordance
with GAAP; provided, however, that the following shall not in any event
be deemed Eligible Inventory:
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(i) Inventory that is: in-transit (provided that goods
in transit in the ordinary course of business between the
Borrower's facilities in Xxxxx and Xxxxxxxx Counties, South
Dakota, its facilities in Rice and Dakota Counties, Minnesota
and Boulder County, Colorado shall not be excluded by this
clause); located at any warehouse, job site or other premises
not approved by the Agent in writing; located outside of the
states, or localities, as applicable, in which the Agent has
filed financing statements to perfect a first priority security
interest in such Inventory; covered by any negotiable or
non-negotiable warehouse receipt, xxxx of lading or other
document of title not in the Agent's possession; on consignment
from or to any Person or subject to any bailment;
(ii) Supplies, packaging, maintenance parts or sample
Inventory;
(iii) Inventory that is damaged, obsolete, slow moving
or not currently saleable in the normal course of the Borrower's
or IFT's operations;
(iv) Inventory that the Borrower or IFT has returned,
has attempted to return, is in the process of returning or
intends to return to the vendor thereof;
(v) Inventory that is perishable or live;
(vi) Inventory manufactured by the Borrower or IFT
pursuant to a license unless the applicable licensor has agreed
in writing to permit the Agent to exercise its rights and
remedies against such Inventory; provided, however, that all
Inventory manufactured using Sidrabe Technology shall not be
deemed ineligible under this clause (vi) until the 91st day
after the date of this Agreement or such later date as the Agent
may agree to in its sole discretion;
(vii) Inventory that is subject to a security interest
in favor of any Person other than the Agent;
(viii) Inventory owned by IFT until the Agent has
received evidence satisfactory to it of the perfection and
priority of its security interest in such Inventory; and
(ix) Inventory otherwise deemed ineligible by the Agent
in its sole discretion."
"`Equipment', of any Person, means all of that Person's
equipment, as such term is defined in the UCC, whether now owned or
hereafter acquired, including but not limited to all present and future
machinery, vehicles, furniture, fixtures, manufacturing equipment, shop
equipment, office and recordkeeping equipment, parts, tools, supplies,
and including specifically (without limitation) the goods
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described in any equipment schedule or list herewith or hereafter
furnished to the Agent by that Person."
"`IFT' means International Flex Technologies, Inc. a
[_Delaware_] corporation."
"`Income Tax Expense' means the Borrower's consolidated state
and federal income tax liability."
"`Inventory', of any Person, means all inventory owned by that
Person, as such term is defined in the UCC, whether now owned or
hereafter acquired, whether consisting of whole goods, spare parts or
components, supplies or materials, whether acquired, held or furnished
for sale, for lease or under service contracts or for manufacture or
processing, and wherever located."
"`Liquidity Reserve' means $5,000,000."
"`Margin' means two percent (2.0%) unless the Borrower's audited
financial statements show that the Borrower has achieved Pre-Tax Net
Income of $5,000,000 for the fiscal year ended December 31, 2001, in
which case, effective as of the first day of first month following
acceptance of such financing statements by the Agent, "Margin" means one
percent (1.0%)."
"`Maturity Date' means June 1, 2002."
"`Merger' has the meaning given in Paragraph 2(a)(i) of the
Eighth Amendment."
"`Note Purchase Agreement' has the meaning given in Paragraph
2(a)(iv) of the Eighth Amendment."
"Pre-tax Net Income" as of a given date means consolidated
fiscal year-to-date net income from operations inclusive of charges
incurred for restructuring and before Income Tax Expenses.
"`Revolving Floating Rate' means an annual rate equal to the
Prime Rate plus the Margin, which rate shall change when and as the
Prime Rate changes."
"`Term Floating Rate' means an annual rate equal to the Prime
Rate plus the Margin, which rate shall change when and as the Prime Rate
changes."
"`UCC' means the Uniform Commercial Code as in effect from time
to time (including after July 1, 2001) in the state designated in
Section 10.17 of the Credit
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Agreement as the state whose laws shall govern this Agreement, or in any
other state whose laws are held to govern this Agreement or any portion
hereof."
2. Consent to Transaction.
(a) The Borrower has requested that the Lenders and the Agent
amend their consent given in the Seventh Amendment and consent to:
(i) the merger of Holdings and Merger Sub with Holdings
being the survivor, pursuant to the Acquisition Agreement (the
"Merger");
(ii) the issuance by the Borrower of approximately
9,691,978 million shares of its common stock in connection with
the Merger;
(iii) the issuance by the Borrower of approximately
8,073,571 shares of its Series G preferred stock and
approximately 9,783,571 of its common stock for $25,000,000
pursuant to a Stock Purchase Agreement (the "Series G
Agreement") by and among the Borrower, Ampersand, Ampersand
Companion and Xxxxxxxxxxxx (the "Series G Issuance"); and
(iv) the issuance by the Borrower of $6,500,000 of
promissory notes (the "Xxxxxxxxxxxx Notes") and warrants to
purchase up to approximately 1,526,814 shares of its common
stock, pursuant to an Amended and Restated Subordinated Notes
and Warrant Purchase Agreement (the "Note Purchase Agreement")
by and among, the Borrower, Xxxxxxxxxxxx, Ampersand and
Ampersand Companion;
(b) The Lenders and the Agent hereby consent to the events
described in Subparagraph (a) on the following conditions:
(i) Unless the Agent and the Required Lenders otherwise
consent, the documents finally executed and delivered by the
Borrower and its Subsidiaries in connection with the
transactions described in Subparagraph (a) shall not be
materially different from the drafts of such documents delivered
to the Agent before the date of this Amendment. The Agent shall
receive copies of all fully executed documents promptly after
their execution and delivery.
(ii) Not later than simultaneously with the occurrence
of the Merger, Holdings and each of its Subsidiaries shall
execute and deliver to the Agent for the benefit of the Lenders,
an unlimited guaranty of the Obligations, a security agreement
granting the Agent a security interest over all of its personal
property assets and such financing statements as the Agent may
reasonably request to perfect such security interest.
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(iii) Unless the Agent and the Required Lenders
otherwise so consent in advance and in writing, the Xxxxxxxxxxxx
Notes shall at all times be unsecured.
(iv) Not later than simultaneously with the first
issuance of any Xxxxxxxxxxxx Notes, the holders of such notes
(the "Holders") and the Agent shall execute and deliver a
subordination agreement pursuant to which, among other things,
the Holders agree:
(A) that the Xxxxxxxxxxxx Notes shall at all
times remain unsecured;
(B) that any financial covenants imposed by the
Holders on the Borrower shall be no more restrictive
than those imposed by the Credit Agreement;
(C) that the Holders will notify the Agent of
the occurrence of any Event of Default (as defined in
the Note Purchase Agreement) not later than
simultaneously with notice given to the Borrower;
(D) that the Holders will notify the Agent of
their intent to exercise any rights or remedies under
the Note Purchase Agreement at least ten (10) days
before any such exercise;
(E) that upon receipt of notice from the Agent,
the Holders will not exercise any right or remedy they
may otherwise be able to exercise for a period of 180
days including any right to accelerate, provided that
only one such notice may be delivered in any period of
365 days;
(F) that, except as provided in clause (E), if
the Lenders accelerate the Obligations, the Holders may
accelerate the Xxxxxxxxxxxx Notes;
(G) that the Holders shall have the ability to
vote their interests in a bankruptcy of the Borrower;
(H) that the Holders shall not be obligated to
pay over to the Lenders any amounts received on account
of the Xxxxxxxxxxxx Notes in a bankruptcy of the
Borrower; and
(I) that such subordination agreement shall run
in favor of the Agent, the Lenders and any other lender
or group of lenders providing a senior secured credit
facility to the Borrower.
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(v) That the sources and uses of cash in connection with
the transactions described in Subparagraph (a) are as set forth
on Exhibit B to this Amendment.
3. Consent to Change of Fiscal Year End. The Lenders and the Agent
consent to the Borrower's changing its fiscal year end to December 31st.
4. Payment of Term Notes. Section 2.10 of the Credit Agreement is
amended to read as follows:
Section 2.10 Payment of Term Notes. The principal of the Term
Notes will be payable in aggregate equal monthly installments of
$205,130 beginning January 1, 1999 and on the first day of each month
thereafter until the Termination Date at which time the outstanding
principal balance of the Term Notes and all interest accrued thereon
shall be due and payable in full. In addition, the Agent shall obtain,
at the Borrower's expense, an appraisal of the Eligible Equipment and
all equipment owned by all Subsidiaries of the Borrower following the
Merger (the "Combined Equipment"). If the aggregate outstanding
principal balance of the Term Notes exceeds 75% of the orderly
liquidation value of the Combined Equipment as shown on such appraisal,
upon demand by the Agent, the Borrower shall immediately prepay the Term
Notes in the amount of such excess together with any prepayment fee owed
pursuant to Section 2.16.
5. Prepayment Fees. Section 2.16 of the Credit Agreement is amended to
read as follows:
Section 2.16 Termination, Facility Amount Reduction and
Prepayment Fees; Waiver of Termination, Prepayment and Facility Amount
Reduction Fees.
(a) TERMINATION AND REVOLVING FACILITY AMOUNT REDUCTION
FEES. If the Borrower or the Lenders (during a Default Period)
terminates the Credit Facility as of a date other than the
Maturity Date, or the Borrower reduces the Revolving Facility
Amount of any Lender, the Borrower shall pay the affected
Lender(s) a fee in an amount equal to one percent of the
Revolving Facility Amounts (or the reduction, as the case may
be).
(b) PREPAYMENT FEES - TERM FACILITY. If the Term Notes
are prepaid, the Borrower shall pay to the Lenders a fee in an
amount equal to one percent of the amount so prepaid.
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6. Financial Covenants. Sections 6.18 through 6.21 and 7.12 of the
Credit Agreement are amended to read as set forth below.
"Section 6.18 Minimum Cash Flow Available for Debt Service. The
Borrower will achieve Cash Flow Available for Debt Service, determined
as at the end of each fiscal quarter, at not less than the amount set
forth opposite such quarter:
Fiscal Quarter Ending on Minimum Cash Flow
or about Available for Debt Service
------------------------ --------------------------
March 31, 2001 $12,600,000
June 30, 2001 $12,900,000
September 30, 2001 $13,900,000
December 31, 2001 $17,000,000
"Section 6.19 Minimum Debt Service Coverage Ratio. The Borrower
will maintain its Debt Service Coverage Ratio, determined as at the end
of each quarter, at not less than the ratio set forth opposite such
quarter:
Fiscal Quarter Ending on Minimum Debt Service
or about Coverage Ratio
------------------------ --------------------
March 31, 2001 1.5 to 1.00
June 30, 2001 1.5 to 1.00
September 30, 2001 1.1 to 1.00
December 31, 2001 1.1 to 1.00
"Section 6.20 Minimum Pre-tax Net Income. The Borrower will
achieve Pre-tax Net Income, determined as of the end of the fiscal
quarter described below, of not less than the amount set forth opposite
such fiscal quarter:
Fiscal Quarter Ending on Minimum Pre-tax
or about Net Income
------------------------ ---------------
March 31, 2001 $(4,000,000)
June 30, 2001 $(8,225,000)
September 30, 2001 $(11,675,000)
December 31, 2001 $(12,400,000)
"Section 6.21 - Deleted"
"Section 7.12 Capital Expenditures. The Borrower will not, and
will not permit any Subsidiary to, expend or contract to expend, in the
aggregate, for Capital Expenditures during the fiscal quarters described
below, amounts in excess of the
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amount set forth opposite such quarter in the table below. This
limitation will not apply to the conversion of any existing operating
leases to capital leases."
Fiscal Quarter Ending on Maximum Capital
or about Expenditures
------------------------ ---------------
March 31, 2001 $5,000,000
June 30, 2001 $10,000,000
September 30, 2001 $16,000,000
December 31, 2001 $16,000,000
7. New Compliance Certificate. Exhibit F to the Credit Agreement is
hereby amended in its entirety and replaced by Exhibit A to this Amendment.
8. No Other Changes. Except as explicitly amended by this Amendment, all
of the terms and conditions of the Credit Agreement shall remain in full force
and effect and shall apply to any advance or letter of credit thereunder.
9. Defaults. The following Events of Default exist (the "Existing
Defaults"):
--------------------------------------------------------------------------------
CREDIT AGREEMENT REQUIRED AS OF ACTUAL AS OF
SECTION/COVENANT 11/30/2000 11/30/2000
--------------------------------------------------------------------------------
ss.6.18 Minimum Cash Flow Not less than $716,000 $(187,000)
Available for Debt Service
--------------------------------------------------------------------------------
ss.6.19 Minimum Debt Service Not less than 0.23 to 1.00 (0.6) to 1.00
Coverage Ratio
--------------------------------------------------------------------------------
ss.6.20 Pre-Tax Net Income Not less than $(2,938,000) $(5,413,000)
--------------------------------------------------------------------------------
ss.6.21 Minimum Net Worth Not less than $52,000,000 $49,082,000
--------------------------------------------------------------------------------
Upon the terms and subject to the conditions set forth in this Amendment, the
Lenders hereby waives the Existing Defaults. This waiver shall be effective only
in this specific instance and for the specific purpose for which it is given,
and this waiver shall not entitle the Borrower to any other or further waiver in
any similar or other circumstances.
10. Amendment Fee. The Borrower shall pay the Agent as of the date
hereof a fully earned, non-refundable fee in the amount of $200,000 in
consideration of the Lenders' execution of this Amendment.
11. Conditions Precedent. This Amendment, and the waiver set forth in
Paragraph 9 hereof, shall be effective when the Agent shall have received an
executed original hereof and payment of the fee described in Xxxxxxxxx 00.
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00. Representations and Warranties. The Borrower hereby represents and
warrants to the Lenders as follows:
(a) The Borrower has all requisite corporate power and authority
to execute this Amendment and to perform all of its obligations
hereunder, and this Amendment has been duly executed and delivered by
the Borrower and constitutes the legal, valid and binding obligation of
the Borrower, enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or approval by
any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the
articles of incorporation or by-laws of the Borrower, or (iii) result in
a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or
affected.
(c) All of the representations and warranties contained in
Article V of the Credit Agreement are correct on and as of the date
hereof as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date.
13. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.
14. No Other Waiver. Except as set forth in Paragraph 9, the execution
of this Amendment and acceptance of any documents related hereto shall not be
deemed to be a waiver of any Default or Event of Default under the Credit
Agreement or breach, default or event of default under any Security Document or
other document held by the Lenders, whether or not known to the Lenders and
whether or not existing on the date of this Amendment.
15. Release. The Borrower hereby absolutely and unconditionally releases
and forever discharges the Lenders, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing
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whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
16. Costs and Expenses. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lenders on demand for all
costs and expenses incurred by the Lenders in connection with the Credit
Agreement, the Security Documents and all other documents contemplated thereby,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lenders
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lenders may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses, including
without limitation the fee owed under Paragraph 10.
17. Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BANK MINNESOTA, XXXXXXXX, INC.
NATIONAL ASSOCIATION, as Agent
By /s/ Xxxxx X. Xxxxxx By /s/ Xxxx Xxxxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxxx Xxxx Xxxxxxxx
Its Vice President Its Chief Financial Officer
XXXXX FARGO BANK MINNESOTA, THE CIT GROUP/EQUIPMENT
NATIONAL ASSOCIATION FINANCING, INC.
By /s/ Xxxxx X. Xxxxxx By /s/ Xxxxx Xxxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxxx Xxxxx Xxxxxxx
Its Vice President Its Assistant Vice President
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DRAFT
1/15/01
Exhibit A to Eighth Amendment to
Amended and Restated Credit and
Security Agreement
COMPLIANCE CERTIFICATE
TO: Xxxxx X. Xxxxxx
Xxxxx Fargo Bank Minnesota, National Association
DATE: ,
--------------------- -------
SUBJECT: Financial Statements
Dear Xx. Xxxxxx:
I am the duly qualified and acting Chief Financial Officer of Xxxxxxxx,
Inc. (the "Borrower") and I am familiar with the financial statements and
financial affairs of the Borrower. I am authorized to execute this Compliance
Certificate on behalf of the Borrower.
Pursuant to Section 6.1 of the Credit and Security Agreement dated as of
June 19, 1998, by and among the Borrower, Xxxxx Fargo Bank Minnesota, National
Association, as agent ("Xxxxx Fargo"; herein in such capacity, together with any
party which may become the successor Agent under such Credit and Security
Agreement, the "Agent"), and each of the financial institutions which are now or
may hereafter become parties to such Credit and Security Agreement, as amended
to date and as the same may be further amended, supplemented or restated from
time to time, the "Credit Agreement"), enclosed are an unaudited balance sheet
and statements of income and retained earnings of the Borrower, as of
___________, ____ (the "Reporting Date"), and for the year-to-date period ending
on the Reporting Date. All terms used in this Compliance Certificate shall have
the meanings given in the Credit Agreement.
The balance sheet and statements of income and retained earnings fairly
present the financial condition of the Borrower as of the date thereof. They
have been prepared in accordance with GAAP.
I hereby certify to the Lenders as follows:
[ ] The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement.
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[ ] The undersigned has knowledge of the occurrence of a Default or
Event of Default under the Credit Agreement and attached hereto
is a statement of the facts with respect thereto.
I further certify to the Lenders as follows:
1. Minimum Cash Flow Available for Debt Service. Pursuant to Section
6.18 of the Credit Agreement, as of the Reporting Date, the Borrower's Cash Flow
Available for Debt Service was $_____________, which [ ] satisfies [ ] does not
satisfy the requirement that such amount be no less than $_____________________
as set forth in the table below:
Fiscal Quarter Ending on Minimum Cash Flow
or about Available for Debt Service
------------------------ --------------------------
March 31, 2001 $12,600,000
June 30, 2001 $12,900,000
September 30, 2001 $13,900,000
December 31, 2001 $17,000,000
2. Minimum Debt Service Coverage Ratio. Pursuant to Section 6.19 of the
Credit Agreement, as of the Reporting Date, the Borrower's Debt Service Coverage
Ratio was _____ to 1.00 which [ ] satisfies [ ] does not satisfy the requirement
that such ratio be no less than ______ to 1.00 on the Reporting Date as set
forth in table below:
Fiscal Quarter Ending on Minimum Debt Service
or about Coverage Ratio
------------------------ --------------------
March 31, 2001 1.5 to 1.00
June 30, 2001 1.5 to 1.00
September 30, 2001 1.1 to 1.00
December 31, 2001 1.1 to 1.00
3. Minimum Pre-tax Net Income. Pursuant to Section 6.20 of the Credit
Agreement, the Borrower's Pre-tax Net Income as of the Reporting Date, was
$____________, which [ ] satisfies [ ] does not satisfy the requirement that
such amount be not less than $_____________ during such period as set forth in
table below:
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Fiscal Quarter Ending on Minimum Pre-tax
or about Net Income
------------------------ ---------------
March 31, 2001 $(4,000,000)
June 30, 2001 $(8,225,000)
September 30, 2001 $(11,675,000)
December 31, 2001 $(12,400,000)
4. Capital Expenditures. Pursuant to Section 7.12 of the Credit
Agreement, for the fiscal quarter ending on the Reporting Date, the Borrower and
its Subsidiaries have expended or contracted to expend for Capital Expenditures,
$__________________ in the aggregate, excluding the conversion of any existing
operating leases to capital leases, which [ ] satisfies [ ] does not satisfy the
requirement that such expenditures not exceed in the aggregate the amount set
forth below for such fiscal quarter:
Fiscal Quarter Ending on Maximum Capital
or about Expenditures
------------------------ ---------------
March 31, 2001 $5,000,000
June 30, 2001 $10,000,000
September 30, 2001 $16,000,000
December 31, 2001 $16,000,000
Attached hereto are all relevant facts in reasonable detail to evidence, and the
computations of the financial covenants referred to above. These computations
were made in accordance with GAAP.
XXXXXXXX, INC.
By
--------------------------------------
Its Chief Financial Officer
-3-
17
Exhibit B to Eighth Amendment to
Amended and Restated Credit and
Security Agreement
SOURCES AND USES OF CASH
The table below sets out the sources and uses of cash in connection with the
transaction described in Paragraph 2(a) of the Eighth Amendment to the Credit
Agreement.
---------------------------------------|----------------------------------------
SOURCES | USES
--------------------|------------------|--------------------|-------------------
| | |
--------------------|------------------|--------------------|-------------------
| | |
--------------------|------------------|--------------------|-------------------
| | |
--------------------|------------------|--------------------|-------------------
[to be completed by Borrower]
