AMENDMENT NO. 3 TO RESTATED REVOLVING CREDIT AGREEMENT
This Amendment No. 3 to Restated Revolving Credit Agreement (the
"Third Amendment"), made as of this 30th day of July, 1997, among the
undersigned, amends that certain Restated Revolving Credit Agreement,
dated as of December 20, 1996, as amended previously by Amendments dated
February 14, 1997 and as of March 28, 1997 (as amended thereby and hereby,
the "Agreement"), among the Borrowers, the Agent, individually and as
agent for itself and each of the other Banks, and the Banks (as such terms
are defined in the Agreement).
Reference is made to the following facts:
A. The Borrowers, the Agent and the Banks have entered into the
Agreement pursuant to which the Banks have, on the terms and subject to
the conditions stated therein, made loans to the U.S. Borrower;
B. The Borrowers requested that the Agreement be amended to modify,
among other provisions, the financial covenants therein to avoid the
occurrence of an Event of Default; and
C. The Agent and the Banks have agreed to make the modifications
requested by the Borrowers solely in accordance with the terms and
conditions of this Third Amendment.
NOW, THEREFORE, in consideration of the premises and of good and
valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used herein which are
defined in the Agreement shall have the meanings herein as therein, except
as otherwise specifically provided herein.
Section 2. Amendments to the Loan Documents. From and after the
date hereof, the Agreement is hereby amended as follows:
2.1 The definitions in Section 1.1 of the Agreement are hereby
amended to provide as follows:
2.1.1 The definition of Availability is hereby amended to
provide in its entirety as follows:
"Availability. The sum of the U.S. Borrowing
Base, less the "Availability Reserve" (as defined
below), minus the Canadian Deficiency. For the
periods described below, the Availability Reserve
shall equal the amount set forth below:
Period Availability Reserve
July 30, 1997 through August $4,000,000
30, 1997
August 31, 1997 through $6,000,000 ($5,000,000 if so
September 15, 1997 determined by the Agent in
its unrestricted discretion)
September 16, 1997 through $6,000,000
September 29, 1997
September 30, 1997 through $6,500,000
October 30, 1997
October 31, 1997 through $7,000,000
November 27, 1997
November 28, 1997 through $7,500,000
December 30, 1997
December 31, 1997 and $8,000,000
thereafter"
2.1.2 Section 1.1 of the Agreement is hereby amended by the
addition of the following definition:
"Availability Reserve. See the definition of
Availability."
2.1.3 The definition of Borrowing Base is hereby amended to
provide in its entirety as follows:
"Borrowing Base. In relation to the Borrowers as at any
particular date, and subject to any adjustment required to
comply with the last sentence of this definition, an amount
equal to the lesser of (i) the aggregate Revolving Credit
Commitments as in effect on such date, and (ii) the sum, as
determined by the Agent, as at such date, of (A) an amount equal
to 55% of the Net Security Value of Base Inventory, plus 55% of
Eligible Documentary Letters of Credit and (B) 85% of the Net
Outstanding Amount of Base Accounts as at such date; provided
that the Agent, subject to the consent of the Majority Banks or
all of the Banks as required by Section 9.8 hereof, in the
reasonable, good faith exercise of its discretion and based upon
a determination that a material change in the Collateral has
occurred, reserves the right to increase or decrease the
foregoing percentages. In no event shall (1) the amount
pursuant to clause (ii)(A) of this definition exceed
$45,000,000, or (2) the portion of such amount pursuant to such
clause (ii)(A) attributable to the Net Security Value of Base
Inventory constituting work-in-process other than wet blues
exceed 50% of the aggregate of such amount pursuant to such
clause (ii)(A).
2.1.4. In order to eliminate the Xxxxxxxx Reserve from the
Agreement, the Agreement is amended by the deletion in its entirety of the
definition of the "Xxxxxxxx Reserve" and the first four lines of the
definition of "Net Outstanding Amount of Base Accounts" are hereby amended
to read as follows:
"Net Outstanding Amount of Base Accounts. The net amount
of Base Accounts outstanding after eliminating from the
aggregate amount of outstanding Base Accounts any Account
which:"
2.2 Section 2.7 of the Agreement is hereby amended by (i) the
deletion of the amount $1,000,000 in clause (z) of Subsection 2.7(b) and
the replacement of such amount with $500,000; (ii) the deletion in its
entirety of clause (X) of such Subsection 2.7(b); and (iii) the insertion
of the phrase "(minus the aggregate sum of all sales of assets excluded
pursuant to clause (z) of this Subsection 2.7(b))" immediately following
the amount $5,000,000 in both places such amount appears in Subsection
2.7(b).
2.3 Clause (f) of Section 5.1 of the Agreement is hereby amended by
the addition at the end thereof of the following sentence:
"In addition to, and not in limitation of, the foregoing, the
Borrower shall also deliver Covenant Compliance Certificates for
each quarter ending on December 31 by no later than January 25
of the following calendar year."
2.4 Subparagraph (iii) of Section 6.6.(a) of the Agreement is hereby
amended to provide in its entirety as follows:
"(iii) sales of assets not in the ordinary course of
business in an aggregate amount, measured on a cumulative basis
until the Maturity Date or earlier termination of this
Agreement, not to exceed the lesser of (A) 10% of the value of
the Borrower's FIFO Tangible Assets, or (B) $500,000;"
2.5 The portion of the table in Section 6.9 regarding the period
from July 1, 1997 through December 31, 1997 is hereby amended to provide
as follows:
Maximum Usual
Allowance Permitted
"Period Amount in Minimum EBITDA
July 1, 1997 through ($600,000) $0*
July 31, 1997
August 1, 1997 through $1,500,000 $0*
August 31, 1997
September 1, 1997 through $1,600,000 $0*
September 30, 1997
October 1, 1997 through $2,300,000 $0*
October 31, 1997
November 1, 1997 through $1,400,000 $0*
November 30, 1997
December 1, 1997 through $1,000,000 $0*"
December 31, 1997
2.6 Section 6.15 of the Agreement is hereby amended to provide in
its entirety as follows:
"6.15 Borrowing Base. None of the Borrowers shall cause or
permit the aggregate principal amount of all Revolving Loans and
the aggregate face amount of all Letters of Credit outstanding
at any time to exceed the difference of the Borrowing Base at
such time, minus the Availability Reserve."
2.7 The address for the Borrowers in Section 9.1 of the Agreement is
hereby amended to provide as follows:
"United States Leather, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Kinzie X. Xxxxxx, Chief Financial Officer
Telecopy: 000-000-0000;"
and the "attention" line in the address of the Agent is hereby amended to
provide as follows:
"Attention: Xxxxxx X. Xxxxxx, Director, Mail Stop 01-09-06."
2.8 Clause (ix) of Section 9.8(d) is hereby amended to read in its
entirety as follows:
"(ix) change the definition of Availability' or Availability
Reserve' hereunder."
2.9 Exhibit G is hereby amended to read in its entirety as set forth
in Exhibit G attached hereto.
Section 3. Conditions precedent to this Amendment. The agreements
of the Agent and the Banks set forth in this Third Amendment are subject
to the satisfaction of the following conditions precedent:
3.1 At the time of the execution of the Third Amendment, there shall
exist no Defaults or Events of Default under the terms of the Agreement,
as amended hereby, the Loan Documents and the Ancillary Documents;
3.2 The U.S. Borrower shall have reimbursed the Agent for all of the
reasonable fees and disbursements of Goulston & Storrs, counsel to the
Agent, which shall have been incurred by the Agent prior to or in
connection with the preparation, negotiation, execution and delivery of
this Third Amendment and the consummation of the transactions contemplated
herein;
3.3 Since the date of the commencement of the Agent's most recent
commercial finance examination, there shall have been no changes in the
assets, liabilities, financial condition, business, income, operations or
prospects of any of the Borrowers, the effect of which have had or will
have, in the aggregate, a material adverse effect on the assets,
properties, business, prospects, income, operations or financial condition
of the Borrowers;
3.4 This Third Amendment shall have been duly and properly
authorized, executed and delivered to the Agent, and shall be in full
force and effect; and
3.5 The U.S. Borrowers shall have paid to the Agent, for the benefit
of the Agent and the U.S. Banks in accordance with their respective U.S.
Commitment Percentages immediately prior to the execution and delivery
hereof, a non-refundable restructuring fee of $150,000.
Section 4. Representations and Warranties. In order to induce the
Agent and the Banks to enter into this Third Amendment, the Borrowers,
jointly and severally, represent and warrant to the Agent and each Bank
that:
4.1 Each of the Borrowers (a) is a corporation duly organized,
validly existing and in good standing under the laws of the state or
Province in which it is organized as listed on Exhibit D to the Agreement,
(b) has all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (c) is duly
qualified and in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction listed in Exhibit D to the
Agreement;
4.2 The execution, delivery and performance of this Third Amendment
and the transactions contemplated hereby are within the corporate power
and authority of each Borrower and have been authorized by all necessary
corporate proceedings, and do not (a) require any consent or approval of
any creditors, trustees for creditors or shareholders of any of the
Borrowers, including, without limitation, the Indenture Trustee or any
other party pursuant to the terms of the Indenture Agreement, (b)
contravene any provision of the charter documents or by-laws of any of the
Borrowers or any law, rule or regulation applicable to any of the
Borrowers, (c) contravene any provision of, or constitute an event of
default or events that, but for the requirement that time elapse or notice
be given, or both, would constitute an event of default, under, any other
agreement, instrument, order or undertaking binding on any of the
Borrowers, including, without limitation, the Indenture Agreement, or (d)
result in or require the imposition of any Encumbrance on any of the
properties, assets or rights of any of the Borrowers other than Permitted
Encumbrances; and
4.3 Each of the representations, warranties, covenants and negative
covenants set forth in the Agreement, as amended hereby, and the other
Loan Documents is true and correct on the date hereof in all material
respects, and no event has occurred and no condition exists which
constitutes a Default or Event of Default under the Agreement, as amended
hereby, or any other Loan Documents or any Ancillary Document.
Section 5. Indemnification. The Borrowers shall absolutely and
unconditionally indemnify and hold harmless the Agent and each of the
Banks against any and all claims, demands, suits, actions, causes of
action, damages, losses, settlement payments, obligations, costs, expenses
and all other liabilities whatsoever which shall at any time or times be
incurred or sustained by the Agent or any of the Banks, or by any of their
shareholders, directors, officers, employees, representatives,
subsidiaries, affiliates or agents (other than as a result of the gross
negligence or willful misconduct of the Agent or any of the Banks or such
officers, directors, shareholders, employees or agents thereof) on account
of, or in relation to, or in any way in connection with, any of the
arrangements or transactions contemplated by, associated with or ancillary
to either this Third Amendment, the Agreement or any of the other Loan
Documents or any of the Ancillary Documents, whether or not all or any of
the transactions contemplated by, associated with, or ancillary to this
Third Amendment, the Agreement, any of such Loan Documents or any of such
Ancillary Documents, are ultimately consummated (other than those costs or
expenses incurred by the Banks other than the Agent in connection with the
syndication, and by the Agent and the Banks in the day-to-day
administration of the transactions contemplated by the Agreement, as
amended hereby, and the other Loan Documents).
Section 6. Miscellaneous.
6.1 As of the date hereof, and after giving effect to the
consummation of any transactions contemplated by this Third Amendment, the
Borrowers acknowledge that each has performed, satisfied, or complied with
all covenants and conditions to be performed, satisfied or complied with
by it under the Agreement, as amended hereby. The Borrowers hereby
covenant and agree that, after giving effect to the consummation of the
transactions contemplated hereby, the Borrowers will continue to perform,
satisfy or comply with all covenants and conditions to be performed,
satisfied or complied with by each of them under the Agreement, as amended
hereby.
6.2 The obligations of the Borrowers (i) to repay to the Agent and
the Banks all of the unpaid principal of each of the Revolving Loans made
or to be made in the future pursuant to the Agreement, as amended hereby,
(ii) to pay to the Agent all of the unpaid interest accrued or to accrue
thereon, (iii) to pay to the Agent and the Banks all of the other
Obligations of the Borrowers, are and will continue to be entitled to all
of the benefits and to all of the security created or contemplated by the
Agreement, as amended hereby, and the other Loan Documents.
6.3 Except as otherwise expressly provided in this Third Amendment,
all of the terms, conditions and provisions of the Agreement and each of
the other Loan Documents remain unaltered and are in full force and
effect. The Agreement and this Third Amendment shall be read and
construed as one Agreement.
6.4 This Third Amendment may be executed in any number of
counterparts, but all such counterparts shall together constitute but one
and the same instrument. In making proof of this Third Amendment, it
shall not be necessary to produce or account for more than one counterpart
thereof signed by each of the parties hereto.
6.5 All of the Obligations undertaken hereunder by the Borrowers are
hereby undertaken by each of them jointly and severally.
6.6 The captions and headings of the various sections and
subsections of this Third Amendment are provided for convenience only and
shall not be construed to modify the meaning of such sections or
subsections.
6.7 The invalidity or unenforceability of any one or more phrases,
clauses or sections of this Third Amendment under particular circumstances
shall not affect the validity or enforceability thereof or of the
Agreement, as amended hereby, under other circumstances, or the validity
or the enforceability of the remaining portions of this Third Amendment or
the Agreement, as amended hereby.
6.8 This Third Amendment shall be deemed to be a contract under seal
and shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts (without giving effect to any conflicts of
law provisions contained therein).
IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment under seal as of the day first above-written by the respective
officers hereunto duly authorized.
UNITED STATES LEATHER, INC.,
as a Borrower
By: /s/
Title:
A. R. XXXXXX LIMITED, as a Borrower, and
Guarantor of United States Leather, Inc's
Obligations
By: /s/
Title:
BANKBOSTON, N.A. (f/k/a The First National
Bank of Boston), as the Agent
By: /s/
Title:
(Signatures continued next page)
BANKBOSTON, N.A. (f/k/a The First National
Bank of Boston), as a Bank
By:/s/
Title:
XXXXXX FINANCIAL, INC., as a Bank
By:/s/
Title:
THE CHASE MANHATTAN BANK, as a Bank
By: /s/
Title:
BTM CAPITAL CORPORATION, as a Bank
By: /s/
Title:
