WAIVER AND SECOND AMENDMENT
AND MODIFICATION TO LOAN AGREEMENT
THIS WAIVER AND SECOND AMENDMENT AND MODIFICATION TO LOAN AGREEMENT (the
"Second Amendment") is made effective the ____ day of May, 2000, among THE JPM
COMPANY, a Pennsylvania corporation ("Borrower"), FIRST UNION NATIONAL BANK
(successor by merger to CoreStates Bank, N.A.) in its capacity as agent
("Agent"), and the Lenders (hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Borrower and the Agent have heretofore entered into that
certain Loan Agreement dated April 9, 1998 (the "Agreement") with the financial
institutions signatory thereto from time to time (the "Lenders"), as amended by
that certain Amendment and Modification to Loan Agreement dated December 17,
1998 (the "First Amendment") (the Agreement, as amended by the First Amendment,
hereinafter referred to as the "Loan Agreement"; capitalized text not otherwise
defined herein shall be ascribed the meanings set forth in the Loan Agreement);
and
WHEREAS, the Borrower has requested waiver of certain financial covenant
defaults and the resetting of certain financial covenants under the Loan
Agreement; and
WHEREAS, the Lenders are willing to waive existing financial covenant
defaults and to reset certain financial covenants under the Loan Agreement on
the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto agree as follows:
1. DEFINITIONS.
(a) Each of the following definitions contained in Section 1 of the
Loan Agreement is hereby amended and restated as follows:
"1.17 "CoreStates" means First Union National Bank, successor by
merger to CoreStates Bank, N.A., in its capacity as a Lender under this
Agreement."
"1.47 Maximum Amount" means Seventy Million Dollars ($70,000,000.00)
less any reductions made pursuant to Section 2.1(c) and Section 2.1(d) for
mandatory prepayments made pursuant to Section 4.2(b)."
(b) The following definitions are hereby added to Section 1 of the
Loan Agreement in the appropriate alphabetical order as indicated:
"1.14A "Change in Working Capital " means, for any period, the
increase or the decrease of the difference between current assets (net of
cash) and current liabilities (net of short term debt and the current
portion of long term debt) as reflected on the Borrower's consolidated
balance sheet delivered to the Agent and the Lenders pursuant to Section
9.1 or 9.3(a) of the Loan Agreement over $50,832,000, which is the
difference between current assets (net of cash) and current liabilities
(net of short term debt and the current portion of long term debt) as
reflected on the Borrower's consolidated balance sheet for the fiscal
quarter ending March 31, 2000."
"1.29A "Excess Cash Flow" means, for any period, the EBITDA of the
Borrower and its Subsidiaries minus (i) Capital Expenditures, (ii) income
and franchise taxes paid with respect to such period, (iii) required
Interest Expense, and (iv) required principal payments made on Indebtedness
for borrowed money and Capitalized Lease Obligations permitted under
Section 7.3, and plus (if decreased) or minus (if increased) the Change in
Working Capital.
(c) Schedule A to the Loan Agreement is hereby amended by deleting the
same in its entirety and replacing it with "Amended Schedule A" attached to
this Second Amendment.
2. MANDATORY REPAYMENTS.
(a) Section 2.1 of the Loan Agreement is hereby amended by adding a
new subsection (d) as follows:
(d) The Maximum Amount shall be permanently reduced by the amount of
the mandatory prepayment made pursuant to Section 4.2(b). All references
herein to the Maximum Amount means the Maximum Amount as it may be reduced
pursuant to subsection (c) above or this subsection (d).
(b) Section 4.2 of the Loan Agreement is hereby amended by inserting
"(a)" between "Payments." and "Borrower" in the first line thereof and
inserting the following additional subsection at the end of existing
Section 4.2:
(b) In addition, until Borrower has delivered to the Agent and the
Lenders pursuant to Section 9.1 or 9.3 of the Loan Agreement financial
statements reflecting a ratio of Total Indebtedness to EBITDA under Section
8.2 of the Loan Agreement of 3.50 to 1 or less for the most recently
completed fiscal quarter, Borrower shall repay to Agent, for the benefit of
Lenders, 75% of Excess Cash Flow at the end of each six (6) month period
ending September 30 and March 31 of each year, beginning with the six (6)
month period ending September 30, 2000. Each mandatory prepayment shall be
due and payable on or before the 30th day following the date on which the
financial statements for the periods ending on September 30 and March 31
are due pursuant to Section 9.1 or Section 9.3 of the Loan Agreement, as
appropriate, and notwithstanding Section 4.9, each mandatory prepayment
shall be applied to outstanding principal on the Revolver and shall
constitute a permanent reduction in the Maximum Amount pursuant to Section
2.1(d).
3. USAGE FEE. Section 4.5 of the Loan Agreement is hereby amended by
replacing it in its entirety with the following:
4.5 Usage Fee. So long as the Revolver is outstanding and has not been
terminated, and the Lender Indebtedness has not been satisfied in full,
Borrower shall unconditionally pay to Agent, for the pro rata benefit of
Lenders in accordance with their respective Pro Rata Percentage, the
applicable Usage Fee shown on Schedule A on the daily unused portion of the
Revolver (which shall be calculated as the difference between the Maximum
Amount minus the outstanding Advances under the Revolver and the
outstanding Swingline Loans at the close of business on the date such
calculation is made), which Usage Fee shall be computed on a quarterly
basis in arrears and shall be due and payable on the first day of each
fiscal quarter for the immediately preceding fiscal quarter. The Usage Fee
shall be calculated on the basis of a year of 360 days and paid for the
actual number of days elapsed.
4. LIMITATION ON ACQUISITIONS. Section 7.7(iii) of the Loan Agreement
is hereby amended by deleting subsection (iii) and replacing it in its
entirety with the following:
(iii) all Lenders consent in writing to the proposed Acquisition
Transaction;
5. TOTAL INDEBTEDNESS TO TOTAL CAPITAL. Section 8.1 of the Loan
Agreement is hereby amended by replacing it in its entirety with the
following:
8.1 Total Indebtedness to Total Capital. Borrower and its Subsidiaries
shall maintain a ratio of Total Indebtedness to Total Capital not to exceed
the percentage corresponding to the applicable time period on the following
table:
April 1, 2000 to June 30, 2000 67.50%
July 1, 2000 to September 30,2000 65.00%
October 1, 2000 to December 31, 2000 62.50%
January 1, 2001 to March 31, 2001 60.00%
April 1, 2001 to end of Contract Period 60.00%
6. TOTAL INDEBTEDNESS TO EBITDA. Section 8.2 of the Loan Agreement is
hereby amended by replacing it in its entirety with the following:
8.2 Total Indebtedness to EBITDA. Borrower and its Subsidiaries shall
maintain, as of the end of each fiscal quarter and determined for the 12
month period then ended, a ratio of Total Indebtedness to EBITDA not to
exceed the ratio corresponding to the applicable time period on the
following table:
April 1, 2000 to June 30, 2000 5.50 to 1.0
July 1, 2000 to September 30,2000 4.25 to 1.0
October 1, 2000 to December 31, 2000 3.50 to 1.0
January 1, 2001 to March 31, 2001 3.50 to 1.0
April 1, 2001 to end of Contract Period 3.50 to 1.0
7. FIXED CHARGE COVERAGE RATIO. Section 8.3 of the Loan Agreement is
hereby amended by replacing it in its entirety with the following:
8.3 Fixed Charge Coverage Ratio. Borrower and its Subsidiaries shall
maintain, as of the end of each fiscal quarter and determined for the 12
month period then ended, a Fixed Charge Coverage Ratio of not less than the
ratio corresponding to the applicable time period on the following table:
April 1, 2000 to June 30, 2000 1.05 to 1.0
July 1, 2000 to September 30,2000 1.40 to 1.0
October 1, 2000 to December 31, 2000 1.50 to 1.0
January 1, 2001 to March 31, 2001 1.50 to 1.0
April 1, 2001 to end of Contract Period 1.50 to 1.0
8. PROJECTIONS AND CASH FLOW. Section 9.2 of the Loan Agreement is
hereby amended by replacing it in its entirety with the following:
"9.2 Projections and Cash Flow. As soon as available and in any event
within sixty (60) days prior to the end of each fiscal year of Borrower,
projections and cash flows on a quarter-by-quarter basis for the next
succeeding twelve (12) months for Borrower and its Subsidiaries, prepared
by the chief financial officer of Borrower. In addition, until Borrower has
delivered to the Agent and the Lenders pursuant to Section 9.1 or 9.3(a) of
the Loan Agreement financial statements reflecting a ratio of Total
Indebtedness to EBITDA under Section 8.2 of the Loan Agreement of 3.50 to 1
or less for the most recently completed fiscal quarter, as soon as
available and in any event within three (3) business days following the end
of each week, a rolling projected cash flow forecast for the next
succeeding twelve (12) week period, prepared by the chief financial officer
of Borrower. Borrower has furnished to Lenders initial projections dated as
of the date hereof and attached hereto as Schedule 9.2 containing the
information required by this Section 9.2. Borrower represents and covenants
that (a) the initial projections attached to the Agreement were and all
projections required by this Section 9.2 shall be prepared by the chief
financial officer of Borrower and represent, and in the future shall
represent, the best available good faith estimate of Borrower regarding the
course of the business of Borrower and its Subsidiaries for the periods
covered thereby; (b) the assumptions set forth in the initial projections
are and the assumptions set forth in the future projections delivered
hereafter shall be reasonable and realistic based on then current economic
conditions; (c) Borrower knows of no reason why Borrower and its
Subsidiaries should not be able to achieve the performance levels set forth
in the initial projections and Borrower and its Subsidiaries shall have no
knowledge at the time of delivery of future projections of any reason why
Borrower and its Subsidiaries shall not be able to meet the performance
levels set forth in said projections; and (d) Borrower and its Subsidiaries
have sufficient capital as may be required for their ongoing businesses and
to pay their existing and anticipated debts as they mature."
9. INTERIM STATEMENTS. Section 9.3 of the Loan Agreement is hereby
amended by replacing it in its entirety with the following:
"9.3 Interim Statements.
(a) Quarterly Statements. As soon as available and in any event within
forty-five (45) days after the end of each first, second and third fiscal
quarter of Borrower:
(i) the consolidated and consolidating income and retained earnings
statements of Borrower and its Subsidiaries for such quarter;
(ii) the consolidated and consolidating balance sheet of Borrower and
its Subsidiaries as of the end of such quarter; and
(iii) the consolidated and consolidating statement of cash flow of
Borrower and its Subsidiaries for such quarter, setting forth in
comparative form the corresponding figures as at the end of the
corresponding quarter of the previous fiscal year, all in reasonable
detail, subject to year-end adjustments, and certified by the chief
financial officer of Borrower to be accurate and to have been prepared in
accordance with GAAP , together with a copy of Borrower's Form lO-Q filed
with the Securities and Exchange Commission for such quarter.
(b) Monthly Reports. As soon as available and in any event within
thirty (30) days after the end of each calendar month,
(i) the management prepared income and retained earnings statements,
balance sheet and statement of cash flow of Borrower and its Subsidiaries
as of and for such calendar month, setting forth in comparative form the
variance of the actual results from the projections and cash flows provided
to the Agent and the Lenders pursuant to Section 9.2 of the Loan Agreement,
which statements shall be certified as to accuracy by the chief financial
officer of Borrower;
(ii) a narrative report explaining the cause for all material
variances from the projections and cash flows as shown on the monthly
statements furnished pursuant to subsection 9.3(b)(i) above and updating
the status of actions taken by Borrower through the end of such calendar
month under that certain Debt Reduction Plan-Discussion Points for the
January 20, 2000 conference with the Lenders; and
(iii) a detailed listing of Borrower's and each Subsidiary's inventory
by location and by category (raw material, work-in-process, finished goods
and reserve)."
10. COMPLIANCE CERTIFICATES. Section 9.7 of the Loan Agreement is
hereby amended by deleting the reference to Section 9.3 in the first line
thereof and replacing it with a reference to Section 9.3(a).
11. FIELD AUDIT. The Loan Agreement is hereby amended by inserting the
following new Section 9.9 immediately following the conclusion of existing
Section 9.8:
"9.9 Field Audit. Borrower shall authorize and facilitate the conduct
and completion of a field audit of inventory and accounts receivable
("Field Audit") by the Agent's internal auditors. Borrower shall reimburse
the Agent for the cost of conducting the Field Audit at the Agent's
customary rates."
12. WAIVER OF EXISTING DEFAULTS. To the extent Borrower was, prior to
the Effective Date of this Second Amendment, in default of the financial
covenants set forth in Sections 8.2 or 8.3 for the fiscal quarter ending
March 31, 2000, such defaults are hereby waived by the Lenders.
13. AMENDMENT FEE. Upon execution of this Second Amendment, Borrower
shall pay to Agent for the pro rata benefit of Lenders consenting to this
Second Amendment an Amendment Fee of 0.25% of such consenting Lenders' Pro
Rata Percentage of the Maximum Amount, which fee is fully earned by the
consenting Lenders and is non-refundable.
14. COSTS AND EXPENSES. Expressly in addition to the Amendment Fee
payable under Paragraph 13 above, Borrower shall pay all of Agent's costs
and expenses in connection with the review, negotiation, documentation and
closing of this Second Amendment and the consummation of the transactions
contemplated herein, including, without limitation, fees, disbursements and
expenses of counsel retained by Agent and all fees related to filings,
recording of documents and searches.
15. ADDITIONAL DOCUMENTS. Borrower covenants and agrees to execute and
deliver, and to cause to be executed and delivered to Agent any and all
other documents, agreements, corporate resolutions, certificates and
opinions as Bank shall request in connection with the execution and
delivery of this Amendment or any other documents in connection herewith.
16. REFERENCES. All references in the Loan Documents to the "Loan
Agreement" shall mean the Loan Agreement as amended by the First Amendment
and this Second Amendment. All references in the Loan Agreement and the
other Loan Documents to the "Loan Documents" shall include, without
limitation, the First Amendment and this Second Amendment and any and all
other instruments or agreements executed in connection with or pursuant
thereto.
17. EFFECTIVE DATE. This Second Amendment shall not be effective until
the date (the "Effective Date") on which the Borrower has satisfied (or the
Agent and the Lenders have waived in writing) each of the following
conditions precedent:
(a) The Agent shall have received this Second Amendment duly executed
by all parties hereto together with the duly executed Second Amended
Acknowledgment and Consent in the form annexed hereto as Exhibit B;
(b) The Agent shall have received a certificate of the Secretary or an
Assistant Secretary of the Borrower and each Guarantor, in form and
substance satisfactory to the Agent, with respect to (i) the certificate of
incorporation and by-laws of the Borrower and each Guarantor, (ii) the
resolutions authorizing the execution, delivery and performance of this
Amendment and (iii) the incumbency of officers of the Borrower and each
Guarantor authorized to execute and deliver this Amendment.
(c) The Agent shall have received a certificate of good standing,
issued as of a recent date, with respect to the Borrower and each Guarantor
from its jurisdiction of incorporation.
(d) The Agent shall have received payment of the Amendment Fee, as
described in Paragraph 13 of this Second Amendment, for the ratable benefit
of the Lenders consenting to this Second Amendment, to be distributed by
the Agent to the consenting Lenders in respect of the Lender's respective
Pro Rata Percentage of the Maximum Amount.
(e) The Agent shall have received an opinion of Borrower's counsel, in
form and substance satisfactory to the Agent and its counsel, as to the due
authorization, validity and enforceability of the Second Amendment.
(f) The Agent shall have received payment of all fees and expenses of
Agent's counsel.
(g) The Agent shall have received such other documents, certificates,
instruments and opinions as the Agent may reasonably request.
18. FURTHER AGREEMENTS AND REPRESENTATIONS. Borrower does hereby:
(a) ratify, confirm and acknowledge that the Loan Agreement, as
amended hereby, and the other Loan Documents are valid, binding and in full
force and effect;
(b) covenant and agree to perform all obligations of Borrower
contained herein, in the Amended and Restated Revolver Notes and under the
Loan Agreement, as amended, and the other Loan Documents;
(c) acknowledge and agree that Borrower has no defense, set-off,
counterclaim or challenge against the payment of any sums owing under Loan
Documents or the enforcement of any of the terms of the Loan Agreement, as
amended, the Amended and Restated Revolver Notes or the other Loan
Documents;
(d) acknowledge and agree that all representations and warranties of
Borrower contained in the Loan Agreement and/or the other Loan Documents,
as amended, are true, accurate and correct on and as of the date hereof as
if made on and as of the date hereof;
(e) represent and warrant that no Event of Default (as defined in the
Loan Agreement or any of the other Loan Documents) or event which with the
giving of notice or passage of time or both would constitute such an Event
of Default exists, except those expressly waived in Paragraph 12 above, and
all information described in the recitals to this Second Amendment is true,
accurate and complete;
(f) acknowledge and agree that nothing contained herein and no actions
taken pursuant to the terms hereof is intended to constitute a novation of
the Loan Agreement or any of the other Loan Documents, and does not
constitute a release, termination or waiver (except as expressly provided
in Paragraph 12 above) of any existing Event of Default or of any liens,
security interests, suretyship obligations, pledges, rights or remedies
granted to the Agent and/or the Lenders therein, which liens, security
interests, suretyship obligations, pledges, rights and remedies are hereby
expressly ratified, confirmed, extended and continued as security for all
Lender Indebtedness, including, without limitation, all obligations of
Borrower to Agent and Lenders under the Loan Agreement, as amended by the
First Amendment and this Second Amendment, the Amended and Restated
Revolver Notes and the other Loan Documents; and
(g) acknowledge and agree that Borrower's failure to comply with or
perform any of its covenants, agreements or obligations contained in this
Second Amendment shall constitute an Event of Default under the Loan
Agreement and each of the Loan Documents.
19. INCONSISTENCIES. To the extent of any inconsistency between the
terms, conditions and provisions of this Second Amendment and the terms,
conditions and provisions of the Loan Agreement or the other Loan
Documents, the terms, conditions and provisions of this Second Amendment
shall prevail. All terms, conditions and provisions of the Loan Agreement
and the other Loan Documents not inconsistent herewith shall remain in full
force and effect and are hereby ratified and confirmed by Borrower.
20. NO WAIVER/COUNTERPARTS. Except as expressly set forth herein,
nothing contained herein and no actions taken pursuant to the terms hereof
are intended to nor shall they constitute a waiver by the Agent or Lenders
of any rights or remedies available to any of them at law or in equity or
as provided in the Loan Agreement or the other Loan Documents. This Second
Amendment may be executed in multiple counterparts.
21. BINDING EFFECT. This Second Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns.
22. GOVERNING LAW. This Second Amendment shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
23. HEADINGS. The headings of the sections of this Second Amendment
are inserted for convenience only and shall not be deemed to constitute a
part of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the date first above written.
THE JPM COMPANY
By:
Name/Title: Xxxx X. Xxxxxxx
Chief Executive Officer
AGENT:
FIRST UNION NATIONAL BANK, as Agent
By:
Name
Title:
ISSUING BANK:
FIRST UNION NATIONAL BANK, as Issuing Bank
By:
Name
Title:
LENDERS:
FIRST UNION NATIONAL BANK, as Lender
By:
Name
Title:
MELLON BANK, N.A.
By:
Name
Title:
BANK OF AMERICA, N.A., successor by merger to
NATIONSBANK, N.A.
By:
Name
Title:
PNC BANK, NATIONAL ASSOCIATION
By:
Name
Title:
SECOND AMENDED
ACKNOWLEDGMENT AND CONSENT
The undersigned Guarantors hereby acknowledge and consent to the foregoing
Waiver and Second Amendment and Modification to Loan Agreement ("Second
Amendment") and do further agree that (i) all sums advanced under the Amended
and Restated Revolver Notes constitute "Guaranteed Obligations" under the terms
of their respective Surety Agreements dated April 9, 1998 in favor of Agent (the
"Guarantees");(ii) the foregoing Second Amendment shall not constitute a release
or waiver of any of the obligations of the undersigned to the Agent and/or the
Lenders under any of the Guarantees, all of which are hereby ratified, confirmed
and continued; and (iii) any lien, security interest or assignment granted to
Agent and/or Lenders by Guarantors do and shall secure all obligations of
Borrower under the Amended and Restated Revolver Notes and under the "Loan
Documents" as such term is defined in the Guarantees.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby,
have executed this Acknowledgment and Consent, effective as of the date of the
foregoing Amendment. JPM TECHNOLOGY, INC.
By:
Name:
Title:
THE JPM COMPANY OF DELAWARE, INC.
By:
Name:
Title:
DENRON, INC.
By:
Name:
Title:
AMENDED SCHEDULE A
Borrower's Funded Applicable Base Rate Applicable LIBOR Rate Usage Fee
Debt/EBITDA* Margin Margin
<2.0 to 1.0 0% .875% 0.250%
>2.0 to 1.0 0% 1.125% 0.250%
but <2.5 to 1.0
>2.5 to 1.0 0.625% 1.875% 0.375%
but <3.0 to 1.0
>3.0 to 1.0 0.875% 2.125% 0.375%
but <3.25 to 1.0
>3.25 to 1.0 1.250% 2.500% 0.500%
but <3.5 to 1.0
>3.5 to 1.0 1.750% 3.000% 0.500%
but <4.0 to 1.0
>4.0 to 1.0 2.00% 3.250% 0.500%
but <4.5 to 1.0
>4.5 to 1.0 2.250% 3.500% 0.500%
*Funded Debt/EBITDA means, as of the end of each fiscal quarter of Borrower and
determined for the 12 month period then ended, (a) total funded debt of Borrower
and its Subsidiaries for such period (Indebtedness for borrowed money plus
Capitalized Lease Obligations), divided by (b) EBITDA for such period; all
calculated on a Consolidated Basis and in accordance with GAAP.
