EXHIBIT 10.25
FIFTH AMENDMENT TO
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LOAN AND SECURITY AGREEMENT
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AND CERTAIN OTHER LOAN DOCUMENTS
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THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND CERTAIN OTHER LOAN
DOCUMENTS (the "Amendment") is made and entered into as of the 25th day of
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August, 1997, to be effective (unless otherwise specified herein) as of August
25, 1997 (the "Effective Date"), by and among FLEET CAPITAL CORPORATION, a Rhode
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Island corporation, successor in interest by merger to FLEET CAPITAL
CORPORATION, a Connecticut corporation, formerly known as SHAWMUT CAPITAL
CORPORATION, successor in interest by assignment to BARCLAYS BUSINESS CREDIT,
INC. ("Lender"), LOWRANCE ELECTRONICS, INC., a Delaware corporation
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("Lowrance"), LEI EXTRAS, INC., a Delaware corporation ("LEI"), LOWRANCE
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CONTRACTS, INC., a Delaware corporation ("Lowrance Contracts"), and SEA
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ELECTRONICS, INC., an Oklahoma corporation ("Sea Electronics") (Lowrance, LEI,
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Lowrance Contracts and Sea Electronics are herein individually and collectively
called "Borrower").
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RECITALS
A. Borrower, Lowrance Australia Pty Limited ("Lowrance Australia") and
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Lender have entered into that certain Loan and Security Agreement, dated
December 15, 1993, as amended by (i) that certain First Amendment to Loan and
Security Agreement, dated October 16, 1995, by and among Lender, Borrower and
Lowrance Australia, (ii) that certain Second Amendment to Loan and Security
Agreement, dated November 1, 1996 by and among Lender and Borrower, (iii) that
certain Third Amendment to Loan and Security Agreement, dated December 30, 1996,
by and among Lender and Borrower, and (iv) that certain Fourth Amendment to Loan
and Security Agreement, entered into effective as of April 1, 1997, by and among
Lender and Borrower (as amended, the "Loan Agreement").
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B. Borrower and Lender desire to amend the Loan Agreement and certain of
the other Loan Documents as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE I
Definitions
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1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.
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ARTICLE II
Amendments
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2.01 Amendment to Section 1.1 of the Loan Agreement; Amendment of Certain
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Definitions. Effective as of the Effective Date Section 1.1 of the Loan
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Agreement is hereby amended by adding the following definitions thereto in
alphabetical order:
"$4,000,000 Term Loan - the Loan described in Section 2.2(A-1) of this
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Agreement.
$4,000,000 Term Note - The Secured Promissory Note to be executed by
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Borrower on or about the date of execution of the Fifth Amendment Agreement in
favor of Lender to evidence the $4,000,000 Term Loan, which shall be in the form
of Annex A to the Fifth Amendment.
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1997 Tax Refund Amount - the amount indicated below for the periods
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indicated below:
Applicable Period 1997 Tax Refund Amount
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(a) Date of execution of Fifth (a) $956,000.00
Amendment Agreement though the
earlier to occur of (i) November
30, 1997 or (ii) receipt by
Borrower of its federal tax
refund for the tax year of
Borrower ending July 31, 1997.
(b) Thereafter (b) $0.00
Adjusted Net Earnings From Operations - with respect to any fiscal period,
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means the net earnings (or loss) after provision for income taxes for such
fiscal period of Borrower, as reflected on the financial statement of Borrower
supplied to Lender pursuant to Section 9.1(J) of this Agreement, but excluding:
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(i) any gain or loss arising from the sale of capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of a Borrower accrued prior to the
date it becomes a Subsidiary;
(iv) earnings of any corporation, substantially all the assets of
which have been acquired in any manner by a Borrower, realized by such
corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a Subsidiary of
a Borrower) in which such Borrower has an ownership interest, unless such net
earnings shall have actually been received by Borrower in the form of cash
contributions;
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(vi) any portion of the net earnings of any Subsidiary of a Borrower
which for any reason is unavailable for payment of dividends to such Borrower;
(vii) the earnings of any Person to which any assets of a Borrower
shall have been sold, transferred or disposed of, or into which such Borrower
shall have merged, or been a party to any consolidation or other form of
reorganization, prior to the date of such transactions;
(viii) any gain arising from the acquisition of any Security of a
Borrower; and
(ix) any gain arising from extraordinary or non-recurring items.
Australian Finished Goods Eligible Inventory - Inventory of Borrower
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located in Australia in compliance with Section 4.6 hereof and consisting of
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finished goods (after deducting therefrom, (i) Inventory consisting of packaging
materials and supplies, promotional materials, samples and display materials,
and Inventory not offered for sale, (ii) all reserves established for excess,
slow moving, obsolete or unmerchantable Inventory, which reserves shall be
calculated and adjusted from time to time using the Borrower's reports with
respect to the determination of excess finished goods, and (iii) all reserves
established by Lender in its good faith credit judgment with respect to
shrinkage or spoilage of Inventory) is Australian Finished Goods Eligible
Inventory. Notwithstanding the generality of the foregoing, no Inventory shall
be Australian Finished Goods Eligible Inventory unless it:
(a) is finished goods;
(b) is in good, new and salable condition (and is not work in
progress);
(c) meets all standards imposed by any governmental agency or
authority;
(d) conforms in all respects to the warranties and representations set
forth in Section 6.1 hereof;
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(e) is at all time subject to Lender's duly perfected, first priority
security interest and no other Lien except a Permitted Lien;
(f) is situated at a location in Australia in compliance with Section
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4.6 hereof and is not in-transit; and
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(g) is not consigned by any Person to Borrower or by Borrower to any
Person.
Furthermore, Lender shall have the right to increase or decrease from time
to time the amount of the deduction described in clause (ii) of the first
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sentence of this definition of Australian Finished Goods Eligible Inventory if
Lender, following its evaluation of Borrower's reserves for excess, slow moving,
obsolete or unmerchantable Inventory (which reserves shall be evaluated by
Lender utilizing Borrower's books and records), determines, in the exercise of
its good faith credit judgment, that such increases or decreases are necessary
or appropriate. No Eligible Inventory shall be deemed to be Australian Finished
Goods Eligible Inventory.
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Fifth Amendment Agreement - the Fifth Amendment to Loan and Security
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Agreement and Certain Other Loan Documents, dated as of August 25, 1997, by and
between Lender and Borrower.
Fixed Charge Ratio - for Borrower for any period means the ratio of (i) (a)
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the sum of (x) Adjusted Net Earnings from Operations during such period, (y)
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Interest Expense during such period, and (z) depreciation, amortization and
other non-cash charges during such period (to the extent the same were deducted
in determining Adjusted Net Earnings from Operations for such period), minus (b)
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the aggregate amount of extraordinary charges during such period, to (ii) the
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sum of (a) Interest Expense during such period, (b) Unfinanced Capital
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Expenditures during such period, and (c) scheduled principal payments on
Borrower's long-term Indebtedness (including, without limitation, scheduled
principal amortization on Capitalized Lease Obligations) during such period.
Guarantor - any Person who now or may hereafter guarantee payment or
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performance of the whole or any part of the Obligations, including, without
limitation, Xxxxxxx X. Xxxxxxxx.
Guaranty Agreements - collectively, any and all of the Unconditional
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Guarantees which are to be executed by a Guarantor in form and substance
satisfactory to Lender, including, without limitation, (i) that certain
Unconditional Guaranty, executed and delivered as of October 16, 1995, executed
by Sea Electronics, and (ii) that certain Unconditional Guaranty, executed and
delivered in connection with the Fifth Amendment Agreement, executed by Xxxxxxx
X. Xxxxxxxx.
Interest Expense - for any period, the interest charges paid or accrued
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during such period (including inputed interest on Capitalized Lease Obligations)
on the Indebtedness of Borrower.
Mexican Raw Materials Eligible Inventory - Inventory of Borrower located
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in Mexico in compliance with Section 4.6 hereof and consisting of raw materials
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(after deducting therefrom, (i) Inventory consisting of packaging materials and
supplies, promotional materials, samples and display materials, and Inventory
not offered for sale, (ii) all reserves established for excess, slow moving,
obsolete or unmerchantable Inventory, which reserves shall be calculated and
adjusted from time to time using the Borrower's reports with respect to the
determination of excess raw materials, and (iii) all reserves established by
Lender, in its good faith credit judgment, with respect to shrinkage or spoilage
of Inventory) is Mexican Raw Materials Eligible Inventory. Notwithstanding the
generality of the foregoing, no Inventory shall be Mexican Raw Materials
Eligible Inventory unless it:
(a) is raw materials;
(b) is in good, new and salable condition (and is not work in
progress);
(c) meets all standards imposed by any governmental agency or
authority;
(d) conforms in all respects to the warranties and representations set
forth in Section 6.1 hereof;
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(e) is at all time subject to Lender's duly perfected, first priority
security interest and no other Lien except a Permitted Lien;
(f) is situated at a location in Mexico in compliance with Section 4.6
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hereof and is not in-transit; and
(g) is not consigned by any Person to Borrower or by Borrower to any
Person.
Furthermore, Lender shall have the right to increase or decrease from time
to time the amount of the deduction described in clause(ii) of the first
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sentence of this definition of Mexican Raw Materials Eligible Inventory if
Lender, following its evaluation of Borrower's reserves for excess, slow moving,
obsolete or unmerchantable Inventory (which reserves shall be evaluated by
Lender utilizing Borrower's books and records), determines in the exercise of
its good faith credit judgment that such increases or decreases are necessary or
appropriate. No Eligible Inventory shall be deemed to be Mexican Raw Materials
Eligible Inventory.
Net Cash Flow - for any fiscal period of Borrower, means the amount
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calculated as follows: (i) the Adjusted Net Earnings From Operations for such
period, plus (ii) depreciation, amortization and other non-cash charges for such
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period (to the extent the same were deducted in determining Adjusted Net
Earnings From Operations for such period) minus (iii) scheduled principal
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payments on Borrower's long-term Indebtedness (including, without limitation,
scheduled principal amortization on Capitalized Lease Obligations) during such
period, minus (iv) Unfinanced Capital Expenditures during such period.
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Term Loans - the Term Loan and the $4,000,000 Term Loan.
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Unfinanced Capital Expenditures - Capital Expenditures and payments on
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Capitalized Lease Obligations of Borrower to the extent not financed pursuant to
long-term Indebtedness of Borrower (other than the Loans)."
2.02 Amendment to Section 1.1 of the Term Loan Agreement; Deletion of
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Definition of "Permitted Overadvance Amount". Effective as of the Effective
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Date, Section 1.1 of the Loan Agreement is hereby amended by deleting therefrom
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the definition of "Permitted Overadvance Amount".
2.03 Amendment to Section 1.1 of the Loan Agreement; Amendment of
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Definition of "Bank". Effective as of April 30, 1996, the definition of "Bank"
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is hereby deleted in its entirety and the following shall be substituted
therefor:
"Bank - Fleet National Bank and its successors and assigns."
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2.04 Amendment to Section 1.1 of the Loan Agreement; Amendment of
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Definition of "Borrowing Base". Effective as of the Effective Date, the
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definition of "Borrowing Base" contained in Section 1.1 of the Loan Agreement is
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hereby deleted in its entirety, and the following shall be substituted therefor:
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"Borrowing Base - as at any date of determination thereof, an amount equal
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to the lesser of:
(a) (i) the Revolving Credit Commitment, minus (ii) the face amount of all
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Letters of Credit outstanding at such date, minus (iii) the aggregate unpaid
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principal balance of all Equipment Loans at such date; or
(b) an amount equal to:
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(i) 85% of the net amount of Eligible Accounts, other than Eligible
Wal-Mart Accounts or Eligible Kmart Accounts, outstanding at such date;
PLUS
(ii) 80% of the net amount of Eligible Wal-Mart Accounts and Eligible
Kmart Accounts outstanding at such date;
PLUS
(iii) the lesser of (a) the Inventory Commitment Amount or (b) the sum
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of (w) 30% of the value of Raw Materials Eligible Inventory at such date, (x)
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30% of the value of Mexican Raw Materials Eligible Inventory at such date, (y)
60% of the value of Finished Goods Eligible Inventory at such date and (z) 60%
of the value of Australian Finished Goods Eligible Inventory at such date, all
of the above as calculated on the basis of the lower of cost or market, with
cost calculated on a first-in, first-out basis;
PLUS
(iv) the 1997 Tax Refund Amount;
MINUS (subtract from the sum of clauses (i), (ii), (iii) and (iv) above)
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(v) an amount equal to the sum of (a) the face amount of all Letters of
Credit outstanding at such date, (b) the amount of all reserves established by
Lender on a monthly basis (and promptly notified to Borrower) to reflect the
liability of Lender and/or Bank under or in connection with guaranties by Lender
and/or Bank of all foreign exchange contracts pursuant to Section 2.5 hereof,
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(c) the amount of any mandatory prepayment paid pursuant to Section 2.2(C) and
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applied by Lender to the Revolving Credit Loans outstanding, (d) any amounts
received by Lender from the Insurance Assignment and applied to the Obligations,
and (e) any amounts which Lender may pay (but which have not been paid and
applied to the Revolving Credit Loans outstanding) pursuant to any of the Loan
Documents for the account of Borrower other than Letters of Credit.
For purposes hereof, the net amount of Eligible Accounts, Eligible Wal-Mart
Accounts or Eligible Kmart Accounts, as the case may be, at any time shall be
the face amount of such Eligible Accounts, Eligible Wal-Mart Accounts or
Eligible Kmart Accounts, less any and all credit memoranda or credit adjustments
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issued for discounts (which may, at Lender's option, be
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calculated on the shortest terms), credit and rebills, returns, allowances,
pricing errors or other similar items at any time outstanding or payable in
connection with such Accounts at such time."
2.05 Amendment to Section 1.1 of the Loan Agreement; Amendment of
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Definition of "Eligible Account. Effective as of the Effective Date, the
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definition of "Eligible Account" contained in Section 1.1 of the Loan Agreement
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is hereby deleted in its entirety, and the following shall be substituted
therefor:
"Eligible Account - an Account arising in the ordinary course of Borrower's
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business from the sale of goods or rendition of services is an Eligible Account.
Notwithstanding the generality of the foregoing, no Account shall be an Eligible
Account if:
(a) it arises out of a sale made by Borrower to (i) a Subsidiary of
Borrower, (ii) an Affiliate of Borrower, (iii) a Person controlled by an
Affiliate of Borrower, or (iv) an officer, director, employee or agent of
Borrower, a Subsidiary of Borrower or an Affiliate of Borrower; or
(b) with respect to accounts owing by Account Debtors, other than Wal-
Mart and Kmart, for which Borrower in the ordinary course of business allows
payment terms in excess of 60 days after the original invoice date, such
Accounts are unpaid for more than 60 days after the original due date shown on
the invoice; provided, however, that no Account shall be deemed an Eligible
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Account if it is unpaid more than 210 days from the original invoice date; or
(c) with respect to Accounts for which Borrower in the ordinary course
of business allows payment terms of 60 days or less after the original invoice
date, such Accounts are unpaid more than 90 days after the original invoice
date; or
(d) 20% or more of the Accounts from the Account Debtor are not deemed
Eligible Accounts hereunder, to the extent of all Accounts owing by such Account
Debtor; or
(e) the total unpaid Accounts of the Account Debtor (other than Wal-
Mart or Kmart) exceed 10% of the net amount of all Accounts, to the extent of
such excess, if Lender in the exercise of its good faith credit judgment
determines that the collection of the Account from the Account Debtor is
insecure or that payment thereof is doubtful; or
(f) any material covenant, representation or warranty contained in
this Agreement with respect to such Account has been breached; or
(g) the Account Debtor is also Borrower's creditor or supplier, or has
disputed liability with respect to such Account, or has made any claim with
respect to any other Account due from such Account Debtor to Borrower, or the
Account otherwise is or may become subject to any right of setoff by the Account
Debtor (including any right of setoff arising from cooperative advertising
arrangements, rebate allowances, and other advertising credits between Borrower
and the Account Debtor), in an amount equal to the extent of any offset, dispute
or claim; or
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(h) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other application for
relief under the federal bankruptcy laws has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended business, ceased to be
Solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs; or
(i) it arises from a sale to an Account Debtor outside the United
States (other than Canada), unless either (i) the sale is on letter of credit,
guaranty, or acceptance terms, in each case acceptable to Lender or such Account
is covered by FCIA insurance, or (ii) the sale is to an Account Debtor of
Lowrance located in Australia and the Account is not unpaid more than 90 days
after the original invoice date, or (iii) the sale is to an Account Debtor
located outside of the United States (other than Canada or Australia), the
Account is not unpaid more than 90 days after the original invoice date thereof,
and the sale is not on letter of credit, guaranty or acceptance terms acceptable
to Lender or such Account is not covered by FCIA insurance; provided, however,
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the aggregate amount of all Revolving Credit Loans advanced against the Accounts
described in this sub-clause (iii) shall not exceed $1,000,000 at any time and
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the aggregate amount of Revolving Credit Loans advanced against all the Accounts
described in this sub-clause (iii) from any specific Account Debtor shall not
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exceed $200,000 at any time; or
(j) it arises from a sale to the Account Debtor on a xxxx-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis and has not been disclosed to Lender on Exhibit T
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attached hereto; or
(k) Lender in the exercise of its good faith credit judgment believes
that collection of such Account is insecure or that payment thereof is doubtful
or will be delayed by reason of the Account Debtor's financial condition; or
(l) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns its right
to payment of such Account to Lender, in form and substance satisfactory to
Lender, so as to comply with the Assignment of Claims Act of 1940, as amended
(31 U.S.C. Sub-Section 203 et seq.); or
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(m) the Account Debtor is located in the States of New Jersey, West
Virginia, Minnesota or Indiana, unless Borrower has filed a Notice of Business
Activities Report with the appropriate officials in each applicable state for
the then current year; or
(n) the Account is subject to a Lien other than a Permitted Lien; or
(o) the goods giving rise to such Account have not been delivered to a
common carrier or the services giving rise to such Account have not been
performed by Borrower and accepted by the Account Debtor or the Account
otherwise does not represent a final sale; or
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(p) the Account arises from a progress billing or an invoice for
deposit; or
(q) the Account arises from a sale which is an installment sale or
lease or is otherwise a sale on an extended payment basis, except to the extent
permitted pursuant to clauses (b) and (c) above; or
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(r) the Account is evidenced by chattel paper or an instrument of any
kind, or has been reduced to judgment; or
(s) Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for (i) discounts or allowances which are made in
the ordinary course of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value of each invoice
related to such Account, and (ii) other discounts and allowances of the type
granted by Borrower to Account Debtors in the ordinary course of business on the
Closing Date; or
(t) Borrower has made an agreement with the Account Debtor to extend
the time of payment thereof, except to the extent permitted pursuant to clauses
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(b) and (c) above; or
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(u) the Account arises from a retail sale of goods to a Person who is
purchasing same primarily for personal, family or household purposes; or
(v) the Account includes any sales, excise or other taxes of any
nature at any time outstanding or payable in connection with such Account, to
the extent of the amount of such taxes included in such Account; or
(w) the Account includes any interest, late fees, and services charges
that may have accrued on such Account by reason of the Account Debtor not having
paid the Account as it became due, to the extent of the amount of such interest,
late fees, and services charges included in such Account."
2.06 Amendment to Section 1.1 of the Loan Agreement; Amendment of
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Definition of "Eligible Inventory". Effective as of the Effective Date hereof,
---------------------------------
the definition of "Eligible Inventory" contained in Section 1.1 of the Loan
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Agreement is hereby deleted in its entirety and the following shall be
substituted therefor:
"Eligible Inventory - Inventory of Borrower consisting of raw materials or
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finished goods (after deducting therefrom, (i) Inventory consisting of packaging
materials and supplies, promotional materials, samples and display materials,
and Inventory not offered for sale, (ii) all reserves established for excess,
slow moving, obsolete or unmerchantable Inventory, which reserves shall be
calculated and adjusted from time to time using the Borrower's reports with
respect to the determination of excess raw materials, and (iii) all reserves
established by Lender in its good faith credit judgment with respect to
shrinkage or spoilage of Inventory) is Eligible Inventory. Notwithstanding the
generality of the foregoing, no Inventory shall be Eligible Inventory unless it:
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(a) is raw materials or finished goods;
(b) is in good, new and salable condition or usable in the production or
repair of Borrower's finished goods (and is not work in progress);
(c) meets all standards imposed by any governmental agency or authority;
(d) conforms in all respects to the warranties and representations set
forth in Section 6.1 hereof;
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(e) is at all time subject to Lender's duly perfected, first priority
security interest and no other Lien except a Permitted Lien;
(f) is situated at a location in compliance with Section 4.6 hereof and is
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not located in Mexico or Australia and is not in transit; and
(g) is not consigned by any Person to Borrower or by Borrower to any
Person.
Furthermore, Lender shall have the right to increase or decrease from time to
time the amount of the deduction described in clause(ii) of the first sentence
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of this definition of Eligible Inventory if Lender, following its evaluation of
Borrower's reserves for excess, slow moving, obsolete or unmerchantable
Inventory (which reserves shall be evaluated by Lender utilizing Borrower's
books and records), determines in the exercise of its good faith credit judgment
that such increases or decreases are necessary or appropriate. No Mexican Raw
Materials Eligible Inventory or Australian Finished Goods Eligible Inventory
shall be deemed to be Eligible Inventory."
2.07 Amendment to Section 1.1 of the Loan Agreement; Amendment of
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Definition of "Inventory Commitment Amount". Effective as of the Effective
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Date, the definition of "Inventory Commitment Amount" contained in Section 1.1
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of the Loan Agreement is hereby deleted in its entirety and the following shall
be substituted therefor:
"Inventory Commitment Amount - the amount indicated below for the periods
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indicated below:
INVENTORY
APPLICABLE PERIOD COMMITMENT AMOUNT
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(a) May 1 through October 31 $10,000,000
(b) November 1 through November 30 $11,000,000
(c) December 1 through March 31 $13,000,000
(d) April 1 through April 30 $11,000,000"
2.08 Amendment to Section 1.1 of the Loan Agreement; Amendment to Definition
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of "Loans". Effective as of the Effective Date, the definition of "Loans" is
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hereby deleted it its entirety and the following shall be substituted therefor:
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"Loans - all loans and advances made by Lender pursuant to this Agreement,
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including without limitation, all Revolving Credit Loans, the Term Loan, the
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$4,000,000 Term Loan, the Equipment Loans, each payment made pursuant to a
guaranty of a foreign currency purchase contract and each payment made pursuant
to a Letter of Credit."
2.09 Amendment to Section 1.1 of the Loan Agreement; Amendment to
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Definition of "Notes". Effective as of the Effective Date, the definition of
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"Notes" is hereby deleted in its entirety and the following shall be substituted
therefor:
"Notes - the Term Note, the $4,000,000 Term Note, the Equipment Notes and
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the Revolving Credit Notes."
2.10 Amendment to Section 1.1 of the Loan Agreement; Amendment to
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Definition of "Other Agreements". Effective as of the Effective Date, the
--------------------------------
definition of "Other Agreements" is hereby amended by deleting therefrom the
reference to the words "Term Note" and substituting therefor the words "Term
Notes".
2.11 Amendment to Section 1.1 of the Loan Agreement; Amendment to
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Definition of "Permitted Raw Materials Loan Amount". Effective as of the
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Effective Date, the definition of "Permitted Raw Materials Loan Amount" is
hereby deleted in its entirety and the following shall be substituted therefor:
"Permitted Raw Materials Loan Amount - $3,750,000."
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2.11 Amendment to Section 1.1 of the Loan Agreement; Amendment of
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Definition of "Seasonal Dating Accounts Loan Amount". Effective as of the
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Effective Date, the definition of "Seasonal Dating Accounts Loan Amount" is
hereby deleted in its entirety and the following shall be substituted therefor:
"Seasonal Dating Accounts Loan Amount - the amount indicated below for the
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periods indicated below:
SEASONAL DATING
APPLICABLE PERIOD ACCOUNTS LOAN AMOUNT
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January 1 through April 30 $5,000,000.00
May 1 through December 31 $0.00"
2.13 Amendment to Section 1.1 of the Loan Agreement; Amendment to
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Definition of "Security Agreements". (i) Effective as of the Effective Date, the
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definition of "Security Agreements" shall include the Guaranty Agreements, and
(ii) effective as of May 6, 1996, the definition of "Security Agreements" shall
include that certain Copyright Security Agreement, dated as of May 6, 1996,
executed by Lowrance, in favor of Lender (the "Copyright Assignment").
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2.14 Amendment to Section 2 of the Loan Agreement; Amendment to Maximum
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Amount of Total Credit Facility. Effective as of the Effective Date, the
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reference to the dollar amount $30,000,000" contained in the fourth line of
Section 2 Credit Facility is hereby deleted and substituted therefore is the
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dollar amount $33,011,000.
2.15 Amendment to Section 2.1(B) of the Loan Agreement. Effective as of
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the Effective Date, Section 2.1(B) of the Loan Agreement is hereby deleted in
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its entirety and the following shall be substituted therefor:
"(B) Notwithstanding the foregoing provisions of Section 2.1(A), it is
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expressly agreed and understood that (i) the aggregate outstanding amount of all
Revolving Loans advanced against Eligible Accounts and Eligible Inventory of
LEI, Lowrance Contracts and Sea Electronics shall not exceed $500,000 at any
time; (ii) the aggregate outstanding amount of Revolving Loans advanced against
Eligible Accounts of Lowrance arising from sales to Account Debtors located in
Australia and Australian Finished Goods Eligible Inventory shall not exceed
$1,000,000 at any time; (iii) the aggregate outstanding amount of all Revolving
Loans advanced against Raw Materials Eligible Inventory shall not exceed the
Permitted Raw Materials Loan Amount at any time; (iv) the aggregate outstanding
amount of all Revolving Loans advanced against Seasonal Dating Accounts shall
not exceed the Seasonal Dating Accounts Loan Amount; and (v) the aggregate
outstanding amount of all Revolving Loans advanced against Mexican Raw Materials
Eligible Inventory shall not exceed $1,000,000 at any time."
2.16 Amendment to Section 2.2 of the Loan Agreement; Addition of New
---------------------------------------------------------------
Section 2.2(A-1). Effective as of the Effective Date, a new Section 2.2(A-1)
---------------- ---------------
$4,000,000 Term Loan is hereby added to the Loan Agreement to read in its
--------------------
entirety as follows:
"(A-1) $4,000,000 Term Loan. Subject to the terms and conditions of this
--------------------
Agreement (including, without limitation, the terms, conditions and conditions
precedent of the Fifth Amendment Agreement), Lender agrees to make a term loan
to Borrower in connection with the Fifth Amendment Agreement in the principal
amount of $4,000,000 (the '$4,000,000 Term Loan'), which shall be repayable in
--------------------
accordance with the terms of the $4,000,000 Term Note and shall be secured by
the Collateral. The $4,000,000 shall be funded upon the satisfaction of the
conditions precedent specified in the Fifth Amendment Agreement in a manner
satisfactory to Lender. The proceeds of the $4,000,000 Term Loan shall be used
by Borrower solely for purposes for which the proceeds of the Revolving Credit
Loans are authorized to be used."
2.17 Amendment to Section 2.2(C) of the Loan Agreement. Effective as of
--------------------------------------------------
the Effective Date, Section 2.2(C) of the Loan Agreement is amended by deleting
-------------
therefrom the words "Term Loan" and substituting therefor the words "Term Loans
in such order and such manner as Lender shall determine".
2.18 Amendment to Section 2.3(A) of the Loan Agreement. Effective as of
-------------------------------------------------
the Effective Date, Section 2.3(A) of the Loan Agreement is hereby deleted in
--------------
its entirety and the following shall be substituted therefor:
12
"(A) A request for a Revolving Credit Loan shall be made, or shall be
deemed to be made, in the following manner: (i) Borrower may give Lender notice
of its intention to borrow, in which notice Borrower shall specify the amount of
the proposed borrowing and the proposed borrowing date; (ii) the becoming due of
any amount required to be paid under this Agreement or the Term Note or the
$4,000,000 Term Note or any Equipment Note as interest shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the
amount required to pay such interest; and (iii) the becoming due of any other
Obligations shall be deemed irrevocably to be a request for a Revolving Credit
Loan on the due date in the amount then so due. As an accommodation to
Borrower, Lender may permit telephonic requests for Loans and electronic
transmittal of instructions, authorizations, agreements or reports to Lender by
Borrower. Unless Borrower specifically directs Lender in writing not to accept
or act upon telephonic or electronic communications from Borrower, Lender shall
have no liability to Borrower for any loss or damage suffered by Borrower as a
result of Lender's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to Lender
telephonically or electronically and purporting to have been sent to Lender by
any individual from time to time designated by Borrower as an authorized officer
and Lender shall have no duty to verify the origin or authenticity of any such
communication;".
2.19 Amendment to Section 3.1(A) of the Loan Agreement. Effective as of
-------------------------------------------------
the Effective Date, Section 3.1(A) of the Loan Agreement is hereby deleted in
---------------
its entirety and the following substituted in lieu thereof:
"Outstanding principal on the Loans shall bear interest, calculated daily,
at the following rates per annum (individually called, as applicable, an
'Applicable Annual Rate'): (i) the Term Loans shall bear interest at a
------------------------
fluctuating rate per annum equal to 1.50% above the Base Rate, (ii) the
Equipment Loans shall bear interest at a fluctuating rate per annum equal to
1.50% above the Base Rate and (iii) the Revolving Credit Loans shall bear
interest at a fluctuating rate per annum equal to 1.50% above the Base Rate.
Each Applicable Annual Rate shall be increased or decreased, as the case may be,
by an amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of business on the day that any
such change in the Base Rate becomes effective. Interest on the Loans shall be
calculated daily, based on the actual days elapsed over a 360 day year.
Further, for the purpose of computing interest, all items of payment received by
Lender shall be applied by Lender (subject to final payment of all drafts and
other items received in form other than immediately available funds) against the
Obligations on the first Business Day after receipt. The determination of when
a payment is received by Lender will be made in accordance with Section 3.6.
-----------
Notwithstanding anything contained herein to the contrary, Lender and
Borrower agree that the Applicable Annual Rate relating to Revolving Credit
Loans shall be reduced from 1.50% above the Base Rate to 0.75% above the Base
Rate if (i) Borrower achieves positive Net Cash Flow for its fiscal year ending
July 31, 1998, evidenced by Borrower's audited financial statements which are to
be delivered by Borrower to Lender pursuant to Section 9.1(J)(i) hereof, and
------------------
(ii) as of the date Lender determines that Borrower has achieved such positive
Net Cash Flow, no Default or Event of Default exists hereunder."
13
2.20 Amendment to Section 3.2 of the Loan Agreement. Effective as of the
----------------------------------------------
Effective Date, Section 3.2 of the Loan Agreement is amended as follows:
-----------
(i) The reference to the date "December 31, 1998" is deleted and
substituted therefor is the date "December 31, 2000."
(ii) The reference to the date "December 31, 1999" is deleted and
substituted therefor is the date "December 31, 2001."
2.21 Amendment to Section 3.3(A) of the Loan Agreement. Effective as of the
-------------------------------------------------
Effective Date, Section 3.3(A) of the Loan Agreement is amended as follows:
---------------
(i) Each reference in Section 3.3(A) to the words "Term Loan" is
---------------
deleted and substituted for each such reference are the words "Term Loans".
(ii) The last sentence of Section 3.3(A) is deleted and substituted
---------------
therefor is the following sentence:
"At the effective date of any such termination of the Revolving Credit
Commitment and this Agreement, Borrower shall pay to Lender (in addition to the
then outstanding principal, accrued interest and other charges owing under the
terms of this Agreement and any of the other Loan Documents), as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to (i)
1.0% of the Termination Amount if such termination occurs during the period from
the date of execution of the Fifth Amendment Agreement through December 31,
1998; and (ii) 0.666% of the Termination Amount if such termination occurs
during the period from January 1, 1999 through December 31, 1999. If
termination occurs after December 31, 1999, no termination charge shall be
payable."
2.22 Amendment to Section 3.5 of the Loan Agreement. Effective as of the
----------------------------------------------
Effective Date, the first sentence of Section 3.5 of the Loan Agreement is
-----------
deleted and substituted therefor is the following sentence:
"Principal and interest (i) on the Term Loan shall be payable as provided
in the Term Note, (ii) on the $4,000,000 Term Loan shall be payable as provided
in the $4,000,000 Term Note, and (iii) on any Equipment Loan shall be payable as
provided in the Equipment Note relating thereto."
2.23 Amendment to Section 4.7 of the Loan Agreement. Effective as of the
----------------------------------------------
Effective Date, Section 4.7 of the Loan Agreement is amended by deleting
-----------
therefrom the words "Term Loan" and substituting therefor the words "Term
Loans".
2.24 Amendment to Section 5.5 of the Loan Agreement. Effective as of the
----------------------------------------------
Effective Date, Section 5.5 of the Loan Agreement is amended by deleting
-----------
therefrom the phrase "(except for such Accounts owing from Account Debtors
located in Australia)".
14
2.25 Amendment to Section 6.1 of the Loan Agreement. Effective as of the
----------------------------------------------
Effective Date, Section 6.1 of the Loan Agreement is amended by deleting
-----------
therefrom the phrase "With respect to Inventory, Borrower represents and
warrants to Lender that Lender may rely, in determining which items of Inventory
constitute Eligible Inventory" and substituting therefor the phrase "With
respect to Inventory, Borrower represents and warrants to Lender that Lender may
rely in determining which items of Inventory constitute respectively Eligible
Inventory, Mexican Raw Materials Eligible Inventory or Australian Finished Goods
Eligible Inventory".
2.26 Amendment to Section 8.11(A) of the Loan Agreement. Effective as of
--------------------------------------------------
the Effective Date, Section 8.1(A) of the Loan Agreement is amended by adding
---------------
thereto a new Section to be inserted at the end of such Section 8.1(A) to read
--------------
in its entirety as follows:
"Lowrance is in good standing, duly registered as a foreign corporation and
authorized to do business in Australia."
2.27 Amendment to Section 8.1(M) of the Loan Agreement. Effective as of
-------------------------------------------------
the Effective Date, Section 8.1(M) of the Loan Agreement is amended by adding
--------------
thereto two new sentences to be inserted at the end of such Section 8.1(M) to
--------------
read in their entirety as follows:
"Lowrance has been transferred, and presently has good title to, all the
Property in Australia previously owned by Lowrance Australia, and Lender has a
first priority Lien in such Property in Australia and in all other Property of
Borrower in Australia, subject only to Permitted Liens. Lender also has a first
priority Lien in all Property of Borrower located in Mexico (either by direct
grant to Lender of a first priority security interest or through the conveyance
to the Mexican Trustee as described in Section 4.9 hereof), subject only to
-----------
Permitted Liens."
2.28 Amendment to Section 9.3 of the Loan Agreement. Effective as of the
----------------------------------------------
Effective Date, Section 9.3 of the Loan Agreement is deleted in its entirety and
-----------
the following is substituted therefor:
"9.3 Specific Financial Covenants. During the term of this Agreement, and
----------------------------
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
(A) Minimum Tangible Net Worth. Maintain a Consolidated Tangible Net
--------------------------
Worth of not less than the amount indicated below of the last day of each
calendar month during the period corresponding thereto:
PERIOD AMOUNT
------ -----------
(a) Date of execution of Fifth Amendment (a) $ 9,000,000
Agreement through August 31, 1997
(b) September 1, 1997 through October (b) $ 8,600,000
31, 1997.
15
(c) November 1, 1997 through December (c) $ 8,300,000
31, 1997.
(d) January 1, 1998 through January (d) $ 8,800,000
31, 1998.
(e) February 1, 1998 through February (e) $ 8,300,000
28, 1998.
(f) March 1, 1998 through March 31, (f) $10,000,000
1998.
(g) April 1, 1998 through April 30, (g) $10,600,000
1998.
(h) May 1, 1998 through May 31, 1998. (h) $11,100,000
(i) June 1, 1998 and thereafter. (i) $11,500,000
(B) Maximum Leverage Ratio. Maintain, on a Consolidated basis, a
----------------------
ratio of (i) total Indebtedness to (ii) Tangible Net Worth of not more than the
ratio shown below as of the last day of each calendar month during the period
corresponding thereto.
PERIOD RATIO
------ -----
(a) Date of execution of Fifth (a) 5.4 to 1.0
Amendment Agreement through August 31,
1997.
(b) September 1, 1997 through (b) 5.2 to 1.0
September 30, 1997.
(c) October 1, 1997 through October (c) 5.1 to 1.0
31, 1997.
(d) November 1, 1997 through November (d) 5.0 to 1.0
30, 1997.
(e) December 1, 1997 through December (e) 4.9 to 1.0
31, 1997.
(f) January 1, 1998 through January (f) 5.0 to 1.0
31, 1998.
(g) February 1, 1998 through February (g) 5.1 to 1.0
28, 1998.
(h) March 1, 1998 through March 31, (h) 4.7 to 1.0
1998.
(i) April 1, 1998 through April 30, (i) 4.5 to 1.0
1998.
(j) May 1, 1998 through July 31, 1998. (j) 3.5 to 1.0
(k) Each thereafter occurring nine (k) 4.5 to 1.0
calendar months beginning with August
1 of a calendar year and continuing
through April 30 of the following
calendar year (the first such nine
calendar month period being August 1,
1998 through April 30, 1999).
16
(l) Each thereafter occurring three (k) 3.5 to 1.0
calendar months beginning with May 1
of a calendar year and continuing
through July 31 of such calendar year
(the first such three calendar month
period being May 1, 1999 through July
31, 1999.
(C) Fixed Charge Ratio. Maintain, on a Consolidated basis, a Fixed
------------------
Charge Ratio of not less than the ratio shown below for the periods
corresponding thereto.
PERIOD RATIO
------ -----
(a) Three calendar month period ending (a) 0.34 to 1.0
on October 31, 1997.
(b) Six calendar month period ending (b) 0.56 to 1.0
on January 31, 1998.
(c) Nine calendar month period ending (c) 1.0 to 1.0
on April 30, 1998.
(d) Twelve calendar month period (d) 1.0 to 1.0
ending on July 31, 1998.
(e) Twelve calendar month period (e) 1.0 to 1.0
ending on October 31, 1998.
(f) Twelve calendar month period (f) 1.0 to 1.0
ending on January 31, 1999.
(g) Twelve calendar month period (g) 1.0 to 1.0
ending on April 30, 1999.
(h) Twelve calendar month period (h) 1.0 to 1.0
ending on July 31, 1999.
(i) Twelve calendar month period (i) 1.0 to 1.0
ending on the last day of each
thereafter occurring October, January,
April and July.
2.29 Amendment to Section 11.1(A) of the Loan Agreement. Effective as of
--------------------------------------------------
the Effective Date, Section 11.1(A) of the Loan Agreement is amended by deleting
----------------
therefrom the phrase "the Term Note or the Revolving Credit Notes" and
substituting therefor the phrase "any Note".
2.30 Amendment to Section 11.1(B) of the Loan Agreement. Effective as of
--------------------------------------------------
the Effective Date, Section 11.1(B) of the Loan Agreement is amended by deleting
----------------
therefrom the phrase "the Term Note or the Revolving Credit Notes" and
substituting therefor the phrase "a Note".
17
2.31 Cure Period for Violation of Section 9.3(C) of the Loan Agreement.
-----------------------------------------------------------------
Notwithstanding the provisions of Section 11.1(D)(i) of the Loan Agreement, if
-----------------
Borrower violates for any period the Fixed Charge Ratio for such period
specified in Section 9.3(C) of the Loan Agreement, Borrower shall have the right
-------------
to cure such Default in the manner detailed in the succeeding sentence such
Default within fifteen (15) days after Borrower's receipt of notice of such
Default by Lender. Such cure by Borrower may only be effectuated by a new cash
equity infusion being made into Lowrance in the amount necessary such that when
such amount is added to the numerator of the Fixed Charge Ratio (i.e., the
amount calculated pursuant to clause (i) of the definition of Fixed Charge
---------
Ratio) for such fiscal period, Borrower is in compliance with the Fixed Charge
Ratio for such fiscal period specified in Section 9.3(C) of the Loan Agreement.
-------------
2.32 Amendment to Section 11.1(I) of the Loan Agreement. Effective as of
--------------------------------------------------
the Effective Date, Section 11.1(I) of the Loan Agreement is amended by
----------------
inserting after each reference thereto to "Lowrance" or "Borrower" the words "or
any Guarantor".
2.33 Amendment to Section 11.1 of the Loan Agreement; Addition of New
----------------------------------------------------------------
Section 11.1(P). Effective as of the Effective Date, a new Section 11.1(P)
--------------- ---------------
Repudiation of or Default under Guaranty Agreement is added to the Loan
--------------------------------------------------
Agreement to read in its entirety as follows:
"(P) Repudiation of or Default Under Guaranty Agreement. Any
--------------------------------------------------
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof."
2.34 Amendment to Section 12.10 of the Loan Agreement. Effective as of the
------------------------------------------------
Effective Date, Section 12.10 of the Loan Agreement is amended such that (i) any
-------------
notice to Lender shall hereafter be addressed as follows:
"(A) If to Lender: Fleet Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Loan Administration Manager
with a copy to: Xxxxxx Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq."
and (ii) any notice to Borrower shall hereafter be addressed as follows:
"(B) if to Borrower: Lowrance Electronics, Inc.
00000 Xxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
18
with a copy to: Stuart, Biolchini, Xxxxxx & Givray
0000 Xxxxx Xxxxx Tower
Fifteen Xxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx, Esq."
2.35 Amendment to Term Note. Effective as of the Effective Date, the Term
----------------------
Note is amended by deleting from the second page of the Term Note the phrase
"and May 31, 1998, in installments of $500,000.00 each" and substituting
therefor the phrase "an installment of $500,000.00".
2.36 Amendment to Revolving Credit Notes. Effective as of the Effective
-----------------------------------
Date, each Revolving Credit Note is amended by deleting therefrom the date
"December 31, 1998" and substituting therefor the date "December 31, 2000".
2.37 Restructuring Fee. In consideration for the agreements of Lender
-----------------
contained herein, including, without limitation, extending the Original Term,
committing to make the $4,000,000 Term Loan, and revising the definition of
"Borrowing Base", but subject to Section 3.1(D) of the Loan Agreement, Borrower
-------------
agrees to pay Lender a fee of $50,000. Such fee shall be fully earned, and due
and payable, on the date of execution of this Amendment. Borrower hereby
irrevocably authorizes Lender, in Lender's sole discretion, to advance to
Borrower, and to charge on the date of execution of this Amendment to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay in
full this restructuring fee.
ARTICLE III
Conditions Precedent and Post-Closing Covenants
-----------------------------------------------
3.01 Conditions Precedent. The effectiveness of this Amendment is subject
--------------------
to the satisfaction of the following conditions precedent, unless specifically
waived in writing by Lender:
(a) Lender shall have received each of the following, each in form and
substance satisfactory to Lender: (i) this Amendment, duly executed by Borrower;
(ii) the $4,000,000 Term Note, in the form of Annex A attached hereto, duly
-------
executed by Borrower, (iii) an Unconditional Guaranty, in the form of Annex C
-------
attached hereto, duly executed by Xxxxxxx X. Xxxxxxxx, whereby Xxxxxxx X.
Xxxxxxxx unconditionally guarantees payment of the Obligations, (iv) Third
Amendment to Mortgage, Security Agreement, Financing Statement and Assignment of
Rents, duly executed by Lowrance regarding the existing Mortgage in favor of
Lender covering Lowrance's Tulsa, Oklahoma real Property; (v) Assignment of
Business Interruption Insurance Policy regarding all business interruption
insurance policies of Borrower, duly executed by Borrower, in favor of Lender
and Assignment of Political Risk Insurance Policy regarding all political risk
insurance policies of Borrower, duly executed by Borrower, in favor of Lender;
(vi) a good standing certificate for each Borrower, issued within 15 days of the
19
date of this Amendment by the Secretary of State or appropriate official of the
jurisdiction of its incorporation, (vii) a closing certificate signed by the
Chief Executive Officer and Chief Financial Officer of Borrower, dated as of the
date of this Amendment, stating that (a) the representations and warranties set
forth in Section 8 of the Loan Agreement are true and correct as of such date,
---------
(b) Borrower is on such date in compliance with all the terms and provisions set
forth in the Loan Agreement, as amended by this Amendment, and (c) on such date
no Default or Event of Default has occurred and is continuing, except for such
Defaults or Events of Default as have been specifically waived in writing by
Lender, (viii) a company general certificate in the form of Annex B attached
-------
hereto (hereinafter referred to as the "Company General Certificate"), certified
---------------------------
by the Secretary or Assistant Secretary of each Borrower acknowledging (a) that
such Borrower's Board of Directors has met and has adopted, approved, consented
to and ratified resolutions which authorize the executio n, delivery and
performance by such Borrower of this Amendment and all other Loan Documents to
which such Borrower is to be a party, and (b) the names of the officers of such
Borrower authorized to sign this Amendment and each of the other Loan Documents
to which such Borrower is or is to be a party hereunder including certificates
contemplated herein), together with specimen signatures of such officers; (ix)
copies of all filing receipts or acknowledgments issued by any governmental
authority to evidence any filing or recordation necessary to perfect the Liens
of Lender in any Property of Borrower located in Australia and evidence
satisfactory in formal substance to Lender that such Liens constitute valid and
perfected first priority Liens, subject only to Permitted Liens; and (x) such
additional documents, instruments and information as Lender or its legal counsel
may request;
(b) The representations and warranties contained herein, in the Loan
Agreement and in the other Loan Documents, as each is amended hereby, shall be
true and correct as of the date hereof, as if made on the date hereof;
(c) Lender shall have received, in immediately available funds, payment of
the $50,000 restructuring fee described in Section 2.37 of this Amendment;
------------
(d) After giving effect to this Amendment, no Default or Event of Default
shall have occurred and be continuing, unless such Default or Event of Default
has been specifically waived in writing by Lender; and
(e) All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to Lender and its legal counsel.
3.02 Post-Closing Covenants. (i) Unless waived or extended in writing in
----------------------
Lender's sole discretion, on or before sixty days after the date of execution of
this Amendment, Borrower shall have:
(a) Delivered to Lender a business valuation study of Borrower prepared by
Xxxxxxxx, Xxxxx or prepared by another Person with comparable experience,
reputation, qualification and expertise comparable to Xxxxxxxx, Xxxxx selected
by Borrower and acceptable to Lender, the cost of which business valuation study
shall be the sole responsibility of Borrower.
20
Lender agrees to treat the information contained in such business valuation
study (hereinafter, the "Information") as confidential and to reveal the
-----------
Information to only such of Lender's employees, regulatory authorities, hired
consultants, attorneys, accountants and auditors as Lender determines, in its
credit judgment, need to know such Information. Notwithstanding the foregoing,
the term "Information" shall not include any information that (i) is or becomes
generally known, (ii) is or becomes available to Lender on a nonconfidential
basis from a source that Lender in good faith believes may disclose such
information without violating any confidentiality agreement with Borrower or
(iii) is in the public domain. In addition, nothing herein shall prevent Lender
from disclosing Information (i) which is required to be made in a judicial,
administrative or governmental proceeding, (ii) required by any applicable law
or regulation, (iii) made to any governmental agency or regulatory body having
or claiming authority over any aspect of Lender's business in connection with
the exercise of such authority or claimed authority, (iv) which is required
pursuant to a subpoena, or (v) in connection with the exercise by Lender of any
of its rights under the Loan Agreement or any other Loan Document after the
occurrence of an Event of Default; and
(b) Delivered to Lender, each in form and substance satisfactory to Lender
and duly executed by Borrower, amendments to the Trademark Assignment, the
Patent Assignment, and the Copyright Assignment and such other documents as
shall be deemed necessary by Lender in order for Lender to have a valid first
priority Lien on all intellectual property of Borrower; and
(c) Delivered to Lender, each in form and substance satisfactory to Lender
and duly executed by each Person a party thereto, such amendments to the Mexican
Security Documents as shall be deemed necessary by Lender to reflect the
transactions contemplated by this Amendment.
(ii) Unless waived or extended in writing in Lender's sole discretion, on or
before fifteen days after the date of execution of this Amendment, Borrower
shall have delivered to Lender the relevant insurer's acknowledgment to each of
the Assignment of Business Interruption Insurance Policy and Assignment of
Political Risk Insurance Policy.
(iii) The failure of Borrower to satisfy any of the covenants set forth in
this Section 3.02 shall constitute an immediate Event of Default under the Loan
------------
Agreement, without any period of grace or other cure period.
ARTICLE IV
Limited Waiver
--------------
Upon satisfaction of the conditions and covenants set forth in Section 3.01
------------
of this Amendment, Lender hereby waives any Default or Event of Default which
occurred solely from the Borrower failing to maintain, on a Consolidated basis,
a ratio of (i) total Indebtedness, to (ii) Tangible Net Worth of not more than
the ratio specified in Section 9.3(B) of the Loan Agreement for the period of
---------------
April 30, 1997 through July 31, 1997, each of which is a violation of Section
-------
9.3(B) of the Loan Agreement. Except as otherwise specifically provided for in
-------
this
21
Amendment, nothing contained in this Amendment shall be construed as a waiver by
Lender of any covenant or provision of the Loan Agreement, the other Loan
Documents, this Amendment, or of any other contract or instrument between
Borrower and Lender, and the failure of Lender at any time or times hereafter to
require strict performance by Borrower of any provision thereof shall not waive,
affect or diminish any right of Lender to thereafter demand strict compliance
therewith. Lender hereby reserves all rights granted under the Loan Agreement,
the other Loan Documents, this Amendment and any other contract or instrument
between Borrower and Lender.
ARTICLE V
Ratifications, Representations and Warranties
---------------------------------------------
5.01 Ratifications. The terms and provisions set forth in this Amendment
-------------
shall modify and supersede all inconsistent terms and provisions set forth in
the Loan Agreement and the other Loan Documents, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the Loan
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. Borrower and Lender agree that the Loan
Agreement and the other Loan Documents, as amended hereby, shall continue to be
legal, valid, binding and enforceable in accordance with their respective terms.
5.02 Representations and Warranties. Borrower hereby represents and
------------------------------
warrants to Lender that (a) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the Certificate of Incorporation or
Bylaws of Borrower; (b) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any other Loan Documents are true and correct
on and as of the date hereof and on and as of the date of execution hereof as
though made on and as of each such date; (c) no Default or Event of Default
under the Loan Agreement, as amended hereby, has occurred and is continuing; (d)
Borrower is in full compliance with all covenants and agreements contained in
the Loan Agreement and the other Loan Documents, as amended hereby; (e) the
Borrower's Certificate of Incorporation and Bylaws are in full force and effect
on and as of the date hereof without modification or amendment in any respect
since November 1, 1996; (f) as of the date hereof, (i) Borrower is in existence
and in corporate and tax good standing in the State of its organization, (ii)
the Borrower is qualified to do business as a foreign corporation and is in
corporate and tax good standing in each jurisdiction where Borrower is doing
business and is required to be so qualified, (iii) Borrower does not owe
franchise taxes or other taxes required to maintain its corporate existence and
no franchise tax reports are due, and (iv) no proceedings are pending for
forfeiture of the Borrower's charter or for its dissolution either voluntarily
or involuntarily; and (g) the officer of Borrower executing this Amendment has
been duly elected and is, at present, qualified and acting in the office
indicated below such officer's name and is duly authorized to execute this
Amendment on behalf of Borrower.
22
ARTICLE VI
Miscellaneous Provisions
------------------------
6.01 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made in the Loan Agreement or any other Loan Document, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Lender or any closing shall affect the
representations and warranties or the right of Lender to rely upon them.
6.02 Reference to Loan Agreement. Each of the Loan Agreement and the other
---------------------------
Loan Documents, and any and all other agreements, documents or instruments now
or hereafter executed and delivered pursuant to the terms hereof or pursuant to
the terms of the Loan Agreement, as amended hereby, are hereby amended so that
any reference in the Loan Agreement and such other Loan Documents to the Loan
Agreement shall mean a reference to the Loan Agreement, as amended hereby.
6.03 Expenses of Lender. As provided in the Loan Agreement, Borrower
------------------
agrees to pay on demand all costs and expenses incurred by Lender in connection
with the preparation, negotiation and execution of this Amendment and the other
Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including, without limitation, the costs
and fees of Lender's legal counsel, and all costs and expenses incurred by
Lender in connection with the enforcement or preservation of any rights under
the Loan Agreement, as amended hereby, or any other Loan Documents, including,
without, limitation, the costs and fees of Lender's legal counsel.
6.04 Severability. Any provision of this Amendment held by a court of
------------
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
6.05 Successors and Assigns. This Amendment is binding upon and shall
----------------------
inure to the benefit of Lender and Borrower and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.
6.06 Counterparts. This Amendment may be executed in one or more counterparts,
------------
each of which when so executed shall be deemed to be an original, but all of
which when taken together shall constitute one and the same instrument.
6.07 Effect of Waiver. No consent or waiver, express or implied, by Lender
----------------
to or for any breach of or deviation from any covenant or condition by Borrower
shall be deemed a consent to or waiver of any other breach of the same or any
other covenant, condition or duty.
6.08 Headings. The headings, captions, and arrangements used in this
--------
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
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6.09 Applicable Law. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED
--------------
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
6.10 Final Agreement. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,
---------------
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND
LENDER.
6.11 Release. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
-------
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS,
AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER,
KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND THE NEGOTIATION
OF AND EXECUTION OF THIS AMENDMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Amendment has been executed and is effective as of
the date first above-written.
"LENDER"
FLEET CAPITAL CORPORATION
By:
-------------------------------------
Xxxxx XxxXxxxx, Vice President
"BORROWER"
LOWRANCE ELECTRONICS, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxxx, President
LEI EXTRAS, INC.
By:
-------------------------------------
Xxxxxx X. Xxxxxxxxx, President
LOWRANCE CONTRACTS, INC.
By:
-------------------------------------
Xxxxx X. Xxxxx, Vice President
SEA ELECTRONICS, INC.
By:
-------------------------------------
Xxxxxx X. Xxxxxxxxx, President
25
