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SECOND AMENDMENT TO CREDIT AGREEMENT
Dated as of July 21, 1998
Between
INTERNATIONAL COMFORT PRODUCTS CORPORATION (CANADA)
(FORMERLY KNOWN AS INTER-CITY PRODUCTS CORPORATION (CANADA))
as Borrower and Loan Party
and
X.X. XXXXXXXX SUPPLY LIMITED,
as Loan Party
and
THE LENDER OR LENDERS NAMED IN
THE CREDIT AGREEMENT
as Lenders
and
GENERAL ELECTRIC CAPITAL CANADA INC.
as Agent
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SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement dated as of July 21, 1998 (this
"SECOND AMENDMENT") between INTERNATIONAL COMFORT PRODUCTS CORPORATION
(CANADA) (formerly known as Inter-City Products Corporation (Canada)), a
Canada Corporation ("BORROWER"), X.X. XXXXXXXX SUPPLY LIMITED, an Ontario
corporation, ("MCDONALD"), each of the lenders listed on the signature pages
hereof or which pursuant to Section 10.2 of the Credit Agreement becomes a
"Lender" (each, a "LENDER", and, collectively, "LENDERS"), and GENERAL
ELECTRIC CAPITAL CANADA INC., a Canada corporation, as agent hereunder for
Lenders (in such capacity, together with its successors in such capacity,
"AGENT").
RECITALS
A. Borrower, McDonald, Agent and Lenders are parties to a Credit
Agreement dated as of December 19, 1996, as amended by First Amendment to
Credit Agreement dated as of May 13, 1998 between Borrower, McDonald, Agent
and Lenders (the "CREDIT AGREEMENT").
B. The Borrower has requested that Agent and Lenders further amend the
Credit Agreement in order to modify the financial covenants of the Borrower.
C. Agent and Lenders have agreed to grant the Borrower's request and
amend the Credit Agreement for the purpose described in Recital B of this
Second Amendment upon the terms and conditions set out in this Second
Amendment.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 INTERPRETATION
1.1 DEFINITIONS. In addition to the defined terms appearing above,
capitalized terms used in this Second Amendment have (unless otherwise
provided elsewhere in this Second Amendment) the meanings given to them in
the Credit Agreement.
1.2 INCORPORATION INTO CREDIT AGREEMENT. The Credit Agreement and this
Second Amendment shall henceforth be read together and shall have the effect
as if all the provisions of such agreements were contained in one instrument.
1.3 SECTION TITLES. The Section titles and Table of Contents contained in
this Second Amendment are and shall be without substantive meaning or content
of any kind whatsoever and are not a part of this Second Amendment.
1.4 INTERPRETATION. Except as otherwise provided for herein, the rules of
construction set forth in Annex A of the Credit Agreement shall govern the
interpretation of this Second Amendment. References to Sections contained in
the text of this Second Amendment, unless otherwise indicated, are references
to the Credit Agreement.
SECTION 2 REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to enter
into this Second Amendment, Borrower makes the following representations and
warranties to Agent and Lenders with respect to itself and McDonald, and
McDonald makes the following representations and warranties to Agent and
Lenders, which representations and warranties shall continue to be effective
as of and after the Effective Date and shall be continuously made until the
Termination Date:
(1) the execution, delivery and performance by each Loan Party of
this Second Amendment are within the corporate powers of the
applicable Loan Party, have been duly authorized by all necessary
corporate and shareholder action, are not in contravention of any
provision of any Loan Party's articles, certificate of
incorporation, bylaws or other organizational documents, will not
violate any Applicable Laws, will not conflict with or result in
the breach or termination of, constitute a default under or
accelerate any performance required by any indenture, mortgage,
deed of trust, lease, agreement or other instrument to which any
Loan Party is a party or by which any Loan Party or any of its
property is bound, will not result in the creation or imposition
of any Lien upon any of the property of any Loan Party; and do
not require the consent or approval of any Governmental Body or
any other Person;
(2) this Second Amendment has been duly authorized, executed and
delivered by each Loan Party and this Second Amendment and the
Credit Agreement, as amended by this Second Amendment, constitute
legal, valid and binding obligations of each Loan Party,
enforceable against each Loan Party in accordance with their
terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally; and
(3) after giving effect to this Second Amendment, no Default or Event
of Default shall have occurred and be continuing.
2.2 REPRESENTATIONS AND WARRANTIES IN CREDIT AGREEMENT. The Loan Parties
represent and warrant that the representations and warranties contained in
the Credit Agreement are or were correct on the dates made or deemed to be
made.
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SECTION 3 CONDITIONS PRECEDENT
3.1 CONDITIONS TO THE EFFECTIVENESS OF THE SECOND AMENDMENT. This Second
Amendment shall become effective on the date upon which the following
condition has been fulfilled to the satisfaction of the Agent (the "EFFECTIVE
DATE"):
(1) this Second Amendment or counterparts thereof shall have been
duly executed by, and delivered to, each Loan Party, Agent and
Lenders.
SECTION 4 AMENDMENTS TO ANNEXES TO CREDIT AGREEMENT
4.1 AMENDMENTS TO SECTION 1 OF ANNEX A - DEFINITIONS; RULES OF CONSTRUCTION.
(1) INSERTION OF DEFINITION - "ADJUSTED EBITDA". On and after the
Effective Date, the definition of "ADJUSTED EBITDA" is inserted into Annex A
to the Credit Agreement in the applicable alphabetical order as follows:
ADJUSTED EBITDA shall mean, with respect to any fiscal period of
Borrower,
(a) EBITDA;
PLUS
(b) Foreign Exchange Expense to the extent deducted in determining Net
Income;
MINUS
(c) Foreign Exchange Gain to the extent added in determining Net
Income.
(2) INSERTION OF DEFINITION - "FOREIGN EXCHANGE EXPENSE". On and after
the Effective Date, the definition of "FOREIGN EXCHANGE EXPENSE" is inserted
into Annex A to the Credit Agreement in the applicable alphabetical order as
follows:
FOREIGN EXCHANGE EXPENSE shall mean with respect to any fiscal period
of Borrower, the net decrease in Net Income attributable to exchange
rate fluctuations affecting the Canadian Dollar Equivalent Amount of
ordinary course obligations payable by Borrower, or receivables
payable to Borrower, in USD.
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(3) INSERTION OF DEFINITION - "FOREIGN EXCHANGE GAIN". On and after the
Effective Date, the definition of "FOREIGN EXCHANGE GAIN" is inserted into
Annex A to the Credit Agreement in the applicable alphabetical order as
follows:
FOREIGN EXCHANGE GAIN shall mean with respect to any fiscal period of
Borrower, the net increase in Net Income attributable to exchange rate
fluctuations affecting the Canadian Dollar Equivalent Amount of
ordinary course obligations payable by Borrower, or receivables
payable to Borrower, in USD.
4.2 AMENDMENT TO SECTION 1(A) OF ANNEX G - MINIMUM OPERATING CASH FLOW TO
INTEREST EXPENSE RATIO. On and after the Effective Date, Section 1(a) of
Annex G to the Credit Agreement is amended and restated as follows:
(a) MINIMUM OPERATING CASH FLOW TO INTEREST EXPENSE RATIO. Borrower
shall maintain (or cause to be maintained):
(1) as of the end of each Fiscal Quarter ending from and after
December 31, 1996 up to and including June 30, 1998, for each
Rolling Period, a ratio of:
(i) EBITDA in respect of such Rolling Period, MINUS Capital
Expenditures made during such Rolling Period, to
(ii) Interest Expense during such Rolling Period,
of not less than 1.25:1;
(2) as of the end of the Fiscal Quarter ending September 30, 1998
for the 9 month period then ended a ratio of:
(i) Adjusted EBITDA in respect of the 9 month period ending
September 30, 1998, MINUS Capital Expenditures made
during such 9 month period; to
(ii) Interest Expense during such 9 month period,
of not less than 0.27:1;
(3) as of the end of the Fiscal Quarter ending December 31, 1998
a ratio of:
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(i) Adjusted EBITDA in respect of the Fiscal Year ending December
31, 1998, MINUS Capital Expenditures made during such
Fiscal Year, to
(ii) Interest Expense during such Fiscal Year,
of not less than 1.25:1;
(4) as of the end of the Fiscal Quarter ending on March 31, 1999,
for the Rolling Period, a ratio of:
(i) Adjusted EBITDA in respect of that Rolling Period, MINUS
Capital Expenditures made during that Rolling Period, to
(ii) Interest Expense during such Rolling Period,
of not less than 0.7:1; and
(5) as of the end of each Fiscal Quarter ending on and after June
30, 1999, for each Rolling Period, a ratio of:
(i) Adjusted EBITDA in respect of such Rolling Period, MINUS
Capital Expenditures made during such Rolling Period, to
(ii) Interest Expense during such Rolling Period,
of not less than 1.25:1.
SECTION 5 REAFFIRMATION OF GUARANTEES AND OTHER LOAN DOCUMENTS
5.1 REAFFIRMATION. The Borrower and each of the Loan Parties acknowledge
and agree that all of the Loan Documents executed and delivered pursuant to
the Credit Agreement remain in full force and effect and hereby reaffirm all
of the terms thereof.
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SECTION 6 MISCELLANEOUS
6.1 AMENDMENT OF CREDIT AGREEMENT. The Credit Agreement has not been
amended or otherwise modified in any respect except pursuant to this Second
Amendment, and the Credit Agreement, as amended by this Second Amendment, is
in full force and effect.
6.2 REMEDIES. The rights and remedies of Agent and Lenders under this
Second Amendment shall be cumulative and nonexclusive of any other rights and
remedies which Agent or any Lenders may have under any other agreement,
including the Loan Documents, by operation of law or otherwise. Recourse to
the Collateral shall not be required.
6.3 SEVERABILITY. Wherever possible, each provision of this Second
Amendment shall be interpreted in such manner as to be effective and valid
under Applicable Laws, but if any provision of this Second Amendment shall be
prohibited by or invalid under Applicable Laws, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Second Amendment.
6.4 ENUREMENT. This Second Amendment shall be binding upon and shall
enure to the benefit of, each Loan Party, Agent and Lenders and their
respective successors and the assigns, transferees and endorsees of Agent and
any Lenders. Nothing in this Second Amendment, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns hereunder, any benefit or any legal or equitable right, remedy or
claim under this Second Amendment.
6.5 FURTHER ASSURANCES. Each Loan Party shall, from time to time, upon
each request by Agent, at Borrower's cost and expense, make, do, execute, or
cause to be made, done or executed, all such further and other lawful acts,
documents and assurances whatsoever which Agent determines in its reasonable
opinion may be necessary in order to give effect to the provisions, purposes
and intent of this Second Amendment and to complete the transactions
contemplated by this Second Amendment.
6.6 GOVERNING LAW. Except as otherwise provided in any of the Loan
Documents, in all respects, including all matters of construction, validity
and performance, this Second Amendment and the obligations arising hereunder
shall be governed by, and construed and enforced in accordance with, the laws
of the Province of Ontario applicable to contracts made and performed in such
Province, and any laws of Canada applicable therein without reference to
principles of conflicts of law. Each Loan Party hereby consents and agrees
that the courts located in the Province of Ontario shall have non-exclusive
jurisdiction to hear and determine any claims or disputes between such Loan
Party, Agent and Lenders pertaining to this Second Amendment or to any matter
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arising out of or relating to this Second Amendment; PROVIDED that nothing in
this Second Amendment shall be deemed to or shall operate to preclude Agent
from bringing suit or taking other legal action in any other jurisdiction to
collect amounts owing under this Second Amendment, realize on the Collateral
or any other security for the obligations or to enforce a judgment or other
court order in favour of Agent. Each Loan Party expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in
any such court and each Loan Party hereby waives any objection which such
Loan Party may have based upon lack of personal jurisdiction, improper venue
or FORUM NON CONVENIENS and hereby consents to the granting of such legal or
equitable relief as is deemed appropriate by such court. Each Loan Party
hereby waives personal service of process issued in any such action or suit
and agrees that service of process may be made by registered or certified
mail addressed to such Loan Party at the address set forth in Section 11.10
of the Credit Agreement and that service so made shall be deemed completed
upon the earlier of Borrower's actual receipt thereof or three Business Days
after deposit in the Canadian mail, proper postage prepaid; PROVIDED,
however, that if service of a process has been made by mail and before the
third Business Day after mailing there is a discontinuance or interruption of
regular postal service so that such service of process cannot be reasonably
expected to be completed within three Business Days after mailing, such
service of process shall be deemed to have been completed upon the Loan
Party's actual receipt thereof.
6.7 LOAN DOCUMENT. For greater certainty, this Second Amendment
constitutes a Loan Document.
6.8 COUNTERPARTS. This Second Amendment may be executed in any number of
separate counterparts which, collectively, shall constitute one Second
Amendment.
IN WITNESS WHEREOF the parties have executed this Second Amendment as of
the date first written above.
INTERNATIONAL COMFORT PRODUCTS
CORPORATION (CANADA)
By:
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Name: Xxxx Xxxxxxxxxx
Title:
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X.X. XXXXXXXX SUPPLY LIMITED
By:
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Name: Xxxx Xxxxxxxxxx
Title:
GENERAL ELECTRIC CAPITAL CANADA
INC., as Agent
By:
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Name: Xxxxxxxx Xxxxxxx
Title: Senior Vice President
GENERAL ELECTRIC CAPITAL CANADA
INC., as Lender
By:
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Name: Xxxxxxxx Xxxxxxx
Title: Senior Vice President
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