EXHIBIT 10.11
SIXTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY
AGREEMENT (the "Amendment') is dated as of April __, 2000, and is by and between
WSI INDUSTRIES, INC., formerly known as WASHINGTON SCIENTIFIC INDUSTRIES, INC.
(the "Borrower") and U.S. BANK NATIONAL ASSOCIATION as assignee of FBS BUSINESS
FINANCE CORPORATION (the "Lender"). Terms not otherwise expressly defined herein
shall have the meanings set forth in the Credit Agreement.
RECITALS
WHEREAS, the Borrower and the Lender are parties to an Amended and
Restated Credit and Security Agreement, dated as of March 31, 1995 as amended by
that certain First Amendment to Amended and Restated Credit and Security
Agreement dated as of April 20, 1995 and by a Waiver and Second Amendment to
Amended and Restated Credit and Security Agreement dated as of October 31, 1996,
a Third Amendment to Amended and Restated Credit and Security Agreement dated as
of April 30, 1997, by a Consent and Fourth Amendment to Amended and Restated
Credit and Security Agreement dated as of February 15, 1999 and by a Fifth
Amendment to Amended and Restated Credit and Security Agreement dated as of
August 6, 1999, (as so amended, the "Credit Agreement") under which the Lender
has agreed to make Advances to the Borrower; and
WHEREAS, the Borrower and the Lender desire to amend the Credit
Agreement as hereinafter set forth.
NOW THEREFORE, for value received, the Borrower and the Lender agree as
follows.
ARTICLE I - AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS.
1.1(A) Section 5.5 of the Credit Agreement is amended to read in its
entirety as follows:
5.5 BOOKS, RECORDS AND ACCESS. Maintain, and cause each
Subsidiary to maintain, complete and accurate books and records
(including, without limitation, records relating to Accounts
Receivable, Inventory, Equipment and other Collateral), in which
full and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its respective
business and activities. Cause its books and records as at the
end of any accounting period to be posted and closed not more
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than 15 days after the last business day of such period. Permit,
and cause each Subsidiary to permit, access by the Lender and its
agents or employees to the books and records of the Borrower and
such Subsidiary at the Borrower's or such Subsidiary's place or
places of business at intervals to be determined by the Lender
and without hindrance or delay, and permit, and cause each
Subsidiary to permit, the Lender or its agents and employees to
inspect the Borrower's Inventory and Equipment and such
Subsidiary's inventory and equipment and to inspect, audit, check
and make copies and/or extracts from the books, records,
journals, orders, receipts correspondence and other data relating
to Inventory, Accounts Receivable, chattel paper, General
Intangibles, Equipment and any other Collateral or Third Party
Collateral, or to any other transactions between the parties
hereto. Any and all such inspections and/or audits shall be at
the Borrower's expense. If no Event of Default or Unmatured Event
of Default shall have occurred and be continuing, the Lender's
audit described in the third sentence of this Section 5.5 shall
be limited to no more than three such audits in any fiscal year
of Borrower; provided, however, that if (i) no Event of Default
or Unmatured Event of Default shall have occurred and be
continuing, and (ii) the average daily amount of outstanding
Revolving Loans is $500,000 or less, then the Lender shall be
limited to no more than one such audit in any fiscal year of
Borrower.
1.1(B) Supplement A to the Credit Agreement is hereby amended to
read in its entirety in the form of Supplement A attached hereto as
Exhibit A.
1.2 CONSTRUCTION. All references in the Credit Agreement to "this
Agreement", "herein" and similar references shall be deemed to refer to
the Credit Agreement as amended by this Amendment.
ARTICLE III- REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Amendment and to make and
maintain the Loans under the Credit Agreement as amended hereby, the Borrower
hereby warrants and represents to the Lender that it is duly authorized to
execute and deliver this Amendment, and to perform its obligations under the
Agreement as amended hereby, and that this Amendment constitutes the legal,
valid and binding obligation of the Borrower, enforceable in accordance with its
terms.
ARTICLE IV - CONDITIONS PRECEDENT
This Amendment shall become effective as of the date first set forth
above, provided, however, that the effectiveness of this Amendment is subject to
the satisfaction of each of the following conditions precedent.
4.1 EXECUTION OF AMENDMENT AND SUPPLEMENT A. The Borrower and the Lender
shall have executed this Amendment and initialed Supplement A as amended
pursuant hereto and the Borrower has executed and delivered a Fifth Amendment to
Mortgage and Extension Agreement in the form provided by the Lender.
4.2 WARRANTIES. Before and after giving effect to this Amendment, the
representations and warranties in Article IV of the Credit Agreement shall be
true and correct as though made on the date hereof, except for changes that are
permitted by the terms of the Credit Agreement. The execution by the Borrower of
this Amendment shall be deemed a representation that the Borrower has complied
with the foregoing condition.
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4.3 DEFAULTS. After giving effect to this Amendment, no Event of Default
and no Unmatured Event of Default shall have occurred and be continuing under
the Credit Agreement. The execution by the Borrower of this Amendment shall be
deemed a representation that the Borrower has complied with the foregoing
condition.
4.4 DOCUMENTS. The following shall have been delivered to the Lender,
each duly executed and dated, or certified, as of the date hereof (or as
required below), as the case may be:
(a) RESOLUTIONS. Certified copies of resolutions of the Board of
Directors of the Borrower authorizing or ratifying the execution,
delivery and performance, respectively, of this Amendment and other
documents (if any) provided for in this Amendment.
(b) CONSENTS. Certified copies of all documents evidencing any
necessary corporate action, consent or governmental or regulatory
approval (if any) with respect to this Amendment.
(c) INCUMBENCY AND SIGNATURES. A certificate of the Secretary or
an Assistant Secretary of the Borrower certifying the names of the
officer or officers of the Borrower authorized to sign this Amendment
and other documents provided for in this Amendment, together with a
sample of the true signature of each such officer.
(d) REAFFIRMATION OF GUARANTY OF TAURUS AND XXXXXX. A
reaffirmation of the guaranty and third party security agreement of
Taurus Numeric Tool, Inc. and of Xxxxxx Tool and Machining, Inc. of all
obligations of Borrower, in form and in substance acceptable to Lender.
ARTICLE V - GENERAL
5.1 EXPENSES. The Borrower agrees to reimburse the Lender upon demand
for all reasonable expenses (including reasonable attorneys' fees and legal
expenses) incurred by this Lender in the preparation, negotiation and execution
of this Amendment and any other document required to be furnished herewith, and
in enforcing the obligations of the Borrower hereunder, and to pay and save the
Lender harmless from all liability for, any stamp or other taxes which may be
payable with respect to the execution or delivery of this Amendment hereunder,
which obligations of the Borrower shall survive any termination of the Credit
Agreement.
5.2 COUNTERPARTS. This Amendment may be executed in as many counterparts
as may be deemed necessary or convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
instrument.
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5.3 SEVERABILITY. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
5.4 LAW. This Amendment shall be a contract made under the laws of the
State of Minnesota, which laws shall govern all the rights and duties hereunder.
5.5 SUCCESSORS; ENFORCEABILITY. This Amendment shall be binding upon the
Borrower and the Lender and their respective successors and assigns, and shall
inure to the benefit of the Borrower and the Lender and the successors and
assigns of the Lender. Except as hereby amended, the Credit Agreement shall
remain in full force and effect and is hereby ratified and confirmed in all
respects.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed at Minneapolis, Minnesota by their respective officers thereunto duly
authorized as of the date first written above.
WSI INDUSTRIES, INC. (formerly known as
Washington Scientific Industries, Inc.)
By:
------------------------------------
Title:
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U.S. BANK NATIONAL ASSOCIATION, as
Assignee of FBS BUSINESS FINANCE
CORPORATION
By:
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Title:
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EXHIBIT 10.11
SUPPLEMENT A
(AMENDED APRIL __, 2000)
TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
DATED AS OF MARCH 31, 1995 BETWEEN
U.S. BANK NATIONAL ASSOCIATION AS ASSIGNEE OF
FBS BUSINESS FINANCE CORPORATION (THE "LENDER")
AND
WSI INDUSTRIES, INC. FORMERLY KNOWN AS
WASHINGTON SCIENTIFIC INDUSTRIES, INC. (THE "BORROWER")
1. CREDIT AGREEMENT REFERENCE. This Supplement A, as it may be amended
or modified from time to time, is a part of the Amended and Restated Credit and
Security Agreement, dated as of March 31, 1995, between the Borrower and the
Lender (together with all amendments, modifications and supplements thereto, the
"Credit Agreement"). Capitalized terms used herein which are defined in the
Credit Agreement shall have the meanings given such terms in the Credit
Agreement unless the context otherwise requires.
2. DEFINITIONS.
2.1 REVOLVING CREDIT AMOUNT. The term "Revolving Credit Amount"
shall mean the maximum amount of Revolving Loans which the Lender will
make available to the Borrower which amount shall not exceed THREE
MILLION AND NO/100 DOLLARS ($3,000,000); provided, however, that the
aggregate outstanding principal balance of the Revolving Loans plus the
Letter of Credit Obligations shall not exceed the Revolving Credit
Amount.
2.2 BORROWING BASE.
(a) DEFINITION. The term "Borrowing Base" shall mean the
sum of (i) an amount of up to 85% of the net amount (as
determined by the Lender after deduction of such reserves and
allowances as the Lender deems proper and necessary) of the
Borrower's, Taurus's and Xxxxxx'x Eligible Accounts Receivable,
plus (ii) the lesser of (x) 50% of the Borrower's and Xxxxxx'x
Eligible Inventory (as determined by the Lender after deduction
of such reserves and allowances as the Lender deems proper and
necessary), or (y) $1,400,000.
(b) LENDER'S RIGHTS. The Borrower agrees that nothing
contained in this Supplement A (a) shall be construed as the
Lender's agreement to resort or look to a particular type or item
of Collateral or as security for any specific Loan or advance or
in any way limit the Lender's right to resort to any or all of
the Collateral or as security for any of the Obligations, (b)
shall be deemed to limit or reduce any lien on or any security
interest in or upon any portion of the Collateral or other
security for the Obligations or (c) shall supersede Section 2.10
of the Credit Agreement.
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2.3 LETTER OF CREDIT SUBLIMIT. The term "Letter of Credit
Sublimit" shall mean the sum of $300,000.
2.4 TERMINATION DATE. The term "Termination Date" shall mean
March 31, 2002.
2.5 ADDITIONAL DEFINITIONS. As used herein, the following terms
shall have the following respective meanings:
"Adjusted Eurodollar Rate": With respect to each Interest
Period applicable to a Eurodollar Rate Advance, the rate (rounded
upward, if necessary, to the next one hundredth of one percent)
determined by dividing the Eurodollar Rate for such Interest
Period by 1.00 minus the Eurodollar Reserve Percentage.
"Advance": Any portion of the outstanding principal
balance of the Revolving Loan or the Term Loan under the Credit
Agreement as to which the Borrower elected one of the available
interest rate options and, if applicable, an Interest Period. An
Advance may be a Eurodollar Rate Advance or a Reference Rate
Advance.
"Applicable Revolving Margin": With respect to:
(a) Reference Rate Advances: 0.50%.
(b) Eurodollar Rate Advances: 3.00%.
"Applicable Term Margin": With respect to:
(a) Reference Rate Advances: 0.75%.
(b) Eurodollar Rate Advances: 3.25%.
"Board": The Board of Governors of the Federal Reserve
System or any successor thereto.
"Eurodollar Business Day": A Business Day which is also a
day for trading by and between Lenders in United States dollar
deposits in the interbank Eurodollar market and a day on which
banks are open for business in New York City.
"Eurodollar Rate": With respect to each Interest Period
applicable to a Eurodollar Rate Advance, the interest rate per
annum (rounded upward, if necessary, to the next one-sixteenth of
one percent) at which United States dollar deposits are offered
to the Lender in the interbank Eurodollar market two Eurodollar
Business Days prior to the first day of such Interest Period for
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delivery in Immediately Available Funds on the first day of such
Interest Period and in an amount approximately equal to the
Advance to which such Interest Period is to apply as determined
by the Lender and for a maturity comparable to the Interest
Period; provided, that in lieu of determining the rate in the
foregoing manner, the Lender may substitute the per annum
Eurodollar interest rate (LIBOR) for United States dollars
displayed on the Reuters Screen LIBO Page two Eurodollar Business
Days prior to the first day of the Interest Period. "Reuters
Screen LIBO Page" means the display designated as page "LIBO" on
the Reuter Monitor Money Rates Screen (or such other page as may
replace the LIBO page on that service) for the purpose of
displaying London Interbank offered rates of major Lenders for
United States dollar deposits.
"Eurodollar Rate Advance": An Advance with respect to
which the interest rate is determined by reference to the
Adjusted Eurodollar Rate.
"Eurodollar Reserve Percentage": As of any day, that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board for determining the maximum
reserve requirement (including any basic, supplemental or
emergency reserves) for a member Lender of the Federal Reserve
System, with deposits comparable in amount to those held by the
Lender, in respect of "Eurocurrency Liabilities" as such term is
defined in Regulation D of the Board. The rate of interest
applicable to any outstanding Eurodollar Rate Advances shall be
adjusted automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Interest Period": With respect to each Eurodollar Rate
Advance, the period commencing on the date of such Advance or on
the last day of the immediately preceding Interest Period, if
any, applicable to an outstanding Advance and ending one, two or
three months thereafter, as the Borrower may elect in the
applicable notice of borrowing, continuation or conversion;
provided that:
(1) Any Interest Period that would otherwise end on
a day which is not a Eurodollar Business Day shall be
extended to the next succeeding Eurodollar Business Day
unless such Eurodollar Business Day falls in another
calendar month, in which case such Interest Period shall
end on the next preceding Eurodollar Business Day;
(2) Any Interest Period that begins on the last
Eurodollar Business Day of a calendar month (or a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall
end on the last Eurodollar Business Day of a calendar
month; and
(3) Any Interest Period that would otherwise end
after the Termination Date shall end on the Termination
Date.
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"Reference Rate": The rate of interest from time to time
publicly announced by the Lender as its "reference rate." The
Lender may lend to its customers at rates that are at, above or
below the Reference Rate. For purposes of determining any
interest rate hereunder or under any Note or loan which is based
on the Reference Rate, such interest rate shall change as and
when the Reference Rate shall change.
"Reference Rate Advance": An Advance with respect to
which the interest rate is determined by reference to the
Reference Rate.
"Regulatory Change": Any change after the date of the
Credit Agreement in federal, state or foreign laws or regulations
or the adoption or making after such date of any interpretations,
directives or requests applying to a class of Lenders including
the Lender under any federal, state or foreign laws or
regulations (whether or not having the force of law) by any court
or governmental or monetary authority charged with the
interpretation or administration thereof.
3. INTEREST; FEES.
3.1 PROCEDURE FOR ADVANCES. Any request for an Advance must be
given so as to be received by the Lender not later than 1:00 p.m.
(Minneapolis time) two Eurodollar Business Days prior to the date of the
requested Advance if the Advance is requested as a Eurodollar Rate
Advance and not later than 1:00 p.m. on the date of the requested
Advance if the Advance is requested as a Reference Rate Advance. Each
request for an Advance shall specify (i) the date of the Advance, (ii)
the amount of the Advance to be made on such date which shall be in a
minimum amount of $5,000 for Reference Rate Advances, or $500,000 for
Eurodollar Rate Advances or, if more in either case, an integral
multiple thereof, (iii) whether such Advance is to be funded as a
Reference Rate Advance or a Eurodollar Rate Advance, and (iv) in the
case of a Eurodollar Rate Advance, the duration of the initial Interest
Period applicable thereto.
3.2 CONVERSIONS AND CONTINUATIONS. On the terms and subject to
the limitations hereof, the Borrower shall have the option at any time
and from time to time to convert all or any portion of the Advances into
Reference Rate Advances or Eurodollar Rate Advances, or to continue a
Eurodollar Rate Advance as such; provided, however that a Eurodollar
Rate Advance may be converted or continued only on the last day of the
Interest Period applicable thereto and no Advance may be converted or
continued as a Eurodollar Rate Advance if a Default or Event of Default
has occurred and is continuing on the proposed date of continuation or
conversion. Advances may be converted to, or continued as, Eurodollar
Rate Advances only in amounts of $500,000 or an integral multiple
thereof. The Borrower shall give the Lender written notice of any
continuation or conversion of any Advance and such notice must be given
so as to be received by the Lender not later than 3:00 p.m. (Minneapolis
time) two Eurodollar Business Days prior to requested date of conversion
or continuation in the case of the continuation of, or conversion to, a
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Eurodollar Rate Advance. Each such notice shall specify (a) the amount
to be continued or converted, (b) the date for the continuation or
conversion (which must be (i) the last day of the preceding Interest
Period for any continuation or conversion of Eurodollar Rate Advances,
and (ii) a Eurodollar Business Day), and (c) in the case of conversions
to or continuations as Eurodollar Rate Advances, the Interest Period
applicable thereto. Any notice given by the Borrower under this Section
shall be irrevocable. If the Borrower shall fail to notify the Lender of
the continuation of any Eurodollar Rate Advance within the time required
by this Section, such Advance shall, on the last day of the Interest
Period applicable thereto, automatically be converted into a Reference
Rate Advance of the same principal amount.
3.3 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST.
Interest shall accrue and be payable on the Advances as follows:
3.3(a) Each Eurodollar Rate Advance on the Revolving Loan
shall bear interest on the unpaid principal amount thereof during
the Interest Period applicable thereto at a rate per annum equal
to the sum of (i) the Adjusted Eurodollar Rate for such Interest
Period, plus (ii) the Applicable Revolving Margin.
3.3(b) Each Reference Rate Advance on the Revolving Loan
shall bear interest on the unpaid principal amount thereof at a
varying rate per annum equal to the sum of (i) the Reference
Rate, plus (ii) the Applicable Revolving Margin.
3.3(c) Each Eurodollar Rate Advance on the Term Loan shall
bear interest on the unpaid principal amount thereof during the
Interest Period applicable thereto at a rate per annum equal to
the sum of (i) the Adjusted Eurodollar Rate for such Interest
Period, plus (ii) the Applicable Term Margin.
3.3(d) Each Reference Rate Advance on the Term Loan shall
bear interest on the unpaid principal amount thereof at a varying
rate per annum equal to the sum of (i) the Reference Rate, plus
(ii) the Applicable Term Margin.
3.3(e) Any Advance not paid when due, whether at the date
scheduled therefor or earlier upon acceleration, shall bear
interest until paid in full at the Default Rate, which shall be
(i) during the balance of any Interest Period applicable to such
Advance, at a rate per annum equal to the sum of the rate
applicable to such Advance during such Interest Period plus 2.0%,
and (ii) otherwise, at a rate per annum equal to the sum of the
rate otherwise applicable to such Advance plus 2.0% per annum.
3.3(f) Interest shall be payable (i) with respect to each
Eurodollar Rate Advance having an Interest Period of three months
or less, on the last day of the Interest Period applicable
thereto; (ii) with respect to any Reference Rate Advance, on the
last day of each month; (iii) with respect to all Advances, upon
any permitted prepayment (on the amount prepaid); and (v) with
respect to all Advances, on the Termination Date; provided that
interest under Section 3.3 (e) shall be payable on demand.
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3.4 OPTIONAL PREPAYMENTS. The Borrower may prepay Reference Rate
Advances on the Revolving Loan, in whole or in part, at any time,
without premium or penalty. Any such prepayment must be accompanied by
accrued and unpaid interest on the amount prepaid. Each partial
prepayment shall be in a minimum amount of $10,000 or, if more, an
integral multiple thereof. Except upon an acceleration following an
Event of Default or upon termination of the Credit in whole or as
otherwise required under the Credit Agreement, the Borrower may pay
Eurodollar Rate Advances only on the last day of the Interest Period
applicable thereto. Amounts paid (unless following an acceleration or
upon termination of the Credit in whole) or prepaid on Advances under
this Section 3.4 may be reborrowed upon the terms and subject to the
conditions and limitations of the Credit Agreement. Prepayment of the
Term Loan is also subject to the provisions of Section 3.13 below.
3.5 INTEREST RATE NOT ASCERTAINABLE, ETC. If, on or prior to the
date for determining the Adjusted Eurodollar Rate in respect of the
Interest Period for any Eurodollar Rate Advance, the Lender determines
(which determination shall be conclusive and binding, absent error)
that:
(a) deposits in dollars (in the applicable amount) are not
being made available to the Lender in the relevant market for
such Interest Period, or
(b) the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to the Lender of funding or maintaining
Eurodollar Rate Advances for such Interest Period,
the Lender shall forthwith give notice to the Borrower of such
determination, whereupon the obligation of the Lender to make or continue,
or to convert any Advances to, Eurodollar Rate Advances, as the case may
be, shall be suspended until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist. While any
such suspension continues, all further Advances by the Lender shall be
made as Reference Rate Advances. No such suspension shall affect the
interest rate then in effect during the applicable Interest Period for any
Eurodollar Rate Advance outstanding at the time such suspension is
imposed.
3.6 INCREASED COST. If any Regulatory Change:
(a) shall subject the Lender to any tax, duty or other
charge with respect to its Eurodollar Rate Advances, its
obligation to make Eurodollar Rate Advances or shall change the
basis of taxation of payment to the Lender of the principal of or
interest on Eurodollar Rate Advances or any other amounts due
under this Agreement in respect of Eurodollar Rate Advances or
its obligation to make Eurodollar Rate Advances (except for
changes in the rate of tax on the overall net income of the
Lender imposed by the jurisdiction in which the Lender's
principal office is located); or
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(b) shall impose, modify or deem applicable any reserve,
special deposit, capital requirement or similar requirement
(including, without limitation, any such requirement imposed by
the Board, but excluding with respect to any Eurodollar Rate
Advance any such requirement to the extent included in
calculating the applicable Adjusted Eurodollar Rate) against
assets of, deposits with or for the account of, or credit
extended by, the Lender or shall impose on the Lender or on the
interbank Eurodollar market any other condition affecting its
Eurodollar Rate Advances or its obligation to make Eurodollar
Rate Advances;
and the result of any of the foregoing is to increase the cost to the
Lender of making or maintaining any Eurodollar Rate Advance, or to reduce
the amount of any sum received or receivable by the Lender under this
Agreement or under the Note, then, within 30 days after demand by the
Lender, the Borrower shall pay to the Lender such additional amount or
amounts as will compensate the Lender for such increased cost or
reduction. The Lender will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will
entitle the Lender to compensation pursuant to this Section. A certificate
of the Lender claiming compensation under this Section, setting forth the
additional amount or amounts to be paid to it hereunder and stating in
reasonable detail the basis for the charge and the method of computation,
shall be conclusive in the absence of error. In determining such amount,
the Lender may use any reasonable averaging and attribution methods.
Failure on the part of the Lender to demand compensation for any increased
costs or reduction in amounts received or receivable with respect to any
Interest Period shall not constitute a waiver of the Lender's rights to
demand compensation for any increased costs or reduction in amounts
received or receivable in any subsequent Interest Period.
3.7 ILLEGALITY. If any Regulatory Change shall make it unlawful
or impossible for the Lender to make, maintain or fund any Eurodollar
Rate Advances, the Lender shall notify the Borrower, whereupon the
obligation of the Lender to make or continue, or to convert any Advances
to, Eurodollar Rate Advances shall be suspended until the Lender
notifies the Borrower that the circumstances giving rise to such
suspension no longer exist. If the Lender determines that it may not
lawfully continue to maintain any Eurodollar Rate Advances to the end of
the applicable Interest Periods, all of the affected Advances shall be
automatically converted to Reference Rate Advances as of the date of the
Lender's notice, and upon such conversion the Borrower shall indemnify
the Lender in accordance with Section 3.8.
3.8 FUNDING LOSSES; EURODOLLAR RATE ADVANCES. The Borrower shall
compensate the Lender, upon its written request, for all losses,
expenses and liabilities (including any interest paid by the Lender to
lenders of funds borrowed by it to make or carry Eurodollar Rate
Advances to the extent not recovered by the Lender in connection with
the re-employment of such funds and including loss of anticipated
profits) which the Lender may sustain: (i) if for any reason, other than
a default by the Lender, a funding of a Eurodollar Rate Advance does not
occur on the date specified therefor in the Borrower's request or notice
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as to such Advance under Section 3.1 or 3.2, or (ii) if, for whatever
reason (including, but not limited to, acceleration of the maturity of
Advances following an Event of Default), any repayment of a Eurodollar
Rate Advance, or a conversion pursuant to Section 3.7, occurs on any day
other than the last day of the Interest Period applicable thereto. The
Lender's request for compensation shall set forth the basis for the
amount requested and shall be final, conclusive and binding, absent
error.
3.9 DISCRETION OF LENDER AS TO MANNER OF FUNDING. The Lender
shall be entitled to fund and maintain its funding of Eurodollar Rate
Advances in any manner it may elect, it being understood, however, that
for the purposes of this Agreement all determinations hereunder
(including, but not limited to, determinations under Section 3.8, but
excluding determinations that the Lender may elect to make from the
Telerate System, Inc. screen) shall be made as if the Lender had
actually funded and maintained each Eurodollar Rate Advance during the
Interest Period for such Advance through the purchase of deposits having
a maturity corresponding to the last day of the Interest Period and
bearing an interest rate equal to the Eurodollar Rate for such Interest
Period.
3.10 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over
Advances (including the Agreed Over Advance) shall bear interest at the
rate(s) determined pursuant to Section 2.7 or Section 2.8 of the Credit
Agreement, as applicable.
3.11 COMMITMENT FEE. The Borrower shall pay to the Lender a
commitment fee for the period from the date hereof to the date the
Credit terminates in an amount equal to .25% per annum on the average
daily Unused Revolving Credit Amount.
3.12 LETTER OF CREDIT FEES. The Borrower shall pay the Lender, or
any Affiliate, a commission on the undrawn amount of each Letter of
Credit and on each L/C Draft accepted by the Lender, or such Affiliate,
in an amount equal to 2.0% per annum.
3.13 PREPAYMENT FEE. Upon prepayment in full of the Term Loan
pursuant to any third party refinancing of the same or in connection
with a sale of the Borrower or substantially all of its assets, the
Borrower shall pay to the Lender a prepayment fee in an amount equal to
one percent (1%) of the outstanding principal balance of the Term Loan;
provided, that if at the time of such prepayment the advance rate then
applicable to Eligible Accounts Receivable pursuant to Section 2.2(a) of
this Supplement A is less than 75%, the prepayment fee shall not be
applicable.
4. ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS.
(a) For Accounts Receivable which are due and payable in full
within 30 days of the date of the invoice evidencing such Account
Receivable, such Account Receivable must not be unpaid on the date that
is 60 days after the due date. For Accounts Receivable which are due and
payable in full within 60, 90 or 120 days of the date of the invoice
evidencing such Account Receivable, such Account Receivable must not be
unpaid on the date that is 30 days after the due date.
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(b) If invoices representing 10% or more of the unpaid net amount
of all Accounts Receivable from any one Account Debtor (25% on Accounts
Receivable from Account Debtors preapproved by the Lender) are unpaid
more than the number of days set forth in Section 4(a) above for such
Accounts Receivable, then all Accounts Receivable relating to such
Account Debtor shall cease to be Eligible Accounts Receivable.
5. ADDITIONAL COVENANTS. From the date of the Credit Agreement and
thereafter until all of the Borrower's Obligations under the Credit Agreement
are paid in full, the Borrower agrees that, unless the Lender shall otherwise
consent in writing, it will not, and will not permit any Subsidiary to, do any
of the following:
5.1 NET WORTH. Permit the Borrower's Net Worth at any time to be
less than $7,000,000.
5.2 LIABILITIES TO NET WORTH RATIO. Permit the ratio, as of the
last day of any fiscal quarter, of the Borrower's consolidated total
liabilities to the Borrower's Net Worth to exceed 4.0 to 1.0.
5.3 CAPITAL EXPENDITURES.
(a) Make Capital Expenditures in an amount exceeding
$3,000,000 on a consolidated basis in any fiscal year.
(b) Fund any Capital Expenditures with Revolving Loans in
an amount exceeding $1,000,000 in any fiscal year.
5.4 CASH FLOW COVERAGE RATIO.
(a) Permit the ratio of the Borrower's EBITDA to the sum
of (i) its consolidated interest expense (including, without
limitation, imputed interest expense on Capitalized Leases), plus
(ii) mandatory principal payments on Long Term Debt, plus (iii)
income taxes actually paid during such period, to be less than
(x) 0.75 to 1.0 as of November 24, 1996, for the four consecutive
fiscal quarters ending on that date and (y) 1.1 to 1.0 as of
February 23, 1997, for the four consecutive fiscal quarters
ending on that date.
(b) Permit the ratio, as of the last day of any fiscal
quarter, of the Borrower's EBITDA for the four consecutive fiscal
quarters ending on that date to the sum of (a) its consolidated
interest expense (including, without limitation, imputed interest
expense on Capitalized Leases), plus (b) mandatory principal
payments on Long Term Debt, plus (c) cash Capital Expenditures
not financed by Long Term Debt, plus (d) income taxes actually
paid during such period, to be less than 1.1 to 1.0.
Borrower's Initials
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Lender's Initials
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Dated as of , 2000
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