EXHIBIT 4.4
AMENDMENT NO. 2
TO RESTATED REVOLVING CREDIT AGREEMENT
This Amendment No. 2 to Restated Revolving Credit Agreement (the
"Second Amendment"), made as of this 28th day of March, 1997, among the
undersigned, amends that certain Restated Revolving Credit Agreement,
dated as of December 20, 1996, as amended by Amendment No. 1, dated
February 14, 1997 (as amended thereby and hereby, the "Agreement"), among
the Borrowers, the Agent, individually and as agent for itself and each of
the other Banks, and the Banks (as such terms are defined in the
Agreement).
Reference is made to the following facts:
A. The Borrowers, the Agent and the Banks have entered into the
Agreement pursuant to which the Banks have, on the terms and subject to
the conditions stated therein, made loans to the U.S. Borrower;
B. The Borrowers requested that the Agreement be amended to modify,
among other provisions, the financial covenants therein to avoid the
occurrence of an Event of Default; and
C. The Agent and the Banks have agreed to make the modifications
requested by the Borrowers solely in accordance with the terms and
conditions of this Second Amendment.
NOW, THEREFORE, in consideration of the premises and of good and
valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used herein which are
defined in the Agreement shall have the meanings herein as therein, except
as otherwise specifically provided herein.
Section 2. Amendments to the Loan Documents. From and after the
date hereof, the Agreement is hereby amended as follows:
2.1 The definitions in Section 1.1 of the Agreement are hereby
amended to provide as follows:
2.1.1 The definition of Availability is hereby amended to
provide in its entirety as follows:
"Availability. The sum of the U.S. Borrowing
Base, less $4,000,000, minus the Canadian Deficiency.
On and after June 30, 1997, Availability shall mean
the sum of the U.S. Borrowing Base, less $6,000,000,
minus the Canadian Deficiency."
2.1.2 The definition of EBITDA is hereby amended to delete
clauses (vi), (vii) and (viii) in their entirety, change the
numbering of clause (ix) to "(vii)," and add a new clause (vi) as
follows:
(vi) Unusual Allowances to the extent permitted under
Section 6.9, ..."
2.1.3 The definition of EBITDA to Cash Interest Expense
Ratio is hereby deleted in its entirety.
2.1.4 The definition of Xxxxxxxx Reserve is hereby amended
to delete the amount set forth in the second line, "$860,000," and
replace it with the following:
"$430,000..."
2.1.5 The definition of Letter of Credit Maximum Amount is
hereby amended to provide in its entirety as follows:
"Letter of Credit Maximum Amount. $10,000,000."
2.1.6 The definition of Maturity Date is hereby amended to
provide in its entirety as follows:
"Maturity Date. October 31, 2001, or such earlier
date upon acceleration pursuant to Section 7.2 of this
Agreement."
2.1.7 The definition of Qualified Investments is hereby
amended to provide in its entirety as follows:
"Qualified Investments. As applied to the
Borrowers, investments in (i) notes, bonds or other
obligations of the United States of America or any
agency thereof that as to principal and interest
constitute direct obligations of or are guaranteed by
the United States of America; (ii) certificates of
deposit or other deposit instruments or accounts of
banks or trust companies organized under the laws of
the United States or any state thereof that have
capital and surplus of at least $200,000,000,
(iii) commercial paper that is rated not less than
prime-one or A-1 or their equivalents by Xxxxx'x
Investors Service, Inc. or Standard & Poor's
Corporation, respectively, or their successors, and
(iv) any repurchase agreement secured by any one or
more of the foregoing."
2.1.8 Section 1.1 of the Agreement is hereby amended to
include the following additional definitions:
"Covenant Compliance Reports. See Section 5.1(f)."
"Fixed Charge Ratio. The ratio of (A) EBITDA
minus Capital Expenditures minus taxes on income
becoming due and payable or actually paid, to (B) Cash
Interest Expense plus payments of principal on
Indebtedness. The Fixed Charge Ratio shall be
measured as of the last day of the fiscal period of
the Borrowers, without duplication, for which such
measurements are made."
"Unusual Allowance. Losses or charges determined
in the reasonable good faith of the U.S. Borrower to
be one-time, nonrecurring, non-cash losses or charges
not arising in the ordinary course, including without
limitation one-time, nonrecurring, non-cash losses or
charges in connection with the disposition of a
segment of a business."
2.2 Subparagraph (ii) of Section 2.3 of the Agreement is hereby
amended to provide in its entirety as follows:
"(ii) In no event shall the aggregate outstanding
amount of Overadvances permitted pursuant to
Section 2.3(i) at any one time exceed
$0.00."
2.3 Section 2.8 of the Agreement is hereby amended to provide as
follows:
"2.8 U.S. Cash Management. The U.S. Borrower shall
deposit all cash, cash equivalents, checks, receipts
and proceeds arising out of the sale of any of the
Collateral into the Revenue Depository Accounts to be
held in trust by the U.S. Borrower for the Agent and
the U.S. Banks in accordance with the Cash Management
Agreements. By the close of business on each Business
Day, all funds in the Revenue Depository Accounts
shall be transferred to the Agent in accordance with
the Cash Management Agreements to be applied towards
the U.S. Borrower's Obligations in accordance with
this Agreement and the other Loan Documents. On or
before May 31, 1997, the U.S. Borrower shall transfer
all Revenue Depository Accounts located in the United
States to the Agent, shall commence and shall
continuously notify account debtors that all Accounts
Receivable shall be paid directly to the Revenue
Depository Accounts maintained with the Agent, and
thereafter shall deposit directly with the Agent all
cash, cash equivalents, checks, receipts and proceeds
arising out of the sale of any of the Collateral to be
applied toward the U.S. Borrower's Obligations in
accordance with this Agreement and the other Loan
Documents."
2.4 Section 2B.2(f) of the Agreement is hereby amended to provide in
its entirety as follows:
"(f) For purposes of this Section 2B.2, (i) the
"Applicable Base Rate Margin" for U.S. Loans
constituting Base Rate Loans shall be equal to 1.00%;
(ii) the "Applicable Base Rate Margin" for Canadian
Loans constituting Base Rate Loans shall be equal to
1.50%; and (iii) the "Applicable Eurodollar Margin"
shall be 2.75%."
2.5 The first proviso in the first sentence of Section 5.1(d) of the
Agreement is hereby amended to provide as follows:
"provided that commencing on Tuesday, April 1, 1997,
and continuing on each and every Tuesday thereafter,
the Borrowers shall deliver to the Agent, in addition
to the monthly Borrowing Base Reports, a written
report in substantially the same form as the Borrowing
Base Report setting forth the Canadian Borrowing Base
and the U.S. Borrowing Base as to Canadian Base
Accounts and U.S. Base Accounts as at the last
Business Day of the immediately prior week (the
"Weekly Base Report"), which Weekly Base Report shall
on the second and fourth Tuesday of each month
incorporate Ineligible Accounts existing as of the
last Business Day of the immediately preceding week.
The Weekly Base Reports are not required to include
Inventory availability, which shall be reported
monthly as part of the Borrowing Base Reports."
2.6 Section 5.1(f) is hereby amended to include at the end of the
paragraph the following definition:
"(the "Covenant Compliance Reports")."
2.7 The provisos set forth in clauses (a) and (c) of Section 5.5 are
hereby deleted in their entirety.
2.8 The parenthetical in clause (ii) of Section 5.8 of the Agreement
is hereby amended to provide as follows:
"(provided, however, and subject to Section 6.16 of
this Agreement, that the U.S. Borrower shall be
prohibited from purchasing any of the Senior Notes (y)
on or before 10 Business Days following the delivery
to the Agent of the Covenant Compliance Reports to be
delivered pursuant to Section 5.1(f) of this Agreement
with respect to the fiscal quarter of the Borrowers
ending on September 30, 1997, and (z) if at the time
such repurchase is to be made the Borrower shall have
failed to have attained EBITDA in excess of
$12,500,000 during the two consecutive calendar
quarters ending immediately prior to such repurchase)
..."
2.9 Section 6.7 of the Agreement is hereby amended to provide in its
entirety as follows:
"Fixed Charge Ratio. The Borrowers shall not at
any time permit the Fixed Charge Ratio of the
Borrowers to be less than the following ratios in the
following fiscal periods:
Period Minimum Ratio
January 1, 1998 through March 31, 1998 0.75
January 1, 1998 through June 30, 1998 0.85
January 1, 1998 through September 30, 1998 0.90
January 1, 1998 through December 31, 1998 1.00
For each fiscal period consisting of four 1.00"
consecutive calendar quarters ending on and
after March 31, 1999
2.10 Section 6.9 of the Agreement is hereby amended to provide in its
entirety as follows:
"6.9. Minimum EBITDA. The Borrower shall not permit
EBITDA to be less than ("Minimum EBITDA"):
Maximum Unusual
Allowance
Period Amount Permitted In
Minimum EBITDA
March 1, 1997 through $1,000,000 None
March 31, 1997
April 1, 1997 through $1,000,000 None
April 30, 1997
May 1, 1997 through $1,000,000 None
May 31, 1997
June 1, 1997 through $1,000,000 $0*
June 30, 1997
July 1, 1997 through $1,500,000 $0*
July 31, 1997
August 1, 1997 through $1,500,000 $0*
August 31, 1997
September 1, 1997 through $1,500,000 $0*
September 30, 1997
October 1, 1997 through $1,500,000 $0*
October 31, 1997
November 1, 1997 through $1,500,000 $0*
November 30, 1997
December 1, 1997 through $1,500,000 $0*
December 31, 1997
January 1, 1998 through $5,625,000 NONE
March 31, 1998
April 1, 1998 through $5,625,000 NONE
June 30, 1998
July 1, 1998 through $5,625,000 NONE
September 30, 1998
October 1, 1998 through $5,625,000 NONE
December 31, 1998
For each fiscal period consisting $25,000,000 NONE
of four consecutive calendar
quarters ending on and after
March 31, 1999
*For the period from June 1, 1997 through December 31, 1997,
there shall be permitted, solely on account of one-time,
nonrecurring, non-cash losses or charges in connection with the
disposition of non-Borrowing Base assets or a segment of a
business, Unusual Allowances not to exceed in aggregate
$3,000,000 for the seven months ending December 31, 1997.
2.11 Section 6.15 of the Agreement is hereby amended to provide in
its entirety as follows:
"6.15 Borrowing Base. None of the Borrowers
shall cause or permit the aggregate principal amount
of all Revolving Loans and the aggregate face amount
of all Letters of Credit outstanding at any time to
exceed the difference of the Borrowing Base at such
time, minus $4,000,000, or on and after June 30, 1997,
minus $6,000,000."
2.12 Section 6.16 of the Agreement is hereby amended to provide in
its entirety as follows:
"6.16 Repurchase and Repayment of Senior Notes.
Subject to Section 5.8, the Borrowers shall not repurchase one
or more Senior Notes until 10 days after the Covenant Compliance
Reports described in Section 5.1(f) of this Agreement are
delivered to the Agent for the fiscal period ending
September 30, 1997; provided, further, that the Borrowers shall
not repurchase one or more Senior Notes at any time if at the
time of the repurchase the amount of Excess Availability is less
than or equal to $30,000,000, taking into account the costs of
such repurchase. The Covenant Compliance Reports for the fiscal
period ending on June 30, 1997 shall be delivered to the Agent
prior to the making of any payments on the Senior Notes,
including without limitation any payments of principal or
interest that are due on July 31, 1997, and in no event shall
they be delivered later than July 25, 1997.
2.13 The address for the Borrowers in Section 9.1 of the Agreement is
hereby amended to provide as follows:
"United States Leather, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Chief Executive Officer
Telecopy: (000) 000-0000;"
and the "Attention" line in the address of the Agent is hereby amended to
provide as follows:
"Attention: Xxxxxx X. Xxxxxx, Vice President,
Mail Stop: 01-09-06."
2.14 Section 9.8(d) is hereby amended to add a new subsection (ix) as
follows:
"(ix) change the definition of Availability
hereunder."
2.15 Section 9.10(vii) is hereby deleted in its entirety.
2.16 The term "Loan Agreement" or "Agreement" shall, wherever used or
referenced in any of the Loan Documents to mean the Agreement, be deemed
also to mean and include the Agreement, as the same may be amended,
supplemented or restated from time to time.
2.17 Exhibit G is hereby amended to read in its entirety as set forth
in Exhibit G attached hereto.
Section 3. Conditions Precedent to this Amendment. The agreements
of the Agent and the Banks set forth in this Second Amendment are subject
to the satisfaction of the following conditions precedent:
3.1 At the time of the execution of the Second Amendment, there
shall exist no Defaults or Events of Default under the terms of the
Agreement, as amended hereby, the Loan Documents and the Ancillary
Documents;
3.2 The U.S. Borrower shall have reimbursed the Agent for all of the
reasonable fees and disbursements of Goulston & Storrs, counsel to the
Agent, which shall have been incurred by the Agent in connection with the
preparation, negotiation, execution and delivery of this Second Amendment
and the consummation of the transactions contemplated herein;
3.3 Since the date of the commencement of the Agent's most recent
commercial finance examination, there shall have been no changes in
assets, liabilities, financial condition, business, income, operations or
prospects of any of the Borrowers, the effect of which have, in the
aggregate, had a material adverse effect on the assets, properties,
business, prospects, income, operations or financial condition of the
Borrowers; and
3.4 This Second Amendment shall have been duly and properly
authorized, executed and delivered to the Agent, and shall be in full
force and effect.
3.5 The U.S. Borrowers shall have paid to the Agent, for the benefit
of the Agent and the U.S. Banks in accordance with their respective U.S.
Commitment Percentages immediately prior to the execution and delivery
hereof, a non-refundable restructuring fee of $300,000.
Section 4. Representations and Warranties. In order to induce the
Agent and the Banks to enter into this Second Amendment, the Borrowers,
jointly and severally, represent and warrant to the Agent and each Bank
that:
4.1 Each of the Borrowers (a) is a corporation duly organized,
validly existing and in good standing under the laws of the state or
Province in which it is organized as listed on Exhibit D to the Agreement,
(b) has all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (c) is duly
qualified and in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction listed in Exhibit D to the
Agreement;
4.2 The execution, delivery and performance of this Second Amendment
and the transactions contemplated hereby are within the corporate power
and authority of each Borrower and have been authorized by all necessary
corporate proceedings, and do not (a) require any consent or approval of
any creditors, trustees for creditors or shareholders of any of the
Borrowers, including, without limitation, the Indenture Trustee or any
other party pursuant to the terms of the Indenture Agreement, (b)
contravene any provision of the charter documents or by-laws of any of the
Borrowers or any law, rule or regulation applicable to any of the
Borrowers, (c) contravene any provision of, or constitute an event of
default or events that, but for the requirement that time elapse or notice
be given, or both, would constitute an event of default, under, any other
agreement, instrument, order or undertaking binding on any of the
Borrowers, including, without limitation, the Indenture Agreement, or (d)
result in or require the imposition of any Encumbrance on any of the
properties, assets or rights of any of the Borrowers other than Permitted
Encumbrances; and
4.3 Each of the representations, warranties, covenants and negative
covenants set forth in the Agreement, as amended hereby, and the other
Loan Documents is true and correct on the date hereof in all material
respects, and no event has occurred and no condition exists which
constitutes a Default or Event of Default under the Agreement, as amended
hereby, or any other Loan Documents or any Ancillary Document.
Section 5. Indemnification. The Borrowers shall absolutely and
unconditionally indemnify and hold harmless the Agent and each of the
Banks against any and all claims, demands, suits, actions, causes of
action, damages, losses, settlement payments, obligations, costs, expenses
and all other liabilities whatsoever which shall at any time or times be
incurred or sustained by the Agent or any of the Banks, or by any of their
shareholders, directors, officers, employees, representatives,
subsidiaries, affiliates or agents (other than as a result of the gross
negligence or willful misconduct of the Agent or any of the Banks or such
officers, directors, shareholders, employees or agents thereof) on account
of, or in relation to, or in any way in connection with, any of the
arrangements or transactions contemplated by, associated with or ancillary
to either this Second Amendment, the Agreement or any of the other Loan
Documents or any of the Ancillary Documents, whether or not all or any of
the transactions contemplated by, associated with, or ancillary to this
Second Amendment, the Agreement, any of such Loan Documents or any of such
Ancillary Documents, are ultimately consummated (other than those costs or
expenses incurred by the Banks other than the Agent in connection with the
syndication, and by the Agent and the Banks in the day-to-day
administration of the transactions contemplated by the Agreement, as
amended hereby, and the other Loan Documents).
Section 6. Miscellaneous.
6.1 All filings and recordings against the Canadian Collateral shall
be completed and the Agent's liens thereon shall be duly perfected by
April 25, 1997.
6.2 As of the date hereof, and after giving effect to the
consummation of any transactions contemplated by this Second Amendment,
the Borrowers acknowledge that each has performed, satisfied, or complied
with all covenants and conditions to be performed, satisfied or complied
with by it under the Agreement, as amended hereby. The Borrowers hereby
covenant and agree that, after giving effect to the consummation of the
transactions contemplated hereby, the Borrowers will continue to perform,
satisfy or comply with all covenants and conditions to be performed,
satisfied or complied with by each of them under the Agreement, as amended
hereby.
6.3 The obligations of the Borrowers (i) to repay to the Agent and
the Banks all of the unpaid principal of each of the Revolving Loans made
or to be made in the future pursuant to the Agreement, as amended hereby,
(ii) to pay to the Agent all of the unpaid interest accrued or to accrue
thereon, (iii) to pay to the Agent and the Banks all of the other
Obligations of the Borrowers, are and will continue to be entitled to all
of the benefits and to all of the security created or contemplated by the
Agreement, as amended hereby, and the other Loan Documents.
6.4 Except as otherwise expressly provided in this Second Amendment,
all of the terms, conditions and provisions of the Agreement and each of
the other Loan Documents remain unaltered and are in full force and
effect. The Agreement and this Second Amendment shall be read and
construed as one Agreement.
6.5 This Second Amendment may be executed in any number of
counterparts, but all such counterparts shall together constitute but one
and the same instrument. In making proof of this Second Amendment, it
shall not be necessary to produce or account for more than one counterpart
thereof signed by each of the parties hereto.
6.6 All of the Obligations undertaken hereunder by the Borrowers are
hereby undertaken by each of them jointly and severally.
6.7 The captions and headings of the various sections and
subsections of this Second Amendment are provided for convenience only and
shall not be construed to modify the meaning of such sections or
subsections.
6.8 The invalidity or unenforceability of any one or more phrases,
clauses or sections of this Second Amendment under particular
circumstances shall not affect the validity or enforceability thereof or
of the Agreement, as amended hereby, under other circumstances, or the
validity or the enforceability of the remaining portions of this Second
Amendment or the Agreement, as amended hereby.
6.9 This Second Amendment shall be deemed to be a contract under
seal and shall be construed in accordance with and governed by the laws of
the Commonwealth of Massachusetts (without giving effect to any conflicts
of law provisions contained therein).
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment under seal as of the day first above-written by the respective
officers hereunto duly authorized.
The Borrowers:
UNITED STATES LEATHER, INC.
By: /s/
Title:
A.R. XXXXXX LIMITED
By: /s/
Title:
The Agent:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
Title:
The Banks:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
Title:
XXXXXX FINANCIAL, INC.
By: /s/
Title:
THE CHASE MANHATTAN BANK
By: /s/
Title:
BTM CAPITAL CORPORATION
By: /s/
Title:
