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EXHIBIT 10.3.1.a
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THIRD WAIVER EXTENSION AGREEMENT AND AMENDMENT NO. 5
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THIRD WAIVER EXTENSION AGREEMENT AND AMENDMENT NO. 5 (this
"Waiver and Amendment"), dated as of June 29, 1999, to the Credit Agreement,
dated as of March 8, 1996, by and among Telxon Corporation (the "Borrower"), the
Lenders party thereto, and The Bank of New York, as Issuer, Swing Line Lender
and Agent (as heretofore amended, the "Agreement").
RECITALS
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I. Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Agreement.
II. The Borrower, the Agent and the Lenders have heretofore entered into a
Waiver and Agreement, dated as of December 29, 1998 (the "Original Waiver"), a
Waiver Extension and Agreement, dated as of February 12, 1999 (the "Original
Waiver Extension") and a Second Waiver Extension Agreement and Amendment No. 4,
dated as of March 26, 1999 (the "Second Waiver Extension"), with respect to
certain matters relating to the compliance by the Borrower with certain
provisions of the Agreement.
III. The Borrower has requested that the Agent and the Lenders agree to a
further waiver of compliance by the Borrower with certain provisions of the
Agreement, including an extension of the waiver granted in the Original Waiver
as extended by the Original Waiver Extension and the Second Waiver Extension,
upon the terms and conditions contained herein.
IV. In addition, the Borrower has requested that the Agent, the Lenders, the
Issuer and the Swing Line Lender agree to amend the Agreement upon the terms
and conditions contained herein, and the Agent, the Lenders, the Issuer and the
Swing Line Lender are willing so to agree.
Accordingly, in consideration of the Recitals and the
covenants and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Borrower, the Agent, the Issuer and the Swing Line Lender hereby agree as
follows:
1. WAIVERS. Subject to satisfaction of the conditions to effectiveness
set forth in Section 4 below:
(i) The Required Lenders hereby agree that the Waiver
Period (as defined in Section 1 of the Original Waiver) shall not
expire as of the time provided in the Second Waiver Extension but
shall be extended and remain in effect for the period (the
"Extended Waiver Period") from the Effective Date (as defined in
Section 4 hereof) through August 30, 1999.
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(ii) The Required Lenders hereby waive, for and during the
Extended Waiver Period, compliance by the Borrower with the
provisions of Sections 7.11 (Leverage Ratio), 7.12 (Tangible Net
Worth), 7.13 (Fixed Charge Coverage Ratio) and 7.15 (Current Ratio)
of the Agreement and any Defaults or Events of Default under any of
said Sections 7.11, 7.12, 7.13 and 7.15 currently existing in
respect of the fiscal quarters of the Borrower ended September 30,
1998, December 31, 1998 and March 31, 1999 and as may exist for the
fiscal quarter of the Borrower ended June 30, 1999 and any other
Defaults or Events of Default existing as of the Effective Date or
arising during the Extended Waiver Period and which arose solely by
reason of (a) the restatement of the Borrower's financial
statements for any period prior to the September 30, 1998 quarter
(any Defaults or Events of Defaults relating to the restatement of
the Borrower's financial statements for the September 30, 1998
quarter, including the effects thereof on the Borrower's financial
statements for the December 31, 1998 quarter, the March 31, 1999
quarter and the June 30, 1999 quarter, being waived as provided in
the Original Waiver, as extended by the Original Waiver Extension,
the Second Waiver Extension and this Waiver and Amendment), (b) the
Borrower's financial results for the December 31, 1998 quarter, the
March 31, 1999 quarter and the June 30, 1999 quarter as reflected
in the Borrower's financial statements for such periods, and/or (c)
any ratios or other computations or certifications required to be
made, maintained or provided under the Agreement or any other Loan
Document (as used in this Waiver and Amendment, such term shall
include, in addition to the documents specified in the definition
thereof in the Agreement, the Original Waiver, the Original Waiver
Extension and the Second Waiver Extension) based upon or in respect
of any of the financial statements referenced in the immediately
foregoing clauses (a) and (b).
(iii) The Required Lenders hereby waive, for and during
the Extended Waiver Period, compliance by the Borrower with the due
dates established in Sections 7.7(a), 7.7(c) and 7.7(d) for the
delivery of financial statements and the associated Compliance
Certificates and any Defaults or Events of Default under Section
7.7 currently existing in respect of the fiscal periods of the
Borrower ended September 30, 1998, December 31, 1998 and March 31,
1999 and any other Defaults or Events of Default existing as of the
Effective Date or arising during the Extended Waiver Period and
which arose solely with respect to any financial statements and/or
certifications or other similar documents based thereon or relating
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thereto required to be provided by the Borrower under the Agreement
or any other Loan Document in respect of the fiscal period ended
March 31, 1999 or any prior period, provided, that the financial
statements required to be delivered pursuant to Section 7.7(a) for
the fiscal year ended March 31, 1999 shall be delivered not later
than July 31, 1999.
Unless otherwise agreed to by the Required Lenders in writing, upon the
expiration of the Extended Waiver Period, the waivers provided for herein shall
be of no further force or effect, and unless as of that time the Borrower is
then in compliance with all of the provisions of the Agreement compliance with
which is waived in the Original Waiver, the Original Waiver Extension, the
Second Waiver Extension and in this Waiver and Amendment, an Event of Default
shall exist, and the Lenders may exercise any and all rights and remedies
available to any of them under Agreement, the other Loan Documents of applicable
law.
2. AMENDMENTS TO AGREEMENT. Subject to satisfaction of the conditions
to effectiveness set forth in Section 4 below, the Agreement is hereby amended
as follows:
(a) The definition of the term "Borrowing Base Amount" set
forth in Section 1.1 is hereby amended in its entirety to read as follows:
"Borrowing Base Amount": as of any date, the sum of (i) the
Eligible Accounts Receivable minus $8,000,000 multiplied by:
85% plus, (ii) $10,000,000 in respect of Eligible Inventory
plus (iii) 100% of all cash and cash equivalents of the
Borrower and its Subsidiaries plus (iv) 80% of the appraised
value of the real estate (based upon the current appraisal
performed by CB Xxxxxxx Xxxxx, Inc.) and 60% of the appraised
value of the machinery and equipment (based upon the current
appraisal performed by Dovetech, Inc.), in each case with
respect to the Texas PP&E, all as set forth on the Borrowing
Base Certificate most recently delivered to the Agent and the
Lenders pursuant to this Agreement.
(b) Section 1.1 is hereby amended by inserting the following
new defined terms in appropriate alphabetical order:
"Third Waiver": shall mean the Third Waiver Extension
Agreement and Amendment No. 5, dated as of June 29, 1999, to
this Agreement.
(c) Section 2.9(e) is hereby amended by inserting the
following sentence at the end thereof:
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"In addition, upon any equity investment in or subordinated
financing of the Borrower, in each case, on terms reasonably
acceptable to the Agent and the Required Lenders, the Borrower
shall apply such percentage of the Net Cash Proceeds thereof
to the prepayment of the Revolving Loans and permanent
reduction of the Aggregate Revolving Commitment Amount as the
Agent and the Required Lenders shall require."
(d) Article 3 is hereby amended by inserting the following new
Section 3.15 at the end thereof:
"3.15 Consent Fee. Upon the occurrence of the Effective Date
of the Third Waiver, the Borrower agrees to pay to the Agent
for the pro rata account of each Lender that has executed a
counterpart of the Third Waiver on or prior to its Effective
Date, a consent fee equal to 1.00% of such Lender s Revolving
Commitment Amount, which fee shall be due and payable (x) on
the Effective Date of the Third Waiver in an amount equal to
.35% of each such Lender's Revolving Commitment Amount (as of
the Effective Date of the Third Waiver), (y) on July 31, 1999
in an amount equal to .15% of each Lender's Revolving
Commitment Amount (as of such date) if the Borrower shall not
have delivered to the Agent, on or before such date, a binding
written commitment letter for an equity investment in, or
subordinated financing of, the Borrower on terms reasonably
acceptable to the Agent and the Required Lenders, provided,
that should such commitment letter be terminated, such portion
of the consent fee shall be payable at the time of such
termination and (z) on August 30, 1999 in an amount equal to
.50% of each such Lender's Revolving Commitment Amount (as of
such date) if the Borrower shall not have refinanced on or
before such date in whole the Obligations on terms reasonably
acceptable to the Agent and the Lenders.
(e) Section 7.7(n) is hereby amended in its entirety to read as
follows:
"(n) and to each Lender, as soon as available, but in
any event not later than 12:00 noon New York City Time on
Wednesday of each week, a Borrowing Base Certificate setting
forth the Borrowing Base Amount as of Friday of the
immediately preceding week (which such Borrowing Base
Certificate shall include a report of the Borrower s gross
sales for such preceding week)"
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(f) Section 9.1(d) is hereby amended by inserting the following proviso
immediately following the words "shall have become aware of such failure"
appearing therein:
"provided, that in the case of the delivery of the Borrowing
Base Certificate when due as provided for in Section 7.7(n)
and the delivery of the weekly report of sources and uses of
cash when due as required pursuant to the Waiver and Agreement
dated as of December 29, 1998 to this Agreement, such failure
shall continue unremedied for more than two (2) Domestic
Business Days"
3. AGREEMENTS BY THE BORROWER. Anything in the Agreement to the
contrary notwithstanding, in consideration of the waivers and amendments set
forth above, the Borrower hereby agrees as follows during the Extended Waiver
Period:
(i) The obligations of the Borrower under Section 2
of the Original Waiver, except as the same has been modified
by the Original Waiver Extension, the Second Waiver Extension
and as may be modified by the terms of this Waiver and
Amendment, shall not be limited to the Waiver Period but
shall, as so modified, continue to be performed and observed
by the Borrower for and during the Extended Waiver Period.
(ii) Notwithstanding that on the Effective Date of
the Third Waiver the Aggregate Revolving Commitment Amount is
$59,238,736.11, unless otherwise agreed to by the Required
Lenders (in the exercise of their respective sole discretion)
in writing, the Borrower agrees that the Aggregate Revolving
Credit Exposure shall not at any time exceed the lesser of (x)
$54,238,736.11 and (y) the Borrowing Base Amount, provided
that the $54,238,736.11 amount set forth in clause (x) above
shall be reduced at the time of and on a dollar-for-dollar
basis by the amount of any prepayment of the Revolving Loans
and reduction of the Aggregate Revolving Commitment Amount
required pursuant to Section 2.9(e) of the Agreement and that
the Borrower will not request any new Loans or the issuance of
any new Letters of Credit under the Agreement in violation
hereof.
The Borrower agrees that any violation of its agreements set forth
above shall constitute a Default under the Agreement.
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4. EFFECTIVE DATE. Paragraph 1, 2 and 3 of this Waiver and Amendment
shall not be effective until such date (the "Effective Date") as each of the
following conditions shall have been satisfied:
(i) COUNTERPARTS. The Agent shall have received
counterparts of this Waiver and Amendment executed by the
Borrower, the Issuer, the Swing Line Lender, the Required
Lenders and the Guarantors.
(ii) FEES AND DISBURSEMENTS. The Borrower shall have
paid the reasonable fees and disbursements of Xxxxxx, Xxxxx &
Bockius LLP, Special Counsel to the Agent, which shall have
accrued up to, and properly invoiced to the Borrower no later
than, the Effective Date.
(iii) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. On
and as of the Effective Date after giving effect to the
Original Waiver, the Original Waiver Extension, the Second
Waiver Extension and this Waiver and Amendment, there shall
exist no Default or Event of Default, and all of the
representations and warranties of the Loan Parties contained
in the Loan Documents (in the case of the affirmation of
representations and warranties in Section 4 of each of the
Original Waiver, the Original Waiver Extension and the Second
Waiver Extension, after giving effect to this Waiver and
Amendment in addition to the Original Waiver, the Original
Waiver Extension and the Second Waiver Extension as therein
recited) shall be true and correct with the same effect as
though such representations and warranties had been made on
the Effective Date.
(iv) BANK ONE CONSENT AND AMENDMENT. Bank One shall
have consented to the waivers, amendments and agreements
contemplated hereby with respect to the Bank One Credit Line
and the Borrower and Bank One shall have executed an amendment
to the Bank One Credit Line to extend the maturity thereof to
no earlier than August 30, 1999.
(v) CONSENT FEE. The Borrower shall have paid to the
Agent for the pro rata account of each Lender entitled thereto
that portion of the consent fee that is required to be paid to
such Lenders on the Effective Date pursuant to Section 3.15 of
the Agreement.
5. AFFIRMATION; RELEASE. (i) On each of the date hereof and the
Effective Date, the Borrower hereby (a) reaffirms and admits the validity and
(subject to the terms of the Original
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Waiver, the Original Waiver Extension, the Second Waiver Extension and this
Waiver and Amendment) enforceability of the Loan Documents and all of its
obligations thereunder, (b) agrees and admits that it has no defenses to or
offsets or counterclaims against any such obligations, and (c) represents and
warrants that after giving effect hereto and to the Original Waiver, the
Original Waiver Extension and the Second Waiver Extension (as modified hereby),
no Default or Event of Default has occurred and is continuing, and that each of
the representations and warranties made by it in the Agreement is true and
correct with the same effect as though such representation and warranty had been
made on such date.
(ii) The Borrower and each Guarantor hereby release the Agent, the
Lenders, the Issuer and the Swing Line Lender and each of their respective
directors, officers, employees, attorneys, agents, advisors, attorneys-in-fact,
experts and Affiliates (collectively the "Lender Group"), from and against any
and all costs and expenses, losses, settlements, claims, causes of action,
debts, liabilities, obligations, damages, actions, judgments, proceedings of any
kind or nature whatsoever, known or unknown, contingent or otherwise which may
be imposed on, incurred by or asserted against any of them in any way relating
to or arising out of or with respect to this Waiver and Amendment, the Agreement
or the other Loan Documents, and/or any actions taken or omitted to be taken by
the Lender Group on or prior to the Effective Date with respect thereto (except
to the extent that any of the foregoing arises solely from the gross negligence
or willful misconduct of the party which would be so released as determined by a
final order or judgment of a court of competent jurisdiction), and the Borrower
and each Guarantor hereby agree to hold the Lender Group harmless from and
against any and all costs and expenses, losses, settlements, claims, causes of
action, debts, liabilities, obligations, damages, actions, judgments,
proceedings of any kind or nature whatsoever, known or unknown, contingent or
otherwise which may be imposed on, incurred by or asserted against any of them
with respect thereto.
6. WAIVERS AND AMENDMENTS LIMITED. In all other respects, the Loan
Documents shall remain in full force and effect, and no waiver or amendment in
respect of any term or condition of any Loan Document contained herein shall be
deemed to be a waiver or amendment in respect of any other term or condition
contained in any Loan Document.
7. COUNTERPARTS. This Waiver and Amendment may be executed in any
number of counterparts all of which, taken together shall constitute one waiver.
In making proof of this Waiver and Amendment, it shall only be necessary to
produce the counterpart executed and delivered by the party to be charged.
8. GOVERNING LAW. THIS WAIVER AND AMENDMENT IS BEING EXECUTED AND
DELIVERED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND
SHALL BE CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS.
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AS EVIDENCE of the agreement by the parties hereto to the
terms and conditions herein contained, each such party has caused this Waiver
and Amendment to be executed on its behalf.
TELXON CORPORATION
By: /s/ Xxxxx X. XxXxx
Name: Xxxxx X. XxXxx
Title: Vice President, Chief Financial Officer
THE BANK OF NEW YORK, in its capacity as a
Lender, as the Issuer, as the Swing Line Lender
and as the Agent
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Each of the following Lenders consents
to the execution and delivery of this
Waiver and Amendment by the Agent,
hereby directs the Agent to so execute
and deliver this Waiver and Amendment
and agrees to all of the terms and
conditions hereof:
BANK ONE, N.A.
By: /s/ Xxxxxx X. Xxxxxx, V.P.
Name: Xxxxxx X. Xxxxxx
Title: Vice President
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COMERICA BANK
By: /s/ Xxxxxxx X. Judge
Name: Xxxxxxx X. Judge
Title: Vice President
THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
PNC BANK, N.A.
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Vice President
SOCIETE GENERALE
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Director
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Joint General Manager
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Each of the Guarantors acknowledges the execution and delivery of this Waiver
and Amendment by the Borrower and the Agent and by signing below, indicates its
reaffirmation of the Guarantor Obligations (as such term is defined in the
Subsidiary Guaranty) and its joinder in the release contained in Section 5(ii)
of this Waiver and Amendment.
PTC AIRCO, INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
META HOLDING CORPORATION
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
TELETRANSACTION, INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
TLXITX CORPORATION
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
PENRIGHT! CORPORATION
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
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THE RETAIL TECHNOLOGY GROUP, INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
TELXON TRADING CO., INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
TELXON PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
TELXON INTERNATIONAL PROCUREMENT SERVICES, INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Vice President and Treasurer
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