The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 5, 1997
Uniroyal Technology Corporation
0 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Re: First Amendment to Financing Agreements
Gentlemen:
Reference is made to certain financing arrangements heretofore
entered into between UNIROYAL TECHNOLOGY CORPORATION (the "Company") and THE CIT
GROUP/BUSINESS CREDIT, INC. ("CITBC") pursuant to certain financing agreements,
including, but not limited to, the Financing Agreement dated June 5,1996 entered
into between the Company and CITBC, as amended from time to time (the "Loan
Agreement"), and related agreements, documents, instruments, notes, mortgages
and guaranties creating or evidencing indebtedness or granting collateral
security therefor, executed and delivered in connection therewith (all of the
foregoing, as the same may now exist or may hereafter be amended, modified,
supplemented, renewed, extended or replaced are hereinafter collectively
referred to as the "Financing Agreements"). All capitalized terms used herein
which are not otherwise defined herein, shall have the respective meaning
ascribed to such terms as set forth in the Loan Agreement. All amendments are
effective as of the date the conditions in Section 3 of this First Amendment
have been satisfied (the "Effective Date").
The Company is about to enter into an Asset Purchase Agreement
dated as of September 5, 1997 (the "Purchase Agreement") with Xxxxxxxx
Industries, Inc. (the "Seller"), pursuant to which the Company is to acquire
certain assets of the Seller (the "Acquired Assets"), including all the Seller's
existing accounts receivable (the "Xxxxxxxx Accounts") for a cash purchase price
of $4,500,000 (subject to adjustment) and 300,000 shares of the Company's common
stock (the "Purchase Price").
The Company has requested that CITBC (a) make a term loan to
the Company in the amount of $1,500,000 to consummate the purchase of the
Acquired Assets; and (b) amend certain other provisions of the Financing
Agreements. CITBC is willing to do so subject to the terms and conditions of
this Letter Re: First Amendment to Financing Agreements (the "First Amendment").
In consideration of the foregoing, the parties hereto hereby
agree as follows:
1. As of the Effective Date Section 1 of the Loan Agreement is
hereby modified and amended as follows:
a. The term "Accounts" shall include the Xxxxxxxx
Accounts and all future accounts created by the Company under
the mark "Xxxxxxxx" and/or the business name "Xxxxxxxx
Plastics".
b. The term "Chemical Bank Rate" shall be
redesignated as the "Chase Bank Rate".
c. The term "Obligations" (other than for the
purposes of calculating Availability) shall include the
indebtedness of the Company arising under the Term Note (as
hereinafter defined in this First Amendment).
d. The term "Permitted Acquisition" shall include the
transactions contemplated by the Purchase Agreement.
e. The term "Permitted Acquisition Indebtedness"
shall include the Purchase Price.
f. The following defined terms shall be added
immediately prior to the term "U.C.C.":
"Term Loan" shall mean the term loan in the original
principal amount of $1,500,000 made by CITBC pursuant
to, and repayable in accordance with the provisions of
Section 3A of this Financing Agreement.
"Term Note" shall mean the promissory note of the
Company annexed hereto as Exhibit A, which shall
evidence the Term Loan.
2. As of the Effective Date the Loan Agreement is hereby
amended to provide for a new Section 3A, which shall read in its entirety as
follows:
"SECTION 3A. Term Loan
1. The Company hereby agrees to execute and deliver to CITBC
the Term Note to evidence the Term Loan to be extended by CITBC to the
Company.
2. Upon receipt of the Term Note, CITBC hereby agrees to
extend to the Company the Term Loan in the principal amount of
$1,500,000.
3. The principal amount of the Term Loan shall be repaid to
CITBC by the Company in twelve (12) equal consecutive quarterly
principal installments of $125,000 each, whereof the first installment
shall be due and payable on December 31, 1997 and the subsequent
installments shall be due and payable on the last Business Day of each
quarterly period thereafter until the Term Loan is paid in full.
4. Interest on the Term loan shall be (a) payable monthly as
of the end of each month in an amount equal to one quarter of one
percent (1/4 of 1%) plus the Chase Bank Rate per annum on the unpaid
balance of the Term Loan other than Libor Loans and (b) payable at the
end of the applicable Libor Period (provided that for Libor Periods in
excess of 3 months, interest shall be payable at the end of each 3
month period therein and at the end thereof) , in an amount equal to
two and three quarters percent (2 3/4%) plus the applicable Libor on
any Libor Loan, on a per annum basis, on the unpaid balance of the Term
Loan. In the event of any change in said Chase Bank Rate, the rate
under clause (a) above shall change, as of the first of the month
following any change, so as to remain one quarter of one percent (1/4
of 1%) above the Chase Bank Rate. The rate hereunder shall be
calculated based on a 360-day year. CITBC shall be entitled to charge
the Company's Revolving Loan Account at the rate provided herein when
due until all obligations have been paid in full. The Company may elect
to use Libor with respect to the Term Loan in accordance with the
provisions of Section 7.2 of this Financing Agreement except that Libor
elections must be for $500,000 or whole multiples thereof.
5. In the event this Financing Agreement or the Line of Credit
is terminated by either CITBC or the Company for any reason whatsoever,
the Term Loan shall become due and payable on the effective date of
such termination notwithstanding any provision to the contrary in the
Term Note or this Financing Agreement
6. The Company may prepay at any time, at its option, in whole
or in part, the Term Loan, provided that on each such prepayment, the
Company shall pay (i) accrued interest on the principal so prepaid to
the date of such prepayment; and (ii) the Libor prepayment penalty, if
applicable.
7. Each prepayment (voluntary or mandatory) of the Term Loan
shall be applied to the then last maturing installments of principal of
the Term Loan.
8. The Company hereby authorizes CITBC to charge its Revolving
Loan Account with the amount of all sums due under this Section 3A as
such amounts become due. The Company confirms that any charges which
CITBC may so make to its Revolving Loan Account as herein provided will
be made as an accommodation to the Company and solely at CITBC's
discretion."
3. The obligation of CITBC to make the Term Loan is subject to
the satisfaction of or waiver in writing of, immediately prior to or
concurrently with the making of such Term Loan, the following conditions:
a. CITBC shall have received tax, judgment and U.C.C.
searches satisfactory to it with respect to the Seller and the
Company.
b. CITBC shall have received such U.C.C. financing
statements as it deems necessary to obtain a first perfected
security interest in all present and future Xxxxxxxx Accounts.
c . Counsel for the Company shall have delivered to
CITBC his opinion in form satisfactory to CITBC.
d. A certificate of the President or Chief Financial
Officer of the Company to the effect that (i) subject to the
payment of the Purchase Price the acquisition of the Acquired
Assets has been consummated; and (ii) after giving effect to
the transactions contemplated the Purchase Agreement, this
First Amendment and the making of the Term Loan to the Company
(x) the Company is not in Default under the Senior Note
Indenture or any of the Financing Agreements (as modified by
this First Amendment); (y) the Company is in compliance with
the Senior Notes Limitation; and (z) there exists no Event of
Default.
e. The Company shall have executed and delivered to
CITBC the Term Note.
f. The Company shall have executed and delivered to
CITBC a Trade Name letter agreement.
g. CITBC shall have received all such other documents
as CITBC and its counsel shall require.
4. In order to induce Xxxxxx to enter into this First
Amendment, the Borrower represents and warrants that:
a. After giving effect to the transactions herein
contemplated, there shall exist no Default or Event of Default
and no conditions, events or acts which, with notice or the
lapse of time, or both, would constitute such a Default or an
Event of Default; and
b. The representations and warranties contained in
the Loan Agreement, or in any of the other Financing
Agreements, or herein are true and correct as of the date
hereof (except to the extent that such are modified by the
transactions herein contemplated) with the same effect as
though such representations and warranties had been made as of
this date.
5. Except as specifically set forth herein, no other changes
or modifications to the Loan Agreement or the other Financing Agreements are
intended or implied, and in all other respects the Loan Agreement and the other
Financing Agreements are hereby specifically ratified and confirmed in
accordance with their respective terms as of the date hereof.
THIS SPACE DELIBERATELY LEFT BLANK
6. This First Amendment may be executed in multiple
counterparts each of which when taken together shall represent one original
First Amendment.
7. The Loan Agreement as modified by this First Amendment
shall be governed by the internal laws of the State of New York and shall only
be modified or amended by a written instrument signed by CITBC.
8. All references in any of the Financing Agreements to the
Loan Agreement shall be deemed to be the Loan Agreement as amended by this First
Amendment.
Please indicate your agreement to this First Amendment by
signing and returning a copy of this letter.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: AVP
AGREED:
UNIROYAL TECHNOLOGY CORPORATION
By: /S/ Xxxxxx X. Xxxxxxx, Xx.
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President and
Chief Financial Officer
