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EXHIBIT 10.51
SIXTH AMENDMENT TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT
(RECEIVABLES AND INVENTORY); WAIVER
This Sixth Amendment to Second Amended and Restated Credit Agreement
(Receivables and Inventory); Waiver (this "Amendment") is entered into as of
August 15, 1997, among Bank of America National Trust and Savings Association
("Bank") and GT Bicycles California, Inc. ("GTBC"), Riteway Products East, Inc.
("East"), Riteway Products North Central, Inc. ("North Central"), Rite-Way
Distributors Central, Inc. ("Central"), Rite-Way Distributors, Inc.
("Distributors"), GT Bicycles, Inc. ("GT"). XXXX, Xxxx, Xxxxx Xxxxxxx, Xxxxxxx,
and Distributors are sometimes hereinafter referred to collectively as
"Borrowers" and individually as a "Borrower."
RECITALS
A. Bank, GI, and Borrowers are parties to that certain Second Amended
and Restated Credit Agreement (Receivables and Inventory) dated as of August 12,
1996, as modified by amendments dated September 15, 1996, October 15, 1996,
October 31, 1996, February 13, 1997, and March 14, 1997 (as amended, the
"Credit Agreement").
B. The parties hereto now desire to amend the Credit Agreement on the
terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meanings ascribed to them in the Credit Agreement.
2. Amendments. The Credit Agreement shall be amended as follows:
(a) The following definitions are added to Paragraph 1.1 in
alphabetical order:
"Contingent Obligation" means any obligation guaranteeing
or intended to guarantee any indebtedness, leases, dividends or other
obligations ("primary obligations") of any person, firm, or
corporation (the
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"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless
the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming that
performance thereunder is required) as determined in good faith.
"EBITDA" means, for GT and its Subsidiaries on a consolidated
basis for any period of determination, the sum of (i) net income (or
loss) for such period plus (ii) to the extent deducted in the
calculation of net income for such period, Interest Expense for such
period plus (iii) to the extent deducted in the calculation of net
income for such period, federal and state income taxes for such
period, plus (iv) to the extent deducted in the calculation of net
income for such period, depreciation and amortization expense for such
period.
"Funded Debt" means all liabilities of whatever nature or
duration consisting of indebtedness for borrowed money or indebtedness
(including obligations under capital leases) incurred to finance the
purchase of any asset, excluding any such indebtedness that consists
of obligations due to trade creditors within one year, accrued
liabilities, and deferred tax liabilities.
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"Interest Expense" means, for GT and its Subsidiaries on a
consolidated basis for any period of determination, the total interest
expense (including, without limitation, interest expense attributable
to capitalized leases for such period.
"Leverage Ratio" means, for GT and its Subsidiaries on a
consolidated basis for any period of determination, the ratio of:
(a) the sum of (i) Funded Debt (including any standby
letters of credit) plus (ii) Contingent Obligations, in each case
issued with respect to Funded Debt, as of that date; to
(b) EBITDA."
(b) The definition of "Applicable Margin" in Paragraph 1.1 is
amended in full to read as follows:
"Applicable Margin" means a percentage based on the
Leverage Ratio achieved by GT and its Subsidiaries on a consolidated
basis, calculated on a rolling four-quarter basis, as follows:
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Leverage Ratio Margin Percentage
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Offshore Rate
Reference Rate and LIBOR Rate
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less than or equal to 1.75 to 1.00 0.00% 1.00%
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greater than 1.75 to 1.00
less than or equal to 2.50 to 1.00 0.00% 1.25%
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greater than 2.50 to 1.00
less than or equal to 3.00 to 1.00 0.25% 1.50%
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greater than 3.00 to 1.00
less than or equal to 3.50 to 1.00 0.50% 1.75%
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greater than 3.50 to 1.00
less than or equal to 4.00 to 1.00 0.75% 2.00%
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greater than 4.00 to 1.00 1.00% 2.25%
=================================================================
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The Applicable Margin shall be determined based on the most recent compliance
certificate received by Bank and shall be effective on the related "Start Date".
"Start Date" means, with respect to each date the compliance certificate is due
to be delivered pursuant to Paragraph 8.2 of this Agreement, the date indicated
below:
Compliance certificate as Related
of fiscal period ending Start Date
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June 30 September 1
September 30 December 1
December 31 March 1
March 31 June 1"
(c) The definition of "Tangible Net Worth" is deleted in full.
(d) In Paragraph 2.2(c), the words "plus the Applicable Margin"
are added immediately after the words "Reference Rate."
(e) Paragraph 2.5(f) is amended in full to read as follows:
"(f) The Term Loan shall, at GTBC's election, bear interest
at a rate per annum equal to the Reference Rate plus the Applicable
Margin or, subject to the requirements set forth in Section 2.6, the
Offshore Rate plus the Applicable Margin, the LIBOR Rate plus the
Applicable Margin, or a combination thereof; provided, however, that
no more than seven designations of optional interest rates under the
Revolving Credit and the Term Loan may be in effect at any one time.
No CD Rate Portion shall be available for the Term Loan."
(f) The form of Compliance Certificate attached to the Credit
Agreement as Exhibit A is amended in full to read as provided on Exhibit A
attached hereto.
(g) Except as hereby amended, all of the terms and conditions of
the Credit Agreement shall remain in full force and effect.
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3. Applicable Margin. The parties hereto agree that an Applicable
Margin of 2.00% shall be in effect under the Credit Agreement from and after the
date of execution of this Amendment to the next Start Date.
4. Waiver. Bank hereby waives Borrowers' noncompliance with Paragraph
8.4 of the Credit Agreement for the fiscal quarter ended June 30, 1997. This
waiver is specific in time and in intent and does not constitute, nor should it
be construed as, a waiver of any other right, power or privilege under the
Credit Agreement, or under any agreement, or instrument mentioned in the Credit
Agreement, or as a waiver of any other default of the same or of any other term
or provision of the Credit Agreement.
5. Representations and Warranties. Borrowers represent and warrant to
Bank that: (i) after giving effect to the waiver provided in Paragraph 4 of this
Amendment, no Event of Default under Credit Agreement and no event which, with
notice or lapse of time or both, would become an Event of Default has occurred
and is continuing; (ii) after giving effect to the waiver provided in Paragraph
4 of this Amendment, Borrowers' representations and warranties made under the
Credit Agreement are true as of the date hereof; (iii) the making and
performance by Borrowers of this Amendment have been duly authorized by all
necessary corporate action; (iv) no consent, approval, authorization, permit, or
license is required in connection with the making or performance of this
Amendment.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
BANK OF AMERICA NATIONAL GT BICYCLES CALIFORNIA, INC.
TRUST AND SAVINGS ASSOCIATION RITEWAY PRODUCTS EAST, INC.
RITEWAY PRODUCTS NORTH CENTRAL, INC.
By: /s/ X.X. XXXXXX RITE-WAY DISTRIBUTORS CENTRAL, INC.
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X.X. Xxxxxx RITE-WAY DISTRIBUTORS, INC.
Title: Vice President GT BICYCLES, INC.
By: /s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
Title: President
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EXHIBIT A
FORM OF
COMPLIANCE CERTIFICATE
To: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Reference is made to that certain Second Amended and Restated Credit
Agreement (Receivables and Inventory) dated as of August 12, 1996, among Bank of
America National Trust and Savings Association and GT Bicycles California, Inc.,
Riteway Products East, Inc., Riteway Products North Central, Inc., Rite-Way
Distributors Central, Inc., Rite-Way Distributors, Inc. and GT Bicycles, Inc.
(the "Credit Agreement"). Capitalized terms not otherwise defined in this
Certificate shall have the meanings ascribed to them in the Credit Agreement.
This Certificate is delivered in accordance with Paragraph 8.2(c) of the Credit
Agreement.
I. CALCULATION OF LEVERAGE RATIO REGARDING APPLICABLE MARGIN
As of the date of the attached financial statements, the Leverage
Ratio was calculated as follows for the period consisting of the most recently
ended fiscal quarter plus the immediately preceding three fiscal quarters
("Fiscal Period"):
(a) Funded Debt (including
Standby L/C's) $____________
plus Contingent Obligations $____________
equals $____________
Divided by
(b) The sum of:
net income (or loss)
for the Fiscal Period $____________
plus Interest Expense
for the Fiscal Period $____________
plus income taxes
for the Fiscal Period $____________
plus depreciation
for the Fiscal Period $____________
plus amortization
for the Fiscal Period $____________
equals $____________
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Compliance Certificate
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(c) The sum of the components of
section (a) above divided by the sum
of the components of section (b) above
equals, expressed as a ratio: to 1.00
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II. COMPLIANCE WITH FINANCIAL COVENANTS
Computations showing compliance with certain paragraphs of the Credit
Agreement are as follows:
Paragraph 8.4; Fixed Charge Coverage Ratio. As of the date of the
attached financial statements, the Fixed Charge Coverage Ratio was
calculated as follows for the period consisting of the most recently ended
fiscal quarter plus the immediately preceding three fiscal quarters
("Fiscal Period"):
(a) The sum of:
net income (or loss) from operations
(excluding extraordinary or non-
recurring gains) for the Fiscal
Period $____________
plus interest expense
for the Fiscal Period $____________
plus depreciation expense
for the Fiscal Period $____________
plus amortization expense
for the Fiscal Period $____________
plus equity contributions and
subordinated loans $____________
minus dividends paid
in the Fiscal Period $____________
equals $____________
Divided by $____________
(b) The sum of:
current portion of long-term
debt and capital leases for
the Fiscal Period $____________
plus capital expenditures made
in cash for the Fiscal Period $____________
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Compliance Certificate
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plus interest expense for
the Fiscal Period $____________
equals $____________
(c) The sum of the components
of section (a) above
divided by the sum of the
components of section (b)
above equals, expressed
as a ratio: to 1.00
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minimum permitted: to 1.00
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Paragraph 8.5; Quick Ratio. As of the date of the
attached financial statements, the quick ratio was calculated
as follows:
(a) The sum of:
cash $____________
plus short-term cash investments $____________
plus marketable securities not
classified as long-term investments $____________
plus trade accounts receivable $____________
equals $____________
Divided by $____________
(b) The sum of:
current liabilities $____________
plus the portion of the
Revolving Facility classified
as long-term debt $____________
equals $____________
(c) The sum of the components
of section (a) above
divided by the sum of the
components of section (b)
above equals, expressed
as a ratio: to 1.00
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minimum permitted: to 1.00
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Paragraph 8.6; Other Indebtedness. As of the date of the attached
financial statements:
the outstanding amount of obligations under guaranties
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Compliance Certificate
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described in Paragraph 8.6(f) was $____________.
maximum permitted: $500,000
the outstanding amount of indebtedness incurred for the
acquisition of fixed or capital assets in the current fiscal year
of GT under Paragraph 8.6(g) was $ .
maximum permitted: $7,000,000
in fiscal
year ending 1997
$3,000,000 in
any fiscal year
thereafter
Paragraph 8.7; Liens. As of the date of the attached
financial statements, the outstanding amount of obligations
secured by liens was $____________.
maximum permitted: $2,000,000 in
any fiscal year
Paragraph 8.8; Acquisitions. [Neither GT nor any Subsidiary has acquired or
purchased any assets or businesses except as permitted under subparagraphs
(a) and (b) and (e) of Paragraph 8.8.] [The following acquisitions or
purchases of assets or businesses, excluding those permitted under
subsections (a) and (b) of Paragraph 8.8, have occurred: [briefly describe
transactions]. The total consideration paid (including assumption of debt)
in the current fiscal year of GT for these transactions was $____________.]
maximum permitted: $1,000,000 in
any fiscal year
III. PERFORMANCE OF OBLIGATIONS
A review of the activities of GT and Borrowers during the fiscal
period covered by this Certificate has been made under the supervision of the
undersigned with a view to determining whether during such fiscal period all
Guarantors and Borrowers performed and observed all of their respective
obligations. To the best knowledge of the undersigned, during the fiscal period
covered by this Certificate, all covenants and conditions have been so performed
and observed and no Event of Default or event which with notice or lapse of time
or both would be an Event of Default has occurred and is continuing, with any
exceptions set forth below, in response to which Borrowers and GT have taken or
propose to take the following actions (if none, so state):
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_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
IV. NO MATERIAL ADVERSE CHANGE
To the best knowledge of the undersigned, no event or circumstance has
occurred that constitutes a material adverse change under Paragraph 9.15 of the
Credit Agreement since the date the most recent Certificate was executed and
delivered, with any exceptions being set forth below (if none, so state):
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
This Certificate is by a responsible officer of GT and Borrowers. The
undersigned hereby certify that each and every matter contained herein is
derived from GT's and its Subsidiaries' books and records and is, to the best
knowledge of the undersigned, true and correct.
Dated: ____________ , 19____.
In signing below, the undersigned is executing this Certificate
on behalf of all Guarantors and all Borrowers.
________________________
________________________
Printed Name and Title
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