1
EXHIBIT 4.1(C)
FIRST AMENDMENT
TO
SECOND AMENDED AND RESTATED
TERM LOAN AGREEMENT
This First Amendment ("First Amendment"), dated as of December 17, 1999
is made by and between SERVOTRONICS, INC. ("Borrower"), a Delaware corporation
having its principal office at 0000 Xxxxx Xxxxxx, X.X. Xxx 000, Xxxx, Xxx Xxxx
00000 and FLEET NATIONAL BANK, a national banking association and successor to
Fleet Bank, with an office at Fleet Bank Building, Ten Fountain Plaza, Buffalo,
New York 14202 ("Bank").
STATEMENT OF THE PREMISES
Borrower and Bank have previously entered into a Second Amended and
Restated Term Loan Agreement dated February 26, 1999 (as amended from time to
time, the "Loan Agreement"). Borrower and Bank have agreed to amend certain
financial covenants in the Loan Agreement and make certain other changes, all
upon the terms and conditions set forth herein.
STATEMENT OF CONSIDERATION
Accordingly, in consideration of the premises and under the authority
of Section 5-1103 of the New York General Obligations Law, Borrower and Bank
agree as follows:
AGREEMENT
1. AMENDMENT. Effective upon the satisfaction of all conditions
specified in Section 3 hereof, the Loan Agreement is hereby amended as follows:
A. The following subsection (vi) is hereby added at the end of
Section 3.2 of the Loan Agreement:
(vi) Borrower has reviewed the "Year 2000 Risk" (that is the
risk that computer applications used by Borrower and/or it suppliers, vendors
and customers may be unable to recognize and perform without error
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999) and represents that, to the best of its knowledge after such
review, it is taking such action as may be necessary to ensure that the Year
2000 Risk will not materially adversely affect its business operations and/or
financial condition. Notwithstanding the provisions of this Section, the
Borrower gives no representation with respect to suppliers, vendors or customers
not controlled by the Borrower except that it has made a reasonable effort to
obtain assurances as to Year 2000 Risk from entities with whom the Borrower has
material business relationships, and the Borrower has received from such
entities no reports advising of a Year 2000 Risk materially adversely affecting
the Borrower's business operations and/or financial condition.
B. Sections 4.2, 4.3, 4.4 and 4.5 of the Loan Agreement are
hereby amended and restated in their entirety to read as follows:
2
EXHIBIT 4.1(c)
Page 2 of 7
4.2 Will maintain, (i) as of December 31, 1999, Net Working
Capital of not less than $7,500,000 and (ii) as at the end of each fiscal
quarter thereafter, Net Working Capital of not less than $7,500,000, increasing
each fiscal year, commencing December 31, 2000, by two percent (2%) of the
amount used on the previous December 31 for purposes of testing this covenant
(e.g. for the quarters ending March 31, 2000, June 30, 2000 and September 30,
2000, not less than $7,500,000; for the quarter ending December 31, 2000, not
less than $7,650,000; for the quarters ending March 31, 2001, June 30, 2001 and
September 30, 2001, not less than $7,650,000; for the quarter ending December
31, 2001, not less than $7,803,000, etc.). If the effect of any change in GAAP
would cause a violation of the covenant set forth in this Section 4.2 on any
testing date during the term of this Agreement and such covenant would not be
violated if such change in GAAP were disregarded in making the calculations set
forth in this Section, then such covenant shall not be deemed violated as of the
applicable testing date.
4.3 Will maintain, (i) as of December 31, 1999, a Tangible Net
Worth of not less than $9,000,000 and (ii) as of the end of each fiscal quarter
thereafter, Tangible Net Worth of not less than $9,000,000, increasing each
fiscal year, commencing December 31, 2000, by two percent (2%) of the amount
used on the previous December 31 for purposes of testing this covenant (e.g. for
the quarters ending March 31, 2000, June 30, 2000 and September 30, 2000, not
less than $9,000,000; for the quarter ending December 31, 2000, not less than
$9,180,000; for the quarters ending March 31, 2001, June 30, 2001 and September
30, 2001, not less than $9,180,000; for the quarter ending December 31, 2001,
not less than $9,363,600, etc.). If the effect of any change in GAAP would cause
a violation of the covenant set forth in this Section 4.3 on any testing date
during the term of this Agreement and such covenant would not be violated if
such change in GAAP were disregarded in making the calculations set forth in
this Section, then such covenant shall not be deemed violated as of the
applicable testing date.
4.4 Will maintain, at the end of each of its fiscal quarters
for the four quarters then ended, a ratio of its Liabilities to Tangible Net
Worth of not more than 1.5 to 1.0.
4.5 Will have a Debt Service Coverage Ratio of not less than
1.0 to 1.0, for the four quarters then ended, as of the end of each fiscal
quarter.
C. The following new Section 4.16 is added to the Loan
Agreement immediately following Section 4.15:
4.16 Borrower will be Year 2000 Compliant by January 1, 2000.
For purposes of this Section, "Year 2000 Compliant" means, with regard to
Borrower and/or its suppliers, vendors and customers (subject, however, to the
last sentence of Section 3.2(vi)), that all software, embedded microchips, and
other processing capabilities utilized by, and material to the business
operations or financial condition of, such entity are able to interpret and
manipulate data on and involving all calendar dates correctly and without
causing any abnormal ending scenario, including in relation to dates on and
after January 1, 2000.
D. The following language is hereby added at the end of
Section 8.7 of the Credit Agreement as part of such Section:
Bank may furnish any information concerning Borrower in its
possession from time to time to prospective Participants, provided that, if any
information is provided which is not publicly available (it being understood
that "publicly available" shall include non-confidential filings made by the
Company with the Securities and Exchange Commission which shall have become
available to the public and shall exclude information which has become publicly
available in violation of the provisions of this Section) Bank shall require any
such prospective Participant to agree in writing (a true copy of which shall be
furnished to Borrower) to maintain the confidentiality of all such information
which is not publicly available and the Borrower shall be identified in that
written agreement as a beneficiary of that agreement with the right to enforce
it.
3
EXHIBIT 4.1(c)
Page 3 of 7
2. REPRESENTATIONS AND WARRANTIES. Borrower makes the following
representations and warranties to Bank which shall be deemed to be continuing
representations and warranties so long as any obligations, including
indebtedness of Borrower to Bank arising under the Loan Agreement or any note
delivered pursuant thereto remain unpaid:
A. AUTHORIZATION. Borrower has full power and authority to
borrow hereunder and to execute, deliver and perform this First Amendment and
any documents delivered in connection with it and all other related documents
and transactions, all of which have been duly authorized by all proper and
necessary corporate action. The execution and delivery of this First Amendment
by Borrower will not violate the provisions of, or cause a default under,
Borrower's Certificate of Incorporation or By-Laws or any agreement to which the
Borrower is a party or by which it or its assets are bound.
B. BINDING EFFECT. This First Amendment has been duly executed
and delivered by Borrower and constitutes the legal, valid and binding
obligation of Borrower enforceable in accordance with its terms.
C. CONSENTS; GOVERNMENTAL APPROVALS. No consent, approval or
authorization of, or registration, declaration or filing with, any governmental
body or authority or any other party is required in connection with the valid
execution, delivery or performance of this First Amendment or any other document
executed and delivered therewith or in connection with any other transactions
contemplated hereby.
D. NO EVENTS OF DEFAULT. There is, on the date hereof, no
event or condition which constitutes an Event of Default under any of the Loan
Documents or which, with notice and/or the passage of time, would constitute an
Event of Default.
E. NO MATERIAL MISSTATEMENTS. Neither this First Amendment nor
any document delivered to Bank by or on behalf of Borrower to induce Bank to
enter into this First Amendment contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein or
therein not misleading in light of the circumstances in which they were made.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall become
effective when and only when Bank shall have received counterparts of this First
Amendment executed by Borrower and Bank and the following conditions shall have
been fulfilled:
A. DOCUMENTS. All instruments, certificates and agreements to
be furnished to the Bank hereunder shall be of such form and content as the Bank
shall reasonably require, and the Borrower shall furnish such consents,
authorizations and other instruments and agreements as the Bank may reasonably
deem necessary to effectuate the intent of this First Amendment.
B. OPINION OF COUNSEL. Counsel to Borrower shall have
delivered to the Bank an opinion in form and substance satisfactory to the Bank.
4
EXHIBIT 4.1(c)
Page 4 of 7
C. AUTHORIZATION. The Borrower shall have taken appropriate
corporate action to authorize, and the Borrower's Board of Directors shall have
adopted resolutions authorizing the execution and delivery of this First
Amendment and the taking of all action called for by this First Amendment, and
the Borrower shall have furnished to Bank certified copies of all such corporate
action and Board resolutions and such other certified corporate documents as the
Bank may request.
D. COSTS AND EXPENSES. Borrower shall have complied with
Section 5 of this First Amendment.
E. ACKNOWLEDGMENT. G. N. Metals Products, Inc., The Ontario
Knife Company and Queen Cutlery Company, Inc. shall each have delivered to Bank
an Acknowledgment in form and substance satisfactory to Bank and such additional
documents as Bank or its counsel may reasonably require and all documents,
instruments and other legal matters in connection with this First Amendment
shall be satisfactory in form and substance to Bank and its counsel.
4. REFERENCE TO AND EFFECT ON LOAN DOCUMENTS.
A. Upon the effectiveness hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like
import, and each reference in the Loan Documents to the Loan Agreement shall
mean and be a reference to the Loan Agreement as amended by this First
Amendment.
B. The Loan Agreement, as amended by this First Amendment,
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof. This First Amendment supersedes all
prior negotiations and any course of dealing between the parties with respect to
the subject matter hereof. This First Amendment shall be binding upon Borrower
and its successors and assigns, and shall inure to the benefit of, and be
enforceable by, Bank and each of its successors and assigns. The Loan Agreement,
as amended hereby, is in full force and effect and, as so amended, is hereby
ratified and reaffirmed in its entirety. The Borrower acknowledges and agrees
that the Loan Agreement (as amended by this First Amendment) and each other
Borrower Document, as defined in the Loan Agreement, to which Borrower is a
party is in full force and effect, that its obligations thereunder and under
this First Amendment are its legal valid and binding obligations enforceable
against it in accordance with the terms thereof and hereof, and it has no
defense, whether legal or equitable, setoff or counterclaim to the payment and
performance of such obligations.
C. The execution, delivery and effectiveness of this First
Amendment shall not operate as a waiver of any right, power or remedy of Bank
under the Loan Agreement, nor constitute a waiver of any provision of the Loan
Agreement.
5. COSTS AND EXPENSES. Borrower agrees to pay on demand all costs and
expenses of Bank in connection with the preparation, negotiation,
administration, execution and delivery of this First Amendment and the other
documents related hereto, including the reasonable fees, charges and
disbursements of counsel for Bank.
5
EXHIBIT 4.1(c)
Page 5 of 7
6. GOVERNING LAW. Pursuant to Section 5-1401 of the New York General
Obligations Law, the laws of the State of New York shall govern the validity,
construction, enforcement and interpretation of this First Amendment in whole
without regard to any rules of conflicts-of-laws that would require the
application of the laws of any jurisdiction other than the State of New York.
7. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not limit or otherwise affect
the meanings of this First Amendment or be used to construe its provisions.
8. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same First Amendment, regardless of
whether or not the execution by all parties shall appear on any single
counterpart. Delivery of an executed counterpart of a signature page to this
First Amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this First Amendment.
6
EXHIBIT 4.1(c)
Page 6 of 7
IN WITNESS WHEREOF, the parties hereto have each caused a counterpart
of this First Amendment to be executed by their respective representatives
thereunto duly authorized, as of the date first above written.
SERVOTRONICS, INC.
By: /S/XXX X. XXXXX, TREASURER
----------------------------
Xxx X. Xxxxx
Treasurer and Chief Financial
Officer
FLEET NATIONAL BANK
By: /S/XXXXXX X. XXX
--------------------
Xxxxxx X. Xxx
Vice President
STATE OF NEW YORK )
: SS.:
COUNTY OF ERIE )
On the 17th day of December in the year 1999 before me personally came
Xxx X. Xxxxx to me known, who, being by me duly sworn, did depose and say that
he resides in Lancaster, New York; that he is the Treasurer and Chief Financial
Officer of Servotronics, Inc., the corporation described in and which executed
the above instrument; and that he signed his name thereto by order of the board
of directors of said corporation.
/S/Pandora X. Xxxxxxx
--------------------------------------------
Notary Public
PANDORA X. XXXXXXX
Notary Public, State of New York
Qualified in Erie County
Commission Expires March 30, 2000
7
EXHIBIT 4.1(c)
Page 7 of 7
STATE OF NEW YORK )
: SS.:
COUNTY OF ERIE )
On this 17th day of December, 1999 before me personally came Xxxxxx X.
Xxx to me known, who, being by me duly sworn, did depose and say that he resides
in Tonawanda, New York; that he is a Vice President of Fleet National Bank, the
banking association described in and which executed the above instrument; and
that he signed his name thereto by order of the board of directors of said
association.
/S/Xxxxxx X. Xxxxxxxx
----------------------------------
Notary Public
XXXXXX X. XXXXXXXX
Notary Public, State of New York
No.02PO4930661
Qualified in Erie County
Certificate Filed in Erie County
Commission Expires April 18, 2000
