THIRD AMENDMENT AND WAIVER
THIS THIRD AMENDMENT AND WAIVER ("Amendment") made as of this 21st day of
June, 1999 among XXXXXX INTERNATIONAL CORP., a Delaware corporation having its
principal place of business at 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000
("Xxxxxx" or a "Borrower"), HAPL LEASING CO., INC., a New York corporation
having its principal place of business at 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 ("HAPL" or a "Borrower") (Xxxxxx and HAPL sometimes referred to
herein as a "Borrower" or collectively, as the "Borrowers"), SEWING MACHINE
EXCHANGE, INC., an Illinois corporation having an office at 000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("SMX"), PULSE MICROSYSTEMS LTD., an
Ontario, Canada corporation having its principal place of business at 0000
Xxxxxxxxxx Xxxxxxxxx, Xxxx 00, Xxxxxxxxxxx, Xxxxxxx, Xxxxxx X0X0X0 ("Pulse"),
SEDECO, INC., a Texas corporation having its principal place of business at 0000
X. Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000 ("Sedeco") and XXXXXX EQUIPMENT
CONNECTION, INC., a Delaware corporation having an office at 000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Equipment") (Xxxxxx,( with respect to
Loans made to HAPL), HAPL, (with respect to Loans made to and Letters of Credit
issued for, Xxxxxx), SMX, Pulse, Sedeco and Equipment being individually, a
"Guarantor" and collectively, the "Guarantors"), THE BANK OF NEW YORK, a New
York banking organization, having an office at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx
Xxx Xxxx 00000 ("BNY" or a "Bank") FLEET BANK, N.A., a national banking
association, having an office at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
("Fleet" or a "Bank"), MELLON BANK, N.A., a national banking association, having
an office at 000 XXX Xxxxx, Xxxx Xxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxx Xxxx
00000-0000 ("Mellon" or a "Bank") and THE BANK OF NEW YORK, as agent for the
Banks (the "Agent").
W I T N E S S E T H :
WHEREAS, Xxxxxx, HAPL and the other Guarantors, and BNY, Mellon and Fleet,
as lending Banks, and BNY, as Agent, entered into a Loan Agreement dated as of
the 7th day of January, 1997, which Loan Agreement has heretofore been amended
pursuant to that certain First Amendment dated September 26, 1997 and that
certain Second Amendment dated as of February 9, 1999 (hereinafter, the
"Agreement"); and
WHEREAS, the Banks have made certain commitments to Xxxxxx and HAPL
pursuant to the Agreement; and
WHEREAS, Xxxxxx, HAPL and the other Guarantors have requested that the
Agent and the Banks agree to waive certain defaults under the Agreement; and
WHEREAS, the Agent and the Banks have agreed to waive such defaults on the
terms and conditions herein contained; and
WHEREAS, Xxxxxx, the Agent and the Banks have agreed to reduce Xxxxxx'x L/C
Exposure on the terms and conditions herein contained; and
WHEREAS, Hirsch, HAPL, the other Guarantors the Agent and the Banks have
agreed to amend the definition of the term Obligations contained in the Security
Agreement.
NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Guarantors and the Bank do hereby agree as
follows:
1. Defined Terms. As used in this Amendment, capitalized terms, unless
otherwise defined, shall have the meanings set forth in the Agreement.
2. Representations and Warranties. As an inducement for the Agent and the
Banks to enter into this Amendment, Xxxxxx, HAPL and each other Guarantor
represent and warrant as follows:
A. That with respect to the Agreement and the Loan Documents executed in
connection therewith and herewith:
(i) There are no defenses or offsets to Xxxxxx'x, HAPL's or any other
Guarantor's obligations under the Agreement, as in effect prior to or subsequent
to this Amendment, the Notes or any of the other Loan Documents or any other
agreements in favor of the Agent or the Banks referred to in the Agreement, and
if any such defenses or offsets exist without the knowledge of Xxxxxx, HAPL or
any other Guarantor, the same are hereby waived.
(ii) All of the representations and warranties made by Xxxxxx, HAPL or any
other Guarantor in the Agreement, as amended hereby, are true and correct in all
material respects as if made on the date hereof, except for those made with
respect to a particular date, which such representations and warranties are
restated as of such date; and provided further that the representations and
warranties set forth in Section 4.01(f) of the Agreement shall relate to the
consolidated financial statements of Xxxxxx, HAPL and the other Guarantors for
the fiscal year ended January 31, 1999.
(iii) The outstanding aggregate principal balance of the Revolving Credit
Loans (Xxxxxx) is $20,000,000.00 and interest has been paid (i) with respect to
the $2,000,000.00 Eurodollar Loan through June 14, 1999, (ii) with respect to
the $14,500,000.00 Eurodollar Loan through May 19, 1999; and (iii) with respect
to the $3,500,000.00 ABR Loan through June 10, 1999.
(iv) The outstanding aggregate L/C Exposure is $3,616,888.33.
(v) The outstanding aggregate principal balance of the Revolving Credit
Loans (HAPL) is $0.
3. Amendments.
(a) The following definition is hereby added to the Agreement as follows:
"'Foreign Exchange Potential Risk' means any and all risk, cost, expense or
liability incurred or which may be incurred by a Bank resulting from such Bank
and Xxxxxx entering into any foreign exchange contract."
(b) Section 2A.01(b)(v) is hereby deleted in its entirety and replaced as
follows:
"(v) the aggregate L/C Exposure, after giving effect to the requested
Letter of Credit, under all Letters of Credit shall exceed $6,616,888.33; or"
4. Waivers. The Agent and the Banks hereby waive the following:
(a) (i) the failure of Xxxxxx and the Guarantors to maintain a Consolidated
Tangible Net Worth ("TNW") (excluding the financial impact of third party sales
by Tajima USA, Inc. from consolidated operations and after excluding the net
income of Tajima USA, Inc. from Xxxxxx'x consolidated net income) of not less
than $60,958,600.00 as of the fiscal quarter ended April 30, 1999, provided that
the actual TNW as of such fiscal quarter end is not less than $55,474,000.00.
(ii) the failure of Xxxxxx and the Guarantors to maintain a
Consolidated Tangible Net Worth ("TNW") of not less than $60,958,600.00 as of
the fiscal quarter ended April 30, 1999, provided that the actual TNW as of such
fiscal quarter end is not less than $55,474,000.00.
(b) (i) the failure of Xxxxxx and Guarantors to maintain as of the fiscal
quarter ended April 30, 1999, on a consolidated basis, a Funded Debt to EBITDA
Ratio (excluding the financial impact of third party sales by Tajima USA, Inc.
from consolidated operations and after excluding the net income of Tajima USA,
Inc. from Xxxxxx'x consolidated net income) of not greater than 2.25 to 1.00,
provided that the actual Funded Debt to EBITDA Ratio as of such fiscal year end
is not greater than -5.23 to 1.00.
(ii) the failure of Xxxxxx and Guarantors to maintain as of the fiscal
quarter ended April 30, 1999, on a consolidated basis, a Funded Debt to EBITDA
Ratio of not greater than 2.25 to 1.00, provided that the actual Funded Debt to
EBITDA Ratio as of such fiscal year end is not greater than -5.23 to 1.00.
(c) (i) the failure of Xxxxxx and Guarantors to maintain as of the fiscal
quarter ended April 30, 1999, on a consolidated basis, a Fixed Charge Coverage
Ratio (excluding the financial impact of third party sales by Tajima USA, Inc.
from consolidated operations and after excluding the net income of Tajima USA,
Inc. from Xxxxxx'x consolidated net income) of not less than 3.50 to 1.00,
provided that the actual Fixed Charge Coverage Ratio is not less than -2.93 to
1.00.
(ii) the failure of Xxxxxx and Guarantors to maintain as of the fiscal
quarter ended April 30, 1999, on a consolidated basis, a Fixed Charge Coverage
Ratio of not less than 3.50 to 1.00, provided that the actual Fixed Charge
Coverage Ratio is not less than -2.93 to 1.00.
5. Effectiveness. This Amendment shall become effective upon the occurrence
of the following events and the receipt and satisfactory review by the Bank and
its counsel of the following documents:
(a) The Agent shall have received this Amendment, duly executed by Hirsch,
HAPL, each other Guarantor and each of the Banks.
(b) The Bank's counsel shall have been paid their fees and disbursements in
connection with this Amendment.
6. Amendment to Security Agreements. The definition of the term Obligations
contained in each of the Security Agreements is hereby deleted in its entirety
and replaced as follows:
"'Obligations' shall mean any and all liabilities and obligations of the
Company to the Agent and the Banks of every kind arising under this Agreement,
the Loan Agreement, any other Loan Document, any other agreement of the Company
with the Agent and the Banks and all Foreign Exchange Potential Risk (determined
by the bank incurring the same in its sole discretion) resulting from foreign
exchange contracts between the Company and any Bank, including any liability of
the Company pursuant to any guarantee executed by the Company in favor of the
Banks, however evidenced and whether now existing or hereafter incurred,
originally contracted with the Agent and the Banks alone or with another or
others, or as agent for another or others, secured or not secured, direct or
indirect, matured or not matured, absolute or contingent, now due or hereafter
to become due (including, without limitation, any and all costs and reasonable
attorneys' fees incurred by the Agent in the collection, whether by suit or by
any other means of any of the Obligations hereunder) and any amendment,
modification, extension or renewal of any of the foregoing."
7. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
8. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9. Ratification. Except as hereby amended, the Agreement and all other Loan
Documents executed in connection therewith shall remain in full force and effect
in accordance with their originally stated terms and conditions. The Agreement
and all other Loan Documents executed in connection therewith, as amended
hereby, are in all respects ratified and confirmed.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the year and date first above written.
THE BANK OF NEW YORK, as Agent HAPL LEASING CO., INC.
By:____________________________ By:________________________
Xxxxxx X. Xxxxxx Name:
Vice President Title:
THE BANK OF NEW YORK PULSE MICROSYSTEMS, LTD.
By:____________________________ By:________________________
Xxxxxx X. Xxxxxx Name:
Vice President Title:
FLEET BANK, N.A. SEWING MACHINE EXCHANGE, INC.
By:____________________________ By:________________________
Name: Name:
Title: Title:
MELLON BANK, N.A. SEDECO, INC.
By:____________________________ By:________________________
Name: Name:
Title: Title:
XXXXXX INTERNATIONAL CORP. XXXXXX EQUIPMENT CONNECTION, INC.
By:____________________________ By:_________________________
Name: Name:
Title: Title:
