FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT ("First
Amendment") made this 30th day of October, 2000 by and among XXXXXX
INTERNATIONAL CORP., a corporation organized under the laws of the State of
Delaware ("HIC"), HAPL LEASING CO., INC., a corporation organized under the laws
of the State of New York ("HAPL"), PULSE MICROSYSTEMS LTD., a corporation
organized under the laws of the Province of Ontario ("PULSE"), SEDECO, INC., a
corporation organized under the laws of the State of Texas ("SEDECO"), SEWING
MACHINE EXCHANGE, INC., a corporation organized under the laws of the State of
Illinois ("SEWING"), XXXXXX BUSINESS CONCEPTS, LLC, formerly known as Hometown
Threads, LLC, a limited liability company organized under the laws of the State
of Delaware ("HBC"), HOMETOWN THREADS, LLC formerly known as HJ Grassroots, LLC,
a limited liability company organized under the laws of the State of Delaware
("Hometown") and XXXXXX EQUIPMENT CONNECTION, INC., a corporation organized
under the laws of the State of Delaware ("CONNECTION") (HIC, HAPL, PULSE,
SEDECO, SEWING, HOMETOWN, HBC and CONNECTION, each a "Borrower" and collectively
"Borrowers"), the financial institutions which are now or which hereafter become
a party hereto (collectively, the "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL ASSOCIATION, a national banking association ("PNC"), as agent for
Lenders (PNC, in such capacity, the "Agent").
WITNESSETH
WHEREAS, the Bank and the Borrowers have previously entered into a
commercial lending arrangement in accordance with the terms and provisions of a
certain Revolving Credit and Security Agreement dated September 30, 1999 (the
"Agreement"); and
WHEREAS, the parties desire to amend the Agreement pursuant to the terms
set forth in this First Amendment and memorialize the amendments to the
Agreement by this writing.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed as follows:
1. The following definitions are hereby added to Subsection 1.2 of the
Agreement to read as follows:
"Applicable Margin" shall mean initially 125 basis points but shall adjust
automatically to the applicable basis point margin as set forth below upon the
Borrowers obtaining and maintaining the indicated Fixed Charge Coverage Ratio:
BASIS POINT
LEVEL RATIO MARGIN
----- ----- ------
I Less than zero to 1 125
II Equal to or greater than zero to 1 but less than .5 100
III Equal to or greater than .5 to 1 but less than 1 to 1 50
IV Equal to or greater than 1 to 1 0
Performance with respect to the foregoing grid shall be tested at the end
of each fiscal quarterly period of the Borrower based upon the prior quarterly
period and any changes to the Applicable Margin shall become effective five (5)
Business Days after delivery of the quarterly financial statement of the
Borrowers as well as a covenant calculation.
"Fixed Charge Coverage Ratio" shall mean and include, with respect to any
fiscal period, the ratio of (i) EBITDA to (ii) all Senior Debt Payments during
such period.
"Senior Debt Payments" shall mean and include all cash actually expended by
Borrowers to make (i) interest payments on any Advances hereunder plus (ii)
payments with respect to any other indebtedness for borrowed money.
2. The definition of Revolving Interest Rate contained in Subsection 1.2 of
the Loan Agreement is hereby deleted and a new Subsection 1.2 is substituted
therefor to read as follows:
"Revolving Interest Rate" shall mean an interest rate per annum equal to
the Base Rate in effect on such date plus the Applicable Margin with respect to
Domestic Rate Loans.
3. Subsection 6.5 of the Agreement is deleted and a new Subsection 6.5 is
substituted therefore to read as follows:
6.5 Net Interest Coverage Ratio. Maintain at all times a ratio of
EBITDA to Lenders' Interest of not less than 1:1. For the purposes
hereof, the term "Lenders' Interest" shall mean interest in excess of
$10,000 per quarter paid on the Revolving Advances.
4. The Lenders hereby waive noncompliance with Subsection 6.5 of the
Agreement, the Minimum Stockholders Equity covenant, for the quarterly fiscal
periods ending January 31, 2000, April 30, 2000 and July 31, 2000.
5. The Lenders hereby consent to the change of Hometown Threads, LLC's name
to Xxxxxx Business Concepts, LLC ("HBC") and HJ Grassroots, LLC's name to
Hometown Threads, LLC ("Hometown"). All references in the Agreement to
"Hometown" shall mean HBC, and all references in the Agreement to "HJ" shall
mean Hometown.
6. On the date hereof and in consideration for the modifications contained
herein, the Borrowers shall pay to the Agent an amendment fee in the amount of
$25,000 plus legal fees.
7. The Borrower hereby affirms and/or makes the representations and
warranties contained in Section V of the Agreement as amended herein, and
represents that said representations and warranties are true as of the date of
this First Amendment.
8. The Borrower hereby affirms and/or agrees to comply with the covenants
contained in Sections VI and VII of the Agreement as amended herein.
9. All the remaining terms and conditions of the Agreement and all other
Loan Documents (including any amendments thereto) except as specifically
modified herein or in connection herewith shall remain in full force and effect,
and any term not otherwise defined herein shall have the meaning described
thereto in the Agreement or the other Loan Documents.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals or
caused these presents to be signed by their respective corporate officers and
the proper corporate seal to be affixed hereto the day and year first above
written.
XXXXXX INTERNATIONAL CORP.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Vice President
HAPL LEASING CO., INC.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Vice President
PULSE MICROSYSTEMS LTD
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Vice President
SEDECO, INC.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Vice President
SEWING MACHINE EXCHANGE, INC.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Vice President
XXXXXX EQUIPMENT CONNECTION, INC.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Vice President
XXXXXX BUSINESS CONCEPTS, LLC
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Chief Financial Officer and Treasurer
HOMETOWN THREADS, LLC
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: XXXXXXX XXXXXX
Title: Chief Financial Officer and Treasurer
PNC BANK, NATIONAL ASSOCIATION, as Lender and as Agent
By:/s/ Xxxxxx X. Xxxxxxx
---------------------
Name: XXXXXX X. XXXXXXX
Title: Vice President
Xxx Xxxxx Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
