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FIRST MODIFICATION OF AMENDED AND RESTATED
REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
This First Modification of Amended and Restated Revolving
Credit Loan and Security Agreement (this "First Modification") dated as
of September 26, 1996 (the "Effective Date"), amends the Amended and
Restated Revolving Credit Loan and Security Agreement dated as of July
10, 1996, by and among XXXXX TICONDEROGA COMPANY, a Delaware corporation
("DTC"), and XXXXX TICONDEROGA INC., an Ontario corporation ("DTI"; DTC
and DTI, are collectively referred to hereinafter as the "Borrower"), the
Lenders named therein and FIRST UNION COMMERCIAL CORPORATION, a North
Carolina corporation ("FUCC"), as Agent for the Lenders (in its capacity
as Agent, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has entered into an Amended and
Restated Revolving Credit Loan and Security Agreement, dated as of July
10, 1996 (said Agreement, as it may be further amended, restated or
otherwise modified from time to time, being hereinafter called the
"Revolving Credit Agreement"), pursuant to which the Lenders extended
financial accommodations to Borrower in the form of a $40,000,000
revolving line of credit and letter of credit facility in accordance
with, and subject to, the terms and conditions of the Revolving Credit
Agreement; and
WHEREAS, the Borrower has entered into a Term Loan
Agreement, dated as of July 10, 1996 (said Agreement, as it may be
amended, restated or otherwise modified from time to time, being herein-
after called the "Term Loan Agreement"; and, together with the Revolving
Credit Agreement, being hereinafter called the "Loan Agreements"),
pursuant to which the Lenders extended a term loan to Borrower in the
original principal amount of $7,750,000.08; and
WHEREAS, the Borrower has requested the Lenders to
consent to the issuance by DTC of its 12% Senior Subordinated Notes due
2003 in the aggregate principal amount of $16,500,000; and
WHEREAS, the Lenders are willing to give such consent
only if the Borrower agrees to certain modification of the Loan
Agreements, as set forth herein.
NOW, THEREFORE, in consideration of the premises and
the covenants and agreements hereinafter set forth, the parties hereto
agree as follows:
SECTION 1: Defined Terms. Capitalized terms used in this First
Modification and not otherwise defined herein, shall have the meanings
ascribed to them in the Revolving Credit Agreement.
SECTION 2: Definitions.
(a) Section 1 (Definitions) of the Revolving Credit Agreement is amended to
add the following new definitions in their alphabetical order:
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"Guarantor" shall mean each of Xxxxx Europe, Limited, a
United Kingdom company, Bryn Mawr Ocean Resorts, Inc., a Florida
corporation, Xxxxx Ticonderoga Company de Mexico, S.A. de C.V., a Mexican
corporation, and Ticonderoga Graphite Inc., a New York corporation, each
of which is executing and delivering a Guaranty to the Agent and the
Lenders, and each existing or future other Subsidiary which executes and
delivers a Guaranty to the Agent and the Lenders.
"Guaranty" shall collectively mean each agreement made in
favor of the Agent and the Lenders by a Guarantor in the form attached
hereto as Exhibit R.
(b) Section 1 (Definitions) of the Revolving Credit Agreement is amended by
amending the following definitions to read in their entirety as follows:
"Change of Control" shall mean (a) the acquisition
after the date hereof by any Person or related group for purposes
of Section 13(d) of the Securities Exchange Act of 1934, as amended
(a "Group"), together with any Affiliates thereof, of 30% or more
of the voting stock of the Borrower, or (b) the success by any Person
or Group, together with any Affiliates thereof, in having its or their
nominees elected to the Board of Directors of the Borrower such that
such nominees, when added to any director remaining on the Board of
Directors of the Borrower who is an Affiliate of or related Person to
such Person or Group, shall constitute a majority of the Board of
Directors of the Borrower.
"Subordinated Debt" shall mean the 12% Senior
Subordinated Notes of DTC due 2003 in the original principal amount
of $16,500,000 issued pursuant to the Subordinated Debt Documents.
"Subordinated Debt Documents" shall mean the Note and
Warrant Purchase Agreement dated as of September 26, 1996, between
DTC and the Subordinated Lenders, the Subordinated Notes issued
pursuant thereto, and all other documents evidencing, securing or
otherwise related to the Subordinated Debt, together with any
restatements, amendments, modifications and supplements thereto, and
any renewals or extensions thereof, in whole or in part.
"Subordinated Lenders" shall mean the holders from time
to time of the Subordinated Debt.
SECTION 3: Additional Guaranties. Simultaneously with the execution and
delivery of this First Modification, each of the Guarantors is executing and
delivering to the Agent a Guaranty.
SECTION 4: Amendment of Covenants.
(a) Amendment of Affirmative Covenants. The following
sections of the Revolving Credit Agreement are amended as follows:
1. Section 7.3(b) is amended by deleting the words "Within
forty-five (45) days" at the beginning of such section and replacing such
words with the following: "Not later than the earlier to occur of (i) the
fiftieth (50th) day", and by adding in the second line thereof after the
comma and before the word "beginning" the following: "and (ii) the date
of the filing thereof with the Securities and Exchange Commission".
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2. Section 7.3(c) is amended by deleting the words "Within
ninety (90) days" at the beginning of such section and replacing such
words with the following: "Not later than the earlier to occur of (i) the
one hundred and fifth (105th) day", and by adding in the second line
thereof after the comma and before the word "Beginning" the following:
"and (ii) the date of the filing thereof with the Securities and Exchange
Commission".
3. Section 7.3(i) of the Revolving Credit Agreement is
amended by deleting the last word ("and") thereof.
4. Section 7.3(j) is renumbered as 7.3(l).
5. New Sections 7.3(j) and (k) of the Revolving Credit
Agreement are added to read as follows:
(j) concurrently with the delivery thereof to other
lenders or security holders of Xxxxx-Mexico, quarterly and annual
balance sheets of Xxxxx-Mexico and the related statements of income,
stockholders" equity and (annually) cash flows of Xxxxx-Mexico for
such period, all meeting substantially the same criteria as set forth
in subparagraphs (a) and (b) of this Section 7.3;
(k) Immediately upon delivery to each holder of
Subordinated Debt, copies of any legal or fairness opinions, officers"
certificates and other notifications required to be delivered pursuant
to the Subordinated Debt Loan Documents; and
(b) Amendment of Financial Covenants. The following
sections of the Revolving Credit Agreement are amended in their entirety
to read as follows:
8.8 Subordinated Debt. (i) Permit the Subordinated
Debt at any time to exceed Sixteen Million Five Hundred Thousand U.S.
Dollars ($16,500,000), (ii) agree to any amendment of Sections 9.1,
10.1(b), (c), (d) or (i), 10.2(f) or (j), 10.8 or 13 of the
Subordinated Debt Loan Documents, (iii) agree to any amendment of
the Subordinated Debt Loan Documents that would (X) have the effect
of amending, eliminating, shortening, narrowing the scope of or
restricting the operation of the 45-day "standstill" provision in
clause (B) following subdivision (i) of Section 11, or (Y) result
in the occurrence of an "Event of Default" or a "Potential Event of
Default" (as such terms are defined in the Subordinated Debt Loan
Documents) at the time such amendment takes effect, (iv) make any
payments of the Subordinated Debt prior to the scheduled repayment
dates or maturity date for such payments, or (v) agree to any other
amendment of the Subordinated Debt Loan Documents (such other amendment
being herein called a "Sub Debt Amendment") unless (A) at least fifteen
(15) Business Days prior to such Sub Debt Amendment taking effect, the
Borrower gives written notice thereof to the Agent, which notice shall
contain the full text of the Sub Debt Amendment, and (B) during such
15-day period, the Borrower negotiates in good faith with the Agent and
the Lenders to amend the Credit Agreement to include changed or additional
provisions thereto which are at least as onerous to the Borrower as any
such Sub Debt Amendment; provided, however, that if no such amendment of
the Credit Agreement is agreed to during such 15-day period and if any
such Sub Debt Amendment either (i) amends a covenant or an Event of
Default which is more onerous to the Borrower than a counterpart covenant
or Event of Default in the Credit Agreement or (ii) adds a new covenant
or event of default to any of the Subordinated Debt Loan Documents which
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is not contained in the Credit Agreement, the Credit Agreement shall be
deemed to have been amended so as to include the more onerous or new
provision(s).
8.9 Tangible Net Worth. Permit Tangible Net Worth to
be less than the amounts shown below at the dates set forth below:
DATE AMOUNT
Effective Date through May 31, 1997 $13,000,000
June 1, 1997 through September 30, 1998 14,000,000
October 1, 1998 through September 30, 1999 16,500,000
October 1, 1999 and thereafter 18,500,000
8.10 Current Ratio. Permit the ratio of Current
Assets to Current Liabilities (including the Revolving Credit Loans)
to be less than 1.25 to 1.00 at any time.
8.11 Fixed Charge Coverage Ratio. As of the last day
of each fiscal quarter, permit the ratio of EBITDA to Fixed Charges
for the twelve (12) months immediately preceding such date to be less
than the ratio show below for the period corresponding thereto:
QUARTER ENDED IN PERIOD RATIO
Effective date to September 29, 1997 0.80 to 1.0
September 30, 1997 and thereafter 1.10 to 1.0
8.12 Senior Fixed Charge Coverage Ratio. The existing
covenant is deleted and replaced with the following:
8.12 Interest and Dividend Coverage. The Borrower
will not at any time permit the Consolidated Interest and Dividend
Coverage Ratio to be less than the ratio shown below for the period
corresponding thereto:
QUARTER ENDED IN PERIOD RATIO
Effective date to September 30, 1996 1.75 to 1.0
October 1, 1996 through
September 30, 1997 1.90 to 1.0
October 1, 1997 through
September 30, 1998 2.30 to 1.0
October 1, 1998 and thereafter 2.55 to 1.0.
Solely for purposes of this Section 12, the following
capitalized terms shall have the following respective meanings:
Adjusted EBIT: for any Reference Period, Consolidated
Net Income before dividends, (a) adjusted by adding thereto (i)
Consolidated Interest Expense, (ii) "minority interests" related to
Xxxxx-Mexico, and (iii) income taxes, all to the extent deducted in
arriving at the calculation of Consolidated Net Income for such Reference
Period; (b) further adjusted by excluding therefrom all extraordinary
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gains and losses and all other extraordinary or non-recurring items
(in each case as determined in accordance with GAAP); and (c) further
adjusted by deducting therefrom Minority EBIT for such Reference Period.
Consolidated Interest and Dividend Coverage Ratio: for
any Reference Period, the ratio of (a) Adjusted EBIT for such Reference
Period to (b) the sum of (i) Consolidated Interest Expense for such
Reference Period, plus (ii) capitalized interest for such Reference
Period, plus (iii) all cash dividends accrued or paid on capital stock of
the Borrower during such Reference Period.
Consolidated Interest Expense: for any Reference
Period, Interest Expense of the Borrower and its consolidated
Subsidiaries for such Reference Period.
Consolidated Net Income: for any Reference Period, (a)
the net income (or deficit) of the Borrower and its Subsidiaries for such
period (taken as a cumulative whole), after deducting all operating
expenses, provisions for all taxes and reserves and all other proper
deductions, all determined in accordance with GAAP, less (b) the net
income (or deficit) of any Subsidiary that is less than wholly-owned
(other than Xxxxx-Mexico).
Interest Expense: as applied to any Person with
reference to any period, interest expense of such Person for such
period, including amortization of debt discount and expense and
imputed interest on Capital Lease Obligations properly chargeable to
income during such period in accordance with GAAP.
Minority EBIT: for any Reference Period, the product
of (a) the ownership percentage of all Persons, other than the Borrower
and any Subsidiary, of the outstanding shares of Xxxxx-Mexico times (b)
the net income (or deficit) of Xxxxx-Mexico for such Reference Period
(taken as a cumulative whole), after deducting all operating expenses,
provisions for all taxes and reserves and all other proper deductions,
all determined in accordance with GAAP, (i) adjusted by adding thereto
Interest Expense and income taxes deducted in the calculation of the net
income of Xxxxx-Mexico for such Reference Period, and (ii) further
adjusted by excluding therefrom all extraordinary gains and losses and
all other extraordinary or non-recurring items (in each case as
determined in accordance with GAAP), provided, that all items under
clause (b) above shall be determined in accordance with United States
GAAP and shall be denominated in U.S. dollars.
Reference Period: as of any date of determination, the
four (4) consecutive full fiscal quarters ended most recently prior to
such date.
8.13 Ratio of EBIT to Interest on Indebtedness. As of
the last day of each fiscal quarter, permit the ratio of EBIT to interest
payable on Indebtedness for the twelve (12) months immediately preceding
such date to be less than the ratio shown below during the period
corresponding thereto:
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QUARTER ENDED IN PERIOD RATIO
Effective date to September 29, 1997 1.80 to 1.0
September 30, 1997 to September 29, 1998 2.00 to 1.0
September 30, 1998 and thereafter 2.25 to 1.0
8.14 Ratio of EBIT to Senior Debt Interest. [The
existing covenant is deleted.]
8.15 Quick Ratio. [The existing covenant is deleted.]
8.16 Debt-to-Equity Ratio. Permit the ratio of Total
Liabilities to Tangible Net Worth to be more than the ratio show below
at the dates corresponding thereto:.
DATE RATIO
September 30, 1996 4.40 to 1.0
September 30, 1997 3.75 to 1.0
September 30, 1998 3.00 to 1.0
September 30, 1999 and
thereafter 2.75 to 1.0
8.21 Funded Debt Limitation. Permit total Funded Debt
at any time to exceed: (A) in the case of the Borrower, the sum of (i)
all Obligations then outstanding, (ii) all Subordinated Debt then
outstanding, (iii) all other Funded Debt outstanding on September 25,
1996 as reflected on Debt Schedule B-2 attached to the Subordinated
Debt Loan Documents, and (iv) $3,100,000; and (B) in the case of
Xxxxx-Mexico, an aggregate of $3,000,000, provided that for purposes of
this clause (B) only, references to the Borrower in the definition of
"Funded Debt" shall be deemed references to Xxxxx-Mexico.
SECTION 5: Ratification; Effect on Term Loan Agreement. Except as
modified hereby, the terms and conditions of the Loan Agreements and the
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed in all respects. To the extent that any of the
amendments of the Revolving Credit Agreement contained in this First
Modification are amendments of provisions which are incorporated by
reference in the Term Loan Agreement, the Term Loan Agreement shall be
deemed to be similarly amended.
SECTION 6: Representations and Warranties. The Borrower represents
warrants to, and agrees with, the Agent and the Lenders and for the benefit
of First Union that (i) it has no defenses, set-offs, or counterclaims of
any kind or nature whatsoever against the Agent, the Lenders or First Union
with respect to the Obligations, any of the agreements among the parties
hereto, including, without limitation, the obligations of the Borrower under
the Loan Agreements, the Notes, this First Modification or any other Loan
Document, or any action previously taken or not taken by the Agent or any
Lender with respect thereto or with respect to any Lien or Collateral in
connection therewith to secure the Obligations, and (ii) this First
Modification has been duly authorized by all necessary corporate action
on the part of the Borrower, has been duly executed by a duly authorized
officer of each entity comprising the Borrower, and constitutes the valid
and binding obligation of the Borrower, enforceable against each entity
comprising the Borrower in accordance with the terms hereof.
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SECTION 7: Loan Agreement Representations and Warranties. The last
sentence of Section 6.1 of the Revolving Credit Agreement is amended to
read as follows:
None of the entities which collectively constitute the
Borrower has any Subsidiaries, except for DTC, which has DTI,
Xxxxx-U.K. and the Guarantors as its only directly-owned Subsidiaries,
and Xxxxx-Mexico which is a Subsidiary of DTI.
The Borrower hereby certifies that the representations and warranties
contained in the Loan Agreements, as amended herein, continue to be true
and correct and that no Event of Default, or event which with the passage
of time or the giving of notice, or both, would constitute an Event of
Default has occurred.
SECTION 8: Conditions Precedent to Effectiveness of Modification.
It shall be a condition precedent to the effectiveness of this First
Modification that the Borrower shall have complied with each of the following:
(a) Guaranties. Each Guarantor shall have executed and delivered a
counterpart original of the Guaranty to the Agent.
(b) Certificates of Secretaries of the Borrower and Guarantors. The
Agent shall have received a certificate of the Secretary or an Assistant
Secretary of each entity comprising the Borrower and of each Guarantor,
certifying (a) with respect to each such Guarantor, that attached thereto
is a true and complete copy of (i) the Bylaws for such Guarantor as in
effect on the date of such certification and (ii) resolutions adopted by
the Board of Directors and sole shareholder of such Guarantor authorizing
the execution, delivery and performance by such Guarantor of the Guaranty
and the other Loan Documents to which such Guarantor is a party; (b) that
attached thereto is a true and complete copy of resolutions adopted by
the Board of Directors of each entity comprising the Borrower authorizing
the execution, delivery and performance of this First Modification by
such entity; and (c) as to the incumbency and genuineness of the
signature of each officer of the Borrower and each Guarantor executing
this First Modification, each Guaranty and each of the other Loan
Documents, as the case may be.
(c) Articles of Incorporation. The Agent shall have received copies of
the Articles of Incorporation for each Guarantor, and all amendments
thereto, each certified by the Secretary of State of such Guarantor's
jurisdiction of incorporation.
(d) Certificates of Status. The Agent shall have received good
standing certificates for each of the Guarantors attesting to each
guarantor's good standing under the laws of the jurisdiction of its
incorporation and of each other jurisdiction where a Guarantor is
authorized to transact business.
(e) Certificates of Guarantors. The Agent shall have received a
certificate from each Guarantor, signed by the Chief Executive Officer
and Secretary of each Guarantor, in form and substance satisfactory to
the Agent and its special counsel, to the effect that all representations
and warranties of the such Guarantor contained in its Guaranty are true,
correct and complete as of the Effective Date; that such Guarantor is not
in violation of any of the covenants contained in its Guaranty.
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(f) Certificate of Borrower. The Agent shall have received a
certificate from each entity comprising the Borrower, signed by the Chief
Executive Officer and Secretary of such entity, in form and substance
satisfactory to the Agent and its special counsel, to the effect that all
representations and warranties of the Borrower contained in this First
Modification are true, correct and complete as of the Effective Date;
that the Borrower is not in violation of any of the covenants contained
in any of the Loan Documents to which it is a party; that, giving effect
to the transactions contemplated by this First Modification, no Event of
Default or any event or condition which with notice, lapse of time, or
both would constitute such an Event of Default, has occurred and is
continuing; and that the Borrower has satisfied each of the closing
conditions set forth in this Section 8.
(g) Opinion of Counsel to the Borrower. The Agent shall have received
the opinion of counsel for the Borrower dated the Effective Date, as to
the transactions contemplated by this First Modification, in form and
substance satisfactory to the Agent and its special counsel.
SECTION 9: Payment of Expenses. Borrower agrees to pay, upon receipt
of an invoice therefor, all fees and expenses of separate legal counsel for
the Agent and the Lenders in connection with the preparation, negotiation or
execution of this First Modification.
SECTION 10: Counterparts. This First Modification may be executed in
any number of counterparts which, when taken together, shall constitute one
original.
SECTION 11: Governing Law; Severability. This First Modification shall
be governed by, and construed and interpreted in accordance with, the law of
the State of Florida. Wherever possible, each provision of this First
Modification shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this First
Modification shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and without invalidating the remaining provisions of this
First Modification.
SECTION 12: WAIVER OF TRIAL BY JURY. Each of the Borrower, the Agent
and the Lenders hereby knowingly, voluntarily, irrevocably and intentionally
waives the right it may have to a trial by jury in respect to any action,
proceeding, counterclaim or other litigation based hereon, or arising out
of, under or in connection with this First Modification, the Loan Agree-
ments or any other Loan Document, or any course of conduct, course of
dealing, statements (whether oral or written) or actions of any party
hereto. This provision is a material inducement of the parties to enter
into this First Modification.
SECTION 13: Titles. The section titles contained in this First
Modification are and shall be without substantive meaning or content of any
kind whatsoever and are not part of this First Modification.
IN WITNESS WHEREOF, the parties hereto have caused this
First Modification to be executed as of the date first above written.
BORROWER:
XXXXX TICONDEROGA COMPANY,
a Delaware corporation
By: /s/ Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx, President and CEO
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XXXXX TICONDEROGA INC.,
an Ontario corporation
By: /s/ Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx, President and CEO
AGENT:
FIRST UNION COMMERCIAL CORPORATION,
a North Carolina corporation, as Agent
By: /s/ Xxxxxx Xxxxxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxxxxx, Vice President
LENDERS:
FIRST UNION COMMERCIAL CORPORATION,
a North Carolina corporation,
as Agent
By: /s/ Xxxxxx Xxxxxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxxxxx, Vice President
THE FIRST NATIONAL BANK OF BOSTON,
a national banking association
By: /s/ Xxxxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxxxx X. Xxxxxxx, Vice President
NATIONAL BANK OF CANADA,
a Canadian chartered bank
By: /s/ Xxxx Page
---------------------------------
Xxxx Page, Vice President
