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EXHIBIT 4(a)
THIRD AMENDMENT TO CREDIT AND LOAN AGREEMENT
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THIS THIRD AMENDMENT (the "Amendment"), effective as of June 23, 2000,
is made to that certain Credit and Loan Agreement, dated as of August 7, 1998,
as the same was amended by that certain First Amendment to Credit Agreement and
Loan Agreement, dated as of October 6, 1998 and that certain Second Amendment to
Credit and Loan Agreement, dated as of February 9, 1999 ( collectively, the
"Loan Agreement"), by and among TRANSMATION, INC., an Ohio corporation (the
"Borrower'), THE LENDERS PARTY THERETO FROM TIME TO TIME (the "Lenders") and
KEYBANK NATIONAL ASSOCIATION, a national banking association, as Agent (in such
capacity, together with its successors in such capacity, the "Agent").
RECITALS:
WHEREAS, the Borrower has requested that certain changes and
modifications be made to the Loan Agreement, and the Lenders are agreeable to
making the same in accordance with the terms and conditions set forth herein,
commencing as of the effective date first written above.
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, the receipt and sufficiency of which are hereby
mutually acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. DEFINITIONS. All capitalized terms used and not otherwise defined in
this Amendment shall have the meanings ascribed to such terms in the Loan
Agreement.
2. CERTAIN DEFINITIONS.
(a) The definition of "Fixed Charge Coverage Ratio" set forth
in Section 1.01 of the Loan Agreement is amended in its entirety to
read as follows: "Fixed Charge Coverage Ratio" shall mean, with respect
to the Borrower, the ratio of (i) EBITDA less taxes paid to (ii)
current maturities of long term debt plus interest expense.
(b) A definition of "Capital Expenditures" is hereby added to
Section 1.01 of the Loan Agreement, to read in its entirety as follows:
"Capital Expenditures" for any period shall mean the sum of all expenditures
made, directly or indirectly, during such period for equipment, fixed assets,
real property or improvements, or for replacements or substitutions therefor or
additions thereto, that have been or should be, in accordance with GAAP,
reflected as additions to property, plant or equipment on a consolidated balance
sheet and all cash expenditures relating to catalog production, publication, and
distribution.
(c) The definition of "EBITDA" set forth in Section 1.01 of
the Loan Agreement is amended in its entirety to read as follows:
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"EBITDA" shall mean, in respect of any period, Consolidated Net Income for such
period (i) minus, to the extent added in the computation of such Consolidated
Net Income, gains, net of losses, arising from the disposition of property other
than in the ordinary course of business; (ii) for calculating EBITDA for the
quarter ending December 31, 1999, minus the sum of $3,368,000 for inventory
write down, severance pay, bank and legal fees and increase in accounts
receivable reserve taken during that quarter; (iii) plus, to the extent deducted
in the computation of such Consolidated Net Income, each of the following:
1. Consolidated Interest Expense (i.e., all amounts
classified as interest expense of the Borrower and
its subsidiaries under generally accepted accounting
principles consistently applied),
2. taxes imposed on or measured by income or excess profits of
the Borrower and its subsidiaries and franchise taxes
however calculated,
3. the amount of all depreciation, depletion and amortization
allowances.
3. COMMITMENT FEE. Section 2.02 (a) of the Loan Agreement is hereby
amended to read in its entirety as follows:
(a) The Borrower shall pay to the Agent for the account of
each Lender a commitment fee (the "Commitment Fee") equal to
the percentage per annum (based on a year of 360 days and
actual days elapsed) calculated in the following matrix, for
each day from and including the date hereof to but not
including the Revolving Credit Maturity Date, on the average
daily amount (not less than zero) by which such Lender's
Revolving Credit Committed Amount on such day, exceeds the
aggregate principal amount of Revolving Credit Loans
(including, without limitation, outstanding Swing Line
Advances) outstanding from such Lender. Such Commitment Fee
shall be due and payable for the preceding period for which
such fee has not been paid: (x) on every third (3rd) Regular
Payment Date, (y) on the date of each reduction of the
Revolving Credit Committed Amounts (whether optional or
mandatory) on the amount so reduced and (z) on the Revolving
Credit Maturity Date. Payments due from the Borrower pursuant
to clauses (x) and (z) of the preceding sentence shall be
billed by the Agent to the Borrower in arrears for the
applicable period and the Borrower shall pay the amount
thereof in full within five (5) Business Days following
receipt of such billing notice, the Borrower's obligations
hereunder surviving the termination or expiration of this
Agreement.
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APPLICABLE MARGIN RATIO (measured quarterly on rolling four (4) quarter basis)
COMMITMENT FEE
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greater than or equal to 2.25 but less than 4.10 0.25%
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greater than or equal to 1.00 but less than 2.25 0.1875%
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less than 1.00 0.125%
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4. CERTAIN INTEREST RATES.
(a) Section 2.04 is amended to read in its entirety as follows:
(a) OPTIONAL BASES OF BORROWING. The unpaid principal
amount of the Revolving Credit Loans shall bear interest
for each day until due on one or more bases selected by
the Borrower from among the interest rate options set
forth below. Subject to the provisions and limitations of
this Agreement, the Borrower may select different Options
to apply simultaneously to different Revolving Credit
Loans and may select different Funding Periods to apply
simultaneously to different parts of each Fixed LIBOR Rate
Loan.
(i) FLOATING RATE OPTION. A rate per annum (computed on a
basis of a year of 360 days and actual days elapsed) for
each day equal to the Prime Rate plus or minus, as the
case may be, the amount of basis points hereinafter set
forth next to the Applicable Margin Ratio in effect as of
the date the Floating Rate Option is selected by the
Borrower or otherwise goes or remains in effect pursuant
to this Agreement.
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APPLICABLE MARGIN RATIO (measured as of the date the
Floating Rate Option selected by Borrower goes into PLUS OR MINUS, AS INDICATED,
effect or otherwise goes or remains in effect pursuant to THE FOLLOWING BASIS POINTS:
this Agreement)
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greater than or equal to 4.00 but less than 4.10 75
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greater than or equal to 3.50 but less than 4.00 50
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greater than or equal to 3.25 but less than 3.50 37.5
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greater than or equal to 2.25 but less than 3.25 25
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greater than or equal to 1.00 but less than 2.25 0
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less than 1.00 -12.5
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(ii) FIXED LIBOR RATE OPTION. A rate per annum (based on a
year of 360 days and actual days elapsed) for each day
during the applicable Funding Period equal to the Fixed
LIBOR Rate for such Funding Period plus the amount of
basis points hereinafter set forth next to the Applicable
Margin Ratio in effect as of the date the Fixed LIBOR Rate
Option is selected by the Borrower (subject to the
provisions of Section 2.09 hereinafter set forth):
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APPLICABLE MARGIN RATIO (measured as of the
date the Fixed LIBOR Rate Option selected by ADDITIONAL BASIS
Borrower goes into effect) POINTS:
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greater than or equal to 4.00 but less than 4.10 300
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greater than or equal to 3.50 but less than 4.00 250
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greater than or equal to 3.25 but less than 3.50 215
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greater than or equal to 2.25 but less than 3.25 185
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greater than or equal to 1.00 but less than 2.25 152.5
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less than 1.00 127.5
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The Agent shall give prompt notice to the Borrower and
each Lender (in any event within ten (10) Business Days of
its receipt of the quarterly financial statements or
annual reports described in Section 5.01 hereof) of (i)
the Floating Rate determined or adjusted in accordance
with the definition of the Floating Rate, (ii) the Fixed
LIBOR Rate determined or adjusted in accordance with the
definition of the Fixed LIBOR Rate, and (iii) the
Applicable Margin Ratio (and corresponding Basis Points
added or subtracted) determined in accordance with the
definition of the Applicable Margin Ratio based upon the
information set forth in the most recent quarterly
financial statements or annual reports described in
Section 5.01 hereof, which determinations or adjustments
shall be conclusive absent manifest error, each such
determination or adjustment to be effective as of the
first Business Day following the most recently concluded
fiscal quarter.
(b) Section 2.06 is amended to read in its entirety as
follows:
The unpaid principal amount of the Term Loan A shall bear
interest for each day until due on the basis selected by
the Borrower from between the interest rate options set
forth below.
(i) FLOATING RATE OPTION. A rate per annum (computed on a
basis of a year of 360 days and actual days elapsed) for
each day equal to the Prime Rate plus or minus, as the
case may be, the amount of basis points hereinafter set
forth next to the Applicable Margin Ratio in effect as of
the date the Floating Rate Option is selected by the
Borrower or otherwise goes or remains in effect pursuant
to this Agreement.
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APPLICABLE MARGIN RATIO (measured as of the date the
Floating Rate Option selected by Borrower goes into
effect or otherwise goes or remains in effect pursuant to PLUS OR MINUS, AS INDICATED,
this Agreement) THE FOLLOWING BASIS POINTS:
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greater than or equal to 4.00 but less than 4.10 75
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greater than or equal to 3.50 but less than 4.00 50
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greater than or equal to 3.25 but less than 3.50 37.5
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greater than or equal to 2.25 but less than 3.25 25
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greater than or equal to 1.00 but less than 2.25 0
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less than 1.00 -12.5
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(ii) Fixed LIBOR Rate Option. A rate per annum (based on a
year of 360 days and actual days elapsed) for each day
during the applicable Funding Period equal to the Fixed
LIBOR Rate for such Funding Period plus the amount of
basis points hereinafter set forth next to the Applicable
Margin Ratio in effect as of the date the Fixed LIBOR Rate
Option is selected by the Borrower (subject to the
provisions of Section 2.09 hereinafter set forth):
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APPLICABLE MARGIN RATIO (measured as of the
date the Fixed LIBOR Rate Option selected by ADDITIONAL BASIS
Borrower goes into effect) POINTS:
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greater than or equal to 4.00 but less than 4.10 300
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greater than or equal to 3.50 but less than 4.00 250
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greater than or equal to 3.25 but less than 3.50 215
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greater than or equal to 2.25 but less than 3.25 185
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greater than or equal to 1.00 but less than 2.25 152.5
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less than 1.00 127.5
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The Agent shall give prompt notice to the Borrower and
each Lender (in any event within ten (10) Business Days of
its receipt of the quarterly financial statements or
annual reports described in Section 5.01 hereof) of (i)
the Floating Rate determined or adjusted in accordance
with the definition of the Floating Rate, (ii) the Fixed
LIBOR Rate determined or adjusted in accordance with the
definition of the Fixed LIBOR Rate, and (iii) the
Applicable Margin Ratio (and corresponding Basis Points
added or subtracted) determined in accordance with the
definition of the Applicable Margin Ratio based upon the
information set forth in the most recent quarterly
financial statements or annual reports described in
Section 5.01 hereof, which determinations or adjustments
shall be conclusive absent manifest error, each such
determination or adjustment to be effective as of the
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first Business Day following the most recently concluded
fiscal quarter.
(c) Section 2.08 is amended to read in its entirety as
follows:
The unpaid principal amount of the Term Loan B shall bear
interest for each day until due on the basis selected by
the Borrower from between the interest rate options set
forth below:
(i) FLOATING RATE OPTION. A rate per annum (computed on a
basis of a year of 360 days and actual days elapsed) for
each day equal to the Prime Rate plus or minus, as the
case may be, the amount of basis points hereinafter set
forth next to the Applicable Margin Ratio in effect as of
the date the Floating Rate Option is (A) selected by the
Borrower or (B) otherwise goes or remains in effect
pursuant to this Agreement:
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APPLICABLE MARGIN RATIO (measured as of the date the
Floating Rate Option selected by Borrower goes into PLUS OR MINUS, AS INDICATED,
effect or otherwise goes or remains in effect pursuant to THE FOLLOWING BASIS POINTS:
this Agreement)
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greater than or equal to 4.00 but less than 4.10 150
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greater than or equal to 3.50 but less than 4.00 100
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greater than or equal to 3.25 but less than 3.50 75
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greater than or equal to 2.25 but less than 3.25 62.5
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greater than or equal to 1.00 but less than 2.25 37.5
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less than 1.00 25
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Such interest rate shall change automatically from time to
time effective as of the effective date of each change in
the Prime Rate and each change in the Applicable Margin
Ratio.
(ii) FIXED LIBOR RATE OPTION. A rate per annum (based on a
year of 360 days and actual days elapsed) for each day
during the applicable Funding Period equal to the Fixed
LIBOR Rate for such Funding Period plus the amount of
basis points hereinafter set forth next to the Applicable
Margin Ratio in effect as of the date the Fixed LIBOR Rate
Option is selected by the Borrower (subject to the
provisions of Section 2.09 hereinafter set forth):
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APPLICABLE MARGIN RATIO (measured as of the
date the Fixed LIBOR Rate Option selected by ADDITIONAL BASIS
Borrower goes into effect) POINTS:
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greater than or equal to 4.00 but less than 4.10 350
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greater than or equal to 3.50 but less than 4.00 325
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greater than or equal to 3.25 but less than 3.50 270
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greater than or equal to 2.25 but less than 3.25 240
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greater than or equal to 1.00 but less than 2.25 215
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less than 1.00 190
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The Agent shall give prompt notice to the Borrower and
each Lender (in any event within ten (10) Business Days of
its receipt of the quarterly financial statements or
annual reports described in Section 5.01 hereof) of (i)
the Floating Rate determined or adjusted in accordance
with the definition of the Floating Rate, (ii) the Fixed
LIBOR Rate determined or adjusted in accordance with the
definition of the Fixed LIBOR Rate, and (iii) the
Applicable Margin Ratio (and corresponding Basis Points
added or subtracted) determined in accordance with the
definition of the Applicable Margin Ratio based upon the
information set forth in the most recent quarterly
financial statements or annual reports described in
Section 5.01 hereof, which determinations or adjustments
shall be conclusive absent manifest error, each such
determination or adjustment to be effective as of the
first Business Day following the most recently concluded
fiscal quarter.
5. CERTAIN FINANCIAL COVENANTS.
(a) Subsection (a) of Section 6.01 of the Loan Agreement
is amended as follows:
(a) (i) For the fiscal quarter ending June 30, 2000 permit
the Fixed Charge Coverage Ratio (measured as of the period
of the four (4) then most recently completed fiscal
quarters of the Borrower) to be less than 1.40 to 1.00;
(ii) for the fiscal quarter ending September 30, 2000
permit the Fixed Charge Coverage Ratio (measured as of the
period of the four (4) then most recently completed fiscal
quarters of the Borrower) to be less than 1.35 to 1.00;
(iii) for the fiscal quarter ending December 31, 2000
permit the Fixed Charge Coverage Ratio (measured as of the
period of the four (4) then most recently completed fiscal
quarters of the Borrower) to be less than 1.45 to 1.00;
and
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(iv) for the fiscal quarter ending March 31, 2001 permit
the Fixed Charge Coverage Ratio (measured as of the period
of the four (4) then most recently completed fiscal
quarters of the Borrower) to be less than 1.50 to 1.00.
The Lenders hereby waive the Event of Default occurring by
reason of Borrower's default under the Loan Agreement due
to its failure to comply with this covenant for the fiscal
quarter ending March 31, 2000. This waiver shall not
extend to any other or subsequent Event of Default or
Potential Default or impair any right consequent thereto.
(b) Subsection (b) of Section 6.01 of the Loan Agreement
is amended as follows:
(b) Permit the consolidated Net Worth of Borrower and its
Subsidiaries to be less than the sum of:
(i) $12,600,000 by June 30, 2000;
(ii) $12,600,000 by September 30, 2000;
(iii)$12,800,000 by December 31, 2000;
(iv) $13,100,000 by March 31, 2001.
If the Net Worth of Borrower as of March 31, 2000 is more
than $12,850,000, each of the amounts set forth in
Subsections (i), (ii), and (iii) above shall be increased
by the amount by which the Net Worth of Borrower as of
March 31, 2000 exceeds $12,800,000.
The Lenders hereby waive the Event of Default occurring by
reason of Borrower's default under the Loan Agreement due
to its failure to comply with this covenant for the fiscal
quarter ending March 31, 2000. This waiver shall not
extend to any other or subsequent Event of Default or
Potential Default or impair any right consequent thereto.
(c) Subsection (c) of Section 6.01 of the Loan Agreement
is amended as follows:
(c) Permit the ratio of consolidated Funded Debt of
Borrower and its Subsidiaries to the consolidated EBITDA
of Borrower and its Subsidiaries, calculated at the same
point in time, and measured as of the period of the four
(4) then most recently completed fiscal quarters of the
Borrower to be:
(i) greater than 3.90 to 1.00 from April 1, 2000 to
and including June 30, 2000
(ii) greater than 3.80 to 1.00 from July 1, 2000 to and
including September 30, 2000;
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(iii) greater than 3.50 to 1.00 from October 1, 2000 to
and including December 31, 2000;
(iv) greater than 3.25 to 1.00 from January 1, 2001 to and
including March 31, 2001.
The Lenders hereby waive the Event of Default occurring by
reason of Borrower's default under the Loan Agreement due
to its failure to comply with this covenant for the fiscal
quarter ending March 31, 2000. This waiver shall not
extend to any other or subsequent Event of Default or
Potential Default or impair any right consequent thereto.
(d) Subsection (d) of Section 6.01 of the Loan Agreement
is hereby added, to read in its entirety as follows:
(d) Make or permit any of its Subsidiaries to make any
Capital Expenditures that would cause the aggregate of
all such Capital Expenditures made by Borrower and its
Subsidiaries in the fiscal year ending March 31, 2001 to
exceed $2,700,000.
6. EVENTS OF DEFAULT.
A new Subsection 7.01(o) is hereby added to read as follows:
(o) Borrower and Lenders shall fail to agree upon financial covenants
by June 15, 2001, to apply to the fiscal periods after March 31,
2001.
7. CONDITIONS TO ENTERING INTO AMENDMENT.
The obligation of each Lender to enter into this Amendment and to
make Loans on the date hereof is subject to the satisfaction of the following
conditions precedent, in addition to the conditions precedent set forth in
Section 4.02 of the Loan Agreement:
(a) AGREEMENT; NOTES. The Agent shall have received an executed
counterpart of this Agreement for each Lender, duly executed by the
Borrower, and executed Restated Term Loan A Notes and Restated Term
Loan B Notes conforming to the requirements hereof, duly executed on
behalf of the Borrower.
(b) FEES, EXPENSES, ETC. All fees and other compensation to be paid
to the Agent or the Lenders pursuant hereto, and pursuant to any
other written agreement on or prior to the date hereof shall have
been paid or received, and all invoiced expenses incurred by the
Agent pursuant hereto shall have been paid.
8. CERTAIN REPRESENTATIONS. Borrower represents and warrants to the
Agent and each Lender as follows:
(a) All Conditions contained in Section 4.02 of the Loan Agreement
have been satisfied in all material respects except as otherwise
specifically set forth herein.
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(b) Borrower's Articles of Incorporation and Code of Regulations
provided to Agent on August 7, 1998 have not been amended or
repealed.
9. CERTAIN COVENANTS. The Borrower hereby covenants to the Lenders as
follows:
(a) Borrower agrees to provide copies of the certificate of
incorporation or articles of organization and all agreements between
it and the other shareholders or members of the joint venture it
proposes to form with Hilton Engineering, Inc., which shall be in
form and substance satisfactory to Lenders and their counsel.
Borrower also agrees to pledge at least 66.5% of its capital stock of
such entity (or of the Borrower's or pledgor's interest in and to
such entity, however characterized), together with any and all other
financing statements, stock powers, stock certificates and other
documents and instruments necessary to create and perfect a valid
first priority security interest in and to such stock or security.
10. MISCELLANEOUS. This Amendment is entered into pursuant to and in
accordance with Section 9.03 of the Loan Agreement. This Amendment may be
executed in counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument. Except as expressly
modified or amended herein, the Loan Agreement and each of the other Loan
Documents to which the Borrower is a party is hereby restated, ratified and
confirmed and shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have caused this Third Amendment to Credit and Loan Agreement
to be duly executed and delivered as of the date first above written.
TRANSMATION, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxx
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Title: President and Chief Executive Officer
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KEYBANK NATIONAL ASSOCIATION,
as Agent and a Lender
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, Vice President
LENDERS:
CITIZENS BANK OF MASSACHUSETTS, F/K/A STATE
STREET BANK AND TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Vice President,
Corporate Banking
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