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EXHIBIT 10.2
THIRD AMENDMENT TO INVESTMENT AGREEMENT
THIS THIRD AMENDMENT TO INVESTMENT AGREEMENT ("Amendment"), dated as of
January 17, 1997, is made by and among (i) XXXXXXX-XXXXXXX, INC., a Delaware
corporation (the "Company"), (ii) BANC ONE CAPITAL PARTNERS CORPORATION, a Texas
corporation ("Banc One"), and PNC CAPITAL CORP, a Delaware corporation ("PNC")
(Banc One and PNC are sometimes collectively referred to as the "Senior Holders
or individually as a "Senior Holder"), (iii) XXXXXXX X. XXXXXXX, XX., an
individual residing in Connecticut ("Xxxxxxx") and (iv) XXXX X. XXXXX, an
individual residing in New York ("Xxxxx") (Xxxxxxx and Xxxxx are sometimes
collectively referred to as the "Junior Holders" or individually as a "Junior
Holder"; the Senior Holders and the Junior Holders are sometimes collectively
referred to as the "Holders").
W I T N E S S E T H:
WHEREAS, the Senior Holders, Allied (as defined in the Agreement) and
the Company entered in to that certain Investment Agreement dated as of May 25,
1994 (the "Original Agreement"), as amended by that certain First Amendment to
Investment Agreement dated as of October 23, 1995, by and among Senior Holders,
Allied, Junior Holders and the Company (the "First Amendment"), and that certain
Second Amendment to Investment Agreement dated as of April 12, 1996, by and
among Senior Holders, Junior Holders and the Company (the "Second Amendment";
the Original Agreement, the First Amendment and the Second Amendment are herein
collectively referred to as the "Agreement"), pursuant to which the Senior
Holders and Allied agreed to purchase $12,000,000 of subordinated debentures and
Junior Holders agreed to purchase $4,000,000 of junior debentures (the proceeds
of said junior debentures having been used to satisfy the senior debentures held
by Allied), all in accordance with, and as provided in, the Agreement; and
WHEREAS, the Company has requested that the Senior Holders and the
Junior Holders further amend the Agreement in certain respects; and
WHEREAS, Allied remains a "Holder" under the Agreement for limited
purposes only and, accordingly, is not required to join in this Amendment;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreement contained herein, intending to be legally bound hereby, the parties
agree as follows:
1. Paragraph 1.03 (Senior Debt) of the Agreement is hereby
deleted and the following is hereby substituted in lieu thereof:
1.03 Senior Debt. The indebtedness under the Debentures and
the Holders' rights herein shall be subordinate, as to lien priority
and right of payment, only to (a) senior bank or institutional
financing(s) in the aggregate amount of no
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more than Forty Million Dollars ($40,000,000), which financing(s) must
be on terms reasonably acceptable to Holders, pursuant to an
Intercreditor Agreement and Subordination Agreement in the form of
Exhibit 1.03 hereto, (b) capitalized leases aggregating in face amounts
of no more than Five Million Dollars ($5,000,000), including those set
forth as part of Exhibit 5.08(a) hereto, and (c) the indebtedness
evidenced by the Seller Note (Xxxxxxxx). Such bank, institutional,
lease and other financings described in the foregoing sentence, as the
same may be renewed or replaced on terms that are no more
disadvantageous to Holders that the renewed or replaced terms, are
sometimes collectively called the "Senior Debt".
2. The definition of "Consolidated Fixed Charge Coverage Ratio"
set forth in the First Amendment is hereby deleted and the following is hereby
substituted in lieu thereof:
"Consolidated Fixed Charge Coverage Ratio" shall mean for any
period, a ratio determined as of the relevant calculation date by
dividing (a) Consolidated EBITDA by (b) the sum for such period of (i)
Consolidated Interest Expense (other than any such expense incurred
under the Seller Note (Xxxxxxxx)), plus (ii) payments made on the term
portion of the Senior Debt (other than Term Loan III), plus (iii)
Capital Expenditures, plus (iv) income taxes of the Company and its
Consolidated Subsidiaries determined in accordance with GAAP.
3. The definitions of "Cumulative Lower EBITDA Target" and
"Cumulative Upper EBITDA Target" contained in Section 2.04(B) of the Agreement
are hereby amended as set forth on Schedule attached hereto; provided,
however, upon permanent reduction in all or a portion of the $11,000,000
increase in the indebtedness of the Company incurred in connection with the
Xxxxxxxx Acquisition (consisting of an $8,000,000 increase in the maximum
indebtedness of the Company to CIT from $32,000,000 to $40,000,000, and the
$3,000,000 maximum indebtedness evidenced by the Seller Note (Xxxxxxxx)), the
adjustments to such definitions as set forth in Schedule I will be reduced on
a pro rata basis (such that if the entire $11,000,000 increase is permanently
reduced to $0, the definitions currently set forth in the Agreement would
apply for all future periods). In accordance with the foregoing, because the
original principal amount of the Seller Note (Xxxxxxxx) was reduced from
$3,000,000 to $2,600,000 due to certain adjustments made at the closing of the
Xxxxxxxx Acquisition, the adjustments to such definitions are hereby reduced
on a pro rata basis.
4. As used in this Amendment, the following capitalized terms
shall have the following meanings:
"CIT" shall mean The CIT Group/Business Credit, Inc.
"Xxxxxxxx Acquisition" shall mean the acquisition by the
Company of certain assets of Xxxxxxxx Technologies, Inc. pursuant to
the provisions of that certain Asset Purchase Agreement dated December
18, 1996, by and between the Company and Xxxxxxxx Technologies, Inc.
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"Seller Note (Xxxxxxxx)" shall mean that certain Secured
Promissory Note dated January 16, 1997, executed by the Company and
payable to the order of Xxxxxxxx Technologies, Inc., in the original
principal amount of $2,600,000.
"Term Loan III" shall mean that certain term loan from CIT to
the Company in the original principal amount of $2,000,000, evidenced
by that certain Term Loan III Promissory Note dated January 17, 1997,
executed by the Company and payable to the order of CIT.
5. The provisions of the Agreement shall remain in full force and
effect except as modified hereby.
IN WITNESS WHEREOF, the parties, by their duly authorized officers,
have executed and delivered this Third Amendment to Investment Agreement as of
the date first written above.
XXXXXXX-XXXXXXX, INC.
ATTEST: By: /s/ Xxxxxxxx X. Xxxxxx
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Title: VP Fin & Secretary
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BANC ONE CAPITAL PARTNERS
CORPORATION
ATTEST: By: /s/ Xxxxx X. Xxxxx
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Title: Managing Director
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PNC CAPITAL CORP
ATTEST: By: /s/ Xxxxx X. Xxxxx
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Title: Sr. Vice President
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WITNESS: /s/ Xxxxxxx X. Mouchetis /s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX, XX.
WITNESS: /s/ Xxxx Xxxxx Xxxxxxxx /s/ Xxxx X. Xxxxx
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XXXX X. XXXXX
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SCHEDULE I
"Cumulative Lower EBITDA Target" shall mean, in
respect of any Valuation Date, the amount set forth opposite such Valuation Date
below.
"Cumulative Upper EBITDA Target" shall mean, in
respect of any Valuation Date, the amount set forth opposite such Valuation Date
below.
Cumulative Cumulative
Lower EBITDA Upper EBITDA
Target(1) Target(1)
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8/1/95 through 7/31/96 $11,148,000 $ 12,878,000
8/1/95 through 7/31/97 22,943,000 29,882,000
8/1/95 through 7/31/98 37,127,000 51,829,000
8/1/95 through 7/31/99 52,416,000 75,545,000
8/1/95 through 7/31/00 68,263,000 100,525,000
