AMENDMENT NO. 2 AND WAIVER TO CREDIT AGREEMENT
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This Amendment No. 2 and Waiver is dated as of October
30, 1996 by and among Xxxx X. Xxxxxxxxxx & Son, Inc. (the
"Borrower"), the Lenders parties hereto and Bank of America
Illinois, as Agent for the Lenders (Amendment No. 2").
W I T N E S S E T H;
WHEREAS, the Borrower, the Lenders and the Agent are
parties to that certain Credit Agreement dated as of March 27,
1996, as amended by that certain Amendment No. 1 and
Waiver to Credit Agreement dated as of August 1, 1996 (the
"Agreement"); and
WHEREAS, the Borrower and the Lenders desire to amend
the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises
herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Each capitalized term used herein but not otherwise
defined herein shall have the meaning ascribed to such term
in the Agreement.
2. The Agent and the Lenders hereby waive compliance
with Section 8.2.4(d) of the Agreement solely for the Fiscal
Quarter ending September 26, 1996.
3. The following text shall be inserted as Section 9.1.10
of the Agreement:
"9.1.10 Failure to Secure Obligations. Either
the Borrower, Sunshine, the Trustee under that certain
Trust Agreement dated February 7, 1979 and known as Trust
No. 100628, or the Trustee under that certain Trust Agreement
dated September 20, 1966 and known as Trust No. 34837,
has failed to pledge, on or before November 27,
1996, substantially all its assets to Agent, Lenders, Prudential
and Teachers Insurance and Annuity Association of America
(with respect solely to the Senior Notes under the Teachers
Note Agreement) in accordance with all the terms and
conditions of the Letter and Term Sheet attached to
Amendment No. 2. and Waiver dated as of October 30,
1996"
4. The Borrower represents and warrants that, after
giving effect to this Amendment No. 2, no Default or Event of
Default exists and is continuing under the Agreement and no
default exists under the Teachers Note Agreement and the
Prudential Note Agreement.
5. This Amendment No. 2 shall become effective as of
October 30,1996 upon satisfaction of the following conditions:
(i) the Borrower, the Agent, Sunshine and each of the
Lenders shall have executed and delivered a
counterpart of this Amendment No. 2.
(ii) the Borrower, the Agent, Sunshine and each of the
Lenders shall have executed and delivered a
counterpart of the Term Sheet attached hereto.
(iii) The Agent shall have received, in sufficient copies
for each Lender, the following in form and substance
satisfactory to the Agent and its counsel:
(A) a board of directors resolution authorizing the
execution and delivery of this Amendment No. 2.
(B) a certificate from the Borrower's chief financial
Authorized Officer certifying that on the date hereof
and after giving effect to this Amendment No. 2 no Default
or Event of Default has occurred and is continuing.
(C) a written consent hereto from each of the
holders of promissory notes under the Prudential Note
Agreement and the Teachers Note Agreement.
(D) a written waiver of the minimum fixed charge
coverage ration requirements set forth in the
Teachers Note Agreement, executed by Teachers Insurance
and Annuity Association of America.
(E) a written waiver of the minimum fixed charge
coverage ratio requirements set forth in the
Prudential Note Agreement, executed by Prudential.
(iv) the Borrower shall have paid the outstanding fees
and out-of-pocket costs and expenses of counsel for the
Agent in the approximate amount of $4,300 and the
additional fees and out-of-pocket costs and expenses
incurred in connection with the negotiation, preparation,
execution and delivery of this Amendment No. 2.
6. Except as specifically set forth in this Amendment
No. 2, the Agreement and the other Loan Documents shall
remain unaltered and in full force and effect and the respective
terms, conditions and covenants thereof are hereby ratified
and confirmed in all respects.
7. Upon the effectiveness of this Amendment No. 2,
each reference in the Agreement to "this Agreement", "hereof",
"herein" or "hereunder" or words of like import, and all
references to the Agreement in any other Loan Documents
shall mean and be a reference to the Agreement as amended
hereby.
8. This Amendment No. 2 may be executed in any
number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
9. THIS AMENDMENT NO. 2 SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS.
(Signature pages follow)
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment No. 1 and Waiver to Credit Agreement as of
the date first above written.
XXXX X. XXXXXXXXXX & SON, INC.
By /s/ Xxxx X. Xxxxxx
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Title: Executive Vice President and
Chief Financial Officer
BANK OF AMERICA ILLINOIS, in its Capacity
as Agent
By /s/ Xxxxx X. Xxxxxx
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Title: Agency Management Services
Senior Agency Officer
BANK OF AMERICA ILLINOIS, in its Capacity
as a Lender, Issuing Lender and Issuer
By /s/ Xxxxx X. Xxxxxxx
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Title: Senior Vice President
THE NORTHERN TRUST COMPANY, in its Capacity
as a Lender
By /s/ Xxxxxx X. Xxxxx
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Title: Vice President
NATIONAL CITY BANK, in its Capacity
as a Lender
By /s/ Xxxxx Xxxxx
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Title: Vice President
TERM SHEET FOR COLLATERALIZATION
1. Section 8.2.15 of the Agreement shall be amended
to change the Maximum Permitted Amount of
Credit Extensions for the period from August 1, 1997
through September 30, 1997 from $25,000,000 to
$40,000,000.
2. Section 8.2.7 of the Agreement shall be amended to
limit Capital Expenditures made by Borrower or any
of its Subsidiaries during the Fiscal Year ending on
December 31, 1997 to $7,200,000.
3. Section 8.2.4(d) of the Agreement shall be amended
to require the following minimum Fixed Charge
Coverage Ratios:
Minimum Fixed Charge For the
Coverage Ratio Quarter Ended
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1.00 December 31, 1996
0.50 March 31, 1997
1.00 June 30, 1997
1.75 September 30, 1997
2.00 December 31, 1997
4. As a condition to the amendments contemplated in
this Term Sheet and consummation of the
Collateralization, the Borrower shall reimburse the Agent for
costs and expenses related to a field review audit performed
earlier this year pursuant to Section 8.1.7 of the
Agreement.
5. Section 8.1.7 of the Agreement shall be amended to
require the Borrower to reimburse the Agent for
costs and expenses up to an aggregate of $15,000 per Fiscal
Year related to two field review audits per Fiscal Year.
6. The Prudential Note Agreement and Teachers Note
Agreement shall be amended to the extent
necessary so that the financial covenants contained in the
Prudential Note Agreement and Section 9.1 of the
Teachers Note Agreement (relating to the Senior
Notes) shall be no more restrictive than those contained in the
Agreement. In addition, the Teachers Note Agreement shall
be amended to the extent necessary so that the
financial covenants applicable to the Senior
Subordinated Notes are no more restrictive as
compared to the amended financial covenants for the
Senior Notes thereunder as such covenants were prior to the
amendments contemplated hereunder.
7. It is not contemplated that any fee or rate increase
shall be paid or incurred by the Borrower as a result
of the Collateralization. However, if a fee or rate
increase shall be paid or incurred by the Borrower
to Teachers or Prudential as a result of the
Collateralization, then the Borrower shall pay or incur a
commensurate fee or rate increase to the Lenders.
8. Borrower and Sunshine shall grant first priority
perfected security interests and liens in substantially
all of their assets, real, personal or mixed, including but not
limited to owned and leased real estate, accounts,
chattel paper, documents, equipment, fixtures,
general intangibles, inventory, instruments, patents,
trademarks, tradenames, and proceeds of the
foregoing, to secure, on a pari passu basis, the
obligations under that certain Credit Agreement dated as of
March 27, 1996, as amended (the "Agreement"), the
Senior Notes issued pursuant to the Teachers Note
Agreement and the Senior Notes issued pursuant to the
Prudential Note Agreement. Agent shall serve as Collateral
Agent for Lenders, Teachers and Prudential. The
security interests and liens shall also secure the
Lenders' cash management services and any Letters of Credit
issued pursuant to the Agreement, including but not
limited to that certain $8.3 million standby Letter of
Credit securing industrial revenue bonds in connection with the
Borrower's Bainbridge, Georgia facility.
9. The Trustee under that certain Trust Agreement
dated February 7, 1979 and known as Trust No.
100628 and the Trustee under that certain Trust Agreement
dated September 20, 1966 and known as Trust No.
34837 shall grant first priority perfected security
interests and liens in substantially all of the Trusts' assets,
including but not limited to the real estate located in
Elk Grove Village, Illinois and Des Plaines, Illinois,
in the event that the Agent determines in its sole
discretion that (i) the Trusts own significant
unencumbered assets and (ii) that the granting of such
security interests and liens is appropriate.
10. The Senior Subordinated Notes issued pursuant to
the Teachers Note Agreement shall be secured by
a completely subordinated silent junior security interest in the
Borrower's assets, including but not limited to: the holders of
the Senior Subordinated Notes shall have no right
to contest (i) any cash collateral order, debtor-in -
possession financing order or adequate protection rights that
the Agent or Lenders may seek, (ii) the release
of any liens, or (iii) the enforcement of any liens.
11. The Collateralization shall include the execution and
delivery of definitive documentation implementing the
Collateralization and deemed appropriate by the
Agent, including but not limited to a third amendment to the
Agreement, security agreements, mortgages,
assignments of leases, trademark and patent
security interests, bailee letters, landlord waivers, and
an opinion of counsel to the Borrower in form and
substance satisfactory in all respects to Agent.
12. The Collateralization shall include the filing of all
UCC financing statements, mortgages and other
public filings in such forms and at such locations as the Agent
deems appropriate.
13. The Agreement and Exhibit F (the Form of Borrowing
Base Certificate) shall be amended to clarify the
calculation of the Borrowing Base.
14. Legal fees for the Collateralization shall not exceed
the following amounts:
Agent $45,000
Borrower $__________
Prudential an amount satisfactory to Agent
Teachers an amount satisfactory to Agent
The foregoing amounts are based upon the following
assumptions. To the extent a party incurs fees in
excess of the foregoing due to another party not adhering to
the assumptions, the Borrower shall pay the additional fees
associated therewith:
a. The Agent's counsel shall prepare the
amendment to the Agreement and all operative
security agreements and mortgages for the Collateralization.
Prudential and Teachers' counsel shall each
prepare its client's respective amendments
and consents for its client's loan documentation.
b. The Agreement, Teachers Note Agreement
and Prudential Note Agreement will not be
substantially amended.
c. Negotiations will take place in Chicago and the
transaction will close in Chicago. The
transaction will close by November 27, 1996.
d. No extensive environmental, tax, ERISA or
labor due diligence will be required.
e. All parties to the transaction will provide timely
comments in writing, and the negotiating
positions of such parties will be reasonable. Each party will
exercise cost discipline by coordinating into one submission
the comments of its various representatives.
f. The negotiations will not require more than two
turns of the documents. Borrower's counsel
will prepare the documentation customarily prepared by
Borrower's counsel.
g. The cost of negotiating title insurance and
landlord, mortgagee and bailee waivers will
be additional charges.
h. The intellectual property is owned by Borrower
free of licensing restrictions.
i. Out-of-pocket costs and expenses, including
filing fees and cost of local real estate counsel,
will be additional charges.
15. The definition of "Fixed Asset Advance" in Section
1.1 of the Agreement shall be amended to define
"Fixed Asset Advance" as either (a) the formulation
reflected in the current Agreement and (b) the
margined appraised value of certain equipment
collateral and certain mortgaged real estate, whichever is
greater for each calendar month. The appraisal must
be reasonably acceptable to Agent. The advance
rate shall be determined by the Agent in its sole
discretion.
