SECOND AMENDMENT
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND
SECURITY AGREEMENT dated as of May 26, 1994 among LASALLE BUSINESS CREDIT, INC.
f/k/a StanChart Business Credit, Inc. ("Lender"), a Delaware corporation,
QUALITY AUTOMOTIVE COMPANY ("Quality"), a Delaware corporation and US AUTOMOTIVE
MANUFACTURING, INC. ("US Auto"), a Delaware corporation.
BACKGROUND
On December 30, 1992, Lender, Quality and US Auto entered into that certain
Amended and Restated Revolving Credit, Term Loan and Security Agreement, as
amended by a First Amendment dated as of March 9, 1993 (as so amended and
further amended from time to time, the "Loan Agreement") whereby Lender agreed
to make certain financial accommodations to Quality and US Auto. Lender, Quality
and US Auto desire to amend the Loan Agreement upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, the parties hereto hereby agree as follows:
1. All references in the Loan Agreement and the Collateral Documents to
"STANCHART" or "StanChart" are hereby amended to read "LASALLE" OR "LaSalle",
respectively.
2. Section 1 of the Loan Agreement is hereby amended as follows:
(a) Sections 1.37, 1.53, 1.61 and 1.62 are hereby amended in their entirety
to read as follows:
"1.37. The term "Lender's Reference Rate" means the variable rate of
interest, per annum, most recently announced by LaSalle National Bank,
at its corporate headquarters in Chicago, Illinois as the "Prime Rate"
with the understanding that the "Prime Rate" is one of LaSalle
National Bank's index rates and merely serves as a basis upon which
effective rates of interest are calculated for loans making reference
thereto and may not be the lowest or best rate at which LaSalle
National Bank calculates interest or extends credit."
"1.53. The term "Restated Note" shall mean that certain Second
Consolidated Amended and Restated Secured Promissory Term Note dated
as of May 26, 1994 in the principal amount of $3,000,000 from Borrower
to Lender."
"1.61. The term "Term Loan" means the aggregate term loan of
$3,000,000 made by Lender to Borrower, as consolidated pursuant to
that certain Note Consolidation and Modification Agreement dated as of
May
26, 1994 between Borrower and Lender, and evidenced by the Term Note."
"1.62. The term "Term Note" shall mean the Restated Note."
(b) Section 1.7. ("Capital Expenditure Loan"), Section 1.8. (Capital
Expenditure Note") and Section 1.20 ("Eligible Equipment") are hereby deleted in
their entirety.
3. Section 2.1(c) of the Loan Agreement is hereby deleted in its
entirety.
4. Section 3 of the Loan Agreement is hereby amended as follows:
(a) Section 3.1 is amended by deleting "March 31, 1995" in the second line
thereof and inserting "March 31, 1997" in its place.
(b) Section 3.2 is amended in its entirety to read as follows:
"3.2 Notwithstanding Section 3.1, Borrower may (a) at any time after
execution of this Agreement, on five (5) business days written notice
prior to the end of any month, prepay and terminate this Agreement by
paying to Lender, in cash or by a wire transfer of immediately
available funds, all of the Obligations owed by Borrower to Lender,
together with a prepayment fee equal to:
Period of Prepayment During Percentage of Total Facility
--------------------------- ----------------------------
April 1, 1994 - March 31, 1996 1%
April 1, 1996 - March 31, 1997 0%
Notwithstanding the foregoing, in the event Borrower prepays the Restated Note
in whole or in part prior to expiration of the Term but not in conjunction with
any permanent reduction in the facilities described in Sections 2.1(a) and
2.1(b) hereof, no prepayment fee with respect to any such prepayment of the
Restated Note shall be payable to Lender hereunder."
5. Section 6 of the Loan Agreement is hereby amended as follows:
(a) Section 6.13 is amended by adding the following at the end of the fifth
line thereof:
"minus (d) the amount paid by Quality for the redemption (the "Redemption")
of its capital stock held by Pyramid Ventures and Ramko Capital Inc., not
to exceed a maximum amount of $2,000,046.79 to be subtracted only at the
time of and upon the consummation of the Redemption."
(b) Section 6.14 is hereby amended in its entirety to read as follows:
"6.14 Borrower shall maintain on a consolidated basis a Tangible Leverage
of not more than (i) 3.75 to 1.0 at all times from May 26, 1994 through
December 31,
1994, (ii) 3.00 to 1.0 at all times from January 1, 1995 through December
31, 1995 and (iii) 2.5 to 1.0 at all times from January 1, 1996 and
thereafter."
(c) Section 6.16 is hereby amended in its entirety to read as follows:
"6.16 Borrower shall maintain on a consolidated basis a Current Ratio of
not less than (i) 1.75 to 1.0 at all times from May 26, 1994 through
December 31, 1994 and (ii) 1.90 to 1.0 at all times from January 1, 1995
and thereafter."
6. Section 7.14 of the Loan Agreement is hereby amended by deleting the
words "or the Capital Expenditure Note" from the second line thereof.
7. Section 14.1(c) of the Loan Agreement is hereby amended by deleting the
words "and the Capital Expenditures Note" from the fifteenth and sixteenth lines
thereof.
8. Exhibit A-1 is hereby amended in its entirety and replaced by Exhibit
A-1 attached hereto.
9. Exhibit A-2 is hereby deleted in its entirety.
10. Notwithstanding the provisions of Section 2.2 and 6.4(e) respectively
of the Loan Agreement, Lender hereby waives:
(a) Compliance by Borrower with Section 2.2 solely with respect to
Borrower's obligation to pay Lender an Administrative Fee in the
amount of $25,000 on September 25, 1994; and
(b) Compliance by Borrower with Section 6.4(e) solely with respect to
the redemption by Quality of its capital stock held by Pyramid
Ventures, provided the aggregate redemption price is not in excess of
$2,000,000 and that Lender is otherwise satisfied with the terms and
conditions of such purchase.
11. Except as expressly amended hereby, the Loan Agreement remains in full
force and effect and this Second Amendment does not and shall not be deemed to
constitute a waiver, forbearance or release of any claim, demand, action or
cause of action arising under the Loan Agreement or any other instruments,
documents or agreements executed and delivered in connection therewith or
herewith.
12. This Second Amendment shall become effective on the date that each of
the following conditions shall have been satisfied: (i) Lender shall have
received four (4) copies of (a) this Second Amendment duly executed by each
Borrower and each Guarantor, (b) Deed of Trust Modification executed by
Borrower, (c) $1,879,161.28 Term Note (one copy), executed by Borrower, (d) Note
Consolidation and Modification Agreement executed by Borrower and, (e)
$3,000,000.00 Second Consolidated, Amended and Restated Promissory Term Note
(one copy) executed by Borrower; (ii) receipt by Lender of a Second Amendment
accommodation fee of $75,000 from Borrower on the date of this Second Amendment;
and (iii) Borrower shall have Excess Availability of at least $300,000. "Excess
Availability" shall mean the difference
between (a) the lesser of (x) $7,500,000 and (y) Revolving Loan Availability;
and (b) the aggregate amount of Revolving Loans outstanding at any time. In the
event the foregoing conditions are not satisfied in full by May 27, 1994 this
Second Amendment shall be deemed null and void and of no force or effect.
13. This Second Amendment shall be governed by and construed in accordance
with the laws of the State of New York.
QUALITY AUTOMOTIVE COMPANY
By: /S/ XXXXXX XXXXXXXXX
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Xxxxxx Xxxxxxxxx, President
US AUTOMOTIVE MANUFACTURING, INC.
By: /S/ XXXXXX XXXXXXXXX
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Xxxxxx Xxxxxxxxx, President
LASALLE BUSINESS CREDIT, INC.
By: /S/ XXXX XXXXX XXXXX-XXXXX
--------------------------
Name: Xxxx Xxxxx Xxxxx-Xxxxx
Title: V.P.
CONSENT OF GUARANTORS:
US AUTOMOTIVE MANUFACTURING, INC.
By:/S/ XXXXXX XXXXXXXXX
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Xxxxxx Xxxxxxxxx, President
QUALITY AUTOMOTIVE COMPANY
By:/S/ XXXXXX XXXXXXXXX
---------------------
Xxxxxx Xxxxxxxxx, President
/S/ XXXXXX XXXXXXXXX
---------------------
Xxxxxx Xxxxxxxxx
ier