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EXHIBIT 4.3
SECOND MODIFICATION TO REVOLVING CREDIT AGREEMENT
THIS MODIFICATION AGREEMENT made this ______ day of May, 1995, by and
between NORTHERN TRUST BANK OF FLORIDA ("Lender") whose post office address is
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, XX 00000, and SUN HYDRAULICS CORPORATION, a
Florida corporation ("Borrower"), whose post office address is 0000 Xxxxxxxxxx
Xxxxxxx, Xxxxxxxx, XX 00000.
R E C I T A L S:
A. Lender has extended to Borrower a revolving line of credit
loan in the amount of $1,700,000.00 ("Line of Credit"), currently evidenced by
Renewal and Replacement Revolving Line of Credit Note dated March 1, 1994.
B. In connection with the Line of Credit, Borrower and Lender
executed a Revolving Credit Agreement dated March 9, 1992, which was previously
amended by Modification Agreement dated March 25, 1993.
C. Borrower has requested Lender to extend the maturity date of
the Line of Credit to March 1, 1997, and Lender is willing to do so.
D. The Line of Credit has been renewed on even date herewith as
evidenced by Revolving Line of Credit Renewal Note in the original principal
amount of $1,700,000.00 ("Note").
E. As a condition of the renewal of the Line of Credit, Borrower
has agreed to modify the terms of the Credit Agreement.
NOW, THEREFORE, in consideration of the agreement by Lender to extend
the maturity date of the Line of Credit, and further good and valuable
considerations, the receipt of which is hereby acknowledged, Borrower and
Lender hereby amend the Credit Agreement in the following particulars:
1. Sections 1.1 and 1.2 are amended to extend the maturity date
to March 1, 1997.
2. Section 1.3 is added to read as follows:
SECTION 1.3 LIMITATIONS ON LOANS. Borrower must maintain
Accounts and Inventory (as those terms are used and defined in the Security
Agreement executed by Borrower in favor of Lender dated March 9, 1992) in such
quantities so that at all times 75% of the face amount of Borrower's qualified
Accounts plus 50% of the cost or wholesale market value, whichever is lower, of
Borrower's Inventory shall be at least equal to the outstanding principal
balance of the Note. Borrower must pay to Lender, in reduction of the
outstanding principal balance of the Note, such sums as may be necessary from
time to time to maintain such ratio. The term
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"qualified Account" means any Account which has been due less than sixty (60)
days.
3. The term "Note" wherever appearing in the Credit Agreement as
previously modified shall refer to the Note.
4. Sections 4.1 and 4.9 are amended to substitute the Exhibit "B" which
is attached to this Modification for the Exhibit "B" attached to the original
Credit Agreement.
5. Section 4.3 is amended to delete the first sentence in its entirety,
and to substitute therefor the following: "All financial statements of the
Borrower, any subsidiary, or any affiliate of Borrower heretofore furnished to
Lender have been prepared in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding fiscal
year, and accurately represent the financial condition of the Borrower,
subsidiary, and affiliate (as the case may be) as of the date of such financial
statements and the results of their respective operations for the respective
periods then ended."
6. The first sentence of Section 4.4 is hereby amended to delete
the clause "... the year ended December 31, 1990" and to substitute therefor
the following ""... the year most recently ended."
7. Section 5.2(h) is added to read as follows:
(h) Income Tax Returns. Within 30 days after filing each
year, an executed copy of Borrower's Federal income
tax return.
8. Section 5.4 is hereby deleted in its entirety and the
following is substituted in its place:
SECTION 5.4 FINANCIAL REQUIREMENTS. The Borrower and its
subsidiaries, on a combined basis, shall:
(a) Working Capital. Maintain at all times combined net working
capital in an amount equal to at least $1,700,000.00. Working
capital shall mean the sum of all current assets less all
current liabilities and less all intercompany eliminations.
(b) Current Ratio. Maintain at all times a combined current ratio
of current assets to current liabilities, less intercompany
eliminations, of not less than 1.5:1.
(c) Liabilities to Net Worth Ratio. Maintain at all times a ratio
of consolidated total liabilities to consolidated tangible net
worth of not more than 2.50:1.
(d) Tangible Net Worth. Maintain at all times a combined tangible
net worth at a minimum amount which will equal the greater of
(i) $5,500,000.00, or (ii) consolidated
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net income, less distributions by Borrower to shareholders of
Borrower for shareholder income tax liability for the then
current year, less $500,000.00.
(e) Minimum Fixed Charge Coverage Ratio. Maintain at all times a
fixed charge coverage ratio of at least 2.25:1, said ratio
being calculated as follows: earnings before interest expense
and taxes, plus depreciation, divided by all interest expense
plus current maturities of all long term debt plus current
capital lease obligations.
(f) Capital Expenditures. Not make combined expenditures for
fixed assets in any fiscal year in an amount greater than
$4,000,000.00.
(g) Debt Service Coverage Ratio. Maintain a minimum consolidated
debt service coverage ratio of 1.25:1, calculated for each
fiscal year as follows: net profits, plus interest, plus
depreciation, all divided by interest plus current maturities
of long term debt and capitalized leases, plus disbursements,
advances and loans made to officers, shareholders, directors,
and other insiders of Borrower, excluding consideration of all
intercompany eliminations.
(h) Loans and Advances to Shareholders. Not make any loans or
advances to its shareholders in excess of the total of
individual tax liabilities of all of its shareholders for the
then current fiscal year, plus $500,000.00.
9. Section 5.6(c) is deleted in its entirety, and the following
substituted in its place:
(c) extend credit to officers and employees of Borrower,
subject to the approval of Lender, provided that the
amount of indebtedness to any single officer or
employee shall not exceed $50,000.00, and further
provided that copies of the notes evidencing such
indebtedness shall be furnished to Lender.
10. Section 5.6(d) is added to read as follows:
(d) Capital contributions of up to $1,500,000.00 to SunOpTech
Corporation
11. Section 5.7 is amended to add the following: "Xxxxxx Xxxxx and
the members of his immediate family must maintain majority ownership and
control of Borrower, and may not sell, transfer or otherwise assign their
ownership interest in Borrower without Lender's prior written consent. Mr. and
Xxx. Xxxxxx Xxxxx shall finalize (by the end of calendar year 1995) their
respective estate plans with respect to ownership succession of their
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respective interests in Borrower and affiliates and subsidiaries of Borrower."
12. Section 7.1(c)(iii) and (iv) are added to read as
follows:
(iii) there shall occur any default or event of default by
Borrower or Sun Hydraulics Real Estate, Ltd., a
Florida limited partnership ("Partnership") under
that certain loan in the original principal amount of
$1,000,000.00 committed to be made by Lender pursuant
to commitment letter dated May 2, 1995.
(iv) there shall occur any default or event of default by
the Partnership under that certain loan in the
original principal amount of $3,500,000.00 committed
to be made by Lender pursuant to commitment letter
dated May 2, 1995.
13. Section 9.12 is added to read as follows:
SECTION 9.12 NO WAIVER, DEFENSES OR SETOFFS. Borrower
acknowledges, warrants, and covenants to Lender that Borrower has absolutely no
defenses, avoidances, setoffs, or counterclaims of any kind that would or could
avert or diminish (i) Borrower's absolute obligation to pay the Note, or (ii)
Lender's unequivocal right to enforce the Note, this Credit Agreement, or any
other loan documents executed in connection therewith. Borrower shall and does
hereby unconditionally and unequivocally release, acquit and discharge forever
Lender and Lender's respective affiliates and all of their respective officers,
directors, shareholders, agents, representatives, attorneys, employees,
sureties, trustees, receivers, and members from any and all claims, debts,
demands, bonds, obligations, actions, causes of action, liabilities,
responsibilities, and duties of every nature (whether at law or in equity,
statutory or regulatory, disputed or undisputed, known or unknown, foreseen or
unforeseen, fixed or contingent, liquidated or unliquidated, expressed or
implied, assumed or imputed, in contract or in tort, negligent or intentional,
permissive or compulsory, related or unrelated, direct or derivative, matured
or unmatured, compensatory or punitive) that Borrower has ever had or now has.
14. In the event of any conflict between the terms of this
Modification Agreement and those of the Credit Agreement as previously
modified, the terms of this Modification Agreement shall control. Except as
amended hereby, all of the terms, covenants and conditions of the Credit
Agreement, as previously modified, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Modification
Agreement to be executed as of the date first above written.
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SUN HYDRAULICS CORPORATION,
a Florida corporation
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
As its President
BORROWER
NORTHERN TRUST BANK OF FLORIDA
By:
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Xxxxxxx X. XxXxxxxx
As its Vice President
LENDER
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EXHIBIT "B"
SUBSIDIARIES AND AFFILIATES OF SUN HYDRAULICS CORPORATION
Affiliates
Sun Hydraulics Real Estate, Ltd., a Florida limited partnership
Suninco, Inc., a Florida corporation
Sun Hydraulik Holdings Ltd., a United Kingdom corporation
Subsidiaries
None
