February 8, 1999
Xx. Xxxxxxx Xxxxx, CFO
Featherlite, Inc.
Xxx. 00 & 0
Xxxxxx, XX 00000
Re: Amendment of Revolving Loan and Security Agreement
Dear Xx. Xxxxx:
Please refer to the Revolving Loan and Security Agreement by and between Firstar
Financial Services, a division of Firstar Bank Milwaukee, N.A. ("FFS") and
Featherlite, Inc., dated September 24, 1998 ("Agreement"). At your request, FFS
has agreed to amend the Agreement as follows:
1. The following shall be added to Section 2. DEFINITIONS:
"(e) "Capital Expenditures" means the aggregate amount of all
purchases or acquisition of fixed assets (including real
estate, motor vehicles, equipment, fixtures, leases and any
other items) that would be capitalized on Debtor's books under
Generally Accepted Accounting Principles (defined below). The
term "Capital Expenditures" will not include expenditures or
charges for the usual and customary maintenance, repair and
retooling of any fixed assets or the acquisition of new
tooling in the ordinary course of Debtor's business.
(f) "Generally Accepted Accounting Principles" means the latest
promulgated generally accepted accounting principles by the
American Institute of Certified Public Accountants ( "AICPA"),
as supplemented by any pronouncements by the AICPA or the
Financial Accounting Standards Board ("FASB") consistently
applied by Debtor to all relevant financial periods.
(g) Debt" means the total of all liabilities of Debtor, on a
consolidated basis, which would properly appear on Debtor's
balance sheet prepared in accordance with Generally Accepted
Accounting Principles (as defined above).
(g) "Debt To Tangible Net Worth Ratio" means the relationship,
expressed as a numerical ratio, between: (i) the total of all
liabilities of Debtor, on a consolidated basis, which would
appear on Debtor's balance sheet in accordance with Generally
Accepted Accounting Principles (as defined above); and (ii)
the Debtor's Tangible Net Worth (as defined below).
(g) "Tangible Net Worth" means the total of all assets properly
appearing on Debtor's balance sheet on a consolidated basis in
accordance with Generally Accepted Accounting Principles (as
defined above), less the sum of the following: (i) the book
amount of all such assets which would be treated as
intangibles under Generally Accepted Accounting Principles
(including, without limitation, all such items as goodwill,
trademarks, trademark rights, trade names, trade name rights,
brands, copyrights, patents, patent rights, licenses, deferred
charges and unamortized debt discount and expense, capitalized
tooling, dies, patterns, jigs and the like, and leasehold
improvements); (ii) any write-up in the book value of any such
assets resulting from a revaluation thereof subsequent to the
date of this Agreement; (iii) all reserves, including reserves
for depreciation, obsolescence, depletion, insurance and
inventory valuation, but excluding contingency reserves not
allocated for any particular purpose and not deducted from
assets; (iv) the amount, if any, at which the shares of stock
of Debtor appear on the asset side of such balance sheet; (v)
all liabilities of Debtor shown on such balance sheet
(excluding deferred tax liabilities and all indebtedness
subordinated to Lender on terms satisfactory to Lender); (vi)
all investments in foreign affiliates and nonconsolidated
domestic affiliates; (vii) advances or loans to employees,
officers, directors; (viii) interest or finance charge
receivables; (ix) deposits; (x) miscellaneous non-trade
receivables; (xi) prepaid or deferred assets (other than for
income taxes and insurance); (xii) net book value of dies,
molds, tooling, jigs, patterns and the like; and (xiii) net
book value of any leasehold improvements on property owned by
party(ies) other than Debtor or Debtor's principals.
(g) "EBITDA" means for any given fiscal period (i) all income
derived from Debtor's operations on a consolidated basis
(excluding any extraordinary or nonrecurring gain); and (ii)
all interest, taxes, depreciation and amortization properly
recordable by Debtor.
(h) "Fixed Charge Coverage Ratio" means the numerical ratio
between EBITDA and the sum of the following items for any
given fiscal period: accrued interest on all nonsubordinated
indebtedness (or portion thereof), principal payments on all
indebtedness (excluding FFS' revolving loan, the wholesale
floorplan financing from Deutsche Financial Services and
payoffs of debt on aircraft financing from the proceeds of
sale of such aircraft), accrued income taxes and any Capital
Expenditures (or portion thereof) internally financed by
Debtor, but excluding that portion of Capital Expenditures
made by Debtor which qualify for term loan financing under
existing term loan facilities which have not been drawn upon
for such purposes as of the date of the Fixed Charge Coverage
Ratio calculation."
2. The first sentence of subsection (a) Term, Termination, Prepayment
of Section 9. TERMINATION shall be amended to read:
"This Agreement may be terminated at any time upon Debtor's
default by written notice from Lender to Debtor."
3. The following financial covenants shall be added to Section 12.
ADDITIONAL TERMS as follows:
"(c) Capital Expenditures. Except for fixed asset acquisitions
evidenced by a binding purchase order or agreement made prior
to the date of this Agreement, Debtor shall not acquire or
expend sums for the acquisition of fixed assets such as real
estate, equipment, motor vehicles, aircraft (excluding
aircraft purchased for sale in the ordinary course of
business), real estate or leasehold improvements, fixtures or
the like (including, without limitation, the principal amount
of any real estate, motor vehicles, equipment, fixtures and/or
real estate or leasehold improvements acquired pursuant to a
lease which would be capitalized on Debtor's books under
Generally Accepted Accounting Principles, as defined in
Section 2. DEFINITIONS) for Debtor's fiscal year ending
December 31, 1998 in excess of $4,000,000.00; for Debtor's
fiscal year ending December 31, 1999 in excess of
$6,600,000.00; and for each of Debtor's fiscal years ending
December 31, 2000 and thereafter in excess of $4,000,000.00
per year. The maximum limit set forth above shall not include
expenditures or charges for the usual and customary
maintenance, repair or retooling of any fixed assets; or the
acquisition of new tooling in the ordinary course of Debtor's
business.
(d) Debt to Tangible Net Worth. Debtor shall maintain at all times
for the periods noted a ratio of Debt to Tangible Net Worth
(as defined in Section 2. DEFINITIONS) not greater than 4.25
to 1 as of December 31, 1998; 4.0 to 1 for the six month
period ending June 30, 1999; 3.75 to 1 for the six month
period ending December 31, 1999; 3.65 to 1 for the six month
period ending June 30, 2000; and not greater than 3.5 to 1 for
the six month periods ending December 31, 2000 and thereafter,
to be tested by Lender semi-annually, based on Debtor's
internally prepared financial statements and/or Lender's or a
certified public accounting firm's audit of Debtor's financial
records.
(e) Minimum EBITDA. Debtor shall achieve EBITDA (as defined in
Section 2. DEFINITIONS) of at least $6,500,000.00 for Debtor's
fiscal year ending December 31, 1998; at least $8,000,000.00
for Debtor's fiscal year ending December 31, 1999, and at
least $11,000,000.00 for each of Debtor's fiscal years ending
December 31, 2000 and thereafter, to be tested by Lender based
upon Debtor's internally prepared financial statements and/or
Lender's or a certified public accounting firm's audit of
Debtor's financial records.
(f) Minimum Fixed Charge Coverage Ratio. Debtor shall maintain at
all times a Fixed Charge Coverage Ratio (as defined in Section
2. DEFINITIONS) equal to or exceeding 1.25 to 1 for all fiscal
periods to be tested quarterly by Lender based upon Debtor's
internally prepared financial statements and/or Lender's or a
certified public accounting firm's audit of Debtor's financial
records.
In all other respects, the Agreement shall remain unchanged and in full force
and effect.
The foregoing amendments are contingent upon the approval of the participant in
this loan: LaSalle National Bank.
If the above agrees with your understanding and approval, please indicate same
by signing the original of this letter and returning it to the undersigned.
(NOTE: If you return executed documents via facsimile, you must also return the
original executed documents. You agree FFS may rely on facsimile signatures for
all purposes and without any liability to you.) If the preconditions (if any) to
this amendment are not satisfied or if this amendment letter is not executed and
returned to FFS on or before February 12, 1999, then the proposed amendments
herein may be withdrawn by FFS by written notice to you. The amendments set
forth herein and any accompanying documents will be deemed effective and
accepted in Milwaukee, Wisconsin, upon our receipt of the executed documents.
Sincerely,
Xxxxx X. Xxxx
Vice President
cag
Enclosure
cc: Xxxxxxx X. Xxxxxxxxx, III
Agreed to this ___ day of _________________ , 1998.
FEATHERLITE, INC.
By: __________________________________
Name and Title: ________________________
