AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amendment to Amended and Restated Loan and Security Agreement is
made to that certain Amended and Restated Loan and Security Agreement entered
into on October 1, 1994 ("Agreement") by and between XXXX COMPANY, and its
subsidiaries/divisions including but not limited to Xxxxxxx Xxxxxx, Inc., and
Xxxx Power Products, Inc. (collectively and individually "Xxxx Company"),
DEUTSCHE FINANCIAL SERVICES CORPORATION, f/k/a ITT Commercial Finance Corp.,
("DFS") and DEUTSCHE FINANCIAL SERVICES CANADA CORPORATION, successor in
interest to ITT Commercial Finance, a Division of ITT Industries of Canada
Ltd., (Deutsche Financial Services Corporation and Deutsche Financial Services
Canada Corporation are individually and collectively referred to as "DFS").
FOR GOOD AND VALUE CONSIDERATION RECEIVED, Xxxx Company and DFS agree to
amend the Agreement as follows:
1. The following definitions are incorporated into Section 1.1 of the
Agreement:
"Bankers' Acceptance Loans" shall mean loans bearing interest at a rate
determined by reference to the Bankers' Acceptance Rate (Reserve
Adjusted).
"Bankers' Acceptance Rate" shall mean, for Canadian Loans, for any
calendar week commencing on Tuesday of such week, the average rate for
one month Canadian dollar bankers' acceptances that appear on the Reuters
Screen CDOR (Canadian Deposit Offered Rate) page as of 10:00 a.m. Toronto
time on (a) the Monday immediately preceding, or (b) if any such Monday
is not a business day, then on the business day immediately preceding
such Monday.
"Bankers' Acceptance Rate (Reserve Adjusted)" shall mean, for Canadian
loans, the rate per annum obtained by dividing the Bankers' Acceptance
Rate by a percentage equal to 100% minus any increase or plus any
decrease in the Bankers' Acceptance Reserve percentage then in effect
over the Bankers' Acceptance Reserve Percentage in effect as of December
1, 1995, which is zero (0).
"Bankers' Acceptance Reserve Percentage", for all Bankers Acceptance
Loans comprising part of the same borrowing, means the daily average
reserve percentage applicable during each day of such Bankers' Acceptance
Loans under regulations issued from time to time by Canadian Banking
Authorities, for determining the maximum reserve requirement (including
without limitation any emergency, supplemental or other marginal reserve
requirement with respect to liabilities or assets consisting of or
including Bankers' Acceptance liabilities (or with respect to any other
category of liabilities that includes deposits by reference to which the
interest rate on Bankers' Acceptance Loans is determined)).
"Eurocurrency Liabilities" has the meaning specified in Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurocurrency Reserve Percentage", for all LIBOR Loans comprising part of
the same borrowing, means the daily average reserve percentage applicable
during each day of such LIBOR Loans under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor), for determining the maximum reserve requirement (including
without limitation any emergency, supplemental or other marginal reserve
requirement for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest
rate on LIBOR Loans is determined)).
"LIBOR Loans" shall mean loans bearing interest at a rate determined by
reference to the LIBOR Rate (Reserve Adjusted).
"LIBOR Rate" shall mean for any calendar week commencing on Tuesday of
such week, the London Interbank Offered Rate (LIBOR) for one-month
deposits for U.S. Loans, in U.S. Dollars as published in The Wall Street
Journal on (a) the Monday immediately preceding, or (b) if any such
Monday is not a business day, then on the business day immediately
preceding such Monday.
"LIBOR Rate (Reserve Adjusted)" shall mean, for loans, the rate per annum
obtained by dividing the applicable U.S.LIBOR Rate by a percentage equal
to 100% minus any increase or plus any decrease in the Eurocurrency
Reserve percentage then in effect over the Eurocurrency Reserve
Percentage in effect as of December 1, 1995, which is zero (0) in the
United States.
2. Section 2.1.1 of the Agreement is hereby deleted in its entirety and
restated to read as follows:
Interest. Xxxx Company agrees to pay interest to DFS, payable as provided
in Section 2.2, on the average daily outstanding balance under the Credit
Facility, at a rate as follows:
(A) U.S. Loans. The unpaid principal amount of the U.S. Loans shall bear
interest for a particular week at a rate per annum equal to the U.S.
LIBOR Rate (Reserve Adjusted) in effect for that week, plus (1) for
December, 1995, one percent (1.0%) per annum, and (2) on and after
January 1, 1996, two percent (2.0%) per annum.
(B) Canadian Loans. The unpaid principal amount of the Canadian Loans
shall bear interest for a particular week at a rate per annum equal to
the Bankers' Acceptance Rate (Reserve Adjusted) in effect for that week,
plus (1) for December, 1995, one percent (1.0%) per annum, and (2) on and
after January 1, 1996, two and one-half percent (2.5%) per annum.
3. Section 2.1.2 of the Agreement is hereby deleted in its entirety and
restated to read as follows:
Charges. Xxxx Company agrees to pay to DFS, on December 31, 1995,
December 31, 1996 and December 31, 1997, an annual line fee (hereinafter
sometimes referred to as a "charge") equal to the lesser of (a) Twenty-
five Thousand Dollars ($25,000.00); and (b) the highest charges from time
to time permitted by applicable law (and amounts received from Xxxx
Company in excess of such highest rate from time to time permitted by
applicable law will be considered reductions of principal to the extent
of such excess).
4. Section 2.1.4 of the Agreement, Non-Use of Credit Facility Fee, is hereby
deleted in its entirety.
5. The third sentence of Section 2.2(a) of the Agreement is hereby deleted
in its entirety and restated to read as follows:
Interest and any charges on U.S. Loans that remain outstanding after the
foregoing due date shall be assessed a finance charge equal to the LIBOR
Rate (Reserve Adjusted) plus four and one-half percent (4.5%) per annum
on such outstanding amounts until paid in full. Interest and any
charges on Canadian Loans that remain outstanding after the foregoing due
date shall be assessed a finance charge equal to the Bankers' Acceptance
Rate (Reserve Adjusted) plus five percent (5.0%) per annum on such
outstanding amounts until paid in full.
6. Section 6.3 of the Agreement is hereby deleted in its entirety and
restated as follows:
Xxxx Company will at all times maintain a Tangible Net Worth and
Subordinated Debt in the combined amount of not less than Thirty-five
Million Dollars ($35,000,000.00). Xxxx Company will also at all times
maintain a ratio of Debt to Tangible Net Worth and Subordinated Debt of
not more than three and six tenths to one (3.6:1). For purposes of this
Section: (i) "Debt" means the total sum of all creditor claims against
Xxxx Company minus Subordinated Debt; (ii) "Tangible Net Worth" means the
net book value of assets less liabilities determined on a consolidated
basis and in accordance with generally accepted accounting principles
("GAAP") consistently applied, excluding from such assets all
Intangibles; (iii) "Intangibles" means and includes general intangibles
(as that term is defined in the Uniform Commercial Code), accounts
receivable from officers, directors and stockholders, and affiliated
companies, leasehold improvements net of depreciation, licenses, good
will, prepaid expenses, covenants not to compete, the excess of cost over
book value of acquired assets, franchise fees, organizational costs,
finance reserves held for recourse obligations, capitalized research and
development costs, the categories of assets listed on Exhibit C attached
hereto which are marked as "intangible," and such similar intangible
assets under GAAP; (iv) "Subordinated Debt" means all of Xxxx Company's
indebtedness which is subordinated to the payment of its liabilities to
DFS by an agreement in form and substance satisfactory to DFS; and (v)
"Net Income" and "Net Losses" means the net income or net loss of Xxxx
Company for such period after provision for income taxes, determined in
accordance with GAAP. Xxxx Company will report its Tangible Net Worth
and Debt to Tangible Net Worth ratio to DFS quarterly, in accordance with
Section 6.1(m)(2) of this Agreement. If Xxxx Company violates any of the
foregoing financial covenants to DFS, the parties agree (a) Xxxx Company
will pay interest to DFS, payable as provided in Section 2.1, on the
average daily outstanding balance under the Credit Facility, at a rate
that is the lesser of (i) (A) in the case of U.S. Loans, four and one-
half percent (4.5%) per annum higher than the U.S. LIBOR Rate then in
effect, (B) in the case of Canadian Loans, five percent (5.0%) per annum
higher than the Bankers' Acceptance Rate then in effect, and (ii) the
highest rate from time to time permitted by applicable law from the time
when Xxxx Company violates any of the financial covenants until such time
as Xxxx Company has cured its violation of its financial covenants to
DFS; (b) DFS may elect in its sole discretion, to amend its eligibility
formula of and its advance rate against the Accounts; and (c) DFS may
elect to declare Xxxx Company in default under this Agreement and
exercise any of DFS' rights pursuant to Section 7 of this Agreement.
7. Section 8.1 of the Agreement is hereby deleted in its entirety and
restated to read as follows:
Term. This Agreement shall terminate on December 31, 1998. This
Agreement may not be terminated by either party prior to December 31,
1998, other than as a result of any Default by Xxxx Company or any
default by DFS hereunder. Xxxx Company and DFS agree that in the event
this Agreement shall have been terminated prior to December 31, 1998,
ITT's liquidated damages hereunder shall include, in addition to
principal, interest, charges and expense reimbursements that are then
owed and unpaid, (i) for any termination during 1995, an amount equal to
Three Hundred Thirty-Seven Thousand Five Hundred Dollars ($337,500.00),
or (ii) for any termination during 1996, Two Hundred Forty Three Thousand
Seven Hundred Fifty ($243,750.00); provided, however, that Xxxx Company
shall not have any liability to DFS for any liquidated damages for any
termination that is effective after December 31, 1996. Xxxx Company
agrees that DFS' actual damages in such event are difficult to calculate,
and that such measure of damages reflects a fair and reasonable
agreement. Such damages shall be payable immediately, upon the date of
termination, without discount to present value. In no event shall Xxxx
Company be entitled to the return of all or any portion of any annual or
other charge payable hereunder, notwithstanding any subsequent
termination hereof. The parties agree to consider and negotiate in good
faith an extension or renewal of this Agreement beginning not later than
six (6) months prior to the termination date hereof.
8. The following provisions are incorporated into the Agreement:
10. ADDITIONAL TERMS
10.1 Increased Cost. If, as a result of any law, regulation, treaty or
directive, or any change therein, or in the interpretation or
application thereof or compliance by DFS with any request or
directive (whether or not having the force of law) from any court or
governmental authority, agency or instrumentality:
(a) the basis of taxation of payments to DFS (for purposes of
this Section 10.1, "DFS" shall also refer to any affiliates of
DFS engaged in the funding of the lending obligations
hereunder) of the principal or of interest on any LIBOR Loan or
Bankers' Acceptance Loan (other than taxes imposed on the
overall net income of DFS by the jurisdiction in which DFS has
its principal office) is changed;
(b) any reserve, special deposit or similar requirements
against assets of, deposits with or for the account of, or
credit extended by, DFS are imposed, modified or deemed
applicable; or
(c) any other condition affecting this Agreement or the LIBOR
Loans or Bankers' Acceptance Loans is imposed on DFS or the
interbank eurodollar market or Canadian Bankers' Acceptance
market;
and DFS determines that, by reason thereof, the cost to DFS of
making or maintaining any of the LIBOR Loans or Bankers'
Acceptance Loans is increased, or the amount of any sum
receivable by DFS hereunder in respect of any of the LIBOR
Loans or Bankers' Acceptance Loans is reduced;
then, Xxxx Company shall pay to DFS upon demand (which demand
shall be accompanied by a statement setting forth the basis for
the calculation thereof but only to the extent not theretofore
provided to Xxxx Company) such additional amount or amounts as
will compensate DFS for such additional cost or reduction
(provided such amount has not been compensated for in the
calculation of the Eurocurrency Reserve Percentage or Bankers'
Acceptance Reserve Percentage). DFS' determinations for
purposes of this Section of the additional amounts required to
compensate DFS in respect of the foregoing shall be conclusive,
absent manifest error.
10.2 Eurodollar Deposits or Bankers' Acceptances Unavailable or Interest
Rate Unascertainable. In the event that prior to any week DFS shall
have determined (which determination shall be conclusive and binding
on the parties hereto) that deposits of the necessary amount for
that relevant week are not available to DFS in the interbank
eurodollar market or Bankers' Acceptances market or that, by reason
of circumstances affecting such market, adequate and reasonable
means do not exist for ascertaining the LIBOR Rate or Bankers'
Acceptance Rate applicable to such period or term, as the case may
be, DFS shall promptly give notice of such determination to Xxxx
Company. The rate in effect after the date of such notice for all
loans shall be equal to the Prime Rate (U.S. or Canadian, as
applicable) plus the Margin (as defined below), whether the Margin
is a positive or negative number ("Prime Rate Loans"). The term
"Margin" as used herein shall mean (1) as to U.S. Loans, the
remainder of (i) the last determinable U.S. LIBOR Interest Rate,
less (ii) the then current U.S. Prime Rate; and (2) as to Canadian
Loans, the remainder of (i) the last determinable Bankers'
Acceptance Rate, less (ii) the then current Canadian Prime Rate.
10.3 Changes in Law Rendering LIBOR Loans or Bankers' Acceptance Loans
Unlawful. If at any time due to any new law, treaty or regulation,
or any change of any existing law, treaty or regulation, or any
interpretation thereof by any governmental or other regulatory
authority charged with the administration thereof, or for any other
reason arising subsequent to December 1, 1995, it shall become
unlawful for DFS to fund any LIBOR Loan or Bankers' Acceptance Loan
which it is committed to make hereunder, the obligation of DFS to
provide LIBOR Loans or Bankers' Acceptance Loans shall, upon the
happening of such event, forthwith be suspended for the duration of
such illegality. If any such change shall make it unlawful to
continue LIBOR Loans or Bankers' Acceptance Loans previously made by
it hereunder, DFS shall, upon the happening of such event, notify
Xxxx Company thereof in writing stating the reasons therefor, and
Xxxx Company shall, if required by such law, regulation or
interpretation, on such date as shall be specified in such notice,
either convert such unlawful LIBOR Loans or Bankers' Acceptance
Loans to Prime Rate Loans, bearing interest at a rate per annum
equal to the U.S. Prime Rate or Canadian Prime Rate, as applicable,
plus the Margin, as defined in Section 10.2, or pay to DFS in full
all such LIBOR Loans or Bankers' Acceptance Loans and terminate this
Agreement without any penalty or premium whatsoever.
10.4 Capital Adequacy. If DFS shall determine at any time after the
Effective Date that the adoption of any law, rule, guideline or
regulation regarding capital adequacy, or compliance with any law,
rule, guideline or regulation regarding capital adequacy, or any
change therein or in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by DFS with any request or directive or compliance with
any law, rule, guideline or regulation regarding capital adequacy
(whether or not having the force of law) from any such authority,
central bank or comparable agency, has or would have the effect of
reducing the rate of return on DFS' capital as a consequence of its
obligations hereunder to a level below that which DFS could have
achieved but for such adoption, change or compliance (taking into
consideration DFS' policies with respect to capital adequacy) by an
amount deemed by DFS to be material, then Xxxx Company shall pay to
DFS upon demand such amount or amounts, in addition to the amounts
payable under the other provisions of this Agreement, as will
compensate DFS for such reduction. Any such demand by DFS hereunder
shall be in writing, and shall set forth the reasons for such demand
and copies of all documentation reasonably relevant in support
thereof. Determinations by DFS for purposes of this Section 10.4 of
the additional amount or amounts required to compensate DFS in
respect of the foregoing shall be conclusive in the absence of
manifest error. In determining such amount or amounts, DFS may use
any reasonable averaging and attribution methods.
10.5 Indemnity. The Xxxx Company will indemnify DFS against any loss or
expense which DFS may sustain or incur, including without
limitation, any loss or expense sustained or incurred in obtaining,
liquidating or employing deposits or other funds acquired to effect,
fund or maintain a loan as a consequence of any failure by Xxxx
Company to make any payment when due of any amount due hereunder in
connection with a LIBOR Loan or Bankers' Acceptance Loan.
10.6 Discretion as to Manner of Funding LIBOR Loans. Notwithstanding any
provision of this Agreement to the contrary, DFS shall be entitled
to fund and maintain its funding of all or any part of its LIBOR
Loans in any manner it elects, it being understood, however, that
for the purposes of this Agreement all determinations hereunder
shall be made as if DFS had actually funded and maintained each
LIBOR Loan through the purchase of deposits having a maturity
corresponding to the maturity of each LIBOR Loan and bearing an
interest rate equal to the LIBOR Rate. DFS may, if it so elects,
fulfill any commitment to make LIBOR Loans by causing a foreign
affiliate to make or continue such LIBOR Loans, provided, however,
that in such event such Loans shall be deemed for the purposes of
this Agreement to have been made by DFS, and the obligation of the
Xxxx Company to repay such Loans shall nevertheless be to DFS and
shall be deemed held by DFS, to the extent of such Loans, for the
account of such branch or affiliate.
9. All references in the Agreement to "ITT Commercial Finance Corp." are
amended to read "Deutsche Financial Services Corporation" and all
references in the Agreement to "ITT" are amended to read "DFS". All
references in this Agreement to "ITT Commercial Finance, a division of
ITT Industries of Canada Ltd." are amended to read "Deutsche Financial
Services Canada Corporation" and all references in this Agreement to "ITT
Canada" are amended to read "DFSC". Xxxx Company acknowledges that ITT
Canada assigned all of its rights under this Agreement to DFSC, that DFSC
is substituted for ITT Canada and consents to such assignment and
substitution. Xxxx Company further agrees that DFSC may at any time
assign all of its rights under this Agreement to DFS without notice or
penalty.
10. All other terms as they appear in the Agreement, to the extent not
inconsistent with the foregoing, are ratified and remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to Amended
and Restated Loan and Security Agreement as of this 1st day of December,
1995.
XXXX COMPANY XXXXXXX XXXXXX, INC.
By: X.X. Xxxx By: X.X. Xxxx
Its: President Its: President
By: X.X. Xxxxxx By: X.X. Xxxxxx
Its: Vice President Its: Treasurer
XXXX POWER PRODUCTS, INC DEUTSCHE FINANCIAL SERVICES CORPORATION
By: X.X. Xxxx By: Xxxxx X. Xxxx
Its: President Its: Division President
By: X.X. Xxxxxx
Its: Treasurer DEUTSCHE FINANCIAL SERVICES
CANADA CORPORATION (f/k/a ITT
Commercial Finance, a division of
ITT Industries of Canada Ltd.)
By: Xxxxx X. Xxxx
Its: Division President
