1998 SECOND AMENDMENT AGREEMENT TO
$37,000,000 AMENDED AND RESTATED LOAN AGREEMENT AND TERM NOTE
THIS AMENDMENT AGREEMENT, made and entered into as of this 30th day of
December, 1998, by and between XXXXXXXX INDUSTRIES, INC., a Delaware corporation
(the "Borrower"), WINK XXXXX EQUIPMENT CO., INC., a Georgia corporation ("WD"),
XXXX MOTION CONTROLS, INC., a North Carolina corporation ("TMC") and
NATIONSBANK, N.A., a national banking association (the "Lender");
W I T N E S S E T H:
WHEREAS, pursuant to the $37,000,000 Amended and Restated Loan Agreement,
dated as of July 31, 1997, as amended by 1998 First Amendment Agreement thereto
dated as of February 6, 1998, between the Borrower and the Lender (collectively
the "Loan Agreement"), arrangements were made for the extension by the Lender to
the Borrower of credit on the terms and conditions set forth in such Loan
Agreement;
WHEREAS, under the Loan Agreement, the Borrower obtained a Credit Facility
in the maximum aggregate principal amount at any time outstanding of up to
$37,000,000, of which (i) up to $30,000,000 may be allocated under a "Letter of
Credit Facility" for the issuance of documentary Letters of Credit to support
the Borrower's purchase and importing of (x) presold textile machinery in the
ordinary course of its business and (y) in certain cases, equipment to be held
as inventory for sale and, within such $30,000,000, up to $8,500,000 may be
allocated to borrowings for the Borrower's short term operating needs under a
Revolving Line of Credit, and up to $500,000 may be allocated for the issuance
of Standby Letters of Credit, as provided in such Loan Agreement, and (ii) up to
$7,000,000, as subsequently increased to $8,050,000 by Note Modification
Agreement dated February 6, 1998, may be allocated as a term loan, all upon the
terms and conditions provided in the Loan Agreement;
WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender
its Amended and Restated Revolving Credit Note dated July 31, 1997 in the
principal amount of $8,500,000 (the "Revolving Credit Note");
WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender
its Term Note dated July 31, 1997 in the original principal amount of
$7,000,000, as subsequently increased to $8,050,000 by Note Modification
Agreement dated February 6, 1998 (the "Term Note");
WHEREAS, collateral for the indebtedness and obligations of the Borrower
in respect of the Loan Agreement, the Revolving Credit Note and the Letter of
Credit Facility is provided under the Amended and Restated Security Agreement
dated July 31, 1997 between the Borrower, WD and
the Lender and a Security Agreement dated as of February 6, 1998 between TMC and
the Lender (collectively, the "Security Agreement");
WHEREAS, the Borrower has requested that the Lender agree to certain
modifications to the Loan Agreement, including a temporary modification to the
Borrowing Base (as defined in the Loan Agreement);
NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions herein set forth, it is hereby agreed as follows:
1. Terms. All terms used herein without definition, unless the context
clearly requires otherwise, shall have the meanings provided therefor in the
Loan Agreement.
2. Amendment to Loan Agreement.
(1) Section 1.12 of the Loan Agreement (entitled "Borrowing Base")
is rewritten in its entirety to read as follows:
"1.12. "Borrowing Base" means the sum as of the date of
determination of (i) Eligible Accounts multiplied by 80% and (ii)
Eligible Inventory multiplied by 30%, and (iii) L/C Credit
multiplied by 50%, and (iv) Cash Collateral multiplied by 100%, all
determined pursuant to the Borrowing Base Certificate, plus the
following amounts for the following periods:
Period Amount
Prior to 12/15/98 $0
12/15/98 to 3/30/99 $3,500,000
3/31/99 to 4/29/99 $3,000,000
4/30/99 to 5/30/99 $2,500,000
5/31/99 to 6/29/99 $2,000,000
Thereafter $0"
(2) The third full paragraph of Section 2.1(b) is rewritten in its
entirety to read as follows:
"The principal indebtedness evidenced by the Term Note shall
also be prepaid annually on the date ninety (90) days following each
Fiscal Year End of each year, commencing with the Fiscal Year ending
June 27, 1998, in an amount equal to 25% of Excess Cash Flow
determined for the immediately preceding Fiscal Year. All such
prepayments shall be applied to principal installments due under the
Term Note in inverse order of their maturities."
(3) Section 8.2 is hereby amended to add the following sentence
immediately following the table contained therein:
"Notwithstanding the foregoing, the ratio of (x) Indebtedness
for Money Borrowed of the Borrower and Subsidiaries, all determined
on a consolidated basis to (y) EBITDA shall not exceed the following
at the measuring dates listed below:
Measuring Dates Ratio
Fiscal Quarter Ending In:
October 1998 3.00 to 1.00
December 1998 3.40 to 1.00
March 1999 2.50 to 1.00
June 1999 2.00 to 1.00"
3. Representations and Warranties. Each of the Borrower, WD and TMC hereby
jointly and severally represents and warrants that:
(1) The representations and warranties contained in Article V of the
Loan Agreement are hereby made by the Borrower on and as of the date
hereof except the representations of Sections 5.3 and 5.4 shall refer to
the most recent financial statements delivered under Section 7.1 of the
Loan Agreement.
(2) There has been no material change, and there exists no known
prospective change, in the condition, financial or otherwise, of the
Borrower, WD or TMC since the date of the most recent financial reports
received by the Lender, other than changes in the ordinary course of
business, none of which has been a materially adverse change;
(3) The business and properties of the Borrower, WD or TMC are not,
and since the date of the most recent financial reports thereof received
by Lender have not, been materially adversely affected as the result of
any fire, explosion, earthquake, chemical spill, accident, strike,
lockout, combination of workmen, flood, embargo, riot, or cancellation or
loss of any major contracts;
(4) No event has occurred and no condition exists which, either
prior to or upon the consummation of the transactions contemplated hereby,
constitutes an Event of Default under the Loan Agreement, either
immediately or with the lapse of time or the giving of notice, or both;
(5) The property which is collateral for the indebtedness of the
Borrower, WD or TMC to the Lender under the Security Agreement and other
collateral documents of the Borrower, WD or TMC in favor of the Lender are
subject to no liens or encumbrances except Permitted Liens;
(6) The execution, delivery and performance by the Borrower, WD or
TMC of its obligations under this Amendment Agreement will not cause a
violation or default under
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any indenture, loan agreement, or other agreement of, or applicable to,
the Borrower, WD or TMC; and (1)
(7) Each of the Borrower, WD and TMC has the requisite corporate
power and authority to execute, deliver and perform this Amendment
Agreement; each of such documents has been duly authorized, executed and
delivered; and each of such documents constitutes a valid, binding and
enforceable instrument, obligation or agreement of the Borrower, WD or
TMC, in accordance with its respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally.
4. Effectiveness of Documents. The terms and conditions hereof shall not
be effective until each of the following are delivered to the Lender:
(1) Amendment Agreement. Two fully executed originals of this
Amendment Agreement.
(2) No Litigation Certificate. Certificate of the chief financial
officer of the Borrower to the effect that no litigation or proceedings
are pending or threatened which might reasonably be expected to materially
adversely affect the Borrower's, TMC's or WD's ability to perform its
obligations under this Amendment Agreement or any Loan Document or
operation of the Borrower's, TMC's or WD's business.
(3) Other Documents, Etc. Such other documents, instruments and
certificates as the Lender may reasonably request.
5. Miscellaneous.
(1) This Amendment Agreement sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof
and supersedes any prior negotiations and agreements among the parties
relative to such subject matter. No promise, condition, representation or
warranty, express or implied, not herein set forth shall bind any party
hereto, and none of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that,
except as in this Amendment Agreement otherwise expressly stated, no
representations, warranties, or commitments, express or implied, have been
made by any other party to the other regarding the subject matter hereof.
None of the terms or conditions of this Amendment Agreement may be
changed, modified, waived or canceled, orally or otherwise, except in a
writing, signed by the party to be charged therewith, specifying such
change, modification, waiver or cancellation of such terms or conditions,
or of any preceding or succeeding breach thereof, unless expressly so
stated.
(2) Except as hereby specifically amended, modified, or
supplemented, the Loan Agreement, the Loan Documents and all other
agreements, documents, and instruments
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related thereto are hereby confirmed and ratified in all respects and
shall remain in full force and effect according to their respective terms.
(3) This Amendment Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of which together shall
constitute one and the same instrument.
(4) This Amendment Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North Carolina.
(5) Upon request of the Lender, each of the parties hereto will duly
execute and deliver or cause to be duly executed and delivered to the
Lender such further instruments and do and cause to be done such further
acts that may be reasonably necessary or proper in the opinion of the
Lender to carry out more effectively the provisions and purposes hereof,
including documents deemed necessary by the Lender to more fully evidence
the obligations of Borrower, TMC or WD to Lender and protect and perfect
the collateral therefor.
(6) The Borrower agrees to pay all reasonable costs and expenses of
the Lender in connection with the preparation, execution and delivery of
the documents executed in connection with this Amendment Agreement,
including without limitation, the reasonable fees and out-of-pocket
expenses of special counsel to the Lender.
(7) Each of WD and TMC (collectively the "Guarantors") as guarantors
under, in the case of WD, a Guaranty Agreement dated July 31, 1997 from
the WD in favor of the Lender and, in the case of TMC, a Guaranty
Agreement dated February 6, 1998, of TMC in favor of the Lender, hereby
joins in this Amendment Agreement to join in the terms hereof and evidence
its consent to the terms and conditions hereof.
[Signatures appear on following page]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
hereof by the Company and the Lender.
ATTEST: XXXXXXXX INDUSTRIES, INC.
/s/ Xxxxx X. XxXxxxxx, III By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------- ----------------------
Secretary Name: Xxxxxx X. Xxxxxxxx
Title: President
ATTEST: WINK XXXXX EQUIPMENT CO., INC.
/s/ Xxxxx X. XxXxxxxx, III By: /s/ C. Xxxxxxxxx Xxxxx
-------------------------- ----------------------
Assistant Secretary Name: C. Xxxxxxxxx Xxxxx
Title: President
ATTEST: XXXX MOTION CONTROLS, INC.
/s/ Xxxxx X. XxXxxxxx, III By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------- -----------------------
Assistant Secretary Name: Xxxxxx X. Xxxxxxxx
Title: President
NATIONSBANK, N.A.
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
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