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EXHIBIT 10.35
THIRD AMENDMENT
TO
REVOLVING LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO REVOLVING LOAN AND SECURITY AGREEMENT (this
"Amendment") dated as of March 31, 2001 between FIRSTAR BANK, N.A., a national
banking association and formerly known as Firstar Bank Milwaukee, N.A.
("Lender"), and FEATHERLITE, INC., a Minnesota corporation ("Debtor"), is as
follows:
PRELIMINARY STATEMENTS
A. Lender and Debtor are parties to a Revolving Loan and Security
Agreement dated September 24, 1998, as amended by a letter agreement dated
February 8, 1999 and by a letter agreement dated January 5, 2000 (as amended,
the "Loan Agreement"). Capitalized terms which are used, but not defined, in
this Amendment will have the meanings given to them in the Loan Agreement.
B. Debtor has requested Lender (i) to waive existing defaults of the
Minimum EBITDA, Minimum Fixed Charge Coverage Ratio, Capital Expenditures, and
Debt to Tangible Net Worth financial covenants set forth in Section 12 of the
Loan Agreement for the periods ending in, and as of, the fiscal year ended
December 31, 2000 (the "Existing Defaults"), (ii) to amend certain financial
covenants for periods ending during the fiscal year ending December 31, 2001,
and (iii) to increase until May 31, 2001 the amount of availability under the
Line of Credit, in the form of Special Advance Availability (as defined in this
Amendment), to be added to the Collateral-Obligation Ratio set forth in
subsections (a) and (b) of Section 3 of the Loan Agreement.
C. In consideration of the increase in the rate of interest payable on
the Obligations, the fee payable to Lender, and the other terms and conditions
provided in this Amendment, Lender is willing to waive the Existing Defaults and
to so amend the Loan Agreement, all as contemplated by the terms, and subject to
the conditions, of this Amendment.
Statement of Amendment
In consideration of the mutual covenants and agreements set forth in
this Amendment, and for other good and valuable consideration, Lender and Debtor
hereby agree as follows:
1. Amendments to Loan Documents. Subject to the satisfaction of the
conditions of this Amendment, the Loan Agreement is hereby amended as follows:
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1.1 The first sentence of Section 3. COLLATERAL-OBLIGATION RATIO is
hereby amended in its entirety by substituting in its stead the following:
Without Lender's prior written consent, Debtor shall not permit
advances (including, without limitation, accrued interest, expenses,
fees and reserves) against Qualified Accounts and Qualified Inventory
at any time outstanding to exceed the lesser of $25,000,000 or an
amount equal to the sum of:
(a) up to 85% of the amount owing on Qualified Accounts (minus
payments on Qualified Accounts which are in the process of
collection by Lender); plus
(b) up to the lesser of $21,000,000 or the following percentages
of Qualified Inventory at cost or wholesale market value,
whichever is lower, as reflected below:
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TYPE OF FEATHERLITE MANUFACTURING VANTARE DIVISION XXXX
QUALIFIED INVENTORY DIVISION DIVISION
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Raw Materials 70% 70% 70%
Work-In-Process 70% 70% 70%
Sub-Assembly
Finished Goods 70% 0% 0%
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plus
(c) the Special Advance Availability, as defined, and to the
extent and in the manner provided for, in subsection (h) of
Section 12.
1.2 The third sentence in Section 1. LOANS AND SECURITY INTEREST,
subsection (a) LOANS AND INTEREST RATE, being a description of the applicable
interest rate charged by Lender, is hereby amended in its entirety by
substituting in its stead the following:
The interest rate hereunder shall be computed at an annual rate equal
to the rate announced from time to time by Lender as its "prime rate",
which may or may not be the best rate available at Lender.
1.3 The following is added to the end of subsection (b) of Section 4,
CREDIT FOR COLLECTIONS, to provide in its entirety as follows:
For the purpose of determining availability under the Line of
Credit, all Collections will reduce the outstanding principal
balance of Qualified Accounts on the business day on which
Lender's Structured Capital Division receives notice of the
deposit of such Collections into the Special Account.
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1.4 The third sentence of Section 7. OTHER LOAN PROVISIONS, subsection
(a) PARTICIPATIONS, PARTICIPANT INTEREST RATE, is hereby amended in its entirety
by substituting in its stead the following:
The annual rate of interest charged to Debtor on any advances
subject to participation shall be the rate announced from time
to time by Lender as its "prime rate."
1.5 Subsections (c), (d), (e) and (f) of Section 12 are hereby amended
in their entirety by substituting in their stead the following:
(c) CAPITAL EXPENDITURES. Debtor shall not make Capital
Expenditures (as defined in Section 2. DEFINITIONS) (excluding
aircraft purchased in replacement of any existing aircraft in
the ordinary course of business) in a total amount that
exceeds $1,500,000 in the aggregate for any fiscal year of
Debtor ending on or after December 31, 2001.
(d) DEBT TO TANGIBLE NET WORTH. Debtor shall maintain a ratio of
Debt to Tangible Net Worth (as defined in Section 2.
DEFINITIONS) not greater than 4.500 to 1.000 as of December
31, 2001 and as of the end of any fiscal year ended
thereafter.
(e) MINIMUM EBITDA. Debtor shall achieve EBITDA (as defined in
Section 2. DEFINITIONS) of at least $10,000,000 for Debtor's
fiscal year ending December 31, 2001 and at least $10,000,000
for each of Debtor's fiscal years ending thereafter.
(f) MINIMUM FIXED CHARGE COVERAGE RATIO. Debtor shall not permit
the Fixed Charge Coverage Ratio (as defined in Section 2.
DEFINITIONS) to be less than the Fixed Charge Coverage Ratios
set opposite the periods ending on the following dates:
Period Fixed Charge Coverage Ratio
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As of June 30, 2001 from
April 1, 2001 1.000 : 1.000
As of September 30, 2001 from
July 1, 2001 1.400 : 1.000
As of December 31, 2001 from
October 1, 2001 1.400 : 1.000
As of December 31, 2001 from
January 1, 2001 1.000 : 1.000
As of the end of each fiscal
quarter ended on and after 1.250 : 1.000
December 31, 2001 from the
beginning of the applicable fiscal
year
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1.6 Section 12 of the Loan Agreement is hereby amended to add the
following subsections to provide in their entirety as follows:
(g) FINANCIAL COVENANTS. All financial covenants set for in
subsections (c), (d), (e) and (f) of Section 12 will be tested
by Lender based upon Debtor's internally prepared financial
statements and/or, at Lender's option, Lender's or a certified
public accounting firm's audit of Debtor's financial records.
(h) SPECIAL ADVANCE AVAILABILITY. Subject to the other terms and
conditions of this Agreement, Lender will provide to Debtor,
and Debtor may draw, additional revolving loan availability
underneath the Line of Credit (as in effect on a date, the
"Special Advance Availability"). Special Advance Availability
will be added to the availability determined under subsections
(a) and (b) of Section 3. The Special Advance Availiability
will not exceed an amount, as at any time of determination,
equal to (i) $1,500,000 less (ii) the sum of all outstanding
amounts drawn (or deemed to be drawn) under the Special
Advance Availability as of each date of drawing by Debtor of
the Special Advance Availability. Subject to the other terms
and conditions of this Agreement, Special Advance Availability
will be available until 5:00 p.m. on May 31, 2001 (the
"Special Advance Termination Date"). As of the Special Advance
Termination Date, the entire unpaid principal balance of, and
all accrued interest on, that portion of the Line of Credit
attributable to Special Advance Availability, if not sooner
repaid, will be due and payable in full and the amount of the
Special Advance Availability will be equal to zero (0)
dollars; and, for purposes of this Agreement, the other Loan
Documents and availability under the Line of Credit, the
Special Advance Availability will be terminated.
Notwithstanding anything to the contrary in this Agreement or
in the other Loan Documents, payments applied to reduce the
principal balance of the Line of Credit will be applied first
to reduce all outstanding amounts drawn under the Special
Advance Availability and second to reduce the remainder of the
Line of Credit. For all purposes of this Agreement and the
other Loan Documents, Debtor will be deemed to have made a
drawing of the Special Advance Availability, and the Special
Advance Availability will be deemed outstanding, in the amount
by which the outstanding balance of the Line of Credit, as at
any time of
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determination, exceeds availability under the Line of Credit
determined under subsections (a) and (b) of Section 3.
(i) CONTROLLED DISBURSEMENT ACCOUNT; ADVANCEMENTS. All
disbursements of proceeds of the Line of Credit requested by
Debtor shall be effectuated by Lender's crediting Debtor's
Account No. 520002042 at Lender, which shall be structured and
utilized as a controlled disbursement account in accordance
with Lender's policies and procedures ("Controlled
Disbursement Account"); however, Lender may at any time
hereafter elect not to credit proceeds of the Line of Credit
to the Controlled Disbursement Account, but instead may
establish a similar non-controlled disbursement account or
accounts for Debtor at Lender and disburse proceeds of the
Line of Credit by crediting such non-controlled disbursement
account of Debtor at Lender. Debtor hereby authorizes Lender
without any further written or oral request of Debtor to make
advances of the Line of Credit to Debtor in amounts necessary
for the payment of checks and other items drawn on the
Controlled Disbursement Account as such checks and other items
are presented to Lender for payment. In addition to advances
of the Line of Credit made pursuant to Lender's controlled
disbursement account system, Lender will, from time to time
prior to the termination of the Line of Credit and subject to
the other terms and conditions of this Agreement, advance the
Line of Credit via wire transfer of funds on the written
request of Debtor therefor. Debtor shall specify in each such
request whether an advance of the Line of Credit is requested
by Debtor. If Lender receives such a request from Debtor for
an advance of the Line of Credit prior to 12:00 noon,
Cincinnati, Ohio time, Lender will make such advance of the
Line of Credit on that same business day subject to the other
terms and conditions of this Agreement. If Lender receives
such a request from Debtor for an advance of the Line of
Credit after 12:00 noon, Cincinnati, Ohio time, Lender will
make such advance of the Line of Credit on the next business
day subject to the other terms and conditions of this
Agreement.
(j) CHARGING OF LINE OF CREDIT. Debtor hereby authorizes Lender,
at Lender's option, to charge any account of Debtor at Lender
or charge or increase the Line of Credit for the payment or
repayment of any interest or principal of Obligations, any
fees, charges or other amounts due to Lender under the Loan
Documents or any of the other Obligations.
(k) SPECIAL ACCOUNT. Upon collection of Collections (as defined in
subsection (a) of Section 4) and other proceeds of accounts
and other Collateral from the lock box, Lender shall deposit
the same in Account No. 183146490 at Lender (the "Special
Account"). Any Collection or other proceeds of accounts and
other Collateral received by Debtor shall be deemed held by
Debtor in trust and as fiduciary for Lender, and Debtor
immediately shall deliver the same, in its original form, to
Lender by
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overnight delivery carrier into the lock box. Pending such
deposit, Debtor agrees that it will not commingle any such
Collection or other proceeds of accounts and other Collateral
with any of Debtor's other funds or property, but will hold it
separate and apart therefrom in trust for Lender until deposit
is made into the lock box or Special Account or until delivery
is made to Lender by overnight delivery carrier as described
above. All deposits to the Special Account and the lock box
shall be Lender's property and shall be subject only to the
signing authority designated from time to time by Lender, and
Debtor shall have no interest therein or control over such
deposits or funds. Lender shall have sole access to the
Special Account and the lock box, and Debtor shall have no
access thereto. Lender shall have, and Debtor hereby confirms
its prior grant and hereby re-grants to Lender, a lien on and
security interest in all funds held in the Special Account and
the lock box as security for the Obligations. The Special
Account shall not be subject to any deduction, set-off,
banker's lien or any other right in favor or any person other
than Lender. Deposits to the Special Account shall be applied
to the Obligations in such order and method of application as
may be elected by Lender in its discretion exercised in good
faith. Any funds in the Special Account remaining after the
applications set forth in the preceding sentence ("Available
Funds") will be paid over by Lender to Debtor; however, at any
time on and after the occurrence of an event of default, all
Available Funds may, at Lender's option be retained in the
Special Account as continuing security for the Obligations. If
any Collection deposited in the Special Account is dishonored
or returned unpaid for any reason, Lender, in its discretion,
may charge the amount of such dishonored or returned
Collection directly against Debtor and any account maintained
by Debtor with Lender and such amount shall be deemed part of
the Obligations. Lender shall not be liable for any loss or
damage resulting from any error, omission, failure or
negligence on the part of Lender arising out of the lock box
or Special Account, but shall be liable for any such loss or
damage only to the extent of any direct, as opposed to
consequential, damages suffered by Debtor from Lender's gross
negligence or willful misconduct. Until a payment is received
by Lender for Lender's account in Milwaukee, Wisconsin in
finally collected funds, all risks associated with such
payment will be borne solely by Debtor. From time to time,
Lender may adopt such regulations and procedures as it may
deem reasonable and appropriate with respect to the operation
of the Special Account, the lock box, and the services to be
provided by Lender under this Agreement.
(l) COSTS. All reasonable costs of collection of Debtor's
accounts, including, without limitation, attorney's fees,
out-of-pocket expenses, administrative and recordkeeping
costs, and all service charges and costs related to the
establishment and maintenance of the lock box, the Controlled
Disbursement Account and the Special Account shall be the sole
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responsibility of Debtor, whether the same are incurred by
Lender or Debtor.
(m) REPORTING OF RECEIVABLES; PAYABLES. Debtor shall deliver to
Lender (a) a borrowing base certificate in the form of
Schedule 12(m) (a "Borrowing Base Certificate") by Tuesday of
each week which certifies the applicable information as of the
immediately preceding Friday and (b) reports of Debtor's
sales, credits to sales or credit memoranda applicable to
sales, collections and non-cash charges (from whatever source,
including, without limitation, sales and noncash journals or
other credits to accounts receivable and non-accounts
receivable collections) for the immediately preceding calendar
week (including, without limitation, a report indicating the
U.S. Dollar value of Debtor's Qualified Accounts, and all
other information deemed necessary by Lender to determine
levels of that which is and is not Qualified Accounts). By no
later than the 20th day after the end of each calendar month,
or sooner if available, Debtor shall deliver to Lender monthly
agings, broken down by due date, of accounts receivable, in
each case reconciled to the Borrowing Base Certificate for the
end of such month and Debtor's general ledger, and setting
forth any changes in the reserves made for bad accounts or any
extensions of the maturity of or any other material changes in
the terms of any accounts, together with such further
information with respect thereto as Lender may reasonably
require. By no later than the 20th day after the end of each
calendar month, or sooner if available, Debtor shall deliver
to Lender monthly agings of accounts payable listed by invoice
date, in each case reconciled to Debtor's general ledger for
the end of such month.
(n) REPORTING OF INVENTORY. By no later than the 20th day after
the end of each calendar month, Debtor shall submit to Lender
a perpetual inventory report reconciled to (i) the Borrowing
Base Certificate for the end of such month, (ii) Debtor's
inventory records, and (iii) Debtor's general ledger, broken
down into such detail and with such categories as Lender shall
reasonably require (including, without limitation, a report
indicating the type, location, and U.S. Dollar value of
Debtor's Raw Materials, Work-In-Process, Sub-Assembly and
Finished Goods inventory, and all other information deemed
necessary by Lender to determine levels of that which is and
is not Qualified Inventory). Values shown on reports of
inventory shall be at the lower of cost or market value
determined in accordance with a "first in-first out" cost
accounting system. By Tuesday of each week, Debtor shall
deliver to Lender a Borrowing Base Certificate, which
certifies the applicable information as of the immediately
preceding Friday, and acceptable supporting documentation
thereto, reporting the value of Debtor's inventory as of the
end of the immediately preceding calendar month for which
Debtor has provided an inventory report in accordance with
this subsection (n) of Section 12.
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(o) AUDITS. Debtor, on demand, will pay to Lender its then current
audit fee, travel and any other out-of-pocket expenses
incurred by Lender in connection with its periodic audit of
the books and records of Debtor. Debtor authorizes Lender to
pay such fee and expenses and charge the same as an advance of
the Line of Credit. Lender currently charges $850.00 per day
based on an 8 hour day plus out-of-pocket expenses per auditor
or field examiner for the services of its auditors and field
examiners.
1.7 The Loan Agreement is hereby amended to add as Schedule 12(m),
Schedule 12(m) attached to this Amendment.
2. Waiver of Specific Events of Default; Consideration of Additional
Special Advance.
2.1 Lender hereby waives the Existing Defaults (as defined in
Preliminary Statement B to this Amendment) for the specific periods indicated in
Preliminary Statement B to this Amendment. This waiver shall not extend to any
other breaches of the Loan Agreement (or of any other Loan Document) by Debtor,
past, present or future, including, without limitation, any violations of the
above described financial covenants as of dates other than that specifically
referenced in Preliminary Statement B to this Amendment. Lender is waiving the
Existing Defaults based on information supplied by Debtor with respect to its
current and projected financial performance.
2.2 Debtor has requested that Lender consider providing Special Advance
Availability for an additional period after May 31, 2001. Lender has apprised
Debtor that Lender is not making any commitment to provide any additional
Special Advance Availability beyond May 31, 2001 as of the date of this
Amendment; however, Lender will, in its sole discretion, consider Debtor's
request after Debtor provides appraisals, satisfactory to Lender, of Debtor's
real estate and equipment and Lender is satisfied as to Debtor's financial
performance after the date of this Amendment and the absence of additional
events of default. Any additional Special Advance Availability, including the
amount, duration, and other terms thereof, are subject to the approval of
Lender's and the Participant's applicable credit authorities in their sole
discretion.
3. Participant's Consent. As a condition of this Amendment, the
Participant, LaSalle National Bank, shall have consented to the terms and
conditions of this Amendment and shall have entered into an amendment of the
Loan Participation Agreement between Lender and Participant, dated October 8,
1998, as amended.
4. Security. This Amendment is in no way intended, nor may it be
construed, to impair, extinguish, or otherwise adversely affect the creation,
attachment, perfection or priority of the existing security interests in, and
other liens on, the Collateral or other security (or any part thereof) granted
to, or held by, Lender, which existing security interests and other liens (i)
Debtor acknowledges, confirms and reaffirms to Lender and (ii) continue in full
force and effect.
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Debtor acknowledges and agrees that the security interests and liens granted to
Lender in the Collateral or other security held by Lender remain first and valid
security interests and liens.
5. Other Documents; Appraisals.
5.1 With the signing of this Amendment, Debtor will deliver to Lender
(i) evidence satisfactory to Lender that this Amendment and the transactions
contemplated hereby were duly authorized by the Board of Directors of Debtor and
(ii) such other documents, instruments, and agreements deemed necessary or
desirable by Lender to effect the amendments to Debtor's credit facilities with
Lender contemplated by this Amendment.
5.2 Debtor will, at its expense, obtain appraisals of its equipment and
real estate from appraisers and on terms acceptable to Lender. Debtor will
obtain those appraisals no later than 45 days after the date of this Amendment.
6. Representations. To induce Lender to accept this Amendment, Debtor
hereby represents and warrants to Lender as follows:
6.1 Debtor has full power and authority to enter into, and to perform
its obligations under, this Amendment, and the execution and delivery of, and
the performance of its obligations under and arising out of, this Amendment have
been duly authorized by all necessary corporate action.
6.2 This Amendment constitutes the legal, valid and binding obligations
of Debtor enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally.
6.3 Debtor's representations and warranties contained in the Loan
Agreement are complete and correct as of the date of this Amendment with the
same effect as though these representations and warranties had been made again
on and as of the date of this Amendment, subject to those changes as are not
prohibited by, or do not constitute events of default under, the Loan Agreement.
6.4 No event of default has occurred and is continuing under the Loan
Agreement.
7. Costs and Expenses; Fees. As a condition of this Amendment, Debtor will
promptly on demand pay or reimburse Lender for the costs and expenses incurred
by Lender in connection with this Amendment, including, without limitation,
attorneys' fees. As a condition of this Agreement, Debtor will, upon the
execution of this Amendment, pay to Lender an amendment fee in the amount of
$50,000, which fee shall be in addition to any other fees provided for in the
Loan Agreement and shall be fully earned and nonrefundable when paid.
8. Release. Debtor hereby releases Lender from any and all liabilities,
damages and claims arising from or in any way related to the Obligations or the
Loan Documents, other than such liabilities, damages and claims which arise
after the execution of this Amendment. The foregoing release does not release or
discharge, or operate to waive performance by, Lender of
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its express agreements and obligations stated in the Loan Documents on and after
the date of this Amendment.
9. Default. Any default by Debtor in the performance of Debtor's
obligations under this Amendment shall constitute an event of default under the
Loan Agreement.
10. Continuing Effect of Loan Agreement. Except as expressly amended
hereby, all of the provisions of the Loan Agreement are ratified and confirmed
and remain in full force and effect. To the extent that any provision of this
Amendment conflicts with any terms or conditions set forth in any of the other
Loan Documents or any of the other agreements, instruments or documents between
Debtor and Lender, the provisions of this Amendment shall supersede and control;
however, future administration of the financing arrangements between Debtor and
Lender shall continue to be governed by all of the terms and conditions of the
Loan Agreement, except to the extent that the same have been amended and
supplemented by this Amendment.
11. One Agreement; References; Fax Signature. The Loan Agreement, as
amended by this Amendment, will be construed as one agreement. All references in
any of the Loan Documents to the Loan Agreement will be deemed to be references
to the Loan Agreement as amended by this Amendment. This Amendment may be signed
by facsimile signatures, and if so signed, (i) may be relied on by each party as
if the document were a manually signed original and (ii) will be binding on each
party for all purposes.
12. Captions. The headings to the Sections of this Amendment have been
inserted for convenience of reference only and shall in no way modify or
restrict any provisions hereof or be used to construe any such provisions.
13. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
14. Entire Agreement. This Amendment sets forth the entire agreement
of the parties with respect to the subject matter of this Amendment and
supersedes all previous understandings, written or oral, in respect of this
Amendment.
15. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Wisconsin.
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IN WITNESS WHEREOF, Debtor has executed this Amendment to be effective
as of the date set forth in the opening paragraph of this Amendment.
FEATHERLITE, INC.
By: /s/Xxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Pres.
Accepted at Milwaukee, Wisconsin,
as of March 31, 2001
FIRSTAR BANK, N.A.
By: /s/ Xxx Xxxx
-----------------------------------
Name: Xxx Xxxx
Title: Vice President
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Schedule 12 (m)
BORROWING BASE CERTIFICATE
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TO: Firstar Bank, National Association Certificate No. Certificate Date:
FROM: Featherlite, Inc. Activity From: To:
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A/R R/M & SUPPLIES WIP F/G
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1 Control Balance from previous cert. # 11
2 Add: Gross Invoices from to
3 Less: Credit Memos from to
4 Total Cash Collections from to
5 - Non-A/R Collections from to 0
6 + Discounts & Allowance from to
7 = Total Gross Payments Posted to A/R (4-5+6)
8 + Misc. Debit Adjustments 0
9 - Misc. Credit Adjustments 0
10 A/R BALANCE THIS CERTIFICATE (1+2-3-7+8-9)
11 INVENTORY BALANCE THIS CERTIFICATE
12 Less Ineligibles as of
13 Collateral Available (A/R & Inventory)
14 Approved Rate of Advance 85% 70% 70% 70%
15 Availability (13 x 14)
16 Total Inventory Available
17 Loan Sublimit 0
18 Lesser of Availability or Sublimit (16 or 17)
19 Combined Availability (A/R & Inventory)
20 Facility Cap for Revolving portion of loan only
21 Lessor of the Facility Cap or Total Availability
(29 or 20)
22 Less Letters of Credit
23 Less Loan Reserve
24 NET AVAILABILITY (21-22-23)
25 Loan Balance from previous cert. # 11
26 - Total Cash Collections
27 + Total Loan Advances
28 + Loan Fees Charged
29 +/- Other Adjustments
30 = LOAN BALANCE THIS CERTIFICATE
31 EXCESS(DEFICIT) AVAILABILITY (24-30)
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Borrower hereby certifies to the truthfulness and accuracy of this report, any attached reports, (invoice registers,
cash receipts journals, monthlyA/R aging reconciled to the G/L, monthly breakdown of inventory by location and type
reconciled to the G/L, and month-end open A/P listing reconciled to the G/L), and the figures set forth herein.
By:
Title:
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