EXHIBIT 10.5(a)
November 14, 2000
Xxxxxx X. Xxxxx
Chief Financial Officer
Trans-Lux Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Via Fax: (000) 000-0000
Dear Xxxxxx:
First Union National Bank ("First Union") hereby amends the Credit Agreement
dated August 28, 1995 among the Borrowers and Lender (as amended, modified,
supplemented or restated from time to time, the "Credit Agreement") and the
Reimbursement Agreement ("Reimbursement Agreement") dated June 3, 19999 among
Trans-Lux Corporation, Integrated Systems Engineering, Inc. and First Union
(as amended, modified, supplemented or restated from time to time).
Collectively, the Credit Agreement and Reimbursement Agreement are referred to
herein as the "Agreements".
The amendment, by way of this letter agreement, shall be for the financial
covenant testing period ending September 30, 2000 only. The amendment to
paragraph 1 of Schedule 6.11 of each of the Agreements is as follows:
1. Debt Service Coverage Ratio. TLX, on a consolidated basis, shall maintain
as of September 30, 2000 for the most recent 12-month period, a Debt Service
Coverage Ratio of not less than 1.40 to 1.00. For purposes of this
calculation, the amount of Current Maturities shall not include any amount
outstanding under Loan C Prior to June 30, 2002, but shall include the
aggregate of Capital Lease Obligations.
For subsequent testing periods, the Debt Service Coverage Ratio shall be tested
in accordance with the existing Agreements as of the day prior to this letter
agreement.
Sincerely,
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
EXHIBIT 10.5(b)
Xxxxxx Xxxxx
Xx. Vice President & Chief Financial Officer
Trans-Lux Corporation
000 Xxxxxxxx Xxx.
Xxxxxxx, XX. 00000-0000
Re: Agreement to modify certain financial covenants included in each of the
following agreements between First Union National Bank ("First Union"); and
Trans-Lux Corporation, Integrated Systems Engineering and all co-borrowers and
guarantors thereto (referred to jointly as "the Borrower").
(1) The Credit Agreement dated as of August 28, 1995, as amended; and
(2) The Letter of Credit and Reimbursement Agreement as of June 3, 1999.
Dear Xxxxxx:
A) Modification of Financial Covenants.
Effective as of December 31, 2000 each of the following financial covenants are
modified as follows:
(1) Consolidated Tangible Net Worth.
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- Borrower will be in compliance, as of December 31, 2000, if its
Consolidated Tangible Net Worth as of that date is not less than
$20,000,000.
- For Fiscal Quarter end-date of March 31, 2001 and each Fiscal Quarter
end-date thereafter, Borrower's Consolidated Tangible Net Worth will be
an amount not less than the sum of (i) $20,000,000 and (ii) 50% of
Borrower's cumulative net income from January 1, 2001 through the end of
the Fiscal Quarter for which covenant is being tested. Cumulative net
income will be no less than $0.00 for purposes of the covenant
calculation.
(2) Debt Service Coverage Ratio.
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- Borrower will be in compliance, as of December 31, 2000, and at each
Fiscal Quarter end-date through and including September 30, 2001, if its
Debt Service Coverage Ratio as of those dates is not less than 1.25 to
1.00.
- For Fiscal Quarter end-date of December 31, 2001 and each Fiscal Quarter
end-date through and including September 30, 2002, Borrower's Debt
Service Coverage Ratio will be no less than 1.40 to 1.00.
- For Fiscal Quarter end-date of December 31, 2002 and each Fiscal Quarter
end-date thereafter, Borrower's Debt Service Coverage Ratio will be no
less than 1.50 to 1.00.
(3) Senior Funded Debt to Cash Flow Ratio.
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- Borrower will be in compliance, as of December 31, 2000, and at each
Fiscal Quarter end-date through and including September 30, 2001, if its
Senior Funded Debt to Cash Flow Ratio as of those dates is not greater
than 4.25 to 1.00.
- For Fiscal Quarter end-date of December 31, 2001 and each Fiscal Quarter
end-date through and including September 30, 2002, Borrower's Senior
Funded Debt to Cash Flow Ratio will not be greater than 3.75 to 1.00.
- For Fiscal Quarter end-date of December 31, 2002 and each Fiscal Quarter
end-date through and including September 30, 2003, Borrower's Senior
Funded Debt to Cash Flow Ratio will not be greater than 3.50 to 1.00.
- For Fiscal Quarter end-date of December 31, 2003 and each Fiscal Quarter
end-date thereafter, Borrower's Senior Funded Debt to Cash Flow Ratio
will not be greater than 3.25 to 1.00.
B) Modification of EBITDA term.
Effective as of December 31, 2000, the term EBITDA, as it is applied to the
calculation of (i) the Senior Funded Debt to Cash Flow Ratio and (ii) the Debt
Service Coverage Ratio, will mean:
For any rolling four-quarter period; the sum of (i) net income, (ii) provision
for income tax, (iii) interest expense, (iv) depreciation expense, (v)
amortization expense and (vi) any accounting loss (before tax), reported on
Borrower's income statement, for the sale of an asset; minus the sum of (i)
interest income and (ii) any accounting gain (before tax), reported on
Borrower's income statement, for the sale of an asset.
C) Amendment fee:
By executing this letter agreement Borrower agrees to an amendment fee in the
amount of $1,500. Borrower will either authorize a debit of its operating
account or remit a check which will be delivered to the Bank with an executed
copy of this letter.
D) All other terms and conditions of the referenced agreements remain unchanged.
E) Representations and warranties:
The Borrower, by Signature below, represents and warrants that after giving
effect to the covenants, there exist no defaults or Event of Default under the
Loan Documents, that the Loan Documents are in full force and effect, and that
Borrower does not have any defenses to its obligations under the Loan Documents
nor any claims against Bank.
Please evidence acceptance of these modifications by signing and returning to
the Bank a copy of this letter bearing original authorized signature of each of
the parties indicated.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Assistant Vice President
ACCEPTED AND AGREED TO:
TRANS-LUX CORPORATION, on behalf of itself and co-borrowers and guarantors
/s/ Xxxxxx Xxxx
By: ------------------------------
Xxxxxx Xxxx, President
/s/ Xxxxxx Xxxxx
By: ------------------------------
Xxxxxx Xxxxx, Senior Vice President
