EXHIBIT 10.18
SECOND AMENDMENT TO TERM LOAN AND ACQUISITION LINE AGREEMENT
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This Second Amendment to Term Loan and Acquisition Line Agreement is made
as of the ___day of March, 1999 by and among
Ustman Industries, Inc. (f/k/a Xxxxxx General Corporation), a California
corporation, with its principal place of business at 00000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 (the "Company"); and
BankBoston, N.A., a national banking association having its principal
offices at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (the "Bank")
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH
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WHEREAS, the Company and the Bank have entered into a Term Loan and
Acquisition Line Agreement dated as of December 16, 1997 (as amended and in
effect, the "Loan Agreement"); and
WHEREAS, the Company has requested the Bank to amend the Loan Agreement
and the Bank is willing to do so on the terms set forth herein.
NOW THEREFORE, it is hereby agreed as follows:
1. Definitions: All capitalized terms used herein and not otherwise
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defined shall have the same meaning herein as in the Loan Agreement.
2. Amendments to Section 1. The provisions of Section 1.1 of the Loan
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Agreement are hereby amended
a. by deleting the definition of Subordinated Indebtedness in its
entirety and substituting the following in its stead:
Subordinated Indebtedness. Preferred Stock of the Company to
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Sagaponack acquired as a result of the conversion of Indebtedness due
from the Company to Sagaponack in the aggregate principal sum of
$7,000,000.00 evidenced by certain Senior Subordinated Promissory
Notes dated May 22, 1997.
b. by deleting the date "December 31, 2000" appearing in the definition
of "Term Loan Maturity Date" and substituting the date "December 31,
2001" in its stead.
c. by adding the following new definition:
Rights Offering. The offering by the Company to its existing
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shareholders of the right to purchase additional shares of the
Company's common stock on or before June 30, 1999.
3. Amendments to Section 2. The provisions of Section 2 of the Loan
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Agreement are hereby amended
a. by deleting the date "December __,2000" appearing in (S)2.2 and
substituting the date "December 31, 2001" in its stead.
b. by deleting the first sentence of (S)2.3 in its entirety and
substituting the following in its stead:
The Term Loan shall bear interest on the outstanding principal
balance thereof at a rate equal to (a) the aggregate of the Base
Rate plus three and one-half percent (3 1/2%) per annum if the
Company does not achieve Consolidated EBITDA of at least
$2,000,000.00 as of the end of the immediately preceding quarter
(calculated on a rolling four quarters basis), or (b) the
aggregate of the Base Rate plus three percent (3%) per annum if
the Company achieves Consolidated EBITDA of at least
$2,000,000.00 for the immediately preceding quarter. For purposes
of determining the rate of interest hereunder, Consolidated
EBITDA shall be determined based upon the financial statements
delivered to the Bank pursuant to (S)6.1 (a) and (b) hereof,
provided that, if the Company fails to deliver such financial
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statements as and when due, interest shall accrue at the rate set
forth in clause (a) hereof (without waiving the provisions of
(S)3.7 hereof).
c. by deleting the first sentence of (S)2.4(a) and substituting the
following in its stead:
An amount equal to the greater of (i) $150,000.00 or (ii) ten
percent (10%) of the result of (A) the Consolidated EBITDA of the
Company and its Subsidiaries for fiscal years 1999, 2000, and
2001 divided by (B) three (3).
d. by deleting the words "fiscal year 2000" appearing in the second
sentence of (S)2.4(a) and substituting the words "fiscal year 2001" in
its stead.
e. by deleting the amortization schedule for the Term Loan for 1999 and
2000 appearing in (S)2.5 and substituting the following in its stead:
Quarters Ending Quarterly Installment
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March, 1999 $0
June, September and
December, 1999 and March 2000 $125,000.00
June, 2000 and each quarter end
thereafter through September, 2001 $250,000.00
December, 2001 The entire outstanding
balance of the Term Loan
In addition to the foregoing, on the earlier of (x) ten (10)
Business Days after the consummation of the Rights Offering, or
(y) June 30, 1999, the Company shall make a principal payment in
the sum of $750,000.00
f. by deleting the provisions of (S)(S)2.6 through 2.11 in their entirety,
it being agreed that no Acquisition Loans are outstanding and the Bank has no
further obligation to make Acquisition Loans.
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g. by adding the words "and other than Net Proceeds from the Rights
Offering" after the words "employee stock option plans" in (S)2.13(d)
thereof.
4. Amendments to Section 3. The provisions of Section 3.7(a) of the Loan
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Agreement are hereby deleted in their entirety and the following substituted in
their stead:
(a) Following the occurrence of an Event of Default, principal
and (to the extent permitted by applicable law) interest on the
Loans and all other amounts payable hereunder or under any of the
other Loan Documents, at the option of the Bank, shall bear
interest (compounded daily) payable on demand at a rate equal to
the aggregate of the Base Rate plus six and one-half percent (6
1/2%) per annum, or if interest is then accruing at the rate set
forth in (S)2.3(b) hereof, at a rate equal to the aggregate of
the Base Rate plus six percent 6% per annum.
5. Amendments to Section 7. The provisions of Section 7 of the Loan
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Agreement are hereby amended as follows:
a. by adding the words, "Except for the conversion of Subordinated
Indebtedness to preferred stock and for the Rights Offering," before the
beginning of (S)7.6.
b. by adding the words "except for the conversion of Subordinated
Indebtedness to preferred stock" at the end of (S)7.11.
c. by adding the following new section:
(S)7.13 Rights Offering. On or before June 30, 1999, the Company shall
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have received at least $1,000,000.00 from the Net Proceeds of the Rights
Offering.
6. Amendments to Section 8. The provisions of Section 8 of the Loan
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Agreement are hereby amended.
a. by deleting the provisions of (S)8.1 in their entirety and substituting
the following in their stead:
8.1 Consolidated Net Worth. The Company shall at all times
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maintain a Consolidated Net Worth equal to or greater than:
(a) $6,000,000.00 as of each of the quarters end September 30,
1998 and December 31, 1998;
(b) $5,500,000.00 as of each of the quarters end March 31, 1999
through and including June 30, 2000;
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(c) as of each quarter and thereafter, the sum of (i)
$5,500,000.00, plus (ii) one hundred percent (100%) of the
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proceeds realized from the issuance of any stock or other equity
interests in the Company, plus (iii) seventy-five percent (75%) of
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the Consolidated Net Income (but not any net loss) of the Company
and its Subsidiaries in each of their fiscal years commencing with
the fiscal year ending June 30, 2000.
b. by deleting the provisions of (S)8.3 in their entirety and
substituting the following in their stead:
8.3 Adjusted Consolidated EBITDA to Interest Charges. The
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Company shall not permit the ratio of Adjusted Consolidated EBITDA
to Interest Charges paid in cash, calculated on a rolling four
quarters basis, to be less than 3.0:1.0 at the end of each of the
Company's fiscal quarters, except for the fiscal quarter ending
March 31, 1999 for which quarter the ratio shall not be less than
2.8:1.0.
c. by amending the provisions of (S)8.5(a) by deleting the ratios for the
periods ending March 31, 1999 and thereafter and substituting the
following in their stead:
Period Minimum EBITDA
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Quarter ending
March 31, 1999 $1,200,000.00
Quarter ending
June 30, 1999 $1,400,000.00
Quarter ending
September 30, 1999 $1,500,000.00
Quarter ending
December 31, 1999 $1,600,000.00
Quarter ending
March 31, 2000 $1,800,000.00
Quarter ending
June 30, 2000 and
each quarter ending thereafter $1,936,000.00
d. by deleting the provisions of (S)8.6 in their entirety and
substituting the following in their stead:
8.6 Consolidated Operating Cash Flow to Debt Service
Charges. The Company shall not permit the ratio of
Consolidated Operating Cash Flow to Debt Service Charges,
calculated on a rolling four quarters basis to be less
than 1.1:1.0 as of the end of any fiscal quarter of the
Company, commencing with the quarter ending March 31,
1999 for which quarter the ratio shall not be less than
1.0:1.0.
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7. Conditions to Effectiveness. This Second Amendment to Term Loan and
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Acquisition Line Agreement shall not be effective until each of the following
conditions precedent have been fulfilled to the satisfaction of the Bank:
a. This Second Amendment to Term Loan and Acquisition Line Agreement
shall have been duly executed and delivered by the Company and the
Bank, and shall be in full force and effect. The Bank shall have
received a fully executed copy hereof and of each other document
required hereunder.
b. All action on the part of the Company necessary for the valid
execution, delivery and performance by the Company of this Second
Amendment to Term Loan and Acquisition Line Agreement shall have been
duly and effectively taken. The Bank shall have received from the
Company true copies of its certificates of the resolutions adopted by
its board of directors authorizing the transactions described herein,
each certified by its secretary as of a recent date to be true and
complete.
c. The Bank shall have received an opinion of counsel to the Company
satisfactory to the Bank and the Bank's counsel.
d. The Bank shall have been paid an amendment fee in the sum of
$16,250.00. The amendment fee shall be fully earned upon execution of
this Second Amendment and shall not be subject to refund or rebate
under any circumstances.
e. The Company shall have paid to the Bank all other fees and expenses
then due and owing pursuant to the Loan Agreement, as modified hereby,
including, without limitation, reasonable attorney's fees incurred by
the Bank.
f. No Default or Event of Default shall have occurred and be continuing.
g. The Company shall have provided such additional instruments and
documents to the Bank as the Bank and its counsel may have reasonably
requested.
8. Miscellaneous.
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a. Except as provided herein, all terms and conditions of the Loan
Agreement and the other Loan Documents remain in full force and
effect. The Company and the Guarantors hereby ratify, confirm, and
reaffirm all of the representations, warranties and covenants therein
contained (except to the extent that such representations and
warranties expressly relate to an earlier date) and that all
Obligations, as modified hereby are secured by the Collateral. The
Company and the Guarantors further acknowledge and agree that none of
them have any offsets, defenses, or counterclaims against the Bank
under the Loan Agreement or the other Loan Documents and, to the
extent that the Company or the Guarantors have, or ever had, any such
offsets, defenses, or counterclaims, the Company and the Guarantors
each hereby waive and release the same.
b. The Company shall pay all costs and expenses incurred by the Bank in
connection with this Second Amendment, including, without limitation,
all reasonable attorneys' fees and expenses, commercial finance
examination fees, appraisal fees, and all reasonable travel expenses
incurred by the Bank.
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c. This Second Amendment may be executed in several counterparts and by
each party on a separate counterpart, each of which when so executed
and delivered, each shall be an original, and all of which together
shall constitute one instrument.
d. This Second Amendment expresses the entire understanding of the
parties with respect to the matters set forth herein and supersedes
all prior discussions or negotiations hereon.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed and their seals to be hereto affixed as the date first above
written.
"Company"
USTMAN INDUSTRIES, INC.
/s/ Xxx X. Xxxx
By:____________________
Name: Xxx X. Xxxx
Title: President
"Bank"
BANKBOSTON, N.A.
/s/ Xxxxxxx X. Xxxxxxxx
By:____________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
374522.3
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