ARROW AUTOMOTIVE INDUSTRIES, INC.
FIFTH AMENDMENT AND WAIVER TO REVOLVING
CREDIT AND TERM LOAN AGREEMENT
THIS FIFTH AMENDMENT AND WAIVER (this "Amendment"), dated as of June 29,
1996, by and between Arrow Automotive Industries, Inc. (the "Borrower") and
The First National Bank of Boston (the "Bank") as parties to a certain
Revolving Credit and Term Loan Agreement, dated as of December 29, 1993, as
amended by the First Amendment to Revolving Credit and Term Loan Agreement,
dated as of March 24, 1995, the Second Amendment to Revolving Credit and Term
Loan Agreement, dated as of June 24, 1995, the Third Amendment to Revolving
Credit and Term Loan Agreement, dated as of December 30, 1995, and the Fourth
Amendment and Waiver to Revolving Credit and Term Loan Agreement dated as of
March 30, 1996, (the "Credit Agreement"). Capitalized terms not otherwise
defined herein shall have the same meanings ascribed thereto in the Credit
Agreement.
WHEREAS, the Borrower has requested the Bank to make certain amendments
to the Credit Agreement;
WHEREAS, the Borrower has informed the Bank that for the fiscal quarter
ended June 29, 1996, the Borrower has failed to comply with the financial
covenant set forth in Section 11.1 - 11.3 of the Credit Agreement and has
requested that the Bank waive to the limited extent necessary to permit such
non-compliance as of June 29, 1996, the provisions of Section 11.1 - 11.3 of
the Credit Agreement; and
WHEREAS, the Bank is willing to make such amendments to, and grant such
waivers of, the Credit Agreement subject to the terms and conditions set forth
herein.
NOW THEREFORE, the Borrower and the Bank hereby covenant and agree as
follows:
1. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is hereby
amended by:
(a) The definition of Applicable Margin contained in Section 1.1 of the
Credit Agreement is amended by deleting such definition in its entirety and
restating it as follows:
Applicable Margin. For each period commencing on an
Adjustment Date through the date immediately preceding the
next Adjustment Date (each a "Rate Adjustment Period"), the
Applicable Margin shall be the applicable margin set forth
below with respect to the Borrower's Debt Service coverage
ratio, as determined for the fiscal quarter specified in the
certificate of compliance delivered by the Borrower during
the fiscal quarter immediately preceding the applicable Rate
Adjustment Period.
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Term Revolving
Debt Service Revolving Base Credit/ Term
(Coverage See Credit/Base Rate Eurodollar Eurodollar
LEVEL SECTION 11.2) RATE LOANS LOANS LOANS RATE LOANS
I Less than or
equal to Not Not
0.50:1.00 3.00% 3.25% Available Available
II Greater than or
equal to
0.76:1.00 but
less than Not Not
1.00:1.00 2.00% 2.25% Available Available
III Greater than or
equal to
1.01:00 but
less than Not Not
1.25:1.00 1.00% 1.25% Available Available
IV Greater than or
equal to
1.25:1.00 0.50% 0.75% 3.00% 3.25%
Notwithstanding the foregoing, (a) for Loans
outstanding during the period commencing on September 27,
1996 through the date immediately preceding the first
Adjustment Date to occur after the fiscal quarter ending
December 31, 1996, the Applicable Margin shall be as set
forth in Level II above, and (b) if the Borrower fails to
deliver any certificate of compliance when required by
Section 9.4(d) hereof then, for the period commencing on the
next Adjustment Date to occur subsequent to such failure
through the date immediately following the date on which
such certificate of compliance is delivered, the Applicable
Margin shall be the highest Applicable Margin set forth
above.
(b) Section 11.1 of the Credit Agreement is amended by inserting
immediately after the words "$500,000 during any fiscal year thereafter" which
appears in Section 11.1 a comma and the words "but for the Borrower's 1997
fiscal year Capital Expenditures shall not include amounts capitalized in
connection with the closing of the Borrower's manufacturing facility located
in Santa Maria, California up to an aggregate amount of $250,000".
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(c) Section 11.2 of the Credit Agreement is amended by deleting such
Section 11.2 and restating it in its entirety as follows:
Section 11.2 Debt Service. The Borrower will not permit,
as at the end of each fiscal period described in the table
set forth below, the ratio of (a) the sum of (i) Net
Income (which, for purposes of this Section 11.2, shall
exclude all non-recurring restructuring charges and
period costs (as such period costs are described in the
Borrower's business plan dated as of September 13, 1996)
of the Borrower relating solely to the closing of the
Borrower's manufacturing facility located in Santa Maria,
California up to a maximum aggregate amount of
$2,200,000) plus (ii) Total Interest Expense, plus (iii)
depreciation, plus (iv) amortization to (b) Total Debt
Service to be less than the ratio set forth opposite such
period in such table:
FISCAL PERIOD RATIO
3 month period: Q1, 1997 1.0:1.0
6 month period: Q1, 1997 through
Q2, 1997 1.0:1.0
9 month period: Q1, 1997 through
Q3, 1997 1.0:1.0
12 month period: Q1, 1997 through
Q4, 1997 1.0:1.0
Each period of four consecutive
fiscal quarters thereafter,
commencing with the four
consecutive fiscal quarters
ending on the last day of
Q1, 1998 1.0:1.0
(d) Section 11.3 of the Credit Agreement is amended by deleting such
Section 11.3 and restating it in its entirety as follows:
Section 11.2 Liabilities to Worth Ratio. The Borrower will
not permit the ratio of Total Liabilities to Tangible
Net Worth to exceed (a) 1.50:1.00 as at the end of each
fiscal quarter for the fiscal quarters ending Q1, 1997,
Q2, 1997 and Q3, 1997 and (b) 1.30 as at the end of each
fiscal quarter ending thereafter.
(e) Inserting immediately after the text of Section 11.4 of the Credit
Agreement the following:
Section 11.5 Minimum Profitability. The Borrower will not
permit, as at the end of each fiscal period described in
the table set forth below, its Net Income (which, for
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purposes of this Section 11.5, shall include all
non-recurring restructuring charges and period costs of the
Borrower relating soley to the closing of the Borrower's
manufacturing facility located in Santa Maria, California)
to be less than the amount set forth opposite such period in
such table:
FISCAL PERIOD AMOUNT
3 month period: Q1, 1997 -$1,250,000
6 month period: Q1, 1997 through
Q2, 1997 -$1,350,000
9 month period: Q1, 1997 through
Q3, 1997 -$1,250,000
12 month period: Q1, 1997 through
Q4, 1997 -$1,000,000
2. WAIVER. The Bank hereby waives the provisions of Section 11.1 -
11.3 of the Credit Agreement solely to the extent necessary to permit non-
compliance with such Section 11.1 - 11.3, and only for the fiscal quarter
ended June 29, 1996.
3. CONDITIONS TO EFFECTIVENESS. This Amendment shall be effective as
of June 29, 1996, upon satisfaction of the following conditions:
(a) This Amendment shall have been duly and properly executed and
delivered to the Bank by the Borrower;
(b) All corporate action necessary for the valid execution,
delivery and performance by the Borrower of this Amendment and the Credit
Agreement as amended hereby shall have been duly and effectively taken, and
evidence thereof satisfactory to the Bank shall have been provided to the
Bank; and
(c) The Borrower shall have paid to the Bank an amendment fee of
$10,000.
4. REPRESENTATIONS AND WARRANTIES. The Borrower, hereby represents
and warrants to the Bank as follows:
(a) REPRESENTATIONS AND WARRANTIES IN CREDIT AGREEMENT. The
representations and warranties of the Borrower contained in the Credit
Agreement (i) were true and correct in all material respects when made, and
(ii) except to the extent such representations and warranties by their terms
are made solely as of a prior date, continue to be true and correct in all
material respects on the date hereof.
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(b) RATIFICATION, ETC. Except as expressly provided by this
Amendment, the Credit Agreement and all documents, instruments and agreements
related thereto, including, but not limited to the Security Documents, are
hereby ratified and confirmed in all respects and shall continue in full force
and effect. The Credit Agreement and this Amendment shall be read and
construed as a single agreement. All references in the Credit Agreement or
any related agreement or instrument to the Credit Agreement shall hereafter
refer to the Credit Agreement as amended hereby.
(c) AUTHORITY, ETC. The execution and delivery by the Borrower
of this Amendment and the performance by the Borrower of all of its agreements
and obligations under the Credit Agreement as amended hereby are within the
corporate authority of the Borrower and have been duly authorized by all
necessary corporate action on the part of the Borrower.
(d) ENFORCEABILITY OF OBLIGATIONS. This Amendment and the Credit
Agreement as amended hereby constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance
with their terms.
(e) NO DEFAULT. After giving effect to this Amendment, no
Default or Event of Default has occurred and is continuing.
5. NO OTHER AMENDMENTS OR WAIVERS. Except as expressly provided in
this Amendment, all of the terms and conditions of the Credit Agreement and
the other Loan Documents remain in full force and effect.
6. EXPENSES. Pursuant to Section 16 of the Credit Agreement, all
costs and expenses incurred or sustained by the Bank in connection with this
Amendment, including the fees and disbursements of legal counsel for the Bank
in producing, reproducing and negotiating the Amendment, will be for the
account of the Borrower whether or not the transactions contemplated by this
Amendment are consummated.
7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall be deemed an original, but which
together shall constitute one instrument.
8. MISCELLEANOUS. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW). The captions in this Amendment are for convenience of reference only
and shall not define or limit the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
under seal as of the date first set forth above.
ARROW AUTOMOTIVE INDUSTRIES, INC.
By: /S/ XXXXX X. XXXXX
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /S/ XXXXXXX X. XXXX
Names: Xxxxxxx X. Xxxx
Title: Vice President
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