THE ▇.▇. ▇▇▇▇▇▇▇▇ COMPANY
THIS FIRST AMENDMENT (this "Amendment") is entered into as of
March 1, 2004, to be effective as of December 27, 2003 (the "Effective
Date"), by and among THE ▇.▇. ▇▇▇▇▇▇▇▇ COMPANY, a Massachusetts
corporation with its chief executive office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower") and Fleet National Bank, as
Agent (the "Agent"), and in its capacity as a Lender ("Fleet Bank") under
the Credit Agreement, as defined below, having its principal place of
business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to
them in the Credit Agreement, as defined below.
R E C I T A L S
WHEREAS, the Borrower, the Agent and Fleet Bank have previously
entered into a Credit Agreement dated as of June 13, 2000 (the "Credit
Agreement");
WHEREAS, the Borrower has requested certain modifications to the
Credit Agreement and Fleet Bank has agreed to permit such modifications
to the Credit Agreement on the terms set forth herein;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual benefits to be derived by the Borrower and Fleet Bank from a
continuing relationship under the Credit Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
A. Amendments to Credit Agreement.
1. The following defined terms appearing in Section 1.01 of the Credit
Agreement are hereby amended as follows:
"Net Income" means, as applied to any Person for any period,
the aggregate amount of net income (or loss) of such Person,
after taxes, for such period, as determined in accordance
with GAAP.
"Revolving Credit Commitment" means, (a) in the aggregate,
$15,000,000; and (b) for each Lender, $15,000,000 multiplied
by the percentage set forth below for such Lender:
Fleet National Bank 100%
, as such amount may be from time to time be adjusted
pursuant to Sections 2.07, 2.08 of 9.08.
"Revolving Credit Termination Date" means the earlier of
(i) September 13, 2005, and (ii) the date of any
acceleration of the Loans pursuant to Section 6.01.
2. Section 1.01 of the Credit Agreement is hereby further amended by
adding the following new defined terms alphabetically:
"Applicable Margin" means as of any date, for the period
commencing on March 1, 2004 and ending on the first (1st)
Business Day after the delivery to Lender of the financial
statements required to be delivered pursuant to
Section 5.01(b) for the first full fiscal quarter of
Borrower ending after the date of this Agreement (the
"Initial Period"), the applicable per annum percentage set
forth below for Level III, and thereafter the applicable
percentage set forth below:
Level
Sales Ratio
LIBOR Loans
Prime Rate Loans
I
15.0%
0.50%
0.00%
II
10.0% <15.0%
1.00%
0.00%
III
5.0% <10.0%
1.50%
0.00%
IV
<5.0%
2.00%
0.00%
For purposes of calculating the Applicable Margin after the
Initial Period, the Applicable Margin shall be based on the
Sales Ratio reflected on Borrower's consolidated financial
statements most recently delivered to Lender pursuant to
Section 5.01(b) for each fiscal quarter of Borrower, with
any change in the Applicable Margin resulting therefrom to
be effective as of the first (1st) Business Day following
the delivery by Borrower to Lender of the financial
statements for such fiscal period. In the event that the
financial statements required to be delivered pursuant to
Section 5.01(b) are not delivered when due, then (i) during
the period from the date on which such financial statements
were required to be delivered until the first (1st) Business
Day after the date on which they actually are delivered, the
"Applicable Margin" shall be deemed to be the highest
percentage set forth in the above table, and
(ii) thereafter, any change in the Applicable Margin
resulting therefrom shall be effective retroactively from
the date such financial statements were due. In the event
that the Applicable Margin which is calculated based on
Borrower's unaudited financial statements for the last
fiscal quarter of any fiscal year of Borrower delivered
pursuant to Section 5.01(b) is different than the Applicable
Margin which is calculated based on Borrower's audited
financial statements delivered pursuant to
Section 5.01(a) for such year, then the Applicable Margin
shall be adjusted retroactively for such quarter, and
(i) upon demand by Lender, Borrower shall pay to Lender any
amount owing by Borrower as a result of such adjustment, or
(ii) if any amount is owed to Borrower, as a result of such
adjustment, such amount shall be credited against accrued
interest on the Loans.
"Consolidated Net Sales" means for any period, the net sales
of Borrower and its Consolidated Subsidiaries determined on
a consolidated basis, as determined in accordance with GAAP.
"Sales Ratio" means, as applied to Borrower for any period,
the ratio of Consolidated EBITDA to Consolidated Net Sales,
expressed as a percentage.
2. Section 2.05(a) of the Credit Agreement is hereby amended in
its entirety to read as follows:
(a) Reserved.
3. Section 5.03 of the Credit Agreement is hereby amended in its
entirety to read as follows:
SECTION 5.03 Financial Covenants.
(a) Ratio of Consolidated Total Liabilities to Consolidated
Tangible Net Worth. The ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth will not at
any time exceed 1.00 to 1.00.
(b) Minimum Consolidated Tangible Net Worth. Commencing
with the Fiscal Quarter ending December 27, 2003,
Consolidated Tangible Net Worth will at no time be less than
a cumulatively increasing amount equal to the sum of
(i) $145,000,000 plus (ii) 50% of the Consolidated Net
Income for each Fiscal Quarter ending March 27, 2004 and
thereafter. In determining the minimum Consolidated
Tangible Net Worth required by this Section 5.04, any
negative Consolidated Net Income, computed cumulatively on
an annual basis, shall be excluded.
(c) Fixed Charge Coverage Ratio. At the end of each Fiscal
Quarter, commencing with the Fiscal Quarter ending
September 28, 2002, the ratio of (x) Consolidated EBITDA
plus certain one time charges related to the investigation
of the Borrower's Mt. Airie plant plus, for the period
commencing with the fiscal quarter ending on
December 27, 2003 and ending with the Fiscal Quarter ending
on September 25, 2004, $3,000,000 plus any non-cash charges
related to plant and inventory reductions incurred during
such Fiscal Quarter, minus the sum of (i) Consolidated
Capital Expenditures and (ii) consolidated current taxes to
(y) the sum of (i) Consolidated Interest Expense, and
(ii) the aggregate scheduled principal payments on
Consolidated Debt, all for such period and as determined in
accordance with GAAP for the four (4) consecutive Fiscal
Quarters then ended, shall not have been less than 1.50 to
1.00. The Fixed Charge Coverage Ratio shall be suspended
for the Fiscal Quarter ending September 27, 2003.
4. Article V of the Credit Agreement is hereby amended by adding new
Sections 5.21 and 5.22 immediately following Section 5.20:
Section 5.21. Minimum Balances. On and after March 1, 2004 and
until the certificate required by Section 5.01(c) hereof for the
Fiscal Quarter ending December 25, 2004 has been delivered to, and
accepted by, the Agent, the Borrower shall maintain cash or
marketable securities in deposit or investment accounts with Fleet
Bank, or an Affiliate or Fleet Bank, in an aggregate minimum amount
of Seven Million Five Hundred Thousand Dollars ($7,500,000).
Section 5.22 Additional Subsidiaries. Concurrently with the
creation of any new Consolidated Domestic Subsidiary, the Borrower
shall cause such new Consolidated Domestic Subsidiary to execute
and deliver a Subsidiary Guaranty in the form attached hereto as
Exhibit 3.01(c), pursuant to which such Consolidated Domestic
Subsidiary will become a Guarantor, and such other documents as the
Agent may require consistent with the documents specified under
Section 3.01(f), including without limitation, copies of the
constituent documents of such Consolidated Domestic Subsidiary and
corporate resolutions (or equivalent) authorizing the delivery of
such Subsidiary Guaranty, in each case certified as true and
correct by an officer of such Consolidated Domestic Subsidiary.
5. Exhibit 2.03 ("Form of Revolving Credit Note"), Exhibit 5.01 ("Form of
Covenant Compliance Certificate") and Schedule 4.08 ("List of
Subsidiaries") are hereby deleted and new Exhibit 2.03, Exhibit 5.01 and
Schedule 4.08 attached to this Amendment are substituted in their stead.
B. Representations and Warranties. The Borrower represents and
warrants to the Agent and Fleet Bank that: (a) the Borrower has the full
power and authority to execute, deliver and perform its respective
obligations under, the Credit Agreement, as amended by this Amendment,
(b) the execution and delivery of this Amendment has been duly authorized
by all necessary action of the Board of Directors of the Borrower;
(c) the representations and warranties contained or referred to in
Article IV of the Credit Agreement are true and accurate in all material
respects as of the date of this Amendment; and (d) no Event of Default
has occurred and is continuing or will result after giving effect to this
Amendment and the transactions contemplated by this Amendment and the
Credit Agreement.
C. Other.
1. This Amendment shall take effect as of the Effective Date upon
the receipt by the Agent of:
(i) this Amendment duly executed by the Borrower, the Agent and
Fleet Bank;
(ii) $15,000,000 Amended and Restated Revolving Credit Note,
substantially in the form attached as Exhibit 2.03 hereto,
duly executed by the Borrower;
(iii) a Bringdown Certificate executed by the Assistant Clerk of
the Borrower with regard to resolutions, organizational
matters and officer incumbencies;
(iv) Good Standing Certificate certified by the Secretary of the
Commonwealth of Massachusetts;
(v) receipt by the Agent of a $15,000 amendment fee; and
(vi) payment of all reasonable costs and expenses (including,
without limitation, the reasonable costs and expenses of the
Agent's counsel) incurred by the Agent in connection with
this Amendment.
2. This Amendment is executed as an instrument under seal and
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts without regard to its conflicts of law
rules. All parts of the Credit Agreement not affected by this Amendment
are hereby ratified and affirmed in all respects, provided that if any
provision of the Credit Agreement shall conflict or be inconsistent with
this Amendment, the terms of this Amendment shall supersede and prevail.
Upon the execution of this Amendment, all references to the Credit
Agreement in that document, or in any related document, shall mean the
Credit Agreement as amended by this Amendment. Except as expressly
provided in this Amendment, the execution and delivery of this Amendment
does not and will not amend, modify or supplement any provision of, or
constitute a consent to or a waiver of any noncompliance with the
provisions of the Credit Agreement, and, except as specifically provided
in this Amendment, the Credit Agreement shall remain in full force and
effect. This Amendment may be executed in one or more counterparts with
the same effect as if the signatures hereto and thereto were upon the
same instrument.
IN WITNESS WHEREOF, each of the Borrower, the Agent and Fleet Bank in
accordance with Section 9.06 of the Credit Agreement, has caused this
Amendment to be executed and delivered by their respective duly authorized
officers as of the date set forth in the preamble on page one of this
Amendment.
BORROWER:
THE ▇.▇. ▇▇▇▇▇▇▇▇ COMPANY
By:/S/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Chief Financial Officer and Treasurer
AGENT:
FLEET NATIONAL BANK, as Agent
By:/S/▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
LENDER:
FLEET NATIONAL BANK
By:/S/▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President