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REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
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PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
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WITH
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AAF-MCQUAY INC.
(BORROWER)
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SEPTEMBER 30, 1999
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FIRST AMENDMENT TO REVOLVING CREDIT,
TERM LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY
AGREEMENT (this "Amendment") is made and entered into this ____ day of October,
1999, by and among AAF-MCQUAY INC., a Delaware corporation "Borrower"); the
various financial institutions listed on the signature pages hereof and their
respective successors and permitted assigns which become "Lenders"; and PNC
BANK, NATIONAL ASSOCIATION, a national association ("PNC"), as collateral and
administrative agent for Lenders (PNC, together with its successors in such
capacity, the "Agent").
RECITALS:
Agent, Lenders and Borrower are parties to a certain Revolving Credit,
Term Loan and Security Agreement dated September 30, 1999 (the "Credit
Agreement") pursuant to which Lenders have made certain revolving credit and
term loans to Borrower.
The parties desire to amend the Credit Agreement as hereinafter set
forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good
and valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:
a. By adding the following definition to Section 1.2 in
appropriate alphabetical order:
"Maximum Collateral Amount" shall mean, on any date
of determination thereof, the sum of (x) the outstanding
principal balance of the Term Loan PLUS (y) the Consolidated
Total Assets Formula Amount MINUS (z) the amount of
Indebtedness, if any, secured by a Limited Lien in favor of
any Person other than Agent (but Borrower acknowledges that
the existence of any such Limited Lien, other than in favor of
Agent, constitutes an Event of Default).
b. By deleting Section 4.1(a) and (b) in their entirety
and inserting the following in lieu thereof:
(a) To secure the prompt payment and performance to
Agent and each Lender of all of the Obligations (excluding,
however, (i) any Obligations consisting from time to time of
Revolving B Advances and any interest or fees
payable in connection with Revolving B Advances, and (ii) the
portion of the Obligations that exceed on any date the Maximum
Collateral Amount), Borrower hereby assigns, pledges and
grants to Agent, for its benefit and the ratable benefit of
Lenders, a continuing security interest in and to all of the
Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located. Borrower shall
mark its books and records as may be necessary or appropriate
to evidence, protect and perfect Agent's security interest and
shall cause its financial statements to reflect such security
interest.
(b) To secure the prompt payment and performance to
Agent and each Lender of the Obligations consisting of (i)
Revolving B Advances, (ii) any interest or fees payable in
connection with Revolving B Advances and (iii) any portion of
the Obligations in excess of the Maximum Collateral Amount on
any date, Borrower hereby assigns, pledges and grants to
Agent, for its benefit and the ratable benefit of Lenders, a
continuing security interest in and to all of Borrower's
"accounts" and "inventory," as such terms are defined in the
UCC, and the proceeds thereof, whether now owned or existing
or hereafter acquired or arising and wheresoever located.
Borrower shall mark its books and records as may be necessary
or appropriate to evidence, protect and perfect Agent's
security interest and shall cause its financial statements to
reflect such security interest.
c. By deleting Section 6.5 in its entirety and inserting the
following in lieu thereof:
6.5 FIXED CHARGE COVERAGE RATIO. Maintain, as of the
end of each period described below, a Fixed Charge Coverage
Ratio of not less than the ratio set forth below for period
corresponding thereto:
Period: Ratio:
------- ------
For the two (2) Fiscal Quarters 1.00:1.00
ending January 1, 2000
For the three (3) Fiscal Quarters 1.00:1.00
ending April 1, 2000
On a four (4) Fiscal Quarter 1.00:1.00
rolling basis, tested at the
end of each Fiscal Quarter
after April 1, 2000
3. ADDITIONAL COVENANTS. To induce Agent and Lenders to enter into this
Amendment, Borrower covenants and agrees as follows: (a) Borrower will execute
and deliver to Agent any amendments or other modifications to any of the Lien
Perfection Documents as Agent may from time to time request in order to reflect
the amendments to the Credit Agreement set forth in this Amendment, including,
without limitation, amendments to the Trademark Security Agreement, the Patent
Security Agreement, the Pledge Agreement, the Collateral Assignment of Contract
Rights, and of the Mortgages, in each case in form and substance satisfactory to
Agent and (b) Borrower shall deliver endorsements or commitments for
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endorsements to the existing mortgagee title insurance policies insuring the
Liens of the Mortgages, which shall be in form and substance satisfactory to
Agent and which shall give effect to the mortgage amendments described in the
foregoing clause (a).
4. RATIFICATION AND REAFFIRMATION. Borrower hereby ratifies and
reaffirms the Obligations, each of the Loan Documents and all of Borrower's
covenants, duties, indebtedness and liabilities under the Loan Documents.
5. ACKNOWLEDGMENTS AND STIPULATIONS. Borrower acknowledges and
stipulates that the Credit Agreement and the other Loan Documents executed by
Borrower are legal, valid and binding obligations of Borrower that are
enforceable against Borrower in accordance with the terms thereof; all of the
Obligations are owing and payable without defense, offset or counterclaim (and
to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by Borrower); the security interests and liens
granted by Borrower in favor of Lender are duly perfected, first priority
security interests and liens; the unpaid principal amount of the Revolving A
Advances on and as of the close of business on October 15, 1999, totaled
$51,786,353.79; the unpaid principal amount of the Revolving B Advances on and
as of the close of business on October 15, 1999, totaled $0.00; and the unpaid
principal amount of the Term Loan on and as of the close of business on October
15, 1999, totaled $30,000,000.00.
6. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Agent and Lenders, to induce Agent and Lenders to enter into this Amendment,
that no Default or Event of Default exists on the date hereof; the execution,
delivery and performance of this Amendment have been duly authorized by all
requisite corporate action on the part of Borrower and this Amendment has been
duly executed and delivered by Borrower; and all of the representations and
warranties made by Borrower in the Credit Agreement are true and correct on and
as of the date hereof.
7. BREACH OF AMENDMENT. This Amendment shall be part of the Credit
Agreement and a breach of any of any representation, warranty or covenant herein
shall constitute an Event of Default.
8. CONDITION PRECEDENT. The effectiveness of the amendments contained
in Section 2 hereof are subject to Agent receiving favorable legal opinions of
Borrower's counsel (qualified to practice in the States of Kentucky, Maryland
and Virginia) in form and substance satisfactory to Agent, which shall cover
such matters incident to the transactions contemplated by this Agreement and the
other Loan Documents as Agent may require.
9. EXPENSES OF AGENT AND LENDERS. Borrower agrees to pay, ON DEMAND,
all costs and expenses incurred by Agent and Lenders in connection with the
preparation, negotiation and execution of this Amendment and any other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limitation, the costs and fees of
Agent's and Lenders' legal counsel and any taxes or expenses associated with or
incurred in connection with any instrument or agreement referred to herein or
contemplated hereby.
10. EFFECTIVENESS; GOVERNING LAW. This Amendment shall be effective
upon acceptance by Agent and Lenders (notice of which acceptance is hereby
waived), whereupon the same shall be governed by and construed in accordance
with the internal laws of the State of New York.
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11. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
12. NO NOVATION, ETC. Except as otherwise expressly provided in this
Amendment, nothing herein shall be deemed to amend or modify any provision of
the Credit Agreement or any of the other Loan Documents, each of which shall
remain in full force and effect. This Amendment is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction, and the Credit
Agreement as herein modified shall continue in full force and effect.
13. COUNTERPARTS; TELECOPIED SIGNATURES. This Amendment may be executed
in any number of counterparts and by different parties to this Amendment on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed to
be an original signature hereto.
14. FURTHER ASSURANCES. Borrower agrees to take such further actions as
Agent and Lenders shall reasonably request from time to time in connection
herewith to evidence or give effect to the amendments set forth herein or any of
the transactions contemplated hereby.
15. SECTION TITLES. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto.
16. RELEASE OF CLAIMS. TO INDUCE AGENT AND LENDERS TO ENTER INTO THIS
AMENDMENT, BORROWER HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES AGENT AND
EACH LENDER, AND ALL THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS OF LENDER, FROM ANY AND ALL LIABILITIES, CLAIMS, DEMANDS,
ACTIONS OR CAUSES OF ACTION OF ANY KIND OR NATURE (IF THERE BE ANY), WHETHER
ABSOLUTE OR CONTINGENT, DISPUTED OR UNDISPUTED, AT LAW OR IN EQUITY, OR KNOWN OR
UNKNOWN, THAT BORROWER NOW HAS OR EVER HAD AGAINST AGENT AND EACH LENDER ARISING
UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS OR OTHERWISE. BORROWER
REPRESENTS AND WARRANTS TO AGENT AND LENDERS THAT BORROWER HAS NOT TRANSFERRED
OR ASSIGNED TO ANY PERSON ANY CLAIM THAT BORROWER EVER HAD OR CLAIMED TO HAVE
AGAINST AGENT OR ANY LENDER.
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17. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, COUNTERCLAIM OR PROCEEDING ARISING OUT OF OR RELATED TO THIS
AMENDMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal, and delivered by their respective duly authorized
officers on the date first written above.
ATTEST: AAF-MCQUAY INC.
("Borrower")
______________________________ By:____________________________
Name:______________________ Name:_________________________
Title:_____________________ Title:________________________
[CORPORATE SEAL]
PNC BANK, NATIONAL ASSOCIATION,
as a Lender and as Agent
By:____________________________
Name:_________________________
Title:________________________
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