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AMENDMENT NO. 1
Dated as of March 27, 1997
AMENDMENT by and among CANNONDALE CORPORATION, a corporation
organized under the laws of the State of Delaware (the "Borrower") and FLEET
NATIONAL BANK (successor by assignment to FLEET CAPITAL CORPORATION) (the
"Lender").
PRELIMINARY STATEMENTS:
A. The Borrower and Fleet Capital Corporation have entered into an
Amended and Restated Loan Agreement dated as of March 29, 1996 (as amended, the
"Loan Agreement"; the capitalized terms defined therein being used herein as
therein defined unless otherwise defined herein).
B. Fleet Capital Corporation assigned its interest in the Loan
Agreement and the other Loan Documents to the Lender on March 27, 1997.
C. Pursuant to the Loan Agreement, the Borrower is indebted to the
Lender under the Loan Documents in the aggregate principal amount of
$12,975,124.22, as of the date hereof (the "Indebtedness"), which Indebtedness
is owed by the Borrower to the Lender without offset, defense or counterclaim of
any kind, nature or description. As security for such Indebtedness, the Borrower
has heretofore granted to the Lender a first priority security interest, subject
only to Permitted Liens, in all the Borrower's assets, whether now owed or
hereafter acquired, wherever located of any kind, nature or description,
tangible or intangible, including without limitation, the Borrower's accounts
receivable, inventory, equipment, and general intangibles, and such security
interests and liens granted by the Borrower to the Lender are hereby
reacknowledged and confirmed by the Borrower.
D. The Borrower and the Lender have agreed to amend the Loan
Agreement and the other Loan Documents as hereinafter set forth.
SECTION 1. Amendments. The Loan Documents are, effective as of
the date hereof and subject to the satisfaction of the conditions precedent set
forth in Section 2 hereof, hereby amended as follows:
(a) The following new definitions are added to Appendix A of
the Loan Agreement in appropriate alphabetical order:
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Current Maturities - as of the date designated, payments
scheduled to be paid under Indebtedness within one year after such date as
determined in accordance with GAAP.
EBITDA - with respect to any fiscal period, EBIT, plus the sum
of the following amounts for such period determined on a Consolidated
basis to the extent included in the determination of EBIT: (i) interest
expense (net of interest income), (ii) income tax expense, (ii)
depreciation and (iv) amortization.
Interest Expense - with respect to any fiscal period, the
amount which would, on a Consolidated basis, be set forth opposite the
caption "interest expense" or any like caption on an income statement of
the Borrower.
Rate Ratio -- with respect to any fiscal period, the ratio of
(a) EBITDA for such period less the sum of all unfinanced Capital
Expenditures for such period to (b) Interest Expense for such period plus
the Current Maturities for such period.
(b) The definition of the term "Adjusted LIBOR Rate" contained
in Appendix A to the Loan Agreement is amended and restated in full to read as
follows:
Adjusted LIBOR Rate - For any LIBOR Interest Period, as
applied to any LIBOR Rate Loan, the rate per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent) as determined on the basis
of the offered rates for deposits in U.S. dollars, for a period of time
comparable to such LIBOR Interest Period which appears on the Telerate
page 3750 as of 11:00 a.m. London time on the date that is two London
business days preceding the first day of such LIBOR Interest Period;
provided, however, if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the
Adjusted LIBOR Rate shall be the rate (rounded upwards as described above,
if necessary) for deposits in dollars for a period substantially equal to
the interest period on the Reuters Page "LIBOR" (or such other page as may
replace the LIBOR Page on that service for the purpose of displaying such
rates), as of 11:00 a.m. (London time), on the day that is two (2) London
business days prior to the beginning of such interest period.
If both the Telerate and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the offered
rates for deposits in U.S. dollars for a period of time comparable to such
LIBOR Interest Period which are offered by four major banks in the London
interbank market at approximately 11:00 a.m. London time, on the day that
is two London business days preceding the first day of such LIBOR Interest
Period as selected by Lender.
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The principal London office of each of the four major London banks will be
requested to provide a quotation of its U.S. dollar deposit offered rate.
If at least two such quotations are provided, the rate for that date will
be the arithmetic means of the quotations. If fewer than two quotations
are provided as requested, the rate for that date will be determined on
the basis of the rates quoted for loans in U.S. dollars to leading
European banks for a period of time comparable to such LIBOR Interest
Period offered by major banks in New York City at approximately 11:00 a.m.
New York City time, on the day that is two Business Days preceding the
first day of such LIBOR Interest Period. In the event that the Lender is
unable to obtain any such quotation as provided above, it will be deemed
that the Adjusted LIBOR Rate cannot be determined.
IN THE EVENT THAT THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM SHALL IMPOSE A RESERVE PERCENTAGE WITH RESPECT TO LIBOR
RATE LOAN DEPOSITS OF THE LENDER; THEN FOR ANY PERIOD DURING WHICH SUCH
RESERVE PERCENTAGE SHALL APPLY, THE ADJUSTED LIBOR RATE SHALL BE EQUAL TO
THE AMOUNT DETERMINED ABOVE DIVIDED BY AN AMOUNT EQUAL TO 1 MINUS THE
RESERVE PERCENTAGE.
(c) The definition of the term "LIBOR Rate" contained in
Appendix A to the Loan Agreement is amended and restated in full to read as
follows:
LIBOR Rate - a per annum rate equal to the sum of the Adjusted
LIBOR Rate plus the corresponding per annum percentage ("LIBOR Margin")
based on Borrower's Rate Ratio calculated on a rolling four quarter basis
as of the most recent four fiscal quarterly financial statements:
Rate Ratio LIBOR Margin
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Less than or equal to 3.0 1.000%
Greater than 3.0, but less
than or equal to 5.0 0.875%
Greater than 5.0, but less
than or equal to 7.50 0.750%
Greater than 7.50, but less
than or equal to 10.0 0.625%
Greater than 10.00 0.500%
For purposes of calculating the LIBOR Margin in connection
with this definition, the applicable LIBOR Margin shall increase by 0.125%
for each
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day when the Revolving Credit Loans outstanding exceed $26,250,000. The
applicable LIBOR Margin shall change quarterly based on the results of
Borrower's most current quarterly financial statements, on the next fiscal
quarter following delivery to Lender of such financial statements.
(d) Section 2.5 of the Loan Agreement is amended and restated
in full to read as follows:
2.5 Annual Facility Fee. Borrower shall pay to Lender a fee
equal to the corresponding following percentage per annum (based upon a
year of 360 days for the actual number of days elapsed) of the average
monthly unused amount of the Revolving Credit Loans available to Borrower
pursuant to Section 1.1 hereof, based on Borrower's Rate Ratio calculated
on a rolling four quarter basis as of the most recent four fiscal
quarterly financial statements:
Rate Ratio Percentage
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Less than or equal to 3.0 0.375%
Greater than 3.0, but less
than or equal to 5.0 0.300%
Greater than 5.0, but less
than or equal to 7.50 0.250%
Greater than 7.50, but less
than or equal to 10.0 0.200%
Greater than 10.00 0.1875%
The applicable Percentage shall change quarterly based on the
results of Borrower's most current quarterly financial statements, on the
next fiscal quarter following delivery to Lender of such financial
statements. The facility fee shall be payable monthly in arrears on the
first day of each calendar month hereafter.
SECTION 2. Conditions of Effectiveness. This Amendment shall
become effective when, and only when, the Lender shall have received
counterparts of this Amendment executed by the Borrower and the Lender, and
Section 1 hereof shall become effective when, and only when, the Lender shall
have additionally received all of the following documents, each document (unless
otherwise indicated) being dated the date of receipt thereof by the Lender
(which date shall be the same for all such documents), in form and substance
satisfactory to the Lender:
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(a) Certified copies of (i) the resolutions of the Board of
Directors of the Borrower approving this Amendment and the matters contemplated
hereby and (ii) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Amendment and the matters
contemplated hereby.
(b) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Amendment and the other documents to be
delivered hereunder.
(c) A certificate signed by a duly authorized officer of the
Borrower stating that:
(i) The representations and warranties contained in Section 3
hereof are correct on and as of the date of such certificate as
though made on and as of such date, and
(ii) No event has occurred and is continuing which constitutes
a Default or an Event of Default.
SECTION 3. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction indicated at
the beginning of this Amendment.
(b) The execution, delivery and performance by the Borrower of
this Amendment and the Loan Documents, as amended hereby, to which it is or is
to be a party are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not contravene (i) the
Borrower's charter or by-laws, (ii) law or any contractual restriction binding
on or affecting the Borrower, or result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge, encumbrance or preferential arrangement of any nature upon or with
respect to any of the properties now owned or hereafter acquired by the
Borrower.
(c) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of this
Amendment or any of the Loan Documents, as amended hereby, to which it is or is
to be a party.
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(d) This Amendment and each of the other Loan Documents as
amended hereby, constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.
(e) The Loan Agreement creates valid and perfected first
priority security interests and liens in and to the Collateral covered thereby
enforceable against all third parties in all jurisdictions, securing the payment
of all Obligations, and the execution, delivery and performance of this
Amendment do not adversely affect the aforesaid security interests and liens of
the Loan Agreement.
(f) Except as set forth in the Loan Agreement, there is no
pending or threatened action or proceeding affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator, which may
materially adversely affect the financial condition or operations of the
Borrower or any Subsidiary. There is no pending or threatened action or
proceeding affecting the Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator which purports to affect the legality,
validity or enforceability of this Amendment or any of the other Loan Documents,
as amended hereby.
(g) The Loan Documents existing on the date hereof constitute
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms.
SECTION 4. Reference to and Effect on the Loan Documents.
(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof each reference in the Loan Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import, and each reference in
any Loan Documents to the Loan Agreement or any other Loan Document, shall mean
and be a reference to the Loan Agreement or such other Loan Document as amended
hereby.
(b) Except as specifically amended above, the Loan Agreement,
the Notes and the other Loan Documents, shall remain in full force and effect
and are hereby ratified and confirmed. Without limiting the generality of the
foregoing, the Loan Agreement and all of the Collateral described therein do and
shall continue to secure the payment of all Obligations, indebtedness and
liabilities of the Borrower to the Lender under the Loan Agreement and the other
Loan Documents, as amended hereby.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Lender under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.
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SECTION 5. Costs, Expenses and Taxes. The Borrower agrees to
pay on demand all costs and expenses of the Lender in connection with the
preparation, execution and delivery of this Amendment and the other instruments
and documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Lender with
respect thereto and with respect to advising the Lender as to its rights and
responsibilities hereunder and thereunder. The Borrower further agrees to pay on
demand all costs and expenses, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 5. In addition, the Borrower shall pay
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, and agrees to save the
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes.
SECTION 6. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
SECTION 7. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of Connecticut.
SECTION 8. Commercial Waiver. THE BORROWER ACKNOWLEDGES THAT
THE LOANS EVIDENCED BY THE NOTES ARE FOR COMMERCIAL PURPOSES AND WAIVES ANY
RIGHT TO NOTICE AND HEARING UNDER SECTIONS 52-278a THROUGH 52-278n OF THE
CONNECTICUT GENERAL STATUTES AS NOW OR HEREAFTER AMENDED AND AUTHORIZES THE
ATTORNEY OF THE LENDER, OR ANY SUCCESSOR THERETO, TO ISSUE A WRIT OF PREJUDGMENT
REMEDY WITHOUT COURT ORDER. THE BORROWER ACKNOWLEDGES THAT IT MAKES THESE
WAIVERS AND THE WAIVERS CONTAINED IN SECTIONS 11.14 and 11.15 KNOWINGLY,
VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THESE
WAIVERS WITH ITS ATTORNEYS.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
Borrower:
CANNONDALE CORPORATION
By: /s/ WILLIAM F. SCHMALKUCHE
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Name: William F. Schmalkuche
Title: Assistant Treasurer
Lender:
FLEET NATIONAL BANK
By: /s/ MARGARET D. HARWOOD
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Margaret D. Harwood
Vice President