EXHIBIT 10.17
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED
REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
This Third Amendment to First Amended and Restated Revolving Credit
Loan and Security Agreement ("Third Amendment") is entered into as of the 13th
day of May, 2002, by and among KeyBank National Association ("Bank") and
Brookwood Companies Incorporated ("Brookwood") Kenyon Industries, Inc.
("Kenyon"), Brookwood Laminating, Inc. ("Laminating"), Ashford Bromley, Inc.
("Ashford"), XtraMile, Inc. ("Xtra"), and Land and Ocean III, Inc. ("Land" and,
together with Brookwood, Kenyon, Laminating, Ashford and Xtra, being sometimes
hereinafter collectively referred to as "Borrower").
RECITALS:
WHEREAS, Borrower and Bank entered into a certain First Amended and
Restated Revolving Credit Loan and Security Agreement dated as of June 6, 2000
(the "Loan Agreement"); and
WHEREAS, the Loan Agreement was amended and modified by that certain
First Amendment to First Amended and Restated Revolving Credit Loan and Security
Agreement dated October 23, 2000 ("First Amendment"); and
WHEREAS, the Loan Agreement was further amended and modified by that
certain Second Amendment to First Amended and Restated Revolving Credit Loan and
Security Agreement dated January 2, 2001 ("Second Amendment" and, together with
the Loan Agreement and the First Amendment, being hereinafter collectively
referred to as the "Existing Agreement"); and
WHEREAS, Borrower has requested Bank to make certain additional changes
to the Existing Agreement, all as more particularly set forth in this Third
Amendment;
PRELIMINARY STATEMENT:
A. Definitions. Unless otherwise defined herein, capitalized terms as
used herein shall have the meanings ascribed to them in the Existing Agreement.
B. Section References. Unless otherwise indicated, all section and
subsection numbers correspond with those in the Existing Agreement.
C. Interpretation. In the event of a conflict between the terms and
conditions of the Existing Agreement and the terms and conditions of this
Third Amendment, the terms and conditions of this Third Amendment shall prevail
and the Existing Agreement shall be interpreted and construed so as to give
maximum effect to the intent and terms and conditions of this Third Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Borrower and Bank, the parties
hereto agree that the Existing Agreement is hereby amended as follows:
1. Recitals and Preliminary Statement True and Correct. Borrower
acknowledges that the Recitals and Preliminary Statement are true and correct
and are hereby incorporated herein and made a part hereof.
2. Relocation of Brookwood's Chief Financial Officer. Brookwood has
notified Bank that it has relocated its Chief Financial Officer to 232
Madison Avenue, Tenth Floor, New York, New York 10016-2901. His new telephone
number is (212) 551-0117. All notice addresses for Brookwood in all Loan
Documents shall be changed accordingly.
3. Financial Covenants. Section 9 of the Existing Agreement is hereby
revised as follows:
9.1 Current Ratio. Borrower shall maintain a minimum Total
Current Assets to Total Current Liabilities Ratio of 1.40:1.00, with
outstanding balances of the Revolving Loans treated as current
liabilities [No change from Existing Agreement].
9.2 Total Funded Debt to Total Capitalization. Borrower shall
maintain its ratio of Total Funded Debt to Total Capitalization of no
greater than 45%. This ratio shall be adjusted to no greater than 50%
through the testing period ending December 31, 2002, after which this
covenant will revert back to the 45% requirement.
9.3 EBITDA to Total Fixed Charge Ratio. Borrower shall
maintain a minimum EBITDA (trailing four-quarters) to Total Fixed
Charge Ratio of 1.25:1.00. [No change from Existing Agreement except
for change in definition of EBITDA].
9.4 Minimum Net Income. Borrower shall maintain a minimum
quarterly Net Income (as defined by GAAP) as follows:
$300,000 for the quarter ending 03/31/02
$750,000 Year-to-date through the quarter ending
06/30/02
$1,100,000 Year-to-date through the quarter ending
09/30/02
$1,500,000 Year-to-date through the quarter ending
12/31/02
4. Eligible Accounts Receivable. The definition of Eligible Accounts
Receivable in subsection 2.1.8(a) is expanded to include the following:
(14) the Receivables of Strategic Technical Alliance, LLC
("STA"), assigned to Brookwood are added to the Borrowing Base.
5. Ineligible Accounts Receivable. The definition of Ineligible
Accounts Receivable in subsection 2.1.8(b) is expanded to include the following:
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(4) the offsetting payable to Burlington Industries, Inc.
("Burlington") with respect to the STA receivables.
(5) unapplied partial payments for Receivables.
6. Extension of Maturity Dates. Subsections 2.1.7 (Working Capital
Revolving Credit Maturity Date), 2.2.7 (Equipment Revolving Credit Facility
Maturity Date) and 2.3.7 (Acquisition Revolving Credit Facility Maturity Date)
are each hereby extended to January 2, 2004.
7. Definition of EBITDA. The definition of EBITDA in subsection 1.1 is
hereby amended to deduct non-cash earnings from the STA joint venture and to add
dividends from the STA joint venture. The new definition is as follows:
"Earnings Before Interest, Taxes, Depreciation and
Amortization" ("EBITDA") means, for the trailing twelve-month period,
consolidated net income (exclusive of any extraordinary or
non-recurring non-cash gains and extraordinary or non-recurring non-
cash losses, other income which is not from the continuing operations
of the Borrower, and exclusive of non-cash earnings from the joint
venture with STA) of the Borrower and its subsidiaries, plus, to the
extent deducted from such consolidated net income, net interest
expenses, income taxes, depreciation/amortization expense, all
determined in accordance with GAAP, and dividends from the joint
venture with STA.
8. Loans/Advances to Hallwood. Loans or advances to Hallwood are
expressly forbidden without the prior written consent of Bank. Any upstream
payments of dividends and/or calculated federal income tax liability will be
limited to the extent that such payments do not create a Default under Section 9
of the Existing Agreement.
9. Distributions. Prior to any Distributions or tax payments to
Hallwood, Brookwood must submit a pro-forma covenant compliance certificate
reflecting full compliance with all financial covenants under in Section 9,
including planned Distributions and tax payments, based upon the most current
available financial information.
10. Renewal Fee. In consideration of Bank's agreement to execute this
Third Amendment, Borrower shall pay to Bank a renewal fee of 0.25% on the
respective credit limits of the Working Capital Revolving Credit Facility and
the Acquisition Revolving Credit Facility.
11. Except as expressly amended by this Third Amendment, all of the
remaining terms and conditions of the Existing Agreement shall continue in full
force and effect and are hereby ratified and affirmed by Borrower, and Borrower
regrants and reconveys to Bank a security interest in the Collateral as defined
and described therein.
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12. Borrower ratifies and confirms that all the representations and
warranties contained in the Existing Agreement are true, correct and complete in
all material respects as of the date hereof, and that there exists no Default
or Event of Default under the Existing Agreement as of the date hereof.
IN WITNESS WHEREOF, the undersigned have duly executed this Third
Amendment as a sealed instrument as of the date first set forth above.
ATTEST: BORROWER:
BROOKWOOD COMPANIES INCORPORATED
/s/ TAMARA COHEN By: /s/ AMBER M. BROOKMAN
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Witness Name: Amber M. Brookman
Title: President/CEO
KENYON INDUSTRIES, INC.
/s/ TAMARA COHEN By: /s/ AMBER M. BROOKMAN
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Witness Name: Amber M. Brookman
Title: President/CEO
BROOKWOOD LAMINATING, INC.
/s/ TAMARA COHEN By: /s/ AMBER M. BROOKMAN
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Witness Name: Amber M. Brookman
Title: President/CEO
ASHFORD BROMLEY, INC.
/s/ TAMARA COHEN By: /s/ AMBER M. BROOKMAN
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Witness Name: Amber M. Brookman
Title: President/CEO
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XTRAMILE, INC.
/s/ TAMARA COHEN By: /s/ AMBER M. BROOKMAN
- ----------------------------- -------------------------------
Witness Name: Amber M. Brookman
Title: President/CEO
LAND AND OCEAN III, INC.
/s/ TAMARA COHEN By: /s/ AMBER M. BROOKMAN
- ----------------------------- -------------------------------
Witness Name: Amber M. Brookman
Title: President/CEO
ACCEPTED BY BANK:
KEYBANK NATIONAL ASSOCIATION
/s/ [ILLEGIBLE] By: /s/ NOEL B. GRAYDON
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Witness Name: Noel B. Graydon
Title: Senior Vice President
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