Amended And Restated Loan And Security Agreement

EXHIBIT 10.1.3


2
--------------------------------------------------


------------------------------


--------------------------------------------------


CANNONDALE CORPORATION


==================================================


AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT


Dated: As of March 29, 1996


$35,000,000


==================================================


--------------------------------------------------


FLEET CAPITAL CORPORATION


-------------------------------------------------- 3
TABLE OF CONTENTS


Page
---- SECTION 1. CREDIT FACILITY . . . . . . . . . . . . . . . . . . 1
1.1 Revolving Credit Loans . . . . . . . . . . . . . . . . . . . 1
1.2 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Letters of Credit; LC Guaranties . . . . . . . . . . . . . . 3


SECTION 2. INTEREST, FEES AND CHARGES . . . . . . . . . . . . 3
2.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Computation of Interest and Fees . . . . . . . . . . . . . . 6
2.3 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . 6
2.4 Letter of Credit and LC Guaranty Fees . . . . . . . . . . . 6
2.5 Annual Facility Fee . . . . . . . . . . . . . . . . . . . . 6
2.6 Audit and Appraisal Fees . . . . . . . . . . . . . . . . . . 6
2.7 Reimbursement of Expenses . . . . . . . . . . . . . . . . . 6
2.8 Bank Charges . . . . . . . . . . . . . . . . . . . . . . . . 7
2.9 Capital Adequacy Charge. . . . . . . . . . . . . . . . . . . 7
2.10 Indemnity re: LIBOR. . . . . . . . . . . . . . . . . . . . 7


SECTION 3. LOAN ADMINISTRATION . . . . . . . . . . . . . . . . 8
3.1 Manner of Borrowing Revolving Credit Loans . . . . . . . . . 8
3.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . 10
3.4 Application of Payments and Collections . . . . . . . . . . 11
3.5 All Loans to Constitute One Obligation . . . . . . . . . . . 11
3.6 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Statements of Account . . . . . . . . . . . . . . . . . . . 11


SECTION 4. TERM AND TERMINATION . . . . . . . . . . . . . . . 11
4.1 Term of Agreement . . . . . . . . . . . . . . . . . . . . . 11
4.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . 11


SECTION 5. SECURITY INTERESTS . . . . . . . . . . . . . . . . 13
5.1 Security Interest in Collateral . . . . . . . . . . . . . . 13
5.2 Lien Perfection; Further Assurances . . . . . . . . . . . . 13
5.3 Lien on Realty . . . . . . . . . . . . . . . . . . . . . . . 13


(i) 4 SECTION 6. COLLATERAL ADMINISTRATION . . . . . . . . . . . . . 14
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Administration of Accounts . . . . . . . . . . . . . . . . . 15
6.3 Administration of Inventory . . . . . . . . . . . . . . . . 17
6.4 Administration of Equipment . . . . . . . . . . . . . . . . 17
6.5 Payment of Charges . . . . . . . . . . . . . . . . . . . . . 17


SECTION 7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 18
7.1 General Representations and Warranties . . . . . . . . . . . 18
7.2 Continuous Nature of Representations and Warranties . . . . 24
7.3 Survival of Representations and Warranties . . . . . . . . . 24


SECTION 8. COVENANTS AND CONTINUING AGREEMENTS . . . . . . . . 24
8.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . 24
8.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . 26
8.3 Specific Financial Covenants . . . . . . . . . . . . . . . . 29


SECTION 9. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 30
9.1 Documentation . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 No Default . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Other Loan Documents . . . . . . . . . . . . . . . . . . . . 30
9.4 Availability . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 No Litigation . . . . . . . . . . . . . . . . . . . . . . . 31


SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT . 31
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . 31
10.2 Acceleration of the Obligations . . . . . . . . . . . . . . 33
10.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 33
10.4 Remedies Cumulative; No Waiver . . . . . . . . . . . . . . . 34


SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 35
11.1 Power of Attorney . . . . . . . . . . . . . . . . . . . . . 35
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.3 Modification of Agreement; Sale of Interest . . . . . . . . 36
11.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . 36
11.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . 37
11.6 Cumulative Effect; Conflict of Terms . . . . . . . . . . . . 37
11.7 Execution in Counterparts . . . . . . . . . . . . . . . . . 37
11.8 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.9 Lender's Consent . . . . . . . . . . . . . . . . . . . . . . 38


(ii) 5
11.10 Credit Inquiries . . . . . . . . . . . . . . . . . . . . . 38
11.11 Time of Essence . . . . . . . . . . . . . . . . . . . . . 38
11.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 38
11.13 Interpretation . . . . . . . . . . . . . . . . . . . . . . 38
11.14 GOVERNING LAW; CONSENT TO FORUM . . . . . . . . . . . . . 38
11.15 WAIVERS BY BORROWER . . . . . . . . . . . . . . . . . . 39


(iii) 6
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT


THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of the 29th day of March, 1996, by and between FLEET CAPITAL CORPORATION, f/k/a SHAWMUT CAPITAL CORPORATION, successor to BARCLAYS BUSINESS CREDIT, INC. ("Lender"), a Connecticut corporation with an office at 200 Glastonbury Blvd., Glastonbury, Connecticut 06033; and CANNONDALE CORPORATION ("Borrower"), a Delaware corporation with its chief executive office and principal place of business at 9 Brookside Place, Georgetown, Connecticut 06829. Capitalized terms used in this Agreement have the meanings assigned to them in Appendix A, General Definitions. Accounting terms not otherwise specifically defined herein shall be construed in accordance with GAAP consistently applied.


BACKGROUND


A. On or about July 2, 1993, Borrower and Lender's predecessor in interest entered into a certain Loan and Security Agreement pursuant to which Lender agreed to make revolving credit loans and a term loan available to Borrower in an aggregate maximum amount not to exceed $30,000,000. The Loan and Security Agreement, as amended from time to time, is hereafter referred to as the "Existing Loan Agreement". The Existing Loan Agreement, along with all agreements, instruments and documents executed and/or delivered in connection therewith, are collectively referred to as the "Existing Loan Documents".


B. Borrower desires to further amend and to restate the Existing Loan Agreement and to obtain other credit accommodations from Lender and Lender is willing to make such amendments and to make available additional funds and extend such other credit accommodations pursuant to the terms and conditions set forth below.


SECTION 1. CREDIT FACILITY


Subject to the terms and conditions of, and in reliance upon the representations and warranties made in this Agreement and the other Loan Documents, Lender agrees to make a Total Credit Facility of up to $35,000,000 available upon Borrower's request therefor, as follows:


1.1 Revolving Credit Loans.


1.1.1 Loans and Reserves. Lender agrees, for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrower from time to time, as requested by Borrower in the manner set forth in subsection 3.1.1 hereof, up to a maximum principal amount at any time outstanding equal to the Borrowing Base at such time minus reserves, if any as provided herein, which Revolving Credit Loans shall be repayable in accordance with the terms of the Revolving Credit Note. If the unpaid balance of the Revolving Credit Loans should exceed the Borrowing 7 Base or any other limitation set forth in this Agreement, such Revolving Credit Loans, to the extent in excess of the Borrowing Base, shall nevertheless constitute Obligations that are due and payable on demand, secured by the Collateral and entitled to all benefits thereof. Lender shall have the right to establish reserves in such amounts, and with respect to such matters, as Lender shall deem necessary or appropriate, against the amount of Revolving Credit Loans which Borrower may otherwise request under this subsection 1.1.1, including, without limitation, with respect to (i) price adjustments, damages, unearned discounts, returned products or other matters for which credit memoranda are issued in the ordinary course of Borrower's business; (ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against Borrower's Loan Account as Revolving Credit Loans under any section of this Agreement; and (v) such other matters, events, conditions or contingencies as to which Lender, in its sole credit judgment, determines reserves should be established from time to time hereunder.


1.1.2 Overadvances. In so far as Borrower may request and Lender may be willing in its sole and absolute discretion to make Revolving Credit Loans to Borrower at a time when the unpaid balance of Revolving Credit Loans exceeds, or would exceed with the making of any such Revolving Credit Loan, the Borrowing Base (any such Loans or Loans being herein referred to individually as an "Overadvance" and collectively as "Overadvances"), Lender shall enter such Overadvances as debits in the Loan Account. All Overadvances shall be repaid on demand, shall be deemed to be secured by the Collateral and shall bear interest as provided in this Agreement for Revolving Credit Loans generally.


1.1.3 Use of Proceeds. The Revolving Credit Loans shall be used solely for Borrower's general operating capital needs in a manner consistent with the provisions of this Agreement and all applicable laws.


1.2 Term Loan. In conjunction with the Existing Loan Agreement, Lender made a Term Loan to Borrower in the original principal amount of $3,500,000. As of the date hereof, the outstanding principal balance of the Term Loan is $1,644,000. The principal balance of the Term Loan shall continue to be paid in successive monthly installments of $58,000 each, each of which shall be payable on the first day of each month, which payments commenced on August 1, 1993, followed by a final installment due and payable on the earlier to occur of the date upon which the outstanding principal balance of the Term Loan shall have been paid in full or the Maturity Date. Notwithstanding the foregoing, the entire unpaid principal balance of the Term Loan, and any accrued and unpaid interest thereon, shall be immediately due and payable upon the occurrence of an Event of Default in consequence of which Lender elects to accelerate the maturity and payment of the Obligations or termination of this Agreement pursuant to Section 4 hereof. All amounts outstanding under the Term Note shall be secured by all of the Collateral. The proceeds of the Term Loan shall be used solely for purposes for which the proceeds of the Revolving Credit Loans are authorized to be used.


-2- 8
1.3 Letters of Credit; LC Guaranties. Lender agrees, for so long as no Default or Event of Default exists and if requested by Borrower, to (i) issue its, or cause to be issued its Affiliate's, Letters of Credit for the account of Borrower or (ii) execute LC Guaranties by which Lender or its Affiliate shall guaranty the payment or performance by Borrower of its reimbursement obligations with respect to letters of credit issued for Borrower's account by other Persons in support of Borrower's obligations (other than obligations for the repayment of Money Borrowed), provided that the LC Amount at any time shall not exceed $2,000,000. No Letter of Credit or LC Guarantee may have an expiration date that is after the Maturity Date. Any amounts paid by Lender under any LC Guaranty or in connection with any Letter of Credit shall be treated as Revolving Credit Loans, shall be secured by all of the Collateral and shall bear interest and be payable at the same rate and in the same manner as Revolving Credit Loans.


1.4 Foreign Currency Purchase Contracts. If requested to do so by Borrower, and provided that no Default or Event of Default exists at the time of, or would exist after giving effect to, such request, Lender shall issue or cause its Affiliates to issue, one or more guaranties, all in form and substance acceptable to Lender, by which Lender or an Affiliate of Lender shall guaranty the payment or performance of Borrower's obligations to other persons in connection with foreign currency purchase contracts entered into in the ordinary course of Borrower's business, provided, however, that in no event shall Lender or any Affiliate of Lender be obligated to issue any such guaranty in respect of any such foreign currency purchase contract if (a) any such foreign currency purchase contract has a settlement date of more than 18 months after its issuance date, or (b) the settlement date of any such foreign currency purchase contract shall or may under any circumstances occur on or after the Maturity Date, unless Borrower shall have delivered to Lender an irrevocable letter of credit naming Lender as beneficiary, in a face amount equal to or greater than any liability of Lender in respect of such foreign currency purchase contract, issued by an issuer acceptable to Lender and otherwise in form and substance acceptable to Lender, or (c) Lender's liability in respect of all such guaranties outstanding would exceed $5,000,000 in the aggregate. Borrower's obligations to Lender in respect of such guaranties of foreign currency purchase contracts, including, without limitation, any costs or expenses incurred by Lender or its Affiliates due to the failure of Borrower to perform its duties under such contracts shall constitute Revolving Credit Loans hereunder, shall be secured by the Collateral and shall be payable in accordance with the terms of this Agreement.


SECTION 2. INTEREST, FEES AND CHARGES


2.1 Interest.


2.1.1 Rates of Interest:


(a) Rate Options. At the time of each Revolving Credit Loan under this Agreement, and thereafter from time to time, Borrower shall have the right, subject to the terms and conditions of this Agreement and provided no Default or Event


-3- 9 of Default has occurred, to designate to Lender in writing that all, or a portion of the Loans shall bear interest at either the LIBOR Rate or Base Rate. Interest on each portion thereof shall accrue and be paid at the time and rate applicable to the respective option selected by Borrower or otherwise governing under the terms of this Agreement. If for any reason the LIBOR Rate option is unavailable, the Base Rate shall apply. The rate of interest on Base Rate Loans shall increase or decrease by an amount equal to any increase or decrease in the Base Rate effective as of the opening of business on the day that any such change in the Base Rate occurs.


(i) LIBOR Rate Option:


(A) Requests. Provided no Default or Event of Default has occurred, and subject to the provisions of this Section 2.1.1(a)(i), if Borrower desires to have the LIBOR Rate apply to all or a portion of the Loans, Borrower shall give Lender a written irrevocable request no later than 11:00 A.M. Eastern time on the third (3rd) Business Day prior to the requested borrowing date specifying (i) the date the LIBOR Rate shall apply (which shall be a Business Day), (ii) the LIBOR Interest Period, and (iii) the amount to be subject to the LIBOR Rate provided that such amount shall be a minimum amount of One Million Dollars ($1,000,000.00).


(B) LIBOR Interest Periods. LIBOR Rate Loans shall be selected by Borrower for a LIBOR Interest Period; provided, however, that if the LIBOR Interest Period would otherwise end on a day which shall not be a London Business Day, such LIBOR Interest Period shall be extended to the next preceding or succeeding London Business Day as is the Bank's custom in the market to which such LIBOR Rate Loan relates. All accrued and unpaid interest on a LIBOR Rate Loan shall be repaid in full on the day the applicable LIBOR Rate Period expires. In addition, interest shall also be due and payable, with respect to LIBOR Rate Loans having a LIBOR Interest Period of six (6) months on the last day of third month of such six (6) month period, as if such six (6) month period were actually two three (3) month periods. No LIBOR Interest Period may end after the Maturity Date. Subject to all of the terms and conditions applicable to a request to convert all or a portion of the Loans to a LIBOR Rate Loan, Borrower may extend a LIBOR Rate Loan to a new LIBOR Rate Loan. If Borrower fails to notify the Lender of the LIBOR Interest Period for a subsequent LIBOR Rate Loan at least three (3) Business Days prior to the last day of the then current LIBOR Interest Period of an outstanding LIBOR Rate Loan, then such outstanding LIBOR Rate Loan shall, at the end of the applicable LIBOR Interest Period accrue interest at the Base Rate.


(C) Adjustments. The Adjusted LIBOR Rate may be automatically adjusted by Lender on a prospective basis to take into account the additional or increased cost of maintaining any necessary reserves for Eurodollar deposits or increased costs due to changes in applicable law or regulation or the interpretation thereof by Lender based on the Federal Reserve Board's or any other applicable agency's or governing body's directive, mandate or interpretation, occurring subsequent to


-4- 10 the commencement of the then applicable LIBOR Interest Period, including but not limited to changes in tax laws (except changes of general applicability in corporate income tax laws) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any successor or other applicable governing body), excluding the Reserve Percentage and any Reserve which has resulted in a payment pursuant to Section 2.9 below, that increase the cost to Lender of funding the LIBOR Rate Loan. Lender shall promptly give Borrower notice of such a determination and adjustment, which determination shall be prima facie evidence of the correctness of the fact and the amount of such adjustment.


(D) Unavailability. If Borrower shall have requested the rate based on the Adjusted LIBOR Rate in accordance with this Section 2.1.1(a)(i) and Lender shall, in good faith, have determined that Eurodollar deposits equal to the amount of the principal of the requested LIBOR Rate Loan and for the LIBOR Interest Period specified are unavailable, impractical or unlawful, or that the rate based on the Adjusted LIBOR Rate will not adequately and fairly reflect the cost to the Lender of making or maintaining the principal amount of the requested LIBOR Rate Loan during the LIBOR Interest Period specified, or that by reason of circumstances affecting Eurodollar markets, adequate means do not exist for ascertaining the rate based on the Adjusted LIBOR Rate applicable to the specified LIBOR Interest Period, Lender shall promptly give notice of such determination to Borrower that the rate based on the Adjusted LIBOR Rate is not available. A determination by Lender hereunder shall be prima facie evidence of the correctness of the fact and amount of such additional costs or unavailability. Upon such a determination, (i) the obligation to convert to, or maintain a LIBOR Rate Loan at the rate based on the Adjusted LIBOR Rate shall be suspended until Lender shall have notified Borrower that such conditions shall have ceased to exist, and (ii) the portion of the Loan subject to the request or requested conversion shall accrue interest at the Base Rate.


2.1.2 Default Rate of Interest. Upon and after the occurrence of an Event of Default, and during the continuation thereof, the principal amount of all Loans shall bear interest at a rate per annum equal to 2.0% above the interest rate otherwise applicable thereto (the "Default Rate") and all LIBOR Rate Loans shall convert to Base Rate Loans, subject to the Default Rate.


2.1.3 Maximum Interest. In no event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Notes and charged or collected pursuant to the terms of this Agreement or pursuant to the Notes exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. If any provisions of this Agreement or the Notes are in contravention of any such law, such provisions shall be deemed amended to conform thereto.


2.1.4 Maximum LIBOR Rate Loans. In no event may Borrower have outstanding at any time more than 5 LIBOR Rate Loans.


-5- 11
2.2 Computation of Interest and Fees. Interest, Letter of Credit, LC Guaranty and foreign currency purchase contract guaranty fees and the facility fee hereunder shall be calculated daily and shall be computed on the actual number of days elapsed over a year of 360 days. For the purpose of computing interest hereunder, all items of payment received by Lender shall be deemed applied by Lender on account of the Obligations (subject to final payment of such items) on the first Business Day after receipt by Lender of good funds.


2.3 [Intentionally Omitted].


2.4 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Lender in conjunction with the issuance of each Letter of Credit and LC Guaranty, pursuant to Section 1.3 hereof, a fee equal to one percent (1%) per annum of the aggregate face amount of such Letter of Credit and/or LC Guaranty outstanding from time to time during the term of this Agreement, plus all normal and customary charges associated with the issuance thereof, which fees and charges shall be deemed fully earned upon issuance of each such Letter of Credit and/or LC Guaranty, shall be due and payable on the first Business Day of each month and shall not be subject to rebate or proration upon the termination of this Agreement for any reason.


2.5 Annual Facility Fee. Borrower shall pay to Lender a fee equal to one quarter of one percent (1/4%) per annum of the average monthly unused amount of the Revolving Credit Loans available to Borrower pursuant to Section 1.1 hereof. The facility fee shall be payable monthly in arrears on the first day of each calendar month hereafter.


2.6 Audit and Appraisal Fees. Borrower shall pay to Lender audit and appraisal fees in accordance with Lender's current schedule of fees in effect from time to time in connection with audits and appraisals of Borrower's books and records and such other matters as Lender shall deem appropriate, plus all out-of-pocket expenses incurred by Lender in connection with such audits and appraisals; provided, that Borrower shall not be obligated to pay any such audit fees in excess of $5,000 during any fiscal year in which no Default or Event of Default shall have occurred. Audit fees shall be payable on the first day of the month following the date of issuance by Lender of a request for payment thereof to Borrower.


2.7 Reimbursement of Expenses. If, at any time or times regardless of whether or not an Event of Default then exists, Lender or any Participating Lender incurs legal or accounting expenses or any other costs or out-of-pocket expenses in connection with (i) the negotiation and preparation of this Agreement or any of the other Loan Documents, any amendment of or modification of this Agreement or any of the other Loan Documents, or any sale or attempted sale of any interest herein to a Participating Lender; (ii) the administration of this Agreement or any of the other Loan Documents and the transactions contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Lender, Borrower or any other


-6- 12 Person) in any way relating to the Collateral, this Agreement or any of the other Loan Documents or Borrower's affairs; (iv) any attempt to enforce any rights of Lender or any Participating Lender against Borrower or any other Person which may be obligated to Lender by virtue of this Agreement or any of the other Loan Documents, including, without limitation, the Account Debtors; or (v) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral; then all such legal and accounting expenses, other costs and out of pocket expenses of Lender shall be charged to Borrower. All amounts chargeable to Borrower under this Section 2.7 shall be Obligations secured by all of the Collateral, shall be payable on demand to Lender or to such Participating Lender, as the case may be, and shall bear interest from the date such demand is made until paid in full at the rate applicable to Revolving Credit Loans from time to time. Borrower shall also reimburse Lender for expenses incurred by Lender in its administration of the Collateral to the extent and in the manner provided in Section 6 hereof.


2.8 Bank Charges. Borrower shall pay to Lender, on demand, any and all fees, costs or expenses which Lender or any Participating Lender pays to a bank or other similar institution (including, without limitation, any fees paid by Lender to any Participating Lender) arising out of or in connection with (i) the forwarding to Borrower or any other Person on behalf of Borrower, by Lender or any Participating Lender, of proceeds of loans made by Lender to Borrower pursuant to this Agreement and (ii) the depositing for collection, by Lender or any Participating Lender, of any check or item of payment received or delivered to Lender or any Participating Lender on account of the Obligations.


2.9 Capital Adequacy Charge. In the event that Lender shall determine that the adoption of any law, rule or regulation regarding capital adequacy, or any change therein or in the interpretation or application ...