EXHIBIT 10.7.1
AMENDMENT TO REVOLVING CREDIT AGREEMENT
AND LOAN DOCUMENTS
This Amendment to Revolving Credit Agreement and Loan Documents (this
"AMENDMENT"), is entered into as of June 4, 2008, by and between Hi-Shear
Technology Corporation ("BORROWER") and U.S. Bank N.A., a national banking
association ("BANK").
RECITALS
A. Borrower and Bank are parties to a Revolving Credit Agreement dated
as of January 29, 2008 (as such document may have previously been amended,
modified, extended, supplemented, restated or replaced, the "EXISTING CREDIT
AGREEMENT"). Borrower and Bank are also parties to (i) an Addendum to Revolving
Credit Agreement and Note dated as of January 29, 2008 (as such document may
have previously been amended, modified, extended, supplemented, restated or
replaced, the "EXISTING FIRST REVOLVER ADDENDUM") and (ii) a Second Addendum to
Revolving Credit Agreement and Note dated as of January 29, 2008 (as such
document may have previously been amended, modified, extended, supplemented,
restated or replaced, the "SECOND REVOLVER ADDENDUM").
B. The current outstanding and unpaid indebtedness of Borrower to Bank
under the Existing Credit Agreement is evidenced by a Revolving Credit Note
dated as of January 29, 2008 in the original principal amount of Five Million
and No/100 Dollars ($5,000,000.00) by Borrower in favor of Bank, with an
Interest Rate Rider by Borrower in favor of Bank attached thereto (such note and
rider, as they may have previously been amended, modified, extended,
supplemented, restated or replaced, collectively, the "NOTE").
C. Borrower and Bank desire to amend the Existing Credit Agreement and
the Existing First Revolver Addendum to modify a financial covenant contained
therein and to, to the extent necessary, to provide a waiver of a certain
violation of a financial covenant.
D. The Existing Credit Agreement and the Existing First Revolver
Addendum, as amended and modified by this Amendment, are referred to hereinafter
as the "CREDIT AGREEMENT" and the "FIRST REVOLVER ADDENDUM," respectively.
AGREEMENT
1. RECITALS. The Recitals above are incorporated herein by this reference as if
fully set forth herein. Capitalized terms not otherwise defined in the Recitals
or otherwise in this Amendment shall have the meanings ascribed to them in the
Existing Credit Agreement.
2. AMENDMENT AND RESTATEMENT OF DEFINITION OF "FIXED CHARGE COVERAGE RATIO." The
definition of "Fixed Charge Coverage Ratio," which consists of three lines of
text on the second page of the Existing First Revolver Addendum, is hereby
amended and restated in its entirety, effective beginning with the period ending
and ended February 29, 2008, as follows:
"Fixed Charge Coverage Ratio" shall mean (a) EBITDAR minus cash taxes,
cash dividends, cash distributions and Maintenance Capital Expenditures
divided by (b) the sum of all required principal payments (on short and
long term debt and capital leases), interest and rental or lease
expense; PROVIDED, HOWEVER, a cash dividend shall hot be subtracted
from EBITDAR as provided in clause (a) of this definition with respect
to any period of measurement in and only if:
(i) such dividend is issued as permitted by the terms and conditions of
the Loan Documents;
(ii) Borrower has maintained LIQUID ASSETS (as defined below) in an
amount if no less than $750,000.00 with Bank as of the last day of the
period on which such dividend is paid; and
(iii) there is no outstanding and unpaid balance under the Note on the
day such dividend is paid.
"LIQUID ASSETS" shall mean unencumbered cash and unencumbered cash
equivalents (which may include, without limitation, highly marketable
securities, securities issued by the United States Treasury, and
similar investments) as determined by Bank in its sole discretion.
3. WAIVER.
3.1 Borrower acknowledges that Borrower committed the following
violation of the Fixed Charge Coverage Ratio as set forth on the second page of
the Existing First Revolver Addendum (the "FCCR COVENANT VIOLATION"): Borrower
permitted the First Charge Coverage Ration to be less than 1.25 to 1.00 for the
rolling four-quarter period ending and ended February 29, 2008.
3.2 To the extent necessary notwithstanding the retroactive amendment
of the Fixed Charge Ratio contained in Section 2 above, Bank hereby waives the
FCCR Covenant Violation and, notwithstanding any of the terms of the Existing
First Revolver Addendum or any of the other Loan Documents, the FCCR Covenant
Violation shall not constitute a violation of, or Event of Default under, any of
the provisions of the Existing Credit Agreement or any of the other Loan
Documents. Except as expressly set forth herein, the waiver in this Section 3.2
shall not by implication or otherwise limit, impair, constitute a waiver of or
otherwise affect the rights or remedies of Bank under the Credit Agreement or
any other Loan Document, and shall not alter, modify, amend or in any way affect
any of the terms, conditions, obligations, covenants or agreements contained in
the Credit Agreement or any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect. Nothing
herein shall be deemed to entitle Borrower to a waiver, amendment, modification
or other change of any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or any other Loan Document in
similar or different circumstances. The waiver in this Section 3.2 shall apply
and be effective only with respect to the specific FCCR Covenant Violation
described in this Amendment and shall not constitute a forbearance, waiver or
consent by Bank with respect to any other violation, default or Event of Default
under the Credit Agreement or any of the other Loan Documents, including,
without limitation, any failure of Borrower to satisfy any covenant set forth in
the Credit Agreement or other Loan Document as of any other date on which such
covenant shall be measured in accordance with the Credit Agreement or other Loan
Document.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. Before and after giving effect to
this Amendment, the representations and warranties in Article II or elsewhere in
the Existing Credit Agreement shall be true and correct as though such
representations and warranties were made on the date hereof. The execution by
the Borrower of this Amendment shall be deemed a representation that the
Borrower has complied with the foregoing conditions. In addition, Borrower
reaffirms all covenants contained in Article II or elsewhere in the Credit
Agreement (including such covenants as have been amended by this Amendment) as
though such covenants were made on the date hereof. All of the terms of the
Existing Credit Agreement, except as expressly amended by this Amendment, shall
remain unchanged and in full force and effect, and the remaking of the
representations and warranties, and reaffirmation of the covenants, does not in
any way limit the continued applicability of all the provisions of the Existing
Credit Agreement, as amended by this Amendment.
5. CONDITIONS TO EFFECTIVENESS. This Agreement shall become effective upon the
occurrence of each of the following on or before June 10, 2008:
5.1 Execution of this Amendment by Borrower and Bank, and the delivery
to Bank of such fully-executed Amendment.
5.2 Payment by Borrower of Bank's fees incurred in connection with this
Amendment.
6. MISCELLANEOUS.
6.1 CONTINUING VALIDITY. Except as expressly modified above, the terms
of the Existing Credit Agreement, the Existing First Revolver Addendum, the
Second Revolver Addendum, the Note and the other Loan Documents shall remain
unchanged and in full force and effect. Consent by Bank to this Amendment does
not waive Bank's right to require strict performance of any and all the
documents executed in connection with any credit extended pursuant to the Credit
Agreement or the other Loan Documents nor does Bank's consent obligate Bank to
make any future modifications. Nothing in this Amendment shall constitute a
satisfaction of the Credit Agreement, the First Revolver Addendum, the Second
Revolver Addendum, the Note or any of the Loan Documents.
6.2 TERM LOAN. The provisions of this Amendment shall apply to the term
loan evidenced by that certain Installment or Single Payment Note in the
original principal amount of $1,000,000.00 dated as of January 29, 2008 by
Borrower in favor of Bank, as provided in that certain Addendum to Installment
or Single Payment Note dated as of January 29, 2008 by and between Borrower and
Bank.
6.3 UNDERSTANDING OF BORROWER.
PRIOR TO SIGNING THIS AMENDMENT, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS AMENDMENT AND ANY AND ALL LOAN DOCUMENTS AND RELATED
DOCUMENTS.
[signature page follows]
IN WITNESS WHEREOF, each of Borrower and Bank agree to the terms and conditions
of this Amendment as set forth above.
Borrower:
Hi-Shear Technology Corporation,
a Delaware corporation
By: /S/ XXX X. XXXXX
----------------------
Name and Title: Xxx X. Xxxxx
Chief Financial Officer
By: /S/ XXXXXX X. XXXXXX
----------------------
Name and Title: Xxxxxx X. Xxxxxx
Chief Executive Officer
Bank:
U.S. Bank N.A.
By: /S/ XXXXX X. XXXXXX
----------------------
Xxxxx X. Xxxxxx,
Vice President