FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT is entered into as of June 30,
1998, by and among XXXXXXXX CONTROLS, INC., a Delaware corporation, AGROTEC
XXXXXXXX, INC., a Delaware corporation, APTEK XXXXXXXX, INC., a Delaware
corporation, GEOFOCUS, INC., a Florida corporation, XXXXXX XXXXXXXX, INC., a
Delaware corporation, KENCO/XXXXXXXX, INC., a Delaware corporation, NESC
XXXXXXXX, INC., a Delaware corporation, PREMIER PLASTIC TECHNOLOGIES, INC., a
Delaware corporation, WACCAMAW WHEEL XXXXXXXX, INC., a Delaware corporation,
XXXXXXXX CONTROLS INDUSTRIES, INC., a Delaware corporation, XXXXXXXX
TECHNOLOGIES, INC., a Delaware corporation, XXXXXXXX WORLD TRADE, INC., a
Delaware corporation, XXXXXXXX AUTOMOTIVE, INC., a Delaware corporation,
TECHWOOD XXXXXXXX, INC., a Delaware corporation, (each individually referred to
as "Borrower" and all collectively referred to as "Borrowers"), and XXXXX FARGO
BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
Borrowers, together with Ajay Sports, Inc., Leisure Life, Inc., Palm
Springs Golf, Inc. and Ajay Leisure Products, Inc. (collectively, the "Ajay
Companies"), are parties to that certain Credit Agreement with Bank entered into
as of July 11, 1997 ("Agreement"). Borrowers and the Ajay Companies desire to
amend the Agreement to delete the Ajay Companies as parties to the Agreement.
Bank is willing to delete the Ajay Companies as parties to the Agreement,
provided that the amount of credit provided for under the Agreement is reduced
and certain other terms and conditions are modified.
All capitalized terms used herein and not otherwise defined herein will
have the meaning attributed to them in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties contained herein, Borrowers and Bank hereby agree as follows:
1. DELETION OF CERTAIN PARTIES. Ajay Sports, Inc., Leisure Life,
Inc., Palm Springs Golf, Inc. and Ajay Leisure Products, Inc. are
hereby deleted as parties to the Agreement.
2. REVISION TO SECTION 1.1 OF AGREEMENT.
(a) Section 1.1 of the Agreement is hereby amended to add the
following new defined term:
"BORROWER" means any one of the following corporations: Xxxxxxxx
Controls, Inc., Agrotec Xxxxxxxx, Inc., Aptek Xxxxxxxx,
Inc., GeoFocus, Inc., Xxxxxx Xxxxxxxx, Inc., Kenco/Xxxxxxxx,
Inc., NESC Xxxxxxxx, Inc., Premier Plastic Technologies,
Inc., Waccamaw Wheel Xxxxxxxx, Inc., Xxxxxxxx Controls
Industries, Inc., Xxxxxxxx Technologies, Inc., Xxxxxxxx
World Trade, Inc., Xxxxxxxx Automotive, Inc., and Techwood
Xxxxxxxx, Inc., and "Borrowers" refers collectively to all
of these corporations.
(b) Section 1.1 of the Agreement is hereby amended as follows:
(i) The definition of "Aggregate Working Capital" is
amended in its entirety to read as follows:
"Aggregate Working Capital" means, as of any date, an amount
equal to the amount (which may be a negative number) by
which Xxxxxxxx Parent's consolidated current assets exceed
its consolidated current liabilities (exclusive of the
Revolving Loans).
(ii) The defined term "Ajay Parent" is deleted.
(iii)The definition of "A/R Advance Rate" is amended in its
entirety to read as follows:
"A/R Advance Rate" means, the following (or such other rates
as Bank may designate from time to time in its sole
discretion) with respect to the Eligible Accounts of each
Borrower listed below: (i)70% for Xxxxxx Xxxxxxxx, Inc. and
Agrotec Xxxxxxxx, Inc.; (ii)80% for Premier Plastics
Technologies, Inc. and (iii)85% for Xxxxxxxx Controls
Industries, Inc., Aptek Xxxxxxxx, Inc., NESC Xxxxxxxx, Inc.,
GeoFocus, Inc. and Waccamaw Wheel Xxxxxxxx, Inc.
(iv) The reference in the defined term "Available Credit" to
$26,000,000 is hereby amended to be $16,500,000.
(v) The reference in item (ii)(a) of the defined term
"Borrowing Base" to $15,000,000 is hereby amended to be
$8,000,000.
(vi) The definition of "Subsidiary" is amended to delete the
words "or Ajay Parent."
3. REVISION TO SECTION 3.1(a). The reference in Section 3.1(a) to
$26,000,000 is hereby amended to be $16,500,000.
4. REVISION TO SECTION 3.2. The reference in Section 3.2(iii) to
$4,000,000 is hereby amended to be $3,000,000.
5. REVISION TO SECTION 3.3; Term Loan I Promissory Note.
(a) Contemporaneously herewith, Borrowers have reduced the
outstanding principal balance of Term Loan I by $525,000,
and as of the date hereof, the outstanding principal balance
of Term Loan I is $3,148,452.34. The second sentence of
Section 3.3(a) is hereby amended in its entirety to read as
follows:
Borrower shall repay the principal of Term Loan I in monthly
principal payments of $42,456.65 each on the first day of
each month beginning July 1, 1998.
(b) The Term Loan I Promissory Note dated July 11, 1997 in the
original principal amount of $4,430,000 is being replaced
with a Replacement Term Loan Promissory Note in the form of
the promissory note attached hereto as EXHIBIT A.
6. REPAYMENT OF TERM LOAN II. Contemporaneously herewith, Borrowers
have repaid Term Loan II in full.
7. REVISION TO SECTION 3.6(c). The reference in Section 3.6(c) to
$7,500 is hereby amended to be $4,500 and the reference in
Section 3.6(c) to $10,000 is hereby amended to be $6,000.
8. REVISION TO SECTION 3.6(d). The reference in Section 3.6(d) to
$26,000,000 is hereby amended to be $16,500,000.
9. REVISION TO SECTION 6.2(c). The references in Section 6.2(c) to
"Ajay Parent" are hereby deleted.
10. Deletion of Section 6.6(b). Section 6.6(b) is hereby deleted.
11. REVISION TO SECTION 6.25. The second sentence of Section 6.25 is
hereby deleted.
12. REVISION TO SECTIONS 8.4(b), (c) (e) and (f). Sections 8.4(b),
(e) and (f) are hereby deleted. The reference in Section 8.4(c)
to 15 days is hereby amended to be 35 days
13. REVISION TO SECTION 8.18. Section 8.18 is hereby amended in its
entirety to read as follows:
(a) Xxxxxxxx Parents' Tangible Net Worth (computed without
regard to deferred income taxes) shall at all times exceed
$18,000,000.
(b) Aggregate Working Capital shall at all times exceed
$12,000,000.
14. REVISION TO SECTION 9.4(a). Item (iii) of Section 9.4(a) is
hereby amended in its entirety to read as follows:
(iii)the 7.5% quarterly dividend payable on all Series A
Convertible, Redeemable, Preferred Stock issued and
outstanding as of the date of the First Amendment hereto;
15. REVISION TO SECTION 9.5(a). The reference in Section 9.5(a) to
$1,000,000 is hereby amended to be $650,000.
16. REVISION TO SECTION 9.6. Section 9.6 is hereby amended to delete
"and" at the end of item (b), to replace the period at the end of
item (c) with "; and" and to add the following new item (d):
(d) Investments in Ajay Sports, Inc. existing as of the date of
the First Amendment hereto and Investments in Ajay Sports,
Inc. in an amount not greater than (x) $1,000,000 plus (y)
the amount of all mandatory payments which Ajay Sports, Inc.
is required and permitted to make pursuant to its July 14,
1997 Promissory Note in the initial principal amount of
$2,340,000 to United States National Bank of Oregon, which
note is the subject of that certain Intercreditor Agreement
dated as of July 11, 1997 among Borrowers, Bank, Ajay
Sports, Inc. and its subsidiaries and United States National
Bank of Oregon.
17. REVISION TO SECTION 9.14. Section 9.14 is hereby amended in its
entirety to read as follows:
Make any capital expenditures (which term shall include
Capitalized Lease Obligations) at any time except (i) in the ordinary
course of business, (ii) in an amount collectively for Borrowers not
in excess of $6,000,000 for the 24-month period ending September 30,
1999, and (iii) in an amount collectively for Borrowers not in excess
of $2,500,000 in any fiscal year of Xxxxxxxx Parent ending after
September 30, 1999.
18. REVISION TO SECTION 9.15. Section 9.15 is hereby amended by
adding the following sentence at the end of such section:
The foregoing and Section 9.6 to the contrary notwithstanding,
Borrower may advance to Ajay Sports, Inc., from time to time, such
amount as is necessary to permit Ajay Sports, Inc. to make all
payments which it is required to make pursuant to its July 14,1997
Promissory Note in the original principal amount of $2,340,000 which
is the subject of the Intercreditor Agreement dated July 11, 1997
among Borrowers, the Ajay Companies, Bank and United States National
Bank of Oregon to the extent that making any such advance does not
otherwise create a Default hereunder.
19. REVISION TO SECTION 10.1(n). Section 10.1(n) is hereby amended in
its entirety to read as follows:
Xxxxxx X. Xxxx or any two members of Borrower's Senior
Management shall cease, for any reason, to be employed by
Borrower on a full-time basis in his present capacity unless such
person is replaced within 90 days by another person acceptable to
Bank. Senior Management means Xxxxxx X. Xxxxxxx, Xxxxxx Xxxxxxxx,
Xxxxxxx Xxxxxx and Xxx Xxxxx; or.
20. REVISION TO SECTION 11.3. The telecopy number for Bank set forth
in Section 11.3 is hereby amended to read as follows: (626)
844-9063.
21. ADDITION OF SECTION 11.17. A new Section 11.17 is hereby added to
the Agreement to read as follows:
SECTION 11.17 YEAR 2000 COMPLIANCE.
Borrower shall perform all acts reasonably necessary to ensure
that (i) Borrower and any business in which Borrower holds a
substantial interest and (ii) all customers, suppliers and vendors
that are material to Borrower's business, become Year 2000 Compliant
in a timely manner. Such acts shall include, without limitation,
performing a comprehensive review and assessment of all of Borrower's
systems and adopting a detailed plan, with itemized budget, for the
remediation, monitoring and testing of such systems. As used in this
paragraph, "Year 2000 Compliant" means, in regard to any entity, that
all software, hardware, firmware, equipment, goods or systems utilized
by or material to the business operations or financial condition of
such entity, will properly perform the date sensitive functions
before, during and after the year 2000. Borrower shall, immediately
upon request, provide to Bank such certifications or other evidence of
Borrower's compliance with the terms of this paragraph as Bank may
from time to time require.
22. XXXXX CREDIT. All references in the Agreement to Bank's
Commercial Finance Division are hereby amended to refer to Bank's
group known as Xxxxx Credit.
23. EFFECTIVE DATE. This First Amendment shall be effective on the
date first above written.
24. RATIFICATION. Except as otherwise provided in this First
Amendment, all of the provisions of the Agreement are hereby
ratified and confirmed and shall remain in full force and effect.
25. ONE AGREEMENT. The Agreement, as modified by the provisions of
this First Amendment, shall be construed as one agreement.
26. OREGON STATUTORY NOTICE.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed as of the date first written above.
XXXXXXXX CONTROLS, INC. AGROTEC XXXXXXXX, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Chief Financial Officer and Chief Financial Officer and
Chief Administrative Officer Chief Administrative Officer
APTEK XXXXXXXX, INC. GEOFOCUS, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Chief Financial Officer and Chief Financial Officer and
Chief Administrative Officer Chief Administrative Officer
XXXXXX XXXXXXXX, INC. KENCO/XXXXXXXX, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Chief Financial Officer and Chief Financial Officer and
Chief Administrative Officer Chief Administrative Officer
NESC XXXXXXXX, INC. PREMIER PLASTIC TECHNOLOGIES, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Chief Financial Officer and Chief Financial Officer and
Chief Administrative Officer Chief Administrative Officer
WACCAMAW WHEEL XXXXXXXX, INC. XXXXXXXX CONTROLS INDUSTRIES, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Chief Financial Officer and Chief Financial Officer and
Chief Administrative Officer Chief Administrative Officer
XXXXXXXX TECHNOLOGIES, INC. XXXXXXXX WORLD TRADE, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Chief Financial Officer and Chief Financial Officer and
Chief Administrative Officer Chief Administrative Officer
XXXXXXXX AUTOMOTIVE, INC. TECHWOOD XXXXXXXX, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Chief Financial Officer and Chief Financial Officer and
Chief Administrative Officer Chief Administrative Officer
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By /s/ Xxxxxx Xxxxxxxxx
-----------------------
Vice President
CONSENT TO DELETION OF PARTIES
Ajay Sports, Inc., Leisure Life, Inc., Palm Springs Golf, Inc. and Ajay
Leisure Products, Inc. each hereby consents to being deleted as a party to the
Agreement.
AJAY SPORTS, INC. LEISURE LIFE, INC.
By /s/ Xxxxx Xxxxxxxxx By /s/ Xxxxx Xxxxxxxxx
----------------------- -----------------------
Chief Financial Officer Chief Financial Officer
PALM SPRINGS GOLF, INC. AJAY LEISURE PRODUCTS, INC.
By /s/ Xxxxx Xxxxxxxxx By /s/ Xxxxx Xxxxxxxxx
----------------------- -----------------------
Chief Financial Officer Chief Financial Officer
