FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST
AMENDMENT TO CREDIT AGREEMENT
THIS
FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of the 16th
day of October, 2007, by and among COMPX INTERNATIONAL, INC., COMPX SECURITY
PRODUCTS, INC., COMPX PRECISION SLIDES, INC., COMPX MARINE, INC., CUSTOM MARINE,
INC. (f/k/a CUSTOM MARINE ACQUISITION, INC.), LIVORSI MARINE, INC., WACHOVIA
BANK, NATIONAL ASSOCIATION, as Administrative Agent and a Lender, COMPASS BANK
and COMERICA BANK (collectively referred to herein as the
“Lenders”).
R
E C
I T A L S:
The
Borrower, the Administrative Agent and the Lenders have entered into a certain
Credit Agreement dated as of December 23, 2005 (referred to herein as the
“Credit Agreement”). Capitalized terms used in this Amendment which
are not otherwise defined in this Amendment shall have the respective meanings
assigned to them in the Credit Agreement. In connection with the
Credit Agreement, the Subsidiary Guarantors have executed the Subsidiary
Guaranty Agreement in favor of the Administrative Agent, for the ratable benefit
of the Administrative Agent and the Lenders.
The
Borrower and Subsidiary Guarantors have requested the Administrative Agent
and
the Lenders to: (1) amend Sections 9.1, 10.1, 10.3 and 10.6 of
the Credit Agreement as set forth herein; (2) amend the definition of
“Consolidated Net Worth” as set forth herein; and (3) modify certain
additional provisions of the Credit Agreement as more fully set forth
herein.
The
Lenders, the Administrative Agent, the Subsidiary Guarantors and the Borrower
desire to amend the Credit Agreement upon the terms and conditions hereinafter
set forth.
NOW,
THEREFORE, in consideration of the Recitals and the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Subsidiary
Guarantors, the Administrative Agent and the Lenders, intending to be legally
bound hereby, agree as follows:
SECTION
1. Recitals. The Recitals are incorporated herein
by reference and shall be deemed to be a part of this Amendment.
SECTION
2. Amendments. The Credit Agreement is hereby
amended as set forth in this Section 2.
SECTION
2.01. Amendment to Section 1.1. (a) The definition
of “Consolidated Net Worth” set forth in Section 1.1 of the Credit Agreement is
amended and restated to read in its entirety as follows:
“Consolidated
Net Worth” means, with respect to the Borrower and its Subsidiaries, on any
date of determination, the total stockholders’ equity (including capital stock,
additional paid-in capital and retained earnings after deducting the treasury
stock) of the Borrower and its Subsidiaries appearing on a Consolidated balance
sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP
(excluding on a cumulative basis any adjustments for foreign currency
translation); provided, however, for purposes of Section 9.2 the term
“Consolidated Net Worth”: (1) shall be calculated without regard to the
Affiliate Loans permitted pursuant to Section 10.3(h); and (2) shall be
increased by the principal amount of the Permitted TIMET Debt relating to the
Permitted TIMET Redemption.
(a) Section
1.1 of the Credit Amendment is amended to add the following
definitions:
“Permitted
TIMET Debt” shall mean that certain unsecured term loan not to exceed
$55,000,000.00 made by TIMET Finance Management Company to the Borrower and
incurred to finance the Permitted TIMET Redemption, which is subordinate to
the
repayment of the Obligations upon terms and conditions satisfactory to the
Administrative Agent.
“Permitted
TIMET Redemption” shall mean the redemption by the Borrower of 2,696,420 shares
of the Borrower’s Class A common stock, whether directly or indirectly through
the purchase of shares of CompX Group, Inc. stock, from TIMET Finance Management
Company the purchase price of which shall be paid by the Borrower by issuance
of
the Permitted TIMET Debt.
SECTION
2.02. Amendment to Section 9.1. Section 9.1 of the
Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
9.1. Leverage Ratio. As of any fiscal quarter end,
permit the ratio of (a) Total Funded Debt (excluding the Permitted TIMET Debt)
on such date, to (b) EBITDA for the period of four (4) consecutive fiscal
quarters ending on or immediately prior to such date, to be greater than 2.50
to
1.00.
SECTION
2.03. Amendment to Section 10.1. Section 10.1 of
the Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
10.1. Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except:
(a) the
Obligations (excluding any Hedging Obligations);
(b) Debt
incurred in connection with a Hedging Agreement with a counterparty and upon
terms and conditions (including interest rate) reasonably satisfactory to the
Administrative Agent; provided, that any counterparty that is a Lender or
the Bank of Montreal shall be deemed satisfactory to the Administrative
Agent;
(c) Debt
existing on the Closing Date and not otherwise permitted under this Section
10.1, as set forth on Schedule 6.1(q), and the renewal, refinancing,
extension and replacement (but not the increase in the aggregate principal
amount) thereof;
(d) Guaranty
Obligations in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(e) unsecured
Debt of the Borrower and the Domestic Subsidiaries in an aggregate amount not
to
exceed $5,000,000 on any date of determination (provided that such Debt
may be secured to the extent that any such Debt is created, incurred, assumed
or
suffered to exist in connection with Capital Leases and purchase money
financing);
(f) Debt
of the Foreign Subsidiaries in an aggregate amount not to exceed $10,000,000
on
any date of determination;
(g) intercompany
Debt between the Borrower and any Subsidiary of the Borrower or between any
Subsidiary of the Borrower and any other Subsidiary of the
Borrower;
(h) the
Permitted TIMET Debt; or
(i) Debt
of any Person acquired in accordance with Section 10.3(c), including any
renewal, extension or refinancing, but not any increase in the aggregate
principal amount, thereof (provided that such Debt was not incurred in
connection with such acquisition);
provided,
that no agreement or instrument with respect to Debt permitted to be incurred
by
this Section shall restrict, limit or otherwise encumber (by covenant or
otherwise) the ability of any Subsidiary of the Borrower to make any payment
to
the Borrower or any of its Subsidiaries (in the form of dividends, intercompany
advances or otherwise) for the purpose of enabling the Borrower to pay the
Obligations.
SECTION
2.04. Amendment to Section 10.3. Section 10.3 of
the Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
10.3. Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any capital stock, interests in any partnership or
joint
venture (including, without limitation, the creation or capitalization of any
Subsidiary), evidence of Debt or other obligation or security, substantially
all
or a portion of the business or assets of any other Person or any other
investment or interest whatsoever in any other Person, or make or permit to
exist, directly or indirectly, any loans, advances or extensions of credit
to,
or any investment in cash or by delivery of property in, any Person
except:
(a) investments
(i) existing on the Closing Date in Subsidiaries, (ii) in Subsidiaries
formed or acquired after the Closing Date so long as the Borrower and its
Subsidiaries comply with the provisions of Section 8.10 and (iii) existing
on the Closing Date in the form of loans, advances and investments described
on
Schedule 10.3;
(b) investments
in (i) marketable direct obligations issued or unconditionally guaranteed
by the United States of America or any agency thereof maturing within three
hundred sixty-five (365) days from the date of acquisition thereof,
(ii) commercial paper maturing no more than one hundred twenty (120) days
from the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor’s Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc. or Xxxxx’x Investors Service, Inc.,
(iii) certificates of deposit maturing no more than one hundred twenty
(120) days from the date of creation thereof issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $500,000,000
and having a rating of “A” or better by a nationally recognized rating agency;
provided, that the aggregate amount invested in such certificates of
deposit shall not at any time exceed $5,000,000 for any one such certificate
of
deposit and $10,000,000 for any one such bank, (iv) time deposits maturing
no more than thirty (30) days from the date of creation thereof with
commercial banks or savings banks or savings and loan associations each having
membership either in the FDIC or the deposits of which are insured by the FDIC
and in amounts not exceeding the maximum amounts of insurance thereunder, (v)
tax-exempt municipal bonds maturing within one hundred twenty (120) days from
the date of acquisition thereof, (vi) any money market or bank fund investing
only in the investments set forth above or (vii) investments held in trust
or
escrow accounts subject to government regulation, legal settlements, collateral
requirements or other similar arrangements; and
(c) investments
by the Borrower or any of its Subsidiaries in the form of acquisitions of all,
substantially all or a majority of the stock or assets of the business or a
line
of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person (each, a “Permitted
Acquisition”); provided that:
(i) the
Person to be acquired shall be a going concern, engaged in a business, or the
assets to be acquired shall be used in a business which is similar, related
or
complimentary to the line of business of the Borrower and its Subsidiaries
as
required pursuant to Section 10.12;
(ii) the
Borrower or such Subsidiary (unless the Person to be acquired complies with
Section 8.10), as applicable, shall be the surviving Person and no Change in
Control shall have been effected thereby;
(iii) with
respect to any Material Acquisition, the Borrower shall have delivered written
notice of such proposed acquisition to the Administrative Agent (for delivery
by
the Administrative Agent to the Lenders) and the Lenders, which notice shall
include the proposed closing date of such proposed acquisition, not less than
twenty (20) calendar days prior to such proposed closing date;
(iv) with
respect to any Material Acquisition, the Borrower shall have delivered to the
Administrative Agent copies of the Permitted Acquisition Documents;
(v) with
respect to any Material Acquisition, the Borrower shall have certified on or
before the closing date of such proposed acquisition, in writing and in a form
reasonably acceptable to the Administrative Agent and the Lenders, that such
proposed acquisition has been approved by the board of directors or equivalent
governing body of the Person to be acquired;
(vi) no
Default or Event of Default shall have occurred and be continuing both before
and after giving effect to such proposed acquisition;
(vii) the
Borrower shall have complied with Section 8.10;
(viii) with
respect to any Material Acquisition, the Borrower shall have delivered to the
Administrative Agent and the Lenders an Officer’s Compliance Certificate dated
as of the closing date of such proposed acquisition demonstrating, in form
and
substance reasonably satisfactory thereto, proforma compliance
with each covenant contained in Article IX (both before and after giving effect
to such proposed acquisition) (it being agreed by the Borrower, the
Administrative Agent and the Lenders that such calculations shall assume that
all Debt assumed or incurred in conjunction with such proposed acquisition
was
incurred at the beginning of the applicable calculation period and that all
income and expenses associated with such proposed acquisition shall be treated
as earned and included in the pro-forma calculations (both on a consolidated
and
consolidating basis));
(ix) the
Borrower shall have at least $10,000,000 in Liquidity both before and after
giving effect to such proposed acquisition; and
(x) the
Person to be acquired is not subject to material pending litigation which could
reasonably be expected to have a Material Adverse Effect;
(d) investments
by the Borrower or any of its Subsidiaries in the form of acquisitions of less
than a majority of the capital stock or other ownership interests of any other
Person; provided that:
(i) the
Person to be invested in shall be a going concern, engaged in a business which
is similar, related or complimentary to the line of business of the Borrower
and
its Subsidiaries;
(ii) the
amount of the investment (regardless of the form of consideration), together
with the aggregate amounts of all other investments pursuant to this Section
10.3(d), shall not exceed $10,000,000 during the term of this
Agreement;
(iii) neither
the Borrower nor any Material Domestic Subsidiary or Material Foreign Subsidiary
shall make any investment in which such party’s potential liability is not
limited to the amount of its investment (i.e., investments as a general partner,
in joint ventures, etc.);
(iv) no
Default or Event of Default shall have occurred and be continuing both before
and after giving effect to such proposed investment;
(v) the
Borrower shall have complied with Section 8.10;
(vi) the
Borrower shall have at least $10,000,000 in Liquidity both before and after
giving effect to such proposed investment; and
(vii) the
Person to be invested in is not subject to material pending litigation which
could reasonably be expected to have a Material Adverse Effect.
(e) intercompany
loans and advances in connection with intercompany Debt permitted under Section
10.1(g);
(f) Hedging
Agreements permitted pursuant to Section 10.1;
(g) purchases
of assets in the ordinary course of business; and
(h) loans
to Affiliates, the aggregate outstanding principal amount of which shall not
exceed at any time $15,000,000 on terms that are no less favorable than would
be
obtained in a comparable arm’s length transaction (“Affiliate
Loans”).
SECTION
2.05. Amendment to Section 10.6. Section 10.6 of
the Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
10.6. Limitations on Dividends and Distributions. Declare
or pay any dividends upon any of its capital stock or any other ownership
interests; purchase, redeem, retire or otherwise acquire, directly or
indirectly, any shares of its capital stock or other ownership interests, or
make any distribution of cash, property or assets among the holders of shares
of
its capital stock or other ownership interests, or make any change in its
capital structure; provided that:
(a) the
Borrower or any Subsidiary may pay dividends in shares of its own capital
stock;
(b) any
Subsidiary may pay cash dividends to the Borrower;
(c) the
Borrower may pay cash dividends on its capital stock, purchase, redeem, retire
or otherwise acquire, directly or indirectly, shares of its capital stock
(including purchases of treasury stock), or make distributions of cash, property
or assets among its shareholders in an aggregate amount not to exceed the lesser
of (i) twelve and one-half cents ($0.125) per share in any calendar quarter,
or
(ii) $8,000,000 in any calendar year;
(d) the
Borrower may redeem shares of its capital stock pursuant to the Permitted TIMET
Redemption; and
(e) in
addition to transactions permitted under subsection (c) above, the Borrower
may
pay cash dividends on its capital stock, purchase, redeem, retire or otherwise
acquire, directly or indirectly, shares of its capital stock (including
purchases of treasury stock), or make distributions of cash, property or assets
among its shareholders in an aggregate amount not to exceed, during the term
of
this Agreement, the sum of (i) $20,000,000 plus (ii) an amount equal to
fifty percent (50%) of aggregate Net Income of the Borrower and its Subsidiaries
since September 30, 2005. The Borrower, Administrative Agent and
Lenders acknowledge and agree that Affiliate Loans made pursuant to Section
10.3(h) shall not be construed as a purchase, redemption, retirement or other
acquisition by Borrower of its capital stock prohibited by this Section
10.6.
SECTION
3. Conditions to Effectiveness. The effectiveness
of this Amendment and the obligations of the Lenders hereunder are subject
to
the following conditions, unless the Required Lenders waive such
conditions:
(a) receipt
by the Administrative Agent from each of the parties hereto of a duly executed
counterpart of this Amendment signed by such party;
(b) receipt
by the Administrative Agent of all documents which the Administrative Agent
may
reasonably request;
(c) the
fact
that the representations and warranties of the Borrower and Subsidiary
Guarantors contained in Section 5 of this Amendment shall be true on and as
of
the date hereof except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations
and
warranties were true on and as of such earlier date; and
(d) All
other
documents and legal matters in connection with the transactions contemplated
by
this Amendment shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel.
SECTION
4. No Other Amendment. Except for the amendments
set forth above, the text of the Credit Agreement shall remain unchanged and
in
full force and effect. On and after the First Amendment Effective
Date, all references to the Credit Agreement in each of the Loan Documents
shall
hereafter mean the Credit Agreement as amended by this
Amendment. This Amendment is not intended to effect, nor shall it be
construed as, a novation. The Credit Agreement and this Amendment
shall be construed together as a single agreement. This amendment
shall constitute a Loan Document under the terms of the Credit
Agreement. Nothing herein contained shall waive, annul, vary or
affect any provision, condition, covenant or agreement contained in the Credit
Agreement, except as herein amended, nor affect nor impair any rights, powers
or
remedies under the Credit Agreement as hereby amended. The Lenders
and the Administrative Agent do hereby reserve all of their rights and remedies
against all parties who may be or may hereafter become secondarily liable for
the repayment of the Notes. The Borrower and Subsidiary Guarantors
promise and agree to perform all of the requirements, conditions, agreements
and
obligations under the terms of the Credit Agreement, as heretofore and hereby
amended, the Credit Agreement, as amended, and the other Loan Documents being
hereby ratified and affirmed. The Borrower and Subsidiary Guarantors
hereby expressly agree that the Credit Agreement, as amended, and the other
Loan
Documents are in full force and effect.
SECTION
5. Representations and Warranties. The Borrower and
Subsidiary Guarantors hereby represent and warrant to each of the Lenders as
follows:
(a) No
Default or Event of Default under the Credit Agreement or any other Loan
Document has occurred and is continuing unwaived by the Lenders on the date
hereof.
(b) The
Borrower and Subsidiary Guarantors have the power and authority to enter into
this Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by them.
(c) This
Amendment has been duly authorized, validly executed and delivered by one or
more authorized officers of the Borrower and Subsidiary Guarantors and
constitutes the legal, valid and binding obligations of the Borrower and
Subsidiary Guarantors enforceable against them in accordance with its terms,
provided that such enforceability is subject to general principles of
equity.
(d) The
execution and delivery of this Amendment and the performance by the Borrower
and
Subsidiary Guarantors hereunder does not and will not, as a condition to such
execution, delivery and performance, require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrower, or any Subsidiary Guarantor, nor be in contravention of
or in
conflict with the articles of incorporation, bylaws or other organizational
documents of the Borrower, or any Subsidiary Guarantor or the provision of
any
statute, or any judgment, order or indenture, instrument, agreement or
undertaking, to which the Borrower, or any Subsidiary Guarantor is party or
by
which the assets or properties of the Borrower, and Subsidiary Guarantors are
or
may become bound.
(e) The
Collateral Agreement continues to create a valid security interest in, and
Lien
upon, the Collateral, in favor of the Administrative Agent, for the benefit
of
the Lenders, which security interests and Liens are perfected in accordance
with
the terms of the Collateral Agreement and prior to all Liens other than Liens
permitted under Section 10.2 of the Credit Agreement.
SECTION
6. Counterparts; Governing Law. This Amendment may
be executed in multiple counterparts, each of which shall be deemed to be an
original and all of which, taken together, shall constitute one and the same
agreement. This Amendment shall be construed in accordance with and
governed by the laws of the State of North Carolina.
SECTION
7. Effective Date. This Amendment shall be
effective as of September, 2007 (the “First Amendment Effective
Date”).
SECTION
8. Expenses. The Borrower and Subsidiary Guarantors
agree to pay all reasonable costs and expenses of the Administrative Agent
in
connection with the preparation, execution and delivery of this Amendment,
including without limitation the reasonable fees and expenses of the
Administrative Agent’s legal counsel.
SECTION
9. Further Assurances. The Loan Parties agree to
promptly take such action, upon the request of the Administrative Agent, as
is
necessary to carry out the intent of this Amendment.
SECTION
10. Consent by Subsidiary Guarantors. The
Subsidiary Guarantors consent to the foregoing amendments. The
Subsidiary Guarantors promise and agree to perform all of the requirements,
conditions, agreements and obligations under the terms of the Subsidiary
Guaranty Agreement, said Subsidiary Guaranty Agreement being hereby ratified
and
affirmed. The Subsidiary Guarantors hereby expressly agree that the
Subsidiary Guaranty Agreement, is in full force and effect.
SECTION
11. Amendment and Extension Fee. On the date
hereof, the Borrower and Subsidiary Guarantors shall pay to the Administrative
Agent for the account of each Lender an amendment and extension fee of $5,000.00
per Lender.
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WCSR 3728358v6
IN
WITNESS WHEREOF, the parties hereto have executed and delivered, or have caused
their respective duly authorized officers or representatives to execute and
deliver, this Amendment as of the day and year first above written.
[CORPORATE
SEAL] COMPX
INTERNATIONAL, INC.
By: /s/
Xxxxxx X.
Xxxxxxx (SEAL)
Name: Xxxxxx
X.
Xxxxxxx
Title: Chief
Financial
Officer
[CORPORATE
SEAL] COMPX
SECURITY PRODUCTS, INC.
By: /s/
Xxxxxx X.
Xxxxxxx (SEAL)
Name: Xxxxxx
X.
Xxxxxxx
Title: Vice
President -
Finance
[CORPORATE
SEAL] COMPX
PRECISION SLIDES, INC.
By: /s/
Xxxxxx X.
Xxxxxxx (SEAL)
Name: Xxxxxx
X.
Xxxxxxx
Title: Treasurer
[CORPORATE
SEAL] COMPX
MARINE, INC.
By: /s/
Xxxxxx X.
Xxxxxxx (SEAL)
Name: Xxxxxx
X.
Xxxxxxx
Title: Chief
Financial
Officer
[CORPORATE
SEAL] CUSTOM
MARINE, INC.
By: /s/
Xxxxxx X.
Xxxxxxx (SEAL)
Name: Xxxxxx
X.
Xxxxxxx
Title: Chief
Financial
Officer
[CORPORATE
SEAL] LIVORSI
MARINE, INC.
By: /s/
Xxxxxx X.
Xxxxxxx (SEAL)
Name: Xxxxxx
X.
Xxxxxxx
Title: Chief
Financial
Officer
ADMINISTRATIVE
AGENT AND
LENDERS:
WACHOVIA
BANK, NATIONAL
ASSOCIATION,
as
Administrative Agent and as a
Lender
By: /s/Xxxxxx
X.
Xxxxxx
Name:
Xxxxxx
X.
Xxxxxx
Title: Senior
Vice
President
[Signature
pages continued on the following page]
COMPASS
BANK,
as
Lender
By: /s/Key
Xxxxx
Name: Key
Xxxxx
Title: Executive
Vice
President
[Signature
pages continued on the following page]
COMERICA
BANK,
as
Lender
By: /s/Xxxxxxx
X.
Xxxxxx
Name: Xxxxxxx
X.
Xxxxxx
Title: Vice
President
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