Exhibit 10.46
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment"), dated as of April
15, 2002, is entered into between Bank of America, N.A. ("Lender") and Xxxxx
Instruments Corp., a Delaware corporation ("Borrower"), with reference to the
following facts:
RECITALS
A. Lender and Borrower are parties to that certain Credit Agreement, dated
as of September 24, 2001 (the "Credit Agreement"), pursuant to which
Lender provided Borrower with certain credit facilities.
B. Borrower and Lender wish to amend the Credit Agreement as described
below.
NOW, THEREFORE, the parties hereby agree as follows:
1. Defined Terms. Any and all initially capitalized terms used in this
Amendment (including, without limitation, in the recitals hereto)
without definition shall have the respective meanings specified in the
Credit Agreement.
2. Amendment to Section 1.1. Section 1.1 of the Credit Agreement is amended
to read in its entirety as follows:
Subject to all of the terms and conditions of this Agreement, the
Lender agrees to make available a total credit facility of up to
$27,100,000 (the "Total Facility") to the Borrower from time to
time during the term of this Agreement. The Total Facility shall
be composed of a revolving line of credit consisting of Revolving
Loans and Letters of Credit and the Term Loan described herein.
Notwithstanding any term of this Agreement to the contrary,
Borrower agrees that while Pricing Level V (as used in the
definition of Applicable Margin) is in effect, Borrower may not
request any new LIBOR Rate Loans. While Pricing Level V is in
effect, any existing LIBOR Rate Loan will be converted into a
Base Rate Loan upon conclusion of the Interest Period applicable
to such LIBOR Rate Loan.
3. Amendment to Section 7.22. Section 7.22 of the Credit Agreement is
amended in its entirety to read as follows:
7.22 Fixed Charge Coverage Ratio. The Borrower will maintain a
Fixed Charge Coverage Ratio for each period of four consecutive
fiscal quarters ending on the last day of each fiscal quarter set
forth below of not less than the applicable ratio set forth
below:
Minimum Fixed
Fiscal Quarter Ending Charge Coverage Ratio
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February 28, 2002 0.50 to 1.00
May 31, 2002 0.50 to 1.00
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August 31, 2002 0.10 to 1.00
November 30, 2002 and
each Fiscal Quarter
ending thereafter 1.00 to 1.00
4. Amendment to Section 7.23. Section 7.23 of the Credit Agreement is
amended in its entirety to read as follows:
7.23 Adjusted Tangible Net Worth. Borrower will maintain Adjusted
Tangible Net Worth of not less than the following amounts during
the following periods:
Minimum Adjusted
End of Month Tangible Net Worth
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Each month prior to
and including June 2002 $37,500,000
July 2002 $38,000,000
August 2002 $38,500,000
September 2002 $38,830,000
October 2002 $39,383,000
November 2002 and each
month to and including
February 2003 $39,711,000
Each month after
February 2003 $39,711,000 plus 50% of positive
Net Income thereafter
"Net Income" means, with respect to any fiscal period of the
Borrower, the Borrower's net income on a consolidated basis as
determined in accordance with GAAP and reported on the Financial
Statements for such period.
5. Amendment to Section 7.25. Section 7.25 of the Credit Agreement is
amended in its entirety to read as follows:
7.25 US EBITDA. The Borrower will maintain US EBITDA for each
period of four consecutive fiscal quarters ending on the last day
of each fiscal quarter set forth below of not less than the
applicable minimum US EBITDA set forth below:
Fiscal Quarter Ending Minimum US EBITDA
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February 28, 2002 $2,000,000
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May 31, 2002 $1,000,000
August 31, 2002 ($500,000)
November 30, 2002 $3,000,000
February 28, 2003 $3,075,000
May 31, 2003 $3,250,000
August 31, 2003 $3,250,000
November 30, 2003 $3,500,000
February 29, 2004 and
each Fiscal Quarter
ending thereafter $4,250,000
6. Amendments to Annex A. A definition for "Fixed Charge Coverage Ratio
Shortfall Reserve" is added to Annex A of the Credit Agreement, and the
definitions of "Applicable Margin", and "Maximum Revolver Amount" and
"Reserves", as set forth in Annex A to the Credit Agreement are amended
to read as follows:
"Applicable Margin" means
(i) with respect to Base Rate Revolving Loans, Base Rate Term
Loans, and all other Obligations (other than LIBOR Loans),
1%;
(ii) with respect to LIBOR Revolving Loans, 3 1/4%; and
(iii) with respect to LIBOR Term Loans, 3 1/2%.
The Applicable Margins shall be adjusted (up or down)
prospectively on a quarterly basis as determined by the
Borrower's consolidated financial performance, commencing with
the first day of the first calendar month that occurs more than 5
days after required delivery to Lender of the Borrower's draft
audited Financial Statements to Lender for the Fiscal Year ending
February 28, 2002. In the event the draft audited Financial
Statements are subsequently determined to be in error, then any
resulting change in the Applicable Margin shall be made
retroactively to the date when the incorrect Applicable Margin
was utilized. Adjustments in Applicable Margins shall be
determined by reference to the following grids:
IF FIXED CHARGE
COVERAGE RATIO PRICING LEVEL
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Greater than 1.50 to 1.00 Level I
Greater than 1.25 to 1.00
but equal to or less than
1.50 to 1.00 Level II
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Greater than 1.00 to 1.00
but equal to or less than
1.25 to 1.00 Level III
Greater than 0.75 to 1.00
but equal to or less than
1.00 to 1.00 Level IV
Equal to or less than
0.75 to 1.00 Level V
APPLICABLE MARGINS
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
------- -------- --------- -------- -------
Base Rate Loans 0.25% 0.50% 0.75% 1.25% 1.50%
LIBOR Revolving Loans 2.50% 2.75% 3.00% 3.50% Not Avail.
LIBOR Term Loans 3.50% 3.50% 3.50% 3.50% Not Avail.
All adjustments in the Applicable Margins after February 28,
2002, shall be implemented quarterly on a prospective basis,
commencing with the first day of the first calendar month that
occurs more than 5 days after the required date of delivery to
the Lender of quarterly unaudited or annual draft audited (as
applicable) Financial Statements evidencing the need for an
adjustment. In the event the draft audited Financial Statements
are subsequently determined to be in error, then any resulting
change in the Applicable Margin shall be made retroactively to
the date when the incorrect Applicable Margin was utilized.
Concurrently with the delivery of those Financial Statements, the
Borrower shall deliver to the Lender a certificate, signed by its
chief financial officer, setting forth in reasonable detail the
basis for the continuance of, or any change in, the Applicable
Margins. Failure to timely deliver such Financial Statements
shall, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins to the
highest level set forth in the foregoing grid, until the first
day of the first calendar month following the delivery of those
Financial Statements demonstrating that such an increase is not
required. If a Default or Event of Default has occurred and is
continuing at the time any reduction in the Applicable Margins is
to be implemented, no reduction may occur until the first day of
the first calendar month following the date on which such Default
or Event of Default is waived or cured.
"Fixed Charge Coverage Ratio Shortfall Reserve" means $1,000,000
at any time the Fixed Charge Coverage Ratio is less than 1.25 to
1 for the period of four consecutive fiscal quarters ending on
the last day of the fiscal quarter immediately prior to such
time.
"Maximum Revolver Amount" means $25,000,000.
"Reserves" means reserves that limit the availability of credit
hereunder, consisting of reserves against Availability, Eligible
Accounts or Eligible Inventory, established by Lender from time
to time in Lender's reasonable credit judgment. Without limiting
the generality of the foregoing, the following
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reserves shall be deemed to be a reasonable exercise of Lender's
credit judgment: (a) Bank Product Reserves; (b) a reserve for
accrued, unpaid interest on the Obligations; (c) reserves for
rent at leased locations subject to statutory or contractual
landlord liens; (d) the Slow Moving Reserve; (e) the Dilution
Adjustment Reserve; (f) warehousemen's or bailees' charges; and
(g) the Fixed Charge Coverage Ratio Shortfall Reserve.
7. Waiver of Default -- Section 7.23. Compliance with Section 7.23 of the
Credit Agreement (as in effect prior to this Amendment) is hereby waived
in respect of Borrower complying with the Adjusted Tangible Net Worth
requirement for the period from November 30, 2001 through January 31,
2002.
8. Waiver of Default -- Section 7.25. Compliance with Section 7.25 of the
Credit Agreement (as in effect prior to this Amendment) is hereby waived
in respect of Borrower complying with the US EBITDA requirement for the
period from November 30, 2001 through January 31, 2002.
9. No Other Waivers. The waivers contained in Section 7 and Section 8 of
this Amendment are expressly limited to the facts and circumstances
referred to therein and shall not operate as a waiver of or a consent to
non-compliance with any other section of the Credit Agreement or any of
the other Loan Documents. The waivers contained in Section 7 and Section
8 are only effective for the specific instances, for the specific
purposes and for the specific periods for which given.
10. Representations and Warranties of Borrower. Borrower represents and
warrants that: (a) after giving effect to the Amendment no Default or
Event of Default exists as of the date of this Amendment; and (b) no
Default or Event of Default will result as a consequence of the
transactions contemplated by this Amendment.
11. Conditions Precedent. The effectiveness of this Amendment shall be
subject to the prior satisfaction of all of the following conditions:
(a) Execution and Delivery of this Amendment. Lender shall have
received an original of this Amendment, duly executed by
Borrower.
(b) Consent and Reaffirmation of Guarantors. Each Guarantor shall
have confirmed the continuing validity and effectiveness of the
Continuing Guaranty dated as of September 24, 2001, by executing
and delivering to Lender its Consent and Reaffirmation of
Continuing Guaranty in the form of Exhibit "A" attached to this
Amendment.
(c) Execution and Delivery of Certificate of Resolution. The Agent
shall have received an original Certificate of Resolution, in the
form of Exhibit "B", duly executed by the Secretary of Borrower.
(d) Amendment Fee. Lender shall have received an amendment fee of
$50,000 in immediately available funds. Borrower acknowledges and
agrees that this amendment fee is fully earned and nonrefundable
upon receipt by Lender. Borrower acknowledges and agrees that
Lender may effect payment of this amendment fee by charging the
full amount thereof to Borrower's revolving loan account as a
$50,000 Revolving Loan under the Agreement.
(e) Execution and Delivery of Other Documents. Borrower shall have
executed and delivered to the Agent such other documents and
instruments as the Agent may require.
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12. Miscellaneous.
(a) Survival of Representations and Warranties. All representations
and warranties made in the Credit Agreement or in any other
document or documents relating thereto, including without
limitation, any Loan Document furnished in connection with this
Amendment, shall survive the execution and delivery of this
Amendment and the other Loan Documents, and no investigation by
Lender or any closing shall affect the representations and
warranties or the right of Lender to rely thereon.
(b) Reference to Credit Agreement. The Credit Agreement, each of the
other Loan Documents, and any and all other agreements, documents
or instruments now or hereafter executed and delivered pursuant
to the terms hereof, or pursuant to the terms of the Credit
Agreement as amended hereby, are hereby amended so that any
reference therein to the Credit Agreement shall mean a reference
to the Credit Agreement as amended hereby.
(c) Credit Agreement Remains in Effect. The Credit Agreement and the
other Loan Documents remain in full force and effect and Borrower
ratifies and confirms its agreements and covenants contained
therein. Borrower hereby confirms that, after giving effect to
this Amendment, no Event of Default or Default exists as of such
date.
(d) Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the
effect thereof shall be confined to the provision so held to be
invalid or unenforceable.
(e) Applicable Law. This Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to
be performable in the State of California and shall be governed
by and construed in accordance with the internal laws (as opposed
to the conflict of law provisions) of the State of California.
(f) Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective
successors and assigns; provided, however, that Borrower may not
assign or transfer any of its rights or obligations hereunder
without the prior written consent of Lender.
(g) Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to
be an original, but all of which when taken together shall
constitute one and the same instrument.
(h) Execution by Facsimile. Facsimile transmission of a signed
original of this Amendment or retransmission of any signed
facsimile transmission or of any Loan Document will be deemed the
same as delivery of an original. At the request of any other
party, each of the undersigned will confirm facsimile
transmission by signing a duplicate original document.
(i) Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
(j) Expenses of Lender. Borrower agrees to pay on demand (i) all
costs and expenses reasonably incurred by Lender in connection
with the preparation, negotiation and execution of this Amendment
and the other Loan Documents executed pursuant hereto and any and
all subsequent amendments, modifications, and supplements hereto
or thereto, including, without limitation, the costs and fees of
Lender's legal counsel and the
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allocated cost of Lender's in-house counsel and (ii) all costs
and expenses reasonably incurred by Lender in connection with the
enforcement or preservation of any rights under the Credit
Agreement, this Agreement or any other Loan Documents, including,
without limitation, the costs and fees of Lender's legal counsel
and the allocated cost of Lender's in-house counsel.
(k) Miscellaneous Terms. The term "or" is disjunctive; the term "and"
is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms
also apply to males. The term "including" is by way of example
and not limitation.
(l) NO ORAL AGREEMENTS. THIS AMENDMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS AS WRITTEN, REPRESENTS THE FINAL AGREEMENT BETWEEN
LENDERS AND BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN LENDERS
AND BORROWER.
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IN WITNESS WHEREOF, the parties have entered into this Amendment by their
respective duly authorized officers as of the date first above written.
LENDER:
BANK OF AMERICA, N.A.
By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxx Xxxxxxxxx
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Title: Assistant Vice President
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BORROWER:
XXXXX INSTRUMENTS CORP.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
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Title: Chief Financial Officer
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