EXHIBIT 10.2
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FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
entered into as of June 1, 2000, by and between XXXXXXX MANUFACTURING,
INC., a California corporation ("Borrower"), and XXXXX FARGO BANK,
NATIONAL ASSOCIATION ("Bank").
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms
and conditions of that certain Credit Agreement between Borrower and Bank
dated as of June 1, 1998, as amended from time to time ("Credit
Agreement").
WHEREAS, Bank and Borrower have agreed to certain changes in the
terms and conditions set forth in the Credit Agreement and have agreed to
amend the Credit Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree
that the Credit Agreement shall be amended as follows:
1. Section 1.1 (a) is hereby amended by deleting "June 1, 2000" as
the last day on which Bank will make advances under the Term Commitment,
and by substituting for said date "June 1, 2002," with such change to be
effective upon the execution and delivery to Bank of a promissory note
substantially in the form of Exhibit A attached hereto (which promissory
note shall replace and be deemed the Term Commitment Note defined in and
made pursuant to the Credit Agreement) and all other contracts,
instruments and documents required by Bank to evidence such change.
2. Section 4.7 (a) and (b) are hereby deleted in their entirety,
and the following substituted therefor:
"(a) Tangible Net Worth not at any time less than
$100,000,000.00, with "Tangible Net Worth" defined as the
aggregate of total stockholders' equity plus subordinated debt
less any intangible assets.
(b) Total Liabilities divided by Tangible Net Worth not at
any time greater than 1.5 to 1.0, with "Total Liabilities"
defined as the aggregate of current liabilities and non-current
liabilities less subordinated debt, and with "Tangible Net
Worth" as defined above."
3. Section 5.5 is hereby deleted in its entirety, and the following
substituted therefor:
"SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS.
Merge into or consolidate with any other entity; make any
substantial change in the nature of Borrower's business as
conducted as of the date hereof; acquire all or substantially
all of the assets of any other entity, except acquisitions with
an aggregate consideration not to exceed $50,000,000.00 per
fiscal year, on a consolidated basis with SHI, SDV and SST; nor
sell, lease, transfer or otherwise dispose of all or a
substantial or material portion of Borrower's assets except in
the ordinary course of its business."
4. Except as specifically provided herein, all terms and conditions
of the Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the
same meaning when used in this Amendment. This Amendment and the Credit
Agreement shall be read together, as one document.
5. Borrower hereby remakes all representations and warranties
contained in the Credit Agreement and reaffirms all covenants set forth
therein. Borrower further certifies that as of the date of this Amendment
there exists no Event of Default as defined in the Credit Agreement, nor
any condition, act or event which with the giving of notice or the passage
of time or both would constitute any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the day and year first written above.
XXXXX FARGO BANK,
XXXXXXX MANUFACTURING CO., INC. NATIONAL ASSOCIATION
By: /s/XXXX XXXXXXX By: /s/XXXX XXXXXXXX
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Xxxx Xxxxxxxx
Title: CFO, Treasurer & Secretary Relationship Manager
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By: /s/XXXXXX X XXXXXXXXX
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Title: President & CEO
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TERM COMMITMENT NOTE
$9,200,000.00 Concord, California
June 1, 2000
FOR VALUE RECEIVED, the undersigned XXXXXXX MANUFACTURING CO., INC.
("Borrower") promises to pay to the order of XXXXX FARGO BANK, NATIONAL
ASSOCIATION ("Bank") at its Mt. Diablo Regional Commercial Banking Office
at, 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000, or at
such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal
sum of Nine Million Two Hundred Thousand Dollars ($9,200,000.00), or so
much thereof as may be advanced and be outstanding, with interest thereon,
to be computed on each advance from the date of its disbursement as set
forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set
forth at the place defined:
(a) "Business Day" means any day except a Saturday, Sunday or any
other day on which commercial banks in California are authorized or
required by law to close.
(b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one (1), two (2), three (3) or six (6) months, as designated
by Borrower, during which all or a portion of the outstanding principal
balance of this Note bears interest determined in relation to LIBOR;
provided however, that no Fixed Rate Term may be selected for a principal
amount less than Five Hundred Thousand Dollars ($500,000.00); and provided
further, that no Fixed Rate Term shall extend beyond the scheduled maturity
date hereof. If any Fixed Rate Term would end on a day which is not a
Business Day, then such Fixed Rate Term shall be extended to the next
succeeding Business Day.
(c) "LIBOR" means the rate per annum (rounded upward, if necessary,
to the nearest whole 1/8 of 1%) and determined pursuant to the following
formula:
Base LIBOR
LIBOR = -------------------------------
100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with
the understanding that such rate is quoted by Bank for the purpose of
calculating effective rates of interest for loans making reference thereto,
on the first day of a Fixed Rate Term for delivery of funds on said date
for a period of time approximately equal to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal
amount to which such Fixed Rate Term applies. Borrower understands and
agrees that Bank may base its quotation of the Inter-Bank Market Offered
Rate upon such offers or other market indicators of the Inter-Bank Market
as Bank in its discretion deems appropriate including, but not limited to,
the rate offered for U.S. dollar deposits on the London Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of
the Federal Reserve Board, as amended), adjusted by Bank for expected
changes in such reserve percentage during the applicable Fixed Rate Term.
(d) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as
the basis upon which effective rates of interest are calculated for those
loans making reference thereto, and is evidenced by the recording thereof
after its announcement in such internal publication or publications as Bank
may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall
bear interest (computed on the basis of a 360-day year, actual days
elapsed) either (i) at a fluctuating rate per annum one-half percent (.50%)
below the Prime Rate in effect from time to time, or (ii) at a fixed rate
per annum determined by Bank to be three-quarters percent (.75%) above
LIBOR in effect on the first day of the applicable Fixed Rate Term. When
interest is determined in relation to the Prime Rate, each change in the
rate of interest hereunder shall become effective on the date each Prime
Rate change is announced within Bank. With respect to each LIBOR selection
hereunder, Bank is hereby authorized to note the date, principal amount,
interest rate and Fixed Rate Term applicable thereto and any payments made
thereon on Bank's books and records (either manually or by electronic
entry) and/or on any schedule attached to this Note, which notations shall
be prima facie evidence of the accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any portion of
this Note bears interest determined in relation to LIBOR, it may be
continued by Borrower at the end the Fixed Rate Term applicable thereto so
that all or a portion thereof bears interest determined in relation to the
Prime Rate or to LIBOR for a new Fixed Rate Term designated by Borrower.
At any time any portion of this Note bears interest determined in relation
to the Prime Rate, Borrower may convert all or a portion thereof so that it
bears interest determined in relation to LIBOR for a Fixed Rate Term
designated by Borrower. At such time as Borrower requests an advance
hereunder or wishes to select a LIBOR option for all or a portion of the
outstanding principal balance hereof, and at the end of each Fixed Rate
Term, Borrower shall give Bank notice specifying: (i) the interest rate
option selected by Borrower; (ii) the principal amount subject thereto; and
(iii) for each LIBOR selection, the length of the applicable Fixed Rate
Term. Any such notice may be given by telephone so long as, with respect
to each LIBOR selection, (A) Bank receives written confirmation from
Borrower not later than three (3) Business Days after such telephone notice
is given, and (B) such notice is given to Bank prior to 10:00 a.m.,
California time, on the first day of the Fixed Rate Term. For each LIBOR
option requested hereunder, Bank will quote the applicable fixed rate to
Borrower at approximately 10:00 a.m., California time, on the first day of
the Fixed Rate Term. If Borrower does not immediately accept the rate
quoted by Bank, any subsequent acceptance by Borrower shall be subject to a
redetermination by Bank of the applicable fixed rate; provided however,
that if Borrower fails to accept any such rate by 11:00 a.m., California
time, on the Business Day such quotation is given, then the quoted rate
shall expire and Bank shall have no obligation to permit a LIBOR option to
be selected on such day. If no specific designation of interest is made at
the time any advance is requested hereunder or at the end of any Fixed Rate
Term, Borrower shall be deemed to have made a Prime Rate interest selection
for such advance or the principal amount to which such Fixed Rate Term
applied.
(c) Additional LIBOR Provisions.
(i) If Bank at any time shall determine that for any reason
adequate and reasonable means do not exist for ascertaining LIBOR, then
Bank shall promptly give notice thereof to Borrower. If such notice is
given and until such notice has been withdrawn by Bank, then (A) no new
LIBOR option may be selected by Borrower, and (B) any portion of the
outstanding principal balance hereof which bears interest determined in
relation to LIBOR, subsequent to the end of the Fixed Rate Term applicable
thereto, shall bear interest determined in relation to the Prime Rate.
(ii) If any law, treaty, rule, regulation or determination of a
court or governmental authority or any change therein or in the
interpretation or application thereof (each, a "Change in Law") shall make
it unlawful for Bank (A) to make LIBOR options available hereunder, or (B)
to maintain interest rates based on LIBOR, then in the former event, any
obligation of Bank to make available such unlawful LIBOR options shall
immediately be cancelled, and in the latter event, any such unlawful LIBOR-
based interest rates then outstanding shall be converted, at Bank's option,
so that interest on the portion of the outstanding principal balance
subject thereto is determined in relation to the Prime Rate; provided
however, that if any such Change in Law shall permit any LIBOR-based
interest rates to remain in effect until the expiration of the Fixed Rate
Term applicable thereto, then such permitted LIBOR-based interest rates
shall continue in effect until the expiration of such Fixed Rate Term.
Upon the occurrence of any of the foregoing events, Borrower shall pay to
Bank immediately upon demand such amounts as may be necessary to compensate
Bank for any fines, fees, charges, penalties or other costs incurred or
payable by Bank as a result thereof and which are attributable to any LIBOR
options made available to Borrower hereunder, and any reasonable allocation
made by Bank among its operations shall be conclusive and binding upon
Borrower.
(iii) If any Change in Law or compliance by Bank with any
request or directive (whether or not having the force of law) from any
central bank or other governmental authority shall:
(A) subject Bank to any tax, duty or other charge with
respect to any LIBOR options, or change the basis of taxation of payments
to Bank of principal, interest, fees or any other amount payable hereunder
(except for changes in the rate of tax on the overall net income of Bank);
or
(B) impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances or
loans by, or any other acquisition of funds by any office of Bank; or
(C) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to
reduce any amount receivable by Bank in connection therewith, then in any
such case, Borrower shall pay to Bank immediately upon demand such amounts
as may be necessary to compensate Bank for any additional costs incurred by
Bank and/or reductions in amounts received by Bank which are attributable
to such LIBOR options. In determining which costs incurred by Bank and/or
reductions in amounts received by Bank are attributable to any LIBOR
options made available to Borrower hereunder, any reasonable allocation
made by Bank among its operations shall be conclusive and binding upon
Borrower.
(d) Payment of Interest. Interest accrued on this Note shall be
payable on the first day of each month, commencing July 1, 2000.
(e) Default Interest. From and after the maturity date of this Note,
or such earlier date as all principal owing hereunder becomes due and
payable by acceleration or otherwise, the outstanding principal balance of
this Note shall bear interest until paid in full at an increased rate per
annum (computed on the basis of a 360-day year, actual days elapsed) equal
to four percent (4%) above the rate of interest from time to time
applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing. Borrower may from time to time during the term of
this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this
Note; provided however, that the outstanding principal balance of this Note
shall not exceed the principal amount stated above. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made
hereon by or for any Borrower, which balance may be endorsed hereon from
time to time by the holder. The outstanding principal balance of this Note
shall be due and payable in full on June 1, 2002, subject to possible
conversion to a term loan as set forth in the Credit Agreement, defined
below.
(b) Advances. Advances hereunder, to the total amount of the
principal sum stated above, may be made by the holder at the oral or
written request of (i) Xxxxxx Xxxxxxxxx or Xxxxxxx X. Xxxxxx or Xxxxx
Xxxxxxxxx or Xxxxxxx Xxxxxxx or Xxxxxxx Xxxxxxx, any one acting alone, who
are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is
received by the holder at the office designated above, or (ii) any person,
with respect to advances deposited to the credit of any account of any
Borrower with the holder, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of each
Borrower regardless of the fact that persons other than those authorized to
request advances may have authority to draw against such account. The
holder shall have no obligation to determine whether any person requesting
an advance is or has been authorized by any Borrower.
(c) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be
applied first, to the outstanding principal balance of this Note which
bears interest determined in relation to the Prime Rate, if any, and
second, to the outstanding principal balance of this Note which bears
interest determined in relation to LIBOR, with such payments applied to the
oldest Fixed Rate Term first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any portion of this
Note which bears interest determined in relation to the Prime Rate at any
time, in any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to LIBOR at any time and in the
minimum amount of Five Hundred Thousand Dollars ($500,000.00); provided
however, that if the outstanding principal balance of such portion of this
Note is less than said amount, the minimum prepayment amount shall be the
entire outstanding principal balance thereof. In consideration of Bank
providing this prepayment option to Borrower, or if any such portion of
this Note shall become due and payable at any time prior to the last day of
the Fixed Rate Term applicable thereto by acceleration or otherwise,
Borrower shall pay to Bank immediately upon demand a fee which is the sum
of the discounted monthly differences for each month from the month of
prepayment through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued
each month on the amount prepaid at the interest rate applicable to such
amount had it remained outstanding until the last day of the Fixed Rate
Term applicable thereto.
(ii) Subtract from the amount determined in (i) above the amount
of interest which would have accrued for the same month on the amount
prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect
on the date of prepayment for new loans made for such term and in a
principal amount equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater
than zero, discount that difference by LIBOR used in (ii) above.
Each Borrower acknowledges that prepayment of such amount may result in
Bank incurring additional costs, expenses and/or liabilities, and that it
is difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate
of the prepayment costs, expenses and/or liabilities of Bank. If Borrower
fails to pay any prepayment fee when due, the amount of such prepayment fee
shall thereafter bear interest until paid at a rate per annum two percent
(2.0%) above the Prime Rate in effect from time to time (computed on the
basis of a 360-day year, actual days elapsed). Each change in the rate of
interest on any such past due prepayment fee shall become effective on the
date each Prime Rate change is announced within Bank.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of
that certain Credit Agreement between Borrower and Bank dated as of June 1,
1998, as amended from time to time (the "Credit Agreement"). Any default
in the payment or performance of any obligation under this Note, or any
defined event of default under the Credit Agreement, shall constitute an
"Event of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the
holder of this Note, at the holder's option, may declare all sums of
principal and interest outstanding hereunder to be immediately due and
payable without presentment, demand, notice of nonperformance, notice of
protest, protest or notice of dishonor, all of which are expressly waived
by each Borrower, and the obligation, if any, of the holder to extend any
further credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of
the holder's in-house counsel), expended or incurred by the holder in
connection with the enforcement of the holder's rights and/or the
collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this
Note, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation,
any adversary proceeding, contested matter or motion brought by Bank or any
other person) relating to any Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower
shall be joint and several.
(c) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
XXXXXXX MANUFACTURING CO., INC.
By: /s/XXXX XXXXXXX
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Title: CFO, Treasurer & Secretary
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By: /s/XXXXXX X XXXXXXXXX
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Title: PRESIDENT & CEO
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ADDENDUM TO PROMISSORY NOTE
(PRIME/LIBOR PRICING ADJUSTMENTS)
THIS ADDENDUM is attached to and made a part of that certain promissory
note executed by XXXXXXX MANUFACTURING CO., INC. ("Borrower") and payable to
XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank"), or order, dated as of June
1, 2000, in the principal amount of Nine Million Two Hundred Thousand
Dollars ($9,200,000.00) (the "Note").
The following provisions are hereby incorporated into the Note to
reflect the interest rate adjustments agreed to by Bank and Borrower:
INTEREST RATE ADJUSTMENTS:
(a) Initial Interest Rates. The initial interest rates applicable to
this Note shall be the rates set forth in the "Interest" paragraph herein.
(b) Interest Rate Adjustments. In addition to any interest rate
adjustments resulting from changes in the Prime Rate, Bank shall adjust the
Prime Rate and LIBOR margins used to determine the rates of interest
applicable to this Note on a quarterly basis, commencing with Borrower's
fiscal quarter ending March 31, 2000, if required to reflect a change in
Borrower's ratio of Total Liabilities to Tangible Net Worth (as defined in
the Credit Agreement referenced herein), in accordance with the following
grid:
Applicable Applicable
Total Liabilities to Prime Rate LIBOR
Tangible Net Worth Margin Margin
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1.1 to 1.0 or greater -0.50% 1.0%
at least 0.5 to 1.0 but
less than 1.1 to 1.0 -0.50% 0.875%
less than 0.5 to 1.0 -0.50% 0.75%
Each such adjustment shall be effective on the first Business Day of
Borrower's fiscal quarter following the quarter during which Bank receives
and reviews Borrower's most current fiscal quarter-end financial statements
in accordance with any requirements established by Bank for the preparation
and delivery thereof.
IN WITNESS WHEREOF, this Addendum has been executed as of the same date
as the Note.
XXXXXXX MANUFACTURING CO., INC.
By: /s/XXXX XXXXXXX
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Title: CFO, Treasurer & Secretary
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By: /s/XXXXXX X XXXXXXXXX
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Title: PRESIDENT & CEO
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