FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
EXHIBIT
10.1
FIRST
AMENDMENT TO LOAN AND SECURITY AGREEMENT
This
First Amendment to Loan and Security Agreement, made as of December 4, 2006
(this “Amendment”),
is
between FANSTEEL INC., a Delaware corporation (“Fansteel”),
and
XXXXXXX DYNAMICS CORPORATION, a Delaware corporation (“Xxxxxxx”,
and
together with Fansteel, “Borrowers”,
and
each a “Borrower”),
and
Fifth Third Bank (Chicago), a Michigan banking corporation (the “Lender”).
Capitalized terms used in this Amendment and not otherwise defined herein
have
the meanings assigned to such terms in the Loan Agreement as defined
below.
WITNESSETH
WHEREAS,
The
Borrowers and the Lender are parties to that certain Loan and Security Agreement
dated as of July 15, 2005 (as such agreement has been amended, restated,
supplemented or otherwise modified from time to time, the “Loan
Agreement”);
WHEREAS,
the
Borrowers have requested an increase to the Revolving Loan and certain other
modifications to the Loan Agreement;
WHEREAS,
the
Lender is willing to modify the Loan Agreement and increase the maximum amount
of the Revolving Loan, all on the terms and subject to the conditions of
this
Amendment;
NOW,
THEREFORE,
in
consideration of the mutual agreements contained in this Amendment, and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties to this Amendment agree as follows:
SECTION
1. AMENDMENT
TO LOAN AGREEMENT
On
the
date this Amendment becomes effective, after satisfaction by the Borrowers
of
each of the conditions set forth in Section
3
(the
“Effective
Date”),
the
Loan Agreement is amended as follows:
1.1 Section
2.1
of the
Loan Agreement is hereby deleted in its entirety and in lieu thereof is inserted
the following:
2.1 Revolving
Loan Facility.
Lender
may, in its good faith discretion, make available for Borrowers’ use from time
to time during the term of this Agreement, upon Borrowers’ request therefor,
certain loans and other financial accommodation, including letters of credit
(the “Revolving
Loan Facility”).
The
Revolving Loan Facility shall be subject to all of the terms and conditions
of
this Agreement and shall consist of a revolving line of credit consisting
of
discretionary Advances against Eligible Accounts, Eligible Inventory, and
Borrowers’ Equipment (the “Revolving
Loans”)
in an
aggregate principal amount not to exceed, at any time, the lesser of (i)
Twenty
One Million Five Hundred Thousand and No/100 Dollars ($21,500,000), less
the
greater of (x) One Million Five Hundred Thousand and No/100 Dollars ($1,500,000)
or (y) the amount outstanding from time to time on any credit cards issued
by
Lender for the benefit of Borrowers and (ii) the amount of Revolving
Availability of Borrowers, which Revolving Loans shall be evidenced by the
Note.
1
As
used
in this Agreement, “Revolving Availability” with respect to each Borrower shall
mean, and, at any particular time and from time to time, be equal to the
sum of
(i) up to eighty-five percent (85%) of the net amount (after deduction of
such
reserves as Lender deems proper and necessary in its sole discretion) of
Eligible Accounts of such Borrower, plus
(ii) up
to the lesser of (A) Six Million Five Hundred Thousand and No/100 Dollars
($6,500,000) and (B) sixty percent (60%) of the lower of cost or market value
of
Eligible Inventory of such Borrower (net of such reserves as Lender deems
proper
and necessary in its sole discretion), plus
(iii) up
to the lesser of (A) Two Million Three Hundred Thirty Thousand Six Hundred
Forty
Five and No/100 Dollars ($2,330,645) and (B) seventy-five percent (75%) of
the
orderly liquidation value of such Borrower’s Equipment as determined by an
appraiser acceptable to Lender in its sole discretion (net of such reserves
as
Lender deems proper and necessary in its sole discretion), less
the face
amount of any Letters of Credit issued on behalf of such Borrower and the
amount
of any drawn upon but unpaid Letters of Credit.
At
no
time shall a Borrower borrow amounts which in the aggregate exceed its
respective Revolving Availability and in no event shall the amounts borrowed
by
Borrowers in the aggregate at any time exceed the Maximum Revolving Loan
Limit.
The
Revolving Loans shall be repayable on January 5, 2009 and as provided in
Section 4.2
of this
Agreement. Subject to the foregoing limits and the other terms and conditions
contained herein, and provided that no Default or Event of Default then exists,
funds out of the Revolving Loan Facility may be advanced, repaid and
re-advanced.
It
is
expressly understood and agreed by Borrowers that nothing contained in this
Agreement shall, at any time, require Lender to make loans, advances or other
extensions of credit (collectively, “Advances”)
to
Borrowers and the making and amount of such loans, advances or other extensions
of credit to Borrowers under this Agreement shall at all times, be in Lender’s
reasonable good faith discretion. Lender may, in the exercise of such
discretion, at any time and from time to time, upon at least seven (7) days’
prior written notice to Borrowers, increase or decrease the advance percentages
to be used in determining Revolving Availability, which are contained in
this
Section 2.1
and, in
the event such percentages are decreased, such decrease shall become effective
seven (7) days following Borrowers receipt of such notice for the purpose
of
calculating the Revolving Availability. The amount of any decrease in the
lending formulas shall have a reasonable relationship to the event, condition
or
circumstance which is the basis for such decrease as determined by Lender
in
good faith. In determining whether to reduce the advance percentages, Lender
may
consider events, conditions, contingencies or risks which are also considered
in
determining Eligible Accounts and Eligible Inventory.
2
1.2 Section
10.7(a)
of the
Loan Agreement is hereby deleted in its entirety and in lieu thereof is inserted
the following:
(a) measured
as of the end of each fiscal year hereafter commencing with the fiscal year
ending December 31, 2006, Borrowers shall not permit their EBITDA plus
extraordinary losses or charges permitted to be included by Lender, in its
sole
discretion, to be less than Three Million Six Hundred Thousand and No/100
Dollars ($3,600,000).
1.3 Section
10.7(b)
of the
Loan Agreement is hereby deleted in its entirety and in lieu thereof is inserted
the following:
measured
as of the end of each of month hereafter, Borrowers shall not permit their
Leverage Ratio to exceed 10.0 to 1.00.
1.4 Section
10.7(c)
of the
Loan Agreement is hereby deleted in its entirety and in lieu thereof is inserted
the following:
(c) measured
as of the end of each fiscal year hereafter for the twelve month period then
ending, commencing with the fiscal year ending December 31, 2006, Borrowers
shall maintain a Debt Service Coverage Ratio of not less than 1.25 to
1.00.
1.5 Section
13.2
of the
Loan Agreement is hereby deleted in its entirety and in lieu thereof is inserted
the following:
13.2 Acceleration
of the Liabilities.
Upon
and after the occurrence of a Default, all of the Liabilities may, at the
option
of Lender, after written notice and demand, but without legal process of
any
kind, be declared, and immediately shall become, due and payable.
1.6 Section
14.10
of the
Loan Agreement is hereby amended by changing the address of the Lender to
000 X.
Xxxxxxxxx Xxxxx, 00xx
Xxxxx,
Xxxxxxx, Xxxxxxxx 00000.
SECTION
2. REPRESENTATIONS
AND WARRANTIES
To
induce
the Lender to enter into this Amendment, the Borrowers represent and warrant
to
the Lender that:
3
2.1 Due
Authorization: Authority; No Conflicts; Enforceability.
The
execution delivery and performance by the Borrowers of this Amendment and
the
other documents delivered under Section
3
(collectively the “Amendment Documents”) are within each of their respective
corporate powers, have been duly authorized by all necessary corporate action,
have received all necessary governmental, regulatory or other approvals (if
any
are required), and do not and will not contravene or conflict with any provision
of (i) any law, (ii) any judgment, decree or order or (iii) its respective
articles of incorporation or by-laws, and do not and will not contravene
or
conflict with, or cause any lien to arise under, any provision of any agreement
or instrument binding upon the Borrowers or upon any of its respective
properties. This Amendment, the Loan Agreement, as amended by this Amendment,
and the other Amendment documents are the legal, valid and binding obligations
of the Borrowers enforceable against the Borrowers in accordance with their
respective terms.
2.2 No
Default: Representations and Warranties.
As of
the Effective Date, (i) no Default or Event of Default under the Loan Agreement
has occurred and is continuing and (ii) the representations and warranties
of
the Borrowers contained in the Loan Agreement are true and correct.
SECTION
3. CONDITIONS
TO EFFECTIVENESS
The
obligation of the Lender to make the amendments and modifications contemplated
by this Amendment, and the effectiveness thereof, are subject to the
following:
3.1 Representations
and Warranties.
The
representations and warranties of the Borrowers contained in this Amendment
are
true and correct as of the Effective Date.
3.2 Documents.
The
Lender has received all of the following, each duly executed and dated as
of the
Effective Date (or such other date as is satisfactory to the Lender) in form
and
substance satisfactory to the Lender:
(a) Amendment.
This
Amendment.
(b) Revolving
Note.
The
Revolving Note, the form of which is attached hereto as Exhibit
A.
(c) Consents.
Etc.
Certified copies of any documents evidencing any necessary corporate action,
consents and governmental approvals, if any, with respect to this Amendment,
the
Amendment Documents or any other document provided for under this
Amendment.
(d) Other.
Such
other documents as the Lender may reasonably request.
SECTION
4. MISCELLANEOUS
4.1 Captions.
The
recitals to this Amendment (except for definitions) and the section captions
used in this Amendment are for convenience only, and do not affect the
construction of this Amendment.
4
4.2 Governing
Law: Severability.
This
Amendment is a contract made under and governed by the internal laws of the
State of Illinois. Wherever possible, each provision of this Amendment will
be
interpreted in such manner as to be effective and valid under applicable
law,
but if any provision of this Amendment is prohibited by or invalid under
such
law, such provision will be ineffective to the extent of such prohibition
or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.
4.3 Counterparts.
This
Amendment may be executed in any number of counterparts and by the different
parties on separate counterparts, and each such counterpart will be deemed
to be
an original, but all such counterparts together constitute but one and the
same
Amendment.
4.4 Successors
and Assigns.
This
Amendment is binding upon the Borrowers, the Lender and their respective
successors and assigns, and inures to the sole benefit of the Borrowers,
the
Lender and their successors and assigns. The Borrowers have no right to assign
their rights or delegate their duties under this Amendment.
4.5 References.
From
and after the Effective Date, each reference in the Loan Agreement to “this
Agreement,” “hereunder,” hereof,” “herein “ or words of like import, and each
reference in the Loan Agreement or any other Financing Agreement to the Loan
Agreement or to any term, condition or provision contained “thereunder,”
“thereof,” “therein,” or words of like import, means and be a reference to the
Loan Agreement (or such term, condition or provision, as applicable) as amended,
supplemented, restated or otherwise modified by this Amendment.
4.6 Continued
Effectiveness.
Notwithstanding anything contained in this Amendment, the terms of this
Amendment are not intended to and do not serve to effect a novation as to
the
Loan Agreement. The parties to this Amendment expressly do not intend to
extinguish the Loan Agreement. Instead, it is the express intention of the
parties to this Amendment to reaffirm the indebtedness created under the
Loan
Agreement. The Loan Agreement remains in full force and effect and the terms
and
provisions of the Loan Agreement are ratified and confirmed.
4.7 Costs.
Expenses and Taxes.
The
Borrower affirms and acknowledges that Section 14.3 of the Loan Agreement
applies to this Amendment and the transactions and agreements and documents
contemplated under this Amendment.
(remainder
of page left intentionally blank; signature page follows)
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Delivered
as of the day and year first above written.
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FIFTH
THIRD BANK (CHICAGO)
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By:/s/
Xxxxxxx X.
May
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Name:
Xxxxxxx
X.
May
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Title:
Vice
President
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By:/s/
R. Xxxxxxx
XxXxxxx
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Name:R.
Xxxxxxx
XxXxxxx
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Title:
Vice
President &
CFO
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XXXXXXX
DYNAMICS CORPORATION
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By:/s/
R. Xxxxxxx
XxXxxxx
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Name:R.
Xxxxxxx
XxXxxxx
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Title:
Vice
President
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6
EXHIBIT
A
to
REVOLVING
LOAN NOTE
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$21,500,000
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Chicago,
Illinois
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as
of December 4, 2006
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FOR
VALUE
RECEIVED, the undersigned, FANSTEEL INC., a Delaware corporation (“Fansteel”),
and
XXXXXXX DYNAMICS CORPORATION, a Delaware corporation (“Xxxxxxx”,
and
together with Fansteel, “Borrowers”,
and
each a “Borrower”),
hereby jointly and severally unconditionally promise to pay to the order
of
FIFTH THIRD BANK (CHICAGO), a Michigan banking corporation (“Lender”),
at
Lender’s office at 000 Xxxxx Xxxxxxxxx Xxxxx, 00xx
Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, or at such other place as Lender may from time to
time
designate in writing, in lawful money of the United States of America and
in
immediately available funds, the principal sum of TWENTY ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($21,500,000), or the aggregate unpaid
principal amount of all advances made pursuant to subsection
2.1
of the
Loan Agreement (as hereinafter defined) at such times as are specified in
and in
accordance with the provisions of the Loan Agreement. This Revolving Loan
Note
(this “Note”)
is
referred to in and was executed and delivered pursuant to that certain Loan
and
Security Agreement dated as of even date herewith by and among Borrowers
and
Lender (as amended, restated, modified or supplemented and in effect from
time
to time, the “Loan
Agreement”),
to
which reference is hereby made for a statement of the terms and conditions
under
which the loan and other advances evidenced hereby were made and are to be
repaid and for a statement of Lender’s remedies. All terms which are capitalized
and used herein (which are not otherwise specifically defined herein) and
which
are defined in the Loan Agreement shall be used in this Note as defined in
the
Loan Agreement.
Borrowers
promise to pay interest, including default interest, on the outstanding unpaid
principal amount hereof, as provided in the Loan Agreement. If demand is
not
sooner made, all accrued interest and principal, if not sooner paid, shall
be
due and payable on January 5, 2009.
Interest
on this Note shall be payable at the rates and from the dates specified in
the
Loan Agreement, on the date of any prepayment hereof, at maturity, whether
due
by acceleration or otherwise, and as otherwise provided in the Loan Agreement.
Interest shall be payable on the last Business Day of each month
hereafter.
This
Note
is secured pursuant to the Loan Agreement and the other Ancillary Agreements
referred to therein, and reference is made thereto for a statement of the
terms
and conditions of such security.
Lender
shall have the continuing exclusive right to apply and to reapply any and
all
payments hereunder against the Liabilities of Borrowers, in accordance with
the
terms of the Loan Agreement.
Each
Borrower hereby waives demand, presentment, protest, notice of demand,
presentment, protest and nonpayment. Each Borrower also waives all rights
to
notice and hearing of any kind upon the occurrence of a Default or an Event
of
Default prior to the exercise by Lender, of its rights to repossess the
Collateral without judicial process or to replevy, attach or levy upon the
Collateral without notice or hearing.
7
In
addition to and not in limitation of the foregoing and the provisions of
the
Loan Agreement, the undersigned further agrees, subject only to any limitation
imposed by applicable law, to pay all expenses, including reasonable attorneys’
fees and legal expenses, incurred by the holder of this Note in endeavoring
to
collect any amounts payable hereunder which are not paid when due whether
by
acceleration or otherwise.
THIS
NOTE SHALL BE DEEMED TO HAVE BEEN MADE AT CHICAGO, ILLINOIS AND SHALL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED
IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF ILLINOIS. WHENEVER POSSIBLE EACH PROVISION
OF THIS
NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS NOTE SHALL BE PROHIBITED BY
OR
INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE
EXTENT
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF
SUCH
PROVISION OR THE PROVISIONS OF THIS NOTE. ALL
REFERENCES TO THE SINGULAR SHALL BE DEEMED TO INCLUDE THE PLURAL, AND VICE
VERSA, WHERE THE CONTEXT SO REQUIRES.
WHENEVER IN THIS NOTE REFERENCE IS MADE TO LENDER OR A BORROWER OR BORROWERS,
SUCH REFERENCE SHALL BE DEEMED TO INCLUDE AS APPLICABLE, A REFERENCE TO THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS. THE PROVISIONS OF THIS NOTE SHALL BE BINDING
UPON AND SHALL INURE
TO
THE BENEFIT OF SUCH SUCCESSORS AND ASSIGNS. EACH BORROWER’S SUCCESSORS AND
ASSIGNS SHALL INCLUDE, WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR
IN
POSSESSION OF OR FOR SUCH BORROWER. EACH
BORROWER SHALL BE JOINTLY AND SEVERALLY OBLIGATED
HEREUNDER.
This
Revolving Note replaces that certain Revolving Note in the original principal
amount of $15,000,000, dated July 15, 2005, and does not constitute payment
thereof or a novation therefor.
[Remainder
of page intentionally left blank; signature page follows]
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IN
WITNESS WHEREOF, each Borrower has caused its duly authorized representative
to
execute this Revolving Loan Note as of the date first set forth
above.
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By:__________________________
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Name:_______________________
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Title:________________________
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XXXXXXX
DYNAMICS CORPORATION
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By:___________________________
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Name:________________________
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Title:_________________________
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