Exhibit 10.2
AMENDMENT NO. 1 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT ("Amendment") is made
and entered into as of January 24, 2005 by and between ELECTROGLAS, INC., a
Delaware corporation ("Borrower") and COMERICA BANK ("Bank").
RECITALS
A. Borrower and Bank have entered into that certain Loan and Security
Agreement dated as of July 16, 2004 (the "Loan Agreement") pursuant to which
Bank has agreed to extend and make available to Borrower certain credit
facilities.
B. Borrower desires that Bank amend the Loan Agreement upon the terms and
conditions more fully set forth herein.
C. Subject to the representations and warranties of Borrower herein and
upon the terms and conditions set forth in this Amendment, Bank is willing to so
amend the Loan Agreement.
D. This Amendment, the Loan Agreement and the other Loan Documents (as
defined in the Loan Agreement), together with all other documents entered into
or delivered pursuant to any of the foregoing, in each case as originally
executed or as the same may from time to time be modified, amended,
supplemented, restated or superseded, are hereinafter collectively referred to
as the "Loan Documents."
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, Borrower and Bank hereby agree to amend the Loan Agreement as
follows:
1. Definitions. Unless otherwise defined herein, all terms defined in
the Loan Agreement have the same meaning when used herein.
2. Amendments to Loan Agreement.
a. The following definitions are hereby added to Exhibit A to the
Loan Agreement:
"`Letter of Credit' means a commercial or standby letter of credit or
similar undertaking issued by Bank at Borrower's request in accordance with
Section 2.1(b)(iv)."
"`Letter of Credit Sublimit' means a sublimit for Letters of Credit
under the Revolving Line not to exceed $500,000.00."
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b. The definition of "Current Liabilities" contained in Exhibit A
to the Loan Agreement is hereby amended by adding the following language to the
end thereof:
"plus, to the extent not already included therein, undrawn
Letters of Credit, if any, but specifically excluding any cash-secured
Obligations"
c. Section 2.1(b)(i) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
"(i) Amount. Subject to and upon the terms and conditions of this
Agreement, at any time and from time to time from the date hereof through the
Business Day immediately prior to the Revolving Maturity Date, Borrower may
request, and Bank will make, Advances in an aggregate outstanding amount not to
exceed the amount of the Revolving Line, less any amounts outstanding under the
Letter of Credit Sublimit. Borrower may request Advances in an aggregate amount
not to exceed $2,000,000 (the "Non-Formula Amount") without regard to the
Borrowing Base. In addition, subject to and upon the terms and conditions of
this Agreement, at any time and from time to time from the date hereof through
the Business Day immediately prior to the Revolving Maturity Date, Borrower may
request Advances in an aggregate outstanding amount that exceeds the Non-Formula
Amount, provided that, the aggregate outstanding amount of Advances in excess of
the Non-Formula Amount shall not exceed the lesser of (A) the Revolving Line
minus the Non-Formula Amount or (B) the Borrowing Base (each, a "Borrowing Base
Advance"), less any amounts outstanding under the Letter of Credit Sublimit. If
at any time or from time to time, the aggregate outstanding amount of Advances
exceeds the Non-Formula Amount and, thereafter, the aggregate outstanding amount
of Advances is reduced below the Non-Formula Amount, for so long as the
aggregate outstanding amount of Advances is less than or equal to the
Non-Formula Amount, the Advances shall not be subject to the Borrowing Base.
Subject to and upon the terms and conditions of this Agreement, amounts borrowed
pursuant to this Section 2.1(b) may be repaid and reborrowed at any time prior
to the Revolving Maturity Date, at which time all Advances under this Section
2.1(b) shall be immediately due and payable. Borrower may prepay any Advances,
in whole or in part, without penalty or premium."
d. The following new Section 2.1(b)(iv) is hereby added to the
Loan Agreement immediately after Section 2.1(b)(iii) thereof:
"(iv) Letters of Credit. Subject to the availability under the
Revolving Line, and in reliance on the representations and warranties of
Borrower set forth herein, at any time and from time to time from the date
hereof through the Business Day immediately prior to the Revolving Maturity
Date, Bank shall issue for the account of Borrower such Letters of Credit as
Borrower may request by delivering to Bank a duly executed letter of credit
application on Bank's standard form; provided, however, that the outstanding and
undrawn amounts under all such Letters of Credit (i) shall not at any time
exceed the Letter of Credit Sublimit, and (ii) shall be deemed to constitute
Advances for the purpose of calculating availability under the Revolving Line.
Any drawn but unreimbursed amounts under any Letters of Credit shall be charged
as Advances against the Revolving Line. All Letters of Credit shall be in form
and substance acceptable to Bank in its sole discretion and shall be subject to
the terms and conditions of Bank's form application and letter of credit
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agreement. Borrower will pay any standard issuance and other fees that Bank
notifies Borrower it will charge for issuing and processing Letters of Credit.
Unless Borrower shall have deposited with Bank cash collateral in an amount
sufficient to cover all undrawn amounts under each such Letter of Credit and
Bank shall have agreed in writing, no Letter of Credit shall have an expiration
date that is later than the Revolving Maturity Date. If Borrower has not secured
to Bank's satisfaction its obligations with respect to any Letters of Credit by
the Revolving Maturity Date, then, effective as of such date, the balance in any
deposit accounts held by Bank and the certificates of deposit or time deposit
accounts issued by Bank in Borrower's name (and any interest paid thereon or
proceeds thereof, including any amounts payable upon the maturity or liquidation
of such certificates or accounts), shall automatically secure such obligations
to the extent of the then outstanding and undrawn Letters of Credit. Borrower
authorizes Bank to hold such balances in pledge and to decline to honor any
drafts thereon or any requests by Borrower or any other Person to pay or
otherwise transfer any part of such balances for so long as the Letters of
Credit are outstanding."
e. Section 9.1 of the Loan Agreement is amended (i) by deleting
"and" at the end of subsection (i) thereof; (ii) by deleting the period at the
end of subsection (j) thereof and substituting "; and" therefor; and (iii) by
including the following new subsection (k) immediately after subsection (j)
thereof:
"(k) Demand that Borrower (i) deposit cash with Bank in an amount
equal to the amount of any Letters of Credit remaining undrawn, as collateral
security for the repayment of any future drawings under such Letters of Credit,
and (ii) pay in advance all Letter of Credit fees scheduled to be paid or
payable over the remaining term of the Letters of Credit, and Borrower shall
promptly deposit and pay such amounts."
f. Exhibit E to the Loan Agreement (Borrowing Base Certificate)
is hereby deleted and replaced with Exhibit E in the form attached to this
Amendment.
3. Ratification and Reaffirmation of Liens. Borrower hereby
ratifies and reaffirms the validity and enforceability of all of the liens and
security interests heretofore granted pursuant to the Loan Documents, as
collateral security for the Obligations, and acknowledge that all of such liens
and security interests, and all Collateral heretofore pledged as security for
the Obligations, continues to be and remains Collateral for the Obligations from
and after the date hereof.
4. Representations And Warranties. Borrower represents and
warrants that its representations and warranties in the Loan Documents (as
amended hereby) continue to be true and complete in all material respects as of
the date hereof after giving effect to this Amendment (except to the extent such
specifically relate to another date) and that the execution, delivery and
performance of this Amendment are duly authorized, do not require the consent or
approval of any governmental body or regulatory authority and are not in
contravention of or in conflict with any law or regulation or any term or
provision of any other agreement entered into by Borrower. Borrower further
represents and warrants that, as of the date hereof after giving effect to this
Amendment, no Event of Default has occurred and is continuing.
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5. Full Force And Effect; Entire Agreement. Except to the extent
expressly provided in this Amendment, the terms and conditions of the Loan
Agreement and the other Loan Documents shall remain in full force and effect.
This Amendment and the other Loan Documents constitute and contain the entire
agreement of the parties hereto and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications between the
parties, whether written or oral, respecting the subject matter hereof. The
parties hereto further agree that the Loan Documents comprise the entire
agreement of the parties thereto and supersede any and all prior agreements,
negotiations, correspondence, understandings and other communications between
the parties thereto, whether written or oral respecting the extension of credit
by Bank to Borrower and/or its affiliates. Except as expressly set forth herein,
the execution, delivery and performance of this Amendment shall not operate as a
waiver of, or as an amendment of, any right, power or remedy of Bank under the
Loan Agreement or any other Loan Document as in effect prior to the date hereof.
6. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts, each of which when so delivered shall be deemed an
original, but all such counterparts taken together shall constitute but one and
the same instrument. This Amendment is effective as of the date first above
written; provided that, as a condition precedent to the effectiveness of this
Amendment, (i) there shall have been no material adverse change in the business
operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole, no material impairment of the prospect of
repayment of any portion of the Obligations owing to Bank, and no material
impairment of the value or priority of the security interest in the Collateral
and (ii) Bank shall have received, in form and substance satisfactory to Bank,
the following:
(a) this Amendment, duly executed by Borrower;
(b) payment of the fees and Bank Expenses then due specified in
Section 2.5 of the Loan Agreement, as amended hereby; and
(c) such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.
[signature page to follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed and delivered by its duly authorized officer as of the date first
written above.
BORROWER:
ELECTROGLAS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Title Chief Financial Officer
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BANK:
COMERICA BANK
By: /s/ Xxxxxx X. Xxxxx
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Title: Senior Vice President
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EXHIBIT E
BORROWING BASE CERTIFICATE
Borrower: Electroglas, Inc. Lender: Comerica Bank
Commitment Amount: $7,500,000
ACCOUNTS RECEIVABLE*
1. Accounts Receivable Book Value as of ___ $___________
2. Additions (please explain on reverse) $___________
3. TOTAL ACCOUNTS RECEIVABLE $___________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)*
4. Amounts over 90 days of invoice date $___________
5. Balance of 25% (50% in the case of National
Semiconductor) over 90 day accounts $___________
6. Concentration Limits $___________
7. Foreign Accounts $___________
8. Governmental Accounts $___________
9. Contra Accounts $___________
10. Demo Accounts $___________
11. Intercompany/Employee Accounts $___________
12. Other (please explain on reverse) $___________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________
14. Eligible Accounts (#3 minus #13) $___________
15. LOAN VALUE OF ACCOUNTS (80% of #14) $___________
BALANCES
16. Revolving Line minus Non-Formula Amount $___________
17. Total Funds Available [Lesser of #16 or #15] $___________
18. Advances in excess of Non-Formula Amount $___________
19. Outstanding under Letter of Credit Sublimit $___________
20. RESERVE POSITION (#17 minus #18 and #19) $___________
* As determined in accordance with the Loan and Security Agreement dated as
of July 16, 2004 between Borrower and Lender.
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The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Comerica Bank.
ELECTROGLAS, INC.
By:
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Authorized Signer
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