EXHIBIT 99.1
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement (this "Amendment") is dated as of
December 15, 2008 by and among Xxxxx, Ruger & Company, Inc. (the "Borrower")
Bank of America, N.A., as Administrative Agent for the lending institutions
party to the Credit Agreement referred to below (the "Agent") and Bank of
America, N.A., as the sole Lender under the Credit Agreement (the "Lender").
WITNESSETH:
WHEREAS, the Borrower, the Lender and the Agent have entered into that
certain Credit Agreement dated as of December 14, 2007 (as amended, restated
and/or modified, the "Credit Agreement"; capitalized terms defined in the Credit
Agreement and not defined herein having the meanings specified in the Credit
Agreement) pursuant to which the Lender has agreed, upon certain terms and
conditions, to make loans to the Borrower;
WHEREAS, the Borrower has requested that the Termination Date be extended
from December 14, 2008 to December 12, 2009; and
WHEREAS, the Bank has agreed to so extend the Termination Date, subject to
the other terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Amendment to the Credit Agreement. Effective as of the date hereof
and subject to the satisfaction of the conditions precedent set forth in Section
2 hereof, the Credit Agreement is hereby amended as follows:
(a) The definition of "Adjusted Net Worth" contained in Section 1.1 is hereby
amended and restated in its entirety as follows:
"Adjusted Net Worth" means (a) the net worth of the Borrower
calculated in accordance with GAAP, plus (b) amounts paid in cash to
shareholders of the Borrower by the Borrower for the repurchase or redemption of
shares of stock of the Borrower, up to but not in excess of Ten Million
($10,000,000) Dollars in the aggregate during the period commencing on December
12, 2008 and ending upon the termination of this Agreement, provided however,
that for purposes of calculating the Borrower's net worth, the Borrower shall be
permitted to add back non-cash expense associated with the xxxx to market
re-valuations of the Borrower's pension plans to the extent such non-cash
expense is included in the calculation of net worth.
(b) The definition of "Applicable Margin" contained in Section 1.1 is hereby
amended and restated in its entirety as follows:
"Applicable Margin" means, with (a) respect to LIBOR Loans,
two hundred (200) basis points, and (b) with respect to Variable Rate Loans, two
hundred (200) basis points.
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(c) The definition of "Default Rate" contained in Section 1.1 is amended by
deleting the reference to "three (3) percent" and inserting the words "four (4%)
percent" in place thereof.
(d) The following definition of "London Banking Day" is added to
Section 1.1 of the Credit Agreement in its proper alphabetical order"
"London Banking Day" means any day on which banks in London
are open for business and dealing in offshore dollars.
(e) The definition of "Prime Rate" is hereby amended and restated in
its entirety as follows:
"Prime Rate" means, on any day, the rate of interest per annum then most
recently established by Lender as its "prime rate." Any such rate is a general
reference rate of interest, may not be related to any other rate, and may not be
the lowest or best rate actually charged by Lender to any customer or a favored
rate and may not correspond with future increases or decreases in interest rates
charged by other lenders or market rates in general, and Lender may make various
business or other loans at rates of interest having no relationship to such
rate. Any change in the Prime Rate shall take effect at the opening of business
on the day specified in the public announcement of a change in Lender's Prime
Rate.
(f) The definition of "Termination Date" contained in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"Termination Date" means December 12, 2009; provided that if
such date is not a Banking Day, the Termination Date shall be the immediately
succeeding Banking Day (or, if such next succeeding Banking Day falls in the
next calendar month, the next preceding Banking Day).
(g) The definition of "Variable Rate" is hereby amended and restated in its
entirety as follows:
"Variable Rate" means a fluctuating rate of interest per annum
equal to the British Bankers Association LIBOR Rate ("BBA LIBOR Rate"), as
published by Reuters (or other commercially available source providing
quotations of BBA LIBOR Rate as selected by Lender from time to time) as
determined for each Business Day at approximately 11:00 a.m. London time two (2)
London Banking Days prior to the date in question, for U.S. Dollar deposits (for
delivery on the first day of such interest period) with a one month term, as
adjusted from time to time in Lender's sole discretion for reserve requirements,
deposit insurance assessment rates and other regulatory costs.
(h) Section 2.10 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
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"Section 2.10 Unused Fee. As additional compensation, the Borrower shall
pay to the Lender, quarterly, in arrears, on the first Banking Day immediately
following each calendar quarter, a fee for the Borrower's non-use of available
funds during such calendar quarter in an amount equal to one half of one percent
(.5%) per annum (calculated on the basis of a 360 day year for actual days
elapsed) multiplied by the difference between (i) the Maximum Revolving Credit
Amount and (ii) the average for the quarter of the daily closing balances of the
aggregate amount of Revolving Loan outstanding. A prorated unused fee shall also
be payable on the Termination Date.
(i) Section 3.1 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"Section 3.1 Additional Costs. If at any time after December
14, 2008, Lender (which shall include, for purposes of this Section 3.1, any
corporation controlling Lender) determines that the adoption or modification of
any applicable law, rule or regulation regarding taxation, Lender's required
levels of reserves, deposits, insurance or capital (including any allocation of
capital requirements or conditions), or similar requirements, or any
interpretation or administration thereof by any Governmental Authority or
compliance by Lender with any of such requirements, has or would have the effect
of (a) increasing Lender's costs related to the Obligations, or (b) reducing the
yield or rate of return of Lender on the Obligation, to a level below that which
Lender could have achieved but for the adoption or modification of any such
requirements, Borrower shall, within fifteen (15) days of any request by Lender,
pay to Lender such additional amounts as (in Lender's sole judgment, after good
faith and reasonable computation) will compensate Lender for such increase in
costs or reduction in yield or rate of return of Lender. No failure by Lender to
immediately demand payment of any additional amounts payable hereunder shall
constitute a waiver of Lender's right to demand payment of any such amounts at
any subsequent time. Nothing herein contained shall be construed or shall so
operate as to require Borrower to pay any interest, fees, costs or charges
greater than is permitted by applicable law, rule or regulation.
(j) Section 3.2 of the Credit Agreement is hereby amended by adding the
following at the end thereof:
"If the BBA LIBOR Rate is not available for any reason, then
the Variable Rate will be determined by such alternate method as reasonably
selected by Lender. If Lender determines that no adequate basis exists for
determining the BBA LIBOR Rate or that the BBA LIBOR Rate will not adequately
and fairly reflect the cost to Lender of funding the Obligations, or that any
applicable law, rule or regulation or compliance therewith by Lender prohibits
or restricts or makes impossible the charging of interest based on the BBA LIBOR
Rate and Lender so notifies Borrower, then until Lender notifies Borrower that
the circumstances giving rise to such suspension no longer exist, interest shall
accrue and be payable on the unpaid principal balance of this Obligations from
the date Lender so notifies Borrower until the Termination Date (whether by
acceleration, declaration, extension or otherwise) at a fluctuating rate of
interest equal to the Prime Rate of Lender plus two hundred (200) basis points
per annum"
(k) A new Section 3.4 is hereby added to the Credit Agreement as follows:
"Section 3.4. Additional LIBOR Unavailability Provisions.
Without limiting the other provisions of this Article III, if, with respect to
any LIBOR Loan, Lender determines that no adequate basis exists for determining
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the LIBOR Rate or that the LIBOR Rate will not adequately and fairly reflect the
cost to Lender of funding or maintaining the applicable LIBOR Loan for such
Interest Period, or that any applicable law, rule or regulation, or any request
or directive (whether or not having the force of law) of any Governmental
Authority, or compliance therewith by Lender, prohibits or restricts or makes
impossible the making or maintaining of such LIBOR Loan or the charging of
interest on such LIBOR Loan, and Lender so notifies Borrower, then until Lender
notifies Borrower that the circumstances giving rise to such suspension no
longer exist, (a) the obligation of Lender to permit such LIBOR Loan shall be
suspended and (b) all existing affected LIBOR Loans shall automatically become
Variable Rate Loans, either (i) on the last day of the corresponding Interest
Period (if Lender determines that it may lawfully continue to fund and maintain
the affected LIBOR Loan to such day); or (ii) immediately (if Lender determines
that it may not lawfully continue to fund and maintain the affected LIBOR Loan
to such day) and in such case Borrower shall pay to Lender any Make Whole amount
pursuant to Section 3.3."
(l) Section 7.1 is hereby amended and restated in its entirety as
follows:
Section 7.1 Adjusted Net Worth. The Borrower shall at all times maintain a
minimum Adjusted Net Worth of $70,000,000.
SECTION 2. Conditions of Effectiveness. This Agreement shall become effective
when, and only when, the Bank shall have executed this Agreement and shall have
received counterparts of this Agreement executed by the Borrower, except that
Section 1 hereof shall become effective when, and only when, the Bank shall have
additionally received all of the following, in form and substance satisfactory
to the Bank:
(a) Resolutions and Secretary's Certificates of the Borrower;
(b) An opinion of counsel of the Borrower; and
(c) Payment of the Lender's fees and expenses (including reasonable fees and
expenses of counsel to the extent invoiced) in connection with this Amendment.
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SECTION 3. Representations and Warranties of the Borrower. Borrower
represents and warrants that, after giving effect to this Amendment, the
representations and warranties contained in the Credit Agreement and the
Facility Documents are true and correct in all material respects on and as of
the date hereof as though made on and as of such date. Borrower represents and
warrants that, after giving effect to this Amendment, no event has occurred and
is continuing, which constitutes an Event of Default under the Credit Agreement,
or any of the other Facility Documents, or would constitute an Event of Default
under the Facility Documents but for the giving of notice or the passage of
time, or both, and the execution, delivery and performance of this Amendment
shall not cause or constitute any such default or Event of Default under any of
the Facility Documents, as amended hereby.
SECTION 4. References to and Effect on the Facility Documents.
(a) Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in the Credit Agreement to "this agreement," "hereunder,"
"hereof," "herein" or words of like import and each reference in the other
Facility Documents to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended hereby. Except as specifically amended herein, the
Credit Agreement and all other Facility Documents remain in full force and
effect and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not, and shall not be deemed to (i) operate as a waiver of any right,
power or remedy of the Bank under the Credit Agreement or any Facility Document,
(ii) establish any course of dealing or custom, or (iii) prejudice any rights
which the Bank now has or may have in the future under or in connection with the
Credit Agreement or any other documents referred to therein or executed in
connection therewith. All terms and conditions of the Credit Agreement and the
other Facility Documents (as defined therein) shall remain unchanged and in full
force and effect, except as and to the extent set forth herein.
SECTION 5. Acknowledgment of Outstanding Loans. The Borrower hereby
acknowledges, certifies and agrees that the obligations of the Borrower to repay
the Loans (with interest and all other sums which may become due under the
Credit Agreement and the other Facility Documents) to the Bank and the
obligations of the Borrower to perform or otherwise satisfy their other
obligations under the Facility Documents: (a) each remain and shall continue in
full force and effect, both before and after giving effect to this Amendment,
(b) are not subject to any defense, counterclaim, setoff, right of recoupment,
abatement, reduction or other claim or determination, and (c) are and shall
continue to be governed by the terms and provisions of the Credit Agreement and
the other Facility Documents as supplemented, modified and amended by this
Amendment.
SECTION 6. No-Offset. The Borrower hereby acknowledges and agrees that it
has no defense, offset, recoupment or counterclaim with respect to the
indebtedness evidenced by the Credit Agreement, or any other Facility Document
(as the same may be amended hereby) and hereby releases the Lender from any and
all liability arising directly or indirectly with respect to the foregoing
documents, the debt evidenced or governed thereby and any and all actions taken
by the Lender with respect to the transactions contemplated therein.
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SECTION 7. Costs, Expenses and Taxes. The Borrower agrees to pay on demand
all costs and expenses of the Bank in connection with the preparation, execution
and delivery of this Amendment, and any other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Bank with respect thereto and with
respect to advising the Bank as to its rights and responsibilities hereunder and
thereunder. The Borrower further agrees to pay on demand all costs and expenses,
if any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Amendment, and any other instruments and documents to be
delivered hereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section. In
addition, the Borrower agrees to pay on demand any and all stamp and other taxes
payable or determined to be payable in connection with the execution and
delivery of this Amendment, and any other instruments and documents to be
delivered hereunder, and agree to save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
SECTION 8. Execution in Counterparts; Facsimile Signatures. This Amendment
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together as a whole shall
constitute but one and the same instrument. Each party may rely upon a facsimile
signature of each other party hereto as if it were an original.
SECTION 9. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Connecticut.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective authorized signatories, as of the date first above
written.
BANK OF AMERICA, N.A.
/s/ Xxxxxxxxxxx X. Xxxxxx
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BY: Xxxxxxxxxxx X. Xxxxxx
ITS: Vice President
XXXXX, RUGER & COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President, Treasurer and
Chief Financial Officer
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