Exhibit 10(a)
CITIZENS BANK OF MASSACHUSETTS
00 XXXXX XXXXXX
XXXXXX, XX 00000
May 23,2000
Westerbeke Corporation
Avon Industrial Park
Avon, MA 02322
RE: Loan Facility
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Ladies and Gentlemen:
Citizens Bank of Massachusetts, as successor to State Street Bank and
Trust Company (the "Bank") has made available to Westerbeke Corporation, a
corporation organized under the laws of the state of Delaware (the
"Borrower") a $4,000,000 revolving line of credit (the "Line of Credit") as
described in a letter agreement dated March 20, 1996, as amended from time
to time, including by a letter amendment dated April 23, 1998 and any
amendment therafter (as amended, the "Letter Agreement"). All obligations
of the Borrower arising under the Line of Credit are evidenced by a Time
Note in the original principal amount of $4,000,000 dated April 3, 1998 and
any amendment thereto thereafter ( the "1998 Note") and secured by
collateral as described in a Security Agreement (Inventory and Accounts
Receivable) dated June 4, 1992 as amended from time to time, including by a
letter amendment dated April 23, 1998 and any amendment thereafter (as
amended, the "Security Agreement"). The Borrower has requested, and the
Bank has agreed, to renew the Line of Credit as set forth herein and to
make certain other changes thereto. Therefore, for good and valuable
consideration, the receipt of which is hereby acknowledged, the Borrower
and the Bank hereby agree as follows:
I. Amendments to Letter Agreement.
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The Letter Agreement is hereby amended by deleting from the paragraph
headed "Line of Credit" and heading to such paragraph "$4,000,000" and
substituting the following therefore: "$5,000,000". The Letter Agreement is
hereby further amended by deleting the follow-up therefrom: "Advances
against inventory will be capped at $2,500,000" and substituting the
following therefore: "Advances against inventory will be capped at
$3,500,000".
The Letter Agreement is hereby amended by deleting the following
therefrom: "March 31, 2000" and substituting the following therefore:
"March 31, 2001".
II. Interest Rates.
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Principal on each outstanding Revolving Loan shall bear interest as
selected by Xxxxxxxx, at (a) a rate per annum equal to the Bank's Prime
Rate or (b) LIBOR plus 2.25% (each a "LIBOR Advance"). Each LIBOR Advance
shall be in a minimum amount of $500,000 and in $100,000 increments in
excess thereof and not more than three (3) LIBOR Advances may be
outstanding at any time. Each LIBOR Advance shall be for an interest period
of one, two or three months, subject to availability. Borrower shall give
Lender at least two (2) business days notice of its selection of a LIBOR
Advance specifying the amount thereof, the interest period and such other
information as the Bank may require. LIBOR shall be determined by the Bank
on the basis of the offered rates for deposits in U.S. dollars for a period
of time comparable to the requested interest period which appears in the
Telerate page 3750 at 11:00 a.m., London time two London banking days
preceding the first day of the LIBOR Advance or if the Telerate system is
not available, as reasonably determined by the Bank. LIBOR shall be
adjusted in accordance with the Bank's policies for the reserve percentage
applicable under the regulations of the Board of Governors of the Federal
Reserve System. LIBOR Advances shall not be prepaid unless the Borrower
pays, in addition to the Bank's costs and expenses relating thereto, a
make-whole payment determined by the Bank in accordance with its customary
policies for loans bearing interest with reference to LIBOR. If any LIBOR
Advance interest period would end on a day that is not a business day or
there is no numerically corresponding day in such month, the interest
period will be extended to the next following business day, unless such
extension would cause the interest period to end in a new calendar month in
which case the last day will be the next preceding business day. Borrower
shall be responsible for all costs and expenses that Bank may incur as a
result of any change in laws, regulation or guidelines or any change in
interpretation thereof relating to LIBOR loans. Borrower further
acknowledges that Bank may cease making LIBOR Advances and require the
repayment of all LIBOR Advances if any change in laws, regulations or
guidelines or the interpretation thereof that make it unlawful for the Bank
to make or maintain LIBOR Advances. Xxxxxxxx further acknowledges that the
availability of LIBOR Advances is subject to Bank being able to ascertain
LIBOR on the date requested, the availability of dollar deposits in London
interbank market and such other conditions as the Bank customarily
establishes for such availability.
III. Covenants.
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The Debt Service Coverage Ratio is replaced with the following:
"To maintain as of the end of each fiscal year a Debt Service
Coverage Ratio of not less than 1.5 to 1.0".
The Leverage Ratio is replaced with the following:
"To maintain as of the end of each fiscal quarter a Leverage
Ratio of not more than 1.5 to 1.0".
IV. Replacement of Note.
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The Borrower has executed a Term Note dated the date hereof in the
original principal amount of $5,000,000 ("2000 Note"). The 2000 Note
supersedes and replaces the 1998 Note and all amounts outstanding under the
1998 Note shall be deemed to be outstanding under the 2000 Note.
V. Amendments to Security Agreement
--------------------------------
The Security Agreement is hereby amended by deleting the following
from Rider 1 thereto: "$4,000,000" and substituting the following
therefore: "$5,000,000".
VI. Miscellaneous.
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1. As amended hereby, all terms and conditions of the Letter
Agreement, Security Agreement and all related documents are ratified and
affirmed as of the date hereof and shall continue in full force and effect.
The Borrower represents and warrants that no default or event of default
has occurred under the Loan Agreement, 2000 Note or the Security Agreement
as of the date hereof.
2. Upon receipt of a fully executed copy of this letter amendment
and such other documents or instruments as the Bank may reasonably request,
this letter amendment shall be deemed to be an instrument under seal and an
amendment to the Letter Agreement, 1998 Note and Security Agreement to be
governed by the laws of the Commonwealth of Massachusetts.
3. This letter agreement may be executed in counterparts each of
which shall be deemed to be an original document.
Sincerely,
CITIZENS BANK OF MASSACHUSETTS
By: /s/ X. Xxxxxx, Xxxxxxxxx
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X. Xxxxxx Xxxxxxxxx
Vice President
Acknowledged and accepted:
WESTERBEKE CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx XXX
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Xxxxxxxx X. Xxxxxx III
Executive VP and COO
