EXECUTION COPY
COMPASS AEROSPACE CORPORATION
AND ITS UNDERSIGNED SUBSIDIARIES
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dated as of July 30, 1999
BankBoston, N.A., as Agent and Issuing
Bank, and the UK Fronting Lender and
the Lenders referred to in the Credit
Agreement (as defined below)
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: CONSENT, WAIVER AND AMENDMENT NO. 2 TO CREDIT AGREEMENT
Ladies and Gentlemen:
We refer to the Amended and Restated Credit Agreement, dated as of
November 20, 1998, as amended and restated as of February 11, 1999, and as
further amended as of June 7, 1999 (as so amended, the "CREDIT Agreement"),
among (a) Compass Aerospace Corporation (the "BORROWER"), (b) Aeromil
Engineering Company ("Aeromil"), (c) Western Methods Machinery Corporation
("WESTERN METHODS"), (d) Xxxxxx Machine Incorporated ("XXXXXX"), (e) Xxxxxxxx
Machine, Inc. ("XXXXXXXX"), (f) Wichita Manufacturing, Inc. ("WICHITA"), (g)
Sea-lect Products, Inc. ("SEA-LECT"), (h) Pacific Hills Manufacturing Co.
(formerly known as Lamsco West, Inc.) ("Lamsco"), (i) Modern Manufacturing,
Inc. ("MODERN MANUFACTURING" and, together with Aeromil, Western Methods,
Xxxxxx, Brittain, Wichita, Sea-Lect and Lamsco, collectively, the
"GUARANTORS"), (j) BankBoston, N.A. ("BankBoston") and the other lending
institutions listed on SCHEDULE 1 thereto as Lenders (the "LENDERS"), (k)
BankBoston, as Issuing Bank and as Agent, (l) Royal Bank of Canada, as
Syndication Agent, (m) General Electric Capital Corporation, as Documentation
Agent, and (n) Bank of America, N.A. (f/k/a NationsBank, N.A), as Co-Agent.
Capitalized terms used but not defined in this Agreement (this "AGREEMENT")
have the same meanings herein as in the Credit Agreement, as amended hereby.
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The Borrower has requested that the Required Lenders and the Agent
(a) consent to the UK Borrower's Acquisition of all of the Capital Stock of
Trim Engineering Ltd., (b) waive the requirements of Sections 6.3, 9.16 and
9.17 of the Credit Agreement which would otherwise be applicable to the Trim
Subsidiary, Maybrey (as defined below), and (c) join with the undersigned
Transaction Parties in amending the Credit Agreement to, among other things,
permit the proposed financing of such Acquisition and amend and restate the
financial covenants of the Borrower in Sections 11.2 and 11.5 of the Credit
Agreement. The undersigned Required Lenders and the Agent have advised the
Borrower that they are prepared to grant such consent and such wavier and to
so amend the Credit Agreement, on the terms, subject to the conditions and in
reliance on the representations contained herein.
SECTION 1. CONSENT TO TRIM ACQUISITION AND WAIVER. Subject to
satisfaction of each of the conditions set forth in Section 3 below, the
Required Lenders hereby:
(a) waive the requirement that Maybrey comply with the
requirements set forth in Sections 6.3, 9.16 and 9.17 of the Credit
Agreement, as amended hereby; PROVIDED that this waiver shall not
affect the applicability or effectiveness of Section 9.23 of the Credit
Agreement, as amended hereby; and
(b) consent to the Trim Acquisition.
Such consent and such waivers shall be effective as of the Effective Date.
SECTION 2. AMENDMENT OF CREDIT AGREEMENT. Subject to satisfaction of
each of the conditions set forth in Section 3 below, each of the undersigned
Transaction Parties, the Agent and the undersigned Required Xxxxxxx agrees to
amend the Credit Agreement as set forth below. Each of the following amendments
shall be effective as of the Effective Date:
(a) DEFINITIONS.
(i) Section 1.1 of the Credit Agreement is amended by amending
and restating in their entirety, each of the following defined terms as
follows:
ACQUISITION DOCUMENTS. Each of the Aeromil
Acquisition Documents, the Western Methods Acquisition
Documents, the Xxxxxx Acquisition Documents, the Xxxxxxxx
Acquisition Documents, the J&J Acquisition Documents, the
Sea-Lect Acquisition Documents, the Lamsco
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Acquisition Documents, the Modern Acquisition Documents,
the Trim Acquisition Documents and all other agreements,
documents and instruments executed and/or delivered in
connection with any Acquisition.
LOAN DOCUMENTS. This Agreement, the Notes, the
Security Documents, the Commitment Letter, the Fee Letter, the
Amendment Agreement, Amendment No. 1 to Credit Agreement,
Amendment No. 2 to Credit Agreement, and any Rate Protection
Agreement between the Borrower and any Lender.
MORTGAGES. Collectively, the several mortgages, deeds
of trust and legal charges over land from the time to time
executed and delivered by any Transaction Party to the Agent
with respect to fee or leasehold interests of such Transaction
Party in Real Estate and in each case in form and substance
satisfactory to the Agent.
SECURITY DOCUMENTS. The Security Agreement, the Stock
Pledge Agreement, the First Amendment to Security Documents
Agreement, the UK Security Documents, the Agency Account
Agreements, the Mortgages and each other Instrument executed
and delivered by any Transaction Party to or in favor of the
Agent or any Lender and designated a "SECURITY DOCUMENT" for
purposes of this Agreement.
SUBORDINATED DEBT DOCUMENTS. The Senior Subordinated
Note Documents, the Exchange Note Documents, the Permitted
Subordinated Debt Documents, the 1999 Senior Subordinated Note
Documents, the Trim Seller Note Documents, and the Permitted
Seller Subordinated Debt Documents.
TRANSACTION PARTIES. Collectively, the Borrowers, all
Guarantors and all UK Guarantors.
UK BORROWER. A UK Subsidiary of the Borrower that
shall become party hereto as the "UK Borrower" pursuant to
ss.13.8 of this Agreement by executing and delivering an
Accession Agreement substantially in the form attached hereto
as EXHIBIT K. As of the Amendment No. 2 Effective Date Compass
UK shall be the UK Borrower.
(ii) Section 1.1 of the Credit Agreement is further
amended by inserting the following new defined terms in the
appropriate alphabetical sequence in such Section:
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AMENDMENT NO. 2 TO CREDIT AGREEMENT. The Consent,
Waiver and Amendment No. 2 to Credit Agreement, dated as of
July 30, 1999, among the US Transaction Parties, the UK
Borrower, the Required Lenders and the Agent.
AMENDMENT NO. 2 EFFECTIVE DATE. The date on which all
of the conditions to the effectiveness of Amendment No. 2 to
Credit Agreement are satisfied and Amendment No. 2 to Credit
Agreement becomes effective.
COMPASS UK. Compass Aerospace Limited (Registered No.
03668754), a private limited liability company organized under
the laws of England and Wales.
DEBENTURES. The Debentures, dated or to be dated on
or prior to the Amendment No. 2 Effective Date, made by the UK
Borrower and the UK Guarantors in favor of the Agent, and each
in form and substance satisfactory to the Agent.
DEEDS OF GUARANTEE. Collectively, the Deeds of
Guarantee and Indemnity from the time to time executed and
delivered by any of the UK Guarantors, in favor of applicable
Lenders, the Agent and the UK Fronting Bank whereby the UK
Guarantors guarantee the UK Obligations, and each in form and
substance satisfactory to the Agent.
DEEDS OF SUPPLEMENTAL GUARANTEE. Collectively, the
Deeds of Supplemental Guarantee and Indemnity from the time to
time executed and delivered by any of the UK Guarantors, in
favor of applicable Lenders, the Agent and the UK Fronting
Bank, whereby the UK Guarantors guarantee all the Obligations,
and each in form and substance satisfactory to the Agent.
DIAC. Diac Limited (Registered No. 00552029), a
private limited liability company organized under the laws of
England and Wales.
FABRICATION. Trefn Fabrications Limited (Registered
No. 02854848), a private limited liability company organized
under the laws of England and Wales.
MAYBREY. Maybrey Precision Castings Limited
(Registered No. 00720270), a private limited liability company
organized under the laws of England and Wales.
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CHARGES OVER SHARES. Collectively, (a) the Charge
over Shares, to be dated on or prior to the Amendment No. 2
Effective Date, from the US Borrower in favor of the Agent,
for the benefit of the Lenders, with respect to the Capital
Stock of the UK Borrower, (b) the Charge over Shares, to be
dated on or prior to the Amendment No. 2 Effective Date, from
the UK Borrower in favor of the Agent, for the benefit of the
Lenders, with respect to the Capital Stock of Trim, (c) the
several Charges over Shares, each to be dated on or prior to
the Amendment No. 2 Effective Date, from Trim in favor of the
Agent, for the benefit of the Lenders, with respect to the
Capital Stock of the Trim Subsidiaries (other than Treatment),
(d) the Charge over Shares, to be dated on or prior to the
Amendment No. 2 Effective Date, from Trefn in favor of the
Agent, for the benefit of the Lenders, with respect to the
Capital Stock of Treatment, and (e) each other Charge over
Shares from the time to time executed and delivered by the UK
Borrower, any UK Guarantor or any other UK Subsidiary, in
favor of the Agent for the benefit of the Lenders, and each
such Charge over Shares in form and substance satisfactory to
the Agent.
INTERCOMPANY FUNDING AGREEMENTS. Collectively, the
several Intercompany Funding Agreements, to be dated on or
prior to the Amendment No. 2 Effective Date, by and among the
UK Borrower and the other UK Subsidiaries, and each in form
and substance satisfactory to the Agent.
1999 EXCHANGE NOTE DOCUMENTS. The 1999 Senior
Subordinated Exchange Notes, the 1999 Senior Subordinated
Indenture and each of the documents, instruments and other
agreements, evidencing or governing obligations of the
Transaction Parties in respect of the 1999 Senior Subordinated
Exchange Notes, as in effect on the Amendment No. 2 Effective
Date and as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof and
hereof.
1999 SENIOR SUBORDINATED EXCHANGE NOTES. The Senior
Subordinated Notes due 2005 which may be issued by the
Borrower in exchange for the 1999 Senior Subordinated Notes in
accordance with the terms contained in the 1999 Senior
Subordinated Indenture.
1999 OFFERING MEMORANDUM. The Offering Memorandum, to
be dated on or prior to the Amendment No. 2 Effective Date,
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disclosing the terms and conditions of the 1999 Senior
Subordinated Notes and the 1999 Senior Subordinated Exchange
Notes.
1999 SENIOR SUBORDINATED INDENTURE. The Senior
Subordinated Indenture, to be dated on or prior to the
Amendment No. 2 Effective Date, by and among the Borrower and
IBJ Whitehall Bank & Trust Company, as Trustee pursuant to
which the 1999 Senior Subordinated Notes shall be issued.
1999 SENIOR SUBORDINATED NOTE DOCUMENTS. The 1999
Senior Subordinated Notes, the 1999 Senior Subordinated
Exchange Notes, the 1999 Senior Subordinated Indenture, any
and all guarantees of any Subsidiary of the Borrower given or
made pursuant to the 1999 Senior Subordinated Indenture, and
each of the Instruments evidencing the 1999 Senior
Subordinated Notes or 1999 senior Subordinated Exchange Notes,
or pursuant to which any 1999 Senior Subordinated Note or 1999
Senior Subordinated Exchange Note is issued, incurred or
guaranteed.
1999 SENIOR SUBORDINATED NOTES. The 10.125% Senior
Subordinated Notes due 2005 issued by the Borrower in
accordance with the terms contained in the 1999 Senior
Subordinated Indenture, in an aggregate principal amount
outstanding not to exceed $19,000,000.
TREATMENT. Trefn Engineering (Metal Treatment
Division) Limited (Registered No. 01665930), a private limited
liability company organized under the laws of England and
Wales.
TREFN. Trefn Engineering Limited (Registered No.
01396688), a private limited liability company organized under
the laws of England and Wales.
TRIM. Trim Engineering Limited (Registered No.
00723273), a private limited liability company organized under
the laws of England and Wales.
TRIM ACQUISITION. The acquisition by the UK Borrower
of all of the Capital Stock of Trim pursuant to the Trim
Acquisition Documents.
TRIM ACQUISITION AGREEMENT. The Share Stock Purchase
Agreement (including the related Disclosure Letter, from the
Trim Sellers to Compass UK, and the attached disclosure
bundle), dated or
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to be dated on or prior to the Amendment No. 2 Effective
Date, by and among the UK Borrower, the US Borrower and the
Trim Sellers.
TRIM ACQUISITION DOCUMENTS. The Trim Acquisition
Agreement, the Intercompany Funding Agreements, the Trim
Seller Notes and all other agreements and documents relating
to the Trim Acquisition.
TRIM SELLERS. Collectively, Xxxxx Xxxxx Xxxxxxx
Xxxxxx, Xxxx Xxxxxx Xxxxxx and Xxxxxx Xxxxxxx Xxxxx Xxxxxx.
TRIM SELLER NOTES. The Variable Rate Guaranteed Loan
Notes 2002, dated or to be dated on or prior to the Amendment
No. 2 Effective Date, made by (a) the UK Borrower in favor of
the Trim Sellers in an aggregate original principal amount not
to exceed L1,600,000, and (b) the Borrower as the
guarantor thereof.
TRIM SELLER NOTE DOCUMENTS. The Trim Seller Notes and
all other agreements and documents relating to the Trim Seller
Notes.
TRIM SUBSIDIARIES. Collectively, Diac, Fabrication,
Maybrey, Trefn and Treatment.
UK GUARANTEES. Collectively, the Deeds of Guarantee
and Deeds of Supplemental Guarantee.
UK GUARANTORS. Collectively, (a) Diac, Fabrication,
Trim, Trefn and Treatment, (b) each other UK Subsidiary of the
Borrower which executes a UK Guarantee, and (c) the UK
Borrower, with respect to any UK Obligation for which it is
not the direct obligor.
UK SECURITY DOCUMENTS. The UK Guarantees, the
Debentures, the Charges Over Shares, the UK Security Trust
Deed, each Mortgage executed by a UK Subsidiary, and each
other document, instrument, certificate or agreement now or
hereafter executed and delivered in connection with the
granting in favor of the Agent, for the benefit of the
applicable Lenders, of any Liens over assets or properties or
Capital Stock of the UK Borrower or any of the other UK
Subsidiaries.
UK SECURITY TRUST DEED. The Trust Deed, dated or to
be dated on or prior to the Amendment No. 2 Effective Date,
among the Agent,
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the Lenders and the Issuers, appointing the Agent as
security trustee under the UK Security Documents.
(b) MANDATORY REDUCTION OF COMMITMENTS. Section 4.2(e) of the Credit
Agreement is hereby amended and restated in its entirety as follows (with such
amendment to have retroactive effect as of the Amendment No. 1 Effective Date):
"(e) INTENTIONALLY OMITTED."
(c) COLLATERAL SECURITY AND GUARANTEE. Article 6 of the Credit
Agreement is hereby amended as follows:
(i) Section 6.3 of the Credit Agreement is amended by
inserting the following sentence immediately before the first sentence
of such Section:
"All UK Obligations shall also be guaranteed pursuant to the
terms of the Deeds of Guarantees."
(ii) by adding the following new Section 6.4 at the end of
such Article:
6.4. RELEASE OF CERTAIN UK GUARANTOR GUARANTEES AND
SECURITY. At such time as all of the Guarantees (as such term
is defined in each of the Senior Subordinated Indenture and
1999 Senior Subordinated Indenture) executed by each of the UK
Guarantors in favor of the Holders (as such term is defined in
each of the Senior Subordinated Indenture and the 1999 Senior
Subordinated Indenture) of the Senior Subordinated Notes and
1999 Senior Subordinated Notes shall have been released in
compliance with the terms of the Senior Subordinated
Indenture, or the 1999 Senior Subordinated Indenture, as the
case may be, the Borrowers shall provide the Agent with
reasonable evidence of such release and upon receipt of such
evidence the Lenders shall promptly direct the Agent to, and
the Agent shall promptly, release (a) each Deed of
Supplemental Guarantee and (b) the security interests and/or
fixed or floating charges over the assets of such UK Guarantor
granted to secure the Obligations guaranteed by such Deeds of
Supplemental Guarantee, and the Agent shall execute such
documents, prepared by the Borrower, as the Borrower shall
reasonably request to evidence such release. Such release
shall not release or affect any (i) Deeds of Guarantee by
which, pursuant to its terms, a UK Guarantor guaranteed solely
the payment and performance of the UK Obligations or (ii) any
security interests and/or fixed or
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floating charges over the assets of such UK Guarantor
granted to secure the UK Obligations.
(d) FINANCIAL STATEMENTS AND PROJECTIONS. Section 8.4(b) of the Credit
Agreement is hereby amended by renumbering Section 8.4(b) to new Subsection
8.4(b)(i) and inserting the following new subsection 8.4(b)(ii):
"(ii) PRO FORMA BALANCE SHEET. There has been furnished to
each of the Lenders the Borrower's unaudited pro forma consolidated
balance sheet as of December 31, 1998 (the "PRO FORMA BALANCE SHEET"),
prepared after giving effect to (i) the Lamsco Acquisition and the
making of the Loans on the Original Closing Date and the consummation
of the other transactions to occur on the Original Closing Date, (ii)
the Modern Acquisition, and (iii) the Trim Acquisition, as if each such
transaction had occurred on such date. Such Pro Forma Balance Sheet has
been prepared (i) in good faith by the Borrower, based upon reasonable
estimates and assumptions and (ii) on the basis of the assumptions
stated therein, accurately reflects all adjustments required to be made
to give effect to the transactions contemplated to occur on the
Original Closing Date and present fairly on a pro forma basis the
estimated consolidated financial position of the Borrower and its
consolidated Subsidiaries, as of such date, assuming that such
transactions had actually occurred at such date."
(e) EMPLOYEE BENEFIT PLANS. Section 8.14(e) of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"(e) UK PENSION SCHEMES.
(i) Except as disclosed on SCHEDULE 8.14 hereto, the UK
Borrower and the UK Subsidiaries have no plans, schemes or arrangements
(whether legally enforceable or not) under which it has any obligation
to provide or contribute towards the provision of benefits in relation
to death, disability or retirement for any of their employees.
(ii) Except as disclosed on SCHEDULE 8.14 hereto, in relation
to each plan, scheme or arrangement disclosed in the SCHEDULE 8.14:
(A) all contributions which are payable by the UK
Borrower or any UK Subsidiary in respect of it have been duly
made and such UK Borrower or UK Subsidiary has fulfilled all
its obligations under it in respect of its employees;
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(B) to the best of the our knowledge, it complies
with and has been administered in respect of its employees and
at all times (x)in accordance in all material respects with
all applicable legal and administrative requirements
(including Article 119 of the Treaty of Rome as it applies to
the eligibility of an Employee to join it and the benefits
provided under it, the preservation requirements within the
meaning of Section 69 of the Pension Schemes Act 1993, the
contracting-out requirements of Part III of the Pensions
Schemes Act 1993 and all relevant requirements of the Pensions
Act 1995) and (y) in accordance in all material respects with
its trusts, powers, and provisions and all other Applicable
Laws;
(C) it provides only money purchase benefits as
defined in Section 18 Pensions Schemes Act 1993; and to the
best of our knowledge, all actuarial, consultancy, legal and
other fees, charges or expenses have been paid and no such
services have been provided for which an account or invoice
has not been rendered."
(f) USE OF PROCEEDS. Section 8.15(a)(ii) of the Credit Agreement is
hereby amended and restated in its entirety as follows:
"(ii) (A) use the proceeds of Revolving Credit Loans solely
(x) to finance permitted Capital Expenditures and for working capital
and general corporate purposes of the US Transaction Parties and (y)
during the period from July 30, 1999 through September 31, 1999, to
make intercompany loans to the UK Borrower to satisfy working capital
needs of the UK Borrower and the other UK Subsidiaries and (B) not use
any proceeds of Revolving Credit Loans to finance any Permitted
Acquisition or any fees or expenses incurred in connection therewith;"
(g) FISCAL YEAR. Section 8.20 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
"8.20. FISCAL YEAR. The Borrower and each of its Subsidiaries
(other than Trim and its Subsidiaries) has a fiscal year which is the
twelve (12) months ending on December 31 of each year. Trim and each of
its Subsidiaries has a fiscal year which (a) as of the Amendment No. 2
Effective date is the twelve months ended April 30 of each year, and
(b) on or before December 31, 1999 will be changed to the twelve (12)
months ended December 31 of each year.
(h) SENIOR DEBT. Section 8.23 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
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"8.23 SENIOR DEBT. All Obligations, including all Loans,
Reimbursement Obligations and the Maximum Drawing Amount of all Letters
of Credit, constitute (a) "Senior Debt" (or the equivalent term) under
all Subordinated Debt Documents and (b) "Designated Senior Debt" under
each of the Senior Subordinated Indenture and the 1999 Senior
Subordinated Indenture. The Borrower hereby irrevocably expressly
designates all such Obligations to be "Senior Debt" and "Designated
Senior Debt" under and for all purposes of each of the Senior
Subordinated Indenture and the 1999 Senior Subordinated Indenture. The
Borrower and each Guarantor hereby irrevocably agree that all
Obligations are, and are hereby made, senior in right of payment to the
Securities and each Guarantee (as such terms are defined in each of the
Senior Subordinated Indenture and 1999 Senior Subordinated Indenture)
and to all other Obligations of the Borrower or any of its Subsidiaries
under or in respect of (i) the Senior Subordinated Indenture or any of
the other Senior Subordinated Debt Documents or (ii) the 1999 Senior
Subordinated Indenture or any of the other 1999 Senior Subordinated
Debt Documents."
(i) REPRESENTATIONS AND WARRANTIES IN ANCILLARY DOCUMENTS. Section 8.24
of the Credit Agreement is hereby amended and restated in its entirety as
follows:
"8.24. REPRESENTATIONS AND WARRANTIES IN ANCILLARY DOCUMENTS.
All representations and warranties set forth in the Ancillary Documents
are true and correct in all material respects at the time as of which
such representations and warranties were made and on the Original
Closing Date (with respect to Ancillary Documents entered into on or
prior to such date) and as of the date of such Ancillary Documents
(with respect to Ancillary Documents entered into after the Original
Closing Date).
(j) FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. Section 9.3 of
the Credit Agreement is amended as follows:
(i) by (A) replacing the period at the end of paragraph (h)
with a semicolon, and (B) inserting the following new paragraphs (o)
and (p) at the end of Section 9.3:
"(o) simultaneously with the delivery of the
financial statements referred to in subsection (c) above, a
report, certified by the principal financial or accounting
officer of the Borrower, as to whether Maybrey has the
required net assets to comply with the requirements of
Section 9.23, 9.16 and 9.17 and setting forth in reasonable
detail the basis therefor; and
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(p) as soon as practicable, but in any event not
later than ninety (90) days after the Amendment No. 2
Effective Date, the consolidated and consolidating balance
sheets of Trim and its Subsidiaries for the period from April
30, 1998 through to the end of March 31, 1999, April 30, 1999
or June 30, 1999, and the related consolidated and
consolidating statements of income and consolidated statements
of retained earnings and cash flow for such period, each such
statement setting forth in comparative form the figures for
the previous fiscal year and prepared in reasonable detail and
in accordance with GAAP, and all such consolidated statements
to be certified without qualification by the Independent
Public Accountants, together with a written statement from
such Accountants to the effect that they have read a copy of
this Agreement, and that, in making the examination necessary
to said certification, they have obtained no knowledge of any
Default or Event of Default, or, if such Accountants shall
have obtained knowledge of any Default or Event of Default,
they shall disclose in such statement any such Default or
Event of Default; PROVIDED that such Accountants shall not be
liable to the Lenders for failure to obtain knowledge of any
Default or Event of Default."
(k) OWNERSHIP OF SUBSIDIARIES. Section 9.15 of the Credit Agreement is
amended by adding, immediately following the word "Guarantors", the phrase
"and of each of the UK Guarantors".
(l) COLLATERAL FOR LOANS. Section 9.16(a) of the Credit Agreement is
hereby amended and restated in its entirety as follows:
"(a) Pledge and maintain the pledge of all of the Capital
Stock of each of its direct Subsidiaries in favor of the Agent, for the
benefit of the Secured Parties, in accordance with the provisions of
the Stock Pledge Agreement or any other Instrument evidencing a pledge
of stock or charge or mortgage over shares entered into by the Borrower
or any of its Subsidiaries, except that only sixty-five percent (65%)
of the Capital Stock of any direct UK Subsidiary of the Borrower shall
be pledged to secure the Obligations (other than the UK Obligations) if
the Borrowers establish, to the reasonable satisfaction of the Agent,
that (i) a pledge of a greater amount would result in adverse tax
consequences and (ii) no Guarantee (as such term is defined in the
Senior Subordinated Indenture and/or the 1999 Senior Subordinated
Indenture, as the case may be) is executed by the issuer of such
Capital Stock."
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(m) AFFIRMATIVE COVENANTS. Article 9 of the Credit Agreement is hereby
amended by adding, at the end of such Article, the following new Section 9.22
and Section 9.23:
9.22. ADDITIONAL UK GUARANTEES; SECURITY. At any time that
a Guarantee (as such term is defined in each of the Senior
Subordinated Indenture or 1999 Senior Subordinated Indenture) is
executed by any UK Subsidiary, cause (A) each such UK Subsidiary to,
prior to such execution or simultaneously therewith: (a) execute and
deliver to the Agent a Deed of Supplemental Guarantee pursuant to
which such UK Subsidiary guarantees the payment and performance of
all the Obligations, and (b) secure or caused to be secured the
Obligations by creating or causing to be created in favor of the
Agent for the benefit of the Lenders and perfected security
interests in and first fixed and floating charges or mortgages over
(subject only to Permitted Liens) all inventory, receivables,
equipment, accounts, copyrights, patents, trademarks, other general
intangibles, real property and other assets (including any Capital
Stock owned by such UK Subsidiary) of such UK Subsidiary, now owned,
or hereafter acquired, and (B) each Transaction Party holding
Capital Stock of such a UK Subsidiary to, prior to such execution or
simultaneously therewith, to satisfy the requirements of Section
9.16(a). All such security interests in and charges or mortgages
over such Property will be created under Security Instruments in
form and substance satisfactory to the Agent, and the Borrower and
its Subsidiaries shall deliver to the Agent all such Security
Instruments (including, without limitation, legal opinions, title
insurance policies and lien searches) as the Agent or the Required
Lenders shall reasonably request to evidence the satisfaction of the
obligations created by this Section 9.22. The Borrower agrees to
provide such evidence as the Agent or the Required Lenders shall
request as to the perfection and priority of such security interests
in and charges or mortgages over such Property (subject only to
Permitted Liens).
9.23. COLLATERAL FOR LOANS BY MAYBREY. Cause Maybrey to, to
the extent not prohibited by Applicable Law, within thirty (30) days
of having net assets for the purposes of Section 155(2) of the
Companies Act 1985 (England), comply with the requirements of
Sections 6.3, 9.16 and 9.17 in order to secure the UK Obligations, as
if for purposes of such sections of the Credit Agreement the
Acquisition of Maybrey had occurred simultaneously with its
satisfaction of the net asset requirement of Section 155(2) of the
Companies Act 1985 (England)."
(n) INDEBTEDNESS. Section 10.1 of the Credit Agreement is amended as
follows:
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(i) by replacing the reference to "$25,000,000" in Section
10.1(d) with a reference to "$5,000,000";
(ii) by amending and restating Section 10.1(k) in its entirety
as follows:
"(k) Any (i) guarantee by the Borrower of Purchase
Money Indebtedness permitted by paragraph (c) of this
ss.10.1 (to the extent permitted in the definition of
Purchase Money Indebtedness), (ii) guarantee by the
Borrower of Permitted Seller Subordinated Debt permitted by
paragraph (d) of this Section 10.1 (to the extent permitted
in the definition of Permitted Seller Subordinated Debt),
(iii) guarantee by the Borrower of the Trim Seller Notes
permitted by paragraph (m) of this Section 10.1 (to the
extent permitted in the definition of Trim Seller Notes),
and (iv) guarantee by the Borrower of the obligations of
the UK Borrower under the Trim Acquisition Agreement;"
(iii) by (A) replacing the period at the end of paragraph (l)
with a semi-colon, and (B) inserting the following new paragraphs (m),
(n), (o) and (p) at the end of Section 10.1:
"(m) Indebtedness of the UK Borrower under the Trim
Seller Notes in an aggregate principal amount not to exceed
L1,600,000, minus the amount of any payment, prepayment,
redemption, repurchase or other acquisition of, or
cancellation or discharge of, such Trim Seller Notes;
(n) Indebtedness of the Borrower under the 1999
Senior Subordinated Notes in an aggregate principal amount not
to exceed $19,000,000, MINUS the amount of any payment,
prepayment, redemption, repurchase or other acquisition of, or
cancellation or discharge of, any 1999 Senior Subordinated
Notes;
(o) Indebtedness of the Borrower under the 1999
Exchange Notes issued in exchange for the 1999 Senior
Subordinated Notes in the manner described in the 1999 Senior
Subordinated Indenture, PROVIDED, that the aggregate principal
amount of the 1999 Exchange Notes outstanding at any time
shall not exceed the outstanding principal amount of the 1999
Senior Subordinated Notes on the date of the issuance of the
1999 Exchange Notes, MINUS the amount of any payment,
prepayment, redemption, repurchase or other acquisition of, or
cancellation or other discharge of, any 1999 Exchange Notes;
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(p) any guarantee by any Subsidiary of the Borrower
of Indebtedness permitted by (A) paragraphs (e) or (f), so
long as such guarantees are in the form of the Guarantee (as
such term is defined in the Senior Subordinated Indenture),
and are subordinated as set forth in the Guarantee and in
Article XII of the Senior Subordinated Indenture and (B)
paragraphs (n) or (o), so long as such guarantees are in the
form of the Guarantee (as such term is defined in the 1999
Senior Subordinated Indenture), and are subordinated as set
forth in the Guarantee and in Article XII of the 1999 Senior
Subordinated Indenture."
(o) INVESTMENTS. Section 10.3 of the Credit Agreement is amended as
follows:
(i) by amending and restating Section 10.3(e) of the Credit
Agreement in its entirety as follows:
"(e) Investments consisting of the Guarantee and the UK
Guarantees;"
(ii) by (A) deleting the "and" at the end of paragraph (g),
(B) replacing the period at the end of paragraph (h) with a semi-colon,
and (C) inserting the following new paragraphs (i) and (j) at the end
of Section 10.3:
"(i) Investments by the UK Borrower or any UK
Subsidiary in a UK Guarantor or the UK Borrower in the form of
intercompany loans made in cash, PROVIDED, HOWEVER, that if
any Enforcement Period is continuing, then no such Investments
shall be permitted under this paragraph (g) in violation of
the restrictions set forth in the Enforcement Notice
commencing such Enforcement Period; and
(j) solely during the period from July 30, 1999
through September 30, 1999, Investments by the Borrower in the
UK Borrower in the form of intercompany loans made in cash to
finance working capital needs of the UK Borrower and the other
UK Subsidiaries, PROVIDED, HOWEVER, that (x) if any
Enforcement Period is continuing, then no such Investments
shall be permitted under this paragraph (g) in violation of
the restrictions set forth in the Enforcement Notice
commencing such Enforcement Period, (y) the aggregate
outstanding principal amount of such intercompany loans shall
not exceed $7,500,000 at any time and (z) all such
intercompany loans shall have been repaid in full by the UK
Borrower on or before September 30, 1999."
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(p) DISTRIBUTIONS AND RESTRICTED PAYMENTS. Section 10.4 of the Credit
Agreement is amended as follows:
(i) Subsections 10.4(b)(i) and (ii) of the Credit Agreement
are hereby amended and restated in their entirety as follows:
"(i) mandatory payments of principal of and accrued
unpaid interest on Subordinated Debt made as required by the
terms of the Subordinated Debt Documents, so long as such
payments are not prohibited by the subordination provisions
set forth in the Subordinated Debt Documents (it being
understood that the redemption of (x) Senior Subordinated
Notes or Exchange Notes pursuant to Article III of the Senior
Subordinated Indenture and/or (y) 1999 Senior Subordinated
Notes or 1999 Senior Subordinated Exchange Notes pursuant to
Article III of the 1999 Senior Subordinated Indenture is
prohibited by this Agreement); and
(ii) the issuance of (x) the Exchange Notes for the
Senior Subordinated Notes originally issued under the Senior
Subordinated Indenture in accordance with the terms of the
Senior Subordinated Note Documents and/or (y) the 1999 Senior
Subordinated Exchange Notes for the 1999 Senior Subordinated
Notes originally issued under the 1999 Senior Subordinated
Indenture in accordance with the terms of the 1999 Senior
Subordinated Note Documents."
(ii) Subsection 10.4(c) is hereby amended and restated in its
entirety as follows:
"(c) Make any payment, prepayment, redemption,
repurchase or other acquisition of, or cancel or discharge in
any manner, any Indebtedness of any Transaction Party to any
other Transaction Party, or make any payment or distribution
in respect of any interest or other sums due in respect of any
such Indebtedness (an "INTERCOMPANY DEBT PAYMENT"), except for
Intercompany Debt Payments made by the Transaction Party which
was permitted to incur such Indebtedness; PROVIDED that no
Intercompany Debt Payment shall be permitted at any time while
any Enforcement Period shall be continuing if the Enforcement
Notice for such Enforcement Period prohibits such Intercompany
Debt Payment,
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(q) TRANSACTIONS WITH AFFILIATES. Section 10.11 of the Credit
Agreement is hereby amended
(i) by (A) deleting the "and" at the end of paragraph (g), (B)
renumbering paragraph (h) as paragraph (k), and (C) inserting the
following new paragraphs (h), (i) and (j) in the appropriate
alphabetical order:
"(h) the intercompany loans permitted under
Section 10.3(i) and (j) and the repayments of such loans
permitted by Section 10.4(c);
(i) the Intercompany Funding Agreements; and
(j) payments under the Trim Seller Note which are
permitted by Section 10.4(b)."
(ii) replacing the parenthetical "(other than as described
in the following paragraphs of this Section 10.9)" contained in the
renumbered paragraph (k) with the following replacement
parenthetical "(other than as described in the preceding paragraphs
of this Section 10.9)". "
(r) FISCAL YEAR. Section 10.15 of the Credit Agreement is
hereby amended and restated in its entirety as follows:
"10.15. FISCAL YEAR. Permit the fiscal year of the Borrower
and each of its Subsidiaries to end on a day other than December 31,
except that for the period from the Amendment No. 2 Effective Date
through December 31, 1999, Trim and its Subsidiaries shall be permitted
to have a fiscal year ending April 30."
(s) MINIMUM CONSOLIDATED EBITDA. Section 11.2 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
11.2. MINIMUM CONSOLIDATED EBITDA. Consolidated EBITDA of the
Borrower and its Subsidiaries for any Reference Period ending on any
date or during any period set forth in the table below to be less than
the amount set forth opposite such date or period:
Minimum
DATE OR PERIOD CONSOLIDATED EBITDA
-------------- -------------------
September 30, 1999 through December 31, 1999 $40,500,000
March 31, 2000 through June 30, 2000 $42,000,000
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September 30, 2000 $43,000,000
December 31, 2000 $44,000,000
January 1, 2001 through June 30, 2001 $51,000,000
July 1 through December 31, 2001 $55,000,000
January 1, 2002 through December 31, 2002 $60,000,000
January 1, 2003 through June 30, 2003 $63,000,000
July 1, 2003 through December 31, 2003 $63,500,000
January 1, 2004 through March 31, 2004 $65,000,000
April 1, 2004 through December 31, 2004 $66,000,000
January 1, 2005 through February 1, 2005 $67,500,000
(t) MAXIMUM CAPITAL EXPENDITURES. Section 11.5 of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:
11.5. MAXIMUM CAPITAL EXPENDITURES. The aggregate amount of
Capital Expenditures of the Borrower and its Subsidiaries (other
than Capital Expenditures made (a) with the proceeds of Indebtedness
permitted by paragraphs (c) of Section 10.1 or (b) as a result of
the acquisition of Capital Assets in any Permitted Acquisition) (i)
to exceed $9,500,000 in the 1999 calendar year and (ii) for any
Reference Period ending on any date or during any period set forth
in the table below to exceed the amount set forth in the table below
opposite such date or period:
DATE OR PERIOD AMOUNT
-------------- ------
January 1, 2000 through December 31, 2000 $ 8,000,000
January 1, 2001 through December 31, 2001 $12,200,000
January 1, 2002 through December 31, 2002 $12,400,000
January 1, 2003 through December 31, 2003 $14,200,000
January 1, 2004 through December 31, 2004 $15,100,000
January 1, 2005 through February 1, 2005 $12,500,000
(u) GENERAL PROVISIONS RELATING TO FINANCIAL TERMS AND COVENANTS.
Section 11.6(a) of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"(a) CONSOLIDATED EBITDA. In determining Consolidated EBITDA
of the Borrower and its Subsidiaries for any period, there shall be (i)
included in such Consolidated EBITDA all EBITDA attributable to any
business acquired by the Borrower or any of its Subsidiaries during
such period as if such business were acquired on the first day of such
period and (ii) excluded from such Consolidated EBITDA all EBITDA
attributable to any business disposed of by
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the Borrower or any of its Subsidiaries during such period as if
such business were disposed of on the first day of such period. For
purposes hereof, the EBITDA attributable to any such acquired or
disposed of business prior to the date of acquisition or disposition
thereof shall be determined in a manner consistent with the method
for determining Consolidated EBITDA, but on a non-consolidated basis
(subject to any adjustments made pursuant to paragraph (c) below).
Notwithstanding the foregoing, this paragraph (a) shall not cause
any increase in Consolidated EBITDA of the Borrower and its
Subsidiaries on account of the Lamsco Acquisition for the fiscal
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998.
The effect of the Lamsco Acquisition and the Modern Acquisition on
Consolidated EBITDA of the Borrower and its Subsidiaries for such
three fiscal quarters is fully reflected and accounted for in
Section 11.7(a). In addition, and notwithstanding the foregoing, this
paragraph (a) shall not cause any increase in Consolidated EBITDA of
the Borrower and its Subsidiaries on account of the Trim Acquisition
for the fiscal quarters ended December 31, 1998, March 31, 1999 and
June 30, 1999. The effect of the Trim Acquisition on Consolidated
EBITDA of the Borrower and its Subsidiaries for such three fiscal
quarters is fully reflected and accounted for in Section 11.8(a)."
(v) FINANCIAL COVENANTS. Article 11 of the Credit Agreement is hereby
amended by inserting the following new Section 11.8 immediately following
Section 11.7:
"11.8 COMPUTATIONS OF CERTAIN FINANCIAL COVENANTS FOLLOWING
TRIM ACQUISITION.
(a) CONSOLIDATED EBITDA CALCULATION. In determining
Consolidated EBITDA of the Borrower and its Subsidiaries for any
Reference Period which includes any fiscal quarter ending December 31,
1998, March 31, 1999 or June 30, 1999, the Consolidated EBITDA of the
Borrower and its Subsidiaries for such fiscal quarter shall be the sum
of (a) the Consolidated EBITDA of the Borrower and its Subsidiaries
(other than Trim and its Subsidiaries) for such fiscal quarter PLUS (b)
the Consolidated EBITDA of Trim and its Subsidiaries for such fiscal
quarter which shall be deemed for all purposes of this Agreement to be
as follows:
FISCAL QUARTER ENDED TRIM CONSOLIDATED EBITDA
-------------------- ------------------------
December 31, 1998 $2,300,000
March 31, 1999 $2,500,000
June 30, 1999 $2,700,000
(b) CONSOLIDATED OPERATING CASH FLOW CALCULATION. In
determining Consolidated Operating Cash Flow of the Borrower and its
Subsidiaries for any
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Reference Period which includes any fiscal quarter ending December
31, 1998, March 31, 1999 or June 30, 1999, the Consolidated
Operating Cash Flow of the Borrower and its Subsidiaries for such
fiscal quarter shall be the sum of (a) the Consolidated Operating
Cash Flow of the Borrower and its Subsidiaries (other than Trim and
its Subsidiaries) for such fiscal quarter PLUS (b) the Consolidated
Operating Cash Flow of Trim and its Subsidiaries for such fiscal
quarter which shall be deemed for all purposes of this Agreement to
be as follows:
TRIM CONSOLIDATED
FISCAL QUARTER ENDED OPERATING CASH FLOW
-------------------- -------------------
December 31, 1998 $1,800,000
March 31, 1999 $1,700,000
June 30, 1998 $1,900,000
(c) CAPITAL EXPENDITURES AND CONSOLIDATED OPERATING CASH FLOW
IN DETERMINING MINIMUM DEBT SERVICE COVERAGE RATIO. For purposes of
determining compliance with Section 11.4, Capital Expenditures of the
Borrower and its Subsidiaries used in determining Consolidated
Operating Cash Flow of the Borrower and its Subsidiaries for Reference
Periods ending September 30, 1999 and December 31, 1999, shall (i) for
the fiscal quarter ending September 30, 1999, be the sum of (A) the
actual Capital Expenditures of the Borrower and its Subsidiaries
(except for Trim and its Subsidiaries) for such fiscal quarter PLUS (B)
the greater (x) the actual Capital Expenditures of Trim and its
Subsidiaries for such fiscal quarter MINUS $1,750,000 and (y) zero, and
(ii) for the fiscal quarter ending December 31, 1999, be the sum of
(Ai) the actual Capital Expenditures of the Borrower and its
Subsidiaries (except for Trim and its Subsidiaries) for such fiscal
quarter PLUS (B) the greater of (x) the actual Capital Expenditures of
Trim and its Subsidiaries for the fiscal quarter ending September 30,
1999, MINUS the actual Capital Expenditures of Trim and its
Subsidiaries for the fiscal quarter ending September 30, 1999, MINUS
$1,750,000 and (y) zero."
(w) CONDITIONS TO ALL BORROWINGS. Section 13.7 of the Credit Agreement
is hereby amended and restated in its entirety as follows:
"13.7 SENIOR DEBT. The Borrower shall have demonstrated to the
reasonable satisfaction of the Agent that (a) all outstanding
Obligations (after giving effect to the requested Loans or Letters of
Credit) constitute "Senior Debt" (or corresponding alternative terms)
under the Subordinated Debt Documents and "Designated Senior Debt"
under and for all purposes of each of the Senior Subordinated Indenture
and 1999 Senior Subordinated Indenture, and (b) the incurrence of
Indebtedness in respect of the requested
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Loans or Letters of Credit shall be permitted by all Subordinated
Debt Documents. The foregoing demonstration shall include (if
requested by the Agent) certificates of the chief financial officer
of the Borrower setting forth in reasonable detail the basis
therefor, and the calculations (if any) required to evidence
compliance with the applicable covenants set forth in the
Subordinated Debt Documents."
(x) EVENTS OF DEFAULT. Section 14.1 of the Credit Agreement is hereby
amended by:
(i) replacing each reference to "Guarantors" contained in
Section 14(p) with a reference to "Guarantors and/or UK Guarantors";
(ii) by (A) deleting the "or" at the end of paragraph (q), and
(B) inserting the following new paragraphs (r) and (s) at the end of
Section 14.1:
"(r) any party to the Trim Seller Note shall fail to
comply with any of its covenants, obligations or agreements
contained in the Trim Seller Note; or
(s) any Transaction Party shall make any payment
or prepayment of principal of any Trim Seller Note if the
Borrower shall not have established to the satisfaction of
the Agent (based on, among other things, projections and
pro forma financial statements delivered to the Agent and
certified by the Chief Financial Officer) that, immediately
after giving effect to such payment or prepayment
(including the making of any Loans and the incurrence of
any Indebtedness required to finance the payment or
prepayment) all covenants (including covenants contained in
Section 11 of this Agreement) contained herein (i) would
have been satisfied on a pro forma basis as at the end of
and for the Most Recent Reference Period for which the
Borrower has delivered to the Lenders, in compliance with
Section 9.3(a) or (b) and Section 9.3(d), the financial
statements and compliance certificate required by such
subsections (such pro forma compliance to be determined as
if such payment or prepayment was made as at the end of
such Most Recent Reference Period)."
(y) SCHEDULES TO CREDIT AGREEMENT.
(i) SCHEDULES 8.16, 8.17, 8.18, 8.19 and 8.22 to the Credit
Agreement are hereby amended by supplementing such existing Schedules
with the following supplemental Schedules attached hereto.
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(ii) The Credit Agreement is hereby amended by adding a new
SCHEDULE 8.14 as attached hereto
SECTION 3. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective if, and only if, on or before July 31, 1999, each of the following
conditions precedent shall have been satisfied:
(a) EXECUTION AND DELIVERY OF DOCUMENTS.
(i) AMENDMENT DOCUMENTS. The Agent shall have received duly
executed counterparts of this Agreement, the Accession Agreement, and
the UK Security Documents (including separate (x) Deeds of Supplemental
Guarantee and (y) Deeds of Guarantees, by each UK Guarantor)
(collectively, the "AMENDMENT DOCUMENTS") in each case which, when
taken together bear the authorized signatures of each of the parties
thereto, and which are each in form and substance satisfactory to the
Agent.
(ii) 1999 SENIOR SUBORDINATED NOTE DOCUMENTS. Each of the 1999
Senior Subordinated Note Documents shall have been duly executed and
delivered by each of the parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to the Agent.
The Agent shall have received an executed copy of each of the 1999
Senior Subordinated Note Documents certified by an authorized officer
of the Borrower as of the Amendment No. 2 Effective Date to be true,
correct and complete copies of such documents.
(iii) ACQUISITION DOCUMENTS. Each of the Trim Acquisition
Documents shall have been duly executed and delivered by each of the
parties thereto, shall be in full force and effect and shall be in form
and substance satisfactory to the Agent. The Agent shall have received
an executed copy of each of the Trim Acquisition Documents certified by
an authorized officer of the Borrower as of the Amendment No. 2
Effective Date, to be true, correct and complete copies of such
documents.
(iv) EQUITY DOCUMENTS. Each of the Equity Documents executed
in connection with the issuance of Capital Stock the proceeds of which
are used to finance the Trim Acquisition (the "TRIM EQUITY DOCUMENTS")
shall have been duly executed by the Borrower and the Borrower's
shareholders party thereto, shall be in full force and effect and shall
be in form and substance satisfactory to the Agent. The Agent shall
have received an executed copy of each of such Trim Equity Documents
certified by an authorized officer of the
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Borrower as of the Amendment No. 2 Effective Date to be true,
correct and complete copies of such documents.
(v) SENIOR SUBORDINATED NOTE DOCUMENTS. Each Senior
Subordinated Note Document, executed in connection with Trim
Acquisition, shall have been duly executed and delivered by each of the
parties thereto, shall be in full force and effect and shall be in form
and substance satisfactory to the Agent. The Agent shall have received
an executed copy of each of such Senior Subordinated Note Documents
certified by an authorized officer of the Borrower as of the Amendment
No. 2 Effective Date to be true, correct and complete copies of such
documents.
(b) UK BORROWER. Compass UK shall have (i) executed and delivered to
the Agent and the Lenders an Accession Agreement in form and substance
satisfactory to the Agent pursuant to the terms of which Compass UK becomes a
party to the Credit Agreement as the UK Borrower, and becomes a party to any
other Loan Document as the Agent may reasonably request (the "ACCESSION
AGREEMENT"), and (ii) agreed to perform and observe all of the obligations
and covenants of the UK Borrower and of a Transaction Party (other than
obligations and covenants of a Guarantor contained in Section 7 of the Credit
Agreement) under the Credit Agreement, and of the appropriate party under any
Loan Document to which it becomes a party.
(c) PERMITTED ACQUISITION. All conditions precedent for the Trim
Acquisition to be a Permitted Acquisition (except for the requirements of (x)
paragraph (q)(i) and (ii) of such definition and (y) with respect to Maybrey,
paragraphs (g) and (h) of such definition) shall have been satisfied and a
duly authorized officer of the Borrower shall have delivered to the Agent an
officer's certificate certifying that such conditions have been met.
(d) COMPLETION OF TRIM ACQUISITION.
(i) The Trim Acquisition, including all of the terms and
conditions thereof, shall have been duly approved by the board of
directors and (if required by Applicable Law) the shareholders of the
parties thereto. The representations and warranties set forth in the
Trim Acquisition Documents shall be true and correct as if made on and
as of the Amendment No. 2 Effective Date. Each of the conditions
precedent to the UK Xxxxxxxx's and the Trim Sellers' obligations to
consummate the Trim Acquisition as set forth in the Trim Acquisition
Documents shall have been satisfied or waived with the consent of the
Agent. The Trim Acquisition shall have been consummated in accordance
with the terms of the Trim Acquisition
-24-
Documents and all Applicable Laws. The purchase price for the Trim
Acquisition shall not exceed L37,000,000, and all the fees and
expenses payable by the Borrower of any of its Subsidiaries in
connection therewith and the financing thereof, shall not exceed
$2,500,000.
(ii) On the Effective Date, after giving effect to the Trim
Acquisition, the ownership and capital structure (including the terms
of any Equity Interests issued or to be issued by the Borrower or any
of its Subsidiaries) and management of the Borrower and its UK
Subsidiaries shall be satisfactory to the Agent.
(e) TRIM SELLER NOTES. The Trim Seller Notes shall (i) have been
subordinated to the Obligations on terms satisfactory to the Agent, (b) not
be secured by any assets of the Borrowers or any of their Subsidiaries, (c)
not be guaranteed by the Borrowers or a Subsidiary of the Borrowers (except
that the Borrower shall be permitted to guarantee the Trim Seller Notes so
long as such guarantee is subject to the same subordination provisions as the
Trim Seller Note), (d) have a maturity date of July 30, 2002, (e) require no
scheduled principal payment prior to such maturity date; (f) have an interest
rate of not more than nine and one-half of one percent (9 1/2%) per annum,
payable twice yearly in arrears, and (g) have the Agent's approval with
respect to all other terms (including mandatory prepayment or redemption
obligations, prepayment or redemption premiums, covenants, events of default,
remedies and subordination provisions) (such approval not to be unreasonably
withheld).
(f) ISSUANCE OF PERMITTED CAPITAL STOCK. All Capital Stock issued
pursuant to the Trim Equity Documents shall constitute Permitted Capital
Stock and a duly authorized officer of the Borrower shall have delivered to
the Agent an officer's certificate certifying that such requirements have
been met.
(g) NET CASH PROCEEDS OF DEBT AND EQUITY ISSUANCES. The Agent shall
have received evidence reasonably satisfactory to it that:
(i) the Borrower shall have issued Permitted
Capital Stock to certain of its existing shareholders for a
cash purchase price of not less than $15,000,000;
(ii) the purchasers thereof shall have paid to the
Borrower not less than $15,000,000 as the cash purchase price
for the 1999 Senior Subordinated Notes; and
(iii) an amount equivalent to the Net Cash Proceeds
received by the Borrower from the issuance of such Permitted
Capital Stock
-25-
and the 1999 Senior Subordinated Notes shall have been used
to finance the Trim Acquisition in accordance with the
terms of the Trim Acquisition Documents.
(h) FEES AND EXPENSES. The Borrower shall have paid or reimbursed the
Agent for all of the fees and disbursements of Xxxxxxx Xxxx XXX, the Agent's
special counsel, which shall have been incurred by the Agent in connection
with the preparation, negotiation, execution and delivery of this Agreement
and the implementation of the transactions contemplated thereby, or which
otherwise are required to be paid under the Credit Agreement.
(i) LEGAL OPINIONS. The Agent shall have received
(i) a copy of each of the legal opinions required in order for
the Trim Acquisition to be a Permitted Acquisition as set forth in the
definition thereof (other than the opinions required by paragraph
(q)(i) and (ii));
(ii) from Xxxxxx, Xxxxx & Xxxxxxx, counsel to the Transaction
Parties, such other favorable legal opinions as the Agent may require,
addressed to the Agent and the Lenders, dated as of the Effective Date
and in form, scope and substance satisfactory to the Agent. The
Transaction Parties shall have instructed such counsel to deliver such
opinion to the Agent; and
(iii) a copy of the favorable legal opinion(s) addressed to
the initial purchaser of the 1999 Senior Subordinated Notes from
counsel to the Borrower, with such legal opinion(s) either addressed to
the Agent and the Lenders or accompanied by a reliance letter(s)
authorizing the Agent and the Lenders to rely on such opinion(s), with
each such opinion and, if applicable, such reliance letter, in form and
substance satisfactory to the Agent.
(j) CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
received from
(i) each of the US Transaction Parties a certificate of a
duly authorized officer of such Person, dated as of the Effective Date,
certifying that no amendments to its Governing Documents have occurred
since the Amendment No. 1 Effective Date; and
(ii) each of the UK Subsidiaries a copy, certified by a duly
authorized officer of such UK Subsidiary to be true and complete, of
each of (A) its Memorandum and Articles of Association, Certificate of
Incorporation and
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any Certificate of Incorporation on Name Change as in effect on such
date of certification, and (B) its by-laws as in effect on such date.
Each such certificate or such certified copies shall be in form and substance
reasonably satisfactory to the Agent.
(k) PROOF OF CORPORATE ACTION. The Agent shall have received from each
of the Transaction Parties copies, certified by a duly authorized officer of
such Person to be true and complete on and as of the Effective Date, of the
records of all corporate action taken by such Person to authorize (i) such
Person's execution and delivery of each of the Amendment Documents, the 1999
Senior Subordinated Note Documents, the Trim Acquisition Documents and the
Trim Equity Documents (collectively, the "DOCUMENTS") to which it is a party,
and (ii) such Person's performance of all of its agreements and obligations
under the Credit Agreement, as amended hereby, and each of the other
Documents to which it is a party. Each of such certified copies shall be in
form and substance reasonably satisfactory to the Agent.
(l) INCUMBENCY CERTIFICATE. The Agent shall have received incumbency
certificates, dated the Effective Date, signed respectively by a duly
authorized officer of each of the Transaction Parties, and giving the name
and bearing a specimen signature of each individual who shall be authorized
(x) to sign, in the name and on behalf of such Person, each of the Amendment
Documents and other Loan Documents to which such person is or is to become a
party, (y) in the case of the UK Borrower, to make UK Loan Requests and
Conversion Requests and (z) to give notices and to take other action on
behalf of such Person under the Amendment Documents or any other Loan
Document. Such certificates shall be in form and substance reasonably
satisfactory to the Agent.
(m) CLOSING CERTIFICATE. The Agent shall have received a certificate,
dated the Effective Date, signed by the chief financial officer of the
Borrower, to the effect that (i) each of the representations and warranties
of the US Transaction Parties contained in Section 4 hereof are true and
correct as of the Effective Date and (ii) no Default or Event of Default
exists on the Effective Date (after giving effect to this Agreement).
(n) INSURANCE CERTIFICATES. The Agent shall have received a
certificate(s) of insurance from an independent insurance broker dated as of
the Amendment No. 2 Effective Date, identifying insurers, types of insurance,
insurance limits, and policy terms, and otherwise describing the insurance
obtained in accordance with the provisions of the UK Security Documents and
naming the Agent as additional insured and loss payee, and the Agent shall be
satisfied with all such insurance coverage.
-27-
(o) REPRESENTATIONS AND WARRANTIES. The Agent shall be satisfied that
the representations and warranties set forth in Section 4 hereof are true and
correct on and as of the Effective Date.
(p) SENIOR DEBT. The Borrower shall have demonstrated to the reasonable
satisfaction of the Agent that (a) all outstanding Obligations (after giving
effect to the requested Loans or Letters of Credit) constitute "Senior Debt"
(or corresponding alternative terms) under the Subordinated Debt Documents
and "Designated Senior Debt" under and for all purposes of each of the Senior
Subordinated Indenture and the 1999 Senior Subordinated Indenture, and (b)
the incurrence of Indebtedness in respect of the requested Loans shall be
permitted by all Subordinated Debt Documents. The foregoing demonstration
shall include certificates of the chief financial officer of the Borrower
setting forth in reasonable detail the basis therefor, and the calculations
(if any) required to evidence compliance with the applicable covenants set
forth in the Subordinated Debt Documents.
(q) DISBURSEMENT INSTRUCTIONS. The Agent shall have received
disbursement instructions from the Borrower with respect to the proceeds of
the UK Acquisition Loans, in form and substance satisfactory to the Agent.
(r) SOURCES AND USES STATEMENT. The Agent shall have received a sources
and uses statement from the Borrower which reflects (a) the source of all
funds to be used by the Borrower and any Subsidiary of the Borrower to
consummate all the transactions contemplated by this Amendment, including the
Trim Acquisition, and (b) all uses of such funds, such statement to be in
form and substance satisfactory to the Agent.
(s) VALIDITY OF LIENS. The UK Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable first priority
(except for Permitted Liens entitled to priority under applicable law) security
interest in and Lien upon the Collateral under applicable law. All filings,
recordings, deliveries of Instruments and other actions necessary or desirable
in the opinion of the Agent to create and perfect such security interests shall
have been duly effected. The Agent shall have received evidence thereof in form
and substance satisfactory to the Agent.
(t) LIEN SEARCH RESULTS. The Agent shall have received from each UK
Subsidiary the results of lien searches with respect to the Collateral located
in the United Kingdom with such search results indicating no Liens other than
Permitted Liens and otherwise in form and substance satisfactory to the Agent.
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(u) PROCEEDINGS AND DOCUMENTS. The Agent shall have received all
information and all such documents, instruments or agreements as the Agent
may reasonably request, and all such information, documents, instruments or
agreements shall be satisfactory to the Agent, including, by way of example
(but not limited to):
(i) Certified true and complete copies of the statutory
declarations made by the directors and auditors of each of Trim and its
Subsidiaries (other than Maybrey) in accordance with Section 156 of the
Companies Act 1985 (England) together with the shareholders resolution
and all other documents ancillary thereto, in each case in form and
substance satisfactory to the Agent; and
(ii) A non-statutory auditors letter from auditors of each of
Trim and its Subsidiaries (other than Maybrey) in connection with
Section 15 of the Companies Act 1985 (England) dated as of the
Amendment No. 2 Effective Date, and in form and substance satisfactory
to the Agent.
The first date as of which all of the foregoing conditions precedents shall be
satisfied is referred to herein as the "EFFECTIVE DATE".
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each of the undersigned
Transaction Parties hereby represents and warrants to the Agent and the Lenders
that:
(a) Each of the Documents have been duly executed and
delivered by the Transaction Parties party thereto. The execution and
delivery by each such Transaction Party of each of the Documents to
which they are a party, have been duly authorized by proper proceedings
by such Person, and each such Document to which any such Person is a
party constitutes the legal, valid and binding obligation of such
Person, enforceable against such Person in accordance with the terms of
such Document.
(b) The execution, delivery and performance of each Document
by each of the Transaction Parties party thereto (i) are within the
corporate or other legal authority of such Person, (ii) have been duly
authorized by all necessary corporate or other proceedings and (iii) do
not and will not conflict with or result in any breach or contravention
of any Applicable Law or any Contractual Obligation or Governing
Document of any of the Transaction Parties.
(c) Each of the representations and warranties of each of the
Transaction Parties contained in the Loan Documents or in any
Instrument
-29-
delivered pursuant to or in connection with the Credit Agreement was
true in all respects as of the date as of which it was made and is
true in all respects on the date hereof (except to the extent that
such representations and warranties relate expressly to an earlier
date).
(d) After giving effect to this Agreement, no Default or Event
of Default has occurred and is continuing.
SECTION 5. COVENANTS OF TRANSACTION PARTIES. The undersigned
Transaction Parties hereby covenant and agree to deliver to the Agent, within
thirty (30) days following the Amendment No. 2 Effective Date, (a) all
endorsements to any insurance certificates delivered to the Agent on the
Amendment No. 2 Effective Date, and (b) certified copies of all policies
evidencing insurance (or certificates therefor signed by the insurer or an agent
authorized to bind the insurer) obtained by each of the UK Subsidiaries in
accordance with the insurance coverage requirements set forth in the Credit
Agreement and the UK Security Documents and the Agent shall be satisfied with
the adequacy of all such endorsements and insurance.
SECTION 6. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. EXPENSES. The Borrower shall pay all reasonable
out-of-pocket expenses incurred by the Agent in connection with the preparation,
negotiation, execution, delivery and enforcement of this Agreement, including,
but not limited to, the reasonable fees and disbursements of Xxxxxxx Xxxx LLP.
SECTION 8. MISCELLANEOUS. From and after the date hereof, this
Agreement shall be deemed a Loan Document for all purposes of the Credit
Agreement and the other Loan Documents and each reference to Loan Documents in
the Credit Agreement and the other Loan Documents shall be deemed to include
this Agreement. Any breach by any Transaction Party of the covenants and
obligations of such Transaction Parties contained herein shall be an immediate
Event of Default. Except as expressly provided herein, this Agreement shall not,
by implication or otherwise, limit, impair, constitute a waiver of or otherwise
affect any rights or remedies of the Agent or the Lenders under the Credit
Agreement or the other Loan Documents, nor alter, modify, amend or in any way
affect any of the obligations or covenants contained in the Credit Agreement or
any of the other Loan Documents, all of which are ratified and confirmed in all
respects and shall continue in full force and effect. This Agreement may be
executed in any number of counterparts, but all of such counterparts shall
together constitute but one and the same agreement. Delivery of an executed
counterpart of a signature page by facsimile transmission
-30-
shall be effective as delivery of a manually executed counterpart of this
Agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
[Remainder of this page intentionally left blank]
-31-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date first above
written.
Very truly yours,
BORROWER: COMPASS AEROSPACE CORPORATION
By:
---------------------------
Name:
Title:
UK BORROWER: COMPASS AEROSPACE LIMITED
By:
---------------------------
Name:
Title:
GUARANTORS: AEROMIL ENGINEERING COMPANY
WESTERN METHODS MACHINERY
CORPORATION
XXXXXX MACHINE INCORPORATED
XXXXXXXX MACHINE, INC.
WICHITA MANUFACTURING, INC.,
SEA-LECT PRODUCTS, INC.,
PACIFIC HILLS MANUFACTURING CO.
MODERN MANUFACTURING, INC.
By:
---------------------------
Name:
Title:
-32-
Agreed to and Accepted By:
XXXXXXXXXX, N.A., as Lender, as
Agent and as Issuing Bank
By: ----------------------------------
Name:
Title:
BANKBOSTON, N.A., (London Branch),
as Lender and UK Fronting Lender
By: ----------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By: ----------------------------------
Name:
Title:
ROYAL BANK OF CANADA, as Lender
By: ----------------------------------
Name:
Title:
-33-
BANK OF AMERICA, N.A.
(Formerly known as
Nationsbank, N.A.), as Lender
By: ----------------------------------
Name:
Title:
PARIBAS, as Lender
By: ----------------------------------
Name:
Title:
By: ----------------------------------
Name:
Title:
WESTERN FINANCIAL BANK, as Lender
By: ----------------------------------
Name:
Title:
XXXXXX FINANCIAL, INC. , as Lender
-34-
By: ----------------------------------
Name:
Title:
CYPRESSTREE INVESTMENT FUND,
LLC, as Lender
By: CypressTree Investment Management
Company Inc., its Managing Member
By: ----------------------------------
Name:
Title:
CYPRESSTREE INSTITUTIONAL
FUND, LLC, as Lender
By: CypressTree Investment Management
Company Inc., its Managing Member
By: ----------------------------------
Name:
Title:
KZH CYPRESSTREE-1 LLC, as Lender
By: ----------------------------------
Name:
Title:
FIRST SOURCE FINANCIAL LLP, as Lender
By: First Source Financial, Inc.,
its Agent/Manager
-35-
By: ----------------------------------
Name:
Title:
SRV-HIGHLAND, INC., as Lender
By: ----------------------------------
Name:
Title:
