[EXECUTION COPY]
THIRD AMENDMENT AND LIMITED WAIVER
TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT AND LIMITED WAIVER TO AMENDED AND RESTATED
CREDIT AGREEMENT dated as of June 25, 1997 (this "THIRD AMENDMENT") is
entered into between Kaynar Technologies Inc., a Delaware corporation (the
"BORROWER") and General Electric Capital Corporation, a New York corporation
(the "LENDER") and relates to that certain Amended and Restated Credit
Agreement dated as of August 12, 1996, between the Borrower and the Lender
(as previously amended as of December 17, 1996 and April 30, 1997 and as
further supplemented or otherwise modified from time to time through the date
hereof, the "CREDIT AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender have entered into the Credit
Agreement;
WHEREAS, the Borrower has requested that the Lender amend the
Credit Agreement (i) to revise the amortization schedule for the repayment of
the Term Loan (after giving effect to a $6,000,000 prepayment thereof made in
connection herewith), (ii) to increase the Revolving Credit Commitment from
$15,000,000 to $21,000,000, (iii) to include 50% of the value of "Eligible
Inventory" (as defined below) in the calculation of the Borrowing Base, (iv)
to increase the maximum amount of permitted Capital Expenditures for Fiscal
Year 1997 to $13,000,000 and (v) to effect other amendments, all as more
fully described herein; and
WHEREAS, the Borrower has also requested that the Lender waive
certain provisions of the Credit Agreement and the Defaults and Events of
Default resulting therefrom, as more fully described herein;
NOW, THEREFORE, in consideration of the above premises, the
Borrower and the Lender agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein have the meanings assigned to them in the Credit Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT. Upon the "Effective Date"
(as defined in SECTION 5 below), the Credit Agreement is hereby amended as
follows:
2.1 AMENDMENTS TO SECTION 1.01. Section 1.01 of the
Credit Agreement is amended as follows:
(a) The definition of "Borrowing Base" is hereby amended to
amend and restate clause (b) thereof to read as follows:
(b) an amount equal to 85% of Eligible Accounts, PLUS 50% of
the book value of Borrower's Eligible Inventory valued on a
first-in, first-out basis (at the lower of cost or market),
MINUS reserves as the Lender may deem necessary or appropriate
in its reasonable credit judgment.
(b) The definition of "Cash Equivalents" is hereby amended
and restated in its entirety to read as follows:
"CASH EQUIVALENTS" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United
States government and backed by the full faith and credit of the
United States government; (ii) shares of an open-end investment
company registered pursuant to the Investment Company Act of 1940,
as amended, and operated as a money-market fund in accordance with
Rule 2a-7 issued thereunder; and (iii) domestic and eurodollar
certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank
organized under the laws of the United States, any state thereof,
the District of Columbia, any foreign bank, or its branches or
agencies (fully protected against currency fluctuations), which, at
the time of acquisition, are rated A-1 (or better) by Standard &
Poor's Corporation or Prime-1 (or better) by Xxxxx'x Investors
Services, Inc.; PROVIDED, that the maturities of such Cash
Equivalents shall not exceed one year.
(c) The following definition of "Eligible Inventory" is added
in proper alphabetical order:
"ELIGIBLE INVENTORY" means that Inventory of the Borrower
that strictly complies with all of the Borrower's representations
and warranties to the Lender with respect to Inventory, and that
are and at all times shall continue to be acceptable to the Lender
in all respects, PROVIDED, HOWEVER, that standards of eligibility
may be fixed and revised from time to time by the Lender in its
reasonable credit judgment. Without limiting the foregoing, the
Lender does not
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CURRENTLY intend to treat the following as Eligible Inventory:
(a) Inventory that is not owned by Borrower free and
clear of all Liens and rights of any other Person (including
the rights of a purchaser that has made progress payments and
the rights of a surety that has issued a bond to assure
Borrower's performance with respect to that Inventory), except
the Liens in favor of Lender;
(b) Inventory that is (i) not located on premises owned
or leased by Borrower in the District of Columbia or any state
of the United States of America or (ii) is stored with a
bailee, warehouseman or similar Person, unless Lender has
given its prior consent thereto and unless (x) a satisfactory
bailee letter or landlord waiver has been delivered to Lender,
or (y) reserves satisfactory to Lender have been established
with respect thereto, or (iii) located at any site if the
aggregate book value of Inventory at any such location is less
than $100,000;
(c) Inventory that is placed on consignment, is in
transit or is otherwise not located on premises owned or
leased by Borrower;
(d) Inventory that is covered by a negotiable document
of title, unless such document and evidence of acceptable
insurance covering such Inventory have been delivered to
Lender;
(e) Inventory that in Lender's reasonable determination
is excess, obsolete, unsalable, shopworn, seconds, damaged or
unfit for sale;
(f) Inventory that consists of items other than (i)
finished goods or (ii) raw materials consisting of sheet
metal, wire coil and bar stock;
(g) Inventory that consists of goods which have been
returned by the buyer for reason of defectiveness or are of a
type which cannot be resold at the same price;
(h) Inventory that is not of a type held for sale in the
ordinary course of Borrower's business;
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(i) Inventory as to which Lender's Lien is not a first
priority perfected Lien;
(j) Inventory which consists of Contaminants or goods
that can be transported or sold only with licenses that are
not readily available;
(k) Inventory that is not covered by casualty insurance
acceptable to Lender;
(l) Inventory with respect to which all or a portion of
the value thereof is attributable to "freight-in" charges, to
the extent of such attributable value; or
(m) Inventory that is otherwise unacceptable to Lender
in its reasonable credit judgment.
(d) The following definition of "New Third Amendment" is
added in proper alphabetical order:
"NEW THIRD AMENDMENT" means the Third Amendment and
Limited Waiver to Amended and Restated Credit Agreement dated as of
June 25, 1997, between the Borrower and the Lender.
(e) The following definition of "New Third Amendment Effective
Date" is added in proper alphabetical order:
"NEW THIRD AMENDMENT EFFECTIVE DATE" means the "Effective
Date" under (and as defined in) the New Third Amendment.
(f) The definition of "Revolving Credit Commitment" is hereby
amended and restated in its entirety to read as follows:
"REVOLVING CREDIT COMMITMENT" means the obligation of the
Lender to make Revolving Loans and to issue, or cause to be issued,
Letters of Credit pursuant to the terms and conditions of this
Agreement (and, for the applicable period, the Existing Credit
Agreement), in an aggregate amount (including all Letter of Credit
Obligations and the principal amount of all Revolving Loans) which
shall not exceed (i) from the Initial Closing Date through and
including December 31, 1994, $6,500,000, (ii) from January 1, 1995
until the Third Amendment Effective Date, $5,000,000, (iii) from
the Third Amendment Effective Date until the New
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First Amendment Effective Date, $9,500,000, (iv) from the New First
Amendment Effective Date until the New Third Amendment Effective
Date, $15,000,000, and (v) from the New Third Amendment Effective
Date until the Revolving Credit Termination Date, $21,000,0000, as
permanently reduced from time to time pursuant to SECTION 3.01.
2.2 AMENDMENTS TO SECTION 2.01(d)(i). Section 2.01(d)(i) of
the Credit Agreement is hereby amended to amend and restate the amortization
table set forth therein as follows:
PAYMENT DATE PRINCIPAL INSTALLMENT
July 1, 1997 $ 100,000
October 1, 1997 $ 100,000
January 1, 1998 $ 100,000
April 1, 1998 $ 100,000
July 1, 1998 $ 100,000
October 1, 1998 $ 100,000
2.3 AMENDMENT TO SECTION 2.02(e)(i). Section 2.02(e)(i) is
hereby amended by deleting the second and third sentences thereof in their
entirety and substituting the following sentences in lieu thereof:
On the Third Amendment Effective Date, the Borrower executed and
delivered to the Lender a substitute promissory note in the form of
EXHIBIT J attached hereto and made a part hereof, evidencing the
then existing Revolving Credit Commitment. On the New First
Amendment Effective Date, the Borrower executed and delivered to
the Lender a second substitute promissory note in the form of
EXHIBIT X-X attached hereto and made a part hereof, evidencing the
then existing Revolving Credit Commitment. On the New Third
Amendment Effective Date, the Borrower shall execute and deliver to
the Lender a third substitute promissory note, in substantially the
form of EXHIBIT X-X attached hereto and made a part hereof,
evidencing the Revolving Loans and the Revolving Credit Commitment
(the "Revolving Credit Note").
2.4 AMENDMENT TO SECTION 5.01. Section 5.01 of the Credit
Agreement is hereby amended by adding the following representation and
warranty as subsection (bb) thereof:
(bb) ELIGIBLE INVENTORY. From and after the New Third
Amendment Effective Date, all Eligible Inventory is, as of the date
as of which any Revolving
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Loan is made or requested or any Letter of Credit is issued hereunder
or a Borrowing Base Certificate is delivered, is of good and
merchantable quality, free from material defects.
2.5 AMENDMENTS TO SECTION 8.01. Section 8.01 of the Credit
Agreement is hereby amended as follows:
(a) to delete the word "and" at the end of clause (x) thereof
in its entirety;
(b) to delete the period (".") at the end of clause (xi)
thereof in its entirety and to substitute in lieu thereof "; and"; and
(c) to add the following new clause (xii):
(xii) Indebtedness arising from the intercompany loan
from the Borrower to RCL of $2,000,000 as evidenced by the
promissory note dated as of May 9, 1997, PROVIDED that such
promissory note has been delivered to the Lender pursuant to
the Security Agreement, together with an endorsement in blank
relating thereto.
2.6 AMENDMENTS TO SECTION 8.04. Section 8.04 of the Credit
Agreement is hereby amended:
(a) to delete the reference to "SECTION 8.01(vii)" in clause
(vi) thereof in its entirety and to substitute in lieu thereof
"SECTIONS 8.01(vii) AND (xii)".
(b) to delete the reference to "$600,000" in clause (viii)
thereof in its entirety and to substitute in lieu thereof "$1,500,000".
2.7 AMENDMENT TO SECTION 9.05. Section 9.05 of the Credit
Agreement is hereby amended by deleting in its entirety the reference to
"$7,500,000" as the Maximum Amount for Fiscal Year 1997 and inserting in lieu
thereof "$13,000,000".
2.8 AMENDMENT TO SECTION 11.06(b). Section 11.06(b) of the
Credit Agreement is hereby amended by deleting the address of the Borrower
and substituting the following in lieu thereof:
Kaynar Technologies Inc.
000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
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Telecopier No. (000) 000-0000
2.9 AMENDMENTS TO EXHIBITS. A new Exhibit X-X is hereby
added to the Credit Agreement in the form of ANNEX A attached hereto and made
a part hereof.
3. LIMITED WAIVER. As of the Effective Date, the Lender hereby
waives (a) the provisions of Section 3.01(b)(ii) of the Credit Agreement in
respect of (and solely in respect of) the requirement that the Borrower make
a mandatory prepayment under such Section based on the amount of Excess Cash
Flow for Fiscal year 1996 and any Default or Event of Default under Section
10.01(a) of the Credit Agreement resulting from the Borrower's failure to
make such prepayment within the time period specified in Section 3.01(b)(ii)
of the Credit Agreement, (b) the provisions of Section 8.01 of the Credit
Agreement in respect of (and solely in respect of) the Borrower's having made
a loan to RCL in a principal amount of $2,000,000 evidenced by the promissory
note dated as of May 9, 1997 and any Default or Event of Default under
Section 10.01(b) of the Credit Agreement resulting therefrom,(c) the
provisions of Section 8.04 of the Credit Agreement in respect of (and solely
in respect of) the Borrower's having Investments, funded by proceeds from its
initial public offering, in a money market mutual fund, and any Default or
Event of Default under Section 10.01(b) of the Credit Agreement resulting
therefrom and (d) the Defaults and Events of Default under Section 10.01(e)
of the Credit Agreement resulting from "Defaults" and "Events of Default"
under (and as defined in) the RCL Loan Agreement, as set forth in the waiver
letter of even date herewith from the Lender to RCL.
4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Lender that, as of the Effective Date and
after giving effect to this Third Amendment:
(a) All of the representations and warranties of the Borrower
contained in this Third Amendment, the Credit Agreement and the other
Loan Documents are true and correct in all material respects on and as
of the Effective Date, as if then made (other than representations and
warranties which expressly speak as of a different date, which shall be
true and correct in all material respects as of that date);
(b) No Potential Event of Default or Event of Default has occurred
or is continuing or will result after giving effect to this Third
Amendment; and
(c) The Borrower has not voluntarily, by operation of law or
otherwise, assigned, conveyed, transferred or encumbered, either
directly or indirectly, in whole or in
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part, any right to or interest in any of the "Released Claims" (as defined
in SECTION 6 below) purported to be released by this Third Amendment.
5. EFFECTIVE DATE. This Third Amendment shall become effective
as of the date first written above (the "EFFECTIVE DATE") upon the
satisfaction of each of the following conditions:
(a) the Lender shall have received each of the following documents,
in each case in form and substance satisfactory to the Lender:
(i) counterparts hereof executed by the Borrower and the
Lender;
(ii) a Revolving Credit Note substantially in the form of
EXHIBIT X-X to the Credit Agreement (as added by this Third
Amendment), duly executed by the Borrower;
(iii) a certificate of the chief financial officer of the
Borrower certifying that all conditions precedent to the effectiveness
of this Third Amendment have been satisfied;
(iv) a certificate of the Secretary or Assistant Secretary
of the Borrower dated the Effective Date certifying (A) the names
and true signatures of the incumbent officers of the Borrower
authorized to sign this Third Amendment and the other Transaction
Documents executed in connection with this Third Amendment to which
it is a party, (B) that the By-laws of the Borrower have not been
amended or otherwise modified since the date of the most recent
certification thereof by the Secretary or Assistant Secretary of
the Borrower delivered to the Lender and remain in full force and
effect as of the Effective Date, (C) that the Articles of
Incorporation of the Borrower have not been amended or otherwise
modified since the date of the most recent certification thereof by
the Secretary of State of Delaware delivered to the Lender and
remain in full force and effect as of the Effective Date and (D)
the resolutions of the Borrower's board of directors approving and
authorizing the execution, delivery and performance of this Third
Amendment and the other Transaction Documents executed in
connection with this Third Amendment to which the Borrower is a
party; and
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(v) such additional documentation as the Lender may
reasonably request;
(b) the Borrower shall have made a prepayment on the Term Loan in
a principal amount of not less than $6,000,000.00;
(c) no law, regulation, order, judgment or decree of any
Governmental Authority shall, and the Lender shall not have received any
notice that litigation is pending or threatened which is likely to,
enjoin, prohibit or restrain the consummation of the transactions
contemplated by this Third Amendment, except for such laws, regulations,
orders or decrees, or pending or threatened litigation that in the
aggregate could not reasonably be expected to result in a Material
Adverse Effect;
(d) all of the representations and warranties of the Borrower
contained in this Third Amendment, the Credit Agreement and the other
Loan Documents shall be true and correct in all material respects on and
as of the Effective Date, as if then made (other than representations
and warranties which expressly speak as of a different date, which shall
be true and correct in all material respects as of that date);
(e) all corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Third Amendment shall be satisfactory in all
respects in form and substance to the Lender; and
(f) no Event of Default or Potential Event of Default shall have
occurred and be continuing on the Effective Date or will result after
giving effect to this Third Amendment.
6. OUTSTANDING INDEBTEDNESS. The Borrower hereby acknowledges
and agrees that as of May 23, 1997 the aggregate outstanding principal amount
of the Revolving Loans under the Credit Agreement was $127,952.54 and that
the aggregate outstanding principal amount of the Term Loan under the Credit
Agreement was $27,725,000 and that such principal amounts are payable
pursuant to the Credit Agreement, as amended hereby, without offset,
withholding, counterclaim or deduction of any kind. The Borrower, for itself
and on behalf of its officers and directors, and its respective predecessors,
successors and assigns (collectively, the "RELEASORS"), hereby waives,
releases and forever discharges the Lender, and its parent corporation,
Subsidiaries and Affiliates, officers, directors, shareholders employees,
attorneys, agents and servants, and its respective
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predecessors, successors, heirs and assigns (collectively, the "LENDER
PARTIES"), from any and all claims of every type, kind, nature, description
or character, known and unknown, whensoever arising out of any actions or
omissions of the Lender Parties, except all such claims of Affiliates of
Lender arising out of sales of inventory in the ordinary course of business,
occurring any time up to and including the date hereof, which in any way
arise out of, are connected with or relate to the Credit Agreement or any
other Loan Documents (the "RELEASED CLAIMS") and agrees not to bring any
action in any judicial, administrative or other proceeding against the Lender
Parties, alleging any such Released Claim or otherwise in connection with any
such Released Claim.
7. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS.
(a) Upon the Effective Date, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import,
and each reference in the other Loan Documents to the Credit Agreement, shall
mean and be a reference to the Credit Agreement as amended hereby.
(b) This Third Amendment shall be limited solely to the matters
expressly set forth herein and shall not (i) constitute an amendment of any
other term or condition of the Credit Agreement or any other Loan Document,
(ii) prejudice any right or rights which the Lender or Lender Parties may now
have or may have in the future under or in connection with the Credit
Agreement or any other Loan Document, (iii) require the Lender to agree to a
similar transaction on a future occasion, (iv) be deemed or construed as an
admission of liability with respect to the Released Claims or otherwise by
the Lender Parties or (v) create any rights herein to another Person or other
beneficiary or otherwise, except to the extent specifically provided herein.
(c) Except to the extent specifically consented to herein, the
respective provisions of the Credit Agreement and the other Loan Documents
shall not be amended, modified, impaired or otherwise affected hereby, and
such documents and the Obligations under each of them are hereby confirmed in
full force and effect.
8. MISCELLANEOUS. This Third Amendment is a Loan Document. The
headings herein are for convenience of reference only and shall not alter or
otherwise affect the meaning hereof.
9. COUNTERPARTS. This Third Amendment may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
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10. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Third Amendment to be executed by their respective officers thereunto duly
authorized as of the date first above written.
KAYNAR TECHNOLOGIES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Authorized Signatory
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ANNEX A
TO
THIRD AMENDMENT AND LIMITED WAIVER
FORM OF AMENDED AND RESTATED REVOLVING CREDIT NOTE
Attached.
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