EXHIBIT 10.2
AMENDMENT NO. 2 TO WAREHOUSING CREDIT AGREEMENT
This Amendment No. 2 to Warehousing Credit Agreement dated as of June
28, 1994 (the "Amendment"), is entered into by and among TEC
AcquiSub, Inc., a California special purpose corporation
("Borrower"), and First Union National Bank of North Carolina ("FUNB")
and each other financial institution which may hereafter execute
and deliver an instrument of assignment pursuant to Section 11.10
of that certain Warehousing Credit Agreement dated June 30, 1993
(any one financial institution individually, a "Lender," and
collectively, "Lenders"), and FUNB, as agent on behalf of Lenders
(not in its individual capacity, but solely as agent, "Agent").
Capitalized terms used herein without definition shall have the
same meanings herein as given to them in the Credit Agreement.
Recital
A. Borrower, Lenders and Agent have entered into the
Warehousing Credit Agreement as amended by that certain Amendment
No. 1 to Warehousing Credit Agreement, dated December 20, 1993
(collectively, the "Credit Agreement") pursuant to which Lenders
have agreed to extend and make available to Borrower certain
advances of money.
B. Borrower desires that Lenders and Agent amend the Credit
Agreement to provide for, among other things, (i) a new subfacility
for commercial letter of credit borrowings not to exceed Five
Million ($5,000,000) in the aggregate undrawn face amount
outstanding at any time and (ii) a one year extension of the
Commitment Termination Date, upon the terms and conditions more
fully set forth herein.
C. Subject to the representations and warranties of Borrower
and upon the terms and conditions set forth in this Amendment, the
Lenders and Agent are willing to so amend the Credit Agreement.
Agreement
Now, Therefore, in consideration of the foregoing Recitals and
intending to be legally bound, the parties hereto agree as follows:
Section 1. Borrower's Representations and Warranties. Borrower
represents and warrants that, immediately before and immediately
after giving effect to this Amendment, no event shall have occurred
and be continuing which constitutes an Event of Default or a
Potential Event of Default.
Section 2. Amendments.
2.1 The definition of "Borrowing Base" set forth in
Section 1.1 of the Credit Agreement is amended (1) by deleting
clause (a) in its entirety and replacing it with the following:
(a) an amount equal to:
(i) eighty percent (80.0%) of the aggregate
Invoice Price of all Eligible Inventory then owned
of record by Borrower or any Marine Subsidiary or
of record by an Owner Trustee for the beneficial
interest of Borrower or any Marine Subsidiary
(provided, however, that there shall be excluded
from this clause (a)(i) the aggregate Invoice Price
of all items of Eligible Inventory subject to a
Lease under which any applicable lease or rental
payment is more than ninety (90) days past due),
computed (1) with respect to any requested Loan, as
of the requested Funding Date (and shall include
the item(s) of Eligible Inventory to be acquired
with the proceeds of the requested Loan), and
(2) with respect to the delivery of any monthly
Borrowing Base Certificate to be furnished pursuant
to Section 5.1(c), as of the last day of the
calendar month for which such Borrowing Base
Certificate is furnished (provided that if any
portion of Borrower's, such Marine Subsidiary's or
such Owner Trustee's ownership interest in any such
item of Eligible Inventory is sold or assigned to
one or more of the Equipment Growth Funds such that
Borrower, such Marine Subsidiary or such Owner
Trustee continues to retain less than the entire
record or beneficial ownership interest therein,
then for the purpose of computing the Borrowing
Base under this clause (a)(i), the Invoice Price of
such item of Eligible Inventory shall be deemed to
be equal to Borrower's or such Marine Subsidiary's
ratable portion of the Invoice Price of such item
of Eligible Inventory);
plus
(ii) one hundred percent (100.0%) of the sum
of the undrawn face amount of all outstanding
Qualified Letters of Credit; or
and (2) by deleting clause (b)(ii) in its entirety and replacing it
with the following:
(ii) fifty percent (50.0%) of an amount equal
to the aggregate net book value of all Equipment
then owned of record by Growth Fund or a wholly-
owned Subsidiary of Growth Fund organized for the
purpose of holding legal or record title to one or
more marine vessels or to aircraft rotables and
spare parts or of record by an Owner Trustee for
the beneficial interest of Growth Fund (provided,
however, that there shall be excluded from this
clause (b)(ii) the aggregate net book value of all
such items of Equipment which are either (y) off-
lease or (z) subject to a Lease under which any
applicable lease or rental payment is more than
ninety (90) days past due, but only to the extent
and in the amount that the aggregate net book value
of such otherwise excluded Equipment exceeds
fifteen percent (15.0%) of the net book value of
all Equipment included in this clause (b)(ii)
notwithstanding this proviso),
2.2 A definition of "Collateralized Portion" is added to
Section 1.1 of the Credit Agreement to read as follows:
"Collateralized Portion" means that portion of the
face amount of a Letter of Credit which is cash
collateralized with and covered by designated funds on
deposit in the Restricted L/C Cash Collateral Account.
2.3 The definition of "Combined Off-Lease Percentage"
set forth in Section 1.1 of the Credit Agreement is deleted in its
entirety.
2.4 The definition of "Commitment Termination Date" set
forth in Section 1.1 of the Credit Agreement is deleted in its
entirety and is replaced with the following:
"Commitment Termination Date" means June 30, 1995.
2.5 A definition of "Letter of Credit" is added to
Section 1.1 of the Credit Agreement to read as follows:
"Letter of Credit" has the meaning set forth in
Section 2.1.1.
2.6 A definition of "Letter of Credit Commitment
Sublimit" is added to Section 1.1 of the Credit Agreement to read
as follows:
"Letter of Credit Commitment Sublimit" means the
combined Commitments of the Lenders to participate in
Letters of Credit issued pursuant to Section 2.1.4 in the
aggregate stated amount of not more than Five Million
Dollars ($5,000,000), which amount is a sublimit of, and
not in addition to, the Commitments of the Lenders.
2.7 The definition of "Loan Document" set forth in
Section 1.1 of the Credit Agreement is amended to add the words
"Letters of Credit," after the words "the Note," in line 2.
2.8 The definition of "Overadvance" set forth in Section
1.1 of the Credit Agreement is amended to substitute the words
"Section 2.1.1(a)(iv)" for "Section 2.1.1(a)(iii)".
2.9 A definition of "Qualified Letter of Credit" is
added to Section 1.1 of the Credit Agreement to read as follows:
"Qualified Letter of Credit" means a Letter of
Credit issued by FUNB pursuant to this Agreement as to
which not less than twenty percent (20.0%) of the face
amount thereof is supported by cash collateral in the
form of designated deposits in the Restricted L/C Cash
Collateral Account.
2.10 A definition of "Restricted L/C Cash Collateral
Account" is added to Section 1.1 of the Credit Agreement to read as
follows:
"Restricted L/C Cash Collateral Account" means a
restricted money market account maintained by Borrower at
FUNB into which Borrower, at the time of each requested
issuance of a Letter of Credit by FUNB pursuant to this
Agreement, is to deposit funds equal to not less than
twenty percent (20.0%) of the face amount thereof as cash
collateral for Borrower's obligations in respect of an
honor by FUNB of such Letter of Credit.
2.11 A definition of "Uncollateralized Portion" is added
to Section 1.1 of the Credit Agreement to read as follows:
"Uncollateralized Portion" means that portion of the
face amount of a Letter of Credit which is not cash
collateralized with and is not otherwise covered by
designated funds on deposit in the Restricted L/C Cash
Collateral Account.
2.12 Section 2.1(a)(ii) of the Credit Agreement is
deleted in its entirety, Sections 2.1.1(a)(iii), (iv), and (v) are
renumbered to become Sections 2.1.1(a)(iv), (v) and (vi),
respectively, and new Sections 2.1.1(a)(ii) and (iii) are added as
follows:
(ii) Each Lender also severally agrees that Borrower
may, at its option as specified in a notice given to the
Agent in accordance with Section 2.1.4(b) also request
FUNB to issue one or more commercial letters of credit
(each a "Letter of Credit"), in which event, after
satisfaction of all conditions precedent set forth in
Section 3, including, without limitation, Section 3.4,
FUNB shall issue such Letters of Credit subject to and in
accordance with Section 2.1.4; provided, however, nothing
contained in this Agreement shall under any circumstance
be deemed to require FUNB to issue any Letter of Credit
which, in its undrawn face amount, taking into account
the sum of the undrawn face amounts of all other Letters
of Credit then outstanding, exceeds the Letter of Credit
Commitment Sublimit.
(iii) The obligation of Lenders to make any
Loan or for FUNB to issue (and the other Lenders to
purchase participations in) Letters of Credit from time
to time hereunder shall be limited to the then applicable
Maximum Availability. For the purpose of determining the
amount of the Borrowing Base available at any one time,
the amount available shall be the total amount of the
Borrowing Base as set forth in the Borrowing Base
Certificate delivered to Agent pursuant to Section 3.2(a)
with respect to each requested Loan or Letter of Credit.
Nothing contained in this Agreement shall under any
circumstance be deemed to require any Lender to make any
Advance or to purchase any participation in a Letter of
Credit under the Facility which, in the aggregate
principal amount, either (1) taking into account such
Lender's Pro Rata Share of the principal amounts
outstanding under this Agreement and the making of such
Advance or the purchase of such participation interest
exceeds the lesser of (A) such Lender's Commitment for
the Facility and (B) such Lender's Pro Rata Share of the
Borrowing Base, or (2) taking into account such Lender's
Pro Rata Share of the principal amounts outstanding under
this Agreement and under the Growth Fund Agreement and
the making of such Advance or the purchase of such
participation exceeds such Lender's Commitment for the
Facility. To the extent that, following the honoring or
any draw on a Letter of Credit and the resulting
conversion of such drawn amounts into Loans pursuant to
Section 2.1.4(d), there shall exist an Overadvance, such
Overadvance shall be immediately due and payable pursuant
to Section 2.1.1(a)(iv).
2.13 Renumbered Section 2.1.1(a)(iv) of the Credit
Agreement is amended by substituting "Section 2.1.1(a)(iv)" for
"Section 2.1.1(a)(iii)" appearing in line 8.
2.14 Section 2.1.3 of the Credit Agreement is deleted in
its entirety and is replaced with the following:
2.1.3 Utilization of the Loans and Letters of
Credit. The Loans made and the Letters of Credit issued
under the Facility may be used solely for the purpose of
acquiring the specific items of Eligible Inventory
approved by Requisite Lenders, in their sole discretion,
and against which Lenders have made Advances or with
respect to which FUNB has issued (and the Lenders have
purchased participations in) Letters of Credit; provided,
however, in no event shall the proceeds of (a) any Loan
be used to finance more than eighty percent (80.0%) of
the Invoice Price of any item of Eligible Inventory to be
purchased with the proceeds of such Loan or (b) any
Letter of Credit be used for any reason other than to
finance up to one hundred percent (100.0%) of the Invoice
Price of any item of Eligible Inventory to be purchased
with the proceeds of such Letter of Credit. The parties
hereto understand and contemplate that the Loans and
Letters of Credit are being requested to finance the
acquisition of items of Eligible Equipment and that only
upon the funding of such Loans or the honoring of such
Letters of Credit, as the case may be, and the
acquisition of record title by Borrower or a Marine
Subsidiary or by an Owner Trustee for the beneficial
interest of Borrower or a Marine Subsidiary in a single
or back-to-back transaction will the ownership
requirements of Eligible Inventory be satisfied.
2.15 A new Section 2.1.4 is added to the Credit Agreement
to read as follows:
2.1.4 Letters of Credit.
(a) Without limiting the generality of Section
2.1.1, Borrower,at its option as specified in a notice
given to the Agent in accordance with Section 2.1.4(b)
may use the Commitments to request FUNB to issue Letters
of Credit, in which event, after satisfaction of all
conditions precedent set forth in Section 3, including,
without limitation, Section 3.4, FUNB shall issue and
each Lender shall be deemed to have purchased a
participation from FUNB in the original stated amount of
such Letter of Credit equal to such Lender's Pro Rata
Share of such Letter of Credit. Nothing contained in
this Agreement shall under any circumstance be deemed to
require any Lender to participate in the issuance of any
Letter of Credit which, taking into account such Lender's
participation in such Letter of Credit, when added to the
aggregate of such Lender's participation in all other
issued and undrawn Letters of Credit, exceeds such
Lender's Pro Rata Share of the Letter of Credit
Commitment Sublimit.
(b) Subject to the terms and conditions of
this Agreement and in reliance upon the representations
and warranties of Borrower set forth herein, at any time
and from time to time from the Closing Date through the
Business Day immediately prior to the Commitment
Termination Date, FUNB shall issue for the account of
Borrower such Letters of Credit as Borrower may request,
which request shall be made by delivering to the Agent a
duly executed Application and Agreement for Irrevocable
Commercial Letter of Credit, in such form as Borrower and
FUNB shall reasonably agree. No Letter of Credit shall
have an expiration date that is later than the Commitment
Termination Date or one hundred fifty (150) days after
the issuance of the Letter of Credit, whichever is
earlier.
(c) Upon the honoring of any draw under a
Letter of Credit, the full amount of such draw shall be
immediately due and payable by Borrower to FUNB. FUNB
shall immediately notify the Agent, each Lender and
Borrower of the amount of such draw and to the extent
that FUNB has not been immediately reimbursed by Borrower
for any payment required to be made by FUNB under such
Letter of Credit (and all commissions incurred but unpaid
in connection therewith), each Lender shall, according to
its Pro Rata Share of the Uncollateralized Portion of
such Letter of Credit, reimburse FUNB upon written demand
for the amount of such payment (and such unpaid
commissions). The obligation of each Lender to so
reimburse FUNB shall be absolute and unconditional and
shall not be affected by the occurrence of an Event of
Default or Potential Event of Default or any other
occurrence or event. Any such reimbursement shall not
relieve or otherwise limit or impair the obligation of
Borrower to reimburse the Lenders for the amount of any
payment made by FUNB under any Letter of Credit.
(d) Without limiting the generality of the
preceding Subsections of this Section 2.1.4, in the event
Borrower shall fail to reimburse FUNB immediately for any
honor of a draw on any Letter of Credit as confirmed by
FUNB's written notice and demand for payment from each
Lender of its ratable participation amount pursuant to
Subsection 2.1.4(c), each Lender shall be deemed to have
made, without further notice to Borrower, Loans in the
principal amount equal to each Lender's Pro Rata Share of
the amount drawn under such Letter of Credit (up to but
not exceeding the Uncollateralized Portion thereof), plus
any unpaid commission, and, for this purpose, the
conditions precedent set forth in Section 3 shall not
apply. The proceeds of such Loans shall be applied to
reimburse FUNB for such payment required to be made by
FUNB under the Letter of Credit. In the event that any
Loan shall be deemed to be made to Borrower pursuant to
this Section 2.1.4(d), such Loan shall be deemed to have
been made as of the date of the honor of the draw under
the respective Letter of Credit and interest shall accrue
thereon at the same rate as provided for other Loans
under this Agreement. In the event that FUNB does not
receive the proceeds of any Loans made pursuant to this
Subsection by 1:00 p.m., North Carolina time, on the date
that the draw on the Letter of Credit is honored, the
Lender whose funds are delayed shall pay interest to FUNB
on the amount not received at the Federal Funds Rate from
the date of such honor until the date on which FUNB
receives such proceeds by 1:00 p.m.
(e) All Letters of Credit advanced under the
Commitments are to be Qualified Letters of Credit.
Borrower hereby acknowledges and reaffirms the grant to
the Agent, on behalf of FUNB and the other Lenders, under
the Security Agreement of a duly and fully perfected
security interest in all of Borrower's right, title and
interest in and to the Restricted L/C Cash Collateral
Account and all funds on deposit therein and all proceeds
thereof. So long as any Letter of Credit shall be
outstanding and undrawn, Borrower shall continue to
maintain separate funds in the Restricted L/C Cash
Collateral Account so to assure that each such
outstanding Letter of Credit remains a Qualified Letter
of Credit. Upon the honoring of a draw on a Letter of
Credit and the delivery of a demand from FUNB pursuant to
Section 2.1.4(c) that Borrower reimburse FUNB for the
entire amount of such draw, Borrower hereby authorizes
FUNB to direct debit the Restricted L/C Cash Collateral
Account in the amount of the Collateralized Portion of
the Letter of Credit, which amount FUNB may apply in
reimbursement of itself for the Collateralized Portion of
the honored draw.
2.16 Section 2.3 of the Credit Agreement is deleted in its
entirety and is replaced with the following:
2.3 Fees and Commissions. Borrower agrees to pay to
FUNB, as set forth below, a nonrefundable commission fee with
respect to each Letter of Credit issued hereunder, according to the
following commission schedule:
(a) Issuance Fee. An issuance fee equal to one-
eighth of one percent
(0.125%) of the face amount of the requested Letter of
Credit, payable at the time of Borrower's request
therefor to the Agent for the ratable account of FUNB for
the Collateralized Portion of such Letter of Credit and
of each Lender (including FUNB) according to each
Lender's Pro Rata Share of the Uncollateralized Portion
of such Letter of Credit.
(b) Negotiation Fee. A negotiation fee equal to
one-fourth of one percent (0.250%) of the face amount of
any draw honored under any Letter of Credit, payable to
the negotiating financial institution at the time such
draw is honored.
(c) Acceptance Fee. For each accepted Letter of
Credit, an acceptance fee calculated at a rate equal to
two and one-half percent (2.5%) per annum of the face
amount of such Letter of Credit (for the period
commencing with the date of acceptance of such Letter of
Credit through such Letter of Credit's expiration date),
payable in advance on the date of acceptance to the Agent
for the ratable account of FUNB for the Collateralized
Portion of such Letter of Credit and of each Lender
(including FUNB) according to each Lender's Pro Rata
Share of the Uncollateralized Portion of such Letter of
Credit.
2.17 Sections 3.1, 3.2 and 3.3 of the Credit Agreement are
modified so that each reference to a Loan or the making of any
Advance shall also be deemed to mean and include a Letter of Credit
or the issuance of a Letter of Credit, as the context may dictate.
2.18 A new Section 3.4 is added to the Credit Agreement to
read as follows:
3.4 Further Conditions to All Letters of Credit.
Notwithstanding anything to the contrary contained in
this Agreement, unless waived in writing by Requisite
Lenders, FUNB shall have no obligation to issue (and no
Lender shall have any obligation to purchase any
participation in) any Letter of Credit if any of the
following events shall no have occurred:
(a) Borrower shall not have executed and
delivered to FUNB, with appropriate insertions
satisfactory to FUNB in its sole discretion, an
Application and Agreement for Irrevocable Commercial
Letter of Credit with respect to the requested Letter of
Credit.
(b) Borrower shall not have deposited
sufficient funds into the Restricted L/C Cash Collateral
Account to cash collateralize at least twenty percent
(20.0%) of the face amount of the requested Letter of
Credit.
2.19 Section 3.3(f) of the Credit Agreement is deleted in its
entirety.
2.20 Sections 8.3(b) and (c) of the Credit Agreement are
renumbered as Sections 8.3(c) and (d) and a new Section 8.3(b) is
added to read as follows:
(b) Demand that Borrower (i) deposit cash in
the Restricted L/C Cash Collateral Account in an amount
equal to the Uncollateralized Portions of any Letters of
Credit remaining undrawn, as collateral security for the
repayment of any future drawings under such Letters of
Credit, and Borrower shall forthwith deposit and pay such
amounts, and (ii) pay in advance all Letter of Credit
fees and commissions scheduled or payable over the
remaining terms of the Letter of Credit.
2.21 Exhibit B (form of Borrowing Base Certificate) to the
Credit Agreement is replaced and superseded by Attachment 1 to this
Amendment.
Section 3. Limitation. The amendments set forth in this
Amendment shall be limited precisely as written and shall not be
deemed (a) to be a modification of any other term or condition of
the Credit Agreement or of any other instrument or agreement
referred to therein or to prejudice any right or remedy which any
of the Lenders or Agent may now have or may have in the future
under or in connection with the Credit Agreement or any instrument
or agreement referred to therein; or (b) to be a consent to any
future amendment or modification to any instrument or agreement the
execution and delivery of which is consented to hereby, or to any
waiver of any of the provisions thereof. Except as expressly
amended hereby, the Credit Agreement shall continue in full force
and effect.
Section 4. Facility Extension Fee. In consideration of the
Lenders' agreement to enter into this Amendment and to extend the
Commitment Termination Date, Borrower agrees to pay to Agent, for
the account of FUNB (in its capacity as the sole Lender as of the
date of this Amendment), an amendment and extension fee of
$125,000, due and payable on the effective date of this Amendment.
Section 5. Effectiveness. This Amendment shall become effective
upon the last to occur of:
(a) Receipt by Agent, in form and substance satisfactory
to FUNB (in its capacity as the sole Lender) of a certified copy of
the records of all actions taken by Borrower, TEC and FSI,
including all corporate resolutions of Borrower, TEC and FSI
authorizing or relating to the execution, delivery and performance
of this Amendment.
(b) The execution and delivery of a copy hereof, whether
the same or different copies, by Borrower, FUNB (in its capacity as
the sole Lender) and Agent.
(c) The execution and delivery of the Acknowledgement of
Amendment and Reaffirmation of Guaranty attached to this Amendment,
whether the same or different copies, by each of FSI and TEC.
(d) Receipt by Agent of an originally executed legal
opinion of Stephen Peary, general counsel of Borrower, on behalf of
Borrower, in form and substance satisfactory to Agent as to the due
authorization and enforceability of this Amendment, dated as of the
effective date of this Amendment and addressed to the Lenders and
Agent.
(e) Receipt by Agent, for the account of FUNB (in its
capacity as the sole Lender), of the $125,000 facility extension
fee described in Section 4, above.
(f) The execution and delivery of an Amendment No. 1 to
the Growth Fund Agreement by Growth Fund, FUNB (in its capacity as
the sole Lender) and Agent.
(g) Receipt by Agent of such other documents as the
Agent shall reasonably request.
Section 6. Counterparts. This Amendment may be signed in any
number of counterparts, and by different parties hereto in separate
counterparts, with the same effect as if the signatures to each
such counterpart were upon a single instrument. All counterparts
shall be deemed an original of this Amendment.
In Witness Whereof, the parties hereto have caused this Amendment
to be executed as of the date first written above.
Borrower TEC Acquisub, Inc.
By: /s/ Stephen Peary
Printed Name: Stephen Peary
Title: Vice President
Lenders First Union National Bank Of North Carolina
By: /s/ Milt Anderson
Printed Name: Milt Anderson
Title: Vice President
Agent First Union National Bank Of North Carolina, as
Agent
By: /s/ Milt Anderson
Printed Name: Milt Anderson
Title: Vice President