EXHIBIT 4.5
[Execution Copy]
COMPASS AEROSPACE CORPORATION
AND ITS UNDERSIGNED SUBSIDIARIES
2029 Century Park East
Suite 1112
Los Angeles, California 90067
Dated as of June 7, 1999
BankBoston, N.A., as Agent, and
the Lenders referred to in the Credit
Agreement (as defined below)
100 Federal Street
Boston, Massachusetts 02110
Re: AMENDMENT NO. 1 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 (the "CREDIT
AGREEMENT"), among (a) Compass Aerospace Corporation (the "BORROWER"), (b)
Aeromil Engineering Company ("AEROMIL"), (c) Western Methods Machinery
Corporation ("WESTERN METHODS"), (d) Barnes Machine Incorporated ("BARNES"), (e)
Brittain Machine, Inc. ("BRITTAIN"), (f) Wichita Manufacturing, Inc.
("WICHITA"), (g) Sea-lect Products, Inc. ("SEA-LECT"), (h) CWE Acquisition Co.
("CWE"), (i) Pacific Hills Manufacturing Co. (formerly known as Lamsco West,
Inc.) ("LAMSCO"), (j) Modern Manufacturing, Inc. ("MODERN MANUFACTURING" and,
together with Aeromil, Western Methods, Barnes, Brittain, Wichita, J&J,
Sea-lect, CWE and Lamsco, collectively, the "GUARANTORS"), (l) BankBoston, N.A.
("BANKBOSTON") and the other lending institutions listed on SCHEDULE 1 thereto
as Lenders (the "LENDERS"), (m) BankBoston, as Issuing Bank and as Agent, (n)
Royal Bank of Canada, as Syndication Agent, (o) General Electric Capital
Corporation, as Documentation Agent, and (p) 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.
The Borrower has requested that the Required Lenders and the Agent join
with the Transactions Parties in amending the Credit Agreement to, among other
things, amend and restate the financial covenants of the Borrower in Sections
11.1, 11.2, 11.3, 11.4 and 11.5 of the Credit Agreement. The undersigned
Required Lenders and the Agent have advised the Borrower that they are prepared
to so amend
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the Credit Agreement, on the terms, subject to the conditions and in reliance on
the representations contained herein.
SECTION 1. AMENDMENT OF CREDIT AGREEMENT. Subject to the conditions
set forth in Section 2 below, each of the Transaction Parties, the Agent and the
undersigned Required Lenders agrees to amend the Credit Agreement as set forth
below. Each of the following amendments shall be effective as of the Effective
Date (other than clauses (d), (e), (f), (g) and (h) below which shall be
effective as of March 31, 1999):
(a) REDUCTION OF TOTAL ACQUISITION COMMITMENT. The Total
Acquisition Commitment is hereby reduced from $65,000,000 to $35,000,000.
As of the date of this Agreement, the Total Acquisition Loan Commitment
shall be $17,500,000, the Total UK Acquisition Loan Commitment shall be
$17,500,000 and the Acquisition Loan Commitments and the UK Acquisition
Loan Commitments of the Acquisition Loan Lenders shall be reallocated PRO
RATA in accordance with their respective Acquisition Loan Commitment
Percentages and UK Acquisition Loan Commitment Percentages of such amounts.
(b) DEFINITIONS. Section 1.1 of the Credit Agreement is hereby
amended as set forth below:
(i) the definitions of "ADDITIONAL ACQUISITION LOANS" and
"PERMITTED ADDITIONAL ACQUISITION LOAN" appearing therein are deleted
in their entirety;
(ii) Clause (b) of the definition of "PERMITTED ACQUISITION"
is amended and restated in its entirety to read as follows:
(b) the Acquisition is on friendly terms and, if all or
any portion of the purchase price to be paid by the Borrower or
any other Transaction Party in connection with such Acquisition
is funded with the proceeds of any Acquisition Loan or UK
Acquisition Loan, the Required Lenders have given their written
consent to such Acquisition;
(iii) each reference to the number "(vi)" appearing before the
phrase "Letter of Credit Exposure" in the definition of "REQUIRED
LENDERS" is deleted;
(iv) the definition of "TOTAL ACQUISITION COMMITMENT"
appearing therein is amended and restated in its entirety to read as
follows:
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TOTAL ACQUISITION COMMITMENT. The sum of the Total
Acquisition Loan Commitments and Total UK Acquisition Loan
Commitments of the Lenders, as in effect from time to time.
The Total Acquisition Commitment was $65,000,000 as of the
Restatement Effective Date and was reduced to $35,000,000 as of
the Amendment No. 1 Effective Date.
(v) the following new definitions are inserted therein in
proper alphabetical sequence:
AMENDMENT NO. 1 TO CREDIT AGREEMENT. Amendment No. 1 to
Credit Agreement, dated as of June 7, 1999, among the
Transaction Parties, the Required Lenders and the Agent.
AMENDMENT NO. 1 EFFECTIVE DATE. The date on which all
of the conditions to the effectiveness of Amendment No. 1 to
Credit Agreement are satisfied and Amendment No. 1 to Credit
Agreement becomes effective.
(c) ACQUISITION LOANS AND UK ACQUISITION LOANS. Section 2.1(d) of
the Credit Agreement is hereby amended as set forth below:
(i) the proviso at the end of the second sentence of Section
2.1(d) is deleted in its entirety; and
(ii) the next to the last sentence of Section 2.1(d) is
amended and restated in its entirety to read as follows:
The Total Acquisition Commitment was $65,000,000 as of the
Restatement Effective Date and was reduced to $35,000,000 as of
the Amendment No. 1 Effective Date.
(d) MAXIMUM LEVERAGE RATIO. Section 11.1 of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:
11.1. MAXIMUM LEVERAGE RATIO. The Leverage Ratio as of the
end of any Reference Period ending on any date or during any period
set forth in the table below to be greater than the ratio set forth
opposite such date or period:
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Date or Period Ratio
-------------- -----
March 31, 1999 4.72 to 1
June 30, 1999 6.00 to 1
September 30, 1999 6.25 to 1
December 31, 1999 6.00 to 1
March 31, 2000 5.75 to 1
June 30, 2000 5.50 to 1
September 30, 2000 5.25 to 1
December 31, 2000 5.25 to 1
January 1, 2001 through September 30, 2001 4.00 to 1
October 1, 2001 through September 30, 2002 3.75 to 1
October 1, 2002 through September 30, 2003 3.50 to 1
October 1, 2003 through February 1, 2005 3.25 to 1
(e) 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
------
March 31, 1999 $41,300,000
June 30, 1999 $35,000,000
September 30, 1999 $32,000,000
December 31, 1999 $32,500,000
March 31, 2000 $35,000,000
June 30, 2000 $37,000,000
September 30, 2000 $37,000,000
December 31, 2000 $37,000,000
January 1, 2001 through December 31, 2001 $48,500,000
January 1, 2002 through December 31, 2002 $50,500,000
January 1, 2003 through December 31, 2003 $53,000,000
January 1, 2004 through December 31, 2004 $55,000,000
January 1, 2005 through February 1, 2005 $57,500,000
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(f) MINIMUM INTEREST COVERAGE RATIO. Section 11.3 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
11.3. MINIMUM INTEREST COVERAGE RATIO. The ratio of (a)
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 (b) Consolidated Total Interest Expense of the
Borrower and its Subsidiaries for such Reference Period, to be less
than the ratio set forth below opposite such date or period:
Minimum Interest
Date or Period Coverage Ratio
-------------- --------------
March 31, 1999 2.10 to 1
June 30, 1999 1.75 to 1
September 30, 1999 1.60 to 1
December 31, 1999 1.60 to 1
March 31, 2000 1.75 to 1
June 30, 2000 1.75 to 1
September 30, 2000 2.00 to 1
December 31, 2000 2.00 to 1
January 1, 2001 through February 1, 2005 2.50 to 1
(g) MINIMUM DEBT SERVICE COVERAGE RATIO. Section 11.4 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
11.4. MINIMUM DEBT SERVICE COVERAGE RATIO. The ratio of (a)
Consolidated Operating Cash Flow 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 (b) Consolidated Debt Service of the
Borrower and its Subsidiaries for such Reference Period, to be less
than the ratio set forth below opposite such date or period:
Minimum Debt
Service
Date or Period Coverage Ratio
-------------- --------------
March 31, 1999 1.17 to 1
June 30, 1999 1.05 to 1
September 30, 1999 1.05 to 1
December 31, 1999 1.10 to 1
January 1, 2000 through February 1, 2005 1.15 to 1
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(h) 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 $6,000,000 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 $ 6,000,000
January 1, 2001 through December 31, 2001 $10,500,000
January 1, 2002 through December 31, 2003 $11,500,000
January 1, 2004 through December 31, 2004 $12,000,000
January 1, 2005 through February 1, 2005 $12,500,000
(i) PERMITTED ACQUISITIONS. Section 13.8(c) of the Credit
Agreement is hereby deleted in its entirety.
(j) SCHEDULE 1 TO CREDIT AGREEMENT (COMMITMENTS; BANK'S OFFICES).
Schedule 1 to the Credit Agreement is hereby amended and restated in its
entirety to read as set forth on SCHEDULE 1 hereto.
(k) SCHEDULE 1.2 TO CREDIT AGREEMENT (APPLICABLE MARGINS).
SCHEDULE 1.2 to the Credit Agreement is hereby amended and restated in its
entirety to read as set forth on SCHEDULE 1.2 hereto.
(l) OTHER SCHEDULES TO CREDIT AGREEMENT. SCHEDULES 2, 8.8, 8.17
and 8.19 to the Credit Agreement are hereby amended and restated in their
entirety to read as set forth on SCHEDULES 2, 8.8, 8.17, and 8.19 hereto,
respectively.
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SECTION 2. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective if, and only if, on or before June 7, 1999, each of the following
conditions precedent shall have been satisfied:
(a) EXECUTION AND DELIVERY OF THIS AGREEMENT. The Agent shall have
received duly executed counterparts of this Agreement which, when taken
together bear the authorized signatures of each of the Transaction Parties
and the Required Lenders.
(b) AMENDMENT FEE. The Borrower shall have paid to the Agent, for
the account of each Lender who executes and delivers this Agreement to the
Agent on or prior to the Effective Date, a non-refundable amendment fee
equal to 0.25% of the sum of such Lender's outstanding (i) Revolving Credit
Commitment, (ii) Acquisition Loan Commitment (after giving effect to this
Agreement), (iii) U.K. Acquisition Loan Commitment (after giving effect to
this Agreement), (iv) Term Loans A and (v) Terms Loans B.
(c) FEES AND EXPENSES. The Borrower shall have paid or reimbursed
the Agent for all of the fees and disbursements of Bingham Dana LLP, 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.
(d) LEGAL OPINION. The Agent shall have received from Morgan,
Lewis & Bockius, counsel to the Transaction Parties, a favorable legal
opinion 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.
(e) CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
received from each of the 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 Restatement Effective Date. Such certificate shall be in form
and substance reasonably satisfactory to the Agent.
(f) 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 this Agreement, and
(ii) such Person's
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performance of all of its agreements and obligations under this Agreement
and the Credit Agreement, as amended hereby (collectively, the "AMENDMENT
DOCUMENTS"). Such certified copies shall be in form and substance
reasonably satisfactory to the Agent.
(g) 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 this
Agreement, and (y) to give notices and to take other action on behalf of
such Person under this Agreement. Such certified copies or certificate
shall be in form and substance reasonably satisfactory to the Agent.
(h) 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 Transaction Parties contained in Section 3 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).
(i) REPRESENTATIONS AND WARRANTIES. The Agent shall be satisfied
that the representations and warranties set forth in Section 3 hereof are
true and correct on and as of the Effective Date.
The first date as of which all of the foregoing conditions precedents shall be
satisfied is referred to herein as the "EFFECTIVE DATE".
SECTION 3. REPRESENTATIONS AND WARRANTIES. Each of the Transaction
Parties hereby represents and warrants to the Agent and the Lenders that:
(a) This Agreement has been duly executed and delivered by such
Transaction Party. The execution and delivery by such Transaction Party of
this Agreement has been duly authorized by proper proceedings by such
Transaction Party, and each Amendment Document constitutes the legal, valid
and binding obligation of such Transaction Party, enforceable against such
Transactions Party in accordance with its terms.
(b) The execution and delivery by such Transaction Party of this
Agreement and the performance by such Transaction Party of each Amendment
Document (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
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(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
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 4. ACQUISITION NOTES. At any time following the Effective Date,
upon the request of the Borrower, each Acquisition Loan Lender shall deliver to
the Agent (for delivery and cancellation by the Borrower) the Acquisition Note
then held by such Lender after such Lender receives a duly executed and properly
completed new Acquisition Note in the form of EXHIBIT A-4 to the Credit
Agreement in a principal amount equal to such Lender's Acquisition Loan
Commitment (after giving effect to this Agreement).
SECTION 5. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. EXPENSES. The Borrower shall pay all reasonable out-of-pocket
expenses incurred by the Agent and the Lenders in connection with the
preparation, negotiation, execution, delivery and enforcement of this Agreement,
including, but not limited to, the reasonable fees and disbursements of Bingham
Dana LLP.
SECTION 7. 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. 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
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one and the same agreement. Delivery of an executed counterpart of a signature
page by facsimile transmission 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]
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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: /s/ N. Paul Brost
---------------------------
Name:
Title:
GUARANTORS: AEROMIL ENGINEERING
COMPANY
WESTERN METHODS MACHINERY
CORPORATION
BARNES MACHINE INCORPORATED
BRITTAIN MACHINE, INC.
WICHITA MANUFACTURING, INC.,
SEA-LECT PRODUCTS, INC.,
CWE ACQUISITION CO.
PACIFIC HILLS MANUFACTURING CO.
MODERN MANUFACTURING, INC.
By: /s/ N. Paul Brost
---------------------------
Name:
Title:
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Agreed to and Accepted By:
BANKBOSTON, N.A., as Lender, as
Agent and as Issuing Bank
By: /s/ Richard D. Hill, Jr.
---------------------------------
Name: Richard D. Hill, Jr.
Title: Managing Director
BANKBOSTON, N.A., (London Branch),
as Lender and UK Fronting Lender
By: /s/ Richard D. Hill, Jr.
---------------------------------
Name: Richard D. Hill, Jr.
Title: Managing Director
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By: /s/ Frederick J. Maurice
---------------------------------
Name: Frederick J. Maurice
Title: Risk Manager
ROYAL BANK OF CANADA, as Lender
By: /s/ John Crawford
---------------------------------
Name: John Crawford
Title: Senior Manager
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NATIONSBANK, N.A., as Lender
By: /s/ Gary K. Peterson
---------------------------------
Name: Gary K. Peterson
Title: Senior Vice President
PARIBAS, as Lender
By: /s/ Robert N. Pinkerton
---------------------------------
Name: Robert N. Pinkerton
Title: Managing Director
By: /s/ Lee S. Buckner
---------------------------------
Name: Lee S. Buckner
Title: Managing Director
WESTERN FINANCIAL BANK, as Lender
By:
---------------------------------
Name:
Title:
HELLER FINANCIAL, INC., as Lender
By: /s/ K. Craig Gallehugh
---------------------------------
Name: K. Craig Gallehugh
Title: Vice President
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CYPRESSTREE INVESTMENT FUND,
LLC, as Lender
By: CypressTree Investment Management
Company Inc., its Managing Member
By: /s/ Jeffrey W. Heuer
---------------------------------
Name: Jeffrey W. Heuer
Title: Principal
CYPRESSTREE INSTITUTIONAL
FUND, LLC, as Lender
By: CypressTree Investment Management
Company Inc., its Managing Member
By: /s/ Jeffrey W. Heuer
---------------------------------
Name: Jeffrey W. Heuer
Title: Principal
KZH CYPRESSTREE-1 LLC, as Lender
By: /s/ Virginia Conway
---------------------------------
Name: Virginia Conway
Title: Authorized Agent
FIRST SOURCE FINANCIAL LLP, as Lender
By: First Source Financial, Inc.,
its Agent/Manager
By: /s/ Pamela D. Eskra
---------------------------------
Name: Pamela D. Eskra
Title: Vice President
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SRV-HIGHLAND, INC. , as Lender
By: /s/ Kelly C. Walker
---------------------------------
Name: Kelly C. Walker
Title: Vice President
SCHEDULE 1.2
APPLICABLE MARGINS
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Revolving Acquisition Loan
Base Base Credit Commitment Fees
Rate A Eurocurrency Rate B Eurocurrency Commitment Fees
Level Leverage Ratio Loans Rate A Loans Loans Rate B Loans
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I Greater than 4.0:1.0 1.75% 3.25% 2.25% 3.75% 0.50% 0.75%
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II Less than or equal to 1.50% 3.00% 2.00% 3.50% 0.50% 0.75%
4.0:1.0 but greater than
3.5:1.0
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III Less than or equal to
3.5:1.0 but greater than 1.25% 2.75% 2.00% 3.50% 0.50% 0.75%
3.0:1.0
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IV Less than or equal to 1.00% 2.50% 2.00% 3.50% 0.375% 0.50%
3.0:1.0
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