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EXHIBIT 4.02
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "Amendment") is
made and entered into as of May 27, 1998, by and among CHASE BANK OF TEXAS,
N.A., a national banking association ("Lender"), formerly known as TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, and TIDEL ENGINEERING, INC., a Delaware
corporation ("Borrower"), and TIDEL TECHNOLOGIES, INC., a Delaware corporation
("Parent"), formerly known as American Medical Technologies, Inc., d/b/a AMT
Industries, Inc.
R E C I T A L S:
A. On June 12, 1997, Lender and Borrower entered into that certain
Credit Agreement (as amended, the "Credit Agreement") pursuant to which Lender
agreed to make loans and advances (collectively the "Loans") to Borrower in
accordance with the terms thereof. The Credit Agreement was amended pursuant to
that certain First Amendment to Credit Agreement dated as of February 23, 1998.
The Loans are evidenced by that certain Promissory Note of even date with the
Credit Agreement, in the stated principal amount of $5,000,000.00, bearing
interest and being payable to the order of Lender as therein provided (as
amended, the "Note"). The Credit Agreement, the Note and the documents,
instruments and agreements executed in connection therewith are collectively
referred to herein as the "Loan Documents".
B. Borrower has requested Lender to modify the Credit Agreement so
as to increase the Commitment from $5,000,000 to $7,000,000.
C. Borrower and Parent also have requested Lender to modify the
Credit Agreement so as to add a term loan facility in the amount of $640,000, to
be evidenced by a term note from Borrower and Parent, jointly and severally,
which will be governed by the Credit Agreement.
D. Finally, Borrower and Parent have requested that Lender modify
certain of the covenants set forth in the Credit Agreement, including, without
limitation, the covenants pertaining to Tangible Net Worth and Capital
Expenditures.
E. Lender, at the request of Borrower and Parent, for good and
valuable consideration, is willing to enter into this Amendment upon the terms
and conditions set forth below:
A G R E E M E N T:
NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Borrower and Lender hereby covenant and agree
as follows:
1. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the meanings given to them in the Credit Agreement.
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2. Additional Definitions. Article 1 of the Credit Agreement is
hereby amended by adding the following definitions:
Dividend means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of Property in respect of
capital stock of such corporation, other than distributions in capital
stock of the same class; or (b) the redemption or other acquisition of
any capital stock of such corporation.
Fixed Rate means eight and four-tenths percent (8.4%) per annum.
Second Amendment Closing Date shall mean the date of the Second
Amendment to the Agreement.
Term Loan shall mean the Term Loan made pursuant to Section 2A.1
hereof.
Term Loan Commitment shall mean the obligation of Lender to make
the Term Loan in an aggregate principal amount of Six Hundred Forty
Thousand Dollars ($640,000).
Term Loan Maturity Date shall mean the earlier of (a) May 31,
2003, and (b) any date the Term Loan Maturity Date is accelerated by
the Lender pursuant to Section 8.1 hereof.
3. Consequential Loss. The definition of "Consequential Loss" in
Section 1.1 of the Credit Agreement is hereby amended to add the following
provisions:
Consequential Loss also shall mean, with respect to (a) the
Borrower's payment of principal of a Fixed Rate Borrowing on a day
other than the last day of the applicable Interest Period, or (b) the
Borrower's failure to borrow a Fixed Rate Borrowing on the date
specified by the Borrower for any reason, in each case whether
voluntary or involuntary, any loss, expense, penalty, premium or
liability incurred by the Lender as a result thereof, including without
limitation, any interest paid by the Lender to lenders of funds
borrowed by it to make or carry the Term Loan and any other costs and
expenses sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain the Term Loan.
4. Concentration Limits for Eligible Receivables. The definition of
"Eligible Receivables" in Section 1.1 of the Credit Agreement is hereby amended
by revising clause (d) of the definition to delete the following parenthetical:
(other than Hanco Systems, in which case 25%, and Retriever Payment
Systems, in which case 15%).
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5. Maturity Date for Revolving Loans. The definition of "Maturity
Date" in Section 1.1 of the Credit Agreement is hereby amended by revising
clause (a) of the definition to read in full as follows:
(a) May 31, 2000.
6. Term Loan. The Credit Agreement is hereby amended by adding
Article 2A as follows:
2A. Term Loan; Term Note; Payments; Prepayments; Interest Rates.
2A.1 Term Loan Commitment. Subject to the terms and conditions
hereof, Lender agrees to make a Term Loan to the Borrower after the
Second Amendment Closing Date until, but not including, the Term Loan
Maturity Date, in a principal amount up to, but not exceeding the Term
Loan Commitment.
2A.2 Mandatory and Voluntary Prepayments.
(a) The Borrower shall have the right, at its option and
subject to the requirements of Section 2.4, to prepay the Term Loan as
provided in this Section 2A.2. Any prepayment under this subsection
shall applied to the prepayment of the aggregate unpaid principal
amount of the Term Note. Prepayment under this subparagraph (a) shall
be subject to the following additional conditions:
(1) In no event shall the Term Note be partially prepaid.
(2) Prepayment applied to the Term Note may be made on any
Business Day, provided, that (i) the Borrower shall have given the
Lender at least five (5) Business Days' prior irrevocable written or
telecopied notice of such prepayment, specifying the principal amount
of the Term Note to be prepaid, which shall be the entire amount of the
outstanding principal of the Term Note, and (ii) if such prepayment is
made on any day other than the Term Loan Maturity Date, the Borrower
shall pay directly to the Lender, on the date of such prepayment, the
Consequential Loss as a result of such prepayment.
(b) Notice of any prepayment having been given, the
principal amount specified in such notice, together with interest
thereon to the date of prepayment, shall be due and payable on such
prepayment date.
2A.3 Term Note; Payments.
(a) The Term Loan made by Lender to the Borrower shall be
evidenced by a Term Note dated as of the Second Amendment Closing Date,
delivered and payable to Lender in a principal amount equal to the Term
Loan Commitment as of the Term Loan Closing Date.
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(b) Principal payments in the amount of Thirty-Two Thousand
and No/100 Dollars ($32,000.00), each, shall be due and payable
quarterly, on each August 31, November 30, February 28 and May 31
during the term of the Term Note, beginning August 31, 1998. The
remaining outstanding principal balance of the Term Loan, as evidenced
by the Term Note, shall mature and be fully due and payable on the Term
Loan Maturity Date.
(c) Subject to Section 9.6 hereof, the Borrower hereby
agrees to pay accrued interest on the unpaid principal balance of the
Term Loan on each August 31, November 30, February 28 and May 31 during
the term of the Term Note, beginning August 31, 1998. After the Term
Loan Maturity Date, accrued and unpaid interest on the Term Loan shall
be payable on demand.
(d) To effect payment of accrued interest owing on the Term
Loan as of the Interest Payment Dates, subject to the provisions of
Sections 2.1 and 4.1 hereof, the Lender may, but shall not be obligated
to, make a Loan to pay in full the amount of accrued interest owing and
payable on the Term Loan as of the respective Interest Payment Date if
(i) such Loan is to be made prior to the Maturity Date, (ii) the
Availability would be equal to or greater than zero after giving effect
to the Loan, and (iii) no Default or Event of Default shall have
occurred which is then continuing. The inability of the Lender to cause
a payment of any accrued interest owing on the Term Loan on any
Interest Payment Date as of the respective due date thereof in
accordance with the preceding sentence shall not in any way whatsoever
effect the Borrower's and the Parent's obligation to otherwise pay such
amounts in accordance with the applicable terms hereof or any other
Loan Documents.
2A.4 Application of Payments and Prepayments.
(a) Prepayment on the Term Note shall be applied to payment
of the aggregate unpaid principal amount of the Term Note, with the
balance of any such prepayments, if any, being applied to accrued
interest. Payments of accrued interest on the Term Note in accordance
with Section 2A.3(c) hereof shall be applied to the aggregate accrued
interest then outstanding under the Term Note, while payment by the
Borrower of the aggregate principal amount outstanding under the Term
Note on the Term Loan Maturity Date shall be applied to principal.
(b) All sums payable by the Borrower to the Lender hereunder
or pursuant to the Term Note shall be payable in United States dollars
in immediately available funds not later than 12:00 noon on the date
such payment or prepayment is due and shall be made without set-off,
counterclaim or deduction of any kind. Any such payment or prepayment
received and accepted by the Lender after 12:00 noon shall be
considered for all purposes (including the payment of interest, to the
extent permitted by law) as having been made on the next succeeding
Business Day. All such payments or prepayments shall be made at the
Principal Office. If any payment or prepayment becomes due and payable
on a day which is not a Business Day, then the date for the
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payment thereof shall be extended to the next succeeding Business Day
and interest shall be payable thereon at the then applicable rate per
annum during such extension
2A.5 Interest Rate for Term Loan.
(a) Subject to Section 9.6 hereof, the Term Note shall bear
interest on its outstanding principal balances at a rate per annum
equal to the Fixed Rate.
(b) All interest will be computed on the basis of a year of 360
days and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable, unless the effect
of so computing shall be to cause the rate of interest to exceed the
Highest Lawful Rate.
2A.6 Special Provisions Applicable to Fixed Rate Borrowings. THE
BORROWER AND PARENT HEREBY AGREE TO INDEMNIFY THE LENDER AGAINST AND
HOLD LENDER HARMLESS FROM ANY LOSS OR EXPENSE WHICH IT MAY INCUR OR
SUSTAIN AS A CONSEQUENCE OF ANY UNTIMELY PAYMENT (MANDATORY OR
OPTIONAL) OR DEFAULT BY THE BORROWER OR THE PARENT IN THE PAYMENT OF
ANY PRINCIPAL AMOUNT OF OR INTEREST ON THE TERM NOTE, OR ANY FAILURE BY
THE BORROWER OR THE PARENT TO CONVERT OR TO BORROW ANY FIXED RATE
BORROWING ON THE DATE SPECIFIED BY THE BORROWER, IN EACH CASE INCLUDING
ANY INTEREST PAYABLE BY LENDER TO THE LENDERS OF THE FUNDS OBTAINED BY
IT IN ORDER TO MAKE OR MAINTAIN ANY FIXED RATE BORROWING (OR ANY
PORTION THEREOF), AND, TO THE EXTENT NOT COVERED ABOVE, ANY
CONSEQUENTIAL LOSS. THIS AGREEMENT SHALL SURVIVE THE PAYMENT OF THE
TERM NOTE. A CERTIFICATE AS TO ANY ADDITIONAL AMOUNTS PAYABLE TO THE
LENDER PURSUANT TO THIS PARAGRAPH SUBMITTED BY THE LENDER TO THE
BORROWER AND PARENT SHALL BE CONCLUSIVE AND BINDING UPON THE BORROWER
AND PARENT, ABSENT MANIFEST ERROR, PROVIDED THE CALCULATION THEREOF IS
SET FORTH IN REASONABLE DETAIL IN SUCH NOTICE.
2A.7 Use of Proceeds. The proceeds of the Term Loan will be used
to refinance the existing Indebtedness of Parent to ▇▇▇▇▇▇ Investments
Ltd.
7. Tangible Net Worth. Section 7.12 of the Credit Agreement is hereby
amended to read in its entirety as follows:
7.12 Tangible Net Worth. Permit the Tangible Net Worth of the
Borrower (expressly excluding Parent, its Subsidiaries and Borrower's
Subsidiaries) to be less than:
(i) $6,900,000 as of the Second Amendment Closing Date and at
all times thereafter through and including September 30, 1998; and
(ii) thereafter, at all times, an amount equal to the minimum
Tangible Net Worth requirement for the preceding fiscal year end,
plus fifty percent (50%) of cumulative, positive net income of the
Borrower for the preceding fiscal year, plus one hundred percent
(100%) of the consideration received in exchange for
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the issuance of any capital stock of the Borrower during the
fiscal year in which the Tangible Net Worth of the Borrower is
being measured.
8. Capital Expenditures. Section 7.13 of the Credit Agreement is
hereby amended to read in its entirety as follows:
7.13 Capital Expenditures. Make, directly or indirectly, Capital
Expenditures other than such expenditures which do not exceed Six
Hundred Thousand Dollars ($600,000) in any fiscal year.
9. Dividends and Distributions. Article 7 of the Credit Agreement is
hereby amended by adding Section 7.18 as follows:
7.18 Dividends. The Borrower shall not directly or indirectly
declare or make, or incur any liability to make, any Dividend, except
Dividends to the Parent by Borrower, so long as no Event of Default has
occurred or would result therefrom, solely for the following purposes:
(a) payment of Federal income tax liabilities of Parent, in
the amount of such Federal income tax liabilities, and at time as the
same become due and payable; and
(b) payment of principal and interest as they becomes due
and payable under the Term Loan.
10. Officer's and Borrowing Base Certificates. Exhibit C to the
Credit Agreement, the form of Officer's Certificate, and Exhibit G to the Credit
Agreement, the form of Borrowing Base Compliance Certificate, are hereby amended
and restated in their entirety to read in full in the forms of Exhibits C and G,
respectively, attached to this Amendment.
11. Conditions.
11.1 Second Amendment. The agreements of Lender to increase the
Commitment from $5,000,000 to $7,000,000, to make the Term Loan, and to be bound
by the terms and conditions of this Amendment are subject to the accuracy of all
representations and warranties of the Borrower on the date of the Term Loan, to
the performance by the Borrower and the Parent of their respective obligations
under the Loan Documents and to the satisfaction of the following further
conditions:
(a) all representations and warranties of the Borrower and the
Parent set forth in this Amendment, the Credit Agreement and in any other Loan
Document shall be true and correct in all material respects with the same effect
as though made on and as of such date, except for (1) those representations and
warranties which relate only to the Closing Date, or (2) such changes in the
representations and warranties otherwise permitted by the terms of this
Amendment;
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(b) the Borrower and the Parent shall be in compliance with all
the terms and provisions contained in this Amendment, the Credit Agreement or in
any other Loan Document which are to be observed or performed by the Borrower or
the Parent, if applicable;
(c) prior to the making of the Term Loan there shall have
occurred no Material Adverse Effect in the assets, liabilities, financial
condition, business or affairs of the Borrower or the Parent since the date
hereof; and
(d) no Default or Event of Default shall have occurred and be
continuing.
11.2 Documentation. In addition to the matters described in Section
6.1 hereof, the agreements of Lender to increase the Commitment from $5,000,000
to $7,000,000, to make the Term Loan, and to be bound by the terms and
conditions of this Amendment are subject to the receipt by the Lender of each of
the following, in Proper Form:
(a) the amended and restated $7,000,000 Revolving Credit Note,
executed by the Borrower;
(b) the Term Note, executed by the Borrower and the Parent;
(c) the amendments to Security Documents executed by the Borrower
and the Parent;
(d) a certificate executed by the Secretary or Assistant
Secretary of the Borrower and the Parent dated as of the date thereof;
(e) certified copies of any amendments to the Organizational
Documents of the Borrower or the Parent;
(f) a legal opinion from counsel for the Borrower and the Parent,
dated as of the Closing Date, addressed to the Lender and acceptable in all
respects to the Lender in its sole and absolute discretion;
(g) an executed disbursement authorization letter from the
Borrower and the Parent to the Lender with respect to the disbursement of the
proceeds of the Term Loan to be made on or after the Second Amendment Closing
Date;
(h) all other Loan Documents and any other instruments or
documents consistent with the terms of this Amendment and relating to the
transactions contemplated hereby as the Lender may reasonably request, executed
by the Borrower or any other Person required by the Lender;
and subject to the further conditions that, at the time of the Term Loan,
(1) all such actions as the Lender shall reasonably require to
perfect the Liens created pursuant to the Security Documents
shall have been taken, including without
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limitation, the delivery to the Lender of all Property with
respect to which possession is necessary for the purpose of
perfecting such Liens (including, without limitation, delivery
to the Lender of the stock certificates described on Schedule I
to this Amendment);
(2) the Borrower shall have paid all fees owing to the Lender by the
Borrower under this Amendment, including without limitation, the
following;
(i) a fee in consideration for the Term Loan and the
increase in the Commitment, in the amount of $12,000; and
(ii) the administration fee, in the amount of $5,000,
pursuant to Section 2.3(b) of the Credit Agreement;
(3) all other legal matters incident to the transactions herein
contemplated shall be reasonably satisfactory to counsel for the
Lender.
12. Collateral. The Term Loan and all other Obligations shall be
secured by the Collateral described in the Security Documents and are entitled
to the benefits thereof.
13. Costs and Expenses. Borrower agrees to reimburse Lender for
Lender's costs and expenses, including, but not limited to, attorneys' fees and
legal expenses, incurred by Lender in connection with the preparation of this
Amendment and in connection with the negotiation and consummation of the
transaction contemplated hereby.
14. The Credit Agreement. All references to the Credit Agreement in
the Loan Documents shall be deemed to be the Credit Agreement, as modified
hereby. Borrower expressly promises to perform all of its obligations under the
Credit Agreement and other Loan Documents, as modified by this Amendment.
15. Acknowledgments of Borrower and Parent. Borrower and Parent
hereby acknowledge and agree that (a) Lender is not in default in the
performance of its obligations under the Loan Documents; (b) neither Borrower
nor Parent has any claims, counterclaims, offsets, credits or defenses to the
Loan Documents and the performance of its respective obligations thereunder, or
if Borrower or Parent has any such claims, counterclaims, offsets, credits or
defenses to the Loan Documents or any transaction related to the Loans and/or
the Loan Documents, same are hereby waived, relinquished and released in
consideration of Lender's execution and delivery of this Amendment; (c) all of
the provisions of the Loan Documents, except as amended hereby, are in full
force and effect; and (d) upon the execution hereof, the Credit Agreement, the
Note, and the other Loan Documents are not in default.
16. Full Force and Effect. Except as expressly modified and amended
in this Amendment, all of the terms, provisions and conditions of the Credit
Agreement, the Note, and all other Loan Documents are and shall remain in full
force and effect and are incorporated herein by reference.
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17. Counterparts. This Amendment may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an original, and all of
which taken together shall constitute but one and the same instrument.
18. No Oral Agreements. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
EMBODY THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER HEREOF.
THIS WRITTEN AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties have executed this Second Amendment to
Credit Agreement as of the day and year first above written.
LENDER:
CHASE BANK OF TEXAS, N.A.,
a national banking association
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
BORROWER:
TIDEL ENGINEERING, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the Board
PARENT:
TIDEL TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the Board
Exhibits:
C - Officer's Certificate
G - Borrowing Base Compliance Certificate
Schedule:
1 - 3CI Complete Compliance Corporation Stock Certificates
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By its execution below, Tidel Technologies, Inc., formerly known as
American Medical Technologies, Inc., a Delaware corporation ("Guarantor"), d/b/a
AMT Industries, Inc., acknowledges and consents to all of the terms and
conditions of this Amendment, and ratifies and confirms its respective Guaranty
to and for the benefit of Lender. Guarantor acknowledges that Guarantor has no
claims, counterclaims, offsets, credits or defenses to the Loan Documents and
the performance of its obligations thereunder, or if Guarantor does have any
such claims, counterclaims, offsets, credits or defenses to the Loan Documents
or any transaction related to the Loans and/or the Loan Documents, same are
hereby waived, relinquished and released in consideration of Lender's execution
and delivery of this Amendment. Further, Guarantor agrees that nothing contained
in this Amendment shall adversely affect any right or remedy of Lender under the
Guaranty and that with respect to the Guaranty, all references in the Guaranty
to the "Obligations" shall mean the "Obligations", as amended by this Amendment;
that the execution and delivery of this Amendment shall in no way change or
modify its obligations as Guarantor pursuant to its Guaranty; and that the
execution and delivery of any agreements by Borrower and Lender in connection
with this Amendment shall not constitute a waiver by Lender of any of Lender's
rights against Guarantor.
TIDEL TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the Board