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EXHIBIT 10(i)
AMENDMENT NO. 2
TO
CREDIT AGREEMENT
DATED MARCH 29, 1996, AS AMENDED
AMERICAN PRECISION INDUSTRIES INC. ("Company") and
MARINE MIDLAND BANK ("Bank") are parties to a Credit Agreement
dated March 29, 1996 as amended August 27, 1996 ("Credit
Agreement").
RECITALS:
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1. Company is implementing a corporate reorganization whereby
new subsidiaries have been, or are being, created to conduct various aspects of
the Company's business in integrated business units.
2. In order to provide adequate working capital and other
funding of the Company's subsidiaries, the Company has requested that the Bank
increase the Commitment under the Credit Agreement from the present $16,000,000
to $20,000,000 in the aggregate.
3. Bank is willing to so increase the Commitment on the
conditions and terms hereinafter set forth.
4. Capitalized terms not otherwise defined herein have the
meanings defined in the Credit Agreement.
NOW, THEREFORE, for a good and valuable consideration the
receipt of which is hereby acknowledged, the parties agree as follows:
A. CONDITIONS. The Amendments set forth below shall
become effective on the date when the Bank receives all of the
following documents in form and content satisfactory to the
Company and the Bank ("Effective Date"):
1. The Replacement Revolving Note (as defined in B.2 below)
dated the Effective Date and executed by the Company and with all blanks
appropriately completed.
2. A favorable counsel opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ &
Mugel LLP in form and content satisfactory to Bank and its counsel, dated as of
the Effective Date, as to, among other things, the due authorization, execution
and delivery of (i) this Agreement and the Replacement Revolving Note by the
Company, and (ii) the Guaranties by the Guarantors; the good standing and
authority to transact their business of the Company and the Guarantors; that
there are no violations of the Company's organization documents, other material
agreements, or any law or
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court decree, and no material litigation or any litigation questioning the
validity of the Credit Agreement, this Agreement, the Revolving Note or the
Replacement Revolving Note; that no consent, filing, license, authorization,
registration or filing is required with any court or governmental authority in
connection with the execution and performance of this Agreement, the Guaranties
or the Replacement Revolving Note; and such other matters as the Bank or its
counsel may reasonably request.
3. Within thirty (30) days of the date of Amendment No. 2 to
Credit Agreement dated March 29, 1996, as amended the following:
A. Guaranties in form and substance
satisfactory to the Bank from each of the following
entities of the indebtedness of the Company to Bank
and of any indebtedness of any of their subsidiaries
to Bank in the respective amounts set forth below
for each such entity:
Guarantor Amount
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API Heat Transfer Inc. $17,180,000
API Motion Inc. $ 6,600,000
API Electronic Components Inc. $ 3,885,000
B. Guaranties from each of the following
entities of the indebtedness of the Company to Bank
in the amounts set forth below for each such entity:
Guarantor Amount
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API ▇▇▇▇▇ Inc. $4,850,000
API Airtech Inc. $ 750,000
API Ketema Inc. $5,250,000
API Controls Inc. $1,100,000
API Deltran Inc. $1,000,000
API ▇▇▇▇▇▇ Inc. $2,200,000
API Harowe Inc. $2,300,000
API Delevan Inc. $1,050,000
API SMD Inc. $1,500,000
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B. AMENDMENTS
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From and after the Effective Date, the Credit Agreement is
amended as follows:
1. The existing definition of "Note" or "Notes" set forth in
Section 1.1 of the Credit Agreement is hereby deleted and the following is
substituted in its place:
"'Note' or 'Notes' - the Revolving Note and/or
Term Note, as appropriate, and, from after the
Effective Date of Amendment No. 2 to this
Agreement, the Replacement Revolving Note."
2. The following definition is added to Section 1.1 of the
Credit Agreement between the existing definitions of "Release" and "Reportable
Event":
"'Replacement Revolving Note' - the promissory
note of the Company in the form of Exhibit A-1 to
Amendment No. 2 to Credit Agreement dated
March 29, 1996, as amended."
3. The existing definition of "Revolving Credit" set forth in
Section 1.1 of the Credit Agreement is hereby deleted and the following is
substituted in its place:
"'Revolving Credit' - the aggregate sum made
available to the Company up to the amount of the
Commitment pursuant to the provisions of Section
2.1(a) of this Agreement."
4. Section 2.1(a) of the Credit Agreement is hereby amended
to delete the sum "Sixteen Million Dollars ($16,000,000)" from the ninth line
thereof, and substitute the following as the amount of the "Commitment":
"Twenty Million Dollars ($20,000,000)".
5. The following new Section 2.1(d) is added to the Credit
Agreement:
"(d) REPLACEMENT REVOLVING NOTE. From and after
the Effective Date of Amendment No. 2 to Credit
Agreement dated March 29, 1996, as amended, the
Advances made by the Bank under this Agreement
shall be evidenced by the Replacement Revolving
Note with all blanks appropriately completed, and
executed by the Company and delivered to the Bank.
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The Replacement Revolving Note shall be inscribed by
the Bank as holder thereof on the schedule on the
reverse side thereof or any continuation thereof
('Schedule') with the date and amount of the
outstanding principal balance of the Advances, the
Rate Option applicable to such Advances, the
applicable interest periods, and all payments and
prepayments made thereon and the dates thereof. Any
such inscription shall constitute prima facie
evidence of the accuracy of the information so
recorded; provided, however, the failure of the Bank
to make any such inscription shall not affect the
Company's obligations under the Replacement
Revolving Note or this Agreement."
6. Sections 2.2 and 2.3 of the Credit Agreement are
amended as follows:
"All existing references to 'Revolving Note' are
changed to read 'Replacement Revolving Note'."
7. Section 6.3 of the Agreement is hereby revised to add the
following new items (iv) and (v) to the list of excepted Liens consented to by
the Bank:
"(iv) existing Liens in trade receivables of
▇▇▇▇▇▇▇-Bretten GmbH granted to Sparkane Bruchsal-
Bretten Bank to secure a line of credit for DM
3,000,000; and
(v) existing Liens on property of Portescap SA
pledged as security for long-term mortgage loans
amounting to CH 11,439,000."
8. The following is added to Section 6.12 of the Agreement:
"For purposes of computing the Company's Debt-to-
Tangible Net Worth Ratio, the Company's existing
20,000 Series A Shares of convertible preferred
shares issued to Inter Scan Holding Ltd. ("Inter
Scan"), and the $5,000,000 Exchangeable Promissory
Note dated July 8, 1997 issued by the Company to
Inter Scan shall not be deemed Liabilities and will
be deemed a part of Net Worth until the earlier of
April 30, 1998 or the date on which the Company's
Board of Directors and shareholders approve of an
amendment to the Company's certificate of
incorporation authorizing the Series B Seven Percent
Cumulative Convertible Preferred Stock, $21.15625
face value and
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liquidation value per share and such amendment is
duly filed with the Secretary of State of
Delaware."
9. Section 6.9 of the Agreement is replaced in its entirety
by the following:
"6.9 LEASE RENTALS. Pay rentals under any
operating or true leases which are not capitalized
on the Company's books in excess of $2,000,000 in
the aggregate during any fiscal year."
C. REPRESENTATIONS AND WARRANTIES
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1. The Company hereby represents and warrants to the Bank
that the representations and warranties of the Company made pursuant to the
Credit Agreement are true in all material respects on and as of the date hereof
as if made on and as of said date.
2. No Event of Default exists under the Credit Agreement, and
no event or condition has occurred which, but for the requirements of notice or
lapse of time or both, would constitute an Event of Default under the Credit
Agreement.
3. The making and performance by the Company of this
Amendment have been duly authorized by all required corporate and shareholder
action.
4. The delivery by the Company on the Effective Date of the
Replacement Revolving Note and the Guaranties shall constitute a further
representation and warranty by the Company that the representations and
warranties contained herein are true in all material respects on and as of the
Effective Date.
D. REAFFIRMATION
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The Credit Agreement, except as specifically modified by this
Amendment, shall remain in full force and effect and the Company hereby
reaffirms the granting and effectiveness of the Credit Agreement as modified by
this Amendment and all prior amendments and all other documents executed and
delivered to the Bank in connection with the Credit Agreement.
E. OTHER PROVISIONS
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1. This Amendment may be executed in any number of
counterparts and by the parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same Amendment.
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2. This Amendment shall be governed by and construed under
the internal laws of the State of New York, as the same may from time to time
be in effect, without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of this 6th day of October, 1997.
AMERICAN PRECISION INDUSTRIES INC.
By ______________________________
(Title)
MARINE MIDLAND BANK
By _____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
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STATE OF NEW YORK )
) SS.:
COUNTY OF ERIE )
On this 6th day of October, 1997, , before me personally came , to me
known, who, being by me duly sworn, did depose and say that (s)he resides at
____________________________________________________________________________ ,
that (s)he is of AMERICAN PRECISION INDUSTRIES INC., the corporation described
in and which executed the foregoing instrument; and that (s)he signed h___ name
thereto by order of the Board of Directors of said corporation.
______________________________________
Notary Public
STATE OF NEW YORK )
) SS.:
COUNTY OF ERIE )
On this 6th day of October, 1997, before me personally came ▇▇▇▇ ▇.
▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
resides at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇; that he is a Vice
President of MARINE MIDLAND BANK, a bank organized under the laws of the State
of New York described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said bank.
______________________________________
Notary Public