EXHIBIT 4.5
HK SYSTEMS, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
▇▇▇▇▇▇ Trust and Savings Bank
Chicago, Illinois
Firstar Bank Milwaukee, N.A.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Northern Trust Company
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Bank One, Wisconsin
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Reference is hereby made to that certain Third Amended and Restated
Credit Agreement dated as of November 15, 1996 (the "Credit Agreement")
currently in effect by and among, HK Systems, Inc., a Wisconsin
corporation (the "Company"), and you (the "Lenders"). All capitalized
terms used herein without definition shall have the same meanings herein
as such terms have in the Credit Agreement.
The Company hereby applies to the Lenders to decrease by $10,000,000
the Revolving Credit Commitments, to extend a new term loan in the
original principal amount of $6,000,000, to extend the Revolving Credit
Termination Date, to amend certain of the financial covenants contained
therein and to make certain other amendments to the Credit Agreement, and
the Lenders are willing to do so under the terms and conditions set forth
in this Amendment.
1. DECREASE OF REVOLVING COMMITMENT AMOUNTS.
Upon the effectiveness of this Amendment, the amount of each Lender's
Commitment in respect of the Revolving Credit set forth opposite its name
in Section 1.1 of the Credit Agreement shall be amended and as so amended
shall be restated as follows:
AMOUNT OF PERCENTAGE
REVOLVING OF REVOLVING
CREDIT CREDIT
LENDER COMMITMENT COMMITMENT
▇▇▇▇▇▇ Trust and Savings Bank $26,666,666.72 33.3333334%
Firstar Bank Milwaukee, N.A. $17,777,777.76 22.2222222%
The Northern Trust Company $17,777,777.76 22.▇▇▇▇▇▇▇%
Bank One, Milwaukee, N.A. $17,777,777.76 22.2222222%
------------- ----------
TOTAL $80,000,000.00 100.00%
2. WAIVER OF REDEMPTION AND DIVIDEND.
On a day in December of 1997, the Company plans to make one-time
redemption of up to 1,050,000 of its shares from ▇▇▇▇▇▇ ▇▇▇▇▇ at a price
of not more than $6.15 per share ("Special Redemption") and pay accrued
dividends on preferred stock as of October 31, 1997 in an amount not to
exceed $4,667,507 ("Special Dividend"). The Lenders agree that (i) the
Special Redemption and the Special Dividend will not constitute a
restricted payment as prohibited by Section 8.16 of the Credit Agreement
and, therefore, an Event of Default pursuant to Section 9.1(d) of the
Credit Agreement and (ii) the Special Dividend and Special Redemption will
not be counted toward the imitation on redemptions in Section 8.16(c) or
dividends in Section 8.16(d).
3. AMENDMENTS.
Upon the effectiveness of this Amendment, the Credit Agreement shall
be and hereby is amended as follows:
3.01. Section 1.6 of the Credit Agreement is hereby amended by
adding the following immediately at the end of such Section.
Section 1.6. Term Credit. Subject to all of the terms
and conditions hereof, each Lender agrees to make a term loan to
the Company in the amount of its Term Credit Commitment. The
maximum amount of the Term Loan which each Lender party hereto
as of the date hereof agrees to extend to the Company shall be
as set forth below opposite such Lender's name:
▇▇▇▇▇▇ Trust and Savings Bank $ 2,000,000.01 33.3333334%
Firstar Bank Milwaukee, N.A. $ 1,333,333.33 22.2222222%
The Northern Trust Company $ 1,333,333.33 22.▇▇▇▇▇▇▇%
Bank One, Milwaukee, N.A. $ 1,333,333.33 22.2222222%
------------ ----------
TOTAL $ 6,000,000.00 100.00%
The loans from all the Lenders under the Term Credit
(collectively, the "Term Loans" and individually, as to each
Lender, its "Term Loan") shall be made concurrently and the Term
Loans shall be disbursed in a single advance made, if at all,on
or before January 15, 1998, at which time the Term Credit
Commitments shall expire. The Term Loan made by each Lender to
the Company under the Term Credit shall be evidenced by a Term
Credit note of the Company (individually a "Term Credit Note"
and collectively the "Term Credit Notes") payable to the order
of such Lender in the amount of its Term Credit Commitment, each
Term Credit Note to be in the form (with appropriate insertions)
attached hereto as Exhibit D. Each Term Credit Note shall be
expressed to mature as follows: one installment in an aggregate
amount of $600,000, to be paid on or before January 31, 1998 and
then five consecutive annual installments, the first such
installment commencing on October 31, 1998 and continuing on the
last day of each October occurring thereafter to and including
October 31, 2002 and aggregating $600,000 per installment, and a
final installment due on December 15, 2002 and aggregating the
entire remaining unpaid principal balance of the Term Credit
Notes. The amount of each installment due on the Term Credit
Note held by each Lender shall be a pro rata part (based on the
relationship which its Term Credit Commitment bears to the total
Term Credit Commitments) of each such aggregate amount. No
amount repaid on the Term Credit Notes may be reborrowed. The
Term Loans shall be used by the Company to fund its
substantially concurrent loan of like amount to the employee
stock ownership plan the Company is establishing for its
employees on or about December of 1997.
3.02. The first sentence of Section 1.3 of the Credit Agreement
shall be amended and as so amended shall be restated in its entirety to
read as follows:
Subject to the terms and conditions hereof, the Revolving
Credit may be availed of by the Company in the form of loans
(individually a "Revolving Loan" and collectively the "Revolving
Loans").
3.03. The third sentence of Section 1.3 of the Credit Agreement
shall be amended and as so amended shall be restated in its entirety to
read as follows:
Each advance made by a Lender of its pro rata share of a
revolving loan shall be evidenced by a Revolving Credit Note of
the Company (individually a "Revolving Credit Note" and
collectively the "Revolving Credit Notes") payable to the order
of such Lender in the amount of its commitment, with each
Revolving Credit Note to be in the form (with appropriate
insertions) attached hereto as Exhibit A.
3.04. The second sentence of Section 1.5(a) of the Credit
Agreement shall be amended and as so amended shall be restated in its
entirety to read as follows:
Each such notice shall specify the date of the Loan
requested (which must be a Business Day), whether such Loan is a
Revolving Loan or the Term Loan and the amount of such Loan.
3.05. Section 5.1 of the Credit Agreement shall be amended by
adding the following new definitions therein in the appropriate
alphabetical order:
"ESOP Principal" means, with reference to any period, the
aggregate amount of principal payments made during such period
on the Term Credit Notes.
"Term Credit Commitments" means the commitments of the
Lenders to extend a Term Loan in the amounts set forth opposite
their names in Section 1.6 hereof and opposite their signatures
on Assignment Agreements delivered pursuant to Section 11.15
hereof under the heading "Commitment", as such amounts may be
reduced pursuant thereto.
3.06. The following definitions appearing in Section 5.1 of the
Credit Agreement shall be amended and as so amended shall be restated in
their entirety to read as follows:
"Funded Debt Ratio" means, as of any time the same is to be
determined, the ratio of (i) Senior Funded Debt at such time to
(ii) the sum of (x) EBITDA for the four most recently completed
fiscal quarters of the Company and (y) ESOP Principal.
"Interest Coverage Ratio" means, as of any time the same is
to be determined, the ratio of (i) the sum of (x) EBITDA for the
four most recently completed fiscal quarters of the Company and
(y) ESOP Principal to (ii) Interest Expense for the same period
of four fiscal quarters.
"Loans" means the Revolving Loans and the Term Loans,
collectively, and the term "Loan" shall mean any of the
Revolving Loans or Term Loans, in each case unless the context
in which such term is used shall otherwise require; provided,
however, that the terms "Loan" and "Loans" as used in
Sections 1.2, 1.3, 1.4 and 1.5(b) hereof shall mean respectively
Revolving Loan and Revolving Loans.
"Notes" means the Revolving Credit Notes and the Term
Credit Notes, collectively, and the term "Note" shall mean any
of the Revolving Credit Notes or Term Notes, in each case unless
the context i which such term is used shall otherwise require;
provided, however, that the terms "Note" and "Notes" as used in
Sections 1.1 and 1.3 of this Agreement shall mean, respectively,
Revolving Credit Note and Revolving Credit Notes.
"Termination Date" means December 15, 2002, or such earlier
date on which the Commitments are terminated in whole pursuant
to Sections 3.3, 9.2 or 9.3 hereof.
3.07. Section 8.6 of the Credit Agreement is hereby amended and
as so amended shall be restated in its entirety to read as follows:
Section 8.6. Current Ratio. The Company will at all
times during each of the period specified below maintain a
Current Ratio of not less than:
CURRENT RATIO
FROM AND TO AND THROUGH SHALL NOT BE
INCLUDING CLOSE OF LESS THAN:
The date hereof 2nd fiscal quarter of the 0.90 to 1.0
Company's 1998 fiscal year
3rd fiscal quarter of the All times thereafter 1.00 to 1.0
Company's 1998 fiscal year
3.08. Schedule 6.3 to the Credit Agreement is hereby amended to
reflect the deletion of ▇▇ ▇▇▇▇▇▇ Industries, Inc. as a Subsidiary and as
so amended shall be restated in its entirety read as set forth on
Schedule Two attached hereto. All references to Schedule 6.3 in the
Credit Agreement shall be declared references to Schedule 6.2 as set forth
on Schedule Two attached hereto.
4. CONDITIONS PRECEDENT.
The effectiveness of this Amendment (other than Section 5 hereof),
and the obligation of the Lenders to extend the Term Loans, is subject to
the satisfaction of all of the following conditions precedent:
4.01. The Company, the Agent and the Lenders shall have executed
and delivered this Amendment.
4.02. The Company shall have executed Term Credit Notes in favor
of each Lender in the form attached hereto as Schedule One, with each Term
Credit Note to a Lender to be dated as of the date of its issuance and in
a face amount equal to the Term loan to be extended by such Lender after
giving effect to this Amendment.
4.03. No Default or Event of Default shall have occurred and be
continuing as of the date this Amendment would otherwise take effect.
4.04. Legal matters incident to the execution and delivery of
this Amendment shall be satisfactory to the Lenders and their counsel; and
the Lenders shall have received the favorable written opinion of counsel
for the Company in form and substance satisfactory to the Lenders and
their counsel.
4.05. The Company shall have delivered to the Agent a certificate
of the Secretary or Assistant Secretary of the Company certifying that the
Articles of Incorporation of the Company have not changed since
November 15, 1996.
5. POST-CLOSING ITEMS.
5.01. Certain Real Estate Collateral. The Agent shall have
received no later than 30 days from the date hereof, the following for the
account of the Lenders (each to be properly executed and completed) and
the same shall have been approved as to form and substance by the Lenders:
(i) a supplement to that certain Deed of Trust, Security
Agreement and Assignment of Rents dated as of january 21, 1997,
and recorded in the Recorder's Office of ▇▇▇▇▇ County, Utah on
February 25,1997, as Document No. 1306007, at Book 2098,
Page 683 (the "Existing Utah Mortgage"), to confirm and assure
that the Existing Utah Mortgage secures the Revolving Credit and
Term Credit as amended hereby, together with any financing
statements or financing statement amendments requested by the
Agent in connection therewith;
(ii) a supplement to that certain Mortgage and Security
Agreement and Assignment of Rents dated as of January 21, 1997,
and recorded on the Recorder's Office of Montgomery County,
Alabama on August 21, 1997, as RLPY 1782, Page 0938 (the
"Existing Alabama Mortgage") to confirm and assure that the
Existing Alabama Mortgage secures the Revolving Credit and Term
Credit as amended hereby, together with any financing statements
or financing statement amendments requested by the Agent in
connection therewith;
(iii) an endorsement to the mortgagee's policy of title
insurance (or a binding commitment therefor) for the Existing
Utah Mortgage (as supplemented) creating liens on the Company's
real property in Bountiful, Utah to confirm that such policy
secures the Revolving Credit and Term Credit as amended hereby
which endorsement shall bring the effective date of coverage
thereunder down to the date of disbursement of the first Loan
under the new Revolving Credit and new Term Credit and show no
exceptions to title or coverage other than those shown on such
policy as originally issued (except that no exception shall
appear for taxes which are now due and payable);
(iv) a mortgagee's title insurance policy (or a prepaid
binding commitment therefor) insuring the lien on the Company's
real property located in Montgomery, Alabama (the "Alabama
Property") in the aggregate amount of its current appraised fair
market value to be a valid first lien subject to no defects or
objections which are unacceptable to the Agent, together with
such endorsements as the Agent may require;
(v) a mortgagee's title insurance policy (or a prepaid
binding commitment therefor) insuring the lien on the Company's
real property located in Salisburg, North Carolina (the "North
Carolina Property") in the aggregate amount of its current
appraised fair market value to be a valid first lien subject to
no defects or objections which are unacceptable to the Bank,
together with such endorsements as the Agent may require;
(vi) the most recent appraisal report, if any, held by the
Company describing the fair market value of each parcel of real
property subject to the lien on the North Carolina Property; and
(vii) a good standing certificate (or equivalent) for
the Company (dated no earlier than five (5) days prior to the
date hereof) from the offices of the Secretary of State of Utah
and Alabama.
Any failure of the Company to satisfy the requirements set forth in
Section 4.01 hereof by the deadlines also set forth above, whether or not
this Amendment otherwise takes effect, will constitute an Event of Default
under the Credit Agreement.
6. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment,
the Company hereby represents to the Lenders that as of the date hereof,
the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct (except that for
purposes of this paragraph, the representations contained in Section 6.4
shall be deemed to refer to the most recent financial statements of the
Company delivered to the Lenders) and the Company is in full compliance
with all of the terms and conditions of the Credit Agreement and no
Default or Event of Default has occurred and is continuing under the
Credit Agreement or shall result after giving effect to this Amendment.
7. MISCELLANEOUS.
7.01. The Company acknowledges and agrees that all of the
Collateral Documents to which it is a party remain in full force and
effect for the benefit and security of, among other things, the Revolving
Credit Loans and Term Loans as modified hereby. The Company further
acknowledges and agrees that all references in such Collateral Documents
to the Loans shall be deemed a reference to the Revolving Credit Loans and
Term Loans as so modified. The Company further agrees to execute and
delivery any and all instruments or documents as may be required by the
Agent or Required Lenders to confirm any of the foregoing.
7.02. Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original
terms. Reference to this specific Amendment need not be made in the
Credit Agreement, the Notes, or any other instrument or document executed
in connection therewith, or in any certificate, letter or communication
issued or made pursuant to or with respect to the Credit Agreement, any
reference in any of such items to the Credit Agreement being sufficient to
refer to the Credit Agreement as amended hereby.
7.03. This Amendment may be executed in any number of
counterparts, and by the different parties on different counterpart
signature pages, all of which taken together shall constitute one and the
same agreement. Any of the parties hereto may execute this Amendment by
signing any such counterparts and each of such counterparts shall for all
purposes be deemed to be an original. This Amendment shall be governed by
the internal laws of the State of Illinois.
7.04. The Company agrees to pay all reasonable out-of-pocket
costs and expenses incurred by the Lenders in connection with the
preparation, execution and delivery of this Amendment and the documents
and transactions contemplated hereby, including the reasonable fees and
expenses of counsel for the Lenders with respect to the foregoing.
Dated as of December 15, 1997.
HK SYSTEMS, INC.
By /s/
Its ___________________________
Accepted and agreed to in Chicago, Illinois as of the date and year
last above written.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By /s/
Its ___________________________
FIRSTAR BANK MILWAUKEE, N.A.
By /s/
Its ___________________________
THE NORTHERN TRUST COMPANY
By /s/
Its ___________________________
BANK ONE, WISCONSIN
By /s/
Its ___________________________
GUARANTOR'S CONSENT
Each of the undersigned has heretofore executed and delivered to the
Agent a Guaranty dated November 15, 1996 and each hereby consents to the
Amendment to the Credit Agreement as set forth above and confirms that its
Guaranty and all of the undersigned's obligations thereunder remain in
full force and effect and,without limiting the foregoing, acknowledges and
agrees that all the Loans, made before and after giving effect to this
Amendment to the Credit Agreement, constitute indebtedness which is
guaranteed by the undersigned under its Guaranty. Each of the undersigned
further agrees that the consent of each of the undersigned to any further
amendments to the Credit Agreement shall not be required as a result of
its consent having been obtained.
HEI SERVICES, INC.
By _________________________________
Its ___________________________
HISCO SYSTEMS OF CANADA LTD.
By _________________________________
Its ___________________________
SCHEDULE ONE
EXHIBIT D
HK SYSTEMS, INC.
TERM NOTE
Chicago, Illinois
$__________ December __, 1997
On the Term Credit Termination Date, for value received, the
undersigned, HK SYSTEMS, INC., a Wisconsin corporation (the "Company"),
hereby promises to pay to the order of
_______________________________________ (the "Lender"), at the principal
office of ▇▇▇▇▇▇ Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) _______________________________________________ and
no/100 Dollars ($__________), or (ii) such lesser amount as may at the
time of the maturity hereof, whether by acceleration or otherwise, be the
aggregate unpaid principal amount of all Term Loans owing from the Company
to the Lender under the Term Credit provided for in the Credit Agreement
hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate
Portion" and "LIBOR Portions" as such terms are defined in that certain
Credit Agreement dated as of November 15, 1996, between the Company,
▇▇▇▇▇▇ Trust and Savings Bank, individually and as Agent thereunder, and
the other Lenders which are now or may from time to time hereafter become
parties thereto (said Credit Agreement, as the same may be amended,
modified or restated from time to time, being referred to herein as the
"Credit Agreement") made and to be made to the Company by the Lender under
the Term Credit provided for under the Credit Agreement, and the Company
hereby promises to pay interest at the office described above on each loan
evidenced hereby at the rates and at the times and in the manner specified
therefor in the Credit Agreement.
Each loan made under the Term Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part
of the Domestic Rate Portion or a LIBOR Portion and, in the case of any
LIBOR Portion, the interest rate and Interest Period applicable thereto
shall be endorsed by the holder hereof on a schedule to this Note or
recorded on the books and records of the holder hereof (provided that such
entries shall be endorsed on a schedule to this Note prior to any
negotiation hereof). The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed on a schedule to this Note or recorded on the books and records
of the holder hereof shall, absent manifest error, be prima facie evidence
of the unpaid principal balance of this Note, the status of each such loan
from time to time as part of the Domestic Rate Portion or a LIBOR Portion,
and, in the case of any LIBOR Portion, the interest rate and Interest
Period applicable thereto.
This Note is issued by the Company under the terms and provisions of
the Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to
which reference is hereby made for a statement thereof. This Note may be
declared to be, or be and become, due prior to its expressed maturity,
voluntary prepayments may be made hereon, and certain prepayments are
required to be made hereon, all in the events, on the terms and with the
effects provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such
terms are defined in the Credit Agreement.
The Company hereby promises to pay all reasonable costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor.
The Company hereby waives presentment for payment and demand. This Note
shall be construed in accordance with, and governed by, the internal laws
of the State of Illinois without regard to principles of conflicts of
laws.
HK SYSTEMS, INC.
By _________________________________
Name: __________________________
Title: __________________________
SCHEDULE TWO
SCHEDULE 6.2
SUBSIDIARIES
JURISDICTION PERCENTAGE
NAME OF INCORPORATION OWNERSHIP
HISCO Systems of Canada Ltd. Canada 100%
HEI Services, Inc. Delaware 100%
HK Systems Foreign Sales Corp. 100%