exh101.htm


    
      	 
      	
              Execution
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    SECOND AMENDMENT TO CREDIT
AGREEMENT

     

    THIS
SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of the 15th
day of January, 2009, by and among COMPX INTERNATIONAL INC. (the “Borrower”),
COMPX SECURITY PRODUCTS INC., COMPX PRECISION SLIDES INC., COMPX MARINE INC.,
CUSTOM MARINE INC. (f/k/a CUSTOM MARINE ACQUISITION, INC.), LIVORSI MARINE,
INC., WACHOVIA BANK, NATIONAL ASSOCIATION (“Wachovia”), as Administrative Agent
(in such capacity, the “Administrative Agent”) and a Lender, COMPASS BANK and
COMERICA BANK (collectively with Wachovia referred to herein as the
“Lenders”).

     

    R E C I T A L
S:

     

    The
Borrower, the Administrative Agent and the Lenders have entered into a certain
Credit Agreement dated as of December 23, 2005, as amended by the First
Amendment thereto dated as of October 16, 2007 (as so amended, the “Credit
Agreement”).  Capitalized terms used in this Amendment that are not
otherwise defined in this Amendment shall have the respective meanings assigned
to them in the Credit Agreement.  In connection with the Credit
Agreement, the Subsidiary Guarantors have executed the Subsidiary Guaranty
Agreement in favor of the Administrative Agent, for the ratable benefit of the
Administrative Agent and the Lenders.

     

    The
Borrower and the Subsidiary Guarantors have requested that the Administrative
Agent and the Lenders extend the term of the Credit Agreement, and, subject to
the terms and conditions in this Amendment and in the Credit Agreement, as
amended hereby, the Administrative Agent and the Lenders have agreed to such
extension.

     

    In
connection with the extension of the term of the Credit Agreement, the Lenders,
the Administrative Agent, the Subsidiary Guarantors and the Borrower desire to
amend the Credit Agreement upon the terms and conditions hereinafter set
forth.

     

    NOW,
THEREFORE, in consideration of these Recitals and the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Subsidiary
Guarantors, the Administrative Agent and the Lenders, intending to be legally
bound hereby, agree as follows:

     

    SECTION
1.  Recitals.  The
Recitals are incorporated herein by reference and shall be deemed to be a part
of this Amendment.

     

    SECTION
2.  Amendments.  The
Credit Agreement is hereby amended as set forth in this Section
2.

     

    (a)           Amendments to Section
1.1.  Section 1.1 of the Credit Agreement is amended as
follows:

     

    (1)           By
amending and restating the definition of “Base Rate” set forth therein to read
in its entirety as follows:

     

    “ “Base
Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal
Funds Rate plus 1/2 of 1% and (c) the one-month LIBOR Rate plus
3.25%.  Each change in the Base Rate shall take effect simultaneously
(x) in the case of clauses (a) and (b), with the corresponding change or changes
in the Prime Rate or  the Federal Funds Rate or (y) in the case of
clause (c), on the first day of each calendar month, and if such day is not a
Business Day (including for purposes of this definition, a Business Day
described in clause (b) of the definition of Business Day), then on the
immediately preceding Business Day.”

     

    (2)           By
deleting the definition of “Calculation Date” set forth therein;
and

     

    (3)           By
amending and restating the definition of “Consolidated Net Worth” set forth
therein to read in its entirety as follows:

     

    “ “Consolidated Net
Worth”  means, with respect to the Borrower and its
Subsidiaries, on any date of determination, the total stockholders’ equity
(including capital stock, additional paid-in capital and retained earnings after
deducting the treasury stock) of the Borrower and its Subsidiaries appearing on
a Consolidated balance sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP (excluding on a cumulative basis any adjustments for
foreign currency translation).”

     

    (4)           By
inserting the following new definition in appropriate alphabetical order to read
in its entirety as follows:

     

     “
“Initial Extension
Date”  means January 15, 2009.”

     

    (b)           Amendment to Section
2.8.  Section 2.8 of the Credit Agreement is amended and
restated to read in its entirety as follows:

    


    “SECTION
2.8  Termination of Credit
Facility.  The Credit Facility shall terminate on the earliest
of (a) January 15, 2012, (b) the date of termination by the Borrower pursuant to
Section 2.7 or (c) the date of termination by the Administrative Agent on behalf
of the Lenders pursuant to Section 11.2(a).”

    


    (c)           Amendment to Section
4.1.  Clause (c) of Section 4.1 of the Credit Agreement is
amended and restated to read in its entirety as follows:

    


    “(c)
“Applicable
Margin” shall mean:  (i) in the case of each LIBOR Rate Loan,
3.25% and (ii) in the case of each Base Rate Loan, 1.00%.”

    


    (d)           Amendment to Section
4.3.  Clause (a) of Section 4.3 of the Credit Agreement is
amended and restated to read in its entirety as follows:

    


    “(a)           Commitment
Fee.  Commencing on the Closing Date, the Borrower shall pay to
the Administrative Agent, for the account of the Lenders, a non-refundable
commitment fee at a rate per annum equal to 0.50% on the average daily unused
portion of the Aggregate Commitment; provided that the amount of outstanding
Swingline Loans and Alternative Currency Loans shall not be considered usage of
the Revolving Credit Commitment for the purpose of calculating such commitment
fee with regard to any Lender other than the Swingline Lender (as to outstanding
Swingline Loans) and the Alternative Currency Lender (as to outstanding
Alternative Currency Loans).  The commitment fee shall be payable in
arrears on the last Business Day of each calendar quarter during the term of
this Agreement commencing March 31, 2009, and on the Revolving Credit
Termination Date.  Such commitment fee shall be distributed by the
Administrative Agent to the Lenders pro rata in accordance with the Lenders’
respective Commitment Percentages.”

    


    (e)           Amendment to Section
9.2.  Section 9.2 of the Credit Agreement is amended and
restated to read in its entirety as follows:

     

    “SECTION
9.2  Consolidated Net
Worth.  Permit, at any time, Consolidated Net Worth to be less
than $77,000,000.”

    


    (f)           Amendments to Section
10.3.  Section 10.3 of the Credit Agreement is amended as
follows:

     

    (1)           by
amending clause (c) of such Section to (A) insert the word “and” at the end of
subsection (x) therein and (B) insert a new subsection (xi) at the end of such
clause (c) to read in its entirety as follows:

    


    “(xi)
without the prior written consent of the Required Lenders, the Costs of
Acquisition of the Permitted Acquisition (regardless of the form of
consideration) together with the aggregate Costs of Acquisition of all other
Permitted Acquisitions pursuant to this Section 10.3(c) shall not exceed
$20,000,000 during the period from and including the Initial Extension Date to
the termination of this Credit Facility; provided that, for
purposes of this subsection (xi), the Required Lenders shall in no event consist
of fewer than two Lenders;”

    


    (2)           by
amending subsection (ii) of clause (d) of such Section to replace the text
“during the term of this Agreement” appearing therein with the text “during the
period from and including the Initial Extension Date to the termination of this
Credit Facility”; and

     

    (3)           by
deleting clause (h) of such Section in its entirety, adding the word “and”
immediately after the semicolon in clause (f) of such Section and replacing the
text “; and” at the end of clause (g) of such Section with a
period.

     

    (g)           Amendment to Section
10.5.  Section 10.5 of the Credit Agreement is amended by
replacing the text “during the term of this Agreement” appearing in clause (h)
of such Section with the text “during the period from and including the Initial
Extension Date to the termination of this Credit Facility”.

     

    (h)           Amendment to Section
10.6.  Clause (e) of Section 10.6 of the Credit Agreement is
amended and restated to read in its entirety as follows:

     

    “(e) in
addition to transactions permitted under subsection (c) above, the Borrower may
pay cash dividends on its capital stock, purchase, redeem, retire or otherwise
acquire, directly or indirectly, shares of its capital stock (including
purchases of treasury stock), or make distributions of cash, property or assets
among its shareholders in an aggregate amount not to exceed, during the period
from and including the Initial Extension Date to the termination of this Credit
Facility, the sum of (i) $20,000,000 plus (ii) an amount
equal to fifty percent (50%) of aggregate Net Income of the Borrower and its
Subsidiaries since September 30, 2008.”

     

    (i)           Amendment to Section
11.1.  Clause (d) of Section 11.1 of the Credit Agreement is
amended by deleting the text “(during which time the Applicable Margin shall be
based on Pricing Level I)” appearing therein.

     

    SECTION
3.  Conditions to
Effectiveness.  The effectiveness of this Amendment and the
obligations of the Lenders hereunder are subject to the following conditions,
unless the Required Lenders waive such conditions:

     

    (a) receipt
by the Administrative Agent from each of the parties hereto of a duly executed
counterpart of this Amendment signed by such party;

     

    (b) receipt
by the Administrative Agent of all documents which the Administrative Agent may
reasonably request;

     

    (c) the fact
that the representations and warranties of the Borrower and Subsidiary
Guarantors contained in Section 5 of this Amendment shall be true on and as of
the date hereof except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties were true on and as of such earlier date; and

     

    (d) all other
documents and legal matters in connection with the transactions contemplated by
this Amendment shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel.

     

    SECTION
4.  No Other
Amendment.  Except for the amendments set forth above, the text
of the Credit Agreement shall remain unchanged and in full force and
effect.  On and after the Second Amendment Effective Date (as defined
in Section 7 of this Agreement), all references to the Credit Agreement in each
of the Loan Documents shall hereafter mean the Credit Agreement as amended by
this Amendment.  This Amendment is not intended to effect, nor shall
it be construed as, a novation.  The Credit Agreement and this
Amendment shall be construed together as a single agreement.  This
amendment shall constitute a Loan Document under the terms of the Credit
Agreement.  Nothing herein contained shall waive, annul, vary or
affect any provision, condition, covenant or agreement contained in the Credit
Agreement, except as herein amended, nor affect nor impair any rights, powers or
remedies under the Credit Agreement as hereby amended.  The Lenders
and the Administrative Agent do hereby reserve all of their rights and remedies
against all parties who may be or may hereafter become secondarily liable for
the repayment of the Notes.  The Borrower and Subsidiary Guarantors
promise and agree to perform all of the requirements, conditions, agreements and
obligations under the terms of the Credit Agreement, as heretofore and hereby
amended, the Credit Agreement, as amended, and the other Loan Documents being
hereby ratified and affirmed.  The Borrower and Subsidiary Guarantors
hereby expressly agree that the Credit Agreement, as amended, and the other Loan
Documents are in full force and effect.

     

    SECTION
5.  Representations and
Warranties.  The Borrower and Subsidiary Guarantors hereby
represent and warrant to each of the Lenders as follows:

     

    (a) No
Default or Event of Default under the Credit Agreement or any other Loan
Document has occurred and is continuing unwaived by the Lenders on the date
hereof.

     

    (b) The
Borrower and Subsidiary Guarantors have the power and authority to enter into
this Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by them.

     

    (c) This
Amendment has been duly authorized, validly executed and delivered by one or
more authorized officers of the Borrower and Subsidiary Guarantors and
constitutes the legal, valid and binding obligations of the Borrower and
Subsidiary Guarantors enforceable against them in accordance with its terms,
provided that such enforceability is subject to general principles of
equity.

     

    (d) The
execution and delivery of this Amendment and the performance by the Borrower and
Subsidiary Guarantors hereunder does not and will not, as a condition to such
execution, delivery and performance, require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrower, or any Subsidiary Guarantor, nor be in contravention of or in
conflict with the articles of incorporation, bylaws or other organizational
documents of the Borrower, or any Subsidiary Guarantor or the provision of any
statute, or any judgment, order or indenture, instrument, agreement or
undertaking, to which the Borrower, or any Subsidiary Guarantor is party or by
which the assets or properties of the Borrower, and Subsidiary Guarantors are or
may become bound.

     

    (e) The
Collateral Agreement continues to create a valid security interest in, and Lien
upon, the Collateral, in favor of the Administrative Agent, for the benefit of
the Lenders, which security interests and Liens are perfected in accordance with
the terms of the Collateral Agreement and prior to all Liens other than Liens
permitted under Section 10.2 of the Credit Agreement.

     

    SECTION
6.  Counterparts; Governing
Law.  This Amendment may be executed in multiple counterparts,
each of which shall be deemed to be an original and all of which, taken
together, shall constitute one and the same agreement.  This Amendment
shall be construed in accordance with and governed by the laws of the State of
North Carolina.

     

    SECTION
7.  Effective
Date.  This Amendment shall be effective as of January 15, 2009
(such date, the “Second Amendment Effective Date”).

     

    SECTION
8.  Expenses.  The
Borrower and Subsidiary Guarantors agree to pay all reasonable costs and
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Amendment, including without limitation the
reasonable fees and expenses of the Administrative Agent’s legal
counsel.

     

    SECTION
9.  Further
Assurances.  The Loan Parties agree to promptly take such
action, upon the request of the Administrative Agent, as is necessary to carry
out the intent of this Amendment.

     

    SECTION
10.  Consent
by Subsidiary Guarantors.  The Subsidiary Guarantors consent to
the foregoing amendments.  The Subsidiary Guarantors promise and agree
to perform all of the requirements, conditions, agreements and obligations under
the terms of the Subsidiary Guaranty Agreement, said Subsidiary Guaranty
Agreement being hereby ratified and affirmed in all respects.  The
Subsidiary Guarantors hereby expressly agree that the Subsidiary Guaranty
Agreement is in full force and effect.

     

    SECTION
11.  Amendment and Extension
Fee.  The Borrower and Subsidiary Guarantors shall pay to the
Administrative Agent for the account of each Lender an amendment and extension
fee in an amount equal to 0.10% of the Aggregate Commitment, which amendment and
extension fee shall be fully earned and due and payable on the date of this
Amendment.

     

    SECTION
12.  Severability.  Any
provision of this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.

     

    SECTION
13.  Waiver
of Claims or Defenses.  The Borrower and Subsidiary Guarantors
represent that none of them has any set-offs, defenses, recoupments, offsets,
counterclaims or other causes of action against the Administrative Agent or the
Lenders relating to the Loan Documents and the indebtedness evidenced and
secured thereby and agree that, if any such set-off, defense, counterclaim,
recoupment or offset otherwise exists on the date of this Amendment, each such
defense, counterclaim, recoupment, offset or cause of action is hereby waived
and released forever.

     

    SECTION
14.  Release of Claims.  For and in consideration of the
obligations set forth herein and intending to be legally bound hereby, the
Borrower and Subsidiary Guarantors do remise, release and forever discharge the
Administrative Agent and the Lenders, and their respective successors and
assigns, of and from and all manner of actions, causes of actions, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims, and demands of whatsoever nature, in
law, in equity or in admiralty, direct or indirect, known or unknown, matured or
not matured, including for contribution and/or indemnity, that the Borrower or
any Subsidiary Guarantor ever had or now has, including, without limitation,
those with respect to any and all matters alleged or which could have been
alleged, with respect to the Loan Documents or the making or administration of
the Loans up to and including the date of this Amendment.  The general
release hereby entered into and executed by Borrower and Subsidiary Guarantors
is intended by Borrower and Subsidiary Guarantors to be final, complete and
total as to all matters that have arisen or occurred up to and including the
date of this Amendment.

     

    


     

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      IN
WITNESS WHEREOF, the parties hereto have executed and delivered, or have caused
their respective duly authorized officers or representatives to execute and
deliver, this Amendment as of the day and year first above written.

       

      
        


        [CORPORATE
SEAL]                                                                                  COMPX
INTERNATIONAL INC.

        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    


            

          

        

        


        


        [CORPORATE
SEAL]                                                                                  COMPX
SECURITY PRODUCTS INC.

        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    


            

          

        

        


        [CORPORATE
SEAL]                                                                                  COMPX
PRECISION SLIDES INC.

        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:       Darryl R. Halbert

                    
	 
      	
                      Title:         Chief Financial Officer

                    


            

          

        

        


        [CORPORATE
SEAL]                                                                                 
COMPX MARINE INC.

        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    


            

          

        

        


        [CORPORATE
SEAL]                                                                                 
CUSTOM MARINE INC.

        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    


            

          

        

        


        [CORPORATE
SEAL]                                                                                 
LIVORSI MARINE, INC.

        


        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    


            

          

        

        



        
          
            
              Signature
page to Second Amendment

              


               

            

             


          

          
             


            
              

            

          

          
             


          

        


        WACHOVIA BANK, NATIONAL
ASSOCIATION,

        as Administrative Agent and as a
Lender

        


        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Thomas F.
      Snider                                                                 

                    
	 
      	
                      Name:      Thomas F. Snider

                    
	 
      	
                      Title:        Senior Vice President

                    


            

          

        

        


        


        [Signature
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        COMPASS BANK,

        as Lender

        


        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Key
      Coker                                                                 

                    
	 
      	
                      Name:      Key Coker

                    
	 
      	
                      Title:        Executive Vice President

                    


            

          

        

        


        


        [Signature
pages continued on the following page]

        



        
          
            
               

            

             


          

          
             


            
              

            

          

          
             


          

        


        


        COMERICA BANK,

        as Lender

        


        


        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Gerald R. Finney,
      Jr.                                                                 

                    
	 
      	
                      Name:      Gerald R. Finney, Jr.

                    
	 
      	
                      Title:        Vice President

                    


            

          

        

        


        


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