Document:

cix-8k090921ex102.htm

FIRST AMENDMENT TO SUBORDINATION AGREEMENT

           THIS FIRST AMENDMENT TO SUBORDINATION AGREEMENT (this “Amendment”) is made as of this 21st day of September, 2009 by TIMET FINANCE MANAGEMENT COMPANY, a Delaware corporation (the “Subordinate Lender”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative
agent (in such capacity, together with any successor agent, the “Administrative Agent”) for the benefit of the Lenders (including, without limitation, the Issuing Lender, the Swing Line Lender and the Alternative Currency Lender) (all as defined in the Credit Agreement referenced below).  Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to them in the Subordination Agreement referred to below.

Recitals:

           A.           CompX International Inc., a Delaware corporation (the “Borrower”), CompX Security Products Inc., CompX Precision Slides Inc., CompX Marine Inc., Custom Marine Inc. (f/k/a Custom Marine Acquisition,
Inc.) and Livorsi Marine, Inc. (collectively, the “Guarantors”), the Administrative Agent and the Lenders have entered into a certain Credit Agreement dated as of December 23, 2005, as amended by that First Amendment to Credit Agreement dated October 16, 2007, the Second Amendment to Credit Agreement dated January 15, 2009 and the Third Amendment to Credit Agreement dated the date hereof (the “Third Amendment”) (the “Credit Agreement,” which term shall include all amendments
and modifications thereto).

           B.           Pursuant to the terms of the Credit Agreement, the Subordinate Lender and the Administrative Agent (for the benefit of the Lenders) entered into that certain Subordination Agreement dated as of October 16,
2007 (the “Subordination Agreement”) as a condition to the consent of the Required Lenders to Subordinate Lender making a term loan to the Borrower evidenced by the Subordinate Note.

           C.           The Borrower and the Guarantors have requested certain amendments to the Credit Agreement, as more specifically set forth in the Third Amendment, and as a condition to the effectiveness of the Third Amendment,
the Required Lenders have required, among other things, the execution of this Amendment by the Subordinate Lender and the modification of certain provisions of the Subordinate Note on terms and conditions satisfactory to the Required Lenders (the “Subordinate Note Modification”).

           NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Subordinate Lender hereby agrees with the Administrative Agent
(for the benefit of the Lenders) as follows:

           1.           Amount of Subordinated Debt and Recitals.  The Subordinate Lender represents, warrants and covenants that (a) the outstanding principal amount
of the Subordinated Debt on the date of this Amendment is, and shall not at any time after the date of this Amendment exceed, $42,230,190; (b) the above Recitals are true, accurate, and correct and are incorporated in this Agreement by reference; (c) the Subordinate Lender is the lawful owner of the Subordinated Debt, free and clear of all liens, assignments, security interests and other encumbrances; (d) the Subordinate Lender has not previously subordinated the Subordinated Debt (other than pursuant to the
Subordination Agreement), (e) a true, correct and complete copy of the Subordinate Note Modification is attached hereto as Exhibit A and such Subordinate Note Modification shall be in full force and effect concurrently with the execution and delivery of this Amendment by the parties hereto, (f) it has the power and authority to enter into and deliver this Amendment and to do all acts and things as are required or contemplated hereunder to be done, observed and performed by the Subordination Agreement as hereby
amended, (g) this Amendment has been duly authorized, validly executed and delivered by an authorized officer and the Subordination Agreement as hereby amended constitutes the legal, valid and binding obligation of the Subordinate Lender enforceable against it in accordance with its terms, subject to general principles of equity and (h) Subordinate Lender’s execution and delivery of this Amendment, and performance of the Subordination Agreement as amended hereby, have not resulted and will not result in
a breach or violation of any provision of (i) its organizational documents, (ii) any statute, law, writ, order, rule or regulation of any Governmental Authority applicable to Subordinate Lender, (iii) any judgment, injunction, decree or determination of any Governmental Authority applicable to Subordinate Lender or (iv) any contract, indenture, mortgage, loan agreement, note, lease or other agreement, document or instrument to which Subordinate Lender is a party or by which Subordinate Lender is bound.

           2.           Paragraph 2 of the Subordination Agreement is hereby amended and restated in its entirety to read as follows:

“2.           Subordination to Senior Obligations.  The Subordinate Lender hereby subordinates and postpones the payment and the time of payment of the Subordinated
Debt to and in favor of the payment and the time of payment of the Senior Obligations.  So long as all or any part of the Senior Obligations remain unpaid, the Subordinate Lender shall not, without the prior written consent of the Required Lenders, ask, demand, sue for, set off, accept, or receive any payment of all or any part of the Subordinated Debt; provided, that, so long as no Default or Event of Default (as such terms are defined in the Credit Agreement) is in existence or would arise as a result
of the making of such payment: (i) on and after January 1, 2011, the Borrower may make regularly scheduled payments of principal and accrued interest on the Subordinated Debt as set forth in the Subordinate Note and (ii) the Borrower, at Borrower’s sole option, may make payments or prepayments on or in respect of the Subordinated Debt in an amount not to exceed the Permitted Distribution Amount less the sum of (x) Restricted Payments made pursuant to clause (c) of Section 10.6 of the Credit Agreement and
(y) all other payments by Borrower pursuant to clause (ii) of the proviso of Section 10.10(b) of the Credit Agreement; provided that the chief financial officer, the controller or the treasurer of the Borrower shall have certified to the Administrative Agent and the Subordinate Lender as to compliance with the preceding clause.  The Subordinate Lender agrees not to subordinate, grant a security interest or lien on, assign, or transfer all or any part of the Subordinated Debt to any other person without
the prior written consent of the Required Lenders.  Subordinate Lender will not, without the prior written consent of the Required Lenders: (a) commence, or join with any other creditor in commencing, any bankruptcy, reorganization, insolvency or similar proceedings with respect to Borrower or any Guarantor; or (b) extend, amend, modify or renew any of the Borrower's obligations under the Subordinated Debt or the documents evidencing or executed or delivered in connection with the Subordinated Debt
(other than to reduce the interest rate (including any default rate) or any fees applicable to or payable in respect of such Subordinated Debt so long as no Default or Event of Default is in existence or would arise as a result of such amendment or modification), or (c) release any surety or security for such obligations or obtain collateral security or exercise any other right under the Subordinated Debt, or the documents evidencing or executed or delivered in connection with the Subordinated Debt.”

            3.           Upon the effectiveness of this Amendment and the Subordinate Note Modification, (i) each reference to “Subordinate Note” in the Subordination Agreement, and in any document, instrument or agreement
executed and/or delivered in connection with the Subordination Agreement, shall mean and be a reference to the Subordinate Note as amended or otherwise modified by the Subordinate Note Modification and (ii) each reference to “Subordinate Debt” shall mean all past, present, and future indebtedness, liabilities, and obligations of any nature whatsoever of the Borrower to the Subordinate Lender, including, without limitation, any and all indebtedness, liabilities, and obligations of the Borrower to the
Subordinate Lender evidenced by such Subordinate Note.

 

            4.           No Other Amendment.  Except for the amendments expressly set forth herein, the Subordination Agreement shall remain unchanged and in full force and effect.  The Subordination Agreement
and this Amendment shall be construed together as a single agreement.  Nothing herein contained shall waive, annul, vary or affect any provision, condition, covenant or agreement contained in the Subordination Agreement, except as specifically herein amended, nor affect nor impair any rights, powers or remedies of any party under the Subordination Agreement, as hereby amended.

 

            5.           Miscellaneous.  This Amendment shall not be affected, impaired, or released by the delay or failure of the Administrative Agent or any of the Lenders to exercise any of their respective rights
and remedies against the Borrower or any Guarantor or under any of the Loan Documents or against any collateral or security for the Senior Obligations. No delay or failure on the part of the Administrative Agent or any of the Lenders to exercise any of their respective rights or remedies hereunder or under the Subordination Agreement (as amended by this Amendment) or now or hereafter existing at law or in equity or by statute or otherwise, or any partial or single exercise thereof, shall constitute a waiver thereof.
All such rights and remedies are cumulative and may be exercised singly or concurrently and the exercise of any one or more of them will not be a waiver of any other.  No waiver of any of its rights and remedies hereunder and no modification or amendment of this Amendment shall be deemed to be made by the Administrative Agent and Lenders unless the same shall be in writing, duly signed by the Administrative Agent on behalf of the Lenders, and each such waiver, if any, shall apply only with respect to
the specific instance involved and shall in no way impair the rights and remedies of the Administrative Agent and Lenders hereunder in any other respect at any other time.  If any term of this Amendment or any obligation thereunder shall be held to be invalid, illegal, or unenforceable, the remainder of this Amendment and any other application of such term shall not be affected thereby.  This Amendment may be executed in duplicate originals or in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one instrument, and it shall not be necessary in making proof hereof to produce or account for more than one such duplicate, original, or counterpart.  This Amendment shall be binding upon the heirs, personal representatives, successors, and assigns of the Subordinate Lender and shall inure to the benefit of the successors and assigns of the Administrative Agent and Lenders. As used herein, the singular number shall include the plural, the
plural the singular, and the use of the masculine, feminine, or neuter gender shall include all genders, as the context may require, and the term “person” shall include an individual, a corporation, an association, a partnership, a trust, and an organization. The paragraph headings of this Amendment are for convenience only and shall not limit or otherwise affect any of the terms hereof. This Amendment shall be governed by and construed in accordance with the laws of the State of North Carolina and
shall be deemed to be executed, delivered, and accepted in the State of North Carolina.

[SIGNATURE PAGES FOLLOW]

  

  

  

           IN WITNESS WHEREOF, the Subordinate Lender has caused this Amendment to be signed, sealed, and delivered on the day and year first written above.

SUBORDINATE LENDER:

TIMET FINANCE MANAGEMENT COMPANY,

a Delaware corporation

[CORPORATE SEAL}

By:  _________________________________ (SEAL)

Name:           Joan Yori

Title:           President

[ADDITIONAL SIGNATURE PAGES FOLLOW]

  

  

  

           The Borrower and the Guarantors join in the execution of this Amendment so as to signify their acceptance of and agreement and consent to the provisions of this Amendment and the Agreement, as amended by this Amendment.

BORROWER:

COMPX INTERNATIONAL INC.,

a Delaware corporation

[CORPORATE SEAL}

                   
By:  _________________________________________ (SEAL)

                   
Name:  _______________________________________                                                                

                   
Title:  ________________________________________                           

                                                            GUARANTORS:

                                                            COMPX
SECURITY PRODUCTS INC.

[CORPORATE SEAL}

                               
By:  _________________________________________ (SEAL)
                   
Name:  _______________________________________                                                                

                   
Title:  ________________________________________                           

                                                            

                 COMPX
PRECISION SLIDES INC.

[CORPORATE SEAL}

                       
By:  _________________________________________ (SEAL)
                   
Name:  _______________________________________                                                                

                   
Title:  ________________________________________                          

                                                           

                       
COMPX MARINE INC.

[CORPORATE SEAL}

                            By: 
_________________________________________ (SEAL)
                   
Name:  _______________________________________                                                                

                   
Title:  ________________________________________     

                                                            
CUSTOM MARINE INC.

[CORPORATE SEAL}

                            By: 
_________________________________________ (SEAL)
                   
Name:  _______________________________________                                                                

                   
Title:  ________________________________________     

                                                            LIVORSI
MARINE, INC.

[CORPORATE SEAL}

                            By: 
_________________________________________ (SEAL)
                   
Name:  _______________________________________                                                                

                   
Title:  ________________________________________     

ACCEPTED BY:               
ADMINISTRATIVE AGENT:

WACHOVIA BANK, NATIONAL ASSOCIATION,

a national banking association

 

                    By:  _________________________________________
                   
Name:  _______________________________________                                                                

                   
Title:  ________________________________________cix-8k090921ex103.htm

AMENDED AND RESTATED

SUBORDINATED TERM LOAN PROMISSORY NOTE

$42,230,190.00                                                   
September 21, 2009

 

For and in consideration of value received, the undersigned, COMPX INTERNATIONAL INC., a corporation duly organized under the laws of Delaware (“Maker”), promises to pay to the order of TIMET
FINANCE MANAGEMENT COMPANY, a corporation duly organized under the laws of Delaware (“Payee”), at its address 1007 Orange Street, Suite 1414, Wilmington, Delaware 19801, in lawful money of the United States of America, the principal sum of Forty-Two Million Two Hundred Thirty Thousand One Hundred and Ninety United States Dollars ($42,230,190.00) together with interest from the date hereof on the amount of principal from time to time outstanding
at a rate equal to the three month United States LIBOR rate as quoted from time to time by The Wall Street Journal or other reliable source, plus one percent (1.00%) per annum.  Simple interest shall be calculated on the basis of a year of 365/366 days and for the actual number of days (including the first, but excluding the last day) elapsed and shall be paid in arrears quarterly on the last day of each March, June, September and December, commencing March 31, 2011.

This Note amends and restates the Subordinated Term Loan Promissory Note dated October 26, 2007 in the original principal amount of $52,580,190.00 executed by Maker and payable to the order of Payee (the “Prior Note”).  This Note shall operate to renew,
amend and modify the rights and obligations of the parties under the Prior Note, as provided herein, but shall not extinguish the obligations under the Prior Note, nor effect a novation thereof.  As of the date of this Note, Maker owes Payee under the Prior Note an unpaid principal amount of $42,230,190.00 and accrued and unpaid interest on this principal amount of $152,448.09, which shall become the unpaid principal and accrued and unpaid interest thereon of this Note as of the date of this Note.

Principal payments of $250,000 will be due and payable quarterly on the last day of each March, June, September and December commencing March 31, 2011, with any and all remaining outstanding principal and any accrued unpaid interest due on September 30, 2014 (the “Maturity Date”).  Maker
shall designate any payments on this Note as applying to either accrued and unpaid interest, to accrued interest not yet payable, or to principal against the scheduled principal payments from earliest to latest.  Maker may prepay principal or interest at any time without penalty.  In the event that principal or interest is not paid within five days of when due or declared due, interest shall thereafter accrue on the full amount of such payment at the rate of United States LIBOR plus three
percent (3%) per annum.

Notice of written demand for payment shall be made by Payee to Maker by certified mail, postage prepaid and return receipt requested to Maker’s address as set forth under its signature below.  The demand for payment or any other communication shall be deemed given and effective as of the date of delivery or upon receipt
as set forth on the return receipt.

Upon the occurrence and during the continuation of an Event of Default (as defined below), Payee shall have all of the rights and remedies provided in the applicable Uniform Commercial Code, this Note or any other agreement between Maker and in favor of Payee, as well as those rights and remedies provided by any other applicable law, rule
or regulation.  In conjunction with and in addition to the foregoing rights and remedies of Payee, Payee may declare all indebtedness due under this Note, although otherwise unmatured, to be due and payable immediately without notice or demand whatsoever.  All rights and remedies of the holder are cumulative and may be exercised singly or concurrently.  The exercise of any right or remedy will not be a waiver of any other right or remedy.

For purposes of this Note, an Event of Default shall mean any one of the following events:

(a)           Maker fails to pay principal payments when due, or Maker fails to make interest payments within 30 days of becoming due;

(b)           Maker otherwise fails to perform or observe any other provision contained in this Note and such breach or failure to perform shall continue for a period of thirty days after notice thereof shall have been given
to Makers by the holder hereof;

(c)           Maker defaults under any loan, extension of credit, security agreement, or any other agreement, in favor of any other creditor or person that may materially affect Maker’s ability to repay this Note or perform
Maker’s obligations under this Note; or

(d)           Maker becomes insolvent, a receiver is appointed for any part of Maker’s property, Maker makes an assignment for the benefit of creditors, or any proceeding is commenced either by Maker or against Maker under
any bankruptcy or insolvency laws.

In the event Payee incurs costs in collecting on this Note, this Note is placed in the hands of any attorney for collection, suit is filed on this Note or if proceedings are had in bankruptcy, receivership, reorganization, or other legal or judicial proceedings for the collection of this Note, Maker agrees to pay on demand to Payee all
expenses and costs of collection, including, but not limited to, reasonable attorneys’ fees incurred in connection with any such collection, suit, or proceeding, in addition to the principal and interest then due.

It is agreed that time is of the essence on this Note.  The failure of the holder of this Note to exercise any remedy shall not constitute a waiver on the part of the holder of the right to exercise any remedy at any other time.  It is the intention of Maker and Payee to conform strictly to applicable usury laws, if
any.  Accordingly, notwithstanding anything to the contrary in this Note or any other agreement entered into in connection herewith, it is agreed as follows: (i) the aggregate of all interest and any other charges constituting interest under applicable law and contracted for, chargeable or receivable under this Note or otherwise in connection with the obligation evidenced hereby shall under no circumstances exceed the maximum amount of interest permitted by applicable law, if any, and any excess shall
be deemed a mistake and canceled automatically and, if theretofore paid, shall, at the option of Payee, be refunded to Maker or credited on the principal amount of this Note; and (ii) in the event that the entire unpaid balance of this Note is declared due and payable by Payee, then earned interest may never include more than the maximum amount permitted by applicable law, if any, and any unearned interest shall be canceled automatically and, if theretofore paid, shall at the option of Payee, either be refunded
to Maker or credited on the principal amount of this Note.

Maker expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of intention to accelerate, notice of acceleration, bringing of suit and diligence in taking any action to collect amounts called for hereunder and is and shall be liable for the payment of all sums owing
and to be owing hereon, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder or in connection with any right, lien, interest or property at any and all times had or existing as security for any amount called for hereunder.

If any payment of principal or interest on this Note shall become due on a Saturday, Sunday or public holiday under the laws of Delaware, United States of America, on which banks are not open for business, such payment shall be made on the next succeeding business day in which banks are open for business.

Pursuant to the terms of that certain Subordination Agreement dated October 16, 2007, executed by the Payee, the Maker and certain subsidiaries of the Maker, the indebtedness evidenced by this Note is subordinate and junior in right of payment to all principal, interest, charges, expenses and attorneys’ fees arising out of or relating
to all indebtedness, liabilities and obligations of Maker arising under that certain Credit Agreement dated December 23, 2005, as such Credit Agreement has been amended and may be further amended, restated, supplemented or otherwise modified from time to time, and the related Loan Documents (as defined in such Credit Agreement) (the “Superior Debt”).  Superior Debt shall continue to be Superior Debt and entitled to the benefits of
these subordination provisions irrespective of any amendment, modification, or waiver of any term of the Superior Debt or extension or renewal of the Superior Debt.

This Note shall be governed by and construed in accordance with the domestic laws of the state of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the state of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the state of
Delaware.

	
Executed by Payee as of the Day and Year First Written

Above in Order to Evidence its Agreement to the terms of this note.

 

TIMET Finance Management Company.

 

 

 

By:  __________________________________________       

Joan Yori, President
	
MAKER:

 

CompX International Inc.

 

 

 

 

 

By:  __________________________________________  

Darryl R. Halbert, Vice President,

Chief Financial Officer an Controller

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