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Exhibit 10.10
FIFTH AMENDMENT TO CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement ("Amendment") dated as of
November 13, 1997 by and among Xxx X. Xxxxxx, Inc. ("Weston"); the Subsidiaries
of Weston listed on the signature pages hereto (Weston and such Subsidiaries
are sometimes referred to individually as a "Borrower" and collectively as the
"Borrowers"); CoreStates Bank, N.A. ("CoreStates"), First Union National Bank,
successor by merger to First Fidelity Bank, N.A., ("First Union") and PNC Bank,
National Association ("PNC") (CoreStates, First Union and PNC are each referred
to individually as a "Bank" and collectively as the "Banks"); and CoreStates
Bank, N.A., as agent for the Banks hereunder (the "Agent").
BACKGROUND
A. Borrowers, Banks and Agent are currently parties to a certain Credit
Agreement dated March 18, 1994, as amended from time to time ("Credit
Agreement") whereby Banks established a credit facility under which loans and
letters of credit were made available from time to time for the benefit of
Borrowers. All capitalized terms used herein without further definition shall
have the meanings ascribed thereto in the Credit Agreement.
B. Borrowers and Banks have agreed upon certain modifications to the
financing arrangements set forth in the Credit Agreement and desire to set
forth their understandings in writing in this Amendment.
NOW, THEREFORE, the parties hereto, with the foregoing Background
incorporated by reference, intending to be legally bound, promise and agree as
follows:
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1. Status of Current Facility. Borrowers and Banks acknowledge and agree
that as of the date hereof there are no outstanding Loans and the aggregate face
amount of all outstanding Letters of Credit (the "Outstanding Letters of
Credit") is $5,786,002.42 (each of which outstanding Letters of Credit is set
forth on Schedule 1 attached hereto and made part hereof). Borrowers
acknowledge and agree that each of them is unconditionally obligated, without
setoff, defense, deduction or counterclaim, to reimburse Banks with respect to
any and all drawings which may from time to time be made with respect to the
Letters of Credit.
2. Amendments.
2.1 The Credit Agreement is hereby amended by deleting clause (A) in the
definition of both "Commitment Termination Date" and "Maturity Date" in Section
1.01 thereof and replacing such clause with the following:
"(A) January 15, 1998."
2.2 The Credit Agreement is hereby amended to reduce the definition of
"Total Commitments" contained in Section 1.01 thereof from $25,000,000 to
$8,857,035; provided, however, that the "Total Commitments" shall be further
reduced by the amount of the face amount of each Outstanding Letter of Credit,
other than the Specified Credit (as defined in Section 3.4 below), which
expires or is returned to Agent.
2.3 The Credit Agreement is hereby amended by modifying Subsection 2.02(A)
thereof to provide that outstanding Line Advances made after the date hereof
shall not at any time exceed $3,000,000, and in no event may any Line Advances
be requested or made available unless Borrowers have demonstrated to Agent's
reasonable satisfaction that they have no other cash on
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hand or investments not otherwise pledged or restricted as set forth, or as
otherwise described, on Schedule 2.3 attached hereto.
2.4 The Credit Agreement is hereby amended by modifying Section 2.01
thereof to provide that additional Letters of Credit may only be issued after
the date hereof under the Credit Agreement (i) if the Specified Credit (as
defined in Section 3.4 below) has been canceled and returned to the Agent, in
which case, additional Letters of Credit may be issued provided that each such
Letter of Credit is fully collateralized with additional Pledged Collateral (of
the kind described in Section 3.2 below) in the amount of such Letter of
Credit, or (ii) if the Specified Credit has not been canceled and returned to
the Agent, then additional Letters of Credit may be issued provided that the
aggregate face amount of all such issued and outstanding Letters of Credit plus
the amount of outstanding Line Advances shall not at any time exceed
$3,000,000. Notwithstanding any other provision hereof, in no event shall the
aggregate face amount of all Letters of Credit issued after the date hereof and
outstanding at any one time exceed $3,000,000.
2.5 The Credit Agreement is hereby further amended to provide that all
Loans which may be outstanding under the Credit Agreement after the date hereof
shall be Base Rate Loans and that no LIBOR Loans shall hereafter be available.
2.6 Section 5.05(A) of the Credit Agreement is hereby amended by deleting
clauses (5), (6), (8) and (9) thereof in their entirety and replacing only
clause (5) with the following:
(5) [t]he interests in computer and office equipment
hereafter acquired by any Borrower which is/are the subject
of capitalized leases and/or operating leases representing an
aggregate equipment cost not to exceed $2,000,000,
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2.7 Section 5.14 of the Credit Agreement is hereby amended by deleting
clause (E) in its entirety.
2.8 Section 5.16 of the Credit Agreement is hereby amended by deleting
clause (2) in its entirety and replacing it with the following:
(2) So long as no Event of Default has occurred and is
continuing or would occur after giving affect thereto, (a)
the sale of TIS-5 (a transportable rotary kiln hazardous
waste incineration system); (b) the sale and subsequent
leaseback (by way of an operating lease) of specified
computer equipment (with a book value not to exceed
$1,300,000); and (c) the sale of other assets in the ordinary
course of Borrowers' business, provided that the proceeds
(cash and noncash) of all such sales are reasonably
equivalent to the fair market value of such assets at the
time of sale and that the aggregate amount of the proceeds
from all such sales from the date hereof through the Maturity
Date shall not exceed $500,000;
2.9 Section 5.23 of the Credit Agreement is hereby amended by deleting
clause (g) thereof in its entirety.
2.10 Section 5.24 of the Credit Agreement is hereby amended by deleting
clause (C) thereof in its entirety and deleting clause (D) in its entirety and
replacing it with the following:
(D) other loans from time to time in the ordinary course of
Borrowers' business to a joint venture(s) in which a Borrower
holds at least a 50% equity interest not exceeding the
principal sum of $500,000 in the aggregate as to all such
loans.
2.11 Section 5.26 of the Credit Agreement is hereby amended by deleting
clause (4) thereof and replacing it with the following:
(4) Indebtedness created to finance the acquisition of the
property hereafter acquired by any Borrower as permitted
pursuant to Section 5.05(A)(5) hereof.
2.12 Section 6.01 of the Credit Agreement is hereby amended by deleting
clause (E) in its entirety and replacing it with the following:
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(E) If any Borrower shall fail to perform, comply
with or observe any other term, covenant or agreement
contained in this Agreement on its part to be performed,
complied with or observed; provided however that with respect
to any Borrower's failure to perform, comply with, or observe
the covenants contained in Sections 5.02, 5.03, 5.04, 5.08,
5.10, 5.15 and 5.22 above, Borrowers shall have 15 days from
the earlier to occur of (1) any Borrower's having knowledge of
the occurrence of such failure to perform, comply with, or
observe any of such covenants or (2) Agent's giving such
Borrower notice of such occurrence to remedy such failure.
2.13 The Credit Agreement is hereby amended to add a new clause (i) to
Section 5.23 of the Credit Agreement to read as follows:
"Bonds issued by corporations incorporated under
the laws of the United States of America with an
investment grade of AA or better as determined by
Xxxxx'x or S&P."
2.14 The Credit Agreement is further amended to provide that in no event
may Borrowers lease equipment (whether through a capitalized lease or operating
lease) except as specifically permitted by Section 5.05(A)(5) of the Credit
Agreement, as amended.
3. Collateral.
3.1 As collateral security for all existing and future obligations and
liabilities of Borrowers to Banks, whether Line Advances, reimbursement
obligations with respect to Letters of Credit, or otherwise, principal,
interest, fees or expenses, and whether due or to become due, matured or
contingent, joint or several, (collectively, the "Bank Obligations"), each
Borrower hereby grants to Agent, for the pro rata benefit of Banks, a security
interest in and to all of its existing and future accounts receivable, together
with all books and records related thereto, and all proceeds thereof.
Borrowers represent and warrant that no other Person holds any lien or security
interest in any of any Borrower's existing or future accounts receivable (other
than Reliance Insurance Company [or its affiliates] which has issued a surety
bond or bonds on behalf of a Borrower on the projects listed on Schedule 3.1
attached hereto ["Surety Projects"] and by
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reason of such bond asserts a prior interest by right of subrogation in
and only in those receivables arising from the Surety Projects and a security
interest [which Borrowers believe to be presently unperfected] in all other
existing and future accounts receivable of Borrowers) and covenant and agree
that they shall not grant or permit to exist any lien or security interest in
favor of any other Person in any of any Borrower's existing or future accounts
receivable. Borrowers do not believe financing statements have been executed
on behalf of Borrowers in favor of the above-described sureties and agree that
they will not execute financing statements in favor of such sureties unless
Agent has notified Borrowers that Agent has received an intercreditor agreement
from such sureties acceptable to Agent as required by paragraph 10.3 below.
3.2 As collateral security for the Bank Obligations, Borrowers hereby
pledge, assign and grant a security interest to Agent for the pro rata benefit
of Banks in and to unrestricted cash and investment property of the type listed
in Section 5.23 of the Credit Agreement (excluding clause (f) therein) totaling
on the date hereof and at all times hereafter $5,500,000, which cash and
investment property ("Pledged Collateral") shall be held in a segregated
account with Delaware Trust Capital Management or such other Person acceptable
to Agent ("Securities Depository") subject to the terms hereof and to a Pledge
Agreement to be executed and delivered to Agent contemporaneously herewith by
each Borrower having an interest in any such Pledged Collateral. Borrowers
shall also cause the Securities Depository to execute and deliver to Agent a
Control Agreement acceptable to Agent with respect to the handling and
disposition of any such Pledged Collateral.
3.3 Borrowers and Banks acknowledge that notice of nonrenewal or request
for cancellation has been sent or will be sent promptly after the date hereof
to the beneficiaries of those Letters of Credit listed on Schedule 3.3 attached
hereto and made part hereof ("Noticed
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Credits"). To the extent that any or all of the Noticed Credits are not
canceled and returned to Agent prior to November 15, 1997, additional Pledged
Collateral shall on such date be pledged to Agent under the same terms and
conditions as the Pledged Collateral granted to Agent contemporaneously
herewith, in dollar amount equal to the aggregate face amount of all Noticed
Credits not so returned.
3.4 Borrowers agree to use their best efforts to obtain the cancellation
and return as soon as possible of that certain Letter of Credit No. 519867 in
the original face amount of $3,006,700 ("Specified Credit") issued by Agent
under the Credit Agreement. If the Specified Credit or any other Outstanding
Letter of Credit, other than the Noticed Credits, is canceled and returned to
Agent, or reduced (evidenced by a writing acceptable to Agent), Pledged
Collateral in the amount of each such Letter of Credit so returned or the
amount of the reduction of each such Letter of Credit shall be returned to
Borrowers so long as no Event of Default is then outstanding under the Credit
Agreement.
3.5 Borrowers represent and warrant that the chief executive office of
each Borrower is located on Schedule 3.5 attached hereto and made part hereof.
Borrowers covenant that such office shall not be changed without at least 20
days prior written notice to Agent.
3. Collateral Audit. Agent shall be entitled to engage an independent
accounting or auditing firm to complete a collateral audit of Borrowers'
accounts receivable (the scope of which is to be determined by Agent), which
audit is to be completed by November 21, 1997 and is to be performed at
Borrowers' sole expense, it being anticipated that the cost of such audit
should be approximately $10,000.00 plus expenses. Agent shall endeavor to give
notice to Borrowers if the cost of such audit will exceed the foregoing amount,
provided that Agent's failure to give such
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notice shall not result in any liability on the part of Agent and/or Banks nor
shall it relieve Borrowers of their obligation to pay for the entire cost of
such audit.
4. Consultant. So long as the Bank Obligations remain outstanding,
Borrowers shall continue to engage Coopers & Xxxxxxx, or such other consultant
as Borrowers may select who may be reasonable acceptable to Banks, to assist
Borrowers in connection with their finances and business operations.
5. Business Plan. Promptly following the execution and delivery of this
Amendment, Borrowers, with the assistance of their independent consultant,
shall begin development and shall thereafter diligently work on completion of a
comprehensive business plan for their next fiscal year, which shall be
delivered to Agent on December 15, 1997.
6. Additional Reporting Requirements.
7.1 Borrowers shall, with the assistance of their independent consultant,
prepare and deliver to Agent, contemporaneously herewith, a 13-week cash flow
projection. Borrowers, with the assistance of their independent consultant,
shall update the projection monthly, on a rolling basis as of the first Friday
of each calendar month or more frequently if requested by Agent to include the
upcoming 13 week period. In addition, Borrowers shall deliver to Agent, and
each Bank, weekly, on Friday of each week, the actual cash flow results with a
comparison to the projections, for the week immediately preceding the week in
which such results are delivered.
7.2 In addition to all other reports required to be provided by Borrowers
to Agent, Borrowers shall forward to Agent, and each Bank, (a) internally
prepared monthly financial statements within 30 days following the end of each
calendar month, and (b) quarterly reporting, to be prepared with the assistance
of Borrowers' independent consultant, to include an
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operating review of each of Borrowers' divisions, with comparison of
actual to projections, utilization rates, multipliers and backlog.
7. Waivers. Borrowers represent and warrant that these Events of Default
listed on Schedule 8 attached hereto and made part hereof are presently
outstanding under the Credit Agreement ("Existing Events of Default"). In
consideration of the amendments and undertakings set forth in this Amendment,
Banks agree to (a) waive the Existing Events of Default and (b) suspend for the
period of October 1, 1997 through January 15, 1998 the measurement of those
covenants set forth in Section 5.17 (Net Worth) and Section 5.20 (Cash, Cash
Equivalents and Marketable Securities) of the Credit Agreement. No waiver or
covenant suspension set forth in this paragraph shall apply to any period or
provision other than as expressly set forth above and nothing herein contained
shall obligate Banks to extend or provide any additional waiver or covenant
suspension.
8. Amendment Fee. In consideration of the amendments and undertakings set
forth herein, Borrowers shall pay to Agent, for the ratable benefit of each Bank
in accordance with each Bank's respective Commitment Percentage, a fully earned,
nonrefundable amendment fee of $39,365, due and payable contemporaneously with
the execution hereof.
9. Miscellaneous.
10.1 Each Borrower represents and warrants to the Banks and Agent that it
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Amendment and the Pledge Agreement. This Amendment and
the Pledge Agreement are, or when executed by the Borrowers and delivered to the
Agent will be, fully executed and constitute valid and legally binding
obligations of the Borrowers, enforceable against each Borrower in accordance
with their respective terms. Each Borrower hereby ratifies, confirms and
restates each
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of the representations and warranties of the Borrowers set forth in
Article IV of the Credit Agreement as being true and correct on the date
hereof, except as modified by the Fourth Amendment and Joinder to Credit
Agreement dated as of March 28,1997, and as set forth on Schedule 10.1 attached
hereto. Also included on Schedule 10.1 is a list of all outstanding guarantees
issued by any Borrower for the account of any other Person.
10.2 As a condition to the effectiveness of this Amendment, the Borrowers
shall cause to be delivered to Agent (for the benefit of Banks) the following
(all to be in form and substance satisfactory to Agent and its counsel);
(a) this Amendment, fully executed by each of the Borrowers, Banks and
Agent;
(b) the Pledge Agreement, fully executed by the Borrowers;
(c) the Control Agreement, executed by the Securities Depository;
(d) a certificate from the secretary of each Borrower (i) certifying true
and correct copies of the applicable Borrower's corporate resolutions
authorizing the execution, delivery and performance of this Amendment and the
Pledge Agreement and, (ii) certifying that no amendment, replacement or
termination of the Articles of Incorporation and Bylaws (or any portion
thereof) of each Borrower which accompanied the secretary's certificate dated
March 28, 1997 (which accompanied execution of the Fourth Amendment and Joinder
to Credit Agreement ("Fourth Amendment")) has occurred (other than amendments
not affecting the power or authority of any Borrower to execute, deliver or
perform under this Amendment) and that the new Incumbency Certificates for each
Borrower delivered to Agent in connection with this Amendment are unchanged
and in effect;
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(e) an opinion of counsel from counsel to each of the Borrowers;
(f) a copy of draft internally prepared September 30, 1997 financial
statements for Borrowers (reflecting covenant compliance except as set forth on
Schedule 8 attached hereto);
(g) current projections of fourth quarter 1997 financial performance;
(h) cash flow projection as required by paragraph 7.1 above; and
(i) payment of (1) the Amendment Fee referenced in paragraph 9 above and
(2) the Commitment Fee due for the period of July 1, 1997 through the
date hereof in the agreed amount of $10,635, in good cleared funds.
10.3 As a precondition to the making of any Line Advances or the issuing
of any additional Letters of Credit, Borrowers shall cause to be delivered to
Agent an intercreditor/subordination agreement from Reliance Insurance Company
and each other entity, if any, who has or may issue surety bonds in conjunction
with the Surety Projects, in form and substance satisfactory to Agent and its
counsel, pursuant to which such entities shall subordinate all liens and
security interests they may have in and to the Collateral described in Section
3 hereof other than those accounts receivable of Borrowers relating directly to
the Surety Projects.
10.4 This Amendment may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement.
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10.5 This Amendment and the documents, instruments and agreements executed
and delivered pursuant hereto constitute the entire agreement among the parties
relating to the specific subject matter contained in this Amendment.
10.6 This Amendment shall amend and is incorporated into the Credit
Agreement. In the event of any express inconsistency between the terms hereof
and the terms of the Credit Agreement, the terms hereof shall control. Except
as expressly amended by this Amendment, all of the terms and conditions of the
Credit Agreement remain in full force and effect.
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IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to Credit
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
XXX X. XXXXXX, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
XXX X. XXXXXX OF NEW YORK, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
XXX X. XXXXXX (DELAWARE), INC.
Attest:___________________ By: ______________________________
Name:_____________________________
Title:____________________________
XXX X. XXXXXX (IPR), INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
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TRANS-THERMAL SYSTEMS, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
XXX X. XXXXXX OF MISSOURI, INC.
(f/k/a Xxx X. Xxxxxx of Idaho, Inc.)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON (A BUSINESS TRUST)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON ENVIRONMENTAL METRICS, INC.
(f/k/a Weston-Gulf Coast, Inc.)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON INTERNATIONAL HOLDINGS, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
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XXXXXX XX XXX XXXXXX, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON INTERACTIVE, INC.
(A Delaware corporation)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON INTERNATIONAL INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
PNC BANK, NATIONAL ASSOCIATION
By:_______________________________
Name:_____________________________
Title:______________________________
FIRST UNION NATIONAL BANK
By:_______________________________
Name:_____________________________
Title:____________________________
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XXXXXXXXXX BANK, N.A.,
(individually and as Agent)
By:_______________________________
Name:_____________________________
Title:____________________________
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