EXHIBIT 4.1(f)
THIS DOCUMENT IS SUBJECT TO A CONFIDENTIAL TREATMENT
REQUEST PURSUANT TO RULE 24b-2 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
AMENDMENT AGREEMENT NO. 6
TO CREDIT AGREEMENT AND
EQUITY APPRECIATION RIGHTS AGREEMENT
THIS AMENDMENT AGREEMENT (this "Amendment Agreement") is made and
entered into as of this 10th day of May, 2002, by and among INSTEEL INDUSTRIES,
INC., a North Carolina corporation (herein called the "Borrower"), BANK OF
AMERICA, N.A., a national banking association (the "Agent"), as Agent for the
lenders (the "Lenders") party to the Credit Agreement dated January 31, 2000 as
amended by the Amendment Agreement No. 1 to Credit Agreement dated January 12,
2001, by the Supplement to Amendment Agreement No. 1 to the Credit Agreement
effective January 12, 2001, by the Amendment Agreement No. 2 to Credit Agreement
dated May 21, 2001, by Amendment Agreement No. 3 to Credit Agreement dated
August 9, 2001, by Amendment Agreement No. 4 to Credit Agreement dated November
16, 2001 and by Amendment Agreement No. 5 to Credit Agreement dated January 28,
2002 (collectively the "Agreement"), and the Equity Appreciation Rights
Agreement dated May 21, 2001 (the "EAR Agreement"), among the Borrower, the
Agent, and the Lenders, and the UNDERSIGNED LENDERS.
WITNESSETH:
WHEREAS, the parties hereto have entered into the Agreement pursuant
to which the Lenders have agreed to make loans to the Borrower as evidenced by
the Notes (as defined in the Agreement) and to issue Letters of Credit for the
benefit of the Borrower; and
WHEREAS, as a condition to the making of the loans pursuant to the
Agreement the Lenders have required that the Subsidiaries of the Borrower
guarantee payment of all Obligations of the Borrower arising under the
Agreement; and
WHEREAS, the Borrower has requested that the Lenders further amend the
Agreement and amend the EAR Agreement in the manner described herein; and
WHEREAS, the Lenders are willing to further amend the Agreement and
amend the EAR Agreement subject to the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Agent and the Lenders do hereby
agree as follows:
1. Definitions. The term "Agreement" as used herein and in the
Loan Documents (as defined in the Agreement) shall mean the Agreement as
hereinafter amended and modified. The term "EAR Agreement" as used herein and
in the Loan Documents (as defined in the Agreement) shall mean the EAR
Agreement as hereinafter amended and modified. Unless the
1
context otherwise requires, other than paragraph 6, all terms used herein
without definition shall have the definition provided therefor in the
Agreement. Unless the context requires otherwise, all terms used herein in
paragraph 6 without definition shall have the definition provided therefor in
the EAR Agreement.
2. Amendment to Agreement. Subject to the conditions set forth
herein, the Agreement is hereby amended, effective as of the date of this
Amendment No. 6 as follows:
(a) Section 1.1 is hereby amended by adding the
following new definitions thereto in the appropriate alphabetical
order:
"`Amendment No. 6' means Amendment Agreement No. 6 to Credit
Agreement and Equity Appreciation Rights Agreement which Amendment No.
6 is dated May 10, 2002;"
"`Applicable Period' means, (x) with respect to the
calculation of Consolidated EBITDA for purposes of determining the
Applicable Margin, the Four-Quarter Period most recently ended for
which the Borrower has delivered a certificate pursuant to Section
9.1(a)(ii) and (b)(ii), (y) with respect to the calculation of
Consolidated EBITDA for purposes of determining Excess EBITDA at any
date, the Fiscal Year ending on such date, and (z) with respect to the
calculation of Consolidated EBITDA for purposes of determining
compliance with Section 10.1(b) as at each of the dates set forth
below, the following periods of time ending at such date:
Date Applicable Period
---- -----------------
June 1, 2002 The 1 month period then ended
June 29, 2002 The 2 month period then ended
August 3, 2002 and each The 3 month period then ended
fiscal month end
thereafter "
"`Excess EBITDA' means, for each of the Applicable Periods
set forth below, 75% of the amount by which Consolidated EBITDA
exceeds the amount set forth below opposite each such period:
Applicable Period Amount
----------------- ------
Fiscal Year ending
September 28, 2002 $[*]
Fiscal Year ending
September 27, 2003 $[*]"
[*] Confidential portion has been omitted and filed separately with the
Commission.
2
(b) The definition of "Applicable Margin" in Section 1.1
is hereby further amended in its entirety so that as amended it shall
read as follows:
"`Applicable Margin' means (a) with respect to the
Revolving Credit Facility, the following percentages per
annum based upon the Consolidated Leverage Ratio for the
Applicable Period as set forth in the most recent compliance
certificate received by the Agent:
Pricing Applicable
Level Consolidated Leverage Ratio Margin
------- --------------------------- ----------
1 < 4.00:1 2.00%
-
2 >4.00:1 but < 4.50:1 2.50%
-
3 >4.50:1 but < 5.00:1 3.00%
-
4 >5.00:1 3.50%
Any increase or decrease in the Applicable
Margin resulting from a change in the
Consolidated Leverage Ratio shall become
effective as of the first Business Day
immediately following the date a compliance
certificate is delivered pursuant to Section
9.1(a); provided, however, that if a compliance
certificate is not delivered when due in
accordance with such Section, then Pricing Level
4 shall apply as of the first Business Day after
the date on which such compliance certificate
was required to have been delivered. The
Applicable Margin in effect from May 6, 2002
through July 15, 2002 shall be determined based
upon Pricing Xxxxx 0, and
(b) with respect to the Term Loan Credit Facility, 7% per
annum for any Term Loan Outstandings in excess of $40,635,000
and for each of the periods set forth below that percent per
annum set forth opposite each such period for all other Term
Loan Outstandings:
Period Applicable Margin
------ -----------------
May 6, 2002 through December 31, 2002 3.75%
January 1, 2003 through October 15, 2003 4.00%
(c) The definition of "Consolidated EBITDA" in Section
1.1 is hereby amended in its entirety so that as amended it shall read
as follows:
"`Consolidated EBITDA' means, with respect to the
Borrower and its Subsidiaries for any Applicable
Period ending on the date of computation thereof, the
sum of, without duplication, (i) Consolidated Net
Income, plus any losses or minus any gains [*] (ii)
Consolidated Interest Expense,
[*] Confidential portion has been omitted and filed separately with the
Commission.
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(iii) taxes on income, (iv) amortization, (v) depreciation, (vi) Amendment Fees
payable to Lenders when and to the extent actually paid and other actual cash
expenses paid in each case in connection with Amendment No. 6, the aggregate of
such fees and expenses not to exceed $[*], all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis."
(d) The definition of "Stated Termination Date" in
Section 1.1 is hereby further amended in its entirety so that as
amended it shall read as follows:
"`Stated Termination Date' means October 15, 2003."
(e) The definition of "Term Loan Maturity Date" in
Section 1.1 is hereby amended in its entirety so that as amended it
shall read as follows:
"`Term Loan Maturity Date' means October 15, 2003."
(f) The definition of "Total Revolving Credit
Commitment" in Section 1.1 is hereby amended in its entirety so that
as amended it shall read as follows:
"`Total Revolving Credit Commitment' means
$50,000,000 and shall be subject to reduction from
time to time in accordance with Section 2.2(e) and
subject to further reduction by $8,000,000 on the
earlier to occur of (i) [*] and (ii) July 31, 2002."
(g) Section 2.1(c) is hereby amended in its entirety so
that as amended it shall read as follows:
"(c) Payment of Principal. The principal amount
of the Term Loan shall be repaid in monthly installments on
the dates and in the amounts set forth below:
Date Amount
---- ------
May 31, 2002 $300,000
June 30, 2002 $300,000
July 31, 2002 $700,000
August 31, 2002 $700,000
September 30, 2002 $700,000
October 31, 2002 $100,000
November 30, 2002 $100,000
December 31, 2002 $100,000
January 31, 2003 $200,000
February 28, 2003 $200,000
March 31, 2003 $200,000
April 30, 2003 $300,000
May 31, 2003 $300,000
June 30, 2003 $300,000
July 31, 2003 $400,000
August 31, 2003 $400,000
September 30, 2003 $400,000
[*] Confidential portion has been omitted and filed separately with the
Commission.
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provided, however, that the entire amount of Term Loan
Outstandings shall be due and payable in full on the Term
Loan Termination Date."
(h) Section 2.1(e) is hereby amended in its entirety so
that as amended it shall read as follows:
"(e) Mandatory Prepayments. In addition to the
required payments of principal of the Term Loan set forth in
Section 2.1(c) and any optional payments of principal of the
Term Loan or reductions of the Revolving Credit Facility
effected under Section 2.1(d) or Section 2.2(e), the Borrower
shall make, or shall cause each applicable Subsidiary to
make, a prepayment from the proceeds of (i) each private or
public offering of equity securities of the Borrower or any
Subsidiary (other than securities issued to the Borrower or a
Guarantor) in an amount equal to fifty percent (50%) of the
Net Proceeds of each issuance of equity securities of the
Borrower or any Subsidiary (including without limitation any
security not constituting Indebtedness exchangeable,
exercisable or convertible for or into equity securities),
(ii) the issuance of any Indebtedness for Money Borrowed
permitted by the Required Lenders, in an amount equal to one
hundred percent (100%) of the Net Proceeds from the issuance
of such Indebtedness excluding Indebtedness permitted to be
issued under Section 10.5(a), (iii) each Asset Disposition
permitted under Section 10.6(b), (c), (f) and (g) in an
amount equal to one hundred percent (100%) of the Net
Proceeds of such Asset Disposition, (iv) one hundred percent
(100%) of the amount of any Price Adjustment received by the
Borrower, (v) one hundred percent (100%) of the amount of any
tax refund from all federal, state and local tax returns
filed by the Borrower and each of its Subsidiaries, and (vi)
seventy-five percent (75%) of the Excess EBITDA, each such
prepayment (other than Excess EBITDA) to be made within
fifteen (15) Business Days of receipt of such proceeds, and
with respect to (vi), within fifteen (15) Business Days after
the delivery of the financial statements pursuant to Section
9.1(a), and upon not less than five (5) Business Days'
written notice to the Agent, which notice shall include a
certificate of an Authorized Representative setting forth in
reasonable detail the calculations utilized in computing the
amount of such prepayment; provided, that the required Excess
EBITDA payment due within such 15 day period shall be an
amount equal to the sum of cash and cash equivalents of the
Borrower and its Subsidiaries and availability under the
Revolving Credit Facility minus $8,500,000, with the balance
of such Excess EBITDA to be due and payable in three equal
installments on the first Business Day of April, May and
June.
The Agent shall give each Lender, within one (1)
Business Day, telefacsimile notice of each notice of
prepayment described in this Section 2.1(e). All mandatory
prepayments made pursuant to this Section 2.1(e) shall be
applied (i) to installments of principal of the Term Loan in
inverse order of their maturities (as adjusted to give effect
to any prior payments or prepayments of principal), and (ii)
in the event that the Term Loan shall have been fully repaid,
to the Revolving Credit Outstandings; provided that the Total
Revolving Credit Commitment shall not be permanently reduced
by any such prepayment except
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that prepayments of Revolving Credit Outstandings pursuant to
Section 2.1(e)(iii) above shall permanently reduce the Total
Revolving Credit Commitment by the amount of such prepayment.
Notwithstanding the foregoing, (x) the Net Proceeds
received from the sale of Inventory, other than in the
ordinary course of business, or Accounts Receivable shall be
applied as repayments of the Revolving Credit Outstandings to
permanently reduce the Total Revolving Credit Commitment, and
(y) the Net Proceeds received from [*] shall be applied in the
following manner: first, $[*] shall be applied as a prepayment
to the Term Loan Outstandings, and second, the remaining Net
Proceeds from such [*] shall be applied as repayments of the
Revolving Credit Outstandings."
(i) Section 9.1(g) is amended in its entirety so that as
amended it shall read as follows:
"(g) as soon as practicable and in any event within
15 days after the end of each fiscal month deliver to
the Agent (i) an Accounts Receivable trial balance
aged from the date of invoice, (ii) an accounts
payable trial balance aged from the date of invoice,
(iii) a list of the Inventory summarized as required
by the Agent, and (iv) a compliance certificate of an
Authorized Representative demonstrating compliance
with Sections 10.1(a) and (b), each of the foregoing
to be in form and detail acceptable to the Agent;"
(j) Section 10.1(a) is amended in its entirety so that
as amended it shall read as follows:
"(a) Consolidated Net Worth. Permit Consolidated Net
Worth to be less than (i) $[*] and (ii) as at the
last day of each fiscal quarter of the Borrower
ending after March 30, 2002 and until (but excluding)
the last day of the next following fiscal quarter of
the Borrower, the sum of (A) the amount of
Consolidated Net Worth required to be maintained
pursuant to this Section 10.1(a) as at the end of the
immediately preceding fiscal quarter (or, in the case
of the computation for the quarter ended March 30,
2002, $[*], plus (B) 50% of Consolidated Net Income
(with no reduction for net losses during any period)
for the fiscal quarter of the Borrower ending on such
day (including within "Consolidated Net Income"
certain items otherwise excluded, as provided for in
the definition of "Consolidated Net Income"), plus
(C) 100% of the aggregate amount of all increases in
the stated capital and additional paid-in capital
accounts of the Borrower resulting from the issuance
of equity securities or other capital investments."
[*] Confidential portion has been omitted and filed separately with the
Commission.
6
(k) Section 10.1(b) is amended in its entirety so that
as amended it shall read as follows:
"(b) Consolidated EBITDA. Permit Consolidated
EBITDA for each of the Applicable Periods ending on the dates
set forth below to be less than the amount set forth opposite
each such date:
APPLICABLE PERIOD AMOUNT
----------------- ------
June 1, 2002 $[*]
June 29, 2002 [*]
August 3, 2002 [*]
August 31, 2002 [*]
September 28, 2002 [*]
November 2, 2002 [*]
November 30, 2002 [*]
December 28, 2002 [*]
February 1, 2003 [*]
March 1, 2003 [*]
March 29, 2003 [*]
May 3, 2003 [*]
May 31, 2003 [*]
June 28, 2003 [*]
August 2, 2003 [*]
August 30, 2003 [*]
September 27, 2003 [*]
(l) Section 10.3 is hereby amended in its entirety so that as
amended it shall read as follows:
"Capital Expenditures. Make or become committed to make
Capital Expenditures which exceed in the aggregate $2,000,000
for the Fiscal Year 2002, and $3,000,000 for the Fiscal Year
2003."
3. Subsidiary Consents. Each Subsidiary of the Borrower that has
delivered a Guaranty to the Agent has joined in the execution of this Amendment
Agreement for the purpose of (i) agreeing to the amendment to the Agreement and
(ii) confirming its guarantee of payment of all the Obligations.
4. Representations and Warranties. The Borrower hereby
represents and warrants that:
(a) The representations and warranties made by Borrower
in Article VIII of the Agreement are true on and as of the date hereof
except that the financial statements referred to in Section 8.6(a)
shall be those most recently furnished to each Lender pursuant to
Section 9.1;
[*] Confidential portion has been omitted and filed separately with the
Commission.
7
(b) There has been no material adverse change in the
condition, financial or otherwise, of the Borrower and its
Subsidiaries since the date of the most recent financial reports of
the Borrower received by each Lender under Section 9.1 thereof, other
than changes in the ordinary course of business, none of which has
been a material adverse change;
(c) The business and properties of the Borrower and its
Subsidiaries are not and have not been adversely affected in any
substantial way as the result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo,
riot, activities of armed forces, war or acts of God or the public
enemy, or cancellation or loss of any major contracts; and
(d) After giving effect to this Amendment Agreement
(including the waivers by the Lenders set forth herein), no event has
occurred and no condition exists which, upon the consummation of the
transaction contemplated hereby, constitutes a Default or an Event of
Default on the part of the Borrower under the Agreement, the Notes or
any other Loan Document either immediately or with the lapse of time
or the giving of notice, or both.
5. Deferral of Amendment Fee under Amendment No. 5. The
provisions regarding the Amendment Fee as set forth in paragraph 5 of Amendment
No. 5 are modified as follows: (i) payment of $[*] is due on each of July 31,
2002, October 31, 2002 and January 31, 2003 and (ii) payment of $[*] is due on
April 30, 2003. In the event all Obligations have been paid in full prior to
the date each payment shall be due, payment of such fees shall be waived.
6. Amendment to EAR Agreement. Subject to the conditions set
forth herein, the EAR Agreement is hereby amended, effective as of the date of
this Amendment No. 5 as follows:
(a) Section 1.01 is hereby amended by adding the
following new definition thereto in the appropriate alphabetical
order:
"Amendment No. 6" means Amendment Agreement No. 6 to
Credit Agreement and Equity Appreciation Rights Agreement
which Amendment No. 6 is dated May 6, 2002;"
(b) The definition of "Exercise Period" in Section 1.01
is hereby amended in its entirety so that as amended it shall read as
follows:
"Exercise Period" means the period (a) beginning and
ending in the case of Section 2.02(b) and (c), upon payment
in full of all the Loans or (b) beginning on the earlier to
occur of (i) July 15, 2003 or (ii) occurrence of an Event of
Default under the Credit Agreement and ending on July 15,
2005;"
[*] Confidential portion has been omitted and filed separately with the
Commission.
8
(c) Section 2.02(a) is hereby amended in its entirety so
that as amended is shall read as follows:
"(a) The Borrower agrees to pay to the Agent for the
benefit of the Lenders the Rights Fee not later than
ninety (90) days next following the Exercise Date,
provided the Agent shall have given the Borrower
notice of the Exercise Date within ten (10) business
days next following delivery by the Borrower to the
Agent of the financial information required to be
delivered to the Agent pursuant to Section 9.1 of the
Credit Agreement for the period ending on such
Exercise Date. The Rights Fee shall be in a maximum
amount of $[*] but in no event less than the greater
of
(i) [*]; or
(ii) $[*];
(d) Section 2.02(b) is hereby amended in its entirety so
that as amended it shall read as follows:
"(b) In the event all Obligations (as defined in
the Credit Agreement) have been paid in full by April 15,
2003 and the Facility Termination Date (as defined in the
Credit Agreement) shall have occurred by April 15, 2003, the
Rights Fee shall be $[*];"
(e) Section 2.02(c) is hereby amended in its entirety so
that as amended it shall read as follows:
"(c) In the event all Obligations (as defined in
the Credit Agreement) have not been paid in full by April 15,
2003 but are paid in full by July 15, 2003 and the Facility
Termination Date (as defined in the Credit Agreement) shall
have occurred by July 15, 2003, the Rights Fee shall be in a
maximum amount of $[*] but in no event less than the greater
of:
(i) [*]; or
(ii) $[*]; and"
7. Conditions. This Amendment Agreement shall become effective
upon the Borrower delivering or causing to be delivered to the Agent the
following:
(i) five (5) counterparts of this Amendment Agreement
duly executed by the Borrower, the Agent and the Required Lenders and
consented to by each of the Subsidiaries;
[*] Confidential portion has been omitted and filed separately with the
Commission.
9
(ii) copy of resolutions adopted by the Board of
Directors of the Borrower and each Guarantor approving this Amendment
Agreement and authorizing its execution certified by the Secretary or
Assistant Secretary to be a true and correct copy duly adopted; and
(iii) all other fees and expenses, including the Agent's
fees, due in connection with this Amendment Agreement.
8. Acknowledgment; Release. The Borrower and the Guarantors
acknowledge that they have no existing defense, counterclaim, offset,
cross-complaint, claim or demand of any kind or nature whatsoever that can be
asserted to reduce or eliminate all or any part of any of their respective
liability to pay the full indebtedness outstanding under the terms of the
Agreement and any other Loan Documents which evidence, guaranty or secure the
Obligations. The Borrower and the Guarantors hereby release and forever
discharge the Agent, the Lenders and all of their officers, directors,
employees, attorneys, consultants and agents from any and all actions, causes
of action, debts, dues, claims, demands, liabilities and obligations of every
kind and nature, both in law and in equity, known or unknown, whether matured
or unmatured, absolute or contingent.
9. Costs and Expenses. The Borrower agrees to pay all costs and
expenses associated with the preparation, due diligence, administration and
enforcement of all documentation executed in connection with the Amendment
Agreement, including without limitation, the legal fees and out-of-pocket
expenses of counsel to the Agent. The Borrower also agrees to pay the expenses
of the Agent and the Lenders in connection with Collateral review, field audits
and retention of consultants.
10. Entire Agreement. This Amendment Agreement sets forth the
entire understanding and agreement of the parties hereto in relation to the
subject matter hereof and supersedes any prior negotiations and agreements
among the parties relative to such subject matter. No promise, conditions,
representation or warranty, express or implied, not herein set forth shall bind
any party hereto, and no one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that,
except as in this Amendment Agreement otherwise expressly stated, no
representations, warranties or commitments, express or implied, have been made
by any other party to the other. None of the terms or conditions of this
Amendment Agreement may be changed, modified, waived or canceled orally or
otherwise, except by writing, in the manner provided in the Agreement,
specifying such change, modification, waiver or cancellation of such terms or
conditions, or of any proceeding or succeeding breach thereof.
11. Full Force and Effect of Agreement. Except as hereby
specifically amended, modified or supplemented, the Agreement and all of the
other Loan Documents are hereby confirmed and ratified in all respects and
shall remain in full force and effect according to their respective terms.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
BORROWER:
INSTEEL INDUSTRIES, INC.
WITNESS:
/s/ Xxxxxx X. Xxxxx, Xx. By: /s/ H.O. Xxxxx III
----------------------------------- ----------------------------------
Print Name: Xxxxxx X. Xxxxx, Xx. Name: H.O. Xxxxx III
----------------------- ----------------------------------
Title: President
----------------------------------
/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Print Name: Xxxxxxx X. Xxxxxxxxx
-----------------------
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GUARANTORS:
INSTEEL WIRE PRODUCTS COMPANY
INTERCONTINENTAL METALS CORPORATION
FLORIDA WIRE AND CABLE, INC.
WITNESS:
/s/ Xxxxxx X. Xxxxx, Xx. By: /s/ H.O. Xxxxx III
----------------------------------- ----------------------------------
Print Name: Xxxxxx X. Xxxxx, Xx. Name: H.O. Xxxxx III
----------------------- ----------------------------------
Title: President
----------------------------------
/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Print Name: Xxxxxxx X. Xxxxxxxxx
-----------------------
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BANK OF AMERICA, N.A.,
as Agent for the Lenders
By: /s/ Xxxxxxx X. Xxx
--------------------------------------
Name: Xxxxxxx X. Xxx
------------------------------------
Title: Senior Vice President
-----------------------------------
BANC OF AMERICA STRATEGIC SOLUTIONS,
INC., as a Lender
By: /s/ Xxxxxxx X. Xxx
--------------------------------------
Name: Xxxxxxx X. Xxx
------------------------------------
Title: Senior Vice President
-----------------------------------
13
BRANCH BANKING AND TRUST COMPANY
By: /s/ Xxxxxxx X.X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X.X. Xxxxxxx
------------------------------------
Title: Senior Vice President
-----------------------------------
14
WACHOVIA BANK, NATIONAL ASSOCIATION,
as successor in interest to First
Union National Bank
By: /s/ Xxxxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
------------------------------------
Title: Director
-----------------------------------
15
PNC BANK, N.A., as successor in interest
to National Bank of Canada,
a Canadian chartered bank
By: /s/ Xxx Xxxxx
--------------------------------------
Name: Xxx Xxxxx
------------------------------------
Title: Vice President
-----------------------------------
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