Exhibit 10(ff)
FOURTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
entered into as of November ___, 2003, by and among Alpine Holdco Inc., a
Delaware corporation ("Parent"), DNE Technologies, Inc., a Delaware corporation
("Technologies"), DNE Manufacturing and Service Company, a Delaware corporation
("Manufacturing"), Essex Electric Inc., a Delaware corporation ("Electric";
Parent, Technologies, Manufacturing and Electric are collectively, the
"Borrowers" and each, a "Borrower"), DNE Systems, Inc., a Delaware corporation
("Systems" or "Credit Party"), Xxxxx Fargo Foothill, Inc., as agent ("Agent")
for the Lenders (defined below) and as a Lender, Congress Financial Corporation
(Southern), as documentation agent for the Lenders ("Documentation Agent") and
as a Lender, and the undersigned Lenders.
WHEREAS, Borrowers, Credit Party, Agent, Documentation Agent and certain
other financial institutions from time to time party thereto (the "Lenders") are
parties to that certain Loan and Security Agreement dated as of December 11,
2002 (as amended from time to time, the "Loan Agreement"); and
WHEREAS, Borrowers, Agent and Lenders have agreed to amend the Loan
Agreement in certain respects, subject to the terms and conditions contained
herein.
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to the satisfaction of the
conditions set forth in Section 4 hereof, the Loan Agreement is amended in the
following respects:
(a) The defined term "Applicable Prepayment Premium" set forth in Section
1.1 of the Loan Agreement is amended and restated in its entirety, as follows:
" 'Applicable Prepayment Premium' means, during the period of time from
and after the date of the execution and delivery of this Agreement up to (but
not including) the Maturity Date, an amount equal to 0.75% times the Maximum
Revolver Amount in effect as of the Closing Date times the number of whole (or
partial) years between the date of termination of this Agreement and the
Maturity Date. "
(b) The defined term "Capex Availability" set forth in Section 1.1 of the
Loan Agreement is amended and restated in its entirety, as follows:
1
" 'Capex Availability' means an initial maximum amount equal to
$5,000,000, which initial amount shall be reduced on the first day of each month
after the month during which the initial Advance based upon Capex Availability
is made by the aggregate amount of Capex Reductions occurring on or prior to
such day (but subsequent to the first day of the immediately preceding month)
and which initial amount shall be further reduced by the amount of any Capex
Appraisal Reduction. "
(c) The defined term "Capex Amount" set forth in Section 1.1 of the Loan
Agreement is amended and restated in its entirety, as follows:
" 'Capex Amount' means, with respect to an item of Eligible Capex
Equipment, an initial amount equal to 80% of the Forced Liquidation Value of
such Eligible Capex Equipment, which initial amount shall be reduced on the
first day of each month subsequent to the purchase of such item of Eligible
Capex Equipment by an amount equal to 1/48th of such initial amount (and which
initial amount shall be further reduced to zero upon any subsequent disposition
of such Eligible Capex Equipment). "
(d) A new defined term "Capex Appraisal Reduction" is added to Section 1.1
of the Loan Agreement in its appropriate alphabetical order, as follows:
" 'Capex Appraisal Reduction' means a reduction of the Capex Amount made
in connection with the redetermination of the Forced Liquidation Value of the
Eligible Capex Equipment pursuant to the terms of the second sentence of Section
2.1(b). "
(e) The defined term "Collateral Reserve" set forth in Section 1.1 of the
Loan Agreement is amended and restated in its entirety, as follows:
" 'Collateral Reserve' means an amount equal to $7,000,000. "
(f) The defined term "EBITDA" set forth in Section 1.1 of the Loan
Agreement is amended by deleting the word "and" at the end of clause (vi)
thereof and inserting a comma in substitution therefor, by inserting the word
"and" at the end of clause (vii) thereof, and by adding a new clause (viii)
immediately following clause (vii) thereof, as follows:
" (viii) non-cash, nonrecurring charges in respect of LIFO adjustments
incurred during the 2004 fiscal year in an aggregate amount not to exceed
$4,200,000; "
(g) Clause (j) of the defined term "Eligible Accounts" set forth in
Section 1.1 of the Loan Agreement is amended and restated in its entirety, as
follows:
" (j) Accounts with respect to a Specified Account Debtor whose total
obligations owing to Operating Borrowers exceed (i) 20%, in the case of Home
Depot and its successors and assigns or (ii) 15%, in the case of any other
Specified Account Debtor (such percentages as applied to a particular Specified
Account Debtor being subject to reduction by Agent in its Permitted Discretion
if the creditworthiness of such Specified Account Debtor deteriorates, with such
reduction to be reasonably proportionate to such deterioration), of all Eligible
Accounts, to the extent of the obligations owing by such Account Debtor in
excess of such percentage, "
2
(h) Clause (b) of the defined term "Eligible Inventory" set forth in
Section 1.1 of the Loan Agreement is amended and restated in its entirety, as
follows:
" (b) it is not located at one of the locations in the United States set
forth on Schedule E-1 (or in transit from one such location to another such
location), or at the Noranda Location, "
(i) The defined term "Eligible Inventory" set forth in Section 1.1 of the
Loan Agreement is amended by deleting the word "or" at the end of clause (h)
thereof, by deleting the period at the end of clause (i) thereof and inserting a
comma and the word "or" in substitution therefor, and by adding a new clause (j)
at the end thereof, as follows:
" (j) it is located at the Noranda Location, unless (i) the Noranda
Location is subject to a Collateral Access Agreement executed by Noranda, (ii)
it is segregated or otherwise separately identifiable from goods of others, if
any, stored or processed at the Noranda Location, (iii) it is subject to an
agreement between Electric and Noranda relating to the purchase, storage and
processing of the Inventory of Electric at the Noranda Location that is
reasonably acceptable to Agent and (iv) Canadian PPSA statements deemed
reasonably necessary by Agent have been filed against Electric, "
(j) The defined term "Forced Liquidation Value" set forth in Section 1.1
of the Loan Agreement is amended and restated in its entirety, as follows:
" 'Forced Liquidation Value' means, with respect to any item of Eligible
Fixed Asset Equipment or Eligible Capex Equipment, the forced liquidation value
of such Eligible Fixed Asset Equipment or Eligible Capex Equipment as determined
by an appraiser acceptable to Agent (pursuant to the most recent written
appraisal obtained by Agent that is in form and substance acceptable to Agent
and that contains methodologies, assumptions and other terms acceptable to
Agent), net of estimated liquidation expenses and commissions as determined by
Agent. "
(k) The defined term "Maximum Revolver Amount" set forth in Section 1.1 of
the Loan Agreement is amended and restated in its entirety, as follows:
(l) " 'Maximum Revolver Amount' means $70,000,000, as such amount may be
adjusted in accordance with the terms hereof. "
(m) The defined term "Permitted Dispositions" set forth in Section 1.1 of
the Loan Agreement is amended by deleting the word "and" at the end of clause
(l) thereof and inserting a comma in substitution therefor, by deleting the
period at the end of clause (m) thereof and inserting the word "and" in
substitution therefor, and by adding a new clause (n) at the end thereof, as
follows:
3
" (n) dispositions of the non-core personal property located at 0000 Xxxxx
Xxxx Xxxxxx in Anaheim, California or 0000 Xxxx Xxxxxx Xxxxxx in Sikeston,
Missouri and specifically identified in the October 3, 2003 appraisal prepared
by AccuVal and delivered to Agent in an aggregate amount not to exceed
$1,500,000. "
(n) Section 1.1 of the Loan Agreement is amended by adding the following
defined terms thereto in their appropriate respective alphabetical order, as
follows:
" 'Noranda' means Noranda Inc. and its Subsidiaries, as applicable.
'Noranda Locations' means the location of Noranda at 220 avenue Xxxxxxxx
in Xxxxxxxx Xxxx, Xxxxxx, Xxxxxx X0X 0X0."
(o) Clause (i) of Section 2.1(a)(w) of the Loan Agreement is amended by
deleting the reference to the amount of "$37,500,000" set forth therein and
inserting a reference to the phrase "$37,500,000, through and including March
31, 2004, and $25,000,000, at all times on and after April 1, 2004" in
substitution therefor.
(p) Sub-clause (C) of clause (ii) of Section 2.1(a)(w) of the Loan
Agreement is amended and restated in its entirety, as follows:
" (C) for all periods other than the period from December 15,
2003 through and including March 31, 2004, the lesser of (1)
sixty percent (60%) of the book value of Eligible Inventory
consisting of copper rods and (2) eighty percent (80%) times
the then extant Net Liquidation Percentage times the book
value of Eligible Inventory consisting of copper rods, and for
the period from December 15, 2003 through and including March
31, 2004, the lesser of (1) seventy-five percent (75%) of the
cost of Eligible Inventory consisting of copper rods and (2)
the then extant Net Liquidation Percentage times the book
value of Eligible Inventory consisting of copper rods; "
(q) Clause (iii) of Section 2.1(a)(w) of the Loan Agreement is amended and
restated in its entirety, as follows:
" (iii) at all times on and after May 1, 2004, 70% of the amount of credit
availability created by clause (v) above (with the limitation set forth in this
clause (iii) not being applicable prior to May 1, 2004), plus "
(r) Clause (D) of the proviso set forth at the end of Section 2.1(a) of
the Loan Agreement is amended and restated in its entirety, as follows:
" (D) Revolver Usage based upon availability described in clause (w) above and
predicated on copper rods shall not exceed (1) $5,000,000 at any time prior to
January 1, 2004, (2) $12,000,000, at any time during the period from January 1,
2004 through and including February 29, 2004, (3) $8,000,000, at any time during
the period from March 1, 2004 through and including March 31, 2004 or (3)
$3,000,000 at any time on or after April 1, 2004. "
4
(s) The clause (y) set forth in the penultimate sentence of Section 2.1(b)
of the Loan Agreement is amended and restated in its entirety, as follows:
" (y) to have the Equipment appraised and reappraised, as applicable, by a
qualified appraisal company selected by Agent from time to time for the purpose
of determining or redetermining, as applicable, the Forced Liquidation Value of
the Eligible Fixed Asset Equipment and Eligible Capex Equipment portion of the
Collateral and to conduct field examinations, including Equipment verifications,
"
(t) The last sentence of Section 2.1(b) of the Loan Agreement is amended
and restated in its entirety, as follows:
" It is acknowledged and agreed by Borrowers that the reappraisals and
examinations of Inventory described in clause (x) of the immediately preceding
sentence will be conducted no less frequently than quarterly and that the
reappraisals of Equipment and Eligible Real Property described in clauses (y)
and (z) of the immediately preceding sentence will be conducted no less
frequently than annually. "
The proviso to the penultimate sentence in Section 3.6 of the Loan
Agreement is amended and restated in its entirety, as follows:
" provided, that if this Agreement is terminated and the Obligations are
repaid in full within 180 days after the date of any such permanent reduction,
Borrowers shall be obligated to pay the Applicable Prepayment Premium based upon
the amount of the Commitments in effect as of the Closing Date. "
(u) Section 6.3(c) of the Loan Agreement is amended and restated in its
entirety, as follows:
" (x) with respect Parent's 2004 fiscal year, as soon as available, but in
any event on or prior to October 31, 2003, (y) with respect to Parent's 2005
fiscal year, as soon as available, but in any event on or prior to October 31,
2004, and (z) with respect to each of Parent's fiscal years thereafter, as soon
as available, but in any event within 30 days prior to the start of each such
fiscal year,
(i) copies of Companies' Projections, in form satisfactory to Agent, in
its sole discretion, for the forthcoming three years, year by year, and for the
forthcoming fiscal year, month by month, which Projections shall reflect
management's good faith and reasonable estimates of future financial performance
of Parent and its Subsidiaries for the period or periods set forth therein and
will be based upon estimates and assumptions stated therein, all of which Parent
shall believe to be reasonable and fair in light of conditions and facts known
to management of the Parent as of the date of preparation thereof (it being
understood that such Projections as they relate to future events are not to be
viewed as representations or warranties that such events will occur, and that
actual results may differ from projected results), "
5
(v) Section 7.16 of the Loan Agreement is amended by deleting the
reference to the amount of "$1,000,000" that is set forth in clause (a) of the
proviso thereto and by inserting a reference to the amount of "$1,750,000" in
substitution therefor.
(w) Section 7.21(a)(i) of the Loan Agreement is amended and restated in
its entirety, as follows:
" (i) Minimum EBITDA. EBITDA, measured on a fiscal month-end basis, for
each period set forth below, of not less than the required amount set forth in
the column labeled "Minimum EBITDA" in the following table for the applicable
period set forth opposite thereto:
-----------------------------------------------------------------------
MINIMUM
PERIOD EBITDA
-----------------------------------------------------------------------
[6][9] month period ending September 30, 2003 ($3,166,000)
-----------------------------------------------------------------------
[7][10] month period ending October 31, 2003 ($3,501,000)
-----------------------------------------------------------------------
[8][11] month period ending November 30, 2003 ($3,267,000)
-----------------------------------------------------------------------
[9][12] month period ending December 31, 2003 ($2,734,000)
-----------------------------------------------------------------------
1 month period ending January 31, 2004 ($1,200,000)
-----------------------------------------------------------------------
2 month period ending February 29, 2004 ($1,500,000)
-----------------------------------------------------------------------
3 month period ending March 31, 2004 ($1,200,000)
-----------------------------------------------------------------------
4 month period ending April 30, 2004 ($1,200,000)
-----------------------------------------------------------------------
5 month period ending May 31, 2004 ($900,000)
-----------------------------------------------------------------------
6 month period ending June 30, 2004 ($500,000)
-----------------------------------------------------------------------
7 month period ending July 31, 2004 $0
-----------------------------------------------------------------------
8 month period ending August 31, 2004 $900,000
-----------------------------------------------------------------------
9 month period ending September 30, 2004 $1,700,000
-----------------------------------------------------------------------
10 month period ending October 31, 2004 $2,200,000
-----------------------------------------------------------------------
11 month period ending November 30, 2004 $3,000,000
-----------------------------------------------------------------------
12 month period ending December 31, 2004 $3,500,000
-----------------------------------------------------------------------
12 month period ending January 31, 2005 and The Minimum EBITDA for the
the 12 month period ending on the last day immediately preceding test
of each month thereafter date plus $750,000 "
--------------------------------------------------------------------------------
(x) Section 7.21(a)(i) of the Loan Agreement is amended and restated in
its entirety, as follows:
6
" (b) Excess Availability. Fail to maintain Excess Availability of least
(i) $5,000,000, at all; provided, that during two separate consecutive-day
periods of up to a maximum length of 5 Business Days each during any fiscal
month, Borrowers may maintain Excess Availability of less than $5,000,000
without there being a breach of this Section 7.21(b)."
(y) Schedule C-1 to the Loan Agreement is amended and restated in its
entirety in the form attached to this Amendment as Annex I.
3. Amendment Fee. Borrowers hereby agree to pay to Agent on the date
hereof, for pro rata distribution to the Lenders, an amendment fee of $200,000,
which fee shall be non-refundable and fully earned as of the date hereof. The
foregoing amendment fee is in addition to, and not in lieu of, all other fees
charged to Borrowers under the Loan Documents.
4. Ratification. This Amendment, subject to satisfaction of the conditions
provided below, shall constitute an amendment to the Loan Agreement and all of
the Loan Documents as appropriate to express the agreements contained herein. In
all other respects, the Loan Agreement and the Loan Documents shall remain
unchanged and in full force and effect in accordance with their original terms.
5. Covenant Regarding 2005 Financial Covenants. Each party hereto
covenants and agrees that it will undertake to negotiate in good faith revisions
to the financial covenants set forth in Section 7.21 of the Loan Agreement on
the basis of Companies' Projections for the 2005 fiscal year that are delivered
to Agent pursuant to Section 6.3(c) of the Loan Agreement and approved by
Required Lenders.
6. Conditions to Effectiveness. This Amendment shall become effective as
of the date hereof and upon the satisfaction of the following conditions
precedent:
(a) Each party hereto shall have executed and delivered this Amendment to
Agent;
(b) Companies shall have delivered to Agent such documents, agreements and
instruments as may be requested or required by Agent in connection with this
Amendment, each in form and content acceptable to Agent;
(c) No Default or Event of Default shall have occurred and be continuing
on the date hereof or as of the date of the effectiveness of this Amendment;
(d) All proceedings taken in connection with the transactions contemplated
by this Amendment and all documents, instruments and other legal matters
incident thereto shall be satisfactory to Agent and its legal counsel; and
(e) Each Lender shall have received the portion of the amendment fee
payable to such Lender on the date of this Agreement under Section 3 hereof.
7
7. Miscellaneous.
(a) Warranties and Absence of Defaults. In order to induce Agent to enter
into this Amendment, each Company hereby warrants to Agent, as of the date
hereof, that the representations and warranties of Companies contained in the
Loan Agreement are true and correct as of the date hereof as if made on the date
hereof (other than those which, by their terms, specifically are made as of
certain dates prior to the date hereof).
(b) Expenses. Companies, jointly and severally, agree to pay on demand all
costs and expenses of Agent (including the reasonable fees and expenses of
outside counsel for Agent) in connection with the preparation, negotiation,
execution, delivery and administration of this Amendment and all other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. In addition, Companies agree, jointly and
severally, to pay, and save Agent harmless from all liability for, any stamp or
other taxes which may be payable in connection with the execution or delivery of
this Amendment or the Loan Agreement, as amended hereby, and the execution and
delivery of any instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All obligations provided
herein shall survive any termination of this Amendment and the Loan Agreement as
amended hereby.
(c) Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Georgia.
(d) Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
8. Release.
(a) In consideration of the agreements of Agent and Lenders contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each Company, on behalf of itself
and its successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges Agent
and Lenders, and their successors and assigns, and their present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents and other representatives (Agent, each
Lender and all such other Persons being hereinafter referred to collectively as
the "Releasees" and individually as a "Releasee"), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a "Claim" and collectively, "Claims")
of every name and nature, known or unknown, suspected or unsuspected, both at
law and in equity, which such Company or any of its successors, assigns, or
other legal representatives may now or hereafter own, hold, have or claim to
have against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this Amendment, including, without limitation, for
or on account of, or in relation to, or in any way in connection with any of the
Loan Agreement, or any of the other Loan Documents or transactions thereunder or
related thereto.
8
(b) Each Company understands, acknowledges and agrees that the release set
forth above may be pleaded as a full and complete defense and may be used as a
basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release.
(c) Each Company agrees that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above.
9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered as
of the date first above written.
BORROWERS:
DNE TECHNOLOGIES, INC.
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Title Assistant Secretary
-------------------------------------------
DNE MANUFACTURING AND SERVICE COMPANY
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Title Assistant Secretary
-------------------------------------------
ESSEX ELECTRIC INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Title Assistant Secretary
-------------------------------------------
ALPINE HOLDCO INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Title Assistant Secretary
-------------------------------------------
10
CREDIT PARTY:
DNE SYSTEMS, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Title Assistant Secretary
-------------------------------------------
AGENT:
XXXXX FARGO FOOTHILL, INC.,
a California corporation
By /s/ Xxxxx Xxxxxxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
DOCUMENTATION AGENT:
CONGRESS FINANCIAL CORPORATION (SOUTHERN),
a Georgia corporation
By /s/ Xxxxx Xxxxxxxx
-------------------------------------------
Title Vice President
-------------------------------------------
11
LENDERS:
XXXXX FARGO FOOTHILL, INC.
By /s/ Xxxxx Xxxxxxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
STANDARD FEDERAL BANK NATIONAL ASSOCIATION
BY: LASALLE BUSINESS CREDIT, INC., ITS AGENT
By /s/ Xxxxx Xxxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
CONGRESS FINANCIAL CORPORATION (SOUTHERN)
By /s/ Xxxxx Xxxxxxxx
-------------------------------------------
Title Vice President
-------------------------------------------
THE CIT GROUP / BUSINESS CREDIT, INC.
By /s/ Xxxxxx Xxxxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
ORIX FINANCIAL SERVICES, INC.
By /s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
12
Annex I
SCHEDULE C-1
COMMITMENTS
============================================================================
LENDER REVOLVER COMMITMENT TOTAL COMMITMENT
============================================================================
Foothill Capital Corporation $21,000,000 $21,000,000
============================================================================
Standard Federal Bank National $14,000,000 $14,000,000
Association
============================================================================
Congress Financial Corporation $21,000,000 $21,000,000
(Southern)
============================================================================
The CIT Group / Business
Credit, Inc. $7,000,000 $7,000,000
============================================================================
ORIX Financial Services, Inc. $7,000,000 $7,000,000
============================================================================
All Lenders $70,000,000 $70,000,000
============================================================================
