Exhibit 10.8(a)
WAKEFIELD ENGINEERING, INC.
000 Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxxxx, XX 00000
As of November 12, 1998
FLEET NATIONAL BANK
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Seventh Amendment to Loan Agreement
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated June 22, 1994,
as amended by the First Amendment thereto dated May 5, 1995, a Second Amendment
thereto dated as of January 30, 1996, a Third Amendment thereto dated as of
March 29, 1996, a Fourth Amendment thereto dated as of October 11, 1996, a Fifth
Amendment thereto dated as of July 1, 1997, and a Sixth Amendment thereto dated
as of December 31, 1997 (together the "Loan Agreement") and all promissory
notes, agreements, documents and instruments entered into by Wakefield
Engineering, Inc. ("Wakefield"), Wakefield Extrusion Corp. ("WEC"), Xxxxxxxx
Industries, Inc. ("Xxxxxxxx") and Malco, Inc. ("Malco") and any other person or
obligor pursuant thereto (collectively, the "Loan Documents") with or for the
benefit of Fleet National Bank ("Bank"). Except as otherwise defined herein,
capitalized terms used herein shall have the meanings given them in the Loan
Agreement. This Seventh Amendment to Loan Agreement is referred to as the
"Seventh Amendment".
Background. Borrowers have requested that Bank agree to accept Uni-Star
Industries, Inc., a Delaware corporation ("Uni-star") as a co-borrower. Bank
has requested that Borrowers agree to shorten the maturity of the credit
facilities and agree to certain other changes to the Loan Agreement.
Accordingly, Bank and Borrowers agree as follows, subject to the terms and
conditions hereof:
1. Uni-Star Designated as Additional Borrower. Uni-Star is, and hereby shall
be, a Borrower under the Loan Agreement and other Loan Documents, jointly and
severally with Wakefield, WEC, Xxxxxxxx and Malco, with respect to all now
existing and hereafter existing or created Obligations and all references to
Borrower or Borrowers in the Loan Agreement shall mean Wakefield, WEC, Xxxxxxxx,
Malco and Uni-Star, jointly and severally.
Fleet National Bank
As of November 12, 1998
Page 2
2. Amendments to Loan Agreement. Subject to the satisfaction of the terms and
conditions hereof, Bank and Borrower have agreed that the Loan Agreement shall
be amended as follows:
(a) Amendment to Definition of Borrowing Base. The definition of Borrowing
Base is amended to add the following in clause (b)(ii) after "$4,500,000.00" and
prior to the semi-colon (;)"(exclusive of Uni-Star Inventory)" and to add the
following clause (d) thereto:
"(d) as to Uni-Star, the lesser of (i) $500,000 or (ii) thirty-five
percent (35%) of the cost or market value, whichever is lower, of all Eligible
Inventory of Uni-Star;"
(b) Amendment to Revolving Loan Limit. The definition of Revolving Loan
Limit is amended to delete "Nine Million Dollars ($9,000,000.00)" and to replace
it with "Ten Million Dollars ($10,000,000.00)".
(c) Amendment to Definition of Termination Date. The definition of
Termination Date is amended to delete "December 31, 1999" and to replace it with
"May 31, 1999, provided, however, that if prior to January 31, 1999 the
Borrowers do not enter into a definitive and binding agreement providing, to the
satisfaction of the Bank, for the sale of substantially all the assets and/or
stock of Wakefield on or before May 31, 1999 and, in connection with such
transaction, the repayment in full of all of the Obligations, the Termination
Date will be January 31, 1999.
(d) Interest Rates Adjustment. Subsections 2(d)(i)A and 2(d)(i)(B) of the
Loan Agreement are deleted and replaced with the following:
"(A) For each Prime Rate Advance, the Prime Rate plus one percent (1%),
and
(B) For each LIBOR Rate Advance, the Adjusted LIBOR Rate for the applicable
Interest period selected by Borrower in accordance with this Agreement plus
three and one-half percent (350 basis points)."
(e) Section 8 of the Loan Agreement is amended to delete Section (p) and to
substitute in place thereof the following:
"(p) Subordinated Indebtedness. Borrowers shall not make, directly or
indirectly, any payment of principal, interest or other amounts on the
Subordinated Indebtedness due to Alpha or pay any management fee to Alpha,
except that Borrowers may pay reimbursements for life insurance, AD&D insurance,
long term disability insurance, commercial package insurance, xxxxxxx'x
compensation insurance, and health insurance payments for the ex-president of
Xxxxxxxx totaling not more than $181,000 in the aggregate through January 31,
1999, and $423,000 in the aggregate through May 31, 1999.."
3. Grant of Security Interest. As security for the prompt performance,
observance and payment in full of all Obligations, Uni-Star hereby grants to
Bank a continuing security interest in and lien on and assigns, transfers, sets
over and pledges to the Bank all property of Uni-Star
Fleet National Bank
As of November 12, 1998
Page 3
whether now owned by Uni-Star or hereafter acquired or existing, and wherever
located (collectively, the "Collateral"), including without limitation:
(a) all Accounts;
(b) all Inventory;
(c) all Equipment;
(d) all General Intangibles;
(e) all Instruments and Documents;
(f) all Related Collateral; and
(g) all accessions to and additions to, substitutions for, replacements,
products and Proceeds to any and all of the foregoing.
The term "Collateral" shall also refer to any other property in which Bank is
granted a Lien to secure any of the Obligations pursuant to an agreement
supplemental hereto or otherwise (whether or not such agreement makes reference
to the Loan agreement or the Obligations of Borrower thereunder).
4. Amendment Fees.
Borrowers agree to pay the Bank fees as follows:
(a) On the date hereof, an amendment fee of $20,000, fully earned as of
the date hereof;
(b) If the conditions to the extension of the Termination Date from
January 31, 1999 to May 31, 1999 as set forth in the definition of Termination
Date are satisfied, Bank will earn a $100,000 extension fee on January 31, 1999,
which fee shall be due and payable on the first to occur of the termination of
the Bank's commitment to make Loans or May 31, 1999.
5. Representations and Warranties.
To induce Bank to enter into this Seventh Amendment, each Borrower
jointly and severally warrants, represents and covenants to Bank that:
(a) Organization and Qualification. Each Borrower is a corporation
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Borrower is duly qualified or is
authorized to do business and is in good standing as a foreign corporation in
all states and jurisdictions in which the failure of such
Fleet National Bank
As of November 12, 1998
Page 4
Borrower to be so qualified would have a material adverse effect on the
financial condition, business or properties of such Borrower.
(b) Corporate Power and Authority. Each Borrower is duly authorized
and empowered to enter into, execute, deliver and perform this Seventh
Amendment, and each of the Loan Documents to which it is a party. The
execution, delivery and performance of this Seventh Amendment and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of the shareholders
of any Borrower; (ii) contravene any Borrower's charter or by-laws; (iii)
violate, or cause any Borrower to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award in effect having applicability to such Borrower; (iv) result in a breach
of or constitute a default under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which any Borrower is a party or by
which such Borrower's properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the properties now owned or hereafter acquired by
any Borrower.
(c) Legally Enforceable Agreement. This Seventh Amendment and each of
the other Loan Documents delivered under this Seventh Amendment will be, a
legal, valid and binding obligation of each Borrower, enforceable against each
Borrower in accordance with its respective terms subject to bankruptcy,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
(d) No Material Adverse Change. Since October 25, 1998, the date of
the last financial statements provided by the Borrowers to the Bank, there has
been no material adverse change in the condition, financial or otherwise, of
Borrowers as shown on the consolidated balance sheet thereof as of such date and
no change in the aggregate value of property and assets owned by Borrowers,
except changes in the ordinary course of business, none of which individually or
in the aggregate has been materially adverse.
(e) Continuous Nature of Representations and Warranties. Each
representation and warranty contained in the Loan Agreement and the other Loan
Documents remains accurate, complete and not misleading in any material respect
on the date of this Seventh Amendment, except for representations and warranties
that explicitly relate to an earlier date and changes in the nature of
Borrowers' business or operations that would render the information in any
exhibit attached thereto either inaccurate, incomplete or misleading, so long as
Bank has consented to such changes or such changes are expressly permitted by
the Loan Agreement.
Fleet National Bank
As of November 12, 1998
Page 5
6. Conditions Precedent.
Notwithstanding any other provision of this Seventh Amendment or any of
the other Loan Documents, and without affecting in any manner the rights of Bank
under the other sections of this Seventh Amendment, this Seventh Amendment shall
not be effective as to Bank unless and until each of the following conditions
has been and continues to be satisfied:
(a) Documentation. Bank shall have received, in form and substance
satisfactory to Bank and its counsel, a duly executed copy of this Seventh
Amendment, the Fifth Amended and Restated Revolving Credit Note in the form
attached as Exhibit A hereto, the First Amended and Restated Equipment Facility
Note in the form attached as Exhibit B hereto, the Amendment to Subordination
Agreement with Alpha in the form attached as Exhibit C hereto, the Perfection
Certificate of Uni-Star in the form of Exhibit D hereto, the Guaranty Agreement
by Uni-Star in the form of Exhibit E hereto, together with such additional
documents, instruments and certificates as Bank and its counsel shall require in
connection therewith, all in form and substance satisfactory to Bank and its
counsel.
(b) No Default. Other than any existing or prospective Events of
Default that Borrowers have disclosed to Bank on the date hereof, no Event of
Default shall exist.
(c) No Litigation. Except as previously disclosed to and consented to
by Bank, no action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages
in respect of, or which is related to or arises out of the Loan Agreement or
this Seventh Amendment or the consummation of the transactions contemplated
thereby or hereby.
7. Acknowledgment of Obligations.
Each Borrower hereby (1) reaffirms and ratifies all of the promises,
agreements, covenants and obligations to Bank under or in respect of the Loan
Agreement and other Loan Documents as amended hereby and (2) acknowledges that
it is unconditionally liable for the punctual and full payment of all
Obligations, including, without limitation, all charges, fees, expenses and
costs (including reasonable attorneys' fees and expenses) under the Loan
Documents, as amended hereby, and that it has no defenses, counterclaims or
setoffs with respect to full, complete and timely payment and performance of all
Obligations. Each Borrower confirms and agrees that at November 12, 1998 the
outstanding principal balances of and accrued interest on the Loans and the fees
owed to Bank were as set forth on Exhibit F hereto.
8. Confirmation of Liens.
Each Borrower acknowledges, confirms and agrees that the Loan
Documents, as amended hereby, are effective to grant to Bank duly perfected,
valid and enforceable first priority security interests and liens in the
Collateral described therein, except for Permitted Liens, and that
Fleet National Bank
As of November 12, 1998
Page 6
the locations for such Collateral specified in the Loan Documents have not
changed except as provided herein. Each Borrower further acknowledges and agrees
that all Obligations of Borrowers are and shall be secured by the Collateral.
9. Uni-Star Accounts Remittances. Bank agrees that Uni-Star shall not be
required to cause remittances on Uni-Star Accounts to be paid to a lock box and
blocked account under the dominion of the Bank until the first to occur of (a)
an Event of Default occurs and is continuing under the Loan Agreement or (b) the
availability of the Borrowers (the difference between the outstanding Loans and
credit extensions and the Borrowing Base) is less than 100,000 for three (3)
consecutive days.
10. Miscellaneous.
Except as set forth herein, the undersigned confirms and agrees that
the Loan Documents remain in full force and effect without amendment or
modification of any kind. The execution and delivery of this Seventh Amendment
by Bank shall not be construed as a waiver by Bank of any existing or hereafter
occurring Default or Event of Default under the Loan Documents. This Seventh
Amendment, together with the Loan Agreement and other Loan Documents,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior dealings, correspondence, conversations
or communications between the parties with respect to the subject matter hereof.
This Seventh Amendment and the transactions hereunder shall be deemed to be
consummated in the Commonwealth of Massachusetts and shall be governed by and
interpreted in accordance with the laws of that state. Any reference in any of
the Loan Documents to Lender shall be deemed to be a reference to the Bank.
This Seventh Amendment and the agreements, instruments and documents entered
into pursuant hereto or in connection herewith shall be "Loan Documents" under
and as defined in the Loan Agreement.
Executed under seal on the date set forth above.
ATTEST: WAKEFIELD ENGINEERING, INC.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxxxx Xxxxxx
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Name: Xxxxxxxx Xxxxxx
----------------------------
Title:
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ATTEST: WAKEFIELD EXTRUSION CORP.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxxxx Xxxxxx
----------------------------
Title:
---------------------------
Fleet National Bank
As of November 12, 1998
Page 7
ATTEST: XXXXXXXX INDUSTRIES, INC.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxxxx Xxxxxx
----------------------------
Title:
---------------------------
ATTEST: MALCO, INC.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxxxx Xxxxxx
----------------------------
Title: President and CEO
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ATTEST: UNI-STAR INDUSTRIES, INC.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxxxx Xxxxxx
----------------------------
Title:
---------------------------
Accepted in Boston, Massachusetts
as of November 12, 1998
FLEET NATIONAL BANK
By: /s/ Xxxxxxx X. XxXxxxx
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Name: Xxxxxxx X. XxXxxxx
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Title: Vice President
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