Exhibit 10.1
EXECUTION COPY
NINTH AMENDMENT TO CREDIT AGREEMENT
THIS NINTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
July 31, 2003 (the "Ninth Amendment Effective Date"), is by and among CORRPRO
COMPANIES, INC., an Ohio corporation (the "Company"), CSI COATING SYSTEMS INC.
(the "Canadian Borrower" and, together with the Company, the "Borrowers"), the
lenders set forth on the signature pages hereof (collectively, the "Lenders")
and BANK ONE, NA, with its main office in Chicago, Illinois, and successor by
merger to Bank One, Michigan, as agent for the Lenders (in such capacity, the
"Agent").
RECITALS
A. The Borrowers, the Agent and the Lenders are parties to an Amended and
Restated Credit Agreement dated as of June 9, 2000 (as now and hereafter
amended, the "Credit Agreement"), pursuant to which the Lenders agreed, subject
to the terms and conditions thereof, to extend credit to the Borrowers.
B. The Credit Agreement was amended by a First Amendment to Credit
Agreement dated as of October 19, 2000 (the "First Amendment") among the
Borrowers, the Lenders and the Agent, pursuant to which the parties agreed to
modify certain terms and conditions of the extension of credit to the Borrowers.
C. Prior to May 29, 2001, certain Defaults occurred under the Credit
Agreement due to breaches of Sections 6.19.1 and 6.19.2 of the Credit Agreement
as of the fiscal quarter ending March 31, 2001 (the "May 2001 Defaults"). Based
upon the request of the Borrowers and the Guarantors, the Agent and the Lenders
temporarily waived the May 2001 Defaults subject to the terms and conditions set
forth in a certain letter dated May 29, 2001 (the "Waiver Letter").
D. Prior to the expiration of the temporary waiver set forth in the Waiver
Letter, the Borrowers requested, notwithstanding the occurrence of the May 2001
Defaults, that the Agent and the Lenders (i) continue to advance Revolving
Credit Loans to the Borrowers under certain modified terms and conditions of
lending, (ii) extend the waiver of the May 2001 Defaults and (iii) forbear from
exercising remedies available under the Loan Documents or at law or in equity,
all in order to (a) permit the Borrowers to develop and implement a business
plan and financial strategy to improve their business operations and financial
condition and (b) permit the Borrowers to develop and implement a potential
financial restructuring plan and strategy that would address, inter alia,
repayment of the indebtedness owed to the Lenders. Pursuant to such request, the
Credit Agreement was further amended by a Second Amendment to Credit Agreement
dated as of June 29, 2001 (the "Second Amendment") among the Borrowers, the
Lenders and the Agent. The Second Amendment, among other things, granted to the
Borrowers a "Restructuring Period" during which the Borrowers would be permitted
to develop and implement their business improvement and financial restructuring
plan.
E. Prior to August 10, 2001, the Borrowers requested that the Agent and
the Lenders extend the Facility Termination Date and agree to certain other
modifications to the provisions of the Credit Agreement. Pursuant to such
request, the Credit Agreement was further amended by a Third Amendment to Credit
Agreement dated as of August 10, 2001 (the "Third Amendment") among the
Borrowers, the Lenders and the Agent.
F. Prior to November 12, 2001, the Borrowers requested that the Agent and
the Lenders further extend the Facility Termination Date, extend the expiration
date of the Restructuring Period and agree to certain other modifications to the
provisions of the Credit Agreement. Pursuant to such request, the Credit
Agreement was further amended by a Fourth Amendment to Credit Agreement dated as
of November 12, 2001 (the "Fourth Amendment") among the Borrowers, the Lenders
and the Agent.
G. Prior to February 11, 2002, the Borrowers requested that the Agent and
the Lenders further extend the Facility Termination Date, extend the expiration
date of the Restructuring Period (also referred to as the "Improvement Period")
and agree to certain other modifications to the provisions of the Credit
Agreement. Pursuant to such request, the Credit Agreement was further amended by
a Fifth Amendment to Credit Agreement dated as of February 11, 2002 (the "Fifth
Amendment") among the Borrowers, the Lenders and the Agent.
H. Beginning in March, 2002 and continuing through August 15, 2002, the
Company informed the Lenders and the Agent that certain additional Events of
Default had occurred under the Credit Agreement as follows: (i) violation of the
financial covenants contained in Section 6.19 of the Credit Agreement and
Section 1.2.g of the Fifth Amendment, as of December 31, 2001 and thereafter,
(ii) violation of the provisions contained in Sections 7.5, 7.6 and 7.7 of the
Credit Agreement, as of March 22, 2002 and thereafter, (iii) violation of the
provisions contained in Section 1.4.c and 1.4.e of the Fifth Amendment, as of
March 22, 2002 and thereafter, (iv) violation of the financial reporting
covenants contained in Section 6.1 of the Credit Agreement, as of December 31,
2001 and thereafter, (v) violations under Section 1.2 of the Fifth Amendment as
a result of accounting irregularities at the Company's Australian subsidiary as
of March 31, 2002 and for any period for which the Company's restated financial
statements (which restatement was due to such accounting irregularities) would
have caused the Company to be in violation of financial covenants then in
effect, and (vi) violation of Section 6.7 of the Credit Agreement as a result of
securities law violations in connection with the accounting irregularities at
the Company's Australian subsidiary and the late filing of the Company's Form
10-K for the year ended March 31, 2002 (collectively the "March 2002 Defaults").
I. Prior to August 15, 2002, the Borrowers requested that the Agent and
the Lenders further extend the Facility Termination Date, extend the expiration
date of the Improvement Period, waive the March 2002 Defaults and agree to
certain other modifications to the provisions of the Credit Agreement. Pursuant
to such request, the Credit Agreement was further amended by a Sixth Amendment
to Credit Agreement dated as of August 15, 2002 (the "Sixth Amendment") among
the Borrowers, the Lenders and the Agent.
J. Prior to November 15, 2002, the Borrowers, the Agent and the Lenders
mutually agreed to extend the expiration date of the Improvement Period and to
certain other modifications to the provisions of the Credit Agreement.
Accordingly, the Credit Agreement was further amended by a Seventh Amendment to
Credit Agreement dated as of November 15, 2002 (the "Seventh Amendment") among
the Borrowers, the Lenders and the Agent.
K. The Improvement Period granted to Borrowers, as extended under the
Seventh Amendment, expired on January 31, 2003. Additionally, beginning in March
of 2003, the Company informed the Agent and the Lenders that certain additional
Events of Default had occurred under the Credit Agreement as follows: (i)
violation of the financial covenant contained in Section 1.2g of the Seventh
Amendment for the period ended March 31, 2003, and (ii) violation of the
financial covenant contained in Section 6.19.3 of the Credit Agreement, as
modified by Section 2.2 of the Seventh Amendment, as of March 31, 2003 and
continuing thereafter (collectively the "March 2003 Defaults").
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L. Prior to February 10, 2003, the Borrowers requested that the Agent and
the Lenders modify certain terms and conditions under which Facility Letters of
Credit may be issued. Pursuant to such request, the Credit Agreement was further
amended by an Eighth Amendment to Credit Agreement dated as of February 10, 2003
(the "Eighth Amendment") among the Borrowers, the Lenders and the Agent.
M. The Credit Agreement (as modified by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Sixth Amendment, the Seventh Amendment and the Eighth Amendment), all promissory
notes executed by either Borrower in favor of the Agent and/or the Lenders, and
any and all of the Collateral Documents executed by any Loan Party (including
without limitation all Security Agreements, Mortgages, Guaranties, pledges of
stock and other instruments, documents or agreements of any kind evidencing or
securing the indebtedness of either Borrower in favor of the Lenders) are
sometimes referred to collectively as the "Loan Documents."
N. Notwithstanding the expiration of the Improvement Period and the
occurrence and continuation of the March 2003 Defaults, the Borrowers have
requested that the Agent and the Lenders further extend the Facility Termination
Date, further extend the expiration date of the Improvement Period, waive the
March 2003 Defaults and agree to certain other modifications to the provisions
of the Credit Agreement. Additionally, the Borrowers have requested that the
Agent and the Lenders continue to permit the Borrowers to develop and implement
their business improvement and financial restructuring plan under the terms and
conditions set forth in this Amendment.
O. Based upon the foregoing recitals, and without waiving any existing or
future rights or remedies which the Agent and/or the Lenders may have against
the Borrowers or any Guarantor, the Agent and the Lenders are willing to amend
the terms of the Credit Agreement (including the Second Amendment, the Third
Amendment , the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the
Seventh Amendment and the Eighth Amendment) under the terms and conditions
expressly set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1.
PROVISIONS FOR IMPROVEMENT PERIOD
1.1 Affirmation of Recitals. The Borrowers and the Guarantors hereby
acknowledge and affirm the accuracy of the foregoing recitals.
1.2 Improvement Period Conditions. Section 1.3 of the Second Amendment set
forth certain "restructuring conditions" governing the Borrowers' implementation
of their business improvement and financial restructuring plan. Such
"restructuring conditions" were amended and restated in Section 1.2 of the Third
Amendment, Section 1.2 of the Fourth Amendment, Section 1.2 of the Fifth
Amendment, Section 1.2 of the Sixth Amendment and Section 1.2 of the Seventh
Amendment, and are hereby further amended and restated in their entirety as set
forth below in this Section 1.2. Nothing contained herein, however, shall be
deemed to modify or retract the terms and conditions that were applicable under
the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment and/or the Seventh Amendment during the period
from and including the Second
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Amendment Effective Date through and including the date immediately preceding
the Ninth Amendment Effective Date. All actions performed by or on behalf of the
Borrowers during such period in furtherance of their obligations under the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment and/or the Seventh Amendment are hereby confirmed
and ratified, and the Agent and the Lenders shall be entitled to retain the full
benefit of such performance. There shall be no disgorgement, refund or
rescission with respect to any payment made by or on behalf of the Borrowers and
received by the Agent or the Lenders pursuant to the terms of the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Sixth Amendment and/or the Seventh Amendment. Except to the extent expressly
modified by the terms set forth below, each of the terms and conditions set
forth in the Second Amendment, the Third Amendment, the Fourth Amendment, the
Fifth Amendment, the Sixth Amendment and/or the Seventh Amendment is hereby
confirmed and ratified and shall remain in full force and effect as provided
therein. From and after the Ninth Amendment Effective Date, subject to strict
compliance with the terms and conditions set forth herein, the Lenders agree to
forbear from enforcing their rights and remedies based on the March 2003
Defaults while the Borrowers and their consultants continue to develop and
implement their plan for improvement of the Borrowers' business and financial
condition, provided that (i) the Lenders' waiver of the March 2003 Defaults
shall be solely in accordance with the terms and conditions set forth in the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment and the Seventh Amendment (as modified herein)
and (ii) such agreement to forbear shall not create a waiver of the right of the
Agent or the Lenders, upon the occurrence of a default hereunder or a Default
(other than the March 2003 Defaults) under the Loan Documents, to enforce
available rights and remedies at any time, in their sole discretion, in
accordance with the Credit Agreement (as previously modified and as modified
herein) and the other Loan Documents. Absent an earlier default hereunder or
Default (other than the March 2003 Defaults) under the Loan Documents, the
period during which the Lenders shall forbear is from the Second Amendment
Effective Date through October 31, 2003 (the "Improvement Period"). The Lenders'
forbearance shall be governed by and subject to the following terms and
conditions:
a. The Borrowers shall keep the Agent, the Lenders and their
consultants apprised of the Borrowers' business and financial operations
and of any material discussions and negotiations (other than discussions or
negotiations in the ordinary course of the Borrowers' business) pertaining
to lessors, vendors, suppliers, customers, other creditors, joint venture
partners or potential purchasers of any business segments or significant
assets of any Borrowers. Reports on such matters shall be provided
periodically and not less frequently than monthly.
b. Notwithstanding any prior practice, the Borrowers shall strictly
comply with the financial reporting requirements under the Loan Documents,
as modified herein. In addition to the reporting requirements set forth in
Section 6.1 of the Credit Agreement (as modified herein), (i) not later
than Wednesday of each week during the Improvement Period, the Borrowers
and their financial advisors will deliver to the Agent and the Lenders, in
form and detail satisfactory to the Agent, weekly updates to the detailed
13-week rolling cash flow forecast as required under Section 4.4 of this
Amendment; (ii) not later than the twentieth (20th) day of each month
during the Improvement Period, the Borrowers and their financial advisors
will deliver to the Agent and the Lenders, in form and detail satisfactory
to the Agent, (x) a summary of agings of accounts payable and accounts
receivable for the Borrowers as of the end of the prior month, (y) a
duly-executed Borrowing Base Certificate as of the last Business Day of the
prior month, together with supporting information as required by the Credit
Agreement, and (z) a duly-executed Compliance Certificate with respect to
the cash flow restrictions set forth in subparagraph f below; (iii) the
Company shall, immediately upon receipt thereof, deliver to the Agent
copies of any correspondence,
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letters of intent, agreements or similar documents pertaining in any manner
to any proposed sale or other disposition of any assets of the Company or
its Subsidiaries other than in the ordinary course of business; and (iv)
the Company shall provide to the Agent, within five (5) business days
following any request by the Agent, a current listing of correct names and
addresses of account debtors (together with periodic updates to such
listing upon request by the Agent). If requested by the Agent, the
Borrowers promptly shall provide detailed backup for the monthly summary of
agings of accounts payable and accounts receivable.
c. The Borrowers shall pay when due all amounts owed to the Agent and
the Lenders under the Loan Documents.
d. The aggregate outstanding amount of the Revolving Credit Loans,
together with the face amount of any Facility LCs, shall not exceed the
maximum amount described in Article 2 of the Second Amendment (as modified
by Article 2 of this Amendment). From and after the date of execution of
this Amendment, the Borrowers shall, absent emergency circumstances
demonstrated to the satisfaction of the Agent, request Revolving Credit
Loans not more frequently than twice per week. Each such request shall be
based upon a Borrowing Base Certificate submitted pursuant to subparagraph
b above, updated to reflect finally-collected funds applied against the
Revolving Credit Loans pursuant to the Borrowers' dominion of funds
arrangement with the Agent.
e. All representations and warranties made by the Borrowers under the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment
and under this Amendment, shall be true and correct.
f. (i) There shall be no change having a Material Adverse Effect
on the financial performance or condition of the Borrowers as compared with
the projections submitted to and approved by the Agent and the Lenders in
the Accepted Forecast pursuant to Section 4.4 of this Amendment.
(ii) For each "Measuring Period" (defined below) during the
Improvement Period, the actual cumulative "Net Cash Flow" (defined below)
of the Company and its domestic Subsidiaries on a consolidated basis during
such Measuring Period shall equal or exceed the projected cumulative Net
Cash Flow for such Measuring Period as set forth in the Accepted Forecast,
within a negative variance of the greater of $500,000 or 10% of cumulative
budgeted Net Cash Flow for each Measuring Period. The term "Net Cash Flow"
shall mean the excess (if any) of the consolidated aggregate cash receipts
of the Company and its domestic Subsidiaries during the relevant period
(excluding (a) any advances of Loans under the Credit Agreement and (b) the
amount of Net Cash Proceeds generated by any transaction and distributed to
the Lenders as required by the Credit Agreement) compared to the
consolidated aggregate cash disbursements of the Company and its domestic
Subsidiaries during such period for operating expenses, taxes and debt
service (but excluding principal repayments and interest payments to the
Lenders and to the Noteholders, and excluding professional fees incurred in
connection with the investigation of the Company's Australian subsidiary),
all as shown on the reports required pursuant to Section 4.4 of this
Amendment and prepared in a manner consistent with the presentation set
forth in the Accepted Forecast. The cumulative Net Cash Flow of the Company
and its domestic Subsidiaries shall be measured as of the end of each
calendar month, for the cumulative period commencing July 1, 2003 and
ending on the last day of
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each successive month (each a "Measuring Period") (i.e., the first
Measuring Period shall be a one-month period commencing July 1, 2003 and
ending July 31, 2003, the second Measuring Period shall be a two-month
period commencing July 1, 2003 and ending August 31, 2003, etc.).
(iii) The Borrowers shall not, absent the prior written consent
of the Required Lenders, (a) disburse any funds for purposes other than
those set forth in the Accepted Forecast or (b) disburse any funds in an
amount that would cause a violation of the net cash flow restrictions set
forth above, and shall not in any event disburse any funds in a manner
inconsistent with any other restrictions set forth in this Amendment or the
Loan Documents.
g. The Company will not permit the Consolidated EBITDA of the Company
and its Subsidiaries to be less than (i) $6,687,000 for the four
consecutive fiscal quarters ending June 30, 2001, (ii) $8,628,000 for the
four consecutive fiscal quarters ending September 30, 2001, (iii)
$8,860,000 for the four consecutive fiscal quarters ending December 31,
2001, (iv) $12,665,000 for the four consecutive fiscal quarters ending
March 31, 2002, (v) $1,901,000 for the three consecutive months ending June
30, 2002, (vi) $5,279,000 for the six consecutive months ending September
30, 2002, (vii) $9,594,000 for the nine consecutive months ending December
31, 2002, (viii) $11,009,000 for the twelve consecutive months ending March
31, 2003, (ix) $2,533,000 for the three consecutive months ending June 30,
2003, or (x) $4,189,000 for the for the three consecutive months ending
September 30, 2003. The parties acknowledge that Consolidated EBITDA is
calculated without regard to extraordinary gains or losses other than in
the ordinary course of business. For the avoidance of doubt, the parties
further acknowledge that, for purposes of this subparagraph, the term
"Consolidated EBITDA" shall be calculated exclusive of (w) commissions
related to asset dispositions, (x) gains or losses recognized upon asset
dispositions, (y) any increase (or decrease) in EBITDA resulting from the
completion of a particular asset disposition in a month that is after (or
before) the projected sale date, and (z) restructuring charges and
professional fees incurred in connection with the investigation of the
Company's Australian subsidiary.
h. No action or proceeding shall be commenced against any Borrower
that would, if adversely determined, cause a Material Adverse Effect or
prevent, impair or delay the completion of the Borrowers' business
improvement plan. With respect to those actions or proceedings currently
pending (as listed on Schedule 1.2h hereof), there shall be no event that
would cause a Material Adverse Effect or prevent, impair or delay the
completion of the Borrowers' business improvement plan.
i. Absent prior approval on behalf of the Agent and the Lenders, no
Borrower shall (i) file with any bankruptcy court or be the subject of any
petition under title 11 of the United States Code (the "Bankruptcy Code"),
(ii) be the subject of any order for relief issued under the Bankruptcy
Code, (iii) file or be the subject of any petition seeking any liquidation,
reorganization, adjustment, protection, arrangement, composition,
dissolution or similar relief under any present or future federal or state
act or law relating to bankruptcy, insolvency, reorganization or other
relief for debtors, (iv) have sought or consented to or acquiesced in the
appointment of any receiver, trustee, conservator, liquidator, custodian or
other similar official, or (v) be the subject of any order, judgment or
decree entered by any court of competent jurisdiction approving a petition
filed against such party for any liquidation, reorganization, adjustment,
protection, arrangement, composition, dissolution or
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similar relief under any present or future federal or state act or law
relating to bankruptcy, insolvency, reorganization or other relief for
debtors.
j. The Agent, the Lenders or their representatives or consultants
shall be permitted to conduct field examinations of the Company and its
Subsidiaries and audits of any collateral securing the obligations of the
Borrowers to the Lenders. The Borrowers shall compensate the Agent or the
Lenders for such audits in accordance with the Agent's or each Lender's
schedule of fees, as applicable, and as such schedules may be amended from
time to time. The foregoing permission to conduct audits shall not restrict
or impair the right of the Agent or the Lenders to inspect the collateral
and any records pertaining thereto at such times and at such intervals as
the Agent or the Required Lenders may require. Further, the Borrowers
acknowledge and agree that the Agent, on behalf of itself and the Lenders,
reserves the right to engage the services of one or more appraisers to
evaluate the properties of the Company and its Subsidiaries. The Borrowers
acknowledge their responsibility to reimburse the Agent for the fees and
disbursements incurred by such parties in connection with such engagements.
k. Neither the Company nor any of its Subsidiaries shall take any
action or fail to take any action within its reasonable control that would
cause a material adverse change in the ability of the Company and its
Subsidiaries to obtain supplies or other assets to continue their
operations. Upon the occurrence of any event not within the reasonable
control of the Company or its Subsidiaries that would cause a material
adverse change in the ability of the Company and its Subsidiaries to obtain
supplies or other assets to continue their operations, the Company shall
immediately initiate and diligently complete such actions as may be
necessary to avoid any impairment or delay in the operations of the Company
and its Subsidiaries.
l. Notwithstanding anything in the Credit Agreement to the contrary
(including without limitation the provisions of Section 6.11 of the Credit
Agreement), during the Improvement Period, absent the prior written consent
of the Required Lenders, the Company shall not, and shall not permit or
cause any of its Subsidiaries to, create, incur, assume or suffer to exist
any Indebtedness other than Indebtedness as permitted under subsections
6.11(i), (ii), (iii), (iv), (v), (vii) and (viii) of the Credit Agreement
(with respect to clause (vii), only to the extent that such Indebtedness is
in existence immediately prior to the Ninth Amendment Effective date as
described in Schedule 1.2l, provided that no increase in the amount thereof
shall be permitted).
m. During the Improvement Period, absent the prior written consent of
the Required Lenders, the Company shall not, and shall not permit or cause
any of its Subsidiaries to, create, incur or suffer to exist any Lien other
than Liens as permitted under Section 6.15 of the Credit Agreement.
n. Notwithstanding anything in the Credit Agreement to the contrary
(including without limitation the provisions of Section 6.13 of the Credit
Agreement), during the Improvement Period, neither the Company nor any of
its Subsidiaries shall agree to or consummate the sale, assignment, lease,
conveyance, transfer or other disposition of any of its assets, except for
(i) sales of inventory in the ordinary course of business, (ii) the
disposition in the ordinary course of business of assets no longer required
for business operations, provided that such assets shall not have a value
exceeding $30,000 per item and $300,000 in the aggregate on a cumulative
basis during the Improvement Period, or (iii) the disposition of other
assets under terms approved by the Required Lenders as evidenced by
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the prior written consent of the Agent (provided that such consent shall
require the approval of all of the Lenders in the event of any proposed
disposition of all or substantially all of the Collateral). With respect to
clause (iii) of the preceding sentence, the Company has designated certain
non-core assets or business units that it intends to list for sale or
otherwise dispose of as soon as practicable. Schedule 1.2n attached to the
Sixth Amendment identifies each such designated non-core asset or business
unit (each a "Targeted Asset Disposition") and the Company's estimate of
the net cash proceeds to be generated from the sale or other disposition of
each such Targeted Asset Disposition (the "Targeted Asset Cash Proceeds").
A copy of the listing agreement (if applicable) with respect to each of
such assets shall be delivered to the Agent and the Lenders as soon as
available. The Company shall, immediately upon receipt thereof, provide to
the Agent and the Lenders copies of any written agreements or letters of
intent pertaining to the potential sale of any of such assets. With respect
to any transaction that is approved by the Required Lenders under the
provisions of this Amendment and otherwise is permissible under the Credit
Agreement (as modified herein), such transaction shall be consummated
within the time parameters and other terms and conditions as disclosed in
the applicable written agreement or letter of intent. Based upon the
Company's request, 100% of the net cash proceeds (after deducting customary
and reasonably commissions and transaction expenses and after deducting any
taxes attributable to the transaction) generated by each such transaction
shall upon closing immediately be paid to the Lenders and the Noteholders
(in the proportion of fifty-six percent (56%) to the Lenders and forty-four
percent (44%) to the Noteholders) . The portion of such net cash proceeds
remitted to the Lenders shall be applied as a repayment of outstanding
principal balance of the Revolving Credit Loans (and the amount of such
repayment shall constitute a permanent reduction of the amount of the
Aggregate Commitments). The Lenders hereby acknowledge that the Company has
consummated certain asset disposition transactions since September 23, 2002
and hereby ratify their consent to the consummation of such transactions
and the application of the net cash proceeds therefrom to amounts
outstanding under the Credit Agreement.
o. Notwithstanding anything in the Credit Agreement to the contrary
(including without limitation the provisions of Sections 6.12 and 6.14 of
the Credit Agreement), during the Improvement Period, absent the consent of
the Required Lenders, neither the Company nor any of its Subsidiaries shall
agree to or consummate, or make or suffer to exist, any Investment or
Acquisition, or extend credit to any other Person, or extend any credit to
any other Person, or enter into any merger or consolidation, or enter into
any similar business arrangement or combination, except for transactions
permitted under subsections 6.14 (i) and (ii) of the Credit Agreement (with
respect to clause (ii), only to the extent in existence immediately prior
to the Ninth Amendment Effective Date).
p. Notwithstanding anything in the Credit Agreement to the contrary,
during the Improvement Period neither the Company nor any of its
Subsidiaries shall advance any loans or credit to any officer, director,
stockholder or other Affiliate of the Company or any of its Subsidiaries,
or otherwise enter into any similar transaction (provided that the Company
may continue to implement intercompany transactions with its Wholly-Owned
Subsidiaries - other than its Australian Subsidiary - consistent with past
practice), nor shall the Company or any of its Subsidiaries forgive or
defer any payment of principal or interest with respect to any existing
loan or advance to any such officer, director, stockholder or other
Affiliate.
q. Notwithstanding anything in the Credit Agreement to the contrary
(including without limitation the provisions of Sections 6.10 of the Credit
Agreement),
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during the Improvement Period, absent the prior written consent of the
Required Lenders, the Company shall not, and shall not permit or cause any
of its Subsidiaries to declare or pay any dividends or make any
distributions on its Capital Stock or redeem, repurchase or otherwise
acquire or retire any of its Capital Stock, provided that any Subsidiary
may continue to declare and pay dividends or make distributions to the
Company or to a Wholly-Owned Subsidiary consistent with past practice.
r. During the Improvement Period, neither the Company nor any of its
Subsidiaries shall pay any discretionary bonus or similar compensation
award to any of their respective officers or employees except pursuant to a
comprehensive plan approved by the Required Lenders. The preceding sentence
shall not limit the right of the Company or its Subsidiaries to pay any
bonus (i) required under any written employment agreement, incentive plan
or similar "guaranteed" bonus plan in existence immediately prior to the
Second Amendment Effective Date, (ii) under its annual incentive plan for
the fiscal year ending March 31, 2004 (provided that such plan is
satisfactory to the Agent) or (iii) negotiated as part of a recruitment
"signing bonus" consistent with past practice. Upon request, the Company
shall deliver to the Lenders and the Agent copies of any applicable
employment agreements, incentive plans or similar "guaranteed" bonus plans.
s. The Company shall pay to the Agent, for the benefit of the
Lenders, an amendment fee in the amount of $275,000.00. Such fee shall be
payable in installments as follows: $91,667 upon execution of this
Amendment, $91,667 not later than September 1, 2003 and $91,666 not later
than October 1, 2003, provided that the unpaid balance of such fee shall in
all events be paid upon consummation of any transaction described in
subparagraph w below.
t. Commencing on the Second Amendment Effective Date and thereafter,
there shall be no principal payments made to the Noteholders in respect of
the Noteholder Obligations unless, simultaneously with the making of any
such payment, the Borrowers pay to the Lenders the "Reduction Amount" (as
such term is defined in Article 2 of the Second Amendment). Upon payment to
the Lenders of the Reduction Amount, the Borrowing Base and the Aggregate
Commitments shall be permanently reduced by such amount, which may not be
reborrowed. The parties acknowledge that, as of the Ninth Amendment
Effective Date, the "Reduction Ratio" (as such term is defined in the
Second Amendment) was 1.272.
u. Notwithstanding anything in the Credit Agreement to the contrary,
the Borrowers shall not, and shall not permit any Subsidiary to, make any
Capital Expenditures that exceed in the aggregate for the Borrowers and
their Subsidiaries (a) $1,750,000 during the fiscal year ending Xxxxx 00,
0000, (x) $500,000 during the three-month period ending June 30, 2002, (c)
$1,000,000 during the six-month period ending September 30, 2002, (d)
$1,300,000 during the nine-month period ending December 31, 2002, (e)
$1,500,000 during the twelve-month period ending Xxxxx 00, 0000, (x)
$500,000 during the three-month period ending June 30, 2003 or (g)
$1,000,000 during the six month period ending September 30, 2003.
v. During the Improvement Period (as such Improvement Period may be
extended from time to time) the Company shall continue to employ or engage,
a full-time consultant acceptable to the Agent and the Required Lenders.
The consultant will have authority that is independent of the authority of
other officers of the Company and will report directly to the Company's
board of directors. The scope of authority of the consultant
9
shall be acceptable to the Agent and the Required Lenders. The Agent and
the Required Lenders hereby consent to the scope of authority and the terms
and conditions of engagement set forth in that certain Consulting Agreement
between the Company and Xxxx Xxxxx Consulting Group, Inc. dated as of
August 1, 2003. The Agent and the Lenders will have unrestricted access to
communicate directly with the consultant.
w. The Company has advised the Agent and the Lenders that the Company
intends to consult with one or more investment banking firms to explore
various strategic alternatives, including refinancing and/or the sale of
certain assets or divisions. The Company shall keep representatives of the
Agent and the Lenders apprised of all consultations with investment banking
firms. The Company has engaged the investment banking firm Xxxxx Xxxxxxx
Xxxx & Company Securities, Inc. ("BGL") pursuant to a letter dated November
21, 2002 to perform certain services (the "BGL Engagement"). The Agent and
the Required Lenders hereby confirm their consent to the BGL Engagement and
the terms thereof. The Company shall not engage any investment banking firm
other than BGL (and shall not engage BGL for any engagement other than the
BGL Engagement) unless the identity of such firm and the scope of the
engagement are acceptable to the Agent and the Required Lenders. The
Company agrees to promptly provide to the Agent all reports and other
information prepared for or on behalf of the Company by any investment
banking firm or similar consultant. The Company acknowledges and agrees
that the Agent, its consultants and counsel shall have direct access to any
investment banking firm or similar consultant engaged on behalf of the
Company, and each of such parties is authorized to discuss information
related to the Company with the Agent, the Lenders or their consultants or
counsel. Not later than September 1, 2003, the Company shall provide to the
Agent and the Lenders copies of one or more executed commitment letters
from one or more financing sources, equity providers and/or purchasers
(collectively, "Financing Sources") (the identity of such Financing Sources
and the terms of the commitment letters must be acceptable to the Required
Lenders, as evidenced by the written consent of the Agent) to refinance or
repay in full all indebtedness owed to the Agent and the Lenders. Not later
than October 8, 2003, the Company shall provide to the Agent and the
Lenders copies of one or more executed definitive agreements pertaining to
such refinancing or sale transaction(s) with the Financing Sources (the
terms of such definitive agreements must be acceptable to the Required
Lenders, as evidenced by the written consent of the Agent), and such
transaction(s) shall be consummated not later than October 31, 2003;
provided, however, that if approval of the proposed transaction by the
Company's shareholders is required, the October 31, 2003 deadline shall be
extended to a date that is five (5) business days following the later of
(x) the date of the meeting of the Company's shareholders called for such
purpose and (y) the date on which any regulatory approvals (such as, by way
of example but not limitation, under the Xxxx-Xxxxx-Xxxxxx Act) have been
obtained or related filing periods have expired. If approval of the
proposed transaction by the Company's shareholders is required, the meeting
for such purpose shall be scheduled to occur not later than forty-five (45)
days after the definitive transaction agreements are executed and the
Company shall deliver to the Agent copies of the proxy materials to be
filed with the Securities and Exchange Commission pertaining to such
meeting not later than seven (7) days after the definitive transaction
agreements are executed.
x. The Company shall continue to implement the cost savings measures
identified in the report submitted to the Agent and the Lenders on May 20,
2002.
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y. The Company shall pay or cause to be paid all accrued but unpaid
interest owing by its Australian Subsidiary to Bank One, NA (including
interest accruing during the Improvement Period).
z. There shall be no other Default or Unmatured Default under the
Credit Agreement (as modified herein) or the other Loan Documents (except
for the March 2003 Defaults expressly acknowledged and waived in this
Amendment through the effective date hereof).
Notwithstanding the provisions of this Section 1.2, all indebtedness of the
Borrowers to the Lenders shall be due and payable on demand in the discretion of
the Required Lenders (i) upon any failure of any one or more of the conditions
set forth in this Section 1.2 or (ii) upon expiration or termination of the
Improvement Period as provided in and subject to Section 1.6 hereof. Further,
any failure of any one or more of the conditions set forth in this Section 1.2
shall constitute a Default under the Loan Documents (without the necessity of
any notice or cure period).
1.3 No Course of Dealing; Review of the Borrowers' Business Plan. The
Borrowers and the Guarantors acknowledge and agree that notwithstanding any
course of dealing between the Borrowers and the Lenders prior to the date
hereof, the Lenders shall have no obligation to make Loans to the Borrowers
outside of the strict conditions and requirements of the Credit Agreement (as
modified herein) nor to forbear from exercising available remedies except as
expressly set forth herein. Notwithstanding any past practice, the Borrowers and
the Guarantors agree that (i) the Agent and the Lenders shall not be obligated
or expected to honor any "overdrafts" or items for which funds of the Borrowers
are not immediately available, and (ii) the Agent and the Lenders shall not be
obligated or expected to provide any credit references on behalf of the
Borrowers, and any inquiries in this regard may be referred back to the
Borrowers or their advisors. The Agent and the Lenders shall be under no
obligation whatsoever to consent to the Borrowers' updated and revised business
plan as the same may be further revised from time to time, and instead the
Agent's and the Lenders' consideration of the Borrowers' updated and revised
business plan shall be undertaken by the Agent and the Lenders in their sole and
absolute discretion. The Agent's and the Lenders' consideration of the
Borrowers' updated and revised business plan shall be without prejudice to (i)
the possibility that the Agent or the Lenders may conclude that such business
plan, as further revised from time to time, does not adequately address the
Borrowers' defaults under the Loan Documents and/or the potential erosion of
collateral supporting the Borrowers' indebtedness to the Lenders, or (ii) the
right of the Agent or the Lenders, in accordance with the terms hereof, to
exercise rights or remedies available due to defaults under the Loan Documents
(as modified herein).
1.4 Defaults. In addition to any events of default specified in the Loan
Documents, the following shall constitute a Default under this Amendment and
under the Loan Documents:
a. Any Borrower or any Guarantor shall fail to comply with, perform
or observe any term, condition, covenant or agreement set forth in this
Amendment;
b. Any representation or warranty of Borrowers or Guarantors
contained in this Amendment shall be untrue in any material respect when made or
shall, during the term of this Amendment, become impaired, untrue or misleading;
c. With the exception of the March 2003 Defaults waived as set forth
in this Amendment, the occurrence of any new or further violation of the
sections of the Credit Agreement implicated by any of the March 2003 Defaults;
d. The occurrence of any default under the Senior Note Agreement;
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e. Any further change having a Material Adverse Effect shall occur in
business, properties, operations or condition (financial or otherwise) of any
Borrower or any Guarantor; or
f. The Aggregate Total Outstandings of all Lenders shall on any date
exceed the Borrowing Base as of such date, and the Borrowers shall fail to pay
on such date not less than the amount of such excess for application against the
Aggregate Total Outstandings.
1.5 Expiration; No Further Extension Implied. The Borrowers and the
Guarantors acknowledge that the Agent and the Lenders have no obligation to
extend the term of the Improvement Period or further extend the Facility
Termination Date, or forbear from enforcing their rights and remedies before the
end of the Improvement Period in the event of any failure of any one or more of
the terms and conditions expressed herein, that no course of dealing that would
permit arguing for further extensions contrary to the Lenders' wishes exists or
is capable of being inferred, and that nothing contained herein or otherwise is
intended to be a promise or agreement to continue to extend the term of the
Improvement Period beyond October 31, 2003 or the Facility Termination Date
beyond October 31, 2003 or to extend any further credit to the Borrowers except
as provided in the Credit Agreement as herein amended. Furthermore, no future
agreement by the Agent and the Lenders to continue to extend the term of the
Improvement Period beyond October 31, 2003 or the Facility Termination Date
beyond October 31, 2003 or any other agreement shall be valid or enforceable
unless it is contained in a final written agreement signed by authorized
representatives of the Agent and the Required Lenders (or, to the extent
required by Section 8.2 of the Credit Agreement, all of the Lenders).
Preliminary understandings or agreements on one or more issues during the course
of any negotiations and prior to the finalization thereof shall not be binding
unless and until such a final written agreement is executed on behalf of the
applicable parties.
1.6 Remedies Upon Default or Termination. The Improvement Period shall
expire automatically upon the earlier to occur of:
(i) a further Default or a default under this Amendment or any
document or agreement comprising the Loan Documents, and without notice or an
opportunity to cure such Default or default under this Amendment, or
(ii) except as provided in a further written agreement (if any) among
the Borrowers, the Agent and the Required Lenders pertaining to the repayment of
the Borrowers' obligations, October 31, 2003.
Upon the expiration of the Improvement Period, if the Borrowers are not then in
full compliance with all provisions of the Loan Documents (as amended by this
Amendment but without the benefit of any waiver of defaults except as expressly
provided in Section 5.3 of the Second Amendment, Section 5.3 of the Sixth
Amendment and Section 5.3 of this Amendment), upon the election of the Required
Lenders but without further notice, all of the Borrowers' obligations to the
Lenders shall be immediately due and payable (to the extent not already due and
payable), all undertakings of the Agent and the Lenders hereunder, including
without limitation the Agent's and the Lenders' forbearance, shall terminate
without notice to the Borrowers and without the requirement of any further
action by or on behalf of the Agent or the Lenders, the waiver of the March 2003
Defaults as set forth in this Amendment shall be deemed rescinded ab initio, and
the Agent or the Lenders shall have the right to exercise any remedies provided
in this Amendment or any of the Loan Documents, or under applicable law or in
equity. All rights and remedies of the Agent and the Lenders shall be cumulative
and not exclusive, and the Agent or the Lenders shall be entitled to pursue one
or more rights and/or remedies simultaneously or sequentially without the
necessity of an election of remedies.
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1.7 Reservation of Rights; No Waiver by Conduct. The Second Amendment, as
modified by the Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Sixth Amendment, the Seventh Amendment and the Eighth Amendment, and as further
modified by this Amendment, grants a limited forbearance until October 31, 2003
only, or until an earlier Default, upon the terms and conditions set forth in
the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment and
this Amendment. Excepting only the waiver of the March 2003 Defaults as set
forth in this Amendment, nothing herein shall be deemed to constitute a waiver
of any new Unmatured Defaults or Defaults of any other provision of any of the
documents referred to herein, and nothing herein shall in any way prejudice the
rights and remedies of the Agent and/or the Lenders under any of the documents
referred to herein or applicable law. Further, the Agent and the Lenders shall
have the right to waive any conditions set forth in this Amendment and/or such
documents, in their sole discretion, and any such waiver shall not prejudice,
waive or reduce any other right or remedy which the Agent or the Lenders may
have against the Borrowers or the Guarantors. No waiver of the rights or any
condition of this Amendment and/or any other document by the Agent or the
Lenders shall be effective unless the same shall be contained in a writing
signed by authorized representatives of the Agent or the Lenders, as the case
may be, in the manner required by Section 8.2 of the Credit Agreement. No course
of dealing on the part of the Agent or the Lenders, nor any delay or failure on
the part of the Agent or the Lenders in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege, nor shall
any single or partial exercise thereof preclude any further exercise thereof or
the exercise of any other right, power or privilege.
1.8 Survival. All representations, warranties, covenants, agreements,
releases and waivers made by or on behalf of the Borrowers or any Guarantor
under this Amendment shall survive and continue after the expiration or
termination of the Improvement Period.
ARTICLE 2.
AMENDMENTS
Effective as of the Ninth Amendment Effective Date, the Credit Agreement
shall be amended as follows:
2.1 The definition of "Facility Termination Date" in Section 1.1 of the
Credit Agreement is restated in its entirety as follows:
"Facility Termination Date" means October 31, 2003, or any earlier
date on which the Aggregate Commitment is reduced to zero or otherwise
terminated pursuant to the terms hereof.
2.2 A new definition of "Ninth Amendment Effective Date" is added to
Section 1.1 of the Credit Agreement in appropriate alphabetical order, stating
as follows:
"Ninth Amendment Effective Date" shall mean July 31, 2003.
2.3 In Section 2.15.2(c) of the Credit Agreement, the reference to
"$2,000,000" (which was inserted in the Sixth Amendment) shall be deleted and
"$3,000,000" substituted therefor.
2.4 Section 6.19.3 of the Credit Agreement is amended and restated in its
entirety as follows:
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6.19.3 Minimum Consolidated Net Worth. The Company will at all times
maintain Consolidated Net Worth of not less than (i) $2,707,000 for the
period from the Ninth Amendment Effective Date to and including September
29, 2003, and (ii) thereafter, $3,635,000 .
From the Ninth Amendment Effective Date and during the remainder of the
Improvement Period, the parties agree that Consolidated Net Worth shall be
calculated according to the definition set forth in the original Credit
Agreement (without giving effect to the adjustments referenced in prior
amendments to the Credit Agreement).
2.5 The Aggregate Commitments shall be reduced to $27,500,000 as of the
Ninth Amendment Effective Date. Schedule 1.1 annexed to the Credit Agreement (as
previously amended) is further amended and restated by substituting therefor
Schedule 1.1 annexed to this Amendment, showing the respective Canadian
Commitments and U.S. Commitments of each Lender as of the Ninth Amendment
Effective Date, and, subject to subparagraph 2.5(b) of the Sixth Amendment, the
corresponding definitions in Section 1.1 of the Credit Agreement for "Aggregate
Canadian Commitments," "Aggregate Commitments," "Aggregate U.S. Commitments,"
"Canadian Commitment," "Commitment" and "U.S. Commitment" shall be modified
accordingly (provided that the Aggregate Commitments shall be reduced from time
to time in accordance with the provisions of Section 2.6.8 of the Credit
Agreement).
ARTICLE 3.
REPRESENTATIONS
Each Borrower represents and warrants to the Agent and the Lenders that:
3.1 The execution, delivery and performance by it of this Amendment are
within its powers, have been duly authorized by all necessary action and are not
in contravention with any law, rule or regulation, or any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority, of the terms of its Articles of Incorporation or By-laws, or any
contract or undertaking to which it is a party or by which it or its property is
or may be bound.
3.2 This Amendment is its legal, valid and binding obligation, enforceable
against it in accordance with the terms hereof.
3.3 No consent, approval or authorization of or declaration, registration
or filing with any governmental authority or any nongovernmental person or
entity, including, without limitation, any of its creditors or stockholders, is
required on its part in connection with the execution, delivery and performance
of this Amendment or as a condition to the legality, validity or enforceability
of this Amendment.
3.4 After giving effect to the amendments herein contained, the
representations and warranties contained in Article V of the Credit Agreement
are true on and as of the date hereof with the same force and effect as if made
on and as of the date hereof.
ARTICLE 4.
ADDITIONAL COVENANTS OF THE BORROWERS
Each Borrower shall:
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4.1 Promptly perform and observe, and cause each Guarantor to perform and
observe, its respective obligations set forth in this Amendment.
4.2 Cause each of the Guarantors to execute the Consent and Agreement at
the end of this Amendment.
4.3 Upon request by the Agent, promptly prepare and deliver to the Agent
and the Lenders an updated and detailed business plan (which may consist of
updates and revisions to the plan submitted to the Lenders in May, 2001,
September, 2001, May, 2002 and August, 2002), viability analysis and financial
strategy to improve the Borrowers' business operations and financial condition,
which plan and strategy shall cover the period at least through March 31, 2004
and shall address, inter alia, repayment of the indebtedness owed to the
Lenders.
4.4 Upon request by the Agent, promptly prepare and deliver to the Agent
and the Lenders an updated and detailed budget forecast for the remainder of the
Improvement Period and thereafter through March 31, 2004, including financial
and cash flow projections based upon Borrowers' business improvement plan, and
such budget forecast and projections shall be acceptable to the Required Lenders
(upon such acceptance, such budget forecast and projections shall be referred to
as the "Accepted Forecast"). The cash flow projections shall be based on a
rolling thirteen (13) week period. Projected capital expenditures shall be shown
in the projections as a separate line item. Not later than Wednesday of each
week, the Borrowers shall update all applicable line items of the Accepted
Forecast and cash flow projections to reflect actual results from the prior week
and on a cumulative basis, and shall prepare and deliver to the Agent and the
Lenders such update and a report of any variances between actual results and the
Accepted Forecast originally approved by the Required Lenders.
4.5 Promptly deliver to the Lenders such information as has previously
been requested in writing by the Lenders, the Agent or the Agent's financial
consultant.
4.6 Promptly execute and deliver, and cause each Guarantor to execute and
deliver, such other documents as the Agent or the Lenders may reasonably
request.
ARTICLE 5.
MISCELLANEOUS.
5.1 Cross References. References in the Credit Agreement or in any note,
certificate, instrument or other document to the "Credit Agreement" shall be
deemed to be references to the Credit Agreement as amended hereby and as further
amended from time to time.
5.2 Expenses and Costs. Each Borrower, jointly and severally, agrees to
pay and to save the Agent and the Lenders harmless for the payment of all fees,
out-of-pocket disbursements, and other costs and expenses incurred by or on
behalf of the Agent or any Lender arising in any way in connection with this
Amendment, or any other document relating to indebtedness described in the
recitals to this Amendment, including the fees and expenses of Xxxxxxxxx Xxxxxx
PLLC, counsel to the Agent, and AlixPartners, LLC, consultant to the Agent, and
specifically including, without limitation, (a) the cost of any financial audit
or inquiry conducted by the Agent, any Lender or their consultants, (b) the fees
and expenses of counsel for the Agent or any Lender for the work performed as a
result of the Borrowers' defaults or financial problems, and for the
preparation, examination and approval of this Amendment or any documents in
connection with this Amendment, (c) for the payment of all fees and
out-of-pocket disbursements incurred
15
by the Agent or any Lender, including attorneys' fees, in any way arising from
or in connection with any action taken by the Agent or any Lender to monitor,
advise, enforce or collect the obligations described in the recitals hereto or
to enforce any obligations of the Borrowers or any Guarantor under this
Amendment or the other documents referred to herein, including any actions to
lift the automatic stay or to otherwise in any way participate in any
bankruptcy, reorganization or insolvency proceeding of any Borrower or Guarantor
or in any trial or appellate proceedings, and (d) any expenses or fees
(including attorneys' fees) incurred in relation to or in defense of any
litigation instituted by any Borrower, any Guarantor or any third party against
the Agent or any Lender arising from or relating to the obligations described in
the recitals hereto or this Amendment, including any so-called "lender
liability" action. All of these expenses and fees (including attorneys' fees)
shall be part of the Obligations owing under the Credit Agreement, and shall be
secured by all of the collateral described in the Collateral Documents. In the
event the Borrowers fail to pay any such fees, expenses and costs within five
(5) days of being invoiced therefor, the Agent or the Lenders, as the case may
be, shall be permitted to charge the accounts of any Borrower for such fees,
expenses and costs, without prejudice to any other rights or remedies of the
Agent or the Lenders. The rights and remedies of the Agent and the Lenders
contained in this paragraph shall be in addition to, and not in lieu of, the
rights and remedies contained in the Credit Agreement, the Collateral Documents
and as otherwise provided by law.
5.3 Waiver of March 2003 Defaults. The Borrowers have requested that the
Lenders and the Agent waive the March 2003 Defaults subject to the terms and
conditions set forth herein. Pursuant to such request, the Lenders and the Agent
hereby waive the March 2003 Defaults for the period prior to the effectiveness
of this Amendment and, so long as there is no occurrence of a new Default (for
purposes hereof, a new Default includes a new or further violation of any of the
sections of the Credit Agreement implicated in any of the March 2003 Defaults),
for the remainder of the Improvement Period. Such waiver shall not extend to any
period of time after the Improvement Period except to the extent expressly
provided in a further written agreement among the Borrowers and the Required
Lenders, provided that such waiver shall automatically survive the expiration of
the Improvement Period if the Borrowers are then in full compliance with all
provisions of the Loan Documents (as amended by this Amendment but without the
benefit of any waiver of defaults except as set forth in this Section 5.3 and in
Section 5.3 of each of the Second Amendment and the Sixth Amendment). The
Borrowers acknowledge and agree that the waiver contained herein is a limited,
specific and one-time waiver as described above. Such limited waiver (a) shall
not modify or waive any other term, covenant or agreement contained in any of
the Loan Documents, and (b) shall not be deemed to have prejudiced any present
or future right or rights which the Agent or the Lenders now have or may have
under this Amendment, the Credit Agreement (as modified hereby) or the other
Loan Documents
5.4 Release. Each Borrower and each Guarantor represents and warrants that
it is not aware of any claims or causes of action against the Agent or any
Lender, any participant lender or any of their successors or assigns, and that
it has no defenses, offsets or counterclaims with respect to the indebtedness
owed by the Borrowers to the Lenders. Notwithstanding this representation and as
further consideration for the agreements and understandings herein, the
Borrowers and Guarantors, on behalf of themselves and their respective
employees, agents, executors, heirs, successors and assigns, hereby release the
Agent and the Lenders, their respective predecessors, officers, directors,
employees, agents, attorneys, affiliates, subsidiaries, successors and assigns,
from any liability, claim, right or cause of action which now exists or
hereafter arises as a result of acts, omissions or events occurring on or prior
to the date hereof, whether known or unknown, including but not limited to
claims arising from or in any way related to the Credit Agreement or the
business relationship among the Borrowers, the Guarantors, the Agent and the
Lenders.
5.5 Performance by Lenders and Agent; No Agency; Borrowers Remain in
Control. Each Borrower and each Guarantor acknowledges and agrees that the Agent
and the Lenders have fully performed all of their obligations under the Credit
Agreement and all documents executed in connection with the Credit Agreement,
and that all actions taken by the Agent and the Lenders are reasonable and
16
appropriate under the circumstances and within their rights under the Credit
Agreement and all other documents executed in connection therewith and otherwise
available. The actions of the Agent and the Lenders taken pursuant to this
Amendment and the documents referred to herein are in furtherance of the efforts
of the Agent and the Lenders as secured lenders seeking to collect the
obligations owed to the Lenders. Nothing contained in this Amendment shall be
deemed to create a partnership, joint venture or agency relationship of any
nature among the Borrowers and the Lenders or the Agent. The Borrowers, the
Guarantors, the Agent and the Lenders agree that notwithstanding the provisions
of this Amendment, each Borrower remains in control of its business operations
and determines the business plans (including employment, management and
operating directions) for its business.
5.6 Entire Agreement; Severability. The Credit Agreement, as previously
amended and as amended by this Amendment, constitutes the entire understanding
of the parties with respect to the subject matter hereof and may only be
modified or amended by a writing signed by the party to be charged. If any
provision of this Amendment is in conflict with any applicable statute or rule
of law or otherwise unenforceable, such offending provision shall be null and
void only to the extent of such conflict or unenforceability, but shall be
deemed separate from and shall not invalidate any other provision of this
Amendment.
5.7 No Other Promises or Inducements. There are no promises or
inducements which have been made to any signatory hereto to cause such signatory
to enter into this Amendment other than those which are set forth in this
Amendment. Each Borrower and each Guarantor acknowledges that its authorized
officers have thoroughly read and reviewed the terms and provisions of this
Amendment and are familiar with same, that the terms and provisions contained
herein are clearly understood by the Borrower or Guarantor and have been fully
and unconditionally consented to by the Borrower or Guarantor, and that the
Borrower or Guarantor has had full benefit and advice of counsel of its own
selection, or the opportunity to obtain the benefit and advice of counsel of its
own selection, in regard to understanding the terms, meaning and effect of this
Amendment, and that this Amendment has been entered into by the Borrower and
Guarantor freely, voluntarily, with full knowledge, and without duress, and that
in executing this Amendment, the Borrower and Guarantor is relying on no other
representations, either written or oral, express or implied, made by any other
party hereto, and that the consideration hereunder received by the Borrower has
been actual and adequate.
5.8 Sufficiency of Improvement Period. Each Borrower represents that: (a)
it has no intention to file or acquiesce in the filing of any bankruptcy or
insolvency proceeding hereafter, absent approval on behalf of the Agent and the
Lenders of such proceeding; and (b) the Improvement Period and forbearance
allowed by the Second Amendment, the Third Amendment, the Fourth Amendment, the
Fifth Amendment, the Sixth Amendment and the Seventh Amendment (as modified
herein) are sufficient for the Borrowers to accomplish the commitments they have
undertaken in the Second Amendment, the Third Amendment, the Fourth Amendment,
the Fifth Amendment, the Sixth Amendment and the Seventh Amendment (as modified
herein).
5.9 Ratification. The Borrowers agree that the Credit Agreement, the
Collateral Documents and all other documents and agreements executed by the
Borrowers or the Guarantors in connection with the Credit Agreement in favor of
the Agent, the Collateral Agent or any Lender are ratified and confirmed and
shall remain in full force and effect as amended hereby, and that there is no
set off, counterclaim or defense with respect to any of the foregoing. Terms
used but not defined herein shall have the respective meanings ascribed thereto
in the Credit Agreement.
5.10 Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument. Facsimile copies of signatures shall be
treated as original signatures for all purposes under this
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Amendment. This Amendment shall become effective as of July 31, 2003 when each
of the following has been satisfied:
(a) Receipt by the Agent of counterparts of this Amendment duly executed by
each Borrower and each Lender, and counterparts of the Consent and Agreement
annexed hereto duly executed by each Guarantor.
(b) With respect to any interest, fees or other charges previously required
to be paid by either Borrower under the terms of any waiver letter, extension
letter, amendment or other agreement, receipt by the Agent of full payment of
such interest, fees or other charges.
(c) Payment of the amendment fee required under this Amendment. In the
event such fee is not received immediately upon execution of this Amendment by
the Borrowers, the Agent is authorized at any time thereafter to charge the
Company's account(s) in the amount of such fee.
(d) Receipt by the Agent of copies, certified by the Secretary or Assistant
Secretary of each Borrower and each Guarantor, of its Board of Directors'
resolutions and of resolutions or actions of any other body authorizing the
execution of this Amendment and all Collateral Documents to be executed in
connection herewith to which such Borrower or such Guarantor, as applicable, is
a party.
(e) Receipt by the Agent of an incumbency certificate, executed by the
Secretary or Assistant Secretary of each Borrower and each Guarantor, which
shall identify by name and title and bear the signatures of the Authorized
Officers and any other officers of each Borrower and each Guarantor authorized
to sign this Amendment and all Collateral Documents to be executed in connection
herewith to which each Borrower and each Guarantor is a party, upon which
certificate the Agent and the Lenders shall be entitled to rely until informed
of any change in writing by such Borrower and such Guarantor.
(f) Receipt by the Agent of a written opinion of the general counsel of the
Borrowers and the Guarantors, addressed to the Agent and Lenders and in form and
substance satisfactory to the Agent.
(g) To the extent not previously delivered, receipt by the Agent (within
five days following written request by the Agent, or within such longer period
of time as may be acceptable to the Agent) of executed copies of all Collateral
Documents and other documents in connection therewith requested by the Agent,
together with all necessary consents and other related documents in connection
therewith, insurance certificates, financing statements, environmental reports,
opinions of foreign counsel, original stock certificates and related transfer
powers, UCC, judgment and other lien and encumbrance searches, title searches
and insurance, surveys and other documents required by the Agent.
(h) The Company and the Noteholders shall have executed an amendment to the
Senior Note Agreement, which amendment shall be satisfactory in form and
substance to the Agent and shall not expire by its terms prior to the Facility
Termination Date.
(i) Delivery of such other agreements and documents, and the satisfaction
of such other conditions as may be reasonably required by the Agent, including
without limitation a solvency certificate of each Borrower, and such evidence of
the perfection and priority of all liens and security interests as required by
the Agent, all of which shall be satisfactory to the Agent and its counsel to
the extent required by the Agent.
5.11 Other Documents. Each Borrower and each Guarantor agrees to execute
and deliver any and all documents reasonably deemed necessary or appropriate by
the Agent or the Lenders to carry out the intent of and/or to implement this
Amendment.
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5.12 Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Michigan without giving effect to
choice of law principles of such State.
5.13 Miscellaneous. This Amendment is made for the sole benefit and
protection of the Borrowers, the Agent and the Lenders and their respective
successors and permitted assigns (provided that the Borrowers shall not be
permitted, absent the prior written consent of all of the Lenders, to assign any
of their respective rights or obligations under this Amendment). No other person
or entity shall have any rights whatsoever under this Amendment. Time shall be
of the strictest essence in the performance of each and every one of the
Borrowers' obligations hereunder.
5.14 Construction. This Amendment shall not be construed more strictly
against the Lenders or the Agent merely by virtue of the fact that the same has
been prepared by the Lenders and the Agent or their counsel, it being recognized
that the Borrowers, the Guarantors, the Agent and the Lenders have contributed
substantially and materially to the preparation of this Amendment, and each of
the parties hereto waives any claim contesting the existence and the adequacy of
the consideration given by any of the other parties hereto in entering into this
Amendment.
5.15 Headings. The headings of the various paragraphs in this Amendment
are for convenience of reference only and shall not be deemed to modify or
restrict the terms or provisions hereof.
5.16 Waiver of Jury Trial; Consent to Jurisdiction. (a) The Borrowers,
each Guarantor, each Lender and the Agent hereby specifically ratifies and
confirms the waiver of jury trial set forth in Section 16.2 of the Credit
Agreement. Without limiting the generality of the preceding ratification and
confirmation, the Borrowers, each Guarantor, each Lender and the Agent, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waives any right any of them may have to a trial
by jury in any litigation or proceeding based upon or arising out of this
Amendment or any related instrument or agreement or any of the transactions
contemplated by this Amendment or any conduct, dealing, statements (whether oral
or written) or actions of any of them. None of the Borrowers, the Guarantors,
the Lenders or the Agent shall seek to consolidate, by counterclaim or
otherwise, any such action in which a jury trial has been waived with any other
action in which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished by any
party hereto except by a written instrument executed by such party.
(b) Each Borrower and each Guarantor agrees that any legal action or
proceeding with respect to this Amendment or any related instrument or
agreement, including the Credit Agreement as previously amended and as amended
hereby, or with respect to the transactions contemplated hereby, may be brought
in any court of the State of Michigan, sitting in or having jurisdiction over
the County of Wayne, Michigan, or in any federal court located within the
Eastern District of Michigan, and Borrowers and Guarantors hereby submit to and
accept generally and unconditionally the non-exclusive jurisdiction of those
courts with respect to their person and property and irrevocably consent to
service of process in connection with any such action or proceeding by mailing
such service of process (certified or registered, if capable of certification or
registration) to Borrowers and/or Guarantors at the address they may have from
time to time provided to the Agent. Borrowers and Guarantors hereby irrevocably
waive any objection based upon jurisdiction, improper venue or forum non
conveniens in any such suit or proceeding in the above-described courts. Nothing
contained herein shall limit the right of the Agent or the Lenders to serve
process in any other manner permitted by law or limit the right of the Agent or
the Lenders to commence any such action or proceeding in the courts of any other
jurisdiction. Any judicial proceeding by any Borrower or any Guarantor against
the Agent or any Lender involving this
19
Amendment shall be brought only in a court in Xxxxx County, Michigan or federal
court located within the Eastern District of Michigan.
[signatures next page]
20
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date and year first above written.
CORRPRO COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Title: Senior Vice President, CFO
---------------------------------
CSI COATING SYSTEMS INC.
By: /s/ Xxxxxx X. Xxx
------------------------------------
Title: Vice President
---------------------------------
BANK ONE, NA, AS AGENT AND AS A LENDER
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Title: First Vice President
---------------------------------
LINC ACQUISITION ONE LLC
By: /s/ Xxxxxx X. Parcel
------------------------------------
Title: Vice President
---------------------------------
KEY BANK
By: /s/ Xxxx X. Xxxx
------------------------------------
Title: Vice President
---------------------------------
FIRSTMERIT BANK
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Title: Senior Vice President
----------------------------------
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COMERICA BANK
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Title: Senior Vice President
---------------------------------
FIFTH THIRD BANK
By: /s/ Xxxxx X. de Vries
------------------------------------
Title: Assistant Vice President
---------------------------------
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CONSENT AND AGREEMENT OF GUARANTORS
As of the date and year first above written, each of the undersigned
hereby:
(a) fully consents to the terms and provisions of the above Amendment and
the consummation of the transactions contemplated thereby and agrees to all
terms and provisions of the above Amendment applicable to it;
(b) agrees that each Guaranty, Collateral Document and all other
agreements executed by any of the undersigned in connection with the Credit
Agreement or otherwise in favor of the Agent or the Lenders (collectively, the
"Guarantor Documents") are hereby ratified and confirmed and shall remain in
full force and effect, and each of the undersigned acknowledges that it has no
setoff, counterclaim or defense with respect to any Guarantor Document; and
(c) acknowledges that its consent and agreement hereto is a condition to
the Lenders' obligation under this Amendment and it is in its interest and to
its financial benefit to execute this consent and agreement.
GOOD-ALL ELECTRIC, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Title: Vice President
---------------------------------
OCEAN CITY RESEARCH CORP.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Title: Vice President
---------------------------------
CCFC, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Title: Vice President
------------------------------------
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