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EXHIBIT 4.5
SECOND AMENDMENT TO CREDIT AGREEMENT
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THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of June 29, 2001 (the "Second 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, MICHIGAN, a Michigan banking corporation, 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. The Credit Agreement (as modified by the First 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."
D. Certain Defaults have 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 "Existing Defaults"). Based upon the request
of the Borrowers and the Guarantors, the Agent and the Lenders temporarily
waived the Existing Defaults subject to the terms and conditions set forth in a
certain letter dated May 29, 2001 (the "Waiver Letter").
E. The temporary waiver set forth in the Waiver Letter is due to expire
by its terms on June 29, 2001. Upon such expiration, as a consequence of the
Existing Defaults, among other things, (i) the Required Lenders have the right
at any time to declare all indebtedness owed to the Lenders by the Borrowers and
all other obligations owed to the Lenders or the Agent under the Loan Documents
to be immediately due and payable, pursuant to Section 8.1 of the Credit
Agreement, and (ii) the Lenders have no obligation to advance further loans or
credit to the Borrowers, pursuant to Sections 4.2 and 8.1 of the Credit
Agreement
F. The Borrowers have requested, notwithstanding the Existing 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 Existing 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.
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G. As of June 9, 2001, the Company is indebted to the Lenders on
account of U.S. Revolving Credit Loans under the Credit Agreement in the
aggregate principal amount of U.S. $31,500,000.00 plus accrued interest. As of
June 14, 2001, the Canadian Borrower is indebted to the Lenders on account of
Canadian Revolving Credit Loans under the Credit Agreement in the aggregate
principal amount of CAD $8,442,484.03. As of June 25, 2001, Facility LCs have
been issued for the account of the Borrowers in the aggregate face amount of
U.S. $246,099.56.
H. In addition to the indebtedness described in the preceding recital,
pursuant to the terms of the Credit Agreement the Borrowers are indebted to the
Agent and the Lenders for certain fees, expenses and costs incurred by or on
behalf of the Agent and the Lenders.
I. The Obligations under the Credit Agreement, together with any other
obligations of the Borrowers to the Agent or the Lenders under the Loan
Documents, are unconditionally guaranteed by the Guarantors.
J. To secure payment of the Obligations and the Noteholder Obligations,
including, without limitation, the indebtedness described in the foregoing
recitals, each Borrower and each Guarantor has granted to the Collateral Agent,
for the benefit of itself, the Lenders and the Noteholders, a first-priority
security interest in, without limitation, all of such Borrower's and such
Guarantor's present and future accounts, documents, instruments, general
intangibles, chattel paper, furniture, fixtures, machinery, equipment, inventory
and all other assets of the Borrowers and the Guarantors, including books and
records relating thereto and all substitutions, replacements, additions,
accessories, products and proceeds thereof, and including a pledge of corporate
stock and deeds of trust or mortgages of real property, which security interest
is a duly perfected first-priority security interest.
K. 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 and to forbear from exercising remedies
available to them at the present time, for a limited period of time, all 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.
DEFAULT AND RESTRUCTURING PROVISIONS
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1.1 AFFIRMATION OF RECITALS. The Borrowers and the Guarantors hereby
acknowledge and affirm the accuracy of the foregoing recitals.
1.2 EXISTING DEFAULTS. The Borrowers acknowledge the occurrence of the
Existing Defaults and, but for the provisions of the Waiver Letter, the
continuation of such Existing Defaults through the date of this Amendment. As a
result of the Existing Defaults, the Borrowers acknowledge that, but for the
waiver set forth in this Amendment, the Required Lenders have the right at any
time to declare all indebtedness owed by the Borrowers to the Lenders to be
immediately due and payable.
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1.3 RESTRUCTURING CONDITIONS. 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 Existing Defaults while the
Borrowers and their consultants develop and implement their plan for improvement
of the Borrowers' business and financial condition, provided that (i) the
Lenders' waiver of the Existing Defaults shall be solely in accordance with the
terms and conditions set forth 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 Existing
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
modified herein) and the other Loan Documents. Absent an earlier default
hereunder or Default (other than the Existing Defaults) under the Loan
Documents, the period during which the Lenders shall forbear is from the Second
Amendment Effective Date through November 30, 2001 (the "Restructuring 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 Restructuring
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 Restructuring 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, 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.
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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 this Amendment.
e. All representations and warranties made by the
Borrowers 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 Restructuring 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 $1,500,000 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), 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, 2001 and
ending on the last day of each successive month (each a
"Measuring Period") (i.e., the first Measuring Period shall be
a one-month period commencing July 1, 2001 and ending July 31,
2001, the second Measuring Period shall be a two-month period
commencing July 1, 2001 and ending August 31, 2001, 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 (less the sum of
(w) the fee required under subparagraph t below, (x) any fee
required under the amendment referenced in Section 5.10(g)
hereof, (y) any fees and disbursements of professionals
retained by the Agent, the Lenders or the Noteholders for
which the Company is responsible to reimburse the Agent or the
Lenders and (z) any fees and disbursements incurred by the
Company during the Restructuring Period, up to a maximum of
$500,000, to any lawyer or consultant referenced in
subparagraph q below) 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)
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$8,860,000 for the four consecutive fiscal quarters ending
December 31, 2001, or (iv) $14,598,000 for the four
consecutive fiscal quarters ending March 31, 2002.
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 1.3h 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 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 acknowledge that a field examination
will be undertaken on behalf of the Lenders contemporaneously
with the execution of this Amendment; the results of such
field examination must be acceptable to the Agent and the
Required Lenders in the exercise of their sole and absolute
discretion. 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.
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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
Restructuring 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 Second Amendment Effective
date as described in Schedule 1.3l, provided that no increase
in the amount thereof shall be permitted).
m. During the Restructuring 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
Restructuring 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 $10,000 per item and $100,000 in the
aggregate on a cumulative basis during the Restructuring
Period, or (iii) the disposition of other assets under terms
approved by the Required Lenders as evidenced by 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).
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
Restructuring 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 Second Amendment Effective
Date).
p. Notwithstanding anything in the Credit Agreement
to the contrary, during the Restructuring 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 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. Not later than July 13, 2001, the Borrowers shall
engage, and shall continue to engage for at least the duration
of the Restructuring Period, at the Borrowers' sole cost and
expense, one or more financial consultants acceptable to the
Agent and the Required
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Lenders. The scope of the engagement of any financial
consultants shall be acceptable to the Agent and the Required
Lenders.
r. Notwithstanding anything in the Credit Agreement
to the contrary (including without limitation the provisions
of Sections 6.10 of the Credit Agreement), during the
Restructuring 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.
s. During the Restructuring 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 or (ii) 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.
t. Upon execution of this Amendment, the Company
shall pay to the Agent, for the benefit of the Lenders, an
amendment fee in the amount of $140,625.00.
u. 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 this 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.
v. 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
$1,750,000 during the fiscal year ending March 31, 2002.
w. There shall be no other Default or Unmatured
Default under the Credit Agreement (as modified herein) or the
other Loan Documents (except for the Existing Defaults
expressly acknowledged and waived in this Amendment through
the effective date hereof).
Notwithstanding the provisions of this Section 1.3, all indebtedness of the
Borrowers to the Lenders shall be due and payable on demand in the discretion of
the Required Lenders upon expiration or termination of the Restructuring Period
as provided in Section 1.10 hereof or any failure of any one or more of the
conditions set forth in this Section 1.3. Further, any failure of any one or
more of the conditions set forth in this Section 1.3 shall constitute a Default
under the Loan Documents (without the necessity of any notice or cure period).
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1.4 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).
1.5 DOMINION OF FUNDS; TRANSFER OF ACCOUNTS; CASH MANAGEMENT SERVICES. (a)
Each Borrower shall enter into a dominion of funds arrangement with the
Collateral Agent and shall execute and deliver any and all further documents
necessary or desirable to implement such dominion of funds arrangement,
including without limitation any lock box agreements or blocked account
agreements. Such dominion of funds arrangement will be implemented at such time
as the Collateral Agent may direct. Upon such implementation, to the extent that
any Borrower receives any wire transfer or electronic payment in lieu of payment
of accounts by cash, check or other item, the Collateral Agent is authorized,
immediately upon the receipt of such wire transfer or electronic payment, to
transfer the proceeds thereof into the cash collateral account maintained in
accordance with the dominion of funds arrangement for purposes of application
against the Loans, the other Obligations and the Noteholder Obligations.
(b) With respect to any domestic bank account maintained on behalf of
any Borrower or its Subsidiaries at any financial institution other than the
Agent or one of the Lenders, such Borrower or such Subsidiary shall, not later
than July 13, 2001, close such accounts and maintain its banking accounts with
the Agent or one or more of the Lenders, unless the Agent shall otherwise
consent in writing. Branch facilities of the Company or its Subsidiaries shall
be permitted to maintain existing imprest cash accounts, with balances not to
exceed $10,000 per account, at other financial institutions. Such accounts,
together with the purpose of each account, are listed on Schedule 1.5.
(c) The Borrowers shall, promptly upon request by the Agent, implement
a cash management system acceptable to the Agent. The Borrowers shall comply
strictly with all procedures and requirements established from time to time by
the Agent or any applicable Lender with respect to any cash management or
similar services provided by the Agent or such Lender. Any obligations owed by
the Borrowers to the Agent or any Lender in connection with any cash management
services shall be deemed included within the term "Obligations" as defined in
the Credit Agreement and shall be secured by the Collateral. Similarly, all
treasury management risks of the Agent or any Lender shall be shared by all of
the Lenders, shall be deemed included within the term "Obligations" as defined
in the Credit Agreement and shall be secured by the Collateral. With respect to
any losses incurred prior to September 30, 2001 in connection with any cash
management or
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treasury management services, the Collateral shall be available to defray such
losses only to the extent that the other Obligations have been satisfied in
full. With respect to any losses incurred on or after September 30, 2001 in
connection with any cash management or treasury management services, (i) to the
extent that such losses in the aggregate are equal to or less than $4,250,000,
such losses shall be treated pari passu with all other Obligations and (ii) to
the extent that such losses in the aggregate exceed $4,250,000, the Collateral
shall be available to defray such excess amount only to the extent that the
remaining other Obligations have been satisfied in full.
1.6 COOPERATION WITH THE AGENT, THE LENDERS AND THEIR FINANCIAL
Consultants. Each Borrower agrees that it will make all of its records available
to the Agent and the Lenders and any financial consultant retained by them and
will make all of its personnel available to the Agent and the Lenders and such
consultants during normal business hours for inquiry as to its business,
financial condition and prospects, and that it will otherwise fully cooperate
with the Agent, the Lenders and their financial consultants in assisting the
Lenders to conduct such analyses as they may wish to make of the Borrowers and
their financial condition.
1.7 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 Existing Defaults as of the date hereof,
the occurrence of any new or further violation of the sections of the Credit
Agreement implicated by any of the Existing Defaults;
d. The occurrence of any default under the Senior Note Agreement;
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 such term is modified and defined in Article 2 of
this Amendment) 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.
1.8 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 Restructuring Period or extend the Facility Termination
Date, or forbear from enforcing their rights and remedies before the end of the
Restructuring 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
Restructuring Period beyond November 30, 2001 or the Facility Termination Date
beyond April 30, 2002 or to extend any further credit to the Borrowers.
Furthermore, no future agreement by the Agent and the Lenders to continue to
extend the term of the Restructuring Period beyond November 30, 2001 or the
Facility Termination Date beyond April 30, 2002 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. Preliminary
understandings or agreements on one or more issues during the course of any
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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.
1.9 BUSINESS AND FINANCIAL CONSULTANT. The Agent and the Lenders
acknowledge that the Borrowers' agreement to retain a financial consultant
acceptable to the Agent and the Required Lenders ("Consultant") has materially
contributed to the willingness of the Agent and the Lenders to enter into this
Amendment. Each Borrower agrees to promptly provide to the Agent and the Lenders
all financial reports, projections and other information as may be provided to
it by Consultant or as may be provided to Consultant by the Borrowers, and
agrees to cause Consultant to prepare and deliver to the Agent and the Lenders
such other reports and information concerning the business and financial
condition of the Borrowers as the Agent or the Lenders shall from time to time
request. The Borrowers acknowledge and agree that the Agent, the Lenders, their
consultants and counsel shall have direct access to Consultant, and Consultant
is authorized to discuss information related to the Borrowers with the Agent,
the Lenders or their consultants or counsel.
1.10 REMEDIES UPON DEFAULT OR TERMINATION. The Restructuring Period shall
expire automatically upon the earlier to occur of (a) 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 (b) November 30, 2001 in the absence of a further
written agreement among the Borrowers, the Agent and the Required Lenders
pertaining to the repayment of the Borrowers' obligations. Upon the expiration
of the Restructuring Period and in the absence of (i) a further written
agreement among the Borrowers, the Agent and the Required Lenders pertaining to
the repayment of the Borrowers' obligations or (ii) the Borrowers then being 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 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 Existing
Defaults as set forth herein 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.
1.11 RESERVATION OF RIGHTS; NO WAIVER BY CONDUCT. This Amendment
grants a limited forbearance until November 30, 2001 only, or until an earlier
Default, upon the terms and conditions set forth in this Amendment. Excepting
only the waiver of the Existing Defaults as set forth herein, 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
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single or partial exercise thereof preclude any further exercise thereof or the
exercise of any other right, power or privilege.
1.12 LIMITATIONS ON CERTAIN ADVANCES. Notwithstanding the provisions of
Sections 2.7 and 2.8 of the Credit Agreement, during the Restructuring Period
(and, absent a further written agreement among the Borrowers and the Lenders to
the contrary, thereafter until the Facility Termination Date) each Borrower
agrees that the Lenders shall not be obligated to advance any Eurocurrency Loan
and the Borrowers shall not request new Eurocurrency Advances, and any existing
Eurocurrency Loans shall, at the end of the applicable Interest Period therefor,
automatically be converted into a Floating Rate Loan.
1.13 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 Restructuring Period.
ARTICLE 2.
AMENDMENTS
----------
Effective as of the Second Amendment Effective Date, the Credit
Agreement shall be amended as follows:
2.1 The definition of "Borrowing Base" in Section 1.1 of the Credit
Agreement is restated in its entirety as follows:
"Borrowing Base" means, as of any date, the lesser of (i) the
Second Amendment Borrowing Base Sublimit or (ii) the sum,
based on the U.S. Dollar Equivalent thereof, of (a) an amount
equal to 75% of the amount of Eligible Accounts Receivable,
plus (b) an amount equal to 40% of the amount of Eligible
Inventory.
2.2 The definition of "Payment Date" in Section 1.1 of the Credit
Agreement is restated in its entirety as follows:
"Payment Date" shall mean the last Business Day of each month.
2.3 A new definition of "Reduction Amount" is added to Section 1.1 of the
Credit Agreement in appropriate alphabetical order, stating as follows:
"Reduction Amount" shall mean the product of (i) the amount of
any principal payment made after the Second Amendment
Effective Date to the Noteholders under the Senior Note
Agreement and (ii) the Reduction Ratio as calculated
immediately prior to such principal payment.
2.4 A new definition of "Reduction Payment" is added to Section 1.1 of the
Credit Agreement in appropriate alphabetical order, stating as follows:
"Reduction Payment" shall mean any principal prepayment made
by the Borrowers after the Second Amendment Effective Date in
accordance with Section 2.6.8(a).
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2.5 A new definition of "Reduction Ratio" is added to Section 1.1 of the
Credit Agreement in appropriate alphabetical order, stating as follows:
"Reduction Ratio" shall mean, as of any date, the ratio of (i)
the Second Amendment Borrowing Base Sublimit (as the same may
be reduced or increased from time to time) on such date to
(ii) the aggregate outstanding principal amount under the
Senior Note Agreement on such date. As of the Second Amendment
Effective Date, the Reduction Ratio is one and one-third
(1.33).
2.6 A new definition of "Second Amendment Borrowing Base Sublimit" is
added to Section 1.1 of the Credit Agreement in appropriate alphabetical order,
stating as follows:
"Second Amendment Borrowing Base Sublimit" shall mean, as of
any date, $40,000,000 less the aggregate amount of any
Reduction Payments received by the Lenders on a cumulative
basis on or prior to the date of calculation, provided that
the Second Amendment Borrowing Base Sublimit may be increased
from time to time upon the written consent of all of the
Lenders.
2.7 A new definition of "Second Amendment Effective Date" is added to
Section 1.1 of the Credit Agreement in appropriate alphabetical order, stating
as follows:
"Second Amendment Effective Date" shall mean June 29, 2001.
2.8 Section 2.6 of the Credit Agreement is amended by adding a new Section
2.6.8 at the end thereof, stating as follows:
2.6.8 (a) In addition to all other payments required
hereunder, simultaneously upon the making of any principal
payment to the Noteholders under the Senior Note Agreement at
any time on or after the Second Amendment Effective Date, the
Borrowers shall prepay the Aggregate Total Outstandings by an
amount equal to the Reduction Amount. Such payments shall be
applied to the Aggregate Total Outstandings on a pro rata
basis between the U.S. Commitment and the Canadian Commitment,
and such Commitments shall also be permanently reduced in
connection with such prepayment.
(b) If, after giving effect to any Reduction Payment
required under subparagraph (a) above, the Aggregate Total
Outstandings would not exceed the Borrowing Base, then such
Reduction Payment need not be made, provided that,
nevertheless, the Commitments and the Second Amendment
Borrowing Base Sublimit shall each be permanently reduced by
the Reduction Amount as if the Reduction Payment had been
made.
2.9 Section 2.9 of the Credit Agreement is amended by substituting the
phrase "3% per annum" in lieu of the phrase "2% per annum" where such phrase
appears in said Section 2.9.
2.10 Section 2.16 of the Credit Agreement is deleted. As of the Second
Amendment Effective Date, the Company shall not be permitted to request any
Swing Loan nor shall the Agent be required to advance any Swing Loan.
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2.11 The last sentence of Section 2.19 of the Credit Agreement is deleted.
All Collateral shall secure all Obligations under the Credit Agreement, together
with any other obligations of the Borrowers to the Agent or the Lenders under
the Loan Documents. Without limiting the generality of the foregoing, it is
understood that the Collateral originally securing only the Canadian Revolving
Credit Loans and the Canadian Facility Letter of Credit Obligations shall secure
all Obligations, including without limitation the U.S. Revolving Credit Loans
and the U.S. Facility Letter of Credit Obligations.
2.12 Section 6.1 of the Credit Agreement is amended to insert the
following subparagraph (xi) thereto:
(xi) As soon as available and in any event within
thirty (30) days after the end of each month, the consolidated
balance sheet of the Company and its Subsidiaries as of the
end of such month, and the related consolidated statements of
income and cash flows of the Company and its Subsidiaries for
such month and for the period commencing at the end of the
previous fiscal year and ending with the end of such month, in
form and detail acceptable to the Agent, setting forth in each
case in comparative form the corresponding figures for the
corresponding date or period of the preceding fiscal year and
the variances, if any, from the most recent budget and
forecast delivered to the Agent and the Lenders pursuant to
Section 4.4 of that certain Second Amendment to Credit
Agreement dated as of June 29, 2001, and together with a duly
executed compliance certificate in the form of Exhibit E;
2.13 Section 6.19 of the Credit Agreement is amended by deleting Sections
6.19.1 and 6.19.2 and inserting the following in place thereof:
6.19.1 CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The
Company will not permit the Consolidated Fixed Charge Coverage Ratio of
the Company and its Subsidiaries, determined as of the end of each of
its fiscal quarters to be less than (I) 0.75 to 1.0 for the quarter
ending June 30, 2001, (ii) 0.87 to 1.0 for the quarter ending September
30, 2001, (iii) 0.85 to 1.0 for the quarter ending December 31, 2001
and (iv) 1.18 to 1.0 for the quarter ending March 31, 2002.
6.19.2 LEVERAGE RATIO. The Company will not permit the
Consolidated Leverage Ratio of the Company and its Subsidiaries,
determined as of the end of each of its fiscal quarters, to be greater
than (I) 9.82 to 1.0 for the period ending June 30, 2001, (ii) 8.12 to
1.0 for the period ending September 30, 2001, (iii) 7.83 to 1.0 for the
period ending December 31, 2001 and (iv) 4.08 to 1.0 for the period
ending March 31, 2002.
2.14 The Pricing Schedule attached to the Credit Agreement, as amended in
the First Amendment, shall be further amended by substituting the following in
place thereof:
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PRICING SCHEDULE
================================= ===================================
APPLICABLE MARGIN
--------------------------------- -----------------------------------
Eurocurrency Rate 4.00%
---------------------------------- -----------------------------------
Floating Rate 2.50%
================================== ==================================
================================== ==================================
APPLICABLE FACILITY FEE RATE
================================== ==================================
Facility Fee 0.75%
================================== ==================================
================================== ==================================
APPLICABLE FACILITY LC RATE
================================== ==================================
Facility LC Fee 3.00%
================================== ==================================
The amendment of such Pricing Schedule shall not restrict the right of the
Lenders to impose the rates specified in Section 2.9 as a consequence of any new
Default after the Second Amendment Effective Date.
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.
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ARTICLE 4.
ADDITIONAL COVENANTS OF THE BORROWERS
-------------------------------------
Each Borrower shall:
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 Not later than July 27, 2001, prepare and deliver to the Agent and the
Lenders a detailed business plan (which may consist of updates and revisions to
the plan submitted to the Lenders in May, 2001), viability analysis and
financial strategy to improve the Borrowers' business operations and financial
condition, which plan and strategy shall address, inter alia, repayment of the
indebtedness owed to the Lenders.
4.4 Not later than July 27, 2001, prepare and deliver to the Agent and the
Lenders an updated and detailed budget forecast for the remainder of the
Restructuring Period, 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 for
the remainder of the year 2001 and on a monthly basis thereafter. Projected
capital expenditures shall be shown in the projections as a separate line item.
Not later than Wednesday of each week (commencing August 1, 2001), 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 To the extent requested by the Agent and to the extent not cost
prohibitive (as determined by the Agent), promptly (within five (5) days after
such request) cause each of its Foreign Subsidiaries to execute and deliver to
the Agent one or more guarantees (in form and substance satisfactory to the
Agent) of the Borrowers' indebtedness in favor of the Lenders.
4.7 To the extent requested by the Agent and to the extent not cost
prohibitive (as determined by the Agent), promptly (within five (5) days after
such request) cause each of its Foreign Subsidiaries to complete the execution
and delivery of the Collateral Documents as required by the Agent.
4.8 Upon request by the Agent, promptly complete all matters required by
the Agent for full implementation of the dominion of funds arrangement between
the Borrowers and the Agent and otherwise cooperate with the implementation of
such arrangement.
4.9 Promptly execute and deliver, and cause each Guarantor to execute and
deliver, such other documents as the Agent or the Lenders may reasonably
request.
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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 Xxx Xxxx & Associates, Inc., 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 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 EXISTING DEFAULTS. The Borrowers have requested that the
Lenders and the Agent waive the Existing Defaults subject to the terms and
conditions set forth herein. Pursuant to such request, the Lenders and the Agent
hereby waive the Existing 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 Existing Defaults),
for the remainder of the Restructuring Period. Such waiver shall not extend to
any period of time after the Restructuring 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 Restructuring 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). 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.
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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
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 RESTRUCTURING 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
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approval on behalf of the Agent and the Lenders of such proceeding; and (b) the
Restructuring Period and forbearance allowed by this Amendment are sufficient
for the Borrowers to accomplish the commitments they have undertaken in this
Amendment.
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 Amendment. This
Amendment shall become effective as of June 29, 2001 when each of the following
has been satisfied:
(a) Receipt by the Agent of counterparts of this Amendment duly
executed by the Borrowers and the Required Lenders, and counterparts of the
Consent and Agreement annexed hereto duly executed by each Guarantor.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) Receipt by 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, provided that certain items
may be delivered within 30 days of the date hereof pursuant to the terms of any
post closing letter agreement approved by the Agent.
(g) 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 the Agent, the Lenders and the Noteholders shall
have executed an amendment to that certain Intercreditor and
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Collateral Agency Agreement dated as of June 9, 2000, which amendment shall be
satisfactory in form and substance to the Agent.
(h) 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.
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 NOTICES TO THE AGENT. Pursuant to Section 14.2 of the Credit
Agreement, future notices to the Agent should be addressed to the Attention of
Xxxxxx X. Xxxxx, III, First Vice President, Mil-8095, 000 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, telephone 000-000-0000, facsimile 000-000-0000, with a
copy to Xxxxxxx X. Xxxxxxx, Xxxxxxxxx Xxxxxx PLLC, 000 Xxxxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, telephone 000-000-0000, facsimile 000-000-0000.
5.17 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
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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 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]
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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/ Xxxx X. Xxxxxx
--------------------------------
Title: Executive Vice President
--------------------------------
CSI COATING SYSTEMS INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Title: Authorized Signature
--------------------------------
BANK ONE, MICHIGAN, AS AGENT AND AS A
LENDER
By: /s/ Xxxxxx X. Xxxxx, III
--------------------------------
Title: First Vice President
--------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxxx X. Xxxxxxxx
--------------------------------
Title: Vice President
--------------------------------
KEY BANK
By: /s/ L. Xxxxx Xxxxxxx
--------------------------------
Title: Vice President
--------------------------------
FIRSTMERIT BANK
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Title: Vice President
--------------------------------
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COMERICA BANK
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Title: Vice President
--------------------------------
FIFTH THIRD BANK, NORTHEASTERN OHIO
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Title: 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/ Xxxx X. Xxxxxx
--------------------------------
Its: Vice President
--------------------------------
BASS SOFTWARE, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Its: Vice President
--------------------------------
CATHODIC PROTECTION SERVICES COMPANY
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Its: Vice President
--------------------------------
OCEAN CITY RESEARCH CORP.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Its: Vice President
--------------------------------
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CCFC, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Its: Vice President
--------------------------------
XXXXXXXX COSASCO SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Its: Vice President
--------------------------------
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