EIGHTH AGREEMENT OF AMENDMENT
EIGHTH AGREEMENT OF AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Eighth Agreement of Amendment to Loan and Security Agreement (“Amendment”) is effective October 1, 2018 by and among GERBER FINANCE INC., a New York corporation, having an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (“Lender”), KBS BUILDERS, INC., having an address at 0000 Xxxxxxxx Xxxxxx X., Xxxxxxx, Xxxxxxxxx 00000 (“Borrower”), and ATRM HOLDINGS, INC., having an office at 0000 Xxxxxxxx Xxxxxx X., Xxxxxxx, Xxxxxxxxx 00000, (“Guarantor”);
RECITALS
A. Borrower has executed and delivered to Lender a certain Promissory Note, dated February 23, 2016, in the original maximum principal sum of Four Million Dollars ($4,000,000.00), (the “Note”) payable to the order of Lender.
B. In connection with the execution and delivery of the Note and to secure payment and performance of the Note and other obligations of Borrower to Lender, Lender and Borrower have executed, among other things, a Loan and Security Agreement dated as of February 23, 2016, as amended by Agreement of Amendment to Loan and Security Agreement, dated as of November 30, 2016, a Second Agreement of Amendment to Loan and Security Agreement, dated as of November 30, 2016, a Third Agreement of Amendment to Loan and Security Agreement, dated as of June 30, 2017, a Fourth Agreement of Amendment to Loan and Security Agreement, dated as of July 19, 2017, a Fifth Agreement of Amendment to Loan and Security Agreement dated as of September 29, 2017, a Sixth Agreement of Agreement to Loan and Security Agreement dated as of December 22, 2017, and emails dated January 12, 13 and 14, 2018 by and on behalf of the parties hereto treated as Seventh Agreement of Amendment (the “Loan Agreement”).
C. By having executed the Loan Agreement as a Corporate Credit Party, ATRM Holdings, Inc., as a Guarantor has unconditionally guaranteed all Obligations of Borrower to Lender.
D. By having executed an instrument of Guaranty dated November 20, 2017, Xxxxxxx X. Xxxxxxxx (“Ancillary Guarantor”) has guaranteed payment of up to $500,000 of Permitted Concentration Related Overadvances defined in the Loan Agreement.
E. For purposes of convenience, the Note, Loan Agreement, the Guaranty dated November 20, 2017 and related collateral agreements, certificates and instruments are collectively referred to as the “Credit Documents” in addition to the definition in the Loan Agreement.
F. Borrower and Guarantor have requested that Lender make a Revolving Credit Advance which would exceed the Borrowing Base in an amount not to exceed $600,000 pursuant to the Loan Agreement (“Guaranteed Overadvance”). $100,000 of that requested $600,000 Guaranteed Overadvance has already been advanced to Borrower pursuant to letter dated September 5, 2018.
G. Ancillary Guarantor has executed and delivered an instrument of Guaranty dated September 28, 2018 by which he has guaranteed payment of the Guaranteed Overadvance in the amount of up to $600,000 as defined herein. The instrument of Guaranty dated September 28, 2018 is in addition to the instrument of Guaranty dated November 20, 2017, and not in replacement thereof.
H. Lender, Borrower and Guarantor wish to clarify their rights and duties to one another as set forth in the Credit Documents.
NOW, THEREFORE, in consideration of the promises, covenants and understandings set forth in this Amendment and the benefits to be received from the performance of such promises, covenants and understandings, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
AGREEMENTS
1. Lender, Borrower and Guarantor reaffirm, consent and agree to all of the terms and conditions of the Credit Documents as binding, effective and enforceable according to their stated terms, except to the extent that such Credit Documents are hereby expressly modified by this Amendment.
2. In the case of any ambiguity or inconsistency between the Credit Documents and this Amendment, the language and interpretation of this Amendment is to be deemed binding and paramount.
3. The Loan Agreement (and any exhibits thereto) are hereby amended as follows:
As to the Loan Agreement:
A. Section 1.1 is hereby amended by the following amended definitions:
“Ancillary Credit Parties” means each Person (other than Lender) that executes any or multiple Credit Documents including but not limited to Xxxxxxx X. Xxxxxxxx, who has executed two separate instruments of Guaranty, Lone Star Value Investors, LP which has executed the Pledge and Security Agreement, as amended, and MUFG Union Bank, N.A., which has executed the Securities Account Control Agreement, as amended.
“Ancillary Guarantor” means Xxxxxxx X. Xxxxxxxx, who has executed two separate instruments of Guaranty.
“Guaranteed Overadvance” means an advance from time to time permitted by the Lender to the Borrower in accordance with the provisions of Section 2.1 hereof in an amount up to $600,000 which
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exceeds the Borrowing Base evidenced by a Borrowing Base Certificate delivered to the Lender other than a Permitted Concentration Related Overadvance or a Permitted (Other) Overadvance and is unconditionally guaranteed by an instrument of Guaranty executed by Ancillary Guarantor in form and substance acceptable to Lender.
B. Section 2.1(a) is hereby amended to read as follows:
“(a)(i) Subject to the terms and conditions set forth herein and in the Credit Documents, Lender may, in its sole discretion, make revolving credit advances (the "Revolving Credit Advances") to Borrower from time to time during the Term which, in the aggregate at any time outstanding together with all outstanding Letter of Credit Obligations, will not exceed the lesser of (x) the Maximum Revolving Amount or (y) an amount equal to the Borrowing Base.
(a)(ii) On such terms and conditions set forth in Section 2.1 (a)(i), Lender may, in its sole discretion, either make a Permitted Concentration Related Overadvance, a Guaranteed Overadvance or a Permitted (Other) Overadvance, or any combination thereof, until not later than the earlier of (A) February 23, 2019, or (B) the Maturity Date or such earlier date in accordance with Section 11.1 of the Loan Agreement, (or such later date that Lender may approve in writing) (the “Overadvance Termination Date”) provided that: (x)(i) the amount of the Permitted Concentration Related Overadvance is up to $500,000 in an amount at any time outstanding and fully secured by the ongoing existence and enforceability of the Guaranty of Ancillary Guarantor dated November 20, 2017; (x)(ii) the amount of the Guaranteed Overadvance is up to $600,000 in amount at any time outstanding, is fully secured by the ongoing existence and enforceability of the Guaranty of Ancillary Guarantor executed on September 28, 2018; and (x)(iii) the amount of the Permitted (Other) Overadvance is fully secured by cash Collateral provided by Guarantor to Lender by means of the deposit of such cash Collateral into the Collateral Account of Borrower subject to the security interest of Lender herein provided, and (y) the cash Collateral of Guarantor is free and clear of any other security interest including that of either Guarantor. On or prior to the Overadvance Termination Date (or such later date that Lender may approve in writing), each Permitted Concentration Related Overadvance, Guaranteed Overadvance and Permitted (Other) Overadvance shall be repaid by Borrower to Lender; provided, however, that the Borrower shall repay the Guaranteed Overadvance as follows:
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(X) $75,000 per week commencing January 4, 2019 and continuing weekly thereafter on Friday of each week, a “Scheduled Repayment Date”, provided that such Scheduled Repayment Date is not a holiday in which case the Scheduled Repayment Date shall be the next business day. As a condition to Lender’s approval of the Permitted (Other) Overadvance the Borrower shall be required to achieve certain Minimum Performance Targets as measured against each of the projected (i) Monthly Net Revenue and (ii) Monthly Net Cash Flow as presented in its projections attached hereto as follows: (i) Sixty-Five (65%) percent for the month of October, 2018, (ii) Seventy-five (75%) percent for the month of November, 2018 and (iii) Eighty (80%) percent for the month of December, 2018; and
(Y) In the event that Borrower shall fail to satisfy the applicable percentage of compliance with its projections set forth above at any time, Lender may reset or demand immediate payment of the Guaranteed Overadvance at any time.
Promptly following all such repayments, but not later than five (5) Business Days thereafter, the cash Collateral provided by Guarantor shall be returned by Lender if there then exists no Event of Default or unless an Event of Default would result due to such return of cash Collateral. At all times the cash Collateral of Guarantor shall secure the Guaranty of Guarantor, provided in Section 13.5 hereof.”
C. Section 5.1(b)(vi) is hereby amended to read as follows:
“(vi) Overline/Overadvance Fees. Under circumstances where any Borrower requests and Lender approves Revolving Credit Advances which would exceed the Maximum Revolving Amount and/or the Borrowing Base, (other than a Permitted (Other) Overadvance or a Guaranteed Overadvance) Lender may impose fees in connection therewith. Such fees shall include (i) a monthly fee in the amount of two and one-half percent (2.50%) of the greater of (A) the highest amount by which the amount of Revolving Credit Advances during such months exceeds the Borrowing Base and (B) if any, the amount approved by the Lender for such Revolving Credit Advance in excess of the Borrowing Base for such month and (ii) two and one-half percent (2.50%) of the greater of (A) the highest amount by which the Revolving Credit Advances during such month exceeds the Maximum Revolving Amount and (B) if any, the amount approved by the Lender for such Revolving Credit Advances in excess of the
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Maximum Revolving Amount for such month. Such fees shall be payable on the first day of each month with respect to the preceding calendar month.”
4. Capitalized terms used in this Amendment which are not otherwise defined herein have the meaning ascribed thereto in the Credit Documents.
5. The parties agree to sign, deliver and file any additional documents and take any other actions that may reasonably be required by Lender including, but not limited to, affidavits, resolutions, or certificates for a full and complete consummation of the matters covered by this Amendment.
6. This Amendment is binding upon, inures to the benefit of, and is enforceable by the heirs, personal representatives, successors and assigns of the parties. This Amendment is not assignable by Borrower or Guarantor without the prior written consent of Lender.
7. To the extent that any provision of this Amendment is determined by any court or legislature to be invalid or unenforceable in whole or part either in a particular case or in all cases, such provision or part thereof is to be deemed surplusage. If that occurs, it does not have the effect of rendering any other provision of this Amendment invalid or unenforceable. This Amendment is to be construed and enforced as if such invalid or unenforceable provision or part thereof were omitted.
8. This Amendment may only be changed or amended by a written agreement signed by all of the parties hereto. By the execution of this Amendment, Lender is not to be deemed to consent to any future renewal or extension of the Loans. This Amendment is deemed to be part of and integrated into the Credit Documents.
9. THIS AMENDMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO THE CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
10. The parties to this Amendment acknowledge that each has had the opportunity to consult independent counsel of their own choice, and that each has relied upon such counsel's advice concerning this Amendment, the enforceability and interpretation of the terms contained in this Amendment and the consummation of the transactions and matters covered by this Amendment.
11 Borrower agrees to pay all attorneys’ fees and other costs incurred by Lender or otherwise payable in connection with this Amendment (in addition to those otherwise payable pursuant to the Credit Documents), which fees and costs are to be paid as of the date hereof. Borrower agrees to pay on the date hereof a fee of $75,000 in consideration for the amendments set forth herein, which fee is deemed fully earned on the date hereof and is not subject to proration or rebate. Such fee is payable in equal monthly installments during a five-month period on the first day of each consecutive month commencing October 1, 2018.
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12. This Amendment may be executed in any number of counterparts, each of which when so executed is deemed to be an original and all of which taken together constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by facsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.
13. THE BORROWER, FOR ITSELF, ITS SUBSIDIARIES (IF ANY) AND GUARANTOR AND LENDER HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS AMENDMENT OR THE DEBT AS AN INDUCEMENT TO THE EXECUTION OF THIS AMENDMENT.
[Remainder of Page Left Intentionally Blank – Signature Pages Follow]
IN WITNESS WHEREOF, the parties have signed this Amendment.
Witness: KBS BUILDERS, INC.
/s/ By:/s/ Xxxxxx X. Koch__________________
Print Name Xxxxxx X. Xxxx
President
President
Witness: ATRM HOLDINGS, INC.
/s/ By:/s/ Xxxxxx X. Koch__________________
Print Name Xxxxxx X. Xxxx
President
President
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[Signature Page to Eighth Agreement of Amendment to Loan and Security Agreement
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(signatures continued from previous page)
GERBER FINANCE INC.
By:/s/ Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
President
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[Signature Page to Eighth Agreement of Amendment to Loan and Security Agreement]
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