Exhibit 10.4
EXECUTION COPY
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TENTH AMENDMENT TO CREDIT AGREEMENT
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THIS TENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of October 31, 2003 (the "Tenth 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. Prior to July 31, 2003, the Borrowers requested that the Agent and
the Lenders, notwithstanding the expiration of the Improvement Period under the
Seventh Amendment and the occurrence of the March 2003 Defaults, 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. Accordingly, the Credit
Agreement was further amended by a Ninth Amendment to Credit Agreement dated as
of July 31, 2003 (the "Ninth Amendment") among the Borrowers, the Lenders and
the Agent. In connection with the Ninth Amendment, the Borrowers requested that
the Agent and the Lenders approve a process under which the Borrowers would
undertake a sale and/or refinancing transaction according to certain deadlines
established in the Ninth Amendment.
N. 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, the Eighth Amendment and the Ninth
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."
O. Consistent with the provisions of the Ninth Amendment, the Company,
with the consent of the Agent and the Lenders, has entered into a letter of
intent governing a potential refinancing transaction. In connection with such
potential refinancing transaction, however, the Borrowers are not in compliance
with the deadlines set forth in Section 1.2w of the Ninth Amendment (the
"Milestone Defaults").
P. The Improvement Period is due to expire on October 31, 2003.
Notwithstanding such expiration and the occurrence and continuation of the
Milestone 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 Milestone 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 pursue completion of the refinancing transaction under the terms
and conditions set forth in this Amendment.
Q. 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, the Eighth Amendment and the Ninth Amendment) under the terms
and conditions expressly set forth herein.
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TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1.
PROVISIONS FOR IMPROVEMENT PERIOD
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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 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, Section 1.2 of the Seventh
Amendment and Section 1.2 of the Ninth 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, the Seventh
Amendment and/or the Ninth Amendment during the period from and including the
Second Amendment Effective Date through and including the date immediately
preceding the Tenth 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, the Seventh Amendment and/or the Ninth 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, the Seventh Amendment and/or the Ninth
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, the
Seventh Amendment and/or the Ninth Amendment is hereby confirmed and ratified
and shall remain in full force and effect as provided therein. From and after
the Tenth 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 Milestone Defaults while the Borrowers
and their consultants continue to pursue completion of the refinancing
transaction, provided that (i) the Lenders' waiver of the Milestone 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 Milestone 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 Milestone Defaults) under the Loan Documents, the period
during which the Lenders shall forbear is from the Second Amendment Effective
Date through January 31, 2004 (the "Improvement Period"). The Lenders'
forbearance shall be governed by and subject to the following terms and
conditions:
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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. With respect to the Borrowers'
pending refinancing transaction, reports on such matter shall
be provided not less frequently than weekly.
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, (x) weekly updates to the detailed
13-week rolling cash flow forecast as required under Section
4.4 of this Amendment, and (y) a duly-executed Borrowing Base
Certificate as of the end of the prior week, together with
supporting information as required by the Credit Agreement;
(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, a summary of
agings of accounts payable and accounts receivable for the
Borrowers as of the end of the prior month, and (y) 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.
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 the
Ninth 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. The Company, the Agent and
the Lenders acknowledge and agree that, following completion
of the sale of the Company's Middle East subsidiaries (as
referenced in subparagraph n below), the parties will discuss
an appropriate adjustment to the definition of the Borrowing
Base to reflect the assets sold pursuant to such transaction.
Upon execution of this Amendment and thereafter, the Company
will provide to the Agent and the Lenders comparative
information showing a
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calculation of the Borrowing Base as if the Company's Middle
East subsidiaries already had been sold.
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, the Ninth
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 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
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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, (x) $4,189,000 for
the for the three consecutive months ending September 30, 2003
or (xi) $3,125,000 for the three consecutive months ending
December 31, 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 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
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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 Tenth 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 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
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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. All parties
acknowledge that the Company has entered into an agreement for
the disposition of its Middle East subsidiaries, and such
disposition shall be completed according to the terms and
conditions approved by the Required Lenders.
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 Tenth 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), 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
9
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
$200,000, payable in installments as follows: $100,000 upon
execution of this Amendment, and $100,000 upon the earlier of
December 31, 2003 or the date on which the Refinance
Transaction (defined in subparagraph w below) is completed.
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 Tenth
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, (g) $1,000,000 during
the six month period ending September 30, 2003 or (h)
$1,300,000 during the nine month period ending December 31,
2003.
v. During the Improvement Period (as such Improvement
Period may be extended from time to time) the Company shall,
if requested by the Agent and the Required Lenders, continue
to employ or engage, a full-time consultant acceptable to the
Agent and the Required Lenders. If such consultant is
required, such 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 such consultant (if required) shall
be acceptable to the Agent and the Required Lenders, and 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
10
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. The Company, with
the consent of the Lenders, has entered into a non-binding
letter of intent (the "Letter of Intent") describing a
transaction that would include refinancing of the Company and
repayment in full of all indebtedness owed to the Agent and
the Lenders (the "Refinance Transaction"). The Company shall
pursue the Refinance Transaction under the following interim
conditions: (i) not later than November 10, 2003, the Company
shall provide to the Agent and the Lenders copies of one or
more draft commitment letters from one or more financing
sources, equity providers or subordinated debt providers
(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 fund the debt amounts
contemplated in the Letter of Intent; (ii) not later than
December 5, 2003, the Company shall provide to the Agent and
the Lenders copies of the final and executed definitive
securities purchase agreement pertaining to the Refinance
Transaction, and the terms of such definitive agreement must
be acceptable to the Required Lenders, as evidenced by the
written consent of the Agent (which consent shall be received
by the Company prior to the Company's execution of such
definitive securities purchase agreement); (iii) also not
later than December 5, 2003, the Company shall provide to the
Agent and the Lenders copies of one or more final and executed
commitment letters from one or more 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 fund the
Refinance Transaction; (iv) not later than December 8, 2003 or
two (2) business days after the date on which the Agent has
issued its consent to the definitive securities purchase
agreement, whichever is later, the Company shall submit to the
Securities and Exchange Commission a preliminary proxy
statement and related materials pertaining to the Refinance
Transaction; and (v) such Refinance Transaction shall be
completed (to include repayment in full of all indebtedness
owed to the Agent and the Lenders) not later than January 31,
2004. In each instance under this subparagraph w calling for
the review and response on behalf of the Required Lenders, the
Agent and the Lenders agree to respond in a diligent and
timely manner following receipt of all information required to
be delivered to them, and further agree that none of the
consents required under this subparagraph w shall be
conditioned on the payment of any fees not otherwise required
under the terms of this Amendment.
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.
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. Notwithstanding the provisions of Section 5.2 of
this Amendment, for the period commencing November 1, 2003 and
ending January 31, 2004, the responsibility of the Company to
reimburse the Agent for the fees of AlixPartners, LLC shall
not exceed $75,000 in the aggregate (provided that such
limitation shall not apply if, during such period, there
occurs any Default under this Amendment).
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aa. 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 Milestone 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 Milestone 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
12
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 January 31, 2004 or the Facility Termination Date
beyond January 31, 2004 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 January 31, 2004 or the Facility Termination Date
beyond January 31, 2004 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, January 31, 2004.
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, Section 5.3 of the Ninth 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 Milestone 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.
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
13
Amendment, the Eighth Amendment and the Ninth Amendment, and as further modified
by this Amendment, grants a limited forbearance until January 31, 2004 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, the Ninth
Amendment and this Amendment. Excepting only the waiver of the Milestone
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 Tenth 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 January 31, 2004, 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 "Tenth Amendment Effective Date" is added to
Section 1.1 of the Credit Agreement in appropriate alphabetical order, stating
as follows:
"Tenth Amendment Effective Date" shall mean October 31, 2003.
2.3 Section 6.19.3 of the Credit Agreement is amended and restated in its
entirety as follows:
6.19.3 Minimum Consolidated Net Worth. The Company will at all
times maintain Consolidated Net Worth of not less than (i) $1,252,000
for the period from the Tenth Amendment Effective Date to and including
December 30, 2003, and (ii) thereafter, $1,386,000.
14
From the Tenth 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).
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:
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 June 30, 2004
and shall address, inter alia, repayment of the indebtedness owed to the
Lenders.
15
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 June 30, 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 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
16
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 Milestone Defaults. The Borrowers have requested that the
Lenders and the Agent waive the Milestone Defaults subject to the terms and
conditions set forth herein. Pursuant to such request, the Lenders and the Agent
hereby waive the Milestone 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 Milestone 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, the Sixth Amendment and the Ninth
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
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
17
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, the Seventh Amendment and the Ninth
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, the
Seventh Amendment and the Ninth 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 Amendment. This
Amendment shall become effective as of October 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.
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(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.
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
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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 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/ Xxxxxx X. Xxxxx
---------------------------------------
Title: Senior Vice President
------------------------------------
CSI COATING SYSTEMS INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
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. Xxxxxx
---------------------------------------
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 Xxxxxxx
---------------------------------------
Title: Officer
-----------------------------------
FIFTH THIRD BANK
By: /s/ Xxxxx X. xxXxxxx
---------------------------------------
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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