Exhibit 10.1
FOURTH AMENDMENT AND FORBEARANCE AGREEMENT
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This FOURTH AMENDMENT AND FORBEARANCE AGREEMENT (this "Amendment"),
dated as of August 13, 2002, is by and among BGF Industries, Inc., a Delaware
corporation (the "Borrower") and those Domestic Subsidiaries of the Borrower as
may from time to time become a party hereto (collectively, the "Guarantors"),
certain financial institutions as may from time to time become parties to this
Amendment, as lenders, (each a "Lender" and collectively, the "Lenders") and
WACHOVIA BANK, NATIONAL ASSOCIATION (formerly First Union National Bank), as
agent for the Lenders (in such capacity, the "Agent").
RECITALS
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A. The Borrower, the Guarantors, the Agent and the Lenders are parties to
that certain Credit Agreement dated as of September 30, 1998 (as from time to
time amended, restated, replaced, supplemented or otherwise modified and in
effect on or before the date hereof, the "Existing Credit Agreement"), pursuant
to which the Agent and Lenders have made loans, advances and other extensions of
credit to the Borrower.
B. The Borrower has informed the Agent and the Lenders that Events of
Default have occurred and are continuing under the Existing Credit Agreement as
a result of, among other things, (i) the Borrower's failure to comply with the
covenants set forth in Sections 5.1(b), 5.9(c) and 5.9(e) of the Existing Credit
Agreement for the fiscal quarter ending June 30, 2002, (ii) the Borrower's
execution of that certain Tax Allocation Agreement dated as of October 26, 2000
to the extent it violates Section 6.7, (iii) the Borrower's practice of
purchasing raw material from Advanced Glassfiber Yarns LLC to the extent it
violates Section 6.7, (iv) the Borrower's inability to make the representations
set forth in Section 3.10 with respect to its Altavista, Virginia facility and
(v) the Borrower's inability to make the representations and warranties set
forth in the representations and warranties set forth in Sections 3.1, 3.2, 3.5
and 3.17 of the Existing Credit Agreement (collectively, the "Acknowledged
Events of Default").
C. The Borrower has requested that the Agent and the Lenders forbear from
exercising certain of its rights and remedies arising from the Acknowledged
Events of Default. The Agent and Lenders have agreed to do so, but only upon the
terms and conditions set forth herein.
D. This Amendment shall constitute a Credit Document and these Recitals
shall be construed as part of this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
PART I
DEFINITIONS
Subpart 1.1 Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, capitalized terms used herein shall have the
respective meanings given to them or incorporated by reference into the Amended
Credit Agreement (as defined below). The following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Forbearance Termination Event" has meaning given in Subpart 2.3
hereof.
"Fourth Amendment Effective Date" has meaning given in Subpart 4.1
hereof.
"Exit Fee" has the meaning give in Subpart 5.7 hereof.
"Retained Rights" has the meaning given in Subpart 2.4 hereof.
PART II
FORBEARANCE
Subpart 2.1 Reaffirmation of Existing Debt. The Borrower acknowledges and
confirms (a) that, without giving effect to the pay down on the Loans required
by Part IV hereof or the conversion of Revolving Loans to Term Loans pursuant to
the terms of this Amendment, the outstanding unpaid principal balance of the
Loans and LOC Obligations as of August 12, 2002 is $26,300,000, (b) that the
Agent has a valid and enforceable first priority perfected security interest in
the Collateral for the benefit of the Lenders, subject only to Permitted Liens,
(c) that the Borrower's obligation to repay the outstanding principal amount of
the Credit Party Obligations is unconditional and not subject to any offsets,
defenses or counterclaims and (d) that the Lenders and the Agent have performed
fully all of their respective obligations under the Amended Credit Agreement and
the other Credit Documents as of the Fourth Amendment Effective Date.
Subpart 2.2 Forbearance. Subject to the terms and conditions set forth
herein, the Agent and the Lenders agree that they shall, until the occurrence of
a Forbearance Termination Event, forbear from exercising their rights and
remedies (excluding the Retained Rights) arising solely from the existence of
the Acknowledged Events of Default.
Subpart 2.3 Forbearance Termination Events. Nothing set forth herein or
contemplated hereby is intended to constitute an agreement by the Agent or the
Lenders to forbear the exercise of any of their rights and remedies available to
them under the Amended Credit Agreement and the other Credit Documents (all of
which rights and remedies are hereby expressly reserved by the Agent and
Lenders) upon and after the occurrence of a Forbearance Termination Event. A
"Forbearance Termination Event" shall exist upon the occurrence of any of the
following: (i) any Event of Default under the Amended Credit Agreement or any
other Credit Documents other than the Acknowledged Events of Default; (ii) any
breach of this
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Amendment by the Borrower or any Guarantor (after giving effect to any
applicable grace period); and (iii) March 31, 2003.
Subpart 2.4 Retained Rights. Notwithstanding Subpart 2.2 hereof, the Agent
and the Lenders specifically reserve the right to (a) apply the Default Rate of
interest as provided in Section 2.9 in the Credit Agreement as a result of any
Defaults or Events of Default, including the Acknowledged Events of Default, and
(b) sell or assign all or any part of its rights and obligations under the
Amended Credit Agreement to one or more Eligible Assignees without the consent
of the Borrower (collectively, the "Retained Rights").
PART III
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on the Fourth Amendment Effective Date, the Existing Credit
Agreement is hereby amended in accordance with this Part III. Except as so
amended, the Existing Credit Agreement shall continue in full force and effect.
Subpart 3.1 Amended and Restated Definitions. The following definitions set
forth in Section 1.1 of the Existing Credit Agreement are hereby amended and
restated in their entirety to read as follows:
"Applicable Percentage" shall mean, for any day, the rate per annum
set forth below opposite the applicable Level then in effect, it being
understood that the Applicable Percentage for (i) Loans which are Alternate
Base Rate Loans shall be the percentage set forth under the column
"Alternate Base Rate Margin", (ii) Loans which are LIBOR Rate Loans shall
be the percentage set forth under the column "LIBOR Rate Margin and Letter
of Credit Fee", (iii) the Commitment Fee shall be the percentage set forth
under the column "Commitment Fee" and (iv) the Letter of Credit Fee shall
be the percentage set forth under the column "LIBOR Rate Margin and Letter
of Credit Fee":
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------- --------------- ------------ ---------------- -----------------
LIBOR Rate
Alternate Margin
Leverage Base Rate and Letter of Commitment
Level Ratio Margin Credit Fee Fee
------- --------------- ------------ ---------------- -----------------
I **** 4.5 to 1.0 2.00% 3.25% 0.50%
------- --------------- ------------ ---------------- -----------------
II **** 4.0 to 1.0 1.75% 3.00% 0.50%
but * 4.5 to
1.0
------- --------------- ------------ ---------------- -----------------
III **** 3.5 to 1.0 1.50% 2.75% 0.50%
but * 4.0 to
1.0
------- --------------- ------------ ---------------- -----------------
IV * 3.5 to 1.0 1.25% 2.50% 0.375%
------- --------------- ------------ ---------------- -----------------
* less than
****greater than or equal to
The Applicable Percentage shall, in each case, be determined and
adjusted quarterly on the date five (5) Business Days after the date on
which the Agent has received from the Borrower the quarterly financial
information and certifications required to be delivered to the Agent and
the Lenders in accordance with the provisions of Sections 5.1(b) and 5.2(b)
(each an "Interest Determination Date"). Such Applicable Percentage shall
be effective from such Interest Determination Date until the next such
Interest Determination Date. The initial Applicable Percentages on the
Third Amendment Effective Date shall be based on Level I. Subsequent to the
Third Amendment Effective Date, the Applicable Percentages shall not be
less than the interest rates for Level I until the first Interest
Determination Date occurring after March 31, 2003. After the Third
Amendment Effective Date, if the Borrower shall fail to provide the
quarterly financial information and certifications in accordance with the
provisions of Sections 5.1(b) and 5.2(b), the Applicable Percentages for
such Interest Determination Date shall, on the date five (5) Business Days
after the date by which the Borrower was so required to provide such
financial information and certifications to the Agent and the Lenders, be
based on Level I until such time as such information and certifications are
provided, whereupon the Level shall be determined by the then current
Leverage Ratio.
"Asset Disposition" shall mean the disposition of any or all of the
assets (including, without limitation, the Capital Stock of a Subsidiary or
any ownership interest in a joint venture) of the Borrower, any Subsidiary,
or BGF Services whether by sale, lease, transfer or otherwise. The term
"Asset Disposition" (i) shall include any "Asset Sale" under the
Subordinated Debt Documentation and (ii) shall not in any event include (a)
Specified Sales, (b) the sale, lease or transfer of assets permitted by
Section 6.5(a)(iii) hereof, or (c) any Debt Issuance or Equity Issuance.
"Borrowing Base Certificate" means a borrowing base certificate
substantially in the form of Exhibit A to the Fourth Amendment.
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"Credit Documents" shall mean this Agreement, each of the Notes, any
Joinder Agreement, the Letters of Credit, the LOC Documents, the
Environmental Indemnity Agreement, the Fourth Amendment, the GHC Guaranty,
the BGF Services Guaranty and the Security Documents, each as from time to
time amended, restated, replaced, supplemented or otherwise modified.
"Eligible Accounts Receivable" means the Accounts that the Agent in
the exercise of its reasonable commercial discretion determines to be
Eligible Accounts Receivable. Without limiting the discretion of the Agent
to establish other criteria of ineligibility, Eligible Accounts Receivable
shall not, unless the Agent in its sole discretion elects, include any
Account:
(a) with respect to which more than 90 days have elapsed since
the date of the original invoice therefor or which is more than 60
days past due;
(b) with respect to which Account (or any other Account due from
such Account Debtor), in whole or in part, a check, promissory note,
draft, trade acceptance or other instrument for the payment of money
has been received, presented for payment and returned uncollected for
any reason on two or more occasions, provided there is not a dispute,
quality control issue or any other reason that would otherwise make
such Account ineligible;
(c) which represents a progress billing (as hereinafter defined)
or as to which any Borrower has extended the time for payment beyond
60 days without the consent of the Agent; for the purposes hereof,
"progress billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which the
Account Debtor's obligation to pay such invoice is conditioned upon a
Borrower's completion of any further performance under the contract or
agreement;
(d) with respect to which any one or more of the following events
has occurred, and is continuing, to the Account Debtor on such
Account: death or judicial declaration of incompetency of an Account
Debtor who is an individual; the filing by or against the Account
Debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or
any foreign jurisdiction, now or hereafter in effect; the making of
any general assignment by the Account Debtor for the benefit of
creditors; the appointment of a receiver or trustee for the Account
Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a
"custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of
insolvency proceeding (under the bankruptcy laws of the United States
or otherwise) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or
winding up of affairs of, the
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Account Debtor; the sale, assignment, or transfer of all or
substantially all of the assets of the Account Debtor; the nonpayment
generally by the Account Debtor of its debts as they become due; or
the cessation of the business of the Account Debtor as a going
concern;
(e) if fifty percent (50%) or more of the aggregate Dollar amount
of outstanding Accounts owed at such time by the Account Debtor
thereon is classified as ineligible under clause (a) above;
(f) owed by an Account Debtor which: (i) does not maintain an
office in the United States of America or Canada; or (ii) is not
organized under the laws of the United States of America or Canada or
any state or province thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality
thereof; except to the extent that such Account is secured or payable
by a letter of credit or has credit insurance, in each case
satisfactory to the Agent in its discretion;
(g) owed by an Account Debtor which is an Affiliate or employee
of any Borrower;
(h) except as provided in clause (j) below, with respect to which
either the perfection, enforceability, or validity of the Agent's Lien
in such Account, or the Agent's right or ability to obtain direct
payment to the Agent of the proceeds of such Account, is governed by
any federal, state, or local statutory requirements other than those
of the UCC;
(i) owed by an Account Debtor to which any Borrower or any of its
Subsidiaries is indebted in any way, or which is subject to any right
of setoff or recoupment by the Account Debtor, unless the Account
Debtor has entered into an agreement acceptable to the Agent to waive
setoff rights; or if the Account Debtor thereon has disputed liability
or made any claim with respect to such Account or any other Account
due from such Account Debtor; but in each such case the aggregate
amount of Eligible Accounts owed by such Account Debtor shall be
reduced only to the extent of such indebtedness, setoff, recoupment,
dispute, or claim;
(j) owed by the government of the United States of America, or
any department, agency, public corporation, or other instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. ss. 3727 et seq.), and any other steps necessary to
perfect the Agent's Lien therein, have been complied with to the
Agent's satisfaction with respect to such Account;
(k) owed by any state, municipality, or other political
subdivision of the United States of America, or any department,
agency, public corporation, or
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other instrumentality thereof and as to which the Agent
determines that its Lien therein is not or cannot be
perfected;
(l) which represents a sale on a xxxx-and-hold,
guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis;
(m) which is evidenced by a promissory note or
other instrument or by chattel paper, unless such note,
instrument or chattel paper is delivered and assigned to the
Agent in a manner acceptable to the Agent;
(n) if the Agent believes, in the exercise of its
reasonable judgment, that the prospect of collection of such
Account is impaired or that the Account may not be paid by
reason of the Account Debtor's financial inability to pay;
(o) with respect to which the Account Debtor is
located in any State requiring the filing of a Notice of
Business Activities Report or similar report in order to
permit any Borrower to seek judicial enforcement in such State
of payment of such Account, unless such Borrower has qualified
to do business in such State or has filed a Notice of Business
Activities Report or equivalent report for the then current
year or could file such report upon the need to seek judicial
enforcement in such State of payment of such Account without
any material penalties or loss of rights for failing to have
filed such report prior to such time;
(p) which arises out of a sale not made in the
ordinary course of the Borrower's business;
(q) with respect to which the goods giving rise to
such Account have not been shipped and delivered to and
accepted by the Account Debtor or the services giving rise to
such Account have not been performed by any Borrower, and, if
applicable, accepted by the Account Debtor, or the Account
Debtor revokes its acceptance of such goods or services;
(r) which arises out of an enforceable contract or
order which, by its terms, forbids, restricts or makes void or
unenforceable the granting of a Lien by the applicable
Borrower to the Agent with respect to such Account; or
(s) which is not subject to a first priority and
perfected security interest in favor of the Agent for the
benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account
Receivable, then such Account shall promptly be excluded from the
calculation of Eligible Accounts Receivable.
"Eligible Inventory" means (i) the aggregate gross amount of
the Borrower's Inventory (other than "work-in-process"), valued at the
lower of cost (on a FIFO basis) or market, which (A) is owned solely by
the Borrower and with respect to which the
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Borrower has good, valid and marketable title, (B) is subject to a
valid, enforceable and first priority Lien in favor of Agent except for
normal and customary warehouseman, filler, packer and processor
charges; (C) is located in the United States; (D) is not obsolete or
slow moving and for which a markdown reserve has not been made, and
which otherwise conforms to the warranties contained herein; and (E) is
not subject to a documentary letter of credit, less (ii) the aggregate
gross amount, without duplication, of (a) Inventory (valued as set
forth in clause (i)) consisting of manufacturing supplies (other than
raw materials) or shipping supplies, (b) Inventory (valued as set forth
in clause (i)) in excess of the aggregate gross amount of sales over
the immediately preceding 12 calendar months; (c) 50% of the aggregate
amount of Inventory held longer than one year and (d) 100% of all
Inventory held longer than two years.
"Guarantors" shall mean, collectively, the Domestic
Subsidiaries identified as a "Guarantor" on the signature pages hereto,
BGF Services, Glass Holdings and the Additional Credit Parties that
execute a Joinder Agreement, together with their successors and
permitted assigns, and "Guarantor" shall mean any one of the
Guarantors.
"Interest Payment Date" shall mean (a) as to any Alternate
Base Rate Loan or Swingline Loan, the last day of each calendar month
and on the applicable Maturity Date, (b) as to any LIBOR Rate Loan
having an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any LIBOR Rate Loan having an Interest
Period longer than three months, each day which is three months after
the first day of such Interest Period and the last day of such Interest
Period.
"Maturity Date" shall mean (i) with respect to any Term Loan,
January 31, 2003 and (ii) with respect to the Revolving Loans or any
Swingline Loan, the Revolving Commitment Termination Date.
"Permitted Investments" shall mean:
(i) cash and Cash Equivalents;
(ii) receivables owing to the Borrower or any of its
Subsidiaries or any receivables and advances to suppliers, in each case
if created, acquired or made in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(iii) investments in and loans to any Credit Parties;
(iv) loans and advances to officers, directors, employees
and Affiliates in an aggregate amount not to exceed $1,500,000, to the
extent made on or before June 30, 2002.
(v) investments (including debt obligations) received
in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent
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obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
(vi) investments, acquisitions or transactions permitted
under Section 6.5(b);
(vii) investments consisting of consigned inventory in an
aggregate amount not to exceed $5,000,000 at any time outstanding;
(viii) that certain loan to Glass Holdings evidenced by a
certain promissory note (the "Glass Holdings Note") dated the Closing
Date in a principal amount of $135,043,844.62 executed by Glass
Holdings in favor of the Borrower;
(ix) investments in Foreign Subsidiaries and Glass
Holdings in an aggregate amount not to exceed $5,000,000 at any time;
(x) additional loan advances and/or investments of a
nature not contemplated by the foregoing clauses hereof to the extent
made on or before June 30, 2002, provided that such loans, advances
and/or investments made pursuant to this clause (x) together with
investments permitted pursuant to clause (ix) shall not exceed an
aggregate amount of $10,000,000 at any time; and
(xi) investments in non-cash consideration to the extent
permitted by Section 6.5(iv).
As used herein, "investment" means all investments, in cash or
by delivery of property made, directly or indirectly in, to or from any
Person, whether by acquisition of shares of Capital Stock, property,
assets, indebtedness or other obligations or securities or by loan
advance, capital contribution or otherwise.
"Permitted Liens" shall mean:
(i) Liens created by or otherwise existing, under
or in connection with this Agreement or the other Credit
Documents in favor of the Agent, the Issuing Bank, the
Swingline Lender and the other Lenders;
(ii) Liens in favor of a Lender hereunder in
connection with Hedging Agreements, but only (A) to the extent
such Liens secure obligations under Hedging Agreements with
any Lender, or any Affiliate of a Lender, (B) to the extent
such Liens are on the same collateral as to which the Agent on
behalf of the Lenders also has a Lien and (C) if such provider
and the Lenders shall share pari passu in the collateral
subject to such Liens;
(iii) purchase money Liens securing purchase money
indebtedness and Liens arising under Capital Leases (and
refinancings thereof) to the extent permitted under Section
6.1(c);
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(iv) Liens for taxes, assessments, charges or other
governmental levies not yet due or as to which the period of
grace (not to exceed 60 days), if any, related thereto has not
expired or which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or
its Subsidiaries, as the case may be, in conformity with GAAP
(or, in the case of Subsidiaries with significant operations
outside of the United States of America, generally accepted
accounting principles in effect from time to time in their
respective jurisdictions of incorporation);
(v) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, contractors', subcontractors' or
other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate
proceedings;
(vi) pledges or deposits in connection with
workers' compensation, unemployment insurance and other social
security legislation and deposits securing liability to
insurance carriers under insurance or self-insurance
arrangements;
(vii) deposits to secure the performance of bids,
trade contracts, (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the
ordinary course of business;
(viii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
(including sellers of goods) and other Liens imposed by law or
pursuant to customary reservations or retentions of title
arising in the ordinary course of business, provided that such
Liens secure only amounts not yet due and payable or, if due
and payable, are unfiled and no other action has been taken to
enforce the same or are being contested in good faith by
appropriate proceedings for which adequate reserves determined
in accordance with GAAP have been established (and as to which
the property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(ix) Liens in connection with attachments or
judgments (including judgment or appeal bonds) provided that
the judgments secured shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
(x) (a) easements (including, without limitation,
reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations,
encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of
property, which do not materially detract from the value of
such property or impair the use thereof and (b)
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any other Lien or exception to coverage described in mortgagee
policies of title insurance issued in favor of and accepted by
the Agent with respect to the Mortgaged Properties;
(xi) leases or subleases granted to others not
interfering in any material respect with the business of any
Credit Party;
(xii) any interest of title of a lessor under, and
Liens arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign jurisdictions)
relating to, leases permitted by this Agreement;
(xiii) Liens deemed to exist in connection with
Investments in repurchase agreements permitted under Section
6.6;
(xiv) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;
(xv) Liens securing Indebtedness not to exceed
$100,000;
(xvi) Liens existing as of the Closing Date and set
forth on Schedule 1.1(c); provided that (a) no such Lien shall
at any time be extended to or cover any property other than
the property subject thereto on the Closing Date and (b) the
principal amount of the Indebtedness secured by such Liens
shall not be extended, renewed, refunded or refinanced;
(xvii) Liens against Glass Holdings' or the
Borrower's interest in such Person's income tax refund for
fiscal year 2002; and
(xviii) any extension, renewal or replacement (or
successive extensions, renewals or replacements) , in whole or
in part, of any Lien referred to in the foregoing clauses;
provided that such extension, renewal or replacement Lien
shall be limited to all or a part of the property which
secured the Lien so extended, renewed or replaced (plus
improvements on such property).
"Security Documents" shall mean the Security Agreement, the
Pledge Agreement, the GHC Pledge Agreements, any Mortgage Instrument in
favor of the Agent for the benefit of the Lenders and such other
documents executed and delivered in connection with the attachment and
perfection of the Agent's security interests and liens arising
thereunder, including, without limitation, UCC financing statements and
patent and trademark filings.
Subpart 3.2 References to First Union National Bank. All references to
"First Union National Bank" contained in the Credit Documents shall be deemed to
refer to "Wachovia Bank, National Association and its successors and assigns".
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Subpart 3.3 New Definitions. The following definitions are added
to Section 1.1 of the Existing Credit Agreement in the appropriate alphabetical
order:
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"Aggregate Committed Amount" means the amount in Dollars from
time to time equal to the sum of (i) the Revolving Committed Amount,
and (ii) the Term Committed Amount.
"BGF Services" means BGF Services, Inc., a Delaware
corporation.
"BGF Services Guaranty" means that certain unconditional and
unlimited guaranty agreement dated as of August 13, 2002 executed by
BGF Services in favor of the Agent for the benefit of the Lender to
guaranty the Credit Party Obligations.
"Fixed Asset Value" means, as of any date of determination and
without duplication, the lower of the aggregate net book value (based
on a FIFO or a moving average cost valuation, consistently applied) or
fair market value (determined on the basis of the most recent appraisal
acceptable to the Agent) of all equipment and fixtures plus the quick
sale value of the real estate value (determined on the basis of the
most recent appraisal acceptable to the Agent) less appropriate
reserves determined in accordance with Generally Accepted Accounting
Principles, but excluding in any event (i) any such asset which is (a)
not subject to a perfected, first priority Lien in favor of the Agent
to secure the Credit Party Obligations or (b) subject to any other Lien
not permitted hereunder, (ii) any such asset which is not in good
condition or fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory
authority over such assets, (iii) any such asset located outside of the
United States, (iv) any such asset which is leased or on consignment,
and (v) any such asset which fails to meet such other specifications
and requirements as may from time to time be established by the Agent
in its reasonable discretion;
"Fourth Amendment" means that certain Fourth Amendment and
Forbearance Agreement dated as of August 13, 2002 among the Credit
Parties, Glass Holdings, BGF Services, the Lenders and the Agent.
"Fourth Amendment Contribution" means the payment made by
Glass Holdings to the Borrower in respect of the Glass Holdings Note in
an amount resulting in Net Cash Proceeds to the Borrower of no less
than $5,000,000 and no more than $7,000,000 in partial satisfaction of
the conditions precedent to the Fourth Amendment.
"Fourth Amendment Debt Issuance" means the loan made by Glass
Holdings to the Borrower in an amount not to exceed $5,000,000
resulting in Net Cash Proceeds to the Borrower of no less than
$5,000,000 made in partial satisfaction of the conditions precedent to
the Fourth Amendment; provided, however, that the loan is made (i) on
an unsecured basis, (ii) with a maturity date no earlier than May 31,
2003, (iii) with an
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interest rate no greater than fifteen percent (15%) (including default
pricing) to be payable quarterly (or in less frequent intervals) in
arrears, (iv) without any term constituting a prepayment prohibition,
penalty or fee, (v) with a payment schedule providing for no principal
amortization until maturity and (vi) without any origination fee or
other fee, paid at closing, deferred or otherwise.
"Fourth Amendment Effective Date" means the date whereby every
condition precedent listed in Fourth Amendment has been satisfied or
otherwise waived by each party entitled to performance.
"GHC Guaranty" means that certain unconditional and unlimited
guaranty agreement dated as of August 13, 2002 executed by Glass
Holdings in favor of the Agent for the benefit of the Lender to
guaranty the Credit Party Obligations.
"Revolving Borrowing Base" means
(a) as to the Revolving Loans, the following
amount calculated as follows:
(1) an amount equal to eighty five
percent (85%) of Eligible Accounts Receivable; plus
(2) an amount equal to forty percent
(40%) of Eligible Inventory until October 31, 2002
and commencing November 1, 2002, an amount equal to
thirty five percent (35%) of Eligible Inventory.
"Revolving Cap" means $18,340,000.
"Second Fourth Amendment Debt Issuance" means a combination of
(x) one or more loans in the aggregate amount of $500,000 made by Glass
Holdings to the Borrower and (y) payments in the aggregate amount of
$500,000 made by Glass Holdings to the Borrower in respect of the Glass
Holdings Note, resulting in Net Cash Proceeds to the Borrower of no
less than $1,000,000; provided, however, that any loan shall be made
(i) on an unsecured basis, (ii) with a maturity date no earlier than
May 31, 2003, (iii) with an interest rate no greater than fifteen
percent (15%) (including default pricing) to be payable quarterly (or
in less frequent intervals) in arrears, (iv) without any term
constituting a prepayment prohibition, penalty or fee, (v) with a
payment schedule providing for no principal amortization until maturity
and (vi) without any origination fee or other fee, paid at closing,
deferred or otherwise.
"Term Borrowing Base" means as to the Term Loans, the
following amount calculated as the lesser of (i) 75% of Fixed Asset
Value and (ii) $3,000,000.
Subpart 3.4 Amendment to Section 2.1 Section 2.1 of the Existing Credit
Agreement is amended and restated in its entirety to read as follows:
13
Section 2.1 Revolving Loans.
(a) Revolving Commitment. During the Commitment Period,
subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans ("Revolving Loans") to the
Borrower from time to time for the purposes hereinafter set forth;
provided, however, that (i) with regard to each Lender individually,
the sum of such Lender's share of outstanding Revolving Loans plus such
Lender's Revolving Commitment Percentage of Swingline Loans plus such
Lender's LOC Commitment Percentage of LOC Obligations shall not exceed
such Lender's Revolving Commitment Percentage of the lesser of (A) the
aggregate Revolving Committed Amount and (B) the Revolving Borrowing
Base, and (ii) with regard to the Lenders collectively, the sum of the
aggregate amount of outstanding Revolving Loans plus Swingline Loans
plus LOC Obligations shall not exceed the lesser of (A) the Revolving
Committed Amount then in effect, (B) the Revolving Borrowing Base, (C)
the Revolving Cap, and (D) the Aggregate Committed Amount. For purposes
hereof, the aggregate amount available hereunder shall be TWENTY-ONE
Million DOLLARS ($21,000,000) (as such aggregate maximum amount may be
reduced from time to time as provided in Section 2.6, the "Revolving
Committed Amount"). Revolving Loans may consist of Alternate Base Rate
Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower
may request, and may be repaid and reborrowed in accordance with the
provisions hereof. LIBOR Rate Loans shall be made by each Lender at its
LIBOR Lending Office and Alternate Base Rate Loans at its Domestic
Lending Office.
Subpart 3.5 Amendment to Section 2.2 Section 2.2 of the Existing Credit
Agreement is amended and restated in its entirety to read as follows:
Section 2.2 Term Loan.
(a) Term Loan. Subject to the terms and conditions hereof and
in reliance upon the representations and warranties set forth herein,
as of the Fourth Amendment Effective Date, a portion of the heretofore
Revolving Loans shall be converted to a Term Loan as described below.
Each Lender severally has made available to the Borrower such Lender's
Term Loan Commitment Percentage of a term loan in Dollars (the "Term
Loan") provided, however, that with regard to the Lenders collectively,
the sum of the aggregate amount of outstanding Term Loans shall not
exceed the lesser of (A) the Term Committed Amount then in effect, (B)
the Term Borrowing Base and (C) the Aggregate Committed Amount. For
purposes hereof, the aggregate amount made available hereunder was
THREE MILLION DOLLARS ($3,000,000) (the "Term Committed Amount") for
the purposes hereinafter set forth. The Term Loan may consist of
Alternate Base Rate Loans or LIBOR Rate Loans, or a combination
thereof, as the Borrower may request. Amounts repaid on the Term Loan
may not be reborrowed and shall automatically reduce the Term Committed
Amount by the amount of the repayment. LIBOR Rate Loans shall be made
by each Lender at its LIBOR Lending Office and Alternate Base Rate
Loans at its Domestic Lending Office.
14
(b) Repayment of Term Loan. The Term Loan shall be
repaid according to the following schedule (each such payment, a
"Principal Amortization Payment"):
Payment Date Payment Amount
August 15, 2002 $550,000
August 31, 2002 $444,444
September 30, 2002 $444,444
October 31, 2002 $444,444
November 30, 2002 $444,444
December 31, 2002 $444,444
January 31, 2003 The remaining
outstanding balance
of the Term Loan.
(c) Interest. Subject to the provisions of Section 2.9, Term
Loans shall bear interest at a per annum rate equal to the sum of the
Alternate Base Rate plus the Applicable Percentage; and Interest on
Term Loans shall be payable in arrears on each Interest Payment Date.
(e) Term Notes. Each Lender's Term Loan Commitment Percentage
of the Term Loan outstanding as of the Closing Date shall be evidenced
by a duly executed promissory note of the Borrower to such Lender in
substantially the form of Schedule 2.2(d).
Subpart 3.6 Amendment to Section 2.3(a) Section 2.3(a) of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:
(a) Swingline Commitment. During the Commitment Period,
subject to the terms and conditions hereof, the Swingline Lender, in
its individual capacity, agrees to make certain revolving credit loans
to the Borrower (each a "Swingline Loan" and, collectively, the
"Swingline Loans") for the purposes hereinafter set forth; provided,
however, (i) the aggregate amount of Swingline Loans outstanding at any
time shall not exceed FIVE MILLION DOLLARS ($5,000,000) (the "Swingline
Committed Amount"), and (ii) the sum of the aggregate amount of
outstanding Revolving Loans plus Swingline Loans plus LOC Obligations
shall not exceed the lesser of (A) the aggregate Revolving Committed
Amount then in effect, (B) the Revolving Borrowing Base, (C) the
Revolving Cap, and (D) the Aggregate Committed Amount. Swingline Loans
hereunder may be repaid and reborrowed in accordance with the
provisions hereof.
15
Subpart 3.7 Amendment to Section 2.4(a) The first sentence of Section
2.4(a) of the Existing Credit Agreement is amended and restated in its entirety
to read as follows:
Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require, during the Commitment Period the Issuing
Lender shall issue, and the Lenders shall participate in, Letters of
Credit for the account of the Borrower from time to time upon request
in a form acceptable to the Issuing Lender; provided, however, that (i)
the aggregate amount of LOC Obligations shall not at any time exceed
TWO MILLION DOLLARS ($2,000,000) (the "LOC Committed Amount"), (ii) the
sum of the aggregate amount of Revolving Loans plus Swingline Loans
plus LOC Obligations shall not at any time exceed the lesser of (A) the
aggregate Revolving Committed Amount then in effect, (B) the Revolving
Borrowing Base, (C) the Revolving Cap, and (D) the Aggregate Committed
Amount; (iii) all Letters of Credit shall be denominated in U.S.
Dollars and (iv) Letters of Credit shall be issued for the purpose of
supporting tax-advantaged variable rate demand note financing and for
other lawful corporate purposes and may be issued as standby letters of
credit, including in connection with workers' compensation and other
insurance programs, and trade letters of credit.
Subpart 3.8 Amendment to Section 2.6 Section 2.6 of the Existing Credit
Agreement is amended and restated in its entirety to read as follows:
Section 2.6 Commitment Reductions.
(a) Voluntary Reductions. The Borrower shall have the
right to terminate or permanently reduce the unused portion of the
Revolving Committed Amount at any time or from time to time upon not
less than three Business Days' prior notice to the Agent (which shall
notify the Lenders thereof as soon as practicable) of each such
termination or reduction, which notice shall specify the effective date
thereof and the amount of any such reduction which shall be in a
minimum amount of $500,000 or a whole multiple of $500,000 in excess
thereof and shall be irrevocable and effective upon receipt by the
Agent, provided that no such reduction or termination shall be
permitted if after giving effect thereto, and to any prepayments of the
Revolving Loans made on the effective date thereof, the sum of the then
outstanding aggregate principal amount of the Revolving Loans plus
Swingline Loans plus LOC Obligations would exceed either (i) the
Revolving Committed Amount then in effect or (ii) the Aggregate
Committed Amount then in effect.
(b) Mandatory Reductions.
(i) On any date that the Revolving Loans are required
to be prepaid pursuant to the terms of Section 2.7(b)(iii),
(iv), (v), (vi) and (vii), the Revolving Committed Amount and
the Revolving Cap shall be automatically and permanently
reduced by the amount of such required prepayment and/or
reduction
16
to the extent that such prepayment is applied to Revolving
Loans or to cash collateralize LOC Obligations.
(ii) Commencing August 31, 2002, the Aggregate
Commitment Amount shall be automatically and permanently
reduced by $1,500,000 on the last calendar day of each month
until such time as the Term Loan has been reduced to zero
Dollars ($0). Thereafter, the Aggregate Commitment Amount
shall be automatically and permanently reduced by $2,000,000
on the last calendar day of each month (with the commitment
reduction for March 2003 occurring on March 30, 2003). The
foregoing mandatory reduction amounts shall hereinafter be
referred to as the "Scheduled Loan Commitment Reductions." The
Scheduled Loan Commitment Reductions shall first reduce the
Term Committed Amount and, after the Term Committed Amount has
been reduced to zero Dollars ($0), then such Scheduled Loan
Commitment Reductions shall reduce the Revolving Committed
Amount (with any reduction in the Revolving Committed Amount
also resulting in a corresponding reduction in the same amount
in the Revolving Cap). Any amounts required to be prepaid on
the Term Loan pursuant to the terms of Section 2.7(b) (iii),
(iv), (v), (vi), and (vii) may be credited to the Scheduled
Loan Commitment Reduction in the direct order of their
occurrence and, after the Term Committed Amount has been
reduced to zero Dollars ($0), any amounts required to be
prepaid on the Revolving Loans pursuant to the terms of
Section 2.7(b)(iii), (iv), (v), (vi) and (vii), may be
credited to the to the Scheduled Loan Commitment Reduction in
the direct order of their occurrence in the amount that such
payment permanently reduced the Revolving Cap pursuant to
Section 2.6(b)(i). Without duplication, any Principal
Amortization Payments made on or after August 31, 2002, shall
be credited to the Scheduled Loan Commitment Reductions in the
direct order of their occurrence.
(c) Revolving Commitment Termination Date. The Revolving
Commitment, the LOC Commitment and the Swingline Commitment shall
automatically terminate on the Revolving Commitment Termination Date.
(d) Term Loan Commitment Termination Date. The Term Loan
Commitment shall terminate on January 31, 2003.
Subpart 3.9 Amendment to Section 2.7 Section 2.7 of the Existing Credit
Agreement is amended and restated in its entirety to read as follows:
Section 2.7 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time; provided, however,
that each partial prepayment of Revolving Loans and Term Loans shall be
in a minimum principal amount of $500,000 and integral multiples of
$100,000 in excess thereof and each prepayment of Swingline Loans shall
be in a minimum principal amount of $100,000 (or if the outstanding
principal balance of the Swingline Loans is less than $100,000, such
lesser amount) and
17
integral multiples of $100,000 in excess thereof. The Borrower shall
give three Business Days' irrevocable notice in the case of LIBOR Rate
Loans and one Business Day's irrevocable notice in the case of
Alternate Base Rate Loans, to the Agent (which shall notify the Lenders
thereof as soon as practicable). Subject to the foregoing terms,
amounts prepaid under this Section 2.7(a) shall be applied as the
Borrower may elect; provided that if the Borrower fails to specify the
application of an optional prepayment then such prepayment shall be
applied first to Revolving Loans and then pro rata to the remaining
principal installments of the Term Loans, in each case first to
Alternate Base Rate Loans and then to LIBOR Rate Loans in direct order
of Interest Period maturities. All prepayments under this Section
2.7(a) shall be subject to Section 2.17, but otherwise without premium
or penalty. Interest on the principal amount prepaid shall be payable
on the next occurring Interest Payment Date that would have occurred
had such loan not been prepaid or, at the request of the Agent,
interest on the principal amount prepaid shall be payable on any date
that a prepayment is made hereunder through the date of prepayment.
Amounts prepaid on the Swingline Loan and the Revolving Loans may be
reborrowed in accordance with the terms hereof. Amounts prepaid on the
Term Loans may not be reborrowed.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time
the sum of the aggregate principal amount of outstanding
Revolving Loans plus Swingline Loans plus LOC Obligations
shall exceed the lesser of (A) the Revolving Committed Amount,
(B) the Revolving Cap, (C) the Aggregate Commitment Amount, or
(D) the Revolving Borrowing Base in each case, then in effect,
the Borrower immediately shall prepay the Revolving Loans and
(after all Revolving Loans have been repaid) cash
collateralize the LOC Obligations, in an amount sufficient to
eliminate such excess.
(ii) Term Committed Amount. If at any time the
sum of the aggregate principal amount of outstanding Term
Loans shall exceed the lesser of (A) the aggregate Term
Committed Amount, (B) the Term Borrowing Base, in each case,
then in effect, the Borrower immediately shall prepay the Term
Loans in an amount sufficient to eliminate such excess.
(iii) Excess Cash Flow. Commencing with the fiscal
year ending December 31, 2002, the Borrower shall prepay the
Term Loans in an amount equal to (x) one hundred percent
(100%) of the Excess Cash Flow earned during such prior fiscal
year less (y) the amount of any optional prepayments of the
Term Loans or (to the extent accompanied by a permanent
reduction in the Revolving Committed Amount) the Revolving
Loans during such prior fiscal year. Any payments of Excess
Cash Flow shall be applied as set forth in clause (viii)
below.
(iv) Asset Dispositions. Upon any Asset
Disposition, the Borrower shall prepay the Loans in an
aggregate amount equal to one hundred percent (100%) of the
Net Cash Proceeds derived from such Asset Disposition (such
18
prepayment to be applied as set forth in clause (viii) below); provided
that the Borrower may hold Net Cash Proceeds of Asset Dispositions until
such time as the amount of such proceeds exceeds, in the aggregate,
$10,000.
(v) Debt Issuances. Immediately upon receipt by any Credit Party of
proceeds from any Debt Issuance (other than the issuance of the
Subordinated Debt except as provided in the definition thereof), the
Borrower shall prepay the Loans in an aggregate amount equal to one-hundred
percent (100%) of the Net Cash Proceeds of such Debt Issuance to the
Lenders (such prepayment to be applied as set forth in clause (viii)
below).
(vi) Issuances of Equity. Immediately upon receipt by a Credit Party
of proceeds from any Equity Issuance, the Borrower shall prepay the Loans
in an aggregate amount equal to one hundred percent (100%) of the Net Cash
Proceeds of such Equity Issuance (such prepayment to be applied as set
forth in clause (viii) below).
(vii) Recovery Event. To the extent of cash proceeds received in
connection with a Recovery Event, the Borrower shall prepay the Loans in an
aggregate amount equal to one-hundred percent (100%) of such cash proceeds
to the Lenders to the extent such cash proceeds are not used (A) to repair
such damaged assets within 180 days after receipt of such cash proceeds or
property or (B) to purchase or otherwise acquire replacement assets or
property, provided that such purchase or acquisition is committed within
180 days after receipt of such cash proceeds and consummated within 270
days thereof (or such shorter period as specified in the Subordinated Debt
Documentation) (such prepayment to be applied as set forth in clause (viii)
below). Notwithstanding anything to the contrary contained herein, after
the occurrence and during the continuation of an Event of Default, the
Required Lenders shall have the option to require such cash proceeds to be
applied immediately to prepay the Loans in accordance with clause (viii)
below.
(viii) Application of Mandatory Prepayments. All amounts required to
be paid pursuant to this Section 2.7(b) shall be applied as follows: (A)
with respect to all amounts prepaid pursuant to Section 2.7(b)(i), to
Revolving Loans and (after all Revolving Loans have been repaid) to a cash
collateral account in respect of LOC Obligations, (B) with respect to all
amounts prepaid pursuant to Sections 2.7(b)(ii) to the Term Loan (to the
Principal Amortization Payments in the inverse order of their maturities)
and (C) with respect to all amounts prepaid pursuant to Sections
2.7(b)(iii) through (vii), (1) first to the Term Loan (to the Principal
Amortization Payments in the inverse order of their maturities), and (2)
second to the Revolving Loans and (after all Revolving Loans have been
repaid) to a cash collateral account in respect of LOC Obligations. Within
the parameters of the applications set forth above, prepayments shall be
applied first to Alternate Base Rate Loans and then to LIBOR Rate Loans in
direct order of Interest Period maturities. All prepayments under this
Section 2.7(b) shall be subject to Section
19
2.17 and be accompanied by interest on the principal amount prepaid
through the date of prepayment.
Subpart 3.10 Amendment to Section 5.1(e). Section 5.1(e) of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:
(e) Borrowing Base Certificate. Daily, a Borrowing Base Certificate,
duly completed and certified by the Company's chief executive officer or
chief financial officer, detailing the Borrower's (i) Eligible Accounts
Receivable as of the close of business of the immediately preceding
Business Day, (ii) Eligible Inventory as of the close of business of the
last Business Day of the preceding calendar week and (iii) Fixed Asset
Value as of the close of business of the immediately preceding Business
Day; provided, however, it is understood and agreed that in reporting and
calculating Eligible Accounts Receivable and Eligible Inventory, the
reporting and calculation of ineligible Inventory need only be current
through the last day of the preceding calendar month and the reporting and
calculation of ineligible Accounts Receivable need only be current through
the last day of the preceding calendar week. Notwithstanding the foregoing,
the Borrower shall immediately report to the Agent any event or occurrence
that increases the amount of ineligible Inventory by $100,000 or more and
provide a Borrowing Base Certificate reflecting such event or occurrence.
The Agent shall rely on each Borrowing Base Certificate delivered hereunder
as accurately setting forth the available Revolving Borrowing Base and Term
Borrowing Base for all purposes of this Agreement until such time as a new
Borrowing Base Certificate is delivered to the Agent in accordance
herewith.
Subpart 3.11 Amendment to Section 5.2. Section 5.2 of the Existing Credit
Agreement is amended by adding the new subsections (h), (i), and (j) to read as
follows:
(h) Commencing on the Fourth Amendment Effective Date and on the
third Business Day of each week thereafter, a 13 week forecast of cash
flows setting forth projected cash disbursements and cash receipts for the
Borrower and the Guarantors on a consolidated basis prepared with the
assistance and input of their advisor, Realization Services, Inc. (or
another advisor acceptable to the Agent), and in a form reasonably
acceptable to the Agent (the "Cash Flow Forecast").
(i) Commencing on the date seven days after the Fourth Amendment
Effective Date and on the third Business Day of each week thereafter, a
reconciliation of the most recently provided Cash Flow Forecast for the
prior week against actual cash flows for the prior week, prepared with the
assistance and input of their advisor, Realization Services, Inc. (or
another advisor acceptable to the Agent), and in a form reasonably
acceptable to the Agent.
(j) Commencing August 30, 2002 and on the third Business Day of each
week thereafter, Borrower will deliver a written report (the "Cumulative
Report") to the Agent that (i) summarizes new developments, opportunities
and significant occurrences in the Borrower's business for the prior week,
(ii) details any increase or decrease in credit exposure or liability of
the Borrower to third parties or from third parties to the Borrower,
20
(iii) summarizes and compares the Borrower's performance through the
end of the prior calendar week to that certain business plan dated as
of August 13, 2002, delivered to the Agent and the Lenders (the
"Plan"). The chief financial officer of the Borrower and, as
necessary, the Borrower's consultants and professionals shall be
available weekly to discuss the Borrower's financial performance and
operational issues.
Subpart 3.12 Amendment to Section 5.6. Section 5.6 of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:
Section 5.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall
be made of all dealings and transactions in relation to its businesses and
activities; and permit, during regular business hours and upon reasonable
notice by the Agent or any Lender, the Agent or any Lender to visit and
inspect any of its properties or the Collateral and examine and make
abstracts from any of its books and records (other than materials protected
by the attorney-client privilege and materials which the Borrower may not
disclose without violation of a confidentiality obligation binding upon it)
at any reasonable time and as often as may reasonably be desired, subject
to the rights of tenants in possession of all or a portion of the Mortgaged
Properties pursuant to leases or other occupancy agreements permitted by
hereunder, and to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries with
officers and employees of the Borrower and its Subsidiaries and with its
independent certified public accountants. Upon the request of the Required
Lenders, the Agent, on behalf of the Lenders, may conduct (or engage a
third-party to conduct) a field exam or other appraisal of the Collateral,
at the Borrower's expense, and the Credit Parties shall provide reasonable
access to all business records and appropriate employees, accountants and
auditors of the Credit Parties to such field exam. There shall be no limit
on the number of field exams or personal property appraisals conducted in
accordance with this section; however, there shall be no more than two
appraisals of real property Collateral during any 12 month period.
Subpart 3.13 Amendment to Sections 5.9(b), 5.9(c) and 5.9(e). Sections
5.9(b), 5.9(c) and 5.9(e)of the Existing Credit Agreement are amended and
restated in their entirety to read as follows:
(b) Consolidated Net Worth. As of the end of any fiscal quarter,
commencing with the fiscal quarter ending September 30, 2002, Consolidated
Net Worth of the Borrower and its Subsidiaries shall be greater than or
equal to (i) negative $95,000,000 plus (ii) 50% of cumulative quarterly
Consolidated Net Income beginning with the fiscal quarter ended December
31, 2002 (without deduction for any quarterly losses) plus (iii) 100% of
the Net Cash Proceeds received by the Borrower or any of its Subsidiaries
of any Equity Issuance by the Borrower or any of its Subsidiaries
subsequent to the Third Amendment Effective Date.
21
(c) Interest Coverage Ratio. The Interest Coverage Ratio as of
the last day of each fiscal quarter of the Credit Parties shall be
greater than or equal to:
---------------------------------------------------------------------------------------
Fiscal Year March 31 June 30 September 30 December 31
---------------------------------------------------------------------------------------
2001 1.00 to 1.0 1.00 to 1.0
---------------------------------------------------------------------------------------
2002 0.95 to 1.0 0.90 to 1.0 -- --
---------------------------------------------------------------------------------------
2003 1.70 to 1.0 1.95 to 1.0
---------------------------------------------------------------------------------------
***
(e) Senior Leverage Ratio. The Senior Leverage Ratio as of the
last day of each fiscal quarter of the Credit Parties shall be less
than or equal to:
---------------------------------------------------------------------------------------
Fiscal Year March 31 June 30 September 30 December 31
---------------------------------------------------------------------------------------
2001 2.00 to 1.0 2.00 to 1.0
---------------------------------------------------------------------------------------
2002 2.20 to 1.0 2.20 to 1.0 - -
---------------------------------------------------------------------------------------
2003 - -
---------------------------------------------------------------------------------------
Subpart 3.11 Amendment to Section 5.9. Section 5.9 of the Existing
Credit Agreement is amended by adding a new subsections (g) to read as follows:
(g) Collections. During each 75 calendar day period, Borrower
shall receive payments on Accounts generated in the ordinary course in
an aggregate amount equal to the outstanding balance of the Obligations
on the last day of such period.
Subpart 3.14 New Section 5.15. A new Section 5.15 is added to the
Existing Credit Agreement to read as follows:
Section 5.15 Bank Accounts.
The Credit Parties shall (i) maintain all of their bank accounts
and cash deposits of any kind (including all Cash Equivalents) with the
Agent or (ii) to the extent not with the Agent, only with such
financial institutions from whom the Credit Parties have procured
tri-party agency agreements, in form acceptable to the Agent, among the
applicable Credit Party, the Agent and such third-party financial
institution whereby such accounts are pledged to the Agent for the
benefit of the Lenders.
Subpart 3.15 New Section 5.16. A new Section 5.16 is added to the
Existing Credit Agreement to read as follows:
22
Section 5.16 Consultant.
The Borrower shall retain a financial advisor reasonably
acceptable to the Agent to assist in managing or advising the Borrower
in connection with the restructure or refinancing of its funded
indebtedness, the evaluation of its strategic alternatives and its
negotiations with its creditors; provided, however (i) the Agent shall
approve the terms of any engagement of any such Advisor and (ii) the
advisor shall be authorized to discuss with the Agent and the Lenders
any and all matters regarding its engagement.
Subpart 3.16 Amendment to Section 6.1. Section 6.1 of the Existing
Credit Agreement is amended by deleting the period at the end of subsection (l),
adding an ";" at the end of subsection (l) and adding a new subsection (m) and
subsection (n) to read as follows:
(m) the Fourth Amendment Debt Issuance; and
(n) the Second Fourth Amendment Debt Issuance.
Subpart 3.17 Amendment to Section 6.3. Section 6.3 of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:
Section 6.3 Guaranty Obligations.
The Borrower will not, nor will it permit any Subsidiary to,
enter into or otherwise become or be liable in respect of any Guaranty
Obligations (excluding specifically therefrom endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) other than (i) those in favor of the Lenders in connection
herewith and (ii) Guaranty Obligations by the Borrower or its
Subsidiaries of Indebtedness and other obligations referred to in and
permitted under Section 6.1 to the extent such Guaranty Obligations
were incurred on or before June 30, 2002.
Subpart 3.18 Amendment to Section 7.1(c). Section 7.1(c) of the
Existing Credit Agreement is amended and restated in its entirety to read as
follows:
(c) (i) Any Credit Party shall fail to perform, comply with or
observe any term, covenant or agreement applicable to it contained in
Section 5.7(a), Section 5.9 or Article VI hereof ; or (ii) any Credit
Party shall fail to comply with any other covenant, contained in this
Agreement or the other Credit Documents or any other agreement,
document or instrument among any Credit Party, the Agent and the
Lenders or executed by any Credit Party in favor of the Agent or the
Lenders (other than as described in Sections 7.1(a) or 7.1(c)(i)
above), and in the event such breach or failure to comply is capable of
cure, is not cured within ten (10) days of its occurrence; or
Subpart 3.19 Amendment to Section 7.1(d). Section 7.1(d) of the
Existing Credit Agreement is amended and restated in its entirety to read as
follows:
23
(d) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest on (A) the Subordinated
Debt, or (B) any Indebtedness (other than the Notes or the Subordinated
Debt) in a principal amount outstanding of at least $100,000 in the
aggregate for the Borrower and any of its Subsidiaries beyond the
period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(ii) default in the observance or performance of any other agreement or
condition relating to (A) the Subordinated Debt or (B) any Indebtedness
(other than the Notes or the Subordinated Debt) in a principal amount
outstanding of at least $100,000 in the aggregate for the Borrower and
its Subsidiaries or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or to bear
interest (or fees) at a higher level than existed prior to the default;
or
Subpart 3.20 Restatement of Schedule 2.1(a). Schedule 2.1(a) to the
Existing Credit Agreement is amended and restated in its entirety in the form of
Schedule 2.1(a) attached hereto.
PART IV
CONDITIONS TO EFFECTIVENESS
Subpart 4.1 Effective Date. This Amendment shall be and become
effective on the date (the "Fourth Amendment Effective Date") when all of the
conditions set forth in this Part IV shall have been satisfied (or waived by
each party entitled to performance).
Subpart 4.2 Execution and Delivery of Documents. The Agent shall have
received counterparts of this Amendment that have been duly executed on behalf
of each of the Borrower, the Guarantors and the Required Lenders.
Subpart 4.3 Fourth Amendment Contribution. Glass Holdings shall have
contributed to the Borrower the Fourth Amendment Contribution. Notwithstanding
any term of the Existing Credit Agreement or other Credit Documents to the
contrary, $5,250,000 of the Net Cash Proceeds of the Fourth Amendment
Contribution shall be applied to satisfy the payment of the interest in owed to
the Subordinated Debt on or about July 15, 2002 and the balance of the Net Cash
Proceeds of the Fourth Amendment Contribution may be retained by the Borrower.
Subpart 4.4 Subordinated Debt. The Borrower shall have (i) paid in full
the interest owed to the Subordinated Debt on or about July 15, 2002 and (ii)
cured all defaults arising from the nonpayment of the interest owed to the
Subordinated Debt on or about July 15, 2002.
Subpart 4.5 Fourth Amendment Debt Issuance. The Borrower shall have
received from Glass Holdings the Net Cash Proceeds of the Fourth Amendment Debt
Issuance. Notwithstanding Section 2.7(b)(v) of the Existing Credit Agreement, on
the Fourth Amendment
24
Effective Date, the Net Cash Proceeds of the Fourth Amendment Debt
Issuance shall be applied to the Loans.
Subpart 4.7 Glass Holdings Guaranty. The Borrower shall have caused
Glass Holdings to provide an unlimited and unconditional guaranty of the Credit
Party Obligations, in form and substance reasonable to the Agent.
Subpart 4.8 BGF Services Guaranty. The Borrower shall have caused BGF
Services to provide an unlimited and unconditional guaranty of the Credit Party
Obligations, in form and substance reasonable to the Agent.
Subpart 4.9 Financial Reporting. The Agent shall have received all
financial information required pursuant to Section 5.1 of the Existing Credit
Agreement for the period ending June 30, 2002, in form and substance reasonably
satisfactory to the Agent.
Subpart 4.10 Fees and Expenses.
(a) Forbearance Fee. The Borrower shall have paid to each
Lender a forbearance fee equal to one percent (1%) of the Revolving
Commitment and Term Loan Commitment for such Lender after giving effect
to the reductions in the Revolving Commitments resulting from this
Amendment.
(b) Reimbursement of Agent's Fees and Expenses. The Borrower
shall have reimbursed the Agent for the reasonable legal fees and
expenses of Xxxxx & Xxx Xxxxx, PLLC, counsel to the Agent, incurred in
connection with the administration of the Existing Credit Agreement and
the negotiation and documentation of this Amendment.
Subpart 4.11 Authority. The Agent shall have received certified
resolutions (and such other documents reasonably requested by the Agent)
demonstrating that the transactions contemplated by this Amendment are
authorized and approved by each of the Credit Parties and Glass Holdings and BGF
Services.
Subpart 4.12 Legal Opinion. The Agent shall have received a legal
opinion from counsel to the Credit Parties, Glass Holdings, and BGF Services in
form and substance acceptable to the Agent and addressed to the Agent on behalf
of the Lenders, and each of their successors and assigns.
Subpart 4.14 Other Items. The Agent shall have received such other
documents, agreements or information that may be reasonably requested by the
Agent or as may be expressly agreed to between the Borrower and the Agent.
PART V
MISCELLANEOUS PROVISIONS
Subpart 5.1 Perfection Certificate. On or before August 31, 2002, the
Credit Parties shall have provided a completed perfection certificate to the
Agent in a form reasonably acceptable to the Agent.
25
Subpart 5.2 Borrowing Base Certificate. The borrowing base certificate
used by the Borrower is hereby amended and replaced by the form of borrowing
base certificate attached hereto as Exhibit A.
Subpart 5.3 Default Rate Interest. From and after the Fourth Amendment
Effective Date, the Default Rate set forth in Section 2.9 of the Amended Credit
Agreement shall apply.
Subpart 5.4 Limitation on Loans. Notwithstanding any provision of this
Amendment or of any other Credit Document to the contrary, the Borrower shall
not be entitled to request, and the Agent and the Lenders shall have no
obligations to make or issue, any Revolving Loans or other extensions of credit;
provided, however, absent the occurrence of a Forbearance Termination Event, the
Borrower shall be entitled to request Letters of Credit and the Lenders shall be
obligated to provide such Letters of Credit in accordance with Section 2.4(a) of
the Amended Credit Agreement.
Subpart 5.5 New Collateral: On or before August 30, 2002, the Borrower
shall have caused BGF Services to execute and deliver a Mortgage Instrument in
favor of the Agent for the benefit of the Lenders encumbering its real property
and improvements located at 00 Xxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx to
secure its obligations under the BGF Services Guaranty and to otherwise secure
the Credit Party Obligations and such other ancillary documentation as is
required by the Agent in connection therewith including without limitation a
title insurance policy in favor of the Agent for the benefit of the Lenders and
an opinion of counsel to BGF Services in form and substance reasonably
satisfactory to the Agent.
Subpart 5.6 LIBOR Rate Loans. From and after the Fourth Amendment
Effective Date, the Borrower shall be not be entitled to continue existing LIBOR
Rate Loans or convert Base Rate Loans to LIBOR Rate Loans.
Subpart 5.7 Exit Fee. In consideration of the accommodations made in
connection with this Fourth Amendment, the Lenders shall earn a fee on the
Fourth Amendment Effective Date in the amount of ONE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($1,500,000) (the "Exit Fee"). On December 31, 2002, $250,000
of the Exit Fee shall be immediately due and payable to the Agent for the
ratable benefit of the Lenders with the balance immediately due and payable on
March 31, 2003. It is understood and agreed that (A) if (i) a Forbearance
Termination Event has not occurred and (ii) the Borrower has permanently and
indefeasibly reduced the principal balance of the Obligations in full on or
before December 31, 2002, the Lenders shall waive $1,500,000 of the Exit Fee,
including the $250,000 payment required on December 31, 2002 and (B) if (i) a
Forbearance Termination Event has not occurred and (ii) the Borrower has
permanently and indefeasibly reduced the principal balance of the Obligations in
full on or before March 31, 2003, the Lenders shall waive $1,250,000 of the Exit
Fee. Notwithstanding the foregoing, the entire Exit Fee (or to the extent a
partial payment has been made or a portion of the Exit Fee has been waived as
provided herein, the balance of the Exit Fee) shall be immediately due and
payable to the Agent for the ratable benefit of the Lenders upon the earlier to
occur of (i) acceleration of the unpaid principal and any accrued interest in
respect of all Loans or (ii) a Forbearance Termination Event.
26
Subpart 5.8 Payment Block. The Borrower shall use its commercially
reasonable efforts to obtain, and provide the Agent evidence reasonably
satisfactory to it (including without limitation, a legal opinion of counsel to
the Borrower) of, a reinstatement of the ability of the Lenders to assert a
payment block in accordance with Sections 10.3 and 12.3 of the indenture for the
Subordinated Debt with respect to that certain interest payment due and payable
on the Subordinated Debt on January 15, 2003.
Subpart 5.9 No Waiver. Nothing herein is or shall be construed to be a
waiver of the Acknowledged Events of Default or any other Default or Event of
Default that may exist under the Credit Documents.
Subpart 5.10 Representations and Warranties. The Credit Parties hereby
represent and warrant to the Agent and the Lenders that, after giving effect to
this Amendment, (a) no Default or Event of Default exists under the Amended
Credit Agreement or any of the other Credit Documents except the Acknowledged
Events of Default, (b) the representations and warranties set forth in Article
III of the Amended Credit Agreement (excluding those contained in Sections 3.1,
3.2, 3.5 and 3.17) are, subject to the limitations set forth therein, true and
correct in all material respects as of the date hereof (except for those which
expressly relate to an earlier date), and (c) the Security Documents continue to
create a valid security interest in, and Liens upon, the Collateral, which
security interests and Liens are perfected in accordance with the terms of the
Security Documents.
Subpart 5.11 Ratification of Credit Agreement. The term "Credit
Agreement", as used in each of the Credit Documents, shall hereafter mean the
Amended Credit Agreement. Except as herein specifically amended (or expressly
waived), the Amended Credit Agreement is hereby expressly ratified and confirmed
and shall remain in full force and effect according to its terms. Each of the
Borrower, the Guarantors and Glass Holdings acknowledges and consents to the
modifications set forth herein and agrees that this Amendment does not impair,
reduce or limit any of their obligations under the Credit Documents and that,
after the Fourth Amendment Effective Date, this Amendment shall constitute a
Credit Document. Notwithstanding anything herein to the contrary and without
limiting the foregoing, each of the Guarantors reaffirm their guaranty
obligations set forth in the Amended Credit Agreement.
Subpart 5.12 Authority/Enforceability. Each of the Credit Parties
represents and warrants as follows:
(a) It has taken all necessary action to authorize the execution,
delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by such
Person and constitutes such Person's legal, valid, and binding
obligations, enforceable in accordance with its terms except
as such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at
law or in equity).
27
(c) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental
authority or third party is required in connection with the
execution, delivery or performance by such Person of this
Amendment except those which have been obtained.
(d) The execution and delivery of this Amendment does not (i)
violate, contravene or conflict with any provision of its, or
its Subsidiaries' organizational documents, (ii) materially
violate, contravene or conflict with any Requirement of Law or
any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment,
injunction, decree or permit applicable to it or any of its
Subsidiaries or (iii) violate, contravene or conflict with
contractual provisions of, or cause an event of default under
any other indenture, loan agreement, mortgage, deed of trust,
contract or other agreement or instrument to which it, or to
which any of its Subsidiaries, is a party or by which it, or
by which any of its Subsidiaries, may be bound, the violation
of which any agreement in this sub-clause (iii) would be
reasonably expected to have a Material Adverse Effect.
Subpart 5.13 RELEASE. IN CONSIDERATION OF ENTERING INTO THIS AMENDMENT,
EACH OF THE CREDIT PARTIES, BGF SERVICES AND GLASS HOLDINGS RELEASES THE AGENT,
THE LENDERS, AND THE AGENT'S AND EACH OF THE LENDERS' RESPECTIVE AFFILIATES,
SUBSIDIARIES, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, COUNSEL AND
DIRECTORS FROM ANY AND ALL ACTIONS, CAUSES OF ACTION, CLAIMS, DEMANDS, DAMAGES
AND LIABILITIES OF WHATEVER KIND OR NATURE, IN LAW OR IN EQUITY, RELATING TO THE
EXISTING CREDIT AGREEMENT, THIS AMENDMENT, THE LOANS OR ANY OF THE OTHER CREDIT
DOCUMENTS, NOW KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED TO THE EXTENT THAT ANY
OF THE FOREGOING ARISES FROM ANY ACTION OR FAILURE TO ACT ON OR PRIOR TO THE
DATE HEREOF.
Subpart 5.14 Entirety. This Amendment, the Amended Credit Agreement and
the other Credit Documents embody the entire agreement between the parties and
supersede all prior agreements and understandings, if any, relating to the
subject matter hereof. The Credit Documents represent the final agreement of the
parties and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties.
Subpart 5.15 Counterparts. This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be effective as an original
and shall constitute a representation that an original will be delivered.
28
Subpart 5.16 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
[SIGNATURES TO FOLLOW]
29
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered in Charlotte, North Carolina by its proper and duly
authorized officers as of the day and year first above written.
BORROWER: BGF INDUSTRIES, INC., a Delaware corporation
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
GUARANTORS: BGF SERVICES, a Delaware corporation
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
GLASS HOLDINGS CORPORATION, a
Delaware corporation
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
[SIGNATURES CONTINUED]
AGENT AND LENDER: WACHOVIA BANK, NATIONAL
ASSOCIATION, individually in its capacity as a
Lender and in its capacity as Agent
By:__________________________________________
Name:________________________________________
Title:_______________________________________
[SIGNATURES CONTINUED]
LENDERS: SUNTRUST BANK, ATLANTA
By:_________________________________________________
Name:_______________________________________________
Title:______________________________________________
By:_________________________________________________
Name:_______________________________________________
Title:______________________________________________
[SIGNATURES CONTINUED]
BANK OF AMERICA, N.A. (formerly known as
NationsBank, N.A.)
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
[SIGNATURES CONTINUED]
PNC BANK, N.A.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
[SIGNATURES CONTINUED]
GMAC COMMERCIAL CREDIT LLC
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
[SIGNATURES CONTINUED]
COMERICA BANK
By:________________________________________
Name:______________________________________
Title:_____________________________________
[SIGNATURES CONTINUED]
COMPAGNIE FINANCIERE DE CREDIT
INDUSTRIEL ET COMMERCIAL ET
DE L'UNION EUROPEENNE
By:____________________________________
Name:__________________________________
Title:_________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
[SIGNATURES CONTINUED]
NATEXIS BANQUE POPULAIRES
By:____________________________________
Name:__________________________________
Title:_________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
[SIGNATURES CONTINUED]
CREDIT LYONNAIS NEW YORK BRANCH
By:____________________________________
Name:__________________________________
Title:_________________________________
[SIGNATURES END]
Schedule 2.1(a)
---------------
SCHEDULE OF LENDERS AND
-----------------------
COMMITMENTS
-----------
Revolving Revolving Term Term LOC LOC
Committed Commitment Committed Commitment Committed Commitment
Lender Amount Percentage Amount Percentage Amount Percentage
------ ------ ---------- ------ ---------- ------ ----------
Wachovia Bank, $ 5,376,000.00 25.60000000% $ 768,000.00 25.60000000% $ 512,000.00 25.6000000%
National
Association
GMAC $ 2,184,000.00 10.40000000% $ 312,000.00 10.40000000% $ 208,000.00 10.40000000%
Commercial
Credit LLC
Comerica Bank $ 2,184,000.00 10.40000000% $ 312,000.00 10.40000000% $ 208,000.00 10.40000000%
Credit Lyonnais $ 2,184,000.00 10.40000000% $ 312,000.00 10.40000000% $ 208,000.00 10.40000000%
New York
Branch
PNC Bank, N.A. $ 2,184,000.00 10.40000000% $ 312,000.00 10.40000000% $ 208,000.00 10.00000000%
Bank of $ 2,184,000.00 10.40000000% $ 312,000.00 10.40000000% $ 208,000.00 10.40000000%
America, N.A.
SunTrust Bank, $ 2,184,000.00 10.40000000% $ 312,000.00 10.40000000% $ 208,000.00 10.40000000%
Atlanta
Compagnie $ 1,680,000.00 8.0000000% $ 240,000.00 8.0000000% $ 160,000.00 8.0000000%
Financiere De
CIC Et De
L'Union
Europpeenne
NATEXIS $ 840,000.00 4.0000000% $ 120,000.00 4.0000000% $ 80,000.00 4.0000000%
Banque
TOTAL $21,000,000.00 100.00000% $3,000,000.00 100.00000% $2,000,000.00 100.00000%
SCHEDULE OF LENDERS AND
-----------------------
COMMITMENTS CONT'D
------------------
Swingline Swingline
Committed Commitment
Lender Amount Percentage
------ ------ ----------
Wachovia Bank, National $5,000,000 100.00000%
Association
TOTAL $5,000,000 100.00000%
