Exhibit 10.1
EXECUTION COPY
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of September 23, 2002 (the "Sixth 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 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. The Credit Agreement (as modified by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment and the Fifth 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."
I. Beginning in March, 2002 and continuing through the date hereof, 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 continuing
through the date hereof, (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 continuing
through the date hereof, (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 continuing
through the date hereof, (iv) violation of the financial reporting covenants
contained in Section 6.1 of the Credit Agreement, as of December 31, 2001 and
continuing through the date hereof, (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"). The May 2001 Defaults and the March
2002 Defaults are referred to collectively as the "Existing Defaults".
J. The "Improvement Period" granted to Borrowers under the Fifth
Amendment expired on May 31, 2002. Notwithstanding such expiration and
notwithstanding the occurrence and continuation of the Existing Defaults, the
Borrowers have requested that the Agent and the Lenders further extend the
Facility Termination Date and further extend the expiration date of the
Improvement Period. Additionally, the Borrowers have requested that the Agent
and the Lenders continue to permit the Borrowers to develop and implement their
business improvement and financial restructuring plan under the terms and
conditions set forth in this Amendment.
K. Based upon the foregoing recitals, and without waiving any existing
or future rights or remedies which the Agent and/or the Lenders may have against
the Borrowers or any Guarantor, the Agent and the Lenders are willing to amend
the terms of the Credit Agreement (including the Second Amendment, the Third
Amendment , the Fourth Amendment and the Fifth 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
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 and Section 1.2 of the Fifth
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 and/or the Fifth
Amendment during the period from and including the Second Amendment Effective
Date through and including the date immediately preceding the Sixth 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 and/or the Fifth 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 and/or the Fifth
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 and/or the Fifth Amendment is hereby confirmed
and ratified and shall remain in full force and effect as provided therein. From
and after the Sixth 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 Existing Defaults while the
Borrowers and their consultants continue to develop and implement their plan for
improvement of the Borrowers' business and financial condition, provided that
(i) the Lenders' waiver of the Existing Defaults shall be solely in accordance
with the terms and conditions set forth in the Second Amendment, the Third
Amendment, the Fourth Amendment and the Fifth Amendment (as modified herein) and
(ii) such agreement to forbear shall not create a waiver of the right of the
Agent or the Lenders, upon the occurrence of a default hereunder or a Default
(other than the Existing Defaults) under the Loan Documents, to enforce
available rights and remedies at any time, in their sole discretion, in
accordance with the Credit Agreement (as previously modified and as modified
herein) and the other Loan Documents. Absent an earlier default hereunder or
Default (other than the Existing Defaults) under the Loan Documents, the period
during which the Lenders shall forbear is from the Second Amendment Effective
Date through October 31, 2002 (the "Improvement Period"). The Lenders'
forbearance shall be governed by and subject to the following terms and
conditions:
a. The Borrowers shall keep the Agent, the Lenders and their
consultants apprised of the Borrowers' business and financial operations
and of any material discussions and negotiations (other than discussions or
negotiations in the ordinary course of the
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Borrowers' business) pertaining to lessors, vendors, suppliers, customers,
other creditors, joint venture partners or potential purchasers of any
business segments or significant assets of any Borrowers. Reports on such
matters shall be provided periodically and not less frequently than
monthly.
b. Notwithstanding any prior practice, the Borrowers shall strictly
comply with the financial reporting requirements under the Loan Documents,
as modified herein. In addition to the reporting requirements set forth in
Section 6.1 of the Credit Agreement (as modified herein), (i) not later
than Wednesday of each week during the Improvement Period, the Borrowers
and their financial advisors will deliver to the Agent and the Lenders, in
form and detail satisfactory to the Agent, weekly updates to the detailed
13-week rolling cash flow forecast as required under Section 4.4 of this
Amendment; (ii) not later than the twentieth (20th) day of each month
during the Improvement Period, the Borrowers and their financial advisors
will deliver to the Agent and the Lenders, in form and detail satisfactory
to the Agent, (x) a summary of agings of accounts payable and accounts
receivable for the Borrowers as of the end of the prior month, (y) a
duly-executed Borrowing Base Certificate as of the last Business Day of the
prior month, together with supporting information as required by the Credit
Agreement, and (z) a duly-executed Compliance Certificate with respect to
the cash flow restrictions set forth in subparagraph f below; (iii) the
Company shall, immediately upon receipt thereof, deliver to the Agent
copies of any correspondence, letters of intent, agreements or similar
documents pertaining in any manner to any proposed sale or other
disposition of any assets of the Company or its Subsidiaries other than in
the ordinary course of business; and (iv) the Company shall provide to the
Agent, within five (5) business days following any request by the Agent, a
current listing of correct names and addresses of account debtors (together
with periodic updates to such listing upon request by the Agent). If
requested by the Agent, the Borrowers promptly shall provide detailed
backup for the monthly summary of agings of accounts payable and accounts
receivable.
c. The Borrowers shall pay when due all amounts owed to the Agent and
the Lenders under the Loan Documents.
d. The aggregate outstanding amount of the Revolving Credit Loans,
together with the face amount of any Facility LCs, shall not exceed the
maximum amount described in Article 2 of the Second Amendment (as modified
by Article 2 of this Amendment). From and after the date of execution of
this Amendment, the Borrowers shall, absent emergency circumstances
demonstrated to the satisfaction of the Agent, request Revolving Credit
Loans not more frequently than twice per week. Each such request shall be
based upon a Borrowing Base Certificate submitted pursuant to subparagraph
b above, updated to reflect finally-collected funds applied against the
Revolving Credit Loans pursuant to the Borrowers' dominion of funds
arrangement with the Agent.
e. All representations and warranties made by the Borrowers under the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment 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.
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(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 April 1, 2002 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
April 1, 2002 and ending April 30, 2002, the second Measuring Period shall
be a two-month period commencing April 1, 2002 and ending May 31, 2002,
etc.).
(iii) The Borrowers shall not, absent the prior written consent of
the Required Lenders, (a) disburse any funds for purposes other than those
set forth in the Accepted Forecast or (b) disburse any funds in an amount
that would cause a violation of the net cash flow restrictions set forth
above, and shall not in any event disburse any funds in a manner
inconsistent with any other restrictions set forth in this Amendment or the
Loan Documents.
g. The Company will not permit the Consolidated EBITDA of the Company
and its Subsidiaries to be less than (i) $6,687,000 for the four
consecutive fiscal quarters ending June 30, 2001, (ii) $8,628,000 for the
four consecutive fiscal quarters ending September 30, 2001, (iii)
$8,860,000 for the four consecutive fiscal quarters ending December 31,
2001, (iv) $12,665,000 for the four consecutive fiscal quarters ending
March 31, 2002, (v) $1,901,000 for the three consecutive months ending June
30, 2002, (vi) $5,279,000 for the six consecutive months ending September
30, 2002, (vii) $9,594,000 for the nine consecutive months ending December
31, 2002, (viii) $11,009,000 for the twelve consecutive months ending March
31, 2003, or (ix) $2,533,000 for the three consecutive months ending June
30, 2003. The parties acknowledge that Consolidated EBITDA is calculated
without regard to extraordinary gains or losses other than in the ordinary
course of business. For the avoidance of doubt, the parties further
acknowledge that, for purposes of this subparagraph, the term "Consolidated
EBITDA" shall be calculated exclusive of (w) commissions related to asset
dispositions, (x) gains or losses recognized upon asset dispositions, (y)
any increase (or decrease) in EBITDA resulting from the completion of a
particular asset disposition in a month that is after (or before) the
projected sale date, and (z) restructuring charges and professional fees
incurred in connection with the investigation of the Company's Australian
subsidiary.
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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 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
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to clause (vii), only to the extent that such Indebtedness is in existence
immediately prior to the Sixth 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 hereto
identifies each such designated non-core asset or business unit (each a
"Targeted Asset Disposition") and the Company's estimate of the net cash
proceeds to be generated from the sale or other disposition of each such
Targeted Asset Disposition (the "Targeted Asset Cash Proceeds"). A copy of
the listing agreement (if applicable) with respect to each of such assets
shall be delivered to the Agent and the Lenders as soon as available. The
Company shall, immediately upon receipt thereof, provide to the Agent and
the Lenders copies of any written agreements or letters of intent
pertaining to the potential sale of any of such assets. With respect to any
transaction that is approved by the Required Lenders under the provisions
of this Amendment and otherwise is permissible under the Credit Agreement
(as modified herein), such transaction shall be consummated within the time
parameters and other terms and conditions as disclosed in the applicable
written agreement or letter of intent. Based upon the Company's request,
100% of the net cash proceeds (after deducting customary and reasonably
commissions and transaction expenses and after deducting any taxes
attributable to the transaction) generated by each such transaction shall
upon closing immediately be paid to the Lenders and the Noteholders (in the
proportion of fifty-six percent (56%) to the Lenders and forty-four percent
(44%) to the Noteholders) . The portion of such net cash proceeds remitted
to the Lenders shall be applied as a repayment of outstanding principal
balance of the Revolving Credit Loans (and the amount of such repayment
shall constitute a permanent reduction of the amount of the Aggregate
Commitments).
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
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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 Sixth
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, 2003 (provided that such plan is
satisfactory to the Agent) or (iii) negotiated as part of a recruitment
"signing bonus" consistent with past practice. Upon request, the Company
shall deliver to the Lenders and the Agent copies of any applicable
employment agreements, incentive plans or similar "guaranteed" bonus plans.
s. The Company shall pay to the Agent, for the benefit of the Lenders,
an amendment fee in the amount of $350,000.00. Not less than one-half of
such fee shall be paid not later than September 23, 2002, and the remainder
shall be paid not later than October 21, 2002.
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 Sixth Amendment
Effective Date, the "Reduction Ratio" (as such term is defined in the
Second Amendment) is 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
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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 March 31, 2003 or (f) $500,000 during the
three-month period ending June 30, 2003.
v. Not later than the date of execution of this Amendment, the Company
shall employ or engage, and during the Improvement Period (as such
Improvement Period may be extended from time to time) shall continue to
employ or engage, a full-time chief restructuring officer acceptable to the
Agent and the Required Lenders. The chief restructuring officer will have
authority that is independent of the authority of other officers of the
Company and will report directly to the Company's board of directors. The
scope of authority of the chief restructuring officer shall be acceptable
to the Agent and the Required Lenders. The Agent and the Lenders will have
unrestricted access to communicate directly with the chief restructuring
officer.
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. Subject to the approval requirements set forth
below, the Company will retain an acceptable investment banking firm not
later than September 30, 2002. The Company shall keep representatives of
the Agent and the Lenders apprised of all consultations with investment
banking firms. The Company shall not engage any investment banking firm
unless the identity of such firm and the scope of the engagement are
acceptable to the Agent and the Required Lenders. The Company agrees to
promptly provide to the Agent all reports and other information prepared
for or on behalf of the Company by any investment banking firm or similar
consultant. The Company acknowledges and agrees that the Agent, its
consultants and counsel shall have direct access to any investment banking
firm or similar consultant engaged on behalf of the Company, and each of
such parties is authorized to discuss information related to the Company
with the Agent, the Lenders or their consultants or counsel. All parties
acknowledge that Xxxxx, Xxxxxxx & Xxxx has been retained by the Company
with respect to two (2) specific asset dispositions, and the Agent and the
Lenders have approved such retention (which shall not be deemed approval
for the Company to retain such firm for any other engagement).
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. Not later than September 30, 2002, the Company shall provide to the
Agent and its advisors an updated written report on the current status of
all proceedings and investigations related to the Company's Australian
Subsidiary, including without limitation any interim conclusions, pending
or completed actions in response thereto, and the status of the
administration of the business and assets of such Subsidiary. Until
completion of such administration, further updated status reports on such
matters shall be provided to the Agent and its advisors not less frequently
than weekly.
z. Not later than September 30, 2002, the Company shall provide to the
Agent and its advisors a detailed restructuring plan for its Middle East
operations, including a proposed liquidation plan and budget for such
operations.
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aa. 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).
bb. There shall be no other Default or Unmatured Default under
the Credit Agreement (as modified herein) or the other Loan Documents
(except for the Existing Defaults expressly acknowledged and waived in
this Amendment through the effective date hereof).
Notwithstanding the provisions of this Section 1.2, 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 Sections 1.6 and 5.3 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 Existing Defaults waived as set forth in
the Second Amendment and in this Amendment, the occurrence of any new or further
violation of the sections of the Credit Agreement implicated by any of the
Existing Defaults;
d. The occurrence of any default under the Senior Note Agreement;
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e. Any further change having a Material Adverse Effect shall occur in
business, properties, operations or condition (financial or otherwise) of any
Borrower or any Guarantor; or
f. The Aggregate Total Outstandings of all Lenders shall on any date
exceed the Borrowing Base as of such date, and the Borrowers shall fail to pay
on such date not less than the amount of such excess for application against the
Aggregate Total Outstandings.
1.5 Expiration; No Further Extension Implied. The Borrowers and the
Guarantors acknowledge that the Agent and the Lenders have no obligation to
extend the term of the Improvement Period or further extend the Facility
Termination Date, or forbear from enforcing their rights and remedies before the
end of the Improvement Period in the event of any failure of any one or more of
the terms and conditions expressed herein, that no course of dealing that would
permit arguing for further extensions contrary to the Lenders' wishes exists or
is capable of being inferred, and that nothing contained herein or otherwise is
intended to be a promise or agreement to continue to extend the term of the
Improvement Period beyond October 31, 2002 or the Facility Termination Date
beyond July 31, 2003 or to extend any further credit to the Borrowers except as
provided in the Credit Agreement as herein amended. Furthermore, no future
agreement by the Agent and the Lenders to continue to extend the term of the
Improvement Period beyond October 31, 2002 or the Facility Termination Date
beyond July 31, 2003 or any other agreement shall be valid or enforceable unless
it is contained in a final written agreement signed by authorized
representatives of the Agent and the Required Lenders (or, to the extent
required by Section 8.2 of the Credit Agreement, all of the Lenders).
Preliminary understandings or agreements on one or more issues during the course
of any negotiations and prior to the finalization thereof shall not be binding
unless and until such a final written agreement is executed on behalf of the
applicable parties.
1.6 Remedies Upon Default or Termination. The Improvement Period shall
expire automatically upon the earlier to occur of:
(i) a further Default or a default under this Amendment or any
document or agreement comprising the Loan Documents, and without notice or an
opportunity to cure such Default or default under this Amendment, or
(ii) except as provided in a further written agreement (if any) among
the Borrowers, the Agent and the Required Lenders pertaining to the repayment of
the Borrowers' obligations, October 31, 2002.
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 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 Existing Defaults as set forth in the Second
Amendment and in this Amendment shall be deemed rescinded ab initio, and the
Agent or the Lenders shall have the right to exercise any remedies provided in
this Amendment or any of the Loan Documents, or under applicable law or in
equity. All rights and remedies of the Agent and the Lenders shall be cumulative
and not exclusive, and the Agent or the Lenders shall be entitled to pursue one
or more rights and/or remedies simultaneously or sequentially without the
necessity of an election of remedies.
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1.7 Reservation of Rights; No Waiver by Conduct. The Second Amendment, as
modified by the Third Amendment, the Fourth Amendment and the Fifth Amendment,
and as further modified by this Amendment, grants a limited forbearance until
October 31, 2002 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 and this Amendment. Excepting only the waiver of
the Existing Defaults as set forth in the Second Amendment and 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 Limitations on Certain Advances. Notwithstanding the provisions of
Sections 2.7 and 2.8 of the Credit Agreement, from and after the Sixth Amendment
Effective Date and during the remainder of the Improvement Period (and, absent a
further written agreement among the Borrowers and the Lenders to the contrary,
thereafter until the Facility Termination Date), each Borrower agrees that the
Lenders shall not be obligated to advance any Eurocurrency Loan and the
Borrowers shall not request new Eurocurrency Advances, and any existing
Eurocurrency Loans shall, at the end of the applicable Interest Period therefor,
automatically be converted into a Floating Rate Loan.
1.9 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 Sixth Amendment Effective Date, the Credit
Agreement shall be amended as follows:
2.1 The definition of "Borrowing Base" in Section 1.1 of the Credit
Agreement is restated in its entirety as follows:
"Borrowing Base" means, as of any date, the lesser of (i) the
Sixth Amendment Borrowing Base Sublimit or (ii) the sum, based
on the U.S. Dollar Equivalent thereof, of (a) an amount equal
to 75% of the amount of Eligible Accounts Receivable, plus (b)
an amount equal to 40% of the amount of Eligible Inventory.
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2.2 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 July 31, 2003, or any
earlier date on which the Aggregate Commitment is reduced to
zero or otherwise terminated pursuant to the terms hereof.
2.3 A new definition of "Sixth Amendment Borrowing Base Sublimit" is added
to Section 1.1 of the Credit Agreement in appropriate alphabetical order,
stating as follows:
"Sixth Amendment Borrowing Base Sublimit" shall mean, as of
any date, $36,000,000 less the aggregate amount of any
Reduction Payments received by the Lenders on a cumulative
basis after the Sixth Amendment Effective Date and on or prior
to the date of calculation, provided that the Sixth Amendment
Borrowing Base Sublimit may be increased from time to time
upon the written consent of the Required Lenders.
2.4 A new definition of "Sixth Amendment Effective Date" is added to
Section 1.1 of the Credit Agreement in appropriate alphabetical order, stating
as follows:
"Sixth Amendment Effective Date" shall mean September 23, 2002.
2.5 (a) The Aggregate Commitments shall be reduced to $37,500,000 as of the
Sixth Amendment Effective Date. Schedule 1.1 annexed to the Credit Agreement (as
previously amended) is further amended and restated by substituting therefor
Schedule 1.1 annexed to this Amendment, showing the respective Canadian
Commitments and U.S. Commitments of each Lender as of the Sixth Amendment
Effective Date, and, subject to subparagraph (b) below, the corresponding
definitions in Section 1.1 of the Credit Agreement for "Aggregate Canadian
Commitments," "Aggregate Commitments," "Aggregate U.S. Commitments," "Canadian
Commitment," "Commitment" and "U.S. Commitment" shall be modified accordingly.
The Aggregate Commitments shall be reduced from time to time in accordance with
the provisions of Section 2.6.8 of the Credit Agreement.
(b) Under the provisions of the Credit Agreement, the election of the
Company to request U.S. Revolving Credit Loans versus the election of the
Canadian Borrower to request Canadian Revolving Credit Loans could create an
imbalance between each Lender's Outstanding Credit Exposure compared to its
intended Pro Rata Share of the Commitments. The Lenders desire to correct such
potential imbalance, such that the respective Outstanding Credit Exposure of the
Lenders will be based upon Aggregate Total Outstandings notwithstanding any
election of the Company or the Canadian Borrower to request U.S. Revolving
Credit Loans versus Canadian Revolving Credit Loans. To effect such correction,
(i) the following definitions in Section 1.1 of the Credit Agreement are
modified as follows:
(A) "Canadian Commitment" means, as to any Lender at any time,
its obligation to make Loans to the Canadian Borrower under Section
2.1.2 in an aggregate amount not to exceed at any time outstanding the
Equivalent Amount in Canadian Dollars of the lesser of (a) the Dollar
amount set forth opposite such Lender's name in Schedule 1.1 under the
heading "Canadian Commitment" or (b) such Lender's total Commitment
less the then-outstanding principal amount of any U.S. Revolving
Credit Loans advanced by such Lender to the Company under Section
2.1.1, or as otherwise established pursuant to Section 13.3, as
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such amount may be reduced from time to time pursuant to
Sections 2.4, 13.3 and the other applicable provisions hereof.
(B) "U.S. Commitment" means, as to any Lender at any time, its
obligation to make Revolving Credit Loans to the Company in Dollars in
an aggregate amount not to exceed at any time outstanding the lesser
of (a) the U.S. Dollar amount set forth opposite such Lender's name in
Schedule 1.1 under the heading "U.S. Commitment" or (b) such Lender's
total Commitment less the then-outstanding principal amount of any
Canadian Revolving Credit Loans advanced by such Lender to the Company
under Section 2.1.2, or as otherwise established pursuant to Section
13.3, as such amount may be reduced from time to time pursuant to
Sections 2.4, 13.3 and the other applicable provisions hereof.
and (ii), the following Section 12.3 is inserted in Article XII of the Credit
Agreement:
12.3 Correction of Pro Rata Share of Loans. If at any time, due
to currency fluctuations or otherwise, the Aggregate Total
Outstandings of any Lender compared to the Aggregate Total
Outstandings of all Lenders exceeds such Lender's respective Pro Rata
Share of the Aggregate Commitments, then such Lender may elect, upon
at least three Business Days' prior written notice given to the Agent,
to require that each of the other Lenders acquire, without recourse or
warranty, an undivided interest and participation in a portion of such
Lender's outstanding Loans in an amount sufficient to cause the
Aggregate Total Outstandings of each Lender (including the
participations so acquired) compared to the Aggregate Total
Outstandings of all Lenders to be equal to each Lender's respective
Pro Rata Share of the Aggregate Commitments. Such written notice to
the Agent shall specify the date of such acquisition and the aggregate
amount in which the other Lenders will be required to participate.
Promptly upon receipt of such notice, the Agent will give notice
thereof to the remaining Lenders, specifying in such notice the amount
that each remaining Lender will be required to purchase. The remaining
Lenders agree, absolutely and unconditionally, to complete such
purchase (and make payment therefor to the Agent for the account of
the requesting Lender) whether or not a Default is then continuing or
any other condition precedent for the advance of any Loan is then met,
and notwithstanding any reduction or termination of the Commitment,
provided, however, that in no event shall any Lender be required to
acquire any such interest or participation if the effect thereof would
be that such Lender's Aggregate Total Outstandings would exceed such
Lender's Commitment.
2.6 In Section 2.15.2(c) of the Credit Agreement, the reference to
"$5,000,000" shall be deleted and "$2,000,000" substituted therefor.
2.7 Section 2.6.8 of the Credit Agreement, as added by the Second
Amendment, is amended and restated in its entirety as follows:
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2.6.8 (a) In addition to all other payments required hereunder,
simultaneously upon the making of any principal payment to the
Noteholders under the Senior Note Agreement at any time on or
after the Sixth Amendment Effective Date, the Borrowers shall
prepay the Aggregate Total Outstandings by an amount equal to
the Reduction Amount. Such payments shall be applied to the
Aggregate Total Outstandings on a pro rata basis between the
U.S. Commitment and the Canadian Commitment, and such Commitments
shall also be permanently reduced in connection with such
prepayment.
(b) If, after giving effect to any Reduction Payment
required under subparagraph (a) above, the Aggregate Total
Outstandings would not exceed the Borrowing Base, then such
Reduction Payment need not be made, provided that, nevertheless,
the Commitments and the Sixth Amendment Borrowing Base Sublimit
shall each be permanently reduced by the Reduction Amount as
if the Reduction Payment had been made.
2.8 Subparagraph (xi) of Section 6.1 of the Credit Agreement, as added by
the Second Amendment, is further amended by deleting said subparagraph (xi) and
inserting the following in place thereof:
(xi) As soon as available and in any event within thirty
(30) days after the end of each month, the consolidated
balance sheet of the Company and its Subsidiaries as of the end
of such month, and the related consolidated statements of
income and cash flows of the Company and its Subsidiaries for
such month and for the period commencing at the end of the
previous fiscal year and ending with the end of such month,
in form and detail acceptable to the Agent, setting forth in
each case in comparative form the corresponding figures for
the corresponding date or period of the preceding fiscal
year and the variances, if any, from the most recent budget
and forecast delivered to the Agent and the Lenders pursuant
to Section 4.4 of that certain Sixth Amendment to Credit
Agreement dated as of September 23, 2002, and together with
a duly executed compliance certificate in the form of
Exhibit E;
2.9 Sections 6.19.1 and 6.19.2 of the Credit Agreement, as previously
amended by the Second Amendment, the Third Amendment, the Fourth Amendment and
the Fifth Amendment, are hereby deleted.
2.10 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) $28,482,000
for the period from the Sixth Amendment Effective Date to and including
September 29, 2002 and (ii) thereafter, $28,471,000.
During the Improvement Period, the parties agree that Consolidated Net
Worth shall be calculated exclusive of (a) gains or losses recognized upon asset
dispositions or (b) any impairment to goodwill or other intangible assets to the
extent required by new accounting regulations promulgated after the date of the
Credit Agreement.
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2.11 The Pricing Schedule attached to the Credit Agreement, as amended in
the First Amendment and in the Second Amendment, shall be further amended by
substituting the following in place thereof:
PRICING SCHEDULE
APPLICABLE MARGIN
Floating Rate 5.00%
APPLICABLE FACILITY FEE RATE
Facility Fee 1.00%
APPLICABLE FACILITY LC RATE
Facility LC Fee 5.00%
The amendment of such Pricing Schedule shall not restrict the right of the
Lenders to impose the rates specified in Section 2.9 of the Credit Agreement (as
amended in the Second Amendment) as a consequence of any new Default after the
Sixth Amendment Effective Date.
ARTICLE 3.
REPRESENTATIONS
Each Borrower represents and warrants to the Agent and the Lenders
that:
3.1 The execution, delivery and performance by it of this Amendment are
within its powers, have been duly authorized by all necessary action and are not
in contravention with any law, rule or regulation, or any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority, of the terms of its Articles of Incorporation or By-laws, or any
contract or undertaking to which it is a party or by which it or its property is
or may be bound.
3.2 This Amendment is its legal, valid and binding obligation, enforceable
against it in accordance with the terms hereof.
3.3 No consent, approval or authorization of or declaration, registration
or filing with any governmental authority or any nongovernmental person or
entity, including, without limitation, any of its creditors or stockholders, is
required on its part in connection with the execution, delivery and performance
of this Amendment or as a condition to the legality, validity or enforceability
of this Amendment.
3.4 After giving effect to the amendments herein contained, the
representations and warranties contained in Article V of the Credit Agreement
are true on and as of the date hereof with the same force and effect as if made
on and as of the date hereof.
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ARTICLE 4.
ADDITIONAL COVENANTS OF THE BORROWERS
Each Borrower shall:
4.1 Promptly perform and observe, and cause each Guarantor to perform and
observe, its respective obligations set forth in this Amendment.
4.2 Cause each of the Guarantors to execute the Consent and Agreement at
the end of this Amendment.
4.3 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 and May, 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 July 31, 2003 and shall
address, inter alia, repayment of the indebtedness owed to the Lenders.
4.4 Upon request by the Agent, promptly prepare and deliver to the Agent
and the Lenders an updated and detailed budget forecast for the remainder of the
Improvement Period and thereafter through July 31, 2003, 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 through September 30, 2002 and on a monthly
basis thereafter. Projected capital expenditures shall be shown in the
projections as a separate line item. Not later than Wednesday of each week
(commencing August 21, 2002), the Borrowers shall update all applicable line
items of the Accepted Forecast and cash flow projections to reflect actual
results from the prior week and on a cumulative basis, and shall prepare and
deliver to the Agent and the Lenders such update and a report of any variances
between actual results and the Accepted Forecast originally approved by the
Required Lenders.
4.5 Promptly deliver to the Lenders such information as has previously been
requested in writing by the Lenders, the Agent or the Agent's financial
consultant.
4.6 To the extent requested by the Agent and to the extent not cost
prohibitive (as determined by the Agent), promptly (within five (5) days after
such request) cause each of its Foreign Subsidiaries to execute and deliver to
the Agent one or more guarantees (in form and substance satisfactory to the
Agent) of the Borrowers' indebtedness in favor of the Lenders.
4.7 To the extent requested by the Agent and to the extent not cost
prohibitive (as determined by the Agent), promptly (within five (5) days after
such request) cause each of its Foreign Subsidiaries to complete the execution
and delivery of the Collateral Documents as required by the Agent.
4.8 Upon request by the Agent, promptly complete all matters required by
the Agent for full implementation of the dominion of funds arrangement between
the Borrowers and the Agent and otherwise cooperate with the implementation of
such arrangement.
4.9 Promptly execute and deliver, and cause each Guarantor to execute and
deliver, such other documents as the Agent or the Lenders may reasonably
request.
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ARTICLE 5.
MISCELLANEOUS.
5.1 Cross References. References in the Credit Agreement or in any note,
certificate, instrument or other document to the "Credit Agreement" shall be
deemed to be references to the Credit Agreement as amended hereby and as further
amended from time to time.
5.2 Expenses and Costs. Each Borrower, jointly and severally, agrees to pay
and to save the Agent and the Lenders harmless for the payment of all fees,
out-of-pocket disbursements, and other costs and expenses incurred by or on
behalf of the Agent or any Lender arising in any way in connection with this
Amendment, or any other document relating to indebtedness described in the
recitals to this Amendment, including the fees and expenses of Xxxxxxxxx Xxxxxx
PLLC, counsel to the Agent, and 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 and the Lenders contained in this paragraph shall be in addition to, and
not in lieu of, the rights and remedies contained in the Credit Agreement, the
Collateral Documents and as otherwise provided by law.
5.3 Waiver of March 2002 Defaults. The Borrowers have requested that the
Lenders and the Agent waive the March 2002 Defaults subject to the terms and
conditions set forth herein. Pursuant to such request, the Lenders and the Agent
hereby waive the March 2002 Defaults for the period prior to the effectiveness
of this Amendment and, so long as there is no occurrence of a new Default (for
purposes hereof, a new Default includes a new or further violation of any of the
sections of the Credit Agreement implicated in any of the Existing Defaults),
for the remainder of the 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 the Second 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
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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 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.
19
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 and
the Fifth 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 and the Fifth 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. Without limiting the generality of the ratification set
forth above, the Company specifically confirms and ratifies its guaranty in
favor of Bank One, NA of the indebtedness owed by the Company's Australian
Subsidiary to Bank One, NA, and further confirms that all obligations under such
guaranty is part of the "Secured Obligations" under the Credit Agreement. Bank
One, NA agrees that, during the Improvement Period, it will not initiate any
enforcement action in respect of such guaranty (other than with respect to the
payment of interest as set forth in Section 1.2aa hereof), but reserves all
rights and remedies, including the right at any time to initiate any enforcement
action against the Company's Australian Subsidiary or its successors or assigns.
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 September 23, 2002 when each of the
following has been satisfied:
(a) Receipt by the Agent of counterparts of this Amendment duly executed by
each Borrower and each Lender, and counterparts of the Consent and Agreement
annexed hereto duly executed by each Guarantor.
(b) With respect to any interest, fees or other charges previously required
to be paid by either Borrower under the terms of any waiver letter, extension
letter, amendment or other agreement, receipt by the Agent of full payment of
such interest, fees or other charges.
(c) Payment of the amendment fee required under this Amendment. In the
event such fee is not received immediately upon execution of this Amendment by
the Borrowers, the Agent is authorized at any time thereafter to charge the
Company's account(s) in the amount of such fee.
(d) Receipt by the Agent of a warrant (the "Warrant") duly executed by the
Company, in the form annexed hereto, initially exercisable for 467,126 shares of
the Common Stock of the Company.
(e) Receipt by the Agent of counterparts of a registration rights agreement
duly executed by the Company in the form annexed hereto.
(f) 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.
20
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) Delivery of such other agreements and documents, and the satisfaction
of such other conditions as may be reasonably required by the Agent, including
without limitation a solvency certificate of each Borrower, and such evidence of
the perfection and priority of all liens and security interests as required by
the Agent, all of which shall be satisfactory to the Agent and its counsel to
the extent required by the Agent.
5.11 Other Documents. Each Borrower and each Guarantor agrees to execute
and deliver any and all documents reasonably deemed necessary or appropriate by
the Agent or the Lenders to carry out the intent of and/or to implement this
Amendment.
5.12 Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Michigan without giving effect to
choice of law principles of such State.
5.13 Miscellaneous. This Amendment is made for the sole benefit and
protection of the Borrowers, the Agent and the Lenders and their respective
successors and permitted assigns (provided that the Borrowers shall not be
permitted, absent the prior written consent of all of the Lenders, to assign any
of their respective rights or obligations under this Amendment). No other person
or entity shall have any rights whatsoever under this Amendment. Time shall be
of the strictest essence in the performance of each and every one of the
Borrowers' obligations hereunder.
5.14 Construction. This Amendment shall not be construed more strictly
against the Lenders or the Agent merely by virtue of the fact that the same has
been prepared by the Lenders and the Agent or their counsel, it being recognized
that the Borrowers, the Guarantors, the Agent and the Lenders have contributed
substantially and materially to the preparation of this Amendment, and each of
the parties hereto waives any claim contesting the existence and the adequacy of
the consideration given by any of the other parties hereto in entering into this
Amendment.
21
5.15 Headings. The headings of the various paragraphs in this Amendment are
for convenience of reference only and shall not be deemed to modify or restrict
the terms or provisions hereof.
5.16 Notices to the Agent. Pursuant to Section 14.2 of the Credit
Agreement, future notice to the Agent should be addressed to the attention of
Xxxx X. Xxxxxxxx, 0 Xxxx Xxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, facsimile (312)
732-1775, with a copy to Xxxxxxx X. Xxxxxxx, Xxxxxxxxx Xxxxxx, PLLC, 000
Xxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, facsimile (000) 000-0000.
5.17 Waiver of Jury Trial; Consent to Jurisdiction. (a) The Borrowers, each
Guarantor, each Lender and the Agent hereby specifically ratifies and confirms
the waiver of jury trial set forth in Section 16.2 of the Credit Agreement.
Without limiting the generality of the preceding ratification and confirmation,
the Borrowers, each Guarantor, each Lender and the Agent, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waives any right any of them may have to a trial by jury in any
litigation or proceeding based upon or arising out of this Amendment or any
related instrument or agreement or any of the transactions contemplated by this
Amendment or any conduct, dealing, statements (whether oral or written) or
actions of any of them. None of the Borrowers, the Guarantors, the Lenders or
the Agent shall seek to consolidate, by counterclaim or otherwise, any such
action in which a jury trial has been waived with any other action in which a
jury trial cannot be or has not been waived. These provisions shall not be
deemed to have been 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. Xxx
-----------------------------------------
Title: Chief Executive Officer, President
-------------------------------------
CSI COATING SYSTEMS INC.
By: /s/ Xxxxxx X. Xxx
----------------------------------------
Title: Vice President
-------------------------------------
BANK ONE, NA, AS AGENT AND AS A LENDER
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Title: Vice President
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Title: Vice President
-------------------------------------
KEY BANK
By: /s/ Xxxx Xxxxxx Xxxx
----------------------------------------
Title: Vice President
-------------------------------------
FIRSTMERIT BANK
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Title: Senior Vice President
-------------------------------------
23
COMERICA BANK
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Title: Vice President
-------------------------------------
FIFTH THIRD BANK (NORTHEASTERN OHIO)
By: /s/ Xxxxx de Vries
----------------------------------------
Title: Commercial Banking Officer
-------------------------------------
24
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. Xxx
----------------------------------------
Title: Vice President
-------------------------------------
BASS SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxx
----------------------------------------
Title: Vice President
-------------------------------------
CATHODIC PROTECTION SERVICES COMPANY
By: /s/ Xxxxxx X. Xxx
-----------------------------------------
Its: Vice President
-------------------------------------
OCEAN CITY RESEARCH CORP.
By: /s/ Xxxxxx X. Xxx
----------------------------------------
Title: Vice President
-------------------------------------
25
CCFC, INC.
By: /s/ Xxxxxx X. Xxx
----------------------------------------
Title: Vice President
-------------------------------------
XXXXXXXX COSASCO SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxx
----------------------------------------
Title: Vice President
-------------------------------------
26
SCHEDULE 1.1
COMMITMENTS
(IN US DOLLARS)
BANK U.S. COMMITMENT CANADIAN COMMITMENT TOTAL COMMITMENT PRO-RATA SHARE
---- --------------- ------------------- ---------------- --------------
Bank One, NA $8,203,125* $6,000,000* $8,203,125 21.875%
PNC Bank, National Association $7,031,250 $7,031,250 18.750%
Key Bank $7,031,250 $7,031,250 18.750%
FirstMerit Bank, N.A. $7,031,250 $7,031,250 18.750%
Comerica Bank $4,687,500 $4,687,500 12.500%
Fifth Third Bank, $3,515,625 $3,515,625 9.375%
Northeastern Ohio
TOTAL: $37,500,000* $6,000,000* $37,500,000 100.000%
* SEE SECTION 2.5(b) OF SIXTH AMENDMENT TO CREDIT AGREEMENT
27
