EXHIBIT 10(ll)
FIFTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
entered into as of November 10, 2004, by and among Alpine Holdco Inc., a
Delaware corporation ("Parent"), Essex Electric Inc., a Delaware corporation
("Electric"; Parent and Electric are collectively, the "Borrowers" and each, a
"Borrower"), Xxxxx Fargo Foothill, Inc., as agent ("Agent") for the Lenders
(defined below) and as a Lender, Congress Financial Corporation (Central), as
documentation agent for the Lenders ("Documentation Agent") and as a Lender, and
the undersigned Lenders.
WHEREAS, Borrowers, Credit Party, Agent, Documentation Agent and certain
other financial institutions from time to time party thereto (the "Lenders") are
parties to that certain Loan and Security Agreement dated as of December 11,
2002 (as amended from time to time, the "Loan Agreement"); and
WHEREAS, Borrowers, Agent and Lenders have agreed to amend the Loan
Agreement in certain respects, subject to the terms and conditions contained
herein.
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Loan Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to the satisfaction of the
conditions set forth in Section 6 hereof, the Loan Agreement is amended in the
following respects:
(a) The defined term "Collateral Reserve" set forth in Section 1.1 of the
Loan Agreement is amended and restated in its entirety, as follows:
"Collateral Reserve" means an amount equal to $5,000,000. "
(b) The defined term "EBITDA" set forth in Section 1.1 of the Loan
Agreement is amended and restated in its entirety, as follows:
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries' consolidated net earnings (or loss), minus extraordinary
gains, plus, to the extent deducted in determining net earnings (or loss)
for such period, (i) interest expense, (ii) income taxes, (iii)
depreciation and amortization, (iv) management fees under the Management
Agreements accrued but not paid due to the operation of the terms of this
Agreement, (v) cash, nonrecurring charges incurred during the 2004 fiscal
year in an aggregate amount not to exceed $5,500,000, and (vi) (A)
non-cash, recurring year-end LIFO adjustments relating to the purchase of
copper cathode and rod by Electric, and (B) non-cash, non-recurring
adjustments made as a result of sales consummated in accordance with the
provisions of this Agreement of (i) the Real Property and other assets
comprising the facility of Electric located at 000 Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxx and/or (ii) the Real Property and other assets comprising the
facility of Electric located at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx.
(c) The defined term "Interest Period" set forth in Section 1.1 of
the Loan Agreement is amended and restated in its entirety, as follows:
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan and
ending 1, 2, 3 or 6 months thereafter; provided, however, that (a) if any
Interest Period would end on a day that is not a Business Day, such
Interest Period shall be extended (subject to clauses (c)-(e) below) to
the next succeeding Business Day, (b) interest shall accrue at the
applicable rate based upon the LIBOR Rate from and including the first day
of each Interest Period to, but excluding, the day on which any Interest
Period expires, (c) any Interest Period that would end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (d)
with respect to an Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the
calendar month that is 1, 2, 3 or 6 months after the date on which the
Interest Period began, as applicable, and (e) Borrowers (or Borrower
Representative on behalf thereof) may not elect an Interest Period which
will end after the Maturity Date.
(d) The defined term "Permitted Dispositions" set forth in Section
1.1 of the Loan Agreement is amended and restated in its entirety, as follows:
"PERMITTED DISPOSITIONS" means (a) sales or other dispositions by
Parent or its Subsidiaries of Equipment that is substantially worn,
damaged, outmoded or obsolete in the ordinary course of business, (b)
sales by Parent or its Subsidiaries of Inventory to buyers in the ordinary
course of business, (c) the use or transfer of money or Cash Equivalents
by Parent or its Subsidiaries in a manner that is not prohibited by the
terms of this Agreement or the other Loan Documents, (d) the sale or
issuance by any Subsidiary of Parent of Stock to Parent or any other
Subsidiary of Parent, so long as any such Stock is pledged in favor of
Agent to secure the Obligations pursuant to an instrument reasonably
acceptable to Agent, (e) at any time that no Event of Default exists, the
sale or discounting, without recourse, of Accounts on an arms'-length
basis in the ordinary course of business, consistent with past practice
and not to exceed an aggregate amount of $50,000 in any month, (f) the
transfer of assets by Parent or any of its Subsidiaries to any Operating
Borrower, (g) the sublease of real or personal property that is leased
(and not owned) by Parent or its Subsidiaries on commercially reasonable
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terms to the extent that such Person determines, in its reasonable
business judgment, that such leased property is no longer useful in the
conduct of the business of the Companies, (h) the sale or other
disposition by an Operating Borrower on an arms'-length basis, for fair
market value and in cash, of the Real Property (together with the
improvements thereon but not including any Eligible Inventory or Eligible
Accounts) and the Equipment (including, without limitation, any Eligible
Fixed Asset Equipment located thereat)) comprising the facilities of
Electric located at (i) 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx and/or (ii) 0000
Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx; provided, that if any such sale
occurs at any time when Advances predicated upon availability described in
sub-clause (x) of Section 2.1(a) are outstanding, the net proceeds of such
sale or other disposition shall be used to repay the aggregate outstanding
principal amount of such Advances together with any accrued and unpaid
interest thereon, (i) the sub-license of intellectual property rights to a
Stocking Agent by the applicable Operating Borrower in accordance with the
agreement between such Operating Borrower and such Stocking Agent, and (j)
so long as no Default or Event of Default then exists, a sale or
disposition of other assets not used by and is not useful to any Company
(but not including any Eligible Accounts, Eligible Inventory, Eligible
Capex Equipment, Eligible Fixed Asset Equipment or Eligible Real
Property), on an arms'-length basis and in an aggregate amount not to
exceed $1,000,000 during the term of this Agreement.
(e) The defined term "Tangible Net Worth" set forth in Section 1.1 of
the Loan Agreement is amended and restated in its entirety, as follows:
"TANGIBLE NET WORTH" means, as of any date of determination, the
result of (a) the total stockholder's equity of Parent and its
Subsidiaries, minus (b) the sum of (i) all Intangible Assets of Parent and
its Subsidiaries, (ii) all of Parent's prepaid expenses, and (iii) all
amounts due to Parent and its Subsidiaries from Affiliates, plus (c) to
the extent that the same would otherwise reduce Tangible Net Worth,
non-cash, recurring year-end LIFO adjustments relating to Electric's
purchase of copper cathode and rod.
(f) The defined terms "Aggregate Capex Amount", "Capex Amount", "Capex
Appraisal Reduction", "Capex Availability", "Capex Reduction" and "Eligible
Capex Equipment" and all references thereto are hereby deleted from the Loan
Agreement in their entirety.
(g) Clause (i) of Section 2.1(a)(w) of the Loan Agreement is amended and
restated to be a reference to the amount "$30,000,000".
(h) Clause (iii) of Section 2.1(a)(w) of the Loan Agreement is amended and
restated in its entirety, as follows:
"(iii) 85% of the amount of credit availability created by clause (v)
above, plus"
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(i) Clause (a) of Section 2.1 of the Loan Agreement is amended by (i)
deleting the reference to "plus" at the end of sub-clause (x)(ii) thereof and
inserting a reference to "minus" in substitution therefor, (ii) deleting in its
entirety the sub-clause (y) currently set forth therein, and (iii) by modifying
the reference to the sub-clause (z) currently set forth therein to be a
reference to sub-clause (y).
(j) The proviso set forth at the end of Section 2.1(a) of the Loan
Agreement is amended by (i) replacing the "and" at the end of sub-clause (C)
thereof and inserting a comma in substitution therefor (ii) amending and
restating sub-clause (D) thereof in its entirety, as follows, and (iii) adding a
new sub-clause (E) thereto, as follows:
"(D) Revolver Usage based upon availability described in clause (w)
above and predicated on copper cathode and rod shall not exceed (1)
$8,000,000 at any time during the period from January 1 through and
including January 31 during any year, (2) $6,000,000, at any time during
the period from February 1 through and including February 28 (or February
29 as the case may be) during any year, (3) $3,000,000, at any time during
the period from March 1, 2004 through and including October 31 during any
year or (4) $10,000,000 at any time during the period from November 1
through and including December 31 during any year, and (E) Revolver Usage
based upon availability described in clause (w) above and predicated on
finished goods with Stocking Agents shall not exceed $5,000,000 at any
time."
(k) The last sentence of Section 2.1(b) of the Loan Agreement is amended
and restated in its entirety, as follows:
"It is acknowledged and agreed by Borrowers that the reappraisals
and examinations of Inventory described in clause (x) of the immediately
preceding sentence will be conducted no less frequently than three times
per each fiscal year of Borrowers and that the reappraisals of Equipment
and Eligible Real Property described in clauses (y) and (z) of the
immediately preceding sentence will be conducted no less frequently than
annually. "
(l) Section 2.8 of the Loan Agreement is amended by deleting all
references to "2 Business Day" contained therein and inserting a reference to "1
Business Day" in substitution therefor.
(m) Section 6.3(c) of the Loan Agreement is amended and restated in its
entirety, as follows:
"(c) (x) with respect to Parent's 2005 fiscal year, as soon as
available, but in any event on or prior to October 31, 2004, (y) with
respect to Parent's 2006 fiscal year, as soon as available, but in any
event on or prior to October 31, 2005, and (z) with respect to each of
Parent's fiscal years thereafter, as soon as available, but in any event
within 30 days prior to the start of each such fiscal year,
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(i) copies of Companies' Projections, in form satisfactory to Agent,
in its sole discretion, for the forthcoming three years, year by year, and
for the forthcoming fiscal year, month by month, which Projections shall
reflect management's good faith and reasonable estimates of future
financial performance of Parent and its Subsidiaries for the period or
periods set forth therein and will be based upon estimates and assumptions
stated therein, all of which Parent shall believe to be reasonable and
fair in light of conditions and facts known to management of the Parent as
of the date of preparation thereof (it being understood that such
Projections as they relate to future events are not to be viewed as
representations or warranties that such events will occur, and that actual
results may differ from projected results),"
(n) Section 7.21(a) of the Loan Agreement is amended and restated in its
entirety, as follows:
"(i) Minimum EBITDA. EBITDA, measured on a fiscal month-end basis,
for each period set forth below, of not less than the required amount set
forth in the column labeled "Minimum EBITDA" in the following table for
the applicable period set forth opposite thereto:
Minimum
Period EBITDA
---------------------------------------- ----------------------
9 month period ending September 30, 2004 $1,700,000
10 month period ending October 31, 2004 $2,200,000
11 month period ending November 30, 2004 $3,000,000
12 month period ending December 31, 2004 $3,500,000
1 month period ending January 31, 2005 ($649,000)
2 month period ending February 28, 2005 ($846,000)
3 month period ending March 31, 2005 ($903,000)
4 month period ending April 30, 2005 ($400,000)
5 month period ending May 31, 2005 ($96,000)
6 month period ending June 30, 2005 $310,000
7 month period ending July 31, 2005 $932,000
8 month period ending August 31, 2005 $1,724,000
9 month period ending September 30, 2005 $2,491,000
10 month period ending October 31, 2005 $3,464,000
11 month period ending November 30, 2005 $4,109,000
12 month period ending December 31, 2005 $4,653,000
12 month period ending January 31, 2006
and the 12 month period ending on the last
day of each month thereafter $5,000,000
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(ii)Tangible Net Worth. As of any month end date, beginning with
September 30, 2004, Tangible Net Worth of not less $15,500,000."
(o) Section 7.21(c)(i) of the Loan Agreement is amended and restated
in its entirety as follows:
"(i) Capital Expenditures. Capital expenditures in any period
set forth below in excess of the amount set forth in the following
table for the applicable period:
Period Amount
------------------------------------- --------------------------------
Fiscal year ending December 31, 2004 $7,000,000
Fiscal year ending December 31, 2005 $4,700,000
Fiscal year ending December 31, 2006
and each fiscal year thereafter $2,000,000
3. AMENDMENT FEE. Borrowers hereby agree to pay to Agent on the date
hereof, for pro rata distribution to the Lenders, an amendment fee of $200,000,
which fee shall be non-refundable and fully earned as of the date hereof. The
foregoing amendment fee is in addition to, and not in lieu of, all other fees
charged to Borrowers under the Loan Documents.
4. RATIFICATION. This Amendment, subject to satisfaction of the conditions
provided below, shall constitute an amendment to the Loan Agreement and all of
the Loan Documents as appropriate to express the agreements contained herein. In
all other respects, the Loan Agreement and the Loan Documents shall remain
unchanged and in full force and effect in accordance with their original terms.
5. COVENANT REGARDING 2006 FINANCIAL COVENANTS. Each party hereto
covenants and agrees that it will undertake to negotiate in good faith revisions
to the Minimum EBITDA covenant for the 2006 fiscal year and the Capital
Expenditures covenant for the 2006 fiscal year set forth in Section 7.21 of the
Loan Agreement on the basis of Companies' Projections for the 2006 fiscal year
that are delivered to Agent pursuant to Section 6.3(c) of the Loan Agreement and
approved by Required Lenders.
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6. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective as
of the date hereof and upon the satisfaction of the following conditions
precedent:
(a) Each party hereto shall have executed and delivered this Amendment to
Agent;
(b) Companies shall have delivered to Agent such documents, agreements and
instruments as may be requested or required by Agent in connection with this
Amendment, each in form and content acceptable to Agent;
(c) No Default or Event of Default shall have occurred and be continuing
on the date hereof or as of the date of the effectiveness of this Amendment;
(d) All proceedings taken in connection with the transactions contemplated
by this Amendment and all documents, instruments and other legal matters
incident thereto shall be satisfactory to Agent and its legal counsel; and
(e) Each Lender shall have received the portion of the amendment fee
payable to such Lender on the date of this Agreement under Section 3 hereof.
7. MISCELLANEOUS.
(a) REPRESENTATIONS AND WARRANTIES. In order to induce Agent to enter into
this Amendment, each Company hereby warrants to Agent, as of the date hereof,
that the representations and warranties of Companies contained in the Loan
Agreement are true and correct as of the date hereof as if made on the date
hereof (other than those which, by their terms, specifically are made as of
certain dates prior to the date hereof). Borrowers and, by its acknowledgment
hereof, Alpine hereby represent and warrant that, pursuant to intercompany
arrangements between Alpine and Parent, all obligations to make any tax payments
owing in connection with Parent's sale of the stock of DNE Systems, Inc. (the
"DNE Sale") shall be solely obligations of Alpine and shall not be obligations
of Parent in any respect (it being agreed and understood that, for purposes of
the representation and warranty in this sentence, the amount of such obligations
of Alpine shall be capped at the amount of the proceeds of the DNE Sale received
by Alpine from Parent by way of distribution of such proceeds by Parent or
otherwise).
(b) EXPENSES. Companies, jointly and severally, agree to pay on demand all
costs and expenses of Agent (including the reasonable fees and expenses of
outside counsel for Agent) in connection with the preparation, negotiation,
execution, delivery and administration of this Amendment and all other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. In addition, Companies agree, jointly and
severally, to pay, and save Agent harmless from all liability for, any stamp or
other taxes which may be payable in connection with the execution or delivery of
this Amendment or the Loan Agreement, as amended hereby, and the execution and
delivery of any instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All obligations provided
herein shall survive any termination of this Amendment and the Loan Agreement as
amended hereby.
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(c) GOVERNING LAW. This Amendment shall be a contract made under and
governed by the internal laws of the State of Georgia.
(d) COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
8. RELEASE.
(a) In consideration of the agreements of Agent and Lenders contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each Company, on behalf of itself
and its successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges Agent
and Lenders, and their successors and assigns, and their present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents and other representatives (Agent, each
Lender and all such other Persons being hereinafter referred to collectively as
the "Releasees" and individually as a "Releasee"), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a "Claim" and collectively, "Claims")
of every name and nature, known or unknown, suspected or unsuspected, both at
law and in equity, which such Company or any of its successors, assigns, or
other legal representatives may now or hereafter own, hold, have or claim to
have against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this Amendment, including, without limitation, for
or on account of, or in relation to, or in any way in connection with any of the
Loan Agreement, or any of the other Loan Documents or transactions thereunder or
related thereto.
(b) Each Company understands, acknowledges and agrees that the release set
forth above may be pleaded as a full and complete defense and may be used as a
basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release.
(c) Each Company agrees that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered as
of the date first above written.
BORROWERS:
ALPINE HOLDCO INC.,
a Delaware corporation
By /s/ Xxxxx X. Xxxx
-----------------------------
Title X.X.Xxxxxxx
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ESSEX ELECTRIC INC.,
a Delaware corporation
By /s/ Xxxxx X. Xxxx
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Title S.V.P. Finance
---------------------------
AGENT:
XXXXX FARGO FOOTHILL, INC.,
a California corporation
By /s/ Xxxxxx Xxxxxx
------------------------------
Title Senior V.P.
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DOCUMENTATION AGENT:
CONGRESS FINANCIAL CORPORATION
(CENTRAL),
an Illinois corporation
By /s/ Xxxxx Xxxxxxxx
------------------------------
Title Vice President
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LENDERS:
XXXXX FARGO FOOTHILL, INC.
By /s/ Xxxxxx Xxxxxx
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Title Senior V.P.
---------------------------
STANDARD FEDERAL BANK NATIONAL
ASSOCIATION
By: LaSalle Business Credit,
LLC, its Agent
By /s/ Xxxxxxx Xxxxxx
------------------------------
Title First Vice President
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CONGRESS FINANCIAL CORPORATION
(CENTRAL)
By /s/ Xxxxx Xxxxxxxx
------------------------------
Title Vice President
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Acknowledged and Agreed
for purposes of Section 7(a):
THE ALPINE GROUP, INC.,
a Delaware corporation
By /s/ X. Xxxxxxxx Posner
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Title Senior V.P.
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