Exhibit 10.1
ELEVENTH AMENDMENT TO CREDIT AGREEMENT
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THIS ELEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated
as of January 31, 2004 (the "Eleventh Amendment Effective Date"), is by and
among CORRPRO COMPANIES, INC., an Ohio corporation (the "Company"), CSI COATING
SYSTEMS INC. (the "Canadian Borrower" and, together with the Company, the
"Borrowers"), the lenders set forth on the signature pages hereof (collectively,
the "Lenders") and BANK ONE, NA, with its main office in Chicago, Illinois, and
successor by merger to Bank One, Michigan, as agent for the Lenders (in such
capacity, the "Agent").
RECITALS
A. The Borrowers, the Agent and the Lenders are parties to an Amended
and Restated Credit Agreement dated as of June 9, 2000 (as now and hereafter
amended, the "Credit Agreement"), pursuant to which the Lenders agreed, subject
to the terms and conditions thereof, to extend credit to the Borrowers.
B. The Credit Agreement was amended by a First Amendment to Credit
Agreement dated as of October 19, 2000 (the "First Amendment") among the
Borrowers, the Lenders and the Agent, pursuant to which the parties agreed to
modify certain terms and conditions of the extension of credit to the Borrowers.
C. Prior to May 29, 2001, certain Defaults occurred under the Credit
Agreement due to breaches of Sections 6.19.1 and 6.19.2 of the Credit Agreement
as of the fiscal quarter ending March 31, 2001 (the "May 2001 Defaults"). Based
upon the request of the Borrowers and the Guarantors, the Agent and the Lenders
temporarily waived the May 2001 Defaults subject to the terms and conditions set
forth in a certain letter dated May 29, 2001 (the "Waiver Letter").
D. Prior to the expiration of the temporary waiver set forth in the
Waiver Letter, the Borrowers requested, notwithstanding the occurrence of the
May 2001 Defaults, that the Agent and the Lenders (i) continue to advance
Revolving Credit Loans to the Borrowers under certain modified terms and
conditions of lending, (ii) extend the waiver of the May 2001 Defaults and (iii)
forbear from exercising remedies available under the Loan Documents or at law or
in equity, all in order to (a) permit the Borrowers to develop and implement a
business plan and financial strategy to improve their business operations and
financial condition and (b) permit the Borrowers to develop and implement a
potential financial restructuring plan and strategy that would address, inter
alia, repayment of the indebtedness owed to the Lenders. Pursuant to such
request, the Credit Agreement was further amended by a Second Amendment to
Credit Agreement dated as of June 29, 2001 (the "Second Amendment") among the
Borrowers, the Lenders and the Agent. The Second Amendment, among other things,
granted to the Borrowers a "Restructuring Period" during which the Borrowers
would be permitted to develop and implement their business improvement and
financial restructuring plan.
E. Prior to August 10, 2001, the Borrowers requested that the Agent and
the Lenders extend the Facility Termination Date and agree to certain other
modifications to the provisions of the Credit Agreement. Pursuant to such
request, the Credit Agreement was further amended by a Third Amendment to Credit
Agreement dated as of August 10, 2001 (the "Third Amendment") among the
Borrowers, the Lenders and the Agent.
F. Prior to November 12, 2001, the Borrowers requested that the Agent
and the Lenders further extend the Facility Termination Date, extend the
expiration date of the Restructuring Period and agree to certain other
modifications to the provisions of the Credit Agreement. Pursuant to such
request, the Credit Agreement was further amended by a Fourth Amendment to
Credit Agreement dated as of November 12, 2001 (the "Fourth Amendment") among
the Borrowers, the Lenders and the Agent.
G. Prior to February 11, 2002, the Borrowers requested that the Agent
and the Lenders further extend the Facility Termination Date, extend the
expiration date of the Restructuring Period (also referred to as the
"Improvement Period") and agree to certain other modifications to the provisions
of the Credit Agreement. Pursuant to such request, the Credit Agreement was
further amended by a Fifth Amendment to Credit Agreement dated as of February
11, 2002 (the "Fifth Amendment") among the Borrowers, the Lenders and the Agent.
H. Beginning in March, 2002 and continuing through August 15, 2002, the
Company informed the Lenders and the Agent that certain additional Events of
Default had occurred under the Credit Agreement as follows: (i) violation of the
financial covenants contained in Section 6.19 of the Credit Agreement and
Section 1.2.g of the Fifth Amendment, as of December 31, 2001 and thereafter,
(ii) violation of the provisions contained in Sections 7.5, 7.6 and 7.7 of the
Credit Agreement, as of March 22, 2002 and thereafter, (iii) violation of the
provisions contained in Section 1.4.c and 1.4.e of the Fifth Amendment, as of
March 22, 2002 and thereafter, (iv) violation of the financial reporting
covenants contained in Section 6.1 of the Credit Agreement, as of December 31,
2001 and thereafter, (v) violations under Section 1.2 of the Fifth Amendment as
a result of accounting irregularities at the Company's Australian subsidiary as
of March 31, 2002 and for any period for which the Company's restated financial
statements (which restatement was due to such accounting irregularities) would
have caused the Company to be in violation of financial covenants then in
effect, and (vi) violation of Section 6.7 of the Credit Agreement as a result of
securities law violations in connection with the accounting irregularities at
the Company's Australian subsidiary and the late filing of the Company's Form
10-K for the year ended March 31, 2002 (collectively the "March 2002 Defaults").
I. Prior to August 15, 2002, the Borrowers requested that the Agent and
the Lenders further extend the Facility Termination Date, extend the expiration
date of the Improvement Period, waive the March 2002 Defaults and agree to
certain other modifications to the provisions of the Credit Agreement. Pursuant
to such request, the Credit Agreement was further amended by a Sixth Amendment
to Credit Agreement dated as of August 15, 2002 (the "Sixth Amendment") among
the Borrowers, the Lenders and the Agent.
J. Prior to November 15, 2002, the Borrowers, the Agent and the Lenders
mutually agreed to extend the expiration date of the Improvement Period and to
certain other modifications to the provisions of the Credit Agreement.
Accordingly, the Credit Agreement was further amended by a Seventh Amendment to
Credit Agreement dated as of November 15, 2002 (the "Seventh Amendment") among
the Borrowers, the Lenders and the Agent.
K. The Improvement Period granted to Borrowers, as extended under the
Seventh Amendment, expired on January 31, 2003. Additionally, beginning in March
of 2003, the Company informed the Agent and the Lenders that certain additional
Events of Default had occurred under the Credit Agreement as follows: (i)
violation of the financial covenant contained in Section 1.2g of the Seventh
Amendment for the period ended March 31, 2003, and (ii) violation of the
financial covenant contained in Section 6.19.3 of the Credit Agreement, as
modified by Section 2.2 of the Seventh Amendment, as of March 31, 2003 and
continuing thereafter (collectively the "March 2003 Defaults").
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L. Prior to February 10, 2003, the Borrowers requested that the Agent
and the Lenders modify certain terms and conditions under which Facility Letters
of Credit may be issued. Pursuant to such request, the Credit Agreement was
further amended by an Eighth Amendment to Credit Agreement dated as of February
10, 2003 (the "Eighth Amendment") among the Borrowers, the Lenders and the
Agent.
M. Prior to July 31, 2003, the Borrowers requested that the Agent and
the Lenders, notwithstanding the expiration of the Improvement Period under the
Seventh Amendment and the occurrence of the March 2003 Defaults, further extend
the Facility Termination Date, further extend the expiration date of the
Improvement Period, waive the March 2003 Defaults and agree to certain other
modifications to the provisions of the Credit Agreement. Accordingly, the Credit
Agreement was further amended by a Ninth Amendment to Credit Agreement dated as
of July 31, 2003 (the "Ninth Amendment") among the Borrowers, the Lenders and
the Agent. In connection with the Ninth Amendment, the Borrowers requested that
the Agent and the Lenders approve a process under which the Borrowers would
undertake a sale and/or refinancing transaction according to certain deadlines
established in the Ninth Amendment.
N. Consistent with the provisions of the Ninth Amendment, the Company,
with the consent of the Agent and the Lenders, entered into a letter of intent
governing a potential refinancing transaction. Prior to October 31, 2003, the
Borrowers were not in compliance with the deadlines set forth in Section 1.2w of
the Ninth Amendment pertaining to such refinancing transaction (the "October
2003 Defaults").
O. Prior to October 31, 2003, the Borrowers requested that the Agent
and the Lenders waive the October 2003 Defaults and further extend the Facility
Termination Date and the expiration date of the Improvement Period, all in order
to permit the Company to continue to pursue the potential refinancing
transaction. Accordingly, the Credit Agreement was further amended by a Tenth
Amendment to Credit Agreement dated as of October 31, 2003 (the "Tenth
Amendment") among the Borrowers, the Lenders and the Agent.
P. The First Amendment, the Second Amendment, the Third Amendment, the
Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh
Amendment, the Eighth Amendment, the Ninth Amendment and the Tenth Amendment are
referred to collectively as the "Prior Amendments". The Credit Agreement (as
modified by the Prior Amendments), 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."
Q. Consistent with the provisions of the Tenth Amendment, the Company,
with the consent of the Agent and the Lenders, has entered into a Securities
Purchase Agreement in order to complete the refinancing transaction described in
the prior recitals. The Securities Purchase Agreement is under review by the
United States Securities and Exchange Commission, and the Borrowers are not in
compliance with the deadlines set forth in Section 1.2w of the Tenth Amendment
(the "Milestone Defaults").
R. The Improvement Period is due to expire on January 31, 2004.
Notwithstanding such expiration and the occurrence and continuation of the
Milestone Defaults, the Borrowers have requested that the Agent and the Lenders
further extend the Facility Termination Date, further extend the expiration date
of the Improvement Period, waive the Milestone Defaults and agree to certain
other modifications to the provisions of the Credit Agreement. Additionally, the
Borrowers have requested that the Agent and
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the Lenders continue to permit the Borrowers to pursue completion of the
refinancing transaction under the terms and conditions set forth in this
Amendment.
S. 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 Prior Amendments) under the
terms and conditions expressly set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1.
PROVISIONS FOR IMPROVEMENT PERIOD
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1.1 Affirmation of Recitals. The Borrowers and the Guarantors hereby
acknowledge and affirm the accuracy of the foregoing recitals.
1.2 Improvement Period Conditions. Section 1.3 of the Second Amendment
set forth certain "restructuring conditions" governing the Borrowers'
implementation of their business improvement and financial restructuring plan.
Such "restructuring conditions" were amended and restated in Section 1.2 of the
Third Amendment, Section 1.2 of the Fourth Amendment, Section 1.2 of the Fifth
Amendment, Section 1.2 of the Sixth Amendment, Section 1.2 of the Seventh
Amendment, Section 1.2 of the Ninth Amendment and Section 1.2 of the Tenth
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
any of the Prior Amendments at any time prior to the Eleventh Amendment
Effective Date. All actions performed by or on behalf of the Borrowers prior to
the Eleventh Amendment Effective Date in furtherance of their obligations under
any of the Prior Amendments 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 any of the Prior Amendments. Except to the extent
expressly modified by the terms set forth below, each of the terms and
conditions set forth in each of the Prior Amendments is hereby confirmed and
ratified and shall remain in full force and effect as provided therein. From and
after the Eleventh Amendment Effective Date, subject to strict compliance with
the terms and conditions set forth herein, the Lenders agree to forbear from
enforcing their rights and remedies based on the Milestone Defaults while the
Borrowers and their consultants continue to pursue completion of the refinancing
transaction, provided that (i) the Lenders' waiver of the Milestone Defaults
shall be solely in accordance with the terms and conditions set forth herein and
(ii) such agreement to forbear shall not create a waiver of the right of the
Agent or the Lenders, upon the occurrence of a default hereunder or a Default
(other than the Milestone Defaults) under the Loan Documents, to enforce
available rights and remedies at any time, in their sole discretion, in
accordance with the Credit Agreement (as previously modified and as modified
herein) and the other Loan Documents. Absent an earlier default hereunder or
Default (other than the Milestone Defaults) under the Loan Documents, the period
during which the Lenders shall forbear is from the Second Amendment Effective
Date through
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March 31, 2004 (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 Borrowers' business) pertaining to
lessors, vendors, suppliers, customers, other creditors, joint
venture partners or potential purchasers of any business
segments or significant assets of any Borrowers. Reports on
such matters shall be provided periodically and not less
frequently than monthly. With respect to the Borrowers'
pending refinancing transaction, reports on such matter shall
be provided not less frequently than weekly.
b. Notwithstanding any prior practice, the Borrowers
shall strictly comply with the financial reporting
requirements under the Loan Documents, as modified herein. In
addition to the reporting requirements set forth in Section
6.1 of the Credit Agreement (as modified herein), (i) not
later than Wednesday of each week during the Improvement
Period, the Borrowers and their financial advisors will
deliver to the Agent and the Lenders, in form and detail
satisfactory to the Agent, (x) weekly updates to the detailed
13-week rolling cash flow forecast as required under Section
4.4 of this Amendment, and (y) a duly-executed Borrowing Base
Certificate as of the end of the prior week, together with
supporting information as required by the Credit Agreement;
(ii) not later than the twentieth (20th) day of each month
during the Improvement Period, the Borrowers and their
financial advisors will deliver to the Agent and the Lenders,
in form and detail satisfactory to the Agent, a summary of
agings of accounts payable and accounts receivable for the
Borrowers as of the end of the prior month, and (y) a
duly-executed Compliance Certificate with respect to the cash
flow restrictions set forth in subparagraph f below; (iii) the
Company shall, immediately upon receipt thereof, deliver to
the Agent copies of any correspondence, letters of intent,
agreements or similar documents pertaining in any manner to
any proposed sale or other disposition of any assets of the
Company or its Subsidiaries other than in the ordinary course
of business; and (iv) the Company shall provide to the Agent,
within five (5) business days following any request by the
Agent, a current listing of correct names and addresses of
account debtors (together with periodic updates to such
listing upon request by the Agent). If requested by the Agent,
the Borrowers promptly shall provide detailed backup for the
monthly summary of agings of accounts payable and accounts
receivable.
c. The Borrowers shall pay when due all amounts owed
to the Agent and the Lenders under the Loan Documents.
d. The aggregate outstanding amount of the Revolving
Credit Loans, together with the face amount of any Facility
LCs, shall not exceed the maximum amount described in Article
2 of the Second Amendment (as modified by Article 2 of the
Ninth Amendment). Further, from the Eleventh Amendment
Effective Date through the remainder of the Improvement
Period, notwithstanding the provisions of Sections 2.1 and 2.2
of the Credit Agreement, the Aggregate Total Outstandings at
any time shall not exceed the sum of (i) the Borrowing Base
plus (ii) the "Middle East Overformula Amount" (defined
hereinafter), and the Borrowers immediately shall repay any
such excess. For purposes hereof, "Middle East Overformula
Amount" shall mean the lesser of (x) $3,343,979.00 or (y) the
cumulative adverse change in the Borrowing Base attributable
to the Company's sale of its Middle East business operations
after taking into account the application against the
Revolving Credit Loans of any collections from accounts
receivable generated from such Middle East
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business operations. 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 each of the Prior Amendments and under this
Amendment shall be true and correct.
f. (i) There shall be no change having a Material
Adverse Effect on the financial performance or condition of
the Borrowers as compared with the projections submitted to
and approved by the Agent and the Lenders in the Accepted
Forecast pursuant to Section 4.4 of this Amendment.
(ii) For each "Measuring Period" (defined below)
during the Improvement Period, the actual cumulative "Net Cash
Flow" (defined below) of the Company and its domestic
Subsidiaries on a consolidated basis during such Measuring
Period shall equal or exceed the projected cumulative Net Cash
Flow for such Measuring Period as set forth in the Accepted
Forecast, within a negative variance of the greater of
$500,000 or 10% of cumulative budgeted Net Cash Flow for each
Measuring Period. The term "Net Cash Flow" shall mean the
excess (if any) of the consolidated aggregate cash receipts of
the Company and its domestic Subsidiaries during the relevant
period (excluding (a) any advances of Loans under the Credit
Agreement and (b) the amount of Net Cash Proceeds generated by
any transaction and distributed to the Lenders as required by
the Credit Agreement) compared to the consolidated aggregate
cash disbursements of the Company and its domestic
Subsidiaries during such period for operating expenses, taxes
and debt service (but excluding principal repayments and
interest payments to the Lenders and to the Noteholders, and
excluding professional fees incurred in connection with the
investigation of the Company's Australian subsidiary), all as
shown on the reports required pursuant to Section 4.4 of this
Amendment and prepared in a manner consistent with the
presentation set forth in the Accepted Forecast. The
cumulative Net Cash Flow of the Company and its domestic
Subsidiaries shall be measured as of the end of each calendar
month, for the cumulative period commencing July 1, 2003 and
ending on the last day of each successive month (each a
"Measuring Period") (i.e., the first Measuring Period shall be
a one-month period commencing July 1, 2003 and ending July 31,
2003, the second Measuring Period shall be a two-month period
commencing July 1, 2003 and ending August 31, 2003, etc.).
(iii) The Borrowers shall not, absent the
prior written consent of the Required Lenders, (a) disburse
any funds for purposes other than those set forth in the
Accepted Forecast or (b) disburse any funds in an amount that
would cause a violation of the net cash flow restrictions set
forth above, and shall not in any event disburse any funds in
a manner inconsistent with any other restrictions set forth in
this Amendment or the Loan Documents.
g. The Company will not permit the Consolidated
EBITDA of the Company and its Subsidiaries to be less than (i)
$6,687,000 for the four consecutive fiscal quarters ending
June 30, 2001, (ii) $8,628,000 for the four consecutive fiscal
quarters ending September 30, 2001, (iii) $8,860,000 for the
four consecutive fiscal quarters ending
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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, (ix) $2,533,000 for
the three consecutive months ending June 30, 2003, (x)
$4,189,000 for the for the three consecutive months ending
September 30, 2003, (xi) $3,125,000 for the three consecutive
months ending December 31, 2003, (xii) $3,433,000 for the four
consecutive months ending January 31, 2004 or (xiii)
$3,553,000 for the five consecutive months ending February 29,
2004. The parties acknowledge that Consolidated EBITDA is
calculated without regard to extraordinary gains or losses
other than in the ordinary course of business. For the
avoidance of doubt, the parties further acknowledge that, for
purposes of this subparagraph, the term "Consolidated EBITDA"
shall be calculated exclusive of (w) commissions related to
asset dispositions, (x) gains or losses recognized upon asset
dispositions, (y) any increase (or decrease) in EBITDA
resulting from the completion of a particular asset
disposition in a month that is after (or before) the projected
sale date, and (z) restructuring charges and professional fees
incurred in connection with the investigation of the Company's
Australian subsidiary.
h. No action or proceeding shall be commenced against
any Borrower that would, if adversely determined, cause a
Material Adverse Effect or prevent, impair or delay the
completion of the Borrowers' business improvement plan. With
respect to those actions or proceedings currently pending (as
listed on Schedule 1.2h hereof), there shall be no event that
would cause a Material Adverse Effect or prevent, impair or
delay the completion of the Borrowers' business improvement
plan.
i. Absent prior approval on behalf of the Agent and
the Lenders, no Borrower shall (i) file with any bankruptcy
court or be the subject of any petition under title 11 of the
United States Code (the "Bankruptcy Code"), (ii) be the
subject of any order for relief issued under the Bankruptcy
Code, (iii) file or be the subject of any petition seeking any
liquidation, reorganization, adjustment, protection,
arrangement, composition, dissolution or similar relief under
any present or future federal or state act or law relating to
bankruptcy, insolvency, reorganization or other relief for
debtors, (iv) have sought or consented to or acquiesced in the
appointment of any receiver, trustee, conservator, liquidator,
custodian or other similar official, or (v) be the subject of
any order, judgment or decree entered by any court of
competent jurisdiction approving a petition filed against such
party for any liquidation, reorganization, adjustment,
protection, arrangement, composition, dissolution or similar
relief under any present or future federal or state act or law
relating to bankruptcy, insolvency, reorganization or other
relief for debtors.
j. The Agent, the Lenders or their representatives or
consultants shall be permitted to conduct field examinations
of the Company and its Subsidiaries and audits of any
collateral securing the obligations of the Borrowers to the
Lenders. The Borrowers shall compensate the Agent or the
Lenders for such audits in accordance with the Agent's or each
Lender's schedule of fees, as applicable, and as such
schedules may be amended from time to time. The foregoing
permission to conduct audits shall not restrict or impair the
right of the Agent or the Lenders to inspect the collateral
and any records pertaining thereto at such times and at such
intervals as the Agent or the Required Lenders may require.
Further, the Borrowers acknowledge and agree that the Agent,
on behalf of itself and the Lenders, reserves the right to
engage the services of one or more appraisers to evaluate the
properties of the Company and its Subsidiaries. The Borrowers
acknowledge their
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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 to
clause (vii), only to the extent that such Indebtedness is in
existence immediately prior to the Eleventh Amendment
Effective date as described in Schedule 1.2l, provided that no
increase in the amount thereof shall be permitted).
m. During the Improvement Period, absent the prior
written consent of the Required Lenders, the Company shall
not, and shall not permit or cause any of its Subsidiaries to,
create, incur or suffer to exist any Lien other than Liens as
permitted under Section 6.15 of the Credit Agreement.
n. Notwithstanding anything in the Credit Agreement
to the contrary (including without limitation the provisions
of Section 6.13 of the Credit Agreement), during the
Improvement Period, neither the Company nor any of its
Subsidiaries shall agree to or consummate the sale,
assignment, lease, conveyance, transfer or other disposition
of any of its assets, except for (i) sales of inventory in the
ordinary course of business, (ii) the disposition in the
ordinary course of business of assets no longer required for
business operations, provided that such assets shall not have
a value exceeding $30,000 per item and $300,000 in the
aggregate on a cumulative basis during the Improvement Period,
or (iii) the disposition of other assets under terms approved
by the Required Lenders as evidenced by the prior written
consent of the Agent (provided that such consent shall require
the approval of all of the Lenders in the event of any
proposed disposition of all or substantially all of the
Collateral). With respect to clause (iii) of the preceding
sentence, the Company has designated certain non-core assets
or business units that it intends to list for sale or
otherwise dispose of as soon as practicable. Schedule 1.2n
attached to the Sixth Amendment identifies each such
designated non-core asset or business unit (each a "Targeted
Asset Disposition") and the Company's estimate of the net cash
proceeds to be generated from the sale or other disposition of
each such Targeted Asset Disposition (the "Targeted Asset Cash
Proceeds"). A copy of the listing agreement (if applicable)
with respect to each of such assets shall be delivered to the
Agent and the Lenders as soon as available. The Company shall,
immediately upon receipt thereof, provide to the Agent and the
Lenders copies of any written agreements or letters of intent
pertaining to the potential sale of any of such assets. With
respect to any transaction that is approved by the Required
Lenders under the provisions of this Amendment and otherwise
is permissible under the Credit Agreement (as
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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). The
Lenders hereby acknowledge that the Company has consummated
certain asset disposition transactions since September 23,
2002 and hereby ratify their consent to the consummation of
such transactions and the application of the net cash proceeds
therefrom to amounts outstanding under the Credit Agreement.
All parties acknowledge that the Company has entered into an
agreement for the disposition of its Middle East subsidiaries,
and such disposition shall be completed according to the terms
and conditions approved by the Required Lenders.
o. Notwithstanding anything in the Credit Agreement
to the contrary (including without limitation the provisions
of Sections 6.12 and 6.14 of the Credit Agreement), during the
Improvement Period, absent the consent of the Required
Lenders, neither the Company nor any of its Subsidiaries shall
agree to or consummate, or make or suffer to exist, any
Investment or Acquisition, or extend credit to any other
Person, or extend any credit to any other Person, or enter
into any merger or consolidation, or enter into any similar
business arrangement or combination, except for transactions
permitted under subsections 6.14 (i) and (ii) of the Credit
Agreement (with respect to clause (ii), only to the extent in
existence immediately prior to the Eleventh 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
9
Subsidiaries to pay any bonus (i) required under any written
employment agreement, incentive plan or similar "guaranteed"
bonus plan in existence immediately prior to the Second
Amendment Effective Date, (ii) under its annual incentive plan
for the fiscal year ending March 31, 2004 (provided that such
plan is satisfactory to the Agent) or (iii) negotiated as part
of a recruitment "signing bonus" consistent with past
practice. Upon 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
$120,000, payable in installments as follows: $55,000 upon
execution of this Amendment, and $65,000 not later than March
1, 2004 (provided that such $65,000 installment shall not be
due if the Refinance Transaction, as defined in subparagraph w
below, is completed prior to March 1, 2004). The first
installment of the amendment fee ($55,000) shall not be
refundable in whole or in part. In the event that the
Refinance Transaction is completed after February 29, 2004 but
prior to March 31, 2004, then a pro-rated portion of the
second installment of the amendment fee ($65,000) shall be
refunded to the Company in an amount equal to the number of
days remaining in March 2004 after the date of closing of the
Refinance Transaction divided by thirty (30).
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 Eleventh
Amendment Effective Date, the "Reduction Ratio" (as such term
is defined in the Second Amendment) was 1.272.
u. Notwithstanding anything in the Credit Agreement
to the contrary, the Borrowers shall not, and shall not permit
any Subsidiary to, make any Capital Expenditures that exceed
in the aggregate for the Borrowers and their Subsidiaries (a)
$1,750,000 during the fiscal year ending Xxxxx 00, 0000, (x)
$500,000 during the three-month period ending June 30, 2002,
(c) $1,000,000 during the six-month period ending September
30, 2002, (d) $1,300,000 during the nine-month period ending
December 31, 2002, (e) $1,500,000 during the twelve-month
period ending Xxxxx 00, 0000, (x) $500,000 during the
three-month period ending June 30, 2003, (g) $1,000,000 during
the six month period ending September 30, 2003 or (h)
$1,300,000 during the nine month period ending December 31,
2003.
v. During the Improvement Period (as such Improvement
Period may be extended from time to time) the Company shall,
if requested by the Agent and the Required Lenders, continue
to employ or engage, a full-time consultant acceptable to the
Agent and the Required Lenders. If such consultant is
required, such consultant will have authority that is
independent of the authority of other officers of the Company
and will report directly to the Company's board of directors.
The scope of authority of such consultant (if required) shall
be acceptable to the Agent and the Required Lenders, and the
Agent and the Lenders will have unrestricted access to
communicate directly with the consultant.
w. The Company has advised the Agent and the Lenders
that the Company intends to consult with one or more
investment banking firms to explore various strategic
alternatives, including refinancing and/or the sale of certain
assets or divisions. The
10
Company shall keep representatives of the Agent and the
Lenders apprised of all consultations with investment banking
firms. The Company has engaged the investment banking firm
Xxxxx Xxxxxxx Xxxx & Company Securities, Inc. ("BGL") pursuant
to a letter dated November 21, 2002 to perform certain
services (the "BGL Engagement"). The Agent and the Required
Lenders hereby confirm their consent to the BGL Engagement and
the terms thereof. The Company shall not engage any investment
banking firm other than BGL (and shall not engage BGL for any
engagement other than the BGL Engagement) unless the identity
of such firm and the scope of the engagement are acceptable to
the Agent and the Required Lenders. The Company agrees to
promptly provide to the Agent all reports and other
information prepared for or on behalf of the Company by any
investment banking firm or similar consultant. The Company
acknowledges and agrees that the Agent, its consultants and
counsel shall have direct access to any investment banking
firm or similar consultant engaged on behalf of the Company,
and each of such parties is authorized to discuss information
related to the Company with the Agent, the Lenders or their
consultants or counsel. The Company, with the consent of the
Lenders, has entered into a Securities Purchase Agreement (the
"Purchase Agreement") and has submitted related proxy
materials to the United States Securities and Exchange
Commission. The transaction set forth in the Purchase
Agreement would include refinancing of the Company and
repayment in full of all indebtedness owed to the Agent and
the Lenders (the "Refinance Transaction"). The Refinance
Transaction shall be completed (without any amendment to the
Securities Purchase Agreement except for any amendments that
have been approved in advance by the Required Lenders as
evidenced by the prior written consent of the Agent), and all
indebtedness owed to the Agent and the Lenders shall thereby
be paid in full, not later than March 31, 2004. Any
termination of the Purchase Agreement by the purchaser
thereunder or any abandonment of the Refinance Transaction by
any party shall constitute a default hereunder. In the event
that the Board of Directors of the Company elects to pursue
any refinancing or sale transaction (an "Alternative
Transaction") other than the Refinance Transaction as set
forth in the Purchase Agreement, (i) definitive agreements
pertaining to such Alternative Transaction shall be executed
and delivered by the Company only with the prior consent of
the Required Lenders (as evidenced by the prior written
consent of the Agent), (ii) if such Alternative Transaction is
approved by the Required Lenders, all definitive agreements
and related proxy materials shall be executed and submitted
not later than February 20, 2004, (iii) if such Alternative
Transaction is approved by the Required Lenders, the Company
shall immediately remit to the Agent, for the pro-rata benefit
of the Lenders, a modification fee in the amount of
$500,000.00 and (iv) if such Alternative Transaction is
approved by the Required Lenders, such Alternative Transaction
shall be completed, and all indebtedness owed to the Agent and
the Lenders shall thereby be paid in full, not later than
March 31, 2004.
x. The Company shall continue to implement the cost
savings measures identified in the report submitted to the
Agent and the Lenders on May 20, 2002.
y. The Company shall pay or cause to be paid all
accrued but unpaid interest owing by its Australian Subsidiary
to Bank One, NA (including interest accruing during the
Improvement Period).
z. There shall be no other Default or Unmatured
Default under the Credit Agreement (as modified herein) or the
other Loan Documents (except for the March 2003 Defaults
expressly acknowledged and waived in this Amendment through
the effective date hereof).
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Notwithstanding the provisions of this Section 1.2, all indebtedness of the
Borrowers to the Lenders shall be due and payable on demand in the discretion of
the Required Lenders (i) upon any failure of any one or more of the conditions
set forth in this Section 1.2 or (ii) upon expiration or termination of the
Improvement Period as provided in and subject to Section 1.6 hereof. Further,
any failure of any one or more of the conditions set forth in this Section 1.2
shall constitute a Default under the Loan Documents (without the necessity of
any notice or cure period).
1.3 No Course of Dealing; Review of the Borrowers' Business Plan. The
Borrowers and the Guarantors acknowledge and agree that notwithstanding any
course of dealing between the Borrowers and the Lenders prior to the date
hereof, the Lenders shall have no obligation to make Loans to the Borrowers
outside of the strict conditions and requirements of the Credit Agreement (as
modified herein) nor to forbear from exercising available remedies except as
expressly set forth herein. Notwithstanding any past practice, the Borrowers and
the Guarantors agree that (i) the Agent and the Lenders shall not be obligated
or expected to honor any "overdrafts" or items for which funds of the Borrowers
are not immediately available, and (ii) the Agent and the Lenders shall not be
obligated or expected to provide any credit references on behalf of the
Borrowers, and any inquiries in this regard may be referred back to the
Borrowers or their advisors. The Agent and the Lenders shall be under no
obligation whatsoever to consent to the Borrowers' updated and revised business
plan as the same may be further revised from time to time, and instead the
Agent's and the Lenders' consideration of the Borrowers' updated and revised
business plan shall be undertaken by the Agent and the Lenders in their sole and
absolute discretion. The Agent's and the Lenders' consideration of the
Borrowers' updated and revised business plan shall be without prejudice to (i)
the possibility that the Agent or the Lenders may conclude that such business
plan, as further revised from time to time, does not adequately address the
Borrowers' defaults under the Loan Documents and/or the potential erosion of
collateral supporting the Borrowers' indebtedness to the Lenders, or (ii) the
right of the Agent or the Lenders, in accordance with the terms hereof, to
exercise rights or remedies available due to defaults under the Loan Documents
(as modified herein).
1.4 Defaults. In addition to any events of default specified in the
Loan Documents, the following shall constitute a Default under this Amendment
and under the Loan Documents:
a. Any Borrower or any Guarantor shall fail to comply with, perform
or observe any term, condition, covenant or agreement set forth in this
Amendment;
b. Any representation or warranty of Borrowers or Guarantors
contained in this Amendment shall be untrue in any material respect when made or
shall, during the term of this Amendment, become impaired, untrue or misleading;
c. With the exception of the Milestone Defaults waived as set forth
in this Amendment, the occurrence of any new or further violation of the
sections of the Credit Agreement implicated by any of the Milestone Defaults;
d. The occurrence of any default under the Senior Note Agreement;
e. Any further change having a Material Adverse Effect shall occur
in business, properties, operations or condition (financial or otherwise) of any
Borrower or any Guarantor; or
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.
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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 March 31, 2004 or the Facility Termination Date beyond
March 31, 2004 or to extend any further credit to the Borrowers except as
provided in the Credit Agreement as herein amended. Furthermore, no future
agreement by the Agent and the Lenders to continue to extend the term of the
Improvement Period beyond March 31, 2004 or the Facility Termination Date beyond
March 31, 2004 or any other agreement shall be valid or enforceable unless it is
contained in a final written agreement signed by authorized representatives of
the Agent and the Required Lenders (or, to the extent required by Section 8.2 of
the Credit Agreement, all of the Lenders). Preliminary understandings or
agreements on one or more issues during the course of any negotiations and prior
to the finalization thereof shall not be binding unless and until such a final
written agreement is executed on behalf of the applicable parties.
1.6 Remedies Upon Default or Termination. The Improvement Period shall
expire automatically upon the earlier to occur of:
(i) a further Default or a default under this Amendment or any
document or agreement comprising the Loan Documents, and without notice or an
opportunity to cure such Default or default under this Amendment, or
(ii) except as provided in a further written agreement (if
any) among the Borrowers, the Agent and the Required Lenders pertaining to the
repayment of the Borrowers' obligations, March 31, 2004.
Upon the expiration of the Improvement Period, if the Borrowers are not then in
full compliance with all provisions of the Loan Documents (as amended by this
Amendment but without the benefit of any waiver of defaults except as expressly
provided in Section 5.3 of the Second Amendment, Section 5.3 of the Sixth
Amendment, Section 5.3 of the Ninth Amendment, Section 5.3 of the Tenth
Amendment and Section 5.3 of this Amendment), upon the election of the Required
Lenders but without further notice, all of the Borrowers' obligations to the
Lenders shall be immediately due and payable (to the extent not already due and
payable), all undertakings of the Agent and the Lenders hereunder, including
without limitation the Agent's and the Lenders' forbearance, shall terminate
without notice to the Borrowers and without the requirement of any further
action by or on behalf of the Agent or the Lenders, the waiver of the Milestone
Defaults as set forth in this Amendment shall be deemed rescinded ab initio, and
the Agent or the Lenders shall have the right to exercise any remedies provided
in this Amendment or any of the Loan Documents, or under applicable law or in
equity. All rights and remedies of the Agent and the Lenders shall be cumulative
and not exclusive, and the Agent or the Lenders shall be entitled to pursue one
or more rights and/or remedies simultaneously or sequentially without the
necessity of an election of remedies.
1.7 Reservation of Rights; No Waiver by Conduct. The Second Amendment,
as modified by the Third Amendment, the Fourth Amendment, the Fifth Amendment,
the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Ninth
Amendment and the Tenth Amendment, and as further modified by this Amendment,
grants a limited forbearance until March 31, 2004 only, or until an earlier
Default, upon the terms and conditions set forth in the Second Amendment, the
Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment,
the Seventh Amendment, the Eighth
13
Amendment, the Ninth Amendment, the Tenth Amendment and this Amendment.
Excepting only the waiver of the Milestone Defaults as set forth in this
Amendment, nothing herein shall be deemed to constitute a waiver of any new
Unmatured Defaults or Defaults of any other provision of any of the documents
referred to herein, and nothing herein shall in any way prejudice the rights and
remedies of the Agent and/or the Lenders under any of the documents referred to
herein or applicable law. Further, the Agent and the Lenders shall have the
right to waive any conditions set forth in this Amendment and/or such documents,
in their sole discretion, and any such waiver shall not prejudice, waive or
reduce any other right or remedy which the Agent or the Lenders may have against
the Borrowers or the Guarantors. No waiver of the rights or any condition of
this Amendment and/or any other document by the Agent or the Lenders shall be
effective unless the same shall be contained in a writing signed by authorized
representatives of the Agent or the Lenders, as the case may be, in the manner
required by Section 8.2 of the Credit Agreement. No course of dealing on the
part of the Agent or the Lenders, nor any delay or failure on the part of the
Agent or the Lenders in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege, nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other right, power or privilege.
1.8 Survival. All representations, warranties, covenants, agreements,
releases and waivers made by or on behalf of the Borrowers or any Guarantor
under this Amendment shall survive and continue after the expiration or
termination of the Improvement Period.
ARTICLE 2.
AMENDMENTS
----------
Effective as of the Eleventh Amendment Effective Date, the Credit
Agreement shall be amended as follows:
2.1 The definition of "Facility Termination Date" in Section 1.1 of the
Credit Agreement is restated in its entirety as follows:
"Facility Termination Date" means March 31, 2004, or any
earlier date on which the Aggregate Commitment is reduced to
zero or otherwise terminated pursuant to the terms hereof.
2.2 A new definition of "Eleventh Amendment Effective Date" is added to
Section 1.1 of the Credit Agreement in appropriate alphabetical order, stating
as follows:
"Eleventh Amendment Effective Date" shall mean January 31,
2004.
2.3 Section 6.19.3 of the Credit Agreement is amended and restated in
its entirety as follows:
6.19.3 Minimum Consolidated Net Worth. The Company will at all
times maintain Consolidated Net Worth of not less than (i) $1,212,000
for the period from the Eleventh Amendment Effective Date to and
including January 31, 2004, and (ii) thereafter, $730,000.
From the Eleventh Amendment Effective Date and during the remainder of
the Improvement Period, the parties agree that Consolidated Net Worth shall be
calculated according to the definition set forth in the original Credit
Agreement (without giving effect to the adjustments referenced in certain of the
Prior Amendments).
14
ARTICLE 3.
REPRESENTATIONS
---------------
Each Borrower represents and warrants to the Agent and the Lenders
that:
3.1 The execution, delivery and performance by it of this Amendment are
within its powers, have been duly authorized by all necessary action and are not
in contravention with any law, rule or regulation, or any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority, of the terms of its Articles of Incorporation or By-laws, or any
contract or undertaking to which it is a party or by which it or its property is
or may be bound.
3.2 This Amendment is its legal, valid and binding obligation,
enforceable against it in accordance with the terms hereof.
3.3 No consent, approval or authorization of or declaration,
registration or filing with any governmental authority or any nongovernmental
person or entity, including, without limitation, any of its creditors or
stockholders, is required on its part in connection with the execution, delivery
and performance of this Amendment or as a condition to the legality, validity or
enforceability of this Amendment.
3.4 After giving effect to the amendments herein contained, the
representations and warranties contained in Article V of the Credit Agreement
are true on and as of the date hereof with the same force and effect as if made
on and as of the date hereof.
ARTICLE 4.
ADDITIONAL COVENANTS OF THE BORROWERS
-------------------------------------
Each Borrower shall:
4.1 Promptly perform and observe, and cause each Guarantor to perform
and observe, its respective obligations set forth in this Amendment.
4.2 Cause each of the Guarantors to execute the Consent and Agreement
at the end of this Amendment.
4.3 Upon request by the Agent, promptly prepare and deliver to the
Agent and the Lenders an updated and detailed business plan (which may consist
of updates and revisions to the plan submitted to the Lenders in May, 2001,
September, 2001, May, 2002 and August, 2002), viability analysis and financial
strategy to improve the Borrowers' business operations and financial condition,
which plan and strategy shall cover the period at least through September 30,
2004 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 September 30, 2004, including
financial and cash flow projections based upon Borrowers' business improvement
plan, and such budget forecast and projections shall be acceptable to the
Required Lenders (upon such acceptance, such budget forecast and projections
shall be referred to as the "Accepted Forecast").
15
The cash flow projections shall be based on a rolling thirteen (13) week period.
Projected capital expenditures shall be shown in the projections as a separate
line item. Not later than Wednesday of each week, the Borrowers shall update all
applicable line items of the Accepted Forecast and cash flow projections to
reflect actual results from the prior week and on a cumulative basis, and shall
prepare and deliver to the Agent and the Lenders such update and a report of any
variances between actual results and the Accepted Forecast originally approved
by the Required Lenders.
4.5 Promptly deliver to the Lenders such information as has previously
been requested in writing by the Lenders, the Agent or the Agent's financial
consultant.
4.6 Promptly execute and deliver, and cause each Guarantor to execute
and deliver, such other documents as the Agent or the Lenders may reasonably
request.
ARTICLE 5.
MISCELLANEOUS.
--------------
5.1 Cross References. References in the Credit Agreement or in any
note, certificate, instrument or other document to the "Credit Agreement" shall
be deemed to be references to the Credit Agreement as amended hereby and as
further amended from time to time.
5.2 Expenses and Costs. Each Borrower, jointly and severally, agrees to
pay and to save the Agent and the Lenders harmless for the payment of all fees,
out-of-pocket disbursements, and other costs and expenses incurred by or on
behalf of the Agent or any Lender arising in any way in connection with this
Amendment, or any other document relating to indebtedness described in the
recitals to this Amendment, including the fees and expenses of Xxxxxxxxx Xxxxxx
PLLC, counsel to the Agent, and AlixPartners, LLC, consultant to the Agent, and
specifically including, without limitation, (a) the cost of any financial audit
or inquiry conducted by the Agent, any Lender or their consultants, (b) the fees
and expenses of counsel for the Agent or any Lender for the work performed as a
result of the Borrowers' defaults or financial problems, and for the
preparation, examination and approval of this Amendment or any documents in
connection with this Amendment, (c) for the payment of all fees and
out-of-pocket disbursements incurred by the Agent or any Lender, including
attorneys' fees, in any way arising from or in connection with any action taken
by the Agent or any Lender to monitor, advise, enforce or collect the
obligations described in the recitals hereto or to enforce any obligations of
the Borrowers or any Guarantor under this Amendment or the other documents
referred to herein, including any actions to lift the automatic stay or to
otherwise in any way participate in any bankruptcy, reorganization or insolvency
proceeding of any Borrower or Guarantor or in any trial or appellate
proceedings, and (d) any expenses or fees (including attorneys' fees) incurred
in relation to or in defense of any litigation instituted by any Borrower, any
Guarantor or any third party against the Agent or any Lender arising from or
relating to the obligations described in the recitals hereto or this Amendment,
including any so-called "lender liability" action. All of these expenses and
fees (including attorneys' fees) shall be part of the Obligations owing under
the Credit Agreement, and shall be secured by all of the collateral described in
the Collateral Documents. In the event the Borrowers fail to pay any such fees,
expenses and costs within five (5) days of being invoiced therefor, the Agent or
the Lenders, as the case may be, shall be permitted to charge the accounts of
any Borrower for such fees, expenses and costs, without prejudice to any other
rights or remedies of the Agent or the Lenders. The rights and remedies of the
Agent and the Lenders contained in this paragraph shall be in addition to, and
not in lieu of, the rights and remedies contained in the Credit Agreement, the
Collateral Documents and as otherwise provided by law.
5.3 Waiver of Milestone Defaults. The Borrowers have requested that the
Lenders and the Agent waive the Milestone Defaults subject to the terms and
conditions set forth herein. Pursuant to such
16
request, the Lenders and the Agent hereby waive the Milestone Defaults for the
period prior to the effectiveness of this Amendment and, so long as there is no
occurrence of a new Default (for purposes hereof, a new Default includes a new
or further violation of any of the sections of the Credit Agreement implicated
in any of the Milestone Defaults), for the remainder of the Improvement Period.
Such waiver shall not extend to any period of time after the Improvement Period
except to the extent expressly provided in a further written agreement among the
Borrowers and the Required Lenders, provided that such waiver shall
automatically survive the expiration of the Improvement Period if the Borrowers
are then in full compliance with all provisions of the Loan Documents (as
amended by this Amendment but without the benefit of any waiver of defaults
except as set forth in this Section 5.3 and in Section 5.3 of each of the Second
Amendment, the Sixth Amendment, the Ninth Amendment and the Tenth Amendment).
The Borrowers acknowledge and agree that the waiver contained herein is a
limited, specific and one-time waiver as described above. Such limited waiver
(a) shall not modify or waive any other term, covenant or agreement contained in
any of the Loan Documents, and (b) shall not be deemed to have prejudiced any
present or future right or rights which the Agent or the Lenders now have or may
have under this Amendment, the Credit Agreement (as modified hereby) or the
other Loan Documents.
5.4 Release. Each Borrower and each Guarantor represents and warrants
that it is not aware of any claims or causes of action against the Agent or any
Lender, any participant lender or any of their successors or assigns, and that
it has no defenses, offsets or counterclaims with respect to the indebtedness
owed by the Borrowers to the Lenders. Notwithstanding this representation and as
further consideration for the agreements and understandings herein, the
Borrowers and Guarantors, on behalf of themselves and their respective
employees, agents, executors, heirs, successors and assigns, hereby release the
Agent and the Lenders, their respective predecessors, officers, directors,
employees, agents, attorneys, affiliates, subsidiaries, successors and assigns,
from any liability, claim, right or cause of action which now exists or
hereafter arises as a result of acts, omissions or events occurring on or prior
to the date hereof, whether known or unknown, including but not limited to
claims arising from or in any way related to the Credit Agreement or the
business relationship among the Borrowers, the Guarantors, the Agent and the
Lenders.
5.5 Performance by Lenders and Agent; No Agency; Borrowers Remain in
Control. Each Borrower and each Guarantor acknowledges and agrees that the Agent
and the Lenders have fully performed all of their obligations under the Credit
Agreement and all documents executed in connection with the Credit Agreement,
and that all actions taken by the Agent and the Lenders are reasonable and
appropriate under the circumstances and within their rights under the Credit
Agreement and all other documents executed in connection therewith and otherwise
available. The actions of the Agent and the Lenders taken pursuant to this
Amendment and the documents referred to herein are in furtherance of the efforts
of the Agent and the Lenders as secured lenders seeking to collect the
obligations owed to the Lenders. Nothing contained in this Amendment shall be
deemed to create a partnership, joint venture or agency relationship of any
nature among the Borrowers and the Lenders or the Agent. The Borrowers, the
Guarantors, the Agent and the Lenders agree that notwithstanding the provisions
of this Amendment, each Borrower remains in control of its business operations
and determines the business plans (including employment, management and
operating directions) for its business.
5.6 Entire Agreement; Severability. The Credit Agreement, as previously
amended and as amended by this Amendment, constitutes the entire understanding
of the parties with respect to the subject matter hereof and may only be
modified or amended by a writing signed by the party to be charged. If any
provision of this Amendment is in conflict with any applicable statute or rule
of law or 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.
17
5.7 No Other Promises or Inducements. There are no promises or
inducements which have been made to any signatory hereto to cause such signatory
to enter into this Amendment other than those which are set forth in this
Amendment. Each Borrower and each Guarantor acknowledges that its authorized
officers have thoroughly read and reviewed the terms and provisions of this
Amendment and are familiar with same, that the terms and provisions contained
herein are clearly understood by the Borrower or Guarantor and have been fully
and unconditionally consented to by the Borrower or Guarantor, and that the
Borrower or Guarantor has had full benefit and advice of counsel of its own
selection, or the opportunity to obtain the benefit and advice of counsel of its
own selection, in regard to understanding the terms, meaning and effect of this
Amendment, and that this Amendment has been entered into by the Borrower and
Guarantor freely, voluntarily, with full knowledge, and without duress, and that
in executing this Amendment, the Borrower and Guarantor is relying on no other
representations, either written or oral, express or implied, made by any other
party hereto, and that the consideration hereunder received by the Borrower has
been actual and adequate.
5.8 Sufficiency of Improvement Period. Each Borrower represents that:
(a) it has no intention to file or acquiesce in the filing of any bankruptcy or
insolvency proceeding hereafter, absent approval on behalf of the Agent and the
Lenders of such proceeding; and (b) the Improvement Period and forbearance
allowed by the Prior Amendments (as modified herein) are sufficient for the
Borrowers to accomplish the commitments they have undertaken in the Prior
Amendments (as modified herein).
5.9 Ratification. The Borrowers agree that the Credit Agreement, the
Collateral Documents and all other documents and agreements executed by the
Borrowers or the Guarantors in connection with the Credit Agreement in favor of
the Agent, the Collateral Agent or any Lender are ratified and confirmed and
shall remain in full force and effect as amended hereby, and that there is no
set off, counterclaim or defense with respect to any of the foregoing. Terms
used but not defined herein shall have the respective meanings ascribed thereto
in the Credit Agreement.
5.10 Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument. Facsimile copies of signatures shall be
treated as original signatures for all purposes under this Amendment. This
Amendment shall become effective as of January 31, 2004 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 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.
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(e) Receipt by the Agent of an incumbency certificate, executed by the
Secretary or Assistant Secretary of each Borrower and each Guarantor, which
shall identify by name and title and bear the signatures of the Authorized
Officers and any other officers of each Borrower and each Guarantor authorized
to sign this Amendment and all Collateral Documents to be executed in connection
herewith to which each Borrower and each Guarantor is a party, upon which
certificate the Agent and the Lenders shall be entitled to rely until informed
of any change in writing by such Borrower and such Guarantor.
(f) Receipt by the Agent of a written opinion of the general counsel of
the Borrowers and the Guarantors, addressed to the Agent and Lenders and in form
and substance satisfactory to the Agent.
(g) To the extent not previously delivered, receipt by the Agent
(within five days following written request by the Agent, or within such longer
period of time as may be acceptable to the Agent) of executed copies of all
Collateral Documents and other documents in connection therewith requested by
the Agent, together with all necessary consents and other related documents in
connection therewith, insurance certificates, financing statements,
environmental reports, opinions of foreign counsel, original stock certificates
and related transfer powers, UCC, judgment and other lien and encumbrance
searches, title searches and insurance, surveys and other documents required by
the Agent.
(h) The Company and the Noteholders shall have executed an amendment to
the Senior Note Agreement, which amendment shall be satisfactory in form and
substance to the Agent and shall not expire by its terms prior to the Facility
Termination Date.
(i) Delivery of such other agreements and documents, and the
satisfaction of such other conditions as may be reasonably required by the
Agent, including without limitation a solvency certificate of each Borrower, and
such evidence of the perfection and priority of all liens and security interests
as required by the Agent, all of which shall be satisfactory to the Agent and
its counsel to the extent required by the Agent.
5.11 Other Documents. Each Borrower and each Guarantor agrees to
execute and deliver any and all documents reasonably deemed necessary or
appropriate by the Agent or the Lenders to carry out the intent of and/or to
implement this Amendment.
5.12 Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Michigan without giving effect to
choice of law principles of such State.
5.13 Miscellaneous. This Amendment is made for the sole benefit and
protection of the Borrowers, the Agent and the Lenders and their respective
successors and permitted assigns (provided that the Borrowers shall not be
permitted, absent the prior written consent of all of the Lenders, to assign any
of their respective rights or obligations under this Amendment). No other person
or entity shall have any rights whatsoever under this Amendment. Time shall be
of the strictest essence in the performance of each and every one of the
Borrowers' obligations hereunder.
5.14 Construction. This Amendment shall not be construed more strictly
against the Lenders or the Agent merely by virtue of the fact that the same has
been prepared by the Lenders and the Agent or their counsel, it being recognized
that the Borrowers, the Guarantors, the Agent and the Lenders have 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.
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5.15 Headings. The headings of the various paragraphs in this Amendment
are for convenience of reference only and shall not be deemed to modify or
restrict the terms or provisions hereof.
5.16 Waiver of Jury Trial; Consent to Jurisdiction. (a) The Borrowers,
each Guarantor, each Lender and the Agent hereby specifically ratifies and
confirms the waiver of jury trial set forth in Section 16.2 of the Credit
Agreement. Without limiting the generality of the preceding ratification and
confirmation, the Borrowers, each Guarantor, each Lender and the Agent, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waives any right any of them may have to a trial
by jury in any litigation or proceeding based upon or arising out of this
Amendment or any related instrument or agreement or any of the transactions
contemplated by this Amendment or any conduct, dealing, statements (whether oral
or written) or actions of any of them. None of the Borrowers, the Guarantors,
the Lenders or the Agent shall seek to consolidate, by counterclaim or
otherwise, any such action in which a jury trial has been waived with any other
action in which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished by any
party hereto except by a written instrument executed by such party.
(b) Each Borrower and each Guarantor agrees that any legal action or
proceeding with respect to this Amendment or any related instrument or
agreement, including the Credit Agreement as previously amended and as amended
hereby, or with respect to the transactions contemplated hereby, may be brought
in any court of the State of Michigan, sitting in or having jurisdiction over
the County of Wayne, Michigan, or in any federal court located within the
Eastern District of Michigan, and Borrowers and Guarantors hereby submit to and
accept generally and unconditionally the non-exclusive jurisdiction of those
courts with respect to their person and property and irrevocably consent to
service of process in connection with any such action or proceeding by mailing
such service of process (certified or registered, if capable of certification or
registration) to Borrowers and/or Guarantors at the address they may have from
time to time provided to the Agent. Borrowers and Guarantors hereby irrevocably
waive any objection based upon jurisdiction, improper venue or forum non
conveniens in any such suit or proceeding in the above-described courts. Nothing
contained herein shall limit the right of the Agent or the Lenders to serve
process in any other manner permitted by law or limit the right of the Agent or
the Lenders to commence any such action or proceeding in the courts of any other
jurisdiction. Any judicial proceeding by any Borrower or any Guarantor against
the Agent or any Lender involving this Amendment shall be brought only in a
court in Xxxxx County, Michigan or federal court located within the Eastern
District of Michigan.
[signatures next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date and year first above written.
CORRPRO COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Title: Senior Vice President
----------------------------------
CSI COATING SYSTEMS INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Title: Vice President
----------------------------------
BANK ONE, NA, AS AGENT AND AS A LENDER
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Title: First Vice President
----------------------------------
LINC ACQUISITION ONE LLC
By: /s/ Xxxxxx X. Parcel
-------------------------------------
Title: Vice President
----------------------------------
KEY BANK
By: /s/ Xxxx X. Xxxx
-------------------------------------
Title: Vice President
----------------------------------
FIRSTMERIT BANK
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Title: Senior Vice President
----------------------------------
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COMERICA BANK
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------
Title: Credit Officer
-----------------------------------
FIFTH THIRD BANK
By: /s/ Xxxxx X. de Vries
--------------------------------------
Title: Assistant Vice President
-----------------------------------
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CONSENT AND AGREEMENT OF GUARANTORS
-----------------------------------
As of the date and year first above written, each of the undersigned
hereby:
(a) fully consents to the terms and provisions of the above Amendment
and the consummation of the transactions contemplated thereby and agrees to all
terms and provisions of the above Amendment applicable to it;
(b) agrees that each Guaranty, Collateral Document and all other
agreements executed by any of the undersigned in connection with the Credit
Agreement or otherwise in favor of the Agent or the Lenders (collectively, the
"Guarantor Documents") are hereby ratified and confirmed and shall remain in
full force and effect, and each of the undersigned acknowledges that it has no
setoff, counterclaim or defense with respect to any Guarantor Document; and
(c) acknowledges that its consent and agreement hereto is a condition
to the Lenders' obligation under this Amendment and it is in its interest and to
its financial benefit to execute this consent and agreement.
GOOD-ALL ELECTRIC, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: Vice President
-----------------------------
OCEAN CITY RESEARCH CORP.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: Vice President
-----------------------------
CCFC, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: Vice President
-----------------------------
DETROIT 786631v04
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