Exhibit 10.2
EXECUTION COPY
July 31, 2003
Corrpro Companies, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxx, CEO
Ladies and Gentlemen:
Reference is made to that certain Note Purchase Agreement, dated as of
January 21, 1998 (as amended from time to time, the "NOTE AGREEMENT"), between
Corrpro Companies, Inc., an Ohio corporation (the "COMPANY"), and The Prudential
Insurance Company of America ("PRUDENTIAL"), pursuant to which the Company
issued and Prudential now holds the Company's Second Amended and Restated Senior
Notes due January 15, 2008 in an aggregate principal amount of $28,285,714 (the
"NOTES"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Note Agreement.
The Company failed to make a payment of principal on the Notes which was
due on July 31, 2003, in an amount equal to $7,560,767.58 (the "PAYMENT
DEFAULT"), which failure is continuing and constitutes an Event of Default under
paragraph 7A(i) of the Note Agreement. The Company has also advised Prudential
that other Events of Default exist under the Note Agreement as set forth on
Annex I hereto (the Payment Default and the other Events of Default listed on
Annex I hereto are referred to collectively herein as the "EXISTING EVENTS OF
DEFAULT"). The Company acknowledges that, as a result of the Existing Events of
Default, Prudential now has the right to cause the entire outstanding principal
balance of the Notes to become immediately due and payable.
The Company has requested that Prudential agree to forbear from exercising
its rights and remedies under the Note Agreement arising as a result of the
occurrence and continuation of the Existing Events of Default and agree to
certain other changes to the Note Agreement, including to defer the date of
certain required payments of principal on the Notes, as more particularly set
forth herein. Subject to the terms and conditions hereof, and effective upon the
satisfaction of the conditions set forth herein, and provided that the Company
agrees to the modifications of the Note Agreement and the Notes set forth below,
Prudential is willing to agree to such request. Accordingly, and in accordance
with the provisions of paragraph 11C of the Note Agreement, the parties hereto
agree as follows:
SECTION 1. FORBEARANCE AND AGREEMENTS OF COMPANY.
1.1 Forbearance. From and after the date hereof, subject to strict
compliance with the terms and conditions set forth herein, Prudential agrees to
forbear from enforcing its rights and remedies based on the Existing Events of
Default while the Company and its consultants continue to develop and implement
their plan for improvement of the Company's business and financial condition,
provided, that such agreement to forbear shall not create a waiver of any
Existing Event of Default or of the right of Prudential or any other any holder
of the Notes, upon the occurrence of a default hereunder or an Event of Default
(other than the Existing Events of Default) under the Note Agreement, to enforce
available rights and remedies at any time, in their sole discretion, in
accordance with the Note Agreement or the Notes, the Collateral Documents or any
documents, instruments or agreements executed in connection with any of the Note
Agreement, the Notes and the Collateral Documents (collectively with the Note
Agreement, the "NOTE DOCUMENTS"). Absent an earlier default hereunder or an
Event of Default (other than an Existing Event of Default) under the Note
Agreement, or the earlier termination of the Forbearance Period as provided in
Section 1.6 hereof, the period during which Prudential and the other holders of
the Notes shall so forbear is from the date hereof through October 31, 2003 (the
"FORBEARANCE PERIOD").
1.2 Forbearance Conditions and Agreements of the Company. The continued
effectiveness of Prudential's forbearance agreement shall be subject to the
continued satisfaction of each of the terms and conditions specified in this
Section 1.2. All agreements made by the Company in this Section 1.2 shall be
incorporated by reference into the Note Agreement and, unless expressly
otherwise provided therein, shall survive the termination of the Forbearance
Agreement so long as the Notes are outstanding.
(a) The Company shall keep the holders of the Notes and their
consultants apprised of the business and financial operations of the
Company and its Subsidiaries and of any material discussions and
negotiations (other than discussions or negotiations in the ordinary course
of the Company's business) pertaining to lessors, vendors, suppliers,
customers, other creditors, joint venture partners or potential purchasers
of any business segments or significant assets of the Company or any of its
Subsidiaries. Reports on such matters shall be provided periodically and
not less frequently than monthly.
(b) Notwithstanding any prior practice, the Company shall strictly
comply with the financial reporting requirements under the Note Documents.
In addition to the reporting requirements set forth in paragraph 5A of the
Note Agreement, (i) not later than Wednesday of each week during the
Forbearance Period, the Company and its financial advisors will deliver to
the holders of the Notes, in form and detail satisfactory to the holders of
the Notes, weekly updates to the detailed 13-week rolling cash flow
forecast as required under Section 2.4 of this letter agreement; (ii) not
later than the twentieth (20th) day of each month during the Forbearance
Period, the Company and its financial advisors will deliver to the holders
of the Notes, in form and detail satisfactory to the holders of the Notes:
(x) a summary of agings of accounts payable and accounts receivable for the
Company as of the end of the prior month, and (y) a duly-executed Officer's
Certificate demonstrating (with computations in reasonable detail)
compliance by the Company and its Subsidiaries with the cash flow
restrictions set forth in clause (e) of this Section 1.2; (iii) the Company
shall, immediately upon receipt thereof, deliver to the holders of the
Notes 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
holders of the Notes, within five (5) business days following any request
by the holders of the Notes, a current listing of correct names and
addresses of account debtors (together with periodic updates to such
listing upon request by the holders of the Notes). If requested by the
holders of the Notes, the Company promptly shall provide detailed backup
for the monthly summary of agings of accounts payable and accounts
receivable.
(c) The Company shall pay when due all amounts (other than the
payments of principal being waived by the holders of the Notes during the
Forbearance Period) owed to the holders of the Notes under the Note
Documents.
(d) All representations and warranties made by the Company under
this letter agreement shall be true and correct.
(e) (i) There shall be no change having a Material Adverse
Effect on the financial performance or condition of the Company as compared
with the projections submitted to and approved by the holders of the Notes
in the Accepted Forecast pursuant to Section 2.4 of this letter agreement.
(ii) For each "Measuring Period" (defined below) during the
Forbearance 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 no more than the greater of $500,000 or 10%
of projected
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cumulative Net Cash Flow for each Measuring Period as set forth in the
Accepted Forecast. 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 holders of the Notes
and the Banks as required by the Note Agreement and 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 Banks and to the holders of the Notes 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 2.4 of this letter agreement 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 Company shall not, absent the prior written consent
of the Required Holder(s), (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 letter agreement
or the Note Documents.
(f) The Company will not permit the Consolidated Cash Flow from
Operations of the Company and its Subsidiaries to be less than (i)
$2,533,000 for the three consecutive months ending June 30, 2003 or (ii)
$4,189,000 for the three consecutive months ending September 30, 2003. The
parties hereto acknowledge that Consolidated Cash Flow from Operations is
calculated without regard to extraordinary gains or losses other than in
the ordinary course of business. For the avoidance of doubt, the parties
hereto further acknowledge that, for purposes of this subparagraph, the
term "Consolidated Cash Flow from Operations" 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
Consolidated Cash Flow from Operations 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.
(g) No action or proceeding shall be commenced against the Company
or any Subsidiary that would, if adversely determined, cause a Material
Adverse Effect or prevent, impair or delay the completion of the Company's
business improvement plan. With respect to those actions or proceedings
currently pending (as listed on Schedule 1.2(g) hereof), there shall be no
event that would cause a Material Adverse Effect or prevent, impair or
delay the completion of the Company's business improvement plan.
(h) Absent prior approval on behalf of the holders of the Notes,
the Company shall not, and will not permit any Subsidiary to, (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
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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.
(i) The holders of the Notes 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 Company to the holders of the Notes. The Company shall reimburse the
holders of the Notes for all costs incurred in conducting such audits. The
foregoing permission to conduct audits shall not restrict or impair the
right of the holders of the Notes to inspect the collateral and any records
pertaining thereto at such times and at such intervals as the holders of
the Notes may require. Further, the Company acknowledges and agrees that
the holders of the Notes reserve the right to engage the services of one or
more appraisers to evaluate the properties of the Company and its
Subsidiaries. The Company acknowledges its responsibility to reimburse the
holders of the Notes for the fees and disbursements incurred by such
parties in connection with such engagements.
(j) 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.
(k) Notwithstanding anything in the Note Agreement to the contrary
(including without limitation the provisions of paragraph 6B(2) of the Note
Agreement), absent the prior written consent of the Required Holder(s), the
Company shall not, and shall not permit or cause any of its Subsidiaries
to, create, incur, assume or suffer to exist any Debt other than (i)
subject to Section 1.2(s)(b) hereof, Debt outstanding under the Credit
Agreement, (ii) Debt of the Company or any Subsidiary owing to the Company
or any of its Subsidiaries, (iii) Guarantees with respect to the
endorsement of instruments for deposit or collection in the ordinary course
of business, Guarantees relating to Debt which is otherwise permitted under
this Section 1.2(k) and Guarantees with respect to performance guaranties
given by the Company with respect to obligations of Subsidiaries under
contracts in the ordinary course of business, (iv) Debt under an agreement,
device or arrangement providing for payments which are related to
fluctuations of interest rates, exchange rates or forward rates, including,
but not limited to, dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants, (v) Debt outstanding under the Notes, (vi)
Subordinated Debt, (vii) Debt described on Schedule 1.2(k) attached hereto,
provided that no increase in the commitment or facility amount thereof
shall be permitted, (viii) other Debt provided that, at the time of the
creation, incurrence or assumption of such other Debt and after giving
effect thereto, no Default or Event of Default exists and the aggregate
amount of all such other Debt of the Company and its Subsidiaries does not
exceed an amount equal to $2,000,000, and (ix) any refunding or refinancing
of any Debt referred to in clauses (ii) through (viii) above, provided that
any such refunding or refinancing of such Debt does not increase the
principal amount thereof, shorten the maturities thereof or make any of the
other terms or provisions thereof materially more onerous on the Company or
any of its Subsidiaries; provided that during the Forbearance Period only
Debt described in clauses (i), (ii), (iii), (iv), (v), (vii) and (viii)
shall be permitted (and with respect to clause (vii), only to the extent
that such Debt is in existence immediately prior to the Effective Date as
described in Schedule 1 2(k), provided that no increase in the amount
thereof shall be permitted).
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(l) Absent the prior written consent of the Required Holder(s), 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 paragraph 6B(1) of the Note Agreement.
(m) Notwithstanding anything in the Note Agreement to the contrary
(including without limitation the provisions of paragraph 6B(5) of the Note
Agreement), 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 on or before October 31,
2003, or (iii) the disposition of other assets under terms approved by the
Required Holder(s) as evidenced by the prior written consent of the
Required Holders (provided that such consent shall require the approval of
all of the holders of the Notes 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 1.2(m) attached hereto sets
forth a list of 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 Targeted Asset
Disposition shall be delivered to the holders of the Notes as soon as
available. The Company shall, immediately upon receipt thereof, provide to
the holders of the Notes copies of any written agreements or letters of
intent pertaining to the potential sale of any Targeted Asset Disposition.
With respect to any transaction that is approved by the Required Holder(s)
under the provisions of this letter agreement and otherwise is permissible
under the Note Agreement (as modified herein), such transaction, if
consummated, 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 reasonable commissions and
transaction expenses and after deducting any taxes attributable to the
transaction) generated by each such transaction shall upon closing
immediately be applied as follows: (i) 44% to prepay the principal of the
Notes in accordance with the terms of paragraph 4B of the Note Agreement,
and (ii) 56% to prepay the principal of the Debt outstanding under the
Credit Agreement. The holders of the Notes 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.
(n) Notwithstanding anything in the Note Agreement to the contrary
(including without limitation the provisions of paragraph 6B(3) of the Note
Agreement), absent the consent of the Required Holder(s), 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 enter into any merger or consolidation, or enter into any
similar business arrangement or combination, except for Investments
described in clauses (i) through (ix) of the definition of "Permitted
Investments" (with respect to Investments described in clauses (ii) and
(vi) of the definition of "Permitted Investments," only to the extent in
existence immediately prior to the Effective Date).
(o) Notwithstanding anything in the Note Agreement to the contrary,
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
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principal or interest with respect to any existing loan or advance to any
such officer, director, stockholder or other Affiliate.
(p) Notwithstanding anything in the Note Agreement to the contrary
(including without limitation the provisions of paragraph 6B(3) of the Note
Agreement), absent the prior written consent of the Required Holder(s), 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. "Capital stock" includes warrants
and options to purchase capital stock.
(q) 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 Holder(s). The preceding sentence shall not limit
the right of the Company or its Subsidiaries to pay any bonus (i) required
under any written employment agreement, incentive plan or similar
"guaranteed" bonus plan in existence immediately prior to the Effective
Date, (ii) under its annual incentive plan for the fiscal year ending March
31, 2003 (provided that such plan is satisfactory to the Required Holders)
or (iii) negotiated as part of a recruitment "signing bonus" consistent
with past practice. Upon request, the Company shall deliver to the holders
of the Notes copies of any applicable employment agreements, incentive
plans or similar "guaranteed" bonus plans.
(r) The Company shall pay to Prudential an amendment fee in an
amount equal to $253,525.73, payable in three consecutive payments as
follows: (i) $84,508.58 upon execution of this letter agreement, (ii)
$84,508.58 on September 1, 2003 and (iii) $84,508.57 on October 1, 2003;
provided that the unpaid balance of such amendment fee shall in all events
be paid upon consummation of any transaction described in Section 1.2(v)
hereof.
(s) The Company will not (a) reduce the amount of the "Commitments"
under the Credit Agreement or pay any outstanding Debt under the Credit
Agreement if such payment would cause a reduction in the amount of any of
the "Commitments" under the Credit Agreement unless, in either case, the
Company shall concurrently prepay an outstanding principal amount of the
Notes pursuant to paragraph 4B(1) of the Note Agreement which principal
amount bears the same ratio to the outstanding principal amount of the
Notes as the amount of such reduction bears to the "Aggregate Commitments"
under the Credit Agreement immediately prior to such reduction, (b) permit
the aggregate principal amount of all Debt outstanding under the Credit
Agreement to at anytime exceed $27,500,000, or (c) voluntarily prepay any
other Debt.
(t) Notwithstanding anything in the Note Agreement to the contrary,
the Company shall not, and shall not permit any Subsidiary to, make any
"Capital Expenditures" (as defined below) that exceed in the aggregate for
the Company and its Subsidiaries: (a) $1,500,000 during the twelve-month
period ending Xxxxx 00, 0000, (x) $500,000 during the three-month period
ending June 30, 2003 or (c) $1,000,000 during the six month period ending
September 30, 2003. The term "CAPITAL EXPENDITURES" shall mean any
expenditure for any purchase or other acquisition of any asset which would
be classified as plant, property or equipment in accordance with GAAP.
(u) On or before the Effective Date, the Company shall employ, and
at all times until at least October 31, 2003, shall continue to engage, a
full-time consultant acceptable to the holders of the Notes. The 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 the consultant shall be acceptable to
the holders of the Notes. The holders of the Notes hereby consent to the
scope of authority and terms and conditions of engagement set forth in that
certain
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Consulting Agreement between the Company and Xxxx Xxxxx Consulting Group,
Inc. dated as of August 1, 2003. The holders of the Notes will have
unrestricted access to communicate directly with said full-time consultant.
(v) The Company has advised the holders of the Notes that the
Company intends to consult with one or more investment banking firms to
explore various strategic alternatives, including the refinancing of the
Notes and the Credit Agreement and/or the sale of certain assets or
divisions. The Company shall keep representatives of the holders of the
Notes apprised of all consultations with investment banking firms. The
Company has engaged the investment banking firm of Xxxxx Xxxxxxx Xxxx &
Company Securities, Inc. ("BGL") pursuant to a letter dated November 21,
2002 to perform certain services (the "BGL Engagement"). The holders of the
Notes 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 holders of the Notes. The Company agrees
to promptly provide to the holders of the Notes all reports and other
information prepared for or on behalf of the Company by BGL, any investment
banking firm or similar consultant. The Company acknowledges and agrees
that the holders of the Notes, their consultants and counsel shall have
direct access to BGL, 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 holders of the Notes or
their consultants or counsel. Immediately upon receipt by the Company, the
board of directors of the Company or any special subcommittee thereof or
BGL of any proposed letters of intent from prospective purchasers of the
Company and its Subsidiaries, the Company, the board of directors of the
Company or any special subcommittee thereof or BGL, as the case may be,
shall deliver to the holders of the Notes a copy of each such proposed
letter of intent. Not later than September 1, 2003, the Company shall
provide to the holders of the Notes copies of one or more executed
commitment letters from one or more financing sources, equity providers
and/or purchasers (collectively, the "Financing Sources") (the identity of
the Financing Sources and the terms of the commitment letters must be
acceptable to the Required Holders, as evidenced by the written consent of
the Required Holders) to refinance or purchase assets of the Company, in
each case the proceeds of which shall be used to repay in full all amounts
owed to the holders of the Notes under the Note Agreement. Not later than
October 8, 2003, the Company shall provide to the holders of the Notes
copies of one or more executed definitive agreements pertaining to such
refinancing or sale transaction(s) with the Financing Sources (the terms of
such definitive agreements must be acceptable to the Required Holders, as
evidenced by the written consent of the Required Holders), and such
transaction(s) shall be consummated not later than October 31, 2003;
provided, however, that if approval of the proposed transaction by the
Company's shareholders is required, the October 31, 2003 deadline shall be
extended to a date that is five (5) business days following the later of
(x) the date of the meeting of the Company's shareholders called for such
purpose and (y) the date on which any regulatory approvals (such as, by way
of example but not limitation, under the Xxxx-Xxxxx-Xxxxxx Act) have been
obtained or related filing periods have expired. If approval of the
proposed transaction by the Company's shareholders is required, the meeting
for such purpose shall be scheduled to occur not later than forty-five (45)
days after the definitive transaction agreements are executed and the
Company shall deliver to the holders of the Notes copies of any proxy
materials to be filed with the Securities and Exchange Commission
pertaining to such meeting not later than seven (7) days after the
definitive transaction agreements are executed. Any proceeds received on
account of any such sale transaction shall be applied to the repayment of
the Notes in accordance with the terms of the Note Agreement.
(w) The Company shall continue to implement the cost savings
measures identified in the report submitted to the holders of the Notes on
May 20, 2002.
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(x) The Company shall provide to the holders of the Notes and their
advisors a written report upon the occurrence of any material event or
litigation in connection with the Company's Australian Subsidiary or
otherwise, including without limitation any proceedings, investigations,
interim conclusions, pending or completed actions in response thereto, and
any changes in the status of the administration of the business and assets
of such Subsidiary.
(y) There shall be no other Default or Event of Default under the
Note Agreement or the other Note Documents (except for the Existing Events
of Default expressly acknowledged and waived in this letter agreement).
Notwithstanding the provisions of this Section 1.2, the Notes shall be due and
payable on demand in the discretion of the Required Holder(s) pursuant to
paragraph 7A of the Note Agreement (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 Forbearance Period as provided in Sections 1.6 and 6 hereof.
Further, any failure of any one or more of the conditions set forth in this
Section 1.2 shall constitute an Event of Default under the Note Agreement
(without the necessity of any notice or cure period).
1.3 No Course of Dealing; Review of the Company's Business Plan. The
Company and the Guarantors acknowledge and agree that notwithstanding any course
of dealing between the Company and the holders of the Notes prior to the date
hereof, the holders of the Notes shall have no obligation to forbear from
exercising available remedies except as expressly set forth herein.
Notwithstanding any past practice, the Company and the Guarantors agree that the
holders of the Notes shall not be obligated or expected to provide any credit
references on behalf of the Company, and any inquiries in this regard may be
referred back to the Company or their advisors. The holders of the Notes shall
be under no obligation whatsoever to consent to the Company's updated and
revised business plan as the same may be further revised from time to time, and
instead the consideration of the holders of the Notes of the Company's updated
and revised business plan shall be undertaken by the holders of the Notes in
their sole and absolute discretion. The consideration of the holders of the
Notes of the Company's updated and revised business plan shall be without
prejudice to (i) the possibility that the holders of the Notes may conclude that
such business plan, as further revised from time to time, does not adequately
address the Company's defaults under the Note Documents and/or the potential
erosion of collateral supporting the Company's indebtedness to the holders of
the Notes, or (ii) the right of the holders of the Notes, in accordance with the
terms hereof, to exercise rights or remedies available due to defaults under the
Note Documents.
1.4 Defaults. In addition to any Events of Default specified in the Note
Documents, the following shall constitute a default under this letter agreement
and an Event of Default under the Note Documents:
(a) The Company or any Guarantor shall fail to comply with, perform
or observe any term, condition, covenant or agreement set forth in this
letter agreement;
(b) Any representation or warranty of Company or Guarantors
contained in this letter agreement shall be untrue in any material respect
when made or shall, during the term of this letter agreement, become
impaired, untrue or misleading;
(c) the occurrence of any Event of Default other than the Existing
Events of Default (including any new or further violation of the sections
of the Note Agreement implicated by any of the Existing Events of Default);
(d) The occurrence of any "Default" as defined in the Credit
Agreement; or
(e) Any further change having a Material Adverse Effect shall occur
in business, properties, operations or condition (financial or otherwise)
of the Company or any Guarantor.
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1.5 Expiration; No Further Extension Implied. The Company and the
Guarantors acknowledge that the holders of the Notes have no obligation to
extend the term of the Forbearance Period or forbear from enforcing their rights
and remedies before the end of the Forbearance 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 wishes of the holders of the Notes 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 Forbearance Period beyond
October 31, 2003 or to extend any further credit to the Company. Furthermore, no
future agreement by the holders of the Notes to continue to extend the term of
the Forbearance Period beyond October 31, 2003 or any other agreement shall be
valid or enforceable unless it is contained in a final written agreement signed
by the Required Holder(s) (or, to the extent required by paragraph 11C of the
Note Agreement, all of the holders of the Notes). 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 Forbearance Period shall
expire automatically upon the earlier to occur of:
(a) a further Event of Default or a default under this letter
agreement or any document or agreement comprising the Note Documents, and
without notice or an opportunity to cure such Event of Default or default
under this letter agreement, or
(b) except as provided in a further written agreement (if any)
among the Company and the holders of the Notes pertaining to the repayment
of the Company's obligations, October 31, 2003.
Upon the expiration of the Forbearance Period, if the Company is not then in
full compliance with all provisions of the Note Documents (as amended by this
letter agreement but without the benefit of any waiver of defaults except as set
forth in Section 6 hereof), upon the election of the Required Holder(s) but
without further notice, all of the Company's obligations to the holders of the
Notes shall be immediately due and payable (to the extent not already due and
payable) pursuant to paragraph 7A of the Note Agreement, all undertakings of the
holders of the Notes hereunder, including without limitation the forbearance
under Section 1.1 hereof, shall terminate without notice to the Company and
without the requirement of any further action by or on behalf of the holders of
the Notes, the waiver of Existing Events of Default set forth in this letter
agreement shall be deemed rescinded, ab initio, and the holders of the Notes
shall have the right to exercise any remedies provided in this letter agreement
or any of the Note Documents, or under applicable law or in equity. All rights
and remedies of the holders of the Notes shall be cumulative and not exclusive,
and the holders of the Notes 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. This letter agreement
grants a limited forbearance until October 31, 2003 only, or until an earlier
Event of Default, upon the terms and conditions set forth herein. Excepting only
the waiver of Existing Events of Default set forth herein, nothing herein shall
be deemed to constitute a waiver of any Defaults or Events of Default or 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 holders of the Notes
under any of the documents referred to herein or applicable law. Further, the
holders of the Notes shall have the right to waive any conditions set forth in
this letter agreement 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 holders of the Notes may have against the Company or the Guarantors. No
waiver of the rights or any condition of this letter agreement and/or any other
document by the holders of the Notes shall be effective unless the same shall be
contained in a writing signed by authorized representatives of the holders of
the Notes, as the case may be, in the manner required by paragraph 11C of the
Note Agreement. No course of dealing on the part of the holders of the Notes,
nor any delay or failure
9
on the part of the holders of the Notes 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 Company or any Guarantor under
this letter agreement shall survive and continue after the expiration or
termination of the Forbearance Period.
SECTION 2. COVENANTS OF THE COMPANY. The Company shall:
2.1 Promptly perform and observe, and cause each Guarantor to perform and
observe, its respective obligations set forth in this letter agreement.
2.2 Cause each of the Guarantors to execute the Consent attached hereto
as Exhibit B.
2.3 Upon request by the holders of the Notes, promptly prepare and
deliver to the holders of the Notes an updated and detailed business plan (which
may consist of updates and revisions to the plan submitted to the holders of the
Notes in May, 2001, September, 2001, May, 2002, August, 2002 and April, 2003),
viability analysis and financial strategy to improve the Company's business
operations and financial condition, which plan and strategy shall cover the
period at least through March 31, 2004 and shall address, inter alia, repayment
of the Notes in their entirety.
2.4 Upon request by the holders of the Notes, promptly prepare and
deliver to the holders of the Notes an updated and detailed budget forecast for
the remainder of the Forbearance Period and thereafter through March 31, 2004,
including financial and cash flow projections based upon the Company's business
improvement plan, and such budget forecast and projections shall be acceptable
to the Required Holder(s) (upon such acceptance, such budget forecast and
projections shall be referred to as the "ACCEPTED FORECAST"; provided, that
until such acceptance, the "ACCEPTED FORECAST" shall consist of the update and
revision to the business plan submitted to the holders of the Notes in April,
2003 referred to in Section 2.3 above). 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 Company 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 holders of the
Notes such update and a report of any variances between actual results and the
Accepted Forecast originally approved by the Required Holder(s).
2.5 Promptly deliver to the holders of the Notes such information as has
previously been requested in writing by the holders of the Notes or their
financial consultant.
2.6 Promptly execute and deliver, and cause each Guarantor to execute and
deliver, such other documents as the holders of the Notes may reasonably
request.
SECTION 3. AMENDMENTS TO THE NOTE AGREEMENT. From and after the Effective
Date (as defined in Section 5 hereof), Prudential and the Company agree that the
Note Agreement shall be amended as follows:
3.1 Paragraph 4A of the Note Agreement is amended and restated in its
entirety to read as follows:
"4A. REQUIRED PREPAYMENTS. Until the Notes shall be prepaid in full,
the Company shall prepay, without Yield-Maintenance Amount, the sum of (i)
$8,712,153.51 on October 31, 2003, and (ii) $383,795.31 on the 15th day of
each month, commencing November 15, 2003 and continuing to and including
December 15, 2007, in each case
10
together with accrued and unpaid interest thereon, and such principal
amount of the Notes shall become due on such prepayment dates. Any unpaid
principal balance of the Notes, together with any accrued and unpaid
interest thereon, shall become due on January 15, 2008, the maturity date
of the Notes. Interest on the Notes at the rate described in the Notes for
each day on which the principal amount thereunder is outstanding shall be
paid monthly on the 15th day of August, 2003, and continuing on the 15th
day of each month thereafter until the Notes have been paid in full."
3.2 Paragraph 5A of the Note Agreement is amended by deleting clause (v)
thereof, and by adding the following thereto as a new clause (v):
(v) within thirty (30) days after the end of each month, the consolidated
balance sheet of the Company and its Subsidiaries as of the end of such
month, and the related consolidated statements of income and cash flows of
the Company and its Subsidiaries for such month and for the period
commencing at the end of the previous fiscal year and ending with the end
of such month, in form and detail reasonably acceptable to the holders of
the Notes, setting forth in each case in comparative form the corresponding
figures for the corresponding date or period of the preceding fiscal year
and the variances, if any, from the most recent budget and forecast
delivered to the holders of the Notes pursuant to that certain letter
agreement dated as of July 31, 2003 by and between the Company and
Prudential, together with a duly executed Officer's Certificate
demonstrating compliance by the Company with the provisions thereof;
3.3 Paragraph 6A of the Note Agreement is amended and restated in its
entirety to read as follows:
"6A. MINIMUM CONSOLIDATED NET WORTH. The Company will not permit
Consolidated Net Worth to be less than (i) at any time during the period
beginning August 1, 2003 through and including September 29, 2003,
$2,707,000, and (ii) at any time after September 29, 2003, $3,635,000.
3.4 The definition of "Consolidated Net Worth" in paragraph 10B of the
Note Agreement is amended and restated in its entirety as follows:
""CONSOLIDATED NET WORTH" shall mean as of any time of determination
thereof, total stockholders' equity of the Company and its Subsidiaries on
a consolidated basis determined in accordance with GAAP. Notwithstanding
the foregoing, during the "Forbearance Period" (as defined in that certain
letter agreement dated as of July 31, 2003 by and between the Company and
Prudential) "Consolidated Net Worth" shall be calculated exclusive of (a)
gains or losses recognized upon asset dispositions, and (b) any impairment
to goodwill or other intangible assets to the extent required by new
accounting regulations promulgated after the date of this Agreement."
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to Prudential that:
(a) The Company has all requisite corporate power to execute,
deliver and perform its obligations under this letter agreement.
(b) The execution, delivery and performance of this letter
agreement has been duly authorized by all requisite corporate action, and
this letter agreement has been duly executed and delivered by authorized
officers of the Company and are valid obligations of the Company, legally
binding upon and enforceable against the Company in accordance with its
terms, except as such
11
enforceability may be limited by (i) bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) Neither the execution nor delivery of this letter agreement,
nor fulfillment of nor compliance with the terms and provisions hereof will
conflict with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of, or result
in the creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, the charter or by-laws of
the Company or any of its Subsidiaries, any award of any arbitrator or any
agreement (including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the Company or
any of its Subsidiaries is subject.
(d) 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 letter agreement or as a
condition to the legality, validity or enforceability of this letter
agreement.
(e) The Company has not paid fees or any other consideration to the
Bank Agent or to any Bank for or with respect to any of the waivers or
amendments set forth in the "Bank Amendment" (as hereinafter defined) or
the defaults referred to therein other than those expressly set forth
therein.
(f) After giving effect hereto (i) each representation and warranty
set forth in paragraph 8 of the Note Agreement is true and correct as of
the date of the execution and delivery of this letter by the Company with
the same effect as if made on such date (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they were true and correct as of such earlier date), and (ii) no Event
of Default or Default exists (other than the Existing Events of Default).
SECTION 5. EFFECTIVENESS. This letter agreement shall become effective on
the date (the "EFFECTIVE DATE") when each of the following conditions has been
satisfied in a manner satisfactory in form and substance to Prudential:
(a) Prudential has received the following documents:
(i) counterparts of this letter agreement duly executed by
the Company;
(ii) a third amended and restated Note duly executed by the
Company in the form of Exhibit A attached hereto (at which time the
holders of the Notes shall return the Second Amended and Restated
Note to the Company for cancellation);
(iii) a consent of guarantors, dated the date hereof, duly
executed by each Guarantor, in the form attached hereto as Exhibit B;
(iv) an amendment to the Credit Agreement (the "Bank
Amendment"), dated the date hereof, duly executed by the Bank Agent,
the Banks, the Company and CSI Coating Systems Inc., amending the
Credit Agreement in a manner satisfactory to Prudential, in form and
substance satisfactory to Prudential, and such amendment shall be in
full force and effect;
12
(v) a favorable opinion of the Company's counsel
satisfactory in form and substance to Prudential as to such matters
as Prudential may reasonably request;
(vi) a Secretary's Certificate signed by the Secretary or
Assistant Secretary and one other officer of the Company certifying,
among other things (a) as to the name, titles and true signatures of
the officers of the Company authorized to sign this letter and the
other documents to be delivered in connection with this letter, (b)
that attached thereto is a true, accurate and complete copy of the
Articles of Incorporation of the Company, certified by the Secretary
of State of the State of Ohio as of a recent date, (c) that attached
thereto is a true, accurate and complete copy of the By-laws of the
Company which were duly adopted and are in effect as of the Effective
Date, (d) that attached thereto is a true, accurate and complete copy
of the resolutions of the Board of Directors of the Company, duly
adopted at a meeting of such Board of Directors, authorizing the
execution, delivery and performance of this letter and the other
documents to be delivered in connection with this letter, and of all
other documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this letter, and (e)
that this letter and the other documents executed and delivered to
Prudential by the Company are in the form approved by its Board of
Directors in the resolutions referred to in clause (d), above; and
(b) Prudential shall have received a written confirmation, in form
and substance satisfactory to Prudential, signed by the Bank Agent and the
Banks of the continued effectiveness of the Intercreditor and Collateral
Agency Agreement, dated as of June 9, 2000, as amended by Amendment No. 1
thereto dated June 29, 2001, notwithstanding this letter agreement and the
amendment to the Credit Agreement referred to in Section 5(a)(iv) hereof;
(c) all corporate and other proceedings in connection with the
transactions contemplated by this letter agreement shall be satisfactory to
Prudential and its counsel, and Prudential shall have received all such
counterpart originals or certified or other copies of such documents as
they may reasonably request; and
(d) Prudential has received payment of all costs and expenses of
Prudential (including reasonable fees and disbursements of special counsel
to Prudential and of Nightingale & Associates, LLC) in connection with this
letter and the transactions contemplated hereby.
SECTION 6. EXISTING EVENTS OF DEFAULT. The Company has requested that the
holders of the Notes waive the Existing Events of Default subject to the terms
and conditions set forth herein. Pursuant to such request, the holders of the
Notes hereby waive the Existing Events of Default for the period prior to the
Effective Date and, so long as there is no occurrence of a new Default hereunder
or of a new Event of Default under the Note Agreement (for purposes hereof, a
new Default or new Event of Default includes a new or further violation of any
of the sections of the Note Agreement implicated in any of the Existing Events
of Default), for the remainder of the Forbearance Period. Such waiver shall not
extend to any period of time after the Forbearance Period except to the extent
expressly provided in a further written agreement among the Company and the
Required Holder(s), provided that such waiver shall automatically survive the
expiration of the Forbearance Period if the Company is then in full compliance
with all provisions of the Note Documents (as amended by this letter agreement
but without the benefit of any waiver of defaults except as set forth in this
Section 6 and other waivers made by the holders of the Notes prior to the
Effective Date). The Company acknowledges and agrees 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 Note Documents, and (b) shall not be deemed to
have prejudiced any present or future right or rights which the holders of the
Notes now have or may have under this letter agreement, the Note Agreement (as
modified hereby) or the other Note Documents.
13
SECTION 7. RELEASE. The Company and each Guarantor represents and warrants
that it is not aware of any claims or causes of action against any holder of the
Notes or any of their successors or assigns, and that it has no defenses,
offsets or counterclaims with respect to the indebtedness owed by the Company to
the holders of the Notes. Notwithstanding this representation and as further
consideration for the agreements and understandings herein, the Company and
Guarantors, on behalf of themselves and their respective employees, agents,
executors, heirs, successors and assigns, hereby release the holders of the
Notes, 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 Note Agreement or the business relationship among the Company,
the Guarantors and the holders of the Notes.
SECTION 8. PERFORMANCE BY HOLDERS OF THE NOTES; NO AGENCY; COMPANY REMAINS
IN CONTROL. The Company and each Guarantor acknowledges and agrees that the
holders of the Notes have fully performed all of their obligations under the
Note Agreement and all documents executed in connection with the Note Agreement,
and that all actions taken by the holders of the Notes are reasonable and
appropriate under the circumstances and within their rights under the Note
Agreement and all other documents executed in connection therewith and otherwise
available. The actions of the holders of the Notes taken pursuant to this letter
agreement and the documents referred to herein are in furtherance of the efforts
of the holders of the Notes as secured lenders seeking to collect the
obligations owed to the holders of the Notes. Nothing contained in this
Amendment shall be deemed to create a partnership, joint venture or agency
relationship of any nature among the Company and the holders of the Notes. The
Company, the Guarantors and the holders of the Notes agree that notwithstanding
the provisions of this letter agreement, the Company remains in control of its
business operations and determines the business plans (including employment,
management and operating directions) for its business.
SECTION 9. ENTIRE AGREEMENT; SEVERABILITY. The Note Agreement, as
previously amended and as amended by this letter agreement, 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 letter agreement 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 letter agreement.
SECTION 10. 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 letter agreement other than those which are set forth in this
letter agreement. The Company and each Guarantor acknowledges that its
authorized officers have thoroughly read and reviewed the terms and provisions
of this letter agreement and are familiar with same, that the terms and
provisions contained herein are clearly understood by the Company or such
Guarantor and have been fully and unconditionally consented to by the Company or
such Guarantor, and that the Company or such 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 letter agreement, and that this letter
agreement has been entered into by the Company and such Guarantor freely,
voluntarily, with full knowledge, and without duress, and that in executing this
letter agreement, the Company and each 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 Company has
been actual and adequate.
SECTION 11. SUFFICIENCY OF FORBEARANCE PERIOD. The Company 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 holders of the
Notes of such proceeding; and (b) the Forbearance Period is sufficient for the
Company to accomplish the commitments they have undertaken herein.
14
SECTION 12. RATIFICATION. The Company agrees that the Note Agreement, the
Notes, the Note Documents and all other documents and agreements executed by the
Company or the Guarantors in connection with the Note Agreement in favor of
Prudential, any holder of any Note, or the Collateral Agent 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 to them in the Note Agreement.
SECTION 13. REFERENCE TO AND EFFECT ON NOTE AGREEMENT. Upon the
effectiveness of this letter agreement, each reference in the Note Agreement or
any other document, instrument or agreement to the "Note Agreement" shall mean
and be a reference to the Note Agreement as modified by this letter agreement.
Except as specifically set forth in Section 1 hereof, the Note Agreement shall
remain in full force and effect and is hereby ratified and confirmed in all
respects.
SECTION 14. EXPENSES. Without limiting the provisions of paragraph 11B of
the Note Agreement, the Company hereby confirms its obligations under the Note
Agreement, whether or not the transactions hereby contemplated are consummated,
to pay, promptly after request by Prudential, all reasonable out-of-pocket costs
and expenses (including attorneys' fees and expenses and the fees and expenses
of Nightingale & Associates, LLC) incurred by Prudential prior to or after the
date of this letter agreement in connection with the Note Agreement, the Company
and the Guarantors, this letter agreement or the transactions contemplated
thereby or hereby, in enforcing any rights under the Note Agreement or this
letter agreement, or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with the Note Agreement, this
letter agreement or the transactions contemplated thereby or hereby. The
obligations of the Company under this Section 14 shall survive transfer by
Prudential of any Note and payment of any Note.
SECTION 15. GOVERNING LAW. THIS LETTER AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE WHICH WOULD OTHERWISE
CAUSE THIS LETTER AGREEMENT TO BE CONSTRUED OR ENFORCED OTHER THAN IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS.
SECTION 16. COUNTERPARTS; SECTION TITLES. This letter may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument. The section titles contained in this letter are and shall be
without substance, meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto.
15
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Xxxx Xxxxx
----------------------------------------
Vice President
AGREED AND ACCEPTED:
CORRPRO COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Title: Senior Vice President, CFO
----------------------------
16
EXHIBIT A
FORM OF THIRD AMENDED AND RESTATED NOTE
See Attached
CORRPRO COMPANIES, INC.
THIRD AMENDED AND RESTATED SENIOR NOTE DUE JANUARY 15, 2008
No. 1998 A-4 July 31, 2003
$25,352,573 Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, CORRPRO COMPANIES, INC., (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Ohio, hereby promises to pay to The Prudential Insurance Company of
America, or registered assigns, the principal sum of TWENTY FIVE MILLION THREE
HUNDRED FIFTY TWO THOUSAND FIVE HUNDRED SEVENTY THREE DOLLARS ($25,352,573) on
January 15, 2008, with interest (computed on the basis of a 360-day year -
30-day month) (a) on the unpaid balance thereof at a rate per annum equal to
11.35%, payable on the 15th day of each month in each year, commencing on August
15, 2003, until the principal hereof shall have become due and payable, and (b)
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of Yield-Maintenance Amount and any overdue payment of interest,
payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the greater
of (i) 13.35% or (ii) 2.00% over the rate of interest publicly announced by The
Bank of New York from time to time in New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest are
to be made at the main office of Bank of New York in New York City or at such
other place as the holder hereof shall designate to the Company in writing, in
lawful money of the United States of America.
This Note is issued pursuant to the Note Purchase Agreement, dated as of
January 21, 1998, as amended (herein called the "Agreement"), between the
Company, on the one hand, and The Prudential Insurance Company of America, on
the other hand, and is entitled to the benefits thereof. As provided in the
Agreement, this Note is subject to prepayment, in whole or from time to time in
part, in certain cases without Yield-Maintenance Amount and in other cases with
the Yield-Maintenance Amount specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly execute, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default shall occur and be continuing, the principal of
this Note may be declared or otherwise become due and payable in the manner and
with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of Illinois and shall be
construed and enforced in accordance with the internal law of such State.
This Note (i) merely re-evidences the indebtedness previously evidenced by
the Company's Second Amended and Restated Senior Note due January 15, 2008 dated
September 23, 2002 (the "Existing Note"), (ii) is given in exchange for, and not
as payment of, the Existing Note, and (iii) is in no way intended to constitute
a novation of the Existing Note.
CORRPRO COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: Senior Vice President, CFO
--------------------------------
EXHIBIT B
FORM OF CONSENT
See Attached
CONSENT OF GUARANTORS
Each of the undersigned is a guarantor under a subsidiary guaranty (as
amended, the "GUARANTY"), dated as of June 9, 2000, made by each guarantor in
favor of each holder of any Notes (the "NOTEHOLDERS"), and as such hereby
consents to that certain letter dated July 31, 2003, by and between Corrpro
Companies, Inc. and The Prudential Insurance Company of America (the
"MODIFICATION") and the amendments, forbearance and agreements contained
therein, and agrees to all agreements of the Guarantors set forth therein, and
confirms and agrees that, notwithstanding the Modification and the effectiveness
of the amendments, forbearance and agreements contained therein, the Guaranty
is, and shall continue to be, in full force and effect and is hereby confirmed
and ratified in all respects. Nothing herein is intended or shall be deemed to
limit any Noteholder's rights under the Guaranty to take actions without the
consent of the undersigned.
Dated as of July 31, 2003
GOOD-ALL ELECTRIC, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Title: Vice President
-------------------------------
BASS SOFTWARE, 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
------------------------------
