JOINDER, WAIVER AND AMENDMENT NO. 4
TO THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS WAIVER AND AMENDMENT NO. 4 (this "Agreement") is entered into as
of May 17, 2004, by and among SPAR MARKETING FORCE, INC. ("SMF"), SPAR, INC.
("SPAR"), SPAR/BURGOYNE RETAIL SERVICES, INC ("SBRS"), SPAR GROUP, INC. ("SGI"),
SPAR INCENTIVE MARKETING, INC. ("SIM"), SPAR TRADEMARKS, INC. ("STM"), SPAR
MARKETING, INC. (DE) ("SMIDE"), SPAR MARKETING, INC. (NV) ("SMINV"), SPAR
ACQUISITION, INC. ("SAI"), SPAR TECHNOLOGY GROUP, INC. ("STG"), SPAR/PIA RETAIL
SERVICES, INC. ("Pia Retail"), RETAIL RESOURCES, INC. ("Retail"), PIVOTAL FIELD
SERVICES, INC. ("Pivotal Field"), PIA MERCHANDISING CO., INC. ("PIA"), PACIFIC
INDOOR DISPLAY CO. ("Pacific"), PIVOTAL SALES COMPANY ("Pivotal"), SPAR ALL
STORE MARKETING SERVICES, INC., ("SAS") (each an "Existing Borrower" and
collectively "Existing Borrowers") and SPAR BERT FIFE, INC. ("SBFI") and WEBSTER
BUSINESS CREDIT CORPORATION (formerly known as Whitehall Business Credit
Corporation) ("Lender").
BACKGROUND
The Existing Borrowers and Lender are parties to that certain Third
Amended and Restated Revolving Credit and Security Agreement dated January 24,
2003 (as amended, restated, supplemented or otherwise modified from time to
time, the "Loan Agreement") pursuant to which Lender provides the Existing
Borrowers with certain financial accommodations.
The Existing Borrowers have violated certain financial covenants and
have requested Lender waive the resulting Events of Default and Lender is
willing to do so in connection with making certain amendments to the Loan
Agreement. In addition, the Existing Borrowers and SBFI (each a "Borrower" and
collectively the "Borrowers") each desire to add SBFI as a Borrower under (and
as defined in) the Loan Agreement and Lender has agreed to do so.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by
Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined or amended herein
shall have the meanings given to them in the Loan Agreement.
2. Joinder.
(a) SBFI hereby consents to being added and obligated as an additional
Borrower under the Loan Agreement and the Ancillary Agreements, and the
Borrowers and the Lender hereby agree that all references to "Borrower" or
"Borrowers" thereunder and under the Ancillary Agreements shall be deemed to
include SBFI, and the definition of "Borrower" and "Borrowers" in the Loan
Agreement is hereby amended to include SBFI.
(b) Effective as of the Amendment No. 4 Effective Date, SBFI hereby
adopts the Loan Agreement and assumes in full, and acknowledges that it is
jointly and severally liable for, the payment, discharge, satisfaction, and
performance of all Obligations under the Loan Agreement and under the Ancillary
Agreements. SBFI hereby grants to Lender a continuing lien and security interest
in all presently existing and hereafter arising Collateral that it now or
hereafter owns or has an interest in, wherever located, to secure the prompt
repayment of any and all Obligations owed to Lender and to secure the prompt
performance by Borrowers of each and all of their covenants and obligations
under the Loan Agreement and under the Ancillary Agreements. Lender's Lien and
security interest in the Collateral shall attach to all Collateral without
further act on the part of Lender or SBFI.
3. Waiver. Subject to the satisfaction of Section 5 below, Lender hereby waives
the Event of Default which has occurred as a result Borrowers' non-compliance
with Section 12(p) and Section 12(r) with respect to the fiscal quarter ending
March 31, 2004 due to Borrowers' failure to maintain the requisite Fixed Charge
Coverage Ratio and EBITDA level for the four fiscal quarters then ended.
4. Amendment. Subject to the satisfaction of Section 5 below, the Loan Agreement
is hereby amended as follows:
(a) Section 1(A) is hereby amended as follows:
(i) "The definition of "EBITDA" is hereby amended by
adding the following at the end thereof:"
"The positive EBITDA of each Unrestricted
Subsidiary shall be excluded from the
foregoing calculation except to the extent
of returns of capital, distributions and/or
repayment of loans made to a Borrower by
dividends or loans or other advances
provided by any Unrestricted Subsidiary. The
negative EBITDA of any Unrestricted
Subsidiary shall also be excluded from the
foregoing calculation of EBITDA."
(ii) The definition of "Fixed Charges" is hereby amended
by amending clause (vii) in its entirety to provide
as follows:
"(vii) all capital contributions and/or
loans made by any Borrower to any
Unrestricted Subsidiary during such period."
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(iii) The definition of "Maximum Revolving Account" is
hereby amended by deleting "$15,000,000" and
inserting "$10,000,000" in its place and stead.
(iv) The definition of "Permitted Acquisitions" is hereby
amended by amending clause (b) in its entirety to
provide as follows:
"(b) with Aggregate Consideration in an
amount not to exceed $100,000 for any
proposed acquisition."
(v) The following new definitions are hereby added in the
appropriate alphabetical order.
"Amendment No. 4" means Waiver and Amendment
No. 4 dated as of May 17, 2004 by and among
Borrowers and Lender.
"Amendment No. 4 Effective Date" shall mean
the date on which all of the conditions
precedent set forth in Section 5 of
Amendment No. 4 have been satisfied.
"Applicable Margin" shall mean, as of the
Amendment No. 4 Effective Date, 0.50% with
respect to Domestic Rate Loans and 3.00%
with respect to Eurodollar Rate Loans.
Thereafter, on a quarterly basis, effective
as of the first Business Day following
receipt by Lender of the quarterly financial
statements required under Section 11(c)
hereof for the previous fiscal quarter (each
Business Day following such receipt, an
"Adjustment Date"), commencing with the
financial statements for the fiscal quarter
ending September 30, 2004, based upon the
amount of EBITDA which is achieved for the
fiscal quarter ending September 30, 2004 for
the three fiscal quarters then ending and
for each fiscal quarter ending thereafter
for the four fiscal quarters then ending,
the Applicable Margin shall be adjusted, if
necessary, to the applicable percent per
annum set forth in the pricing table set
forth below:
- --------------------------------------------- ----------------------------- -------------------------------
EBITDA APPLICABLE MARGIN FOR APPLICABLE MARGINS FOR
DOMESTIC RATE LOANS EURORAISE RATE LOANS
- --------------------------------------------- ----------------------------- -------------------------------
Greater than $5,000,000 0.00% 2.50%
- --------------------------------------------- ----------------------------- -------------------------------
Greater than $4,000,000 but equal to or 0.25% 2.75%
less than $5,000,000
- --------------------------------------------- ----------------------------- -------------------------------
Greater than $3,000,000 but equal to or 0.50% 3.00%
less than $4,000,000
- --------------------------------------------- ----------------------------- -------------------------------
Less than or equal to $3,000,000 0.75% 3.25%
- --------------------------------------------- ----------------------------- -------------------------------
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If Borrowers shall fail to deliver the financial statements,
certificates, and/or other information required under Sections 11(a) and (c)
hereof by the dates required pursuant to such Sections, each Applicable Margin
shall be conclusively presumed to be the highest Applicable Margin specified in
the pricing table set forth above until the date of delivery of such financial
statements, certificates and/or other information.
(vi) "General Availability Reserve" shall mean
$800,000.
(b) Section 2(a)(y)(v) of the Loan Agreement is hereby
amended by deleting "SBFI Reserve" and inserting
"General Availability Reserve".
(c) Section 2(b) of the Loan Agreement is hereby amended
by adding the following at the end thereof:
"Unbilled Receivables Availability at any
time shall be limited to an amount not to
exceed Receivables Availability at such
time."
(d) Section 12(n)(v)(E) is amended by amending the second
proviso in its entirety to provide as follows:
"provided, further, that commencing on the
Amendment No. 4 Effective Date the
outstanding principal amount of SPG Loans
shall not exceed $1,000,000, and"
(e) Section 12(n)(v)(F) is hereby amended in its entirety
to provide as follows:
"(F) any investment (net of all related
repayments and returns of capital) made by
any Borrower in any Unrestricted Subsidiary,
in the form of a capitalized expense,
capital contribution or loan, for purposes
of investing in, or investing in an entity
which is investing in, entities or
participating in joint ventures formed under
the laws of a foreign country, provided that
such investment, together with the Aggregate
Consideration, shall not exceed (x) $625,000
in the aggregate during the period
commencing on the date Amendment No. 4 is
executed through December 31, 2004, and (y)
$500,000 during each calendar year
thereafter."
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(f) New Section 12(x) is hereby added to the Loan
Agreement which provides as follows:
"(x) On or before May 25, 2004, Borrowers
shall provide Lender with contingency
scenarios reflecting the impact upon
Borrowers if Eckerd should materially reduce
its demand for services from Borrowers. In
addition, on or before June 15, 2004,
Borrowers shall retain a consultant to be
selected by Borrowing Agent but who is
satisfactory to Lender. The terms of the
engagement shall be subject to a
satisfactory review by Lender. The
consultant shall prepare a report analyzing
the contingency scenarios and Lender shall
have received a copy of such report on or
before June 30, 2004."
5. Conditions of Effectiveness. This Agreement shall become effective as of the
date hereof, provided that the following conditions shall have been satisfied:
Lender shall have received (i) four (4) copies of this Agreement executed by the
Borrowers, and, (ii) payment of a waiver and amendment fee in the sum of $50,000
which fee shall be charged by Lender to Borrowers' loan account as a Revolving
Advance, and (iii) limited guarantees from William Bartels (limited to $400,000)
and Robert Brown (limited to $600,000) in form and substance satisfactory to
Lender.
6. Representations, Warranties and Covenants. Each of the Borrowers hereby
represents, warrants and covenants as follows:
(a) This Agreement and the Loan Agreement constitute legal, valid and
binding obligations of each of the Borrowers and are enforceable against each of
the Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Agreement, each of the Borrowers
hereby reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Agreement.
(c) No Borrower has any defense, counterclaim or offset with respect to
the Loan Agreement or the Obligations.
(d) Within ten (10) days of the Amendment No. 4 Effective Date, the
Chief Financial Officer of Borrower shall deliver to Lender (x) a report setting
forth the covenant violations as of March 31, 2004 and as projected for the
balance of 2004, together with a request for any necessary waivers and proposed
amendments, and (y) a year-end compliance certificate in substantially the form
of Exhibit A to this Agreement setting forth year-end covenant calculations
(including advances to Unrestricted Subsidiaries).
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7. Effect on the Loan Agreement.
(a) Except as specifically amended herein, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(b) Except as set forth in Section 2 hereof, the execution, delivery
and effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments or agreements executed and/or
delivered under or in connection therewith.
8. Governing Law. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns and shall be
governed by and construed in accordance with the laws of the State of New York
(other than those conflict of law rules that would defer to the substantive law
of another jurisdiction).
9. Release. Borrowers hereby release, remise, acquit and forever discharge
Lender, Lender's employees, agents, representatives, consultants, attorneys,
fiduciaries, officers, directors, partners, predecessors, successors and
assigns, subsidiary corporations, parent corporations, and related corporate
divisions (all of the foregoing hereinafter called the "Released Parties"), from
any and all actions and causes of action, judgments, executions, suits, debts,
claims, demands, liabilities, obligations, damages and expenses of any and every
character, known or unknown, direct and/or indirect, at law or in equity, of
whatsoever kind or nature, for or because of any matter or things done, omitted
or suffered to be done by any of the Released Parties prior to and including the
date of execution hereof, and in any way directly or indirectly arising out of
or in any way connected to this Amendment or the Ancillary Agreements (all of
the foregoing hereinafter called the "Released Matters"). Borrowers acknowledge
that the agreements in this Section are intended to be in full satisfaction of
all or any alleged injuries or damages arising in connection with the Released
Matters.
10. Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
11. Counterparts; Facsimile Signatures. This Agreement may be executed by the
parties hereto in one or more counterparts of the entire document or of the
signature pages hereto, each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement. Any signature
received by facsimile transmission shall be deemed an original signature hereto.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first written above.
SPAR MARKETING FORCE, INC.
SPAR, INC.
SPAR/BURGOYNE RETAIL SERVICES, INC.
SPAR GROUP, INC.
SPAR INCENTIVE MARKETING, INC.
SPAR TRADEMARKS, INC.
SPAR MARKETING, INC. (DE)
SPAR MARKETING, INC. (NV)
SPAR ACQUISITION, INC.
SPAR TECHNOLOGY GROUP, INC.
SPAR/PIA RETAIL SERVICES, INC.
RETAIL RESOURCES, INC.
PIVOTAL FIELD SERVICES, INC.
PIA MERCHANDISING CO., INC.
PACIFIC INDOOR DISPLAY CO.
PIVOTAL SALES COMPANY
SPAR GROUP, INC.
SPAR ALL STORE MARKETING SERVICES, INC.
SPAR BERT FIFE, INC.
By:
-------------------------------------
Name: Charles Cimitile
Title: Chief Financial Officer of
each of the foregoing
entities
WEBSTER BUSINESS CREDIT CORPORATION
By:
-------------------------------------
Name:
Its:
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