EXHIBIT 10.20
FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
This First Amendment to Amended and Restated Credit Agreement (this
"FIRST AMENDMENT") is executed as of the 26th day of January, 2004 (the
"EFFECTIVE DATE"), by and among HWG, LLC, a Delaware limited liability company
("BORROWER"), THE HALLWOOD GROUP INCORPORATED, a Delaware corporation
("PARENT"), and FIRST BANK (d/b/a First Bank & Trust), as Administrative Agent
("ADMINISTRATIVE AGENT") and the sole Lender party to the Credit Agreement
("LENDER").
WITNESSETH:
WHEREAS, Borrower, Parent, Administrative Agent and Lender are parties
to that certain Amended and Restated Credit Agreement dated as of July 28, 2003
(the "CREDIT AGREEMENT") (unless otherwise defined herein, all terms used herein
with their initial letter capitalized shall have the meaning given such terms in
the Credit Agreement); and
WHEREAS, pursuant to the Credit Agreement, Lender has made Revolving
Loans, the Term A Loan and the SPA Loans to Borrower; and
WHEREAS, Borrower failed to borrow the proceeds of the SPA Term Loans
to make the Separation Agreement Payment by August 26, 2003; and
WHEREAS, the obligation of Lender to make the SPA Term Loans expired on
August 26, 2003; and
WHEREAS, Borrower and Parent have requested that Lender amend certain
terms of the Credit Agreement in certain respects including, without limitation,
extending the Separation Agreement Payment Date to December 15, 2004; and
WHEREAS, subject to the terms and conditions herein contained, Lender
has agreed to Borrower's and Parent's request.
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrower, Parent, Administrative Agent and Lender hereby agree as follows:
Section 1 AMENDMENTS. In reliance on the representations, warranties,
covenants and agreements contained in this First Amendment, and subject to the
terms and conditions contained herein, the Credit Agreement is hereby amended,
effective as of the Effective Date, in the manner provided in this Section 1.
1.1 DEFINITIONS.
(a) The definitions of "SPA TERM LOAN PREPAYMENT HORIZON" and
"SPA TERM LOAN RATE" are hereby deleted from the Credit Agreement.
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(b) The definitions of "ADVANCE NOTICE", "APPLICABLE MARGIN",
"BASE RATE LOAN", "EURODOLLAR LOAN", FINANCING DOCUMENTS", and
"SEPARATION AGREEMENT PAYMENT DATE" contained in Section 1.1 of the
Credit Agreement shall be amended to read in full as follows:
"ADVANCE NOTICE" shall mean written or telecopy notice (with telephone
confirmation in the case of telecopy notice), which in each case shall
be irrevocable, from the Borrower to be received by the Administrative
Agent before 10:00 a.m. (Dallas, Texas time), by the number of Business
Days in advance of any Borrowing, conversion, continuation or
prepayment of any SPA Term Loan or Revolving Credit Loan pursuant to
this Agreement, as respectively indicated below:
(a) Eurodollar Loans - 3 Business Days; and
(b) Base Rate Loans - Same Business Day.
For the purpose of determining the respectively applicable SPA Term
Loans or Revolving Credit Loans in the case of the conversion from one
Type of SPA Term Loan or Revolving Credit Loan, respectively, into
another, the SPA Term Loans or Revolving Credit Loans, respectively,
into which there is to be a conversion shall control. The
Administrative Agent and each Lender are entitled to rely upon and act
upon telecopy notice made or purportedly made by the Borrower, and the
Borrower hereby waives the right to dispute the authenticity and
validity of any such transaction once the Administrative Agent or any
Lender has advanced funds, absent manifest error.
"APPLICABLE MARGIN" shall mean, on any day and with respect to any SPA
Term Loan or Revolving Credit Loan, the applicable per annum percentage
set forth below:
(a) Eurodollar Loans - 3.250%; and
(b) Base Rate Loans - 0.500%.
"BASE RATE LOAN" shall mean a Revolving Credit Loan or a SPA Term Loan
bearing interest at the rate provided in Section 2.5(a).
"EURODOLLAR LOAN" shall mean a Revolving Credit Loan or a SPA Term Loan
bearing interest at the rate provided in Section 2.5(b).
"FINANCING DOCUMENTS" shall mean this Agreement, the First Amendment,
the Revolving Credit Notes, the Term Notes, the Security Instruments,
the Borrowing Requests, the Gotham Payment Notice, the Separation
Agreement Payment Notice, and the other documents, instruments or
agreements described in Section 3.1, Section 3.2, Section 3.3 and
Section 3.4, together with any other document, instrument or agreement
now or hereafter entered into in connection with the Loans, the Lender
Indebtedness or the Collateral, as such documents,
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instruments or agreements may be amended, modified or supplemented from
time to time.
"SEPARATION AGREEMENT PAYMENT DATE" shall mean any Business Day after
the Closing Date but prior to December 15, 2004, on which the
Separation Agreement Payment is made, which date shall be expressly set
forth in the Separation Agreement Payment Notice as the "Separation
Agreement Payment Date".
(c) The following definitions of "FIRST AMENDMENT" and "SPA
TERM CREDIT EXPOSURE" are added to Section 1.1 of the Credit Agreement
in alphabetical order:
"FIRST AMENDMENT" shall mean that certain First Amendment to Amended
and Restated Credit Agreement dated as of January 26, 2004 entered into
by and among Borrower, Parent, Administrative Agent and Lenders.
"SPA TERM CREDIT EXPOSURE" shall mean, at any time and as to each
Lender, the aggregate principal amount of the SPA Term Loans made by
such Lender outstanding as of such date.
1.2 AMENDMENT TO SECTION 2.1(b). Section 2.1(b) is hereby amended to
read in its entirety as follows:
(b) TYPES OF REVOLVING CREDIT LOANS AND SPA TERM LOANS. The Revolving
Credit Loans and SPA Term Loans made pursuant hereto by each Lender
shall, at the option of the Borrower, be either Base Rate Loans or
Eurodollar Loans and may be continued or converted pursuant to Section
2.9; provided, that, except as otherwise specifically provided herein,
all Revolving Credit Loans and SPA Term Loans made pursuant to the same
Borrowing shall be of the same Type.
1.3 AMENDMENT TO SECTION 2.1(d). Section 2.1(d) is hereby amended to
read in its entirety as follows:
(d) TERM AND SPA LOAN COMMITMENTS. The Term A Loans, SPA Term Loans and
SPA Loans made pursuant hereto by each Lender shall not exceed in the
aggregate principal amount outstanding the amount set forth opposite
such Lender's name on Annex I under the caption "Term A Loan
Commitment", "SPA Term Loan Commitment" or "SPA Loan Commitment",
respectively (its "TERM A LOAN COMMITMENT", "SPA TERM LOAN COMMITMENT"
[as may be reduced pursuant to the provisions below] and "SPA LOAN
COMMITMENT", respectively, and collectively for all Lenders, the "TERM
A LOAN COMMITMENTS", "SPA TERM LOAN COMMITMENTS" [as may be reduced
pursuant to the provisions below] and "SPA LOAN COMMITMENTS",
respectively). Notwithstanding the foregoing, if the Separation
Agreement Payment Date does not occur by January 31, 2004, the SPA Term
Loan Commitment shall automatically reduce (without any further action
or notice by Administrative Agent or any Lender) by $50,000 on the
first day of each calendar month thereafter (beginning February 1,
2004) until the earlier of (i) December 15, 2004 or (ii) the Separation
Agreement Payment Date.
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1.4 AMENDMENT TO SECTION 2.2(a). Section 2.2(a) is hereby amended to
read in its entirety as follows:
(a) BORROWING REQUESTS. Whenever the Borrower desires to make a
Borrowing of Revolving Loans or SPA Term Loans hereunder, it shall give
Advance Notice in the form of a Borrowing Request (which, in the case
of a Borrowing of a SPA Term Loan, shall be the Separation Agreement
Payment Notice), specifying, subject to the provisions hereof, (1) the
aggregate principal amount of the Revolving Loans or SPA Term Loans to
be made pursuant to such Borrowing, (2) the date of Borrowing (which
shall be a Business Day), (3) whether the Revolving Loans or SPA Term
Loans being made pursuant to such Borrowing are to be Base Rate Loans
or Eurodollar Loans, and (4) in the case of Eurodollar Loans, the
Interest Period to be applicable thereto.
1.5 AMENDMENT TO SECTION 2.4(b). Section 2.4(b) is hereby amended to
read in its entirety as follows:
(b) TERM NOTES AND AMORTIZATION. The Borrower's obligation to
pay the principal of, and interest on, the Term A Loans and SPA Term
Loans maintained outstanding by each Lender shall be further evidenced
by the Borrower's issuance, execution and delivery of a Term A Note and
SPA Term Note, respectively, payable to the order of each such Lender
in the amount of such Lender's Term A Loan Commitment (if issued at or
prior to the Closing Date) and SPA Term Loan Commitment (if issued
prior to the Separation Agreement Payment Date), respectively, or in
the principal amount of such Lender's Term A Loans (if issued after the
Closing Date) and SPA Term Loans (if issued after the Separation
Agreement Payment Date), respectively (if issued after the Closing
Date), and dated as of the date of issuance of such Term A Note and SPA
Term Note, respectively. The aggregate principal amount of the Term A
Notes applicable to the aggregate Term A Loans of all Lenders shall be
payable in monthly installments of principal and interest in the amount
of $92,631.29 each, and the aggregate principal amount of the SPA Term
Notes applicable to the aggregate SPA Term Loans of all Lenders shall
be payable in monthly installments of principal in the amount of
$50,000.00 each plus interest thereon. Each such installment shall be
applied first to accrued but unpaid interest on the Term A Loans and
the SPA Term Loans, as applicable, and then to principal on the Term A
Loans and the SPA Term Loans, as applicable. The first such monthly
installment with respect to Term A Loans shall be payable on August 1,
2003, and the first such monthly installments with respect to SPA Term
Loans shall be payable on the first day of the calendar month
immediately following the Separation Agreement Payment Date. The
remaining monthly installments with respect to each of the Term A Loans
and the SPA Term Loans shall be payable on each Monthly Date after the
applicable date set forth in the preceding sentence, with the final
installments in the amounts of the aggregate unpaid principal balance
on the Term A Loans and the SPA Term Loans, as applicable, then owing,
together with all accrued and unpaid interest, being payable on or
before
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the Term A Loan Maturity Date in the case of the Term A Loans and the
SPA Term Loan Maturity Date in the case of the SPA Term Loans.
1.6 AMENDMENTS TO SECTION 2.5. Sections 2.5(c), 2.5(d) and 2.5(e) are
hereby amended to read in their entirety as follows:
(c) TERM A LOANS. Subject to Section 2.5(d), the Borrower
agrees to pay interest in respect of the unpaid principal amount of
each Term A Loan from the date thereof until payment in full thereof at
a rate per annum which shall be, for any day, equal to the Term A Loan
Rate, but in no event shall such rate exceed the Highest Lawful Rate.
(d) DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount
becoming due hereunder or under any Financing Document, by acceleration
or otherwise, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount to
but excluding the date of actual payment (after as well as before
judgment) at a rate per annum equal to (1) in the case of any
Eurodollar Loan, the rate that would be applicable under Section 2.5(b)
to such Eurodollar Loan plus 4% per annum, (2) in the case of any Term
A Loan, eleven percent (11%) per annum, and (3) in the case of any
other amount, the rate that would be applicable under Section 2.5(a) to
a Base Rate Loan plus 4% per annum, but in no event to exceed the
Highest Lawful Rate.
(e) INTEREST PAYMENT DATES. Interest on each Loan shall accrue
from and including the date of such Loan to but excluding the date of
payment in full thereof. Interest on each Eurodollar Loan shall be
payable on each Monthly Date and the last day of each Interest Period
applicable thereto, and on any prepayment (on the amount prepaid), at
maturity (whether by acceleration or otherwise) and, after maturity, on
demand. Interest on each Term A Loan and Base Rate Loan shall be
payable on each Monthly Date, commencing on the first of such days to
occur after such Loan is made, at maturity (whether by acceleration or
otherwise) and, after maturity, on demand.
1.7 AMENDMENT TO SECTION 2.6(d). Section 2.6(d) is hereby amended to
read in its entirety as follows:
(d) MATURITY DATES. No Interest Period with respect to a Revolving
Credit Loan shall extend beyond the Revolving Credit Maturity Date, and
no Interest Period with respect to a SPA Term Loan shall extend beyond
the SPA Term Loan Maturity Date.
1.8 AMENDMENT TO SECTION 2.8(a)(5). Section 2.8(a)(5) is hereby amended
to read in its entirety as follows:
(5) Any or all of (a) the Term A Loan Commitment remaining
unused after the Closing Date shall automatically terminate at 5:00
p.m. (Dallas, Texas time) on such date, (b) the SPA Term Loan
Commitment remaining unused after
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December 15, 2004 shall automatically terminate at 5:00 p.m. (Dallas,
Texas time) on such date, and (c) the SPA Loan Commitment remaining
unused after the Gotham Litigation Payment Date shall automatically
terminate at 5:00 p.m. (Dallas, Texas time) on such date.
1.9 AMENDMENT TO SECTION 2.8(c). Section 2.8(c) is hereby amended to
read in its entirety as follows:
(c) PREPAYMENT PENALTY. In the event that the Term A Loans are prepaid
in whole or in part on or prior to the Term A Loan Maturity Date,
including, without limitation, pursuant to a mandatory prepayment
required by Article 8 hereof, but excluding, however, pursuant to a
mandatory prepayment required by Section 2.8 or Section 7.4 hereof, the
Borrower shall also pay to the Lenders at the time of such prepayment,
a prepayment penalty equal to a percentage of the amount prepaid in
accordance with the following schedule:
<Table>
<Caption>
Penalty as Percentage of
Time of Prepayment Amount Prepaid
- ----------------------------- ------------------------
On or prior to April 1, 2004 2%
Prior to April 1, 2005 1%
</Table>
Furthermore, in the event any Credit Party shall (1) receive Net Cash
Proceeds from any Equity Contribution, and (2) apply, prior to the Term
A Loan Maturity Date (in the case of Term A Loans), all or a portion of
such Net Cash Proceeds as a prepayment of more than thirty-five percent
(35%) of the then outstanding principal balance of the Term A Loans
(any portion prepaid in excess of thirty-five percent (35%) of the then
outstanding principal balance of the Term A Loans, as the case may be,
being referred to herein as an "EXCESS PREPAID AMOUNT"), the Borrower
shall also pay to the Lenders at the time of such prepayment, a
prepayment penalty equal to a percentage of the Excess Prepaid Amount
in accordance with the foregoing provisions.
1.10 AMENDMENT TO SECTION 2.10(A). Section 2.10(a) is hereby amended to
read in its entirety as follows:
(a) UNUSED COMMITMENT FEES. The Borrower shall pay to the
Administrative Agent for the account of and distribution to each
Lender: (1) in accordance with its Revolving Credit Percentage a
commitment fee for the period commencing on the Closing Date, to and
including the Revolving Credit Maturity Date (or such earlier date as
the Revolving Credit Commitments shall have been terminated entirely)
computed at a rate per annum equal to the Commitment Fee Percentage on
the average daily excess amount of the Revolving Credit Commitments
over the Revolving Credit Exposure; (2) in accordance with its SPA Loan
Percentage a commitment fee for the period commencing on the Closing
Date, to and including the Gotham Litigation Payment Date computed at
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a rate per annum equal to the Commitment Fee Percentage on the average
daily excess amount of the SPA Loan Commitments over the SPA Credit
Exposure; and (3) in accordance with its SPA Term Loan Percentage a
commitment fee for the period commencing on the Effective Date (as
defined in the First Amendment), to and including the earlier of (A)
December 15, 2004, or (B) the Separation Agreement Payment Date
computed at a rate per annum equal to the Commitment Fee Percentage on
the average daily excess amount of the SPA Term Loan Commitments over
the SPA Term Credit Exposure. The commitment fees on the (i) Revolving
Credit Commitments earned from and after the Closing Date shall be
payable in arrears on each Quarterly Date, commencing on the first
Quarterly Date to occur after the Closing Date, (ii) SPA Loan
Commitments earned from and after the Closing Date shall be payable in
arrears on or before the first Quarterly Date following the Gotham
Payment Date, and (iii) SPA Term Loan Commitments earned from and after
the Effective Date (as defined in the First Amendment) shall be payable
in arrears on or before the first Quarterly Date following the
Effective Date (as defined in the First Amendment).
1.11 AMENDMENTS TO SECTION 2.11(c). Section 2.11(c) is hereby amended
to read in its entirety as follows:
(c) COMPUTATIONS. All computations of interest shall be made on the
basis of a year of 360 days (unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis
of a year of 365 or 366 days, as the case may be) in the case of Term A
Loans and Eurodollar Loans, and 365 or 366 days (as the case may be) in
the case of Base Rate Loans, and all computations of fees shall be made
on the basis of a year of 360 days (unless such calculation would
result in a usurious rate, in which case interest shall be calculated
on the basis of a year of 365 or 366 days, as the case may be), in each
case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest
or fees are payable.
1.12 AMENDMENT TO EXHIBIT I. The form of Separation Agreement Payment
Notice attached as Exhibit I to the Credit Agreement shall be replaced with the
form attached hereto as Exhibit I.
Section 2 CONDITIONS PRECEDENT. The effectiveness of the amendments to
the Credit Agreement contained in Section 1 hereof is subject to the
satisfaction of the each of the following conditions precedent:
2.1 EXECUTION OF FIRST AMENDMENT. Counterparts of this First Amendment
shall have been duly executed by each of the parties hereto, and a fully
executed copy of this First Amendment shall have been received by Administrative
Agent.
2.2 FEES. Borrower shall have paid to Administrative Agent: (a) an
amendment fee in the amount of $5,000.00 and (b) all fees and expenses of
counsel to Administrative Agent in connection with the preparation, negotiation
and execution of this First Amendment.
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2.3 NO DEFAULT. No Default or Event of Default shall have occurred
which is continuing.
2.4 OTHER DOCUMENTS. Administrative Agent shall have been provided with
such other documents, instruments and agreements, and Borrower and Parent shall
have taken such actions, as Administrative Agent may reasonably require in
connection with this First Amendment and the transactions contemplated hereby.
Section 3 REPRESENTATIONS AND WARRANTIES. In order to induce
Administrative Agent and Lender to enter into this First Amendment, Borrower and
Parent hereby jointly and severally represent and warrant to Administrative
Agent and each Lender that:
3.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of each Credit Party contained in the Financing Documents is true and
correct in all material respects as of the date hereof (except to the extent
that any such representation and warranty is expressly made as of a particular
date, in which event such representation and warranty was true and correct as of
such date).
3.2 ABSENCE OF DEFAULTS. Neither a Default nor an Event of Default has
occurred which is continuing.
3.3 NO DEFENSES. No Credit Party has any defenses to payment,
counterclaims or rights of set-off with respect to the Lender Indebtedness on
the date hereof.
Section 4 MISCELLANEOUS.
4.1 REAFFIRMATION OF FINANCING DOCUMENTS; EXTENSION OF LIENS. Any and
all of the terms and provisions of the Credit Agreement and the Financing
Documents shall, except as amended and modified hereby, remain in full force and
effect. Borrower hereby extends the Liens securing the Lender Indebtedness until
the Lender Indebtedness has been paid in full, and Borrower and Parent hereby
agree that the amendments and modifications herein contained shall in no manner
affect or impair the Lender Indebtedness, the Liens securing payment and
performance thereof and/or the Facility Guaranty executed and delivered by
Parent in connection with the Credit Agreement.
4.2 PARTIES IN INTEREST. All of the terms and provisions of this First
Amendment shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
4.3 COUNTERPARTS. This First Amendment may be executed in counterparts,
and all parties need not execute the same counterpart. Facsimiles shall be
effective as originals.
4.4 COMPLETE AGREEMENT. THIS FIRST AMENDMENT, THE CREDIT AGREEMENT AND
THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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4.5 HEADINGS. The headings, captions and arrangements used in this
First Amendment are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of this First Amendment, nor
affect the meaning thereof.
4.6 EXPENSES. Borrower and Parent jointly and severally agree to
promptly pay all reasonable fees and expenses of counsel to Administrative Agent
incurred by Administrative Agent in connection with the preparation, negotiation
and execution of this First Amendment and all related documents.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed by their respective authorized officers on the date and year
first above written.
[Signature pages to follow]
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SIGNATURE PAGE TO FIRST AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
HWG, LLC
By:
----------------------------------------
William L. Guzzetti, President
THE HALLWOOD GROUP INCORPORATED
By:
----------------------------------------
Melvin J. Melle, Vice President
[Signature Page]
SIGNATURE PAGE TO FIRST AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
FIRST BANK, individually and as
Administrative Agent
By:
----------------------------------------
Steve D. Israel, Vice President
[Signature Page]
EXHIBIT I
FORM OF SEPARATION AGREEMENT PAYMENT NOTICE
Reference is made to that certain Amended and Restated Credit Agreement
dated as of July 28, 2003 (as may be amended from time to time, the "CREDIT
AGREEMENT") by and among The Hallwood Group Incorporated, a Delaware
corporation, as parent guarantor, HWG, LLC, a Delaware limited liability company
("BORROWER"), First Bank, in its individual capacity as a Lender and as
Administrative Agent, and certain other Lenders a party thereto. Terms which are
defined in the Credit Agreement and which are used but not defined herein are
used herein with the meanings given them in the Credit Agreement. Pursuant to
Section 3.4 of the Credit Agreement, Borrower hereby provides notice to the
Administrative Agent and the Lenders that Borrower intends to make the
Separation Agreement Payment on _________, 2004, such date to be the Separation
Agreement Payment Date, and requests that the Lenders make the SPA Term Loan to
Borrower on such date.
Borrower requests that the Borrowing to be made hereunder shall be [A BASE RATE
BORROWING] [A EURODOLLAR BORROWING] and shall have the Interest Periods all as
set forth below:
Type of Borrowing Aggregate Amount Interest Period
(if applicable)
- ----------------- ---------------- ---------------
- ----------------- ---------------- ---------------
- ----------------- ---------------- ---------------
Borrower hereby certifies that:
(a) The Responsible Officer of Borrower signing this
instrument is the duly elected, qualified and acting officer of
Borrower as indicated below such officer's signature hereto.
(b) The representations and warranties of each Credit Party
contained in the Credit Agreement and the other Financing Documents are
true and correct on and as of the date hereof, with the same effect as
though such representations and warranties had been made on and as of
the date hereof or, if such representations and warranties are
expressly limited to particular dates, as of such particular dates.
(c) Immediately before and after giving effect to the
extension of the SPA Term Loan requested hereby, no Default or Event of
Default has occurred and is continuing, and the making of such SPA Term
Loan by the Lenders will not cause a Default or Event of Default.
(d) The Credit Parties have performed and complied with all
agreements and conditions in the Credit Agreement required to be
performed or complied with by such Credit Parties on or prior to the
date hereof, and each of the conditions precedent to the making of the
SPA Term Loan contained in the Credit Agreement remain satisfied in all
material respects.
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IN WITNESS WHEREOF, this instrument is executed as of
_____________________, 2004.
HWG, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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