Exhibit 10.5
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT FACILITY AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT FACILITY AND
SECURITY AGREEMENT (the "First Amendment") is made effective as of March 9,
2006, by and among JP MORGAN CHASE BANK, N.A. (successor by merger to Bank One,
N.A.), with an office located at 1300 East Ninth Street, FL 13, Cleveland, Ohio
44114 ("Lender"), and CONTINENTAL CONVEYOR & EQUIPMENT COMPANY, a Delaware
corporation ("Continental"), with its principal place of business and executive
offices located at 216 West 4th Avenue, South, P. O. Box 400, Winfield, Alabama
35594, and GOODMAN CONVEYOR COMPANY, a Delaware corporation ("Goodman"), with
its principal place of business and executive offices located at U.S. Route 178
South, P. O. Box 866, Belton, South Carolina 29627 (each of "Continental" and
"Goodman" being sometimes referred to herein individually as a "Borrower" and
collectively as the "Borrowers").
RECITALS
A. The Borrower and Lender, entered into a Second Amended And
Restated Credit Facility and Security Agreement, dated as of
October 4, 2004 (the "Credit Agreement"), pursuant to which
Lender agreed to make available to the Borrower a loan of up
to $35,000,000.00. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in
the Credit Agreement.
B. The Borrower has requested the extension of the maturity date
of, and certain other amendments to, the Credit Agreement.
C. To secure the repayment of the loan described herein, Borrower
granted to Lender a continuing security interest in the
Collateral pursuant to the Credit Agreement, together with a
lien granted in certain real property pursuant to the various
Mortgages delivered with respect thereto.
D. Lender is willing to make the extensions and amendments herein
described, upon the terms, covenants and conditions herein set
forth, and in reliance upon the representations and warranties
of Borrower herein contained.
NOW, THEREFORE, in consideration of the foregoing Recitals (which are
incorporated herein by reference), the terms, covenants and conditions
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Amendments.
1.1 Section 1.1 of the Credit Agreement is hereby amended by adding in
alphabetical order the defined term "Allocated Special Reserves" to read in its
entirety as follows:
"Allocated Special Reserves" means that portion or all of the
Special Reserves that is allocated in writing by the Borrowers
to either or both the Continental Revolving Commitment and/or
the Goodman Revolving Commitment in a manner other than the
amounts derived from the Pro-Rata Special Reserves; provided,
that the amount of the aggregate Allocated Special Reserves
shall be equal to the amount of the Special Reserves in effect
at that time; provided, further, if the Borrowers make a
written election of Allocated Special Reserves, the Borrowers
may thereafter make another such written election prior to the
beginning of each subsequent calendar quarter, and if no such
election is made prior to the end of a calendar quarter, the
Pro-Rata Special Reserves automatically shall be
re-implemented for the next succeeding calendar quarter.
1.2 Section 1.1 of the Credit Agreement is hereby amended by adding in
alphabetical order the defined term "Continental Revolving Commitment" to read
in its entirety as follows:
"Continental Revolving Commitment" means $27,000,000.00, minus
the Pro-Rata Special Reserves or Allocated Special Reserves
(as the case may be) applicable to Continental.
1.3 Section 1.1 of the Credit Agreement is hereby amended by modifying
the defined term "Borrowing Base" to read in its entirety as follows:
"Borrowing Base" means, at any time, with respect to each
Borrower, the sum of (a) 85% of such Borrower's Eligible
Accounts at such time, plus (b) 55% of such Borrower's
Eligible Inventory, valued at the lower of cost or market
value, determined on a first-in-first-out basis, minus (c)
Reserves related to such Borrower, minus (d) any Special
Reserves. The maximum amount of Inventory which may be
included as part of Borrowers' Borrowing Base is $12,000,000
for Continental, and $1,500,000 for Goodman (after the advance
rate is applied). The Lender may, in its Permitted Discretion,
reduce the advance rates set forth above, reduce one or more
of the other elements used in computing the Borrowing Base, or
increase the Reserves. Lender shall provide Borrowers twenty
(20) days advance written notice of any change in the advance
rates, Borrowing Base elements or Reserves, and Borrowers
shall comply with any such change or changes by the twentieth
(20th) day after the date of such notice by repaying any
advances that would otherwise exceed the Borrowing Base as
adjusted by such changes; provided, however, that if the net
effect of such changes in the advance rates, elements and/or
Reserves reduces the Borrowing Base by $1,000,000 or more,
then Borrowers shall comply with such change or changes by the
thirtieth (30th) day after the date of such notice by repaying
any advances that would otherwise exceed the Borrowing Base as
adjusted by such changes.
1.4 Section 1.1 of the Credit Agreement is hereby amended by modifying
the defined term "Debt Coverage" to read in its entirety as follows:
"Debt Coverage" means, on a combined consolidated basis, the
ratio of: (1) Borrowers' operating income, plus depreciation,
amortization and other non-cash items reasonably acceptable to
Lender, less Distributions and cash Taxes paid; to (2) the
amount of all principal and interest paid or payable by the
Borrowers to Lender plus all Capital Expenditures not funded
on a term basis at the end of calculation thereof.
1.5 Section 1.1 of the Credit Agreement is hereby amended by modifying
the defined term "Distribution" to read in its entirety as follows:
"Distribution" in respect of a Borrower means:
(i) The payment of any dividends or other distributions,
whether in cash, by transfer of property or otherwise, to or
for the benefit of any shareholder or stockholder or Affiliate
of such Borrower (including, any distribution to or for the
benefit of Global intended for the payment of interest and/or
principal payments toward the Bond Obligations);
(ii) The redemption or acquisition of any Securities of such
Borrower; and
(iii) The payment of any Management Fees.
1.6 Section 1.1 of the Credit Agreement is hereby amended by modifying
the defined term "Facility Termination Date" by deleting the reference to "July
31, 2006" in the second line thereof and replacing it with a reference to "March
31, 2008."
1.7 Section 1.1 of the Credit Agreement is hereby amended by adding in
alphabetical order the defined term "Goodman Revolving Commitment" to read in
its entirety as follows:
"Goodman Revolving Commitment" means $3,000,000.00, minus the
Pro-Rata Special Reserves or the Allocated Special Reserves
(as the case may be) applicable to Goodman.
1.8 Section 1.1 of the Credit Agreement is hereby amended by modifying the
defined term "Obligations," to read in its entirety as follows:
"Obligations" means all debts, liabilities and obligations of
the Loan Parties to Lender under this Agreement and also any
and all other debts, liabilities and obligations of Loan
Parties to Lender of every kind and description, direct or
indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, including without limiting the
generality of the foregoing, any debt, liability or obligation
of any Loan Party to Lender (or any affiliate of Lender) under
any Guaranty, Letter of Credit and/or Reimbursement
Obligation, Banking Services, Rate Management Transaction, or
of any Loan Party to any other Person which Lender may have
obtained by assignment or otherwise and all interest, fees,
charges and expenses which at any time may be payable by any
Loan Party to Lender.
1.9 Section 1.1 of the Credit Agreement is hereby amended by modifying
the defined term "Permitted Distributions," to read in its entirety as follows:
"Permitted Distributions" means, provided that no Event of
Default or Unmatured Default then exists, and the making of
such payment or distribution would not cause an Event of
Default to occur:
(a) the payment of one or more dividends or distributions by
Borrowers to or for the benefit of Global, and in support of
Borrowers' obligations under the Guaranty or Guarantees by
Borrowers of the Bond Obligations, in order to assist Global
in making semi-annual interest payments on the Bond
Obligations pursuant to the Indenture, but only if the
Borrowers are then in compliance with all covenants set forth
in Sections 8.1 and 8.2 of the Credit Agreement both before
and after such proposed Distribution.
(b) the payment of one or more dividends or distributions by
Borrowers to or for the benefit of Global, and in support of
Borrowers' obligations under the Guaranty or Guarantees by
Borrowers of the Bond Obligations, in order to assist Global
in making, effective as of April 1, 2007, a payment not to
exceed $10,700,000 with respect to the Bond Obligations
pursuant to the Indenture, but only if:
i) the Borrowers shall have a Debt Coverage ratio of
not less than 1.2 to 1.0 on a pro-forma basis after
giving affect to a proposed redemption payment to be
made upon the Bond Obligations;
ii) the Borrowers shall have Aggregate Availability
of not less than $10,000,000 under the Revolving
Loans on a pro-forma basis after giving affect to a
proposed principal redemption payment to be made upon
the Bond Obligations, and the Borrower's unsecured
payables and trade debt shall not be outstanding more
than sixty (60) days past the due date thereof
(except to the extent an unsecured payable or trade
debt is disputed in good faith by Continental or
Goodman, and such disputed payable or trade debt is
reasonably acceptable to Lender); provided, however,
the Aggregate Availability for purposes of this
subsection shall be calculated without deducting the
Special Reserves from the Borrowing Base.
iii) all such calculations shall be based upon the
audited annual financial statements and unaudited
internally prepared quarterly financial statements
submitted by Borrowers and Global to the Lender and
the Indenture Trustee;
iv) the Borrowers shall submit to Lender pro-forma
financial statements, certified as being true and
correct by each of the Borrowers' respective chief
financial officer, establishing that both before and
after any proposed redemption payment of the Bond
Obligations, the Borrowers are in compliance with all
covenants set forth in Sections 8.1 and 8.2 of the
Credit Agreement, together with those set forth in
this subsection (b); and
(c) the payment of management fees by Borrowers to Global.
(d) the payment of one or more dividends or distributions by
Borrower to or for the purpose of funding any and all
taxes that are or may become due.
1.10 Section 1.1 of the Credit Agreement is hereby amended by adding in
alphabetical order the defined term "Pro-Rata Special Reserves" in alphabetical
order:
"Pro-Rata Special Reserves" means the product derived by the
following calculation:
The Continental Revolving Commitment or the Goodman Revolving
Commitment (before deduction of the Special Reserves), divided
by the aggregate Revolving Commitment (before deduction of the
Special Reserves), with the resulting amount multiplied by the
Special Reserves then in effect.
1.11 Section 1.1 of the Credit Agreement is hereby amended by modifying
the defined term "Revolving Commitment" to read in its entirety as follows:
"Revolving Commitment" means the commitment of the
Lender to make Revolving Loans or incur LC Obligations, which
aggregate commitment shall be Thirty Million and no/100
Dollars ($30,000,000.00) minus the Special Reserves, as such
amount may be adjusted, if at all, from time to time in
accordance with this Agreement; provided, however, that the
following sub-limits shall apply:
(i) With respect to Continental, an amount equal to
the Continental Revolving Commitment, with a further
$5,000,000 sub-limit for Letters of Credit for the account of
Continental; and
(ii) With respect to Goodman, an amount equal to the
Goodman Revolving Commitment, with a further $500,000
sub-limit for Letters of Credit for the account of Goodman.
1.12 Section 1.1 of the Credit Agreement is hereby amended by adding in
alphabetical order the defined term "Special Reserves" in alphabetical order:
"Special Reserves" shall mean the following aggregate amounts
for the following periods: $2,500,000 as of March 31, 2006;
$5,000,000 as of June 30, 2006; $7,500,000 as of September 30,
2006; and, $10,700,000 as of December 31, 2006 and thereafter;
provided, however, that if a Permitted Distribution is in fact
made on or about April 1, 2007 to Global pursuant to the terms
of the Credit Agreement (as amended) to assist Global in
making a redemption payment, not to exceed $10,700,000, of the
Bond Obligations, then, and in that event, the Special
Reserves thereafter shall be $0.00.
1.13 (a) The second sentence of Subsection (c) of Section 2.1.4 of the
Credit Agreement is hereby modified and amended by substituting the date "March
1, 2008" for the date "July 1, 2006"
(b) The third sentence of Subsection (c) of Section 2.1.4 of
the Credit Agreement is hereby modified and amended to read in its entirety as
follows:
The final installment of principal shall be in an amount equal
to the then remaining principal balance of the Term A Loan,
together with any accrued but unpaid interest, fees and
expenses with respect thereto, and shall be payable on the
Facility Termination Date.
1.14 Section 2.8(d) of the Credit Agreement is hereby amended by
deleting clause (iii) thereof. The remaining balance of the deferred forbearance
fee is hereby eliminated.
1.15 Subsection 8.1(t) of the Credit Agreement is hereby amended to
read in its entirety as follows:
(t) Maintain a consolidated Minimum Net Worth, in
each case calculated based upon Borrowers' fiscal quarter end
combined consolidated financial statement prepared in
accordance with GAAP, for each fiscal quarter ending on or
after the periods shown below of not less than the following
amount:
Period Minimum Net Worth
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As of December 31, 2005, and the last $15,000,000
day of each calendar quarter thereafter
1.16 Section 8.2 is hereby amended by adding in numerical order the following
additional subsection (v) at the end thereof:
(v) permit or suffer to permit NES Group, Inc. or its
Affiliates to own less voting power or control than
fifty-one percent (51%) of the equity of Global on a
fully diluted basis; and/or permit or suffer to
permit Global or its Affiliates to own less voting
power or control than fifty-one percent (51%) of the
equity of Borrowers on a fully diluted basis
1.17 Subsection 14.9(a) of the Credit Agreement is hereby amended
to read in it's entirety as follows:
(a) If to Lender, at: JPMorgan
Chase Bank, N.A. 1300 East
9th Street, FL 13
Cleveland, Ohio 44114 Attn:
David J. Waugh, Vice
President
With a copy to: Ulmer & Berne LLP
Skylight Office Tower
1660 West 2nd Street, Suite 1100
Cleveland, OH 44113-1448
Attn: Alan W. Scheufler, Esq.
1.18 The Lending Installation appearing on the signature page of the
Credit Agreement is hereby amended to read in its entirety as follows:
Lending Installation:
JPMorgan Chase Bank, N.A.
1300 East 9th Street, FL 13
Cleveland, Ohio 44114
2. Borrower's Representations, Warranties and Events of Default.
2.1 Affirmation of Credit Agreement. Except as amended hereby, the
terms, provisions, conditions and agreements of the Credit Agreement are hereby
ratified and confirmed and shall remain in full force and effect. Borrowers
expressly acknowledge that this First Amendment shall neither extinguish nor
satisfy, nor constitute a novation or a waiver of, the Borrowers' existing
indebtedness or obligations to Lender. Each and every representation and
warranty of the Borrowers set forth in the Credit Agreement are hereby confirmed
and ratified in all material respects and such representations and warranties
shall be deemed to have been made and undertaken as of the date of this First
Amendment as well as at the time they were made and undertaken.
2.2 Other Representations. The Borrowers further represent and warrant that:
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2.2.1 No Event of Default now exists or will exist immediately
following the execution hereof or after giving effect to the transactions
contemplated hereby.
2.2.2 All necessary corporate actions have been taken by
Borrowers to authorize the execution, delivery and performance of this First
Amendment and all other documents or instruments required pursuant hereto or
thereto; this First Amendment and each such other document or instrument have
been duly and validly executed and delivered, and are valid and legally binding
upon the parties thereto and enforceable in accordance with their respective
terms, except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws or by general equitable principals.
2.2.3 No consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority or any other
person or entity (including, but not limited to, any Indenture Trustee, or any
holder of bonds or notes thereunder) is required to be obtained by the Borrowers
in connection with the execution, delivery or performance of this First
Amendment or any document or instrument required in connection herewith or
therewith which has not already been obtained or completed.
3. Consent; Continuing Security Interest. This First Amendment is executed by
the Borrowers and the Guarantor to acknowledge, agree and consent to the
amendments made pursuant hereto, and to acknowledge that the security interests
and liens granted by the Borrowers and the Guarantor to Lender pursuant to the
Credit Agreement and the Mortgages shall continue to secure all Obligations.
4. Waivers; Releases. EACH BORROWER, FOR ITSELF AND ITS RESPECTIVE AFFILIATES,
SUCCESSORS, ASSIGNS, MEMBERS, SHAREHOLDERS, OFFICERS, DIRECTORS AND MANAGERS,
HEREBY FOREVER WAIVES, RELINQUISHES, DISCHARGES AND RELEASES ALL DEFENSES AND
CLAIMS OF EVERY KIND OR NATURE, WHETHER EXISTING BY VIRTUE OF STATE, FEDERAL, OR
LOCAL LAW, BY AGREEMENT OR OTHERWISE, AGAINST LENDER, ITS SUCCESSORS, ASSIGNS,
DIRECTORS, OFFICERS, SHAREHOLDERS, AGENTS, EMPLOYEES AND ATTORNEYS, WHETHER
PREVIOUSLY OR NOW EXISTING OR ARISING OUT OF OR RELATED TO ANY TRANSACTION OR
DEALINGS AMONG THE PARTIES, OR ARISING OUT OF THIS FIRST AMENDMENT OR ANY PRIOR
AMENDMENT, WHICH ANY BORROWER MAY HAVE OR MAY HAVE MADE AT ANY TIME UP THROUGH
AND INCLUDING THE DATE OF THIS FIRST AMENDMENT, INCLUDING WITHOUT LIMITATION,
ANY AFFIRMATIVE DEFENSES, CLAIMS, COUNTERCLAIMS, SETOFFS, DEDUCTIONS OR
RECOUPMENTS. NOTHING CONTAINED IN THIS FIRST AMENDMENT PREVENTS ENFORCEMENT OF
THIS RELEASE.
5. Fees and Expenses. The Borrowers shall pay to Lender an extension fee of
$30,000 upon the execution hereof. As required under the Credit Agreement, the
Borrowers shall reimburse the Lender upon demand for all out-of-pocket costs,
charges and expenses of the Lender (including reasonable fees and disbursements
of legal counsel to Lender) in connection with the preparation, negotiation,
execution and delivery of this First Amendment and the other agreements or
documents relating hereto or required hereby.
6. Reference to Credit Agreement. On and after the date of this First Amendment,
each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import, and each reference to the Credit
Agreement in any Note or other Loan Document, or other agreement, document or
instrument executed and delivered pursuant to the Credit Agreement, shall be
deemed a reference to the Credit Agreement as amended hereby.
7. Counterparts. This First Amendment may be executed in as many counterparts as
may be convenient, each of which when so executed shall be deemed to be an
original for all purposes, and all of which shall be deemed on and the same
instrument.
8. Further Acts. The parties agree to perform any further acts and to execute
and deliver any additional documents which may be reasonably necessary to carry
out the intent and provisions of this First Amendment.
9. Binding Effect. This First Amendment shall be binding upon and shall inure to
the benefit of the Borrowers, the Guarantor, the Lender, and their respective
heirs, personal representatives, successors and assigns.
10. Construction. This First Amendment shall be interpreted in accordance with
the laws of the State of Ohio, without regard to its conflicts of laws
principles. Headings used herein are provided for convenience only, and shall
not be used in construing this First Amendment. If any provision of this First
Amendment is deemed by a court of competent jurisdiction to be invalid or
unenforceable, then such invalid or unenforceable provision shall be ignored and
shall have no effect upon the validity and enforceability of the remaining
provisions hereof.
11. WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR LENDER
TO ENTER INTO THIS FIRST AMENDMENT, LENDER AND BORROWER AGREE THAT
NOTWITHSTANDING ANY CONSTITUTIONAL RIGHT, EACH PARTY HEREBY WAIVES SUCH RIGHT TO
A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF
OR ARISING OUT OF THIS FIRST AMENDMENT OR THE CONDUCT OF THE RELATIONSHIP
BETWEEN LENDER AND BORROWER (REGARDLESS OF WHETHER THE CLAIMS MAY ARISE UNDER
CONTRACT, TORT OR OTHERWISE).
IN WITNESS WHEREOF, the parties have signed this First Amendment to
Credit Facility and Security Agreement, intending to be legally bound thereby as
of the date first set forth above.
BORROWERS
CONTINENTAL CONVEYOR & EQUIPMENT COMPANY
By: _____________________________
Print Name: _______________________
Print Title: ________________________
GOODMAN CONVEYOR COMPANY
By: _____________________________
Print Name: _______________________
Print Title: ________________________
LENDER
JP MORGAN CHASE BANK, N.A.
By: _____________________________
Print Name: _______________________
Print Title: ________________________
CONSENT AND REAFFIRMATION OF GUARANTOR
The undersigned is a Guarantor of the Obligations arising pursuant to
the Credit Agreement. The undersigned does hereby consent to the terms of the
foregoing First Amendment executed and delivered by Borrower, and does hereby
ratify and confirm in all respects the Guaranty dated October 4, 2004 to which
the undersigned is a party. The undersigned further specifically consents to and
joins in the representations, warranties, agreements and the waiver and release
set forth in Sections 2, 4 and 11 of the foregoing Amendment. Guarantor
acknowledges that it has consulted with counsel in connection with the
negotiation, execution and delivery of this Consent And Reaffirmation of
Guarantor.
WARNING. BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT OR ANY OTHER CAUSE.
GUARANTOR
CONTINENTAL GLOBAL GROUP, INC.
By: _____________________________
Print Name: _______________________
Print Title: ________________________