Exhibit 10.3
FIFTH AMENDMENT TO
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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THIS FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("Fifth Amendment") is made as of the 1st day of October, 2003 by and among PW
Eagle, Inc., a Minnesota corporation ("Borrower"), the lenders who are
signatories hereto ("Lenders"), and Fleet Capital Corporation, a Rhode Island
corporation ("FCC"), as agent for Lenders hereunder (FCC, in such capacity,
being "Agent").
W I T N E S S E T H:
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WHEREAS, Borrower, Agent and Lenders entered into a certain Third Amended and
Restated Loan and Security Agreement dated as of September 30, 2002 as amended
by a certain First Amendment to Third Amended and Restated Loan and Security
Agreement dated as of February 4, 2003 by and among Borrowers, Lenders and
Agent, by a certain Second Amendment to Third Amended and Restated Loan and
Security Agreement dated as of May 30, 2003 by and among Borrower, Lenders and
Agent, by a certain Third Amendment to Third Amended and Restated Loan and
Security Agreement dated as of August 7, 2003 by and among Borrower, Lenders and
Agent, and by a certain Fourth Amendment to Third Amended and Restated Loan and
Security Agreement dated as of September 15, 2003 by and among Borrowers,
Lenders and Agent, (said Third Amended and Restated Loan and Security Agreement,
as so amended, is hereinafter referred to as the "Loan Agreement"); and
WHEREAS, Borrower desires to amend and modify certain provisions of the Loan
Agreement and, subject to the terms hereof, Agent and Lenders are willing to
agree to such amendments and modifications;
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and any extension of credit heretofore, now or
hereafter made by Agent and Lenders to Borrowers, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms used herein without definition
shall have the meaning given to them in the Loan Agreement.
2. Consent to Hastings, Nebraska Real Property Sale and Leaseback. In
reliance upon and subject to the accuracy of the representations set forth in
this Fifth Amendment, upon the Fifth Amendment Effective Date, Majority Lenders
hereby consent to the sale by Borrower of the real Property, facility, and
fixtures located at Hastings, Nebraska and the leaseback of same by PW Poly (as
defined below) (the "Hastings Sale and Leaseback"); provided, that (i) the
aggregate net cash proceeds to Borrower received in respect of the Hastings Sale
and Leaseback shall be at least $1,128,000, (ii) Borrower shall pay the entire
net cash proceeds to Agent, with such proceeds to be applied for prepayment of
the Term Loan as provided in subsection 3.3.1 of the Loan Agreement, (iii) the
maximum annual gross lease payment (including, without limitation, obligations
to reimburse landlord's expenses) in respect of the Hastings Sale and Leaseback
shall not exceed $183,300, which lease payments shall be the obligation of PW
Poly and Borrower shall have no liability therefor, (iv) the Hastings Sale and
Leaseback shall be a bona fide arm's length transaction, (v) the documentation
in respect of the Hastings Sale and Leaseback shall be reasonably satisfactory
in all material respects to Agent (it being agreed that such documentation shall
be deemed to be satisfactory if, taken as a whole, such documentation is no less
favorable to Agent from a risk allocation perspective than the Sale and
Leaseback
Documents) and (vi) if the Hastings Sale and Leaseback is not consummated within
120 days after the date hereof, then this Section 2 shall be null and void ab
initio.
3. Consent to ▇▇▇▇▇ City, Oregon Real Property Sale and Leaseback. In
reliance upon and subject to the accuracy of the representations set forth in
this Fifth Amendment, upon the Fifth Amendment Effective Date, Majority Lenders
hereby consent to the sale by Borrower of the real Property, facility, and
fixtures located at ▇▇▇▇▇ City, Oregon and the leaseback of same by PW Poly (as
defined below) the "▇▇▇▇▇ City Sale and Leaseback"); provided, that (i) the
aggregate net cash proceeds to Borrower received in respect of the ▇▇▇▇▇ City
Sale and Leaseback shall be at least $584,000 (ii) Borrower shall pay the entire
net cash proceeds to Agent, with such proceeds to be applied for prepayment of
the Term Loan as provided in subsection 3.3.1 of the Loan Agreement, (iii) the
maximum annual gross lease payment (including, without limitation, obligations
to reimburse landlord's expenses) in respect of the ▇▇▇▇▇ City Sale and
Leaseback shall not exceed $94,900, which lease payments shall be the
obligations of PW Poly and Borrower shall have no liability therefor, (iv) the
▇▇▇▇▇ City Sale and Leaseback shall be a bona fide arm's length transaction, (v)
the documentation in respect of the ▇▇▇▇▇ City Sale and Leaseback shall be
reasonably satisfactory in all material respects to Agent (it being agreed that
such documentation shall be deemed to be satisfactory if, taken as a whole, such
documentation is no les favorable to agent from a risk allocation perspective
than the Sale and Leaseback Documents) and (vi) if the ▇▇▇▇▇ City Sale and
Leaseback is not consummated within 120 days after the date hereof, then this
Section 3 shall be null and void ab initio.
4. Consent to Visalia, California Real Property Sale and Leaseback. In
reliance upon and subject to the accuracy of the representations set forth in
this Fifth Amendment, upon the Fifth Amendment Effective Date, Majority Lenders
hereby consent to the sale by Borrower of the real Property, facility, and
fixtures located at Visalia, California and the leaseback of same by Borrower
(as defined below) the "Visalia Sale and Leaseback"); provided, that (i) the
aggregate net cash proceeds to Borrower received in respect of the Visalia Sale
and Leaseback and Leaseback shall be at least $1,300,000 (ii) Borrower shall pay
the entire net cash proceeds to Agent, with such proceeds to be applied for
prepayment of the Term Loan as provided in subsection 3.3.1 of the Loan
Agreement, (iii) the maximum annual gross lease payment (including, without
limitation, obligations to reimburse landlord's expenses) in respect of the
Visalia Sale and Leaseback shall not exceed $211,250, (iv) the Visalia Sale and
Leaseback shall be a bona fide arm's length transaction, (v) the documentation
in respect of the Visalia Sale and Leaseback shall be reasonably satisfactory in
all material respects to Agent (it being agreed that such documentation shall be
deemed to be satisfactory if, taken as a whole, such documentation is no les
favorable to agent from a risk allocation perspective than the Sale and
Leaseback Documents) and (vi) if the Visalia Sale and Leaseback is not
consummated within 120 days after the date hereof, then this Section 4 shall be
null and void ab initio.
5. Consent to Sunnyside, Washington Real Property Sale and Leaseback. In
reliance upon and subject to the accuracy of the representations set forth in
this Fifth Amendment, upon the Fifth Amendment Effective Date, Majority Lenders
hereby consent to the sale by Borrower of the real Property, facility, and
fixtures located at Sunnyside, Washington and the leaseback of same by Borrower
(as defined below) the "Sunnyside Sale and Leaseback"); provided, that (i) the
aggregate net cash proceeds to Borrower received in respect of the Sunnyside
Sale and
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Leaseback shall be at least $1,544,000 (ii) Borrower shall pay the entire net
cash proceeds to Agent, with such proceeds to be applied for prepayment of the
Term Loan as provided in subsection 3.3.1 of the Loan Agreement, (iii) the
maximum annual gross lease payment (including, without limitation, obligations
to reimburse landlord's expenses) in respect of the Sunnyside Sale and Leaseback
shall not exceed $250,900, (iv) the Sunnyside Sale and Leaseback shall be a bona
fide arm's length transaction, (v) the documentation in respect of the Sunnyside
Sale and Leaseback shall be reasonably satisfactory in all material respects to
Agent (it being agreed that such documentation shall be deemed to be
satisfactory if, taken as a whole, such documentation is no les favorable to
agent from a risk allocation perspective than the Sale and Leaseback Documents)
and (vi) if the Sunnyside Sale and Leaseback is not consummated within 120 days
after the date hereof, then this Section 5 shall be null and void ab initio.
6. Consent to PW Poly Transaction. In reliance upon and subject to the
accuracy of the representations set forth in this Fifth Amendment, upon the
Fifth Amendment Effective Date, Majority Lenders hereby consent to the formation
of PW Poly, Inc. ("PW Poly") as a subsidiary of Borrower and the transfer by
Borrower to PW Poly of certain Inventory and Equipment (for clarification
purposes, the transferred property shall not include any real Property or
Accounts and shall be listed in the "PW Poly ▇▇▇▇ of Sale" (as defined below))
used solely in Borrower's polyethylene pipe business (collectively, the
"Transferred Poly Property") pursuant to a ▇▇▇▇ of Sale and Assumption Agreement
("PW Poly ▇▇▇▇ of Sale") in substantially the form attached hereto as Exhibit A
(the transactions contemplated by this Section 7, collectively, the "PW Poly
Transaction"); provided, that:
(a) the aggregate book value of the Transferred Poly Property shall
not exceed $5,160,000,
(b) PW Poly shall assume and pay at least $520,000 of Borrower's
accounts payable (and, to the extent Borrower (rather than PW Poly) pays any or
all of such accounts payable, PW Poly shall immediately reimburse Borrower for
any amount paid by Borrower),
(c) PW Poly shall pay (on the closing date of the PW Poly
Transaction) to Borrower at least $ 1,400,000 in cash,
(d) Borrower shall pay (on the closing date of the PW Poly
Transaction) the entire net cash proceeds (i.e., at least $1,400,000) to Agent,
to pay down the Term Loan in the amount of $875,000 and the Revolving Credit
Loans in the amount of $525,000. Term Loan paydowns shall be applied, ratably,
against outstanding principal installments due under the Term Notes in inverse
order of maturity.
(e) the documentation in respect of the PW Poly Transaction shall be
reasonably satisfactory in all material respects to Majority Lenders (it being
agreed that the following documentation is satisfactory: (i) the PW Poly ▇▇▇▇ of
Sale, as modified by any non-substantive changes the parties thereto may deem
appropriate and (ii) each other PW Poly Transaction document, so long as neither
Borrower nor any Guarantor provides any representations, warranties, covenants,
indemnities, commitments or the like that are inconsistent with, or materially
more extensive than, those contained in the PW Poly ▇▇▇▇ of Sale),
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(f) prior to the closing of the PW Poly Transaction, Borrower shall
have delivered to Agent a Borrowing Base Certificate evidencing the reduction in
the Borrowing Base caused by the transfer of Inventory from Borrower to PW Poly,
(g) after giving effect to the PW Poly Transaction and subsequent
reduction to the Borrowing Base, but excluding the effect of any payment made by
Borrower during the month of October 2003 to *** for product purchases occurring
during August, 2003, Availability shall equal or exceed $12,000,000,
(h) in connection with the PW Poly Transaction, Borrower shall not
guaranty any Indebtedness of PW Poly, including, without limitation, any Money
Borrowed or any buy-back agreement obligations, and
(i) if the PW Poly Transaction is not consummated within 90 days
after the date hereof, then this Section 6 shall be null and void ab initio.
7. Amendments to Loan Agreement. In reliance upon and subject to the
accuracy of the representations set forth in this Fifth Amendment, upon the
Fifth Amendment Effective Date, Borrower, Agent and Lenders hereby agree that:
(a) In no event shall any provision (including, without limitation,
any representation, warranty, covenants, default or event of default) of the
Loan Agreement apply to PW Poly and its subsidiaries;
(b) By way of example, and not in limitation of Section 7(a) above,
any reference to "Borrower," "Subsidiary," "Subsidiaries" or "Consolidated" in
the Loan Agreement shall expressly exclude PW Poly and its Subsidiaries;
(c) By way of example, and not in limitation of Section 7(a) above,
and notwithstanding anything to the contrary contained in GAAP, all computations
of financial covenants in the Loan agreement shall exclude the results of
operations and financial condition of PW Poly and its Subsidiaries;
(d) Notwithstanding anything to the contrary contained in this
Section 7 or otherwise (but subject to the proviso at the end of this clause
(d)), each of PW Poly and its Subsidiaries shall be expressly included as a
Subsidiary of Borrower for the purposes of subsection 8.1.3 (Financial Reports)
of the Loan Agreement; provided, however, that with respect to the monthly
financial statements contemplated by subsection 8.1.3(ii) of the Loan Agreement,
each of PW Poly and its Subsidiaries shall be expressly excluded as a Subsidiary
of Borrower;
(e) Notwithstanding anything to the contrary contained in this
Section 7 or otherwise, each of PW Poly and its Subsidiaries shall be expressly
included as an Affiliate of Borrower for the purposes of subsection 8.2.4
(Affiliate Transactions) of the Loan Agreement;
(f) Notwithstanding anything to the contrary contained in this
Section 7 or otherwise, Borrower may enter into a tax sharing agreement with PW
Poly and its Subsidiaries; provided that the tax obligations owing by Borrower,
on the one hand, and PW Poly and its
*** SUBJECT TO CONFIDENTIAL TREATMENT.
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Subsidiaries, on the other hand, do not exceed the tax obligations that either
such party would have on a stand-alone basis; and
(g) Notwithstanding anything to the contrary contained in this
Section 7 or otherwise, Borrower shall operate PW Poly and its Subsidiaries
(including, without limitation, with respect to ERISA law compliance,
environmental law compliance and tax law compliance) with the same care and
diligence as Borrower is operated.
8. Effectiveness of this Fifth Amendment.
(a) This Fifth Amendment (except for Sections 2, 3, 4, 5, 6, and 7)
shall become effective on the date (the "Fifth Amendment Effective Date") when
Borrower and the Majority Lenders shall have signed a counterpart hereof
(whether the same or different counterparts),
(b) Each of Sections 2, 3, 4, 5, 6, and 7 of this Amendment shall
separately become effective on the date (each a "Consent Effective Date") when
Agent shall have received a copy of a duly executed amendment or amendments of
the Subordinated Note Documents and, to the extent required, the Sale and
Leaseback Documents (a) consenting to the actions contemplated by Section 2, 3,
4, 5, or 6 hereof, as the case may be, or (b) providing for the substantive
equivalent of Section 7 hereof; provided that in each case each such amendment
or amendments shall be in a form reasonably satisfactory to Agent and provided,
further, that the reasonable satisfaction of each such amendment or amendments
shall be acknowledged in writing by Majority Lenders, and
(c) Upon the closing of any of the transactions referred to in
Sections 2, 3, 4, 5, and 6 in accordance with the consents contained herein,
Agent shall deliver to Borrower such mortgage releases, UCC-3 termination
statements or other documents necessary or appropriate to release Agent's Lien
on the transferred Property.
9. Miscellaneous.
(a) This Fifth Amendment is limited as specified and shall not
constitute an amendment, modification or waiver of any other provision of the
Loan Agreement or any other Loan Document.
(b) This Fifth Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument.
10. Continuing Effect. Except as otherwise specifically set out herein,
the provisions of the Loan Agreement shall remain in full force and effect.
(Signature Page Follows)
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(Signature Page to Fifth Amendment to
Third Amended and Restated Loan and Security Agreement)
IN WITNESS WHEREOF, this Fifth Amendment has been duly executed as of the day
and year specified at the beginning hereof.
PW EAGLE, INC., ("Borrower")
By: /s/ ▇▇▇▇▇▇ West
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Name: ▇▇▇▇▇▇ West
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Title: CAO
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FLEET CAPITAL CORPORATION, as
Agent and as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Senior Vice President
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THE CIT GROUP/BUSINESS CREDIT,
INC., as Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
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