Exhibit 10.8
AMENDMENT NO. 9 AND CONSENT
(this "Amendment"), dated as of
September __, 2003, by and among PW
EAGLE, INC., a Minnesota corporation
(the "Company") and the investors party
to the Securities Purchase Agreement
referred to below on the date hereof
(the "Investors").
WHEREAS, the Company and the Investors are parties to a Securities Purchase
Agreement, dated as of September 20, 1999 (as amended, supplemented or otherwise
modified through the date hereof, including pursuant to Amendments No.1 through
No. 8, the "Purchase Agreement") pursuant to which the Investors purchased
$32,500,000 principal amount of the Company's senior subordinated notes; and
WHEREAS, the Company and the Investors are parties to a Warrant Agreement,
dated as of September 20, 1999 (as amended, supplemented or otherwise modified
through the date hereof, the "Warrant Agreement") pursuant to which the Company
issued certain warrants to the Investors; and
WHEREAS, the Company and the Investors are parties to a Warrant Agreement,
dated as of March 14, 2003 (as amended, supplemented or otherwise modified
through the date hereof, the "2003 Warrant Agreement") pursuant to which the
Company issued certain warrants to the Investors; and
WHEREAS, the Company has requested, and the Investors party hereto are
willing (subject to the terms and conditions hereof), to consent to certain
actions by the Company and to amend certain provisions of the Purchase Agreement
as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms used and not otherwise defined in
this Amendment shall have the meanings given to them in the Purchase 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 Amendment, upon the Effective Date, the Investors hereby consent to the
sale by the Company 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 the Company received in respect of the Hastings Sale and Leaseback
shall be at least $1,128,000, (ii) the Company shall pay (as soon as practicable
but in any event within 24 hours of the closing of the Hastings Sale and
Leaseback) the entire net cash proceeds to the Senior Bank Agent, with at least
half of such proceeds to be applied for prepayment of the Term Loan (as defined
in the Senior Credit Agreement) and the balance to be applied for prepayment of
the Revolving
Credit Loans (as defined in the Senior Credit 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, (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
the Required Investors (it being agreed that such documentation shall be deemed
to be satisfactory if, taken as a whole, such documentation is no less favorable
to the Company 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 of this Amendment shall be
null and void ab initio. The parties hereto agree that the Company shall have
the right to lease (on an arm's length basis) the real property, facilities, and
fixtures located at Hastings, Nebraska to PW Poly prior to a sale by the Company
of such real property, facilities, and fixtures.
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 Amendment, upon the Effective Date, the Investors hereby consent to the
sale by the Company 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 the Company received in respect of the ▇▇▇▇▇ City Sale and Leaseback
shall be at least $584,000, (ii) the Company shall pay (as soon as practicable
but in any event within 24 hours of the closing of the ▇▇▇▇▇ City Sale and
Leaseback) the entire net cash proceeds to the Senior Bank Agent, with at least
half of such proceeds to be applied for prepayment of the Term Loan (as defined
in the Senior Credit Agreement) and the balance to be applied for prepayment of
the Revolving Credit Loans (as defined in the Senior Credit 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, (iii) the ▇▇▇▇▇ City Sale and Leaseback
shall be a bona fide arm's length transaction, (iv) the documentation in respect
of the ▇▇▇▇▇ City Sale and Leaseback shall be reasonably satisfactory in all
material respects to the Required Investors (it being agreed that such
documentation shall be deemed to be satisfactory if, taken as a whole, such
documentation is no less favorable to the Company from a risk allocation
perspective than the Sale and Leaseback Documents) and (v) if the ▇▇▇▇▇ City
Sale and Leaseback is not consummated within 120 days after the date hereof,
then this Section 3 of this Amendment shall be null and void ab initio. The
parties hereto agree that the Company shall have the right to lease (on an arm's
length basis) the real property, facilities, and fixtures located at Hastings,
Nebraska to PW Poly prior to a sale by the Company of such real property,
facilities, and fixtures.
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 Amendment, upon the Effective Date, the Investors hereby consent to the
sale and leaseback by the Company of the real property, facility, and fixtures
located at Visalia, California (the "Visalia Sale and Leaseback"); provided,
that (i) the aggregate net cash proceeds to the Company received in respect of
the Visalia Sale and Leaseback shall be
2
at least $1,300,000, (ii) the Company shall pay shall pay (as soon as
practicable but in any event within 24 hours of the closing of the Visalia Sale
and Leaseback) the entire net cash proceeds to the Senior Bank Agent, with at
least half of such proceeds to be applied for prepayment of the Term Loan (as
defined in the Senior Credit Agreement) and the balance to be applied for
prepayment of the Revolving Credit Loans (as defined in the Senior Credit
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 the Required Investors (it being agreed that such
documentation shall be deemed to be satisfactory if, taken as a whole, such
documentation is no less favorable to the Company 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 of this Amendment 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 Amendment, upon the Effective Date, the Investors hereby consent to the
sale and leaseback by the Company of the real property, facility, and fixtures
located at Sunnyside, Washington (the "Sunnyside Sale and Leaseback"); provided,
that (i) the aggregate net cash proceeds to the Company received in respect of
the Sunnyside Sale and Leaseback shall be at least $1,544,000, (ii) the Company
shall pay shall pay (as soon as practicable but in any event within 24 hours of
the closing of the Sunnyside Sale and Leaseback) the entire net cash proceeds to
the Senior Bank Agent, with at least half of such proceeds to be applied for
prepayment of the Term Loan (as defined in the Senior Credit Agreement) and the
balance to be applied for prepayment of the Revolving Credit Loans (as defined
in the Senior Credit 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 the Required Investors (it
being agreed that such documentation shall be deemed to be satisfactory if,
taken as a whole, such documentation is no less favorable to the Company 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 of this Amendment 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 Amendment, upon the Effective
Date, the Investors hereby consent to the formation of PW Poly, Inc. ("PW Poly")
as a subsidiary of the Company and the transfer by the Company to PW Poly of
inventory, machinery and equipment (for clarification purposes, the transferred
property shall not include any real property or accounts receivable) used solely
in the Company'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
3
hereto as Exhibit A (the transactions contemplated by this Section 6,
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 the
Company's accounts payable (and, to the extent the Company (rather than PW
Poly) pays any or all of such accounts payable, PW Poly shall immediately
reimburse the Company in cash for any amount paid by the Company),
(c) PW Poly shall pay (on the closing date of the PW Poly
Transaction) to the Company at least $1,400,000 in cash,
(d) the Company shall pay (on the closing date of the PW Poly
Transaction) the entire net cash proceeds (i.e., at least $1,400,000) to
the Senior Bank Agent, with at least half of such proceeds to be applied
for prepayment of the Term Loan (as defined in the Senior Credit Agreement)
and the balance to be applied for prepayment of the Revolving Credit Loans
(as defined in the Senior Credit Agreement),
(e) the Company shall not transfer to PW Poly any accounts
receivable of the Company, including without limitation any accounts
receivable related to the polyethylene portion of the Company's business,
(f) after giving effect to the PW Poly Transaction, the Company
shall own greater than ninety percent (90%) of the fully diluted equity of
PW Poly,
(g) the documentation in respect of the PW Poly Transaction
shall be reasonably satisfactory in all material respects to the Required
Investors (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 the Company nor
any Subsidiary 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),
(h) the Company shall not guaranty any Indebtedness of PW Poly,
including, without limitation, any buy-back agreement obligations,
(i) PW Poly shall not invest greater than $2,375,000 in the
entity or entities (collectively, "WL Newco") that purchase assets of ▇.▇.
Plastics, LLC; provided that no more than $2,075,000 of such amount shall
constitute a cash investment,
4
(j) PW Poly shall own at least 30% of the fully diluted equity
of WL Newco (or, to the extent PW Poly invests less than $2,375,000 in WL
Newco, a pro rata portion of the 30% ownership requirement, based on the
actual amount invested by PW Poly), and
(k) if the PW Poly Transaction is not consummated within 90 days
after the date hereof, then this Section 6 of this Amendment shall be null
and void ab initio.
7. Amendments to Purchase Agreement, the Warrant Agreement and the
2003 Warrant Agreement in Connection with the PW Poly Transaction. In reliance
upon and subject to the accuracy of the representations set forth in this
Amendment, upon the Effective Date, the Investors and the Company hereby agree
that:
(a) In no event shall any provision (including without
limitation, any representation, warranty, covenant, default or event of
default) of the Purchase Agreement, the Warrant Agreement or the 2003
Warrant 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 "Company", "Obligor", "Subsidiary", "Subsidiaries"
or "Consolidated" in the Purchase Agreement, the Warrant Agreement or the
2003 Warrant 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 Purchase 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 an Subsidiary of the Company for the purposes of Section 7.7
(Maintenance of Books and Records; Financial Statements, Reports, Etc.) of
the Purchase Agreement and Section 7.2 (Financial Statements and Reports)
of the Warrant Agreement and the 2003 Warrant Agreement; provided, however,
that with respect to the monthly financial statements contemplated by
Section 7.7(ii) of the Purchase Agreement, each of PW Poly and its
subsidiaries shall be expressly excluded as a Subsidiary of the Company;
(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 the Company for the purposes of
Section 8.3 (Affiliate Transactions) of the Purchase Agreement, Section 7.4
(Affiliate Transactions) of the Warrant Agreement and Section 7.4
(Affiliate Transactions) of the 2003 Warrant Agreement;
5
(f) Notwithstanding anything to the contrary contained in this
Section 7 or otherwise, the Company may enter into a tax sharing agreement
with PW Poly and its subsidiaries; provided that the tax obligations owing
by the Company, on the one hand, and PW Poly and its 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, the Company 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 the Company is operated.
8. Amendments to the Warrant Agreement and the 2003 Warrant
Agreement in Connection with the ETI Stock Purchase Documents. In reliance upon
and subject to the accuracy of the representations set forth in this Amendment
and Amendment No. 7, upon the Effective Date (as defined in Amendment No. 7),
the Investors and the Company hereby agree that in no event shall any provision
(including without limitation, any representation, warranty, covenant, default
or event of default) of the Warrant Agreement or the 2003 Warrant Agreement
apply to the ETI Group. Notwithstanding anything to the contrary contained in
this Section 8 or otherwise, each Person within the ETI Group (i) shall be
expressly included as an Affiliate of the Company for the purposes of Section
7.4 (Affiliate Transactions) of the Warrant Agreement and Section 7.4 (Affiliate
Transactions) of the 2003 Warrant Agreement and (ii) shall be expressly included
as a Subsidiary of the Company for the purposes of Section 7.2 (Financial
Statements and Reports) of the Warrant Agreement and the 2003 Warrant Agreement.
9. Representations and Warranties. In order to induce the Investors
to enter into this Amendment, the Company hereby represents and warrants that
(w) no Default or Event of Default exists on the Effective Date, after giving
effect to this Amendment, (x) no Event of Default (as defined in the Sale and
Leaseback Documents) exists on the Effective Date, and no Event of Default (as
defined in the Sale and Leaseback Documents) shall subsequently exist due to the
actions contemplated by Sections 2, 3, 4, 5 and 6 hereof, (y) no Default or
Event of Default (in each case as defined in the Senior Credit Agreement) exists
on the Effective Date, after giving effect to the amendment of the Senior Credit
Agreement referred to herein and (z) all of the representations and warranties
contained in the Note Documents shall be true and correct in all respects on the
Effective Date, after giving effect to this Amendment, with the same effect as
though such representations and warranties had been made on and as of the
Effective Date (it being understood that any representation or warranty made as
of a specified date shall be true and correct in all material respects as of
such specific date), in each case except as previously disclosed in writing to
the Investors.
10. Effectiveness of this Amendment.
6
(a) This Amendment (except for Sections 2, 3, 4, 5, 6 and 7)
shall become effective on the date (the "Effective Date") when:
(i) the Company and the Required Investors shall have signed a
counterpart hereof (whether the same or different counterparts), and
(ii) the Company shall have paid all fees and expenses of
O'Melveny & ▇▇▇▇▇ LLP incurred by the Investors in connection with or
relating to the preparation, execution or delivery of this Amendment and
all other unpaid fees and expenses of O'Melveny & ▇▇▇▇▇ LLP incurred by the
Investors in connection with the Purchase Agreement to the extent the
amount thereof has been provided to the Company prior to the execution and
delivery of this Amendment; provided, however, that nothing in this
Amendment shall limit the generality of Section 12.4 of the Purchase
Agreement.
(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:
(i) the Investors shall have received a copy of a duly executed
amendment or amendments of the Senior Credit Agreement (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 the Required Investors and provided,
further, that the reasonable satisfaction of each such amendment or
amendments shall be acknowledged in writing by the Required Investors, and
(ii) the Company shall have paid all fees and expenses of
O'Melveny & ▇▇▇▇▇ LLP incurred by the Investors in connection with or
relating to the review of documents in connection with a Consent Effective
Date and all other unpaid fees and expenses of O'Melveny & ▇▇▇▇▇ LLP
incurred by the Investors in connection with the Purchase Agreement to the
extent the amount thereof has been provided to the Company prior to the
execution and delivery of this Amendment; provided, however, that nothing
in this Amendment shall limit the generality of Section 12.4 of the
Purchase Agreement.
11. Miscellaneous.
(a) This Amendment is limited as specified and shall not
constitute an amendment, modification or waiver of any other provision of
the Purchase Agreement or any other Note Document.
(b) This 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.
7
(c) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.
(d) The parties hereby agree that this Amendment shall be a Note
Document for all purposes under the Purchase Agreement. From and after the
Effective Date, all references in the Purchase Agreement and each of the
other Note Documents to the Purchase Agreement shall be deemed to be
references to the Purchase Agreement as amended hereby.
(e) All notices, demands and requests of any kind to be
delivered to any party hereto in connection with this Amendment shall be
delivered in accordance with the notice provisions contained in the
Purchase Agreement.
(f) The headings used herein are for convenience of reference
only and shall not affect the construction of, nor shall they be taken into
consideration in interpreting, this Amendment.
8
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
AMENDMENT NO. 9 to be duly executed and delivered as of the date first above
written.
PW EAGLE, INC.
By: /s/ ▇▇▇▇▇▇ West
------------------------------------
Name: ▇▇▇▇▇▇ West
Title: CAO
▇.▇. ▇▇▇▇▇▇ PARTNERS (23A SBIC), LLC
By: ▇.▇. ▇▇▇▇▇▇ PARTNERS (23A SBIC
MANAGER), INC., Its Managing
Member
By: /s/ ▇▇▇▇▇▇▇ ▇.▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇.▇▇▇▇▇▇
Title: Managing Director
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc. as
Investment Advisor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
MASSMUTUAL CORPORATE INVESTORS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
9
The foregoing is executed on behalf of
MassMutual Corporate Investors,
organized under a Declaration of Trust,
dated September 13, 1985, as amended
from time to time. The obligations of
such Trust are not personally binding
upon, nor shall resort to be had to the
property of, any of the Trustees,
shareholders, officers, employees or
agents of such Trust, but the Trust's
property only shall be bound.
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
The foregoing is executed on behalf of
MassMutual Participation Investors,
organized under a Declaration of Trust,
dated April 7, 1988, as amended from
time to time. The obligations of such
Trust are not binding upon, nor shall
resort be had to the property of, any of
the Trustees, shareholders, officers,
employees or agents of such Trust
individually, but the Trust's assets and
property only shall be bound.
MASSMUTUAL CORPORATE VALUE PARTNERS
LIMITED
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc.
under delegated authority from
Massachusetts Mutual Life
Insurance Company, as Investment
Manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
10