EXHIBIT 10.1
AMENDMENT NO. 7
TO THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
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THIS AMENDMENT NO. 7 (this "Agreement") is entered into as of January
18, 2006, by and among SPAR MARKETING FORCE, INC. ("SMF"), SPAR, INC. ("SPAR"),
SPAR/▇▇▇▇▇▇▇▇ 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") and SPAR ▇▇▇▇ ▇▇▇▇, INC. ("SBFI") (each
a "Borrower" and collectively "Borrowers") and ▇▇▇▇▇▇▇ BUSINESS CREDIT
CORPORATION (formerly known as Whitehall Business Credit Corporation)
("Lender").
BACKGROUND
The 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 Borrowers with certain
financial accommodations.
Lender desires to make certain amendments to the Loan Agreement and
Borrowers are willing to do so on the terms and conditions hereafter set forth.
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. Amendment. Subject to the satisfaction of Section 4 below, the Loan Agreement
is hereby amended as follows, effective as of December 31, 2005:
(a) Section 1(A) is amended as follows:
(i) The definition of "Term" is amended by deleting "January
24, 2006" and replacing the same with "January 24, 2009."
(ii) The definition of "General Availability Reserve" is
hereby amended in its entirety to provide as follows:
"General Availability Reserve" shall mean $400,000;
provided, however, such amount shall be reduced to $0
upon delivery of the December 31, 2005 10-K report
which demonstrates that Borrowers are in compliance
with each of the financial covenants set forth in
Section 12 hereof and no other Event of Default
exists.
(ii) The following defined term is added in its appropriate
alphabetical order to provide as follows:
"Amendment No. 7 Effective Date" shall mean the date
upon which all of the conditions precedent set forth
in Section 5 below have been satisfied.
(b) Section 5(b)(iv) is amended by deleting each reference therein to
"three (3)" and replacing the same with "two (2)".
(c) Section 9 is hereby amended in its entirety to provide as follows:
"Collection and Maintenance of Collateral and Records.
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Lender may at any time verify each Borrower's Receivables
utilizing an audit control company or any other agent of
Lender. Lender or Lender's designee may notify Customers, at
any time following the occurrence and during the continuance
of and Event of Default, of Lender's security interest in
Receivables, collect them directly and charge the collection
costs and expenses to Borrowers' account. In the event that,
notwithstanding the provisions of Section 23 hereof, any
Borrower receives any amount representing the proceeds of any
Collateral, such Borrower shall receive all such amounts for
Lender's benefit in trust as Lender's trustee and immediately
deposit such payments in accordance with Section 23 hereof.
Each Borrower shall provide Lender with a borrowing base
certificate in form and substance satisfactory to Lender upon
request at any time and (i) in any event no later than 5:00
p.m. (New York time) on Wednesday of each week (or such other
day as Lender may specify in such request) or more frequently
if requested by Lender, duly completed, as of the close of
business on the previous Tuesday with schedules describing all
Receivables created or acquired by such Borrower since the
date of the previous schedule of Receivables created or
acquired and (ii) in any event no later than 5:00 p.m. (New
York time) on the fifteenth (15th) day of each month, or the
next succeeding Business Day (or such other day as Lender may
specify in such request) or more frequently if requested by
Lender, duly completed, as of the close of business on the
last Business Day of the previous month with schedules
describing all Receivables created or acquired by such
Borrower since the date of the previous schedule of
Receivables created or acquired, and shall
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execute and deliver confirmatory written assignments of such
Receivables to Lender, but such Borrower's failure to execute
and deliver such schedules or written confirmatory assignments
of such Receivables shall not affect or limit Lender's
security interest or other rights in and to the Receivables.
So long as Lender is satisfied with the weekly and monthly
borrowing base certificates delivered by each Borrower, the
Receivables Availability shall be adjusted based on such
borrowing base certificates. Each Borrower shall furnish, at
Lender's reasonable request, copies of contracts, invoices or
the equivalent, and any original shipping and delivery
receipts for all merchandise sold or services rendered and
such other documents and information as Lender may reasonably
require. Each Borrower shall also provide Lender on a monthly
(within ten (10) days after the end of each month), or more
frequent basis, as reasonably requested by Lender, a detailed
or aged trial balance of all of such Borrower's existing
Receivables specifying the names and balances due for each
Customer and such other information pertaining to the
Receivables as Lender may request. Each Borrower shall provide
Lender on a monthly (within ten (10) days after the end of
each month), or more frequent basis, as requested by Lender,
an aged trial balance of such Borrower's existing accounts
payable. Each Borrower shall provide Lender, as requested by
Lender, such other schedules, documents and/or information
regarding the Collateral as Lender may require."
(d) 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, during any
calendar year ending after December 31, 2005, the sum of (x)
$500,000, plus (y) any funds repatriated from Unrestricted
Subsidiaries, plus (z) solely for the calendar year ending
December 31, 2006, $377,000 (as calculated for each calendar
year, the "Unrestricted Subsidiary Investment Amount");
provided, that, should any such investment be less than the
Unrestricted Subsidiary Investment Amount during the
applicable calendar year (the unutilized portion of the
Unrestricted Subsidiary Investment Amount during such calendar
year hereinafter the "Unutilized Amount"), the Unrestricted
Subsidiary Investment Amount for the subsequent calendar year
shall be increased by the Unutilized Amount; provided,
further, that (i) the Borrowers shall have Undrawn
Availability of not less than $1,000,000 after giving effect
to such investment and (ii) there shall be no Undrawn
Availability requirement with respect to funds repatriated to
a Borrower, after January
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1, 2005, from an Unrestricted Subsidiary which funds are
subsequently invested in an Unrestricted Subsidiary;"
(e) Section 12(o) is hereby amended in its entirety to provide as
follows:
"it shall cause to be maintained for Borrowers on a
consolidated basis at the end of the fiscal quarter ending
December 31, 2005 a Net Worth of at least the Net Worth as at
the end of the fiscal quarter ending December 31, 2004 (the
"Base Net Worth") and shall maintain at the end of each fiscal
quarter thereafter an amount equal to the Base Net Worth as
same shall be increased (on a cumulative basis) on March 31 of
each year, commencing March 31, 2006, by fifty percent (50%)
of the net income of Borrowers on a consolidated basis (but
not less than $0) for the prior fiscal year;
(f) Section 12(p) is hereby amended in its entirety to provide as
follows:
"it shall cause to be maintained for the period commencing
with the fiscal quarter ending on December 31, 2005 and for
each fiscal quarter ending thereafter, calculated for the four
(4) fiscal quarters then ended, a Fixed Charge Coverage Ratio
of not less than 1.1 to 1.0;"
(g) Section 12(q) is hereby amended by deleting "$2,000,000" and
replacing the same with "$1,500,000";
(h) Section 12(r) is hereby amended in its entirety to provide
"Intentionally Omitted";
(i) Section 18 is hereby amended in its entirety to provide as follows:
"Term of Agreement. This Agreement shall continue in full
force and effect until the expiration of the Term. Borrowers
may terminate this Agreement at any time upon thirty (30)
days' prior written notice upon payment in full of the
Obligations; provided, that Borrowers pay an early termination
fee in an amount equal to the Required Percentage of the
Maximum Revolving Amount. For the purposes hereof, Required
Percentage shall mean (a) 1.50% from the Amendment No. 7
Effective Date to and including the date immediately preceding
the first anniversary of the Amendment No. 7 Effective Date,
(b) .75% from the first anniversary of the Amendment No. 7
Effective Date to and including the date immediately preceding
the second anniversary of the Amendment No. 7 Effective Date,
and (c) 0% thereafter."
3. Termination of Limited Guarantees. Upon receipt by Lender of the December 31,
2005 10-K report which demonstrates that (i) Borrowers are in compliance with
each of the financial covenants set forth in Section 12 of the Loan Agreement,
including, without limitation, the requirement that Borrowers maintain a Fixed
Charge Coverage Ratio of not less than 1.1 to 1.0 for the four (4) fiscal
quarters ending on December 31, 2005 and (ii) no Event of Default exists, (a)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Limited
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Guarantors") shall be released from all of their obligations under their
respective limited guarantees in favor of Lender, each dated as of May 17, 2004
("Limited Guarantees"), and as of the date hereof, such Limited Guarantees shall
be of no further force and effect and (b) Lender and its officers, directors,
subsidiaries, affiliates, successors and attorneys shall be released from any
and all claims of the Limited Guarantors, known or unknown, existing as of the
date of the execution hereof.
4. 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, the Limited Guarantors and any additional guarantors listed on the
signature pages hereto and (ii) payment of an amendment fee in the sum of
$20,000 which fee shall be charged by Lender to Borrowers' loan account as a
Revolving Advance.
5. 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.
6. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) 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.
(c) 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.
7. Costs and Expenses. Borrowers and Guarantor each hereby agree to pay Lender,
on demand, all costs and expenses (including reasonable attorneys' fees and
legal
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expenses) incurred in connection with this Agreement and any instruments or
documents contemplated hereunder.
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 and Guarantor 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 Agreement or the Ancillary Agreements (all of
the foregoing hereinafter called the "Released Matters"). Borrowers acknowledge
that the agreements in this Section 9 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.
[Remainder of page intentionally left blank]
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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/▇▇▇▇▇▇▇▇ 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 ▇▇▇▇ ▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer of each
of the foregoing entities
▇▇▇▇▇▇▇ BUSINESS CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
CONSENTED AND AGREED TO BY:
PIA MERCHANDISING LIMITED, as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Chief Financial Officer
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as a Limited Guarantor
Address:580 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as a Limited Guarantor
Address:580 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
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