Exhibit 10.1
FIRST AMENDMENT TO CREDIT AGREEMENT
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This First Amendment to Credit Agreement (this "Amendment") is made
and entered into as of the 13th day of February, 2003, by and among ▇▇▇▇▇▇
COMPANIES, INC., a Missouri corporation having its chief executive office
and principal place of business located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Parent"), ZOLTEK CORPORATION, a Missouri corporation, CAPE
COMPOSITES, INC., a California corporation, ENGINEERING TECHNOLOGY
CORPORATION, a Missouri corporation, and ZOLTEK PROPERTIES, INC., a Missouri
corporation, (individually and collectively hereinafter "Borrowers"; all
references to "Borrowers" or "Borrower" shall mean each and all of the
Borrowers) and SOUTHWEST BANK OF ST. LOUIS (the "Bank"), with an office at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Bank, Borrowers and Hardcore Composites Operations, LLC, a
Delaware limited liability company, are parties to that certain Credit
Agreement dated as of May 11, 2001 (the "Agreement"); and
WHEREAS, Bank and Borrowers desire to amend the Agreement upon and
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the covenants,
promises and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which hereby is acknowledged,
the parties hereto agree as follows:
1. Amendments to the Agreement.
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(a) Hardcore Composites Operations, LLC, a Delaware
limited liability company ("Hardcore"), is no longer a subsidiary
of the Parent. Hardcore shall henceforth no longer be a party to,
or have any liabilities, obligations or duties under, the Agreement
or any of the other Loan Documents. All references in the Agreement
and the other Loan Documents to Hardcore shall henceforth be
disregarded. To the extent it has not already done so, Bank will
release any and all security interests and/or liens which it may
have in or on any property or assets of Hardcore.
(b) Section 1.01 of the Agreement is hereby amended by
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deleting the definitions of the terms described below and replacing
them (unless otherwise indicated) with the following, and by adding
certain new defined terms as set forth below:
Accounts - All "Accounts" (as defined in the
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Code) in which the Borrowers now have or hereafter acquire
an interest.
Borrowing Base - At any date of determination, an
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amount equal to: (i) eighty percent (80%) of the face
amount of Eligible Accounts outstanding at such date; plus
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(ii) the Eligible Inventory Advance Amount; minus (iii)
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the aggregate undrawn face amount
of all outstanding letters of credit issued by the Bank
for the account of any one or more of the Borrowers. In no
event, however, shall the Borrowing Base exceed Five
Million Dollars ($5,000,000.00).
Eligible Inventory Advance Rate - With respect to
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Eligible Inventory which is located in the United States
and is to be sold by any Borrower to ▇▇▇▇▇▇▇▇ Corporation,
fifty percent (50%) (measured at cost), and with respect
to all other Eligible Inventory, twenty-five percent (25%)
(measured at cost.)
Inventory Turn Ratio - the definition of
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Inventory Turn Ratio contained in the Agreement is hereby
deleted in its entirety and not replaced.
Maximum Inventory Advance - From and after the
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date hereof, the maximum inventory advance on all Eligible
Inventory shall not exceed Three Million Dollars
($3,000,000.00).
Obligations - All Loans and all other advances,
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debts, liabilities, obligations, covenants and duties
owing, arising, due or payable from the Borrowers to the
Bank of any kind or nature, present or future, whether or
not evidenced by any note, letter of credit, guaranty or
other instrument, whether arising under this Agreement or
any of the other Loan Documents or otherwise and whether
direct or indirect (including, without limitation, those
acquired by assignment), absolute or contingent, primary
or secondary, joint, several or joint and several, due or
to become due, now existing or hereafter arising and
however acquired, and all replacements, renewals,
extensions and other modifications of any of the
foregoing. The term includes, without limitation, all
interest, charges, expenses, fees, attorneys' fees and any
other sums chargeable to the Borrowers under any of the
Loan Documents. The term also includes any of the
foregoing that arise after the filing of a petition by or
against any Borrower under any bankruptcy or similar law,
even if the Obligations do not accrue because of the
automatic stay under Bankruptcy Code Section 362 or
otherwise.
Permitted Debt - Without duplication, any of the
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following:
(i) Debt to trade creditors and normal
expense accruals incurred in the
ordinary course of the Borrowers'
business;
(ii) Debt to the Bank;
(iii) Debt secured by Permitted Liens;
(iv) Debt which is subordinated to the
Obligations pursuant to the terms of a
subordination agreement satisfactory to
the Bank in its sole discretion;
(v) Debt existing on the date of this
Agreement and disclosed on Schedule 1.01
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(Existing Permitted Debt) of this
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Agreement (and any extensions, renewals,
refinancings and replacements thereof in
a principal amount not in excess of the
amount of such Debt outstanding
immediately prior to the effectiveness
of such extension, renewal, refinancing
or replacement);
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(vi) Debt incurred by any Borrower resulting
solely from such Borrower's guaranty of
the debt or other obligations of another
Borrower;
(vii) Debt issued by Parent pursuant to that
certain Subordinated Convertible
Debenture Purchase Agreement dated as of
February 13, 2003 (the "Debenture
Agreement"); provided, however that the
principal amount of such indebtedness
shall not exceed at any time, in the
aggregate, $10,000,000.00, which
Debenture Agreement contains express
terms satisfactory to the Bank that the
debentures issued thereunder are
subordinate to the Obligations; and
(viii) other Debt approved in advance by the
Bank in writing.
Restricted Payment. With respect to any Borrower,
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any purchase, redemption or other acquisition for value of
any shares of its stock or any warrants, rights or options
to acquire any such shares, now or hereafter outstanding.
(c) Section 2.01 of the Agreement is hereby deleted in its
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entirety and replaced by the following:
2.01. TOTAL CREDIT FACILITY. Subject to the
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following terms and conditions of this Agreement, the Bank
agrees to make a total credit facility of up to
$8,500,000.00 available to the Borrowers.
(d) Section 2.03 of the Agreement is hereby deleted in its
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entirety and replaced by the following:
2.03. TERM LOAN. The Bank shall make a Term Loan
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to the Borrowers in the principal amount of Three Million
Five Hundred Thousand Dollars ($3,500,000.00), which shall
be evidenced by and repayable in accordance with the terms
of the Term Loan Note. The proceeds of the Term Loan shall
be used by the Borrowers solely for purposes of the
Borrowers' general working capital needs and general
corporate purposes to the extent not inconsistent with the
terms of this Agreement.
(e) Section 3.01(a) of the Agreement is hereby deleted in
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its entirety and replaced by the following (with the remaining
subsections of Section 3.01 remaining unchanged):
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3.01. INTEREST AND CHARGES.
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(a) Interest shall accrue on the
principal amount of the Revolving Credit Note outstanding
and the Term Loan Note outstanding at the end of each day
at a fluctuating rate per annum equal to the Prime Rate in
effect on such day plus two percent (2%). After the date
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hereof, the foregoing fluctuating rate of interest shall
be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Prime
Rate, with such adjustments to be effective as of the
opening of business on the day that any such change in the
Prime Rate becomes effective. Interest shall be calculated
on a daily basis (computed on the actual number of days
elapsed over a year of 360 days), commencing on the date
the initial Loan is made.
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(f) Section 3.02 of the Agreement is hereby deleted in its
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entirety and replaced by the following:
3.02 TERM OF REVOLVING CREDIT FACILITY. Subject
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to the Bank's right to cease making Loans to the Borrowers
at any time upon or after the occurrence and during the
continuation of any Default or Event of Default, the
Borrowers shall be entitled to request advances under the
Revolving Credit Note for the period from the date hereof
to and including January 31, 2004. In no event may the
Borrowers terminate this Agreement until the Borrowers
have repaid all Loans and otherwise paid and performed
their Obligations hereunder. All indemnities given by the
Borrowers to the Bank under any of the Loan Documents
shall survive the repayment of the Loans and the
termination of this Agreement.
(g) Section 3.03 of the Agreement is hereby deleted in its
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entirety and replaced by the following:
3.03 PAYMENTS. Except where evidenced by notes or
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other instruments issued or made by the Borrowers to the
Bank specifically containing payment provisions which are
in conflict with this Section 3.03 (in which event the
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conflicting provisions of such notes or other instruments
shall govern and control), that portion of the Obligations
consisting of:
(a) Principal payable on account of the
Revolving Credit Loan shall be payable by the
Borrowers to the Bank immediately upon the
earliest to occur of (i) the date or dates for
payment as specified in the Revolving Credit
Note, (ii) the occurrence of any event described
in Section 3.04 hereof which requires the payment
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of principal on the Loans (but only after the
Term Loan has been repaid in full), (iii) the
occurrence and continuance of an Event of Default
in consequence of which the Bank elects to
accelerate the maturity and payment of any of the
Obligations, (iv) termination of this Agreement
for any reason, or (v) January 31, 2004 (the
"Revolving Loan Maturity Date"); provided,
however, that if the principal balance of
Revolving Credit Loan outstanding at any time
shall exceed the Borrowing Base at such time, the
Borrowers shall, on demand, repay the Revolving
Credit Loan in an amount sufficient to reduce the
aggregate unpaid principal amount of such
Revolving Credit Loans by an amount equal to such
excess;
(b) Principal payable on account of the
Term Loan shall be payable by the Borrower to the
Bank immediately upon the earliest to occur of
(i) the date or dates for payment as specified in
the Term Note, which shall call for quarterly
principal payments in the amount of $100,000.00
each, (ii) the occurrence of any event described
in Section 3.04 hereof which requires the payment
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of principal on the Loans, (iii) the occurrence
and continuance of an Event of Default in
consequence of which the Bank elects to
accelerate the maturity and payment of any of the
Obligations, (iv) termination of this Agreement
for any reason, or (v) February 13, 2005 (the
"Term Loan Maturity Date");
(c) Interest accrued on the Loans shall
be due on the earliest to occur of (i) the first
day of each month (for the immediately preceding
month)
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with respect to the Revolving Credit Loan,
computed through the last calendar day of the
preceding month, and quarterly (for the
immediately preceding quarter) with respect to
the Term Loan, computed through the last calendar
day of the preceding quarter (as more fully
described in the Term Loan Note), (ii) the
occurrence of an Event of Default in consequence
of which the Bank elects to accelerate the
maturity and payment of the Obligations, (iii)
termination of this Agreement for any reason or
(iv) the Revolving Loan Maturity Date or the Term
Loan Maturity Date, respectively, as the case may
be; provided, however, that the Borrowers hereby
irrevocably authorize the Bank, in the Bank's
sole discretion, to advance to or on behalf of
the Borrowers, and to charge to the Borrowers'
Loan Account as a Revolving Credit Loan, a sum
sufficient each month to pay all interest accrued
on the Obligations during the immediately
preceding month to the extent such interest is
not otherwise timely paid by the Borrowers;
(d) Costs, fees and expenses payable
pursuant to this Agreement or the other Loan
Documents shall be payable by the Borrowers, on
demand, to the Bank or to any other Person
designated by the Bank and the Borrowers hereby
authorize the Bank, in the Bank's sole
discretion, to advance to or on behalf of the
Borrowers, and to charge the Borrowers' Loan
Account as a Revolving Credit Loan, all such
costs, fees and expenses to the extent not
otherwise timely paid by the Borrowers; and
(e) The balance of the Obligations
requiring the payment of money, if any, shall be
payable by the Borrowers to the Bank as and when
provided in this Agreement or the other Loan
Documents, or if no specific provision for
payment is made, on demand.
(h) Section 6.01.(j) of the Agreement is hereby deleted in
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its entirety and replaced by the following:
(j) Books and Records; Inspection; Bank
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Audits. Maintain complete and accurate books and
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financial records in accordance with GAAP; during
normal working hours permit the Bank and Persons
designated by the Bank to visit and inspect its
properties and to conduct any environmental tests
or audits thereon, to inspect its books and
financial records (including its journals,
orders, receipts and correspondence which relates
to its Accounts), and to discuss its affairs,
finances and Accounts and operations with its
directors, officers, employees and agents and its
independent public accountants; and permit the
Bank and Persons designated by the Bank to
perform audits of such books and financial
records and of the Accounts and inventory of the
Borrowers when and as requested by the Bank; and
pay to the Bank or Persons designated by the Bank
an audit fee based on the Bank's then current
audit rate (which rate is presently $650.00 per
day) plus expenses for each such audit. Without
limiting the foregoing, until the Borrowers
receive written notice from the Bank to the
contrary, Bank shall perform, at the expense of
the Borrowers, quarterly audits of the Accounts
and the inventory of the Borrowers.
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(i) Section 6.01.(m) of the Agreement is hereby deleted in
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its entirety and replaced by the following:
(m) Location of Collateral, Borrower
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Name and State of Organization. Keep all
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Collateral, other than inventory in transit and
motor vehicles, at one or more of the locations
set forth on Schedule 6.01(m) and not remove any
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Collateral therefrom except for, for so long as
there exists no Event of Default, (i) inventory
sold in the ordinary course of the Borrowers'
business, and (ii) dispositions of obsolete
equipment to the extent permitted under this
Agreement. Each Borrower's exact legal name and
all tradenames are as set forth on Schedule
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6.01(m) and no Borrower shall change any such
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names without giving the Bank at least thirty
(30) days prior written notice. Each Borrower's
State of incorporation or organization is as set
forth in the opening paragraph of this Agreement
and no Borrower shall change its State of
incorporation or organization without giving the
Bank at least thirty (30) days prior written
notice.
(j) Section 6.02 of the Agreement is hereby amended by
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adding the following new subpart (k):
(k) Restricted Payments. Make or commit to make
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any Restricted Payment.
(k) Section 6.03 of the Agreement is hereby deleted in its
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entirety and replaced by the following:
6.03 SPECIFIC FINANCIAL COVENANTS. So long as any
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Obligations remain unpaid or the Bank shall have any
commitment to extend credit to or for the benefit of the
Borrowers, unless otherwise consented to in writing by the
Bank:
(a) Minimum Working Capital. Parent
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shall maintain at all times, on a consolidated
basis, Minimum Working capital of not less than
$18,000,000.00.
(b) Debt Coverage Ratio. Parent shall
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not permit its Debt Coverage Ratio, on a
consolidated basis and measured as at the end of
each fiscal quarter of the Borrowers, to be less
than the ratio set forth below for the relevant
time period:
Quarter Ending Debt Coverage Ratio
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12/31/02 Compliance waived
3/31/03 0.75 to 1.0
6/30/03 1.0 to 1.0
9/30/03 and thereafter 1.25 to 1.0
(c) Current Ratio. Parent shall at all
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times maintain, on a consolidated basis, a
minimum Current Ratio of no less than 1.75 to
1.0.
(d) Capital Expenditures. Borrowers
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shall not make Capital Expenditures which exceed,
in the aggregate and on a consolidated basis,
during any fiscal year of the Borrowers,
$3,000,000.00.
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(l) Section 7.01.(g) of the Agreement is hereby deleted in
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its entirety and replaced by the following:
(g) The Borrowers shall (i) fail to pay
any Debt in a principal amount in excess of
$150,000.00 (other than the Debt described in
Sections 7.01(a), 7.01(b) and 7.01(c) above) of
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the Borrowers, or any interest or premium
thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or
otherwise), and such failure shall continue after
any applicable grace period specified in the
agreement or instrument relating to such Debt, or
(ii) fail to perform or observe any covenant or
condition on its part to be performed or observed
under any agreement or instrument relating to any
such Debt when required to be performed or
observed, and such failure shall continue after
the applicable grace period, if any, specified in
such agreement or instrument, if the effect of
such failure to pay or perform or observe is to
accelerate or to permit the acceleration of the
maturity of such Debt; or any such Debt shall be
declared to be due and payable or required to be
prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity
thereof as a result of a default by a Borrower,
or (iii) without limiting the foregoing in any
manner, there shall occur and be continuing an
Event of Default (as such term is defined
therein) under the Debenture Agreement which is
not cured or waived within any applicable grace
or cure period; or
(m) Schedule 1.01 to the Credit Agreement is hereby
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deleted in its entirety and the Schedule 1.01 attached to this
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Amendment is hereby substituted in lieu thereof.
(n) Schedule 5.01(p) to the Credit Agreement is hereby
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deleted in its entirety and the Schedule 5.01(p) attached to this
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Amendment is hereby substituted in lieu thereof.
(o) Schedule 6.01(m) to the Credit Agreement is hereby
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deleted in its entirety and the Schedule 6.01(m) attached to this
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Amendment is hereby substituted in lieu thereof.
2. Conditions To Execution Of This Amendment. Any provision contained
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herein or in the Agreement to the contrary notwithstanding, Bank's execution
of this Amendment is subject to the following:
(a) Bank shall have first received a certified copy of the
resolutions of Borrower, duly adopted at a meeting duly held
authorizing the execution, delivery and performance of this
Amendment in accordance with its terms;
(b) All representations and warranties made in the
Agreement and herein shall be true and correct in all material
respects as of the date hereof and, by execution of this Amendment,
each Borrower hereby certifies same to Bank;
(c) No Borrower shall have defaulted, or taken or failed
to take any action which, unless corrected, would give rise to a
default on any of its obligations to Bank;
(d) No action or omission exists as of the date hereof
which constitutes, or which, with the passage of time, would
constitute a Default or Event of Default, and each Borrower shall
have certified the same to Bank by a duly authorized officer;
(e) Each Borrower shall be in compliance with all
covenants of the Agreement, as amended;
(f) All documents and filings necessary to maintain and
perfect Bank's security interest in the collateral provided for in
the Loan Documents shall be in full force and effect, and all
actions necessary to maintain and perfect the same shall have been
taken;
(g) No material adverse change in the financial condition
of the Borrowers taken as a whole shall have occurred since January
10, 2003;
(h) Bank shall have received the following documents, duly
executed and delivered by all parties thereto, and otherwise
satisfactory in form and content to Bank and its counsel
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(i) An Amended and Restated Revolving Credit
Note in the form of Exhibit A attached
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hereto (which shall also serve as the
revised Exhibit A of the Agreement);
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(ii) An Amended and Restated Term Loan Note
in the form of Exhibit B attached hereto
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(which shall also serve as the revised
Exhibit B of the Agreement);
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(iii) A non-refundable modification fee in the
aggregate amount of $75,000.00;
(iv) An Amended and Restated Equipment Lease
(or similar modification document)
between the Borrowers and the Bank with
respect to the equipment and related
items utilized by the Borrowers at the
Borrowers' nitrogen plant located in
Abilene Texas;
(v) A photocopy of a fully executed original
of the Subordinated Convertible
Debenture Purchase Agreement, and
evidence that Parent has received an
amount not less than $8,000,000.00 with
respect to the sale of such debentures;
(vi) The favorable written opinion of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLP, counsel to the
Borrowers, to the Bank regarding the
Borrowers, the Loan Documents and the
transactions contemplated by this
Agreement and the other Loan Documents;
and
(vii) A good standing certificate from the
Secretary of State for the
organizational State of each Borrower.
(i) No pending or threatened litigation or other
proceeding or investigation shall exist which could reasonably be
expected to have a material adverse effect on the prospects,
operation or financial condition of the Borrowers taken as a whole;
and
(j) The Borrowers shall pay the costs and expenses of Bank
(including reasonable attorneys' fees and expenses) in connection
with the negotiation, preparation, execution and delivery of this
Amendment and all other matters herein provided for or required in
connection with this Amendment.
3. Representations and Warranties. The Borrowers hereby represent and
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warrant to Bank that:
(a) All representations and warranties made by the
Borrowers in the Agreement are true and correct in all material
respects as if they had been made on the date hereof.
(b) No Default or Event of Default exists within the
meaning of the Agreement.
(c) The officers of the Borrowers executing this Amendment
shall be fully authorized to do so, and all corporate actions
necessary or proper to authorize the execution of this Amendment
have been duly done, taken and performed. No consent, authorization
or approval of any other Person is necessary for the due execution
and delivery by any Borrower of this Amendment and the performance
by any Borrower of the terms hereof and thereof. This
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Amendment is executed and delivered in accordance with any laws and
regulations applicable hereto and thereto, and is the legal, valid
and binding obligation of each Borrower, enforceable in accordance
with its terms.
(d) The execution, delivery, and performance, in
accordance with its terms, of this Amendment will not violate any
provision of any Borrower's organizational documents, any law, or
any applicable judgment or regulation of any court or of any public
or governmental agency, officer, or authority, and will not
conflict with, result in a breach of or default under, or result in
the creation of any lien, charge or encumbrance upon any of the
property or assets of any Borrower (except for the security
interest created by the Loan Documents) under any indenture,
mortgage, contract, deed of trust, or other agreement to which any
Borrower is a party or by which any Borrower or any of its
properties or assets is or may be bound.
4. Entire Agreement. This Amendment and the Agreement embody the entire
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agreement between the parties respecting the subject matter hereof and
supersede all prior agreements, proposals, communications and understandings
relating to such subject matter. The terms of the Amendment shall be
considered a part of the Agreement as if fully set forth therein.
5. Miscellaneous. This Amendment shall be binding upon the Borrowers
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and their respective successors and the Bank and its successors and assigns.
The Section headings are furnished for the convenience of the parties and
are not to be considered in the construction or interpretation of this
Amendment or the Agreement. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument. Capitalized terms not defined
herein shall have the meanings set forth in the Agreement. This Agreement
shall be a contract made under and governed by the laws of the State of
Missouri applicable to contracts made and to be performed entirely within
such State.
6. No Other Amendments. In case of a conflict between the terms of this
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Amendment and the Agreement, the terms of this Amendment control. Except as
expressly set forth in this Amendment, the terms of the Agreement remain
unchanged and in full force and effect. The following notice is given
pursuant to Section 432.045 of the Missouri Revised Statutes; nothing
contained in such notice shall be deemed to limit or modify the terms of the
Loan Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWERS) AND US (BANK) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
BORROWERS:
▇▇▇▇▇▇ COMPANIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
CAPE COMPOSITES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
ENGINEERING TECHNOLOGY CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
ZOLTEK PROPERTIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
BANK:
SOUTHWEST BANK OF ST. LOUIS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
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