EXHIBIT 4.1(F)
THIS DOCUMENT IS SUBJECT TO A CONFIDENTIAL TREATMENT
REQUEST PURSUANT TO RULE 24B-2 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
AMENDMENT AGREEMENT NO. 6
TO CREDIT AGREEMENT AND
EQUITY APPRECIATION RIGHTS AGREEMENT
THIS AMENDMENT AGREEMENT (this "Amendment Agreement") is made and
entered into as of this 10th day of May, 2002, by and among INSTEEL INDUSTRIES,
INC., a North Carolina corporation (herein called the "Borrower"), BANK OF
AMERICA, N.A., a national banking association (the "Agent"), as Agent for the
lenders (the "Lenders") party to the Credit Agreement dated January 31, 2000 as
amended by the Amendment Agreement No. 1 to Credit Agreement dated January 12,
2001, by the Supplement to Amendment Agreement No. 1 to the Credit Agreement
effective January 12, 2001, by the Amendment Agreement No. 2 to Credit Agreement
dated May 21, 2001, by Amendment Agreement No. 3 to Credit Agreement dated
August 9, 2001, by Amendment Agreement No. 4 to Credit Agreement dated November
16, 2001 and by Amendment Agreement No. 5 to Credit Agreement dated January 28,
2002 (collectively the "Agreement"), and the Equity Appreciation Rights
Agreement dated May 21, 2001 (the "EAR Agreement"), among the Borrower, the
Agent, and the Lenders, and the UNDERSIGNED LENDERS.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into the Agreement pursuant to
which the Lenders have agreed to make loans to the Borrower as evidenced by the
Notes (as defined in the Agreement) and to issue Letters of Credit for the
benefit of the Borrower; and
WHEREAS, as a condition to the making of the loans pursuant to the
Agreement the Lenders have required that the Subsidiaries of the Borrower
guarantee payment of all Obligations of the Borrower arising under the
Agreement; and
WHEREAS, the Borrower has requested that the Lenders further amend the
Agreement and amend the EAR Agreement in the manner described herein; and
WHEREAS, the Lenders are willing to further amend the Agreement and
amend the EAR Agreement subject to the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Agent and the Lenders do hereby agree
as follows:
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1. Definitions. The term "Agreement" as used herein and in the
Loan Documents (as defined in the Agreement) shall mean the Agreement as
hereinafter amended and modified. The term "EAR Agreement" as used herein and in
the Loan Documents (as defined in the Agreement) shall mean the EAR Agreement as
hereinafter amended and modified. Unless the context otherwise requires, other
than paragraph 6, all terms used herein without definition shall have the
definition provided therefor in the Agreement. Unless the context requires
otherwise, all terms used herein in paragraph 6 without definition shall have
the definition provided therefor in the EAR Agreement.
2. Amendment to Agreement. Subject to the conditions set forth
herein, the Agreement is hereby amended, effective as of the date of this
Amendment No. 6 as follows:
(a) Section 1.1 is hereby amended by adding the following
new definitions thereto in the appropriate alphabetical order:
"`Amendment No. 6' means Amendment Agreement No. 6 to
Credit Agreement and Equity Appreciation Rights Agreement
which Amendment No. 6 is dated May 10, 2002;"
"`Applicable Period' means, (x) with respect to the
calculation of Consolidated EBITDA for purposes of determining
the Applicable Margin, the Four-Quarter Period most recently
ended for which the Borrower has delivered a certificate
pursuant to Section 9.1(a)(ii) and (b)(ii), (y) with respect
to the calculation of Consolidated EBITDA for purposes of
determining Excess EBITDA at any date, the Fiscal Year ending
on such date, and (z) with respect to the calculation of
Consolidated EBITDA for purposes of determining compliance
with Section 10.1(b) as at each of the dates set forth below,
the following periods of time ending at such date:
Date Applicable Period
June 1, 2002 The 1 month period then ended
June 29, 2002 The 2 month period then ended
August 3, 2002 and each The 3 month period then ended
fiscal month end
thereafter "
"`Excess EBITDA' means, for each of the Applicable
Periods set forth below, 75% of the amount by which
Consolidated EBITDA exceeds the amount set forth below
opposite each such period:
Applicable Period Amount
Fiscal Year ending
September 28, 2002 $21,051,800
2
Fiscal Year ending
September 27, 2003 $16,654,000"
(b) The definition of "Applicable Margin" in Section 1.1
is hereby further amended in its entirety so that as amended it shall
read as follows:
"`Applicable Margin' means (a) with respect to the
Revolving Credit Facility, the following percentages per annum
based upon the Consolidated Leverage Ratio for the Applicable
Period as set forth in the most recent compliance certificate
received by the Agent:
Pricing Applicable
Level Consolidated Leverage Ratio Margin
----- --------------------------- ----------
1 < 4.00:1 2.00%
-
2 >4.00:1 but < 4.50:1 2.50%
-
3 >4.50:1 but < 5.00:1 3.00%
-
4 >5.00:1 3.50%
Any increase or decrease in the Applicable
Margin resulting from a change in the
Consolidated Leverage Ratio shall become
effective as of the first Business Day
immediately following the date a compliance
certificate is delivered pursuant to Section
9.1(a); provided, however, that if a
compliance certificate is not delivered when
due in accordance with such Section, then
Pricing Level 4 shall apply as of the first
Business Day after the date on which such
compliance certificate was required to have
been delivered. The Applicable Margin in
effect from May 6, 2002 through July 15,
2002 shall be determined based upon Pricing
Xxxxx 0, and
(b) with respect to the Term Loan Credit Facility, 7% per
annum for any Term Loan Outstandings in excess of $40,635,000
and for each of the periods set forth below that percent per
annum set forth opposite each such period for all other Term
Loan Outstandings:
Period Applicable Margin
May 6, 2002 through December 31, 2002 3.75%
January 1, 2003 through October 15, 2003 4.00%
(c) The definition of "Consolidated EBITDA" in Section
1.1 is hereby amended in its entirety so that as amended it shall read
as follows:
"`Consolidated EBITDA' means, with respect to the
Borrower and its Subsidiaries for any Applicable
Period ending on the date of computation thereof, the
sum of, without duplication, (i) Consolidated Net
Income, plus any losses or minus any gains associated
with the closing, restructuring,
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sale, lease, transfer or other disposition of any
assets related to the Jacksonville, Florida,
Fredericksburg, Virginia, Xxxxxxx, South Carolina and
Gallatin, Tennessee facilities, (ii) Consolidated
Interest Expense, (iii) taxes on income, (iv)
amortization, (v) depreciation, (vi) Amendment Fees
payable to Lenders when and to the extent actually
paid and other actual cash expenses paid in each case
in connection with Amendment No. 6, the aggregate of
such fees and expenses not to exceed $[*], all
determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis."
(d) The definition of "Stated Termination Date" in
Section 1.1 is hereby further amended in its entirety so that as
amended it shall read as follows:
"`Stated Termination Date' means October 15, 2003."
(e) The definition of "Term Loan Maturity Date" in
Section 1.1 is hereby amended in its entirety so that as amended it
shall read as follows:
"`Term Loan Maturity Date' means October 15, 2003."
(f) The definition of "Total Revolving Credit Commitment"
in Section 1.1 is hereby amended in its entirety so that as amended it
shall read as follows:
"`Total Revolving Credit Commitment' means
$50,000,000 and shall be subject to reduction from
time to time in accordance with Section 2.2(e) and
subject to further reduction by $8,000,000 on the
earlier to occur of (i) the Asset Disposition of the
Xxxxxxx, South Carolina facility and (ii) July 31,
2002."
(g) Section 2.1(c) is hereby amended in its entirety so
that as amended it shall read as follows:
"(c) Payment of Principal. The principal amount of
the Term Loan shall be repaid in monthly installments on the
dates and in the amounts set forth below:
Date Amount
---- ------
May 31, 2002 $300,000
June 30, 2002 $300,000
July 31, 2002 $700,000
August 31, 2002 $700,000
September 30, 2002 $700,000
--------
[*] Confidential portion has been omitted and filed separately with the
Commission.
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October 31, 2002 $100,000
November 30, 2002 $100,000
December 31, 2002 $100,000
January 31, 2003 $200,000
February 28, 2003 $200,000
March 31, 2003 $200,000
April 30, 2003 $300,000
May 31, 2003 $300,000
June 30, 2003 $300,000
July 31, 2003 $400,000
August 31, 2003 $400,000
September 30, 2003 $400,000
provided, however, that the entire amount of Term Loan
Outstandings shall be due and payable in full on the Term Loan
Termination Date."
(h) Section 2.1(e) is hereby amended in its entirety so
that as amended it shall read as follows:
"(e) Mandatory Prepayments. In addition to the
required payments of principal of the Term Loan set forth in
Section 2.1(c) and any optional payments of principal of the
Term Loan or reductions of the Revolving Credit Facility
effected under Section 2.1(d) or Section 2.2(e), the Borrower
shall make, or shall cause each applicable Subsidiary to make,
a prepayment from the proceeds of (i) each private or public
offering of equity securities of the Borrower or any
Subsidiary (other than securities issued to the Borrower or a
Guarantor) in an amount equal to fifty percent (50%) of the
Net Proceeds of each issuance of equity securities of the
Borrower or any Subsidiary (including without limitation any
security not constituting Indebtedness exchangeable,
exercisable or convertible for or into equity securities),
(ii) the issuance of any Indebtedness for Money Borrowed
permitted by the Required Lenders, in an amount equal to one
hundred percent (100%) of the Net Proceeds from the issuance
of such Indebtedness excluding Indebtedness permitted to be
issued under Section 10.5(a), (iii) each Asset Disposition
permitted under Section 10.6(b), (c), (f) and (g) in an amount
equal to one hundred percent (100%) of the Net Proceeds of
such Asset Disposition, (iv) one hundred percent (100%) of the
amount of any Price Adjustment received by the Borrower, (v)
one hundred percent (100%) of the amount of any tax refund
from all federal, state and local tax returns filed by the
Borrower and each of its Subsidiaries, and (vi) seventy-five
percent (75%) of the Excess EBITDA, each such prepayment
(other than Excess EBITDA) to be made within fifteen (15)
Business Days of receipt of such proceeds, and with respect to
(vi), within fifteen (15) Business Days after the delivery of
the financial statements pursuant to Section 9.1(a), and upon
not less than five (5) Business Days' written notice to the
Agent, which notice shall include a certificate of an
Authorized Representative setting forth in reasonable detail
the calculations utilized in computing the amount of such
prepayment; provided, that the required
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Excess EBITDA payment due within such 15 day period shall be
an amount equal to the sum of cash and cash equivalents of the
Borrower and its Subsidiaries and availability under the
Revolving Credit Facility minus $8,500,000, with the balance
of such Excess EBITDA to be due and payable in three equal
installments on the first Business Day of April, May and June.
The Agent shall give each Lender, within one (1)
Business Day, telefacsimile notice of each notice of
prepayment described in this Section 2.1(e). All mandatory
prepayments made pursuant to this Section 2.1(e) shall be
applied (i) to installments of principal of the Term Loan in
inverse order of their maturities (as adjusted to give effect
to any prior payments or prepayments of principal), and (ii)
in the event that the Term Loan shall have been fully repaid,
to the Revolving Credit Outstandings; provided that the Total
Revolving Credit Commitment shall not be permanently reduced
by any such prepayment except that prepayments of Revolving
Credit Outstandings pursuant to Section 2.1(e)(iii) above
shall permanently reduce the Total Revolving Credit Commitment
by the amount of such prepayment.
Notwithstanding the foregoing, (x) the Net Proceeds
received from the sale of Inventory, other than in the
ordinary course of business, or Accounts Receivable shall be
applied as repayments of the Revolving Credit Outstandings to
permanently reduce the Total Revolving Credit Commitment, and
(y) the Net Proceeds received from the Asset Disposition of
the Xxxxxxx, South Carolina facility shall be applied in the
following manner: first, $1,400,000 shall be applied as a
prepayment to the Term Loan Outstandings, and second, the
remaining Net Proceeds from such Asset Disposition shall be
applied as repayments of the Revolving Credit Outstandings."
(i) Section 9.1(g) is amended in its entirety so that as
amended it shall read as follows:
"(g) as soon as practicable and in any event
within 15 days after the end of each fiscal month
deliver to the Agent (i) an Accounts Receivable trial
balance aged from the date of invoice, (ii) an
accounts payable trial balance aged from the date of
invoice, (iii) a list of the Inventory summarized as
required by the Agent, and (iv) a compliance
certificate of an Authorized Representative
demonstrating compliance with Sections 10.1(a) and
(b), each of the foregoing to be in form and detail
acceptable to the Agent;"
(j) Section 10.1(a) is amended in its entirety so that as
amended it shall read as follows:
"(a) Consolidated Net Worth. Permit Consolidated
Net Worth to be less than (i) $25,000,000 and (ii) as
at the last day of each fiscal quarter of the
Borrower ending after March 30, 2002 and until (but
excluding) the last day of the next following fiscal
quarter of the Borrower, the sum of (A) the amount of
Consolidated Net Worth required to be maintained
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pursuant to this Section 10.1(a) as at the end of the
immediately preceding fiscal quarter (or, in the case
of the computation for the quarter ended March 30,
2002, $25,000,000, plus (B) 50% of Consolidated Net
Income (with no reduction for net losses during any
period) for the fiscal quarter of the Borrower ending
on such day (including within "Consolidated Net
Income" certain items otherwise excluded, as provided
for in the definition of "Consolidated Net Income"),
plus (C) 100% of the aggregate amount of all
increases in the stated capital and additional
paid-in capital accounts of the Borrower resulting
from the issuance of equity securities or other
capital investments."
(k) Section 10.1(b) is amended in its entirety so that as
amended it shall read as follows:
"(b) Consolidated EBITDA. Permit Consolidated
EBITDA for each of the Applicable Periods ending on the dates
set forth below to be less than the amount set forth opposite
each such date:
APPLICABLE PERIOD AMOUNT
------------------ ------
June 1, 2002 $1,253,000
June 29, 2002 2,493,000
August 3, 2002 4,108,000
August 31, 2002 4,138,000
September 28, 2002 4,021,000
November 2, 2002 3,878,000
November 30, 2002 3,343,000
December 28, 2002 2,659,000
February 1, 2003 2,170,000
March 1, 2003 2,286,000
March 29, 2003 2,859,000
May 3, 2003 3,254,000
May 31, 2003 3,447,000
June 28, 2003 3,603,000
August 2, 2003 3,675,000
August 30, 2003 3,823,000
September 27, 2003 3,749,000
(l) Section 10.3 is hereby amended in its entirety so
that as amended it shall read as follows:
"Capital Expenditures. Make or become committed to
make Capital Expenditures which exceed in the
aggregate $2,000,000 for the Fiscal Year 2002, and
$3,000,000 for the Fiscal Year 2003."
3. Subsidiary Consents. Each Subsidiary of the Borrower that has
delivered a Guaranty to the Agent has joined in the execution of this Amendment
Agreement for the purpose
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of (i) agreeing to the amendment to the Agreement and (ii) confirming its
guarantee of payment of all the Obligations.
4. Representations and Warranties. The Borrower hereby represents
and warrants that:
(a) The representations and warranties made by Borrower
in Article VIII of the Agreement are true on and as of the date hereof
except that the financial statements referred to in Section 8.6(a)
shall be those most recently furnished to each Lender pursuant to
Section 9.1;
(b) There has been no material adverse change in the
condition, financial or otherwise, of the Borrower and its Subsidiaries
since the date of the most recent financial reports of the Borrower
received by each Lender under Section 9.1 thereof, other than changes
in the ordinary course of business, none of which has been a material
adverse change;
(c) The business and properties of the Borrower and its
Subsidiaries are not and have not been adversely affected in any
substantial way as the result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo,
riot, activities of armed forces, war or acts of God or the public
enemy, or cancellation or loss of any major contracts; and
(d) After giving effect to this Amendment Agreement
(including the waivers by the Lenders set forth herein), no event has
occurred and no condition exists which, upon the consummation of the
transaction contemplated hereby, constitutes a Default or an Event of
Default on the part of the Borrower under the Agreement, the Notes or
any other Loan Document either immediately or with the lapse of time or
the giving of notice, or both.
5. Deferral of Amendment Fee under Amendment No. 5. The
provisions regarding the Amendment Fee as set forth in paragraph 5 of Amendment
No. 5 are modified as follows: (i) payment of $[*] is due on each of July 31,
2002, October 31, 2002 and January 31, 2003 and (ii) payment of $[*] is due on
April 30, 2003. In the event all Obligations have been paid in full prior to the
date each payment shall be due, payment of such fees shall be waived.
6. Amendment to EAR Agreement. Subject to the conditions set
forth herein, the EAR Agreement is hereby amended, effective as of the date of
this Amendment No. 5 as follows:
(a) Section 1.01 is hereby amended by adding the
following new definition thereto in the appropriate alphabetical order:
--------
[*] Confidential portion has been omitted and filed separately with the
Commission.
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"Amendment No. 6" means Amendment Agreement No. 6 to
Credit Agreement and Equity Appreciation Rights Agreement
which Amendment No. 6 is dated May 6, 2002;"
(b) The definition of "Exercise Period" in Section 1.01
is hereby amended in its entirety so that as amended it shall read as
follows:
"Exercise Period" means the period (a) beginning and
ending in the case of Section 2.02(b) and (c), upon payment in
full of all the Loans or (b) beginning on the earlier to occur
of (i) July 15, 2003 or (ii) occurrence of an Event of Default
under the Credit Agreement and ending on July 15, 2005;"
(c) Section 2.02(a) is hereby amended in its entirety so
that as amended is shall read as follows:
"(a) The Borrower agrees to pay to the Agent for
the benefit of the Lenders the Rights Fee not later than
ninety (90) days next following the Exercise Date, provided
the Agent shall have given the Borrower notice of the
Exercise Date within ten (10) business days next following
delivery by the Borrower to the Agent of the financial
information required to be delivered to the Agent pursuant
to Section 9.1 of the Credit Agreement for the period ending
on such Exercise Date. The Rights Fee shall be in a maximum
amount of $[*] but in no event less than the greater of
(i) [*]; or
(ii) $[*];
(d) Section 2.02(b) is hereby amended in its entirety so
that as amended it shall read as follows:
"(b) In the event all Obligations (as defined in
the Credit Agreement) have been paid in full by April 15, 2003
and the Facility Termination Date (as defined in the Credit
Agreement) shall have occurred by April 15, 2003, the Rights
Fee shall be $[*];"
(e) Section 2.02(c) is hereby amended in its entirety so
that as amended it shall read as follows:
"(c) In the event all Obligations (as defined in
the Credit Agreement) have not been paid in full by April 15,
2003 but are paid in full by July 15, 2003 and the Facility
Termination Date (as defined in the Credit Agreement) shall
have
--------
[*] Confidential portion has been omitted and filed separately with the
Commission.
9
occurred by July 15, 2003, the Rights Fee shall be in a
maximum amount of $[*] but in no event less than the greater
of:
(i) [*]; or
(ii) $[*]; and"
7. Conditions. This Amendment Agreement shall become effective
upon the Borrower delivering or causing to be delivered to the Agent the
following:
(i) five (5) counterparts of this Amendment Agreement
duly executed by the Borrower, the Agent and the Required Lenders and
consented to by each of the Subsidiaries;
(ii) copy of resolutions adopted by the Board of Directors
of the Borrower and each Guarantor approving this Amendment Agreement
and authorizing its execution certified by the Secretary or Assistant
Secretary to be a true and correct copy duly adopted; and
(iii) all other fees and expenses, including the Agent's
fees, due in connection with this Amendment Agreement.
8. Acknowledgment; Release. The Borrower and the Guarantors
acknowledge that they have no existing defense, counterclaim, offset,
cross-complaint, claim or demand of any kind or nature whatsoever that can be
asserted to reduce or eliminate all or any part of any of their respective
liability to pay the full indebtedness outstanding under the terms of the
Agreement and any other Loan Documents which evidence, guaranty or secure the
Obligations. The Borrower and the Guarantors hereby release and forever
discharge the Agent, the Lenders and all of their officers, directors,
employees, attorneys, consultants and agents from any and all actions, causes of
action, debts, dues, claims, demands, liabilities and obligations of every kind
and nature, both in law and in equity, known or unknown, whether matured or
unmatured, absolute or contingent.
9. Costs and Expenses. The Borrower agrees to pay all costs and
expenses associated with the preparation, due diligence, administration and
enforcement of all documentation executed in connection with the Amendment
Agreement, including without limitation, the legal fees and out-of-pocket
expenses of counsel to the Agent. The Borrower also agrees to pay the expenses
of the Agent and the Lenders in connection with Collateral review, field audits
and retention of consultants.
10. Entire Agreement. This Amendment Agreement sets forth the
entire understanding and agreement of the parties hereto in relation to the
subject matter hereof and supersedes any prior negotiations and agreements among
the parties relative to such subject
--------
[*] Confidential portion has been omitted and filed separately with the
Commission.
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matter. No promise, conditions, representation or warranty, express or implied,
not herein set forth shall bind any party hereto, and no one of them has relied
on any such promise, condition, representation or warranty. Each of the parties
hereto acknowledges that, except as in this Amendment Agreement otherwise
expressly stated, no representations, warranties or commitments, express or
implied, have been made by any other party to the other. None of the terms or
conditions of this Amendment Agreement may be changed, modified, waived or
canceled orally or otherwise, except by writing, in the manner provided in the
Agreement, specifying such change, modification, waiver or cancellation of such
terms or conditions, or of any proceeding or succeeding breach thereof.
11. Full Force and Effect of Agreement. Except as hereby
specifically amended, modified or supplemented, the Agreement and all of the
other Loan Documents are hereby confirmed and ratified in all respects and shall
remain in full force and effect according to their respective terms.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
BORROWER:
INSTEEL INDUSTRIES, INC.
WITNESS:
/s/ Xxxxxx X. Xxxxx Xx. By: /s/ H.O. Xxxxx III
--------------------------------- --------------------------------
Print Name: Xxxxxx X. Xxxxx Xx. Name: H.O. Xxxxx III
---------------------- ------------------------------
Title: President
-----------------------------
/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Print Name: Xxxxxxx X. Xxxxxxxxx
---------------------
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GUARANTORS:
INSTEEL WIRE PRODUCTS COMPANY
INTERCONTINENTAL METALS CORPORATION
FLORIDA WIRE AND CABLE, INC.
WITNESS:
/s/ Xxxxxx X. Xxxxx Xx. By: /s/ H.O. Xxxxx III
-------------------------------- -------------------------------
Print Name: Xxxxxx X. Xxxxx Xx. Name: H.O. Xxxxx III
--------------------- -----------------------------
Title: President
-----------------------------
/s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Print Name: Xxxxxxx X. Xxxxxxxxx
--------------------
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BANK OF AMERICA, N.A., as Agent for the Lenders
By: /s/ Xxxxxxx X. Xxx
------------------------------------------
Name: Xxxxxxx X. Xxx
----------------------------------------
Title: Senior Vice President
---------------------------------------
BANK OF AMERICA, N.A., as a Lender
By: /s/ Xxxxxxx X. Xxx
------------------------------------------
Name: Xxxxxxx X. Xxx
----------------------------------------
Title: Senior Vice President
----------------------------------------
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BRANCH BANKING AND TRUST COMPANY
By: /s/ Xxxxxxx X.X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X.X. Xxxxxxx
-------------------------------------
Title: Senior Vice President
------------------------------------
15
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
----------------------------------
Title: Director
---------------------------------
16
PNC BANK, N.A., as attorney in fact for
NATIONAL BANK OF CANADA
By: /s/ Xxx Xxxxx
-------------------------------------
Name: Xxx Xxxxx
-----------------------------------
Title: Vice President
---------------------------------
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