Exhibit 10.23
FOURTH AMENDMENT TO CREDIT AGREEMENT
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THIS FOURTH AMENDMENT TO CREDIT AGREEMENT ("Amendment") is made and
entered into as of June 27, 2001 (the "Effective Date"), by and between NESCO,
Inc., an Oklahoma corporation (the "Borrower"), and Bank One, Oklahoma, N.A., a
national banking association (the "Lender"), with reference to the following:
A. The Borrower and the Lender are parties to that certain Credit
Agreement dated as of May 12, 2000, as amended by that certain First Amendment
to Credit Agreement dated as of August 4, 2000, as amended by that certain
Second Amendment to Credit Agreement dated as of September 30, 2000 and as
further amended by that certain Third Amendment to Credit Agreement dated as of
December 20, 2000 (as amended, the "Credit Agreement"). Capitalized terms used
herein but not otherwise defined have the respective meanings assigned to them
in the Credit Agreement.
B. The Borrower has requested that the Lender (i) modify the rate of
interest applicable to the Facilities, (ii) apply a borrowing base limitation to
the Working Capital Revolving Credit Facility, (iii) extend the maturity date of
the Construction Loan Facility, (iv) cross-collateralize the Commercial Card
Purchase Obligations (as hereinafter defined) with the Obligations of the
Borrower, and (v) otherwise modify certain covenants.
C. The Lender has agreed to the foregoing changes, subject to the terms
and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby amend the Credit Agreement, effective as of the Effective Date,
as follows:
1. INCREASE OF INTEREST APPLICABLE TO THE FACILITIES. As of the Effective
Date, the formula used in computing the interest rate applicable to the
Facilities will be changed so that the interest rate applicable to all
Facilities will be equal to the Prime Rate, plus three percent (3%) per annum.
Consequently, the Eurodollar Rate will no longer be available as a pricing
option for any Loans, and the Alternate Base Rate will be modified solely to
include a reference to the Prime Rate, and the Applicable Margin will be fixed
at 3.00%. As a result, as of the Effective Date all of the Loans will bear
interest at a rate of Prime Rate plus 3.00%. In order to effectuate the
foregoing, the definitions of the terms "Eurodollar Base Rate," "Eurodollar
Loan," and "Eurodollar Rate," together with all references to such terms in the
Credit Agreement, are deleted in their entirety as of the Effective Date. In
addition, the definitions of the terms "Alternate Base Rate" and "Applicable
Margin" appearing in Section 1.1 of the Credit Agreement are amended as follows:
"Alternate Base Rate" means, for any day, a rate of interest equal to
the Prime Rate for such day.
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"Applicable Margin" means, with respect to Loans of any Type at any
time, an interest rate per annum of three percent (3.00%).
2. APPLICATION OF BORROWING BASE. As of the Effective Date, the parties
agree that the Working Capital Revolving Credit Commitment will be subject to a
borrowing base limitation equal to eighty-five percent (85%) of the Eligible
Accounts (as hereafter defined). In order to effectuate the forgoing, the Credit
Agreement is amended in the following respects:
A. Additional Definitions. The following terms are hereby added to
Section 1.1 of the Credit Agreement:
"Accounts" means and includes all accounts, accounts
receivable, notes receivable, reimbursements and other rights to
payment of the Borrower and its Subsidiaries, whether now existing or
hereafter arising.
"Borrowing Base" means, as of any determination date, the sum
equal to eighty-five percent (85%) of Eligible Accounts.
"Borrowing Base Certificate" means a written certificate to be
delivered by the Borrower pursuant to Section 6.1(xii), substantially
in the form of Exhibit F attached hereto.
"Eligible Accounts" means, as of any determination date, the
aggregate unpaid balance (net of interest, finance charges and contra
accounts) of Accounts (a) which arose from bona fide, outright sales of
items of inventory or from the performance of services by the Borrower
and its Subsidiaries, (b) if arising from sales of items of inventory,
as to which the items of inventory have been delivered or shipped for
delivery, (c) which are based upon valid, enforceable and legally
binding orders or contracts and invoiced in accordance with the terms
of such orders or contracts, (d) for which the account debtors are
unconditionally obligated to make payment, and (e) in and to which the
Bank has a valid and perfected first priority security interest. The
term shall exclude the following:
(i) Any Account which is in dispute or as to which any of the
Borrower or its Subsidiaries has received notice that the
account debtor claims right of rejection, return, recoupment,
setoff, counterclaim, deduction or defense to payment, to the
extent of the actual or asserted contra amount;
(ii) Any Account which is subject to any assignment, adverse
claim or Lien (except Permitted Liens);
(iii) Any Account which is evidenced by, or as to which any of
the Borrower or its Subsidiaries has received, a note, chattel
paper, draft, check, trade acceptance or other instrument in
payment thereof or obtained a judgment with respect thereto;
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(iv) Any Account as to which the account debtor is an
Affiliate of the Borrower;
(v) Any Account as to which the account debtor is a
Governmental Authority if the Bank is unable to obtain a valid
and perfected first priority security interest in such
Account;
(vi) Any Account as to which the account debtor has died or is
the subject of dissolution, liquidation, termination of
existence, insolvency, business failure, receivership,
bankruptcy, readjustment of debt, assignment for the benefit
of creditors or similar proceedings;
(vii) Any Account which remains unpaid for a period in excess
of two hundred forty (240) days beyond the original stated
invoice date that is due from any State Indemnity Fund Account
Debtor;
(viii) All Accounts which are due from any State Indemnity
Fund Account Debtor who owes Accounts ten percent (10%) or
more of which remain unpaid for a period in excess of two
hundred forty (240) days beyond the original stated invoice
date;
(ix) All Accounts which are due from any account debtor (other
than a State Indemnity Fund Account Debtor) who owes Accounts
ten percent (10%) or Fmore of which remain unpaid for a period
in excess of ninety (90) days beyond the original stated
invoice date;
(x) Any Account which is due from an account debtor who is a
Person not located in the United States or which is payable in
a currency other than U.S. Dollars (unless the Bank
determines, in its sole discretion, to include such Account
and the Bank shall have first received, at its option, a
written opinion in form and substance, and from counsel for
the Borrower, satisfactory to the Bank reflecting that all
necessary steps have been taken to render the Bank's Lien on
such Account properly perfected and of first priority or
backed by foreign credit insurance);
(xi) If the aggregate Accounts due from any account debtor
exceed twenty percent (20%) of the total Accounts outstanding
as of any determination date, the amount by which such
Accounts exceed twenty percent (20%) of the total Accounts;
(xii) Any Account that is a bonded account due from an account
debtor that is a contractor; and
(xiii) Any other Account as to which the Bank has made a
determination, in the reasonable exercise of its discretion,
that the prospects for collection are doubtful.
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"State Indemnity Fund Account Debtor" means any account debtor
of the Borrower or any of its Subsidiaries which is an entity, fund or
program that is subject to the Oklahoma Petroleum Storage Tank Reform
Act (17 Okla. Stat. Secs. 321, et seq.).
B. Modification of Definition. The definition of the following term
appearing in Section 1.1 of the Credit Agreement is amended in its entirety to
read as follows:
"Working Capital Revolving Credit Commitment" means,
as of any date of determination, the lesser of: (i) the
Borrowing Base as of such date, and (ii) the sum of
$6,500,000, or such other amount to which the Working Capital
Revolving Credit Commitment may be modified from time to time
pursuant to the terms hereof. As the context requires,
"Working Capital Revolving Credit Commitment" also refers to
the obligation of the Lender to make Working Capital Revolving
Loans and issue Facility LC's under the Working Capital
Revolving Loan Facility.
C. Borrowing Base Certificate. The Borrower covenants to provide the
Lender a Borrowing Base Certificate on or before the 20th day of each calendar
month calculated as of the last day of the immediately preceding calendar month.
In order to effectuate the foregoing, as of the Effective Date, the following
Section 6.1(xii) is hereby added to the Credit Agreement:
(xii) On or before the 20th day of each calendar month, a
Borrowing Base Certificate signed by an Authorized Officer of the
Borrower certifying as to the matters involved in the calculation of
the Borrowing Base as of the end of the immediately preceding calendar
month.
3. USE OF WORKING CAPITAL REVOLVING CREDIT FACILITY PROCEEDS. The parties
hereby agree that proceeds from the Working Capital Revolving Credit Facility
Proceeds may no longer be used by the Borrower in any amount to finance the
Borrower's purchase of shares of its capital stock from Xxxxxxxxx. In order to
effectuate the foregoing, the Credit Agreement is amended, as of the Effective
Date, as follows:
A. Section 2.2.1 Modification. Section 2.2.1 of the Credit Agreement is
modified as of the Effective Date by: (i) deleting in its entirety subsection
(iv), and (ii) correspondingly inserting the appropriate modifications to the
punctuation of that Section.
B. Section 6.2 Modification. Section 6.2 of the Credit Agreement is
modified as of the Effective Date by deleting the following language from the
second paragraph of that Section: "; provided, however, that up to $1,000,000 of
the proceeds of a Working Capital Revolving Loan may be used to finance the
Borrower's purchase of shares of its capital stock, as contemplated by Section
2.2.1(iv)". In all other respects, Section 6.2 shall remain unaltered.
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4. MODIFICATION OF CONSTRUCTION LOAN FACILITY.
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A. Extension of Maturity Date. As of the Effective Date, the maturity
date of all outstanding Construction Loans and all other unpaid Obligations
arising under or relating to the Construction Loan Facility will be due and
payable in full on August 10, 2001.
B. Replacement Construction Note. The Borrower agrees to make, execute
and deliver to the Lender a replacement Construction Note (the "Replacement
Construction Note"), substantially in the form attached hereto as Exhibit
"D-6B," in replacement of and substitution for, but not in satisfaction or as a
novation of, the Construction Note dated as of December 20, 2000, delivered in
connection with the execution and delivery of the Third Amendment to Credit
Agreement. The parties agree that, from and after the Effective Date, unless the
context otherwise requires: (i) all references to the "Construction Note"
appearing in the Credit Agreement or any other Loan Documents shall mean and
refer to the Replacement Construction Note, together with any and all renewals,
extensions or replacements thereof, amendments or modifications thereto or
substitutions therefor, and (ii) the term "Loan Documents" shall include the
Replacement Construction Note.
C. Extension Fee. In consideration of the Lender's agreement to extend
the Construction Loan Facility, the Borrower agrees to pay the Lender a fee of
$15,000.
5. CROSS-COLLATERALIZATION OF COMMERCIAL CARD PURCHASE FACILITY. As of
the Effective Date, any and all obligations and Indebtedness accrued under the
Commercial Card Purchase Facility (as such term is defined below) shall be
cross-collateralized to the Obligations of the Borrower, and shall enjoy the
same rights under the Collateral Documents as all other Loans made under Article
2 of the Credit Agreement. The Borrower acknowledges that, as a result of the
amendment to the definition of the term "Obligations" effected by this
Amendment, the prompt payment of all Commercial Card Purchase Obligations (as
such term is defined below) will be secured by a valid and perfected first
priority security interest in all of the now existing and after-acquired
tangible and intangible Property of the Borrower and each of its Subsidiaries
and all Collateral Documents and will guaranteed by the Guaranty executed by
each of the Subsidiaries. In order to effectuate the foregoing, the Credit
Agreement is amended as of the date hereof in the following respects:
A. New Definitions. The following definitions of "Commercial Card
Purchase Facility" and "Commercial Card Purchase Obligations" are hereby added
to Section 1.1 of the Credit Agreement (to be inserted in alphabetical order):
(i) "Commercial Card Purchase Facility" means the Commercial Card
Purchase Facility established by that certain agreement entered into as of
August 21, 2000 between the Borrower and the Lender pursuant to which, among
other things, the Lender agreed to provide a system to Borrower to process small
purchases and reduce the need for the Borrower to process vendor invoices and
process checks.
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(ii) "Commercial Card Purchase Obligations" of a Person means
any and all obligations of such Person, whether absolute or contingent,
now existing or hereafter created, arising or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under the Commercial Card Purchase Facility.
B. Amended Definitions. The definitions of the term "Obligations"
appearing in Section 1.1 of the Credit Agreement is hereby amended to include
the "Commercial Card Purchase Obligations." In order to effectuate the
foregoing, the definition of the term "Obligations" is deleted in its entirety
from Section 1.1 of the Credit Agreement and replaced with the following:
"Obligations" means all Commercial Card Purchase Obligations and all unpaid
principal of and accrued and unpaid interest on the Loans, all
accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the
Lender or any indemnified party arising under the Loan
Documents.
6. CONDITIONS PRECEDENT. This Amendment shall become effective as of the
Effective Date, subject to the Borrower's satisfaction of the following
conditions precedent (in addition to the conditions precedent set forth in
Article IV of the Credit Agreement):
A. Execution of Documents. This Amendment and the Replacement
Construction Note shall have been duly and validly authorized, executed and
delivered to the Lender by the Borrower, and the "Consent of Subsidiaries"
appearing after the Borrower's signature to this Amendment shall have been duly
and validly authorized, executed and delivered to the Lender by each Subsidiary
of the Borrower.
B. Resolutions. The Bank shall have received a copy of the resolutions
of the Board of Directors of the Borrower authorizing the execution, delivery
and performance of this Amendment, the Credit Agreement (as amended by this
Amendment) and the Replacement Construction Note.
C. Accuracy of Representations and Warranties. All representations and
warranties made by the Borrower in the Credit Agreement and the other Loan
Documents and in Section 5 hereof shall be true and correct in all material
respects as of the Effective Date (except to the extent any of such
representations and warranties with respect to the financial condition of the
Borrower refer to an earlier specified date).
D. No Default. There shall not have occurred any Default or Unmatured
Default as of the Effective Date, and the Borrower shall be current in payment
of all principal, interest and fees due and owing to the Lender as of the
Effective Date.
E. Fee. The Borrower shall have paid the fee referred to in Section 2.C
above.
7. REPRESENTATIONS AND WARRANTIES. All representations and warranties of
Borrower contained in Article V of the Credit Agreement are hereby remade and
restated as the date hereof and shall survive the execution and delivery of this
Amendment. The Borrower further represents and warrants as follows:
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A. Authority. The Borrower has all requisite power and authority and
has been duly authorized to agree to the increase in the interest rate
applicable to the Facilities, the extension of the maturity of the Construction
Loan Facility, the cross-collateralization of the Commercial Card Purchase
Facility, and to execute, deliver and perform its obligations under this
Amendment, the Credit Agreement (as amended by this Amendment) and the
Replacement Construction Note.
B. Binding Obligations; Enforceability. This Amendment, the Credit
Agreement (as amended by this Amendment) and the Replacement Construction Note
are valid and legally binding obligations of the Borrower, enforceable in
accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency or other laws affecting the enforcement of creditors'
rights generally.
C. No Conflict; Government Consent. Neither the execution and delivery
by the Borrower of this Amendment and the Replacement Construction Note, nor the
consummation of the transactions herein contemplated or compliance with the
provisions hereof and thereof, will violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the Borrower or
any of its Subsidiaries, or (ii) the Borrower's or any Subsidiary's articles or
certificate of incorporation, partnership agreement, certificate of partnership,
articles or certificate of organization, by-laws, or operating or other
management agreement, as the case may be, or (iii) the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in, or
require, the creation or imposition of any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by the
Borrower or any of its Subsidiaries, is required to be obtained by the Borrower
or any of its Subsidiaries in connection with the execution and delivery of this
Amendment, the borrowings and other credit extensions under the Credit Agreement
(as amended hereby), the payment and performance by the Borrower of the
Obligations, or the legality, validity, binding effect or enforceability of this
Amendment, the Credit Agreement (as amended by this Amendment) and the
Replacement Construction Note.
D. No Material Adverse Change. Since March 31, 2001 (the date of the
latest financial statements of the Borrower which have been delivered to the
Lender), there has been no adverse change in the business, Property, prospects,
condition (financial or otherwise) or results of operations of the Borrower and
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
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8. MISCELLANEOUS.
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A. Effect of Amendment. The terms of this Amendment shall be
incorporated into and form a part of the Credit Agreement. Except as amended,
modified and supplemented by this Amendment, the Credit Agreement and all other
Loan Documents shall continue in full force and effect in accordance with their
original stated terms, all of which are hereby reaffirmed in every respect as of
the date hereof. In the event of any irreconcilable inconsistency between the
terms of this Amendment and the terms of the Credit Agreement, the terms of this
Amendment shall control and govern, and the agreements shall be interpreted so
as to carry out and give full effect to the intent of this Amendment.
B. References to Defined Terms. The parties acknowledge and agree that
the terms "Loans" and "Obligations" as used in the Credit Agreement and any
other Loan Documents will include all Commercial Card Purchase Obligations
outstanding under the Commercial Card Purchase Facility. Further, all references
to the "Credit Agreement" appearing in any of the Loan Documents shall hereafter
be deemed references to the Credit Agreement as amended, modified and
supplemented by this Amendment.
C. Exhibits. The form of Replacement Construction Note attached hereto
as Exhibit D-6B is hereby substituted for Exhibit D-6 to the Credit Agreement
and incorporated therein by this reference.
D. Descriptive Headings. The descriptive headings of the several
sections of this Amendment are inserted for convenience only and shall not be
used in the construction of the content of this Amendment.
E. Governing Law. This Amendment shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Oklahoma.
F. Reimbursement of Expenses. The Borrower agrees to pay the reasonable
fees and out-of-pocket expenses of Xxxxx & Xxxxxxx, counsel to the Lender,
incurred in connection with the preparation of this Amendment and the
consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Agreement as of the date first above written.
NESCO, INC.,
an Oklahoma corporation
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Vice President & Secretary-Treasurer
BANK ONE, OKLAHOMA, N.A.,
a national banking association
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: First Vice President
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CONSTRUCTION NOTE
$8,000,000 June ___, 2001
NESCO, Inc., an Oklahoma corporation (the "Borrower"), promises to pay
to the order of Bank One, Oklahoma, NA (the "Lender"), the aggregate unpaid
principal amount of all Construction Loans made by the Lender to the Borrower
pursuant to Construction Loan Facility established under the Agreement (as
hereinafter defined), in immediately available funds at the main office of the
Lender, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Agreement. The Borrower shall pay the
principal of and accrued and unpaid interest on the Construction Loans in full
on August 10, 2001, and prior to maturity shall make such mandatory payments as
are required to be made under the terms of Article II of the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Construction Loan and the date and amount of each
principal payment hereunder.
This Note is the Construction Note issued pursuant to, and is entitled
to the benefits of, the Credit Agreement dated as of May 12, 2000, as amended by
the First Amendment to Credit Agreement dated as of August 4, 2000, as amended
by the Second Amendment to Credit Agreement dated as of September 30, 2000, as
amended by the Third Amendment to Credit Agreement dated as of December 20, 2000
and as further amended by the Fourth Amendment to Credit Agreement of even date
herewith (which, as it may be further amended or modified and in effect from
time to time, is herein called the "Agreement"), between the Borrower and the
Lender, to which Agreement reference is hereby made for a statement of the terms
and conditions governing this Note, including the terms and conditions under
which this Note may be prepaid or its maturity date accelerated. This Note is
secured pursuant to the Collateral Documents, all as more specifically described
in the Agreement, and reference is made thereto for a statement of the terms and
provisions thereof. Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Agreement.
NESCO, INC.,
an Oklahoma corporation
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Vice President & Secretary-Treasurer
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