Exhibit 10.4
FLEET CAPITAL CORPORATION
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
March 14, 2003
PW EAGLE, INC.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Re: Third Amended and Restated Loan and Security Agreement/Consent to ETI
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Transactions
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Gentlemen:
Reference is made to that certain Third Amended and Restated Loan and
Security Agreement dated September 30, 2002 by and among PW Eagle, Inc.
("Borrower"), the lender signatories thereto ("Lenders") and Fleet Capital
Corporation ("FCC"), individually as a Lender and as agent for said Lenders (FCC
in such capacity, "Agent"). Said Third Amended and Restated Loan and Security
Agreement, as modified or amended from time to time, is hereinafter referred to
as the "Loan Agreement." Capitalized terms used herein without definition shall
have the meanings contained in the Loan Agreement.
Subject to the fulfillment of the following conditions precedent, Agent and
Lenders consent to:
1. The formation of a new wholly owned subsidiary of Borrower, Extrusion
Technologies, Inc., a Colorado corporation ("New ETI");
2. The equity contribution by Borrower to New ETI in the amount of
$7,000,000.
3. The acquisition (the "Acquisition") by New ETI of all of the issued and
outstanding capital stock of Uponor ETI Company, a Colorado corporation ("ETI")
pursuant to a certain Stock Purchase Agreement dated as of March 4, 2003 by and
among New ETI, ETI and Uponor North America, Inc., a Delaware corporation
("Seller").
4 New ETI issuing a $22,000,000 Demand Note and a $320,000 unsecured
promissory note to Seller to consummate the Acquisition.
5 After the consummation of the Acquisition, the merger of New ETI into
ETI.
6 After the consummation of the merger referred to in item 5 above, ETI and
its wholly owned Subsidiary, Mid-States Plastics, Inc., incurring Indebtedness
for Money Borrowed
PW Eagle, Inc.
March 14, 2003
Page 2
pursuant to the terms of a certain Loan and Security Agreement ("ETI Loan
Agreement") dated March 4, 2003 by and among ETI and Mid-States Plastics, Inc.,
the lender signatories thereto and Fleet Capital Corporation as agent for said
lenders.
7. Borrower's issuance of warrants to X.X. Xxxxxx Partners and various
MassMutual entities representing an aggregate of 350,000 shares of Borrower's
common stock at an exercise price of $9.50 per share.
The transactions described in items 1 through 7 above are hereinafter
referred to as the "ETI Transactions."
Further, upon consummation of the ETI Transactions, Agent and Lenders agree
that for purposes of the Loan Agreement, ETI and its Subsidiaries shall not be
included within the definition of Borrower's Subsidiaries. Without in any way
limiting the generality of the foregoing, in no event shall any of the covenants
(other than 8.2.4 (Transactions with Affiliates)), warranties and/or
representations contained in the Loan Agreement apply to ETI and/or its
Subsidiaries. By way of example and not of limitation, any reference to
"Borrower's Subsidiaries" in the Loan Agreement or the other Loan Documents
shall expressly exclude ETI and its Subsidiaries and the term "Consolidated" or
any other terms or calculation under GAAP shall not include ETI and/or its
Subsidiaries. Agent and Lenders hereby consent to PW and its Subsidiaries
entering into a tax sharing agreement with ETI and its Subsidiaries; provided
that the tax obligations owing by PW and its Subsidiaries, on the one hand, or
by ETI and its Subsidiaries, on the other hand, do not exceed the tax
obligations that either such party would have on a stand-alone basis.
The consents of Agent and Lenders to the ETI Transactions and the exclusion
of ETI and its Subsidiaries from the definition of Borrower's Subsidiaries are
subject to the fulfillment of each of the following conditions precedent:
A. Borrower shall have delivered to Agent and Lenders true and correct
copies of the Stock Purchase Agreement, each schedule or exhibit related thereto
and each other document and instrument executed and/or delivered in connection
therewith and the terms and conditions of the Stock Purchase Agreement,
schedules, exhibits and such other instruments and exhibits are acceptable to
Agent and Lenders.
B. Borrowers shall have delivered to Agent and Lenders true and correct
copies of the ETI Loan Agreement, all exhibits and schedules thereto and all
other documents and instruments executed and/or delivered in connection
therewith and such ETI Loan Agreement, schedules and exhibits and other
documents and instruments are in form and substance reasonably acceptable to
Agent and Lenders.
C. Borrower shall (x) have executed and delivered to Agent a Stock Pledge
Agreement, in form and substance acceptable to Agent, pursuant to which Borrower
shall pledge to Agent, for the ratable benefit of Lenders, all of the issued and
outstanding capital stock of ETI
PW Eagle, Inc.
March 14, 2003
Page 3
and (y) have delivered to Agent stock certificates and stock powers executed in
blank (assignments separate from certificates) for all issued and outstanding
capital stock of ETI.
D. After giving effect to the consummation of the ETI Transactions, no
Default or Event of Default exists and is continuing and Availability equals or
exceeds $13,000,000.
E. Borrower, ETI and Mid-States Plastics, Inc. shall have delivered to
Agent a copy of a letter from [_____] in form and substance reasonably
acceptable to Agent, confirming that (i) [_____]. intends to enter into a Supply
Agreement with Borrower and ETI as provided in the ETI Loan Agreement, (ii)
Borrower, ETI and Mid-States Plastics, Inc. currently have [_____] payment terms
and credit limits in amounts at least as large as available to Borrower, ETI and
Mid-States Plastics, Inc. prior to the closing date of the Acquisition.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
[_____] confidential treatment requested
The consents and waiver contained in this letter only relate to the ETI
Transactions. Except as otherwise provided for herein, the terms and conditions
of the Loan Agreement remain in full force and effect,
FLEET CAPITAL CORPORATION, as
Agent and Lender
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: Senior Vice President
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THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Vice President
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