EXHIBIT 10.1
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FOURTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This Fourteenth Amendment to Loan and Security Agreement (the "Fourteenth
Amendment") is made as of March 31, 2006 by and between Proliance International,
Inc., ("Proliance"), Ready Aire, Inc. ("RA"; together with Proliance, the
"Borrowers"), Proliance International, S.A. de C.V. ("Proliance Mexico") and
Radiadores GDI, S.A. de C.V. ("Radiadores"; together with Proliance Mexico, the
"Obligors"), and Wachovia Capital Finance Corporation (New England), formerly
known as Congress Financial Corporation (New England), as lender (the "Lender").
WHEREAS, the Lender, Borrowers and Obligors are parties to that certain
Loan and Security Agreement dated as of January 4, 2001, as amended by the First
Amendment to Loan and Security Agreement dated as of July 2001 ("First
Amendment"), the Second Amendment to Loan and Security Agreement dated as of
July 30, 2001 ("Second Amendment"), the Third Amendment to Loan and Security
Agreement dated as of November 27, 2001 ("Third Amendment"), the Fourth
Amendment to Loan and Security Agreement dated as of December 31, 2001 ("Fourth
Amendment"), the Fifth Amendment to Loan and Security Agreement dated as of
February 20, 2002 ("Fifth Amendment"), the Sixth Amendment to Loan and Security
Agreement dated as of December 31, 2001 ("Sixth Amendment"), the Seventh
Amendment to Loan and Security Agreement dated as of July 1, 2002 ("Seventh
Amendment"), the Eighth Amendment to Loan and Security Agreement dated as of
November 22, 2002 ("Eighth Amendment"), the Ninth Amendment to Loan and Security
Agreement dated as of December 27, 2002 ("Ninth Amendment"), the Tenth Amendment
to Loan and Security Agreement dated as of November 19, 2004 (the "Tenth
Amendment"), the Eleventh Amendment to Loan and Security Agreement dated as of
March 2, 2005 (the "Eleventh Amendment"), the Twelfth Amendment to Loan and
Security Agreement dated as of July 21, 2005 (as amended by that certain
Amendment to Twelfth Amendment dated September 30, 2005 and that certain Second
Amendment to Twelfth Amendment dated November 30, 2005, the "Twelfth
Amendment"), and the Thirteenth Amendment to Loan and Security Agreement dated
as of October 20, 2005 (the "Thirteenth Amendment") (as amended hereby and as
the same may be supplemented, amended, restated or modified from time to time,
the "Loan Agreement"); all capitalized terms not otherwise defined herein shall
have the meanings given such terms in the Loan Agreement;
WHEREAS, Borrowers have requested that Lender amend certain provisions of
the Loan Agreement as set forth herein; and
WHEREAS, the Lender has agreed to amend certain provisions of the Loan
Agreement subject to the terms and conditions hereof;
NOW THEREFORE, based on these premises, and in consideration of the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties, the
Borrowers, the Obligors
and the Lender hereby agree as follows:
1. Amendments to Loan Agreement.
1.1. Definitions. The following definitions are added to Section 1 of
the Loan Agreement in proper alphabetical order (such definitions hereby replace
in entirety the same definitions set forth in the Loan Agreement):
(a) "Capital Stock" shall mean, with respect to any Person, any
and all shares, interests, participations or other equivalents
(however designated) of such Person's capital stock, partnership
interests or limited liability company interests at any time
outstanding, and any and all rights, warrants or options exchangeable
for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible
into such capital stock).
(b) "EBITDA" shall mean the sum, without duplication, of the
following for any applicable period as determined on a consolidated
basis in accordance with GAAP for Proliance and its wholly owned
Subsidiaries: (a) Net Income (but excluding Net Income of, or gain
from the sale of, G&O Manufacturing Company, Inc.), plus (b) interest
expense on all indebtedness to the extent deducted in determining Net
Income, plus (c) taxes on income to the extent deducted in
determining Net Income, plus (d) depreciation expense to the extent
deducted in determining Net Income, plus (e) amortization expense to
the extent deducted in determining Net Income, minus (f) non-cash
gain or plus non-cash loss from the sale of assets, other than sales
in the ordinary course of business but only to the extent added to or
deducted in determining Net Income, and minus (g) negative goodwill
to the extent added in determining Net Income.
(c) "Fixed Charge Coverage Ratio" shall mean, for any applicable
period as determined in accordance with GAAP on a consolidated basis
for Proliance and its wholly owned Subsidiaries, the ratio of (a)
EBITDA minus Capital Expenditures made in cash to (b) Fixed Charges.
(d) "Fixed Charges" shall mean, for any applicable period as
determined in accordance with GAAP on a consolidated basis for
Proliance and its wholly owned Subsidiaries, the amount equal to
(without duplication): (a) the aggregate amount of interest,
including payments in the nature of interest under capital leases,
paid or accrued by Proliance and its wholly owned Subsidiaries
(whether such interest is reflected as an item of expense or
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capitalized) on Indebtedness, plus (b) the aggregate amount of all
mandatory scheduled payments, prepayments and sinking fund payments,
in each case with respect to principal paid or accrued by Proliance
and its wholly owned Subsidiaries in respect of Indebtedness except
for principal payments made on account of Revolving Loans (with the
exception of such payments made upon a permanent reduction in the
Revolving Loan Ceiling) plus (c) any dividends or distributions paid
or payable by Proliance and its wholly owned Subsidiaries (other than
dividends or distributions paid or payable from any such Subsidiary
to Proliance) plus (d) income taxes paid by Proliance or its wholly
owned Subsidiaries.
(e) "Net Income" shall mean the net income (or loss) of Proliance
and its wholly owned Subsidiaries on a consolidated basis as
determined in accordance with GAAP.
(f) "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust,
association or other business entity of which an aggregate of at
least a majority of the outstanding Capital Stock or other interests
entitled to vote in the election of the board of directors of such
corporation (other than Capital Stock of any other class or classes
of such corporation having such voting power by reason of the
happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein,
of such Person is, at the time, directly or indirectly, owned by such
Person and/or one or more subsidiaries of such Person.
1.2. Financial Covenants.
(a) Minimum EBITDA. Section 9.20 of the Loan Agreement is hereby
deleted in its entirety and the following is substituted in lieu thereof:
"9.20 Minimum EBITDA. Borrowers shall achieve, on a consolidated
basis, EBITDA of not less than the amounts set forth below for the
twelve consecutive month periods ending on the dates set forth below:
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Test Date Amount
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December 31, 2005 ($21,800,000)
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March 31, 2006 ($21,800,000)
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June 30, 2006 ($12,500,000)
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September 30, 2006 $4,000,000
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December 31, 2006 $18,500,000
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March 31, 2007 $20,000,000
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June 30, 2007 $20,000,000
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September 30, 2007 $21,200,000
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Compliance with the foregoing EBITDA covenant will not be required on
any test date if Excess Availability equals or exceeds $15,000,000 at
all times during the calendar quarter immediately preceding such test
date."
(b) Minimum Excess Availability. Section 9.20A is hereby deleted
in its entirety and the following is substituted in lieu thereof:
"9.20A Minimum Excess Availability. The Borrowers shall maintain
Excess Availability equal to or in excess of (i) $3,000,000 from
March 31, 2006 through May 31, 2006 and (ii) $5,000,000 from June 1,
2006 through June 30, 2006. Solely for the purpose of this Section
9.20A, Excess Availability shall be determined without regard to the
limitation that the Maximum Credit and the Revolving Loan Ceiling
place on the Revolving Loans available to the Borrowers."
(c) Fixed Charge Coverage Ratio. The following Section 9.20C is
hereby added to the Loan Agreement in proper numerical order:
"9.20C Fixed Charge Coverage Ratio. On December 31, 2007, and on each
March 31, June 30, September 30 and December 31 thereafter, in each
case for the twelve months then ended, Borrowers shall maintain, on a
consolidated basis, a Fixed Charge Coverage Ratio (as defined herein)
of not less than 1.00 to 1.00.
Compliance with the foregoing Fixed Charge Coverage Ratio covenant
will not be required on any test date if Excess Availability equals
or exceeds $15,000,000 at all times during the three month period
immediately preceding such test date."
2. Limited Waiver. The Borrowers have requested that certain
covenants set forth in Section 1.3 of the Fourth Amendment and Section 5.13 of
the Twelfth Amendment be waived, and Lender, subject to the terms, conditions
and covenants set forth in this Section 2, has agreed to the following,
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2.1. Deposit Account Control Agreements. Subject to the terms,
conditions and covenants set forth in this Section 2, the Lender
hereby waives the Borrowers' obligation under Section 1.3 of the
Fourth Amendment and Section 5.13 of the Twelfth Amendment to deliver
to the Lender a deposit account control agreement with respect to
Account # 646927012 (the "Account") held in the name of Proliance at
JPMorgan Chase Bank, N.A., provided that the Borrowers covenant and
agree not to maintain more than $25,000 in the Account at any time.
Upon the occurrence of an Event of Default or Borrowers' failure to
comply with the covenant set forth in the first sentence of this
Section 2.1, and at the direction of the Lender, Borrowers shall
promptly (but in any event within one Business Day) (i) close the
Account and (ii) transfer by wire all funds then held in the Account
to the Payment Account of the Lender.
2.2. Limited Waiver. The limited waiver set forth in this Section
2 is and shall be effective solely for the specific instance and
purpose described herein and is not and shall not be applicable to
any other provision of the Loan Agreement or the other Financing
Agreements or to any future event or condition. The execution and
delivery of this limited waiver by the Lender shall not be construed
as a waiver by the Lender of any other term, covenant, condition or
agreement under the Loan Agreement or the other Financing Agreements.
3. Conditions Precedent. The following are all of the conditions
precedent to the effectiveness of this Fourteenth Amendment and the agreements
of the Lender hereunder:
3.1. payment to Lender in immediately available funds of all
documented out-of-pocket expenses, including, without limitation,
reasonable attorneys' fees and disbursements, incurred by the Lender
through the date hereof, in accordance with Section 7 hereof;
3.2. receipt by Lender of this Fourteenth Amendment, duly
executed by the Borrowers and Obligors;
3.3. each of the representations and warranties set forth in
Section 4 hereof is true, accurate and correct in all material
respects as of the date hereof (or such other date referenced in
Section 4 hereof).
4. Representations and Warranties. Each Borrower and Obligor jointly
and severally represents and warrants to Lender the following, as applicable:
4.1. Organization and Qualification. Each of the Borrowers and
Obligors is duly incorporated or formed, as applicable, validly
existing, and in good standing under the laws of their respective
jurisdictions of incorporation or formation, as applicable. Each
Borrower and Obligor is duly qualified to do business and is in good
standing as a foreign corporation or other applicable organization in
all states and jurisdictions in which the failure to be so qualified
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would have a material adverse effect on the financial condition,
business or properties of such Borrower or Obligor.
4.2. Power and Authority. Each Borrower and Obligor are duly
authorized and empowered to enter, deliver, and perform this
Fourteenth Amendment. The execution, delivery, and performance of
this Fourteenth Amendment has been duly authorized by all necessary
corporate action of each of the applicable Borrowers and Obligors.
The execution, delivery and performance of this Fourteenth Amendment
do not and will not (i) require any consent or approval of the
shareholders of the Borrowers or the Obligors; (ii) contravene the
charter or by-laws or equivalent organizational documents of any of
the Borrowers or Obligor; (iii) violate or cause any Borrower or
Obligor to be in default under, any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award in effect having applicability to such Borrower or Obligor;
(iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease
or instrument to which any Borrower or Obligor is a party or by which
such Borrower's or Obligor's properties may be bound or affected,
which breach or default is reasonably likely to have a material
adverse effect on the financial condition, business or properties of
such Borrower or Obligor; or (v) result in, or require, the creation
or imposition of any lien (other than the liens set forth in Schedule
8.4 to the Loan Agreement) upon or with respect to any of the
properties now owned or hereafter acquired by any Borrower or
Obligor.
4.3. Legally Enforceable Agreement. This Fourteenth Amendment is
a legal, valid and binding obligation of each of the Borrowers and
Obligors and is enforceable against each of the Borrowers and
Obligors in accordance with the terms hereof subject to bankruptcy,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
4.4. Continuous Nature of Representations and Warranties. Each
Borrower confirms and agrees that, except for the amendments to the
Loan Agreement provided herein and in the other previously executed
amendments to the Loan Agreement, (a) all representations and
warranties contained in the Loan Agreement and in the other Financing
Agreements (as amended prior to the date hereof and pursuant to this
Fourteenth Amendment) are on the date hereof true and correct in all
material respects (except with respect to deviations therefrom
permitted under Article 9 of the Loan Agreement) except to the extent
that such representations and warranties expressly relate to a
specific earlier date in which case the Borrowers confirm, reaffirm
and restate such representations and warranties as of such earlier
date, (b) all Information Certificates delivered in conjunction with
the Loan Agreement and the Twelfth Amendment to Loan and Security
Agreement dated as of July 21, 2005, as the same may be amended
and/or restated, remain true and correct in all material respects and
(c) it is unconditionally, absolutely, and jointly and severally
liable for the punctual and full performance and payment of all
Obligations, including, without limitation, all termination fees
under Section 12.1(c) of the Loan Agreement, charges, fees, expenses
and costs (including attorneys' fees and expenses) under the
Financing Agreements, and that
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no Borrower has any defenses, counterclaims or setoffs with respect
to full, complete and timely payment of all Obligations.
5. Acknowledgement of Obligations. Each Obligor, for value received,
hereby consents to the Borrowers' execution and delivery of this Fourteenth
Amendment, and the performance by the Borrowers of their respective agreements
and obligations hereunder. The Borrowers' performance and/or consummation of any
transaction or matter contemplated under this Fourteenth Amendment shall not
limit, restrict, extinguish or otherwise impair any of the Obligors' obligations
to Lender with respect to the Financing Agreements, as applicable. Each Obligor
acknowledges that it is unconditionally liable to Lender for the full and
complete payment of all Obligations, including, without limitation, all charges,
fees, expenses and costs (including attorney's fees and expenses) under the
Financing Agreements and that such Obligor has no defenses, counterclaims or
setoffs with respect to full, complete and timely payment of any and all
Obligations.
6. Confirmation of Liens. Each Borrower and Obligor acknowledges,
confirms and agrees that the Financing Agreements, as amended hereby, are
effective to grant to Lender duly perfected, valid and enforceable first
priority security interests in and liens on the Collateral described therein,
except for liens permitted under Sections 8.4 and 9.8 and Schedule 8.4 of the
Loan Agreement, and that the locations for such Collateral specified in the
Financing Agreements have not changed except as provided herein or as previously
disclosed to the Lender. Each Borrower and Obligor further acknowledges and
agrees that all Obligations of the Borrowers are and shall be secured by the
Collateral.
7. Miscellaneous. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Financing Agreements. Borrowers
hereby agree to pay to Lender all reasonable attorney's fees and costs which
have been incurred or may in the future be incurred by Lender in connection with
the negotiation, preparation, performance and enforcement of this Fourteenth
Amendment and any other documents and agreements prepared and/or reviewed in
connection herewith. The undersigned confirm that the Financing Agreements
remain in full force and effect without amendment or modification of any kind,
except for as set forth in this Fourteenth Amendment (and as set forth in any
previously executed amendments to the Loan Agreement). The Borrowers and
Obligors further confirm that no Event of Default or events which with notice or
the passage of time or both would constitute an Event of Default have occurred
and are continuing. The execution and delivery of this Fourteenth Amendment by
Lender shall not be construed as a waiver by Lender of any Event of Default
under the Financing Agreements. This Fourteenth Amendment shall be deemed to be
a Financing Agreement and, together with the other Financing Agreements,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior dealings, correspondence, conversations
or communications between the parties with respect to the subject matter hereof.
REST OF PAGE LEFT INTENTIONALLY BLANK
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Signature page to Fourteenth Amendment to Loan Agreement
IN WITNESS WHEREOF, the Borrowers, the Obligors, and the Lender have
executed this Fourteenth Amendment as of the date first above written, by their
respective officers hereunto duly authorized, under seal.
BORROWERS:
WITNESS PROLIANCE INTERNATIONAL, INC.
/s/ X. X. Xxxxxxx By: /s/ X. X. Xxxxx
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Title: Vice President
READY AIRE, INC.
/s/ X. X. Xxxxxxx By: /s/ X. X. Xxxxx
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Title: Vice President
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Signature page to Fourteenth Amendment to Loan Agreement
OBLIGORS:
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PROLIANCE INTERNATIONAL, S.A. de
C.V.
/s/ X. X. Xxxxxxx By: /s/ X. X. Xxxxx
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Title: Vice President
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RADIADORES GDI, S.A. de C.V.
/s/ X. X. Xxxxxxx By: /s/ X. X. Xxxxx
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Title: Vice President
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LENDER:
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WACHOVIA CAPITAL FINANCE
CORPORATION (NEW ENGLAND)
/s/ Xxxxxxxx Xxxxx Xxxx By: /s/ Xxxxxx X. Xxxxxxxx
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Title: Vice President
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