8-K
Core Molding Technologies Inc (CMT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of Earliest Event Reported): | March 13, 2020 |
|---|
CORE MOLDING TECHNOLOGIES, INC.
__________________________________________
(Exact name of registrant as specified in its charter)
| Delaware | 001-12505 | 31-1481870 |
|---|---|---|
| _____________________<br><br>(State or other jurisdiction | _____________<br><br>(Commission | ______________<br><br>(I.R.S. Employer |
| of incorporation) | File Number) | Identification No.) |
| 800 Manor Park Drive, Columbus, Ohio | 43228-0183 | |
| ________________________________<br><br>(Address of principal executive offices) | ___________<br><br>(Zip Code) | |
| Registrant’s telephone number, including area code: | 614-870-5000 | |
| --- | --- |
Not Applicable
___________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 1.01 Entry into a Material Definitive Agreement.
On March 13, 2020, the Company entered into an Amendment to the Forbearance Agreement (the “Amended Forbearance Agreement”) with the Lenders. Pursuant to the terms of the Amended Forbearance Agreement, the Company and Lenders agreed to modify certain terms of the A/R Credit Agreement and Forbearance Agreement and extend the Forbearance Agreement through May 29, 2020. The modifications include (1) a reduction in the U.S. Revolving Loan to $25,000,000 with an availability block of $5,000,000 which can be borrowed with the unanimous approval of the lenders, (2) a change of interest rate to LIBOR plus 650 basis points for all outstanding loans, (3) forbear compliance with the leverage covenant and fixed charge covenant through May 29, 2020, and (4) implementation of a capital expenditure spend limit of $3,500,0000 from the effective date of the Amended Forbearance Agreement through May 29, 2020.
The Amended Forbearance Agreement provides that the Administrative Agent and Lenders shall forbear from the exercise of rights and remedies pursuant to the Loan Documents described in the Credit Agreement through May 29, 2020, as long as the Company satisfies the conditions set forth in the Amended Forbearance Agreement, including, (i) on or before March 31, 2020, the borrowers shall have obtained an executed term sheet from involved parties and/or lenders providing the basis for implementation of a new capital structure and defined due diligence parameters, (ii) on or before May 15, 2020 the Borrowers shall have obtained an executed definitive, written commitment from the New Lenders to enter into a definitive agreement to effect the refinancing, and (iii) on or before May 29, 2020, the borrowers shall have closed on a new capital structure.
The foregoing description is qualified in its entirety by reference to the Amendment to Forbearance Agreement, a copy of which is attached to this Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On March 13, 2020, the Company announced financial results for the fourth quarter and year ended December 31, 2019. A copy of the press release announcing this event is included in this Form 8-K as Exhibit 99.1.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosures contained above under Item 1.01 are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description |
|---|---|
| 10.1 | Amendment to Forbearance Agreement |
| 99.1 | Press release announcing earnings for the Company for the fourth quarter and year ended December 31, 2019 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CORE MOLDING TECHNOLOGIES, INC. | ||
|---|---|---|
| March 13, 2020 | By: | /s/ John P. Zimmer |
| Name: John P. Zimmer | ||
| Title: Vice President, Treasurer, Secretary and Chief Financial Officer |
Exhibit
Exhibit 99.1
FOR IMMEDIATE RELEASE
CORE MOLDING TECHNOLOGIES REPORTS RESULTS FOR THE 2019 FOURTH QUARTER AND FULL YEAR
COLUMBUS, Ohio - March 13, 2020 - Core Molding Technologies, Inc. (NYSE American: CMT) (“Core Molding”, “Core” or the “Company”) today announced results for the fourth quarter and full year ended December 31, 2019.
For the fourth quarter 2019, net sales decreased $17.0 million or 23% compared to the same period in 2018 as demand from North American heavy-duty truck customers decreased consistent with industry analysts’ expectations of a cyclical industry downturn. Higher demand from marine customers in the fourth quarter 2019 compared to the same period in 2018 partially offset the lower demand from North American heavy-duty truck customers. The Company’s net sales increased $14.8 million or 5.5% for the full year 2019 to $284.3 million compared to $269.5 million in the full year 2018. Increased demand from North American heavy-duty truck customers and marine customers were primarily responsible for the increase in sales.
The Company recorded a net loss of $5.5 million in the fourth quarter 2019 and $15.2 million for full year 2019 compared to a net loss of $3.9 million and $4.8 million for the fourth quarter and full year 2018. The full year losses in 2019 and 2018 include non-cash impairment charges for the write-down of goodwill of $3.0 million and $1.9 million, net of tax, respectively. For the full year and fourth quarter 2019, the Company recorded non-cash charges of $3.3 million and $1.4 million to write-down deferred tax assets. Excluding the non-cash charges, the Company would have recorded net losses of $8.9 million and $2.9 million for the full year 2019 and 2018, respectively, and $4.1 million and $2.0 million for the fourth quarter ended 2019 and 2018.
“The fourth quarter results were significantly affected by decreased revenues from heavy-duty truck customers. Demand from heavy-duty truck customers declined due to labor strike shutdowns at multiple customer locations, the beginning of a cyclical downturn and normal seasonality. Anticipating the revenue decrease, the Company reduced costs in the fourth quarter through headcount reductions, shift modifications
Exhibit 99.1
and temporary plant shutdowns. We were not able to fully offset the decrease in revenues, but believe the cost reductions made, along with a seasonal rebound in revenues from the fourth quarter, has set up the Company for a solid first quarter in 2020,” said Duvall.
The Company announced in November 2019 that it provided its customer, Volvo Group, with a twelve-month notice of its intention to terminate its supply agreement. “The Company is pleased to announce that it was able to come to a mutual resolution with Volvo and renegotiate certain terms of its supply agreement. Consequently, the Company has rescinded its termination notification,” said Duvall.
Fourth Quarter 2019 Compared to Fourth Quarter 2018:
•Net sales were $56.1 million compared to $73.2 million.
•Product sales were $54.6 million compared to $69.0 million.
•Gross margin was 6.0% compared to 8.9%.
•Selling, general and administrative expenses were $7.5 million compared to $8.3 million.
•Goodwill impairment charge was $2.4 million for the three months ended December 31, 2018.
•Operating loss was $4.1 million compared to $4.2 million.
| • | Net loss was $5.5 million, or $0.69 per share, compared to net loss of $3.9 million, or $0.51 per share. |
|---|
Year ended 2019 Compared to Year ended 2018:
•Net sales were $284.3 million compared to $269.5 million.
•Product sales were $269.0 million compared to $256.2 million.
•Gross margin was 7.6% compared to 10.1%.
•Selling, general and administrative expenses were $29.0 million compared to $27.8 million.
•Goodwill impairment charge was $4.1 million compared to $2.4 million.
•Operating loss was $11.5 million compared to $3.1 million.
| • | Net loss was $15.2 million, or $1.94 per share, compared to net loss of $4.8 million, or $0.62 per share. |
|---|
Full year and fourth quarter 2019 gross margin declined over the same periods in 2018 as a result of operational inefficiencies and lower leverage of fixed costs, offset by a favorable net change in selling price and material costs. “We started to see an improvement in gross margin in the third quarter of 2019, but the improvement reversed in the fourth quarter as sales decreased significantly,” said John Zimmer, Chief Financial Officer. “The decrease in gross margin in the fourth quarter of 2019 was driven largely by lower leverage of fixed
Exhibit 99.1
costs resulting from lower sales. The effect on gross margin of operational inefficiencies was lower in the fourth quarter than any other quarter in 2019. This is an indication that the operational improvements made through 2019 are beginning to have a positive effect on gross margin,” Zimmer concluded.
Selling, general and administrative expenses decreased in the fourth quarter compared to the same period in 2018 due primarily to lower labor and benefit costs and lower professional fees, as the Company reduced costs in response to decreasing sales. Selling, general and administrative expenses increased for the full year 2019 compared to the full year 2018 due primarily to higher spending on labor to support the Company’s turnaround efforts and as a result of higher sales.
Financial Position at December 31, 2019:
•Total assets of $179.3 million.
•Revolving line of credit debt of $12.0 million.
•Term loan debt of $37.4 million.
•Stockholders’ equity of $84.4 million.
Through a focus on generating free cash flows (non-GAAP), the Company reduced its total debt outstanding at December 31, 2019 to $49.4 million from $59.0 as of September 30, 2019. Lower working capital levels and a reduction in spending allowed the Company to generate free cash flows in the fourth quarter and reduce its outstanding line of credit balance as of December 31, 2019 by 42% from September 30, 2019.
As of September 30, 2019, the Company was unable to meet its loan covenants. On November 22, 2019, the Company executed a forbearance agreement that provides that the bank group shall forbear from the exercise of rights taking action on the Company’s loan covenant default while the Company is restructuring or refinancing its existing credit agreement. On March 12, 2020, the Company amended the forbearance agreement to extend the forbearance period until May 29, 2020. The Company has engaged Huron Transactional Advisors to assist the Company to refinance its current debt facility. The Company has received multiple term sheets to refinance the debt facility. The Company is evaluating the term sheets and expects to have executed term sheets by March 31, 2020, in time to refinance the existing debt structure prior to the expiration of the amended forbearance agreement.
Outlook
Based on industry analysts’ projections and customer forecasts, the Company expects sales levels for 2020 to decrease compared to 2019 due to decreased demand from truck customers. ACT Research is forecasting 2020 North American production of heavy-duty trucks to decrease approximately 34% compared to 2019.
Exhibit 99.1
“While the fourth quarter heavy-duty truck plant shut downs and reduction in demand reduced profitability, we continued to see benefits in the fourth quarter from operational improvements we made throughout 2019. In 2020 we will use operational systems implemented in 2020 to focus on several key performance metrics including improved quality performance, labor productivity, scrap and overhead spend reductions,” said Eric Palomaki, Executive Vice President of Operations. “Through the outstanding hard work and efforts of our dedicated teams we have been able to deliver substantially improved service to all of our customers. In 2020 we will build off these changes and systems to improve financial performance,” Palomaki concluded.
“The past year was a year of significant foundational improvements, which we are now just realizing substantial benefit. We have already seen benefit in the first two months of 2020 with an improvement of more than $5.5 million in operational profit compared to the same period in 2019. We anticipate the first quarter of 2020 to be the Company’s first profitable quarter since the second quarter of 2019. Our operational foundation has stabilized and is now moving into a continuous improvement phase, with our focus turning to leveraging our Sales & Marketing function across our entire business. The 2019 year was all about fixing problems and servicing our customers, so that we could successfully operate and grow the business. We expect 2020 to realize the full financial benefit of our operational stabilization efforts, which will allow us to focus on the long-term profitable growth of the Company,” Duvall concluded.
About Core Molding Technologies, Inc.
Core Molding Technologies is a manufacturer of sheet molding compound ("SMC") and molder of thermoset and thermoplastic products. The Company operates in one operating segment as a molder of thermoplastic and thermoset (plastic) structural products. The Company's operating segment consists of two component reporting units, Core Traditional and Horizon Plastics. The Company produces and sells molded products for varied markets, including medium and heavy-duty trucks, automobiles, marine, construction and other commercial markets. The Company offers customers a wide range of manufacturing processes to fit various program volume and investment requirements. These processes include compression molding of SMC, bulk molding compounds ("BMC"), resin transfer molding ("RTM"), liquid molding of dicyclopentadiene ("DCPD"), spray-up and hand-lay-up, glass mat thermoplastics ("GMT"), direct long-fiber thermoplastics ("D-LFT") and structural foam and structural web injection molding ("SIM"). Core Molding Technologies has its headquarters in Columbus, Ohio, and operates production facilities in Columbus and Batavia, Ohio; Gaffney, South Carolina; Winona, Minnesota; Matamoros and Escobedo, Mexico; and Cobourg, Ontario, Canada. For further information, visit the company's website at www.coremt.com.
Exhibit 99.1
This press release may contain certain forward-looking statements within the meaning of the federal securities laws. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance as opposed to historical items and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature. Such forward-looking statements involve known and unknown risks and are subject to uncertainties and factors relating to Core Molding Technologies' operations and business environment, all of which are difficult to predict and many of which are beyond Core Molding Technologies' control. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plans,” “projects,” “believes,” “estimates,” “encouraged,” “confident” and similar expressions are used to identify these forward-looking statements. These uncertainties and factors could cause Core Molding Technologies' actual results to differ materially from those matters expressed in or implied by such forward-looking statements.
Core Molding Technologies believes that the following factors, among others, could affect its future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements made in this report: business conditions in the plastics, transportation, marine and commercial product industries (including changes in demand for truck production); federal and state regulations (including engine emission regulations); general economic, social, regulatory (including foreign trade policy) and political environments in the countries in which Core Molding Technologies operates; safety and security conditions in Mexico and Canada; dependence upon certain major customers as the primary source of Core Molding Technologies’ sales revenues; the efforts of Core Molding Technologies to expand its customer base and increase profitability; the ability to develop new and innovative products and to diversify markets, materials and processes and increase operational enhancements; the actions of competitors, customers, and suppliers; failure of Core Molding Technologies’ suppliers to perform their obligations; the availability of raw materials; inflationary pressures; new technologies; regulatory matters; labor relations; labor availability; the loss or inability of Core Molding Technologies to attract and retain key personnel; the Company's ability to successfully identify, evaluate and manage potential acquisitions and to benefit from and properly integrate any completed acquisitions, including the acquisition of Horizon Plastics; the risk that the integration of Horizon Plastics may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the acquisition of Horizon Plastics may not be fully realized within the expected timeframe; revenues following the acquisition of Horizon Plastics may be lower than expected; customer and employee relationships and business operations may be disrupted by the acquisition of Horizon Plastics; federal, state and local environmental laws and regulations; the availability of capital; the risks associated with our current levels of indebtedness, including borrowings under our Amended A/R
Exhibit 99.1
Credit Agreement and the ability to restructure or refinance our existing debt or otherwise adhere to financial covenants related to our borrowing arrangements; the impact of the inclusion in any report of our auditor regarding substantial doubt as to our ability to continue as a going concern; the ability of Core Molding Technologies to provide on-time delivery to customers, which may require additional shipping expenses to ensure on-time delivery or otherwise result in late fees and other customer charges; risk of cancellation or rescheduling of orders; management’s decision to pursue new products or businesses which involve additional costs, risks or capital expenditures; inadequate insurance coverage to protect against potential hazards; equipment and machinery failure; product liability and warranty claims; and other risks identified from time to time in Core Molding Technologies’ other public documents on file with the Securities and Exchange Commission, including those described in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2019.
| Company Contact:<br><br>John Zimmer<br><br>Vice President & Chief Financial Officer<br><br>614-870-5604<br><br>jzimmer@coremt.com |
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(See Accompanying Tables)
Exhibit 99.1
CORE MOLDING TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income (Loss) (Unaudited)
(in thousands, expect per share data)
| Three Months Ended | Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net sales: | ||||||||||||
| Products | $ | 54,585 | $ | 68,975 | $ | 268,987 | $ | 256,217 | ||||
| Tooling | 1,537 | 4,187 | 15,303 | 13,268 | ||||||||
| Total net sales | 56,122 | 73,162 | 284,290 | 269,485 | ||||||||
| Total cost of sales | 52,740 | 66,665 | 262,784 | 242,344 | ||||||||
| Gross margin | 3,382 | 6,497 | 21,506 | 27,141 | ||||||||
| Selling, general and administrative expense | 7,503 | 8,250 | 28,934 | 27,838 | ||||||||
| Goodwill impairment | — | 2,403 | 4,100 | 2,403 | ||||||||
| Total expenses | 7,501 | 10,653 | 33,034 | 30,241 | ||||||||
| Operating income (loss) | (4,121 | ) | (4,156 | ) | (11,528 | ) | (3,100 | ) | ||||
| Other income and expense | ||||||||||||
| Interest expense | 1,266 | 689 | 4,144 | 2,394 | ||||||||
| Net periodic post-retirement benefit cost | (22 | ) | (12 | ) | (94 | ) | (48 | ) | ||||
| Total other income and expense | 1,244 | 677 | 4,050 | 2,346 | ||||||||
| Loss before taxes | (5,365 | ) | (4,833 | ) | (15,578 | ) | (5,446 | ) | ||||
| Income tax expense (benefit) | 97 | (891 | ) | (355 | ) | (664 | ) | |||||
| Net (loss) | $ | (5,462 | ) | $ | (3,942 | ) | $ | (15,223 | ) | $ | (4,782 | ) |
| Net (loss) per common share: | ||||||||||||
| Basic | $ | (0.69 | ) | $ | (0.51 | ) | $ | (1.94 | ) | $ | (0.62 | ) |
| Diluted | $ | (0.69 | ) | $ | (0.51 | ) | $ | (1.94 | ) | $ | (0.62 | ) |
| Weighted average shares outstanding: | ||||||||||||
| Basic | 7,868 | 7,750 | 7,830 | 7,750 | ||||||||
| Diluted | 7,868 | 7,750 | 7,830 | 7,750 |
Exhibit 99.1
Condensed Consolidated Balance Sheets
| (in thousands) | As of 12/31/2019<br><br>(Unaudited) | As of<br><br>12/31/2018 | ||
|---|---|---|---|---|
| Assets: | ||||
| Cash | $ | 1,856 | $ | 1,891 |
| Accounts Receivable, net | 32,424 | 45,468 | ||
| Inventories, net | 21,682 | 25,765 | ||
| Other Current Assets | 5,263 | 7,178 | ||
| Right of Use Asset | 4,484 | — | ||
| Property, Plant and Equipment, net | 79,206 | 80,657 | ||
| Goodwill | 17,376 | 21,476 | ||
| Intangibles, net | 13,464 | 15,413 | ||
| Other Long-Term Assets | 3,551 | 3,350 | ||
| Total Assets | $ | 179,306 | $ | 201,198 |
| Liabilities and Stockholders' Equity | ||||
| Current Portion of Long-Term Debt | $ | 37,443 | $ | 3,230 |
| Current Portion of Revolving Debt | 12,008 | — | ||
| Accounts Payable | 19,910 | 25,450 | ||
| Compensation and Related Benefits | 5,515 | 5,154 | ||
| Accrued Other Liabilities | 7,725 | 5,200 | ||
| Lease Liability | 3,119 | — | ||
| Long-Term Debt | — | 37,784 | ||
| Revolving Debt | — | 17,375 | ||
| Post Retirement Benefits Liability | 9,160 | 8,076 | ||
| Stockholders' Equity | 84,426 | 98,929 | ||
| Total Liabilities and Stockholders' Equity | $ | 176,306 | $ | 201,198 |
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s management uses non-GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-GAAP financial measures to the comparable GAAP results available in the accompanying table.
Non-GAAP Reconciliation of Free Cash Flow
This press release includes references to free cash flow, a non-GAAP financial measure that comprises cash provided by operating activities less cash expenditures for property, plant and equipment. Free cash flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that free cash flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after cash expenditures for property, plant and equipment.
Exhibit 99.1
This non-GAAP financial measures is used in addition to and in conjunction with results presented in accordance with GAAP. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP and are reconciled to the most appropriate GAAP number below.
| Three months ended 12/31/2019 | Twelve months ended 12/31/19 | |||
|---|---|---|---|---|
| Cash provided by operating activities | 12,728 | 16,701 | ||
| Expenditures for property, plant and equipment | (1,180 | ) | (7,460 | ) |
| Free Cash Flow | 11,548 | 9,241 |
Exhibit
Exhibit 10.1
AMENDMENT TO FORBEARANCE AGREEMENT AND OTHER LOAN DOCUMENTS
THIS AMENDMENT TO FORBEARANCE AGREEMENT AND OTHER LOAN DOCUMENTS (the “Amendment”) is made and entered into effective as of the 13th day of March, 2020 (the “Effective Date”), upon the date of the full execution hereof (the “Execution Date”), by and among:
(a) CORE MOLDING TECHNOLOGIES, INC., a Delaware corporation (the “US Borrower”);
(b) HORIZON PLASTICS INTERNATIONAL INC., f/k/a 1137925 B.C. Ltd., a corporation incorporated under the laws of British Columbia, Canada (the “Canadian Borrower” and, together with the US Borrower, collectively, the “Borrowers” and individually, each a “Borrower”);
(c) the Lenders (collectively, the “Lenders” and individually, each a “Lender”) as defined in the Credit Agreement (hereafter defined), currently including KEYBANK NATIONAL ASSOCIATION, a national banking association (“KeyBank”); THE HUNTINGTON NATIONAL BANK, national banking association (“Huntington”); and THE TORONTO-DOMINION BANK, a Canadian national bank (“Toronto-Dominion”);
(d) KEYBANK NATIONAL ASSOCIATION, a national banking association, as the administrative agent for the Lenders under the Credit Agreement (the “Administrative Agent”); and
(e) CORE COMPOSITES CORPORATION, a Delaware corporation; CORE AUTOMOTIVE TECHNOLOGIES LLC, a Delaware limited liability company; and CORE COMPOSITES CINCINNATI, LLC, a Delaware limited liability company (collectively, the “Domestic Subsidiaries” and together with the US Borrower, the “Guarantors” and individually, each a “Guarantor”).
R E C I T A L S:
A.The US Borrower, Canadian Borrower, Administrative Agent and Lenders are parties to an Amended and Restated Credit Agreement dated as of January 16, 2018, as subject to a First Amendment Agreement dated as of March 14, 2019, and as subject to further amendment pursuant to a Forbearance Agreement (hereafter defined) (collectively, the “Credit Agreement”). The Borrowers, Lenders, Administrative Agent and Guarantors are parties to a Forbearance Agreement dated effective as of November 22, 2019 (the “Forbearance Agreement”), which amends the Credit Agreement and other Loan Documents. The applicable forbearance period pursuant to the Forbearance Agreement continues through March 13, 2020. Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Forbearance Agreement or, if not defined therein, the Credit Agreement. The Credit Agreement amends and restates and supersedes the Original Credit Agreement.
B.In connection with the Credit Agreement, the Lenders extended (i) a Revolving Credit Commitment to the Borrowers in respect of all Revolving Loans (including a US Revolving Loan or a Canadian Revolving Loan), Swing Loans and obligations as to Letters of Credit (collectively, the “Revolver”), (ii) a US Term Loan Commitment to the US Borrower in respect of the US Term Loan, and (iii) a Canadian Term Loan Commitment to the Canadian Borrower in respect of the Canadian Term Loan. (The US Term Loan and the Canadian Term Loan shall be referred to herein as the "Term Loans".) The Revolver (in the original and a current commitment amount up to $40,000,000, subject to an availability block), the US Term Loan to the US Borrower (in the original commitment amount of $32,000,000) and the Canadian Term Loan to the Canadian Borrower (in the original commitment amount of $13,000,000), are in the current principal amounts as of March 5, 2020 of $7,622,716.22, $27,200,000.00 and $11,050,000.00, respectfully, and shall
Exhibit 10.1
be referred to collectively herein, together with all other loans pursuant to the Loan Documents, As defined in the Credit Agreement and also including all loan documents in respect of the Original Credit Agreement. as the “Loans.”
C.The Loans are evidenced and secured by the Loan Documents (as defined in the Credit Agreement), including the Notes and Security Documents and each Guaranty of Payment and Guaranty of Payment Joinder, and all loan documents in respect of the Original Credit Agreement, among other documentation, without limitation, evidencing, acting as security for, or executed in connection with the Loans, including but not limited to the Forbearance Agreement and this Amendment (collectively, the “Loan Documents”).
D.The Borrowers, Guarantors, Administrative Agent and Lenders hereby acknowledge and confirm:
(i) that the following events of default (the "Existing Defaults") have occurred and are continuing pursuant to the Loan Documents:
The Borrowers failed to maintain the required Fixed Charge Coverage Ratio pursuant to Section 5.7 of the Credit Agreement for the fiscal quarter of the US Borrower ended September 30, 2019, and such covenant violation constitutes an Event of Default pursuant to Section 7.2 of the Credit Agreement, Section 16 of the Amended Security Agreement and Section 22 of each of the Mortgages, without limitation as to other resulting defaults pursuant to the Loan Documents not acknowledged hereby; and
The Borrowers failed to obtain a written commitment from involved parties and/or lenders on or before February 14, 2020 providing the basis for implementation of a new capital structure, as required pursuant to Section 4(b)(vi) of the Forbearance Agreement.
(ii) that further defaults under Section 5.7, parts (a) and (b), of the Credit Agreement dealing with the Leverage Ratio and the Fixed Charge Coverage Ratio (collectively, the “Specified Potential Defaults”) may have occurred in respect of the December 31, 2019 measurement date and may occur with respect to the March 31, 2020 measurement date.
The Administrative Agent and Lenders reserve all rights and remedies in respect of the Existing Defaults and any Specified Potential Default, including but not limited to the establishment of a “Cash Collateral Account” as defined in and pursuant to the Amended Security Agreement and the Canadian Security Agreement.
E.As of March 5, 2020, the total principal amount due to the Lenders from the Borrowers pursuant to the Loans is $45,872,716.22, including a principal balance of $7,622,716.22, in respect of the Revolver, a principal balance of $27,200,000.00 on the US Term Loan, and a principal balance of $11,050,000.00 on the Canadian Term Loan. As of March 5, 2020, the total amount due to the Lenders from the Borrowers in connection with the Loans is a principal amount not less than $45,872,716.22, plus interest, default interest, other existing and continuing amounts now due and hereafter arising pursuant to the Loan Documents and this Amendment including, without limitation, attorneys’ fees and expenses, and other bank charges, fees and costs (collectively, all of such stated, unstated, current and future amounts, and further including the definition of Obligations as contained in the Credit Agreement, the “Obligations”).
F.The Borrowers have requested that the Administrative Agent and Lenders extend the applicable forbearance period and continue to forbear from exercising remedies as a result of the Existing Defaults and any Specified Potential Defaults. The Administrative Agent and Lenders are willing to forbear for certain additional time in connection with the Loans on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of
Exhibit 10.1
which are hereby acknowledged, the Borrowers, Guarantors, the Administrative Agent and the Lenders hereby agree as follows:
1.Acknowledgments. The parties hereby make the following acknowledgments:
(a)The Borrowers, Guarantors, the Administrative Agent and Lenders hereby acknowledge the accuracy of the foregoing recitals and such recitals among the parties are hereby adopted and made a part hereof;
(b)The Borrowers and the Administrative Agent and Lenders hereby acknowledge that (i) the Borrowers each executed the Loan Documents in the places where their names are noted therein, on the dates indicated therein; and (ii) the Borrowers are properly obligated under the Loan Documents and the terms of this Amendment and such obligations are not subject to any defenses, setoffs or counterclaims against the Administrative Agent and/or Lenders;
(c)The Guarantors and the Administrative Agent and Lenders hereby acknowledge that (i) the Guarantors executed and provided certain guaranties in connection with the Loans on the dates indicated therein; and (ii) the Guarantors are properly obligated under the applicable guaranties and such obligations are not subject to any defenses, setoffs or counterclaims against the Administrative Agent and/or Lenders;
(d)The Borrowers, Guarantors, the Administrative Agent and Lenders hereby acknowledge that the Administrative Agent’s security interests and liens in the Collateral are, to the best of their knowledge, properly perfected and that Administrative Agent has a first and best lien with respect to the Collateral pursuant to the Loan Documents, subject only to assessments and real property taxes with respect to the Domestic Real Property;
(e)The Borrowers and Guarantors acknowledge that the Administrative Agent has employed outside counsel for advice and other representation and has incurred and will continue to incur legal and/or other costs and expenses in connection with the Loans and recovery of the Obligations owed to the Lenders and that such costs and expenses constitute Obligations of the Borrowers secured by the Collateral pursuant to the Loan Documents;
(f)All of the provisions of the Loan Documents are ratified and confirmed and remain in full force and effect except to the extent modified by this Amendment. The Borrowers, Guarantors, Administrative Agent and Lenders hereby expressly intend that this Amendment shall not in any manner (i) constitute the refinancing, refunding, payment or extinguishment of the Obligations evidenced by the existing Loan Documents; (ii) be deemed to evidence a novation of the outstanding balance of the Obligations; or (iii) replace, impair, or extinguish the creation, attachment, perfection or priority of the Liens in favor of the Administrative Agent on the Collateral. Each Borrower and Guarantor ratifies and reaffirms any and all grants of Liens to the Administrative Agent for the benefit of the Lenders on the Collateral as security for the Obligations, and each Borrower and Guarantor acknowledges and confirms that the grant of the Liens to the Administrative Agent on the Collateral: (x) represents continuing Liens on all of the Collateral, and (y) secures all of the Obligations; and
(g)The Borrowers and Guarantors acknowledge that the Loans are in default and that the Administrative Agent and Lenders are not obligated to fund, or otherwise make disbursements or advances, pursuant to the Loans or Loan Documents.
2.Representations, Warranties and Covenants. The Borrowers and Guarantors hereby represent, warrant and covenant to the Administrative Agent and Lenders as follows:
(a)Except for the Existing Defaults, no default, violation or event of default under the Credit Agreement and other Loan Documents, and no event which, with the passage of time or giving of notice, or both, could constitute any such default, violation or event of default, has occurred and is continuing as of the Effective Date;
(b)After giving effect to this Amendment, and except for those matters constituting the Existing Defaults or a Specified Potential Defaults, (i) all of the representations and warranties of the Borrowers and Guarantors in the Loan Documents are true and correct in all material respects on and as of
Exhibit 10.1
the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case they are true and correct in all material respects as of such earlier date, and (ii) the execution and delivery by each Borrower and Guarantor of this Amendment and the performance by such Borrowers and Guarantors of the Credit Agreement and this Amendment do not require the consent of any Person (other than that which has been obtained) and do not contravene the terms of any of Borrowers’ or Guarantors’ organizational documents, or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or any of Borrower’s or Guarantor’s property is bound;
(c)After giving effect to this Amendment, no representation or warranty by the Borrowers contained in this Amendment or any document, agreement or instrument to be executed or delivered herewith contains any untrue statements of material fact or omits to state a material fact necessary to make such representation or warranty not misleading in any material respect in light of the circumstances under which it was made;
(d)The execution, delivery and performance of this Amendment, and any document, agreement or instrument to be executed or delivered herewith, by the Borrowers or Guarantors will not result in the violation of any mortgage, security agreement, indenture, material contract, instrument, agreement, organizational document, judgment, decree, order, statute, rule or regulation to which the Borrowers or Guarantors are subject or by which any of the Borrowers’ or Guarantors’ respective properties and assets are bound;
(e)This Amendment has been, and all documents and instruments which may be executed by the Borrowers and Guarantors under the terms and conditions hereof shall be, duly and validly executed by the Borrowers and Guarantors, and shall constitute the legal, valid and binding obligations of the Borrowers and Guarantors, enforceable against the Borrowers and Guarantors in accordance with their respective terms;
(f)The Borrowers and Guarantors have obtained any necessary consents or approvals and have the individual or corporate power and authority to execute, deliver and carryout the terms and provisions of this Amendment and the transactions contemplated hereby and have taken or caused to be taken all necessary corporate action to authorize the execution, delivery and performance of this Amendment and the transactions contemplated hereby;
(g)The Loan Documents, except as, and solely to the extent that the same may be, modified by this Amendment, remain in full force and effect and remain the valid and binding obligations of the Borrowers, enforceable against the Borrowers in accordance with their respective terms;
(h)The Administrative Agent holds, to the best of Borrowers’ and Guarantors’ knowledge, perfected first priority liens and security interests in all of the Collateral, and each lien, security interest and encumbrance granted in favor of the Administrative Agent for the benefit of Lenders pursuant to the Loan Documents or this Amendment is valid, in full force and effect, has the priority required of it by the Loan Documents, this Amendment and such other related documents and secures the Obligations of the Borrowers and Guarantors;
(i)The Borrowers and Guarantors, as applicable, own and possess all right, title and interest in and to the Collateral, subject to the liens and security interests held by the Administrative Agent for the benefit of Lenders;
(j)Except for sales in the ordinary course of business, none of the Collateral which is subject to the Administrate Agent’s security interests has been sold, transferred, assigned, abandoned, exchanged or otherwise conveyed to any other person or entity;
(k)With respect to all material obligations, each Borrower and Guarantor has filed, on a timely basis, all tax returns and reports of any nature whatsoever which are required to be filed with any federal, state, local or foreign governmental authority or agency, and has paid in full all assessments received and all taxes of any nature whatsoever which have become due under applicable federal, state, local or foreign governmental law or regulations with respect to all periods prior to the execution and delivery of this Amendment, and there is no dispute or claim concerning tax liability of any Borrower or Guarantor claimed
Exhibit 10.1
or, to the best of any Borrower’s or Guarantor’s knowledge, raised or threatened by any authority or agency and there exists no tax liens of any nature (except for statutory liens for real property taxes not yet due and payable);
(l)With respect to all material obligations, the Borrowers and Guarantors, as applicable, have withheld and paid all taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, or other third party;
(m)Except as otherwise specifically provided herein, the execution, delivery, performance, and effectiveness of this Amendment shall not operate nor be deemed to be or construed as a waiver (i) of any right, power or remedy of the Administrate Agent and Lenders under the Loan Documents, or (ii) of any term, provision, representation, warranty or covenant contained in the Loan Documents. Further, none of the provisions of this Amendment shall constitute, be deemed to be, or construed as, a waiver of any default, or event of default under any of the Loan Documents, whether occurring before or after the date hereof;
(n)The Loan Documents, and the obligations set forth therein, shall be subject to the terms of this Amendment and shall be further altered only to the extent a modification is reduced to a written agreement and signed by each party; and
(o)The Administrate Agent and Lenders are under no duty or obligation of any kind or nature to grant the Borrowers any additional period of forbearance beyond the Forbearance Period (hereafter defined).
The Borrowers and Guarantors hereby expressly acknowledge and confirm that the foregoing representations and warranties are being specifically relied upon by the Administrative Agent and Lenders as a material inducement to the Administrative Agent and Lenders to enter into this Amendment and to forbear from exercising certain rights and remedies with respect to the Existing Defaults and the Specified Potential Defaults. The foregoing representations and warranties shall survive the execution and delivery of this Amendment and the documents, agreements and instruments to be executed or delivered herewith.
3.Conditions Precedent to Effectiveness of Amendment. In addition to all other conditions and agreements set forth herein, this Amendment shall not be effective until it is fully executed and delivered and all of the following have occurred:
(a)The Administrative Agent and Lenders shall have received all required payments and deliveries from the Borrowers, Guarantors and others, pursuant to the Loan Documents through the Effective Date;
(b)The Borrowers shall have paid the Administrative Agent in immediately available funds, a forbearance fee in the amount of $225,000 (the “Forbearance Fee”), to be shared on a pro-rata basis among the Lenders based on their respective Commitment Percentage, which Forbearance Fee shall due upon the full execution of the Amendment on the Execution Date and shall be non-refundable and fully earned when paid.
(c)KeyBank shall have received certified resolutions or written consent resolutions from each of the Borrowers and Guarantors (through board of directors, shareholder or member consent and approval, as applicable) authorizing the execution of this Amendment and the transactions contemplated hereby, together with applicable good standing certificates or the equivalent, certified copies of organizational documents (in each case, if modified from those delivered in connection with the Forbearance Agreement), and certificates of incumbency and ownership (in each case, if modified from those delivered in connection with the Forbearance Agreement) for each of the Borrowers and Guarantors;
(d)The Borrowers shall have paid a portion of the legal fees and expenses of the Administrative Agent incurred in respect of this Amendment in the amount of $5,000, with all remaining unpaid and incurred amounts to be paid subsequently upon request by the Administrative Agent. The Borrower shall remain liable for all fees, expenses and other obligations due pursuant to the Loan Documents; and
Exhibit 10.1
(e)The Borrowers and Guarantors shall have executed and delivered this Amendment to the Administrative Agent, together with any and all documents necessary to satisfy the terms and conditions of the Amendment.
4.Forbearance of Administrative Agent and Lenders/Required Payments. The Administrative Agent and Lenders shall forbear from the exercise of rights and remedies pursuant to the Loan Documents solely as to the Existing Defaults and the Specified Potential Defaults subject to the terms of this Amendment for the period from and after the Effective Date through May 29, 2020 (the “Forbearance Period”), solely in accordance with the following terms and subject to the following conditions:
(a)The Borrowers shall remain current on the payment and, except with respect to the Existing Defaults and the Specified Potential Defaults, the performance of all required obligations pursuant to the Loan Documents (as modified by this Amendment) and this Amendment from and after the Effective Date;
(b)Borrower shall satisfy the following requirements by the deadlines noted:
(i) On or before March 31, 2020, the Borrowers shall have obtained an executed term sheet from involved parties and/or lenders (the "New Lenders") providing the basis for implementation of a new capital structure and defined due diligence parameters consistent with a closing by the Refinancing Deadline (hereafter defined), and shall have provided copies of the applicable documentation to the Administrative Agent and Lenders;
(ii) On or before May 15, 2020, the Borrowers shall have obtained an executed definitive, written commitment from the New Lenders to enter into a definitive agreement to effect the Refinancing (hereafter defined) by the Refinancing Deadline;
(iii) On or before May 29, 2020 (the “Refinancing Deadline”), the Borrowers shall have closed on a new capital structure, acceptable to the Administrative Agent and Lenders in their sole discretion (“Refinancing”) or otherwise satisfying the Obligations in full.
(c)Borrowers shall not make any Capital Distribution or any other Restricted Payment of any kind during the Forbearance Period.
(d)The Borrowers shall not spend or invest more than $3,500,000 in additional Consolidated Capital Expenditures from and after the Effective Date through May 29, 2020 (the “Capital Expenditures Limitation”).
(e)The Borrowers and Guarantors shall comply with all of the terms and conditions of this Amendment and other Loan Documents. Except as otherwise specifically provided herein or in the Forbearance Agreement, the Borrowers and Guarantors shall comply with all of the terms and conditions of the Loan Documents. The Borrowers shall remain liable for (i) all fees, expenses and other payment obligations pursuant to the Loan Documents, and (ii) performance of further obligations pursuant to the Loan Documents except as modified by this Amendment.
(f)If the Borrowers timely satisfy the conditions precedent set forth in Section 3 of this Agreement and make all required payments of the Loans through and after the Effective Date, and otherwise perform timely all obligations owing under the Loan Documents and this Amendment (including but not limited to payment in full of the Obligations upon the expiration of the Forbearance Period or entry into a Refinancing), without default, payment of all default interest accruing through and after the Effective Date shall be forgiven upon the expiration of the Forbearance Period (the “Expiration Date”) and the immediate, concurrent payment in full of the Loans and Obligations on the Expiration Date or the prior or concurrent entry into a Refinancing (please note that in the event of the occurrence of a default or an event of default subsequent to the Effective Date, or if payment of the Loans or the entry into a Refinancing is not made in full on or before the expiration of the Forbearance Period on the Expiration Date, default interest shall be
Exhibit 10.1
assessed and the amount thereof accrued through and after the Effective Date shall be immediately due and payable and shall further accrue from and after the date of any further default or nonpayment); and
(g)Reasonable attorneys’ fees and any other professional fees as well as all reasonable expenses, costs, charges and other fees incurred by counsel, other professionals, and the Administrative Agent and Lenders in connection with the Loans and the Loan Documents and the recovery of amounts owed from the Borrowers and other liable parties, shall be payable, jointly and severally, on demand, by the Borrowers and Guarantors to the Administrative Agent.
5. Changes to Loan Documents. Upon satisfaction of the conditions precedent hereto and full execution hereof, the Borrowers, Guarantors, the Administrative Agent and Lenders agree that the Loan Documents shall be modified and amended as of the Effective Date as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended to delete the definition of “Revolving Amount” therefrom and to insert in place thereof the following:
"Revolving Amount" means Twenty-Five Million Dollars ($25,000,000), as such amount may be increased pursuant to Section 2.11(b) hereof, or decreased pursuant to Section 2.11(a) hereof.
(b) Section 1.1 of the Credit Agreement is hereby amended to delete the definition of “Availability Block” therefrom and to insert in place thereof the following:
“Availability Block” means Five Million Dollars ($5,000,000), as such amount may be decreased or otherwise modified pursuant to Section 11.3(b)(i)(G).
(c) Section 1.1 of the Credit Agreement is hereby amended to delete the definition of "US Revolving Loan Maximum Amount" therefrom and to insert in place thereof the following:
"US Revolving Loan Maximum Amount" means the sum of (a) Twenty-Five Million Dollars ($25,000,000), as such amount may be decreased pursuant to Section 2.11(a) hereof, minus (b) the Availability Block.
(d) The definition of “Applicable Margin” in Section 1.1 of the Credit Agreement is hereby amended to replace the September 30, 2019 date in the first paragraph in part (b) with “December 31, 2019” and to replace the November 22, 2019 date referenced twice in the second paragraph in part (b) with “March 13, 2020”, and to delete the chart following the first paragraph in part (b) of the definition and to insert in place thereof the following:
| Leverage Ratio | Applicable Basis Points for Eurodollar Loans and Daily LIBOR Loans | Applicable Basis Points for Base Rate Loans |
|---|---|---|
| Greater than or equal to 4.75 to 1.00 | 650.00 | 350.00 |
| Greater than or equal to 4.25 to 1.00 but less than 4.75 to 1.00 | 650.00 | 350.00 |
| Greater than or equal to 3.75 to 1.00 but less than 4.25 to 1.00 | 650.00 | 350.00 |
| Greater than or equal to 3.25 to 1.00 but less than 3.75 to 1.00 | 650.00 | 350.00 |
| Greater than or equal to 2.75 to 1.00 but less than 3.25 to 1.00 | 650.00 | 350.00 |
| Greater than or equal 1.75 to 1.00 but less than 2.75 to 1.00 | 650.00 | 350.00 |
| Less than 1.75 to 1.00 | 650.00 | 350.00 |
Exhibit 10.1
(e) any and all of the Loan Documents are deemed amended and modified as further necessary to effect the terms and conditions of this Amendment.
6. Termination of Forbearance/Default.
(a) The Lender shall forbear from the exercise of its rights and remedies (in accordance with the provisions of Section 4 hereof) until the earlier of the expiration of the Forbearance Period (as of May 30, 2020, the Administrative Agent and Lenders may pursue all available rights and remedies) or the occurrence of any of the following:
(i)any default or event of default (other than the Specified Potential Defaults) arising under any of the Loan Documents after the date hereof (without additional notice or cure periods);
(ii)default in performance by the Borrowers under any provisions of this Amendment (without notice or cure periods);
(iii)any default in making any payment due to the Administrative Agent or Lenders or taxing authorities (without notice or cure periods) under this Amendment or the Loan Documents;
(iv)any warranty, representation, statement, report, financial statement or certificate, made or furnished to the Administrative Agent and Lenders by or on behalf of the Borrowers or Guarantors proves to have been false or knowingly inaccurate in any material respect when made or furnished;
(v)any default (other than the Specified Potential Defaults) in any other non-payment or non-performance obligation due hereunder after written notice from the Administrative Agent to the Borrowers or Guarantors, and the expiration of ten (10) days following the date of mailing of such notice without the Borrowers or Guarantors having effected a cure thereof; or
(vi)if the Administrative Agent or Lenders, in their sole discretion, determine that a material adverse change has occurred after the Effective Date in the financial condition, operations or business of any Borrower or the value of the Collateral.
(b) Upon the expiration of the Forbearance Period or the termination of the Forbearance Period and the applicable forbearance of the Administrative Agent and Lenders resulting from an occurrence set forth in Section 6(a) above, the Administrative Agent and Lenders may exercise all or any one of the rights, powers, privileges and other remedies available to the Administrative Agent and/or Lenders against the Borrowers, Guarantors and/or the Collateral under the Loan Documents and this Amendment or at law or in equity at any time and from time to time thereafter whether or not the Administrative Agent and/or Lenders shall have commenced any collection action, foreclosure proceeding or other litigation for enforcement of its or their rights and remedies under the Loan Documents with respect to the Collateral and the Borrowers. The parties hereto agree that in the event of an occurrence set forth in Section 6(a) above, this Amendment does not, in any manner, limit any rights which the Administrative Agent and Lenders had, or now have, to institute legal proceedings or take any other action against all or any of the Borrowers, Guarantors, and/or Collateral for the purpose of collecting the Obligations and any additional obligations owed to the Lenders.
7. Continued Effectiveness of Forbearance Agreement. Except to the extent modified by, or inconsistent with, the terms this Amendment, the terms and conditions of the Forbearance Agreement and the amendments to the Loan Documents contained therein shall remain in full force and effect and are hereby incorporated herein. The Borrowers and Guarantors hereby make and reaffirm all of the representations, warranties, covenants, agreements and statements contained in the Forbearance Agreement in respect of this
Exhibit 10.1
Amendment, the Loans, Collateral, the Forbearance Agreement and other matters addressed therein, and the other Loan Documents, as of the Effective Date as if fully restated herein.
8. Release. EACH OF THE BORROWERS AND GUARANTORS hereby representS and warrantS to the ADMINISTRATIVE AGENT AND LenderS, and agreeS with the ADMINISTRATIVE AGENT AND LenderS, that IT HAS no claim or offset against, or defense or counterclaim to, any of the Obligations to the ADMINISTRATIVE AGENT AND LenderS and, in consideration of this Amendment, EACH OF THE BORROWERS AND GUARANTORS, on their own behalf of and on behalf of their partners, affiliates, subsidiaries, officers, directors, SHAREHOLDERS, agents, successors, predecessors, MEMBERS, attorneys, heirs and assigns (collectively for the purposes of this Section 8, the “Releasors”), doES hereby release, cancel, forgive and forever discharge the ADMINISTRATIVE AGENT AND LenderS, each of THEIR predecessors, parent corporations, holding companies, subsidiaries, affiliates, divisions, successors and assigns, and all officers, directors, employees, representatives, attorneys, agents, MEMBERS, and shareholders thereof (collectively for the purposes of this Section 8, the “Released Parties”), from any and all actions, CAUSES OF ACTION, JUDGMENTS, DEBTS, claims, demands, damages, losses, EXPENSES, obligations, liabilities, controversies and executions, of any kind or nature whatsoever, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR NOT, DIRECT OR INDIRECT, AT LAW OR IN EQUITY, arising out of or by reason of or related to the Obligations, the loans, THE COLLATERAL, and/or the Loan Documents (INCLUDING THIS AGREEMENT IN ALL REFERENCES THERETO) and further including, but not limited to, those matters related to the obligations, the loans and/or the loan documents, WHICH PERTAIN TO ANY MATTER OR THINGS DONE, OMITTED, OR SUFFERED TO BE DONE BY ANY OF THE RELEASED PARTIES, OR which have arisen, or may have arisen, or shall HEREAFTER arise by reason of any matter, cause or thing whatsoever, from the first day of the world, to and including the LATER OF THE EXECUTION Date OR THE EFFECTIVE DATE, and each of the Releasors does specifically waive any claim or right to assert any cause of action or alleged cause of action or claim or demand against the Released Parties which has, through oversight or error, intentionally or unintentionally, or through a mutual mistake, been omitted from this Amendment, but is related to the subject matter hereof. The Borrowers and Guarantors hereby confirm that they have all right, power and authority to grant the releases to the Released Parties as provided in this Section 8, and that the Borrowers and Guarantors have not transferred, assigned or conveyed any right, title or interest to the matters subject to release hereby to any other person. The Administrative Agent and Lenders would not agree to enter into this Amendment but for the provisions set forth in this Section 8. The Borrowers and Guarantors confirm that they have agreed to the provisions of this Section 8 of their own volition, with full knowledge of the extent and effect of the various releases and waivers granted by this Section and of the importance to the Administrative Agent and Lenders of these waivers and releases and after having had the opportunity to discuss this matter with counsel of their choice. The foregoing release shall be effective immediately upon execution of this Amendment and shall remain in full force and effect notwithstanding the unfullfillment of the conditions precedent contained in Section 3 or other conditions contained elsewhere in this Amendment or the later termination of this Amendment for any reason.
9. Confirmation and Waiver of Guarantors. Guarantors, as guarantors, by executing this Amendment, hereby assent to the terms and conditions of this Amendment and ratify and reaffirm the terms and conditions of the guaranties included among the Loan Documents, which guaranties shall remain in full force and effect. Guarantors hereby waive any and all defenses to the obligations under the guaranties based upon or arising out of (i) any modifications to the Loans and the Loan Documents as provided herein, (ii) the taking of any additional security for repayment of the Obligations, and (iii) any act or omission of the Administrative Agent or Lenders or agents thereof occurring prior to and including the later of the Execution Date or the Effective Date. Notwithstanding any language contained in the guaranties or other applicable documentation, Guarantors, as guarantors, to the extent permitted by law, each waive any claim or other right
Exhibit 10.1
which such Guarantor might now have or hereafter may acquire against any of the Administrative Agent, Lenders, Borrowers, co-guarantors, or any other obligor of the Obligations, which arises from the existence or performance of each Guarantor’s liability or other obligations under the guaranties and any other guaranties which any of the Guarantors has executed in favor of the Administrative Agent and Lenders, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Administrative Agent and Lenders against any of the Borrowers or any of the Collateral, whether or not such claim, remedy, or right arises in equity, or under contract, statute, or common law.
10. Additional Funding/Forbearance Period. The Lenders shall make ongoing funding to the Borrowers pursuant to the Loan Documents as modified by the terms of this Amendment and on no other basis. The Lenders are under no duty or obligation of any kind or nature to grant the Borrowers any additional period of forbearance beyond the Forbearance Period.
11. Hold Harmless/Indemnification. In addition to any other obligations of indemnification under the Loan Documents, the Borrowers and Guarantors hereby assume responsibility and liability for, and hereby agree to hold harmless and indemnify the Administrative Agent and Lenders from and against, any and all, by way of example but without limitation, liabilities, demands, obligations, injuries, costs, damages (direct, indirect or consequential), awards, loss of interest, principal or any portion of the Collateral or Obligations, charges, expenses, payments of money and attorneys’ fees, incurred or suffered, directly or indirectly, by the Administrative Agent and/or Lenders and/or asserted against the Administrative Agent and/or Lenders, by any person or entity whatsoever, including the Borrowers and Guarantors, without limitation, arising out of or related to the Loans, Loan Documents, this Amendment or any document executed in connection herewith, or the relationship between or among the parties hereto, or the exercise of any right or remedy for which the Lenders may be liable, for any reason whatsoever except for the Administrative Agent’s or the Lenders’ own acts of gross negligence or willful misconduct. The foregoing hold harmless and indemnification obligations shall be effective immediately upon execution of this Amendment and shall remain in full force and effect notwithstanding the unfullfillment of the conditions precedent contained in Section 3 or other conditions contained elsewhere in this Amendment or the later termination of this Amendment for any reason.
12. Lenders Costs/Attorneys’ Fees. After taking into account the separate provisions hereof addressing payment of certain legal fees and legal expenses of the Administrative Agent and Lenders and other expenses of the Administrative Agent and Lenders, the Borrowers and Guarantors shall otherwise reimburse the Administrative Agent and Lenders promptly upon demand for all costs and expenses, expended or incurred by the Administrative Agent or Lenders in connection with: (a) the Existing Defaults, (b) the negotiation and preparation or enforcement of this Amendment and the Loan Documents, including without limitation, during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Administrative Agent’s or Lenders’ rights, remedies and obligations under this Amendment or any of the Loan Documents, whether or not any form of legal proceeding has commenced, (c) collecting any sum which becomes due to the Administrative Agent or Lenders under this Amendment or any of the Loan Documents, (d) any proceeding for declaratory relief, any counterclaim to any proceeding, or any appeal, (e) the protection, preservation or enforcement of any rights or remedies of the Administrative Agent or Lenders, whether or not any form of legal proceeding is commenced, (f) any action necessary to defend, protect, assert, or preserve any of the Administrative Agent’s or Lenders’ rights or remedies as a result of or related to any case or proceeding under Chapter 11 of the United States Code, as amended, or any similar law of any jurisdiction, and (g) all other matters as provided pursuant to the terms and conditions of the Loan Documents. All of such costs and expenses shall bear interest from the time of demand at the highest rate
Exhibit 10.1
then in effect under the Loan Documents or this Amendment, and shall be considered part of the Obligations, as that term is defined in this Amendment.
13. Expenses. The Borrowers and Guarantors shall be responsible for their own expenses, as well as those of the Administrative Agent and Lenders, related to this Amendment.
14. Voluntary Amendment. In the negotiations leading up to this Amendment, the Borrowers and Guarantors have had sufficient time to consider all terms of this Amendment and the alternatives hereto, during which time they have had the benefit of, or opportunity to consult with, counsel, and each is fully prepared and willing to sign this Amendment and be legally bound thereby. The Borrowers and Guarantors freely and thoroughly considered all options, and enter into this Amendment knowingly and voluntarily. The Borrowers and Guarantors acknowledge that they have not signed this Amendment under duress or coercion, and that other alternatives exist which they have considered and rejected. Each party has had equal opportunity to negotiate the terms of this Amendment, and counsel for the Administrative Agent has prepared the draft merely for the convenience of the parties. The identity of the party preparing this Amendment shall have no effect on the interpretation hereof.
15. Effect and Construction of Amendment. Except as expressly provided herein, the Loan Documents shall remain in full force and effect in accordance with their respective terms, and this Amendment shall not be construed to: (a) impair the validity, perfection or priority of any lien or security interest securing the Obligations, (b) waive or impair any rights, powers or remedies of the Administrate Agent and Lenders under the Loan Documents upon termination of the Forbearance Period, (c) constitute an agreement by the Administrative Agent and Lenders or require the Administrative Agent and Lenders to extend the Forbearance Period, or grant additional forbearance periods, or extend the time for payment of any of the Obligations, or (d) make any loans or other extensions of credit to the Borrowers after termination of the Forbearance Period. The execution of this Amendment shall not constitute a novation of any of the Loan Documents or of the Obligations or any other indebtedness owing to the Lenders. In the event of any inconsistency between the terms of this Amendment and the Forbearance Amendment or any other Loan Documents, this Amendment shall govern. The Borrowers and Guarantors acknowledge that they have consulted with counsel and with such other experts and advisors as they have deemed necessary in connection with the negotiation, execution, and delivery of this Amendment. This Amendment shall be construed without regard to any presumption or rule requiring that the Amendment be construed against the party causing this Amendment or any part hereof to be drafted.
16. No Third Party Beneficiaries. Except as otherwise specifically provided herein, this Amendment is not intended to benefit any third parties including, without limitation, such parties that may have claims against the Borrowers and Guarantors.
17. Waiver of Right to Jury Trial. THE BORROWERS, GUARANTORS, ADMINISTRATIVE AGENT AND LENDERS HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE LENDER AND ANY OTHER PARTY HERETO ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN OR AMONG THE ADMINISTRATIVE AGENT AND LENDERS AND ANY OR ALL OF THE BORROWERS AND/OR GUARANTORS IN CONNECTION WITH THIS AMENDMENT, THE FORBEARANCE AGREEMENT, THE OBLIGATIONS, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE ADMINISTRATIVE AGENT AND LENDERS TO ENTER INTO THIS AMENDMENT.
Exhibit 10.1
18. Entire Amendment. This Amendment, and any agreements, documents and instruments executed and delivered pursuant hereto or in connection herewith, or incorporated herein by reference (including but not limited to the Forbearance Agreement and the other Loan Documents), constitutes the entire agreement among the parties pertaining to the subject matter hereof and, except as otherwise provided herein, supersedes all prior contemporaneous agreements, understandings, negotiations, and discussions whether oral or written.
19. Assignment. With respect to the obligations of the Borrowers and Guarantors hereunder, this Amendment is personal, being entered into in reliance upon and in consideration of the singular personal skill and qualifications of the Borrowers and Guarantors, and the trust and confidentiality reposed in the Borrowers and Guarantors by the Administrative Agent and Lenders. The Borrowers and Guarantors shall not assign their rights, or delegate any of their duties hereunder without the express written consent of the Administrative Agent. The Administrative Agent and/or Lenders shall have the right to assign this Amendment to a related entity or affiliate, or to a successor in interest in connection with a merger, sale of the Loans or any portion thereof, or the like.
20. Amendments. This Amendment may not be amended or modified except by written instrument executed by the parties.
21. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original for all purposes, but all of which shall constitute one and the same instrument.
22. Severability. All clauses of this Amendment are distinct and severable and if any clause shall be held to be invalid or illegal, that shall not affect the validity or legality of the remainder of the Amendment. The parties hereto further agree that any such unenforceable clause shall be deemed modified so that it shall be enforced to the greatest extent permissible under law. Except as otherwise specifically provided herein, all obligations, liabilities and responsibilities of the Borrowers and Guarantors shall survive the consummation of the transactions set forth herein.
23. Further Assurances. The parties each covenant and agree to execute and deliver to the other parties all such further instruments, agreements and other writings as any party may reasonably request of such other parties to effectuate the purpose of this Amendment or to confirm the availability of the Collateral to secure the Obligations. This Amendment is not intended to, nor will it, establish any course of dealing between the Borrowers or Guarantors and the Administrative Agent and Lenders that is inconsistent with the express terms of the Loan Documents, and the Borrowers and Guarantors hereby certify and agree to be bound by this Amendment and the Loan Documents and any document executed in connection therewith. Each of the Borrowers and Guarantors, to the extent necessary and not already done so, hereby grants a new security interest to the Administrative Agent for the benefit of Lenders in all of the Borrowers’ and Guarantors’ respective Collateral to secure all of the Obligations and continuing obligations under the Loan Documents and this Amendment. The Borrowers or Guarantors agree to execute and deliver to the Administrative Agent and Lenders such other and further documents and instruments as the Administrative Agent and Lenders may from time to time reasonably request to implement the provisions of this Amendment and to perfect and protect the liens and security interests created by the Loan Documents, the Forbearance Agreement, this Amendment or any other applicable agreement.
24. Enforceability. Each of the parties hereto represents and declares that the person executing this Amendment on behalf of such party is duly empowered and authorized to do so and that this Amendment is a legal, valid and binding obligation of such party, enforceable against it in accordance with the terms hereof.
Exhibit 10.1
25. Governing Law. This Amendment is made and entered into, and shall be governed by and construed in accordance with, the laws of the State of Ohio.
26. Successor and Assigns. The provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
27. Survival. Any provision of this Amendment which imposes an obligation following the termination or expiration hereof shall survive such termination or expiration and shall continue to be binding upon the parties hereto.
28. Headings. Paragraph and section headings are not to be considered part of this Amendment; they are included solely for convenience and are not intended to be full or accurate descriptions of the contents herein.
29. Waiver. No waiver by the Administrative Agent or Lenders of any breach of this Amendment shall be a waiver of any proceeding or succeeding breach. No waiver by the Administrative Agent or Lenders of any right under this Amendment shall be construed as a waiver of any other right. The Administrative Agent and Lenders shall not be required to give notice to enforce strict adherence to all terms of this Amendment and the Loan Documents. Other than expressly provided in this Amendment, nothing contained in this Amendment shall be construed to restrict the exercise of any of the rights or remedies granted to the Administrative Agent and Lenders under the Loan Documents. No failure by the Administrative Agent or Lenders to exercise any rights under the Loan Documents or this Amendment shall be construed as a waiver of the right to exercise the same or any other right at any time or from time to time hereafter.
30. True and Complete Statements. The Borrowers and Guarantors represent and warrant that all of the statements contained in this Amendment, the Forbearance Agreement, the other Loan Documents and in any other documents previously, concurrently, or hereafter delivered by the Borrowers and Guarantors to the Administrative Agent and Lenders are and shall be true, complete, and correct in all material respects and that the Borrowers and Guarantors have not omitted any facts which are necessary to keep the statements made or delivered by the Borrowers and Guarantors from being misleading in any material respect.
31. Time is of the Essence. TIME IS OF THE ESSENCE FOR ALL PURPOSES OF THIS AMENDMENT INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO REQUIRED PAYMENTS AND THE SATISFACTION OF CONDITIONS ON THE DATES SET FORTH HEREIN AND IN THE LOAN DOCUMENTS.
Exhibit 10.1
JURY TRIAL WAIVER. THE BORROWERS, THE ADMINISTRATIVE AGENT, THE GUARANTORS, AND THE LENDERS, TO THE EXTENT PERMITTED BY LAW, EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG THE BORROWERS, THE ADMINSTRATIVE AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the Effective Date on the dates indicated adjacent to their respective signatures below.
| CORE MOLDING TECHNOLGIES, INC.<br><br>as a Borrower and as a Guarantor<br><br><br><br>By: /s/ John P. Zimmer<br><br>John P. Zimmer<br><br>Vice President, Secretary, Treasurer<br><br>and Chief Financial Officer<br><br><br><br>Date signed: March 12, 2020<br><br><br><br>HORIZON PLASTICS INTERNATIONAL, INC.<br><br>as a Borrower<br><br><br><br>By: /s/ John P. Zimmer<br><br>John P. Zimmer<br><br>Chief Financial Officer<br><br><br><br>Date signed: March 12, 2020<br><br><br><br>CORE COMPOSITES CORPORATION<br><br>CORE AUTOMOTIVE TECHNOLOGIES LLC<br><br>CORE COMPOSITES CINCINNATI, LLC<br><br>each as a Guarantor<br><br><br><br>By: /s/ John P. Zimmer<br><br>John P. Zimmer<br><br>Vice President, Secretary, Treasurer<br><br>and Chief Financial Officer<br><br><br><br>Date signed: March 12, 2020 | THE HUNTINGTON NATIONAL BANK<br><br>as a Lender<br><br><br><br>By: /s/ Lance Rapp<br><br>Name: Lance Rapp<br><br>Title: Senior Vice President<br><br><br><br>Date signed: March 13, 2020<br><br><br><br>THE TORONOTO-DOMINION BANK<br><br>as a Lender<br><br><br><br>By: /s/ Jeffrey Swan<br><br>Name: Jeffrey Swan<br><br>Title: Director<br><br><br><br>Date signed: March 11, 2020<br><br><br><br>KEYBANK NATIONAL ASSOCIATION<br><br>as the Administrative Agent and as a Lender<br><br><br><br>By: /s/ Scott Saber<br><br>Scott Saber<br><br>Senior Vice President<br><br><br><br>Date signed: March 11, 2020 |
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