SILVER POINT FINANCE, LLC
Two Greenwich Plaza, 1 st
Floor
Greenwich, CT 06830-6353
February 26, 2008
Wachovia Capital Finance Corporation
(New England),
as Borrowing Base Agent
One Post Office Square, Suite
3600
Boston, MA 02109
Attention: Willis Williams, Vice
President
Re: Insurance/Condemnation Proceeds
Ladies and Gentlemen:
Reference hereby is made to that
certain Credit and Guaranty Agreement, dated as of July 19, 2007
(as amended, restated, supplemented, or otherwise modified from
time to time, the “ Credit Agreement ”), by and among Proliance International,
Inc., a Delaware corporation (the “ Borrower ”), each subsidiary of the Borrower listed
as a “ Guarantor ” on the signature pages thereto (each a
“ Guarantor
” and collectively, the
“ Guarantors ”), the Lenders, Wachovia Capital Finance
Corporation (New England), as borrowing base agent for the Lenders
(in such capacity, together with its successors and assigns in such
capacity, the “ Borrowing Base Agent ”), Silver Point Finance, LLC, a Delaware
limited liability company (“ Silver Point ”), as administrative agent for the Lenders
(in such capacity, together with its successors and assigns in such
capacity, the “ Administrative Agent ”) and Silver Point, as collateral agent for
the Lenders (in such capacity, together with its successors and
assigns in such capacity, the “ Collateral Agent ”, and together with the Borrowing Base
Agent and the Administrative Agent, each an “
Agent ” and collectively, the “
Agents ”). Capitalized terms used in this letter
agreement and not otherwise defined herein shall have the meanings
ascribed thereto in the Credit Agreement.
On February 5, 2008, the
Borrower’s primary distribution facility in Southaven,
Mississippi was severely damaged by two tornados (the
“ Casualty
Event ”). On February
14, 2008, after demonstrating to its insurance carrier that an
advance payment in the amount of $10,000,000 was required to
mitigate its losses and begin to restore its operations, the
Borrower received a preliminary advance of Net
Insurance/Condemnation Proceeds in the amount of $10,000,000 from
its insurance carrier with respect to the Casualty Event (the
“ Southaven Insurance
Proceeds Amount ”).
However, pursuant to the Credit
Agreement, as a result of certain Events of Default that are
continuing on the date hereof, the Southaven Insurance Proceeds
Amount is required to be applied to the Obligations in the order
and manner set forth in Section 2.15(h) of the Credit
Agreement.
February 26, 2008
Page 2
Notwithstanding Section 2.15(h) of the
Credit Agreement, the Borrower acting in its best interests to
maximize liquidity, mitigate its losses and begin to restore its
operations, has negotiated with the Agents. As a result of such
negotiations, the parties hereto have agreed to apply the Southaven
Insurance Proceeds Amount as set forth in this letter
agreement.
Accordingly, the parties hereto hereby
agree as follows:
1. Southaven Insurance Proceeds Amount
. The Southaven Insurance Proceeds
Amount shall be applied as follows: (i) $5,000,000 to the
outstanding principal amount of the Revolving B Loans, (ii)
$4,617,034.64 to the outstanding principal amount of the Tranche A
Term Loans, and (iii) $382,956.36 to the Make-Whole Amount and/or
Prepayment Premium required by Section 2.12(c) of the Credit
Agreement.
2. Borrowing Base . In
connection with the application of the Southaven Insurance Proceeds
Amount pursuant to this letter agreement, the Borrowing Base Agent
shall establish and maintain a reserve (the “
Southaven Insurance Proceeds
Reserve ”) against
the Borrowing Base in an amount equal to $5,000,000. The Agents and
the Lenders hereby agree that (i) if, at any time, the outstanding
principal balance of the Revolving A Loans is greater than zero at
such time or the Borrowing Base Agent has not received cash
collateral in an amount equal to one hundred and five percent
(105%) of the amount of all Obligations
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