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Exhibit 10.4
THIRD AMENDMENT TO CREDIT AGREEMENT
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THIS
THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made
and
entered into as of the 21st day of December, 2006, by and among
ZOLTEK
COMPANIES, INC., a Missouri corporation having its chief executive
office and
principal place of business located at 3101 McKelvey Road, St.
Louis, Missouri
63044 ("Parent"), ZOLTEK CORPORATION, a Missouri corporation,
ENGINEERING
TECHNOLOGY CORPORATION, a Missouri corporation, and ZOLTEK
PROPERTIES, INC., a
Missouri corporation, (individually and collectively hereinafter
"Borrowers";
all references to "Borrowers" or "Borrower" shall mean each and all
of the
Borrowers) and SOUTHWEST BANK OF ST. LOUIS (the "Bank"), with an
office at
13205 Manchester Road, St. Louis, Missouri 63131.
W I T N E S S E T H:
WHEREAS, Bank, Borrowers and Cape Composites, Inc., a
California
corporation ("Cape Composites"), are parties to that certain Credit
Agreement
dated as of May 11, 2001, as amended by that certain First
Amendment to Credit
Agreement dated as of February 13, 2003, and by that certain Second
Amendment
to Credit Agreement dated as of January 13, 2004 (as amended,
the
"Agreement"); and
WHEREAS, Bank and Borrowers desire to amend the Agreement upon
and
subject to the terms and conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the premises, the covenants,
promises
and agreements hereinafter set forth, and other good and
valuable
consideration, the receipt and sufficiency of which hereby is
acknowledged,
the parties hereto agree as follows:
1. Amendments to
the Agreement.
(a) Release of Cape Composites. Cape Composites is no longer an
active corporation and has no operations or assets. Cape Composites
shall
henceforth no longer be a party to, or have any liabilities,
obligations
or
duties under, the Agreement or any of the other Loan Documents.
All
references in the Agreement and the other Loan Documents to
Cape
Composites shall henceforth be disregarded. To the extent it has
not
already done so, Bank will release any and all security interests
and/or
liens which it may have in or on any property or assets of Cape
Composites.
(b) The applicable definitions set forth in Section 1.01 of the
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Credit Agreement (Certain Defined Terms) are hereby deleted and
replaced
with
the following or added as new definitions, as the case may be:
Appeal Bond Letter of Credit - That certain Standby Letter of
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Credit in the face amount of up to $40,000,000.00 issued or to
be
issued by the Bank, with the Borrowers as the applicants and
Travelers Casualty and Surety Company of America, for itself and
on
behalf of
its parents, affiliates and subsidiaries as the
beneficiaries, such letter of credit issued to secure the payment
of
an appeal bond obtained by the Parent with respect to a
judgment
rendered against Zoltek Corporation in Structural Polymer
Group,
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Ltd. and Structural Polymer Systems, Ltd. v. Zoltek Corporation
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pending in the United States District Court for the Eastern
District
of Missouri(the "Lawsuit").
Appeal Bond Letter of Credit Reimbursement Agreement - That
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certain Standby Letter of Credit Application and Agreement for
Southwest Bank dated as of December 14, 2006,
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by and among Bank and the Borrowers with respect to the Appeal
Bond
Letter of Credit.
Borrowing Base - At any date of determination, an amount equal
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to: (i) eighty percent (80%) of the face amount of Eligible
Accounts
outstanding at such date; plus (ii) the Eligible Inventory
Advance
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Amount; minus (iii) the aggregate undrawn face amount of all
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outstanding letters of credit issued by the Bank for the account
of
any one or more of the Borrowers (excluding the Appeal Bond
Letter
of Credit). In no event, however, shall the amount advanced by
the
Bank pursuant to the Borrowing Base exceed Six Million Seven
Hundred
Nineteen Thousand Seven Hundred Seventy and 39/100 Dollars
($6,719,770.39).
Loan Documents - This Credit Agreement, the Notes, the Security
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Agreement, the Appeal Bond Letter of Credit Reimbursement
Agreement
and any other agreements or documents now or hereafter
evidencing,
securing or otherwise relating to any of the transactions
described
in or contemplated by this Agreement (including, without
limitation,
any deeds of trust or leasehold deeds of trust executed by any
Borrower in favor of the Bank), as the same may be amended,
renewed,
replaced, consolidated or otherwise modified from time to time.
(c) Section 3.02 of the Agreement is hereby deleted in its
entirety
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and replaced by the
following:
3.02 TERM OF REVOLVING CREDIT FACILITY. Subject to the Bank's
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right to cease making Loans to the Borrowers at any time upon
or
after the occurrence and during the continuation of any Default
or
Event of Default, the Borrowers shall be entitled to request
advances under the Revolving Credit Note for the period from
the
date hereof to and including January 1, 2008 (the "Revolving
Loan
Maturity Date"). In no event may the Borrowers terminate this
Agreement until the Borrowers have repaid all Loans and
otherwise
paid and performed their Obligations hereunder. All indemnities
given by the Borrowers to the Bank under any of the Loan
Documents
shall survive the repayment of the Loans and the termination of
this
Agreement.
(d) Section 3.03(a) of the Agreement is hereby deleted in its
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entirety and replaced by the following:
(a) Principal payable on account of the Revolving Credit
Loan shall be payable by the Borrowers to the Bank immediately
upon the earliest to occur of (i) the date or dates for payment
as specified in the Revolving Credit Note, (ii) the occurrence
of any event described in Section 3.04 hereof which requires
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the payment of principal on the Loans (but only after the Term
Loan has been repaid in full), (iii) the occurrence and
continuance of an Event of Default in consequence of which the
Bank elects to accelerate the maturity and payment of any of
the Obligations, (iv) termination of this Agreement for any
reason, or (v) the Revolving Loan Maturity Date; provided,
however, that if the principal balance of Revolving Credit Loan
outstanding at any time shall exceed the Borrowing Base at such
time, the Borrowers shall, on demand, repay the Revolving
Credit Loan in an amount sufficient to reduce the aggregate
unpaid principal amount of such Revolving Credit Loans by an
amount equal to such excess;
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(e) Section 3 of the Credit Agreement is hereby amended by
adding
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the
following as a new Section 3.12:
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3.12. APPEAL BOND LETTER OF CREDIT FEES. As additional
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consideration for Bank's issuing the Appeal Bond Letter of
Credit
for Borrowers' account, Borrowers agree to pay the Bank all fees
and
charges set forth in the Appeal Bond Letter of Credit
Reimbursement
Agreement.
2.
Conditions To Execution Of This Amendment. Any provision
contained
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herein or in the Agreement to the contrary notwithstanding, Bank's
execution
of this Amendment is subject to the following:
(a) Bank shall have first received a certified copy of the
resolutions of each Borrower, duly adopted and authorizing the
execution,
delivery and performance of this Amendment in accordance with its
terms;
(b) Except for any breach (if any) of any such representations
or
warranties resulting from the Lawsuit or any judgment rendered
in
connection therewith, all representations and warranties made in
the
Agreement and herein shall be true and correct in all material
respects
as
of the date hereof and, by execution of this Amendment, each
Borrower
hereby certifies same
to Bank;
(c) Except for any such default (if any) resulting from the
Lawsuit
or
any judgment rendered in connection
