Execution Copy
EIGHTH AMENDMENT AND WAIVER TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
EIGHTH
AMENDMENT AND WAIVER, dated as of July 1, 2008, to the Credit
Agreement referred to below (this “ Amendment
”), by and among BUTLER SERVICE GROUP, INC., a New Jersey
corporation, as Borrower (“ Borrower ”), the
other Credit Parties signatory hereto, GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, for itself, as Lender, and as
Agent for Lenders (in such capacity, “ Agent ”)
and the other Lenders signatory hereto.
W I T N E S S
E T H :
WHEREAS,
Borrower, the other Credit Parties signatory thereto, Agent, and
Lenders signatory thereto are parties to that certain Third Amended
and Restated Credit Agreement, dated as of August 29, 2007, as
amended as of February 1, 2008, as further amended as of February
28, 2008, as further amended as of April 14, 2008, as further
amended as of April 28, 2008, as further amended as of May 12,
2008, as further amended as of May 30, 2008, and as further amended
as of June 13, 2008 (including all annexes, exhibits and schedules
thereto, and as amended, supplemented or otherwise modified from
time to time prior to the date hereof, the “ Credit
Agreement ”); and
WHEREAS,
Agent and Lenders have agreed to amend the Credit Agreement in the
manner and on the terms and conditions provided for
herein.
NOW
THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, the parties hereby agree as
follows:
1.
Definitions . Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in Annex A of the
Credit Agreement.
2.
Waiver of Existing Defaults and Events of Default . All
Defaults and Events of Default in existence prior to the Eighth
Amendment Effective Date are hereby waived by the Agent and the
Lenders as of the Effective Date; provided , that
Agent and Lenders may exercise all of their respective rights and
remedies as may be available under the Credit Agreement and under
applicable law, upon or after the occurrence of any other Default
or Event of Default under the Credit Agreement or any Loan Document
from and after the Effective Date.
3.
Amendments to the Credit Agreement .
(a)
Section 1.3(b)(iii) of the Credit Agreement is hereby
amended as of the Eighth Amending Effective Date (as defined below)
by deleting “ 6.14(f) , or 6.14(g) .”
where it appears in the last sentence of such Section
1.3(b)(iii) .
(b)
Section 1.5(a) of the Credit Agreement is hereby amended and
restated as of the Eighth Amendment Effective Date by deleting such
Section 1.5(a) in its entirety and substituting in lieu
thereof the following new Section 1.5(a) :
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“(a)
As of the Eighth Amendment Effective Date, Borrower shall pay
interest to Agent, for the ratable benefit of Lenders in accordance
with the various Loans being made by each Lender, in arrears on
each applicable Interest Payment Date, at the following rates: (i)
for the period commencing on July 1, 2008 and ending on September
30, 2008, (A) with respect to Revolving Credit Advances, as
determined by Agent, the Index Rate plus
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5.5% per
annum, or, at the election of Borrower, the applicable LIBOR Rate
plus 7.0% per annum, or, at the election of Borrower, the
applicable Commercial Paper Rate plus 7.0% per annum, based
on the aggregate Revolving Credit Advances outstanding from time to
time and (B) with respect to the Swing Line Loan, as determined by
Agent, the Index Rate plus 5.5% per annum, and (ii) for the
period commencing on October 1, 2008 and ending on the Commitment
Termination Date, (A) with respect to Revolving Credit Advances, as
determined by Agent, the Index Rate plus 7.5% per annum, or,
at the election of Borrower, the applicable LIBOR Rate plus
9.0% per annum, or, at the election of Borrower, the applicable
Commercial Paper Rate plus 9.0% per annum, based on the
aggregate Revolving Credit Advances outstanding from time to time
and (B) with respect to the Swing Line Loan, as determined by
Agent, the Index Rate plus 7.5% per annum.”
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(c)
Section 1.6(r) of the Credit Agreement is hereby amended and
restated as of the Eighth Amendment Effective Date by deleting such
Section 1.6(r) in its entirety and substituting in lieu
thereof the following new Section 1.6(r) :
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“(r)(i) to the extent that such Account (other than the
Referenced Accounts), together with all other Accounts owing from
such Account Debtor and its Affiliates as of any date of
determination, exceed 10% of all Eligible Accounts, and (ii) to the
extent that any Account that constitutes a Referenced Account
together with all other Referenced Accounts owing from such Account
Debtor and its Affiliates as of any date of determination, exceed
15% of all Eligible Accounts;”
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(d)
Section 1.9 of the Credit Agreement is hereby amended as of
the Eighth Amendment Effective Date by adding new clauses
(d) and (e) respectively, following clause (c)
therein as follows:
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“(d)
Borrower agrees to pay to Agent, for the ratable benefit of
Revolving Lenders, a non-refundable fee in an amount equal to
$10,000 for any day which the Borrowing Availability for such day
is less than (i) during the period commencing on July 18, 2008 and
ending on September 30, 2008, $2,000,000, (ii) during the period
commencing on October 1, 2008 and ending on December 31, 2008,
$4,000,000 and (iii) during the period commencing on January 1,
2009 and ending on the Commitment Termination Date, $5,000,000, and
an additional fee in the amount equal to $2,500 for each
consecutive day thereafter that the Borrowing Availability remains
less than the applicable amount for such day identified above;
provided , that for purposes of determining the
amount of the minimum Borrowing Availability pursuant to this
clause (d) , such determination shall be made without regard
to clause (ii) of the proviso set forth in clause (d)
of Annex G .
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(e) Borrower
agrees to pay to Agent, for the ratable benefit of the Revolving
Lenders, a non-refundable fee in an amount equal to $25,000 for
each day during which the outstanding principal amount of the Loans
exceeds the Borrowing Base; provided , however , that
the payment of such fee to Agent shall not constitute, or otherwise
shall be deemed to constitute, a waiver of any Default or Event of
Default which may exist as a result of such excess, or to affect,
limit or impair any rights, powers or remedies of Agent or any
Lender or any Obligations of Borrower under or in respect of the
Credit Agreement or any other Loan Document.”
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(e)
Section 5 of the Credit Agreement is amended as of the
Eighth Amendment Effective Date by adding new Section 5.11
immediately following Section 5.10 thereof as
follows:
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“5.11
Actions in Furtherance of Increased Liquidity . Borrower and
the other Credit Parties, with the assistance of the Investment
Banker, shall endeavor to effect a transaction or take other steps
to increase liquidity to the extent necessary to avoid a breach of
Section 8.1(n) and shall strictly and timely comply with
each and every one of the following additional covenants regarding
such process, the failure to do so constituting an immediate Event
of Default as of such date:
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(a) On
or before July 15, 2008, the Credit Parties shall have retained the
Investment Banker;
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(b) From
and after the date hereof until the Liquidity Test Date, management
of the Credit Parties and the Investment Banker shall conduct a
weekly (or more often as may be reasonably requested by Agent at
any time) telephonic meeting to be attended by the respective
management representatives of the Credit Parties, the Lenders and
their respective representatives, and the Investment Banker, at
which meeting the Credit Parties and the Investment Banker shall
present an update on the process (including an assessment of any
proposed steps to increase Liquidity); and
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(c) From
and after the date hereof, the Credit Parties irrevocably
authorize, and shall cause the Investment Banker to (i) disclose
fully and promptly to Agent and the Lenders and their respective
representatives all material developments in connection with the
efforts of the Credit Parties and the Investment Banker described
in this Section 5.11 , and (ii) after consultations with the
Borrower, respond to the inquiries of Agent and the Lenders and
their respective representatives concerning any and all matters
relating to the steps proposed to be taken to increase
liquidity;
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provided , however , that no disclosure shall be
required under clauses (ii) or (iii) hereof which
would be inconsistent with a reasonable, good faith determination
by the officers of the Borrower or any other Credit Party that such
disclosure would violate the fiduciary duties of the officers of
the Borrower or such other Credit Party.
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(f)
Section 6.8(b) and (c) of the Credit Agreement is
amended and restated as of the Eighth Amendment Effective Date by
deleting such Section 6.8(b) and (c) in its entirety and
substituting in lieu thereof the following new Section 6.8(b)
and (c) :
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“(b)
the sale, transfer, conveyance or other disposition by a Credit
Party of Equipment, Fixtures or Real Estate that are obsolete or no
longer used or useful in such Credit Party’s business and
having a sales price not exceeding $50,000 in any single
transaction or $100,000 in the aggregate in any Fiscal Year, and
(c) the sale of the Montvale Property, provided that
any proceeds thereof are applied as required by Section
1.3(b)(ii) of the Second Lien Credit
Agreement.”
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(g)
Section 6.14 of the Credit Agreement is hereby amended as of
the Eighth Amendment Effective Date by (A) inserting
“and” immediately before clause (e) thereof, (B)
deleting the comma at the end of clause (e) thereof and
replacing it with a period, and (C) deleting clauses (g) and
(f) in their entirety.
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(h)
Section 8.1 of the Credit Agreement is hereby amended as of
the Eighth Amendment Effective date by adding new clause (n)
immediately following clause (m) thereof as
follows:
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“(n)
Borrower fails to have (i) Funded Debt on January 2, 2009 of less
than $44,872,006.67, (ii) an average Borrowing Availability over
the four weekly measurement periods immediately preceding December
31, 2008 of at least $5,000,000, (iii) a Leverage Ratio for
Holdings and its Subsidiaries on a consolidated basis (using Funded
Debt as of January 2, 2009 and EBITDA as of the fiscal month ending
nearest December 31, 2008) of less than 3.50:1.00, or (iv)
delivered to Agent (A) the financial information necessary to
determine EBITDA as of December 31, 2008, and (B) a Compliance
Certificate signed by a responsible officer of the Borrower in a
form reasonably satisfactory to the Agent demonstrating that no
Event of Default exists under this clause (n)
.”
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(i)
Section 8.1(b) of the Credit Agreement is hereby amended and
restated as of the Eighth Amendment Effective Date by deleting such
Section 8.1(b) in its entirety and substituting in lieu
thereof the following new Section 8.1(b) :
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“Any
Credit Party fails or neglects to perform, keep or observe any of
the provisions of Sections 1.4, 1.8, 5.4(a), 5.11 , or
6 , or any of the provisions set forth in Annexes C or
G , respectively; provided , that it shall not
constitute a Default or Event of Default hereunder if the Credit
Parties fail to comply with (i) clause (d)(i) of Annex
G during the period commencing on July 1, 2008 and ending on
July 17, 2008 (it being understood and agreed that any failure to
comply with clause (d)(i) of Annex G shall result in
an Event of Default if such failure to comply is not cured or
waived on or prior to July 18, 2008) or (ii) clause (d)(ii)
of Annex G during the period commencing on October 1, 2008
and ending on October 15, 2008 (it being understood and agreed that
any failure to comply with clause (d)(ii) of Annex G
shall result in an Event of Default if such failure to comply is
not cured or waived on or prior to October 16,
2008).”
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(j)
Annex A of the Credit Agreement is hereby amended as of the
Eighth Amendment Effective Date by:
(i) amending
the definition of “ Borrowing Availability ” by
deleting the word “Account” in clause (i) of
such definition and substituting in lieu thereof the word
“Amount”.
(ii) amending
the definition of “ Borrowing Base ” by deleting
the period where it appears at the end of the second to last line
of such definition and substituting in lieu thereof a
comma.
(iii) amending
the definition of “ Commitment Termination Date
” by deleting the language “July 1, 2008” in
clause (a) of such definition and substituting in lieu
thereof the language “August 1, 2009”.
(iv) amending
the definition of “ EBITDA ” by removing the
“and” where it appears immediately before clause
(v) thereof and substituting in lieu thereof a comma, and
deleting the period where it appears at the end of clause
(v) and adding in lieu thereof, “(vi) charges recorded in
the first Fiscal Quarter of 2008 (not to exceed $2,055,000 in the
aggregate) related to the one time effect of (A) recording bad debt
expense for certain accounts receivables from American Airlines and
Vought and (B) recording the sale of the Montvale Property, and
(vii) actual costs and expenses
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incurred by
the Investment Banker and any restructuring advisor hired by
Borrower along with charges related to implementing any plans or
recommendations thereof, in each case, in amounts reasonably
acceptable to Agent.”
(v) amending
the definition of “ Funded Debt ” by deleting
the proviso where it appears at the end of such definition and
substituting in lieu thereof, the following new proviso:
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“
provided , that solely for the purposes of
calculating the Leverage Ratio for the periods ending on or before
December 31, 2008 (other than with respect to the Leverage Ratio
calculation required to determine compliance with Section
8.1(n) ), there shall be added to Funded Debt (i) the net
proceeds from any sale, transfer, conveyance, assignment or other
disposition of any property other than as permitted by Section
6.8(a) or (b) and (ii) the net proceeds from any sale or
offering of Holdings Stock after the Eighth Amendment Effective
Date.”
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(vi) amending
and restating the definition of “ Daily Reserve
” in its entirety by deleting such definition in its entirety
and substituting in lieu thereof the following new
definition:
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“‘ Daily Reserve ’ means with respect
to the Borrowing Base of Borrower, a reserve against the Borrowing
Availability of Borrower in an amount, which shall accrue Monday
through Friday of each calendar week in daily equal installments of
(i) for the period commencing on the Eighth Amendment Effective
Date and ending on July 31, 2008, $5,000, (ii) for the period
commencing on August 1, 2008 and ending on August 31, 2008,
$30,000, (iii) for the period commencing on September 1, 2008 and
ending on September 30, 2008, $40,000, (iv) for the period
commencing on October 1, 2008 and ending on October 31, 2008,
$20,000, and (v) for the period commencing on November 1, 2008 and
ending on the date in which the cumulative aggregate Daily Reserves
reach $4,000,000 (the “ Daily Reserve Cap ”),
$50,000; provided , that the Daily Reserves shall be
increased by an amount equal to fifty percent (50%) of the amount
by which the face amount of Letters of Credit are reduced pursuant
to the terms thereof (or otherwise cancelled) on terms and
conditions satisfactory to Agent, but in no event shall the
aggregate amount of Daily Reserves exceed the Daily Reserve Cap.
Commencing on January 1, 2009, Agent may, in its sole discretion,
release an amount up to $2,000,000 of such Daily Reserves to be
used for working capital needs of Borrower on an “as
needed” basis subject to conditions and criteria satisfactory
to Agent; provided , that Agent shall retain the
right to reinstitute the amount of such Daily Reserves until it
reaches the Daily Reserve Cap.”
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(vii) amending
and restating clause (a) of the definition of “
Reserves ” in its entirety and substituting in lieu
thereof the following new clause (a) :
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“(a) a
reserve for the fac
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