Exhibit 10.1
WAIVER AND FIFTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS WAIVER AND FIFTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT (this “Waiver and
Amendment”), dated as of February 12, 2007 (the
“Effective Date”), is entered into by and among
Channell Commercial Corporation, a Delaware corporation
(“Domestic Borrower”), Channell Commercial Canada Inc.,
an Ontario corporation (“Canadian Borrower”), Channell
Limited, a limited liability company incorporated under the laws of
England and Wales (“CLU”), Channell Commercial Europe
Limited, a limited liability company incorporated under the laws of
England and Wales (“CCEL” and, together with CLU,
“UK Borrowers”, and, together with Domestic Borrower,
Canadian Borrower and CLU, “Borrowers”), Bank of
America, N.A., as assignee of Banc of America Leasing and Capital,
LLC, successor-in-interest to Fleet Capital Corporation, as
Administrative Agent under the Loan Agreement referred to below (in
such capacity, the “Administrative Agent”), BABC Global
Finance Inc., as assignee of Fleet Capital Global Finance, Inc., as
assignee of Fleet Capital Canada Corporation, as Canadian Agent
under the Loan Agreement referred to below (in such capacity, the
“Canadian Agent”), Bank of America, N.A., as
successor-in-interest to Fleet National Bank, London U.K. Branch,
as UK Agent under the Loan Agreement referred to below (in such
capacity, the “UK Agent”), and the Lenders party to the
Loan Agreement referred to below, with reference to the following
facts:
RECITALS
A.
The Borrowers are currently in default under (i) Section 10.1.3 of
the Loan and Security Agreement dated as of September 25, 2002 (as
heretofore amended, the “Loan Agreement”), with the
Administrative Agent, the Canadian Agent, the UK Agent and the
Lenders party thereto, due to their breach of Section 8.2.18 of the
Loan Agreement by their failure to maintain an Aggregate
Availability of at least $1,500,000, and due to the Domestic
Borrower’s breach of Section 3.3.2(a) of the Loan Agreement
by its failure to have prepaid the outstanding principal amount of
the Domestic Revolving Credit Loans in the amount of the excess of
the Domestic Revolving Credit Exposure of all the Domestic Lenders
over the Domestic Borrowing Base (minus the outstanding principal
amount of the Domestic Term Loan and the Reserves applicable to
Domestic Revolving Credit Loans) and (ii) Section 10.1.4 due to
their breach of Section 8.1.7 by their failure to deliver the
Projections of the Domestic Borrower and its Subsidiaries for
fiscal year 2007 (collectively, the “Existing Events of
Default”).
B.
The Borrowers have requested that the Lenders waive the Existing
Events of Default and amend the Loan Agreement in order to
(i) decrease the Aggregate Availability required pursuant to
Section 8.2.18 of the Loan Agreement from $1,500,000 to $500,000,
during the period from the Effective Date through and including
April 30, 2007; (ii) extend the Term of the Loan Agreement
from March 31, 2007 to June 30, 2007; (iii) decrease the
amount of Reserves established under the Loan Agreement from
$600,000 to $300,000 during the period from the Effective Date
through and including
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April 30, 2007; (iv) increase
the maximum amount of the UK Borrowing Base to $600,000; and (v)
make certain other modifications set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1.
Defined Terms . Any and all initially capitalized
terms used in this Waiver and Amendment without definition shall
have the respective meanings specified in the Loan
Agreement.
2.
Waiver of Existing Events of Default . The Lenders
hereby waive the Existing Events of Default. Such waiver by
the Lenders shall constitute a waiver of only the Existing Events
of Default and shall not constitute a waiver of any future breach
of any provision of the Loan Agreement. The Lenders hereby
agree and acknowledge that the Default Rate shall not apply to any
period prior to the Effective Date and hereby waive any right to
impose or charge the Default Rate on any Obligations as a result of
the Existing Events of Default.
3.
Agreement Re Projections . The Domestic Borrower
agrees that it shall deliver the Projections of the Domestic
Borrower and its Subsidiaries for fiscal year 2007 required under
Section 8.1.7 not later than February 28, 2007.
4.
Temporary Reduction of Reserve . Without limiting its
right to impose additional discretionary Reserves from time to time
pursuant to Section 1.1.5 of the Loan Agreement, on the Effective
Date, the Reserves heretofore established by the Administrative
Agent under the Loan Agreement shall be reduced from $600,000 to
$300,000 until April 30, 2007, after which date they shall increase
again to $600,000.
5.
Section 1.1.1 . Section 1.1.1 of the Loan Agreement is
hereby amended to read in full as follows:
“ Domestic Revolving Credit
Loans . Each Lender having a Domestic Revolving Credit
Commitment (each, a “Domestic Lender”) agrees,
severally and not jointly, for so long as no Default or Event of
Default exists, to make loans denominated in U.S. Dollars (such
loans relative to such Lender, its “Domestic Revolving Credit
Loans”) to Domestic Borrower from time to time during the
period from the date hereof to but not including the last day of
the Term, as requested by Borrower Representative in the manner set
forth in Section 3.1.1(a) hereof, provided, that no Domestic
Revolving Credit Loan shall be made if, after giving effect to the
making of such Loan and the simultaneous application of the
proceeds thereof:
(a) the principal amount
of the Domestic Revolving Credit Exposure of such Lender (which,
for purposes of clarification, includes the Domestic LC Amount and
outstanding Domestic LC Obligations, as further set forth in the
definition of “Domestic Revolving Credit Exposure”)
would exceed such Lender’s Domestic Revolving Credit
Commitment minus such Lender’s Domestic Revolving Loan
Percentage of Reserves, if any;
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(b) the aggregate amount
of the Domestic Revolving Credit Exposure of all the Domestic
Lenders plus the UK Revolving Credit Exposure of the UK
Lender and plus the Canadian Revolving Credit Exposure of
the Canadian Lender would exceed the Aggregate Borrowing Base then
in effect (minus Reserves, if any); or
(c) the aggregate amount
of the Domestic Revolving Credit Exposure of all the Domestic
Lenders (which, for purposes of clarification, includes the
Domestic LC Amount and outstanding Domestic LC Obligations, as
further set forth in the definition of “Domestic Revolving
Credit Exposure”) would exceed the Revolving Credit Maximum
Amount minus the Dollar Equivalent of the aggregate principal
amount of the outstanding Canadian Revolving Credit Loans minus the
Dollar Equivalent of the aggregate principal amount of the
outstanding UK Revolving Credit Loans, minus the Dollar Equivalent
of the UK LC Amount minus Reserves, if any.
Domestic Revolving Credit Loans may
be borrowed as Domestic Base Rate Loans or Domestic LIBOR
Loans. Amounts borrowed under this Section 1.1.1 may be
repaid in whole or in part and, up to but excluding the last day of
the Term, reborrowed, all in accordance with the terms and
conditions hereof. The Domestic Revolving Credit Loans shall
be further evidenced by, and repayable in accordance with the terms
of, the applicable Revolving Notes and shall be secured by all of
the Domestic Collateral.”
6.
Section 1.1.2(a) . Section 1.1.2(a) of the Loan
Agreement is hereby amended to read in full as follows:
“(a) Subject to the terms and
conditions hereof, the Canadian Lender agrees, for so long as no
Default or Event of Default exists, to make loans to Canadian
Borrower denominated in Canadian Dollars (each such loan or
extension of credit, a “ Canadian Revolving Credit
Loan ”) from time to time during the period from the date
hereof to but not including the last day of the Term, as requested
by the Borrower Representative in the manner set forth in
Section 3.1.1(b) hereof; provided that no Canadian
Revolving Credit Loan shall be made if, after giving effect to the
making of such Loan and the simultaneous application of the
proceeds thereof, (i) the aggregate amount of the Canadian
Revolving Credit Exposure of the Canadian Lender would exceed the
Canadian Borrowing Base then in effect minus Reserves
applicable to Canadian Revolving Credit Loans, if any, or
(ii) the aggregate amount of the Domestic Revolving Credit
Exposure of all the Lenders would exceed the Revolving Credit
Maximum Amount minus the Dollar Equivalent of the aggregate
principal amount of the outstanding Canadian Revolving Credit Loans
minus the Dollar Equivalent of the aggregate principal
amount of the outstanding UK Revolving Credit Loans minus
the Dollar Equivalent of the UK LC Amount minus Reserves, if
any. The Canadian Revolving Credit Loans shall be further
evidenced by, and repayable in accordance with the terms of, the
applicable Revolving Note and shall be secured
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by all of the Canadian
Collateral. Amounts borrowed under this Section 1.1.2
may be repaid in whole or in part and, up to but excluding the last
day of the Term, re
