Exhibit 10.6
WAIVER, SIXTH AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
AND REAFFIRMATION OF GUARANTIES
THIS
WAIVER, SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND REAFFIRMATION OF GUARANTIES, dated as of May 7, 2009 (this
“ Sixth Amendment ”), is entered into by and
between Quixote Corporation, a Delaware corporation (the “
Borrower ”), whose address is 35 East Wacker Drive,
Chicago, Illinois 60601, and Quixote Transportation Safety, Inc.,
Transafe Corporation, Energy Absorption Systems, Inc., Energy
Absorption Systems (AL) LLC, Surface Systems, Inc., Nu-Metrics,
Inc., and Highway Information Systems, Inc., as Subsidiary
Guarantors, (each being referred to herein as a “
Guarantor ” and collectively referred to herein as the
“ Guarantors ”), and Bank of America, N.A., a
national banking association (the “ Lender ”),
whose address is 135 South LaSalle Street, Chicago, Illinois
60603.
RECITALS:
A.
Borrower and Lender entered into that certain Amended and Restated
Credit Agreement, dated as of April 20, 2005 (the “
Original Credit Agreement ”), as amended by that
certain First Amendment to Amended and Restated Credit Agreement
and Reaffirmation of Guaranties dated as of December 1, 2006, (the
“ First Amendment ”), that certain Second
Amendment to Amended and Restated Credit Agreement and
Reaffirmation of Guaranties dated as of March 15, 2007 (the “
Second Amendment ”), that certain Third Amendment to
Amended and Restated Credit Agreement and Reaffirmation of
Guaranties dated as of November 7, 2007 (the “ Third
Amendment ”), that certain Fourth Amendment to Amended
and Restated Credit Agreement and Reaffirmation of Guaranties dated
as of November 7, 2008 (the “ Fourth Amendment
”) and that certain Waiver, Fifth Amendment to Amended and
Restated Credit Agreement and Reaffirmation of Guaranties dated as
of February 9, 2009 (the “ Fifth Amendment ”,
and together with the Original Credit Agreement, the First
Amendment, the Second Amendment, the Third Amendment and the Fourth
Amendment, the “ Credit Agreement ”) pursuant to
which Credit Agreement Lender has made a Revolving Loan to Borrower
evidenced by that certain Second Amended and Restated Revolving
Loan Note, dated as of February 9, 2009, in the maximum
principal amount of $15,000,000, executed by Borrower and made
payable to the order of Lender (the “ Revolving Note
”).
B.
In connection with the Original Credit Agreement, the Guarantors
executed and delivered to Lender that certain Guaranty dated as of
May 16, 2003 in favor of Lender, as amended by that Reaffirmation
and Amendment of Subsidiary Guaranty dated as of April 20, 2005
(the “ Guaranty ”).
C.
Borrower has failed to comply with Section 7.4(D) and 7.4(E) of the
Credit Agreement for the period ending March 31, 2009 (the
“ Existing Defaults ”). Borrower has requested
that Lender waive the Existing Defaults and Lender has agreed to
waive the Existing Defaults on the terms and conditions set forth
herein.
D.
Borrower and the Guarantors have also requested, and Lender has
agreed to, the modification of certain terms contained in the
Credit Agreement as set forth herein, all pursuant to the terms and
conditions hereinafter set forth herein.
NOW
THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Borrower, the Guarantors and Lender hereby
agree as follows:
AGREEMENTS:
1.
RECITALS . The foregoing Recitals are hereby made a part of
this Sixth Amendment.
2.
DEFINITIONS . Capitalized words and phrases used herein
without definition shall have the respective meanings ascribed
thereto in the Credit Agreement.
3.
WAIVER . Subject to the terms hereof, Lender, hereby waives
the Existing Defaults. Lender and Borrower hereby agree that the
foregoing waiver of the Existing Defaults shall in no way be deemed
to be a waiver or forbearance of any other default, any Unmatured
Default or any other Event of Default, whether now existing or
hereafter arising, under the Credit Agreement (whether occurring
before or after giving effect to this Sixth Amendment) or any other
Loan Document.
4.
AMENDMENTS TO THE CREDIT AGREEMENT .
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4.1
Section 1.1 of the Credit Agreement.
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(a)
Section 1.1 of the Credit Agreement is hereby amended by adding the
following definitions where alphabetically appropriate:
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“ Borrowing Base
Amount ” shall mean:
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(a) an
amount equal to 80% of the net amount (after deduction of such
reserves and allowances as the Lender deems proper and necessary)
of the Eligible Accounts; plus
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(b) the
lesser of (i) an amount equal to 50% of the lower of cost or market
value (after deduction of such reserves and allowances as the
Lender deems proper and necessary) of the Eligible Inventory, or
(ii) Ten Million Dollars and 00/100 ($10,000,000);
plus
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(c) 80%
of the orderly liquidation value of machinery and equipment of
Borrower and its Subsidiaries, plus 75% of the fair market
value (as evidenced by an appraisal acceptable to Lender) of the
real property of Borrower and Subsidiaries as pledged hereunder
less the Curtailment Amount.
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“ Curtailment Amount
” shall mean an amount equal to Three Million Five Hundred
Twenty Five Thousand ($3,525,000) plus $75,000 on April 30,
2009 and on the 30 th day of each month
thereafter.
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“ Eligible Accounts
” shall mean those Accounts of the Borrower or any Subsidiary
which meet the following requirements:
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(a) is
genuine in all respects and have arisen in the ordinary course of
the Borrower’s business from (i) the performance of services
by the Borrower or the applicable Subsidiary, which services have
been fully performed, acknowledged and accepted by the Account
Debtor or (ii) the sale, license, assignment or lease of Goods by
the Borrower, including C.O.D. sales, which Goods have been
completed in accordance with the Account Debtor's specifications
(if any) and delivered to and accepted by the Account Debtor, and
the Borrower has possession of, or has delivered to the Lender at
the Lender's request, shipping and delivery receipts evidencing
such shipment;
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(b) is
subject to a perfected, first priority Lien in favor of the Lender
and is not subject to any other assignment, claim or
Lien;
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(c) is
the valid, legally enforceable and unconditional obligation of the
Account Debtor with respect thereto, and is not subject to the
fulfillment of any condition whatsoever or any counterclaim, credit
(except as provided in subsection (h) of this definition), trade or
volume discount, allowance, discount, rebate or adjustment by the
Account Debtor with respect thereto, or to any claim by such
Account Debtor denying liability thereunder in whole or in part and
the Account Debtor has not refused to accept and/or has not
returned or offered to return any of the Goods or services which
are the subject of such Account;
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(d) the
Account Debtor with respect thereto is a resident or citizen of,
and is located within, the United States, unless the sale of goods
or services giving rise to such Account is on letter of credit,
banker’s acceptance or other credit support terms reasonably
satisfactory to the Lender;
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(e) it
is not an Account arising from a “sale on approval”,
“sale or return”, “consignment”,
“guaranteed sale” or “bill and hold”, or
are subject to any other repurchase or return agreement;
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(f) it
is not an Account with respect to which possession and/or control
of the goods sold giving rise thereto is held, maintained or
retained by the Borrower or any Subsidiary (or by any agent or
custodian of the Borrower or any Subsidiary) for the account of, or
subject to, further and/or future direction from the Account Debtor
with respect thereto;
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(g) it
has not arisen out of contracts with the United States or any
department, agency or instrumentality thereof, unless the Borrower
has assigned its right to payment of such Account to the Lender
pursuant to the Assignment of Claims Act of 1940, and evidence
(satisfactory to the Lender) of such assignment has been delivered
to the Lender;
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(h) if
the Borrower maintains a credit limit for an Account Debtor, the
aggregate dollar amount of Accounts due from such Account Debtor;
including such Account, does not exceed such credit
limit;
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(i) if
the Account is evidence by chattel paper or an instrument, the
originals of such chattel paper or instrument shall have been
endorsed and/or assigned and delivered to the bank or, in the case
of electronic chattel paper, shall be in the control of the Lender,
in each case in a manner satisfactory to the Lender;
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(j) such
Account is evidenced by an invoice delivered to the related Account
Debtor and is not more than (i) sixty 60 days (except in the case
of Energy Absorptions Systems, Inc., ninety (90) days), past the
due date thereof; or (ii) ninety (90) days past the original
invoice date thereof, in each case according to the original terms
of sale;
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(k) it
is not an Account with respect to an Account Debtor that is located
in any jurisdiction which has adopted a statute or other
requirement with respect to which any Person that obtains business
from within such jurisdiction must file a notice of business
activities report or make any other required filings in a timely
manner in order to enforce its claims in such jurisdiction’s
courts unless (i) such notice of business activities report has
been duly and timely filed or the borrower or the applicable
Subsidiary is exempt from filing such report and has provided the
bank with satisfactory evidence of such exemption or (ii) the
failure to make such filings may be cured retroactively by the
Borrower or the applicable Subsidiary for a nominal fee;
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(l) the
Account Debtor with respect thereto is not the Borrower or an
Affiliate of the Borrower;
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(m) such
Account does not arise out of a contract or order which, by its
terms, forbids or makes void or unenforceable the assignment
thereof by the Borrower or any Subsidiary to the Lender and is not
unassignable to the Lender for any other reason;
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(n) there
is no bankruptcy, insolvency or liquidation proceeding pending by
or against the Account Debtor with respect thereto, nor has the
Account Debtor suspended business, made a general assignment for
the benefit of creditors or failed to pay its debts generally as
they come due, and/or no condition or event has occurred having a
material adverse effect on the Account Debtor which would require
the Accounts of such Account Debtor to be deemed uncollectible in
accordance with GAAP;
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(o) it
is not owed by an Account Debtor with respect to which twenty five
percent (25%) or more of the aggregate amount of outstanding
Accounts owed at such time by such Account Debtor is classified as
ineligible under clause (j) of this definition;
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(p) if
the aggregate amount of all Accounts owed by the Account Debtor
thereon exceeds twenty five percent (25%) of the aggregate amount
of all Accounts at such time, then all Accounts owed by such
Account Debtor in excess of such amount shall be deemed ineligible;
and
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(q) it
does not violate the negative covenants and does satisfy the
affirmative covenants of the Borrower contained in this Agreement,
and it is otherwise not unacceptable to the Lender for any other
reason.
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An Account which is at any time
an Eligible Account, but which subsequently fails to meet any of
the foregoing requirements, shall forthwith cease to be an Eligible
Account. Further, with respect to any Account, if the Lender at any
time hereafter determines in its discretion that the prospect of
payment or performance by the Account Debtor with respect thereto
is materially impaired for any reason whatsoever, such Account
shall cease to be an Eligible Account after notice of such
determination is given to the Borrower.
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“ Eligible Inventory
” shall mean all Inventory of the Borrower or any Subsidiary
which meets each of the following requirements:
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(a) it
is subject to a perfected, first priority Lien in favor of the
Lender and is not subject to any other assignment, claim or
Lien;
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(b) it
is salable and not slow-moving, obsolete or discontinued, as
determined in the sole and absolute discretion of the
Lender;
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(c) it
is in th
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