Exhibit 10.1

 

FOURTH AGREEMENT OF AMENDMENT

TO

REVOLVING LOAN AND SECURITY AGREEMENT

AND OTHER DOCUMENTS

 

 

This Fourth Agreement of Amendment to Revolving Loan and Security Agreement And
Other Documents ("Fourth Agreement of Amendment") shall be effective as of July
1, 2013, and is by and among STERLING NATIONAL BANK, having offices at 500
Seventh Avenue, New York, N.Y. 10018-4502 ("Sterling"), and any other entity
becoming a Lender pursuant to the Loan Agreement (defined below) are
collectively referred to as the “Lenders” and individually as a "Lender;" and
Sterling as the Agent for the Lenders as well as acting for the benefit of
Lenders ("Agent"); SPAR Group, Inc., a Delaware corporation ("SGRP"), National
Assembly Services, Inc., a New Jersey corporation, SPAR Group International,
Inc., SPAR Acquisition, Inc., SPAR Trademarks, Inc., and SPAR Marketing Force,
Inc., each a Nevada corporation (together with SGRP, either separately, jointly,
or jointly and severally, "Borrower"); all currently having an address at 333
Westchester Avenue, South Building, Suite 204, White Plains, N.Y. 10604.

 

 

RECITALS

 

A.     Borrower has executed and delivered (i) a certain Secured Revolving Loan
Note dated July 6, 2010 in the original maximum principal sum of Five Million
Dollars ($5,000,000.00), as subsequently amended to Six Million Five Hundred
Thousand Dollars ($6,500,000.00), as amended (the “Note”), payable to the order
of Agent.

 

B.     In connection with the execution and delivery of the Note and to secure
payment and performance of the Note and other obligations of Borrower to Agent,
the Agent and Borrower have executed, among other things, a Revolving Loan and
Security Agreement effective July 6, 2010, as amended ("Loan Agreement").

 

C.     In addition to the foregoing documents, the Borrower and Agent have
executed or delivered other collateral agreements, certificates and instruments
perfecting or otherwise relating to the security interests created. For purposes
of convenience, the Note, Loan Agreement and related collateral agreements,
certificates and instruments (as amended) are collectively referred to as the
"Loan Documents.”

 

D.     Borrower has requested and Agent has agreed to a modification of the loan
evidenced by the Note subject to the Loan Documents.

 

E.     In addition, Agent and Borrower wish to clarify certain of their rights
and duties to one another as set forth in the Loan Documents.

 

NOW, THEREFORE, in consideration of the promises, covenants and understandings
set forth in this Fourth Agreement of Amendment and the benefits to be received
from the performance of such promises, covenants and understandings, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

 

 

AGREEMENTS

 

1.     Agent and Borrower reaffirm, consent and agree to all of the terms and
conditions of the Loan Documents as binding, effective and enforceable according
to their stated terms, except to the extent that such Loan Documents are hereby
expressly modified by this Fourth Agreement of Amendment.

 

2.     In the case of any ambiguity or inconsistency between the Loan Documents
and this Fourth Agreement of Amendment, the language and interpretation of this
Fourth Agreement of Amendment is to be deemed binding and paramount.

 

3.     The Loan Agreement is hereby amended as follows:

 

 

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(i)

The address of the Borrower in Tarrytown, N.Y., in the first paragraph on page
1, in Section 11.5(c) and anywhere else it may appear in the Loan Agreement or
any schedule or exhibit thereto is hereby amended and restated to read as
follows:

 

SPAR Group, Inc., 333 Westchester Avenue, South Building, Suite 204, White
Plains, New York 10604

 

The Borrower does not intend to change any address of the Borrower in Michigan
or any person at the Borrower to whom attention is directed.

 

 

(ii)

The last sentence in Subsection 1.1(a) is hereby amended and restated to read as
follows:

 

The full amount of outstanding principal and interest on account of the
Revolving Loan is to be payable on the earlier of (i) July 6, 2016, (ii) as
provided in Article 14 of this Agreement or (iii) upon a Default as provided in
this Agreement.

 

 

(iii)

Subsection 1.3(a) is hereby amended and restated to read as follows:

 

1.3(a)     Interest accrues on the Revolving Loan at Agent’s floating Prime Rate
(as that term is defined in the Loan Agreement) minus one half of one percent
(1/2%) per annum.

 

 

(iv)

Section 1.5(a) is hereby deleted in its entirety with no material to be placed
in its stead.

 

 

(v)

Section 1.5(b) is amended and restated to read as follows:

 

Subject to Section 1.1(a), the Borrower may repay the Revolving Loan from time
to time, in whole or in part, without any premium or penalty, and the principal
balance of the Revolving Loan will be reduced and availability for additional
advances will be increased accordingly. Without limiting any other permitted
manner of payment, the Borrower from time to time may direct that payments (in
good collected funds) be made to the Agent through deducting the payment amount
directed by the Borrower from any account maintained by the Borrower with the
Agent.

 

 

(vi)

Section 1.5(c) is hereby deleted in its entirety with no material to be placed
in its stead.

 

 

(vii)

Section 1.9(l) is hereby amended and restated as follows:

 

1.9(l)     Agent and Borrower have entered into account agreements with respect
to each depository account and Borrower has established cash balances in such
demand deposit accounts at Agent. Borrower will maintain an aggregate average
monthly balance in the depository accounts of at least $375,000.00.

 

 

(viii)

Subsections 5.9(b) and (d) are amended and restated to read as follows:

 

5.9(b)     The Borrower is a “United States person(s)” and does not intend to
apply the proceeds of the Revolving Loan directly or indirectly to the
“acquisition” of “stock” of a “foreign issuer” or “debt obligation” of a
“foreign obligor” in violation of (and as such terms are defined) in the United
States Interest Equalization Tact Act, or to take or permit any other action
which would subject Agent to the tax imposed by said Act.

 

5.9(d)     The Revolving Loan has been requested by Borrower for working capital
and other business purposes (and not for personal, household or family purposes)
and to retire indebtedness owed to Webster Business Credit Corporation (it being
understood, however, that any funds available for any Permitted Non-Borrower
Transfer may have been and hereafter may be used for the purpose of repaying the
Revolving Loan, reborrowed thereafter in accordance with the terms and
conditions of this Agreement under Subsection 1.1(a) and used for any Permitted
Non-Borrower Transfer).

 

 
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(ix)

Subsection 6.7(h) is hereby amended and restated to read as follows:

 

6.7(h)      On a monthly basis (and more frequently as desired by Borrower with
the written consent of the Agent), reports and supporting documents evidencing
the Borrower’s sales, credits, remittances and collections and all other
adjusting entries in form and substance satisfactory to Agent.

 

 

(x)

The first sentence of Subsection 6.14(a) is hereby amended and restated to read
as follows:

 

If a Default has occurred and remains uncured and the Agent has given written
notice to the Borrower to do so, then upon receipt of any or all proceeds of the
Collateral, the Borrower is to pay such proceeds directly to Agent.

 

 

(xi)

Subsection 6.20(f) is hereby amended and restated to read as follows:

 

(f)     Unused Line Fee. Borrower is to pay Agent, for the ratable benefit of
Lenders, an annual unused line fee equal to .125% of the difference between the
Borrowing Base and the amount of advances outstanding on account of the
Revolving Loan, payable monthly in arrears. The unused line fee is deemed earned
in full on the date when same is due and payable hereunder and is not subject to
rebate or pro ration upon termination of this Agreement for any reason. For the
purposes of this subsection, the amount of advances outstanding on account of
the Revolving Loan shall be deemed to include the unadvanced face amount of each
Letter of Credit.

 

 

(xii)

Clause (ii) of Section 7.1 is hereby amended and restated to read as follows:

 

(ii) SPAR Group International, Inc. or any Foreign Subsidiary may acquire assets
or the business of another corporation, partnership or entity organized and
operating outside the United States provided that the funds utilized therefor
are not derived from the proceeds of Collateral and are derived solely from any
one or more of the operations or debt of the Borrower’s Foreign Subsidiaries,
any Permitted Non-Borrower Transfer (as defined in Section 7.12) or any Approved
Subordinated Debt (it being understood, however, that any funds may have been
and hereafter may be transferred to a Borrower by a Foreign Subsidiary or the
litigation proceeds described in Section 6.14(d) may be used for the purpose of
repaying the Revolving Loan and reborrowed thereafter in accordance with the
terms and conditions of this Agreement); when reborrowed, such funds are not to
be deemed proceeds of Collateral if segregated or used by the Borrower for the
purposes of a Permitted Non-Borrower Transfer and are not subject to any use
restrictions provided in this Agreement. Prior to any transfer or acquisition
set forth above, the Borrower shall submit to Agent a Compliance Certificate
based upon the pro forma analysis of the effect of such transfer or acquisition.

 

 

(xiii)

The last sentence of Section 7.12 is hereby amended and restated to read as
follows:

 

Further notwithstanding the foregoing, SGRP or any Domestic Subsidiary which is
a Borrower may make any payment to or transfer any property or assets to any
Foreign Subsidiary ( each a “Permitted Non-Borrower Transfer”) provided that (a)
the Borrower is in compliance with Sections 7.15, 7.16, 7.17 and 7.19 at the
time of any such payment or transfer; (b) the aggregate amount of such payment
or transfer does not exceed $1,500,000 at any time; and (c) excluding the
$1,500,000 set forth in (b) above, any additional funds utilized therefor are
(i) derived from the litigation proceeds described in Section 6.14(d) or (ii)
are not derived from the proceeds of Collateral and are derived solely from any
one or more of the operations or debt of the Borrower’s Foreign Subsidiaries (it
being understood, however, that any such funds may have been and hereafter may
be transferred to a Borrower by a Foreign Subsidiary or the litigation proceeds
described in Section 6.14(d) may be used for the purpose of repaying the
Revolving Loan and reborrowed thereafter in accordance with the terms and
conditions of this Agreement; when reborrowed, such funds are not to be deemed
proceeds of Collateral if segregated or used by the Borrower for the purposes of
a Permitted Non-Borrower Transfer and are not subject to the use restrictions
provided in this Agreement).

 

 
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(xiv)

The following sentence is added to the end of Section 7.15:

 

For the sake of clarity, the GAAP or other determinations in this Agreement
respecting the Borrower on a combined basis do not include any Foreign
Subsidiary, while those respecting SPAR Group, Inc., and its Subsidiaries on a
consolidated basis include all Foreign Subsidiaries, in each case except to the
extent specifically provided otherwise.

 

 

(xv)

Section 7.17 is hereby amended and restated to read as follows

 

Neither the Borrower (on a combined basis) nor SPAR Group, Inc., and its
Subsidiaries (on a consolidated basis) is to create or suffer to exist its
combined or consolidated indebtedness to tangible net worth ratio, the numerator
of which being Indebtedness and the denominator of which being Tangible Net
Worth, to be greater than (a) 3.0 to 1 for the Borrower on a combined basis and
(b) 4.0 to 1 for SPAR Group, Inc., and its Subsidiaries on a consolidated basis.
The term “Indebtedness” is to be determined on a combined basis for the Borrower
or consolidated basis for SGRP and its Subsidiaries, as applicable, in
accordance with GAAP and includes all items which should be and are included on
the balance sheet in determining total liabilities, whether demand, installment,
contingent, secured, unsecured, guaranteed, endorsed or assumed.

 

 

(xvi)

Section 7.19 is hereby amended and restated to read as follows:

 

Section 7.19 Borrower Fixed Charge Coverage Ratio

 

The Borrower is not to cause or permit its combined Fixed Charge Coverage Ratio
to be less than 1.0 to 1.0 as of the last day of each fiscal quarter for the
twelve month period then ended. The term “Fixed Charge Coverage Ratio” is to be
determined for the Borrower on a combined basis in accordance with GAAP and
means and includes with respect to any fiscal period the ratio of (a) (i) EBITDA
of Borrower on a combined basis, minus (ii) Non-Financed Capital Expenditures
made by the Borrower on a combined basis during such period (including, without
limitation, expenditures for software) to (b) the Fixed Charges of the Borrower
on a combined basis during such period. “EBITDA” means (on a combined basis for
the Borrower) for the applicable period the sum of (i) earnings of Borrower on a
combined basis before interest and taxes for such period plus (ii) depreciation
expenses of Borrower on a combined basis for such period, plus (iii)
amortization expenses of Borrower on a combined basis for such period, plus (iv)
cash received during such period by Borrower from Foreign Subsidiaries as
recorded through intercompany, less (v) other income and/or expense of Borrower
on a combined basis for such period related to extraordinary litigation, less
(vi) allocation of Borrower expenses during such period to the Foreign
Subsidiaries as recorded through intercompany. “Non-Financed Capital
Expenditures” means capital expenditures by Borrower on a combined basis during
the applicable period not financed with proceed of purchase money financing
permitted in Section 7.4. “Fixed Charge” means the sum (without duplication) for
the Borrower on a combined basis during the applicable period of (i) all
interest payments made on the Revolving Loan hereunder, plus (ii) all dividends
or other distributions to stockholders (if permitted by Agent) and other
payments made or paid with respect to any indebtedness for money borrowed
(excluding the principal amount of Revolving Advances but including all payments
made on capitalized leases) during such period, plus (iii) income or franchise
taxes paid in cash during such period, plus (iv) all capital contributions
and/or loans made by any Borrower to any Foreign Subsidiary during such period
which are otherwise permitted by this Agreement.

 

 
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(xvii)

The first sentence in Subsection 14.1 is hereby amended and restated to read as
follows:

 

The Revolving Loan terminates July 6, 2016, and automatically renews on each
anniversary thereof for successive one (1) year periods thereafter in the
absence of a Default and notice of non-renewal from Agent, unless (a) terminated
earlier pursuant to Section 10.1 hereof, (b) terminated by Agent by not less
than ninety (90) days written notice of termination prior to a Termination Date
or (c) terminated by Borrower pursuant to Section 14.2 hereof, whichever
termination occurs first. “Termination Date” shall mean the earliest date on
which the Revolving Loan (i) is not so automatically renewed, (ii) is so
terminated pursuant to Section 10.1, or (c) is so terminated by Agent or
Borrower.

 

 

(xviii)

Section 14.2(iii) is hereby deleted in its entirety with no material to be
placed in its stead.

 

 

(xix)

The definitions of "Domestic Subsidiary" and "Foreign Subsidiary" in Exhibit D
are hereby amended and restated to read as follows:

 

“Domestic Subsidiary” shall mean any Subsidiary of SGRP organized in a state or
territory of the United States of America, whether wholly or partially owned,
and whether now existing or hereafter acquired or created, but excluding SPAR
Canada, Inc. and National Merchandising Services, LLC, and excluding each
Inactive Subsidiary. Although SPAR Canada Inc., is a Nevada corporation, and
National Merchandising Services, LLC, is a Nevada limited liability company,
each is classified as a Foreign Subsidiary for the purposes of this Agreement
and the other Loan Documents.

 

“Foreign Subsidiary” means SPAR Canada, Inc., a Nevada Corporation, National
Merchandising Services, LLC, a Nevada limited liability company, or any direct
or indirect Subsidiary of SGRP organized in any jurisdiction outside of the
United States, whether wholly or partially owned, and whether now existing or
hereafter acquired or created. Although SPAR Canada Inc., is a Nevada
corporation, and National Merchandising Services, LLC, is a Nevada limited
liability company, each is classified as a Foreign Subsidiary for the purposes
of this Agreement and the other Loan Documents.

 

 

(xx)

In the definition of “Permitted Investment” in Exhibit D, the following new
clauses (d) and (e) are hereby inserted immediately before the closing period:

 

(d) any Permitted Non-Borrower Transfer; or

 

(e) any extension, renewal or replacement of any such investment.

 

4.     Borrower represents and warrants that there are no Defaults or events of
Default pursuant to or defined in any of the Loan Documents, and that all
warranties and covenants which have been made or performed by Borrower in
connection with the Loan Documents were true and complete in all material
respects when made or performed.

 

5.     All representations, warranties and covenants made by Borrower to Agent
in the Loan Documents are true and complete in all material respects as if
hereby repeated and (except as and to the extent limited to reference dates)
first made expressly in this Fourth Agreement of Amendment.

 

6.     Except as otherwise provided herein, the Loan Documents shall continue in
full force and effect, in accordance with their respective terms. The parties
hereto hereby expressly confirm and reaffirm all of their respective
liabilities, obligations, duties and responsibilities under and pursuant to said
Loan Documents as amended hereby and consent to the terms of this Fourth
Agreement of Amendment. Capitalized terms used in this Fourth Agreement of
Amendment which are not otherwise defined or amended herein have the meaning
ascribed thereto in the Loan Documents.

 

 
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7.     The parties agree to sign, deliver and file any additional documents and
take any other actions that may reasonably be required by Agent including, but
not limited to, affidavits, resolutions, or certificates for a full and complete
consummation of the matters covered by this Fourth Agreement of Amendment.

 

8.     This Fourth Agreement of Amendment is binding upon, inures to the benefit
of, and is enforceable by the heirs, personal representatives, successors and
assigns of the parties. This Fourth Agreement of Amendment is not assignable by
Borrower without the prior written consent of Agent; provided, however, that
this Agreement shall be deemed to be assigned with any assignment of the Loan
Agreement consented to by Agent.

 

9.     To the extent that any provision of this Fourth Agreement of Amendment is
determined by any court or legislature to be invalid or unenforceable in whole
or part either in a particular case or in all cases, such provision or part
thereof is to be deemed surplusage. If that occurs, it does not have the effect
of rendering any other provision of this Fourth Agreement of Amendment invalid
or unenforceable. This Fourth Agreement of Amendment is to be construed and
enforced as if such invalid or unenforceable provision or part thereof were
omitted.

 

10.   This Fourth Agreement of Amendment may only be changed or amended by a
written agreement signed by all of the parties. By the execution of this Fourth
Agreement of Amendment, Agent is not to be deemed to consent to any future
renewal or extension of the Revolving Loan or Loan Documents.

 

11.   This Fourth Agreement of Amendment is governed by and is to be construed
and enforced in accordance with the laws of New York as though made and to be
fully performed in New York (without regard to the conflicts of law rules of New
York that would defer to the substantive laws of any other jurisdiction).

 

12.   The parties to this Fourth Agreement of Amendment acknowledge that each
has had the opportunity to consult independent counsel of their own choice, and
that each has relied upon such counsel's advice concerning this Fourth Agreement
of Amendment, the enforceability and interpretation of the terms contained in
this Fourth Agreement of Amendment and the consummation of the transactions and
matters covered by this Fourth Agreement of Amendment.

 

13.   The Borrower agrees to pay all reasonable attorneys' fees incurred by
Agent in connection with this Fourth Agreement of Amendment (in addition to
those otherwise payable pursuant to the Loan Agreement), which fees are to be
paid as of the execution hereof.

 

THE BORROWER, FOR ITSELF, ITS SUBSIDIARIES (IF ANY) AND AGENT HEREBY WAIVE ALL
RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS FOURTH AGREEMENT OF
AMENDMENT OR THE DEBT AS AN INDUCEMENT TO THE EXECUTION OF THIS FOURTH AGREEMENT
OF AMENDMENT.

 

 

 

-Remainder of this page intentionally left blank-

 

 

 

[signatures appear on the following page]

 

 
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IN WITNESS WHEREOF, the parties have signed this Fourth Agreement of Amendment.

 

 

 

(BORROWER)

 

SPAR GROUP, INC.

NATIONAL ASSEMBLY SERVICES, INC.

SPAR GROUP INTERNATIONAL, INC.

SPAR ACQUISITION, INC.

SPAR TRADEMARKS, INC.

SPAR MARKETING FORCE, INC.

 

Witness:

               /s/ Marc Pedalino By:    /s/ James R. Segreto  

Print Name: Marc Pedalino

     James R. Segreto   Title: Assistant      Chief Financial Officer,

   Treasurer and Secretary

   (As to all Borrower entities)

 

(AGENT/LENDER)

 

STERLING NATIONAL BANK

                       /s/ Michelle Tawdeen By: /s/ Murray R. Markowitz  Print
Name:  Michelle Tawdeen Name:     Murray R. Markowitz Title:             Vice
President Title:     First Vice President

 

 
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ACKNOWLEDGMENT

 

 

 

 

STATE OF NEW YORK               

SS.:

COUNTY OF WESTCHESTER                        ,

 

 

 

 

 

BE IT REMEMBERED, that on this 10th day of July, 2013, before me, the
subscriber, personally appeared JAMES R. SEGRETO who, I am satisfied, is the
person who signed the within document as Chief Financial Officer, Treasurer and
Secretary of SPAR GROUP, INC., NATIONAL ASSEMBLY SERVICES, INC., SPAR GROUP
INTERNATIONAL, INC., SPAR ACQUISITION, INC., SPAR TRADEMARKS, INC., and SPAR
MARKETING FORCE, INC., the corporations ("Corporations") named therein and this
person thereupon acknowledged that he is authorized to sign the within document
on behalf of the Corporations and that the said document made by the
Corporations was signed, sealed and delivered by this person as such officer and
is the voluntary act and deed of the Corporations, made by virtue of authority
from their Board(s) of Directors.

 

 

 

         /s/ Marc Pedalino    

Marc Pedalino, Notary Public

 

 

 

 

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