FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of August 1, 2001 (the "Amendment Date"), among INDUSTRIAL DISTRIBUTION
GROUP, INC., a Delaware corporation (the "Borrower"), those Subsidiaries of the
Borrower identified on the signature pages hereto as "Affiliate Guarantors";
Borrower and the Affiliate Guarantors are sometimes collectively referred to as
the "Obligors" or individually referred to as an "Obligor"); FIRST UNION
NATIONAL BANK, a national bank ("FUNB," "First Union" or the "Bank"), as a
"Lender," together with each of the other financial institutions identified as
"Lenders" on the signature pages hereto (together with each of their successors
and assigns, referred to individually as a "Lender" and, collectively, as the
"Lenders"); First Union, acting as agent for the Lenders (including the
Swingline Lender) in the manner and to the extent described in Article XIII of
the Credit Agreement defined below (First Union, when acting in such capacity,
herein called the "Administrative Agent"); FLEET CAPITAL CORPORATION ("Fleet"),
a Rhode Island corporation, as a Lender and as Documentation Agent pursuant to
the Credit Agreement; and BANK OF AMERICA, N.A. ("Bank of America"), a national
bank, as a Lender and as Syndication Agent pursuant to the Credit Agreement; for
the purpose of amending that certain Credit Agreement, dated as of December 22,
2000, among the aforesaid parties (as amended hereby, the "Credit Agreement") in
the following particulars. Capitalized terms used in this Amendment, but not
otherwise expressly defined herein, shall have the meanings given to such terms
in the Credit Agreement.
R E C I T A L S:
WHEREAS, a certain Event of Default has occurred and is
continuing on the Amendment Date, namely, the Fixed Charge Coverage Ratio, set
forth in Section 8.1 of the Credit Agreement, was less than 1.10:1 as of the
fiscal quarter ended June 30, 2001 which, under Section 11.1(c) of the Credit
Agreement, is an Event of Default (the "Existing Default"); and
WHEREAS, Borrower has requested that Lenders waive the
Existing Default and forbear from exercising any of the rights and remedies
accorded to Lenders under the Credit Agreement after the occurrence and during
the continuance of the Existing Default; and
WHEREAS, Lenders have considered, and are willing to
accommodate, Borrower's request, subject, however, to certain amendments and
modifications being incorporated into the Credit Agreement, as more particularly
set forth below; and
WHEREAS, all Affiliate Guarantors will obtain direct and
material economic benefits from such waiver being given and such amendments
being made, and have agreed to join with Borrower in executing this Amendment in
order to confirm their continuing credit support to Borrower in respect thereof;
NOW, THEREFORE, in consideration of the foregoing recitals and
the agreements, provisions and covenants herein contained, the receipt and
sufficiency of which are hereby acknowledged, the Obligors, together with
Lenders and the Administrative Agent, the
Documentation Agent and the Syndication Agent, each intending to be legally
bound, hereby acknowledge, covenant and agree as follows:
1. Pricing Matrix Change. The existing pricing matrix, set forth in the
definition of "Applicable Percentage" in Section 1.1 of the Credit Agreement, is
deleted in its entirety, and the following revised pricing matrix is substituted
in its place:
-------------- ---------------------- ----------------------------- ----------------------------- --------------------------
Tier Levels Leverage Ratio Applicable Percentage for Applicable Percentage for Applicable Percentage
Eurodollar Loans Base Rate Loans for Unused Line Fee
-------------- ---------------------- ----------------------------- ----------------------------- --------------------------
1 > 4.5 to 1.0 3.00% 1.75% .375%
-
-------------- ---------------------- ----------------------------- ----------------------------- --------------------------
2 > 4.0 to 1.0 but 2.75% 1.50% .375%
-
< 4.5 to 1.0
-------------- ---------------------- ----------------------------- ----------------------------- --------------------------
3 > 3.5 to 1.0 but 2.50% 1.25% .375%
-
< 4.0 to 1.0
-------------- ---------------------- ----------------------------- ----------------------------- --------------------------
4 > 3.0 to 1.0 but 2.25% 1.00% .25%
-
< 3.5 to 1.0
-------------- ---------------------- ----------------------------- ----------------------------- --------------------------
5 < 3.0 to 1.0 2.00% .75% .25%
-------------- ---------------------- ----------------------------- ----------------------------- --------------------------
2. Eligible Inventory Change. There shall be excluded from Eligible
Inventory any Xxxxxx-Xxxxx mobile inventory, which is maintained on and sold
from trucks.
3. Cash Control. Existing Section 2.3(b)(ii)(C) of the Credit Agreement
shall be deleted in its entirety, and the following revised Section
2.3(b)(ii)(C) shall be substituted in its place:
(C) Notwithstanding any terms of subsection (B)
above to the contrary, so long as (i) no Event of
Default or Default exists, and (ii) Average Excess
Availability exceeds Twenty-Two Million Five Hundred
Thousand Dollars ($22,500,000), all or portions of
any funds deposited into the Lockbox Accounts on any
Business Day may, at the Borrower's option, be
transferred to an account of the Borrower other than
the First Union Account, thereafter to be used by
the Borrower in a manner consistent with the terms
of this Credit Agreement. Should the Administrative
Agent at any time determine that either of the
foregoing conditions is not being met, then, the
Administrative Agent may, or at the direction of the
Required Lenders, the Administrative Agent shall,
notify the Borrower and the Lockbox Banks
accordingly and the special permission granted
herein to the Borrower shall cease to be effective
until such time as the Administrative Agent, by
subsequent notice to the Borrower and the Lockbox
Banks, determine that each of the foregoing
conditions is being met and that the special
permission granted herein to the Borrower may be
restored.
2
4. Borrowing Base Certificate Change. Existing Section 7.1(e) of the
Credit Agreement is deleted in its entirety, and the following revised Section
6.3(e) is substituted in its place:
(e) biweekly, by not later than 12:00 Noon on the second
Business Day of every other calendar week, a certificate, to be
substantially in the form of Exhibit T (the "Borrowing Base
Certificate"), duly completed and certified by an Authorized Officer of
the Borrower, detailing the Obligors' Eligible Accounts Receivable as
of the most recent date of determination (which shall be determined not
less frequently than monthly) and Eligible Inventory as of each Friday
of the immediately preceding week; provided, however, that if the Fixed
Charge Coverage Ratio as of the end of any Fiscal Quarter equals or
exceeds 1.10:1, then, the Borrower may defer the delivery of the
Borrowing Base Certificates until the end of each calendar month, with
delivery thereof to be completed within thirty (30) days after the end
of such month, for so long as the Fixed Charge Coverage Ratio is
maintained in at least the amount specified above; and, provided,
further, that if (i) any Event of Default or Default exists, or (ii)
Average Excess Availability is at any time less than Twenty-Two Million
Five Hundred Thousand Dollars ($22,500,000), the Administrative Agent
may, or at the direction of the Required Lenders, the Administrative
Agent shall require the reporting of the Borrowing Base be changed from
biweekly to weekly, in which event such report shall be due not later
than the 12:00 Noon on the second Business Day of each week, for the
preceding calendar week. In addition, on the thirtieth (30th) day of
each month (or if such day is not a Business Day, then on the next
succeeding Business Day), the Borrower shall furnish a written report
to the Lenders setting forth (i) the accounts receivable aged trial
balance at the immediately preceding month end for each account debtor,
aged by due date, which aging reports shall indicate which Accounts are
current, up to 30, 30-to-60 and over 60 days past due and shall list
the names and addresses of all applicable account debtors, (ii) a
monthly accounts payable aging with such aging to be in form
satisfactory to the Administrative Agent, (iii) a schedule of Inventory
owned by each Obligor by location and category, in summary form,
together with, on at least a quarterly basis, a detailed report in
respect thereof, and (iv) a monthly report on the addition of any new
locations of Inventory (including ISA Sites) and the entry into any new
ISA. The Administrative Agent may, but shall not be required to, rely
on each Borrowing Base Certificate delivered hereunder as accurately
setting forth the available Borrowing Base for all purposes of this
Credit Agreement until such time as a new Borrowing Base Certificate is
delivered to the Administrative Agent in accordance herewith; Borrowing
Base Certificates may be prepared and submitted to the Lenders on a
more frequent basis than weekly (or, in the Administrative Agent's
discretion, less frequently, but in no case less than monthly),
provided, however, that such certificate complies with the requirements
set forth elsewhere herein;
3
5. Fixed Charge Coverage Ratio Change. Existing Section 8.1 of the
Credit Agreement (Fixed Charge Coverage Ratio) is deleted in its entirety, and
the following revised Section 8.1 is substituted in its place:
8.1 Fixed Charge Coverage Ratio. The Borrower shall maintain a
Fixed Charge Coverage Ratio of not less than: (i) 1.10:1, as of March
31, 2001; (ii) .90:1, as of June 30, 2001; (iii) .85:1, as of September
30, 2001; (iv) .90:1, as of December 31, 2001; (v) 1.00:1, as of March
31, 2002; and (vi) 1.10:1, as of the last day of each fiscal quarter of
the Borrower ending subsequent to March 31, 2002.
6. Certain Representations And Warranties. Each Obligor represents and
warrants to the Lenders as inducements to their entry into this Amendment that:
(a) it has the power and authority to enter into, deliver and to perform this
Amendment and any Credit Documents to be executed and delivered in connection
herewith (herein, "Amendment Documents"), and to incur any obligations provided
for in this Amendment and any Amendment Documents, all of which have been duly
authorized and approved in accordance with its corporate documents; (b) it has
obtained all consents or approvals from any Person necessary to permit it to
enter into and perform under the Amendment Documents without its being in
violation of any material agreements with such Person; (c) this Amendment,
together with all other Amendment Documents, shall constitute, when executed,
its valid and legally binding obligations in accordance with their respective
terms; (d) except with respect to events or circumstances occurring subsequent
to the date thereof and known to the Lenders, all representations and warranties
made by it in the Credit Agreement remain true and correct in all material
respects as of the date hereof, with the same force and effect as if all such
representations and warranties were fully set forth herein (except to the extent
that any such representations or warranties refer to a specific date or period);
(e) its obligations under the Credit Agreement and the other Credit Documents
remain valid and enforceable obligations, and the execution and delivery of the
Amendment and the other Amendment Documents shall not be construed as a novation
of the Credit Agreement or any of the other Credit Documents; (f) as of the
Amendment Date, it has no knowledge of any offsets or defenses existing in its
favor in respect of the payment of any of the Obligations; and (g) as of the
Amendment Date, after giving effect to this Amendment, it has no knowledge that
any Default or Event of Default exists.
7. Existing Default. Lenders hereby waive the Existing Default and
agree to exercise no right or remedy in respect thereof hereafter; provided,
however, that this waiver (i) shall be limited to the Existing Default only and
to no other Event of Default (known or unknown); and (ii) shall not be construed
to suggest or imply that Lenders have waived, or will waive, any other similar
or dissimilar Event of Default hereafter.
8. Amendment Fee. Upon execution and delivery by Lenders of this
Amendment on the Amendment Date, the Lenders shall have fully earned a
non-refundable amendment fee equal in amount to Two Hundred Fifty Thousand
Dollars ($250,000), to be shared pro rata among them, which shall be due and
payable, in installments, as follows (if payment thereof is not sooner
accelerated in conjunction with any acceleration of the Obligations pursuant to
the terms of Credit Agreement): (i) One Hundred Thousand Dollars ($100,000),
which shall be due and payable on October 1, 2001, (ii) One Hundred Thousand
Dollars ($100,000), which shall be due
4
and payable on January 1, 2002, and (iii) Fifty Thousand Dollars ($50,000),
which shall be due and payable on April 1, 2002; provided, however, that,
notwithstanding the foregoing, if the Fixed Charge Coverage Ratio, computed as
of the fiscal quarter of the Borrower ending December 31, 2001, is at least
1.00:1, and no Event of Default then exists, the final installment of the
amendment fee otherwise due and payable on April 1, 2002, shall be waived.
9. Miscellaneous.
(a) Reference to Agreement and Note. This Amendment shall become
effective upon its execution by all parties hereto and, at such time, its
effective date shall be the date of this Amendment. Upon the effectiveness of
this Amendment, each reference in the Credit Agreement to "this Agreement" and
each reference in the other Credit Documents to the Loan Agreement, shall mean
and be a reference to the Credit Agreement as amended hereby.
(b) Effect on Credit Documents. Except as specifically amended
above, the Credit Agreement and all other Credit Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(c) No Waiver. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power, or remedy of the
Agent or Lenders under any of the Credit Documents, nor constitute a waiver of
any provision of any of the Credit Documents.
(d) Costs and Expenses. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Administrative Agent in connection with
the preparation, reproduction, execution, and delivery of this Amendment and the
other instruments and documents to be delivered hereunder, including the
reasonable fees and out-of-pocket expenses of counsel for the Agent with respect
hereto. All such fees and charges, if not paid promptly when due, may be charged
directly as Revolving Loans.
(e) No Novation. Nothing contained herein is intended, or shall
be construed, to constitute a novation of the Credit Agreement or any Credit
Document.
(f) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Georgia, without giving
effect to conflict of law provisions.
(g) Credit Document. This Amendment constitutes a Credit
Document.
5
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed under seal and delivered by their proper and duly authorized officers
as of the date set forth above.
BORROWER:
INDUSTRIAL DISTRIBUTION GROUP, INC. (SEAL)
By:
-------------------------------------------------
Xxxx X. Xxxxxx, Senior Vice President
6
AFFILIATED GUARANTORS:
IDG USA, LLC (SEAL)
By:
-------------------------------------------------
Xxxx X. Xxxxxx,
Secretary
7
XXXXXX BROS., INC. (SEAL)
By:
-------------------------------------------------
Xxxx X. Xxxxxx, Secretary
8
CARDINAL MACHINERY, INC. (SEAL)
By:
-------------------------------------------------
Xxxx X. Xxxxxx, Secretary
9
X.X. XXXXXXXXXX COMPANY (SEAL)
By:
-------------------------------------------------
Xxxx X. Xxxxxx, Secretary
10
IDG-MEXICO, INC. (SEAL)
By:
-------------------------------------------------
Xxxx X. Xxxxxx, Secretary
11
THE NEW ENGLAND GROUP INDUSTRIAL
DISTRIBUTORS, INC. (SEAL)
By:
--------------------------------------------------
Xxxx X. Xxxxxx, Secretary
12
ADMINISTRATIVE AGENT AND LENDER:
FIRST UNION NATIONAL BANK, (SEAL)
as Administrative Agent and as a Lender
By:
-------------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
13
OTHER LENDERS:
FLEET CAPITAL CORPORATION, (SEAL)
as Documentation Agent and as a Lender
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
14
BANK OF AMERICA, N.A., (SEAL)
as Syndication Agent and as a Lender
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
15
PNC BANK, NATIONAL ASSOCIATION, (SEAL)
as a Lender
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
16
IBJ WHITEHALL BUSINESS CREDIT (SEAL)
CORPORATION, as a Lender
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
17
