EXHIBIT 10.2
DIAMOND HOME SERVICES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank Bank of America National Trust and
Chicago, Illinois Savings Association
Chicago, Illinois
LaSalle National Bank
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
April 20, 1998, as amended by that certain letter agreement dated as of April
23, 1998 and that certain First Amendment dated as of August 13, 1998 (such
Credit Agreement as so amended being hereinafter referred to as the "Credit
Agreement"), and currently in effect by and among, Diamond Home Services, Inc.,
a Delaware corporation (the "Borrower"), and you (the "Banks"). All capitalized
terms used herein without definition shall have the same meanings herein as such
terms have in the Credit Agreement.
The Borrower has requested that the Banks (i) modify the interest rate
applicable to Loans outstanding under the Credit Agreement, (ii) waive the
Borrower's noncompliance with the minimum quarterly earnings covenant contained
in the Credit Agreement and (iii) reduce the amount of the Revolving Credit
Commitments in the Credit Agreement, and the Banks are willing to do so under
the terms and conditions set forth in this Amendment.
1. AMENDMENT.
Subject to the satisfaction of the conditions precedent set forth in
Section 3 below, the Credit Agreement shall be and hereby is amended (effective
as of November 16, 1998) as follows:
1.01. The portion of the first sentence up to the term "provided" in the
definition of "Applicable Margin" appearing in Section 5.1 of the Credit
Agreement is hereby amended and as so amended shall be restated to read as
follows:
"`Applicable Margin' means, with respect to Loans, Reimbursement Obligations,
and the Revolving Credit Commitment fees and letter of credit fees payable
under Section 2.1 hereof, from November 16, 1998 through the first Pricing
Date the rate per annum specified below:
Applicable Margin for Base Rate Loans and Reimbursement
Obligations: 0.75%
Applicable Margin for Eurodollar Loans 3.00%
Applicable Margin for Revolving Credit Commitment fee: 0.375%
Applicable Margin for letter of credit fee: 2.00%"
1.02. The Revolving Credit Commitments shall be reduced from $15,000,000
to $12,000,000 (herein, the "Revolver Reduction"). In accordance with Section
1.13 of the Credit Agreement, the Revolver Reduction shall be allocated ratably
among the Banks in proportion to their respective Revolver Percentages.
1.03. Section 8.9 of the Credit Agreement shall be amended by inserting
the following sentence immediately at the end thereof:
"Notwithstanding anything in this Section to the contrary, the
Borrower shall not make any Acquisition on or any time after
November 16, 1998 other than the KanTel Acquisition. For
purposes hereof, the "KanTel Acquisition" means the
acquisition by the Borrower during the fourth quarter of 1998
of the business and related assets of KanTel, the telephone
operations and telemarketing division of HI, Inc. based in
Lawrence, Kansas, for approximately $2,700,000."
1.04. The Revolving Credit Commitment amounts of "$5,000,000",
"$5,000,000", and "$5,000,000" appearing on the signature pages of Xxxxxx Trust
and Savings Bank, LaSalle National Bank and Bank of America Illinois,
respectively, at the end of the Credit Agreement shall be amended to state the
following new amounts, respectively: "$4,000,000", "$4,000,000", and
"$4,000,000".
2. WAIVER.
The Borrower is currently not in compliance with Section 8.26(b) of the
Credit Agreement by virtue of the Borrower's failure to maintain EBITDA at not
less than $4,500,000 for its fiscal quarter ending on or about September 30,
1998. The Borrower has requested that the Banks waive such noncompliance.
Accordingly, subject to satisfaction of the conditions precedent set forth in
Section 3 below, and subject as well to the satisfaction of the conditions
subsequent set forth below in this Section, the Banks hereby waive (subject to
satisfaction of such conditions, but upon such satisfaction, such waiver to be
effective as of September 30, 1998) compliance with such Section 8.26(b).
Notwithstanding anything in this Amendment to the contrary, the waiver given in
this Section is subject to, and its effectiveness is contingent upon, the
effectiveness no later than December 31, 1998 of an amendment to the Credit
Agreement which is in form and substance mutually acceptable to the Banks and
the Borrower and, among other things, modifies the financial covenants contained
in Sections 8.22, 8.23, 8.24, 8.25 and 8.26 of the Credit Agreement in a manner
mutually satisfactory to the Borrower and the Banks (it being understood that
the ability of the Banks to enter into such amendment is subject to their
internal credit approvals). If such amendment does not take effect before such
date, this waiver shall immediately have no further force and effect, and an
Event of Default shall immediately exist under Section 9.1(b) of the Credit
Agreement by virtue of the Borrower's noncompliance with such Section 8.26(b).
The foregoing does not waive compliance with such Section 8.26(b) unless such
conditions have been satisfied and also does not waive compliance with any other
terms, conditions and provisions of the Credit Agreement.
3. AMENDMENT FEE.
In consideration of the agreements made in this Amendment, the
Borrower hereby agrees to pay the Agent for the ratable account of the Banks an
Amendment Fee of $225,000. Such fee shall be deemed fully earned and payable
upon the effectiveness of this Amendment. $56,250 of this fee shall be due and
payable on the earlier of (i) the date of the Borrower's acceptance of this
Amendment or (ii) November 18, 1998. The $168,750 balance of the fee shall be
due and payable on the earlier of (i) December 31, 1998 or (ii) the
effectiveness of the Amendment referred to in Section 2 above. The Borrower's
failure to pay this Amendment Fee when due shall constitute an Event of Default.
4. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to:
(a) The acceptance of this Amendment by the Banks and the
Material Subsidiaries in the spaces provided for that purpose below.
(b) The payment to the Agent for the ratable account of the
Banks of the $56,250 portion of the Amendment Fee referred to above
which is due and payable concurrent with the Borrower's acceptance
hereof.
Upon the satisfaction of such conditions precedent, (i) this Amendment (except
for Section 2 hereof) shall take effect as of November 16, 1998 and (ii) Section
2 hereof shall take effect as of September 30, 1998.
5. REPRESENTATIONS.
In order to induce the Banks to execute and deliver this Amendment, the
Borrower hereby represents to the Banks that as of the date upon which this
Amendment becomes effective, after giving effect to this Amendment, the Borrower
is in full compliance with all of the terms and conditions of the Credit
Agreement, as amended hereby, and no Default or Event of Default shall have
occurred and be continuing under the Credit Agreement.
6. MISCELLANEOUS.
6.01. The Borrower acknowledges and agrees that all of the Collateral
Documents to which it is a party remain in full force and effect for the benefit
and security of, among other things, the Revolving Credit as modified hereby.
The Borrower further acknowledges and agrees that all references in such
Collateral Documents to the Revolving Credit shall be deemed a reference to the
Revolving Credit as so modified. The Borrower further agrees to execute and
deliver any and all instruments or documents as may be required by the Agent or
Required Banks to confirm any of the foregoing.
6.02. Except as specifically amended herein or waived hereby, the Credit
Agreement shall continue in full force and effect in accordance with its
original terms. Reference to this specific Amendment need not be made in the
Credit Agreement, the Notes, or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any
of such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
6.03. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
6.04. The Borrower agrees to pay all reasonable out-of-pocket costs and
expenses incurred by the Banks in connection with the preparation, execution and
delivery of this Amendment and the documents and transactions contemplated
hereby, including the reasonable fees and expenses of counsel for the Agent with
respect to the foregoing.
Dated as of November 13, 1998.
DIAMOND HOME SERVICES, INC.
By /s/ Diamond Home Services, Inc.
Its
Accepted and agreed to in Chicago, Illinois as of the date and year
last above written.
XXXXXX TRUST AND SAVINGS BANK
By /s/ Xxxxxx Trust and Savings Bank
Its Vice President
LASALLE NATIONAL BANK
By /s/ LaSalle National Bank
Its
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(successor by merger to Bank of America Illinois)
By /s/ Bank of America National Trust
and Savings Association
Its
GUARANTORS' CONSENT
The undersigned, the Material Subsidiaries of the Borrower, have
heretofore executed and delivered to the Banks a Guaranty and certain other
Collateral Documents and hereby consent to this Amendment to the Credit
Agreement as set forth above and confirm that their Guaranty and such Collateral
Documents and all of the undersigned's obligations thereunder remain in full
force and effect. The undersigned further agree that the consent of the
undersigned to any further amendments to the Credit Agreement shall not be
required as a result of this consent having been obtained.
DIAMOND ACQUISITION CORP.
By /s/ Diamond Acquisition Corp.
Name
Title
XXXXXX SOUTHEASTERN CORPORATION
By /s/ Xxxxxx Southeastern Corporation
Name
Title
FORELINE SECURITY CORPORATION
By /s/ Foreline Security Corporation
Name
Title
DIAMOND EXTERIORS, INC.
By /s/ Diamond Exteriors, Inc.
Name
Title___________________________________
MARQUISE FINANCIAL SERVICES, INC.
By /s/ Marquise Financial Services, Inc.
Name
Title
XXXXXX SOUTHEASTERN REALTY, INC.
By /s/ Xxxxxx Southeastern Realty, Inc.
Name
Title
