EXHIBIT 10.1
AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AGREEMENT
This Amendment dated as of November 23, 1999 by and among Summa Industries, a
Delaware corporation ("Borrower"), Comerica Bank-California, a California
corporation, as agent for the lenders from time to time ("Agent") and the
various financial institutions that are (or may hereafter become) parties hereto
as Lenders (each a "Lender" and collectively the "Lenders").
R E C I T A L S:
A. Borrower, Agent and the Lenders entered into that certain Amended and
Restated Revolving Credit and Term Loan Agreement dated as of March 5, 1999, as
previously amended as of April 21, 1999 ("Agreement").
B. The parties desire to amend the Agreement as set forth below.
The parties agree as follows:
1. The following definitions are added to SECTION 1 of the Agreement:
"`ACQUISITION ADVANCE' MEANS THE BORROWING OF THE ACQUISITION LOAN REQUESTED BY
BORROWER AND MADE BY LENDERS UNDER SECTION 2.10."
"`ACQUISITION COMMITMENT LIMIT' HAS THE MEANING SET FORTH IN SECTION 2.10."
"`ACQUISITION LOAN' HAS THE MEANING SET FORTH IN SECTION 2.10."
"`ACQUISITION NOTE' AND `ACQUISITION NOTES' HAVE THE MEANINGS SET FORTH IN
SECTION 2.10."
"`COMMITMENT' MEANS THE AGGREGATE COMMITMENT OF THE LENDERS TO MAKE ADVANCES OF
THE REVOLVING LOAN TO BORROWER UNDER SECTION 2.1 AND TO MAKE ADVANCES OF THE
ACQUISITION LOAN TO BORROWER UNDER SECTION 2.10."
"`PERMITTED ACQUISITION" MEANS ANY ACQUISITION BY BORROWER OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF ANOTHER PERSON, OR OF A DIVISION OR LINE OF
BUSINESS OF ANOTHER PERSON, OR SHARES OF STOCK OR OTHER OWNERSHIP INTERESTS OF
ANOTHER PERSON, WHICH IS CONDUCTED IN ACCORDANCE WITH THE FOLLOWING
REQUIREMENTS:
(a) SUCH ACQUISITION IS OF A BUSINESS OR PERSON ENGAGED IN A LINE OF BUSINESS
WHICH IS COMPATIBLE WITH, OR COMPLEMENTARY TO, THE BUSINESS OF BORROWER;
(b) BOTH IMMEDIATELY BEFORE AND AFTER SUCH ACQUISITION NO DEFAULT OR EVENT OF
DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING;
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(c) THE BOARD OF DIRECTORS (OR OTHER PERSON(S) EXERCISING SIMILAR FUNCTIONS) OF
THE SELLER OF THE ASSETS OR ISSUER OF THE SHARES OF STOCK OR OTHER OWNERSHIP
INTERESTS BEING ACQUIRED SHALL NOT HAVE DISAPPROVED SUCH TRANSACTION OR
RECOMMENDED THAT SUCH TRANSACTION BE DISAPPROVED;
(d) IF THE SUM OF (i) THE PURCHASE PRICE OF SUCH PROPOSED NEW ACQUISITION,
COMPUTED ON THE BASIS OF TOTAL ACQUISITION CONSIDERATION PAID OR INCURRED, OR TO
BE PAID OR INCURRED, BY BORROWER WITH RESPECT THERETO, INCLUDING THE AMOUNT OF
DEBT ASSUMED OR TO WHICH SUCH ASSETS, BUSINESSES OR BUSINESS OR OWNERSHIP
INTERESTS OR SHARES, OR ANY PERSON SO ACQUIRED, IS SUBJECT, BUT EXCLUDING THE
VALUE OF ANY COMMON SHARES TRANSFERRED AS A PART OF SUCH ACQUISITION, PLUS (ii)
THE AGGREGATE PURCHASE PRICE OF ALL OTHER PERMITTED ACQUISITIONS MADE DURING THE
TWELVE (12) MONTH PERIOD ENDING ON THE EFFECTIVE DATE OF THE PROPOSED
ACQUISITION, PLUS (iii) THE AMOUNT OF PAYMENTS TO BE MADE UNDER NON-COMPETE
AGREEMENTS ENTERED INTO IN CONNECTION WITH SUCH ACQUISITION, ("PURCHASE PRICE")
IS GREATER THAN SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS $7,500,000, (x)
BORROWER SHALL HAVE DELIVERED TO THE AGENT AND THE LENDERS NOT LESS THAN FIFTEEN
(15) NOR MORE THAN NINETY (90) DAYS PRIOR TO THE DATE OF SUCH ACQUISITION,
NOTICE OF SUCH ACQUISITION TOGETHER WITH PRO FORMA PROJECTED FINANCIAL
INFORMATION; (y) LENDERS SHALL HAVE HAD SUFFICIENT OPPORTUNITY TO CONDUCT AUDITS
AND APPRAISALS OF THE TARGET CORPORATION (INCLUDING WITHOUT LIMIT ACCOUNT
RECEIVABLE AUDITS, INVENTORY AUDITS AND APPRAISALS OF BORROWER'S MACHINERY,
EQUIPMENT AND REAL ESTATE) AND ARE SATISFIED WITH THE RESULTS THEREOF; AND (z)
THE ACQUISITION SHALL HAVE BEEN APPROVED IN WRITING BY THE REQUIRED LENDERS
PRIOR TO ITS CONSUMMATION (WHICH APPROVAL SHALL BE GIVEN OR DENIED WITHIN THIRTY
DAYS OF RECEIPT BY THE AGENT AND THE LENDERS OF THE INFORMATION REFERRED TO IN
CLAUSE (x) ABOVE); AND
(e) IF AFTER GIVING EFFECT TO SUCH ACQUISITION, BORROWER'S RATIO OF FUNDED DEBT
TO EBITDA WOULD BE EQUAL TO OR GREATER THAN 3.0:1, THE ACQUISITION SHALL HAVE
BEEN APPROVED IN WRITING BY THE REQUIRED LENDERS PRIOR TO ITS CONSUMMATION
(WHICH APPROVAL SHALL BE GIVEN OR DENIED WITHIN THIRTY DAYS OF RECEIPT BY THE
AGENT AND THE LENDERS OF THE INFORMATION REFERRED TO IN CLAUSES (b) AND (c)
ABOVE); AND
(f) THE GOODWILL CREATED BY THE ACQUISITION SHALL NOT EXCEED SIXTY PERCENT (60%)
OF THE PURCHASE PRICE."
"'PRO FORMA PROJECTED FINANCIAL INFORMATION' MEANS AS TO ANY PROPOSED
ACQUISITION, A STATEMENT EXECUTED BY THE CHIEF FINANCIAL OFFICER OF BORROWER
(SUPPORTED BY REASONABLE DETAIL) SETTING FORTH THE TOTAL CONSIDERATION TO BE
PAID OR INCURRED IN CONNECTION WITH THE PROPOSED ACQUISITION AND, PRO FORMA
COMBINED PROJECTED FINANCIAL INFORMATION FOR BORROWER AND ITS CONSOLIDATED
SUBSIDIARIES AND THE ACQUISITION TARGET (IF APPLICABLE), CONSISTING OF (a)
PROJECTED BALANCE SHEETS AS OF THE PROPOSED EFFECTIVE DATE OF THE ACQUISITION OR
THE CLOSING DATE AND AS OF THE END OF AT LEAST THE NEXT SUCCEEDING THREE (3)
FISCAL YEARS OF BORROWER FOLLOWING THE ACQUISITION, (b) PROJECTED STATEMENTS OF
INCOME FOR EACH OF THOSE YEARS, INCLUDING SUFFICIENT DETAIL TO PERMIT
CALCULATION OF THE AMOUNTS AND THE RATIOS DESCRIBED IN SECTION 7.15 HEREOF, AS
PROJECTED AS OF THE EFFECTIVE DATE OF THE ACQUISITION AND FOR THOSE FISCAL YEARS
AND (c) COPIES OF FINANCIAL STATEMENTS OF THE ACQUISITION TARGET FOR THE THREE
(3) IMMEDIATELY PRECEDING FISCAL YEARS
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AUDITED WITH UNQUALIFIED OPINIONS OR REVIEWED BY INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS SATISFACTORY TO THE REQUIRED LENDERS, AND ACCOMPANIED BY (i) A
STATEMENT SETTING FORTH A CALCULATION OF THE RATIOS AND AMOUNTS SO DESCRIBED,
(ii) A STATEMENT IN REASONABLE DETAIL SPECIFYING ALL MATERIAL ASSUMPTIONS
UNDERLYING THE PROJECTIONS AND (iii) SUCH OTHER INFORMATION AS ANY LENDER
SHALL REASONABLY REQUEST."
"'QUICK RATIO' MEANS AS OF ANY DATE OF DETERMINATION A RATIO, THE NUMERATOR OF
WHICH IS THE SUM OF COMPANY'S AND ITS CONSOLIDATED SUBSIDIARIES' CASH, CASH
EQUIVALENTS AND ACCOUNTS AS OF SUCH DATE AND THE DENOMINATOR OF WHICH IS
CONSOLIDATED CURRENT LIABILITIES AS OF SUCH DATE."
"'REVOLVING ADVANCE' MEANS A BORROWING OF THE REVOLVING LOAN REQUESTED BY
BORROWER AND MADE BY LENDERS UNDER SECTION 2.1."
"'REVOLVING COMMITMENT' MEANS THE AGGREGATE COMMITMENT OF THE LENDERS TO MAKE
ADVANCES OF THE REVOLVING LOAN TO BORROWER UNDER SECTION 2.1."
"'TERM LOAN C' HAS THE MEANING SET FORTH IN SECTION 2.9."
"'TERM NOTE C' AND `TERM NOTES C' SHALL HAVE THE MEANINGS SET FORTH IN
SECTION 2.9."
2. The definitions of "Advance", "Applicable Base Rate Margin," "Applicable
LIBOR Margin", "Available Amount," "Letter of Credit Maximum Amount",
"Loans", "Required Lenders", "Revolving Maturity Date", "Swing Line
Commitment", and "Term Loan" set forth in SECTION 1 of the Agreement are
amended to read as follows:
"'ADVANCE' MEANS A REVOLVING ADVANCE OR AN ACQUISITION ADVANCE."
"'APPLICABLE BASE RATE MARGIN' MEANS
(a) FROM THE DATE HEREOF UNTIL THE PRICING MATRIX COMMENCEMENT DATE, (i)
WITH RESPECT TO THE REVOLVING LOAN, THREE EIGHTHS OF ONE PERCENT (.375%) AND
(ii) WITH RESPECT TO TERM LOAN C AND THE ACQUISITION LOAN, FIVE EIGHTHS OF
ONE PERCENT (.625%) AND
(b) ON THE PRICING MATRIX COMMENCEMENT DATE AND THEREAFTER, THE APPLICABLE
PERCENTAGE FOR EACH LOAN SET FORTH BELOW BENEATH SUCH LOAN BASED UPON
BORROWER'S RATIO OF SENIOR DEBT TO EBITDA FOR THE MOST RECENTLY ENDED PERIOD
OF FOUR CONSECUTIVE FISCAL QUARTERS (TAKING INTO ACCOUNT ACTUAL FINANCIAL
RESULTS OF EACH CONSOLIDATED SUBSIDIARY OF BORROWER FOR SUCH ENTIRE FOUR
QUARTER PERIOD NOTWITHSTANDING THAT SUCH SUBSIDIARY MAY HAVE BEEN ACQUIRED
DURING SUCH FOUR QUARTER PERIOD, PROVIDED THAT AGENT SHALL HAVE RECEIVED
AUDITED FINANCIAL STATEMENTS WITH UNQUALIFIED OPINIONS OR FINANCIAL
STATEMENTS REVIEWED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SATISFACTORY
TO THE REQUIRED LENDERS FOR SUCH SUBSIDIARIES FOR SUCH MEASURING PERIOD) AS
SET FORTH IN THE MOST RECENT OFFICER'S CERTIFICATE OF BORROWER FURNISHED
PURSUANT TO SECTION 7.1(c):
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APPLICABLE BASE RATE MARGIN
SENIOR DEBT/EBITDA RATIO REVOLVING LOAN TERM LOAN C ACQUISITION LOAN
------------------------ -------------- ----------- ----------------
< 2.0 0% .250% .250%
> = 2.0 AND < 2.5 .125% .375% .375%
> = 2.5 AND < 3.0 .375% .625% .625%
> = 3.0 .625% .875% .875%"
"'APPLICABLE LIBOR MARGIN' means:
(a) FROM THE DATE HEREOF UNTIL THE PRICING MATRIX COMMENCEMENT DATE, (i)
WITH RESPECT TO THE REVOLVING LOAN, TWO AND THREE EIGHTHS PERCENT (2.375%)
AND (iii) WITH RESPECT TO TERM LOAN C AND THE ACQUISITION LOAN, TWO AND FIVE
EIGHTHS PERCENT (2.625%) AND
(b) ON THE PRICING MATRIX COMMENCEMENT DATE AND THEREAFTER, WITH RESPECT TO
ANY LOAN, THE APPLICABLE PERCENTAGE SET FORTH BELOW BENEATH SUCH LOAN BASED
UPON BORROWER'S RATIO OF SENIOR DEBT TO EBITDA FOR THE MOST RECENTLY ENDED
PERIOD OF FOUR CONSECUTIVE FISCAL QUARTERS (TAKING INTO ACCOUNT ACTUAL
FINANCIAL RESULTS OF EACH CONSOLIDATED SUBSIDIARY OF BORROWER FOR SUCH ENTIRE
FOUR QUARTER PERIOD NOTWITHSTANDING THAT SUCH SUBSIDIARY MAY HAVE BEEN
ACQUIRED DURING SUCH FOUR QUARTER PERIOD, PROVIDED THAT AGENT SHALL HAVE
RECEIVED AUDITED FINANCIAL STATEMENTS WITH UNQUALIFIED OPINIONS OR FINANCIAL
STATEMENTS REVIEWED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SATISFACTORY
TO THE REQUIRED LENDERS FOR SUCH SUBSIDIARIES FOR SUCH MEASURING PERIOD) AS
SET FORTH IN THE MOST RECENT OFFICER'S CERTIFICATE OF BORROWER FURNISHED
PURSUANT TO SECTION 7.1(c):
APPLICABLE LIBOR MARGIN
SENIOR DEBT/EBITDA RATIO REVOLVING LOAN TERM LOAN C ACQUISITION LOAN
------------------------ -------------- ----------- ----------------
< 1.5 1.625% 1.875% 1.875%
> = 1.5 AND < 2.0 1.875% 2.125% 2.125%
> = 2.0 AND < 2.5 2.125% 2.375% 2.375%
> = 2.5 AND < 3.0 2.375% 2.625% 2.625%
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> = 3.0 2.625% 2.875% 2.875%"
"'AVAILABLE AMOUNT' MEANS AS OF ANY DATE THE REVOLVING COMMITMENT LIMIT AS OF
SUCH DATE."
"'LETTER OF CREDIT MAXIMUM AMOUNT' MEANS FIVE MILLION DOLLARS ($5,000,000)."
"'REQUIRED LENDERS' MEANS, AS OF ANY DATE OF DETERMINATION (a) SO LONG AS THE
REVOLVING COMMITMENT LIMIT IS OUTSTANDING HEREUNDER, LENDERS HOLDING NOT LESS
THAN 66-2/3% OF THE AGGREGATE PRINCIPAL AMOUNT OF (i) THE REVOLVING COMMITMENT
LIMIT, PLUS (ii) THE ACQUISITION COMMITMENT LIMIT, PLUS (iii) THE OBLIGATIONS
THEN OUTSTANDING UNDER TERM LOAN C AND (b) IF THE REVOLVING COMMITMENT LIMIT AND
THE ACQUISITION COMMITMENT LIMIT HAVE BEEN TERMINATED, THE LENDERS HOLDING NOT
LESS THAN 66-2/3% OF THE AGGREGATE PRINCIPAL AMOUNT OF THE OBLIGATIONS THEN
OUTSTANDING HEREUNDER; PROVIDED HOWEVER, THAT FOR PURPOSES OF DETERMINING
REQUIRED LENDERS HEREUNDER, OBLIGATIONS OUTSTANDING UNDER ANY LETTER OF CREDIT
SHALL BE ALLOCATED AMONG THE LENDERS BASED ON THEIR RESPECTIVE PERCENTAGES OF
THE REVOLVING COMMITMENT."
"'REVOLVING MATURITY DATE' MEANS THE EARLIER OF (i) DECEMBER 31, 2002 AND (ii)
THE DATE ON WHICH THE REVOLVING COMMITMENT IS TERMINATED PURSUANT TO SECTION
8.2."
"'SWING LINE COMMITMENT' MEANS THREE MILLION DOLLARS ($3,000,000) SUBJECT TO
TERMINATION PURSUANT TO SECTION 8.2."
"'TERM LOANS' MEANS TERM LOAN A, TERM LOAN B AND TERM LOAN C."
"'LOAN' MEANS EACH OF THE REVOLVING LOAN, TERM LOAN A, TERM LOAN B, TERM LOAN C
AND THE ACQUISITION LOAN, OR ANY PORTION THEREOF. `LOANS' MEANS ALL OF SUCH
LOANS COLLECTIVELY."
3. The term "Facilities", wherever used in the Agreement, means the
Revolving Loan, the Acquisition Loan, Term Loan A, Term Loan B or Term Loan C
and "Facility" means any of them.
4. SECTION 2.1 of the Agreement is amended to read as follows:
"2.1 REVOLVING LOAN LENDERS AGREE TO MAKE AVAILABLE TO BORROWER, IN AN AMOUNT
NOT TO EXCEED EACH SUCH LENDER'S PERCENTAGE OF THE REVOLVING LOAN, A REVOLVING
LINE OF CREDIT (THE `REVOLVING LOAN') IN THE MAXIMUM PRINCIPAL AMOUNT
OUTSTANDING AT ANY TIME OF TWENTY FIVE MILLION DOLLARS ($25,000,000) (THE
`REVOLVING COMMITMENT LIMIT') WHICH REVOLVING LOAN SHALL BE EVIDENCED BY ONE OR
MORE REVOLVING NOTES, EACH SUBSTANTIALLY IN THE FORM OF EXHIBIT A ANNEXED HERETO
(EACH A `REVOLVING NOTE' AND COLLECTIVELY THE `REVOLVING NOTES'). EACH REVOLVING
NOTE SHALL BE REGISTERED IN THE NAME OF A LENDER AND SHALL HAVE A MAXIMUM
PRINCIPAL AMOUNT EQUAL TO SUCH LENDER'S PERCENTAGE OF THE REVOLVING COMMITMENT.
THE REVOLVING LOAN SHALL MATURE AND BE PAYABLE IN FULL ON THE REVOLVING MATURITY
DATE. SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION, SECTION 3.7, BORROWER MAY FROM TIME TO TIME REPAY ALL
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OR A PORTION OF THE AMOUNTS OUTSTANDING UNDER THE REVOLVING LOAN (TOGETHER
WITH ACCRUED INTEREST TO THE DATE OF REPAYMENT ON THE PRINCIPAL AMOUNT SO
REPAID), WHICH AMOUNTS MAY BE REBORROWED (SUBJECT TO THE REVOLVING COMMITMENT
LIMIT AND THE AVAILABLE AMOUNT) SO LONG AS THE REVOLVING COMMITMENT OF THE
LENDERS TO MAKE ADVANCES UNDER THE REVOLVING LOAN HAS NOT BEEN TERMINATED. IN
NO EVENT SHALL THE SUM OF THE AGGREGATE OUTSTANDING ADVANCES PLUS THE
OUTSTANDING LETTER OF CREDIT OBLIGATIONS EXCEED THE LESSER OF (i) THE
REVOLVING COMMITMENT LIMIT OR (ii) THE AVAILABLE AMOUNT."
5. SECTION 2.4(b) of the Agreement is amended to read as follows:
"(b) UNLESS AGENT SHALL HAVE BEEN NOTIFIED BY TELEPHONE, CONFIRMED IN WRITING,
BY ANY LENDER BY 5:00 P.M., PACIFIC TIME, ON THE BUSINESS DAY PRIOR TO AN
ADVANCE THAT SUCH LENDER WILL NOT MAKE AVAILABLE THE AMOUNT WHICH WOULD
CONSTITUTE ITS PERCENTAGE OF SUCH ADVANCE ON THE DATE SPECIFIED THEREFORE, AGENT
MAY ASSUME THAT SUCH LENDER HAS MADE SUCH AMOUNT AVAILABLE TO AGENT AND, IN
RELIANCE UPON SUCH ASSUMPTION, MAKE AVAILABLE TO BORROWER A CORRESPONDING
AMOUNT. IF AND TO THE EXTENT THAT SUCH LENDER SHALL NOT HAVE MADE SUCH AMOUNT
AVAILABLE TO AGENT, SUCH LENDER AND BORROWER SEVERALLY AGREE TO REPAY AGENT
FORTHWITH ON DEMAND SUCH CORRESPONDING AMOUNT TOGETHER WITH INTEREST THEREON FOR
EACH DAY FROM THE DATE AGENT MADE SUCH AMOUNT AVAILABLE TO BORROWER TO THE DATE
SUCH AMOUNT IS REPAID TO AGENT, AT THE INTEREST RATE APPLICABLE AT THE TIME TO
THE PORTION OF THE REVOLVING LOAN OR ACQUISITION LOAN COMPRISING SUCH ADVANCE."
6. SECTION 2.6(c) is added to the Agreement as follows:
"(c) ON THE DATE OF EACH ACQUISITION ADVANCE UNDER THE ACQUISITION LOAN,
BORROWER SHALL PAY TO THE AGENT FOR DISTRIBUTION TO THE LENDERS, PRO RATA IN
ACCORDANCE WITH THEIR PERCENTAGES, A NON-REFUNDABLE DRAW FEE (`DRAW FEE') EQUAL
TO TWELVE AND ONE-HALF (12.5) BASIS POINTS OF THE AMOUNT OF SUCH ACQUISITION
ADVANCE."
7. Each reference to the term "Advance" in SECTIONS 2.7 AND 2.8 of the
Agreement shall mean Revolving Advances.
8. The reference to the term "Commitment" in Section 2.8(j) of the
Agreement shall mean the Revolving Commitment.
9. SECTION 2.9 is added to Agreement as follows:
"2.9 TERM LOAN C. SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, LENDERS
AGREE TO PROVIDE BORROWER ON THE DATE HEREOF WITH A TERM LOAN (`TERM LOAN C') IN
THE PRINCIPAL AMOUNT OF EIGHTEEN MILLION TWELVE THOUSAND SEVEN HUNDRED SEVENTY
SEVEN DOLLARS AND 14/100 DOLLARS ($18,012,777.14) WHICH TERM LOAN C SHALL BE
EVIDENCED BY ONE OR MORE TERM NOTES EACH SUBSTANTIALLY IN THE FORM OF EXHIBIT
`T' HERETO (EACH `TERM NOTE C' AND COLLECTIVELY `TERM NOTES C') PAYABLE TO EACH
LENDER IN AN AMOUNT EQUAL TO EACH LENDER'S PERCENTAGE OF TERM LOAN C. IN NO
EVENT MAY BORROWER RE-BORROW ANY PRINCIPAL PORTION OF TERM
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LOAN C THAT HAS BEEN REPAID. THE PROCEEDS OF TERM LOAN C SHALL BE USED BY
BORROWER TO REPAY IN FULL THE INDEBTEDNESS OUTSTANDING UNDER TERM LOAN A AND
TERM LOAN B. THE PRINCIPAL OF TERM LOAN C SHALL BE PAYABLE AS PROVIDED IN
SECTION 3.3(g) AND INTEREST SHALL BE PAYABLE CONCURRENTLY WITH PRINCIPAL. AT
ITS OPTION, BORROWER MAY FROM TIME TO TIME PREPAY ALL OR ANY PORTION OF THE
OUTSTANDING PRINCIPAL OF TERM LOAN C, TOGETHER WITH ACCRUED INTEREST ON THE
PRINCIPAL BEING SO REPAID AND ANY AMOUNT PAYABLE PURSUANT TO SECTION 3.7.
BORROWER SHALL BE ENTITLED TO DESIGNATE THE SCHEDULED PRINCIPAL PAYMENTS TO
WHICH ANY PARTIAL VOLUNTARY PREPAYMENT UNDER TERM LOAN C IS TO BE APPLIED; IN
SUCH EVENT BORROWER SHALL PAY ACCRUED INTEREST ON THE OUTSTANDING PRINCIPAL
OF TERM LOAN C ON THE PAYMENT DATE WHEN SUCH PREPAID PRINCIPAL AMOUNT WOULD
OTHERWISE HAVE BEEN DUE."
10. SECTION 2.10 is added to the Agreement as follows:
"2.10 ACQUISITION LOAN. LENDERS AGREE TO MAKE AVAILABLE TO BORROWER, IN AN
AMOUNT NOT TO EXCEED EACH SUCH LENDER'S PERCENTAGE OF THE ACQUISITION LOAN, A
NONREVOLVING LINE OF CREDIT (THE `ACQUISITION LOAN') IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED FIFTEEN MILLION DOLLARS ($15,000,000) (THE `ACQUISITION
COMMITMENT LIMIT') WHICH ACQUISITION LOAN SHALL BE EVIDENCED BY ONE OR MORE
NOTES, EACH SUBSTANTIALLY IN THE FORM OF EXHIBIT `U' HERETO (EACH AN
`ACQUISITION NOTE' AND COLLECTIVELY THE `ACQUISITION NOTES'). EACH ACQUISITION
NOTE SHALL BE REGISTERED IN THE NAME OF A LENDER IN AN AMOUNT EQUAL TO SUCH
LENDER'S PERCENTAGE OF THE ACQUISITION COMMITMENT LIMIT. ACQUISITION ADVANCES
SHALL BE AVAILABLE FROM THE DATE HEREOF THROUGH NOVEMBER 1, 2001. PRINCIPAL
SHALL BE PAID AS PROVIDED IN SECTION 3.3(h). SUBJECT TO THE TERMS AND CONDITIONS
OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, SECTION 3.7, BORROWER MAY FROM
TIME TO TIME REPAY ALL OR PORTION OF THE AMOUNTS OUTSTANDING UNDER THE
ACQUISITION LOAN (TOGETHER WITH ACCRUED INTEREST TO THE DATE OF REPAYMENT ON THE
PRINCIPAL AMOUNT SO REPAID) PROVIDED, HOWEVER, THAT ANY SUCH AMOUNTS REPAID
CANNOT BE REBORROWED. IN NO EVENT SHALL THE SUM OF THE AGGREGATE ACQUISITION
ADVANCES EXCEED THE ACQUISITION COMMITMENT LIMIT. THE PROCEEDS OF ACQUISITION
ADVANCES SHALL BE USED SOLELY TO FINANCE PERMITTED ACQUISITIONS."
11. The cash flow recapture covenant set forth is SECTION 3.3(e) of the
Agreement is deleted and replaced by the following:
"(e) [RESERVED]."
12. The last sentence of SECTION 3.3(d) of the Agreement is amended to read as
follows:
"ALL NET CASH PROCEEDS PAID TO AGENT AS HEREIN PROVIDED SHALL BE DISTRIBUTED TO
THE LENDERS FOR APPLICATION FIRST TO REPAY THE INDEBTEDNESS OUTSTANDING UNDER
TERM NOTES C, ON A PRO RATA BASIS, AND THEN TO THE PRINCIPAL INDEBTEDNESS
OUTSTANDING UNDER THE ACQUISITION NOTES, ON A PRO RATA BASIS."
13. SECTION 3.3(g) is added to the Agreement as follows:
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"(g) THE PRINCIPAL OF TERM LOAN C SHALL BE PAYABLE IN FORTY-EIGHT (48) MONTHLY
INSTALLMENTS OF THREE HUNDRED SEVENTY SEVEN THOUSAND ONE HUNDRED EIGHTY SIX AND
93/100 DOLLARS ($377,186.93) EACH COMMENCING ON NOVEMBER 1, 1999 AND THE FIRST
BUSINESS DAY OF EACH MONTH THEREAFTER UNTIL NOVEMBER 1, 2003, WHEN TERM LOAN C
SHALL MATURE AND BE PAYABLE IN FULL. INTEREST ON EACH TERM NOTE C SHALL BE
REPAID IN ACCORDANCE WITH SECTION 3.2 OF THE AGREEMENT."
14. SECTION 3.3(h) is added to the Agreement as follows:
"(h) EACH ACQUISITION ADVANCE SHALL BE REPAID IN SIXTY (60) MONTHLY PRINCIPAL
INSTALLMENTS EACH EQUAL TO 1/60TH OF THE PRINCIPAL AMOUNT OF SUCH ACQUISITION
ADVANCE, COMMENCING ON THE FIRST BUSINESS DAY OF THE FIRST MONTH IMMEDIATELY
FOLLOWING THE DATE OF THE ACQUISITION ADVANCE AND ON THE FIRST BUSINESS DAY OF
EACH MONTH THEREAFTER UNTIL THE DATE WHICH IS FIVE (5) YEARS AFTER THE DATE OF
SUCH ACQUISITION ADVANCE WHEN SUCH ACQUISITION ADVANCE SHALL MATURE AND BE
PAYABLE IN FULL. INTEREST ON EACH ACQUISITION ADVANCE SHALL BE REPAID IN
ACCORDANCE WITH SECTION 3.2 OF THE AGREEMENT."
15. SECTION 7.1(a) of the Agreement is amended to read as follows:
"(a) AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 30 DAYS AFTER THE END OF EACH
MONTH, COPIES OF THE CONSOLIDATED AND CONSOLIDATING BALANCE SHEETS OF BORROWER
AND ITS SUBSIDIARIES AS OF THE END OF SUCH MONTH, AND OF THE RELATED
CONSOLIDATED AND CONSOLIDATING STATEMENTS OF OPERATIONS, EARNINGS AND CASH FLOWS
FOR SUCH MONTH AND FOR THE PORTION OF THE FISCAL YEAR OF BORROWER ENDED WITH THE
LAST DAY OF SUCH MONTH, ALL IN REASONABLE DETAIL AND STATING IN COMPARATIVE FORM
(i) THE CONSOLIDATED AND CONSOLIDATING FIGURES AS OF THE END OF AND FOR THE
CORRESPONDING DATE AND PERIOD IN THE PREVIOUS FISCAL YEAR AND (ii) THE
CORRESPONDING FIGURES FROM THE CONSOLIDATED BUDGET OF BORROWER AND ITS
SUBSIDIARIES FOR SUCH PERIOD, ALL SUCH STATEMENTS BEING CERTIFIED BY THE CHIEF
FINANCIAL OFFICER OF BORROWER;"
16. SECTION 7.1(c) of the Agreement is amended to read as follows:
"(c) WITHIN 30 DAYS AFTER THE END OF EACH MONTH, AN OFFICER'S CERTIFICATE OF
BORROWER (1) SETTING FORTH CALCULATIONS IN REASONABLE DETAIL DEMONSTRATING
WHETHER OR NOT AS AT THE END OF SUCH MONTH BORROWER WAS IN COMPLIANCE WITH
SECTIONS 7.7, 7.8 AND 7.15 OF THIS AGREEMENT AND (2) STATING THAT, BASED UPON
SUCH EXAMINATION OR INVESTIGATION AND REVIEW OF THIS AGREEMENT AND OTHER LOAN
DOCUMENTS AS IN THE OPINION OF THE SIGNER IS NECESSARY TO ENABLE THE SIGNER TO
EXPRESS AN INFORMED OPINION WITH RESPECT THERETO, NO DEFAULT BY BORROWER AND ITS
SUBSIDIARIES IN THE FULFILLMENT OF ANY OF THE TERMS, COVENANTS, PROVISIONS OR
CONDITIONS OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS EXISTS OR HAS EXISTED
DURING SUCH MONTH OR, IF SUCH A DEFAULT SHALL EXIST OR HAVE EXISTED, THE NATURE
AND PERIOD OF EXISTENCE THEREOF AND WHAT ACTION BORROWER (OR THE APPLICABLE
SUBSIDIARY) HAS TAKEN, IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO;"
17. SECTION 7.11 of the Agreement is amended to read as follows:
"7.11 MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS; ACQUISITIONS. BORROWER
WILL NOT, AND
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WILL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, ENTER INTO ANY TRANSACTION OF
MERGER OR CONSOLIDATION, OR LIQUIDATE, WIND UP OR DISSOLVE ITSELF (OR SUFFER
ANY LIQUIDATION OR DISSOLUTION), OR CONVEY, SELL, LEASE, TRANSFER OR
OTHERWISE DISPOSE OF, IN ONE TRANSACTION OR A SERIES OF TRANSACTIONS, ALL OR
ANY PART OF ITS BUSINESS, PROPERTY OR FIXED ASSETS, WHETHER NOW OWNED OR
HEREAFTER ACQUIRED, OR ACQUIRE BY PURCHASE OR OTHERWISE ALL OR SUBSTANTIALLY
ALL OF THE BUSINESS, PROPERTY OR FIXED ASSETS OF, OR STOCK OR OTHER EVIDENCE
OF BENEFICIAL INTEREST IN ANY PERSON, EXCEPT:
(a) BORROWER AND ITS SUBSIDIARIES MAY IN THE ORDINARY COURSE OF ITS BUSINESS
SELL OR OTHERWISE DISPOSE OF INVENTORY;
(b) BORROWER AND ITS SUBSIDIARIES MAY SELL OR OTHERWISE DISPOSE OF, IN THE
ORDINARY COURSE OF BUSINESS, (i) PROPERTY THAT IS WORN OUT OR OBSOLETE OR NO
LONGER USED IN ITS BUSINESS, AND (ii) OTHER PROPERTY IN AN AMOUNT NOT TO EXCEED
AN AGGREGATE FAIR MARKET VALUE OF $500,000 ON A CONSOLIDATED BASIS PER FISCAL
YEAR;
(c) ANY SUBSIDIARY OF BORROWER MAY MERGE WITH BORROWER (PROVIDED THAT BORROWER
IS THE SURVIVING ENTITY) OR ANY OTHER SUBSIDIARY OF BORROWER; AND
(d) PERMITTED ACQUISITIONS."
18. Section 7.14 of the Agreement is amended to read as follows:
"7.14 RESTRICTED PAYMENTS AND INVESTMENTS. BORROWER WILL NOT, AND WILL NOT
PERMIT ANY OF ITS SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, MAKE
(i) ANY RESTRICTED PAYMENT OTHER THAN (a) RESTRICTED PAYMENTS TO BORROWER AND
(b) THE PAYMENTS AND DISTRIBUTIONS DESCRIBED IN CLAUSES (a) AND (b) OF THE
DEFINITION OF `RESTRICTED PAYMENTS', PROVIDED THAT IMMEDIATELY PRIOR TO AND
AFTER GIVING EFFECT TO ANY SUCH PAYMENT OR DISTRIBUTION NO EVENT OF DEFAULT
SHALL HAVE OCCURRED AND BE CONTINUING, OR
(ii) ANY INVESTMENT OTHER THAN PERMITTED INVESTMENTS AND THE LOANS TO BORROWER'S
SUBSIDIARIES PERMITTED UNDER SECTION 7.7(d). THIS SECTION 7.14 SHALL NOT
PROHIBIT BORROWER OR ANY SUBSIDIARY FROM OWNING THE CAPITAL STOCK OF THEIR
RESPECTIVE SUBSIDIARIES; PROVIDED THAT NO INVESTMENTS MAY BE MADE IN EXCLUDED
SUBSIDIARIES IN EXCESS OF THOSE INVESTMENTS EXISTING AS OF THE CLOSING DATE."
19. SECTION 7.15(a) of the Agreement is amended to read as follows:
"(a) BORROWER WILL HAVE, AS OF THE LAST DAY OF EACH MONTH, A BOOK NET WORTH OF
NOT LESS THAN THE FOLLOWING DURING THE PERIODS SET FORTH BELOW:
FROM AUGUST 31, 1999 THROUGH AUGUST 30, 2000 $34,000,000
FROM AUGUST 31, 2000 THROUGH AUGUST 30, 2001 $39,000,000
FROM AUGUST 31, 2001 THROUGH AUGUST 30, 2002 $44,000,000
9
FROM AUGUST 31, 2002 AND THEREAFTER $49,000,000"
20. The Total Liabilities to Book Net Worth ratio set forth in Section
7.15(b) of the Agreement is hereby deleted and replaced by the following:
"(b) [RESERVED.]"
21. SECTION 7.15(c) of the Agreement is amended to read as follows:
"(c) BORROWER WILL HAVE, AS AT THE END OF EACH MONTH, A RATIO OF FUNDED DEBT TO
EDITDA (TAKING INTO ACCOUNT ACTUAL FINANCIAL RESULTS OF EACH CONSOLIDATED
SUBSIDIARY OF BORROWER FOR THE TWELVE MONTH PERIOD ENDING ON THE DATE OF
DETERMINATION NOTWITHSTANDING THAT SUCH SUBSIDIARY MAY HAVE BEEN ACQUIRED DURING
SUCH PERIOD, PROVIDED THAT AGENT SHALL HAVE RECEIVED AUDITED FINANCIAL
STATEMENTS WITH UNQUALIFIED OPINIONS OR FINANCIAL STATEMENTS REVIEWED BY
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SATISFACTORY TO THE REQUIRED LENDERS
FOR SUCH SUBSIDIARIES FOR SUCH TWELVE MONTH PERIOD) OF NOT MORE THAT 3.5: 1."
22. SECTION 7.15(d) of the Agreement is amended to read as follows:
"(d) BORROWER SHALL AT ALL TIMES HAVE A RATIO OF (x) CONSOLIDATED NET INCOME
PLUS DEPRECIATION AND AMORTIZATION (TAKING INTO ACCOUNT ACTUAL FINANCIAL RESULTS
OF EACH CONSOLIDATED SUBSIDIARY OF BORROWER FOR THE TWELVE MONTH PERIOD ENDING
ON THE DATE OF DETERMINATION NOTWITHSTANDING THAT SUCH SUBSIDIARY MAY HAVE BEEN
ACQUIRED DURING SUCH PERIOD, PROVIDED THAT AGENT SHALL HAVE RECEIVED AUDITED
FINANCIAL STATEMENTS WITH UNQUALIFIED OPINIONS OR FINANCIAL STATEMENTS REVIEWED
BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SATISFACTORY TO THE REQUIRED LENDERS
FOR SUCH SUBSIDIARIES FOR SUCH TWELVE MONTH PERIOD) LESS DIVIDENDS PAID TO
SHAREHOLDERS OF COMPANY FOR THE TWELVE MONTH PERIOD ENDING ON SUCH DATE TO (y)
THE CURRENT PORTION OF LONG-TERM INDEBTEDNESS PLUS CAPITAL EXPENDITURES INCURRED
BUT NOT FINANCED DURING THE APPLICABLE PERIOD OF MEASUREMENT OF NOT LESS THAN
1.5 TO 1.0, AS AT THE END OF EACH MONTH FOR THE PERIOD OF TWELVE CONSECUTIVE
MONTHS THEN ENDED."
23. The Consolidated Current Assets to Consolidated Current Liabilities ratio
set forth in SECTION 7.15(e) of the Agreement is deleted and replaced by the
following::
"(e) BORROWER WILL HAVE, AS AT THE LAST DAY OF EACH MONTH, A QUICK RATIO OF NOT
LESS THAN .45:1.0."
24. SECTION 9.14 of the Agreement is amended to read as follows:
"9.14 APPLICATION OF PROCEEDS OF COLLATERAL. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, AFTER AN EVENT OF DEFAULT, THE PROCEEDS OF ANY
COLLATERAL, TOGETHER WITH ANY OFFSETS, VOLUNTARY PAYMENTS BY BORROWER OR ANY
SUBSIDIARY OF THE BORROWER OR OTHERS AND ANY OTHER SUMS RECEIVED OR COLLECTED IN
RESPECT OF THE INDEBTEDNESS, SHALL BE APPLIED, FIRST, TO THE ADVANCES OF THE
REVOLVING LOAN, THE ACQUISITION LOAN, TERM LOAN C AND ANY REIMBURSEMENT
OBLIGATIONS
10
ON A PRO RATA BASIS (OR IN SUCH ORDER AND MANNER AS DETERMINED BY
THE REQUIRED LENDERS; SUBJECT, HOWEVER, TO THE APPLICABLE PERCENTAGES OF THE
LOANS HELD BY EACH OF THE LENDERS), NEXT, TO ANY OTHER INDEBTEDNESS ON A PRO
RATA BASIS, AND THEN, IF THERE IS ANY EXCESS, TO BORROWER AND THE SUBSIDIARIES,
AS THE CASE MAY BE. SUBJECT TO THE TERMS OF THIS SECTION 9.14, THE APPLICATION
OF SUCH PROCEEDS AND OTHER SUMS TO THE ADVANCES OF THE REVOLVING CREDIT, THE
ACQUISITION LOAN, TERM LOAN C AND THE REIMBURSEMENT OBLIGATIONS SHALL BE BASED
ON EACH LENDER'S PERCENTAGE OF THE AGGREGATE OF THE LOANS."
25. Section 10.2(g) of the Agreement is hereby deleted.
26. SCHEDULES 6.4, 6.5(b), 6.6, 6.7(a), 6.8(a), 6.9, 6.10, 6.21, 6.22, 6.23,
6.31 and 7.19 of the Agreement are amended as annexed hereto. EXHIBIT A is
amended and restated in the form annexed hereto. EXHIBITS T, U AND V are added
to the Agreement in the form annexed hereto. SCHEDULE 1 of the Agreement is
amended to read in the form of SCHEDULE 1 annexed hereto.
27. Pursuant to this Amendment, the parties have modified the definition
of "Available Amount" effectively deleting the requirement that the Revolving
Loan be governed by the Borrowing Base. In the event at any time after the
occurrence of an Event of Default or if after the date hereof Borrower=s
Funded Debt to EDITDA ratio equals or exceeds 3.0 to 1 (as determined by
reference to the financial statements furnished Agent and Lenders pursuant to
Section 7.1), the Required Lenders have the right to reinstate the Borrowing
Base. Upon the written instruction of Required Lenders to Agent, the Agent
shall give Borrower written notice of the Lenders' election to reinstate the
Borrowing Base and effective on (but not until) the 20th day following
delivery of written notice of such reinstatement by Agent to Borrower in the
form of EXHIBIT V annexed hereto, the definition of "Available Amount"
automatically shall be deemed amended to read as follows:
"'AVAILABLE AMOUNT' MEANS AS OF ANY DATE THE LESSER OF (i) THE
BORROWING BASE AS OF SUCH DATE AND (ii) THE REVOLVING COMMITMENT LIMIT
AS OF SUCH DATE."
Within 20 days of receipt of such written notice of reinstatement, Borrower
shall furnish Agent, with copies for the Lenders, with a Borrowing Base
Certificate as of the last Business Day of the immediately preceding month.
Unless and until the Borrowing Base is reinstated pursuant to this paragraph,
Borrower shall not be required to furnish Agent and the Lenders with the
documents and information required under SECTION 7.1(e) (i) and (iii) of the
Agreement, but Borrower shall continue to be required to furnish Agent and the
Lenders on a quarterly basis with the other documents and information required
under SECTION 7.1(e) (ii) AND (iv) of the Agreement.
28. For purposes of calculating the financial covenants set forth in
the Agreement, Borrower shall be permitted to take into account actual financial
results of each consolidated Subsidiary of Borrower for the applicable measuring
period notwithstanding that such Subsidiary may have been acquired during such
measuring period, provided that Agent shall have received audited financial
statements with unqualified opinions or financial statements reviewed by
independent certified public accountants satisfactory to the Required Lenders
for such measuring period.
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29. The above amendments shall be effective as of the date hereof upon
issuance by Borrower of the Revolving Notes, Term Notes C and the Acquisition
Notes (all in the form annexed hereto) and delivery by Borrower to Agent of all
of the documents set forth on the closing agenda annexed hereto.
30. Except as expressly modified hereby, all the terms of and
conditions of the Agreement shall remain in full force and effect. A default
under this Amendment shall constitute an Event of Default.
31. Borrower hereby represents and warrants that, after giving effect
to the amendments contained herein, (a) execution, delivery and performance of
this Amendment and any other documents and instruments required under this
Amendment or the Agreement are within Borrower=s powers, have been duly
authorized, are not in contravention of law or the terms of the Borrower=s
Articles of Incorporation or Bylaws or Articles of Organization or Operating
Agreement, as applicable, and do not require the consent or approval of any
governmental body, agency, or authority; and this Amendment and any other
documents and instruments required under this Amendment or the Agreement, will
be valid and binding in accordance with their terms; (b) the representations and
warranties of Borrower set forth in SECTIONS 6.1 THROUGH 6.4 AND 6.6 THROUGH
6.32 of the Agreement are true and correct in all material respects on and as of
the date hereof with the same force and effect as if made on and as of the date
hereof; (c) the representations and warranties of Borrower set forth in SECTION
6.5 of the Agreement are true and correct in all material respects as of the
date hereof with respect to the most recent financial statements furnished to
the Lenders by Borrowers in accordance with SECTION 7.1 of the Agreement; and
(d) no Event of Default, or condition or event which, with the giving of notice
or the running of time, or both, would constitute an Event of Default under the
Agreement, has occurred and is continuing as of the date hereof.
32. This Amendment may be signed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK-CALIFORNIA, SUMMA INDUSTRIES
as Agent
By: /s/ XXXXX XXXXXXXX By: /s/ XXXXXX X. XXXXXXXX
------------------------------- ---------------------------------
Its: Vice President Its: Vice President
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REVOLVING/TERM/ACQUISITION LENDERS: COMERICA BANK- CALIFORNIA
By: /s/ XXXXX XXXXXXXX
------------------------------
Its: Vice President
MELLON BANK, N.A.
By: /s/ XXXXX XXXXXXXXX
------------------------------
Its: Vice President
SWINGLINE LENDER: COMERICA BANK- CALIFORNIA
By: /s/ XXXXX XXXXXXXX
------------------------------
Its: Vice President
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SCHEDULE 1
PERCENTAGES
COMERICA BANK 66%
MELLON BANK 34%
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