FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT
Exhibit 10(b)
FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT
This First Amendment to Revolving Credit and Security Agreement (this
“Amendment”) is made and entered into as of December 28, 2006 by and among
LESCO, INC., an Ohio corporation, LESCO SERVICES, INC., an Ohio corporation, AIM LAWN
& GARDEN PRODUCTS, INC., an Ohio corporation, and LESCO TECHNOLOGIES, LLC, a Nevada
limited liability company (collectively, the “Borrowers”), the Lenders party
to the Agreement (as defined below), NATIONAL CITY BUSINESS CREDIT, INC., an Ohio
corporation, as agent for the Lenders (the “Agent”), and NATIONAL CITY BANK, a
national banking association, as the Issuer.
PRELIMINARY STATEMENTS
A. The Borrowers, the Agent, the Lenders and the Issuer have entered into that certain Revolving Credit and Security Agreement dated as of September 27, 2006 (the “Agreement”).
B. The Borrowers, the Agent, the Lenders and the Issuer desire to amend the Agreement pursuant to the terms and conditions of this Amendment.
C. Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Agreement.
NOW, THEREFORE, for valuable consideration received to their mutual satisfaction, the Borrowers, the Agent, the Lenders and the Issuer hereby agree as follows:
1. Amendment to Section 1-2 — Definitions. The definition of “Availability
Block,” contained in Section 1.2 of the Agreement is hereby deleted in its entirety and
replaced with the following:
“Availability Block” shall mean (a) Two Million Five
Hundred Thousand Dollars ($2,500,000) from December 28, 2006
through January 30, 2007, (b) Five Million Dollars ($5,000,000)
from January 31, 2007 through February 27, 2007, and (c) Ten
Million Dollars ($10,000,000) at all times thereafter; provided
that the Availability Block shall be reduced to $0 at such time as
the Loan Parties are in compliance with the financial standards
contained in Section 6(d) of the TCS Supply Agreement for at least
one fiscal quarter; and, provided further that, the Availability
Block shall immediately be Ten Million Dollars ($10,000,000) at
such time as the Loan Parties are not in compliance with the
financial standards contained in Section 6(d) of the TCS Supply
Agreement.
2. Amendment to Section 3.1 — Interest Rates. Notwithstanding the
provisions of Section 3.1 or any other provision contained in the Agreement to the contrary, from
December 28, 2006 through the later of (a) April 30, 2007 or (b) the last day of the
calendar month in which the Agent receives the March 31, 2007 Borrowing Base Certificate, the
Applicable Libor Rate Margin and the Applicable Letter of Credit Fee
Percentage shall equal 2.25%. On the later
of May 1, 2007 or the first day of the first calendar month after the calendar month
in which the Agent receives the March 31, 2007 Borrowing Base Certificate, the
Applicable Libor Rate Margin and the Applicable Letter of Credit Fee Percentage shall
revert to the rates set forth in the pricing grid contained in Section 3.l(b) of the
Agreement.
3. Amendment to Section 9.11 — Delivery of Projections. Notwithstanding
the provisions of Section 9.11 to the contrary, the Borrowers shall have until January
31, 2007 to provide to the Agent their fiscal year 2007 preliminary operating
projections. All future preliminary operating projections required to be delivered to
the Agent pursuant to Section 9.11 shall be delivered in accordance with the time periods
set forth in such Section.
4. Amendment to Article X — Events of Defaults. Article X of the
Agreement is hereby amended by inserting new Section 10.21 to the end of such Article.
10.21 Revolving Advance Paydown. Failure of the
Borrowers to pay in full all outstanding Revolving Advances on
or before April 30, 2007 and to maintain a $0 Revolving Advance
balance for at least 15 consecutive days thereafter.
5. Notice of Cash Dominion. The Borrowers hereby agree that, pursuant to the
cash dominion terms contained in Section 4.15(g) of the Agreement, upon the execution of
this Amendment, they will immediately notify each of their Customers, and use their best
efforts to cause each of their Customers, to forward all collections of every kind due to
the Borrowers to a Lockbox subject to a Blocked Account Agreement. The Borrowers shall
continue to use commercially reasonable efforts to request that their Customers send such
collections to such Lockboxes until the later of (a) the date on which the Threshold
Availability (after adding back the Availability Block) equals or exceeds $12,500,000 for
a. minimum of 30 consecutive calendar days or (b) April 1, 2007 (the “Reversion
Date”). After the Reversion Date, the terms of
Section 4.15(g) of the Agreement shall once again apply to the Borrowers.
Section 4.15(g) of the Agreement shall once again apply to the Borrowers.
6. Trade Name Appraisal. The Borrowers hereby agree to conduct an
appraisal of the trade name “LESCO”, to be completed as soon as is reasonably practical
following the date hereof, but in no event later that February 15, 2007. The appraiser
and the form and substance of the appraisal shall be acceptable to the Agent in its
reasonable discretion. All costs of such appraisal shall be for the account of the
Borrowers.
7. Consultant. The Borrowers hereby agree that, from the date
hereof until the Facility Termination Date, at the request of the Agent, which request
shall be in the Agent’s sole and absolute discretion, the Borrowers shall hire any
consultant that the Agent requests the Borrowers to hire, which hiring shall be on such
terms as the Agent so requests. All fees and costs of any such consultant shall be for
the account of the Borrowers.
8. Fees and Expenses. The Borrowers hereby agree to (a) pay to the
Agent, for the benefit of the Agent and the Lenders, an amendment fee in the amount
of $150,000 due and payable on the date hereof and (b) reimburse the Agent and the
Lenders for all reasonable out-of-pocket costs, fees and expenses incurred in
connection with this Amendment, including, without limitation, reasonable attorneys’
fees.
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9. Release of Claims. In consideration of this Amendment, the Borrowers hereby
release and discharge the Agent, the Lenders and their respective shareholders, directors,
officers, employees, attorneys, affiliates and subsidiaries from any and all claims,
demands, liability and causes of action whatsoever, now known or unknown, arising prior to
the date hereof out of or in any way related to the extension or administration of the
Obligations of the Borrowers, the Agreement or any mortgage or security interest related
thereto.
10. No Change or Effect. The Borrowers, the Agent and the Lenders hereby agree
to continue all liens and security interests securing the Obligations until said
Obligations, as modified herein, and any and all related promissory notes have been fully
paid. The parties hereto further agree that this Amendment shall in no manner affect or
impair the liens and security interests evidenced by the Agreement, the Other Documents,
and/or any other instruments evidencing, securing or related to the Obligations. The
Borrowers hereby acknowledge that all liens and security interests securing the Obligations
are valid and subsisting.
11. Obligations Absolute. The Borrowers covenant and agree (a) to pay the
balance of any principal, together with all accrued interest, as specified above in
connection with any promissory note executed and evidencing any indebtedness incurred in
connection with the Agreement, as modified by this Amendment pursuant to the terms set
forth therein, and (b) to perform and observe covenants, agreements, stipulations and
conditions on its part to be performed hereunder or under the Agreement and all Other
Documents executed in connection herewith or thereof.
12.
No Set Offs, Etc. The Borrowers hereby declare that the Borrowers have no
set offs, counterclaims, defenses or other causes of action against the Agent or the
Lenders arising out of the Agreement or any Other Documents, and to the extent any such set
offs, counterclaims, defenses or other causes of action may exist, whether known or
unknown, such items are hereby waived by the Borrowers.
13.
Counterparts; Facsimile. This Amendment may be executed in counterparts and all such counterparts shall constitute one agreement binding on all the parties,
notwithstanding that the parties are not signatories to the same counterpart. The parties may execute
this Amendment by facsimile, and all such facsimile signatures shall have the same force and effect as manual signatures delivered in person.
14. Representations and Warranties. The Borrowers hereby represent and warrant to the Agent and the Lenders that (a) the Borrowers have the legal power and authority to
execute and deliver this Amendment, (b) the officials executing this Amendment have been duly authorized to execute and deliver the same and bind the Borrowers with respect to the
provisions hereof, (c) the execution and delivery hereof by the Borrowers and the performance and observance by the Borrowers of the provisions hereof do not violate or conflict with the
organizational agreements of the Borrowers or any law applicable to the Borrowers or result in a breach of any provisions of or constitute a default under any other material agreement,
instrument or document binding upon or enforceable against the Borrowers, and (d) this Amendment constitutes a valid and binding obligation upon the Borrowers in every respect.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first
written above.
| LESCO, INC., an Ohio corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||
| Title: | V.P., CFO and Treasurer | |||
| LESCO SERVICES, INC., an Ohio corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||
| Title: | V.P., CFO and Treasurer | |||
| AIM LAWN & GARDEN PRODUCTS, INC., an Ohio corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||
| Title: | V.P., CFO and Treasurer | |||
| LESCO TECHNOLOGIES, LLC, a Nevada Limited liability company |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||
| Title: | V.P., CFO and Treasurer | |||
| NATIONAL CITY BUSINESS CREDIT, INC., an Ohio corporation |
||||
| By: | /s/ Xxxxxxx Xxxxxxxxx | |||
| Name: | Xxxxxxx Xxxxxxxxx | |||
| Title: | Vice President | |||
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| XXXXX XXXX XXXXXXXX XXXXXXX XXXXXXXXXXX |
||||
| By: | /s/ Xxxx Xxxxxxx | |||
| Name: | Xxxx Xxxxxxx | |||
| Title: | Vice President | |||
| NATIONAL CITY BANK, a national banking association |
||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | Senior Vice President | |||
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