AMENDMENT TO NOTE AGREEMENT
This AMENDMENT TO NOTE AGREEMENT, dated as of September 29, 1999
(this "Amendent") among QUESTRON OPERATING COMPANY, INC. and ALBION ALLIANCE
MEZZANINE FUND, L.P., ALLIANCE INVESTMENT OPPORTUNITIES FUND, LLC, THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES and IBJ WHITEHALL BANK & TRUST
COMPANY (collectively, the "Purchasers") modifies that certain Note Agreement,
dated as of June 29, 1999 (the "Existing Note Agreement;" and the Existing Note
Agreement as modified by this Amendment, the "Note Agreement") among the Company
and the Purchasers.
WHEREAS, pursuant to the Existing Note Agreement, the Company issued
to the Purchaser its 14.50% Senior Subordinated Notes due June 30 2005 (the
"Notes") in the aggregate principal amount of Twenty Million Dollars
($20,000,000); and
WHEREAS, the Purchasers are the holders of all the outstanding Notes;
and
WHEREAS, the Company and the Purchasers have agreed to waive, on a
limited basis, certain provisions of the Existing Note Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiently of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS
Capitalized terms used and not defined herein shall have the same
meanings given to them in the Note Agreement.
2. CERTAIN AMENDMENTS AND AGREEMENTS.
2.1 Limited Waivers.
Each Purchaser hereby waives any default which might have occurred
pursuant to Section 6.1(b) of the Existing Note Agreement by virtue of the
failure of the Company to comply with:
(a) Section 4.2 of the Existing Note Agreement with respect
to any failure by the Company to maintain the specified ratio of
Consolidated Senior Secured Funded Debt to Pro Forma Combined EBITDA
for the period of four (4) full consecutive fiscal quarters of the
Company ended September 30, 1999;
(b) Section 4.3 of the Existing Note Agreement with respect
to any failure by the Company to maintain the specified ratio of
Total Funded Debt to Pro Forma Combined EBITDA for the period of four
(4) full consecutive fiscal quarters of the Company ended September
30, 1999; or
(c) Section 4.4 of the Existing Note Agreement with respect
to any failure by the Company to maintain the specified ratio of Pro
Forma Combined EBITDA to Pro Forma Combined Interest Expense for the
period of four (4) full consecutive fiscal quarters of the Company
ended September 30, 1999.
2.2 No Other Amendments.
Except as expressly set forth in Section 2.1, the Purchasers do not
waive the occurrence of any other Event of Default. Specifically, the Purchasers
do not waive any Event of Default arising other than pursuant to Section 6.1(b)
of the Existing Note Agreement, any Event of Default pursuant to Section 6.1(b)
arising out of the failure by the Company to comply with any provision of the
Existing Note Agreement other than Section 4.2, Section 4.3 and Section 4.4, or
any Event of Default pursuant to Section 6.1(b) arising out of the failure by
the Company to comply with Section 4.2, Section 4.3 or Section 4.4 of the
Existing Note Agreement for any fiscal period of the Company other than the
period of four (4) full consecutive fiscal quarters of the Company ended
September 30, 1999.
3. NO OTHER MODIFICATIONS; CONFIRMATION .
All the provisions of the Notes, and, except as expressly waived,
modified and supplemented hereby, all the provisions of the Existing Note
Agreement, are and shall remain in full force and effect. As of the Effective
Date (defined below), all references in the Financing Documents to the "Note
Agreement" shall be references to the Existing Note Agreement, as modified by
this Amendment and as hereafter amended, modified or supplemented in accordance
with its terms.
4. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants as follows to each holder of
Notes as of the date hereof and as of the Effective Date (as defined below). The
Company acknowledges and agrees that the representations and warranties of this
Section 4 comprise representations and warranties in a written modification to
the Note Agreement, as contemplated by Section 6.1(c) of the Note Agreement.
4.1 No Other Defaults.
No Default or Event of Default (other than Defaults or Events of
Default expressly and specifically waived pursuant to the provisions of Section
2.1 of this Amendment) has occurred and is continuing.
4.2 Senior Credit Agreement.
The Senior Credit Agreement (as amended as described in Section 5.3)
is the only Senior Credit Facility in existence as of the date hereof. After
giving effect to the effectiveness of this Amendment, no unwaived default or
event of default has occurred or is continuing in respect of any Senior Credit
Facility.
4.3 Obligations Remain Enforceable.
The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
notice to or action by, any person (including any Governmental Authority) in
order to be effective and enforceable. The Note Agreement (as modified by this
Amendment) and the Notes constitute the legal, valid and binding obligation of
the Company, enforceable against Company in accordance with its terms, except
that the enforceability thereof may be limited by applicable bankruptcy,
reorganization, arrangement, insolvency, moratorium, or other similar laws
affecting the enforceability of creditors' rights generally; and subject to the
availability of equitable remedies.
4.4 Securities Purchase Agreement Representations.
All representations and warranties of the Company contained in the
Securities Purchase Agreement (other than representations or warranties
expressly made only on and as of the Closing Date or any earlier date) are true
and correct as of the date hereof, after taking into account Section 2 above.
4.5 Financial Information.
All financial statements delivered to the Purchasers by the Company
pursuant to the provisions of Section 5.1(a), Section 5.1(b) and Section 5.1(c)
of the Note Agreement since the Closing Date were, and all information delivered
to the Purchasers by the Company pursuant to Section 5.1(e) of the Note
Agreement since the Closing Date was, true, complete and correct in all material
respects as of the respective dates of such information.
5. EFFECTIVENESS
This Amendment shall become effective only upon the date of the
satisfaction in full of the following conditions precedent (which date shall be
the "Effective Date").
5.1 Execution and Delivery of this Amendment.
Each Purchaser shall have received a counterpart hereof, duly
executed and delivered by the Company and each other Purchaser.
5.2 Acknowledgement by Affiliate Guarantors.
Each Affiliate Guarantor shall have duly executed and delivered the
form of acknowledgement attached to this Amendment acknowledging its obligations
in respect of the Affiliate Guaranty.
5.3 Senior Credit Agreement.
The Company and each of its Affiliates and Subsidiaries as are
parties to the Senior Credit Facility shall have entered into an amendment to
the Senior Credit Agreement in the form attached hereto as Exhibit 5.3.
5.4 Representations and Warranties.
The representations and warranties of the Company made in Section 4
of this Amendment shall remain true and correct in all respects as of the
Effective Date.
5.5 No Injunction, Etc.
No injunction, writ, restraining order or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
Governmental Authority.
5.6 Expenses.
The Company shall have paid all out-of-pocket expenses of the
Purchasers in connection with the execution and delivery of this Amendment,
including, without limitation, the fees and disbursements of Xxxxxxx Xxxx LLP,
as special counsel to the Required Holders.
6. MISCELLANEOUS
6.1 Section Headings.
The titles of the Sections of this Amendment appear as a matter of
convenience only, do not constitute a part hereof and shall not affect the
construction hereof. The words "herein," "hereof," "hereunder" and "hereto"
refer to this Amendment as a whole and not to any particular Section or other
subdivision. References to Sections are, unless otherwise specified, references
to Sections of this Amendment.
6.2 Governing Law.
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
6.3 Successors and Assigns.
This Amendment shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder whether or not an express assignment to
such holder of rights hereunder shall have been made by any Purchaser or its
successor or assign.
6.4 Execution in Counterpart.
This Amendment may be executed in one or more counterparts and shall
be effective when at least one counterpart shall have been executed by each
party hereto, and each set of counterparts that, collectively, show execution by
each party hereto shall constitute one duplicate original.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
QUESTRON OPERATING COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title Chairman and CEO
ALBION ALLIANCE MEZZANINE FUND, L.P.
By: Albion Alliance LLC,
its General Partner
By: /s/ U. Xxxxx X. Xxxxxxxx
------------------------------------
Name: U. Xxxxx X. Xxxxxxxx
Title Senior Vice President
ALLIANCE INVESTMENT
OPPORTUNITIES FUND, LLC
By: Alliance Investment Opportunities
Management L.P., its Managing Member
By: Alliance Capital Management, L.P.,
its Managing Member
By: Alliance Capital Management
Corporation, its General Partner
By: /s/ Xxxxxx Jantgen
------------------------------------
Name: Xxxxxx Jantgen
Title SVP
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
By: /s/ U. Xxxxx X. Xxxxxxxx
------------------------------------
Name: U. Xxxxx X. Xxxxxxxx
Title Investment Officer
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/ Xxxx-Xxxxx Xxxxxx
-------------------------------------
Name: Xxxx-Xxxxx Xxxxxx
Title: Director
ACKNOWLEDGEMENT AND CONFIRMATION OF
AFFILIATE GUARANTORS
Each of the undersigned, being a party to that Unconditional Guaranty
(the "Guaranty"), dated as of June 29, 1999, re: $20,000,000 14.5% Senior
Subordinated Notes due June 30, 2005 (the "Notes") issued by Questron Operating
Company, Inc. (the "Company") acknowledges that:
(a) it has received and read the attached Amendment to Note
Agreement;
(b) that it will benefit materially and substantially from
the agreements and forbearances made by the Purchasers in the
attached Amendment to Note Agreement; and
(c) that its guaranty of the Guarantied Obligations (as
defined in the Guaranty) and all of its other obligations pursuant to
the Guaranty shall remain in full force and effect notwithstanding
the execution and delivery by the Company and the Purchasers of the
attached Amendment to Note Agreement and the performance by the
Company and the Purchasers of their respective obligations pursuant
to the Notes and the Note Agreement (as defined in the attached
Amendment to Note Agreement).
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IN WITNESS WHEREOF, each of the undersigned parties hereto have
caused this Acknowledgement and Confirmation of Affiliate Guarantors to be duly
executed and delivered by their respective proper and duly authorized officers
as of the day and year first above written.
QUESTRON TECHNOLOGY, INC.
QUESTRON FINANCE CORP.
QUESTRON DISTRIBUTION LOGISTICS, INC.
COMP XXXX, INC.
POWER COMPONENTS, INC.
INTEGRATED MATERIAL SYSTEMS, INC.
CALIFORNIA FASTENERS, INC.
FAS-TRONICS, INC.
FORTUNE INDUSTRIES, INC.
CAPITAL FASTENERS, INC.
ACTION THREADED PRODUCTS, INC.
ACTION THREADED PRODUCTS OF
GEORGIA, INC.
ACTION THREADED PRODUCTS OF
MINNESOTA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title Chairman and CEO
EXHIBIT 5.3
AMENDMENT TO SENIOR CREDIT AGREEMENT
