Exhibit 10(y)(2)
FIRST AMENDMENT TO
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
BY AND AMONG
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER, ADMINISTRATIVE AGENT AND LEAD ARRANGER),
JPMORGAN CHASE BANK
(AS LENDER AND SYNDICATION AGENT),
THE LENDERS,
AND
LESCO, INC.;
LESCO SERVICES, INC.;
LESCO TECHNOLOGIES, LLC;
AND
AIM LAWN & GARDEN PRODUCTS, INC.;
(BORROWERS)
February 7, 2002
FIRST AMENDMENT TO REVOLVING CREDIT,
TERM LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY
AGREEMENT (the "Amendment") dated as of February 7, 2002, by and among LESCO,
INC., a corporation organized under the laws of the State of Ohio ("LESCO"),
LESCO SERVICES, INC., a corporation organized under the laws of the State of
Ohio ("LSI"), LESCO TECHNOLOGIES, LLC, a limited liability company organized
under the laws of the State of Nevada ("Technologies"), and AIM LAWN & GARDEN
PRODUCTS, INC., a corporation organized under the laws of the State of Ohio
("AIM"), each a "Borrower" and collectively "Borrowers"), the financial
institutions which are now or which hereafter become a party hereto
(collectively, the "Lenders" and individually a "Lender"), PNC BANK, NATIONAL
ASSOCIATION ("PNC"), as administrative agent for Lenders (PNC, in such capacity,
the "Agent"), and JPMORGAN CHASE BANK ("JPMorgan Chase"), as syndication agent
for the Lenders (JPMorgan Chase, in such capacity, the "Syndication Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers and PNC are parties to that certain Revolving
Credit, Term Loan and Security Agreement dated as of January 14, 2002 (the
"Agreement").
WHEREAS, immediately after giving effect to this Amendment, PNC will
assign a portion of the Revolving Advances, the Term Loan and the Commitment
Percentage of PNC to the other Lenders joining the Agreement pursuant to a
Commitment Transfer Supplement of even date herewith among PNC and such Lenders.
WHEREAS, the parties hereto desire to amend the terms of the Agreement
as provided for herein.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. DEFINITIONS.
Defined terms used herein shall have the meanings given to
them in the Agreement.
2. Section 2.1 of the Agreement is hereby amended and restated as
follows:
"2.1. (a) REVOLVING ADVANCES. Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, will make
Revolving Advances to Borrowers in aggregate amounts outstanding at any time
equal to such Lender's Commitment Percentage of the lesser of (x) the Maximum
Revolving Advance Amount less the aggregate amount of outstanding Letters of
Credit or (y) an amount equal to the sum of:
(i) up to 85%, subject to the provisions of
Section 2.1(c) hereof ("Receivables Advance Rate"),
of the Eligible Receivables, excluding Dated
Receivables, which are unpaid not more than ninety
(90) days after the original invoice date, PLUS
(ii) the lesser of (A) up to 85%, subject to
the provisions of Section 2.1(c) hereof, of the
Eligible Receivables, excluding Dated Receivables,
which are unpaid more than ninety (90) days but not
more than one hundred twenty (120) days after the
original invoice date, or (B) $5,000,000, PLUS
(iii) the lesser of (A) up to 85%, subject
to the provisions of Section 2.1(c) hereof, of
Eligible Receivables which are Dated Receivables, or
(B) $30,000,000 during the period from November 1
through May 31 of any calendar year and $10,000,000
during the period from June 1 through October 31 of
any calendar year minus the amount determined under
item (ii) above, PLUS
(iv) up to the lesser of (A) 53.7%, subject
to the provisions of Section 2.1(c) hereof, during
the period from October 1 through February 29 of any
calendar year and 60%, subject to the provisions of
Section 2.1(c) hereof, during the period from March 1
through September 30 of any calendar year ("Inventory
Advance Rate"), of the value of Eligible Inventory
(the Receivables Advance Rate and the Inventory
Advance Rate shall be referred to collectively, as
the "Advance Rates"), (B) during the period from
January 1 through June 30, $70,000,000, and during
the period from July 1 through December 31,
$60,000,000, PLUS
(v) during the Seasonal Overadvance Period,
the lesser of (A) 10% of the value of Eligible
Inventory, or (B) $7,000,000, MINUS
(vi) the amount by which the availability
for Revolving Advances based upon Stores-on-Wheels
Inventory under item (iv) above exceeds $4,000,000;
MINUS
(vii) the aggregate amount of outstanding
Letters of Credit, MINUS
(viii) the Bank Products Reserves and such
other reserves as Agent may reasonably deem proper
and necessary from time to time.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i), (ii),
(iii), (iv) and (v) MINUS the sum of (y) Sections 2.1 (a)(y)(vi), (vii) and
(viii) at any time and from time to time shall be referred to as the "Formula
Amount". The Revolving Advances shall be evidenced by one or more secured
promissory notes (collectively, the "Revolving Credit Note") substantially in
the form attached hereto as EXHIBIT 2.1(a).
-2-
(b) [Intentionally Omitted].
(c) DISCRETIONARY RIGHTS. Subject to Section 16.2, the Advance
Rates may be increased or decreased by Agent at any time and from time to time
in the exercise of its reasonable discretion. Each Borrower consents to any such
increases or decreases and acknowledges that decreasing the Advance Rates or
increasing the reserves may limit or restrict Advances requested by Borrowing
Agent."
3. Section 14.1 is hereby amended and restated in its entirety as
follows:
"14.1. APPOINTMENT. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in the Fee
Letter and Section 3.4), charges and collections (without giving effect to any
collection days) received pursuant to this Agreement, for the ratable benefit of
Lenders. Agent may perform any of its duties hereunder by or through its agents
or employees. As to any matters not expressly provided for by this Agreement
(including without limitation, collection of the Note) Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; PROVIDED, HOWEVER, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
JPMorgan Chase Bank, identified on the facing page, the recitals and
the signature pages as the "Syndication Agent", shall not have any right, power,
obligation, liability, responsibility, or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing,
JPMorgan Chase Bank shall not have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied
and will not rely upon JPMorgan Chase Bank in deciding to enter into this
Agreement in taking or not taking action hereunder."
4. Section 16.2 of the Agreement is hereby amended and restated as
follows:
"16.2. ENTIRE UNDERSTANDING. (a)This Agreement and the documents
executed concurrently herewith contain the entire understanding between each
Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each
Borrower's, Agent's and each Lender's respective officers. Neither this
Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an
-3-
agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrowers may, subject to the provisions of this
Section 16.2 (b), from time to time enter into written supplemental agreements
to this Agreement or the Other Documents executed by Borrowers, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Borrowers thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
PROVIDED, HOWEVER, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Maximum Loan Amount or the
Commitment Percentage or maximum dollar commitment of any Lender.
(ii) extend the maturity of any Note or the due date
for any amount payable hereunder, or decrease the rate of interest or
reduce any fee payable by Borrowers to Lenders pursuant to this
Agreement.
(iii) alter the definition of the term Required
Lenders or alter, amend or modify this Section 16.2(b).
(iv) release any Collateral during any calendar year
(other than in accordance with the provisions of this Agreement) having
an aggregate value in excess of $1,000,000.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if after
giving effect thereto the total of Revolving Advances outstanding
hereunder would exceed the Formula Amount for more than thirty (30)
consecutive Business Days or exceed one hundred and five percent (105%)
of the Formula Amount.
(vii) increase the Advance Rates above the Advance
Rates in effect on the Closing Date.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
-4-
In the event that Agent requests the consent of a Lender pursuant to
this Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed
not to have consented to the matter that was the subject of the request. In the
event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such consent is denied, then PNC may, at its option, require such Lender to
assign its interest in the Advances to PNC or to another Lender or to any other
Person designated by the Agent (the "Designated Lender"), for a price equal to
the then outstanding principal amount thereof plus accrued and unpaid interest
and fees due such Lender, which interest and fees shall be paid when collected
from Borrowers. In the event PNC elects to require any Lender to assign its
interest to PNC or to the Designated Lender, PNC will so notify such Lender in
writing within forty five (45) days following such Lender's denial, and such
Lender will assign its interest to PNC or the Designated Lender no later than
five (5) days following receipt of such notice pursuant to a Commitment Transfer
Supplement executed by such Lender, PNC or the Designated Lender, as
appropriate, and Agent.
Notwithstanding (a) the existence of a Default or an Event of Default,
(b) that any of the other applicable conditions precedent set forth in Section
8.2 hereof have not been satisfied or (c) any other provision of this Loan
Agreement, Agent may at its discretion and without the consent of the Required
Lenders, voluntarily permit the outstanding Revolving Advances at any time to
exceed the Formula Amount by up to five percent (5%) of the Formula Amount for
up to thirty (30) consecutive Business Days. For purposes of the preceding
sentence, the discretion granted to Agent hereunder shall not preclude
involuntary overadvances that may result from time to time due to the fact that
the Formula Amount was unintentionally exceeded for any reason, including, but
not limited to, Collateral previously deemed to be either "Eligible Receivables"
or "Eligible Inventory", as applicable, becomes ineligible, collections of
Receivables applied to reduce outstanding Revolving Advances are thereafter
returned for insufficient funds or overadvances are made to protect or preserve
the Collateral.
In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 16.2, the Agent is hereby authorized by
the Borrowers and the Lenders, from time to time in the Agent's sole discretion,
(A) after the occurrence and during the continuation of a Default or an Event of
Default, or (b) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to the Borrowers on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (a) to preserve
or protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (iii) to pay any other amount chargeable to the Borrowers pursuant to the
terms of this Agreement; PROVIDED, THAT at any time after giving effect to any
such Revolving Advances the outstanding Revolving Advances do not exceed one
hundred and five percent (105%) of the Formula Amount."
5. Annex B and Annex C to Schedule 4.5 to the Agreement are hereby
amended and restated as set forth in Annex B and Annex C attached to this
Amendment.
6. FORCE AND EFFECT. Each Lender and each Borrower reconfirms and
ratifies the Agreement and all Other Documents executed in connection therewith
except to the extent any
-5-
such documents are expressly modified by this Amendment, and each Borrower
confirms that all such documents have remained in full force and effect since
the date of their execution.
7. GOVERNING LAW. This Amendment shall be deemed to be a contract under
the laws of the State of Ohio and for all purposes shall be governed by and
construed and enforced in accordance with the internal laws of the State of Ohio
without regard to its conflict of laws principles.
8. COUNTERPARTS; EFFECTIVE DATE. This Amendment may be signed by
telecopy or original in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Amendment shall become effective as of the date first above
written upon its execution and delivery by the Borrowers, PNC and JPMorgan
Chase.
[SIGNATURE PAGES FOLLOW]
-6-
[SIGNATURE PAGE 1 OF 3 TO FIRST AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this instrument under
seal as of the day and year first above written.
LESCO, INC.
By:____________________________(SEAL)
Name:________________________________
Title:_________________________________
LESCO SERVICES, INC.
By:____________________________(SEAL)
Name:________________________________
Title:_________________________________
LESCO TECHNOLOGIES, LLC
By ________________________, its Manager
By:____________________________(SEAL)
Name:________________________________
Title:_________________________________
AIM LAWN & GARDEN PRODUCTS, INC.
By:____________________________(SEAL)
Name:________________________________
Title:_________________________________
[SIGNATURE PAGE 2 OF 3 TO FIRST AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION, as
Lender and as Agent
By:___________________________________
Name:________________________________
Title:_________________________________
[SIGNATURE PAGE 3 OF 3 TO FIRST AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
JPMORGAN CHASE BANK, as Syndication Agent
By:___________________________________
Name:________________________________
Title:_________________________________
