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AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment") is made
and entered into as of ___________1999, among INDUSTRIAL DISTRIBUTION GROUP,
INC., a Delaware corporation (the "Borrower"), the lending institutions listed
on the signature pages of this Amendment (collectively, the "Lenders"), BANK
ONE, N.A. (formerly The First National Bank of Chicago), in its capacities as
agent for the Lenders (in such capacity, the "Agent") and as issuing bank for
the "Facility LCs" as provided in the Credit Agreement referred to below (in
such capacity, the "LC Issuer"), BANK OF AMERICA, N.A. (formerly Bank of
America National Trust and Savings Association), in its capacity as Co-Agent
for the Lenders, and FIRST UNION NATIONAL BANK, in its capacity as Co-Agent for
the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, and the Agent and LC Issuer are
parties to a certain Credit Agreement dated as of December 11, 1997, as amended
and restated by a certain First Amendment and Restatement of Credit Agreement
dated as of December 11, 1998 (as so amended and restated, the "Credit
Agreement");
WHEREAS, the Borrower has requested that the Lenders amend the Credit
Agreement so as to revise one of the financial covenants set forth therein and
in certain other respects;
WHEREAS, the Lenders have agreed to make such amendments, subject to
the terms, conditions and requirements set forth in this Amendment;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINED TERMS. Except as otherwise expressly defined herein,
capitalized terms used in this Amendment that are defined in the Credit
Agreement are used in this Amendment with the respective meanings assigned to
such capitalized terms in the Credit Agreement.
2. AMENDMENT OF SECTION 6.19 ("FINANCIAL COVENANTS"). Section 6.19 of the
Credit Agreement is hereby amended by deleting subsection 6.19.1 thereof
("Coverage Ratio") and substituting in lieu thereof the following subsection
6.19.1:
6.19.1. COVERAGE RATIO. The Borrower will not permit the
ratio, determined as of the end of each of its fiscal quarters for the
then most-recently ended four fiscal quarters, of (i) Consolidated
EBITDA plus Consolidated Rentals, to (ii) Consolidated Interest
Expense plus Consolidated Rentals, to be less than (x) 2.40 to 1.00
for the fiscal quarter of the Borrower ending September 30, 1999, or
(y) 2.50 to 1.00 for any other fiscal quarter of the Borrower.
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3. AMENDMENT OF SCHEDULE 5.8 ("SUBSIDIARIES"). Schedule 5.8 attached to
the Credit Agreement is hereby amended by deleting said Schedule 5.8 in its
entirety and substituting in lieu thereof Schedule 5.8 as attached to this
Amendment.
4. AMENDMENT OF PRICING SCHEDULE. The Pricing Schedule attached to the
Credit Agreement is hereby amended by deleting such Pricing Schedule in its
entirety and substituting in lieu thereof the Pricing Schedule attached to this
Amendment. On and after the Amendment Effective Date (as defined below),
interest on all Loans and Commitment Fees on the daily unused portion of each
Lender's Revolving Commitment shall be calculated on the basis of the
applicable interest rate margins and fee rates as set forth in the Pricing
Schedule attached to this Amendment.
5. PROPERTY INFORMATION. The Borrower agrees to furnish to the Agent (a)
not later than November 15, 1999 (i) descriptions in reasonable detail of all
inventory, accounts receivable and fixed assets of the Borrower and its
Subsidiaries, including without limitation (x) as to inventory and equipment,
the locations where such property is maintained and the existence of lien
waivers from landlords or other third parties having control over such
locations, (y) as to accounts receivable, a current listing and aging report,
and (z) as to real property, the report with respect to such properties
prepared for the Borrower by Xxxxxxxx Xxxx and, if requested by the Agent,
existing title insurance policies, surveys, and environmental audit reports in
respect of such properties, (ii) the book and estimated fair market values of
the respective properties described in the preceding clause (i) and the basis
for such estimates, and (iii) copies of all agreements that purport to limit or
restrict in any manner the Borrower's or any such Subsidiary's right or ability
to grant in favor of the Agent for the benefit of the Lenders a first priority
security interest in and lien on such properties (other than leases,
conditional sale agreements, and similar secured financing agreements in
respect of specific equipment or leased property, and license agreements in
respect of specific software and similar intellectual property rights, in each
case containing customary restrictions on the right or ability of the lessee,
owner or licensee thereunder to grant such security interests or liens), and
(b) not later than November 30, 1999, current Uniform Commercial Code and, if
requested by the Agent, real property records examination reports with respect
to the Borrower and such Subsidiaries and their respective properties
indicating the status of title to, and the existence of security interests and
liens on, such properties, together with copies of all documents or instruments
creating any such security interests or liens. The Borrower acknowledges and
agrees that failure to comply with the requirements in the preceding sentence
shall constitute a Default for all purposes of the Credit Agreement and all
other Credit Documents.
6. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders and the
Agent and LC Issuer to enter into this Amendment, the Borrower represents and
warrants to the Lenders and the Agent and LC Issuer as follows:
(a) All representations and warranties set forth in the Credit
Agreement, as amended by this Amendment, are true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of this Amendment, except to the extent that
such representations and warranties are expressly made with respect to a
specific date, in which case such representations and warranties are true and
correct in all material respects as of such specific date.
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(b) No Default or Unmatured Default has occurred and is continuing
on the date hereof. Since June 30, 1999, there has been no change in the
business, property, prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect.
(c) Each of the Borrower and the other Loan Parties has the
organizational power and authority to make, deliver and perform their
respective obligations under this Amendment and has taken all necessary
organizational action to authorize the execution, delivery and performance of
this Amendment. No consent or authorization of, or filing with, any Person
(including, without limitation, any governmental authority), is required in
connection with the execution, delivery or performance by the Borrower or any
such other Loan Party, or the validity or enforceability against the Borrower
or any such other Loan Party, of this Amendment, other than such consents,
authorizations or filings which have been made or obtained.
(d) This Amendment has been duly executed and delivered by the
Borrower and the other Loan Parties, as applicable, and this Amendment
constitutes the legal, valid and binding obligation of the Borrower and such
other Loan Parties, respectively, enforceable against the Borrower and such
other Loan Parties in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity. The execution, delivery and performance by the Borrower
and such other Loan Parties of this Amendment will not violate any applicable
legal requirements or cause a breach or default under any of their respective
contractual obligations.
(e) The Borrower acknowledges and agrees that there are no defenses,
claims, counterclaims, or rights of setoff in its favor against any Lender or
the Agent or LC Issuer with regard to any of the obligations and liabilities of
the Borrower or any of its Subsidiaries under the terms of the Credit
Agreement, the other Credit Documents, or this Amendment.
7. REFERENCES TO AGREEMENT. On and after the Amendment Effective Date,
each and every reference in the Credit Documents to the Credit Agreement shall
be deemed to refer to and mean the Credit Agreement as amended by this
Amendment. The parties further confirm and agree that (i) except as expressly
amended herein, the Credit Agreement remains in full force and effect in
accordance with its terms, and (ii) except as expressly amended or supplemented
by this Amendment, all other Credit Documents remain in full force and effect
in accordance with their respective terms.
8. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Amendment and the other Credit Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities hereunder and thereunder. In
addition, the Borrower shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of this
Amendment and the other Credit Documents, and agrees to save the Agent and each
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying such taxes.
9. GOVERNING LAW. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Georgia.
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10. ENTIRE UNDERSTANDING. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations, commitment letters, or agreements,
whether written or oral, with respect to such matters.
11. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts and may
be delivered by telecopier. Each counterpart so executed and delivered shall be
deemed an original and all of which taken together shall constitute but one and
the same instrument.
12. NO WAIVER. The Borrower agrees that nothing herein shall constitute a
waiver by the Lenders of any Default or Unmatured Default, whether known or
unknown, which may exist under the Credit Agreement, except as expressly
provided herein with respect to compliance by the Borrower with the minimum
Coverage Ratio of 2.50 to 1.00 for the four fiscal quarter period ending
September 30, 1999, as required by Section 6.19.1 of the Credit Agreement.
13. AMENDMENT EFFECTIVE DATE. This Amendment shall become effective as of
the date first above written (the "Amendment Effective Date") when this
Amendment shall have been executed and delivered by the Borrower, Lenders
constituting the Required Lenders as provided in the Credit Agreement, and the
Agent.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
INDUSTRIAL DISTRIBUTION GROUP, INC.
By:
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Title:
---------------------------------
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BANK ONE, N.A.
(Formerly The First National Bank of Chicago)
Individually and as Agent
By:
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Title:
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BANK OF AMERICA, N.A.
(Formerly Bank of America National Trust and
Savings Association),
Individually and as Co-Agent
By:
----------------------------------------
Title:
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FIRST UNION NATIONAL BANK,
Individually and as Co-Agent
By:
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Title:
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FLEET NATIONAL BANK
By:
---------------------------------
Title:
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WACHOVIA BANK, N.A.
By:
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Title:
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COMPASS BANK
By:
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Title:
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PRICING SCHEDULE
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APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
MARGIN STATUS STATUS STATUS STATUS STATUS
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Eurodollar Rate 1.50% 1.75% 2.00% 2.25% 2.50%
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Floating Rate 0.50% 0.75% 1.00% 1.25% 1.50%
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APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
FEE RATE STATUS STATUS STATUS STATUS STATUS
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Commitment 0.325% 0.35% 0.50% 0.50% 0.50%
Fee
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For the purposes of this Schedule, the following terms have the
following meanings, subject to the final paragraph of this Schedule:
"FINANCIALS" means the annual or quarterly consolidated financial
statements of the Borrower and its Subsidiaries delivered pursuant to Section
6.1(i) or (ii).
"LEVEL I STATUS" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, the
Leverage Ratio is less than or equal to 2.00 to 1.00.
"LEVEL II STATUS" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower does not qualify for Level I Status and (ii) the Leverage Ratio is
less than or equal to 2.50 to 1.00.
"LEVEL III STATUS" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower does not qualify for Level I Status or Level II Status, and (ii)
the Leverage Ratio is less than or equal to 3.00 to 1.00.
"LEVEL IV STATUS" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower does not qualify for Level I Status, Level II Status, or Level III
Status and (ii) the Leverage Ratio is less than or equal to 3.50 to 1.00.
"LEVEL V STATUS" exists at any date if the Borrower does not qualify
for Level I, Level II, Level III or Level IV Status.
"STATUS" means either Level I Status, Level II Status, Level III
Status, or Level IV Status, as the case may be.
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The Applicable Margin and Applicable Fee Rate shall be determined in
accordance with the foregoing table based on the Borrower's Status as reflected
in the then most recent Financials. Adjustments, if any, to the Applicable
Margin or Applicable Fee Rate shall be effective five Business Days after the
Agent has received the applicable Financials. If the Borrower fails to deliver
the Financials to the Agent at the time required pursuant to Section 6.1, then
the Applicable Margin and Applicable Fee Rate shall be the highest Applicable
Margin and Applicable Fee Rate set forth in the foregoing table until five
Business Days after such Financials are so delivered.
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ACKNOWLEDGMENT AND REAFFIRMATION OF GUARANTORS
Each of the undersigned (i) acknowledges receipt of the foregoing
Amendment No. 1 to Credit Agreement dated as of __________, 1999 (the
"Amendment"), (ii) consents to the execution and delivery of the Amendment by
the parties thereto, and (iii) reaffirms all of its obligations and covenants
under the Subsidiary Guaranty and Subsidiary Pledge Agreement (all as defined
in the Credit Agreement and in effect as of the date hereof), and agrees that
none of such obligations and covenants shall be affected by the execution and
delivery of the Amendment, and that all of such obligations and covenants
remain in full force and effect on and after the date hereof. This
Acknowledgment and Reaffirmation may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
instrument.
Associated Suppliers, Inc.
Atlantic Industrial Supply Co., Inc.
Xxxxxx Xxxx Xxxxx, Inc.
B&J Industrial Supply Company
B&J Industrial Supply Company of Spokane
B&J Industrial Supply Company of Tacoma
Xxxxxx Bros., Inc.
Cardinal Machinery, Inc.
Xxxxxx Industrial Supplies, Inc.
The Distribution Group, Inc.
Dynamic Tool & Abrasives, Inc.
X. X. Xxxxxxxxxx Company
Xxxxxx Industrial Supplies, Inc.
IDG Real Properties, Inc.
Industrial & Tool Suppliers Limited Liability
Company
Industrial Distribution Group - California, Inc.
The Innovative Distributor Group, Inc.
X.X. Xxxxxxx Co.
Xxxx Industrial, Inc.
X.X. Supply, Inc.
Mel's Industrial Supplies, Inc.
The New England Group Industrial Distributors, Inc.
Northern Tool & Supply, Inc.
Xxxxx & Xxxxxx, Inc.
Refco, Inc.
Xxxxxxx Industrial Supply Co.
Tri-Star Industrial Supply, Inc.
Xxxxxx Industries, Inc.
Wm. X. Xxxxxx & Company, Inc.
By:
--------------------------------------------------
Name:
Title:
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SCHEDULE 5.8
LIST OF SUBSIDIARIES
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NAME STATE OF CAPITAL STOCK PERCENTAGE
INCORPORATION HELD BY HELD
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Associated Suppliers, Inc. Oregon IDG 100
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Atlantic Industrial Supply Co., Inc. Massachusetts IDG 100
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Xxxxxx Xxxx Xxxxx, Inc. New York IDG 100
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B&J Industrial Supply Company Washington IDG 100
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B&J Industrial Supply Company of Washington B&J 100
Spokane
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B&J Industrial Supply Company of Washington B&J 100
Tacoma
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Xxxxxx Bros., Inc. Tennessee IDG 100
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Cardinal Machinery, Inc. Tennessee IDG 100
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Xxxxxx Industrial Supplies, Inc. New York IDG 100
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The Distribution Group, Inc. Georgia IDG 100
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Dynamic Tool & Abrasives, Inc. Michigan IDG 100
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X.X. Xxxxxxxxxx Company Georgia IDG 100
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Xxxxxx Industrial Supplies, Inc. Connecticut IDG 100
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IDG Real Properties, Inc. Georgia IDG 100
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Industrial & Tool Suppliers Maine IDG 50
Limited Liability Company Refco 50
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Industrial Distribution Group - California IDG 100
California, Inc.
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The Innovative Distributor Group, Inc. Ohio IDG 100
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X.X. Xxxxxxx Co. Wisconsin IDG 100
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Xxxx Industrial, Inc. California IDG-CA 100
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X.X. Supply, Inc. Georgia IDG 100
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Mel's Industrial Supplies, Inc. California IDG 100
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The New England Group New Hampshire IDG 100
Industrial Distributors, Inc.
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Northern Tool & Supply, Inc. Michigan IDG 100
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Xxxxx & Xxxxxx, Inc. Pennsylvania IDG 100
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Refco, Inc. Georgia IDG 100
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Xxxxxxx Industrial Supply Co. Pennsylvania IDG 100
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Tri-Star Industrial Supply, Inc. Missouri IDG 100
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Xxxxxx Industries, Inc. Pennsylvania Xxxxxxx 100
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Wm. X. Xxxxxx & Company, Inc. Delaware Xxxxxxx 100
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