FORM 10-Q
EXHIBIT 10.3
SECOND AMENDMENT TO FINANCING AGREEMENT
THIS SECOND AMENDMENT TO FINANCING AGREEMENT (the "Second Amendment")
dated as of June 28, 2002, is by and among ENCORE WIRE LIMITED, a Texas limited
partnership ("Borrower"), BANK OF AMERICA, N.A., a national banking association,
and COMERICA BANK-TEXAS ("Comerica Bank"), a state banking association, in their
individual capacities as "Lenders" (as such term is defined herein), and BANK OF
AMERICA, N.A., a national banking association, as agent for itself and other
Lenders (in such capacity, together with its successors in such capacity, the
"Agent").
WITNESSETH:
WHEREAS, the Borrower, the Agent and the Lenders are parties to the
Financing Agreement, dated as of August 31, 1999, as amended by that certain
First Amendment to Financing Agreement, dated as of June 27, 2000 (said
Financing Agreement, as amended, the "Financing Agreement"), pursuant to which
the Lenders agreed to make certain loans available to the Borrower upon the
terms and conditions contained in the Financing Agreement;
WHEREAS, the parties to the Financing Agreement desire to amend the
Financing Agreement to make certain changes to the terms therein upon the terms
and conditions set forth below;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Borrower, the Lenders, and the Agent agree
as follows:
SECTION 1. Terms. All capitalized terms defined in the Financing
Agreement and not otherwise defined herein shall have the same definitions when
used herein as set forth in the Financing Agreement as amended.
SECTION 2. Amendment of Section 1.21. Section 1.21 of the Financing
Agreement is amended and restated in its entirety to read as follows:
"Contract Term" means the period beginning on the effective date specified in
the preamble of this Agreement and continuing through May 31, 2005.
SECTION 3. Amendment of definition in Section 3.1.6. The definition of
"Applicable Margin" contained in Section 3.1.6 of the Financing Agreement is
amended and restated in its entirety to read as follows:
"Applicable Margin" means the per annum percentages, applicable in the case of
Prime Based Loans and LIBOR Based Loans, respectively, under the specified
conditions, as follows:
FORM 10-Q
FUNDED DEBT APPLICABLE MARGIN FOR PRIME BASED APPLICABLE MARGIN FOR LIBOR BASED
TO EBITDA LOANS LOANS
----------- --------------------------------- ---------------------------------
Less than or equal to 1.00 to 1.0 Prime minus one percent per annum Three-fourths of one percent per
(1.00%) annum (0.750%)
Greater than 1.00 to 1.0 and less Prime minus one percent per annum Seven-eighths of one percent per
than or equal to 1.50 to 1.0 (1.00%) annum (0.875%)
Greater than 1.50 to 1.0 and less Prime minus one percent per annum One percent per annum (1.00%)
than or equal to 2.10 to 1.0 (1.00%)
Greater than 2.10 to 1.0 and less Prime minus one percent per annum One and one-eighths of one
or equal to 2.75 to 1.0 (1.00%) percent per annum (1.125%)
Greater than 2.75 to 1.0 Prime minus one percent per annum One and one-quarter of one
(1.00%) percent per annum (1.250%)
The Applicable Margin shall be measured and determined according to the
quarterly consolidated financial statements delivered to Agent under paragraph
7.6. Any adjustment in the Applicable Margin after the Effective Date shall be
deemed effective as of the first day following the receipt by the Agent of the
financial statements referred to in the immediately preceding sentence.
SECTION 4. Amendment of Section 7.21(a)3. Section 7.21(a)3 is amended and
restated in its entirety to read as follows:
3. Capital Expenditures. Capital Expenditures shall not exceed (a) $17,000,000
during fiscal year 2002 and (b) $10,000,000 in any fiscal year thereafter.
SECTION 5. Amendment of Section 7.35. Section 7.35 is amended and restated in
its entirety to read as follows:
7.35 Acquisitions. Borrower shall not purchase or otherwise acquire
assets from any Person outside the ordinary course of business of Borrower,
except for purchases or acquisitions of equipment in an aggregate amount of
which when added to all other Capital Expenditures for such year do not exceed
(a) $17,000,000 during fiscal year 2002 and (b) $10,000,000 in any fiscal year
thereafter.
SECTION 6. Amendment of each Lender's Commitment. The Commitment of Bank of
America, N.A. of $50,000,000 shall be revised and reduced to $40,000,000. The
Commitment of Comerica Bank shall be revised and increased to $25,000,000. In
connection therewith, the Borrower shall execute and deliver a $40,000,000
replacement Revolving Note payable to the order of Bank of America, N.A. and a
$25,000,000 replacement Revolving Note payable to the order of Comerica Bank,
N.A., (collectively, the "Replacement Revolving Notes").
SECTION 7. Purchase by Lenders. Simultaneously with the satisfaction of the
conditions precedent set forth in Section 8 hereof, to the extent that there are
any outstanding Loans and Letter of Credit Liabilities, Comerica Bank shall
purchase without recourse an amount of Bank of America's outstanding Loans and
Letter of Credit Liabilities such that after giving effect to this Second
Amendment, the percentage of each Lender's outstanding Loans and Letter of
Credit Liabilities shall be equal to each such Lender's Commitment Percentages
as revised pursuant to this Second Amendment.
SECTION 8. Conditions Precedent. This Second Amendment shall not be effective
until the Agent shall have received:
(a) executed signature pages from the Borrower, the Agent and the Lenders;
(b) executed Replacement Revolving Notes;
(c) a confirmation by each of the Guarantors of such Guarantor's obligations
under the Guaranties and the other Loan Documents executed by such Guarantor;
(d) a renewal fee in the amount of $40,000 to be divided among the Lenders on a
pro rata basis in accordance with their respective Commitment Percentages, as
revised by this Second Amendment;
(e) all reasonable fees and expenses in connection with this Second Amendment
and the other Loan Documents, including legal and other professional fees and
expenses incurred on or prior to the date of this Second Amendment by the Agent,
and including, without limitation, the reasonable fees and expenses of Xxxxxxxx
Xxxxxxxx & Xxxxxx P.C.; and
(f) such other documents, instruments, and certificates, in form and substance
satisfactory to Agent and the Lenders, as the Agent and the Lenders shall deem
necessary or appropriate in connection with this Second Amendment and the
transactions contemplated hereby.
SECTION 9. Applicable Margin Adjustment. Provided this Second Amendment
becomes effective, the amendment of the definition of Applicable Margin set
forth in Section 3 hereof shall be effective on **[TO BE CLOSING DATE]**, 2002,
notwithstanding anything in such definition to the contrary.
SECTION 10. Termination of Second Amendment. This Second Amendment
shall terminate and be of no further force and effect, without any notice or
other action by the Lenders or the Administrative Agent, upon the failure of the
Borrower to deliver such certificates of existence, good standing,
qualification, incumbency, certified resolutions of Boards of Directors and
certified copies of articles of incorporation and partnership certificates with
respect to Borrower, EWC GP, EWC LP, Aviation and Parent as Agent may reasonably
requested, by July 10, 2002.
SECTION 11. Further Assurances. The Borrower shall execute and deliver
such further agreements, documents, instruments, and certificates in form and
substance satisfactory to the Agent, as the Agent or any Lender may deem
necessary or appropriate in connection with this Second Amendment.
SECTION 12. No Waiver. Nothing contained in this Second Amendment shall
be construed as a waiver by Agent or the Lenders of any covenants or provisions
of the Financing Agreement, the other Loan Documents, this Second Amendment, or
of any other contract or instrument between Borrower, Agent and/or Lenders, and
the failure of Agent or Lenders at any time or times hereafter to require strict
performance by Borrower of any provisions thereof shall not waive, affect or
diminish any right of Agent or the Lenders to thereafter demand strict
compliance therewith. Agent and the Lenders hereby reserve all rights granted
under the Financing Agreement, and the other Loan Documents, this Second
Amendment and any other contract or instrument between the Borrower, Agent
and/or the Lenders.
SECTION 13. Representations and Warranties. The Borrower and each
Guarantor by its execution below represent and warrant to the Lenders and the
Agent that (a) the execution, delivery and performance of this Second Amendment,
the Replacement Revolving Notes and any and all other Loan Documents executed
and/or
delivered in connection herewith have been authorized by all requisite corporate
action on the part of the Borrower and Guarantors and will not violate the
Articles of Incorporation, Bylaws or other governing documents of the Borrower
or any Guarantor; (b) the representations and warranties contained in the
Financing Agreement and other Loan Documents are true and correct on the date
hereof both before and after giving effect to this Second Amendment; (c) there
exists no Event of Default or Default under the Financing Agreement both before
and after giving effect to this Second Amendment; (d) each of Borrower and each
Guarantor is in full compliance with all covenants and agreements applicable to
it contained in the Financing Agreement and the other Loan Documents, as amended
hereby; (e) the Financing Agreement, as amended hereby, and the other Loan
Documents remain in full force and effect; and (f) no notice to, or consent of,
any Person is required under the terms of any agreement of the Borrower or any
Guarantor in connection with the execution of this Second Amendment and the
Replacement Revolving Notes.
SECTION 14. Ratification. The terms and provisions set forth in this
Second Amendment shall modify and supersede all inconsistent terms and
provisions in the Financing Agreement and the other Loan Documents, and, except
as expressly modified and superseded by this Second Amendment, the terms and
provisions of the Financing Agreement and the other Loan Documents are ratified
and confirmed and shall continue in full force and effect. The Borrower, Agent
and the Lenders agree that the Financing Agreement and the other Loan Documents,
as amended hereby, shall continue to be legal, valid, binding and enforceable in
accordance with their respective terms.
SECTION 15. Counterparts. This Second Amendment and the other Loan
Documents may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument. In making proof of any
such agreement, it shall not be necessary to produce or account for any
counterpart other than one signed by the party against which enforcement is
sought.
SECTION 16. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS AMONG THE PARTIES, AND EACH OF
THE BORROWER, ITS SUBSIDIARIES, THE AGENT, AND EACH LENDER SPECIFICALLY WAIVES,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT ANY OF THEM MAY HAVE TO
CLAIM THAT THERE EXISTS AN ORAL AGREEMENT AMONG ANY OF THE PARTIES HERETO.
SECTION 17. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
TEXAS AND APPLICABLE
FEDERAL LAW.
SECTION 18. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO AGREE THAT NO
PARTY HERETO SHALL REQUEST A TRIAL BY JURY IN THE EVENT OF LITIGATION BETWEEN OR
AMONG THEM CONCERNING THIS SECOND AMENDMENT OR ANY OTHER LOAN DOCUMENTS OR ANY
CLAIMS OR TRANSACTIONS IN CONNECTION THEREWITH, IN EITHER A STATE OR FEDERAL
COURT, THE RIGHT TO TRIAL BY JURY BEING EXPRESSLY WAIVED BY ALL PARTIES HERETO.
THE AGENT, EACH LENDER AND THE BORROWER
ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF
THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF
ADVICE OF COUNSEL OF ITS CHOOSING.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed
by their respective duly authorized officers as of the date first written above.
BORROWER:
ENCORE WIRE LIMITED
By: EWC GP Corp., its general partner
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Xxxxxx X. Xxxxx, President
LENDERS AND AGENT:
BANK OF AMERICA, N.A.,
as Agent
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
Vice President
BANK OF AMERICA, N.A.,
as a Lender
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------
Xxxxxx Xxxxxxxxx
Vice President
COMERICA BANK-
TEXAS,
as a Lender
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
-------------------------
Title: Corporate Banking Officer
-------------------------
