Exhibit 10(a)
THE XXXXXX & SESSIONS CO.
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This Third Amendment to the Amended and Restated Credit Agreement
(herein, the "Amendment") is entered into as of March 27, 2002, among The Xxxxxx
& Sessions Co., an Ohio corporation (the "Borrower"), the Guarantors party
hereto, the Lenders party hereto, and Xxxxxx Trust and Savings Bank, as
Administrative Agent for the Lenders.
PRELIMINARY STATEMENTS
A. The Borrower, the Guarantors, the Lenders and the Administrative
Agent are parties to an Amended and Restated Credit Agreement dated as of
December 15, 2000 (the Amended and Restated Credit Agreement, as the same has
been amended prior to the date hereof, being referred to herein as the "Credit
Agreement"). All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.
B. The Borrower has requested that the Lenders reduce the commitments,
amend certain financial covenants and make certain other amendments to the
Credit Agreement, and the Lenders are willing to do so under the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth in
Section 2 below, effective as of the effective date of this Amendment, the
Credit Agreement shall be and hereby is amended as follows:
1.1. A new subsection (d) shall be added to Section 2.1 to read as
follows:
(d) Term Loan Fee. The Borrower agrees that if the
Term Loans are not paid in full by September 30, 2002, it
shall pay to the Administrative Agent for distribution to the
Lenders in accordance with their pro rata shares of the
outstanding Term Loans a fee in an amount equal to 1%
multiplied by the outstanding principal balance of the Term
Loans as of such date.
1.2. The definition of "Applicable Margin" appearing in Section 5.1
of the Credit Agreement shall be amended and restated in its
entirety to read as follows:
"Applicable Margin" means the following with respect
to Loans, Reimbursement Obligations, and Revolving Credit
Commitment and Letter of Credit fees payable under Section 2.1
hereof, the rate per annum specified below:
Applicable Margin for Base Rate Loans and Reimbursement
Obligations: 2.25%
Applicable Margin for Eurodollar Loans and Letter of Credit
fee: 4.00%
Applicable Margin for Revolving Credit Commitment fee: .50%
provided, however, that the Applicable Margin shall be subject
to quarterly adjustments on each Pricing Date, and from one
Pricing Date to the next the Applicable Margin shall mean a
rate per annum determined in accordance with the following
schedule:
APPLICABLE
APPLICABLE MARGIN FOR APPLICABLE
MARGIN FOR BASE EURODOLLAR MARGIN FOR
RATE LOANS AND LOANS AND REVOLVING
TOTAL FUNDED DEBT/ REIMBURSEMENT LETTER OF CREDIT
EBITDA RATIO FOR SUCH OBLIGATIONS CREDIT FEE COMMITMENT FEE
PRICING DATE SHALL BE SHALL BE: SHALL BE:
Greater than or equal
to 3.5 to 1.0 2.25% 4.00% .50%
Greater than or equal
to 3.0 to 1.0, but less
than 3.5 to 1.0 1.75% 3.50% .50%
Greater than or equal
to 2.5 to 1.0, but less
than 3.0 to 1.0 1.25% 3.00% .50%
Greater than or equal
to 2.0 to 1.0, but less
than 2.5 to 1.0 .25% 2.00% .35%
Greater than or equal
to 1.5 to 1.0, but less
than 2.0 to 1.0 0% 1.75% .30%
Less than 1.5 to 1.0 0% 1.50% .25%
For purposes hereof, the term "Pricing Date" means, for the
fiscal quarter of the Borrower ending on or about March 31,
2002 and each fiscal quarter ending thereafter, the date on
which the Administrative Agent is in
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receipt of the Borrower's most recent financial statements for
the fiscal quarter then ended (and in the case of the year-end
financial statements, audit report), pursuant to Section 8.5
hereof. The Applicable Margin shall be established based on
the Total Funded Debt/EBITDA Ratio for the most recently
completed fiscal quarter and the Applicable Margin established
on a Pricing Date shall remain in effect until the next
Pricing Date. If the Borrower has not delivered its financial
statements (and, in the case of the year-end financial
statements, audit report) by the date such financial
statements are required to be delivered under Section 8.5
hereof, until such financial statements are delivered, the
Applicable Margin shall be the highest Applicable Margin
(i.e., the Total Funded Debt/EBITDA Ratio shall be deemed to
be greater than 3.5 to 1.0). If the Borrower subsequently
delivers such financial statements before the next Pricing
Date, the Applicable Margin established by such late delivered
financial statements shall take effect from the date of
delivery until the next Pricing Date. In all other
circumstances, the Applicable Margin established by such
financial statements shall be in effect from the Pricing Date
that occurs immediately after the end of the fiscal quarter
covered by such financial statements until the next Pricing
Date. Each determination of the Applicable Margin made by the
Administrative Agent in accordance with the foregoing shall be
conclusive and binding on the Borrower and the Lenders if
reasonably determined. From and after September 30, 2002, and
until the Pricing Date related to the second consecutive
fiscal quarter where the Total Funded Debt / EBITDA Ratio has
been less than 3.0 to 1.0 as of the last day of such two most
recently completed fiscal quarters, the Applicable Margins
with respect to the Term Loans shall increase by 1.0% over the
Applicable Margins set forth above.
1.3. The definitions of "EBITDA", "L/C Commitment" and "Revolving Credit
Commitment" appearing in Section 5.1 of the Credit Agreement shall each be
amended and restated in its entirety to read as follows:
"EBITDA" means, with respect to any period, Net
Income for such period plus (A) all amounts deducted in
arriving at such Net Income in respect of (a) Interest
Expense, plus (b) federal, state, local, and foreign income
taxes for such period, plus (c) amounts properly charged for
depreciation of fixed assets and amortization of intangible
assets during such period, plus (d) any charges to Net Income
during such period which are non-cash, non-recurring expenses
arising from the rationalization of the Borrower's facilities,
product lines or personnel, up to a maximum amount equal to
10% of Net Worth at the end of such period, plus (e) any
charges to Net Income during such period (up to $15,000,000 in
the aggregate during the term of this Agreement, including any
such charges accrued prior to the Effective Date) associated
with the Intermatic Litigation, plus (f) for each fiscal
quarter
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ending after January 1, 2002, any non-cash expenses incurred
with respect to its Plans during such period, plus (g) for
each fiscal quarter ending after January 1, 2002, any cash
expenses incurred with respect to its Plans during such period
up to a maximum amount of $500,000, plus (h) for each fiscal
quarter ending after March 31, 2002, any cash or non-cash
expenses incurred with respect to the consultant and financial
advisor described in Sections 8.29 and 8.30 hereof minus (B)
the sum of (a) any recapture, recoveries, or other credits to
Net Income during such period associated with the Intermatic
Litigation and (b) any recapture, recoveries or other credits
to Net Income during such period incurred with respect to its
Plans; provided, however, that EBITDA for the relevant period
shall be calculated on a pro forma basis in good faith by the
Borrower and established to the reasonable satisfaction of the
Administrative Agent as if each Permitted Acquisition which
occurred during such period had taken place on the first day
of such period (including adjustments for non-recurring
expenses and income reasonably determined by the Borrower in
good faith and established to the reasonable satisfaction of
the Administrative Agent). In the event that any non-cash
charge is excluded from the computation of EBITDA for a given
period pursuant to clause (d) above but the circumstances
giving rise to such charge have a cash impact in a subsequent
period which would have reduced EBITDA but for the charge in
the prior period, such impact shall be taken into account in
computing EBITDA in the period when such impact occurs.
"L/C Commitment" means $25,000,000, as reduced
pursuant to the terms hereof.
"Revolving Credit Commitment" means, as to each
Lender, the obligation of such Lender to make Revolving Loans
and to participate in Letters of Credit issued for the account
of the Borrower hereunder in an aggregate principal or face
amount at any one time outstanding not to exceed the amount
set forth opposite such Lender's name on Schedule 1 attached
hereto and made a part hereof, as the same may be reduced or
modified at any time or from time to time pursuant to the
terms hereof. The Borrower and the Lenders acknowledge and
agree that the Revolving Credit Commitments of the Lenders
aggregate $110,000,000 upon the effectiveness of the Third
Amendment hereto.
1.4. Subsections (j) and (k) of Section 8.9 of the Credit Agreement shall
be amended and restated in their entirety to read as follows:
(j) intentionally omitted; and
(k) intentionally omitted.
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1.5. Section 8.12 of the Credit Agreement shall be amended and restated in
its entirety to read as follows:
Section 8.12. Dividends and Certain Other Restricted
Payments. The Borrower shall not, nor shall it permit any of
its Subsidiaries to, declare or pay any dividends on or make
any other distributions in respect of any class or series of
its capital stock, or directly or indirectly purchase, redeem
or otherwise acquire or retire any of its capital stock
(collectively, "Restricted Payments"); provided, however, that
the foregoing shall not operate to prevent (a) the making of
dividends or distributions to the Borrower by any of its
Subsidiaries and (b) Restricted Payments consisting of the
purchase by the Borrower of shares of its common stock for the
sole purpose of the funding of the Borrower's deferred
compensation plan in accordance with its terms in a maximum
amount of $250,000 per fiscal year.
1.6. Section 8.22 of the Credit Agreement shall be amended and restated in
its entirety to read as follows:
Section 8.22. Total Funded Debt/EBITDA Ratio. The
Borrower shall not, as of the last day of each fiscal quarter
of the Borrower specified below, permit the Total Funded
Debt/EBITDA Ratio to be more than:
TOTAL FUNDED DEBT/EBITDA RATIO
FISCAL QUARTER ENDING ON OR ABOUT: SHALL NOT BE MORE THAN:
March 31, 2002 5.70 to 1.0
June 30, 2002 5.90 to 1.0
September 30, 2002 4.90 to 1.0
December 31, 2002 4.40 to 1.0
March 31, 2003 3.95 to 1.0
June 30, 2003 3.95 to 1.0
September 30, 2003 3.65 to 1.0
December 31, 2003 3.25 to 1.0
March 31, 2004 3.00 to 1.0
June 30, 2004 3.00 to 1.0
September 30, 2004 and each fiscal quarter 2.75 to 1.0
ending thereafter
1.7. Section 8.23 of the Credit Agreement shall be amended and restated in
its entirety to read as follows:
Section 8.23. Interest Coverage Ratio. The Borrower
shall not, as of the last day of each fiscal quarter of the
Borrower specified
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below, permit the ratio of (a) EBITDA for the four fiscal
quarters of the Borrower then ended to (b) Interest Expense
for the same four fiscal quarters then ended to be less than:
INTEREST COVERAGE RATIO SHALL
FISCAL QUARTER ENDING ON OR ABOUT: NOT BE LESS THAN:
March 31, 2002 2.00 to 1.0
June 30, 2002 2.00 to 1.0
September 30, 2002 2.25 to 1.0
December 31, 2002 2.25 to 1.0
March 31, 2003 2.75 to 1.0
June 30, 2003 3.00 to 1.0
September 30, 2003 3.25 to 1.0
December 31, 2003 3.50 to 1.0
March 31, 2004, and each fiscal quarter 4.00 to 1.0
ending thereafter
1.8. Section 8.24 of the Credit Agreement shall be amended and restated in
its entirety to read as follows:
Section 8.24. Capital Expenditures. The Borrower
shall not, nor shall it permit any Subsidiary to, incur
Capital Expenditures in an aggregate amount in excess of (a)
$10,000,000 during the fiscal year ending on or about December
31, 2002 and (b) $12,500,000 during any fiscal year of the
Borrower ending thereafter.
1.9. Section 8.27 of the Credit Agreement shall be amended and restated in
its entirety to read as follows:
Section 8.27. Minimum EBITDA. As of the last day of
each fiscal quarter of the Borrower specified below, the
Borrower shall not permit EBITDA for the four fiscal quarters
of the Borrower then ended to be less than:
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EBITDA FOR FOUR FISCAL
QUARTERS THEN ENDED SHALL NOT
FISCAL QUARTER ENDING ON OR ABOUT: BE LESS THAN
March 31, 2002 $21,000,000
June 30, 2002 $22,000,000
September 30, 2002 $26,000,000
December 31, 2002 $26,000,000
March 31, 2003 $30,000,000
June 30, 2003 $33,000,000
September 30, 2003 $35,000,000
December 31, 2003 $36,000,000
March 31, 2004 $38,200,000
June 30, 2004 $39,200,000
September 30, 2004 and each fiscal quarter $40,000,000
ending thereafter
1.10. Section 8.28 of the Credit Agreement shall be amended and restated in
its entirety to read as follows:
Section 8.28. Level of Borrowings. Notwithstanding
the Revolving Credit Commitments or anything contained herein
to the contrary, unless EBITDA has exceeded $40,000,000 for
the past two consecutive fiscal quarters (in which case the
following restrictions shall not apply), the Borrower agrees
that (a) during the Seasonal Period, the sum of the aggregate
principal amount of Revolving Credit Loans and Swing Loans
shall not exceed $94,000,000, plus the sum of (i) amounts paid
in cash by the Borrower to fund its Plans up to a maximum of
$3,000,000 and (ii) the principal amount of any Reimbursement
Obligations reimbursed to the Administrative Agent with the
proceeds of one or more Revolving Credit Loans, and (b) at all
times other than the Seasonal Period, the sum of the aggregate
principal amount of Revolving Credit Loans and Swing Loans
shall not exceed $84,000,000, plus the sum of (i) amounts paid
in cash by the Borrower to fund its Plans up to a maximum of
$3,000,000 and (ii) the principal amount of any Reimbursement
Obligations reimbursed to the Administrative Agent with the
proceeds of one or more Revolving Credit Loans.
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1.11. The Credit Agreement shall be amended by adding new Sections 8.29 and
8.30 to read as follows:
Section 8.29. Operating Review. The Borrower shall at
all times make the written evaluations and recommendations of
Keystone Consulting Group or any replacement consultant
thereto available to the Administrative Agent and Lenders and
shall otherwise permit the Administrative Agent and Lenders
and their duly authorized representatives and agents to
discuss with such consultant the affairs, finances, books and
records, and business prospects of the Borrower and its
Subsidiaries.
Section 8.30. Financial Advisor. The Borrower hereby
agrees to engage at its expense a financial advisor selected
by the Borrower and satisfactory to the Administrative Agent
by no later than April 30, 2002, to prepare recommendations
with respect to strategic financing options and to perform
such other analyses and evaluations as the Borrower may
designate or that the Administrative Agent or the Required
Lenders may require. The Borrower shall at all times make the
financial advisor's written evaluations and recommendations
available to the Administrative Agent and Lenders and shall
permit the Administrative Agent and Lenders and their duly
authorized representatives and agents to discuss with the
financial advisor the affairs, finances, books and records,
and business prospects of the Borrower and its Subsidiaries.
Without limiting the foregoing, the Borrower and its financial
advisor shall present to the Administrative Agent and the
Lenders a recapitalization plan by no later than July 31,
2002.
1.12. Section 9(b) of the Credit Agreement shall be amended and restated in
its entirety to read as follows:
(b) default in the observance or performance of any
covenant set forth in Sections 8.1, 8.5(a), 8.5(b), 8.5(e),
8.5(f), 8.5(g), 8.5(h), 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.16,
8.18, 8.21, 8.22, 8.23, 8.24, 8.25, 8.27, 8.28, 8.29 or 8.30
hereof or of any provision in any Loan Document dealing with
the use, disposition or remittance of the proceeds of
Collateral or requiring the maintenance of insurance thereon;
1.13. Schedule 1 to the Credit Agreement shall be amended and restated in
its entirety to read as set forth on Schedule 1 hereto.
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SECTION 2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
2.1. The Borrower, the Administrative Agent, and the Required Lenders shall
have executed and delivered this Amendment.
2.2. The Administrative Agent shall have received an amendment fee in the
amount of $750,000 for the ratable account of the Lenders.
2.3. The Administrative Agent shall have received the fees called for by
the fee letter between the Administrative Agent and the Borrower dated of even
date herewith.
2.4. The Guarantors shall have executed and delivered to the Administrative
Agent their consent to this Amendment in the space provided below.
2.5. Legal matters incident to the execution and delivery of this Amendment
shall be satisfactory to the Administrative Agent and its counsel.
SECTION 3. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment, the
Borrower hereby represents to the Lenders that as of the date hereof, and after
giving effect to the amendments provided for in this Amendment, (a) the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 6.5 shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Lenders) and (b) the Borrower is in
compliance with the terms and conditions of the Credit Agreement and no Default
or Event of Default has occurred and is continuing under the Credit Agreement or
shall result after giving effect to this Amendment.
SECTION 4. MISCELLANEOUS.
4.1. The Borrower and the Guarantors have heretofore or concurrently
herewith executed and delivered to the Lenders the Mortgages, the Security
Agreement, the Pledge Agreement, and certain other Collateral Documents. The
Borrower and, by signing below, the Guarantors, hereby acknowledge and agree
that the Liens created and provided for by the Collateral Documents continue to
secure, among other things, the Obligations arising under the Credit Agreement
as amended hereby; and the Collateral Documents and the rights and remedies of
the Lenders thereunder, the obligations of the Borrower and the Guarantors
thereunder, and the Liens created and provided for thereunder remain in full
force and effect and shall not be affected, impaired or discharged hereby.
Nothing herein contained shall in any manner affect or impair the priority of
the liens and security interests created and provided for by the Collateral
Documents as to the indebtedness which would be secured thereby prior to giving
effect to this Amendment.
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4.2. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.
4.3. The Borrower agrees to pay on demand all reasonable costs and
expenses incurred by the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of this Amendment, including
the reasonable fees and expenses of counsel for the Administrative Agent.
4.4. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
[SIGNATURE PAGE TO FOLLOW]
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This Third Amendment to Amended and Restated Credit Agreement is
entered into as of the date and year first above written.
"BORROWER"
THE XXXXXX & SESSIONS CO.
By /s/ Xxxxx X. Xxxx
--------------------------------------------
Name Xxxxx X. Xxxx
-------------------------------------------
Title Executive Vice President & CFO
------------------------------------------
"GUARANTORS"
XXXXXX CHIMES CO.
By /s/ Xxxxx X. Xxxx
--------------------------------------------
Name Xxxxx X. Xxxx
-------------------------------------------
Title Vice President, Secretary & Treasurer
------------------------------------------
DIMANGO PRODUCTS CORPORATION
By /s/ Xxxxx X. Xxxx
---------------------------------------------
Name Xxxxx X. Xxxx
-------------------------------------------
Title Secretary
------------------------------------------
PYRAMID INDUSTRIES II, INC.
By /s/ Xxxxx X. Xxxx
--------------------------------------------
Name Xxxxx X. Xxxx
-------------------------------------------
Title Vice President & Treasurer
------------------------------------------
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"LENDERS"
XXXXXX TRUST AND SAVINGS BANK, in its individual
capacity as a Lender and as Administrative Agent
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name Xxxxxxx X. Xxxxxxx
-------------------------------------------
Title Managing Director
------------------------------------------
BANK OF AMERICA, N.A.
By /s/ Xxxxxxx Xxxxxxxx
--------------------------------------------
Name Xxxxxxx Xxxxxxxx
-------------------------------------------
Title Senior Vice President
------------------------------------------
NATIONAL CITY BANK
By /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name Xxxxxx X. Xxxxx
-------------------------------------------
Title Vice President
------------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By /s/ Xxxx X. Land
--------------------------------------------
Name Xxxx X. Land
-------------------------------------------
Title Vice President
------------------------------------------
GE CAPITAL CFE, INC.
By /s/ Xxxxxxx Xxxxxxxxx
--------------------------------------------
Name Xxxxxxx Xxxxxxxxx
-------------------------------------------
Title Duly Authorized Signatory
------------------------------------------
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BANK ONE, N.A.
By /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name Xxxxx X. Xxxxxx
----------------------------------------
Title Vice President
---------------------------------------
THE HUNTINGTON NATIONAL BANK
By /s/ Xxx X. Xxxxxxxxx
-----------------------------------------
Name Xxx X. Xxxxxxxxx
-----------------------------------------
Title Senior Vice President
--------------------------------------
FIFTH THIRD BANK (NORTHEASTERN OHIO)
By /s/ X X Xxxxxxx
-----------------------------------------
Name Xxx X. Xxxxxxx
----------------------------------------
Title Vice President
---------------------------------------
KEYBANK NATIONAL ASSOCIATION
By /s/ X. X. Xxxxxx
-----------------------------------------
Name X. X. Xxxxxx
----------------------------------------
Title Vice President
---------------------------------------
LASALLE BANK NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name Xxxxxxx X. Xxxxxx
----------------------------------------
Title Vice President
---------------------------------------
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