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EXHIBIT 10.12
[Execution Copy]
AMENDMENT NO. 4 AND CONSENT
dated as of September 26, 1996
to
LOAN AND SECURITY AGREEMENT
dated as of March 31, 1995
THIS AMENDMENT NO. 4 AND CONSENT dated as of September 26, 1996 made
between PROSOURCE SERVICES CORPORATION, a Delaware corporation (PROSOURCE),
BROMAR SERVICES, INC., a Delaware corporation (BROMAR), and PROSOURCE
DISTRIBUTION SERVICES LIMITED, a Canadian corporation (PROSOURCE CANADA and
together with ProSource and BroMar, the BORROWERS), the financial institutions
party from time to time to the Loan Agreement referred to below (the LENDERS),
NATIONSBANK, N.A. (SOUTH) (successor by merger to NationsBank of Georgia,
N.A.), a national banking association (NATIONSBANK), THE FIRST NATIONAL BANK OF
BOSTON, a national banking association (BANK OF BOSTON), and FLEET CAPITAL
CORPORATION (successor by merger to Shawmut Capital Corporation), a Rhode
Island corporation (FLEET), as co-agents (each in that capacity a CO-AGENT and
collectively the CO-AGENTS) and NATIONSBANK, N.A. (SOUTH), as administrative
agent for the Lenders (in that capacity, together with any successors in that
capacity, the ADMINISTRATIVE AGENT).
Preliminary Statements
The Borrowers, the Lenders, the Co-Agents and the Administrative Agent
are parties to a Loan and Security Agreement dated as of March 31, 1995, as
amended by Amendment No. 1 dated as of December 29, 1995, Amendment No. 2 and
Waiver dated as of March 28, 1996 and Amendment No. 3 and Consent dated as of
September 6, 1996 (as so amended and as otherwise heretofore amended, the LOAN
AGREEMENT; terms defined therein and not otherwise defined herein being used
herein as therein defined).
The Borrowers have requested that the interest rates applicable to
Loans outstanding under the Loan Agreement be modified and the certain other
modifications to the Loan Agreement and the Lenders and the Administrative
Agent have agreed to such requests, upon and subject to all the terms,
conditions and provisions of this Amendment.
NOW, THEREFORE, in consideration of the Loan Agreement, the Loans made
by the Lenders and outstanding thereunder, the mutual promises hereinafter set
forth and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
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Section 1. Amendments to Loan Agreement. The Loan Agreement is hereby
amended, subject to the provisions of Section 2 hereof, by
(a) amending Section 1.1 Definitions thereof by
(i) amending the definition APPLICABLE L/C FEE by deleting therefrom
the phrase "of determination" appearing therein and substituting therefor
the phrase "of issuance or renewal thereof";
(ii) amending the definition EURODOLLAR RATE MARGIN in its entirety to
read as follows:
EURODOLLAR RATE MARGIN means 2.00% from September 1, 1996 to August 31,
1997. From and after September 1, 1997, the EURODOLLAR RATE MARGIN shall be
adjusted in accordance with of the pricing matrix attached to this
Agreement as SCHEDULE 1.1B - PRICING MATRIX, each adjustment to be
effective as of the first day of the calendar month in which each quarterly
Compliance Certificate delivered on or after September 1, 1997 is delivered
pursuant to the provisions of SECTION 11.3, based upon the Total Debt to
EBITDA Ratio reflected in each such Compliance Certificate. If the
Borrowers fail or refuse to deliver any Compliance Certificate in
accordance with the provisions of SECTION 11.3, the Administrative Agent
may, and at the direction of the Majority Lenders shall, increase the
EURODOLLAR RATE MARGIN for the relevant quarterly period to the EURODOLLAR
RATE MARGIN for the next higher pricing interval above the EURODOLLAR RATE
MARGIN then in effect.
(iii) amending the definition PRIME RATE MARGIN in its entirety to
read as follows:
PRIME RATE MARGIN means -0-% from September 1, 1996 to September 1,
1997. From and after September 1, 1997, the PRIME RATE MARGIN shall remain
-0-% except that (i) if any quarterly Compliance Certificate delivered in
accordance with SECTION 11.3 after September 1, 1997 reflects a Total Debt
to EBITDA Ratio greater than 5.0 to 1, the PRIME RATE MARGIN shall be
increased to 0.25% or (ii) if the Borrowers fail or refuse to deliver any
Compliance Certificate in accordance with the provisions of SECTION 11.3,
the Administrative Agent may, and at the direction of the Majority Lenders
shall, increase the PRIME RATE MARGIN to 0.25% for the applicable
quarterly period, all as shown on SCHEDULE 1.1B -- PRICING MATRIX.
(b) further amending Section 1.1 Definitions by adding thereto in
appropriate alphabetical order the following new definition:
IPO means (i) the completion in compliance with all Applicable Laws of
an initial public offering of the common stock of the Parent, (ii) the
contribution of at least $43,000,000 in cash (less, if the Seller Note is
outstanding following completion
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of the IPO, any amount applied by the Parent to repay the Seller Note in
its entirety, up to the lesser of $10,000,000 and the sum of the
principal amount outstanding under and accrued and unpaid interest on
the Seller Note) by the Parent to ProSource from the net proceeds of
such offering and (iii) the application by ProSource of such cash
contribution first to the repayment of outstanding Subordinated Debt of
the Borrowers issued to Onex Ohio Holdings, Inc. and then, to the extent
of the balance of such contribution, to the repayment of Revolving
Credit Loans.
(c) amending Section 5.3 Administrative Agent Fee in its
entirety to read as follows:
SECTION 5.3. Administrative Agent Fee. For administration and
other services performed by the Administrative Agent in connection with
its continuing administration of this Agreement, the Borrowers shall
pay to the Administrative Agent, for its own account and not for the
account of the Co-Agents or the Lenders, an annual fee, payable on the
Effective Date in an amount equal to $250,000, on the first Anniversary
Date in an amount equal to $200,000, and on each Anniversary Date
thereafter (other than any Anniversary Date that is also the Termination
Date), in an amount equal to $125,000, so long as any Secured Obligation
remains outstanding or the Revolving Credit Facility shall not have been
terminated. The fee payable pursuant to this SECTION 5.3 shall be fully
earned by the Administrative Agent on the date payment thereof is due
and shall not be subject to refund or rebate.
(d) amending Section 5.4 Unused Facility by amending the
PROVISO therein in its entirety to read as follows:
PROVIDED, HOWEVER, that from and after September 1, 1997, such fee shall
be subject to adjustment in accordance with the pricing matrix attached
hereto as SCHEDULE 1.1B - PRICING MATRIX, each such adjustment to become
effective upon receipt by the Administrative Agent of the quarterly
Compliance Certificate delivered in connection with financial statements
provided pursuant to SECTION 11.1(C) and shall be based upon the Total
Debt to EBITDA Ratio derived from the information contained in such
financial statements.
(e) amending Section 11.3 Officer's Certificate by inserting
in subsection (a) thereof after the phrase "calculations required to establish"
the phrase "the Total Debt to EBITDA Ratio as of the end of such Fiscal Quarter
and"; and
(f) further amending the Loan Agreement by deleting
therefrom Schedule 1.1B - Pricing Matrix attached thereto and substituting
therefor the schedule bearing the same title attached to this Amendment as
Annex 1.
Section 2. Consent and Waiver. The Lenders hereby (a)
consent to the repayment by ProSource of all amounts owing by it under the
Parent Subordinated Note in the original principal amount of $15,000,000 payable
to Onex Ohio Holdings, Inc., which
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amount, as of the date of this Amendment, is $15,000,000, (b) consent to the
issuance by ProSource to the Parent of additional shares of common stock of
ProSource in exchange for and in satisfaction of amounts owing by ProSource
under the Parent Subordinated Note in the original principal amount of
$2,500,000 owing to the Parent, which amount, as of the date of this Amendment,
is approximately $3,668,000, and (c) waive any Default or Event of Default that
would otherwise result from such Restricted Payment or issuance of shares,
PROVIDED that the IPO has been completed prior to or contemporaneously with the
actions described in the foregoing clauses (a) and (b) and that such actions
are completed not later than December 31, 1996 and, PROVIDED FURTHER, that on
the date or dates on which each such action described in foregoing clauses (a)
and (b) is taken, and after giving effect to this Amendment, no Default or
Event of Default shall have occurred and be continuing.
Section 3. Effectiveness of Amendment. Sections 1 and 2 of this
Amendment shall become effective as of September 26, 1996 upon receipt by the
Administrative Agent not later than September 26, 1996 of (a) at least ten
copies of this Amendment duly executed and delivered by each Borrower, the
Co-Agents and each Lender, (b) a certificate of the President of ProSource or
of the Financial Officer as to the continuing accuracy of the representations
and warranties of the Borrowers set forth in the Loan Agreement and of the
Schedules to the Loan Agreement, having attached thereto any revised Schedules
necessary to permit such certification, (c) a confirmation duly executed and
delivered by the Guarantor of its Unconditional Guaranty and the Pledge
Agreement in the form attached to this Amendment, and (d) an amendment and
restructuring fee in an amount equal to $250,000 for the ratable benefit of the
Lenders.
Section 4. Effect of Amendment. From and after the effectiveness of
this Amendment, all references in the Loan Agreement and in any other Loan
Document to "this Agreement," "the Loan Agreement," "hereunder," "hereof" and
words of like import referring to the Loan Agreement, shall mean and be
references to the Loan Agreement as amended by this Amendment. Except as
expressly amended hereby, the Loan Agreement and all terms, conditions and
provisions thereof remain in full force and effect and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Administrative Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
Section 5. Counterpart Execution: Governing Law.
(a) Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by 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 taken together shall constitute but one and the
same agreement.
(b) Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Georgia.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWERS:
PROSOURCE SERVICES CORPORATION
[Corporate Seal]
Attest: By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
By: /s/ Xxxx X. Xxxxxx xx Xxxxxxx Executive Vice President
---------------------------------
Xxxx X. Xxxxxx xx Xxxxxxx
Secretary
BROMAR SERVICES, INC.
[Corporate Seal]
Attest: By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
By: /s/ Xxxx X. Xxxxxx de Xxxxxxx Xxxxxxx X. Xxxxx
--------------------------------- Executive Vice President
Xxxx X. Xxxxxx xx Xxxxxxx
Secretary
PROSOURCE DISTRIBUTION SERVICES
LIMITED
[Corporate Seal]
Attest: By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
By: /s/ Xxxx X. Xxxxxx de Xxxxxxx Xxxxxxx X. Xxxxx
--------------------------------- Executive Vice President
Xxxx X. Xxxxxx xx Xxxxxxx
Secretary
(Signatures continued on following three pages)
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ADMINISTRATIVE AGENT:
NATIONSBANK, N.A. (SOUTH)
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
Vice President
CO-AGENTS AND LENDERS:
NATIONSBANK, N.A. (SOUTH),
as a Lender and Co-Agent
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender and Co-Agent
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Division Executive
FLEET CAPITAL
CORPORATION
as a Lender and Co-Agent
By: /s/ Xxxx X. Xxxx
-----------------------------
Name: Xxxx X. Xxxx
Title: SVP
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THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Relationship Manager
BANKAMERICA BUSINESS
CREDIT, INC.,
as a Lender
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
THE CIT GROUP/BUSINESS
CREDIT, INC.,
as a Lender
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
XXXXXX FINANCIAL, INC.,
as a Lender
By: /s/ Xxxxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: AVP
SANWA BUSINESS CREDIT
CORPORATION
as a Lender
By: /s/ Xxxx X. XxXxxxx
------------------------------------
Name: Xxxx X. XxXxxxx
Title: First Vice President
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NATIONAL CITY
COMMERCIAL FINANCE,
INC., as a Lender
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: Vice President
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