EXHIBIT 10.44
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
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THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
made and entered into this 23rd day of August, 2000, by and among PAMECO
CORPORATION, a Delaware corporation with its chief executive office and
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000
("Borrower"); and FLEET CAPITAL CORPORATION, a Rhode Island corporation with an
office at 000 Xxxxxxxx Xxxxxxx, X.X., Xxxxx 000, Xxxxxxx, Xxxxxxx 00000
("Agent"), in its capacity as collateral and administrative agent for the
Lenders (as defined in the Loan Agreement referenced below); and Lenders.
Recitals:
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Lenders, Agent and Borrower are parties to a certain Loan and Security
Agreement dated February 17, 2000, as amended by that certain First Amendment to
Loan and Security Agreement dated February 29, 2000, that certain Second
Amendment to Loan and Security Agreement dated May 18, 2000, and that certain
Assumption and Amendment Agreement dated as of July 21, 2000 (as at any time
amended, the Loan Agreement), pursuant to which Lenders may make certain loans
and other extensions of credit to Borrower from time to time.
The parties desire to amend the Loan Agreement as hereinafter set forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and
valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Definitions. All capitalized terms used in this Amendment, unless
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otherwise defined herein, shall have the meaning ascribed to such terms in the
Loan Agreement.
2. Amendments to Loan Agreement. The Loan Agreement is hereby amended as
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follows:
(a) By adding a new Section 7.6 to the Loan Agreement that reads as follows:
7.6. Additional Reporting Requirements. Borrower shall deliver to Agent
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and Lenders a weekly sales and gross margin report on Monday of each week
for the immediately preceding week. Borrower shall deliver to Agent and
Lenders on Tuesday of each week, commencing on August 23, 2000, a weekly
rolling cash forecast for the immediately succeeding 6-week period.
(b) By deleting Section 9.2.9 of the Loan Agreement and by substituting the
following new Section 9.2.9 in lieu thereof:
9.2.9. Capital Expenditures. Make Capital Expenditures (including
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expenditures by way of capitalized leases) which in the aggregate, as to
Borrower and its Subsidiaries, exceed (i) $2,500,000 during the Fiscal
Year ending February 28, 2001, and (ii) $4,000,000 during the Fiscal Year
ending February 28, 2002 and for each Fiscal Year thereafter.
(c) By deleting Sections 9.3.1, 9.3.2 and 9.3.3 of the Loan Agreement and by
substituting the following new Sections 9.3.1, 9.3.2 and 9.3.3 in lieu thereof:
9.3.1. Consolidated Net Worth. Maintain a Consolidated Net Worth of at
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least the amount set forth below for the period applicable thereto, to be
tested on a monthly basis as of the last day of each month (except as
otherwise expressly provided below):
Period Amount
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July, 2000 $20,250,000
August, 2000 $27,750,000
September, 2000 $27,725,000
October, 2000 $25,375,000
November, 2000 $22,475,000
December, 2000 $19,375,000
January, 2001 $16,225,000
February, 2001 $13,475,000
March, 2001 $12,325,000
April, 2001 $12,075,000
May, 2001 $14,225,000
June, 2001 $16,975,000
July, 2001 $20,025,000
August, 2001 $22,225,000
September, 2001 $21,975,000
October, 2001 $22,075,000
November, 2001 $20,875,000
December, 2001 $19,525,000
January, 2002 $17,825,000
February, 2002 $16,425,000
March, 2002 $16,425,000
April, 2002 $16,425,000
May, 2002 $20,425,000
June, 2002 $20,425,000
July, 2002 $20,425,000
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August, 2002 $32,775,000
;provided, however, that the foregoing amount shall be increased as of
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the last day of the second month following the end of each Fiscal
Quarter, commencing with the Fiscal Quarter ending August 31, 2002, by an
amount equal to 50% of Consolidated Net Income during each such Fiscal
Quarter, but no reduction in the foregoing amount shall be made if
Consolidated Net Income in any Fiscal Quarter is a negative number.
9.3.2. Consolidated EBITDA. Achieve Consolidated EBITDA of at least the
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amount shown below for the period corresponding thereto:
Period Amount
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July 1, 2000
through July 31, 2000 $ 0
July 1, 2000
through August 31, 2000 ($ 100,000)
July 1, 2000
through September 30, 2000 ($ 1,500,000)
July 1, 2000
through October 31, 2000 ($ 3,300,000)
July 1, 2000
through November 30, 2000 ($ 5,700,000)
July 1, 2000
through December 31, 2000 ($ 8,400,000)
July 1, 2000
through January 30, 2001 ($11,600,000)
July 1, 2000
through February 28, 2001 ($14,200,000)
July 1, 2000
through March 31, 2001 ($14,300,000)
July 1, 2000
through April 30, 2001 ($13,700,000)
July 1, 2000
through May 31, 2001 ($10,600,000)
July 1, 2000
through June 30, 2001 ($ 6,500,000)
August 1, 2000
through July 31, 2001 ($ 1,000,000)
September 1, 2000
through August 31, 2001 $ 2,300,000
October 1, 2000
through September 30, 2001 $ 4,400,000
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November 1, 2000
through October 31, 2001 $ 6,900,000
December 1, 2000
through November 30, 2001 $ 8,700,000
January 1, 2001
through December 31, 2001 $11,100,000
February 1, 2001
through January 31, 2002 $13,200,000
March 1, 2001
through February 28, 2002 $15,200,000
9.3.3. Consolidated Fixed Charge Coverage Ratio. Achieve a Consolidated
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Fixed Charge Coverage Ratio of at least the ratio shown below for the
period corresponding thereto:
Fiscal Quarter ended 5/31/02 1.30 to 1.0
Two Fiscal Quarters ended 8/31/02 1.40 to 1.0
Three Fiscal Quarters ended 11/30/02 1.40 to 1.0
Four Fiscal Quarters ended on 2/28/03 1.40 to 1.0
Each Fiscal Quarter end thereafter
for the four Fiscal Quarters then ending 1.40 to 1.0
(d) By inserting the words or 7.6" directly following the words contained in
Section 7.5" in Section 11.1.3(ii) of the Loan Agreement.
(e) By adding a new Section 11.1.19 to the Loan Agreement that reads as
follows:
11.1.19 Additional Capital Contribution. Xxxxxxxxxx and/or Quilvest
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shall fail to make an additional capital contribution to Borrower of at
least $2,500,000 after August 23, 2000 but prior to September 23, 2000.
(f) By deleting the definition of Applicable Margin from Appendix A to the
Loan Agreement and by substituting the following new definition in lieu thereof:
Applicable Margin - a percentage equal to 1.25% with respect to Revolver
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Loans that are Base Rate Loans, 3.25% with respect to Revolver Loans that
are LIBOR Loans, and 0.375% with respect to the Unused Line Fee, provided
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that, commencing after the Adjustment Date, the Applicable Margin shall be
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increased or (if no Default or Event of Default exists) decreased, based
upon the Average Availability, as follows:
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Applicable Margin
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Average
Availability Base Rate LIBOR Rate Unused Line Fee
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Less than $2,500,000 1.00% 3.00% 0.50%
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Less than $10,000,00 but greater than 0.75% 2.75% 0.375%
or equal to $2,500,000
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Less than $20,000,000 but greater than 0.50% 2.50% 0.375%
or equal to $10,000,000
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Less than $30,000,000 but greater than 0.25% 2.25% 0.35%
or equal to $15,000,000
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Greater than or equal to $30,000,000 0.00% 2.00% 0.25%
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The Applicable Margin shall be subject to reduction or increase, as
applicable and as set forth in the table above, on a quarterly basis, as
measured by Average Availability, as of the end of each Fiscal Quarter
after the Adjustment Date, based upon the immediately preceding 4 Fiscal
Quarters of Borrower. Except as set forth in the last sentence hereof, any
such increase or reduction in the Applicable Margin provided for herein
shall be effective 3 Business Days after receipt by Agent of Borrower's
quarterly financial statements and Compliance Certificate; provided,
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however, that any reduction in the Applicable Margin shall not apply to
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any LIBOR Loans outstanding on the effective date of such reduction that
have an Interest Period commencing prior to the effective date of such
reduction. If the financial statements and the Compliance Certificate of
Borrower setting forth the Average Availability are not received by Agent
by the date required pursuant to Section 9.1.3 of the Agreement, the
Applicable Margin shall be determined as if the Average Availability was
less than $2,500,000 until such time as such financial statements and
Compliance Certificate are received and any Event of Default resulting
from a failure timely to deliver such financial statements or Compliance
Certificate is waived in writing by Agent and Lenders; provided, however,
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that nothing herein shall be deemed to prevent Agent and Lenders from
charging interest at the Default Rate at any time that an Event of Default
exists.
(g) By deleting the definition of Consolidated Net Worth from Appendix A to
the Loan Agreement and by substituting the following new definition in lieu
thereof:
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Consolidated Net Worth - on any date of determination thereof, the sum on
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such date of (i) the Consolidated net worth of Borrower and its
Subsidiaries after deducting therefrom the amount of all intangible items
reflected therein, including all unamortized debt discount and expense,
unamortized research and development expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names,
copyrights, unamortized excess cost of investment in Subsidiaries over
equity at dates of acquisition and all similar items that could properly
be treated as intangibles in accordance with GAAP, (ii) Subordinated Debt,
(iii) accrued but undeclared Distributions with respect to preferred stock
as reflected on a Consolidated balance sheet of Borrower and its
Subsidiaries, (iv) the $35,000,000 investment in Series A redeemable
preferred stock and warrants of Borrower made by Xxxxxxxxxx and Quilvest
on the Closing Date, (v) the $10,000,000 investment in Series B Cumulative
Pay-in-Kind Convertible Preferred Stock of Borrower by Xxxxxxxxxx and
Quilvest on or about August 23, 2000, and (vi) the $2,500,000 investment
in Series B Cumulative Pay-in-Kind Convertible Preferred Stock of Borrower
by Xxxxxxxxxx and/or Quilvest on or before September 23, 2000.
(h) By deleting the definitions Normal Period Reserve Amount and Slow Period
Reserve Amount from Appendix A to the Loan Agreement and by substituting the
following new definitions in lieu thereof:
Normal Period Reserve Amount - for each month, or portion thereof, that
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the Slow Period Reserve Amount or Interim Period Reserve Amount is not in
effect, an amount equal to $10,000,000; provided that, commencing April 1,
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2000, and for each month thereafter (other than a month, or portion
thereof, that the Slow Period Reserve Amount or the Interim Period Reserve
Amount is in effect), the amount shall be $5,000,000 if the ratio of
Consolidated Operating Cash Flow to Consolidated Debt Service is equal to
or greater than 1.25 to 1. The foregoing ratio shall be calculated for a
period (not to exceed 12 consecutive months) ending on the month preceding
the month for which the reserve amount is to be determined, but the first
month of such period shall be February 2000 until March 2001 (at which
time a rolling 12-month period shall be utilized to calculate the ratio).
Slow Period Reserve Amount - for any interval of 90 consecutive days
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selected by Borrower to be effective during the period (other than any
period in which the Interim Period Reserve Amount is in effect) from
November 1 of each year through the last day of February of the next
year, an amount equal to $5,000,000.
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(i) By deleting the reference to "$130,000,000" that is contained in the
definition of "Revolver Commitment" in Appendix A to the Loan Agreement and by
substituting in lieu thereof a reference to "$117,500,000."
(j) By adding new definitions of Adjustment Date and Interim Period Reserve
Amount to Appendix A to the Loan Agreement, in proper alphabetical sequence:
Adjustment Date - November 30, 2001, unless a Default or Event of Default
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exists at such time, in which case, the last day of the first Fiscal
Quarter following November 30, 2001 at which time no Default or Event
of Default exists.
Interim Period Reserve Amount - (i) $3,000,000 for each month during the
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period from August 1, 2000 through February 28, 2001 and (ii) $3,000,000
for each month during the period from July 1, 2001 through October 31,
2001.
(k) By deleting the references to "$130,000,000" that are contained on the
cover page to the Loan Agreement, the first recital thereto, and in the
introductory paragraph of Section 1 of the Loan Agreement and by substituting in
lieu thereof, in each instance, a reference to "$117,500,000."
(l) By amending the Loan Agreement to reflect the aggregate amount of the
Revolver Commitments as $117,500,000 and the Revolver Commitment of each Lender
as follows:
(i) Fleet Capital Corporation - $27,500,000
(ii) Foothill Capital Corporation - $25,000,000
(iii) Bank of America, N.A - $25,000,000
(iv) The CIT Group/Business Credit, Inc. - $25,000,000
(v) Wachovia Bank, N.A. - $15,000,000
3. Ratification and Reaffirmation. Borrower hereby ratifies and reaffirms
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the Obligations, each of the Loan Documents and all of Borrower's covenants,
duties, indebtedness and liabilities under the Loan Documents.
4. Acknowledgments and Stipulations. Borrower acknowledges and stipulates
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that the Loan Agreement and the other Loan Documents executed by Borrower are
legal, valid and binding obligations of Borrower that are enforceable against
Borrower in accordance with the terms thereof; all of the Obligations are owing
and payable without defense, offset or counterclaim (and
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to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by Borrower); and the security interests and
Liens granted by Borrower in favor of Agent, for the benefit of itself and
Lenders, are duly perfected, first priority security interests and Liens.
5. Representations and Warranties. Borrower represents and warrants to Agent
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and Lenders, to induce Agent and Lenders to enter into this Amendment, that no
Default or Event of Default exists on the date hereof; the execution, delivery
and performance of this Amendment have been duly authorized by all requisite
corporate action on the part of Borrower and this Amendment has been duly
executed and delivered by Borrower; and all of the representations and
warranties made by Borrower in the Loan Agreement are true and correct on and as
of the date hereof.
6. Amendment Fee. In consideration of Agent's and Lenders' willingness to
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enter into this Amendment, Borrower agrees to pay to Agent, for the ratable
benefit of Lenders, an amendment fee of $146,875 on the date hereof, in
immediately available funds.
7. Waiver. By their signatures below, Agent and Lenders hereby waive any
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Events of Default under Sections 8.1.1, 8.1.2, 8.1.4, 8.1.5, 8.1.20, 9.2.1,
9.2.7, 9.2.11, 9.2.16, 10.2.1, 11.1.3, 12.9.1, 12.9.2, 14.8 and 14.9 of, and any
Schedules to, the Loan Agreement arising from the reincorporation of Pameco
Corporation in the State of Delaware, as described in that certain Assumption
and Amendment Agreement dated as of July 21, 2000, among Borrower, Agent and
Lenders, such waivers to be effective as of July 21, 2000.
8. Breach of Amendment. This Amendment shall be part of the Loan Agreement
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and a breach of any representation, warranty or covenant herein shall constitute
an Event of Default.
9. Expenses of Agent. Borrower agrees to pay, on demand, all reasonable
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costs and expenses incurred by Agent in connection with the preparation,
negotiation and execution of this Amendment and any other Loan Documents
executed pursuant hereto and any and all amendments, modifications, and
supplements thereto, including, without limitation, the reasonable costs and
fees of Agent's legal counsel and any taxes or expenses associated with or
incurred in connection with any instrument or agreement referred to herein or
contemplated hereby.
10. Conditions Precedent. The effectiveness of the amendments contained in
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Section 2 hereof are subject to the satisfaction of each of the following
conditions precedent, in form and substance satisfactory to Agent and Lenders,
unless satisfaction thereof is specifically waived in writing by Agent and
Lenders:
(a) Xxxxxxxxxx and Quilvest shall have made an additional capital contribution
to Borrower of at least $10,000,000 in the aggregate in exchange for shares of
Series B Cumulative Pay-in-Kind Convertible Preferred Stock, and the proceeds of
such capital contribution shall have been applied to the outstanding balance of
the Revolver Loans;
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(b) Agent and Lenders shall have received and found satisfactory in all
respects an appraisal with respect to the Inventory; and
(c) Borrower, Guarantor and each Lender shall have delivered to Agent an
executed original of this Amendment.
11. Effectiveness; Governing Law. This Amendment shall be effective upon
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execution by Borrower and acceptance by Agent and Lenders (notice of which
acceptance is hereby waived), whereupon the same shall be governed by and
construed in accordance with the internal laws of the State of Georgia.
12. Successors and Assigns. This Amendment shall be binding upon and inure
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to the benefit of the parties hereto and their respective successors and
assigns.
13. No Novation, etc. Except as otherwise expressly provided in this
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Amendment, nothing herein shall be deemed to amend or modify any provision of
the Loan Agreement or any of the other Loan Documents, each of which shall
remain in full force and effect. This Amendment is not intended to be, nor
shall it be construed to create, a novation or accord and satisfaction, and the
Loan Agreement as herein modified shall continue in full force and effect.
14. Counterparts; Telecopied Signatures. This Amendment may be executed in
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any number of counterparts and by different parties to this Amendment on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed to
be an original signature hereto.
15. Further Assurances. Borrower agrees to take such further actions as
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Agent shall reasonably request from time to time in connection herewith to
evidence or give effect to the amendments set forth herein or any of the
transactions contemplated hereby in accordance with the terms and conditions of
the Loan Documents.
16. Section Titles. Section titles and references used in this Amendment
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shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreements among the parties hereto.
17. Waiver of Jury Trial. To the fullest extent permitted by Applicable Law,
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the parties hereto each hereby waives the right to trial by jury in any action,
suit, counterclaim or proceeding arising out of or related to this Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed under seal in Atlanta, Georgia, and delivered by their respective duly
authorized officers on the date first written above.
ATTEST: PAMECO CORPORATION
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxxx Xxxxxx Name: Xxxxxx X. Xxxxx
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Title: VP, Sec., Treas. Title: Chief Financial Officer
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FLEET CAPITAL CORPORATION, as Agent
By: /s/ Xxxxxx Login
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Title: Vice President
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FLEET CAPITAL CORPORATION, as a Lender
By: /s/ Xxxxxx Login
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Title: Vice President
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[Signatures continued on following page]
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FOOTHILL CAPITAL CORPORATION, as a Lender
By: /s/ Xxxxxx Lambara
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Title: Senior Vice President
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THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Xxxxxxx Xxxxxxx
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Title: AVP
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BANK OF AMERICA, N.A., as a Lender
By: /s/ Xxxxxxx X. Xxxxx
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Title: Vice President
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WACHOVIA BANK, N.A., as a Lender
By: /s/ Xxxxxxx Xxxxxx
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Title: Vice President
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CONSENT AND REAFFIRMATION
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Each of the undersigned guarantors of the Obligations of Borrower at any time
owing to Agent and Lenders hereby: (i) acknowledges receipt of a copy of the
foregoing Fourth Amendment to Loan and Security Agreement; (ii) consents to
Borrower's execution and delivery thereof and of the other documents,
instruments or agreements Borrower agrees to execute and deliver pursuant
thereto; (iii) agrees to be bound thereby; and (iv) affirms that nothing
contained therein shall modify in any respect whatsoever its guaranty of the
Obligations and reaffirms that such guaranty is and shall remain in full force
and effect.
IN WITNESS WHEREOF, each of the undersigned has executed this Consent and
Reaffirmation on the date of such Fourth Amendment to Loan and Security
Agreement.
PAMECO INVESTMENT COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxx
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Title: Chief Financial Officer
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Attest: /s/ Xxxxxxx Xxxxxx
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Title: VP, Sec., Treas.
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[CORPORATE SEAL]
XXXXXXXXXX FUND II, L.P.
By: Xxxxxxxxxx Associates II, L.L.C.,
its General Partner
By: /s/ [illegible]
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Title: Manager
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