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Exhibit: 10(r)(2)
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (this "AMENDMENT") is made as of
February 14, 1997 by and among Lesco, Inc. ("BORROWER"), an Ohio corporation,
National City Bank, NBD Bank, and PNC Bank, National Association (the three
financial institutions hereinbefore mentioned each a "BANK" and, collectively,
the "BANKS") and National City Bank as agent (in that capacity, "NCB-AGENT") of
the banks for the purposes of the Existing Credit Agreement (as defined below),
this Amendment and the related writings:
INTRODUCTION:
WHEREAS, I. Borrower, the Banks and NCB-Agent are parties to a Credit
Agreement (the "EXISTING CREDIT AGREEMENT") made as of September 30, 1994, as
amended by a First Amendment to Credit Agreement made as of January 18, 1996,
and as further amended by a Second Amendment to Credit Agreement made as of
November 1, 1996, setting forth, among other things, the terms and conditions of
each Bank's several agreement (its "REVOLVING COMMITMENT") to make loans (each a
"REVOLVING LOAN") to Borrower until April 30, 2000 (or such later "Expiration
Date", if any, as may be established from time to time pursuant to the Existing
Credit Agreement, subject in each case to certain terms and conditions, one such
condition being that the aggregate unpaid principal balance of the Revolving
Loans shall not at any time exceed an amount equal to eighty million dollars
($80,000,000); and
II. Borrower, the Banks, and NCB-Agent desire, subject to the
terms and conditions of this Amendment, to amend the Existing Credit Agreement
in certain material respects;
THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other valuable considerations, and in the case of the
Banks and NCB-Agent, in reliance on the representations and warranties of
Borrower hereinafter set forth, Borrower, the Banks and NCB-Agent hereby agree
as follows:
A. DEFINED TERMS. Each term used in this Amendment that is defined in
the Existing Credit Agreement shall have the meaning in this Amendment that is
ascribed to that term in the Existing Credit Agreement.
B. AMENDMENT TO SUBSECTION 3B.04 -- INTEREST COVERAGE. Subject to
Borrower's satisfaction of the conditions precedent set forth in paragraph E,
subsection 3D.04 (captioned "INTEREST COVERAGE") of the Existing Credit
Agreement shall be deemed to have been deleted as of December 30, 1996 (the
"RETROACTIVE EFFECTIVE DATE"), and the following subsection 3B.04 shall be
deemed to have been inserted, as of the Retroactive Effective Date, in lieu of
the subsection so deleted:
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"3B.04 INTEREST COVERAGE -- Borrower will not, as of the end of any
period (each such period a FOUR-QUARTER PERIOD) of four consecutive
quarter-annual fiscal periods of Borrower (commencing with the
Four-Quarter Period ending December 31, 1996), suffer or permit the
ratio of the aggregate of
(a) the Adjusted Net Income of the Companies for that
Four-Quarter Period, plus
(b) the aggregate interest expense of the Companies for that
Four-Quarter Period, plus
(c) the aggregate federal, state and local income taxes of the
Companies for that Four-Quarter Period
to the aggregate interest expense of the Companies for that
Four-Quarter Period to be less than one and one-half to one (1.5:1) at
any time, all as determined on a consolidated basis. For purposes of
this subsection 3B.04, the ADJUSTED NET INCOME for any Four-Quarter
Period shall be the Net Income for that Four-Quarter Period, plus in
the case of, but only in the case of, the Four-Quarter Periods ending
December 31, 1996, March 31, 1997, June 30, 1997, September 30, 1997,
and December 31, 1997, respectively, an amount, in no case greater than
ten million five hundred thousand dollars ($10,500,000), equal to the
aggregate, if and to the extent subtracted in the computation of Net
Income, of
(i) the amount of plant relocation costs recognized by
Borrower for the quarter-annual fiscal periods of Borrower
ending December 31, 1996 and March 31, 1997, respectively, as
a result of the relocation of Borrower's Sebring, Florida,
manufacturing operations, plus
(ii) the amount of the reduction in the historical cost of
Borrower's inventory recognized by Borrower for the
quarter-annual fiscal periods of Borrower ending December 31,
1996 and March 31, 1997, respectively, as a result of
Borrower's comprehensive product evaluation, plus
(iii) the amount of the incremental valuation reserve
established by Borrower for the quarter-annual fiscal periods
of Borrower ending December 31, 1996 and March 31, 1997,
respectively, as result of Borrower's review of its accounts
receivable in order to evaluate the collectiblity of amounts
outstanding for more than one (1) year,
all as described in Note 9 (captioned "Other Costs and Expenses") of
the February 10, 1997 draft of Borrower's annual audit report for its
fiscal year ending December 31, 1996."
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C. AMENDMENT TO SUBSECTION 3D.02 -- CREDIT EXTENSIONS. Subject to
Borrower's satisfaction of the conditions precedent set forth in paragraph E,
subsection 3D.02 (captioned "CREDIT EXTENSIONS") of the Existing Credit
Agreement is hereby amended, as of the date of this Amendment, by deleting the
word "or" from the end of clause (iv) of that subsection, deleting the period
(".") from the end of clause (v) of that subsection and inserting the expression
", or" in lieu of the period so deleted, and inserting, immediately after clause
(v) of that subsection and immediately before subsection 3D.03 (captioned
"BORROWINGS") of the Existing Credit Agreement the following clause (vi)
"(vi) any Guaranty by Borrower of the obligations of Commercial Turf
Products, Ltd. (COMMERCIAL TURF PRODUCTS), an Ohio limited liability
company, but only if and to the extent that Borrower's aggregate
liability for those obligations (exclusive of Borrower's liability for
interest, premiums, charges, expenses, and fees) under all Guaranties
does not at any one time exceed an aggregate amount equal to twenty
million dollars ($20,000,000)."
D. REPRESENTATIONS AND WARRANTIES. In order to induce the Banks and
NCB-Agent to enter into this Amendment, Borrower hereby represents and warrants
to the Banks and NCB-Agent as follows:
(I) after giving effect to Borrower's satisfaction of the
conditions precedent set forth in paragraph E, no Default Under This
Agreement shall exist, nor will any thereupon begin to exist;
(II) no representation, warranty, or other statement made in
or pursuant to the Existing Credit Agreement or any Related Writing
will be untrue or incomplete in any material respect;
(III) EXHIBIT A to this Amendment sets forth a true and
complete copy of Note 9 (captioned "Other Costs and Expenses") of the
February 10, 1997 draft of Borrower's annual audit report for its
fiscal year ending December 31, 1996; and
(IV) there has not occurred any material adverse change in
Borrower's financial condition, properties or business since the date
of Borrower's Most Recent 4A.04 Financial Statements or in its then
most recent financial statements, if any, furnished to the Banks
pursuant to subsection 3A.01 of the Existing Credit Agreement.
The representations and warranties made in or pursuant to this paragraph D shall
survive the execution and delivery of this Amendment.
E. CONDITIONS PRECEDENT. It is a condition precedent to the
effectiveness of paragraphs B and C that, on or before the date of this
Amendment, Borrower shall have complied with or caused compliance with each of
the following:
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(I) Borrower shall have executed and delivered this Amendment
to NCB-Agent; and
(II) each Bank and NCB-Agent shall have executed and delivered
this Amendment.
F. EXECUTION AND DELIVERY. This Amendment may be executed in one or
more counterparts. Any party to the Existing Credit Agreement may deliver an
executed counterpart of this Amendment by transmitting a facsimile thereof to
NCB-Agent at (000) 000-0000, and any party so delivering a counterpart of this
Amendment party shall be deemed to have executed and delivered that counterpart
with the intent to be bound by this Amendment. Each party to this Amendment
shall, on NCB-Agent's request, deliver to NCB-Agent such number of counterparts
bearing the original signature of that party as NCB-Agent may request in order
that each party may ultimately have a counterpart bearing the original signature
of each party to this Amendment. Each party to this Amendment hereby assents to
the foregoing procedure for executing and delivering this Amendment and agrees
that all such counterparts taken together shall constitute but one agreement,
which agreement constitutes the entire agreement between the parties to this
Amendment in respect of its subject matter.
G. RATIFICATION AND CONFIRMATION. Borrower, the banks and NCB-Agent do
hereby ratify and confirm all of the terms and conditions of the Existing Credit
Agreement not specifically amended by this Amendment and all such terms and
conditions remain in full force and effect.
IN WITNESS WHEREOF, this Amendment is executed and delivered at
Cleveland, Ohio as of the date first hereinabove set forth.
Address: Lesco, Inc.
00000 Xxxx
Xxxxx Xxxxx, Xxxx 00000 By: /s/ Xxxxxxx X. Xxxxxx
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Title: Treasurer
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Address: National City Bank, Agent
0000 Xxxx Xxxxx Xxxxxx
Attn: Multinational Division By: /s/ Xxxxxxxx X. Lathe
Xxxxxxxxx, Xxxx 00000-0000 -------------------------------
Title: S V P
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Address: National City Bank
0000 Xxxx Xxxxx Xxxxxx
Attn: Multinational Division By: /s/ Xxxxxxxx X. Lathe
Xxxxxxxxx, Xxxx 00000-0000 -------------------------------
Title: S V P
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Address: PNC Bank, National Association
0000 X. 0xx Xx., #000
Xxxxxxxxx, Xxxx 00000-0000 By: /s/ Xxxxx X. Xxxxxxxx
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Title: Vice President
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Address: NBD Bank
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 By /s/ Xxxx XxXxxx
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Title: Vice President
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