SIXTEENTH AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
This SIXTEENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
("Amendment") is dated as of July 13, 2001, and is entered into by and among
UNIONTOOLS, INC., a Delaware corporation ("BORROWER"), ACORN PRODUCTS, INC., a
Delaware corporation ("HOLDINGS"), HAWTHORNE TOOLS, INC., f/k/a X.X. Xxxxxxx
Manufacturing Company, a Missouri corporation ("X.X. XXXXXXX"), PINETREE TOOLS,
INC., f/k/a Uniontools Irrigation, Inc., a Delaware corporation formerly known
as UnionTools Watering Products, Inc. ("IRRIGATION" and together with Borrower,
Holdings and X.X. Xxxxxxx collectively, the "LOAN PARTIES"), XXXXXX FINANCIAL,
INC., in its capacity as Agent for the Lenders party to the Credit Agreement
described below ("AGENT"), and the Lenders which are signatories hereto.
WHEREAS, Borrower, Agent and Lenders have entered into an Amended and
Restated Credit Agreement dated as of May 20, 1997, as amended by that certain
Amendment No. 1 to Credit Agreement dated November 24, 1997, Second Amendment to
Credit Agreement dated as of May 22, 1998, Third Amendment to Amended and
Restated Credit Agreement dated as of October 29, 0000, Xxxxxx Xxxxxxxxx to
Amended and Restated Credit Agreement dated as of February 26, 1999, Fifth
Amendment to Amended and Restated Credit Agreement dated as of June 10, 1999,
Sixth Amendment to Amended and Restated Credit Agreement dated as of October 28,
1999 (the "SIXTH AMENDMENT"), Consent and Seventh Amendment to Amended and
Restated Credit Agreement dated as of March 13, 2000, Eighth Amendment to
Amended and Restated Credit Agreement dated as of April 30, 2001, Ninth
Amendment to Amended and Restated Credit Agreement dated as of May 7, 2001,
Tenth Amendment to Amended and Restated Credit Agreement ("TENTH AMENDMENT")
dated as of May 14, 2001, Eleventh Amendment to Amended and Restated Credit
Agreement dated as of May 21, 2001, Twelfth Amendment to Amended and Restated
Credit Agreement dated as of June 4, 2001, Thirteenth Amendment to Amended and
Restated Credit Agreement dated as of June 15, 2001, Fourteenth Amendment to
Amended and Restated Credit Agreement dated as of June 26, 2001, and Fifteenth
Amendment to Amended and Restated Credit Agreement dated as of July 6, 2001 (as
so amended and from time to time hereafter amended, supplemented or otherwise
modified, the "CREDIT AGREEMENT"); and
WHEREAS, Borrower has, in the past, performed below projected financial
targets or breached certain financial performance covenants, and has, as a
result, requested, and Agent and Lenders have agreed, to make certain of the
amendments indicated above; and
WHEREAS, the Borrower has requested and Lenders have agreed to make
certain additional modifications to the Credit Agreement as hereinafter set
forth, subject to the conditions and terms contained herein.
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Credit Agreement and this Amendment, the Recitals set forth
above (which are incorporated herein by this reference thereto) and for other
good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Credit Agreement.
2. AMENDMENTS. Subject to the conditions set forth below, the Credit
Agreement is amended as follows:
A. Subsection 1.1(A)(1) is amended by deleting the first sentence
of such subsection in its entirety and inserting the following
sentence in lieu thereof:
"Subject to the satisfaction of the terms and conditions set
forth herein and in reliance upon the representations and
warranties set forth herein, each Lender agrees, severally and
not jointly, to lend to Borrower from the Closing Date to the
Expiry Date its Pro Rata Share of the loans requested by
Borrower to be made by Lenders under this subsection 1.1(A),
up to an aggregate maximum for all Lenders of (i) during the
period from January 1 through and including July 30 of each
year, $35,000,000, (ii) during the period from July 31 through
and including October 31 of each year, $25,000,000, and (iii)
during the period from November 1 through and including
December 31 of each year, $30,000,000 (as the same may be
reduced from time to time hereunder, the "Revolving Loan
Commitment").
B. Subsection 1.1(C) is amended by deleting the following text
from such section:
"On the dates indicated below, Borrower shall repay the
Acquisition Loans through periodic installments in the amounts
equal to the applicable percentage of the Acquisition Loans
outstanding as of the Amendment No. 6 Date ("Scheduled
Acquisition Loan Installments").
DATE PERCENTAGE
---- ----------
September 30, 2000 2.083%
December 31, 2000 2.083%
March 31, 2001 2.083%
April 30, 2001 93.751%
On April 30, 2001, the entire remaining principal balance of
the Acquisition Loans, together with all accrued but unpaid
interest thereon, shall be due and payable in full."
and inserting the following in lieu thereof:
"The Loan Parties acknowledge and agree that as of July 13,
2001 the principal amount of outstanding Acquisition Loans is
$15,008,867. On the
2
dates indicated below, Borrower shall repay the aggregate
amounts set forth opposite such dates ("Scheduled Loan
Installments") for application to the Acquisition Loans and
Revolving Loans pro rata based on the then existing
outstanding balance of the Acquisition Loans and the then
existing Revolving Loan Commitment, for the benefit of all
Lenders on an Adjusted Pro Rata Share basis and in permanent
reduction of the Revolving Loan Commitment:
DATE AMOUNT
---- ------
July 31, 2001 $350,000
September 30, 2001 $350,000
December 31, 2001 $350,000
March 31, 2002 $350,000
April 30, 2002 Entire remaining principal balance
of the Acquisition Loans, together
with all accrued but unpaid interest
thereon, and all other Obligations,
shall be due and payable in full."
C. Subsection 1.2 is amended by deleting the definition of "Base
Rate Margin" and inserting the following in lieu thereof:
"Base Rate Margin' means three percent (3%)."
D. Subsection 1.2 is amended by deleting the definition of
"LIBOR" and inserting the following in lieu thereof:
"`LIBOR' means, for each Interest Period, a rate per annum
equal to:
(a) the offered rate for deposits in U.S. dollars in an
amount comparable to the amount of the applicable
Loan in the London interbank market which is
published by the British Bankers' Association, and
that currently appears on Telerate Page 3750, or any
other source available to Agent, as of 11:00 a.m.
(London time) on the day which is two (2) Business
Days prior to the first day of the relevant Interest
Period for a term comparable to such Interest Period;
or if, for any reason, such a rate is not published
by the British Bankers' Association on Telerate or
any other source available to Agent, the rate per
annum equal to the average rate (rounded upwards, if
necessary, to the nearest 1/100 of 1%) at which Agent
determines that U.S. dollars in an amount comparable
to the amount of the applicable Loans are being
offered to prime banks at approximately 11:00 a.m.
(London time) on the day which is two (2) Business
Days prior to the first day of such Interest Period
for a term comparable to such Interest Period for
settlement in immediately available funds by leading
banks in the London interbank market selected by
Agent; DIVIDED BY
3
(b) a number equal to 1.0 MINUS the aggregate (but
without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect
on the day which is two (2) Business Days prior to
the beginning of such Interest Period (including,
without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with
respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a
member bank of the Federal Reserve System; such rate
to be rounded upward to the next whole multiple of
one-sixteenth of one percent (.0625%)."
E. Subsection 1.2 is hereby further amended by deleting the first
sentence of the paragraph beginning with the words "Each LIBOR
Loan may be obtained" and containing the definition of
"Interest Period", and substituting the following new sentence
therefor: "Each LIBOR Loan may be obtained for periods no
longer than one (1) month each (each an "Interest Period").".
Accordingly, all references to and provisions allowing for or
contemplating Interest Periods other than of a one month
duration shall be deemed modified hereby to reference, provide
for or contemplate only one month Interest Periods.
F. Subsection 1.2 is further amended by deleting the definition
of "LIBOR Margin" and inserting the following in lieu thereof:
"`LIBOR Margin' means four percent (4%)."
G. Subsection 1.2 is further amended by deleting from such
section the following paragraphs and the Pricing Table
appearing immediately after the definition of "LIBOR Margin"
in their entirety:
"For the purposes of this subsection 1.2(A), "Adjusted Total
Indebtedness to Operating Cash Flow Ratio" means, for any
Calculation Period, the ratio of (i) the sum of (a) the
average daily principal balance of the Revolving Loans during
the twelve (12) month period ending on the last day of the
month for which the Compliance Certificate most recently
delivered pursuant to subsection 4.10(C) was prepared, PLUS
(b) the aggregate outstanding principal balance of the
Acquisition Loans, the Lender Letters of Credit and Risk
Participation Agreements as of the last day of such month PLUS
(c) all other Indebtedness for borrowed money of the Borrower
and its Subsidiaries on a consolidated basis as of the last
day of such month, to (ii) Operating Cash Flow (calculated as
illustrated on Exhibit 4.10(C)) for the twelve (12) month
period ending on the last day of such month.
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PRICING TABLE
-------------
===================================== ================================ ==============================
Adjusted Total Indebtedness to Base Rate Margin on and after LIBOR Margin on and after
Operating Cash Flow Ratio Amendment Xx. 0 Xxxx Xxxxxxxxx Xx. 0 Date
------------------------------------- -------------------------------- ------------------------------
Greater than 3.75:1 1.50% 3.50%
------------------------------------- -------------------------------- ------------------------------
Equal to or greater than 3.00:1 but
equal to or less than 3.75:1 1.50% 3.50%
------------------------------------- -------------------------------- ------------------------------
Less than 3:00:1 1.50% 3.50%
===================================== ================================ ==============================
With respect to clause (i)(c) of the definition of "Adjusted
Total Indebtedness to Operating Cash Flow Ratio", Adjusted
Total Indebtedness shall include all other Indebtedness for
borrowed money of Holdings and its Subsidiaries on a
consolidated basis.
If Borrower shall fail to deliver a Compliance
Certificate by the date required pursuant to subsection
4.10(C), effective as of the first Business Day of the
immediately succeeding calendar month and continuing through
the day preceding the next succeeding Adjustment Date, each
applicable Base Rate Margin and each applicable LIBOR Margin
shall be conclusively presumed to equal the highest Base Rate
Margin and the highest LIBOR Margin specified in the pricing
table set forth above."
H. Interest shall henceforth be due and payable monthly in
arrears. Accordingly, subsection 1.2(C) of the Credit
Agreement is amended by deleting the word "quarter" and
substituting the word "month" therefor in the fourth sentence
of such subsection.
I. Subsection 1.5(C) is amended by deleting such subsection in
its entirety and inserting the following in lieu thereof:
"(C) PREPAYMENTS FROM ASSET DISPOSITIONS. Borrower shall
immediately use the proceeds from sales of inventory, other
than in the ordinary course of business, and any payments
received with respect to accounts receivable to immediately
repay Revolving Loans by the amount of any reduction in the
Borrowing Base attributable to the Asset Disposition giving
rise to such Net Proceeds. To the extent not required to repay
Revolving Loans as provided above, or to the extent any Net
Proceeds remain after giving effect to any such required
payment of Revolving Loans as provided above, Borrower shall
prepay the Acquisition Loan and the outstanding principal
balance of the Revolving Loans in an aggregate amount equal to
such remaining Net Proceeds on an Adjusted Pro Rata basis. Any
Net
5
Proceeds remaining after application as set forth above shall
be applied as provided in subsection 1.5(E)."
J. Subsection 1.5(E) is amended by deleting such subsection in
its entirety and inserting the following in lieu thereof:
"(E) APPLICATION OF PROCEEDS. With respect to the mandatory
prepayments described in subsections 1.5(B), 1.5(C) and 1.5(D)
(but only as relates to Net Proceeds and otherwise after
giving effect to the provisions of subsection 1.5(C)), such
prepayments shall first be applied against the full amount of
any and all remaining Scheduled Loan Installments in their
inverse order of maturity on an Adjusted Pro Rata basis and
otherwise in accordance with the provisions of subsection
1.1(C); PROVIDED that with respect to all such prepayments, at
any time after the Acquisition Loans shall have been repaid in
full, such prepayments shall be applied to reduce the
outstanding principal balance of the Revolving Loans. All
repayments of outstanding Revolving Loans made pursuant to
subsections 1.5(B), 1.5(C) and 1.5(D) shall be in permanent
reduction of the Revolving Loan Commitment (together with
Scheduled Loan Installments, ("Permanent Reductions")."
K. Section 3.16 of the Credit Agreement is hereby deleted in its
entirety and the following new Section 3.16 is substituted in
lieu thereof:
"3.16. Except as expressly permitted or contemplated under the
Sixteenth Amendment, Borrower shall not make any expenditures
or use the proceeds of any Revolving Loan for any purpose
other than those incurred in the ordinary course of its
business, those otherwise directly related to its current or
future business operations or as set forth in the then current
Cash Flow Forecast."
L. The following new Section 3.17 is hereby added to the Credit
Agreement immediately following Section 3.16:
"3.17 RELOCATION OF DISTRIBUTION CENTER. Borrower will not use
any Revolving Loan proceeds for any purpose relating to any
relocation of its Columbus, Ohio distribution center without
the prior written consent of Lenders. Nothing herein shall be
construed as constituting consent to any such relocation."
M. Section 4.1 is hereby deleted in its entirety and the
following is hereby substituted therefore:
"4.1 CAPITAL EXPENDITURE LIMITS. Borrower shall not permit the
aggregate amount of all Capital Expenditures of Holdings and
its Subsidiaries on a consolidated basis to exceed (i)
$1,500,000 in the Borrower's fiscal year
6
ending December 31, 2001, and (ii) $500,000 from January 1,
2002 to the Expiry Date (the "Capex Limit"). "Capital
Expenditures" will be calculated as illustrated on Exhibit
4.10(C)."
N. Section 4.3 is hereby deleted in its entirety and the
following is hereby substituted therefore:
"4.3 EBIDAT. Borrower shall not permit EBIDAT of Holdings and
its Subsidiaries on a consolidated basis for the period ending
on the last day of the dates set forth below to be less than
the amount set forth opposite such date under the column
headed "Required" (TTM shall mean Trailing Twelve Months):
------------------------------ ------------- ------------- -------------------
Date Projected Required Cure Threshold
------------------------------ ------------- ------------- -------------------
1/1/01 thru MAY 31, 2001 $6,533,000 $5,716,000 $5,553,000
1/1/01 thru JUNE 30, 2001 $6,990,000 $6,116,000 $5,942,000
1/1/01 thru JULY 31, 2001 $7,293,000 $6,381,000 $6,199,000
1/1/01 thru AUGUST 31, 2001 $7,586,000 $6,638,000 $6,448,000
1/1/01 thru SEPTEMBER 30, 2001 $7,736,000 $6,769,000 $6,576,000
1/1/01 thru OCTOBER 31, 2001 $7,954,000 $6,960,000 $6,761,000
1/1/01 thru NOVEMBER 30, 2001 $8,129,000 $7,113,000 $6,910,000
1/1/01 thru DECEMBER 31, 2001 $8,000,000 $7,000,000 $6,800,000
TTM ended JANUARY 31, 2002 $8,139,000 $7,122,000 $6,918,000
TTM ended FEBRUARY 28, 2002 $8,290,000 $7,254,000 $7,047,000
TTM ended MARCH 31, 2002 $8,438,000 $7,383,000 $7,172,000
TTM ended APRIL 30, 2002 $8,584,000 $7,511,000 $7,296,000
------------------------------ ------------- ------------- -------------------
"EBIDAT" will be calculated as illustrated on Exhibit 4.10(C).
Notwithstanding anything else in subclause 6.1 or elsewhere in
the Loan Documents to the contrary, the Borrower shall not be
deemed to have breached this covenant, and no Default or Event
of Default with respect to this covenant shall be deemed to
exist, to the extent that: (1) Borrower's EBIDAT for such
measurement period is not less than the amount set forth in
the column headed "Cure Threshold" for such period, and (2)
within three (3) Business Days of the delivery of financial
statements demonstrating that the Borrower has not generated
sufficient EBIDAT for the applicable measurement period,
Borrower notifies Agent of its intent to cure such deficiency
in accordance with the terms hereof and within five (5)
Business Days thereafter Borrower actually receives proceeds
from a capital contribution by Holdings, the issuance and sale
of additional capital stock to Holdings or from the issuance
of Subordinated Indebtedness by Borrower (on terms and
conditions acceptable to Requisite Lenders), in each case in
the form of cash in an amount sufficient to bring Borrower
into compliance with this covenant for such measurement
period, after giving effect to Borrower's receipt of such
7
funds (the foregoing being referred to herein as the "EBIDAT
Cure"). The proceeds of any Subordinated Indebtedness issued
by Borrower or any capital contribution or other funds
received from Holdings pursuant to this subclause shall
thereafter be deemed to be additional EBIDAT of the Borrower
generated in the period covered by the financial statements
referred to above in the computation of Borrower's EBIDAT
under the Compliance Certificate. Notwithstanding the
provisions of subclause 1.5(E), the proceeds of such
Subordinated Indebtedness or funds received by Holdings
pursuant to this subclause shall be applied as payments of the
Revolving Loans and/or the Acquisition Loans, as the Borrower
may determine in a written notice delivered to Agent prior to
such prepayment (and if the Borrower fails to deliver such a
notice such prepayments shall be applied first in the order of
maturity of the remaining Scheduled Loan Installments and next
as payment of the Revolving Loans)."
O. Section 4.4 is hereby deleted in its entirety and the
following is hereby substituted therefore:
"4.4 FIXED CHARGE COVERAGE. Borrower shall not permit Fixed
Charge Coverage of Borrower and its Subsidiaries on a
consolidated basis for the period ending on the last day of
any month for the dates set forth below to be less than the
amount set forth opposite such date (TTM shall mean Trailing
Twelve Months):
--------------------------------------------------
Date Ratio
--------------------------------------------------
1/1/01 thru MAY 31, 2001 2.02
1/1/01 thru JUNE 30, 2001 1.82
1/1/01 thru JULY 31, 2001 1.49
1/1/01 thru AUGUST 31, 2001 1.39
1/1/01 thru SEPTEMBER 30, 2001 1.19
1/1/01 thru OCTOBER 31, 2001 1.11
1/1/01 thru NOVEMBER 30, 2001 1.04
1/1/01 thru DECEMBER 31, 2001 0.88
TTM ended JANUARY 31, 2002 0.90
TTM ended FEBRUARY 28, 2002 0.92
TTM ended MARCH 31, 2002 0.94
TTM ended APRIL 30, 2002 0.96
---------------------------------------------------
"Fixed Charge Coverage" will be calculated as illustrated on
Exhibit 4.10(C)."
P. Section 4.5 is hereby deleted in its entirety and the
following is hereby substituted therefore:
8
"4.5 TOTAL INTEREST COVERAGE. Borrower shall not permit Total
Interest Coverage of Holdings and Subsidiaries on a
consolidated basis for the period ending on the last day of
any fiscal quarter ending on the dates or during the periods
set forth below to be less than the amount set forth for such
date or period (TTM shall mean Trailing Twelve Months):
-------------------------------------------------------
Date Ratio
-------------------------------------------------------
1/1/01 thru MAY 31, 2001 2.40
1/1/01 thru JUNE 30, 2001 2.11
1/1/01 thru JULY 31, 2001 1.88
1/1/01 thru AUGUST 31, 2001 1.72
1/1/01 thru SEPTEMBER 30, 2001 1.56
1/1/01 thru OCTOBER 31, 2001 1.44
1/1/01 thru NOVEMBER 30, 2001 1.32
1/1/01 thru DECEMBER 31, 2001 1.16
TTM ended JANUARY 31, 2002 1.19
TTM ended FEBRUARY 28, 2002 1.22
TTM ended MARCH 31, 2002 1.24
TTM ended APRIL 30, 2002 1.27
-------------------------------------------------------
"Total Interest Coverage" will be calculated as illustrated on
Exhibit 4.10(C)."
Q. Section 4.6 is hereby deleted in its entirety and the
following is hereby substituted therefore:
"4.6 TOTAL SENIOR INDEBTEDNESS TO EBIDAT RATIO. Borrower shall
not permit the ratio of Total Senior Indebtedness to EBIDAT of
Borrower and Subsidiaries on a consolidated basis for the
twelve (12) month period ending on the last day of any month
for the dates set forth below to be greater than the amount
set forth opposite each such date:
9
---------------------------------------------
Date Ratio
---------------------------------------------
MAY 31, 2001 10.27
JUNE 30, 2001 8.81
JULY 31, 2001 7.20
AUGUST 31, 2001 6.73
SEPTEMBER 30, 2001 5.76
OCTOBER 31, 2001 6.18
NOVEMBER 30, 2001 6.24
DECEMBER 31, 2001 6.02
JANUARY 31, 2002 6.15
FEBRUARY 28, 2002 6.47
MARCH 31, 2002 6.73
APRIL 30, 2002 6.67
---------------------------------------------
"Total Senior Indebtedness" and "EBIDAT" will be calculated as
illustrated on Exhibit 4.10(C)."
R. Exhibit 4.10(C) is hereby amended in its entirety and Exhibit
4.10(C) attached to this Amendment is hereby substituted
therefor.
S. Subsection 4.10(F) is hereby amended by deleting the period
appearing at the end thereof and adding the following thereto:
"(each a "Rolling Cash Flow Forecast"). Each Rolling Cash Flow
Forecast shall include a comparison of the actual Net Cash
Flow to the projected Net Cash Flow for the prior week and
shall include a written explanation by management of any
negative variances exceeding the greater of 25% or $25,000
from any line item contained in such Rolling Cash Flow
Forecast for any such week on a weekly and on a cumulative
basis. Each Rolling Cash Flow Forecast shall contain a
representation and warranty by Borrower that there is, to
Borrower's knowledge, no Default or Event of Default and that
Borrower is in compliance with all representations and
warranties contained in the Loan Documents, including, without
limitation Section 3.16, or if there is a Default or an Event
of Default, what action Borrower is taking in respect thereof.
Without limiting the foregoing in any manner, Borrower also
shall deliver to Agent a 13 week cash flow projection of
Borrower and its Subsidiaries on a consolidated basis, for the
13 week period commencing on June 25, 2001 and ending on
September 24, 2001 (the "Initial Cash Flow Forecast").
Thereafter, Borrower shall deliver a new 13 week cash flow
forecast to Agent (each such forecast, a "Sequential Cash Flow
Forecast") for each subsequent 13 week period which commences
on the day immediately following the end of the then current
cash flow forecast, in each instance at least one week prior
to the final day reflected in such current 13 week forecast
(e.g. on September 17, 2001 with respect to the
10
forecast following the Initial Cash Flow Forecast). Each such
Sequential Cash Flow Forecast shall be certified by an officer
of Borrower as being the good faith, best effort projection by
Borrower of its cash flow for such period, shall be in
substantially the form of the Initial Cash Flow Statement,
attached hereto as Exhibit 4.10(F-2), and shall set forth,
with appropriate specificity, the projected expenditures,
disbursements and the Net Cash Flow of Borrower for each week
of each such 13 week period."
T. Section 10.1 is amended by
(a) deleting the date "July 13, 2001 appearing in the
definition of "Expiry Date" and replacing it with the
date "April 30, 2002"; and
(b) adding the following defined terms in their
appropriate alphabetic order:
"'Adjusted Pro Rata Share' means, on the date of determination
and with respect to a Lender, the percentage obtained by
dividing (i) the amount of such Lender's outstanding principal
balance of the Acquisition Loan PLUS such Lender's Pro Rata
Share of the Revolving Loan Commitment as of such date, after
giving effect to any permanent reductions in the Revolving
Loan Commitment previously made from the application of any
Net Proceeds in accordance with the terms of this Agreement
(other than in connection with the transaction for which the
determination is being made), and as such Revolving Loan
Commitments otherwise may be reduced or adjusted from time to
time in accordance with the terms of this Agreement (as so
reduced and adjusted, the "Adjusted Revolving Loan
Commitment"), by (ii) the sum of the aggregate outstanding
balance of the Acquisition Loan PLUS the aggregate Adjusted
Revolving Loan Commitment of all Lenders."
"`Cash Flow Forecast' means Borrower's consolidated and
consolidating cash flow projections delivered pursuant to
subsection 4.10(F) hereof and shall include the Rolling Cash
Flow Forecasts, the Initial Cash Flow Forecast and the
Sequential Cash Flow Forecasts."
"`Net Cash Flow' means Borrower's gross receipts for a given
period less Borrower's aggregate disbursements for such
period, each as reflected in Borrower's Cash Flow Forecast."
3. ADDITIONAL WARRANTIES AND COVENANTS. Borrower hereby agrees with and
represents, warrants and covenants to Agent and Lenders as follows:
A. RENEWAL OF UNION CONTRACT. Borrower shall, on or before August
31, 2001, renew the union contract with The International
Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths,
Forgers and Helpers, AFL-CIO Local 1916.
11
B. SALE OF CUSTOM INJECTION MOLDING. Borrower shall, on or before
September 1, 2001, sell all or substantially all of the assets
of its Custom Injection Molding business (collectively, the
"CIM ASSETS") for an amount sufficient to repay and reduce the
Obligations in accordance with Section 1.5(E) of the Credit
Agreement by the greater of $1,750,000 or eighty percent
(80.0%) of the Net Proceeds derived from such sale(s). If
Borrower is unable to sell the CIM Assets as aforesaid, then
Borrower shall, on or before December 1, 2001, sell all CIM
Assets which are used or useful in the manufacture of products
for any Persons other than Borrower (hereafter, "THIRD PARTY
CUSTOMERS") and shall diligently continue in the exercise of
its best efforts to sell all remaining CIM Assets, including,
without limitation, all equipment, machinery and real property
and all improvements located thereon. Notwithstanding the
foregoing, Borrower shall continue to comply with its
contractual obligations owing to all Third Party Customers,
whether by the so-called outsourcing of services or otherwise.
C. SALE OF BORROWER. Borrower shall engage an investment banker
of national repute, reasonably acceptable to Agent and Lenders
(the "INVESTMENT BANKER"), to advise and assist Borrower with
respect to its operations, its strategic plans and management,
enhancing its capital structure, refinancing the Obligations
and/or selling all or substantially all of Borrower's business
and/or assets. Borrower shall cause such Investment Banker to
issue periodic progress reports to Agent and the Lenders as
and when requested by Agent and Lenders and will authorize
Agent to contact the Investment Banker and discuss any matter
within the scope of its engagement. Borrower will at all
relevant times diligently pursue the sale of its business
and/or assets and will keep the Agent apprised of any
meaningful progress in connection therewith. Borrower agrees
to participate in conference calls with the Agent and the
Lenders (with the participation of the Investment Banker, if
requested by Agent) in which the Borrower and the Investment
Banker, if requested, provide to Agent status reports on the
sale of Borrower as aforesaid. Borrower agrees to promptly
implement any recommendations of the Investment Banker which
are acceptable to all of the Lenders, pursuant to a timetable
reasonably acceptable to Borrower and Requisite Lenders.
Without limiting the generality of the foregoing, Borrower
shall:
(a) On or before June 30, 2001, provide evidence
reasonably acceptable to Lenders that Borrower has
retained the services of the Investment Banker as
aforesaid;
(b) On or before August 31, 2001, provide to the Agent a
copy of an appropriate offering memorandum prepared
by the Investment Banker and Borrower, suitable for
the effective marketing of Borrower and/or its
business and assets;
(c) On or before September 15, 2001, provide evidence
reasonably acceptable to Lenders that no less than 20
suitable offering memoranda have been
12
distributed to qualified investors or purchasers (the
"MINIMUM MARKETING REQUIREMENT");
(d) Beginning on June 15, 2001 and on the 15th day of
each month thereafter, provide to Lenders a report
summarizing, in reasonable detail, the sales efforts
and the progress and results thereof for the
preceding month;
(e) On or before January 31, 2002, provide Lenders with a
certified copy of a letter of intent for the purchase
of Borrower which is acceptable to the board of
directors of Holdings (a "LETTER OF INTENT");
PROVIDED, however, that if the Net Proceeds from such
sale would not be sufficient to satisfy the
Obligations in full, in cash, then the Board of
Directors of Holdings shall not accept the offer set
forth in such Letter of Intent without the prior
written consent of all of the Lenders, and PROVIDED
further that if Borrower has failed to achieve at
least 90% of the "Projected" EBIDAT (as reflected in
the table contained in Section 4.1 hereof for the
measurement period most recently then ended), then
the deadline for delivery of evidence of such Letter
of Intent shall be November 30, 2001. Notwithstanding
the foregoing to the contrary, so long as Borrower's
EBIDAT for such measurement period is not less than
the amount set forth in the column headed "Cure
Threshold" for such period as set forth in the table
contained in Section 4.1 hereof, and Borrower
delivers the requisite notice to Agent in a timely
manner, as set forth in Section 4.1, then Borrower
may effect an EBIDAT Cure with respect to the
requirements under this paragraph (e) in order to
achieve 90% of the "Projected" EBIDAT and thereby
retain the later deadline set forth above; and
(f) On or before the date that is 45 days following the
receipt by Borrower of an acceptable Letter of Intent
and delivery of evidence thereof to Agent in
accordance with paragraph (e) above, enter into a
definitive, binding purchase and sale agreement for
the sale and purchase of Borrower or substantially
all of Borrower's assets for an amount and on terms
substantially the same as set forth in such Letter of
Intent.
The sale of Borrower shall close and all transactions
incidental thereto as contemplated under such purchase and
sale agreement shall be consummated on or before (i) April 30,
2002, so long as a definitive and binding sales contract has
been executed and delivered by the parties thereto and all
conditions precedent to the closing of the sale have been or,
in the reasonable judgement of the Requisite Lenders, will be
met in a timely manner, (ii) March 31, 2002, if the
circumstances described in clause (i) above have not occurred
and so long as Borrower achieves the required level of EBIDAT
as described in paragraph (e) above, or (iii) January 31,
2002, in all other instances.
D. PAYMENT OF SUCCESS FEE. Borrower hereby agrees that
it shall pay Agent, for the ratable benefit of all
Lenders, a success fee equal to $3,250,000, $300,000
of
13
which (the "INITIAL INSTALLMENT") shall be due and
payable immediately upon execution and delivery of
this Amendment and the balance of which, equaling
$2,950,000 (the "FEE BALANCE"), shall be fully earned
upon execution and delivery of this Amendment and
shall be due and payable in cash, in full, upon the
earliest to occur of (i) the Expiry Date (as defined
as of the date hereof), (ii) the occurrence of an
Event of Default, or (iii) the repayment in full of
the Obligations (whether by a refinancing thereof or
otherwise). Notwithstanding the foregoing to the
contrary, (A) Borrower shall receive a credit against
its obligation to pay the Initial Installment for
each dollar of the Extension Fee paid to and received
by Agent pursuant to the terms of the Tenth
Amendment, and (B) the Fee Balance shall be reduced
to (i) $2,450,000 upon satisfaction of the Minimum
Marketing Requirement, (ii) $2,200,000 upon receipt
of an acceptable Letter of Intent as described in
Section (C)(e) above, and (iii) $1,700,000 upon
repayment of the Obligations in full on or before
April 30, 2002. The Fee Balance shall accrue
interest, calculated on a basis of 360 days for the
actual days elapsed, from and after the date hereof
until paid in full, at a rate equal to ten percent
(10%) per annum. Any accrued interest shall be
payable on the date any principal portion of such fee
is payable. Notwithstanding anything contained in the
Loan Documents or the Subordinated Participation
Agreement to the contrary, the success fee
contemplated by this paragraph D shall not be deemed
to be proceeds, repayments or earnings related to the
Term Loan and the Purchasers (as defined in the
Subordinated Participation Agreement) shall have no
right to receive any portion of or direct benefit
from the payment by Borrower of such success fee.
Agent hereby acknowledges receipt of the Extension
Fee in the amount of $100,000. The success fee, when
paid, shall be treated by Borrower as an interest
expense for purposes of calculating EBIDAT. The
provisions of this Paragraph D replace and supercede
the terms and provisions of Section 1.7 of the Sixth
Amendment and any provisions of the Loan Documents
amended thereby. Notwithstanding anything herein to
the contrary, after the payment of the Initial
Installment the rights of Agent and Lenders to
receive the remaining Fee Balance contemplated under
this Paragraph D shall rank pari passu with the
rights of the holders of the Term Loan to receive
payments in accordance with the Subordinated
Participation Agreement.
E. REIMBURSEMENT OF INCENTIVE OR SEVERANCE PAYMENTS.
Borrower hereby agrees that any Severance Payments or
Awards paid by Agent or Lenders pursuant to and as
defined in that certain Backstop Letter agreement of
even date herewith made by Lenders are and shall be
Obligations under the Credit Agreement and, without
limiting the generality of the foregoing, Borrower
agrees to reimburse Agent and Lenders for any amounts
paid by Agent or Lenders thereunder.
Borrower's failure to comply with any of the
representations, warranties or covenants set forth above in this Section 3
shall constitute an immediate Event of Default under the Credit Agreement.
14
4. PAYMENT OF TRUE UP. Promptly upon the earliest to occur (the
"DETERMINATION DATE") of (i) the Expiry Date, (ii) the acceleration of the
Obligations pursuant to the terms of the Credit Agreement and (iii) upon
agreement by the Lenders to accept less than full payment of all outstanding
Obligations in complete discharge thereof, the Lenders having a Revolving Loan
Commitment (or which, prior to such acceleration, had a Revolving Loan
Commitment; each a "REVOLVING LOAN LENDER") shall pay to Agent for the benefit
of each Lender having only an Acquisition Loan Commitment (or which, prior to
such acceleration had an Acquisition Loan Commitment; each an "ACQUISITION LOAN
LENDER") such Revolving Loan Lender's Adjusted Pro Rata Share of the True Up
Amount, if any, thereby reducing the outstanding principal amount of the
Acquisition Loan. The Revolving Loan Lenders making such payments shall charge
the Revolver for the amount so paid, thereby increasing the outstanding
aggregate principal balance of the Revolving Loans. For purposes of this Section
4, the following terms shall have the meanings indicated below:
"TRUE UP AMOUNT" means the product obtained by multiplying (i)
the Base Date Loan Ratio Percentage by (ii) the Ordinary
Course Revolver Payments.
"ORDINARY COURSE REVOLVER PAYMENTS" means the result obtained
(but only if such result is a positive number) by subtracting
(i) the sum of (a) the aggregate outstanding principal balance
of the Revolving Loans on the Determination Date PLUS (b) the
aggregate amount of Permanent Reductions applied in payment of
the Revolving Loans (but excluding those Permanent Reductions
of the Revolving Loan Commitment resulting from repayments
associated with reductions in the Borrowing Base) during the
period commencing April 30, 2001 and ending on (but excluding)
the Determination Date from (ii) the aggregate outstanding
Revolving Loan balance as of April 30, 2001.
"BASE DATE LOAN RATIO PERCENTAGE" means 34.2109233%.
For avoidance of doubt, the provisions of this Section 4 are not
intended to and shall not apply to any Lender whose Adjusted Pro Rata Share of
the Revolving Loan Commitment is equal to its Adjusted Pro Rata Share of the
outstanding Acquisition Loan.
5. CONDITIONS. The effectiveness of this Amendment is subject to the
following conditions precedent (unless specifically waived in writing by Agent):
A. each Loan Party shall have executed and delivered this
Amendment, and such other documents and instruments as Agent
may require shall have been executed and/or delivered to
Agent;
B. All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments
and other legal matters incident thereto shall be satisfactory
to Agent and its legal counsel;
15
C. No Default or Event of Default shall have occurred and be
continuing;
D. Borrower shall have paid Agent all fees owing in connection
with this Amendment; and
E. Agent shall have received the Initial Cash Flow Forecast, in
form and substance acceptable to Agent, at least five Business
Days prior to the date hereof.
6. REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to enter
into this Amendment, each Loan Party represents and warrants to Agent and
Lenders as follows:
A. The execution, delivery and performance of this Amendment has
been duly authorized by all requisite corporate action on the
part of each Loan Party and that this Amendment has been duly
executed and delivered by each Loan Party;
B. Each of the representations and warranties set forth in
Section 5 of the Credit Agreement (other than those which, by
their terms, specifically are made as of certain date prior to
the date hereof) are true and correct in all material respects
as of the date hereof;
C. Neither Hawthorne Tools, Inc. nor Pinetree Tools owns any
material assets, has any material liabilities, conducts or
engages in any business, or employs any Persons and neither
such Subsidiary shall do, own or incur any of the foregoing.
Borrower intends to dissolve said Subsidiaries as soon as is
practicable without incurring adverse tax consequences;
D. Schedule 5.4(A) to the Credit Agreement which sets forth the
jurisdiction of organization of each Loan Party is complete
and accurate in all respects; and
E. The disclosure Schedules to the Security Agreement, which set
forth the locations and names of Borrower and each of its
Subsidiaries, are complete and accurate in all respects.
7. WAIVER OF EXISTING EVENT OF DEFAULT. Effective as of the date
hereof, upon satisfaction of the conditions precedent set forth in Section 5
hereof, and in reliance upon the representations and warranties of Borrower set
forth in the Credit Agreement and in this Amendment, Agent and Lenders hereby
waive the Existing Event of Default. The foregoing is a limited waiver and the
execution and delivery of this Amendment does not constitute a waiver by Agent
or any Lender of any other Default or Event of Default now or hereafter
existing, or any other term or provision of the Loan Documents. This Waiver does
not (i) constitute a waiver by any Lender of any of its other rights or remedies
under the Loan Documents (all such rights and remedies being expressly
reserved), or (iii) establish a custom or a course of dealing or conduct between
Agent, any Lender and Borrower.
8. RELEASE. In consideration of Agent's and Lenders' execution of this
Amendment and for other good and valuable consideration, receipt of which is
hereby acknowledged, (a) each Loan Party hereby acknowledges that it has no
defense, counterclaim, offset, cross-complaint,
16
claim, or demand of any kind or nature whatsoever that can be asserted to reduce
or eliminate all or any part of its liability to pay or perform any of the
Obligations, or to pay or perform any of its other obligations with respect to
any other loans or other extensions of credit or financial accommodations made
available to or for its account by Lenders or Agent, or to seek affirmative
relief or damages of any kind or nature from Lenders or Agent, and (b) each Loan
Party, on its own behalf and on behalf of its employees, agents, officers,
directors, successors, and assigns, does hereby fully, unconditionally, and
irrevocably forever relieve, relinquish, release, waive, discharge, and hold
harmless the Agent and each Lender and its current and former shareholders,
directors, officers, employees, agents, attorneys, successors, and assigns of
and from any and all claims, debts, actions, causes of action, liabilities,
demands, obligations, promises, acts, agreements, costs, expenses (including but
not limited to reasonably attorneys' fees) and damages of whatsoever kind and
nature, whether now known or unknown, based upon, resulting from, arising out
of, or in connection with the Credit Agreement, the Agent's and each Lender's
administration of the Loans or the Credit Agreement (including, without
limitation, the actions or inactions, taken by the Agent or any Lender in
connection therewith), the Loans or other extensions of credit or financial
accommodations made by the Lenders from time to time to or for the account of
the Borrower or any Subsidiary thereof, including, without limitation, any Loans
made under the Credit Agreement or in any way connected with or relating to any
other instrument or document executed or delivered in connection therewith
and/or the administration or collection thereof and/or collateral therefor or
guaranties thereof.
9. SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
10. REFERENCES. Any reference to the Credit Agreement contained in any
document, instrument or agreement executed in connection with the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as modified
by this Amendment.
11. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.
12. RATIFICATION. Each Loan Party hereby consents to the execution and
delivery of this Amendment. Each Loan Party hereby agrees that except as amended
hereby, the Credit Agreement and each of the other Loan Documents shall remain
in full force and effect in accordance with their respective terms. Each Loan
Party hereby ratifies and confirms its liabilities, obligations and agreements
under the Credit Agreement and each other Loan Document, all as amended by this
Amendment, and acknowledges that other than as specifically set forth herein,
Agent and Lenders do not waive, diminish or limit any term or condition
contained in the Credit Agreement or any of the other Loan Documents. Agent's
and each Lender's agreement to the terms of this Amendment or any other
amendment shall not be deemed to establish or create a custom or course of
dealing between Agent or Lenders, on the one hand, and any Loan Party, on the
other hand.
17
13. FURTHER ASSURANCES AND FEES AND EXPENSES. Each Loan Party covenants
and agrees that it will at any time and from time to time do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acts, documents and instruments as reasonably may be
required by Agent in order to effectuate fully the intent of this Amendment. The
Borrower shall pay all fees and expenses incurred in the preparation,
negotiation and execution of this Amendment, including, without limitation, the
fees and expenses of counsel for Agent and the Lenders.
Balance of Page Intentionally Left Blank
Signature Page Follows
18
IN WITNESS WHEREOF, the parties hereto have caused this Sixteenth
Amendment to be duly executed under seal and delivered by their respective duly
authorized officers on the date first written above.
UNIONTOOLS, INC., a Delaware corporation ACORN PRODUCTS, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
---------------------------------------------- ----------------------------------------------
Title: VP and CFO Title: VP and CFO
------------------------------------------- -------------------------------------------
HAWTHORNE TOOLS, INC., a Missouri corporation PINETREE TOOLS, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
---------------------------------------------- ----------------------------------------------
Title: VP and CFO Title: VP and CFO
------------------------------------------- -------------------------------------------
XXXXXX FINANCIAL, INC., as Agent and a Lender FLEET BUSINESS CREDIT CORP., formerly known as
Sanwa Business Credit Corporation
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------------------- ----------------------------------------------
Title: Assistant VP Title: Senior VP
------------------------------------------- -------------------------------------------
FLEET CAPITAL CORPORATION PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxxx Xxxxxxx By /s/ Xxxxxxx Xxxxx
---------------------------------------------- ----------------------------------------------
Title: Senior VP Title: Vice President
------------------------------------------- -------------------------------------------
FIRSTAR BANK, N.A. ARK CLO 2000-1 LIMITED
By: Patriarch Partners, LLC
Its: Attorney-in-fact
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx Xxxxxx
---------------------------------------------- ----------------------------------------------
Title: Assistant VP Title: Authorized Signatory
------------------------------------------- -------------------------------------------
CONSENT AND REAFFIRMATION
-------------------------
The undersigned hereby (i) acknowledges receipt of a copy of the
foregoing Sixteenth Amendment to Amended and Restated Credit Agreement; (ii)
agrees to be bound thereby, as a participant under the credit facility evidenced
by said Amended and Restated Credit Agreement, and (iii) affirms that nothing
contained therein shall modify in any respect whatsoever the obligations of
undersigned to, or rights and remedies of, Agent and Lenders pursuant to the
terms of that certain Subordinated Participation Agreement (the "Subordination
Agreement") entered into as of the 28th day of October, 1999, by and among
Xxxxxx Financial, Inc. in its individual capacity ("Xxxxxx") and (if applicable
pursuant to Section 11.17 thereof) certain other "Lender(s)" under the Credit
Agreement (each, individually (including Xxxxxx), a "Seller" and collectively,
the "Sellers") and Xxxxxx Financial, Inc. in its capacity as Agent under the
Credit Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Agent") and OCM Principal Opportunities Fund,
L.P. and TCW Special Credits, as general partner and/or investment manager of
the funds and accounts set forth on Schedule IA hereof (collectively, the
"Purchasers") and reaffirms that the Subordination Agreement is and shall
continue to remain in full force and effect. Although Purchasers have been
informed of the matters set forth herein and have acknowledged and agreed to
same, the execution and delivery by Purchasers of this Consent and Reaffirmation
does not create any obligation on the part of Agent and Lenders to inform
Purchasers of such matters in the future or to seek Purchaser's acknowledgment
or agreement to future amendments or waivers, and nothing herein shall create
such a duty.
Balance of Page Intentionally Left Blank - Signature Page Follows
IN WITNESS WHEREOF, the undersigned has executed this Consent and
Reaffirmation on and as of the date of such Sixteenth Amendment.
OCM PRINCIPAL OPPORTUNITIES FUND, L.P.
By: Oaktree Capital Management, LLC
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
Principal
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
Managing Director
TCW SPECIAL CREDITS, as general partner and
investment manager of the funds and accounts
set forth on Schedule I
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx
Authorized Signator
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxx
Authorized Signator
SCHEDULE IA TO CONSENT AND REAFFIRMATION
TCW SPECIAL CREDITS FUND IIIB
TCW SPECIAL CREDITS TRUST IIIB
THE COMMON FUND FOR BOND INVESTMENTS, INC.
DELAWARE STATE EMPLOYEES' RETIREMENT FUND
WEYERHAEUSER COMPANY MASTER RETIREMENT TRUST (TCW)
TCW SPECIAL CREDITS TRUST
TCW SPECIAL CREDITS TRUST IV
TCW SPECIAL CREDITS TRUST IV-A
TCW SPECIAL CREDITS FUND IV
TCW SPECIAL CREDITS PLUS FUND
