EXHIBIT 10.19
FOURTH AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
PENTACON, INC.
AS BORROWER,
NATIONSBANK, N.A.,
AS ADMINISTRATIVE AGENT,
NATIONSBANC XXXXXXXXXX SECURITIES LLC,
AS LEAD ARRANGER,
AND
THE LENDERS SIGNATORY HERETO
DATED AS OF
MARCH 29, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS
Section 1.01 TERMS DEFINED ABOVE ........................................... 1
Section 1.02 TERMS DEFINED IN CREDIT AGREEMENT ............................. 1
Section 1.03 OTHER DEFINITIONAL PROVISIONS ................................. 2
ARTICLE II. AMENDMENTS TO CREDIT AGREEMENT
Section 2.01 AMENDMENTS TO DEFINITIONS ..................................... 2
Section 2.02 AMENDMENTS TO ARTICLE II ...................................... 3
Section 2.03 AMENDMENTS TO ARTICLE IX ...................................... 3
Section 2.04 AMENDMENTS TO ANNEXES, SCHEDULES AND EXHIBITS ................. 4
ARTICLE III. CONDITIONS
Section 3.01 LOAN DOCUMENTS ................................................ 4
Section 3.02 CORPORATE PROCEEDINGS OF LOAN PARTIES ......................... 4
Section 3.03 REPRESENTATIONS AND WARRANTIES ................................ 5
Section 3.04 NO DEFAULT .................................................... 5
Section 3.05 NO CHANGE ..................................................... 5
Section 3.06 SECURITY INSTRUMENTS .......................................... 5
Section 3.07 FEES .......................................................... 5
Section 3.08 OTHER INSTRUMENTS OR DOCUMENTS ................................ 6
ARTICLE IV. MISCELLANEOUS
Section 4.01 ADOPTION, RATIFICATION AND CONFIRMATION OF CREDIT AGREEMENT ... 6
Section 4.02 RATIFICATION AND AFFIRMATION OF GUARANTY ...................... 6
Section 4.03 SUCCESSORS AND ASSIGNS ........................................ 6
Section 4.04 COUNTERPARTS .................................................. 6
Section 4.05 NUMBER AND GENDER ............................................. 6
Section 4.06 ENTIRE AGREEMENT .............................................. 7
Section 4.07 INVALIDITY .................................................... 7
Section 4.08 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS .................. 7
Section 4.09 GOVERNING LAW ................................................. 7
ANNEXES, EXHIBITS AND SCHEDULES
Annex I - List of Percentage Shares, Maximum Revolving Credit Amounts, and
Revolver Term Loans
FOURTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
This FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"FOURTH AMENDMENT") executed effective as of the 29th day of March, 1999 (the
"EFFECTIVE DATE"), is by and among Pentacon, Inc., a corporation formed under
the laws of the State of Delaware (the "BORROWER"); each of the lenders that is
a signatory hereto or which becomes a signatory hereto and to the hereinafter
described Credit Agreement as provided in Section 12.06 of the Credit Agreement
(individually, together with its successors and assigns, a "LENDER" and,
collectively, the "LENDERS"); and NationsBank, N.A., a national banking
association (in its individual capacity, "NATIONSBANK"), and as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, the Borrower, the Administrative Agent and the Lenders are
parties to that certain Amended and Restated Credit Agreement dated as of
September 3, 1998, as amended by the First Amendment to Amended and Restated
Credit Agreement dated as of December 31, 1998, the Second Amendment to Amended
and Restated Credit Agreement dated as of February 12, 1999, and the Third
Amendment to Amended and Restated Credit Agreement dated as of March 9, 1999
(the "CREDIT AGREEMENT"), pursuant to which the Lenders agreed to make loans to
and extensions of credit on behalf of the Borrower; and
WHEREAS, the Borrower and the Lenders desire to amend the Credit Agreement
in the particulars hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01 TERMS DEFINED ABOVE. As used in this Fourth Amendment, each
of the terms "ADMINISTRATIVE AGENT", "BORROWER", "CREDIT AGREEMENT", "EFFECTIVE
DATE", "FOURTH AMENDMENT", "LENDERS" and "NATIONSBANK" shall have the meaning
assigned to such term hereinabove.
SECTION 1.02 TERMS DEFINED IN CREDIT AGREEMENT. Each term defined in the
Credit Agreement and used herein without definition shall have the meaning
assigned to such term in the Credit Agreement, unless expressly provided to the
contrary.
SECTION 1.03 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereby", "herein", "hereinafter", "hereof", "hereto"
and "hereunder" when used in this Fourth Amendment shall refer to this
Fourth Amendment as a whole and not to any particular Article, Section,
subsection or provision of this Fourth Amendment.
(b) Section, subsection and Exhibit references herein are to such
Sections, subsections and Exhibits to this Fourth Amendment unless
otherwise specified.
ARTICLE II. AMENDMENTS TO CREDIT AGREEMENT
The Borrower, the Administrative Agent, and the Lenders agree that the
Credit Agreement is hereby amended, effective as of the Effective Date, in the
following particulars.
SECTION 2.01 AMENDMENTS TO DEFINITIONS.
(a) The following terms, which are defined in Section 1.02 of the Credit
Agreement, are hereby amended in their entirety to read as follows:
"AGREEMENT" shall mean this Amended and Restated Credit Agreement, as
amended and supplemented by the First Amendment, the Second Amendment, the Third
Amendment, and the Fourth Amendment, as the same may from time to time be
further amended or supplemented.
"BORROWING BASE" shall mean at any time the sum of (i) 85% of Eligible
Accounts Receivable plus (ii) 50% of Eligible Inventory, but not to exceed 60%
of the Borrowing Base; PROVIDED, HOWEVER, prior to the occurrence of a Capital
Market Event, the Borrowing Base shall be equal to the Aggregate Maximum
Revolving Credit Amounts.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Fee Letters,
the Third Amendment Fee Letters, the Fourth Amendment Fee Letters, the
Engagement Letter, the Security Instruments, and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower or any other
Person in connection with this Agreement (other than participation or similar
agreements between any Lender and any other lender or creditor with respect to
any Indebtedness pursuant to this Agreement).
"SUBORDINATED DEBT EVENT" shall mean the consummation of the issuance of
Subordinated Debt resulting in gross cash proceeds to the Borrower of at least
$97,000,000, but not to exceed $150,000,000, upon terms and conditions and
pursuant to documentation, all in form and substance satisfactory to the
Majority Lenders.
(b) Section 1.02 of the Credit Agreement is hereby further amended and
supplemented by adding the following new definitions where alphabetically
appropriate, which reads in their entirety as follows:
"ENGAGEMENT LETTER" shall mean that certain letter agreement dated March
24, 1999 among NationsBank, N.A., NationsBanc Xxxxxxxxxx Securities LLC, and
Pentacon, Inc. regarding, among other matters, syndication of the credit
facilities provided by this Agreement, as amended, supplemented or otherwise
modified from time to time.
"FOURTH AMENDMENT" shall mean that certain Fourth Amendment to Amended and
Restated Credit Agreement dated as of March 29, 1999, by and among the Borrower,
the Administrative Agent and the Lenders.
"FOURTH AMENDMENT FEE LETTERS" shall mean the fee letters, if any, between
the Borrower and each of the Lenders, executed in connection with the Fourth
Amendment.
SECTION 2.02 AMENDMENTS TO ARTICLE II. Section 2.03(c) of the Credit
Agreement is hereby amended by changing the reference to $65,000,000 in the last
sentence thereof to $85,000,000.
SECTION 2.03 AMENDMENTS TO ARTICLE IX. Section 9.14 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"Section 9.14 SENIOR DEBT LEVERAGE RATIO. The Borrower will not
permit its ratio of Senior Debt as of the end of any fiscal quarter to
Adjusted EBITDA for the four fiscal quarters ending on such date to be
greater than the ratio corresponding to the applicable period set forth
below:
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PERIOD RATIO
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from the Closing Date until, but excluding 3/31/99 4.00 to 1.00
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on and after 3/31/99 until, but excluding 6/30/99 3.50 to 1.00
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on and after 6/30/99 until, but excluding 12/31/99 3.25 to 1.00
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on 12/31/99 and thereafter 3.00 to 1.00
----------------------------------------------------------------------------
PROVIDED, HOWEVER, upon the occurrence of a Capital Market Event, from and after
such Capital Market Event, the Borrower will not permit its ratio of Senior Debt
as of the end of any fiscal quarter to Adjusted EBITDA for the four fiscal
quarters ending on such date to be greater than the ratio corresponding to the
applicable period set forth below:
--------------------------------------------------------------------------------
PERIOD RATIO
--------------------------------------------------------------------------------
from the funding date of the 2.50 to 1.00
Capital Market Event until, but
excluding 3/31/2000
--------------------------------------------------------------------------------
on 3/31/2000 and thereafter 2.25 to 1.00
--------------------------------------------------------------------------------
For the purposes of Sections 9.13 and 9.14, "Adjusted EBITDA" shall
mean the EBITDA of the Borrower and the Subsidiaries calculated on a
pro-forma basis to include the EBITDA for the most recent four fiscal
quarters of acquired Persons to the extent that such EBITDA is not
included in the EBITDA of the Borrower plus certain extraordinary or
non-recurring expenses as specifically listed on SCHEDULE 9.13."
SECTION 2.04 AMENDMENTS TO ANNEXES, SCHEDULES AND EXHIBITS. ANNEX I to the
Credit Agreement is hereby replaced with ANNEX I attached hereto. Accordingly,
all references in the Credit Agreement, to ANNEX I shall be deemed to be
references to ANNEX I attached to this Fourth Amendment.
ARTICLE III. CONDITIONS
The enforceability of this Fourth Amendment against the Administrative
Agent and the Lenders is subject to the satisfaction of the following conditions
precedent:
SECTION 3.01 LOAN DOCUMENTS. The Administrative Agent shall have received:
(a) multiple original counterparts, as requested by the
Administrative Agent, of this Fourth Amendment executed and delivered by a
duly authorized officer of the Borrower, the Administrative Agent, each
Guarantor, and each Lender; and
(b) multiple original counterparts, as requested by each Lender, of
the Fourth Amendment Fee Letters executed and delivered by a duly
authorized officer of the Borrower and the respective Lenders.
SECTION 3.02 CORPORATE PROCEEDINGS OF LOAN PARTIES. The Administrative
Agent shall have received multiple copies, as requested by the Administrative
Agent, of the resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Boards of Directors of the Borrower and the
Guarantors, authorizing the execution, delivery and performance of this Fourth
Amendment and any other Loan Documents to which they are respectively a party,
executed in connection with this Fourth Amendment, each such copy being attached
to original certificates of the Secretary or an Assistant Secretary of the
Borrower and each Guarantor, dated as of the Effective Date, certifying (i) that
the resolutions attached thereto are true, correct and complete copies of
resolutions duly adopted by written consent or at a meeting of the Board of
Directors of the Borrower or such Guarantor, as applicable, (ii) that such
resolutions constitute all resolutions adopted with respect to the transactions
contemplated hereby, (iii) that such resolutions have not been amended,
modified, revoked or rescinded as of the Effective Date, (iv) that the articles
of incorporation and bylaws of the Borrower or such Guarantor have not been
amended or otherwise modified since the effective date of the Credit Agreement,
except pursuant to any amendments attached thereto, and (v) as to the incumbency
and signature of the officers of the Borrower or such Guarantor, as applicable,
executing this Fourth Amendment and any other Loan Document executed pursuant
hereto.
SECTION 3.03 REPRESENTATIONS AND WARRANTIES. Except as affected by the
transactions contemplated in the Credit Agreement and this Fourth Amendment,
each of the representations and warranties made by the Borrower and the
Guarantors in or pursuant to the Security Instruments, including the Credit
Agreement, shall be true and correct in all material respects as of the
Effective Date, as if made on and as of such date. Borrower hereby represents
and warrants to the Administrative Agent that the execution, delivery and
performance of this Fourth Amendment has been duly authorized and that the
representation in the Credit Agreement as to the enforceability and
authorization thereof shall refer to the Credit Agreement, as amended by this
Fourth Amendment.
SECTION 3.04 NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing as of the Effective Date.
SECTION 3.05 NO CHANGE. No event shall have occurred since September 30,
1998, which, in the reasonable opinion of the Lenders, could have a material
adverse effect on the condition (financial or otherwise), business, operations
or prospects of the Borrower or the Guarantors.
SECTION 3.06 SECURITY INSTRUMENTS. All of the Security Instruments shall
be in full force and effect and provide to the Administrative Agent the security
intended thereby to secure the Indebtedness, as amended and supplemented hereby.
SECTION 3.07 FEES. On or before the Effective Date, the Borrower shall
have paid to each Lender all fees required by the Fourth Amendment Fee Letters
and any other Loan Documents (as such term is amended hereby).
SECTION 3.08 OTHER INSTRUMENTS OR DOCUMENTS. The Administrative Agent or
any Lender or counsel to the Administrative Agent shall receive such other
instruments or documents as they may reasonably request.
ARTICLE IV. MISCELLANEOUS
SECTION 4.01 ADOPTION, RATIFICATION AND CONFIRMATION OF CREDIT AGREEMENT.
Each of the Borrower, the Guarantors, the Administrative Agent, and the Lenders
does hereby adopt, ratify and confirm the Credit Agreement, as amended hereby,
and acknowledges and agrees that the Credit Agreement, as amended hereby, is and
remains in full force and effect.
SECTION 4.02 RATIFICATION AND AFFIRMATION OF GUARANTY. Each Guarantor
hereby expressly (i) acknowledges the terms of this Fourth Amendment, (ii)
ratifies and affirms its obligations under its Amended and Restated Guaranty
Agreement or Guaranty Agreement, as applicable, dated as of September 3, 1998,
in favor of the Administrative Agent and the Lenders, as amended, supplemented
or otherwise modified (the "GUARANTY AGREEMENT"), (iii) acknowledges, renews and
extends its continued liability under its Guaranty Agreement and agrees that its
Guaranty Agreement remains in full force and effect; and (iv) guarantees to the
Administrative Agent and each Lender to promptly pay when due all amounts owing
or to be owing by it under its Guaranty Agreement pursuant to the terms and
conditions thereof.
SECTION 4.03 SUCCESSORS AND ASSIGNS. This Fourth Amendment shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted pursuant to the Credit Agreement.
SECTION 4.04 COUNTERPARTS. This Fourth Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument and shall be enforceable as of the Effective Date upon the execution
of one or more counterparts hereof by the Borrower, the Guarantors, the
Administrative Agent and the Lenders. In this regard, each of the parties hereto
acknowledges that a counterpart of this Fourth Amendment containing a set of
counterpart execution pages reflecting the execution of each party hereto shall
be sufficient to reflect the execution of this Fourth Amendment by each
necessary party hereto and shall constitute one instrument.
SECTION 4.05 NUMBER AND GENDER. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall
be understood to include the singular. Words denoting sex shall be construed to
include the masculine, feminine and neuter, when such construction is
appropriate; and specific enumeration shall not exclude the general but shall be
construed as cumulative. Definitions of terms defined in the singular or plural
shall be equally applicable to the plural or singular, as the case may be,
unless otherwise indicated.
SECTION 4.06 ENTIRE AGREEMENT. This Fourth Amendment constitutes the
entire agreement among the parties hereto with respect to the subject hereof.
All prior understandings, statements and agreements, whether written or oral,
relating to the subject hereof are superseded by this Fourth Amendment.
SECTION 4.07 INVALIDITY. In the event that any one or more of the
provisions contained in this Fourth Amendment shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Fourth Amendment.
SECTION 4.08 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS. All titles or
headings to Articles, Sections, subsections or other divisions of this Fourth
Amendment or the exhibits hereto, if any, are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect to
the other content of such Articles, Sections, subsections, other divisions or
exhibits, such other content being controlling as the agreement among the
parties hereto.
SECTION 4.09 GOVERNING LAW. This Fourth Amendment shall be deemed to be a
contract made under and shall be governed by and construed in accordance with
the internal laws of the State of Texas.
THIS FOURTH AMENDMENT AND OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE
PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION
HEREOF TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES BEGIN NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the Effective Date.
BORROWER: PENTACON, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Senior Vice President
LENDER AND AGENT: NATIONSBANK, N.A.
By: /S/ XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
LENDERS: PARIBAS
By: /S/ XXXXX XXXXXXXX
Name: Xxxxx Xxxxxxxx
Title: Vice President
By: /S/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Managing Director
UNION BANK OF CALIFORNIA, N.A.
By: /S/ XXXX XXXXXXX
Name: Xxxx Xxxxxxx
Title: Vice President
GUARANTORS: ALATEC PRODUCTS, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
AXS SOLUTIONS, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
CAPITOL BOLT & SUPPLY, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
MAUMEE INDUSTRIES, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
SALES SYSTEMS, LIMITED
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
TEXAS INTERNATIONAL AVIATION, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
PACE PRODUCTS, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
WEST COAST AERO PRODUCTS HOLDING
CORPORATION, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
ASI AEROSPACE GROUP, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
XXXXXXX AVIATION, INC.
By: /S/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
ANNEX I
LIST OF PERCENTAGE SHARES,
MAXIMUM REVOLVING CREDIT AMOUNTS
AND REVOLVER TERM LOANS
A. So long as a Subordinated Debt Event has not occurred on or before
April 15, 1999:
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PERCENTAGE MAXIMUM REVOLVING REVOLVER
NAME OF LENDER SHARE CREDIT AMOUNT TERM LOANS
--------------------------------------------------------------------------------
NationsBank, N.A. 80.000% $88,000,000 $32,000,000
--------------------------------------------------------------------------------
Paribas 8.5714% $9,428,540 $3,428,571.43
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Union Bank of California, N.A. 11.4286% $12,571,460 $4,571,428.57
--------------------------------------------------------------------------------
TOTAL 100% $110,000,000 $40,000,000
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B. If a Subordinated Debt Event occurs on or before April 15, 1999:
--------------------------------------------------------------------------------
PERCENTAGE MAXIMUM REVOLVING REVOLVER
NAME OF LENDER SHARE CREDIT AMOUNT TERM LOANS
--------------------------------------------------------------------------------
NationsBank, N.A. 69.9160% $59,428,590.00 -0-
--------------------------------------------------------------------------------
Paribas 6.5546% $5,571,410 -0-
--------------------------------------------------------------------------------
Union Bank of California, N.A. 23.5294% $20,000,000 -0-
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TOTAL 100% $85,000,000 -0-
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ANNEX I-1
