EXHIBIT 10.14F
FOURTH AMENDMENT AND WAIVER
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FOURTH AMENDMENT AND WAIVER (this "Amendment"), dated as of June 15,
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1999, to the Amended and Restated Credit Agreement, dated as of March 10, 1998
(as previously amended, and as the same is being and may be further amended,
restated, supplemented or otherwise modified from time to time, the "Credit
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Agreement"), among PAMECO CORPORATION, a Georgia corporation (the "Company"),
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the lenders parties thereto (together with their respective successors and
permitted assigns, the "Lenders") and GENERAL ELECTRIC CAPITAL CORPORATION, a
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New York corporation, as agent for the Lenders (in such capacity, together with
its successors and permitted assigns, the "Agent").
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W I T N E S S E T H :
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WHEREAS, the Company has requested that the Agent and the Lenders
amend certain provisions of, and grant a certain waiver with respect to, the
Credit Agreement upon the terms and subject to the conditions set forth herein;
and
WHEREAS, the Agent and the Lenders have agreed to such amendments and
waiver only upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
1. Defined Terms. Terms defined in the Credit Agreement are used
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herein with the meanings set forth in the Credit Agreement unless otherwise
defined herein.
2. Amendment of Credit Agreement.
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(a) Amendment of Section 1.1.
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(i) The following text is hereby inserted into the definition
of Consolidated EBITDA contained in Section 1.1 of the Credit
Agreement immediately after clause (e) of such definition:
"plus (f) for the fiscal months ending February 28, 1999
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through January 31, 2000, the amount set forth opposite
"Total FY 1999 Income Statement Charges" listed on Annex A
attached to Schedule 10.8 hereto"
(ii) The definitions of the following defined terms are deleted
in their respective entireties and inserted in lieu thereof the
following new definitions:
""Borrowing Base" shall mean, at any date, the amount equal
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to the
lesser of (a) $90,000,000 and (b) 50% of Eligible
Inventory, less Tranche A Term Loan Reserves in effect from
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time to time; provided, however, that in no event shall the
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sum of the Revolving Credit Loans, the Swingline Loans and
the Reimbursement Obligations (without duplication of the
Reimbursement Obligations deemed to have become Loans)
exceed the Borrowing Base. The Agent, at any and all times,
shall be entitled to change any and all of the percentages
used in determining the Borrowing Base at any time in its
reasonable discretion with the consent of the Majority
Facility Lenders.
"Tranche A Term Loan Maturity Date" shall mean September 30,
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2001.
"Tranche B Term Loan Maturity Date" shall mean June 30,
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2001.
"Loan Documents" shall mean this Agreement, the Notes, the
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Syndication Letter Agreement, the Intercreditor Agreement,
the Global Amendment, the Warrants and the Collateral
Documents.
"Obligations" shall mean the unpaid principal amount of, and
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interest on, the Loans and all other obligations,
indebtedness and liabilities (including, without
limitation, Reimbursement Obligations) of the Company to the
Agent and the Lenders (including the Lenders and/or any
Affiliates of the Lenders in their individual capacities as
a holder of a Warrant), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in
connection with this Agreement or the other Loan Documents
and any other document executed and delivered in connection
therewith or herewith, whether on account of principal,
interest, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to
the Agent) or otherwise. "Obligations" shall include,
without limitation, interest accruing after the maturity of
the Loans or Reimbursement Obligations and interest accruing
after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or like
proceeding relating to the Company, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding; provided however, in no event shall the
Obligations with respect to any Warrant be secured by any
Lien granted in favor of the Agent or the Lenders."
"Required Lenders" shall mean the Majority Facility
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Lenders."
(iii) The following new definitions shall be inserted in
alphabetical order:
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""Fixed Charge Coverage Ratio" shall mean the ratio
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described in paragraph (b) of Schedule 10.8 to the Credit
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Agreement."
"Permitted Subordinated Debt" shall mean Indebtedness of the
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Company in an amount not to exceed $30,000,000, is otherwise
subordinated to the Obligations in a manner and form
satisfactory to the Lenders in their sole discretion, as to
right and time of payment and as to any rights and remedies
thereunder."
"Tranche A Term Loan Reserves" shall mean, for the fiscal
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month ended July 1999, $3,000,000 and, thereafter, shall be
equal to the aggregate amount outstanding under the Tranche
A Term Loan.
"Warrants" shall mean those certain detachable warrant
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agreements dated the Fourth Amendment Effective Date in
favor of each Tranche B Term Loan Lender."
(b) Amendment of Section 2.4. Section 2.4 of the Credit Agreement is
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hereby amended by:
(i) deleting paragraph (a) thereof in its entirety and inserting
in lieu thereof the following:
"(a) The Tranche A Term Loan of each Tranche A Term Loan Lender shall
mature, and the Company unconditionally promises to pay such Tranche A
Term Loan to the Agent for the account of such Tranche A Term Loan
Lender, in 11 consecutive installments, commencing on the Fourth
Amendment Effective Date, each of which shall be in an amount equal to
such Lender's Tranche A Term Loan Percentage multiplied by the amount
set forth below opposite such installment:
Installment Principal Amount
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Fourth Amendment Effective Date 15,000,000
June 30, 1999 750,000
September 30, 1999 750,000
December 31, 1999 750,000
March 31, 2000 750,000
June 30, 2000 750,000
September 30, 2000 750,000
December 31, 2000 1,250,000
March 31, 2001 1,250,000
June 30, 2001 1,250,000
Tranche A Term Loan
Maturity Date 250,000"
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(ii) deleting paragraph (b) thereof in its entirety and inserting
in lieu thereof the following:
"(b) The Tranche B Term Loan of each Tranche B Term Loan Lender shall
mature, and the Company unconditionally promises to pay such Tranche B
Term Loan to the Agent for the account of such Tranche B Term Loan
Lender, in 9 consecutive quarterly installments, commencing on the
Fourth Amendment Effective Date, each of which shall be in an amount
equal to such Lender's Tranche B Term Loan Percentage multiplied by
the amount set forth below opposite such installment:
Installment Principal Amount
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June 30, 1999 62,500
September 30, 1999 62,500
December 31, 1999 62,500
March 31, 2000 62,500
June 30, 2000 62,500
September 30, 2000 62,500
December 31, 2000 62,500
March 31, 2001 62,500
Tranche B Term Loan
Maturity Date 24,375,000"
(c) Amendment of Section 6.3. The following text is hereby inserted
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into Section 6.3 to the Credit Agreement as the final text thereof:
"(g) Until, on a rolling four-quarter basis, the Consolidated Senior
Debt Leverage Ratio is less than or equal to 5.0, the Tranche B Term Loan shall
accrue interest (payable on the earlier of (i) the payment in full of Tranche B
Term Loan and (ii) the refinancing in full of Tranche B Term Loan) which will
compound monthly against the accreted principal balance of the Tranche B Term
Loan (i.e. the original principal balance of Tranche B Term Loan increased
periodically by such accrued interest) at the following rates during the
following periods:
Period Accrued Rate
from the Fourth
Amendment Effective
Date through and
including June 30, 1999 2.00% per annum
from July 1, 1999
through and including
July 31, 1999 3.00% per annum
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from August 1, 1999
through and including
August 31, 1999 4.00% per annum
from September 1, 1999
through and including
February 29, 2000 5.00% per annum
March 1, 2000 until
payment or the Tranche
B Term Loan Maturity
Date 10.00% per annum"
(d) Amendment of Section 6.12. Section 6.12(d) to the Credit
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Agreement is hereby amended by deleting it in its entirety and substituting
in lieu thereof the following:
"(d) Each prepayment of Term Loan Facilities shall be applied
first, to the Tranche A Term Loan until the same shall have been repaid in full
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and thereafter, to the Tranche B Term Loan."
(e) Amendment of Section 9.1. Subsection 9.1(c) to the Credit
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Agreement is hereby amended by deleting it in its entirety and substituting
in lieu thereof the following:
"(c) as soon as available, but in any event within 30 days after the
end of each month (other than May, August, November and February (except
with respect to fiscal month ended February 29, 2000) (i) copies of the
unaudited consolidated balance sheet of the Company and its Consolidated
Subsidiaries, in each case as at the end of such month, and the related
unaudited consolidated statement of earnings and cash flows for such month
and the portion of the calendar year through such month, certified by the
chief financial officer of the Company as presenting fairly the financial
condition and results of operations of the Company and its Consolidated
Subsidiaries (subject to normal year-end and quarterly audit adjustments)
and (ii) copies of the unaudited consolidating financial statements of the
Company and its Consolidated Subsidiaries including therein (A) the
consolidating balance sheets of each of the Company and its Consolidated
Subsidiaries, as at the end of such month and (B) the related consolidating
statements of earnings for such month and the portion of the calendar year
through such month, and in each case showing inter-company eliminations;"
(f) Amendment of Section 9.2. Subsection 9.2(a) to the Credit
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Agreement is hereby amended by deleting it in its entirety and substituting
in lieu thereof the following:
"(a) concurrently with the delivery of each set of the financial
statements referred to in subsections 9.1(a) and 9.1(b) and, for the
fiscal year ended February 29, 2000 only, subsection 9.1(c), a
certificate of the chief financial officer of the Company (i) stating
that, to the best of such officer's knowledge, during the period
covered by
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such set of financial statements, each Loan Party has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in the Loan Documents to be observed,
performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Event of Default (except as specified in
such certificate, in which case such certificate shall set forth in
reasonable detail the steps that the Company plans to take in respect
thereof), (ii) showing in reasonable detail the calculations
supporting such statement in respect of subsection 10.8 and (iii)
certifying that such consolidating financial statements are fairly
stated in all material respects when considered in relation to the
consolidated financial statements of the Company and its Consolidated
Subsidiaries (subject to normal year-end audit adjustments and
quarterly adjustments);"
(g) Amendment of Section 10.1. Section 10.1 to the Credit Agreement
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is hereby amended by deleting clauses (c) and (d) of Section 10.1 in their
entirety and substituting in lieu thereof the following:
"(c) Indebtedness of the Company and its Subsidiaries to each other
to the extent permitted by subsection 10.5(e);
(d) Indebtedness not otherwise described in clauses (a) through (c)
above not to exceed $250,000 in principal amount in the aggregate at
any time outstanding; and
(e) Permitted Subordinated Debt; provided the net proceeds thereof are
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applied first, to interest due and payable (including interest in
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accordance with Section 6.3(g)) on the Tranche B Term Loan, second, to
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scheduled installements of the Tranche B Term Loan until such Loan
shall have been prepaid in full, third, to interest due and payable on
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the Tranche A Term Loan, fourth, to scheduled installments of the
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Tranche A Term Loan, until such Loan shall have been prepaid in full,
and thereafter in accordance with subsection 6.1(a)."
(h) Amendment of Section 10.5. Section 10.5 to the Credit Agreement
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is hereby amended by deleting clauses (e) and (f) of Section 10.5 in their
entirety and substituting in lieu thereof the following:
"(e) loans, advances, extensions of credit, capital contributions and
investments by the Company to or in its Wholly Owned Subsidiaries in an
aggregate among not to exceed $50,000 made in the ordinary course of business
and loans, advances, extensions of credit, capital contributions and investments
by Subsidiaries of the Company in the Company."
(i) Amendment of Section 13.1. The following text is hereby
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inserted into Section 13.1 to the Credit Agreement as the final text
thereof:
"Notwithstanding anything contained in this subsection 13.1 to
the contrary, no amendment or supplement to, waiver of any provision of any
Warrant, nor consent to any departure by any Loan Party therefrom, shall in
any event be effective unless the same shall
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be in writing and signed by the Company, all of the Lenders and all
Purchasing Institutions affected thereby; and then such amendment,
supplement, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given."
(j) Amendment of Section 13.3. The name and address appearing
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opposite the second reference to "with a copy to:" contained in Section
13.3 of the Credit Agreement is hereby replaced with the following text:
"Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Telecopy: (312) 558-5700
Attn: M. David Galainena /
Ronald H. Jacobson"
(k) Amendment of Schedule 10.8. Schedule 10.8 to the Credit
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Agreement is hereby replaced with Annex A attached hereto.
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(l) Amendment of Annex A. The following text is hereby inserted
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into Annex A to the Credit Agreement as the final text thereof:
"Further notwithstanding the foregoing, for the period from the Fourth
Amendment Effective Date to and until the date (based on quarterly
financial data) on which, for the preceding twelve (12) consecutive
fiscal months, (a) Consolidated EBITDA is not less than $20,000,000,
(b) the Fixed Charge Coverage Ratio is not less than 1.25 to 1.00, (c)
the Consolidated Senior Debt Leverage Ratio is not greater than 5.00
to 1.00, and (d) the Consolidated Total Debt Leverage is not greater
than 6.00 to 1.00, the Applicable Margins and Unused Commitment Fee
Rate will be as follows:
Applicable Margin for Revolving Credit Loans:
Index Rate Loans 0.75%
Eurodollar Loans 2.50%
Applicable Margin for Tranche A Term Loan:
Index Rate Loans 1.25%
Eurodollar Loans 3.00%
Applicable Margin for Tranche B Term Loan:
Index Rate Loans 2.75%
Eurodollar Loans 4.50%
Unused Commitment Fee Rate 0.25%"
(m) New Tranche B Term Notes. On the Fourth Amendment Effective
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Date, the Company shall execute and deliver to each Tranche B Term Loan
Lender, in substitution and exchange for, but not in payment of the Tranche
B Term Note held by such Lender, a promissory note (each, a "New Tranche B
Term Note") substantially in the form of Exhibit A-2 attached hereto, with
appropriate insertions therein as to payee and date,
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payable to the order of such Lender and in a principal amount equal to such
Lender's Tranche B Term Loan Percentage of the Tranche B Term Loan
Commitments with effect of such New Tranche B Term Note to amend and
restate and be deemed to be the "Tranche B Term Note" under the Credit
Agreement.
3. Waiver. The Agent and the Lenders hereby waive the Event of
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Default arising under Sections 11(c) and (e) of the Credit Agreement caused
solely by the Company's failure to comply with subsections (a), (b), (e) and (f)
of Schedule 10.8, Sections 9.1, 9.2 and 9.8(a) to the Credit Agreement for the
fiscal quarter ended February 28, 1999. The Agent and the Lenders hereby waive
the Company's compliance with Section 6.1(b) of the Credit Agreement solely for
the fiscal year ended February 28, 1999. The foregoing waivers are limited to
the specific purpose for which they are granted and shall not be construed as a
consent, waiver or other modification with respect to any other term, condition
or other provisions of any Loan Document or any other Default or Event of
Default now or hereafter existing.
4. Conditions to Effectiveness. This Amendment shall become
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effective (the actual date of such effectiveness, the "Fourth Amendment
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Effective Date") as of the date first above written when:
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(a) This Amendment shall have been duly executed and delivered by
each of the parties hereto.
(b) The Acknowledgment and Consent dated as of the date hereof by
the Company and Pameco Investment Company, Inc. shall have been duly
executed and delivered by each of the parties thereto.
(c) The Agent shall have received a certificate of the Secretary
or an Assistant Secretary of each Loan Party, dated as of the Fourth
Amendment Effective Date, and certifying (i) that attached thereto is a
true and complete copy of the resolutions (which resolutions are in form
and substance reasonably satisfactory to each Lender) of the board of
directors of such Loan Party authorizing, as applicable, the execution,
delivery and performance of this Amendment, the Acknowledgment and Consent
attached hereto, the Fourth Amendment Fee Letter (as defined below) and
related matters, certified by the Secretary or an Assistant Secretary of
such Loan Party as of the Fourth Amendment Effective Date and (ii) as to
the incumbency and specimen signature of such Loan Party's officers
executing this Amendment and all other documents required or necessary to
be delivered hereunder or in connection herewith. Such certificate shall
state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded as of the date of such certificate.
(d) The Agent shall have received true and complete copies of the
certificate of incorporation and by-laws of each Loan Party, certified as
of the Fourth Amendment Effective Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of such Loan Party.
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(e) The Agent shall have received fees as required in the Fee
Letter dated as of the date hereof from GE Capital to the Company (the
"Fourth Amendment Fee Letter").
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(f) Each Lender shall have received a duly executed original
Warrant.
(g) Each Lender shall have received a duly executed original
Tranche B Term Note.
(h) The Agent shall have received an executed legal opinion from
Kilpatrick Stockton LLP in form and substance satisfactory to the Agent.
5. Company Representations and Warranties. The Company represents
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and warrants that:
(a) Each of this Amendment and the Credit Agreement as amended by
this Amendment constitutes the legal, valid and binding obligation of the
Company.
(b) Each of the representations and warranties set forth in
Section 7 of the Credit Agreement are true and correct as of the Fourth
Amendment Effective Date; provided that references in the Credit Agreement
to this "Agreement" shall be deemed references to the Credit Agreement as
amended to date and by this Amendment.
(c) After giving effect to this Amendment, there does not exist
any Default or Event of Default.
6. Continuing Effect. Except as expressly waived hereby, the Credit
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Agreement shall continue to be and shall remain in full force and effect in
accordance with its terms.
7. Expenses. The Company agrees to pay and reimburse the Agent for
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all of its out-of-pocket costs and expenses incurred in connection with the
negotiation, preparation, execution, and delivery of this Amendment, including
the fees and expenses of counsel to the Agent.
8. Counterparts. This Amendment may be executed on any number of
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separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopy shall be effective
as delivery of a manually executed counterpart of this Amendment.
9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
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AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment and Waiver to be duly executed and delivered in New York, New York by
their proper and duly authorized officers as of the day and year first above
written.
PAMECO CORPORATION
By: ________________________
Title: ______________________
GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and
as a Lender
By: ________________________
Title: Duly Authorized Signatory
WACHOVIA BANK, N.A.
By: ________________________
Title: ______________________
NATIONSBANK, N.A.
By: ________________________
Title: ______________________
SUNTRUST BANK, ATLANTA
By: ________________________
Title: ______________________
By: ________________________
Title: ______________________
ANNEX A
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SCHEDULE 10.8
to
Credit Agreement
FINANCIAL COVENANTS
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The Company shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP, consistently applied:
(a) Company EBITDA. As of the last day of each fiscal period of the
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Company, the Consolidated EBITDA for the preceding twelve consecutive fiscal
months shall not be less than the amount set forth below opposite such period:
Fiscal Quarter Ending Amount
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May 31, 1999 $20,012,000
August 31, 1999 $18,524,000
November 30, 1999 $18,976,000
February 29, 2000 $17,272,000
For each fiscal quarter thereafter $20,000,000
Fiscal Month Ending Amount
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June 30, 1999 $19,033,000
July 31, 1999 $18,382,000
September 30, 1999 $18,190,000
October 31, 1999 $18,115,000
December 31, 1999 $17,905,000
January 31, 2000 $18,190,000
(b) Fixed Charge Coverage Ratio. As of the last day of each fiscal
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quarter of the Company, the ratio of (i) Consolidated EBITDA to (ii)
Consolidated Fixed Charges for the preceding twelve consecutive fiscal months
(the "Fixed Charge Coverage Ratio") shall not be less than the ratio set forth
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below opposite such period:
Fiscal Quarter Ending Ratio
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May 31, 1999 1.43 to 1.00
August 31, 1999 1.20 to 1.00
November 30, 1999 1.07 to 1.00
February 29, 2000 0.85 to 1.00
For each fiscal quarter thereafter 1.25 to 1.00
(c) Maintenance of Net Worth. (i) The Company Net Worth on the last
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day of each fiscal quarter ending on the day set forth below shall not be less
than the amount set forth opposite such date:
Fiscal Year Ending Amount
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May 31, 1998 $65,000,000
August 31, 1998 $65,000,000
November 30, 1998 $65,000,000
February 28, 1999 $65,000,000 plus 50% of
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Consolidated Net Income for the
fiscal year then ended
(ii) Commencing with the fiscal year of the Company ending on February
29, 2000, (A) the Company Net Worth on the last day of each of the first, second
and third fiscal quarters of each fiscal year of the Company shall not be less
than the minimum Company Net Worth of the Company required pursuant to this
paragraph (c) for the fourth quarter of the immediately preceding fiscal year of
the Company and (B) the Company Net Worth on the last day of each fiscal year of
the Company shall not be less than the minimum Company Net Worth required
pursuant to this paragraph (c) for the third quarter of such fiscal year plus
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50% of Consolidated Net Income for such fiscal year.
(d) Consolidated Senior Debt Leverage Ratio. As of the last day of
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any fiscal period of the Company, the Consolidated Senior Debt Leverage Ratio
shall not be greater than the ratio set forth below opposite such period:
Fiscal Quarter Ending Ratio
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May 31, 1999 7.43 to 1.00
August 31, 1999 8.61 to 1.00
November 30, 1999 8.58 to 1.00
February 29, 2000 10.52 to 1.00
For each fiscal quarter thereafter 5.00 to 1.00
Fiscal Month Ending Ratio
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June 30, 1999 8.00 to 1.00
July 31, 1999 8.53 to 1.00
September 30, 1999 8.97 to 1.00
October 31, 1999 8.95 to 1.00
December 31, 1999 9.34 to 1.00
January 31, 2000 9.16 to 1.00
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(e) Consolidated Total Debt Leverage Ratio. As of the last day of any
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fiscal quarter of the Company, the Consolidated Total Debt Leverage Ratio shall
not be greater than the ratio set forth below opposite such period:
Fiscal Quarter Ending Ratio
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May 31, 1999 7.48 to 1.00
August 31, 1999 8.62 to 1.00
November 30, 1999 8.63 to 1.00
February 29, 2000 10.53 to 1.00
For each fiscal quarter thereafter 6.00 to 1.00