Exhibit 10(y)(3)
THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
BY AND AMONG
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER, ADMINISTRATIVE AGENT AND LEAD ARRANGER),
JPMORGAN CHASE BANK
(AS LENDER AND SYNDICATION AGENT),
THE LENDERS,
AND
LESCO, INC.;
LESCO SERVICES, INC.;
LESCO TECHNOLOGIES, LLC;
AND
AIM LAWN & GARDEN PRODUCTS, INC.;
(BORROWERS)
July 26, 2002
THIRD AMENDMENT TO REVOLVING CREDIT,
TERM LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
(the "Amendment") dated as of July 26, 2002, by and among LESCO, INC., a
corporation organized under the laws of the State of Ohio ("LESCO"), LESCO
SERVICES, INC., a corporation organized under the laws of the State of Ohio
("LSI"), LESCO TECHNOLOGIES, LLC, a limited liability company organized under
the laws of the State of Nevada ("Technologies"), and AIM LAWN & GARDEN
PRODUCTS, INC., a corporation organized under the laws of the State of Ohio
("AIM"), each a "Borrower" and collectively "Borrowers"), the financial
institutions which are a party hereto (collectively, the "Lenders" and
individually a "Lender"), PNC BANK, NATIONAL ASSOCIATION ("PNC"), as
administrative agent for Lenders (PNC, in such capacity, the "Agent"), and
JPMORGAN CHASE BANK ("JPMorgan Chase"), as syndication agent for the Lenders
(JPMorgan Chase, in such capacity, the "Syndication Agent").
WITNESSETH:
WHEREAS, the Borrowers, the Lenders, the Agent and the Syndication Agent
are parties to that certain Revolving Credit, Term Loan and Security Agreement
dated as of January 14, 2002, as amended by a First Amendment thereto dated as
of February 7, 2002, as further amended by a Second Amendment thereto dated as
of February 25, 2002 (collectively, the "Agreement").
WHEREAS, the parties hereto desire to amend the terms of the Agreement as
provided for herein.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. Definitions.
(a) Except as otherwise amended by this Amendment, defined terms used
herein shall have the meanings given to them in the Agreement.
(b) The following definition in Section 1.2 of the Agreement is hereby
amended and restated as follows:
"Earnings Before Interest and Taxes" shall mean for any period the
sum of (i) net income (or loss) of Borrowers on a consolidated basis for such
period (excluding extraordinary gains and losses AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE), plus (ii) all interest expense of Borrowers on a
consolidated basis for such period, plus (iii) all charges against income of
Borrowers on a consolidated basis for such period for federal, state and local
taxes.
(c) The following new definition is hereby inserted in Section 1.2 of
the Agreement in alphabetical order:
"LESCO Restructuring Charges" shall mean for the six months ended
June 30, 2002 either (i) reductions made by the Borrowers on the Borrowers'
books and records with respect to the book value of certain assets, or (ii)
charges incurred by the Borrower in connection with certain management and asset
restructuring of the Borrowers, provided however, such amounts do not exceed
either $23,351,000 in the aggregate, or the amounts set forth below for the
enumerated items:
reductions in value of inventory $9,608,000
reductions in value of fixed assets 7,266,000
reduction in value of intangibles 1,952,000
provision for continuing lease
obligations on closed plants 1,253,000
employee severance and related costs
(including $2,000,000 incurred to date) 2,410,000
other miscellaneous restructuring costs 862,000
------------
Total $23,351,000
2. Subsection 5.5(c) of the Agreement is hereby amended and restated in
its entirety as follows:
"(c) The consolidated and consolidating balance sheets of the
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of December 31, 2000, and the
related statements of income, changes in stockholder's equity, and changes in
cash flow for the period ended on such date, THE CONSOLIDATED BALANCE SHEET AND
CONSOLIDATED STATEMENTS being accompanied by reports thereon containing opinions
without qualification by independent certified public accountants, copies of
which have been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of the Borrowers at
such date and the results of their operations for such period. Except as set
forth in the Projections, since September 30, 2001, there has been no change in
the condition, financial or otherwise, of Borrowers as shown on the consolidated
balance sheet as of such date and no change in the aggregate value of machinery,
equipment and Real Property owned by Borrowers, except changes in the ordinary
course of business, none of which individually or in the aggregate has been
materially adverse."
3. Section 6.5 of the Agreement is hereby amended and restated in its
entirety as follows:
"6.5. Net Worth. Commencing on JUNE 30, 2002, and at all times thereafter,
Borrowers on a consolidated basis shall maintain a Net Worth in an amount not
less than $70,000,000. Commencing on DECEMBER 31, 2002, and on the last day of
each fiscal year thereafter, the minimum Net Worth requirement set forth above
shall be increased by an amount
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equal to fifty percent (50%) of consolidated net income of Borrowers on a
consolidated basis for each such fiscal year in which net income was earned (as
opposed to a net loss)."
4. Section 6.6 of the Agreement is hereby amended and restated in its
entirety as follows:
"6.6. Fixed Charge Coverage Ratio. Commencing with the fiscal quarter
ending June 30, 2002, and at the end of each fiscal quarter thereafter,
Borrowers on a consolidated basis shall maintain a Fixed Charge Coverage Ratio,
as calculated at the end of each fiscal quarter for the four fiscal quarters
then ended, of not less than 1.05 to 1.00. IN DETERMINING EARNINGS BEFORE
INTEREST AND TAXES, EBITDA, PROVISION FOR INCOME TAXES AND FIXED CHARGES FOR
PURPOSES OF CALCULATING THE FIXED CHARGE COVERAGE RATIO, THE LESCO RESTRUCTURING
CHARGES, TO THE EXTENT THEY ARE INCLUDED IN THE DETERMINATION OF EARNINGS BEFORE
INTEREST AND TAXES, EBITDA, PROVISION FOR INCOME TAXES AND FIXED CHARGES, SHALL
BE INCLUDED IN THE FISCAL QUARTER WHEN THE BORROWERS RECEIVE THE CASH INCOME OR
PAY THE CASH EXPENDITURE FOR SUCH ITEMS, RATHER THAN WHEN SUCH ITEMS ARE
RECORDED ON THE BOOKS AND RECORDS OF THE BORROWERS. THE LESCO RESTRUCTURING
CHARGES WILL NOT BE INCLUDED IN CALCULATING THE FIXED CHARGE COVERAGE RATIO FOR
THE FISCAL QUARTER ENDING JUNE 30, 2002."
5. Section 7.5 of the Agreement is hereby amended and restated in its
entirety as follows:
"7.5. Loans. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except (i)
with respect to the extension of commercial trade credit in connection with the
sale of Inventory in the ordinary course of its business, AND (ii) LOANS BY LSI
AND TECHNOLOGIES TO LESCO."
6. Section 7.6 of the Agreement is hereby amended and restated in its
entirety as follows:
"7.6. Capital Expenditures. Contract for, purchase or make any expenditure
or commitments for fixed or capital assets (including capitalized leases) which
in an aggregate amount for all Borrowers would exceed the following amounts in
any of the following fiscal years of the Borrowers:
Fiscal year ended December 31 Maximum capital expenditures
----------------------------- ----------------------------
2002 $ 7,000,000
2003 $ 15,000,000
2004 $ 11,000,000"
7. Section 7.7 of the Agreement is hereby amended and restated in its
entirety as follows:
"7.7. Dividends. Except for (i) non-cash dividends made in accordance with
the terms of any Borrower's incentive compensation plans, or (ii) DIVIDENDS MADE
BY LSI AND TECHNOLOGIES TO LESCO, declare, pay or make any dividend or
distribution on any shares of the
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common stock or preferred stock of any Borrower (other than dividends or
distributions payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other retirement of any common or preferred stock, or of any options to
purchase or acquire any such shares of common or preferred stock of any Borrower
except that so long as (a) a notice of termination with regard to this Agreement
shall not be outstanding, (b) no Event of Default or Default shall have
occurred, and (c) the purpose for such purchase, redemption or dividend shall be
as set forth in writing to Agent at least ten (10) days prior to such purchase,
redemption or dividend and such purchase, redemption or dividend shall in fact
be used for such purpose, Borrowers shall be permitted to pay dividends in
accordance with the provisions of each Borrower's Certificate of Incorporation
as in effect on the Closing Date, to any Borrower, provided, however, that after
giving effect to the payment of such dividends there shall not exist any Event
of Default or Default."
8. Section 7.8 of the Agreement is hereby amended and restated in its
entirety as follows:
"7.8. Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders; (ii) Indebtedness incurred for capital expenditures permitted under
Section 7.6 hereof; (iii) Indebtedness set forth on Schedule 7.8; (iv)
INDEBTEDNESS OF LESCO TO LSI AND TECHNOLOGIES, and (v) other unsecured
Indebtedness not in excess of $5,000,000 at any one time outstanding."
9. Section 7.11 of the Agreement is hereby amended and restated in its
entirety as follows:
"7.11 Leases. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property in the aggregate for all the Borrowers would exceed (i) $24,000,000 in
the fiscal year ended December 31, 2002, (ii) $25,000,000 in the fiscal year
ended December 31, 2003, or (iii) $26,000,000 in the fiscal year ended December
31, 2004."
10. Section 9.7 of the Agreement is hereby amended and restated in its
entirety as follows:
"9.7. Annual Financial Statements. Furnish Agent within ninety (90) days
after the end of each fiscal year of Borrowers, financial statements of
Borrowers on a consolidating and consolidated basis including, but not limited
to, statements of income and stockholders' equity and cash flow from the
beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and, WITH RESPECT TO THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED
STATEMENTS, reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and reasonably satisfactory to
Agent (the "Accountants"). The report of the Accountants shall be accompanied by
a statement of the Accountants certifying that (i) they have caused the Loan
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted an Event of Default or a
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Default under this Agreement or any related agreement or, if such information
came to their attention, specifying any such Default or Event of Default, its
nature, when it occurred and whether it is continuing, and such report shall
contain or have appended thereto calculations which set forth Borrowers'
compliance with the requirements or restrictions imposed by Sections 6.5, 6.6,
6.7, 7.6 and 7.11 hereof. In addition, the reports shall be accompanied by a
certificate of each Borrower's Chief Financial Officer which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by such Borrower with respect to such
event, and such certificate shall have appended thereto calculations which set
forth Borrowers' compliance with the requirements or restrictions imposed by
Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof."
11. Amendment Fee. The Borrowers shall pay or cause to be paid (i) to
the Agent for the account of each Lender which has executed and delivered to the
Agent this Amendment on or before 5:00 p.m. Pittsburgh time on July 26, 2002, a
fee (the "Amendment Fee") in the amount of $243,712, payable to each such Lender
ratably based upon its Commitment Percentage and the Commitment Percentages of
all the Lenders which execute and deliver this Amendment in the time period
provided above, and (ii) all other costs and expenses accrued through the date
hereof and the costs and expenses of the Agent including, without limitation,
reasonable fees of the Agent's counsel in connection with this Amendment.
12. Force and Effect. Each Lender and each Borrower reconfirms and
ratifies the Agreement and all Other Documents executed in connection therewith
except to the extent any such documents are expressly modified by this
Amendment, and each Borrower confirms that all such documents have remained in
full force and effect since the date of their execution.
13. Governing Law. This Amendment shall be deemed to be a contract under
the laws of the State of Ohio and for all purposes shall be governed by and
construed and enforced in accordance with the internal laws of the State of Ohio
without regard to its conflict of laws principles.
14. Counterparts; Effective Date. This Amendment may be signed by
telecopy or original in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Amendment shall become effective as of the date first above
written upon its execution and delivery by the Borrowers and the Required
Lenders.
[SIGNATURE PAGES FOLLOW]
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[SIGNATURE PAGE 1 OF 7 TO THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this instrument under seal
as of the day and year first above written.
LESCO, INC.
By:/s/ Jeffrey L. Rutherford (SEAL)
Name:___________________________________________
Title:Sr. Vice President, Chief Financial Officer
LESCO SERVICES, INC.
By: /s/ Patricia W. Pribisko (SEAL)
Name:___________________________________________
Title: Vice President & Secretary
LESCO TECHNOLOGIES, LLC
By /s/ Patricia W. Pribisko, its Manager
By:____________________________(SEAL)
Name:___________________________________________
Title: Vice President & Secretary
AIM LAWN & GARDEN PRODUCTS, INC.
By: /s/ Patricia W. Pribisko (SEAL)
Name:___________________________________________
Title: Vice President & Secretary
[SIGNATURE PAGE 2 OF 7 TO THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION, as a Lender
and as Administrative Agent
By: /s/ James M. Steffy
Name:________________________________
Title Vice President
[SIGNATURE PAGE 3 OF 7 TO THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
JPMORGAN CHASE BANK, as a Lender and as
Syndication Agent
By: /s/ John M Hariaczyi
Name:________________________________
Title: Vice President
[SIGNATURE PAGE 4 OF 7 TO THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
COMERICA BANK
By: /s/ Timothy C. Griffin
Name: ___________________________
Title: Vice President
[SIGNATURE PAGE 5 OF 7 TO THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Kerina Graves
Name: ___________________________
Title: Vice President
[SIGNATURE PAGE 6 OF 7 TO THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Linda Skinner
Name: ___________________________
Title: Vice President
[SIGNATURE PAGE 7 OF 7 TO THIRD AMENDMENT TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT]
LASALLE BUSINESS CREDIT, INC.
By: /s/ Scott R. Busch
Name: ___________________________
Title: First Vice President