Exhibit (b)(2)
FIRST AMENDMENT TO REVOLVING CREDIT,
TERM LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY
AGREEMENT (this "Amendment") is made and entered into as of this 4th day of
April, 2003, by and among ACORN PRODUCTS, INC., a Delaware corporation
("PARENT"), UNIONTOOLS, INC., a Delaware corporation ("UNION"), (individually
and collectively, the "BORROWER"), CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company ("CAPITALSOURCE"), as administrative agent and collateral
agent for Lenders (in such capacities, the "AGENT"), and the Lenders.
RECITALS
A. WHEREAS, pursuant to the terms and subject to the conditions of that
certain Revolving Credit, Term Loan and Security Agreement, dated as of June 28,
2002 among Agent, the Lenders and Borrower (such Revolving Credit, Term Loan and
Security Agreement, as the same is hereby amended and may hereafter be amended
from time to time, being hereinafter referred to as the "LOAN AGREEMENT"), the
Borrower was provided a Term Loan in the amount of $12,500,000 and a Revolving
Loan Facility in an aggregate amount not to exceed $32,500,000;
B. WHEREAS, Borrower has requested Lenders to, among other things, (i)
provide a new term loan in the amount of $1,500,000 ("$1,500,000 TERM LOAN",
which shall be part of the Term Loan and be evidenced by a new Term Note) and
reduce the Facility Cap on the Revolving Facility by $1,500,000 and (ii) make
such other amendments to the Loan Agreement to provide for the "going private"
merger involving Parent in which approximately 91.2% of the shares of the Parent
will be contributed, pursuant to that certain Contribution Agreement between the
Parent and contributing stockholders, as amended (the "CONTRIBUTION AGREEMENT"),
to Acorn Merger Corporation ("AMC") and AMC will be merged into Parent (with
Parent being the surviving entity) (the "MERGER").
C. WHEREAS, in connection with the Merger, Parent will pay $3.50 per
share (or such other consideration as obtained by dissenting stockholders in the
Merger), in the exchange for approximately 450,000 shares of the Parent's common
stock held by stockholders other than AMC (the "STOCK REPURCHASES").
D. WHEREAS, in furtherance of the foregoing and to evidence the
agreements of the parties hereto in relation thereto the parties hereto desire
to amend the Loan Agreement as hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS TO LOAN AGREEMENT
The Loan Agreement is hereby amended as follows:
2.01 AMENDMENT TO RECITALS. Effective as of the date of this Amendment,
the second recital shall be amended by replacing "Thirty-Two Million Five
Hundred Thousand Dollars ($32,500,000)" with "Thirty-One Million Dollars
($31,000,000)" and replacing "Twelve Million Five Hundred Thousand Dollars
($12,500,000)" with "Fourteen Million Dollars ($14,000,000)."
2.02 AMENDMENT TO REPAYMENT OF TERM LOAN; MATURITY. Effective as of the
date of this Amendment, Section 2.9 shall be amended and restated as follows:
"2.9 REPAYMENT OF TERM LOAN; MATURITY.
Payment of principal (in addition to the interest
payments in Section 2.8) and all other amounts outstanding
under the Term Loan shall be made quarterly in arrears as
follows:
(a) $700,000 per calendar quarter shall be due and
payable on each of October 1, 2003, January 1, 2004, April 1,
2004 and July 1, 2004;
(b) $840,000 per calendar quarter shall be due and
payable on each of October 1, 2004, January 1, 2005, April 1,
2005 and July 1, 2005;
(c) $910,000 per calendar quarter shall be due and
payable on each of October 1, 2005, January 1, 2006, April 1,
2006 and July 1, 2006;
(d) $1,050,000 per calendar quarter shall be due and
payable on each of October 1, 2006, January 1, 2007 and April
1, 2007;
(e) all remaining outstanding amounts under the Term
Loan shall be due and payable in full on the last day of the
Term; and
(f) the unpaid principal of the Term Loan and all
other Obligations under the Term Loan shall be due and payable
in full, and the Term Notes shall mature, if not earlier in
accordance with this Agreement, on the Maturity Date."
2.03 FINANCIAL COVENANTS. Effective as of the date of this Amendment,
Paragraph 2 of Annex I and the definition of "Fixed Charges" set forth in Annex
I are hereby amended and restated to read as set forth on Annex I attached
hereto.
2.04 AMENDMENT OF DEFINITION. Effective as of the date of this
Amendment, the definition in Appendix A set forth below is hereby amended and
restated to read as set forth below:
"Facility Cap" shall mean $31,000,000, subject to adjustment
as provided in this Agreement.
2.05 LENDERS/COMMITMENTS. Effective as of the date of this Amendment,
Schedule A is hereby amended and restated to read as set forth on Schedule A
attached hereto.
2.06 ADJUSTED EBITDA ADD-BACKS. Effective as of the date of this
Amendment, Schedule A-1 is hereby amended and restated to read as set forth on
Schedule A-1 attached hereto.
2.07 DEFINITION OF GUARANTORS. Effective as of the date of this
Amendment, the definition of "Guarantor" contained in Exhibit A to the Loan
Agreement is hereby amended and restated as follows:
"Guarantor" shall mean, collectively and each individually,
McGuire-Nichols Company, Inc., and any other guarantors of the
Obligations or any part hereof.
ARTICLE III
CONDITIONS PRECEDENT AND OTHER AGREEMENTS
3.01 CONDITIONS TO EFFECTIVENESS OF SECTIONS 2.03, 2.06 AND 2.07. The
effectiveness of Sections 2.03, 2.06 and 2.07 to this Amendment is subject to
the satisfaction of the following conditions precedent in a manner satisfactory
to Agent, unless specifically waived in writing by Lenders:
(a) Agent shall have received each of the following, each in
form and substance satisfactory to Agent, in its sole discretion, and,
where applicable, each duly executed by each party thereto:
(i) This Amendment, duly executed by Borrower;
(ii) a general certificate of each Borrower attaching
(A) certified copies of the resolutions of the Board of
Directors of each Borrower authorizing the execution, delivery
and performance of this Amendment and any and all other Loan
Documents executed by each Borrower in connection herewith,
(B) any amendments to any Borrower's certificate of
incorporation, bylaws or other governing documents since the
Closing Date, and (C) a certificate of incumbency certified by
the secretary of each Borrower with specimen signatures of the
officers of the each Borrower who are authorized to sign such
documents, all in form and substance satisfactory to Agent;
and
(iii) All other documents Agent may request with
respect to any matter relevant to this Amendment or the
transactions contemplated hereby, including, without
limitation, all consents, approvals and agreements from such
third parties as are necessary or desirable with respect to
this Amendment and the Loan Documents executed in connection
herewith.
(b) The representations and warranties contained herein and in
the Loan Agreement and the other documents executed in connection with
the Loan Agreement (herein referred to
as "LOAN DOCUMENTS"), as each is amended hereby, shall be true and
correct as of the date hereof, as if made on the date hereof, except
for such representations and warranties as are by their express
terms limited to a specific date.
(c) No Default or Event of Default shall have occurred and be
continuing, unless such Default or Event of Default has been otherwise
specifically waived in writing by Lenders.
(d) Borrower shall pay (i) to Term Lenders a commitment fee
for the $1,500,000 Term Loan of $30,000, (iii) to CapitalSource an
amendment fee of $7,500 and (iii) to the Agent for the benefit of
Provident Bank an amendment fee of $12,500.
(e) All corporate 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 Lender.
3.02 CONDITIONS TO EFFECTIVENESS OF SECTIONS, 2.01, 2.02, 2.04 AND
2.05. The effectiveness of Sections 2.01, 2.02, 2.04 and 2.05 of this Amendment
is subject to the satisfaction of the following conditions precedent in a manner
satisfactory to Agent, unless specifically waived in writing by Lenders:
(a) Agent shall have received each of the following, each in
form and substance satisfactory to Agent, in its sole discretion, and,
where applicable, each duly executed by each party thereto:
(i) the documents, duly executed, evidencing all of
the transactions contemplated in connection with the Merger in
form and substance satisfactory to Agent;
(ii) a general certificate of each Borrower attaching
(A) certified copies of the resolutions of the Board of
Directors of each Borrower authorizing the execution, delivery
and performance of this Amendment and any and all other Loan
Documents executed by each Borrower in connection herewith,
(B) any amendments to any Borrower's certificate of
incorporation, bylaws or other governing documents since the
Closing Date, and (C) a certificate of incumbency certified by
the secretary of each Borrower with specimen signatures of the
officers of the each Borrower who are authorized to sign such
documents, all in form and substance satisfactory to Agent;
(iii) a Term Note duly executed by Borrower in the
original principal amount of $1,500,000 payable to
CapitalSource;
(iv) restated Revolving Notes duly executed by
Borrower in the aggregate original principal amount of
$21,000,000 payable to CapitalSource which shall be split into
denominations requested by CapitalSource;
(v) a Consent, Ratification and Release duly executed
by each Guarantor;
(vi) a legal opinion from Porter, Wright, Morris &
Arthur LLP; and
(vii) all other documents Agent may request with
respect to any matter relevant to this Amendment or the
transactions contemplated hereby, including, without
limitation, all consents, approvals and agreements from such
third parties as are necessary or desirable with respect to
this Amendment and the Loan Documents executed in connection
herewith.
(b) The representations and warranties contained herein and in
the Loan Agreement and the Loan Documents, as each is amended hereby,
shall be true and correct as of the date hereof, as if made on the date
hereof, except for such representations and warranties as are by their
express terms limited to a specific date.
(c) No Default or Event of Default shall have occurred and be
continuing, unless such Default or Event of Default has been otherwise
specifically waived in writing by Lenders.
(d) All corporate 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 Lender.
(e) The Merger shall have been consummated and be effective
pursuant to terms satisfactory to Agent.
3.03 OTHER AGREEMENTS. Parent agrees to provide the funds necessary to
pay the cash consideration for the Stock Repurchases to its Transfer Agent upon
the consummation of the Merger.
ARTICLE IV
LIMITED CONSENT
4.01 LIMITED CONSENTS. (a) Subject to the satisfaction of the
conditions precedent in Article III of this Amendment and to the other terms,
conditions and provisions of this Amendment, Agent and Lenders hereby consent to
the Stock Repurchases in connection with the Merger. Notwithstanding anything
contained in this Amendment, the consent letter relating to the Merger from
Agent and Lenders to Borrower dated February 21, 2003 (the "FEBRUARY CONSENT
LETTER") remains in full force and effect and is not superceded hereby.
(b) Subject to the satisfaction of the conditions precedent in
Article III of this Amendment and to the other terms, conditions and
provisions of this Amendment, Agent and Lenders hereby consent to the
payment of cash in lieu of fractional shares upon consummation of a
reserve stock split (the "Reserve Stock Split") following the Merger so
long as the payment of cash in lieu of fractional shares does not
exceed $2,000.
4.02 NO OTHER CONSENT OR WAIVER. Except as otherwise specifically
provided for in this Amendment, nothing contained herein shall be construed as a
consent or waiver by Agent or Lenders of any covenant or provision of the Loan
Agreement, the other Loan Documents, this Amendment , any other contract or
instrument among the Borrower, Agent and Lenders, or of any Default or Event of
Default under any of the foregoing, in each case whether arising before or after
the date hereof or as a result of performance hereunder or thereunder, and the
failure of Agent or Lenders at any time or times hereafter to require strict
performance by the Borrower of any provision thereof shall not
waive, affect or diminish any right of Agent or Lenders to thereafter demand
strict compliance therewith. This Amendment and the other Loan Documents
executed and delivered in connection herewith shall not preclude the future
exercise of any right, remedy, power, or privilege available to Agent and/or
Lenders whether under the Loan Agreement, the other Loan Documents, at law or
otherwise. This Amendment and the other Loan Documents executed and delivered in
connection herewith shall not constitute novations or satisfactions and accords
of the Loan Documents, but shall constitute amendments thereof.
ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
5.01 RATIFICATIONS. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and the other Loan Documents, and, except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Loan Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. The Borrower, the Agent and Lenders
agree that the Loan Agreement and the other Loan Documents, as amended hereby,
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms.
5.02 REPRESENTATIONS AND WARRANTIES. Each Borrower hereby represents
and warrants to Lenders that (a) it is duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (b) the
execution, delivery and performance by it of this Amendment and the other Loan
Documents executed and delivered in connection herewith are within its powers,
have been duly authorized, and do not contravene (i) its certificate of
incorporation, bylaws or other organizational documents or (ii) any applicable
law; (c) no consent, license, permit, approval or authorization of, or
registration, filing or declaration with any Governmental Authority or other
Person is required in connection with the execution, delivery, performance,
validity or enforceability of this Amendment and the other Loan Documents
executed and delivered in connection herewith by or against it; (d) this
Amendment and the other Loan Documents executed and delivered in connection
herewith constitute its legal, valid and binding obligations enforceable against
it in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity; (e) each of the Borrower's Board of Directors has
authorized the execution, delivery and performance of this Amendment and any and
all other Loan Documents executed and/or delivered in connection herewith; (f)
the representations and warranties contained in the Loan Agreement, as amended
hereby, and any other Loan Document are true and correct on and as of the date
hereof and on and as of the date of execution hereof as though made on and as of
each such date; (g) no Default or Event of Default under the Loan Agreement, as
amended hereby, has occurred and is continuing, unless such Default or Event of
Default has been specifically waived in writing by Lenders; (h) the Borrower is
in full compliance with all covenants and agreements contained in the Loan
Agreement and the other Loan Documents, as amended hereby; and (i) the Borrower
has not amended their Articles (or Certificates) of Incorporation or their
Bylaws or similar organizational documents since the date of the Loan Agreement,
except as otherwise disclosed to Agent.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in the Loan Agreement or any other Loan Document, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Agent and Lenders or any closing shall affect
the representations and warranties or the right of Agent and Lenders to rely
upon them.
6.02 REFERENCE TO LOAN AGREEMENT. Each of the Loan Agreement and the
other Loan Documents, and any and all other Loan Documents, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Loan Agreement, as amended hereby, are hereby
amended so that any reference in the Loan Agreement and such other Loan
Documents to the Loan Agreement shall mean a reference to the Loan Agreement, as
amended hereby.
6.03 EXPENSES OF AGENT AND LENDERS. Borrower shall pay all costs and
expenses incurred by Agent and Lenders or any of their affiliates, including,
without limitation, documentation and diligence fees and expenses, all search,
audit, appraisal, recording, professional and filing fees and expenses and all
other out-of-pocket charges and expenses (including, without limitation, UCC and
judgment and tax lien searches and UCC filings and fees for post-Closing UCC and
judgment and tax lien searches) and reasonable attorneys' fees and expenses, in
connection with entering into, negotiating, preparing, reviewing and executing
this Amendment and the other Loan Documents executed in connection herewith, and
all of the same shall be part of the Obligations. If Agent, any Lender or any of
their affiliates uses in-house counsel for any of the purposes set forth above,
Borrower expressly agrees that the Obligations include reasonable charges for
such work commensurate with the fees that would otherwise be charged by outside
legal counsel selected by such Person in its sole discretion for the work
performed.
6.04 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.
6.05 SUCCESSORS AND ASSIGNS. Borrower may not assign, delegate or
transfer this Amendment or any Loan Document delivered in connection herewith or
any of its rights or obligations thereunder. No rights are intended to be
created under this Amendment or any Loan Document delivered in connection
herewith for the benefit of any third party donee, creditor or incidental
beneficiary of Borrower or any Guarantor or any other Person other than Agent
and the Lenders. Nothing contained in this Amendment or any Loan Document
delivered in connection herewith shall be construed as a delegation to Agent or
Lenders of Borrower's or any Guarantor's duty of performance, including, without
limitation, any duties under any account or contract in which Agent, for the
ratable benefit of the Lenders, has a security interest or Lien. This Amendment
and the other Loan Documents delivered in connection herewith shall be binding
upon Borrower and its successors and assigns..
6.06 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument. This Amendment may be executed by facsimile transmission, which
facsimile signatures shall be considered original executed counterparts for
purposes of this Section 6.06, and each party to this Amendment agrees that it
will be bound by its
own facsimile signature and that it accepts the facsimile signature of each
other party to this Amendment.
6.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by
Agent or Lenders to or for any breach of or deviation from any covenant or
condition by Borrower shall be deemed a consent to or waiver of any other breach
of the same or any other covenant, condition or duty.
6.08 HEADINGS. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS SET FORTH IN THE CHOICE OF LAW PROVISIONS SET FORTH IN
THE LOAN AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE
PROVISIONS OF THE AGREEMENT.
6.10 FINAL AGREEMENT. THE LOAN AGREEMENT, THE FEBRUARY CONSENT LETTER
AND THE OTHER LOAN DOCUMENTS, EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE
EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE
THIS AMENDMENT IS EXECUTED. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
AMENDED HEREBY, 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. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR
AMENDMENT OF ANY PROVISION OF THIS AMENDMENT OR OTHER LOAN DOCUMENT DELIVERED IN
CONNECTION HEREWITH SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY
BORROWER AND LENDER.
6.11 RELEASE BY THE BORROWER. THE BORROWER HEREBY ACKNOWLEDGES THAT
THEY HAVE NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, 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 REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE
RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT OR LENDERS. THE BORROWER
HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT AND
LENDERS AND THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE "RELEASED PARTIES"), FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER,
KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST THE RELEASED PARTIES, IF ANY, AND IRRESPECTIVE OF WHETHER
ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES
UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.
[The Remainder of this Page Intentionally Left Blank]
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
BORROWER:
ACORN PRODUCTS, INC.
By: /s/ John G. Jacob
------------------------------------------
Name: John G. Jacob
------------------------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
UNIONTOOLS, INC.
By: /s/ John G. Jacob
------------------------------------------
Name: John G. Jacob
------------------------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
AGENT:
CAPITALSOURCE FINANCE LLC
By: /s/ Joseph Turitz
------------------------------------------
Name: Joseph Turitz
------------------------------------------
Title: Associate General Counsel
------------------------------------------
LENDERS:
CAPITALSOURCE FINANCE LLC
By: /s/ Joseph Turitz
------------------------------------------
Name: Joseph Turitz
------------------------------------------
Title: Associate General Counsel
------------------------------------------
THE PROVIDENT BANK
By: /s/ Thomas J. Flecher
------------------------------------------
Name: Thomas J. Flecher
------------------------------------------
Title: Vice President
------------------------------------------
ANNEX I
FINANCIAL COVENANTS
"2) MINIMUM ADJUSTED EBITDA
As measured on each of the following Covenant Test Dates for the Test
Periods then ending, Adjusted EBITDA for the applicable Test Period shall not be
less than the following:
------------------------------------------------
ACCOUNTING MINIMUM ADJUSTED
QUARTER ENDED EBITDA
(ON OR ABOUT)
------------------------------------------------
June 30, 2002 $ 9,500,000
September 30, 2002 9,500,000
December 31, 2002 9,500,000
------------------------------------------------
March 31, 2003 9,000,000
June 30, 2003 9,000,000
September 30, 2003 9,000,000
December 31, 2003 9,500,000
------------------------------------------------
March 31, 2004 9,500,000
June 30, 2004 9,500,000
September 30, 2004 9,500,000
December 31, 2004 10,000,000
------------------------------------------------
March 31, 2005 10,000,000
June 30, 2005 10,000,000
September 30, 2005 10,000,000
December 31, 2005 11,000,000
------------------------------------------------
March 31, 2006 11,000,000
June 30, 2006 11,000,000
September 30, 2006 11,000,000
December 31, 2006 12,000,000
March 31, 2007 12,000,000
------------------------------------------------
The above minimum Adjusted EBITDA levels shall be reduced by an amount equal to
20% of the amount of any prepayment of the Term Loan pursuant to Section 2.12
for the Test Period in which such prepayment occurs and each Test Period
thereafter, which prepayment results from cash equity contributed to and
retained by Borrower within such Test Period."
""Fixed Charges" shall mean, the sum of the following for Borrower, on
a consolidated basis: (a) Total Debt Service, (b) dividends paid, and (c) cash
paid for stock repurchases, other than (i) the Stock Purchases of Parent in
connection with the "going private" merger (the "MERGER") between Parent and
Acorn Merger Corporation (ii) other stock repurchases made in accordance with
the consent letter from Agent and Lenders to Borrower dated December 27, 2002
and (iii) cash paid in lieu of fractional shares pursuant to a 40 for 1 reverse
stock split to be consummated following the Merger."
SCHEDULE A
Lenders/Commitments
REVOLVING LENDERS REVOLVING COMMITMENT
- ----------------- --------------------
CAPITALSOURCE FINANCE LLC $21,000,000
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
THE PROVIDENT BANK $10,000,000
One East Fourth Street, 216A
Cincinnati, Ohio 45202
- -------------------------------------------------------------------------------
TOTAL: $31,000,000
===============================================================================
TERM LENDERS TERM LOAN
- ------------ ---------
CAPITALSOURCE FINANCE LLC $14,000,000
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
- -------------------------------------------------------------------------------
TOTAL: $14,000,000
===============================================================================
SCHEDULE A-1
Adjusted EBITDA Add-Backs
1. Expenses related to the relocation of the Columbus, OH Distribution
Center of up to $2,600,000 incurred during fiscal year 2002.
2. Expenses related to the capital restructuring and sale of Borrower of
up to $1,900,000 incurred during the period from May 1, 2002 until
December 31, 2002.
3. Expenses related to customer buybacks of up to $500,000 for each fiscal
year.
4. Management incentive expenses of up to $750,000 for fiscal year 2002.
5.
-------------------------------------------------------------------------------------------------
HISTORICAL ADJUSTMENTS TO EBITDA Q3FY01 Q4FY01 Q1FY01 APR-02
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Post Retirement Medical (1,350) - - -
-------------------------------------------------------------------------------------------------
Workers Comp - Prior Yrs 300 200 - -
-------------------------------------------------------------------------------------------------
Mgmt Incentive - Restr Stk and Comp - 312 579 -
-------------------------------------------------------------------------------------------------
Sale/Recapitalization Exp - 539 - 104
-------------------------------------------------------------------------------------------------
Payless Preference Claim - 300 - -
-------------------------------------------------------------------------------------------------
Distribution Center - - - 53
-------------------------------------------------------------------------------------------------
Customer Buyback - - 362 -
-------------------------------------------------------------------------------------------------
Loss on Asset Disposal - - - 32
-------------------------------------------------------------------------------------------------
Assembly Project - - - -
-------------------------------------------------------------------------------------------------
Total Adjustments (1,050) 1,351 941 189
=================================================================================================
6. Expenses related to the relocation of the Borrower's tool assembly
operations from Frankfort, New York to Louisville, Kentucky of up to
$2,150,000.
7. Amounts of up to $2,000,000 expended in the Stock Repurchases and
expenses related thereto pursuant to the short form merger to be
consummated on or about April 30, 2003.
8. Other historical adjustments to EBITDA through the Term, in each case
subject solely to the approval of Agent.
* All of such expenses must be supported by documentation sufficient to Agent
in its Permitted Discretion.