Exhibit 10.28
AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
(this "AMENDMENT"), dated as of March 31, 1999, is entered into by and among:
(1) BMC WEST CORPORATION, a Delaware corporation ("BORROWER");
(2) Each of the financial institutions from time to time
listed in SCHEDULE I TO THE CREDIT AGREEMENT referred to in RECITAL A
below (collectively, the "BANKS"); and
(3) WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association organized and operating under the laws of the United
States, as agent for the Banks (in such capacity, "AGENT").
RECITALS
A. Borrower, the Banks and Agent are parties to a Third Amended and
Restated Credit Agreement, effective as of September 30, 1998 (the "CREDIT
AGREEMENT").
B. Borrower has requested the Banks and Agent to amend the Credit
Agreement in certain respects.
C. The Banks and Agent are willing so to amend the Credit Agreement
upon the terms and subject to the conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, the Banks and Agent hereby agree as follows:
1. DEFINITIONS, INTERPRETATION. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Credit Agreement, as amended by
this Amendment. The rules of construction set forth in SECTION I OF THE CREDIT
AGREEMENT shall, to the extent not inconsistent with the terms of this
Amendment, apply to this Amendment and are hereby incorporated by reference.
2. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction of the
conditions set forth in PARAGRAPH 5 below, the Credit Agreement is hereby
amended as follows:
(a) PARAGRAPH 2.02 is hereby amended as follows:
(i) SUBPARAGRAPH 2.02(d)(i) is hereby amended to
substitute "Commitment On and After Scheduled Reduction Date" for
"Proportionate Share On and After Scheduled Reduction Date."
(ii) A new SUBPARAGRAPH 2.02(e) is hereby added as
follows:
"(e) ADMISSION OF ADDITIONAL BANKS. At the request of
Borrower, one or more banks or financial institutions may become
parties to this Agreement as Banks (each an "ADDITIONAL BANK") with
Commitments which do not exceed Twenty-Five Million Dollars
($25,000,000) in the aggregate; PROVIDED, that (i) Agent and the
Required Banks consent to each Additional Bank becoming a party to this
Agreement and (ii) each Additional Bank agrees to be bound by this
Agreement as it would have been if it had been an original Bank party
hereto and agrees to perform in accordance with their terms all of the
obligations which are required under the Credit Documents to be
performed by it as a Bank. On the date any Additional Bank becomes a
party to this Agreement, the Total Commitment shall be increased by the
Commitment of such Additional Bank and the Proportionate Shares of the
other Banks shall be ratably reduced. If on the date any Additional
Bank becomes a party to this Agreement any other Bank has Revolving
Loans and Drawing Payments outstanding which are greater than such
other Bank's Proportionate Share of all Revolving Loans and Drawing
Payments outstanding on such date, such other Bank shall assign to such
Additional Bank and such Additional Bank shall assume and pay to such
other Bank on such date the principal amount by which such other Bank's
Revolving Loans and Drawing Payments are greater than its Proportionate
Share of the aggregate principal amount of all Revolving Loans and
Drawing Payments outstanding on such date and accrued interest on the
amount of such Revolving Loans and Drawing Payments assigned and
assumed shall be allocated between such other Bank and such Additional
Bank as of the date such payment was made by such Additional Bank."
(b) SUBPARAGRAPH 5.01(i) is hereby amended to read in
full as follows:
"(i) NET WORTH. Borrower will maintain, at all times,
a Net Worth in an amount of not less than the sum of (i) 80% of
$180,250,000 (Borrower's Net Worth as of December 31, 1998) PLUS (ii)
seventy-five percent (75%) of the net cash proceeds of the issuance of
all capital stock of Borrower and all capital contributions from Parent
(whether or not stock is issued in connection with such contribution)
from and after December 31, 1998 through and including the date
immediately preceding the date on which such Net Worth is to be
determined, PLUS (iii) fifty percent (50%) of the cumulative Net
Incomes for all fiscal quarters from and after December 31, 1998
through and including the fiscal quarter immediately preceding the date
on which such Net Worth is to be determined; PROVIDED, HOWEVER, that in
calculating any amount under the
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preceding CLAUSE (III), any fiscal quarter for which Net Income was
negative shall be excluded."
(c) PARAGRAPH 8.05 of the Credit Agreement is hereby
amended as follows:
(i) The second and third sentences of SUBPARAGRAPH 8.05(c) are
hereby amended in their entirety as follows:
"Upon such execution, delivery, acceptance and recording of each
Assignment and Assumption Agreement, from and after the Assignment
Effective Date determined pursuant to such Assignment and Assumption
Agreement, (A) each Assignee Bank thereunder shall be a Bank hereunder
with a Commitment as set forth on ATTACHMENT 1 TO SUCH ASSIGNMENT AND
ASSUMPTION AGREEMENT and shall have the rights, duties and obligations
of such a Bank under this Agreement and the other Credit Documents, and
(B) the Assignor Bank thereunder shall be a Bank with a Commitment as
set forth on ATTACHMENT 1 TO SUCH ASSIGNMENT AND ASSUMPTION AGREEMENT,
or, if the Commitment of the Assignor Bank has been reduced to $0, the
Assignor Bank shall cease to be a Bank; PROVIDED, HOWEVER, that each
Assignor Bank shall nevertheless be entitled to the benefits of any
provision of this Agreement which by its terms survives termination of
this Agreement with respect to matters occurring before the Assignment
Effective Date. Each Assignment and Assumption Agreement shall be
deemed to amend SCHEDULE I to the extent, and only to the extent,
necessary to reflect the addition of each Assignee Bank, the deletion
of each Assignor Bank which reduces its Commitment to $0 and the
resulting adjustment of Commitments arising from the purchase by each
Assignee Bank of all or a portion of the rights and obligation of an
Assignor Bank under this Agreement and the other Credit Documents."
(ii) SUBPARAGRAPH 8.05(d) is hereby amended to add "and the
Commitments" after "the Proportionate Shares" where such phrase appears
in the first sentence.
(iii) SUBPARAGRAPH 8.05(e) is hereby amended to add "and
Commitments" after "Proportionate Shares" where such phrase appears in
the second sentence.
(d) SCHEDULE I to the Credit Agreement is hereby amended by
deleting the columns opposite each Bank's name entitled "Proportionate Share
Before Scheduled Reduction Date" and "Proportionate Share On and After Scheduled
Reduction Date" and substituting the following:
COMMITMENT BEFORE SCHEDULED COMMITMENT ON AND AFTER SCHEDULED
BANK REDUCTION DATE REDUCTION DATE
- ---- ---------------------------- ---------------------------------
Wells Fargo Bank, National Association $35,000,000 $25,000,000
U.S. Bank National Association $35,000,000 $25,000,000
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KeyBank National Association $30,000,000 $20,000,000
(e) SCHEDULE II to the Credit Agreement is hereby amended by
changing the definitions of the terms "APPLICABLE MARGIN," "COMMITMENT,"
"COMMITMENT MARGIN," "PROPORTIONATE SHARE," "SCHEDULED REDUCTION DATE" and
"TOTAL COMMITMENT" set forth therein to read in their entirety as follows:
"APPLICABLE MARGIN" shall mean for any Interest
Period on any Revolving LIBOR Loan or for any Revolving Base Rate Loan,
the per annum rate determined in accordance with the following
schedule:
APPLICABLE
MARGIN APPLICABLE MARGIN
REVOLVING REVOLVING
EBITDA RATIO LIBOR LOAN BASE RATE LOAN
------------ ----------- -----------------
1. less than 2.00 to 1.00 1.000% 0%
2. 2.00 to 1.00 to 2.75 to 1.250% 0.250%
1.00
3. 2.76 to 1.00 to 3.00 to 1.625% 0.625%
1.00
4. 3.01 to 1.00 to 3.49 to 2.000% 1.000%
1.00
5. 3.50 to 1.00 or greater 2.250% 1.250%
The EBITDA Ratio shall be calculated quarterly on a rolling four
quarters basis based upon Borrower's quarterly consolidated financial
statements delivered in accordance with SUBPARAGRAPH 5.01(c)(ii) of
this Agreement. Once the EBITDA Ratio has been determined, the
Applicable Margin corresponding to such EBITDA Ratio as set forth above
shall apply from and including the third (3rd) Business Day following
the delivery of the applicable quarterly financial statements from
which such EBITDA Ratio has been determined to but excluding the third
(3rd) Business Day following the delivery of the next quarterly
financial statements under SUBPARAGRAPH 5.01(c)(ii) of this Agreement
at which time such new EBITDA Ratio and related Applicable Margin shall
be determined and apply. With respect to any Revolving LIBOR Loan, the
Applicable Margin in effect (pursuant to the preceding sentence) on the
first day of any Interest Period shall apply during the entire Interest
Period. With respect to any Revolving Base Rate Loan, the Applicable
Margin shall change from time to time as determined pursuant to the
second preceding sentence.
"COMMITMENT" shall mean, with respect to each Bank,
(i) before the Scheduled Reduction Date, the Dollar amount set forth
under the caption "Commitment Before Scheduled Reduction Date" opposite
such Bank's name on SCHEDULE I, (ii) on or
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after the Scheduled Reduction Date, the Dollar amount set forth under
the caption "Commitment On and After the Scheduled Reduction Date"
opposite such Bank's name on SCHEDULE I, and (iii) if such Commitment
is changed, such Dollar amount as may be set forth for such Bank in the
Register.
"COMMITMENT MARGIN" shall mean, for any period, a per
annum rate determined in accordance with the following schedule:
Commitment
EBITDA RATIO MARGIN
------------ ----------
1. less than 2.00 to 1.00 0.250%
2. 2.00 to 1.00 0.250%
to 2.75 to 1.00
3. 2.76 to 1.00 0.375%
to 3.00 to 1.00
4. greater than 3.00 to 1.00 0.500%
The EBITDA Ratio shall be calculated quarterly on a rolling four
quarters basis based upon Borrower's quarterly consolidated financial
statements delivered in accordance with SUBPARAGRAPH 5.01(c)(ii). Once
the EBITDA Ratio has been determined, the Commitment Margin
corresponding to such EBITDA Ratio as set forth above shall apply from
and including the third (3rd) Business Day following the delivery of
the applicable financial statements from which such EBITDA Ratio has
been determined to but excluding the third (3rd) Business Day following
the delivery of the next quarterly financial statements under
SUBPARAGRAPH 5.01(c)(ii) at which time such new EBITDA Ratio and
related Applicable Margin shall be determined and apply.
"PROPORTIONATE SHARE" shall mean, with respect to
any Bank:
(i) At any time prior to the termination of the
Commitments, the ratio (expressed as a percentage rounded to the eighth
digit to the right of the decimal point) of (x) such Bank's Commitment
at such time TO (y) the Total Commitment at such time; and
(ii) At any time after the termination of the
Commitments, the ratio (expressed as a percentage rounded to the eighth
digit to the right of the decimal point) of (x) the aggregate principal
amount of all of such Bank's Loans outstanding at such time TO (y) the
aggregate principal amount of all Banks' Loans outstanding at such
time.
"SCHEDULED REDUCTION DATE" shall mean August 31,
1999.
"TOTAL COMMITMENT" shall have the meaning given to
that term in SUBPARAGRAPH 2.02(a), subject to any reduction pursuant to
SUBPARAGRAPHS 2.02(c) AND 2.02(d) or any increase pursuant to
SUBPARAGRAPH 2.02(e).
(f) EXHIBIT F to the Credit Agreement is hereby amended as
follows:
(i) PARAGRAPH 2 is hereby amended to substitute "Commitment"
for
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"Proportionate Share" where such term appears in the last sentence
thereof.
(ii) ATTACHMENT 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT is
hereby amended to substitute "Commitments" for "Proportionate Shares"
where such term appears in the caption.
3. CONSENT TO DISTRIBUTION. Subject to the satisfaction of the
conditions set forth in PARAGRAPH 5 below, the Banks hereby consent to (i) the
distribution by Borrower to Parent of inventory and equipment of Borrower
located at the Borrower's facility in Phoenix, Arizona and cash in the amount
necessary to enable Parent to acquire forty-nine percent (49%) of Knipp Brothers
Industries LLC ("KBI") notwithstanding SUBPARAGRAPH 5.02(e) of the Credit
Agreement; and (ii) the loan (the "Knipp Loan") by Borrower to Parent in an
amount not to exceed $5,000,000 notwithstanding SUBPARAGRAPH 5.02(f) of the
Credit Agreement PROVIDED, that (x) the total amount of such cash distribution
does not exceed $33,000,000, the fair value of such inventory and equipment
distribution does not exceed $3,000,000 and the principal amount Knipp Loan does
not exceed $5,000,000, (y) the Knipp Loan is evidenced by an unsubordinated note
of Parent bearing interest at market rates and payable in full on or before
October 31, 1999 and (z) proceeds of the Knipp Loan are used by Parent solely to
provide working capital funding to KBI.
4. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Agent and the Banks that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendments set forth
in PARAGRAPH 2 above, the following are true and correct on the Effective Date
(as defined below):
(a) The representations and warranties of Borrower set forth
in PARAGRAPH 4.01 OF THE CREDIT AGREEMENT and in the other Credit
Documents are true and correct as of the Effective Date;
(b) No Event of Default or Default has occurred and is
continuing;
(c) The aggregate principal amount of the Outstanding Credit
on the Effective Date does not exceed the Borrowing Base; and
(d) Each of the Credit Documents remains in full force and
effect in accordance with its terms.
(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
PARAGRAPH 4 that, on and after the date hereof, such term includes this
Amendment.)
5. EFFECTIVE DATE. The amendments effected by PARAGRAPH 2 above and the
consent given by PARAGRAPH 3 above shall become effective as of March 31, 1999
(the "EFFECTIVE DATE"), subject to receipt by Agent and the Banks of the
following before any distribution is made by Borrower to Parent in connection
with the acquisition by Parent of an interest in Knipp Brothers
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Industries LLC, each in form and substance satisfactory to Agent, the Banks and
their respective counsel:
(a) This Amendment duly executed by Borrower, each Bank and
Agent;
(b) Amendment No.1 to Continuing Guaranty, dated the Effective
Date and duly executed by Parent, each Bank and Agent;
(c) A Certificate of the Secretary of Borrower, certifying
that (i) the Certificate of Incorporation and Bylaws of Borrower, in
the form delivered to Agent in connection with the Credit Agreement,
are in full force and effect and have not been amended, supplemented,
revoked or repealed since September 30, 1998, and (ii) that attached
thereto are true and correct copies of resolutions duly adopted by the
Board of Directors of Borrower and continuing in effect, which
authorize the execution, delivery and performance by Borrower of this
Amendment and the consummation of the transactions contemplated hereby;
(d) Amendment fees paid to Agent for the benefit of each Bank
in an amount equal to 0.25% of the amount by which such Bank's
Commitment would have been reduced on March 31, 1999, if the Scheduled
Reduction Date had not been extended as provided in PARAGRAPH 2 of this
Amendment; and
(e) Such other evidence as Agent or any Bank may reasonably
request to establish the accuracy and completeness of the
representations and warranties and the compliance with the terms and
conditions contained in this Amendment and the other Credit Documents.
6. EFFECT OF THIS AMENDMENT. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Banks or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.
7. MISCELLANEOUS.
(a) COUNTERPARTS. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) HEADINGS. Headings in this Amendment are for convenience
of reference only and are not part of the substance hereof.
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(c) GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
(d) MARGINS. The parties acknowledge that as of December 31,
1998, the Borrower's EBITDA Ratio was between 2.00 to 1.00 and 2.75 to
1.00 and that therefore the Applicable Margin for Revolving LIBOR Loans
is 1.25%, the Applicable Margin for Revolving Base Rate Loans is 0.25%
and the Commitment Margin is 0.25%.
[Remainder of page left blank.]
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IN WITNESS WHEREOF, Borrower, Agent and the Banks have caused this
Amendment to be executed as of the day and year first above written.
BORROWER: BMC WEST CORPORATION
By: /s/ ELLIS C. GOEBEL
------------------------------------------
Name: ELLIS C. GOEBEL
Title: Senior VP - Finance & Treasurer
AGENT: WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Agent
By: /s/ ALFRED ARTIS AND DONALD A. HARTMAN
------------------------------------------
Name: DONALD A. HARTMANN
Title: Senior Vice President
Name: ALFRED ARTIS
Title: Vice President
BANKS: WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ ALFRED ARTIS AND DONALD A. HARTMAN
------------------------------------------
Name: DONALD A. HARTMANN
Title: Senior Vice President
Name: ALFRED ARTIS
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/ KEVIN P. MCBRIDE
------------------------------------------
Name: KEVIN P. MCBRIDE
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/ JAMES W. HENKEN
------------------------------------------
Name: JAMES W. HENKEN
Title: Vice President
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EXHIBIT A
AMENDMENT NO. 1 TO
CONTINUING GUARANTY
THIS AMENDMENT NO. 1 TO CONTINUING GUARANTY (this "AMENDMENT"), dated
as of March 31, 1999, is entered into by and among:
(1) Building Materials Holding Corporation, a Delaware
corporation ("GUARANTOR");
(2) Each of the financial institutions from time to time
listed in SCHEDULE I TO THE CREDIT AGREEMENT referred to in RECITAL A
below (collectively, the "BANKS"); and
(3) WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association organized and operating under the laws of the United
States, as agent for the Banks (in such capacity, "AGENT").
RECITALS
A. BMC West Corporation, a Delaware corporation and a wholly owned
subsidiary of Guarantor ("Borrower"), the Banks and Agent are parties to a Third
Amended and Restated Credit Agreement, effective as of September 30, 1998, as
amended by Amendment No.1 thereto dated the date hereof (the "CREDIT AGREEMENT
AMENDMENT"), such Credit Agreement, as so amended being referred to as the
"CREDIT AGREEMENT".
B. Borrower and Guarantor have requested the Banks and Agent to amend
the Credit Agreement in certain respects and to consent to certain transactions
as described in the Credit Agreement Amendment
C. The Banks and Agent are willing so to amend the Credit Agreement and
to grant such consent provided that the Guaranty is amended upon the terms set
forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor, the Banks and Agent hereby agree as follows:
1. DEFINITIONS, INTERPRETATION. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the guaranty as amended by this
Amendment.
2. AMENDMENTS TO GUARANTY. The guaranty is hereby amended as follows:
(a) Section 6(c) of the Guaranty is deleted.
(b) New Sections 6(c), (d), (e), (f) and (g) are added to the
Guaranty as follows:
(c) LIENS. Guarantor shall not, nor shall it permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on or
with respect to its assets or property of any character, whether now
owned or hereafter acquired, except for the following permitted liens:
(i) Liens relating to precautionary Uniform Commercial Code filings
under true leases of equipment, PROVIDED, HOWEVER, that such Liens
shall not be extended to any other property of Guarantor; (ii)
carriers', warehousemen's, mechanics', landlords', materialmen's,
suppliers', tax, assessment, governmental and other like Liens and
charges arising in the ordinary course of business securing obligations
that are not incurred in connection with the obtaining of any advance
or credit and which are not overdue, or are being contested in good
faith by appropriate proceedings; provided that provision is made to
the satisfaction of Agent and the Banks for the eventual payment
thereof in the event it is found that such is payable by Guarantor or
any Subsidiary; (iii) Liens arising in connection with worker's
compensation, unemployment insurance, appeal and release bonds and
progress payments under government contracts; (iv) judgment Liens with
respect to which execution has been stayed or the payment of which is
covered in full by insurance; (v) encumbrances or claims affecting any
real property owned or leased by Guarantor or any Subsidiary which do
not alone or in the aggregate materially adversely affect the use or
value of such property (on a parcel by parcel basis); and (vi) with
respect to Liens incurred by Borrower, Permitted Liens.
(d) DIVIDENDS. Guarantor shall not, directly or
indirectly, make or declare any dividend in cash, securities (other
than Guarantor's securities) or any other form of property on, or other
payment or distribution on account of, any shares of any of Guarantor's
or any Subsidiary's Equity Securities except that Guarantor may pay
dividends on Guarantor's common stock:
(i) In each fiscal year of Guarantor in an
amount not to exceed twenty-five percent (25%) of Guarantor's
Net Income (after giving effect to any item of extraordinary
losses) for the prior fiscal year, provided that at the time
of declaration no Default or Event of Default has occurred and
is continuing. In calculating the amount of dividends which
Guarantor is permitted to pay in any fiscal year pursuant to
this clause (i), (A) Net Income for the prior fiscal year
shall be based on the financial statements for such fiscal
year delivered to Agent and the Banks pursuant to Section
6(a)(ii) of the guaranty and (B) if the Net Income for the
prior fiscal year as determined under clause (A) is negative,
no dividends shall be permitted during the current fiscal
year.
(ii) If, immediately after giving effect
thereto, the aggregate amounts of all dividends pursuant to
this Section 6(d) subsequent to
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November 19, 1992, would not exceed the sum of $2 million,
PLUS 50% of the net cash proceeds received by the Guarantor on
account of any Equity Securities issued by Guarantor
subsequent to December 31, 1992, PLUS 50% of Cumulative
Consolidated Net Income or MINUS 100% of Cumulative
Consolidated Net Loss, as the case may be, subsequent to
December 31, 1992 (provided that such net income or net loss
shall exclude the cumulative prior years' effect of any
accounting changes required by generally accepted accounting
principles that have a non-cash effect).
(iii) For purposes of this Section 6(d), the
amount of any dividends payable in property shall be deemed to
be the fair market value of such property as determined in
good faith by the Board of Directors of Guarantor.
(iv) Notwithstanding the foregoing,
Guarantor shall not pay dividends which are payable more than
60 days after the date of declaration thereof.
(v) In calculating the amount of dividends
permitted hereunder, Guarantor shall include any amounts paid
to repurchase or redeem common stock of Guarantor as permitted
under Section 6(f).
(e) INVESTMENTS. Guarantor shall not, nor shall it
permit any Subsidiary to, make or permit to remain outstanding any
advances or loans or extensions of credit to, purchase or own any
stocks, bonds, notes, debentures or other securities of, make any
contribution of capital to or otherwise invest in, any Person
(including, without limitation, any Subsidiary), or acquire by purchase
of stock or by purchase of assets all or any substantial division or
portion of the assets and business of any Person, except (i)
investments in, and deposits with, commercial banks organized under the
laws of the United States or a state thereof having capital of at least
One Hundred Million Dollars ($100,000,000); (ii) investments in short
term marketable obligations of the United States or of any state
thereof or of any agency or instrumentality of the United States or any
state thereof; (iii) investments in open market commercial paper given
a rating of at least "A1" or "P1" or higher by a national credit agency
and maturing not more than one year from the creation thereof; (iv)
current advances to suppliers in the ordinary course of Guarantor's or
such Subsidiary's business; (v) endorsements of negotiable instruments
in the ordinary course of business; (vi) partnership or joint venture
interests permitted by Section 6(g) of the guaranty; (vii) deposits
with commercial banks other than those described in CLAUSE (I) provided
that no deposit exceeds at any time an amount equal to One Hundred
Thousand Dollars ($100,000); PROVIDED, that, in each case described in
CLAUSES (I) THROUGH (vii), such investment does not create or have the
effect of creating or acquiring any Subsidiary; (viii) Investments in
businesses directly related to the building supply industry, and if any
such Investment is for all or substantially all of the business or
assets of any Person, such acquisition shall have been approved by the
board of directors of such Person and, if required, the shareholders of
such Person and, if such Investment would exceed Fifteen Million
Dollars ($15,000,000), including any Debt
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assumed or for which the assets acquired are subject to Liens, such
acquisition shall have been approved by the Required Banks, and (z)
Parent shall have given the Agent a written description of the
Investment to be made with the loan proceeds prior to receiving such
proceeds; and (ix) with respect to Investments made by Borrower and its
subsidiaries, Investments permitted by the Credit Agreement.
(f) STOCK. Neither Guarantor nor any Subsidiary shall
redeem, purchase, retire or otherwise acquire for value any shares of
any class of capital stock of Guarantor or any Subsidiary or any
warrant, right or option pertaining thereto or other security
convertible into any of the foregoing except repurchases or redemptions
of common stock of Guarantor provided that (A) the amount of all such
repurchases or redemptions, together with all amounts paid in dividends
in each fiscal year, shall not exceed the limitations on dividends set
forth in Section 6(d), (B) the amount of any repurchase or redemption
payable in property shall be deemed to be the fair market value of such
property as determined in good faith by the Board of Directors of
Guarantor, and (C) Guarantor shall not make any repurchase which is
payable more than 60 days after the date of declaration thereof.
(g) PARTNERSHIPS. Neither Guarantor nor any
Subsidiary shall be a general or limited partner in any partnership or
a joint venturer in any joint venture, provided that Guarantor or a
subsidiary may become such a partner or joint venturer so long as (i)
the aggregate Investments in all such partnerships or ventures does not
exceed $5,000,000 (excluding the Investment in Knipp Brothers
Industries LLC ("KBI")); (ii) the liability (including any contingent
liability, whether arising by contract, tort, operation of law or
otherwise) of Guarantor or such subsidiary arising from entering into
or participating in such partnerships or joint ventures is limited
under all circumstances to not more than an aggregate of $5,000,000 and
prior to entering into such partnership or joint venture arrangement
(other than the Investment in KBI), Guarantor provides Agent and Banks
an opinion of counsel satisfactory to Agent and Banks to the effect
that Guarantor's liability is so limited; and (iii) the principal
business of such partnership or joint venture is directly related to
the building supply business.
(c) A new Section 14 is added to the Guaranty to read as follows:
14. DEFINITIONS.
(a) "CONSOLIDATED NET INCOME (NET LOSS)" shall mean the amount
of net income (loss) of the Guarantor and its consolidated Subsidiaries
determined in accordance with GAAP, excluding (a) any net income (loss)
of a Subsidiary for any period during which it was not a consolidated
Subsidiary, or (b) any net income (loss) of any businesses, properties,
or assets acquired or disposed of (by way of merger, consolidation,
purchase, sale or otherwise) by Guarantor or any consolidated
Subsidiary for any period prior to the acquisition thereof or
subsequent to the disposition thereof.
(b) "CUMULATIVE CONSOLIDATED NET INCOME" shall mean the
excess, if any, of:
(i) the sum of (A) Consolidated Net Income, if any,
for each
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completed fiscal year of Guarantor commencing on or after
December 31, 1992 and (B) Consolidated Net income, if any, for
any completed month ending after the end of the most recently
completed fiscal year of Guarantor; OVER
(ii) the sum of (a) Consolidated Net Loss, if any,
for each completed fiscal year of Guarantor commencing on or
after December 31, 1992 and (B) Consolidated Net Loss, if any,
for any completed month ending after the end of the most
recently completed fiscal year of Guarantor.
(c) "CUMULATIVE CONSOLIDATED NET LOSS" shall mean the excess,
if any, of:
(i) the sum of (A) Consolidated Net Loss, if any, for
each completed fiscal year of Guarantor commencing on or after
December 31, 1992 and (B) Consolidated Net Loss, if any, for
any completed month ending after the end of the most recently
completed fiscal year of Guarantor; OVER
(ii) the sum of (A) Consolidated Net Income, if any,
for each completed fiscal year of Guarantor commencing on or
after December 31, 1992 and (B) Consolidated Net Income, if
any, for any completed month ending after the end of the most
recently completed fiscal year of Guarantor.
(d) "DEBT" shall mean, WITH respect to Guarantor or any
Subsidiary, the aggregate amount of, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, but excluding preferred stock, (iii) all obligations of
such Person to pay the deferred purchase price of property or services,
(iv) all capitalized lease obligations of such Person, (v) all
obligations or liabilities secured by a Lien on any asset of such
Person, whether or not such obligation or liability is assumed, (vi)
all obligations or liabilities of others guaranteed by such Person;
(vii) all obligations of Guarantor or any Subsidiary in respect of any
letter of credit, bankers' acceptance or other similar credit
facilities, to the extent not otherwise included in Debt or which
consists of accounts payable in the ordinary course of business; and
(viii) any other obligations or liabilities which are required by GAAP
to be shown as debt on the balance sheet of such Person. Unless
otherwise indicated, the term "Debt" shall include all Debt of
Guarantor and its Subsidiaries.
(e) "NET INCOME" shall mean, for any period, the consolidated
gross revenues of Guarantor and its Subsidiaries, less all expenses and
other proper charges for such period, all as determined in accordance
with GAAP; PROVIDED, HOWEVER, that in determining Net Income of
Guarantor and its Subsidiaries, there shall not be included in gross
revenues any of the following items: (i) any extraordinary items; (ii)
if a corporation shall have become a Subsidiary, any earnings of such
corporation prior to the date it shall have become a Subsidiary or any
portion of the net income of a Subsidiary which for any reason is
available for the payment of dividends to Guarantor or another
Subsidiary; (iii) if Guarantor or a Subsidiary shall have acquired the
assets and business of any Person or any substantial part of the assets
and business of any Person, any earnings properly attributable to such
assets and business or part thereof prior to the date
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of such acquisition; (iv) any earnings of, and dividends payable to,
Guarantor or a Subsidiary in currencies which at the time are blocked
against conversion into Dollars; (v) any restoration to income of any
contingency reserve, except to the extent that provision for such
reserve was made out of income accrued during such period; (vi) any
deferred credit or amortization thereof from the acquisition of any
properties or assets of any Person; (vii) any gain during such period
arising from (A) the sale, exchange or other disposition of capital
assets (such term to include all fixed assets, whether tangible or
intangible, and all securities) to the extent the aggregate gains
from such transactions exceed losses during such period from such
transactions, (B) any reappraisal, revaluation or write-up of assets
subsequent to Guarantor's fiscal year ended December 31, 1994,
(C) the acquisition of any securities of Guarantor or any Subsidiary or
(D) the termination or any Plan; and (viii) the proceeds of any life
insurance policy, provided that there shall not be excluded from Net
Income by reason of this CLAUSE (viii) (A) net gains resulting from the
sale of capital assets (other than any Facility referred to below) to
the extent that such gains are treated in accordance with GAAP and the
Guarantor's usual practice prior to the date hereof as ordinary income,
or (B) net gains resulting from the sale of building materials outlets,
door shops or other operating sites or other real estate of the
Guarantor or any Subsidiaries (collectively, "FACILITIES") to the
extent that the amount of such gains resulting from the sale of any one
Facility shall not exceed $1,000,000 and the aggregate amount of such
gains from all sales of Facilities in any period of twelve months shall
not exceed $2,000,000.
(f) "SUBSIDIARY" shall mean any corporation at least the
majority of whose securities having ordinary voting power for the
election of directors (other than securities having such power only by
reason of the happening of a contingency) are at the time owned by
Guarantor and/or one or more Subsidiaries.
3. GUARANTOR CONSENT. Guarantor hereby consents to the Credit Agreement
Amendment. Guarantor expressly agrees that the term "Indebtedness" as used in
the Guaranty shall include the additional obligations owing by Guarantor to
Agent or the Banks under the Credit Agreement as amended by the Credit Agreement
Amendment and the rights, duties, and obligations of Guarantor, the Banks or
Agent under the Guaranty remain in full force and effect notwithstanding the
amendments contained in Credit Agreement. Guarantor's consent to the Credit
Agreement Amendment shall not be construed (i) to have been required by the
terms of the Guaranty or any other document, instrument or agreement relating
thereto or (ii) to require the consent of Guarantor in connection with any
future amendment of the Credit Agreement or any other Credit Document.
4. CONSENT TO Distribution. Subject to the satisfaction of the
conditions set forth in PARAGRAPH 5 of the Credit Agreement Amendment, the Banks
hereby consent to (i) Guarantor's acquisition, directly or indirectly, of
forty-nine percent (49%) of KBI and the loan (the "Knipp Loan") by Guarantor to
KBI in an amount not to exceed $5,000,000 notwithstanding Section 6(e) and
Section 6(g) of the Guaranty; PROVIDED, that (y) the total amount of such
Investment and Knipp Loan does not exceed Thirty-Three Million Dollars
($33,000,000), (z) the Knipp Loan is evidenced by an unsubordinated note of KBI
bearing interest at market rates and payable in full on or before October 31,
1999.
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5. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants to Agent and the Banks that after giving effect to the consent set
forth in Section 4 above, the following are true and correct:
(a) The representations and warranties of Guarantor set forth
in Section 5 of the Guaranty are true and correct as of the date
hereof;
(b) The Guaranty remains in full force and effect in
accordance with its terms.
6. EFFECT OF THIS AMENDMENT. On and after the Effective date, as
defined on the Credit Agreement Amendment each reference in the Guaranty and the
other Credit Documents shall mean the Guaranty as amended by the Amendment. The
Guaranty shall remain in full force and effect and is hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Banks or Agent, nor constitute a waiver of any
provision of the Guaranty or any other Credit Document.
7. MISCELLANEOUS.
(a) COUNTERPARTS. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) HEADINGS. Headings in this Amendment are for convenience
of reference only and are not part of the substance hereof.
(c) GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
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IN WITNESS WHEREOF, Guarantor, Agent and the Banks have caused this
Amendment to be executed as of the day and year first above written.
GUARANTOR: BMC WEST CORPORATION
By: /s/ ELLIS C. GOEBEL
--------------------------------------------
Name: ELLIS C. GOEBEL
Title: Senior VP - Finance & Treasurer
AGENT: WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Agent
By: /s/ ALFRED ARTIS AND DONALD A. HARTMAN
--------------------------------------------
Name: DONALD A. HARTMANN
Title: Senior Vice President
Name: ALFRED ARTIS
Title: Vice President
BANKS: WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ ALFRED ARTIS AND DONALD A. HARTMAN
--------------------------------------------
Name: DONALD A. HARTMANN
Title: Senior Vice President
Name: ALFRED ARTIS
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/ KEVIN P. MCBRIDE
--------------------------------------------
Name: KEVIN P. MCBRIDE
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/ JAMES W. HENKEN
--------------------------------------------
Name: JAMES W. HENKEN
Title: Vice President
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