Exhibit 10.12
EXECUTION COPY
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WAIVER AND SEVENTH AMENDMENT
WAIVER AND SEVENTH AMENDMENT (this "Seventh Amendment"), dated as of
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November 21, 1996, to the Credit Agreement, dated as of March 19, 1992 (as
amended prior to the date hereof and as the same is being and may be further
amended, supplemented or otherwise modified from time to time, the "Credit
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Agreement"), among PAMECO CORPORATION (formerly named MLX Refrigeration & Air
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Conditioning Group, Inc.), a Delaware corporation (the "Company"), the lenders
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parties thereto (together with their respective successors and permitted
assigns, the "Lenders") and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
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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 Lenders agree to waive
compliance with certain provisions of the Credit Agreement and amend certain
provisions of the Credit Agreement upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the Lenders have agreed to such waivers and amendments 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. (a) Terms defined in the Credit Agreement are
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used herein with the meanings set forth in the Credit Agreement unless otherwise
defined herein.
(b) For the avoidance of doubt, the term "Accounts" as used in the
Credit Agreement shall include such accounts receivable of Xxx Xxxxxx
Industries, Inc. acquired by the Company pursuant to the Asset Purchase
Agreement dated November 1, 1996 (the "Asset Purchase Agreement") by and between
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Xxx Xxxxxx Industries, Inc. and the Company.
2. Waiver of Sections 6.3 and 6.5. The Agent and the Banks hereby
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waive compliance with the provisions of Sections 6.3 and 6.5 of the Credit
Agreement to the extent and only to the extent necessary to permit the Company
to purchase the S.E. USA Business (as defined in the Asset Purchase Agreement)
in accordance with the terms of the Asset Purchase Agreement.
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3. Amendment of Section 1.1. Section 1.1 of the Credit Agreement is
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hereby amended by:
(a) deleting therefrom the definition of the term "Borrowing Base" in its
entirety and by substituting therefor the following:
'"Borrowing Base" shall mean, at any date, the amount equal to
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85% of Eligible Receivables and 50% of Eligible Inventory; provided,
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however, that in no event shall (a) the portion of the Borrowing Base
which is based upon Eligible Inventory exceed $50,000,000 or (b) the
sum of the Loans and the Reimbursement Obligations (without
duplication of the Reimbursement Obligations deemed to have become
Loans) exceed the Borrowing Base and, provided, further, that the
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Borrowing Base on each date shall be reduced by the amount of
liabilities of the Company and its Subsidiaries in respect of (i)
audited assessments by taxing authorities for Charges then outstanding
for which the Company or the Subsidiary liable in respect thereof is
not maintaining adequate reserves, in the sole judgment of the Agent,
on its books in accordance with GAAP and (ii) claims by any
Governmental Authority against Holdings or the Company in respect of
any alternative minimum tax attributable to the consolidated group of
which the Acquired Companies were members prior to the Acquisition.
The Agent, at any and all times, shall be entitled to reduce any and
all of the percentages used in determining the Borrowing Base at any
time in its sole discretion with the consent of the Lenders.'
(c) deleting from the definition of "Termination Date" the date "April 29,
2001" and substituting therefor the date "November 21, 2001"; and
(c) adding thereto the following definitions in the proper alphabetical order:
"New Subordinated Bridge Note" shall mean the unsecured
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Subordinated Promissory Note, dated on or about November 25, 1996,
made by the Company to Terfin International Limited in a principal
amount of $7,500,000 bearing interest at an annual rate not to exceed
12.5% per year with a stated maturity of March 31, 1997 on terms
satisfactory to the Agent .
"New Subordinated Debt" shall mean the unsecured Indebtedness
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incurred pursuant to the New Subordinated Note, in the principal
amount not to exceed $20,000,000 bearing interest at an annual rate
not to exceed 13%.
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"New Subordinated Note" shall mean the New Subordinated Note,
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dated November 6, 1996, in the principal amount of $15,000,000 and
made by Holdings to Terfin International Limited and which is stated
to mature on December 31, 1996, as the same may be amended,
supplemented, renewed, restated, refinanced or replaced or otherwise
modified from time to time; provided that Indebtedness evidenced
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thereby (i) shall not (A) exceed $20,000,000 in aggregate principal
amount or (B) bear interest at an annual rate in excess of 13% and
(ii) shall be on terms satisfactory to the Agent.
"Supplemental Borrowing Base Certificate" shall mean a
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certificate substantially in the form of Exhibit M, delivered pursuant
to subsection 5.2(b).
4. Amendment of Section 2.1(a). Section 2.1(a) of the Credit
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Agreement is hereby amended by deleting therefrom the amount "$70,000,000" as it
appears in two places in such Section and substituting therefor the amount
"$100,000,000", and by deleting therefrom the amount of "$30,000,000" as it
appears and substituting therefor the amount "$50,000,000".
5. Amendment of Section 2.13. Section 2.13 of the Credit Agreement
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is hereby amended by deleting therefrom the date "April 29, 1996" as it appears
and substituting therefor the date "November 21, 1996".
6. Amendment of Section 5.2(b). Section 5.2(b) of the Credit
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Agreement is hereby amended by deleting therefrom clause (i) and substituting
therefor the following:
"(i) a Borrowing Base Certificate and, until notified in writing by
the Agent that such Supplemental Borrowing Base Certificate is no
longer required to be provided under this Section 5.2(b), a
Supplemental Borrowing Base Certificate, each of which certificates
shall be true and accurate as of the date thereof and".
7. Amendment of Section 5.13. Section 5.13 of the Credit
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Agreement is hereby amended by deleting from clause (c) of such section the
words "no less frequently than quarterly" and substituting therefor the words
"at the request of the Agent" .
8. Amendment of Section 6.1(b). Section 6.1(b) of the Credit
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Agreement is hereby amended by adding after the words "Subordinated Bridge
Notes" at the end thereof the words "and the New Subordinated Bridge Note".
9. Amendment of Section 6.1(c). Section 6.1(c) of the Credit
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Agreement is hereby amended by deleting therefrom the amount "$1,500,000" as it
appears and substituting therefor the amount "$3,000,000".
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10. Amendment of Section 6.4(b). Section 6.4(b) of the Credit
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Agreement is hereby amended by deleting therefrom the proviso in its entirety
and by substituting therefor the following:
"provided that (i) any such payment is made no sooner than one
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Business Day prior to the date upon which Holdings files such return
or upon which estimated taxes are due or any extension for payment of
taxes expires and (ii) all such payments shall be made in accordance
with applicable law;".
11. Amendment of Section 6.4(d). Section 6.4(d) of the Credit
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Agreement is hereby amended by deleting that Section in its entirety and by
substituting therefor the following:
"(d) the Company may pay dividends to Holdings in order to pay (i)
interest on the Junior Subordinated Notes, (ii) dividends on the Holdings
Preferred Stock, (iii) principal on the Junior Subordinated Notes, (iv)
principal on the Subordinated Bridge Notes, (v) on the maturity date
thereof, principal and interest on the Subordinated Promissory Note, dated
February 28, 1995 by Holdings in favor of Xxxxx X. Xxxxx, in the original
principal amount of $43,449, (vi) on the maturity date thereof, principal
and interest on the Junior Subordinated Promissory Note, dated March 19,
1992 by Holdings in favor of Xxxxx X. Xxxxx, in the original principal
amount of $28,558 as amended to date, and (vii) on the maturity date
thereof, principal and interest on the New Subordinated Note; provided,
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that the aggregate amount of such payments for any fiscal year of the
Company, beginning with the fiscal year ended February 28, 1996, shall not
exceed (i) 75% of the Consolidated Net Income of Holdings for the
immediately preceding fiscal year (as reflected in the audited financial
statements required by subsection 5.1(a) of the Credit Agreement for such
prior fiscal year of the Company, which financial statements must have been
prepared in accordance with GAAP applied consistently throughout such
fiscal year and certified with an Unqualified Opinion by an accountant of
nationally recognized standing selected by the Company and acceptable to
the Agent) plus (ii) with respect to the immediately preceding fiscal year,
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any dividends permitted to be paid to Holdings pursuant to clause (i) of
this proviso but not paid in such immediately preceding fiscal year; and,
provided, further, that no such payments shall be made pursuant to this
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clause (d) when a Default or an Event of Default has occurred and is
continuing;"
12. Amendment of Section 6.7. Section 6.7 of the Credit Agreement is
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amended by deleting the word "and" at the end of clause (d) thereof and
inserting the following prior to the period at the end of clause (e):
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"; and (f) the sale of Receivables to Xxx Xxxxxx Industries, Inc. pursuant
to Section 2 of the Asset Purchase Agreement dated November 1, 1996 by and
between Xxx Xxxxxx Industries, Inc. and the Company"
13. Amendment of Section 6.23. Section 6.23 of the Credit Agreement
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is amended in its entirety to read as follows: "Intentionally omitted."
14. Amendment of Section 7(n). Section 7(n) of the Credit Agreement
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is amended in its entirety to read as follows: "Intentionally omitted."
15. Amendment of Section 7(aa). Section 7(aa) of the Credit
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Agreement is amended in its entirety to read as follows:
"Junior Subordinated Notes and New Subordinated Note. Holdings shall
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(i) amend the terms and provisions of the Junior Subordinated Notes or
repay the Junior Subordinated Debt, in whole or in part, prior to the
scheduled maturity thereof or (ii) amend the terms and provisions of the
New Subordinated Note or the Indebtedness evidenced thereby in a manner
inconsistent with the definition of the "New Subordinated Note" contained
in this Agreement or on terms (including, without limitation, maturity date
and applicable covenants) not otherwise acceptable to the Agent; or"
16. Amendment of Schedule I. Schedule I to the Credit Agreement is
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hereby amended by deleting the amount "$30,000,000" where it appears and
substituting therefor the amount "50,000,000".
17. Addition of Exhibit M. The Credit Agreement is hereby amended by
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adding thereto a new "Exhibit M" in the form of Annex A to this Seventh
Amendment.
18. New Promissory Note. On the Seventh Amendment Effective Date,
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the Company shall execute and delivery to the Agent a Promissory Note (the "New
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Promissory Note") substantially in the form of Annex B to this Seventh
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Amendment, in substitution and exchange for, but not in payment of, that certain
promissory note of the Company made in favor of GE Capital in the principal
amount of $70,000,000.
19. Company Agreement. The Company hereby agrees that it shall, as
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soon as practicable but in any event no later than 60 days after the date
hereof, cease to do business as "Xxx Xxxxxx" or "Xxx Xxxxxx Industries, Inc." at
all of the stores and locations where it is acquiring assets pursuant to the
Asset Purchase Agreement.
20. Conditions to Effectiveness. This Seventh Amendment shall become
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effective (the actual date of such
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effectiveness, the "Seventh Amendment Effective Date") as of the date first
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above written when:
(a) counterparts hereof shall have been duly executed and delivered by
each of the parties hereto and acknowledged by Pameco Holdings, Inc.;
(b) the Agent shall have received a Promissory Note, executed and
delivered by a duly authorized officer of the Company, which conforms to
the requirements of the Credit Agreement and Section 16 of this Seventh
Amendment;
(c) the Remittance Agreement dated as of November 21, 1996 among Xxx
Xxxxxx Industries, Inc., the Company and GE Capital shall have been duly
executed and delivered by each of the parties thereto;
(d) the Consent and Acknowledgment dated as of November 21, 1996 among GE
Capital, the Company, PSC and Redwood Receivables Corporation shall have
been duly executed and delivered by each of the parties thereto;
(e) the Agent shall have received, with a copy for each Lender, a
certificate of the Secretary or an Assistant Secretary of each Loan Party,
dated as of the Seventh 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, (A) the execution, delivery and performance of this Seventh
Amendment, the Consent and Acknowledgment attached hereto, the New
Promissory Note, the New Fee Letter (as defined below) and related matters
and (B) the granting by the Company of the pledges and security interests
granted by it in the S.E. USA Business, in each case certified by the
Secretary or an Assistant Secretary of such Loan Party as of the Seventh
Amendment Effective Date and (ii) as to the incumbency and specimen
signature of such Loan Party's officers executing this Seventh Amendment
and all other documents require 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.
(f) the Agent shall have received, with a copy for each Lender, true and
complete copies of the certificate of incorporation and by-laws of each
Loan Party, certified as of the Seventh Amendment Effective Date as
complete and correct copies thereof by the Secretary or an Assistant
Secretary of such Loan Party.
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(g) the Agent shall have received from the Company an executed
Supplemental Borrowing Base Certificate in the form of Annex A attached
hereto.
(h) the Agent shall have received with a counterpart for each Lender the
executed legal opinion of Xxxxxxxxxx & Xxxx. L.L.P., counsel to the Loan
Parties, in form and substance satisfactory to the Agent;
(i) the Company shall have filed such Uniform Commercial Code financing
statements as the Agent has requested in connection with the acquisition by
the Company of S.E. USA Business;
(j) substantially concurrent with the Seventh Amendment Effective Date,
the Company acquires the S.E. USA Business and enters into related
transactions on terms satisfactory to the Agent;
(k) GE Capital shall have received fees as required in the Fee Letter
dated November 21, 1996 from GE Capital and Redwood Receivables Corporation
to the Company and PSC (the "New Fee Letter"); and
(l) the Agent shall have received copies of all lien searches that it
deems appropriate, and none of such searches shall have revealed any
existing liens or encumbrances on the assets being acquired pursuant to the
Asset Purchase Agreement other than those liens or encumbrances that are
permitted under Section 6.2 of the Credit Agreement.
21. Company Representations. The Company represents and warrants
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that:
(a) each of this Seventh Amendment and the New Promissory Note has been
duly authorized, executed and delivered by the Company;
(b) each of this Seventh Amendment, and the Credit Agreement as amended by
this Seventh Amendment and the New Promissory Note constitutes the legal,
valid and binding obligation of the Company;
(c) each of the representations and warranties set forth in Section 3 of
the Credit Agreement are true and correct as of the Seventh 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 Seventh Amendment and references to the "Note" in the
Credit Agreement shall be deemed references to the New Promissory Note; and
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(d) after giving effect to this Seventh Amendment, there does not exist
any Default or Event of Default.
22. Continuing Effects. Except as expressly waived hereby, the
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Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms.
23. 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 (a) any
and all periodic field examinations relating to the Credit Agreement which have
been undertaken by General Electric Capital Corporation through and after the
date hereof and (b) the negotiation, preparation, execution, and delivery of
this Seventh Amendment, including the reasonable fees and expenses of counsel to
the Agent.
24. Counterparts. This Seventh Amendment may be executed on any
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number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
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25. GOVERNING LAW. THIS SEVENTH AMENDMENT SHALL BE GOVERNED BY, AND
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CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
PAMECO CORPORATION (formerly named
MLX Refrigeration & Air
Conditioning Group, Inc.)
By ______________________________
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
and as a Lender
By _____________________________
Title:
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ACKNOWLEDGEMENT AND CONSENT
The undersigned does hereby acknowledge and consent to the foregoing
Seventh Amendment. The undersigned does hereby confirm and agree that, after
giving effect to such Seventh Amendment, the Guarantees and other Collateral
Documents in favor of the Agent to which it is a party are and shall continue to
be in full force and effect and are hereby confirmed and ratified in all
respects.
PAMECO HOLDINGS, INC.
By _____________________________
Title:
ANNEX A
[to come]
ANNEX B
PROMISSORY NOTE
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$100,000,000./00/ New York, New York
March 19, 1992
Amended and Restated
November 21, 1996
FOR VALUE RECEIVED, the undersigned, PAMECO CORPORATION, a Delaware
corporation (the "Company"), hereby unconditionally promises to pay on the
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Termination Date, to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation (the "Lender") at the office of General Electric Capital
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Corporation, as agent for the lenders parties to the Credit Agreement referred
to below (in such capacity, the "Agent"), located at 000 Xxxx Xxxxx Xxxx,
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Xxxxxxxx, XX 00000, in lawful money of the United States of America and in
immediately available funds, the principal amount equal to the lesser of (a) ONE
HUNDRED MILLION AND 00/100 DOLLARS ($100,000,000.00) and (b) the aggregate
unpaid principal amount of all Loans made by the Lender to the undersigned
pursuant to subsection 2.1 of said Credit Agreement and all other Loans made or
deemed made by the Company under the Credit Agreement.
The undersigned further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time from the date
hereof at the applicable rate per annum as specified in subsection 2.4 of said
Credit Agreement until any such amount shall become due and payable (whether at
the stated maturity, by acceleration or otherwise), and thereafter on such
overdue amount at the rate per annum set forth in subsection 2.4(c) of said
Credit Agreement until paid in full (both before and after judgment). Interest
shall be due and payable in arrears on each Interest Payment Date, as such term
is defined in the Credit Agreement, provided that interest accruing pursuant to
subsection 2.4(c) shall be payable on demand.
The holder of this Note is authorized to record the date, Type and
amount of each Loan made by such Lender, each continuation thereof, each
conversion of all or a portion thereof to another Type, the date and amount of
each payment or prepayment of principal thereof and the length of each Interest
Period with respect thereto, and any such recordation shall constitute prima
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facie evidence of the accuracy of the information so recorded in the absence of
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manifest error, provided that failure by the Lender to make such recordation on
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this Note shall not affect any of the obligations of the Company under this Note
or said Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement,
dated as of March 19, 1992 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among the undersigned, the Lender, the
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other lenders and financial institutions parties thereto and General Electric
Capital Corporation, as Agent, is entitled to the benefits thereof, is secured
as provided therein and is subject to
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optional and mandatory prepayment in whole or in part as provided therein. Terms
used herein which are defined in the Credit Agreement shall have such defined
meanings unless otherwise defined herein or unless the context otherwise
requires.
This Note is being issued in replacement of and substitution for that
certain Amended and Restated Promissory Note dated May 1, 1996 by the Company to
the order of the Lender in the principal amount of $70,000,000, which was issued
in replacement of and substitution for that certain Promissory Note dated March
19, 1992 (the "Original Note") by the Company to the order of the Lender in the
original principal amount of $60,000,000. In addition to the indebtedness
evidenced by this Note, this Note shall also evidence any accrued and unpaid
interest on such preceding notes.
Upon the occurrence of any one or more of the Events of Default
specified in such Credit Agreement, all amounts then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable all as
provided therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
PAMECO CORPORATION
By_________________________
Title:
SCHEDULE I
TO NOTE
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BASE RATE LOANS AND CONVERSIONS
AND REPAYMENTS OF PRINCIPAL
Amount of Amount of
Base Rate Eurodollar
Loans Con- Loans
Amount of verted into Converted Amount of Unpaid
of Base Rate Eurodollar into Base Principal Principal Notation Made
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Date Interest Period Loans Loans Rate Loans Repaid Balance By
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SCHEDULE II
TO NOTE
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EURODOLLAR LOANS AND CONVERSIONS
AND REPAYMENTS OF PRINCIPAL
Amount of Amount of
Base Rate Eurodollar
Loans Con- Loans
Amount of verted into Converted Amount of Unpaid
of Base Rate Eurodollar into Base Principal Principal Notation Made
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Date Interest Period Loans Loans Rate Loans Repaid Balance By
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