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EXHIBIT 10.1
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT AND WAIVER
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this "Amendment") is made as of the 21st day of May, 1999,
by and between KEYBANK NATIONAL ASSOCIATION, a national banking association and
formerly known as Society National Bank ("Lender"), and ASSOCIATED MATERIALS
INCORPORATED, a Delaware corporation ("Borrower").
WITNESSETH THAT:
WHEREAS, the Lender and the Borrower entered into a Second
Amended and Restated Loan and Security Agreement dated as of April 2, 1996, as
amended by the First Amendment to Second Amended and Restated Loan and Security
Agreement and Waiver dated as of January 27, 1998, and the Second Amendment to
Second Amended and Restated Loan and Security Agreement and Waiver dated as of
September 8, 1998 (collectively, the "Loan Agreement"); and
WHEREAS, the parties desire to amend the Loan Agreement as set
forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Effect of Amendment; Definitions.
Effective as of the date of this Amendment, the Loan Agreement
shall be and hereby is amended as provided in Section 2 hereof. Except as
expressly amended in Section 2 hereof, the Loan Agreement shall continue in full
force and effect in accordance with its respective provisions on the date
hereof. As used in the Loan Agreement, the terms "this Agreement", "herein",
"hereinafter", "hereto", "hereof", and words of similar import shall, unless the
context otherwise requires, mean the Loan Agreement as amended and modified by
this Amendment. Capitalized terms that are not otherwise defined herein have the
meanings ascribed to such terms in the Loan Agreement.
2. Amendments.
(A) Section 2.2 of the Loan Agreement shall be amended by
deleting the first two paragraphs thereof and substituting in lieu thereof the
following:
"2.2. Interest Rate.
Through December 31, 1999, Borrower shall pay to Lender
interest on the outstanding principal balance of all Revolving
Loans and on the principal amount of all other Liabilities
which are outstanding at a rate per annum equal to (i) the
Prime Rate or (ii) upon an election by Borrower in accordance
with Section 2.11, the LIBOR Rate plus one and one-quarter
percent (1-1/4%).
On and after January 1, 2000, all Advances outstanding under
this Agreement shall bear interest at a rate per annum equal
to the Prime Rate in effect from time to time, or upon
election by Borrower in accordance with Section 2.11, the
LIBOR Rate, in each case plus the Applicable Margin set forth
below that corresponds to the Leverage Ratio (as
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hereinafter defined) as of the last day of the immediately
preceding March 31 or September 30. As used herein, "Leverage
Ratio" means the Total Funded Debt (as defined in Section
10.15(D) of this Agreement) as of the date of determination
divided by the Consolidated EBITDA determined for the four
most recently completed fiscal quarters of Borrower preceding
the date of determination.
APPLICABLE APPLICABLE APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR UNUSED LETTER OF
LEVEL LEVERAGE RATIO PRIME RATE LIBOR RATE FACILITY FEE CREDIT FEE
----- ------------------- ---------- ---------- ------------ -----------
1 > 2.75 25% 2.00% .25% 1.50%
----- ------------------- ---------- ---------- ------------ -----------
2 > 2.50 and <= 2.75 0% 1.75% .25% 1.50%
----- ------------------- ---------- ---------- ------------ -----------
3 > 2.25 and <= 2.50 0% 1.50% .25% 1.50%
----- ------------------- ---------- ---------- ------------ -----------
4 > 1.50 and <= 2.25 0% 1.25% .25% 1.25%
----- ------------------- ---------- ---------- ------------ -----------
5 <= 1.50 0% 1.00% .20% 1.125%
----- ------------------- ---------- ---------- ------------ -----------
(B) Section 2.3 of the Loan Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"2.3. Termination.
The Revolving Loan Facility, Term Loan Advance
Facility and LC Facility and Lender's obligations with respect
thereto shall be in effect until May 31, 2002 ("Initial
Term"). Upon the effective date of termination of the
Revolving Loan Facility and LC Facility, all of the
Liabilities shall become immediately due and payable without
notice or demand. Upon termination of this Agreement and the
Ancillary Agreements, satisfaction of Borrower's obligations
hereunder and payment in full of the Liabilities, Lender shall
comply with Section 12.17."
(C) Section 2.4(A) of the Loan Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"(A) Revolving Loan Facility, Term Loan Advance Facility and
LC Facility.
Borrower may terminate the Revolving Loan Facility, Term Loan
Advance Facility and LC Facility in whole, but not in part
(except for partial terminations pursuant to repayment or
refinancing in accordance with the proviso to this sentence),
at any time prior to the end of the Initial Term by paying to
Lender upon such termination the then outstanding principal,
accrued interest, other charges, and other Liabilities owing
under the terms of this Agreement, including, without
limitation, any accrued and unpaid amounts due pursuant to
Sections 2.5, 2.6, and 2.8 of this Agreement and in addition
to such amounts, as liquidated damages for Lender's loss of
the benefit of its bargain, an amount equal to (a) one percent
(1.0%) of the Total Credit Facility in effect on the date of
termination if such termination occurs on or prior to May 31,
2001, and (b) one-half of one percent (0.5%) of the Total
Credit Facility in effect on the date of termination if such
termination occurs after May 31, 2001, but on or prior to the
expiration of the Initial Term; provided, however, that (i)
such liquidated damages shall not be payable if the
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Total Credit Facility is repaid or refinanced in whole or in
part within sixty (60) days of the receipt of proceeds from an
initial public offering of the capital stock (other than
preferred stock) of Borrower and (ii) the Total Credit
Facility may be partially terminated, but only on a permanent
basis, in integral multiples of $1,000,000 to an amount not
less that $40,000,000 without the payment of such liquidated
damages in connection therewith and only upon thirty (30) days
prior written notice to Lender. Such amounts shall also be
payable by Borrower upon termination of the Total Credit
Facility and a demand for repayment by Lender upon the
occurrence of a Default as provided in this Agreement."
(D) Section 2.5 of the Loan Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"2.5. Unused Facility Fee.
Borrower shall pay to Lender an unused facility fee equal to
Applicable Unused Facility Fee (as hereinafter defined) per
annum of the amount by which the Total Credit Facility minus
the principal amount of the Term Loan Advance exceeds the sum
of the average daily outstanding Letter of Credit Reserve and
the average daily outstanding principal amount of the
Revolving Loans. As used herein, "Applicable Unused Facility
Fee" or "unused facility fee" means the Applicable Unused
Facility Fee set forth in the table in Section 2.2 of this
Agreement that corresponds to the Leverage Ratio as of the
last day of the immediately preceding March 31 or September
30; provided, however, through December 31, 1999, the
Applicable Unused Facility Fee shall be equal to one-quarter
of one percent (1/4%). The Applicable Unused Facility Fee
shall accrue daily, beginning on the date of Borrower's
execution of this Agreement, shall be calculated on the basis
of a three hundred sixty (360) day year for the actual number
of days elapsed and shall be payable monthly, in arrears, on
the first calendar day of each month following the date hereof
and upon the Revolving Loan Termination Date."
(E) Section 2.6 of the Loan Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"2.6. LC Fee.
For each Letter of Credit, Borrower shall pay to Lender a per
annum fee equal to the Applicable Letter of Credit Fee (the
"LC Fee") set forth in the table in Section 2.2 of this
Agreement that corresponds to the Leverage Ratio as of the
last day of the immediately preceding March 31 or September 30
(provided, however, through December 31, 1999, the LC Fee
shall be equal to one and one-quarter percent (1-1/4%)) on (i)
with respect to Letters of Credit other than the Bond Letter
of Credit, the sum, without duplication, of the undrawn face
amount of such Letter of Credit and the outstanding amount of
any time draft presented to Lender by the beneficiary of such
Letter of Credit and (ii) with respect to the Bond Letter of
Credit, the principal amount of the Bonds plus interest
accrued thereon for 51 days at 16% per annum, plus in either
case an amount equal to Lender's customary processing fee
charged to applicants of letters of credit of the same type
and amount as such Letter of Credit, as is applicable at the
time of Borrower's request for such Letter of Credit. The LC
Fee for each Letter of Credit shall be payable on the date of
issuance and on each yearly anniversary or renewal thereof
based upon the Letters of Credit outstanding on each such
date. On the date when such Letter of Credit is amended,
reissued or renewed, or in any event as soon thereafter as
possible, the LC Fee
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for each such Letter of Credit shall be calculated by Lender
and Borrower shall pay to Lender any shortfall and Lender
shall pay to Borrower any overpayment of LC Fees paid by
Borrower at such time. The LC Fee shall be computed on the
basis of a three hundred sixty (360) day year for the actual
number of days elapsed."
(F) Section 2.8 of the Loan Agreement shall be amended by
inserting the following provision at the end of that Section:
"On the first day of each calendar quarter commencing on July
1, 1999, Borrower shall pay to Lender an administrative fee of
$2,500."
(G) Section 7.1 of the Loan Agreement shall be amended by
deleting the phrase "(iii) Equipment" therein and substituting in lieu thereof
"(iii) intentionally omitted".
(H) Section 10.4 of the Loan Agreement shall be amended by
deleting the first paragraph thereof and substituting in lieu thereof the
following:
"Borrower shall not directly or indirectly make, pay, declare
or permit any Restricted Junior Payment, except (i) purchases,
redemptions, acquisitions, or retirements of capital stock of
Borrower from Persons holding five percent (5%) or less of
such outstanding capital stock, if at the time of any such
purchase, redemption, acquisition, or retirement of capital
stock, and after giving effect thereto on a pro forma basis,
the conditions in (A), (B), and (C) below are met; and (ii)
dividend payments made with respect to Borrower's Capital
Stock (as defined in the Indenture) and purchases or
redemptions of Subordinated Notes if at the time of any such
dividend, purchase, or redemption, and after giving effect
thereto on a pro forma basis, the conditions in (A), (B), and
(C) below are met:"
(I) Section 10.15 of the Loan Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"10.15. Financial Covenants.
(A) Maintenance of Cash Inflows to Cash Outflows.
Borrower shall not permit its ratio of Cash Inflows to Cash
Outflows determined for the preceding twelve (12) month period at the end of
each calendar quarter commencing on April 1, 1999, and thereafter to be less
than 1.2 to 1.0.
(B) Maintenance of Adjusted Consolidated Net Worth.
Borrower shall not permit its Adjusted Consolidated Net Worth
at any time to be less than $114,343,000 (as of March 31, 1999) plus fifty
percent (50%) of all Consolidated Net Income if positive (each such Consolidated
Net Income calculated separately for each quarter and determined at the end of
each calendar quarter commencing June 30, 1999).
(C) Maintenance of Consolidated EBITDA to Interest Expense.
Through the twelve (12) month period ending September 30,
1996, Borrower shall not permit its ratio of Consolidated EBITDA to its total
consolidated interest expense determined at the end of each calendar quarter for
the preceding twelve (12) month period to be less than the ratio of 1.3 to 1.0.
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(D) Maintenance of Total Funded Debt to Consolidated EBITDA.
Borrower shall not at any time permit the ratio of Total
Funded Debt (as hereinafter defined) to Consolidated EBITDA determined for the
four most recently completed fiscal quarters of Borrower preceding the date of
determination to exceed the ratio of 3.0 to 1.0 (with such calculation reported
by Borrower to Lender each calendar quarter following the date hereof). As used
herein, "Total Funded Debt" means an amount equal to the Funded Indebtedness of
Borrower and its Subsidiaries on a consolidated basis plus the amount of all
contingent obligations of Borrower and its Subsidiaries under undrawn Letters of
Credit.
(E) Maintenance of Consolidated EBIT to Interest Expense.
Commencing with the twelve (12) month period ending June 30,
1999, and each calendar quarter thereafter, Borrower shall not permit its ratio
of Consolidated EBIT to its total consolidated interest expense determined at
the end of each calendar quarter for the preceding twelve (12) month period (the
"Interest Coverage Ratio") to be less than the ratio of 2.5 to 1.0."
3. Waiver. The Lender hereby waives the requirements of
Sections 8(J) and 10.5 of the Credit Agreement solely as such requirements apply
to prohibit the creation by Borrower of AMI Management Company, a Delaware
business trust, as a Subsidiary of Borrower or the existence of that Subsidiary,
so long as that Subsidiary conducts a financial and strategic management
business for Borrower, and so long as Borrower covenants and agrees that it will
cause that Subsidiary to execute and deliver to the Lender a Guaranty Agreement,
in form and substance satisfactory to the Lender on or before August 15, 1999.
4. Representations and Warranties.
The Borrower hereby represents and warrants to the Lender as
follows:
(A) This Amendment has been executed and delivered by a duly
authorized officer of the Borrower and constitutes the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
its terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity.
(B) The execution, delivery and performance by the Borrower of
this Amendment and its performance of the Loan Agreement have been authorized by
all requisite corporate action and will not (1) violate (a) any order of any
court, or any rule, regulation or order of any other agency of government, (b)
the articles or certificate of incorporation, the bylaws or any other instrument
of corporate governance of the Borrower, or (c) any provision of any indenture,
agreement or other instrument to which the Borrower is a party, or by which the
Borrower or any of its properties or assets are or may be bound; (2) be in
conflict with, result in a breach of or constitute, alone or with due notice or
lapse of time or both, a default under any indenture, agreement or other
instrument referred to in (1)(c) above; or (3) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever, except
pursuant to the terms hereof.
5. Miscellaneous.
(A) This Amendment shall be construed in accordance with and
governed by the laws of the State of Ohio, without reference to principles of
conflict of laws. The Borrower agrees to pay to the Lender at the time this
Amendment is executed and delivered by the Lender an amendment fee in an
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aggregate amount equal to $62,500, and to pay on demand all costs and expenses
of the Lender, including reasonable attorneys' fees and expenses, in connection
with the preparation, execution and delivery of this Amendment.
(B) The execution, delivery and performance by the Lender of
this Amendment shall not constitute, or be deemed to be or construed as, a
waiver of any right, power or remedy of the Lender, or a waiver of any provision
of the Loan Agreement.
(C) This Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
(D) This Amendment shall become effective as of the date of
this Amendment.
IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed as of the day and year first above written.
ASSOCIATED MATERIALS INCORPORATED
By:
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Its:
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KEYBANK NATIONAL ASSOCIATION
By:
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Title:
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"WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE"
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