EXHIBIT 4.3
Second Amendment to
Amended and Restated Credit Agreement
This Second Amendment to Amended and Restated Credit Agreement (this
"Second Amendment"), effective as of September 30, 2000, is entered into by and
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among U.S. Concrete, Inc., a Delaware corporation, (the "Company"), the
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Guarantors signatory hereto under the caption "Guarantors" (together with each
other Person who becomes a Guarantor, collectively, the "Guarantors"), the
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Lenders signatory hereto under the caption "Lenders" (together with each other
Person who becomes a Lender, collectively, the "Lenders") and The Chase
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Manhattan Bank, a New York banking corporation, successor-in-interest by merger
to Chase Bank of Texas, National Association, as administrative agent for the
other Lenders (in such capacity, together with any other Person who becomes the
administrative agent, the "Administrative Agent"), Bankers Trust Company, as
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syndication agent, First Union National Bank, as documentation agent, and Bank
One, Texas, NA, Branch Banking & Trust Company, Credit Lyonnais New York Branch
and The Bank of Nova Scotia, collectively as co-managing agents for the Lenders.
Preliminary Statement
Whereas, the Company, the Guarantors, the Lenders, the Administrative
Agent, the syndication agent, the documentation agent and the co-managing agents
have entered into that certain Amended and Restated Credit Agreement dated as of
February 9, 2000 (the "Original Credit Agreement") under the terms of which the
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Lenders agreed to make Revolving Credit Loans to the Company in an amount not
exceeding $200,000,000.00; and
Whereas, the Company, the Guarantors, the Lenders, the Administrative
Agent, the syndication agent, the documentation agent and the co-managing agents
have amended the Original Credit Agreement pursuant to that certain First
Amendment to Amended and Restated Credit Agreement dated as of July 7, 2000 (the
"First Amendment")(the Original Credit Agreement, as amended by the First
Amendment and as may be further amended, extended, supplemented or restated from
time to time, the "Credit Agreement"); and
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Whereas, the Company has requested the Lenders and the Administrative
Agent to further amend certain terms of the Credit Agreement; and
Whereas, the Lenders and the Administrative Agent have agreed to do so
to the extent reflected in this Second Amendment, provided that each of the
Company and the Guarantors ratifies and confirms all of its respective
obligations under the Credit Agreement and the Loan Documents.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration and the mutual benefits, covenants and agreements
herein expressed, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. Defined Terms. All capitalized terms used in this Second
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Amendment and not otherwise defined herein shall have the meanings ascribed to
such terms in the Credit Agreement.
2. Amendment to Section 1.01. Section 1.01 of the Credit Agreement
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is hereby amended as follows:
(a) The definition of "Capital Markets Event" in Section 1.01 of the
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Credit Agreement is hereby deleted in its entirety and replaced by the
following:
""Capital Markets Event" means the first issuance after the Effective
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Date by the Borrower or any Subsidiary of (i) Subordinated Debt, (ii)
preferred stock on terms reasonably satisfactory to the Administrative
Agent and the Lenders or (iii) common equity of the Borrower, from
which the gross proceeds, when added to the aggregate gross proceeds
of any other previous issuance after the Effective Date by the
Borrower or any Subsidiary of (i) Subordinated Debt, (ii) preferred
stock on terms reasonably satisfactory to the Administrative Agent and
the Lenders and (iii) common equity of the Borrower, equals an
aggregate principal amount of not less than $75,000,000.".
(b) The definition of "Applicable Margin" in Section 1.01 of the
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Credit Agreement is hereby deleted in its entirety and replaced by the
following:
""Applicable Margin" means, for any day during any period between two
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successive Financial Statement Delivery Dates commencing on the first
Financial Statement Delivery Date in such period and ending on the day
before the following Financial Statement Delivery Date, with respect
to any ABR Loan, Eurodollar Revolving Loan, or with respect to the
commitment fees payable hereunder, as the case may be, the applicable
margin per annum set forth in the appropriate column below under the
caption "ABR Spread Before Capital Markets Event", "Eurodollar Spread
Before Capital Markets Event" or "Commitment Fee Rate", as the case
may be, for the ratio of Funded Debt to EBITDA for the fiscal period
for which such financial statements were delivered as of the Financial
Statement Delivery Date; provided that, upon the occurrence of any
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Capital Markets Event, the columns under the captions "ABR Spread
After Capital Markets Event" and "Eurodollar Spread After Capital
Markets Event" shall be used to determine the applicable margin with
respect to any ABR Loan or Eurodollar Revolving Loan, as the case may
be. The applicable margin for all of the rows of such table under the
caption "Commitment Fee" shall remain unchanged:
ABR Eurodollar ABR Eurodollar
Spread Spread Spread Spread
Before Before After After
Capital Capital Capital Capital
Ratio of Funded Debt Markets Markets Markets Markets Commitment
To EBITDA Event Event Event Event Fee Rate
--------- -------- -------- ----------- -------- -----------
* 3.0 to 1.0 2.00% 3.00% 1.75% 2.75% .50%
* 2.5 to 1.0 but ** 3.0 to 1.0 1.75% 2.75% 1.50% 2.50% .50%
* 2.0 to 1.0 but ** 2.5 to 1.0 1.50% 2.50% 1.25% 2.25% .50%
* 1.5 to 1.0 but ** 2.0 to 1.0 1.00% 2.00% 1.00% 2.00% .50%
* 1.0 to 1.0 but ** 1.5 to 1.0 .75% 1.75% .75% 1.75% .375%
* .5 to 1.0 but ** 1.0 to 1.0 .50% 1.50% .50% 1.50% .375%
** .5 to 1.0 .25% 1.25% .25% 1.25% .250%
For purposes of the foregoing, (a) if sufficient information
does not exist to calculate the Applicable Margin, or the Borrower has
not delivered such information to the Administrative Agent in a timely
manner, Eurodollar Loans shall not be available to the Borrower and
the Applicable Margin for ABR Loans shall be 2.00% per annum and for
the commitment fee shall be .50% per annum; and (b) if (i) the Ratio
of Funded Debt to EBITDA shall change upon delivery of any financial
statement required under Section 5.01 or (ii) a Capital Markets Event
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shall have occurred, such change in the Applicable Margin shall be
effective as of the date on which any such financial statement is
delivered or on the date of the Capital Markets Event shall have
occurred, as the case may be, irrespective of whether it is in the
middle of an Interest Period or when notice of such change shall have
been furnished by the Borrower to the Administrative Agent and the
Lenders pursuant to Section 5.01(c) hereof or otherwise. Each change
in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately
preceding the effective date of the next such change.".
(c) The definition of "Commitment" in Section 1.01 of the Credit
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Agreement is hereby deleted in its entirety and replaced by the following:
""Commitment" means (a) with respect to each Lender, the commitment of
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such Lender to make Revolving Loans and to acquire participations in
Letters of Credit and Swingline Loans hereunder, expressed as an
amount representing the maximum aggregate amount of such Lender's
Revolving Credit Exposure hereunder, as such commitment may be (i)
reduced from time to time pursuant to Section 2.08 and/or (ii) reduced
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or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04 and (b) with respect to the Swingline
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Lender, its commitment to make Swingline Loans. The initial amount of
each Lender's Commitment is set forth on Schedule 2.01 under the
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caption "Initial Commitment", or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Commitment, as
applicable. The aggregate amount of the Lenders' total Commitments is
$200,000,000.00, unless reduced pursuant to Section 2.08.".
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___________
* more than or equal to
** less than
(d) The definition of "Restricted Payment" in Section 1.01 of the
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Credit Agreement is hereby deleted in its entirety and replaced by the
following:
""Restricted Payment" means any dividend or other distribution
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(whether in cash, securities or other property, except distributions
payable in capital stock) with respect to any shares of any class of
capital stock of the Borrower or any Subsidiary (other than
distributions to the Borrower or any Subsidiary), any payment (whether
in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital
stock of the Borrower, any option, warrant or other right to acquire
any such shares of capital stock of the Borrower or any voluntary
prepayment, purchase, redemption, retirement or acquisition of any
debt of the Borrower subordinated to the Obligations which is made at
the option of the Borrower.".
(e) The definition of "Subordinated Debt" in Section 1.01 of the
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Credit Agreement is hereby deleted in its entirety and replaced by the
following:
""Subordinated Debt" means any Indebtedness of the Borrower or any
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Subsidiary permitted hereunder that is (i) subordinated to the
Indebtedness incurred under this Agreement on terms substantially in
form and substance to those contained in Exhibit 1.01C to the Credit
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Agreement, and (ii) incurred pursuant to the terms and conditions
contained in the Summary of Principal Terms attached as Exhibit A to
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the Second Amendment to Amended and Restated Credit Agreement, or
(iii) otherwise approved by the Required Lenders, including such
Indebtedness incurred in connection with a Capital Markets Event, and,
upon obtaining the consent of the Required Lenders, any renewals, or
extensions thereof, amendments thereto, substitutions therefor or
restatements and refinancing thereof.".
3. Amendment to Section 2.08(b). Section 2.08(b) of the Credit
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Agreement is hereby deleted in its entirety and is replaced by the following:
"(b) Intentionally Deleted.".
4. Amendment to Section 2.09(b). Section 2.09(b) of the Credit
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Agreement is hereby deleted in its entirety and is replaced by the following:
"(b) Intentionally Deleted.".
5. Amendment to Section 5.01. Section 5.01 of the Credit Agreement
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is hereby amended by adding a new subsection 5.01(j) to read in its entirety as
follows:
"(j) on or before November 15, 2000 the Company shall provide to the
Administrative Agent and the Lenders an officer's certificate executed by a
Financial Officer of the
Company, which certificate shall contain, and shall certify as correct,
recalculations made by the Company as of October 31, 2000 of the
calculations set forth in the certificate most recently delivered pursuant
to Section 5.01(c), evidencing the Company's compliance as of October 31,
2000 with the covenants contained in Section 6.08 through 6.10, inclusive.
In the event a Capital Markets Event has not occurred on or before October
31, 2000, the certificate described in the immediately preceding sentence
shall also include pro forma calculations showing the effect that a Capital
Markets Event would have on the Company's compliance as of October 31, 2000
with the covenants contained in Section 6.08 through 6.10, inclusive.
6. Amendment to Section 6.08(b). Section 6.08(b) of the Credit
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Agreement is hereby deleted in its entirety and replaced by the following:
"(b) Asset Coverage Ratio. The Borrower will not at any time permit the
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ratio of: (a) (i) accounts receivable plus (ii) inventory plus (iii) the
net book value of all property, plant and equipment in each case as
reflected on the financial statements delivered pursuant to Section 5.01,
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to (b) Funded Debt minus Subordinated Debt, to be less than (i) 1.0 to 1.0
for the period from the Effective Date through November 15, 2000 and (ii)
1.25 to 1.0 for the period from November 16, 2000 and thereafter. For the
purposes of calculating this Asset Coverage Ratio, the Borrower may use (i)
the book value of such assets as recorded on the financials delivered under
Section 5.01 hereof or (ii) the fair market value of such assets, as such
fair market value is determined by a third party approved by the
Administrative Agent in its sole discretion; provided, that in the event
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any fair market valuation has been determined which for any asset is less
that its book value, such fair market valuation must be used in the
calculation of this Asset Coverage Ratio.".
7. Amendment to Section 6.08(c). Section 6.08(c) of the Credit
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Agreement is hereby deleted in its entirety and replaced by the following:
"(c) Senior Debt Leverage Ratio. The Borrower will not at any time permit
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the ratio of (i) Funded Debt minus Subordinated Debt to (ii) EBITDA
calculated on a rolling four (4) quarter basis, to be greater than (i) 2.75
to 1.0 for the period from the Effective Date through June 29, 2000, (ii)
2.50 to 1.0 for the period from June 30, 2000 through November 15, 2000 and
(iii) 2.25 to 1.0 for the period from November 16, 2000 and thereafter;
provided, that upon the occurrence of a Capital Markets Event, such ratio
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will not be greater than 2.25 to 1.0 for the period from the date of
occurrence of the Capital Markets Event and thereafter.".
8. Amendment to Section 6.11(vi). Section 6.11(vi) of the Credit
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Agreement is hereby deleted in its entirety and replaced by the following:
"(vi) at any time prior to the occurrence of a Capital Markets Event,
concurrently with the delivery of the Permitted Acquisition Notice, the
Borrower shall have provided to the Administrative Agent and the Lenders a
calculation by the Borrower of the ratio of pro forma Funded Debt minus
Subordinated Debt (after giving effect to the proposed
Acquisition) to pro forma EBITDA (after giving effect to the proposed
Acquisition) showing that such ratio will not at any time be greater than
(A) 2.50 to 1.0 for the period from the Effective Date through June 29,
2000, (B) 2.25 to 1.0 for the period from June 30, 2000 through November
15, 2000 and (C) 2.00 to 1.0 for the period from November 16, 2000 and
thereafter."
9. Amendment to Exhibit 1.01C. Exhibit 1.01C to the Credit
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Agreement is hereby amended by deleting in its entirety the last sentence on the
second page of such Exhibit which reads "If a payment or distribution is made to
holders of the Notes that, due to the subordination provisions, should not have
been made to them, such holders are required to hold it in trust for the holders
of Senior Indebtedness and pay the payment or distribution over to holders of
Senior Indebtedness as their interests may appear" and replacing such sentence
by the following:
"If a payment or distribution is made to holders of the Notes that, due to
the subordination provisions, should not have been made to them, such
holders are required to hold it in trust for the holders of Senior
Indebtedness and pay the payment or distribution over to holders of Senior
Indebtedness as their interests may appear; provided, however, that
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distributions of securities of U.S. Concrete to the holders of the Notes,
the payment of which securities is subordinate to the Senior Indebtedness,
may be made to and retained by the holders of the Notes."
10. Amendment to Schedule 2.01. The column in Schedule 2.01 to the
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Credit Agreement captioned "Commitment Subsequent to Capital Markets Event" is
hereby deleted in its entirety.
11. Ratification. Each of the Company, as to itself and each
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Guarantor, and each Guarantor, as to itself, hereby ratifies all of its
respective obligations under the Credit Agreement (including the Guaranty
contained in Article X thereof) and each of the Loan Documents to which it is a
party, and agrees and acknowledges that the Credit Agreement and each of the
Loan Documents to which it is a party remains in full force and effect and shall
continue in full force and effect as amended and modified by this Second
Amendment. Nothing in this Second Amendment extinguishes, novates or releases
any right, claim, lien, security interest or entitlement of any of the Lenders
or the Administrative Agent created by or contained in any of such documents nor
is the Company or any Guarantor released from any covenant, warranty or
obligation created by or contained therein or herein.
12. Representations and Warranties. Each of the Company, as to
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itself and each Guarantor, and each Guarantor, as to itself, hereby represents
and warrants to the Administrative Agent and the Lenders that (a) this Second
Amendment has been duly executed and delivered on behalf of the Company and such
Guarantor, subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law, (b) this Second Amendment constitutes a valid
and legally binding agreement enforceable against the Company or such Guarantor,
as the case may be, in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law,
(c) the representations and warranties contained in the Credit Agreement and the
Loan Documents shall be true and correct on and as of the date of each Borrowing
and the date of issuance, amendment, renewal or extension of each Letter of
Credit, as applicable, except to the extent such representations and warranties
relate to a prior date or, after prior notice to the Administrative Agent, are
untrue or incorrect as a result of transactions permitted by the Loan Documents,
(d) no Default exists under the Credit Agreement or under any other Loan
Document and (e) the execution, delivery and performance of this Second
Amendment has been duly authorized by the Company and each Guarantor.
13. Conditions to Effectiveness. This Second Amendment shall be
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effective upon (i) the execution and delivery hereof by all parties to the
Administrative Agent and receipt by the Administrative Agent of this Second
Amendment, and (ii) receipt by the Administrative Agent of an amendment fee due
and payable by the Company to the Administrative Agent for the pro rata benefit
of the Lenders of .075% of the total Commitments.
14. Counterparts. This Second Amendment may be signed in any number
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of counterparts, which may be delivered in original or facsimile form each of
which shall be construed as an original, but all of which together shall
constitute one and the same instrument.
15. Governing Law. This Second Amendment, the Credit Agreement, all
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Notes, the other Loan Documents and all other documents executed in connection
herewith shall be deemed to be contracts and agreements under the laws of the
State of Texas and of the United States of America and for all purposes shall be
construed in accordance with, and governed by, the laws of Texas and of the
United States.
16. Final Agreement of the Parties. THIS SECOND AMENDMENT AND THE
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CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND 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.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed by their respective officers thereunto duly authorized
as of the date first above written.
Company:
U.S. CONCRETE
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Guarantors:
AFTM Corporation, a Michigan corporation
Atlas Concrete, Inc., an Oklahoma corporation
Atlas-Tuck Concrete, Inc., an Oklahoma corporation
B.W.B., Inc. of Michigan, a Delaware corporation
▇▇▇▇ Concrete, Inc., a New Jersey corporation
▇▇▇▇▇ Concrete Enterprises, Ltd., a Texas limited partnership
▇▇▇▇▇ Industries, Inc., a Texas corporation
▇▇▇▇▇ Management, Inc., a Texas corporation
▇▇▇▇▇ Trucking, Inc., an Oklahoma corporation
Carrier Excavation and Foundation Company, a Delaware corporation
Central Concrete Supply Co., Inc., a California corporation
Concrete XX Acquisition, Inc., a Delaware corporation
Corden, Inc., a Michigan corporation
▇▇▇▇▇▇▇▇▇ Fuel & Supply, Inc., a Michigan corporation
▇▇▇▇▇▇▇▇▇ Leasing, Inc., a Michigan corporation
Dencor, Inc., a Michigan corporation
DYNA, Inc., a Delaware corporation
▇.▇. ▇▇▇▇▇▇, Inc., a Michigan corporation
Fendt Transit Mix, Inc., a Michigan corporation
Hunter Equipment Company, a Michigan corporation
Olive Branch Ready Mix, Inc., a Delaware corporation
Opportunity Concrete Corporation, a District of Columbia corporation
Premix Concrete Corp., a Delaware corporation
▇.▇. ▇▇▇▇▇/Associates d/b/a/ Santa ▇▇▇▇ Cast Products Co., a California
corporation
Ready Mix Concrete Company of Knoxville, a Delaware corporation
San Diego Precast Concrete, Inc., a Delaware corporation
▇▇▇▇▇▇ Transit Mix, Inc., an Oklahoma corporation
Superior Materials Company, Inc., a Delaware corporation
Superior Redi-Mix, Inc., a Michigan corporation
USC GP, Inc., a Delaware corporation
USC Management Co., LP, a Texas limited partnership
Western Concrete Products, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Administrative Agent/Lender:
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CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇. Dolphin
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▇▇▇▇▇ ▇. Dolphin
Senior Vice President
Syndication Agent/Lender:
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BANKERS TRUST COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇▇
--------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Documentation Agent/Lender:
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FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Lender:
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BANK OF AMERICA, N.A.,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
Co-Managing Agent/Lender:
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BANK ONE, TEXAS, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇
Title: Vice President
Co-Managing Agent/Lender:
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CREDIT LYONNAIS
NEW YORK BRANCH
By: /s/ Atilla Koc
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Name: Atilla Koc
Title: Senior Vice President
Co-Managing Agent/Lender:
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THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. ▇▇▇▇▇
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Name: F. C. H. ▇▇▇▇▇
Title: Senior Manager Loan Operations
Co-Managing Agent/Lender:
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BRANCH BANKING & TRUST COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Lender:
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COMERICA BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: First Vice President
EXHIBIT A
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Summary of Principal Terms of Subordinated Debt
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----------------------
Issue Senior Subordinated Notes (the "Notes").
----------------------
Issuer U.S. Concrete, Inc. (the "Company").
----------------------
Guarantors The Notes shall be unconditionally guaranteed, on a
subordinated basis, as to the payment of principal,
interest and premium, if any, by each Material
Subsidiary.
----------------------
Principal Amount Approximately $75,000,000
----------------------
Noteholders Accredited institutional investors
----------------------
Final Maturity Ten years from the date of takedown.
----------------------
Amortization Seven equal annual principal repayments beginning on
the fourth anniversary of the issuance of the Notes
resulting in an average life of seven years.
----------------------
Interest Rate 12%. Interest will be payable quarterly in arrears.
----------------------
Price 100% of Principal Amount
----------------------
Takedown Immediately following completion of documentation.
----------------------
Use of Proceeds General corporate purposes of the Company including the
repayment of debt.
----------------------
Ranking The Notes shall be subordinated to the Company's Senior
Indebtedness.
----------------------
Optional Redemption The Issuer may redeem the Notes, in whole or pro rata
in part, at any time. In the event of prepayment, the
Issuer will pay an amount equal to par plus accrued
interest plus a "Make Whole Premium", as defined
herein.
----------------------
Make Whole Premium Make Whole Premium shall be defined as the difference
(not to be less than zero) between (a) the present
value of the expected future cash flows from the Notes
(minus any accrued Interest) discounted at a rate equal
to the then-current Treasury Note yield corresponding
closest to
EXHIBIT A - Page 1
the remaining weighted average life on the Notes
calculated at the time of the prepayment plus 150
basis points, and (b) the Principal Amount
outstanding.
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Change of Control In the event that one person or a group of related
persons (other than the existing management group)
acquires more than 50% of the voting shares of the
Company, a Change of Control will be deemed to
have occurred. In the event of a Change of
Control, the Noteholders individually will have
the right, but not the obligation, to put their
Notes back to the Company at an amount equal to
par plus accrued interest plus the Modified Make
Whole Premium, if any.
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Modified Make Whole Premium Shall mean the Make Whole Premium computed as if
the phrase "150 basis points" read "250 basis
points."
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Financial Covenants
Total Debt Leverage Ratio The Company will maintain the ratio of
Consolidated Total Debt to EBITDA at no greater
than 3.25 to 1.0. This ratio will be calculated at
the end of each fiscal quarter based on the
previous four fiscal quarters.
Senior Debt Leverage Ratio The Company will maintain the ratio of
Consolidated Senior Debt to EBITDA at no greater
than 2.25 to 1.0. This ratio will be calculated at
the end of each fiscal quarter based on the
previous four fiscal quarters. In the event that
the covenants pertaining to Consolidated Senior
Debt in the Company's principal bank lending
agreement shall allow a greater amount of
Consolidated Senior Debt than is otherwise
permitted herein, then such greater amount shall
be the maximum allowable amount of Consolidated
Senior Debt; provided that, in any event, The
Company will maintain the ratio of Consolidated
Senior Debt to EBITDA at no greater than 2.50 to
1.0.
Fixed Charge Coverage Ratio The Company will not permit the ratio of (i)
EBITDA less cash taxes plus rent payments under
operating leases to (ii) the sum of (a) cash
interest plus (b) rent payments under operating
leases plus (c) maintenance capital expenditures
(defined as depreciation for the same period) to
be less than 1.0 to 1.0. This ratio will be
calculated at the end of each fiscal quarter based
on the previous four fiscal quarters.
Mergers and Consolidations The Company will not merge into or consolidate
with (or sell or convey all or substantially all
of its assets to) any other person unless (a) the
Company is the surviving entity or the surviving
entity expressly assumes the punctual payment and
observance of all obligations under the Notes, (b)
the surviving entity shall not immediately after
such merger or sale of assets be in default on the
Notes, and (c) the surviving entity shall be
organized in the United States; except that any
Subsidiary may merge with the Company (provided
that the Company shall be the surviving entity) or
with any one or more other Subsidiary.
EXHIBIT A - Page 2
Sale of Assets The Company will not sell, lease or transfer or
otherwise dispose of all or a substantial part of its
assets (defined to be in excess of 15% of Consolidated
Total Assets at the time of the sale), other than in
the ordinary course of business in any given fiscal
year and provided that such sale of substantial assets
on a cumulative basis shall not exceed 35% of
Consolidated Total Assets at the time of the sale,
except that: (x) any Subsidiary, other than the
Company, may sell, lease, transfer or otherwise dispose
of its assets to the Company or any other Subsidiary;
and (y) the Company may sell, lease, transfer or
otherwise dispose of its assets in excess of the
limitations set forth above if the proceeds of such
sales are used within one year of such sale (i) to
purchase other property useful in the business of the
Company or any Subsidiary and/or (ii) to repay Senior
Indebtedness.
Restricted Payments The Company's Restricted Payments and those of its
Subsidiaries will be limited to the amount in the pool
(the "Pool"). The following amounts will be included in
the Pool: (1) 25% (or minus 100% in the case of a
deficit) of Consolidated Net Earnings for each
quarterly period subsequent to June 30, 2000, and (2)
all proceeds from the issuance or sale of shares of any
class of stock for the period. The Restricted Payments
for each quarterly period will be subtracted from the
Pool and the outstanding balance in the Pool will be
carried over to the next period.
Other Covenants The Issuer and Company will agree to observe certain
covenants including covenants as to transactions with
affiliates, payment of taxes, maintenance of business
lines, compliance with laws, maintenance of properties,
and delivery of financial statements.
-----------------------
Subordination The Notes shall rank pari passu with the Company's
other senior subordinated obligations but shall be
subordinated and junior in right of payment to all
Senior Indebtedness. Furthermore, the Company agrees
not to create any class of obligations which is senior
to the Notes but expressly subordinated to the
Company's Senior Indebtedness.
If (i) the Company shall default in the payment of
principal, interest, or premium, if any, on any Senior
Indebtedness, or (ii) an event of default occurs which
shall permit the holders of Senior Indebtedness to
accelerate the maturity thereof, then:
(a) during any period in which the holders of Senior
Indebtedness shall have accelerated the payment
thereof and shall be pursuing the remedies
available to them, or if the Company shall default
in the payment of interest, principal or premium,
if any, on any Senior Indebtedness, unless and
until such default in payment or event of default
shall have been cured or waived or shall cease to
exist, no payment shall be made on account of the
Notes; and
(b) during any period not described in clause (a)
above, the holders of a majority of the unpaid
principal balance of Senior Indebtedness
EXHIBIT A - Page 3
may block payments of principal and interest to
the holders of the Notes for a period not to
exceed 179 days. Unless and until the earliest to
occur of (x) such default in payment or event of
default being cured, waived, or ceasing to exist,
or (y) the commencement of the 179/th/ consecutive
day of payment blockage pursuant to the provisions
of this clause (b), no payment shall be made on
the Notes; provided, however, that (i) no more
than one blockage period under this clause (b) may
occur during any period of 360 consecutive days.
In the event of bankruptcy or insolvency of the
Company, all Senior Indebtedness shall be paid in full
before any payment shall be made on account of the
Notes. In any such bankruptcy event, any payment or
distribution which would otherwise be payable to the
holders of the Notes shall be paid or delivered
directly to the holders of Senior Indebtedness until
Senior Indebtedness has been paid in full.
Nothing contained in these provisions is intended to
affect the relative rights of the holders of the Notes
and other creditors of the Company (other than holders
of Senior Indebtedness) nor shall any of these
provisions prevent any holder of the Notes from
exercising all remedies otherwise permitted by
applicable law upon the occurrence of an event of
default under this agreement.
-----------------------
Events of Default Events of Default will include the following:
i) default in the payment of interest on the
Notes for more than five business days;
ii) default in the payment of principal or Make-
Whole Premium on the Notes when due;
iii) default in the observance of any financial
covenant;
iv) default in the observance of any non-
financial covenant which continues unremedied
for 30 days;
v) any representations or warranties shall be
false or misleading in any material respect;
vi) cross acceleration on other indebtedness of
the Company or any Subsidiary in excess of
$5,000,000; and
vii) certain events involving bankruptcy of the
Company.
-----------------------
Noteholders' Rights upon
Event of Default Upon the occurrence of any Event of Default described
in paragraph 1 or 2 above, any Noteholder may declare
its Notes immediately due and payable in an amount
equal to par plus accrued interest plus the Make-Whole
Premium, if any. Upon the occurrence of any Event of
Default described in paragraphs 3-6 above, the holder
or holders of a majority of the aggregate unpaid
principal amount may declare all of the Notes to be
immediately due and payable in an amount equal to par
plus accrued interest plus the Make-Whole Premium, if
any. Upon the occurrence of
EXHIBIT A - Page 4
any Event of Default described in paragraph 7
above, all the Notes shall be immediately due and
payable in an amount equal to the outstanding
principal amount plus any interest accrued
thereon, plus the Make Whole Premium, if any (to
the full extent permitted by applicable law). The
holders of a majority of the aggregate unpaid
principal amount may rescind acceleration any time
within 90 days of the date thereof in the event
the Company shall have cured.
---------------------------
Governing Law The Notes will be governed by, and construed in
accordance with the laws of the State of New York.
---------------------------
Amendments Any provisions of the Notes may be amended or
waived with the written consent of the holders of
a majority of the aggregate principal amount of
Notes outstanding except that each Noteholder must
consent in writing to any amendment or waiver
which adversely affects the interest rate,
maturity, prepayment or redemption provisions, or
the percentage required to amend the Notes.
---------------------------
Expenses The Company will pay reasonable legal fees of
Investor's Counsel, whether or not the transaction
closes.
---------------------------
Definitions
Capital Lease Shall mean any lease of property which in
accordance with GAAP would be capitalized as a
liability on the lessee's balance sheet or for
which the amount of the asset and liability
thereunder as if so capitalized should be
disclosed in a note to such balance sheet.
Consolidated Net Earnings Shall mean the net earnings of the Company and its
Subsidiaries in accordance with GAAP, excluding
(i) extraordinary items and (ii) any equity
interest of the Company on the unremitted earnings
of any corporation not a Subsidiary.
Consolidated Total Assets Shall mean the total assets of the Company and its
Subsidiaries, determined on a consolidated basis
in accordance with GAAP.
Consolidated Senior Debt Shall mean, at any time, the sum of all Senior
Indebtedness of the Company and all of its
Subsidiaries outstanding at such time determined
on a consolidated basis.
Consolidated Total Debt Shall mean, at any time, the sum of all
Indebtedness of the Company and all of its
Subsidiaries outstanding at such time determined
on a consolidated basis.
EXHIBIT A - Page 5
EBITDA Shall mean, for the most recently ended
period of four full fiscal quarters of
the Company, the sum of:
a) Consolidated Net Earnings plus the
aggregate amount which was deducted for
such period for federal, state and local
income and franchise taxes, interest
expense, depreciation expense, and
amortization expense; and
b) Without duplication, Pro Forma Operating
Income, if any, for such period. Pro
Forma Operating Income shall mean, for
any date of determination, Consolidated
Net Earnings with respect to each company
acquired by the Company during the four
quarters preceding the date as of which
EBITDA is calculated plus the aggregate
amount which was deducted for such period
for federal, state and local income and
franchise taxes, interest expense,
depreciation expense, and amortization
expense, in each case limited to amounts
reported by the Company on Form 8-K to
the Securities and Exchange Commission.
GAAP Shall mean generally accepted accounting
principles as in effect from time to time
in the United States of America.
Indebtedness Shall mean all liabilities for borrowed
money which, in accordance with GAAP,
would be included in determining total
liabilities, obligations in respect of
any Capital Lease, and any guarantee of
the foregoing, but shall exclude such
liabilities, obligations and guarantees
if owed or guaranteed by a Subsidiary to
the Company or another Subsidiary or by
the Company to a Subsidiary.
Material Subsidiary Any Subsidiary comprising more than 5% of
Consolidated Total Assets and any other
Subsidiary that provides a guarantee to
any Senior Indebtedness.
Restricted Payments Shall mean any of the following: (1)
payment or declaration of any dividend or
any other distribution on account of any
class of its stock (except dividends or
stock splits payable solely in common
stock of the Company), (2) redemptions,
purchases, or other acquisitions (direct
or indirect) of shares of the Company's
stock, and (3) any optional prepayment of
any Indebtedness of the Company or any
Subsidiary ranking junior to the Notes.
Senior Indebtedness Shall mean any Indebtedness which is not
expressly subordinated to other
Indebtedness of the Company provided such
Indebtedness is incurred in compliance
with the Senior Debt Leverage Ratio.
Senior Subordinated Indebtedness Shall mean the Notes and any other
Indebtedness which, by its terms, shall
be subordinated to any Senior
Indebtedness.
EXHIBIT A - Page 6
Subsidiary Shall mean any corporation of which such
first mentioned corporation at the time
owns, directly or through any intervening
medium, that number of shares of voting
stock which has the power to elect a
majority of the board of directors.
EXHIBIT A - Page 7