Exhibit 4.2
AMENDMENT NO. 2 TO FORBEARANCE AGREEMENT
AMENDMENT NO. 2 TO
FORBEARANCE AGREEMENT , dated as of June 27, 2008 (this
“ Amendment ”), among (a) Home Solutions of
America, Inc., a Delaware corporation (the “ Borrower
”), (b) each of the lenders party hereto (individually,
together with its successors and assigns, a “ Lender
” and collectively, the “ Lenders ”),
(c) each of the Debtors set forth in the Pledge and Security
Agreement dated as of November 1, 2006 (collectively, the
“ Debtors ” or each, a “ Debtor
”), (d) the Guarantors (as such term is defined in the
Credit Agreement) (collectively, with the Debtors and the Borrower,
the “ Credit Parties ” and each, individually, a
“ Credit Party ”) and (e) Texas Capital Bank,
National Association, as Lender, Administrative Agent, Arranger and
Sole Bookrunner (the “ Agent ”).
WITNESSETH :
WHEREAS,
on or about November 1, 2006, the Borrower, the Agent, and the
Lenders party thereto entered into the Credit Agreement dated as of
November 1, 2006 (as it may be amended from time to time, the
“ Credit Agreement ”). 1
WHEREAS,
on or about February 6, 2008, the Borrower, the Agent, the
Lenders, the Debtors, and the Credit Parties entered into a
Forbearance Agreement (as subsequently amended, the “
Forbearance Agreement ”) pursuant to which the Lenders
agreed to forbear, during the Forbearance Period (as such term is
defined in the Forbearance Agreement), from exercising their rights
and remedies under the Loan Documents with respect to certain
then-existing Events of Default (the “ Existing Events of
Default ”).
WHEREAS,
on or about June 3, 2008, the Borrower, the Agent, the
Lenders, the Debtors, and the Credit Parties entered into that
certain Amendment No. 1 to Forbearance Agreement (“
Amendment No. 1 ”) pursuant to which the parties
amended the terms of the Forbearance Agreement.
WHEREAS,
certain defaults exist and are continuing under the Forbearance
Agreement (collectively, the “ Existing Forbearance Events
of Default ”).
WHEREAS,
notwithstanding the existence of the Existing Forbearance Events of
Default, the Borrower has requested, and the Lenders have agreed,
to amend the Forbearance Agreement as set forth below.
NOW,
THEREFORE, in consideration of the premises and the agreements
hereinafter contained, and for other good and valuable
consideration, notwithstanding any provisions of the Credit
Agreement or the Forbearance Agreement to the contrary, the parties
hereto hereby agree as follows:
1.
Modification of Minimum Interim Reductions. Subparagraph
3(a) of Amendment No. 1 is hereby deleted and replaced in its
entirety by the following:
|
|
|
| 1 |
|
Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Credit Agreement. |
(a)
Notwithstanding anything to the contrary in Paragraphs 10, 11 and
12 of the Forbearance Agreement, during the period commencing on
May 19, 2008 and ending on July 15, 2008 (the “
Pay-Off Period ”), the Borrower shall have made to the
Agent for the benefit of the Lenders payments, whether from the
collection of accounts receivable or otherwise and after taking
into account the order of application set forth in Paragraph 2
above, 2 that result in
the reduction of the principal amount of the Borrower’s
Obligations under the Credit Agreement in the aggregate amount of
$10,500,000 (the “ Pay-Off Amount ”), including
minimum interim aggregate reductions of principal of $5,450,000 by
July 1, 2008; and $10,500,000 by July 15, 2008 (each, a
“ Minimum Interim Reduction ”). If any such
payments are funded with the proceeds of a disposition of an asset
other than accounts receivable, and the Lenders have granted prior
written consent of such disposition, the Agent shall release its
lien on such asset, contemporaneously with its receipt of 100% of
the proceeds of such disposition in readily available funds.
2.
Consent to Sale of PWS . Execution of this Amendment
No. 2 by a Super Majority of Lenders shall constitute consent
of the Lenders to the sale of substantially all the assets of P.W.
Stephens, Inc. (“ PWS ”) for an amount not less
than $5,000,000; provided that prior to such sale (i) the
Borrower shall have delivered to the Agent a copy of the fully
executed agreement for the sale of the PWS assets and such
agreement is in form and substance satisfactory to the Agent;
(ii) the Credit Parties shall have remitted to the Agent 100%
of all accounts receivable collected by PWS from June 15, 2008
through the date immediately preceding the date of closing of such
sale; (iii)&nbs
