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Exhibit 10.3
EXECUTION COPY
SECOND AMENDMENT AND SECOND WAIVER
SECOND AMENDMENT AND SECOND WAIVER, dated as of May 10, 2005
(this
"Amendment"), to and under the Credit
Agreement, dated as of June 11, 2003 (as
heretofore amended, supplemented or
otherwise modified, the "Credit Agreement"),
among Werner Holding Co. (DE), Inc. (the
"Company"), the several lenders from
time to time parties to the Credit
Agreement (the "Lenders"), Citigroup Global
Markets Inc., as syndication agent (in such
capacity, the "Syndication Agent"),
Citigroup Global Markets Inc. and J.P.
Morgan Securities, Inc., as joint lead
arrangers and joint bookrunners (in such
capacity, the "Arrangers"), and
JPMorgan Chase Bank, N.A. (formerly known
as JPMorgan Chase Bank), as
administrative agent for the Lenders (in
such capacity, the "Administrative
Agent" and, together with the Syndication
Agent, the "Agents").
WITNESSETH:
WHEREAS, the Company, the Lenders, the Arrangers and the Agents
are
parties to the Credit Agreement;
WHEREAS, pursuant to the Waiver and Agreement, dated as of March
31,
2005 (the "Existing Waiver"), to the Credit
Agreement, the Lenders agreed to
waive during the Waiver Period (as defined
in the Existing Waiver) certain
Defaults and Events of Default under the
Credit Agreement (the "Waived
Defaults") in order to afford the Company
an opportunity to arrange new
financing in part to repay a portion of the
Loans;
WHEREAS the Company has obtained a commitment from Credit Suisse
First
Boston and Morgan Stanley Senior Funding,
Inc., pursuant to a Commitment Letter,
dated April 25, 2005 (the "Second Lien
Facility Commitment Letter"), to provide
a $100,000,000 senior secured second lien
facility (the "Second Lien Facility"),
the proceeds of which will be applied to,
among other things, prepay the Loans
as more fully set forth in this Amendment,
and the Second Lien Facility shall be
secured by a second Lien on the Collateral,
junior to the Liens on the
Collateral securing the obligations under
the Credit Agreement;
WHEREAS, the Company has requested that the Lenders agree to amend
and
waive certain provisions of the Credit
Agreement, including without limitation,
to permit the incurrence of the
Indebtedness under, and the Liens securing, the
Second Lien Facility, and to waive
permanently any uncured Waived Defaults, and
the Lenders are agreeable to such request
but only upon the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other
valuable consideration the receipt of
which is hereby acknowledged, the Company,
the Lenders, and the Administrative
Agent agree as follows:
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2
SECTION 1. DEFINITIONS. Unless otherwise defined herein,
capitalized
terms are used herein as defined in the
Credit Agreement.
SECTION 2. WAIVER. The Lenders hereby waive any Default or Event
of
Default (a) under Section 10(c) of the
Credit Agreement arising solely by reason
of the failure of the Company to comply
with subsections 9.9 (Debt to EBITDA)
and 9.10 (Interest Coverage) of the Credit
Agreement for the fiscal period
ending on March 31, 2005 or (b) under
Section 10(d) of the Credit Agreement
arising solely by reason of the failure of
the Company to comply with the
requirements contained in (i) subsections
8.1(a), 8.2(a) and 8.2(b) of the
Credit Agreement to timely deliver
financial statements for the fiscal year of
the Company ending December 31, 2004 and
the required accompanying certificates
and letter and (ii) subsection 8.2(e) of
the Credit Agreement to timely deliver
the management summary for the firscal
period ending on March 31, 2005, provided
that the waiver set forth in the foregoing
clause (ii) is conditioned upon such
management summary being delivered on or
before May 20, 2005 (as would otherwise
be required by the terms of the Credit
Agreement).
SECTION 3. AMENDMENTS AND OTHER AGREEMENTS.
3.1 Amendment to Subsection 1.1.
(a) Subsection 1.1 of the Credit Agreement is hereby amended by
deleting therefrom the definitions of
"Applicable Margin", "Asset Sale",
"Receivables Facility" and "Receivables
Facility Assets" in their entireties and
inserting the following new definitions in
their appropriate alphabetical order:
"Applicable Margin": in the case of Alternate Base Rate Loans,
3.00%, and in the case of Eurodollar Loans, 4.00%.
"Asset Sale": any sale, lease (other than a sublease of real
property), sale and leaseback, assignment, conveyance, transfer
or
other disposition (including through a transaction of merger or
consolidation) of property or series of related dispositions of
property (excluding dispositions of leasehold interests and any
such
disposition permitted by subsections 9.5(a), (b), (c), (f), (h)
and
(k)) that yields cash proceeds to Holdings or any of its
Subsidiaries.
"Available
Cash": at any time, the cash of Holdings, the Company
and its Subsidiaries on deposit in the accounts listed on Schedule
I
to the Waiver and Agreement, dated as of March 31, 2005, to
this
Agreement and in such other accounts identified in writing by
the
Company to the Administrative Agent at least one Business Day prior
to
depositing any such cash therein.
"First Lien Indebtedness": at a particular date, the sum of (a)
all Indebtedness (other than Indebtedness described in clauses
(b),
(c) or (f) of the definition of "Indebtedness" included in this
subsection 1.1) of the Company and its Subsidiaries at such
date,
determined on a consolidated basis in accordance with GAAP, under
(i)
this Agreement, (ii) Financing Leases and (iii) the Industrial
Revenue
Bonds, plus (b) all Receivables Facility Attributed Indebtedness
at
such date.
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3
"Second Amendment": the Second Amendment and Second Waiver,
dated
as of May 10, 2005, to and under this Agreement.
"Second Amendment Effective Date": the Amendment Effective Date
under and as defined in the Second Amendment.
"Second Lien Facility": the $100,000,000 (plus accretions to
principal and paid-in-kind interest) senior secured second lien
facility pursuant to the Credit Agreement, dated as of May 10,
2005,
among the Company, the lenders from time to time parties thereto
and
Credit Suisse First Boston, as administrative agent for such
lenders,
and all other documentation executed in connection therewith, in
each
case in form and substance reasonably satisfactory to the
Required
Lenders, in each case as amended, supplemented or otherwise
modified
from time to time in accordance with subsection 9.19.
"Intercreditor Agreement": the Intercreditor Agreement,
substantially in the form attached as Exhibit A to the Second
Amendment, among the Administrative Agent, the administrative
agent
under the Second Lien Facility and the Credit Parties, which
sets
forth the relative rights and the Lien priorities of the Lenders
and
the lenders under the Second Lien Facility.
"Receivables Facility": the A/R Facility or one or more
receivables facilities which may replace such facility which
are
non-recourse to the Company and its Subsidiaries (except for
any
Receivables SPV) providing for the sale, encumbrance or other
disposition, at any time or from time to time, of all or a portion
of
the accounts receivable of the Company or any of its
Subsidiaries,
provided that any refinancing of the A/R Facility shall be on
market
terms.
"Receivables Facility Assets": accounts receivable and related
ancillary rights, including, without limitation, any security
interests or guarantees securing the payment of such receivables,
of
the Company or any of its Subsidiaries, whether existing on the
date
hereof or hereafter arising, that are sold, encumbered or disposed
of
at any time or from time to time in connection with a
Receivables
Facility, and all cash and non-cash proceeds of any of the
foregoing.
"Total Secured Indebtedness": at a particular date, the sum of
(a) all Indebtedness (other than Indebtedness described in
clauses
(b), (c) or (f) of the definition of "Indebtedness" included in
this
subsection 1.1) of the Company and its Subsidiaries at such
date,
determined on a consolidated basis in accordance with GAAP, under
(i)
this Agreement, and (ii) the Second Lien Facility, plus (b) all
Receivables Facility Attributed Indebtedness at such date, less
the
domestic cash and Cash Equivalent balances without encumbrances
(other
than liens permitted pursuant to subsection 9.2(f) or
subsection
9.2(n)) in excess of $5,000,000 of the Company and the
Subsidiary
Guarantors at such
date.".
(b) Subsection 1.1 of the Credit Agreement is hereby amended by
amending the definition of "Change of
Control" by (i) deleting the word "or"
immediately before
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4
clause (iii) in such definition and
inserting in lieu thereof a comma and adding
immediately after clause (iii) in such
definition "or (iv) a "change of control"
or similar event occurs under the Second
Lien Facility".
(c) Subsection 1.1 of the Credit Agreement is hereby amended by
amending the definition of "Consolidated
EBITDA" by (i) deleting the reference
to "clause (r)" in the first parenthetical
in such definition and inserting in
lieu thereof a reference to "clause (s)",
(ii) deleting the phrase "and (r)" in
such definition and inserting in lieu
thereof ", (r) the fees, expenses and
other costs incurred in connection with the
negotiation and consummation of the
Second Lien Facility, including without
limitation, the negotiation and
consummation of any Receivables Facility
and the Second Amendment, and (s)",
(iii) deleting the word "and" immediately
prior to clause (vi) in such
definition and inserting in lieu thereof a
comma, (iv) inserting immediately
after the word "charges" in clause (vi)(I)
of such definition the phrase
"incurred prior to the Second Amendment
Effective Date" and (v) deleting in its
entirety clause (vi)(II) of such definition
and inserting in lieu thereof the
following:
"(II) additional
nonrecurring losses and charges up to (w) $10,000,000
in the 2005 fiscal year of the Company, (x) $11,500,000 in the
2006
fiscal year of the Company, (y) $8,000,000 in the 2007 fiscal year
of
the Company and (z) $5,000,000 in each fiscal year of the
Company
thereafter, shall be excluded. provided that (a) any amount
referred
to above, if not excluded in the fiscal year in which it is
permitted,
may be carried over for exclusion in the next succeeding fiscal
year
and (b) any amount excluded during any fiscal year shall be
deemed
made, first, in respect of amounts permitted for such fiscal year
as
provided above and, second, in respect of amounts carried over
from
the prior fiscal year pursuant to clause (a) above.".
(d) Subsection 1.1 of the Credit Agreement is hereby amended by
adding in the definition of "Contingent
Obligation" (i) immediately prior to the
word "endorsements" a reference to "(i)"
and (ii) at the end of the first
sentence of such definition, the phrase "or
(ii) guaranties by the Company or
any Subsidiary of the Company that are
deemed for purposes of GAAP and for
purposes of this Agreement to be Financing
Leases of the Company or any such
Subsidiary, as the case may be, so long as
such Financing Leases are permitted
to be incurred by the Company or any such
Subsidiary, as the case may be, under
this Agreement".
(e) Subsection 1.1 of the Credit Agreement is hereby amended by
adding in the definition of "Credit
Documents" immediately after the term "the
Mortgages" in such definition ", the
Intercreditor Agreement".
(f) Subsection 1.1 of the Credit Agreement is hereby amended by
deleting in its entirety clause (b) of the
definition of "Net Proceeds" and
inserting in lieu thereof "(b) any Asset
Sale;".
3.2 Amendment to Subsection 3.4. Subsection 3.4(a) of the
Credit
Agreement is hereby amended by adding at
the end of such subsection the
following:
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5
"Notwithstanding anything to the contrary contained in this
Agreement,
on and after the Second Amendment Effective Date (x) the
Borrower
shall not request, and the Swing Line Lender shall not make,
Swing
Line Loans and (y) the Swing Line Commitment of the Swing Line
Lender,
and the obligation of each Revolving Credit Lender to participate
in
Swing Line Loans, shall terminate.".
3.3 Amendments to Subsection 5.4.
(a) Subsection 5.4(c)(iii) of the Credit Agreement is hereby
amended by deleting in its entirety such
subsection and inserting in lieu
thereof the following:
"(iii) If, subsequent to the Second Amendment Effective Date,
Holdings or any of its Subsidiaries shall receive Net Proceeds
from
any Asset Sale, (x) with respect to the first $40,000,000 of
the
aggregate Net Proceeds from any such Asset Sales, 50% of such
Net
Proceeds and (y) with respect to the aggregate Net Proceeds from
any
such Asset Sales in excess of $40,000,000, 100% of such Net
Proceeds,
shall promptly, and in any event within two Business Days after
the
date of receipt, be delivered to the Administrative Agent to be
applied by it, subject to clause (vii) of this subsection 5.4(c),
to
the prepayment of the Term Loans as set forth in clause (vi) of
this
subsection 5.4(c), provided, however, if all or any portion of
such
Net Proceeds which are retained by Holdings or any Subsidiary
thereof
pursuant to this paragraph (iii) are not applied within the
time
period after receipt thereof such that a prepayment under any
Permanent Subordinated Debt shall be required, then such Net
Proceeds
shall be delivered to the Administrative Agent on the date
occurring
one Business Day prior to the date that such prepayment would
be
required under such Permanent Subordinated Debt to be applied by
it,
subject to clause (vii) of this subsection 5.4(c), to the
prepayment
of the Term Loans as set forth in clause (vi) of this
subsection
5.4(c).".
(b) Subsection 5.4(c)(iv) of the Credit Agreement is hereby
amended by deleting such subsection in its
entirety and inserting in lieu
thereof "(iv) [Intentionally
Omitted].".
(c) Subsection 5.4 of the Credit Agreement is hereby amended by
adding immediately after paragraph (c)(vii)
in such subsection the following:
"(viii) At least $91,700,000 of the Net Proceeds of the Second
Lien Facility shall on the Second Amendment Effective Date be
delivered to the Administrative Agent to be applied by it, first,
to
prepay the Term Loans in an aggregate amount of not less than
$65,000,000 with such prepayment being applied to the remaining
installments of the Term Loans in direct order of maturity and,
second, to prepay the outstanding Revolving Credit Loans in an
aggregate amount of not less than $26,700,000 without reducing
permanently the Revolving Credit Commitments. Any remaining
proceeds
may be retained by the Company to pay fees and expenses related to
the
negotiation and consummation
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6
of the Second Lien Facility, a Receivables Facility and the
Second
Amendment or for general corporate purposes of the Company and
its
Subsidiaries.".
3.4 Amendment to Subsection 7.2. Subsection 7.2 of the Credit
Agreement is hereby amended by adding
immediately after paragraph (b) in such
subsection the following:
"(c) Receivables Facility Availability. In the case of a
borrowing of Revolving Credit Loans only, availability on such
Borrowing Date under all Receivables Facilities shall not
exceed
$500,000.
(d) Available Cash. In the case of a borrowing of Revolving
Credit Loans only, (i) the amount of Available Cash, after
giving
effect to the making of such Revolving Credit Loan and the
immediate
use of the proceeds thereof for general corporate purposes of
the
Company and its Subsidiaries, shall not exceed $7,500,000 and (ii)
the
proceeds of such Revolving Credit Loans are required to make
expenditures for general corporate purposes of the Company and
its
Subsidiaries within three Business Days after the making of
such
Revolving Credit Loans.
(e) Officer's Certificate. In the case of a borrowing of
Revolving Credit Loans only, the Administrative Agent shall
have
received a certificate of a Responsible Officer of the Company
certifying that the foregoing conditions contained in clauses
(a)
through (d) above shall have been satisfied as of such
Borrowing
Date.".
3.5 Amendment to Subsection 8.1. Subsection 8.1(d) of the
Credit
Agreement is hereby amended by (a) deleting
in their entireties clauses (x) and
(y) in such subsection and substituting in
lieu thereof "the computations of (x)
Capital Expenditures as of the last day of
the fiscal period covered by such
financial statements and (y) the ratios or
Consolidated EBITDA, as applicable,
as of such last day for the respective
period being tested pursuant to
subsect
