EXHIBIT 10.1

 

FIRST AMENDMENT TO

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this “Agreement”) is dated as of December 23, 2005, and is entered into by and
among BEACON SALES ACQUISITION, INC. (“Borrower”) and the Domestic Subsidiary
Guarantors which are signatories hereto (together with Borrower, “Obligors”);
GENERAL ELECTRIC CAPITAL CORPORATION (“GE Capital”), for itself as a Lender, as
L/C Issuer and as Agent; and the Lenders which are signatories hereto.

 

WHEREAS, Agent, Lenders and Obligors are parties to a certain Third Amended and
Restated Loan and Security Agreement dated as of October 14, 2005 (as such
agreement has been or may hereafter be from time to time amended, supplemented
or otherwise modified, the “Loan Agreement”); and

 

WHEREAS, Borrower has requested that GE Capital, as a Lender, enter into letters
of credit or other credit enhancement to support the payment obligations of
Borrower under any interest rate protection or hedging agreement as described
herein; and

 

WHEREAS, the parties desire to amend the Loan Agreement to provide for such
letters of credit or other credit enhancement as hereinafter set forth.

 

NOW THEREFORE, in consideration of the mutual conditions and agreements set
forth in the Loan Agreement and this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

1.                                      DEFINITIONS.  CAPITALIZED TERMS USED IN
THIS AGREEMENT, UNLESS OTHERWISE DEFINED HEREIN, SHALL HAVE THE MEANING ASCRIBED
TO SUCH TERMS IN THE LOAN AGREEMENT.

 

2.                                      AMENDMENTS TO LOAN AGREEMENT.

 

2.1                                 SECTION 2.1 OF THE LOAN AGREEMENT IS HEREBY
AMENDED BY INSERTING THE FOLLOWING AS (J) THEREOF:

 

“(J)                             Swap Related Reimbursement Obligations.

 

(1)                                  Borrower agrees to reimburse GE Capital in
immediately available funds in the amount of any payment made by GE Capital
under a Swap Related L/C (such reimbursement obligation, whether contingent upon
payment by GE Capital under the Swap Related L/C or otherwise, being herein
called a “Swap Related Reimbursement Obligation”).  No Swap Related
Reimbursement Obligation for any Swap Related L/C may exceed the amount of the
payment

 

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obligations owed by Borrower under the interest rate protection or hedging
agreement or transaction supported by the Swap Related L/C.

 

(2)                                  A Swap Related Reimbursement Obligation
shall be due and payable by Borrower within one (1) Business Day after the date
on which the related payment is made by GE Capital under the Swap Related L/C.

 

(3)                                  Any Swap Related Reimbursement Obligation
shall, during the period in which it is unpaid, bear interest at the rate per
annum equal to LIBOR plus one percent (1%), as if the unpaid amount of the Swap
Related Reimbursement Obligation were a LIBOR Loan, and not at any otherwise
applicable Default Rate.  Such interest shall be payable upon demand.  The
following additional provisions apply to the calculation and charging of
interest by reference to LIBOR:

 

(a)                                  LIBOR shall be determined for each
successive one-month LIBOR Period during which the Swap Related Reimbursement
Obligation is unpaid, notwithstanding the occurrence of any Event of Default and
even if the LIBOR Period were to extend beyond the Termination Date.

 

(b)                                 If a Swap Related Reimbursement Obligation
is paid during a monthly period for which LIBOR is determined, interest shall be
pro-rated and charged for the portion of the monthly period during which the
Swap Related Reimbursement Obligation was unpaid.  Section 2.9(B) and any other
provision relating to the indemnification by Borrower of losses, costs and
expenses relating to LIBOR Loans shall not apply to any payment of a Swap
Related Reimbursement Obligation during the monthly period.

 

(c)                                  Notwithstanding the last paragraph of the
definition of “LIBOR”, if LIBOR is no longer available from Telerate News
Service, LIBOR shall be determined by GE Capital from such financial reporting
service or other information available to GE Capital as in GE Capital’s
reasonable discretion indicates GE Capital’s cost of funds.

 

(4)                                  Except as provided in the foregoing
provisions of this Section 2.1(J) and in Section 10.1, Borrower shall not be
obligated to pay to GE Capital or any of its Affiliates any fees with respect to
Letters of Credit, or any other fees, charges or expenses, in respect of a Swap
Related L/C or arranging for any interest rate protection or hedging agreement
or transaction supported by the Swap Related L/C.  GE Capital and its Affiliates
shall look to the beneficiary of a Swap Related L/C for payment of any such
letter of credit fees or other fees, charges or expenses and such beneficiary
may factor such fees, charges, or expenses into the pricing of any interest rate
protection or hedging agreement or transaction supported by the Swap Related
L/C.

 

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(5)                                  If any Swap Related L/C is revocable prior
to its scheduled expiry date, GE Capital agrees not to revoke the Swap Related
L/C unless the Termination Date or an Event of Default has occurred.

 

(6)                                  GE Capital or any of its Affiliates shall
be permitted to (i) provide confidential or other information furnished to it by
any of the Credit Parties (including, without limitation, copies of any
documents and information in or referred to in Schedule 3.1, financial
statements and other reports contained in the Reporting Rider and Compliance
Certificates) to a beneficiary or potential beneficiary of a Swap Related L/C
and (ii) receive confidential or other information from the beneficiary or
potential beneficiary relating to any agreement or transaction supported or to
be supported by the Swap Related L/C.  However, no confidential information
shall be provided to any Person under this paragraph unless the Person has
agreed to comply with the covenant substantially as contained in Section 10.18
of this Agreement.”

 

2.2                                 SECTION 7.2(B) OF THE LOAN AGREEMENT IS
HEREBY AMENDED TO READ AS FOLLOWS:

 

(B)                                Swap Related Reimbursement Obligations and
those resulting from Currency Rate Agreements and Interest Rate Agreements
entered into by Borrower with any Lender (or Affiliate of a Lender) upon prior
or contemporaneous written notice to Agent or otherwise with Agent’s prior
written approval, including the Interest Rate Agreement in effect on the Closing
Date between Borrower and LaSalle Bank National Association;

 

2.3                                 SECTION 8.7(B) OF THE LOAN AGREEMENT IS
HEREBY AMENDED TO READ AS FOLLOWS:

 

“(b) in the absence of a specific determination by Agent with respect thereto,
the proceeds of any sale of, or other realization upon, all or any part of the
Collateral shall be applied: first, to all fees, costs and expenses incurred by
or owing to Agent and then any Lender with respect to this Agreement, the other
Loan Documents or the Collateral; second, to accrued and unpaid interest on the
Loans, on unpaid Swap Related Reimbursement Obligations and on unpaid
Obligations under Interest Rate Agreements and Currency Rate Agreements
(including any interest which but for the provisions of any bankruptcy or
insolvency law would have accrued on such amounts), ratably in proportion to the
interest accrued as to each Loan, unpaid Swap Related Reimbursement Obligation
and unpaid Obligations under each Interest Rate Agreement and Currency Rate
Agreement, as applicable; third, to the principal amounts of the Loans, unpaid
Swap Related Reimbursement Obligations and unpaid Obligations under Interest
Rate Agreements and Currency Rate Agreements, and the Letter of Credit
Obligations outstanding, ratably to the aggregate combined principal balance of
the Loans, unpaid Swap Related Reimbursement Obligations, unpaid Obligations
under each Interest Rate Agreement and Currency Rate Agreement, and outstanding
Letter of Credit Obligations; and fourth, to any other Obligations of Borrower
owing to Agent or any Lender under the Loan Documents or in respect of any
Banking Services”.

 

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2.4                                 THE LAST PROVISO OF THE FIRST SENTENCE OF
SECTION 9.4(A)OF THE LOAN AGREEMENT IS HEREBY AMENDED TO READ AS FOLLOWS:

 

“; provided, further, no amendment, modification, termination or waiver
affecting the rights or duties of Agent or L/C Issuer, or of GE Capital in
respect of any Swap Related Reimbursement Obligations, under this Agreement or
any other Loan Document including any release of any guaranty or Collateral
requiring a writing signed by all Lenders,  shall in any event be effective
unless in writing and signed by Agent or L/C Issuer or GE Capital, as the case
may be, in addition to Lenders required to take such action”.

 

2.5                                 SECTION 9.5 OF THE LOAN AGREEMENT IS HEREBY
AMENDED BY INSERTING THE FOLLOWING AS (F) THEREOF:

 

“(F)                           Nothing contained in this Section 9 shall require
the consent of any party for GE Capital to assign any of its rights in respect
of any Swap Related Reimbursement Obligation.”

 

2.6                                 SUBSECTION 11.1 OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY INSERTING THE FOLLOWING NEW DEFINITIONS IN THEIR PROPER
ALPHABETICAL ORDER:

 

““Swap Related L/C” means a letter of credit or other credit enhancement
provided by GE Capital to the extent supporting the payment obligations by
Borrower under an interest rate protection or hedging agreement or transaction
(including, but not limited to, interest rate swaps, caps, collars, floors and
similar transactions) designed to protect or manage exposure to the fluctuations
in the interest rates applicable to any of the Loans, and which agreement or
transaction Borrower entered into as the result of a specific referral pursuant
to which GE Capital, GE Corporate Financial Services, Inc. or any other
Affiliate of GE Capital had arranged for Borrower to enter into such agreement
or transaction.  The term includes a Swap Related L/C as it may be increased
from time to time fully to support Borrower’s payment obligations under any and
all such interest rate protection or hedging agreements or transactions.”

 

““Swap Related Reimbursement Obligation” has the meaning ascribed to it in
Section 2.1(J).”

 

2.7                                 THE DEFINITIONS OF “LETTERS OF CREDIT”,
“OBLIGATIONS”, “PERMITTED SMALL ACQUISITIONS” AND “RESERVES” SET FORTH IN
SUBSECTION 11.1 OF THE LOAN AGREEMENT ARE HEREBY AMENDED TO READ AS FOLLOWS:

 

““Letters of Credit” means documentary or standby letters of credit issued for
the account of Borrower by any L/C Issuer, and bankers’ acceptances issued by
Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.  The term does not include a Swap Related L/C.”

 

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““Obligations” means all obligations, liabilities and indebtedness of every
nature of each Loan Party from time to time owed to Agent or to any Lender (or
any Affiliate of any Lender) under the Loan Documents (whether incurred before
or after the Termination Date) including the principal amount of all debts,
claims and indebtedness, accrued and unpaid interest and all fees, costs and
expenses, whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or payable
including, without limitation, all interest, fees, cost and expenses accrued or
incurred after the filing of any petition under any bankruptcy or insolvency law
whether or not allowed in such proceeding.  Obligations shall also include
(i) all obligations of the Loan Parties to any Lender (or any Affiliate of any
Lender) in respect of Banking Services and (ii) all obligations of the Loan
Parties in respect of Swap Related Reimbursement Obligations.”

 

““Permitted Small Acquisition” means a Permitted Acquisition for which the
purchase price payable in connection therewith (together with all transaction
costs incurred in connection therewith) does not exceed $7,000,000.”

 

““Reserves” means, with respect to the Borrowing Base (a) the Credit Memoranda
Reserve and the Dilution Reserve, (b) a reserve in the amount of the outstanding
amount of Swap Related Reimbursement Obligations and Obligations under Interest
Rate and Currency Rate Agreements marked-to-market on a monthly basis, and
(c) other reserves against Eligible Accounts, Eligible Inventory or Consolidated
Borrowing Base that Agent may, in its reasonable credit judgment, establish from
time to time, with prior or contemporaneous notice to Borrower.”

 

3.                                      CONDITIONS.  THE EFFECTIVENESS OF THIS
AGREEMENT IS SUBJECT TO THE FOLLOWING CONDITIONS PRECEDENT (UNLESS SPECIFICALLY
WAIVED IN WRITING BY AGENT AND LENDERS):

 

(A)                                  OBLIGORS, AGENT AND LENDERS SHALL HAVE
EXECUTED AND DELIVERED THIS AGREEMENT; PROVIDED, THAT THE AMENDMENT TO THE
DEFINITION OF “PERMITTED SMALL ACQUISITION” SET FORTH IN SECTION 2.6 HEREIN
SHALL BECOME EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY THE OBLIGORS,
AGENT AND REQUISITE LENDERS;

 

(B)                                 BORROWER SHALL HAVE DELIVERED SUCH OTHER
DOCUMENTS AS AGENT MAY HAVE REASONABLY REQUESTED;

 

(C)                                  NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING; AND

 

(D)                                 BEACON CANADA, CANADIAN FACILITY AGENT AND
CANADIAN FACILITY LENDERS SHALL HAVE ENTERED INTO AN AMENDMENT TO THE CANADIAN
FACILITY CREDIT AGREEMENT AND THE CANADIAN FACILITY INTERCREDITOR AGREEMENT IN
FORM AND SUBSTANCE SATISFACTORY TO AGENT, TOGETHER WITH A REAFFIRMATION BY
HOLDINGS AND BY EACH OBLIGOR OF THEIR RESPECTIVE OBLIGATIONS UNDER THE CANADIAN
FACILITY LOAN DOCUMENTS TO WHICH IT IS A PARTY.

 

4.                                      REPRESENTATIONS AND WARRANTIES.  TO
INDUCE AGENT AND LENDERS TO ENTER INTO THIS AGREEMENT, OBLIGORS REPRESENT AND
WARRANT TO AGENT AND LENDERS:

 

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(A)                                  THAT THE LOAN PARTIES HAVE ALL REQUISITE
ORGANIZATIONAL POWER AND AUTHORITY TO ENTER INTO, AND CARRY OUT THE TRANSACTIONS
CONTEMPLATED BY, THIS AGREEMENT AND ALL OTHER AGREEMENT AND DOCUMENTS EXECUTED
IN CONNECTION THEREWITH TO WHICH SUCH LOAN PARTIES ARE PARTIES.

 

(B)                                 THAT THE EXECUTION, DELIVERY AND PERFORMANCE
OF THIS AGREEMENT AND ALL OTHER AGREEMENTS AND DOCUMENTS EXECUTED IN CONNECTION
THEREWITH HAVE BEEN DULY AUTHORIZED BY ALL REQUISITE ACTION ON THE PART OF THE
LOAN PARTIES WHICH ARE PARTIES THERETO AND THAT THIS AGREEMENT HAS BEEN DULY
EXECUTED AND DELIVERED BY BORROWER;

 

(C)                                  THAT EACH OF THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN SECTION 4 OF THE LOAN AGREEMENT (OTHER THAN THOSE WHICH,
BY THEIR TERMS, SPECIFICALLY ARE MADE AS OF CERTAIN DATE PRIOR TO THE DATE
HEREOF) ARE TRUE AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE HEREOF; AND

 

(D)                                 THAT, AFTER GIVING EFFECT TO THIS AGREEMENT,
NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.

 

5.                                      SEVERABILITY.  ANY PROVISION OF THIS
AGREEMENT HELD BY A COURT OF COMPETENT JURISDICTION TO BE INVALID OR
UNENFORCEABLE SHALL NOT IMPAIR OR INVALIDATE THE REMAINDER OF THIS AGREEMENT AND
THE EFFECT THEREOF SHALL BE CONFINED TO THE PROVISION SO HELD TO BE INVALID OR
UNENFORCEABLE.

 

6.                                      COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN ONE OR MORE COUNTERPARTS, EACH OF WHICH SHALL CONSTITUTE AN
ORIGINAL, BUT ALL OF WHICH TAKEN TOGETHER SHALL BE ONE AND THE SAME INSTRUMENT.

 

7.                                      RATIFICATION.  EXCEPT AS EXPRESSLY SET
FORTH HEREIN, THE TERMS AND PROVISIONS SET FORTH IN THIS AGREEMENT SHALL NOT BE
DEEMED TO BE A MODIFICATION OR WAIVER OF ANY TERM OR CONDITION OF THE LOAN
AGREEMENT.  THE TERMS AND PROVISIONS OF THE LOAN AGREEMENT, AS AMENDED HEREBY,
AND THE OTHER LOAN DOCUMENTS ARE RATIFIED AND CONFIRMED AND SHALL CONTINUE IN
FULL FORCE AND EFFECT AND ALL COLLATERAL ENCUMBERED BY ANY OF THE LOAN DOCUMENTS
WILL CONTINUE TO SECURE, TO THE FULLEST EXTENT POSSIBLE, THE PAYMENT AND
PERFORMANCE OF ALL OBLIGATIONS UNDER OR IN RESPECT OF THE LOAN AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed under seal and delivered by their respective duly authorized officers
on the date first written above

 

 

BEACON SALES ACQUISITION, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

QUALITY ROOFING SUPPLY

 

COMPANY, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

BEACON CANADA, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

BEST DISTRIBUTING CO.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

THE ROOF CENTER, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

WEST END LUMBER COMPANY, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

J.G.A. BEACON, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

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SDI HOLDING, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

SDI ACQUISITION GUARANTOR, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

SHELTER DISTRIBUTION, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

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GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent, an L/C Issuer and a
Lender

 

 

 

By: /s/ Ken A. Brown

 

 

 Its Authorized Signatory

 

 

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BANK OF AMERICA, N.A.

 

as a Lender

 

 

 

By: /s/ Jason Riley

 

 

Title: Vice President

 

 

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THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender

 

 

 

By: /s/ Chad Ramsey

 

 

Title: Vice President

 

 

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LASALLE BANK NATIONAL

 

ASSOCIATION, a national banking

 

association, as a Lender

 

 

 

By: /s/ Andrew Heinz

 

 

Title: Vice President

 

 

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JP MORGAN CHASE BANK, N.A., as a Lender

 

 

 

By: /s/ Stephen Christ

 

 

Title: Account Executive

 

 

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WACHOVIA CAPITAL FINANCE
CORPORATION (CENTRAL), as a Lender

 

 

 

By: /s/ Vicky Geist

 

 

Title: Vice President

 

 

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UPS CAPITAL CORPORATION, as a Lender

 

 

 

By: /s/ John P. Holloway

 

 

Title: Director of Portfolio Management

 

 

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FIFTH THIRD BANK, as a Lender

 

 

 

By: /s/ John T. Penny

 

 

Title: Vice President

 

 

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ANTARES CAPITAL CORPORATION,

 

as a Lender

 

 

 

By: /s/ Chester R. Zara

 

 

Title: Director

 

 

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CONSENT AND REAFFIRMATION (HOLDINGS)

 

The undersigned hereby (i) acknowledges receipt of a copy of the foregoing First
Amendment to Third Amended and Restated Loan and Security Agreement;
(ii) consents to Obligors’ execution and delivery thereof; and (iii) affirms
that nothing contained therein shall modify in any respect whatsoever its
guaranty of the obligations of Borrower to Agent and Lenders pursuant to the
terms of that certain Guaranty dated as of March 12, 2004 (the “Holdings
Guaranty”) and reaffirms that the Holdings Guaranty is and shall continue to
remain in full force and effect and that each Loan Document to which it is a
party or otherwise bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent possible, the
payment and performance of all obligations under or in respect of the Holdings
Guaranty and such other Loan Documents.  Although the undersigned has been
informed of the matters set forth herein and has acknowledged and consented to
same, the undersigned understands that Agent and Lenders have no obligation to
inform it of such matters in the future or to seek its acknowledgment or consent
to future agreements or waivers, and nothing herein shall create such a duty.

 

IN WITNESS WHEREOF, the undersigned has executed this Consent and Reaffirmation
on and as of the date of such Agreement.

 

 

BEACON ROOFING SUPPLY, INC.

 

 

 

By: /s/ David R. Grace

 

 

Title: Chief Financial Officer

 

 

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