Exhibit 10.17


 


AMENDMENT
NO. 5

TO

SECOND AMENDED AND RESTATED FINANCING AND SECURITY

AGREEMENT


 












 


This AMENDMENT NO. 5 TO SECOND AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT (this “Amendment”) is made
as of September 8, 2003 by and among FLEET CAPITAL CORPORATION, a
Rhode Island corporation, individually as a Lender and as Agent (in such
capacity, “Agent”) for itself, and any other financial institution which
becomes a party to the Financing and Security Agreement described below (each
such financial institution, including Agent is referred to hereinafter
individually as a “Lender” and collectively as “Lenders”), LENDERS,
HENRY
COMPANY, a California corporation (“Henry”), and KIMBERTON
ENTERPRISES, INC., a Delaware corporation (“Kimberton”)
(Henry, together with Kimberton, are referred to hereinafter each individually
as a “Borrower” and collectively as “Borrowers”).


 


RECITALS


 


WHEREAS,
Agent, Lenders, and Borrowers are parties to that certain Second Amended and
Restated Financing and Security Agreement dated as of August 23, 2001, as
amended by that certain Amendment No. 1 to Second Amended and
Restated Financing and Security Agreement dated as of June 3, 2002, that
certain Amendment No. 2 to Second Amended and Restated Financing and Security
Agreement dated as of August 2, 2002, that certain Amendment No. 3 to
Second Amended and Restated Financing and Security Agreement dated as of
April 28, 2003, and that certain Amendment No. 4 to Second Amended and
Restated Financing and Security Agreement dated as of May 29, 2003  (as further amended, amended and restated,
supplemented or otherwise modified from time to time, the “Financing and
Security Agreement”);


 


WHEREAS,
Borrowers have requested certain amendments to the Financing and Security
Agreement;


 


WHEREAS,
each Lender has agreed, subject to and in accordance with the terms and
conditions set forth herein, to amend the Financing and Security Agreement; and


 


WHEREAS,
Section 11.10 of the Financing and Security Agreement provides that the
Financing and Security Agreement may be amended, and provisions thereof may be
waived, by the written consent of Agent, each Borrower, and the Lenders, as
specified in such Section 11.10 of the Financing and Security Agreement.


 

















 


NOW,
THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:


 


SECTION 1.         RELATION
TO THE FINANCING AND SECURITY AGREEMENT; 
DEFINITIONS.


 


1.1           Relation to
Financing and Security Agreement. 
This Amendment constitutes an integral part of the Financing and
Security Agreement and shall be deemed to be a Loan Document for all purposes.


 


1.2           Capitalized Terms.  For all purposes of this Amendment,
capitalized terms used herein without definition shall have the meanings
specified in the Financing and Security Agreement, as said agreement shall be
in effect on the Amendment Effective Date (as hereinafter defined) after giving
effect to this Amendment.


 


SECTION 2.         AMENDMENT
TO THE FINANCING AND SECURITY AGREEMENT.


 


A.            Amendment to
Sections of the Financing and Security Agreement


 


2.1           Amendment to
Section 1.3 of the Financing and Security Agreement. Section 1.3
of the Financing and Security Agreement is hereby amended by deleting it in its
entirety and replacing it with the following new Section 1.3:


 


1.3  Capex
Loans.


 


1.3.1
Capex Loan A.  Each Lender,
severally and not jointly, upon ten (10) Business Days’ prior written notice to
Agent by Borrowers specifying the date, amount and purpose (except for the
refinancing of amounts outstanding under CapEx Loan A outstanding as of
September 8, 2003 which shall not require such notice) and for so long as
no Default or Event of Default exists, agrees to make capital expenditure loans
(collectively, the “Capex Loan A”) to Borrowers, in the aggregate principal
amount of the product of such Lender’s Capex Loan A Percentage and the lesser
of (i) Capex Loan A Availability and (ii) the sum of (1) seventy-five
percent (75%) of  the appraised value
(less any environmental remediation costs) of Eligible Real Property  as determined by  Agent plus (2) eighty-five percent
(85%)  of the gross orderly liquidation
value of Eligible Production Equipment as determined by Agent plus (3) $3,000,000.  All Capex Loan A borrowings shall be equal
to at least $250,000 and in integral multiples of $50,000.  The Capex Loan A shall be repayable in
accordance with the terms of the Capex Loan A Notes and shall amortize on a
monthly basis based upon an 84 month amortization schedule. The


 


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Capex
Loan A shall bear interest  in
accordance with Section 2.1 and shall be secured by all of the
Collateral.  The proceeds of Capex Loan
A shall be used solely for the repurchase of the Senior Notes in accordance
with Section 8.2.18 and to refinance amounts outstanding under Capex Loan
A as of September 8, 2003. The outstanding unpaid principal balance and
all accrued and unpaid interest under Capex Loan A shall be due and payable on
the date of termination of this Agreement, whether by its terms, by prepayment,
or by acceleration.  Amounts borrowed as
Capex Loan A and repaid may not be re-borrowed.


 


1.3.2
Capex Loan B.  Each Lender,
severally and not jointly, may, in its sole and absolute discretion and upon
ten (10) Business Days’ prior written notice to Agent by Borrowers
specifying the date, the amount, the purpose and a detailing listing of the
Eligible Production Equipment to be purchased and for so long as no Default or
Event of Default exists, make capital expenditure loans (collectively the
“Capex Loan B”) to Borrowers in the aggregate principal amount of the
product of such Lender’s Capex Loan B Percentage multiplied by the lesser
of (i) $1,000,000 and (ii) an amount equal to eighty-five percent (85%) of
the gross orderly liquidation value of Eligible Production Equipment as
determined by Agent.  The proceeds of Capex Loan B shall be used
solely for the purchase of Eligible Production Equipment.  All Capex Loan B borrowings shall be equal
to at least $250,000 and in integral multiples of $50,000.  The Capex Loan B shall be repayable in
accordance with the terms of the Capex Loan B Notes and shall amortize on
a monthly basis based upon an 84 month amortization schedule.  Capex 
Loan B shall bear interest in accordance with Section 2.1 and shall
be secured by all of the Collateral. The outstanding unpaid principal balance
and all accrued and unpaid interest under Capex Loan B shall be due and payable
on the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. Amounts borrowed as Capex Loan B and repaid may
not be re-borrowed.


 


2.2           Amendment to
Section 2.6 of the Financing and Security Agreement. Section 2.6
of the Financing and Security Agreement is hereby amended by deleting it in its
entirety and replacing it with the following new Section 2.6:


 


2.6           Borrowers shall pay to
Agent, for the ratable benefit of Lenders, a fee (the “Unused Line Fee”) equal
to .375% per annum multiplied by the average daily amount by which (a) the
Revolving Credit Maximum Amount exceeds (b) the sum of (i)


 


3

















 


the
outstanding principal balance of the Revolving Credit Loans, plus (ii) the LC
Amount.  The Unused Line Fee shall be
payable monthly in arrears on the first day of each month hereafter.


 


2.3           Amendment to
Section 2.7 of the Financing and 
Security Agreement. 
Section 2.7 of the Financing and Security Agreement is hereby
amended by deleting it in its entirety and replacing it with the following new
Section 2.7:


 


2.7           Borrowers shall pay to
Agent, for the ratable benefit of Lenders, a fee in the event that on or before
September 8, 2005, Borrowers elect to repay the Loans in full and
terminate all Revolving Loan Commitments (the “Prepayment Fee”).  Such fee shall be payable upon repayment of
the Loans and shall be in an amount
equal to (i) two percent (2%) of the Total Credit Facility if the Loans are
repaid and the Revolving Loan Commitments are terminated on or before
September 8, 2004, (ii) one percent (1%) of the Total Credit Facility
if the Loans are repaid and the Revolving Loan Commitments are terminated after
September 8, 2004, but on or before September 8, 2005, and (iii)
zero, if the Loans are repaid and the Revolving Loan Commitments are terminated
after September 8, 2005.  The
foregoing to the contrary notwithstanding, in the event (a) all of the
Securities of the Borrowers are sold to Persons who are not (i) Affiliates of
Borrowers, (ii) Warner W. Henry or any of his Affiliates, or (iii) the
Henry Trust or any of its Affiliates, and the Obligations are paid in full or
(b) the Obligations are refinanced by Bank, then the Prepayment Fee shall be zero.


 


2.4           Amendment to
Section 3.3.2 of the Financing and 
Security Agreement. 
Section 3.3.2 of the Financing and Security Agreement is hereby
amended by deleting it in its entirety and replacing it with the following new
Section 3.3.2:


 


3.3.2        Excess Cash Flow Recapture.  Borrowers shall prepay the Capex Loan Notes
in amounts equal to fifty percent (50%) of Borrowers’ Excess Cash Flow
with respect to each fiscal year of Borrowers during the Term hereof, with the
first payment commencing in the fiscal year 2004. All such prepayments  will be based upon, and made within 5
Business Days following the due date for delivery by Borrowers to Agent of the
annual financial statements required by subsection 8.1.3(i) for fiscal year
2003 and each year thereafter. Each such prepayment shall be applied to the
Loans in the manner specified in the second sentence of subsection 3.3.1
until payment thereof in full.


 


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2.5           Amendment to
Section 3.3.4 of the Financing and 
Security Agreement. 
Section 3.3.4 of the Financing and Security Agreement is hereby
amended by deleting it in its entirety and replacing it with the following new
Section 3.3.4:


 


3.3.4        [Intentionally Omitted].


 


2.6           Amendment to
Section 4.1 of the Financing and Security Agreement.  Section 4.1 of the Financing and
Security Agreement is hereby amended by deleting it in its entirety and
replacing it with the following new Section 4.1:


 


4.1           Subject to the right of
Lenders to cease making Loans to Borrowers during the continuance of any
Default or Event of Default, this Agreement shall be in effect for a period of
five years from the date of Amendment No. 5, through and including
January 31, 2008 (the “Term”), unless terminated as provided in
Section 4.2 hereof.


 


2.7           Amendment to
Section 8.2.18 of the Financing and Security Agreement.  Section 8.2.18 of the Financing and
Security Agreement is hereby amended by deleting it in its entirety and
replacing it with the following new Section 8.2.18:


 


8.2.18                      Senior
Notes.  Purchase or pre-pay, or make
or permit any Subsidiary of any Borrower to purchase or pre-pay, the Senior
Notes without the prior written consent of Lenders; provided, however,
any Borrower shall be permitted to purchase Senior Notes from Persons who are
not (i) Affiliates of Borrowers, (ii) Warner W. Henry or any of his
Affiliates, or (iii) the Henry Trust or any of its Affiliates so long as:


 


(i) no
Default or Event of Default has occurred and is continuing or would result
therefrom;


 


(ii) Borrowers
have certified to Agent in writing that such repurchase is not from
(1) Persons who are Affiliates of Borrowers, (2) Warner W. Henry or
any of his Affiliates, or (3) the Henry Trust or any of its Affiliates;


 


(iii)
Borrower has provided Agent with written confirmation, supported by reasonably
detailed calculations, that after giving effect to such purchase Availability
is not less than $5,000,000 at all times during the 60 day period prior to such
purchase;


 


(iv)
immediately after giving effect to such purchase, Availability is not less than
$5,000,000; and


 


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(v)
Borrower has provided Agent with written confirmation, supported by reasonably
detailed calculations, that the Fixed Charge Ratio is not less than 1.10:1.00
for the trailing twelve month period measured as of the last date for which
financial statements are due pursuant to Section 8.1.3 prior to
such purchase.


 


2.8           Amendment to
Section 8.3.1 of the Financing and Security Agreement.  Section 8.3.1of the Financing and
Security Agreement is hereby amended by deleting it in its entirety and
replacing it with the following new Section 8.3.1:


 


8.3.1        During the Term, and
thereafter for so long as there are any Obligations outstanding, Borrowers
covenant that, unless otherwise consented to by Majority Lenders in writing,
Borrowers shall maintain a Fixed Charge Ratio of not less than 1.10:1.00
measured on a quarter-end basis for the trailing twelve month period.


 


2.9           Amendment to
Section 11.10 of the Financing and Security Agreement.  Section 11.10 of the Financing and
Security Agreement is hereby amended by deleting the references to “Capex Loan
C Commitment.”


 


B.            Amendments to
Appendix A to Replace Definitions.  Appendix
A to the Financing and Security Agreement is amended to delete each of the
following definitions in their entirety and replace them with the following:


 


“Applicable Margin” means the rates for Base
Rate Portions and the LIBOR Portions set forth below:


 


	
  Level

  	
   

  	
  Performance

  Criteria

  	
   

  	
  Base Rate

  Capex

  Portions

  	
   

  	
  LIBOR

  Capex

  Portions

  	
   

  	
  Base Rate

  Revolving

  Portions

  	
   

  	
  LIBOR

  Revolving

  Portions

  	
   

  
	
  I

  	
   

  	
  If the Fixed Charge
  Ratio is greater than  1.30:1.00

  	
   

  	
  0

  	
  %

  	
  2.25

  	
  %

  	
  0

  	
  %

  	
  2.00

  	
  %

  
	
  II

  	
   

  	
  If the Fixed Charge
  Ratio is greater than 1.20:1.00 but less than  or equal to 1.30:1.00

  	
   

  	
  0

  	
  %

  	
  2.50

  	
  %

  	
  0

  	
  %

  	
  2.25

  	
  %

  
	
  III

  	
   

  	
  If the Fixed Charge
  Ratio is less than or equal to 
  1.20:1.00

  	
   

  	
  .50

  	
  %

  	
  2.75

  	
  %

  	
  .25

  	
  %

  	
  2.50

  	
  %

  



 


6

















 


Initially, the Applicable Margin shall be at Level II
through the date that Agent receives certified calculation of the Fixed Charge
Ratio in respect of quarter ending December 31, 2003 delivered by
Borrowers pursuant to Section 8.1.3. 
Thereafter, the Applicable Margin shall be adjusted quarterly as of the
first day of the month following the date Borrowers deliver to Agent a
certificated calculation of the Fixed Charge Ratio pursuant to Section 8.1.3.


 


Base Rate Capex Portion – means a
Base Rate Capex A Portion and/or Base Rate Capex B Portion.


 


Capex Loans – means the Capex Loan A
and Capex Loan B.


 


Capex Loan A Commitment – with
respect to any Lender, the amount of such Lender’s Capex A Loan Commitment as
set forth next to such Lender’s name on the signature pages to Amendment No. 5,
minus all Capex Loan A payments made to such Lender.


 


Capex Loan B Commitment – with
respect to any Lender, the amount of such Lender’s Capex  B Loan Commitment as set forth next to such
Lender’s name on the signature pages to the Amendment No. 5, minus all
Capex Loan A payments made to such Lender.


 


Capex Loan Commitments – means the
Capex Loan A Commitments and the Capex Loan B Commitments.


 


Capex Loan Notes – means the Capex
Loan A Notes and the Capex Loan B Notes.


 


Capex Loan Percentage – means the
Capex Loan A Percentage and the Capex Loan B Percentage.


 


Eligible Production Equipment –
means and includes any equipment that satisfies all of the following:  (i) 
is fully operational, (ii) is located at real Property owned by
Borrowers or at premises leased by Borrowers and Agent has received a landlord
waiver in form and substance acceptable to Agent with respect thereto, and
(iii) is otherwise acceptable to Agent in its reasonable credit judgment; but
in no event shall any computer equipment or hardware, computer software,
telephones and/or telephone systems constitute Eligible Production Equipment.


 


LIBOR Capex Portion – means a LIBOR
Capex A Portion and/or a LIBOR Capex B Portion.


 


Loan Commitment – with respect to
any Lender, the amount of such Lender’s Revolving Loan Commitment plus
such Lender’s Capex Loan A Commitment plus such Lender’s Capex Loan B
Commitment.


 


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Loan Documents – the Agreement,
Amendment No. 1,  Amendment No. 2,
Amendment No. 3, Amendment No. 5,  the
Other Agreements and the Security Documents.


 


C.            Amendments to
Appendix A to Add Definitions. 
Appendix A to the Financing and Security Agreement is amended to add
each of the following definitions, in alphabetical order:


 


Adjusted Net Earnings From Operations
– with respect to any fiscal period, means the net earnings (or loss) after
provision for income taxes for such fiscal period of Borrowers, as reflected on
the financial statement of Borrowers 
supplied to Agent pursuant to Section 8.1.3 of the Agreement, but
excluding the net earnings (or loss) for Bakor and excluding from the net
earnings (or loss) for Borrowers:


 


(i)            any gain or loss
arising from the sale of capital assets;


 


(ii)           any gain arising from
any write up of assets;


 


(iii)          earnings of any
Subsidiary of any Borrower accrued prior to the date it became a Subsidiary;


 


(iv)          earnings of any
corporation, substantially all the assets of which have been acquired in any
manner by any Borrower, realized by such corporation prior to the date of such
acquisition;


 


(v)           net earnings of any business
entity (other than a Subsidiary of any Borrower) in which any Borrower has an
ownership interest unless such net earnings shall have actually been received
by any Borrower in the form of cash distributions;


 


(vi)          any portion of the net
earnings of any Subsidiary of any Borrower which for any reason is unavailable
for payment of dividends to any Borrower;


 


(vii)         the earnings of any
Person to which any assets of any Borrower shall have been sold, transferred of
disposed of, or into which any Borrower shall have merged, or been a party to
any consolidation or other form of reorganization, prior to the date of such
transaction;


 


(viii)        any gain arising from the
acquisition of any Securities of any Borrower; and


 


(ix)           any gain arising from
extraordinary or non-recurring items.


 


Amendment No. 5 – Amendment  No. 5 to Second Amended and Restated
Financing and Security Agreement dated as of September 8, 2003 by and
among Agent, each Borrower, and each Lender.


 


Amendment No. 5 Effective Date – as
defined in Amendment No. 5.


 


8

















 


Capex Loan A Availability – means,
as of any date of determination, (i) $9,000,000 minus (ii) the product
of (1) $107,000 multiplied by (2) the number of full or partial months elapsed
since September 8, 2003 minus (iii) the aggregate amounts of Capex
Loan A outstanding.


 


Cash Flow - for any period, means
Borrowers’ Consolidated (i) Adjusted Net Earnings from Operations for such
period, plus (ii) depreciation and amortization expenses for such
period, plus (iii) deferred taxes for such period, plus (iv)
interest expense for such period, minus (v) Capital Expenditures not
financed by Capex Loans hereunder or borrowings under any other financing
arrangement otherwise permitted hereunder during any such period, minus
(vi) cash taxes paid, all as determined in accordance with GAAP.


 


Eligible Real Property – means real
Property owned by Borrowers (i) for which all additional environmental
reviews reasonably requested by Agent have been conducted with respect to such
real Property, and the scope and results of such reviews are acceptable to
Agent in its sole discretion, (ii) for which Agent has, for the ratable
benefit of Lenders, a first priority lien on such real Property, and
(iii) that is otherwise acceptable to Agent in its sole discretion.  Any real Property with remediation costs in
excess of twenty percent (20%) of its appraised value shall be deemed
ineligible for purposes of the Capex Loans.


 


Fixed Charges - for any period,
means the current portion of long-term debt plus interest payments required to
be made during such period, all as determined in accordance with GAAP.


 


Fixed Charge Ratio – means the ratio
of Cash Flow to Fixed Charges.


 


Prepayment Fee – has the meaning
specified in Section 2.7.


 


D.            Amendments to
Appendix A to Delete Definitions.  Appendix
A to the Financing and Security Agreement is amended to delete each of the
following definitions:  Base Rate Capex
C Portion, Capex Loan C, Capex Loan C Commitment, Capex Loan C Notes, Capex
Loan C Percentage and LIBOR Capex C Portion.


 


E.             Exhibits.  The Exhibits to the Financing and Security
Agreement are amended by deleting Exhibit 1.3A, Exhibit 1.3B and
Exhibit 8.1.3 and replacing them with Exhibit 1.3A, Exhibit 1.3B
and Exhibit 8.1.3 attached hereto as Exhibit A.  Exhibit 1.3C to the Financing and Security Agreement is
hereby deleted in its entirety.


 


SECTION 3.         REPRESENTATIONS
AND WARRANTIES AND COVENANTS OF THE BORROWERS.


 


3.1           Representations and
Warranties.  To induce Agent and
each Lender to execute and deliver this Amendment, each Borrower represents and
warrants (which representations and warranties shall survive the execution and
delivery of this Amendment) to Agent and each Lender that:


 


9

















 


A.            Authority.  This Amendment has been duly authorized,
executed and delivered by it and this Amendment constitutes the legal, valid
and binding obligation, contract and agreement of each Borrower, enforceable
against it in accordance with its terms;


 


B.            Validity of Loan
Documents.  The Loan Documents, as
amended by this Amendment, constitute the legal, valid and binding obligations,
contracts and agreements of each Borrower, enforceable against it in accordance
with their respective terms;


 


C.            Power and Authority.  The execution, delivery and performance of
this Amendment has been duly authorized by all necessary corporate or other
relevant action and does not and will not (i) require any consent or approval
of the shareholders of any Borrower or any of the shareholders, partners or
members, as the case may be, of any Subsidiary of Borrower; (ii) contravene any
Borrower’s or any of its Subsidiaries’ charter, articles or certificate of
incorporation, partnership agreement, certificate of formation, by-laws,
limited liability agreement, operating agreement or other organizational
documents (as the case may be); (iii) violate, or cause any Borrower or any of
its Subsidiaries to be in default under, any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
in effect having applicability to any Borrower or any of its Subsidiaries, the
violation of which would reasonably be expected to have a Material Adverse
Effect; (iv) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to
which any Borrower or any of its Subsidiaries is a party or by which it or its
Properties may be bound or affected, the breach of or default under which would
reasonably be expected to have a Material Adverse Effect; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired
by Borrower or any of its Subsidiaries;


 


D.            No Default or Event
of Default.  As of the date hereof
and after giving effect to this Amendment, no Default or Event of Default has
occurred which is continuing; and


 


E.             Capex Loan A
Amounts.  As of the Amendment
Effective Date, $1,537,283.98 in principal and $1,949.58 in interest is owed by
each Borrower under the Capex Loan A.


 


F.             All Other
Representations and Warranties.  All
the representations and warranties contained in Section 7.1 of the
Financing and Security Agreement are true and correct in all material respects
with the same force and effect as if made by each Borrower on and as of the
date hereof.


 


SECTION 4.         CONDITIONS
TO EFFECTIVENESS OF THIS AMENDMENT.


 


4.1           Amendment Effective
Date.  This Amendment shall not become
effective until, and shall become effective when, each and every one of the
following


 


10

















 


conditions shall have been satisfied or waived by Agent and each Lender
(the “Amendment Effective Date”):


 


A.            Execution.  Counterparts of this Amendment, in form and
substance satisfactory to Agent and each Lender, shall have been executed and
delivered to Agent by Agent, each Borrower, and each Lender;


 


B.            Capex Note.  The 
Capex Loan A Note and Capex Loan B Note 
shall have been duly executed and delivered to Agent by each Borrower.


 


C.            Revolving Note.  Each Borrower shall have executed and
delivered to Agent the Revolving Note attached as Exhibit B hereto.


 


D.            Assignment
Agreement.  LaSalle Business Credit,
Inc. (“LaSalle”) shall have executed and delivered to Agent an
assignment agreement, in form and substance satisfactory to Agent, assigning
100% of its Commitments to Fleet Capital Corporation.


 


E.             Delivery of Notes
by LaSalle.  LaSalle shall have
delivered to Agent the originals of any and all promissory notes previously
delivered to it  in connection with its
Capex Loan A Commitment, Capex Loan B Commitment, Capex Loan C Commitment, and
its Revolving Loan Commitment.


 


F.             Proceedings,
Instruments, etc.  All proceedings
and actions taken on or prior to the Amendment Effective Date in connection
with the transactions contemplated by this Amendment and all instruments
incident thereto shall be in form and substance satisfactory to Agent and its
counsel, and Agent and its counsel shall have received copies of all documents
that it or they may request in connection with such proceedings, actions and
transactions, in each case in form and substance satisfactory to Agent and its
counsel.


 


SECTION 5.         MISCELLANEOUS.


 


5.1           Cross-References.  References in this Amendment to any
Section are, unless otherwise specified, to such Section of this
Amendment.


 


5.2           Instrument Pursuant
to Existing Financing and Security Agreement; Limited Amendment.  This Amendment is executed pursuant to
Section 11.10 of the Financing and Security Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered, and applied
in accordance with all of the terms and provisions of the Financing and
Security Agreement, including Section 11.10 thereof.  Except as expressly amended or waived
herein, all of the representations, warranties, terms, covenants and conditions
of the Financing and Security Agreement shall remain unamended and unwaived and
shall continue to be, and shall remain, in full force and effect in accordance
with their respective terms. Agent and each Lender specifically reserve all of
their respective rights and remedies against each Borrower under the Loan
Documents, applicable law, or otherwise


 


11

















 


with respect to any Default or Event of Default.  Neither Agent, nor any Lender shall have
been deemed to have waived any term or condition of the Financing and Security
Agreement or any other Loan Document, at law, in equity or otherwise on account
of any Default or Event of Default.  The
amendments and waivers set forth herein shall be limited precisely as provided
for herein and shall not be deemed to be a waiver of, forbearance of, amendment
of, consent to or modification of any other term, provision, Default or Event
of Default under the Financing and Security Agreement or of any other provision
of any other instrument referred to therein or herein or of any transaction or
further or future action on the part of any Borrower which would require the
consent of Agent or any Lender under the Financing and Security Agreement.


 


5.3           Ratification of Loan
Documents.


 


(a)           Each Borrower hereby
ratifies, confirms and re-affirms all of the terms and conditions of the
Financing and Security Agreement and the other Loan Documents, and further
acknowledges and agrees that except as expressly modified in this Amendment,
all terms and conditions of the Financing and Security Agreement and the other
Loan Documents shall remain in full force and effect.


 


(b)           Each Borrower hereby
ratifies, confirms and re-affirms that (i) the obligations secured by the Loan
Documents include, without limitation, the Obligations and any future
modifications, amendments, substitutions or renewals thereof, and (ii) all
Collateral, whether now existing or hereafter acquired shall continue to secure
all of the Obligations.


 


5.4           Successors and
Assigns.  This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.


 


5.5           Counterparts.  This Amendment may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute together but one and the same instrument.  Delivery of a counterpart hereof by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.


 


5.6           Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of California.


 


[Signature page follows].


 


12

















 


IN
WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.


 


	
   

  	
  HENRY COMPANY,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  Jeffrey A. Wahba

  
	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  KIMBERTON ENTERPRISES, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  Gary Spence

  
	
   

  	
  Title:  Vice President and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET CAPITAL CORPORATION,

  
	
   

  	
  a Rhode Island
  corporation, as Agent and as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  Matthew R. Van Steenhuyse

  
	
   

  	
  Title:  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Capex Loan A Commitment
  = $9,000,000

  
	
   

  	
  Capex Loan B Commitment
  = $1,000,000

  



 


[Signature Page to Amendment]