Document:

Amendment No. 2 to Credit Agreement

 
Exhibit 4.3

 
AMENDMENT NO. 2 TO CREDIT AGREEMENT

 
This Amendment No. 2 to Credit Agreement
(this “Agreement”) dated as of February 3, 2003 is made by and among OMNOVA SOLUTIONS INC., an Ohio corporation (the “Borrower”), BANK OF AMERICA, N.A., a national banking association organized and
existing under the laws of the United States (“Bank of America”), in its capacity as administrative agent for the Lenders (as defined in the Credit Agreement (as defined below)) (in such capacity, the “Agent”), and
each of the Lenders signatory hereto, and each of the Guarantors (as defined in the Credit Agreement) signatory hereto. 
 
W I T N E S S E T H: 
 
WHEREAS, the Borrower, the Agent and the Lenders have entered into that certain Amended and Restated Credit Agreement dated as of
April 12, 2001, as amended by Amendment No. 1 to Credit Agreement dated as of September 13, 2002 (as so amended, as hereby amended and as from time to time hereafter further amended, modified, supplemented, restated, or amended and restated, the
“Credit Agreement”; the capitalized terms as used in this Agreement not otherwise defined herein shall have the respective meanings given thereto in the Credit Agreement), pursuant to which the Lenders have made available to the
Borrower revolving credit facility (including a letter of credit facility and a swing line facility); and 
 
WHEREAS, each of the Guarantors has entered into a Facility Guaranty pursuant to which it has guaranteed the payment and
performance of the obligations of the Borrower under the Credit Agreement and the other Loan Documents; and 
 
WHEREAS, the Borrower has advised the Agent and the Lenders that it desires to amend certain provisions of the Credit Agreement as
set forth herein, and the Agent and the Lenders signatory hereto are willing to effect such amendment on the terms and conditions contained in this Agreement; 
 
NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows: 
 
1. Amendments to Credit Agreement. Subject to the terms and conditions set forth herein, the Credit Agreement is hereby amended as follows: 
 
(a) Section 1.2 is hereby amended by deleting the definition of “Applicable
Margin” in its entirety and replacing such definition with the following: 
 
“Applicable Margin” means 2.00% per annum at any time prior to March 1, 2003, increasing to 2.25% on March 1, 2003, and increasing by an additional 0.25% on the first of each month
thereafter. 
 
(b) Section
1.2 is hereby amended by deleting the definition of “Applicable 
 

 
Unused
Fee” in its entirety and replacing such definition with the following: 
 
“Applicable Unused Fee” means 0.50% per annum. 
 
(c) Section 1.2 is hereby amended by adding the following new definition of “Eurodollar Termination Date”
in its appropriate alphabetical order therein: 
 
“Eurodollar Termination Date” means February 3, 2003. 
 
(d) Section 1.2 is hereby amended by deleting the definition of “Net Proceeds” in its entirety and replacing such definition with the following: 
 
“Net Proceeds” means (a) with
respect to any public or private offering of any security or any issuance of subordinated Indebtedness pursuant to Section 10.5(a)(viii), cash payments received by the Borrower or any Subsidiary therefrom as and when received, net of all
legal, accounting, banking and underwriting fees and expenses, commissions, discounts and other issuance expenses incurred in connection therewith and all taxes required to be paid or accrued as a consequence of such issuance, and (b) with respect
to the sale of any asset by the Borrower or any Subsidiary, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such sale (including any cash received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by such asset and that is required to be repaid in connection with the sale thereof (other than
Indebtedness under the Loan Documents), (B) the out-of-pocket expenses incurred by the Borrower or any Subsidiary in connection with such sale and (C) income taxes reasonably estimated to be actually payable (after giving effect to any credits,
offsets, loss carryforwards or other reductions in tax liabilities) within two years of the date of the relevant asset sale as a result of any gain recognized in connection therewith. 
 
(e) Section 1.2 is hereby amended by deleting the definition of “Restructuring
Addback” in its entirety and replacing such definition with the following: 
 
“Restructuring Addback” means, for any period of measurement thereof and only to the extent otherwise deducted in arriving at Consolidated Net Income for such period, an amount equal to any
Restructuring Charge applicable to such measurement period. 
 
(f) Section 1.2 is hereby amended by deleting the definition of “Restructuring Charge” in its entirety and replacing such definition with the following: 
 
“Restructuring Charge” means an
amount for the relevant Four-Quarter Period, not to exceed $4,300,000 in the aggregate, equal to the sum of (a) the total amount of cash expenses (not to exceed $2,000,000 in the aggregate) paid by the Borrower or one or more of its Subsidiaries
between September 1, 2002 and March 31, 2003 related to reductions in workforce, and (b) non-cash restructuring charges of the Borrower or one or more of its Subsidiaries incurred between September 1, 2002 and 
 

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March 31,
2003 and relating the write-down of receivable from a Polish customer of the Borrower or one of its Subsidiaries, the closing of warehouse of the Borrower or one of its Subsidiaries located in the United Kingdom, and an increase in roofing warranty
reserves. 
 
(g) Section 1.2
is hereby amended by deleting the definition of “Total Revolving Credit Commitment” in its entirety and replacing such definition with the following: 
 
“Total Revolving Credit Commitment” means a principal amount equal to (a) $185,000,000 at all times prior to May
31, 2003, (b) $180,000,000 on and after May 31, 2003 to and including November 29, 2003, and (c) $175,000,000 on November 30, 2003 and at all times thereafter, in each case as reduced from time to time in accordance with Sections 2.1(e) and
(f); provided that any reduction pursuant to Sections 2.1(e) or (f) on or after February 3, 2003 shall reduce the amounts set forth in (b) and (c) above on a dollar-for-dollar basis. 
 
(h) The following new Section
2.1(c)(iv) is hereby added to the Credit Agreement: 
 
(iv) Notwithstanding anything to the contrary in this Section 2.1, in Section 4.1 or 4.2, or elsewhere in this Agreement, Eurodollar Rate Loans will no longer be available on and after the Eurodollar
Termination Date, and on and after the Eurodollar Termination Date (A) no borrowing shall be available as a Eurodollar Rate Loan, (B) no Eurodollar Rate Loan may be Continued as a Eurodollar Rate Loan, and (C) no Base Rate Loan may be Converted into
a Eurodollar Rate Loan. In addition, on the Eurodollar Termination Date all outstanding Eurodollar Rate Loans shall automatically be Converted to Base Rate Loans, and such Conversion shall be accompanied by the payment by the Borrower of any
additional payment required by Section 6.5. 
 
(i) Section 2.1(f)(ii) is hereby deleted in its entirety and the following new subsections (ii) and (iii) inserted in lieu thereof: 
 
(ii) In the event of any disposition of assets of the Borrower or any Subsidiary (other than
dispositions permitted under Section 10.6(a), (b), (d), (f), (h) or (i)), the Total Revolving Credit Commitment shall be permanently reduced by an amount equal to seventy-five percent (75%) of the Net Proceeds from each such
disposition of assets; provided that no prepayment will be required with respect to dispositions of assets pursuant to Section 10.6(e) or (g) hereof so long as the Net Proceeds of such disposition are reinvested in a manner
permitted by this Agreement within thirty (30) days of such disposition; provided further that despite the application of this Section 2.1(f)(ii) to any disposition of assets that is not otherwise permitted under this Agreement,
nothing in this Section 2.1(f) 
 

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shall be
deemed to permit any disposition of assets not expressly permitted under this Agreement or to constitute a waiver or cure of any Default or Event of Default that arises as a result of a disposition of assets that is not permitted under this
Agreement. 
 
(iii) The Borrower
shall give written notice to the Agent of any equity offering described in Section 2.1(f)(i) and of any disposition of assets described in Section 2.1(f)(ii) not less than five (5) Business Days prior to the closing thereof, which
notice shall include a certificate of an Authorized Representative of the Borrower setting forth in reasonable detail the calculations utilized in computing the Net Proceeds of such offering or disposition of assets and the amount of such
prepayment, and shall confirm to the Agent the closing of such offering or disposition of assets by written, telefacsimile or telephonic notice (confirmed in writing) on the day of such closing. The Agent shall give each Lender, within one (1)
Business Day of receipt of the notice of the closing of such equity issuance or disposition of assets, notice (whether written, telefacsimile or telephonic (confirmed in writing)), of such reduction. Each reduction of the Total Revolving Credit
Commitment provided for in Section 2.1(f)(i) or (ii) shall be accompanied by payment of the Revolving Loans to the extent that the principal amount of Revolving Credit Outstandings plus Letter of Credit Outstandings plus Swing Line
Outstandings exceeds the Total Revolving Credit Commitment after giving effect to such reduction, together with accrued and unpaid interest on the amounts prepaid, which payment must be made not more than one (1) Business Day after the receipt of
the Net Proceeds by the Borrower or applicable Subsidiary from such equity offering or disposition of assets. 
 
(j) Section 4.1 is hereby amended by adding the following sentence to the end of such section: “This entire Section 4.1
is subject to the limitations set forth in Section 2.1(c)(iv) hereof.” 
 
(k) Section 4.2 is hereby amended by deleting the introduction thereto and replacing it with the following: “Subject to the limitations set forth in the definition of “Interest
Period,” in Sections 2.1(c)(iv) and 4.1 and in Article VI, the Borrower may:”. 
 
(l) Section 4.6(b) is hereby amended by deleting the phrase “Applicable Margin for Eurodollar Rate Loans” therefrom and
replacing such phrase with “3.50% per annum”. 
 
(m) Section 4.6 is hereby amended by adding the following new subsection (e) thereto: 
 
(e)    Continuation Fee. In the event that the Facility Termination Date has not occurred as of
November 30, 2003, the Borrower will pay to the Agent, for the benefit of those Lenders that approved Amendment No. 2 to Credit Agreement dated as of February 3, 
 

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2003, a fee
in an amount equal to 0.25% of the Revolving Credit Commitment of each such Lender on such date (after giving effect to all reductions of the Total Revolving Credit Commitment through such date, including any reductions scheduled to take effect on
such date). 
 
(n) The table set forth in
Section 10.1(a) is hereby deleted in its entirety and replaced with the following table: 
 

	  Four-Quarter Period Ending:

	     	  Maximum Consolidated
 
Leverage Ratio

	
	  February 28, 2001 and
  May 31, 2001
	     	  5.95 to 1.00

	
	  August 31, 2001
	     	  5.00 to 1.00

	
	  November 30, 2001,
  February 28, 2002 and
  May 31, 2002
	     	  3.75 to 1.00

	
	  August 31, 2002
	     	  4.00 to 1.00

	
	  November 30, 2002
	     	  4.75 to 1.00

	
	  February 28, 2003
	     	  5.50 to 1.00

	
	  May 31, 2003
	     	  5.75 to 1.00

	
	  August 31, 2003
	     	  4.75 to 1.00

	
	  November 30, 2003 and February 29, 2004
	     	  4.00 to 1.00

	
	  May 31, 2004 and thereafter
	     	  3.25 to 1.00

 
(o) The
table set forth in Section 10.1(b) is hereby deleted in its entirety and replaced with the following table: 
 

	  Four-Quarter Period Ending:

	     	  Minimum Consolidated
 
Interest Coverage Ratio

	
	  February 28, 2001 and
  May 31, 2001
	     	  2.00 to 1.00

	
	  August 31, 2001
	     	  2.25 to 1.00

	
	  November 30, 2001,
  February 28, 2002 and
  May 31, 2002
	     	  2.75 to 1.00

	
	  August 31, 2002 and November 30, 2002
	     	  3.00 to 1.00

	
	  February 28, 2003 and thereafter
	     	  2.25 to 1.00

 
(p)
Section 10.2 is hereby deleted in its entirety and replaced with the 
 

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following: 
 
10.2. Acquisitions. Enter into any
agreement, contract, binding commitment or other arrangement providing for any Acquisition, or take any action to solicit the tender of securities or proxies in respect thereof in order to effect any Acquisition. 
 
(q)  Section 10.3 is hereby deleted in its
entirety and replaced with the following: 
 
10.3 Capital Expenditures. Make or become committed to make Capital Expenditures in excess of $20,000,000 in the aggregate in any Fiscal Year of the Borrower, on a noncumulative basis with the effect that amounts not expended
in any Fiscal Year may not be carried forward to a subsequent period. 
 
(r)  Section 10.5(a)(viii) is hereby deleted in its entirety and replaced with the following: 
 
(viii) Reserved. 
 
(s)  Section 10.5(ix) is hereby deleted in its entirety and replaced with the following: 
 
(ix) other Indebtedness in an aggregate principal amount at
any time outstanding not to exceed $2,000,000; and 
 
(t)  Section 10.6(c) is hereby deleted in its entirety and replaced with the following: 
 
(c)  dispositions of equipment, inventory or other assets (in addition to dispositions thereof permitted under clause (a) above)
which, when aggregated with the fair market value or book value, whichever is greater, of all other asset dispositions on and after Feburary 3, 2003, does not exceed $20,000,000, 
 
(u)  Section 10.13 is hereby amended by replacing the value “$15,000,000” therein
with “$10,000,000.” 
 
(v)  Section 13.5 is hereby deleted in its entirety and replaced with the following: 
 
13.5 Expenses. The Borrower agrees to pay on demand all costs and expenses of the Agent in connection with the
syndication, preparation, execution, delivery, administration, modification, and amendment of this Agreement, the other Loan Documents, and the other documents to be delivered hereunder, including, without limitation, (a) the reasonable fees and
expenses of counsel for the Agent (including the cost of internal 
 

6 

 
counsel) with
respect thereto and with respect to advising the Agent as to its rights and responsibilities under the Loan Documents, and (b) the reasonable fees and expenses of an outside financial adviser retained by the Agent for the benefit of the Agent and
the Lenders at any time on or after March 1, 2003. The Borrower further agrees to pay on demand all costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable attorneys’ fees and expenses and the cost of
internal counsel), in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) of the Loan Documents and the other documents to be delivered hereunder. 
 
2. Effectiveness; Conditions Precedent. The
effectiveness of this Agreement and the amendments to the Credit Agreement herein provided are subject to the satisfaction of the following conditions precedent: 
 
(a) the Agent shall have received each of the following documents or instruments in form and
substance reasonably acceptable to the Agent: 
 
(i) four (4) original or facsimile (followed promptly by originals) counterparts of this Agreement, duly executed by the Borrower, the Agent, each Guarantor and the Required Lenders, together with all schedules and exhibits thereto
duly completed; 
 
(ii) a
certificate of the Secretary or Assistant Secretary of the Borrower to the effect that the resolutions of the Board of Directors of the Borrower delivered in conjunction with the original closing of the Credit Agreement have not been altered,
amended, modified, revoked, rescinded or otherwise adjusted in any way since the date of such resolutions, and attaching a copy thereof; and 
 
(iii) such other documents, instruments, opinions, certifications, undertakings, further assurances and other matters as
the Agent shall reasonably request; and 
 
(b) all fees and expenses payable to the Agent and the Lenders (including the fees and expenses of counsel to the Agent) estimated to date shall have been paid in full (without prejudice to final settling of accounts for such fees
and expenses). 
 
3. Consent of the
Guarantors. Each Guarantor hereby consents, acknowledges and agrees to the amendments set forth herein and hereby confirms and ratifies in all respects the Facility Guaranty to which such Guarantor is a party (including without limitation the
continuation of such Guarantor’s payment and performance obligations thereunder upon and after the effectiveness of this Agreement and the amendments contemplated hereby) and the enforceability of such Facility Guaranty against such Guarantor
in accordance with its terms. 
 
4.
Representations and Warranties. In order to induce the Agent and the Lenders to enter into this Agreement, the Borrower represents and warrants to the Agent and the Lenders as follows: 
 

7 

(a) the representations and warranties made by any Credit Party in
Article VIII of the Credit Agreement and in each of the other Loan Documents to which such Credit Party is a party are true and correct on and as of the date hereof, except to the extent that such representations and warranties expressly
relate to an earlier date; 
 
(b)
since the date of the most recent financial reports of the Borrower delivered pursuant to Section 9.1 of the Credit Agreement, no act, event, condition or circumstance has occurred or arisen which, singly or in the aggregate with one or more
other acts, events, occurrences or conditions (whenever occurring or arising), has had or could reasonably be expected to have a Material Adverse Effect; 
 
(c) the Persons appearing as Guarantors on the signature pages to this Agreement constitute all Persons who are required
to be Guarantors pursuant to the terms of the Credit Agreement and the other Loan Documents, including without limitation all Persons who became Subsidiaries or were otherwise required to become Guarantors after the Closing Date, and each of such
Persons has become and remains a party to a Facility Guaranty as a Guarantor; 
 
(d) this Agreement has been duly authorized, executed and delivered by the Borrower and Guarantors party hereto and constitutes a legal, valid and binding obligation of such parties, except as may be
limited by general principles of equity or by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally; and 
 
(e) both before and after giving effect to this Agreement, No Default or Event of Default has
occurred and is continuing. 
 
5.
Acknowledgment; Release. The Borrower and the Guarantors jointly and severally acknowledge that they have no existing defense, counterclaim, offset, recoupment, cross-complaint, claim or demand of any kind or nature whatsoever that can be
asserted to reduce or eliminate all or any part of any of their respective indebtedness or liability, direct or contingent, to pay the full indebtedness outstanding under the terms of the Credit Agreement and any other documents which evidence,
guaranty or secure the Obligations. The Borrower and the Guarantors hereby release and forever discharge the Agent, the Lenders and all affiliates of the any of them, and all of their respective officers, directors, employees, attorneys, consultants
and agents from any and all actions, causes of action, debts, dues, claims, demands, liabilities and obligations of every kind and nature, both in law and in equity, known or unknown, whether matured or unmatured, absolute or contingent, arising out
of or related to any of the Loan Documents or the transactions consummated thereunder or contemplated thereby. 
 
6. Entire Agreement. This Agreement, together with all the Loan Documents (collectively, the “Relevant
Documents”), sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relating to such subject matter. No
promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties
hereto acknowledges that, except as otherwise 
 

8 

 
expressly stated in the
Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to the other. None of the terms or conditions of this Agreement may be changed, modified, waived or canceled orally or otherwise,
except in writing and in accordance with Section 13.6 of the Credit Agreement. 
 
7. Full Force and Effect of Agreement. Except as hereby specifically amended, modified or supplemented, the Credit Agreement and all other Loan Documents are hereby confirmed and ratified in all
respects and shall be and remain in full force and effect according to their respective terms. 
 
8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. 
 
9. Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of Ohio applicable to contracts executed and to be performed entirely within such State, and shall
be further subject to the provisions of Section 13.16 of the Credit Agreement. 
 
10. Enforceability. Should any one or more of the provisions of this Agreement be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions
nevertheless shall remain effective and binding on the parties hereto. 
 
11. References. All references in any of the Loan Documents to the “Credit Agreement” shall mean the Credit Agreement, as amended hereby. 
 
12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent and each of the Guarantors and Lenders, and their respective successors, legal representatives, and assignees to the extent such assignees are permitted assignees as provided in Section 13.1 of the Credit Agreement.

 
[Signature pages follow.] 
 

9 

 
IN WITNESS
WHEREOF, the parties hereto have caused this Amendment No. 2 to Credit Agreement to be made, executed and delivered by their duly authorized officers as of the day and year first above written. 
 

	  BORROWER:
   
  OMNOVA SOLUTIONS INC.

	
	  By:
	  	  /s/ Michael E. Hicks

	  Name:
	  	  Michael E. Hicks

	  Title:
	  	  Senior Vice President and Chief
  Financial Officer; Treasurer

 

	  GUARANTORS:
   
  DECORATIVE PRODUCTS THAILAND, INC.

	
	  By:
	  	  /s/ Michael E. Hicks

	  Name:
	  	  Michael E. Hicks

	  Title:
	  	  Treasurer

 

	  OMNOVA OVERSEAS INC.

	
	  By:
	  	  /s/ Michael E. Hicks

	  Name:
	  	  Michael E. Hicks

	  Title:
	  	  Treasurer

 
 

	  OMNOVA WALLCOVERING (USA), INC.

	
	  By:
	  	  /s/ Michael E. Hicks

	  Name:
	  	  Michael E. Hicks

	  Title:
	  	  Treasurer

 
Amendment No. 2 to Credit Agreement 
Signature Page 1 

 

	  ADMINISTRATIVE AGENT:
   
  BANK OF AMERICA, N.A., as Agent

	
	  By:
	  	  /s/ Kathleen M. Carry

	  Name:
	  	  Kathleen M. Carry

	  Title:
	  	  Vice President

 
Amendment No. 2 to Credit Agreement 
Signature Page 2 

 

	  LENDERS: 
   
  BANK OF AMERICA, N.A.

	
	  By:
	  	  /s/ Raju N. Patel

	  Name:
	  	  Raju N. Patel

	  Title:
	  	  Principal

 
Amendment No. 2 to Credit Agreement 
Signature Page 3 
 

 

	  BANK  ONE, NA  Successor by Merger to
 
    BANK  ONE, MICHIGAN

	
	  By:
	  	  /s/ Glenn A. Currin

	  Name:
	  	  Glenn A. Currin

	  Title:
	  	  Managing Director

 
Amendment No. 2 to Credit Agreement 
Signature Page 4 

 

	  DEUTSCHE BANK AG, New York or Cayman     Islands Branch

	
	  By:
	  	  /s/ Patrick J. McKenna

	  Name:
	  	  Patrick J. McKenna

	  Title:
	  	  Director

 

	
	  By:
	  	  /s/ Hans-Josef Thiele

	  Name:
	  	  Hans-Josef Thiele

	  Title:
	  	  Director

 
Amendment No. 2 to Credit Agreement 
Signature Page 5 

 

	  COMERICA BANK

	
	  By:
	  	  /s/ Scott M. Kowalski

	  Name:
	  	  Scott M. Kowalski

	  Title:
	  	  Account Officer

 
Amendment No. 2 to Credit Agreement 
Signature Page 6 
 

 

	  FIFTH THIRD BANK

	
	  By:
	  	  /s/ James P. Byrnes        

	  Name:
	  	  James P. Byrnes

	  Title:
	  	  Vice President

 
Amendment No. 2 to Credit Agreement 
Signature Page 7 

 

	  WACHOVIA BANK NATIONAL ASSOCIATION     (successor to First Union National
Bank)

	
	  By:
	  	  /s/ Elizabeth D. Morris        

	  Name:
	  	  Elizabeth D. Morris

	  Title:
	  	  Director

 
Amendment No. 2 to Credit Agreement 
Signature Page 8 

 

	  KEYBANK NATIONAL ASSOCIATION

	
	  By:
	  	  /s/ Marianne T. Meil        

	  Name:
	  	  Marianne T. Meil

	  Title:
	  	  Vice President

 
Amendment No. 2 to Credit Agreement 
Signature Page 9 

 

	  NATIONAL CITY BANK

	
	  By:
	  	  /s/ Robert S. Coleman

	  Name:
	  	  Robert S. Coleman

	  Title:
	  	  Senior Vice President

 
Amendment No. 2 to Credit Agreement 
Signature
Page 10 

 

	  THE BANK OF NEW YORK

	
	  By:
	  	  /s/ Kenneth R. McDonnell

	  Name:
	  	  Kenneth R. McDonnell

	  Title:
	  	  Vice President

 
Amendment No. 2 to Credit Agreement 
Signature
Page 11 

 
 

	  MIZUHO CORPORATE BANK (successor to The
  Industrial Bank of Japan, Limited)

	
	  By:
	  	  /s/ Noel Purcell

	  Name:
	  	  Noel Purcell

	  Title:
	  	  Senior Vice President

 
Amendment No. 2 to Credit Agreement 
Signature
Page 12 

 

	  GE CAPITAL CFE, INC.

	
	  By:
	  	  /s/ Robert M. Kadlick

	  Name:
	  	  Robert M. Kadlick

	  Title:
	  	  Duly Authorized Signatory

 
Amendment No. 2 to Credit Agreement 
Signature Page 13 

 

	  THE NORTHERN TRUST COMPANY

	
	  By:
	  	  /s/ Barbara B. Tuszynska

	  Name:
	  	  Barbara B. Tuszynksa

	  Title:
	  	  Second Vice President

 
Amendment No. 2 to Credit Agreement 
Signature Page 14 
 

 
 

	  SUMITOMO MITSUI BANKING CORPORATION

	
	  By:
	  	  /s/ Suresh Tata

	  Name:
	  	  Suresh Tata

	  Title:
	  	  Senior Vice President

 
Amendment No. 2 to Credit Agreement 
Signature Page 15Second Amendment to Credit Agreement

 
Exhibit
10.1 
 
SECOND AMENDMENT TO CREDIT
AGREEMENT 
 
THIS SECOND AMENDMENT TO
CREDIT AGREEMENT (this “Amendment”) is made as of the 31st day of October, 2002, by and among SCANSOURCE,
INC., a South Carolina corporation (the “Borrower”), 4100 QUEST, LLC and CHANNELMAX, INC. (collectively referred to herein as the “Guarantors”), BRANCH BANKING AND TRUST COMPANY OF SOUTH CAROLINA, as Agent and a Bank, and FIFTH
THIRD BANK, FIRST TENNESSEE BANK NATIONAL ASSOCIATION and HIBERNIA NATIONAL BANK (collectively referred to herein as the “Banks”). 
 
R E C I T A L S: 
 
The Borrower, the Guarantors, the Agent and the Banks have entered into a certain Credit Agreement dated as of July 26, 2001, as amended
by that certain First Amendment to Credit Agreement dated June 15, 2002 (referred to herein as the “Credit Agreement”). Capitalized terms used in this Amendment which are not otherwise defined in this Amendment shall have the respective
meanings assigned to them in the Credit Agreement. 
 
The Borrower and Guarantors have requested the Agent and the Banks to amend the Credit Agreement to modify certain provisions of the Credit Agreement as more fully set forth herein. The Banks, the Agent, the Guarantors and the
Borrower desire to amend the Credit Agreement upon the terms and conditions hereinafter set forth. 
 
NOW, THEREFORE, in consideration of the Recitals and the mutual promises contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Guarantors, the Agent and the Banks, intending to be legally bound hereby, agree as follows: 
 
SECTION 1. Recitals. The Recitals are incorporated herein by reference and shall be deemed to be a
part of this Amendment. 
 
SECTION 2.
Amendments. The Credit Agreement is hereby amended as set forth in this Section 2. 
 
SECTION 2.01. Amendment to Section 1.01. Section 1.01 of the Credit Agreement is amended to amend and restate the following definition: 
 
“Termination Date” means September 30, 2004.

 
SECTION 2.02. Amendment to Section 5.30.
Section 5.30 of the Credit Agreement is amended and restated to read, in its entirety, as follows: 
 
SECTION 5.30. Operating Leases. No Loan Party nor any Subsidiary of a Loan Party shall create, assume or suffer to
exist any operating lease except operating leases which: (1) are entered into in the ordinary course of business, and 
 

 
(2) the
aggregate indebtedness, liabilities and obligations of the Loan Parties under all such operating leases during any period of four (4) consecutive Fiscal Quarters shall at no time exceed $1,300,000. 
 
SECTION 2.03 Amendment to Section 10 of the First
Amendment. Section 10 of the First Amendment to Credit Agreement is amended and restated to read, in its entirety, as follows: 
 
SECTION 10. Pledge Documentation. On or before December 15, 2002, the Borrower shall grant to the Agent for the
benefit of the Banks a first priority security interest in 65% of the Capital Stock (or equivalent equity interests) owned by the Borrower in the European Subsidiaries and 100% of all loans, advances and other claims owed to the Borrower by either
or both of the European Subsidiaries pursuant to a pledge agreement in the form attached to this First Amendment as Exhibit A. Any and all loans and advances made by the Borrower to either or both of the European Subsidiaries shall be evidenced by a
written promissory note in form and content reasonably satisfactory to the Required Banks (the “European Promissory Note”). The Borrower shall deliver to the Agent: (A) on or before December 15, 2002: (1) the foregoing shares of Capital
Stock together with stock powers undated and executed in blank; (2) the original European Promissory Notes, together with a duly undated endorsement in blank affixed thereto; and (3) the items specified in Sections 3.01(c), (f) and (n) of the Credit
Agreement modified appropriately to refer to the pledge agreement; and (B) on or before December 15, 2002: (1) a legal opinion in form and content reasonably satisfactory to the Agent from legal counsel licensed in the United Kingdom and Belgium
confirming that the pledge agreement constitutes a valid, enforceable and perfected first priority security interest in and lien upon the Collateral (as defined in the Pledge Agreement) under the applicable laws of the United Kingdom and Belgium;
and (2) such other documentation and information as the Agent may reasonably request to evidence the first priority lien and security interest in the Collateral (as defined in the pledge agreement) and to enable the Agent to realize upon such
Collateral in accordance with the terms of the pledge agreement and applicable law. 
 
SECTION 3. Conditions to Effectiveness. The effectiveness of this Amendment and the obligations of the Banks hereunder are subject to the following conditions, unless the Required Banks waive
such conditions: 
 
(a) receipt by the Agent from
each of the parties hereto of a duly executed counterpart of this Amendment signed by such party; and 
 
(b) the fact that the representations and warranties of the Borrower and Guarantor contained in Section 5 of this Amendment shall be true
on and as of the date hereof. 
 
SECTION 4. No
Other Amendment. Except for the amendments set forth above, the text of the Credit Agreement shall remain unchanged and in full force and effect. This 
 

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Amendment is not intended to
effect, nor shall it be construed as, a novation. The Credit Agreement and this Amendment shall be construed together as a single agreement. Nothing herein contained shall waive, annul, vary or affect any provision, condition, covenant or agreement
contained in the Credit Agreement, except as herein amended, nor affect nor impair any rights, powers or remedies under the Credit Agreement as hereby amended. The Banks and the Agent do hereby reserve all of their rights and remedies against all
parties who may be or may hereafter become secondarily liable for the repayment of the Notes. The Borrower and Guarantors promise and agree to perform all of the requirements, conditions, agreements and obligations under the terms of the Credit
Agreement, as heretofore and hereby amended, the Credit Agreement, as amended, and the other Loan Documents being hereby ratified and affirmed. The Borrower and Guarantors hereby expressly agree that the Credit Agreement, as amended, and the other
Loan Documents are in full force and effect. 
 
SECTION 5. Representations and Warranties. The Borrower and Guarantors hereby represent and warrant to each of the Banks as follows: 
 
(a) No Default or Event of Default, nor any act, event, condition or circumstance which with the passage of time or the giving of notice,
or both, would constitute an Event of Default, under the Credit Agreement or any other Loan Document has occurred and is continuing unwaived by the Banks on the date hereof. 
 
(b) The Borrower and Guarantors have the power and authority to enter into this Amendment and to do all acts
and things as are required or contemplated hereunder to be done, observed and performed by them. 
 
(c) This Amendment has been duly authorized, validly executed and delivered by one or more authorized officers of the Borrower and Guarantors and constitutes the legal, valid and binding obligations of
the Borrower and Guarantors enforceable against them in accordance with its terms, provided that such enforceability is subject to general principles of equity. 
 
(d) The execution and delivery of this Amendment and the performance by the Borrower and Guarantors hereunder
do not and will not require the consent or approval of any regulatory authority or governmental authority or agency having jurisdiction over the Borrower, either European Subsidiary or either Guarantor, nor be in contravention of or in conflict with
the articles of incorporation, bylaws or other organizational documents of the Borrower, either European Subsidiary or Channelmax, Inc., the articles of organization or operating agreement of 4100 Quest, LLC or the provision of any statute, or any
judgment, order or indenture, instrument, agreement or undertaking, to which the Borrower, either European Subsidiary or any Guarantor is party or by which the assets or properties of the Borrower, either European Subsidiary and Guarantors are or
may become bound. 
 
SECTION 6.
Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement. 
 

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SECTION 7.
Governing Law. This Amendment shall be construed in accordance with and governed by the laws of the State of South Carolina. 
 
SECTION 8. Effective Date. This Amendment shall be effective as of October 30, 2002. 
 
SECTION 9. Amendment Fee. On the date of this
Amendment, the Borrower hereby agrees to pay to the Agent for the ratable account of each Bank an Amendment Fee equal to the product of: (i) such Bank’s Commitment, on the date of this Agreement, times (ii) a per annum percentage equal to
0.05%. 
 
SECTION 10. Waiver of Event of Default
Under Section 5.30. The Banks hereby waive all Defaults and Events of Default under the Credit Agreement and the other Loan Documents that are a result of the Borrower’s failure to comply with Section 5.30 of the Credit Agreement as of the
Fiscal Quarters ending June 30, 2002 and September 30, 2002. The Agent and the Banks expressly reserve all of their rights and remedies with respect to any other present or any future Default or Event of Default arising under or existing under the
Credit Agreement or any of the Loan Documents other than a violation of Section 5.30 determined as of the Fiscal Quarters ending June 30, 2002 and September 30, 2002. 
 
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4 

 
IN WITNESS
WHEREOF, the parties hereto have executed and delivered, or have caused their respective duly authorized officers or representatives to execute and deliver, this Amendment as of the day and year first above written. 
 

	
	  SCANSOURCE, INC.        

	
	  By:   
	  	      /s/ Jeffery A. Bryson        

	  	  (SEAL)

	  Title:
	  	                  CFO

 

	
	  4100 QUEST, LLC
	  	  
	
	  	  	  By:   
	  	  ScanSource,Inc., its sole member
	  	  
	
	  	  	  	  	  By:   
	  	      /s/  Jeffery A. Bryson

	  	  (SEAL)

	  	  	  	  	  Title:
	  	  CFO

	  	  

 

	
	  CHANNELMAX, INC.   
	  	  
	
	  By:   
	  	          /s/ William T. Mauldin

	  	  (SEAL)

	  Title:
	  	                      CFO 

	  	  

 
[Remainder of this page intentionally left blank] 
 

5 

 

	
	  BRANCH BANKING AND TRUST COMPANY OF SOUTH CAROLINA, as Agent, Issuing Bank and as a Bank
  

	
	  By:
	  	      /s/ David W. Weaver    

	  	  (SEAL)

	  Title:
	  	      Senior Vice President

	  	  

 
[Remainder of this page intentionally left blank] 
 

6 

 

	
	  FIFTH THIRD BANK   

	
	  By:
	  	      /s/ Jennifer Schwartz

	  	  (SEAL)

	  Title:
	  	      Financial Services Officer

	  	  

 
[Remainder of this page intentionally left blank] 
 

7 

 

	
	  FIRST TENNESSEE BANK NATIONAL ASSOCIATION

	
	  By:
	  	      /s/ Phil Stevenson     

	  	  (SEAL)

	  Title:
	  	      Senior Vice President

	  	  

 
[Remainder of this page intentionally left blank] 
 

8 

 

	
	  HIBERNIA NATIONAL BANK   
	  	  
	
	  By:
	  	      /s/ Laura Watts    

	  	  (SEAL)

	  Title:
	  	      Vice President

	  	  

 

9

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