Document:

exv10w3

 

CONSENT AND SECOND AMENDMENT TO

CREDIT AGREEMENT

     This CONSENT AND SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”)
is dated as of October 3, 2002, and is entered into by and among The Hillman
Group, Inc. (“Borrower”), Heller Financial, Inc., in its capacity as Agent for
the Lenders party to the Credit Agreement described below (“Agent”), and the
Lenders which are signatories hereto.

     WHEREAS, Agent, Lenders and Borrower are parties to a certain Credit
Agreement dated as of September 28, 2001 (as such agreement has from time to
time been amended, supplemented or otherwise modified, the “Credit Agreement”);
and

     WHEREAS, Borrower has requested that Agent and Lenders consent to the
acquisition (the “Acquisition”) by Borrower of certain assets of Fastenal
Company, a Minnesota corporation (“Seller”) pursuant to the terms of that
certain Asset Purchase Agreement dated of even date herewith between Borrower
and Seller (the “Purchase Agreement”); and

     WHEREAS Borrower has further requested that Agent and Lenders agree to
amend the Credit Agreement in certain respects.

     NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Credit Agreement and this Amendment, 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 Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Credit Agreement.

     2.     Consent. Subject to the conditions precedent set forth in Section 4 of
this Amendment, and in reliance on the representations and warranties set forth
in Section 5 of this Amendment, Agent and Lenders hereby consent to the
consummation of the Acquisition pursuant to the terms set forth in the Purchase
Agreement attached hereto as Exhibit A. Except as expressly provided herein,
the foregoing consent shall not constitute (a) a modification or alteration of
the terms, conditions or covenants of the Credit Agreement or any document
entered into in connection therewith, or (b) a waiver, release or limitation
upon the exercise by Agent or Lenders of any of their rights, legal or
equitable, hereunder or under the Credit Agreement or any Loan Document.

     3.     Amendments. Subject to the conditions precedent set forth in Section 4
of this Amendment, and in reliance on the representations and warranties set
forth in

 

 

Section 5 of this Amendment, Borrower, Agent and Lenders hereby amend
the Credit Agreement as follows:

     (a)     To the extent necessary to make the representations and warranties
made under the Credit Agreement true, correct and complete after giving effect
to the consummation of the Acquisition, the disclosure schedules to the Credit
Agreement and the other Loan Documents identified on Exhibit B hereto are
hereby amended in the manner set forth therein.

     (b)     Subsection 4.4 of the Credit Agreement is hereby amended and restated
in its entirety, as follows:

     4.4  Fixed Charge Coverage.

     Borrower shall not permit Fixed Charge Coverage for any twelve (12) month
period ending on the last day of any month ending during any of the periods set
forth below to be less than the ratio set forth below for such period.

	 	 	 	 	 
	Period	 	Applicable Ratio
	
	 	

	October 31, 2001-December 31, 2003
	 	 	1.05x	 
	January 31, 2004 and thereafter
	 	 	1.10x	 

“Fixed Charge Coverage” will be calculated as illustrated on Exhibit 4.8(C).”

     4.     Conditions. The effectiveness of this Amendment is subject to the
following conditions precedent (unless specifically waived in writing by
Agent):

     (a)     Borrower shall have executed and delivered this Amendment and such
other documents and instruments as Agent may require shall have been executed
and/or delivered to Agent;

     (b)     Agent shall have received (i) a fully-executed copy of the Purchase
Agreement (including all schedules and exhibits thereto) and each of the other
ancillary documents executed in connection therewith, and (ii) evidence that
the transactions contemplated thereby have been consummated, each in form and
substance satisfactory to Agent, in its sole discretion, as evidenced by
Agent’s execution of this Amendment;

     (c)     Borrower shall have executed and delivered to Agent the Collateral
Assignment of Undertakings Under Asset Purchase Agreement, in form and
substance satisfactory to Agent, in its sole discretion;

     (d)     Agent shall have received a Consent and Reaffirmation of Guaranty
executed by each of First Tier Holdings and Second Tier Holdings in form and
substance satisfactory to Agent, in its sole discretion; and

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     (e)     No Default or Event of Default shall have occurred and be continuing.

     5.     Representations
and Warranties. To induce Agent and Lenders to enter
into this Amendment, Borrower represents and warrants to Agent and Lenders:

     (a)     that the execution, delivery and performance of this Amendment has
been duly authorized by all requisite corporate action on the part of Borrower
and that this Amendment has been duly executed and delivered by Borrower;

     (b)     that each of the representations and warranties set forth in Section 5
of the Credit Agreement (other than those which, by their terms, specifically
are made as of a certain date prior to the date hereof) are true and correct in
all material respects as of the date hereof; and

     (c)     that the consummation of the Acquisition and the other transactions
contemplated thereby does not and will not violate or conflict with any laws,
rules, regulations or orders of any governmental authority or violate, conflict
with, result in a breach of, or constitute a default (with due notice or lapse
of time or both) under any Contractual Obligation (including without limitation
under the Debentures) or organizational documents of any Loan Party.

     6.     Amendment to Trademark Security Agreement. Borrower, Agent and Lenders
hereby acknowledge and agree that Schedule A to the Trademark Security
Agreement is hereby amended by adding thereto the federally registered
trademarks listed on Exhibit C attached hereto, which trademarks are being
acquired by Borrower in connection with the Acquisition. Borrower hereby
further acknowledges and agrees that Agent shall have the right to file any
necessary documentation with the United States Patent and Trademark Office (the
“PTO”) to evidence Agent’s and Lenders’ security interest in such additional
trademarks.

     7.     Additional
Agreements.

     (a)     Borrower hereby agrees that within thirty (30) days of the date
hereof, Borrower shall deliver to Agent, with respect to the real property
located in Goodlettsville, Tennessee that is being acquired by Borrower in
connection with the Acquisition, (i) a fully-executed Deed of Trust, in form
and substance satisfactory to Agent, in Agent’s sole discretion, and (ii) all
insurance documents and other agreements requested by Agent in connection
therewith, including without limitation such title insurance requirements and
surveys as requested by Agent, each in form and substance satisfactory to
Agent, in Agent’s sole discretion (collectively, the “Mortgage Documents”).
Borrower hereby acknowledges and agrees that Borrower’s failure to deliver such
Mortgage Documents to Agent within thirty (30) days of the date hereof shall
upon written notice by Agent to Borrower constitute an Event of Default under
the Credit Agreement.

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     (b)     Borrower hereby agrees that within thirty (30) days of the date
hereof, Borrower shall deliver to Agent a Landlord’s Agreement (or Agreements)
with respect to the leased property located in Rockford, Illinois that is being
acquired by Borrower in connection with the Acquisition, which Landlord’s
Agreement (or Agreements) shall have been executed by Borrower, the landlord
for the property and the sub-landlord for the property, and shall otherwise be
in form and substance satisfactory to Agent, in Agent’s sole discretion.
Borrower hereby acknowledges and agrees that Borrower’s failure to deliver such
Landlord’s Agreement (or Agreements) to Agent within thirty (30) days of the
date hereof shall upon written notice by Agent to Borrower constitute an Event
of Default under the Credit Agreement.

     (c)     Borrower hereby agrees that within five (5) days of the date hereof,
Borrower shall deliver to Agent, in form and substance satisfactory to Agent in
Agent’s sole discretion, an originally-executed assignment agreement pursuant
to which Seller has assigned to Borrower the federally-registered trademarks
set forth on Exhibit C hereto, for Agent to file with the PTO. Borrower hereby
acknowledges and agrees that Borrower’s failure to deliver such trademark
assignment to Agent within five (5) days of the date hereof shall upon written
notice by Agent to Borrower constitute an Event of Default under the Credit
Agreement.

     8.     Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

     9.     References. Any reference to the Credit Agreement contained in any
document, instrument or agreement executed in connection with the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as modified
by this Amendment.

     10.     Counterparts. This Amendment 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.

     11.     Ratification. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the Credit
Agreement and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Credit Agreement. Except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Credit Agreement are ratified and confirmed and shall continue in full force
and effect.

[Signature Pages Follow]

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

	 	THE HILLMAN GROUP, INC.

	 	/s/ James P.
Waters                    

By: James P. Waters

Title: Vice President-Finance

 

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	 	HELLER FINANCIAL, INC., as Agent, an Issuing

Lender and a Lender

	 	By: /s/ Robert A. Pierce                    

Title: Duly Authorized Signatory

 

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	 	ANTARES CAPITAL CORPORATION

	 	By:            
             
             
        

Title: 

 

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	 	MADISON CAPITAL FUNDING LLC

	 	By: /s/ K. Thomas Klimmeck                    

Title: Managing Director                          

 

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	 	GENERAL ELECTRIC CAPITAL CORPORATION

	 	By: /s/ Michael Lustbader                    

Title: Duly Authorized Signatory

 

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	 	PNC BANK, NATIONAL ASSOCIATION

	 	By: /s/ Joni Wagner                    

Title: Assistant Vice President

 

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	 	FIFTH THIRD BANK

	 	By: ___________________________

Title:__________________________

 

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	 	JOHN HANCOCK LIFE INSURANCE COMPANY

	 	By: ___________________________

Title:__________________________

 

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	 	JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

	 	By: ___________________________

Title:__________________________

 

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	 	INVESTORS PARTNER LIFE INSURANCE COMPANY

	 	By: ___________________________

Title:__________________________

 

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	 	MARINER CDO 2002, LTD.

	 	By: ___________________________

Title:__________________________

 

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	 	THE PROVIDENT BANK

	 	 	 
	 	By: 	/s/ Scott Kray

	 	Title: 	Vice President

 

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THIRD AMENDMENT TO

CREDIT AGREEMENT

     This THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of
December 23, 2002, and is entered into by and among The Hillman Group, Inc.
(“Borrower”), Heller Financial, Inc., in its capacity as Agent for the Lenders
party to the Credit Agreement described below (“Agent”), and the Lenders which
are signatories hereto.

     WHEREAS, Agent, Lenders and Borrower are parties to a certain Credit
Agreement dated as of September 28, 2001 (as such agreement has from time to
time been amended, supplemented or otherwise modified, the “Credit Agreement”);
and

     WHEREAS, Borrower has requested that Agent and Lenders amend the Credit
Agreement in certain respects, principally to (i) join Merrill Lynch Capital, a
division of Merrill Lynch Business Financial Services Inc. (“Merrill”) as a
Lender under the Credit Agreement, (ii) increase the Revolving Loan Commitment
from $60,000,000 to $64,780,000, (iii) increase the outstanding principal
amount of Term Loan A from $31,647,061 to $34,147,061, and (iii) increase the
outstanding principal amount of Term Loan B from $34,500,000 to $37,220,000;
and

     WHEREAS, such increase in the Revolving Loan Commitment and such increases
of the outstanding principal amounts of Term Loan A and Term Loan B shall be
allocated to and funded solely by, Merrill, and such increases shall not affect
any other Lender’s Revolving Credit Exposure, Term Loan A Exposure or Term Loan
B Exposure.

     NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Credit Agreement and this Amendment, 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 Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Credit Agreement.

     2.    Amendments.  Subject to the conditions precedent set forth in Section 4
of this Amendment, and in reliance on the representations and warranties set
forth in Section 5 of this Amendment, Borrower, Agent and Lenders hereby agree
to amend the Credit Agreement as follows:

     (a)    Agent, Lenders and Borrower hereby acknowledge and agree that from and
following the date hereof, Merrill shall be deemed to be a Lender for all
purposes under the Credit Agreement, and Merrill shall be deemed to have the
same rights and obligations of each other Lender thereunder. Merrill’s
Revolving Loan Commitment, Term Loan A

 

 

Exposure and Term Loan B Exposure shall
be the amounts set forth opposite its name on Exhibit A hereto.

     (b)     On the Closing Date, Lenders made Term Loan A to Borrower in the
aggregate principal amount of $20,000,000. On the May 1, 2002, Lenders
increased the aggregate principal amount of Term Loan A to $33,500,000. As of
the date of this Amendment, but prior to the effectiveness of the terms hereof,
the outstanding principal balance of Term Loan A is $31,647,061. Borrower,
Agent and each Lender agree that, upon the effectiveness of this Amendment,
Merrill will advance $2,500,000 to Borrower, such that the outstanding
principal balance of Term Loan A shall be $34,147,061. Term Loan A, as
reconstituted hereby, shall be repayable as set forth in subsection 1.1(A) of
the Credit Agreement.

     (c)     On the Closing Date, Lenders made Term Loan B to Borrower in the
aggregate principal amount of $35,000,000. As of the date of this Amendment,
but prior to the effectiveness of the terms hereof, the outstanding principal
balance of Term Loan B is $34,500,000. Borrower, Agent and each Lender agree
that, upon the effectiveness of this Amendment, Merrill will advance $2,720,000
to Borrower, such that the outstanding principal balance of Term Loan B shall
be $37,220,000. Term Loan B, as reconstituted hereby, shall be repayable as
set forth in subsection 1.1(A) of the Credit Agreement.

     (d)     The charts of Scheduled Installments for Term Loan A and Term Loan B
set forth in subsection 1.1(A) of the Credit Agreement are each hereby amended
and restated in their entirety, as follows:

     

	 	 	 	 	 
	Term Loan A	 	 
	 
	Date	 	Scheduled Installment
	
	 	

	December 31, 2002	 	 	
$1,415,441.18	 
	March 31, 2003	 	 	
$2,182,107.85	 
	June 30, 2003	 	 	
$2,182,107.85	 
	September 30, 2003	 	 	
$2,182,107.85	 
	December 31, 2003	 	 	
$2,182,107.85	 
	March 31, 2004	 	 	
$2,182,107.85	 
	June 30, 2004	 	 	
$2,182,107.85	 
	September 30, 2004	 	 	
$2,182,107.85	 
	December 31, 2004	 	 	
$2,182,107.85	 
	March 31, 2005	 	 	
$2,182,107.85	 
	June 30, 2005	 	 	
$2,182,107.85	 
	September 30, 2005	 	 	
$2,182,107.85	 
	December 31, 2005	 	 	
$2,182,107.85	 
	March 31, 2006	 	 	
$2,182,107.85	 
	June 30, 2006	 	 	
$2,182,107.85	 

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	Date	 	Scheduled Installment
	
	 	

	September 27, 2006, or if different, the then
outstanding balance of Term Loan A	 	$	2,182,107.74	 

	 	 	 	 	 
	Term Loan B	 	 	 	 
	 
	Date	 	Scheduled Installment
	
	 	

	December 31, 2002	 	 	
$125,000.00	 
	March 31, 2003	 	 	
$134,890.91	 
	June 30, 2003	 	 	
$134,890.91	 
	September 30, 2003	 	 	
$134,890.91	 
	December 31, 2003	 	 	
$134,890.91	 
	March 31, 2004	 	 	
$134,890.91	 
	June 30, 2004	 	 	
$134,890.91	 
	September 30, 2004	 	 	
$134,890.91	 
	December 31, 2004	 	 	
$134,890.91	 
	March 31, 2005	 	 	
$134,890.91	 
	June 30, 2005	 	 	
$134,890.91	 
	September 30, 2005	 	 	
$134,890.91	 
	December 31, 2005	 	 	
$134,890.91	 
	March 31, 2006	 	 	
$134,890.91	 
	June 30, 2006	 	 	
$134,890.91	 
	September 30, 2006	 	 	
$134,890.91	 
	December 31, 2006	 	 	
$4,383,954.55	 
	March 31, 2007	 	 	
$4,383,954.55	 
	June 30, 2007	 	 	
$4,383,954.55	 
	September 30, 2007	 	 	
$4,383,954.55	 
	December 31, 2007	 	 	
$4,383,954.55	 
	March 31, 2008	 	 	
$4,383,954.55	 
	June 30, 2008	 	 	
$4,383,954.55	 
	September 28, 2008, or if different, the then

outstanding balance of Term Loan B	 	 	
$4,383,954.55	 

     (e)    The first sentence of subsection 1.1(B) of the Credit Agreement is
hereby amended by deleting the “$60,000,000” dollar amount set forth therein
and replacing it with “$64,780,000”.

     (f)   
 Schedule 10.1(C) of the Credit Agreement is hereby amended and
restated in its entirety, as set forth on Exhibit A hereto. Upon the
effectiveness of this Amendment, Merrill will advance to Agent a Revolving
Loan, to be allocated by Agent among the Lenders having Revolving Loan
Commitments, such that after giving effect thereto the outstanding Revolving
Loans of each Lender will equal its revised Pro Rata Share thereof.

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     3.   Conditions. The effectiveness of this Amendment is subject to the
following conditions precedent (unless specifically waived in writing by
Agent):

     (a)   Borrower shall have executed and delivered this Amendment and such
other documents and instruments as Agent may require shall have been executed
and/or delivered to Agent;

     (b)   Borrower shall have delivered to Merrill a Term Note A executed by
Borrower in favor of Merrill, in the amount set forth on Schedule 10.1(C) with
respect to Merrill’s Term Loan A funded amount, as revised pursuant to this
Amendment and attached as Exhibit A hereto;

     (c)     Borrower shall have delivered to Merrill a Term Note B executed by
Borrower in favor of Merrill, in the amount set forth on Schedule 10.1(C) with
respect to Merrill’s Term Loan B funded amount, as revised pursuant to this
Amendment and attached as Exhibit A hereto;

     (d)   Borrower shall have delivered to Merrill a Revolving Note executed by
Borrower in favor of Merrill, in the amount set forth on Schedule 10.1(C) with
respect to Merrill’s Revolving Loan Commitment, as revised pursuant to this
Amendment and attached as Exhibit A hereto;

     (e)   Agent shall have received a Consent and Reaffirmation of Guaranty
executed by each of First Tier Holdings and Second Tier Holdings in form and
substance satisfactory to Agent and Lenders, in their sole discretion;

     (f)   No Default or Event of Default shall have occurred and be continuing;
and

     (g)   Borrower shall have paid to Agent a fee in the amount of $157,684,
which fee shall be fully-earned and payable as of the date hereof, and shall be
allocated among the Lenders pursuant to each Lender’s Pro Rata Share before
giving effect to this Amendment.

     4.   Representations and Warranties. To induce Agent and Lenders to enter
into this Amendment, Borrower represents and warrants to Agent and Lenders:

     (a)   that the execution, delivery and performance of this Amendment has
been duly authorized by all requisite corporate action on the part of Borrower
and that this Amendment has been duly executed and delivered by Borrower; and

     (b)   that each of the representations and warranties set forth in Section 5
of the Credit Agreement (other than those which, by their terms, specifically
are made as of a certain date prior to the date hereof) are true and correct in
all material respects as of the date hereof.

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     5.   Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

     6.   References. Any reference to the Credit Agreement contained in any
document, instrument or agreement executed in connection with the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as modified
by this Amendment.

     7.   Counterparts. This Amendment 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.

     8.   Ratification. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the Credit
Agreement and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Credit Agreement. Except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Credit Agreement are ratified and confirmed and shall continue in full force
and effect.

[Signature Pages Follow]

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

	 	THE HILLMAN GROUP, INC.
	 
	 	/s/ James P. Waters
_____________________________

By: James P. Waters

Title: Vice President-Finance

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	 	HELLER FINANCIAL, INC., as Agent, an Issuing

Lender and a Lender

	 	By:  /s/ Matthew
Kirst                         

Title: Duly Authorized Signatory

 

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	 	ANTARES CAPITAL CORPORATION

	 	By:  /s/ Dan Glickman                         

Title: Director

 

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	 	MADISON CAPITAL FUNDING LLC

	 	By:  /s/ K. Thomas
Klimmeck                         

Title: Managing Director

 

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	 	GENERAL ELECTRIC CAPITAL CORPORATION

	 	By:  /s/ Michael
Liestbader                         

Title: Duly Authorized Signatory

 

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	 	PNC BANK, NATIONAL ASSOCIATION

	 	 	 
	 	By: 	/s/ Joni Wagner

	 	Title: 	Assistant Vice President

 

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	 	FIFTH THIRD BANK

	 	 	 
	 	By: 	/s/ K. E. Goodpaster

	 	Title: 	Vice President

 

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	 	JOHN HANCOCK LIFE INSURANCE COMPANY

	 	 	 
	 	By: 	/s/ Lorne C. Davis

	 	Title: 	Director

 

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	 	JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

	 	By: /s/ Lorne C.
Davis                    

Title: Authorized Signatory

 

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	 	INVESTORS PARTNER LIFE INSURANCE COMPANY

	 	By: /s/ Lorne C.
Davis                    

Title: Authorized Signatory

 

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	 	MARINER CDO 2002, LTD.

	 	By: /s/ David Mahon                    

Title: Vice President

 

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	 	THE PROVIDENT BANK

	 	By: /s/ Scott Kray                    

Title: Vice President

 

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	 	MERRILL LYNCH CAPITAL, a division of Merrill

Lynch Business Financial Services Inc.

	 	By: /s/ Jeffrey L. Jelm                    

Title: Director

 

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