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Exhibit 99.1
FORBEARANCE AND AMENDMENT NO. 4 TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FORBEARANCE AND AMENDMENT NO. 4 TO AMENDED AND RESTATED
CREDIT AGREEMENT (this "Amendment"), dated as of March 15, 2001, by and between
PEN HOLDINGS, INC., a Tennessee corporation ("Borrower") and MELLON BANK, N.A.,
a national banking association, CIBC INC., AMSOUTH BANK and any other "Banks"
which are hereafter made a party to the Credit Agreement as hereinafter defined
(individually, a "Bank" and collectively, the "Banks") and MELLON BANK, N.A. as
Agent for the Banks (the "Agent").
W I T N E S S E T H
WHEREAS, the Agent, the Banks and the Borrower entered into an
Amended and Restated Credit Agreement dated as of June 3, 1998 as amended by
Amendment No. 1 to Amended and Restated Credit Agreement dated as of February 1,
, 1999, Amendment No. 2 to Amended and Restated Credit Agreement dated as of
June 21, 2000 and Amendment No. 3 to Amended and Restated Credit Agreement dated
as of August 31, 2000 (collectively the "Credit Agreement"), pursuant to which
the Banks agreed to make, inter alia, revolving credit loans to the Borrower of
up to $40,000,000, in accordance with, and as provided for in, the Credit
Agreement;
WHEREAS, the Borrower has notified the Banks that certain Events
of Default and Potential Defaults have occurred under the Credit Agreement, and
the Banks have not waived such Events of Default and Potential Defaults;
WHEREAS, Borrower has requested, inter alia, that the Banks
forbear from taking actions to accelerate the Loans and to dispose of or collect
upon collateral granted under the Credit Agreement and the other Loan Documents
until April 16, 2001 and to make other accommodations to the Borrower and the
Banks are willing to forbear from taking such actions until April 16, 2001 upon
the terms and conditions set forth herein;
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WHEREAS, the Borrower and the Banks accordingly desire to make
certain amendments to the Credit Agreement, as set forth herein; and
WHEREAS, Section 9.03 of the Credit Agreement provides that such
Credit Agreement may be amended from time to time by an instrument signed by the
parties thereto.
NOW THEREFORE, the parties to this Amendment, in consideration
of their mutual covenants and agreements contained in this Amendment and the
Credit Agreement, and intending to be legally bound hereby, covenant and agree
as follows:
Section 1: Preambles. The preambles set forth above are
incorporated in this Amendment as if fully set forth in this Amendment.
Section 2: Amendment to Definitions in Credit Agreement.
(A) All terms used in this Amendment No. 4 to Credit Agreement
and not otherwise defined shall have the meanings ascribed to them in the Credit
Agreement. The Credit Agreement, and this Forbearance and Amendment No. 4 to
Credit Agreement are to be treated as one agreement and are together referred to
hereafter as the "Agreement".
(B) Article I of the Credit Agreement is amended to include the
following definitions. To the extent the definitions below modify defined terms
contained in the Credit Agreement prior to this Forbearance and Amendment No. 4
to Credit Agreement, such terms are amended and restated in their entirety to
read as follows:
"Agreement" means the Amended and Restated Credit Agreement
dated as of June 3, 1998, as amended by Amendment No. 1 to Credit Agreement
dated as of February 1, 1999, as amended by Amendment No. 2 to Credit Agreement
dated as of June 21, 2000, as amended by Amendment No. 3 to Credit Agreement
dated as of August 31, 2000 and as amended by Forbearance and Amendment No. 4 to
Amended and Restated Credit Agreement dated as of March 15, 2001, as the same
may be further amended, modified or supplemented from time to time.
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"Amendment No. 4 to Credit Agreement" means that certain
Forbearance and Amendment No. 4 to Amended and Restated Credit Agreement dated
as of March 15, 2001 entered into by and among the Borrower, the Agent and the
Banks.
(b) The following definition shall be inserted in Article I of
the Credit Agreement in the appropriate alphabetical order:
"Known Defaults" shall mean (i) the Events of Default
and Potential Defaults described in the letter of the Agent to the Borrower
dated February 21, 2001 (the "Cheyenne Judgment"), together with the Event of
Default which has occurred pursuant to Section 7.01(j) of the Credit Agreement
as a result of such events; (ii) the existence of the Lien created by the
recording or other perfection of the Cheyenne Judgment by Travelers Casualty and
Surety Company of America ("Travlers") or its affiliates against Elk Horn; (iii)
the Default (as defined in the Senior Note Indenture) which will occur under the
Senior Note Indenture by reason of (x) the payment by Travelers on the appeal
bond issued in connection with the Cheyenne Judgment, and (y) the recording or
other perfection by Travelers or its affiliates of the Cheyenne Judgment against
Elk Horn; and (iv) the failure of the Borrower to comply with certain of the
financial maintenance covenants set forth in Section 6.16 of the Credit
Agreement for the period ended December 31, 2000.
"Restructuring Consultant" shall mean a financial
advisor and restructuring consultant acceptable to the Banks.
Section 3: Forbearance; Making of Revolving Credit Loans. (A)
Subject to the terms and conditions of the Credit Agreement and the other Loan
Documents and relying upon the accuracy of the representations and warranties
set forth in the Credit Agreement, this Amendment and the other Loan Documents
and the absence of any Event of Default or Potential Default other than the
Known Defaults, the Banks agree to forbear from taking action to accelerate the
Loans and to dispose of or collect upon Collateral granted under the Credit
Agreement and the other Loan Documents until April 16, 2001. If any Event of
Default or Potential Default which is not a Known Default shall occur or shall
exist, the Banks shall not be under any further obligation
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to forbear from taking actions to dispose of or collect upon Collateral granted
under the Credit Agreement and the other Loan Documents and the Banks shall be
free to exercise any and all rights and remedies they may have against the
Borrower and the Sureties. The Borrower acknowledges that the Banks shall have
no obligation to continue to forbear from taking actions to dispose of or
collect upon Collateral granted or to make any loans, advances or other credit
accommodations under the Credit Agreement after the first to occur of (i) an
Event of Default or Potential Default, which is not a Known Default, (ii) the
failure by Borrower to perform any of its obligations to be performed under the
Credit Agreement or the Amendment within the time period specified therein or
herein, (iii) failure of the Borrower or Travelers to comply with any of the
terms of that certain Standstill and Forbearance Agreement dated as of March 15,
2001 entered into by and among the Borrower, Travelers and the Banks (the
"Travelers Forbearance Agreement"), (iv) an Event of Default (as defined in the
Senior Note Indenture) shall occur or exist, or (v) April 16, 2001. The period
commencing on the date of this Amendment and continuing through April 16, 2001
shall sometimes be referred to herein as the "Forbearance Period."
(B) Subject to the terms and conditions of the Credit Agreement
and the other Loan Documents and relying upon the accuracy of the
representations and warranties set forth in the Credit Agreement, this Amendment
and the other Loan Documents and the absence of any Event of Default or
Potential Default other than the Known Defaults, the Banks agree to make
Revolving Credit Loans to the Borrower during the Forbearance Period provided
that the Borrower complies with the terms and conditions of this Amendment and
the following terms and conditions:
(1) On or before March 14, 2001, the Borrower will
provide to the Agent and the Banks with a 13 week rolling cash
flow projection and accounts payable aging report (the "Cash
Flow Projection"). The Borrower will provide to the Agent and
each Bank an updated Cash Flow Projection on a weekly basis each
Friday.
(2) Together with each request for a Revolving Credit
Loan, the Borrower shall provide to the Agent and each Bank a
certificate signed by either the Chief Financial Officer or the
President of the Borrower
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certifying that the items which are expected to be paid with the
proceeds of the requested Revolving Credit Loan are business
expenses incurred in the ordinary course of business of the
Borrower and its Subsidiaries and are reflected in the Cash Flow
Projections to be paid on or about the date of the request for
advance.
(3) On or before the date of this Amendment, the
Borrower shall open a cash collateral account with the Agent
(the "Cash Collateral Account") and shall cause all cash
receipts from whatever source and payments on accounts
receivable to be deposited in the Cash Collateral Account. The
Cash Collateral Account shall be assigned to the Agent, for the
benefit of the Banks, as collateral for the Loans in accordance
with documentation which is satisfactory to the Agent. Provided
that no Event of Default other than the Known Defaults occurs or
is in existence, during the Forbearance Period the Banks shall
make available to the Borrower all finally collected funds which
are maintained in the Cash Collateral Account.
Section 4: Interest Rate. Notwithstanding anything contained in
Article II of the Credit Agreement or any other provision of the Credit
Agreement to the contrary, as provided in the letter of the Agent to the
Borrower dated February 23, 2001, the default interest rate set forth in Section
2.07 of the Credit Agreement shall be applicable to all Loans.
Section 5: Events of Termination of Forbearance. Notwithstanding
anything contained herein or in the Credit Agreement to the contrary, the Agent
and the Banks shall have the right to terminate the Forbearance Period, and to
exercise any rights or remedies they may have under the Credit Agreement, the
Loan Documents or under law, upon the occurrence of any of the following:
(a) Failure to timely pay or perform any indebtedness,
liability or obligation arising under this Amendment.
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(b) Any material adverse change in the condition of the
Borrower or the Sureties.
(c) The occurrence of any Event of Default or Potential
Default, other than the Known Defaults.
(d) At any time after the date of this Amendment, failure to
pay into the Cash Collateral Account any and all amounts
received by the Borrower or Sureties from any source.
(5) The occurrence of an Event of Default under the
Senior Note Indenture.
(6) Failure by the Borrower or Travelers to comply with
any of the terms and conditions of the Travelers Forbearance
Agreement.
Section 6: Representations and Warranties. The Borrower and each
Surety represents and warrants to the Banks that:
(a) The Borrower and each Surety has and will continue to have
corporate power and authority to execute, deliver and perform the provisions of
this Amendment and the Credit Agreement as amended hereby and to execute and
deliver the instruments required by the provisions of this Amendment and the
Credit Agreement as amended hereby to be executed and delivered by the Borrower
and each Surety; and all such action has been duly and validly authorized by all
necessary corporate proceedings on the part of the Borrower and each Surety.
(b) The execution and delivery of this Amendment and the
carrying out of this Amendment and the Credit Agreement as amended hereby will
not violate any provisions of law or the articles of incorporation or the
by-laws of the Borrower or any Surety or of any agreement or other instrument to
which the Borrower or any Surety is a party or by which it is bound or to which
it is subject.
(c) This Amendment has been duly and validly executed and
delivered by the Borrower and each Surety, and this Amendment and the Credit
Agreement as amended hereby, constitute legal,
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valid and binding obligations of the Borrower and each Surety enforceable in
accordance with the terms of this Amendment and the Credit Agreement as amended
by this Amendment.
(d) Except as has been disclosed to the Banks in writing, the
representations and warranties by the Borrower contained in Article III of the
Credit Agreement are correct and accurate on and as of the date of this
Amendment with the same effect as though made on and as of the date of this
Amendment.
(e) Except for the Known Defaults, no event has occurred and is
continuing which constitutes an Event of Default or Potential Default and no
default which is continuing has occurred under the Credit Agreement.
Section 7: Conditions to Forbearance and this Amendment. The
obligation of the Banks to enter into this Amendment and to make any Loan or
advance under the Credit Agreement or this Amendment is subject to the accuracy
as of the date hereof of the representations and warranties contained in this
Amendment, the Credit Agreement and the other Loan Documents, to the performance
by Borrower of its obligations to be performed under this Amendment, the Credit
Agreement and the other Loan Documents on or before the date of such Loan or
advance, and to the satisfaction of the following further conditions:
(a) This Amendment and the Cash Collateral Agreement shall have
been executed by the Borrower and delivered to the Agent and shall be in effect.
(b) The Agent shall have received a certificate in form and
substance satisfactory to the Agent, dated as of the date of this Amendment,
certifying as to (i) true copies of all corporate action taken by the Borrower
and each Surety relative to this Amendment and the Travelers Forbearance
Agreement, and (ii) the names, true signatures and incumbency of the officers of
the Borrower and each Surety authorized to execute this Amendment and the other
documents and instruments to be executed in connection with this Amendment. The
Banks and the Agent may conclusively rely on such certificate unless and until a
later certificate revising the prior certificate has been furnished to the
Agent.
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(c) As of the date of this Amendment, all legal details and
proceedings in connection with the transactions contemplated by this Amendment
shall be satisfactory to the Agent and its counsel and the Agent shall have
received and shall receive from time to time all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions, in form and substance satisfactory to the Agent, as the Agent
may from time to time request.
(d) On or before March 14, 2001, the Borrower will have provided
the initial Cash Flow Projection to the Agent and each Bank.
(e) On or before March 14, 2001, the Borrower and its counsel
shall provide UCC lien, judgment, litigation and bankruptcy searches covering
the Borrower and each Surety in each jurisdiction in which any of the foregoing
conduct business, together with an updated listing of all real property,
leasehold and mineral right holdings of the Borrower and each Surety and a
detailed listing of each material agreement of the Borrower and each Surety.
(f) On or before March 14, 2001, the Borrower will retain, at
Borrower's expense, the Restructuring Consultant to advise the Borrower in
connection with its financial and capital affairs.
Section 8: No Waiver of Known Defaults. Except for waivers
previously granted by the Bank of the Events of Default which occurred by reason
of the Borrower's failure to comply with the terms of Section 6.16 of the Credit
Agreement as of June 30, 2000 and September 30, 2000 as provided in the waiver
letters previously issued by the Banks, the Agent and the Banks have not agreed
to waive, and have not waived, any past or present default under the Credit
Agreement or any of the other Loan Documents, including, without limitation, the
Known Defaults. The Banks have not consented to any departure by the Borrower or
the Sureties from their due performance under the Credit Agreement or under any
of the Loan Documents except as specifically set forth herein. The rights and
remedies of the Agent and the Banks under the Credit Agreement and the other
Loan Documents shall survive
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the execution and delivery of this Amendment and the Agent and the Banks may
exercise such rights and remedies with respect to any such defaults at any time.
Section 9: Jury Trial Waiver
THE BORROWER, THE SURETIES, THE AGENT AND THE BANKS
EXPRESSLY, KNOWINGLY AND VOLUNTARILY WAIVE ALL BENEFIT AND ADVANTAGE OF ANY
RIGHT TO A TRIAL BY JURY, AND THEY WILL NOT AT ANY TIME INSIST UPON OR PLEAD OR
IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF A TRIAL BY
JURY IN ACTION ARISING IN CONNECTION WITH THE CREDIT AGREEMENT, THE NOTES, THIS
AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
Section 10: Effective Date. Except as otherwise expressly
provided in this Amendment, the effective date of this Amendment shall be the
date of this Amendment.
Section 11: Expenses. The Borrower agrees to pay and save the
Agent and the Banks harmless against liability for the payment of all
out-of-pocket expenses of the Agent and each of the Banks arising in connection
with this Amendment, including the fees and expenses of counsel for the Agent
and each of the Banks and the expenses of any lien searches or other
investigations conducted for the Agent and the Banks.
Section 12: Scope of Amendments. Except as expressly amended by
this Amendment, the provisions of the Credit Agreement shall remain in full
force and effect. The Loan Documents shall likewise remain in full force and
effect. Nothing contained in this Amendment shall be construed to impair the
security of the Agent and the Banks under the Credit Agreement and the other
Loan Documents, nor affect or impair any rights or powers that the Agent or the
Banks may have under the Credit Agreement and the other Loan Documents in case
of the Borrower's or the Sureties' nonperformance of the terms, provisions and
covenants contained in this Amendment or in the case of the occurrence of an
Event of Default or Potential Default other than the Known Defaults. The
Borrower and the Sureties hereby ratify and confirm the validity and
effectiveness of the Credit Agreement and the other Loan Documents as modified
by this Amendment.
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Section 13: Further Assurances. The Borrower and each Surety, at
its own cost and expense, will cause to be promptly and duly taken, executed,
acknowledged and delivered all such further acts, documents and assurances as
the Banks or the Agent may from time to time request in order to more
effectively carry out the intent and purposes of this Amendment and the
transactions contemplated by this Amendment. Promptly upon request by the Agent,
the Borrower and each Surety agrees to execute and deliver and to file and
record and refile and record such financing statements, mortgages and
assignments and other documents in such manner, at such time or times and in
such place or places as may be required by law and to cause such other actions
which may be required by law or as may be requested by the Agent in order more
effectively to carry out the intent and purposes of this Amendment. In addition,
Borrower and each Surety shall permit the Banks to conduct all appraisals,
evaluations and other examinations or reports deemed necessary by the Banks, and
Borrower shall pay the reasonable costs thereof.
Section 14: Miscellaneous. This Amendment shall be deemed to be
a contract under the laws of the Commonwealth of Pennsylvania and for all
purposes shall be construed in accordance with, and governed by, such laws. The
caption headings contained in this Amendment are for convenience of reference
and shall not be deemed to be a part of this contract or used in the
construction of this contract. All representations, warranties and covenants
contained herein or made in writing by the Borrower and each Surety in
connection with this Amendment shall survive the execution and delivery of this
Amendment and will bind and inure to the benefit of the successors and assigns
of the Agent, the Banks and the Borrower, provided that, without the prior
written consent of the Banks, the Borrower may not assign the Credit Agreement
as amended by this Amendment or any of its rights or obligations under the
Credit Agreement and this Amendment and any such attempted assignment shall be
null and void. The provisions of this Amendment are intended to be severable. If
any provision of this Amendment shall be held to be invalid or unenforceable in
whole or in part in any jurisdiction such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions of this
Amendment in any jurisdiction.
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This Amendment, the Credit Agreement and other Loan Documents modified by this
Amendment integrate all the terms and conditions referred to herein, constitute
the entire agreement between the parties and supersede any other prior
understandings and agreements, whether written or oral, with respect to the
subject matter herein. No further amendments shall be effective unless agreed to
by the parties in writing.
Section 15: Counterparts. This Amendment may be executed in
counterparts and by the Banks and the Borrower and Sureties on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
Furthermore, the parties agree that this Amendment may be executed by
telecopying each such counterpart signature page to the Agent, followed by
delivering the original signed counterpart signature page by overnight courier
services to the Agent for next day delivery.
Section 16: Reaffirmation; No Defenses or Counterclaims. The
Borrower and each Surety hereby reaffirms the validity and enforceability of the
security interests granted by the Borrower and each Surety to the Agent and the
Banks in the property of the Borrower and the Sureties pursuant to the terms of
the Loan Documents. The Borrower and each Surety hereby represents and warrants
that as of the date of this Amendment, the Borrower and each Surety has no
defenses or counterclaims whatsoever against the Agent, the Banks or any of them
arising from this Amendment, the Credit Agreement or the Loan Documents, or any
of them, and that the Agent and the Banks have not waived any of their rights
and remedies.
IN WITNESS WHEREOF, the parties, by their duly authorized
officers, have executed and delivered this Forbearance and Amendment No. 4 to
Amended and Restated Credit Agreement as of the date first written above.
PEN HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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MELLON BANK, N.A., as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Regional Manager
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CIBC INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title:
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AMSOUTH BANK
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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Title:
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The undersigned, being all the Sureties, and intending to be legally bound,
hereby (i) acknowledge and consent to the foregoing Forbearance and Amendment
No. 4 to Amended and Restated Credit Agreement,(ii) confirm that they continue
to be bound by the terms of the Suretyship Agreements and the other Loan
Documents to which they are a party, and (iii) ratify and confirm their
respective obligations under the Suretyship Agreements and the Loan Documents to
which they are a party.
PEN COAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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RIVER MARINE TERMINALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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THE ELK HORN COAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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PEN COTTON COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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PEN HARDWOOD COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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MARINE TERMINALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
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