Exhibit 10.1
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "AMENDMENT") is executed this 28th day of October, 2002, but
effective as of the 30th day of September, 2002 (the "SECOND AMENDMENT EFFECTIVE
DATE"), among VALLEY NATIONAL GASES, INC., a West Virginia corporation (the
"COMPANY"), VALLEY NATIONAL GASES INCORPORATED, a Pennsylvania corporation
("VNGI"), VALLEY NATIONAL GASES DELAWARE, INC., a Delaware corporation
("VNGDI"), BANK ONE, NA, a national banking association having its main office
in Chicago, Illinois (successor by merger with Bank One, Indiana, National
Association) ("BANK ONE"), LASALLE BANK NATIONAL ASSOCIATION, a national banking
association, NATIONAL CITY BANK, a national banking association, THE HUNTINGTON
NATIONAL BANK, a national banking association, WESBANCO BANK, INC., SKY BANK,
and FIFTH THIRD BANK (collectively, the "LENDERS"), and Bank One, as
administrative and collateral agent (the "AGENT") for the Lenders from time to
time parties to that certain Second Amended and Restated Credit Agreement, dated
as of May 1, 2000, as amended by the Amendment to Second Amended and Restated
Credit Agreement dated June 28, 2002 (the "CREDIT AGREEMENT").
RECITAL
The Company has requested the Lenders to amend the Credit Agreement
as provided in this Amendment. Subject to the terms and conditions stated in
this Amendment, the Lenders are willing to amend the Credit Agreement as
provided in this Amendment.
AMENDMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein, and each act performed and to be performed hereunder, the
parties hereto agree as follows:
1. DEFINITIONS. All terms used in this Amendment that are defined in
the Credit Agreement and that are not otherwise defined in this Amendment shall
have the same meanings in this Amendment as are ascribed to such terms in the
Credit Agreement, as amended by this Amendment.
2. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the Second
Amendment Effective Date, the Credit Agreement is amended as follows:
(a) NEW DEFINITION. The following definitions are added to Section 1.01
of the Credit Agreement:
"Put/Call Target Company" means the independent distributor with
which the Company has entered into a put/call option agreement for
the purchase of such distributor's business, as identified in the
Company's Form 10-K filed with the Securities Commission on
September 27, 2002.
"Second Amendment Effective Date" means September 30,
2002.
(b) AMENDED DEFINITIONS. The following definitions set forth in
Section 1.01 of the Credit Agreement are amended and restated in their
respective entireties to read as follows:
"EBITDA" means, with respect to the Credit Parties and their
respective Subsidiaries for any period, the amount of Consolidated
Net Income, plus, without duplication and to the extent deducted in
determining the amount of Consolidated Net Income, the sum of (i)
interest expense, (ii) income tax expense, (iii) depreciation, (iv)
amortization expense (all determined in accordance with GAAP), and
(v) a one-time extraordinary charge not in excess of $550,000.00
taken during June, 2002.
For purposes of determining EBITDA for the Credit Parties and their
respective Subsidiaries on a pro forma basis to determine the effect
of a New Acquisition on compliance with the covenants in subsections
5.01(g) of this Agreement (EXCLUDING the covenant in subsection
5.01(g)(2) of this Agreement), to determine whether the
Qualification Conditions to any New Acquisition have been satisfied,
and to determine the Applicable Spread, the Applicable LOC Fee
Percentage and the Applicable Unused Commitment Fee Percentage for
any period of twelve (12) months or four fiscal quarters of the
Company that ends ("PERIOD ENDING DATE"): (i) on any New Acquisition
Closing Date, EBITDA for such period will be deemed to include the
Additional EBITDA Amount calculated with respect to the Related
Business Entity acquired (or assumed to be acquired) on such New
Acquisition Closing Date; and (ii) within one year after any New
Acquisition Closing Date, EBITDA for such period will be deemed to
include an amount equal to (A) the Additional EBITDA Amount
calculated with respect to the Related Business Entity acquired on
such New Acquisition Closing Date, MINUS (B) 1/12 of such Additional
EBITDA Amount for each full calendar month that has elapsed
between such New Acquisition Closing Date and the Period Ending
Date, MINUS (c) 1/30 of such Additional EBITDA Amount for each day
of any partial calendar month that has elapsed
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between such New Acquisition Closing Date and the Period Ending
Date.
"New Acquisition" means the acquisition by the Company from any
Person of the assets and goodwill of such Person which comprise a
Related Business Entity, or of all or substantially all of the
stock, partnership interest, or other ownership interest of any type
whatsoever of such Person in a Related Business Entity if such
Related Business Entity is merged into the Company with the Company
being the surviving entity, in a transaction or series of
transactions closed after the Closing Date, provided that (i)
Financial Statements have been maintained for such Related Business
Entity for such periods preceding the acquisition as may be
reasonably required by the Required Lenders; and (ii) the
consummation of such acquisition on a pro forma basis will not cause
the occurrence of an Event of Default or an Unmatured Event of
Default, provided that, for purposes of determining satisfaction of
the condition stated in this clause (ii), the Ratio of Total Funded
Debt to EBITDA shall be calculated on pro forma basis by (a) making
New Acquisition Adjustments giving effect to the proposed
acquisition of such Related Business Entity, and (b) if the Related
Business Entity is not the Put/Call Target Company, making New
Acquisition Adjustments as though, on the date of closing of the
proposed acquisition, the Company also would complete a New
Acquisition of the Put/Call Target Company (collectively, the
"QUALIFICATION CONDITIONS"). An acquisition which would otherwise
qualify as a "New Acquisition" shall not so qualify unless the
Company shall have obtained from the Agent its confirmation that the
written submissions made to the Agent by the Company demonstrate
that the Qualifying Conditions are fully met with respect to the
proposed acquisition. To obtain such confirmation from the Agent the
Company shall submit to the Agent such historical financial
statements and pro forma calculations of the Additional EBITDA
Amount which will be applicable to the proposed acquisition (and, if
applicable, the hypothetical acquisition of the Put/Call Target
Company) as the Agent may require.
(c) AMENDMENT OF SECTION 5.01 (G). Section 5.01 (g) of the Credit
Agreement is amended and restated in its entirety to read as follows:
(g) FINANCIAL COVENANTS. The Credit Parties shall
observe each of the following financial covenants:
(1) CONSOLIDATED NET WORTH. The Credit Parties and their
respective Subsidiaries shall maintain at all times from
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and after the Amendment Effective Date Consolidated Net Worth
at a level not less than (i) $35,500,000.00, PLUS (ii)
Seventy-Five Percent (75%) of the cumulative Consolidated Net
Income for each fiscal quarter of the Company ending after
March 31, 2002, provided that cumulative Consolidated Net
Income shall not be reduced by the amount of the net loss for
any fiscal quarter in which the Credit Parties and their
respective subsidiaries on a consolidated basis suffers a net
loss, PLUS (iii) One Hundred Percent (100%) of the amount of
any new paid in capital or other new equity received by any
Credit Party from any Person who is not a Credit Party
provided, that, such amount shall in no event be less than
zero.
(2) FIXED CHARGE COVERAGE RATIO. As of the close of each
fiscal quarter of the Company ending after the Closing Date,
the Credit Parties and their respective Subsidiaries, for the
period of the four consecutive fiscal quarters which end on
such close, shall have a Fixed Charge Coverage Ratio of not
less than: (i) 1.05:1 through September 30, 2002, (ii) 1.10:1
on October 1, 2002, and thereafter through September 29, 2003,
and (iii) 1.15:1 on September 30, 2003, and thereafter.
(3) RATIO OF TOTAL FUNDED DEBT TO EBITDA. As of the close of
each fiscal quarter of the Company ending after the Closing
Date, the Credit Parties and their respective Subsidiaries,
for the period of the four consecutive fiscal quarters which
end on such close, shall have a Ratio of Total Funded Debt to
EBITDA of not greater than (i) 4.00:1 through ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇▇) 3.75:1 on March 31, 2003, through June 29, 2003, (iii)
3.50:1 on June 30, 2003, through September 29, 2003, (iv)
3.25:1 on September 30, 2003, through December 30, 2003, (v)
3.00:1 on December 31, 2003, through June 29, 2004, and (vi)
2.75:1 on and after June 30, 2004.
(d) AMENDMENT OF SECTION 5.02 (e). Section 5.02 (e) of the Credit
Agreement is amended and restated in its entirety to read as follows:
(e) MERGERS, CONSOLIDATIONS, SALES, ACQUISITION OR FORMATION OF
SUBSIDIARIES. Neither the Credit Parties nor any of their respective
Subsidiaries nor any Guarantor shall (i) be a party to any
consolidation or to any merger or purchase the capital stock of or
otherwise acquire any equity interest in any other business entity
other than New Acquisitions (with respect to the Company only)
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made after September 30, 2003, (ii) acquire any material part of the
assets of any other business entity other than New Acquisitions (with
respect to the Company only) permitted by the preceding clause (i),
except in the ordinary course of business and excepting Short-Term Real
Estate Sales, or (iii) sell, transfer, convey or lease all or any
material part of its assets, except in the ordinary course of business,
or sell or assign with or without recourse any receivables. VNGI shall
not cause to be created or otherwise acquire any Subsidiary other than
VNGDI without the prior written consent of the Agent and the Required
Lenders. VNGDI shall not cause to be created or otherwise acquire any
Subsidiary other than the Company without the prior written consent of
the Agent and the Required Lenders. The Company shall not cause to be
created or otherwise acquire any Subsidiary without the prior written
consent of the Agent and the Required Lenders, which consent shall not
be unreasonably withheld. Without limiting the generality of the
foregoing sentence, the Company shall not consummate any New
Acquisition which would cause a new Subsidiary of the Company to exist
without the prior written consent of the Agent and the Required
Lenders, and if such consent is given, concurrently with or within
sixty (60) days following consummation of such New Acquisition: (i) the
Company shall amend the Company Pledge Agreement to include a pledge of
and security interest and Lien in and to all of the capital stock of
such Subsidiary as provided in SECTION 4.01(f) of this Agreement, and
deliver to the Agent, for the benefit of the Lenders and the Agent, all
of the original stock certificates of such Subsidiary, together with
executed blank stock powers therefor; and (ii) such Subsidiary shall
become a Guarantor and shall execute and deliver in favor of the Agent,
for the benefit of the Lenders and the Agent, a Subsidiary Guaranty and
Subsidiary Security Agreement as provided in SECTION 4.01(f) of this
Agreement. No Subsidiary of the Company shall cause to be created or
otherwise acquire any Subsidiary without the prior written consent of
the Agent and the Required Lenders.
3. REPRESENTATIONS AND WARRANTIES. The Credit Parties jointly
and severally represent and warrant to the Lenders that:
(a) (i) The execution, delivery and performance of this Amendment by the
Credit Parties have been duly authorized by all necessary corporate
action, and do not and will not violate any provision of any law, rule,
regulation, order, judgment, injunction, or writ presently in effect
applying to the Credit Parties, the articles of incorporation or by-laws
of any of the Credit Parties, or result in a breach of or constitute a
default under any material agreement, lease or instrument to which any of
the Credit Parties is a party or by
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which any of the Credit Parties or any of the properties of any of the
Credit Parties may be bound or affected; (ii) no authorization,
consent, approval, license, exemption or filing of a registration with
any court or governmental department, agency or instrumentality or any
other Person is or will be necessary for the valid execution, delivery
or performance by any of the Credit Parties of this Amendment; and
(iii) this Amendment is the legal, valid and binding obligation of each
of the Credit Parties, as a signatory thereto, and is enforceable
against each of the Credit Parties in accordance with its terms.
(b) After giving effect to the amendments contained in this Amendment, the
representations and warranties contained in Section 3 of the Credit
Agreement are true and correct with the same force and effect as if made
on and as of the date of execution of this Amendment, except that the
reference to the Financial Statements in Section 3.01(d) of the Credit
Agreement shall be to the most recent financial statements of the Company
and its Subsidiaries provided to the Bank prior to the date hereof.
(c) After giving effect to the amendments contained in this Amendment, no
Default or Unmatured Default has occurred and is continuing or will exist
under the Credit Agreement.
4. CONDITIONS. The obligation of the Lenders and the Agent to
perform this Amendment shall be subject to full satisfaction of the following
conditions precedent:
(a) The Credit Parties shall have delivered to the Agent copies of such
corporate documents and resolutions of the Credit Parties as the Agent may
request evidencing necessary action by the Credit Parties to obtain
necessary authorization for the execution and performance of this
Amendment and all other agreements or documents delivered pursuant hereto
as the Agent may request, each certified as of the date of execution of
this Amendment.
(b) This Amendment shall have been duly executed by each of the Credit
Parties and the Required Lenders and delivered to the Agent.
(c) The Company shall have paid to the Agent, for the account of the
Lenders, a waiver fee in the amount of $90,000.00.
(d) The Company shall have paid all costs and expenses incurred by the
Agent in connection with the negotiation, preparation and closing of this
Amendment and the other documents and agreements delivered pursuant
hereto, including the reasonable fees and out-of-pocket expenses of ▇▇▇▇▇
& ▇▇▇▇▇▇▇, special counsel to the Agent.
(e) The Agent shall have received such additional agreements, documents
and certifications, as may be reasonably requested by the Required
Lenders.
5. GUARANTOR CONSENT/AFFIRMATION. VNGI and VNDGI, in their
respective capacities as a Guarantor under the Guaranties, by their execution of
this Amendment, expressly
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consent to the execution, delivery and performance by the Company and the Agent
of this Amendment, and agree that neither the provisions of this Amendment nor
any action taken or not taken in accordance with the terms of this Amendment
shall constitute a termination, extinguishment, release or discharge of any of
their respective guaranty obligations or provide a defense, set off, or counter
claim to any of them with respect to any of their respective guaranty
obligations under any of the Guaranties or other Loan Documents. VNGI and VNDGI
each affirms to the Lenders and the Agent that its Guaranty remains in full
force and effect and is its valid and binding obligation.
6. BINDING ON SUCCESSORS AND ASSIGNS. All of the terms and
provisions of this Amendment shall be binding upon and inure to the benefit of
the Credit Parties, the Lenders, the Agent, and their respective successors and
assigns and legal representatives.
7. GOVERNING LAW/ENTIRE AGREEMENT/SURVIVAL. This Amendment is a
contract made under, and shall be governed by and construed in accordance with,
the laws of the State of Indiana applicable to contracts made and to be
performed entirely within such state and without giving effect to the choice or
conflicts of laws principles of any jurisdiction. This Amendment constitutes and
expresses the entire understanding between the parties with respect to the
subject matter hereof, and supersedes all prior agreements and understandings,
commitments, inducements or conditions, whether expressed or implied, oral or
written. All covenants, agreements, undertakings, representations and warranties
made in this Amendment shall survive the execution and delivery of this
Amendment, and shall not be affected by any investigation made by any person.
The Credit Agreement, as amended hereby, remains in full force and effect in
accordance with its terms and provisions.
8. FURTHER AGREEMENTS AND ACKNOWLEDGMENTS. The Credit Parties
hereby further acknowledge and agree that:
(a) Neither the provisions of this Amendment nor any actions taken or not
taken pursuant to or in reliance upon the terms of this Amendment shall
constitute a novation of any of the Loan Documents, all of which remain in
full force and effect in accordance with their respective terms, as
amended to date; and
(b) Neither this Amendment, nor any action taken by the Lenders or the
Agent pursuant to this Amendment, shall impair, prejudice, or in any other
manner affect the rights of the Lenders with respect to any Collateral or
other security which now or hereafter secures payment or performance of
the Obligations or any part thereof, or establish or be deemed to
establish any precedent or course of dealing with respect to any matter.
9. COUNTERPARTS. This Amendment may be executed, by original
or facsimile signatures, in two or more counterparts, each of which shall
constitute an original, but all of which shall constitute one agreement.
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IN WITNESS WHEREOF, the Credit Parties, the Required Lenders and the
Agent have caused this Amendment to be duly executed and delivered by their
respective authorized signatories this 28th day of October, 2002.
VALLEY NATIONAL GASES, INC.,
a West Virginia corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇▇, CFO
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VALLEY NATIONAL GASES INCORPORATED
a Pennsylvania corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇▇, CFO
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VALLEY NATIONAL GASES DELAWARE, INC., a
Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇▇, CFO
------------------------------------
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BANK ONE, NA, as Lender and as Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: First Vice President
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LASALLE BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Printed: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Assistant Vice President
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NATIONAL CITY BANK, as Lender and as
Syndication Agent
By: /s/ R.E. ▇▇▇▇▇▇
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Printed: R.E. ▇▇▇▇▇▇
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Title: Vice President
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THE HUNTINGTON NATIONAL BANK, as Lender
and as Documentation Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Printed: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:Vice President
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WESBANCO BANK, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Printed: ▇▇▇▇▇ ▇▇▇▇
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Title: Senior Vice President - Corp. Banking
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SKY BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Printed: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Senior Vice President
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FIFTH THIRD BANK
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Printed: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President
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