EXH 10.6
LETTER AMENDMENT NO. 3
(AMENDS MASTER SHELF AGREEMENT AND PLEDGE AGREEMENT)
As of October 30, 1998
The Prudential Insurance Company
of America
U.S. Private Placement Fund
c/o Prudential Capital Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We refer to the Master Shelf Agreement dated as of April 17, 1997, as
amended by Letter Amendment No. 1 dated March 31, 1998 and Letter Amendment No.
2 dated as of June 30, 1998 (as amended, the "AGREEMENT"), among the
undersigned, TransMontaigne Inc., formerly known as TransMontaigne Oil Company,
(the "COMPANY") and The Prudential Insurance Company of America ("PRUDENTIAL")
and U.S. Private Placement Fund (collectively, the "PURCHASERS"). Unless
otherwise defined herein, the terms defined in the Agreement shall be used
herein as therein defined.
On April 17, 1997 the Company issued to the Purchasers $50,000,000
aggregate principal amount of its 7.85% Series A Senior Notes due April 17, 2003
and on December 16, 1997 the Company issued to Prudential $25,000,000 aggregate
principal amount of its 7.22% Series B Senior Notes due October 17, 2004. The
Company is acquiring ▇▇▇▇▇ ▇▇▇▇▇▇▇ Energy Corp., a Delaware corporation
("LDEC"), pursuant to an Agreement dated as of September 13, 1998 between the
Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation, a New York corporation. The Company has
requested that you agree to amend certain provisions contained in the Agreement
and the Pledge Agreement. You have indicated your willingness to so agree.
Accordingly, it is hereby agreed by you and us as follows:
1. AMENDMENTS TO THE AGREEMENT. The Agreement is, effective the date
first above written, hereby amended as follows:
(a) ▇▇▇▇▇▇▇▇▇ ▇▇. FINANCIAL STATEMENTS AND REPORTS. Paragraph 5A of
the Agreement is amended as follows:
(I) Clause (ii) of paragraph 5A is amended by adding at the
end thereof a new subparagraph (e) to read as follows:
"(e) Calculations by the Company showing the Contango
Market Obligations and Permitted Contango Market Transactions of the
Company and its Subsidiaries as of the last day of such quarter, such
calculations to be materially consistent with the Risk and Product
Management Policy Statement referred to in paragraph 5J as currently
in effect."
(II) Paragraph 5A is amended by adding at the end thereof new
clauses (viii) and (ix) to read as follows:
"(viii) YEAR 2000 COMPLIANT. The Company shall furnish
to the holders as soon as available and in any event within 50 days
after the end of each fiscal quarter of the Company, a certificate
signed by a responsible officer stating that the Company and its
Subsidiaries have made no determination that any computer application
or system which is material to the operations of the Company or its
Subsidiaries will not be Year 2000 Compliant on a timely basis, except
to the extent that such failure could not be expected to have a
Material Adverse Effect.
(ix) NOTICE OF YEAR 2000 PROBLEM. The Company will
promptly notify the holders in writing within 15 days of determining
that any computer application or system which is material to the
operations of the Company or any of its Subsidiaries or any of its
material vendors or suppliers will not be Year 2000 Compliant on a
timely basis, except to the extent that such failure could not be
expected to have a Material Adverse Effect."
(b) PARAGRAPH 5C. INSPECTION OF PROPERTY. ▇▇▇▇▇▇▇▇▇ ▇▇ of the
Agreement is amended by adding at the end thereof a new clause (iv) to read ad
follows:
"(iv) The Company and its Subsidiaries shall permit a
representative designated by the Majority Holders to examine its Year 2000
Plan and/or to discuss the Company's Year 2000 Plan with appropriate
officers of the Company all at such reasonable times and intervals as the
Majority Holders may request."
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(c) PARAGRAPH 5J. TRADING POLICY. The second sentence of paragraph
5J of the Agreement is amended in full to read as follows:
"The holders acknowledge that the policy described in the Risk
and Product Management Policy Statement dated May 1998 of TransMontaigne
Product Services Inc., an Arkansas corporation, as modified by the letter
dated October 30, 1998 from the Company to the Bank Agent and Prudential, a
copy of which is attached to this Agreement as Schedule 5J, represents such
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a policy."
(d) PARAGRAPH 5L. INVENTORY ACCOUNTING. Paragraph 5L is amended in
full to read as follows:
"5L. INVENTORY ACCOUNTING. The Company shall, and shall cause
each of its Subsidiaries to, account for their inventory on the basis of
the "LIFO" method of accounting; provided, that they may change to any
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other method of inventory accounting, then permitted by GAAP so long as and
if the provisions of paragraph 6A are amended in such manner as the
Majority Holders shall consider necessary in their reasonable judgment to
maintain the same standards of creditworthiness."
(e) PARAGRAPH 5. AFFIRMATIVE COVENANTS. Paragraph 5 of the
Agreement is amended by adding new paragraphs 5Q and 5R to read as follows:
"5Q. CREDIT FEE. (i) On October 30, 1998, the Company shall pay
to each holder a credit fee equal to 1.50% times the outstanding principal
amount of Notes held by such holder. Thereafter, prior to the date on
which the Company shall issue New Equity Securities yielding aggregate net
proceeds of $100,000,000 or more, the Company shall pay to each holder a
credit fee equal to (a) 0.625% times the outstanding principal amount of
Notes held by such holder on April 30, 1999 and (b) 0.625% times the
outstanding principal amount of Notes held by such holder on July 31, 1999;
provided, however, that if the Company issues New Equity Securities
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yielding aggregate net proceeds of $100,000,000 or more on a date (the
"EQUITY RECEIPT DATE") after October 30, 1998 and before April 30, 1999,
each holder shall repay to the Company that portion of the credit fee
received by such holder on October 30, 1998 equal to the product of (x) 66
2/3% of the credit fee received by such holder on October 30, 1998 and (y)
a fraction, the numerator of which is the number of days from the equity
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receipt date to April 30, 1999 and the denominator of which is 182. Such
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repayment shall be made by a holder within five Business Days after the
receipt by such holder of written request of the Company.
(ii) On October 31, 1999 and on each January 31, April 30, July
31 and October 31 thereafter, which occur prior to the equity receipt date,
the Company shall pay to each holder a credit fee equal to 0.625% times the
outstanding principal amount of Notes held by such holder on such date.
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5R. PERMITTED CONTANGO MARKET TRANSACTIONS. The Company and its
Subsidiaries may only maintain Permitted Contango Market Transactions that
do not exceed the amount permitted by the Risk and Product Management
Policy Statement then in effect, so long as that policy is materially
consistent with the requirements of paragraph 5J."
(f) PARAGRAPH 6A(1). FIXED CHARGES COVERAGE. Paragraph 6A(1) of the
Agreement is amended in full to read as follows:
"6A(1) FIXED CHARGES COVERAGE. The Company will not permit
(a) For each fiscal quarter of the Company ending during each
period specified below, commencing with the fiscal quarter ended September
30, 1998, the Consolidated Income from Operations of the Company and its
Subsidiaries for the period of four consecutive fiscal quarters then ended
to be less than the percentage specified below next to such date of the
Consolidated interest expense of the Company and its Subsidiaries for such
period determined in accordance with GAAP:
Date Percentage
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On or before December 31, 1999 200%
After December 31, 1999 and on or
before December 31, 2000 225%
After December 31, 2000 250%
(b) Notwithstanding the foregoing, in the event that after
October 30, 1998 and prior to January 1, 2000 the Company shall issue New
Equity Securities yielding net proceeds of $100,000,000 or more, then for
each fiscal period from and after such date of issuance through December
31, 1999 the required percentage under each of the preceding subsections of
this paragraph 6A(1) shall be 225% instead of 200%.
(c) For the purposes of this paragraph 6A(1) the Consolidated
Income from Operations of the Company and its Subsidiaries for any period
prior to October 30, 1998 shall be deemed to be the Consolidated Income
from Operations of the Company and its Subsidiaries for such period plus
the Consolidated Income from Operations of LDEC for such period, combined
in accordance with GAAP.
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(d) For the purposes of this paragraph 6A(1) the Consolidated
interest expenses of the Company and its Subsidiaries for each period
listed below shall be the amount set forth next to such period:
Period Amount
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Twelve months ended $32,550,000
September 30, 1998
Twelve months ended $26,580,000 plus Consolidated interest expense
December 31, 1998 for the portion of the period commencing
November 1, 1998
Twelve months ended $19,260,000 plus Consolidated interest expense
March 31, 1999 for the portion of the period commencing
November 1, 1998
Twelve months ended $10,310,000 plus Consolidated interest expense
June 30, 1999 for the portion of the period commencing
November 1, 1998
Twelve months ended $2,980,000 plus Consolidated interest expense
September 30, 1999 for the portion of the period commencing
November 1, 1998.
(e) For the purposes of this paragraph 6A(1) interest expense
shall include any amounts incurred by the Company or any Subsidiary in
respect of Permitted Subordinated Trust Indebtedness or Permitted Preferred
Trust Securities to the extent, but only to the extent, that such amounts
are paid in cash or in the form of Indebtedness of the Company or a
Subsidiary."
(g) PARAGRAPH 6A(2). LEVERAGE RATIO. Paragraph 6A(2) of the
Agreement shall be amended in full to read as follows:
"6A(2) ADJUSTED LEVERAGE RATIO.
(i) The Company will not permit at any time during the period
commencing October 30, 1998 and ending on and including December 31, 1999
the Adjusted Leverage Ratio of the Company and its Subsidiaries to equal or
exceed 70%; provided, however, that in the event that after October 30,
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1998 and prior to January 1, 2000 the Company shall issue New Equity
Securities yielding aggregate net proceeds
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of $100,000,000 or more, then from and after the date of such issuance to
and including December 31, 1999 the Company will not permit the Adjusted
Leverage Ratio of the Company and its Subsidiaries to equal or exceed 65%.
(ii) The Company will not permit the Adjusted Leverage Ratio of
the Company and its Subsidiaries at any time during each period specified
below to equal or exceed the percentage set forth below next to such
period:
Period Percentage
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From and including January 1, 2000 to and
including June 29, 2000 65%
From and including June 30, 2000 to and
including December 30, 2000 60%
From and including December 31, 2000 55%
(iii) Notwithstanding the provisions of clause (ii) of this
paragraph 6A(2), in the event that the Bank Term Loan shall be repaid in
full prior to March 31, 2000, then during each period specified below the
Company will not permit the Adjusted Leverage Ratio of the Company and its
Subsidiaries to equal or exceed the percentage set forth below next to such
period:
Period Percentage
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From and including the later of (x) January 1, 2000
and (y) the date the Bank Term Loan is repaid in
full to and including December 30, 2000 65%
From and including December 31, 2000 to and
including December 30, 2001 60%
From and including December 31, 2001 55%."
(h) PARAGRAPH 6A(3). CONSOLIDATED TANGIBLE NET WORTH. Paragraph
6A(3) of the Agreement is amended in full to read as follows:
"6A(3) CONSOLIDATED TANGIBLE NET WORTH. The Company will not
permit Consolidated Tangible Net Worth at any time to be less than
$140,000,000; provided, however, that on the last day of each fiscal
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quarter of the Company commencing with the fiscal quarter ended September
30, 1998, the then effective dollar amount in this paragraph 6A(3) shall be
increased by the sum of (a) 100% of the first
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$75,000,000 in net proceeds of equity securities issued after October 30,
1998 by the Company and its Subsidiaries, calculated on a Consolidated
basis in accordance with GAAP, from the Capital Markets Transaction, plus
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(b) 50% of any proceeds realized by the Company and its Subsidiaries,
calculated on a Consolidated basis in accordance with GAAP, from the
issuance of equity securities after October 30, 1998 to the extent that the
aggregate net proceeds of such issues exceed $75,000,000, plus (c) 50% of
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Consolidated Net Income (if positive) for the fiscal quarter then ended."
(i) PARAGRAPH 6B. DISTRIBUTIONS. Clause (ii) of paragraph 6B of the
Agreement is amended in full to read as follows:
"(ii) So long as immediately before and after giving effect
thereto no Default or Event of Default exists, the Company may make
Distributions to its stockholders; provided that the cumulative amount
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distributed shall not exceed the remainder of (a) the sum of (I)
$20,000,000 plus (II) 50% of the cumulative Consolidated Net Income of the
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Company and its Subsidiaries commencing July 1, 1998 minus (b) the
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aggregate cumulative amount of the Investments made by the Company and its
Subsidiaries under paragraph 6C(4)(vii). Notwithstanding the foregoing, no
such Distributions to stockholders may be made while any portion of the
Bank Term Loan remains outstanding."
(j) PARAGRAPH 6C(2). INDEBTEDNESS. Paragraph 6C(2) of the Agreement
is amended as follows:
(I) Clause (vii) of paragraph 6C(2) is amended in full to read
as follows:
"(vii) To the extent permitted by paragraph 6C(1)(ix),
Indebtedness in respect of Capitalized Lease Obligations or secured by
purchase money security interests; provided, however, that (a) the
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aggregate principal amount of all Indebtedness permitted by this
paragraph 6C(2)(vii) which consists of Indebtedness in respect of
Capital Lease Obligations and other Indebtedness incurred for the
acquisition of equipment shall not exceed 2% of Adjusted Consolidated
Net Tangible Assets at any one time outstanding and (b) that the
aggregate principal amount of all Indebtedness permitted by this
paragraph 6C(2)(vii) which consists of Indebtedness issued to sellers
of any business or part thereof or operating assets in consideration
for the acquisition thereof by the Company or a Subsidiary shall not
exceed 4% of Adjusted Consolidated Net Tangible Assets at any one time
outstanding."
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(II) Clause (xv) of paragraph 6C(2) is amended in full to read
as follows:
"(xv) Unsecured Funded Debt of the Company; provided that
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after giving effect to the issuance of such unsecured Funded Debt and
the application of any of the proceeds thereof on the issuance date no
Default or Event of Default shall exist, and the Company shall have
delivered to the holders a certificate of a Financial Officer of the
Company in reasonable detail demonstrating compliance with these
conditions after giving effect to such issuance and application;
provided, further, either (a) that the terms and conditions of such
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unsecured Funded Debt, including without limitation, financial
covenants, defaults, amortization and rate of interest shall have been
consented to by to the Majority Holders or (b) that the sum of (I) the
aggregate outstanding principal amount of Notes (other than the Series
A Notes and the Series B Notes) plus (II) the aggregate principal
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amount of Indebtedness permitted under this clause (b) and not
consented to as provided in the preceding clause (a) at no time shall
exceed $35,000,000."
(III) Clause (xvi) of paragraph 6C(2) is amended by renumbering
paragraph 6C(2)(xvi) to become 6C(2)(xvii) and by inserting a new paragraph
6C(2)(xvi) reading in its entirety as follows:
"(xvi) Unsecured Funded Debt of the Company issued in a
Capital Markets Transaction which is subordinated to the Notes on
terms satisfactory to the Majority Holders."
(k) PARAGRAPH 6C(3). GUARANTEES; LETTERS OF CREDIT. Paragraph 6C(3)
of the Agreement is amended by amending clause (v) thereof by deleting the name
"TransMontaigne Product Services, Inc." and substituting therefor the name
"TransMontaigne Product Services Midwest Inc."
(l) PARAGRAPH 6C(4). INVESTMENTS AND ACQUISITIONS. Paragraph 6C(4)
of the Agreement is amended as follows:
(I) Clause (v) of paragraph 6C(4) is amended in full to read
as follows:
"(v) Investments made after October 30, 1998 in
Subsidiaries listed in Schedule 8A hereto as supplemented from time to
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time other than Wholly Owned Subsidiaries, provided that the aggregate
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outstanding amount of loans, advances and other Investments in such
Subsidiaries, measured in each case as of the date of the making of
such Investment, shall not at any time exceed 15% of Adjusted
Consolidated Net Tangible Assets."
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(II) Clause (vi) of paragraph 6C(4) is amended in full to read
as follows:
"Investments outstanding on October 30, 1998 and
identified in Schedule 8D."
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(III) Clause (vii) of paragraph 6C(4) is amended in full to read
as follows:
"(vii) Investments in West Shore Pipe Line Company, a
Delaware corporation, in addition to any such Investments permitted
under the other provisions of this paragraph 6C(4); provided, that no
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Investment under this paragraph 6C(4)(vii) shall be permitted unless
and until the Bank Term Loan shall have been repaid in full; and
provided, further, that the aggregate cumulative amount of the
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Investments made under this paragraph 6C(4)(vii) shall not exceed the
remainder of (a) the sum of (I) $20,000,000 plus (II) 50% of the
cumulative Consolidated Net Income of the Company and its Subsidiaries
commencing July 1, 1998 minus (b) the aggregate cumulative amount of
Distributions theretofore paid by the Company permitted by paragraph
6B(ii)."
(IV) The paragraph following clause (ix) of paragraph 6C(4) is
amended in full to read as follows:
"In addition, the Company covenants that the Company and
its Subsidiaries shall not acquire any operating business (whether
through an asset acquisition or an acquisition of stock or other
equity) unless, after giving effect to such acquisition and the
financing thereof, the Company and its Subsidiaries will not suffer
any Default or Event of Default under any Computation Covenant or any
other provision of this Agreement; and provided, that, if the
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consideration (including without limitation any assumption of
Indebtedness, any deferred consideration and any consideration paid
for any related non-competition agreement) given shall exceed
$20,000,000 for any single acquisition (or, from and after the date
that the Bank Term Loan shall have been repaid in full, $40,000,000
for any single acquisition), then prior to consummating any such
acquisition of the Company shall provide to the holders a certificate
of a Financial Officer demonstrating that, after giving effect to such
acquisition and the financing thereof, the Company and its
Subsidiaries will not suffer any Default or Event of Default under any
Computation Covenant or any other provision of this Agreement."
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(m) PARAGRAPH 6C(5). MERGERS, CONSOLIDATION AND DISPOSITION OF
ASSETS. Clause (i) of paragraph 6C(5) of the Agreement is amended in full to
read as follows:
"(i) The Company and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory in the ordinary course of business, (b)
tangible assets to be replaced in the ordinary course of business within
six months by other tangible assets of equal or greater value and (c)
tangible assets that are no longer used or useful in the business of the
Company or such Subsidiary, the fair market value (or book value if
greater) of which shall not exceed 4% of Adjusted Consolidated Net Tangible
Assets of the Company and its Subsidiaries as of the last day of the next
preceding fiscal year."
(n) PARAGRAPH 6C(6). LEASE OBLIGATIONS. Clause (ii) of paragraph
6C(6) of the Agreement is amended in full to read as follows:
"(ii) Leases other than Capitalized Leases; provided, however,
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that the aggregate fixed rental obligations for any fiscal year (excluding
payments required to be made by the lessee in respect of taxes and
insurance whether or not denominated as rent) shall not exceed an amount
equal to 3% of Adjusted Consolidated Net Tangible Assets."
(o) PARAGRAPH 6C. LIENS, INDEBTEDNESS AND OTHER RESTRICTIONS.
▇▇▇▇▇▇▇▇▇ ▇▇ of the Agreement is amended by adding a new paragraph 6C(7) at the
end thereof to read as follows:
"6C(7) SALE/LEASEBACK. Enter into any arrangement, directly or
indirectly, whereby the Company or any Subsidiary shall sell or transfer
any property owned by it in order then or thereafter to lease such property
or to lease other property which the Company or such Subsidiary intends to
use for substantially the same purpose as the property being sold or
transferred."
(p) PARAGRAPH 6. NEGATIVE COVENANTS. Paragraph 6 of the Agreement
is amended by adding at the end thereof a new paragraph 6I to read as follows:
"6I. INTEREST RATE PROTECTION. On or before December 31, 1999,
unless the Term Loan shall have been paid in full, the Company shall obtain
one or more Interest Rate Protection Agreements, each in form and substance
reasonably satisfactory to the Agent, covering the entire anticipated
outstanding principal amount of the Bank Revolving Loan."
(q) PARAGRAPH 7A. ACCELERATION. Paragraph 7A is amended by amending
clause (ii) thereof in its entirety to read as follows:
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"(ii) the Company defaults in the payment of any interest on any
Note or any credit fee required by paragraph 5Q for more than three
Business Days after the date due; or"
(r) PARAGRAPH 8B. FINANCIAL STATEMENTS. Paragraph 8B is amended by
inserting "(i)" in front of the first sentence thereof and by adding at the end
thereof a new clause "(ii)" to read as follows:
"(ii) The Company has furnished to each Purchaser of Accepted
Notes (a) the three-year financial and operational projections and current
capital expenditures plan of the Company and its Subsidiaries dated
September 28, 1998 and (b) calculations demonstrating pro forma compliance
with the Computation Covenants as of the end of the most recent month or
quarter, as applicable, preceding the date hereof. In the Company's
judgment, the financial and operational projections referred to in clause
(a) above constitute a reasonable basis as of October 30, 1998 for the
assessment of the future performance of the Company and its Subsidiaries
during the periods indicated therein, it being understood that any
projected financial information represents an estimate, based on various
assumptions, of future results of operations, which assumptions may prove
to have been incorrect and which results may not in fact occur."
(s) PARAGRAPH 8T. MATERIAL AGREEMENTS. Paragraph 8T of the
Agreement is amended by adding the phrase ", the Acquisition Agreement" after
the phrase "Subordinated Debentures Guarantee."
(t) PARAGRAPH 8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
Paragraph 8 of the Agreement is amended by adding a new paragraph 8U to read as
follows:
"8U. YEAR 2000 COMPLIANCE. The Company and its Subsidiaries
have (i) reviewed the areas within their business and operations which
could be adversely affected by failure to become "Year 2000 Compliant"
(that is, that computer applications, imbedded microchips and other systems
used by the Company, its Subsidiaries or its material vendors, will be able
properly to recognize and perform date-sensitive functions involving
certain dates prior to and any date after December 31, 1999); (ii)
developed a detailed plan and timetable to become Year 2000 Compliant in a
timely manner; and (iii) committed adequate resources to support its Year
2000 Plan. Based on such review and plan, the Company and its Subsidiaries
reasonably believe that they will become Year 2000 Compliant on a timely
basis except to the extent that a failure to do so will not have a Material
Adverse Effect."
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(u) PARAGRAPH 10B. OTHER TERMS. Paragraph 10B of the Agreement is
amended
(I) by amending the definitions of "Bank Agent," "Bank
Agreement," "Computation Covenants," "Consolidated Net Tangible Assets,"
"Consolidated Tangible Net Worth," "Distribution," "Indebtedness," and "Material
Adverse Effect" in full to read as follows:
"'BANK AGENT' shall mean BankBoston, N.A. (formerly known as
First National Bank of Boston) and any successor agent under the Bank
Agreement.
'BANK AGREEMENT' shall mean the Second Amended and Restated
Credit Agreement dated as of October 30, 1998 among the Company and
the Bank Agent, as amended from time to time.
'COMPUTATION COVENANTS' shall mean ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇, ▇▇,
▇▇(▇)(▇▇▇), ▇▇▇(▇▇), ▇▇▇(▇▇▇▇), 6C(4)(v), 6C(4)(vii), 6C(4)(viii),
6B(ii), 6C(5)(i) and 6C(6)(ii).
'CONSOLIDATED NET TANGIBLE ASSETS' shall mean at any date the
total of:
(a) the total assets of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis; minus
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(b) Consolidated Current Liabilities; minus
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(c) all other liabilities of the Company and its
Subsidiaries determined in accordance with GAAP on a Consolidated
basis other than liabilities for Funded Debt (excluding, however, any
Permitted Preferred Trust Securities or Permitted Subordinated Trust
Indebtedness); minus
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(d) the amount of intangible assets carried on the
balance sheet of the Company and its Subsidiaries determined in
accordance with GAAP on a Consolidated basis, including goodwill,
patents, patent applications, copyrights, trademarks, tradenames,
research and development expense, organizational expense, annualized
debt discount and expense, deferred financing charges and debt
acquisition costs; minus
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(e) the amount at which any minority interest in a
Subsidiary appears as a liability on the Consolidated balance sheet of
the Company and its Subsidiaries.
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'CONSOLIDATED TANGIBLE NET WORTH' shall mean, at any date, the
total of:
(a) stockholders' equity of the Company and its
Subsidiaries determined in accordance with GAAP on a Consolidated
basis, excluding the effect of any foreign currency translation
adjustments (but, in any event including in such equity, on a
Consolidated basis, any Permitted Preferred Trust Securities or
Permitted Subordinated Trust Indebtedness at the time outstanding);
minus
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(b) the amount by which such stockholders' equity has been
increased after April 30, 1998 by the items described in clauses (a)
through (f) of the definition of Consolidated Net Income; minus
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(c) to the extent not already deducted from the amount in
clause (a) above, (i) treasury stock, (ii) receivables due from an
employee stock ownership plan and (iii) Guarantees of Indebtedness
incurred by an employee stock ownership plan; minus
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(d) the amount of intangible assets carried on the balance
sheet of the Company and its Subsidiaries determined in accordance
with GAAP on a Consolidated basis, including goodwill, patents, patent
applications, copyrights, trademarks, tradenames, research and
development expense, organizational expense, unamortized debt discount
and expense, deferred financing charges and debt acquisition costs.
'DISTRIBUTION' shall mean, with respect to the Company (or other
specified Person):
(a) the declaration or payment of any dividend or
distribution, including dividends payable in shares of capital stock
of or other equity interests in the Company (or such specified
Person), on or in respect of any shares of any class of capital stock
of or other equity interests in the Company (or such specified
Person);
(b) the purchase, redemption or other retirement of any
shares of any class of capital stock of or other equity interest in
the Company (or such specified Person) or of options, warrants or
other rights for the purchase of such shares, directly, indirectly
through a Subsidiary or otherwise;
(c) any other distribution on or in respect of any shares
of any class of capital stock of or equity or other beneficial
interest in the Company (or such specified Person);
(d) any payment of principal or interest with respect to,
or any
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purchase, redemption or defeasance of, any Indebtedness of the Company
(or such specified Person) which by its terms or the terms of any
agreement is subordinated to the payment of the Obligations;
(e) any loan or advance by the Company (or such specified
Person) to, or any other Investment by the Company (or such specified
Person) in, the holder of any shares of any class of capital stock of
or equity interest in the Company (or such specified Person), or any
Affiliate of such holder; and
(f) without duplication, any cash payment in respect of
Permitted Preferred Trust Securities or Permitted Subordinated Trust
Indebtedness.
provided, however, that the term 'Distribution' shall not include
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(i) dividends payable in perpetual common stock of or other similar
equity interests in the Company (or such specified Person), (ii)
payments in the ordinary course of business in respect of (A)
reasonable compensation paid to employees, officers and directors or
(B) advances to employees for travel expenses, drawing accounts and
similar expenditures, (iii) any loan or advance by the Company to any
Guarantor or (iv) any other loan or advance by the Company which
constitutes an Investment permitted under paragraph 6C(4)(v),
6C(4)(vi) or 6C(4)(vii).
'INDEBTEDNESS' shall mean all obligations, contingent or
otherwise, which in accordance with GAAP are required to be classified
upon the balance sheet of the Company (or other specified Person) as
liabilities, but in any event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets or securities,
including related noncompetition, consulting and stock repurchase
obligations (other than ordinary trade accounts payable within six
months after the incurrence thereof in the ordinary course of
business);
14
(e) mandatory redemption or dividend obligations on capital
stock (or other equity);
(f) reimbursement obligations with respect to letters of
credit, bankers acceptances, surety bonds, other financial guarantees
and Interest Rate Protection Agreements;
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and
payable out of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property
owned or acquired by the Company (or such specified Person), whether
or not the liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others,
provided, however, that the 'Indebtedness' of any Person shall not
-------- -------
include any liability in respect of Permitted Preferred Trust
Securities or Permitted Subordinated Trust Indebtedness.
'MATERIAL ADVERSE EFFECT' shall mean (i) a materially adverse
effect on business, assets, operations, prospects, income or
condition, financial or otherwise, of the Company and its Subsidiaries
on a Consolidated basis, (ii) material impairment of the ability of
the Company or any of its Subsidiaries to perform any of their
obligations under this Agreement or any of the other Loan Documents,
or (iii) material impairment of the rights of or benefits available to
the Lenders under this Agreement or any of the other Loan Documents."
(II) by adding the following new definitions in alphabetical
order:
"'ACQUISITION' shall mean the acquisition of LDEC under the
Acquisition Agreement.
'ACQUISITION AGREEMENT' shall mean the Stock Purchase Agreement
dated as of September 13, 1998 between the Company and the Seller
providing for the acquisition by the Company of all of the outstanding
common stock of LDEC.
15
'ADJUSTED CONSOLIDATED FUNDED DEBT' shall mean at any date the
Consolidated Funded Debt of the Company and its Subsidiaries minus up
to $150,000,000 aggregate principal amount, if any, of Contango Market
Obligations of the Company and its Subsidiaries determined on a
Consolidated basis.
'ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS' shall mean at any
date the Consolidated Net Tangible Assets of the Company and its
Subsidiaries minus up to $150,000,000 of petroleum inventory (but not
less than the amount of Contango Market Obligations deducted in
calculating Adjusted Consolidated Funded Debt), if any, which is the
subject of Permitted Contango Market Transactions of the Company and
its Subsidiaries determined on a Consolidated basis.
'ADJUSTED LEVERAGE RATIO' shall mean on any date the quotient,
expressed as a percentage, equal to the Adjusted Consolidated Funded
Debt of the Company and its Subsidiaries divided by the Adjusted
Consolidated Net Tangible Assets of the Company and its Subsidiaries.
'BANK REVOLVING LOAN' shall mean the Revolving Loan as defined in
the Bank Agreement.
'BANK TERM LOAN' shall mean the Term Loan as defined in the Bank
Agreement.
'CAPITAL MARKETS TRANSACTION' shall mean the Capital Markets
Transaction as defined in the Bank Agreement.
'CONTANGO MARKET OBLIGATIONS' shall mean Indebtedness under the
Bank Revolving Loan incurred for the purpose of financing the
acquisition and maintenance of petroleum inventory by the Company or a
Subsidiary which is a Guarantor subject to Permitted Contango Market
Transactions, provided that for the period commencing on the date the
--------
Company or the Guarantor is obligated to take delivery of such
petroleum inventory so purchased by it, and until and including the
date on which delivery to the purchaser is fulfilled, the Company or
the Guarantor has the right and ability to store such quantity and
quality of petroleum inventory in storage facilities owned, leased,
operated or otherwise controlled by the company or the Guarantor.
'LDEC' shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇ Energy Corp., a Delaware
corporation.
'MOODY'S' shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
16
'NEW EQUITY SECURITIES' shall mean common stock, preferred stock
that is not redeemable prior to a date that is more than 11 years
after the date on which the Bank Term Loan is repaid in full, and
other equity securities issued by the Company after October 30, 1998
and shall include, without limiting the foregoing, any Permitted
Subordinated Trust Indebtedness.
'PERMITTED CONTANGO MARKET TRANSACTION' shall mean a transaction
in which the Company or any Guarantor either (i) establishes a
position using New York Mercantile Exchange Future contracts to
purchase petroleum inventory for future delivery to it, or (ii)
purchases or commits to purchase petroleum inventory for future
delivery to it, and contemporaneously with such purchase (described in
the preceding subsection (i) or (ii)) either (a) establishes one or
more positions using New York Mercantile Exchange contracts to resell
at a date subsequent to such aforementioned delivery date, or (b)
enters into a contract with a Qualified Person to resell at a date
subsequent to such delivery date, a similar aggregate quantity and
quality of petroleum inventory as so purchased by the Company or such
Guarantor, as applicable, and at an aggregate price greater than the
Indebtedness incurred to finance the costs of acquiring and
maintaining the petroleum inventory that is the subject of such
transaction.
'PERMITTED PREFERRED TRUST SECURITIES' shall mean any securities
made up of trust participation interests, preferred stock or limited
partnership interests, issued by a Subsidiary of the Company, provided
--------
that:
(a) the issuer of such securities has no assets other than
Permitted Subordinated Trust Indebtedness owing to it by the Company;
(b) payments upon such securities can be made only out of
funds received in payment of such Permitted Subordinated Trust
Indebtedness;
(c) all payments upon such securities can in all
circumstances, at the election of the Company (acting either directly
or through such issuer), be deferred for the greater of (i) one or
more payment periods, (ii) a period expiring not earlier than the day
after the Final Maturity Date (as defined in the Bank Agreement) in
effect at the time of issuance of such securities, and (iii) a period
of not less than 12 months;
(d) such securities are convertible at the option of the
Company into common stock of the Company; and
17
(e) such securities are not redeemable prior to a date that
is more than 11 years after the date on which the Bank Term Loan is
repaid in full.
'PERMITTED SUBORDINATED TRUST INDEBTEDNESS' shall mean (a) any
promissory notes or debentures issued by the Company to any issuer of
Permitted Preferred Trust Securities, provided that such notes or
--------
debentures (1) are subordinated to the Credit Obligations upon terms
satisfactory to the Majority Holders, (2) do not exceed in aggregate
principal amount or liquidation value at any time outstanding
$150,000,000, (3) do not require any principal payments to be made
until more than 11 years after the date on which the Bank Term Loan is
repaid in full, and (4) provide that all payments upon such notes or
debentures can in all circumstances, at the election of the Company,
be deferred for the greater of (i) one or more payment periods, (ii) a
period expiring not earlier than the day after the Final Maturity Date
(as defined in the Bank Agreement) in effect at the time of issuance
of such notes or debentures, and (iii) a period of not less than 12
months, and (b) any guaranty by the Company that the issuer of such
Permitted Preferred Trust Securities will make required distributions
thereon to the extent it has funds available therefor, provided that
such guaranty is subordinated to the Obligations upon terms
satisfactory to the Majority Holders.
'QUALIFIED PERSON' shall mean either (a) a Person the senior
unsecured long-term debt rating issued and maintained by S&P or
Moody's of which is equal to or higher than BBB- from S&P and a Senior
Debt Rating equal to or higher than Baa3 from Moody's or (b) a Person
all of whose obligations to the Company or any Subsidiary described in
clause (b) of the definition of "Permitted Contango Market
Transaction" herein (i) are irrevocably and unconditionally guaranteed
by a Person having the Senior Debt Ratings required by the preceding
clause (a) and/or are secured by an irrevocable letter of credit
issued by one or more commercial banks having Senior Debt Ratings
equal to or higher than A- from S&P and equal to or higher than A3
from Moody's.
'S&P' shall mean Standard & Poor's, a Division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
'SELLER' shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation, a New York
corporation."
(v) SCHEDULE 5A(I). Schedule 5A(i) of the Agreement is replaced by
the Schedule 5A(i) attached hereto.
18
(w) SCHEDULE 5J. Schedule 5J of the Agreement is replaced by the
Schedule 5J attached hereto.
(x) SCHEDULE 8A. Schedule 8A of the Agreement is replaced by the
Schedule 8A attached hereto.
(y) SCHEDULE 8D. Schedule 8D of the Agreement is replaced by the
Schedule 8D attached hereto.
2. AMENDMENTS TO THE PLEDGE AGREEMENT. The Pledge Agreement is,
effective the date first above written, hereby amended as follows:
(a) The first sentence of the Pledge Agreement is amended in its
entirety to read as follows:
"PLEDGE AGREEMENT dated as of April 17, 1997 made by
TransMontaigne Inc. (formerly known as TransMontaigne Oil Company), a
Delaware corporation (the "COMPANY"), TransMontaigne Transportation
Services Inc., an Arkansas corporation, TransMontaigne Product Services
Inc., a Delaware corporation, and TransMontaigne Pipeline, Inc., an
Arkansas corporation (collectively with the Company, herein called the
"PLEDGORS"), to BankBoston, N.A. (f/k/a First National Bank of Boston)
("FNB"), as agent (the "COLLATERAL AGENT") for the holders (the "HOLDERS")
of the Notes issued pursuant to the Shelf Agreement, as hereinafter
defined."
(b) Each Pledgor, including TransMontaigne Product Services, Inc. and
TransMontaigne Pipeline, Inc., hereby makes the following pledge and Section 1
of the Pledge Agreement is hereby amended in its entirety to read as follows:
"SECTION 1. PLEDGE. Each Pledgor hereby mortgages, pledges and
collaterally grants and assigns to the Collateral Agent for the benefit of
the Purchasers and the Holders from time to time, and creates a security
interest in favor of the Collateral Agent for the benefit of the Purchasers
and the Holders in, all of such Pledgor's right, title and interest in and
to (but none of its obligations or liabilities with respect to) the items
and types of present and future property described in Sections 1.01 through
1.04 (subject, however, to Section 1.05), whether now owned or hereafter
acquired, all of which shall be included in the term "LOAN SECURITY":
1.01. PLEDGED STOCK. (a) All shares of capital stock or other
evidence of beneficial interest in any corporation, business trust or
limited liability company, including without limitation of all shares of
stock of each of TransMontaigne Product Services Inc., TransMontaigne
Transportation Services Inc., TransMontaigne Holding Inc. and Bear Paw
Energy Inc. owned by the Company, all shares of stock of
19
TransMontaigne Terminaling Inc. and TransMontaigne Pipeline Inc. owned by
TransMontaigne Transportation Services Inc., all shares of stock of
TransMontaigne Product Services Midwest Inc. and LDEC (to be renamed
TransMontaigne Product Services East Inc.) owned by TransMontaigne Product
Services Inc. and all shares of West Shore Pipe Line Company owned by
TransMontaigne Pipeline Inc., (b) all limited partnership interests in any
limited partnership, (c) all general partnership interests in any general
partnership, (d) all joint venture interests in any joint venture and (e)
all options, warrants and similar rights to acquire such capital stock or
such interests. All such capital stock, interests, options, warrants and
other rights are collectively referred to as the "PLEDGED STOCK".
1.02. PLEDGED RIGHTS. All rights to receive profits or surplus
of, or other Distributions (including income, return of capital and
liquidating distributions) from, any corporation, business trust or limited
liability company, partnership or joint venture, including, without
limitation, any distributions by any such Person to partners or joint
venturers. All such rights are collectively referred to as the "PLEDGED
RIGHTS".
1.03. PLEDGED INDEBTEDNESS. All Indebtedness from time to time
owing to such Pledgor from any Obligor or any Subsidiary of any Obligor
(all such Indebtedness being referred to as the "PLEDGED INDEBTEDNESS").
1.04. PROCEEDS AND PRODUCTS. All proceeds, including insurance
proceeds, and products of the items of Loan Security described or referred
to in Sections 1.01 through 1.03 and, to the extent not included in the
foregoing, all Distributions with respect to the Pledged Securities.
1.05. EXCLUDED PROPERTY. Notwithstanding Sections 1.01 through
1.04, the payment and performance of the Loan Obligations shall not be
secured by:
(a) any rights arising under, and any property, tangible
or intangible, acquired under, any agreement which validly prohibits the
creation by such Pledgor of a security interest in such rights or property;
(b) any rights or property to the extent that any valid
and enforceable law or regulation applicable to such rights or property
prohibits the creation of a security interest therein; or
(c) more than 66% of the outstanding stock or other
equity in any foreign Subsidiary."
20
3. CONSENT OF GUARANTORS. Each Guarantor under the Guaranty contained in
paragraph 11 of the Agreement, hereby consents to this letter amendment and
hereby confirms and agrees that the Guaranty is, and shall continue to be, in
full force and effect and is hereby confirmed and ratified in all respects
except that, upon the effectiveness of, and on and after the date of, said
letter amendment, all references in the Guaranty to the Agreement, "thereunder",
"thereof", or words of like import referring to the Agreement shall mean the
Agreement as amended by said letter amendment.
4. CONSENT OF PLEDGORS. Each of the Company, TransMontaigne
Transportation Services Inc., TransMontaigne Product Services Inc. and
TransMontaigne Pipeline Inc. is a Pledgor under the Pledge Agreement (the
"PLEDGORS") and each hereby agrees that (i) the Pledge Agreement shall continue
to be, in full force and effect and is hereby confirmed and ratified in all
respects except that, upon the effectiveness of, and on and after the date of,
this letter amendment, all references in the Pledge Agreement to the Loan
Documents shall mean the Loan Documents as amended by this Amendment and (ii)
all of the Loan Security described therein does, and shall continue to, secure
the payment by the Pledgors of their obligations under the Loan Documents, as
amended by this letter amendment.
5. REPRESENTATIONS AND WARRANTIES. In order to induce you to enter into
this Amendment, each of the Obligors hereby represents and warrants that
(a) Each of the representations and warranties contained in paragraph
8 of the Agreement is true and correct on the date hereof.
(b) The Company has previously furnished to each holder of Notes a
correct and complete copy of the Acquisition Agreement.
6. MISCELLANEOUS.
(a) EFFECT ON AGREEMENT. On and after the effective date of this
letter amendment, each reference in the Agreement to "this Agreement",
"hereunder", "hereof", or words of like import referring to the Agreement, each
reference in the Notes to "the Agreement", "thereunder", "thereof", or words of
like import referring to the Agreement, and each reference in the Pledge
Agreement to "the Shelf Agreement" "thereunder", "thereof", or words of like
import referring to the Agreement, shall mean the Agreement as amended by this
letter amendment. On and after the effective date of this letter amendment,
each reference in the Pledge Agreement to "this Agreement", "hereunder",
"hereof", or words of like import referring to the Pledge Agreement, and each
reference in the Notes to "the Pledge Agreement", "thereunder", "thereof", or
words of like import referring to the Pledge Agreement, shall mean the Pledge
Agreement as amended by this letter amendment. The Agreement and the Pledge
Agreement, as amended by this letter amendment, is and shall continue to be in
full force and effect and are hereby in all respects ratified and confirmed.
The execution, delivery and effectiveness of this letter amendment shall not,
except as expressly provided herein,
21
operate as a waiver of any right, power or remedy under the Agreement or the
Pledge Agreement nor constitute a waiver of any provision of the Agreement or
the Pledge Agreement.
(b) COUNTERPARTS. This letter amendment may be executed in any
number of counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same letter amendment.
(c) EFFECTIVENESS. This letter amendment shall become effective as
of the date first above written when and if:
(I) counterparts of this letter amendment shall have been
executed by the Company, each Guarantor and the Pledgors and you;
(II) the covenants of the Company set forth in the Bank
Agreement shall have been amended to reflect the covenant modifications of the
Agreement made herein; the Required Holders hereby consent to such amendments
and waivers under the Bank Agreement;
(III) no Default or Event of Default under the Agreement shall
have occurred and be continuing;
(IV) the Bank Agent and other requisite holders, if any, of the
Indebtedness issued under the Bank Agreement shall have consented to the
amendments of the Agreement set forth herein;
(V) the Bank Agent shall have possession of all shares of
stock of TransMontaigne Product Services Midwest Inc. and LDEC owned by
TransMontaigne Product Services Inc. and all shares of West Shore Pipe Line
Company owned by TransMontaigne Pipeline Inc.;
(VI) the opinions of ▇▇▇▇ ▇▇▇▇▇▇▇, counsel to the Company and
▇▇▇▇▇▇▇▇ ▇▇▇, counsel to certain Guarantors, in form and substance satisfactory
to the Majority Holders;
(VII) the holders shall have received the credit fee payable on
October 30, 1998 referred to in paragraph 5Q of the Agreement, as amended
hereby; and
(VIII) the holders shall have received Joinder Agreements
contemplated by paragraph 11I of the Agreement of TransMontaigne Product
Services East Inc. and TransMontaigne Product Services Inc.
22
(d) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇.
If you agree to the terms and provisions hereof, please evidence your
agreement by executing and returning at least a counterpart of this letter
amendment to TransMontaigne Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
Very truly yours,
TRANSMONTAIGNE INC.
(f/k/a TransMontaigne Oil Company)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Title: President
GUARANTORS/PLEDGORS
TRANSMONTAIGNE PRODUCT SERVICES
MIDWEST INC. (f/k/a TransMontaigne Product
Services Inc.)
TRANSMONTAIGNE PIPELINE INC.
TRANSMONTAIGNE TERMINALING INC.
TRANSMONTAIGNE TRANSPORTATION
SERVICES INC.
BEAR PAW ENERGY INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
As C.E.O. of each of the foregoing
corporations
The following corporations are executing this Letter Amendment No. 3 to evidence
their intention to become parties to the Pledge Agreement and to be bound by the
terms thereof.
TRANSMONTAIGNE PRODUCT SERVICES INC.
TRANSMONTAIGNE PIPELINE INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
As C.E.O. of each of the foregoing
corporations
23
Agreed as of the date first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ ▇▇▇ ▇. ▇▇▇▇
--------------------------
Vice President
U.S. PRIVATE PLACEMENT FUND
By: Prudential Private Placement
Investors, L.P., Investment Advisor
By: Prudential Private Placement
Investors, Inc., its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
--------------------------
Vice President
24