SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit 10.1
SECOND AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”), dated as of June 15, 2009, by and among THERMADYNE INDUSTRIES, INC., a
Delaware corporation (“Industries”), THERMAL DYNAMICS CORPORATION, a Delaware corporation
(“Dynamics”), XXXXXX EQUIPMENT COMPANY, a Delaware corporation (“Xxxxxx”), C & G
SYSTEMS, INC., an Illinois corporation (“C & G”), STOODY COMPANY, a Delaware corporation
(“Stoody”), THERMADYNE INTERNATIONAL CORP., a Delaware corporation
(“International”, and collectively with Stoody, C & G, Xxxxxx, Dynamics and Industries, the
“Borrowers”), the other persons designated as Credit Parties on the signature pages hereof,
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (“Agent”) and the Persons
signatory hereto as Lenders. Unless otherwise specified herein, capitalized terms used in this
Amendment shall have the meanings ascribed to them in Annex A to the Credit Agreement (as
hereinafter defined).
RECITALS
WHEREAS, the Borrowers, the other Credit Parties, Agent and Lenders have entered into that
certain Third Amended and Restated Credit Agreement dated as of June 29, 2007 (as further amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, the Borrowers and the other Credit Parties have requested that Agent and Lenders
amend certain provisions of the Credit Agreement; and
WHEREAS, the Agent and Lenders have agreed to amend the Credit Agreement as set forth herein.
NOW THEREFORE, in consideration of the mutual execution hereof and other good and valuable
consideration, the parties hereto agree as follows:
1. Amendments to Credit Agreement. Subject to the satisfaction of the conditions precedent
set forth in Section 3 hereof, the parties hereto hereby agree to amend the Credit Agreement as
follows:
(a) Subsection 1.3(b)(ii) of the Credit Agreement is hereby amended by amending and
restating the last sentence thereof to read in its entirety as follows:
“The following shall not be subject to mandatory prepayment under this clause (ii): (1)
proceeds of sales of Inventory in the ordinary course of business, (2) the proceeds of any asset
disposition or series of asset dispositions otherwise permitted under Section 6.8 (other
than subsection 6.8(f)) not in excess of $500,000, and (3) the proceeds of the asset
disposition permitted under subsection 6.8(f).”
(b) Subsection 1.5(a) of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
“(a) Borrowers shall pay interest to Agent, for the ratable benefit of Lenders
in accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the following rates: (i) with respect to the
Revolving Credit Advances, the Index Rate plus the Applicable Index Margin per annum
or, at the election of Borrower Representative, the applicable LIBOR Rate
plus the Applicable LIBOR Margin per annum, based on the aggregate Revolving
Credit Advances outstanding from time to time; and (ii) with respect to the Swing
Line Loan, the Index Rate plus the Applicable Index Margin.
The Applicable Margins are as follows:
Applicable Index Margin
2.50%
Applicable LIBOR Margin
4.00%
Applicable L/C Margin
4.00%
Applicable Unused Line Fee Margin
1.00%
; provided, that the Applicable Unused Line Fee Margin shall be reduced to 0.75% for
each month during which the Unused Line as a percentage of the Maximum Amount is
less than 50%.
(c) Subsection 1.5(b) of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
“(b) [Intentionally Deleted]”
(d) Subsection 1.5(e) of the Credit Agreement is hereby amended by deleting the
last sentence thereof in its entirety.
(e) Subsection 1.7(b) of the Credit Agreement is hereby amended by inserting “(the
“Unused Line”)” prior to the period at the end thereof.
(f) Subsection 1.7(c) of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
“(c) If Borrowers prepay the Revolving Loan and reduce or terminate the
Revolving Loan Commitment on or prior to June 27, 2011, whether voluntarily or
involuntarily and whether before or after acceleration of the Obligations, or if the
Revolving Loan Commitment is otherwise terminated, Borrowers shall pay to Agent, for
the benefit of Lenders, as liquidated damages and compensation for the costs of
being prepared to make funds available hereunder an amount equal to (i) two percent
(2.0%) multiplied by the amount of the reduction of the Revolving Loan Commitment if
such prepayment occurs on or prior to June 27, 2010 and (ii) one percent (1.0%)
multiplied by the amount of
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the reduction of the Revolving Loan Commitment if such prepayment occurs after
June 27, 2010 and on or prior to June 27, 2011.”
(g) Subsection 6.3(a) of the Credit Agreement is hereby amended by amending and
restating clause (xiv) thereof to read in its entirety as follows:
“(xiv) Indebtedness consisting of (A) Second Lien Loan Obligations of
Borrowers to Second Lien Lenders (as defined in the Intercreditor Agreement) under
the Second Lien Credit Agreement in an aggregate principal amount not to exceed
$35,000,000 or (B) other Indebtedness on terms and conditions satisfactory to Agent;
provided that the aggregate principal amount of Indebtedness permitted by the
foregoing clauses (A) and (B) shall not exceed $35,000,000;”
(h) Section 6.8 of the Credit Agreement is hereby amended by deleting the word
“and” at the end of subsection (d) thereof, deleting the period at the end of subsection
(e) thereof and inserting the phrase “, and” in its place, and adding the following new
clause (f):
“(f) the sale of 00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 0000 Xxxxxxxxx for fair
market value to an unrelated third party.”
(i) Subsection 8.1(b) of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
“Any Credit Party fails or neglects to perform, keep or observe any of the
provisions of Sections 1.4, 1.6, 5.4(a), 5.13 or 6, or any of the
provisions set forth in Annexes C or G, respectively.”
(j) The definition of “Eligible Equipment” set forth in Annex A to the Credit
Agreement is hereby amended by amending and restating clause (v) thereof to read in its
entirety as follows:
“(v) as to which the Agent has not received an appraisal by an independent
appraisal or audit firm designated by the Agent and reasonably acceptable to the
Borrower on or after June 1, 2007;”
(k) Annex A to the Credit Agreement is hereby amended by (i) deleting the
definitions of “ABL Portion”, “Applicable ABL Portion Index Margin”, “Applicable ABL
Portion LIBOR Margin”, “Applicable Cash Flow Portion Index Margin”, “Applicable Cash Flow
Portion LIBOR Margin”, “Cash Flow Portion” and “Enhanced Financial Covenants” and (ii)
inserting the following definitions or, if contained therein, amending and restating such
definitions to read in their entirety as follows:
““ABL Borrowing Base” means that portion of the Borrowing Base equal to
the sum of the amount represented by clauses (a)-(i) of the Borrowing Base.”
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““Adjusted NOLV” has the meaning ascribed to it in clause (i) of the
definition of Borrowing Base.”
““Amortization Amount” has the meaning ascribed to it in clause (i) of
the definition of Borrowing Base.”
““Amortization Percentage” has the meaning ascribed to it in clause (i)
of the definition of Borrowing Base.”
““Applicable Index Margin” means the per annum interest rate margin
from time to time in effect and payable in addition to the Index Rate applicable to
the Revolving Loan, as set forth in Section 1.5(a).”
““Applicable LIBOR Margin” means the per annum interest rate from time
to time in effect and payable in addition to the LIBOR Rate applicable to the
Revolving Loan, as set forth in Section 1.5(a).”
““Applicable Margins” means collectively the Applicable L/C Margin, the
Applicable Unused Line Fee Margin, the Applicable Index Margin and the Applicable
LIBOR Margin.”
““Borrowing Base” means, as of any date of determination by Agent, from
time to time, an amount equal to the sum at such time of:
(a) up to 85% of the book value of Collateral Parties’ Eligible Accounts; plus
(b) the lesser of (i) up to 85% of the Net Orderly Liquidation Value of the sum
of the Collateral Parties’ Eligible Inventory multiplied by the then current NOLV
Factor, by category, of Eligible Inventory; and (ii) up to 65% of the book value of
sum of the Collateral Parties’ Eligible Inventory valued at the lower of cost
(determined on a first in, first out basis) or market; plus
(c) the lesser of (i) up to 85% of the Net Orderly Liquidation Value of the sum
of the Collateral Parties’ Eligible In-Transit Inventory multiplied by the then
current NOLV Factor, by category, of Eligible In-Transit Inventory; and (ii) up to
65% of the book value of sum of the Collateral Parties’ Eligible In-Transit
Inventory valued at the lower of cost (determined on a first in, first out basis) or
market; less
(d) the Rent Reserve; less
(e) the Shipping Reserve; less
(f) the Processors Reserve; less
(g) the Priority Payables Reserve; less
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(h) in each of (a), (b) and (c) above, any other Reserves established by Agent
at such time (in addition, the Agent may at any time make any adjustments to the
Borrowing Base at its sole discretion to reflect fluctuations in currency values);
plus
(i) the lesser of (x) $10,000,000, and (y) $7,000,000 less 85% of the Net
Orderly Liquidation Value of Eligible Equipment sold or otherwise disposed of on or
after the date of the most recent Equipment Appraisal plus 85% of the Net Orderly
Liquidation Value of Eligible Equipment acquired (the “Adjusted NOLV”) after
April 24, 2009 and prior to March 31, 2010, reduced by 4.1667% (the
“Amortization Percentage”) of the amount that is the lesser of clause (x) or
the sum of the components of clause (y) above (the “Amortization Amount”) on
the first day of each calendar quarter commencing on July 1, 2009; provided, that
the Adjusted NOLV of Eligible Equipment purchased during the period from July 1,
2009 through March 31, 2010 shall not begin to be reduced by the Amortization
Percentage until the first day of the first calendar quarter to occur after the date
on which such Eligible Equipment is added to the Borrowing Base.”
““Fixed Charges” means, with respect to any Person for any fiscal
period:
(a) the aggregate of all Interest Expense paid or accrued (without duplication)
during such period (less any interest income received in cash during such period),
plus
(b) scheduled payments of principal with respect to Indebtedness during such
period, including amortization of the ABL Borrowing Base in the amount of the
Amortization Amount per calendar quarter in accordance with clause (i) of the
definition of Borrowing Base, plus
(c) Capital Expenditures during such period (other than that portion of such
Capital Expenditures:
(i) financed by lenders other than the Lenders hereunder;
(ii) equal to $1,000,000, which is derived from the Incremental M&E
Availability during the Measuring Period, allocated to the Fiscal Quarter
ended March 31, 2009; and
(iii) equal to the lesser of
(x) the amount of Capital Expenditures from April 1, 2009
through March 31, 2010 (the “Measuring Period”) and
(y) the sum of (1) additional principal of Second Lien
Obligations which were incurred during the Measuring Period, up to
$6,000,000 and (2) an amount equal to the proceeds of the Revolving
Loans derived from the Incremental M&E Availability during the
Measuring Period), plus
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(d) income taxes paid or currently payable in cash with respect to such fiscal
period, minus
(e) solely with respect to the fiscal quarter ending March 31, 2009, income tax
refunds received with respect to such fiscal period.”
““Incremental M&E Availability” means the incremental Borrowing
Availability resulting from the amendment to the definition of Borrowing Base on the
Second Amendment Effective Date.”
““Index Rate” means, for any day, a rate per annum equal to the highest
of (a) the rate last quoted by The Wall Street Journal as the “Prime Rate”
in the United States or, if The Wall Street Journal ceases to quote such
rate, the highest per annum interest rate published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the
“bank prime loan” rate or, if such rate is no longer quoted therein, any similar
rate quoted therein (as determined by Agent) or any similar release by the Federal
Reserve Board (as determined by Agent), (b) the sum of 3.0% per annum and the
Federal Funds Rate, and (c) the sum of (x) the LIBOR Rate, as defined herein,
calculated for each such day based on a LIBOR Period of three months determined two
(2) LIBOR Business Days prior to such day, plus (y) the excess of the Applicable
LIBOR Margin over the Applicable Index Margin, in each instance, as of such day.
Any change in the Base Rate due to a change in any of the foregoing shall be
effective on the effective date of such change in the “bank prime loan” rate, the
Federal Funds Rate, or LIBOR Rate for an LIBOR Period of three months.”
““LIBOR Rate” means for each LIBOR Period, the greater of (a) the
offered rate per annum for deposits of Dollars for the applicable LIBOR Period and
(b) the offered rate per annum for deposits of Dollars for a LIBOR Period of three
months, in each case, that appears on Reuters Screen LIBOR01 Page as of 11:00 A.M.
(London, England time) two (2) LIBOR Business Day prior to the first day in such
LIBOR Period. If no such offered rate exists, such rate will be the rate of
interest per annum, as determined by the Agent (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which deposits of Dollars in immediately available funds
are offered at 11:00 A.M. (London, England time) two (2) LIBOR Business Days prior
to the first day in such LIBOR Period by major financial institutions reasonably
satisfactory to the Agent in the London interbank market for such LIBOR Period for
the applicable principal amount on such date of determination.”
““Measuring Period” has the meaning ascribed to it in clause (c) of the
definition of Fixed Charges.”
““Second Amendment” means that certain Second Amendment to Third
Amended and Restated Credit Agreement entered into as of June 15, 2009 among
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the Borrowers, the other Credit Parties, the Agent and the Lenders signatory
thereto.”
““Second Amendment Effective Date” means the date on which the Second
Amendment becomes effective.”
““Unused Line” has the meaning ascribed to it in Section
1.7(b).”
(l) Annex B to the Credit Agreement is hereby amended by amending and restating
clause (i) of the second sentence of subsection (a) contained therein to read in its
entirety as follows:
“(i) Ten Million Dollars ($10,000,000) (the “L/C Sublimit”)”
(m) Annex C to the Credit Agreement is hereby amended by amending and restating the
proviso following the first sentence of subsection (a) contained therein to read in its
entirety as follows:
“provided, however that (i) no more than $200,000 in the
aggregate may be maintained in the JPMC Account and, in the event that the balance
in JPMC Account exceeds $200,000, the Collateral Parties shall promptly (and in any
event within one (1) Business Day) transfer funds to the Master Disbursement Account
(as defined below) at least in the amount of such excess and (ii) no more than
$2,000,000 may be held by Xxxxxx Equipment Company in an account at X.X. Xxxxxx
Canada that is subject to a springing blocked account agreement in form and
substance satisfactory to Agent in its sole discretion.”
(n) Annex G to the Credit Agreement is hereby amended by amending and restating
subsection (a) (ii) contained therein in its entirety to read as follows:
“(ii) Minimum Fixed Charge Coverage Ratio. Holdings and its
Subsidiaries shall have on a consolidated basis at the end of the Fiscal Quarters
ending (A) on and prior to March 31, 2009, a Fixed Charge Coverage Ratio for the
12-month period then ended of not less than 1.10; (B) on June 30, 2009, a Fixed
Charge Coverage Ratio for the 12-month period then ended of not less than 0.95; (C)
on September 30, 2009, a Fixed Charge Coverage Ratio for the 12-month period then
ended of not less than 0.825; (D) on December 31, 2009, a Fixed Charge Coverage
Ratio for the 12-month period then ended of not less than 0.975, and (E) each Fiscal
Quarter thereafter, a Fixed Charge Coverage Ratio for the 12-month period then ended
of not less than 1.10.”
(o) Annex G to the Credit Agreement is hereby amended by deleting subsection (c)
contained therein in its entirety.
(p) Annex J to the Credit Agreement is hereby amended by deleting the reference
therein to “$100,000,000” and replacing the same with “$70,000,000”.
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2. Representations and Warranties of Credit Parties. The Credit Parties represent and
warrant that:
(a) the execution, delivery and performance by the Credit Parties of this Amendment have
been duly authorized by all necessary corporate action required on its part and this
Amendment is a legal, valid and binding obligation of the Credit Parties enforceable against
the Credit Parties in accordance with its terms except as the enforcement thereof may be
subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and (ii) general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity or at law);
and
(b) after giving effect to this Amendment, each of the representations and warranties
contained in the Credit Agreement is true and correct in all material respects on and as of
the date hereof as if made on the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date.
3. Conditions To Effectiveness. This Amendment shall be effective upon the following (all
in form and substance satisfactory to Agent):
(a) execution and delivery of this Amendment by Agent, Requisite Lenders and Credit
Parties; execution and delivery of this Amendment by Agent, Requisite Lenders and Credit
Parties;
(b) payment in full of all fees, costs and expenses, including the reasonable fees,
costs and expenses of counsel or other advisors for advice, assistance, or other
representation in connection with this Amendment, as provided in Section 11.3(a) of
the Credit Agreement; and
(c) receipt by Agent, for the ratable benefit of the Lenders, of an amendment fee in
the amount of $500,000, which amendment fee is fully earned on the date hereof and shall be
non-refundable when paid.
4. Reference To And Effect Upon The Credit Agreement.
(a) The Credit Agreement and the other Loan Documents shall remain in full force and
effect, as amended hereby, and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment shall not (i) operate
as a waiver or otherwise prejudice any right, power or remedy that the Agent or the Lenders
may now have or may have in the future under or in connection with the Credit Agreement or
any other Loan Document or (ii) constitute a waiver of any provision of the Credit Agreement
or any Loan Document, except as specifically set forth herein. Upon the effectiveness of
this Amendment, each reference in the Credit Agreement to “this Agreement”, “herein”,
“hereof” and words of like import and each reference in the Credit Agreement and the Loan
Documents to the Credit Agreement shall mean the Credit Agreement as amended hereby. This
Amendment shall be construed in connection with and as part of the Credit Agreement.
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5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
6. Headings. Section headings in this Amendment are included herein for convenience of
reference only and shall not constitute a part of this Amendment for any other purposes.
7. Counterparts. This Amendment may be executed in any number of counterparts, each of
which when so executed shall be deemed an original, but all such counterparts shall constitute one
and the same instrument.
8. Reaffirmation of Guaranties. The Credit Parties signatory hereto hereby reaffirm their
Guaranties of the Obligations, taking into account the provisions of this Amendment.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the
date first written above.
| LENDER: GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Duly Authorized Signatory | ||||
[Signature Page to Second Amendment to Third Amended and Restated Credit Agreement]
| CREDIT PARTIES: THERMADYNE INDUSTRIES, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| THERMAL DYNAMICS CORPORATION |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and XXX | |||
| XXXXXX EQUIPMENT COMPANY |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| C & G SYSTEMS, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| STOODY COMPANY |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| THERMADYNE INTERNATIONAL CORP. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
[Signature Page to Second Amendment to Third Amended and Restated Credit Agreement]
| THERMADYNE HOLDINGS CORPORATION |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| C&G SYSTEMS HOLDING, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| THERMADYNE AUSTRALIA PTY LTD. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| CIGWELD PTY LTD. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| THERMADYNE WELDING PRODUCTS CANADA LIMITED |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
| THERMADYNE INDUSTRIES LIMITED |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President, CFO and CAO | |||
[Signature Page to Second Amendment to Third Amended and Restated Credit Agreement]
