Exhibit 10.13
LETTER AMENDMENT NO. 1
March 31, 1998
The Prudential Insurance Company
of America
U.S. Private Placement Fund
c/o Prudential Capital Group
0000 Xxxx Xxxxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
We refer to the Master Shelf Agreement dated as of April 17, 1997 (the
"AGREEMENT") between the undersigned, 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 entering into an Amended and Restated Credit Agreement dated as of
the date hereof which amends the existing Bank Agreement. The Company has
requested that you agree to amend certain definitions and covenants contained in
the Agreement to conform them to the changes in the amended Bank Agreement. You
have indicated your willingness to so agree. Accordingly, it is hereby agreed
by you and us as follows:
1. AMENDMENTS. The Agreement is, effective the date first above
written, hereby amended as follows:
(a) PARAGRAPH 5F. Paragraph 5F of the Agreement is amended in full to
read as follows:
5F. TYPES OF BUSINESS. The Company shall, and shall cause each of
its Subsidiaries to, engage principally in one or more of the business of (a)
providing transportation, terminaling and storage services for petroleum
products and the distribution, purchase and/or sale of petroleum products,
chemicals and other bulk liquids, (b) natural gas
gathering, processing, transmission and marketing and (c) other activities
related thereto. The Company and its Subsidiaries may engage in businesses other
than those described in the preceding sentence, provided that the gross revenues
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of such other businesses in any fiscal year of the Company shall not exceed 10%
of the Consolidated gross revenues of the Company and its Subsidiaries."
(b) PARAGRAPH 5J. Paragraph 5J of the Agreement is amended in full to
read as follows:
"5J. TRADING POLICY. The Company shall, and shall cause each of its
Subsidiaries (to the extent they are engaged in such business) to, maintain and
follow a policy of managing petroleum inventory risk with the objective of
minimizing potentially adverse impacts on earnings arising from volatility in
refined petroleum product prices. The holders acknowledge that the policy
described in the Risk and Product Management Policy Statement dated March 1998
of TransMontaigne Product Services Inc. (formerly known as Continental Ozark,
Inc.), an Arkansas corporation, a copy of which is attached to this Agreement as
Schedule 5J, represents such a policy."
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(c) PARAGRAPH 6A(2). Paragraph 6A(2) of the Agreement is amended in
full to read as follows:
"6A(2) LEVERAGE RATIO. The Company will not permit the 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
------ ----------
To and including April 29, 2001 65%
From and including April 30, 2001 to 60%
and including April 29, 2002
April 30, 2002 and thereafter 55%."
(d) PARAGRAPH 6A(3). 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 $115,000,000 plus
50% of Consolidated Net Income (if positive) for the period from May 1, 1997 to
January 31, 1998; provided, however, that on April 30, 1998 and on the last day
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of each fiscal quarter of the Company thereafter, the then effective dollar
amount in this paragraph 6A(3) shall be
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increased by the sum of (a) 50% of Consolidated Net Income (if positive) for the
fiscal quarter then ended plus (b) 50% of the net proceeds realized by the
Company and its Subsidiaries, calculated on a Consolidated basis in accordance
with GAAP, from the issuance of any equity securities during the fiscal quarter
then ended."
(e) PARAGRAPH 6B. 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 distributed after April 30,
--------
1997 shall not exceed the sum of (a) $10,000,000 plus (b) 50% of the cumulative
----
Consolidated Net Income of the Company and its Subsidiaries commencing May 1,
1997."
(f) PARAGRAPH 6C(2). Clauses (vii) and (xv) of paragraph 6C(2) of the
Agreement are 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 aggregate principal
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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 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 Consolidated Net Tangible Assets at any
one time outstanding."
"(xii) So long as the Intercreditor Agreement is in effect, Funded
Debt of the Company under the Bank Agreement not exceeding $175,000,000, and
other "Credit Obligations" (as defined in the Bank Agreement) of the Company and
the Guarantors under the Bank Agreement."
"(xv) Unsecured Funded Debt of the Company; provided that 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, the Leverage Ratio shall not exceed 60% on or before April
29, 2000, 55% on or after April 30, 2000 and on or before April 29, 2001, or 50%
on or after April 30, 2001 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
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conditions of such unsecured Funded Debt, including without limitation,
financial covenants, defaults, amortization and rate
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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
----
amount of Indebtedness permitted under this clause (b) and not consented to as
provided in the preceding clause (a) at no time shall exceed $60,000,000."
(g) PARAGRAPH 6C(4). Xxxxxx (v) of paragraph 6C(4) of the Agreement is
amended by deleting the figure "10%" and substituting therefor the figure"15%."
(h) PARAGRAPH 6C(6). 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
Consolidated Net Tangible Assets as of the last day of the next preceding fiscal
year."
(i) PARAGRAPH 10B. Paragraph 10B of the Agreement is amended by
amending the following definitions in full to read as follows:
"'BANK AGREEMENT' shall mean the Amended and Restated Credit
Agreement dated as of March 31, 1998 among the Company, the Guarantors and the
Bank Agent and the institutions parties thereto, as amended from time to time."
"'CONSOLIDATED NET INCOME' shall mean, for any period, the net
income (or loss) of the Company and its Subsidiaries, determined in accordance
with GAAP on a Consolidated basis; provided, however, that Consolidated Net
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Income shall not include:
---
(a) the income (or loss) of any Person accrued prior to the date
such Person becomes a Subsidiary or is merged into or consolidated with the
Company or any of its Subsidiaries;
(b) the income (or loss) of any Person (other than a Subsidiary)
in which the Company or any of its Subsidiaries has an ownership interest;
provided, however, that (i) Consolidated Net Income shall include amounts in
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respect of the income of such Person when actually received in cash by the
Company or such Subsidiary in the form of dividends or similar Distributions and
(ii) Consolidated Net Income shall be reduced by the aggregate amount of all
Investments, regardless of the form thereof, made by the Company or any of its
Subsidiaries in such Person for the purpose of funding any deficit or loss of
such Person;
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(c) all amounts included in computing such net income (or loss) in
respect of the write-up of any asset or the retirement of any Indebtedness or
equity at less than face value after April 30, 1997;
(d) extraordinary and nonrecurring gains;
(e) the income of any Subsidiary to the extent the payment of such
income in the form of a Distribution or repayment of Indebtedness to the Company
or a Wholly Owned Subsidiary is not permitted, whether on account of any Charter
or By-law restriction, any agreement, instrument, deed or lease or any law,
statute, judgment, decree or governmental order, rule or regulation applicable
to such Subsidiary; and
(f) any after-tax gains or losses attributable to returned surplus
assets of any Plan."
"'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;
minus (b) the amount by which such stockholders' equity has been
-----
increased after April 30, 1997 by the items described in clauses (a) through (f)
of the definition of Consolidated Net Income;
minus (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 (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."
"'SERIES B NOTES' shall mean the 7.22% Series B Senior Notes due
October 17, 2004 in the principal amount of $25,000,000."
(j) SCHEDULE 5A(i). Schedule 5A(i) to the Agreement is replaced by the
Schedule 5A(i) attached hereto.
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(k) SCHEDULE 5J. Schedule 5J to the Agreement is replaced by the
Schedule 5J attached hereto.
2. 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.
3. CONSENT OF PLEDGORS. Each of the Company and TransMontaigne
Transportation Services 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.
4. 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, and
each reference in the Notes to "the Agreement", "thereunder", "thereof", or
words of like import referring to the Agreement, shall mean the Agreement as
amended by this letter amendment. The Agreement, as amended by this letter
amendment, is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed. The execution, delivery and effectiveness
of this letter amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy under the Agreement nor constitute a
waiver of any provision of the 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; and (II) the covenants of
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the Company set forth in the Bank Agreement shall have been amended to reflect
the covenant modifications of the Agreement made herein.
(d) FEES. The Company agrees to pay Prudential $1,500 for the
allocated costs of internal counsel for the preparation of this Amendment.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE 0F NEW YORK.
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 Oil Company, 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxx 00000, Attention of Xxxxxx X. Xxxxx.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
By: /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------------
Title:EVP/Finance
GUARANTORS/PLEDGORS
TRANSMONTAIGNE PRODUCT SERVICES INC.
TRANSMONTAIGNE PIPELINE INC.
TRANSMONTAIGNE TERMINALING INC.
TRANSMONTAIGNE TRANSPORTATION
SERVICES INC.
BEAR PAW ENERGY INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
As C.E.O. of each of the foregoing
corporations
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Agreed as of the date first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Xxxxxxx X. Xxx
-------------------------------------
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/ Xxxxxxx X. Xxx
-------------------------------------
Vice President
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SCHEDULE 5A(i)
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FORM OF COVENANT COMPLIANCE CERTIFICATE
The Prudential Insurance Company of America
U.S. Private Placement Fund
c/o Prudential Capital Group
0000 Xxxx Xxx., Xxxxx 0000X
Xxxxxx, Xxxxx 00000
Attn: Managing Director
[other Holders]
Ladies and Gentlemen:
Reference is made to the Master Shelf Agreement dated as of April 17, 1997
among TransMontaigne Oil Company, a Delaware corporation (the "COMPANY"),
certain Guarantors named therein, The Prudential Insurance Company of America,
and the other holders from time to time of Notes issued thereunder (the "SHELF
AGREEMENT"). Terms defined in the Shelf Agreement and not otherwise defined
herein are used herein as defined in the Shelf Agreement.
Pursuant to paragraph 5A of the Shelf Agreement, the Company is furnishing
to you herewith [or has most recently furnished to you] the financial statements
of the Company and its Subsidiaries for the fiscal period ended __________ (the
"BALANCE SHEET DATE"). Such financial. statements have been prepared in
accordance with generally accepted accounting principles and present fairly, in
all material respects, the financial position of the Company and its
Subsidiaries covered thereby at the date thereof and the results of their
operations for the period covered thereby, subject in the case of interim
statements only to normal year-end audit adjustments and the addition of
footnotes and except that permanent base product inventory will be recorded at
historical cost.
This certificate is submitted in compliance with the requirements of
paragraph 5A(i)(d) or 5A(ii)(c) of the Shelf Agreement. The undersigned officer
of the Company is a duly authorized Financial Officer.
The undersigned officer has caused the provisions of the Shelf Agreement to
be reviewed and has no knowledge of any Default or Event of Default. [Note: If
the signer does have knowledge of any Default or Event of Default, the form of
certificate should be revised to specify the Default or Event of Default, the
nature thereof and the actions taken, being taken or proposed to be taken by the
Company with respect thereto.]
The Company is providing the following information to demonstrate
compliance as of
the Balance Sheet Date with the following Computation Covenants:
1. Paragraph 6A(1). Fixed Charges Coverage.
---------------------------------------
A. Consolidated Income from Operations
Consolidated gross revenues (per income statement) $____________
Minus Consolidated cost of operations (per income statement) (____________)
Minus Consolidated selling, general and administrative (____________)
expenses (per income statement)
Subtotal for most recent quarter $____________
Consolidated Income from Operations for three prior quarters:
Quarter ended _____________
Quarter ended _____________
Quarter ended _____________
Total $____________
Consolidated Interest Expense
Subtotal for most recent quarter (per income $ statement) $____________
Consolidated interest expense for three prior quarters:
Quarter ended _____________
Quarter ended _____________
Quarter ended _____________
Total $____________
A divided by B equals (may not be less than 225 %) _____________%
2. Paragraph 6A(2). Leverage Ratio.
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A. Consolidated Funded Debt
Long term debt (per balance sheet) _____________
Current maturities of long term debt, unless included above _____________
(per balance sheet)
Other Funded Debt, including certain letter of credit _____________
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reimbursement obligations
Total $____________
B. Consolidated Net Tangible Assets
Consolidated total assets (per balance sheet) $____________
Minus Consolidated Current Liabilities (per balance sheet) (____________)
Minus Consolidated other liabilities (other than liabilities (____________)
for Funded Debt) (per balance sheet)
Minus Consolidated intangible assets (per balance sheet) (____________)
Minus book value of any minority interest in a Subsidiary (per (____________)
balance sheet)
Total $____________
A divided by B equals (may not equal or exceed the applicable _____________%
percentage)
3. Paragraph 6A(3). Consolidated Tangible Net Worth.
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A. Consolidated Tangible Net Worth
Consolidated stockholders' equity (per balance sheet) $____________
(excluding effect of any foreign currency translation
adjustments)
Minus increase in such stockholders' equity after April 30, (____________)
1997 because of items (a) - (f) in definition of Consolidated
Net Income
Minus (without duplication) the book value of treasury stock, (____________)
receivables due from an employee stock ownership plan and
Guarantees of Indebtedness incurred by an employee stock
ownership plan
Minus Consolidated intangible assets (____________)
Total $____________
B. Requirement
Initial requirement $ 115,000,000
Cumulative increases through quarter preceding most recent _____________
quarter
50% of Consolidated Net Income (if positive) in most recent _____________
quarter (commencing quarter ended April 30, 1997)
50% of Consolidated net proceeds from issuance of equity _____________
securities in most recent quarter (commencing quarter ended
April 30, 1997)
Total $____________
A must exceed B.
4. Paragraph 6C(2). Certain Indebtedness.
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X. Xxxxxxxxx principal amount of all Indebtedness in respect of
Capital Lease Obligations and other Indebtedness incurred for
acquisition of equipment
Total (may not exceed 2% of Consolidated Net Tangible Assets) $____________
B. Aggregate principal amount of paragraph 6C(2)(vii) Indebtedness
issued to sellers of any business or part thereof or operating
assets for the acquisition thereof
Total (may not exceed 4% of Consolidated Net Tangible Assets) $____________
5. Paragraph 6C(2)(xv). Unsecured Funded Debt.
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X. Xxxxxxxxx outstanding principal of Indebtedness permitted by
paragraph 6C(2)(xv)
Total $____________
X. Xxxxxxxxx outstanding principal of Indebtedness permitted by
clause (b) of paragraph 6C(2)(xv) and not consented to under
clause (a) thereof.
Total $____________
A plus B equals (may not exceed $60,000,000) $____________
6. Paragraph 6C(2)(xvi). Other Indebtedness.
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A. Indebtedness (other than Financing Debt) in addition to other
types of indebtedness permitted by paragraph 6C(2)
[List Indebtedness]
Total (may not exceed $2,000,000) $____________
7. Paragraph 6C(4). Investments in Certain Subsidiaries.
----------------------------------------------------
A. Investments in Subsidiaries listed in Schedule 8A other than Wholly
Owned Subsidiaries (after December 18, 1996):
[List Investments]
Total $__________
B. Consolidated Net Tangible Assets
Total (per (P)2B) $__________
A divided by B equals (may not exceed 10%) __________%
8. Paragraph 6C(4)(vii). Other Investments.
----------------------------------------
A. Investments in Subsidiaries listed in Schedule 8A otherwise not
permitted in paragraph 6C(4)
[List Investments]
Total $__________
B. Consolidated Tangible Net Worth
Total (per (P)3A) $__________
A divided by B equals (may not exceed 15%) __________%
9. Paragraph 6B. Distributions.
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A. Consolidated Net Income (cumulative since November 1, 1996)
Cumulative Consolidated Net Income from November 1, 1996 $__________
to beginning of most recent quarter
Consolidated net income (or loss) (per income statement) __________
Minus income (or loss) of any Person accrued prior to (_________)
becoming a Subsidiary
Minus income (or loss) of any Person (other than a (_________)
Subsidiary) in which the Company or a Subsidiary has an
ownership interest (subject to certain exceptions in
Section) [definition of Consolidated Net Income])
Minus amounts included in net income (or loss) in respect (_________)
of
the write-up of any asset or retirement of any
Indebtedness or equity at less than face value after
October 31, 1996
Minus extraordinary and nonrecurring gains (_________)
Minus income from an impermissible Distribution or (_________)
repayment of Indebtedness by any Subsidiary
Minus after-tax gains or losses attributable to returned (_________)
surplus assets of any Plan
Total $__________
B. Distributions
Total of cumulative Distributions after October 31, 1996 $__________
B minus ($5,000,000 plus 50% of A) equals (may not exceed zero) __________%
10. Paragraph 6C(5). Dispositions of Certain Assets.
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A. Assets disposed of (at fair market value or book value if
greater) to date in fiscal year
[List assets]
Total $__________
B. Consolidated Net Tangible Assets (as of last day of next
preceding fiscal year)
Consolidated total assets (per balance sheet) $__________
Minus Consolidated Current Liabilities (per balance sheet) (_________)
Minus Consolidated other liabilities (other than liabilities (_________)
for Funded Debt) (per balance sheet)
Minus Consolidated intangible assets (per balance sheet) (_________)
Minus book value of any minority interest in a Subsidiary (_________)
(per balance sheet)
Total $__________
A divided by B equals (may not exceed 4% in any fiscal year) __________%
11. Paragraph 6C(6). Certain Lease Obligations.
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A. Leases Other than Capitalized Leases
Aggregate fixed rental obligations for fiscal year $__________
Minus payments required in respect of taxes and insurance- (_________)
(if included above)
Total (may not exceed 3% of Consolidated Net Tangible $__________
Assets and the last day of the next preceding fiscal year)
12. Paragraph 5O. Open Positions.
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A. Consolidated Open Positions
Number of barrels of petroleum product held in inventory or ___________
subject to purchase contracts
Minus number of barrels of petroleum product subject to (_________)
sale contracts
Total (may not exceed Company policy of barrels) ___________
If the Balance Sheet Date is the last day of a fiscal quarter of the
Company, this certificate is accompanied by supplements to Schedule 7A, 8D and
8J to the extent required by paragraph 5A(i)(f) or 5A(ii)(d).
If the Balance Sheet Date is the last day of the fiscal year of the Company,
this certificate is accompanied by a written statement of the independent
certified public accountants of the Company complying with the terms of
paragraph 5A(i)(a) of the Shelf Agreement and the calculations of Accumulated
Benefit Obligations and Plan assets complying with the terms of paragraph
5A(1)(e) of the Shelf Agreement.
IN WITNESS WHEREOF, the undersigned Financial Officer of the Company has set
his or her hand and seal this day of __________, 199_.
TRANSMONTAIGNE OIL COMPANY
By: ____________________________________
Title
