EXHIBIT 10.34
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "AMENDMENT") is dated as of the 30th day of June, 2003 (the
"THIRD AMENDMENT EFFECTIVE DATE"), among VALLEY NATIONAL GASES, INC., a West
Virginia corporation (the "COMPANY"), VALLEY NATIONAL GASES INCORPORATED, a
Pennsylvania corporation ("VNGI"), VALLEY NATIONAL GASES DELAWARE, INC., a
Delaware corporation ("VNGDI"), BANK ONE, NA, a national banking association
having its main office in Chicago, Illinois (successor by merger with Bank One,
Indiana, National Association) ("BANK ONE"), LASALLE BANK NATIONAL ASSOCIATION,
a national banking association, NATIONAL CITY BANK, a national banking
association, THE HUNTINGTON NATIONAL BANK, a national banking association,
WESBANCO BANK, INC., SKY BANK, and FIFTH THIRD BANK (collectively, the
"LENDERS"), and Bank One, as administrative and collateral agent (the "AGENT")
for the Lenders from time to time parties to that certain Second Amended and
Restated Credit Agreement, dated as of May 1, 2000, as amended by the Amendment
to Second Amended and Restated Credit Agreement dated June 28, 2002, and by the
Second Amendment to Second Amended and Restated Credit Agreement dated October
28, 2002 (the "CREDIT AGREEMENT").
Recital
The Company has requested the Lenders to amend the Credit
Agreement as provided in this Amendment. Subject to the terms and conditions
stated in this Amendment, the Lenders are willing to amend the Credit Agreement
as provided in this Amendment.
Amendment
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein, and each act performed and to be performed hereunder, the
parties hereto agree as follows:
1. Definitions. All terms used in this Amendment that
are defined in the Credit Agreement and that are not otherwise defined in this
Amendment shall have the same meanings in this Amendment as are ascribed to such
terms in the Credit Agreement, as amended by this Amendment.
2. Amendments to Credit Agreement. Effective as of the
Third Amendment Effective Date, the Credit Agreement is amended as follows:
(a) New Definitions. Section 1.01 of the Credit Agreement is
amended by the addition of the following new definitions:
"Third Amendment" means the Third Amendment to Second
Amended and Restated Credit Agreement dated as of the
Third Amendment Effective Date, among the Credit
Parties, the Lenders, and the Agents.
"Third Amendment Effective Date" means June 30, 2003.
(b) Amended Definitions. The following definitions set forth in
Section 1.01 of the Credit Agreement are amended and restated in their
respective entireties to read as follows:
"Applicable LOC Fee Percentage" means the rate per
annum at which the commission due on each Letter of
Credit will be calculated, which rate shall be
determined by reference to the Ratio of Total Funded
Debt to EBITDA in accordance with the following
table:
Ratio of
Total Funded Debt to EBITDA Applicable LOC Fee Percentage
--------------------------- -----------------------------
3.50 or above 2.75%
3.00 to 3.49 2.375%
2.50 to 2.99 2.125%
2.00 to 2.49 1.75%
Below 2.00 1.50%
The Applicable LOC Fee Percentage shall be determined
on the Third Amendment Effective Date on the basis of
the Ratio of Total Funded Debt to EBITDA for the
Credit Parties and their respective Subsidiaries in
effect on the Third Amendment Effective Date (which
the Company and the Lenders agree for purposes of the
Applicable LOC Fee Percentage, the Applicable Spread
and the Applicable Unused Commitment Fee Percentage
is greater than 3.50) and shall be redetermined,
based on the Ratio of Total Funded Debt to EBITDA as
of the close of each fiscal quarter of the Company
ending after June 30, 2003, concurrently with each
adjustment to the "Ratio of Total Funded Debt to
EBITDA" (as provided in the definition of Ratio of
Total Funded Debt to EBITDA in this Agreement), with
such redetermined Applicable LOC Fee Percentage to be
effective as and for the period provided in the
definition of "Ratio of Total Funded Debt to EBITDA."
"Applicable Spread" means the percentage per annum to
be taken into account in determining any LIBOR-based
Rate and any Prime-based Rate as provided in this
Agreement, which number shall be determined by
reference to the Ratio of Total Funded Debt to EBITDA
in accordance with the following table:
Ratio of Total Funded If Determining a If Determining a
Debt to EBITDA Prime-based Rate LIBOR-based Rate
--------------------- ---------------- ----------------
3.50 or above 0.875% 2.75%
3.00 to 3.49 0.625% 2.375%
2.50 to 2.99 0.375% 2.125%
2.00 to 2.49 0% 1.75%
less than 2.00 0% 1.50%
The Applicable Spread shall be determined on the
Third Amendment Effective Date on the basis of the
Ratio of Total Funded Debt to EBITDA for the Credit
Parties and their respective Subsidiaries in effect
on the Third Amendment Effective Date, as provided in
the definition of "Applicable LOC Fee Percentage" in
this Agreement, and shall be redetermined, based on
the Ratio of Total Funded Debt to EBITDA as of the
close of each fiscal quarter of the Company ending
after June 30, 2003, concurrently with each
adjustment to the "Ratio of Total Funded Debt to
EBITDA" (as provided in the definition of Ratio of
Total Funded Debt to EBITDA in this Agreement), with
such redetermined Applicable Spread be effective as
and for the period provided in the definition of
"Ratio of Total Funded Debt to EBITDA."
"Applicable Unused Commitment Fee Percentage" means
the percentage per annum determined by reference to
the Ratio of Total Funded Debt to EBITDA in
accordance with the following table:
Ratio of
Total Funded Debt to EBITDA Applicable Unused Commitment Fee Percentage
--------------------------- -------------------------------------------
3.50 or above 0.50%
3.00 to 3.49 0.375%
2.50 to 2.99 0.375%
2.00 to 2.49 0.35%
Below 2.00 0.30%
The Applicable Unused Commitment Fee Percentage shall
be determined on the Third Amendment Effective Date
on the basis of the Ratio of Total Funded Debt to
EBITDA in effect on the Third Amendment Effective
Date, as provided in the definition of "Applicable
LOC Fee Percentage" in this Agreement, and shall be
redetermined, based on the Ratio of Total Funded Debt
to EBITDA as of the close of each fiscal quarter of
the Company ending after June 30, 2003, concurrently
with each adjustment to the "Ratio of Total Funded
Debt to EBITDA" (as provided in the definition of
Ratio of Total Funded Debt to EBITDA in this
Agreement), with such redetermined Applicable Unused
Commitment Fee Percentage to be effective as and for
the period provided in the definition of "Ratio of
Total Funded Debt to EBITDA."
"EBITDA" means, with respect to the Credit Parties
and their respective Subsidiaries for any period, the
amount of Consolidated Net Income, plus, without
duplication and to the extent deducted in determining
the amount of Consolidated Net Income, the sum of (i)
interest expense, (ii) income tax expense, (iii)
depreciation, (iv) amortization expense (all
determined in accordance with GAAP), (v) for the
calendar quarter ending March 31, 2003, and any
period which includes such calendar quarter,
extraordinary charges not in excess of $577,000.00
identified on Exhibit B attached hereto as taken
during the calendar quarter ending March 31, 2003,
and (vi) for the calendar quarter ending June 30,
2003, and any period which includes such calendar
quarter, extraordinary charges not in excess of
$4,165,000.00 identified on Exhibit B attached hereto
as taken during the calendar quarter ending June,
2003.
For purposes of determining EBITDA for the Credit
Parties and their respective Subsidiaries on a pro
forma basis to determine the effect of a New
Acquisition on compliance with the covenants in
subsections 5.01(g) of this Agreement (excluding the
covenant in subsection 5.01(g)(2) of this Agreement),
to determine whether the Qualification Conditions to
any New Acquisition have been satisfied, and to
determine the Applicable Spread, the Applicable LOC
Fee Percentage and the Applicable Unused Commitment
Fee Percentage for any period of twelve (12) months
or four fiscal quarters of the Company that ends
("PERIOD ENDING DATE"): (i) on any New Acquisition
Closing Date, EBITDA for such period will be deemed
to include the Additional EBITDA Amount calculated
with respect to the Related Business Entity acquired
(or assumed to be acquired) on such New Acquisition
Closing Date; and (ii) within one year after any New
Acquisition Closing Date, EBITDA for such period will
be deemed to include an amount equal to (A) the
Additional EBITDA Amount calculated with respect to
the Related Business Entity acquired on such New
Acquisition Closing Date, minus (B) 1/12 of such
Additional EBITDA Amount for each full calendar month
that has elapsed between such New Acquisition Closing
Date and the Period Ending Date, minus (c) 1/30 of
such Additional EBITDA Amount for each day of any
partial calendar month that has elapsed between such
New Acquisition Closing Date and the Period Ending
Date.
"Maximum Availability" means $67,500,000.00 or such
greater amount as may be established pursuant to
Section 2.02(g) of this
Agreement. If an Event of Default or an Unmatured
Event of Default has occurred and is continuing and
the Agent shall have notified the Company of the
election of the Required Lenders to take any action
specified in Section 7.02 of this Agreement, the
Maximum Availability shall be automatically reduced
to zero (0) dollars without any action on the part of
or the giving of any additional notice to the Company
by the Lenders or the Agent.
(c) Amendment of Section 2.02 (b). The first sentence of
Section 2.02 (b) of the Credit Agreement is amended and
restated in its entirety to read as follows: "The obligation
of the Company to repay the Revolving Loans shall be evidenced
by promissory notes executed by the Company to each of the
Revolver Lenders in the form of Exhibit A attached to the
Third Amendment (as the same may be amended, modified,
extended, renewed, supplemented, replaced and/or restated from
time to time and at any time, the "REVOLVING NOTES").
(d) Amendment of Section 5.01(g)(2). Section 5.01(g)(2)
of the Credit Agreement is amended and restated in its
entirety to read as follows:
(2) Fixed Charge Coverage Ratio. As of
the close of each fiscal quarter of the
Company ending on or after the Third
Amendment Effective Date, the Credit Parties
and their respective Subsidiaries, for the
period of the four consecutive fiscal
quarters which end on such close, shall have
a Fixed Charge Coverage Ratio of not less
than: (i) 1.10:1 through June 29, 2004, and
(ii) 1.15:1 on June 30, 2004, and
thereafter.
(e) Amendment of Section 5.01(g)(3). Section 5.01(g)(3)
of the Credit Agreement is amended and restated in its
entirety to read as follows:
(3) Ratio of Total Funded Debt to
EBITDA. As of the close of each fiscal
quarter of the Company ending on or after
the Third Amendment Effective Date, the
Credit Parties and their respective
Subsidiaries, for the period of the four
consecutive fiscal quarters which end on
such close, shall have a Ratio of Total
Funded Debt to EBITDA of not greater than
(i) 3.75:1 through Xxxxx 00, 0000, (xx)
3.50:1 on March 31, 2004, through June 29,
2004, (iii) 3.25:1 on June 30, 2004, through
September 29, 2004, (iv) 3.00:1 on September
30, 2004, through December 30, 2004, and (v)
2.75:1 on and after December 31, 2004.
(f) Amendment of Section 5.02 (e). Section 5.02 (e) of
the Credit Agreement is amended and restated in its entirety
to read as follows:
(e) Mergers, Consolidations, Sales, Acquisition or
Formation of Subsidiaries. Neither the Credit Parties nor any
of their respective Subsidiaries nor any Guarantor shall (i)
be a party to any consolidation or to any merger or purchase
the capital stock of or otherwise acquire any equity interest
in any other business entity other than (A) with the approval
of the Agent, New Acquisitions (with respect to the Company
only) made after the Third Amendment Effective Date and on or
prior to June 30, 2004, provided that the purchase price in
respect of any such New Acquisition is not in excess of
$300,000.00, and provided further that the aggregate purchase
prices of all New Acquisitions during such period is not in
excess of $600,000.00, and (B) New Acquisitions (with respect
to the Company only) made after June 30, 2004, (ii) acquire
any material part of the assets of any other business entity
other than New Acquisitions (with respect to the Company only)
permitted by the preceding clause (i), except in the ordinary
course of business and excepting Short-Term Real Estate Sales,
or (iii) sell, transfer, convey or lease all or any material
part of its assets, except in the ordinary course of business,
or sell or assign with or without recourse any receivables.
VNGI shall not cause to be created or otherwise acquire any
Subsidiary other than VNGDI without the prior written consent
of the Agent and the Required Lenders. VNGDI shall not cause
to be created or otherwise acquire any Subsidiary other than
the Company without the prior written consent of the Agent and
the Required Lenders. The Company shall not cause to be
created or otherwise acquire any Subsidiary without the prior
written consent of the Agent and the Required Lenders, which
consent shall not be unreasonably withheld. Without limiting
the generality of the foregoing sentence, the Company shall
not consummate any New Acquisition which would cause a new
Subsidiary of the Company to exist without the prior written
consent of the Agent and the Required Lenders, and if such
consent is given, concurrently with or within sixty (60) days
following consummation of such New Acquisition: (i) the
Company shall amend the Company Pledge Agreement to include a
pledge of and security interest and Lien in and to all of the
capital stock of such Subsidiary as provided in Section
4.01(f) of this Agreement, and deliver to the Agent, for the
benefit of the Lenders and the Agent, all of the original
stock certificates of such Subsidiary, together with executed
blank stock powers therefor; and (ii) such Subsidiary shall
become a Guarantor and shall execute and deliver in favor of
the Agent, for the benefit of the Lenders and the Agent, a
Subsidiary Guaranty and Subsidiary Security Agreement as
provided in Section 4.01(f) of this Agreement. No Subsidiary
of the Company shall cause to be
created or otherwise acquire any Subsidiary without the prior
written consent of the Agent and the Required Lenders.
3. Representations and Warranties. The Credit Parties
jointly and severally represent and warrant to the Lenders that:
(a) (i) The execution, delivery and performance of this Amendment
by the Credit Parties have been duly authorized by all necessary
corporate action, and do not and will not violate any provision of any
law, rule, regulation, order, judgment, injunction, or writ presently
in effect applying to the Credit Parties, the articles of incorporation
or by-laws of any of the Credit Parties, or result in a breach of or
constitute a default under any material agreement, lease or instrument
to which any of the Credit Parties is a party or by which any of the
Credit Parties or any of the properties of any of the Credit Parties
may be bound or affected; (ii) no authorization, consent, approval,
license, exemption or filing of a registration with any court or
governmental department, agency or instrumentality or any other Person
is or will be necessary for the valid execution, delivery or
performance by any of the Credit Parties of this Amendment; and (iii)
this Amendment is the legal, valid and binding obligation of each of
the Credit Parties, as a signatory thereto, and is enforceable against
each of the Credit Parties in accordance with its terms.
(b) After giving effect to the amendments contained in this
Amendment, the representations and warranties contained in Section 3 of
the Credit Agreement are true and correct with the same force and
effect as if made on and as of the date of execution of this Amendment,
except that the reference to the Financial Statements in Section
3.01(d) of the Credit Agreement shall be to the most recent financial
statements of the Company and its Subsidiaries provided to the Bank
prior to the date hereof.
(c) After giving effect to the amendments contained in this
Amendment, no Default or Unmatured Default has occurred and is
continuing or will exist under the Credit Agreement.
4. Conditions. The obligation of the Lenders and the
Agent to perform this Amendment shall be subject to full satisfaction of the
following conditions precedent:
(a) The Credit Parties shall have delivered to the Agent copies of
such corporate documents and resolutions of the Credit Parties as the
Agent may request evidencing necessary action by the Credit Parties to
obtain necessary authorization for the execution and performance of
this Amendment and all other agreements or documents delivered pursuant
hereto as the Agent may request, each certified as of the date of
execution of this Amendment.
(b) This Amendment shall have been duly executed by each of the
Credit Parties and the Required Lenders and delivered to the Agent.
(c) The Company shall have executed and delivered to the Agent
Revolving Notes payable to each of the Revolver Lenders in form and
substance the same as Exhibit A to this Amendment.
(d) The Company shall have paid to the Agent, for the account of
the Lenders, a waiver fee in the amount of $80,250.00.
(d) The Company shall have paid all costs and expenses incurred by
the Agent in connection with the negotiation, preparation and closing
of this Amendment and the other documents and agreements delivered
pursuant hereto, including the reasonable fees and out-of-pocket
expenses of Xxxxx & Xxxxxxx, special counsel to the Agent.
(e) The Agent shall have received such additional agreements,
documents and certifications, as may be reasonably requested by the
Required Lenders.
5. Guarantor Consent/Affirmation. VNGI and VNDGI, in
their respective capacities as a Guarantor under the Guaranties, by their
execution of this Amendment, expressly consent to the execution, delivery and
performance by the Company and the Agent of this Amendment, and agree that
neither the provisions of this Amendment nor any action taken or not taken in
accordance with the terms of this Amendment shall constitute a termination,
extinguishment, release or discharge of any of their respective guaranty
obligations or provide a defense, set off, or counter claim to any of them with
respect to any of their respective guaranty obligations under any of the
Guaranties or other Loan Documents. VNGI and VNDGI each affirms to the Lenders
and the Agent that its Guaranty remains in full force and effect and is its
valid and binding obligation.
6. Binding on Successors and Assigns. All of the terms
and provisions of this Amendment shall be binding upon and inure to the benefit
of the Credit Parties, the Lenders, the Agent, and their respective successors
and assigns and legal representatives.
7. Governing Law/Entire Agreement/Survival. This
Amendment is a contract made under, and shall be governed by and construed in
accordance with, the laws of the State of Indiana applicable to contracts made
and to be performed entirely within such state and without giving effect to the
choice or conflicts of laws principles of any jurisdiction. This Amendment
constitutes and expresses the entire understanding between the parties with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings, commitments, inducements or conditions, whether expressed or
implied, oral or written. All covenants, agreements, undertakings,
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and shall not be affected by any
investigation made by any person. The Credit Agreement, as amended hereby,
remains in full force and effect in accordance with its terms and provisions.
8. Further Agreements and Acknowledgments. The Credit
Parties hereby further acknowledge and agree that:
(a) Neither the provisions of this Amendment nor any actions taken
or not taken pursuant to or in reliance upon the terms of this
Amendment shall constitute a novation of any of the Loan Documents, all
of which remain in full force and effect in accordance with their
respective terms, as amended to date; and
(b) Neither this Amendment, nor any action taken by the Lenders or
the Agent pursuant to this Amendment, shall impair, prejudice, or in
any other manner affect the rights of the Lenders with respect to any
Collateral or other security which now or hereafter secures payment or
performance of the Obligations or any part thereof, or establish or be
deemed to establish any precedent or course of dealing with respect to
any matter.
9. Counterparts. This Amendment may be executed, by
original or facsimile signatures, in two or more counterparts, each of which
shall constitute an original, but all of which shall constitute one agreement.
IN WITNESS WHEREOF, the Credit Parties, the Required Lenders
and the Agent have caused this Amendment to be duly executed and delivered by
their respective authorized signatories as of the 30th day of June, 2003.
VALLEY NATIONAL GASES, INC.,
a West Virginia corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx, CFO
VALLEY NATIONAL GASES INCORPORATED
a Pennsylvania corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx, CFO
VALLEY NATIONAL GASES DELAWARE,
INC., a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx, CFO
BANK ONE, NA, as Lender and as Agent
By: /s/ Xxxxxx X. XxXxxxxx
-----------------------------------------
Printed: Xxxxxx X. XxXxxxxx
Title: First Vice President
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------------
Printed: Xxxxxxxx X. Xxxxxxx
Title: Assistant Vice President
NATIONAL CITY BANK, as Lender and as
Syndication Agent
By: /s/ R E Xxxxxx
-----------------------------------------
Printed: Xxxxx Xxxxxx
Title: Vice President
THE HUNTINGTON NATIONAL BANK, as
Lender and as Documentation Agent
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Printed: Xxxx X. Xxxxxx
Title: Vice President
WESBANCO BANK, INC.
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Printed: Xxxxx X. Xxxx
Title: Senior Vice President
SKY BANK
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Printed: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
FIFTH THIRD BANK
By: /s/ X. X. Xxxxxxx
-----------------------------------------
Printed: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President
