FIFTH AMENDMENT
THIS FIFTH AMENDMENT (this "Amendment") is entered into as of October
30, 1996, among the undersigned. Terms not defined in this Amendment have the
respective meanings given such terms in the Credit Agreement defined below.
RECITALS
A. Reference is made to that certain AMENDED AND RESTATED CREDIT
AGREEMENT (as amended, supplemented, or replaced, the "Credit Agreement") dated
as of December 11, 1992, executed by ELJER MANUFACTURING, INC., a Delaware
corporation (the "Borrower"); ELJER INDUSTRIES, INC., a Delaware corporation
(the "Parent Guarantor"); the financial institutions from time to time parties
thereto; NATIONSBANK OF TEXAS, N.A., ("NationsBank"), as a Bank and a co-agent
and the administrative agent for itself and the other Banks; and XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK ("Xxxxxx Guaranty"), as a Bank and a co-agent for
itself and the other Banks.
B. The undersigned desire to amend the Credit Agreement.
NOW THEREFORE, the undersigned agree as follows:
1. Definitions. Unless otherwise defined herein, all capitalized
terms shall have the same meanings as in the Credit Agreement.
2. Applicable Margin. The definition of Applicable Margin is hereby
amended in its entirety to read as follows:
Applicable Margin means 5%, which is the margin of interest in
excess of the Prime Rate that is applicable when any interest rate is
determined under this Agreement.
3. Maturity Date. The definition of Maturity Date is hereby amended
in its entiety to read as follows:
Maturity Date means the earlier of (a) January 31, 1998, and
(b) the effective date that the Banks' obligations to extend or
maintain credit hereunder are otherwise canceled in accordance with the
provisions herein.
4. Mandatory Prepayment. Subparagraph (e) of Section 2.5 is hereby
amended in its entirety to read as follows:
(e) On or before September 30, 1997, the Borrower shall pay as a
mandatory prepayment of the Obligation an amount sufficient to reduce
the Principal Debt outstanding on that date by at least $2,000,000.
On or before December 31, 1997, the Borrower shall pay
as a mandatory prepayment of the Obligation an amount sufficient
to reduce the Principal Debt outstanding on that date by at least
$3,000,000.
5. Financial Covenants. Section 8 is hereby amended in its entirety
to read as follows:
SECTION 8
FINANCIAL COVENANTS
Until the Obligation has been paid and performed in full, and
unless a deviation therefrom is permitted by the Required Banks, the
Parent Guarantor and the Borrower, for themselves and the other Related
Companies, jointly and severally agree as follows:
SECTION 8.1 Capital Expenditures. No Related Company
(including, without limitation, U.S. Brass) will, directly or
indirectly, make expenditures for the acquisition, construction,
improvement, or replacement of land, buildings, equipment, or other
fixed or capital assets or leaseholds (excluding expenditures properly
chargeable to repairs or maintenance), other than expenditures which
are for or related to assets or leaseholds used or useful in the normal
business operations of such Related Company and which, together with
all other such expenditures by any other Related Company, do not exceed
the following limits (which, for calendar year 1997, may be adjusted
upward by the unused amount of the previous year's maximum amount:
Period Maximum Amount
-------- --------------
1996 $12,000,000
1997 $14,000,000
SECTION 8.2 Minimum Adjusted Tangible Net Worth - Parent
Guarantor. At the end of any fiscal quarter listed below, the Adjusted
Tangible Net Worth - Parent Guarantor shall not be less than the
applicable minimum amount set forth below opposite such fiscal quarter:
Fiscal Quarter Minimum
Ending On Or About Amount
------------------ -------------
9/30/96 $(20,446,000)
12/31/96 $(17,091,000)
3/31/97 $ (8,337,000)
6/30/97 $ (9,114,000)
9/30/97 $ (6,613,000)
12/31/97 $ (2,357,000)
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For purposes of the calculations in this Section 8.2 and in Section
8.3, below, accruals for post-retirement benefits according to
Financial Accounting Standards No. 106 will be reflected after December
31, 1993.
SECTION 8.3 Minimum Adjusted Tangible Net Worth - U.S. Only.
At the end of any fiscal quarter listed below, the Adjusted Tangible
Net Worth - U.S. Only shall not be less than the applicable minimum
amount set forth below opposite such fiscal quarter:
Fiscal Quarter Minimum
Ending On Or About Amount
------------------ --------
9/30/96 $(96,551,000)
12/31/96 $(94,658,000)
3/31/97 $(87,615,000)
6/30/97 $(86,476,000)
9/30/97 $(84,965,000)
12/31/97 $(82,289,000)
SECTION 8.4 Minimum Consolidated Cash Flow From Operating
Activities Parent Guarantor. For the period of four consecutive fiscal
quarters ending with the fiscal quarter listed below, the consolidated
Cash Flow From Operating Activities for the Parent Guarantor and its
Consolidated Subsidiaries (excluding U.S. Brass and any compensation
earned from U.S. Brass under the U.S. Brass - EMI Tax Sharing
Agreement) shall not be less than the applicable minimum amount set
forth below opposite such fiscal quarter:
Fiscal Quarter Minimum
Ending On Or About Amount
------------------ --------
9/30/96 $ 8,000,000
12/31/96 $ 5,000,000
3/31/97 $ 5,000,000
6/30/97 $ 1,000,000
9/30/97 $ 3,000,000
12/31/97 $ 4,000,000
SECTION 8.5 Minimum Consolidated Cash Flow From Operating
Activities - U.S. Only. For the period of four consecutive fiscal
quarters ending with the fiscal quarter listed below, the consolidated
Cash Flow From Operating Activities for the Parent Guarantor and its
Consolidated Subsidiaries (excluding U.S. Brass and any foreign
Subsidiaries, any interest income resulting from the Permitted Debt
described in items 7 and 8 on Schedule 5.15, and any compensation
earned from U.S. Brass under the U.S. Brass - EMI Tax Sharing
Agreement) shall not be less than the applicable minimum amount set
forth below opposite such fiscal quarter:
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Fiscal Quarter Minimum
Ending On Or About Amount
------------------ --------
9/30/96 $ 5,000,000
12/31/96 $ 500,000
3/31/97 $ 5,000,000
6/30/97 $ 0
9/30/97 $ 0
12/31/97 $ 2,000,000
SECTION 8.6 Minimum Current Ratio - Parent Guarantor. For any
fiscal quarter listed below, the ratio of the consolidated current
assets (excluding any compensation payable by U.S. Brass under the U.S.
Brass - EMI Tax Sharing Agreement) to the consolidated current
liabilities (excluding current maturities of Restricted Debt and any
amounts accrued in connection with the Xxxxx-Xxxxxxx Lawsuit) of the
Parent Guarantor and its Consolidated Subsidiaries (excluding U.S.
Brass) shall not be less than 1.50 to 1.
SECTION 8.7 Fixed Charge Coverage Ratio - Parent Guarantor.
For any fiscal quarter, the Fixed Charges Coverage Ratio for the Parent
Guarantor and its Consolidated Subsidiaries (excluding U.S. Brass) for
the period of four consecutive fiscal quarters ending with such fiscal
quarter shall not be less than 0.85 to 1.
SECTION 8.8 Fixed Charge Coverage Ratio - U.S. Only. For any
fiscal quarter, the Fixed Charges Coverage Ratio for the Parent
Guarantor and its Consolidated Subsidiaries (excluding U.S. Brass and
any foreign Subsidiaries) for the period of four consecutive fiscal
quarters ending with such fiscal quarter shall not be less than 0.65 to
1.
For purposes of the provisions of Sections 8.4, 8.5 and 8.6 of the
Credit Agreement and the calculations on the Financial Report
Certificate with respect to those Sections, the principal amount of
debt outstanding under the Congress Receivables Facility shall be
excluded.
6. Permitted Debt. Schedule 5.15 is hereby amended by adding as item
number 13 the following:
13. $500,000.00, 7-year, 2% loan from the Pennsylvania
Department of Commerce to finance the purchase of a Bricesco Envelope
Kiln for use in Borrower's Ford City, Pennsylvania facility, secured by
such Bricesco Envelope Kiln.
7. Representations and Warranties. The Borrower and the Parent
Guarantor jointly and severally represent and warrant to each Agent and to each
Bank that as of this date:
(a) the execution and delivery of this Amendment have been
authorized by all requisite corporate action and will not violate its
organizational documents;
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(b) except for matters heretofore disclosed in writing by any
Related Company, the representations and warranties in each Loan Paper
(as affected by this Amendment) to which it is a party are true and
correct in all material respects on and as of the date hereof as though
made on and as of the date hereof (except to the extent that (i) such
representations and warranties speak to a specific date or (ii) the
facts on which such representations and warranties are based have been
changed by transactions contemplated by the Credit Agreement); and
(c) no Default or Event of Default exists.
8. Conditions. This Fifth Amendment shall not become effective unless:
(a) The Administrative Agent shall have received from the
Borrower an amendment fee in the amount of $520,430.77, which is 1% of
the sum of (i) Principal Debt of the Existing Letters of Credit issued
by NationsBank minus $1,996,975.27 (the amount in the Cash Collateral
Account as of the date of this Amendment securing the Existing Letters
of Credit issued by NationsBank) plus (ii) the unpaid principal balance
of the Notes. Such amendment fee shall be for the account of the Banks
other than First Chicago on a pro rata basis according to the amount in
the preceding sentence held by each of them upon which the 1% amendment
fee is being paid.
(b) The Administrative Agent shall have received a certificate
from a Responsible Officer certifying, based on due inquiry, that all
of the representations and warranties in paragraph 7, above, are true
and correct;
(c) Administrative Agent shall have received executed
counterparts of this Fifth Amendment from the Borrower, the Parent
Guarantor, and all Banks, and a certificate from a Responsible Officer
of each of the Borrower and Parent Guarantor certifying as to (i) the
due incumbency of its officers authorized to execute this Fifth
Amendment, (ii) resolutions duly adopted by its directors approving and
authorizing execution of this Fifth Amendment, and (iii) any changes to
its corporate charter or bylaws since April 30, 1996.
9. Release. In consideration of the agreement of the parties hereto to
enter into this Amendment, (a) the Parent Guarantor and the Borrower each
release the Administrative Agent, each Agent, each Bank, and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, assigns, and attorneys from all claims and causes of action existing
on or before the date hereof under or in connection with the Existing Credit
Facilities, the Xxxxxx Guaranty Swap Agreement, or the Existing Letters of
Credit, or arising in connection with the execution, negotiation, and
preparation of this Amendment, the Credit Agreement and the other Loan Papers,
and (b) the Administrative Agent, each Agent, and each Bank each release the
Borrower, the Parent Guarantor, and their respective parents, subsidiaries,
directors, officers, employees, representatives, agents, successors, assigns,
and attorneys from all claims and causes of action existing on or before the
date hereof under or in connection with the Existing Credit Facilities,
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the Xxxxxx Guaranty Swap Agreement, the Existing Letters of Credit or the Loan
Papers, or arising in connection with the execution, negotiation, and
preparation of this Amendment, the Credit Agreement and the other Loan
Papers; provided that, nothing herein shall be deemed to be a waiver of any
Default or Event of Default under the Loan Papers.
10. Ford City Kiln. Each of the parties hereto consents to the
subordination by the Agent of its security interest in the Bricesco Envelope
Kiln used by Borrower in its Ford City, Pennsylvania facility to the security
interest held by the Pennsylvania Department of Commerce to secure its $500,000
loan to Borrower to purchase such kiln.
11. Miscellaneous. This Amendment is a Loan Paper, and, therefore, this
Amendment is subject to the applicable provisions of Section 11 of the Credit
Agreement, all of which applicable provisions are incorporated herein by
reference the same as if set forth herein verbatim. Except as affected by this
Amendment, the Loan Papers are unchanged and continue in full force and effect.
Borrower and Parent Guarantor each agree that all Loan Papers to which it is a
party remain in full force and effect and continue to evidence its legal, valid,
and binding obligations enforceable in accordance with their terms (as affected
by this Amendment), except as enforceability may be limited by applicable Debtor
Relief Laws and general principles of equity. This Amendment shall be binding
upon and inure to the benefit of each of the undersigned and their respective
successors and permitted assigns.
THE LOAN PAPERS, INCLUDING THIS AMENDMENT, REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
12. Counterparts. This Amendment may be executed in more than one
counterpart, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
[Remainder of page left intentionally blank. Signature pages follow.]
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EXECUTED as of the date first written above.
ELJER MANUFACTURING, INC.,
as Borrower
By:/s/Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President-Finance
ELJER INDUSTRIES, INC.,
as Parent Guarantor
By:/s/Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice Presient-Finance
NATIONSBANK OF TEXAS, N. A.,
as Administrative Agent, an Agent,
and a Bank
By:/s/Xxxxxxx X. Xxxxxxxxxxx, XX
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx,XX
Title: Senior Vice President
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK,
as an Agent and a Bank
By:/s/Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
THE FIRST NATIONAL BANK OF CHICAGO,
as a Bank
By:/s/Xxxxxx Xxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
DK ACQUISITION PARTNERS,
as a Bank
By: X.X. Xxxxxxxx & Co.,
a general partner
By:/s/Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
FOOTHILL CAPITAL CORPORATION,
as a Bank
By:/s/Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
THIRD AVENUE VALUE FUND, INC.,
as a Bank
By:/s/Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Treasurer, CFO
COMAC PARTNERS
as a Bank
By:/s/Xxxxxxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: General Partner
