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Exhibit 10.1(a)
[Execution]
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called the
"Amendment") made as of September 30, 1998, by and among HECLA
MINING COMPANY, a Delaware corporation (herein called
"Borrower"), Kentucky-Tennessee Clay Company, a Delaware
corporation, K-T Feldspar Corporation, a North Carolina
corporation, MWCA, Inc., an Idaho corporation (successor by
merger to Colorado Aggregate Company of New Mexico and Mountain
West Products, Inc., an Idaho corporation), and NATIONSBANK,
N.A., a national banking association, (successor to NationsBank
of Texas, N.A.) (in its capacity as Agent under the Original
Agreement, herein called "Agent"), and Lenders named in the
Original Agreement referred to below ("Lenders"),
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Lenders have entered into that
certain Credit Agreement dated as of August 11, 1997, (the
"Original Agreement"), for the purpose and consideration therein
expressed, whereby Lenders became obligated to make loans to
Borrower as therein provided; and
WHEREAS, Borrower, Agent and Lenders desire to amend the
Original Agreement to provide for the purposes and consideration
set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and in the
Original Agreement and in consideration of the loans which may
hereafter be made by Lenders to Borrower, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as
follows:
ARTICLE I.
DEFINITIONS AND REFERENCES
SECTION 1.1. TERMS DEFINED IN THE ORIGINAL AGREEMENT.
Unless the context otherwise requires or unless otherwise
expressly defined herein, the terms defined in the Original
Agreement shall have the same meanings whenever used in this
Amendment.
SECTION 1.2. OTHER DEFINED TERMS. Unless the context
otherwise requires, the following terms when used in this
Amendment shall have the meanings assigned to them in this
Section 1.2.
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"Amendment" shall mean this First Amendment to Credit
Agreement.
"Amendment Documents" shall mean this Amendment and any
other documents executed and delivered by Borrower or any
Subsidiary Guarantor.
"Credit Agreement" shall mean the Original Agreement as
amended hereby.
ARTICLE II.
AMENDMENTS TO ORIGINAL AGREEMENT
SECTION 2.1. DEFINED TERMS. (a) The following definitions
in Section 1.1 of the Original Agreement are hereby amended in
their entirety to read as follows:
"'Cash Earnings' means as of the end of any Fiscal
Quarter, Borrower's Consolidated net income for for the two
consecutive Fiscal Quarters then ended plus Borrower's
projected Consolidated net income for the immediately
succeeding two Fiscal Quarters as set forth in the cash flow
projections delivered to Agent and approved by Majority
Lenders in accordance with Section 2.8(b) plus (i)
nonrecurring losses taken into account in determining such
net income and (ii) exploration expenses taken into account
in determining such net income, but only to the extent that
exploration expenses exceed $3,000,000, minus (iii)
nonrecurring gains taken into account in determining such
net income and (iv) any cash dividends that have been
declared, accrued or paid (without duplication) on common or
preferred stock during such Fiscal Quarter.
"'Commitment Period' means the period from and
including the date hereof until and including December 31,
2001 (or, if earlier, the day on which the Notes first
become due and payable in full)."
"'Final Maturity Date' means December 31, 2003."
"'EBITDA' means as of the end of any Fiscal Quarter,
Borrower's Consolidated net income for the four consecutive
Fiscal Quarters then ended plus exploration expenses in
excess of $3,000,000, interest, taxes, depreciation and
amortization, nonrecurring losses and reclamation charges,
to the extent the foregoing have been deducted in
determining such net income, minus nonrecurring gains to the
extent such gains have been included in determining such net
income.
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"'Fixed Charges' means as of the end of any Fiscal
Quarter, the sum of the following for the period of four
consecutive Fiscal Quarters then ended (i) Borrower's
Consolidated interest expense for such period, plus (ii)
Borrower's Consolidated long-term debt scheduled to be paid
during such period, plus (iii) Borrower's Consolidated
capital lease payments paid during such period, plus (iv)
dividends on common and preferred stock declared or paid
(without duplication) by Borrower during such period, plus
(v) Borrower's Consolidated reclamation expenditures paid
during such period; provided however, that during the period
through and including December 31, 1999, Fixed Charges shall
be reduced by the net proceeds from sales of real property
and the Metalline Contact Mines, Inc. shares, which are non-
recurring gains."
"'Total Debt to Cash Earnings Ratio' means as of the
end of any Fiscal Quarter, the ratio of (i) Total Debt at
the end of such Fiscal Quarter to (ii) Cash Earnings as of
the end of such Fiscal Quarter (calculated on a four quarter
basis as set forth in the definition of Cash Earnings in
Section 1.1)."
(b) The following definition in Section 1.1 of the Original
Agreement is hereby added immediately following the definition of
"Event of Default" to read as follows:
"'First Amendment Effective Date' shall mean
September 30, 1998."
SECTION 2.2. FEES. Section 2.5(b) of the Original
Agreement is hereby amended in its entirety to read as follows:
"(b) In consideration of the issuance of each Letter
of Credit by Issuing Bank, Borrower agrees to pay:
(i) an issuance fee for each Letter of Credit in
the amount calculated by applying one-eighth of one
percent (0.125%) per annum of the face amount of such
Letter of Credit for the term thereof, payable to
Issuing Bank for its own account at the time of
issuance of such Letter of Credit;
(ii) for the Bond LC, a letter of credit fee
equal to the amount calculated by applying 1.375% per
annum to the face amount of the Bond LC for the term
thereof, payable to Issuing Bank.
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(iii) for all Letters of Credit except the Bond
LC, a letter of credit fee equal to the greater of (A)
the amount calculated by applying the Fixed Rate Spread
to the face amount of such Letter of Credit for the
term thereof or (B) $500, in each case payable to
Issuing Bank at the time of issuance of such Letter of
Credit for the account of Lenders in accordance with
their Percentage Shares."
SECTION 2.3. MANDATORY PREPAYMENTS; DETERMINATION OF TOTAL
DEBT TO CASH EARNINGS RATIO. Section 2.8(a) of the Original
Agreement is hereby amended in its entirety to read as follows:
(a) Applicable Cash Earnings Ratio.
(i) During the Commitment Period:
(1) if the Total Debt to Cash Earnings Ratio
exceeds 3.75 to 1.0 as of the end of any Fiscal
Quarter during the period beginning on the First
Amendment Effective Date and ending on or prior
to December 31, 1999;
(2) if the Total Debt to Cash Earnings Ratio
exceeds 3.5 to 1.0 as of the end of any Fiscal
Quarter during the period beginning on January 1,
2000 and ending on or prior to December 31, 2000; or
(3) if the Total Debt to Cash Earnings Ratio
exceeds 3.25 to 1.0 as of the end of any Fiscal
Quarter ending after January 1, 2001;
(the maximum Total Debt to Cash Earnings Ratio specified in
this Section 2.8(a)(i) and in Section 2.8(a)(ii) for a
particular period is herein called the "Maximum Total Debt
to Cash Earnings Ratio" for such period);
then, Borrower shall make a prepayment of the Loan Balance
to Agent for distribution to Lenders in the amount necessary
to cause the Total Debt to Cash Earnings Ratio to be equal
to or less than the Maximum Total Debt to Cash Earnings
Ratio for such period under this Section 2.8 (in this
section called the "Required Prepayment Amount"), all in
accordance with the following provisions of this Section
2.8.
(ii) After the Commitment Period expires, if the
Total Debt to Cash Earnings Ratio exceeds 3.25 to 1.0 as
of the end of any Fiscal Quarter, then Borrower shall make a
prepayment of the Loan Balance to Agent for distribution to
Lenders in the amount necessary to cause the Total Debt to
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Cash Earnings Ratio to be equal to or less than the Maximum
Total Debt to Cash Earnings Ratio for such period under this
Section 2.8 (in this section called the "Required Prepayment
Amount"), all in accordance with the following provisions of
this Section 2.8.
Before the end of the second calendar month immediately
following such Fiscal Quarter, Borrower shall give written
notice to Agent electing to pay the Required Prepayment
Amount to Agent for distribution to Lenders either (i) on
the last day of the next calendar month or (ii) in six (6)
equal consecutive monthly installments due on the last day
of each of the next six calendar months beginning with the
month following the month in which such election is made.
(For example, if the Total Debt to Cash Earnings Ratio as of
the end of the Fiscal Quarter ended September 30, 1998 were
to exceed 3.75 to 1.0, Borrower would be required to elect
by November 30, 1998 whether to pay the full Required
Prepayment Amount on December 31, 1998 or to pay the
Required Prepayment Amount in six equal consecutive monthly
installments beginning on December 31, 1998.) If such
installment payments are elected, Borrower shall pay each
such installment when due. Each such prepayment made after
the end of the Commitment Period shall be applied to the
regular installments of principal due under the Notes in the
inverse order of their maturities. Each prepayment of
principal under this section shall be accompanied by all
interest then accrued and unpaid on the principal so
prepaid, together with any other amounts then due and
payable under Section 2.14. Any principal or interest
prepaid pursuant to this section shall be in addition to,
and not in lieu of, all payments otherwise required to be
paid under the Loan Documents at the time of such
prepayment."
SECTION 2.4. CASH FLOW PROJECTIONS. Section 5.1(b)(iii) of
the Original Agreement is hereby amended in its entirety to read
as follows:
"(iii) Within 45 days after the end of each Fiscal
Quarter, cash flow projections based on a rolling four
quarter basis, to be used to calculate the Total Debt to
Cash Earnings Ratio as set forth in Section 2.8(b), and by
March 31 of each year annual five-year cash flow
projections, together with (A) information prepared by
Borrower and/or its geologists and/or consultants supporting
such projections and (B) as to such quarterly projections,
any available information regarding actual cash flow since
the end of such Fiscal Quarter.
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SECTION 2.5. SUBSIDIARY GUARANTORS. The first sentence of
Section 5.1(m) of the Original Agreement is hereby amended in its
entirety to read as follows:
"Borrower shall cause each of its Subsidiaries now existing
or created, acquired or coming into existence after the date
hereof, that has assets at any time in excess of $1,000,000
(calculated at net book value) or having net cash earnings
constituting more than ten percent (10%) of Cash Earnings as
of the end of such Fiscal Quarter (calculated on a four
quarter basis as set forth in the definition of Cash
Earnings in Section 1.1 and then divided by four), to become
a Subsidiary Guarantor and a party hereto at such time and
to execute and deliver to Agent a Subsidiary Guarantor
Security Agreement, and shall cause such Subsidiary to
deliver at such time written evidence satisfactory to Agent
and its counsel that such Subsidiary has taken all corporate
or partnership action necessary to duly approve and
authorize its joinder hereto and the performance of its
obligations as a Subsidiary Guarantor hereunder."
SECTION 2.6. FIXED CHARGE COVERAGE RATIO. Section 5.2(l)
of the Original Agreement is hereby amended in its entirety to
read as follows:
"(l) Fixed Charge Coverage Ratio. The ratio of (1)
Borrower's Consolidated EBITDA as of the end of each Fiscal
Quarter to (2) Borrower's Consolidated Fixed Charges as of
the end of such Fiscal Quarter will never be less than (i)
1.1 to 1.0 from September 30, 1998 until December 31, 1999
(ii) 1.25 to 1.0 from January 1, 2000 until December 31,
2000, and (iii) 1.5 to 1.0 at any time after December 31,
2000."
SECTION 2.7. TANGIBLE NET WORTH. Section 5.2(m) of the
Original Agreement is hereby amended in its entirety to read as
follows:
"(m) Tangible Net Worth. Borrower's Consolidated
Tangible Net Worth as of the end of any Fiscal Quarter
ending after December 31, 1997 will not be less than the sum
of (1) $150,000,000, plus (2) 50% of Borrower's Consolidated
net income earned during the period from January 1, 1998 to
the end of such Fiscal Quarter, if positive, or zero, if
negative, plus (3) 75% of the net proceeds from the issuance
of equity securities of Borrower after July 1, 1999, to the
end of such Fiscal Quarter;"
SECTION 2.8. LIMITATION ON INTEREST The next-to-last
sentence of Section 9.6 of the Original Agreement is hereby
amended in its entirety to read as follows:
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"In the event applicable law provides for an interest
ceiling under Section 303 of the Texas Finance Code (the
"Texas Finance Code") as amended, for that day, the ceiling
shall be the "weekly ceiling" as defined in the Texas
Finance Code and shall be used when appropriate in
determining the Highest Lawful Rate"
ARTICLE III.
CONDITIONS OF EFFECTIVENESS
SECTION 3.1. EFFECTIVE DATE. This Amendment shall become
effective as of the date first above written when, and only when:
(a) Agent shall have received the Amendment duly executed
and delivered by Borrower;
(b) Agent shall have received an amendment fee of $27,500
payable to Agent for the account of Lenders in accordance with
their Percentage Shares; and
(c) Agent shall have additionally received all of the
following documents, each document (unless otherwise indicated)
being dated the date of receipt thereof by Agent, duly
authorized, executed and delivered, and in form and substance
satisfactory to Agent:
(i) a compliance certificate of a duly authorized
officer of Borrower to the effect that all of the
representations and warranties set forth in Article IV
hereof are true and correct at and as of the time of such
effectiveness and certifying as to certain corporate
matters;
(ii) an opinion of Borrower's counsel in form and
substance satisfactory to Agent; and
(iii) such supporting documents as Agent may
reasonably request.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF BORROWER.
In order to induce each Lender to enter into the Amendment
Documents, Borrower represents and warrants to each Lender that:
(a) The representations and warranties contained in Section
4.1 of the Original Agreement are true and correct at and as of
the time of the effectiveness hereof.
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(b) Borrower is duly authorized to execute and deliver the
Amendment Documents and is and will continue to be duly
authorized to borrow monies and to perform its obligations under
the Credit Agreement. Borrower has duly taken all corporate
action necessary to authorize the execution and delivery of the
Amendment Documents and to authorize the performance of the
obligations of Borrower hereunder.
(c) The execution and delivery by Borrower of the Amendment
Documents, the performance by Borrower of its obligations
thereunder and the consummation of the transactions contemplated
thereby do not and will not conflict with any provision of law,
statute, rule or regulation or of the certificate of
incorporation and bylaws of Borrower, or of any material
agreement, judgment, license, order or permit applicable to or
binding upon Borrower, or result in the creation of any lien,
charge or encumbrance upon any assets or properties of Borrower.
Except for those which have been obtained, no consent, approval,
authorization or order of any court or governmental authority or
third party is required in connection with the execution and
delivery by Borrower of the Amendment Documents.
(d) When duly executed and delivered, each of the Amendment
Documents and the Credit Agreement will be a legal and binding
obligation of Borrower, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors'
rights and by equitable principles of general application.
(e) The audited annual Consolidated financial statements of
Borrower dated as of December 31, 1997 and the unaudited
quarterly Consolidated financial statements of Borrower dated as
of June 30, 1998 fairly present the Consolidated financial
position at such dates and the Consolidated statement of
operations and the changes in Consolidated financial position for
the periods ending on such dates for Borrower. Copies of such
financial statements have heretofore been delivered to each
Lender. Since June 30, 1998, no material adverse change has
occurred in the financial condition or businesses or in the
Consolidated financial condition or businesses of Borrower.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1. RATIFICATION OF AGREEMENTS. The Original
Agreement as hereby amended is hereby ratified and confirmed in
all respects. The Loan Documents, as they may be amended or
affected by the various Amendment Documents, are hereby ratified
and confirmed in all respects. Any reference to the Credit
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Agreement in any Loan Document shall be deemed to refer to this
Amendment also and any reference in any Loan Document to any
other document or instrument amended, renewed, extended or
otherwise affected by any Amendment Document shall also refer to
such Amendment Document. The execution, delivery and
effectiveness of the other Amendment Documents shall not, except
as expressly provided herein or therein, operate as a waiver of
any right, power or remedy of Lender under the Credit Agreement
or any other Loan Document nor constitute a waiver of any
provision of the Credit Agreement or any other Loan Document.
SECTION 5.2. SURVIVAL OF AGREEMENTS. All representations,
warranties, covenants and agreements of Borrower herein shall
survive the execution and delivery of the Amendment Documents and
the performance hereof and shall further survive until all of the
Obligations are paid in full. All statements and agreements
contained in any certificate or instrument delivered by Borrower
or any Related Person hereunder or under the Credit Agreement to
any Lender shall be deemed to constitute representations and
warranties by, and/or agreements and covenants of, Borrower under
the Amendment Documents and under the Credit Agreement.
SECTION 5.3. GOVERNING LAW. The Amendment Documents shall
be governed by and construed in accordance with the laws of the
State of Texas and any applicable laws of the United States of
America in all respects, including construction, validity and
performance.
SECTION 5.4. COUNTERPARTS. This Amendment may be
separately executed in counterparts and by the different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to constitute one and the same Amendment.
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IN WITNESS WHEREOF, this Amendment is executed as of the date
first above written.
HECLA MINING COMPANY, Borrower
By: /s/ John P. Stilwell
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John P. Stilwell
Vice President-Chief Financial
Officer
Address (for Borrower and Subsidiary
Guarantors):
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
Attention: Vice President-Finance
Telephone: (208) 769-4100
Telecopy: (208) 769-7612
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MWCA, INC., Subsidiary Guarantor,
successor by merger to Colorado
Aggregate Company of New Mexico and
Mountain West Products, Inc.
By: /s/ J. Gary Childress
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J. Gary Childress
Vice President
KENTUCKY-TENNESSEE CLAY COMPANY,
Subsidiary Guarantor
By: /s/ J. Gary Childress
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J. Gary Childress
Vice President
K-T FELDSPAR CORPORATION, Subsidiary
Guarantor
By: /s/ J. Gary Childress
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J. Gary Childress
Vice President
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NATIONSBANK, N.A.,
Agent and Lender
By: /s/ David C. Rubenking
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David C. Rubenking,
Senior Vice President
Address:
NationsBank Plaza
901 Main Street, 49th Floor (75202)
Post Office Box 830104
Dallas, Texas 75383
Attention: Energy Lending Group
Telephone: (214) 508-1200
Telecopy: (214) 508-1286
with a copy to:
NationsBank, N.A.
Denver Energy Group
370 Seventeenth, Suite 3250
Denver, Colorado 80202-5632
Attention: David Rubenking
Telephone: (303) 629-6969
Telecopy: (303) 629-6303
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BANK OF AMERICA N.T. & S.A., as
Successor by Merger to Bank of
America, N W, N.A.
By: /s/ Joe Poole
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Joe Poole, Vice President
Address:
Corporate Banking, Spokane Office
West 601 Riverside Ave., Fl. SFC-5
Spokane, Washington 99201
Attention: Joe Poole, Vice Pres.
Telephone: (509) 353-1475
Telecopy: (509) 353-1492
FIRST SECURITY BANK, N.A., Lender
By: /s/ Vicki Riga
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Vicki Riga, Vice President
Commercial Lending
119 North 9th Street
Boise Idaho 83702
Attention: Vicki Riga, Vice President
Telephone: 208/393-2163
Telecopy: 208/393-2472