EXHIBIT 10.13
FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
(WITH LETTER OF CREDIT FACILITY)
This Fourth Amendment to Third Amended And Restated Revolving Credit and
Term Loan Agreement (With Letter of Credit Facility) (this "FOURTH AMENDMENT")
is entered into effective the 31st day of December, 1997, by and between ALAMO
GROUP INC., a Delaware corporation (the "COMPANY"), Alamo Group (USA) Inc.,
Alamo Group (TX) Inc., Alamo Group (KS) Inc., Alamo Group (IL) Inc., Alamo Sales
Corp., Tiger Corporation f/k/a Alamo Group (SD) Inc. , Alamo Group (WA) Inc.,
M&W Gear Company, Adams Hard-Facing Company, Inc., Herschel-Adams Inc., Alamo
Group (IA) Inc. (collectively, the "GUARANTORS") and NATIONSBANK OF TEXAS, N.A.
(the "BANK").
R E C I T A L S
A. Company and Bank executed a Third Amended and Restated Revolving
Credit and Term Loan Agreement (With Letter of Credit Facility), dated December
29, 1995 (the "THIRD AMENDED LOAN AGREEMENT"), pursuant to which Bank provided
to Company a $35,000,000.00 loan facility to be used for general working capital
purposes, financing new acquisitions, and to support letters of credit;
B. Among the credit support for this facility are the Guaranty
Agreements, dated December 29, 1995 (collectively, the "GUARANTIES"), executed
by Alamo Group (USA) Inc., Alamo Group (TX) Inc., Alamo Group (KS) Inc., Alamo
Group (IL) Inc., Alamo Sales Corp., Tiger Corporation f/k/a Alamo Group (SD)
Inc. , Alamo Group (WA) Inc., M&W Gear Company, Adams Hard-Facing Company, Inc.,
Herschel-Adams Inc., Alamo Group (IA) Inc. (collectively, the "GUARANTORS");
C. Effective April 10, 1996, Company and Bank executed First
Amendment to Third Amended and Restated Revolving Credit and Term Loan Agreement
(With Letter of Credit Facility) (the "FIRST AMENDMENT"), pursuant to which Bank
increased the amount available under this facility to $40,000,000.00, on the
terms and conditions stated in the First Amendment.
D. Effective December 23, 1996, Company and Bank executed Second
Amendment to Third Amended and Restated Revolving Credit and Term Loan Agreement
(with Letter of Credit Facility) (the "SECOND AMENDMENT"), pursuant to which
Bank agreed to (i) give a one-year extension of the maturity of the term and
revolving loans evidenced by this facility; (ii) reduce the interest rate margin
on certain LIBOR-priced borrowings under the facility; and (iii) adjust the
threshold for application of an unused facility fee and the timing of payment
thereof.
E. Effective June 23, 1997, the Company and Bank executed Third
Amendment to Third Amended and Restated Revolving Credit and Term Loan Agreement
(with Letter of Credit Facility) (the "THIRD AMENDMENT") pursuant to which (i)
the loan and note amounts were increased to $45,000,000.00; (ii) the interest
rate margin on certain LIBOR-priced borrowings under the facility was reduced;
(iii) the requirement for a separate Consolidated Tangible Net Worth Retention
Percentage of 60% on Tier 1 pricing was eliminated; (iv) the minimum
Consolidated Tangible Net Worth amount for calendar year 1996 was established at
$80,000,000.00, less adjustments for certain Treasury stock additions; and (v)
Bank consented to stock repurchases of up to $17,000,000.00.
F. Company and Bank have agreed to further amend the Third Amended
Loan Agreement, including (i) to eliminate the Total Liabilities to Tangible Net
Worth covenant, (ii) to replace the Current Maturity Coverage with a Fixed
Charge Coverage, (iii) to eliminate all Interest Margin Factors other than
Operating Leverage Ratio, (iv) to eliminate Company's ability to convert from
revolving credit advances to a term loan, and (v) to extend the maturity of the
Loan to December 31, 2002.
G. Although not required to do so for the Guaranties to continue to
be fully effective, the Guarantors confirm by their execution of this Fourth
Amendment that they acknowledge the amendments effected hereby and that their
Guaranties are unaffected.
H. Each capitalized term used in this Fourth Amendment shall have
the meaning given to it in the Third Amended Loan Agreement, as previously
amended by the First Amendment, Second Amendment and Third Amendment.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other valuable consideration, Company and Bank agree as follows:
A G R E E M E N T:
1. RECITALS. The foregoing recitals are true and correct.
2. AMENDMENTS. The following provisions of the Third Amended Loan
Agreement are hereby amended:
(a) The following changes and additions are made to the
definitions contained in
SECTION 1.01 of the Third Amended Loan Agreement:
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(I) "CAPITAL EXPENDITURES" MEANS ANY EXPENDITURES BY COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES FOR AN ASSET THAT WILL BE USED IN YEARS
SUBSEQUENT TO THE YEAR IN WHICH THE EXPENDITURE IS MADE OR THAT IS
PROPERLY CLASSIFIED IN RELEVANT FINANCIAL STATEMENTS IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AS A CAPITAL ASSET.
(II) "INTEREST EXPENSE" MEANS, FOR COMPANY AND ITS CONSOLIDATED
SUBSIDIARIES FOR ANY PERIOD, TOTAL INTEREST EXPENSE IN RESPECT OF
CONSOLIDATED TOTAL LIABILITIES PAYABLE DURING SUCH PERIOD, INCLUDING,
WITHOUT LIMITATION, ALL COMMISSIONS, DISCOUNTS, AND OTHER FEES AND
CHARGES WITH RESPECT TO LETTERS OF CREDIT, ALL AS DETERMINED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
(III) "CASH TAXES" MEANS FOR COMPANY AND ITS CONSOLIDATED SUBSIDIARIES
FOR ANY PERIOD, TAXES PAID OR PAYABLE BY THEM DURING SUCH PERIOD.
(IV) "CURRENT MATURITIES OF LONG-TERM DEBT AND CAPITAL LEASES" MEANS, AS
OF ANY DATE, THE AGGREGATE AMOUNT OF ALL REGULARLY SCHEDULED PRINCIPAL
PAYMENTS ON ALL OUTSTANDING CONSOLIDATED FUNDED DEBT OF COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES, AND ALL PAYMENTS OF RENT ON CAPITAL LEASES,
THAT WERE DUE AND PAYABLE FOR THE PREVIOUS TWELVE (12) MONTHS ENDING ON
SUCH DATE.
(V) "FIXED CHARGES" MEANS, FOR ANY PERIOD FOR COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES, THE SUM OF (A) INTEREST EXPENSE, (B)
OPERATING LEASE EXPENSES, (C) RENT EXPENSES, (D) CURRENT MATURITIES OF
LONG-TERM DEBT AND CAPITAL LEASES AND (E) CAPITAL EXPENDITURES.
(VI) "FIXED CHARGE COVERAGE RATIO" MEANS THE RATIO OF OPERATING CASH
FLOW PLUS RENT EXPENSES PLUS OPERATING LEASE EXPENSES LESS CASH TAXES,
TO FIXED CHARGES. (VII) "TERMINATION DATE" SHALL MEAN THE EARLIEST DATE
ON WHICH ANY OF THE FOLLOWING EVENTS OCCURS: (A) DECEMBER 31, 2002; (B)
THE DATE THAT BANK TERMINATES ITS COMMITMENT TO LEND HEREUNDER, AFTER
THE OCCURRENCE OF AN EVENT OF DEFAULT; OR (C) SUCH EARLIER DATE AS MAY
BE AGREED UPON IN WRITING BY COMPANY AND BANK.
(b) SECTION 2.04(D) is amended and restated to read as follows:
(D) APPLICABLE MARGIN. AS USED IN THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, "APPLICABLE MARGIN" MEANS, AS TO THE LOANS, A RATE PER
ANNUM DETERMINED FOR EACH FISCAL QUARTER DURING COMPANY'S FISCAL YEAR,
BEGINNING WITH THE QUARTER ENDING MARCH 31, 1998, BY REFERENCE TO THE
OPERATING LEVERAGE RATIO (THE "INTEREST MARGIN FACTOR") AS OF THE END OF
THE FISCAL QUARTER (HEREIN CALLED THE "DATE OF DETERMINATION"), AND THE
TYPE OF ADVANCE, AS FOLLOWS:
(I) IF, ON ANY DATE OF DETERMINATION, THE FOLLOWING IS
MET: THE OPERATING LEVERAGE RATIO IS EQUAL TO OR LESS THAN 1.75
TO 1.0, THEN THE APPLICABLE MARGIN DURING THE FISCAL QUARTER
FOLLOWING THE DATE OF DETERMINATION, EXPRESSED AS A RATE PER
ANNUM, SHALL BE (- 1%) FOR FLOATING BASE ADVANCES, AND 5/8 OF 1%
FOR EURODOLLAR ADVANCES; AND IF NOT, THEN
(II) IF, ON ANY DATE OF DETERMINATION, THE FOLLOWING IS
MET: THE OPERATING LEVERAGE RATIO IS GREATER THAN 1.75 TO 1.0 AND
LESS THAN OR EQUAL TO 2.25 TO 1.0, THEN THE APPLICABLE MARGIN
DURING THE FISCAL QUARTER FOLLOWING THE DATE OF DETERMINATION,
EXPRESSED AS A RATE PER ANNUM, SHALL BE (-3/4 OF 1%) FOR FLOATING
BASE ADVANCES, AND 1% FOR EURODOLLAR ADVANCES; AND IF NOT, THEN.
(III) IF, ON ANY DATE OF DETERMINATION, THE FOLLOWING IS
MET: THE OPERATING LEVERAGE RATIO IS GREATER THAN 2.25 TO 1.0 AND
LESS THAN OR EQUAL TO 2.75 TO 1.0, THEN THE APPLICABLE MARGIN
DURING THE FISCAL QUARTER FOLLOWING THE DATE OF DETERMINATION,
EXPRESSED AS A RATE PER ANNUM, SHALL BE ZERO (0) FOR FLOATING
BASE ADVANCES, AND 1-3/8% FOR EURODOLLAR ADVANCES.
THE PRICING PROVIDED IN SUBPARAGRAPH (III) SHALL BE APPLICABLE IF
COMPANY FAILS TO SATISFY THE INTEREST MARGIN FACTOR STATED THEREIN, BUT
HAS NOT SUFFERED AN EVENT OF DEFAULT (E.G. BY FAILING TO SATISFY EACH OF
THE COVENANTS CONTAINED IN SECTIONS 8.15, AND 8.17).
FOR CONVENIENCE OF REFERENCE, SECTION 2.04(D) IS SUMMARIZED IN THE
PRICING GRID ATTACHED AS EXHIBIT "K".
FOR EURODOLLAR ADVANCES, THE APPLICABLE MARGIN FOR A LOAN YEAR APPLIES
BOTH TO (I) ADVANCES MADE DURING THE CURRENT LOAN YEAR AND (II) ADVANCES
OUTSTANDING DURING THE CURRENT LOAN YEAR THAT WERE MADE DURING A PRIOR
LOAN YEAR.
If the interest rate changes hereunder because of a change in the
Applicable Margin, interest shall accrue at the changed rate beginning the first
day of the month after the earlier of the date on which the Company provides, or
by which it was required to provide, pursuant to SECTION 8.01(D) of the Third
Amended Loan Agreement, the financial information necessary to determine the
Applicable Margin.
The foregoing change reflects that references to "Current Maturity
Coverage Ratio," "Leverage Ratio" and "Consolidated Net Worth Retention
Percentage" have been eliminated as Interest Margin Factors. The same
adjustments shall be considered to have been made to the Pricing Grid attached
to the Third Amended Loan Agreement as EXHIBIT "K."
(c) ARTICLE 3 of the Third Amended Loan Agreement is hereby
deleted, thereby eliminating Company's option to convert any portion of the
Revolving Credit Loan to a Term Loan. All portions of the Third Amended Loan
Agreement shall be deemed hereafter to be construed consistently with this
modification.
(d) SECTION 8.14 (Minimum Current Maturity Coverage Ratio)
and
SECTION 8.16 (Maximum Leverage Ratio) are hereby deleted.
(e) A new SECTION 8.14 is hereby added to read as follows:
"8.14 MINIMUM FIXED CHARGE COVERAGE RATIO. THE COMPANY SHALL MAINTAIN A MINIMUM
FIXED CHARGE COVERAGE RATIO OF (I) FOR THE PERIOD BEGINNING MARCH 31, 1998 AND
ENDING DECEMBER 31, 1998, OF AT LEAST 1.25 TO 1.0 AND (II) FOR THE PERIODS
BEGINNING WITH THE QUARTER ENDING MARCH 31, 1999, AT LEAST 1.5 TO 1.0. THE
FOREGOING COVENANT SHALL BE MET BY THE COMPANY AT THE END OF EACH OF ITS FISCAL
QUARTERS USING A ROLLING FOUR QUARTERS OF HISTORICAL OPERATING CASH FLOW AND
FIXED CHARGES INFORMATION.
SECTIONS 8.15 (Minimum Consolidated Tangible Net Worth and Minimum Consolidated
Tangible Net Worth Retention Percentage), 8.17 (Maximum Operating Leverage
Ratio) and 8.18 (ERISA Compliance) shall retain their same numerical
designations, and for now there shall be no SECTION 8.16.
3. GUARANTIES. The Guarantors hereby confirm that the Guaranties
cover the entire amount of the Loans, as previously increased, are in full force
and effect and are in no way diminished or adversely affected by this Fourth
Amendment.
4. NO OTHER AMENDMENTS. All other provisions of the Third Amended
Loan Agreement, as previously amended by the First Amendment, Second Amendment
and Third Amendment, that are not specifically modified or amended by this
Fourth Amendment, shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Fourth Amendment as of
the day and year first above written.
ALAMO GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, DECEMBER 31, 1996 AND DECEMBER 30, 1995
COMPANY:
ALAMO GROUP INC. NATIONSBANK OF TEXAS, N.A.
By: /s/ Robert H. George By:/s/ D. Kirk McDonald
Robert H. George D. Kirk McDonald
Vice President Senior Vice President
GUARANTORS:
ALAMO GROUP (USA) INC. ALAMO GROUP (KS) INC.
By: /s/ Robert H. George By:/s/ Robert H. George
Robert H. George Robert H. George
Vice President - Administration Vice President - Administration
ALAMO GROUP (TX) INC. ALAMO SALES CORP.
By: /s/ Robert H. George By:/s/ Robert H. George
Robert H. George Robert H. George
Vice President - Administration Vice President - Administration
ALAMO GROUP (IL) INC. ADAMS HARD-FACING COMPANY, INC.
By: /s/ Robert H. George By:/s/ Robert H. George
Robert H. George Robert H. George
Vice President - Administration Vice President - Administration
TIGER CORPORATION HERSCHEL-ADAMS INC.
By: /s/ Robert H. George By:/s/ Robert H. George
Robert H. George Robert H. George
Vice President - Administration Vice President - Administration
ALAMO GROUP (WA) INC. ALAMO GROUP (IA) INC.
By: /s/ Robert H. George By:/s/ Robert H. George
Robert H. George Robert H. George
Vice President - Administration Vice President - Administration
M&W GEAR COMPANY
By:/s/ Robert H. George
Robert H. George
Vice President - Administration