EXHIBIT 10.2
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT ("Second Amendment"), dated
as of June 19, 2003, amends that certain Credit Agreement dated as of October
17, 2002, as amended by that certain Amendment No. 1 to Credit Agreement dated
as of April 4, 2003 (the "Credit Agreement"), by and among NRP (OPERATING) LLC,
a Delaware limited liability company (the "Borrower"), the FINANCIAL
INSTITUTIONS from time to time party thereto (individually, a "Lender" and
collectively, the "Lenders"), PNC BANK, NATIONAL ASSOCIATION, a national banking
association, as Administrative Agent for the Lenders (the "Administrative
Agent"), BANK OF MONTREAL and BNP PARIBAS, as Documentation Agents for the
Lenders, and BRANCH BANKING AND TRUST COMPANY, as Syndication Agent for the
Lenders.
WITNESSETH:
WHEREAS, Borrower has requested, and the Required Lenders have
agreed, subject to the terms and conditions herein, to amend the Credit
Agreement to, among other things, permit the Borrower to issue certain unsecured
notes through a private placement in an amount up to $175,000,000, a portion of
the net proceeds of which will be used to reduce the principal outstanding under
the Credit Agreement.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements herein contained and intending to be legally bound
hereby, covenant and agree as follows:
1. Recitals. The foregoing recitals are true and correct and
incorporated herein by reference.
2. Amendments to Credit Agreement.
(a) The definition of "Applicable Euro-Rate Margin" in
Section 1.1 of the Credit Agreement is hereby amended
and restated as follows:
"Applicable Euro-Rate Margin" means for each Euro-Rate Portion
of all Revolving Credit Loans, the percentage expressed in
basis points per annum determined from time to time based upon
the ratio of the Parent's Consolidated Total Indebtedness as
at the end of each Fiscal Quarter to the Parent's Consolidated
EBITDDA for the four most recently completed Fiscal Quarters
treated as a single accounting period set forth on Schedule
1.1(A) hereto, all as determined by the Parent's financial
statements and Compliance Certificate for the preceding Fiscal
Quarter or Fiscal Year delivered to the Agent pursuant to
Section 4.2 below. Adjustments to the Applicable Euro-Rate
Margin resulting from changes in the ratio of the Parent's
Consolidated Total Indebtedness to the Parent's Consolidated
EBITDDA shall be made without notice to the Borrower. Such
adjustments will be effective on the date on which the
Parent's financial
statements and Compliance Certificate are due to be delivered
to the Lenders pursuant to Section 4.2; provided, however,
that if the Borrower has failed to deliver, or caused to be
delivered, such financial statements and Compliance
Certificate on or before the date such delivery is due, then
the ratio of the Parent's Consolidated Total Indebtedness to
the Parent's Consolidated EBITDDA shall be deemed, solely for
the purposes of this definition, to be greater than 2.75 to
1.00 until such time as they are actually delivered.
(b) The definition of "Change in Control" in Section 1.1
of the Credit Agreement is hereby amended and
restated as follows:
"Change in Control" means (i) such time as the Parent
ceases to own directly all of the member interests of
the Borrower, (ii) such time as the General Partner
ceases to own directly all of the general partner
interests of the Parent, or (iii) such time as Corbin
J. Robertson, Jr., the WPP Group, Arch Coal, Inc.
and/or one or more of their direct or indirect,
wholly-owned Subsidiaries cease to own, in the
aggregate, more than 50% of the partnership interests
of the General Partner.
(c) The definition of "Consolidated EBITDDA" in Section
1.1 of the Credit Agreement is hereby amended and
restated as follows:
"Consolidated EBITDDA" means, for any period,
Consolidated Net Income for such period, (x)
excluding therefrom (A) any non-cash extraordinary
items of gain or loss (including without limitation
those items created by mandated changes in accounting
treatment) and (B) any gain or loss of any other
Person accounted for on the equity method, except to
the extent of cash distributions received during the
relevant period (y) plus the aggregate amounts
deducted in determining Consolidated Net Income for
such period in respect of (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depletion expense,
(iv) depreciation expense and (iv) amortization
expense. Notwithstanding the foregoing, in the
calculation of Consolidated EBITDDA for each of the
Fiscal Quarters ending September 30, 2002, December
31, 2002, March 31, 2003, June 30, 2003 and September
30, 2003, respectively, Consolidated EBITDDA shall be
determined as follows: (i) for the Fiscal Quarter
ending September 30, 2002, Consolidated EBITDDA shall
be Historical EBITDDA, (ii) for the Fiscal Quarter
ending December 31, 2002, Consolidated EBITDDA shall
be the Historical EBITDDA multiplied by the sum of
365 minus the number of days elapsed from the Closing
Date until December 31, 2002 divided by 365, plus
Consolidated EBITDDA of the Parent for the period
beginning on the Closing Date and ending December 31,
2002, (iii) for the Fiscal Quarter ending March 31,
2003, Consolidated EBITDDA shall be 75% of Historical
EBITDDA of the Parent, plus Consolidated EBITDDA of
the Parent for the Fiscal Quarter ending March 31,
2003, (iv) for the Fiscal Quarter ending June 30,
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2003, Consolidated EBITDDA shall be 50% of Historical
EBITDDA, plus Consolidated EBITDDA of the Parent for
the two (2) Fiscal Quarters ending June 30, 2003, and
(v) for the Fiscal Quarter ending September 30, 2003,
Consolidated EBITDDA shall be 25% of Historical
EBITDDA, plus Consolidated EBITDDA of the Parent for
the three (3) Fiscal Quarters ending September 30,
2003.
(d) The definition of "Historical EBITDDA" in Section 1.1
of the Credit Agreement is hereby amended and
restated as follows:
"Historical EBITDDA" means $47,000,000.
(e) The following new defined term "Applicable Base Rate
Option" is hereby added to Section 1.1 of the Credit
Agreement as follows:
"Applicable Base Rate Option" means for each Base Rate Portion
of all Revolving Credit Loans, the percentage expressed in
basis points per annum determined from time to time based upon
the ratio of the Parent's Consolidated Total Indebtedness as
at the end of each Fiscal Quarter to the Parent's Consolidated
EBITDDA for the four most recently completed Fiscal Quarters
treated as a single accounting period set forth on Schedule
1.1(A) hereto, all as determined by the Parent's financial
statements and Compliance Certificate for the preceding Fiscal
Quarter or Fiscal Year delivered to the Agent pursuant to
Section 4.2 below. Adjustments to the Applicable Base Rate
Margin resulting from changes in the ratio of the Parent's
Consolidated Total Indebtedness to the Parent's Consolidated
EBITDDA shall be made without notice to the Borrower. Such
adjustments will be effective on the date on which the
Parent's financial statements and Compliance Certificate are
due to be delivered to the Lenders pursuant to Section 4.2;
provided, however, that if the Borrower has failed to deliver,
or caused to be delivered, such financial statements and
Compliance Certificate on or before the date such delivery is
due, then the ratio of the Parent's Consolidated Total
Indebtedness to the Parent's Consolidated EBITDDA shall be
deemed, solely for the purposes of this definition, to be
greater than 2.75 to 1.00 until such time as they are actually
delivered.
(f) The following new defined term is hereby added to
Section 1.1 of the Credit Agreement as follows:
"Consolidated Fixed Charges" means, for the relevant
period, the sum of Consolidated Interest Expense and
Consolidated Lease Expense for such period.
(g) The following new defined term is hereby added to
Section 1.1 of the Credit Agreement as follows:
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"Consolidated Lease Expense" means, for the relevant
period, on a Consolidated basis, the operating lease
expense of the Parent and its Consolidated
Subsidiaries for such period.
(h) Section 2.2(b)(i) of the Credit Agreement is hereby
amended and restated as follows:
(i) Base Rate Option: A rate of interest per annum
(computed upon the basis of a year of 365 or 366
days, as the case may be, and the actual number of
days elapsed) equal to the sum of (A) the Base Rate,
plus (B) the Applicable Base Rate Margin from time to
time in effect. The rate of interest per annum under
the Base Rate Option shall be adjusted automatically,
from time to time, upon each change in the Base Rate
and each change in the Applicable Base Rate Margin
resulting from an increase or decrease in the
Parent's ratio of Consolidated Total Indebtedness to
Consolidated EBITDDA.
(i) Section 5.3(a) of the Credit Agreement is hereby
amended and restated as follows:
5.3a LEVERAGE RATIO. At no time shall the ratio of
the Parent's Consolidated Total Indebtedness to its
Consolidated EBITDDA for the four (4) most recently
completed Fiscal Quarters, taken as a single
accounting period, exceed 3.50 to 1.00.
(j) Section 5.3(b) of the Credit Agreement is hereby
amended, restated and retitled as follows:
5.3b FIXED CHARGE COVERAGE RATIO. At no time shall
the ratio of the Parent's Consolidated EBITDDA for
the four (4) most recently completed Fiscal Quarters,
taken as a single accounting period, to its
Consolidated Fixed Charges for the four (4) most
recently completed Fiscal Quarters, taken as a single
accounting period, be less than 4.00 to 1.00.
(k) Clause (vi) of Section 5.5 of the Credit Agreement is
hereby amended and restated as follows:
(vi) other unsecured Indebtedness owed by the
Borrower and its Subsidiaries pursuant to a sale of
notes in a public offering or a private placement in
an aggregate principal amount not to exceed
$175,000,000 at any one time outstanding (the "Other
Senior Notes"), provided (a) the terms and provisions
of such Indebtedness are no more restrictive than the
terms and provisions of this Agreement as determined
by the Agent in its sole discretion and such terms
and provisions are otherwise satisfactory to the
Agent in its sole discretion, (b) the final maturity
date of such Indebtedness is after the Termination
Date and (c) after giving effect to the
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issuance of such Indebtedness, the Borrower shall be
in pro forma compliance with the covenants set forth
in Section 5.3 as demonstrated by the delivery of
evidence of such pro forma compliance in form and
substance satisfactory to the Administrative Agent
not less than three (3) Business Days prior to the
closing of such Indebtedness.
(l) A new clause (iv) is hereby added to Section 5.12 of
the Credit Agreement as follows:
(iv) negative pledges imposed in connection with the
issuance of the Other Senior Notes incurred pursuant
to clause (vi) of Section 5.5 of the Credit
Agreement.
(m) Section 5.16 of the Credit Agreement is hereby
amended and restated as follows:
5.16 TRANSACTIONS WITH AFFILIATES. Neither the
Borrower nor any Loan Party shall enter into or carry
out any transaction with an Affiliate (including
purchasing property or services from or selling
property or services to any Affiliate of Borrower or
other Person) unless such transaction is not
otherwise prohibited by this Agreement and is on fair
and reasonable terms and conditions no less favorable
to the Borrower or such Loan Party than would be
obtained in a comparable arms-length transaction.
(n) A new Section 5.17 of the Credit Agreement is added
as follows:
5.17 CHANGES IN OTHER SENIOR NOTES DOCUMENTS;
LIMITATIONS ON PREPAYMENTS OF OTHER SENIOR
NOTES. Each of the Loan Parties shall not,
and shall not permit any of its Subsidiaries
to, amend, modify, supplement or restate any
of the documents relating to the issuance of
the Other Senior Notes, including without
limitation the amortization schedule
relating to the Other Senior Notes attached
hereto as Exhibit A, or to waive compliance
by any Person party thereto with any
material provision thereof without providing
at least fifteen (15) calendar days' prior
written notice to the Administrative Agent
and, in the event such change could be
adverse to the Lenders as reasonably
determined by the Administrative Agent,
obtaining the prior written consent of the
Required Lenders. Each of the Loan Parties
shall not, and shall not permit any of its
Subsidiaries to, make any optional payments,
prepayments, purchases, repurchases,
redemptions, retirements or defeasements
under or in respect of the Other Senior
Notes.
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(o) A new Schedule 1.1(A) to the Credit Agreement is
hereby incorporated into the Credit Agreement in its
entirety in the form attached hereto as Schedule
1.1(A).
3. Conditions Precedent. The Borrower and the Lenders acknowledge
that this Second Amendment shall not be effective until each of the following
conditions precedent has been satisfied as determined by the Administrative
Agent in its sole discretion (such date is referred to herein as the "Effective
Date"):
(a) The Borrower, the Required Lenders, and the Administrative
Agent shall have executed this Second Amendment;
(b) Each of the Guarantors shall have executed and delivered the
Joinder attached hereto;
(c) The Other Senior Notes to be issued by the Borrower under
clause (vi) of Section 5.5 of the Credit Agreement shall have been issued on
terms and conditions and pursuant to documentation satisfactory to the
Administrative Agent in all respects, including but not limited to (i) a
Consolidated Indebtedness to Consolidated EBITDDA ratio incurrence test of not
less than 4.0 to 1.0, (ii) a Fixed Charge Coverage Ratio no more restrictive
than 3.5 to 1.0, (iii) scheduled principal repayments shall be in accordance
with the amortization schedule attached hereto as Exhibit A (iv) issuance of the
Other Senior Notes in a principal amount equal to at least $125,000,000 shall
have occurred on or before July 15, 2003 (the "First Issuance Date"), and (v) a
portion of the net proceeds of the First Issuance shall be used to reduce the
principal outstanding under the Credit Agreement to zero;
(d) The Borrower shall have delivered to the Administrative Agent
a closing certificate certifying to the accuracy of representations and
warranties, compliance with covenants and conditions and absence of any
Potential Default or Event of Default under the Credit Agreement;
(e) No Material Adverse Change shall have occurred with respect to
the Borrower or any of the Guarantors;
(f) No material litigation shall have occurred or be existing with
respect to the Borrower or any of the Guarantors;
(g) The Administrative Agent shall have reviewed to its
satisfaction all requested due diligence materials, including without
limitation, title files, record searches, liens and material leases entered into
subsequent to the First Amendment to the Credit Agreement;
(h) The Borrower shall have paid to the Administrative Agent, for
the benefit of the Administrative Agent and each of the Lenders executing this
Second Amendment, an amendment fee in the amount of 37.5 basis points of such
Lender's Commitment;
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(i) The Borrower shall have paid to the Administrative Agent and
its counsel all reasonable fees and expenses for which the Administrative Agent
and such counsel are entitled to be reimbursed;
(j) All legal details and proceedings in connection with the
transactions contemplated by this Second Amendment and all other Loan Documents
to be delivered to the Lenders shall be in form and substance reasonably
satisfactory to the Administrative Agent and to Buchanan Ingersoll Professional
Corporation.
4. Incorporation into Credit Agreement. This Second Amendment
shall be incorporated into the Credit Agreement by this reference.
5. Full Force and Effect. Except as expressly modified by this
Second Amendment, all of the terms, conditions, representations, warranties and
covenants of the Credit Agreement and the other Loan Documents are true and
correct and shall continue in full force and effect without modification,
including without limitation, all liens and security interests securing the
Borrower's indebtedness to the Lenders and all Guaranty Agreements executed and
delivered by the Guarantors.
6. Reimbursement of Expenses. The Borrower unconditionally agrees
to pay and reimburse the Administrative Agent and save the Administrative Agent
harmless against liability for the payment of reasonable out-of-pocket costs,
expenses and disbursements, including without limitation, fees and expenses of
counsel incurred by the Administrative Agent in connection with the development,
preparation, execution, administration, interpretation or performance of this
Second Amendment and all other documents or instruments to be delivered in
connection herewith.
7. Counterparts. This Second Amendment may be executed by
different parties hereto in any number of separate counterparts, each of which,
when so executed and delivered shall be an original and all such counterparts
shall together constitute one and the same instrument.
8. Entire Agreement. This Second Amendment sets forth the entire
agreement and understanding of the parties with respect to the transactions
contemplated hereby and supersedes all prior understandings and agreements,
whether written or oral, between the parties hereto relating to the subject
matter hereof. No representation, promise, inducement or statement of intention
has been made by any party which is not embodied in this Second Amendment, and
no party shall be bound by or liable for any alleged representation, promise,
inducement or statement of intention not set forth herein.
9. Governing Law. This Second Amendment shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and for all purposes
shall be governed by and construed and enforced in accordance with the internal
laws of the Commonwealth of Pennsylvania without regard to its conflict of laws
principles.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, have executed this Second Amendment as of the day and year first
above written with the intention that it constitutes a sealed instrument.
ATTEST: NRP (OPERATING) LLC, a Delaware limited
liability company
/s/ Wyatt Hogan By: /s/ Dwight L. Dunlap
- ------------------------------ --------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer
[SEAL]
WITNESS: PNC BANK, NATIONAL ASSOCIATION,
individually and as Administrative Agent
/s/ Louis K. McLenden By: /s/ Norm Harkleroad
- ------------------------------ --------------------------------------
Name: Norm Harkleroad
Title: AVP
WITNESS: BRANCH BANKING AND TRUST COMPANY,
individually and as Syndication Agent
/s/ Andrea Williamson By: /s/ Stephen J. Wood
- ------------------------------ --------------------------------------
Name: Stephen J. Wood
Title: Vice President
WITNESS: BANK OF MONTREAL, individually and as
Documentation Agent
/s/ Gloria Smith By: /s/ John MacLean Cook
- ------------------------------ --------------------------------------
Name: John MacLean Cook
Title: Director
WITNESS: BNP PARIBAS, individually and as
Documentation Agent
/s/ Nina J. Milligan By: /s/ Evans R. Swann
- ------------------------------ --------------------------------------
Name: Evans R. Swann
Title: Director
/s/ Nina J. Milligan By: /s/ Greg Smothers
- ------------------------------ --------------------------------------
Name: Greg Smothers
Title: Vice President
WITNESS: THE HUNTINGTON NATIONAL BANK
/s/ Mary Ann Frederick By: /s/ Mark A. Scurci
- ------------------------------ --------------------------------------
Name: Mark A. Scurci
Title: Vice President
WITNESS: CITIBANK N.A.
/s/ Raymond G. Dunning By: /s/ Daniel J. Miller
- ------------------------------ --------------------------------------
Name: Daniel J. Miller
Title: Vice President
WITNESS: WACHOVIA BANK, NATIONAL ASSOCIATION
/s/ Tamara L. Crawford By: /s/ Laurence M. Levy
- ------------------------------ --------------------------------------
Name: Laurence M. Levy
Title: Senior Vice President
WITNESS: SOUTHWEST BANK OF TEXAS
/s/ Tracy Butz By: /s/ W. Bryan Chapman
- ------------------------------ --------------------------------------
Name: W. Bryan Chapman
Title: Vice President, Energy Lending
JOINDER
Each of the undersigned has executed this agreement, intending to be
legally bound hereby, for the purposes of (i) agreeing to comply with the terms
and conditions of the Credit Agreement, as amended by Amendment No. 2 to Credit
Agreement, applicable to each of the undersigned, (ii) consenting to the matters
in the Amendment No. 2 to Credit Agreement, and (iii) confirming that each Loan
Document executed by the undersigned shall continue in full force and effect
subsequent to the execution and delivery of Amendment No. 2 to Credit Agreement.
GUARANTORS:
NATURAL RESOURCE PARTNERS L.P., a
Delaware limited Partnership
By: NRP (GP) LP, a Delaware limited partnership,
its general partner
By: GP Natural Resource Partners LLC, a
Delaware limited liability company, its
general partner
By:/s/ Dwight L. Dunlap
-------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer
WPP LLC, a Delaware limited liability company
By: NRP (Operating) LLC, a Delaware limited
liability company, its sole managing member
By: /s/ Dwight L. Dunlap
----------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer
NNG LLC, a Delaware limited liability company
By: NRP (Operating) LLC, a Delaware limited
liability company, its sole managing member
By: /s/ Dwight L. Dunlap
----------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer
GNP LLC, a Delaware limited liability company
By: NRP (Operating) LLC, a Delaware limited
liability company, its sole member
By: /s/ Dwight L. Dunlap
----------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer
WBRD LLC, a Delaware limited liability company
By: NRP (Operating) LLC, a Delaware limited
liability company, its sole managing member
By: /s/ Dwight L. Dunlap
----------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer
CSTL LLC, a Delaware limited liability company
By: NRP (Operating) LLC, a Delaware limited
liability company, its sole managing member
By: /s/ Dwight L. Dunlap
----------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer
ACIN LLC, a Delaware limited liability company
By: NRP (Operating) LLC, a Delaware limited
liability company, its sole managing member
By: /s/ Dwight L. Dunlap
----------------------------------------
Name: Dwight L. Dunlap
Title: Chief Financial Officer