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EXHIBIT 10.1.3
HERITAGE OPERATING, L.P.
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement, dated as of September 30, 1997,
is among Heritage Operating, L.P., a Delaware limited partnership (the
"Company"), the Banks party hereto, BankBoston, N.A. (formerly known as The
First National Bank of Boston), as administrative agent (the "Administrative
Agent") for itself and the other Banks, and Bank of Oklahoma, National
Association, as documentation agent (the "Documentation Agent") for itself and
the other Banks. The parties agree as follows:
1. Reference to Credit Agreement; Background.
1.1. Reference to Credit Agreement; Definitions. Reference is made to the
Credit agreement dated as of June 25, 1996, as amended by the First Amendment
to Credit Agreement dated as of July 25, 1996 and the Second Amendment to
Credit Agreement dated as of February 28, 1997 (as so amended, the "Credit
Agreement"), among the Company, the Banks from time to time party thereto, the
Administrative Agent and the Documentation Agent. The Credit Agreement, as
amended by the amendments set forth in Section 2 hereof (the "Amendment"), is
referred to as the "Amended Credit Agreement." Terms defined in the Amended
Credit Agreement and not otherwise defined herein are used herein with the
meanings so defined.
1.2. Background. The Company and the Banks desire that Mercantile Bank
National Association ("Mercantile") become a Bank party to the Credit Agreement
with a Commitment of $10,000,000 and that the Maximum Amount of Acquisition
Credit be increased from a total of $25,000,000 to a total of $35,000,000. In
addition, the Company has requested that the Banks consent to a number of
amendments of the Credit Agreement, as set forth in Section 2 hereof.
2. Amendments to Credit Agreement. Subject to all of the terms and conditions
hereof and in reliance upon the representations and warranties set forth or
incorporated by reference in Section 3 hereof, the Credit Agreement is amended
as follows, effective as of September 30, 1997 (the "Amendment Closing Date".
2.1. Section 1.1 of the Credit Agreement is amended by amending the
definition of "Applicable Commitment Fee Percentage" to read in its entirety as
follows:
"Applicable Commitment Fee Percentage" means, with respect to any
Margin Period, (i) if the Leverage Ratio on the last day preceding the
commencement of such Margin Period was equal to or greater than 4 to 1,
.50% or (ii) if the Leverage Ratio on the last day preceding the
commencement of such Margin Period was less than 4 to 1, .375%.
Notwithstanding the foregoing, if any of the financial statements required
pursuant to Section 7A.1(i) are not delivered within the time periods
specified in Section
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7A.1(i), the Applicable Commitment Fee Percentage shall be .50% until the
date such statements are delivered.
2.2. Section 1.1 of the Credit Agreement is further amended by amending
the definition of "Applicable Margin" to read in its entirety as follows:
"Applicable Margin". With respect to any Eurodollar Loan or with
respect to any Base Rate Loan for any Margin Period, the rate of interest
per annum determined as set forth below:
(a) if the Leverage Ratio on the last day preceding the
commencement of such Margin Period was less than 3.75 to 1, the
Applicable Margin will be 1.00% for Eurodollar Loans and zero for
Base Rate Loans;
(b) if the Leverage Ratio on the last day preceding the
commencement of such Margin Period was equal to or greater than 3.75
to 1 but less than 4.00 to 1, the Applicable Margin will be 1.25% for
Eurodollar Loans and zero for Base Rate Loans;
(c) if the Leverage Ratio on the last day preceding the
commencement of such Margin Period was equal to or greater than 4.00
to 1 but less than 4.50 to 1, the Applicable Margin will be 1.375%
for Eurodollar Loans and zero for Base Rate Loans;
(d) if the Leverage Ratio on the last day preceding the
commencement of such Margin Period was equal to or greater than 4.50
to 1 but less than 4.75 to 1, the Applicable Margin will be 1.625%
for Eurodollar Loans and .125% for Base Rate Loans; and
(e) if the Leverage Ratio on the last day preceding the
commencement of such Margin Period was equal to or greater than 4.75
to 1, the Applicable Margin will be 1.875% for Eurodollar Loans and
.25% for Base Rate Loans.
Notwithstanding the foregoing, if any of the financial statements
required pursuant to Section 7A.1(i) are not delivered with the time
periods specified in Section 7A.1(i), the Applicable Margin shall be the
Applicable Margin set forth in clause (e) above until the date such
statements are delivered.
2.3. Section 1.1 of the Credit Agreement is further amended by amending
the definition of "Final Maturity Date" to read in its entirety as follows:
"Final Maturity Date" means (i) with respect to the Working Capital
Loan, June 30, 2000, and (ii) with respect to the Acquisition Loan, June
30, 2002.
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2.4 Section 1.1 of the Credit Agreement is further amended by adding
thereto, in appropriate alphabetical order, a definition of the term "HHI
Acquisition Note" reading in its entirety as follows:
"HHI Acquisition Notes" shall mean those certain promissory notes
from Heritage payable to the order of the Banks as more particularly
described and defined in the Letter Agreement among Heritage, the Banks
and the Agents dated as of September 30, 1997, and any credit agreement
among Heritage, the Banks and the Agents as contemplated by paragraph (ii)
of such Letter Agreement.
2.5. Section 1.1 of the Credit Agreement is further amended to amend the
definition of "Loan Documents" to read in its entirety as follows:
"Loan Documents" means this Agreement, the Intercreditor Agreement,
the Administrative Agent Fee Letter, the Documentation Agent Fee Letter,
the Security Documents and the HHI Acquisition Notes and each agreement of
Heritage governing or securing the HHI Acquisition Notes.
2.6 Section 1.1 of the Credit Agreement is further amended by amending the
definition of "Margin Period" to read in its entirety as follows:
"Margin Period" means each period commencing on (and including) the
first day of any fiscal quarter of the Borrower and ending on (and
including) the earlier of (i) the last day of such fiscal quarter of the
Borrower or (ii) in the case of the Acquisition Facility, the Acquisition
Conversion Date or, in the case of the Working Capital Facility, the Final
Maturity Date with respect to the Working Capital Loans.
2.7 Section 1.1 of the Credit Agreement is further amended by adding
thereto, in appropriate alphabetical order, a definition of the term
"Mercantile" reading in its entirety as follows:
"Mercantile" means Mercantile Bank National Association.
2.8 Section 2.1.1 of the Credit Agreement is amended by deleting the date
"December 31, 1998" and replacing it with the date "December 31, 1999".
2.9. Section 2.1.2 of the Credit Agreement is amended to read in its
entirety as follows:
2.1.2 Maximum Amount of Acquisition Credit. The term "Maximum Amount
of Acquisition Credit" means, on any date on or prior to the Acquisition
Conversion Date, the remainder of (x) the lesser of (a) $35,000,000 or (b)
the aggregate Acquisition Loan Commitments described in Section 10.1, as
amended from time to time, minus (y) the aggregate outstanding principal
amount of the HHI Acquisition Notes from time to time,
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or such lesser amount as the Borrower may specify from time to time by
notice from the Borrower to the Administrative Agent and, after the
Acquisition Conversion Date, zero.
2.10. Section 2.1.3 of the Credit Agreement is amended by amending the
first sentence thereof to read in its entirety as follows:
The Borrower may from time to time request a loan under Section 2.1.1 by
providing to the Administrative Agent either a notice in writing (with a
copy to each Bank) or telephone notice promptly confirmed in writing (with
a copy to each Bank).
2.11. Section 2.1.3 of the Credit Agreement is further amended by amending
subclause (iii) thereof to read in its entirety as follows:
"(iii) a full and complete copy of Borrower's internal acquisition or
capital expenditure model (in general form, content and detail as utilized
by the General Partner or its Affiliates for similar acquisitions or
capital expenditures prior to the Initial Closing Date), and, in the case
of borrowings hereunder relating to acquisitions or capital expenditures
costing in excess of $1,000,000 and in each other case in which the
Required Banks shall so request, calculations demonstrating Borrower's
continued compliance with the financial ratios of Section 7B.1(i) and (ii)
hereof as of and following the closing of such proposed acquisition or
capital expenditure (utilizing, for the purpose of such demonstration, and
subject to the calculation of Consolidated EBITDA resulting from such
proposed Asset Acquisition, including adjustments permitted thereby, the
financial statements of the Borrower and of the acquired business or asset
for the most recent period of twelve consecutive months (as opposed to the
immediately preceding four full fiscal quarters) for which such statements
are available), and ".
2.12. Section 2.2.3 of the Credit Agreement is amended by amending the
first sentence thereof to read in its entirety as follows:
The Borrower may from time to time request a loan under Section 2.2.1 by
providing to the Administrative Agent either a notice in writing (with a
copy to each Bank) or telephonic notice promptly confirmed in writing
(with a copy to each Bank).
2.13. Section 2.4.1 of the Credit Agreement is amended to read in its
entirety as follows:
2.4.1. Acquisition Loan. The Borrower will apply the proceeds of the
Acquisition Loan solely to finance acquisitions permitted pursuant to
Section 2.1 and to finance capital expenditures for additions or
improvements to the assets of the Borrower (as distinguished from
maintenance capital expenditures).
2.14. Section 2.4.2 of the Credit Agreement is amended to read in its
entirety as follows:
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2.4.2. Working Capital Loan. The Borrower will apply the proceeds of
the Working Capital Loan for working capital and other lawful purposes of
the Borrower and its Subsidiaries; provided, however, that at no time
shall more than $500,000 of the outstanding principal amount of the
Working Capital Loan have been applied to the purposes of financing
acquisitions permitted pursuant to Section 2.1 and/or capital expenditures
for additions or improvements to the assets of the Borrower (as
distinguished from maintenance capital expenditures).
2.15. Section 3.2.3 of the Credit Agreement is amended by amending
subclause (ii) thereof to read in its entirety as follows:
(ii) no more than a total of six Eurodollar Pricing Options shall be
outstanding at any one time with respect to the Loans;
2.16. Section 3.3 of the Credit Agreement is amended to read in its
entirety as follows:
3.3 Commitment Fees.
3.3.1 Acquisition Financing Facility. In consideration of the
Banks' Commitments to make the extensions of credit provided for in
Section 2.1, while such commitments are outstanding, the Borrower
will pay to the Administrative Agent for the account of the Banks in
accordance with the Banks' respective Percentage Interests, within
five (5) Banking Days following the end of each fiscal quarter of the
Borrower prior to the Acquisition Conversion Date and on the
Acquisition Conversion Date, an amount equal to interest computed at
the rate per annum equal to the Applicable Commitment Fee Percentage
multiplied by the amount by which (a) the average daily Maximum
Amount of Acquisition Credit during the Margin Period or portion
thereof ending on the last day of such fiscal quarter or the
Acquisition Conversion Date exceeded (b) the average daily
Acquisition Loan during such Margin Period or portion thereof.
3.3.2 Working Capital Facility. In consideration of the Banks'
commitments to make the extensions of credit provided for in Section
2.2 while such commitments are outstanding, the Borrower will pay to
the Administrative Agent for the account of the Banks in accordance
with the Banks' respective Percentage Interests, within five (5)
Banking Days following the end of each fiscal quarter of the Borrower
and on the Final Maturity Date with respect to the Working Capital
Loan, an amount equal to interest computed at the rate per annum
equal to the Applicable Commitment Fee Percentage multiplied by the
amount by which (a) the average daily Maximum Amount of Working
Capital Credit during the Margin Period or portion thereof ending on
the last day of such fiscal quarter or such Final Maturity Date
exceeded (b) the average daily Working Capital Loan during such
Margin Period or portion thereof.
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2.17. Section 10.1 of the Credit Agreement is amended to read in its
entirety as follows:
10.1 Interests in Loans/Commitments. The percentage interest of each
Bank in the Loans and Letters of Credit, and the Commitments, shall be
computed based on the maximum principal amount for each Bank as follows:
Maximum Maximum
Acquisition Working Maximum
Loan Capital Loan Commitment Percentage
Bank Commitments Commitments Amounts Interests
- - ---- ----------- ----------- ------- ---------
BOk $14,000,000 $ 6,000,000 $20,000,000 40%
Bank of Boston 14,000,000 6,000,000 20,000,000 40%
Mercantile 7,000,000 3,000,000 10,000,000 20%
----------- ----------- ----------- ----
TOTAL $35,000,000 $15,000,000 $50,000,000 100%
The foregoing percentage interests, as from time to time in effect
and reflected in the Register, are referred to as the "Percentage
Interests" with respect to all or any portion of the Loans and
Letters of Credit, and the Commitments.
3. Representations and Warranties. In order to induce the Banks to enter into
this Amendment, the Company represents and warrants to each of the Banks that:
3.1. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Amendment or any other Loan Document, nor the making of any borrowing
under the Amended Credit Agreement, nor the guaranteeing of the Credit
Obligations, nor the securing of the Credit Obligations with the Collateral,
nor the consummation of any transaction referred to in or contemplated by this
Amendment, the Amended Credit Agreement or any other Loan Document, nor the
fulfillment of the terms hereof or thereof or of any other agreement,
instrument, deed or lease contemplated by this Amendment, the Amended Credit
Agreement or any other Loan Document, has constituted or resulted in or will
constitute or result in:
(a) any breach or termination of the provisions of any agreements,
instrument, deed or lease to which the Company is a party or by which it
is bound, or of the Partnership Agreement of the Company;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company;
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(c) The creation under any agreement, instrument, deed or lease of
any Lien (other than Liens on the Collateral which secure the Credit
Obligations and Liens permitted by Section 7B.3 of the Amended Credit
Agreement) upon any of the assets of the Company; or
(d) any redemption, retirement or other repurchase obligation of the
Company under the Partnership Agreement or other agreement, instrument,
deed or lease.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by the Company in connection with the execution
and delivery of this Amendment, the performance of this Amendment, the Amended
Credit Agreement or any other Credit Document, the transactions contemplated
hereby or thereby, the making of any borrowing under the Amended Credit
Agreement, the guaranteeing of the Credit Obligations or the securing of the
Credit Obligations with the Collateral.
3.2. Defaults. Immediately after giving effect to this Amendment, no
default shall exist.
3.3. Incorporation of Representations and Warranties of Company.
Immediately after giving effect to this Amendment, the representations and
warranties set forth in Article VIII of the Amended Credit Agreement will be
true and correct as if originally made on and as of the Amendment Closing Date
(except to the extent of any representation or warranty which refers to a
specific earlier date).
4. Conditions. The effectiveness of each of the amendments set forth in
Section 2 hereof shall be subject to the satisfaction of the following
conditions:
4.1. Officer's Certificate. The representations and warranties contained
in Section 3 hereof shall be true and correct on and as of the Amendment
Closing Date with the same force and effect as though originally made on and as
of the Amendment Closing Date; immediately after giving effect to such
amendments, no Default shall exist; no Material Adverse Change shall have
occurred since August 31, 1996; and the Company shall have furnished to the
Administrative Agent on behalf of the Banks on or before the Amendment Closing
Date a certificate to these effects signed by a Financial Officer of the
Company.
4.2. Replacement Notes. The Company shall have executed and delivered to
the Administrative Agent for delivery to each of the Banks replacement
Acquisition Notes and Working Capital Notes in the amount of each Bank's
Percentage Interest in the Maximum Amount of Acquisition Credit and the Maximum
Amount of Working Capital Credit, respectively.
4.3. Legal Opinion. The Administrative Agent shall have received from the
Company's counsel, Doerner, Sanders, Daniel & Anderson, their favorable written
opinion addressed to the Agents and the Banks with respect to this Amendment
and the Amended Credit Agreement, satisfactory in form and substance to the
Agents and their counsel.
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4.4. Fees. The Company shall have paid to each of the Administrative Agent
and Mercantile Bank the fees relating to this Amendment set forth in separate
side letters from the Company to the Administrative Agent and Mercantile Bank,
respectively, dated the date hereof.
4.5. Proper Proceedings. All proper proceedings shall have been taken by
the Company to authorize this Amendment, the Amended Credit Agreement and the
transactions contemplated hereby and thereby. On or before the Amendment
Closing Date, the Agents shall have received copies of all documents, including
legal opinions of counsel and records of corporate proceedings which the Agents
may have requested in connection therewith, such documents, where appropriate,
to be certified by proper corporate or governmental authorities.
4.6. Execution and Delivery. Each of the Company and the Banks shall have
executed and delivered this Amendment.
5. Assignment and Acceptance.
5.1. Assignment of Acquisition Loan. Each of BOk and Bank of Boston (each
sometimes hereinafter referred to as an "Assignor") hereby sells and assigns to
Mercantile (sometimes hereinafter referred to as the "Assignee"), and the
Assignee hereby purchases from each Assignor, a twenty percent (20%) interest
in and to all of each Assignor's percentage interest in the Acquisition Loan
outstanding on September 30, 1997 (the "Acquisition Date"), together with such
percentage interest in all unpaid interest with respect to the Acquisition Loan
accruing on and after the Acquisition Date.
5.2. Assignment of Working Capital Loan. Each Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from
each Assignor, a twenty percent (20%) interest in and to all of each Assignor's
interests, rights and obligations under the Working Capital Facility
established under Section 2.2 of the Credit Agreement effective as of the
Assignment Date, including without limitation such percentage interest in the
Working Capital Loan outstanding on the Assignment Date and a participation in
such percentage interest in the Letters of Credit outstanding on the Assignment
Date, together with such percentage interest in all unpaid interest with
respect to the Working Capital Loan accruing on and after the Acquisition Date
and all fees with respect thereto arising under Sections 3.3.2 and 3.4 of the
Credit Agreement accruing on and after the Assignment Date.
5.3 Payment for Loans. On the Acquisition Date the Assignee shall pay to
each Assignor in immediately available funds an amount equal to the sum of the
portions of the Acquisition Loan and the Working Capital Loan assigned
hereunder to the Assignee by such Assignor.
5.4. Assignor's Representations and Warranties. Each Assignor:
(a) represents that as of the date hereof, the outstanding principal
balance of its portion of the Acquisition Loan is $__________;
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(b) represents that as of the date hereof, its Commitment allocable
to the Working Capital Facility is $7,500,000, the outstanding principal
balance of its portion of the Working Capital Loan is $________, and the
outstanding balance of its participation in the Letters of Credit is
$_________;
(c) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or
in connections with the Amended Credit Agreement or the other Loan
Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or the other
Loan Documents or any other instrument or document furnished pursuant
thereto, other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim; and
(d) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Company or the performance
of any of the obligations of the Company under the Credit Agreement, any
of the Loan Documents or any other instrument or document furnished
pursuant hereto or thereto.
5.5. Assignee's Representations, Warranties and Agreements. The Assignee:
(a) represents and warrants that it is legally authorized to enter
into this Amendment and the Amended Credit Agreement;
(b) confirms that it has received a copy of the Credit Agreement, the
prior amendments thereto and certain other Loan Documents it has
requested, together with copies of the most recent financial statements
delivered pursuant to Section 7A.1 of the Credit Agreement and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter this Amendment and the Amended
Credit Agreement;
(c) agrees that it will, independently and without reliance upon the
Agents, the Assignors or any other Person which has become a Bank, and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under the Amended Credit Agreement and the other Loan
Documents;
(d) agrees that it will be bound by the provisions of the Amended
Credit Agreement and the other Loan Documents and will perform in
accordance with their terms all the obligations which are required to be
performed by it as a Bank; and
(e) agrees to appoint and authorize the Agents to take such action as
agent on its behalf and to exercise such powers under the Amended Credit
Agreement as are delegated to the Agents by the terms thereof, together
with such powers as are reasonably incidental thereto.
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5.6 Assignee Party to Credit Agreement; Assignor Release of Obligations.
From and after the Assignment Date, (a) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Amendment, have the rights
and obligations of a Bank thereunder and under the Loan Documents and (b) each
Assignor shall, to the extent provided in this Section 5, relinquish its rights
and be released from its obligations under the Credit Agreement and the other
Loan Documents.
5.7. Notice Address. For the purpose of Section 12.1 of the Credit
Agreement the initial notice address of Mercantile shall be as follows:
Mercantile Bank National Association
721 Locust Street
Tram 12-3
St. Louis, Missouri 63101
Attn: John Holland
Fax: (314) 418-8430
6. Intercreditor Agreement. The Company confirms that it has reviewed and
approved the terms of the Intercreditor Agreement, including without limitation
the setoff sharing provisions set forth in Section 13(c) thereof. The Company
agrees that any setoffs shared under the terms of the Intercreditor Agreement
with the Purchasers of the Private Placement Notes, to the extent of the
portions so shared, will not be deemed to pay down the Loan.
7. Further Assurances. The Company will, promptly upon the request of the Agent
from time to time, execute, acknowledge and deliver, and file and record, all
such instruments and notices, and take all such action, as the Agents deem
necessary or advisable to carry out the intent and purposes of this Amendment
and the Amended Credit Agreement.
8. General. The Amended Credit Agreement and all of the other Loan Documents
are each confirmed as being in full force and effect. This Amendment, the
Amended Credit Agreement and the other Loan Documents referred to herein or
therein constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral, with respect to such
subject matter. The invalidity or unenforceability of any provision hereof
shall not affect the validity and enforceability of any other term or provision
hereof. The headings in this Amendment are for convenience of reference only
and shall not alter, limit or otherwise affect the meaning hereof. Each of this
Amendment and the Amended Credit Agreement is a Loan Document and may be
executed in any number of counterparts, which together shall constitute one
instrument, and shall bind and inure to the benefit of the parties and their
respective successors and assigns, including as such successors and assigns all
holders of any Note. This Amendment shall be governed by and construed in
accordance with the laws (other than the conflict of law rules) of the State of
Oklahoma.
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Each of the undersigned has caused this Amendment to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
HERITAGE OPERATING, L.P., a
Delaware limited partnership
By: Heritage Holdings, Inc., a Delaware
corporation, general partner
By /s/ H. Michael Krimbill
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H. Michael Krimbill, Vice President
and Chief Financial Officer
BANKBOSTON, N.A., individually and as
Administrative Agent for the Lenders
By /s/ H. Louis Bailey
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Authorized Officer
BANK OF OKLAHOMA, NATIONAL
ASSOCIATION, individually and as
Documentation Agent
By /s/ Denise L. Maltby
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Authorized Officer
MERCANTILE BANK NATIONAL
ASSOCIATION
By /s/ John Holland
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John Holland, Vice President
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