EXHIBIT 10.1
AMENDMENT NO. 4
TO CREDIT AGREEMENT
THIS AMENDMENT NO. 4 TO CREDIT AGREEMENT, dated as of March 31, 2004 (the
"Agreement") relating to the Credit Agreement referenced below, is by and among
WOLVERINE TUBE, INC., a Delaware corporation (the "Company"), its U.S. and
Canadian Subsidiaries identified as Subsidiary Borrowers on the signature pages
hereto and any additional U.S. or Canadian Subsidiaries of the Company which
become parties to the Credit Agreement in accordance with the terms thereof
(collectively referred to as the "Subsidiary Borrowers" and individually
referred to as a "Subsidiary Borrower") (hereinafter, the Company and the
Subsidiary Borrowers are collectively referred to as the "Borrowers" or referred
to individually as a "Borrower"), each of the financial institutions identified
as Lenders on the signature pages hereto (the "Lenders" and each individually, a
"Lender"), WACHOVIA BANK, NATIONAL ASSOCIATION, ("Wachovia"), acting in the
manner and to the extent described in Article XIII of the Credit Agreement (in
such capacity, the "Administrative Agent") and CONGRESS FINANCIAL CORPORATION
(CANADA) acting in the manner and to the extent described in Article XIII of the
Credit Agreement (in such capacity, the "Canadian Agent"). Terms used but not
otherwise defined herein shall have the meanings provided in the Credit
Agreement and the provisions of Sections 1.2, 1.3 and 1.4 of the Credit
Agreement related to the definitions shall apply herein.
WITNESSETH
WHEREAS, a $37,500,000 credit facility has been extended to the Borrowers
pursuant to the terms of that certain Credit Agreement dated as of March 27,
2002 (as amended, modified or otherwise supplemented from time to time, the
"Credit Agreement") among the Borrowers, the Lenders, the Administrative Agent
and the Canadian Agent;
WHEREAS, the Borrowers have requested that the term of the facility be
extended, certain covenants be adjusted and certain other amendments be made as
contemplated herein and the Lenders agree to amend the term, such covenants and
certain other provisions pursuant to the terms and conditions herein;
WHEREAS, the Borrowers have requested an increase in the maximum amount of
LOC Obligations permitted under the Credit Agreement; and
WHEREAS, the undersigned Lenders have agreed to amend the Credit Agreement
as set forth herein;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
(A) AMENDMENTS.
1. Section 1.1 of the Credit Agreement is hereby amended by
adding the following new definitions in the appropriate alphabetical order:
"Copper Hedge" means the Trading Agreements between PB Financial,
Inc. and Wolverine Tube, Inc., Wolverine Tube (Canada) Inc. and Wolverine
Joining Technologies, LLC related to hedging copper and any other copper hedging
contract permitted hereunder entered into by any Credit Party.
"Equity Issuance" means any issuance by any Borrower or any
Subsidiary to any Person which is not a Credit Party of (a) shares of its
Capital Stock, (b) any shares of its Capital Stock pursuant to the exercise of
options or warrants or (c) any shares of its Capital Stock pursuant to the
conversion of any debt securities to equity. The term "Equity Issuance" shall
not include any Asset Disposition or any issuance of Indebtedness.
"Interest Determination Date" means such term as defined in the
definition of Applicable Percentage.
2. The definitions of Canadian Maturity Date and U.S. Maturity
Date in Section 1.1 of the Credit Agreement are hereby deleted and replaced,
respectively, with the following:
"Canadian Maturity Date" means March 29, 2005.
"U.S. Maturity Date" means March 31, 2007.
3. The definition of Applicable Percentage in Section 1.1 of the
Credit Agreement is hereby deleted and replaced with the following:
"Applicable Percentage" shall mean, for any day, the rate per annum
set forth below opposite the applicable Level then in effect, it being
understood that the Applicable Percentage for (i) Base Rate Loans shall be
the percentage set forth under the column "Base Rate Margin", (ii)
Eurodollar Loans, Bankers' Acceptances and Letter of Credit Fees shall be
the percentage set forth under the column "Eurodollar Rate Margin; Letter
of Credit Fee" and (iii) the Unused Fees shall be the percentage set forth
under the column "Unused Fee":
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Fixed Charge Eurodollar Rate
Coverage Base Rate Margin; Letter
Level Ratio Margin of Credit Fee Unused Fee
- ------ ----------------------- --------- --------------- ----------
I < 0.75 to 1.00 1.25% 2.75% 0.500%
II > or = 0.75 to 1.00 but 1.00% 2.50% 0.500%
< 1.00 to 1.00
III > or = 1.00 to 1.00 but 0.75% 2.25% 0.500%
< 1.20 to 1.00
IV > or = 1.20 to 1.00 0.50% 2.00% 0.500%
The Applicable Percentage shall, in each case, be determined and
adjusted quarterly on the date five (5) Business Days after the date on
which the Administrative Agent has received from the Borrowers the
quarterly company-prepared financial information (for each fiscal quarter
of the Consolidated Parties), annual financial information (in the case of
the fourth fiscal quarter of the Consolidated Parties) and certifications
required to be delivered to the Administrative Agent and the Lenders in
accordance with the provisions of Sections 7.1(a), 7.1(b) and 7.1(d) (each
an "Interest Determination Date"). Such Applicable Percentage shall be
effective from such Interest Determination Date until the next such
Interest Determination Date. If the Borrowers shall fail to provide the
quarterly financial information and certifications in accordance with the
provisions of Sections 7.1(a), 7.1(b) and 7.1(d), the Applicable
Percentage shall, on the date five (5) Business Days after the date by
which the Borrowers were so required to provide such financial information
and certifications to the Administrative Agent and the Lenders, be based
on Level I until such time as such information and certifications are
provided, whereupon the Level shall be determined by the then current
Fixed Charge Coverage Ratio. Notwithstanding the foregoing, the Applicable
Percentage commencing on March 31, 2004 shall be based on the Fixed Charge
Coverage Ratio as set forth in the officer's certificate delivered
pursuant to Section 7.1(d) with respect to the fiscal year ending December
31, 2003.
4. The definition of Consolidated Net Income in Section 1.1 of
the Credit Agreement is hereby amended by replacing the "and (ii)" with ", (ii)"
and by adding the following at the end of such definition immediately prior to
the period:
and (iii) the tax adjusted net value of (a) the non-cash adjustments to
Consolidated Net Income on account of gains or losses resulting from changes in
the metal variance account required by the mark to market of the Copper Hedge,
as determined in accordance with U.S. GAAP and (b) the non-cash adjustments to
valuations of inventory that consists of copper covered by the Copper Hedge
resulting from the Company's mark to market of inventory levels under the Copper
Hedge at the time of testing (with the submission of the certificate pursuant to
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Section 7.1(d), the Company will provide the Administrative Agent with a
reconciliation of these adjustments in a format similar to that of Exhibit O).
5. The definition of Credit Parties in Section 1.1 of the Credit
Agreement is hereby amended by adding the following at the end of such
definition immediately prior to the period:
, provided, after the occurrence of the Canadian Maturity Date, the
Canadian Credit Parties shall no longer be deemed to be Credit Parties
hereunder or under the other Loan Documents unless such Canadian Maturity
Date has been extended, the Canadian Revolving Loan Commitment is
outstanding or there are any Canadian Revolving Loans, BA Obligations, or
LOC Obligations or other Obligations of a Canadian Borrower, then
outstanding
6. Section 2.2 of the Credit Agreement is hereby amended by
deleting clause (i) of subsection (a) thereof and replacing it with the
following:
(i) the aggregate amount of U.S. LOC Obligations shall not at any
time exceed $12,000,000 (U.S.),
7. Section 4.4(b)(ii) of the Credit Agreement is hereby amended
by deleting clause (B) thereof and replacing it with the following:
(B) any sale, transfer or other disposition of assets or properties
permitted by Section 9.5(f), the Borrowers shall use all net proceeds (but
not amounts other than net proceeds) to prepay the Loans in an amount
necessary to cause Excess Availability immediately following such
prepayment to be at a minimum $10,000,000 (such prepayment to be applied
as set forth in Section 4.4(c)) and any remaining net proceeds may be used
as permitted herein.
8. Section 6.6(a) of the Credit Agreement is hereby deleted and
replaced with the following:
(a) The financial statements provided to the Lenders, consisting of (i) an
audited balance sheet of the Consolidated Parties, together with related
consolidated statements of income, stockholders' equity and cash flow for
the fiscal year 2003 and (ii) unaudited consolidated balance sheets of the
Consolidated Parties, together with related consolidated statements of
income, and consolidated statements of cash flow for the month ended
February 1, 2004, fairly present the financial condition and business
operations of the Consolidated Parties as of such respective dates
(together, the "Financial Statements"); such financial statements were
prepared in accordance with U.S. GAAP; and since December 31, 2003, there
have occurred no changes or circumstances which have had or are reasonably
expected to have a Material Adverse Effect.
9. Section 7.1(d) of the Credit Agreement is amended by adding
the following at the end of such Section 7.1(d):
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In addition to the foregoing, at the time of delivery of the financial
statements provided for in Sections 7.1(a), (b) and (c), a certificate of
the Company substantially in the form of Exhibit O demonstrating the
adjustments made to Consolidated Net Income pursuant to subsection (iii)
of Consolidated Net Income.
10. Section 7.1(i) of the Credit Agreement is amended by adding
the following at the end of such Section 7.1(i):
In the event the "Available Accounts Receivable at an 85% Advance Rate,"
as shown on line A14 of the Borrowing Base Certificate, are greater than
or equal to the U.S. Revolving Loan Commitment, then the Borrowers may
elect not to complete the calculations of Ineligible Inventory set forth
in lines B5 and B6 of such Borrowing Base Certificate, but in no event
shall this change the information reporting requirements set forth in the
Credit Documents, including without limitation Section 7.1(i)(iii). If the
Borrowers make such an election, then the Inventory components of the
Borrowing Base Certificate in lines B7, B8, B9 and D2b shall be $0.
11. Section 8.1 of the Credit Agreement is amended by replacing
the table therein with the following table:
Minimum Fixed Charge
Fiscal Quarter Ending Coverage Ratio
- -------------------------------------------------- --------------------
March 31, 2004 0.65 to 1.0
June 30, 2004 0.50 to 1.0
September 30, 2004 0.70 to 1.0
December 31, 2004 1.00 to 1.0
Each fiscal quarter ending after December 31, 2004 1.05 to 1.0
12. Section 8.2 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
8.2 CAPITAL EXPENDITURES.
The Consolidated Parties shall not make Consolidated Capital
Expenditures in excess of (a) $15,000,000 during the fiscal year ending
December 31, 2004, (b) $20,000,000 during the fiscal year ending December
31, 2005, (c) $22,000,000 during the fiscal year ending December 31, 2006
and (d) $25,000,000 during any fiscal year ending after December 31, 2006
(in each case computed on a non-cumulative basis).
13. Section 8.3 of the Credit Agreement is amended by replacing
the table therein with the following table:
Minimum Consolidated
Fiscal Quarter Ending EBITDA
- -------------------------------------------------- --------------------
March 31, 2004 $23,000,000
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June 30, 2004 $23,500,000
September 30, 2004 $29,500,000
December 31, 2004 $36,000,000
Each fiscal quarter ending after December 31, 2004 $40,000,000
14. Section 9.15(b) of the Credit Agreement is hereby deleted in
its entirety and replaced with the following:
(b) so long as no Default or Event of Default shall have occurred and be
continuing immediately prior to or immediately after giving effect to any
of the actions or payments contemplated by this subsection 9.15(b), the
Consolidated Parties may prepay, redeem or repurchase long-term (as such
term is defined in accordance with GAAP) Indebtedness of any Borrower (i)
in an amount not to exceed $10,000,000 in any fiscal year, provided the
Excess Availability immediately prior to and immediately after giving
effect to such prepayment shall be equal to or greater than $15,000,000 or
(ii) with the proceeds from (1) the sale of any assets or properties
permitted by Section 9.5(f) after compliance with Section 4.4(b)(ii) or
(2) any Equity Issuance occurring after March 30, 2004.
15. Each of the Schedules attached to the Credit Agreement is
hereby deleted and replaced by the corresponding Schedule attached to this
Agreement.
16. Exhibit O to this Agreement is hereby added to the Credit
Agreement, in the appropriate order, as Exhibit O thereto.
(B) REPRESENTATIONS AND WARRANTIES. Each Credit Party hereby represents
and warrants that (i) the representations and warranties contained in Article VI
of the Credit Agreement are true and correct in all material respects on and as
of the date hereof as though made on and as of such date (except for those
representations and warranties which by their terms relate solely to an earlier
date) and after giving effect to the transactions contemplated herein, (ii) no
Default or Event of Default exists under the Credit Agreement on and as of the
date hereof and after giving effect to the transactions contemplated herein,
(iii) it has the corporate, limited liability company or limited partnership
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and has taken all necessary organizational action to
authorize the execution, delivery and performance by it of this Agreement; (iv)
it has duly executed and delivered this Agreement, and this Agreement
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws affecting the rights of creditors
generally or by general principles of equity and (v) neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated therein, nor performance of and compliance with the terms and
provisions thereof will violate or conflict in any material respect with any
material provision of its articles or certificate of incorporation or
certificate of limited partnership or certificate of formation, bylaws,
agreement of limited partnership or limited liability company agreement or
violate, contravene or conflict in any material respect with contractual
provisions of, or cause an event of default under, any indenture, including
without limitation the 2008 Senior Note Indenture and 2009 Senior Note
Indenture, loan
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agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound.
(C) EFFECTIVENESS. This Agreement shall become effective upon
satisfaction of all of the following conditions precedent:
1. Executed Agreement. The Administrative Agent shall have
received a fully executed counterpart of this Agreement from each party
hereto.
2. Secretary's Certificates. The Administrative Agent shall have
received a secretary's certificates from each U.S. Borrower dated as of
the date hereof either substantially in the form required by Section
5.1(d) of the Credit Agreement, mutatis mutandis, or a bring-down
certificate if no change has occurred to the secretary's certificate since
the last delivery thereof to the Administrative Agent, in accordance with
the Credit Agreement, and, in each case, otherwise in form and substance
acceptable to the Administrative Agent.
3. Legal Opinions. The Administrative Agent shall have received a
legal opinion from U.S. Borrowers' outside counsel in form and substance
reasonably acceptable to the Administrative Agent.
4. Other Conditions Precedent. The Borrowers shall have completed
all proceedings taken in connection with the transactions contemplated by
this Agreement and delivered to the Administrative Agent all other
documentation and other items incident thereto, including without
limitation the matters contemplated in the letter agreement dated as of
the date first written above, and each shall be satisfactory to the
Administrative Agent and its legal counsel, Moore & Van Allen PLLC.
(D) CANADIAN FACILITY. Notwithstanding any other provision herein or in
any other Loan Document, the Credit Parties agree that the Canadian Revolving
Commitment shall be deemed to be zero and no Canadian Revolving Loans, BA
Obligations, or Letters of Credit (with respect to Canadian Borrowers) shall be
issued until such time as the Administrative Agent is satisfied, in its
discretion, that all documentation required by the Administrative Agent to
evidence (among other things) the validity of the security interests
contemplated by the Loan Documents and the due authorization and enforceability
of the Canadian Obligations has been delivered by the Canadian Borrowers, which
may include a legal opinion from Canadian Borrower's outside counsel and
Secretary's Certificates of the Canadian Borrowers, each in form acceptable to
the Administrative Agent.
(E) EXTENDED FORBEARANCE. The Company is in the process of dissolving
Wolverine Tube Asia, Ltd. ("Wolverine Asia") and as a result, the Administrative
Agent and the Lenders hereby agree to forbear until March 31, 2005 the
requirement that Wolverine Asia pledge any of its assets or otherwise join or
provide Collateral pursuant to the Credit Documents, including without
limitation the pledge of Wolverine Asia's Capital Stock by the Credit Party who
owns such Capital Stock.
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(F) NO OTHER MODIFICATION. Except to the extent specifically provided to
the contrary in this Agreement, all terms and conditions of the Credit Agreement
(including Exhibits and Schedules thereto) and the other Credit Documents shall
remain in full force and effect, without modification or limitation. This
Agreement shall not operate as a consent to any other action or inaction by the
Borrowers or any other Credit Party, or as a waiver or amendment of any right,
power, or remedy of any Lender, the Administrative Agent or the Canadian Agent
under the Credit Agreement or any other Credit Document nor constitute a consent
to any such action or inaction, or a waiver or amendment of any provision
contained in the Credit Agreement or any other Credit Document except as
specifically provided herein. Each of the Credit Parties acknowledges, confirms
and agrees that the Credit Documents to which it is a party remain in full force
and effect as of the date hereof and continue to secure all Obligations of each
such Credit Party to any Lender, the Administrative Agent or the Canadian Agent,
and novation of any kind is hereby expressly disclaimed.
(G) RELEASE. In consideration of entering into this Agreement, each
Credit Party (a) represents and warrants to each Agent and each Lender that as
of the date hereof there are no causes of action, claims, actions, proceedings,
judgments, suits, demands, damages or offsets against or defenses or
counterclaims to its Obligations or Secured Obligations under the Credit
Documents and furthermore, such Credit Party waives any and all such causes of
action, claims, actions, proceedings, judgments, suits, demands, damages,
offsets, defenses or counterclaims whether known or unknown, arising prior to
the date of this Agreement and (b) releases each Agent and each Lender and each
of their respective Affiliates, Subsidiaries, officers, employees,
representatives, agents, counsel and directors from any and all actions, causes
of action, claims, actions, proceedings, judgments, suits, demands, damages and
liabilities of whatever kind or nature, in law or in equity, now known or
unknown, suspected or unsuspected to the extent that any of the foregoing arises
from any action or failure to act with respect to any Credit Document, on or
prior to the date hereof.
(H) GOVERNING LAW. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North Carolina, without
regard to the principles governing conflicts of laws thereof.
(I) INCORPORATION BY REFERENCE OF CERTAIN PROVISIONS. THE PROVISIONS IN
SECTIONS 14.5, 14.6, 14.8, 14.9, 14.10, 14.12, 14.13, 14.14, 14.15, 14.19 AND
14.24 OF THE CREDIT AGREEMENT ARE HEREBY INCORPORATED BY REFERENCE HEREIN,
MUTATIS MUTANDIS.
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Each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
COMPANY:
WOLVERINE TUBE, INC.
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Executive V.P. CFO and Secretary
U.S. SUBSIDIARY BORROWERS:
TF INVESTOR, INC.
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: V.P. and Treasurer
TUBE FORMING HOLDINGS, INC.
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: V.P. and Treasurer
TUBE FORMING, L.P.
By: Tube Forming Holdings, Inc.,
its General Partner
By: /s/ James E. Deason
-----------------------------------
Name: James E. Deason
Title: V.P. and Treasurer
(signature pages continue)
Wolverine Tube, Inc.
Amendment No. 4
WOLVERINE FINANCE, LLC
By: Wolverine Tube, Inc.,
its Sole Member
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Executive V.P., CFO and Secretary
SMALL TUBE MANUFACTURING, LLC
By: Wolverine Tube, Inc.,
its Sole Member
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Executive V.P., CFO and Secretary
WOLVERINE JOINING TECHNOLOGIES, LLC
By: Wolverine Tube, Inc.,
its Sole Member
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Executive V.P., CFO and Secretary
(signature pages continue)
Wolverine Tube, Inc.
Amendment No. 4
WOLVERINE CHINA INVESTMENTS, LLC
By: Wolverine Tube, Inc.,
its Managing Manager
By: /s/ James E. Deason
------------------------------------
Name: James E. Deason
Title: Executive V.P., CFO and Secretary
WT HOLDING COMPANY, INC.
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: V.P. and Treasurer
(signature pages continue)
Wolverine Tube, Inc.
Amendment No. 4
CANADIAN SUBSIDIARY BORROWERS:
3072996 NOVA SCOTIA COMPANY
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Vice President
WOLVERINE JOINING TECHNOLOGIES
(CANADA) INC.
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Vice President and Treasurer
3072452 NOVA SCOTIA COMPANY
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Vice President
3072453 NOVA SCOTIA COMPANY
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Vice President
WOLVERINE TUBE CANADA LIMITED PARTNERSHIP
By: 3072453 NOVA SCOTIA COMPANY,
its General Partner
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: Vice President
(signature pages continue)
Wolverine Tube, Inc.
Amendment No. 4
WOLVERINE TUBE (CANADA) INC.
By: /s/ James E. Deason
----------------------------------------
Name: James E. Deason
Title: V.P. and Secretary
By: /s/ Johann R. Manning, Jr.
----------------------------------------
Name: Johann R. Manning, Jr.
Title: V.P. and Assistant Secretary
(signature pages continue)
Wolverine Tube, Inc.
Amendment No. 4
LENDERS:
WACHOVIA BANK, NATIONAL ASSOCIATION,
in its capacity as Administrative Agent and
as a Lender
By: /s/ Laurie D. Galliano
----------------------------------------
Name: Laurie D. Galliano
Title: Director
(signature pages continue)
Wolverine Tube, Inc.
Amendment No. 4
CONGRESS FINANCIAL CORPORATION (CANADA),
in its capacity as Canadian Agent and as
a Lender
By: /s/ H. Rosenfeld
----------------------------------------
Name: H. Rosenfeld
Title: Senior Vice President
(signature pages end)
Wolverine Tube, Inc.
Amendment No. 4