WAIVER, AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
AND AMENDMENT NO. 4 TO SUPPLEMENT A
TO LOAN AND SECURITY AGREEMENT
September 9, 1996
Empire Gas Corporation
1700 South Jefferson Street
Lebanon, Missouri 65536
Attention: Ms. Valeria Schall
Ladies and Gentlemen:
Reference is made to the Loan and Security
Agreement dated as of June 29, 1994 among Empire Gas
Corporation ("Borrower"), the Lenders party thereto
("Lenders") and Bank of America Illinois, f/k/a
Continental Bank, f/k/a Continental Bank N.A., as a
Lender and as Agent for the Lenders, as amended through
the date hereof (the "Loan Agreement"). Unless otherwise
defined herein, capitalized terms used herein shall have
the meanings ascribed to such terms in the Loan
Agreement.
Reference is further made to the certain
conditional waiver letter dated May 15, 1996 executed by
Agent and addressed to Borrower (the "Waiver Letter").
Pursuant to the Waiver Letter, Borrower informed Agent
that Borrower had breached Section 6.2 of Supplement A to
the Loan Agreement by failing to comply with the
limitation on the acquisition of fixed assets set forth
herein for the 1996 Fiscal Year. The occurrence of such
breach and continuance thereof for a period exceeding ten
(10) days after the occurrence thereof constituted an
Event of Default under Section 6.1(h) of the Loan
Agreement (the "Existing Default"). Pursuant to the
Waiver Letter, Requisite Lenders agreed to waive the
Existing Default, subject to the satisfaction of certain
conditions on or prior to June 30, 1996. Such conditions
were not satisfied on or prior to June 30, 1996;
consequently, pursuant to the terms of the Waiver Letter,
on July 1, 1996, the waiver of the Existing Default
immediately ceased to be effective and the Existing
Default was immediately reinstated.
Borrower has informed Agent that the Existing
Default remains in existence as of the date hereof.
Consequently, Borrower has requested that Requisite
Lenders agree to waive the Existing Default. Requisite
Lenders have agreed to do so, on the terms and conditions
contained herein.
Borrower has also requested that Requisite
Lenders agree to amend various provisions contained in
the Loan Agreement and Supplement A. Requisite Lenders
have agreed to do so, on the terms and conditions
contained herein.
Therefore, the parties hereto agree as follows:
1. Waiver. Requisite Lenders hereby waive
the Existing Default and any and all rights and remedies
that Agent and Lenders may have under the Loan Agreement,
the Related Agreements and applicable law in respect
thereof. Other than as expressly set forth herein, the
foregoing waiver shall not constitute a waiver of any
Events of Default or Unmatured Events of Default that are
now in existence or that may hereafter occur or any
rights or remedies that Agent or any Lender may have
under the Loan Agreement, the Related Agreements or
applicable law with respect thereto, all of which rights
and remedies Agent and Lenders hereby specifically
reserve.
2. Amendments to Loan Agreement. The Loan
Agreement is hereby amended as follows:
(a) Section 1.1.
(i) Section 1.1 of the Loan Agreement is
hereby amended by inserting therein, in appropriate
alphabetical order, the following new definitions:
"'Acquisition Availability' means, for any
period, the sum of (a) net earnings before
interest expense, income tax expense,
depreciation and amortization for such period,
plus (b) proceeds from asset dispositions
consummated during such period and permitted
under Section 5.12 (or otherwise consented to
by Requisite Lenders), net of all related taxes
and disposition expenses, minus (c) cash
interest expense during such period in respect
of Indebtedness for borrowed money, including,
without limitation, Indebtedness under the
Agreement, in respect of the Senior Notes, in
respect of Subordinated Debt and in respect of
Acquisition Indebtedness, minus (d) taxes paid
during such period plus (e) tax refunds
received during such period, minus (f) required
principal payments during such period in
respect of Indebtedness for borrowed money,
including, without limitation, Indebtedness in
respect of the Senior Notes, in respect of
Subordinated Debt and in respect of Acquisition
Indebtedness and minus (g) capital expenditures
during such period and permitted under Section
6.2 of Supplement A (or otherwise consented to
by Requisite Lenders), each determined for
Borrower and its Subsidiaries on a consolidated
basis, and in accordance with GAAP."
"'Permitted Acquisition' means any
Acquisition that either is consented to in
writing by Requisite Lenders or satisfies the
following conditions:
(a) no Event of Default or Unmatured
Event of Default is in existence at the time of
such Acquisition or, after giving pro forma
effect to such Acquisition, would be caused
thereby;
(b) total cash consideration paid for
such Acquisition, together with the cash
consideration paid for all other Permitted
Acquisitions consummated in the immediately
preceding twelve month period, does not exceed
$3,000,000 in the aggregate;
(c) the Revolving Credit Amount exceeds
the outstanding principal balance of the
Revolving Loans plus the Letter of Credit
Obligations by at least $500,000 immediately
prior to, and immediately after, consummation
of such Acquisition;
(d) Agent has received, as soon as
available, copies of all agreements delivered
in connection therewith; and
(e) Agent has received a certificate of
Borrower's chief financial officer certifying
that all of the applicable conditions contained
herein to treating such Acquisition as a
Permitted Acquisition have been satisfied and
showing all appropriate calculations."
(ii) Section 1.1 of the Loan Agreement is
hereby further amended by amending and restating in
their entirety the definitions of the terms "LIBOR
Base Rate" and "LIBOR Rate" contained therein, as
follows:
"'LIBOR Base Rate' means, with respect to
each Interest Rate Period for a LIBOR Rate-
Loan, the rate per annum at which U.S. Dollar
deposits in immediately available funds are
offered to Bank of America Illinois two (2)
Banking Days prior to the beginning of such
Interest Rate Period by major banks in the
London interbank eurodollar market at or about
11:00 a.m., London time, for delivery on the
first day of such Interest Rate Period, for the
number of days comprised therein and in an
amount equal to the amount of the LIBOR Rate
Loan to be outstanding during such Interest
Rate Period.
'LIBOR Rate' means, with respect to each
Interest Rate Period for a LIBOR Rate Loan, a
rate per annum (rounded upward, if necessary,
to the nearest one hundredth of one percent
(1/100th of 1%)) determined pursuant to the
following formula:
LIBOR Rate = 3.00% + LIBOR Base Rate
___________________________________
1 -Eurocurrency Reserve Requirement"
(b) Section 2.2. The third sentence of
subsection (b) of Section 2.2 of the Loan Agreement
is hereby amended by deleting therefrom the words
"one percent (1%)" and inserting in their place the
words "one and one-half percent (1.5%)".
(c) Section 5.12. Subsection (d) of Section
5.12 of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(d) purchase or otherwise acquire, or
agree to purchase or otherwise acquire, any of
the stock, assets or business of any Person
(including, without limitation, by means of an
Acquisition), other than pursuant to a
Permitted Acquisition."
(d) Section 5.15. Subsection (h) of Section
5.12 of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(h) 'Acquisition Indebtedness' as that
term is defined in the Senior Loan Documents in
an aggregate principal amount at any one time
outstanding not to exceed $10,000,000 and no
more than $3,000,000 of which may be incurred
in any twelve month period,"
3. Amendments to Supplement A. Supplement A
is hereby amended as follows:
(a) Section 2.2. Clauses (iii) and (iv) of
Section 2.2 of Supplement A are hereby amended and
restated in their entirety, as follows:
"(iii) during the period commencing on
September 9, 1996 and ending on December 31,
1996, $1,500,000."
(b) Section 3.1.1.
(i) Subsection (a) of Section 3.1.1 of
Supplement A is hereby amended by deleting the
percentage "1.00%" contained therein and inserting
in its place the percentage "1.50%."
(ii) Subsection (c) of Section 3.1.1 of
Supplement A is hereby amended by deleting the words
"LIBOR Base Rate" each time that it appears and
inserting in their place the words "LIBOR Rate."
(c) Section 6.2. Section 6.2 of Supplement A
is hereby amended by deleting the words "Acquisition
permitted under the Agreement" contained therein and
inserting in their place the words "Permitted
Acquisition."
(d) Section 6.3. Section 6.3 of Supplement A
is hereby amended and restated in its entirety, as
follows:
"6.3 Interest Coverage Ratio. Borrower
will not permit the ratio ("Interest Coverage
Ratio") of (a) net earnings before interest
expense, income tax expense, depreciation and
amortization to (b) cash interest expense in
respect of Indebtedness for borrowed money,
including, without limitation, Indebtedness
under the Agreement, in respect of the Senior
Notes, in respect of Subordinated Debt and in
respect of Acquisition Indebtedness, in each
case measured on the last day of any calendar
quarter set forth below, calculated for the
twelve months ending on such date, and
determined for Borrower and its Subsidiaries on
a consolidated basis, and in accordance with
GAAP, to be less than the ratio set forth below
opposite such period:
Interest Coverage
Date Ratio
The quarter ending March 31, 1996 1.00:1.0
The quarter ending June 30, 1996 1.00:1.0
The quarter ending September 30, 1996 1.00:1.0
The quarter ending December 31, 1996 1.05:1.0
The quarter ending March 31, 1997 1.10:1.0
The quarter ending June 30, 1997 and 1.20:1.0"
each September 30, December 31,
March 31 and June 30 thereafter
(e) Section 6.4. A new Section 6.4 is hereby
added to Supplement A, as follows:
"6.4 Acquisition Availability. Borrower
will not permit Acquisition Availability,
measured on the last day of each calendar
quarter commencing September 30, 1996, and
calculated for the twelve months ending on such
date, to be less than zero."
4. Scope. This Waiver, Amendment No. 2 to
Loan and Security Agreement and Amendment No. 4 to
Supplement A to Loan and Security Agreement (the
"Amendment") shall have the effect of amending the Loan
Agreement, Supplement A and the Related Agreements as
appropriate to express the agreements contained herein.
In all other respects, the Loan Agreement, Supplement A
and the Related Agreements shall remain in full force and
effect in accordance with their respective terms.
5. Acknowledgment of Effect of Amendments.
Borrower hereby acknowledges that the effectiveness of
the amendments to the Loan Agreement and Supplement A
contained in this Amendment shall have the effect of
immediately increasing the LIBOR Rate, the Adjusted
Reference Rate and the Letter of Credit commissions
payable under Section 2.2(b) of the Loan Agreement.
Borrower further hereby acknowledges that such increases
shall effect interest accruing on and after the effective
date of this Amendment with respect to Loans outstanding
on such effective date (including, without limitation,
LIBOR Rate Loans) or advanced thereafter, and Letter of
Credit commissions accruing on and after such effective
date with respect to Letters of Credit and L/C Drafts
outstanding on such effective date or issued thereafter.
6. Conditions to Effectiveness. This
Amendment shall be effective immediately upon the
execution of this Amendment by BAI, on behalf of the
Requisite Lenders, acceptance hereof by Borrower and each
other Obligor, and delivery hereof to BAI at 231 South
LaSalle Street, Chicago, Illinois 60697, Attention: Mr.
Mark Cordes, on or prior to September 9, 1996, together
with a $20,000 work fee payable to the Agent for its own
account.
Very truly yours,
BANK OF AMERICA ILLINOIS,
f/k/a CONTINENTAL BANK,
f/k/a CONTINENTAL BANK N.A., AS
AGENT ON BEHALF OF REQUISITE
LENDERS
By /s/
__________________________
Its_______________________
Acknowledged and agreed to this
9th day of September, 1996.
EMPIRE GAS CORPORATION
By /s/ Mark Castaneda
_____________________
Its V.P., Finance
Acknowledgment and Acceptance of Guarantors
Each of the undersigned is a party to the
Master Corporate Guaranty dated June 29, 1994 in favor of
BAI, as Agent for itself and Lenders (the "Guaranty"),
pursuant to which each of the undersigned has guaranteed
the Obligations of Borrower under the Loan Agreement.
Each of the undersigned hereby acknowledges receipt of
the foregoing Amendment, accepts and agrees to be bound
by the terms thereof, ratifies and confirms all of its
obligations under the Guaranty, and agrees that the
Guaranty shall continue in full force and effect as to
it, notwithstanding such Amendment.
Acknowledged and Agreed to this
9th day of September, 1996.
EACH OF THE SUBSIDIARIES OF
EMPIRE GAS CORPORATION LISTED
ON EXHIBIT A ATTACHED HERETO
By /s/ Robert L. Mathews
___________________________
Vice President of each Subsidiary