EXHIBIT 10.2
EXECUTION COPY
WAIVER LETTER AND
AMENDMENT NO. 6
TO
LOAN AGREEMENT
This WAIVER LETTER AND AMENDMENT NO. 6 TO LOAN AGREEMENT (this
"Agreement and Amendment"), made as of March 31, 2003, among OGLEBAY NORTON
COMPANY ("Borrower"), the banking institutions named in Schedule 1 to the Loan
Agreement (as hereinafter defined) (collectively, the "Banks" and individually,
"Bank"), KEYBANK NATIONAL ASSOCIATION, as administrative agent for the Banks
("Agent"), BANK ONE, MICHIGAN (now known as Bank One, NA), as syndication agent
("Syndication Agent") and THE BANK OF NOVA SCOTIA, as documentation agent
("Documentation Agent"),
WITNESSETH:
WHEREAS, Borrower, the Banks, the Agent, the Syndication Agent and the
Documentation Agent have entered into that certain Loan Agreement, dated as of
April 3, 2000, and as subsequently amended by that certain Amendment No. 1 to
Loan Agreement and Waiver, dated as of June 30, 2001, Amendment No. 2 to Loan
Agreement and Waiver, dated as of November 9, 2001, Amendment No. 3 to Loan
Agreement, dated as of December 24, 2001, Amendment No. 4 to Loan Agreement,
dated as of October 23, 2002, and Amendment No. 5 to Loan Agreement, dated as of
January 8, 2003 (as amended from time to time, the "Loan Agreement"), pursuant
to which the Banks have made certain loans and other financial accommodations
available to Borrower;
WHEREAS, Borrower has advised the Agent that Borrower may violate one or
more of the financial covenants contained in Section 5.7 of the Loan Agreement
as of and for the period ending March 31, 2003 (the "Financial Covenant
Violations");
WHEREAS, subject to the terms and conditions hereof, the Banks and the
Agent are willing to temporarily waive: (i) the Events of Default set forth in
Section 7.2 (the "Designated Events of Default") of the Loan Agreement which
will occur by reason of the Financial Covenant Violations and (ii) the exercise
of rights and remedies under the Credit Agreement with respect to such
Designated Events of Default; and
WHEREAS, the parties also desire to amend certain provisions of the Loan
Agreement as set forth herein and the Banks which are signatories hereto
constitute the "Majority Banks" required to so amend the Credit Agreement
pursuant to Section 10.3 thereof;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower and the Banks do hereby
agree as follows:
1. DEFINED TERMS.
Each defined term used herein and not otherwise defined herein shall
have the meaning ascribed to such term in the Loan Agreement, as amended hereby.
2. AGREEMENT TO WAIVE.
Notwithstanding the occurrence or continuation of the Designated Events
of Default, subject to satisfaction of the conditions precedent set forth in
Section 5 hereof, the Designated Events of Default are hereby waived in
accordance with the Loan Agreement from the date of occurrence thereof until
June 15, 2003 (the "Waiver Expiration Date") and the Banks and Agent will not
exercise rights and remedies under the Loan Agreement and the other Loan
Documents as a result of the occurrence of such Designated Events of Default
until after the Waiver Expiration Date. Nothing contained in this Agreement and
Amendment shall prejudice any rights or remedies the Banks or the Agent may
have, or the right of the Banks and the Agent to exercise any such rights and
remedies, prior to the Waiver Expiration Date with respect to Events of Default
(whether now existing or hereafter occurring and including any violation of
Section 5.7A) other than the Designated Events of Default. Moreover, nothing
contained in this Agreement and Amendment shall prejudice any rights or remedies
the Banks or the Agent may have, or the right of the Banks or the Agent to
exercise any such rights and remedies, with respect to any Events of Default
(including the Designated Events of Default) after the Waiver Expiration Date.
3. AMENDMENT TO THE LOAN AGREEMENT.
3.1 Amendment to Article I. Article I, Definitions, is amended by:
(i) adding thereto new definition "Amendment No. 6 Closing Date," to be inserted
into Article I in appropriate alphabetical order to read as set forth below and
(ii) amending paragraph (a) of the definition of "Applicable Margin" and the
first clause of paragraph (b) of such definition to read as set forth below:
"Amendment No. 6 Closing Date" shall mean date on which the "Effective
Date" (as such term is defined in Section 5 of that certain Waiver Letter and
Amendment No. 6 to Loan Agreement, dated as of March 31, 2003) occurs.
"Applicable Margin" shall mean:
(a) for the period commencing on the Amendment No. 6 Closing
Date until and including August 15, 2003, (i) four hundred fifty (450)
basis points for each LIBOR Interest Segment, and (ii) two hundred
twenty five (225) basis points for the Prime Interest Segment, and . . .
(b) commencing August 16, 2003, . . .
3.2 Amendment to Section 5.3. Section 5.3 of the Loan Agreement is
hereby amended as follows: (w) with respect to fiscal quarter ending March 31,
2003 only, paragraph (a) of Section 5.3 shall be amended so that financial
statements with respect to such fiscal quarter shall be required to be released
to the public and delivered to each Bank on May 1, 2003 and such financial
statements with respect to such fiscal quarter (with any adjustments made to
such financial statements) shall be disclosed in the Borrower's 10Q and
delivered to each Bank by May 15, 2003, (x) with respect to fiscal quarter
ending March 31, 2003 only, paragraph (c) of Section 5.3 shall be amended so
that the Borrower shall be required to deliver to each Bank on
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Amendment No. 6 to Loan Agreement
May 1, 2003 calculations of the financial covenants set forth in Section 5.7A
(rather than Section 5.7) of the Loan Agreement which calculations shall be
based on the financial statements delivered to the Banks on May 1, 2003 and
certified by a Financial Officer of the Borrower (subject to such adjustments as
are made to the financial statements included in the 10Q filed for March 31,
2003), (y) with respect to fiscal quarter ending March 31, 2003 only, paragraph
(c) of Section 5.3 shall be further amended so that the Borrower shall be
required to deliver to each Bank on May 15, 2003 a Compliance Certificate and
calculations of the financial covenants set forth in Section 5.7A (rather than
Section 5.7) of the Loan Agreement which calculations shall be based on the
financial statements delivered to the Banks on May 15, 2003 and certified by a
Financial Officer of the Borrower, (z) paragraph (g) thereof shall be amended to
delete the word "and" following such paragraph (g) and to add the word "and"
after paragraph (h) thereof and (zz) new paragraph (i) shall be added to Section
5.3 to read as set forth below:
(i) On or prior to May 30, 2003, a comprehensive business
plan for fiscal years 2003 and 2004, the form, detail and substance of
which shall be satisfactory to the Agent and the Banks.
3.3 Temporary Financial Covenants. From and after the Amendment No.
6 Closing Date until and including the Waiver Expiration Date, Section 5 of the
Loan Agreement shall be amended to add Section 5.7A thereto to read as set forth
below (the terms of Section 5.7 as in effect prior to this Agreement and
Amendment shall become again effective on and after June 16, 2003):
SECTION 5.7A TEMPORARY FINANCIAL COVENANTS
(a) LEVERAGE RATIO. The Companies shall not suffer or permit
at any time the Leverage Ratio to exceed 6.90 to 1.00 on March 31, 2003
through and including June 15, 2003.
(b) SENIOR SECURED DEBT RATIO. The Companies shall not
suffer or permit at any time the ratio of: (x) Total Senior Funded
Indebtedness to the extent such Indebtedness is a secured obligation
(but, excluding for purposes hereof, the Indebtedness evidenced by the
2002 Senior Secured Fund Notes) to (y) Consolidated Pro-Forma EBITDA to
be greater than 4.05 to 1.00 on March 31, 2003 through and including
June 15, 2003, based upon the financial statements of the Companies for
the most recently completed four (4) fiscal quarters.
(c) INTEREST COVERAGE. The Companies shall not suffer or
permit at any time the ratio of: (x) Consolidated Pro-Forma EBITDA to
(y) Consolidated Pro-Forma Interest Expense (less non cash amortized
financing and FAS 133 costs to the extent included in Consolidated
Pro-Forma Interest Expense in accordance with GAAP) to be less than 1.40
to 1.00 on March 31, 2003 through and including June 15, 2003, based
upon the financial statements of the Companies for the most recently
completed four (4) fiscal quarters.
(d) CASH-FLOW COVERAGE. The Companies shall not suffer or
permit at any time the ratio of: (x) Consolidated Pro-Forma Cash Flow to
(y) Consolidated Pro-Forma Fixed Charges (excluding from Pro-Forma Fixed
Charges for purposes of calculating compliance with this covenant,
amounts payable with respect to the Revolving Loans and the Term Loans
(as defined in the Loan Agreement) to be less than
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Amendment No. 6 to Loan Agreement
0.90 to 1.00 on March 31, 2003 through and including June 15, 2003,
based upon the financial statements of the Companies for the most
recently completed four (4) fiscal quarters.
(e) NET WORTH. The Companies shall not suffer or permit
Consolidated Net Worth at any time, based upon the Consolidated
financial statements of the Companies for the most recently completed
fiscal quarter, to fall below the current minimum amount required, which
current minimum amount required shall be as of March 31, 2003, an amount
equal to $98,643,000; provided, however, that (i) any non-cash impact to
Consolidated Net Worth related to FAS 142 shall be excluded in
calculating Borrower's compliance with this covenant and (ii) any
potential non-cash impact associated with the extinguishment of
Indebtedness (as a result of the issuance of the 2002 Senior Secured
Fund Notes and the required repayment of a portion of the Revolving
Credit Loans) as indicated pursuant to EITF 96.19/SFAS 140 shall
likewise be excluded in calculating Borrower's compliance with this
covenant.
(f) MINIMUM CONSOLIDATED PRO-FORMA EBITDA. The Companies
shall not suffer or permit at any time Consolidated Pro-Forma EBITDA to
be less than $62,500,000 on March 31, 2003 through and including June
15, 2003, based upon the financial statements of the Companies for the
most recently completed four (4) fiscal quarters.
3.4 Amendment to Section 7.2. Section 7.2 of the Loan Agreement is
hereby amended to add therein a reference to "5.7A" after the reference to
"5.7".
4. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents and warrants as follows:
4.1 The Agreement and Amendment. This Agreement and Amendment has
been duly and validly executed by an authorized executive officer of Borrower
and constitutes the legal, valid and binding obligation of Borrower enforceable
against Borrower in accordance with its terms. The execution, delivery, and
performance of this Agreement and Amendment, the Loan Agreement (as amended
hereby), and the other Loan Documents to which Borrower is a party are within
Borrower's corporate powers, have been duly authorized, and are not in
contravention of Law or the terms of Borrower's Certificate of Incorporation or
By-Laws or any indenture (including the Indenture) or other document or
instrument evidencing borrowed money or any other agreement or undertaking to
which Borrower is a party or by which it or its property is bound.
4.2 Claims and Defenses. As of the date of this Agreement and
Amendment, neither Borrower nor any of the Companies has any defenses, claims,
counterclaims or setoffs with respect to the Loan Agreement, the Loan Documents
or any obligations thereunder or with respect to any actions of Agent, the
Syndication Agent, the Documentation Agent, the Banks or any of their respective
officers, directors, shareholders, employees, agents or attorneys, and Borrower
irrevocably and absolutely waives any such defenses, claims, counterclaims and
setoffs and releases Agent, the Syndication Agent, the Documentation Agent, the
Banks, and each of their respective officers, directors, shareholders,
employees, agents and attorneys, from the same.
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Amendment No. 6 to Loan Agreement
4.3 Loan Agreement; Status of Loan Agreement The Loan Agreement, as
amended by this Agreement and Amendment, remains in full force and effect and
remains the valid and binding obligation of Borrower enforceable against
Borrower in accordance with its terms except as expressly limited hereby. As of
the date of this Agreement and Amendment, the representations and warranties of
Borrower set forth in the Loan Agreement are true and correct with the same
force and effect as if made on and as of such date except to the extent that any
thereof expressly relate to an earlier date.
4.4 Nonwaiver. The execution, delivery, performance and
effectiveness of this Agreement and Amendment shall not, except as provided in
Article 2 of this Agreement and Amendment, operate, be deemed to be, or be
construed to be a waiver: (i) of any right, power or remedy of Agent, the
Syndication Agent, the Documentation Agent, or any Bank under the Loan Agreement
or (ii) of any term, provision, representation, warranty or covenant contained
in the Loan Agreement or any other documentation executed in connection
therewith. Further, except as provided in Article 2 of this Agreement and
Amendment, none of the provisions of this Agreement and Amendment shall
constitute, be deemed to be or construed to be: (i) a waiver of any Event of
Default under the Loan Agreement as previously amended and as further amended by
this Agreement and Amendment or (ii) a revocation of any prior written waivers
of any Events of Default thereunder.
4.5 Reference to and Effect on the Loan Agreement. Upon the
effectiveness of this Agreement and Amendment, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like
import shall mean and be a reference to the Loan Agreement, as previously
amended and as further amended hereby, and each reference to the Loan Agreement
in any other document, instrument or agreement executed and/or delivered in
connection with the Loan Agreement shall mean and be a reference to the Loan
Agreement, as previously amended and as further amended hereby.
5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT AND AMENDMENT.
This Agreement and Amendment shall become effective as of the time (the
"Effective Date") on which each of the following conditions precedent shall have
been fulfilled:
5.1 Waiver Letter and Amendment No. 6 to Loan Agreement. Agent shall
have received from Borrower and Banks constituting the Majority Banks (as
determined by the Agent) an original counterpart of this Agreement and
Amendment, executed and delivered by a duly authorized officer of Borrower and
each such Bank, as the case may be.
5.2 Waiver Letter and Amendment No. 6 to Credit Agreement. Agent
shall have received from Borrower and Banks constituting Majority Banks (as
determined by the Agent) an original counterpart of the Waiver Letter and
Amendment No. 6 to Credit Agreement, in form and substance acceptable to Agent,
executed and delivered by a duly authorized officer of Borrower and each such
Bank, as the case may be.
5.3 Acknowledgment of Guarantors. Agent shall have received the
Acknowledgment of Guarantors, attached hereto, executed and delivered by a duly
authorized officer of each of the Guarantors.
5.4 Independent Business Consultant. An independent business
consultant, which has a recognized reputation for working with financial
situations comparable to Borrower's and
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Amendment No. 6 to Loan Agreement
with industries consistent with Borrower's industry segments and which is
otherwise acceptable to the Agent as a matter of sound credit policy, shall have
been retained by Borrower pursuant to a written engagement the form, scope and
substance of which shall be satisfactory to the Agent.
5.5 Agreement and Amendment Fee. Agent shall have received, for the
benefit of each Bank (including Agent in its capacity as a Bank) approving and
executing both this Agreement and Amendment and the Waiver Letter and Amendment
No. 6 to Credit Agreement, a one time fee in the amount of ten (10.00) basis
points multiplied by the sum of the Revolving Credit Commitment (as defined in
the Credit Agreement) of such Bank plus the Term Loan Commitment Amount of such
Bank.
5.6 Opinion Concerning Agreement and Amendment. Agent shall have
received an opinion of counsel to Borrower and its subsidiaries, in form and
substance satisfactory to the Agent, as to the authorization, due execution and
delivery, and enforceability by and against Borrower and the Subsidiaries
thereof which are parties to this Agreement and Amendment
6. MISCELLANEOUS.
6.1 Governing Law. This Agreement and Amendment has been delivered
and accepted at and shall be deemed to have been made at Cleveland, Ohio. This
Agreement and Amendment shall be interpreted and the rights and liabilities of
the parties hereto determined in accordance with the laws of the State of Ohio,
without regard to principles of conflict of law, and all other laws of mandatory
application.
6.2 Severability. Each provision of this Agreement and Amendment
shall be interpreted in such manner as to be valid under applicable law, but if
any provision hereof shall be invalid under applicable law, such provision shall
be ineffective to the extent of such invalidity, without invalidating the
remainder of such provision or the remaining provisions hereof.
6.3 Counterparts. This Agreement and Amendment may be executed in
one or more counterparts, each of which, when taken together, shall constitute
but one and the same agreement.
[Signature Page to Follow]
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Amendment No. 6 to Loan Agreement
IN WITNESS WHEREOF, Borrower has caused this Waiver Letter and Amendment
No. 6 to Loan Agreement to be duly executed and delivered by its duly authorized
officer as of the date first above written.
Address: North Point Tower OGLEBAY NORTON COMPANY
1001 Lakeside Avenue, By:
15th floor --------------------------------
Cleveland, Ohio 44114-1151 Name: Julie A. Boland
Attention: Treasurer ------------------------------
Title: Chief Financial Officer
-----------------------------
Address: Key Center KEYBANK NATIONAL ASSOCIATION,
127 Public Square as a Bank and as Agent
Cleveland, Ohio 44114-1306
Attention: Large Corporate By:
Banking Division --------------------------------
Name: Thomas J. Purcell
------------------------------
Title: Sr. Vice President
-----------------------------
Address: 611 Woodward Avenue BANK ONE, NA (formerly known as
Detroit, Michigan 48226 One, Michigan) Bank
Attention: Large Corporate
Banking Division By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 600 Peachtree Street THE BANK OF NOVA SCOTIA
Suite 2700
Atlanta, Georgia 30308 By:
Attention: Large Corporate --------------------------------
Banking Division Name:
------------------------------
Title:
-----------------------------
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Amendment No. 6 to Loan Agreement
Address: 500 Woodward Avenue, 9th Fl. COMERICA BANK
Detroit, Michigan 48226
Attention: Large Corporate By:
Banking Division --------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 231 S. LaSalle Street BANK OF AMERICA, N.A.
Chicago, Illinois 60697
Attention: Ronald A. Prince
Banking Division By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 111 West Monroe, 10W HARRIS TRUST AND SAVINGS BANK
Chicago, Illinois 60603
Attention: Large Corporate
Banking Division By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 975 Euclid Avenue THE HUNTINGTON NATIONAL BANK
Cleveland, Ohio 44115
Attention: Large Corporate By:
Banking Division --------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 6 High Ridge Park GE CAPITAL CFE, INC.
Building 6 C, Mail Stop 4097-203
Stamford, Ct., 06927-5100 By:
Attention: Commercial Finance --------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 1900 East Ninth Street NATIONAL CITY BANK
Cleveland, Ohio 44114
Attention: Large Corporate By:
Banking Division --------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 250 West Huron JPMORGAN CHASE BANK
Cleveland, Ohio 44113
Attention: Large Corporate By:
Banking Division --------------------------------
Name:
------------------------------
Title:
-----------------------------
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Amendment No. 6 to Loan Agreement
Address: 1404 East Ninth Street FIFTH THIRD BANK
Cleveland, Ohio 44114
Attention: Large Corporate By:
Banking Division --------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 1350 Euclid Avenue U. S. BANK, NATIONAL ASSOCIATION
Cleveland, Ohio (f\k\a Firstar Bank National
Attention: Commercial Association)
Banking Division By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 1185 Avenue of the Americas FLEET NATIONAL BANK
New York, New York 10036
Attention: Manhattan
Commercial By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: 110 South Stratford Road BRANCH BANKING & TRUST CO.
Suite 301
Winston-Salem, NC 27104 By:
Attention: Large Corporate --------------------------------
Banking Division Name:
------------------------------
Title:
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Amendment No. 6 to Loan Agreement
ACKNOWLEDGMENT OF GUARANTORS
Each of the undersigned consents and agrees to and acknowledges the
terms of the foregoing Waiver Letter and Amendment No. 6 to Loan Agreement as of
the date first above written. Each of the undersigned further agrees that the
obligations of each of the undersigned pursuant to the Guaranty of Payment, the
Security Agreement and any other Loan Document to which any of the undersigned
is a party shall remain in full force and effect and be unaffected hereby.
ONCO Investment Company
Oglebay Norton Management Company
Oglebay Norton Industrial Sands, Inc.
Oglebay Norton Terminals, Inc.
Oglebay Norton Engineered Materials, Inc.
Michigan Limestone Operations, Inc.
Global Stone Corporation (successor by merger to
Oglebay Norton Acquisition Company)
Global Stone Tenn Lutrell Company
Global Stone Chemstone Corporation
Global Stone St. Clair, Inc.
Global Stone Management Company
Global Stone Filler Products Company
Global Stone James River, Inc.
GS PC, Inc.
Oglebay Norton Minerals, Inc.
Oglebay Norton Specialty Minerals, Inc.
ON Coast Petroleum Company
ON Marine Services Company
ONCO WVA, Inc.
ONTEX, Inc.
Saginaw Mining Company
Erie Navigation Company
Erie Sand and Gravel Company
Erie Sand Steamship Co.
Mountfort Terminal, Ltd.
Serve-All Concrete, Inc.
S & J Trucking, Inc.
By:
-------------------------------------------
Rochelle F. Walk, as Vice President and
Secretary of each of the companies listed above.
Texas Mining, LP, by its General Partner
ONTEX, Inc.
By:
------------------------------------
Rochelle F. Walk
Vice President and Secretary
Global Stone PenRoc, LP, by its General Partner,
GS PC, Inc,.
By:
------------------------------------
Rochelle F. Walk
Vice President and Secretary
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Amendment No.6 to Credit Agreement
Oglebay Norton Marine Services Company, L.L.C., by its
Member ON Marine Services Company
By:
------------------------------------
Rochelle F. Walk
Vice President and Secretary
Oglebay Norton Marine Management Company, LLC.
by its member Oglebay Norton Marine Services Company
By:
------------------------------------
Rochelle F. Walk
Vice President and Secretary
Global Stone Portage, LLC by its member
---------------------------
By:
------------------------------------
Rochelle F. Walk
Vice President and Secretary
S-5
Amendment No. 6 to Credit Agreement
Schedule 3
Amendment No. 6 to Loan Agreement