Exhibit 10.2
WAIVER AND
AMENDMENT NO. 8
TO
LOAN AGREEMENT
This WAIVER AND AMENDMENT NO. 8 TO LOAN AGREEMENT (this "Agreement and
Amendment"), made as of September 11, 2003, among OGLEBAY NORTON COMPANY
("Borrower"), the Banks (as defined in the Loan Agreement (as hereinafter
defined) (the "Banks")), and KEYBANK NATIONAL ASSOCIATION, as administrative
agent for the Banks ("Agent"),
WITNESSETH:
WHEREAS, Borrower, the Banks, Agent, Bank One, Michigan (now known as Bank
One, NA), as Syndication Agent and The Bank of Nova Scotia, as 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, Amendment No. 5 to Loan Agreement, dated as of January 8, 2003, Waiver
Letter and Amendment No. 6 to Loan Agreement, dated as of March 31, 2003 and
Waiver Letter and Amendment No. 7 to Loan Agreement, dated as of June 13, 2003
(as so 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 certain Events of Default have
occurred under the Loan Agreement, as further described on Exhibit A attached
hereto (the "Designated Events of Default");
WHEREAS, as a condition to any further waiver of the Designated Events of
Default, Borrower has agreed, subject to the terms and conditions of this
Amendment and the Loan Documents, as amended hereby, and in enforcement of the
rights of the Agent on behalf of the Banks under the Loan Agreement, to sell
certain assets and to remit a portion of the proceeds of such asset sales to the
Banks as a partial realization on collateral securing the Loan Agreement to
reduce the outstandings and the Commitments under the Loan Agreement;
WHEREAS, subject to the terms and conditions hereof, the Banks and the
Agent are willing to waive the 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 Loan 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. SCHEDULES 2 AND 3 TO LOAN AGREEMENT; UPDATED DISCLOSURE SCHEDULES.
Schedules 2 and 3 to the Loan Agreement are amended by deleting the
existing Schedules 2 and 3 and replacing such schedules with Schedule 2 and
Schedule 3 as attached hereto and such revised Schedules 2 and 3 shall be
incorporated into the Loan Agreement as if fully written therein. In addition,
the following Schedules to the Loan Agreement, Schedules 6.1, 6.4, 6.5, 6.17 and
6.19, are amended by deleting the existing Schedules 6.1, 6.4, 6.5, 6.17 and
6.19, and replacing such schedules with new Schedules 6.1, 6.4, 6.5, 6.17 and
6.19, attached hereto as Annex I, and such revised Schedules 6.1, 6.4, 6.5, 6.17
and 6.19 shall be incorporated into the Loan Agreement as if fully written
therein.
3. AMENDMENT TO THE LOAN AGREEMENT.
3.1 Amendment to Article I. Article I, Definitions, is amended by: (i)
adding thereto the new definitions "Amendment No. 8 Closing Date," "Amendment
No. 8 Fee," "Dominion of Funds Agreement," "Michigan MLO Leasehold Proceeds
Mortgage, "and "Permitted Asset Dispositions" to be inserted into Article I in
appropriate alphabetical order and (ii) amending the definitions of "Applicable
Margin," "Change of Control," "Consolidated Pro-Forma EBITDA," "Default Rate"
and "Net Proceeds" to read as follows:
"Amendment No. 8" shall mean that certain Waiver and Amendment No. 8
to Loan Agreement, dated as of September 11, 2003.
"Amendment No. 8 Agent Fee Letter" shall mean that certain Fee Letter
between Agent and Borrower, dated as of the date of Amendment No. 8.
"Amendment No. 8 Closing Date" shall mean date on which the "Effective
Date" (as such term is defined in Section 5 of Amendment No. 8) occurs.
"Amendment No. 8 Fee" shall have the meaning set forth in Section 2.5
hereof.
"Applicable Margin" shall mean (i) six hundred (600) basis points for
LIBOR Loans, and (ii) four hundred (400) basis points for Prime Rate Loans.
Nothing in this definition modifies or waives, in any respect, the rights
of the Banks to charge the Default Rate in lieu of the rate specified
above, or the rights and remedies of Agent and the Banks pursuant to
Articles VII and VIII hereof.
"Change of Control" shall mean the occurrence of any one of any the
following events: (a) the acquisition of, or, if earlier, the shareholder
or director approval of the
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Amendment No. 8 to Loan Agreement
acquisition of, ownership or voting control, directly or indirectly,
beneficially or of record, on or after the Closing Date, by any Person or
group (as the terms beneficial ownership, person, and group are used for
purposes of or are within the meaning of Rule 13d-3 of the SEC under the
Securities Exchange Act of 1934, as then in effect), shares representing
more than fifty-percent (50%) of the aggregate Voting Power (whether
exclusive or non-exclusive) represented by the issued and outstanding
capital stock of Borrower; (b) the occupation of a majority of the seats
(other than vacant seats) on the board of directors of Borrower by Persons
who were neither (i) nominated by the board of directors of Borrower nor
(ii) appointed by directors so nominated; (c) the Board of Directors or
stockholders of Borrower shall approve (i) any consolidation or merger of
the Borrower where the stockholders of Borrower, immediately prior to the
consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own, directly or indirectly, shares representing in
the aggregate 50% or more of the voting shares of the corporation issuing
cash or securities in the consolidation or merger (or of its ultimate
parent corporation, if any), (ii) any asset sale of all or substantially
all of the assets of the Borrower or any division thereof (provided,
however, that the consummation of any or all of the Permitted Asset
Dispositions shall not be deemed to be a sale of a division of the
Borrower), and (iii) any plan or proposal for the liquidation or
dissolution of the Borrower; or (d) the 2002 Senior Secured Fund Notes (or
any of them) or any other Indebtedness under the 2002 Senior Secured Fund
Notes shall cease to constitute, or the Borrower and its Subsidiaries (or
any of them) shall challenge in writing or otherwise that, the 2002 Senior
Secured Fund Notes (or any of them) or any other Indebtedness under the
2002 Senior Secured Fund Notes constitute "Senior Indebtedness" and
"Designated Senior Indebtedness" in each case as such term is defined in
the Indenture.
"Consolidated Pro-Forma EBITDA" shall mean the sum of (a) Consolidated
EBITDA, plus (b)(i) without duplication, the EBITDA of Companies acquired
by Borrower and its Subsidiaries during the most recently completed four
(4) fiscal quarters to the extent that such EBITDA of Companies acquired is
confirmed by audited financial or other information satisfactory to Agent,
minus (ii) EBITDA of Companies (including without limitation EBITDA of
those Companies that comprise the businesses described on Schedule 5.12(e))
disposed of by Borrower and its Subsidiaries during the most recently
completed four (4) fiscal quarters, plus (c) the amount by which
professional fees incurred by the Borrower through Amendment No. 8 Closing
Date exceeded Borrower's budget set forth in Schedule 1A, plus (d) the
amount of professional fees and expenses incurred by the Borrower after the
Amendment No. 8 Closing Date for professionals listed on Schedule 1B.
"Default Rate" shall mean, at any time, a rate per annum equal to two
hundred (200) basis points in excess of the rate of interest that would
otherwise be applicable under this Agreement at such time.
"Dominion of Funds Agreement" shall mean the Dominion of Funds
Agreement, in the form of the attached as Exhibit K, dated as of the
Amendment No. 8 Closing Date, among the Agent, on behalf of the Banks, the
Credit Agreement Agent, on behalf of the Credit Agreement Banks, and the
Collateral Agent, as the same may from time to time by amended, restated or
otherwise modified or replaced.
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Amendment No. 8 to Loan Agreement
"Michigan MLO Leasehold Proceeds Mortgage" shall have the meaning set
forth in Section 5.34 hereof.
"Net Proceeds" shall mean
(a) the cash proceeds (including cash proceeds subsequently received
in respect of non-cash consideration initially received) from any sale,
transfer or other disposition of assets of Borrower or any of its
Subsidiaries to a Person, including without limitation, cash payments in
respect of inventory sales, payments in respect of other dispositions of
Collateral (other than the sale of inventory in the ordinary course of
business to the extent giving rise to accounts receivable) and real
property of Borrower and each Subsidiary, in each case net of (x) selling
expenses, including without limitation any reasonable broker's fees or
commissions, costs of discontinuing operations associated with such assets
and sales, transfer and similar taxes and (y) the repayment of any
Indebtedness secured by a purchase money Lien on such assets that is
permitted under this Agreement;
(b) the cash proceeds from the issuance and/or sale of equity or debt
securities of Borrower or any Subsidiaries thereof by any means, whether
pursuant to any public offering, Rule 144A offering, private placement with
one or more institutional investors or otherwise, net of transaction costs
(including customary fees, costs and expenses including, without
limitation, underwriters' or placement agents' discounts and commissions
and transfer and similar taxes) (excluding any (i) proceeds from the
issuance or sale of equity or debt securities in connection with a
Permitted Acquisition and (ii) proceeds from the issuance of any equity or
debt securities pursuant to compensation plans for employees, executive
officers or directors of Borrower and the Subsidiaries thereof), and
(c) the cash proceeds from any Material Recovery Event.
"Permitted Asset Dispositions" shall have the meaning set forth in
Section 5.12(e) hereof.
3.2 Amendment to Section 2.1. The fifth and sixth paragraphs of Section 2.1
are amended in their entirety to read as follows:
With respect to the Prime Interest Segment, if any, Borrower shall pay
interest on the unpaid principal amount thereof outstanding from time to
time from the date thereof until paid, commencing on September 30, 2003,
and continuing on the last day of each succeeding month thereafter and at
the maturity thereof, at the Derived Prime Rate from time to time in
effect.
With respect to each LIBOR Interest Segment, Borrower shall pay
interest on the unpaid principal amount thereof outstanding from time to
time from the date thereof until paid, at the Derived LIBOR Rate, fixed in
advance for each Interest Period (but subject to changes in the Applicable
Margin) as herein provided for each such Interest Period. Interest on such
LIBOR Loans shall be payable on each Interest Adjustment Date with respect
to an Interest Period (provided that if an Interest Period exceeds one (1)
month, the interest must be paid every month, commencing one (1) month from
the beginning of such Interest Period).
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Amendment No. 8 to Loan Agreement
3.3 Amendment to Section 2.5. Section 2.5 is amended by adding a new
sentence at the end thereof to read as follows:
. . . Notwithstanding any other provision of this Agreement or any of the
Loan Documents, from and after the date of any Event of Default, interest
shall be payable monthly on the last day of each month or, at the election
of Agent (which election shall be communicated in writing to Borrower), at
such more frequent intervals as Agent shall in its sole discretion require.
3.4 Amendment to Section 2.8. Section 2.8 of the Loan Agreement shall be
amended in its entirety to read as follows:
SECTION 2.8. MANDATORY PAYMENT; MANDATORY REDUCTION OF COMMITMENT.
(a) MANDATORY APPLICATION OF NET PROCEEDS; RESULTING MANDATORY
REDUCTION IN REVOLVING CREDIT COMMITMENTS AND TERM LOANS. From and
after the Amendment No. 8 Closing Date, Borrower shall apply all Net
Proceeds relating to Borrower or any of the Companies (including
without limitation all Net Proceeds from Permitted Asset Dispositions)
promptly upon receipt thereof to Term Loans under this Agreement and
Revolving Loans under the Credit Agreement outstanding at the time of
such receipt with such prepayments being applied among the Banks and
the Credit Agreement Banks as set forth in further detail in the
Intercreditor Agreement and the Dominion of Funds Agreement; provided,
however, that nothing in this Subsection or in the definition of "Net
Proceeds" shall constitute authorization not otherwise permitted by
this Agreement for Borrower or any Subsidiary thereof to enter into
any transaction that would generate Net Proceeds.
(b) EFFECT OF APPLICATION OF NET PROCEEDS AS COMMITMENT
REDUCTION. Each application of Net Proceeds of Permitted Asset
Dispositions with respect to Revolving Loans under the Credit
Agreement shall constitute not only a reduction in such Revolving
Loans but also a permanent reduction in the amount of the Revolving
Credit Commitment (and the Total Commitment Amount) of the Credit
Agreement Banks thereunder (subject, however, to the limitations
applicable to such permanent reductions set forth in the Credit
Agreement). Each prepayment with respect to Term Loans required by
this Section 2.8 shall constitute not only a reduction in such Term
Loans but also a permanent reduction in the amount of the applicable
Term Loan Commitment of the Banks under this Agreement. Amounts
applied with respect to Term Loans under this Agreement may not be
reborrowed.
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Amendment No. 8 to Loan Agreement
3.5 Amendment to Article II. Article II is amended by adding new Section
2.9 at the end thereof to read as follows:
2.9 AMENDMENT NO. 8 FEES.
(a) Borrower shall pay to Agent on the Amendment No. 8 Closing Date,
for the ratable account of the Banks that approve and execute Waiver and
Amendment No. 8 to Loan Agreement, an amendment fee equal to 100 basis
points multiplied by the Total Commitment Amount as of such date (the
"Amendment No. 8 Fee").
(b) Borrower shall pay to Agent, for its sole account and benefit, all
fees set forth in the Amendment No. 8 Agent Fee Letter.
(c) Borrower shall pay to the Agent, for the ratable account of the
Banks, all fees describe on Schedule 2.9(c) attached hereto and by
reference made a part hereof.
3.6 Amendment to Section 5.3. Section 5.3 is amended by deleting the word
"and" at the end of subparagraph (g), replacing the period at the end of
subparagraph (h) with a semicolon, and adding a new subparagraph (i) thereto
immediately following subparagraph (h), to read as follows:
(i) by no later than Wednesday of each week, a 13-week rolling cash
flow forecast, compared to Borrower's most current plan then submitted to
the Agent, in form and with content and detail satisfactory to the Agent.
3.7 Amendment to Sections 5.7, 5.7A and 5.7B. Sections 5.7, 5.7A and 5.7B
of the Agreement shall be deleted and replaced by the following new Section 5.7:
SECTION 5.7 FINANCIAL COVENANTS
(a) LEVERAGE RATIO. The Companies shall not suffer or permit at any
time the Leverage Ratio to exceed: (i) 9.55 to 1.00 at the end of any
fiscal quarter ending during the period of July 1, 2003 through September
30, 2003, (ii) 9.30 to 1.00 at the end of any fiscal quarter ending during
the period of October 1, 2003 through December 31, 2003, (iii) 9.40 to 1.00
at the end of any fiscal quarter ending during the period of January 1,
2004 through March 31, 2004, (iv) 8.95 to 1.00 at the end of any fiscal
quarter ending during the period of April 1, 2004 through June 30, 2004,
(v) 8.25 to 1.00 at the end of any fiscal quarter ending during the period
of July 1, 2004 through September 30, 2004, and (vi) 7.60 to 1.00 at the
end of any fiscal quarter ending during the period of October 1, 2004 and
thereafter.
(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: (i) 5.70 to
1.00 at the end of any fiscal quarter ending during the period of July 1,
2003 through September 30, 2003, (ii) 5.45 to 1.00 at the end of any fiscal
quarter ending during the period of October 1, 2003 through December 31,
2003,
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Amendment No. 8 to Loan Agreement
(iii) 5.65 to 1.00 at the end of any fiscal quarter ending during the
period of January 1, 2004 through March 31, 2004, (iv) 5.50 to 1.00 at the
end of any fiscal quarter ending during the period of April 1, 2004 through
June 30, 2004, (v) 4.95 to 1.00 at the end of any fiscal quarter ending
during the period of July 1, 2004 through September 30, 2004, and (vi) 4.45
to 1.00 at the end of any fiscal quarter ending during the period of
October 1, 2004 and thereafter, in each case, 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: (i) 1.04 to 1.00 at the end of any
fiscal quarter ending during the period of July 1, 2003 through September
30, 2003, (ii) 1.03 to 1.00 at the end of any fiscal quarter ending during
the period of October 1, 2003 through December 31, 2003, (iii) 1.08 to 1.00
at the end of any fiscal quarter ending during the period of January 1,
2004 through March 31, 2004, (iv) 1.18 to 1.00 at the end of any fiscal
quarter ending during the period of April 1, 2004 through June 30, 2004,
(v) 1.26 to 1.00 at the end of any fiscal quarter ending during the period
of July 1, 2004 through September 30, 2004, and (vi) 1.34 to 1.00 at the
end of any fiscal quarter ending during the period of October 1, 2004 and
thereafter, in each case, 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: (i) 0.52 to 1.00 at the end of any
fiscal quarter ending during the period of July 1, 2003 through September
30, 2003, (ii) 0.56 to 1.00 at the end of any fiscal quarter ending during
the period of October 1, 2003 through December 31, 2003, (iii) 0.57 to 1.00
at the end of any fiscal quarter ending during the period of January 1,
2004 through March 31, 2004, (iv) 0.67 to 1.00 at the end of any fiscal
quarter ending during the period of April 1, 2004 through June 30, 2004,
(v) 0.76 to 1.00 at the end of any fiscal quarter ending during the period
of July 1, 2004 through September 30, 2004, and (vi) 0.81 to 1.00 at the
end of any fiscal quarter ending during the period of October 1, 2004 and
thereafter, in each case, 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: (i) as of September 30, 2003, an amount equal to $83,500,000,
(ii) as of December 31, 2003, an amount equal to $75,000,000, (iii) as of
March 31, 2004, an amount equal to $67,500,000, (iv) as of June 30, 2004,
an amount equal to $66,000,000, (v) as of September 30, 2004, an amount
equal to $66,000,000, and (vi) as of December 31, 2004
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Amendment No. 8 to Loan Agreement
and thereafter, an amount equal to $57,500,000; provided, however, in each
case, 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 Amendment No. 8 and that
certain Waiver and Amendment No. 2 to Note Purchase Agreement, dated as of
the Amendment No. 8 Closing Date) 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
(i) $47,000,000 at the end of any fiscal quarter ending during the period
of June 30, 2003 through September 30, 2003, (ii) $47,000,000 at the end of
any fiscal quarter ending during the period of October 1, 2003 through
December 31, 2003, (iii) $48,500,000 at the end of any fiscal quarter
ending during the period of January 1, 2004 through March 31, 2004, (iv)
$53,000,000 at the end of any fiscal quarter ending during the period of
April 1, 2004 through June 30, 2004, (v) $56,500,000 at the end of any
fiscal quarter ending during the period of July 1, 2004 through September
30, 2004, and (vi) $58,500,000 at the end of any fiscal quarter ending
during the period of October 1, 2004 and thereafter, in each case, based
upon the financial statements of the Companies for the most recently
completed four (4) fiscal quarters.
(g) CAPITAL EXPENDITURES. Borrower and its Subsidiaries shall not
invest in Consolidated Capital Expenditures in an aggregate amount
exceeding $23,500,000 in any fiscal year.
(h) ADJUSTMENTS TO FINANCIAL COVENANTS DUE TO PERMITTED ASSET
DISPOSITIONS. Attached hereto as Schedule 5.7(h) are quarterly projections
for fiscal years 2003 and 2004 for each of the Borrower's businesses
identified in Item 1 of Schedule 5.12(e) hereto. The Companies and the
Agent acknowledge that adjustments to financial covenants due to Permitted
Asset Dispositions will be negotiated in good faith based upon the
information contained in Schedule 5.7(h).
3.8 Amendment to Section 5.12(e). Section 5.12(e) is amended in its
entirety to read as follows:
(e) in addition to any assets permitted to be disposed of pursuant to
subpart (d) above, the Companies may consummate the asset sales described
on Schedule 5.12(e) attached hereto and by reference made a part hereof
(collectively, the "Permitted Asset Dispositions").
3.9 Amendment to Section 5.17. The final proviso to Section 5.17 is amended
to read as follows:
. . . ; provided, further, however that, so long as no Event of Default
exists or immediately thereafter shall begin to exist, Borrower may use any
portion of the proceeds to make scheduled interest payments (including all
amounts required to be paid under the Indenture with respect to the missed
interest payment due August 1, 2003 and the interest
8
Amendment No. 8 to Loan Agreement
payment due February 1, 2004 should that payment be missed) with respect to
such Indebtedness to the extent not restricted by Section 5.21.
3.10 Amendment to Section 5.18. Section 5.18 is amended in its entirety to
read as follows:
SECTION 5.18. [RESERVED].
3.11 Amendment to Section 5.21. Section 5.21 is amended by adding the
following phrase at the end of the first sentence and a new sentence at the end
thereof:
. . . (including all amounts required to be paid under the Indenture with
respect to the missed interest payment due August 1, 2003 and the interest
payment due February 1, 2004 should that payment be missed). In addition,
with respect to all Indebtedness other than Subordinated Indebtedness and
the 2002 Senior Secured Funds Notes (including without limitation any
earn-out or similar arrangements), no Company shall repurchase or make any
optional prepayment or optional redemption or exercise any right of
defeasance or covenant defeasance or similar right.
3.12 Amendment to Section 5.27. Section 5.27 is amended in its entirety to
read as follows:
SECTION 5.27. [RESERVED].
3.13 Amendment to Section 5.33. Section 5.33 is amended in its entirety to
read as follows:
SECTION 5.33. INFORMATION REGARDING ASSET DISPOSITIONS. Borrower shall
furnish to Agent true and complete copies, as soon as they become
available, of each of the following in connection with any proposed sale of
any of the Companies' assets (including without limitation all Permitted
Asset Dispositions): (a) each final offering memorandum generated with
respect thereto; (b) all preliminary indications of interest received with
respect thereto; (c) all management presentations in connection therewith;
(d) draft and final term sheets discussed or negotiated with prospective
buyers, (e) draft and execution copies of all purchase documentation; and
(f) copies of all applicable financing commitments; provided, however, that
items (b) (c), (d) and (e) shall be held in strict confidence by the Agent,
to be shared by the Agent with its attorneys, financial advisors and with
the Banks only pursuant to reasonable confidentiality restrictions.
3.14 Amendment to Article V. Article V is amended by adding the following
new Sections 5.34, 5.35 and 5.36 thereto:
SECTION 5.34. MICHIGAN MLO MINERAL LEASE. Borrower will use its best
efforts to obtain the consent of the lessors under each lease to a
leasehold mortgage granted by Borrower (and/or any other appropriate
Obligors(s)) in favor of the Agent with respect to Borrower's interests
under such leases (for purposes hereof, "best efforts" shall not include
requiring the Borrower to renegotiate the lease if such
9
Amendment No. 8 to Loan Agreement
negotiation would cause a material change in the operations of the leased
property or a material adverse effect on Borrower's financial condition).
Without limiting the generality of the foregoing, (a) Borrower will permit
the Agent to participate in the Borrower's negotiations with said lessors
with respect thereto and to be present at such meetings with said lessors
and its representatives as the Agent shall; reasonably request, and (b)
Borrower will present said lessors with (i) the draft leasehold mortgage
and consent documents attached hereto as Exhibit M, and (ii) such legal
analyses as Borrower shall have obtained with respect to the effectiveness
of prohibitions on leasehold mortgages. On or prior to the Amendment No. 8
Closing Date, Borrower (and/or any other appropriate Obligor(s)) will
execute and deliver to Agent a Future Advance Mortgage and Rents and
Fixture Filing or Leasehold Proceeds, substantially in the form attached
hereto as Exhibit L (the "Michigan MLO Leasehold Mortgage") with respect to
each of the leases described on Schedule 5.34 attached hereto; provided,
however, that Agent shall not be permitted to file such Mortgages of record
without the prior written consent of Borrower which consent may not be
given pursuant to the exercise of any power of attorney on the Borrower's
behalf.
SECTION 5.35. LEGACY COSTS. Borrower and its legal and financial
advisors will: (a) engage in detailed consultations with the Agent and its
legal and financial advisors with respect to developing appropriate cost
savings measures relating to the Companies' early retirement provisions of
their pension plans and post-retirement medical benefits, and (b) undertake
all appropriate cost savings measures on a timely basis unless Borrower
reasonably demonstrates that implementation of such measures will result in
materially adverse consequences to the Companies' business, operations or
human resource situation.
SECTION 5.36. LOCKBOXES; CASH MANAGEMENT SYSTEMS. The Companies will
establish within 14 days following the Amendment No. 8 Closing Date, and
thereafter maintain such lockboxes and accounts, and shall execute and
deliver such blocked account agreements, deposit account control agreements
and other agreements and documents as the Agent shall require to ensure
that Agent has dominion of funds and a continuing first-priority security
interest in and lien on all of each Company's Collections and Remittances
(as each such term is defined in the Security Agreements) and all proceeds
thereof and of other Collateral and all cash. Within fourteen (14) days
after the Amendment No. 8 Closing Date, the Companies will send to each of
their Account Debtors (as defined in the Security Agreements) a notice
directing such Account Debtors to remit all Collections and Remittances to
the appropriate lockbox (copies of which notices shall be provided to Agent
upon request).
3.15 Amendment to Section 7.2. Section 7.2 is amended to add therein
references to "5.33," "5.34," "5.35" and "5.36" after the reference to "5.21."
3.16 Amendment to Article VII. Article VII is amended by adding Sections
7.16 and 7.17 thereto to read as follows:
SECTION 7.16. NET PROCEEDS FROM PERMITTED ASSET DISPOSITIONS. If the
Companies shall fail to deliver to the Agent and the Loan Agreement Agent,
by no later than February 25, 2004, aggregate Net Proceeds from
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Amendment No. 8 to Loan Agreement
Permitted Asset Dispositions occurring after the Amendment No. 8 Closing
Date in an aggregate amount of at least One Hundred Million Dollars
($100,000,000) for application to the Debt and the Indebtedness under the
Loan Agreement in accordance with the terms of this Agreement, the Loan
Agreement, the Intercreditor Agreement and the Dominion of Funds Agreement.
SECTION 7.17. LIMITED EXCLUSION FROM EVENTS OF DEFAULT.
Notwithstanding any other provision of this Agreement or any of the Loan
Documents, an Event of Default (or an event that with the lapse of time
would become an Event of Default) under the Indenture arising solely from
Borrower's failure to make the interest payment due under the Indenture on
August 1, 2003 or February 1, 2004, shall not constitute an Event of
Default under this Agreement so long as all of the following conditions
continue to be met: (i) with respect to the interest payment due on
February 1, 2004, a reserve has been imposed by the Credit Agreement Agent
under clause (c) of the definition of Reserve Amount (as set forth in the
Credit Agreement) and remains in effect (except that this condition shall
not be deemed to have failed if (A) such reserve is released in order to
permit Borrower to make such interest payment, (B) such interest payment is
in fact made by Borrower on the same day as the release of such reserve,
and (C) any such Event of Default (or event that with the lapse of time
would become an Event of Default) under the Indenture is permanently waived
in accordance with the provisions of the Indenture effective upon such
payment by Borrower), (ii) the Indebtedness under the Indenture has not
been accelerated, (iii) neither the trustee under the Indenture nor any of
the holders thereunder have taken any action to enforce any rights and
remedies under the Indenture or any documents relating thereto, and (iv) no
Default or Event of Default (each as defined in the Note Purchase
Agreement) shall have occurred or be continuing with respect to Borrower's
failure to make such payment.
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; Waiver and Release. 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 affiliates, officers, directors,
11
Amendment No. 8 to Loan Agreement
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 affiliates, officers, directors, shareholders,
employees, agents and attorneys, from the same.
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 as amended hereby are true and correct
in all material respects 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 Section 6 of this
Agreement and Amendment, operate as, 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 Section 6 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 (provided, however, that, at the election of the Agent, exercised
at any time, this Agreement and Amendment will be effective notwithstanding the
failure of Borrower to satisfy one or more of such conditions precedent):
5.1 Waiver and Amendment No. 8 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.
12
Amendment No. 8 to Loan Agreement
5.2 Waiver and Amendment No. 8 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 and Amendment No. 7 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 Dominion of Funds Agreement. Agent shall have received the Dominion of
Funds Agreement, executed and delivered by a duly authorized officer of each
party thereto.
5.5 Waiver of 2002 Senior Secured Fund Notes Defaults and Amendment to Note
Purchase Agreement. Agent shall have received written evidence, in form and
substance satisfactory to Agent, that (a) the Borrower has obtained a waiver of
any Events of Default under the 2002 Senior Secured Fund Notes, and (b) the Note
Purchase Agreement and any appropriate documents executed in connection
therewith have been amended to reflect the changes required by the Agent in
connection with this Agreement and Amendment.
5.6 Waiver of National City and U.S. Bank Defaults. Agent shall have
received written evidence, in form and substance satisfactory to Agent, that the
Borrower has obtained a waiver of any Events of Default (to the extent such
exist) under the Companies' credit facilities with National City Bank and U.S.
Bank National Association.
5.7 Michigan MLO Leasehold Mortgage. Agent shall have received the Michigan
MLO Leasehold Proceeds Mortgage, executed and delivered by a duly authorized
officer of each party thereto.
5.8 Forecasts and Budgets. The Borrower shall have furnished to Agent a
revised cash budget, prepared on a monthly basis for such period as the Agent
shall require, reflecting such information as is required by the Agent and the
Banks consistent with customary credit practices.
5.9 Investment Bank Engagement Letters. The Borrower shall have furnished
to the Agent copies of the Harris Williams and Cobblestone investment bank
engagement letters with the Borrower covering the sale of assets (including
without limitation the Permitted Asset Dispositions).
5.10 Noteholder Intercreditor Agreement. The Noteholder Intercreditor
Agreement shall have been supplemented to make certain clarifications in form
and substance reasonably satisfactory to the Agent.
5.11 Noteholder and Credit Agreement Agent Tri-Party Agreement. The Agent,
the Loan Agreement Agent, the Noteholders and the Borrower will execute an
undertaking with respect to the sale of the business identified in Item 1(A) of
Schedule 5.12(e) hereto, pursuant to which, conditioned only upon the receipt by
the Borrower of a fairness opinion from Harris Williams with respect to such
sale (which the Borrower shall agree to request in connection with
13
Amendment No. 8 to Loan Agreement
such sale): (i) the Borrower will consummate such sale and (ii) Banks, Credit
Agreement Banks and the Noteholders (and/or the respective agents thereof, as
appropriate) will release all security interests and liens in the assets of such
business in connection with the consummation of such sale. Such tri-party
agreement (the "Tri-Party Agreement") shall not limit the requirement under the
Loan Agreement that Borrower deliver not less than $100 Million from sales of
the Permitted Asset Dispositions or the Banks' remedies for failure of the
Borrower to meet such requirement.
5.12 Opinions. The Agent shall have received appropriate and customary
opinions relating the transactions contemplated hereby and such other matters as
are deemed appropriate by Agent and its counsel.
5.13 Fees; Legal Expenses to Date. Agent shall have received the Amendment
No. 8 Fee and all fees set forth in the Amendment No. 8 Agent Fee Letter. In
addition, the Agent shall have received payment of all currently outstanding
expenses of Agent, including, without limitation, the outstanding fees and
expenses of counsel to Agent incurred in connection with the matters
contemplated hereby or undertaken to date in connection with the Credit
Agreement and Loan Agreement.
5.14 Other Deliveries. Agent shall have received from Borrower such other
agreements as Agent may reasonably request in connection with this Agreement and
Amendment, each in form and substance acceptable to Agent, executed and
delivered by a duly authorized officer of Borrower.
6. 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 and after the date of occurrence
thereof, and the Banks and the Agent waive any right to exercise rights or
remedies under the Loan Agreement and the other Loan Documents as a result of
the occurrence of such Designated Events of Default. 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 at any time with respect to Events of Default (whether now
existing or hereafter occurring) other than the Designated Events of Default.
The Borrower acknowledges and agrees that the foregoing waiver shall not affect
the continued legality, validity and binding effect of the Loan Agreement in its
entirety (as amended hereby), and, except with respect to such waiver, the Loan
Agreement continues to be fully enforceable.
7. MISCELLANEOUS.
7.1 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.
14
Amendment No. 8 to Loan Agreement
7.2 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.
7.3 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.
7.4 Agent Authorization. By executing this Agreement and Amendment, the
Majority Banks hereby authorize the Agent on behalf of and for the benefit of
the Lenders to enter into the Tri-Party Agreement and the Dominion of Funds
Agreement.
[Signature Page to Follow]
15
Amendment No. 8 to Loan Agreement
IN WITNESS WHEREOF, Borrower has caused this Waiver and Amendment No. 8 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,
15th floor
Cleveland, Ohio 44114-1151 By:
Attention: Treasurer ----------------------------------
Name: Julie A. Boland
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
Banking Division By:
----------------------------------
Name: Arthur E. Cutler
Title: Senior Vice President
I-1
Amendment No. 8 to Loan Agreement
Signature Page to Amendment No. 8 to Loan Agreement (Term Loan)
--------------------------------------
Address: (print complete name of Bank)
----------------------------
---------------------------- By:
----------------------------------
---------------------------- Name:
--------------------------------
---------------------------- Title:
-------------------------------
Phone:
----------------------------
Fax:
----------------------------
Email:
----------------------------
Term Loan Commitment Amount as of September 11, 2003: $
-------------------
Aggregate Amount Outstanding as of September 11, 2003: $
-------------------
I-2
Amendment No. 8 to Loan Agreement
ACKNOWLEDGMENT OF GUARANTORS
Each of the undersigned consents and agrees to and acknowledges the terms
of the foregoing Waiver and Amendment No. 8 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. As of the
Amendment No. 8 Closing Date, none of the undersigned has any defenses, claims,
counterclaims or setoffs with respect to the Credit 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 each of the undersigned 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.
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:
--------------------------------------------
Julie A. Boland, of each of the
------
companies listed above.
I-3
Amendment No. 8 to Loan Agreement
Texas Mining, LP, by its General Partner
ONTEX, Inc.
By:
----------------------------------------
Julie A. Boland
Global Stone PenRoc, LP, by its General Partner,
GS PC, Inc,.
By:
----------------------------------------
Julie A. Boland
Oglebay Norton Marine Services Company, L.L.C.,
by its Member ON Marine Services Company
By:
----------------------------------------
Julie A. Boland
Oglebay Norton Marine Management Company, LLC.
by its member Oglebay Norton Marine Services
Company
By:
----------------------------------------
Julie A. Boland
Global Stone Portage, LLC by its member
By:
----------------------------------------
Julie A. Boland
I-4
Amendment No. 8 to Loan Agreement