Fifth Amendment, Waiver and Partial Release
Re: Credit Agreement
This Fifth Amendment, Waiver and Partial Release Re: Credit Agreement
(herein the "Amendment") is entered into as of May 26, 2000 among AMCOL
International Corporation (formerly known as American Colloid Company), a
Delaware corporation (the "Company"), Harris Trust and Savings Bank in its
capacity as Agent (the "Agent") and each of the Banks (collectively, the
"Banks") party to the Credit Agreement (as such term is defined below).
Preliminary Statements
A. The Company, the Agent and the Banks entered into a Credit Agreement
dated as of October 4, 1994 (as amended, the "Credit Agreement"). All
capitalized terms used herein without definition shall have the same meanings
herein as such terms have in the Credit Agreement.
B. The Company has informed the Banks that the Company intends to sell
certain assets and subsidiaries of the Company (collectively, the "Chemdal
Assets and Subsidiaries") pursuant to that certain Asset and Stock Purchase
Agreement dated as of November 22, 1999, between the Company and BASF
Aktiengesellschaft (the sale of the Chemdal Assets and Subsidiaries being
hereinafter referred to as the "Chemdal Transaction"). In order to permit the
Chemdal Transaction, the Company has requested that the Banks make certain
amendments to, waive certain sections of and release certain Guarantors under
the Credit Agreement, and the Banks are willing to do so under the terms and
conditions set forth in this Amendment.
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Waiver.
The Company has requested that the Banks waive any noncompliance with
Section 7.10 of the Credit Agreement resulting from the consummation of the
Chemdal Transaction and any distribution of the proceeds resulting from the
Chemdal Transaction to the shareholders of the Company. Accordingly, the Banks
hereby waive Section 7.10 of the Credit Agreement to the extent and only to the
extent the same would prevent the sale of the Chemdal Assets and Subsidiaries as
part of the Chemdal Transaction and any distribution of the proceeds resulting
from the Chemdal Transaction to the shareholders of the Company; provided that
this waiver shall not become effective unless and until the conditions precedent
set forth in Section 4 have been satisfied.
<PAGE>
Section 2. Partial Release of Guaranties.
In connection with the Chemdal Transaction, the Company has requested that
the Banks release Chemdal Corporation, a wholly-owned Domestic Subsidiary of the
Company, from its obligations under Section 1.9 of the Credit Agreement and from
its obligations as a Guarantor under the Joint and Several Guaranty Agreement
dated as of October 4, 1994 by the Guarantors (as defined in such Joint and
Several Guaranty Agreement). Accordingly, the Banks hereby release Chemdal
Corporation from such obligations; provided that (i) this partial release shall
not become effective unless and until the conditions precedent set forth in
Section 4 have been satisfied, and (ii) this partial release shall not in any
manner affect the obligations of the other Guarantors hereunder. Furthermore,
the Agent and each of the Banks hereby acknowledge and agree, for the benefit of
the Company and BASF Aktiengesellschaft, that the Chemdal Assets and
Subsidiaries (as defined above) are not subject to, and are hereby released
from, any and all claims and liabilities of any kind arising under or in
connection with the Credit Agreement, the Joint and Several Guaranty Agreement
or any agreements, documents or instruments executed and delivered in connection
therewith; provided, that this acknowledgment, agreement and release shall not
become effective unless and until the conditions precedent set forth in
Section 4 have been satisfied.
Section 3. Amendments to Credit Agreement.
Upon satisfaction of all of the conditions precedent specified in Section 4
of this Amendment, the Credit Agreement shall be amended as follows:
Section 3.1. Exhibit B of the Credit Agreement shall be amended and
restated in its entirety to read as set forth on Exhibit B attached hereto and
made a part hereof.
Section 3.2. Section 7.6 of the Credit Agreement shall be amended in its
entirety and as so amended shall be restated to read as follows:
Section 7.6. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth of not
less than the sum of (a) $70,000,000.00 plus (b) 25% of Consolidated
Net Income for each fiscal year of the Company ending after
December 31, 1999 (i.e., commencing with the fiscal year ending
December 31, 2000) for which such Consolidated Net Income is a
positive number (i.e., there shall be no reduction to the amount of
Consolidated Tangible Net Worth required to be maintained hereunder
for any such period in which Consolidated Net Income is less than
zero). For purposes of this Section, Consolidated Net Income shall not
include the proceeds resulting from the Chemdal Transaction and any
earnings reasonably allocable to the Chemdal Assets and Subsidiaries
for the entire period during which the Chemdal Transaction occurred.
<PAGE>
Section 3.3. Subsections (f) and (h) of Section 7.15 of the Credit
Agreement shall be deleted and the following subsections (f) and (h) shall be
inserted in their stead:
(f) investments in, and loans and advances to, Restricted
Subsidiaries (other than Domestic Subsidiaries), provided such
investments, loans and advances at any one time outstanding do not
exceed the sum of (i) $50,000,000 plus (ii) the amount (if any) by
which (A) $70,000,000 exceeds (B) the aggregate amount outstanding on
investments, loans and advances permitted solely by virtue of
subsection (h) of this Section;
(h) any other investments, loans and advances not otherwise
permitted by this Section in an aggregate amount not to exceed
$70,000,000.
Section 3.4. Section 7.17 of the Credit Agreement shall be amended in its
entirety and as so amended shall be restated to read as follows:
Section 7.17. Senior Funded Debt Ratio. The Company will not
permit the Senior Funded Debt Ratio to exceed (i) 3.00 to 1.00 as of
the end of each fiscal quarter of the Company through, but not
including, December 31, 2000, and (ii) 2.50 to 1.00 as of the end of
any fiscal quarter thereafter.
Section 3.5. Section 1.7 of the Credit Agreement shall be amended in its
entirety and as so amended shall be restated to read as follows:
Section 1.7. Interest Rate Margin and Commitment Fee Adjustment.
The applicable Eurocurrency Margin specified in Section 1.4(b) hereof
and the commitment fee specified in Section 3.1 hereof shall be
subject to quarterly adjustment (based upon the Funded Debt Ratio and
the Senior Funded Debt Ratio for the quarter ending March 30, 2000) as
follows (the margins from time to time applicable to the Eurocurrency
Loans being hereinafter referred to as the "Applicable Eurocurrency
Margin" and the commitment fee from time to time in effect being
hereinafter referred to as the "Applicable Commitment Fee") with the
Funded Debt Ratio and Senior Funded Debt Ratio being computed as in
effect on the last day of each fiscal quarter:
A. Applicable Eurocurrency Margin:
If as of the last
day of any fiscal
quarter:
<PAGE>
<TABLE>
<CAPTION>
senior funded debt ratio Greater Less than or Less than or Less than or Less than
is: than 3.00 equal to 3.00 equal to equal to 2.00 1.50 to 1.00
to 1.00 to 1.00 but 2.50 to 1.00 to 1.00 but
and greater than but greater greater than
2.50 to 1.00 than 2.00 to 1.50 to 1.00
1.00
funded debt ratio is:
<S> <C> <C> <C> <C> <C> <C>
Less than 25% .500% .375% .300% .250% .250%
Equal to or greater than
25% but less than 45% .625% .500% .375% .300% .250%
Equal to or greater than
45% but less than 60% .750% .625% .500% .375% .300%
Greater than or equal to
60% .825% .750% .625% .500% .375%
</TABLE>
B. Applicable Commitment Fee:
If as of the last
day of any fiscal
quarter:
<TABLE>
<CAPTION>
senior funded debt ratio Greater Less than or Less than or Less than or Less than
is: than 3.00 equal to 3.00 equal to 2.50 equal to 2.00 1.50 to 1.00
to 1.00 to 1.00 but to 1.00 but to 1.00 but
and greater than greater than greater than
2.50 to 1.00 2.00 to 1.00 1.50 to 1.00
funded debt ratio is:
<S> <C> <C> <C> <C> <C> <C>
Less than 25% .200% .175% .150% .125% .100%
Equal to or greater than
25% but less than 45% .200% .175% .150% .125% .100%
Equal to or greater than
45% but less than 60% .200% .175% .150% .125% .100%
Greater than or equal to
60% .200% .175% .150% .125% .100%
</TABLE>
Not later than five Business Days after receipt by the Agent of
the financial statements and the compliance certificate called for by
Section 7.14 hereof for the applicable quarter, the Agent shall
determine the Senior Funded Debt Ratio and the Funded Debt Ratio as of
the close of the applicable period based on the information contained
in such financial statements and compliance certificate and shall
promptly notify the Company and the Banks of such determination and of
any change in the Applicable Eurocurrency Margin and Applicable
Commitment Fee resulting therefrom, any such change in the Applicable
Eurocurrency Margin and Applicable Commitment Fee to be effective as
of the
<PAGE>
date the Agent so notifies the Company, with such new Applicable
Eurocurrency Margin and Applicable Commitment Fee to continue in
effect until the effective date of the next quarterly redetermination
in accordance with the foregoing. Each determination of the Senior
Funded Debt Ratio, Funded Debt Ratio, Applicable Eurocurrency Margin
and Applicable Commitment Fee by the Agent in accordance with this
Section shall be conclusive and binding on the Company and the Banks
absent manifest error.
Section 3.6. Section 4 of the Credit Agreement shall be amended as follows:
(a) the definition of "EBITDA" shall be amended in its entirety and as
so amended shall be restated to read as follows:
"EBITDA" means, with reference to any period, Consolidated Net
Income for such period plus all amounts deducted in arriving at such
Consolidated Net Income in respect of (i) Interest Expense for such
period, plus (ii) federal, state and local income taxes for such
period, plus (iii) all amounts properly charged for depreciation of
fixed assets and amortization of intangible assets during such period
on the books of the Company and its Restricted Subsidiaries; provided,
however, that notwithstanding anything in this definition to the
contrary: (a) non-cash gains and non-cash losses on sales or other
dispositions of assets of the Company and its Subsidiaries outside the
ordinary course of their business shall be given no effect in
determining EBITDA; and (b) if a Divestiture occurs at any time during
such period, EBITDA shall be calculated on a proforma basis to exclude
earnings reasonably allocable to the divested Person or business, as
the case may be, for the entire period as if such Divestiture had
taken place on the first day of such period, all as reasonably
calculated by the Company based on historical operations (including,
but not limited to, operations conducted during such quarter) and
reasonably calculated adjustments due to anticipated operational
changes. Notwithstanding anything contained herein to the contrary, to
the extent deducted in computing EBITDA for any period, the Fourth
Quarter 1999 Charges shall be added back to each such computation of
EBITDA for the relevant period.
(b) the following new definitions shall be added in the appropriate
alphabetical order:
<PAGE>
"Chemdal Transaction" means the sale of certain assets and
Subsidiaries of the Company pursuant to that certain Asset and Stock
Purchase Agreement dated as of November 22, 1999, between the Company
and BASF Aktiengesellschaft.
"Divestiture" means any transaction or series of related
transactions, by which the Company or any of the Subsidiaries sells or
otherwise disposes of (i) any going business, line of business or all
or substantially all of the assets of any Subsidiary or (ii) any
Subsidiary.
"Fourth Quarter 1999 Charges" means up to $10,300,000
attributable to those certain non-recurring cash and non-cash charges
incurred under the restructuring program of the Company in the
relevant period during the Company's fiscal fourth quarter of 1999.
Any foregoing cash and non-cash charges not classified as
"restructuring charges" in accordance with GAAP must be one-time
expenses reasonably deemed to have been incurred as a result of such
restructuring program, and such expenses must be reported by the
Company in reasonable detail in separate schedules accompanying the
Compliance Certificates required by Section 7.14(F) hereof for each of
the fiscal quarters in which such expenses are incurred.
Section 4. Conditions Precedent.
The effectiveness of the foregoing is subject to the satisfaction of all of
the following conditions precedent:
Section 4.1. The Company, the Agent and the Banks shall have executed this
Amendment (such execution may be in several counterparts and the several parties
hereto may execute on separate counterparts).
Section 4.2. The Agent shall have received an executed Guarantors' Consent
in the form attached hereto as Exhibit A.
Section 4.3. The Banks shall have received copies (executed or certified as
may be appropriate) of all legal documents or proceedings taken in connection
with the execution and delivery of this Amendment and the other instruments and
documents contemplated hereby and an opinion of counsel to the Company in a form
satisfactory to the Banks.
Section 4.4. Each of the representations and warranties set forth in
Section 5 of the Credit Agreement shall be true and correct (except that the
representations contained in Section 5.4 of the Credit Agreement shall be deemed
to refer to the most recent financial
<PAGE>
statements of the Company delivered to the Banks pursuant to Section 7.14 of the
Credit Agreement). The Company further represents and warrants that the
Guarantors listed on the form of Guarantors' Consent attached hereto as Exhibit
A constitute all of the Company's Domestic Subsidiaries existing as of the date
hereof.
Section 4.5. After giving effect to this Amendment, the Company shall be in
full compliance with all of the terms and conditions of the Credit Agreement and
no Event of Default or Default shall have occurred and be continuing thereunder.
Section 4.6. The Company shall have consummated the Chemdal Transaction
pursuant to that certain Asset and Stock Purchase Agreement dated as of November
22, 1999 between the Company, as seller, and BASF Aktiengesellschaft, as
purchaser (the "Sale Agreement") and the Agent shall have received an executed
counterpart of the Sale Agreement.
Section 5. Miscellaneous.
Section 5.1. Except as specifically modified, amended and waived herein the
Credit Agreement shall continue in full force and effect. Reference to this
specific Amendment need not be made in any note, document, letter, certificate,
the Credit Agreement itself, the Revolving Credit Notes, the Guaranty Agreement
or any communication issued or made pursuant to or with respect thereto, any
reference to the Credit Agreement in any of such being sufficient to refer to
the Credit Agreement as amended hereby.
Section 5.2. The Company shall pay all fees and expenses (including
attorneys' fees) incurred by Harris Trust and Savings Bank and its counsel
incurred in connection with the drafting and preparation, and supervision of
legal matters in connection with this Amendment. The Company shall also provide
to the Agent within thirty (30) days of the consummation of the Chemdal
Transaction a Compliance Certificate in the form set forth in Exhibit C of the
Credit Agreement, certified by the chief financial officer of the Company,
reflecting the condition of the Company and showing compliance with certain
covenants of the Credit Agreement as in effect immediately following the
consummation of the Chemdal Transaction.
Section 5.3. This Amendment may be executed in any number of counterparts,
and by the different parties on different counterparts, all of which taken
together shall constitute one and the same Agreement. Any of the parties hereto
may execute this Amendment by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. This Amendment
shall be governed by the internal laws of the State of Illinois.
<PAGE>
Dated as of this 26th day of May, 2000.
AMCOL International Corporation
(formerly known as American Colloid Company)
By /s/ Paul G. Shelton
Its Senior Vice President & Chief Financial Officer
Accepted and agreed to as of the day and year last above written.
Harris Trust and Savings Bank, individually
and as Agent
By /s/ Edward Klinger
Its Vice President
Bank One, NA (formerly known as The First
National Bank of Chicago)
By /s/ Scott P. Moreen
Its Vice President
LaSalle National Bank
By /s/ Richard Bott
Its Senior Vice President
The Northern Trust Company
By /s/ Olga Georgiev
Its Vice President
Bank of America, NA
By /s/ Daniel Lange
Its Vice President
<PAGE>
