exv10w7






Exhibit 10.7


 

 



FOURTH AMENDMENT

TO

CREDIT AGREEMENT




Dated as of August 6, 2008




among




ENCORE WIRE CORPORATION,

as the Borrower




BANK OF AMERICA, N.A.,

as Administrative Agent and a Lender,




and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agent and a Lender




and




The Other Lenders Party Thereto


 

 



BANK OF AMERICA, N.A.,

as Sole Lead Arranger and Sole Book Manager




 









 








FOURTH AMENDMENT TO CREDIT AGREEMENT




     THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Fourth Amendment”), dated as of
August 6, 2008, is entered into among ENCORE WIRE CORPORATION, a Delaware corporation (the
“Borrower”), BANK OF AMERICA, N.A. (“Bank of America”) and WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Wells Fargo”), in their individual capacities as “Lenders”
(as such term is defined herein), and BANK OF AMERICA, N.A., as Administrative Agent.



BACKGROUND




     A. The Borrower, the Lenders and the Administrative Agent are parties to that certain Credit
Agreement, dated as of August 27, 2004, as amended by that certain First Amendment to Credit
Agreement, dated as of May 16, 2006, that certain Second Amendment to Credit Agreement, dated as of
August 31, 2006, and that certain Third Amendment to Credit Agreement, dated as of June 29, 2007
(said Credit Agreement, as amended, the “Credit Agreement”). The terms defined in the
Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit
Agreement.



     B. The Borrower has requested certain amendments to the Credit Agreement.



     C. The Lenders and the Administrative Agent hereby agree to amend the Credit Agreement,
subject to the terms and conditions set forth herein.



     NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set
forth, and for other good and valuable consideration, the receipt and adequacy of which are all
hereby acknowledged, the Borrower, the Lenders and the Administrative Agent covenant and agree as
follows:



     1. AMENDMENTS.



     (a) The definition of “Aggregate Commitments” set forth at 1.6 of the Credit Agreement
is hereby amended to read as follows:



     “Aggregate Commitments” means the Commitments of all the Lenders. As of the
Fourth Amendment Effective Date, the Aggregate Commitments are $150,000,000.



     (b) The definition of “Accordion Amount” set forth in Article I of the Credit
Agreement is hereby amended to read as follows:



     “Accordion Amount” means $50,000,000.



     (c) The definition of “Applicable Margin” set forth at 1.8 of the Credit Agreement is
hereby amended to read as follows:



     “Applicable Margin” means the following percentages per annum, based upon the
Leverage Ratio:



 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	APPLICABLE	 	APPLICABLE	 	 
	 	 	 	 	 	 	MARGIN FOR	 	MARGIN FOR	 	 
	 	 	 	 	 	 	BASE RATE	 	EURODOLLAR	 	COMMITMENT
	LEVEL	 	LEVERAGE RATIO	 	LOANS	 	RATE LOANS	 	FEE
	 	1	 	 	Less than or equal to 1.50 to 1.00
	 	 	0	%	 	 	1.000	%	 	 	0.200	%
	 	2	 	 	Greater than 1.50 to 1.00 and less than or
equal to 2.25 to 1.00
	 	 	0	%	 	 	1.250	%	 	 	0.250	%
	 	3	 	 	Greater than 2.25 to 1.00 and less than or
equal to 3.00 to 1.00
	 	 	0	%	 	 	1.500	%	 	 	0.250	%
	 	4	 	 	Greater than 3.00 to 1.00
	 	 	0.250	%	 	 	1.750	%	 	 	0.375	%







     The Applicable Margin shall be measured and determined according to the quarterly
consolidated financial statements delivered to Agent under paragraph 7.6. Any adjustment in
the Applicable Margin after the Effective Date shall be deemed effective as of the date the
financial statements referred to in the immediately preceding sentence are due. The
Applicable Margin in effect from the Fourth Amendment Effective Date until the first day
following the receipt by the Agent of the quarterly consolidated financial statements
referred to above for the quarter ending June 30, 2008 shall be determined based upon
Pricing Level 1.




     If, as a result of a restatement of or other adjustments to the financial statements to
Agent under paragraph 7.6, Agent determines that (a) the Leverage Ratio as calculated by
Borrower as of any applicable date was inaccurate and (b) a proper calculation of the
Leverage Ratio would have resulted in different pricing for any period, then (i) if the
proper calculation of the Leverage Ratio would have resulted in a higher pricing for such
period, Borrower shall automatically and retroactively be obligated to pay to Agent (for the
account of Lenders), promptly on demand by Agent, an amount equal to the excess of the
amount of interest and fees that should have been paid for such period over the amount of
interest and fees actually paid for such period, and (ii) if the proper calculation of the
Leverage Ratio would have resulted in lower pricing for such period, Lenders shall have no
obligation to repay any interest or fees to Borrower; provided that if, as a result of any
restatement or other event a proper calculation of the Leverage Ratio would have resulted in
higher pricing for one or more periods and lower pricing for one or more periods (due to the
shifting of income or expenses from one period to another period or any similar reason),
then the amount payable by Borrower pursuant to clause (i) above shall be based upon the
excess, if any, of the total amount of interest and fees that should have been paid for all
applicable periods over the total amount of interest and fees actually paid for all such
periods. This paragraph shall not limit the rights of Lenders under paragraph 3.1.1(c) or
other provisions of this



 









 







Agreement. The obligation of Borrower under this paragraph shall survive termination
of the Commitments and repayment of all other Obligations hereunder.



     (d) The definition of “Contract Term” set forth at 1.29 of the Credit Agreement is
hereby amended to read as follows:




     “Contract Term” means the period beginning on the Effective Date and continuing
through August 6, 2013.



     (e) Article I of the Credit Agreement is hereby amended by adding the defined term “Fourth
Amendment Effective Date” thereto in proper alphabetical order to read as follows:




     “Fourth Amendment Effective Date” means August 6, 2008.



     (f) Paragraph 7.21(a) of the Credit Agreement is hereby amended to read as follows:




     (a) Borrower agrees that the following financial covenants must be maintained as set
forth herein. Borrower’s compliance shall be measured as of the end of each Fiscal Quarter,
unless the context provides otherwise.




	 	1.	 	Fixed Charge Ratio. Fixed Charge Ratio shall not at
any time be less than 2.00 to 1.00.
	 
	 	2.	 	Leverage Ratio. Leverage Ratio shall not at any time
be more than 3.50 to 1.00.
	 
	 	3.	 	Leverage Ratio. Leverage Ratio for more than two
consecutive Fiscal Quarters shall not exceed 3.00 to 1.00.
	 
	 	4.	 	Capital Expenditures. Capital Expenditures shall not
exceed $30,000,000 during any fiscal year.





     (g) Paragraph 7.26 of the Credit Agreement is hereby amended to read as follows:




     7.26 Limitation on Indebtedness. Neither Borrower nor any Guarantor will be
obligated, directly or indirectly, for borrowed money or otherwise under any promissory
note, bond, indenture or similar instrument, other than (a) in favor of Agent and the
Lenders hereunder, (b) trade indebtedness incurred in the normal and ordinary course of
Borrower’s or such Guarantor’s business and not more than ninety (90) days past due, (c)(i)
indebtedness of Borrower or any Guarantor under capitalized leases and (ii) purchase money
indebtedness in connection with the purchase of equipment, provided that the aggregate
outstanding amount of indebtedness in respect of such capitalized leases and purchase money
indebtedness does not exceed $15,000,000 at any time, (d) the Private Placement Debt, so
long as there is no Default or Event of Default immediately before and, on a pro forma
basis, after incurrence of such indebtedness, (f) obligations (contingent or otherwise) of
the Borrower or any Subsidiary existing or arising under any Swap Contract with any Lender
or any Affiliate of any Lender, provided that (i) such obligations are (or were)
entered into by such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities,



 









 






commitments, investments, assets, or property held or reasonably anticipated by such
Person, or changes in the value of securities issued by such Person, and not for purposes of
speculation or taking a “market view;” and (ii) such Swap Contract does not contain any
provision exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party, and (g) unsecured indebtedness not
otherwise permitted pursuant to clauses (a) through (f) above, not to exceed $5,000,000 in
aggregate principal amount at any time outstanding;



     (h) Paragraph 7.30 of the Credit Agreement is hereby amended to read as follows:




     7.30 Dividends, Distributions, Redemptions. Borrower will not (i) declare, pay
or issue any dividends or other distributions in respect of its equity interests, (ii)
distribute, reserve, secure or otherwise commit distributions in respect of its equity
interests or (iii) make any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination in respect of its equity interests;
provided, however, that if no Default or Event of Default exists or will result therefrom
and there is compliance with the financial covenants in Paragraph 7.21(a) on a pro forma
basis after giving effect thereto, Borrower may (x) repurchase shares of Borrower to be held
as treasury shares for an aggregate amount during any fiscal year not to exceed $15,000,000
and (y) pay dividends to its shareholders.



     2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and
delivery hereof, the Borrower represents and warrants that, as of the date hereof and after giving
effect to this Fourth Amendment:



     (a) the representations and warranties contained in the Credit Agreement and the other Loan
Documents are true and correct on and as of the date hereof as made on and as of such date, except
to the extent that such representations and warranties specifically refer to an earlier date, in
which case they shall be true and correct as of such earlier date, and except to the extent such
representations and warranties have been supplemented pursuant to paragraph 7.12 of the Credit
Agreement;



     (b) no event has occurred and is continuing which constitutes a Default or an Event of
Default;



     (c) (i) the Borrower has full power and authority to execute and deliver this Fourth
Amendment, (ii) this Fourth Amendment has been duly executed and delivered by the Borrower, and
(iii) this Fourth Amendment and the Credit Agreement, as amended hereby, constitute the legal,
valid and binding obligations of the Borrower, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable Debtor Relief Laws and by general
principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at
law) and except as rights to indemnity may be limited by federal or state securities laws;



     (d) neither the execution, delivery and performance of this Fourth Amendment or the Credit
Agreement, as amended hereby, nor the consummation of any transactions contemplated herein or
therein, will conflict with (i) the certificate or articles of incorporation or the applicable
constituent documents or bylaws of the Borrower or the Guarantor, (ii) any Law



 









 




applicable to the Borrower or the Guarantor or (iii) any indenture, agreement or other
instrument to which the Borrower, the Guarantor or any of their respective properties are subject;
and




     (e) no authorization, approval, consent, or other action by, notice to, or filing with, any
Governmental Authority or other Person not previously obtained is required for (i) the execution,
delivery or performance by the Borrower of this Fourth Amendment or (ii) the acknowledgement by the
Guarantor of this Fourth Amendment.



     3. CONDITIONS TO EFFECTIVENESS. This Fourth Amendment shall be effective immediately
upon satisfaction or completion of the following:



     (a) the Administrative Agent shall have received counterparts of this Fourth Amendment
executed by each Lender;



     (b) the Administrative Agent shall have received counterparts of this Fourth Amendment
executed by the Borrower and acknowledged by the Guarantor;



     (c) the Administrative Agent shall have received a certified resolution of the Board of
Directors of the Borrower authorizing the execution, delivery and performance of this Fourth
Amendment;



     (d) the Administrative Agent shall have received an opinion of the Borrower’s counsel, in form
and substance satisfactory to the Administrative Agent and its counsel, with respect to the matters
set forth in clauses (c), (d) and (e) of Section 2 of this Fourth Amendment and with
respect to such other matters as the Administrative Agent and its counsel shall reasonably request;



     (e) the Administrative Agent shall have received in immediately available funds for the
account of each Lender a fee in an amount equal to the product of (A) $125,000.00 and (B) the
amount of such Lender’s Commitment, as reduced by this Fourth Amendment, divided by the Aggregate
Commitments; and



     (f) the Administrative Agent shall have received, in form and substance satisfactory to the
Administrative Agent and its counsel, such other documents, certificates and instruments as the
Administrative Agent shall require.



     4. REFERENCE TO THE CREDIT AGREEMENT.



     (a) Upon the effectiveness of this Fourth Amendment, each reference in the Credit Agreement to
“this Agreement”, “hereunder”, or words of like import shall mean and be a reference to the Credit
Agreement, as affected and amended hereby.



     (b) The Credit Agreement, as amended by the amendments referred to above, shall remain in full
force and effect and is hereby ratified and confirmed.



     5. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation, reproduction, execution
and delivery of this Fourth Amendment and the other instruments and documents to be delivered
hereunder (including the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto).



 









 





     6. GUARANTOR’S ACKNOWLEDGMENT. By signing below, the Guarantor (a) acknowledges,
consents and agrees to the execution, delivery and performance by the Borrower of this Fourth
Amendment, (b) acknowledges and agrees that its obligations in respect of its Guaranty (i) are not
released, diminished, waived, modified, impaired or affected in any manner by this Fourth Amendment
or any of the provisions contemplated herein, and (ii) includes all Obligations as assumed by the
Borrower, (c) ratifies and confirms its obligations under its Guaranty, and (d) acknowledges and
agrees that it has no claims or offsets against, or defenses or counterclaims to, its Guaranty.



     7. EXECUTION IN COUNTERPARTS. This Fourth Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which when taken together shall
constitute but one and the same instrument. For purposes of this Fourth Amendment, a counterpart
hereof (or signature page thereto) signed and transmitted by any Person party hereto to the
Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be
treated as an original. The signature of such Person thereon, for purposes hereof, is to be
considered as an original signature, and the counterpart (or signature page thereto) so transmitted
is to be considered to have the same binding effect as an original signature on an original
document.



     8. GOVERNING LAW; BINDING EFFECT. This Fourth Amendment shall be governed by and
construed in accordance with the laws of the State of Texas, provided that the Administrative Agent
and each Lender shall retain all rights arising under federal law, and shall be binding upon the
parties hereto and their respective successors and assigns.



     9. HEADINGS. Section headings in this Fourth Amendment are included herein for
convenience of reference only and shall not constitute a part of this Fourth Amendment for any
other purpose.



     10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FOURTH AMENDMENT, AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



REMAINDER OF PAGE LEFT INTENTIONALLY BLANK




 









 





     IN WITNESS WHEREOF, this Fourth Amendment is executed as of the date first set forth above.



	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	ENCORE WIRE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Frank J. Bilban
 

Frank J. Bilban
	 	 
	 

	 	Title:
	 	Vice President &

Chief Financial Officer	 	 






 









 






	 	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Suzanne M. Paul
 

Suzanne M. Paul
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as a Lender	 	 
	Commitment: $90,000,000
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Allison W. Connally
 

Allison W. Connally
	 	 
	 

	 	Title:
	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as a
Lender	 	 
	 
	 	 	 	 	 	 
	Commitment: $60,000,000
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Douglas I. Sako
 

Douglas I. Sako
	 	 
	 

	 	Title:
	 	Vice President	 	 






 









 






ACKNOWLEDGED AND AGREED:




EWC AVIATION CORP.




By:     /s/ Frank J. Bilban               

Name: Frank J. Bilban

Title: Vice President & Chief Financial Officer