THIRD AMENDMENT TO CREDIT
AND GUARANTY AGREEMENT
THIS THIRD AMENDMENT, dated as of February 16, 1998 (this "Amendment") to
the Existing Credit Agreement referred to below is among IMO INDUSTRIES INC., a
Delaware corporation (the "Borrower"), II ACQUISITION CORP., a Delaware
corporation (the "Parent") and the Lenders (as defined below) parties hereto.
W I T N E S S E T H:
WHEREAS, the Borrower, the Parent, certain financial institutions from
time to time parties thereto (collectively, the "Lenders"), The Bank of Nova
Scotia, as the Administrative Agent and NationsBanc Capital Markets, Inc., as
Syndication Agent have entered into the Credit and Guaranty Agreement, dated as
of August 29, 1997 (as amended, supplemented, amended and restated or otherwise
modified prior to the date hereof, the "Existing Credit Agreement" and, as
amended by, and together with, this Amendment, the "Credit Agreement"); and
WHEREAS, the Borrower and the Parent have requested that the Existing
Credit Agreement be amended in certain respects, and the Lenders have agreed to
amend the Existing Credit Agreement (subject to the terms and conditions of this
Amendment);
NOW, THEREFORE, in consideration of the premises and the other provisions
herein contained, the parties hereto hereby agree as follows.
PART I
DEFINITIONS
SUBPART I.1. Use of Defined Terms. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the respective meanings provided therefor in the Existing
Credit Agreement.
PART II
AMENDMENTS TO
THE EXISTING CREDIT AGREEMENT
Effective upon (and subject to) the occurrence of the Third Amendment
Effective Date (as defined in Subpart 3.1), certain terms and provisions of the
Existing Credit Agreement are hereby amended in accordance with this Part.
Except as so amended, the Existing Credit Agreement shall continue in full force
and effect in accordance with its terms.
SUBPART II.1. Amendment to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 and 2.1.2.
SUBPART II.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in the appropriate alphabetical
order:
"Amendment No. 3" means the Third Amendment, dated as of February
16, 1998, to this Agreement among the Borrower, the Parent and the
Lenders parties thereto.
"Governmental Refund" means the amount received by the Borrower or
any of its Subsidiaries from the United States Air Force ("USAF") in
settlement of Contract Number F09603-86-C-2278, dated October 23, 1986,
between Varo, Inc. (now known as VHC, Inc., a Subsidiary of the Borrower)
and the USAF.
"Third Amendment Effective Date" is defined is Subpart 3.1 of
Amendment No. 3.
SUBPART II.1.2. Section 1.1 of the Existing Credit Agreement is hereby
further amended as follows:
(a) the definition of "Permitted Amount" is hereby amended in its
entirety to read as follows:
"Permitted Amount" means in the case of (a) the permitted maximum
amount of Revolving Loans which may be applied by the Borrower to purchase
outstanding Senior Subordinated Notes "put" to the Borrower pursuant to
the "put" provision contained in the Senior Subordinated Notes in the
event of a Change of Control (as defined therein) pursuant to the terms of
Section 4.10, $40,000,000, (b) the permitted maximum amount of Revolving
Loans which may be applied by the Borrower to open market purchases or
redemptions of outstanding Senior Subordinated Notes pursuant to the terms
of Section 4.10, the sum of (I) $50,000,000 (payable in respect of the
face amount of Senior Subordinated Notes purchased or redeemed) plus (ii)
an amount (referred to as the "Additional Amount") payable in respect of
any premium over the face amount of the Senior Subordinated Notes
purchased or redeemed by it in the open market (with the payment of such
Additional Amount being in all events subject to the terms of clause (iv)
of Section 4.10), (c) the permitted maximum amount of Revolving Loans
which may be applied by the Borrower to make intercompany loans to
Non-U.S. Subsidiaries to refinance existing Indebtedness of such Non-U.S.
Subsidiaries, $40,000,000, which amount shall automatically be reduced to
$25,000,000 following the sale of Roltra Xxxxx and (d) guarantees by the
Borrower of Indebtedness of Non-U.S. Subsidiaries, in an amount not to
exceed $20,000,000; provided, however, that the sum of clauses (a), (b),
(c) and (d) above shall not at any time exceed $50,000,000 plus (in the
case of clause (b) only), the Additional Amount.
SUBPART II.2. Amendment to Article III. Article III of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.2.1 and 2.2.2.
SUBPART II.2.1. The first proviso contained in clause (c) of Section 3.1.2
of the Existing Credit Agreement is hereby amended in its entirety to read as
follows:
(provided, however, in the case of the disposition of Roltra Xxxxx,
if the net cash proceeds received from such sale are in excess of
$15,000,000 (after the repayment of outstanding Indebtedness of
Roltra Xxxxx), then $8,000,000 of such net proceeds shall be deemed
to be Net Disposition Proceeds that shall be required to be applied
as a prepayment of the Term Loans)
SUBPART II.2.2. Section 3.1.2 of the Existing Credit Agreement is further
amended by (I) deleting the word "and" at the end of clause (c), (ii) changing
clause (d) to become clause (e) and (iii) adding a new clause (d), to read in
its entirety as follows:
(d) the Borrower shall promptly (and in any event within three
Business Days) following the receipt of Net Disposition Proceeds
from the sale of Roltra Xxxxx make a mandatory prepayment of the
outstanding principal amount of Revolving Loans with such Net
Disposition Proceeds in excess of $8,000,000; and
SUBPART II.3. Amendment to Article IV. Clause (iv) of Section 4.10 of the
Existing Credit Agreement and the remaining portion of such Section is hereby
amended in its entirety to read as follows:
"(iv) to refinance up to $40,000,000 (or if less than such amount at
any time, the Permitted Amount) (the "Subordinated Debt Refunding
Availability") of the Borrower's Senior Subordinated Notes through
redemptions pursuant to the put provision contained in the Senior
Subordinated Notes in the event of a Change of Control (as defined
therein) or subject to certain conditions, open market purchases or
redemptions in an amount up to the lesser of (A) the then existing
Permitted Amount and (B) $50,000,000 (which amount shall only be
applicable to the face amount of Senior Subordinated Notes purchased
or redeemed, it being agreed that such amount in this clause (iv)(B)
may be increased (subject to the terms of the following proviso) by
the Additional Amount); provided, that the average purchase price
paid pursuant to any such open market purchases or redemptions
(which for purposes of this calculation shall include both the face
amount of the Senior Subordinated Notes purchased or redeemed and
any premium paid over such face amount), when aggregated with such
purchase price (and premium) paid for all prior open market
purchases and redemptions made by the Borrower or another Obligor
since the Effective Date, shall not exceed 115% of the face amount
of such Senior Subordinated Notes previously purchased or redeemed
and then being purchased or redeemed (the "Subordinated Debt
Refunding"); provided, further, that on a pro forma basis after
giving effect to each Subordinated Debt Refunding and the aggregate
amount of Revolving Loans used to make intercompany loans to
Non-U.S. Subsidiaries, the Borrower must maintain availability under
the Revolving Loan Commitment of no less than $15,000,000 (as
increased, Dollar for Dollar, by the amount of the Governmental
Refund received by the Borrower or any other Obligor). The Borrower
shall apply the Term Loans to refinance the term loans of the
Borrower outstanding under the Existing Credit Facility."
SUBPART II.4. Amendment to Article VII. Article VII of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.4.1 and 2.4.2.
SUBPART II.4.1. Section 7.1.1 of the Existing Credit Agreement is hereby
amended by (I) deleting the word "and" at the end of clause (j), (ii) changing
clause (k) to become clause (m) and (iii) adding new clauses (k) and (l), to
read as follows:
"(k) promptly, and in any event within one Business Day following
receipt, notify the Administrative Agent of the receipt and amount
of the Governmental Refund;
(l) on the date of delivery of (and as part of) the Compliance
Certificate delivered pursuant to clause (b), a report stating (I)
the face amount of such Senior Subordinated Notes purchased or
redeemed and the premium (or amount in excess of the face amount)
(if any) paid in respect thereof during the Fiscal Quarter that is
covered by such Compliance Certificate and (ii) the aggregate face
amount of all Senior Subordinated Notes purchased or redeemed by the
Obligors since the Effective Date through the last day of the Fiscal
Quarter reported on such Compliance Certificate and a calculation of
the Additional Amount from the Effective Date through the last day
of the Fiscal Quarter reported on such Compliance Certificate; and"
SUBPART II.4.2. Clause (b) of Section 7.2.6 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"(b) purchase or redeem Senior Subordinated Notes in a face amount
not in excess of the lesser of (I) the Permitted Amount then in
effect and (ii)$50,000,000 (in respect of the face amount of Senior
Subordinated Notes) plus the Additional Amount, through open market
purchases or redemptions so long as the average purchase price of
such Senior Subordinated Notes purchased or redeemed remains in
compliance with clause (iv) of Section 4.10."
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART III.1. This Amendment shall become effective on the date (the
"Third Amendment Effective Date") when all of the following conditions have been
satisfied to the satisfaction of the Administrative Agent.
SUBPART III.1.1. Execution of Counterparts. The Administrative Agent shall
have received copies of this Amendment, duly executed and delivered by the
Borrower, the Parent and the Required Lenders.
SUBPART III.1.2. Affirmation and Comment. The Administrative Agent shall
have received an affirmation and consent in form and substance satisfactory to
it, duly executed and delivered by the Parent and each other Guarantor.
SUBPART III.1.3. Payment of Fees, etc. The Administrative Agent shall have
received evidence satisfactory to it that all fees and expenses of Xxxxx, Xxxxx
& Xxxxx arising in connection with the Existing Credit Agreement have been paid
in full.
SUBPART III.1.4. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent as counsel. The Administrative Agent and its counsel shall
have received all information and such counterpart originals or such certified
or other copies or such materials, as the Administrative Agent or its counsel
may reasonably request, and all legal matters incident to the transactions
contemplated by this Amendment shall be satisfactory to the Administrative
Agents and its counsel.
PART IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Amendment, the Borrower
and the Parent represent and warrant to the Administrative Agent, each Issuer
and each Lender as set forth in this Part.
SUBPART IV.1. Compliance with Warranties. The representations and
warranties set forth herein, in Article VI of the Credit Agreement and in each
other Loan Document delivered in connection herewith or therewith are true and
correct in all material respects with the same effect as if made on and as of
the date hereof (unless stated to relate solely to an earlier date, in which
case they were true and correct as of such earlier date).
SUBPART IV.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower, the Parent and the Guarantors of this
Amendment and other documents delivered pursuant hereto are within the
Borrower's, the Parent's and the Guarantors' corporate powers, have been duly
authorized by all necessary corporate action, and do not (I) contravene either
the Borrower's, the Parent's or the Guarantors' Organic Documents, (ii)
contravene or result in a default under any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting either
the Borrower, the Parent or the Guarantors, or (iii) result in, or require the
creation or imposition of, any Lien (except as contemplated in or created by the
Loan Documents).
SUBPART IV.3. Validity, etc. This Amendment has been duly executed and
delivered by the Borrower and the Parent and constitutes the legal, valid and
binding obligation of the Borrower and the Parent enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and to
general principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity.
SUBPART IV.4. Compliance With Existing Credit Agreement. As of the Third
Amendment Effective Date, each of the Borrower and each other Obligor is in
compliance with all the terms and conditions of the Existing Credit Agreement
and the other Loan Documents to be observed or performed by it, and both before
and after giving effect to the terms of this Amendment no Default has occurred
and is continuing.
PART V
MISCELLANEOUS PROVISIONS
SUBPART V.1. Ratification of and Limited Amendment to the Credit
Agreement. This Amendment shall be deemed to be an amendment to the Existing
Credit Agreement, and the Existing Credit Agreement, as amended hereby, is
hereby ratified, approved and confirmed in each and every respect. Except as
specifically amended or modified herein, the Existing Credit Agreement shall
continue in full force and effect in accordance with the provisions thereof and
except as expressly set forth herein the provisions hereof shall not operate as
a waiver of or amendment of any right, power or privilege of the Administrative
Agent and the Lenders nor shall the entering into of this Amendment preclude the
Lenders from refusing to enter into any further or future amendments. This
Amendment shall be deemed to be a "Loan Document" for all purposes of the Credit
Agreement.
SUBPART V.2. Credit Agreement, References, etc. All references to the
Credit Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Existing Credit Agreement as amended hereby.
As used in the Credit Agreement, the terms "Agreement", "herein", "hereinafter",
"hereunder", "hereto" and words of similar import shall mean, from and after the
date hereof, the Existing Credit Agreement as amended by this Amendment.
SUBPART V.3. Expenses. The Borrower agrees to pay all out-of-pocket
expenses incurred by the Administrative Agent in connection with the
preparation, negotiation, execution and delivery of this Amendment.
SUBPART V.4. Headings; Counterparts. The various headings of this
Amendment are inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof. This Amendment may be
signed in any number of separate counterparts, each of which shall be an
original, and all of which taken together shall constitute one instrument.
SUBPART V.5. Governing Law; Entire Agreement. THIS AMENDMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK. This Amendment constitutes the entire understanding among the parties
hereto with respect to the subject matter hereof and supersedes any prior
agreements, written or oral, with respect thereto.
SUBPART V.6. Loan Document Pursuant to Credit Agreement. This Amendment is
a Loan Document executed pursuant to the Credit Agreement and shall be
construed, administered and applied in accordance with all of the terms and
provisions of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
IMO INDUSTRIES INC.
By: Xxxx X. Xxxxx
Title: Vice President
II ACQUISITION CORP.
By: Xxxx X. Xxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
By: Xxxxx X. xxxxxxx
Title: Senior Relationship Manager
NATIONSBANK, N.A.
By: Xxxxxxxxxxxx X. Swamidasan
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: Xxx X. Xxxxxxx
Title: Vice President
FLEET CAPITAL CORPORATION
By: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: Xxxxx X'Xxxxx
Title: Vice President
By: Xxxxxxx Xxxx
Title: Vice President
CRESTAR BANK
By: Xxxxxxxxxxx X. Xxxxxx
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: Xxx Xxxxx
Title: Vice President
By: Xxxxxxx Xxxxx
Title: Assistant Treasurer
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: Xxxxxx Xxxxxxx
Title: Executive Vice President
US TRUST
By: Xxxxxx X. Xxxxxx
Title: Vice President
