Exhibit 10.4
THIRD AMENDMENT
THIRD AMENDMENT (this "Amendment"), dated as of November 21, 1997,
among MOTORS AND GEARS INDUSTRIES, INC., a Delaware corporation (the
"Borrower"), the financial institutions party to the Credit Agreement referred
to below (each, a "Bank" and, collectively, the "Banks"), and BANKERS TRUST
COMPANY, as Agent for the Banks (the "Agent"). All capitalized terms used herein
and not otherwise defined shall have the respective meanings provided such terms
in the Credit Agreement.
W I T N E S S E T H:
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WHEREAS, the Borrower, the Banks and the Agent are parties to a Credit
Agreement, dated as of November 7, 1996 (as amended, modified or supplemented to
the date hereof, the "Credit Agreement");
WHEREAS, the Borrower desires to acquire, through Motion Holdings,
Inc., a Delaware corporation ("Motion Holdings") and, upon the consummation of
the Motion Holdings Assignment described below, a Wholly-Owned Subsidiary of the
Borrower, all of the capital stock of Motion Control Engineering, Inc., a
California corporation ("MCE"), pursuant to a Stock Purchase Agreement (as
amended, modified or supplemented through the Third Amendment Effective Date (as
defined below), the "MC Stock Purchase Agreement"), dated as of November 17,
1997, among Motion Holdings and all of the stockholders of MCE (the "Motion
Control Acquisition"), which transaction, after giving effect to this Amendment,
will constitute a Permitted Acquisition effected in accordance with the
requirements of the Credit Agreement;
WHEREAS, subject to the terms and conditions of this Amendment, the
parties hereto wish to amend the Credit Agreement as herein provided;
NOW, THEREFORE, it is agreed:
I. Amendments and Modifications to Credit Agreement.
1. Notwithstanding anything to the contrary contained in Sections 9.02
and 9.13 of the Credit Agreement, on the Third Amendment Effective Date and
immediately prior to giving effect to the Motion Control Acquisition, the
Borrower may acquire 100% of the capital stock of Motion Holdings by way of
assignment (the "Motion Holdings Assignment") from Parent pursuant to, and in
accordance with the terms of, an assignment
agreement, between Parent and the Borrower, in form and substance satisfactory
to the Agent, so long as (i) no consideration is paid to Parent in connection
with the Motion Holdings Assignment and (ii) all of the requirements of Section
9.13 of the Credit Agreement have been satisfied with respect to Motion Holdings
(for this purpose, treating each reference to "any Wholly-Owned Domestic
Subsidiary", "such new Wholly-Owned Domestic Subsidiary" and "such new
Subsidiary" appearing in Section 9.13 of the Credit Agreement as a reference to
Motion Holdings).
2. The Banks hereby acknowledge and agree that the Motion Control
Acquisition may be effected as a Permitted Acquisition in accordance with (x)
all applicable requirements of the Credit Agreement, including, without
limitation, Sections 8.11, 8.15, 8.16, 9.02, 9.12, and 9.13 thereof and (y) the
terms of the MC Stock Purchase Agreement; provided that, notwithstanding
anything to the contrary contained in Section 8.15 of the Credit Agreement, the
Permitted Transaction Cost of the Motion Control Acquisition (including fees and
expenses) shall be permitted to be $53,000,000 (subject to upward or downward
adjustment as provided in Section 1.1 of the Stock Purchase Agreement), so long
as the Motion Control Acquisition otherwise meets all applicable requirements
for a Permitted Acquisition pursuant to the Credit Agreement.
3. Section 9.03(ix) of the Credit Agreement is hereby amended by (i)
deleting the word "Indenture" in each place it appears therein and inserting the
word "Indentures" in lieu thereof, (ii) deleting the text "Initial Borrowing
Date" in the first place it appears in clause (x) of said Section and inserting
the text "Third Amendment Effective Date" in lieu thereof and (iii) deleting the
test "the Initial Borrowing Date" in the second place it appears in clause (x)
of said Section and inserting the text "(x) in the case of the Series A Senior
Unsecured Notes, the Initial Borrowing Date and (y) in the case of the Series C
Senior Unsecured Notes, the Third Amendment Effective Date" in lieu thereof.
4. Section 9.04(xix) of the Credit Agreement is hereby amended by
deleting the amount "$170" appearing in said Section and inserting the amount
"$300.0" in lieu thereof text.
5. Section 9.11 of the Credit Agreement is hereby amended by
inserting the text "Third Amendment" immediately prior to the text "Effective
Date" appearing in clause (a)(vi) thereof.
6. Notwithstanding anything to the contrary contained in Section
9.10(i) of the Credit Agreement, the Parent Subordinated Intercompany Note may
be amended (i) to increase the amount "ONE HUNDRED TWENTY SEVENTY MILLION"
appearing therein to the amount "THREE HUNDRED MILLION" and (ii) to delete the
word "Indenture" in each place it appears therein and to insert the word
"Indentures" in lieu thereof.
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7. Notwithstanding anything to the contrary contained in Section 10.11
of the Credit Agreement, amendments may be made to Section 4.07 of the Series A
Senior Unsecured Note Indenture to permit the issuance of the Series C Senior
Unsecured Notes pursuant to the Series C Senior Unsecured Note Indenture.
8. The definition of "Additional Interest" appearing in Section 11.01
of the Credit Agreement is hereby amended by deleting the word "Indenture"
appearing therein and inserting the word "Indentures" in lieu thereof.
9. The definition of "Change of Control" appearing in Section 11.01 of
the Credit Agreement is hereby amended by deleting the word "Indenture"
appearing therein and inserting the word "Indentures" in lieu thereof.
10. The definition of "Senior Unsecured Note Indenture" appearing in
Section 11.01 of the Credit Agreement is hereby deleted in its entirety and the
following new definition is inserted in lieu thereof:
"Senior Unsecured Note Indentures" shall mean the Series A Senior
Unsecured Note Indenture and the Series C Senior Unsecured Note Indenture.
11. The definition of "Senior Unsecured Notes" appearing in Section
11.01 of the Credit Agreement is hereby deleted in its entirety and the
following new definition is inserted in lieu thereof:
"Senior Unsecured Notes" shall mean the Series A Senior Unsecured
Notes and the Series C Senior Unsecured Notes.
12. The definition of "Senior Unsecured Note Documents" appearing in
Section 11.01 of the Credit Agreement is hereby deleted in its entirety and the
following new definition is inserted in lieu thereof:
"Senior Unsecured Note Documents" shall mean the Series A Senior
Unsecured Note Documents and the Series C Senior Unsecured Note Documents.
13. Section 11.01 of the Credit Agreement is hereby amended by
inserting the following new definitions in appropriate alphabetical order:
"Exchange Series A Senior Unsecured Notes" shall mean senior unsecured
notes which are substantially identical securities to the Series A Senior
Unsecured Notes, which Exchange Series A Senior Unsecured Notes shall be
issued pursuant to a registered exchange offer or private exchange offer
for the Series A Senior Unsecured Notes and pursuant to the Series A Senior
Unsecured Note Indenture.
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In no event will the issuance of any Exchange Series A Senior Unsecured
Notes increase the aggregate principal amount of Series A Senior Unsecured
Notes then outstanding or otherwise result in an increase in an interest
rate applicable to the Series A Senior Unsecured Notes.
"Exchange Series C Senior Unsecured Notes" shall mean senior unsecured
notes which are substantially identical securities to the Series C Senior
Unsecured Notes and the Exchange Series A Senior Unsecured Notes, which
Exchange Series C Senior Unsecured Notes shall be issued pursuant to a
registered exchange offer or private exchange offer for the Series C Senior
Unsecured Notes and a portion of the Exchange Series A Senior Unsecured
Notes (the "Converted Exchange Series A Senior Unsecured Notes") and
pursuant to the Series C Senior Unsecured Note Indenture, all as
contemplated by the Series C Senior Unsecured Note Offering Memorandum. In
no event will the issuance of any Exchange Series C Senior Unsecured Notes
increase the aggregate principal amount of the Series C Senior Unsecured
Notes or of the Converted Exchange Series A Senior Unsecured Notes then
outstanding or otherwise result in an increase in an interest rate
applicable to the Series C Senior Unsecured Notes or the Converted Exchange
Series A Senior Unsecured Notes.
"Series A Senior Unsecured Note Documents" shall mean each of the
documents and other agreements entered into (including, without
limitation, the Series A Senior Unsecured Note Indenture) relating to the
issuance by Parent of the Series A Senior Unsecured Notes, as in effect on
the Initial Borrowing Date and as the same may be entered into, modified,
supplemented or amended from time to time pursuant to the terms thereof.
"Series A Senior Unsecured Note Indenture" shall mean that certain
Indenture, dated as of November 7, 1996, entered into by and between Parent
and Fleet National Bank, as trustee thereunder, as in effect on the Initial
Borrowing Date and as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Series A Senior Unsecured Note Offering Memorandum" shall mean the
Offering Memorandum, dated November 7, 1996, in connection with the private
placement of the Series A Senior Unsecured Notes.
"Series A Senior Unsecured Notes" shall mean Parent's 10-3/4% Series A
Senior Notes due 2006, as in effect on the Initial Borrowing Date and as
the same may be amended, modified or supplemented from time to time
pursuant to the terms thereof. As used herein, the term "Series A Senior
Unsecured Notes" shall include any Exchange Series A Senior Unsecured Notes
issued pursuant to the Series A
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Senior Unsecured Note Indenture in exchange for outstanding Series A Senior
Unsecured Notes, as contemplated by the Series A Senior Unsecured Note
Offering Memorandum and the definition of Exchange Series A Senior
Unsecured Notes.
"Series C Senior Unsecured Note Documents" shall mean each of the
documents and other agreements entered into (including, without limitation,
the Series C Senior Unsecured Note Indenture) relating to the issuance by
Parent of the Series C Senior Unsecured Notes, as in effect on the Third
Amendment Effective Date and as the same may be entered into, modified,
supplemented or amended from time to time pursuant to the terms thereof.
"Series C Senior Unsecured Note Indenture" shall mean that certain
Indenture, dated as of December 5, 1997, entered into by and between Parent
and State Street Bank and Trust Company, as trustee thereunder, as in
effect on the Third Amendment Effective Date and as the same may be
amended, modified or supplemented from time to time in accordance with the
terms thereof.
"Series C Senior Unsecured Note Offering Memorandum" shall mean the
Offering Memorandum, dated December 2, 1997, in connection with the private
placement of the Series C Senior Unsecured Notes.
"Series C Senior Unsecured Notes" shall mean Parent's 10-3/4% Series C
Senior Notes due 2006, as in effect on the Third Amendment Effective Date
and as the same may be amended, modified or supplemented from time to time
pursuant to the terms thereof. As used herein, the term "Series C Senior
Unsecured Notes" shall include any Exchange Series C Senior Unsecured Notes
issued pursuant to the Series C Senior Unsecured Note Indenture in exchange
for outstanding Exchange Series A Senior Unsecured Notes and outstanding
Series C Senior Unsecured Notes, as contemplated by the Series C Senior
Unsecured Note Offering Memorandum and the definition of Exchange Series C
Senior Unsecured Notes.
"Third Amendment" shall mean the Third Amendment to this Agreement,
dated as of November 21, 1997.
"Third Amendment Effective Date" shall have the meaning provided in
the Third Amendment.
II. Miscellaneous Provisions.
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1. In order to induce the Banks to enter this Amendment, the Borrower
hereby represents and warrants that:
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(a) no Default or Event of Default exists as of the Third Amendment
Effective Date, both before and after giving effect to this Amendment; and
(b) all of the representations and warranties contained in the Credit
Agreement or the other Credit Documents are true and correct in all
material respects on the Third Amendment Effective Date both before and
after giving effect to this Amendment, with the same effect as though such
representations and warranties had been made on and as of the Third
Amendment Effective Date (it being understood that any representation or
warranty made as of a specific date shall be true and correct in all
material respects as of such specific date).
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
3. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
5. This Amendment shall become effective on the date (the "Third
Amendment Effective Date") when each of the following conditions shall have been
satisfied:
(i) the Borrower shall have duly authorized, executed and delivered
to Parent the Parent Subordinated Intercompany Note, amended as described
in Part I. Section 6 of this Amendment;
(ii) the Agent and the Banks shall have received an opinion from (x)
Xxxxx, Xxxxx & Xxxxx covering such matters incident to the transactions
contemplated by this Amendment as the Agent may reasonably request and (y)
Xxxxx, Cave covering such matters incident to the transactions contemplated
by this Amendment as the Agent may reasonably request, which opinions shall
be in form and substance satisfactory to the Agent; and
(iii) each of the Borrower and the Required Banks shall have signed a
counterpart hereof (whether the same or different counterparts) and shall
have
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delivered (including by way of facsimile transmission) the same to the
Agent at its Notice Office.
6. From and after the Third Amendment Effective Date, all references
in the Credit Agreement and each of the other Credit Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as modified
hereby.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
MOTORS AND GEARS INDUSTRIES, INC.
By /s/ Xxxxxx Xxxxxx
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Title: Vice President
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Xxxxxxxx Xxxxx
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Title: Vice President
BANKBOSTON, N.A.
By /s/ Xxxxxxx Xxxxxxx
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Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Xxxxxx Redrath
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Title: Vice President
XXXXXX FINANCIAL
By /s/ Xxxxxxx X. Xxxxxxx
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Title: Vice President
