FOURTH AMENDMENT TO CREDIT AND GUARANTY AGREEMENT
THIS FOURTH AMENDMENT, dated as of March 9, 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
the 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 that the Lenders grant a
waiver to certain terms of the Existing Credit Agreement and consent to the
Transaction (as defined below), and the Lenders have agreed to amend the
Existing Credit Agreement and grant such waivers and consent (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 1.1. 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 Fourth Amendment
Effective Date (as defined in Subpart 3.1), certain terms and provisions of the
Existing Credit Agreement are hereby amended, and the waivers and consent
described below are hereby granted, in accordance with this Part. Except as so
amended or modified by this Amendment, the Existing Credit Agreement shall
continue in full force and effect in accordance with its terms.
SUBPART 2.1. 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 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in the appropriate alphabetical
order:
"Amendment No. 4" means the Fourth Amendment, dated as of
March 9, 1998, to this Agreement among the Borrower, the Parent and the
Lenders parties thereto.
"Borrower Merger" means the merger of Newco with and into the
Borrower, with the Borrower being the surviving corporation at such
merger.
"Fourth Amendment Effective Date" is defined in Subpart 3.1 of
Amendment No. 4.
"Newco" means a to be formed Delaware corporation that will be a
direct, wholly owned Subsidiary of the Parent.
"Transaction" means the incorporation of Newco by the Parent, the
contribution of cash by the Parent to Newco sufficient in amount to pay
for the redemption of approximately 1,200,000 issued and outstanding
shares of the Borrower's common stock (owned by other than Affiliates of
the Borrower) required as a result of the Borrower Merger and the
contribution of all of the issued and outstanding shares of common stock
of the Borrower owned on March 9, 1998 by the Parent into Newco (with the
contribution of such cash and shares by the Parent into Newco collectively
referred to as the "Contribution"), and within three Business Days
following the Contribution, the consummation of the Borrower Merger.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is hereby
further amended by amending the definition of "Permitted Amount" 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 aggregate amount of
Revolving Loans which may be applied from time to time by the Borrower to
open market purchases or redemptions of outstanding Senior Subordinated
Notes pursuant to the terms of Section 4.10 (whether or not the Borrower
has repaid or prepaid Revolving Loans subsequent to the date such
Revolving Loans were made (even if all Revolving Loans are repaid or
prepaid in full on any given date)), the sum of (i) $75,000,000 (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, $25,000,000, 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 $75,000,000 plus (in the case of
clause (b) only), the Additional Amount.
SUBPART 2.2. Amendment to Article II. Section 2.7 of the Existing Credit
Agreement is hereby amended by inserting the following sentence after the first
sentence contained in such Section:
"Notwithstanding the immediately preceding sentence, solely with regard to
Letter of Credit No. 90016/80085 issued in favor of Magna International
Inc. on February 27, 1998, the Borrower may deliver an Issuance Request on
not less than 60 nor more than 90 Business Days' notice prior to the then
existing Stated Expiry Date of such Letter of Credit requesting that the
Issuer extend the Stated Expiry Date of such Letter of Credit and unless
the Borrower delivers an Issuance Request during such period, such Letter
of Credit will not be extended by the Issuer pursuant to the "evergreen"
provisions."
SUBPART 2.3. Amendment to Article IV. Clause (iv)(B) of Section 4.10 of
the Existing Credit Agreement is hereby amended by deleting the figure
"$50,000,000" in such clause, and inserting the figure "$75,000,000" in its
place.
SUBPART 2.4. Amendment to Article VII. Article VII of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.4.1 through 2.4.2.
SUBPART 2.4.1. Clause (e) of Section 7.2.2 of the Existing Credit
Agreement is hereby amended by designating existing clause (e) as clause
"(e)(i), and adding a new clause (e)(ii) to read in its entirety to read as
follows:
"(e)(ii) unsecured Indebtedness of the Parent in a principal amount not to
exceed $95,000,000 at any time outstanding owing to Persons (other than
the Borrower or any Subsidiary of the Borrower) that are directly or
indirectly wholly owned and controlled by the two largest individual
Stockholders of the Parent (determined as of March 9, 1998) pursuant to
documentation containing terms (including the events of default, rights of
acceleration, representations and covenants) satisfactory to the
Administrative Agent; provided, that such Indebtedness shall be fully
subordinated on terms satisfactory to the Administrative Agent to the
obligations of the Parent under the guaranty of the Parent contained in
Article IX hereof and the final maturity date is at least one year
following the Stated Maturity Date (with no amortization or other payments
of principal required prior to such final maturity date), and the lenders
of such unsecured Indebtedness shall covenant that they will not commence
or cause the commencement of any of the actions described in clause (b),
(c) or (d) of Section 8.1.9 of this Agreement with respect to the Parent;"
SUBPART 2.4.2. Clause (b)(ii) of Section 7.2.6 of the Existing Credit
Agreement is hereby amended by deleting the figure "$50,000,000" in such clause,
and inserting the figure "$75,000,000" in its place.
SUBPART 2.5. Limited Waivers and Consent. Subject to the terms of this
Subpart, by their signatures below the Lenders hereby waive compliance with the
following terms of the Credit Agreement, but only to the extent necessary to
enable the Parent and the Borrower to consummate the Transaction:
(a) the provisions of clause (d) of the definition of "Change in
Control" for the period of time from the date of the Contribution to the
date of the consummation of the Borrower Merger;
(b) the representation contained in Section 6.17 of the Credit
Agreement; provided, that from the date of the Contribution until the date
of the consummation of the Borrower Merger, "(together with Newco)" shall
be deemed to be substituted for the words "(together with management
shareholders of the Parent and the Borrower)" and the phrase "(other than
Liens pursuant to a Loan Document)" shall be deemed to be substituted for
the phrase "(other than Liens pursuant to the Parent Pledge Agreement)";
(c) the provisions of clause (a) of Section 7.2.5 of the Credit
Agreement limiting the Parent's Investment to its Investment existing on
the Effective Date in the Borrower, but only to the extent of an
Investment by the Parent in Newco contemplated by the Transaction and to
the extent that the Parent is the owner of 100% of the capital stock of
Newco prior to the Borrower Merger;
(d) the provisions of Section 7.2.6 of the Credit Agreement, but
only to the extent the Borrower is obligated to pay consideration
(including cash) to holders (other than Affiliates of the Borrower) of the
Senior Subordinated Notes for consents to amend the Senior Subordinated
Indenture in connection with the Transaction in an amount agreed to by the
Administrative Agent;
(e) the provisions of Section 7.2.10 of the Credit Agreement in
connection with the Borrower Merger, but only to the extent that the
Borrower is the surviving corporation of the Borrower Merger; and
(f) the provisions of Section 7.2.11 and Section 7.2.19 of the
Credit Agreement, but only to the extent necessary to permit the Parent to
contribute cash and the Borrower Shares to Newco (as described in the
definition of "Transaction") in connection with the Transaction.
The limited waivers and consent described above are subject to the
following conditions:
(i) Newco shall at all times prior to the consummation of the
Borrower Merger be a direct, wholly owned Subsidiary of the Parent, and
Newco shall own directly all the issued and outstanding shares of the
Borrower that were owned on March 9, 1998 by the Stockholders and
management shareholders of the Borrower and of the Parent (the "Borrower
Shares"), free and clear of all Liens (other than Liens granted pursuant
to a Loan Document);
(ii) if the Borrower Merger shall not have been consummated
within three Business Days following the Contribution, Newco shall have
executed and delivered on such third Business Day a Guaranty in
substantially the form of the Parent Guaranty (with such changes thereto
as are deemed to be necessary by the Administrative Agent) and a Pledge
Agreement in substantially the form of the Borrower Pledge Agreement (with
such changes thereto as are deemed to be necessary by the Administrative
Agent), and Newco shall have delivered in pledge to the Administrative
Agent on such third Business Day the original share certificates
evidencing all of the Borrower Shares, together with undated stock powers
executed by Newco in blank for all Borrower Shares, and legal opinions
from counsel to the Borrower and Newco in form and substance satisfactory
to the Administrative Agent; and
(iii) prior to the date of the Contribution, the Administrative
Agent shall have received copies of all documentation to be
delivered in connection with the Transaction.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. This Amendment shall become effective on the date first set
forth above (the "Fourth Amendment Effective Date") when all of the following
conditions have been satisfied to the satisfaction of the Administrative Agent.
SUBPART 3.1.1. 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 3.1.2. Affirmation and Consent. 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 3.1.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its 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 4.1. 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 4.2. 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 4.3. 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 4.4. Compliance With Existing Credit Agreement. As of the Fourth
Amendment Effective Date, 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 5.1. 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 5.2. 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 5.3. 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 5.4. 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 5.5. 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 5.6. 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: Xxxxxxx X. Heredis
Title: Senior 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: Xxxx Xxxxxxx
Title: First Vice President
CRESTAR BANK
By: Xxxxxxxxxxx X. Xxxxxx
Title: Vice President
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By: Xxxxxxx X. Xxxxxx
Title: Vice President
By: Xxx Xxxxx
Title: Vice President
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: Xxxxx Xxxxxxxx
Title: Senior Vice President
US TRUST
By: Xxxxxx X. Xxxxxx
Title: Vice President
CIBC INC.
By: Xxxxxxx X. Xxxxxxx
Title: Authorized Signatory
