EXECUTION COPY
EXHIBIT 4.1
THIRD AMENDMENT TO THE CREDIT AGREEMENT
THIRD AMENDMENT, dated as of March 13, 2002 (this "Third Amendment"),
to the Credit Agreement, dated as of September 30, 1999 (as amended,
supplemented, or otherwise modified from time to time, the "Credit Agreement"),
among TENNECO AUTOMOTIVE INC., a Delaware corporation (the "Borrower"), the
several lenders from time to time parties thereto (the "Lenders"), JPMORGAN
CHASE BANK (formerly known as The Chase Manhattan Bank), a New York banking
corporation, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and the other financial institutions named therein as
agents for the Lenders (in such capacity, collectively, the "Other Agents").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders and the Administrative Agent and
the Other Agents are parties to the Credit Agreement;
WHEREAS, the Borrower has requested that the Lenders amend the Credit
Agreement as set forth herein;
WHEREAS, the Lenders, the Administrative Agent and the Other Agents
are willing to agree to such amendment to the Credit Agreement, subject to the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Borrower, the Lenders, the Administrative Agent and the
Other Agents hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
which are defined in the Credit Agreement are used herein as therein defined.
2. Amendments to Credit Agreement. (a) Section 1.1 of the Credit
Agreement is amended as follows:
(i) by deleting the definition of "Applicable Margin" in its entirety
and substituting, in lieu thereof, the following:
"Applicable Margin": with respect to Revolving Loans, Swingline
Loans and Tranche A Term Loans, the rate per annum determined pursuant
to the Pricing Grid; and with respect to the Tranche B Term Loans and
Tranche C Term Loans, the rate per annum set forth under the relevant
column heading below:
ABR Loans Eurodollar Loans
--------- ----------------
Tranche B Term Loans 3.00% 4.00%
Tranche C Term Loans 3.25 4.25
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(ii) by adding the following three sentences at the end of the
definition of "Consolidated EBITDA":
In addition, Consolidated EBITDA for each fiscal quarter of the
Borrower, commencing with the first quarter of the Borrower's 2002
fiscal year and ending with the last quarter of the Borrower's 2004
fiscal year, shall be increased by the amount of cash restructuring
charges and related expenses associated with restructurings undertaken
by the Borrower and/or its Subsidiaries in the United States and/or
internationally included in the calculation of Consolidated Net Income
for such fiscal quarter, provided that the aggregate amount of such
cash restructuring charges in such twelve fiscal quarter period shall
not exceed $60,000,000. For purposes of the foregoing sentence, "cash"
restructuring charges and related expenses shall be deemed to include
any accrual of or reserve for cash restructuring charges and related
expenses for any future period. In addition, for purposes of Section
7.1 of this Agreement, Consolidated EBITDA for each fiscal quarter of
the Borrower's 2002 fiscal year shall be increased (but not by more
than $11,000,000 in the aggregate for all of the Borrower's 2002
fiscal year) by the amount of aftermarket acquisition costs of the
Borrower and its Subsidiaries to the extent such costs otherwise
reduce Consolidated EBITDA for such fiscal quarter. In addition, in
the event that any Permitted Sale/Leaseback results in the Borrower or
a Subsidiary entering into an operating lease, then Consolidated
EBITDA for any period shall be deemed to be increased by the amount of
lease payments under such operating lease made during such period.
(iii) by adding at the end of the definition of "Consolidated Interest
Expense" the following:
Notwithstanding the foregoing, in the event that Borrower or a
Subsidiary has entered into an operating lease in connection with a
Permitted Sale/Leaseback, then Consolidated Interest Expense for any
period shall be deemed to be increased by the interest component of
lease payments under such operating lease made during such period (as
determined based on the applicable schedule setting forth the
components of lease payments delivered pursuant to Section 7.11).
(iv) by adding at the end of the definition of "Consolidated Leverage
Ratio" the following:
Notwithstanding the foregoing, in the event that the Borrower or a
Subsidiary has entered into an operating lease in connection with a
Permitted Sale/Leaseback then for purposes of calculating the
Consolidated Leverage Ratio on any day, Consolidated Total Debt shall
be deemed to be increased by the remaining unamortized principal
component of such operating lease (as determined based on the
applicable schedule setting forth the components of lease payments
delivered pursuant to Section 7.11).
(v) by adding at the end of clause (e) of the definition of
"Indebtedness" the following:
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provided that Capital Lease Obligations of such Person arising from
Permitted Sale/Leasebacks shall be Indebtedness for purposes of
Section 7.1 and related defined terms used therein,
and (vi) adding the following defined terms in proper alphabetical order:
"Permitted Sale/Leasebacks": as defined in Section 7.11.
"Third Amendment Effective Date": the Effective Date, as defined
in the Third Amendment dated as of March 13, 2002 to this Agreement.
(b) Section 2.11 (b)(i) of the Credit Agreement is amended by adding at the
end thereof the following:
Notwithstanding the foregoing, the Net Cash Proceeds from
sale/leaseback transactions permitted by Section 7.11 shall be applied
to repayment of the Term Loans within five Business Days of the
receipt by the Borrower or a Subsidiary of such Net Cash Proceeds.
(c) Section 2.17(b) of the Credit Agreement is amended by adding the
following at the end of the second sentence thereof:
and provided, further, that prepayments of the Tranche A Term Loans,
Tranche B Term Loans and Tranche C Term Loans from the Net Cash
Proceeds of sale/leaseback transactions permitted by Section 7.11
shall be applied to reduce the then remaining installments set forth
in Section 2.3 in the direct order of maturity of such installments.
(d) Section 7.1 of the Credit Agreement is amended by deleting paragraphs
(a), (b) and (c) in their entirety and substituting, in lieu thereof, the
following:
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal
quarters of the Borrower ending with any fiscal quarter during any
period set forth below to exceed the ratio set forth below opposite
such period:
Consolidated
Period Leverage Ratio
------ --------------
Fourth Quarter 2001 5.50
First Quarter 2002 5.75
Second Quarter 2002 5.75
Third Quarter 2002 5.75
Fourth Quarter 2002 5.75
First Quarter 2003 5.75
Second Quarter 2003 5.50
Third Quarter 2003 5.25
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Fourth Quarter 2003 5.00
First Quarter 2004 4.75
Second Quarter 2004 4.50
Third Quarter 2004 4.25
Fourth Quarter 2004 4.00
Fiscal Year 2005 3.50
Fiscal Year 2006 3.50
Fiscal Year 2007 3.50
Fiscal Year 2008 3.50
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower ending with any fiscal quarter during any
period set forth below to be less than the ratio set forth below
opposite such period:
Consolidated Interest
Period Coverage Ratio
------ ---------------------
Fourth Quarter 2001 1.55
First Quarter 2002 1.60
Third Quarter 2002 1.65
Third Quarter 2002 1.65
Fourth Quarter 2002 1.65
First Quarter 2003 1.65
Second Quarter 2003 1.75
Third Quarter 2003 1.80
Fourth Quarter 2003 1.95
First Quarter 2004 2.10
Second Quarter 2004 2.20
Third Quarter 2004 2.25
Fourth Quarter 2004 2.35
Fiscal Year 2005 3.00
Fiscal Year 2006 3.00
Fiscal Year 2007 3.00
Fiscal Year 2008 3.00
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four
consecutive fiscal quarters of the Borrower ending with any fiscal
quarter during any period set forth below to be less than the ratio
set forth below opposite such period:
Consolidated Fixed
Period Charge Coverage Ratio
------ ---------------------
Fourth Quarter 2001 0.80
First Quarter 2002 0.75
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Second Quarter 2002 0.70
Third Quarter 2002 0.70
Fourth Quarter 2002 0.75
First Quarter 2003 0.80
Second Quarter 2003 0.90
Third Quarter 2003 0.95
Fourth Quarter 2003 1.00
First Quarter 2004 1.15
Second Quarter 2004 1.25
Third Quarter 2004 1.35
Fourth Quarter 2004 1.45
Fiscal Year 2005 1.75
Fiscal Year 2006 1.75
Fiscal Year 2007 1.75
Fiscal Year 2008 1.75
(e) Section 7.2 of the Credit Agreement is amended by (i) deleting the
word "and" from the end of clause (i), (ii) deleting the period at the end
of clause (j) and substituting therefor the phrase "; and" and (iii) adding
the following new clause (k) at the end thereof.
(k) Capital Lease Obligations arising from Permitted
Sale/Leasebacks.
(f) Section 7.5 of the Credit Agreement is amended by (i) deleting the
word "and" from the end of clause (h), (ii) deleting the period at the end
of clause (i) and substituting therefor a semi-colon and (iii) adding the
following new clauses (j) and (k) at the end thereof:
(j) Tenneco International Holding Corp. may transfer
ownership of the Capital Stock of Monroe Australia Limited to
Tenneco Canada Inc. in exchange for a promissory note of Tenneco
Canada Inc. having a principal amount equal to the fair market
value of Monroe Australia Limited (and such promissory note shall
be pledged to the Administrative Agent as Collateral pursuant to
the Loan Documents); and
(k) the Borrower and its Subsidiaries may sell property
pursuant to Permitted Sale/Leasebacks.
The Lenders hereby release the Lien on and security interest in the Capital
Stock of Monroe Australia Limited created by the Loan Documents, and authorize
the Administrative Agent to take any action reasonably requested by the Borrower
to effect such release.
(g) Section 7.9 of the Credit Agreement is amended by adding at the
end thereof the following:
Notwithstanding the foregoing, the Borrower may purchase and cancel or
redeem its Senior Subordinated Notes in connection with an exchange of
such Notes for shares of common stock issued by the Borrower after the
Third Amendment Effective Date.
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(h) Section 7.7 of the Credit Agreement is amended by deleting such
Section and substituting therefor the following:
7.7 Capital Expenditures. Make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business, together with any
Investments in Joint Ventures in excess of $25,000,000 under
subsection 7.8(h), not exceeding the following amounts in each fiscal
year
Fiscal Year Amount
----------- ------
2001 $150,000,000
2002 150,000,000
2003 150,000,000
2004 150,000,000
2005 275,000,000
2006 275,000,000
2007 275,000,000
2008 275,000,000
;provided, that (a) up to 50% of any such amount not so expended in
the period for which it is permitted may be carried over for
expenditure in the next succeeding fiscal year only and (b) Capital
Expenditures during any fiscal year (beginning with fiscal year 2002)
shall be deemed made, first, in respect of amounts permitted for such
fiscal year as provided above and, second, in respect of amounts
carried over from the prior fiscal year pursuant to clause (a) above.
(i) Section 7.11 of the Credit Agreement is amended by adding the
following at the end thereof:
except for such transactions entered into after the Third
Amendment Effective Date as long as (i) the aggregate fair market
value of the property sold in connection therewith does not
exceed $200,000,000, the consideration for each such sale shall
be cash and such transactions are consummated on an arm's length
basis and (ii) the Net Cash Proceeds thereof are applied to
prepay the Term Loans as set forth in Sections 2.11(b) and
2.17(b) (the "Permitted Sale/Leasebacks") (the Borrower agreeing
that all Permitted Sale/Leasebacks shall be Asset Sales and the
Lenders hereby authorizing the Administrative Agent to release
any Lien on or security interests in any such property created by
the Loan Documents upon consummation of such Permitted
Sale/Leasebacks). Notwithstanding anything to the contrary
contained herein, any Permitted Sale/Leasebacks shall be deemed
to be expressly permitted pursuant to each other provision of
this Section 7 (other than Sections 7.1 and 7.10) that would
otherwise be construed to prohibit or restrict such Permitted
Sale/Leasebacks. In the event that the Borrower or a Subsidiary
enters into an operating lease in connection with a Permitted
Sale/Leaseback, then the Borrower shall deliver to the
Administrative Agent at the time it or a Subsidiary enters into
such lease, a schedule setting forth the
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principal and interest components of payments to be made under
such lease as reasonably determined by the Borrower.
(j) The Credit Agreement is amended by deleting the Pricing Grid
attached thereto as Annex A and substituting therefor the Pricing Grid
attached to this Third Amendment as Annex A.
3. Reduction in Total Revolving Commitments. On the Effective
Date (as defined below) the aggregate Revolving Commitments will automatically
be reduced to $450,000,000 on the terms set forth in Sections 2.9(b) and 2.17(a)
of the Credit Agreement.
4. Representations and Warranties. The Borrower hereby confirms,
reaffirms and restates the representations and warranties set forth in Section 4
of the Credit Agreement, as amended by this Third Amendment. The Borrower
represents and warrants that, after giving effect to this Third Amendment, no
Default or Event of Default has occurred and is continuing.
5. Effectiveness. This Third Amendment shall become effective as
of the date of receipt by the Administrative Agent of (a) counterparts of this
Third Amendment executed by the Borrower, the Required Lenders and the Majority
Facility Lenders under each of the Tranche A Term Facility, the Tranche B Term
Facility and the Tranche C Term Facility and (b) payment for all fees required
to be paid and all expenses for which invoices have been presented (including
the reasonable fees and expenses of legal counsel) (the "Effective Date").
6. Continuing Effect of the Credit Agreement. This Third
Amendment shall not constitute an amendment of any provision of the Credit
Agreement not expressly referred to herein and shall not be construed as a
waiver or consent to any further or future action on the part of the Borrower
that would require a waiver or consent of the Lenders, the Administrative Agent
or the Other Agents. Except as expressly amended hereby, the provisions of the
Credit Agreement are and shall remain in full force and effect.
7. Counterparts. This Third Amendment may be executed by the
parties hereto in any number of separate counterparts (including telecopied
counterparts), each of which shall be deemed to be an original, and all of which
taken together shall be deemed to constitute one and the same instrument.
8. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Annex A
PRICING GRID FOR REVOLVING LOANS, SWINGLINE LOANS,
TRANCHE A TERM LOANS AND COMMITMENT FEES
Applicable Applicable
Consolidated Leverage Ratio Margin Margin for Commitment
for Eurodollar ABR Loans Fee Rate
Loans
Greater than or equal to 4.5 to 1.0 3.50% 2.50% .500%
Less than 4.5 to 1.0 and greater than
or equal to 4.0 to 1.0 3.25% 2.25% .500%
Less than 4.0 to 1.0 and greater than
or equal to 3.5 to 1.0 3.00% 2.00% .500%
Less than 3.5 to 1.0 and greater than
or equal to 3.0 to 1.0 2.75% 1.75% .375%
Less than 3.0 to 1.0 and greater than
or equal to 2.5 to 1.0 2.50% 1.50% .375%
Less than 2.5 to 1.0 2.25% 1.25% .375%
Changes in the Applicable Margin with respect to Revolving Loans, Swingline
Loans and Tranche A Loans or in the Commitment Fee Rate resulting from changes
in the Consolidated Leverage Ratio shall become effective on the date (the
"Adjustment Date") on which financial statements are delivered to the Lenders
pursuant to Section 6.1(a) or (b) (but in any event not later than the 45th day
after the end of each of the first three quarterly periods of each fiscal year
or the 90th day after the end of each fiscal year, as the case may be) and shall
remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified above, then, until such financial statements
are delivered, the Consolidated Leverage Ratio as at the end of the fiscal
period that would have been covered thereby shall for the purposes of this
definition be deemed to be greater than 4.5 to 1.0. In addition, at all times
while an Event of Default shall have occurred and be continuing, the
Consolidated Leverage Ratio shall for the purposes of this definition be deemed
to be greater than 4.5 to 1.0. Each determination of the Consolidated Leverage
Ratio pursuant to this pricing grid shall be made with respect to (or, in the
case of Consolidated Total Debt, as at the end of) the period of four
consecutive fiscal quarters of the Borrower ending at the end of the period
covered by the relevant financial statements.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
TENNECO AUTOMOTIVE INC.
By:
---------------------------------
Name:
Title:
JPMORGAN CHASE BANK, as
Administrative Agent and as a Lender
By:
---------------------------------
Name:
Title:
CITICORP USA, INC., as Syndication Agent
and as a Lender
By:
---------------------------------
Name:
Title:
THIRD AMENDMENT dated as of March 13, 2002
to the Tenneco Automotive Inc. Credit
Agreement dated as of September 30, 1999
--------------------------------------
[LENDER]
By:
---------------------------------
Name:
Title:
Each of the undersigned agrees to the foregoing
Third Amendment and confirms that its
obligations under the Loan Documents to
which it is a party remain in full force and
effect after giving effect to such Third
Amendment:
TENNECO AUTOMOTIVE OPERATING COMPANY INC.
TENNECO INTERNATIONAL HOLDING CORP.
TENNECO GLOBAL HOLDINGS INC.
THE PULLMAN COMPANY
TMC TEXAS INC.
CLEVITE INDUSTRIES INC.
By:
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Name:
Title:
