1
Exhibit 4.17
January 31, 1997
Intermet Corporation
0000 Xxxxxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxx
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Note Agreement
dated as of March 21, 1996 (as amended from time to time, the "Note Agreement")
between Intermet Corporation, a Georgia corporation (the "Company") and The
Prudential Insurance Company of America ("Prudential"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Note Agreement.
Pursuant to the request of the Company and in accordance with paragraph
11C of the Note Agreement, the parties hereto agree as follows:
SECTION 1. Amendment. From and after the date this letter becomes
effective in accordance with its terms, the Note Agreement is amended as
follows:
1.1 Paragraph 5A of the Note Agreement is amended to delete in its
entirety clause (v) thereof and to substitute therefor the following: "(v)
Intentionally left blank;".
1.2 Paragraph 5K of the Note Agreement is deleted in its entirety and the
following is hereby substituted therefor:
"5K ADDITIONAL GUARANTORS AND COLLATERAL. Unless the Required
Holder(s) otherwise agree in writing, promptly after (i) the formation or
acquisition (provided that nothing in this paragraph shall be deemed to
authorize the acquisition of any entity not otherwise permitted
hereunder) of any Subsidiary not listed on Schedule 5K, (unless such
Subsidiary holds no assets and conducts no business), (ii) the
domestication of any Foreign Subsidiary, or (iii) the occurrence of any
other event creating a new Subsidiary, the Company shall execute and
deliver, and cause to be executed and delivered (x) in the case of a
Foreign Subsidiary, if, in the reasonable opinion of the Company's
accountants, delivery of a Guaranty Agreement would cause the Company to
be subject to tax on the undistributed earnings and profits of such
Subsidiary
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January 31, 1997
Page 2
pursuant to Subpart F of Part III, Subchapter N of the Internal Revenue
Code, a Pledge Agreement with respect to 49% of the capital stock of such
Subsidiary if it is a Foreign Subsidiary directly owned by the Company or
a Subsidiary that is not, and is not directly or indirectly controlled
by, a Foreign Subsidiary, (y) a Guaranty Agreement from each such
Subsidiary that is not a Foreign Subsidiary whose stock has been pledged
to the extent and in accordance with subsection (x) hereof and (z) a
Contribution Agreement from each such Subsidiary, together with related
documents with respect to such new Subsidiary (or the pledgor of its
stock) of the kind described in Attachment 1 attached hereto and
incorporated herein, all in form and substance satisfactory to the
Required Holder(s)."
1.3 Paragraph 6A of the Note Agreement is amended to delete in its
entirety clause (ii) thereof and to substitute therefor the following:
"(ii) the Leverage Ratio to exceed 60%; provided, that in the event the
Company consummates an Acquisition after November 14, 1996 which affects
its compliance with this clause (ii) of paragraph 6A, the maximum
Leverage Ratio permitted hereunder shall be 72.5% for each of the fiscal
quarters ending during the twelve-month period immediately succeeding
such Acquisition and the maximum Leverage Ratio permitted hereunder shall
be reduced to 60% on the next fiscal quarter end thereafter and shall
remain a maximum ratio of 60% regardless of any other Acquisitions
occurring thereafter; or".
1.4 Paragraph 6B of the Note Agreement (i) is amended to delete in its
entirety clause (c) thereof and to substitute therefor the following:
"(c) Indebtedness of the Company pursuant to the Bank Agreement and
secured by Liens which are pari passu with the Liens on such collateral
in favor of the holders of the Notes securing the Notes and the other
Obligations hereunder and governed by the terms of the Intercreditor
Agreement,"
and (ii) is further amended to delete in its entirety clauses (d) and (g)
thereof and to substitute therefor the following in appropriate alphabetical
order:
"(d) Investments in the form of intercompany loans permitted by paragraph
6G hereof;"
"(g) purchase money Indebtedness to the extent secured by a Lien
permitted pursuant to clause (f) of paragraph 6C; and"
"(h) additional Indebtedness of the Company which is pari passu in all
material respects with the Notes and the other Obligations, without
limiting the foregoing, such Indebtedness will not have the benefit of
any security or guaranties not
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January 31, 1997
Page 3
benefiting the Notes and the other Obligations and will have
representations and warranties, covenants, events of default and other
conditions to borrowing which are not more restrictive than the Bank
Agreement as in effect on November 14, 1996 and as modified from time to
time in accordance with paragraph 6M."
1.5 Xxxxxxxxx 0X of the Note Agreement is amended to delete in its
entirety clauses (e) and (f) thereof and to substitute therefor the following:
"(e) Liens permitted by clause (c) or (h) of paragraph 6B hereof;
(f) Intentionally Left Blank; and
(g) Liens (other than those permitted by paragraphs (a) through (f) of
this paragraph 6C) encumbering assets having an Asset Value not greater
than five percent (5%) of Consolidated Net Worth of the Company in the
aggregate at any one time."
1.6 Paragraph 6D of the Note Agreement is deleted in its entirety and the
following is hereby substituted therefor:
"6D. MERGERS, ACQUISITIONS, DIVERSTITURES. The Company covenants
that it will not and not permit any Subsidiary to:
(a) merge or consolidate with any other Person,
except that the foregoing restriction shall not be applicable
to:
(i) mergers or consolidations of (x) any Subsidiary with
any other Subsidiary which is a Guarantor or (y) any
Subsidiary with the Company; or
(ii) mergers or consolidations which result in Acquisitions
of Persons engaged in businesses in which the Company was
engaged on November 14, 1996 or substantially related
thereto and as otherwise permitted by paragraph 6K of this
Agreement where the surviving corporation is a wholly-owned
Subsidiary of the Company (or will become a wholly-owned
Subsidiary within six (6) months of such Acquisition) and
such Acquisition is in compliance with subsection (c) of
this paragraph 6D;
provided, that, before and after giving effect to any such merger or
consolidation, (w) the Company is in compliance with paragraph 6A hereof
(as demonstrated by delivery of pro forma financial covenants
calculations prepared in compliance with clause (c) hereof), (x) no other
Default or Event of Default exists hereunder;
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January 31, 1997
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(y) in the event of such merger or consolidation, the surviving Person is
a Consolidated Company and complies with paragraph 5K hereof, if
applicable, and (z) the Company is the surviving corporation in
connection with any merger or consolidation to which it is a party;
(b) sell or otherwise dispose of the capital stock
of a Subsidiary of the Company except as permitted pursuant
to clause (c) of paragraph 6E hereof; or
(c) make or permit any Acquisition other than an
Acquisition of Persons engaged in businesses in which the
Company is engaged on November 14, 1996 or substantially
related thereto and as otherwise permitted pursuant to
paragraph 6K of this Agreement; provided that:
(i) after giving effect to such Acquisition, assets
comprising such Acquisition are owned by the Company or a
wholly-owned Subsidiary of the Company, or, in the case of
a stock purchase, such Person is a wholly-owned Subsidiary
of the Company or is merged into the Company or a
wholly-owned Subsidiary of the Company;
(ii) prior to the consummation of such Acquisition,
the Company provides to the holders of the Notes
calculations evidencing the Company's compliance on a pro
forma basis with the financial covenants set forth in
paragraph 6A hereof on the last day of the immediately
preceding fiscal quarter of the Company, calculated with
respect to the immediately preceding four fiscal quarters
of the Company as if the Acquisition had been consummated
on the first day of such period;
(iii) such Acquisition shall have been approved in
advance by a majority of the board of directors of the
seller; and
(iv) no Default of Event of Default shall exist
hereunder or shall result therefrom and the Company shall
comply with the provisions of paragraph 5K hereof."
1.7 Paragraph 6F of the Note Agreement is amended to delete in its
entirety clause (ii) thereof and to substitute therefor the following:
"(ii) cash dividends declared and paid and all other Restricted Payments
made, after November 14, 1996 in an aggregate amount not to exceed the
sum of (x)
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January 31, 1997
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$25,000,000, plus (y) fifty percent of Consolidated Net Income earned
during the period commencing on June 30, 1996 and ending on the last day
of the most recently ended fiscal quarter of the Company (such period to
be treated as one accounting period taking into account 100% of
Consolidated Net Losses during such period);"
1.8 Paragraph 6G of the Note Agreement is amended to delete in its
entirety clause (d) thereof and to substitute therefor the following:
"(d) an Investment outstanding on November 14, 1996 consisting of
Intermet Machining GmbH's 49% interest in IWESA - $6,800,000;
(e) Investments (other than those permitted by paragraphs (a) through (d)
above), including loans to employees, officers and other Persons, in an
aggregate amount not to exceed five percent (5%) of Consolidated Net
Worth at any one time outstanding; provided that, Investments in
Subsidiaries which are not Guarantors are expressly prohibited by this
paragraph 6G."
1.9 Paragraph 6K of the Note Agreement is deleted in its entirety and the
following is hereby substituted therefor:
"6K CHANGES IN BUSINESS. The Company covenants that it will not and
not permit any Subsidiary to enter into any business which is
substantially different from that presently conducted by the Consolidated
Companies taken as a whole (which includes iron and aluminum foundry
operations and machining); provided that, the Company and the
Consolidated Companies may make Acquisitions of, and Investments in, (to
the extent permitted by this Agreement) Persons engaged in an unrelated
business as long as the total revenues of such Persons resulting from
unrelated businesses (or total revenues generated by such assets used in
unrelated businesses in the case of a purchase of assets), as determined
for the most recently ended four fiscal quarters of such Person in
accordance with GAAP, do not exceed twenty percent (20%) of Total Sales
of the Consolidated Companies for the most recently ended four fiscal
quarters of the Company."
1.10 Paragraph 10B of the Note Agreement is amended to delete the
definition of "Asset Value", "Bank Agreement", "Consolidated EBIT",
"Consolidated Rental Expense", "Guarantors", "Person", "Pledge Agreement" and,
"Pledged Stock" and "Tangible Net Worth" appearing therein and to substitute
therefor the following definitions in appropriate alphabetical order:
"ASSET VALUE" shall mean, with respect to any property or asset of any
Consolidated Company as of any particular date, an amount equal to the
greater
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January 31, 1997
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of (i) the then book value of such property or asset as established in
accordance with GAAP, and (ii) the then fair market value of such
property or asset as determined in good faith by such Consolidated
Company.
"BANK AGREEMENT" shall mean that Third Amended and Restated Credit
Agreement dated as of November 14, 1996 among the Company, SunTrust Bank,
Atlanta as Agent, NBD Bank and First Union National Bank of North
Carolina as Co-Agents and the other lenders listed therein or from time
to time party thereto, as it may be amended, restated, supplemented or
otherwise modified from time to time in accordance with its terms.
"CONSOLIDATED EBIT" shall mean, for any fiscal period of the Company, an
amount equal to (A) the sum for such fiscal period of Consolidated Net
Income (Loss) and, to the extent deducted in determining such
Consolidated Net Income (Loss), provisions for (i) taxes based on income
and (ii) Consolidated Interest Expense, minus (B) any items of gain (or
plus any items of loss) which were included in determining such
Consolidated Net income (Loss) and were (x) not realized in the ordinary
course of business (whether or not classified as "ordinary" by GAAP), (y)
the result of any sale of assets, or (z) resulting from minority
investments, together in case of (x), (y) or (z), any related provisions
for taxes included in Consolidated Net Income (Loss) with respect
thereto, plus (C) without duplication, the sum of the following items to
the extent not included in Consolidated Net Income (Loss) for such
period:
(1) the net income (or net loss) for such period of any Person which
became a Subsidiary during such period (a "New Subsidiary");
(2) the net income (or net loss) derived during such period from any
assets acquired by any Consolidated Company during such period ("New
Assets"); and
(3) the sum of the following items to the extent deducted in
determining net income of any New Subsidiary or derived from any New
Assets during such period:
(x) taxes based on income, (y) Consolidated Interest Expense, and
(z) any items of gain (or plus any items of loss) which were
included in determining such net income and were (aa) not realized
in the ordinary course of business (whether or not classified as
"ordinary" by GAAP), (bb) the result of any sale of assets, or
(cc) resulting from minority investments, together in the case of
(aa), (bb) or (cc), any related provision for taxes included in
such net income with respect thereto;
minus (D) the sum of the following items to the extent included in
determining
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January 31, 1997
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Consolidated Net Income (loss) for such period:
(1) the net income (or net loss) for such period of any Person which
ceased to be a Subsidiary (other than due to merger or consolidation with
another Consolidated Company) during such period (an "Old Subsidiary");
(2) the net income (or net loss) derived during such period from any
assets sold or otherwise disposed of by any Consolidated Company during
such period ("Old Assets"); and
(3) the sum of the following items to the extent deducted in
determining net income of any Old Subsidiary or derived from any Old
Assets during such period:
(x) taxes based on income, (y) Consolidated Interest Expense, and
(z) any items of gain (or plus any items of loss) which were
included in determining such net income and were (aa) not realized
in the ordinary course of business (whether or not classified as
"ordinary" by GAAP), (bb) the result of any sale of assets, or
(cc) resulting from minority investments, together in the case of
(aa), (bb) or (cc), any related provision for taxes included in
such net income with respect thereto;
For purposes of calculating any financial definitions based upon
Consolidated EBIT, the addition or subtraction of any financial
definitions to or from Consolidated EBIT shall be calculated with
appropriate adjustment for New Subsidiaries, New Assets, Old Subsidiaries
and Old Assets as is consistent with this definition.
"CONSOLIDATED RENTAL EXPENSE" shall mean, for any fiscal period of the
Company, the operating lease expense of the Consolidated Companies
determined in accordance with GAAP for leases with an initial term
greater than one year, as disclosed in the notes to the Company's
consolidated financial statements of the Consolidated Companies,
determined on a consolidated basis in accordance with GAAP.
"GUARANTORS" shall mean, collectively, Lynchburg Foundry Company, Ironton
Iron, Inc., Northern Castings Corporation, Intermet International, Inc.,
New River Castings Company, Alexander City Castings Company, Inc. and all
other domestic Subsidiaries formed or acquired after November 14, 1996
unless otherwise agreed by the Required Holders pursuant to paragraph 5K
hereof.
"PERSON" shall mean any individual, limited liability company,
partnership, firm, corporation, association, joint venture, trust or
other entity, or any government or political subdivision or agency,
department or instrumentality thereof.
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January 31, 1997
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"PLEDGE AGREEMENT" shall mean collectively, any pledge agreement
providing for the grant of first priority Liens on the Pledged Stock.
"PLEDGED STOCK" shall mean, collectively, 49% of the issued and
outstanding capital stock, together with all warrants, stock options, and
other purchase and conversion rights with respect to such capital stock,
of all Subsidiaries that are Foreign Subsidiaries directly owned by the
Company and/or owned by one or more other Subsidiaries organized in the
United States (other than Columbus Neunkirchen, Intermet Machining GmbH
and Intermet Holding Deutschland GmbH).
"TOTAL SALES" shall mean for any period of determination, the total
revenues of the Consolidated Companies, determined in accordance with
GAAP.
1.11 The Note Agreement is amended to attach thereto and incorporate as a
part thereof Attachment 1 which is attached hereto.
SECTION 2. Conditions Precedent. This letter shall become effective as
of the date first above written upon the return by the Company to Prudential of
a counterpart hereof duly executed by the Company and Prudential.
SECTION 3. Reference to and Effect on Note Agreement. Upon the
effectiveness of this letter, each reference to the Note Agreement in any other
document, instrument or agreement shall mean and be a reference to the Note
Agreement as modified by this letter. Except as specifically set forth in
Section 1 hereof, the Note Agreement shall remain in full force and effect and
is hereby ratified and confirmed in all respects.
SECTION 4. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE.
SECTION 5. Counterparts; Section Titles. This letter 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 taken together shall constitute but one and the
same instrument. The section titles contained in this letter are and shall be
without substance, meaning or content of any kind whatsoever and are not a part
of the agreement between the two parties hereto.
Very truly yours,
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THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: _____________________________________
Vice President
Agreed and accepted:
INTERMET CORPORATION
By: _____________________________________
Xxxxxxx X. Xxxxxxxxx
Vice President - Finance
