Consent and Amendment No. 3
Dated as of December 23, 1993
to
RESTATED AND AMENDED CREDIT AGREEMENT
Dated as of July 27, 1992
This Consent and Amendment No. 3 ("Amendment No. 3")
dated as of December 23, 1993, is entered into among RHI
Holdings, Inc., a Delaware corporation ("RHI"), the "Senior
Lenders" (as defined in the Credit Agreement referred to below)
of RHI, Citicorp North America, Inc., a Delaware corporation
("Citicorp") and The Bank of Nova Scotia, a Canadian chartered
bank ("Scotiabank") as agents for the Senior Lenders (Citicorp
and Scotiabank being sometimes hereinafter collectively referred
to as the "Agents"), and Citicorp, as administrative agent for
the Senior Lenders (the "Administrative Agent").
PRELIMINARY STATEMENT. VSI Corporation, a Delaware
corporation, Fairchild Industries, Inc., a Delaware corporation,
RHI, the Senior Lenders, the Agents, and the Administrative Agent
are parties to that certain Restated and Amended Credit Agreement
dated as of July 27, 1992, as amended, (the "Credit Agreement").
Capitalized terms used herein without definition are used herein
as defined in the Credit Agreement. RHI has entered into a
certain Purchase Agreement dated as of December 2, 1993 with The
Fairchild Corporation, a Delaware corporation ("TFC") and BTR
Dunlop Holdings, Inc., a Delaware corporation ("BTR Dunlop")
(such Purchase Agreement being herein referred to as the
"Purchase Agreement") pursuant to which, among other things, RHI
has agreed to sell all of the capital stock of Rexnord
Corporation owned by RHI (the "Rexnord Shares") to BTR Dunlop and
to indemnify BTR Dunlop and Rexnord Corporation with respect to
certain environmental liabilities.
In connection with the transactions contemplated by the
Purchase Agreement, TFC, RHI and Rexnord Corporation have entered
into a certain Tax Agreement dated as of December 2, 1993 with
BTR Dunlop (the "Tax Agreement"), pursuant to which, among other
things, (a) the Amendment to and Restatement of Tax Agreement
dated May 15, 1992, as amended on August 5, 1993, will be
terminated in its entirety and the Tax Agreement will supersede
the same in its entirety as of the time described therein and (b)
TFC and RHI will become obligated under certain indemnities
specified in the Tax Agreement with respect to certain tax
obligations of Rexnord Corporation.
In connection with the transactions contemplated by the
Purchase Agreement, TFC and RHI entered into an Escrow Agreement
dated as of December 2, 1993 with BTR Dunlop and Cahill Gordon &
Reindel, as "Escrow Agent", (the "Escrow Agreement") pursuant to
which, among other things, TFC and RHI are required (a) to
deposit, on the date the transactions described in the Purchase
Agreement close, into the escrow established pursuant to the
Escrow Agreement, for the benefit of BTR Dunlop, shares of common
stock of Aerospace having a market price of $25,000,000, as
calculated pursuant to the Escrow Agreement, as of the date of
such deposit and (b) to make or receive supplemental deposits or
withdrawals thereafter of cash and/or common stock of Aerospace
into such escrow under certain circumstances, such deposits to be
held by the Escrow Agent until the obligations of TFC and RHI
expire with respect to the indemnities for federal and state
taxes described in the Tax Agreement and the Escrow Agreement.
In connection with the establishment of such escrow arrangement,
RHI has requested that its Requisite Senior Lenders consent to
the release of certain of the stock of Aerospace pledged to the
Administrative Agent pursuant to the Special Increase II Pledge
Agreement in an amount sufficient to fund the escrow arrangement
on the date upon which the transactions described in the Purchase
Agreement are consummated.
It is contemplated that the transactions described in
the Purchase Agreement with respect to the sale of the Rexnord
Shares by RHI to BTR Dunlop will occur on the second Business Day
following the date on which all applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and under the law relating to filings with the German
Federal Cartel office referenced in the Purchase Agreement, shall
expire or be terminated.
It is further contemplated that the proceeds of the
sale of the Rexnord Shares by RHI to BTR Dunlop under the
Purchase Agreement will be used as follows:
(i) a portion thereof to repurchase or derease certain of
RHI's Subordinated Indebtedness (the "Subordinated Debt
Repayment");
(ii) a portion thereof to make dividends, distributions or
other advances to TFC to the extent permitted under the
terms and conditions of the Credit Agreement;
(iii) approximately $5,000,000 thereof to repay the
Rexnord/Holdings Mortgage Indebtedness; and
(iv) a portion thereof to repay the obligations of RHI
under Facility A in an amount sufficient to permanently
reduce the Facility Outstandings under Facility A to an
amount less than or equal to the "Facility Commitments" with
respect to "Facility A" (as each such term is hereinafter
defined in Section 1 of this Amendment No. 3).
Subject to the terms and conditions stated herein, RHI
and its Senior Lenders have agreed to further amend the Credit
Agreement as hereinafter set forth and to consent to the
transactions described in Section 2 hereof.
SECTION 1. Amendments to the Credit Agreement.
Effective as of the later to occur of (i) the
effectiveness of Amendment No. 3 pursuant to Section 3 hereof and
(ii) the Rexnord Sale Effective Date, and subject to the
satisfaction of the conditions precedent set forth in Section 3
below, the Credit Agreement is hereby amended as follows:
1.1 Section 1.01 of the Credit Agreement is hereby
amended to add the following definitions thereto in alphabetical
order:
"'Facility A Cash Collateral Amount' shall have the
meaning set forth in Section 4.2(d) hereof."
"'Facility A Collateral Loan Value' shall mean an
amount equal to the lesser of:
(i) as of any date of determination, an amount
equal to the sum of the remainder of (A) the product
of the price at which the last trade of Aerospace
common stock occurred on the immediately preceding
Business Day on the New York Stock Exchange, which
shall be the close quotation for such Business Day as
reported by The Wall Street Journal (or in the event
publication of The Wall Street Journal is permanently
or temporarily suspended, such other national domestic
daily business journal as may be designated by the
Administrative Agent) for the date of determination, or
if there is no such close quotation, the average
between the high and low quotations for such Business
Day, or if there are no such quotations for such
Business Day, the close quotation for the immediately
preceding Business Day, multiplied by the number of
Aerospace shares pledged as security under the Special
Increase II Pledge Agreement (the "Pledged Share
Value") minus (B) the sum of the amount equal to sixty
percent (60%) of the Pledged Share Value and $500,000;
and
(ii) the maximum amount permitted to be loaned
against the Aerospace shares pledged as security under
the Special Increase II Pledge Agreement under
Regulations G and U."
"'Rexnord Sale Effective Date' shall mean the date upon
which the sale of all of the Rexnord Shares owned by
RHI to BTR Dunlop Holdings, Inc., a Delaware
corporation (('BTR Dunlop') is consummated pursuant to
that certain Purchase Agreement dated as of December 2,
1993 by and among RHI, TFC and BTR Dunlop."
"'Rexnord Shares' shall mean all of the issued and
outstanding shares of Rexnord Corporation owned by
RHI."
1.2 For purposes of determining the Facility A
Commitment of each of the Facility A Lenders and the Facility A
Commitments, the definitions of "Facility Commitment" and
"Facility Commitments" set forth in Section 1.01 of the Credit
Agreement are hereby deleted in their entirety and the following
definitions are substituted therefor:
"'Facility Commitment' shall mean, (i) with respect to
Facility G and each Facility G Senior Lender the amount set
forth below such Facility G Senior Lender's name under the
heading 'Facility Commitment' on the signature pages of this
Agreement, or, as the case may be, on the signature pages of
the Assignment Agreement pursuant to which such Facility G
Senior Lender became a Facility G Senior Lender hereunder in
accordance with the provisions of Section 16.02, as such
amount may be reduced or increased (whether temporarily or
permanently) from time to time pursuant to the terms of this
Agreement, including any reduction resulting from the
assignment of all or a portion of such Facility G Senior
Lender's Facility G Commitment in accordance with Section
16.02 and (ii) with respect to Facility A and each Facility
A Lender, the amount set forth below such Facility A Senior
Lender's name under the heading 'Facility A Commitment' on
the signature pages of Consent and Amendment No. 3 to this
Agreement, or, as the case may be, on the signature pages of
the Assignment Agreement pursuant to which such Facility A
Senior Lender became a Facility A Senior Lender hereunder in
accordance with the provisions of Section 16.02, as such
amount may be reduced or increased (whether temporarily or
permanently) from time to time pursuant to the terms of this
Agreement, including any reduction resulting from the
assignment of all or a portion of such Facility A Senior
Lender's Facility A Commitment in accordance with Section
16.02. 'Facility Commitments' shall mean (i) prior to the
Facility G Extension Date, with respect to Facility G,
$59,500,000, (ii) on and after the Facility G Extension
Date, with respect to Facility G, $50,250,000 and (iii) at
any time, with respect to Facility A, the lesser of (a)
$5,000,000 and (b) the sum of (I) the Facility A Collateral
Loan Value at such time and (II) the Facility A Cash
Collateral Amount divided by one hundred and five percent
(105%).
1.3 The definition of "Facility Commitment Period" set
forth in Section 1.01 of the Credit Agreement is hereby amended
to delete clause (i) thereof in its entirety and to substitute
"(i) in the case of Facility A, on February 28, 1995" therefor.
1.4 The definition of "L/C Subfacility" set forth in
Section 1.01 of the Credit Agreement is hereby amended to delete
the amount "$15,000,000" appearing opposite the notation
"Facility A" in the column labeled "Maximum Amount as of the
Closing Date" and to substitute the amount "$5,000,000"
therefor.
1.5 Section 1.01 of the Credit Agreement is hereby amended
to delete the following definitions in their entirety: "Special
Facility II A Loans", "Special Increase II" and "Special Increase
II Termination Date".
1.6 Section 3.05(a) of the Credit Agreement is hereby
amended to delete the amount "$45,000,000" appearing at the end
thereof and to substitute the amount "$5,000,000" therefor.
1.7 Section 3.06 of the Credit Agreement is hereby amended
to delete the first sentence thereof in its entirety and to
substitute the following therefor:
"The Revolving Credit Loans made under Facility A are
evidenced by Amended and Restated Series A Revolving
Credit Notes in a maximum aggregate principal amount
of $5,000,000."
1.8 Section 3.07(a) of the Credit Agreement is hereby
amended to delete the last sentence thereof in its entirety.
1.9 Section 4.02(d) of the Credit Agreement is hereby
amended to delete the first sentence thereof in its entirety and
to substitute the following therefor:
"The Facility A Borrower shall make prepayments of its
Revolving Credit Loans and/or post cash collateral with
the Administrative Agent, in form and substance
reasonably acceptable to the Administrative Agent, such
that the amount of cash collateral on deposit with the
Administrative Agent pursuant to this Section 4.2(d) is
at all times equal to or greater than one hundred and
five percent (105%) of the difference between (a) the
Facility Outstandings for Facility A and (b) the
Facility A Collateral Loan Value (the "Facility A Cash
Collateral Amount").
1.10 Section 4.03 of the Credit Agreement is hereby
amended to delete subsection (c) thereof in its entirety.
1.11 Section 4.06(a) of the Credit Agreement is hereby
amended to delete the last sentence thereof in its entirety.
1.12 Section 9.03 of the Credit Agreement is hereby amended
to delete the phrase "(x) the cash flow projections delivered to
the Administrative Agent on June 10, 1992 and (y)" from the last
sentence thereof.
1.13 Section 11.04B of the Credit Agreement is hereby
amended to (i) delete the word "and" at the end of clause (e)
thereof, (ii) delete the period at the end of clause (f) thereof
and to substitute a semicolon and the word "and" therefor and
(iii) add the following clause (g) immediately following clause
(g) thereof:
"(g) as long as (i) no Event of Default or
Potential Event of Default exists with respect to RHI
or would result therefrom; (ii) Senior Subordinated
Debentures constituting more than fifty percent (50%)
of the aggregate outstanding principal balance thereof
on the Rexnord Sale Effective Date have been
repurchased by RHI and the Senior Subordinated
Debenture Indenture has been amended to remove any
dividend restrictions with respect to RHI; (iii) the
Rexnord 12-3/4 Debentures have been repurchased or
defeased in full, such defeasance to be in form and
substance satisfactory to the trustee under the Rexnord
12/3-4 Debenture Indenture; (iv) RHI has provided to
the Administrative Agent an Officers' Certificate
certifying as to the fulfillment of the conditions set
forth in clauses (ii) and (iii) above; and (v) the
Consolidated Net Worth of RHI is equal to greater than
$175,000,000 immediately prior to such transaction and
after giving effect thereto, the payment of dividends
or distributions on RHI's stock to TFC or the making of
other advances by RHI to TFC."
1.14 Section 12.01A of the Credit Agreement is hereby
amended to (i) delete the title thereof in its entirety and to
substitute the title "Consolidated Net Worth of RHI; Additional
Capital" therefor, (ii) delete subsection (a) thereof in its
entirety and (iii) substitute the following therefor:
"(a) the Consolidated Net Worth of RHI shall at all
times be equal to or greater than $175,000,000."
SECTION 2. Consents and Waiver. (A) Effective as of
the date of this Amendment No. 3 and subject to the satisfaction
of the conditions precedent set forth in Section 3 below, the
Senior Lenders of RHI hereby consent to the following:
(a) the sale of the Rexnord Shares by RHI to BTR Dunlop
pursuant to, and the performance by RHI of, the Purchase
Agreement;
(b) the release of the Lien of the Administrative Agent
under the Special Increase II Pledge Agreement with respect
to a sufficient number of shares of the stock of Aerospace
to satisfy the terms and conditions of the Escrow Agreement
as of the date the transactions described in the Purchase
Agreement are consummated;
(c) the release of the Lien of the Collateral Trustee
under the Rexnord Holdings Pledge Agreement with respect to
all of the Rexnord Shares pledged thereunder;
(d) the transfer by Banner Investments to RHI of all of
the issued and outstanding shares of Rexnord Corporation
owned by Banner Investments;
(e) the Subordinated Debt Repayment; and
(f) the use of a portion of the proceeds received by
RHI in connection with the sale of the Rexnord Shares to
repay a portion of the Obligations of RHI under Facility A
and the Rexnord/Holdings Mortgage Indebtedness.
(B) Effective as of the date of this Amendment No. 3
and subject to the satisfaction of the conditions precedent set
forth in Section 3 below, the Senior Lenders of RHI hereby waive
the requirement under Section 9.08 of the Credit Agreement that
RHI provide the Administrative Agent with ninety (90) days' prior
written notice of the making of a dividend or other distribution
by RHI with respect to its capital stock; provided that (i) this
waiver shall be limited to dividends made by RHI to TFC pursuant
to clause (g) of Section 11.04B of the Credit Agreement and (ii)
RHI shall provide one Business Days' prior written notice to the
Administrative Agent in connection with the making of any such
dividend or distribution."
SECTION 3. Conditions Precedent to Amendment No. 3;
Effectiveness. This Amendment No. 3 shall become effective and
be deemed effective as of the date hereof, if, and only if, (i)
the Administrative Agent shall have received on or before January
31, 1994 a facsimile or original executed copy of this Amendment
executed by RHI and each of the Senior Lenders of RHI and (ii)
the Administrative Agent shall have received on or before January
31, 1994, all of which shall be in form and substance
satisfactory to the Administrative Agent and the Senior Lenders,
(a) an amendment to the Special Increase II Pledge Agreement
executed by each of RHI and the Collateral Trustee pursuant to
which RHI agrees that the shares of Aerospace remaining subject
to the Special Increase II Pledge Agreement shall secure all of
the Obligations of RHI under Facility A and amending Exhibit A
thereto, (b) Amended and Restated Series A Revolving Credit Notes
in the maximum amount of each Facility A Lender's Facility A
Commitment executed by RHI and made payable to each of the
Facility A Lenders, (c) an amendment to the Rexnord Holdings
Pledge Agreement executed by RHI and the Collateral Trustee
deleting the references to the Rexnord Shares from Exhibit A
thereto and (d) a Pledge and Assignment Agreement executed by RHI
and the Administrative Agent with respect to the cash collateral
posted by RHI pursuant to Section 4.02(d) of the Credit
Agreement.
SECTION 4. Representations and Warranties. RHI hereby
represents and warrants as follows:
4.1 This Amendment No. 3 and the Credit Agreement as
previously executed and amended and as amended hereby, constitute
legal, valid and binding obligations of RHI and are enforceable
against RHI in accordance with their terms.
4.2 No Event of Default or Potential Event of Default
exists or would result from any of the transactions contemplated
by this Amendment No. 3.
4.3 Upon the effectiveness of this Amendment No. 3,
RHI hereby reaffirms all covenants, representations and
warranties made in the Credit Agreement to the extent the same
are not amended hereby, and agrees that all such covenants,
representations and warranties shall be deemed to have been
remade as of the date this Amendment No. 3 becomes effective
(unless a representation and warranty is stated to be given on
and as of a specific date, in which case such representation and
warranty shall be true, correct and complete as of such date).
SECTION 5. Reference to and Effect on the Credit
Agreement.
5.1 Upon the effectiveness of this Amendment No. 3,
each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import shall
mean and be a reference to the Credit Agreement, as amended
hereby, and each reference to the Credit Agreement in any other
document, instrument or agreement executed and/or delivered in
connection with the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended hereby.
5.2 Except as specifically amended above, the Credit
Agreement, the Notes and all other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed.
5.3 The execution, delivery and effectiveness of this
Amendment No. 3 shall not operate as a waiver of any right, power
or remedy of any Senior Lender or Agent or the Administrative
Agent under the Credit Agreement, the Notes or any of the other
Loan Documents, nor constitute a waiver of any provision
contained therein, except as specifically set forth herein.
SECTION 6. Execution in Counterparts. This Amendment
No. 3 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. Delivery of an executed counterpart of this
Amendment No. 3 by telecopier shall be effective as delivery of a
manually executed counterpart of this Amendment No. 3.
SECTION 7. Governing Law. This Amendment No. 3 shall
be governed by and construed in accordance with the laws of the
State of New York.
SECTION 8. Headings. Section headings in this
Amendment No. 3 are included herein for convenience of reference
only and shall not constitute a part of this Amendment No. 3 for
any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 3 to be executed by their respective officers
thereunto duly authorized as of the date first above written.
RHI HOLDINGS, INC.
By Karen L. Schneckenburger
--------------------------------
Title: Treasurer
CITICORP NORTH AMERICA, INC.,
individually as a Senior Lender, as
one of the Agents for the Senior
Lenders and as Administrative Agent
for the Senior Lenders
By Colin M. Cohen
--------------------------------
Title: Vice President
Facility A Commitment: $2,500,000
THE BANK OF NOVA SCOTIA,
individually as a Senior Lender and
as one of the Agents for the Senior
Lenders
By F.C.H. Ashby
--------------------------------
Title: Senior Manager Loan Operations
Facility A Commitment: $2,500,000