FOURTH AMENDMENT TO CREDIT AGREEMENT
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THIS AMENDMENT is entered into effective as of June 30, 1996, between
MAGNETEK, INC., a Delaware corporation ("BORROWER"), certain Lenders,
NATIONSBANK OF TEXAS, N.A. ("AGENT"), as Agent for Lenders, and CIBC INC., THE
FIRST NATIONAL BANK OF CHICAGO, and LTCB TRUST COMPANY as Co-Agents for Lenders.
Borrower, Agent, Co-Agents, and certain Lenders are party to the Credit
Agreement (as renewed, extended, and amended, the "CREDIT AGREEMENT") dated as
of March 31, 1995, providing for a $225,000,000 revolving credit facility, which
facility has been reduced to $200,000,000, and a $75,000,000 term loan, which
term loan has been repaid. Borrower, Agent, and Lenders have agreed, upon the
following terms and conditions, to amend the Credit Agreement to provide for,
among other things, (a) the reduction of the Commitments for the Revolving
Facility to $170,000,000, and (b) changes to certain pricing terms and financial
covenants.
Accordingly, for adequate and sufficient consideration, Borrower, Agent,
and Determining Lenders agree as follows:
1. TERMS AND REFERENCES. Unless otherwise stated in this amendment (a)
terms defined in the Credit Agreement have the same meanings when used in this
amendment and (b) references to "SECTIONS," "SCHEDULES," and "EXHIBITS" are to
the Credit Agreement's sections, schedules, and exhibits.
2. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is amended
effective as of June 30, 1996, as follows:
(a) The recital paragraph of the Credit Agreement is entirely amended
as follows:
BORROWER ORIGINALLY REQUESTED THAT LENDERS EXTEND CREDIT TO
BORROWER NOT TO EXCEED A TOTAL OUTSTANDING PRINCIPAL AMOUNT OF
$300,000,000 (AS THAT AMOUNT MAY BE REDUCED BY CERTAIN BORROWING BASE
RESTRICTIONS) TO BE USED BY BORROWER AS PROVIDED IN SECTION 7.1 AND
ALLOCATED AS (A) A TERM LOAN OF $75,000,000 (THE "TERM LOAN") TO BE
FUNDED BY LENDERS ON THE CLOSING DATE, WHICH HAS BEEN REPAID, AND (B)A
REVOLVING-CREDIT FACILITY OF $225,000,000, WHICH HAS BEEN REDUCED TO
$170,000,000 (THE "REVOLVING FACILITY"), TO BE FUNDED BY LENDERS FROM
TIME TO TIME IN A COMBINATION OF ADVANCES AND LETTERS OF CREDIT.
LENDERS ARE WILLING TO EXTEND THE REQUESTED CREDIT ON THE TERMS AND
CONDITIONS OF THIS AGREEMENT.
(b) SECTION 1.1 is amended by adding a new PARAGRAPH (F) to the
definition of APPLICABLE MARGIN:
(f) FROM JULY 1, 1996, THROUGH THE DATE THAT AGENT RECEIVES THE
CURRENT FINANCIALS AND COMPLIANCE CERTIFICATE FOR THE FISCAL QUARTER
OF BORROWER ENDING SEPTEMBER 30, 1996, THE APPLICABLE MARGIN IS DEEMED
TO BE 2.25% FOR LIBOR-RATE BORROWINGS AND 1.00% FOR BASE-RATE
BORROWINGS, AND THE APPLICABLE PERCENTAGE IS DEEMED TO BE 0.375%.
(c) SECTION 1.1 is amended by adding or entirely amending the
following terms:
CAPITALIZATION MEANS -- FOR ANY PERSON, AT ANY TIME, AND WITHOUT
DUPLICATION -- THE SUM OF (a) ITS STOCKHOLDERS' EQUITY PLUS (B) ITS
FUNDED DEBT.
EBITDA MEANS -- FOR ANY PERSON, FOR ANY PERIOD, AND WITHOUT
DUPLICATION -- THE SUM OF (a) NET INCOME (WITHOUT REGARD TO
EXTRAORDINARY ITEMS), PLUS (b) TO THE EXTENT ACTUALLY DEDUCTED IN
CALCULATING NET INCOME, INTEREST EXPENSE, INCOME TAXES, AND
DEPRECIATION AND AMORTIZATION FROM CONTINUING OPERATIONS, AND (c)
MINUS OR PLUS, RESPECTIVELY, ANY NET GAINS OR LOSSES FROM DISCONTINUED
OPERATIONS THAT ARE NOT EXTRAORDINARY ITEMS. HOWEVER, SOLELY FOR
PURPOSES OF SECTIONS 10.4 AND 10.5, EXCLUDED CHARGES SHALL NOT BE
INCLUDED IN THE CALCULATION OF EBITDA.
EXCLUDED CHARGES MEANS, WITH RESPECT TO THE DETERMINATION OF
EBITDA, THE $79,177,000 IN PRE-TAX CHARGES TAKEN IN THE FISCAL QUARTER
OF BORROWER ENDING ON JUNE 30, 1996, AND SET FORTH ON SCHEDULE 1.1.
TANGIBLE-NET WORTH MEANS -- AT ANY TIME AND FOR ANY PERSON - THE
SUM OF (i) ITS STOCKHOLDERS' EQUITY, PLUS (ii) AMOUNTS EXCLUDED FROM
STOCKHOLDERS' EQUITY UNDER GAAP RELATING TO THE ESTABLISHMENT OF AN
EMPLOYEE STOCK OWNERSHIP PLAN, MINUS (iii) THE TOTAL (WITHOUT
DUPLICATION OF DEDUCTIONS ALREADY MADE IN ARRIVING AT STOCKHOLDERS'
EQUITY) OF THE BOOK VALUE OF ALL ASSETS ACQUIRED AFTER THE CLOSING
DATE THAT WOULD BE TREATED AS INTANGIBLE ASSETS UNDER GAAP, INCLUDING,
WITHOUT LIMITATION, GOODWILL, TRADEMARKS, TRADE NAMES, COPYRIGHTS,
PATENTS, AND UNAMORTIZED DEBT DISCOUNT AND EXPENSE.
(d) SECTION 10.1 is entirely amended as follows:
10.1 TANGIBLE-NET WORTH. THE COMPANIES' TANGIBLE-NET WORTH --
DETERMINED AS OF THE LAST DAY OF EACH FISCAL QUARTER OF BORROWER -- TO
BE LESS THAN THE SUM OF (a) $30,000,000, PLUS (b) 50% OF THE
COMPANIES' CUMULATIVE NET INCOME (WITHOUT DEDUCTION FOR LOSSES)
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AFTER JUNE 30, 1996, PLUS (c) 75% OF THE NET (I.E., GROSS LESS USUAL
AND CUSTOMARY UNDERWRITING, PLACEMENT, AND OTHER RELATED COSTS AND
EXPENSES) PROCEEDS OF THE ISSUANCE OF ANY EQUITY SECURITIES BY
BORROWER AFTER THE DATE OF THIS AGREEMENT.
(e) SECTION 10.3 is entirely amended as follows:
10.3 FUNDED DEBT/CAPITALIZATION. THE RATIO -- DETERMINED AS OF
THE LAST DAY OF EACH FISCAL QUARTER OF BORROWER -- OF THE COMPANIES'
FUNDED DEBT TO CAPITALIZATION TO EXCEED:
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QUARTERS ENDING RATIO
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3/31/95 THROUGH 3/31/96 0.80 TO 1.00
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6/30/96 THROUGH 6/30/97 0.90 TO 1.00
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9/30/97 THROUGH 3/31/98 0.87 TO 1.00
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6/30/98 AND EACH FISCAL QUARTER AFTER THAT 0.85 TO 1.00
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(f) SCHEDULE 2 and EXHIBITS A-2 and D-5 are entirely amended in the
respective forms of -- and all references in the Credit Agreement to
SCHEDULE 2 and EXHIBITS A-2 and D-5 are respectively changed to -- the
attached AMENDED SCHEDULE 2 and AMENDED EXHIBITS A-2 and D-5.
(g) A new SCHEDULE 1.1 is added to the Credit Agreement in the form
of the attached SCHEDULE 1.1.
3. CONDITIONS PRECEDENT. PARAGRAPH 2 above is not effective until Agent
receives (a) counterparts of this amendment executed by Borrower, each
Restricted Company, and Determining Lenders, (b) each document and other item
listed on the attached ANNEX A, each in form and substance satisfactory to Agent
and its special counsel, (c) a prepayment of the Principal Debt of the Revolving
Facility equal to the amount, if any, by which the outstanding Principal Debt
exceeds the lesser of EITHER (i) the Borrowing Base, OR (ii) $170,000,000, and
(d) an amendment fee for Lenders according to each Lender's Commitment
Percentage in an amount equal to 0.10% of the total Commitments described on the
attached AMENDED SCHEDULE 2. Each Lender hereby severally agrees to return to
Borrower the Revolving Note issued to it prior to the date of this amendment
promptly upon receipt by such Lender of the Revolving Note referred to on ANNEX
A.
4. RATIFICATIONS. Borrower (a) ratifies and confirms all provisions of
the Loan Documents as amended by this amendment, (b) ratifies and confirms that
all guaranties, assurances, and Liens granted, conveyed, or assigned to Agent
under the Loan Documents are not released, reduced, or otherwise adversely
affected by this amendment and continue to guarantee, assure, and secure full
payment and performance of the present and future Obligation, and (c)
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agrees to perform such acts and duly authorize, execute, acknowledge, deliver,
file, and record such additional documents and certificates as Agent may request
in order to create, perfect, preserve, and protect those guaranties, assurances,
and Liens.
5. REPRESENTATIONS. Borrower represents and warrants to Agent and
Lenders that as of the date of this amendment (a) all representations and
warranties in the Loan Documents are true and correct in all material respects
EXCEPT to the extent that (i) any of them speak to a different specific date or
(ii) the facts on which any of them were based have been changed by transactions
contemplated or permitted by the Credit Agreement, and (b) no Material Adverse
Event, Default or Potential Default exists.
6. MISCELLANEOUS. All references in the Loan Documents to the "CREDIT
AGREEMENT" refer to the Credit Agreement as amended by this amendment. This
amendment is a "LOAN DOCUMENT" referred to in the Credit Agreement, and the
provisions relating to Loan Documents in SECTIONS 1 and 14 of the Credit
Agreement are incorporated in this amendment by reference. Except as
specifically amended and modified in this amendment, the Credit Agreement is
unchanged and continues in full force and effect. This amendment may be
executed in any number of counterparts with the same effect as if all
signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instrument. This amendment binds and
inures to each of the undersigned and their respective successors and permitted
assigns, subject to the terms of the Credit Agreement. THIS AMENDMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.
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EXECUTED as of the date first stated above.
MAGNETEK, INC., NATIONSBANK OF TEXAS, N.A.,
as BORROWER as AGENT and a LENDER
By By
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John P. Colling, Jr., Michele M. Shafroth,
Vice President and Treasurer Senior Vice President and
Treasurer
CIBC INC., as a CO-AGENT and a LENDER THE FIRST NATIONAL BANK OF CHICAGO,
as a CO-AGENT and a LENDER
By By
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Name: Name:
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Title: Title:
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FIRST UNION NATIONAL BANK OF LTCB TRUST COMPANY,
TENNESSEE, as a LENDER as a CO-AGENT and a LENDER
By By
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Name: Name:
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Title: Title:
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FLEET BANK OF MASSACHUSETTS, N.A., CREDIT LYONNAIS - CAYMAN ISLAND
as a LENDER BRANCH, as a LENDER
By By
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Name: Name:
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Title: Title:
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UNION BANK OF CALIFORNIA, N.A., SOCIETE GENERALE, SOUTHWEST AGENCY,
successor from the merger of Union Bank and as a LENDER
The Bank of California, N.A., as a LENDER
By By
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Name: Name:
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Title: Title:
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ARAB BANKING CORPORATION,
as a LENDER
By
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Name:
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Title:
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Fourth Amendment Signature Page One of Two Pages
BANQUE FRANCAISE DU COMMERCE THE BOATMEN'S NATIONAL BANK OF
EXTERIEUR, as a LENDER ST. LOUIS, as a LENDER
By By
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Name: Name:
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Title: Title:
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By
---------------------------------- CREDITANSTALT CORPORATE FINANCE,
Name: INC., as a LENDER
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Title: By
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Name:
COMMERZBANK AG, ATLANTA -------------------------
AGENCY, as a LENDER Title:
By -------------------------
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Name: By
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Title Name:
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Title:
By -------------------------
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Name: FIRST AMERICAN NATIONAL BANK,
---------------------------- as a LENDER
Title:
---------------------------- By
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Name:
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Title:
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To induce Agent and Lenders to enter into this amendment, the undersigned
consents and agrees (a) to its execution and delivery, (b) that this
amendment in no way releases, diminishes, impairs, reduces, or otherwise
adversely affects any Liens, guaranties, assurances, or other obligations
or undertakings of any of the undersigned under any Loan Documents, and (c)
waives notice of acceptance of this consent and agreement, which consent
and agreement binds the undersigned and its successors and permitted
assigns and inures to Agent and Lenders and their respective successors and
permitted assigns.
MAGNETEK NATIONAL ELECTRIC COIL,
INC.,
as GUARANTOR
By
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John Colling, Jr., Vice President and
Treasurer
Fourth Amendment Signature Page Two of Two Pages