Exhibit 10.1
[Execution Copy]
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of January 23, 2003 between BE AEROSPACE,
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "Borrower"), each of the lenders that is a signatory
hereto under the caption "LENDERS" on the signature pages hereto (individually a
"Lender" and collectively the "Lenders") and JPMORGAN CHASE BANK (formerly known
as The Chase Manhattan Bank) as administrative agent (in such capacity, together
with its successors in such capacity, the "Administrative Agent") under the
Credit Agreement referred to below.
The Borrower, the Lenders and the Administrative Agent are parties to
a Credit Agreement dated as of August 21, 2001 (as heretofore amended, the
"Credit Agreement"). The Borrower, the Lenders and the Administrative Agent wish
to amend the Credit Agreement in certain respects and, accordingly, the parties
hereto hereby agree as follows:
Section 1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of the conditions
set forth in Section 6 hereof, the Credit Agreement shall be amended as of the
date hereof as follows:
Section 2.01. Definitions. Section 1.01 of the Credit Agreement is
hereby amended by adding the following definitions in the appropriate
alphabetical order (to the extent not already included), and amending in their
entirety the following definitions (to the extent already included):
"Amendment No. 2" means Amendment No. 2 to this Agreement dated as of
January 23, 2003 between the Borrower, Lenders constituting the Required
Lenders and the Administrative Agent.
"Applicable Rate" means, for any day, for any Type of Revolving Credit
Loans, or with respect to the commitment fees payable hereunder, as the
case may be, the applicable rate per annum set forth below under the
caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate",
respectively, based upon the Leverage Ratio as of the most recent
determination date:
- ---------------------------- ------------- -------------- ---------------------
Leverage Ratio: ABR Eurodollar Commitment
Spread Spread Fee Rate
- ---------------------------- ------------- -------------- ---------------------
- ---------------------------- ------------- -------------- ---------------------
Category 1 1.00% 2.00% 0.300%
Less than 4.00 to 1
- ---------------------------- ------------- -------------- ---------------------
- ---------------------------- ------------- -------------- ---------------------
Category 2 1.25% 2.25% 0.375%
Less than 4.50 to 1, but
greater than or equal to
4.00 to 1
- ---------------------------- ------------- -------------- ---------------------
- ---------------------------- ------------- -------------- ---------------------
2
Category 3 1.75% 2.75% 0.500%
Less than 5.00 to 1, but
greater than or equal to
4.50 to 1
- ---------------------------- ------------- -------------- ---------------------
- ---------------------------- ------------- -------------- ---------------------
Category 4 2.00% 3.00% 0.500%
Less than 5.50 to 1, but
greater than or equal to
5.00 to 1
- ---------------------------- ------------- -------------- ---------------------
- ---------------------------- ------------- -------------- ---------------------
Category 5 2.50% 3.50% 0.500%
Greater than or equal to
5.50 to 1
- ---------------------------- ------------- -------------- ---------------------
For purposes of the foregoing, (i) the Leverage Ratio shall be determined
as of the end of each fiscal quarter of the Borrower's fiscal year based
upon the Borrower's consolidated financial statements delivered pursuant to
Section 5.01(a) or (b) and (ii) each change in the Applicable Rate
resulting from a change in the Leverage Ratio shall be effective during the
period commencing on and including the date three Business Days after
delivery to the Administrative Agent of such consolidated financial
statements indicating such change and ending on the date immediately
preceding the effective date of the next such change; provided that the
Leverage Ratio shall be deemed to be in Category 5 (A) at any time that an
Event of Default has occurred and is continuing and (B) if the Borrower
fails to deliver the consolidated financial statements required to be
delivered by it pursuant to Section 5.01(a), (b) or (f), during the period
from the expiration of the time for delivery thereof until such
consolidated financial statements are delivered; provided further, that
that the Leverage Ratio shall be deemed to be in Category 5 for the period
from and including the effective date of Amendment No. 2 to but excluding
the date of delivery of the first quarterly financial statements following
such date as required by Section 5.01(a).
Notwithstanding the foregoing, the "Applicable Rate" for any Series of
Incremental Loans shall be the respective rates as shall be agreed upon at
the time Incremental Loan Commitments of such Series are established;
provided that, if the Applicable Rate for either Type of any Series of
Incremental Loans shall be greater than .50% above the Applicable Rate for
such Type of Revolving Credit Loans for any Category of Leverage Ratio set
forth above, the Applicable Rate for such Type of Revolving Credit Loans
shall be automatically adjusted upwards on the date upon which the
Incremental Loan Commitments of such Series are established pursuant to
Section 2.01(b) so that the Applicable Rate for such Type of such Series of
Incremental Loans is .50% above such Applicable Rate for such Type of
Revolving Credit Loans.
"Relevant Transaction" means, as at any date, all Acquisitions, all
Restricted Payments described in clause (i) of Section 6.06 and all
Investments described in Section 6.05(d) or 6.05(h), made during the
immediately preceding two consecutive quarterly fiscal periods.
"Senior Funded Debt" means, as at any date, the sum, for the Borrower
and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of all Indebtedness other than
Indebtedness under the Senior Subordinated Indentures and any other
Indebtedness that is subordinated to the obligations of the Borrower to the
Lenders hereunder, upon terms, and in form and substance satisfactory to
the Administrative Agent.
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"Senior Leverage Ratio" means, as at any date, the ratio of Senior
Funded Debt at such date to EBITDA for the relevant Calculation Period;
provided that, from and after the date of any Acquisition or Disposition
until four full fiscal quarters of the Borrower shall have elapsed since
the date of such Acquisition or Disposition, the Leverage Ratio shall be
calculated on a pro forma basis (reflecting, inter alia, in the case of any
Acquisition, any amount attributable to any operating expense that will be
eliminated or cost reduction that will be realized (in each case, net of
any operating expense or other cost increase) in connection with such
Acquisition, as determined in good faith by the chief financial officer of
the Borrower in accordance with GAAP and the rules, regulations and
guidelines of the Securities and Exchange Commission, as if such
elimination of operating expense or the realization of such cost reductions
were achieved at the beginning of such four-quarter period) as though such
Acquisition or Disposition had occurred, any Senior Funded Debt incurred,
assumed or repaid by the Borrower or any of its Subsidiaries in connection
with, or in anticipation of, such Acquisition or Disposition had been
incurred, assumed or repaid (as applicable), on the first day of such
Calculation Period.
Section 2.02. Reduction of Commitments. Section 2.07(a) of the Credit
Agreement shall be amended in its entirety to read as follows:
"(a) Scheduled Reduction and Termination. Unless previously reduced or
terminated, the Commitments shall (i) automatically reduce on December 31,
2004 to an amount equal to $120,000,000 and (ii) automatically terminate on
the Commitment Termination Date."
Section 2.03. Fundamental Changes. Section 6.03(c) of the Credit
Agreement shall be amended in its entirety to read as follows:
"(c) subject to Section 6.04, the Borrower or any Subsidiary of the
Borrower may make any Acquisition; provided that (x) immediately prior to
and after giving effect to any such Acquisition, (i) no Default shall have
occurred and be continuing and (ii) not more than $100,000,000 of the
proceeds of the Revolving Credit Loans then outstanding shall have been
applied, directly by the Borrower or indirectly through a Subsidiary, for
the purposes specified in clause (ii) of Section 5.05 and (y) unless the
Leverage Ratio at all times during the two consecutive quarterly fiscal
periods immediately preceding such Acquisition, determined on a pro forma
basis after giving effect to such Acquisition (and to all other Relevant
Transactions), shall have been less than 5.00 to 1, (A) no portion of any
Acquisition may be financed (on or after the date of the effectiveness of
Amendment No. 2) with proceeds of the Revolving Credit Loans and (B) the
aggregate consideration paid or delivered by the Borrower and its
Subsidiaries in connection with all Acquisitions after the effectiveness of
Amendment No. 2 shall not exceed $30,000,000; and"
Section 2.04. Investments. Clauses (d) and (h) of Section 6.05 of the
Credit Agreement shall be amended in its entirety to read as follows:
"(d) Investments by the Borrower in Subsidiaries of the Borrower in
the ordinary course of business; provided that the aggregate amount of
Customer Obligations (as defined in paragraph (h) below) that are not fully
secured (whether by a perfected Lien on, or an indefeasible title retention
to, the products so sold or leased, or otherwise) plus the aggregate fair
market value of all Property (whether now owned or hereafter acquired) of
the Borrower or any of its Subsidiaries (as determined in good faith by the
chief financial officer of the Borrower) sold, assigned, transferred or
otherwise disposed of on or after May 26, 2001 to any Minority-Owned
Entities (as defined in paragraph (h) below) plus the aggregate book value
(at the time of its transfer) of all
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Property (not including cash and not including any Property that is subject
to a Lien in favor of the Administrative Agent for the benefit of the
Lenders) transferred by the Borrower to any one or more Subsidiaries since
May 26, 2001 shall not exceed in the aggregate at any one time outstanding
the greater of (x) $10,000,000 and (y) 5% of Adjusted Net Worth as of the
most recent Fiscal Date for which financial statements have been provided
hereunder, provided further that such $10,000,000 figure shall be increased
to $50,000,000 if the Leverage Ratio at all times during the immediately
preceding two consecutive quarterly fiscal periods, determined on a pro
forma basis after giving effect to such Investment (and to all other
Relevant Transactions), shall have been less than 5.00 to 1;"
"(h) Investments of the Borrower and its Subsidiaries (i) in
corporations, companies, limited liability companies, partnerships and
other entities in each case that are not, or do not thereby become,
Subsidiaries of the Borrower ("Minority-Owned Entities") or (ii)
representing obligations of customers owing to the Borrower and its
Subsidiaries in respect of the deferred purchase price of products or
services sold or the leasing of products to customers and calculated as the
excess (if any) of (x) the cost to the Borrower and its Subsidiaries of
such products or services, as the case may be, over (y) the aggregate
amount paid by such customer to the Borrower and its Subsidiaries in
respect of such products or services, as the case may be ("Customer
Obligations"), in each case in the ordinary course of business of the
Borrower and its Subsidiaries as provided for in Section 6.04 hereof and on
such terms as the management of the Borrower may determine in its
reasonable business judgment, provided that the aggregate amount of such
Customer Obligations that are not fully secured (whether by a perfected
Lien on, or an indefeasible title retention to, the products so sold or
leased, or otherwise) plus the aggregate fair market value of all Property
(whether now owned or hereafter acquired) of the Borrower or any of its
Subsidiaries (as determined in good faith by the chief financial officer of
the Borrower) sold, assigned, transferred or otherwise disposed of on or
after May 26, 2001 to any such Minority-Owned Entities plus the aggregate
book value (at the time of its transfer) of all Property (not including
cash and not including Property that is subject to a Lien in favor of the
Administrative Agent for the benefit of the Lenders) transferred by the
Borrower to any one or more Subsidiaries since May 26, 2001 shall not
exceed in the aggregate at any one time outstanding the greater of (x)
$10,000,000 and (y) 5% of Adjusted Net Worth as of the most recent Fiscal
Date for which financial statements have been provided hereunder, provided
further that such $10,000,000 figure shall be increased to $50,000,000 if
the Leverage Ratio at all times during the immediately preceding two
consecutive quarterly fiscal periods, determined on a pro forma basis after
giving effect to such Investment (and to all other Relevant Transactions),
shall have been less than 5.00 to 1."
Section 2.05. Restricted Payments. Section 6.06 of the Credit
Agreement shall be amended in its entirety to read as follows:
"SECTION 6.06. Restricted Payments. The Borrower will not, nor will it
permit any of its Subsidiaries to, declare or make any Restricted Payment
at any time; provided that, so long as (i) no Default shall have occurred
and be continuing or result therefrom, and (ii) the Leverage Ratio at all
times during the immediately preceding two consecutive quarterly fiscal
periods, determined on a pro forma basis after giving effect to such
Restricted Payment (and to all other Relevant Transactions), shall have
been less than 5.00 to 1, the Borrower may make Restricted Payments in cash
in an amount up to but not exceeding in the aggregate the sum of
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(A) $25,000,000 plus
(B) the aggregate proceeds of the sale, assignment, transfer or other
disposition of any shares of stock of Advanced Thermal Sciences Corporation
in connection with an initial public offering of such shares of stock plus
(C) in any fiscal year of the Borrower, an aggregate amount up to but
not exceeding 25% of the net earnings of the Borrower for the immediately
preceding fiscal year ("Available Net Earnings"),
provided, further, that any portion of Available Net Earnings not used for
Restricted Payments in any fiscal year (the "Carry-Over Amount") may be used for
Restricted Payments in the immediately succeeding fiscal year only, for which
purpose Restricted Payments in any fiscal year shall be deemed to have been made
first from Available Net Earnings, and only thereafter from any Carry-Over
Amount, such Restricted Payments set forth in clauses (i)(A) and (B) hereof not
to exceed $75,000,000 in the aggregate.
Notwithstanding the foregoing, any Subsidiary of the Borrower may make
Restricted Payments to the Borrower or any other Subsidiary of the Borrower
from time to time."
Section 2.06. Certain Financial Covenants. Section 6.08 of the Credit
Agreement shall be amended in its entirety to read as follows:
"SECTION 6.08. Certain Financial Covenants.
(a) Leverage Ratio. The Borrower will not permit the Leverage Ratio to
exceed the following respective ratios at any time during the following
respective periods:
Fiscal Period Ratio
------------- -----
From (but not including) the Fiscal 7.50 to 1
Date in November 2002 through the
Fiscal Date in December 2002.
From (but not including) the Fiscal 7.75 to 1
Date in December 2002 through the
Fiscal Date in March 2003.
From (but not including) the Fiscal 8.25 to 1
Date in March 2003 through the Fiscal
Date in September 2003.
From (but not including) the Fiscal 8.00 to 1
Date in September 2003 through the
Fiscal Date in December 2003.
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From (but not including) the Fiscal 7.25 to 1
Date in December 2003 through the
Fiscal Date in March 2004.
From (but not including) the Fiscal 7.00 to 1
Date in March 2004 through the Fiscal
Date in June 2004.
From (but not including) the Fiscal 6.25 to 1
Date in June 2004 through the Fiscal
Date in September 2004.
From (but not including) the Fiscal 6.00 to 1
Date in September 2004 through the
Fiscal Date in December 2004.
From (but not including) the Fiscal 5.50 to 1
Date in December 2004 through the
Fiscal Date in March 2005.
Thereafter 4.00 to 1
(b) Senior Leverage Ratio. The Borrower will not permit the Senior
Leverage Ratio to exceed 2.00 to 1 at any time.
(c) Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio to be less than the following respective ratios at
any time during the following respective periods:
Fiscal Period Ratio
From (but not including) the Fiscal 1.25 to 1
Date in November 2002 through the
Fiscal Date in December 2003.
From (but not including) the Fiscal 1.50 to 1
Date in December 2003 through the
Fiscal Date in September 2004.
From (but not including) the Fiscal 1.75 to 1
Date in September 2004 through the
Fiscal Date in December 2004.
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From (but not including) the Fiscal 2.00 to 1
Date in December 2004 through the
Fiscal Date in March 2005.
From (but not including) the Fiscal 2.50 to 1
Date in March 2005 through the Fiscal
Date in December 2005.
Thereafter 3.00 to 1
(d) Adjusted Net Worth. The Borrower will not at any date permit
Adjusted Net Worth to be less than the sum of (a) $120,000,000 plus (b) 50%
of the aggregate amount of Net Available Proceeds of Equity Issuances since
May 26, 2001 plus (c) 50% of the sum of consolidated net earnings of the
Borrower and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) for each fiscal quarter of the
Borrower ending after May 26, 2001; provided that consolidated net earnings
for any fiscal quarter in which there is a consolidated net loss shall be
deemed to be zero."
Section 3. Reduction of Aggregate Revolving Credit Commitments. Upon
the effectiveness of the amendments to the Credit Agreement provided for in
Section 2 of this Amendment No. 2, the aggregate amount of the Revolving Credit
Commitments of the Lenders shall be reduced, on a ratable basis as provided in
Section 2.07(d), to $135,000,000, such reduction to occur automatically, and
without delivery of any notice, as would otherwise be required under Section
2.07 of the Credit Agreement.
Section 4. Certain Asset Transfers; Section 3.01 of Amendment No. 1.
Section 4.01. Certain Asset Transfers. Not later than the date 90
days after the effectiveness of the amendments provided for in Section 2 hereof,
the Borrower shall transfer (and shall deliver to the Administrative Agent
evidence of such transfer) all assets of all Domestic Subsidiaries (either
through liquidation or dissolution of such subsidiaries, through merger of such
Subsidiaries into the Borrower, or through any other form of transaction that
as the same effect), so that after giving effect thereto, all of the assets of
such Subsidiaries are owned by the Borrower and subject to the Lien of the
Security Agreement, provided that the foregoing shall not be applicable to the
assets of Advanced Thermal Sciences Corporation or Aerospace Lighting
Corporation.
Section 4.02. Section 3.01 of Amendment No. 1. Nothing herein shall be
deemed to alter or affect the provisions of Section 3.01 of Amendment No. 1,
which shall continue at all times in full force and effect as if set forth in
their entirety herein.
Section 5. Representations and Warranties. The Borrower represents and
warrants to the Lenders that the representations and warranties set forth in
Article III of the Credit Agreement (as amended hereby) are true and complete on
the date hereof as if made on and as of the date hereof (or, if such
representation or warranty is expressly stated to be made as of a specific date,
as of such specific date) and as if each reference in said Article III to "this
Agreement" included reference to this Amendment No. 2.
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Section 6. Condition Precedent. The effectiveness of the amendments to
the Credit Agreement set forth in Section 2 hereof shall be subject to the
satisfaction of the following conditions precedent:
(a) Execution. The Administrative Agent shall have received
counterparts of this Amendment No. 2, duly executed and delivered by the
Borrower, the Required Lenders and the Administrative Agent.
(b) Fees and Expenses. The Borrower shall have paid all fees and
expenses that it shall have agreed to pay to any Lender or the
Administrative Agent in connection with this Amendment No. 2, including (i)
an amendment fee to each Lender executing this Amendment No. 2 prior to
5:00 p.m. on January 23, 2003, in an amount equal to 0.25% of such Lender's
Revolving Credit Commitment (after giving effect to the reduction of such
Commitments provided for in Section 3 hereof and (ii) the reasonable fees
and expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York
counsel to Chase.
(c) Prepayment. To the extent that, after giving effect to the
reduction of Revolving Credit Commitments contemplated by Section 3 hereof,
the total Revolving Credit Exposure shall exceed the total Revolving Credit
Commitments, the Borrower shall have prepaid an amount of the Loans, or
provided cover for LC Exposure, so that the total Revolving Credit Exposure
does not in exceed the total Revolving Credit Commitments.
(d) Other Documents. The Administrative Agent shall have received such
other documents as it, or special New York counsel to Chase, shall have
reasonably requested.
Section 7. Collateral Security. By its signature below, the Borrower
hereby confirms the grant of collateral security to the Administrative Agent
pursuant to the Security Agreement as collateral security for the obligations of
the Borrower to the Lenders and the Administrative Agent under the Credit
Agreement as amended hereby. In addition, the Borrower agrees, not later than
the date 60 days after the date hereof, to enter into, and cause any bank,
investment bank or financial institution at which any cash or investments is
held by the Borrower or any of its Subsidiaries (other than operating deposit
accounts), to enter into control or similar agreements pursuant to which the
Lien in favor of the Administrative Agent created under the Security Agreement
in such cash and investments is perfected on a senior basis in a manner in form
and substance satisfactory to the Administrative Agent, provided that the
Borrower shall be required to take such action only with respect to such portion
(if any) of such cash and investments having a fair market value in excess of
$35,000,000.
Section 8. Miscellaneous. Except as expressly provided herein, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 2 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 2 by signing any such
counterpart. This Amendment No. 2 shall be governed by, and construed in
accordance with, the law of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be duly executed as of the day and year first above written.
BE AEROSPACE, INC.
By /s/ Thomas P. McCaffrey
--------------------------------
Name: Thomas P. McCaffrey
Title: Senior Vice President and
Chief Financial Officer
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LENDERS
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JPMORGAN CHASE BANK (formerly known
as The Chase Manhattan Bank)
By /s/ Matthew H. Massie
--------------------------------
Name: Matthew H. Massie
Title: Managing Director
BANK OF AMERICA, N.A.
By
--------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By /s/ Jay Chall
--------------------------------
Name: Jay Chall
Title: Director
By /s/ Cassandra Droogan
--------------------------------
Name: Cassandra Droogan
Title: Associate
FIRST UNION NATIONAL BANK
By
--------------------------------
Name:
Title:
MERRILL LYNCH CAPITAL CORPORATION
By /s/ Nancy E. Meadows
--------------------------------
Name: Nancy E. Meadows
Title: Assistant Vice President
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THE BANK OF NEW YORK
By /s/ Brendan T. Nedzi
--------------------------------
Name: Brendan T. Nedzi
Title: Senior Vice President
CREDIT LYONNAIS, NEW YORK
BRANCH
By /s/ Scott R. Chappelka
--------------------------------
Name: Scott R. Chappelka
Title: Vice President
GE CAPITAL CORPORATION
By /s/ Karl Kieffer
--------------------------------
Name: Karl Kieffer
Title: Duly Authorized Signatory