EXHIBIT 4.2
Execution Copy
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of November 4, 2005
(this "Amendment"), is among Tecumseh Products Company, a Michigan corporation
(the "Borrower"), the Lenders party hereto and JPMorgan Chase Bank, N.A., as
agent for the Lenders (in such capacity, the "Agent").
RECITAL
The Borrower, the Lenders party thereto and the Agent are parties to a
Credit Agreement dated as of December 21, 2004, as modified by a waiver letter
dated June 30, 2005 and a First Amendment dated August 5, 2005 (the "Credit
Agreement"). The Borrower and the Guarantors desire to amend the Credit
Agreement and the Agent and the Lenders are willing to do so in accordance with
the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1.
AMENDMENTS
The Credit Agreement shall be amended as follows:
1.1 The following definitions are added to the Credit Agreement in
appropriate alphabetical order:
"Second Amendment" means the Second Amendment to this Agreement dated
as of the Second Amendment Effective Date.
"Second Amendment Effective Date" shall mean November 4, 2005.
1.2 The following definition in the Credit Agreement is restated
as follows:
"Second Amendment Financial Certificate" means a separate certificate
delivered by the Borrower to the Lenders dated the Second Amendment Effective
Date and identified as the "Second Amendment Financial Certificate", together
with any Supplemental Projections delivered under this Agreement.
1.3 All references in the Credit Agreement to "First Amendment
Financial Certificate" shall be deleted and "Second Amendment Financial
Certificate" shall be substituted in each place thereof.
1.4 Section 2.2(ii) is amended by deleting reference therein to
"$15,000,000" and substituting "$7,500,000" in place thereof.
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1.5 Section 5.5 is restated as follows:
5.5. Material Adverse Change. Since the date of the financial
statements of the Borrower filed with the Securities and Exchange Commission
with the Borrower's Quarterly Report on Form 10-Q for the period ended June 30,
2005 (the "Second Quarter 2005 Financial Statements"), there has been no change
in the business, Property, prospects, condition (financial or otherwise) or
results of operations of the Borrower and its Subsidiaries which, except for an
approximate $25,000,000 reduction in profits and assets resulting from the
establishment by the Company, during the fiscal quarter ended September 30,
2005, of a valuation allowance against deferred tax assets, as contemplated in
footnote 11 to the Second Quarter 2005 Financial Statements, could reasonably be
expected to have a Material Adverse Effect, except as disclosed in the SEC
Reports.
1.6 Section 6.1(ii) is restated as follows:
(ii) For each of the first three quarterly periods of each
of its fiscal years, upon the earlier of the date 40
days after the close of each such quarterly period
and the date the Company files its quarterly report
on Form 10-Q with the Securities and Exchange
Commission for such quarterly period, for itself and
its Subsidiaries, consolidated unaudited balance
sheets as at the close of each such period and
consolidated profit and loss and reconciliation of
surplus statements and a statement of cash flows for
the period from the beginning of such fiscal year to
the end of such quarter, all certified by its chief
financial officer.
1.7 Section 6.1(x) is hereby amended by adding the following
proviso to the end of such Section:
"; provided, however that such reporting package shall also
contain a calculation in reasonable detail of Consolidated
EBITDA for the period of 12 fiscal months of the Borrower
ending on the last day of such fiscal month and for the period
beginning on the first day of the then current fiscal year of
the Borrower and ending on the last day of such fiscal month"
1.8 Section 6.13(vi) is restated as follows:
(vi) Other leases, sales or other dispositions of its Property
that, together with all other Property of the Borrower and its
Subsidiaries previously leased, sold or disposed of (other
than inventory in the ordinary course of business) as
permitted by this clause (vi) shall be less than: (a) in the
2005 or 2006 fiscal year of the Borrower, $7,500,000 in the
aggregate for each such fiscal year, based on the Net Cash
Proceeds received by the Borrower or any of its Subsidiaries
from the lease, sale or other disposition of such Property,
(b) in any fiscal year of the Borrower thereafter, 15% of the
consolidated assets of the Borrower and its Subsidiaries or
Property which is responsible for more than 15% of the
consolidated net sales or of the consolidated net income of
the Borrower and its Subsidiaries, in each case, as would be
shown in the consolidated financial statements of the Borrower
and its Subsidiaries as of the end of the immediately
preceding fiscal year, and (c) cumulatively after the date
hereof, 30% of the consolidated assets of the Borrower and its
Subsidiaries or Property which is responsible for more than
30% of the consolidated net sales or of the consolidated net
income of the Borrower and its Subsidiaries, in each case, as
would be shown in the consolidated financial statements of the
Borrower and its Subsidiaries as of the end
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of the most recent fiscal quarter ending prior to the date
hereof, provided that, immediately before and after any such
transaction, no Default or Unmatured Default shall exist or
shall have occurred and be continuing. Notwithstanding the
foregoing, and in addition to any other restrictions contained
herein, the Borrower will not, nor will permit its Subsidiary
to lease, sell or otherwise dispose of its Property to any
other person if such lease, sale or other disposition is not
permitted by the 2003 Senior Note Documents.
1.9 Section 6.19.2 is restated as follows:
6.19.2. Leverage Ratio. The Borrower will not permit
the Leverage Ratio to be greater than 3.0:1.0 at any time on or after
March 31, 2007.
1.10 Section 6.19.6 is amended by deleting reference therein to
"December 31, 2006" and substituting "March 30, 2007" in place thereof.
1.11 Sections 6.21 and 6.22 added pursuant to the First Amendment
and inadvertently designated as Sections 6.20 and 6.21 are re-designated as
Sections 6.21 and 6.22, respectively, and such Section 6.22 is restated as
follows:
6.22 Optional Payments and Modification of Debt. The
Borrower will not, nor will it permit any Subsidiary to, (i) make any optional
payment, defeasance (whether a covenant defeasance, legal defeasance or other
defeasance), prepayment, repurchase (including without limitation any offer to
repurchase) or other optional redemption of any 2003 Senior Note Debt or IRB
Debt, unless, concurrently therewith, all other Secured Obligations are paid in
full, (ii) enter into any agreement restricting the ability of the Borrower and
its Subsidiaries to amend or modify any Loan Document, (iii) enter into any
agreement or arrangement requiring any defeasance of any kind of any 2003 Senior
Note Debt or IRB Debt or (iv) pay or agree to pay any fee, interest or other
compensation or consideration (other than as required under the 2003 Senior Note
Documents and IRB Documents delivered to the Lenders prior to the First
Amendment Effective Date and under Amendment No. 3 to the 2003 Note Purchase
Agreement delivered to the Lenders pursuant to Section 3.3 of the Second
Amendment (which means that any fees in the documents delivered to the Agent and
the Lenders under Section 3.3 of the Second Amendment are permitted to be paid,
which the Agent and the Lenders understand to be the fees payable to Bingham
McCutchen LLP and Conway, Del Genio, Gries & Co., LLC agreed to by the Borrower
and the fee payable on March 31, 2006 under Section 7(b) of such Amendment No.
3) to any purchaser or other holder of the 2003 Senior Note Debt or IRB Debt.
ARTICLE 2.
REPRESENTATIONS
The Borrower represents and warrants to the Agent and the Lenders that:
2.1 The execution, delivery and performance of this Amendment are
within its powers, have been duly authorized by the Borrower and are not in
contravention of any Requirement of Law. This Amendment is the legal, valid and
binding obligations of the Borrower, enforceable against it in accordance with
the terms thereof, except to the extent the enforcement thereof may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
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2.2 After giving effect to the amendments and waiver herein
contained and the amendment to the 2003 Note Purchase Agreement delivered under
Section 3.3 below and previously received waiver to the IRB Documents dated
August 5, 2005, the representations and warranties contained in the Credit
Agreement and the representations and warranties contained in the other Loan
Documents are true on and as of the date hereof with the same force and effect
as if made on and as of the date hereof, except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct on
and as of such earlier date, and no Default or Unmatured Default exists or has
occurred and is continuing on the date hereof.
2.3 Complete and correct copies of Amendment No. 3 to 2003 Note
Purchase Agreement and all agreements and documents executed in connection
therewith have been delivered to the Lenders and such amendment and other
agreements and documents are being executed simultaneously herewith, and neither
the Borrower nor any Subsidiary thereof has paid (or promised to pay) any
amendment fee or any other direct or indirect compensation to any party to the
2003 Note Purchase Documents or the IRB Documents or any of their respective
Affiliates, attorneys, agents, consultants or other representatives (other than
as set forth in such amendment and other agreements and documents, which means
that any fees in the documents delivered to the Agent and the Lenders under
Section 3.3 below are permitted to be paid, which the Agent and the Lenders
understand to be the fees payable to Bingham McCutchen LLP and Conway, Del
Genio, Gries & Co., LLC agreed to by the Borrower and the fee payable on March
31, 2006 under Section 7(b) of such Amendment No. 3) or to any other creditor of
the Borrower or any Subsidiary in connection with the transactions contemplated
thereby. No amendment, waiver or other modification is being made to the IRB
Documents as of the date hereof and there is no default under the IRB Documents,
provided that the Borrower represents that the IRB Documents will be amended to
conform certain terms thereof to the Credit Agreement but no other material
amendments to the IRB Documents will be made.
2.4 All Subsidiaries that are Guarantors (per the definition of
Guarantor) have duly executed and delivered a Guaranty and are parties to the
Consent and Agreement attached hereto.
ARTICLE 3.
CONDITIONS PRECEDENT.
This Amendment shall become effective as of the date hereof,
provided that each of the following has been satisfied:
3.1 This Amendment shall be signed by the Borrower, the Agent and
the Required Lenders.
3.2 Each Guarantor shall have executed the Consent and Agreement
attached hereto.
3.3 The Lenders shall have received an amendment to the 2003 Note
Purchase Agreement and all agreements and documents executed in connection
therewith, and all such amendments and waivers and other agreements and
documents shall be executed simultaneously herewith and shall be satisfactory to
the Required Lenders.
3.4 The Lenders shall have received the Second Amendment Financial
Certificate, and such Second Amendment Financial Certificate shall be
satisfactory to the Required Lenders.
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3.5 The Borrower and the Guarantors shall have executed and
delivered such other agreements and instruments, and satisfied such other
conditions in connection with this Amendment as required by the Agent, including
but not limited to certificates, financial statements and projections and
opinions of counsel acceptable to the Agent.
ARTICLE 4.
WAIVER.
The Lenders hereby waive (a) any Default as a result of the
non-compliance with Section 6.19.5 of the Credit Agreement for the fiscal
quarter ending September 30, 2005, (but do not waive compliance with such
Section 6.19.5 for any other fiscal quarter) and (b) any Default as a result of
the non-compliance with Section 6.19.2 of the Credit Agreement at any time on or
prior to the date hereof. The Lenders do not waive any other Default or
Unmatured Default.
ARTICLE 5.
MISCELLANEOUS.
5.1 References in any Loan Document to the Credit Agreement shall
be deemed to be references to the Credit Agreement as amended hereby and as
further amended from time to time.
5.2 The Borrower agrees to pay and to save the Agent harmless for
the payment of all costs and expenses arising in connection with this Amendment,
including the reasonable fees of counsel to the Agent in connection with
preparing this Amendment and the related documents.
5.3 The Borrower acknowledges and agrees that the Agent and the
Lenders have fully performed all of their obligations under all documents
executed in connection with the Loan Documents and all actions taken by the
Agent and the Lenders are reasonable and appropriate under the circumstances and
within their rights under the Loan Documents. The Borrower represents and
warrants that it is not aware of, and hereby waives, any claims or causes of
action against the Agent or any Lender, any participant lender or any of their
successors or assigns.
5.4 Except as expressly amended hereby, the Borrower agrees that
the Loan Documents are ratified and confirmed and shall remain in full force and
effect and that it has no set off, counterclaim, defense or other claim or
dispute with respect to any Loan Document or any transactions in connection
therewith. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement.
5.5 This Amendment may be signed upon any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the same
instrument, and telecopied signatures shall be enforceable as originals.
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IN WITNESS WHEREOF, the parties signing this Amendment have caused this
Amendment to be executed, delivered and effective as of the day and year first
above written.
TECUMSEH PRODUCTS COMPANY
By: /s/ James S. Nicholson
Title: Vice President, Treasurer & CFO
JPMORGAN CHASE BANK, N.A., as a Lender and
as Agent and LC Issuer
By: /s/ Mike Kelly
Title: Vice President
COMERICA BANK, as a Lender and as Syndication
Agent
By: /s/ (not readable)
Title: Account Officer
FIFTH THIRD BANK
By: /s/ (not readable)
Title: Executive Vice President
THE NORTHERN TRUST COMPANY
By: /s/ (not readable)
Title: Vice President
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CONSENT AND AGREEMENT
As of the date and year first above written, each of the undersigned
hereby:
(a) fully consents to the terms and provisions of the above
Amendment and the consummation of the transactions contemplated hereby, and
agrees to all terms and provisions of the above letter applicable to it;
(b) agrees that its Guaranty and all other Loan Documents executed
by the undersigned in connection with the Credit Agreement or otherwise in favor
of the Agent and/or the Lenders (collectively, the "Documents") are hereby
ratified and confirmed and shall remain in full force and effect, and the
undersigned acknowledges that it has no setoff, counterclaim, defense or other
claim or dispute with respect to any Document or any transactions in connection
therewith; and
(c) acknowledges that it is in its interest and to its financial
benefit to execute this consent and agreement.
M.P. PUMPS, INC.
TECUMSEH INVESTMENTS INC.
TECUMSEH COMPRESSOR COMPANY
LITTLE GIANT PUMP COMPANY
DOUGLAS HOLDINGS, INC.
TECUMSEH POWER COMPANY
FASCO INDUSTRIES, INC.
CONVERGENT TECHNOLOGIES
INTERNATIONAL, INC.
EVERGY, INC.
TECUMSEH DO BRASIL USA, LLC
TECUMSEH PUMP COMPANY
TECUMSEH CANADA HOLDING COMPANY
VON WEISE GEAR COMPANY
MANUFACTURING DATA SYSTEMS, INC.
By:
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James. Nicholson
Their: Vice President and Treasurer
EUROMOTOR, INC.
By:
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James. Nicholson
Its: Vice President and Treasurer
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