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EXHIBIT 10.38
FIRST AMENDMENT, dated as of January 20, 1998 (this "Amendment"), to the
Second Amended and Restated Credit Agreement, dated as of December 18, 1997 the
("Credit Agreement"), among FEDERAL-MOGUL CORPORATION, a Michigan corporation
(the "Company"), each Foreign Subsidiary Borrower named therein (together with
the Company, the "Borrowers"), the several banks and other financial
institutions from time to time parties thereto (the "Lenders") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as administrative agent for the
Lenders thereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
make certain loans and other extensions of credit to the Borrowers; and
WHEREAS, the Borrowers have requested, and, upon this Amendment
becoming effective, the Required Prepayment Lenders and the Required Lenders
have agreed, that certain provisions of the Credit Agreement be amended in the
manner provided for in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
2. Amendment to Recitals to the Credit Agreement. The first recital
to the Credit Agreement is hereby amended to read in its entirety as follows:
"WHEREAS, the Company is party to the Revolving
Credit, Competitive Advance and Multicurrency Facility Agreement,
dated as of June 16, 1997 (as hereinafter defined, the "Existing
Credit Agreement"), with the several banks and other financial
institutions party thereto and The Chase Manhattan Bank, as the
administrative agent;"
3. Amendments to Section 1.01 of the Credit Agreement. (a) The
definition of "Net Cash Proceeds" contained in Section 1.01 of the Credit
Agreement is hereby amended by adding the following sentence immediately at the
end of such definition:
"It is understood that the issuance by the Company of Capital Stock as
a part of the consideration for the Fel- Pro Acquisition will not be
deemed to generate Net Cash Proceeds."
(b) Section 1.01 of the Credit Agreement is hereby amended by adding
thereto the following new definitions in their appropriate alphabetical order:
"`Existing Credit Agreement': the Revolving Credit,
Competitive Advance and Multicurrency Facility Agreement, dated as of
June 16, 1997, as amended from time to time.
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`Fel-Pro Acquisition Agreement': the Equity Purchase
Agreement, dated as of January 9, 1998, by and among the Company, as
Buyer, and Fel-Pro Realty Corporation, McCormick Investments L.P. and
the other Sellers listed therein, as sellers.
`Fel-Pro Acquisition': the acquisition by the
Company pursuant to the Fel-Pro Acquisition Agreement of (i) the
Equity Interests (as defined in the Fel-Pro Acquisition Agreement),
consisting of all the partnership interests in Fel-Pro Master General
Partnership, an Illinois general partnership, and all of the issued
and outstanding capital stock of Felt Products Mfg. Co., a Delaware
corporation, Fel-Pro Management Co., a Delaware corporation, Meridian
Parts Corporation, a California corporation, and Fel-Pro Mexico S. de
R.L. de C. V., a Mexican limited liability partnership and (ii)
certain real property owned by Fel-Pro Realty Corporation, for
consideration consisting of (a) approximately $495,000,000 in cash
(which may include repayment of existing indebtedness of up to
$10,000,000) and (b) Capital Stock of the Company having an aggregate
market value of at least $225,000,000.
`Threshold Amount': $1,075,000,000; provided, that
if a reduction of the Term Loan Commitments is required to be made
pursuant to Section 6.04(d)(iv), the Threshold Amount shall be reduced
to $875,000,000 upon the making of such reduction."
4. Amendment to Section 3.01 of the Credit Agreement. The second
sentence of Section 3.01 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"The Term Loans shall be made (i) on the Initial Term Loan Funding
Date, in an aggregate principal amount not to exceed the aggregate
purchase price of Target Shares purchased on such date and the amount
applied to repay existing indebtedness of the Target on such date and
to pay fees and expenses in respect of the transactions contemplated
hereby (less the amount applied for such purposes from the proceeds of
the Senior Subordinated Bridge Loans and of the 7% Trust Convertible
Preferred Securities issued by Federal-Mogul Financing Trust on
December 1, 1997 and December 10, 1997), (ii) on the later of (A) the
Initial Term Loan Funding Date and (B) the closing date of the Fel-Pro
Acquisition, in an aggregate principal amount of up to $500,000,000
and (iii) following the Initial Term Loan Funding Date, until the last
day of the Term Loan Commitment Period, on up to ten Borrowing Dates,
in a minimum aggregate principal amount of $75,000,000 on each such
Borrowing Date unless otherwise agreed by the Administrative Agent and
Borrower."
5. Amendment to Section 6.04(d) of the Credit Agreement. Section
6.04(d) of the Credit Agreement is hereby amended to read in its entirety as
follows:
"(d) Unless the Required Prepayment Lenders and the
Required Lenders shall otherwise agree, if any Capital Stock or
Indebtedness (other than Indebtedness permitted by paragraphs (a)
through (c), paragraphs (e) through (g) and paragraph (i) of Section
10.05 as in effect prior to the Covenant Transition Date) shall be
issued or incurred by the Company or any of its Subsidiaries at any
time after November 30, 1997, an amount equal to 100% of the Net Cash
Proceeds thereof shall be applied on the date of such issuance or
Incurrence toward the prepayment of the Term Loans as set forth in
Section 6.08(b); provided, that, notwithstanding the foregoing:
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(i) on the Business Day immediately preceding the
Initial Revolving Credit Funding Date (or on such earlier date
as the Company shall elect), the Company shall reduce the Term
Loan Commitments (in the same order as prepayments of the Term
Loans are to be applied pursuant to Section 6.08(b)) by an
amount equal to (A) $75,000,000 and (B) the Net Cash Proceeds
of any issuance after December 10, 1997 and prior to the
Initial Revolving Credit Funding Date of the Company's Capital
Stock yielding Gross Cash Proceeds in an amount which,
together with the Gross Cash Proceeds of all prior issuances
of the Company's Capital Stock during the Reduction Period
(including the 7% Trust Convertible Securities issued by
Federal-Mogul Financing Trust), aggregates less than the
Threshold Amount;
(ii) if subsequent to December 10, 1997 and prior to
the Initial Term Loan Funding Date the Company receives Gross
Cash Proceeds from the issuance of its Capital Stock in an
amount which, together with the amount of Gross Cash Proceeds
received in all prior Capital Stock issuance transactions
consummated during the Reduction Period, aggregates the
Threshold Amount or more, the Company may, on the Business Day
immediately preceding the Initial Revolving Credit Funding
Date (or on such earlier date as the Company shall elect),
reduce the Senior Subordinated Bridge Loan Commitments by an
aggregate amount up to the amount of the Net Cash Proceeds of
such subsequent issuance, and the Term Loan Commitments shall
be reduced, in the same order as prepayments of the Term Loans
are to be applied pursuant to Section 6.08(b), by an amount
equal to the excess of such Net Cash Proceeds over the amount
by which the Company has reduced the Senior Subordinated
Bridge Loan Commitments pursuant to this clause) (such
reduction of the Term Loan Commitments to occur simultaneously
with any reduction of the Senior Subordinated Bridge Loan
Commitments and in any event not later than the Business Day
immediately preceding the Initial Revolving Credit Funding
Date);
(iii) if on or after the Initial Term Loan Funding
Date the Company receives Gross Cash Proceeds from the
issuance of its Capital Stock in an amount which, together
with the amount of Gross Cash Proceeds received in the prior
Capital Stock issuance transactions consummated during the
Reduction Period, aggregates the Threshold Amount or more, the
Company may apply the Net Cash Proceeds of such issuance to
prepay the Senior Subordinated Debt, and the remainder of such
Net Cash Proceeds not so applied shall be applied on the date
of receipt thereof to prepay the Term Loans as set forth in
Section 6.08(b);
(iv) unless on or before May 1, 1998 the Company
shall have (A) consummated the Fel-Pro Acquisition and (B) as
a portion of the consideration for the Fel-Pro Acquisition,
issued at least $225,000,000 in aggregate market value of the
Company's Capital Stock, the Company shall, on such date,
reduce the Term Loan Commitments, in the same order as
prepayments are required to be applied pursuant to Section
6.08(b), by $500,000,000;
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(v) Net Cash Proceeds of Subordinated Debt (other
than Senior Subordinated Debt) issued prior to the date of
repayment in full of the Interim Term Loans and the Senior
Subordinated Debt shall be applied on the date of receipt
thereof toward the prepayment of the Interim Term Loans or, at
the Company's option (if no Default or Event of Default is in
existence), the Senior Subordinated Debt, and after the
repayment in full of the Interim Term Loans, the Company shall
not be required to apply proceeds of Subordinated Debt toward
prepayment of the Loans;
(vi) the Company shall not be required to make
mandatory prepayments with the proceeds of Capital Stock
issued to employees pursuant to stock option plans or similar
arrangements, or Capital Stock issued as consideration for
acquisitions made by the Company and its Subsidiaries;
(vii) after the Interim Term Loans have been repaid
in full, the Company shall not be required to make mandatory
prepayments with proceeds of issuances by the Company of
Capital Stock or Subordinated Debt, and the Company may use
such Net Cash Proceeds to prepay the Senior Subordinated Debt
or for other corporate purposes to the extent not prohibited
hereunder; and
(viii) after the Collateral Release Date, the Company
shall not be required to make mandatory prepayments with the
proceeds of Indebtedness."
6. Amendment to Section 6.13 of the Credit Agreement. The second
sentence of Section 6.13 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Up to $500,000,000 of the proceeds of the Term Loans may be used to
finance the Fel-Pro Acquisition and related fees and expenses (or, as
the case may be, to refinance loans made under the Existing Credit
Agreement whose proceeds were used to finance the Fel-Pro Acquisition
and related fees and expenses), and the remaining proceeds of the Term
Loans shall be used in accordance with Schedule 6.13 (a) to finance
the acquisition of the Target Shares, (b) to refinance existing
indebtedness of the Target and (c) to pay fees and expenses incurred
in connection with the Tender Offer and this Agreement."
7. Amendments to Section 8.05 of the Credit Agreement. (a) The
initial paragraph of Section 8.05 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"SECTION (a) Conditions to each Revolving Credit and
Multicurrency Loan after Initial Revolving Credit Funding Date and
Term Loans used to Finance or Refinance Fel-Pro Acquisition. The
obligation of each Lender to make (i) any Revolving Credit Loan and
Multicurrency Loan requested to be made by it on any date (other than
the Revolving Credit Loans and Multicurrency Loans made on the Initial
Revolving Credit Funding Date in an amount sufficient to repay all
amounts outstanding under the Existing Credit Agreement), and (ii) the
Term Loans whose proceeds will be used to finance the Fel-Pro
Acquisition (or, as the case may be, to refinance loans made under the
Existing Credit Agreement whose proceeds were used to finance the
Fel-Pro Acquisition), is in each case subject to the satisfaction of
the following conditions precedent:"
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(b) The last paragraph of Section 8.05 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"Each borrowing by a Borrower of Revolving Credit Loans or
Multicurrency Loans (other than any such Loans made on the Initial
Revolving Credit Funding Date, to the extent the proceeds thereof are
used solely to repay amounts outstanding under the Existing Credit
Agreement), or of Term Loans whose proceeds are used to fund the
Fel-Pro Acquisition, shall in each case constitute a representation
and warranty by the Company and such Borrower as of the date of such
Loan that the applicable conditions contained in this Section 8.05
have been satisfied."
8. Amendment to Section 9.11 of the Credit Agreement. Section 9.11
of the Credit Agreement is hereby amended to add thereto the following new
paragraph (d):
"(d) Without limiting the generality of the foregoing
provisions of this Section 9.11, and subject to the provisions of the
foregoing paragraph (c), the Company agrees that it shall comply with
the provisions of the foregoing paragraphs (a) and (b) in respect of
Subsidiaries and assets acquired in connection with the Fel-Pro
Acquisition, promptly following consummation of the Fel-Pro
Acquisition."
9. Amendment to Section 10.04 of the Credit Agreement. Paragraph (b)
of Section 10.04 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"(i) Liens on property or assets of any entity existing at
the time such entity becomes a Subsidiary and not created in
contemplation thereof;".
10. Amendment to Section 10.05 of the Credit Agreement. Paragraph
(g) of Section 10.05 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"(g) (i) Indebtedness outstanding on the date hereof and
listed on Schedule IV and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount
thereof), (ii) Indebtedness of the Target and its Subsidiaries
outstanding on the date of consummation of the Acquisition, but not
any refinancings, refundings, renewals or extensions thereof, (iii)
Indebtedness of the entities acquired in the Fel-Pro Acquisition
outstanding on the date of consummation of the Fel-Pro Acquisition and
listed on Schedule IV-A, but not any refinancings, refundings,
renewals or extensions thereof and (iv) other Indebtedness of the
entities acquired in the Fel-Pro Acquisition outstanding on the date
of consummation of the Fel-Pro Acquisition in an aggregate principal
amount not exceeding $10,000,000 (provided, that the cash portion of
the consideration for the Fel-Pro Acquisition shall be reduced by an
equal amount), but not any refinancings, refundings, renewals or
extensions thereof;
11. Amendments to Section 10.11 of the Credit Agreement. (a)
Paragraph (e) of Section 10.11 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"(e) the Acquisition and the Fel-Pro Acquisition;".
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(b) Paragraph (j) of Section 10.11 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(j) Investments to the extent that the consideration paid by
the Company and its Subsidiaries is Capital Stock of the Company
(provided that if such Investment is the acquisition of, in a single
transaction or in a series of related transactions, all or
substantially all of the equity interests of any Person, such
acquisition is approved by the board of directors or analogous
governing body of such Person); and".
12. Amendments to Schedules to the Credit Agreement. Schedule IV to
the Credit Agreement is hereby amended to add thereto Schedule IV-A, in the
form of Annex I to this Amendment, and Schedule 10.08 to the Credit Agreement
is hereby amended to read in its entirety as set forth in Annex II to this
Amendment.
13. Conditions to Effectiveness. This Amendment shall become
effective on the date (the "Amendment Effective Date") on which (i) the
Borrowers shall have executed and delivered to the Administrative Agent this
Amendment and each of the Required Prepayment Lenders and the Required Lenders
shall have delivered to the Administrative Agent its written consent to the
execution and delivery hereof by the Administrative Agent and (ii) the Company
shall have delivered to the Administrative Agent a copy of the Fel-Pro
Acquisition Agreement.
14. Representation and Warranties. To induce the Administrative
Agent and the Lenders to enter into this Amendment, each Borrower hereby
represents and warrants to the Administrative Agent and each Lender as of the
Amendment Effective Date that:
(a) Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate or other power and authority, and
the legal right, to execute, deliver and perform this Amendment and
has taken all necessary corporate or other action to authorize the
execution, delivery and performance of this Amendment. No consent or
authorization of, filing with, notice to or other act by or in respect
of, any Governmental Authority or any other Person is required with
respect to the Company or any of its Subsidiaries in connection with
the execution, delivery, performance, validity or enforceability of
this Amendment, except for consents, filings, authorizations or
approvals which have been obtained and are in full force and effect,
and except for other approvals the failure to obtain which could not
reasonably be expected to have a Material Adverse Effect. This
Amendment has been duly executed and delivered on behalf of each of
the applicable Loan Parties. This Amendment constitutes a legal,
valid and binding obligation of such Person enforceable against such
Person in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and by an
implied covenant of good faith and fair dealing.
(b) No Legal Bar. The execution, delivery and performance of
this Amendment will not violate any Requirement of Law or Contractual
Obligation of the Company or of any of its Subsidiaries, other than
any such violation which could not reasonably be expected to have a
Material Adverse Effect, and will not result in, or require, the
creation
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or imposition of any Lien on any of its or their respective properties
or revenues pursuant to any such Requirement of Law or Contractual
Obligation, except Liens created pursuant to the Loan Documents and
any Lien which could not reasonably be expected to have a Material
Adverse Effect.
(c) Representations and Warranties in Credit Agreement. Each
of the representations and warranties set forth in Article VII of the
Credit Agreement is true and correct in all material respects as of
the Amendment Effective Date as if made on and as of the Amendment
Effective Date (after giving effect to the amendments effected
hereby), except if such representation or warranty relates to an
earlier date, in which case such representation and warranty is true
and correct in all material respects on such earlier date.
15. General. (a) Payment of Expenses. The Company agrees to pay or
reimburse the Administrative Agent for all of its reasonable out-of-pocket
costs and expenses incurred in connection with the development, preparation,
execution and delivery of, and any amendment, supplement or modification to,
this Amendment and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel (and any special or local counsel retained by such
counsel to assist it) to the Administrative Agent.
(b) No Other Amendments; Confirmation. Except as expressly amended,
modified and supplemented hereby, the provisions of the Credit Agreement and
the Notes are and shall remain in full force and effect.
(C) GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(d) Counterparts. This Amendment may be executed by one or more of
the parties to this Amendment on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. A set of the copies of
this Amendment signed by all the parties shall be delivered to the Borrowers
and the Administrative Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers and
delivered in New York, New York as of the day and year first above written.
FEDERAL-MOGUL CORPORATION
By:
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Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a
Lender
By:
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Name:
Title:
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Annex I
[To be completed]
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Annex II
[To be completed]