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EXHIBIT 10.39
AMENDMENT NO. 2 TO CREDIT AGREEMENT
-----------------------------------
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT ("AMENDMENT") is dated as of the
_____ day of February, 1996 by and among UNC INCORPORATED, a corporation
organized under the laws of the State of Delaware (the "BORROWER"), UNC/CFC
ACQUISITION CO., a Delaware corporation ("CFC ACQUISITION"), FIRST UNION
COMMERCIAL CORPORATION, as administrative agent (the "ADMINISTRATIVE AGENT"),
FIRST UNION COMMERCIAL CORPORATION, as collateral agent (the "COLLATERAL
AGENT"), the various corporations identified on the signature pages hereto as
a GUARANTOR (each a "GUARANTOR" and collectively, the "GUARANTORS") and the
various banks and lending institutions identified on the signature pages
hereto (each a "LENDER" and collectively, the "LENDERS").
STATEMENT OF PURPOSE
--------------------
Pursuant to the terms and provisions of the Credit Agreement dated as of
May 30, 1995 by and among the BORROWER, the ADMINISTRATIVE AGENT, the
COLLATERAL AGENT, FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as issuer of
certain letters of credit, and the LENDERS, as amended by Amendment No. 1 to
Credit Agreement dated August 30, 1995 ("CREDIT AGREEMENT"), the LENDERS
agreed to extend certain credit facilities to the BORROWER. The GUARANTORS
have guaranteed the obligations of the BORROWER under the CREDIT AGREEMENT
pursuant to the terms of various Guaranty And Security Agreements dated May
30, 1995 (collectively, "GUARANTIES").
CFC ACQUISITION has been formed as a subsidiary of the BORROWER for the
purpose of acquiring substantially all of the assets of CFC AVIATION SERVICES,
L.P., a Delaware limited partnership and CFC AVIATION COMPANY, L.L.C., a
Delaware limited liability company (collectively, "GARRET") pursuant to the
terms and provisions of that certain Asset Purchase Agreement dated as of
January 15, 1996 by and among the BORROWER, CFC ACQUISITION, GARRET, CFC
AVIATION, INC., CARLISLE ENTERPRISES, L.P., FIRST CAPITAL CORPORATION OF
CHICAGO and CROSS CREEK PARTNERS III ("PURCHASE AGREEMENT").
In order to finance the acquisition of substantially all of the assets
of GARRET pursuant to the terms of the PURCHASE AGREEMENT ("ACQUISITION"), the
BORROWER intends to: (a) issue and sell One Hundred Twenty-Five Million
Dollars ($125,000,000.00) of its Senior Subordinated Debentures Due 2006 ("NEW
SUBORDINATED DEBENTURES"); and (b) issue and sell two hundred fifty thousand
(250,000) shares of its Series B Senior Cumulative Convertible Preferred Stock
at a purchase price of One Hundred Dollars ($100.00) per share all pursuant
to the terms of a Stock Purchase Agreement dated as of October 4, 1995 by and
among the BORROWER, NETWORK III HOLDINGS LDC, ▇▇▇▇▇ INVESTMENT COMPANY, IRON
CITY PARTNERS, INC., ARIEL FUND, LTD. and PEQUOD INVESTMENTS, L.P. ("STOCK
PURCHASE AGREEMENT").
The BORROWER has requested the LENDERS' consent to (1) CFC ACQUISITION
completing the ACQUISITION, (2) the BORROWER incurring the indebtedness under
the NEW SUBORDINATED DEBENTURES, and (3) the BORROWER selling the preferred
stock pursuant to the terms of the STOCK PURCHASE AGREEMENT. The BORROWER has
also requested that the LENDERS agree to amend certain provisions of the
CREDIT AGREEMENT.
The LENDERS are willing to consent to the BORROWER'S requests subject and
pursuant to the terms and provisions set forth in this AMENDMENT.
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the
parties hereto agree as follows:
Section 1. AMENDMENT TO CREDIT AGREEMENT. The CREDIT AGREEMENT is
hereby amended as follows:
a. Section 1.1. Section 1.1 of the CREDIT AGREEMENT is
hereby amended as follows:
i. Fixed Charge Coverage Ratio Definition. The
definition of "FIXED CHARGE COVERAGE RATIO" contained in Section 1.1 of the
CREDIT AGREEMENT is hereby amended by deleting its present language in its
entirety and substituting in lieu thereof the following:
"FIXED COVERAGE RATIO" means, as determined on a
CONSOLIDATED basis for any period, the CREDIT PARTIES'
ratio of: (a) EBITDA for that period minus CAPITAL
EXPENDITURES that are not financed with the use of
borrowed funds (exclusive of the CREDIT FACILITY) or
CAPITAL LEASES minus dividends paid to shareholders of
the BORROWER in cash; to (b) regularly scheduled
principal payments and prepayments of principal on the
CONSOLIDATED TOTAL FUNDED INDEBTEDNESS (including,
without limitation, the SINKING FUND PAYMENTS), paid or
scheduled to be paid during the period of determination
(except payments made under the LOANS), plus INTEREST
EXPENSE deducted in determining the CREDIT PARTIES'
earnings, plus payments under all CAPITAL LEASES paid or
scheduled to be paid during the period of determination.
ii. Senior Notes Definition. The definition of
"SENIOR NOTES" contained in Section 1.1 of the CREDIT AGREEMENT is hereby
amended by deleting its present language in its entirety and substituting in
lieu thereof the following:
'SENIOR NOTES' means, collectively: (4) the nine
and one-eighth percent (9 1/8%) Senior Notes Due 2003
which were issued under the terms of the Indenture dated
as of July 15, 1993 between the BORROWER and the trustee
thereunder; and (5) the SENIOR SUBORDINATED DEBENTURES.
iii. Senior Subordinated Debentures. Section 1.1
of the CREDIT AGREEMENT is hereby amended by inserting between the definitions
of "SENIOR NOTES" and "SETTLEMENT DATE" the following new definition:
'SENIOR SUBORDINATED DEBENTURES' means, debentures
issued by the BORROWER which: (6) are in an aggregate
face amount not exceeding One Hundred Twenty-Five
Million Dollars ($125,000,000.00); (7) have a maturity
date no earlier than March 1, 2006; (8) require payments
of interest only until their maturity; (9) are
subordinate in right of payment to the OBLIGATIONS; (10)
do not give the holder of such debentures any right to
require the BORROWER to repurchase the debentures except
in the case of a "Change of Control" (as that term is
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defined in the Indenture dated as of July 15, 1993 between the
BORROWER and the trustee thereunder) or on the "Distribution Date"
(as that term is defined in the Indenture dated as of May 1, 1986
between the BORROWER and the trustee thereunder); and (11) are
evidenced by, and are issued pursuant to, documents which do not
contain covenants any more restrictive than the covenants contained
in this CREDIT AGREEMENT.
b. Section 9.1. Section 9.1 of the CREDIT AGREEMENT is
hereby amended by deleting its present language in its entirety and
substituting in lieu thereof the following:
Section 9.1. Tangible Net Worth. The minimum TANGIBLE NET WORTH
of the CREDIT PARTIES measured at the end of each fiscal quarter shall not be
less than the following amounts during the following periods:
MINIMUM TANGIBLE
FISCAL PERIOD NET WORTH
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12/31/95 TO 03/30/96 $ 28,000,000.00
03/31/96 TO 06/29/96 ($ 60,000,000.00)
06/30/96 TO 09/29/96 ($ 57,500,000.00)
09/30/96 TO 12/30/96 ($ 55,000,000.00)
12/31/96 TO 12/30/97 ($ 50,000,000.00)
12/31/97 TO 12/30/98 ($ 38,500,000.00)
12/31/98 TO 12/30/99 $ 12,500,000.00
12/31/99 & THEREAFTER $ 50,000,000.00
c. Section 9.2. Section 9.2 of the CREDIT AGREEMENT is
hereby amended by deleting its present language in its entirety and
substituting in lieu thereof the following:
Section 9.2. Consolidated Total Funded Indebtedness To EBITDA.
The ratio of CONSOLIDATED TOTAL FUNDED INDEBTEDNESS to EBITDA, measured at the
end of each fiscal quarter (EBITDA shall be calculated on a cumulative basis
for the four (4) most recent fiscal quarters, prior to the date of
determination) of the CREDIT PARTIES shall not exceed the following amounts
during the following periods:
FISCAL PERIOD RATIO
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12/31/95 TO 03/30/96 6.00 to 1
03/31/96 TO 06/29/96 10.50 to 1
06/30/96 TO 09/29/96 9.00 to 1
09/30/96 TO 12/30/96 8.00 to 1
12/31/96 TO 03/30/97 7.00 to 1
03/31/97 TO 06/29/97 6.00 to 1
06/30/97 & THEREAFTER 5.00 to 1
d. Section 9.3. Section 9.3 of the CREDIT AGREEMENT is
hereby amended by deleting its present language in its entirety and
substituting in lieu thereof the following:
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Section 9.3. Fixed Charge Coverage Ratio. The FIXED CHARGE
COVERAGE RATIO of the CREDIT PARTIES, measured as of the end of each fiscal
quarter and calculated on a rolling four (4) fiscal quarters basis, shall not
be less than the following amounts during the following periods:
FISCAL PERIOD RATIO
12/31/95 TO 03/30/96 1.10 to 1
03/31/96 TO 09/29/96 .90 to 1
09/30/96 TO 12/30/96 1.00 to 1
12/31/96 & THEREAFTER 1.10 to 1
e. Section 10.1. Section 10.1 of the CREDIT AGREEMENT
is hereby amended by deleting Subsection 10.1(f) in its entirety and
substituting in lieu thereof the following:
(f) DEBT incurred in connection with (i) the
CAPITALIZED LEASES which UNC/CFC Acquisition Co. assumed
in connection with UNC/CFC Acquisition Co.'s acquisition
of substantially all of the assets of CFC Aviation
Services, L.P. and CFC Aviation Company, L.L.C. pursuant
to that certain Asset Purchase Agreement dated January
15, 1996, provided that the aggregate amount of such
DEBT does not exceed Five Million Three Hundred Sixty
Thousand Dollars ($5,360,000.00), and (ii) purchase
money DEBT of the CREDIT PARTIES (including DEBT
incurred in connection with CAPITALIZED LEASES (other
than those referred to in (i) above) and DEBT incurred
in connection with the construction of improvements to
real property) in an aggregate amount not to exceed Five
Million Dollars ($5,000,000.00) on any date of
determination;
f. Section 10.7. Section 10.7 of the CREDIT AGREEMENT
is hereby amended as follows: (a) Subsection 10.7(b) is hereby amended by
deleting the word "and" at the end thereof; (b) Subsection 10.7(c) is hereby
amended by deleting the period "." at the end thereof and substituting in lieu
thereof the word "; and"; (c) Section 10.7 is hereby amended by inserting the
following new subsection at the end thereof:
(d) provided there are no DEFAULTS or EVENTS OF
DEFAULT under this AGREEMENT after giving effect
thereto, the BORROWER may pay dividends on the
BORROWER'S Series B Senior Cumulative Convertible
Preferred Stock and the BORROWER'S Series C Senior
Cumulative Convertible Preferred Stock, provided that
the aggregate amount of all such dividends paid in cash
in any FISCAL YEAR may not exceed Two Million One
Hundred Twenty-Five Thousand Dollars ($2,125,000.00).
g. Schedule 1. Schedule 1 to the CREDIT AGREEMENT is
hereby deleted and in lieu thereof Schedule 1 attached hereto is substituted
therefor.
Section 2. CONSENTS BY LENDERS. The LENDERS hereby provide the
following consents:
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a. Acquisition. Pursuant to Subsection 10.4(c) of the
CREDIT AGREEMENT the LENDERS hereby consent to the ACQUISITION; provided that:
(d) CFC ACQUISITION delivers to the COLLATERAL AGENT all of the documents
required to be delivered pursuant to Section 3 of this AMENDMENT; (e) the
ACQUISITION is completed in accordance with the terms of the PURCHASE
AGREEMENT; (f) the COLLATERAL AGENT is provided with copies of lien searches
and other documents which evidence that CFC ACQUISITION shall acquire the
assets of GARRET free and clear of all liens other than liens permitted
pursuant to Section 10.3 of the CREDIT AGREEMENT; (g) the COLLATERAL AGENT is
provided with acceptable evidence that the Operating Agreement dated June 30,
1994 between AlliedSignal, Inc. and CFC Aviation Services, L.P., the Licensed
Proprietary Rights Agreement dated June 30, 1994 between AlliedSignal, Inc.
and CFC Aviation Services, L.P. and the Trade Name and Service ▇▇▇▇ License
Agreement dated June 30, 1994 between AlliedSignal, Inc. and CFC Aviation
Services, L.P., have each been validly assigned to CFC ACQUISITION; (h) the
COLLATERAL AGENT is provided with acceptable evidence that the rights of
indemnification from AlliedSignal, Inc. under the terms of the Asset And Stock
Purchase Agreement dated May 26, 1994 between AlliedSignal, Inc. and LDC
Aviation Services, Inc. have been validly assigned to CFC ACQUISITION; and (i)
the ADMINISTRATIVE AGENT, for the benefit of the LENDERS, is provided with an
acceptable opinion of counsel letter from the counsel for the BORROWER, the
GUARANTORS and CFC ACQUISITION opining (A) to the due authorization and
execution of this AMENDMENT by the BORROWER, the GUARANTORS and CFC
ACQUISITION; (B) that this AMENDMENT is the valid, binding and enforceable
obligation of the BORROWER, the GUARANTORS and CFC ACQUISITION; (C) to the due
authorization and execution of the documents referred to in Section 3 of this
AMENDMENT by CFC ACQUISITION, and (D) that the documents referred to in
Section 3 of this AMENDMENT are the valid, binding and enforceable obligations
of CFC ACQUISITION.
b. Amendment To Senior Notes. Notwithstanding the terms
of Section 10.11 of the CREDIT AGREEMENT the LENDERS consent to the amendments
to the terms and provisions of the Indenture dated July 15, 1993, relating to
the nine and one-eighth percent (9 1/8%) Senior Notes Due 2003, as such
amendments are described in the BORROWER'S Consent Solicitation Statement
dated February 2, 1996, as supplemented in the BORROWER'S Supplement to
Consent Solicitation Statement dated February 21, 1996.
Section 3. CFC ACQUISITION. On or before the date of the ACQUISITION,
CFC ACQUISITION shall execute and deliver to the COLLATERAL AGENT: (12) a
Secured Promissory Note in the form attached to the CREDIT AGREEMENT as
Exhibit A; (13) a Guaranty And Security Agreement in the form attached to the
CREDIT AGREEMENT as Exhibit B; (14) a Certificate of the Corporate Secretary
of CFC ACQUISITION in a form acceptable to the COLLATERAL AGENT and which
shall have attached to it the Charter and By-laws of CFC ACQUISITION and the
Resolutions of the Board of Directors of CFC ACQUISITION approving the
ACQUISITION and the execution and delivery of the Secured Promissory Note and
Guaranty And Security Agreement referred to in Subparagraphs (a) and (b)
above; and (15) such financing statements and other documents requested by the
COLLATERAL AGENT in order to perfect the security interests granted under the
Secured Promissory Note and Guaranty And Security Agreement referred to in
Subparagraphs (a) and (b) above.
Section 4. CONTRIBUTION AND INDEMNIFICATION AGREEMENT. CFC ACQUISITION,
the GUARANTORS and the COLLATERAL AGENT agree that the Contribution And
Indemnification Agreement dated May 30, 1995 by and between the BORROWER and
the GUARANTORS ("INDEMNIFICATION AGREEMENT") is hereby amended to include CFC
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ACQUISITION in the definition of "SUBSIDIARIES" as used therein. CFC
ACQUISITION agrees that by its execution and delivery of this AMENDMENT, CFC
ACQUISITION unconditionally and irrevocably accepts, adheres to and becomes
party to and bound under the INDEMNIFICATION AGREEMENT as a "SUBSIDIARY" as
fully as if CFC ACQUISITION had been a signatory to the INDEMNIFICATION
AGREEMENT as a "SUBSIDIARY" when the INDEMNIFICATION AGREEMENT was executed
and delivered by the GUARANTORS and the BORROWER.
Section 5. CONSENT OF GUARANTORS. The GUARANTORS hereby consent to the
modifications contained in this AMENDMENT and ratify and confirm their
respective obligations under the GUARANTIES.
Section 6. OTHER TERMS. Except as specifically modified herein, all
other terms and provisions of the CREDIT AGREEMENT and all other documents
executed in connection therewith remain in full force and effect and are
hereby ratified and confirmed.
Section 7. AMENDMENT FEE. The BORROWER shall pay to the ADMINISTRATIVE
AGENT, for the benefit of the LENDERS on a pro rata basis, on the date of this
AMENDMENT a fee in the amount of One Hundred Twelve Thousand Five Hundred
Dollars ($112,500.00).
Section 8. BINDING NATURE. This AMENDMENT shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors
and assigns.
Section 9. GOVERNING LAW. This AMENDMENT shall be governed by and
construed and enforced in accordance with the laws of the State of Maryland,
without reference to the conflicts or choice of law principles thereof.
Section 10. DELIVERY BY TELEFACSIMILE. This AMENDMENT may be delivered
by telefacsimile and a telefacsimile of any parties signature hereto shall
constitute an original signature for all purposes.
Section 11. COUNTERPARTS. This AMENDMENT may be executed in multiple
counterparts, any one of which need not contain the signatures of more than
one party, but all of which, taken together, shall constitute one and the same
agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT under
seal as of the date first above written.
WITNESS/ATTEST: BORROWER:
UNC INCORPORATED,
A Delaware Corporation
_________________________ By: _________________________(SEAL)
Name:____________________
Title:___________________
ADMINISTRATIVE AGENT:
FIRST UNION COMMERCIAL CORPORATION,
A North Carolina Corporation
_________________________ By: _________________________(SEAL)
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇,
Vice President
COLLATERAL AGENT:
FIRST UNION COMMERCIAL CORPORATION,
A North Carolina Corporation
_________________________ By: _________________________(SEAL)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
WITNESS/ATTEST: LENDERS:
FIRST UNION COMMERCIAL CORPORATION,
A North Carolina Corporation
_________________________ By: _________________________(SEAL)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
_________________________ By: _________________________(SEAL)
Name:____________________
Title:___________________
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IBJ ▇▇▇▇▇▇▇▇▇ BANK & TRUST CO.
_________________________ By: _________________________(SEAL)
Name:____________________
Title:___________________
BANK ONE, COLUMBUS, N.A.
_________________________ By: _________________________(SEAL)
Name:____________________
Title:___________________
THE FIRST NATIONAL BANK OF MARYLAND
_________________________ By: _________________________(SEAL)
Name:____________________
Title:___________________
PROVIDENT BANK OF MARYLAND
_________________________ By: _________________________(SEAL)
Name:____________________
Title:___________________
WITNESS/ATTEST: LENDERS: (Continued)
SANWA BUSINESS CREDIT CORPORATION
_________________________ By: _________________________(SEAL)
Name:____________________
Title:___________________
GUARANTORS:
UNC HOLDINGS INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
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UNC ▇▇▇▇ ▇▇▇▇▇▇▇, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC ALL FAB, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC ▇▇▇▇▇▇▇ SERVICING, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
WITNESS/ATTEST: GUARANTORS: (Continued)
UNC ▇▇▇▇▇▇▇ TECHNOLOGY, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC ARTEX, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
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UNC TEXAS CAMCO INCORPORATED,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC CAMCO INCORPORATED,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC ARDCO INCORPORATED,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
WITNESS/ATTEST: GUARANTORS: (Continued)
UNC ENGINE & ENGINE PARTS, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC ACCESSORY OVERHAUL GROUP,
INCORPORATED, A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
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UNC AVIATION SERVICES, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC TRI-INDUSTRIES, INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC AIRWORK CORPORATION,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
WITNESS/ATTEST: GUARANTORS: (Continued)
UNC PARTS ACQUISITION COMPANY, INC.,
A Maryland Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer
UNC PACIFIC AIRMOTIVE CORPORATION,
INC.,
A Delaware Corporation
________________________ By: _________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Treasurer