EXHIBIT 10.3
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GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
GPX CORP.
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AMENDMENT NO. 1
DATED AS OF AUGUST 31, 1998
TO
NOTE AGREEMENT DATED AS OF JUNE 30, 1998
$75,000,000 6.83% SENIOR NOTES, DUE JUNE 30, 2008
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AMENDMENT NO. 1 TO NOTE AGREEMENT
THIS AMENDMENT NO. 1 TO NOTE AGREEMENT dated as of August 31, 1998
(this "AMENDMENT"), is entered into by and between GLOBAL INDUSTRIAL
TECHNOLOGIES, INC., a Delaware corporation (the "COMPANY"), and GPX CORP., a
Nevada corporation ("GPX," and together with the Company, the "CO-MAKERS"), THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("PRUDENTIAL") and U.S. PRIVATE
PLACEMENT FUND ("U.S. FUND"), (collectively, the "PURCHASERS").
RECITALS
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A. The Co-Makers and the Purchasers entered into a Note Agreement dated
as of June 30, 1998 (as amended, supplemented or otherwise modified from time to
time, the "NOTE AGREEMENT"), pursuant to which the Co-Makers issued and sold to
the Purchasers and the Purchasers purchased, on the terms and conditions therein
set forth, the Co-Maker's 6.83% Senior Notes, Due June 30, 2008 in the aggregate
amount of $75,000,000 (the "NOTES"). The Purchasers remain, collectively, the
holders of 100% of the outstanding principal amount of the Notes.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Note Agreement.
B. The Co-Makers and Chase Bank of Texas, N.A., Bank of America National
Trust and Savings Association, ABN Amro Bank N.V., The Chase Manhattan Bank and
the other financial institutions party thereto (collectively, the "BANKS") have
entered into a Credit Agreement dated as of August 31, 1998 (as the same may be
amended, modified, or supplemented from time to time, the "CREDIT AGREEMENT"),
pursuant to which the Banks have agreed to extend credit to the Co-Makers in the
form of revolving credit advances not to exceed an aggregate principal amount of
$215,000,000.
C. The Co-Makers desire that the obligations of certain of the Restricted
Subsidiaries of the Company under Guaranties executed and delivered in
connection with the Credit Agreement (the "BANK GUARANTIES") be excluded from
"Priority Debt" for purposes of the Note Agreement.
D. The Restricted Subsidiaries (including GPX) that have executed Bank
Guaranties and the Company (collectively, the "GUARANTORS") have agreed to
execute Guaranties in respect of the Co-Makers' obligations under the Notes.
E. The Guarantors, the Banks, and the Purchasers have executed a Sharing
Agreement dated as of August 31, 1998.
F. In furtherance of the foregoing, the Co-Makers and the Purchasers now
desire to amend the Note Agreement in the respects, but only in the respects,
hereinafter set forth.
NOW, THEREFORE, the Co-Makers and the Purchasers, in consideration of the
foregoing and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENT OF THE NOTE AGREEMENT. The Note Agreement is
hereby amended as follows:
(a) Paragraphs 5A(i) and 5A(ii) of the Note Agreement are amended by the
addition of the phrase "(other than Aken)" after the phrase "Unrestricted
Subsidiaries" in subclause (B) of each of paragraph 5A(i) and paragraph 5A(ii).
(b) Paragraph 5A is further amended by deleting the paragraph number and
punctuation "6C," from the fourth line of the text immediately following
paragraph 5A(vi).
(c) The following new paragraphs 5K and 5L are added to the Note
Agreement:
5K. FURTHER ASSURANCES. Each of the Co-Makers will, and will cause
each Subsidiary to, execute and deliver such further agreements and
instruments and take such further action as may be reasonably requested by
the Required Holders to carry out the provisions and purposes of this Note
Agreement, the Notes, any Guaranty executed and delivered by any Guarantor
and any other instrument or agreement executed and delivered pursuant to or
in connection with any of the foregoing (the "NOTE DOCUMENTS"). Without in
any way limiting the foregoing, if at any time any Subsidiary which is not
a Guarantor guarantees any Debt of the Company or GPX under the Credit
Agreement, the Co-Makers shall cause such Subsidiary (which Subsidiary
shall then be deemed to be a Restricted Subsidiary) to execute and deliver
a Guaranty in form and substance identical to the Guaranty Agreement
attached as Exhibit D-1, pursuant to which each such Subsidiary guarantees
the prompt payment and performance in full of the Notes and all other
obligations under the Note Agreement and the other Note Documents and
subordinates any and all Debt of any Co-Maker or any Subsidiary to such
Guarantor, together with such legal opinions, corporate and partnership
documents and certificates as the Purchasers or their counsel may require
in connection therewith.
5L. OTHER INFORMATION. Each of the Co-Makers will, and will cause
each Subsidiary to, deliver to the Purchasers copies of any and all
information provided to any of its lenders (including, without limitation,
the Banks) under the terms of any loan, credit, or similar agreement to
which either Co-Maker is a party (including, without limitation, the Credit
Agreement) at the same time as such information is delivered to such
lenders.
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(d) Paragraphs 6B and 6C of the Note Agreement are amended in their
entirety to read as follows:
"6B. LIMITATION ON CONSOLIDATED TOTAL DEBT. The Company will not
and will not permit any Restricted Subsidiary to create, incur, assume, or
suffer to exist any Debt if Consolidated Total Debt will (i) at any time
during the period commencing July 1, 1998 and ending June 30, 1999, exceed
55% of Total Capitalization; (ii) at any time during the period commencing
July 1, 1999 and ending June 30, 2001, exceed 50% of Total Capitalization;
or (iii) at any time after June 30, 2001, exceed 47.5% of Total
Capitalization.
6C. INTENTIONALLY DELETED."
(e) Paragraph 6E(v) of the Note Agreement is amended by the addition at
the end of the paragraph, prior to the semicolon, of the following phrase:
", provided that such Liens secure the Notes and the other obligations
of the Co-Makers under this Agreement and the other Note Documents equally
and ratably with all other Debt secured thereby pursuant to documentation
reasonably satisfactory to the Required Holders"
(f) Paragraph 6G(a) of the Note Agreement is replaced with the following
new paragraphs (a) and (b), and existing paragraphs (b) and (c) are renumbered
(c) and (d):
"(a) any Restricted Subsidiary which is a Guarantor may merge with
the Company or another wholly-owned Restricted Subsidiary which is a
Guarantor;
(b) any Restricted Subsidiary which is not a Guarantor may merge with
any other Restricted Subsidiary which is not a Guarantor;"
(g) Paragraph 7A(ii) of the Note Agreement is amended by the replacement of
the phrase "Business Days" in the second line with the phrase "calendar days".
(h) Paragraph 7A(iii) of the Note Agreement is amended (i) by the addition
of the phrase "(other than Aken Debt)" between the phrases "money borrowed" and
"(or any Capitalized Lease" in the third line; (ii) by the addition of the
phrase "or to permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause," after the phrase "such failure or
other event is to cause" in the eleventh line; by the addition of the phrase
"provided that if any such failure or other event shall be waived or cured (as
evidenced by a writing from such holder or holders of such obligation or any
Person acting on behalf of such holder or holders) then, to the extent of such
waiver or cure, the Default or Event of Default hereunder by reason of such
failure or other event shall be deemed likewise to have been thereupon waived or
cured except to the extent
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such failure or other event otherwise constitutes a Default or Event of Default
under any provision of this Agreement other than this Paragraph 7A(iii);"
between the words "maturity," and "provided" in the thirteenth line; by the
addition of the phrase "or permitting" between the words "causing" and
"acceleration" in the fourteenth line; and (iii) by the replacement of the
phrase "exceeds $5,000,000" with the phrase "exceeds $10,000,000" in the
fifteenth line.
(i) Paragraph 7A(v) of the Note Agreement is amended in its entirety to
read as follows:
(v)(a) the Company fails to perform or observe any term, covenant or
agreement contained in paragraphs 6A or 6B, or (b) the Company fails to
perform or observe any other term, covenant or agreement contained in
paragraph 6 and such failure shall continue for five (5) calendar days;
(j) Paragraph 7A(xi) of the Note Agreement is amended by the replacement of
the phrase "60 days" in the third line thereof with the phrase "30 days".
(k) Paragraph 7A(xii) of the Note Agreement is amended by the replacement
of the number "$7,500,000" in the second line thereof with the number
"$15,000,000".
(l) Paragraph 7A of the Note Agreement is amended by the addition of the
following new paragraph (xiii) immediately after paragraph (xii) thereof:
"(xiii) This Agreement or any Guaranty shall cease to be in full force
and effect or shall be declared null or void, or the validity or
enforceability thereof shall be contested or challenged by either Co-
Maker, any Guarantor or any other Subsidiary or any of their respective
shareholders, or any Co-Maker, Guarantor or any other Subsidiary shall
deny that it has any further liability or obligations under this
Agreement or any Guaranty; or ";
and by renumbering existing paragraph (xiii) as paragraph (xiv).
(m) The definition of "RESTRICTED SUBSIDIARY" in paragraph 10B of the Note
Agreement is amended by the addition of the following phrase at the end of such
paragraph, immediately preceding the period:
"or (e) such Subsidiary guarantees or is required pursuant to
paragraph 5K to guarantee the Notes and the other obligations of the Co-
Makers under this Agreement and the other Note Documents. For purposes
hereof, GPX shall always be a Restricted Subsidiary".
(n) Paragraph 10B of the Note Agreement is amended to read as follows with
respect to the following defined terms:
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"SUBSIDIARY" shall mean (i) any corporation of which at least 51% of
the total combined voting power of all classes of outstanding Voting Stock
of which shall, at the time as of which any determination is being made, be
owned or controlled by the Company either directly or through Subsidiaries;
and (ii) any other entity (a) of which at least a majority of the
ownership, equity, or voting interests is at the time directly or
indirectly owned or controlled by one or more of the Co-Makers and the
Subsidiaries and (b) which is treated as a subsidiary in accordance with
GAAP.
"TOTAL CAPITALIZATION" shall mean the sum of (i) Funded Debt and
Current Debt of the Company and its Restricted Subsidiaries, and (ii)
Consolidated Tangible Net Worth.
(o) Paragraph 10B of the Note Agreement is amended by inserting the
following new defined terms in the appropriate alphabetical order within such
paragraph:
"AKEN" shall mean Magnesitwerk Aken GmbH.
"AKEN DEBT" shall mean the indebtedness of Aken, which indebtedness is
non-recourse to the Company.
"BANKS" shall mean Chase Bank of Texas, N.A., Bank of America National
Trust and Savings Association, ABNA Amro Bank, N.V., The Chase Manhattan
Bank and the other financial institutions party to the Credit Agreement.
"CONSOLIDATED TOTAL DEBT" shall mean total Debt of the Company and its
Restricted Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"CREDIT AGREEMENT" shall mean the Credit Agreement dated as of August
31, 1998 between the Co-Makers and the Banks, as the same may be amended,
modified, or supplemented from time to time.
"CURRENT DEBT" shall mean, without duplication, Debt other than Funded
Debt.
"GUARANTY" means the Guaranty in the form of Exhibit D-1 hereto,
executed by each of the Guarantors other than the Co-Makers, and the
Guaranty in the form of Exhibit D-2 hereto, executed by each of the
Co-Makers, pursuant to the terms of paragraph 5K, as the same may be
amended, modified, or supplemented from time to time.
"GUARANTOR" shall mean the Company and any Subsidiary that at any time
executes a Guaranty in favor of the holders of the Notes.
"NOTE DOCUMENTS" shall have the meaning specified in paragraph 5K.
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(p) New Exhibits D-1 and D-2, in the forms attached hereto, are added to
the Note Agreement.
SECTION 2. EFFECTIVENESS OF AMENDMENT TO PARAGRAPH 7A(III). The
addition of the language to paragraph 7A(iii) effected in Section 1(h)(ii) of
this Amendment shall remain effective from and after the Effective Date only for
so long as the Credit Agreement contains the same or substantially similar
language regarding the ability to accelerate the Co-Makers' obligations under
the Credit Agreement. If the Credit Agreement is changed to delete such
language and satisfactory evidence thereof is provided to the Required Holders,
the amendment effected in Section 1(h)(ii) described in this Section 2 with
respect to paragraph 7A(iii) shall cease to be effective.
SECTION 3. TECHNICAL CORRECTIONS TO NOTES. The Co-Makers and the
Purchasers hereby agree that the pages attached hereto as Exhibits E-1, E-2, and
E-3 making certain technical corrections with respect to quarterly, rather than
semi-annual, payment of interest due under the Notes replace the existing first
pages of the Notes, and the Co-Makers hereby authorize the existing pages to be
substituted with the new pages attached hereto as Exhibits E-1, E-2, and E-3.
SECTION 4. EFFECTIVE DATE. This Amendment shall become effective on
the date hereof (the "EFFECTIVE DATE"), subject in all cases to the following
having been received by and being satisfactory to the Purchasers:
(a) duly executed counterparts of this Amendment;
(b) duly executed counterparts of each Guaranty executed and delivered by
the Guarantors and the Co-Makers;
(c) certificates of the Secretary or Assistant Secretary of each of the
Guarantors and the Co-Makers attaching and certifying copies of (i) the
certificate of incorporation of such Guarantor or Co-Maker, as the case may be,
(ii) the bylaws of such Guarantor or Co-Maker, as the case may be, (iii) the
resolutions of the board of directors of such Guarantor authorizing the
execution, delivery and performance of its Guaranty; (iv) the resolutions of the
board of directors of each Co-Maker authorizing the execution, delivery, and
performance of the Amendment; and (v) the name, title and true signature of each
officer of such Guarantor or Co-Maker, as the case may be, executing the
Amendment or the applicable Guaranty; and
(d) a favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., general counsel of the
Company, counsel for the Co-Makers and the Guarantors, satisfactory to the
Purchasers and the Purchasers' special counsel and addressing such matters as
the Purchasers may request;
(e) evidence satisfactory to the Purchasers that the Purchasers' special
counsel has received its fees, charges and disbursements charged or incurred in
connection with the preparation,
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negotiation, execution and delivery of this Amendment, the Guaranties, and any
other documents executed and delivered contemporaneously herewith or therewith,
to the extent such fees, charges and disbursements are reflected in a statement
of such special counsel tendered to the Co-Makers at least one Business Day
prior to the execution of this Amendment.
SECTION 5. REPRESENTATIONS AND WARRANTIES. In order to induce the
Purchasers to enter into this Amendment, each of the Co-Makers represents and
warrants as follows:
(a) Organization. The Company is a corporation duly organized and validly
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existing in good standing under the laws of the State of Delaware. GPX is a
corporation duly organized and validly existing in good standing under the laws
of the State of Nevada. Each other Guarantor is a corporation duly organized
and validly existing in good standing under the laws of the state of its
incorporation.
(b) Power and Authority. Each of the Co-Makers and each Guarantor has all
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requisite corporate power to execute, deliver and perform its obligations under
this Amendment and under the Guaranty executed by it. The execution, delivery
and performance by the Co-Makers of this Amendment and by the Guarantors of
their respective Guaranties have been duly authorized by all requisite corporate
action on the part of each of the Co-Makers or such Guarantors, as the case may
be. Each of the Co-Makers has duly executed and delivered this Amendment, and
this Amendment constitutes the legal, valid and binding obligation of each of
the Co-Makers, enforceable against the Co-Makers in accordance with its terms.
Each of the Guarantors has duly executed and delivered its Guaranty, and such
Guaranty constitutes the legal, valiud and binding obligation of such Guarantor,
enforceable against it in accordance with its terms.
(c) No Conflicts. Neither the execution and delivery of this Amendment by
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the Co-Makers or of the Guaranties by the Guarantors, nor the consummation of
the transactions contemplated hereby, nor fulfillment of nor compliance with the
terms and provisions thereof will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any security interest, lien or
other encumbrance upon any of the properties or assets of the Co-Makers or the
Guarantors pursuant to the certificate of incorporation or bylaws of the Co-
Makers or the Guarantors, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Co-Makers or the
Guarantors are subject.
(d) Consents. Neither the nature of the business conducted by the Co-
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Makers, nor any of its properties, nor any relationship between the Co-Makers
and any other Person, nor any circumstance in connection with the transactions
contemplated by this [First] Amendment is such as to require any authorization,
consent, approval, exemption or other action by or notice to or filing with any
court or administrative or governmental body or any other Person in connection
with the
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execution and delivery of this Amendment or fulfillment of or compliance with
the terms and provisions hereof.
(e) No Event of Default or Default. Immediately following the
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effectiveness of this Amendment, no Event of Default or Default exists.
(f) Other. All representations and warranties of the Co-Makers in the
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Credit Agreement are true and correct on the date hereof, as though made on and
as of such date.
SECTION 6. MISCELLANEOUS.
(a) References to Note Agreement. Upon and after the Effective Date, each
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reference to the Note Agreement in each document relating thereto shall mean and
be a reference to such Note Agreement as amended by this Amendment.
(b) Ratification and Confirmation. Except as specifically amended herein,
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the Note Agreement shall remain in full force and effect, and is hereby ratified
and confirmed.
(c) No Waiver. The execution, delivery and effectiveness of this Amendment
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shall not operate as a waiver of any right, power or remedy of any Purchaser or
any other holder of Notes, nor constitute a waiver of any provision of the Note
Agreement, the Notes or any other document relating thereto.
(d) Expenses. The Company confirms its agreement, pursuant to paragraph
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11B of the Note Agreement, to pay promptly all expenses of Purchaser related to
this Amendment and all matters contemplated hereby, including, without
limitation, all fees and expenses of the Purchasers' special counsel.
(E) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
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ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK, AND EACH OF THE PARTIES HERETO CHOOSES NEW YORK LAW TO
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GOVERN THIS AMENDMENT PURSUANT TO N.Y. GEN. OBLIG. LAW SECTION 5-1401 (CONSOL.
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1995).
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(f) Counterparts. This Amendment may be executed in counterparts
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(including those transmitted by facsimile), each of which shall be deemed an
original and all of which taken together shall constitute one and the same
document. Delivery of this Amendment may be made by facsimile transmission of a
duly executed counterpart copy hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute this Amendment as of the date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
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Name:
Title:
U.S. PRIVATE PLACEMENT FUND
By: Prudential Private Placement Investors,
L.P., Investment Advisor
By: Prudential Private Placement Investors,
Inc., its General Partner
By:
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Title:
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GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:
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Name:
Title:
GPX CORP.
By:
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Name:
Title:
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