AMENDMENT NO. 11 TO AND WAIVER UNDER THE CREDIT AGREEMENT Dated as of September 29, 2005

Exhibit 4.1

 

EXECUTION COPY

 

AMENDMENT NO. 11 TO AND WAIVER UNDER THE CREDIT

AGREEMENT

Dated as of September 29, 2005

 

AMENDMENT NO. 11 TO AND WAIVER UNDER THE CREDIT AGREEMENT, dated as of September 29, 2005 (this “Amendment”), among DRESSER, INC., a Delaware corporation (the “U.S. Borrower”), D.I. LUXEMBOURG S.A.R.L., a corporation organized and existing under the laws of Luxembourg (the “Euro Borrower”, and, collectively with the U.S. Borrower, the “Borrowers”), DRESSER HOLDINGS, INC., a Delaware corporation (“Dresser Holdings” or the “Parent”), DEG ACQUISITIONS, LLC, a Delaware limited liability company (“DEG Acquisitions”), the Lenders listed on the signature pages hereto and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC. (“MSSF”), as Administrative Agent.

 

W I T N E S S E T H:

 

WHEREAS, the Borrowers, DEG Acquisitions, the Subsidiary Guarantors, the Lender Parties party thereto and the Agents have entered into a Credit Agreement dated as of April 10, 2001, as amended by Amendment No. 1 thereto dated as of March 13, 2002, Amendment No. 2 thereto dated as of June 17, 2002, Amendment No. 3 thereto dated as of December 11, 2002, Amendment No. 4 and Waiver thereto dated as of March 31, 2003, Amendment No. 5 thereto dated as of June 30, 2003, Amendment No. 6 and Waiver thereto dated as of August 5, 2003, Amendment No. 7 thereto dated as of March 1, 2004, Amendment No. 8 and Waiver thereto dated as of March 18, 2005, Amendment No. 9 and Waiver thereto dated as of May 27, 2005 and Amendment No. 10 and Waiver thereto dated as of July 14, 2005 and as modified by the Consent dated as of June 3, 2004 (as so amended and modified, the “Credit Agreement”; capitalized terms used herein but not defined shall be used herein as defined in the Credit Agreement). Dresser Holdings has entered into an Assignment and Assumption Agreement dated as of July 3, 2002 with DEG Acquisitions whereby Dresser Holdings assumed the duties and liabilities of DEG Acquisitions under the Credit Agreement and the Security Agreement.

 

WHEREAS, the Borrowers desire to (a) amend certain provisions of the Credit Agreement and (b) waive certain Defaults and Events of Default under the Credit Agreement, in each case as provided herein;

 

WHEREAS, the Required Lenders have agreed, subject to the terms and conditions hereinafter set forth, to grant the Borrowers’ request as set forth below;

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NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

 

SECTION 1. Amendments to the Credit Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 3, the Credit Agreement is, effective as of the date hereof, hereby amended as follows:

 

(a) Section 1.01 is hereby amended by inserting the following new definition therein in the appropriate alphabetical order:

 

“Prepayment Amount” has the meaning specified in Section 6.01(n).

 

(b) Section 2.06(b)(ii)(A) is amended by (i) deleting the word “and” where it appears at the end of clause (i) of the parenthetical therein, (ii) inserting the word “and” immediately after subclause (ii) of such parenthetical and (iii) inserting the following new subclause (iii) at the end of such parenthetical:

 

“(iii) assets sold pursuant to clause (viii) and/or clause (ix) of Section 5.02(e)”

 

(c) Section 5.01 is amended by replacing clause (q) with the following:

 

“(q) On or prior to November 14, 2005, the U.S. Borrower shall furnish to the Agents and the Lender Parties (i) audited annual financial statements for the Fiscal Year ended in 2004, as required by Section 5.03(b) and (ii) to the extent that the annual financial statements for the Fiscal Years ended in 2002 or 2003 are required to be restated in connection with the preparation of such financial statements for the Fiscal Year ended in 2004, revised audited financial statements for such Fiscal Years, as required by Section 5.03(b), it being agreed that the delivery of the financial statements contained in the U.S. Borrower’s Annual Report on Form 10-K for the Fiscal Year ended in 2004, if such financial statements include the restated annual financial statements for the Fiscal Years ended in 2002 or 2003, shall satisfy the requirements of this clause (ii).”

 

(d) Section 5.02(e) is amended by deleting the word “and” where it appears at the end of clause (vi) thereof and adding a new clause (viii) and a new clause (ix) immediately following clause (vii) of such section to read as follows:

 

“(viii) the sale or other disposition of assets comprising, used in or relating to the world-wide on/off valve business of the U.S. Borrower and its Subsidiaries (including, without limitation, stock of Subsidiaries engaged in such business) and agreements granting the right to purchase or otherwise acquire such assets, so long as the Net Cash Proceeds of such sale are not less than the difference between U.S.$200,000,000 and the amount of Net Cash Proceeds, if any, received by the U.S. Borrower in respect of a sale or other disposition made pursuant to clause (ix) below; and

 

(ix) the sale or other disposition of assets comprising, used in or relating to the world-wide instruments business of the U.S. Borrower and its Subsidiaries (including, without limitation, stock of Subsidiaries engaged in such business) and agreements granting the right to purchase or otherwise acquire such assets.”

 

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(e) Section 6.01 is amended by inserting the word “or” immediately after clause (m) thereof and adding a new clause (n) immediately following clause (m) of such section to read as follows:

 

“(n) the U.S. Borrower shall fail, within 30 days after its receipt of any Net Cash Proceeds from any sale of its world-wide on/off valve business permitted by Section 5.02(e)(viii) or any Net Cash Proceeds from any sale of its world-wide instruments business permitted by Section 5.02(e)(ix), to make an optional prepayment of Tranche C Term Advances pursuant to Section 2.06(a) in an amount (the “Prepayment Amount”) equal to the Net Cash Proceeds so received; provided, that if (and only if) substantially all of the assets of both of such businesses have been sold, the Prepayment Amount shall be reduced by an amount, not exceeding U.S.$30,000,000, equal to all such Net Cash Proceeds applied to pay Obligations of Foreign Subsidiaries;”

 

SECTION 2. Waiver and Standstill. (a) Subject to Section 3 hereof, the Required Lenders hereby waive any Default or Event of Default in respect of the provisions of Sections 2.06(b)(ii) (but only in respect of equity proceeds in an amount not greater than $10,000,000 used to finance an asset acquisition), 2.07(a), 2.08(c), 3.01(a)(vi), 3.01(c), 3.01(e), 3.01(i), 3.02, 4.01(g), 4.01(h), 4.01(i), 4.01(j), 4.01(q)(ii), 5.01(a), 5.01(g), 5.02(b)(ii)(F) and (G), 5.02(f)(vii), (viii) and (ix), 5.02(g), 5.03(a), 5.03(b), 5.03(c), 5.03(d), 5.04(a) and 5.04(b) of the Credit Agreement and any related or substantially comparable provision of any Loan Document, in each case consisting of, resulting from or relating in any respect to (i) the re-audit, revision or restatement of any financial statement delivered prior to the date of this Amendment by the U.S. Borrower or any of its Subsidiaries (including, without limitation, any misstatement therein or in any certificate, representation or warranty relating thereto and any error, defect or deficiency in accounting procedures or in the application of accounting principles reflected thereby or relating thereto), (ii) any failure to deliver any such financial statement or the 2004 audited annual financial statements when or as required, except as required by Section 5.01(q), (iii) any failure to comply with any obligation that became required to be performed or observed under any of such provisions by reason of the occurrence of any such Default or Event of Default or (iv) any misstatement as to the absence of any such Default or Event of Default.

 

(b) Subject to Section 3 hereof, the Required Lenders waive any Default or Event of Default now existing or hereafter arising under Section 6.01(e) of the Credit Agreement resulting from a default under Section 4.03 of the Indenture under which the Senior Subordinated Debt was issued; provided, however, that the exercise by the Trustee or the requisite holders of Senior Subordinated Notes of their right to give a notice of acceleration pursuant to Section 6.02 of such Indenture by reason of the existence of such default under Section 4.03 of the Indenture shall constitute an immediate Event of Default.

 

SECTION 3. Conditions to Effectiveness. This Amendment shall become effective as of the first date set forth above (the “Amendment No. 11 Effective Date”) when each of the conditions set forth in this Section 3 to this Amendment shall have been fulfilled to the satisfaction of the Administrative Agent.

 

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(i) Execution of Counterparts. The Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered on behalf of each of (a) the Borrowers, (b) the Administrative Agent and (c) the Required Lenders, or as to any of the foregoing parties, advice reasonably satisfactory to the Administrative Agent that each of the foregoing parties has executed a counterpart of this Amendment.

 

(ii) Payment of Fees and Expenses. The U.S. Borrower shall have paid, on or before September 30, 2005, (a) to the Administrative Agent, for the benefit of each Lender executing this Amendment on or before September 28, 2005, a fee equal to 0.05% of the aggregate Revolving Credit Commitments and Tranche C Term Advances of each such Lender and (b) all expenses (including the fees and expenses of Shearman & Sterling LLP) incurred in connection with the preparation, negotiation and execution of this Amendment and other matters relating to the Credit Agreement from and after the last invoice to the extent invoiced.

 

(iii) Execution of Consent. The Administrative Agent shall have received counterparts of a Consent substantially in the form of Exhibit A to this Amendment, duly executed by each of the entities listed therein.

 

(iv) Waiver Under Refinancing Loan Agreement. The requisite number of lenders under the Refinancing Loan Agreement shall have agreed to waive any defaults under the Refinancing Loan Agreement arising from the matters referred to herein, on terms satisfactory to the Administrative Agent.

 

The Administrative Agent will notify the U.S. Borrower when this Amendment has become effective as set forth above, and such notice shall be conclusive and binding on the Lenders.

 

SECTION 4. Representations and Warranties. Each Borrower hereby represents and warrants as follows:

 

(a) On the date hereof, after giving effect to this Amendment No. 11, (i) no event has occurred and is continuing, or would result from the effectiveness of this Amendment No. 11, that constitutes a Default and (ii) all representations and warranties set forth in the Loan Documents shall be true and correct in all material respects.

 

(b) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery or performance by the Borrowers of this Amendment No. 11 and by the Guarantors and the Grantors of the consent attached hereto or other transactions contemplated hereby.

 

(c) This Amendment No. 11 has been duly executed and delivered by the Borrowers. The consent attached hereto has been duly executed and delivered by each of the Guarantors and the Grantors. This Amendment No. 11 and each of the other Loan Documents, as amended hereby, to which each Borrower, each Guarantor and each Grantor is a party are legal, valid and binding obligations of such Borrower, such Guarantor and such Grantor, as applicable, enforceable against such Borrower, such Guarantor and such Grantor, as applicable, in accordance with their respective terms.

 

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SECTION 5. Reference to and Effect on the Transaction Documents. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other transaction documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified by this Amendment.

 

(b) The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, in each case as amended by this Amendment.

 

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

 

SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

 

SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York, and shall be subject to the jurisdictional and service provisions of the Credit Agreement, as if this were a part of the Credit Agreement.

 

SECTION 8. Entire Agreement; Modification. This Amendment constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, there being no other agreements or understandings, oral, written or otherwise, respecting such subject matter, any such agreement or understanding being superseded hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and may not be amended, extended or otherwise modified, except in a writing executed in whole or in counterparts by each party hereto.

 

SECTION 9. Confirmation of Release of Collateral. Upon any sale, lease, transfer or other disposition of any item of Collateral of any Grantor in accordance with the terms of the Loan Documents as amended hereby, the Collateral Agent will, at such Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence the release of such item of Collateral from all assignments and security

 

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interests granted by the Loan Documents; provided, however, that such Grantor shall have delivered to the Collateral Agent, at least five Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale, lease, transfer or other disposition in reasonable detail, including, without limitation, the price thereof and any expenses in connection therewith, together with a form of release for execution by the Collateral Agent and a certificate of such Grantor to the effect that the transaction is in compliance with the Loan Documents and as to such other matters as the Collateral Agent may request.

 

[Signatures follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective authorized officers as of the day and year first above written.

 

 

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EXHIBIT A TO AMENDMENT NO. 11

 

CONSENT

 

Reference is made to the Credit Agreement, dated as of April 10, 2001, as amended by Amendment No. 1 thereto dated as of March 13, 2002, Amendment No. 2 thereto dated as of June 17, 2002, Amendment No. 3 thereto dated as of December 11, 2002, Amendment No. 4 and Waiver thereto dated as of March 31, 2003, Amendment No. 5 dated as of June 30, 2003, Amendment No. 6 and Waiver thereto dated as of August 5, 2003, Amendment No. 7 thereto dated as of March 1, 2004, Amendment No. 8 and Waiver thereto dated as of March 18, 2005, Amendment No. 9 and Waiver thereto dated as of May 27, 2005 and Amendment No. 10 and Waiver thereto dated as of July 14, 2005 and as modified by the Consent dated as of June 3, 2004 and the Consent and Waiver dated as of March 18, 2005, among the Borrowers, the Lender Parties party thereto, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as Administrative Agent (such Credit Agreement, as so amended and modified, the “Credit Agreement”).

 

Each of the undersigned confirms and agrees that (a) notwithstanding the effectiveness of the foregoing Amendment No. 11 to and Waiver under the Credit Agreement, each Loan Document to which such Person is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, in each case as amended by Amendment No. 11 to and Waiver under the Credit Agreement, and (b) the Collateral Documents to which such Person is a party and all of the Collateral described therein do, and shall continue to, secure the payment of all of the Secured Obligations and the Guaranteed Obligations, respectively (in each case, as defined therein).

 

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LENDERS

 

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LENDERS

 

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LENDERS

 

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LENDERS

 

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LENDERS

 

						[Print Name of Financial Institution]
NYLIM Flatiron CLO 2003-1 Ltd.
By:		New York Life Investment Management LLC, as Collateral Manager and Attorney-in-Fact				By:
By:				/s/    ▇▇▇▇▇▇ ▇. ▇▇▇▇				Name:
		Name:		▇▇▇▇▇▇ ▇. ▇▇▇▇				Title:
		Title:		Managing Director
NYLIM Flatiron CLO 2004-1 Ltd.						New York Life Insurance and Annuity Corporation
By:		New York Life Investment Management LLC, as Collateral Manager and Attorney-in-Fact				By:		New York Life Investment Management LLC, Its Investment Manager
By:				/s/    ▇▇▇▇▇▇ ▇. ▇▇▇▇		By:				/s/    ▇▇▇▇▇▇ ▇. ▇▇▇▇
		Name:		▇▇▇▇▇▇ ▇. ▇▇▇▇				Name:		▇▇▇▇▇▇ ▇. ▇▇▇▇
		Title:		Managing Director				Title:		Managing Director
NYLIM Flatiron CLO 2005-1 Ltd.
By:		New York Life Investment Management LLC, as Collateral Manager and Attorney-in-Fact
By:				/s/    ▇▇▇▇▇▇ ▇. ▇▇▇▇
		Name:		▇▇▇▇▇▇ ▇. ▇▇▇▇
		Title:		Managing Director
NYLIM High Yield CDO 2001 Ltd.
By:		New York Life Investment Management LLC, as Collateral Manager and Attorney-in-Fact
By:				/s/    ▇▇▇▇▇▇ ▇. ▇▇▇▇
		Name:		▇▇▇▇▇▇ ▇. ▇▇▇▇
		Title:		Managing Director
New York Life Insurance Company
By:				/s/    ▇▇▇▇▇▇ ▇. ▇▇▇▇
		Name:		▇▇▇▇▇▇ ▇. ▇▇▇▇
		Title:		Vice President

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LENDERS

 

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LENDERS

 

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