Exhibit 10.8
FIRST AMENDMENT AND
LIMITED WAIVER TO
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
THIS FIRST AMENDMENT AND LIMITED
WAIVER TO LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this
“ Amendment ”) is entered into as of
March 15, 2005, among FLOWSERVE B.V. , a company
organized under the laws of the Netherlands (“
Company ”), FLOWSERVE CORPORATION , a
New York corporation (“ Parent ”), the
Material Subsidiaries (as defined in the Agreement) (each of Parent
and each Material Subsidiary a “ Guarantor
” and collectively, the “ Guarantors
”), the LENDERS (hereinafter defined), and CALYON
NEW YORK BRANCH , a duly licensed branch under the New York
Banking Law of a foreign banking corporation organized under the
laws of the Republic of France, as Administrative Agent
(hereinafter defined) for itself and the other Lenders.
Reference is made to the Letter of
Credit and Reimbursement Agreement, dated as of the 28 th day of July,
2004 (as amended to date, the “ Agreement
”), among Company, Guarantors, Administrative Agent, and the
Lenders party thereto. Unless otherwise defined in this Amendment,
capitalized terms used herein shall have the meaning set forth in
the Agreement; all Section references herein are to Sections in the
Agreement; and all Paragraph references herein are to Paragraphs in
this Amendment.
RECITALS
A. Pursuant to
Sections 7. 4(a)(i) and
(iii) of the Agreement, Parent is required to deliver
the audited financial statements, opinion, and the
accountants’ certificate referred to therein within
100 days after the end of each fiscal year;
B. Pursuant to
Sections 7. 4(b)(ii) and
(v) of the Agreement, Company is required to deliver
the audited financial statements, opinion, and accountants
certificate referred to therein within 210 days after the end
of each fiscal year;
C. Company has requested that
Determining Lenders waive compliance with such requirements under
Sections 7. 4(a)(i) and
(iii) and 7. 4(b)(ii) and
(v) of the Agreement with respect to the fiscal year
ended December 31, 2004, until September 30, 2005, and
any consequences resulting from such non-compliance during such
period; and
D. Company and Lenders desire to
amend the Agreement to permit senior unsecured debt and to modify
certain of its financial definitions as set forth below.
Accordingly, for adequate and
sufficient consideration, the parties hereto agree as follows:
1.
Amendments to Agreement .
a. The definition of “
Consolidated EBITDA ” in
Section 1.1 of the Agreement is hereby amended
and restated in its entirety as follows:
“ Consolidated
EBITDA ” means, for any period, Consolidated Net
Income for such period, plus (a) without duplication and to
the extent deducted in determining such Consolidated Net Income,
the sum of (i) Consolidated Interest Expense for such period,
(ii) consolidated income tax expense for such period,
(iii) all amounts attributable to depreciation and
amortization for such period, (iv) any
First Amendment and
Limited Waiver to
Letter of Credit and Reimbursement Agreement
extraordinary losses or extraordinary non-cash charges for such
period, (v) the amount of premium payments made by Parent or its
Subsidiaries associated with the repurchase or prepayment of the
Subordinated Notes from the proceeds of the Fall 2001 Equity
Issuance and the amount of such premium payments and unamortized
fees associated with any further repurchase or prepayment of the
Subordinated Notes to the extent such repurchase or prepayment is
permitted hereunder, (vi) integration and restructuring
charges in connection with the IDP Transactions and taken with
respect to periods ended on or prior to December 31, 2001,
(vii) integration and restructuring charges in connection with
the Acquisition and taken with respect to periods ended on or prior
to June 30, 2004, in an aggregate amount not to exceed
$40,000,000, and (viii) restructuring and integration charges
taken with respect to periods beginning on July 1, 2003 and
ended on or prior to December 31, 2004, in an aggregate amount
not to exceed $15,000,000, and minus (b) without duplication
and to the extent included in determining such Consolidated Net
Income, any extraordinary gains for such period, all determined on
a consolidated basis in accordance with GAAP.
b. The definition of “
Consolidated Interest Expense ” in
Section 1.1 of the Agreement is hereby amended
and restated in its entirety as follows:
“ Consolidated
Interest Expense ” means, for any period, for the
Parent and its Subsidiaries on a consolidated basis, the sum,
without duplication, of: (a) all interest, premium payments,
fees, charges, and related expenses payable by the Parent and its
Subsidiaries in connection with borrowed money(including
capitalized interest) (other than premium payments associated with
the repurchase or prepayment of the Subordinated Notes from
proceeds of the Fall 2001 Equity Issuance and premium payments and
unamortized fees associated with any further repurchase or
prepayment of the Subordinated Notes to the extent such repurchase
or prepayment is permitted hereunder) or in connection with the
deferred purchase price of assets, in each case to the extent
treated as interest in accordance with GAAP and payable in cash,
(b) the portion of rent payable by the Parent and its
Subsidiaries with respect to such period under capital leases that
is treated as interest in accordance with GAAP and payable in cash,
and (c) all fees, discounts, premiums, expenses, or similar
amounts incurred by the Parent or any of its Subsidiaries in
connection with the Receivables Program for such period, including
purchase discounts (net of any loss reserves), purchase premiums,
operating expense fees, structuring fees, collection agent fees,
unutilized purchase limit fees, and other similar fees and
expenses.
c. The definition of “
New Subordinated Debt ” in
Section 1.1 of the Agreement amended and
restated in its entirety as follows:
“ New Unsecured
Debt ” means Indebtedness having the following
characteristics: (i) the obligors shall be the Parent and/or
Flowserve Finance B.V., (ii) such Indebtedness shall be
unsecured, (iii) if such Indebtedness is subordinated, such
Indebtedness shall be subordinated in right of payment to the
Obligations in a manner reasonably acceptable to Administrative
Agent, (iv) such Indebtedness shall not have any scheduled
payment of principal, scheduled prepayment, scheduled mandatory
redemption or sinking fund payment prior to December 31, 2009,
(v) such Indebtedness shall not contain any provision
prohibiting the creation or assumption of any Lien on any of the
properties or assets of Parent or its Subsidiaries, whether then
owned or thereafter acquired, or prohibiting guaranties by Parent
or any of its Subsidiaries to secure payment of the Obligations or
any agreement renewing, refinancing or extending the Obligations or
this Agreement, (vi) the Parent shall be in compliance
with Sections 8.11, 8.12 and
8. 13 on a pro forma basis after giving
effect to the incurrence of such Indebtedness, (vii) other
terms and conditions shall be no less favorable to the Parent or
its Subsidiaries or the Lenders in any material respect than the
terms and conditions
First Amendment and
Limited Waiver to
Letter of Credit and Reimbursement Agreement
2
applicable to the Subordinated Notes, and (viii) such
Indebtedness shall be issued pursuant to documentation reasonably
satisfactory to the Administrative Agent.
d. The definition of “
Total Debt ” in Section 1.1
of the Agreement is hereby amended and restated in its entirety as
follows:
“ Total
Debt ” means, at any time, the total consolidated
Indebtedness of the Parent and its Subsidiaries at such time
(excluding (a) Indebtedness under
Section 8.1(k) , and (b) Indebtedness of the
type described in clause (i) of the definition
of such term and under Section 8.1(l) ,
except in each case to the extent of any unreimbursed drawings or
payments thereunder).
e.
Section 8. 1(o) of the Agreement
is hereby amended and restated in its entirety to read as
follows:
(o) Indebtedness of the
Parent constituting New Unsecured Debt in an aggregate principal
amount not to exceed $325,000,000 or its Dollar Equivalent;
provided, however, that the proceeds of any such New Unsecured Debt
shall be used to redeem, repurchase, prepay, or otherwise acquire
for consideration, the Indebtedness permitted under
clause (i) above (including any premium payments)
until repaid in full and, once repaid, such amounts referenced
in clause (i) above shall no longer be
permitted under this Agreement.
f.
Section 8.8 of the Agreement is hereby amended
and restated in its entirety to read as follows:
Engage at any time in any
business or business activity other than the business currently
conducted by the Credit Parties and business activities reasonably
incidental thereto, including any activities permitted hereunder;
provided, however, that the Parent shall be entitled to create a
wholly-owned Subsidiary engaged solely in the business of providing
the insurance coverage required under
Section 7.2 hereof solely to the Credit
Parties, so long as such Subsidiary is adequately capitalized to
satisfy the requirements of Section 7.2
and investments therein do not exceed $1,000,000 in the
aggregate (a “ Captive Insurance Company
”).
g.
Section 8. 9(b) of the Agreement
is hereby amended and restated in its entirety to read as
follows:
(b) (i) With respect to any
Credit Party, make any distribution, whether in cash, property,
securities, or a combination thereof, other than regular scheduled
payments of interest as and when due (to the extent not prohibited
by applicable subordination provisions), in respect of, or pay, or
offer or commit to pay, or directly or indirectly redeem,
repurchase, retire, or otherwise acquire for consideration, or set
apart any sum for the aforesaid purposes, any subordinated
Indebtedness (except the redemption or repurchase of the
Subordinated Notes with the proceeds of the issuance of the New
Unsecured Debt), or (ii) pay in cash any amount in respect of
any Indebtedness or preferred equity interests that may at the
obligor’s option be paid in kind or in other securities;
provided that the Parent was permitted to repurchase and/or prepay
the Subordinated Notes to the extent provided in the final proviso
of Section 2. 13(c) of the Original Credit
Agreement.
2.
Waiver of certain Financial Rep
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