Exhibit 10.1
FLOWSERVE
CORPORATION
LIMITED WAIVER AND
THIRD AMENDMENT TO FIRST AMENDED AND
RESTATED CREDIT AGREEMENT
This
LIMITED WAIVER AND THIRD AMENDMENT TO FIRST AMENDED AND RESTATED
CREDIT AGREEMENT (this “ Third Amendment ”)
is dated as of March 15, 2005 and entered into by and among
Flowserve Corporation, a New York corporation (the “
Company ”), Flowserve France SAS (the “
Subsidiary Borrower ”), the Guarantors of the Company
listed on the signature pages hereof (only for the purposes of
Section 6), the financial institutions executing the Consent
of Lender (the “ Consent ”) in the form of
Exhibit A annexed hereto (each individually a “
Lender ” and collectively the “ Lenders
”), and Bank of America, N.A., a national banking
association, as administrative agent for the Lenders (in such
capacity, the “ Administrative Agent ”), and is
made with reference to that certain First Amended and Restated
Credit Agreement dated as of May 2, 2002, as amended by that
certain First Amendment to First Amended and Restated Credit
Agreement dated as of June 30, 2003 and that certain Second
Amendment to First Amended and Restated Credit Agreement dated as
of June 24, 2004 (as so amended, the “Credit Agreement
”), each by and among the Company, the Subsidiary Borrower,
the Guarantors, the Lenders party thereto, the Administrative Agent
and Credit Suisse First Boston, as syndication agent. Capitalized
terms used herein without definition shall have the same meanings
as set forth in the Credit Agreement.
RECITALS
WHEREAS, pursuant to Sections 5.04(a) and 5.04(c) of
the Credit Agreement the Company 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;
WHEREAS, the Company has requested that the Required Lenders
waive compliance with such requirements under Sections 5.04(a)
and 5.04(c) of the Credit Agreement with respect to the fiscal year
ended December 31, 2004 until September 30, 2005 and any
consequences resulting from such noncompliance during such
period;
WHEREAS, the Company and the Lenders desire to amend the
Credit Agreement to (i) permit the Company to redeem,
repurchase or otherwise acquire for consideration the Subordinated
Notes, and (ii) amend the defined term New Subordinated Debt
to include new senior unsecured debt;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereto agree as follows:
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Section 1.
AMENDMENTS TO CREDIT AGREEMENT
A. Amendments to
Definitions
1. The definition of “
Consolidated EBITDA ” in Section 1.01 of the
Credit Agreement is hereby amended and restated in its entirety to
read as follows:
“‘ Consolidated
EBITDA’ shall mean, 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 extraordinary losses or
extraordinary non-cash charges for such period, (v) the amount
of premium payments made by Company 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; provided that in the case of the
Company, Consolidated EBITDA shall be determined with reference to
Schedule 1.01(d).”
2. The definition of “
Consolidated Interest Expense ” in Section 1.01
of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
“‘
Consolidated Interest Expense ’ shall mean, for any
period, for the Company 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
Company 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
Company 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 Company or any of its
Subsidiaries in connection with the Receivables Program for such
period, including purchase discounts
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(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.”
3. The definition of “ New
Subordinated Debt ” in Section 1.01 of the Credit
Agreement is hereby amended by deleting it in its entirety and
substituting therefor the following defined term:
“‘
New Unsecured Debt ’ means Indebtedness having the
following characteristics: (i) the issuer shall be the Company
and/or FFBV and such Indebtedness may be guaranteed by one or more
of the Guarantors only, (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 the 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) the Net Cash Proceeds of such Indebtedness shall be
applied as required by Section 2.13(e), (vi) such Indebtedness
shall not contain any provision prohibiting the creation or
assumption of any Lien on any of the properties or assets of
Company or its Subsidiaries, whether then owned or thereafter
acquired, or prohibiting guaranties by Company or any of its
Subsidiaries to secure payment of the Obligations or any agreement
renewing, refinancing or extending the Obligations or this
Agreement, (vii) the Company shall be in compliance with
Sections 6.11, 6.12 and 6.13 on a pro forma basis after
giving effect to the incurrence of such Indebtedness,
(viii) other terms and conditions shall be no less favorable
to the Company or its Subsidiaries or the Lenders in any material
respect than the terms and conditions applicable to the
Subordinated Notes, and (ix) such Indebtedness shall be issued
pursuant to documentation reasonably satisfactory to the
Administrative Agent.”
4. The definition of “ Total
Debt ” in Section 1.01 of the Credit Agreement is
hereby amended deleting it in its entirety and substituting
therefor the following defined term:
“‘
Total Debt ’ shall mean, at any time, the total
consolidated Indebtedness of the Company and the Subsidiaries at
such time (excluding (a) Indebtedness under
Section 6.01(k), and (b) Indebtedness of the type
described in clause (i) of the definition of such term and
under Section 6.01(l), except in each case to the extent of
any unreimbursed drawings or payments thereunder).”
B. Amendments to
Article II – The Credits.
1. Section 2.13(e) of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
“(e)
Subject to paragraph (k) below, in the event that any Loan
Party or any subsidiary of a Loan Party shall receive Net Cash
Proceeds from (i) the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any subsidiary
of a Loan Party (other than Indebtedness for money borrowed
permitted pursuant to Section 6.01; provided that Net Cash
Proceeds from the issuance of any New Unsecured Debt shall be
applied to redeem, repurchase, prepay or otherwise acquire for
consideration the Subordinated Notes
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(including
any premium payments) and any remaining Net Cash Proceeds shall be
applied to prepay Term Loans in accordance with
Section 2.13(h) ) or (ii) the establishment of the
Receivables Program or any subsequent increase thereto, the
Borrowers shall, substantially simultaneously with (and in any
event not later than the fifth Business Day next following) the
receipt of such Net Cash Proceeds by a Loan Party or a subsidiary,
apply an amount equal to 100% of such Net Cash Proceeds to prepay
outstanding Term Loans in accordance with
Section 2.13(h).”
C. Amendments to
Article VI -Negative Covenants
1. Section 6.01(o) of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
“(o) Indebtedness constituting
New Unsecured Debt in an aggregate principal amount not to exceed
$325,000,000 or its Dollar Equivalent; and”
2. Section 6.08 of the Credit
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 Company and the
Subsidiaries and business activities reasonably incidental thereto,
including any activities permitted hereunder, which, in the case of
Finsub, shall be limited solely to performing its obligations under
the Receivables Program Documentation and, in the case of FFBV,
shall be limited solely to performing its obligations under the
Subordinated Note Documents and the Loan Documents and any document
pursuant to which the New Unsecured Debt is issued; provided,
however, Company shall be entitled to create a wholly-owned
subsidiary engaged solely in the business of providing the
insurance coverage required under Section 5.02 hereof solely
to the Company and the Subsidiaries, so long as such subsidiary is
adequately capitalized to satisfy the requirements of
Section 5.02 and investments therein do not exceed $1,000,000
in the aggregate (a “Captive Insurance
Company”).”
3. Section 6.09(b) of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
“(b) (i) 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, re
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