Exhibit 10.4
EXECUTION COPY
AMENDMENT NO. 2 AND CONSENT
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NO. 2 AND CONSENT to SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(the “Amendment”), dated as of October 1, 2008, is entered into by and among
Woodward Governor Company (the “Company”), the financial institutions party to
the below-defined Credit Agreement (the “Lenders”), and JPMorgan Chase Bank,
National Association, as Administrative Agent (the “Agent”). Each capitalized
term used herein and not otherwise defined herein shall have the meaning given
to it in the below-defined Credit Agreement.
WITNESSETH
WHEREAS, the Company, the Lenders, and the Agent are parties to a Second Amended
and Restated Credit Agreement dated as of October 25, 2007 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”);
WHEREAS, the Company wishes to amend the Credit Agreement in certain respects
and the Lenders and the Agent are willing to amend the Credit Agreement on the
terms and conditions set forth herein;
WHEREAS, the Company has requested certain consents of the Lenders, and the
Lenders and the Agent are willing to provide such consents on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Amendments to Credit Agreement. Effective as of the date first above written,
and subject to the satisfaction of the conditions to effectiveness set forth in
Section 3 below, the Credit Agreement is hereby modified as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended to add the following
definitions of “2008 Note Agreement”, “2008 Senior Noteholder”, “2008 Senior
Notes”, “Drawn Foreign Amount”, “Foreign Guarantor”, “Foreign Subsidiary
Investment Limitation”, “Material Acquisition”, “Material Asset Sale”, “MPC”,
“MPC Acquisition”, “MPC Stock Purchase Agreement”, “Techni-Core” and “Term Loan
Credit Facility” in their appropriate alphabetical order therein:
“2008 Note Agreement” means that certain Note Purchase Agreement, dated as of
October 1, 2008, by and among the Company, as the issuer of the 2008 Senior
Notes, and the 2008 Senior Noteholders, as the same may be amended, restated,
supplemented, or otherwise modified from time to time.

 

 

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“2008 Senior Noteholder” means a Person holding a 2008 Senior Note.
“2008 Senior Notes” means, collectively, the Series B Senior Notes due 2013 in
an aggregate initial principal amount of $100,000,000, (ii) the Series C Senior
Notes due 2015 in an aggregate initial principal amount of $50,000,000 and
(iii) the Series D Senior Notes due 2017 in an aggregate initial principal
amount of $100,000,000, in each case as the same may be amended, restated,
supplemented or otherwise modified from time to time, issued by the Company
pursuant to the 2008 Note Agreement.
“Drawn Foreign Amount” means on any date the aggregate principal amount of
Obligations outstanding under the Agreement that are owed or guaranteed by the
Foreign Subsidiaries and the aggregate stated face amount of Letters of Credit
issued under the Agreement for the account of Foreign Subsidiaries.
“Foreign Guarantor” is defined in Section 7.3(D)(v).
“Foreign Subsidiary Investment Limitation” means (i) at any time the Leverage
Ratio is equal to or greater than 2.50 to 1.00 but less than 3.00 to 1.00,
aggregate Investments by the Company and its Subsidiaries in Foreign
Subsidiaries, measured by the cash value at the time of Investment, shall not
exceed $200,000,000 plus the Drawn Foreign Amount, and (ii) at any time the
Leverage Ratio is equal to or greater than 3.00 to 1.00, aggregate Investments
by the Company and its Subsidiaries in Foreign Subsidiaries, measured by the
cash value at the time of Investment, shall not exceed $100,000,000 plus the
Drawn Foreign Amount; provided, however, for any period during which at least
65% of the aggregate voting Equity Interests of a Foreign Subsidiary have been
pledged (on a first priority basis and pursuant to agreements, documents and
instruments reasonably acceptable to the Required Lenders and the other
requisite creditors needed to approve amendments or modifications to the
Intercreditor Agreement) to secure the Obligations and the obligations owing
under and in connection with the financings subject to the Intercreditor
Agreement, Investments in such Foreign Subsidiary shall not be included in any
determination of compliance with the then applicable Foreign Subsidiary
Investment Limitation; provided, further that any amounts of cash or property
distributed as a dividend or otherwise from any Foreign Subsidiary to the
Company or any Significant Domestic Incorporated Subsidiary shall be deemed to
reduce the aggregate Investments in Foreign Subsidiaries by such amount. In
addition to the foregoing, if, within sixty (60) days after any Investment is
made in a Foreign Subsidiary and (i) a pledge as described in the first proviso
of this definition is entered into with respect to the Equity Interests of the
Foreign Subsidiary into which such Investment is made, (ii) the Foreign
Subsidiary into which such Investment is made becomes a Foreign Guarantor, or
(iii) the Company or any of its Subsidiaries issues additional Equity Interests,
the proceeds of which are used to pay down outstanding Indebtedness in an amount
sufficient to reduce the Leverage Ratio to a level that permits such Investment,
then such Investment shall not be subject to this Foreign Subsidiary Investment
Limitation.

 

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“Material Acquisition” means one or more related acquisitions for net
consideration in excess of $20,000,000.
“Material Asset Sale” means any Asset Sale or series of Asset Sales the fair
market value of which is equal to or greater than $20,000,000 individually or in
the aggregate.
“MPC” means MPC Products Corporation, an Illinois corporation.
“MPC Acquisition” means the acquisition of the Capital Stock of each of MPC and
Techni-Core by the Company pursuant to the terms the MPC Stock Purchase
Agreement.
“MPC Stock Purchase Agreement” means that certain Stock Purchase Agreement made
as of August 19, 2008, by and among the Company, MPC, Techni-Core, the Successor
Trustees of the Joseph M. Roberti Revocable Trust dated December 29, 1992,
Maribeth Gentry, as Successor Trustee of the Vincent V. Roberti Revocable Trust
dated April 4, 1991 and the other holders of Capital Stock of MPC and
Techni-Core listed on Schedule I thereto.
“Techni-Core” means Techni-Core, Inc., a Delaware corporation.
“Term Loan Credit Facility” means the $150,000,000 Term Loan Credit Facility
evidenced by the Term Loan Credit Agreement, dated as of October 1, 2008, by and
among the Company, the lenders party thereto and JPMorgan Chase, as
administrative agent thereunder, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
(b) Section 1.1 of the Credit Agreement is hereby amended to amend and restate
the last sentence of the definition of “EBITDA” set forth therein in its
entirety as follows:
“EBITDA shall be calculated on a pro forma basis giving effect to Material
Acquisitions and Material Asset Sales on a last twelve (12) months’ basis using,
for any Permitted Acquisition, historical financial statements containing
reasonable adjustments satisfactory to the Administrative Agent, broken down by
fiscal quarter in the Company’s reasonable judgment.”

 

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(c) Section 1.1 of the Credit Agreement is hereby amended to amend and restate
the definitions of “Intercreditor Agreement” and “Loan Documents” set forth
therein in their entirety as follows:
“Intercreditor Agreement” means the Amended and Restated Intercreditor
Agreement, dated as of October 1, 2008 (attached as Exhibit A to Amendment No. 2
to the Agreement, dated as of October 1, 2008), by and among the Administrative
Agent, the administrative agent under the Term Loan Credit Facility, the Senior
Noteholders, the 2008 Senior Noteholders and any other credit provider to the
Company which may become party thereto from time to time, as the same may be
amended, restated, supplemented, or otherwise modified from time to time.
“Loan Documents” means this Agreement, any promissory notes executed pursuant to
Section 2.12(D), the Domestic Subsidiary Guaranty, the Foreign Subsidiary
Guaranty, the Intercreditor Agreement, and all other documents, instruments,
notes and agreements executed in connection therewith or contemplated thereby,
in each case, as the same may be amended, restated or otherwise modified and in
effect from time to time.
(d) Section 1.1 of the Credit Agreement is hereby amended to amend and restate
clause (i) of the definition of “Permitted Refinancing Indebtedness” in its
entirety as follows:
“(i) does not exceed the aggregate maximum principal amount of and maxumum
unused commitments under (in each case, giving effect to any permitted increases
expressly provided for therein), and accrued interest and any applicable premium
and associated fees and expenses of, the Indebtedness being replaced, renewed,
refinanced or extended,”.
(e) Section 2.10 of the Credit Agreement is hereby amended to delete the
reference to “ABR Loans” therein and to substitute “Floating Rate Loans”
therefor.
(f) Section 2.14(E)(ii) of the Credit Agreement is hereby amended to restate the
parenthetical at the end of such clause in its entirety as follows:
“(other than Excluded Taxes, collectively, the “Other Taxes”)”.
(g) Section 5.2 of the Credit Agreement is hereby amended to add the following
sentence at the end of such section:
“For the avoidance of doubt, this Section 5.2 does not apply to the conversion
or continuation of any existing Revolving Loan.”
(h) Section 7.3(A)(xii) of the Credit Agreement is hereby amended and restated
in its entirety as follows:
“(xii) Indebtedness evidenced by the Senior Notes or the 2008 Senior Notes
(including any Indebtedness of the Subsidiary Guarantors arising under a
guaranty of the Senior Notes or the 2008 Senior Notes), and Indebtedness
evidenced by the Term Loan Credit Facility (including any increases pursuant to
Section 2.20 thereof and including any Indebtedness of the Subsidiary Guarantors
arising under a guaranty of the obligations thereunder);”.

 

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(i) Section 7.3(B)(iv) of the Credit Agreement is hereby amended to delete the
reference therein to “Section 7.3(A)(x)” and to substitute “Section 7.3(A)(xiv)”
therefor.
(j) Section 7.3(C)(vii) of the Credit Agreement is hereby amended and restated
in its entirety as follows:
“(vii) Liens arising under or in connection with the Senior Notes, the 2008
Senior Notes, the Term Loan Credit Facility, the 2008 Note Agreement, the Note
Agreement and any other senior (unsubordinated) credit, loan or borrowing
facility or senior (unsubordinated) note purchase agreement similar in form and
substance to any of the foregoing and in a principal amount equal to or greater
than $25,000,000, so long as the creditors under such facility or note purchase
agreement agree to be bound by the terms of the Intercreditor Agreement, the
collateral securing the Liens of such creditors also secures the Obligations,
and the Liens of such creditors are pari passu to the Liens securing the
Obligations to the extent that the collateral securing such Liens also secures
the Obligations;”.
(k) Section 7.3(C) of the Credit Agreement is hereby further amended to delete
the proviso in the last paragraph thereof in its entirety and to add the
following sentence to the end of such paragraph:
“Notwithstanding the foregoing, any such agreement, note, indenture or other
instrument may prohibit the creation of a Lien in favor of the Administrative
Agent for the benefit of itself and the Lenders, as collateral for the
Obligations, so long as such prohibition does not apply if the Senior
Noteholders, the 2008 Senior Noteholders, the lenders under the Term Loan Credit
Facility and the lenders or creditors under any other senior
(unsubordinated) credit, loan or borrowing facility or senior
(unsubordinated) note purchase agreement similar in form and substance to any of
the foregoing and in a principal amount equal to or greater than $25,000,000, so
long as the creditors under such facility or note purchase agreement agree to be
bound by the terms of the Intercreditor Agreement, shall be provided with a Lien
that is equal and ratable with the Lien provided to the Administrative Agent for
the benefit of itself and the Lenders.”
(l) Section 7.3(D) of the Credit Agreement is hereby amended to (1) amend and
restate clause (v) thereof in its entirety as follows, (2) add the following new
clause (vi), (3) renumber the existing clause (vi) as clause (vii) and amend and
restate it in its entirety as follows, and (4) renumber the existing clauses
(vii) through (x) accordingly:
“(v) Investments in (i) Domestic Incorporated Subsidiaries or (ii) Foreign
Subsidiaries which provide a guarantee (including gross-up amounts for any
withholding taxes or capital charges) of the Obligations (as distinguished from
solely guaranteeing Drawn Foreign Amounts) (each such Foreign Subsidiary, a
“Foreign Guarantor”), so long as any guarantee payments made in connection with
such guarantee can be shared and applied in accordance with the requirements of
the Intercreditor Agreement; provided, however, that any Investment constituting
a Permitted Acquisition shall be governed by clause (vii) below and not this
clause (v);

 

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(vi) Investments in Foreign Subsidiaries which are not Foreign Guarantors,
subject to the Foreign Subsidiary Investment Limitation, if applicable;
provided, that (x) intercompany loans permitted pursuant to Section 7.3(A)(v)
and assets of Foreign Subsidiaries (other than assets directly or indirectly
contributed to such Foreign Subsidiaries by the Company and/or the Significant
Domestic Incorporated Subsidiaries after the Closing Date) which are used to
make Investments in other Foreign Subsidiaries shall not be included in
determining compliance with this clause (vi), (y) prior to consummating any
Investment in a Foreign Subsidiary in an amount in excess of $50,000,000, the
Company shall demonstrate to the Administrative Agent’s satisfaction the
Company’s and its Subsidiaries’ pro forma compliance or planned pro forma
compliance with this clause (vi), and (z) any Investment constituting a
Permitted Acquisition shall be governed by clause (vii) below and not this
clause (vi);
(vii) Investments constituting Permitted Acquisitions; provided, that the
Leverage Ratio will not exceed 3.35 to 1.00 after giving effect to any such
Permitted Acquisition in excess of $100,000,000 (as demonstrated by the Company
on a pro forma basis to the Administrative Agent’s satisfaction); provided,
further, that if a Foreign Subsidiary (the “Acquiring Foreign Subsidiary”)
Acquires another Person that becomes a Foreign Subsidiary (the “Target Sub”) as
a result of such Acquisition, and the Equity Interests of the Target Sub are
transferred in their entirety by the Acquiring Foreign Subsidiary to the Company
or a Significant Domestic Incorporated Subsidiary within 60 days after the date
on which the Target Sub is initially Acquired, then the Target Sub shall be
deemed to have been owned at all times by the Company or the applicable
Significant Domestic Incorporated Subsidiary, and, so long as the other
conditions for a Permitted Acquisition have been satisfied and the Leverage
Ratio test set forth above is met, then the Investment in the Target Sub shall
be permitted under this clause (vii)”.
(m) Section 7.3(E) of the Credit Agreement is hereby amended to amend and
restate clause (vi) thereof in its entirety as follows:
“(vi) Contingent Obligations of the Subsidiary Guarantors under any guaranty of
the Indebtedness arising under the Senior Notes, the 2008 Senior Notes, the Note
Agreement, the 2008 Note Agreement, the Term Loan Credit Facility or any other
senior (unsubordinated) credit, loan or borrowing facility or senior
(unsubordinated) note purchase agreement similar in form and substance to any of
the foregoing and in a principal amount equal to or greater than $25,000,000, so
long as the creditors under such facility or note purchase agreement agree to be
bound by the terms of the Intercreditor Agreement,”.

 

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(n) Section 7.3(G) of the Credit Agreement is hereby amended to amend and
restate the last sentence of the introductory paragraph thereof as follows:
“Neither the Company nor any Significant Domestic Subsidiary shall make any
Acquisitions, other than Acquisitions meeting the following requirements or
otherwise approved by the Required Lenders (each such Acquisition constituting a
“Permitted Acquisition”):”.
(o) Section 7.3(G) of the Credit Agreement is hereby further amended to add the
following clause immediately following clause (v) of the definition of
“Permitted Acquisition” set forth therein:
“it being acknowledged that the provisions of the foregoing clauses (i)-(v) have
been satisfied as they relate to the MPC Acquisition, and the MPC Acquisition
shall be a Permitted Acquisition.”
(p) Section 7.3(L) of the Credit Agreement is hereby amended to (i) amend and
restate clause (iii) thereof in its entirety as follows, (ii) delete the word
“and” immediately following clause (ix) thereof and substitute a comma (“,”)
therefor, (iii) add the word “and” at the end of clause (x) thereof and (iv) add
the following new clause (xi) :
“(iii) the Senior Notes, the 2008 Senior Notes, the Term Loan Credit Facility
and any other senior (unsubordinated) credit, loan or borrowing facility or
senior (unsubordinated) note purchase agreement similar in form and substance to
any of the foregoing and in a principal amount equal to or greater than
$25,000,000, so long as the creditors under such facility or note purchase
agreement agree to be bound by the terms of the Intercreditor Agreement,”;
“(xi) restrictions and conditions in any existing or future license agreement
with respect to intellectual property that restricts the ability of any party to
such agreement to create, incur or permit a Lien on such intellectual
property.”.
(q) Section 8.1 is hereby amended to amend and restate clauses (A) and
(O) thereof in their entirety as follows:
“(A) Failure to Make Payments When Due. (i) The Company shall fail to pay when
due any of the Obligations consisting of principal with respect to the Loans or
Reimbursement Obligations or (ii) any member of the Obligor Group shall fail to
pay within five (5) days of the date when due any of the other Obligations under
this Agreement or the other Loan Documents.”
“(O) Guarantor Revocation. Except as permitted upon the termination of such
Foreign Subsidiary Guarantor’s parent as a Foreign Subsidiary Borrower, any
guarantor of the Obligations shall terminate or revoke any of its obligations
under the Domestic Subsidiary Guaranty or the Foreign Subsidiary Guaranty.”
2. Consent. Effective as of the date first above written, and subject to the
satisfaction of the conditions to effectiveness set forth in Section 3 below,
the Intercreditor Agreement attached hereto as Exhibit A is hereby approved
under the Credit Agreement.

 

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3. Conditions of Effectiveness. This Amendment shall become effective and be
deemed effective as of the date hereof, if, and only if, the Agent shall have
received (i) executed copies of this Amendment from the Company and the Required
Lenders and (ii) fully executed and effective copies of (a) an amendment to the
Note Agreement, (b) an agreement evidencing the Term Loan Credit Facility,
(c) the Intercreditor Agreement and (d) the 2008 Note Agreement, each in form
and substance satisfactory to the Agent.
4. Representations and Warranties of the Company. The Company hereby represents
and warrants as follows:
(a) The Credit Agreement as previously executed and as amended and modified
hereby constitutes the legal, valid and binding obligation of the Company and is
enforceable against the Company in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors’ rights generally and general equitable
principles).
(b) Upon the effectiveness of this Amendment, (i) no Default or Unmatured
Default has occurred and is continuing under the terms of the Credit Agreement,
(ii) the Company hereby reaffirms its obligations and liabilities under the
Credit Agreement (as amended hereby) and the other Loan Documents and (iii) all
representations and warranties in the Credit Agreement are true and correct in
all material respects as of the date hereof, other than those which expressly
speak to an earlier date (in which case, the Company represents and warrants
that such representations and warranties were true and correct in all material
respects as of such earlier date).
5. Effect on the Credit Agreement.
(a) Upon the effectiveness of this Amendment, on and after the date hereof, each
reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,”
“herein” or words of like import shall mean and be a reference to the Credit
Agreement, as amended and modified hereby.
(b) Except as specifically amended and modified above, the Credit Agreement and
all other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall neither,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of the Lenders or the Agent, nor constitute a waiver of any provision of
the Credit Agreement or any other documents, instruments and agreements executed
and/or delivered in connection therewith.
6. Costs and Expenses. The Company agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and expenses charged to the
Agent) incurred by the Agent in connection with the preparation, arrangement and
execution of this Amendment and of the Agent and the Lenders in connection with
the enforcement of this Amendment.

 

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7. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (including 735 ILCS Section 105/5-1 et seq.
but otherwise without regards to the conflicts of laws provisions) of the State
of Illinois.
8. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
9. Counterparts. This Amendment may be executed by one or more of the parties to
the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A facsimile copy of any signature hereto shall have the same effect
as the original of such signature.
10. No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Amendment. In the event an ambiguity or
question of intent or interpretation arises, this Amendment shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Amendment.
The remainder of this page is intentionally blank.

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first above written.

            WOODWARD GOVERNOR COMPANY,
as Borrower
      By:   /s/ Robert F. Weber, Jr.         Name:   Robert F. Weber, Jr.       
Title:   Chief Financial Officer and Treasurer   

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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                JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Administrative
Agent and as a Lender    
 
           
 
  By:   /s/ Krys Szremski
 
Name: Krys Szremski    
 
      Title: Vice President    

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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                WACHOVIA BANK, N.A., as a Lender    
 
           
 
  By:   /s/ W. Scott Powell
 
Name: W. Scott Powell    
 
      Title: Vice President    

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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                WELLS FARGO BANK, N.A., as a Lender      
 
  By:   /s/ Corinne M. Potter
 
Name: Corinne M. Potter    
 
      Title: Vice President    

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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                DEUTSCHE BANK AG NEW YORK BRANCH,
as a Lender    
 
           
 
  By:   /s/ Ming K. Chu
 
Name: Ming K. Chu    
 
      Title: Vice President    
 
           
 
  By:   /s/ Heidi Sandquist
 
Name: Heidi Sandquist    
 
      Title: Vice President    

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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                NATIONAL CITY BANK, as a Lender    
 
           
 
  By:   /s/ Derek R. Cook
 
Name: Derek R. Cook    
 
      Title: Senior Vice President    

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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                THE NORTHERN TRUST COMPANY, as a Lender    
 
           
 
  By:   /s/ Jeffrey Clark
 
Name: Jeffrey Clark    
 
      Title: Senior Vice President    

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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                FIRST NATIONAL BANK, as a Lender    
 
           
 
  By:   /s/ Paul Benigni
 
Name: Paul Benigni    
 
      Title: Vice President    

Signature Page to
Amendment No. 2 to WGOV Credit Agreement

 

 

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EXHIBIT A
[Intentionally Removed]