EXHIBIT 10.3
December 21, 2009
BorgWarner Inc.
3850 Hamlin Road
Auburn Hills, Michigan 48326
Attention: General Counsel
Attention: John J. Gasparovic, General Counsel and Secretary
Ladies and Gentlemen:
     Reference is hereby made to that certain Credit Agreement dated as of
July 22, 2004 (as amended by (a) that certain Amendment No. 1 and Consent
Agreement dated as of April 30, 2009, (b) that certain Amendment No. 2 dated as
of August 11, 2009, and (c) that certain Amendment No. 3 and Consent dated as of
October 23, 2009 and as further amended, restated, supplemented or otherwise
modified, the “Credit Agreement”), among BorgWarner Inc., a Delaware corporation
(the “Borrower”), the several banks and other financial institutions from time
to time parties hereto (the “Lenders”), and Bank of America, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”), Issuing
Bank and Swingline Lender. Except as otherwise specified in this agreement (this
“Letter Agreement”), all capitalized undefined terms used herein shall have the
meanings assigned thereto in the Credit Agreement.
     Reference is also made to (a) that certain Receivables Sale Agreement,
dated as of December 21, 2009 (the “Receivables Sale Agreement”), by and among
(i) BorgWarner Emissions Systems Inc., a Delaware corporation, BorgWarner Morse
TEC Inc., a Delaware corporation, BorgWarner Powdered Metals Inc., a Delaware
corporation, BorgWarner Thermal Systems Inc., a Delaware corporation, BorgWarner
TorqTransfer Systems Inc., a Delaware corporation, BorgWarner Transmission
Systems Inc., a Delaware corporation, BorgWarner Turbo Systems Inc., a Delaware
corporation, collectively as originators and (ii) BWA Receivables Corporation, a
Delaware corporation, as buyer and (b) that certain Receivables Purchase
Agreement dated as of December 21, 2009 (the “Receivables Purchase Agreement”
and together with the Receivables Sale Agreement, the “2009 Receivables
Documents”) among BWA Receivables Corporation, a Delaware corporation, as
seller, BorgWarner Inc., a Delaware corporation, as initial collection agent,
Wachovia Bank, National Association, as purchaser and Wachovia Bank, National
Association, as administrative agent, copies of which are attached hereto as
Exhibit A.
     Notwithstanding anything in the Credit Agreement or any other Loan Document
to the contrary, each of the parties hereto agrees that Section 6.6 of the
Credit Agreement is hereby modified to permit the Disposition of accounts
receivable and assets supporting the obligations under such transferred accounts
receivable in each case in connection with any Receivables Facility that is
permitted under the Credit Agreement. The parties hereto further agree that
Consolidated Total Debt shall not include any Receivables Facility that is
permitted under the Credit Agreement irrespective of whether such Receivables
Facility is treated as indebtedness in accordance with GAAP.
     Effective upon the execution hereof by the Required Lenders, the
Administrative Agent and each Loan Party and the Lenders’ receipt of the final
2009 Receivables Documents and the completion of the

 

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Disposition of the accounts receivables subject to the Receivables Facility
evidenced by the 2009 Receivables Documents, the Administrative Agent hereby
unconditionally and irrevocably releases and discharges:
     (a) each Lien granted under the Security Agreement that is applicable to
the accounts receivable sold or transferred to BWA Receivables Corporation by
BorgWarner Emissions Systems Inc., BorgWarner Morse TEC Inc., BorgWarner
Powdered Metals Inc., BorgWarner Thermal Systems Inc., BorgWarner TorqTransfer
Systems Inc., BorgWarner Transmission Systems Inc., and BorgWarner Turbo Systems
Inc. pursuant to the Receivables Sale Agreement (and such assets supporting the
obligations under such transferred accounts receivable as are reasonably
required to be subject to such Lien and constitute “Purchased Assets” (as
defined in the Receivables Sale Agreement)), but only to the extent such
accounts receivable and supporting obligations are actually sold pursuant to and
in accordance with the Receivables Purchase Agreement, it being understood and
agreed that this release is a partial release and shall not effect the
Administrative Agent’s Liens on any other Collateral, including, without
limitation, (i) any machinery or equipment of the Borrower or any Guarantor or
(ii) to any inventory or goods of the Borrower or any Guarantor that has not
been sold or transferred and given rise to an account receivable transferred by
BWA Receivables Corporation pursuant to the Receivables Purchase Agreement); and
     (b) BWA Receivables Corporation from its obligations under the Guaranty
Agreement and the Security Agreement.
     Each of the Loan Parties hereto and BWA Receivables Corporation represents
and warrants that (a) BWA Receivables Corporation (i) does not and shall not own
or hold any assets other than the Purchased Assets (as defined in the
Receivables Sale Agreement), or conduct any operations, other than those
reasonably necessary to comply with the terms of the 2009 Receivables Documents,
and (ii) does not currently have, and will not incur, assume or suffer to exist,
any Indebtedness other than Indebtedness under the terms of the Receivables
Facility evidenced by the 2009 Receivables Documents, with aggregate
outstandings at no time exceeding the maximum amounts set forth in the
definition of Receivables Facility in the Credit Agreement and (b) the release
of BWA Receivables Corporation from the Guaranty as contemplated herein does not
constitute a release of all or substantially all of the value of the Guaranty.
     Pursuant to the terms hereof and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the Administrative Agent and each of the Lenders party hereto each hereby agrees
to the modifications set forth in this Letter Agreement.
     Except as expressly provided herein, the Credit Agreement and the other
Loan Documents (and each of the guaranties set forth therein and the security
interests granted therein) shall remain unmodified and in full force and effect.
This Letter Agreement shall not be deemed (a) to be a waiver of, or consent to,
a modification or amendment of, any other term or condition of the Credit
Agreement or any other Loan Document, (b) to prejudice any other right or rights
which the Administrative Agent or the Lenders may now have or may have in the
future under or in connection with the Credit Agreement or the other Loan
Documents or any of the instruments or agreements referred to therein, as the
same may be amended, restated, supplemented or otherwise modified from time to
time, (c) to be a commitment or any other undertaking or expression of any
willingness to engage in any further discussion with the Borrower or any other
Person with respect to any waiver, amendment, modification or any other change
to the Credit Agreement or the Loan Documents or any rights or remedies arising
in favor of the Lenders or the

 

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Administrative Agent, or any of them, under or with respect to any such
documents or (d) to be a waiver of, or consent to or a modification or amendment
of, any other term or condition of any other agreement by and among the Loan
Parties or any Loan Party, on the one hand, and the Administrative Agent or any
other Lender, on the other hand. References in the Credit Agreement to “this
Agreement” (and indirect references such as “hereunder”, “hereby”, “herein”, and
“hereof”) and in any Loan Document to the Credit Agreement shall be deemed to be
references to the Credit Agreement as modified hereby.
     This Letter Agreement shall be effective upon the execution hereof by the
Required Lenders, the Administrative Agent and each Loan Party.
     By its execution hereof, each Loan Party, on a joint and several basis,
hereby represents and warrants that after giving effect to this Letter
Agreement, (a) each of the representations and warranties set forth in the
Credit Agreement and the other Loan Documents is true and correct as of the date
hereof as if fully set forth herein, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, (b) no Default or
Event of Default has occurred and is continuing as of the date hereof or would
result after giving effect to the transactions contemplated hereunder, (c) that
such Person has all requisite power and authority and has taken all necessary
corporate or other action to authorize the execution, delivery and performance
of this Letter Agreement and each other document executed in connection herewith
to which it is a party in accordance with their respective terms, and (d) this
Letter Agreement and each other document executed in connection herewith has
been duly executed and delivered by the duly authorized officers of each Loan
Party, and each such document constitutes the legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms.
     This Letter Agreement may be executed in counterparts (and by different
parties hereto in different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. Delivery of an executed counterpart of a signature page of this Letter
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Letter Agreement.
     THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAW
PRINCIPLES.
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     Except as expressly provided herein, the Credit Agreement and the other
Loan Documents shall remain unmodified and in full force and effect.

            Sincerely,

BANK OF AMERICA, N.A., as
Administrative Agent
        By:                 Name:           Title:        

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            BANK OF AMERICA, N.A.,
as a Lender, Issuing Bank and Swingline Lender
        By:                 Name:           Title:           CITIBANK, N.A., as
a Lender
        By:           Name:           Title:           DEUTSCHE BANK AG NEW YORK
BRANCH,
as a Lender           By:           Name:           Title:           MORGAN
STANLEY BANK, N.A., as a Lender           By:           Name:           Title:  
        KEYBANK NATIONAL ASSOCIATION,
as a Lender           By:           Name:           Title:           THE BANK OF
TOKYO-MITSUBISHI UFJ, LTD.,
as a Lender           By:           Name:           Title:        

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            THE NORTHERN TRUST COMPANY, as a Lender
        By:           Name:           Title:           INTESA SANPAOLO S.P.A.,
as a Lender
        By:           Name:           Title:           MERRILL LYNCH BANK USA,
as a Lender
        By:           Name:           Title:        

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          Acknowledged and accepted by:    
  BORGWARNER INC., as Borrower
        By:                   Name:           Title:           BORGWARNER
DIVERSIFIED TRANSMISSION
PRODUCTS INC., as Guarantor         By:                     Name:          
Title:           BORGWARNER DIVERSIFIED TRANSMISSION
PRODUCTS SERVICES INC.,
as Guarantor
        By:                     Name:           Title:           BORGWARNER
EMISSIONS SYSTEMS HOLDING INC.,
as Guarantor
        By:                     Name:           Title:           BORGWARNER
EMISSIONS SYSTEMS INC.,
as Guarantor
        By:                     Name:           Title:           BORGWARNER
EMISSIONS SYSTEMS OF MICHIGAN INC.,
as Guarantor
        By:                   Name:           Title:        

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            BORGWARNER EUROPE INC., as Guarantor
        By:                   Name:           Title:           BORGWARNER
HOLDING INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER
INVESTMENT HOLDING INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER
JAPAN INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER
MORSE TEC INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER NW
INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER
POWDERED METALS INC., as Guarantor
        By:                   Name:           Title:        

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            BORGWARNER SOUTH ASIA INC.,
as Guarantor
        By:                     Name:           Title:           BORGWARNER
THERMAL SYSTEMS INC.,
as Guarantor
        By:                     Name:           Title:           BORGWARNER
THERMAL SYSTEMS OF MICHIGAN INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER
TORQTRANSFER SYSTEMS INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER
TRANSMISSION SYSTEMS INC., as Guarantor
        By:                     Name:           Title:           BORGWARNER
TURBO SYSTEMS INC.,
as Guarantor
        By:                     Name:           Title:           BRONSON
SPECIALTIES INC., as Guarantor
        By:                     Name:           Title:           BWA TURBO
SYSTEMS HOLDING CORPORATION, as Guarantor
        By:                     Name:           Title:      

 

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            KUHLMAN CORPORATION, as Guarantor
        By:                     Name:           Title:           BWA RECEIVABLES
CORPORATION
        By:                     Name:           Title:        

BorgWarner Inc.
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