1
EXHIBIT 4.1
AMENDMENT AND WAIVER AGREEMENT
THIS AMENDMENT AND WAIVER AGREEMENT (this "Agreement"), dated as of June
29, 2001, to the Restated Credit Agreement, dated as of November 29, 1999 (as
the same may be further amended, supplemented or modified from time to time in
accordance with its terms, the "Credit Agreement"), among Water Pik, Inc., a
Delaware corporation ("Water Pik"), and Laars, Inc., a Delaware corporation
("Laars" and together with Water Pik, herein referred to as the "Borrowers"),
the Guarantors named therein, the financial institutions named therein (the
"Lenders") and The Chase Manhattan Bank, as agent (the "Agent") for the Lenders.
Capitalized terms used and not otherwise defined herein shall have the meanings
attributed thereto in the Credit Agreement.
WHEREAS, the Borrowers have requested that the Agent and the Lenders amend
and waive certain provisions of the Credit Agreement, Security Agreement and
Pledge Agreement, and the Lenders are willing to amend and waive such provisions
on the terms and conditions hereof;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:
Section 1. AMENDMENTS UNDER CREDIT AGREEMENT
1.1 There shall be added to Section 1.01 in its appropriate alphabetical
sequence a definition of "Customer" to read in its entirety as follows:
"Customer" shall mean and include the account debtor or obligor with
respect to any Receivable.
1.2 There shall be added to Section 1.01 in its appropriate alphabetical
sequence a definition of "EBIT" to read in its entirety as follows:
"EBIT" shall mean with respect to any person for any period the sum of
(i) Net Income, (ii) Interest Expense and (iii) federal, state and local
income taxes, in each case of such person for such period, computed and
calculated in accordance with GAAP, in each case for the corresponding
period.
1.3 There shall be added to Section 1.01 in its appropriate alphabetical
sequence a definition of "Private Placement" to read in its entirety as follows:
"Private Placement" shall mean the private placement by Holdings of
its equity securities resulting in the issuance of 1,973,685 shares
pursuant to the Stock Purchase Agreement, dated as of December 29, 2000,
among Holdings, Special Value Bond Fund, LLC and Special Value Bond Fund
II, LLC.
2
1.4 The definition of "Eligible Receivables" in Section 1.01 of the Credit
Agreement is hereby amended deleting the last sentence thereof in its entirety
and substituting therefor the following: "Notwithstanding the foregoing, all
Receivables of an applicable Receivables Grantor of any single Customer which,
in the aggregate, exceed 10% (or (i) 15% in the case of Lowes, Target Stores and
Bed Bath & Beyond, (ii) 20% in the case of K-Mart or Home Depot or (iii) 25% in
the case of WalMart or (iv) 35% through and including June 1, 2001 and 25% from
June 2, 2001 and thereafter in the case of South Central Pool Supply, provided,
that (x) in each case the Agent shall be satisfied, in its sole discretion, that
the financial condition of the relevant account debtor at such time has not
significantly deteriorated since the Closing Date as determined by the Agent, in
its sole discretion, from whatever sources are available to the Agent and (y)
the concentration limits for Lowes, Target Stores, Bed Bath & Beyond and WalMart
shall automatically be reduced by 5% if there is any down grade in its debt
rating by either Standard & Poor's Rating Group or Xxxxx'x Investors Service,
Inc.) of the total Eligible Receivables of such Receivables Grantor at the time
of any such determination shall be deemed not to be Eligible Receivables to the
extent of such excess".
1.5 The definition of "Interest Coverage Ratio" in Section 1.01 of the
Credit Agreement is hereby deleted in its entirety and amended and restated as
follows:
"Interest Coverage Ratio" shall mean, with respect to any person for
any period, the ratio of (i) EBIT to (ii) the Cash Interest Expense of such
person for such period.
1.6 The definition of "Interest Margin" in Section 1.01 of the Credit
Agreement is hereby deleted in its entirety and amended and restated as follows:
"Interest Margin" and "Revolving Credit Commitment Fee Margin" shall
mean, with respect to any Loan, the amount as set forth below as
corresponds to the Leverage Ratio computed for Holdings and its
subsidiaries on a Consolidated basis for the four consecutive fiscal
quarter period ending prior to the date of determination set forth below,
determined three (3) Business Days after the delivery of the financial
statements to the Agent required pursuant to Section 6.05(a) or (b) hereof,
as applicable, together with the corresponding compliance certificates
required pursuant to Section 6.05(e) hereof (which certificate shall notify
the Agent of any change to the applicable Interest Margin from the previous
four consecutive fiscal quarter period), commencing with the financial
statements and certificates for the fiscal quarter immediately following
the fiscal quarter in which Holdings has completed the Private Placement,
or if the Borrowers shall fail to timely deliver such statements and
certificates for any such period or during the continuance of an Event of
Default, then at the highest Interest Margin and Revolving Credit
Commitment Fee Margin provided for herein; provided, however, each of the
Interest Margins provided for herein shall be increased by 0.25% for any
Loans supported by M&E Availability (which, for purposes hereof and the
following paragraph, shall be calculated on the basis that Revolving Credit
Loans shall be deemed as first drawn against Eligible Inventory and
Eligible Receivables until fully utilized and then as drawn against M&E
Availability):
- 2 -
3
LIBO Rate Alternate Base Rate Revolving Credit
Leverage Ratio Interest Margin Interest Margin Commitment Fee Margin
-------------- --------------- ------------------- ---------------------
Greater than 2.00:1.00 2.25% 0.50% 0.50%
Equal to or less than 2.00% 0.50% 0.50%
2.00:1.00 but greater than
1.75:1.00
Equal to or less than 1.75% 0.375% 0.375%
1.75:1.00 but greater than
1.50:1.00
Equal to or less than 1.50% 0.375% 0.25%
1.50:1.00 but greater than
1.25:1.00
1.25:1.00 or less 1.25% 0.25% 0.175%
Notwithstanding the above, for the period from the date hereof until the
receipt of financial statements for the Fiscal Year ending December 31, 2001,
the applicable Interest Margin shall be no less than (A) 2.00% in the case of
the LIBO Rate Interest Margin, (B) 0.50% in the case of the Alternate Base Rate
Interest Margin and (C) 0.50% in the case of the Revolving Credit Commitment Fee
Margin.
1.7 The definition of "Net Cash Flow" in Section 1.01 of the Credit
Agreement is hereby amended by deleting the word "and" in clause (iv) thereof
and substituting therefor "," and inserting after clause (v) the following:
"and (vi) Net Proceeds of the Private Placement solely for the
quarters ended June 30, 2001 through and including the quarters ended June
30, 2002."
1.8 The definition of "Net Proceeds" in Section 1.01 of the Credit
Agreement is hereby amended by adding a new sentence at the end thereof to read
in its entirety as follows:
"For the purposes of the definition of Net Proceeds and for no other
purpose, the Net Proceeds of the Private Placement shall be deemed to be
$13,646,000."
1.9 The first sentence of Section 2.15(a) of the Credit Agreement is
hereby amended by deleting "200 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000" and
substituting therefor "395 Xxxxx Xxxxxxx Xxxx, 0xx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000" as the offices of the Agent.
1.10 Article Three of the Credit Agreement is hereby amended by adding a
new Section 3.03 as follows:
"SECTION 3.03. Release of Mortgages. Upon the refinancing of any or
all real property covered by any or all of the Mortgages on terms
satisfactory to the Agent and the Required Lenders, the Agent shall (i)
release the relevant Mortgages, (ii) terminate all liens on such refinanced
property and (iii) adjust the M&E Availability as reasonably determined by
the Agent and the Required Lenders."
- 3 -
4
1.11 Section 7.01(e)(ii) of the Credit Agreement is hereby amended by
deleting "90%" and substituting therefor "100%".
1.12 Section 7.06(k) of the Credit Agreement is hereby deleted in its
entirety and amended and restated as follows:
"(k) Indebtedness representing loans and advances by one Borrower to
another Borrower not to exceed $10,000,000 at any one time outstanding,
provided that in each instance such loans and advances are evidenced by
promissory notes pledged to the Agent for the ratable benefit of the
Lenders;"
1.13 Section 7.10 of the Credit Agreement is hereby deleted in its entirety
amended and restated in its entirety as follows:
SECTION 7.10. Interest Coverage Ratio. Permit the Interest Coverage
Ratio of the Borrowers and their respective subsidiaries on a combined
basis for the four consecutive fiscal quarter periods ending on the dates
set forth below to be less than the respective amounts set forth below
opposite such dates:
Period Ratio
------ -----
June 30, 2001 4.50:1.00
September 30, 2001 4.15:1.00
Thereafter 5.00:1.00
1.14 Article Seven of the Credit Agreement is hereby amended by adding a
new Section 7.20 as follows:
Section 7.20. Capital Expenditure. Permit Capital Expenditures of the
Borrowers and their respective subsidiaries on a combined basis for the
period set forth below to exceed the respective amounts set forth below
opposite such period:
Period Amount
------ ------
Fiscal Year ending 2001 $30,000,000
Fiscal Year ending 2002 $25,000,000
Fiscal Year ending 2003 $20,000,000
Fiscal Year ending 2004 $20,000,000
- 4 -
5
provided, however, that up to 25% of an unused amount may be carried
forward to the next succeeding Fiscal Year to be used during such
succeeding Fiscal Year only after utilization of all allowed amounts
(without regard to such rollover) for Capital Expenditures in such
succeeding Fiscal Year.
1.15 Section 11.01(b) is hereby deleted in its entirety and amended and
restated as follows:
"(b) if to the Agent, at The Chase Manhattan Bank, 1166 Avenue of the
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: WPTI Account
Executive (Telecopy No. 212-899-2929), with a copy to Xxxx Xxxxxxx LLP, at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxxx,
Esq. (Telecopy No. 212-836-6475); and".
1.16 Schedules 2.01, 2.02 and 2.03 are hereby amended by (i) deleting the
address of The Chase Manhattan Bank and replacing it with "1166 Avenue of the
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, ATTN: WPTI Account Executive",
(ii) deleting "Bank One, N.A." and replacing it with "Bank One, Arizona, N.A.",
and (iii) deleting the address of Bank One, N.A. and replacing it with
"Commercial Banking Group, 000 X. Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxx. XX0-0000,
Xxxxxxx, XX 00000, Attention: Water Pik Technologies Account Executive".
1.17 Waterpik International, Inc., a Delaware corporation ("WP
International") shall be added as a party to the Credit Agreement and shall be a
"Guarantor" as such term is defined in the Credit Agreement. By its execution
and delivery of this Agreement, WP International agrees to be bound by all of
the terms and provisions of the Credit Agreement that are applicable to it as a
Guarantor.
1.18 Schedule 4.15 to the Credit Agreement is hereby amended by deleting
such Schedule in its entirety and substituting, in lieu thereof, Schedule 4.15
attached hereto as Annex 1.
1.19 Except for the specific amendments set forth in Sections 1.1 through
1.18 of this Agreement, nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and the Borrowers and
the Loan Parties hereby agree that all of the covenants and agreements contained
in the Credit Agreement are hereby ratified and confirmed in all respects.
Section 2. WAIVERS UNDER CREDIT AGREEMENT
2.1 Subject to the receipt by the Agent of the re-appraisal of fixed
assets and owned real estate in form and substance satisfactory to the Agent,
the Agent and the Lenders hereby waive the $2,500,000 reduction in M&E
Availability for each Borrower which was to occur after completion of the Public
Offering as specified in the definition of "M&E Availability" in Section 1.01 of
the Credit Agreement.
2.2 Except for the specific waiver set forth above, nothing herein shall
be deemed to be a waiver of any covenant or agreement contained in the Credit
Agreement.
- 5 -
6
Section 3. AMENDMENTS UNDER SECURITY AGREEMENT
3.1 WP International shall be added as a party to the Security Agreement
and shall be a "Grantor" as such terms is defined in the Security Agreement. By
its execution and delivery of this Agreement, WP International (i) agrees to be
bound by all of the terms and provisions of the Security Agreement, (ii) hereby,
and thereby, grants a security interest in all assets owned by it which meet the
description of Collateral set forth in the Security Agreement to secure all
Obligations and (iii) agrees and confirms that it and such assets shall be
subject to the terms and provisions of the Security Agreement.
3.2 Except for the specific amendments set forth in Section 3.1 of this
Agreement, nothing herein shall be deemed to be a waiver of any covenant or
agreement in the Security Agreement and the Borrowers and the Loan Parties
hereby agree that all of the covenants and agreements contained in the Security
Agreement are hereby ratified and confirmed in all respects.
Section 4. AMENDMENTS UNDER PLEDGE AGREEMENT
4.1 Water Pik shall be added as a party to the Pledge Agreement and shall
be a "Grantor" as such term is defined in the Pledge Agreement. By its execution
and delivery of this Agreement, (i) Water Pik agrees to be bound by all of the
terms and provisions of the Pledge Agreement, (ii) hereby, and thereby, grants a
security interest in all assets owned by it which meet the description of
Collateral as set forth in the Pledge Agreement to secure all Obligations and
(iii) agrees and confirms that it and such assets shall be subject to the terms
and provisions of the Pledge Agreement.
4.2 Schedule I annexed to the Pledge Agreement shall be deleted in its
entirety and replaced with Schedule I annexed hereto as Annex 2.
4.3 Except for the specific amendments set forth in Section 4.1 and 4.2 of
this Agreement, nothing herein shall be deemed to be a waiver of any covenant or
agreement in the Pledge Agreement and the Borrowers and the Loan Parties hereby
agree that all of the covenants and agreements contained in the Pledge Agreement
are hereby ratified and confirmed in all respects.
Section 5. CONDITIONS PRECEDENT
Sections 1 through 4 of this Agreement shall become effective upon the
execution and delivery of counterparts hereof by the parties listed below and
the fulfillment of the following conditions:
(a) The Borrowers shall deliver to the Agent the results of machinery and
equipment appraisals of the Borrowers' property conducted on an orderly
liquidation value, in form and substance reasonably satisfactory to the Agent.
(b) The Borrowers shall deliver to the Agent the results of appraisals
conducted of the real property and improvements owned in fee by the Borrowers
with respect to
- 6 -
7
which Mortgages have been taken, in each case in compliance with the
requirements of FIRREA and applicable regulations and in form and substance
reasonably satisfactory to the Agent.
(c) The Borrowers shall cause WP International to enter into a Guarantee
of the Obligations in the form annexed hereto as Annex 3.
(d) All representations and warranties contained in this Agreement or
otherwise made in writing to the Agent in connection herewith shall be true and
correct.
(e) No unwaived event has occurred and is continuing which constitutes a
Default or Event of Default under the Credit Agreement.
(f) The Borrowers shall reimburse the Agent for all of its out-of-pocket
expenses, including legal fees, associated with this Agreement, all of which may
be charged to the Borrowers' accounts with the Agent.
(g) The Borrowers shall pay to the Agent certain amendment fees as
separately agreed upon in the Fee Letter Agreement, dated June 25, 2001, between
The Chase Manhattan Bank and the Borrowers.
Section 6. CONDITIONS SUBSEQUENT
6.1 The Borrowers shall either (i) cause Water Pik Technologies Foreign
Sales Corporation ("WPTFS") to enter into a Guarantee of the Obligations,
execute the Security Documents, and comply with Section 6.12 of the Credit
Agreement or (ii) provide assurances satisfactory to the Agent that WPTFS does
not and will not hold any assets other than the bank account identified on Annex
4 and will not accept or receive loans, advances or other extensions of credit
from any of the Borrowers or any of their subsidiaries.
6.2 The failure to comply with Section 6.1 of this Agreement by August 15,
2001, shall constitute an Event of Default under the Credit Agreement.
Section 7. MISCELLANEOUS
7.1 Each of the Borrowers reaffirms and restates the representations and
warranties set forth in Article IV of the Credit Agreement and all such
representations and warranties are true and correct on the date hereof with the
same force and effect as if made on such date, except as they may specifically
refer to an earlier date.
7.2 Except as herein expressly amended or waived, each of the Credit
Agreement, the Security Agreement and the Pledge Agreement are ratified and
confirmed in all respects and shall remain in full force and effect in
accordance with its terms.
7.3 All references to the Credit Agreement, the Security Agreement and the
Pledge Agreement in the Credit Agreement, the Security Documents and the other
documents and instruments delivered pursuant to or in connection therewith shall
mean each of the Credit Agreement, the Security Agreement and the Pledge
Agreement as amended hereby and as the same may in the future be amended,
restated, supplemented or modified from time to time.
- 7 -
8
7.4 This Agreement may be executed by the parties hereto individually or
in combination, in one or more counterparts, each of which shall be an original
and all of which shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page by telecopier shall be effective as
delivery of a manually executed counterpart.
7.5 THIS AGREEMENT IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL
OBLIGATION LAW OF THE STATE OF NEW YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAW PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
- 8 -
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LAARS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President - Finance
WATER PIK, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President - Finance
JANDY INDUSTRIES, INC.,
as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President - Finance
WATERPIK INTERNATIONAL, INC.
as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President - Finance
WATER PIK TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President - Finance
- 9 -
10
THE CHASE MANHATTAN BANK,
as Agent and as a Lender
By: /s/ Xxxxx X. XxXxxxx
-----------------------
Name: Xxxxx X. XxXxxxx
Title: Vice President
BANK ONE, ARIZONA, N.A.,
as a Lender
By: /s/ Xxxxx Xxxxxxxx
-----------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
MELLON BANK, N.A.,
as a Lender
By: /s/ Xxxx Xxxxxxx
-----------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
as a Lender
By: /s/ Xxxxxxx X. Xxxxx
-----------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
- 10 -
11
ANNEX 1
SCHEDULE 4.15
SUBSIDIARIES
Water Pik, Inc., a Delaware corporation
Authorized stock consisting of 1,000 shares of Common Stock, $.01 par value
1,000 shares of Common Stock issued to Water Pik Technologies, Inc.
Laars, Inc., a Delaware corporation
Authorized stock consisting of 1,000 shares of Common Stock, $.01 par value
1,000 shares of Common Stock issued to Water Pik Technologies, Inc.
Jandy Industries, Inc., a California corporation
Authorized stock consisting of:
1,200 shares of Class A Common Stock, $10.00 par value
6,300 shares of Class B Nonvoting Common Stock, $10.00 par value
160 shares of Class A Common Stock issued to Laars, Inc.
840 shares of Class B Nonvoting Common Stock issued to Laars, Inc.
Waterpik International, Inc., a Delaware corporation
Authorized stock consisting of 1,000 shares of Common Stock, $.01 par value
1,000 shares of Common Stock issued to Water Pik, Inc.
- 11 -
12
ANNEX 2
SCHEDULE 1
TO PLEDGE AGREEMENT
Description of Pledged Stock
% of Shares
Issuer Class Par Value Cert No(s). No. of Shares Outstanding
------ ----- --------- ----------- ------------- -----------
Water Pik, Inc. Common $ .01 1 1,000 100%
Laars, Inc. Common $ .01 1 1,000 100%
Jandy Industries, Inc. Class A
Common $10.00 30 160
100%
Jandy Industries, Inc. Class B
Common $10.00 31 840
Waterpik International, Inc. Common $ .01 1 1,000 100% owned by
Water Pik, Inc.
Description of Pledged Debt
Description Maturity Orig.
Obligation Issuer of Obligation Date Principal Amt.
----------------- ------------- -------- --------------
None
- 12 -
13
ANNEX 3
FORM OF GUARANTEE
- 13 -
