Exhibit 10(aa)
THIRD AMENDMENT TO 1994 TERM LOAN AGREEMENT
This THIRD AMENDMENT TO 1994 TERM LOAN AGREEMENT ("Amendment"), dated
as of March 31, 1995, is by and among CENTRAL SPRINKLER COMPANY, a Pennsylvania
corporation, as the Company (the "Company"), CENTRAL SPRINKLER CORPORATION, a
Pennsylvania corporation, CENTRAL SPRINK, INC., a California corporation and
CENTRAL CASTINGS CORPORATION, an Alabama corporation, as the guarantors
(collectively the "Guarantors"), and CORESTATES BANK, N.A., a national banking
association, as the lender (the "Bank"), with reference to the following
BACKGROUND:
A. The Company, the Guarantors and the Bank have entered into a Letter
Agreement dated as of April 29, 1994, as amended by an Amendment to 1994 Term
Loan Agreement dated as of June 30, 1994, and a Second Amendment to and Consent
Under 1994 Term Loan Agreement dated as of October 24, 1994 (said Letter
Agreement, as so amended, the "Agreement") pursuant to which the Bank has made a
$10,000,000 term loan to the Company guarantied by each Guarantor.
B. The Company, the Guarantors and the Bank desire to amend
the Agreement all as more particularly hereinafter set forth.
C. All capitalized terms used herein and not otherwise defined herein
shall have the meaning assigned to them in the Agreement.
THEREFORE, in consideration of the premises contained herein and
intending to be legally bound, the Company, the Guarantors, and the Bank agree
as follows:
1. Amendments.
(a) The definition of "Subsidiary" in Section 1.01 of the
Agreement is hereby amended and restated to read in its entirety as follows:
"Subsidiary" means, as to any designated corporation, any
other corporation the shares of stock of which, having ordinary voting power
(other than stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such other corporation, are at the time owned, or the management of which is
otherwise controlled by the designated corporation, directly or indirectly
through one or more intermediaries or both."
(b) The first paragraph of Section 5.07 of the Agreement is
hereby amended and restated in its entirety to read as follows:
"Neither the Company nor any Guarantor will, or will
permit any Subsidiary of the Company or any Subsidiary of any Guarantor to,
incur, create or permit to exist any consolidated Funded Indebtedness, without
the prior written consent of the Bank, except that the Company and the
Guarantors may incur, create or permit to exist the following:"
(c) The first paragraph of Section 5.11 of the Agreement is
hereby amended and restated in its entirety to read as follows:
"Neither the Company nor any Guarantor will, or will
permit any Subsidiary of the Company or any Subsidiary of any Guarantor to,
guarantee or otherwise become liable or responsible for consolidated Funded
Indebtedness or other obligations of any other Person, contingent or otherwise,
without the written consent of the Bank, except that the Company and the
Guarantors may incur, create or permit to exist the following:"
(d) Sections 5.12, 5.13, 5.14 and 5.15 of the Agreement are
hereby amended and restated in their entirety to read as follows:
"5.12. CSC and its consolidated Subsidiaries will
maintain a consolidated Tangible Net Worth of at least
$37,000,000 at March 31, 1995, June 30, 1995 and September 30,
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1995 and $41,000,000 at December 31, 1995 and at the end of
each fiscal quarter thereafter, to be tested in connection
with the delivery of quarterly financial statements pursuant
to Section 5.01.
"5.13. CSC and its consolidated Subsidiaries will
maintain a ratio of consolidated current assets to
consolidated current liabilities not less than 1.3 to 1.0 at
March 31, 1995, and September 30, 1995; 1.5 to 1.0 at December
31, 1995; March 31, 1996, June 30, 1996, and September 30,
1996; and 1.75 to 1.0 at December 31, 1996 and at the end of
each fiscal quarter thereafter, to be tested in connection
with the delivery of quarterly financial statements pursuant
to Section 5.01.
"5.14. CSC and its consolidated Subsidiaries will
maintain a ratio of consolidated Funded Indebtedness, to
consolidated Tangible Net Worth not greater than 1.5 to 1.0 at
March 31, 1995, June 30, 1995, and September 30, 1995; 1.37 to
1.0 at December 31, 1995, March 31, 1996, June 30, 1996 and
September 30, 1996; and 1.2 to 1.0 at December 31, 1996 and at
the end of each fiscal quarter thereafter, to be tested in
connection with the delivery of quarterly financial statements
pursuant to Section 5.01.
"5.15. CSC and its consolidated Subsidiaries will
maintain at all times a ratio of (1) the sum of (a) cash, (b)
Investments and (c) accounts receivable to (2) current
liabilities not less than 0.7 to 1.0 at March 31, 1995, June
30, 1995 and September 30, 1995, and 0.87 to 1.0 at December
31, 1995 at the end of each fiscal quarter thereafter, to be
tested on a quarterly basis in connection with the delivery of
financial statements pursuant to Section 5.01."
(e) In addition to the Funded Indebtedness permitted pursuant
to Section 5.07 of the Agreement, the Bank hereby approves the borrowing by the
Company of $11,750,000 from its affiliate, CSC Finance Company, which is
evidenced by a promissory note, a copy of which is attached hereto as Exhibit
"A" (the "Finance Note"), provided that the indebtedness of the Company under
the Finance Note shall at all times be unsecured and shall be subordinated to
the indebtedness of the Company to the Bank under the Agreement pursuant to a
subordination agreement in the form attached hereto as Exhibit "B" (the
"Subordination Agreement").
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2. Conditions Precedent. The effectiveness of this Amendment and the
amendments and approval contained herein and the Bank's obligations hereunder
are conditioned upon receipt by the Bank of the following prior to or
concurrently with the execution of this Amendment:
(a) the Subordination Agreement duly executed by the
Company;
(b) copies of the resolutions of the Board of Directors of the
Company and each Guarantor, in form and substance satisfactory to the Bank,
authorizing the Company's and each Guarantor's execution and delivery of this
Amendment, the performance of the transactions contemplated hereby and thereby,
and all such other and further actions in connection herewith as may be
necessary and proper, which copies shall be certified as of the date hereof, by
the Company's and each Guarantor's secretary or assistant secretary as being
true, correct and complete;
(c) certificate, as of the date hereof, by the Company's and
each Guarantor's secretary or assistant secretary as to the incumbency and
signatures of the officers signing this Amendment; and
(d) the items required under (b) and (c) above with respect to
the execution of the Subordination Agreement by CSC Finance Company.
3. Representations and Warranties. The Company and the Guarantors
hereby represent and warrant to the Bank that they have taken all corporate
action necessary to authorize the execution, delivery and performance of this
Amendment. This Amendment has been duly executed and constitutes the valid and
legally binding obligation of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its terms. The Company
and the Guarantors hereby ratify and confirm the representations and warranties
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of the Company and the Guarantors set forth in Article 4 of the Agreement as
being true and correct on the date hereof and certify that no Event of Default
or event which with the giving of any required notice or the expiration of any
applicable grace or cure period would become an Event of Default has occurred
and is continuing under the Loan Documents.
4. Ratification. Except as amended by this Amendment, all of the terms
and conditions of the Agreement and all of the other Loan Documents are ratified
and confirmed, and the Agreement and all of the other Loan Documents shall
continue in full force and effect in accordance with the terms thereof.
5. Miscellaneous.
(a) Expenses. The Company agrees to pay all out-of-pocket
costs and expenses of the Bank, including, without limitation, all attorney's
fees and expenses in connection with the negotiation and preparation of this
Amendment and the completion of the transactions contemplated hereby.
(b) Binding Effect. This Amendment shall be binding
upon and shall inure to the benefit of the Bank, the Company and
the Guarantors, and their respective successors and assigns.
(c) Counterparts. This Amendment may be executed in any number
of counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument, but all of such counterparts taken together shall
be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment
to be executed by their duly authorized officers as of the date
first written above.
Attest: CENTRAL SPRINKLER COMPANY
By: /s/Xxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxx
-------------------------- ----------------------------------
Xxxx X. Xxxxxx, Xxxxxx X. Xxxxx,
Secretary Vice President Finance
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CENTRAL SPRINKLER CORPORATION
By: /s/Xxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxx
-------------------------- ----------------------------------
Xxxx X. Xxxxxx, Xxxxxx X. Xxxxx,
Secretary Vice President Finance
CENTRAL SPRINK INC.
By: /s/Xxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxx
-------------------------- ----------------------------------
Xxxx X. Xxxxxx, Xxxxxx X. Xxxxx,
Secretary Vice President Finance
CENTRAL CASTINGS CORPORATION
By: /s/Xxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxx
-------------------------- ----------------------------------
Xxxx X. Xxxxxx, Xxxxxx X. Xxxxx,
Secretary Vice President Finance
CORESTATES BANK, N.A.
By: /s/Xxxx X. Xxxxxxxx
----------------------------------
Xxxx X. Xxxxxxxx,
Vice President
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SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT, dated as of March 31, 1995, is among
CENTRAL SPRINKLER COMPANY, a Pennsylvania corporation (the "Borrower"),
CORESTATES BANK, N.A., a national banking association (the "Bank"), and CSC
FINANCE COMPANY, a Delaware corporation ("Subordinated Creditor").
BACKGROUND
WHEREAS, the Bank and the Borrower are parties to a Letter Agreement,
dated as of April 29, 1994 (together with all amendments and modifications
thereto, the "Loan Agreement"), providing, subject to the terms and conditions
thereof, for a loan made by the Bank to the Borrower in the amount of
$10,000,000 (the "Loan"), which indebtedness is further evidenced by a Term Note
in the principal amount of $10,000,000 dated April 29, 1994 (the "Note"); and
WHEREAS, except as otherwise herein expressly provided, terms defined
in the Note and the Loan Agreement and used herein shall have the same meaning
when used herein; and
WHEREAS, the Bank has agreed to enter into that certain amendment to
the Loan Agreement dated as of the date hereof and to continue the extension of
credit provided for in the Loan Agreement, and the Subordinated Creditor has
agreed as required by the Loan Agreement to subordinate the Subordinated Debt to
the Bank Debt (as each of such terms is hereinafter defined) in the manner and
to the extent hereinafter provided.
NOW, THEREFORE, incorporating the foregoing by reference, and for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Subordination. The Subordinated Creditor hereby agrees that, except
as and to the extent hereinafter provided, all Subordinated Debt is and shall be
subordinate and subject in right of payment to the prior payment in full of the
following obligations to the Bank (all such obligations to the Bank being
referred to herein as the "Bank Debt"): (i) the Loan and other obligations of
the Borrower to the Bank under the Loan Agreement and the Note, and (ii) all
reimbursement obligations of Central Castings Corporation, a wholly-owned
subsidiary of the Borrower, and the Borrower, with respect to any letter of
credit which may be issued by the Bank to support a bond issue, including,
without limitation, all obligations of the Borrower or Central Castings
Corporation in respect of interest, fees and/or expenses accruing before or
after the commencement of any bankruptcy, insolvency, or similar proceedings
with respect to the Borrower or Central Castings Corporation. The Subordinated
Creditor further agrees that it will not ask, demand, xxx for, take or receive
from the Borrower, or from any guarantor or surety of the Subordinated Debt or
any portion thereof, by set-off or in any other manner, payment of, and the
Borrower hereby agrees that it will not pay or give, the whole or any part of
the Subordinated Debt, or any security therefor, unless or until all the Bank
Debt shall have been fully paid. The Subordinated Creditor hereby directs the
Borrower to, and the Borrower agrees that it will, make such prior payment of
the Bank Debt to Bank. As used herein, "Subordinated Debt" shall mean all
obligations for borrowed money of the Borrower or any subsidiary or affiliate
thereof to the Subordinated Creditor, whether now existing or hereafter arising,
including without limitation, all such obligations in respect of (i) the note
dated December 21, 1994 payable by the Borrower to the Subordinated Creditor in
the amount of $11,750,000 and any documents in connection therewith between the
Borrower and the Subordinated Creditor (the "Subordinated Note"); (ii) interest
accruing on any such obligations before or after the commencement of any
bankruptcy, insolvency, or similar proceeding with respect to the Borrower. The
obligations of the Borrower to the Subordinated Creditor shall remain
Subordinated Debt notwithstanding any increase or decrease in the Bank Debt.
Subordinated Debt shall include any obligations of the Borrower to the
Subordinated Creditor which are modifications, renewals or refinancings of
obligations which constitute Subordinated Debt.
2. Payments Permitted on Subordinated Debt. Anything in this
Subordination Agreement to the contrary notwithstanding, the Borrower may make
the following payments on the Subordinated Note: regularly scheduled payments of
interest not in excess of the rate presently provided for in the Subordinated
Note so long as no Event of Default, as defined in the Note or the Loan
Agreement, has occurred, will occur as a result of such payment of interest, or
will occur with the passage of time or giving of notice or both.
Except as provided in this Paragraph 2, the Borrower shall
make no other or additional payments on the Subordinated Debt.
3. Liens and Security Interests. The Borrower and the Subordinated
Creditor represent, warrant and covenant that the Subordinated Debt is unsecured
and shall at all times remain unsecured.
4. Distribution. In the furtherance of, and to make effective, the
subordination provided for herein, the Subordinated Creditor further agrees as
follows:
(a) In the event of any distribution, division, or
application, partial or complete, voluntary or involuntary, by operation of
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law or otherwise, of all or any part of the assets of the Borrower or the
proceeds thereof, to creditors of the Borrower, or upon any indebtedness of the
Borrower, by reason of the liquidation, dissolution or other winding up, partial
or complete, of the Borrower or its business, or any sale, receivership,
insolvency or bankruptcy proceedings, or assignment for the benefit of
creditors, or any proceeding by or against the Borrower for any relief under any
bankruptcy or insolvency law or laws related to the relief of debtors, the
adjustment of indebtedness, arrangements, reorganizations, compositions, or
extensions, then and in any such event:
(1) Any payment or distribution of any kind or character,
whether in cash, securities or any other property which but for this
Subordination Agreement would be payable or deliverable upon or with respect to
any or all of the Subordinated Debt, shall instead be paid or delivered directly
to Bank for application on the Bank Debt, whether then due or not due, until the
Bank Debt shall have first been fully paid and satisfied; and
(2) The Subordinated Creditor hereby irrevocably authorizes
and empowers Bank to take any and all actions necessary or appropriate, in its
name or in the name of the Subordinated Creditor, to enforce any and all claims
upon or with respect to the Subordinated Debt, including without limitation,
voting claims and filing appropriate proof of claims, and to demand, xxx for,
collect and receive any and all payments or distributions that may be payable or
deliverable at any time upon or with respect to the Subordinated Debt.
Notwithstanding the foregoing, this provision shall not serve to impose any
affirmative obligation on the part of the Bank or its successors and assigns to
take any action or pursue any claim on behalf of the Subordinated Creditor.
Subordinated Creditor shall not attempt to hold the Bank liable and hereby
waives any claims or cause of action it may otherwise have against the Bank as a
result of any action taken or not taken by the Bank to enforce any and all
claims in respect of the Subordinated Debt.
(b) Should any payment not permitted under Section 2 hereof or
distribution of security or proceeds of any security be received by the
Subordinated Creditor upon or in respect of the Subordinated Debt prior to the
payment in full of the Bank Debt, the Subordinated Creditor will forthwith
deliver the same to Bank in precisely the form received (except for the
endorsement or assignment of the Subordinated Creditor where necessary) for
application on the Bank Debt, whether then due or not due, and, until so
delivered, the same shall be held in trust by the Subordinated Creditor as
property of Bank. In the event of the failure of the Subordinated Creditor to
make any such endorsement or assignment, Bank, or any of its officers or
employees, are hereby irrevocably appointed as attorney-in-fact for Subordinated
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Creditor and is authorized to make such endorsement or assignment on behalf of
Subordinated Creditor.
(c) The Subordinated Creditor agrees that it will not
transfer, assign, pledge or encumber the Subordinated Debt or any part thereof
or any instrument evidencing the same unless such instruments evidencing the
same and the instrument of assignment specifically provide that the holder or
assignee takes the Subordinated Debt subject to the provisions of this
Subordination Agreement.
5. Continuing Subordination, etc. The subordination effected by this
Subordination Agreement is a continuing subordination, and the Subordinated
Creditor hereby agrees that at any time and from time to time, without notice to
and without impairing or affecting the subordination provisions of this
Subordination Agreement or the obligations of the Subordinated Creditor
hereunder:
(a) The time for the Borrower's performance of or compliance
with any of its obligations, covenants or agreements contained in the Note, the
Loan Agreement and any other documents provided for thereby may be extended or
such performance or compliance may be waived by Bank;
(b) Any of the acts mentioned in the note, the Loan Agreement
and any other documents provided for thereby may be done;
(c) The Note, the Loan Agreement and any other documents
provided for thereby may be amended for the purpose of adding any provisions
thereto or changing in any manner the rights of Bank or the Borrower thereunder;
(d) Payment of the Bank Debt or any portion thereof may be
extended or the Note may be renewed in whole or in part; and
(e) The maturity of any of the Bank Debt may be accelerated,
and any collateral security, guarantee or surety therefor may be exchanged,
sold, surrendered, released, modified or otherwise dealt with in accordance with
the terms of any present or future agreement between the Borrower or any
guarantor or surety and Bank, including any agreement permitting the Bank to
take unilateral action with respect thereto; and
(f) The amount of the Bank Debt to which the Subordinated Debt
is subordinated may be increased.
6. Waiver of Notice. The Subordinated Creditor hereby unconditionally
waives notice of the incurring of the Bank Debt or any part thereof in reliance
by the Bank upon the subordination of the Subordinated Debt to the Bank Debt.
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7. Representations and Warranties. The Subordinated Creditor hereby
represents and warrants that: (i) it has the necessary power and capacity to
make and perform this Subordination Agreement and such making and performance
have been duly authorized by all necessary action on the part of the
Subordinated Creditor; (ii) the making and performance by the Subordinated
Creditor of this Subordination Agreement does not and will not violate any
provision of law or regulation or result in the breach of, or constitute a
default or require any consent under, or result in the creation of any lien,
charge or encumbrance upon any of its properties, revenues or assets pursuant to
any indenture or other agreement or instrument to which it is a party or by
which any of its properties may be bound; and (iii) this Subordination Agreement
is the legal, valid and binding obligation of the Subordinated Creditor,
enforceable against the Subordinated Creditor in accordance with its terms.
8. Default under Agreement. In the event of a breach of this Agreement
by the Borrower or the Subordinated Creditor, the Bank, at its option, may
accelerate the maturity of any or all of the Bank Debt.
9. No Waiver and Counterparts.
(a) No failure on the part of Bank to exercise, no delay in
exercising, and no course of dealing with respect to, any right or remedy
hereunder will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right or remedy. This Subordination
Agreement may not be amended or modified except by written agreement of the
Subordinated Creditor, the Borrower and the Bank. No consent or waiver hereunder
shall be valid unless in writing and signed by Bank.
(b) This Subordination Agreement may be executed in any number
of identical counterparts each of which, when executed by one of the parties
hereto, shall be considered to be an original.
10. Successors and Assigns. This Subordination Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs, executors,
administrators, successors and assigns.
11. Governing Law. This Subordination Agreement shall be construed in
accordance with and governed by the internal laws of the Commonwealth of
Pennsylvania.
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12. Entire Agreement. This Subordination Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and superseded all prior and contemporary agreements, commitments and
understandings between the parties with respect to the subject matter hereof.
13. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceabiality of any other
provision.
14. Notices. Every notice and communication under this Agreement shall
be in writing and shall be given by either (i) hand-delivery, (ii) first class
mail (postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Subordinated Creditor:
CSC Finance Company
0000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
FAX: 000-000-0000
If to the Borrower:
Central Sprinkler Company
000 X. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
FAX: 000-000-0000
If to the Bank:
CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Vice President
F.C. 3-90-1-1
FAX: 000-000-0000
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Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when received. Notice by
overnight courier shall be deemed to have been given and received on the date
scheduled for delivery. Notice by mail shall be deemed to have been given and
received three (3) calendar days after the date first deposited in the United
States Mail. Notice by hand delivery shall be deemed to have been given and
received upon delivery.
A party may change its address by giving written notice to the other
parties as specified herein.
IN WITNESS WHEREOF, this Subordination Agreement has been duly executed
as of the day and year first above written.
CSC FINANCE COMPANY, as
Subordinated Creditor
By /s/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx,
Vice President
CENTRAL SPRINKLER COMPANY, as
Borrower
By /s/Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx,
Vice President
CORESTATES BANK, N.A.
By /s/Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx,
Vice President
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