Exhibit 10.3
SECOND AMENDMENT AND WAIVER TO
THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Second Amendment and Waiver, dated as of March 28, 2002, to Third Amended
and Restated Revolving Credit Agreement ("this Amendment"), by and among IONICS,
INCORPORATED, a Massachusetts corporation (the "Borrower"), FLEET NATIONAL BANK
and the other lending institutions listed on Schedule 1 to the Credit Agreement
(as hereinafter defined) (the "Banks"), amending certain provisions of the Third
Amended and Restated Revolving Credit Agreement, dated as of June 29, 2001 (as
amended by the First Amendment and Waiver, dated as of December 21, 2001, and as
further amended and in effect from time to time, the "Credit Agreement") by and
among the Borrower, the Banks and FLEET NATIONAL BANK as agent for the Banks (in
such capacity, the "Agent"). Terms not otherwise defined herein which are
defined in the Credit Agreement shall have the same respective meanings herein
as therein.
WHEREAS, the Banks have entered into a letter agreement with the Borrower,
dated as of March 27, 2002, pursuant to which each of the Banks other than Fleet
agreed, upon the request of the Borrower, to terminate its respective Commitment
(the "Commitment Termination Agreement");
WHEREAS, all conditions set forth in the Commitment Termination Agreement
having been satisfied by the Borrower and the Banks as of the date hereof, none
of Bank of America, N.A., JPMorgan Chase Bank and Mellon Bank, N.A. shall
constitute Banks;
WHEREAS, the Borrower and the Banks have agreed to modify and waive certain
terms and conditions of the Credit Agreement as specifically set forth in this
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ss.1. Amendments to Section 1 of the Credit Agreement. Section 1.1 of
the Credit Agreement is hereby amended as follows:
(a) The definition of "Applicable Margin" contained in Section 1.1 of
the Credit Agreement is hereby amended by deleting such definition in its
entirety and restating it as follows:
Applicable Margin: The Applicable Margin for (i) Prime Rate Loans
shall be zero, (ii) LIBOR Rate Loans shall be 1.25%, (iii) the Letter
of Credit Fee shall be 1.25% and (iv) the Commitment Fee Rate shall be
0.25%.
(b) The definition of "Commitment Fee Rate" contained in Section 1.1
of the Credit Agreement is hereby amended by deleting the text "set forth
in the chart" and "under the heading `Commitment Fee Rate'".
(c) The definition of "Permitted Acquisitions" contained in Section
1.1 of the Credit Agreement is hereby amended by deleting each reference to
the amount "$5,000,000" contained in such definition and substituting the
amount "$25,000,000" therefor.
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(d) The definition of "Revolving Credit Loan Maturity Date" contained
in Section 1.1 of the Credit Agreement is hereby amended by deleting such
definition it in its entirety and restating it as follows:
Revolving Credit Loan Maturity Date: March 26, 2003, as the same may
be extended in the sole discretion of the Banks pursuant to ss.2.11 or
such earlier date on which the Revolving Credit Loans may become due
and payable pursuant to the terms hereof.
(e) Section 1.1 of the Credit Agreement is further amended by
inserting the following new definitions in the appropriate alphabetical
order:
Cash Equivalents. As to the Borrower and its Consolidated
Subsidiaries, (a) securities issued or directly and fully guaranteed
or insured by the United States of America and having a maturity of
not more than twelve (12) months from the date of acquisition; (b)
certificates of deposit, time deposits and eurodollar time deposits
with maturities of twelve (12) months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding twelve
(12) months and overnight bank deposits, in each case, (i) with any
Banks or (ii) with any domestic commercial bank organized under the
laws of the United States of America or any state thereof, in each
case having a rating of not less than A or its equivalent by Standard
& Poor's Ratings Group or any successor and having capital and surplus
in excess of $1,000,000,000; (c) repurchase obligations with a term of
not more than seven (7) days for underlying securities of the types
described in clauses (a) and (b) above; and (d) any commercial paper
or finance company paper issued by (i) any Lender or any holding
company controlling any Bank or (ii) any other Person that is rated
not less than "P-1" or "A-1" or their equivalents by ▇▇▇▇▇'▇ Investors
Services, Inc. or Standard & Poor's Ratings Group or their successors.
Consolidated Tangible Net Worth. The excess of Consolidated Total
Assets over Consolidated Total Liabilities, and less the sum of:
(a) the total book value of assets of the Borrower and its
Subsidiaries properly classified as intangible assets under GAAP,
including such items as good will, the purchase price of acquired
assets in excess of the fair market value thereof, trademarks,
trade names, service marks, brand names, copyrights, patents and
licenses, and rights with respect to the foregoing; plus
(b) Investments by the Borrower and its Subsidiaries in any
of their Affiliates and other joint ventures or partnerships;
plus
(c) all amounts representing any write-up in the book value
of any assets of the Borrower or its Subsidiaries resulting from
a revaluation thereof subsequent to the Balance Sheet Date,
excluding adjustments to translate foreign assets and liabilities
for changes in foreign exchange rates made in accordance with
Financial Accounting Standards Board Statement No. 52; plus
(d) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any subscriptions receivable.
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(f) Section 1.1 of the Credit Agreement is further amended
by deleting the definitions of "EBITDA", "Leverage Ratio" and
"Total Funded Indebtedness" in their entirety.
ss.2. Amendments to Section 2 of the Credit Agreement.
(a) Section 2.6.1 of the Credit Agreement is hereby amended by
deleting the first sentence of such ss.2.6.1 in its entirety and restating
it as follows:
The Borrower shall give to the Agent written notice in the form of
Exhibit B hereto (or telephonic notice confirmed in a writing in the
form of Exhibit B hereto) of each Revolving Credit Loan requested
hereunder (a "Loan Request") by no later than 11:00 a.m. (Boston time)
(a)(i) and no less than one (1) Business Day prior to the proposed
Drawdown Date of any Prime Rate Loan or (ii) if the Banks shall
consist of only one (1) Bank at such time, on the day of the proposed
Drawdown Date of any Prime Rate Loan and (b) and no less than three
(3) LIBOR Business Days prior to the proposed Drawdown Date of any
LIBOR Rate Loan.
(b) Section 2.11 of the Credit Agreement is hereby amended by deleting
suchss.2.11 in its entirety and restating it as follows:
2.11. Extension of Revolving Credit Loan Maturity Date. The Borrower
may, provided that no Default or Event of Default has occurred and is
continuing, by written notice to the Agent and the Banks given not
more than 120 days nor less than 90 days prior to the then applicable
Revolving Credit Loan Maturity Date (the "Applicable Maturity Date")
request that the Applicable Maturity Date be extended to the date
which is 364 days after the then Applicable Maturity Date. If the
Banks in their sole discretion consent to the extension on the then
Applicable Maturity Date, the Revolving Credit Loan Maturity Date
shall be extended for 364 days, and the definition of Revolving Credit
Maturity Date shall be deemed to reflect such extension for all
purposes hereof.
(c) Section 2 of the Credit Agreement is further amended, if and so
long as the Banks shall consist of only one (1) Bank, by making the Swing
Line described in ss.2.6.2 of the Credit Agreement and any provisions
related thereto inactive.
ss.3. Amendments to Section 9 of the Credit Agreement.
(a) Section 9.3(i) of the Credit Agreement is hereby amended by
deleting the reference to the amount "$30,000,000" contained in such
ss.9.3(i) and substituting the amount "$50,000,000" therefor.
(b) Section 9.3(j) of the Credit Agreement is hereby amended by
deleting the reference to the amount "$10,000,000" contained in such
ss.9.3(j) and substituting the amount "$30,000,000" therefor.
ss.4. Amendments to Section 10 of the Credit Agreement.
(a) Section 10.1 of the Credit Agreement is hereby amended by deleting
suchss.10.1 in its entirety and restating it as follows:
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10.1 Profitable Operations. The Borrower will not permit Consolidated
Net Income for any fiscal year to be less than $1.00.
(b) Section 10.2 of the Credit Agreement is hereby amended by deleting
suchss.10.2 in its entirety and restating it as follows:
10.2 Minimum Liquidity. The Borrower will not permit the sum of cash
and Cash Equivalents maintained on its books at any time to be less
than $60,000,000.
(c) Section 10.4 of the Credit Agreement is hereby amended by deleting
the reference to the amount "$40,000,000" in the table contained in such
ss.10.4 and substituting the amount "$50,000,000" therefor.
(d) Section 10.5 of the Credit Agreement is hereby amended by deleting
the table and the text following such table set forth in such ss.10.5 and
substituting the following therefor:
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Fiscal Quarters Ratio
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Q2 2002 2.00:1.00
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Q3 2002 and each fiscal quarter 3.00:1.00
thereafter
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Solely for the purposes of this ss.10.5 (a) Reference Period shall
mean (i) for ▇▇ ▇▇▇▇, the period commencing on 01/01/02 and ending on
06/30/02, (ii) for ▇▇ ▇▇▇▇, the period commencing on 01/01/02 and
ending on 09/30/02, and (b) for Q4 2002 and each fiscal quarter
thereafter, Reference Period shall have the meaning set forth in
ss.1.1 for such term. In addition, this covenant shall not be tested
as of 03/31/02.
(e) Section 10 is further amended by adding the following newss.10.6
immediately followingss.10.5:
10.6 Ratio of Total Liabilities to Tangible Net Worth. The Borrower
will not permit the ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth to exceed 0.95:1.00 at any time.
ss.5. Amendment to Schedule I to the Credit Agreement. Schedule I to the
Credit Agreement is hereby amended by deleting such Schedule I and substituting
Schedule I attached hereto therefor.
ss.6. Limited Waiver. The Borrower has informed the Agent and the Banks
that the Borrower has failed to comply with the covenants set forth in
ss.ss.10.2 and 10.5 of the Credit Agreement for the Reference Period ended
12/31/01, and has requested that the Banks waive such non-compliance. As of the
Effective Date, the Banks hereby waive compliance with the provisions of
ss.ss.10.2 and 10.5 of the Credit Agreement solely for the Reference Period
ended 12/31/01, and accordingly the Banks deem such non-compliance to have been
subsequently cured. Nothing contained in this waiver shall be construed to imply
a willingness on the part of the Banks to grant any similar or other future
waivers of any of the terms and conditions of the Credit Agreement or the other
Loan Documents.
ss.7. Conditions to Effectiveness. This Amendment shall be effective as of
March 28, 2002 (the "Effective Date"), subject to the satisfaction of the
following conditions:
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(a) The Borrower, the Banks and the Agent shall have executed and delivered
to the Agent this Amendment.
(b) The Agent shall have received an amendment fee in the amount of
$25,000.
(c) All proceedings in connection with the transactions contemplated by
this Amendment and all documents incident thereto shall be reasonably
satisfactory in substance and form to the Banks and the Agent, and the Agent
shall have received all information and such counterpart originals or certified
or other copies of such documents as the Agent may reasonably request.
(d) The Borrower shall have paid all fees and expenses required to be paid
on or prior to the date hereof.
ss.8. Condition Subsequent. The Borrower shall have delivered to the Agent
no later than May 8, 2002, resolutions of the Board of Directors of each of the
Borrower and its domestic Subsidiaries (other than the Inactive Subsidiaries)
evidencing its authorization of such entity's execution and delivery of this
Amendment and the obligations contemplated therein along with an officer's
certificate with respect thereto. The Borrower hereby agrees with the Agent and
the Banks that failure to provide the aforementioned resolutions on or prior to
the date specified herein shall constitute an Event of Default under the Credit
Agreement.
ss.9. Representations and Warranties. The Borrower hereby repeats, on and
as of the Effective Date, each of the representations and warranties made by it
in ss.7 of the Credit Agreement (except to the extent of changes resulting from
transactions contemplated or permitted by this Amendment, the Credit Agreement
and the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and to the
extent that such representations and warranties relate expressly to an earlier
date), provided, that all references therein to the Credit Agreement shall refer
to such Credit Agreement as amended hereby. In addition, the Borrower hereby
represents and warrants that the execution and delivery by the Borrower and its
Subsidiaries of this Amendment and the performance by the Borrower and its
Subsidiaries of all of its agreements and obligations under the Credit Agreement
as amended hereby are within the corporate or other authority of each of the
Borrower and its Subsidiaries and have been duly authorized by all necessary
corporate or other action on the part of the Borrower and its Subsidiaries.
ss.10. Ratification, Etc. Except as expressly amended hereby, the Credit
Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the other Loan Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Amendment shall be read and construed as a single
agreement. All references in the Credit Agreement or any related agreement or
instrument to the Credit Agreement shall hereafter refer to the Credit Agreement
as amended hereby.
ss.11. No Waiver. Except as set forth in ss.6, nothing contained herein
shall constitute a waiver of, impair or otherwise affect any Obligations, any
other obligation of the Borrower or any rights of the Agent or the Banks
consequent thereon.
ss.12. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
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ss.13. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
a document under seal as of the date first above written.
IONICS, INCORPORATED
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President and Chief Financial Officer
FLEET NATIONAL BANK
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
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RATIFICATION OF GUARANTY
Each of the undersigned Guarantors hereby acknowledges and consents to the
foregoing Amendment as of March 28, 2002, and agrees that the Guaranty to which
such Guarantor is a party remains in full force and effect, and each of the
Guarantors confirms and ratifies all of its obligations thereunder.
AQUA DESIGN, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
FIDELITY PUREWATER, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Title: Treasurer
FIDELITY WATER SYSTEMS, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Title: Treasurer
IONICS KOREA, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary
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IONICS LIFE SCIENCES, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary
IONICS ULTRAPURE WATER CORPORATION
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary
RESOURCES CONSERVATION CO. INTERNATIONAL
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary
SEPARATION TECHNOLOGY INC.
By: /s/Ark ▇. ▇▇▇▇
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Name: Ark ▇. ▇▇▇▇
Title: President
▇▇▇▇▇▇▇ INSTRUMENTS, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary
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SCHEDULE 1
Bank Commitments and Commitment Percentages
-------------------------------- -------------------- ----------------------
Domestic and LIBOR Revolving Credit Revolving Credit
Lending Office Commitment Commitment Percentage
-------------------------------- -------------------- ----------------------
Fleet National Bank $30,000,000 100.00000%
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
-------------------------------- -------------------- ----------------------
TOTAL $30,000,000 100.00000%
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