EX-10.3 4 tm2037032d10_ex10-3.htm EXHIBIT 10.3

 

Exhibit 10.3

 

EXECUTION VERSION

 

AMENDMENT NO. 2 TO FIRST LIEN CREDIT AGREEMENT

 

This AMENDMENT NO. 2 TO FIRST LIEN CREDIT AGREEMENT, dated as of October 28, 2020 (this “Amendment”), is entered into by and among Hayward Industries, Inc., a New Jersey corporation (the “Borrower”), Bank of America, N.A., as administrative agent and collateral agent (in such capacities, the “Administrative Agent”), and the undersigned 2020 Incremental Term Lenders (as defined below).

 

PRELIMINARY STATEMENTS:

 

WHEREAS, the Borrower, Hayward Intermediate, Inc., a Delaware corporation (“Holdings”), the Administrative Agent and the lenders from time to time party thereto are party to that certain First Lien Credit Agreement, dated as of August 4, 2017 (as amended by that certain Amendment No. 1 to First Lien Credit Agreement, dated as of September 28, 2018, and as further amended, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”; capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement);

 

WHEREAS, (i) pursuant to Section 2.22(a) of the Credit Agreement, the Borrower has delivered a written request for a new Class of Term Loans to the Administrative Agent in an aggregate principal amount of $150,000,000, (ii) the Borrower has requested that each financial institution signatory hereto as an Additional Lender (in such capacity, each a “2020 Incremental Term Lender”) provide, pursuant to Section 2.22(a) and clause (c) of the definition of “Incremental Cap”, an Additional Term Commitment (the “2020 Incremental Term Loan Commitment”) under the Amended Credit Agreement (as defined below), and make Incremental Term Loans (with respect to each 2020 Incremental Term Lender, its “2020 Incremental Term Loans”) in an aggregate principal amount equal to $150,000,000 on the Second Amendment Effective Date (as defined below), the proceeds of which will be used by the Borrower, directly or indirectly, (a) together with Cash on the Borrower’s balance sheet, to fund a portion of a one-time Cash dividend substantially concurrently with the Second Amendment Effective Date (as defined below) to the Parent Company of Holdings in the aggregate amount of $275,000,000 (the “2020 Dividend”), (b) for working capital and general corporate purposes and (c) without duplication, to pay fees, costs and expenses in connection with the 2020 Dividend, the 2020 Incremental Term Loans, this Amendment, and the other transactions contemplated by this Amendment, and (iii) each 2020 Incremental Term Lender is prepared to provide its 2020 Incremental Term Loan Commitment and to make its 2020 Incremental Term Loans pursuant to the Amended Credit Agreement in the principal amount set forth opposite such 2020 Incremental Term Lender’s name under the heading “2020 Incremental Term Loan Commitments” on Schedule 1.01(b) to the Credit Agreement (as amended by this Amendment, the “Amended Credit Agreement”), in each case subject to the other terms and conditions set forth herein;

 

WHEREAS, the Borrower, the 2020 Incremental Term Lenders and the Administrative Agent are entering into this Amendment in order to evidence such 2020 Incremental Term Loan Commitments and such 2020 Incremental Term Loans in accordance with Section 2.22(e) of the Credit Agreement;

 

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WHEREAS, in furtherance of the foregoing, the Borrower, the undersigned 2020 Incremental Term Lenders and the Administrative Agent (pursuant to its authority under Section 2.22(e) and 9.02(d)(ii) of the Credit Agreement) have agreed to amend the Credit Agreement pursuant to Section 2.22(e) and 9.02(d)(ii) of the Credit Agreement as hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto hereby agree as follows:

 

Section 1. Amendments to Credit Agreement. The Credit Agreement is, effective as of the Second Amendment Effective Date and subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, hereby amended as follows:

 

(a)               The following shall be added to the Credit Agreement as Schedule 1.01(b) thereof:

 

2020 Incremental Term Loan Commitments:

 

Lender  Pro Rata Share   2020 Incremental
Term Loan
Commitment		 
Bank of America, N.A.   100.00%  $150,000,000 
Total   100.00%  $150,000,000 

 

(b)               Section 1.01 of the Credit Agreement is hereby amended by adding the following new definitions thereto in the proper alphabetical order:

 

“2020 Incremental Term Lender” means, at any time, any Lender that has a 2020 Incremental Term Loan Commitment or a 2020 Incremental Term Loan at such time.

 

“2020 Incremental Term Loan Commitment” means, as to each 2020 Incremental Term Lender, its obligation to make a 2020 Incremental Term Loan to the Borrower on the Second Amendment Effective Date in an aggregate amount not to exceed the amount specified opposite such 2020 Incremental Term Lender’s name on Schedule 1.01(b) under the caption “2020 Incremental Term Loan Commitment”.

 

“2020 Incremental Term Loan Maturity Date” means August 4, 2026. “2020 Incremental Term Loans” means the Term Loans made by each 2020 Incremental Term Lender on the Second Amendment Effective Date to the Borrower pursuant to Section 2.01(b).

 

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“Second Amendment” means that certain Amendment No. 2 to First Lien Credit Agreement, dated as of October 28, 2020, among the Borrower, the Administrative Agent and the 2020 Incremental Term Lenders party thereto.

 

“Second Amendment Effective Date” means October 28, 2020.

 

(c)               The definition of the term “Applicable Rate” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Applicable Rate” means, for any day, with respect to (x) any Initial Term Loans (i) that are LIBO Rate Loans, 3.50% per annum and (ii) that are ABR Loans, 2.50% per annum and (y) any 2020 Incremental Term Loans (i) that are LIBO Rate Loans, 3.75% per annum and (ii) that are ABR Loans, 2.75% per annum.

 

(d)               The definition of the term “First Priority Secured Obligations” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“First Priority Secured Obligations” means the Secured Obligations in respect of the Initial Term Loans, the 2020 Incremental Term Loans and any other Credit Facilities secured by the Collateral on a pari passu basis with the Initial Term Loans (as incurred and secured on the Closing Date) or the 2020 Incremental Term Loans (as incurred and secured on the Second Amendment Effective Date), as applicable.

 

(e)               The definition of the term “LIBO Rate” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“LIBO Rate” means, the Published LIBO Rate, as adjusted to reflect applicable reserves prescribed by governmental authorities; provided that, in respect of the Initial Term Loans, in no event shall the LIBO Rate be less than 0.00% per annum; provided further that, in respect of the 2020 Incremental Term Loans, in no event shall the LIBO Rate be less than 0.75% per annum.

 

(f)                The definition of the term “Maturity Date” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Maturity Date” means (a) with respect to the Initial Term Loans, the Initial Term Loan Maturity Date, (b) as to any Replacement Term Loans incurred pursuant to Section 9.02(c), the final maturity date for such Replacement Term Loan as set forth in the applicable Refinancing Amendment, (c) as to any Replacement Revolving Facility established pursuant to Section 9.02(c), the final maturity date for such Replacement Revolving Facility as set forth in the applicable Refinancing Amendment, (d) with respect to any Incremental Term Loans, the final maturity date set forth in the applicable documentation with respect thereto, (e) with respect to any Incremental Revolving Facility, the final maturity date set forth in the applicable documentation with respect thereto, (f) with respect to the 2020 Incremental Term Loans, the 2020 Incremental Term Loan Maturity Date and (g) with respect to any other Loans, the final maturity date for such Loans as set forth in the applicable Credit Facility.

 

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(g)               The definition of the term “Repricing Transaction” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Repricing Transaction” means any of the following, but solely to the extent effected and consummated for the primary purpose of reducing the All-In Yield of the Initial Term Loans or the 2020 Incremental Term Loans, as applicable: (a) the prepayment, repayment, refinancing, substitution or replacement of all or a portion of the Initial Term Loans or 2020 Incremental Term Loans substantially concurrently with the incurrence by any Loan Party of any term loans (including any Replacement Term Loans) pari passu in right of payment with the existing Initial Term Loans or 2020 Incremental Term Loans being so prepaid, repaid, refinanced, substituted or replaced in right of payment and secured by a Lien on the Collateral on a pari passu basis with the Liens securing such Initial Term Loans or such 2020 Incremental Term Loans, having an All-In Yield that is less than the effective All-In Yield applicable to the Initial Term Loans or 2020 Incremental Term Loans so prepaid, repaid, refinanced, substituted or replaced, and (b) any amendment, waiver or other modification to this Agreement that would have the effect of reducing the All-In Yield of the Initial Term Loans or 2020 Incremental Term Loans in lieu of a transaction described in clause (a); provided, that the determinations of All-In Yield for any Repricing Transaction shall be made in a manner consistent with generally accepted financial practices and reasonably determined by the Administrative Agent, and in any event consistent with the second proviso to Section 2.22(a)(v)) and shall disregard any fluctuation in any “base” or reference rate; provided, further, that in none of the events in the preceding clauses (a) and (b) shall constitute a Repricing Transaction if effected or consummated in connection with a Change of Control, Qualifying IPO or Transformational Event. Any determination by the Administrative Agent and the Borrower contemplated by preceding clauses (a) and (b) shall be conclusive and binding on all Lenders, and the Administrative Agent shall have no liability to any Person with respect to such determination absent bad faith, gross negligence or willful misconduct.

 

(h)               The definition of the term “Second Lien Facility” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Second Lien Facility” means the credit facility governed by the Second Lien Credit Agreement and one or more debt facilities or other financing arrangements (including indentures) providing for loans, notes or other long-term indebtedness that replace or refinance such credit facility, including any such replacement or refinancing facility or indenture that increases or decreases the amount permitted to be borrowed thereunder or alters the maturity thereof and whether by the same or any other agent, lender or group of lenders, and any amendments, supplements, modifications, extensions, renewals, restatements, amendments and restatements or refundings thereof or any such indentures or credit facilities that replace or refinance such credit facility (or any subsequent replacement thereof), in each case to the extent permitted pursuant to Section 6.01(p) (or any other provision in Section 6.01, so long as, if applicable, any corresponding Lien is (x) junior to the Lien securing the Initial Term Loans and the 2020 Incremental Term Loans and (y) permitted by Section 6.02).

 

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(i)                 The definition of the term “Term Loan” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Term Loan” means the Initial Term Loans, any Additional Term Loans (including, for the avoidance of doubt, the 2020 Incremental Term Loans) and any term loan under any other Credit Facility.

 

(j)                 Section 2.01 of the Credit Agreement is hereby amended by adding the following sub-clause (c):

 

(c)       Subject to the terms and conditions set forth herein, each 2020 Incremental Term Lender severally, and not jointly, agrees to make 2020 Incremental Term Loans to the Borrower on the Second Amendment Effective Date in Dollars in a principal amount not to exceed its 2020 Incremental Term Loan Commitment.

 

(k)               Section 2.09 of the Credit Agreement is hereby amended by adding the following sentence immediately after the second sentence thereof:

 

Unless previously terminated, the 2020 Incremental Term Loan Commitments shall automatically terminate upon the making of the 2020 Incremental Term Loans on the Second Amendment Effective Date.

 

(l)                 Section 2.10(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(a)       (X) The Borrower hereby unconditionally promises to repay Initial Term Loans to the Administrative Agent for the account of each Term Lender (i) commencing December 31, 2017, on the last Business Day of each March, June, September and December on or prior to the First Amendment Effective Date (each such date being referred to as a “Pre-Amendment Loan Installment Date”), in each case in an amount equal to 0.25% of the original principal amount of the Initial Term Loans made to the Borrower on the Closing Date, (ii) commencing December 31, 2018, on the last Business Day of each March, June, September and December prior to the Initial Term Loan Maturity Date (together with each Pre-Amendment Loan Installment Date, each a “Loan Installment Date”), in each case in an amount equal to the First Amendment Amortization Percentage of the aggregate principal amount of all Initial Term Loans outstanding on the First Amendment Effective Date (after giving effect to the 2018 Incremental Term Loans made pursuant to the First Amendment) (as such payments, in the case of clause (i) and (ii), may be reduced from time to time as a result of the application of prepayments in accordance with Section 2.11 and repurchases in accordance with Section 9.05(h) or increased as a result of any increase in the amount of such Initial Term Loans pursuant to Section 2.22(a)), and (iii) on the Initial Term Loan Maturity Date, in an amount equal to the remainder of the principal amount of the Initial Term Loans outstanding on such date, together in each case with accrued and unpaid interest on the principal amount to be paid to, but excluding, the date of such payment.

 

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(Y) The Borrower hereby unconditionally promises to repay 2020 Incremental Term Loans to the Administrative Agent for the account of each 2020 Incremental Term Lender (i) commencing March 31, 2021, on the last Business Day of each March, June, September and December prior to the 2020 Incremental Term Loan Maturity Date, in each case in an amount equal to the 0.25% of the aggregate principal amount of all 2020 Incremental Term Loans outstanding on the Second Amendment Effective Date (as such payments may be reduced from time to time as a result of the application of prepayments in accordance with Section 2.11 and repurchases in accordance with Section 9.05(h) or increased as a result of any increase in the amount of such 2020 Incremental Term Loans pursuant to Section 2.22(a)), and (ii) on the 2020 Incremental Term Loan Maturity Date, in an amount equal to the remainder of the principal amount of the 2020 Incremental Term Loans outstanding on such date, together in each case with accrued and unpaid interest on the principal amount to be paid to, but excluding, the date of such payment.

 

(m)             Section 2.11(b)(ii) of the Credit Agreement is hereby amended by replacing the last sentence thereof in its entirety with the following sentence:

 

Notwithstanding anything to the contrary herein or in any other Loan Document, the Net Proceeds of any Disposition of any ABL US Priority Collateral shall not be required to be applied to the prepayment of the Term Loans hereunder.

 

(n)               Section 2.11(b)(vi) of the Credit Agreement is hereby amended by adding the following sentence at the end thereof:

 

Any prepayment of 2020 Incremental Term Loans made on or prior to the date that is six months after the Second Amendment Effective Date pursuant to Section 2.11(b)(iii) as part of a Repricing Transaction shall be accompanied by the fee set forth in Section 2.12(e).

 

(o)               Section 2.12 of the Credit Agreement is hereby amended by inserting the following new subsection (e) at the end thereof:

 

(e)       In the event that, on or prior to the date that is six months after the Second Amendment Effective Date, the Borrower (x) prepays, repays, refinances, substitutes or replaces any 2020 Incremental Term Loans in connection with a Repricing Transaction (including, for the avoidance of doubt, any prepayment made pursuant to Section 2.11(b)(iii) that constitutes a Repricing Transaction), or (y) effects any amendment, modification or waiver of, or consent under, this Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable 2020 Incremental Term Lenders, (I) in the case of clause (x), a premium of 1.00% of the aggregate principal amount of the 2020 Incremental Term Loans so prepaid, repaid, refinanced, substituted or replaced and (II) in the case of clause (y), a fee equal to 1.00% of the aggregate principal amount of the 2020 Incremental Term Loans that are the subject of such Repricing Transaction outstanding immediately prior to such amendment. All such amounts shall be due and payable on the date of effectiveness of such Repricing Transaction.

 

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(p)               Section 5.11 of the Credit Agreement is hereby amended by replacing the first sentence thereof in its entirety with the following sentence:

 

The Borrower shall (a) use the proceeds of the Initial Term Loans made to the Borrower on the Closing Date solely to finance a portion of the Transactions (including working capital and/or purchase price adjustments and the payment of Transaction Costs), (b) notwithstanding anything to the contrary in Section 2.22(a)(xii), use the proceeds of the 2018 Incremental Term Loans made to the Borrower on the First Amendment Effective Date solely to (i) replenish cash on the Borrower’s balance sheet and/or prepay Revolving Loans (as defined in the ABL Credit Agreement) in an aggregate amount no greater than the consideration paid under the Paramount Acquisition Agreement to consummate the Paramount Acquisition and to pay fees, costs and expenses in connection therewith, (ii) prepay term loans outstanding under the Second Lien Facility on the First Amendment Effective Date in an aggregate principal amount of approximately $80,000,000 (the “2018 Second Lien Prepayment”) and (iii) without duplication, pay fees, costs and expenses in connection with the 2018 Incremental Term Loans, the First Amendment, the 2018 Second Lien Prepayment and the other transactions contemplated by the First Amendment and (c) use the proceeds of the 2020 Incremental Term Loans made to the Borrower on the Second Amendment Effective Date solely to (i) together with Cash on the balance sheet, fund a portion of a one-time Cash dividend substantially concurrently with the Second Amendment Effective Date to the Parent Company of Holdings in the aggregate amount of $275,000,000 (the “2020 Dividend”), (ii) for general corporate and working capital purposes and (iii) without duplication, pay fees, costs and expenses in connection with the 2020 Dividend, the 2020 Incremental Term Loans, the Second Amendment, and the other transactions contemplated by the Second Amendment.

 

(q)               Section 6.02(t) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(t)       Liens securing (i) Indebtedness (and related obligations) incurred pursuant to Section 6.01(x); provided that such Liens are junior to the Lien securing the Initial Term Loans and 2020 Incremental Term Loans pursuant to an Acceptable Intercreditor Agreement and (ii) Indebtedness (and related obligations) incurred pursuant to Section 6.01(aa), subject, if applicable, to an Acceptable Intercreditor Agreement;

 

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Section 2. The 2020 Incremental Term Loan Commitment and the 2020 Incremental Term Loans.

 

(a)              In accordance with Section 2.22 of the Credit Agreement, and subject to the satisfaction of the conditions set forth in Section 4 hereof, on and as of the Second Amendment Effective Date, each 2020 Incremental Term Lender hereby agrees that such 2020 Incremental Term Lender (i) shall have, as contemplated by this Amendment and the Amended Credit Agreement, a 2020 Incremental Term Loan Commitment under the Amended Credit Agreement in an amount equal to the amount set forth opposite such 2020 Incremental Term Lender’s name under the heading “2020 Incremental Term Loan Commitments” on Schedule 1.01(b) to the Amended Credit Agreement, (ii) shall make 2020 Incremental Term Loans to the Borrower pursuant to Section 2.01(c) of the Amended Credit Agreement on the Second Amendment Effective Date in a principal amount not to exceed its 2020 Incremental Term Loan Commitment under the Amendment Credit Agreement, and (iii) shall be deemed to be, and shall become, a “2020 Incremental Term Lender”, an “Additional Lender”, a “Term Lender”, a “Lender” and a “Secured Party” for all purposes of, and subject to all the obligations of a “2020 Incremental Term Lender”, an “Additional Lender”, a “Term Lender”, a “Lender” and a “Secured Party” under, the Amended Credit Agreement and the other Loan Documents.

 

(b)              The Borrower and the Administrative Agent hereby agree that from and after the Second Amendment Effective Date, (i) each 2020 Incremental Term Lender shall be deemed to be, and shall become, a “2020 Incremental Term Lender”, an “Additional Lender”, a “Term Lender”, a “Lender” and a “Secured Party” for all purposes of, and with all the rights and remedies of a “2020 Incremental Term Lender”, an “Additional Lender”, a “Term Lender”, a “Lender” and a “Secured Party” under, the Amended Credit Agreement and the other Loan Documents and (ii) the 2020 Incremental Term Loans shall constitute “Loans”, “Term Loans”, “Additional Term Loans” and “Incremental Term Loans”, for all purposes of the Amended Credit Agreement and the other Loan Documents.

 

(c)              The Borrower hereby designates that the 2020 Incremental Term Loans are being incurred in reliance on clause (c) of the definition of “Incremental Cap” in the Credit Agreement.

 

(d)              The 2020 Incremental Term Loans shall (i) constitute an Incremental Term Facility and a new Class of Term Loans, (ii) be secured on a pari passu basis by the Liens granted to the Administrative Agent for the benefit of the Secured Parties under the Collateral Documents and (iii) be guaranteed in the same manner and to the same extent by the Loan Parties that guarantee the Obligations.

 

(e)              The 2020 Incremental Term Loans shall not accrue interest for any period prior to the funding thereof on the Second Amendment Effective Date, and the Borrower shall not be required to pay interest on the 2020 Incremental Term Loans pursuant to Section 2.13 of the Credit Agreement for any period prior to the Second Amendment Effective Date.

 

Section 3. Reference to and Effect on the Loan Documents. On and after the Second Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the “Credit Agreement”, shall mean and be a reference to the Amended Credit Agreement, and any reference to “Obligations” shall mean and be a reference to the “Obligations” under the Amended Credit Agreement.

 

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(a)              On and after the Second Amendment Effective Date, the Credit Agreement, as specifically amended by this Amendment, and the other Loan Documents are, and shall continue to be, in full force and effect, and are hereby in all respects ratified and confirmed.

 

(b)              From and after the Second Amendment Effective Date, this Amendment shall be deemed a Loan Document for all purposes under the Amended Credit Agreement and the other Loan Documents.

 

(c)              The parties hereto acknowledge and agree that the amendment of the Credit Agreement pursuant to this Amendment and all other Loan Documents amended and/or executed and delivered in connection herewith shall not constitute a novation of the Credit Agreement and the other Loan Documents as in effect prior to the Second Amendment Effective Date.

 

Section 4. Conditions of Effectiveness. The obligations of the 2020 Incremental Term Lenders to make 2020 Incremental Term Loans under the Amended Credit Agreement, and the amendments to the Credit Agreement contained in Section 1 hereof, shall become effective as of the first date (the “Second Amendment Effective Date”) on which the following conditions shall have been satisfied (or waived by the 2020 Incremental Term Lenders):

 

(a)              The Administrative Agent and the 2020 Incremental Term Lenders shall have received counterparts of (i) this Amendment executed by the Borrower, the Administrative Agent and the 2020 Incremental Term Lenders and (ii) the Guarantor Consent and Reaffirmation attached hereto as Exhibit A (the “Guarantor Consent”) executed by Holdings and each Subsidiary Guarantor (collectively, the “Guarantors” and each, a “Guarantor”);

 

(b)              The Administrative Agent on behalf of itself and the 2020 Incremental Term Lenders shall have received a customary legal opinion from (i) Ropes & Gray LLP, counsel to the Loan Parties and (ii) each local counsel to the Loan Parties listed on Schedule 4(b) to this Amendment;

 

(c)              The Administrative Agent on behalf of itself and the 2020 Incremental Term Lenders shall have received, with respect to each Loan Party, certificates of good standing from the secretary of state of the state of organization of each Loan Party (to the extent such concept exists in such jurisdiction), customary certificates of resolutions or other action, incumbency certificates or other certificates of Responsible Officers of each Loan Party certifying true and complete copies of the Organizational Documents attached thereto and evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the Guarantor Consent;

 

(d)              The Administrative Agent and the 2020 Incremental Term Lenders shall have received a certificate of a Responsible Officer of the Borrower certifying that the conditions in clauses (f) and (g) of this Section 4 have been satisfied;

 

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(e)              The Administrative Agent and the 2020 Incremental Term Lenders shall have received a solvency certificate from a Responsible Officer of the Borrower (after giving effect to the transactions contemplated by this Amendment) based on and consistent with the form attached to the Credit Agreement as Exhibit K;

 

(f)               The representations and warranties of the Borrower contained in Article III of the Credit Agreement and Section 5 of this Amendment shall be true and correct in all material respects on and as of the Second Amendment Effective Date; provided that, in the case of any representation and warranty which expressly relates to a specific date or period, such representation and warranty shall be true and correct in all material respects as of the respective date or for the respective period, as the case may be; provided, further, that, if any representation and warranty is qualified by or subject to a “material adverse effect”, “material adverse change” or similar term or qualification, such representation and warranty shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates;

 

(g)              No Event of Default shall exist immediately prior to or after giving effect to this Amendment and the making of the 2020 Incremental Term Loans;

 

(h)              The Administrative Agent on behalf of itself and the 2020 Incremental Term Lenders shall have received a Borrowing Request no later than 2:00 p.m. (New York time) at least three Business Days prior to the requested date of the Borrowing (or any such later date the Administrative Agent may agree) in respect of the 2020 Incremental Term Loans;

 

(i)               The Borrower shall have paid all reasonable and documented out-of-pocket expenses of the Administrative Agent and the Arrangers (as defined in the engagement letter, dated as October 26, 2020 (the “Engagement Letter”), by and among the Borrower, BofA Securities, Inc. (“BofA Securities”), Nomura Securities International, Inc. (“Nomura”), Jefferies Finance LLC and Morgan Stanley Senior Funding, Inc. (including, without limitation, the actual reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of outside counsel to all such Persons taken as a whole and, if reasonably necessary, of one local counsel in any relevant jurisdiction to all such Persons, taken as a whole, to the extent provided for in Section 9.03 of the Credit Agreement or Section 5 of the Engagement Letter) and the 2020 Incremental Term Lenders in connection with this Amendment invoiced at least three (3) Business Days (unless otherwise agreed by the Borrower) prior to the Second Amendment Effective Date;

 

(j)               The Borrower shall have paid all fees required to be paid pursuant to the fee letter, dated as of October 20, 2020, by and between the Borrower, BofA Securities and Nomura (the “Fee Letter”); and

 

(k)              The Administrative Agent shall have received (i) at least two (2) Business Days prior to the Second Amendment Effective Date all documentation and other information about the Borrower and the Guarantors required under applicable “know your customer” and anti-money laundering rules and regulations (including the USA PATRIOT Act) that has been reasonably requested in writing at least ten (10) Business Days prior to the Second Amendment Effective Date and (ii) one (1) Business Day prior to the Second Amendment Effective Date all documentation and other information about the Borrower required by regulatory authorities under 31 C.F.R. § 1010.230 (the “Beneficial Ownership Regulation”) that has been reasonably requested in writing at least ten (10) Business Days prior to the Second Amendment Effective Date.

 

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For purposes of determining compliance with the conditions specified in this Section 4, the 2020 Incremental Term Lenders shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required hereunder to be consented to or approved by or acceptable or satisfactory to the 2020 Incremental Term Lenders from and after the making by the 2020 Incremental Term Lenders of the 2020 Incremental Term Loans pursuant to Section 2.01(b) of the Amended Credit Agreement. The 2020 Incremental Term Lenders and the Borrower shall promptly notify the Administrative Agent of the occurrence of the Second Amendment Effective Date.

 

Section 5. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the 2020 Incremental Term Lenders as of the Second Amendment Effective Date that:

 

(a)               The execution, delivery and performance by the Borrower of this Amendment and the execution, delivery and performance by each Guarantor of the Guarantor Consent are within each applicable Loan Party’s corporate or other organizational power and have been duly authorized by all necessary corporate or other organizational action of such Loan Party;

 

(b)               None of the execution, delivery or performance by the Borrower of this Amendment or the execution, delivery or performance by any Guarantor of the Guarantor Consent (i) require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (A) such as have been obtained or made and are in full force and effect, (B) in connection with the Perfection Requirements and (C) such consents, approvals, registrations, filings, or other actions the failure to obtain or make which would not be reasonably expected to have a Material Adverse Effect, (ii) will violate any (A) of such Loan Party’s Organizational Documents or (B) Requirements of Law applicable to such Loan Party which violation, in the case of this clause (ii)(B), would reasonably be expected to have a Material Adverse Effect or (iii) will violate or result in a Default (as defined in the ABL Credit Agreement and the Second Lien Credit Agreement) under (A) the ABL Credit Agreement, (B) the Second Lien Credit Agreement or (C) any other material Contractual Obligation to which such Loan Party is a party which violation, in the case of this clause (iii), would reasonably be expected to result in a Material Adverse Effect;

 

(c)               This Amendment has been duly executed and delivered by the Borrower, and the Guarantor Consent has been duly executed and delivered by each Guarantor. This Amendment constitutes a legal, valid and binding obligation of the Borrower, and the Guarantor Consent constitutes a legal, valid and binding obligation of each Guarantor, enforceable against the Borrower and each Guarantor, as applicable, in accordance with its terms, subject to the Legal Reservations; and

 

(d)               Each of the Loan Parties and each of its Restricted Subsidiaries (i) is (A) duly organized and validly existing and (B) in good standing (to the extent such concept exists in the relevant jurisdiction) under the laws of its jurisdiction of organization, (ii) has all requisite organizational power and authority to own its property and assets and to carry on its business as now conducted and (iii) is qualified to do business in, and is in good standing (to the extent such concept exists in the relevant jurisdiction) in, every jurisdiction where its ownership, lease or operation of properties or conduct of its business requires such qualification; except, in each case referred to in this clause (d) (other than clause (i)(A) with respect to the Borrower and clause (ii) with respect to the Loan Parties) where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

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Section 6. Costs and Expenses. The Borrower agrees to pay all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent (including, without limitation, actual reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of outside counsel to all such Persons taken as a whole and, if reasonably necessary, of one local counsel in any relevant jurisdiction to all such Persons, taken as a whole, to the extent provided for in Section 9.03 of the Credit Agreement) in connection with the preparation, execution and delivery of this Amendment and any other instruments and documents to be delivered hereunder or in connection herewith.

 

Section 7. Execution in Counterparts; Effectiveness. This Amendment 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 Amendment by facsimile or other electronic imaging (including in .pdf format) means shall be effective as delivery of a manually executed counterpart of this Amendment. Except as provided in Section 4, this Amendment shall become effective when it shall have been executed by the Borrower, the Administrative Agent and the 2020 Incremental Term Lenders. This Agreement may be in the form of an Electronic Record and may be executed using Electronic Signatures (including, without limitation, facsimile and .pdf) and shall be considered an original, and shall have the same legal effect, validity and enforceability as a paper record. This Amendment may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Amendment. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Administrative Agent of a manually signed paper communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed communication converted into another format, for transmission, delivery and/or retention. The Administrative Agent may, at its option, create one or more copies of this Amendment in the form of an imaged Electronic Record (an “Electronic Copy”), which shall be deemed created in the ordinary course of the Administrative Agent’s business, and destroy the original paper document. This Amendment in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided, further, without limiting the foregoing, (a) to the extent the Administrative Agent has agreed to accept such Electronic Signature, the Administrative Agent shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Loan Party without further verification and (b) upon the request of the Administrative Agent any Electronic Signature shall be promptly followed by a manually executed, original counterpart. For purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.

 

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Section 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Clauses (b) and (c) of Section 9.10 of the Credit Agreement are incorporated herein by reference, mutatis mutandis.

 

Section 9. WAIVER OF RIGHT OF TRIAL BY JURY. EACH PARTY TO THIS AMENDMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective authorized officers as of the date first above written.

 

  HAYWARD INDUSTRIES, INC.
   
  By: /s/ Eifion Jones
    Name: Eifion Jones
    Title: Chief Financial Officer
   
  BANK OF AMERICA, N.A.,
  as Administrative Agent
   
  By: /s/ Denise Jones
    Name: Denise Jones
    Title: Vice President
   
  BANK OF AMERICA, N.A.,
  as an Additional lender and
  2020 Incremental Term Lender
   
  By: /s/ David Stricker
    Name: David Stricker
    Title: Managing Director

 

[Signature Page to Amendment No. 2 to First Lien Credit Agreement]

 

 

 

 

Schedule 4(b)
Local Counsel

 

Firm Jurisdiction
Lowenstein Sandler LLP New Jersey
Ropes & Gray LLP Delaware
Gordon Rees Scully Mansukhani, LLP Arizona

 

 

 

 

EXHIBIT A

 

GUARANTOR CONSENT AND REAFFIRMATION

 

October 28, 2020

 

Reference is made to Amendment No. 2 to First Lien Credit Agreement, dated as of October 28, 2020 (the “Amendment”), by and among Hayward Industries, Inc., a New Jersey corporation (the “Borrower”), Bank of America, N.A., as administrative agent and collateral agent (in such capacities, the “Administrative Agent”), and the lenders party thereto (the “2020 Incremental Term Lenders”), amending that certain First Lien Credit Agreement, dated as of August 4, 2017 (as amended by Amendment No. 1 to First Lien Credit Agreement, dated as of September 28, 2018, and as further amended, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”; the Credit Agreement as amended by the Amendment, the “Amended Credit Agreement”).

 

Each of the undersigned, as a Guarantor under the First Lien Loan Guaranty, dated as of August 4, 2017 (the “Guaranty”), in favor of the Administrative Agent and the Lenders parties to the Credit Agreement, hereby consents to such Amendment and the transactions contemplated by such Amendment and, as of the Second Amendment Effective Date, hereby, (a) ratifies, acknowledges and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, in each case, as amended and in effect after giving effect to the Amendment and the making of the 2020 Incremental Term Loans and agrees that its Guarantee remains in full force and effect to the extent set forth in such Guaranty and after giving effect to this Amendment and the incurrence of the 2020 Incremental Term Loans, (b) ratifies, acknowledges and reaffirms each grant of a lien on, or security interest or pledge in, its Collateral made pursuant to the Loan Documents, in each case, as amended by the Amendment, and confirms that such liens and security interests continue to secure the Obligations in effect after giving effect to the Amendment and the making of the 2020 Incremental Term Loans, in each case subject to the terms of the Amendment and the Amended Credit Agreement, and (c) confirms that the obligations of the Loan Parties with respect to the 2020 Incremental Term Loans shall constitute, from and after the making of the 2020 Incremental Term Loans, Obligations, Guaranteed Obligations (as defined in the Guaranty), Secured Obligations and First Lien Term Credit Agreement Obligations and Other First Lien Term Obligations (each as defined in the ABL Intercreditor Agreement) and agrees that the security interests in connection therewith remain in full force and effect. Capitalized terms not otherwise defined in this Guarantor Consent have the same meanings as specified in the Amendment or the Amended Credit Agreement, as applicable.

 

[The remainder of this page is intentionally left blank]

 

 

 

 

  GUARANTORS
   
  HAYWARD INTERMEDIATE, INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Chief Financial Officer
     
  GOLDLINE PROPERTIES LLC
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Treasurer
     
  HAYWARD INUSTRIAL PRODUCTS, INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Chief Financial Officer
     
  HAYWARD WRIGHT-AUSTIN INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Chief Financial Officer
     
  WEBSTER PUMPS, INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Chief Financial Officer
     
  LDAG HOLDINGS, INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Treasurer
     
  LDAG ACQUISITION CORP.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Treasurer

 

[Signature Page to Guarantor Consent and Reaffirmation]

 

 

 

 

  PARAMOUNT LEISURE INDUSTRIES, INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Treasurer
     
  GSG HOLDINGS, INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Treasurer
     
  PARAMOUNT CAPITAL FINANCE CORP.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Treasurer
     
  PARAMOUNT INTERNATIONAL, INC.
   
  By: /s/ Eifion Jones
  Name: Eifion Jones
  Title: Treasurer

 

[Signature Page to Guarantor Consent and Reaffirmation]