Exhibit 10.3

 

March 11, 2004

 

Watts Water Technologies, Inc.
Watts Regulator Co.
Watts Industries Europe B.V.
c/o Watts Water Technologies, Inc.
815 Chestnut Street
North Andover, Massachusetts  01845

 

Attention:                                         Chief Financial Officer

 

Re:                             Limited Waiver

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Revolving Credit Agreement, dated as of
February 28, 2002 (as amended and in effect from time to time, the “Credit
Agreement”), by and among (a) Watts Water Technologies, Inc. (f/k/a Watts
Industries, Inc.), a Delaware corporation (the “Parent”), (b) Watts Regulator
Co., a Massachusetts corporation (the “Domestic Borrower”), (c) Watts Industries
Europe B.V., a private company with limited liability organized under the laws
of The Netherlands (the “Foreign Borrower” and, collectively with the Domestic
Borrower, the “Borrowers”, and each individually, a “Borrower”), (d) Fleet
National Bank and the other lending institutions set forth on Schedule 1 to the
Credit Agreement (the “Lenders”), and (e) Fleet National Bank, as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”). 
Capitalized terms used herein and which are not otherwise defined shall have the
respective meanings ascribed thereto in the Credit Agreement.

 

The Parent and the Borrowers have informed the Lenders and the Administrative
Agent that (a) Taizhou Shida Plumbing Manufacturing Co. Ltd. (“Shida”), a
Subsidiary of the Parent, currently has approximately $6,000,000 of Indebtedness
owing to the Bank of China, which Indebtedness is secured by a Lien on the
assets of Shida (the “Shida Secured Debt”); and (b) Tianjin Tanggu Watts Valve
Co. Ltd. (“TWT”), a Subsidiary of the Parent, currently has approximately
$1,200,000 of Indebtedness owing to the Bank of China, which Indebtedness is
secured by a Lien on the assets of TWT (the “TWT Secured Debt”).  As you are
aware, §8.1 of the Credit Agreement does not permit either the Shida Secured
Debt or the TWT Secured Debt, and §8.2.1. of the Credit Agreement does not
permit the Lien on the assets of either Shida or TWT to secure the Shida Secured
Debt or the TWT Secured Debt, as the case may be.  As such, the Parent and its
Subsidiaries are not in compliance with the covenants contained in §§8.1 and
8.2.1 of the Credit Agreement.

 

The Parent and the Borrowers have requested that the Lenders and the
Administrative Agent waive, to the limited extent necessary to permit the above-

 

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referenced non-compliance, the provisions of §§8.1 and 8.2.1 of the Credit
Agreement from the date each of the Shida Secured Debt and TWT Secured Debt was
incurred through April 30, 2004, but solely to permit the Shida Secured Debt and
the TWT Secured Debt (including the Liens on the assets of each of Shida and TWT
in favor of Bank of China to secure such Shida Secured Debt and TWT Secured
Debt, as the case may be) to remain outstanding until (but not after) April 30,
2004.

 

In response to your request, upon the effectiveness of this letter as described
in the paragraph below, the Lenders and the Administrative Agent hereby waive
the provision of §§8.1 and 8.2.1 of the Credit Agreement solely to the extent
necessary to permit the above-referenced non-compliance, only from the date each
of the Shida Secured Debt and the TWT Secured Debt was incurred until April 30,
2004.  The failure by the Parent and the Borrowers to repay all the Shida
Secured Debt and the TWT Secured Debt (including terminating all commitments
thereunder) and to demonstrate to the satisfaction of the Administrative Agent
that all Liens on the assets of each of Shida and TWT securing such Indebtedness
have been released by not later than April 30, 2004 shall constitute an
immediate Event of Default under the Credit Agreement.  The Parent and the
Borrowers hereby represent and warrant that, on and as of the date hereof, (a)
except as expressly set forth above, no Default or Event of Default has occurred
and is continuing under the Credit Agreement and each of the other Loan
Documents; and (b) each of the representations and warranties made by it in §6
of the Credit Agreement remain true as of the date hereof (except to the extent
of changes resulting from transactions contemplated or permitted by the Credit
Agreement and the other Loan Documents, and to the extent that such
representations and warranties relate expressly to an earlier date).

 

This waiver letter shall not become effective until the Administrative Agent
receives an original counterpart of this letter, duly executed by the Parent,
the Borrowers, the Guarantors, the Required Lenders and the Administrative
Agent.

 

Nothing contained in this waiver letter shall be construed to imply a
willingness on the part of the Administrative Agent and the Lenders to grant any
similar or other future waivers of any of the terms and conditions of the Credit
Agreement or the other Loan Documents.

 

Except as specifically waived hereby, each of the terms and conditions of the
Credit Agreement and the other Loan Documents are hereby ratified and confirmed
and shall remain in full force and effect.  Nothing contained herein shall in
any way prejudice, impair or effect any rights or remedies of the Administrative
Agent and the Lenders under the Credit Agreement and the other Loan Documents.

 

This waiver letter may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.

 

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THIS WAIVER LETTER SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO CONFLICTS OF LAW).

 

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Please acknowledge the foregoing by executing and returning five (5) copies of
this letter to Alicia Szendiuch, Managing Director, Fleet National Bank, 100
Federal Street, Boston, MA  02110.

 

 

Very truly yours,

 

 

 

 

 

 

 

FLEET NATIONAL BANK

 

 

 

 

 

 

 

By:

/s/  Christopher J. Wickles

 

 

 

Name:  Christopher J. Wickles

 

 

Title:  Director

 

 

 

 

BANK OF AMERICA, N.A.

 

 

 

 

 

 

 

By:

/s/  Jonathan M. Phillips

 

 

 

Name:  Jonathan M. Phillips

 

 

Title:  VP

 

 

 

 

CITIZENS BANK OF MASSACHUSETTS

 

 

 

 

 

 

 

By:

/s/  Stephanie Epkins

 

 

 

Name:  Stephanie Epkins

 

 

Title:  VP

 

 

 

 

MELLON BANK, N.A.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

WACHOVIA BANK, NA successor to
FIRST UNION NATIONAL BANK

 

 

 

 

 

 

 

By:

/s/  Sarah T. Warren

 

 

 

Name:  Sarah T. Warren

 

 

Title:  Director

 

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BROWN BROTHERS HARRIMAN & CO.

 

 

 

 

 

 

 

By:

/s/  John D. Rogers

 

 

 

Name:  John D. Rogers

 

 

Title:  SVP

 

 

 

 

JPMORGAN CHASE BANK

 

 

 

 

 

 

 

By:

/s/  A. Neil Sweeny

 

 

 

Name:  A. Neil Sweeny

 

 

Title:  Vice President

 

 

 

 

KEYBANK NATIONAL ASSOCIATION

 

 

 

 

 

 

 

By:

/s/  Thomas J. Purcell

 

 

 

Name:  Thomas J. Purcell

 

 

Title:  Senior Vice President

 

 

 

ACKNOWLEDGED AND AGREED:

 

 

 

 

 

 

 

 

WATTS REGULATOR CO.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

 

 

Title:

 

 

 

 

 

WATTS INDUSTRIES EUROPE B.V.

 

 

 

 

 

 

 

 

By:

/s/  J. van Kouterik

 

Title:  C.F.O. Europe

 

 

 

 

 

 

 

 

WATTS WATER TECHNOLOGIES, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

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WATTS PREMIER, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

 

 

 

 

 

WATTS SPACEMAKER, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

 

 

 

 

 

WATTS RADIANT, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

 

 

 

 

 

ANDERSON-BARROWS METALS CORPORATION

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

 

 

 

 

 

WATTS DRAINAGE PRODUCTS, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

 

 

 

 

 

WEBSTER VALVE, INC.

 

 

 

 

 

 

 

 

By:

/s/ William C. McCartney

 

Title:

 

 

 

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WATTS DISTRIBUTION COMPANY, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

 

 

 

 

 

JAMECO INDUSTRIES, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

 

 

 

 

 

WATTS OCEAN B.V.

 

 

 

 

 

 

 

 

By:

/s/  J. van Kouterik

 

Title:  Director

 

 

 

 

 

 

 

 

WATTS CAZZANIGA SPA

 

 

 

 

 

 

 

 

By:

/s/  J. van Kouterik

 

Title:  Director

 

 

 

 

 

 

 

 

WATTS INTERMES SRL

 

 

 

 

 

 

 

 

By:

/s/  J. van Kouterik

 

Title:  Director

 

 

 

 

 

 

 

 

HUNTER INNOVATIONS, INC.

 

 

 

 

 

 

 

 

By:

/s/  William C. McCartney

 

Title:

 

 

 

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