Item 1.01Entry into a Material Definitive Agreement.
On August 7, 2014, Gentherm Incorporated ("Gentherm"), together with its direct
and indirect subsidiaries Gentherm GmbH (the "German Borrower"), Gentherm
(Texas), Inc. ("Gentherm Texas"), Gentherm Canada Ltd. ("Gentherm Canada") and
Global Thermoelectric Inc. ("Global" and, together with Gentherm Canada, the
"Canadian Borrowers", and collectively with Gentherm, the German Borrower and
Gentherm Texas, the "Borrowers") entered into a Credit Agreement (the "Credit
Agreement") with the lenders party thereto and Bank of America, N.A., as
administrative agent (the "Agent").
The Credit Agreement provides for a $100 million secured revolving credit
facility for the Borrowers, with a $10 million sublimit for the Canadian
Borrowers and a $25 million sublimit for the German Borrower, a $50 million
secured term loan facility for Gentherm, and a €20 million secured term loan
facility for the German Borrower. Subject to specified conditions, Gentherm can
increase the revolving credit facility or incur additional secured term loans in
an aggregate amount of $50 million. A portion of the proceeds of the term loans
and borrowings under the revolving credit facility will be used to refinance
existing indebtedness of certain Borrowers (see Item 1.02 below).
All obligations under the Credit Agreement (including all the obligations of any
U.S. or non-U.S. loan party) are unconditionally guaranteed by Gentherm,
Gentherm Texas and Gentherm's subsidiary, Westridge Haggerty LLC ("Westridge").
Additionally, the German Borrower, the Canadian Borrowers and Gentherm's
indirect subsidiaries, Gentherm Holding (Malta) Limited, Gentherm Automotive
Systems (Malta) Ltd. and Gentherm Hungary KorlÁtolt Felel?ssÉg? TÁrsasÁg
guarantee all obligations of the non-U.S. loan parties under the Credit
Loans under the Credit Agreement bear interest at either Base Rate, for U.S.
Dollar denominated loans to Gentherm or Gentherm Texas, or the Eurocurrency Rate
(each as defined in the Credit Agreement), plus a margin for Base Rate loans
ranging from 0.50% to 1.00% or a margin for Eurocurrency Rate loans ranging from
1.50% to 2.00% based upon the Consolidated Total Leverage Ratio (as defined in
the Credit Agreement) of Gentherm and its subsidiaries. The obligations under
the Credit Agreement are secured by a security interest in substantially all
personal property of Gentherm, Gentherm Texas and Westridge, including the stock
and membership interests of Gentherm's and Gentherm Texas' subsidiaries (limited
to 66% of the stock in the case of certain non-U.S. subsidiaries).
The Credit Agreement contains customary affirmative and negative covenants that
will prohibit or limit the ability of the Borrowers and any material subsidiary
to, among other things, incur additional indebtedness, create liens, pay
dividends, make certain types of investments, including acquisitions, enter into
certain types of transactions with affiliates, prepay other indebtedness, sell
assets, merge with other companies or enter into certain other transactions
outside the ordinary course of business. The Credit Agreement also requires
compliance with certain financial covenants. The Credit Agreement additionally
contains customary events of default, including, but not limited to: (a)
non-payment of amounts due; (b) material breach of representations, warranties
or covenants under the Credit Agreement or the documents pertaining thereto; (c)
cross-default provisions relating to other indebtedness obligations; (d)
judgments or attachments against property; (e) bankruptcy or similar proceedings
or insolvency; or (f) certain changes in control. Upon the occurrence of an
event of default, the amounts outstanding under the credit facility may be
accelerated and may become immediately due and payable.
A copy of the Credit Agreement is attached hereto as Exhibit 10.1, and the above
description of the material terms of the Credit Agreement is qualified in its
entirety by reference to such exhibit, which is incorporated herein by
On August 7, 2014, Gentherm, Gentherm Texas and Westridge entered into a Pledge
and Security Agreement (the "Security Agreement") in favor of the Agent for the
Secured Parties (each as defined in the Security Agreement). Pursuant to the
Security Agreement, each of Gentherm, Gentherm Texas and Westridge granted the
Agent a security interest in substantially all of their personal property to
secure their respective obligations under the Credit Agreement. The Security
Agreement is subject to customary covenants regulating or restricting, among
other things, preservation and use of collateral and changes of name or other
corporate information, and grants the Agent customary rights and remedies
following the occurrence of an event of default under the Credit Agreement.
A copy of the Security Agreement is attached hereto as Exhibit 10.2, and the
above description of the material terms of the Security Agreement is qualified
in its entirety by reference to such exhibit, which is incorporated herein by
Item 1.02Termination of a Material Definitive Agreement
On August 7, 2014, Gentherm and the German Borrower paid off all amounts owed
under the credit agreement entered into on March 30, 2011 (filed as Exhibit 10.4
to Gentherm's Form 8-K filed on March 31, 2011), and Gentherm Canada paid off
owed under the credit agreement entered into on March 30, 2011 (filed as Exhibit
10.1 to Gentherm's Form 8-K filed on August 4, 2011), and both credit agreements
(and related security and pledge agreements) were terminated in connection
therewith. There were no prepayment penalties; however, certain unamortized
capitalized financing costs totaling approximately $900,000 related to these
credit agreements will be expensed during Gentherm's 2014 third quarter.
Item 2.03Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth in Item 1.01 above is incorporated herein by reference.
Item 9.01Financial Statements and Exhibits.
10.1 Credit Agreement, dated as of August 7, 2014, by and among Gentherm
Incorporated, Gentherm GmbH, Gentherm (Texas), Inc., Gentherm Canada
Ltd., Global Thermoelectric Inc., the lenders party thereto, and Bank of
America, N.A., as administrative agent.
10.2 Pledge and Security Agreement, dated as of August 7, 2014, by and among
Gentherm Incorporated, Gentherm (Texas), Inc., Westridge Haggerty LLC
and Bank of America, N.A.