FIRST AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of November 30, 2010 by and among THERMON INDUSTRIES, INC., a Delaware corporation (the “US Borrower”), THERMON CANADA INC., a Nova Scotia company (the “Canadian Borrower”; and, together with the US Borrower, each a “Borrower” and collectively, the “Borrowers”), the other Persons party hereto that are designated as a “Credit Party” on the signature pages hereof, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as US Agent and as a Lender, GE CANADA FINANCING HOLDING COMPANY, as Canadian Agent (together with US Agent, each an “Agent” and collectively, the “Agents”) and as a Lender, and the other LENDERS signatory hereto.
W I T N E S S E T H:
WHEREAS, Borrowers, the other Credit Parties, the Agents, and the Lenders are parties to that certain Credit Agreement dated as of April 30, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); and
WHEREAS, the Credit Parties have requested that the Agents and the Lenders amend certain provisions of the Credit Agreement, and, subject to the satisfaction of the conditions set forth herein, the Agents and the Lenders signatory hereto are willing to do so, on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:
1. Defined Terms. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Credit Agreement.
2. Amendments to Credit Agreement. Upon satisfaction of the conditions set forth in Section 3 hereof, the Credit Agreement is hereby amended as follows:
a. Subsection 4.2(a) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting the following therefor:
“(a)(i) together with each delivery of financial statements pursuant to subsections 4.1(a) and 4.1(b), a report setting forth in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the most recent projections for the current Fiscal Year delivered pursuant to subsection 4.2(f) and discussing the reasons for any significant variations and (ii) concurrently with the delivery of such information to the Securities and Exchange Commission (which shall in no event be later than forty five (45) days following the end of each Fiscal Quarter) a management discussion and analysis report, in reasonable detail, signed by the chief financial officer of Holdings, describing the operations and financial
condition of the Credit Parties and their Subsidiaries for the fiscal quarter and the portion of the Fiscal Year then ended (or for the Fiscal Year then ended in the case of annual financial statements);”
b. Subsection 4.2(i) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting the following therefor:
“(i) to US Agent, at the time of delivery of each of the monthly financial statements delivered pursuant to subsection 4.1(b), a report providing consolidating Borrowing Base details regarding the fixed assets, accounts receivable and inventory of the Borrowers and their applicable Subsidiaries, in form and substance reasonably satisfactory to US Agent, together with such other information and detail as shall be reasonably requested by US Agent in its reasonable discretion; provided, to the extent specifically requested by US Agent or Required Lenders and not otherwise delivered pursuant to this subsection 4.2(i), the Borrowers shall also furnish, together with such supporting detail and documentation as shall be reasonably requested by US Agent or the Required Lenders in their respective reasonable discretion:
(i) a reconciliation of the most recent Borrowing Base Certificate, general ledger and month-end accounts receivable aging of each Borrower to such Borrower’s general ledger and monthly financial statements delivered pursuant to subsection 4.1(b);
(ii) a reconciliation of the perpetual inventory by location to each Borrower’s most recent Borrowing Base Certificate, general ledger and monthly financial statements delivered pursuant to subsection 4.1(b);
(iii) a reconciliation of the accounts payable aging to each Borrower’s general ledger and monthly financial statements delivered pursuant to subsection 4.1(b);
(iv) a reconciliation of the accounts receivable aging to each Borrower’s general ledger and monthly financial statements delivered pursuant to subsection 4.1(b); and
(v) a reconciliation of the outstanding Loans as set forth in the monthly loan account statement provided by the applicable Agent to each Borrower’s general ledger and monthly financial statements delivered pursuant to subsection 4.1(b); and”
c. Exhibit 4.2(b) to the Credit Agreement (Form of Compliance Certificate) is hereby amended by deleting such exhibit in its entirety and substituting the revised form of Compliance Certificate attached hereto as Exhibit A therefor.
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3. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
a. the execution and delivery of this Amendment by each Credit Party, Agents and the Required Lenders;
b. the truth and accuracy of the representations and warranties contained in Section 4 hereof; and
c. no Default or Event of Default exists or shall arise as a direct result of this Amendment.
4. Representations and Warranties. Each Credit Party hereby represents and warrants to each Agent and each Lender as follows:
a. the representations and warranties made by such Credit Party contained in the Loan Documents are true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of the date hereof, except to the extent such representation or warranty expressly relates to an earlier date (in which case, such representations and warranties were true and correct in all material respects as of such earlier date (without duplication of any materiality qualifier contained therein));
b. such Credit Party is a corporation or limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, as applicable;
c. such Credit Party has the power and authority to execute, deliver and perform its obligations under this Amendment and the Credit Agreement, as amended hereby;
d. the execution, delivery and performance by such Credit Party of this Amendment and the Credit Agreement, as amended hereby, have been duly authorized by all necessary action and do not and will not (i) contravene the terms of any of such Credit Party’s Organization Documents, (ii) conflict with or result in any material breach or contravention of, or result in the creation of any Lien (other than Permitted Liens) under, any Related Agreement or any other document evidencing any material Contractual Obligation to which such Credit Party is a party or any material order, injunction, writ or decree of any Governmental Authority to which such Credit Party or its Property is subject, or (iii) violate any material Requirement of Law in any material respect;
e. this Amendment and the Credit Agreement, as amended hereby, constitutes the legal, valid and binding obligation of such Credit Party, enforceable against such Person in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditor’s rights generally or by equitable principles relating to enforceability; and
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f. no Default or Event of Default exists or will arise as a direct result of this Amendment.
5. No Modification. Except as expressly set forth herein, nothing contained herein shall be deemed to constitute a waiver of compliance with any term or condition contained in the Credit Agreement or any of the other Loan Documents or constitute a course of conduct or dealing among the parties. Except as expressly stated herein, the Agents and Lenders reserve all rights, privileges and remedies under the Loan Documents. Except as amended or consented to hereby, the Credit Agreement and other Loan Documents remain unmodified and in full force and effect. All references in the Loan Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby.
6. Counterparts. This Amendment may be executed in any number of counterparts and by different parties in separate 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 agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Amendment by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.
7. Successors and Assigns. The provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that none of the Credit Parties may assign or transfer any of its rights or obligations under this Amendment without the prior written consent of US Agent.
8. Further Assurance. Each Borrower hereby agrees from time to time, as and when requested by US Agent or Lenders, to execute and deliver or cause to be executed and delivered, all such documents, instruments and agreements and to take or cause to be taken such further or other action as US Agent or such Lenders may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Amendment, the Credit Agreement and the Loan Documents.
9. Governing Law and Jurisdiction.
(a) Governing Law. The laws of the State of Illinois shall govern all matters arising out of, in connection with or relating to this Amendment, including, without limitation, its validity, interpretation, construction, performance and enforcement.
(b) Submission to Jurisdiction. Any legal action or proceeding with respect to this Amendment may be brought in the courts of the State of Illinois located in the City of Chicago, Illinois, or of the United States of America sitting in Chicago, Illinois and, by execution and delivery of this Amendment, each Credit Party hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.
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(c) Service of Process. Each Credit Party hereby irrevocably waives personal service of any and all legal process, summons, notices and other documents and other service of process of any kind and consents to such service in any suit, action or proceeding brought in the United States of America with respect to or otherwise arising out of or in connection with this Agreement by any means permitted by applicable Requirements of Law, including by the mailing thereof (by registered or certified mail, postage prepaid) to the address of such Person specified in the Credit Agreement (and shall be effective when such mailing shall be effective, as provided therein). Each Credit Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(d) Non-Exclusive Jurisdiction. Nothing contained in this Section 9 shall affect the right of any Agent to serve process in any other manner permitted by applicable Requirements of Law or commence legal proceedings or otherwise proceed against any Credit Party in any other jurisdiction.
10. Severability. The illegality or unenforceability of any provision of this Amendment or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Amendment or any instrument or agreement required hereunder.
11. Reaffirmation. Each of the Credit Parties as debtor, grantor, pledgor, guarantor, assignor, or in other any other similar capacity in which such Credit Party grants liens or security interests in its property or otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto) and (ii) to the extent such Credit Party granted liens on or security interests in any of its property pursuant to any such Loan Document as security for or otherwise guaranteed the Borrowers’ Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such security interests and liens hereafter secure all of the Obligations as amended hereby. Each of the Credit Parties hereby consents to this Amendment and acknowledges that each of the Loan Documents remains in full force and effect and is hereby ratified and reaffirmed. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Agents or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of the Obligations.
12. Release of Claims. In consideration of the Lenders’ and the Agents’ agreements contained in this Amendment, each Credit Party hereby irrevocably releases and forever discharge the Lenders and the Agents and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all claims, suits, actions, investigations, proceedings or demands,
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whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which such Credit Party ever had or now has against any Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of any Agent, any Lender or any other Released Person relating to the Credit Agreement or any other Loan Document on or prior to the date hereof.
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
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IN WITNESS WHEREOF, each of the undersigned has executed this Amendment as of the date set forth above.
| BORROWERS: | ||
| THERMON INDUSTRIES, INC., a Delaware corporation, as US Borrower | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | President | |
| THERMON CANADA INC., a Nova Scotia company, as Canadian Borrower | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | Treasurer | |
IN WITNESS WHEREOF, each of the undersigned has executed this Amendment as of the date set forth above.
| CREDIT PARTIES: | ||
| XXXXXXX HOLDING CORP., a Delaware corporation, as a Credit Party | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | President | |
| THERMON MANUFACTURING COMPANY, a Texas corporation, as a Credit Party | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | President | |
| THERMON HEAT TRACING SERVICES, INC., a Texas corporation, as a Credit Party | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | President | |
| THERMON HEAT TRACING SERVICES-I, INC., a Texas corporation, as a Credit Party | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | President | |
| THERMON HEAT TRACING SERVICES-II, INC., a Louisiana corporation, as a Credit Party | ||
| By: | /s/ Xxxxxx Xxxxxxx | |
| Name: | Xxxxxx Xxxxxxx | |
| Title: | President | |
IN WITNESS WHEREOF, each of the undersigned has executed this Amendment as of the date set forth above.
| AGENTS AND LENDERS: | ||
| GENERAL ELECTRIC CAPITAL CORPORATION, as US Agent and as a Lender | ||
| By: | /s/ Xxxx Xxxxxxx | |
| Name: | Xxxx Xxxxxxx | |
| Title: | Duly Authorized Signatory | |
| GE CANADA FINANCE HOLDING COMPANY, as Canadian Agent and as a Lender | ||
| By: | /s/ Xxxxxxx Xxxx | |
| Name: | Xxxxxxx Xxxx | |
| Title: | Duly Authorized Signatory | |
| BANK OF MONTREAL, as a US Lender and as a Canadian Lender | ||
| By: | /s/ Xxx Xxxxx | |
| Name: | Xxx Xxxxx | |
| Title: | Vice President | |
| KEYBANK NATIONAL ASSOCIATION, as a Lender | ||
| By: | /s/ Xxxx Xxxxxxx | |
| Name: | Xxxx Xxxxxxx | |
| Title: | Vice President | |
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EXHIBIT A
Revised form of Compliance Certificate
See attached.
EXHIBIT 4.2(b)
COMPLIANCE CERTIFICATE
THERMON INDUSTRIES, INC., as the US Borrower
THERMON CANADA INC., as the Canadian Borrower
Date: , 201
This Compliance Certificate (this “Certificate”) is given by Xxxxxxx Holding Corp., a Delaware corporation (“Holdings”), pursuant to subsection 4.2(b) of that certain Credit Agreement dated as of April 30, 2010 by and among Thermon Industries, Inc., a Texas corporation (the “US Borrower”), and Thermon Canada Inc., a Nova Scotia company (the “Canadian Borrower”; the US Borrower and the Canadian Borrower are referred to herein each individually as a “Borrower” and together as the “Borrowers”), Holdings, as a Credit Party, the other Credit Parties party thereto, General Electric Capital Corporation, as administrative agent (in such capacity, “US Agent”) for the financial institutions from time to time party to the Credit Agreement described herein with a US Revolving Loan Commitment (as defined in the Credit Agreement described herein) (the “US Lenders”), the US Lenders, GE Canada Holding Finance Company, a Nova Scotia unlimited liability company, as administrative agent (in such capacity, “Canadian Agent”) for the financial institutions from time to time party to the Credit Agreement described herein with a Canadian Revolving Loan Commitment (as defined in the Credit Agreement described herein) (the “Canadian Lenders”), and the Canadian Lenders party thereto (as such agreement may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.
The officer executing this Certificate is a Responsible Officer of Holdings and as such is duly authorized to execute and deliver this Certificate on behalf of Holdings and the Borrowers. By executing this Certificate, such officer hereby certifies to Agents, the Lenders and L/C Issuers, on behalf of Holdings, that:
(a) the financial statements delivered with this Certificate in accordance with subsection 4.1(a) and/or 4.1(b) of the Credit Agreement are correct and complete and fairly present, in all material respects, in accordance with GAAP the financial position and the results of operations of Holdings and its Subsidiaries as of the dates of and for the periods covered by such financial statements (subject, in the case of interim financial statements, to normal year-end adjustments and the absence of footnote disclosure);
(b) to the best of such officer’s knowledge, no Default or Event of Default has occurred and is continuing [except as specified on the written attachment hereto];
(c) based on the financial statements described in clause (a), Exhibit A hereto is a correct calculation of the financial covenant contained in Article VI of the Credit Agreement [[only required to be provided with respect to Certificates delivered for the last fiscal month of each Fiscal Quarter for which average daily Aggregate Availability (as calculated in the Borrowing Base Certificate) for the applicable period is less than the Applicable Minimum Availability Threshold]]; and
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(d) since the Closing Date and except as disclosed in prior Certificates delivered to Agent, no Credit Party and no Subsidiary of any Credit Party has:
(i) changed its legal name, identity, jurisdiction of incorporation, organization or formation or organizational structure or formed or acquired any Subsidiary except as follows: ;
(ii) acquired the assets of, or merged or consolidated with or into, any Person pursuant to an Acquisition, except as follows: ; or
(iii) changed its address or otherwise relocated, acquired fee simple title to any real property or entered into any real property leases, except as follows: .
IN WITNESS WHEREOF, Holdings has caused this Certificate to be executed by one of its Responsible Officers this day of , 20 .
| XXXXXXX HOLDING CORP., a Delaware corporation | ||
| By: |
| |
| Name: |
| |
| Title: |
| |
Note: Unless otherwise specified, all financial covenants and calculations are calculated for Holdings and its Subsidiaries on a consolidated basis in accordance with GAAP and all calculations are without duplication. All calculations shall be expressed in US Dollar Equivalent.
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EXHIBIT A TO EXHIBIT 4.2(b)
COMPLIANCE CERTIFICATE
Covenant 6.1 Fixed Charge Coverage
| Fixed Charge Coverage is defined as follows: | ||||||
| Fixed Charge Cash Flow: | ||||||
| Cash Flow (per Part II of Exhibit B) | $ | |||||
| Minus: | Management fees pursuant to the Management Agreement paid in cash during such period1 | $ | ||||
| (Y) | Fixed Charge Cash Flow | $ | ||||
| Fixed Charges:2 | ||||||
| 1 | For purposes of calculating Fixed Charge Cash Flow as of any date on or prior to March 31, 2011, Management fees paid pursuant to the Management Agreement shall be deemed to be $1,534,880. |
| 2 | For purposes of calculating Fixed Charge Coverage Ratio as of any date on or prior to March 31, 2011, Fixed Charges shall be calculated as follows: |
a. Net Interest Expense (i) attributable to the Second Lien Indebtedness shall equal $19,950,000 and (ii) for all other components thereof (a) for the measurement period ending on June 30, 2010, shall equal Net Interest Expense during the period from May 1, 2010 through June 30, 2010 multiplied by 6, (b) for the measurement period ending on September 30, 2010, shall equal Net Interest Expense during the period from May 1, 2010 through September 30, 2010 multiplied by 12/5, (c) for the measurement period ending on December 31, 2010, shall equal Net Interest Expense during the period from May 1, 2010 through December 31, 2010 multiplied by 3/2, and (d) for the measurement period ending on March 31, 2011, shall equal Net Interest Expense during the period from May 1, 2010 through March 31, 2011 multiplied by 12/11.
b. Scheduled principal payments of all Indebtedness (other than Prior Indebtedness) shall be calculated using the actual amounts in respect thereof during each such measurement period.
c. Taxes on or measured by income paid or required to be paid in cash (“Cash Taxes”) (a) for the measurement period ending on June 30, 2010, shall equal Cash Taxes during the period from May 1, 2010 through June 30, 2010 multiplied by 6, (b) for the measurement period ending on September 30, 2010, shall equal Cash Taxes during the period from May 1, 2010 through September 30, 2010 multiplied by 12/5, (c) for the measurement period ending on December 31, 2010, shall equal Cash Taxes during the period from May 1, 2010 through December 31, 2010 multiplied by 3/2, and (d) for the measurement period ending on March 31, 2011, shall equal Cash Taxes during the period from May 1, 2010 through March 31, 2011 multiplied by 12/11; provided, Cash Taxes shall not include taxes on or measured by income earned or attributable to any period prior to the Closing Date that are paid in cash by the Seller.
d. Restricted Payments described in subsection 5.11(b) of the Credit Agreement shall be calculated using the actual amounts paid in cash in respect thereof during each such measurement period.
e. Out-of-pocket expenses and indemnities paid pursuant to Management Agreement shall equal actual out-of-pocket expenses and indemnities paid pursuant to Management Agreement during each such measurement period.
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| Net Interest Expense: | ||||||
| Gross interest expense for such period paid or required to be paid in cash (including all commissions, discounts, fees and other charges in connection with letters of credit and similar instruments and net amounts paid or payable and/or received or receivable under permitted Rate Contracts in respect of interest rates) for Holdings and its Subsidiaries on a consolidated basis | ||||||
| Less: | Interest income for such period | |||||
| (A) | Net Interest Expense | |||||
| (B) | Scheduled principal payments of Indebtedness during such period | |||||
| (C) | Earnouts payable in cash during such period | |||||
| (D) | Taxes on or measured by income paid or payable in cash during such period | |||||
| (E) | Restricted Payments described in subsections 5.11(b), 5.11(d), 5.11(f), 5.11(g) and 5.11(h) paid in cash during such period | |||||
| (F) | Expenses and indemnities pursuant to the Management Agreement paid in cash during such period | |||||
| (Z) | Fixed Charges ((A)+(B)+(C)+(D)+(E)+(F)) | $ | ||||
| Fixed Charge Coverage ((Y)/(Z)) | ||||||
| Required Fixed Charge Coverage | ||||||
| In Compliance | Yes/No | |||||
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EXHIBIT B TO EXHIBIT 4.2(b)
COMPLIANCE CERTIFICATE
| Part I – Calculation of Adjusted EBITDA | ||||||
| EBITDA is defined as follows: | ||||||
| Net income (or loss) for the applicable period of measurement of Holdings and its Subsidiaries on a consolidated basis determined in accordance with GAAP, but excluding: (a) the income (or loss) of any Person which is not a Subsidiary of a Borrower, except to the extent of the amount of dividends or other distributions actually paid to a Borrower or any of its Subsidiaries in cash by such Person during such period and the payment of dividends or similar distributions by that Person is not at the time prohibited by operation of the terms of its charter or of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Person; (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of a Borrower or is merged into or consolidated with a Borrower or any of its Subsidiaries or that Person’s assets are acquired by a Borrower or any of its Subsidiaries; (c) the proceeds of any life insurance policy; (d) gains or losses from the sale, exchange, transfer or other disposition of Property or assets not in the Ordinary Course of Business of the Borrowers and their Subsidiaries, and related tax effects in accordance with GAAP; and (e) any other extraordinary or gains or losses of a Borrower or its Subsidiaries, and related tax effects in accordance with GAAP. | $ | |||||
| Plus: | All amounts deducted in calculating net income (or loss) for depreciation or amortization for such period | |||||
| Interest expense (less interest income) deducted in calculating net income (or loss) for such period | ||||||
| All taxes on or measured by income to the extent deducted in calculating net income (or loss) for such period | ||||||
| All management or similar fees, expenses and indemnities pursuant to the Management Agreement to the extent deducted in calculating net income (or loss) for such period All non-cash losses or expenses (or minus non-cash income or gain) included or deducted in calculating net income (or loss) for such period including, without limitation, any non-cash impairment charge or asset write-off related to intangible | ||||||
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| assets, long-lived assets, and investments in debt and equity securities, and any non-cash foreign currency exchange losses (or minus gains), but excluding, in any event, any non-cash loss or expense (a) that is an accrual of a reserve for a cash expenditure or payment to be made, or anticipated to be made, in a future period or (b) relating to a write-down, write off or reserve with respect to Accounts and Inventory | ||||
| All non-cash losses or expenses deducted (or minus all non-cash income or gain added) in the calculation of net income (or loss) for such period from the application of purchase accounting, including the write up or write down of inventory in connection therewith | ||||
| All non-cash compensation expense to the extent deducted in the calculation of net income (or loss) for such period | ||||
| Fees and expenses incurred in connection with the negotiation, execution and delivery on the Closing Date of the Loan Documents and Related Agreements and consummation on the Closing Date of the Related Transactions, to the extent (i) deducted in the calculation of net income (or loss) for such period and (ii) disclosed to Agent | ||||
| Fees, expenses (including reimbursement of out-of-pocket expenses) and prepayment premiums paid to Agent, Lenders and/or Second Lien Lenders in connection with the Loan Documents or Second Lien Note Agreement, respectively, to the extent deducted in calculating net income (or loss) for such period | ||||
| To the extent deducted in calculating net income (or loss) for such period and so long as same is not reasonably likely to result in a cash expenditure in a future period, non-cash expenses (including as a result of the acceleration of vesting in the event of a change of control) resulting from the grant or periodic remeasurement of stock options or other equity-related incentives to any director, officer or employee of any of the Credit Parties pursuant to a written plan or agreement approved by the board of directors or similar governing body of any Credit Party | ||||
| To the extent not included in net income, cash proceeds of business interruption insurance received during such period | ||||
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| To the extent deducted in calculating net income (or loss) for such period, non-recurring cash expenses and costs not in excess of $3,000,000 during any trailing twelve month period, in each case, as set forth on a schedule certified by a Responsible Officer of Holdings delivered to the Agents concurrently with the applicable Compliance Certificate, including, but not limited to, non-recurring cash expenses and costs incurred in connection with (i) restructurings, integration, severance and synergies, (ii) the implementation of the new ERP system, (iii) Permitted Acquisitions (including restructurings, severance payments and synergies resulting therefrom or implemented in connection therewith), (iv) compliance fees, (v) the recruiting of a new Chief Financial Officer, (vi) environmental remediation actions required by law with respect to the real property locations of the Credit Parties, (vii) resolution of legal compliance issues affecting U.S. employee benefits plans and (viii) losses (or minus gains) with respect to discontinued operations | ||||||
| To the extent deducted in calculating net income (or loss) for such period, any non-cash loss to the extent such loss is covered by the “Insurance Policies” (as defined in the Purchase Agreement); provided, in the event a Credit Party is required to pay all or any portion of such loss in cash, such cash payment shall be permitted to be added back to net income to the extent the applicable Credit Party receives payment in cash in respect of such cash loss from such Insurance Policies within three (3) months of the date such loss is paid in cash by such Credit Party | ||||||
| EBITDA3 |
$ | |||||
| 3 | For purposes of calculating EBITDA as of any date of measurement ending on or before April 30, 2011, EBITDA for any period set forth below included in the twelve month period ending on such date shall be deemed to equal the amount set forth below for such period: |
| Period: | Pre-Closing EBITDA | |
| Month of April, 2009 |
$4,157,471 | |
| Month of May, 2009 |
$4,137,644 | |
| Month of June, 2009 |
$4,844,655 | |
| Month of July, 2009 |
$3,024,095 | |
| Month of August, 2009 |
$4,384,346 | |
| Month of September, 2009 |
$5,322,021 | |
| Month of October, 2009 |
$5,272,113 | |
| Month of November, 2009 |
$3,176,222 | |
| Month of December, 2009 |
$2,811,562 | |
| Month of January, 2010 |
$3,991,322 | |
| Month of February, 2010 |
$2,870,058 | |
| Month of March, 2010 |
$3,216,006 | |
| Month of April, 2010 |
$4,009,789 |
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| Plus: | Pro Forma EBITDA for each Permitted Acquisition as set forth on the attached schedule4 [Holdings to attach schedule for each Permitted Acquisition] | |||||||
| Minus: |
with respect to any Disposition consummated within the period in question, EBITDA attributable to the Subsidiary, profit centers, or other asset which is the subject of such Disposition from the beginning of such period until the date of consummation of such Disposition | |||||||
| Adjusted EBITDA | $ | |||||||
| Part II – Calculation of Cash Flow | ||||||||
| (A) EBITDA (per Part I of Exhibit B) for the applicable period of measurement: |
$ | |||||||
| Unfinanced Capital Expenditures: | ||||||||
| The aggregate of all expenditures and other obligations for the twelve month period ending on the last day of the month covered by such financial statements which should be capitalized under GAAP | ||||||||
| Less: | Net Proceeds from Dispositions and/or Events of Loss which a Borrower is permitted to reinvest pursuant to subsection 1.8(c) and which are included above | |||||||
| To the extent included above, expenditures financed with cash proceeds from Excluded Equity Issuances | ||||||||
| To the extent included above, amounts paid as the purchase price for a Target in a Permitted Acquisition | ||||||||
| 4 | Pro Forma EBITDA means EBITDA (calculated in the manner set forth in Part I of Exhibit B) attributable to each Permitted Acquisition (with such pro forma adjustments as are reasonably acceptable to US Agent and Borrowers) consummated during the one year period preceding the date of measurement solely for a number of months immediately preceding the consummation of such Permitted Acquisition, which number equals twelve (12) minus the number of full calendar months following the consummation of such Permitted Acquisition for which financial statements have been delivered pursuant to subsection 4.1(b) of the Credit Agreement. |
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| Portion of capital expenditures included above financed under Capital Leases or other Indebtedness (Indebtedness, for this purpose, does not include drawings under the Revolving Loan Commitment) | ||||
| (B) | Unfinanced Capital Expenditures5 | $ | ||
| Cash Flow ((A)-(B)) | $ | |||
| Part III – Calculation of Leverage Ratio | ||||
| Average of the sum of the aggregate balance of outstanding Revolving Loans and Swing Loans as of the last day of each month in the twelve month (or shorter period commencing on the Closing Date) period ended on the date of measurement | ||||
| Plus: | L/C Reimbursement Obligations as of date of measurement, whether or not then due and payable | |||
| All amounts drawn on letters of credit not constituting Letters of Credit, to the extent (a) such letters of credit are not supported by cash collateral and (b) Holdings and its Subsidiaries have not reimbursed the issuer thereof for such drawn amount | ||||
| 5 | For purposes of calculating Cash Flow as of any date of measurement ending on or before April 30, 2010, Unfinanced Capital Expenditures for any period below included in the twelve month period ending on such date shall be deemed to equal the amount set forth below for such period: |
| Period |
Pre-Closing Unfinanced Capital Expenditures | |
| Month of April, 2009 |
$ 24,996 | |
| Month of May, 2009 |
$168,792 | |
| Month of June, 2009 |
$380,851 | |
| Month of July, 2009 |
$ 16,479 | |
| Month of August, 2009 |
$ 60,659 | |
| Month of September 2009 |
$124,507 | |
| Month of October, 2009 |
$ 89,066 | |
| Month of November, 2009 |
$ 74,647 | |
| Month of December 2009 |
$ 36,037 | |
| Month of January 2010 |
$ 68,609 | |
| Month of February 2010 |
$228,542 | |
| Months of March, 2010 and April, 2010 |
Pre-Closing Unfinanced Capital Expenditures of Holdings and its Subsidiaries for each such month shall be computed on a basis consistent with the determination of Pre-Closing Unfinanced Capital Expenditures for the preceding periods |
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| Principal portion of Capital Lease Obligations and Indebtedness secured by purchase money Liens as of date of measurement | ||||
| Second Lien Indebtedness | ||||
| Earnouts (valued in accordance with GAAP) | ||||
| Without duplication, all other Funded Indebtedness of Holdings and its Subsidiaries as of date of measurement other than L/C Reimbursement Obligations | ||||
| Indebtedness | $ | |||
| Less: | Average of the sum of unrestricted cash and Cash Equivalents of Holdings and its Subsidiaries as of the last day of each month in the twelve month (or shorter period commencing on the Closing Date) period ended on date of measurement provided such unrestricted cash and Cash Equivalents are maintained in a deposit account of the Credit Parties in which the Applicable Agent has a perfected first priority security interest. | |||
| (A) | Net Indebtedness | |||
| (B) | Adjusted EBITDA for the twelve month period ending on the date of measurement (per Part II of Exhibit B) | $ | ||
| Leverage Ratio ((A)/(B)) (used in the determining if mandatory prepayments are required) | ||||
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