FIRST AMENDMENT TO CREDIT AGREEMENT
EXHIBIT 10.1
Execution Version
Execution Version
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of
March 8, 2010, by and among XXXX X. XXXXXXXXXX & SON, INC., a Delaware corporation (the
“Borrower”), the lenders identified on the signature pages hereof (such lenders, together
with their respective successors and permitted assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), and XXXXX FARGO
CAPITAL FINANCE, LLC (f/k/a Xxxxx Fargo Foothill, LLC), a Delaware limited liability company, as
administrative agent (in such capacity “Agent”) and as a Lender. Unless otherwise
specified herein, capitalized terms used in this Amendment shall have the meanings ascribed to them
by the Credit Agreement (defined below).
RECITALS
WHEREAS, the Borrower, Agent, the Lenders and Wachovia Capital Finance Corporation (Central),
an Illinois corporation, as documentation agent, have entered into that certain Credit Agreement,
dated as of February 7, 2008 (as amended, supplemented, restated or otherwise modified from time to
time, the “Credit Agreement”); and
WHEREAS, on the terms and subject to the conditions set forth herein, the Borrower, Agent and
Lenders have agreed to amend the Credit Agreement as more fully described below;
NOW THEREFORE, in consideration of the foregoing, mutual agreements contained herein and for
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrowers, Agent and Lenders hereby agree as follows:
SECTION 1. Amendment.
(a) Schedule 1.1 to the Credit Agreement is hereby amended by amending and
restating the following defined terms to read in their entirety as follows:
“‘Average Excess Availability’ means, as of any relevant date of
determination in any calendar week, Excess Availability determined on a seven
(7)-day average basis for the immediately preceding week for which a Borrowing Base
Certificate has been delivered by Borrower (using weekly adjustments for Accounts
and monthly adjustments for Inventory) in accordance with the Agent’s normal
availability tracking procedures; provided that the amount of such Excess
Availability shall not be limited by the Maximum Revolver Amount or the Inventory
Sublimit.
‘Base Rate Margin’ means, as of any date of determination, the
following percentages per annum, based upon Average Margin Availability:
| Level | Average Margin Availability | Base Rate Margin | ||||
I
|
< $20,000,000 | 0.50 | % | |||
II
|
≥ $20,000,000 but < $30,000,000 | 0.25 | % | |||
III
|
≥ $30,000,000 | 0.00 | % | |||
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
1
After the First Amendment Effective Date, the Base Rate Margin shall be
adjusted in accordance with the foregoing on the first day of each calendar month.
‘EBITDA’ means, with respect to any fiscal period, (a) Borrower’s
consolidated net earnings (or loss), minus (b)(i) extraordinary gains, and (ii)
interest income for such period, plus (c)(i) interest expense, (ii) income taxes,
(iii) depreciation and amortization, (iv) other non-cash expenses, charges and
losses (including, without limitation, stock option expenses, retirement plan
expense, impairment charges and charges and losses arising from accounting
pronouncements), (v) extraordinary or nonrecurring non-cash losses for such period,
and (vi) fees, expenses and prepayment premiums incurred in connection with the
consummation of the financing provided under this Agreement and the Term Loan
Agreement, in each case, determined on a consolidated basis in accordance with GAAP.
For the purposes of calculating EBITDA for any period, (a) if, at any time during
such period, Borrower or any of its Subsidiaries shall have made a Permitted
Acquisition, EBITDA for such period shall be calculated after giving pro forma
effect thereto (including pro forma adjustments arising out of events which are
directly attributable to such Permitted Acquisition, are factually supportable, and
are expected to have a continuing impact, in each case to be mutually and reasonably
agreed upon by Borrower and Agent) as if any such Permitted Acquisition or
adjustment occurred on the first day of such period).
‘Fixed Charges’ means, with respect to any fiscal period and with
respect to Borrower determined on a consolidated basis in accordance with GAAP, the
sum, without duplication, of (a) Interest Expense paid in cash during such period,
(b) regularly scheduled principal payments of Indebtedness during such period and
(c) earnout payments made during such period on Indebtedness permitted pursuant to
Section 6.1(h).
‘Fixed Charge Coverage Ratio’ means, with respect to Borrower for any
period, the ratio of (i) EBITDA for such period, minus Capital Expenditures not
financed with the proceeds of Indebtedness and made (to the extent not already
incurred in a prior period) or incurred during such period, minus all federal,
state, and local income taxes paid in cash during such period, plus, to the extent
not already included in EBITDA, cash tax refunds and receipts for such period to
(ii) Fixed Charges for such period.
‘Indebtedness’ means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments and
all reimbursement or other obligations in respect of letters of credit, bankers
acceptances, or other financial products, (c) all obligations as a lessee under
Capital Leases, (d) all obligations or liabilities of others secured by a Lien on
any asset of a Person or its Subsidiaries, irrespective of whether such obligation
or liability is assumed, (e) earnouts and all other obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary course
of business and repayable in accordance with customary trade practices), (f) all
obligations owing under Hedge Agreements, and (g) any obligation guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (f) above.
‘L/C Margin’ means, as of any date of determination, the following
percentages per annum, based upon Average Margin Availability:
| Level | Average Margin Availability | L/C Margin | ||||
I
|
< $20,000,000 | 2.50 | % | |||
II
|
≥ $20,000,000 but < $30,000,000 | 2.25 | % | |||
III
|
≥ $30,000,000 | 2.00 | % | |||
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
2
After the First Amendment Effective Date, the L/C Margin shall be adjusted in
accordance with the foregoing on the first day of each calendar month.
‘LIBOR Rate Margin’ means, as of any date of determination, the
following percentages per annum, based upon Average Margin Availability:
| Level | Average Margin Availability | LIBOR Rate Margin | ||||
I
|
< $20,000,000 | 3.00 | % | |||
II
|
≥ $20,000,000 but < $30,000,000 | 2.75 | % | |||
III
|
≥ $30,000,000 | 2.50 | % | |||
After the First Amendment Effective Date, the LIBOR Rate Margin shall be
adjusted in accordance with the foregoing on the first day of each calendar month.
‘Term Loan’ means, collectively, (a) the term loans made to Borrower
pursuant to the Term Loan Agreement on the Closing Date in an aggregate outstanding
principal amount not to exceed $45,000,000 and (b) additional term loans made to the
Borrower pursuant to the Term Loan Agreement on or after the First Amendment
Effective Date in an aggregate principal amount not to exceed $20,000,000.”
(b) Clause (e)(iii) of the definition of “Borrowing Base” contained in
Schedule 1.1 to the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“(iii) (A) at any time during the months of January, February, March, October,
November and December, $100,000,000 and, (B) at all other times, $92,500,000 (in
each case, the “Inventory Sublimit”), plus”
(c) Clause (i) of the definition of “Eligible Accounts” contained in
Schedule 1.1 to the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“(i) Accounts with respect to an Account Debtor whose total obligations owing
to Borrower exceed 10%, or with respect to (i) Wal-Mart Stores, Inc. (and its
subsidiaries and affiliates), 25%, (ii) Costco Wholesale Corporation or Safeway,
Inc. (and their respective subsidiaries and affiliates), 15%, or (iii) Target
Corporation (and its subsidiaries and affiliates), only so long as it has a rating
of Baa3 or higher from Xxxxx’x or BBB- or higher from S&P, 20% (each such
percentage, as applied to a particular Account Debtor, being subject to reduction by
Agent in its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates), of all Eligible Accounts, to the extent of the obligations owing by
such Account Debtor in excess of such percentage; provided, however,
that, in each case, the amount of Eligible Accounts that are excluded because they
exceed the foregoing
percentage shall be determined by Agent based on all of the otherwise Eligible
Accounts prior to giving effect to any eliminations based upon the foregoing
concentration limit,”
(d) The definition of “Eligible Equipment” set forth in Schedule 1.1 to the
Credit Agreement is hereby amended by deleting the word “or” at the end of clause
(c) thereof, deleting the
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
3
“.” at the end of clause (d) thereof and replacing it with “;
or” and inserting a new clause (e) to read in its entirety as follows:
“(e) it was acquired in connection with a Permitted Acquisition, until the
completion of an appraisal and field examination of such Equipment, in each case,
reasonably satisfactory to Agent (which appraisal and field examination may be
conducted prior to the closing of such Permitted Acquisition).”
(e) The definition of “Eligible Inventory” set forth in Schedule 1.1 to the
Credit Agreement is hereby amended by deleting the word “or” at the end of clause
(f) thereof, deleting the “.” at the end of clause (g) thereof and replacing it
with “; or” and inserting a new clause (h) to read in its entirety as follows:
“(h) it was acquired in connection with a Permitted Acquisition, until the
completion of a field examination (and, if required by the Lenders, an appraisal;
provided that [***]) of such Inventory, in each case, reasonably
satisfactory to Agent (which field examination (and, if applicable, appraisal) may
be conducted prior to the closing of such Permitted Acquisition).”
(f) The definition of “Permitted Dispositions” set forth in Schedule 1.1 to the
Credit Agreement is hereby amended by deleting the word “and” at the end of clause (d)
thereof and inserting “,” in its place, deleting the “.” at the end of clause (e) thereof
and replacing it with “; and” and inserting a new clause (f) to read in its entirety as
follows:
“(f) dispositions of assets acquired by Borrower or its Subsidiaries pursuant
to a Permitted Acquisition consummated within 12 months of the date of the proposed
Disposition (the “Subject Permitted Acquisition”) so long as (i) the
consideration received for the assets to be so disposed is at least equal to the
fair market value thereof, (ii) the assets to be so disposed are not necessary or
economically desirable in connection with the business of Borrower and its
Subsidiaries, and (iii) the assets to be so disposed are readily identifiable as
assets acquired pursuant to the Subject Permitted Acquisition.”
(g) The definition of “Permitted Investments” set forth in Schedule 1.1 to the
Credit Agreement is hereby amended by deleting the word “and” at the end of clause
(c) thereof, deleting the “.” at the end of clause (d) thereof and replacing it
with “;” and inserting new clauses (e) and (f) to read in their entirety as
follows:
“(e) Permitted Acquisitions; and (f) Investments held by a Person acquired in a
Permitted Acquisition to the extent that such Investments were not made in
contemplation of or in connection with such Permitted Acquisition and were in
existence on the date of such Permitted Acquisition.”
(h) The definition of “Permitted Liens” set forth in Schedule 1.1 to the Credit
Agreement is hereby amended by deleting the word “and” at the end of clause (n)
thereof, deleting the “.” at the end of clause (o) thereof and replacing it with “;”
and inserting new clauses (p) and (q) to read in their entirety as follows:
“(p) Liens solely on any xxxx xxxxxxx money deposits made by Borrower or any of
its Subsidiaries in connection with any letter of intent or purchase agreement with
respect to a Permitted Acquisition; and
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
4
(q) Liens on Equipment and/or Real Property to the extent securing Indebtedness
(other than earnout obligations) permitted pursuant to Section 6.1(h);
provided that (i) any such Lien is not incurred in connection with or in
anticipation of the related Permitted Acquisition and (ii) such Lien attaches solely
to the Equipment or Real Property acquired in such Permitted Acquisition and the
proceeds thereof.”
(i) Schedule 1.1 to the Credit Agreement is hereby amended by inserting the
following defined terms in alphabetical order:
“‘Acquisition’ means (a) the purchase or other acquisition by a Person
or its Subsidiaries of all or substantially all of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, or otherwise) by a Person or its
Subsidiaries of all or substantially all of the Stock of any other Person.
‘First Amendment’ means the certain First Amendment to Credit
Agreement, dated as of March 8, 2010, by and among the Borrower, the Agent and each
Lender party thereto.
‘First Amendment Effective Date’ means March 8, 2010.
[***]
‘Permitted Acquisition’ means any Acquisition so long as:
(a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,
(b) no Indebtedness will be incurred, assumed, or would exist with respect to
Borrower or its Subsidiaries as a result of such Acquisition, other than
Indebtedness permitted under clause (c), (f), (g) or
(h) of Section 6.1 and no Liens will be incurred, assumed, or would
exist with respect to the assets of Borrower or its Subsidiaries as a result or such
Acquisition other than Permitted Liens,
(c) Borrower has provided Agent with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such proposed
Acquisition, are factually supportable, and are expected to have a continuing
impact, in each case, determined as if the combination had been accomplished at the
beginning of the relevant period; such eliminations and inclusions to be mutually
and reasonably agreed upon by Borrower and Agent) created by adding the historical
combined financial statements of Borrower (including the combined financial
statements of any other Person or assets that were the subject of a prior Permitted
Acquisition during the relevant period) to the historical consolidated financial
statements of the Person to be acquired (or the historical financial statements
related to the assets to be acquired) pursuant to the proposed Acquisition, Borrower
and its Subsidiaries would have been in compliance with the financial covenants in
Section 6.16 of the Agreement for the 4 fiscal quarter period ended
immediately prior to the proposed date of consummation of such proposed Acquisition,
(d) Borrower has provided Agent with such due diligence information as
requested by Agent, including, without limitation, forecasted balance sheets, profit
and loss statements, and cash flow statements of the Person or assets to be acquired
for the remainder
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
5
of the fiscal year in which the proposed Acquisition is
consummated for such Person or related to such assets, all prepared on a basis
consistent with such Person’s (or assets’) historical financial statements, together
with appropriate supporting details and a statement of underlying assumptions, on a
quarter by quarter basis, in form and substance (including as to scope and
underlying assumptions) reasonably satisfactory to Agent,
(e) Borrower shall have Availability plus Qualified Cash in an amount equal to
or greater than $20,000,000 after giving effect to the consummation of the proposed
Acquisition; provided, that, for purposes of this clause (e), the
calculation of Availability shall include Accounts, Inventory and Equipment acquired
by the Borrower pursuant to such Acquisition only to the extent that such Accounts,
Inventory and Equipment constitute Eligible Accounts, Eligible Inventory and
Eligible Equipment, respectively,
(f) Borrower has provided Agent with written notice of the proposed Acquisition
at least 15 Business Days prior to the anticipated closing date of the proposed
Acquisition and, not later than 5 Business Days prior to the anticipated closing
date of the proposed Acquisition, copies of the acquisition agreement and other
material documents relative to the proposed Acquisition, which agreement and
documents must be reasonably acceptable to Agent,
(g) the assets being acquired (other than a de minimis amount of assets in
relation to Borrower’s and its Subsidiaries’ total assets), or the Person whose
Stock is being acquired, are useful in or engaged in, as applicable, the business of
Borrower and its Subsidiaries or a business reasonably related thereto,
(h) the assets being acquired (other than a de minimis amount of assets in
relation to Borrower’s and its Subsidiaries’ total assets) are located within the
United States or the Person whose Stock is being acquired is organized in a
jurisdiction located within the United States,
(i) the subject assets or Stock, as applicable, are being acquired directly by
a Borrower or one of its Subsidiaries that is a Loan Party, and, in connection
therewith, Borrower or the applicable Loan Party shall have complied with
Section 5.16 or 5.17, as applicable, of the Agreement and, in the
case of an acquisition of Stock, Borrower or the applicable Loan Party shall have
demonstrated to Agent that the new Loan Parties have received consideration
sufficient to make the joinder documents binding and enforceable against such new
Loan Parties, and
(j) the cash consideration payable at closing in respect of all Permitted
Acquisitions (including the proposed Acquisition) shall not exceed $50,000,000 in
the aggregate.”
(j) Section 6.1 of the Credit Agreement is hereby amended by deleting the word “and”
at the end of clause (e) thereof, replacing the “.” at the end of clause (f) thereof with “;” and
inserting the following new clauses (g), (h) and (i) at the end thereof to
read in their entirety as follows:
“(g) contingent liabilities in respect of any indemnification obligation,
adjustment of purchase price, non-compete, or similar obligation of Borrower or the
applicable Loan Party incurred in connection with the consummation of one or more
Permitted Acquisitions;
(h) [***]; and
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
6
(i) in addition to the Indebtedness set forth in the first row of the table set
forth in Schedule 4.19, Indebtedness under the Term Loan Documents in an
aggregate amount not to exceed $20,000,000; provided that at the time of, and
immediately after giving effect to, the incurrence of any such Indebtedness, no
Event of Default shall have occurred and be continuing.”
(k) Section 6.3 of the Credit Agreement is hereby amended by inserting the phrase
“Other than in order to consummate a Permitted Acquisition:” immediately prior to clause
(a) thereof.
(l) The first paragraph of Section 6.16(a) of the Credit Agreement is hereby amended
and restated to read in its entirety as follows:
“(a) Fixed Charge Coverage Ratio. Have, on any date on which Average
Excess Availability is less than $25,000,000, a Fixed Charge Coverage Ratio,
measured on a trailing 12-month-end basis on the last day of each fiscal month of
the Borrower, less than the required amount set forth in the following table for the
applicable period set forth opposite thereto:
| Applicable Ratio | Applicable Period | |
1.0:1.0
|
For the trailing 12 months ending on the last day of the then most-recently ended fiscal month of the Borrower and the last day of each fiscal month thereafter until such time as Average Excess Availability is equal to or greater than $25,000,000 for three consecutive fiscal months |
SECTION 2. Conditions. This Amendment shall become effective when (i) the Agent shall
have received duly executed counterparts of this Amendment from the Borrower and the Required
Lenders and the Agent shall have executed and delivered its counterpart to this Amendment, (ii) the
Agent shall have received from Borrower duly executed counterparts to the amended and restated Fee
Letter executed and executed and delivered its signed counterpart to the Borrower, and (iii) the
Agent shall have received in immediately available funds all fees owing under the amended and
restated Fee Letter.
SECTION 3. Reference to and Effect Upon the Credit Agreement.
(a) Except as specifically set forth herein, the Credit Agreement and the other Loan
Documents shall remain in full force and effect and are hereby ratified and confirmed; and
(b) The amendment set forth herein is effective solely for the purpose set forth herein
and shall be limited precisely as written, and shall not be deemed to (i) be a consent to
any amendment, waiver of or modification of any other term or condition of the Credit
Agreement or any other Loan Document, (ii) operate as a waiver of or otherwise prejudice any
right, power or remedy that Agent or Lenders may now have or may have in the future under or
in connection with the Credit Agreement or any other Loan Document or (iii) constitute an
amendment or waiver of any provision of the Credit Agreement or any Loan Document, except as
specifically set forth herein. Upon the effectiveness of this Amendment, each reference in
the Credit Agreement to “this Agreement”, “herein”, “hereof” and words of like import and
each reference in the Credit Agreement and the Loan
Documents to the Credit Agreement shall mean the Credit Agreement as amended hereby.
This Amendment shall be construed in connection with and as part of the Credit Agreement.
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
7
SECTION 4. Costs and Expenses. As provided in Section 17.10 of the Credit
Agreement, the Borrower shall pay all costs and expenses incurred by or on behalf of Agent and
Lenders arising from or relating to this Amendment constituting Lender Group Expenses.
SECTION 5. GOVERNING LAW. THE VALIDITY OF THIS AMENDMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL
MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
SECTION 6. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute part of this Amendment for any other
purposes.
SECTION 7. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original, but all such counterparts
shall constitute one and the same instrument.
(signature pages follow)
| *** | Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934 and filed separately with the United States Securities and Exchange Commission. |
8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first above written.
| XXXX X. XXXXXXXXXX & SON, INC. a Delaware corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Title: Chief Financial Officer | ||||
| XXXXX FARGO CAPITAL FINANCE, LLC (f/k/a Xxxxx Fargo
Foothill, LLC), a Delaware limited liability company,
as Agent and as a Lender |
||||
| By: | /s/ Xxxx Xxxxxxxxx | |||
| Title: Vice President | ||||
| BURDALE FINANCIAL LIMITED, a United Kingdom corporation, as a Lender |
||||
| By: | /s/ Xxxxx Xxxxxxxx | |||
| Title: Duly Authorized Signatory | ||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||
| Title: Duly Authorized Signatory | ||||
[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT]
