INCREASE NOTICE AND FOURTH AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.10
INCREASE
NOTICE AND
FOURTH AMENDMENT TO CREDIT AGREEMENT
FOURTH AMENDMENT TO CREDIT AGREEMENT
This
Increase Notice and Fourth Amendment to Credit Agreement (this
“Amendment”) is entered
into as of January 30, 2008, among Madison Capital Funding LLC (in its individual capacity,
“Madison”), as Agent for the Lenders, the undersigned Lenders, and Compass Group Diversified
Holdings LLC, a Delaware limited liability company (“Borrower”).
W I T N E S S E T H
WHEREAS, Borrower, Agent and Lenders are parties to that certain Credit Agreement dated as of
November 21, 2006 (as amended to date, the “Credit
Agreement”; capitalized terms used herein and
not otherwise defined herein shall have the respective meanings given to them in the Credit
Agreement);
WHEREAS, Borrower, Agent and Lenders entered into a certain Third Amendment to the Credit
Agreement dated as of December 7, 2007, pursuant to which the terms and conditions of the Credit
Agreement were amended to reflect all of the terms and conditions set forth in the updated version
of the Credit Agreement attached as an Exhibit to such Third Amendment and, subsequent to the
consummation of the Third Amendment, Required Lenders approved of the clarifying changes to the
definitions of Existing Portfolio Companies and Permitted Ineligible Acquisitions reflected in the
changed pages attached hereto as Attachment I:
WHEREAS, Borrower has requested an increase to the Term Loan in the amount of $5,000,000
pursuant to Section 2.1.3 of the Credit Agreement (the “Specified Term Loan
Increase”) and has further requested that (i) Required Lenders agree to waive, in respect of
the Specified Term Loan Increase, the $10,000,000 minimum threshold for Requested Term Loan
Increases set forth in Section 2.1.3 of the Credit Agreement and (ii) Term Lenders waive
their right to participate in the Specified Term Loan Increase, with all of the Specified Term
Loan Increase to be allocated to Madison; and
WHEREAS, Borrower has requested that Agent and Required Lenders agree to amend the
definitions of “Existing Portfolio Company EBITDA” and “New Portfolio Company EBITDA” under the
Credit Agreement to provide for a new addback in respect of integration costs incurred in
connection with Permitted Eligible Acquisitions that are add-on acquisitions, on and subject to
the terms and conditions specified herein.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
herein, the parties hereto agree as follows:
1. Specified Term Loan Increase. Pursuant to Section 2.1.3 of the Credit
Agreement, (a) Required Lenders hereby waive, in respect of the Specified Term Loan Increase, the
$10,000,000 minimum threshold for Requested Term Loan Increases set forth in Section
2.1.3 of the Credit Agreement and (b) Term Lenders hereby waive their right to
participate in the Specified Term Loan Increase, with all of the Specified Term Loan Increase to be
allocated to Madison. Borrower, Agent and the undersigned Lenders (including Madison) hereby agree
that the Specified Term Loan Increase shall be effective immediately upon the effectiveness of this
amendment pursuant to the provisions of Section 6 hereof (the
“Effective Date”). After giving
effect to the Specified Term Loan Increase on the Effective Date, the aggregate amount of the Term
Loan shall be $155,000,000 and all references in the Credit Agreement and the other Loan Documents
to the Term Loan shall be considered a reference to the Term Loan as increased pursuant to the
Specified Term Loan Increase. Borrower acknowledges and agrees that the Specified Term Loan
Increase shall become part of the Term Loan for all purposes under the Credit Agreement and under
the Collateral Documents and shall be secured by the Collateral in all respects.
2. Allocation of Specified Term Loan Increase. Borrower, Agent, and
Lenders hereby acknowledge and agree that all of the Specified Term Loan Increase shall be
allocated to Madison.
3. Amendments
to Credit Agreement. In reliance upon the representations
and warranties of Borrower set forth in Section 4 below and subject to the satisfaction of the
conditions set forth in Section 5 below, the parties hereto hereby agree to amend the Credit
Agreement as follows:
(a) The definition of “Existing Portfolio Company EBITDA” contained in Section 1.1 to the
Credit Agreement is hereby amended and restated in its entirety as follows:
“Existing
Portfolio Company EBITDA means, for any Existing Portfolio Company for any
period, Consolidated Net Income of such Existing Portfolio Company
plus. to the extent deducted in determining such Consolidated
Net Income (and without duplication), (i) the
consolidated interest expense of such Existing Portfolio Company (including all imputed interest
on Capital Leases), (ii) income tax expense of such Existing
Portfolio Company, (iii) depreciation
and amortization of such Existing Portfolio Company, (iv) Management Fees paid that are permitted
under Section 7.4 and satisfied by or otherwise allocable to such Existing Portfolio
Company, (v) non-cash charges incurred to reflect any in-process research and development acquired
by Borrower at the time of its acquisition of such Existing Portfolio Company, (vi) expense in
respect of any forgiveness of non-cash loans to management of such Existing Portfolio Company,
(vii) other non-cash expenses (or less gains or income) deducted in the determination of such
Consolidated Net Income and for which no cash outlay (or cash receipt) is foreseeable prior to the
Termination Date and (viii) integration costs incurred by such Existing Portfolio Company in
connection with the integration of a Target acquired by such Existing Portfolio Company pursuant
to a Permitted Eligible Acquisition that is an add-on Acquisition, in each case so long as (I) the
aggregate amount of all such integration costs with respect to such Target so added back to the
Existing Portfolio Company EBITDA of such Existing Portfolio Company pursuant to this clause
(viii) does not exceed (1) $9,000,000, in the case of the add-on Acquisition of Staffmark
Investment LLC by CBS and (2) the lesser of (A) fifteen percent (15%) of the amount of the
Existing Portfolio Company EBITDA of such Existing Portfolio Company (after giving effect to the
consummation of the Acquisition of the applicable add-on Target and as of the date thereof) and
(B) forty percent (40%) of the Pro Forma EBITDA of the applicable add-on
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Target, in all other cases, (II) such integration costs are incurred within the first
twenty-four (24) months (thirty-six (36) months in the case of the Acquisition of Staffmark
Investment LLC by CBS) following the consummation of the Acquisition of the applicable add-on
Target, and (III) all such addback amounts have been approved by Agent; provided, that
(x) with respect to an Existing Portfolio Company that was previously a New Portfolio Company,
for periods prior to the acquisition of such Existing Portfolio Company pursuant to a Permitted
Eligible Acquisition, the amount of such Existing Portfolio Company EBITDA shall be equal to
the Pro Forma EBITDA of such Existing Portfolio Company for such period, (y) notwithstanding
anything to the contrary contained herein, no Pro Forma EBITDA of Tasco shall be included in
Halo’s Existing Portfolio Company EBITDA and Tasco’s Existing Portfolio Company EBITDA shall be
limited to periods after the consummation of the acquisition of Tasco by Halo; and (z)
notwithstanding anything to the contrary contained herein, for each of the calendar months
preceding the Third Amendment Date set forth below, the Existing Portfolio Company EBITDA for
each Existing Portfolio Company shall be deemed to be the amount set forth below opposite such
month:
January 2007 | February 2007 | March 2007 | April 2007 | |||||||||||||
Anodyne |
$ | 452,000 | $ | 229,000 | $ | 899,000 | $ | 396,000 | ||||||||
Advanced Circuits |
$ | 1,658,000 | $ | 1,777,000 | $ | 1,975,000 | $ | 1,712,000 | ||||||||
Aeroglide |
$ | 1,296,000 | $ | 729,000 | $ | 1,135,000 | $ | 972,000 | ||||||||
American
Furniture |
$ | 2,088,000 | $ | 2,029,000 | $ | 2,327,000 | $ | 1,390,000 | ||||||||
CBS |
$ | 904,000 | $ | 682,000 | $ | 2,722,000 | $ | 1,693,000 | ||||||||
Halo |
$ | (247,000 | ) | $ | 423,000 | $ | (222,000 | ) | $ | (147,000 | ) | |||||
Silvue |
$ | 556,000 | $ | 715,000 | $ | 552,000 | $ | 630,000 |
August | September | |||||||||||||||||||
May 2007 | June 2007 | July 2007 | 2007 | 2007 | ||||||||||||||||
Anodyne |
$ | 237,000 | $ | 346,000 | $ | 612,000 | $ | 735,000 | $ | 392,000 | ||||||||||
Advanced Circuits |
$ | 1,890,000 | $ | 1,915,000 | $ | 1,797,000 | $ | 1,936,000 | $ | 1,889,000 | ||||||||||
Aeroglide |
$ | 804,000 | $ | 957,000 | $ | 415,000 | $ | 595,000 | $ | 460,000 | ||||||||||
American
Furniture |
$ | 1,261,000 | $ | 979,000 | $ | 870,000 | $ | 1,032,000 | $ | 1,160,000 |
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August | September | |||||||||||||||||||
May 2007 | June 2007 | July 2007 | 2007 | 2007 | ||||||||||||||||
CBS |
$ | 1,638,000 | $ | 2,500,000 | $ | 1,495,000 | $ | 2,174,000 | $ | 3,599,000 | ||||||||||
Halo |
$ | 587,000 | $ | 883,000 | $ | 106,000 | $ | 1,166,000 | $ | 1,447,000 | ||||||||||
Silvue |
$ | 598,000 | $ | 603,000 | $ | 622,000 | $ | 555,000 | $ | 687,000 " |
(b) The definition of “New Portfolio Company EBITDA” contained in Section
1.1 to the Credit Agreement is hereby amended and restated in its entirety as follows:
1.1 to the Credit Agreement is hereby amended and restated in its entirety as follows:
“New Portfolio Company EBITDA means, for any New Portfolio Company for any
period, (x) with respect to periods after the acquisition of such New Portfolio Company
pursuant to a Permitted Eligible Acquisition, Consolidated Net Income of such New
Portfolio Company plus, to the extent deducted in determining such Consolidated
Net Income, (i) the consolidated interest expense of such New Portfolio Company
(including all imputed interest on Capital Leases), (ii) income tax expense of such New
Portfolio Company, (iii) depreciation and amortization of such New Portfolio Company,
(iv) Management Fees paid that are permitted under Section 7.4 and satisfied by
or otherwise allocable to such New Portfolio Company, (v) non-cash charges incurred to
reflect any in-process research and development acquired by Borrower at the time of its
acquisition of such New Portfolio Company, (vi) expense in respect of any forgiveness of
non-cash loans to management of such New Portfolio Company, (vii) other non-cash expenses
(or less gains or income) deducted in the determination of such Consolidated Net Income
and for which no cash outlay (or cash receipt) is foreseeable prior to the Termination
Date and (viii) integration costs incurred by such New Portfolio Company in connection
with the integration of a Target acquired by such New Portfolio Company pursuant to a
Permitted Eligible Acquisition that is an add-on Acquisition, in each case so long as (I)
the aggregate amount of all such integration costs with respect to such Target so added
back to the New Portfolio Company EBITDA of such New Portfolio Company pursuant to this
clause (viii) does not exceed the lesser of (A) fifteen percent (15%) of the amount of
the New Portfolio Company EBITDA of such New Portfolio Company (after giving effect to
the consummation of the Acquisition of the applicable add-on Target and as of the date
thereof) and (B) forty percent (40%) of the Pro Forma EBITDA of the applicable add-on
Target, (II) such integration costs are incurred within the first twenty-four (24) months
following the consummation of the Acquisition of the applicable add-on Target, and (III)
all such addback amounts have been approved by Agent; and (y) with respect to periods
prior to the acquisition of such New Portfolio Company pursuant to a Permitted Eligible
Acquisition, Pro Forma EBITDA for such New Portfolio Company.”
(c) The calculations of Existing Portfolio Company EBITDA and New
Portfolio Company EBITDA that are included as part of the Schedule to the Compliance
Certificate are amended and restated as set forth on Attachment II hereto.
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4. Representations and Warranties of Borrower. Borrower hereby represents
and warrants to Agent and Lenders that, both before and after giving effect to this
Amendment:
(a) The execution, delivery and performance of this Amendment has been
duly authorized by all requisite corporate action on the part of Borrower;
(b) No Default or Event of Default has occurred and is continuing; and
(c) The representations and warranties of Borrower set forth in the Credit
Agreement, as amended hereby, and in the other Loan Documents, as amended hereby, are
true and correct in all material respects as of the date hereof, with the same effect as
though
made on the date hereof (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they are true and correct in all material respects as
of
such earlier date).
5. Conditions Precedent to Effectiveness. The effectiveness of this
Amendment is subject to the prior or concurrent consummation of each of the following
conditions:
(a) Agent shall have received an executed copy of this Amendment, together
with such other documents, agreements and instruments as Agent may reasonably require or
request in connection herewith;
(b) all proceedings taken in connection with the transactions contemplated by
this Amendment and all documents, instruments and other legal matters incident thereto shall
be reasonably satisfactory to Agent and its legal counsel; and
(c) no Default or Event of Default shall have occurred and be continuing or
shall be caused by the transactions contemplated by this Amendment.
6. Miscellaneous.
(a) Governing
Law. THIS AMENDMENT SHALL BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
(b) Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts, and each such
counterpart, when executed and delivered, shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Amendment.
(c) Reference to Credit Agreement. Each reference in the Credit Agreement to
“this Agreement,” “hereunder,” “hereof,” “herein” or words of like import, and each
reference in the Credit Agreement or in any other Loan Document, or other agreements,
documents or other instruments executed and delivered pursuant to the Credit Agreement,
shall mean and be a reference to the Credit Agreement as amended by this Amendment.
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(d) Costs and Expenses. Borrower acknowledges that Section 10.4 of the Credit
Agreement applies to this Amendment and the transactions, agreements and documents contemplated
hereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their duly authorized officers as of the day and year first above written.
COMPASS GROUP DIVERSIFIED HOLDINGS | ||||||
LLC | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | CFO |
Signature page to Increase Notice and Fourth Amendment
MADISON CAPITAL FUNDING LLC, | ||||||
as Agent and a Lender | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | Managing Director |
Signature page to Increase Notice and Fourth Amendment
U.S. BANK NATIONAL ASSOCIATION, | ||||||
as a Lender | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | VICE PRESIDENT |
Signature page to Increase Notice and Fourth Amendment
NEWSTAR CP FUNDING LLC, as a Lender | ||||||
By: NewStar Financial, Inc., its Designated Manager | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | Managing Director | |||||
NEWSTAR CREDIT OPPORTUNITIES FUNDING | ||||||
II LTD., as a Lender | ||||||
By: NewStar Financial, Inc, its Manager | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | Managing Director |
Signature page to Increase Notice and Fourth Amendment
FIFTH THIRD BANK, as a Lender | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | Vice President |
Signature page to Increase Notice and Fourth Amendment
ALLIED IRISH BANKS, P.L.C., as a Lender | ||||||
By: | /s/ Xxxxxx Xxxxxx | |||||
Title: | Assistant Vice President | |||||
By: | /s/ Xxxxxx Xxxx | |||||
Title: | Vice President |
Signature page to Increase Notice and Fourth Amendment
SUNTRUST BANK, as a Lender | ||||||
By: | /s/ J. Xxxxxx Xxxxxx | |||||
Title: | Vice President |
Signature page to Increase Notice and Fourth Amendment
BRANCH BANKING AND TRUST COMPANY, | ||||||
as a Lender | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | Vice President |
Signature page to Increase Notice and Fourth Amendment
THE PRIVATEBANK AND TRUST COMPANY, | ||||||
as a Lender | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | Managing Director |
Signature page to Increase Notice and Fourth Amendment
CITIBANK, N.A., as a Lender | ||||||
By: | /s/ Xxx Xxxxxx | |||||
Title: | Vice President |
Signature page to Increase Notice and Fourth Amendment
AIB DEBT MANAGEMENT LIMITED, as a Lender | ||||||
By: Title: |
/s/ Xxxxxx Xxxxxx
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Investment Advisor to | ||||||
AIB Debt Management Limited |
By: Title: |
/s/ Xxxxxx Xxxx
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Investment Advisor to | ||||||
AIB Debt Management Limited | ||||||
Signature page to Increase Notice and Fourth Amendment
XXXXX CAPITAL SENIOR LOAN | ||||||
OPPORTUNITY FUND, LTD., as a Lender | ||||||
By: Xxxxx Capital Incorporated, as Collateral Manager | ||||||
By: | /s/ [ILLEGIBLE]
|
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Title: | ||||||
XXXXX CAPITAL CP FUNDING LLC, as a Lender | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | ||||||
XXXXX CAPITAL MASTER FUNDING LLC, as a Lender | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | ||||||
XXXXX INTERNATIONAL LOAN LTD. I, as a Lender | ||||||
By: Xxxxx Capital International Management LLC, | ||||||
as Collateral Manager | ||||||
By: | /s/ [ILLEGIBLE] | |||||
Title: | ||||||
Signature page to Increase Notice and Fourth Amendment
AUDAX CREDIT OPPORTUNITIES OFFSHORE | ||||||
LTD., as a Lender | ||||||
By: Title: |
/s/ [ILLEGIBLE]
|
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Authorized Signatory |
Signature page to Increase Notice and Fourth Amendment
ATTACHMENT I TO
INCREASE NOTICE AND FOURTH AMENDMENT
INCREASE NOTICE AND FOURTH AMENDMENT
See attached pages
ATTACHMENT II TO
INCREASE NOTICE AND FOURTH AMENDMENT
INCREASE NOTICE AND FOURTH AMENDMENT
Existing Portfolio Company EBITDA for each Existing Portfolio Company
1. | Consolidated Net Income for such Existing Portfolio Company | $ | ||||||||||
2.
|
Plus: | Interest Expense | $ | |||||||||
income tax expense | $ | |||||||||||
depreciation | $ | |||||||||||
amortization | $ | |||||||||||
Management Fees satisfied by or otherwise allocable to such Existing Portfolio Company | $ | |||||||||||
Non-cash charges reflecting in-process research and development | $ | |||||||||||
Expense due to forgiveness of non-cash loans to management | $ | |||||||||||
Other non-cash expenses (or less gains or income) for which no cash outlay (or receipt) is foreseeable | $ | |||||||||||
Integration costs incurred in connection with the integration of add-on Targets* | $ | |||||||||||
For periods prior to the acquisition of such Portfolio Company: | ||||||||||||
Pro Forma EBITDA for such Portfolio Company | $ | |||||||||||
* | Not to exceed the lesser of (x) 15% of Existing Portfolio Company EBITDA of such Existing
Portfolio Company after giving effect to the Acquisition of the applicable add-on Target and (y)
forty percent (40%) of the Pro Forma EBITDA of the applicable add-on Target ($9,000,000 in the case
of the Acquisition of Staffmark Investments LLC by CBS), and only to the extent incurred within the
first 24 months (36 months in the case of the Acquisition of Staffmark Investments LLC by CBS)
after the Acquisition of applicable Add-On Target and approved by Agent. |
New Portfolio Company EBITDA for each New Portfolio Company
For periods after the acquisition of such New Portfolio Company: | ||||||||||||
1. | Consolidated Net Income for such New Portfolio Company | $ | ||||||||||
2.
|
Plus: | Interest Expense | $ | |||||||||
income tax expense | $ | |||||||||||
depreciation | $ | |||||||||||
amortization | $ | |||||||||||
Management Fees satisfied by or otherwise allocable to such New Portfolio Company | $ | |||||||||||
Non-cash charges reflecting in-process research and development | $ | |||||||||||
Expense due to forgiveness of non-cash loans to management | $ | |||||||||||
Other non-cash expenses (or less gains or income) for which no cash outlay (or receipt) is foreseeable | $ | |||||||||||
Integration costs incurred in connection with the integration of add-on Targets** | $ | |||||||||||
For periods prior to the acquisition of such Portfolio Company: | ||||||||||||
Pro Forma EBITDA for such Portfolio Company | $ | |||||||||||
** | Not to exceed the lesser of (x) 15% of New Portfolio Company EBITDA of such New Portfolio Company
after giving effect to the Acquisition of the applicable add-on Target and (y) forty percent (40%)
of the Pro Forma EBITDA of the applicable add-on Target, and only to the extent incurred within the
first 24 months after the Acquisition of applicable Add-On Target and approved by Agent. |
ATTACHMENT I TO
INCREASE NOTICE AND FOURTH AMENDMENT
INCREASE NOTICE AND FOURTH AMENDMENT
See attached pages
ATTACHMENT II TO
INCREASE NOTICE AND FOURTH AMENDMENT
INCREASE NOTICE AND FOURTH AMENDMENT
Existing Portfolio Company EBITDA for each Existing Portfolio Company
1. | Consolidated Net Income for such Existing Portfolio Company | $ | ||||||||||
2.
|
Plus: | Interest Expense | $ | |||||||||
income tax expense | $ | |||||||||||
depreciation | $ | |||||||||||
amortization | $ | |||||||||||
Management Fees satisfied by or otherwise allocable to such Existing Portfolio Company | $ | |||||||||||
Non-cash charges reflecting in-process research and development | $ | |||||||||||
Expense due to forgiveness of non-cash loans to management | $ | |||||||||||
Other non-cash expenses (or less gains or income) for which no cash outlay (or receipt) is foreseeable | $ | |||||||||||
Integration costs incurred in connection with the integration of add-on Targets* | $ | |||||||||||
For periods prior to the acquisition of such Portfolio Company: | ||||||||||||
Pro Forma EBITDA for such Portfolio Company | $ | |||||||||||
* | Not to exceed the lesser of (x) 15% of Existing Portfolio Company EBITDA of such Existing
Portfolio Company after giving effect to the Acquisition of the applicable add-on Target and (y)
forty percent (40%) of the Pro Forma EBITDA of the applicable add-on Target ($9,000,000 in the case
of the Acquisition of Staffmark Investments LLC by CBS), and only to the extent incurred within the
first 24 months (36 months in the case of the Acquisition of Staffmark Investments LLC by CBS)
after the Acquisition of applicable Add-On Target and approved by Agent. |
New Portfolio Company EBITDA for each New Portfolio Company
For periods after the acquisition of such New Portfolio Company: | ||||||||||||
1. | Consolidated Net Income for such New Portfolio Company | $ | ||||||||||
2.
|
Plus: | Interest Expense | $ | |||||||||
income tax expense | $ | |||||||||||
depreciation | $ | |||||||||||
amortization | $ | |||||||||||
Management Fees satisfied by or otherwise allocable to such New Portfolio Company | $ | |||||||||||
Non-cash charges reflecting in-process research and development | $ | |||||||||||
Expense due to forgiveness of non-cash loans to management | $ | |||||||||||
Other non-cash expenses (or less gains or income) for which no cash outlay (or receipt) is foreseeable | $ | |||||||||||
Integration costs incurred in connection with the integration of add-on Targets** | $ | |||||||||||
For periods prior to the acquisition of such Portfolio Company: | ||||||||||||
Pro Forma EBITDA for such Portfolio Company | $ | |||||||||||
** | Not to exceed the lesser of (x) 15% of New Portfolio Company EBITDA of such New Portfolio Company
after giving effect to the Acquisition of the applicable add-on Target and (y) forty percent (40%)
of the Pro Forma EBITDA of the applicable add-on Target, and only to the extent incurred within the
first 24 months after the Acquisition of applicable Add-On Target and approved by Agent. |