Exhibit 10.15
FIRST AMENDMENT, WAIVER AND CONSENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
FIRST AMENDMENT, WAIVER AND CONSENT
TO AMENDED AND RESTATED CREDIT AGREEMENT (this “
Amendment ”) dated as of April 9, 2009 by and
among
BRODER BROS., CO., a Michigan
corporation, as Lead Borrower for the Borrowers named herein (in
such capacity, the “ Lead Borrower
”);
The BORROWERS party
hereto;
The GUARANTORS party
hereto;
The LENDERS party hereto;
and
BANK OF AMERICA, N.A., as
administrative agent (in such capacity, the “
Administrative Agent ”) for the Lenders;
BANK OF AMERICA, N.A., as collateral
agent (in such capacity, the “ Collateral Agent
”) for the Lenders;
BANK OF AMERICA, N.A., as Issuing
Bank and Swingline Lender;
in consideration of the mutual
covenants herein contained and benefits to be derived
herefrom.
W I T N E S
S E T H :
WHEREAS, the Borrowers, the
Guarantors, the Lenders, the Administrative Agent, and the
Collateral Agent, among others, have entered into that certain
Amended and Restated Credit Agreement dated as of August 31,
2006 (as amended, restated, modified or supplemented and in effect,
the “ Credit Agreement ”); and
WHEREAS, the Lead Borrower has
informed the Administrative Agent that the Borrowers are
negotiating the refinancing of the Qualified Senior Notes through
an exchange offer (the “ Exchange Offer ”) of
the Qualified Senior Notes for exchange notes (the “
Exchange Notes ”) and up to one hundred
(100%) percent of the Equity Interests in the Lead Borrower,
which may include the repurchase of Equity Interests from existing
holders, consummation of a merger or similar transactions (the
“ Exchange Offer Equity Issuance ”)
and;
WHEREAS, in order for the Lead
Borrower to refinance and exchange the Qualified Senior Notes for
the Exchange Notes pursuant to the Exchange Offer, the
Administrative Agent’s consent to the terms of such Exchange
Offer is required pursuant to Section 5.05(b) of the Credit
Agreement; and
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WHEREAS, the Borrowers have
requested that the Administrative Agent and the Required Lenders
consent to the terms of the Exchange Offer and the Exchange Offer
Equity Issuance, and the Administrative Agent and the Required
Lenders are willing to so consent to such terms subject to the
terms and conditions provided herein; and
WHEREAS, the Borrowers have failed
to deliver the annual financial statements for the fiscal year
ending December 27, 2008 required to be delivered pursuant to
Section 5.01(a) of the Credit Agreement, which failure is a
Default under the Credit Agreement and shall become an Event of
Default under clause (e) of Article VIII of the Credit
Agreement if such financial statements are not delivered within the
grace period set forth in clause (e) of Article VIII of the
Credit Agreement (the “ Financial Statement Default
”); and
WHEREAS, the Borrowers have informed
the Administrative Agent that the Borrowers will fail to make the
interest payment due April 15, 2009 to the holders of the
Qualified Senior Notes pursuant to the Qualified Senior Debt
Documents, and the Borrowers have requested that the Required
Lenders waive any Default or Event of Default arising under clause
(f) of Article VIII of the Credit Agreement as a result of
such failure (the “ Interest Default ”), and the
Required Lenders are willing to do so subject to the terms and
conditions provided herein; and
WHEREAS, the Borrowers have
requested that the Required Lenders waive the Financial Statement
Default and the Interest Default (and certain other Defaults or
Events of Default which may (i) arise under clause (c) of
Article VIII of the Credit Agreement as a result of a breach of the
representations and warranties of the Borrowers in connection
therewith and (ii) arise under clause (f) of Article VIII
of the Credit Agreement as a result of the failure of the Borrowers
to deliver an annual report on Form 10-K containing the annual
financial statements for the fiscal year ending December 27,
2008 to the noteholders and file such annual report with the
Securities and Exchange Commission as required pursuant to the
Qualified Senior Debt Documents (the “ Related
Defaults ”, and collectively with the Financial Statement
Default and the Interest Default, the “ Specified
Default ”)) and extend the time for delivery of the
annual financial statements for the fiscal year ending
December 27, 2008 required to be delivered pursuant to
Section 5.01(a) of the Credit Agreement to May 15, 2009,
and the Required Lenders are willing to do so subject to the terms
and conditions provided herein; and
WHEREAS, the Borrowers, the
Guarantors, the Agents and the Required Lenders have agreed to
amend the Credit Agreement as set forth herein.
NOW THEREFORE, in consideration of
the mutual promises and agreements herein contained, the parties
hereto hereby agree as follows:
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1.
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Capitalized
Terms . All capitalized
terms not otherwise defined herein shall have the same meaning as
in the Credit Agreement, as applicable.
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2.
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Representations and
Warranties . Each Loan
Party hereby represents and warrants that, after giving effect to
this Amendment, (i) no Default or Event of Default by the Loan
Parties exists under the Credit Agreement or under any other Loan
Document, and (ii) all representations and warranties
contained in the Credit Agreement and the other Loan Documents are
true and correct in all material respects (without duplication of
any materiality standard set forth in any such representation or
warranty) as of the date hereof with the same effect as though made
on and as of such date, except to the extent such
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representations and warranties
expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects (without duplication of any materiality standard
set forth in any such representation or warranty) as of such
date.
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3.
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Amendments
to Credit Agreement . The
Credit Agreement is hereby amended as follows:
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a.
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Amendments
to Article I . The
provisions of Article I of the Credit Agreement are hereby amended
as follows:
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i.
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The definition
of “Applicable Fee” is hereby deleted in its entirety
and the following substituted in its stead:
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“Applicable Fee” shall
mean 0.75%.
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ii.
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The definition
of “Applicable Margin” is hereby deleted in its
entirety and the following substituted in its stead:
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“Applicable Margin”
shall mean, (i) with respect to ABR Revolving Loans, 3.00%,
and (ii) with respect to any Eurodollar Revolving Loan,
(x) from the First Amendment Effective Date through
May 30, 2009, 4.00%, and (y) thereafter, the percentages
set forth in the pricing grid below:
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Average Daily Excess Availability
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Adjusted LIBOR Rate Applicable Margin
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Greater than or equal to $40,000,000
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3.75
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%
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Less than $40,000,000
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4.00
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%
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On the first day of each fiscal
quarter (each, an “Adjustment Date”), commencing with
the fiscal quarter beginning on December 28, 2009, the
Applicable Margin for Eurodollar Revolving Loans shall be
determined from such pricing grid based upon average daily Excess
Availability for the most recently ended fiscal quarter immediately
preceding such Adjustment Date.
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iii.
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The definition
of “Asset Sale” is hereby amended by adding the
following sentence at the end thereof:
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“For the avoidance of doubt,
neither any Designated Equity Issuance nor the Exchange Offer
Equity Issuance shall be deemed to be an Asset Sale
hereunder.”
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iv.
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The definition
of “Borrowing Base” is hereby deleted in its entirety
and the following substituted in its stead:
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“Borrowing Base” shall
mean at any time, subject to adjustment as provided in
Section 2.19, an amount equal to the lesser of :
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(a)
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the sum of,
without duplication:
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(i) the book value of Eligible
Accounts of the Loan Parties, net of Receivables Reserves,
multiplied by the advance rate of 85%, plus
(ii) the lesser of (A) the
advance rate of 75% multiplied by the Cost of Eligible Inventory of
the Loan Parties, net of Inventory Reserves, or (B) the
advance rate of 85% of the Net Recovery Cost Percentage multiplied
by the Cost of Eligible Inventory, net of Inventory Reserves, of
the Loan Parties, plus
(iii)(A) during the period from the
First Amendment Effective Date through May 2, 2009, an amount
equal to (x) 10.0% of the Net Recovery Cost Percentage
multiplied by the Cost of Eligible Inventory, net of Inventory
Reserves, of the Loan Parties, plus, (y) the book value of
Eligible Accounts of the Loan Parties, net of Receivables Reserves,
multiplied by 5.0% (the “ April Seasonal Overadvance
”); provided, the April Seasonal Overadvance shall not exceed
$13.5 million at any time; and (B) during the period from
May 3, 2009 through May 30, 2009, an amount equal to
(x) 5.0% of the Net Recovery Cost Percentage multiplied by the
Cost of Eligible Inventory, net of Inventory Reserves, of the Loan
Parties, plus, (y) the book value of Eligible Accounts of the
Loan Parties, net of Receivables Reserves, multiplied by 2.5% (the
“ May Seasonal Overadvance ”, and together with
the April Seasonal Overadvance, collectively, the “
Seasonal Overadvance ”); provided, the May Seasonal
Overadvance shall not exceed $10.0 million at any time;
minus
(iv) the Hedging Reserve,
minus
(v) any Availability Reserves
established from time to time by the Administrative Agent in
accordance with Section 2.21, minus
(vi) the then amount of the
Availability Block; or
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(b)
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the Indenture
Borrowing Base.
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The Borrowing Base at any time shall
be determined by reference to the most recent Borrowing Base
Certificate theretofore delivered to the Administrative Agent and
the Collateral Agent.
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v.
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Upon the
consummation of the Exchange Offer and the Exchange Offer Equity
Issuance, the definition of “Change in Control” will be
deleted in its entirety and the following substituted in its
stead:
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A “Change in Control”
shall be deemed to have occurred if: (a) any “change of
control” occurs under and as defined in any documentation
relating to any Indebtedness in excess of $50,000,000; (b) any
“person” or “group” (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that for purposes of this clause such person or group shall be
deemed to have “beneficial ownership” of all securities
that any such person or group has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of Voting Stock representing more
than 35% of the voting power of the total outstanding Voting Stock
of the Lead Borrower or following the formation thereof, the Future
Holding Company; (c) following an IPO (other than in
connection with the Exchange Offer Equity Issuance), during any
period of two consecutive years, individuals who at the beginning
of such period constituted the Board of Directors of the Lead
Borrower or, following the formation thereof, the Future Holding
Company (other than vacant seats, together with any new directors
whose election to such Board of Directors or whose nomination for
election was approved by a vote of 51% of the directors of the
Person who is the subject of the IPO then still in office who were
either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of
the Person who is the subject of the IPO, (d) following the
formation of the Future Holding Company, the Future Holding Company
at any time ceases to own directly 100% of the Equity Interests of
the Lead Borrower (unless the Lead Borrower is the subject of an
IPO), or (e) the Lead Borrower at any time ceases to own,
directly or indirectly, 100% of the Equity Interests of each other
Loan Party (other than the Future Holding Company).
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vi.
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The definition
of “Consolidated EBITDA” is hereby amended as
follows:
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a)
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by deleting
clause (a)(vi) thereof in its entirety and by substituting the
following in its stead:
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“(vi) unusual or non-recurring
charges, fees and expenses which are reasonably acceptable to the
Administrative Agent (including, without limitation the following
(which are reasonably acceptable to the Administrative Agent),
(x) any cash losses arising in connection with any Asset Sales
permitted by Section 6.05(b)(iii) hereof during such period,
(y) audit fees incurred in such period in connection with the
preparation of the Borrowers’ financial statements and
required to be paid pursuant to the Sarbanes-Oxley Act, in an
amount not to exceed (i) for the 2009 fiscal year, 75% of such
fees incurred (but in any event not more than $750,000), and
(ii) for the 2010 fiscal year, 40% of such fees incurred (but
in any event not more than $400,000), and (z) without
duplication of other charges, fees and expenses, increased amounts
(as determined by the Lead Borrower and concurred with by the Lead
Borrower’s public accountants) in connection with the Lead
Borrower’s allowance for doubtful accounts or allowances for
discontinued and slow moving inventory for the fiscal quarters
ending December 27, 2008 or March 28,
2009),”
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b)
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by adding the
following new clause (a)(xiv) thereto:
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“and (xiv) fees, expenses
and costs incurred in connection with the First Amendment and the
Exchange Offer paid during such period (including, without
limitation, the fees, expenses and costs of attorneys and advisors
for the Lead Borrower and the holders of the Qualified Senior
Notes),”
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c)
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by adding the
following sentence at the end thereof:
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Notwithstanding the foregoing, for
purposes of determining Consolidated EBITDA for the periods set
forth on Exhibit B hereto, Consolidated EBITDA shall be the
amounts set forth on Exhibit B , plus, without duplication
of other charges, fees and expenses, increased amounts (as
determined by the Lead Borrower and concurred with by the Lead
Borrower’s public accountants) in connection with the Lead
Borrower’s allowance for doubtful accounts or allowances for
discontinued and slow moving inventory for the fiscal quarters
ending December 27, 2008 or March 28, 2009.
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vii.
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The definition
of “Consolidated Fixed Charge Coverage Ratio” is hereby
deleted in its entirety and the following substituted in its
stead:
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“Consolidated Fixed Charge
Coverage Ratio” means, with respect to any Person for any
period, the ratio of (a) (i) Consolidated EBITDA for such
period minus (ii) Capital Expenditures (excluding those
financed under Capital Lease Obligations) made during such period,
minus (iii) all cash payments in respect of federal,
state and foreign income Taxes paid during such period (net of any
cash refund in respect of income taxes actually
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received during such period), to
(b) the sum of (i) the principal amount of all scheduled
amortization payments on all Indebtedness (including the principal
component of all Capital Lease Obligations), but excluding any
scheduled amortization payments of Indebtedness under the Qualified
Senior Notes, payable in cash during such period, plus
(ii) Cash Interest Expense accrued or paid in cash during such
period, plus (iii) Dividends paid in cash during such
period, in each case determined on a consolidated basis in
accordance with GAAP. For the avoidance of doubt, in no event shall
(i) interest paid in kind and payable at maturity or
(ii) any interest waived in connection with the Exchange Offer
constitute “Cash Interest Expense”.
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viii.
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The definition
of “Designated Equity Issuance” is hereby amended by
deleting “the Qualified Senior Notes” in clause
(d) thereof and by substituting “the Senior Notes”
in its stead.
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ix.
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The definition
of “Excess Availability” is hereby deleted in its
entirety and the following substituted in its stead:
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“Excess Availability”
shall mean (a) the lesser of (i) the Revolving
Commitments of all of the Lenders and (ii) the Borrowing Base
less any amounts available to be borrowed under clause (a)(iii) of
the definition of such term, in each case on the date of
determination less (b) all outstanding Loans and LC Exposure
less (c) without duplication of items deducted from the
Borrowing Base, all Reserves.
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x.
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The definition
of “Excess Availability Requirements” is hereby deleted
in its entirety.
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xi.
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The definition
of “Indenture Borrowing Base” is hereby deleted in its
entirety and the following substituted in its stead:
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“Indenture Borrowing
Base” means the “Borrowing Base” as defined in
the Senior Notes Debt Documents.
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xii.
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The definition
of “LIBOR Rate” is hereby deleted in its entirety and
the following substituted in its stead:
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“LIBOR Rate” shall mean,
with respect to any Eurodollar Borrowing for any Interest Period
therefor, the higher of (a) 1.50%, or (b) (i) the
rate per annum equal to the rate determined by the Administrative
Agent to be the offered rate that appears on the page of the
Telerate screen (or any successor thereto) that displays an average
British Bankers Association Interest Settlement Rate for deposits
in Dollars (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period,
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determined as of approximately 11:00
a.m. (London time) two Business Days prior to the first day of such
Interest Period, or (ii) if the rate referenced in the
preceding clause (b) (i) does not appear on such page or
service or such page or service shall not be available, the rate
per annum equal to the rate determined by the Administrative Agent
to be the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement
Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, or
(iii) if the rates referenced in the preceding clauses
(b) (i) and (b) (ii) are not available, the
rate per annum determined by the Administrative Agent as the rate
of interest at which deposits in Dollars for delivery on the first
day of such Interest Period in same day funds in the approximate
amount of the LIBO Borrowing being made, continued or converted by
Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major
banks in the London interbank eurodollar market at their request at
approximately 4:00 p.m. (London time) two Business Days prior to
the first day of such Interest Period.
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xiii.
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The definition
of “Material Indebtedness” is hereby amended by
deleting “the Qualified Senior Debt Documents” in the
third line thereof and by substituting “the Senior Notes Debt
Documents” in its stead.
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xiv.
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The definition
of “Permitted Acquisitions” is hereby amended by
deleting clause (vi) thereof in its entirety and by
substituting the following in its stead:
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“(vi) concurrent with delivery
of the notice referred to in clause (i) above, the Lead
Borrower shall have delivered to the Agents, in form and substance
reasonably satisfactory to Administrative Agent:
(a) for Permitted Acquisitions with
Acquisition Consideration in an amount less than or equal to $15.0
million, evidence that the Borrowers have Excess Availability equal
to or greater than $20,000,000 before, and Excess Availability is
projected to be equal to or greater than $20,000,000 for the
subsequent three fiscal month ends after giving effect to, such
Permitted Acquisition;
(b) for Permitted Acquisitions with
Acquisition Consideration in an amount greater than $15.0 million,
evidence that (i) the Borrowers have Excess Availability equal
to or greater than twenty (20%) percent of the lesser of the
Revolving Commitment and the Borrowing Base before, and Excess
Availability is projected to be equal to or greater than
twenty
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(20%) percent of the lesser of the
Revolving Commitment and the Borrowing Base for the subsequent
three fiscal month ends after giving effect to, such Permitted
Acquisition, and (ii) a consolidated balance sheet,
income statement and cash flow statement prepared on a Pro Forma
Basis for any Future Holding Company, the Borrowers and their
Subsidiaries (the “ Acquisition Pro Forma ”),
based on recent financial statements, which shall be complete and
shall fairly present in all material respects the assets,
liabilities, financial condition and results of operations of any
Future Holding Company, the Borrowers and their Subsidiaries in
accordance with GAAP consistently applied, but taking into account
such Permitted Acquisition and all Acquisition Related Indebtedness
arising in connection therewith, such Acquisition Pro Forma shall
reflect that the Loan Parties shall have complied with
Section 6.08 hereof (whether or not the Consolidated Fixed
Charge Coverage Ratio is then required to be tested) as of the most
recent Test Period prior to the consummation of such Permitted
Acquisition;
(c) for Permitted Acquisitions with
Acquisition Consideration in an amount greater than $15.0 million,
reasonably detailed projections of balance sheets, income
statements and cash flow statements covering the period commencing
on the date of such Permitted Acquisition and ending on the
Revolving Maturity Date reasonably satisfactory to the
Administrative Agent, taking into account such Permitted
Acquisition (the “ Acquisition Projections
”);
(d) for Permitted Acquisitions with
Acquisition Consideration in an amount greater than $15.0 million,
(x) historical financial statements for the last three fiscal
years of the Person to be acquired (audited if available without
undue cost or delay) and unaudited financial statements thereof for
the most recent interim period which are available, (y) a
reasonably detailed description of all material information
relating thereto and copies of all material documentation
pertaining to such acquisition, and (z) all such other
information and data relating to such acquisition or to the Person
to be acquired as may be reasonably requested by any Agent;
and
(e) a certificate of a Financial
Officer of the Lead Borrower certifying that (w) upon the
consummation of the Permitted Acquisition, the Loan Parties will
have sufficient cash liquidity to conduct their business and pay
their respective debts and other liabilities as they come due,
(x) the Acquisition Pro Forma (if required to be delivered
pursuant to this definition) fairly presents in all material
respects the financial condition of the Loan Parties and their
Subsidiaries (on a consolidated basis) as of the date thereof after
giving effect to the Permitted Acquisition
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(y) the Acquisition Projections (if
required to be delivered pursuant to this definition) are
reasonable estimates of future financial performance of the Loan
Parties and their Subsidiaries and the acquired Person, and
(z) such acquisition complies with all of the terms of this
definition.”
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xv.
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Upon the
consummation of the Exchange Offer and the Exchange Offer Equity
Issuance, the definition of “Permitted Holders” will be
deleted in its entirety and the following substituted in its
stead:
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“Permitted Holders”
shall mean (i) the Sponsor and its Affiliates, (ii) any
party to the Amended and Restated Shareholders Agreement, dated
September 22, 2003, among the Lead Borrower, Bain Capital Fund
VI, L.P. and the other stockholders named therein or any other
stockholders agreement to be entered into in connection with
Exchange Offer Equity Issuance, and (iii) any group (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act or any successor provision) of which any of the
foregoing are members; provided that, in the case of any
group and without giving effect to the existence of such group or
any other group, any member of such group (other than the Sponsor
and its Affiliates) does not have beneficial ownership of more than
35.0% of the total voting power of the Voting Stock of the Company
or any of its direct or indirect parent companies.
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xvi.
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The definition
of “Prime Rate” is hereby deleted in its entirety and
the following substituted in its stead:
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“Prime
Rate” means, as to any Borrowing, for any day, the highest
of: (a) the variable annual rate of interest then most
recently announced by Bank of America at its head office in
Charlotte, North Carolina as its “Prime Rate”;
(b) the Federal Funds Effective Rate in effect on such day
plus 1 / 2 of 1% (0.50%) per annum; and
(c) the LIBOR Rate for a 30 day interest period as determined
on such day, plus 1.0%. The Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate being charged to
any customer. The Prime Rate is a rate set by Bank of America based
upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and
is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. If for any reason
the Administrative Agent shall have reasonably determined (which
determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative
Agent to obtain sufficient quotations thereof in accordance with
the terms hereof, the Prime Rate shall be determined without regard
to clause (b) of the first sentence of this definition, until
the
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circumstances giving rise to such
inability no longer exist. Any change in the Prime Rate due to a
change in Bank of America’s Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such
change in Bank of America’s Prime Rate or the Federal Funds
Effective Rate.
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xvii.
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The definition
of “Required Excess Availability Amount” is hereby
deleted in its entirety.
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xviii.
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The definition
of “Revolving Commitment” is hereby amended by deleting
the last two sentences thereof in their entirety and by
substituting the following in their stead:
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“The aggregate amount of the
Lenders’ Revolving Commitments on the First Amendment
Effective Date is $200.0 million. The aggregate amount of the
Lenders’ Revolving Commitments may be increased as
set
