Company: CODI-PB
Filing Date: 2025-12-08
Form Type: 10-K/A
Source: 0001345126-25-000078
Chunk: 351

Company: Compass Diversified Holdings
Filing Date: 2025-12-08
Form: 10-K/A
Chunk 351
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 net assets are less than or equal to $ 3.5billion (the “Initial Threshold Fee”), (ii) the Initial Threshold Fee plus 1.25% of the amount of adjusted net assets exceeding $ 3.5billion when the adjusted net assets are more than $ 3.5billion but less than $ 10billion, or (iii) 1.5% of the adjusted net assets when the adjusted net assets are $ 10billion or more. The incentive management fee will be 0.25% of the amount of adjusted net assets exceeding $ 3.5billion only when the adjusted net assets are more than $ 3.5billion but less than $ 10billion and only if the Company’s annualized internal rate of return on equity for the trailing three-years, exceeds 12%. Any incentive management fee paid to the Manager may only be distributed by the Manager among the then-current Employees (as defined in the MSA) of the Manager. Such incentive management fee is subject to approval by the Compensation Committee of the Board. The Amendment also eliminates the payment of integration services fee by the Company’s subsidiaries to the Manager and excludes excess cash held by the Company and the Company’s subsidiaries, subject to certain exceptions, from the calculation of the adjusted net assets of the Company, along with certain other changes.

Suspension of At-the-Market Offering Programs

As a result of the commencement of the Lugano Investigation and related events, the Company determined it was unable to offer and sell shares under its common and preferred at-the-market equity offering programs.

First Forbearance Agreement with Respect to Credit Agreement

On May 7, 2025, the Company indicated its intent to delay the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and disclosed non-reliance on its 2024 financial statements as a result of concerns about financing, accounting, and inventory practices at one of its subsidiaries, Lugano, and irregularities identified in sales, cost of sales, inventory, and accounts receivable recorded by Lugano. Concurrently, the LLC also provided notice to the Administrative Agent, advising of the existence of potential defaults or events of default under the Credit Agreement in respect of Lugano (the “Lugano Events of Default”).

On May 22, 2025, the LLC entered into a Forbearance Agreement and Second Amendment to Credit Agreement (the “First Forbearance Agreement”) with the