Exhibit 10.1
INCREASE NOTICE, CONSENT AND
SECOND AMENDMENT TO CREDIT AGREEMENT
          This Increase Notice, Consent and Second Amendment to Credit Agreement
(this “Amendment”) is entered into as of May ___, 2007, among Madison Capital
Funding LLC, as Agent for the Lenders, the undersigned Lenders, and Compass
Group Diversified Holdings LLC, a Delaware limited liability company
(“Borrower”).
WITNESSETH
          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 has requested that Agent and Lenders agree to an
increase in the Revolving Loan Commitment in the amount of $45,000,000 (the
“Revolver Increase”) pursuant to Section 2.1.2 of the Credit Agreement and,
further, that Lenders waive their right to participate, to the extent of their
respective Pro Rata Shares, in such Revolver Increase except to the extent of
the participations in the Revolver Increase that are detailed herein;
          WHEREAS, Borrower has requested that Agent and Lenders consent to CBS
purchasing from the chief executive officer of CBS 50,000 shares of CBS’ stock
for a total price of $875,500 (the “Redemption”), notwithstanding that such
stock redemption would otherwise be prohibited under Section 7.4(b) of the
Credit Agreement;
          WHEREAS, Borrower has requested that Agent and Lenders agree to amend
the definition of “Permitted Eligible Acquisitions” under the Credit Agreement
to revise the terms under which a Portfolio Company may make certain Permitted
Eligible Acquisitions that are add-on acquisitions; and
          WHEREAS, Borrower, Agent and Lenders have further agreed to amend the
Credit Agreement in certain other respects, subject to the terms and conditions
contained herein.
          NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereto agree as follows:
          1. Revolver Increase. Pursuant to Section 2.1.2 of the Credit
Agreement, Agent and Lenders hereby consent to the Revolver Increase and Lenders
hereby waive their right to participate, to the extent of their respective Pro
Rata Shares, in such Revolver Increase except to the extent of the
participations in the Revolver Increase that are detailed herein. Borrower,
Agent and Lenders hereby agree the Revolver Increase shall be effective
immediately upon the effectiveness of this amendment pursuant to the provisions
of Section 7 hereof (the “Effective Date”). After giving effect to the Revolver
Increase on the Effective Date, the aggregate amount of the Revolving Loan
Commitments is $300,000,000 and all

 

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references in the Credit Agreement and the other Loan Documents to the Revolving
Loan Commitment shall be considered a reference to the Revolving Loan Commitment
as increased hereby. Borrower acknowledges and agrees that such Revolver
Increase shall become part of the Revolving Loan Commitments for all purposes
under the Credit Agreement and under the Collateral Documents and shall be
secured by the Collateral in all respects.
          2. Additional Lenders; Allocation of Revolver Increase. In reliance on
the representations and warranties of Additional Lenders (as defined below) set
forth in Section 6 below, Borrower, Agent, and Lenders hereby acknowledge and
agree that by executing this Amendment each of First Horizon Bank, a Division of
First Tennessee Bank National Association (“First Horizon”), Allied Irish Banks,
p.l.c. (“AIB”) and NewStar Arcturus CLO I Ltd. (“Arcturus”); together with First
Horizon and AIB, each an “Additional Lender” and collectively the “Additional
Lenders”) hereby become “Lenders” under the Credit Agreement and assume all the
rights and obligations of a Lender under the Credit Agreement and the other Loan
Documents as of the Effective Date. Such Additional Lenders share of the
Revolving Loan Commitments and their Pro Rata Share shall be the applicable
amount specified opposite such Lender’s name on Annex I hereto. In addition, the
parties hereto hereby agree that the share of the Revolving Loan Commitment of
US Bank National Association shall be increased by $7,000,000, and that its new
share of the Revolver Commitment and Pro Rata Share are set forth opposite its
name on Annex I hereto. Annex I sets forth the aggregate Revolver Commitment and
Pro Rata Share for each Lender after giving effect to the Revolver Increase.
          3. Consent to Redemption. In reliance upon the representations and
warranties of Borrower set forth in Section 5 below and subject to the
satisfaction of the conditions set forth in Section 7 below, Agent and the
Lenders party hereto hereby consent to the consummation of the Redemption by
CBS. This consent is a limited consent and shall not be deemed to constitute a
consent with respect to any other current or future departure from the
requirements of any provision of the Credit Agreement or any other Loan
Documents.
          4. Amendments to Credit Agreement. In reliance upon the
representations and warranties of Borrower set forth in Section 5 below and
subject to the satisfaction of the conditions set forth in Section 7 below, the
parties hereto hereby agree to amend the Credit Agreement as follows:
          (a) The definition of “Permitted Eligible Acquisition” contained in
Section 1.1 to the Credit Agreement is hereby amended and restated in its
entirety as follows:
     “Permitted Eligible Acquisition means any Acquisition by (i) an Acquisition
Subsidiary of Borrower of all or substantially all of the assets of a Person as
a New Portfolio Company of Borrower, or of all or substantially all of any
business or division of a Person as a New Portfolio Company of Borrower, (ii)
Borrower of no less than a voting majority of the capital stock, partnership
interests, membership interests or equity of any Person as a New

 

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Portfolio Company of Borrower, (iii) a Portfolio Company (or an Acquisition
Subsidiary of such Portfolio Company) of all or substantially all of the assets
of a Person as an add-on acquisition for such Portfolio Company, or of all or
substantially all of any business or division of a Person as an add-on
acquisition for such Portfolio Company or (iv) a Portfolio Company of no less
than 100% of the capital stock, partnership interests, membership interests or
equity of any Person as an add-on acquisition for such Portfolio Company, in
each case to the extent that each of the conditions precedent set forth in Annex
III shall have been satisfied; provided, however, that if such Acquisition is
otherwise a Permitted Eligible Acquisition under clauses (iii) or (iv) hereof
and the aggregate consideration to be paid in such Acquisition is $5,000,000 or
less, then the conditions set forth in clauses (1), (4), (8) and (10) of Annex
III shall not be required to be satisfied and the condition set forth in clause
(12) of Annex III shall not be required to be satisfied until thirty (30) days
after giving effect to such Acquisition; and provided, further, that in the case
of any such Acquisition, (x) the Target shall be assigned the same multiple for
purposes of Availability as the Portfolio Company consummating such Acquisition
and (y) there shall be no Pro Forma EBITDA of the Target included in the
Existing Portfolio Company EBITDA (or New Portfolio Company EBITDA, as
applicable) of the Portfolio Company consummating such Acquisition, with
Existing Portfolio Company EBITDA (or New Portfolio Company EBITDA, as
applicable) for the Target being acquired to be limited to periods after the
consummation of such Acquisition. It is agreed and understood that the SES
Add-On Acquisition shall be a Permitted Eligible Acquisition within the
foregoing clause (iii) so long as (x) the SES Add-On Acquisition is consummated
on or within 10 Business Days of the Closing Date and (y) no Event of Default
exists either before or after giving effect to the SES Add-On Acquisition.”
          (b) Section 6.1.2 of the Credit Agreement is hereby amended by
deleting the first clause and replacing it with the following:
          “Promptly when available and in any event within 45 days after the end
of each month (including months that correspond to the end of a Fiscal
Quarter),”
          (c) Section 6.1.6 of the Credit Agreement is hereby amended by
replacing the phrase “dated as of the end of the most recently ended month” with
the phrase “dated as of the end of the most recently ended month covered by such
interim report”.
          (d) Annex I to the Credit Agreement is deleted in its entirety and
replaced with Annex I attached hereto.
          (e) Annex II to the Credit Agreement is hereby amended by adding the
notice and payment addresses listed on Annex II attached hereto to the end
thereof.

 

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          (f) Annex III to the Credit Agreement is hereby amended by replacing
the phrase “recomputed for the most recently ended month of Borrower” in clause
(5) thereof with the phrase “recomputed for the most recent Computation Period
of Borrower”.
          5. 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).
          6. Representations and Warranties of Additional Lenders. Each
Additional Lender hereby represents and warrants to Agent and Lenders that, both
before and after giving effect to this Amendment, that such Additional Lender:
          (a) is legally authorized to enter into this Amendment;
          (b) has received a copy of the Credit Agreement, together with copies
of the most recent financial statements delivered pursuant thereto and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Amendment;
          (c) agrees that it will, independently and without reliance upon Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement;
          (d) appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to Agent by the terms thereof, together with such powers as are reasonably
incidental thereto;
          (e) agrees that it will perform in accordance with their terms all
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender;
          (f) represents that on the date of this Amendment it is not presently
aware of any facts that would cause it to make a claim under the Credit
Agreement; and

 

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          (g) if organized under the laws of a jurisdiction outside the United
States, has delivered to Agent the forms prescribed by the Internal Revenue
Service of the United States, which have been duly executed, certifying as to
such Additional Lender’s exemption from United States withholding taxes with
respect to all payments to be made to such Additional Lender under the Credit
Agreement or such other documents as are necessary to indicate that all such
payments are subject to such tax at a rate reduced by an applicable tax treaty.
          7. 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 a fully executed copy of this Amendment,
together with such other documents, agreements and instruments as Agent may
reasonably require or request, including any documents, agreements or
instruments that may be required to be delivered by either Additional Lender to
Agent;
          (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.
          8. 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.
          (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.