EXHIBIT 10.2

 

AMENDMENT NO. 1

 

Dated as of October 10, 2012

 

to

 

CREDIT AGREEMENT

 

Dated as of July 15, 2010

 

THIS AMENDMENT NO. 1 (this “Amendment”) is made as of October 10, 2012 by and
among Zep Inc. (the “Company”), Acuity Specialty Products, Inc. (together with
the Company, the “Borrowers”), the financial institutions listed on the
signature pages hereof and JPMorgan Chase Bank, N.A., as Administrative Agent
(the “Administrative Agent”), under that certain Credit Agreement dated as of
July 15, 2010 by and among the Borrowers, the Subsidiary Borrowers from time to
time party thereto, the Lenders and the Administrative Agent (as amended by that
certain Consent Memorandum dated October 13, 2011 and as the same may be further
amended, restated, supplemented or otherwise modified from time to time, 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, the Company has requested that the Required Lenders and the
Administrative Agent agree to certain amendments to the Credit Agreement;

 

WHEREAS, the Borrowers, the Lenders party hereto and the Administrative Agent
have agreed to such amendments on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrowers, the
Lenders party hereto and the Administrative Agent hereby agree to the following
amendments to the Credit Agreement.

 

1.                                      Amendments to the Credit Agreement. 
Effective as of the date of satisfaction of the conditions precedent set forth
in Section 2 and, as applicable, Section 3 below, the parties hereto agree that
the Credit Agreement is hereby amended as follows:

 

(a)                                 Section 1.01 of the Credit Agreement is
amended to insert the following new definition therein in the appropriate
alphabetical order as follows:

 

“Permitted Goldeneye Acquisition” means the acquisition by the Company of
certain personal property of the Person disclosed to the Lenders as “Goldeneye”
all as described to the Administrative Agent and the Lenders at a meeting on or
about September 25, 2012, if, at the time of and immediately after giving effect
thereto, (a) no Event of Default has occurred and is continuing or would arise
after giving effect thereto, (b) the Company has delivered to the Lenders a
certificate demonstrating the calculation of the Leverage Ratio and the Fixed
Charge Coverage Ratio (on a Pro Forma Basis after giving effect to such
acquisition (but without giving effect to any synergies or cost savings unless

 

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permitted in accordance with Regulation S-X)) recomputed as of the last day of
the most recently ended fiscal quarter of the Company for which financial
statements are available, as if such acquisition (and any related incurrence or
repayment of Indebtedness, with any new Indebtedness being deemed to be
amortized over the applicable testing period in accordance with its terms) had
occurred on the first day of each relevant period for calculating such
covenants) demonstrating a Leverage Ratio not greater than 4.25 to 1.00 and a
Fixed Charge Coverage Ratio not less than 1.15 to 1.00 and (c) the Company has
delivered to the Lenders a certificate confirming that it has not entered into
or consummated any Permitted Acquisitions on or after September 25, 2012.

 

(b)                                 Section 1.04 of the Credit Agreement is
amended to restate in its entirety the last sentence thereof as follows:

 

Notwithstanding any other provision contained herein, all terms of an accounting
or financial nature used herein shall be construed, and all computations of
amounts and ratios referred to herein shall be made (i) without giving effect to
any election under Accounting Standards Codification 825-10-25 (or any other
Accounting Standards Codification or Financial Accounting Standard having a
similar result or effect) to value any Indebtedness or other liabilities of the
Company or any Subsidiary at “fair value”, as defined therein, (ii) without
giving effect to any treatment of Indebtedness in respect of convertible debt
instruments under Accounting Standards Codification 470-20 (or any other
Accounting Standards Codification or Financial Accounting Standard having a
similar result or effect) to value any such Indebtedness in a reduced or
bifurcated manner as described therein, and such Indebtedness shall at all times
be valued at the full stated principal amount thereof and (iii) in a manner such
that any obligations relating to a lease that was accounted for by such Person
as an operating lease as of the Effective Date and any similar lease entered
into after the Effective Date by such Person shall be accounted for as
obligations relating to an operating lease and not as Capital Lease Obligations.

 

(c)                                  Section 2.02(c) of the Credit Agreement is
amended to delete the reference to “and not less than $5,000,000 (or, if such
Borrowing is denominated in a Foreign Currency 5,000,000 units of such
currency)” appearing therein and to replace such reference with a reference to
“and not less than $5,000,000 (or, if such Borrowing is denominated in a Foreign
Currency 1,000,000 units of such currency)”.

 

(d)                                 Section 6.04(b) of the Credit Agreement is
restated in its entirety as follows:

 

(b) the Permitted Goldeneye Acquisition and Permitted Acquisitions;

 

(e)                                  Section 1.01 of the Credit Agreement is
amended to insert the following new definitions therein in the appropriate
alphabetical order as follows:

 

“Amendment No. 1 Effective Date” means the date on which the conditions of
effectiveness set forth in Section 3 of Amendment No. 1 to this Agreement, dated
as of October 10, 2012, have all been satisfied.

 

“Covenant Reversion Notice” means a written notice provided by the Company to
the Administrative Agent stating the Company’s election to maintain (i) a
maximum Leverage Ratio of 3.75 to 1.00 under this Agreement and (ii) a

 

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minimum Fixed Charge Coverage Ratio of 1.25 to 1.00 under this Agreement, in
each case, on and after the date of receipt of such notice by the Administrative
Agent, which notice shall be irrevocable in all respects.

 

“Restriction Period” means the period beginning on the Amendment No. 1 Effective
Date through and including the last day of the sixth fiscal quarter of the
Company ending on or after the Amendment No. 1 Effective Date; provided that the
Restriction Period shall automatically cease to exist and shall be of no further
force or effect on and after the date, if any, on which the Company delivers to
the Administrative Agent the Covenant Reversion Notice.

 

(f)                                   The definition of “Permitted Acquisition”
appearing in Section 1.01 of the Credit Agreement is amended to delete the
phrase “(2) the Leverage Ratio is equal to or less than 3.50 to 1.00” appearing
therein and to replace such phrase with the phrase “(2) the Leverage Ratio is
equal to or less than a ratio equal to (x) the numerator of the maximum Leverage
Ratio permitted under Section 6.11(a) at such time minus 0.25 to (y) 1.00”.

 

(g)                                  The definition of “Permitted Acquisition”
appearing in Section 1.01 of the Credit Agreement is further amended to insert
the following sentence at the end thereof:

 

Notwithstanding the foregoing, it is understood and agreed that the aggregate
consideration paid in respect of all Permitted Acquisitions consummated during
the Restriction Period shall not exceed $15,000,000.

 

(h)                                 Section 6.11(a) of the Credit Agreement is
restated in its entirety as follows:

 

(a) Maximum Leverage Ratio.  The Company will not permit the ratio (the
“Leverage Ratio”), determined as of the end of each of its fiscal quarters, of
(i) Consolidated Total Indebtedness to (ii) Consolidated EBITDA for the period
of four (4) consecutive fiscal quarters ending with the end of such fiscal
quarter, all calculated for the Company and its Subsidiaries on a consolidated
basis, to be greater than (x) 4.25 to 1.00 for the first fiscal quarter of the
Company ending on or after the Amendment No. 1 Effective Date and the three
fiscal quarters of the Company ending immediately following such fiscal quarter,
(y) 4.00 to 1.00 for the two fiscal quarters of the Company ending immediately
following the latest fiscal quarter referenced in the preceding clause (x) and
(z) 3.75 to 1.00 for the fiscal quarter of the Company ending immediately
following the latest fiscal quarter referenced in the previous clause (y) and
each fiscal quarter of the Company thereafter; provided that, notwithstanding
the foregoing, on and after the date, if any, on which the Company delivers to
the Administrative Agent the Covenant Reversion Notice, the maximum Leverage
Ratio permitted under this Section 6.11(a) shall be 3.75 to 1.00.

 

(i)                                     Section 6.11(b) of the Credit Agreement
is restated in its entirety as follows:

 

(b) Fixed Charge Coverage Ratio.  The Company will not permit the ratio (the
“Fixed Charge Coverage Ratio”), determined as of the end of each of its fiscal
quarters, of (i) (A) Consolidated EBITDA, minus (B) expense for taxes paid in
cash, minus (C) payments in respect of unfinanced Consolidated Capital
Expenditures, minus (D) Restricted Payments made pursuant to clause (d) of
Section 6.07 to (ii) Consolidated Fixed Charges, in each case for the period of

 

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four (4) consecutive fiscal quarters ending with the end of such fiscal quarter,
all calculated for the Company and its Subsidiaries on a consolidated basis, to
be less than (x) 1.15 to 1.00 for the first fiscal quarter of the Company ending
on or after the Amendment No. 1 Effective Date and the three fiscal quarters of
the Company ending immediately following such fiscal quarter, (y) 1.20 to 1.00
for the two fiscal quarters of the Company ending immediately following the
latest fiscal quarter referenced in the preceding clause (x) and (z) 1.25 to
1.00 for the fiscal quarter of the Company ending immediately following the
latest fiscal quarter referenced in the previous clause (y) and each fiscal
quarter of the Company thereafter; provided that, notwithstanding the foregoing,
on and after the date, if any, on which the Company delivers to the
Administrative Agent the Covenant Reversion Notice, the minimum Fixed Charge
Coverage Ratio permitted under this Section 6.11(b) shall be 1.25 to 1.00.

 

2.                                     Conditions of Effectiveness.  The
effectiveness of Sections 1(a), 1(b), 1(c) and 1(d) of this Amendment is subject
to the conditions precedent that the Administrative Agent shall have received
counterparts of this Amendment duly executed by the Borrowers, the Required
Lenders and the Administrative Agent and the Consent and Reaffirmation attached
as Exhibit A hereto duly executed by the Subsidiary Guarantors.

 

3.                                     Further Conditions of Effectiveness.  The
effectiveness of Sections 1(e), 1(f), 1(g), 1(h) and 1(i) of this Amendment is
subject to the conditions precedent that, on or prior to January 2, 2013,
(a) all of the conditions precedent set forth in Section 2 shall have been
satisfied, (b) the Company shall have (i) consummated the Permitted Goldeneye
Acquisition (as defined in this Amendment), (ii) provided the Administrative
Agent reasonable evidence confirming such consummation and (iii) provided the
Lenders the certificates required pursuant to the definition of Permitted
Goldeneye Acquisition, (c) the Company shall have paid to the Administrative
Agent, for the account of each Lender that executes and delivers its signature
page hereto by such time as is requested by the Administrative Agent, an
amendment fee equal to 0.05% of such Lender’s Revolving Commitment and the
amount of such Lender’s outstanding Term Loans and (d) the Company shall have
paid, to the extent invoiced, all expenses of the Administrative Agent
(including reasonable and documented attorneys’ fees and expenses) in connection
with this Amendment and the other Loan Documents.

 

4.                                      Representations and Warranties of the
Borrowers.  Each Borrower hereby represents and warrants as follows:

 

(a)                                 This Amendment and the Credit Agreement as
amended hereby constitute legal, valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

 

(b)                                 As of the date hereof and after giving
effect to the terms of this Amendment, (i) no Default or Event of Default has
occurred and is continuing and (ii) the representations and warranties of such
Borrower set forth in the Credit Agreement, as amended hereby, are true and
correct in all material respects as of the date hereof.

 

5.                                      Reference to and Effect on the Credit
Agreement.

 

(a)                                 Upon the effectiveness hereof, each
reference to the Credit Agreement in the Credit Agreement or any other Loan
Document shall mean and be a reference to the Credit Agreement as amended
hereby.

 

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(b)                                 Each Loan Document and all other documents,
instruments and agreements executed and/or delivered in connection therewith
shall remain in full force and effect and are hereby ratified and confirmed.

 

(c)                                  The execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power or remedy of
the Administrative Agent or the Lenders, nor constitute a waiver of any
provision of the Credit Agreement, the Loan Documents or any other documents,
instruments and agreements executed and/or delivered in connection therewith.

 

6.                                     Governing Law.  This Amendment shall be
construed in accordance with and governed by the law of the State of New York.

 

7.                                     Headings.  Section headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.

 

8.                                     Counterparts.  This Amendment may be
executed by one or more of the parties hereto on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.  Signatures delivered by facsimile or
PDF shall have the same force and effect as manual signatures delivered in
person.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first above written.

 

 

 

ZEP INC.,

 

 

 

as the Company

 

 

 

 

 

By:

/s/ Mark R. Bachmann

 

Name:

Mark R. Bachmann

 

Title:

Executive Vice President and Chief

 

 

Financial Officer

 

 

 

 

 

 

 

ACUITY SPECIALTY PRODUCTS, INC.,

 

 

 

as a Borrower

 

 

 

 

 

By:

/s/ Mark R. Bachmann

 

Name:

Mark R. Bachmann

 

Title:

Executive Vice President and Chief

 

 

Financial Officer

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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JPMORGAN CHASE BANK, N.A.,

 

 

 

individually as a Lender and as Administrative Agent

 

 

 

 

 

 

 

By:

/s/ John A. Horst

 

Name:

John A. Horst

 

Title:

Credit Executive

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

 

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ Brian E. Martin

 

Name:

Brian E. Martin

 

Title:

Sr. Vice President

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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REGIONS BANK,

 

 

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ Olesya Deneau

 

Name:

Olesya Deneau

 

Title:

Vice President

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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BANK OF AMERICA, N.A.,

 

 

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ George Hlentzas

 

Name:

George Hlentzas

 

Title:

Vice President

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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BRANCH BANKING & TRUST COMPANY,

 

 

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ Bradley B. Sands

 

Name:

Bradley B. Sands

 

Title:

Assistant Vice President

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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KEYBANK NATIONAL ASSOCIATION,

 

 

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ Brian P. Fox

 

Name:

Brian P. Fox

 

Title:

Vice President

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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COMPASS BANK,

 

 

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ W. Brad Davis

 

Name:

W. Brad Davis

 

Title:

Senior Vice President

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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HSBC BANK USA, NATIONAL ASSOCIATION,

 

 

 

as a Lender

 

 

 

 

 

By:

/s/ Santiago Riviere

 

Name:

Santiago Riviere

 

Title:

Vice President – Corporate Banking Group

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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TD BANK, N.A.,

 

 

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ Mark Hogan

 

Name:

Mark Hogan

 

Title:

Senior Vice President

 

Signature Page to Amendment No. 1 to

Credit Agreement dated as of July 15, 2010

Zep Inc. et al

 

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EXHIBIT A

 

CONSENT AND REAFFIRMATION

 

Each of the undersigned hereby acknowledges receipt of a copy of the foregoing
Amendment No. 1 to the Credit Agreement dated as of July 15, 2010 (as amended by
that certain Consent Memorandum dated October 13, 2011 and as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”) by and among Zep Inc. (the “Company”), Acuity Specialty
Products, Inc., the other Subsidiary Borrowers from time to time party thereto,
the Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (the
“Administrative Agent”), which Amendment No. 1 is dated as of October 10, 2012
and is by and among the Borrowers, the financial institutions listed on the
signature pages thereof and the Administrative Agent (the “Amendment”). 
Capitalized terms used in this Consent and Reaffirmation and not defined herein
shall have the meanings given to them in the Credit Agreement.   Without in any
way establishing a course of dealing by the Administrative Agent or any Lender,
each of the undersigned consents to the Amendment and reaffirms the terms and
conditions of the Subsidiary Guaranty, the Security Agreement and any other Loan
Document executed by it and acknowledges and agrees that such agreements and
each and every such Loan Document executed by the undersigned in connection with
the Credit Agreement remains in full force and effect and is hereby reaffirmed,
ratified and confirmed.  All references to the Credit Agreement contained in the
above-referenced documents shall be a reference to the Credit Agreement as so
modified by the Amendment and as the same may from time to time hereafter be
amended, modified or restated.

 

Dated:  October 10, 2012

 

[Signature Page Follows]

 

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ACUITY SPECIALTY PRODUCTS, INC.

 

 

 

 

 

By:

/s/ Mark R. Bachmann

 

Name:

Mark R. Bachmann

 

Title:

Executive Vice President and Chief

 

 

Financial Officer

 

 

 

 

 

 

 

AMREP, INC.

 

 

 

 

 

By:

/s/ Mark R. Bachmann

 

Name:

Mark R. Bachmann

 

Title:

Executive Vice President and Chief

 

 

Financial Officer

 

 

 

 

 

 

 

AMREP IP HOLDINGS, LLC

 

 

 

 

 

By:

/s/ Mark R. Bachmann

 

Name:

Mark R. Bachmann

 

Title:

Executive Vice President and Chief

 

 

Financial Officer

 

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ZEP IP HOLDING LLC

 

 

 

 

 

By:

/s/ Mark R. Bachmann

 

Name:

Mark R. Bachmann

 

Title:

Executive Vice President and Chief

 

 

Financial Officer

 

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