Exhibit 10.42

 

FIRST AMENDMENT TO CREDIT AND GUARANTY AGREEMENT

 

 

THIS FIRST AMENDMENT TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is
entered into as of January 8, 2018 by and among PRIMO WATER OPERATIONS, INC.
(f/k/a Primo Water Corporation), a Delaware corporation (“Primo”), for itself
and as successor by merger to GLACIER WATER SERVICES, INC., a Delaware
corporation (“Glacier Water), PRIMO PRODUCTS, LLC, a North Carolina limited
liability company (“Products”), PRIMO DIRECT, LLC, a North Carolina limited
liability company (“Direct”), PRIMO REFILL, LLC, a North Carolina limited
liability company (“Refill”), PRIMO ICE, LLC, a North Carolina limited liability
company (“Ice”), GW SERVICES, LLC, a California limited liability company (“GWS”
and together with Primo, Products, Direct, Refill and ICE, and any other
Subsidiaries of Holdings that thereafter join the Credit Agreement, the
“Companies” and each, a “Company”); PRIMO WATER CORPORATION, a Delaware
corporation (“Holdings”), the other Credit Parties signatory hereto; the Lenders
signatory hereto and GOLDMAN SACHS BANK USA, as administrative agent for the
Lenders (in such capacity, the “Administrative Agent”).

 

RECITALS

 

A.           The Credit Parties, Lenders and Administrative Agent are parties to
a certain Credit and Guaranty Agreement, dated as of December 12, 2016 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”; capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement),
pursuant to which the Lenders have made certain financial accommodations
available to the Companies;

 

B.           The Companies have requested that the Lenders amend certain
provisions of the Credit Agreement and, subject to the terms and conditions
hereof, the Lenders executing this Amendment are willing to do so;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and intending to be legally bound, the parties hereto
agree as follows:

 

A. AMENDMENTS

 

1.           Section 1.1 of the Credit Agreement is hereby amended by replacing
“$2,400,000” in clause (i)(g) of the definition of “Consolidated Adjusted
EBITDA” with “$4,200,000”.

 

2.           Section 1.1 of the Credit Agreement is hereby further amended by
replacing the defined term “Fee Letter” with the following:

 

“Fee Letter” means the amended and restated letter agreement dated as of January
8, 2018 among the Companies and Administrative Agent.

 

 

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3.           Section 6.5 of the Credit Agreement is hereby amended by replacing
Section 6.5(z) in its entirety with the following:

 

(z) so long as (1) no Default or Event of Default is continuing or would result
therefrom, (2) as of the date of such Restricted Junior Payment, both before and
after giving pro forma effect to such Restricted Junior Payment, Availability
(determined based on clause (b) of the definition of “Availability”) shall be
greater than zero and (3) with respect to any Restricted Junior Payment made
after December 31, 2017, after giving pro forma effect to such payment the
Leverage Ratio (determined based on Consolidated Total Debt and Subordinated
Indebtedness as of such date and Consolidated Adjusted EBITDA for the most
recently ended period of twelve consecutive fiscal months with respect to which
financial statements are required to have been delivered under Section 5.1)
shall not exceed the Leverage Multiple as of the date of such Restricted Junior
Payment, Holdings may either issue additional shares of common Capital Stock or
purchase and redeem its Capital Stock, in each case, for the sole purpose of
providing proceeds to Equity Interest Option Holders to permit such Equity
Interest Option Holders to pay federal, state and provincial income taxes solely
arising out of and relating to options and warrants owned by such Equity
Interest Option Holders; provided, that, the aggregate amount of issuances,
purchases and redemptions under this clause (z) during any Fiscal Year shall not
exceed (1)(A) with respect to the Fiscal Year ending December 31, 2017,
$2,500,000, (B) with respect to the fiscal year ending December 31, 2018,
$9,000,000) and (C) with respect to any fiscal year ending after December 31,
2018, $5,000,000) plus (2) the Additional Tax Amounts with respect to such
Fiscal Year, if any

 

4.            Section 6.8 of the Credit Agreement is hereby amended by replacing
Section 6.8(a) in its entirety with the following:

 

(a)   Fixed Charge Coverage Ratio. Holdings shall not permit the Fixed Charge
Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the
Fiscal Quarter ending March 31, 2017, to be less than the correlative ratio
indicated:

 

Fiscal Quarter Ended

Fixed Charge Coverage Ratio

March 31, 2017

1.20:1.00

June 30, 2017

1.20:1.00

September 30, 2017

1.20:1.00

December 31, 2017

1.15:1.00

March 31, 2018

1.15:1.00

June 30, 2018

1.15:1.00

September 30, 2018

1.20:1.00

December 31, 2018

1.20:1.00

March 31, 2019

1.25:1.00

June 30, 2019

1.30:1.00

September 30, 2019

1.35:1.00

December 31, 2019

1.35:1.00

March 31, 2020

1.40:1.00

June 30, 2020

1.40:1.00

September 30, 2020

1.40:1.00

December 31, 2020

1.45:1.00

March 31, 2021 and each Fiscal Quarter ending thereafter

1.50:1.00

 

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B.     CONDITIONS TO EFFECTIVENESS

 

Notwithstanding any other provision of this Amendment and without affecting in
any manner the rights of the Lenders hereunder, it is understood and agreed that
this Amendment shall not become effective, and the Credit Parties shall have no
rights under this Amendment, until Administrative Agent shall have received (i)
reimbursement or payment of its costs and expenses incurred in connection with
this Amendment or the Credit Agreement (including reasonable fees, charges and
disbursements of counsel to Administrative Agent); and (ii) each of the
following documents, in form and substance satisfactory to Administrative Agent:

 

 

(a)

executed counterparts to this Amendment from each Company, each other Credit
Party, and the Lenders; and

 

 

(b)

executed counterparts to the Fee Letter from each Company.

 

C. REPRESENTATIONS

 

To induce the Lenders and Administrative Agent to enter into this Amendment,
each Credit Party hereby represents and warrants to the Lenders and the
Administrative Agent that:

 

1.           Each of the Credit Parties and its Subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) has all requisite power and authority to own
and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Credit Documents to which it is a
party and to carry out the transactions contemplated thereby, and (c) is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had, and could not be reasonably expected to have, a
Material Adverse Effect;

 

2.           The execution, delivery and performance of this Amendment has been
duly authorized by all necessary action on the part of each Credit Party that is
a party hereto; and

 

3.           After giving effect to this Amendment, the representations and
warranties contained in the Credit Agreement and in the other Credit Documents
are true and correct in all material respects on and as of the First Amendment
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date.

 

 

D. OTHER AGREEMENTS

 

1.     Continuing Effectiveness of Credit Documents. As amended hereby, all
terms of the Credit Agreement and the other Credit Documents shall be and remain
in full force and effect and shall constitute the legal, valid, binding and
enforceable obligations of the Credit Parties party thereto. To the extent any
terms and conditions in any of the other Credit Documents shall contradict or be
in conflict with any terms or conditions of the Credit Agreement, after giving
effect to this Amendment, such terms and conditions are hereby deemed modified
and amended accordingly to reflect the terms and conditions of the Credit
Agreement as modified and amended hereby. Upon the effectiveness of this
Amendment such terms and conditions are hereby deemed modified and amended
accordingly to reflect the terms and conditions of the Credit Agreement as
modified and amended hereby.

 

2.     Reaffirmation of Guaranty. Each Guarantor consents to the execution and
delivery by the Credit Parties of this Amendment and the consummation of the
transactions described herein, and ratifies and confirms the terms of the
Guaranty to which such Guarantor is a party with respect to the indebtedness now
or hereafter outstanding under the Credit Agreement as amended hereby and all
promissory notes issued thereunder. Each Guarantor acknowledges that,
notwithstanding anything to the contrary contained herein or in any other
document evidencing any indebtedness of the Credit Parties to the Lenders or any
other obligation of the Credit Parties, or any actions now or hereafter taken by
the Lenders with respect to any obligation of the Credit Parties, the Guaranty
to which such Guarantor is a party (i) is and shall continue to be a primary
obligation of such Guarantor, (ii) is and shall continue to be an absolute,
unconditional, continuing and irrevocable guaranty of payment, and (iii) is and
shall continue to be in full force and effect in accordance with its terms.
Nothing contained herein to the contrary shall release, discharge, modify,
change or affect the original liability of any Guarantor under the Guaranty to
which such Guarantor is a party.

 

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3.     Acknowledgment of Perfection of Security Interest. Each Credit Party
hereby acknowledges that, as of the date hereof, the security interests and
liens granted to Administrative Agent and the Lenders under the Credit Agreement
and the other Credit Documents are in full force and effect, are properly
perfected and are enforceable in accordance with the terms of the Credit
Agreement and the other Credit Documents.

 

4.     Effect of Agreement. Except as set forth expressly herein, all terms of
the Credit Agreement, as amended hereby, and the other Credit Documents shall be
and remain in full force and effect and shall constitute the legal, valid,
binding and enforceable obligations of the Credit Parties to the Lenders and
Administrative Agent. The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Lenders under the Credit Agreement, nor
constitute a waiver of any provision of the Credit Agreement. This Amendment
shall constitute a Credit Document for all purposes of the Credit Agreement.

 

5.     Governing Law. This Amendment shall be governed by, and construed in
accordance with, the internal laws of the State of New York and all applicable
federal laws of the United States of America.

 

6.     No Novation. This Amendment is not intended by the parties to be, and
shall not be construed to be, a novation of the Credit Agreement and the other
Credit Documents or an accord and satisfaction in regard thereto.

 

7.     Costs and Expenses. The Credit Parties agrees to pay on demand all costs
and expenses of Administrative Agent in connection with the preparation,
execution and delivery of this Amendment, including, without limitation, the
reasonable fees and out-of-pocket expenses of outside counsel for Administrative
Agent with respect thereto.

 

8.     Counterparts. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, each of which shall be
deemed an original and all of which, taken together, shall be deemed to
constitute one and the same instrument. Delivery of an executed counterpart of
this Amendment by facsimile transmission, electronic transmission (including
delivery of an executed counterpart in .pdf format) shall be as effective as
delivery of a manually executed counterpart hereof.

 

9.     Binding Nature. This Amendment shall be binding upon and inure to the
benefit of the parties hereto, their respective successors,
successors-in-titles, and assigns. No third party beneficiaries are intended in
connection with this Amendment.

 

10.     Entire Understanding. This Amendment sets forth the entire understanding
of the parties with respect to the matters set forth herein, and shall supersede
any prior negotiations or agreements, whether written or oral, with respect
thereto.

 

11.     Release. Each Credit Party hereby releases, acquits, and forever
discharges Administrative Agent and each of the Lenders, and each and every past
and present subsidiary, affiliate, stockholder, officer, director, agent,
servant, employee, representative, and attorney of Administrative Agent and the
Lenders, from any and all claims, causes of action, suits, debts, liens,
obligations, liabilities, demands, losses, costs and expenses (including
reasonable attorneys' fees) of any kind, character, or nature whatsoever, known
or unknown, fixed or contingent, which such Credit Party may have or claim to
have now or which may hereafter arise out of or connected with any act of
commission or omission of Administrative Agent or the Lenders existing or
occurring prior to the date of this Amendment or any instrument executed prior
to the date of this Amendment including, without limitation, any claims,
liabilities or obligations arising with respect to the Credit Agreement or the
other of the Credit Documents, other than claims, liabilities or obligations
caused by Administrative Agent's or any Lender's own gross negligence or willful
misconduct. The provisions of this paragraph shall be binding upon each Credit
Party and shall inure to the benefit of Administrative Agent, the Lenders, and
their respective heirs, executors, administrators, successors and assigns.

 

[remainder of page intentionally left blank]

 

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

 

 

PRIMO WATER OPERATIONS, INC.

 

 

 

 

 

 

By:

/s/ David J. Mills

 

 

Name: David J Mills

 

  Title: Vice President, Finance  

 

 

PRIMO PRODUCTS, LLC

 

 

 

 

 

 

By:

/s/ David J. Mills

 

 

Name: David J Mills

 

  Title: Vice President, Finance  

 

 

PRIMO DIRECT, LLC

 

 

 

 

By:

/s/ David J. Mills

 

Name: David J Mills

  Title: Vice President, Finance

 

 

PRIMO REFILL, LLC

 

 

 

 

By:

/s/ David J. Mills

 

Name: David J Mills

  Title: Vice President, Finance

 

 

 

PRIMO ICE, LLC

 

 

 

 

By:

/s/ David J. Mills

 

Name: David J Mills

  Title: Vice President, Finance

 

 

GW SERVICES, LLC

 

 

 

 

By:

/s/ David J. Mills

 

Name: David J Mills

  Title: Vice President, Finance

 

 

PRIMO WATER CORPORATION

 

 

 

 

By:

/s/ David J. Mills 

 

Name: David J Mills

  Title: Vice President, Finance

 

 

GOLDMAN SACHS BANK USA, as Administrative Agent and as a Lender

 

 

 

 

By:

/s/ Greg Watts

 

Name: Greg Watts

  Title: Authorized Signatory

 

[Signature Page to First Amendment to Credit and Guaranty Agreement]

 

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AB PRIVATE CREDIT INVESTORS MIDDLE MARKET DIRECT LENDING FUND, L.P., as a Lender

      By: AB Private Credit Investors Middle Market Direct Lending Fund G.P.
L.P., its General Partner

 

 

 

 

 

By:

/s/ Evan Cohen

 

 

Name: Evan Cohen

 

  Title: Vice President  

 

[Signature Page to First Amendment to Credit and Guaranty Agreement]

 

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CIBC BANK USA (formerly known as “THE PRIVATEBANK AND TRUST COMPANY”), as a
Lender

 

 

 

 

 

 

By:

/s/ James Marsh

 

 

Name: James Marsh

 

  Title: Managing Director  

 

[Signature Page to First Amendment to Credit and Guaranty Agreement]

 

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WOODMONT 2017-3 LP

 

       

By: MidCap Financial Services Capital Management, LLC,

as Collateral Manager

 

 

 

 

 

 

By:

/s/ John O’Dea

 

 

Name: John O’Dea

 

  Title: Authorized Signatory  

 

 

WOODMONT 2017-2 TRUST

 

       

By: MidCap Financial Services Capital Management, LLC,

    As Collateral Manager  

 

 

 

 

 

By:

/s/ John O’Dea

 

 

Name: John O’Dea

 

  Title: Authorized Signatory  

 

 

 

MIDCAP FINANCIAL TRUST

 

        By: Apollo Capital Management, L.P.,    

its investment manager

          By: Apollo Capital Management GP, LLC     its general partner  

 

 

 

 

       

 

By:

/s/ Maurice Amsellem

 

 

Name: Maurice Amsellem

 

  Title: Authorized Signatory  

 

[Signature Page to First Amendment to Credit and Guaranty Agreement]