EXHIBIT 10.2
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment") is entered
into as of November 8, 2005, by and among DYNAMIC DETAILS, INCORPORATED, a
California corporation ("Details"), DYNAMIC DETAILS CANADA, CORP., a Nova Scotia
unlimited liability company ("Canada"), and DDI CANADA ACQUISITION CORP., an
Ontario corporation ("DDI Canada") (Canada and DDI Canada are collectively
referred to as "Borrowers" and each individually as a "Borrower"); the other
Credit Parties signatory hereto; and GE CANADA FINANCE HOLDING COMPANY, a Nova
Scotia unlimited liability company, for itself as Lender, and as Agent for
Lenders.
RECITALS
A. Pursuant to the Credit Agreement dated as of June 30, 2004, by and
among Borrowers, the other Credit Parties, Agent and Lenders, as amended by
Amendment No. 1 to Credit Agreement dated as of June 20, 2005 (collectively, the
"Credit Agreement"), Lenders are providing certain financial accommodations in
favor of Credit Parties. Unless otherwise defined herein, capitalized terms and
matters of construction defined and established in ANNEX A to the Credit
Agreement shall be applied herein as defined and established therein.
B. Credit Parties have requested that certain provisions of the Credit
Agreement be amended, and Agent and Lenders are willing to do so on the terms
and conditions specified herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. RATIFICATION OF LOAN DOCUMENTS
Each Credit Party hereby acknowledges, confirms, and ratifies all of the
terms and conditions set forth in, and all of its obligations under, the Credit
Agreement and the other Loan Documents (in each case, as modified by this
Amendment), and all of the terms and conditions set forth in the Credit
Agreement and the other Loan Documents are incorporated herein by this reference
as if set forth in full herein. Without limiting the generality of the
foregoing, each Credit Party acknowledges and agrees that as of November 8,
2005, there was no Revolving Loan balance. Each Borrower and each other Credit
Party represents that it has no offset, defense, counterclaim, dispute or
disagreement of any kind or nature whatsoever with respect to the amount of such
Indebtedness.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT AND CONSENT
2.1 SECTION 1.5(a) of the Credit Agreement is hereby amended by deleting
the second paragraph thereof in its entirety and substituting the following in
lieu thereof:
As of the Second Amendment Effective Date (as defined below), the
Applicable Margins are as follows:
Applicable Revolver Index Margin 2.00%
Applicable Revolver LIBOR Margin 3.50%
Applicable L/C Margin 3.50%
AMENDMENT NO. 2
The Applicable Margins may be adjusted by reference to the following grids:
IF AS OF THE END OF ANY FISCAL MONTH
EBITDA OF BORROWERS AND THEIR
SUBSIDIARIES FOR THE LAST 12 FISCAL APPLICABLE REVOLVER APPLICABLE REVOLVER APPLICABLE L/C
MONTHS IS: INDEX MARGIN IS: LIBOR MARGIN IS: MARGIN IS:
------------------------------------------ ----------------------- --------------------------- ---------------------
< $15,000,000 2.00% 3.50% 3.50%
------------------------------------------ ----------------------- --------------------------- ---------------------
>= $15,000,000 but
< $20,000,000 1.75% 3.25% 3.25%
------------------------------------------ ----------------------- --------------------------- ---------------------
>= $20,000,000 but
< $25,000,000 1.50% 3.00% 3.00%
------------------------------------------ ----------------------- --------------------------- ---------------------
>= $25,000,000 but
< $30,000,000 1.25% 2.75% 2.75%
------------------------------------------ ----------------------- --------------------------- ---------------------
>= $30,000,000 1.00% 2.50% 2.50%
------------------------------------------ ----------------------- --------------------------- ---------------------
Adjustments in the Applicable Margins will commence with the Fiscal
Quarter ending December 31, 2005, and thereafter will be implemented quarterly
on a prospective basis, for each calendar month, within five days after the date
of delivery to Agent of the quarterly unaudited Financial Statements evidencing
the need for an adjustment; provided, that no such adjustments will take effect
until the date Agent receives Borrowers' quarterly Financial Statements for the
Fiscal Quarter ending September 30, 2005. Concurrently with the delivery of the
quarterly Financial Statements, Borrowers shall deliver to Agent a certificate,
signed by the chief financial officer of Details, setting forth in reasonable
detail the basis for the continuance of, or any change in, the Applicable
Margins. Failure to timely deliver such Financial Statements shall, in addition
to any other remedy provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the foregoing grid, until
the first day of the first calendar month following the delivery of those
Financial Statements demonstrating that such an increase is not required. If an
Event of Default has occurred and is continuing at the time any reduction in the
Applicable Margins is to be implemented, that reduction shall be deferred until
the first day of the first calendar month following the date on which such Event
of Default is waived or cured.
2.2 SECTION 1.6(f)(ii) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
(ii) is subject to any Lien of any other Person, other than (A) Liens in
favor of Agent, on behalf of itself and Lenders, or (B) the Liens on Accounts
described in clause (r) of the definition of Permitted Encumbrances.
2.3 SECTION 6.3(a)(xiv) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
AMENDMENT NO. 2
2
(xiv) Indebtedness of Parent in favor of any Borrower resulting from any
advance made pursuant to SECTION 6.13(i) or SECTION 6.13(l); and
2.4 SECTION 6.3(a)(xvi) of the Credit Agreement is hereby amended by
deleting the "." at the end of such clause, and substituting a ";" in lieu
thereof;
2.5 SECTION 6.3(a)(xvii). The following is hereby added as a new SECTION
6.3(a)(xvii) immediately following SECTION 6.3(a)(xvi):
(xvii) other Indebtedness in an aggregate amount not to exceed
US$25,000,000 (or the Equivalent Amount in Canadian Dollars) at any time (the
"Other Indebtedness"); provided, that (A) no more than US$20,000,000 (or the
Equivalent Amount in Canadian Dollars) of the proceeds of such Other
Indebtedness may be used to fund advances made pursuant to SECTION 6.13(l); (B)
such Indebtedness, to the extent secured, shall solely be secured by the Liens
described in clause (r) of the definition of Permitted Encumbrances, or the
Liens described in clause q of the definition of Permitted Encumbrances in the
US Credit Agreement, and (C) such Indebtedness shall not be duplicative of the
Indebtedness permitted under SECTION 6.3(a)(xv) of the US Credit Agreement.
2.6 SECTION 6.13 of the Credit Agreement is hereby amended by deleting the
"." at the end of clause (k) and substituting a ";" in lieu thereof; and adding
the following new clause (l) immediately following such ";"
(l) so long as (i) no Default or Event of Default has occurred and is
continuing or would result from any such proposed payment, (ii) Details
and its Subsidiaries have a Fixed Charge Coverage Ratio (as certified by
Details' chief financial officer) for the 12-month period ending at the
end of the Fiscal Quarter ending immediately preceding the date such
payment is proposed to be made of at least 1.10:1.0 after giving effect to
such proposed payment as if it had been made during such Fiscal Quarter,
and (iii) both before and after giving effect to any such proposed
payment, Details individually, and Credit Parties taken as a whole, are
and will be Solvent, then Borrower Representative may make payments that
are proceeds of the Other Indebtedness to Parent for the purpose of making
the Restricted Payment permitted in Section 6.13(h); provided, that the
aggregate amount of such payments shall not exceed US$20,000,000 (or the
Equivalent Amount in Canadian Dollars) at any time.
2.7 The following new definitions are hereby added to ANNEX A to the
Credit Agreement in appropriate alphabetical order:
"Other Indebtedness" has the meaning ascribed to it in SECTION
6.3(a)(xvii).
"Second Amendment Effective Date" has the meaning ascribed to it in
Section 3 of that certain Amendment No. 2 to Credit Agreement dated as of
November 8, 2005, by and among Borrowers, the other Credit Parties party
thereto, Agent and Lenders.
2.8 The definitions of "Availability Reserve," and "Reserves" set forth in
ANNEX A to the Credit Agreement are hereby deleted in their entirety and the
following are substituted therefor:
AMENDMENT NO. 2
3
"Availability Reserve" means the Reserve maintained against Borrowing
Availability in the amount of US$1,000,000, provided that such Reserve shall not
be duplicative of the "Availability Reserve" maintained under the US Credit
Agreement.
"Reserves" means with respect to any Borrowing Base (a) reserves
established pursuant to SECTION 5.4(c), (b) the Availability Reserve, and (c)
such other reserves against Eligible Accounts or Borrowing Availability that
Agent may, in its reasonable credit judgment, establish from time to time.
Without limiting the generality of the foregoing, Reserves established to ensure
the payment of accrued Interest Expenses or Indebtedness shall be deemed to be a
reasonable exercise of Agent's credit judgment.
2.9 The definition of "Permitted Encumbrances" set forth in ANNEX A to the
Credit Agreement is hereby amended by deleting clause (r) thereof, and the term
"and" immediately preceding such clause, and substituting the following
therefor:
; (r) Liens on Accounts and Equipment securing the Other Indebtedness;
provided, that any such Liens on Accounts are subordinated to the Liens of Agent
and Lenders on such Accounts, on terms and conditions acceptable to Agent in its
sole discretion, and pursuant to a written subordination agreement, in form and
substance acceptable to Agent in its sole discretion; and (s) other Liens
securing Indebtedness not exceeding US$100,000 (or the Equivalent Amount in
Canadian Dollars) in the aggregate at any time outstanding.
2.10 The definition of "Senior Accreting Notes Interest Reserve" set forth
in ANNEX A to the Credit Agreement is hereby deleted in its entirety.
2.11 Consent to Lien Release on Equipment. Notwithstanding any contrary
provision contained in the Credit Agreement or any other Loan Document, Agent
hereby agrees to release the Lien on Equipment granted to Agent, for the benefit
of Lenders, pursuant to the Security Agreement, within 45 days of the Second
Amendment Effective Date.
SECTION 3. CONDITIONS TO EFFECTIVENESS
The effectiveness of this Amendment is subject to satisfaction of each of
the following conditions precedent (the date upon which all such conditions
precedent have been satisfied, the "Second Amendment Effective Date"):
3.1 receipt by Agent of copies of this Amendment duly executed by each
Credit Party;
3.2 receipt by Agent of copies of the Amendment No. 3 to US Credit
Agreement in form and substance satisfactory to Agent and Lenders;
3.3 receipt by GE Capital of the amendment fee referred in Section 3.3 of
Amendment No.3 to the US Credit Agreement; and
3.4 the absence of any Default or Event of Default.
AMENDMENT NO. 2
4
SECTION 4. MISCELLANEOUS
4.1 Entire Agreement. This Amendment, together with the Credit Agreement
and the other Loan Documents, is the entire agreement between the parties hereto
with respect to the subject matter hereof. This Amendment supersedes all prior
and contemporaneous oral and written agreements and discussions with respect to
the subject matter hereof. Except as otherwise expressly modified herein, the
Loan Documents shall remain in full force and effect.
4.2 Counterparts. This Amendment may be executed in identical counterpart
copies, each of which shall be an original, but all of which shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Amendment by facsimile transmission or other electronic
transmission shall be effective as delivery of a manually executed counterpart
thereof.
4.3 Headings. Section headings used herein are for convenience of
reference only, are not part of this Amendment, and are not to be taken into
consideration in interpreting this Amendment.
4.4 Recitals. The recitals set forth at the beginning of this Amendment
are true and correct, and such recitals are incorporated into and are a part of
this Amendment.
4.5 Governing Law. This Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the Province of Ontario applicable to
contracts made and performed in such province, and any applicable laws of
Canada.
4.6 Credit Party Consents. By signing this Amendment, each Credit Party
hereby (a) ratifies and reaffirms, as of the date hereof, all of the provisions
of those Guaranties and Pledge Agreements to which it is a party, (b)
acknowledges receipt of a copy of this Amendment, and (c) consents to all of the
provisions of this Amendment.
4.7 Representations and Warranties. Each Credit Party hereby represents
and warrants that the representations and warranties contained in the Credit
Agreement were true and correct in all material respects when made and, except
to the extent that (a) a particular representation or warranty by its terms
expressly applies only to an earlier date or (b) such Credit Party has
previously advised Lender in writing as contemplated under the Credit Agreement,
are true and correct in all material respects as of the date hereof.
4.8 Effect. Upon the effectiveness of this Amendment, from and after the
date hereof, each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," or words of like import shall mean and be a reference to
the Credit Agreement as amended hereby, and each reference in the other Loan
Documents to the Credit Agreement, "thereunder," "thereof," or words of like
import shall mean and be a reference to the Credit Agreement as amended hereby.
4.9 No Novation. The execution, delivery, and effectiveness of this
Amendment shall not (a) limit, impair, constitute a waiver of, or otherwise
affect any right, power, or remedy of Lender under the Credit Agreement or any
other Loan Document, (b) constitute a waiver of any provision in the Credit
Agreement or in any of the other Loan Documents, or (c) except as expressly
modified by this Amendment, alter, modify, amend, or in any way affect any of
the terms, conditions, obligations, covenants, or agreements contained in the
Credit Agreement, all of which are ratified and affirmed in all respects and
shall continue in full force and effect.
AMENDMENT NO. 2
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4.10 Conflict of Terms. In the event of any inconsistency between the
provisions of this Amendment and any provision of the Credit Agreement, the
terms and provisions of this Amendment shall govern and control.
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AMENDMENT NO. 2
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
No. 2 to Credit Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.
"BORROWERS"
DYNAMIC DETAILS CANADA, CORP.
By: /S/ XXXX XXXXXX
----------------------------------------
Xxxx Xxxxxx
Vice President
DDI CANADA ACQUISITION CORP.
By: /S/ XXXX XXXXXX
----------------------------------------
Xxxx Xxxxxx
Vice President
"AGENT" and "LENDER"
GE CANADA FINANCE HOLDING COMPANY
By: /S/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Duly Authorized Signatory
AMENDMENT NO. 2
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The following Persons are signatories to this Agreement in their capacity
as Credit Parties and not as Borrowers.
"CREDIT PARTIES"
DDI CORP. DDI INTERMEDIATE HOLDINGS CORP.
By: /S/ XXXX XXXXXX By: /S/ XXXX XXXXXX
----------------------------------------- ---------------------
Xxxx Xxxxxx Xxxx Xxxxxx
Vice President Vice President
DDI CAPITAL CORP.
DYNAMIC DETAILS INCORPORATED,
COLORADO SPRINGS
By: /S/ XXXX XXXXXX By: /S/ XXXX XXXXXX
----------------------------------------- ---------------------
Xxxx Xxxxxx Xxxx Xxxxxx
Vice President Vice President
DYNAMIC DETAILS, INCORPORATED
DYNAMIC DETAILS INCORPORATED, VIRGINIA
By: /S/ XXXX XXXXXX By: /S/ XXXX XXXXXX
----------------------------------------- ---------------------
Xxxx Xxxxxx Xxxx Xxxxxx
Vice President Vice President
DDI SALES CORP. DYNAMIC DETAILS TEXAS, LLC
By: /S/ XXXX XXXXXX By: /S/ XXXX XXXXXX
----------------------------------------- ---------------------
Xxxx Xxxxxx Xxxx Xxxxxx
Vice President Vice President
DDI-TEXAS INTERMEDIATE HOLDINGS II, L.L.C. DDI-TEXAS INTERMEDIATE PARTNERS II, L.L.C.
By: /S/ XXXX XXXXXX By: /S/ XXXX XXXXXX
----------------------------------------- ---------------------
Xxxx Xxxxxx Xxxx Xxxxxx
Vice President Vice President
LAMINATE TECHNOLOGY CORP.
DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY
By: /S/ XXXX XXXXXX By: /S/ XXXX XXXXXX
----------------------------------------- ---------------------
Xxxx Xxxxxx Xxxx Xxxxxx
Vice President Vice President
AMENDMENT NO. 2
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DYNAMIC DETAILS, L.P.
By: DDi-Texas Intermediate
Partners II, L.L.C., its General Partner
By: /S/ XXXX XXXXXX
---------------------
Xxxx Xxxxxx
Vice President
AMENDMENT NO. 2
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