EXHIBIT 10.34
SECOND AMENDMENT TO CREDIT AGREEMENT
SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
January 26, 2000, among SPECIAL DEVICES, INCORPORATED, a corporation organized
under the laws of the State of Delaware (the "Borrower"), the lenders party to
the Credit Agreement referred to below (collectively, the "Banks") and BANKERS
TRUST COMPANY, as Administrative Agent. All capitalized terms used herein and
not otherwise defined shall have the respective meanings provided such terms in
the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Administrative Agent are parties
to a Credit Agreement, dated as of December 15, 1998 (as in effect on the date
hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto have agreed to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
I. AMENDMENTS TO CREDIT AGREEMENT.
1. Section 4.02(f) of the Credit Agreement is hereby amended by inserting
the following parenthetical at the end thereof:
"(it being understood and agreed that, in any event and notwithstanding
anything to the contrary contained above in this Section 4.02(f), 100% of
the Capital Call Amount paid to the Borrower pursuant to the Capital Call
Agreement shall be applied as a mandatory repayment of outstanding Term
Loans as provided in Sections 4.02(h) and (i))".
2. Section 9.02(xii) of the Credit Agreement is hereby amended by inserting
the following text immediately before the first word of such Section:
"with the prior written consent of the Required Banks,".
3. Section 9.03 of the Credit Agreement is hereby amended by (i) deleting
the word "and" appearing at the end of clause (iv) thereof, (ii) deleting the
period appearing at the end of clause (v) thereof and inserting "; and" in lieu
thereof and (iii) inserting the following new clause (vi) at the end thereof:
"(vi) the Borrower may pay a cash Dividend in that amount, if any,
equal to the cash capital contribution actually made to the Borrower
pursuant to the Capital Call Agreement so long as (i) the cash proceeds
from such capital contribution were applied to repay outstanding Term Loans
as required by Section
4.02(f), (ii) the Borrower's Leverage Ratio at all times during two
consecutive Test Periods ending after the date of such capital contribution
and on and prior to the date of such Dividend was less than 4.00:1.00 and
(iii) no Default or Event of Default then exists or would result
therefrom."
4. The table appearing in Section 9.08 of the Credit Agreement is hereby
deleted and the following new table is inserted in lieu thereof:
"FISCAL QUARTER
ENDING CLOSEST TO RATIO
----------------- -----
January 31, 2000 1.40:1.00
April 30, 2000 1.50:1.00
July 31, 2000 1.60:1.00
October 31, 2000 1.75:1.00
January 31, 2001 1.85:1.00
April 30, 2001 2.00:1.00
July 31, 2001 2.00:1.00
October 31, 2001 2.00:1.00
January 31, 2002
and the last day of each
fiscal quarter thereafter 3.00:1.00".
5. The table appearing in Section 9.09 of the Credit Agreement is hereby
deleted and the following new table is inserted in lieu thereof:
"PERIOD RATIO
------- -----
January 26, 2000 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter ending
closest to January 31, 2000 6.40:1.00
The last day of the Borrower's fiscal quarter ending closest
to January 31, 2000 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter ending
closest to April 30, 2000 6.40:1.00
The last day of the Borrower's fiscal quarter ending closest
to April 30, 2000 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter
ending closest to July 31, 2000 6.00:1.00
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The last day of the Borrower's fiscal quarter ending closest
to July 31, 2000 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter
ending closest to October 31, 2000 6.00:1.00
The last day of the Borrower's fiscal quarter ending closest
to October 31, 2000 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter
ending closest to January 31, 2001 5.00:1.00
The last day of the Borrower's fiscal quarter ending closest
to January 31, 2001 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter
ending closest to April 30, 2001 4.75:1.00
The last day of the Borrower's fiscal quarter ending closet to
April 30, 2001 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter
ending closest to July 31, 2001 4.75:1.00
The last day of the Borrower's fiscal quarter ending closest
to July 31, 2001 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter
ending closest to October 31, 2001 4.50:1.00
The last day of the Borrower's fiscal quarter ending closest
to October 31, 2001 through and including the date immediately
preceding the last day of the Borrower's fiscal quarter
ending closest to January 31, 2002 4.50:1.00
Thereafter 3.00:1.00".
6. The table appearing in Section 9.10 of the Credit Agreement is hereby
deleted and the following new table is inserted in lieu thereof:
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"FISCAL QUARTER
ENDING CLOSEST TO AMOUNT
----------------- ------
January 31, 2000 $28,500,000
April 30, 2000 $30,000,000
July 31, 2000 $30,000,000
October 31, 2000 $35,000,000
January 31, 2001 $35,000,000
April 30, 2001 $36,000,000
July 31, 2001 $37,000,000
October 31, 2001 $38,000,000
January 31, 2002 $48,000,000
April 30, 2002 $49,000,000
July 31, 2002 $51,000,000
October 31, 2002
and the last day of each
fiscal quarter thereafter $53,000,000".
7. Section 10 of the Credit Agreement is hereby amended by (i) inserting
the word "or" at the end of Section 10.10 thereof and (ii) inserting the
following new Section 10.11 immediately following such Section 10.10:
"10.11 CAPITAL CALL AGREEMENT. (a) The Capital Call Agreement or any
provision thereof shall cease to be in full force and effect, or JFL Equity
or any Person acting by or on behalf of JFL Equity shall deny or disaffirm
its obligations under the Capital Call Agreement or JFL Equity or any
Person acting on or behalf of JFL Equity shall default in the due
performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to the Capital Call Agreement or a
Capital Call Event of Default under, and as defined in, the Capital Call
Agreement shall occur; or
(b) Any representation, warranty or statement made (or deemed made) by
JFL Equity in the Capital Call Agreement shall prove to be untrue in any
material respect on the date as of which made or deemed made;".
8. The definition of "Consolidated EBITDA" appearing in Section 11.01 of
the Credit Agreement is hereby deleted and the following new definition is
inserted in lieu thereof:
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT
for such period, adjusted by (x) adding thereto (without duplication) (i)
the amount of all amortization, depreciation and other non-cash expenses or
non-cash charges that were deducted in arriving at Consolidated EBIT for
such period (including amortization of goodwill, the non-cash costs of
agreements evidencing Interest Rate Protection Agreements, Other Hedging
Agreements, license agreements and non-competition
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agreements, and the non-cash amortization of Capitalized Lease Obligations,
managements fees and organization costs), but excluding, however, any
non-cash expenses or non-cash charges associated with any asset
write-downs, (ii) unrealized non-cash gains and losses from hedging,
foreign currency or commodities translations and transactions that were
deducted in arriving at Consolidated EBIT for such period and (iii) up to
(I) $1,700,000 of inventory write-downs, (II) $11,300,000 of legal,
consulting and other expenses relating to the environmental investigations
at the Borrower's facilities and (III) $638,700 relating to the write-off
of a receivable, in each case (in the case of this clause (iii)) to the
extent that such charges were incurred in the Borrower's fiscal quarter
ended October 31, 1999 and were deducted in arriving at Consolidated EBIT
for such period and (y) subtracting therefrom any cash expenses, cash
charges or cash payments arising from any non-cash expenses, non-cash
charges or unrealized non-cash gains or losses that were deducted in
arriving at Consolidated EBIT in a previous period.
9. The definitions of "Applicable Base Rate Margin" and "Applicable
Eurodollar Rate Margin" appearing in Section 11.01 of the Credit Agreement are
deleted and the following new definitions are inserted in lieu thereof:
"Applicable Base Rate Margin" shall mean, (i) in the case of Revolving
Loans and Swingline Loans, 2.00% and (ii) in the case of Term Loans, 2.50%.
"Applicable Eurodollar Rate Margin" shall mean, (i) in the case of
Revolving Loans, 3.00% and (ii) in the case of Term Loans, 3.50%.
10. The definition of "Credit Documents" appearing in Section 11.01 of the
Credit Agreement is hereby amended by inserting the text", the Capital Call
Agreement" immediately after the words "the Subsidiaries Guaranty" appearing
therein.
11. Section 11.01 of the Credit Agreement is hereby further amended by
inserting the following new definitions in the appropriate alphabetical order:
"Capital Call Agreement" shall mean the Capital Call Agreement, dated
as of January 26, 2000, among JFL Equity, the Borrower and the
Administrative Agent, as amended, modified or supplemented from time to
time in accordance with the terms thereof and hereof.
"Capital Call Amount" shall have the meaning provided in the Capital
Call Agreement.
12. The Banks hereby waive any Default or Event of Default that has arisen
(i) under Sections 9.08 and 9.10 of the Credit Agreement for the Test Period
ended closest to October 31, 1999 and (ii) under Section 9.09 of the Credit
Agreement for the period from and after October 31, 1999 through but not
including the Second Amendment Effective Date (as defined below).
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II. MISCELLANEOUS.
1. In order to induce the Banks to enter into this Amendment, the Borrower
hereby represents and warrants that (i) all representations, warranties and
agreements contained in Section 7 of the Credit Agreement are true and correct
in all material respects on and as of the Second Amendment Effective Date
(unless such representations and warranties relate to a specific earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date) and (ii) there exists no Default or Event of Default on
the Second Amendment Effective Date, in each case after giving effect to this
Amendment (but otherwise taking into account the provisions of Section 1 of Part
I of the Waiver and Modification to Credit Agreement, dated as of September 14,
1999).
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
3. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Administrative Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
5. This Amendment shall become effective on the date (the "Second Amendment
Effective Date") when (i) each Credit Party and the Required Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including, without limitation, by way of facsimile
transmission) the same to the Administrative Agent at the Notice Office, (ii)
JFL Equity and the Borrower shall have entered into the Capital Call Agreement
in the form attached hereto and (iii) the Borrower shall have paid to the
Administrative Agent for the account of each Bank which has executed a
counterpart hereof and delivered the same to the Administrative Agent at the
Notice Office on or prior to 5:30 P.M. (New York time) on January 26, 2000, an
amendment fee equal to 0.25% of the sum of such Bank's (I) outstanding Term
Loans and (II) Revolving Loan Commitment at such time. This Amendment and the
agreements contained herein shall be binding on the successors and assigns of
the parties hereto.
6. From and after the Second Amendment Effective Date, all references in
the Credit Agreement and the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended hereby.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.
SPECIAL DEVICES, INCORPORATED
By: __________________________
Name:
Title:
BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By: __________________________
Name:
Title:
BANKBOSTON, N.A.
By: __________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By: __________________________
Name:
Title:
CITY NATIONAL BANK
By: __________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By: __________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By: __________________________
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX
PRIME INCOME TRUST
By: __________________________
Name:
Title:
NATIONAL CITY BANK
By: __________________________
Name:
Title:
PARIBAS
By: __________________________
Name:
Title:
KZH STERLING LLC
By: __________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By: __________________________
Name:
Title:
Acknowledged and Agreed:
XXXX, INCORPORATED
By:__________________________
Name:
Title:
