EXHIBIT 10.45A
WAIVER AND AMENDMENT NO. 1 TO LOAN AGREEMENT
This WAIVER AND AMENDMENT NO. 1 TO LOAN AGREEMENT (this "Amendment")
is dated as of August 19, 2002 by and among Allied Capital Corporation, a
Maryland corporation ("Holder"), Simula, Inc., an Arizona corporation
("Simula"), and the direct and indirect subsidiaries of Simula listed on the
signature pages hereof.
WHEREAS, Simula, the Subsidiaries of Simula (collectively with
Simula, the "Companies") and Holder are parties to a certain Loan Agreement
dated as of September 26, 2001 (as amended, supplemented or otherwise modified
from time to time, the "Loan Agreement");
WHEREAS, certain Events of Default exist under the Loan Agreement as
a result of the Companies' failure to have (i) Consolidated EBITDA of at least
$14,500,000 for the four (4) consecutive fiscal quarter period ended June 30,
2002, in violation of Section 4.13(a) of the Loan Agreement, (ii) a Fixed Charge
Coverage Ratio of at least 1.25 to 1.0 for the four (4) consecutive fiscal
quarter period ended June 30, 2002, in violation of Section 4.13(b) of the Loan
Agreement, (iii) a Consolidated Debt to EBITDA Ratio, calculated as of June 30,
2002 and for the four (4) consecutive fiscal quarter period then ended, of not
more than 4.80 to 1.0, in violation of Section 4.13(c) of the Loan Agreement,
and (iv) an Interest Coverage Ratio of at least 2.05 to 1.0 for the four (4)
consecutive fiscal quarter period ended June 30, 2002, in violation of Section
4.13(f) of the Loan Agreement (collectively, the "Existing Events of Default");
and
WHEREAS, the Companies have requested that Holder (a) waive the
Existing Events of Default, and (b) amend the Loan Agreement in certain
respects.
NOW THEREFORE, in consideration of the mutual conditions and
agreements set forth in the Loan Agreement and this Amendment, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment, unless otherwise
defined herein, shall have the meanings ascribed to such terms in the Loan
Agreement.
2. WAIVER. In reliance upon the representations and warranties of the Companies
set forth in Section 5 below and subject to the prior satisfaction of the
conditions to effectiveness set forth in Section 4 below, Holder hereby
waives the Existing Events of Default. The foregoing waiver only applies to
the Existing Events of Default and shall not be deemed to constitute a
waiver of any other Defaults or Events of Default that may now be in
existence or that may hereafter occur, or of any rights or remedies that
Holder may have under the Loan Agreement, the other Loan Documents or
applicable law with respect thereto, all of which rights and remedies are
specifically reserved.
3. AMENDMENTS. In reliance upon the representations and warranties of the
Companies set forth in Section 5 below and subject to the prior satisfaction
of the conditions to effectiveness set forth in Section 4 below, the Loan
Agreement is hereby amended as follows:
3.1. Section 4.8 of the Loan Agreement is hereby amended and restated in its
entirety, as follows:
"Section 4.8 Board Meetings.
Simula will hold meetings of its Board of Directors at least four times
a year; will allow at least one designee of the Holder to attend and
participate on an observer basis in such meeting and all meetings of
committees of such Board either in person or via video or teleconference
and at Company's expense; and will provide the Holder with the same
prior notice received by directors to meetings, and written materials as
given to the directors; provided, however, that if any such Board
desires to act by unanimous written consent in lieu of a meeting, it may
do so if the Holder receives, prior to their adoption, a copy of the
resolutions to be adopted in the same manner and at
36
the same time as provided to the directors and provided, further, that
in the event any other Company at any time or from time to time holds
meetings of its Board of Directors and/or desires to act by unanimous
written consent in lieu of a meeting, then the provisions of this
Section 4.8 shall also apply to such Company. The designee of the Holder
may only be excluded from any such meeting or a portion thereof if (i)
the Board of Directors will be discussing matters (x) pertaining to the
Loan, and (y) in which Holder and Simula have interests that are
directly adverse to each other, and (ii) a member of the Board of
Directors has requested that the designee not be present."
3.2. Section 4.13 of the Loan Agreement is hereby amended and restated in
its entirety, as follows:
"Section 4.13 Financial Covenants.
Notwithstanding Section 5.10 hereof or any other covenant herein, the
Companies will maintain the following financial covenants, as reflected
on the Companies' books of account in accordance with GAAP:
(a) Minimum Consolidated EBITDA. The Companies will have a Consolidated
EBITDA, determined for each four (4) consecutive fiscal quarter
period of the Companies ending as of the dates set forth below, of
at least the amount set forth below opposite each such date:
FOUR QUARTERS ENDING MINIMUM EBITDA
-------------------- --------------
September 30, 2002 $12,000,000
December 31, 2002 $13,250,000
March 31, 2003 $13,750,000
June 30, 2003 $14,000,000
September 30, 2003 $15,200,000
December 31, 2003, and each $15,200,000
March 31, June 30,
September 30 and December
31 thereafter
(b) Minimum Fixed Charge Coverage Ratio. The Companies will have a Fixed
Charge Coverage Ratio, determined for each four (4) consecutive
fiscal quarter period of the Companies ending as of the dates set
forth below, of at least the amounts set forth below opposite each
such date:
FOUR QUARTERS ENDING AMOUNT
-------------------- ------
September 30, 2002 1.025 to 1.0
December 31, 2002 1.125 to 1.0
March 31, 2003 1.15 to 1.0
June 30, 2003 1.20 to 1.0
September 30, 2003 1.35 to 1.0
December 31, 2003, and each 1.35 to 1.0
March 31, June 30, September
30 and December 31 thereafter
37
(c) Maximum Consolidated Debt to EBITDA Ratio. The Companies will have a
Consolidated Debt to EBITDA Ratio determined as of each date set
forth below, of not more than the amounts set forth below opposite
each such date:
FOUR QUARTERS ENDING AMOUNT
-------------------- ------
September 30, 2002 6.10 to 1.0
December 31, 2002 5.60 to 1.0
March 31, 2003 5.40 to 1.0
June 30, 2003 4.00 to 1.0
September 30, 2003 4.00 to 1.0
December 31, 2003, and each 00 to 1.0
March 31, June 30, September
30 and December 31 thereafter
(d) Capital Expenditures and Capitalized Leases. No Company will, nor
will any Company permit any of its Subsidiaries to, make any Capital
Expenditure or enter into any capitalized lease, if the sum of (i)
the aggregate amount of all Capital Expenditures (including the
Capital Expenditure in question) made by the Companies and their
Subsidiaries during each four (4) consecutive fiscal quarter period
of the Companies ending as of the dates set forth below, other than
ASD Capital Expenditures, plus (ii) the aggregate amount of all
capitalized lease obligations (including the capitalized lease in
question) made or required to be made by the Companies and their
Subsidiaries during each such four (4) consecutive fiscal quarter
period of the Companies ending as of the dates set forth below,
other than ASD Capitalized Lease Obligations, would exceed the
amount set forth below opposite each such date:
FOUR QUARTERS ENDING AMOUNT
-------------------- ------
September 30, 2002 $3,000,000
December 31, 2002 $3,500,000
March 31, 2003 $3,750,000
June 30, 2003 $3,850,000
September 30, 2003 $3,750,000
December 31, 2003, and each $3,500,000
March 31, June 30, September
30 and December 31 thereafter
38
(e) ASD Capital Expenditures and Capitalized Leases. No Company will,
nor will any Company permit any of its Subsidiaries to, make any ASD
Capital Expenditure or enter into any ASD Capitalized Lease
Obligation, if the sum of (i) the aggregate amount of all ASD
Capital Expenditures (including the ASD Capital Expenditure in
question) made by the Companies and their Subsidiaries during each
fiscal quarter of the Companies ending as of the dates set forth
below, plus (ii) the aggregate amount of all ASD Capitalized Lease
Obligations (including the ASD Capitalized Lease Obligation in
question) made or required to be made by the Companies and their
Subsidiaries during each such fiscal quarter of the Companies ending
as of the dates set forth below, would exceed the amount set forth
below opposite each such date:
FISCAL QUARTER ENDING AMOUNT
--------------------- ------
September 30, 2002 $300,000
December 31, 2002 $300,000
March 31, 2003 $300,000
June 30, 2003 $150,000
September 30, 2003 $150,000
December 31, 2003, and each $150,000
March 31, June 30, September
30 and December 31 thereafter
(f) Minimum Interest Coverage Ratio. The Companies will have an Interest
Coverage Ratio, determined for each four (4) consecutive fiscal
quarter period of the Companies ending as of the dates set forth
below, of at least the amounts set forth below opposite each such
date:
FOUR QUARTERS ENDING AMOUNT
-------------------- ------
September 30, 2002 1.65 to 1.0
December 31, 2002 1.90 to 1.0
March 31, 2003 1.95 to 1.0
June 30, 2003 2.00 to 1.0
September 30, 2003 2.10 to 1.0
December 31, 2003, and each 2.10 to 1.0
March 31, June 30, September
30 and December 31 thereafter
(g) Minimum Monthly Consolidated EBITDA. The Companies will have a
Consolidated EBITDA, for each month, determined as of the last day
of such month, of at least $500,000. The Companies hereby agree that
in addition to the requirements set forth in Section 4.2 herein, the
Companies shall also provide to Holder, in writing, each month, a
written certification by a Responsible Officer containing the
computations evidencing the Companies' compliance with the minimum
monthly Consolidated EBITDA covenant contained in this subsection
4.13(g) (or, in the event of any non-compliance, containing a
statement to such effect)."
39
3.3 Section 20.1 of the Loan Agreement is hereby amended by adding the
following definitions thereto:
"ASD Capital Expenditures" means Capital Expenditures made by the
Companies in connection with the operation of Simula Automotive
Safety Devices, Inc. and/or Simula Automotive Safety Devices, Ltd.;
"ASD Capitalized Lease Obligations" means capitalized lease
obligations incurred by the Companies in connection with the
operation of Simula Automotive Safety Devices, Inc. and/or Simula
Automotive Safety Devices, Ltd.;
3.4 Subsections 4.13(d) and 4.13(e) of the form of Compliance Certificate
set forth at Exhibit A to the Loan Agreement are hereby amended and
restated in their entirety, as set forth on Exhibit A hereto.
4. Conditions. The effectiveness of this Amendment is subject to the
following conditions precedent:
(a) Each Company shall have delivered to Holder a manually executed
original of this Amendment;
(b) The Companies shall have paid to Holder the Amendment Fee (as
defined below);
(c) The Companies shall have delivered to Holder an agreement executed
by each Company and CIT in form and substance satisfactory to Holder
(the "CIT Amendment"), pursuant to which, among other things, (i)
CIT shall have waived all Defaults and Events of Default (as such
terms are defined in the CIT Financing Agreement) in existence as of
the date hereof under the CIT Financing Agreement, which waiver
shall be subject to no conditions to effectiveness other than those
substantially similar to those set forth herein, and (ii) CIT and
the Companies shall have agreed to amend the financial covenants set
forth in the CIT Financing Agreement such that the financial
covenants therein are the same as the financial covenants set forth
in the Loan Agreement, as amended hereby;
(d) After giving effect to the waiver set forth in Section 2, no Default
or Event of Default shall be in existence as of the date hereof; and
(e) After giving effect to the CIT Amendment, no Default or Event of
Default (as such terms are defined in the CIT Financing Agreement)
shall be in existence as of the date hereof under the CIT Financing
Agreement.
5. REPRESENTATIONS AND WARRANTIES. To induce Holder to enter into this
Amendment, the Companies represent and warrant to Holder that (a) the
execution, delivery and performance of this Amendment has been duly
authorized by all requisite corporate action on the part of the
Companies and that this Amendment has been duly executed and delivered
by the Companies, and (b) except for the Existing Events of Default,
no Default or Event of Default shall have occurred and be continuing
before and immediately after giving effect to this Amendment.
6. WAIVER FEE. The Companies hereby agree, jointly and severally, to pay
to Holder an amendment fee (the "Amendment Fee") in the amount of
$100,000.
7. ADDITIONAL AGREEMENTS. Notwithstanding anything contained in this
Amendment or in the Loan Agreement to the contrary, Holder and
Companies hereby agree as follows:
40
7.1 Notwithstanding the Consolidated Debt to EBITDA Ratio covenant set
forth in clause (c) of Section 4.13 of the Loan Agreement, in the
event that the Companies shall fail to have a Consolidated Debt to
EBITDA Ratio, calculated as of June 30, 2003 and for the four (4)
consecutive fiscal quarter period then ending, of less than 4.0 to
1.0, the Companies agree, jointly and severally, to pay to Holder a
fee (the "Performance Fee") in the amount of $1,000,000, which
Performance Fee shall be fully-earned and payable in full in cash on
July 31, 2003.
7.2 On or before October 31, 2002, the Companies shall engage a financial
consultant acceptable to Holder, in Holder's reasonable discretion
(the "Financial Consultant"), to advise the Companies with respect to
strategic planning and refinancing opportunities for the Companies.
Holder and the Companies further agree that in the event that the
Companies fail to engage the Financial Consultant on or prior to
October 31, 2002 pursuant to the terms set forth herein, commencing on
November 1, 2002 the Principal Balance shall bear interest pursuant to
the terms set forth in Section 1.4 of the Loan Agreement.
7.3 On or before October 31, 2002, the Companies shall have delivered to
Holder, in form and substance satisfactory to Holder in Holder's sole
discretion, all of the agreements, instruments and documents required
or requested by Allied to create an enforceable lien under the laws of
the countries set forth below with respect to the following federally
registered patents registered or applied for registration in such
countries, together with evidence satisfactory to Allied, in Allied's
sole discretion, showing that such agreements, instruments and
documents have been registered pursuant to the laws of such
jurisdictions: (i) Patent No. 5,839,753, registered in Germany, Italy,
Japan and South Korea; (ii) Patent No. 6,126,194, registered in
Germany, Italy, Japan and South Korea; (iii) Patent No. 5,322,322,
registered in Germany, Italy, Japan and South Korea; (iv) Patent No.
5,480,181, registered in Germany, Italy, Japan and South Korea; (v)
Patent No. 5,253,826, registered in Great Britain; (vi) Patent No.
5,962,617, registered in Italy, Japan and The Netherlands; and (vii)
Patent No. 6,127,505, registered in Italy, Japan and The Netherlands
(collectively, the "Foreign I.P. Deliveries"). The Companies hereby
acknowledge and agree that if the Companies shall fail to make any of
the Foreign I.P. Deliveries on or before October 31, 2002, (a) such
failure shall constitute an Event of Default, (b) on November 1, 2002,
the Companies shall pay, jointly and severally, a fee to Holder in the
amount of $25,000, and (c) until all of the Foreign I.P. Deliveries
are made to Holder, the Companies shall pay additional fees to Holder
in the amount of $25,000 each, payable on the first day of each month
thereafter, until all of the Foreign I.P. Deliveries have been made to
Holder pursuant to the terms set forth herein.
7.4 From and following the date hereof, no Company shall (i) make any DCI
Capital Expenditures, or (ii) incur any DCI Capitalized Lease
Obligations.
7.5 Notwithstanding anything set forth in the Loan Agreement or in this
Amendment to the contrary, from and following the date hereof, the
Companies shall be permitted to add back, in the calculation of
EBITDA, any GAAP-recognized restructuring costs associated with the
cost reduction plan previously delivered by the Companies to Holder
(the "Restructuring Costs"), provided, however, that (i) the Companies
shall only be permitted to add back Restructuring Costs to the extent
they are incurred during the third quarter of fiscal year 2002, and
(ii) the amount of Restructuring Costs that the Companies shall be
permitted to add back in the calculation of EBITDA shall be limited to
$900,000, in the aggregate.
41
8. SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the provision so held to be invalid or
unenforceable.
9. REFERENCES. Any reference to the Loan Agreement contained in any
document, instrument or agreement executed in connection with the Loan
Agreement shall be deemed to be a reference to the Loan Agreement as
modified by this Amendment.
10. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of
which taken together shall be one and the same instrument.
11. RATIFICATION. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of
the Loan Agreement and shall not be deemed to be a consent to the
modification or waiver of any other term or condition of the Loan
Agreement. Except as expressly modified and superseded by this
Amendment, the terms and provisions of the Loan Agreement are ratified
and confirmed and shall continue in full force and effect.
[SIGNATURE PAGES FOLLOW]
42
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective duly authorized officers on
the date first written above.
SIMULA, INC.,
an Arizona corporation
By /s/ Xxxxxxx X. Xxxxx
--------------------------------
Its President and CEO
THE SUBSIDIARIES OF SIMULA, INC.:
AI CAPITAL CORP.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its President
-------------------------------
CCEC CAPITAL CORP.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its President
-------------------------------
INTERNATIONAL CENTER FOR SAFETY EDUCATION,
INC., an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its Secretary
-------------------------------
SAI CAPITAL CORP., an Arizona corporation
f/k/a Simula Artcraft Industries, Inc.
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its President
-------------------------------
SIMULA AUTOMOTIVE SAFETY DEVICES, INC., an
Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its Secretary
-------------------------------
43
SIMULA COMPOSITES CORPORATION,
a Delaware corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its President
--------------------------------
SIMULA POLYMER SYSTEMS, INC.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its Secretary
--------------------------------
SIMULA SAFETY SYSTEMS, INC.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its Assistant Secretary
--------------------------------
SIMULA TECHNOLOGIES, INC.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its Secretary
--------------------------------
SIMULA TRANSPORTATION EQUIPMENT CORPORATION,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its President
--------------------------------
SIMULA AUTOMOTIVE SAFETY DEVICES, LTD., a
United Kingdom limited company
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Its Secretary
--------------------------------
HOLDER:
ALLIED CAPITAL CORPORATION
By /s/ Xxxxx Xxxxx
--------------------------------
Its Principal
--------------------------------
44
EXHIBIT A
CAPITAL EXPENDITURES AND CAPITALIZED LEASES (4.13(d))
Expenditures for capital improvements for the applicable measurement period
(other than ASD Capital Expenditures, as defined below) $_________________
Plus: the aggregate amount of all capitalized lease obligations (other than ASD
Capitalized Lease Obligations) made by the Companies and their Subsidiaries
during the period $_________________
Total Capital Expenditures and capitalized lease obligations $
=================
Permitted Capital Expenditures and capitalized lease obligations for the period $_________________
In Compliance Yes/No
ASD CAPITAL EXPENDITURES AND CAPITALIZED LEASE OBLIGATIONS (4.13(e))
ASD Capital Expenditures are defined as follows:
Capital Expenditures to date made in connection with the operation of Simula
Automotive Safety Devices, Inc. and/or Simula Automotive Safety Devices, Ltd.
$_________________
Plus: Capitalized lease obligations incurred to date in connection with the
operation of Simula Automotive Safety Devices, Inc. and/or Simula
Automotive Safety Devices, Ltd.
$_________________
Total ASD Capital Expenditures and ASD Capitalized Lease Obligations
$
=================
Total Permitted ASD Capital Expenditures and ASD Capitalized Lease Obligations
$_________________
In Compliance Yes/No
45
