EXHIBIT 10.8
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of September 17, 2004
(the "First Amendment"), is by and among DIRECTED ELECTRONICS, INC., a
California corporation (the "Borrower"), those Domestic Subsidiaries of the
Borrower identified as "Guarantors" on the signature pages hereto (the
"Guarantors"), the financial institutions party hereto (collectively, the
"Lenders"; and individually, a "Lender"), and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
WITNESSETH
WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative
Agent are parties to that certain Credit Agreement dated as of June 17, 2004 (as
amended, modified, supplemented or restated from time to time, the "Credit
Agreement"; capitalized terms used herein shall have the meanings ascribed
thereto in the Credit Agreement unless otherwise defined herein);
WHEREAS, Holdings has agreed to purchase the assets (the "Acquired
Assets") of Definitive Technology LLP, a Maryland limited liability partnership
("Definitive") pursuant to the terms of that certain Purchase Agreement (as
defined below) by and among Holdings, Definitive, Xxxxx Xxxxx, Xxxxxx Xxxxxxx
and Xxxxxx Xxxxx for an aggregate amount, including (i) all related fees and
expenses, (ii) a working capital adjustment in an amount not to exceed
$1,000,000 and (iii) the DT Deferred Payment (as defined below), not exceeding
$54,000,000, with the Definitive assets to be acquired from Definitive by
Borrower and DEI Headquarters, Inc. (the "DT Acquisition");
WHEREAS, the Borrower has requested that the Requisite Lenders waive the
prohibition under Section 7.18 of the Credit Agreement (i) to allow Holdings to
enter into and consummate the Purchase Agreement (with Borrower and DEI
Headquarters, Inc. actually acquiring the Definitive assets) and (ii) to allow
Holdings to issue shares of its common stock to Trivest and its assigns in
connection with the DT Acquisition (the "Trivest Stock Issuance");
WHEREAS, the Borrower has requested that the Requisite Lenders waive the
terms of Sections 6.2, 7.7 and 7.15 of the Credit Agreement to allow Borrower to
change its domicile of incorporation to Florida (the "Redomestication");
WHEREAS, the Borrower has requested an increase of the Term Loan
Commitment in an aggregate principal amount not to exceed $45,000,000 for
purposes of funding the DT Acquisition (the "Term Loan Increase");
WHEREAS, the Borrower has requested that the Requisite Lenders waive the
mandatory prepayment required under Section 2.8(b)(iv) of the Credit Agreement
(the "Prepayment") in connection with the Term Loan Increase and the Trivest
Stock Issuance;
WHEREAS, the Borrower has requested that the Requisite Lenders permit the
DT Acquisition, the Redomestication, the Trivest Stock Issuance, and the Term
Loan Increase and agree to certain modifications to the terms of the Credit
Agreement in connection therewith; and
WHEREAS, the Requisite Lenders have agreed to (i) permit the DT
Acquisition, the Redomestication, the Trivest Stock Issuance, and the Term Loan
Increase, (ii) amend the Credit Agreement in connection therewith, and (iii)
waive the Prepayment required by the Term Loan Increase and the Trivest Stock
Issuance on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
WAIVER
1.1 The Requisite Lenders hereby waive Sections 6.2, 7.7 and 7.15 to the
extent the same prohibits the Redomestication.
1.2 The Requisite Lenders hereby waive Section 7.12 of the Credit
Agreement to the extent that same prohibits the Borrower from paying Trivest a
one-time fee of $1,450,000 pursuant to Section 6(c)(i) of the Trivest Management
Agreement at the closing of the DT Acquisition (subject, however, to Trivest
waiving any increase in the "Base Compensation" otherwise required by Section
6(b) of the Trivest Management Agreement in connection with the DT Acquisition).
1.3 The Requisite Lenders hereby waive Section 7.18 of the Credit
Agreement to the extent the same prohibits Holdings from executing, delivering,
and performing the obligations of the Purchase Agreement and to the extent the
same prohibits the Trivest Stock Issuance.
1.4 The Requisite Lenders hereby waive the Prepayment in respect of the
proceeds of the Trivest Stock Issuance made concurrently (and only the issuance
made concurrently) with the consummation of the closing of the DT Acquisition.
1.5 Notwithstanding the terms of Section 2.8(b)(iv) of the Credit
Agreement, the Requisite Lenders hereby consent to the proceeds of the Term Loan
Increase being used for (and exclusively for) consummation of the DT Acquisition
in accordance with the terms and conditions of the Purchase Agreement (as
defined in Section 2.1 of this Amendment), with the Borrower and DEI
Headquarters, Inc. acquiring the Acquired Assets.
1.6 The Requisite Lenders hereby waive the provisions of Section 6.10 of
the Credit Agreement to the extent that it prohibits the Borrower or its
Subsidiaries from acquiring bank accounts ("DT Bank Accounts") in the DT
Acquisition that are not maintained with one of the Lenders; provided that the
Borrower or such Subsidiary that acquires the DT Bank Accounts shall, within 60
days from the First Amendment Effective Date (as defined below), either (a)
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deliver a deposit account control agreement signed by the institution
maintaining the DT Bank Accounts and acceptable to Administrative Agent in its
sole discretion, or (b) transfer such DT Bank Accounts to Administrative Agent
or one of the Lenders.
1.7 Except for the specific waivers set forth herein, nothing contained
herein shall be deemed to constitute a waiver of (i) any rights or remedies the
Administrative Agent or any Lender may have under the Credit Agreement or any
other Loan Document or under applicable law or (ii) the Loan Parties' obligation
to comply fully with any duty, term, condition, obligation or covenant contained
in the Credit Agreement and the other Loan Documents not specifically waived.
The specific waivers set forth herein are one-time waivers and shall be
effective only in this specific instance and shall not obligate the Lenders to
waive any Default or Event of Default, now existing or hereafter arising.
SECTION 2
AMENDMENTS
2.1 AMENDMENTS TO SECTION 1.1.
(a) The following definitions are hereby added to the Credit Agreement
to read as follows:
"Add-On Term Loan" shall have the meaning set forth in Section
2.2(a).
"Add-On Term Loan Commitment Percentage" shall mean, for any Add-On
Term Loan Lender, the percentage identified as its Add-On Term Loan
Commitment Percentage on Schedule 2.1(a)-2.
"Add-On Term Loan Committed Amount" shall have the meaning set forth
in Section 2.2(a).
"Add-On Term Loan Lender" shall mean a Lender that makes an Add-On
Term Loan, together with its successors and permitted assigns pursuant to
Section 10.1.
"DT Acquisition" shall mean the acquisition by the Borrower and DEI
Headquarters, Inc. of substantially all of the assets of Definitive
Technology LLP, a Maryland limited liability partnership for an aggregate
amount, including (i) all related fees and expenses, (ii) a working
capital adjustment in an amount not to exceed $1,000,000 and (iii) the DT
Deferred Payment, not exceeding $54,000,000, consummated pursuant to the
terms of the Purchase Agreement.
"DT Deferred Payment" shall mean the deferred payment in an
aggregate amount not to exceed $2,000,000 paid or payable pursuant to the
Purchase Agreement.
"First Amendment Effective Date" shall mean September 17, 2004.
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"Initial Term Loan" shall have the meaning set forth in Section
2.2(a).
"Initial Term Loan Committed Amount" shall have the meaning set
forth in Section 2.2(a).
"Purchase Agreement" shall mean, that certain Asset Purchase
Agreement, dated as of the First Amendment Effective Date, by and among
Holdings, the Seller, Xxxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxxxx Xxxxx.
"Seller" shall mean Definitive Technology, LLP.
(b) The definition of "Consolidated EBITDA" in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"Consolidated EBITDA" means, for any period, the sum of the amounts
for such period of (a) Consolidated Net Income plus to the extent deducted
in determining Consolidated Net Income, (i) Consolidated Interest Expense,
(ii) provisions for taxes based on income, (iii) total depreciation
expense, (iv) total amortization expense, (v) management fees paid to
Trivest pursuant to the Trivest Management Agreement to the extent
permitted by Section 7.12, (vi) other non-recurring and non-cash items
reducing Consolidated Net Income in an aggregate amount not to exceed
$3,000,000, (vii) other one time add-backs set forth on Schedule 1.1(a)
attached hereto (it being understood that such one-time add-backs shall
roll-off on a quarterly basis and shall not affect Consolidated EBITDA
after one year following the Closing Date) and (viii) other one time
add-backs related to Definitive set forth on Schedule 1.1(a)(viii)
attached hereto (it being understood that such one time add backs shall
roll-off on a quarterly basis and shall not affect Consolidated EBITDA
after one year following the First Amendment Effective Date), less (b)
interest income and any non-operating, non-recurring and non-operating,
non-cash items increasing Consolidated Net Income, all of the foregoing as
determined on a consolidated basis for Borrower and its Subsidiaries in
conformity with GAAP; provided that in calculating any such items for such
period, any Asset Sales or other acquisitions or dispositions of assets
during such period shall have been deemed to have occurred on the first
day of such period.
(c) The definition of "Permitted Acquisition" in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety as follows:
"Permitted Acquisition" shall mean (a) the DT Acquisition and (b) an
acquisition or any series of related acquisitions by a Loan Party of (i)
all or substantially all of the assets or a majority of the outstanding
voting stock or economic interests of a Person that is incorporated,
formed or organized in the United States or Canada or (ii) any division,
line of business or other business unit of a Person that is incorporated,
formed or organized in the United States or Canada (such Person or such
division, line of business or other business unit of such Person shall be
referred to herein as the "Target"), in each case that is a type of
business (or assets used in a type of business) permitted to be engaged in
by Borrower and its Subsidiaries pursuant to Section 7.14 hereof, so long
as (A) no Event of Default or Potential Event of Default shall then exist
or would exist after
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giving effect thereto, (B) Borrower shall demonstrate to the reasonable
satisfaction of Administrative Agent and the Requisite Lenders that, after
giving effect to the acquisition on a pro forma basis (giving effect to
adjustments for owner compensation for such period, documented to the
reasonable satisfaction of the Administrative Agent, to the extent such
compensation does not continue after such acquisition) (I) the
Consolidated Total Leverage Ratio shall be less than or equal to the ratio
that is 0.25 lower than the Consolidated Total Leverage Ratio then
required under Section 7.6A and (II) Loan Parties are in compliance with
each of the financial covenants set forth in Section 7.6, (C)
Administrative Agent, on behalf of Lenders, shall have received (or shall
receive in connection with the closing of such acquisition) a First
Priority perfected security interest in all property (including, without
limitation, capital stock) acquired with respect to the Target in
accordance with the terms of Sections 6.8 and 6.9 and the Target, if a
Person, shall have executed counterparts of the Subsidiary Guaranty and
the Security Agreement and take such further action as required under
Sections 6.8 and 6.9, (D) the Target shall have earnings before interest,
taxes, depreciation and amortization for the four fiscal quarter period
prior to the acquisition date in an amount greater than $0, as adjusted
for owner compensation for such period, documented to the reasonable
satisfaction of the Administrative Agent, to the extent such compensation
does not continue after such acquisition (provided that the aggregate
consideration paid by the Loan Parties and their Subsidiaries shall not
exceed $5,000,000 for any Target which, but for such owner compensation
adjustment, would have negative earnings for such period), (E) such
acquisition shall not be a "hostile" acquisition and shall have been
approved by the board of directors and/or shareholders of the applicable
Loan Party and the Target, (F) the Borrower shall have provided at least
ten (10) days prior written notice of such acquisition to the
Administrative Agent (which shall distribute such notice to the Lenders),
(G) after giving effect to such acquisition, there shall be at least
$5,000,000 of borrowing availability under the Revolving Commitment and
(H) the aggregate consideration (including without limitation equity
consideration, earn outs or deferred compensation or non-competition
arrangements and the amount of Indebtedness and other liabilities assumed
by Loan Parties and their Subsidiaries) paid by Loan Parties and their
Subsidiaries (I) in connection with any such acquisition of a Target
organized in Canada shall not exceed $7,000,000, (II) in connection with
any such acquisition shall not exceed $10,000,000 and (III) for all
acquisitions (other than the DT Acquisition) made during any twelve month
period shall not exceed $20,000,000.
2.2 AMENDMENT TO SECTION 2.2.
Sections 2.2(a) and 2.2(b) of the Credit Agreement are amended and
restated in their entireties to read as follows:
2.2 TERM LOAN.
(a) Term Loan. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each
Term Loan Lender severally agrees to make available to Borrower on the
Closing Date such Term Loan Lender's Term Loan Commitment Percentage of a
term loan in Dollars (the "Initial Term Loan") in the aggregate principal
amount of ONE HUNDRED ELEVEN
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MILLION DOLLARS ($111,000,000) (the "Initial Term Loan Committed Amount") for
the purposes hereinafter set forth. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein, each
Add-On Term Loan Lender severally agrees to make available to Borrower on the
First Amendment Effective Date such Add-On Term Loan Lender's Add-On Term Loan
Commitment Percentage of a term loan in Dollars (the "Add-On Term Loan",
together with the Initial Term Loan, the "Term Loan") in the aggregate principal
amount of FORTY-FIVE MILLION DOLLARS ($45,000,000) (the "Add-On Term Loan
Committed Amount", together with the Initial Term Loan Committed Amount, the
"Term Loan Committed Amount") for the purposes hereinafter set forth. The Term
Loan may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a
combination thereof, as Borrower may request; provided that (i) on the Closing
Date and on the two Business Days following the Closing Date, the Initial Term
Loan shall bear interest at the Alternate Base Rate and (ii) on the First
Amendment Effective Date and on the two Business Days following the First
Amendment Effective Date, the Add-On Term Loan shall bear interest at the
Alternate Base Rate. LIBOR Rate Loans shall be made by each Term Loan Lender at
its LIBOR Lending Office and Alternate Base Rate Loans at its Domestic Lending
Office. Amounts repaid or prepaid on the Term Loan may not be reborrowed.
(b) Repayment of Term Loan. The principal amount of the Term Loan shall be
repaid in twenty-four (24) consecutive quarterly installments (as reduced
pursuant to Section 2.8) as follows:
PRINCIPAL AMORTIZATION TERM LOAN
PAYMENT DATE PRINCIPAL AMORTIZATION PAYMENT
---------------------- ------------------------------
September 30, 2004 $390,000
December 31, 2004 $390,000
March 31, 2005 $390,000
June 30, 2005 $390,000
September 30, 2005 $390,000
December 31, 2005 $390,000
March 31, 2006 $390,000
June 30, 2006 $390,000
September 30, 2006 $390,000
December 31, 2006 $390,000
March 31, 2007 $390,000
June 30, 2007 $390,000
September 30, 2007 $390,000
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PRINCIPAL AMORTIZATION TERM LOAN
PAYMENT DATE PRINCIPAL AMORTIZATION PAYMENT
----------------------- ------------------------------
December 31, 2007 $ 390,000
March 31, 2008 $ 390,000
June 30, 2008 $ 390,000
September 30, 2008 $ 390,000
December 31, 2008 $ 390,000
March 31, 2009 $ 390,000
June 30, 2009 $ 390,000
September 30, 2009 $37,050,000
December 31, 2009 $37,050,000
March 31, 2010 $37,050,000
Term Loan Maturity Date $37,050,000
2.3 AMENDMENT TO SECTION 6.11. Section 6.11 of the Credit Agreement is
amended and restated in its entirety to read as follows:
6.11 INTEREST RATE CAP.
(a) Borrower shall, within ninety (90) days of the Closing Date
enter into a Hedge Agreement protecting against fluctuations in interest
rates, in amounts and for periods of time reasonably satisfactory to
Administrative Agent, which agreements shall provide for coverage in a
minimum amount of at least 50% of the initial principal amount of the
Initial Term Loan made on the Closing Date for a period of at least three
(3) years.
(b) Borrower shall, within ninety (90) days of the First Amendment
Effective Date enter into a Hedge Agreement protecting against
fluctuations in interest rates, in amounts and for periods of time
reasonably satisfactory to Administrative Agent, which agreements shall
provide for coverage in a minimum amount of at least 50% of the initial
principal amount of the Add-On Term Loan made on the First Amendment
Effective Date for a period of at least three (3) years.
2.4 AMENDMENT TO SECTION 6.13(a). Section 6.13(a) of the Credit
Agreement is amended and restated in its entirety to read as follows:
6.13 POST-CLOSING COVENANTS.
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(a) Within one hundred thirty-five (135) calendar days of the
Closing Date, obtain, and thereafter maintain, key-man insurance ("Key-Man
Insurance") with respect to Xx. Xxxxxxx on the following basis:
2.5 AMENDMENT TO SECTION 7.5. A new clause (vi) is hereby added to
Section 7.5 of the Credit Agreement to read as follows:
(vi) Borrower may dividend up to $2,000,000 to Holdings to pay the
DT Deferred Payment in accordance with the terms of the Purchase
Agreement.
2.6 AMENDMENT TO SECTION 7.6. Sections 7.6(B) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
B. Maximum Consolidated Senior Leverage Ratio. Borrower shall not
permit the Consolidated Senior Leverage Ratio as of the last day of any
Fiscal Quarter ending during any of the periods set forth below to exceed
the correlative ratio indicated:
MAXIMUM CONSOLIDATED
PERIOD SENIOR LEVERAGE RATIO
----------------------------------- ---------------------
Closing Date to March 31, 2005 3.9 to 1.0
April 1, 2005 to September 30, 2005 3.5 to 1.0
October 1, 2005 to June 30, 2006 3.0 to 1.0
July 1, 2006 and thereafter 2.5 to 1.0
2.7 AMENDMENT TO SCHEDULES. Schedule 1.1(a)(viii) attached hereto as
Exhibit A and Schedule 2.1(a)-2 attached hereto as Exhibit B are hereby added to
the Credit Agreement. To the extent that Borrower must amend Schedules 4.1(k),
5.1, 5.5A, 5.8, 5.11, 5.20 or 6.10 to the Credit Agreement due to the DT
Acquisition, the Requisite Lenders agree that Borrower may deliver such amended
schedules to Administrative Agent no later than ten (10) business days after the
First Amendment Effective Date.
SECTION 3
CLOSING CONDITIONS
3.1 CONDITIONS PRECEDENT. This First Amendment shall become effective as
of the date hereof upon the receipt by the Administrative Agent of the
following:
(a) Executed Agreement. Receipt by the Administrative Agent of a duly
executed signature page to the First Amendment to the Credit Agreement from each
of the Borrower, the Guarantors, the Requisite Lenders and the Add-On Term Loan
Lenders;
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(b) Consents. All consents and approvals of the boards of directors,
shareholders, governmental authorities and other applicable third parties
necessary in connection with the DT Acquisition and the Add-On Term Loan shall
have been obtained;
(c) Acquisition Documents. All documentation related to the DT
Acquisition (including without limitation the Purchase Agreement and all
schedules thereto) shall have been duly executed and delivered by the parties
thereto, shall be satisfactory in form and substance to the Agents and the DT
Acquisition shall have been consummated in accordance with such terms, and the
Agents shall have received a copy of the Purchase Agreement and all other
documentation related thereto, certified as true, correct and complete by an
officer of the Borrower;
(d) Joinder Agreements. Any new Subsidiaries of the Loan Parties (each a
"New Subsidiary") created or acquired in connection with the DT Acquisition
shall have entered into a joinder agreement (the "Joinder Agreement") to the
Credit Agreement and to the Collateral Documents and the Administrative Agent,
on behalf of the Lenders, shall have received a first-priority, perfected
security interest in all New Subsidiaries' present and future property and
assets;
(e) Authority Documents.
(i) Articles of Incorporation; Partnership Agreement. Copies of the
articles of incorporation, partnership agreement or other charter
documents of each New Subsidiary certified to be true and complete as of a
recent date by the appropriate Governmental Authority of the state of its
organization or formation;
(ii) Officer's Certificates. Copies of the articles of
incorporation, partnership agreement, or other charter documents of each
Loan Party certified by an officer of such Loan Party, as of the First
Amendment Date, to be true and correct, in force and effect, and complete
as of such date;
(iii) Resolutions. Copies of resolutions of the board of directors
or other comparable governing body of each Loan Party and each New
Subsidiary approving and adopting this Amendment (and, with respect to
each New Subsidiary, the Joinder Agreement and the other Loan Documents),
the transactions contemplated herein (and therein) and authorizing
execution and delivery hereof (and thereof), certified by an officer of
such Loan Party or such New Subsidiary, as applicable, as of the First
Amendment Effective Date to be true and correct and in force and effect as
of such date;
(iv) Bylaws. A copy of the bylaws or other operating agreement of
each Loan Party and each New Subsidiary certified by an officer of such
Loan Party or such New Subsidiary, as applicable, as of the First
Amendment Effective Date to be true and correct and in force and effect as
of such date;
(v) Good Standing. Copies of (i) certificates of good standing,
existence or its equivalent with respect to each Loan Party and each new
Subsidiary certified as of a
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recent date by the appropriate Governmental Authorities of the state of
incorporation and each other state in which such Loan Party or such New
Subsidiary, as applicable, is qualified to do business and (ii) to the
extent readily available, a certificate indicating payment of all
corporate and other franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities; and
(vi) Incumbency. An incumbency certificate of each Loan Party and
each New Subsidiary certified by a secretary or assistant secretary of
such Loan Party or such New Subsidiary, as applicable, to be true and
correct as of the First Amendment Effective Date;
(f) Perfection of Liens. The Loan Parties shall have taken such actions
as the Administrative Agent may reasonably require to continue the perfection of
the Administrative Agent's Liens on the Collateral after giving effect to the
Redomestication;
(g) Corporate Structure. The corporate and capital structure and the
management of the Borrower and its Subsidiaries after giving effect to the DT
Acquisition and the Add-On Term Loan, and all legal, tax, accounting,
environmental and other matters relating to the Borrower and its Subsidiaries
after giving effect thereto, shall be reasonably satisfactory in all material
respects to the Agents;
(h) Material Adverse Change. No material adverse change shall have
occurred in the business, properties, operations or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole;
(i) Litigation and Bankruptcy. There shall be no material pending or
overtly threatened litigation, bankruptcy or insolvency, injunction, order or
claim with respect to the Borrower or any of its Subsidiaries that would have a
Material Adverse Effect whole;
(j) Existing Indebtedness. All of the existing indebtedness for borrowed
money associated with the Acquired Assets shall be repaid in full and all liens
relating thereto extinguished (or arrangements satisfactory to the Agents shall
have been made therefor) on or prior to the date hereof and all filings,
recordations and other actions necessary or in the Agents' opinion desirable to
perfect the Administrative Agent's liens and security interests in the Acquired
Assets shall have been made or taken, or arrangements satisfactory to the Agents
for the completion thereof shall have been made;
(k) Legal Opinions. The Borrower shall deliver opinions of counsel
(including local counsel opinions) in form and substance reasonably acceptable
to the Agents and the Lenders;
(l) Financial Statements. All financial statements (including, without
limitation, (i) unaudited financials of the Definitive's historical results for
the years ended December 31, 2001, 2002 and 2003, (ii) unaudited financials for
the month ending June 30, 2004 and (iii) seven-year projections requested by the
Agents) shall have been delivered and be in form and substance reasonably
satisfactory thereto;
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(m) Financial Covenants. Immediately after giving effect to the DT
Acquisition, the Add-On Term Loan and the other transactions contemplated
hereby, (i) the Consolidated Total Leverage Ratio of the Borrower and its
Subsidiaries, calculated on a pro forma basis as of July 31, 2004, shall not
exceed 5.15 to 1.0 and (ii) the Consolidated Senior Leverage Ratio of the
Borrower and its Subsidiaries, calculated on a pro forma basis as of July 31,
2004, shall not exceed 3.55 to 1.0;
(n) EBITDA. Immediately after giving effect to the DT Acquisition, the
Add-On Term Loan and the other transactions contemplated hereby, Consolidated
EBITDA of the Borrower and its Subsidiaries, calculated on a pro forma basis as
of July 31, 2004 shall be not less than $45,000,000;
(o) Equity Contribution. The Borrower shall have received cash proceeds
from the Trivest Equity Issuance in an aggregate amount not less than $6,000,000
on terms and conditions satisfactory to the Agents;
(p) Waiver of Base Compensation. Trivest shall deliver evidence that it
has waived any increase in the "Base Compensation" otherwise required by Section
6(b) of the Trivest Management Agreement in connection with the DT Acquisition;
(q) Fees and Expenses. The Agents and the Lenders shall have received
from the Borrower the aggregate amount of fees and expenses payable in
connection with the consummation of the transactions contemplated hereby; and
(r) Subordinated Debt. The Agents shall have received satisfactory
evidence that the holders of the Subordinated Notes shall have approved the DT
Acquisition and made such amendments as are necessary thereunder to permit the
transactions contemplated hereby.
SECTION 4
MISCELLANEOUS
4.1 AMENDED TERMS. The term "Credit Agreement" as used in each of the
Loan Documents shall hereafter mean the Credit Agreement as amended by this
First Amendment. Except as specifically amended hereby or otherwise agreed, the
Credit Agreement is hereby ratified and confirmed and shall remain in full force
and effect according to its terms.
4.2 REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES. The Borrower
hereby represents and warrants as follows:
(a) Each of the Borrower and the Guarantors has taken all necessary
action to authorize the execution, delivery and performance of this First
Amendment.
(b) This First Amendment has been duly executed and delivered by such
Person and constitutes such Person's legal, valid and binding obligations,
enforceable in accordance with its
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terms, except as such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(c) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental authority or third
party is required in connection with the execution, delivery or performance by
such Person of this First Amendment.
(d) After giving effect to this First Amendment, the representations and
warranties set forth in Section 5 of the Credit Agreement are, subject to the
limitations set forth therein, true and correct in all respects as of the date
hereof (except for those which expressly relate to an earlier date).
(e) After giving effect to this First Amendment, no Default or Event of
Default has occurred and is continuing.
4.3 LOAN DOCUMENT. This First Amendment shall constitute a Loan Document
under the terms of the Credit Agreement and shall be subject to the terms and
conditions thereof (including, without limitation, Sections 10.17 and 10.18 of
the Credit Agreement).
4.4 ENTIRETY. This First Amendment and the other Loan Documents embody
the entire agreement between the parties hereto and supersede all prior
agreements and understandings, oral or written, if any, relating to the subject
matter hereof.
4.5 COUNTERPARTS. This First Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument.
4.6 GOVERNING LAW. THIS FIRST AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this First Amendment to be duly executed and delivered as of the date first
above written.
BORROWER: DIRECTED ELECTRONICS, INC.,
a California corporation
By: /s/ Xxxxx X. Xxxxxxx
_______________________________
Name:
Title:
GUARANTORS: DEI HOLDINGS, INC.,
a Florida corporation
By: /s/ Xxxxx X. Xxxxxxx
_______________________________
Name:
Title:
DEI HEADQUARTERS, INC.,
a Florida corporation
By: /s/ Xxxxx X. Xxxxxxx
_______________________________
Name:
Title:
DIRECTED ELECTRONICS, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
ADMINISTRATIVE AGENT
AND LENDERS: WACHOVIA BANK, NATIONAL
ASSOCIATION,
as Administrative Agent and as a Lender
By: /s/ Xxxxx X. Xxxxxxx
________________________________
Name: Xxxxx X. Xxxxxxx
Title: Vice President
[signature pages continue]
DIRECTED ELECTRONICS, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
AIB DEBT MANAGEMENT LTD.
By: /s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: Senior Vice President
Investment Advisor to
AIB Debt Management, Limited
By: /s/ Xxxxxx Xxxx
----------------------------
Name: Xxxxxx Xxxx
Title: Vice President
Investment Advisor to
AIB Debt Management, Limited
AIMCO CDO SERIES 2000-A
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory
AIMCO CLO SERIES 2001-A
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory
ANTARES CAPITAL CORP.
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Name: Xxxxxxx X. Xxxx
Title: Director
APEX (IDM) CDO I, LTD.
ELC (CAYMAN) LTD. 1999-II
ELC (CAYMAN) LTD. 1999-III
ELC (CAYMAN) LTD. 2000-I
XXXXX CLO LTD. 2000-I
BABSON CLO LTD. 2003-I
BABSON CLO LTD. 2004-I
SEABOARD CLO 2000 LTD.
SUFFIELD CLO, LIMITED
By: Babson Capital Management LLC as
Collateral Manager
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx, CFA
Title: Managing Director
SIMSBURY CLO, LIMITED
By: Babson Capital Management LLC under delegated
authority from Massachusetts Mutual Life Insurance
Company as Collateral Manager
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx, CFA
Title: Managing Director
CIBC WORLD MARKETS CORP.
By: /s/ Xxxxxx Xxxxxx
----------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Director
LOAN FUNDING CORP. THC, LTD.
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: As Attorney-in-Fact
CAYMAN CAPITAL ADVISORS
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: Managing Partner
SPECIAL SITUATIONS OPPORTUNITY FUND I, LLC
By: First Source Financial, Inc.
Its Authorized Agent
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
FRANKLIN FLOATING RATE TRUST
FRANKLIN FLOATING RATE MASTER SERIES
FRANKLIN FLOATING RATE DAILY ACCESS FUND
By: /s/ Xxxxxxx Xxx
----------------------------
Name: Xxxxxxx Xxx
Title: Vice President
FRANKLIN CLO II, LIMITED
FRANKLIN CLO III, LIMITED
FRANKLIN CLO IV, LIMITED
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
LOAN FUNDING CORP THC. LTD.
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: As Attorney-in-Fact
MIDLAND NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
XXXXXXX XXXXX CAPITAL, A DIVISION OF XXXXXXX XXXXX
BUSINESS FINANCIAL SERVICES INC.
By: /s/ Xxxxx Xxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxx
Title: Director, Team Leader
VENTURE IV CDO, LIMITED
By its investor advisor MJX Asset Management LLC
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: Managing Director
XXXXXX STRAITS CLO 2004, LTD.
By Royal Bank of Canada as Collateral Manager
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Authorized Signatory
WACHOVIA BANK, NATIONAL ASSOCIATION,
As a Lender
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
