SEVENTH AMENDMENT TO THE SENIOR SECURED CREDIT AGREEMENT
Exhibit
99.1
EXECUTION
COPY
SEVENTH
AMENDMENT TO THE
This
SEVENTH AMENDMENT TO THE SENIOR SECURED CREDIT AGREEMENT, dated as of December
24, 2008 (this “Amendment”), in
respect of and to that certain Senior Secured Credit Agreement, dated as of
October 17, 2006, as amended by the First Amendment to the Credit Agreement,
dated as of June 5, 2007, by the Second Amendment to the Credit Agreement, dated
as of September 11, 2007, by the Third Amendment to the Credit Agreement, dated
as of February 4, 2008, by the Fourth Amendment and Limited Waiver to the Credit
Agreement, dated as of February 14, 2008, by the Fifth Amendment to the Credit
Agreement, dated as of August 25, 2008, and by the Sixth Amendment to the Credit
Agreement, dated as of September 22, 2008 (as further amended, modified,
restated, amended and restated and/or supplemented from time to time, the “Credit Agreement”),
by and among SILICON GRAPHICS, INC., a corporation formed under the laws of
Delaware (the “Parent”), and certain
of the Parent’s Subsidiaries identified on the signature pages thereto, as
borrowers (such Subsidiaries, together with Parent, are referred to hereinafter
each individually as a “Borrower”, and
collectively, jointly and severally, as the “Borrowers”), the
other Credit Parties thereto from time to time, as Guarantors, the lenders party
thereto from time to time (the “Lenders”), XXXXXX
XXXXXXX SENIOR FUNDING, INC., a corporation formed under the laws of Delaware
(“Xxxxxx
Xxxxxxx”), as administrative agent for the Lenders (in such capacity,
together with its successors and assigns, if any, the “Administrative
Agent”), as revolving agent for the Revolving Lenders (in such capacity,
together with its successors and assigns, if any, the “Revolving Agent”),
and XXXXXX XXXXXXX & CO., INCORPORATED (“MS& Co.”) as
collateral agent for the Secured Creditors (in such capacity, together with its
successors and assigns, if any, the “Collateral
Agent”). Capitalized terms used in this Amendment and not
otherwise defined shall have the meanings set forth in the Credit
Agreement.
RECITALS:
WHEREAS,
the Borrowers have requested that the Administrative Agent and each of the
Lenders agree to certain amendments to the Credit Agreement, including
amendments to modify the payment schedule of principal repayments of the Term
Loans, to allow all interest payments to be paid-in-kind, at the Borrowers’
option, through December 24, 2010, to provide for an additional mandatory
prepayment in the event that certain Consolidated EBITDA targets are met, to
modify the Minimum Consolidated EBITDA and Minimum Liquidity covenants, to
modify the definition of Required Lenders, to increase the frequency of required
conference calls between the Lenders and management, and to require the Borrower
to deliver certain proposals to the Lenders upon receipt.
WHEREAS,
the Administrative Agent, the Borrowers, and each of the Lenders are willing to
consent to this Amendment pursuant to, and subject to, the terms and conditions
set forth herein.
NOW,
THEREFORE, the parties agree as follows:
SECTION
1. Definitions. Capitalized
terms used in this Amendment and not otherwise defined shall have the meanings
set forth in the Credit Agreement.
SECTION
2. Amendments to the Credit
Agreement. The Credit Agreement is hereby amended as
follows:
2.1 Article I, Section
1.03(a) is hereby amended by deleting the period at the end of the second
sentence and replacing with the following:
“(other than with respect to interest
paid-in-kind to the Term Lenders pursuant to Section
3.01(a)).”
2.2 Article I, Section
1.03(e) is hereby amended by deleting the chart therein and replacing it
with the following:
|
Date
|
Term
Loan
Scheduled
Repayment
|
|||
|
December
24, 2010
|
$ | 6,250,000 | ||
|
March 25, 2011
|
$ | 6,250,000 | ||
|
June 24, 2011
|
$ | 6,250,000 | ||
|
Maturity
Date
|
$ | 113,750,000 | ||
|
Total
|
$ | 132,500,000 | ||
2.3 Article I, Section
1.10 is hereby amended by inserting the following after the words
“consisting of ” in the clause marked “FOURTH”:
“Revolving
PIK Loans and”
2.4 Article I, Section
1.10 is hereby amended by inserting the following at the end of the
clause marked “SEVENTH”:
“ (including interest paid-in-kind to
the Term Lenders in accordance with Section
3.01(a))”
2.5 Article II, Section
2.02 is hereby amended by adding the following new subsection
(f):
“(f) Prepayments Upon Meeting
Consolidated EDITDA Targets.
(i) With
respect to any fiscal quarter ending on or prior to June 26, 2009 during which
the Credit Parties had Consolidated EBITDA of $7,500,000 or more, the Borrower
shall prepay the Loans in an amount equal to $4,250,000 (or a lesser amount
subject to the second sentence of clause (iii) below),
such amount to be due and payable on the next occurring Quarterly Prepayment
Date.
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(ii) With
respect to any fiscal quarter ending after June 26, 2009, but ending on or prior
to June 25, 2010 during which the Credit Parties had Consolidated EBITDA of
$7,500,000 or more, the Borrower shall prepay the Loans in an amount equal to
$5,250,000 (or a lesser amount subject to the second sentence of clause (iii) below),
such amount to be due and payable on the next occurring Quarterly Prepayment
Date.
(iii) All
prepayments made pursuant to this Section 2.02(f) shall
be accompanied by all accrued and unpaid interest on the Loans being prepaid
(other than interest paid-in-kind pursuant to Section 3.01(a)), but
shall not be subject to the Prepayment Premium. Any prepayment
otherwise required by this Section 2.02(f) shall
be reduced to the extent, if any, required such that the amount of such
prepayment shall not exceed an amount equal to the Consolidated EBITDA of the
Credit Parties for the prior fiscal quarter less the amount of interest paid
during the fiscal quarter in which such prepayment is made.”
2.6 Article III, Section
3.01(a) is hereby amended by adding the following sentence between the
second and third sentences therein:
“During
the PIK Period, the Borrowers shall have the option to pay interest on the Loans
in-kind by adding the amount of such interest to the principal amount of the
Term Loans or Revolving Advances (as applicable) on such Interest Payment Date;
provided, however, that such
option shall not be available if the Borrower had Consolidated EBITDA of
$7,500,000 or more as of the most recently ended fiscal quarter.”
2.7 Article VI, Section
6.02(d) is hereby amended by deleting the proviso at the end of the first
sentence thereof and replacing it with the following:
“provided, however, that the
Credit Parties shall not be required to conduct conference calls pursuant to
this Section 6.02(d) more frequently than once in any period of two consecutive
weeks.”
2.8 Article VI is hereby
amended by adding the following:
“Section
6.09. Notice of
Proposals. Each Credit Party shall be required to deliver to
the Administrative Agent and the Revolving Agent copies of any proposals it
receives from any party related to any divestiture, capital raise, merger, or
consolidation of the Borrower or any part thereof, no later than two (2)
Business Days following the receipt thereof.”
2.9 Article VIII is
hereby amended by adding the following additional negative
covenant:
“Section
8.22. Payment of Advisors’
Fees. The Credit Parties shall not, and shall not permit any
of their Subsidiaries to, pay any fees to financial advisors in connection with
the Seventh Amendment.”
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2.10 Article XII is hereby
amended by adding the following additional negative covenant:
“Section
8.23. Financial
Advisors. The Credit Parties shall not, and shall not permit
any of its Subsidiaries to, engage any financial advisor after the effective
date of the Seventh Amendment without the prior written consent of the
Lenders.”
2.11 Article IX, Section 9.02 is
hereby amended by deleting the table therein and replacing it with the
following:
“The
Credit Parties shall not permit Consolidated EBITDA for the Parent and its
Subsidiaries for the fiscal quarter ended on each date set forth below to be
less than the amount set forth opposite such date:
|
Measurement
Period
Ending
|
Amount
|
|
March
27, 2009
|
$1,000,000
|
|
June
26, 2009
|
$5,000,000
|
|
September 25, 2009
|
$10,000,000
|
|
December 25, 2009
|
$10,000,000
|
|
March 26, 2010
|
$10,000,000
|
|
June 25, 2010
|
$10,000,000
|
|
September 24, 2010
|
$10,000,000
|
|
December 24, 2010
|
$10,000,000
|
|
March 25, 2011
|
$10,000,000
|
|
June 24, 2011
|
$10,000,000
|
|
September 30, 2011
|
$10,000,000
|
2.12 Article IX, Section
9.03 is hereby amended by deleting it in its entirety and replacing it
with the following:
“The Credit Parties shall
maintain Minimum Liquidity of not less than ten million Dollars ($10,000,000) on
a weekly average basis.”
2.13 Article XIV, Section
14.01 is hereby amended by adding the words “and Revolving PIK Loans”
after the words “Revolving Advances” in the table contained in the definition of
“Applicable Margin”.
2.14 Article XIV, Section
14.01 is hereby amended by deleting the definition of “Consolidated
EBITDA” in its entirety and replacing it with the following:
““Consolidated EBITDA”
means with respect to any Person and its consolidated Subsidiaries for any
quarterly period, the GAAP operating income of such Person for such period plus (a) depreciation
expense, (b) amortization expense, (c) fees
4
and
expenses paid to Xxxxxxxx Xxxxxx + Company and (d) charges related to severance
and other employee termination costs in connection with the restructuring
announced by the Parent in December 2008 in an amount not to exceed $6,700,000
in the aggregate minus any
non-recurring items of income; provided, however, Consolidated
EBITDA for the quarterly periods ending on or about December 29, 2006, March 30,
2007, June 29, 2007 and September 28, 2007 shall be deemed to be Consolidated
EBITDAR for such period; and provided further that in
computing GAAP operating income for periods ending on or prior to June 26, 2009,
changes relating to revenue recognition under fresh start accounting rules and
changes under SOP 97-2 accounting rules shall be excluded.”
2.15 Article XIV, Section
14.01 is hereby amended by deleting the definition of “Interest Payment
Date” in its entirety and replacing it with the following:
““Interest Payment
Date” means (a) with respect to (i) any Alternate Base Rate
Loan, the last Business Day of each fiscal quarter, and (ii) any LIBOR Rate
Loan, the last day of each LIBOR Period applicable to such Loan; (b) with
respect to the amount of any Loan prepaid, the date of such prepayment, and
(c) with respect to all Loans, the Maturity Date.”
2.16 Article XIV, Section 14.01
is hereby amended by deleting the definition of “Loans” in its entirety and
replacing it with the following:
““Loans” means,
collectively, the Revolving Advances, the Revolving PIK Loans, the Letters of
Credit and the Term Loans.”
2.17 Article XIV, Section 14.01
is hereby amended by deleting the definition of “Required Revolving Lenders” in
its entirety and replacing it with the following:
““Required Revolving
Lenders” means, at any time, collectively, (i) the Revolving Lenders
having more than 66.67% of the Total Revolving Commitments or (ii) if the
Revolving Commitments have been terminated, more than 66.67% of the aggregate
outstanding amount of the Aggregate Exposure.”
2.18 Article XIV, Section
14.01 is hereby amended by deleting the definition of “Required Term
Lenders” in its entirety and replacing it with the following:
““Required Term
Lenders” means, at any time, Term Lenders having more than 66.67% of the
aggregate outstanding amount of the Term Loans.”
2.19 Article XIV, Section
14.01 is hereby amended by deleting the definition of “Term Loan” in its
entirety and replacing it with the following:
““Term Loan” has the
meaning ascribed to such term in Section 1.03(a). For
the avoidance of doubt, interest paid-in-kind to the Term Lenders in accordance
with Section
3.01(a) shall be considered a “Term Loan” for all purposes.”
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2.20 Article XIV, Section
14.01 is hereby amended by inserting the following definition of “PIK
Period” in the appropriate place to preserve the alphabetical order of the
definitions in such Section
14.01:
““PIK Period” means the
period commencing on December 24, 2008 and ending on December 24,
2010.”
2.21 Article XIV, Section
14.01 is hereby amended by inserting the following definition of
“Quarterly Prepayment Date” in the appropriate place to preserve the
alphabetical order of the definitions in such Section
14.01:
““Quarterly Prepayment
Date” shall mean December 26, 2008, March 27, 2009, June 26, 2009,
September 25, 2009, December 25, 2009, March 26, 2010 and June 25,
2010.”
2.22 Article XIV, Section
14.01 is hereby amended by inserting the following definition of
“Revolving PIK Loans” in the appropriate place to preserve the alphabetical
order of the definitions in such Section
14.01:
““Revolving PIK Loans”
means interest paid-in-kind to the Revolving Lenders in
accordance with Section
3.01(a).”
2.23 Article XIV, Section
14.01 is hereby amended by inserting the following definition of “Seventh
Amendment” in the appropriate place to preserve the alphabetical order of the
definitions in such Section
14.01:
““Seventh Amendment”
means the seventh amendment to this Agreement, dated as of December 24, 2008, by
and among Parent, and the Borrowers, the other Credit Parties thereto from time
to time, as Guarantors, the Lenders, the Administrative Agent and the Revolving
Agent.”
SECTION
3. Representations and
Warranties. The Credit Parties hereby represent and warrant as
follows:
3.1 As
of the date hereof, and after giving effect to this Amendment, all of the
representations and warranties contained in the Credit Agreement (other than
with respect to Section 5.01(h)(iii)) and each of the other Loan Documents are
true and correct in all material respects, except to the extent such
representations and warranties specifically relate to an earlier date thereto,
in which case, such representations and warranties shall be true and correct as
of such earlier date.
3.2 The
execution, delivery and performance by each Credit Party of this Amendment has
been duly authorized by all necessary corporate action, and this Amendment
constitutes the legal, valid and binding obligation of such Credit Parties and
is enforceable against them in accordance with its terms, except as the
enforcement hereof may be subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally or to general principles of equity.
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3.3 The
execution, delivery and performance of this Amendment by the Credit Parties and
the consummation of the transactions contemplated hereby does not, and will not,
contravene or conflict with any provision of (i) applicable law, (ii) any
judgment, decree or order to which any Credit Party or its property is subject,
or (iii) the Governing Documents of the Credit Parties and does not, and will
not, contravene, conflict with or cause any Lien to arise under any provision of
any indenture, agreement, mortgage, lease, instrument or other document,
including the Loan Documents.
3.4 After
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing under any of the Loan Documents or will be triggered by the
execution, delivery or performance of this Amendment or the consummation of the
transactions contemplated hereby.
3.5 Both
before and after giving effect to this Amendment, the Collateral Agent, on
behalf of the Secured Parties, has a valid, perfected, first priority lien and
security interest in the Collateral (except for Permitted
Encumbrances).
3.6 Each
of the Credit Agreement and each of the other Loan Documents remain in full
force and effect.
SECTION
4. Conditions Precedent to
Effectiveness. This Amendment shall be effective upon the
satisfaction of the following:
4.1 This
Amendment shall have been duly executed and delivered by each Credit Party, the
Administrative Agent, and the Lenders.
4.2 After
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing under any Loan Document or will be triggered by the execution,
delivery or performance of this Amendment or the consummation of the
transactions contemplated hereby.
4.3 The
representations and warranties contained herein shall be true and
correct.
4.4 The
Parent shall have retained Xxxxxxxx Xxxxxx + Company to act as its principal
advisor to management of the Parent in connection with the restructuring of the
Parent’s operations, on terms and conditions satisfactory to the
Lenders.
4.5 The
Borrowers shall have paid the fees, costs and expenses incurred by the Agents
and the Lenders in connection with the preparation, execution and delivery of
the Amendment, including, without limitation, the attorneys’ fees of Xxxxxxxx
& Xxxxxxxx LLP (including all amounts due and payable in connection with
previous modifications to the Loan Documents) and the previously incurred fees
and expenses of Xxxxxxxx Xxxxxx + Company.
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SECTION
5. Miscellaneous.
5.1 Certain
Terms. All references in the Credit Agreement to the
“Agreement,” “hereof,” “herein,” “hereunder” or any other words of similar
import shall be deemed to be references to the Credit Agreement as amended by
this Amendment.
5.2 No
Waiver. The execution, delivery and effect of this Amendment
shall be limited precisely as written and shall not be deemed to (i) be a
consent to any waiver, amendment or modification of any term or condition of the
Loan Documents except as specifically provided herein or (ii) prejudice any
right, power or remedy that the Agents or any Lender now has or may have in the
future under or in connection with the Loan Documents.
5.3 Confirmation of
Guarantee. By executing and delivering this Amendment, each
Guarantor hereby (a) confirms that the Lenders continue, and will continue, to
have the benefit of the guaranty contained in the Credit Agreement and the
execution and delivery of the Amendment does not in any way modify, reduce,
revise, discharge or otherwise impair or affect the Guarantors’ obligations
thereunder, (b) acknowledges that the guaranty contained in the Credit Agreement
remains in full force and effect and (c) ratifies the guaranty and further
ratifies and confirms any Liens granted by it to the Collateral Agent for the
benefit of the Lenders under the Loan Documents.
5.4 GOVERNING
LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5.5 CONFIRMATION AND
ACKNOWLEDGEMENT OF THE OBLIGATIONS; RELEASE. EACH OF THE CREDIT PARTIES
HEREBY (A) CONFIRMS AND ACKNOWLEDGES TO THE AGENTS AND THE LENDERS THAT IT IS
VALIDLY AND JUSTLY INDEBTED TO THE AGENTS AND THE LENDERS FOR THE PAYMENT OF ALL
OBLIGATIONS (AS DEFINED IN THE CREDIT AGREEMENT) WITHOUT OFFSET, DEFENSE, CAUSE
OF ACTION OR COUNTERCLAIM OF ANY KIND OR NATURE WHATSOEVER AND (B) REAFFIRMS AND
ADMITS THE VALIDITY AND ENFORCEABILITY OF THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS. EACH OF THE CREDIT PARTIES, ON ITS OWN BEHALF AND ON
BEHALF OF ITS SUCCESSORS AND ASSIGNS, HEREBY WAIVES, RELEASES AND DISCHARGES THE
AGENTS AND THE LENDERS AND ALL OF THE AFFILIATES OF THE AGENTS AND
THE LENDERS, AND ALL OF THE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS,
SUCCESSORS AND ASSIGNS OF THE AGENTS AND THE LENDERS AND SUCH AFFILIATES, FROM
ANY AND ALL CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION (KNOWN AND UNKNOWN)
ARISING OUT OF OR IN ANY WAY RELATING TO ANY OF THE LOAN DOCUMENTS AND ANY
DOCUMENTS, AGREEMENTS, DEALINGS OR OTHER MATTERS CONNECTED WITH ANY OF THE
LOAN DOCUMENTS, IN EACH CASE TO THE EXTENT ARISING (X) ON OR PRIOR TO
THE DATE
8
HEREOF OR
(Y) OUT OF, OR RELATING TO, ACTIONS, DEALINGS OR MATTERS OCCURRING ON OR PRIOR
TO THE DATE HEREOF.
5.6 Headings. The
headings contained in this Amendment are solely for convenience and shall not be
used or relied upon in any manner in the construction or interpretation of this
Amendment.
5.7 Counterparts. This
Amendment may be executed in any number of counterparts, each of which, when so
executed and delivered, shall be deemed an original, and all such counterparts,
taken together, shall constitute one and the same Amendment. Delivery
of an executed counterpart of a signature page to this Amendment by electronic
means shall be as effective as delivery of a manually executed
counterpart.
[Signature pages
follow]
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IN WITNESS
WHEREOF, this Amendment has been duly executed as of the date
hereof.
|
SILICON
GRAPHICS, INC.
|
|||
|
By:
|
/s/
Xxxxxxx X. Xxxx
|
||
|
Name: Xxxxxxx
X. Xxxx
|
|||
|
Title: Senior
Vice President and Chief Financial Officer
|
|||
|
SILICON
GRAPHICS FEDERAL, INC.
|
|||
|
By:
|
/s/
Xxxxx Xxxxxxxxx
|
||
|
Name: Xxxxx
Xxxxxxxxx
|
|||
|
Title: President
|
|||
|
SILICON
GRAPHICS WORLD TRADE CORPORATION
|
|||
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
||
|
Name: Xxxxx
X. Xxxxxxx
|
|||
|
Title: Vice
President
|
|||
[Signature
Page to Seventh Amendment]
|
ADMINISTRATIVE
AGENT:
|
|||
|
XXXXXX
XXXXXXX SENIOR FUNDING, INC.,
on
behalf of and at the direction of the Lenders
|
|||
|
By:
|
/s/
Xxxxxxx X. Xxxx
|
||
|
Name: Xxxxxxx
X. Xxxx
|
|||
|
Title: Vice
President
|
|||
[Signature
Page to Seventh Amendment]
