EXHIBIT 10.36
FOURTH AMENDMENT, CONSENT AND WAIVER TO CREDIT AGREEMENT
FOURTH AMENDMENT, CONSENT AND WAIVER TO CREDIT AGREEMENT (this
"Amendment"), dated as of September 18, 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");
WHEREAS, the Borrower has determined that it is in its best
interests to sell 100% of the capital stock of Xxxx, Incorporated, a
corporation organized under the laws of the State of Delaware ("Xxxx") and a
Wholly-Owned Domestic Subsidiary of the Borrower (the "Xxxx Sale");
WHEREAS, to effectuate the Xxxx Sale, the Borrower and Xxxx have
heretofore entered into an Agreement and Plan of Merger, dated as of August
18, 2000;
WHEREAS, the Borrower has requested that the Banks consent to the
Xxxx Sale as provided herein;
WHEREAS, the Borrower also has requested certain other amendments
and waivers to the Credit Agreement as provided herein; and
WHEREAS, subject to the terms and conditions of this Amendment, the
Banks hereby agree to grant the consents, amendments and waivers under the
Credit Agreement as herein provided;
NOW, THEREFORE, it is agreed:
I. CONSENTS UNDER CREDIT AGREEMENT.
1. The Banks hereby consent to the Xxxx Sale, so long as (i) no
Default or Event of Default then exists or would result therefrom, (ii) such
sale is in an arm's-length transaction and the Borrower receives at least
fair market value (as determined in good faith by the Borrower), (iii) the
total consideration received therefrom by the Borrower is 100% cash and is
paid at the time of the closing of such sale, (iv) such consideration shall
be at least $55,400,000 and the Net Sale Proceeds therefrom shall be at least
$38,000,000, (v) 100% of the Net Sale Proceeds therefrom are applied upon
receipt thereof as a mandatory repayment of principal of outstanding Term
Loans in accordance with the requirements of Sections 4.02(h) and
(i) of the Credit Agreement (for avoidance of doubt, it is acknowledged and
agreed that no portion of such Net Sale Proceeds shall be permitted to be
reinvested pursuant to Section 4.02(d) of the Credit Agreement) and (vi) an
amount (the "Revolver Blocked Amount") equal to $11,500,000 of non-Net Sale
Proceeds from the Xxxx Sale is applied upon receipt thereof to prepay
outstanding Revolving Loans (with no corresponding reduction to the Total
Revolving Loan Commitment). To the extent Collateral is sold in compliance
with the preceding provisions of this Section 1 of Part I, such Collateral
shall be sold free and clear of the Liens created by the respective Security
Documents and Xxxx also shall be released from its obligations under the
Subsidiaries Guaranty, and the Banks hereby authorize the Administrative
Agent and the Collateral Agent to take any actions deemed appropriate in
order to effect such releases.
2. In order to induce the Banks to grant the consent set forth in
preceding Section 1 of this Part I and notwithstanding anything to the
contrary contained in the Credit Agreement, the following limitations shall
apply:
(i) During the period commencing upon the consummation of the Xxxx
Sale and continuing until such time as when the Borrower shall have paid
its estimated tax payments with respect to both its federal and state
income tax obligations for its fiscal year ending closest to October 31,
2000 (which date shall not be earlier than January 15, 2001), (A) the
Borrower may not incur any Revolving Loans, Swingline Loans or Letters
of Credit if, after giving effect to the incurrence thereof, the
aggregate outstanding principal amount of all Revolving Loans, Swingline
Loans and Letter of Credit Outstandings would exceed the lesser of (x)
the Total Revolving Loan Commitment as then in effect and (y) an amount
equal to $20,000,000 LESS the Revolver Blocked Amount and (B) on any day
on which the sum of the aggregate outstanding principal amount of all
Revolving Loans, Swingline Loans and Letter of Credit Outstandings
exceeds the lesser of (x) the Total Revolving Loan Commitment as then in
effect and (y) an amount equal to $20,000,000 LESS the Revolver Blocked
Amount, the Borrower shall prepay on such day the principal of Swingline
Loans and, after all Swingline Loans have been repaid in full (or if no
Swingline Loans are outstanding), Revolving Loans in an amount equal to
such excess. If, after giving effect to the prepayment of all
outstanding Swingline Loans and Revolving Loans as contemplated by the
immediately preceding sentence, the aggregate amount of the Letter of
Credit Outstandings exceeds the lesser of (x) the Total Revolving Loan
Commitment as then in effect and (y) an amount equal to $20,000,000 LESS
the Revolver Blocked Amount, the Borrower shall pay to the
Administrative Agent at the Payment Office on such day an amount of cash
and/or Cash Equivalents equal to the amount of such excess (up to a
maximum amount equal to the Letter of Credit Outstandings at such time),
such cash and/or Cash Equivalents to be held as security for all
obligations of the Borrower to the Issuing Bank and the Banks under the
Credit Agreement in a cash collateral account to be established by the
Administrative Agent. The Banks hereby agree that, notwithstanding the
existence or continuation of any Default or Event of Default (except as
otherwise provided in clause (ii) below of the proviso), the Borrower
shall at any time during the continuance of the limitations set forth in
this Section 2(i) (but not before January 15, 2001) be permitted to
incur Revolving Loans and Swingline Loans in an aggregate principal amount
not exceeding the Revolver Blocked Amount PROVIDED that (i) the proceeds
of such Revolving Loans and Swingline
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Loans shall be promptly utilized by the Borrower for the sole purpose of
satisfying its federal and state income tax obligations with respect to
its fiscal year ending closest to October 31, 2000 and (ii) no Default
or Event of Default under Section 10.01, 10.05, 10.10 or 10.11 of the
Credit Agreement shall then exist; and
(ii) At all times after the Borrower shall have made its estimated
tax payments with respect to its federal and state income tax
obligations for its fiscal year ending closest to October 31, 2000
(which date shall be no earlier than January 15, 2001) (at which time
clause (i) above of this Section 2 of this Part I shall no longer be
effective), unless the Required Banks shall have otherwise agreed in
writing, (A) the Borrower may not incur any Revolving Loans, Swingline
Loans or Letters of Credit if, after giving effect to the incurrence
thereof, the aggregate outstanding principal amount of all Revolving
Loans, Swingline Loans and Letter of Credit Outstandings would exceed
the lesser of (x) the Total Revolving Loan Commitment as then in effect
and (y) $20,000,000 and (B) on any day on which the sum of the aggregate
outstanding principal amount of all Revolving Loans, Swingline Loans and
Letter of Credit Outstandings exceeds the lesser of (x) the Total
Revolving Loan Commitment as then in effect and (y) $20,000,000, the
Borrower shall prepay on such day the principal of Swingline Loans and,
after all Swingline Loans have been repaid in full (or if no Swingline
Loans are outstanding), Revolving Loans in an amount equal to such
excess. If, after giving effect to the prepayment of all outstanding
Swingline Loans and Revolving Loans as contemplated by the immediately
preceding sentence, the aggregate amount of the Letter of Credit
Outstandings exceeds the lesser of (x) the Total Revolving Loan
Commitment as then in effect and (y) $20,000,000, the Borrower shall pay
to the Administrative Agent at the Payment Office on such day an amount
of cash and/or Cash Equivalents equal to the amount of such excess (up
to a maximum amount equal to the Letter of Credit Outstandings at such
time), such cash and/or Cash Equivalents to be held as security for all
obligations of the Borrower to the Issuing Bank and the Banks under the
Credit Agreement in a cash collateral account to be established by the
Administrative Agent.
3. Notwithstanding anything to the contrary contained in the
Capital Call Agreement (as in effect prior to giving effect to this
Amendment), from and after the Fourth Amendment Effective Date (as defined
below), the Capital Call Agreement (as in effect prior to giving effect to
this Amendment) shall be terminated and of no further force or effect (it
being understood and agreed that the provisions of this Section 3 shall not
apply in any respect to the new Capital Call Agreement entered into
concurrently with this Amendment).
II. AMENDMENTS TO CREDIT AGREEMENT.
1. The table appearing in Section 4.02(b) of the Credit Agreement
is hereby deleted in its entirety and the following new table is inserted in
lieu thereof (which table reflects payments made prior to the Fourth
Amendment Effective Date and shall be the table used in determining the PRO
RATA application of the Net Sale Proceeds from the Xxxx Sale):
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"SCHEDULED REPAYMENT DATE AMOUNT
October 31, 2000 $175,000.00
January 31, 2001 $175,000.00
April 30, 2001 $3,352,152.72
July 31, 2001 $3,352,152.72
October 31, 2001 $4,469,536.96
January 31, 2002 $2,500,000.00
April 30, 2002 $2,500,000.00
July 31, 2002 $2,500,000.00
October 31, 2002 $2,500,000.00
January 31, 2003 $4,175,000.00
April 30, 2003 $4,175,000.00
July 31, 2003 $4,175,000.00
October 31, 2003 $4,175,000.00
January 31, 2004 $4,500,000.00
April 30, 2004 $4,500,000.00
July 31, 2004 $4,500,000.00
October 31, 2004 $4,500,000.00
January 31, 2005 $5,800,000.00
April 30, 2005 $5,800,000.00
July 31, 2005 $ 951,157.60".
2. Section 4.02(f) of the Credit Agreement is hereby amended by
inserting the following parenthetical immediately after the text "Initial
Borrowing Date" appearing in clause (iii) of the first parenthetical thereof:
"(excluding, for purposes of this clause (iii), any equity
contributions made to the Borrower pursuant to the Capital Call
Agreement)".
3. Section 4.02(h) of the Credit Agreement is hereby amended by
inserting the following proviso at the end thereof:
"; PROVIDED, HOWEVER, that any mandatory repayment of Term Loans
required to be applied pursuant to this Section 4.02(h) after
September 18, 2000 (other than with the Net Sale Proceeds from the
Xxxx Sale) shall be applied (i) first, to reduce in direct order of
maturity the Scheduled Repayments that are due on April 30, 2001,
July 31, 2001 and October 31, 2001 and (ii) second, to the extent
that any such amounts are in excess of the amount of such Scheduled
Repayments at the time of such payments, as provided above in this
Section 4.02(h) without regard to this proviso."
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4. Section 7.10 of the Credit Agreement is hereby amended by
inserting the following new sentence at the end thereof:
"Notwithstanding the foregoing, the representations and warranties
set forth above in this Section 7.10 shall not be deemed breached as
a result of defects with respect qualification requirements under
Section 410(b) of the Code in connection with certain Plans
sponsored by the Borrower and Xxxx, Incorporated (a Wholly-Owned
Domestic Subsidiary of the Borrower) and an early participation
qualification defect in connection with a Plan sponsored by Xxxx,
Incorporated so long as (i) the aggregate liability of the Borrower
and its Subsidiaries as a result thereof does not exceed $600,000
and (ii) such defects are remedied on or before December 15, 2001."
5. The table appearing in Section 9.08 of the Credit Agreement is
hereby deleted in its entirety and the following new table is inserted in
lieu thereof:
"FISCAL QUARTER
ENDING CLOSEST TO RATIO
January 31, 2001 1.25:1.00
April 30, 2001 1.25:1.00
July 31, 2001 1.30:1.00
October 31, 2001 1.30:1.00
January 31, 2002
and the last day of each
fiscal quarter thereafter 3.00:1.00."
6. Section 9.09 of the Credit Agreement is hereby amended by
deleting said Section 9.09 in its entirety and inserting the following new
Section 9.09 in lieu thereof:
"9.09 MAXIMUM LEVERAGE RATIO. The Borrower will not permit the
Leverage Ratio at any time during a period set forth below to be greater
than the ratio set forth opposite such period below:
PERIOD RATIO
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 7.00:1.00
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
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closest to July 31, 2001 7.10:1.00
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 6.70:1.00
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 6.00:1.00
Thereafter 3.00:1.00."
7. The table appearing in Section 9.10 of the Credit
Agreement is hereby deleted in its entirety and the following new table is
inserted in lieu thereof:
"FISCAL QUARTER
ENDING CLOSEST TO AMOUNT
October 31, 2000 $22,000,000
January 31, 2001 $21,500,000
April 30, 2001 $21,000,000
July 31, 2001 $22,000,000
October 31, 2001 $23,000,000
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".
8. The definition of "Capital Call Agreement" appearing in Section
11.01 of the Credit Agreement is hereby amended by deleting the date "January
26, 2000" appearing therein and inserting the date "September 18, 2000" in
lieu thereof:
9. Section 11.01 of the Credit Agreement is hereby further amended
by inserting in the appropriate alphabetical order the following new
definition:
"Xxxx Sale" shall have the meaning provided for in the recitals to
the Fourth Amendment, Consent and Waiver, dated as of September 18,
2000, to this Agreement.
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10. Section 13.07(a) of the Credit Agreement is hereby amended by
(i) inserting the text "(x)" immediately after the text "except as otherwise
specifically provided herein," appearing in the proviso thereof, and (ii)
inserting the following new clause (y) at the end of such proviso:
"and (y) all computations and all definitions used in determining
compliance with Sections 9.08 through 9.10, inclusive (including for
purposes of the Capital Call Agreement), shall be determined as if the
Xxxx Sale (and the application of the proceeds therefrom) had occurred
on the first day of the Borrower's fiscal quarter that began closest to
November 1, 1999".
III. WAIVERS TO CREDIT AGREEMENT.
1. 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 July 31, 2000 and (ii) under Section 9.09 of the
Credit Agreement for the period from and after April 30, 2000 through but not
including the Fourth Amendment Effective Date.
IV. 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 Fourth 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 Fourth Amendment Effective Date, in each
case after giving effect to this Amendment.
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 "Fourth
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
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Call Agreement in the form attached hereto, (iii) the Borrower shall have
paid to the Administrative Agent for the account of each Lender who has
executed a counterpart hereof and delivered same to the Administrative Agent
at the Notice Office on or prior to 5:00 P.M. (New York City time) on
September 18, 2000, an amendment fee equal to 0.125% of the sum of (x) such
Lender's Revolving Loan Commitment and (y) the aggregate outstanding
principal amount of such Lender's Term Loans, in each case on the Fourth
Amendment Effective Date (but calculated before giving effect to any
repayment on such date from the proceeds of the Xxxx Sale) and (iv) the Xxxx
Sale shall have been consummated on the terms and conditions set forth
herein. This Amendment and the agreements contained herein shall be binding
on the successors and assigns of the parties hereto.
6. From and after the Fourth Amendment Effective Date, all
references in the Credit Agreement and in the other Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
modified hereby.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Consent as of the date first
above written.
SPECIAL DEVICES, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President &
Chief Financial Officer
BANKERS TRUST COMPANY,
Individually and as Administrative
Agent
By: /s/ Xxxxx X. Le Fevre
----------------------------------
Name: Xxxxx X. Le Fevre
Title: Director
FLEET NATIONAL BANK FORMERLY KNOWN AS
BANKBOSTON, N.A.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
Title: Managing Director
CITY NATIONAL BANK
By:
----------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Risk Manager
XXXXXX XXXXXXX XXXX XXXXXX
PRIME INCOME TRUST
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
NATIONAL CITY BANK
By: /s/ Xxxx X. Xxxx
----------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
PARIBAS
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
By: /s/ PJ De Pillipis
----------------------------------
Name: PJ de Pillipis
Title: Managing Director
KZH STERLING LLC
By: /s/ Xxxxx Xxx
----------------------------------
Name: Xxxxx Xxx
Title: Authorized Agent
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxxxx X. Xxxx
----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
Acknowledged and Agreed to:
XXXX, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
