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Exhibit 10.25
MODIFICATION AGREEMENT
BY THIS MODIFICATION AGREEMENT (the "Agreement"), made and entered into
as of the 12th day of February, 1999, BANK ONE, ARIZONA, NA, a national banking
association, as administrative agent for the Banks (as hereinafter defined) (the
"Administrative Agent"), and SIMULA, INC., an Arizona corporation (the
"Company"), all present and future Subsidiaries of the Company (with the
Company, the "Borrower"), in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, hereby confirm and agree as follows:
RECITALS:
A. Borrower, the Administrative Agent, the Issuing Bank and the "Banks"
named therein entered into that Senior Credit Agreement dated November 6, 1998
to provide financial accommodations to the Borrower as provided therein (as
modified from time to time, the "Senior Credit Agreement").
B. Borrower and the Administrative Agent, with the consent of the Banks
and the Issuing Bank, desire to modify the Senior Credit Agreement as set forth
herein.
C. All undefined capitalized terms used herein shall have the meaning
given them in the Senior Credit Agreement.
AGREEMENT:
SECTION 1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATIONS OF LOAN DOCUMENTS; OTHER AGREEMENTS.
2.1 The following definitions in Section 1.1 of the Senior Credit
Agreement are hereby amended to read as follows:
"Discontinued Operations" means the railcar seat operations
conducted by the Company's Subsidiaries known as Artcraft Industries
Corp. and Coach and Car Equipment Corp.
"EBITDA" means Net Income, plus the sum of all interest
expense, depreciation and amortization deducted in computing such Net
Income, less any debt service on Subordinated Debt, all calculated as
follows:
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(i) for the fiscal quarter ending March 31, 1999, the
EBITDA for said fiscal quarter multiplied by 4;
(ii) for the six month fiscal period ending June 30,
1999, the EBITDA for said period multiplied by 2;
(iii) for the nine month fiscal period ending
September 30, 1999, the EBITDA for said period multiplied by
1.33; and
(iv) thereafter, the EBITDA for the prior four fiscal
quarters, using a rolling four quarter period;
provided, however, that any losses recorded due to the Discontinued
Operations shall be disregarded in the calculation of Net Income.
"Imperial" means IMPERIAL BANK, a California banking
corporation, successor by merger to IMPERIAL BANK ARIZONA, an Arizona
banking corporation.
"Interest Period" means:
(a) For each LIBOR Based Rate RLC Advance, the period
commencing on the date of such LIBOR Based Rate RLC Advance
and ending on the last day of the period selected by Borrower
pursuant to the provisions herein and, thereafter, each
subsequent period commencing on the date after the last day of
the immediately preceding Interest Period and ending on the
last day of the period selected by Borrower pursuant to the
provisions herein. The duration of each Interest Period shall
be one month, two months or three months, as selected by
Borrower (A), for a new RLC Advance, in the request for a
LIBOR Based Rate RLC Advance or (B), for an outstanding RLC
Advance, in the request for a LIBOR Based Rate RLC Advance to
continue bearing interest at the LIBOR Based Rate or (C), for
an outstanding Variable Rate RLC Advance, in the request to
convert to a LIBOR Based Rate RLC Advance; provided, however,
that:
(i) Interest Periods commencing on the same
date shall be of the same duration;
(ii) Whenever the last day of any Interest
Period would otherwise occur on a day other than a
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Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding
Business Day, provided that if such extension would
cause the last day of such Interest Period to occur
in the next following calendar month, the last day of
such Interest Period shall occur on the next
preceding Business Day; and
(iii) No Interest Period with respect to any
RLC Advance shall extend beyond the RLC Maturity
Date.
(b) For each LIBOR Based Rate Term Portion, one
month, commencing on the first day of each month and ending on
the last day of each month; provided, however, that no
Interest Period shall extend beyond the Term A Maturity Date
or the Term B Maturity date, as applicable.
"LIBOR Based Rate" means the rate per annum equal to the sum
of (i) the LIBOR Based Rate Factor per annum in effect, and (ii) the
rate per annum obtained by dividing (A) the offered rate for United
States dollar deposits of not less than $1,000,000.00 for a period of
time equal to each Interest Period as of 11:00 A.M. City of London,
England time as to the RLC two London Business Days prior to, and as to
the Term Loans, the first date of each Interest Period as shown on the
display designated as "British Bankers Assoc. Interest Settlement
Rates" on the Telerate System ("Telerate"), Page 3750 or Page 3740, or
such other page or pages as may replace such pages on Telerate for the
purpose of displaying such rate; provided, however, that if such rate
is not available on Telerate then such offered rate shall be otherwise
independently determined by the Administrative Agent from an alternate,
substantially similar independent source available to the
Administrative Agent or shall be calculated by the Administrative Agent
by a substantially similar methodology as that theretofore used to
determine such offered rate in Telerate, by (B) a percentage equal to
one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
for the period equal to such Interest Period. "London Business Day"
means any day other than a Saturday, Sunday or a day on which banking
institutions are generally authorized or obligated by law or executive
order to close in the City of London, England. The LIBOR Based Rate
will change to the extent of any change in the LIBOR Based Rate Factor.
The LIBOR Based Rate Factor shall be recalculated ninety (90) days
after the end of the final fiscal quarter of each fiscal year, and
sixty (60) days after the end of each other fiscal quarter, based on
the EBITDA Ratio for the prior fiscal quarter.
"LIBOR Based Rate Factor" means until the Pricing Adjustment
Date 3.50%, and thereafter:
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(a) 1.50% if the EBITDA Ratio is less than or equal
to 1.0 to 1.0.
(b) 1.75% if the EBITDA Ratio is less than or equal
to 1.5 to 1.0, but greater than 1.0 to 1.0.
(c) 2.0% if the EBITDA Ratio is less than or equal to
2.0 to 1.0, but greater than 1.5 to 1.0.
(d) 2.25% if the EBITDA Ratio is less than or equal
to 2.5 to 1.0, but greater than 2.0 to 1.0.
(e) 2.5% if the EBITDA Ratio is less than or equal to
3.0 to 1.0, but greater than 2.5 to 1.0.
"LIBOR Based Rate Term Portion" means any portion of a Term
Loan that at any time bears interest at a LIBOR Based Rate.
"NIDA" means Net Income plus the sum of all depreciation and
amortization deducted in computing such Net Income, less any income
taxes paid in cash, all calculated as follows:
(i) for the fiscal quarter ending March 31, 1999,
the NIDA for said fiscal quarter multiplied by 4;
(ii) for the six month fiscal period ending June
30, 1999, the NIDA for said period multiplied by 2;
(iii) for the nine month fiscal period ending
September 30, 1999, the NIDA for said period multiplied by
1.33; and
(iv) thereafter, the NIDA for the prior four
fiscal quarters, using a rolling four quarter period;
provided, however, that any losses recorded due to the Discontinued
Operations shall be disregarded in the calculation of Net Income.
"RLC Commitment" means Twenty-Six Million And No/100 Dollars
($26,000,000.00) until the RLC Adjustment Date, after which it means
Twenty Million And No/100 Dollars ($20,000,000.00).
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"Term B Loan Commitment" means Two Million Five Hundred
Thousand And No/100 Dollars ($2,500,000.00).
"Variable Rate Factor" means until the Pricing Adjustment Date
1.0%, and thereafter:
(a) 0% if the EBITDA Ratio is less than or equal to
2.5 to 1.0;
(b) 0.25% if the EBITDA Ratio is less than 3.0 to
1.0, but greater than 2.5 to 1.0.
2.2 Section 1.1 of the Senior Credit Agreement is hereby amended by the
addition of the following definitions:
"Accounts Receivable" means, as of any date, accounts
receivable of Borrower on a consolidated basis.
"Compliance Date" means that date by which no Event of Default
shall be outstanding and Borrower shall be in compliance with all
Original Financial Covenants, calculated using a rolling four quarter
period.
"Discontinued Operations Sale Date" means that date by which
Borrower shall have sold its Discontinued Operations in accordance with
Section 7.19.
"Eligible Account Receivable" means an amount owing to
Borrower, as determined by the Administrative Agent in its sole and
absolute discretion, which has arisen from the delivery and/or shipment
of products previously made and from services rendered for which an
invoice has been issued by Borrower to its customer ("Customer") (a)
which amount is not subject to any offset, counterclaim or defense
asserted by the Customer, (b) which amount is subject to a perfected
security interest in favor of the Administrative Agent on behalf of the
Banks and is not subject to any other security interest, lien, claim or
encumbrances, and (c) which amount is not an uninsured amount owing
from a Customer located in a foreign country.
"Eligible Inventory" means the inventory of Borrower
(consisting of raw materials, work in progress, and finished goods), as
determined by the Administrative Agent in its sole and absolute
discretion, to be (a) in good condition and salable in the ordinary
course of Borrower's business, (b) owned by Borrower free and clear of
any mortgages, liens, security interests, claims, encumbrances or
rights of others, excepting only the security interests in favor of the
Administrative Agent on behalf of the Banks, (c) located in the United
States of America at a location identified in a Security Agreement, (d)
subject to a perfected security interest in favor of the Administrative
Agent on behalf of the Banks, (e) not subject to any consignment to any
customer, and
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(f) not acquired by Borrower in or as part of a bulk transfer of sale
or assets unless Borrower has complied with all applicable bulk sales
or bulk transfer laws.
"Original Financial Covenants" means those "Financial
Covenants" as defined in the Senior Credit Agreement prior to any
modification thereof.
"Pledge Agreement": See Section 4.1(c).
"Pricing Adjustment Date" means that date by which both the
RLC Adjustment Date and the Compliance Date shall have occurred.
"Rail Credit Fee": See Section 3.2(d).
"Reporting Period" means each month and fiscal quarter until
the Compliance Date and thereafter each fiscal quarter.
"RLC Adjustment Date" means the earliest of (i) July 31, 1999,
(ii) the Discontinued Operations Sale Date, or (iii) the date on which
the aggregate outstanding principal balance of the RLC is reduced to a
balance below $20,000,000.00 by Borrower from funds obtained by it from
a junior capital source.
"RLC Borrowing Base" means the amount, from time to time,
equal to the sum of (i) eighty percent (80%) of the aggregate
consolidated book value of the Eligible Accounts Receivable of
Borrower, (ii) thirty percent (30%) of the aggregate consolidated book
value of the Eligible Inventory of Borrower, and (iii) thirty percent
(30%) of the aggregate Costs and Estimated Earnings in excess of
Xxxxxxxx (as described in the Company's financial statements).
"RLC Borrowing Base Certificate" means a certificate of an
Authorized Officer setting forth a detailed reconciliation of the RLC
Balance against the definitional components of the RLC Borrowing Base,
substantially in the form of Exhibit "A-1" attached hereto signed by an
Authorized Officer.
2.3 Section 2.1 of the Senior Credit Agreement is hereby amended by the
deletion of the following definitions:
Variable Rate Term Loan Advance
Variable Rate Term Portion
2.4 Section 2.1 of the Senior Credit Agreement is hereby amended to
read as follows:
2.1 RLC Commitment. Each Bank agrees, severally but not
jointly, to loan to or for the benefit of Borrower, and Borrower shall
be entitled to draw upon and
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borrow, in the manner and upon the terms and conditions contained in
this Senior Credit Agreement, an amount that shall not exceed that
Bank's Pro Rata Share of the lesser of the RLC Borrowing Base or the
RLC Commitment.
2.5 Section 2.2 of the Senior Credit Agreement is hereby amended to
read as follows:
2.2 Revolving Line.
(a) Subject to the terms and conditions set forth in
this Senior Credit Agreement, each Bank shall provide to
Borrower a revolving line of credit (each, a "RLC"), against
which a Bank shall fund its Pro Rata Share of each RLC Advance
to be made to Borrower, repaid by Borrower, and readvanced to
Borrower, as Borrower may request, and the Issuing Bank shall
issue such Letters of Credit as Borrower shall request, which
may be terminated or repaid by Borrower and reissued provided
that (i) there is no Event of Default under any provision of
this Senior Credit Agreement, (ii) no RLC Advance shall be
made or Letter of Credit issued that would cause the RLC
Balance to exceed the lesser of the RLC Borrowing Base or the
RLC Commitment, (iii) no Bank shall be obligated under any
circumstances to fund an RLC Advance in excess of that Bank's
Pro Rata Share of the requested RLC Advance, (iv) the
aggregate amount of a Bank's funding of the RLC Balance at any
one time outstanding shall not exceed its Pro Rata Share of
the lesser of the RLC Borrowing Base or the RLC Commitment,
and (v) no Letter of Credit shall be issued with a Stated
Expiry Date later than the RLC Maturity Date. The Banks shall
not be obligated to fund their Pro Rata Share of any RLC
Advance if, after giving effect thereto, any of the foregoing
limitations would be exceeded.
(b) The failure of any Bank to fund its Pro Rata
Share of an RLC Advance in accordance with its Pro Rata Share
of the lesser of the RLC Borrowing Base or the RLC Commitment
shall not relieve any other Bank of its several obligations
hereunder, but no Bank shall be liable with respect to the
obligation of any other Bank hereunder.
(c) RLC Advances may be made for the purpose of
providing to Borrower working capital financing or in
connection with a Disbursement under a Letter of Credit. No
RLC Advances shall be made for the purpose of purchasing stock
of the Borrower or refinancing any Subordinated Debt.
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(d) Notwithstanding anything herein to the contrary,
an amount of the RLC Commitment equal to $600,000.00 shall not
be disbursed for any purpose other than to pay the fees, costs
and expenses of the Administrative Agent, the Banks and their
agents (including, without limitation, attorneys' fees and
costs) with respect to the documentation of the Loans, and the
drafting of the Credit Documents and any modification thereof
until the Administrative Agent shall have determined in its
sole discretion that all such amounts have been fully paid.
2.6 Section 2.5 of the Senior Credit Agreement is hereby amended to
read as follows:
2.5 Excess Balance Repayment. There shall be due and payable
from Borrower to the Banks, and Borrower shall immediately repay to the
Banks, without notice or demand, from time to time, any amount by which
the RLC Balance exceeds the lesser of the RLC Borrowing Base or the RLC
Commitment.
2.7 Section 2.10(b) of the Senior Credit Agreement is hereby amended to
read as follows:
(b) Each Letter of Credit shall (i) by its terms be issued in
a Stated Amount; (ii) have a Stated Expiry Date no later than the RLC
Maturity Date; (iii) expire or be terminated by the beneficiary
thereunder on or before its Stated Expiry Date; (iv) not cause the RLC
Balance after the issuance of said Letter of Credit to exceed the
lesser of the RLC Borrowing Base or the RLC Commitment; and (v) not
cause the Outstanding LC Balance after the issuance of said Letter of
Credit to exceed the Maximum LC Commitment.
2.8 Section 2A.3 of the Senior Loan Agreement is hereby amended to read
as follows:
2A.3 Term A Loan. The Term A Loan shall bear interest and be
payable to the Banks upon the terms and conditions contained therein,
which include the following provisions:
(a) Interest shall accrue on the unpaid principal of
the Term A Loan at the LIBOR Based Rate.
(b) Principal shall be due and payable on the Payment
Date in consecutive monthly installments equal to the Principal
Payment, together with interest until the Term A Maturity Date.
(c) All interest shall be computed on the basis of a
360-day year and accrue on a daily basis for the actual number of days
elapsed. No Interest Period shall begin on any day other than a Payment
Date.
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(d) The entire unpaid principal balance, all accrued
and unpaid interest, and all other amounts payable under the Term A
Note shall be due and payable in full on the Term A Maturity Date.
(e) The proceeds of the Term A Loan shall be
disbursed in a single Term A Loan Advance.
(f) [Intentionally left blank.]
(g) Each request for a Term A Loan Advance by the
Borrower shall be irrevocable and binding on Borrower once the request
is received by the Agent and the Agent notifies the Banks of the
request. Prior to the Agent's notice of the request to the Banks,
Borrower may revoke the request. Borrower shall indemnify each Bank
against any cost, loss or expense incurred by any Bank as a result of
Borrower's failure to fulfill, on or before the date specified for a
Term A Loan Advance in any request for a Term A Loan Advance, the
conditions to such Term A Loan Advance set forth herein, including any
cost, loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by a Bank to fund such
Term A Loan Advance when such Term A Loan Advance, as a result of such
failure, is not made on the date so specified.
(h) [Intentionally left blank.]
(i) Nothing herein shall be deemed to relieve any Bank from
its obligations to fulfill its Pro Rata Share of the Term A Loan
Commitment hereunder or to prejudice any right which the Agent or the
Borrower may have against any Bank as a result of any default by such
Bank hereunder.
(j) Upon default, including failure to pay upon final
maturity, the Banks, at their option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the
applicable interest rate to the Default Rate, and/or (b) add any unpaid
accrued interest to principal and such sum will bear interest therefrom
until paid at the rate provided herein (including any increased rate).
The interest rate will not exceed the maximum rate permitted by
applicable law.
2.9 Section 2B.3 of the Senior Loan Agreement is hereby amended to read
as follows:
2B.3 Term B Loan. The Term B Loan shall be evidenced by the
Term B Note, and shall bear interest and be payable to the Banks upon
the terms and conditions contained therein, which include the following
provisions:
(a) Interest shall accrue on the unpaid principal of
the Term B Loan at the LIBOR Based Rate.
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(b) Principal shall be due and payable on the Payment
Date in consecutive monthly installments equal to the Principal
Payment, together with interest until the Term B Maturity Date.
(c) All interest shall be computed on the basis of a
360-day year and accrue on a daily basis for the actual number of days
elapsed. No Interest Period shall begin on any day other than a Payment
Date.
(d) The entire unpaid principal balance, all accrued
and unpaid interest, and all other amounts payable under the Term B
Note shall be due and payable in full on the Term B Maturity Date.
(e) Each request for a Term B Loan Advance shall, in
addition to complying with the other requirements in this Senior Credit
Agreement, specify the date and amount of the requested Term B Loan
Advance.
(f) After receiving a request for a Term B Loan
Advance in the manner provided herein, the Administrative Agent shall
promptly, before 11:30 a.m. (Phoenix, Arizona local time) on the date a
Term B Loan Advance is requested, notify each Bank by telephone
(confirmed promptly in writing), telefacsimile or cable of the terms of
such request and such Bank's Pro Rata Share of the requested Term B
Loan Advance. Each Bank shall, before 1:00 p.m. (Phoenix, Arizona local
time) on the date a Term B Loan Advance is to be made as specified in a
request for a Term B Loan Advance, deposit with the Administrative
Agent such Bank's Pro Rata Share of the requested Term B Loan Advance
in immediately available funds. Upon fulfillment of all applicable
conditions set forth herein and after receipt by the Administrative
Agent of such funds, the Administrative Agent shall pay or deliver all
funds so received to the order of Borrower at the principal office of
the Administrative Agent. The failure of any Bank to fund its Pro Rata
Share of any Term B Loan Advance required of it hereunder shall not
relieve any other Bank of its obligation to fund its Pro Rata Share of
any Term B Loan Advance hereunder. If any Bank fails to fund its Pro
Rata Share of the requested Term B Loan Advance and if all conditions
to such Term B Loan Advance have apparently been satisfied, the
Administrative Agent will make available to Borrower the funds received
by it from the other Bank. Neither the Administrative Agent nor any
Bank shall be responsible for the performance by any other Bank of its
obligations hereunder.
Unless the Administrative Agent shall have received
notice from a Bank prior to the date of any Term B Loan Advance that
such Bank will not make available to the Administrative Agent such
Bank's Pro Rata Share of the requested Term B Loan Advance, the
Administrative Agent may assume that such Bank has made such amount
available to the Administrative Agent on the date of such Term B Loan
Advance in accordance with this Section and the Administrative Agent
may, in
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reliance upon such assumption, make available a corresponding amount to
or on behalf of Borrower on such date. If and to the extent any Bank
shall not have so made its Pro Rata Share of the requested Term B Loan
Advance available to the Administrative Agent (the "Term Principal
Shortfall Amount"), Borrower agrees to repay the Term Principal
Shortfall Amount to the Administrative Agent forthwith on demand,
together with interest thereon for each day from (and including) the
date such amount is made available to or on behalf of Borrower to (but
excluding) the date such amount is repaid to the Administrative Agent,
at the rate per annum equal to the rate otherwise applicable to the
Term B Loan Advance in question.
(g) [Intentionally left blank.]
(h) [Intentionally left blank.]
(i) Each request for a Term B Loan Advance by the
Borrower shall be irrevocable and binding on Borrower once the request
is received by the Agent and the Agent notifies the Banks of the
request. Prior to the Agent's notice of the request to the Banks,
Borrower may revoke the request. Borrower shall indemnify each Bank
against any cost, loss or expense incurred by any Bank as a result of
Borrower's failure to fulfill, on or before the date specified for a
Term B Loan Advance in any request for a Term B Loan Advance, the
conditions to such Term B Loan Advance set forth herein, including any
cost, loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by a Bank to fund such
Term B Loan Advance when such Term B Loan Advance, as a result of such
failure, is not made on the date so specified.
(j) [Intentionally left blank.]
(k) Nothing herein shall be deemed to relieve any
Bank from its obligations to fulfill its Pro Rata Share of the Term
Loan Commitment hereunder or to prejudice any right which the Agent or
the Borrower may have against any Bank as a result of any default by
such Bank hereunder.
(l) Upon default, including failure to pay upon final
maturity, the Banks at their option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the
applicable interest rate to the Default Rate, and/or (b) add any unpaid
accrued interest to principal and such sum will bear interest therefrom
until paid at the rate provided herein (including any increased rate).
The interest rate will not exceed the maximum rate permitted by
applicable law.
2.10 Section 3.2(a) of the Senior Loan Agreement is hereby amended to
read as follows:
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(a) RLC Non-Use Fee. Borrower agrees to pay the Administrative
Agent for distribution to the Banks pursuant to Section 9A.8 hereof a
quarterly fee (the "RLC Non-Use Fee") in an annualized amount equal to
one percent (1.0%) until the Pricing Adjustment Date, and thereafter
one-half percent (0.5%), of the average daily undrawn balance of the
RLC Commitment during the prior calendar quarterly period. For purposes
of calculating the RLC Non-Use Fee, the Outstanding LC Balance on any
date shall be deemed to have been drawn. The RLC Non-Use Fee shall
initially accrue from the Closing Date and shall be due and payable in
arrears within three (3) Business Days after written notice of such
amount due by the Administrative Agent to Borrower and shall be
non-refundable.
2.11 Section 3.2 of the Senior Loan Agreement is hereby amended by the
addition of the following Paragraph (e):
(e) Rail Credit Fee. Company agrees to pay the Administrative
Agent for distribution to the Banks a monthly fee (the "Rail Credit
Fee") equal to $100,000.00 in advance on the first day of each month,
commencing May 1, 1999 if the Discontinued Operations Sale Date has not
yet occurred and continuing until the Discontinued Operations Sale Date
has occurred. The Rail Credit Fee shall be distributed by the
Administrative Agent as follows: $80,000.00 to Bank One and $20,000.00
to Imperial.
2.12 Section 4.1 of the Senior Credit Agreement is hereby amended by
the addition of the following Paragraph (c):
(c) So long as any Loan is outstanding, Company shall cause
such Loan and Borrower's obligations under this Senior Credit Agreement
to be secured at all times by a valid and effective pledge and
irrevocable proxy security agreement (each, a "Pledge Agreement"), each
duly executed and delivered by Company (or if applicable, by a
Subsidiary), together with the stock related thereto and any other
documents reasonably requested by the Administrative Agent, granting
the Administrative Agent on behalf of the Banks and the Issuing Bank a
valid and enforceable security interest in the stock owned by Company
(or if applicable, by a Subsidiary) of any Subsidiary, subject to no
prior Lien other than Permitted Liens.
2.13 Sections 7.1(a) and (c) of the Senior Credit Agreement are hereby
amended to read as follows:
(a) Consolidated Periodic Statements of the Company. As soon
as available, and in any event within thirty (30) days after the end of
each month until the Compliance Date, within seventy-five (75) days
after the end of the final fiscal quarter of each fiscal year, and
within forty-five (45) days after the end of all other fiscal quarters,
copies of the consolidated balance sheet of the Company as of the end
of the
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applicable Reporting Period, and consolidated statements of income of
the Company for that Reporting Period and for the portion of the fiscal
year ending with such Reporting Period, in each case setting forth in
comparative form the figures for the corresponding period of the
preceding fiscal year, all in reasonable detail and fairly stated and
prepared in accordance with GAAP.
(c) Compliance Certificate of the Company. Within seventy-five
(75) days after the end of the final fiscal quarter of each fiscal
year, and within forty-five (45) days after the end of all other fiscal
quarters, a certificate (the "Compliance Certificate") substantially in
the form of Exhibit "A" attached hereto signed by an Authorized
Officer, (i) stating that a review of the activities of Borrower during
such Reporting Period or year has been made under his/her supervision,
that, as of such date, Borrower has observed, performed and fulfilled
each and every obligation and covenant contained herein and no Event of
Default exists under any of the same or, if any Event of Default shall
have occurred, specifying the nature and status thereof, and stating
that all financial statements delivered to the Banks during the
respective period pursuant to Section 7.1(a) and 7.1(b) hereof, to such
officer's knowledge after due inquiry, fairly present in all material
respects the financial position of the Company and the results of its
operations at the dates and for the periods indicated, and have been
prepared in accordance with GAAP, subject to year end audit and
adjustments, (ii) setting forth in such level of detail as the Banks
shall reasonably require a calculation of the Financial Covenants as of
the end of that fiscal quarter, and (iii) reporting on the profit
status of its principal contracts.
2.14 Section 7.1 of the Senior Credit Agreement is hereby amended by
the addition of the following Paragraph:
(h) RLC Borrowing Base Certificate. No later than thirty (30)
days after the end of each month a fully executed RLC Borrowing Base
Certificate.
2.15 Section 7.19 of the Senior Credit Agreement is hereby amended to
read as follows:
7.19 Discontinued Operations.
(a) Upon its sale of the Discontinued Operations, the
Company shall apply the net proceeds from such sale to the
repayment of the Loans, first to the extent applicable the
RLC, second to the extent applicable the Term B Loan and third
to the extent applicable the Term A Loan.
(b) The Discontinued Operations shall be sold by the
Company no later than July 31, 1999. The net sales price
therefrom
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to be applied to the prepayment of the RLC Loans shall not be
less than $10,000,000.00 unless the Banks otherwise agree in
writing.
(c) Unless the Banks otherwise agree in writing, the
Company shall not invest, directly or indirectly, more than an
additional $1,500,000.00 in cash in the Discontinued
Operations during the 1999 fiscal year.
2.16 Article 7 of the Senior Credit Agreement is hereby amended by the
addition of the following Section 7.20:
7.20 Building Sale. The building located at 00000 Xxxxx 00xx
Xxxxxx, Xxxxxxx, Xxxxxxx shall be sold no later than April 30, 1999. As
a result of such sale, at least $2,000,000 of such sale proceeds shall
be available for, and shall be applied to, the repayment of the Loans,
first to the extent applicable the RLC and thereafter to the other
Loans.
2.17 Section 8.9 of the Senior Credit Agreement is hereby amended to
read as follows:
8.9 Financial Covenants. It will not permit:
(a) Its EBITDA Ratio to be more than 3.5 to 1.0 until
the earlier of July 31, 1999 or the Discontinued Operations
Sale Date, and thereafter 3.0 to 1.0 at the end of any fiscal
quarter.
(b) Its Current Ratio to be less than 1.50 to 1.0 at
the end of any fiscal quarter.
(c) Its Debt Coverage Ratio to be less than 1.75 to
1.0 at the end of any fiscal quarter.
(d) Its Tangible Net Worth Percentage to be less than
fifty percent (50.0%) at the end of any fiscal quarter.
(e) Its Net Income for any two consecutive fiscal
quarters, beginning with the two fiscal quarters ending June
30, 1999, or for any fiscal year beginning with the 1999
fiscal year to be less than zero (i.e. net loss), provided
that any decrease in Net Income resulting from the
Discontinued Operations shall be disregarded in the
calculation of Net Income.
(f) Its EBITDA to be less than $3,000,000.00 for the
fiscal quarter ending March 31, 1999 and $4,000,000.00 for any
fiscal
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quarter thereafter, calculated for each such fiscal quarter
without any annualization adjustment.
2.18 Article 8 of the Senior Credit Agreement is hereby amended by the
addition of the following Section 8.10:
8.10 Use of Senior Bank Debt. Until the latest of the
Discontinued Operations Sale Date, the RLC Adjustment Date and the
Compliance Date, it will not repay or reduce the principal of any
Indebtedness, the payment of which is subordinate to that of the Loans,
or repurchase or redeem any stock of the Company or of any Subsidiary.
2.19 Section 9A.8(a) of the Senior Credit Agreement is hereby amended
to read as follows:
(a) Administrative Agent, upon receipt, shall promptly
distribute in like funds as received to each Bank its Pro Rata Share of
all payments of principal, interest and fees (including without
limitation any Letter of Credit Fees) received by Administrative Agent
on or with respect to the Loans, whether collected from Borrower, or
any security for the Loans, or otherwise, after first deducting any
costs, fees or other charges due Administrative Agent hereunder or
under the Credit Documents, with the exception of (i) the RLC "Non-Use
Fee" of which Imperial shall receive until the Pricing Adjustment Date
three-quarters, and thereafter one-half, of its Pro Rata Share, (ii)
the Termination Fee of which Imperial shall receive a share based on
its share of the Total Commitment, and (iii) any charge for the
administrative expenses of the Issuing Bank in connection with the
Letters of Credit paid by Borrower pursuant to Section 2.12, which
amounts shall be paid to the Issuing Bank.
2.20 Each of the RLC Notes is hereby amended as follows:
(a) The amount of the RLC Note held by Bank One shall be equal
to its Pro Rata Share of the RLC Commitment as shown from time to time
on Schedule 1.1 attached to the Senior Credit Agreement.
(b) The amount of the RLC Note held by Imperial shall be equal
to its Pro Rata Share of the RLC Commitment as shown from time to time
on Schedule 1.1 attached to the Senior Credit Agreement.
2.21 Paragraph A of the Term A Note held by Bank One and Paragraph A of
Exhibit D-2 to the Senior Credit Agreement are each hereby amended to read as
follows:
A. Interest shall accrue on the unpaid principal of the Term A
Loan at the LIBOR Based Rate.
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2.22 Paragraph A of the Term B Note held by Bank One and Paragraph A of
Exhibit D-3 to the Senior Credit Agreement are each hereby amended to read as
follows:
A. Interest shall accrue on the unpaid principal of the Term B
Loan at the LIBOR Based Rate.
2.23 All references in the Term B Note held by Bank One to
"$5,000,000.00" are hereby amended to read "$2,500,000.00."
2.24 Schedule 1.1 of the Senior Credit Agreement is hereby amended to
read as attached hereto.
2.25 Schedule 6.18 of the Senior Credit Agreement is hereby amended to
read as attached hereto.
2.26 Exhibit "A" to the Senior Credit Agreement is hereby amended to
read as attached hereto.
2.27 The reference to "$20,000,000.00" in Section 2(a) of each Security
Agreement is hereby amended to read "$26,000,000.00."
2.28 The reference to "$5,000,000.00" in Section 2(c) of each Security
Agreement is hereby amended to read "$2,500,000.00."
2.29 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantors is materially incomplete, incorrect, or misleading as of
the date hereof.
2.30 Each reference in the Credit Documents to any of the Credit
Documents is hereby amended to be a reference to such document as modified
herein.
SECTION 3. RATIFICATION OF CREDIT DOCUMENTS AND COLLATERAL.
The Credit Documents are ratified and affirmed by Borrower and shall
remain in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Credit Documents shall remain
as security for the Loans and the obligations of Borrower in the Credit
Documents.
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SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Company and each Co-Borrower to the extent applicable represents and
warrants to the Banks:
4.1 No default or event of default under any of the Credit Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Credit
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to the Banks in connection with the Loans from the most recent
financial statement received by the Banks.
4.3 Each and all representations and warranties of Borrower in the
Credit Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loans or the Credit Documents as modified herein.
4.5 The Credit Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Credit Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Credit Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and
delivered on behalf of Borrower.
SECTION 5. BORROWER COVENANTS.
Borrower covenants with the Banks:
5.1 Borrower shall execute, deliver, and provide to the Administrative
Agent such additional agreements, documents, and instruments as reasonably
required by the Banks to effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and absolutely and forever releases and
discharges the Administrative Agent and the Banks and their present and former
directors, shareholders, officers, employees, agents, representatives,
successors and assigns, and their separate and respective heirs, personal
representatives, successors and assigns, from any and all actions, causes of
action, claims, debts, damages, demands, liabilities, obligations, and suits, of
whatever kind or nature, in law or equity of Borrower, whether now known or
unknown to Borrower, and whether contingent or matured, (i) in respect of the
Loans, the Credit Documents, or the actions or omissions of the Administrative
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Agent or the Banks in respect of the Loans or the Credit Documents and (ii)
arising from events occurring prior to the date of this Agreement.
5.3 Borrower agrees to deliver to the Administrative Agent the original
of all shares of stock of each direct and indirect Subsidiary of the Company
including that of Simula Automotive Safety Devices Limited, no later than
February 19, 1999. Failure to do so shall be an Event of Default.
SECTION 6. CONDITIONS PRECEDENT.
The agreements of the Banks and the Administrative Agent and the
modifications contained herein shall not be binding(1) upon the Banks until the
Banks have executed and delivered this Agreement and the Administrative Agent
has received, at Borrower's expense, all of the following, all of which shall be
in form and content satisfactory to the Administrative Agent and shall be
subject to approval by the Administrative Agent:
6.1 An original of this Agreement fully executed by the Borrower and
all Guarantors;
6.2 A modification fee in the amount of $300,000.00 of which
$235,000.00 shall be paid to Bank One and $65,000.00 to Imperial, and an
arrangement fee of $25,000.00 to Bank One;
6.3 An original Pledge and Irrevocable Proxy Security Agreement for
each Subsidiary, fully executed by the Company or if applicable a Subsidiary,
together with executed assignments of the Subsidiary's stock;
6.4 Such resolutions or authorizations and such other documents as the
Administrative Agent may require relating to the existence and good standing of
each Borrower and Guarantor the authority of any person executing this Agreement
or other documents on behalf of each Borrower and Guarantor; and
6.5 Payment of all the internal and external costs and expenses
incurred by the Administrative Agent and the Banks in connection with this
Agreement (including, without limitation, inside and outside attorneys,
appraisal, appraisal review, processing, title, filing, and recording costs,
expenses, and fees).
--------
(1) The Administrative Agent acknowledges that the effective date of this
Agreement is February 16, 1999.
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SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
WAIVER.
The Credit Documents as modified herein contain the complete
understanding and agreement of Borrower and the Banks in respect of the Loans
and supersede all prior representations, warranties, agreements, arrangements,
understandings, and negotiations. No provision of the Credit Documents as
modified herein may be changed, discharged, supplemented, terminated, or waived
except in a writing signed by the parties thereto.
SECTION 8. BINDING EFFECT.
The Credit Documents as modified herein shall be binding upon and shall
inure to the benefit of Borrower and the Banks and their successors and assigns
and the executors, legal administrators, personal representatives, heirs,
devisees, and beneficiaries of Borrower, provided, however, Borrower may not
assign any of its right or delegate any of its obligation under the Credit
Documents and any purported assignment or delegation shall be void.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of law
principles.
SECTION 10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
SIMULA, INC., an Arizona corporation
By:/s/Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Its: Treasurer
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