Security and Convenience. Security products consist of alarm systems designed to prevent theft of both vehicles and vehicle contents. Convenience products allow drivers to perform various functions remotely, such as starting a vehicle in order to heat or cool it prior to driving. Hybrid products contain both security and convenience functions. These markets continue to be characterized by technical innovation. Recent product introductions include two-way security systems, which report vehicle status to the user via an LCD screen on the remote, and GPS tracking systems, which allow for vehicle locating and tracking. We estimate that wholesale spending on aftermarket vehicle security and convenience products in the United States was approximately $300 million in 2004. We believe that this market is generally stable, with growth prospects based on increasing consumer awareness of the features available in aftermarket products compared to those of original equipment manufacturers (OEMs), which generally remain limited to basic security and keyless entry devices; continued public focus on security, particularly as consumers install more valuable electronics in their vehicles; enhanced product features; and broadening distribution channels

Contract Categories: Business Operations - Distribution Agreements
EX-10.9 10 p70473exv10w9.txt EXHIBIT 10.9 EXHIBIT 10.9 SECOND AMENDMENT TO CREDIT AGREEMENT THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of February 4, 2005 (this "Second Amendment"), is by and among DIRECTED ELECTRONICS, INC., a Florida corporation (the "Borrower"), DEI HOLDINGS, INC., a Florida corporation ("Holdings"), those Domestic Subsidiaries of the Borrower party hereto (together with Holdings, 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 previously amended and modified and as further 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, the Borrower has requested that the Lenders agree to reduce the Applicable Percentage for the Term Loan in respect of both Alternate Base Rate Loans and LIBOR Rate Loans (the "Pricing Reduction"); and WHEREAS, the Lenders have agreed to the Pricing Reduction, subject to 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 AMENDMENTS 1.1 NEW DEFINITION. Section 1.1 of the Credit Agreement is hereby amended by adding the following new definition is the appropriate alphabetical location. "Second Amendment Effective Date" shall mean February 4, 2005. 1.2 AMENDMENT TO APPLICABLE PERCENTAGE. The pricing grid in the definition of Applicable Percentage set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
LIBOR RATE MARGIN FOR REVOLVING ALTERNATE BASE CONSOLIDATED TOTAL LOANS AND RATE MARGIN LIBOR RATE ALTERNATE BASE LEVERAGE LETTER OF FOR REVOLVING MARGIN FOR TERM RATE MARGIN LEVEL RATIO CREDIT FEE LOANS LOANS FOR TERM LOANS COMMITMENT FEE - ----- ------------------ ---------- -------------- --------------- -------------- -------------- I < or = 3.00 to 1.0 2.75% 1.75% 3.25% 2.25% 0.375% ii > 3.00 to 1.0 but 3.00% 2.00% 3.25% 2.25% 0.50% < or = 3.75 to 1.0 iii > 3.75 to 1.0 but 3.25% 2.25% 3.25% 2.25% 0.50% < or = 4.50 to 1.0 iv > 4.50 to 1.0 3.50% 2.50% 3.25% 2.25% 0.50%
1.3 CALL PROTECTION. The fourth sentence in Section 2.8(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: All prepayments under this Section 2.8(a) shall be subject to Section 2.17, but otherwise shall be made without premium or penalty; provided that any refinancing of the outstanding Term Loan with the proceeds of a replacement term loan to effect a reduction in the Applicable Margin for the Term Loan prior to the first anniversary of the Second Amendment Effective Date shall be made at 101% of par. SECTION 2 CLOSING CONDITIONS 2.1 CLOSING CONDITIONS. This Second Amendment shall be effective as of the date hereof upon satisfaction of the following conditions precedent, in form and substance reasonably acceptable to the Administrative Agent: (a) Second Amendment. The Administrative Agent shall have received a copy of this Second Amendment duly executed by each of the Loan Parties and the Lenders. (b) Fees. Receipt by the Administrative Agent of (i) all fees owing to the Co-Lead Arrangers pursuant to that certain engagement letter agreement dated January 21, 2005, addressed to the Borrower and signed by the Co-Lead Arrangers and the Borrower, and (ii) all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Second Amendment, including, without limitation, the reasonable fees and expenses of Moore & Van Allen PLLC relating to the Second Amendment together with other fees and expenses owing by the Borrower thereto outstanding prior to the date of this Second Amendment. 2 2.2 POST-CLOSING REQUIREMENTS. As soon as possible, and in any event no later than ten (10) Business Days after the date of this Second Amendment (or such later date as agreed to by the Administrative Agent in its sole discretion), the Administrative Agent shall have received (i) a copy of the Borrower's articles of incorporation certified by the Secretary of State of Florida as of a recent date, (ii) a certificate of good standing, existence or its equivalent certified as of a recent date by the Secretary of State of the State of Florida, (iii) all stock certificates evidencing the capital stock of the Borrower pledged to the Administrative Agent pursuant to the Pledge Agreement, together with duly executed in blank undated stock powers attached thereto, and (iv) a legal opinion from the Borrower's Florida counsel, in form and substance reasonably satisfactory to the Administrative Agent. SECTION 3 MISCELLANEOUS 3.1 AMENDED TERMS. The term "Credit Agreement" as used in each of the Loan Documents, and all references therein to the Credit Agreement, shall hereafter mean and refer to the Credit Agreement as amended by this Second Amendment. Except as specifically amended or modified hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms. 3.2 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES. Each of the Loan Parties represents and warrants to the Lenders as follows: (a) It has taken all necessary action to authorize the execution, delivery and performance of this Second Amendment and it has full power, authority and legal right to execute, deliver and perform this Second Amendment. (b) This Second 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 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 Second Amendment. (d) The execution, delivery and performance of and compliance with the terms of this Second Amendment will not result in any violation of, or be in conflict with, or constitute a default under, the terms of its certificate of incorporation or by-laws, any other Requirement of Law applicable to it or any agreement, indenture, lease, assignment or other instrument to which it is a party or which is binding upon it or upon any of its 3 properties or assets, unless such violation could not reasonably be expected to have a Material Adverse Effect, or, except pursuant to the Loan Documents, result in the creation of any Lien upon any of its properties or assets. (e) The representations and warranties of such Person set forth in each of the Loan Documents are, subject to the limitations set forth therein, true and correct as of the date hereof (except for those which expressly relate to an earlier date) and no Event of Default or Potential Event of Default exists on the date hereof (after giving effect to this Second Amendment). 3.3 REAFFIRMATION OF OBLIGATIONS. (a) Directed Electronics, Inc., a Florida corporation (successor in interest to Directed Electronics, Inc., a California corporation), hereby ratifies the Credit Agreement (as amended by this Second Amendment) and the other Loan Documents and acknowledges and reaffirms (a) that, as the Borrower, it is bound by all terms of the Credit Agreement (as amended by this Second Amendment) and the other Loan Documents applicable to it and (b) that, as the Borrower, it is responsible for the observance and full performance of the Obligations applicable it. (b) Each Guarantor hereby ratifies the Credit Agreement (as amended by this Second Amendment) and the other Loan Documents and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement (as amended by this Second Amendment) and the other Loan Documents applicable to it and (b) that it is responsible for the observance and full performance of the Obligations applicable to it. 3.4 LOAN DOCUMENT. This Second Amendment shall constitute a Loan Document under the terms of the Credit Agreement. 3.5 ENTIRETY. This Second 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. 3.6 COUNTERPARTS/TELECOPY. This Second 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. Delivery of executed counterparts of this Second Amendment by telecopy or electronic signature shall be effective as an original and shall constitute a representation that an original shall be delivered. 3.7 GOVERNING LAW. This Second Amendment and the rights and obligations of the parties under this Second Amendment shall be governed by, and construed and interpreted in accordance with, the law 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. 4 3.8 CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. The jurisdiction, services of process and waiver of jury trial provisions set forth in Sections 10.17 and 10.18 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis. 3.9 FURTHER ASSURANCES. The Loan Parties agree to promptly take such action, upon the request of the Administrative Agent, as is reasonably necessary to carry out the intent of this Second Amendment. [Signature Pages Follow] 5 DIRECTED ELECTRONICS, INC. SECOND AMENDMENT TO CREDIT AGREEMENT IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Second Amendment to be duly executed and delivered as of the date first above written. BORROWER: DIRECTED ELECTRONICS, INC., a Florida corporation By: /s/ Richard Hirshberg -------------------------------- Name: Richard Hirshberg Title: VP CFO GUARANTORS: DEI HOLDINGS, INC., a Florida corporation By: /s/ Richard Hirshberg -------------------------------- Name: Richard Hirshberg Title: VP CFO DEI HEADQUARTERS, INC., a Florida corporation By: /s/ Richard Hirshberg -------------------------------- Name: Richard Hirshberg Title: VP CFO DIRECTED ELECTRONICS, INC. SECOND AMENDMENT TO CREDIT AGREEMENT ADMINISTRATIVE AGENT AND LENDERS: WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender By: /s/ David C. Hauglid ________________________________ Name: David C. Hauglid Title: Vice President [signature pages continue] AIB DEBT MANAGEMENT LIMITED,. as a Lender By: /s/ Martin Chin ---------------------------- Name: Martin Chin Title: Vice President Investment Advisor to AIB Debt Management, Limited By: /s/ Roisin O'Connell ---------------------------- Name: Roisin O'Connell Title: Assistant Vice President Investment Advisor to AIB Debt Management, Limited ALLSTATE LIFE INSURANCE COMPANY, as a Lender By: /s/ Chris Goergen ---------------------------- Name: Chris Goergen Title: Authorized Signatory By: /s/ Jerry D. Zinkula ---------------------------- Name: Jerry D. Zinkula Title: Authorized Signatory AIMCO CDO SERIES 2000-A, as a Lender By: /s/ Chris Goergen ---------------------------- Name: Chris Goergen Title: Authorized Signatory By: /s/ Jerry D. Zinkula ---------------------------- Name: Jerry D. Zinkula Title: Authorized Signatory AIMCO CLO SERIES 2001-A, as a Lender By: /s/ Chris Georgen ---------------------------- Name: Chris Goergen Title: Authorized Signatory By: /s/ Jerry D. Zinkula ---------------------------- Name: Jerry D. Zinkula Title: Authorized Signatory ANTARES CAPITAL CORPORATION as a Lender By: /s/ Tyler W. Lindblad ---------------------------- Name: Tyler W. Lindblad Title: Director JPMORGAN CHASE BANK, as trustee of the Antares Funding Trust created under the Trust Agreement Dated as of November 30, 1999. By: /s/ Greg Sheehan ---------------------------- Name: Greg Sheehan Title: Vice President NAVIGATOR CDO 2003, LTD By Antares Asset Management Inc., as Collateral Manager By: /s/ David Mahon ---------------------------- Name: David Mahon Title: Vice President NAVIGATOR CDO 2004, LTD By Antares Asset Management Inc., as Agent By: /s/ David Mahon ---------------------------- Name: David Mahon Title: Vice President APOLLO INVESTMENT MANAGEMENT, L.P., as a Lender By: /s/ A. Renn ---------------------------- Name: A. Renn Title: Vice President APEX (IDM) CDO I, LTD. BABSON CLO LTD. 2003-I BABSON CLO LTD. 2004-I BABSON CLO LTD. 2004-II ELC (CAYMAN) LTD. 1999-II ELC (CAYMAN) LTD. 1999-III ELC (CAYMAN) LTD. 2000-I SEABOARD CLO 2000 LTD. TRYON CLO LTD. 2000-I SUFFIELD CLO, LIMITED By: Babson Capital Management LLC as Collateral Manager By: /s/ John W. Stelwagon ---------------------------- Name: John W. Stelwagon 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/ John W. Stelwagon ---------------------------- Name: John W. Stelwagon Title: Managing Director BLACKROCK GLOBAL FLOATING RATE INCOME TRUST BLACKROCK SENIOR INCOME SERIES, as a Lender By: /s/ Tom Colwell ---------------------------- Name: Tom Colwell Title: Authorized Signatory CANYON CAPITAL CDO 2001-1, LTD., as a Lender By: Canyon Capital Advisors LLC, a Delaware Limited Liability Company, its Collateral Manager By: /s/ Patrick Dooley ---------------------------- Name: Patrick Dooley Title: Authorized Signatory CANYON CAPITAL CDO 2002-1, LTD., as a Lender By: Canyon Capital Advisors LLC, a Delaware Limited Liability Company, its Collateral Manager By: /s/ Patrick Dooley ---------------------------- Name: Patrick Dooley Title: Authorized Signatory CANYON CAPITAL CDO 2004-1, LTD., as a Lender By: Canyon Capital Advisors LLC, a Delaware Limited Liability Company, its Collateral Manager By: /s/ Michael M. Leyland ---------------------------- Name: Michael M. Leyland Title: Authorized Signatory CIBC INC., as a Lender By: /s/ Cedric Henley ---------------------------- Name: Cedric Henley Title: Executive Director SPECIAL SITUATIONS OPPORTUNITY FUND I, LLC, as a Lender By: First Source Financial, Inc., its authorized agent By: /s/ James M. Cassady ---------------------------- Name: James M. Cassady Title: Vice President FRANKLIN TEMPLETON as a Lender By: /s/ Tyler Chan ---------------------------- Name: Tyler Chan Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender By: /s/ Matthew D. Liepert ---------------------------- Name: Matthew D. Liepert Title: Duly Authorized Signatory GSC PARTNERS CDO FUND IV, LIMITED By: GSCP (NJ), L.P., as Collateral Manager By: /s/ Alexander B. Wright ---------------------------- Name: Alexander B. Wright Title: Authorized Signatory GSC PARTNERS CDO FUND V, LIMITED By: GSCP (NJ), L.P., as Collateral Manager By: /s/ Alexander B. Wright ---------------------------- Name: Alexander B. Wright Title: Authorized Signatory 1888 FUND, LTD. By: /s/ Kaitlin Trinh ---------------------------- Name: Kaitlin Trinh Title: Fund Controller GREEN LANE CLO LTD. By: /s/ Kaitlin Trinh ---------------------------- Name: Kaitlin Trinh Title: Fund Controller LFC2 LOAN FUNDING LLC, For Itself or as Agent for Loan Funding Corp., THC, LTD. By: /s/ Janet Haack ---------------------------- Name: Janet Haack Title: As Attorney-in-Fact GULF STREAM-COMPASS CLO 2002-1 LTD. By: Gulf Stream Asset Management LLC As Collateral Manager, As a Lender By: /s/ Barry K. Love ---------------------------- Name: Barry K. Love Title: Chief Credit Officer GULF STREAM-COMPASS CLO 2003-1 LTD. By: Gulf Stream Asset Management LLC As Collateral Manager, As a Lender By: /s/ Barry K. Love ---------------------------- Name: Barry K. Love Title: Chief Credit Officer GULF STREAM-COMPASS CLO 2004-1 LTD. By: Gulf Stream Asset Management LLC As Collateral Manager, As a Lender By: /s/ Barry K. Love ---------------------------- Name: Barry K. Love Title: Chief Credit Officer FOX RIVER CLO, LTD. as a Lender By: /s/ Mark D. Senkprel ---------------------------- Name: Mark D. Senkprel Title: Managing Director PREMIUM LOAN TRUST I, LTD. as an Investor By: /s/ Timothy S. Van Kirk ---------------------------- Name: Timothy S. Van Kirk Title: Managing Director MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., as a Lender By: /s/ Craig Gallehugh ---------------------------- Name: Craig Gallehugh Title: Director, Team Leader VENTURE CDO 2002, LIMITED, as a Lender By its investment advisor MJX Asset Management LLC By: /s/ Martin Davey ---------------------------- Name: Martin Davey Title: Managing Director VENTURE II CDO, LIMITED, as a Lender By its investment advisor MJX Asset Management LLC By: /s/ Martin Davey ---------------------------- Name: Martin Davey Title: Managing Director VENTURE III CDO, LIMITED, as a Lender By its investment advisor MJX Asset Management LLC By: /s/ Martin Davey ---------------------------- Name: Martin Davey Title: Managing Director VENTURE IV CDO, LIMITED, as a Lender By its investment advisor MJX Asset Management LLC By: /s/ Martin Davey ---------------------------- Name: Martin Davey Title: Managing Director VISTA LEVERAGED INCOME FUND, as a Lender By its investment advisor MJX Asset Management LLC By: /s/ Martin Davey ---------------------------- Name: Martin Davey Title: Managing Director BANK ONE HIGH YIELD By: /s/ William J. Morgan ---------------------------- Name: William J. Morgan Title: Portfolio Manager FOXE BASIN CLO 2003, LTD. By Royal Bank of Canada as Collateral Manager By: /s/ Lee M. Shaiman ---------------------------- Name: Lee M. Shaiman Title: Authorized Signatory HUDSON STRAITS CLO 2004, LTD. By Royal Bank of Canada as Collateral Manager By: /s/ Lee M. Shaiman ---------------------------- Name: Lee M. Shaiman Title: Authorized Signatory GRANITE VENTURES I LTD. By: Stone Tower Debt Advisors LLC, as its Collateral Manager By: /s/ W. Anthony Edson ---------------------------- Name: W. Anthony Edson Title: Authorized Signatory STONE TOWER CDO LTD. By: Stone Tower Debt Advisors LLC, as its Collateral Manager By: /s/ W. Anthony Edson ---------------------------- Name: W. Anthony Edson Title: Authorized Signatory STONE TOWER CDO II LTD. By: Stone Tower Debt Advisors LLC, as its Collateral Manager By: /s/ W. Anthony Edson ---------------------------- Name: W. Anthony Edson Title: Authorized Signatory WACHOVIA BANK, NATIONAL ASSOCIATION, As a Lender By: /s/ Kenneth M. Gacevich ---------------------------- Name: Kenneth M. Gacevich Title: Vice President WELLS FARGO BANK, N.A., as a Lender By: /s/ David G. James ---------------------------- Name: David G. James Title: Vice President