|
<PAGE>
EXHIBIT 10.11
FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT (this "First
Amendment"),
dated as of September 17, 2004, is by and among DIRECTED
ELECTRONICS, INC., a
California corporation ("Company"), DEI HOLDINGS, INC., a
Florida corporation
("Holdings"), and DEI HEADQUARTERS, INC., a Florida corporation
("Headquarters",
and together with Company and Holdings, the "Loan Parties"), the
note purchasers
that are now and hereafter at any time parties to the Note
Purchase Agreement,
as defined below, (each a "Purchaser" and collectively,
"Purchasers"), and
AMERICAN CAPITAL FINANCIAL SERVICES, INC., a Delaware
corporation, as
administrative agent for Purchasers (in such capacity
"Agent").
WITNESSETH
WHEREAS, the Loan Parties, Purchasers and Agent are parties to
that certain
Note Purchase Agreement dated as of June 17, 2004 (as amended,
modified,
supplemented or restated from time to time, the "Note Purchase
Agreement";
capitalized terms used herein shall have the meanings ascribed
thereto in the
Note Purchase Agreement unless otherwise defined herein);
WHEREAS, Holdings has agreed to purchase the assets (the
"Acquired Assets")
of Definitive Technology LLP, a Maryland limited liability
partnership
("Definitive") pursuant to the terms of that certain DT Purchase
Agreement (as
defined in Section 2.1(a), below) by and among Holdings,
Definitive, Sandy
Gross, Donald Givogue and Edmond Blais for an aggregate amount,
including (i)
all related fees and expenses, (ii) a working capital adjustment
in an amount
not to exceed $1,000,000 and (iii) the DT Deferred Payment (as
defined in
Section 2.1(a), below), not exceeding $54,000,000, with the
Acquired Assets to
be acquired from Definitive by Company and Headquarters (the "DT
Acquisition");
WHEREAS, the Loan Parties have requested that Agent and
Purchasers waive
the prohibition under Section 7.2(p) of the Note Purchase
Agreement (i) to allow
Holdings to enter into and consummate the transactions
contemplated by the DT
Purchase Agreement (with Company and Headquarters actually
acquiring the
Acquired Assets), and (ii) to allow Holdings to issue shares of
its common stock
to Trivest and its assigns in connection with the DT Acquisition
(the "Trivest
Stock Issuance");
WHEREAS, the Loan Parties have requested that Agent and
Purchasers waive
the terms of Sections 7.1(a), 7.2(e) and 7.2(j) of the Note
Purchase Agreement
to allow Company to change its domicile of incorporation to
Florida (the
"Redomestication");
WHEREAS, the Company has requested an increase of the Term Loan
Committed
Amount (as defined in the Senior Credit Agreement) in an
aggregate principal
amount not to exceed $45,000,000 for purposes of funding the DT
Acquisition (the
"Term Loan Increase");
WHEREAS, the Loan Parties have requested that Agent and
Purchasers permit
the DT Acquisition, the Redomestication, the Trivest Stock
Issuance, and the
Term Loan Increase and agree to certain modifications to the
terms of the Note
Purchase Agreement in connection therewith;
<PAGE>
WHEREAS, Agent and Purchasers have agreed to permit the DT
Acquisition, the
Redomestication, the Trivest Stock Issuance, and the Term Loan
Increase, and
amend the Note Purchase Agreement in connection therewith, in
each case on the
terms and conditions set forth herein; and
WHEREAS, the Loan Parties have requested that Agent and
Purchasers agree to
an extension, and Agent and Purchasers have agreed to extend,
the period by
which the Loan Parties shall have obtained the Key-Man
Insurance.
NOW, THEREFORE, in consideration of the agreements hereinafter
set forth,
and for other good and valuable consideration, the receipt and
adequacy of which
are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
WAIVER
1.1 Agent and Purchasers hereby waive Sections 7.1(a), 7.2(e)
and 7.2(j) of
the Note Purchase Agreement to the extent the same prohibits
the
Redomestication.
1.2 Agent and Purchasers hereby waive Section 7.2(f) of the Note
Purchase
Agreement to the extent that same prohibits the Company from
paying Trivest a
one-time fee of $1,450,000 pursuant to Section 6(c)(i) of the
Management
Agreement at the closing of the DT Acquisition (subject,
however, to Trivest
waiving any increase in the "Base Compensation" otherwise
required by Section
6(b) of the Management Agreement in connection with the DT
Acquisition).
1.3 Agent and Purchasers hereby waive Section 7.2(p) of the Note
Purchase
Agreement to the extent the same prohibits Holdings from
executing, delivering,
and performing the obligations of the DT Purchase Agreement and
to the extent
the same prohibits the Trivest Stock Issuance.
1.4 Except for the specific waivers set forth herein, nothing
contained
herein shall be deemed to constitute a waiver of (i) any rights
or remedies
Agent or any Purchaser may have under the Note Purchase
Agreement or any other
Purchase Document or under applicable law or (ii) the Loan
Parties' obligation
to comply fully with any duty, term, condition, obligation or
covenant contained
in the Note Purchase Agreement and the other Purchase Documents
not specifically
waived. The specific waivers set forth herein are one-time
waivers and shall be
effective only in this specific instance and shall not obligate
Agent or
Purchasers to waive any Default or Event of Default, now
existing or hereafter
arising.
2
<PAGE>
SECTION 2
AMENDMENTS
2.1 AMENDMENTS TO SECTION 1.1.
(a) The following definitions are hereby added to the Note
Purchase
Agreement to read as follows:
"DT Acquisition" shall mean the acquisition by Company and
Headquarters of substantially all of the assets of DT Seller for
an
aggregate amount, including (i) all related fees and expenses,
(ii) a
working capital adjustment in an amount not to exceed $1,000,000
and (iii)
the DT Deferred Payment, not exceeding $54,000,000, consummated
pursuant to
the terms of the DT Purchase Agreement.
"DT Deferred Payment" shall mean the deferred payment in an
aggregate
amount not to exceed $2,000,000 paid or payable pursuant to the
DT Purchase
Agreement.
"DT Purchase Agreement" shall mean, that certain Asset
Purchase
Agreement, dated as of the First Amendment Effective Date, by
and among
Holdings, the DT Seller, Sandy Gross, Donald Givogue and Edmond
Blais.
"DT Seller" shall mean Definitive Technology, LLP, a Maryland
limited
liability partnership.
"First Amendment Effective Date" shall mean September 17,
2004.
(b) The definition of "Consolidated EBITDA" in Section 1.1 of
the Note
Purchase Agreement is hereby amended and restated in its
entirety as follows:
"Consolidated EBITDA" means, for any period, the sum of the
amounts
for such period of (a) Consolidated Net Income plus, to the
extent deducted
in determining Consolidated Net Income, (i) Consolidated
Interest Expense,
(ii) provisions for taxes based on income, (iii) total
depreciation
expense, (iv) total amortization expense, (v) management fees
paid to
Trivest pursuant to the Management Agreement to the extent
permitted by
Section 7.2(f), (vi) other non-recurring and non-cash items
reducing
Consolidated Net Income in an aggregate amount not to exceed
$3,000,000,
(vii) other one time add-backs set forth on Annex C attached
hereto (it
being understood that such one-time add-backs shall roll-off on
a quarterly
basis and shall not affect Consolidated EBITDA after one year
following the
Closing Date) and (viii) other one time add-backs related to the
DT Seller
set forth on Annex D attached hereto (it being understood that
such one
time add backs shall roll-off on a quarterly basis and shall not
affect
Consolidated EBITDA after one year following the First Amendment
Effective
Date, less (b) interest income and any non-operating,
non-recurring and
non-operating, non-cash items increasing Consolidated Net
Income, all of
the foregoing as determined on a
3
<PAGE>
consolidated basis for the Loan Parties in conformity with GAAP;
provided
that in calculating any such items for such period, any Asset
Sales or
other acquisitions or dispositions of assets during such period
shall have
been deemed to have occurred on the first day of such
period.
(c) The definition of "Permitted Acquisition" in Section 1.1 of
the Note
Purchase Agreement is hereby amended and restated in its
entirety as follows:
"Permitted Acquisition" shall mean (a) the DT Acquisition and
(b) an
acquisition or any series of related acquisitions by a Loan
Party of (i)
all or substantially all of the assets or a majority of the
outstanding
voting stock or economic interests of a Person that is
incorporated, formed
or organized in the United States or Canada or (ii) any
division, line of
business or other business unit of a Person that is
incorporated, formed or
organized in the United States or Canada (such Person or such
division,
line of business or other business unit of such Person shall be
referred to
herein as the "Target"), in each case that is a type of business
(or assets
used in a type of business) permitted to be engaged in by the
Loan Parties
pursuant to Section 7.2(l) hereof, so long as (A) no Default or
Event of
Default shall then exist or would exist after giving effect
thereto, (B)
Company shall demonstrate to the reasonable satisfaction of
Agent and the
Required Purchasers that, after giving effect to the acquisition
on a pro
forma basis (giving effect to adjustments for owner compensation
for such
period, documented to the reasonable satisfaction of Agent, to
the extent
such compensation does not continue after such acquisition) (I)
the
Consolidated Total Leverage Ratio shall be less than or equal to
the ratio
that is 0.25 lower than the Consolidated Total Leverage Ratio
then required
under Section 7.3 and (II) the Loan Parties are in compliance
with each of
the financial covenants set forth in Section 7.3, (C) the Target
shall have
earnings before interest, taxes, depreciation and amortization
for the four
fiscal quarter period prior to the acquisition date in an amount
greater
than $0, as adjusted for owner compensation for such period,
documented to
the reasonable satisfaction of the Agent, to the extent such
compensation
does not continue after such acquisition (provided that the
aggregate
consideration paid by the Loan Parties shall not exceed
$5,000,000 for any
Target which, but for such owner compensation adjustment, would
have
negative earnings fo
| 
