FORM 8-K
Item 1.01 Entry into a Material Definitive Agreement
On December 21, 2010, DynaVox Systems LLC (the “ Borrower ”), DynaVox Intermediate LLC, DynaVox Services Inc., Blink-Twice LLC, Mayer-Johnson LLC, DynaVox International Holdings Inc., and Eye Response Technologies, Inc. (all of which are subsidiaries of DynaVox Inc. (the “ Company ”)) entered into the Third Amendment to Credit Agreement (the “ Amendment ”) with GE Business Financial Services Inc., for itself as a lender and as agent for the several financial institutions from time to time party to the Third Amended and Restated Credit Agreement dated as of June 23, 2008, as amended, modified, restated or otherwise supplemented from time to time (the “ Credit Agreement ”), and such other lenders signatories to the Amendment. The Amendment was sought by the Borrower to address the impact of the one time pre-IPO distribution of $10.0 million on the Fixed Charge Coverage Ratio for the 12-month period ending December 31, 2010. The Company is confident that it will be in full compliance with the covenants in the Credit Agreement as of the end of the second quarter of fiscal year ending December 31, 2010.
The Amendment (1) modifies the calculation of the Fixed Charge Coverage Ratio (which is calculated by dividing the sum of cash interest expense (net of interest income), cash taxes paid, scheduled principal payments on all debt, restricted cash distributions and management fees paid to Vestar Capital Partners and other certain pre-IPO owners by operating cash flow) for the 12-month period ending December 31, 2010 to exclude from the definition of restricted cash distributions a $10.0 million distribution made by the Borrower in March 2010; (2) modifies the calculation of the ratios of net senior debt to Adjusted EBITDA and net total debt to Adjusted EBITDA by limiting the ability of the Borrower to net cash and cash equivalents from total debt and senior debt to only any 12-month period in which Adjusted EBITDA for such period is greater than $30.0 million, whereupon the amount of cash and cash equivalents that may be so netted is limited to $5.0 million; and (3) modifies an affirmative covenant relating to information to be provided to the lenders to require the Borrower to provide monthly financial statements of the Company and its subsidiaries within 30 days of the end of each month commencing with the month ending November 30, 2010.
Certain of the lenders under the Amendment, or their affiliates, have provided, and may in the future from time to time provide, certain commercial and investment banking, financial advisory and other services in the ordinary course of business for the Company and its subsidiaries, for which they have in the past and may in the future receive customary fees and commissions.
Date: December 23, 2010
AI
