AMENDMENT AGREEMENT NO. 6 TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT
This AMENDMENT AGREEMENT NO. 6 (this "Amendment"), dated as of October
20, 1998, by and among SIGNAL TECHNOLOGY CORPORATION, a Delaware corporation
("STC"), SIGNAL TECHNOLOGY SALES CORP., a United States Virgin Islands
corporation ("Sales" and, together with STC, the "Companies"), and BankBoston,
N.A., a national banking association formerly known as The First National Bank
of Boston (the "Bank"), amends the Second Amended and Restated Credit Agreement
dated as of September 30, 1993, as amended (as the same may be further amended,
modified, or supplemented from time to time the "Credit Agreement"), by and
among the Companies and the Bank. Capitalized terms used but not defined herein
shall have the meanings set forth for such terms in the Credit Agreement.
WHEREAS, the Companies have requested that the Bank agree to certain
amendments to the Credit Agreement; and
WHEREAS, subject to the terms and provisions hereof, the Bank is
willing to so amend the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Amendment to Credit Agreement. Subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Credit Agreement is
hereby amended as follows:
1.1 Amendments to Certain Definitions.
(a) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately preceding the defined term
"Agreement":
"Accounts Receivable. All of the Companies' accounts, accounts
receivable, notes, bills, drafts, acceptances, instruments, documents,
chattel paper and all other debts, obligations and liabilities in
whatever form owing to any Company from any Person for goods sold by it
or for services
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rendered by it, or however otherwise established or created, all
guarantees and security therefor, all right, title and interest of any
Company in the goods or services which gave rise thereto, including
rights to reclamation and stoppage in transit and all rights of an
unpaid seller of goods or services; whether any of the foregoing be now
existing or hereafter arising, now or hereafter received by or owing or
belonging to any Company.
(b) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately following the defined term
"Benecia":
"Borrowing Base. An amount equal to 80% of the unpaid amount
of all Eligible Accounts of the Companies."
(c) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately following the defined term
"Borrowing Base":
"Borrowing Base Report. A report signed by either the
President or Chief Financial Officer of STC in substantially the form
of Exhibit E hereto."
(d) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately following the defined term
"Consolidated Tangible Net Worth":
"Contra Customer. Any customer or other Person with whom STC
or Sales has a contract or agreement of any kind (including an account
payable) and in respect of whom there is an Account Receivable included
in Eligible Accounts."
(e) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately following the defined term
"Effective Date":
"Eligible Accounts. An Account Receivable which:
(a) is not unpaid more than 90 days after invoice
date;
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(b) arose in the ordinary course of business as a
result of services which have been performed for the account debtor or the sale
of goods which have been shipped to the account debtor;
(c) is the legal, valid and binding obligation of the
account debtor thereunder, is assignable, is owned free and clear of all
encumbrances (except in favor of the Bank) and is not evidenced by a promissory
note or other instrument;
(d) has not been reduced and is not subject to
reduction, as against STC or Sales, their respective agents or the Bank, by any
offset, counterclaim, adjustment, credit, allowance or other defense, and as to
which there is no (and no basis for any) return, rejection, loss or damage of or
to the goods giving rise thereto, or any request for credit or adjustments;
(e) is not difficult to collect or uncollectible for
any reason, including, without limitation, return, rejection, repossession, loss
of or damage to the merchandise giving rise thereto, a merchandise or other
dispute, any bankruptcy, insolvency, adverse credit rating or other financial
difficulty of the account debtor, or any impediment to the assertion of a claim
or commencement of an action against the account debtor (including as a
consequence of a failure of STC or Sales to be qualified or licensed in any
jurisdiction where such qualification or licensing is required), all as
reasonably determined by the Bank in its sole discretion;
(f) is not owing from any affiliate of STC or Sales;
(g) is owing from an account debtor located in the
United States;
(h) is owing from an account debtor at least 70% of
whose accounts payable owing to STC or Sales are Eligible Accounts;
(i) if owing from any Contra Customer, will be
eligible only to the extent it exceeds the amount of STC's or Sales' accounts
payable to such Contra Customer; and
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(j) has not been designated by the Bank in its
reasonable judgment by notice to STC as unacceptable for any reason."
(f) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately following the defined term
"Environmental Laws":
"Equipment. All machinery, equipment and fixtures, furniture,
furnishings, trade fixtures, specialty tools and parts, motor vehicles
and materials handling equipment of any of the Companies, together with
such Company's interest in, and right to, any and all manuals, computer
programs, data bases and other materials relating to the use, operation
or structure of any of the foregoing; and all other property
constituting "equipment" as such term is defined in the Uniform
Commercial Code."
(g) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately following the defined term
"Interest Period":
"Inventory. All goods, merchandise and other personal property
(including warehouse receipts and other negotiable and non-negotiable
documents of title covering any such property) of the Companies that
are held for sale, lease or other disposition, or are to be furnished
under contracts of service, or for display or demonstration, or leased
or consigned, or that are raw materials, piece goods, work-in-process,
finished goods or supplies or other materials used or consumed or to be
used or consumed in such Company's business, whether in transit or in
the possession of such Company or another, including without limitation
all goods covered by purchase orders and contracts with suppliers and
all goods billed and held by suppliers and goods located on the
premises of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents or other third parties; all proprietary rights,
patents, plans, drawings, diagrams, schematics, assembly and display
materials relating to any of the foregoing; and all other property
constituting "inventory" as such term is defined in the Uniform
Commercial Code.
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(h) The definition of the term "Secured Obligations" is hereby
amended to read as follows:
"Secured Obligations. The Obligations."
(i) The following new defined term is hereby inserted in
Section 1 of the Credit Agreement, immediately following the defined term
"Secured Obligations":
"Security Agreement. The Security Agreement, dated as of
October 20, 1998 by and among the Companies and the Bank."
1.2 Amendment of Section 2.1. Section 2.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:
"ss. 2.1 Commitment to Lend. Subject to the terms and
conditions hereinafter set forth, the Bank agrees to lend to the
Companies, on a joint and several basis, during the period commencing
on the Effective date and ending on the Revolving Credit Maturity Date,
upon notice by the Companies pursuant to ss. 2.4 from time to time an
amount (a "Revolving Credit Loan", or if more than one, "Revolving
Credit Loans") equal to the aggregate principal amount of the Revolving
Credit Loan requested by the Companies in such notice, for working
capital and general corporate purposes as permitted pursuant to the
provisions of this Agreement, provided that in no event shall the sum
of (a) the aggregate outstanding principal balance of all Revolving
Credit Loans (after giving effect to all amounts requested), plus (b)
the aggregate Maximum Drawing Amount of Letters of Credit outstanding
(collectively the "Total Credit Extended"), exceed at any one time the
lesser of (i) the Revolving Credit Commitment Amount and (ii) the
Borrowing Base."
1.3 Amendment of Section 2.6. Section 2.6 of the Credit
Agreement is hereby amended by deleting the second sentence of said Section 2.6
and replacing said second sentence of Section 2.6 with the following:
"If at any time, for any reason, the Total Credit Extended
exceeds the lesser of (i) the Borrowing Base
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and (ii) the Revolving Credit Commitment Amount, then the Companies
jointly and severally shall immediately pay cash in the amount of such
excess to the Bank for application first to pay down the principal of
Revolving Credit Loans and then to be held by the Bank as cash
collateral for the Obligations."
1.4 Amendment of Section 2.8. Sections 2.8(a) and (b) of the
Credit Agreement are hereby amended to read in their entirety as follows:
"(a) Except as provided in ss. 5.1 hereof, each Revolving
Credit Loan that is a Base Rate Loan shall bear interest at the rate
per annum equal to the Base Rate plus 0.50% per annum.
(b) Except as provided in ss. 5.1 hereof, each Revolving
Credit Loan that is a Eurodollar Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate per annum
equal to the Eurodollar Rate determined for such Interest Period plus
2.25% per annum."
1.5 Amendment of Section 3.3. Section 3.3 of the Credit
Agreement is hereby amended to read in its entirety as follows:
"ss. 3.3 Interest on Real Estate Term Loans.
(a) Unless and until converted to a different Type
pursuant to ss. 3.4, the Real Estate Term Loans shall be Base Rate
Loans.
(b) Except as provided in ss. 5.1 hereof, any portion
of the Real Estate Term Loans that is a Base Rate Loan shall bear
interest at the Base Rate plus 0.50% per annum.
(c) Except as provided in ss. 5.1 hereof, any portion
of the Real Estate Term Loans that is a Eurodollar Rate Loan shall bear
interest for each Term Loan Interest Period at the rate of two and
one-quarter percent (2.25%) per annum above the Eurodollar Rate
determined for each such Term Loan Interest Period.
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(d) The Companies jointly and severally promise to
pay interest on each Real Estate Term Loan in arrears on each Interest
Payment Date with respect thereto and at the stated or any accelerated
maturity of the Real Estate Term Loans."
1.6 Amendment of Section 4.1. Section 4.1 of the Credit Agreement is
hereby amended by deleting the first sentence of said Section 4.1 and replacing
said first sentence of Section 4.1 with the following:
"Subject to the terms and conditions set forth in this Agreement upon
written request from STC, as provided below, the Bank may, at its option,
and without any obligation or commitment to do so, at any time thereafter
but prior to the Revolving Credit Maturity Date issue letters of credit
("Letters of Credit") in such form as STC and the Bank may agree, for the
account of any of the Companies, provided, however, that the Total Credit
Extended shall not at any time exceed the lesser of (i) the Borrowing Base
and (ii) the Revolving Credit Commitment Amount, and provided, further,
that the Maximum Drawing Amount of all Letters of Credit outstanding shall
not at any time exceed Three Million Dollars ($3,000,000) ."
1.7 Amendment of Section 6.1. Section 6.1 of the Credit Agreement is
hereby amended by deleting the term "one-eighth of one percent (1/8%) per annum"
in the first line of subparagraph (b) of said Section 6.1. and inserting the
phrase "three-eighths of one percent (3/8%) per annum" immediately following the
term "(b)" in the first line of subparagraph (b) of said Section 6.1.
1.8 Amendment of Section 7. Section 7 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"ss. 7. SECURITY. (a) The Companies confirm that the Secured
Obligations are entitled to the benefits of and shall be secured by a first
priority perfected security interest (subject only to such prior liens as shall
be acceptable to the Bank) on all of the real estate of the Companies covered by
the Mortgages and by a first priority perfected security interest (subject to
such prior liens as shall be acceptable to the Bank) on all of
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the Accounts Receivable, Inventory and Equipment of the Companies.
(b) The Attornment Agreements, the Mortgages from time to time
delivered, the Security Agreement and any other instruments and documents from
time to time delivered pursuant hereto or thereto, or in furtherance hereof or
thereof, in each case secured or providing credit support for the Secured
Obligations and in each case as amended, modified, supplemented or restated and
in effect from time to time, are collectively referred to herein as the
"Security Documents"."
1.9 Amendment of Section 11.4. Section 11.4 of the Credit Agreement is
hereby amended by deleting subparagraph (g) of said Section 4.1 and replacing
said subparagraph (g) of Section 4.1 with the following:
"(g) as soon as available, but in any event within 15 days
after the end of each month, a Borrowing Base Report, together with
such other information regarding Accounts Receivable as the Bank may
require; and
(h) with reasonable promptness such other financial
information as the Bank may reasonably request and the disclosure of
which is not prohibited by law."
1.10 Amendment of Section 12.4. Section 12.4 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"ss. 12.4. Distributions. Make any Distributions except
Distributions by any direct or indirect Subsidiary of STC to STC or any
other direct or indirect Subsidiary of STC."
1.11 Amendment of Section 12.7. Section 12.7 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"ss. 12.7 Net Worth. Permit at any time Consolidated Tangible
Net Worth to be less than the amount equal to the sum of $23,000,000
plus, on a cumulative basis, 50% of positive Consolidated Net Income
for each fiscal quarter ending after September 30, 1998."
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1.12 Amendment of Section 15. Section 15 of the Credit Agreement is
hereby amended by (a) deleting the word "or" at the end of subparagraph (i) of
said Section 15 and (b) inserting the following language immediately following
subparagraph (j) of said Section 15:
"(k) if either of the individuals serving as Chief Executive
Officer and Chief Financial Officer of STC on September 30, 1998 shall
cease for any reason (including, without limitation, resignation,
removal or death) to be executive officers of STC at any point in time
while any amounts with regard to Loans are outstanding."
2. Representations and Warranties. The Companies hereby represent and
warrant to the Bank as follows:
(a) Representations and Warranties in Credit Agreement. Except as
specified in writing by the Companies to the Bank with respect to the subject
matter of this Amendment prior to the execution and delivery hereof by the Bank
and the Companies, the representations and warranties of the Companies contained
in the Credit Agreement were true and correct in all material respects when made
and continued to be true and correct in all material respects on the date
hereof, except, in each case to the extent of changes resulting from
transactions contemplated or permitted by the Loan Documents and this Amendment,
and changes occurring in the ordinary course of business which singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date.
(b) Authority, No Conflicts, Enforceability of Obligations, Etc. Each
of the Companies hereby confirms that the representations and warranties of the
Companies contained in Sections 8.1 and 8.3 of the Credit Agreement are true and
correct on and as of the date hereof as if made on the date hereof, treating
this Amendment, the Credit Agreement as amended hereby, and the other Loan
Documents as amended hereby, as "Loan Documents" for the purposes of making said
representations and warranties.
3. Conditions to Effectiveness. The effectiveness of this Amendment
shall be subject to the delivery to the Bank by (or on behalf of) each of the
Companies, as the case may be,
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contemporaneously with the execution hereof, of the following, in form and
substance satisfactory to the Bank:
(a) this Amendment signed by each of the Companies and the Bank;
(b) a legal opinion letter from the Companies' outside counsel with
respect to the organization, continued existence, good standing, corporate power
and corporate authorization of STC and as to the due execution, delivery,
legality, validity, binding effect and enforceability of this Amendment and the
Credit Agreement as amended hereby;
(c) payment of an amendment fee of $30,000;
(d) the duly authorized and executed Security Agreement; and
(e) any other confirmatory or corporate authority document or
instrument the Bank may reasonably request.
4. Filing of Form 10-Q. Not later than by October 31, 1998, the
Companies shall file STC's Quarterly Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, for the period ended June 30,
1998 on Form l0-Q. Failure of the Companies to comply with this Section 4 shall
constitute an Event of Default.
5. Waiver of Noncompliance with Covenants. The Bank hereby waives the
Companies' noncompliance with Sections 11.4(a), 12.7 and 12.8 of the Credit
Agreement (as in effect immediately prior to giving effect to this Amendment)
for the period ended June 30, 1998.
6. Miscellaneous Provisions. Except as otherwise expressly provided by
this Amendment, all of the terms, conditions and provisions of the Credit
Agreement and the other Loan Documents shall remain in full force and effect.
Each of the Companies confirms and agrees that the joint and several Obligations
of the Companies to the Bank, as amended and supplemented hereby, are entitled
to the benefits of the Loan Documents. The parties hereto hereby acknowledge and
agree that all references to the Credit Agreement and the Obligations thereunder
contained in any of the Loan Documents shall be references to the Credit
Agreement and the Obligations as amended
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hereby and as the same may be amended, modified, supplemented, or restated from
time to time. This Amendment may be executed in any number of counterparts, but
all such counterparts shall together constitute but one instrument. In making
proof of this Amendment it shall not be necessary to produce or account for more
than one counterpart signed by each party hereto by and against which
enforcement hereof is sought. The Companies hereby jointly and severally confirm
their obligations to pay promptly upon request all reasonable out-of-pocket
costs and expenses incurred or sustained by the Bank in connection with this
Amendment, including the reasonable fees and expenses of Xxxxxxxx & Worcester
LLP.
7. Governing Law. This Amendment shall be construed according to and
governed by the internal laws of The Commonwealth of Massachusetts without
reference to principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized.
SIGNAL TECHNOLOGY CORPORATION
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: V.P. Finance
SIGNAL TECHNOLOGY SALES CORP.
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman, President
& CEO
BANKBOSTON, N.A.
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------
Name:
Title: Director
EXHIBIT E
SIGNAL TECHNOLOGY CORPORATION
BORROWING BASE REPORT
Period Covered: _________________________________
I. Accounts Receivable
1. Balance from prior period ____________
2. New sales ____________
3. Collections ____________
4. Ineligible: ____________
(a) more than 90 days ____________
(b) Contra Customers and
other ineligibles ____________
Total Ineligible ____________
5. Eligible Accounts
(1 + 2 - 3 - 4) ____________
6. Borrowing Base Value
(80% of 5) ____________
II. Availability
1. Borrowing Base value of Accounts ____________
2. Revolving Credit Loans Outstanding ____________
3. Maximum Drawing Amount of
Letters of Credit ____________
4. Total Outstandings (2 + 3) ____________
5. Availability (lesser of 1 or
$15 million, minus 4) ____________
SIGNAL TECHNOLOGY CORPORATION
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Date: ________________________ By: ___________________________
Title:
