AMENDMENT AGREEMENT NO. 5 TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT
This AMENDMENT AGREEMENT NO. 5 (this "Amendment"), dated as of December
15, 1997, 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 the same may be 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 defined terms are hereby deleted from Section 1
of the Credit Agreement: (i) "Arizona Term Loan", (ii) "Fixed Rate", (iii)
"Fixed Rate Amount", (iv) "Fixed Rate Prepayment Penalty", and (v) "Florida Term
Loan".
(b) The definition of the term "Base Rate Loans" is hereby
amended by deleting therefrom the words "Revolving Credit".
(c) The definition of the term "Companies" is hereby amended to
refer to "Signal Technology Corporation, a Delaware corporation, and Signal
Technology Sales Corp., a United States Virgin Islands Corporation".
(d) The defined term "Consolidated Net Earnings Available for
Interest Charges" is hereby deleted and the following is inserted in
substitution therefor:
"Consolidated Net Earnings Available for Debt Service - for any
period, (a) Consolidated Net Income
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for such period, plus (b) interest paid or accrued by STC and its
Subsidiaries with respect to all Indebtedness for such period
(excluding any interest taken into account in the computation of
Consolidated Net Earnings Available for Debt Service in any prior
period), plus (c) all taxes for such period which are imposed on or
measured by income after deduction of Interest Changes, plus (d)
depreciation and amortization (determined with respect to STC and its
Subsidiaries on a consolidated basis in accordance with generally
accepted accounting principles), minus (e) the sum of (i) Capital
Expenditures and (ii) federal and state income taxes actually paid in
cash during such period."
Each reference in the Credit Agreement to "Consolidated Net Earnings Available
for Interest Charges" is hereby amended to refer to "Consolidated Net Earnings
Available for Debt Service".
(e) The following new defined term is hereby inserted in Section
1 of the Credit Agreement, immediately following the defined term "Consolidated
Tangible Net Worth":
"Debt Service - for any period, the sum of (i) Interest Charges
for such period, plus (iii) the aggregate amount of all principal
payments made, accrued or becoming due during such period in respect
of the Real Estate Term Loans."
(f) The definition of the term "Drawdown Date" is hereby amended
to read in its entirety as follows:
"Drawdown Date - the date on which any Loan is made or is to be
made, and the date on which any Loan is converted or converted or
continued in accordance with ss.2.9 or ss.3.4."
(g) The definition of the term "Eurodollar Rate" is hereby
amended by inserting the phrase "or Term Loan Interest Period" immediately
following the term "Interest Period" in each place that such term appears in
said definition.
(h) The definition of the term "Eurodollar Rate Loans" is hereby
amended by deleting therefrom the words "Revolving Credit".
(i) The definitions of the terms "FNBB" and "the Bank" are hereby
amended to refer to "BankBoston, N.A., a national banking association formerly
known as The First National Bank of Boston".
(j) The definition of the term "Interest Payment Date" is hereby
amended by inserting the phrase "or Term Loan Interest Period" immediately
following the term "Interest Period" in each place that such term appears in
said definition.
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(k) The following new defined term is hereby inserted in Section
1 of the Credit Agreement, immediately following the term "Proprietary Rights":
"Real Estate Term Loan Maturity Date - January 31, 2003".
(1) The definition of the term "Real Estate Term Loans" is hereby
amended to read "see ss.3.1".
(m) The following new defined term is hereby inserted in Section
1 of the Credit Agreement, immediately following the defined term "Subsidiary":
"Term Loan Interest Period - with respect to any portion of the
Real Estate Term Loans, (a) initially, the period commencing on the
Drawdown Date of such portion of the Real Estate Term Loans and ending
on the last day of one of the periods set forth below, as selected by
the Companies when borrowing such portion of the Real Estate Term
Loans: (i) for any Base Rate Loan, the applicable calendar quarter;
and (ii) for any Eurodollar Rate Loan, 1, 2 or 3 months; and (b)
thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such portion of the Real
Estate Term Loans and ending on the last day of one of the periods set
forth above, as selected by the Companies when converting or
continuing the Type of such portion of the Real Estate Term Loans;
provided that all of the foregoing provisions relating to Term Loan
Interest Periods are subject to the following:
(A) if any Term Loan Interest Period with respect to a
Eurodollar Rate Loan would otherwise end on a day that is not a
Eurodollar Business Day, that Term Loan Interest Period shall be
extended to the next succeeding Eurodollar Business Day unless the
result of such extension would be to carry such Term Loan Interest
Period into another calendar month, in which event such Term Loan
Interest Period shall end on the immediately preceding Eurodollar
Business Day;
(B) if any Term Loan Interest Period with respect to a Base
Rate Loan would end on a day that is not a Business Day, that Term
Loan Interest Period shall end on the next succeeding Business Day;
(C) if the Companies shall fail to give notice as provided in
ss.3.4, the Companies shall be deemed to have requested a conversion
of the affected Eurodollar Rate Loan to a Base Rate Loan on the last
day of the then current Term Loan Interest Period with respect
thereto;
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(D) any Term Loan Interest Period that begins on the last
Eurodollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Term Loan Interest Period) shall end on the last
Eurodollar Business Day of a calendar month; and
(E) any Term Loan Interest Period relating to any Eurodollar
Rate Loan that would otherwise extend beyond the Real Estate Term Loan
Maturity Date shall end on the Real Estate Term Loan Maturity Date."
(n) The definition of the term "Type" is hereby amended to read
in its entirety as follows:
"Type - as to any Loan or portion thereof its nature as a Base
Rate Loan or a Eurodollar Rate Loan."
1.2 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.
(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
1.75% per annum."
1.3 Amendment of Section 3. Section 3 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"3. THE REAL ESTATE TERM LOANS.
ss.3.1 Making of the Loans. The Companies and the Bank
acknowledge and agree that the Bank (a) on March 31, 1993, advanced
funds to the Companies on a joint and several basis for the purposes
of funding the acquisition of the Arizona Real Estate, and (b) on
April 14, 1992 advanced funds to the Companies on a joint and several
basis for the purpose of funding the acquisition of the Fort Xxxxxx
Real Estate. The Bank agrees to make an additional advance to the
Companies, on a joint and several basis, on December 15, 1997, in an
amount equal to the sum of (i) $6,000,000, minus (ii) the aggregate
outstanding principal amount of the advances referred to in the
immediately preceding sentence (such previous advances and such
additional
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advances are herein collectively referred to as the "Real Estate Term
Loans"). The proceeds of such additional advance shall be used solely
to (i) repay Revolving Credit Loans that were incurred to finance the
acquisition of the Companies' facility in Beverly, Massachusetts and
(ii) pay costs and expenses incurred by the Companies in connection
with such acquisition and the amendment of the Loan Documents to
reflect such additional advance.
ss.3.2 Repayment of Real Estate Term Loans. The Companies jointly
and severally and irrevocably and unconditionally promise to repay to
the Bank the Real Estate Term Loans in twenty-two (22) remaining
installments due and payable on the first Business Day of each
January, April, July and October of each year, commencing January 1,
1998, and with the final installment due and payable on the Real
Estate Term Loan Maturity Date; each of the first twenty-one (21) such
installments shall be in an amount equal to $100,000 and the last
installment shall be in an aggregate amount equal to the unpaid
balance of the Real Estate Term Loans.
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.
(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 one and
three-quarters percent (1.75%) per annum above the Eurodollar Rate
determined for each such Term Loan Interest Period.
(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.
ss.3.4 Conversion Options.
(a) The Companies may elect from time to time to convert any
portion of the outstanding Real Estate Term Loans to Real Estate Term
Loans of another Type, provided that (i) with respect to any such
conversion of a Eurodollar Rate Loan into Real Estate
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Term Loans of another Type, such conversion shall only be made on the
last day of the Term Loan Interest Period with respect thereto; (ii)
with respect to any such conversion of a Base Rate Loan to a
Eurodollar Rate Loan, the Companies shall give the Bank at least three
(3) Eurodollar Business Days' prior written notice of such election;
and (iii) no Loan may be converted into a Eurodollar Rate Loan when
any Default or Event of Default has occurred and is continuing. All or
any part of outstanding Real Estate Term Loans of any Type may be
converted as provided herein, provided that partial conversions shall
be in an aggregate principal amount of $500,000 or a larger integral
multiple of $100,000. Each request relating to the conversion of any
portion of the Revolving Credit Loans to a Eurodollar Rate Loan shall
be irrevocable by the Companies.
(b) Real Estate Term Loans of any Type may be continued as
such upon the expiration of a Term Loan Interest Period with respect
thereto by compliance by the Companies with the notice provisions
contained in ss.3.4(a); provided that no Eurodollar Rate Loan may be
continued as such when any Default or Event of Default has occurred
and is continuing, but shall be automatically converted to a Base Rate
Loan on the last day of the first Term Loan Interest Period relating
thereto ending during the continuance of any Default or Event of
Default of which the officers of the Bank active upon the Companies'
account have actual knowledge.
(c) Any conversion to or from Real Estate Term Loans that are
Eurodollar Rate Loans shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurodollar Rate Loans having the same Interest
Period shall not be less than $500,000 or a larger integral multiple
of $100,000 in excess thereof.
ss.3.5 Prepayment. Subject to the provisions of ss.5.13, the
Companies shall have the right at any time to prepay the Real Estate
Term Loans as a whole or in part, with accrued interest to the date of
prepayment on the amount prepaid; provided that each partial
prepayment thereof shall be in the aggregate amount of $50,000 or an
integral multiple thereof. The Companies shall give the Bank at least
three (3) Business Days' prior written notice of any such proposed
prepayment pursuant to this ss.3.5 of Eurodollar Rate Loans,
specifying the proposed date of such prepayment and the principal
amount to be prepaid. Each partial prepayment shall be applied to the
then last maturing installment or installments of principal in inverse
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order of their maturity. Whenever any interest on, and any principal
of the Real Estate Term Loans are paid simultaneously hereunder, the
whole amount paid shall be applied first to interest accrued and
unpaid on the Real Estate Term Loan and then to principal."
1.4 Amendment of Section 5.1. Section 5.1 of the Credit Agreement
is hereby amended by deleting therefrom the phrase "or, in the case of Fixed
Rate Amounts, two percent (2%) above the applicable Fixed Rate,".
1.5 Amendment of Section 5.2. Section 5.2 of the Credit Agreement
is hereby amended by inserting the phrase "or "Term Loan Interest Period""
immediately following the term "Interest Period" in the sixth line of said
Section 5.2.
1.6 Deletion of Sections 5.7 and 5.8. Sections 5.7 and 5.8 of the
Credit Agreement are hereby deleted in their entirety and the following is
hereby inserted in substitution therefor:
"ss.5.7 [INTENTIONALLY DELETED].
ss.5.8 [INTENTIONALLY DELETED]".
1.7 Amendment of Section 5.9. Section 5.9 of the Credit Agreement
is hereby amended by deleting therefrom the phrase "any Fixed Rate Amounts", in
each place such phrase appears in said Section 5.9.
1.8 Amendment of Section 5.11. Section 5.11 of the Credit
Agreement is hereby amended by inserting the phrase "or any Term Loan Interest
Period" immediately following the phrase "Interest Period" in each place such
phrase appears in said Section 5.11.
1.9 Amendment of Section 5.12. Section 5.12 of the Credit
Agreement is hereby amended by (a) deleting the term "Revolving Credit" in each
place such phrase appears in said Section 5.12, and (b) inserting the phrase "or
any Term Loan Interest Period" immediately following the term "Interest Period"
in the eighth line of said Section 5.12.
1.10 Amendment of Section 5.13. Section 5.13 of the Credit
Agreement is hereby amended by (a) inserting the phrase "or ss.3.4" immediately
following the term "ss.2.9" in clause (a) of said Section 5.13, and (b)
inserting the phrase "or any Term Loan Interest Period" immediately following
the term "Interest Period" in clause (c) of said Section 5.13.
1.11 Amendment of Section 12.7. Section 12.7 of the Credit
Agreement is hereby amended to read in its entirety as follows:
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"ss.12.7 Net Worth. Permit at any time Consolidated Tangible Net
Worth to be less than the amount equal to the sum of $32,000,000 plus,
on a cumulative basis, 50% of positive Consolidated Net Income for the
fiscal quarter ending December 31, 1997 and each fiscal quarter ending
thereafter."
1.12 Amendment of Section 12.8. Section 12.8 of the Credit
Agreement is hereby deleted and the following is hereby inserted in substitution
therefor:
"ss.12.8 Debt Service Coverage. Permit the ratio of (a)
Consolidated Net Earnings Available for Debt Service for any fiscal
quarter to (b) aggregate Debt Service for such fiscal quarter, to be
less than 3 to 1."
1.13 Amendment of Section 23. Subsection (b) of Section 23 of the
Credit Agreement is hereby amended to read in its entirety as follows:
"(b) if to the Bank, at 000 Xxxxxxx Xxxxxx, 00-00-00, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attn: Xxxxxxx X. Xxxxxxxx, Director, or such
other address for notice as the Bank shall have last furnished in
writing to the Person giving such notice; with a copy to Xxxxxxx X.
Xxxxxx, Esq., Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000."
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
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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, 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) an interest rate swap agreement with the Bank covering the
entire outstanding principal balance of the Real Estate Loans (after giving
effect to additional advances contemplated by this Amendment) having terms and
conditions acceptable to the Bank;
(c) 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;
(d) payment of an amendment fee of $40,000; and
(e) any other confirmatory or corporate authority document or
instrument the Bank may reasonably request.
4. Title Insurance Endorsements and Good Standing Certificates. Not
later than by January 9, 1998, the Companies shall: (a) execute, deliver and
cause to be recorded amendments to each of the Mortgages (the "Mortgage
Amendments"), dated as of the date of this Amendment, which Mortgage Amendments
shall provide, among other things, that (i) the Credit Agreement has been
amended through and including this Amendment and (ii) the obligations under the
Credit Agreement (as amended) that are secured by the Mortgages shall be limited
to the Secured Obligations, and which Mortgage Amendments shall be in form
satisfactory to the Bank in its sole discretion and shall be prepared by the
Bank at the Companies' expense; (b) deliver to the Bank endorsements to the
existing title insurance policies issued to the Bank with respect to the
Mortgages, amending such policies so that (i) the insured amount of each such
policy is no less than the current appraised value of the property covered
thereby, (ii) the effective date of each such policy (as affected by the
endorsements) is no earlier than the effective date of this Amendment and (iii)
the mortgage insured by each such policy shall be the applicable Mortgage as
amended by the applicable Mortgage Amendment, without exception for any liens,
encumbrances or other matters affecting title to or possession of the property
not disclosed in the existing title insurance policies, except for real estate
taxes not yet due and payable at the time the Mortgage Amendments are effective,
provided, however, that if the
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endorsements are not able to be issued without taking any such exception then
the Companies shall have an additional forty-five (45) days (i.e. to February
23, 1998) in which to remove all such exceptions from title and cause the
endorsements to be issued without any such exceptions; and (c) deliver to the
Bank a certificate from the appropriate governmental authority as to the
continued existence and good standing of Sales under the laws of the United
States Virgin Islands. Failure of the Companies to comply with this Section 4
shall constitute an Event of Default.
5. Waiver of Noncompliance with Interest Coverage Covenant. The Bank
hereby waives the Companies' noncompliance with Section 12.8 of the Credit
Agreement (as in effect prior to giving effect to this Amendment) for the period
ended September 30, 1997.
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 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/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: CEO & Chairman
SIGNAL TECHNOLOGY SALES CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Secretary
BANKBOSTON, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name Xxxxxxx X. Xxxxxxxx
Title: Director
