THIRD MODIFICATION AGREEMENT
Exhibit 10.1
| DATE: | As of March 31, 2009 (the “Effective Date”) | |||
PARTIES:
|
Borrower: | WHITE ELECTRONIC DESIGNS CORPORATION, an Indiana corporation |
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| Bank: | JPMORGAN CHASE BANK, N.A., as Administrative Agent and Lender |
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RECITALS:
A. Bank has heretofore established in favor of Borrower a credit accommodation
(“Loan”) under that certain Credit Agreement, dated as of April 3, 2007 (as amended
from time to time, the “Credit Agreement”), in the original principal amount of
$30,000,000.00, which is evidenced by that certain Note (Revolving Loans), dated as of
April 3, 2007 (as amended from time to time, the “Note”). As of the Effective Date,
there is no outstanding principal balance on the Loan.
B. The Note, the Credit Agreement and the other documents evidencing and securing
the Loan (a) have heretofore been amended by that certain Modification Agreement,
dated February 12, 2008 (the “First Modification Agreement”), and (ii) that certain
Second Modification Agreement, dated August 15, 2008 (the “Second Modification
Agreement”), and (b) as heretofore modified are referred to hereinafter, jointly and
severally, as the “Credit Documents.”
C. All undefined capitalized terms used herein shall have the meaning given them
in the Credit Agreement.
D. The Loan is secured by, among other things, the Security Documents. The
agreements, documents, and instruments securing the Loan and the Credit Agreement are
referred to individually and collectively as the “Security Documents.”
E. Borrower has requested that Bank further modify the Loan and the Credit
Documents as provided herein. Bank is willing to so modify the Loan and the Credit
Documents, subject to the terms and conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:
SECTION 1. ACCURACY OF RECITALS, ACKNOWLEDGMENTS.
1.1 Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATION OF CREDIT DOCUMENTS; OTHER AGREEMENTS.
2.1 Section 1.01 of the Credit Agreement is hereby amended by the
addition of the following definitions of in their respective correct
alphabetic positions:
“Adjusted One Month LIBOR Rate” means an interest rate
per annum equal to the sum of (i) 2.50% per annum plus (ii) the
Adjusted LIBO Rate for a one month Interest Period on such day (or
if such day is not a Business Day, the immediately preceding
Business Day); provided that, for the avoidance of doubt, the
Adjusted LIBO Rate for any day shall be based on the rate appearing
on the Reuters Screen LIBOR01 Page (or on any successor or
substitute page) at approximately 11:00 a.m. London time on such day
(without any rounding).
“CB Floating Rate” means the Prime Rate; provided that
the CB Floating Rate shall never be less than the Adjusted One Month
LIBOR Rate for a one month Interest Period on such day (or if such
day is not a Business Day, the immediately preceding Business Day).
Any change in the CB Floating Rate due to a change in the Prime Rate
or the Adjusted One Month LIBOR Rate shall be effective from and
including the effective date of such change in the Prime Rate or the
Adjusted One Month LIBOR Rate, respectively.
“CBFR,” when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by reference to
the CB Floating Rate.
2.2 Section 1.01 of the Credit Agreement is hereby amended by the
deletion of the definitions of the terms “ABR” and “Alternate Base Rate.”
2.3 The definition of “Applicable Rate” in Section 1.01 of the Credit
Agreement is hereby amended to read as follows:
“Applicable Rate” means, for any day, with respect to
any CBFR Loan or Eurodollar Loan, or with respect to the facility
fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption “CBFR Spread,” “Eurodollar
Spread,” “Facility Fee Rate,” or “LC Rate” as the case may be:
| CBFR | Eurodollar | Facility Fee | ||||
| Spread | Spread | Rate Per Annum | LC Rate | |||
| 1.0% | 2.65% | 0.5% | 1.50% |
2.4 The definition of “EBITDA” in Section 1.01 of the Credit
Agreement is hereby amended to read, in its entirety, as follows:
“EBITDA” means, as applied to any Person, the Net
Income of such Person (excluding the effect of any non-cash goodwill
impairments or non-cash gains or losses from discontinued
operations) plus interest expense, plus depreciation expense, plus
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amortization expense, plus income tax expense, plus non-cash
non-recurring expense, minus non-cash non-recurring income, and
minus extraordinary gains, all as determined in accordance with
GAAP, and all computed for any period of twelve consecutive months.
2.5 The definition of “interest Period” in Section 1.01 of the Credit
Agreement is hereby amended to read, in its entirety, as follows:
“Interest Period” means with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day in the calendar month
that is one, three or six months thereafter, as the Borrower may
elect; provided that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (ii) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is
made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
2.6 The definition of “LIBO Rate” in Section 1.01 of the Credit Agreement
is hereby amended to read as follows:
“LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Reuters Screen LIBOR01
Page (or on any successor or substitute page thereof, or any
successor to or substitute for such page, providing rate quotations
comparable to those currently provided on such page, as determined by
the Bank from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank
market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, as the rate for
dollar deposits with a maturity comparable to such Interest Period.
In the event that such rate is not available at such time for any
reason, then the “LIBO Rate” with respect to such Eurodollar
Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of the Bank in
immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
2.7 The definition of “Prime Rate” in Section 1.01 of the Credit
Agreement is hereby amended to read as follows:
“Prime Rate” means the rate of interest per annum
publicly announced from time to time by JPMorgan Chase Bank, N.A. as
its prime rate; each change in the Prime Rate
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shall be effective from and including the date such change is publicly announced
as being effective. The Prime Rate is a reference rate and is not necessarily
the lowest rate.
2.8 The definition of “Revolving Loan Maturity Date” in Section 1.01 of the
Credit
Agreement is hereby amended to read as follows:
“Revolving Loan Maturity Date” means March 31, 2011.
2.9 From and after the date hereof, the following terms and conditions will
govern the
Loan:
(a) The parties agree that the maximum aggregate amount of the Commitment of all
Lenders is hereby reduced from $30,000,000 to $10,000,000. In furtherance thereof,
each reference in the Note, the Credit Agreement and the other Credit Documents to
$30,000,000 is used to signify the maximum amount of Loan, is hereby replaced by
$10,000,000.
(b) The parties further agree that the interest rate borne by Loans and
Borrowings may no longer be related to “ABR” and “Alternate Base Rate,” each of which
is intended to be eliminated hereby. Therefore, Borrower’s right to choose the
interest rate applicable to any Loan or Borrowing (i) will no longer include the
right to have such Loan or Borrowing bear interest with reference to the Alternate
Base Rate, but (ii) will include the right to have such Loan or Borrowing bear
interest with reference to the CB Floating Rate or the Adjusted LIBO Rate. In
furtherance thereof, wherever the term “ABR” is used in the Credit Agreement, it is
hereby deleted and replaced by the term “CBFR,” as defined herein, and wherever the
term “Alternate Base Rate” is used in the Credit Agreement, it is hereby deleted and
replaced by the term “CB Floating Rate.”
(c) If Borrower elects to have a Loan or Borrowing bear interest with reference
to the Adjusted LIBO Rate, such Loan or Borrowing must have an original, aggregate
principal amount of not less than $100,000. Borrower acknowledges and agrees that
there may not be more than five (5) Eurodollar Loans outstanding at any one time.
2.10 Section 5.01(b) of the Credit Agreement is hereby amended by deleting “sixty
(60) days” from the second and third lines thereof, and substituting therefor
“forty-five (45) days.”
2.11 Section 5.01(c) of the Credit Agreement is hereby amended to read in its
entirety as follows:
(c) a certificate of a Financial Officer of the Borrower
substantially in the form of Exhibit “C” (i) certifying as to
whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with
Section 6.09 and (iii) stating whether any change in GAAP or
in the application thereof has occurred since the date of the
audited financial statements referred to in Section 3.04 and,
if any such change has occurred,
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specifying the effect of such change on the
financial statements accompanying such certificate.
Such certificate must be delivered (1) concurrently
with each delivery of financial statements under
clause (a) or (b) above, (2) unless Borrower’s
financial statements have been furnished within 90
days prior to at Borrower’s request that a Loan or
Borrowing be made hereunder, at the time of
Borrower’s making such request, and (3) within
forty-five (45) days of the last day of each month,
whenever there are Loans or Borrowings outstanding;
and
2.12 Section 6.06 of the Credit Agreement is hereby amended to read in its
entirety as
follows:
6.06 Restricted Payments. Permit any of its
Subsidiaries to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted
Payment, except (i) the Borrower may declare and
pay dividends with respect to its Equity Interests
payable solely in additional shares of its common
stock, (ii) Subsidiaries may declare and pay
dividends ratably with respect to their Equity
Interests, (iii) the Borrower may make Restricted
Payments pursuant to and in accordance with stock
option plans or other benefit plans for management
or employees of the Borrower and its Subsidiaries,
(iv) the Borrower may purchase, redeem or otherwise
acquire up to, but no more than, twenty percent
(20%) of its common stock prior to the termination
of this Agreement, and (v) cash dividends and
distributions paid on the common stock of Borrower;
provided, for purpose of this clause (v), that (1)
no Default has occurred and is continuing at the
time such dividend or distribution is paid, (2) the
aggregate amount of all such Restricted Payments
pursuant to this clause (v) made by Borrower in any
fiscal year docs not exceed 50% of Net Income (if
greater than $0) earned during the immediately
preceding fiscal year, and (3) if Restricted
Payments made pursuant to this clause (v) in any
fiscal year are less than permitted in such fiscal
year, the excess permitted amount for such fiscal
year may be carried forward to the next succeeding
fiscal year.
2.13 Section 6.09 of the Credit Agreement is hereby amended to read, in its
entirety, as
follows:
Section 6.09 Financial Covenants. The Borrower will not:
(a) Minimum EBITDA. Permit at any time
its EBITDA to be less than $4,500,000.
(b) Minimum Liquidity. Permit at any
time the sum of (i) its unencumbered cash, and
(ii) the market value of its
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unencumbered marketable securities held at JPMorgan Chase Bank,
N.A. to be less than $20,000,000.
(c) Acquisitions. Permit at any time its expenditures on
Permitted Acquisitions during the period from March , 2009, to
March 31, 2011, to exceed $10,000,000, without Bank’s prior written
consent.
2.14 The Credit Agreement is hereby amended by replacing the current form of Exhibit “C”
attached thereto, with the form of such Compliance Certificate in the form attached hereto as
Attachment “1.”
SECTION 3. RATIFICATION OF CREDIT DOCUMENTS AND COLLATERAL.
The Credit Documents are ratified and affirmed by Borrower and shall remain in full force and
effect as modified herein. Any property or rights to or interests in property granted as security
in the Credit Documents shall remain as security for the Loan and the obligations of Borrower in
the Credit Documents.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Bank:
4.1 No default or event of default under any of the Credit Documents as modified herein, nor
any event, that, with the giving of notice or the passage of time or both, would be a default or
an event of default under the Credit Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial condition of Borrower or any
other person whose financial statement has been delivered to Bank in connection with the Loan from
the most recent financial statement received by Bank.
4.3 Each and all representations and warranties of Borrower in the Credit Documents are
accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with respect to the Loan or
the Credit Documents as modified herein.
4.5 The Credit Documents as modified herein are the legal, valid, and binding obligation of
Borrower, enforceable against Borrower in accordance with their terms.
4.6 Borrower is validly existing under the laws of the State of its formation or organization
and has the requisite power and authority to execute and deliver this Agreement and to perform the
Credit Documents as modified herein. The execution and delivery of this Agreement and the
performance of the Credit Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and delivered on behalf
of Borrower.
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SECTION 5. BORROWER COVENANTS.
Borrower covenants with Bank:
5.1 Borrower shall execute, deliver, and provide to Bank such additional agreements,
documents, and instruments as reasonably required by Bank to effectuate the intent of this
Agreement.
5.2 Borrower fully, finally, and absolutely and forever releases and discharges Bank and its
present and former directors, shareholders, officers, employees, agents, representatives,
successors and assigns, and their separate and respective heirs, personal representatives,
successors and assigns, from any and all actions, causes of action, claims, debts, damages,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law or equity of
Borrower, whether now known or unknown to Borrower, and whether contingent or matured, (i) in
respect of the Loan, the Credit Documents, or the actions or omissions of Bank in respect of the
Loan or the Credit Documents and (ii) arising from events occurring prior to the date of this
Agreement.
5.3 Borrower hereby agrees that, from and after the date hereof, it shall maintain Bank as
its principal depository bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts, disbursement services and investment financial
services.
SECTION 6. CONDITIONS.
6.1 The agreements of Bank and the modifications contained herein shall not be binding upon
Bank until Bank has executed and delivered this Agreement and Bank has received, at Borrower’s
expense, all of the following, all of which shall be in form and content satisfactory to Bank and
shall be subject to approval by Bank:
(a) An original of this Agreement fully executed by the Borrower and Guarantors.
(b) Such resolutions or authorizations and such other documents as Bank may require relating
to the existence and good standing of that corporation, partnership or trust, and the authority of
any person executing this Agreement or other documents on behalf of that corporation, limited
liability company, partnership or trust.
(c) Payment of all the internal and external costs and expenses incurred by Bank in
connection with this Agreement (including, without limitation, inside and outside attorneys,
appraisal, appraisal review, processing, title, filing, and recording costs, expenses, and fees).
SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
The Credit Documents as modified herein contain the complete understanding and agreement of
Borrower and Bank in respect of the Loan and supersede all prior representations,
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warranties, agreements, arrangements, understandings, and negotiations. No
provision of the Credit Documents as modified herein may be changed,
discharged, supplemented, terminated, or waived except in a writing signed
by the parties thereto.
SECTION 8. BINDING EFFECT.
The Credit Documents as modified herein shall be binding upon and
shall inure to the benefit of Borrower and Bank and their successors and
assigns and the executors, legal administrators, personal representatives,
heirs, devisees, and beneficiaries of Borrower, provided, however,
Borrower may not assign any of its right or delegate any of its obligation
under the Credit Documents and any purported assignment or delegation
shall be void.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of
law principles.
SECTION 10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall
constitute one and the same document. Signature pages may be detached from
the counterparts and attached to a single copy of this Agreement to
physically form one document.
DATED as of the date first above stated.
| WHITE ELECTRONIC DESIGNS CORPORATION, an Indiana corporation |
||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | VP/CFO | |||
BORROWER
| JPMORGAN CHASE BANK, N.A., individually and as Administrative Agent |
||||
| By: | /s/ Xxxxxxx X. Xxxx | |||
| Name: | Xxxxxxx X. Xxxx | |||
| Title: | SVP | |||
BANK
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EXHIBIT “C”
COMPLIANCE CERTIFICATE
This Compliance Certificate (this “Certificate”) is executed and
delivered pursuant to and in accordance with the provisions of that
certain Credit Agreement, dated as of April 3, 2007 (as amended, modified,
extended or restated from time to time, the “Credit Agreement”), among
WHITE ELECTRONIC DESIGNS CORPORATION, an Indiana corporation (“Borrower”),
the Lenders party thereto and JPMORGAN CHASE BANK, N.A., as Administrative
Agent (“Bank”). All capitalized terms used in this Certificate, if not
otherwise defined herein, shall have the respective meanings assigned to
such terms under the Credit Agreement.
The undersigned hereby represents and warrants to Bank as follows:
1. Authority. The undersigned is a Financial Officer of Borrower.
2. Review. The undersigned has reviewed (a) the activities of Borrower
during Borrower’s
fiscal period ending , 20
(the “Subject Fiscal Period”), (b) the financial condition
of
Borrower as of the last day of the Subject Fiscal Period, and (c) the
Credit Agreement and all of the other Credit Documents.
3. Compliance. Based upon my review of the financial
condition of Borrower and the other
information and documents described in paragraph 2 above, Borrower
(a) has observed, performed and
fulfilled its obligations and covenants contained in the Credit
Agreement and the other Credit Documents,
(b) without limiting the generality of Borrower’s statement in clause
(a) of this paragraph 3, Borrower is
in full compliance with its obligations under Sections 6.01 through
6.08, inclusive, of the Credit
Agreement, and (c) no Default or Event of Default has occurred and is
continuing or, if any Default or
Event of Default has occurred, the nature and status of such Default
or Event of Default is described as
follows:
4. GAAP. No change in GAAP or in the application thereof has
occurred since the date of
the financial statements accompanying this certificate or if any
change has occurred, the effect of such
change in the said financial statements is
as follows:
5. Financial Covenants. The financial information of Borrower that the
undersigned has
provided below demonstrates the Borrower’s compliance with the financial
covenants set forth in Section 6.09 of the Credit Agreement. All of such
financial information is true and correct as of the last day of the
Subject Fiscal Period (unless another date or a specific time period is
stated). The Subsections specifically referenced below have been provided
to identify the applicable provision in the Credit Agreement which covers
the subject financial covenant. All financial covenants are calculated on
a consolidated basis:
Page 1 of 2
(a) EBITDA. Borrower shall not permit its
EBITDA to be at any time less than $4,500,000.
Net Income: |
$ | |||
(excluding certain items per the Credit Agreement) |
||||
Plus Interest Expense: |
$ | |||
Plus Depreciation Expense: |
$ | |||
Plus Amortization Expense: |
$ | |||
Plus Income Tax Expense: |
$ | |||
Plus Non-Cash Non-Recurring Expense: |
$ | |||
Less Non-Cash Non-Recurring Income: |
$ | |||
Less Extraordinary Gains: |
$ | |||
Total: |
$ |
(b) Minimum Liquidity. Borrower shall not
permit the sum of (i) its unencumbered cash, and (ii) the
market value of its unencumbered marketable securities held at JPMorgan Chase Bank, N.A. to be less than $20,000.000.
Unencumbered cash on deposit with Bank: |
$ | |||
Value of its unencumbered marketable securities held with Bank: |
$ | |||
Total |
$ |
(c) Acquisitions. Borrower shall not permit at any time its
expenditures on
Permitted Acquisitions during the period from March __, 2009, to March 31, 2011 to
exceed $10,000,000, without Bank’s prior written consent.
Permitted Acquisitions since March , 2009: |
$ |
Dated:
| WHITE ELECTRONIC DESIGNS CORPORATION |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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