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EIGHTH AMENDMENT TO
CREDIT AGREEMENT
THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as
of December 24, 1997, is made by and between MICRODYNE CORPORATION, a Maryland
corporation (the "Borrower"), CRESTAR BANK (the "Bank"), and CRESTAR BANK, as
agent (the "Agent").
RECITALS
The Borrower, the Bank, NBD Bank ("NBD") and the Agent are parties to
a Credit Agreement, dated as of January 27, 1995, as amended by the First
Amendment to Credit Agreement, dated as of October 26, 1995, the Second
Amendment to Credit Agreement, dated as of June 30, 1996, the Third Amendment
to Credit Agreement, dated as of August 19, 1996, the Fourth Amendment to
Credit Agreement, dated as of September 27, 1996, the Fifth Amendment to Credit
Agreement, dated as of March 14, 1997, the Sixth Amendment to Credit Agreement,
dated as of June 17, 1997, and the Seventh Amendment to Credit Agreement, dated
as of September 15, 1997 (as further amended, modified or supplemented from
time to time, the "Agreement"). Terms defined in the Agreement shall have the
same defined meanings when such terms are used in this Amendment.
The Bank has acquired from NBD all of its rights under the Agreement.
The Borrower, the Agent and the Bank have agreed to amend certain provisions of
the Agreement. Accordingly, for valuable consideration, the receipt and
sufficiency of which are acknowledged, the Borrower, the Bank and the Agent
agree as follows:
1. Each of the following definitions in Section 1.1 of the
Agreement is amended to read in its entirety:
"Advance Commitment" means $12,000,000 until March 31, 1998,
and $9,000,000 as of April 1, 1998, and at all times
thereafter; provided however that the Advance Commitment shall
be automatically reduced by the amount of any prepayment
required by Section 2.10(c).
"Annualized Cash Flow" means (a) for the fiscal quarter of the
Borrower ending on September 28, 1997, Cash Flow for such
fiscal quarter divided by .25; (b) for the fiscal quarter of
the Borrower ending on December 31, 1997, (1) Cash Flow for
such fiscal quarter plus Cash Flow for the immediately
preceding fiscal quarter, divided by (2) .50; (c) for the
fiscal quarter of the Borrower ending on March 31, 1998 (1)
Cash Flow for such fiscal quarter and the two immediately
preceding fiscal quarters, divided by (2) .75; and (d) for the
fiscal quarter of the Borrower ending on June 30, 1998, and
for each succeeding fiscal quarter, Cash Flow for such fiscal
quarter plus Cash Flow for the three immediately preceding
fiscal quarters.
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"Annualized EBITDA" means (a) for the fiscal quarter of the
Borrower ending on September 28, 1997, EBITDA for such fiscal
quarter divided by .25; (b) for the fiscal quarter of the
Borrower ending on December 31, 1997, (1) EBITDA for such
fiscal quarter plus EBITDA for the immediately preceding
fiscal quarter, divided by (2) .50; (c) for the fiscal quarter
of the Borrower ending on March 31, 1998 (1) EBITDA for such
fiscal quarter and the two immediately preceding fiscal
quarters, divided by (2) .75; and (d) for the fiscal quarter
of the Borrower ending on June 30, 1998, and for each
succeeding fiscal quarter, EBITDA for such fiscal quarter plus
EBITDA for the three immediately preceding fiscal quarters.
"Cash Flow" means, for any period, Net Income from continuing
operations of the Borrower and its Subsidiaries, plus, to the
extent deducted to determine Net Income, depreciation and
amortization, and, for any determination made after December
31, 1997, minus the amount by which aggregate capital
expenditures paid, accrued or incurred by the Borrower and its
Subsidiaries after June 30, 1997, exceed $3,500,000.
"Maximum Amount" means $12,000,000 until March 31, 1998, and
$9,000,000 as of April 1, 1998, and at all times thereafter;
provided, however, that the Maximum Amount shall be
automatically reduced by the amount of any prepayment required
by Section 2.10(c).
2. Section 2.10(d) of the Agreement is amended to read in its
entirety as follows:
"(d) The Borrower shall immediately prepay the Obligations
to the extent that (1) the Borrowing Base is less than 60% of
the Borrowing Base Loans at any time through March 31, 1998,
or (2) the Borrowing Base is less than 90% of the Borrowing
Base Loans as of April 1, 1998, or at any time thereafter. If
any mandatory prepayment is required with respect to
outstanding Letters of Credit, the amount of such prepayment
shall be held by the Agent in a cash collateral account, over
which the Agent shall have the exclusive power of withdrawal,
as security for the Obligations arising out of the LC
Agreements."
3. Subsection (7) of Section 7.1(b) is amended to read in its
entirety as follows:
"(7) the following information, in a format acceptable to the
Agent:
(i) On or before the fifteenth day of each fiscal month of
the Borrower, an Aging as of the most recently ended
fiscal month, accompanied by a Borrowing Base
Certificate calculating the Borrowing Base as of the
last day of the most recently ended fiscal month;
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(ii) On or before the last day of each fiscal month of the
Borrower through March 31, 1998, an Aging as of the
fifteenth day of such fiscal month, accompanied by a
Borrowing Base Certificate as of such fifteenth day of
such fiscal month;
(iii) Within 25 days after the end of each fiscal month of the
Borrower an Inventory summary for the fiscal month most
recently ended, together with a contract backlog report
for the ATD and a percent complete ATD Inventory Report;
(iv) Within 25 days after the end of each fiscal month of the
Borrower, a listing and aging of its accounts payable as
of the end of such fiscal month; and
(v) Within 30 days after the end of each fiscal month
through and including the fiscal month ending on March
31, 1998, a cash flow statement for such fiscal month."
4. Section 7.3 of the Agreement is amended to read in its
entirety as follows:
"SECTION 7.3 Financial Covenants. So long as any
Note shall remain unpaid, any Letter of Credit remains
outstanding or any Bank shall have any Commitment hereunder,
the Borrower shall:
(a) Tangible Net Worth. Maintain as of the end of each
fiscal quarter of the Borrower, Tangible Net Worth of not less
than (1) $6,200,000 as of September 28, 1997, and (2)
$8,250,000 as of December 31, 1997, and each fiscal quarter
thereafter.
(b) Funded Debt Ratio. Maintain as of the end of each
fiscal quarter of the Borrower a Funded Debt Ratio of not
greater than (a) 3 to 1 as of September 28, 1997 and December
31, 1997, and (b) 2.5 to 1 for each fiscal quarter thereafter.
(c) Debt Service Ratio. Maintain as of the end of each
fiscal quarter of the Borrower, beginning on September 28,
1997, a ratio of Annualized EBITDA to interest expense for the
12-month period then ended plus current maturities of
long-term Debt (excluding the Advances) scheduled to be repaid
during such 12-month period of not less than 1.65 to 1.
(d) Capital Expenditures. Not permit capital
expenditures for the fiscal quarter of the Borrower beginning
on June 30, 1997, and ending on December 31, 1997, to exceed
$3,500,000."
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5. Pursuant to Section 7.2(a) of the Agreement, the Bank hereby
consents to the sale and leaseback transaction between the Borrower and Mellon
US Leasing (Mellon) pursuant to which the Borrower will sell the Equipment of
the SSD to Mellon for $1,227,264.02 and lease such Equipment from Mellon for a
period of 36 months at a rental rate of $32,473.41 per month, and the Bank
agrees to release its Lien on such Equipment upon receipt by the Bank of the
net sales proceeds as a prepayment of the Obligations. Notwithstanding the
provisions of Section 2.10(c) and the definition of Maximum Amount, such
prepayment shall not reduce the Maximum Amount.
6. Except for the amendments to the Agreement expressly set forth
above, the Agreement and the other Loan Documents shall remain in full force
and effect. The Borrower acknowledges and agrees that this Amendment only
amends the terms of the Agreement and is not a novation, and the Borrower
ratifies and confirms the remaining terms and provisions of the Agreement and
the other Loan Documents in all respects. Nothing in this Agreement shall
require the Bank to grant any further amendments to or waivers of the terms of
the Loan Documents. The failure of the Borrower to perform or observe any
covenant or agreement contained herein shall constitute an Event of Default
under the Agreement.
7. The Borrower acknowledges and agrees that (a) there are no
defenses, counterclaims or setoffs against any of its obligations under the
Loan Document, and (b) the prior grant of a security interest in the Collateral
created by the Security Agreement and the Patent and Trademark Assignment
continues to secure the Obligations, is in full force and effect, and is
ratified and confirmed by the Borrower in all respects.
8. The Borrower represents and warrants that this Amendment has
been duly authorized, executed and delivered by it. All other representations
and warranties made by the Borrower in the Loan Documents are incorporated by
reference in this Amendment and are deemed to have been repeated as of the date
of this Amendment with the same force and effect as if set forth in this
Amendment, except that any representation or warranty relating to any financial
statements shall be deemed to be applicable to the financial statements most
recently delivered to the Bank in accordance with the provisions of the Loan
Documents.
9. The Borrower agrees to pay all costs and expenses incurred by
the Agent and the Bank in connection with this Amendment, including, but not
limited to, reasonable attorney fees.
10. This Amendment shall be governed by the laws of the
Commonwealth of Virginia, without reference to conflict of laws principles.
11. This Amendment may be executed by the parties individually or
in any combination, in one or more counterparts, each of which shall be an
original and all of which together constitute one and the same instrument.
[SIGNATURES ON FOLLOWING PAGE]
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WITNESS the following signatures.
BORROWER:
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MICRODYNE CORPORATION,
a Maryland corporation
By: /s/ Massoud Safaui
Name: Massoud Safaui
Title: C.F.O.
AGENT:
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CRESTAR BANK
By: /s/ Xxxxxx Xxxxxx
Xxxxxx X. Xxxxxx
Senior Vice President
BANK:
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CRESTAR BANK
By: /s/ Xxxxxx Xxxxxx
Xxxxxx X. Xxxxxx
Senior Vice President
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