January 31, 2001
REMEC, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxxxx
Chief Financial Officer
Re: REMEC Inc. Trust 1998 A - Fifth Amendment ("Amendment") to the
Participation Agreement, dated as of August 25, 1998 (the
"Participation Agreement").
Dear Xxxx:
This Fifth Amendment to the Participation Agreement (the "Fifth
Amendment"), dated as of January 31, 2001, is entered into among REMEC Inc., a
California corporation, as Lessee; Union Bank of California, N.A. not in its
individual capacity except as expressly stated herein but solely as Certificate
Trustee; the Persons named on Schedule 1-A of the Participation Agreement
(together with their respective permitted successors, assigns and transferees,)
as Certificate Purchasers; the Persons listed on Schedule 1-B of the
Participation Agreement (together with their respective permitted successors,
assigns and transferees), as Lenders; and Union Bank of California, N.A. as
Agent.
WITNESSETH:
Whereas, Lessee, Lessor, Agent, the Certificate Purchasers and the
Lenders have entered into that certain Participation Agreement, dated as of
August 25, 1998 (as amended by those certain First, Second, Third, and Fourth
Amendments to the Participation Agreement, dated as of September 29, 1998,
September 21, 1999, February 24, 2000, and April 20, 2000, respectively, the
"Participation Agreement") (capitalized terms used herein without definition
shall have the same meanings ascribed to them in Appendix 1 to the Participation
Agreement; and
WHEREAS, the parties hereto desire to enter into this Amendment in
order to amend the Participation Agreement with respect to the matters provided
for in this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
terms and conditions herein contained, and for other good and valuable
consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. MODIFICATION TO PARTICIPATION AGREEMENT. The parties hereto
amend the Participation Agreement as follows and all references to the words
"Participation Agreement" shall hereinafter refer to the Participation Agreement
as amended by this Section 1.
1.1 Section 5.2 of the Participation Agreement is amended
and restated in its entirety to read as follows:
Section 5.2. LIENS. Lessee will not, and will not
permit any Subsidiary to, create, assume or suffer to exist any mortgage,
pledge, security interest, encumbrance, or lien (other than for taxes not
delinquent and for taxes and other items being contested in good faith) on
property of any kind, whether real, personal or mixed, now owned or hereafter
acquired, or upon the income of profits thereof except to Bank, except for (a)
minor encumbrances and easements on real property which do not affect its market
value, (b) existing liens on Lessee's personal property, (c) future purchase
money security interests encumbering only the personal property purchased or (d)
liens that may exist between February 1, 2001 and July 31, 2001 as related to
the acquisition of Pacific Microwave Corporation. Notwithstanding the foregoing,
Lessee shall not incur or suffer to exist any Lien on the Leased Property or
other Lease Collateral other than Permitted Liens.
1.2 Section 5.6 of the Participation Agreement is amended
adding section (k) to read as follows:
(k) As soon as available, and in any event not
later than ninety (90) days after the commencement of each Fiscal Year, a
quarterly budget for that Fiscal Year including a consolidating balance sheet,
profit and loss statement, statement of cash flow and schedule of capital
expenditures all in reasonable detail.
1.3 Section 5.18 of the Participation Agreement is
amended and restated in its entirety to read as follows:
Section 5.18. BORROWINGS. Lessee will not, and will
not permit any Subsidiary to, borrow any money, become contingently liable to
borrow money, nor enter any agreement to directly or indirectly obtain borrowed
money, except: a) pursuant to agreements made with UBOC, b) loans and other
borrowings secured by liens permitted by Section 5.2, c) obligations incurred by
AirTech under shipside bond facilities referred to in Section 5.19(a)(iv), d)
related debt created through the acquisition of Pacific Microwave Corporation
from date of acquisition through July 31, 2001 and e) a Two Million Pound
Sterling (GBP 2,000,000) unsecured foreign exchange facility entered into by
AirTech Plc with National Westminster Bank, Plc.
2
1.4 Section 5.19 of the Participation Agreement is
amended and restated in its entirety to read as follows:
Section 5.19. LOANS, ADVANCES AND GUARANTIES. Lessee
will not, and will not permit any Subsidiary to, except in the ordinary course
of business as currently conducted, make any loans or advances, become a
guarantor or surety, pledge its credit or properties in any manner or extend
credit; provided, however, that lessee may (i) make loans or advances to its
Affiliates or Subsidiaries, (ii) guarantee the obligations of AirTech to
National Westminster Bank, Plc arising under the new foreign exchange facility
in an amount not to exceed Two Million Pounds Sterling (GBP 2,000,000), and
(iii) guarantee the obligations of AirTech arising under any shipside bond
facility in an amount not to exceed One Hundred Thousand Pounds Sterling (GBP
100,000).
1.5 Section 5.20 (b) of the Participation Agreement is
amended to read as follows:
(b) Lessee's purchase of stock in Allgon AB
between September 1, 2000 and December 31, 2000 that did not exceed Fourteen
Million Dollars ($14,000,000) when converted from Swedish Krona to U.S. Dollars.
1.6 Section 5.21 of the Participation Agreement is
amended and restated in its entirety to read as follows:
Section 5.21. CHANGES/MERGERS. Lessee will not, and
will not permit any Subsidiary to (a) liquidate, dissolve or enter into any
consolidation, merger, partnership, joint venture or other combination, (b)
convey, sell or lease all or the greater part of its assets or business, or (c)
purchase or release all or the greater part of the assets or business of another
if the total purchase price exceeds Thirty Million Dollars ($30,000,000) or the
cash consideration exceeds Fifteen Million Dollars ($15,000,000) except for: (i)
the acquisition of Pacific Microwave Corporation by March 31, 2001 and (ii) the
sale of Xxxxxxxx Inc. assets.
1.7 Section 5.24 of the Participation Agreement is added
to read as follows:
Section 5.24. FUTURE SUBSIDIARIES. Lessee shall cause
each Domestic Subsidiary formed or acquired after the closing date of this
agreement to execute and deliver an appropriate Subsidiary Guaranty and Security
Agreement in form and substance satisfactory to Bank. As requested by Bank,
Lessee shall cause each Foreign Subsidiary formed or acquired after the closing
date of this agreement to deliver an appropriate Subsidiary Guaranty in form and
substance satisfactory to Bank and or pledge 65% of the capital stock of the
Subsidiary if the Subsidiary or Subsidiaries combined have tangible assets in
excess of 5% of the total tangible assets of Borrower
3
and its Subsidiaries on a consolidated basis as at the end of the fiscal year
then most recently ended.
Section 2. REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants to each of the other parties hereto that each of the representations
and warranties of Lessee contained in the Participation Agreement and in each
other Operative Document is true and correct in all material respects on the
date hereof, with the same effect as though made on and as of such date and, for
purposes of this paragraph, all references in such representations and
warranties to the "Operative Documents" shall be deemed to include this
Amendment.
Section 3. EFFECTIVENESS. Subject to the execution and delivery of this
Amendment by all parties hereto, this Amendment is entered into as of the date
set forth in the preamble to this Amendment, but effective, however, as of
January 31, 2001 (the "EFFECTIVE DATE").
Section 4. APPLICABLE LAW. THIS AMENDMENT HAS BEEN DELIVERED IN, AND
SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF, THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES OF
SUCH STATE.
Section 5. COUNTERPARTS. This Amendment may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each
executed counterpart constituting an original but all together one agreement.
Section 6. DIRECTION TO TRUSTEE. By signing this Amendment, the
Participants authorize and direct Union Bank of California, N.A., as Certificate
Trustee, and Union Bank of California, N.A., as Agent, to sign this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first above written.
Lessee: REMEC, INC., a California corporation,
as Lessee
By: /s/ Xxxxxxx XxXxxxxx
----------------------------------------
Name Printed: Xxxxxxx XxXxxxxx
Title: Chief Financial Officer
4
Certificate Trustee UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity except
as expressly stated herein, but solely
as Certificate Trustee
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Assistant Vice President
Agent: UNION BANK OF CALIFORNIA, N.A. not in
its individual capacity except as expressly
stated herein, but solely as Agent
By: /s/ Xxxx Xxxxx
----------------------------------------
Name Printed: Xxxx Xxxxx
Title: Vice President
Certificate Purchaser: BANKERS COMMERCIAL CORPORATION,
as Certificate Purchaser
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name Printed: Xxxxx X. Xxxxxxxxx
Title: President
Lender: UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity except
as expressly stated herein, but solely
as Lender
By: /s/ Xxxx Xxxxx
----------------------------------------
Name Printed: Xxxx Xxxxx
Title: Vice President
5
