Exhibit 10.1
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of July 18, 2003, is made and entered into by and among ANALEX CORPORATION, a
Delaware corporation, successor by merger to Hadron, Inc. (the "Borrower"), and
the subsidiaries of the Borrower identified on the signature pages hereto (the
"Subsidiary Guarantors"), and BANK OF AMERICA, N.A., a national banking
association (the "Lender").
WITNESSETH
WHEREAS, the Borrower and the Lender entered into that certain Credit
Agreement dated as of November 2, 2001, as modified by that certain First
Amendment to Credit Agreement dated as of August 1, 2002, Second Amendment to
Credit Agreement dated as of December 20, 2002 and Third Amendment to Credit
Agreement dated as of April 30, 2003 (collectively, the "Existing Credit
Agreement").
WHEREAS, the parties have agreed to amend the Existing Credit Agreement
as set forth herein.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
1. Certain Definitions. Unless otherwise defined herein or the context
otherwise requires, the following terms used in this Amendment, including its
preamble and recitals, have the following meanings:
"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Amendment No. 4 Effective Date" is defined in Part III.
2. Other Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Amendment, including its preamble and
recitals, have the meanings provided in the Amended Credit Agreement.
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 4
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II. Except as so amended, the Existing Credit Agreement and all
other Loan Documents shall continue in full force and effect.
1. Amendment to Section 1.1. Each of the following definitions
appearing in Section 1.1 of the Existing Credit Agreement is amended in its
entirety to read as follows:
"Change of Control" shall mean the occurrence of any of
the following events: (i) after the Closing Date, any Person
(other than the Purchasers and their Affiliates) or two or
more Persons (other than the Purchasers and their
Affiliates) acting in concert shall have acquired beneficial
ownership, directly or indirectly, of, or shall have
acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation, will
result in its or their acquisition of or control over,
voting stock of the Borrower (or other securities
convertible into such voting stock) representing 50% or more
of the combined voting power of all voting stock of the
Borrower, or (ii) during any period of up to 24 consecutive
months, commencing after the Closing Date, individuals who
at the beginning of such 24 month period were directors of
the Borrower (together with any new director whose election
by the Borrower's board of directors or whose nomination for
election by the Borrower's shareholders was approved by a
vote of at least a majority of the directors then still in
office who either were directors at the beginning of such
period or whose election or nomination for election was
previously so approved and any new director designated,
nominated and elected pursuant to the Stockholders'
Agreement (as defined in the Note Purchase Agreement) cease
for any reason to constitute a majority of the directors of
the Borrower then in office. As used herein, "beneficial
ownership" shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Fixed Charges" for any period shall mean the sum of (a)
Interest Expense for such period, plus (b) preferred stock
cash dividends actually paid or required to be paid, plus
(c) the aggregate amount of all non-compete payments made by
the Borrower for such period, plus (d) without duplication,
scheduled payments of principal on Indebtedness and
Capitalized Lease Obligations of the Borrower for such
period, all as determined on a consolidated basis in
accordance with GAAP. For the avoidance of doubt, the
Borrower's payment of $280,000 to Xxx Xxxxx related to the
termination of Xx. Xxxxx'x employment agreement shall not
constitute a Fixed Charge.
The following definitions are hereby added to Section 1.1 of the
Existing Credit Agreement:
"Note Purchase Agreement" shall mean that certain
Subordinated Note and Series A Convertible Preferred Stock
Purchase Agreement dated July 18, 2003, by and among the
Borrower and the Purchasers.
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"Pequot Subordination Agreement" shall mean that certain
Intercreditor and Subordination Agreement to be dated the
Closing Date (as defined in the Note Purchase Agreement), by
and among the Lender, the Purchasers, the Borrower and the
Subsidiary Guarantors, in the form of Exhibit A-4 hereto, as
amended, modified and supplemented from time to time.
"Purchasers" shall mean Pequot Private Equity Fund III,
L.P., a Delaware limited partnership, and Pequot Offshore
Private Equity Partners III, L.P., a Delaware limited
partnership.
2. Amendment to Section 5.1(i). Section 5.1(i) of the Existing Credit
Agreement is hereby amended by adding the following new clause (vii):
(vii) Any Default (as defined in the Note Purchase
Agreement).
3. Amendment to Section 5.14. Section 5.14 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
5.14 Government Contracts.
At the Lender's request, documentation necessary for
compliance with the Assignment of Claims Act will be
executed and delivered by the appropriate Credit Parties
with respect to any Government Contract which constitutes a
Material Contract. In any event, no Government Contract will
be assigned pursuant to the Assignment of Claims Act to the
Junior Lender (as defined in the Pequot Subordination
Agreement) or any other Person; provided, however, that if a
Credit Party assigns to the Lender any Government Contract
pursuant to the Assignment of Claims Act, the Lender shall,
subject to the Pequot Subordination Agreement and to the
extent permitted by applicable law, permit the Junior Lender
to be a subordinate assignee of such Government Contract or
otherwise participate, on terms reasonably acceptable to the
Lender, in such assignment to the Lender.
4. Amendment to Section 6.1. Section 6.1 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
6.1 Financial Covenants.
The Borrower hereby covenants to the Lender as follows,
which covenants shall be based upon the consolidated
financial statements of the Borrower:
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(a) Total Funded Debt to EBITDA Ratio. The Borrower will
maintain at all times during the following periods a
Total Funded Debt to EBITDA ratio of not greater than
the following:
PERIOD MAXIMUM TOTAL FUNDED DEBT
------ -------------------------
TO EBITDA RATIO
---------------
Amendment No. 4
Effective Date - 09/30/04 4.0 to 1.0
10/01/04 - thereafter 3.5 to 1.0
(b) Fixed Charge Coverage Ratio. The Borrower will maintain
at all times during the following periods, a Fixed
Charge Coverage Ratio of not less than the following:
PERIOD MINIMUM FIXED CHARGE
------ --------------------
COVERAGE RATIO
--------------
Amendment No. 4
Effective Date - 12/31/03 1.05 to 1.0
01/01/04 - 09/30/04 1.1 to 1.0
10/01/04 - thereafter 1.2 to 1.0
The financial covenants referenced in this Section 6.1
shall be calculated and tested on a quarterly basis as
of the last day of each quarter for the four fiscal
quarter period then ended. Unless otherwise defined,
all financial terms used in this Section 6.1 shall have
the meanings attributed to such terms in accordance
with GAAP; provided however, that for the avoidance of
doubt, regardless of how the Borrower's series A
preferred stock is characterized under GAAP, such
series A preferred stock shall not constitute
Indebtedness, as used in this Agreement.
5. Amendment to Section 6.4. Section 6.4 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
6.4 Liens.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien
on any of its property, or agree, become or remain liable
(contingently or otherwise) to do any of the foregoing, except for
the following ("Permitted Liens"):
(a) Liens pursuant to the Security Documents in favor of the
Lender to secure the Obligations;
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(b) Liens securing the Junior Indebtedness (as defined in the
Pequot Subordination Agreement);
(c) Liens arising from taxes, assessments, charges or claims
described in Section 5.4 that are not yet due or that remain
payable without penalty or to the extent permitted to remain
unpaid under the proviso to such Section 5.4;
(d) Deposits or pledges of cash or securities in the ordinary
course of business to secure (i) worker's compensation,
unemployment insurance or other social security obligations,
(ii) performance of bids, tenders, trade contracts (other
than for payment of money) or leases, (iii) stay, surety or
appeal bonds, or (iv) other obligations of a like nature
incurred in the ordinary course of business;
(e) Liens securing Indebtedness permitted by Section 6.5(d),
provided, however, that such Liens shall only extend to the
property financed by the Indebtedness securing the same;
(f) Liens existing on the date hereof and specified on Schedule
6.4;
(g) Title exceptions or encumbrances granted in the ordinary
course of business, affecting real property owned by the
Borrower or any of its Subsidiaries, provided that such
exceptions do not in the aggregate materially detract from
the value of such property or materially interfere with its
use in the ordinary conduct of the Borrower's or each
Subsidiary's business;
(h) Liens with respect to judgments, attachments and the like
which do not constitute Events of Default hereunder; and
(i) Liens arising from leases or subleases granted to others
which do not interfere in any material respects with the
business of the Borrower or its Subsidiaries.
"Permitted Lien" shall in no event include any Lien imposed
by, or required to be granted pursuant to, ERISA or any
Environmental Law. Nothing in this Section 6.4 shall be construed
to limit any other restriction on Liens imposed by the Security
Agreement or otherwise in the Loan Documents.
6. Amendment to Section 6.5. Section 6.5 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
6.5 Indebtedness and Guaranty Obligations.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness or Guaranty Obligations,
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or agree, become or remain liable (contingently or otherwise) to
do any of the foregoing, except:
(a) Indebtedness and Guaranty Obligations to or in favor of the
Lender pursuant to this Agreement and the other Loan
Documents;
(b) The Junior Indebtedness (as defined in the Pequot
Subordination Agreement);
(c) Indebtedness of the Borrower or any of its Subsidiaries
existing on the date hereof and listed in Schedule 6.5 (and
extensions, renewals and refinancings thereof on terms no
less favorable in any material respect than those existing
before such extension, renewal or refinancing);
(d) Purchase money Indebtedness (including Capitalized Leases)
hereafter incurred by the Borrower or any of its
Subsidiaries to finance the purchase of fixed assets
provided that (i) the total of all such Indebtedness for all
such Persons taken together shall not exceed an aggregate
principal amount of $500,000 during any fiscal year; (ii)
such Indebtedness when incurred shall not exceed the
purchase price of the assets(s) financed; and (ii) no such
Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the
time of such refinancing;
(e) Intercompany Debt;
(f) Indebtedness that is expressly subordinate to the monetary
obligations arising under this Agreement pursuant to a
written subordination agreement in form and substance
reasonably acceptable to the Lender;
(g) Contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection
in the ordinary course of business; and
(h) To the extent not mentioned above, accruals and accounts
payable in the ordinary course of business not for borrowed
money.
7. Amendment to Section 6.7. Section 6.7 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
6.7 Dividends and Related Distributions.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, declare or make any Stock Payment, or
agree, become or remain liable (contingently or otherwise)
to do any of the foregoing, except
(a) dividends payable to a Credit Party; and
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(b) so long as no Event of Default has occurred and is
continuing, or would occur as a result of such
dividends, dividends payable to holders of series A
preferred stock in accordance with the Certificate of
Designations, Powers, Preferences and Rights of the
Series A Convertible Preferred Stock to be dated the
Closing Date (as defined in the Note Purchase
Agreement) ("Series A Certificate"); and
(c) so long as no Event of Default has occurred and is
continuing, or would occur as a result of such payment,
required redemption payments to holders of series A
preferred stock in accordance with the Series A
Certificate.
8. Amendment to Section 6.14. Exhibit 6.14 to the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
6.14 Limitations on Other Restrictions on Liens.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into, become or remain subject to any
agreement or instrument, except for the Loan Documents and the
Junior Loan Documents (as defined in the Pequot Subordination
Agreement), that would prohibit the grant of any Lien upon any of
its properties.
9. Amendment to Exhibit J. Exhibit J to the Existing Credit Agreement
is hereby amended in its entirety to read as set forth in Exhibit J attached to
this Amendment.
10. Amendment to Section 7.1(f). Section 7.1(f) of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
(f) Any Cross-Default Event shall occur with respect to
Cross-Default Obligations. As used herein, "Cross-Default
Obligation" shall mean any Indebtedness or Guaranty
Obligation of a Credit Party or any agreement or instrument
creating, evidencing or securing such Indebtedness or
Guaranty Obligation. As used herein, "Cross-Default Event"
with respect to a Cross-Default Obligation shall mean the
occurrence of any default, event or condition (other than a
default, event or condition waived by the obligee of such
Cross-Default Obligation) which causes or which would permit
any Person or Persons to cause all or any part of such
Cross-Default Obligation to become due (by acceleration,
mandatory prepayment or repurchase, or otherwise) before its
otherwise stated maturity, or failure to pay all or any part
of such Cross-Default Obligation at its stated maturity.
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PART III
CONDITIONS TO EFFECTIVENESS
1. Amendment No. 4 Effective Date. This Amendment shall be and become
effective as of the date hereof (the "Amendment No. 4 Effective Date") when all
of the conditions set forth in this Part III shall have been satisfied, and
thereafter this Amendment shall be known, and may be referred to, as "Amendment
No. 4".
2. Execution of Counterparts of Amendment. The Lender shall have
received counterparts of this Amendment, which collectively shall have been duly
executed on behalf of the Borrower, the Subsidiary Guarantors and the Lender.
3. Fees and Expenses. All out-of-pocket fees and expenses of the
Lender in connection with the Loan Documents, including this Amendment,
including legal and other professional fees and expenses incurred on or prior to
the date of this Amendment, shall have been paid.
4. Subordinated Debt Transaction. The Closing (as defined in the Note
Purchase Agreement) shall have occurred, as indicated in a letter delivered to
the Lender by the Borrower, which letter shall confirm the Closing Date (as
defined in the Note Purchase Agreement), and the Pequot Subordination Agreement
shall have been executed and delivered to the Lender.
5. Other Items. The Lender shall have received an amendment to the
Security Agreement in form satisfactory to it and such other documents,
agreements or information which may be reasonably requested by the Lender.
PART IV
MISCELLANEOUS
1. Representations and Warranties. Borrower hereby represents and
warrants to the Lender that, after giving effect to this Amendment, (a) no
Default exists under the Amended Credit Agreement or any of the other Loan
Documents which has not been waived and (b) except as set forth in the revised
Schedule 3.19 attached hereto, the representations and warranties set forth in
the Existing Credit Agreement (other than the representations and warranties set
forth in Sections 3.6, 3.l6 and 3.18 of the Existing Credit Agreement) are,
subject to the limitations set forth therein, true and correct in all material
respects as of the date hereof (except for those which expressly relate to an
earlier date and except for representations that refer to or are qualified by
Schedules to the Existing Credit Agreement). The Borrower makes no
representation as to the accuracy of the Schedules to the Existing Credit
Agreement as of the date of this Amendment, other than the revised Schedule
3.19.
2. Cross-References. References in this Amendment to any Part are,
unless otherwise specified, to such Part of this Amendment.
3. Instrument Pursuant to Existing Credit Agreement. This Amendment
is a Loan Document executed pursuant to the Existing Credit Agreement and shall
(unless otherwise
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expressly indicated therein) be construed, administered and applied in
accordance with the terms and provisions of the Existing Credit Agreement.
4. References in Other Loan Documents. At such time as this Amendment
shall become effective pursuant to the terms of Part III, all references in the
Loan Documents to the "Agreement" shall be deemed to refer to the Existing
Credit Agreement as amended by this Amendment.
5. Counterparts. This Amendment may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.
6. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE COMMONWEALTH OF VIRGINIA
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
7. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly signed, sealed and delivered by their properly and duly authorized officers
as of the day and year first above-written.
BORROWER:
--------
ANALEX CORPORATION
By:______________________________(SEAL)
Name:_______________________________
Title:______________________________
SUBSIDIARY GUARANTORS:
---------------------
ADVANCED BIOSYSTEMS, INC.
By:______________________________(SEAL)
Name:_______________________________
Title:______________________________
SYCOM SERVICES, INC.
By:______________________________(SEAL)
Name:_______________________________
Title:______________________________
LENDER:
------
BANK OF AMERICA, N.A.
By:______________________________(SEAL)
Name:_______________________________
Title:______________________________
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