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Exhibit 10.1
THIRD AMENDMENT TO CREDIT AGREEMENT AND WAIVER
THIS THIRD AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this "Amendment"),
dated as of April 10, 2001, is by and among Condor Systems, Inc. (the
"Borrower"), certain subsidiaries of the Borrower identified on the signature
pages hereto (the "Guarantors"), the lenders identified on the signature pages
hereto (the "Lenders"), Bank of America, N.A., formerly Bank of America National
Trust and Savings Association, as agent for the Lenders (in such capacity, the
"Agent"), and Antares Capital Corporation, as Documentation Agent for the
Lenders.
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, WJCS, Inc., Airwave Technology,
Inc., Airwave Capital, Inc., the Lenders and the Agent entered into that certain
Credit Agreement dated as of April 15, 1999, as amended as of April 27, 1999 and
as further amended as of February 9, 2000 (as so amended, the "Existing Credit
Agreement");
WHEREAS, WJCS, Inc. Airwave Technology, Inc. and Airwave Capital, Inc.
merged into Borrower; and
WHEREAS, the Credit Parties, the Agent and the Required Lenders have
agreed to amend the Existing Credit Agreement as provided 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 1
DEFINITIONS
SUBPART 1.1 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. 3 Effective Date" is defined in Subpart 4.1
hereof.
SUBPART 1.2 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.
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PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 3
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part 2. Except as so amended, the Existing Credit Agreement and all
other Credit Documents shall continue in full force and effect.
SUBPART 2.1 Amendments to Section 1.1.
(a) The definition of "Borrowing Base" appearing in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Borrowing Base" means, as of any day and without duplication,
the sum of (a) 85% of Eligible Receivables plus (b) 50% of Eligible
Inventory plus (c) 50% of Unbilled Receivables, in each case as set
forth in the most recent Borrowing Base Certificate delivered to the
Agent and the Lenders in accordance with the terms of Section 7.1(m).
(b) The definition of "Consolidated EBITDA Adjustment" appearing in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
"Consolidated EBITDA Adjustment" means, for the fiscal quarter
ended December 31, 2000, an amount equal to $7,130,000.
(c) The definition of "Consolidated Capital Expenditures" appearing in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
"Consolidated Capital Expenditures" means, as of any date for the
four fiscal quarter period ending on such date with respect to the
Consolidated Parties on a consolidated basis (subject to the terms of
Section 1.3), all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that capitalized
portion of Capital Leases) that are included in "additions to property,
plant or equipment" or comparable items reflected in the consolidated
statement of cash flows of Borrower and its Subsidiaries for such
period, as determined in accordance with GAAP; provided that
Consolidated Capital Expenditures shall not include (i) any such
expenditures funded with the proceeds of any Asset Disposition, Excluded
Asset Disposition, Involuntary Disposition or Equity Issuance occurring
subsequent to the Closing Date or any such expenditure consisting of the
acquisition of Eligible Assets which have been received as consideration
for an Asset Disposition permitted under Section 8.5 or an Excluded
Asset Disposition, (ii) any Permitted Investment described in clauses
(xii) and (xvi) of the definition thereof and (iii) any cash expense
incurred by a Consolidated Party during the Borrower's fiscal year 2001
in connection with the move of the Borrower from San Jose, California to
Morgan Hill, California not to exceed $2,500,000 for such period.
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(d) The definition of "Consolidated EBITDA" appearing in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Consolidated EBITDA" means, as of any date for the four fiscal
quarter period ending on such date with respect to the Consolidated
Parties on a consolidated basis (subject to the terms of Section 1.3),
the sum (without duplication) of (i) Consolidated Net Income, plus (ii)
an amount which, in the determination of Consolidated Net Income, has
been deducted for (A) interest expense, (B) total federal, state, local
and foreign income, value added and similar taxes, (C) depreciation and
amortization expense and other charges and expenses (other than in
connection with any write-downs of accounts receivable) reducing
Consolidated Net Income for such period which do not represent a cash
item in such period or in any future period, (D) any non-capitalized
transaction costs incurred in connection with actual or proposed
financings, acquisitions or divestitures (including, but not limited to,
financing and refinancing fees and costs incurred in connection with the
Transaction), (E) the amount of any net loss (or minus the amount of any
net gain) realized in connection with any Asset Disposition and (F) the
amount of any extraordinary or unusual loss (or minus the amount of any
extraordinary or unusual gain), all as determined in accordance with
GAAP; provided, however, that Consolidated EBITDA for each four fiscal
quarter period ending on March 31, 2001, June 30, 2001 and September 30,
2001 shall be equal to the sum of (x) the amount determined as set forth
above in this definition for such period plus (y) the Consolidated
EBITDA Adjustment.
(e) The definition of "Net Senior Funded Indebtedness" appearing in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"Net Senior Funded Indebtedness" means, as of any date with
respect to the Consolidated Parties on a consolidated basis (subject to
the terms of Section 1.3), all Funded Indebtedness minus (i) Funded
Indebtedness outstanding under the Subordinated Notes and any other
Funded Indebtedness which is subordinated to the Credit Party
Obligations to at least the same extent of the Funded Indebtedness under
the Subordinated Notes, (ii) all cash on hand and Investments consisting
of Cash Equivalents, and (iii) Funded Indebtedness outstanding under the
Senior Discount Notes, all as determined in accordance with GAAP.
(f) The following new definitions are hereby added to Section 1.1 of the
Credit Agreement in the appropriate alphabetical order to read as follows:
"Amendment No. 3" means the Third Amendment to Credit Agreement
and Waiver dated as of April 10, 2001 by and among the Borrower, the
Guarantors, the Required Lenders and the Agent.
"Cash Flow Forecast" shall have the meaning given to such term in
Section 7.1(o).
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"Receivables Ratio" means, as of the last day of any fiscal
quarter, the ratio of (i) the amount of Receivables (including Unbilled
Receivables) as of such day to (ii) the total revenues of the
Consolidated Parties on a consolidated basis for the period of twelve
consecutive months ending on such day.
"Senior Discount Notes" shall have the meaning given to such term
in Section 8.1(h).
SUBPART 2.2 Amendments to Section 3.3(b)(ii). Section 3.3(b)(ii) of the
Existing Credit Agreement is hereby amended and restated in its entirety to read
as follows:
3.3 PREPAYMENTS.
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(ii) Cash on Hand. If for any period of five consecutive
calendar days, the sum of (i) cash on hand of the Consolidated
Parties plus (ii) the Cash Equivalents of the Consolidated
Parties exceeds $6,000,000, the Borrower shall, within five (5)
days of the existence of such condition, prepay the Loans in an
aggregate amount equal to such excess (except to the extent that
such excess is attributable to Net Cash Proceeds or Excess
Proceeds from Asset Dispositions or Involuntary Dispositions, as
the case may be, which have not yet been required to be applied
to the prepayment of the Loans pursuant to clause (iii) below)
(such prepayment to be applied as set forth in clause (v) below).
SUBPART 2.3 Amendments to Section 3.4. A new Section 3.4(a)(iv) is
hereby added to Section 3.4 of the Existing Credit Agreement to read as follows:
(iv) The Committed Amount shall be automatically and
permanently reduced (subject to the Borrower's option to increase
the Committed Amount in accordance with Section 3.4(b)) by two
million dollars ($2,000,000) as of the last Business Day of each
of the calendar years 2001, 2002 and 2003 (each, a "Commitment
Reduction Date") minus, in each case, the aggregate amount by
which the Committed Amount has been voluntarily reduced by the
Borrower pursuant to Section 3.4(a)(i) (other than voluntary
reductions made pursuant to Section 7.17) during the calendar
year in which such Commitment Reduction Date falls. Upon
reduction of the Committed Amount, the Borrower shall prepay the
Loans (or cash collateralize Letters of Credit) in an amount
equal to the amount by which the aggregate of the outstanding
principal amount of Revolving Loans plus LOC Obligations plus
Swingline Loans exceeds the reduced Committed Amount.
SUBPART 2.4 Amendments to Section 3.4(b). Section 3.4(b) of the Existing
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
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3.4 TERMINATION AND REDUCTION OF COMMITTED AMOUNT; INCREASE OF
COMMITTED AMOUNT.
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(b) Increase in Committed Amount. The Borrower shall have the
right, upon at least ten (10) Business Days' prior written notice to the
Agent, to effectuate a one-time increase of up to $5,000,000 in the
Committed Amount, subject, however, to satisfaction of the following
conditions precedent:
(1) no Event of Default shall have occurred and be
continuing on the date on which such Committed Amount increase is
to become effective, and the Total Leverage Ratio as of the most
recent fiscal quarter end preceding the date of such increase
with respect to which the Agent has received the Required
Financial Information is less than or equal to 5.0 to 1.0;
(2) the representations and warranties set forth in
Section 6 of this Credit Agreement shall be true and correct in
all material respects on and as of the date on which such
Committed Amount increase is to become effective (except those
that expressly relate to an earlier date);
(3) on or before the date on which such Committed Amount
increase is to become effective, the Agent shall have received,
for its own account, the mutually acceptable fees and expenses
required by separate agreement of the Borrower and the Agent to
be paid in connection with such increase;
(4) such Committed Amount increase shall in no event be
less than the entire $5,000,000 permitted hereby.
(5) the Borrower shall have delivered to the Agent a
certificate of the chief financial officer or the chief
accounting officer of the Borrower certifying that the
Indebtedness of the Borrower under the Credit Documents as in
effect after giving effect to such increase in the Committed
Amount (including, without limitation, any Loan made thereafter
and any reimbursement obligations with respect to Letters of
Credit issued thereafter) constitute "Designated Senior
Indebtedness" under the Subordinated Note Indenture; and
(6) such requested Committed Amount increase shall be
effective on such date only to the extent that, on or before such
date, the Agent shall have received and accepted from one or more
institutions reasonably acceptable to the Agent and, with respect
to any institution that is not at such time a Lender hereunder,
reasonably acceptable to the Borrower, an agreement in the form
of Exhibit 3.4(b) hereto (each such agreement a "New Commitment
Agreement"), with respect to the increase in the Committed
Amount.
Any such increase in the Committed Amount shall not apply to the
Commitment
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of any existing Lender unless such Lender consents in writing thereto.
SUBPART 2.5 Amendments to Section 7.1.
(a) Section 7.1(g) is hereby amended and restated in its
entirety to read as follows:
(g) Reports. Promptly (i) upon the filing thereof, copies of
all registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which
any Consolidated Party shall have filed with the Securities and
Exchange Commission, (ii) upon transmission thereof, copies of
all financial information, notices and reports as any
Consolidated Party shall send to the holders (other than an
Affiliate) of any Indebtedness owed by any Consolidated Party, in
their capacities as such holders and (iii) upon transmission
thereof, copies of all notices and reports as any Consolidated
Party shall receive from or on behalf of the holders (in their
capacities as such holders) of any Indebtedness owed by any
Consolidated Party under the Subordinated Notes or the Senior
Discount Notes.
(b) New clauses (o), (p), (q), and (r) are hereby added to
Section 7.1 of the Existing Credit Agreement to read as follows:
(o) Cash Flow Forecasts. On April 10, 2001 and on or before
the 25th day of each calendar month thereafter (other than April
25, 2001), a two month cash flow forecast (the "Cash Flow
Forecast") for the two calendar months immediately succeeding the
calendar month during which such forecast is delivered or, in the
case of the Cash Flow Forecast delivered on April 10, 2001, for
April and May 2001, including all cash receipts and
disbursements, for the Consolidated Parties on a consolidated
basis, such forecast to be in form and substance reasonably
acceptable to the Agent.
(p) Reconciliation of Cash Flow Forecasts. On May 25, 2001
and on or before the 25th day of each calendar month thereafter
(each a "Reconciliation Date"), a reconciliation (current through
the last Business Day of the immediately preceding calendar
month) of actual cash receipts and disbursements for the
immediately preceding calendar month against projected cash
receipts and disbursements contained in the Cash Flow Forecast
furnished to the Lenders pursuant to Section 7.1(o) during the
calendar month occurring two months prior to the month in which
such Reconciliation Date occurs (or in the case of the
reconciliation due on May 25, 2001, the Cash Flow Forecast
furnished on April 10, 2001), such reconciliation to be in form
and substance reasonably acceptable to the Agent.
(q) Letter of Credit Forecast. On April 10, 2001 and on the
25th calendar day subsequent to the end of each fiscal quarter
(other than April 25, 2001) of the Borrower thereafter, a twelve
month forecast of the Borrower's need for Letters of
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Credit under the Credit Agreement, such report to be in form and
substance reasonably acceptable to the Agent.
(r) Receivables Report. On April 10, 2001 and on or before
the 25th day of each calendar month thereafter (other than April
25, 2001) (i) a statement of the Receivables, as of the last day
of the most recently ended calendar month, of the Consolidated
Parties on a consolidated basis, with aging, (ii) a statement
setting forth the components of the Receivables including billed
and Unbilled Receivables, as of the last day of the most recently
ended calendar month, of the Consolidated Parties on a
consolidated basis, and (iii) a summary by contract of the
Unbilled Receivables including the percentage completed, each
such report to be in form and substance reasonably acceptable to
the Agent.
(c) A new Section 7.1(s) is hereby added by restating Section
7.1(o) of the Existing Credit Agreement (as currently written) as
Section 7.1(s).
SUBPART 2.6 Amendments to Section 7.9. Section 7.9 of the Existing
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
7.9 USE OF PROCEEDS.
The Borrower will use the proceeds of the Loans solely to effect
the Transaction, to pay fees and expenses related to the Transaction and
to provide for working capital and general corporate purposes, provided,
however, that such proceeds shall not be used for any Acquisition
unless, in addition to any other condition placed upon Acquisitions in
this Credit Agreement, (i) the Total Leverage Ratio as most recently
reported in the compliance certificate delivered pursuant to Section
7.1(c) (in connection with financial statements of the Consolidated
Parties) is less than or equal to 4.0 to 1.0 and (ii) no Default or
Event of Default then exists. The Borrower will use the Letters of
Credit only for or in connection with appeal bonds, reimbursement
obligations arising in connection with surety and reclamation bonds,
reinsurance, domestic or international trade transactions and
obligations not otherwise aforementioned relating to transactions
entered into by the applicable account party in the ordinary course of
business.
SUBPART 2.7 Amendments to Section 7.11. Section 7.11 of the Existing
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
7.11 FINANCIAL COVENANTS.
(a) Total Leverage Ratio. The Total Leverage Ratio, as of the
last day of each fiscal quarter of the Borrower, shall be less than or
equal to:
(i) for the fiscal quarter ending March 31, 2001, 7.50
to 1.00;
(ii) for the fiscal quarter ending June 30, 2001, 9.25 to
1.00;
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(iii) for the fiscal quarter ending September 30, 2001,
7.50 to 1.00;
(iv) for the fiscal quarter ending December 31, 2001,
7.25 to 1.00;
(v) for the fiscal quarter ending March 31, 2002, 6.25
to 1.00;
(vi) for the fiscal quarter ending June 30, 2002, 5.50 to
1.00;
(vii) for the fiscal quarter ending September 30, 2002,
5.50 to 1.00;
(viii) for the fiscal quarter ending December 31, 2002,
5.50 to 1.00;
(ix) for the fiscal quarter ending March 31, 2003, 5.50
to 1.00;
(x) for the fiscal quarter ending June 30, 2003, 5.25 to
1.00;
(xi) for the fiscal quarter ending September 30, 2003,
5.00 to 1.00;
(xii) for the fiscal quarter ending December 31, 2003,
5.00 to 1.00; and
(xiii) for any fiscal quarter thereafter, 4.50 to 1.00.
(b) Senior Leverage Ratio. The Senior Leverage Ratio, as of the
last day of each fiscal quarter of the Borrower, shall be less than or
equal:
(i) for the fiscal quarter ending March 31, 2001, 3.0 to
1.00;
(ii) for the fiscal quarter ending June 30, 2001, 3.75 to
1.00;
(iii) for the fiscal quarter ending September 30, 2001,
3.00 to 1.00;
(iv) for the fiscal quarter ending December 31, 2001,
3.00 to 1.00;
(v) for the fiscal quarter ending March 31, 2002, 2.75
to 1.00;
(vi) for the fiscal quarter ending June 30, 2002, 2.50 to
1.00; and
(vii) for the fiscal quarter ending September 30, 2002 and
for any fiscal quarter thereafter, 2.25 to 1.00.
(c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio, as of the last day of each fiscal quarter of the Borrower, shall
be greater than or equal to:
(i) for the fiscal quarter ending March 31, 2001, .80 to
1.00;
(ii) for the fiscal quarters ending June 30, 2001 and
September 30, 2001,
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0.75 to 1.00;
(iii) for the fiscal quarter ending December 31, 2001, .85
to 1.00;
(iv) for the fiscal quarter ending March 31, 2002, 1.00
to 1.00;
(v) for the fiscal quarter ending June 30, 2002; 1.05 to
1.00;
(vi) for the fiscal quarters ending September 30, 2002
and December 31, 2002, 1.10 to 1.00;
(vii) for the fiscal quarters ending March 31, 2003 and
June 30, 2003, 1.10 to 1.00; and
(viii) for the fiscal quarter ending September 30, 2003 and
for any fiscal quarter thereafter, 1.15 to 1.00.
(d) Consolidated EBITDA. Consolidated EBITDA, as of the last day
of each fiscal quarter of the Borrower for the four fiscal quarter
period ending on such date, shall be greater than or equal to:
(i) the fiscal quarter ending March 31, 2001,
$15,000,000;
(ii) for the fiscal quarter ending June 30, 2001,
$11,500,000;
(iii) for the fiscal quarter ending September 30, 2001,
$14,500,000;
(iv) for the fiscal quarter ending December 31, 2001,
$15,000,000;
(v) the fiscal quarter ending March 31, 2002,
$17,000,000;
(vi) for the fiscal quarter ending June 30, 2002,
$18,000,000;
(vii) for the fiscal quarter ending September 30, 2002,
$18,500,000; and
(viii) for the fiscal quarter ending December 31, 2002 and
for each fiscal quarter thereafter, $19,000,000.
(e) Receivables to Revenue Ratio. The Receivables Ratio, as of
the last day of each fiscal quarter of the Borrower, shall be less than
or equal to:
(i) for the fiscal quarters ending March 31, 2001 and
June 30, 2001, .60 to 1.0;
(ii) for the fiscal quarters ending September 30, 2001,
December 31, 2001, March 31, 2002 and June 30, 2002, .55 to 1.0;
and
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(iii) for the fiscal quarter ending September 30, 2002 and
for each fiscal quarter thereafter, .50 to 1.0.
SUBPART 2.8 Section 7.17. A new Section 7.17 is hereby added to read as
follows:
7.17 PREEMPTIVE RIGHTS SENIOR DISCOUNT NOTES.
If the cash proceeds received from the issuance of Preemptive Rights
Senior Discount Notes (as defined in Section 8.1(h)) are (a) equal to or greater
than $500,000 but less than $1,000,000, then the Borrower shall notify the Agent
that it is, pursuant to Section 3.4(a), voluntarily reducing the Committed
Amount by $500,000 and (b) equal to or greater than $1,000,000, then the
Borrower shall notify the Agent that it is, pursuant to Section 3.4(a),
voluntarily reducing the Committed Amount by $1,000,000.
SUBPART 2.9 Amendments to Section 8.1. Section 8.1 is hereby amended by
deleting the "and" at the end of Section 8.1(g) and by (i) restating in its
entirety Section 8.1(h) of the Existing Credit Agreement and (ii) adding a new
Section 8.1(i), in each case to read as follows:
8.1 INDEBTEDNESS.
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(h) other unsecured Indebtedness (i) issued for cash proceeds
between $10,040,000 and $10,060,000 pursuant to those certain 15% Senior
Discount Notes issued in satisfaction of Subpart 4.1.5 of Amendment No.
3 (the "Senior Discount Notes"); provided that such Indebtedness shall
(A) have a maturity date no earlier than one year beyond the Maturity
Date and (B) provide that no payment of cash interest or other debt
service or amortization of principal (including any defeasance of
principal) shall occur prior to one year beyond the Maturity Date; and
(ii) consisting of additional Senior Discount Notes (the "Preemptive
Rights Senior Discount Notes") issued on or prior to 90 days after the
date of effectiveness of Amendment No. 3 to certain shareholders of the
Borrower pursuant to the exercise of existing preemptive rights for cash
proceeds not to exceed $1,200,000; provided that (A) such Indebtedness
is on the same terms as the Indebtedness described in clause (i) above
and (B) the Borrower complies with Section 7.17, as applicable; and
(i) other unsecured Indebtedness (in addition to the Indebtedness
permitted under subsection (g) of this Section 8.1) hereafter incurred
by any Consolidated Party provided that the total of all such
Indebtedness shall not exceed an aggregate principal amount of
$2,500,000 at any one time outstanding.
SUBPART 2.10 Amendments to Section 8.8. Section 8.8 of the Existing
Credit is hereby amended to replace the "or" before clause (d) of such Section
with a "," and to replace the "." at the end of such clause with the following
text:
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,(e) amend or modify (or permit the amendment or modification of)
any provision of the Senior Discount Notes in a manner that would be
materially adverse to the Lenders, (f) make any cash interest payments
in respect of the Indebtedness arising under the Senior Discount Notes
prior to the time on which such payments are required to be made
pursuant to the Senior Discount Notes as in effect on the date of
issuance thereof or (g) make (or give any notice with respect thereto)
any voluntary or optional payment or prepayment, redemption, acquisition
for value or defeasance of (including without limitation, by way of
depositing money or securities with any trustee with respect thereto
before due for the purpose of paying when due), refund, refinance or
exchange of any Indebtedness arising under the Senior Discount Notes.
SUBPART 2.11 Amendments to Section 8.12. Section 8.12 of the Existing
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
8.12 CAPITAL EXPENDITURES.
The Credit Parties will not permit Consolidated Capital Expenditures for
any fiscal year to exceed $3,000,000.
SUBPART 2.12 Amendments to Section 9.1.
(a) Section 9.1(c)(ii) is hereby amended and restated in its
entirety to read as follows:
(ii) default in the due performance or observance of any
term, covenant or agreement contained in Section 7.1(a), (b),
(c), (d), (m), (o), (p), (q) or (r) and such default shall
continue unremedied for a period of at least 15 days after the
earlier of an Executive Officer of a Credit Party becoming aware
of such default or notice thereof by the Agent; or
(b) Section 9.1(k) is hereby amended by replacing the "." at the
end of such clause with a ";or" and a new Section 9.1(l) is hereby added
to read as follows:
(l) Senior Discount Notes. There shall occur and be
continuing any Event of Default under and as defined in the
Senior Discount Notes (or any related indenture effective for the
Senior Discount Notes).
SUBPART 2.13 Amendments to Section 11.5(a). Section 11.5(a) of the
Existing Credit Agreement is hereby amended and restated in its entirety to read
as follows:
11.5 EXPENSES; INDEMNIFICATION.
(a) The Borrower agrees to pay on demand all costs and expenses
of the Agent incurred from time to time in connection with the
syndication, preparation, execution, delivery, administration,
modification, and amendment of this Credit
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Agreement, the other Credit Documents, and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees
and expenses of a single law firm (and any necessary local or special
counsel) for the Agent with respect thereto and with respect to advising
the Agent as to its rights and responsibilities under the Credit
Documents. The Borrower further agrees to pay on demand all costs and
expenses of the Agent and the Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses), in connection with
the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Credit Documents and the other documents to be
delivered hereunder. The Borrower further agrees that upon the
occurrence and continuation of an Event of Default, the Borrower shall
be responsible for all fees and expenses thereafter incurred by the
Agent in connection with the retention of a financial advisor by the
Agent.
SUBPART 2.14 Amendments to Schedule 6.10. Schedule 6.10 to the Existing
Credit Agreement is hereby amended and replaced with Schedule 6.10 attached
hereto.
SUBPART 2.15 Amendments to Schedule 6.14. Schedule 6.14 to the Existing
Credit Agreement is hereby amended and replaced with Schedule 6.14 attached
hereto.
SUBPART 2.16 Amendments to Schedule 6.16(a). Schedule 6.16(a) to the
Existing Credit Agreement is hereby amended and replaced with Schedule 6.16(a)
attached hereto.
SUBPART 2.17 Amendments to Schedule 6.16(b). Schedule 6.16(b) to the
Existing Credit Agreement is hereby amended and replaced with Schedule 6.16(b)
attached hereto.
SUBPART 2.18 Amendments to Schedule 6.16(c). Schedule 6.16(c) to the
Existing Credit Agreement is hereby amended and replaced with Schedule 6.16(c)
attached hereto.
PART 3
RELEASE
The Credit Parties each hereby release the Agent, the Lenders, and the
Agent's and the Lenders' respective officers, employees, representatives,
agents, managers, counsel, and directors from any and all actions, causes of
action, claims, demands, damages and liabilities of whatever kind or nature, in
law or in equity, now known or unknown, suspected or unsuspected to the extent
that any of the foregoing arises from any action or failure to act on or prior
to the date hereof.
PART 4
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1 Amendment No. 3 Effective Date. This Amendment shall be and
become effective as of the date hereof (the "Amendment No. 3 Effective Date")
when all of the conditions set forth in this Part 4 shall have been satisfied,
and thereafter this Amendment shall
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be known, and may be referred to, as "Amendment No. 3."
SUBPART 4.1.1 Execution of Counterparts of Amendment. The Agent
shall have received counterparts of this Amendment, which shall have
been duly executed on behalf of each of the Borrower, the Guarantors and
the Required Lenders.
SUBPART 4.1.2 Authority. Receipt by the Agent of (i) a
certificate of the corporate secretary of each of the Credit Parties
certifying as to resolutions or authorization of the Board of Directors
of each Credit Party approving and adopting, as applicable, this
Amendment and the Senior Discount Notes and the transactions
contemplated herein and therein and authorizing the execution, delivery
and performance hereof and thereof and (ii) an incumbency certificate of
each Credit Party certified by a secretary or assistant secretary to be
true and correct as of the Closing Date.
SUBPART 4.1.3 Opinions. Receipt by the Agent of an opinion or
opinions from counsel to the Credit Parties relating to this Amendment
and the Senior Discount Notes, in form and substance reasonably
satisfactory to the Agent, addressed to the Agent on behalf of the
Lenders and dated as of the date hereof.
SUBPART 4.1.4 Fees and Expenses.
(a) Amendment Fee. The Borrower shall have paid to the
Agent an amendment fee equal to 0.50% of the Committed Amount
with such fee to be shared ratably with each of the Lenders that
has executed this Amendment prior to the date hereof.
(b) Agent's Fee. The Borrower shall have paid to the Agent,
for its own account, such working fee as agreed upon between
Borrower and Agent.
(c) Reimbursement of Agent's Fees and Expenses. The
Borrower shall have reimbursed the Agent for the legal fees and
expenses of Xxxxx & Xxx Xxxxx, PLLC, counsel to the Agent, as
reflected in a statement provided to the Borrower on the date
hereof.
SUBPART 4.1.5 Perfection Certificate. The Credit Parties shall
have provided a completed perfection certificate to the Agent in form
and substance reasonably acceptable to the Agent.
SUBPART 4.1.6 Sponsor Contribution. The Borrower shall have (i)
issued the Senior Discount Notes and the proceeds therefrom shall have
been applied to the Loans, on terms and conditions satisfactory to the
Agent and the Required Lenders in their sole discretion and (ii)
provided to the Agent a
13
14
certificate of an officer of the Borrower, in form and substance
reasonably acceptable to the Agent, certifying that the Borrower has
delivered to the Agent complete copies of all documents executed in
connection with Senior Discount Notes (and all schedules and exhibits
thereto).
SUBPART 4.1.7 Other Items. The Agent shall have received such
other documents, agreements or information that may be reasonably
requested by the Agent or as may be expressly agreed to between the
Borrower and the Agent.
PART 5
MISCELLANEOUS
SUBPART 5.1 Waivers. The Required Lenders hereby waive (a) the Events of
Default existing as of the date hereof caused by the Credit Parties failure to
comply with Section 7.11(a), (b) and (c) of the Existing Credit Agreement as of
December 31, 2000 and March 31, 2001; provided, however that such waiver does
not (a) waive any Events of Default arising from the failure of any Credit Party
to comply with the Amended Credit Agreement, including the covenants contained
in Section 7.11 for the period ending March 31, 2001 or (b) any other Events of
Default that may exist as of the date hereof.
SUBPART 5.2 Representations and Warranties. The Credit Parties hereby
represent and warrant to the Agent and the Lenders that, after giving effect to
this Amendment, (a) no Default or Event of Default exists under the Credit
Agreement or any of the other Credit Documents, (b) the representations and
warranties set forth in Section 6 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), (c) no default or event of default exists under the Subordinated Note
Indenture and (d) the Collateral Documents continue to create a valid security
interest in, and Lien upon, the Collateral, which security interests and Liens
are perfected in accordance with the terms of the Collateral Documents and are
prior to all Liens other than Permitted Liens; provided however that, the
representation and warranty contained in Section 6.2 of the Existing Credit
Agreement is qualified by reference to the consolidated financial statements of
the Credit Parties for the third quarter ended September 30, 2000 on Form 10-Q
filed with the Securities and Exchange Commission on November 14, 2000, as
amended by amendments filed on November 15, 2000 and November 16, 2000, and by
information furnished by the Borrower to the Agent and the Lenders in connection
with this Amendment.
SUBPART 5.3 Reaffirmation of Credit Party Obligations. Each Credit Party
hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it
is bound by all terms of the Credit Agreement applicable to it and (b) that it
is responsible for the observance and full performance of its respective Credit
Party Obligations.
SUBPART 5.4 Cross-References. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
14
15
SUBPART 5.5 Instrument Pursuant to Existing Credit Agreement. This
Amendment is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.
SUBPART 5.6 References in Other Credit Documents. At such time as this
Amendment No. 3 shall become effective pursuant to the terms of Subpart 4.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment.
SUBPART 5.7 Counterparts/Telecopy. 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. Delivery of executed counterparts of this Amendment by telecopy shall
be effective as an original and shall constitute a representation that an
original shall be delivered.
SUBPART 5.8 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SUBPART 5.9 Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
15
16
IN WITNESS WHEREOF the Borrower, the Guarantors and the Required Lenders
have caused this Amendment to be duly executed on the date first above written.
BORROWER: CONDOR SYSTEMS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
GUARANTORS: CEI SYSTEMS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
17
AGENT: BANK OF AMERICA, N.A., formerly Bank of
America National Trust and Savings Association,
in its capacity as Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
LENDERS: BANK OF AMERICA, N.A., formerly Bank of
America National Trust and Savings Association,
in its capacity as a Lender
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ANTARES CAPITAL CORPORATION,
in its capacity as Documentation Agent and
individually as a Lender
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BNP PARIBAS
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
UNION BANK OF CALIFORNIA, N.A.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
18
Schedule 6.10
SUBSIDIARIES
NAME/JURISDICTION CAPITAL STOCK SHARES OUTSTANDING /
SHARES HELD BY A CREDIT
PARTY
---------------------------------------------------------------------------
CEI Systems, Inc. Common Stock, par value 1,000 shares issued and
/ Delaware $0.01 per share / 10,000 outstanding / 1,000 shares
shares authorized held by Condor Systems,
Inc.
---------------------------------------------------------------------------
Condor GmbH / 50,000 shares authorized 1 share issued and
Germany outstanding / 1 share held
by CEI Systems, Inc.
---------------------------------------------------------------------------
19
Schedule 6.14
INTELLECTUAL PROPERTY
See Attached.
20
TRADEMARKS
JURIS- EXP.
XXXX OWNER REG# DICTION DATE DATE
Condor Systems Condor 2,223,650 US 02/16/99 02/16/09
(Logo)
----------------------------------------------------------------------------------------
Digital Caddy AirWave 2,014,189 US 11/05/96 11/05/06
----------------------------------------------------------------------------------------
ESSI (Logo) Condor 1,543,366 US 06/13/89 06/26/09
----------------------------------------------------------------------------------------
SciComm (Logo) Condor 1,160,758 US 07/14/81 07/14/01
----------------------------------------------------------------------------------------
Landmark Condor (Signal 2,094,217 US 09/09/97 09/09/07
Science)
----------------------------------------------------------------------------------------
Signal Science Condor (Signal 2,242,052 US 04/27/99 04/27/09
(Logo) Science)
----------------------------------------------------------------------------------------
Signalworks Condor (Signal 2,243,053 US 05/04/99 05/04/09
Science)
----------------------------------------------------------------------------------------
21
PATENTS
------------------------------------------------------------------------------------------
PATENT NO. TITLE COUNTRY OWNER ISSUE EXPIRATION
DATE DATE
------------------------------------------------------------------------------------------
5,691,922 Golf Autoranging System US Airwave 11/25/97 11/14/15
------------------------------------------------------------------------------------------
5,714,964 Horned Interferometer Antenna US Condor 11/07/95 11/07/15
Apparatus
------------------------------------------------------------------------------------------
5,708,470 Optical Monitoring System US Condor 06/08/96 06/10/16
Apparatus
------------------------------------------------------------------------------------------
5,692,709 Shockwave Stabilization Apparatus US Condor 12/02/97 12/02/14
and Method
------------------------------------------------------------------------------------------
5,661,485 Improved Homodyne Receiver US Condor 09/08/95 09/08/15
Apparatus and Method
------------------------------------------------------------------------------------------
5,651,516 Shockwave Stabilization Apparatus US Condor 07/29/96 04/29/16
and Method
------------------------------------------------------------------------------------------
4,888,593 Time Difference of Arrival US Signal 12/19/89 12/15/07
Geolocation Method, Etc. Science
(Xxxxxxxx, et al)
------------------------------------------------------------------------------------------
5,285,499 Ultrasonic Frequency Expansion US Signal 02/08/94 04/27/13
Processor (Xxxxxxx, et al) Science
------------------------------------------------------------------------------------------
5,455,846 Detection of a Digitally US Signal 10/03/95 10/03/13
Modulated Signal Using Binary Science
Line Enhancement (Xxxxxxx)
------------------------------------------------------------------------------------------
5,524,124 Multiple-Filter Equalizer for US Signal 06/04/96 11/17/13
Structured Digitally Modulated Science
Signals (Xxxxxx)
------------------------------------------------------------------------------------------
5,640,423 Method for Signal Transmission US Signal 06/17/97 12/16/13
Using Spectrally Efficient Science
Orthogonal Modulation (Xxxxxx)
------------------------------------------------------------------------------------------
5,691,978 Self-Canceling Full-duplex RF US Signal 11/25/97 01/21/07
Communication System (Xxxxxxxxx) Science
------------------------------------------------------------------------------------------
22
PATENT APPLICATIONS
-------------------------------------------------------------------------------------------------------------------
APPLICATION TITLE COUNTRY ASSIGNEE FILING DATE ISSUE EXPIRATION STATUS
NO. DATE DATE (SECRECY ORDER/
PENDING
APPLICATION)
-------------------------------------------------------------------------------------------------------------------
09/393,408 Signal Transfer US Condor 09/10/1999 N/A N/A Pending
Device Measurement Application
System and Method
-------------------------------------------------------------------------------------------------------------------
23
-----------------------------------------------------------------------------------------------------------------------------------
Date Date of Date
Reg. No. Description Registered Registrant Assignee Assignor Execution Recorded
-----------------------------------------------------------------------------------------------------------------------------------
N/A 1. Transponder unit Unregistered AirWave Condor Systems, AirWave 02/02/96 03/05/96
code/firmware, ver. 4.14, Technology, Inc. Technology, (Exclusive
pertaining to AirWave Inc. Inc. License)
Technology, Inc.'s product known
as "Digital Caddy" and "Digital
Caddy System".
2. Hand-held unit
code/firmware, ver. 4.11,
pertaining to AirWave
Technology, Inc.'s product known
as "digital Caddy" and Digital
Caddy System".
3. Maintenance unit
code/firmware, ver. 4.11,
pertaining to AirWave
Technology, Inc.'s product known
as "Digital Caddy" and Digital
Caddy System".
-----------------------------------------------------------------------------------------------------------------------------------
24
Schedule 6.16(a)
MORTGAGED PROPERTIES
(1) 2133 and 0000 Xxxxxxxxx Xxxxx, Xxx Xxxx, XX
(2) 000 Xxxxxx Xxxxx Xxxxxx, Xxxx Xxxxxx, XX
25
Schedule 6.16(b)
COLLATERAL LOCATIONS
Location Held By
------------------------------------------------------------------------------------
(1) 0000 Xxxxxxxxx Xxxxx, Xxx Xxxx, XX Condor Systems, Inc.
------------------------------------------------------------------------------------
(2) 0000 Xxxxxxxxx Xxxxx, Xxx Xxxx, XX Condor Systems, Inc.
------------------------------------------------------------------------------------
(3) 0000 Xxxxxxxxxx Xxxx., Units A, B & E, San Condor Systems, Inc.
Xxxx, CA
------------------------------------------------------------------------------------
(4) 000 Xxxxxx Xxxx Xxxxxx, Xxxx Xxxxxx, XX CEI Systems, Inc.
------------------------------------------------------------------------------------
(5) 0000 Xxxxxxxxx Xxxxx Xxx., Xxxxx 0000, Condor Systems, Inc.
Sterling, VA
------------------------------------------------------------------------------------
(6) 0000 Xxxxxx Xxxxxx, Xxxxx X & H, E1 Paso, CEI Systems, Inc.
TX
------------------------------------------------------------------------------------
(7) Xxxxxxxx Xxxxxx 000x, 0000 Xxxxxxx, XXXXXXX CEI Systems, Inc.
------------------------------------------------------------------------------------
26
Schedule 6.16(c)
CHIEF EXECUTIVE OFFICES/PRINCIPAL PLACES OF BUSINESS
Address of the Chief Executive Office of each Consolidated Party
c/o Condor Systems, Inc.
0000 Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
