Exhibit 10.7.3
SECOND AMENDMENT
TO
FINANCING AGREEMENT
THIS SECOND AMENDMENT TO FINANCING AGREEMENT (this "Agreement") is made
as of the 28th day of February, 1997, by TESSCO TECHNOLOGIES INCORPORATED
(sometimes referred to herein as the "Parent"), a corporation organized under
the laws of the State of Delaware, TESSCO COMMUNICATIONS INCORPORATED, a
corporation organized under the laws of the State of Delaware, TESSCO
INCORPORATED, a corporation organized under the laws of the State of Delaware,
TESSCO FINANCIAL CORPORATION, a corporation organized under the laws of the
State of Delaware, NATIONAL AIRTIME CORPORATION, a corporation organized under
the laws of the State of Delaware, WIRELESS SOLUTIONS INCORPORATED, a
corporation organized under the laws of the State of Maryland, (each of the
foregoing corporations, jointly and severally, collectively, the "Original
Borrower") and XXXXXXXXXX COMMUNICATIONS COMPANY, a corporation organized under
the laws of the State of Delaware ("Xxxxxxxxxx"), jointly and severally (the
Original Borrower and Xxxxxxxxxx collectively, the "Borrower"), and NATIONSBANK,
N.A., a national banking association, its successors and assigns (the "Lender").
RECITALS
A. The Original Borrower and the Lender entered into a Financing
Agreement dated March 31, 1995 (the same as amended by First Amendment to
Financing Agreement dated September 26, 1996, and as amended, modified,
substituted, extended, and renewed from time to time, the "Financing
Agreement"). The Financing Agreement provides for some of the agreements between
the Original Borrower and the Lender with respect to the "Loans" (as defined in
the Financing Agreement), including a revolving credit facility in an amount not
to exceed $10,000,000.
B. The Original Borrower has requested that the Lender permit
Xxxxxxxxxx to become part of the Borrower under the Financing Agreement,
increase the maximum principal amount of the Loans from $10,000,000 to
$15,000,000, revise certain of the financial covenants and make other changes to
the Financing Agreement as more fully described herein.
C. The Lender is willing to agree to the Original Borrower's request on
the condition, among others, that this Agreement be executed.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Borrower
and the Lender agree as follows:
1. The Borrower and the Lender agree that the Recitals above are a part
of this Agreement. Unless otherwise expressly defined in this Agreement, terms
defined in the Financing Agreement shall have the same meaning under this
Agreement.
2. The Original Borrowers and Xxxxxxxxxx hereby jointly and severally
acknowledge, confirm and agree that on and as of the date of this Agreement
Xxxxxxxxxx has become, and is, a "Borrower" under the Financing Agreement, the
Revolving Credit Note and the other Financing Documents for all purposes
thereof, and as such shall be jointly and severally liable, as provided in the
Financing Agreement, the Revolving Credit Note and the other Financing
Documents, for all Obligations thereunder (whether incurred or arising prior to,
on, or subsequent to the date hereof) and otherwise bound by all of the terms,
provisions and conditions thereof.
3. Xxxxxxxxxx makes as of the date of this Agreement the
representations contained in Section 3.1 of the Financing Agreement, except that
in Section 3.1.11 of the Financing Agreement the applicable financial statements
shall be the December 27, 1996 quarterly statements as reflected in the
Borrower's 10Q filed with the United States Securities and Exchange Commission,
and not the December 30, 1994 statements, and except that references in Section
3.1 of the Financing Agreement to EXHIBITS B, C and D, shall mean those exhibits
with any amendments thereto set forth in Schedule 1 to this Agreement.
4. The Borrower and the Lender agree that on the date hereof the
aggregate outstanding principal balance under the Revolving Credit Note (as
defined in the Financing Agreement and subject to change for returned items and
other adjustments made in the ordinary course of business) is $4,000,000.
5. The Original Borrower represents and warrants to the Lender as
follows:
(a) Original Borrower is a corporation duly organized, and validly
existing and in good standing under the laws of the state in which it was
organized and has the power and authority to own its property and to carry on
its business in each jurisdiction in which the Original Borrower does business;
(b) Original Borrower has the power and authority to execute and
deliver this Agreement and perform its obligations hereunder and has taken all
necessary and appropriate corporate action to authorize the execution, delivery
and performance of this Agreement;
(c) The Financing Agreement, as amended by this Agreement, and each
of the other Financing Documents to which the Original Borrower is a party
remain in full force and effect, and each constitutes the valid and legally
binding obligation of Original Borrower, enforceable in accordance with its
terms;
(d) All of Original Borrower's representations and warranties
contained in the Financing Agreement and the other Financing Documents to which
the Original Borrower is a party are true and correct on and as of the date of
Original Borrower's execution of this Agreement; and
(e) No Event of Default and no event which, with notice, lapse of
time or both would constitute an Event of Default, has occurred and is
continuing under the Financing Agreement or the other Financing Documents which
has not been waived in writing by the Lender.
6. The Financing Agreement is hereby amended as follows:
(a) Section 1.1 of the Financing Agreement is hereby amended by
deleting the definitions of "Applicable Margin," "Permitted Acquisitions," "Post
Default Rate" and "Revolving Credit Expiration Date" in their entirety and by
substituting therefor the following:
"Applicable Margin" means the applicable basis points per annum
added, as set forth in Section 2.2.1(c), to the LIBOR Base Rate or the Prime
Rate.
"Permitted Acquisitions" means Acquisitions, the aggregate
consideration for all of which does not exceed $5,000,000, provided, however,
that the consideration for the Acquisition of Xxxxxxxxxx Communications Company
shall not be included in the calculation of that $5,000,000 limit.
"Post-Default Rate" means the Revolving Loan Rate in effect from
time to time without regard to this definition, plus two percent (2%) per annum.
"Revolving Credit Expiration Date" means September 30, 1999.
(b) Section 2.1.1 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
2.1.1 Revolving Credit Facility. Subject to and upon the
provisions of this Agreement, the Lender establishes a revolving credit facility
(the "Revolving Credit Facility") in favor of the Borrower. The aggregate of all
advances under the Revolving Credit Facility are sometimes referred to in this
Agreement collectively as the "Revolving Loan". The "Revolving Credit Committed
Amount" means $15,000,000.00. Provided, however, in no event shall the Lender
consider any request for a Revolving Loan if after giving effect to the
Borrower's request, the outstanding principal balance of the Revolving Loan and
of the Letter of Credit Obligations would exceed the Revolving Credit Committed
Amount.
(c) Section 2.1.5 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
2.1.5 Revolving Credit Unused Line Fee. The Borrower shall pay
to the Lender a quarterly revolving credit facility fee (collectively, the
"Revolving Credit Unused Line Fees" and individually, a "Revolving Credit Unused
Line Fee") in an amount equal to one-quarter of one percent (0.25%) per annum on
the average daily unused and undisbursed portion of the Revolving Credit
Committed Amount in effect from time to time accruing during each calendar
quarter. The accrued and unpaid portion of the Revolving Credit Unused Line Fee
shall be paid by the Borrower to the Lender on the first day of the next
calendar quarter (commencing on the first such date following the date hereof)
and on the Revolving Credit Termination Date.
(d) Section 2.2.1(c) of the Financing Agreement is hereby deleted
in its entirety and substituted therefor is the following:
(c) The term "Revolving Loan Rate" shall mean either the Base Rate
or the LIBOR Rate for such Revolving Loan as chosen by the Borrower in writing
prior to the making of such Revolving Loan in accordance with the terms and
conditions of this Agreement, including the following basis points (the
"Applicable Margin"), based upon the Borrower's reaching and maintaining the
following corresponding Fixed Charges Coverage Ratios as determined by the
Lender from the Borrower's financial statements delivered in accordance with
Section 5.1.1 hereof:
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Applicable Margin Applicable Margin
Ratio for for
LIBOR Loans Base Rate Loans
------------------------------------------------------------------------- -------------------- ----------------------
If the Borrower's Fixed Charges Coverage Ratio 125 0
is greater than 2.0 to 1.0
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If the Borrower's Fixed Charges Coverage Ratio 150 0
is greater than or equal to 1.75 to 1.0, but less than 2.0 to 1.0
------------------------------------------------------------------------- -------------------- ----------------------
If the Borrower's Fixed Charges Coverage Ratio 175 25
is less than 1.75 to 1.0
------------------------------------------------------------------------- -------------------- ----------------------
The initial Fixed Charges Coverage Ratio is assumed to be greater than 2.0 to
1.0. Upon the determination of the Fixed Charges Coverage Ratio at the end of
each of the Borrower's fiscal quarters (beginning on the fiscal quarter ending
March, 1997), the corresponding Revolving Loan Rate shall be in effect
commencing with the first day of the month following the receipt of the
applicable financial statements of the Borrower and continuing through and
including the next determination of the Fixed Charges Coverage Ratio. Provided,
however, in the event that the Borrower fails to timely provide the Lender with
the financial statements required by Section 5.1.1 hereof, then the Lender may
in good faith determine the Fixed Charges Coverage Ratio and the Borrower may
choose the corresponding Revolving Loan Rate set forth above.
(e) Section 2.3.2 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
2.3.2 Letter of Credit Fees. Prior to or simultaneously with the
opening of each Letter of Credit, the Borrower shall pay to the Lender, a letter
of credit fee (each a "Letter of Credit Fee" and collectively the "Letter of
Credit Fees") in an amount equal to the amount of the Letter of Credit
multiplied by the per annum Applicable Margin (minus 25 basis points) for LIBOR
Loans under Section 2.2.1(c) of this Agreement. Such Letter of Credit Fees shall
be paid upon the opening of the Letter of Credit and upon each anniversary
thereof, if any thereof. In addition, the Borrower shall pay to the Lender any
and all additional issuance, negotiation, processing, transfer or other fees to
the extent and as and when required by the provisions of any Letter of Credit
Agreement; such additional fees are included in and a part of the "Fees" payable
by the Borrower under the provisions of this Agreement.
(f) Section 5.1.14 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
5.1.14 Current Ratio. The Borrower will at all times maintain,
tested as of the end of each fiscal quarter of the Borrower, a ratio of current
assets (as determined in accordance with GAAP consistently applied) to current
liabilities (as determined in accordance with GAAP consistently applied, except
that the outstanding principal balance of the Revolving Loan shall not be
included in current liabilities) of not less than 1.50 to 1.0.
(g) Section 5.1.17 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
5.1.17 Fixed Charges Coverage Ratio. The Borrower will maintain,
tested as of the last day of each of the Borrower's fiscal quarters for the four
(4) quarter period ending on that date (on a rolling four quarter basis), a
Fixed Charges Coverage Ratio of not less than 1.50 to 1.0.
(h) Section 5.1.18 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
5.1.18 Senior Funded Indebtedness to EBITDA Ratio. The Borrower
will maintain, tested as of the last day of each of the Borrower's fiscal
quarters for the four (4) quarter period ending on that date (on a rolling four
quarter basis), a ratio of Senior Funded Indebtedness to EBITDA of not greater
than 2.50 to 1.0.
"Senior Funded Indebtedness" means at any date, the aggregate of
all Indebtedness for Borrowed Money of the Borrower and its Subsidiaries, to the
Lender whether secured or unsecured, having a final maturity (or which by the
terms thereof is renewable or extendible at the option of the obligor for a
period ending) more than a year after that date.
(i) Section 5.2.1 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
5.2.1 Capital Structure, Merger, Acquisition or Sale of Assets
Capital Structure, Merger, Acquisition or Sale of Assets. Except for Permitted
Acquisitions, the Borrower shall not (i) enter into any merger or consolidation
or amalgamation, windup or dissolve itself (or suffer any liquidation or
dissolution) or (ii) make any Acquisition or sell, lease or otherwise dispose of
any of its assets except inventory and obsolete or unused equipment disposed of
in the ordinary course of its business, and except other asset dispositions
which do not exceed $500,000 in the aggregate in any fiscal year or, if in
excess of $500,000, for which the Lender has received not less than thirty (30)
days prior written notice and the proceeds of which have been used to reduce
non-subordinated indebtedness for borrowed money having a final maturity (or
which by the terms thereof is renewable or extendible at the option of the
obligor for a period ending) more than a year after the date proceeds are
applied.
(j) Section 5.2.14 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
5.2.14 Capital Lease Obligations. The Borrower will not incur or
permit to exist any Capital Leases unless otherwise expressly permitted by this
Agreement or permit any Subsidiary so to do, if the aggregate amount of all such
payments due under Capital Leases of the Borrower and its Subsidiaries (taken as
a whole) would at any time exceed One Million Dollars ($1,000,000.00) in any
twelve month period.
(k) The Financing Agreement is hereby amended by adding the
following as new Sections 5.2.15 and 5.2.16:k) The Financing Agreement is hereby
amended by adding the following as new Sections 5.2.15 and 5.2.16:
5.2.15 Capital Expenditures. The Borrower will not, directly or
indirectly (by way of the acquisition of the securities of a Person or
otherwise), make capital expenditures (a) which exceed in the aggregate
$6,500,000 in fiscal year 1997, or (b) which exceed in the aggregate for any
four (4) consecutive fiscal quarters (tested for the first time as of the end of
the Borrower's first fiscal quarter in fiscal year 1998) 125% of the Borrower's
depreciation (determined in accordance with GAAP, consistently applied to the
Borrower) for those four (4) fiscal quarters; provided, however, in determining
the amount of capital expenditures there shall be deducted capital expenditures
financed with the proceeds of capital leases or loans having a final maturity
(or which by the terms thereof is renewable or extendible at the option of the
obligor for a period ending) more than a year after the date proceeds are
applied.
5.2.16 Contingent Liabilities. The Borrower will not incur
contingent liabilities (by guaranty, indemnification, reimbursement, other
surety agreement, or otherwise) of $1,000,000 or more in the aggregate
outstanding at any time, other than by the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business.
(l) Section 6.1.12 of the Financing Agreement is hereby deleted in
its entirety and substituted therefor is the following:
6.1.12 Change in Ownership. Any change in (i) the ownership of the
Subsidiaries owned by the Parent or (ii) the Parent such that the Persons who
currently own the Parent's voting common stock no longer own at least 50% of the
Parent's voting common stock.
7. In addition to the information expressly required by Section 5.1.1
of the Financing Agreement, the Borrower agrees to provide to the Lender, no
later than ten (10) days after the Borrower's receipt, a copy of each management
letter furnished by the Borrower's independent certified public accountants.
8. At the time this Agreement is executed and delivered, the Borrower
shall execute and deliver the Amended and Restated Revolving Credit Note in
substantially the form attached to this Agreement as EXHIBIT A, which amends and
restates the Revolving Credit Note. References in this Agreement, the Financing
Agreement and the other Financing Documents to the "Revolving Credit Note" shall
mean the Revolving Credit Note as so amended and restated.
9. The Borrower hereby ratifies and confirms the representations,
warranties and covenants contained in the Financing Agreement, as amended
hereby. The Borrower agrees that this Agreement is not intended to and shall not
cause a novation with respect to any or all of the Obligations.
10. The Borrower shall pay at the time this Agreement is executed and
delivered all fees, commissions, costs, charges, taxes and other expenses
incurred by the Lender and its counsel in connection with this Agreement,
including, but not limited to, reasonable fees and expenses of the Lender's
counsel.
11. This Agreement may be executed in any number of duplicate originals
or counterparts, each of such duplicate originals or counterparts shall be
deemed to be an original and all taken together shall constitute but one and the
same instrument. The Borrower agrees that the Lender may rely on a telecopy of
any signature of the Borrower. The Lender agrees that the Borrower may rely on a
telecopy of this Agreement executed by the Lender.
IN WITNESS WHEREOF, the Borrowers and the Lender have executed this
Agreement under seal as of the date and year first written above.
WITNESS: TESSCO TECHNOLOGIES INCORPORATED
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Treasurer
WITNESS: TESSCO COMMUNICATIONS INCORPORATED
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Treasurer
WITNESS: TESSCO INCORPORATED
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Treasurer
WITNESS: TESSCO FINANCIAL CORPORATION
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Treasurer
WITNESS: NATIONAL AIRTIME CORPORATION
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Treasurer
WITNESS: WIRELESS SOLUTIONS INCORPORATED
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Treasurer
WITNESS: XXXXXXXXXX COMMUNICATIONS COMPANY
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Treasurer
WITNESS: NATIONSBANK, N.A.
/s/ By: /s/ XXXXXX X. XXXXXXX
-------------------------- -----------------------------(Seal)
Xxxxxx X. Xxxxxxx
Vice President
