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AMENDMENT, WAIVER AND CONSENT dated as
of June 6, 1996 (this "Amendment") to the
Credit Agreement dated as of September 23,
1990 (as amended and restated as of
September 29, 1995) (the "Credit Agreement"),
among ESCO ELECTRONICS CORPORATION, a
Missouri corporation ("ESCO"), DEFENSE
HOLDING CORP., a Delaware corporation (the
"Borrower"), the BANKS party thereto (the
"Banks") and XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Agent (the "Agent").
A. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in
the Credit Agreement, as amended hereby.
X. XXXX and the Borrower have requested that the
Banks enter into this Amendment in order to permit the
potential sale of Xxxxxxxxx or its assets (the "Xxxxxxxxx
Transaction"). Xxxxxxxxx is one of the Borrower's
Subsidiaries. The Banks are willing to permit the Xxxxxxxxx
Transaction, subject to the terms and conditions set forth
herein.
Accordingly, in consideration of the mutual
agreements herein contained and other good and valuable
consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Consent and Waiver. (a) Subject to
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the conditions set forth in paragraph (b) below, the
undersigned Banks hereby consent to the Xxxxxxxxx
Transaction under Section 5.13(b) of the Credit Agreement
and waive compliance with the provisions of Sections 5.11(d)
and 5.12 of the Credit Agreement to the extent, but only to
the extent, necessary to allow the use of the proceeds of
the Xxxxxxxxx Transaction as provided below.
(b) The foregoing consent and waiver shall be
subject to the satisfaction of the following conditions:
(i) The Xxxxxxxxx Transaction shall be
consummated on or before September 30, 1996, as a
sale of all the outstanding capital stock or all
or substantially all of the assets of Xxxxxxxxx
for fair market value (and in any event no less
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than $100,000,000) and solely for cash
consideration.
(ii) At the time of and after giving effect
to the Xxxxxxxxx Transaction, no Default shall
have occurred and be continuing.
(iii) On the date of consummation of the
Xxxxxxxxx Transaction (the "Xxxxxxxxx Closing
Date"), the Agent shall have received a
certificate from the Borrower as to the portion of
the Borrowing Base (as reflected in the most
recent Borrowing Base Certificate delivered prior
to the Xxxxxxxxx Closing Date) transferred as a
result of the Xxxxxxxxx Transaction. The
Borrowing Base shall thereupon be reduced to
reflect the consummation of the Xxxxxxxxx
Transaction and if on the Xxxxxxxxx Closing Date,
after giving effect to the Xxxxxxxxx Transaction,
the sum of the Letter of Credit Exposure plus the
aggregate outstanding principal amount of the
Working Capital Loans exceeds the Borrowing Base,
the Borrower shall forthwith comply with
Section 2.08(c) of the Credit Agreement.
(iv) None of ESCO, the Borrower or any
Subsidiary shall have transferred any assets to
Xxxxxxxxx prior to the Xxxxxxxxx Closing Date
except in the ordinary course of business.
(v) On or prior to the Xxxxxxxxx Closing
Date, unless the Borrower shall choose to remain
liable after the Xxxxxxxxx Closing Date for all
obligations and liabilities under the Xxxxxxxxx
Letters of Credit, each Issuing Bank that shall
have issued any of the Xxxxxxxxx Letters of Credit
shall have received (A) letters of credit issued
to such Issuing Bank in respect of the Xxxxxxxxx
Letters of Credit issued by it, in amounts equal
to the Letter of Credit Exposure in respect of
such Xxxxxxxxx Letters of Credit and issued by a
bank and in a form satisfactory to such Issuing
Bank, supporting the obligations to reimburse
drawings under such Xxxxxxxxx Letters of Credit,
and (B) if the Xxxxxxxxx Transaction is
consummated as a sale of assets, a written
agreement, satisfactory in form to such Issuing
Bank, signed by the purchaser of such assets, to
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the effect that such purchaser assumes all
liability of the Borrower in respect of fees
payable in respect of such Xxxxxxxxx Letters of
Credit and obligations to reimburse Letter of
Credit Disbursements thereunder. If each such
Issuing Bank receives the letters of credit and
written agreement (if any) set forth in (A) and
(B) above on the Xxxxxxxxx Closing Date, the
Borrower shall pay all fees in respect of the
Xxxxxxxxx Letters of Credit accrued through and
including the Xxxxxxxxx Closing Date.
(vi) On, or within one Business Day after,
the Xxxxxxxxx Closing Date, the Borrower shall
prepay Term Loans in the aggregate principal
amount of $6,000,000, if such prepayment is made
prior to June 30, 1996, or $5,500,000, if such
prepayment is made on or after June 30, 1996. As
soon as practicable after the Xxxxxxxxx Closing
Date and with such advance notice as is required
by the terms thereof, the Borrower shall fully
prepay the PTI Note.
SECTION 2. Amendment of the Credit Agreement.
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The Credit Agreement is hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is
hereby amended as follows:
(i) The definition of "Consolidated Adjusted
Net Income" is hereby amended by inserting an
ending parenthesis after the word "nature" at the
end of such definition.
(ii) The definition of "Letter of Credit
Exposure" is hereby amended by inserting at the
end of the first sentence thereof: ", but the
"Letter of Credit Exposure" shall not include any
drawn or undrawn amounts under the Xxxxxxxxx
Letters of Credit if and when the Xxxxxxxxx
Letters of Credit cease to constitute Letters of
Credit as provided in Section 2.14(n)".
(iii) The definition of "Specified
Subsidiaries" is hereby amended by inserting at
the end of such definition the following proviso:
";provided that Xxxxxxxxx shall cease to be a
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Specified Subsidiary upon consummation of the
Xxxxxxxxx Transaction."
(iv) The following definitions are hereby
added to Section 1.01 in their appropriate
alphabetical order:
"Xxxxxxxxx Closing Date" means the date of
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consummation of the Xxxxxxxxx Transaction.
"Xxxxxxxxx Letters of Credit" means Letters of
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Credit that will remain outstanding after consummation of
the Xxxxxxxxx Transaction and that are issued to support an
obligation of Xxxxxxxxx or for the account of Xxxxxxxxx.
"Xxxxxxxxx Transaction" means the sale of all the
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outstanding capital stock or all or substantially all the
assets of Xxxxxxxxx (and, in the case of an asset sale, the
liquidation of Xxxxxxxxx) in accordance with the terms and
conditions of Section 1 of the Amendment, Waiver and Consent
dated as of June 6, 1996, relating to this Agreement.
"Restricted Payment Amount" means an amount equal
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to the net cash proceeds of the Xxxxxxxxx Transaction
received by the Borrower less the sum of the amounts applied
to prepay Term Loans and the PTI Note in connection with the
Xxxxxxxxx Transaction as required by the terms and
conditions of Section 1 of the Amendment, Waiver and Consent
dated as of June 6, 1996, relating to this Agreement;
provided that the Restricted Payment Amount shall not exceed
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$50,000,000.
(b) The first sentence of Section 2.08(a) of the
Credit Agreement is hereby amended by inserting at the end
thereof the following proviso: ";provided that if the
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Xxxxxxxxx Transaction is consummated, the $500,000 amount
referred to above shall be reduced to $325,000 for payments
due thereafter".
(c) Section 2.14 of the Credit Agreement is
hereby amended by inserting at the end thereof the following
additional paragraph:
(n) If the Xxxxxxxxx Transaction is
consummated in accordance with Section 1 of the
Amendment, Waiver and Consent dated as of June 6,
1996, relating to this Agreement and if each
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Issuing Bank that shall have issued any of the
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Xxxxxxxxx Letters of Credit shall have received
the letters of credit and written agreement (if
any) referred to in Section 1(b)(v) thereto, then
on and as of the Xxxxxxxxx Closing Date (i) the
Xxxxxxxxx Letters of Credit shall cease to
constitute Letters of Credit hereunder, (ii) the
Borrower, ESCO and the Subsidiaries shall be
released from their obligations and liabilities in
respect of the Xxxxxxxxx Letters of Credit and
(iii) the Banks shall be released from their
participations in the Xxxxxxxxx Letters of Credit;
provided that (i) the Borrower shall indemnify the
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Issuing Banks in respect of the Xxxxxxxxx Letters
of Credit for any failure by Xxxxxxxxx (or the
purchaser of its assets) to pay fees in respect of
the Xxxxxxxxx Letters of Credit after the
Xxxxxxxxx Closing Date, and (ii) unless the
Xxxxxxxxx Transaction is consummated as a sale by
Xxxxxxxxx of its assets, Xxxxxxxxx shall not be
released from its obligations and liabilities in
respect of the Xxxxxxxxx Letters of Credit and
shall remain liable on and after the Xxxxxxxxx
Closing Date for the reimbursement of drawings
under the Xxxxxxxxx Letters of Credit and for the
payment of fees in respect thereof to the
respective Issuing Banks, all on the terms
specified in this Agreement applicable to Letters
of Credit, notwithstanding any contrary provision
herein or in any other Loan Document.
(d) Section 5.12 of the Credit Agreement is
hereby amended as follows:
(i) Clause (ii)(b) of Section 5.12 is hereby
deleted and replaced with the following: "(b) the
aggregate, cumulative dividends paid pursuant to this
clause (ii) does not exceed during any fiscal year 25%
of Consolidated Net Income for the next preceding
fiscal year of ESCO plus, if the Xxxxxxxxx Transaction
is consummated, additional dividends not to exceed, on
a cumulative basis commencing with the Xxxxxxxxx
Closing Date, the Restricted Payment Amount less any
amounts paid for stock repurchases based on the
Restricted Payment Amount pursuant to clause (iii)
below;"
(ii) Clause (iii)(b) of Section 5.12 is hereby
deleted and replaced with the following:
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"(b) aggregate Restricted Payments pursuant to this
clause (iii) shall not exceed $5,000,000 during the 12-
month period ending on the date of such purchase and
shall not exceed $10,000,000 on a cumulative basis
commencing with September 30, 1995, plus, if the
Xxxxxxxxx Transaction is consummated, additional stock
repurchases not to exceed, on a cumulative basis
commencing with the Xxxxxxxxx Closing Date, the
Restricted Payment Amount less any amounts paid as cash
dividends based on the Restricted Payment Amount
pursuant to clause (ii) above;"
(e) Section 5.13(a) of the Credit Agreement is
hereby amended by inserting at the end of the first
parenthetical clause appearing in clause (iii) of such
Section, immediately before the close of such parenthetical
clause, the following: ";provided that, if the Xxxxxxxxx
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Transaction is consummated, then on and after the Xxxxxxxxx
Closing Date the foregoing provisions of this parenthetical
clause shall cease to apply and, in lieu thereof, such cash
consideration shall not exceed, in any fiscal year, the
excess of $10,000,000 over the aggregate cumulative amount
of Investments made in such fiscal year in reliance upon
clause (g) of Section 5.16".
(f) Section 5.16 of the Credit Agreement is
hereby amended as follows:
(i) Section 5.16(c) thereof is hereby
deleted in its entirety.
(ii) Section 5.16(g)(iii) is hereby amended
by inserting at the end of Section 5.16(g)(iii)
the following: ";provided that, if the Xxxxxxxxx
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Transaction is consummated, then on and after the
Xxxxxxxxx Closing Date the foregoing provisions of
this Section 5.16(g)(iii) shall cease to apply
and, in lieu thereof, the aggregate cumulative
amount of all Investments made immediately after
any such Investment is made or acquired, in any
fiscal year made in reliance upon this clause (g),
shall not exceed the excess of $10,000,000 over
the aggregate cumulative amount of consideration
paid in such fiscal year in respect of
acquisitions made in reliance upon clause (iii) of
Section 5.13(a)".
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(g) Section 5.22 of the Credit Agreement is
hereby amended by inserting at the end thereof the phrase
"minus (iv) if the Xxxxxxxxx Transaction is consummated, the
aggregate amount that Consolidated Adjusted Tangible Net
Worth is reduced as a result of repurchases of ESCO capital
stock or the payment of any cash dividends to the holders of
ESCO capital stock pursuant to clause (ii) or (iii) of
Section 5.12, but only to the extent made in reliance upon
the Restricted Payment Amount".
SECTION 3. Representations and Warranties. Each
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of ESCO and the Borrower hereby represents and warrants to
each Bank, on and as of the date hereof, that:
(a) This Amendment has been duly authorized,
executed and delivered by each of ESCO and the Borrower, and
each of this Amendment and the Credit Agreement as amended
by this Amendment constitutes a legal, valid and binding
obligation of each of ESCO and the Borrower, enforceable in
accordance with its terms.
(b) The representations and warranties of each of
ESCO and Borrower contained in the Credit Agreement and in
each other Loan Document are true and correct in all
respects with the same effect as if made on and as of the
date hereof, except to the extent that such representations
and warranties expressly relate to an earlier date.
(c) Before and after giving effect to this
Amendment, no Default has occurred and is continuing.
SECTION 4. Effectiveness. This Amendment shall
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become effective upon receipt by the Agent of counterparts
hereof signed by each of ESCO, the Borrower, the Required
Banks and each Issuing Bank.
SECTION 5. Miscellaneous. (a) This Amendment
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constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and
supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
(b) Section headings used herein are for
convenience of reference only and are not to affect the
construction of, or to be taken into consideration in
interpreting, this Amendment.
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(c) This Amendment shall be construed in
accordance with and governed by the law of the State of
New York.
(d) Each reference to a party hereto shall be
deemed to include its successors and assigns, all of whom
shall be bound by this Amendment and to whose benefit the
provisions of this Amendment shall inure.
(e) This Amendment may be executed in any number
of counterparts, each of which shall be an original but all
of which, when taken together, shall constitute but one
instrument.
(f) Except as specifically amended or modified
hereby, the Credit Agreement shall continue in full force
and effect in accordance with the provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed by their respective
authorized officers as of the date first above written.
ESCO ELECTRONICS CORPORATION
by
/s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President &
Treasurer
DEFENSE HOLDING CORP.
by
/s/ P.M. Ford
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Name: P.M. Ford
Title: Sr. Vice President &
CFO
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
by
/s/ Xxxxx X. X'Xxxxx
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Name: Xxxxx X. X'Xxxxx
Title: Vice President
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK
by
/s/ Xxxxx X. X'Xxxxx
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Name: Xxxxx X. X'Xxxxx
Title: Vice President
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THE XXXXXXX'X NATIONAL BANK
OF ST. LOUIS
by
/s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
THE BANK OF NEW YORK
by
/s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
by
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Name:
Title:
THE SUMITOMO BANK, LIMITED
by
/s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
by
/s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Vice President
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SANWA BUSINESS CREDIT
CORPORATION
by
/s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President
