EXHIBIT 10.30
WAIVER, CONSENT AND FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Waiver, Consent and Fourth Amendment to the Loan and Security
Agreement dated as of June 10, 2002 (this "AMENDMENT") is entered into as of the
12th day of March, 2004, by and among DEL GLOBAL TECHNOLOGIES CORP., a New York
corporation ("DEL GLOBAL"), BERTAN HIGH VOLTAGE CORP., a Delaware corporation
("BERTAN"), RFI CORPORATION, a Delaware corporation ("RFI"), and DEL MEDICAL
IMAGING CORP., a Delaware corporation ("DEL MEDICAL") (each a "BORROWER" and
collectively, the "Borrowers) and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, as successor by assignment to Transamerica Business
Corporation ("LENDER").
BACKGROUND
The Borrowers and the Lender are parties to a Loan and Security
Agreement dated as of June 10, 2002 (as amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement") pursuant to which
the Lender provides the Borrowers with certain financial accommodations.
The Borrowers have requested that the Lender (a) waive certain
Events of Default that have occurred and are continuing under the Loan
Agreement, (b) consent to the incurrence of subordinated Indebtedness and the
grant of a Lien in the Borrowers' assets in connection therewith and (c) amend
the Loan Agreement and the Lender is willing to do so on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of the Borrowers by
the Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction of the
conditions precedent set forth in Section 5 below, the Loan Agreement is hereby
amended as follows:
(i) Section 1.1 of the Loan Agreement is amended as follows:
(a) The following defined terms are amended in their
entirety to provide as follows:
"BASE RATE" means the latest rate for 30-day dealer placed
commercial paper (which for the purposes hereof shall mean high
grade unsecured notes sold through dealers by major corporations
in multiples of $1,000), which normally is published in the
"Money Rates" section of The Wall Street Journal (or if such
rate ceases to be so published, as quoted from such other
generally available and recognizable source as the Lender may
select). The Base Rate shall be determined on the last Business
Day of each calendar month for calculation of interest for the
following month.
"EXPIRATION DATE" means the earlier of (i) December 31, 2004
and (ii) the date of termination of the Lender's obligations to
make Loans or to use its best efforts to cause Letters of Credit
to be issued pursuant to the terms hereof.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the
ratio of the following for the Borrowers and their Subsidiaries
on a consolidated basis determined in accordance with GAAP: (a)
EBITDA for such period less Capital Expenditures for such period
which are not financed through the incurrence of any
Indebtedness (excluding the Loans) to (b) the sum of (i)
Interest Expense paid or accrued in respect of any Indebtedness
during such period, plus (ii) regularly scheduled payments of
principal paid or that were required to be paid on Funded Debt
(excluding the Loans) during such period plus (iii) dividends or
other distributions paid to stockholders during such period
except for the dividends or other distributions paid to the
minority stockholders of Villa Sistemi.
(b) The following defined terms are inserted in their
appropriate alphabetical order:
"EBITDA" means, for any period, the Net Income (Loss) of the
Borrowers and their Subsidiaries on a consolidated basis for
such period, plus Interest Expense, income tax expense,
amortization expense, depreciation expense and extraordinary
losses and minus extraordinary gains, in each case, of the
Borrowers and their Subsidiaries on a consolidated basis for
such period determined in accordance with GAAP to the extent
included in the determination of such Net Income (Loss). The
fees payable by Borrowers in connection with the Fourth
Amendment shall be excluded in calculating EBITDA.
"FOURTH AMENDMENT" means the Waiver, Consent and Fourth
Amendment to Loan and Security Agreement dated as of March __,
2004 by and among the Lender and the Borrowers.
"FOURTH AMENDMENT EFFECTIVE DATE" means the date on which
all of the conditions precedent set forth in the Fourth
Amendment shall have been satisfied.
"FUNDED DEBT" means, for any Person, all of such Person's
Indebtedness which by the terms of the agreement governing or
instrument evidencing such Indebtedness matures more than one
year from, or is directly or indirectly renewable or extendible
at the option of such Person under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over
a period of more than one year from, the date of creation
2
thereof, including current maturities of long-term debt,
revolving credit, and short-term debt extendible beyond one year
at the option of such Person.
"NET INCOME (LOSS)" means with respect to any Person and for
any period, the aggregate net income (or loss) after taxes of
such Person for such period, determined in accordance with GAAP.
"NET WORTH" means with respect to any Person and for any
period, the net worth of such Person for such period, determined
in accordance with GAAP.
"PERFORMANCE FEE" shall mean $500,000.
"PERFORMANCE FEE PAYMENT DATE" shall mean the earliest to
occur of (i) the Expiration Date and/or (ii) the date of
indefeasible payment or repayment in full of all outstanding
Loans and all outstanding Obligations (whether such final
payment or prepayment is made pursuant to Section 2.4 or any
other provision of this Agreement) and/or termination of this
Agreement.
(c) The following defined terms are deleted:
"ADJUSTED EARNINGS"
"ADJUSTED U.S. EARNINGS"
"AVERAGE EXCESS AVAILABILITY"
"PRICING INCREMENT"
"TANGIBLE NET WORTH"
(ii) The following subsection is added after the end of Section
2.2(e):
"(f) Notwithstanding anything to the contrary contained in
this Agreement or any other Loan Document, following the Fourth
Amendment Effective Date, the Borrowers may not request any
LIBOR Rate Advances, convert any Base Rate Advance into a LIBOR
Rate Advance or maintain any Borrowing as a LIBOR Rate Advance
at the end of the Interest period for such Borrowing."
(iii) Section 4.1 is amended in its entirety to provide as
follows:
"SECTION 4.1. INTEREST. Commencing on March 1, 2004, the
Borrowers shall pay to the Lender interest on the Advances,
payable monthly in arrears of the first Business Day of each
month and on the Expiration Date, at a floating rate equal to
the Base Rate plus three and one-half percent (3.50%) per
annum."
(iv) Section 4.6 is amended in its entirety to provide as
follows:
3
"SECTION 4.6. PERFORMANCE FEE. On the Fourth Amendment
Effective Date, Lender shall have earned the Performance Fee.
The Borrowers shall pay the Lender the Performance Fee on the
Performance Fee Payment Date. Notwithstanding anything to the
contrary in this Agreement, the terms of this Section 4.6, if
not fully complied with and indefeasibly paid in full by the
Borrowers, shall survive in full the termination of this
Agreement, any public offering of securities of any Borrower,
the Expiration Date, an Event of Default and/or payment or
prepayment in full of any Loan and/or the Obligations."
(v) The following subsection is added after the end of
Section 7.1(v):
"(w) DOD SETTLEMENT. No later than September 30, 2004, the
Lender shall have received evidence that the United States
Government and RFI have entered into a written settlement
agreement with respect to the investigation conducted by the
Department of Justice of the United States (the "DOJ") into the
business relationship between the Department of Defense of the
United States of America ("DOD") and RFI on terms and conditions
satisfactory to the Lender including, without limitation, (i) an
agreement by the DOJ to end its investigation of RFI with
respect to RFI's business relationship with the DOD and to
release any claims with respect thereto and (ii) the payment by
RFI to the United States Government of an amount not to exceed
$5,000,000.
(vi) The following subsection is added after the end of
Section 7.2(w):
"(x) EXCESS AVAILABILITY. At all times, after giving effect
to all Revolving Credit Loans and all Letters of Credit issued
at such time, the Excess Availability shall not be less than
$500,000."
(vii) Section 8.1 is amended in its entirety to provide as
follows:
"SECTION 8.1. Intentionally Omitted."
(viii) Section 8.2 is amended in its entirety to provide as
follows:
"SECTION 8.2. Intentionally Omitted."
(ix) Section 8.3 is amended in its entirety to provide as
follows:
"SECTION 8.3. Intentionally Omitted."
(x) Section 8.4 is amended in its entirety to provide as
follows:
"SECTION 8.4. FIXED CHARGE COVERAGE RATIO. The Fixed
Charge Coverage Ratio for any period set forth below shall
not be less than the ratio set forth below opposite such
period:
4
Minimum Fixed
Period Charge Coverage Ratio
------ ---------------------
February 1, 2004 through April 30, 2004 2.00:1.00
February 1, 2004 through July 31, 2004 2.00:1.00
February 1, 2004 through October 31, 2004 1.50:1.00
(xi) Section 8.5 is amended in its entirety to provide as
follows:
"SECTION 8.5. NET WORTH. The Net Worth of Borrowers
and their Subsidiaries as of the last day of each fiscal
month commencing with the fiscal month ending March 31, 2004
shall not be less than $9,500,000."
(xii) The addresses for notice to the Lender in Section 11.1
are amended in their entirety to provide as follows:
General Electric Capital Corporation
000 Xxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Account Manager - Del Global Technologies Corp.
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
3. CONSENT. Subject to the satisfaction of the conditions precedent
set forth in Section 5 below, the Lender agrees that the Borrowers may obtain
financing in an amount not to exceed $5,000,000 (the "SUBORDINATED DEBT") from a
financial institution (the "SUBORDINATED LENDER") so long as (a) the proceeds of
such financing shall be used solely to pay all amounts owing by RFI to the
United States Government under the settlement agreement between RFI and the
United States Government, (b) the agreements evidencing such Indebtedness shall
be in a form and substance satisfactory to Lender and (c) such Indebtedness
shall be subordinated in the right of payment and claims, to the rights and
claims of Lender in respect of the Obligations on terms and conditions
satisfactory to the Lender, pursuant to a subordination agreement, satisfactory
in form and substance to Lender. The Borrowers may grant the Subordinated Lender
a Lien in their assets to secure the Subordinated Debt so long as the
Subordinated Lender agrees to subordinate its Lien in the Borrowers' assets to
the Lender's Lien in the Borrowers' assets and agrees that it shall exercise no
rights or remedies with respect thereto pursuant to an agreement having terms
and conditions satisfactory to the Lender.
4. WAIVER. Subject to the satisfaction of the conditions precedent
set forth in Section 5 below, the Lender hereby waives the Events of Default
arising solely out of the failure by the Borrowers to maintain (a) Adjusted
Earnings of not less than $4,500,000 for the fiscal period commencing February
2, 2003 and ending January 31, 2004 as required by Section 8.1 of the Loan
Agreement, (b) Adjusted U.S. Earnings of not less than $2,775,000 for the fiscal
period commencing February 2, 2003 and ending January 31, 2004 as required by
Section 8.2 of the Loan Agreement, (c) a Senior Debt Ratio of not greater than
5
1.50 to 1.00 as of the last day of the fiscal quarter ending January 31, 2004 as
required by Section 8.3 of the Loan Agreement and (d) a Fixed Charge Coverage
Ratio of not less than 2.00 to 1.00 for the fiscal period commencing February 2,
2003 and ending January 31, 2004 as required by Section 8.4 of the Loan
Agreement.
5. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective upon satisfaction or waiver in writing by the Lender of each of the
following conditions precedent, each in form and substance satisfactory to the
Lender: (a) the Lender's receipt of this Amendment duly executed by the
Borrowers and (b) the Lender's receipt of a non-refundable fee in the amount of
$100,000 and all reasonable attorney's fees incurred in connection with this
Amendment, each of which shall be charged to the Borrowers' loan account as a
Loan on the date of this Amendment.
6. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby represent
and warrant as follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of the Borrowers and are
enforceable against the Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, the Borrowers
hereby reaffirm all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) As of the date hereof, the Borrowers have no defense,
counterclaim or offset with respect to the Loan Agreement.
7. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of Section 2 hereof, each reference
in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import and each reference in the other Loan Documents to the Loan
Agreement shall mean and be a reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended or waived herein, the Loan
Agreement, and all other documents, instruments and agreements executed and/or
delivered in connection therewith, shall remain in full force and effect, and
are hereby ratified and confirmed by each of the parties hereto.
(c) Except as specifically provided herein, the execution,
delivery and effectiveness of this Amendment shall not operate as a waiver of
any right, power or remedy of the Lender, nor constitute a waiver of any
6
provision of the Loan Agreement, or any other documents, instruments or
agreements executed and/or delivered under or in connection therewith.
8. GOVERNING LAW. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the internal laws (as
opposed to the conflicts of law provisions) of the State of Illinois.
9. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
10. COUNTERPARTS; FACSIMILE. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed an
original and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
[Signature Page to Follow]
7
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first written above.
DEL GLOBAL TECHNOLOGIES CORP.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BERTAN HIGH VOLTAGE CORP.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
RFI CORPORATION
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Title: Chief Financial Officer
DEL MEDICAL IMAGING CORP.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Title: Chief Financial Officer
GENERAL ELECTRIC CAPITAL
CORPORATION
By:/s/ Xxxxxxx Xxxx
---------------------------------
Name: Xxxxxxx Xxxx
Title: Duly Authorized Signatory
