Exhibit 10.35
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement is made as of this 12th day of
December, 2001, by and between Cape Cod Bank and Trust Company, NA ("Lender"), a
National Association, with offices at 2 Barlows Landing Road, Pocasset,
Massachusetts 02559 and Benthos, Inc. ("Borrower"), a Massachusetts corporation
with its principal place at 49 Edgerton Drive, North Falmouth, Massachusetts
02556.
RECITALS:
A. Borrower and Lender entered into a certain Credit Agreement dated August
18, 1999, as amended by a First Amendment to Credit Agreement and Amendment to
Revolving Note and Term Note dated March 23, 2001 (the "Credit Agreement")
regarding: (i) a Commercial Variable Rate Revolving or Draw Note dated August
18, 1999, as amended by an Amendment dated December 8, 2000, a Second Amendment
dated March 23, 2001, and a Third Amendment dated July 9, 2001 (the "Revolving
Note"), (ii) a Commercial Variable Rate Promissory Note August 18, 1999, as
amended by an Amendment dated October 17, 2000, and a Second Amendment dated
March 23, 2001 (the "Term Note"), and (iii) other instruments and agreements
executed in conjunction therewith;
B. Borrower and Lender now desire to further amend the Credit Agreement and
to further amend each of the Revolving Note and Term Note as set forth herein
and in separate amendments of even date herewith to said Revolving Note and Term
Note.
AGREEMENTS:
Now, therefore, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Lender and the Borrower hereby agree as follows:
1. Capitalized terms used herein shall have the meaning given to them in
the Credit Agreement unless separately defined herein.
2. As of December 12th, 2001, the outstanding principal balance of the
Revolving Loan under the Revolving Note is $650,000.00 and the outstanding
principal balance of the Term Loan under the Term Note is $3,732,142.87.
3. The definition of "Expiration Date" as set forth in Section 1.01 of the
Credit Agreement is hereby amended to be January 31, 2003.
4. The following new definition is added to Section 1.01 of the Credit
Agreement: "Term Loan Expiration Date shall mean August 18, 2006".
5. The second sentence of Section 2.04(a) of the Credit Agreement is hereby
deleted and replaced with the following:
"The rate of interest so payable shall be a fluctuating rate per annum
which at all times shall be equal to the sum of the prime rate as
published in The Wall Street Journal ("WSJ Prime") on such date plus
two percent (2%), but in no event shall such interest rate be less
than seven percent (7%) or in excess of the maximum rate then
permitted by applicable law, with a change in such rate to become
effective on the same day on which any change in the WSJ Prime is
effective."
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6. Section 8.02 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:
"Section 8.02. Financial Covenants.
The Borrower covenants and agrees that, so long as any Loan is
outstanding or any obligation of the Borrower to the Lender, in any
capacity, remains unpaid, or any commitment by the Lender to the Borrower
is in effect:
a. The Borrower will maintain a ratio of Current Assets to Current
Liabilities of greater than or equal to:
(i) 1.95 to 1.00 as of December 31, 2001;
(ii) 2.00 to 1.00 as of March 31, 2002;
(iii) 2.00 to 1.00 as of June 30, 2002; and
(iv) 2.00 to 1.00 as of September 30, 2002.
b. The Borrower shall maintain a ratio of Total Debt to Tangible Net
Worth less than or equal to:
(i) 1.90 to 1.00 as of December 31, 2001;
(ii) 1.80 to 1.00 as of March 31, 2002;
(iii) 1.75 to 1.00 as of June 30, 2002; and
(iv) 1.55 to 1.00 as of September 30, 2002.
Tangible Net Worth shall equal total assets minus total liabilities
minus intangible assets.
c. The Borrower shall maintain a ratio of Cash Flow to Debt Service
Payments, which on a cumulative basis for the applicable period shall be
greater than or equal to the following:
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(i) .32 to 1.00 for quarter ending December 31, 2001;
(ii) .24 to 1.00 for quarter ending March 31, 2002;
(iii) .59 to 1.00 for quarter ending June 30, 2002; and
(iv) .76 to 1.00 for quarter ending September 30, 2002.
This ratio will be calculated on a cumulative basis and will
be determined as follows: (x) Net profit after taxes (a) plus
interest expense, (b) plus seventy-five percent (75%) of
depreciation, (c) plus amortization (y) divided by interest
expense plus the current maturity of principal for the year."
7. Section 10.01 of the Credit Agreement is hereby amended by adding
the following paragraph:
"(n) monthly, on or before the before the 15th of each month
for the immediately prior month, a monthly receivable aging, a
monthly inventory summary and a monthly backlog report."
8. A new Section 11.01(m) is added to the Credit Agreement as an
additional Event of Default as follows:
"(m) If Borrower's S.E.C. Form 10K for year ending September
30, 2001 is in substance materially different than Lender has
been led to expect by Borrower."
9. Article XIII of the Credit Agreement is hereby amended to add a new
Section 13.03 as follows:
"Section 13.03. Right to Conduct Internal Audits. Lender shall
have the right at any time to conduct an internal audit of the
Borrower upon reasonable advance notice to Borrower's senior
management."
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10. Except as provided herein, the Credit Agreement, as previously
amended, shall remain unchanged. The Credit Agreement as previously amended and
as further amended hereby is hereby ratified and confirmed.
Witness: BENTHOS, INC.
___________________ By: /s/ Ronald L. Marsiglio
Name: Ronald L. Marsiglio
Title: Chief Executive Officer and President
Witness: CAPE COD BANK AND TRUST COMPANY, NA
___________________ By: /s/ Timothy F. Kelleher III
Name: Timothy F. Kelleher III
Title: Senior Vice President
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