THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (the "Third Amendment") is made and
entered into this 28th day of January, 2002, by and between HERLEY INDUSTRIES,
INC., a Delaware corporation, having offices at 3061 Industry Drive, Lancaster,
Pennsylvania 17603 (the "Borrower") and ALLFIRST BANK, a Maryland state-
chartered commercial bank, successor to The First National Bank of Maryland, a
division of FMB Bank, having offices at 1703 Oregon Pike, Lancaster,
Pennsylvania 17601 (the ALender@).
B A C K G R O U N D :
A. Borrower has borrowed from Lender and desires to continue to borrow from
Lender in connection with the operation of its business(es). On February 16,
1999, the parties entered into a Loan Agreement relative to a Revolving Loan and
a Mortgage Loan, which was amended by an Amendment to Loan Agreement dated
January 11, 2000, and by a Second Amendment to Loan Agreement dated February 15,
2001 (as amended, the AAgreement@). The Agreement is incorporated herein by
reference and made a part hereof. All capitalized terms used herein without
definition which are defined in the Agreement shall have the meanings set forth
therein.
B. The parties desire to further amend the Agreement.
C. Borrower has no defense, charge, defalcation, claim, plea, demand or
set-off against the Agreement or any of the Loan Documents.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
covenant and agree as follows:
1. That the above Background is incorporated herein by reference.
2. That Section 1.1 of the Agreement is amended to extend the current
Revolving Loan Maturity Date from January 31, 2003, to January 31, 2004.
3. That Section 2.5 of the Agreement is amended to provide that interest
will accrue on the outstanding principal balance of the Revolving Loan at a rate
per annum equal to the Federal Funds Target Rate as established by the Federal
Open Market Committee of the Federal Reserve Board, as in effect from time to
time, plus 1.65%. The interest rate shall change effective with the Bank=s
implementation of changes in the Federal Funds Target Rate as publicly
announced.
4. That Section 6.11 of the Agreement is amended to provide that Borrower
will not permit the Tangible Net Worth of Borrower, on a consolidated basis, to
be less than $35,000,000 at any time while any Loan remains outstanding and
unpaid or any other amount is owing under any Loan Document to Lender.
5. That Section 6.12 of the Agreement is amended to provide that Borrower
shall at all times maintain a maximum Debt-to-Tangible Net Worth Ratio of
1.50-to-1 while any Loan remains outstanding and unpaid or any other amount is
owing under any Loan Document to Lender.
6. That the Borrower reaffirms and restates the representations and
warranties set forth in Article VII of the Agreement, as amended by this Third
Amendment, and all such representations and warranties shall be true and correct
on the date hereof with the same force and effect as if made on such date,
except as they may specifically refer to an earlier date(s). The Borrower
represents and warrants (which representations and warranties shall survive the
execution and delivery hereof) to the Lender that (i) this Third Amendment has
been duly authorized, executed and delivered and constitute a legal, valid and
binding obligation of the Borrower, and is enforceable in accordance with its
terms; (ii) the Borrower is not in default under the Agreement or any of the
other Loan Documents, and the Borrower is in full compliance with all of the
terms and conditions thereof; (iii) no event exists, or is likely to exist in
the future, which with the passage of time, notice, or both, will constitute a
default under the Agreement or any of the other Loan Documents; and (iv) there
have been no material adverse changes in the Borrower=s finances or operations
which would cause the Borrower to be in default under any of the financial
covenants contained in the Loan Documents.
7. That the terms and conditions, paragraph sections, collateral and
guaranty requirements, representations and warranties of the Agreement and Loan
Documents, together with all understandings by and between the parties to this
Third Amendment evidenced by writings of the same or subsequent date not in
conflict with the above modifications under this Third Amendment shall remain in
full force and effect as the agreement of the parties relative to the Loans, and
are hereby ratified, reaffirmed and con- firmed.
8. That all references to the Agreement, the Loan Documents, and the other
documents and instruments delivered pursuant to or in connection therewith, as
well as in writings of the same or subsequent date, shall mean the Agreement as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time. Similarly, all references to The First National
Bank of Maryland, a division of FMB Bank, shall be deemed to have been made and
to refer to Allfirst Bank, successor to The First National Bank of Maryland, a
division of FMB Bank.
9. That the parties hereto shall, at any time, and from time to time
following the execution of this Third Amendment, execute and deliver all such
further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Third
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be executed by their respective duly authorized officers all as of the day and
year first above written.
ATTEST: HERLEY INDUSTRIES, INC.,
a Delaware corporation
/s/ John Kelley By: /s/ Myron Levy
Title: Sr. Vice President Title: CEO
/s/ John Kelley By: /s/ A. C. Garefino
Title: Sr. Vice President Title: VP Finance/CFO
ALLFIRST BANK, successor to The First
National Bank of Maryland, a Division
of FMB Bank
By: /s/ Jane E. Kline
Title: Vice President
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