EXHIBIT 10.6
SECOND AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDMENT, dated as of October 13, 1995 (the
'Amendment'), to the Amended and Restated Credit Agreement, dated as of April
12, 1995, among NAI Technologies, Inc., a New York corporation (the 'Borrower'),
Chemical Bank, a New York banking corporation ('Chemical'), The Bank of New
York, a New York banking corporation ('BNY'), and each of the other financial
institutions which from time to time becomes party thereto (together with
Chemical and BNY, the 'Banks'), BNY, as administrative agent (in such capacity,
the 'Administrative Agent') and Chemical, as collateral agent (in such capacity,
the 'Collateral Agent').
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks, the Administrative Agent and
the Collateral Agent are parties to that certain Amended and Restated Credit
Agreement, dated as of April 12, 1995 (as amended by that certain First
Amendment to Amended and Restated Credit Agreement, dated as of August 14, 1995,
the 'Credit Agreement');
WHEREAS, unless otherwise defined herein, terms defined in the
Credit Agreement and used herein are used herein as therein defined;
WHEREAS, the Borrower and Charles Holmes ('Holmes') have
reached an agreement whereby Holmes will make a $1,000,000 subordinated
unsecured loan to the Borrower in exchange for certain consideration;
WHEREAS, the Borrower has requested a limited waiver of the
financial covenant set forth in Section 6.16 of the Credit Agreement for the
periods provided herein; and
WHEREAS, the Borrower has requested and the Banks have agreed
to consent to the incurrence of such subordinated indebtedness and to waive
compliance with the financial covenant referred to above on the terms
hereinafter set forth.
Accordingly, the parties hereto hereby agree as follows:
Section 1. Amendment to Article I. Article I of the Credit
Agreement is hereby amended by adding the following defined term to Section 1.01
thereof:
'Second Amendment' shall mean the Second Amendment dated as of October
13, 1995 to the Agreement.
Section 2. Amendments to Article V. Article V of the Credit
Agreement is hereby amended by adding the following sections at the end thereof:
Section 5.16. Delivery of Certificate. Within five days after the end
of each month, furnish each of the Banks with a certificate of a
Financial Officer certifying that neither the Borrower nor any of the
Guarantors have sold any Inventory, fixtures or equipment for amounts
less than 90% of the book value of such assets during the preceding
month.
Section 5.17. Additional Subordinated Note. In the event that the
Borrower seeks to obtain $2,000,000 of the Subordinated Indebtedness
permitted by Section 6.03(vi) hereof, cause the promissory note
delivered to the Subordinated Lender thereof to be in substantially the
form of note annexed as Exhibit A to the Second Amendment.
Section 3. Clarification of Section 6.02. For purposes of
clarifying the provisions of Section 6.02, it is understood and agreed among the
parties hereto that the sale of Inventory, fixtures and equipment for amounts
equal to or in excess of 90% of the book value of such assets would constitute a
sale in the ordinary course of business, and that a sale of such assets for
amounts below 90% of the book value of such assets would not constitute a sale
in the ordinary course of business.
Section 4. Amendments to Article VI. Article VI of the Credit
Agreement is hereby amended by (a) amending Section 6.03 thereof to delete the
word 'and' prior to clause (v) and to add the following language at the
conclusion of such Section just prior to the period:
; and (vi) Indebtedness of the Borrower to Charles Holmes or any of his
Affiliates (the 'Subordinated Lender') in an aggregate amount not to
exceed $3,000,000 (the 'Subordinated Indebtedness'), which Indebtedness
shall be subordinate in right of payment to the Indebtedness owed to
the Bank under this Agreement.
and (b) to add the following section at the end thereof:
Section 6.18. Use of Proceeds of Subordinated Indebtedness. The
Borrower will not, and will not permit its Subsidiaries to, use
proceeds of the Subordinated Indebtedness for purposes of mergers,
acquisitions, joint ventures or other business combinations. Any such
use of the proceeds of the Subordinated Indebtedness shall constitute
an Event of Default under the Agreement.
Section 5. Limited Waiver of Section 6.16; Consolidated
Tangible Net Worth. Compliance with the financial covenant set forth in Section
6.16 of the Credit Agreement is hereby waived for the period August 1, 1995
through December 15, 1995; provided, that the Consolidated Tangible Net Worth
shall not be less than $1,000,000.
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Section 6. Confirmation of Liens. The Borrower hereby confirms
that, pursuant to the terms of the Credit Agreement and the Security Documents,
the Borrower and the Guarantors have granted Liens on all of their assets to the
Collateral Agent for the benefit of the Banks. The Borrower hereby further
confirms that it will not and will not permit its Subsidiaries to incur, create,
assume or suffer to exist any Lien on any property or assets, income or profits
of the Borrower or any of its Subsidiaries other than those permitted by Section
6.01 of the Credit Agreement, and any such granting of any such Lien in favor of
any third person, including the holders of the Subordinated Indebtedness (as
hereinafter defined) shall constitute an Event of Default under the Credit
Agreement. Nothing contained herein (including the provisions of Section 2
hereof) shall constitute a release or modification of any Lien in favor of the
Collateral Agent and the Banks in any Collateral which constitutes security for
any of the Obligations.
Section 7. Representations and Warranties. The representations
and warranties set forth in Section 3 of the Credit Agreement are true and
correct in all material respects on and as of the date hereof, except to the
extent that such representations and warranties expressly relate to an earlier
date. As of the Effective Date, and after giving effect to this Amendment, no
Event of Default, or an event with which the giving of notice or the passage of
time, or both, would constitute an Event of Default, exists.
Section 8. Counterparts. This Amendment may be executed
in any number of counterparts, each of which shall constitute an
original and all of which when taken together shall constitute one
and the same instrument.
Section 9. Conditions to Effectiveness. This Amendment shall
become effective as of the date hereof (the 'Effective Date') when all of the
following shall have occurred:
(a) The Banks shall have each received
counterparts of this Amendment, duly executed by the Borrower;
(b) The Borrower shall have received $1,000,000
in cash in respect of Subordinated Indebtedness; and
(c) The Banks shall have received a copy of the fully
executed promissory note of the Borrower to the Subordinated Lender in
the form of Exhibit A hereto.
Section 10. Ratification. Except to the extent hereby amended,
the Credit Agreement remains in full force and effect and is hereby ratified and
affirmed. References in the Loan Documents to the Credit Agreement shall mean
such document as amended by this Amendment, as the same may be further amended,
supplemented or otherwise modified from time to time.
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Section 11. Costs and Expenses. All out-of-pocket expenses
incurred by the Banks, including the reasonable fees and disbursements of
Zalkin, Rodin & Goodman LLP, counsel to the Banks, incurred in connection with
the negotiation and preparation of this Amendment shall be paid by the Borrower
as provided in Subsection 9.05 of the Credit Agreement. The Borrower hereby
confirms that the Borrower shall be obligated to reimburse the Banks' reasonable
expenses incurred in the retention of a financial advisor to the Banks in
connection with the administration of the Loans or the protection or enforcement
of the Banks' rights in connection therewith.
Section 12. References. This Amendment shall be limited
precisely as written and shall not be deemed (a) to be a consent granted
pursuant to, or a waiver or modification of, any other term or condition of the
Credit Agreement or any of the instruments or agreements referred to therein or
(b) to prejudice any right or rights which the Administrative Agent, Collateral
Agent or the Banks may now have or have in the future under or in connection
with the Credit Agreement or the Loan Documents or any of the instruments or
agreements referred to therein.
Section 13. Applicable Law. THIS AMENDMENT SHALL IN ALL
RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH
STATE.
Section 14. Headings. Section headings in this Amendment are
included herein for convenience of reference only and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Amendment.
Section 15. Integration. This Amendment represents the entire
agreement of the parties hereto with respect to the amendment of the Credit
Agreement and the terms of any letters and other documentation entered into
among the Borrower and any Bank or the Administrative Agent or the Collateral
Agent prior to the execution of this Amendment which relate to the amendment of
the Credit Agreement shall be replaced by the terms of this Amendment.
Section 16. Execution in Counterparts. This Second Amendment
may be executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
NAI TECHNOLOGIES, INC.
By___________________________
Title:
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THE BANK OF NEW YORK
as Administrative Agent and as a Bank
By:___________________________
Vice President
CHEMICAL BANK
as Collateral Agent and as a Bank
By:___________________________
Vice President
Consented to as of this
13th day of October, 1995
NAI TECHNOLOGIES - SYSTEMS DIVISION CORPORATION
By:_______________________
Title:
WILCOM, INC.
By:_______________________
Title:
ARATHON, V.I., INC.
By:_______________________
Title:
CODAR TECHNOLOGY, INC.
By:_______________________
Title:
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