Exhibit 10.23
AMENDMENT NO. 3
Dated as of June 25, 1999
to
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of March 19, 1998
THIS AMENDMENT NO. 3 ("Amendment") is made as of June 25, 1999 by and
among IFR SYSTEMS, INC. (the "Borrower"), the financial institutions parties
hereto as Lenders, and THE FIRST NATIONAL BANK OF CHICAGO, in its capacity as
contractual representative (the "Agent") under that certain Amended and Restated
Credit Agreement dated as of March 19, 1998 by and among the Borrower, the
Lenders and the Agent, as amended by an Amendment No. 1 and Waiver dated as of
November 3, 1998 and an Amendment No. 2 dated as of March 31, 1999 (as amended
and as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"). Defined terms used herein and not
otherwise defined herein shall have the respective meanings given to them in the
Credit Agreement.
WHEREAS, the Borrower, the Lenders and the Agent are parties to the
Credit Agreement; and
WHEREAS, the Borrower has requested that the Agent and the Required
Lenders amend the Credit Agreement in certain respects, and the Required Lenders
and the Agent are willing to amend the Credit Agreement on the terms and
conditions set forth herein, it being expressly understood that the
modifications set forth herein shall in no event constitute a waiver by the
Lenders or the Agent of any breach of the Credit Agreement or any of the
Lenders' or Agent's rights or remedies with respect thereto;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower, the Lenders and the Agent have agreed to the following amendments to
the Credit Agreement:
1. AMENDMENT TO CREDIT AGREEMENT. Effective as of the Effective Date
(as defined below) and subject to the satisfaction of the conditions precedent
set forth in SECTION 2 below, the Credit Agreement is hereby amended as follows:
1.1 SECTION 1.1 of the Credit Agreement is amended (i) to insert the
following immediately prior to the period (".") now appearing at the end of the
definition of "EBITDA":
", MINUS (x) the net gain on the sale of the OTM Division to the extent
added in computing Net Income; PROVIDED, that EBITDA attributable to the
OTM Division shall be included in the calculation of EBITDA to but not
including the date of the sale of the OTM Division".
; and (ii) to insert alphabetically the following new definition:
- 1 -
"OTM DIVISION" means substantially all of the assets of the Borrower
comprising the optical test and measurement business of the Borrower."
1.2 SECTION 2.5(B)(I) of the Credit Agreement is hereby amended to
insert immediately after the phrase "Asset Sale" now appearing in CLAUSE (F) of
SECTION 2.5(B)(I), the following: "(other than the sale of the OTM Division)".
1.3 SECTION 7.4(A) of the Credit Agreement is hereby amended to
delete the phrase "1.35 to 1.00" now appearing therein and to substitute the
following therefor: "1.15 to 1.00".
1.4 SECTION 7.4(B) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
" (B) MAXIMUM LEVERAGE RATIO. The Borrower shall not permit the ratio
(the "LEVERAGE RATIO") of (i) the sum of (a) Indebtedness for borrowed
money and (b) Capitalized Lease Obligations to (ii) EBITDA to be greater
than:
(i) 5.75 to 1.00 for each fiscal quarter for the period
commencing with the fiscal quarter ending June 30, 1999 through the
fiscal quarter ending September 30, 1999; and
(ii) 5.50 to 1.00 for the fiscal quarter ending December 31,
1999; and
(iii) 5.25 to 1.00 for each fiscal quarter for the period
commencing with the fiscal quarter ending March 31, 2000 through the
fiscal quarter ending June 30, 2000; and
(iv) 5.00 to 1.00 for the fiscal quarter ending September
30, 2000; and
(v) 4.00 to 1.00 for each fiscal quarter for the period
commencing with the fiscal quarter ending December 31, 2000 through
the fiscal quarter ending December 31, 2001; and
(vi) 3.25 to 1.00 for each fiscal quarter for the period
commencing with the fiscal quarter ending March 31, 2002 through the
fiscal quarter ending December 31, 2002; and
(vii) 2.50 to 1.00 for each fiscal quarter for the period
commencing with the fiscal quarter ending March 31, 2003 through the
fiscal quarter ending December 31, 2003; and
(viii) 2.00 to 1.00 for each fiscal quarter thereafter until
the Termination Date.
The Leverage Ratio shall be calculated, in each case, determined as of the
last day of each fiscal quarter based upon (a) for Indebtedness for
borrowed money and Capitalized Lease Obligations, Indebtedness for borrowed
money and Capitalized Lease Obligations as of the last day of each such
fiscal quarter; and (b) for EBITDA, the actual amount for the four-quarter
period ending on such day, calculated, with respect to Permitted
Acquisitions, on a PRO FORMA basis using historical audited and reviewed
unaudited financial statements obtained from the seller, broken down by
fiscal quarter in the Borrower's reasonable judgment; PROVIDED, HOWEVER,
that for purposes of calculating Indebtedness for each fiscal quarter
through and including the fiscal quarter ending December 31, 1997,
Indebtedness shall exclude all liabilities in connection with the overdraft
facilities maintained by the Borrower and its Subsidiaries in the United
Kingdom."
1.5 SECTION 7.4(D) of the Credit Agreement is hereby amended to
delete the phrase "$9,500,000" now appearing in CLAUSE (III) thereof, and to
substitute the following therefor: "$7,000,000".
2. CONDITIONS OF EFFECTIVENESS. The effectiveness of this Amendment
is subject to the condition precedent that the Agent shall have received the
following documents:
(i) duly executed originals of this Amendment from the Borrower, the
Required Lenders and the Agent;
(ii) duly executed originals of the Reaffirmation attached hereto from
each Domestic Incorporated Subsidiary of the Borrower; and
(iii) such other documents, instruments and agreements as the
Agent may reasonably request.
Upon the satisfaction of the foregoing conditions precedent, this Amendment
shall be deemed effective as of June __, 1999 (the "Effective Date").
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
hereby represents and warrants as follows:
(a) This Amendment and the Credit Agreement as previously executed
and as amended hereby, constitute legal, valid and binding obligations of the
Borrower and are enforceable against the Borrower in accordance with their
terms.
(b) Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made in the Credit
Agreement, as amended hereby, and agrees that all such covenants,
representations and warranties shall be deemed to have been remade as of the
Effective Date of this Amendment.
4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
(a) Upon the effectiveness of SECTION 1 hereof, each reference to the
Credit Agreement in the Credit Agreement and each other Loan Document shall mean
and be a reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit 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.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or the
Lenders, nor constitute a waiver of any provision of the Credit Agreement or any
other documents, instruments and agreements executed and/or delivered in
connection therewith.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS
105/5-1 ET SEQ., BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS.
6. 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.
7. COUNTERPARTS. This Amendment may be executed by one or more of
the parties to the Amendment on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.
IFR SYSTEMS, INC.
By: ____________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Agent and as Lender
By: ____________________________
Name:
Title:
INTRUST BANK, as a Lender
By: ____________________________
Name:
Title:
THE BANK OF NOVA SCOTIA, as a Lender
By: ____________________________
Name:
Title:
HARRIS TRUST AND SAVINGS BANK, as a Lender
By: ____________________________
Name:
Title:
SIGNATURE PAGE TO AMENDMENT NO. 3
TO AMENDED AND RESTATED CREDIT AGREEMENT
NATIONAL WESTMINSTER BANK PLC, as a Lender
By: ____________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as a Lender
By: ____________________________
Name:
Title:
LLOYDS BANK PLC, as a Lender
By: ____________________________
Name:
Title:
SIGNATURE PAGE TO AMENDMENT NO. 3
TO AMENDED AND RESTATED CREDIT AGREEMENT
REAFFIRMATION
Each of the undersigned hereby acknowledges receipt of a copy of the
foregoing Amendment No. 3 to the Amended and Restated Credit Agreement dated as
of March 19, 1998 by and among IFR Systems, Inc., a Delaware corporation (the
"Borrower"), the lenders from time to time parties thereto (collectively, the
"Lenders") and The First National Bank of Chicago, as one of the Lenders and in
its capacity as contractual representative (the "Agent") on behalf of itself and
the other Lenders, as amended by an Amendment No. 1 and Waiver and an Amendment
No. 2 dated as of November 3, 1998 and March 31, 1999, respectively (as amended
and as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT") which Amendment No. 3 is dated as of
June __, 1999 (the "AMENDMENT"). Capitalized terms used in this Reaffirmation
and not defined herein shall have the meanings given to them in the Credit
Agreement. Without in any way establishing a course of dealing by the Agent or
any Lender, each of the undersigned reaffirms the terms and conditions of the
Guaranty, Security Agreement and any other Loan Document executed by it and
acknowledges and agrees that such agreement and each and every such Loan
Document executed by the undersigned in connection with the Credit Agreement
remains in full force and effect and are hereby reaffirmed, ratified and
confirmed. All references to the Credit Agreement contained in the
above-referenced documents shall be a reference to the Credit Agreement as so
modified by the Amendment and as the same may from time to time hereafter be
amended, modified or restated.
Dated: June __, 1999
IFR AMERICAS, INC., formerly known as
IFR Instruments, Inc.
PK TECHNOLOGY, INC.
IFR INSTRUMENTS OF TEXAS, INC.,
formerly known as Marconi Instruments, Inc.
IFR FINANCE, INC.
By __________________________
Name:
Title:
SIGNATURE PAGE TO REAFFIRMATION