================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26634
LECROY CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2507777
(State of other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
700 CHESTNUT RIDGE ROAD, CHESTNUT RIDGE, NEW YORK 10977
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (914) 425-2000
Indicate by check mark ("X") whether the Registrant: (1) has filed all reports
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT APRIL 28, 2000
----- -----------------------------
Common stock, par value $.01 share 7,771,966
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<PAGE>
LECROY CORPORATION
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
9-14
PART II OTHER INFORMATION 15
Signatures 15
2
<PAGE>
LECROY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- ----------------- ----------------
March 31, June 30,
In thousands 2000 1999
- ------------------------------------------------------------------------------------- ----------------- ----------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,284 $ 1,791
Accounts receivable 28,175 31,549
Inventories:
Raw materials 10,818 10,346
Work in process 8,177 5,854
Finished goods 12,768 12,920
------------- ---------------
Total inventories 31,763 29,120
Other current assets 2,820 3,200
------------- ---------------
Total current assets 69,042 65,660
Property and equipment, at cost:
Land and building 11,318 9,294
Furniture, machinery and equipment 30,457 28,463
------------- ---------------
Total property and equipment 41,775 37,757
Less: Accumulated depreciation and amortization (25,723) (23,200)
-------------- ----------------
Property and equipment, net 16,052 14,557
Marketable securities 2,454 7,383
Other assets 14,534 14,614
------------- ---------------
TOTAL ASSETS $ 102,082 $ 102,214
============= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 11,951 $ 1,600
Accounts payable 11,966 11,858
Accrued expenses:
Deferred revenue 2,588 3,910
Restructuring 2,288 3,420
Other 13,886 14,492
------------- -------------
Total current liabilities 42,679 35,280
Long term debt - 6,600
Deferred compensation - 327
Redeemable convertible preferred stock 8,406 8,152
Stockholders' equity:
Common stock 78 77
Additional paid-in capital 43,167 42,869
Accumulated other comprehensive loss (4,715) (3,970)
Retained earnings 12,467 12,879
------------- ---------------
Total stockholders' equity 50,997 51,855
------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 102,082 $ 102,214
============= ===============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
LECROY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ------------------------------- -------------------------------
Three months ended Nine months ended
March 31, March 31,
In thousands, except per share data 2000 1999 2000 1999
- ------------------------------------------------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Digital oscilloscopes and related products $ 28,342 $ 25,533 $ 78,939 $ 72,668
High energy physics products 829 2,314 3,585 5,850
Service and other 1,860 1,781 5,348 5,016
License fees - 2,400 - 4,900
------------ ----------- ------------ -------------
Test and measurement revenues 31,031 32,028 87,872 88,434
------------ ------------ ------------ -------------
Vigilant products 1,186 2,566 4,282 7,787
Sale of network technology - - 2,000 -
------------ ----------- ------------ -------------
Vigilant revenues 1,186 2,566 6,282 7,787
------------ ----------- ------------ -------------
Total revenues 32,217 34,594 94,154 96,221
Cost of sales 15,438 18,429 46,180 47,435
------------ ----------- ------------ -------------
Gross profit 16,779 16,165 47,974 48,786
------------ ----------- ------------ -------------
Operating expenses:
Selling, general and administrative 12,289 11,596 35,541 32,649
Research and development 5,019 4,807 14,918 13,409
Restructuring and non-recurring charges - 8,546 - 8,546
------------ ----------- ------------ -------------
Total operating expenses 17,308 24,949 50,459 54,604
------------ ----------- ------------ -------------
Operating loss (529) (8,784) (2,485) (5,818)
Gain from sale of marketable securities - - 2,460 -
Other (income) expenses, net 85 (194) (153) (8)
------------ ------------ ------------- --------------
Income (loss) before income taxes (614) (8,590) 128 (5,810)
Provision for income taxes 317 265 540 1,098
------------ ----------- ------------ -------------
Net loss (931) (8,855) (412) (6,908)
Charges related to convertible preferred stock (85) - (254) -
------------- ----------- ------------- -------------
Net loss applicable to common stockholders $ (1,016) $ (8,855) $ (666) $ (6,908)
============= ============ ============= ==============
Loss per common share:
Basic $ (0.13) $ (1.16) $ (0.09) $ (0.91)
============ =========== ============ =============
Diluted $ (0.13) $ (1.16) $ (0.09) $ (0.91)
============ =========== ============ =============
Weighted average number of common shares:
Basic 7,757 7,629 7,734 7,601
============ =========== ============ =============
Diluted 7,757 7,629 7,734 7,601
============ =========== ============ =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
LECROY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
In thousands 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Loss $ (412) $ (6,908)
Adjustments for noncash items included in operating activities:
Depreciation and amortization 3,726 3,473
Gain on sale of marketable securities (2,460) -
Restructuring provisions - 9,745
Other - (13)
Change in operating asset and liability components:
Accounts receivable 3,066 228
Inventories (2,757) (1,625)
Prepaid expenses and other assets (370) (341)
Accounts payable, deferred revenue, restructuring and other liabilities (2,615) (5,793)
----------------- -----------------
Net cash used by operating activities (1,822) (1,234)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,974) (4,998)
Purchase of intangible assets - (2,525)
Investment in computer software (865) (1,105)
Proceeds from the sale of marketable securities 7,587 -
---------------- ----------------
Net cash provided (used) in investing activities 1,748 (8,628)
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term debt (682) 184
Borrowings under line of credit 4,400 9,800
Proceeds from exercise of stock options and stock purchases 609 648
Costs related to the issuance of preferred stock (61) -
----------------- ----------------
Net cash provided by financing activities 4,266 10,632
---------------- ----------------
Effect of exchange rates on cash 301 (170)
---------------- -----------------
Increase in cash and cash equivalents 4,493 600
Cash and cash equivalents at beginning of the period 1,791 1,895
---------------- ----------------
Cash and cash equivalents at end of the period $ 6,284 $ 2,495
================ ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
LECROY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Basis of Presentation
In the opinion of management, the accompanying unaudited interim condensed
consolidated financial statements reflect all adjustments, of a normal and
recurring nature, necessary to present fairly the results for the interim
periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The year-end balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. It is suggested that these condensed
statements be read in conjunction with the Company's most recent Form 10-K and
Annual Report as of June 30, 1999.
This Form 10-Q contains forward-looking statements, which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
the Company's actual results or activities to differ materially from these
forward-looking statements include but are not limited to: the effect of
economic conditions, including the effect on purchases by the Company's
customers; competitive factors, including pricing pressures, technological
developments and products offered by competitors; changes in product sales and
mix; the Company's ability to deliver a timely flow of competitive new products
and market acceptance of these products; inventory risks due to changes in
market demand or the Company's business strategies; currency fluctuations; risks
due to an interruption in supply or an increase in price for the Company's
parts, components and subassemblies; the impact of violations by the Company
under its existing Credit Agreement; the ability of the Company to negotiate new
financing arrangements with lenders; the ability of the Company to obtain
alternative funding for its Vigilant segment; and other risk factors listed from
time to time in the Company's reports filed with the Securities and Exchange
Commission and press releases.
Results for the interim period are not necessarily indicative of the results
that may be expected for the entire year.
Comprehensive Loss
For the three months ended March 31, 2000 and 1999, the Company's comprehensive
loss was $1.4 million and $9.8 million, respectively. For the nine months ended
March 31, 2000 and 1999, the Company's comprehensive loss was $1.2 million and
$5.9 million, respectively. The comprehensive loss for the three months ended
March 31, 2000 included foreign currency translation losses of $0.5 million. The
comprehensive loss for the nine months ended March 31, 2000 included foreign
currency translation losses of $0.6 million and an unrealized gain on marketable
equity securities classified as available for sale of $0.4 million. During the
nine months ended March 31, 2000 the Company recognized $0.5 million of
previously unrealized gains on marketable equity securities included in prior
periods' comprehensive income. The comprehensive loss for the three and nine
months ended March 31, 1999, included foreign currency translation gains
(losses) of $(2.2) million and $0.7 million, respectively, as well as unrealized
gains on marketable equity securities of $1.3 million and $0.2 million,
respectively. The cumulative foreign currency translation losses were $5.3
million at March 31, 2000 and $4.6 million at June 30, 1999. The cumulative
unrealized gains on marketable equity securities classified as available for
sale were $0.6 million at March 31, 2000 and $0.7 million at June 30, 1999.
Restructuring Costs
In the third quarter of fiscal 1999 the Company adopted a restructuring plan
(the "Plan"), the objectives of which were to consolidate oscilloscope
operations in order to enhance operating efficiencies and to dedicate additional
resources to capitalize on several current breakthrough technologies.
6
<PAGE>
LECROY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
At March 31, 2000 the Company had remaining reserves and liabilities of
approximately $4.2 million relating to the Plan. During the quarter and nine
months ended March 31, 2000 the Company charged approximately $0.9 million and
$2.6 million, respectively, against the restructuring reserves. These charges
primarily related to severance and employee benefits costs and lease payments.
In addition, during the third quarter and nine months ended March 31, 2000, the
restructuring reserve was reduced by $0.3 million due to the effect of exchange
rate changes. This $0.3 million reduction is included in accumulated other
comprehensive loss in the Condensed Consolidated Balance Sheets. The overall
expected cost of the Plan has not changed since the Plan was approved. The Plan
is expected to be completed by the end of fiscal 2000.
Sale of Marketable Equity Securities
In a series of transactions in October 1999, the Company sold 2.691 million
shares of marketable securities representing an investment in a strategic
partner for net proceeds of approximately $7.6 million. As a result of this
sale, the Company recorded a pretax gain of approximately $2.5 million ($0.20
per diluted share, net of taxes) in its second fiscal quarter.
Change in Accounting Estimate
The Company has experienced improved quality on its newer product offerings and
has developed a more refined methodology to reflect these improvements in its
assessment of warranty exposure. As a result, the Company has reduced its
warranty reserve and increased operating income by $0.6 million, or $0.08 per
basic share, in the quarter ended March 31, 2000.
Segment and Geographic Information
The Company develops, manufactures, sells and licenses signal analyzers,
principally high-performance digital oscilloscopes, in its Test and Measurement
segment. In addition, the Company develops, manufactures, sells and licenses
local area network analyzers, including remote protocol analyzers through its
Vigilant Networks segment. The Company has recently announced that it has
combined its protocol analyzer product lines with its network analysis products.
As such, these two segments, previously presented separately, are now combined
as Vigilant Networks. Revenue, operating income (loss) and assets by segment are
as follows:
<TABLE>
<CAPTION>
Elimination
of
Test & Vigilant Corporate/ Intersegment
Measurement Networks Other Revenue Consolidated
----------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
For the Nine Months Ended March 31, 2000
Revenue:
Revenue from external customers $ 87,872 $ 6,282 $ - $ - $ 94,154
Intersegment revenue 1,684 - - - 1,684
Elimination of intersegment revenue - - - (1,684) (1,684)
----------- ---------- ----------- ---------- ----------
Total revenue $ 89,556 $ 6,282 $ - $ (1,684) $ 94,154
=========== ========== =========== ========== ==========
Operating income (loss) $ 5,263 $ (6,908) $ - $ (840) $ (2,485)
=========== ========== =========== ========== ==========
For the Three Months Ended March 31, 2000
Revenue:
Revenue from external customers $ 31,031 $ 1,186 $ - $ - $ 32,217
Intersegment revenue 250 - - - 250
Elimination of intersegment revenue - - - (250) (250)
----------- ---------- ----------- ---------- ----------
Total revenue $ 31,281 $ 1,186 $ - $ (250) $ 32,217
=========== ========== =========== ========== ==========
Operating income (loss) $ 3,025 $ (3,429) $ - $ (125) $ (529)
=========== ========== =========== ========== ==========
Total Assets at March 31, 2000 $ 91,928 $ 9,298 $ 856 $ - $ 102,082
=========== ========== =========== ========== ==========
</TABLE>
7
<PAGE>
LECROY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Elimination
of
Test & Vigilant Corporate/ Intersegment
Measurement Networks Other Revenue Consolidated
----------- -------- ---------- ------------ ------------
For the Nine Months Ended March 31, 1999
Revenue:
<S> <C> <C> <C> <C> <C>
Revenue from external customers $ 88,434 $ 7,787 $ - $ - $ 96,221
Intersegment revenue 927 - - - 927
Elimination of intersegment revenue - - - (927) (927)
----------- ---------- ----------- ----------- -----------
Total revenue $ 89,361 $ 7,787 $ - $ (927) $ 96,221
=========== ========== =========== ========== ==========
Operating income (loss) $ 9,360 $ (3,998) $ (10,717) $ (463) $ (5,818)
=========== ========== =========== ========== ==========
For the Three Months Ended March 31,1999
Revenue:
Revenue from external customers $ 32,028 $ 2,566 $ - $ - $ 34,594
Intersegment revenue 563 - - - 563
Elimination of intersegment revenue - - - (563) (563)
----------- ---------- ----------- ----------- ----------
Total revenue $ 32,591 $ 2,566 $ - $ (563) $ 34,594
=========== ========== =========== =========== ==========
Operating income (loss) $ 3,644 $ (1,429) $ (10,717) $ (282) $ (8,784)
=========== ========== =========== ========== ==========
</TABLE>
As a result of the Company's philosophy of maximizing operating efficiencies
through the centralization of certain functions, each segment includes an
allocation of corporate expenses. Included in Corporate/Other operating income
are restructuring and other non-recurring expenses of $10.7 million related to
the Test and Measurement segment. Such amounts are included in Corporate/Other
because management reviews and makes decisions on the Test and Measurement
segment based on operating results exclusive of non-recurring charges.
Revenues, by geographic area, are as follows:
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended March 31, Ended March 31,
--------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
North America $ 43,921 $ 46,889 $ 14,256 $ 16,824
Europe 25,038 27,078 8,796 8,963
Other foreign 25,195 22,254 9,165 8,807
----------- ----------- ----------- -----------
Total $ 94,154 $ 96,221 $ 32,217 $ 34,594
=========== =========== =========== ===========
</TABLE>
Other foreign revenues consist principally of sales from Japan and Asia.
Total assets, by geographic area, are as follows:
<TABLE>
<CAPTION>
March 31, 2000 June 30, 1999
--------------------------- -------------------------
<S> <C> <C>
North America $ 71,172 $ 69,644
Europe 23,877 25,502
Other foreign 7,033 7,068
----------- -----------
Total $ 102,082 $ 102,214
=========== ===========
</TABLE>
8
<PAGE>
LECROY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CONSOLIDATED RESULTS OF OPERATIONS
The following table indicates the percentage of total revenues represented by
each item in the Company's consolidated statements of operations.
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
2000 1999 2000 1999
--------------- -------------- --------------- --------------
Revenues:
<S> <C> <C> <C> <C>
Digital oscilloscopes and related products 88.0% 73.8% 83.8% 75.5%
High energy physics products 2.5 6.7 3.8 6.1
Service and other 5.8 5.2 5.7 5.2
License fees - 6.9 - 5.1
------ ------ ------ ------
Test and Measurement revenues 96.3 92.6 93.3 91.9
------ ------ ------ ------
Vigilant products 3.7 7.4 4.6 8.1
Sale of network technology - - 2.1 -
------ ------ ------ ------
Vigilant revenues 3.7 7.4 6.7 8.1
------ ------ ------ ------
Total revenues 100.0 100.0 100.0 100.0
Cost of sales 47.9 53.3 49.0 49.3
------ ------ ------ ------
Gross profit 52.1 46.7 51.0 50.7
Operating expenses:
Selling, general and administrative 38.1 33.5 37.8 33.9
Research and development 15.6 13.9 15.8 14.0
Restructuring and non-recurring charges - 24.7 - 8.9
------ ------ ------ ------
Operating loss (1.6) (25.4) (2.6) (6.1)
Gain from sale of marketable securities - - 2.6 -
Other (income) expenses, net 0.3 (0.6) (0.1) -
------ ------- ------- ------
Income (loss) before incomes taxes (1.9) (24.8) 0.1 (6.1)
Provision for income taxes 1.0 0.8 0.5 1.1
------ ------ ------ ------
Net loss (2.9)% (25.6)% (0.4)% (7.2)%
======= ======= ======= =======
</TABLE>
Consolidated revenues were $32.2 million and $94.2 million for the three and
nine months ended March 31, 2000, a decrease of approximately $2.4 million and
$2.1 million, or 7% and 2%, respectively, from the comparable prior year
periods. Revenues for the nine months ended March 31, 2000 included $2.0 million
for the sale of technology. Revenues for the three and nine months ended March
31, 1999 included license fees of approximately $2.4 million and $4.9 million,
respectively. Excluding the sale of technology and license fees, consolidated
revenues for the quarter ended March 31, 2000 were substantially the same as in
the prior year, and increased $0.8 million, or 1%, for the nine months ended
March 31, 2000, compared to the prior year. Refer to the specific segment
results of operations below for further discussion and analysis of revenues.
Gross margins were 52.1% and 51.0% for the three and nine months ended March 31,
2000, respectively, compared with 46.7% and 50.7% for the comparable periods in
the prior year. Excluding the favorable effect of the sale of technology and
license fees noted above and a $2.2 million charge related to the restructuring
plan adopted by the Company in the third quarter of fiscal 1999 (see
Restructuring costs below), gross margins were 52.1% and 49.9% for the three and
nine months ended March 31, 2000, respectively, compared with 49.5% and 50.4%
for the comparable periods in the prior year. Refer to the specific segment
results of operations below for further discussion and analysis of gross
margins.
Selling, general and administrative expenses for the three and nine months ended
March 31, 2000, increased $0.7 million and $2.9 million, or 6% and 9%,
respectively, from the comparable prior year periods. The increase was primarily
due to higher spending to support the projected growth in the Vigilant segment's
revenues. Excluding the sale of technology and license fees, selling, general
and administrative expenses as a percentage of consolidated revenues were 38.1%
and 38.6% for the three and nine months ended March 31, 2000, compared to 36.0%
and 35.8% for the comparable prior year periods.
9
<PAGE>
Research and development expenses increased $0.2 million, or 4% for the three
months ended March 31, 2000, and $1.5 million, or 11%, for the nine months ended
March 31, 2000, compared to the corresponding prior year periods. The increases
reflect continued investment in future generations of Test and Measurement
products as well as in the Vigilant segment's network analysis product, Big
TangerineTM.
Operating losses were $0.5 million and $2.5 million for the three and nine
months ended March 31, 2000, compared to operating losses of $8.8 million and
$5.8 million for the comparable prior year periods. Included in the operating
loss for the three and nine months ended March 31, 1999 were $10.7 million of
expenses related to the restructuring plan adopted by the Company in the third
quarter of fiscal 1999, $2.2 million of which were recorded in cost of sales
(see Restructuring Costs below). Refer to the specific segment results of
operations below for further discussion and analysis of operating income (loss).
In a series of transactions in the second quarter of fiscal 2000, the Company
sold 2.691 million shares of marketable equity securities of a strategic
partner. This sale generated net proceeds of approximately $7.6 million and
resulted in a pretax gain of approximately $2.5 million ($0.20 per diluted
share, net of taxes), which was recorded in the second quarter of fiscal 2000.
Net interest expense and financing charges, included in other (income) expenses,
net were $0.2 million and $0.6 million for the three and nine months ended March
31, 2000, compared to $0.1 million and $0.3 million for the comparable prior
year periods. The increase is due to higher borrowing levels to fund the
Company's continued investment, in terms of operating losses, in its Vigilant
segment and working capital requirements. Also included in other (income)
expenses, net are foreign currency exchange gains of $0.1 million and $0.8
million for the three and nine months ended March 31, 2000, compared to $0.3
million for both the three and nine months ended March 31, 1999.
Based on the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," the Company has determined that it is more likely
than not that it will not realize any benefits from the assets created through
U.S. tax losses. As such, it has not recognized a tax benefit in its income
statement for losses generated by its U.S. operations. The provision for income
taxes for the three and nine month periods ended March 31, 1999 and 2000 consist
primarily of tax on income generated by certain of the Company's foreign
subsidiaries, foreign withholding tax on license fee revenue to customers in
foreign countries, and U.S. based state and local franchise taxes.
TEST AND MEASUREMENT SEGMENT RESULTS OF OPERATIONS
The table below provides the Test and Measurement's operating results as a
percentage of total segment revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Digital oscilloscopes and related products 91.3% 79.7% 89.8% 82.2%
High energy physics products 2.7 7.2 4.1 6.6
Service and other 6.0 5.6 6.1 5.7
License fees - 7.5 - 5.5
------ ------ ------ ------
Test and measurement revenues 100.0 100.0 100.0 100.0
Cost of sales 47.9 54.0 50.7 49.6
------ ------ ------ ------
Gross profit 52.1 46.0 49.3 50.4
Operating expenses 42.8 42.3 44.3 42.8
Restructuring and non-recurring charges - 26.7 - 9.7
------ ------ ------ ------
Operating income (loss) 9.3% (23.0)% 5.0% (2.1)%
====== ====== ====== ======
</TABLE>
10
<PAGE>
Test and Measurement revenues were $31.0 million and $87.9 million for the three
and nine months ended March 31, 2000, a decrease of 3% and 1%, respectively,
compared to corresponding prior year periods. Excluding license fees of $2.4
million and $4.9 million for the three and nine months ended March 31, 1999,
respectively, revenues increased 5% for both the three and nine months ended
March 31, 2000. Revenues from digital oscilloscopes and related products for the
quarter and nine months ended March 31, 2000, increased 11% and 9%,
respectively. These increases were primarily attributable to higher unit volume
of the Company's successful Waverunner/TM/ family of oscilloscopes introduced in
the third quarter of fiscal 1999. In addition, the Company had shipments to
Kelly Air Force base of $1.5 million and $3.1 million for the three and nine
months ended March 31, 2000, respectively. The increase in digital oscilloscopes
and related products was partially offset by decreases in revenues from high
energy physics products. These products comprised only 2.7% and 4.1% of test and
measurement revenues for the quarter and nine months ended March 31, 2000,
compared to 7.8% and 7.0% for the comparable prior year periods excluding
license fees. The Company expects that revenues from high energy physics
products will continue to decline as a percent of total test and measurement
revenues.
Gross margins for the quarter and nine months ended March 31, 2000 were 52.1%
and 49.3%, respectively, compared to 46.0% and 50.4%, respectively, for the
corresponding prior year periods. Included in gross profit for the quarter and
nine months ended March 31, 1999 is the favorable effect of the license fees
noted above, partially offset by $2.2 million of restructuring charges.
Excluding the effect of the license fees and restructuring charges, gross
margins were 49.0% and 50.1% for the quarter and nine months ended March 31,
1999. The improvement in gross margin in the current quarter was primarily
attributable to lower warranty costs and manufacturing efficiencies. The lower
warranty costs were the result of significant quality enhancements in the
Company's product offerings and a more refined methodology used to determine the
Company's warranty exposure. As a result, the Company decreased its warranty
reserve by $0.6 million in the quarter ended March 31, 2000. The improvement in
gross margin for the nine months ended March 31, 2000 was primarily due to the
reduction in warranty reserve.
Operating expenses were $13.3 million and $39.0 million, respectively, for the
three and nine months ended March 31, 2000 compared to $13.5 million and $37.8
million, respectively, for the corresponding prior year periods. Excluding the
effect of the license fees, operating expenses as a percentage of revenues
decreased to 42.8% and 44.3%, for the three and nine months ended March 31,
2000, compared to 45.8% and 45.3%, respectively, for the corresponding prior
year periods. The decrease was primarily the result of leveraging higher product
revenue, as well as cost reduction activities and higher productivity resulting
from the Company's restructuring in the third quarter of fiscal 1999.
As a result of the factors discussed above, operating income for the Test and
Measurement segment was $2.9 million and $4.4 million for the quarter and nine
months ended March 31, 2000, compared to an operating loss of $7.3 million and
$1.8 million, including $10.7 million of restructuring and other non-recurring
expense, for the corresponding periods in the prior year.
VIGILANT NETWORKS SEGMENT RESULTS OF OPERATIONS
The Vigilant Networks segment is comprised of the Company's Vigilant and
Digitech subsidiaries. In 1998, the Company, capitalizing on its core signal
analysis competency, developed a network monitor which evaluates the health and
integrity of the network's physical layer. This product has been recently
launched as the Big TangerineTM . During fiscal year 1998, the Company acquired
Digitech Corporation to incorporate their LAN and WAN protocol analysis
technology into Vigilant's product line. Since the beginning of 1998,
substantial investments in Vigilant Networks have generated more than $20.0
million in operating losses, excluding license fees. The Company expects to
continue to make significant investments in the Vigilant business through at
least fiscal 2001 (see "Liquidity and Capital Resources" for discussion of
funding requirements).
11
<PAGE>
The table below provides the Vigilant Networks segment ("Vigilant") operating
results as a percentage of total segment revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
---------------- --------------- ---------------- --------------
Revenues:
<S> <C> <C> <C> <C>
Vigilant products 100.0% 100.0% 68.2% 100.0%
Sale of network technology - - 31.8 -
------- ------- ------ ------
Vigilant revenues 100.0 100.0 100.0 100.0
Cost of sales 47.1 44.8 26.5 37.9
------- ------- ------ ------
Gross profit 52.9 55.2 73.5 62.1
Operating expenses 342.0 110.9 183.4 113.5
------- ------- ------ ------
Operating loss (289.1)% (55.7)% (109.9)% (51.4)%
======= ======= ====== ======
</TABLE>
The Vigilant segment generated revenue of $1.2 million and $6.3 million for the
three and nine months ended March 31, 2000, compared with $2.6 million and $7.8
million for the corresponding periods of the prior year. Included in revenue for
the nine month period ended March 31, 2000 is $2.0 million related to the sale
of technology. The decrease in revenue for both the three and nine months ended
March 31, 2000 is primarily attributable to lower volume at Digitech due to the
refocus from WAN/carrier related products to LAN/enterprise network analysis
products. In addition, revenue in the three months ended March 31, 2000 was
approximately $0.5 million lower than the comparable prior year period due to
lower sales of Vigilant's Big TangerineTM network analyzer. Approximately $1.0
million of the Big TangerineTM product revenue in the third quarter of fiscal
1999, which consisted primarily of stocking orders to a distributor, were
deferred in the subsequent quarter due to the initial efforts required by the
Company to assist the distributor in bringing about the sale to the final
customer. This revenue will be recognized in the periods in which the units are
sold to the final customer. Considering this subsequent adjustment, Big
TangerineTM revenue actually increased in the quarter ended March 31, 2000 by
approximately $0.5 million, compared to the prior year.
Gross margin for the Vigilant segment was 52.9% and 73.5% in the three and nine
months ended March 31, 2000, compared to 55.2% and 62.1% in the comparable
periods of the prior fiscal year. Excluding the sale of technology, gross margin
for the nine months ended March 31, 2000 was 61.1%. The decrease in gross margin
is due primarily to lower revenue and related manufacturing inefficiencies at
Digitech.
Operating expenses for the Vigilant segment were $4.0 million and $11.5 million
for the third quarter and nine months ended March 31, 2000, compared to $2.8
million and $8.8 million for the comparable prior year periods. The increase in
operating expenses was due to increased spending in sales, marketing and R&D to
build the infrastructure for supporting the projected increase in sales of
Vigilant's Big TangerineTM product line.
As a result of the factors discussed above, the Vigilant segment generated
operating losses of $3.4 million and $6.9 million in the three and nine month
periods ended March 31, 2000, compared to operating losses of $1.4 million and
$4.0 million for the corresponding periods in the prior fiscal year.
RESTRUCTURING COSTS
In the third quarter of fiscal 1999, the Company adopted a restructuring plan
(the "Plan"), the objectives of which were to consolidate oscilloscope
operations in order to enhance operating efficiencies and to dedicate additional
resources to capitalize on several current breakthrough technologies.
At March 31, 2000 the Company had remaining reserves and liabilities of
approximately $4.2 million related to the Plan. During the quarter and nine
months ended March 31, 2000 the Company charged approximately $0.9 million and
$2.6 million, respectively, against the restructuring reserves. These charges
primarily related to severance and employee benefits costs and lease payments.
In addition, during the third quarter and nine months ended March 31, 2000 the
restructuring reserve was reduced by $0.3 million due to the effect of exchange
rate changes. This $0.3 million reduction is included in accumulated other
comprehensive loss in the Condensed Consolidated Balance Sheets. The overall
expected cost of the Plan has not changed since the Plan was approved. The Plan
is expected to be completed by the end of fiscal 2000.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $26.4 million at March 31, 2000 compared to $30.4 million at
June 30, 1999. The current ratio at March 31, 2000 was 1.62 to 1, compared to
1.86 to 1 at June 30, 1999. The reduction of the current ratio was due to the
reclassification of the Company's borrowings under its secured multicurrency
revolving credit agreement (the "Credit Agreement") to current liabilities in
the Condensed Consolidated Balance Sheets (see further discussion below).
At March 31, 2000, the Company had total debt of $12.0, cash and cash
equivalents of $6.3 million and marketable securities of $2.5 million. As such,
debt, net of cash and cash equivalents and marketable securities, was $3.2
million at March 31, 2000.
Net cash used by operating activities was $1.8 million for the nine months ended
March 31, 2000, compared with a usage of $1.2 million for the comparable period
of the prior year. The increase in cash usage is primarily due to lower
operating earnings before restructuring charges substantially offset by lower
cash used for working capital requirements.
Net cash from investing activities was $1.7 for the nine months ended March 31,
2000, compared with a usage of $8.6 million in the comparable period of the
prior year. The increase was primarily due to the sale of marketable securities
in October 1999, which generated $7.6 million in proceeds.
At March 31, 2000, the Company failed certain financial covenants relating to
its Credit Agreement due to the losses of its Vigilant segment. The banks have
waived these violations for the third quarter and have amended the covenant
requirements for the fourth quarter of fiscal 2000. In connection with the
waiver and amendment, the Company has provided additional collateral in the form
of a mortgage on the Company's facilities in Chestnut Ridge, New York. Also, the
maximum borrowing limit under the Credit Agreement was reduced to $12.0 million
and the interest rate on outstanding borrowings increased to prime rate plus 2%.
Based on the Company's projections, which include the continued significant
investment in its Vigilant segment, it appears likely that the Company will be
in violation of certain of its financial covenants at the end of the first
quarter of fiscal 2001. As such, outstanding borrowings under the Credit
Agreement as of March 31, 2000 of $11.0 million have been classified as a
current liability. The Company also has $951,000 outstanding under a foreign
subsidiary working capital facility.
As noted above, the Company's continued investment in its Vigilant segment, in
terms of increased spending in R&D and selling, general and administrative
expenses, has resulted in its failure to meet certain financial covenants. The
Company has initiated the process of finding strategic investment partners for
this business segment in order to capitalize on significant market
opportunities, without carrying the full burden for this venture in terms of
profits and cash in the future. In addition, the Company, in cooperation with
its existing banks, has started evaluating alternative financing opportunities
with new lenders which it expects will provide additional credit availability
and financial flexibility.
The Company believes that its cash and marketable security balances, along with
cash generated from its Test and Measurement segment and amounts available under
its current credit agreement, should be sufficient to fund working capital and
capital expenditure requirements, as well as further investments in its Vigilant
segment through the first quarter of fiscal 2001. In addition, the Company
believes that, by the end of the first quarter of fiscal 2001, it is likely to
secure alternative funding for the Vigilant segment from third party investors
and to be successful in negotiating new financing arrangements which would
provide additional credit availability.
YEAR 2000
The year 2000 problem concerns the inability of information systems to recognize
properly and process date-sensitive information beyond December 31, 1999. At the
time of this filing the Company had not experienced any year 2000 problems with
any of its financial or operating systems or with any of its suppliers or
customers. The Company will continue to monitor these systems, but it does not
anticipate any problems or significant expenditures in the future. This
represents a forward-looking statement under the Private Securities Litigation
Reform Act of 1997. Undiscovered issues related to the year 2000 issue could
have an adverse impact on the Company's results of operations.
13
<PAGE>
RISK MANAGEMENT
The Company's equity investment in Iwatsu Electric Co., Ltd is subject to the
impact of foreign exchange rates and fluctuations in the Japanese stock market.
In October 1999 the Company sold 2.691 million shares of such stock reducing its
exposure to exchange risk and fluctuations in the Japanese stock market. As of
March 31, 2000, Japanese stock market and currency fluctuations resulted in an
increase of approximately $0.6 million to the investment's original cost. The
change in the value of this investment, which is deemed temporary, is included
as part of accumulated comprehensive loss in stockholders' equity and is,
accordingly, not included in the Condensed Consolidated Statements of Income.
NEW PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB
101, which for the Company is effective beginning in the first quarter of fiscal
year 2001, summarizes certain of the SEC staff's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
The Company is currently evaluating the impact of this pronouncement on its
financial position, results of operations and cash flows.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments and requires recognition of all
derivatives as assets or liabilities in the statement of financial position and
measurement of those instruments at fair value. The statement is effective for
fiscal years beginning after June 15, 2000. Management believes that adopting
this statement will not have a material impact on the financial position,
results of operations or cash flows of the Company.
14
<PAGE>
LECROY CORPORATION
PART II. OTHER INFORMATION
ITEM 6.(a) EXHIBITS
Exhibit 10.23 First Amendment dated June 12, 1999 to the Amended and
Restated Multicurrency Credit Agreement between the
Company, Chase Manhattan Bank and Fleet National Bank
Exhibit 10.24 Second Amendment dated September 7, 1999 to the Amended
and Restated Multicurrency Credit Agreement between the
Company, Chase Manhattan Bank and Fleet National Bank
Exhibit 10.25 Third Amendment dated April 19, 2000 to the Amended and
Restated Multicurrency Credit Agreement between the
Company , Chase Manhattan Bank and Fleet National Bank
Exhibit 10.26 Fourth Amendment dated May 5, 2000 to the Amended and
Restated Multicurrency Credit Agreement between the
Company, Chase Manhattan Bank and Fleet National Bank
Exhibit 10.27 Fifth Amendment dated May 18, 2000 to the Amended and
Restated Multicurrency Credit Agreement between the
Company, Chase Manhattan Bank and Fleet National Bank
Exhibit 10.28 Term Loan Agreement dated May 12, 2000 between the
Company, Chase Manhattan Bank and Fleet National Bank
Exhibit 10.29 First Amendment dated May 18, 2000 to the Term Loan
Agreement between the Company, Chase Manhattan Bank and
Fleet National Bank
Exhibit 27 Financial Data Schedule.
ITEM 6.(b) REPORTS ON FORM 8-K
No current reports on Form 8-K were filed during the
quarter ended March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LECROY CORPORATION
Date: May 19, 2000 By: /S/ Raymond F. Kunzmann
-------------------------------
Raymond F. Kunzmann
Vice President and
Chief Financial Officer
EXHIBIT 10.23
FIRST AMENDMENT TO
AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT
THIS FIRST AMENDMENT (the "First Amendment") is made as of the 12th day
of June, 1999 by and among LECROY CORPORATION (the "Borrower"), a corporation
organized and existing under the laws of the State of Delaware, THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation, as agent (the "Agent")
for the Lenders (defined below) under the Credit Agreement (defined below) and
as a Lender thereunder and BANKBOSTON, N.A. ("BBNA"), a national banking
association, as a Lender under the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Chase and BBNA (collectively the "Lenders" and
individually, a "Lender") and the Agent are parties to a certain Amended and
Restated Multicurrency Credit Agreement dated as of March 31, 1999 ("the Credit
Agreement");
WHEREAS, the Agent, the Lenders and Borrower desire to amend certain
terms and provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, receipt of which is hereby
acknowledged and upon the execution and delivery of this First Amendment by each
party hereto and the satisfaction of the conditions set forth in Paragraph 3
below, the Borrower and Lenders, agree as follows:
1. Amendment. (a) Section 7.04 of the Credit Agreement is deleted in
its entirety and the following new Section 7.04 is
inserted in lieu thereof:
"SECTION 7.04. Fixed Charge Coverage Ratio. The Borrower and
its Consolidated Subsidiaries shall maintain on a consolidated basis, a
Fixed Charge Coverage Ratio, to be measured at the end of each fiscal
quarter, not greater than (a) (1.25):1.00 (1.25 being a negative
number) for the quarter ending June 30, 1999; (b) 2.00:1.00 for the
quarter ending September 30, 1999; (c) 3.00:1.00 for the quarters
ending December 31, 1999 and thereafter. For the purpose of calculating
Fixed Charge Coverage Ratio, the operating profit for the fiscal
quarter ending June 30, 1999 shall consist solely of the one quarter
then ended; the operating profit for the fiscal quarter ending
September 30, 1999 shall consist of the cumulative of the quarter
ending June 30, 1999 and the quarter ending September 30, 1999; the
operating profit for the fiscal quarter ending December 31, 1999 shall
consist of the cumulative of the quarter ending June 30, 1999, the
quarter ending September 30, 1999 and the quarter ending December 31,
1999; and the operating profit for the fiscal quarter ending March 31,
2000 shall consist of the cumulative of the quarter ending June 30,
1999, the quarter ending September 30, 1999, the quarter ending
December 31, 1999 and the quarter ending March 31, 2000. After the
quarter ending March 31, 2000, the operating profit for each fiscal
quarter shall be measured at the end of such fiscal quarter on the
basis of the period of the four consecutive quarters then ended."
<PAGE>
(b) Section 7.05 of the Credit Agreement is deleted
in its entirety and the following new Section 7.05 is inserted in lieu thereof:
"SECTION 7.05. Leverage Ratio. The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis a Leverage
Ratio, to be measured at the end of each fiscal quarter, not greater than (a)
1.5:1.0 for the quarter ending June 30, 1999; (b) 1.25:1.00 for the quarter
ending September 30, 1999; (c) 1.35:1.00 for the quarter ending December 31,
1999; (d) 1.25:1.00 for the quarters ending March 30, 2000 and June 30, 2000;
(e) 1.10:1.0 for the quarter terminating September 30, 2000; and (f) 1.0:1.0 for
the quarter terminating December 31, 2000 and thereafter."
(c) Section 7.07 of the Credit Agreement is amended by
deleting the figure "$4,000,000.00" in the last line and inserting in lieu
thereof "$6,000,000.00".
(d) A new Section 7.08 is inserted at the end of Section
7.07 of the Credit Agreement as follows:
"SECTION 7.08. Minimum EBITDA Requirement The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis, EBITDA (as
defined below), to be measured at the end of each fiscal quarter, of not less
than (a) $3,000,000.00 for the quarter ending September 30, 1999; (b)
$7,200,000.00 for the quarter ending December 31, 1999; (c) $11,800,000.00 for
the quarter ending March 31, 2000; and (d) $17,800,000.00 for the quarter ending
June 30, 2000. For purpose of this Section 7.08, "EBITDA" shall mean earnings
before interest, taxes, depreciation, and amortization as determined in
accordance with GAAP. For the purpose of calculating EBITDA, EBITDA for the
fiscal quarter ending September 30,1999 shall consist solely of the one quarter
then ended; EBITDA for the fiscal quarter ending December 31, 1999 shall consist
of the cumulative of the quarter ending September 30, 1999 and the quarter
ending December 31, 1999; EBITDA for the fiscal quarter ending March 31, 2000
shall consist of the cumulative of the quarter ending September 30, 1999, the
quarter ending December 31, 1999, and the quarter ending March 31, 2000; and
EBITDA for the fiscal quarter ending June 30, 2000 shall consist of the
cumulative of the quarter ending September 30, 1999, the quarter ending December
31, 1999, the quarter ending March 31, 2000, and the quarter ending June 30,
2000.
2. Representations and Warranties. The Borrower hereby represents and
warrants as follows:
(a) The execution, delivery and performance by the Borrower of
this First Amendment has been duly authorized by all necessary
corporate action; and
(b) This First Amendment constitutes the legal, valid and
binding obligations of the Borrower, enforceable against the
Borrower in accordance with its terms, except to the extent
that such enforcement may be limited by applicable bankruptcy,
insolvency, equitable remedies and other similar laws
affecting creditors' rights generally, and except that the
availability of equitable remedies is subject to the
discretion of the court before which such remedies are sought.
<PAGE>
3. Conditions Precedent. (a) For purposes of Section 10.01 of the
Credit Agreement, each of the Lenders hereby consents and agrees, as of the
Effective Date referred to below, to the terms and provisions of this First
Amendment subject to the Agent's receipt of (and the effectiveness of this First
Amendment shall be conditioned upon such receipt by the Agent of) the
Subparagraph 3(b) Documents (as defined below) specified in subparagraph 3(b)
below. If the Agent does not receive the Subparagraph 3(b) Documents in the
manner and on the date set forth in Subparagraph 3(b) hereof, then this First
Amendment shall not be effective among the parties. If the Subparagraph 3(b)
Documents are received by the Agent in the manner and on the date set forth in
Subparagraph 3(b) hereof, then this First Amendment shall be effective among the
parties as of the date first above written.
(b) For purposes hereof, the Agent shall receive on the date of the
execution and delivery of this First Amendment by all parties hereto (the
"Effective Date") the following documents in form and substance satisfactory to
the Agent (the "Subparagraph 3(b) Documents") either as copies thereof via
telecopy with the originals delivered to the Agent promptly after the Effective
Date or as originals:
(i) Duly executed counterpart of this First Amendment
signed by the Agent, the Lenders, and the Borrower; and
(ii) Resolution of the Borrower which duly authorizes the
execution, delivery and performance of that certain ISDA
Master Agreement dated as of March 17, 1999 between Chase and
Borrower.
Furthermore, as a condition to the effectiveness of this First
Amendment, the Borrower certifies (1) that there have been no changes to (A) the
Certificate of Incorporation of the Borrower and all amendments thereto or (B)
the By-laws of Borrower as amended since the delivery of such items to the Agent
on April 25, 1997, (2) that the Borrower has duly authorized the modifications
contemplated by this First Amendment, (3) that the officer of the Borrower
executing this First Amendment is duly authorized to execute this First
Amendment and (4) that no Articles of Dissolution of the Borrower have been
filed with the Secretary of State of the State of Delaware.
4. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all
reasonable fees and expenses of the Agent and the Lenders in connection with the
preparation, negotiation, execution, delivery, administration, modification and
amendment of this First Amendment, including without limitation, the reasonable
fees and expenses of counsel for the Agent and the Lenders with respect thereto
and with respect to advising the Agent and the Lenders as to their respective
rights and responsibilities hereunder and thereunder. The Borrower further
agrees to pay on demand all reasonable costs and expenses, if any (including
without limitation, reasonable counsel fees and expenses), in connection with
the enforcement (whether through negotiations, legal proceedings or otherwise)
of this First Amendment, including, without limitation, reasonable fees and
expenses of counsel in connection with the enforcement of rights under the
Credit Agreement, as amended by this First Amendment.
<PAGE>
5. Agreement. Except as specifically amended hereby, the Credit
Agreement and the other Loan Documents (as defined in the Credit Agreement) are
and shall continue to be in full force and effect and are hereby in all respects
ratified and confirmed.
6. Capitalized Terms. All capitalized terms used in this First
Amendment and not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
7. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
8. Governing Law. This First Amendment shall be governed by, and
construed and enforced in accordance with, the internal, substantive laws of the
State of New York without giving effect to the conflict of law rules thereof.
IN WITNESS WHEREOF, the parties to this First Amendment have caused
their signatures to be affixed hereto the date above first written.
LECROY CORPORATION
By: /s/
---------------------------------
Name: John C. Maag
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK, as
Agent and Lender
By: /s/
---------------------------------
Name: C. William Cosgrove
Title: Vice President
BANKBOSTON, N.A.
By: /s/
---------------------------------
Name: Sheila A. Maher
Title: Director
<PAGE>
EXHIBIT 10.24
SECOND AMENDMENT TO
AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT
THIS SECOND AMENDMENT (the "Second Amendment") is made as of the 7th
day of September, 1999 by and among LECROY CORPORATION (the "Borrower"), a
corporation organized and existing under the laws of the State of Delaware, THE
CHASE MANHATTAN BANK ("Chase"), a New York banking corporation, as agent (the
"Agent") for the Lenders (defined below) under the Credit Agreement (defined
below) and as a Lender thereunder and BANKBOSTON, N.A. ("BBNA"), a national
banking association, as a Lender under the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Chase and BBNA (collectively the "Lenders" and
individually, a "Lender") and the Agent are parties to a certain Amended and
Restated Multicurrency Credit Agreement dated as of March 31, 1999, as amended
by the First Amendment to Amended and Restated Multicurrency Credit Agreement
dated June 12, 1999 (collectively, "the Credit Agreement");
WHEREAS, the Agent, the Lenders and Borrower desire to amend certain
terms and provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, receipt of which is hereby
acknowledged and upon the execution and delivery of this Second Amendment by
each party hereto and the satisfaction of the conditions set forth in Paragraph
3 below, the Borrower and Lenders, agree as follows:
I Amendments.
(a) The definition of "Applicable Eurocurrency Rate Margin" set forth in Section
1.01 of the Credit Agreement is deleted in its entirety and the following new
definition is inserted in lieu thereof:
" `Applicable Eurocurrency Rate Margin' means
(a) (i) through and including June 30, 2000, one hundred
fifty (150) basis points; and
(ii) if EBITDA, as at the end of fiscal quarter ending
June 30, 2000, is (A) $9,910,000.00 or greater, one
hundred twenty five (125) basis points or (B) less
than $9,910,000.00 one hundred fifty (150) basis
points;
(b) in the event EBITDA, as at the end of fiscal quarter ending
June 30, 2000 was $9,910,000.00 or greater the following:
<PAGE>
(A) if EBITDA, as at the end of fiscal quarter ending
September 30, 2000, is (1) $4,353,000.00 or greater,
seventy five (75) basis points or (2) less than
$4,353,000.00, one hundred (100) basis points;
(B) if EBITDA, as at the end of fiscal quarter ending
December 31, 2000, is (1) $9,272,000.00 or greater,
seventy five (75) basis points or (2) less than
$9,272,000.00, one hundred (100) basis points;
(C) if EBITDA, as at the end of fiscal quarter ending
March 31, 2001, is (1) $14,521,000.00 or greater,
seventy five (75) basis points or (2) less than
$14,521,000.00, one hundred (100) basis points;
(D) if EBITDA, as at the end of fiscal quarter ending
June 30, 2001, is (1) $20,274,000,000.00 or greater,
seventy five (75) basis points or (2) less than
$20,274,000.00, one hundred (100) basis points;
(E) if EBITDA, as at the end of fiscal quarter ending
September 30, 2001, is (1) $4,811,000.00 or greater,
seventy five (75) basis points or (2) less than
$4,811,000.00, one hundred (100) basis points; and
(F) if EBITDA, as at the end of fiscal quarter ending
December 31, 2001, is (1) $10,275,000.00 or greater,
seventy five (75) basis points or (2) less than
$10,275,000.00, one hundred (100) basis points;
( c ) if (b) above is not applicable:
(i) if EBITDA, as at the end of fiscal quarter ending
September 30, 2000, is (A) $4,353,000.00 or greater,
one hundred twenty five (125) basis points or (B)
less than $4,353,000.00, one hundred fifty (150)
basis points;
(ii) if EBITDA, as at the end of fiscal quarter ending
December 31, 2000, is (A) $9,272,000.00 or greater,
one hundred twenty five (125) basis points or (B)
less than $9,272,000.00, one hundred fifty (150)
basis points;
(iii) if EBITDA, as at the end of fiscal quarter ending
March 31, 2001, is (A) $14,521,000.00 or greater, one
hundred twenty five (125) basis points or (B) less
than $14,521,000.00, one hundred fifty (150) basis
points;
(iv) if EBITDA, as at the end of fiscal quarter ending
June 30, 2001, is (A) $20,274,000.00 or greater, one
hundred twenty five (125) basis points or (B) less
than $20,274,000.00, one hundred fifty (150) basis
points;
(v) if EBITDA, as at the end of fiscal quarter ending
September 30, 2001, is (A) $4,811,000.00 or greater,
one hundred twenty five (125) basis points or (B)
less than $4,811,000.00, one hundred fifty (150)
basis points;
(vi) if EBITDA, as at the end of fiscal quarter ending
December 31, 2001, is (A) $10,275,000.00 or greater,
one hundred twenty five (125) basis points or (B)
less than $10,275,000.00, one hundred fifty (150)
basis points."
(b) A new definition, "EBITDA", is inserted in the alphabetically corresponding
position in Section 1.01 of the Credit Agreement as follows:
" `EBITDA' has the meaning assigned to such term in Section 7.08(a),
except that for purposes of Section 7.08(b), EBITDA shall have the
meaning assigned to such term in Section 7.08(b)."
<PAGE>
( c ) The second sentence of Section 2.01 of the Credit Agreement is deleted in
its entirety and the following new sentence is inserted in lieu thereof:
As of the date hereof, the aggregate of all Lenders' Commitments is
TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00) from and including
the date hereof through and including November 11, 1999 and FIFTEEN
MILLION AND 00/100 DOLLARS ($15,000,000.00) from and including November
12, 1999 through and including the Termination Date."
(d) Section 2.04(b) of the Credit Agreement is deleted in its entirety and
the following new Section 2.04(b) is inserted in lieu thereof:
"Pursuant to the terms of this Agreement the respective Commitments
shall automatically be reduced as set forth on Schedule 9 hereto on
November 12, 1999."
(e) Section 2.05 of the Credit Agreement is deleted in its entirety and the
following new Section 2.05 is inserted in lieu thereof:
"The Borrower shall repay the principal amount of all Advances on the
Termination Date. Notwithstanding the foregoing, on November 12, 1999,
Borrower shall repay any outstanding advances greater than FIFTEEN
MILLION AND 00/100 DOLLARS ($15,000,000.00), as provided in this
Agreement."
(f) The number "1.0%" in the penultimate sentence of Section 2.06(C) of the
Credit Agreement is deleted and the number "2.0%" is inserted in lieu
thereof.
(g) Section 2.08(C) of the Credit Agreement is deleted in its entirety and
the following new Section 2.08(C) is inserted in lieu thereof:
"No later than December 3, 1999, a minimum of $5,000,000.00 shall be
interest rate protected."
(h) Section 5.01(h)(xii) of the Credit Agreement is deleted in its entirety
and the following new Section 5.01(h)(xii) is inserted in lieu thereof:
"(xii) within twenty (20) days after the end of each month, commencing
with the month ending September 30, 1999, an Informal Borrowing Base
Certificate (modified to reflect monthly reporting);".
(i) The semicolon at the end of Section 5.01(h)(xv) of the Credit Agreement
is changed to a period.
(j) Section 6.01(C)(I) of the Credit Agreement is deleted in its entirety
and the following new Section 6.01(C)(I) is inserted in lieu thereof:
"(I) Liens in favor of the Banks or the Agent; provided that if
Liens are granted in favor of the Banks, the Liens must be
equal in scope to the Banks;"
<PAGE>
(k) Section 7.04 of the Credit Agreement is deleted in its entirety and the
following new Section 7.04 is inserted in lieu thereof:
"SECTION 7.04. Fixed Charge Coverage Ratio. The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis, at
all times, a Fixed Charge Coverage Ratio of not less than 3.00:1.00.
For the purpose of calculating Fixed Charge Coverage Ratio, the Fixed
Charge Coverage Ratio for the fiscal quarter ending September 30, 1999
shall not be applicable; the Fixed Charge Coverage Ratio for the fiscal
quarter ending December 31, 1999 shall consist of the cumulative of the
quarter ending September 30, 1999 and the quarter ending December 31,
1999; the Fixed Charge Coverage Ratio for the fiscal quarter ending
March 31, 2000 shall consist of the cumulative of the quarter ending
September 30, 1999, the quarter ending December 31, 1999 and the
quarter ending March 31, 2000; and the Fixed Charge Coverage Ratio for
the fiscal quarter ending June 30, 2000 shall consist of the cumulative
of the quarter ending September 30, 1999, the quarter ending December
31, 1999, the quarter ending March 31, 2000 and the quarter ending June
30, 2000. After the quarter ending June 30, 2000, the Fixed Charge
Coverage Ratio for each fiscal quarter shall be measured at the end of
such fiscal quarter on the basis of the period of the four consecutive
quarters then ended."
(l) Section 7.08 of the Credit Agreement is deleted in its entirety and the
following new Section 7.08 is inserted in lieu thereof:
"SECTION 7.08. Minimum EBITDA Requirement. (a) The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis,
EBITDA (as defined below in this Section 7.08(a)), to be measured at
the end of each fiscal quarter, of not less than (I) $N/A for the
quarter ending September 30, 1999; (ii) $1,700,000.00 for the quarter
ending December 31, 1999; (iii) $4,300,000.00 for the quarter ending
March 31, 2000; (iv) $9,200,000.00 for the quarter ending June 30,
2000; (v) $3,500,000.00 for the quarter ending September 30, 2000; (vi)
$8,600,000.00 for the quarter ending December 31, 2000; (vii)
$13,800,000.00 for the quarter ending March 31, 2001; (viii)
$19,500,000.00 for the quarter ending June 30, 2001; (ix) $3,850,000.00
for the quarter ending September 30, 2001; and (x) $9,600,000.00 for
the quarter ending December 31, 2001. For purpose of this Section
7.08(a), "EBITDA" shall mean earnings before interest, taxes,
depreciation, and amortization as determined in accordance with GAAP;
provided, however, the gain on the sale of Iwatsu Electric Company
stock shall be excluded from the earnings component of the definition
of EBITDA. For the purpose of calculating EBITDA in this Section
7.08(a), EBITDA for a fiscal quarter ending September 30 in any year,
shall consist solely of the one quarter then ended; EBITDA for a fiscal
quarter ending December 31 in any year, shall consist of the cumulative
of the preceding quarter ending September 30 and the preceding quarter
ending December 31; EBITDA for a fiscal quarter ending March 31 in any
year, shall consist of the cumulative of the preceding quarter ending
September 30, the preceding quarter ending December 31, and the
preceding quarter ending March 31; and EBITDA for a fiscal quarter
ending June 30 in any year, shall consist of the cumulative of the
preceding quarter ending September 30, the preceding quarter ending
December 31, the preceding quarter ending March 31, and the preceding
quarter ending June 30.
<PAGE>
(b) The Borrower and its Consolidated Subsidiaries shall maintain, on a
consolidated basis, EBITDA (as defined below in this Section 7.08(b)),
to be measured at the end of each fiscal quarter, of not less than (I)
$N/A for the quarter ending September 30, 1999; (ii) $1,700,000.00 for
the quarter ending December 31, 1999; (iii) $2,350,000.00 for the
quarter ending March 31, 2000; (iv) $4,000,000.00 for the quarter
ending June 30, 2000; (v) $3,500,000.00 for the quarter ending
September 30, 2000; (vi) $3,950,000.00 for the quarter ending December
31, 2000; (vii) $4,200,000.00 for the quarter ending March 31, 2001;
(viii) $4,600,000.00 for the quarter ending June 30, 2001; (ix)
$3,850,000.00 for the quarter ending September 30, 2001; and (x)
$4,400,000.00 for the quarter ending December 31, 2001. For purposes of
this Section 7.08(b), "EBITDA" shall mean earnings before interest,
taxes, depreciation, and amortization as determined in accordance with
GAAP; provided, however, the gain on the sale of Iwatsu Electric
Company stock shall be excluded from the earnings component of the
definition of EBITDA. For the purposes of calculating EBITDA in this
Section 7.08(b), EBITDA shall consist solely of the quarter then
ended."
(m) The address for the Agent set forth in Section 10.02 of the Credit
Agreement is changed to:
"400 Rella Boulevard, Suffern, NY 10901, (or at facsimile
number (914) 368-2366), Attention: Mr. C. William Cosgrove".
(n) Schedule 1 of the Credit Agreement is deleted in its entirety and a new
Schedule 1 in the form of Exhibit A attached to this Second Amendment is
inserted in lieu thereof.
(o) Schedule 9 of the Credit Agreement is deleted in its entirety and a new
Schedule 9 in the form of Exhibit B attached to this Second Amendment is
inserted in lieu thereof.
2. Representations and Warranties. The Borrower hereby represents and
warrants as follows:
(a) The execution, delivery and performance by the Borrower of this Second
Amendment and the Other Documents (as defined in Paragraph 3(b)(iv) below) have
been duly authorized by all necessary corporate action; and
(b) This Second Amendment and the Other Documents executed by the Borrower and
the Guarantors (as defined in Paragraph 3(b)(ii) below) constitute the legal,
valid and binding obligations of the Borrower and the Guarantors, as applicable,
enforceable against them in accordance with their respective terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, equitable remedies and other similar laws affecting creditors'
rights generally, and except that the availability of equitable remedies is
subject to the discretion of the court before which such remedies are sought.
3. Conditions Precedent. (a) For purposes of Section 10.01 of the Credit
Agreement, each of the Lenders hereby consents and agrees, as of the Effective
Date referred to below, to the terms and provisions of this Second Amendment
subject to the Agent's receipt of (and, unless waived, the effectiveness of this
Second Amendment shall be conditioned upon such receipt by the Agent of) the
Subparagraph 3(b) Documents (as defined in Paragraph 3(b) below) specified in
subparagraph 3(b) below. If the Agent does not receive the Subparagraph 3(b)
Documents in the manner and on the date set forth in Subparagraph 3(b) hereof
then, this Second Amendment shall not be effective among the parties. If the
Subparagraph 3(b) Documents are received by the Agent in the manner and on the
date set forth in Subparagraph 3(b) hereof then this Second Amendment shall be
effective among the parties as of the date first above written.
<PAGE>
(b) For purposes hereof, the Agent shall receive on the date of the execution
and delivery of this Second Amendment by all parties hereto (the "Effective
Date") the following documents in form and substance satisfactory to the Agent
(the "Subparagraph 3(b) Documents") either as copies thereof via telecopy with
the originals delivered to the Agent promptly after the Effective Date or as
originals:
(i) Duly executed Security Agreement ("Security Agreements")
signed by the Borrower and each Guarantor in favor of each
Lender granting a security interest in Borrower's and each
Guarantor's personal property now existing and hereafter
acquired and wherever located;
(ii) Duly executed Guaranty Agreements ("Guaranty Agreements")
in favor of each Lender signed by Vigilant Networks, Inc.
(formerly known as LeCroy NEWCO Corporation), Digitech
Industries, Inc. and Preamble Instruments, Inc. (jointly and
severally, the "Guarantors");
(iii) Duly executed Uniform Commercial Code Financing
Statements ("UCCs") signed by the Borrower and each Guarantor,
as debtor, and each Lender, as secured party, for filing in
all jurisdictions and government offices required by the
Lenders;
(iv) Duly executed Intercreditor Agreement signed by Chase, as
lender, and BBNA and agreed to by Borrower and each Guarantor
("Intercreditor Agreement"; the Security Agreements, the
Guarantor Agreements, the UCCs and the Intercreditor
Agreement, collectively referred to as the "Other Documents");
(v) Opinion or opinions of counsel for the Borrower and each
Guarantor dated the date of this Second Amendment and
addressed to the Lenders and the Agent;
(vi) The certificates of incorporation and all amendments
thereto of Borrower and each Guarantor duly certified as of a
recent date by an appropriate official of the Secretary of
State of their respective states of incorporation;
(vii) Certificates of the Secretary of State of the applicable
state of incorporation, dated as of a recent date, to the
effect that Borrower and each Guarantor has legal existence
and is in good standing in the state of their applicable
states of incorporation;
(viii) Duly executed counterpart of this Second Amendment
signed by the Agent, the Lenders, the Borrower and each
Guarantor;
<PAGE>
(ix) Certificates of the secretary or assistant secretary of
Borrower and each Guarantor certifying (1) that the following
documents attached to such certificate are correct, complete
and in full force and effect on the date of this Second
Amendment: (A) the certificate of incorporation and all
amendments thereto, (B) the by-laws; and (C) the resolutions
authorizing the transactions contemplated by this Second
Amendment and the Other Documents executed by the Borrower and
the Guarantors, respectively, and (2) as to the incumbency of
certain officers;
(x) Certificates of the Secretary of State of each state where
the Borrower or any Guarantor is organized, has its principal
office or conducts business, unless waived by the Agent, dated
as of a recent date, to the effect that Borrower or
Guarantors, as applicable, is authorized to conduct business
in such state and is in good standing, such certificate to be
in form and substance reasonably acceptable to the Agent;
(xi) Evidence of tax good standing from the Secretary of
States of each state where Borrower or any Guarantor is
organized, has its principal office or conducts business,
unless waived by the Agent, dated as of a recent date, such
certificate to be in form and substance reasonably acceptable
to the Agent;
(xii) A restructuring fee in the amount of $100,000.00
($67,000.00 payable to Chase and $33,000.00 payable to BBNA)
in immediately available funds;
(xiii) UCC financing statement lien searches, judgement
searches, bankruptcy and tax searches in form and substance
satisfactory to the Agent and its counsel against Borrower and
each Guarantor from the appropriate governmental offices in
the states where each is incorporated and conducting business;
(xiv) Evidence satisfactory to the Agent of the existence of
all risk and general liability insurance covering Borrower's
and each Guarantor's personal property naming the Lenders as
loss payees and additional insureds and from financially sound
and reputable insurance companies or associations in such
amounts and with such risks as are usually carried by
companies engaged in the same business and similarly situated
as the Borrower and each Guarantor;
(xv) Duly executed perfection certificates signed by Borrower
and each Guarantor;
(xvi) UCC-3 termination statements terminating any existing
UCC filings required by Agent; and
(xvii) Such other certificates, affidavits, agreements and
documents as a Lender or Agent may reasonably require.
4. Covenant. The Borrower, in addition to the financial reporting requirements
contained in Section 5.01(h) of the Credit Agreement, agrees to deliver to the
Agent immediately upon Borrower's receipt thereof, a copy of the management
letter submitted to the Borrower and prepared by Ernst & Young, LLP (the
"Auditor") in connection with the Auditor's examination of the financial
statements of the Borrower for the fiscal year ending June 30, 1999.
<PAGE>
5. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all
reasonable fees and expenses of the Agent and the Lenders in connection with the
preparation, negotiation, execution, delivery, administration, modification and
amendment of this Second Amendment and the Other Documents, including without
limitation, the reasonable fees and expenses of counsel for the Agent and the
Lenders with respect thereto and with respect to advising the Agent and the
Lenders as to their respective rights and responsibilities hereunder and
thereunder. The Borrower further agrees to pay on demand all reasonable costs
and expenses, if any (including without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Second Amendment or any Other Document,
including, without limitation, reasonable fees and expenses of counsel in
connection with the enforcement of rights under the Credit Agreement, as amended
by this Second Amendment.
6. Agreement. Except as specifically amended hereby, the Credit Agreement and
the other Loan Documents (as defined in the Credit Agreement) and the Other
Documents are and shall continue to be in full force and effect and are hereby
in all respects ratified and confirmed.
7. Capitalized Terms. All capitalized terms used in this Second Amendment and
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement.
8. Counterparts. This Second Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9 Governing Law. This Second Amendment shall be governed by, and construed and
enforced in accordance with, the internal, substantive laws of the State of New
York without giving effect to the conflict of law rules thereof.
IN WITNESS WHEREOF, the parties to this Second Amendment have caused
their signatures to be affixed hereto the date above first written.
<PAGE>
LECROY CORPORATION
By: /s/
----------------------------------
Name: John C. Maag
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK, as
Agent and Lender
By: /s/
----------------------------------
Name: C. William Cosgrove
Title: Vice President
BANKBOSTON, N.A.
By: /s/
----------------------------------
Name: Andrew H. Harris
Title: Vice President
ACCEPTED AND AGREED TO:
VIGILANT NETWORKS, INC., formerly
known as LeCroy NEWCO Corporation
By: /s/
- ----------------------------------
Name: John C. Maag
Title: Treasurer
DIGITECH INDUSTRIES, INC.
By: /s/
- ----------------------------------
Name: John C. Maag
Title: Vice President/Secretary/Treasurer
PREAMBLE INSTRUMENTS, INC.
By: /s/
- ----------------------------------
Name: John C. Maag
Title: Secretary
<PAGE>
EXHIBIT A
SCHEDULE I
LECROY CORPORATION
Amended and Restated Multicurrency Credit Agreement dated as of March 31, 1999
among LeCroy Corporation, as Borrower, and the Lenders named therein, as
Lenders, and The Chase Manhattan Bank, as Agent
<TABLE>
<CAPTION>
- ---------------------------------- --------------------------------------- ---------------------------------------
Name of Lender Domestic Lending Office Eurocurrency Lending Office
<S> <C> <C>
- ---------------------------------- --------------------------------------- ---------------------------------------
The Chase Manhattan Bank 400 Rella Boulevard 400 Rella Boulevard
Suffern, New York 10901 Suffern, New York 10901
Phone: (914) 368-2272 Phone: (914) 368-2272
Fax: (914) 368-2366 Fax: (914) 368-2366
Attention: C. William Cosgrove Attention: C. William Cosgrove
- ---------------------------------- --------------------------------------- ---------------------------------------
BankBoston, N.A. Landmark Square Landmark Square
2nd Floor, Mail Stop CT FD KO2A 2nd Floor, Mail Stop CT FD KO2A
Stamford, Connecticut 06901 Stamford, Connecticut 06901
Phone: (203) 964-4829 Phone: (203) 964-4829
Fax: (203) 964-4850 Fax: (203) 964-4850
Attention: Andrew H. Harris Attention: Andrew H. Harris
- ---------------------------------- --------------------------------------- ---------------------------------------
</TABLE>
<PAGE>
EXHIBIT B
SCHEDULE 9
Commitments
Commitments totaling $20,000,000.00 (from March 31, 1999
through and including November 11, 1999)
Lenders Commitment
THE CHASE MANHATTAN BANK $13,400,000.00
BANKBOSTON, N.A. $ 6,600,000.00
--------------
TOTAL $20,000,000.00
Commitments totaling $15,000,000.00 (from and including
November 12,1999 through and including the Termination Date)
Lenders Commitment
THE CHASE MANHATTAN BANK $10,050,000.00
BANKBOSTON, N.A. $ 4,950,000.00
--------------
TOTAL $15,000,000.00
<PAGE>
EXHIBIT 10.25
TOTAL $15,000,000.00
THIS THIRD AMENDMENT AND WAIVER (the "Amendment and Waiver") is made as
of the 19th day of April, 2000 by and among LECROY CORPORATION (the "Borrower"),
a corporation organized and existing under the laws of the State of Delaware,
THE CHASE MANHATTAN BANK ("Chase"), a New York banking corporation, as agent for
the Lenders (defined below) under the Credit Agreement (defined below) and as a
Lender thereunder and FLEET NATIONAL BANK, a national banking association,
formerly known as BankBoston, N.A. ("Fleet"), as a Lender under the Credit
Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Chase and Fleet (formerly known as BankBoston,
N.A.) (Chase and Fleet, collectively, the "Lenders" and each individually, a
"Lender") and the Agent are parties to a certain Amended and Restated
Multicurrency Credit Agreement dated as of March 31, 1999, as amended by the
First Amendment to Amended and Restated Multicurrency Credit Agreement dated
June 12, 1999 and the Second Amendment to Amended and Restated Multicurrency
Credit Agreement (the "Second Amendment") dated as of September 7, 1999
(collectively, "the Credit Agreement");
WHEREAS, pursuant to the Credit Agreement, (i) Chase (x) acts as Agent
under a revolving credit facility in the maximum principal sum of $15,000,000
and (y) is a Lender with a Commitment (as defined in the Credit Agreement) in
the sum of $10,050,000 and (ii) Fleet is a Lender with a Commitment in the sum
of $4,950,000;
WHEREAS, Borrower, with respect to the fiscal quarter ending March 31,
2000, violated (the "Defaults") (i) the Fixed Charge Coverage Ratio financial
covenant set forth in Section 7.04 of the Credit Agreement and (ii) the minimum
EBITDA Requirements set forth in Sections 7.08(a) and 7.08(b) of the Credit
Agreement ((i) and (ii), collectively, the "Defaulted Financial Covenants");
WHEREAS, Borrower has requested that the Agent and the Lenders waive
their right to exercise the remedies which exist under the Credit Agreement, the
other Loan Documents (as defined in the Credit Agreement) and the Other
Documents (as defined in the Second Amendment) solely as a result of the
occurrence of the Defaults (the "Remedies");
WHEREAS, the Agent and the Lenders have agreed to waive their right to
exercise the Remedies, subject to certain conditions and limitations contained
in this Amendment and Waiver;
WHEREAS, as a condition to the Agent and the Lenders agreeing to waive
their right to exercise Remedies and in addition to the above, Chase, Fleet and
the Borrower have agreed to reduce the maximum principal amount of the
Commitments from, and including, April 20, 2000 to TWELVE MILLION AND 00/100
DOLLARS ($12,000,000) with Chase's Commitment, as a Lender, not to exceed EIGHT
MILLION FORTY THOUSAND AND 00/100 DOLLARS ($8,040,000) and Fleet's Commitment
not to exceed THREE MILLION NINE HUNDRED SIXTY THOUSAND AND 00/100 DOLLARS
($3,960,000);
<PAGE>
WHEREAS, as a further condition to the Agent and the Lenders agreeing
to waive their right to exercise Remedies and in addition to the above, the
parties to this Amendment and Waiver have also agreed that from and including
April 20, 2000, (i) all Advances (as defined in the Credit Agreement) shall be
Base Rate Advances (as defined in the Credit Agreement), (ii) the rate of
interest on Advances shall be increased to a rate per annum equal at all times
to the Base Rate (as defined in the Credit Agreement) plus 2.0%, (iii)
Eurocurrency Advances (as defined in the Credit Agreement) are no longer
permitted, (iv) any currently outstanding Eurocurrency Advance shall be
automatically Converted (as defined in the Credit Agreement) at the end of the
now existing Interest Period (as defined in the Credit Agreement) to a Base Rate
Advance and (v) Advances in any Alternate Currency (as defined in the Credit
Agreement) are prohibited, all Advances, therefore, being in Dollars (as defined
in the Credit Agreement); and
WHEREAS, as a further condition to the Agent and the Lenders agreeing
to waive their right to exercise Remedies and in addition to the above, the
parties to this Amendment and Waiver have agreed to amend certain other terms
and provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, receipt of which is hereby
acknowledged and upon the execution and delivery of this Amendment and Waiver by
each party hereto and the satisfaction of the conditions set forth in Paragraph
5 below, the Borrower, Chase, as Agent and Lender, and Fleet agree as follows:
1. Capitalized Terms. All capitalized terms used in this Amendment and
Waiver and not otherwise defined herein shall have the meanings ascribed thereto
in the Credit Agreement.
2. Waiver. (a) The Agent and the Lenders hereby waive their right to
exercise Remedies arising solely out of the Defaults and waive Borrower's
failure to comply with the Defaulted Financial Covenants for the fiscal quarter
ending March 31, 2000 only and no other period, provided, however, the waiver
contained in this Paragraph 2(a) will terminate and be of no force and effect in
the event the conditions contained in Paragraph 2(b) are not completely
satisfied as determined solely by the Agent and the Lenders.
(b) The Borrower acknowledges and agrees that the waiver granted by the
Agent and Lenders in Paragraph 2(a) will automatically terminate and be of no
force and effect unless the Borrower, no later than the close of business on May
12, 2000 (or such later date as the Lenders and Agent in their sole discretion
shall extend), provides to the Lenders (or the Agent, as Lenders in their sole
discretion shall determine):
<PAGE>
(A) first and second mortgage liens, as determined by the Lenders and the Agent
in their sole discretion, encumbering all of the Borrower's property located in
Chestnut Ridge, New York, including but not limited to Borrower's corporate
headquarters located at 700 Chestnut Ridge Road, Chestnut Ridge, NY and property
located at 702 and 750 Chestnut Ridge Road, Chestnut Ridge, NY, as required by
the Lenders (collectively, the "Premises") in an aggregate amount equal to
$6,000,000 together with the improvements located on the Premises, an assignment
of all leases now or hereafter affecting any of the Premises and a security
interest in all fixtures, equipment and articles of personal property now or
hereafter affixed to or used in the management, maintenance or operation of any
of the Premises, subject to no other liens, security interests or encumbrances
except as permitted by the Lenders; and
(B) additional documentation as the Lenders and Agent reasonably require to
further protect Lenders' first priority security interest and assignment in
specific, identifiable patents and patent applications (the "Patents") as the
Lenders shall determine.
(c) The mortgage liens and additional documentation required in
Paragraph 2(b) above shall be completed pursuant to documentation (the
"Additional Collateral Documents") in form and substance reasonably satisfactory
to the Lenders and the Agent (which documentation may, at Lenders' and Agent's
sole discretion, include a division (by amendment or other loan documentation
reasonably required by the Lenders and the Agent) of the credit facility
evidenced by the Credit Agreement into separate term loan and revolving loan
facilities in amounts determined by the Lenders and Agent, provided the
aggregate amount of Lenders' exposure under both the term loan and revolving
loan facilities is no less than the aggregate of all Lenders' Commitments at the
time of the receipt by the Agent of executed Additional Collateral Documents. In
addition to the grant of the mortgage liens and delivery of the additional
documentation required in Paragraph 2(b) above, Borrower shall (at Borrower's
expense) simultaneously provide to the Agent documentary evidence, as reasonably
determined by the Lenders and the Agent, in support of the Additional Collateral
Documentation. Documentary evidence shall be in form and substance reasonably
satisfactory to the Agent and the Lenders and include, but not be limited to, an
opinion of counsel, proof of payment of all taxes and assessments affecting the
Premises due and/or payable at the time the Mortgage is granted, a survey of the
Premises, title insurance from a national title insurance company reasonably
acceptable to the Agent and the Lenders, property and liability insurance
covering the Premises in amounts, scope and form reasonably acceptable to the
Lenders and the Agent, subordination of all leases affecting the Premises to the
mortgage liens, licensee consents, Uniform Commercial Code, U.S. Patent office,
judgement, bankruptcy and tax lien searches as reasonably determined by the
Lenders and Agent and resolutions and miscellaneous certificates as reasonably
determined by the Lender and the Agent.
3. Amendment. (a) The first two sentences of Section 2.01 of the Credit
Agreement are amended and restated in their entirety to read as follows:
<PAGE>
"Each Lender severally agrees, on the terms and conditions hereinafter
set forth, to make Advances to the Borrower from time to time on any
Business Day during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender's name on
Schedule 9 hereto or, if such Lender has entered into any Assignment
and Acceptance, set forth as such Lender's Commitment in the Register
maintained by the Agent pursuant to Section 10.08(c) (such Lender's
"Commitment"), or the equivalent thereof, as such amount may be reduced
pursuant to Section 2.04. As of the date hereof, the aggregate of all
Lenders' Commitments is TWENTY MILLION AND 00/100 DOLLARS
($20,000,000.00) from and including the date hereof through and
including November 11, 1999, FIFTEEN MILLION AND 00/100 DOLLARS
($15,000,000.00) from and including November 12, 1999 through and
including April 19, 2000 and TWELVE MILLION AND 00/100 DOLLARS
($12,000,000.00) from and including April 20, 2000 through and
including the Termination Date."
(b) Schedule 9 attached to the Credit Agreement is replaced by Schedule
9 attached to this Amendment and Waiver as Exhibit A hereto.
(c) Notwithstanding any term, provision, definition or section
contained in the Credit Agreement, any other Loan Document or any Other
Document, and notwithstanding the satisfaction of any condition contained in the
Credit Agreement, any other Loan Document or any Other Document, from and after
April 20, 2000, (i) all Advances shall be Base Rate Advances, (ii) the rate of
interest on Advances shall be increased to a rate per annum equal at all times
to the Base Rate plus 2.0%, (iii) Eurocurrency Advances are no longer permitted,
(iv) any currently outstanding Eurocurrency Advance shall be automatically
Converted at the end of the now existing Interest Period to a Base Rate Advance
and (v) Advances in any Alternate Currency is prohibited, all Advances,
therefore, being in Dollars.
(d) Section 5.01(h) of the Credit Agreement is amended by (i)
renumbering Section 5.01(h)(xv) to Section 5.01(h)(xviii) and (ii) inserting
after Section 5.01(h)(xiv) the following:
"(xv) on April 28, 2000 and on the last Business Day of each month
thereafter, written, consolidating three (3) month cash flow
projections of the Borrower and each Guarantor on schedules in form and
substance reasonably satisfactory to the Agent and the Lenders (which
projections shall include, but not be limited to, projections showing
expected weekly and monthly cash, inventory and receivables and
anticipated liquidity needs for the applicable three (3) month
reporting period) and be certified as true, accurate and complete by
the chief financial officer of the Borrower;
(xvi) on the last Business Day of each week, verbal status updates
acceptable to the Lenders and Agent from the chief financial officer of
the Borrower or other officer reasonably acceptable to the Agent and
Lenders regarding (A) Borrower's LAN division section of its business
and (B) Borrower's efforts and progress toward (1) replacing the
current Lenders in the Credit Agreement with other financial
institutions and/or repaying all outstanding Advances owed to the
Lenders under the Credit Agreement, the other Loan Documents and the
Other Documents and terminating the Commitments and (2) replacing the
Agent with a new substitute agent;
<PAGE>
(xvii) a written compliance certificate, substantially in the form
attached as Exhibit B to the Third Amendment and Waiver dated as of
April 19, 2000 among the Borrower, Guarantors, Agent and Lenders, no
later than the last Business Day of the fiscal quarter ending June 30,
2000, with respect to projected compliance with the Financial Covenants
set forth in Article VII of the Credit Agreement as of and for such
fiscal quarter and showing whether compliance with the Financial
Covenants will or will not be achieved; and".
4. Representations and Warranties. The Borrower and each Guarantor
hereby represent and warrant as follows (with the effectiveness of this
Amendment and Waiver being further conditioned upon all such representations and
warranties being true and correct in all material respects on May 5, 2000):
(a) The execution, delivery and performance by the Borrower and each
Guarantor of this Amendment and Waiver has been duly authorized by all necessary
corporate action;
(b) This Amendment and Waiver, the Credit Agreement, each of the other
Loan Documents and each of the Other Documents, as amended hereby, to which the
Borrower or a Guarantor is a party constitute legal, valid and binding
obligations of the Borrower and each Guarantor, respectively, enforceable
against it in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, equitable
remedies and other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies is subject to the discretion
of the court before which such remedies are sought;
(c) The representations and warranties contained in Article IV of the
Credit Agreement and set forth in the Second Amendment are correct as of May 5,
2000, except to the extent of changes resulting from transactions contemplated
or permitted by the Credit Agreement, the Loan Documents and the Other Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse as reasonably determined by the Lenders and
Agent, or to the extent that such representations or warranties relate expressly
to an earlier date; and
(d) Other than the Defaults of the Defaulted Financial Covenants, no
other event has occurred and is continuing which constitutes a Default (as
defined in the Credit Agreement) or an Event of Default.
5. Conditions Precedent. (a) For purposes of Section 10.01 of the
Credit Agreement, each of the Lenders and the Agent hereby consents and agrees,
as of April 20, 2000, to the terms and provisions of this Amendment and Waiver
subject to the Agent's receipt no later than May 5, 2000 of (and the
effectiveness of this Amendment and Waiver shall be conditioned upon such
receipt by the Agent of) the Subparagraph 5(b) Documents (as defined below) in
the manner specified in subparagraph 5(b) below.
<PAGE>
(b) For purposes hereof, the Agent shall receive no later than May 5,
2000 the following documents in form and substance satisfactory to the Agent and
the Lenders and other items (collectively, the "Subparagraph 5(b) Documents")
either as copies thereof via telecopy with the originals delivered to the Agent
promptly thereafter or as originals:
(i) Duly executed counterpart of this Amendment and Waiver signed
by the Agent, the Lenders, the Guarantors and the Borrower;
(ii) a waiver fee in the amount of $67,000 in immediately available
funds, payable to Chase and a waiver fee in the amount of $33,000
in immediately available funds, payable to Fleet; and
(iii) (A) a check in the amount of $18,665.00 payable to the order of
Thacher Proffitt & Wood on account of the reasonable Agent's
legal fees to date incurred in connection with this Amendment and
Waiver and other matters in connection therewith, (B) a check in
the amount of $6,800.00 payable to the order of The Chase
Manhattan Bank to reimburse Chase for the reasonable allocated
costs of its internal counsel to date incurred in connection with
this Amendment and Waiver and other matters in connection
therewith and (C) a check in the amount of $1,000.00 payable to
the order of Finn, Dixon & Herling LLP, on account of Fleet's
reasonable legal fees to date in connection with this Amendment
and Waiver and other matters in connection therewith.
6. Costs, Expenses and Taxes. The Borrower and each Guarantor agrees to
pay on demand all reasonable fees and expenses of the Agent and the Lenders in
connection with the preparation, negotiation, execution, delivery,
administration, modification and amendment of this Amendment and Waiver and the
other instruments and documents to be delivered hereunder, including without
limitation, those documents described in Paragraphs 2(b) and 2(c), the
reasonable fees and expenses of counsel for the Agent and the Lenders with
respect thereto and with respect to advising the Agent and the Lenders as to
their respective rights and responsibilities hereunder and thereunder. The
Borrower and each Guarantor further agrees to pay on demand all reasonable costs
and expenses, if any (including without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Amendment and Waiver and the other
instruments and documents to be delivered hereunder, including, without
limitation, reasonable fees and expenses of counsel in connection with the
enforcement of rights under the Credit Agreement, the other Loan Documents and
the Other Documents. In addition, the Borrower and each Guarantor shall pay any
mortgage tax and filing and recording fees payable or determined to be payable
in connection with the execution and delivery and recording of this Amendment
and Waiver and/or any Additional Collateral Document and agrees to save the
Agent and Lenders harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes,
recording or filing fees (except any such delay or omission caused by the gross
negligence or willful misconduct of the Agent or the Lenders, as applicable).
<PAGE>
7. Default. The Borrower and each Guarantor expressly acknowledges and
agrees that failure to perform any term or provision contained in this Amendment
and Waiver, including but not limited to those contained in Paragraphs 2(b) and
2(c) and the additional reporting requirements contained in Paragraph 3(d)
shall, in addition to all other Events of Default be an Event of Default
thereunder, the waiver granted in Paragraph 2(a) shall be of no further force
and effect and the Agent and/or the Lenders may exercise remedies as provided in
the Credit Agreement, other Loan Documents or the Other Documents and the
original Defaults shall exist.
8. Agreement; Waiver. Except as specifically amended hereby, the Credit
Agreement, the other Loan Documents and the Other Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Nothing in this Amendment and Waiver contained or implied herein
shall be construed as a waiver of any provisions of the Credit Agreement for any
other matters or any other period (including, without limitation, any fiscal
period other than the fiscal quarter ended March 31 2000) or reason other than
as expressly set forth in Paragraph 2(a) or a waiver of any other Default (as
defined in the Credit Agreement), Event of Default, covenant or restriction in
the Credit Agreement or this Amendment and Waiver.
9. Release of Agent and Lenders. By execution of this Amendment and
Waiver, the Borrower and each Guarantor, jointly and severally, acknowledge and
confirm that they do not have any actions, causes of action, suits, debts,
controversies, damages, offsets, defenses, claims or counterclaims against the
Agent or either Lender, or any of their respective subsidiaries, affiliates,
officers, agents, directors, employees, attorneys, successors, and assigns, both
present and former (collectively, the "Related Affiliates") whether asserted or
unasserted, in law or in equity (collectively, the "Claims"), and to the extent
any Claim does exist, jointly and severally, release and forever discharge the
Agent and Lenders and any Related Affiliates of and from such Claim.
10. No Future Commitments. Borrower and each Guarantor understand that
they may need to pursue refinancing of their obligations to the Lenders and
provide for a new Agent in the event that after the execution and delivery of
this Amendment and Waiver, Borrower and Guarantors subsequently are unable to
enter into any subsequent amendment, waiver, modification or an arrangement for
restructuring the Credit Agreement, any of the Loan Documents and/or any Other
Documents with the Agent and Lenders. The Borrower and each Guarantor
acknowledge and agree that the execution and delivery of this Amendment and
Waiver or any previous amendment and/or waiver does not manifest a course of
dealing with the Borrower and or Guarantors leading to an expectation by
Borrower and/or Guarantors of any future waivers and/or amendments.
11. Counterparts. This Amendment and Waiver may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
<PAGE>
12. Governing Law. This Amendment and Waiver shall be governed by, and
construed and enforced in accordance with, the internal, substantive laws of the
State of New York without giving effect to the conflict of law rules thereof.
[NO FURTHER TEXT ON THIS PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties to this Amendment and Waiver have
caused their signatures to be affixed hereto the date above first written.
LECROY CORPORATION
By: /s/
--------------------------
Name: Lutz Henckels
Title: President and Chief
Executive Officer
THE CHASE MANHATTAN BANK,
as Agent
By: /s/
--------------------------
Name: Frank Apollo
Title: Vice President
THE CHASE MANHATTAN BANK,
as Lender
By: /s/
--------------------------
Name: Frank Apollo
Title: Vice President
FLEET NATIONAL BANK
(formerly known as
BankBoston, N.A.), as Lender
By: /s/
--------------------------
Name: Andrew H. Harris
Title: Vice President
<PAGE>
ACCEPTED AND AGREED TO:
VIGILANT NETWORKS, INC.
Guarantor
By: /s/
- ----------------------
Name: Lutz Henckels
Title: Chairman
DIGITECH INDUSTRIES, INC. (Guarantor)
By: /s/
- ----------------------
Name: Lutz Henckels
Title: Chairman
PREAMBLE INSTRUMENTS, INC.
By: /s/
- ----------------------
Name: Lutz Henckels
Title: Chairman
<PAGE>
EXHIBIT A
SCHEDULE 9
COMMITMENTS
Lender Period from March Period from Period from and
31, 1999 through November 12, 1999 after April 19, 2000
and including through and including
November 11, 1999 April 19, 2000
THE CHASE $13,400,000 $10,050,000 $8,040,000
MANHATTAN
BANK
FLEET $ 6,600,000 $ 4,950,000 $3,960,000
NATIONAL
BANK
<PAGE>
EXHIBIT B
COMPLIANCE CERTIFICATE EXHIBIT B, PAGE 1 OF 2
For the Fiscal Period Ending
[_________] [__], 200[___]
<TABLE>
<CAPTION>
Q __, ___ Rolling Q __, ___ Rolling Q __, ___ Rolling Q __, ___ Rolling
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Flows
Operating Profit (PBT) $ $ $ $ $ $ $ $
Depreciation
Foreign Exchange
Capital Expenditures
Additions to ERP Project
Total Cash Flows $ $ $ $ $ $ $ $
Fixed Charges
Interest Expense $ $ $ $ $ $ $ $
Tangible Net Worth
Total Assets $ $ $ $ $ $ $ $
Less Patents and
Trademarks
Less Manufacturing &
Distribution
Less Goodwill and
Technology
Less Consolidated
Liabilities
Tangible Net Worth $ $ $ $ $ $ $ $
EBITA $ $ $ $ $ $ $ $
</TABLE>
<PAGE>
COMPLIANCE CERTIFICATE EXHIBIT B
For the Fiscal Period Ending Page 2 of 2
[_________] [__], 200[___]
SECTION 7.01
Current Assets
Current Liabilities (As defined)
Calculated Ratio
Bank Covenant
Compliance
SECTION 7.04 - Fixed Charge Coverage Ratio
Cash Flows
Fixed Charges
Calculated Ratio
Bank Covenant
Compliance
SECTION 7.05 - Leverage Ratio
Consolidated Liabilities
Consolidated Tangible Net Worth
Calculated Ratio
Bank Covenant
Compliance
SECTION 7.06 - Capital Expenditures
Capital Expenditures FY (Estimate)
Bank Covenant (Limit)
Compliance
SECTION 7.07 - Net Loss
Net Income FY
Bank Covenant (Minimum)
Compliance
Individual Quarterly EBITDA w/o IWATSU
Calculated
Bank Covenant
Compliance
Cumulative EBITDA w/o IWATSU
Calculated
Bank Covenant
Compliance
<PAGE>
I, __________________________, the __________________ of LECROY CORPORATION
hereby certify that the information contained herein is true and correct and no
Default has occurred and is continuing on the date hereof.
Date: _________ __, 200_
<PAGE>
EXHIBIT 10.26
THIS FOURTH AMENDMENT (the "Fourth Amendment") is made as of the 12th
day of May, 2000 by and among LECROY CORPORATION (the "Borrower"), a corporation
organized and existing under the laws of the State of Delaware, THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation, as agent for the
Lenders (defined below) under the Credit Agreement (defined below) and as a
Lender thereunder and FLEET NATIONAL BANK, a national banking association,
formerly known as BankBoston, N.A. ("Fleet"), as a Lender under the Credit
Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Chase and Fleet (formerly known as BankBoston,
N.A.) (Chase and Fleet, collectively, the "Lenders" and each individually, a
"Lender") and the Agent are parties to a certain Amended and Restated
Multicurrency Credit Agreement dated as of March 31, 1999, as amended by the
First Amendment to Amended and Restated Multicurrency Credit Agreement dated
June 12, 1999, the Second Amendment to Amended and Restated Multicurrency Credit
Agreement (the "Second Amendment") dated as of September 7, 1999 and the Third
Amendment and Waiver (the "Third Amendment") dated as of April 19, 2000
(collectively, "the Credit Agreement");
WHEREAS, pursuant to the Credit Agreement, (i) Chase (x) acts as Agent
under a revolving credit facility in the maximum principal sum of $12,000,000
and (y) is a Lender with a Commitment (as defined in the Credit Agreement) in
the sum of $8,040,000 and (ii) Fleet is a Lender with a Commitment in the sum of
$3,960,000;
WHEREAS, Borrower, with respect to the fiscal quarter ending March 31,
2000, violated (the "Defaults") (i) the Fixed Charge Coverage Ratio financial
covenant set forth in Section 7.04 of the Credit Agreement and (ii) the minimum
EBITDA Requirements set forth in Sections 7.08(a) and 7.08(b) of the Credit
Agreement ((i) and (ii), collectively, the "Defaulted Financial Covenants");
WHEREAS, Borrower requested that the Agent and the Lenders waive their
right to exercise the remedies which existed under the Credit Agreement, the
other Loan Documents (as defined in the Credit Agreement) and the Other
Documents (as defined in the Second Amendment) solely as a result of the
occurrence of the Defaults (the "Remedies");
WHEREAS, the Agent and the Lenders pursuant to the Third Amendment have
waived their right to exercise the Remedies, subject to certain conditions and
limitations contained in paragraph 2(b) of the Third Amendment;
WHEREAS, pursuant to paragraph 2(b) of the Third Amendment, Borrower
must, among other things, provide a first mortgage lien on its property located
in Chestnut Ridge, New York in an aggregate amount equal to $6,000,000 in favor
of the Agent;
WHEREAS, in order to satisfy the condition to provide a $6,000,000
mortgage lien on Borrower's property in Chestnut Ridge, New York, the Lenders
will provide Borrower with a $6,000,000 term loan ("Mortgage Loan") secured by a
$6,000,000 mortgage lien in favor of the Agent, the proceeds of which Mortgage
Loan will be used to prepay the Advances (as defined in the Credit Agreement)
under the Credit Agreement by $6,000,000;
<PAGE>
WHEREAS, simultaneously with the making of the Mortgage Loan to the
Borrower and the prepayment of the Advances under the Credit Agreement, Chase,
Fleet, the Agent and the Borrower have agreed to reduce the maximum principal
amount of the Commitments under the Credit Agreement from, and including, the
date of the prepayment of the Advances in the amount of $6,000,000 to SIX
MILLION AND 00/100 DOLLARS ($6,000,000) with Chase's Commitment, as a Lender,
not to exceed FOUR MILLION TWENTY THOUSAND AND 00/100 DOLLARS ($4,020,000) and
Fleet's Commitment not to exceed ONE MILLION NINE HUNDRED EIGHTY THOUSAND AND
00/100 DOLLARS ($1,980,000).
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, receipt of which is hereby
acknowledged and upon the execution and delivery of this Fourth Amendment by
each party hereto and the satisfaction of the conditions set forth in Paragraph
4 below, the Borrower, Chase, as Agent and Lender, and Fleet agree as follows:
1. Capitalized Terms. All capitalized terms used in this Fourth
Amendment and not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
2. Amendment.(a) The first two sentences of Section 2.01 of the Credit
Agreement are amended and restated in their entirety to read as follows:
"Each Lender severally agrees, on the terms and conditions hereinafter
set forth, to make Advances to the Borrower from time to time on any
Business Day during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender's name on
Schedule 9 hereto or, if such Lender has entered into any Assignment
and Acceptance, set forth as such Lender's Commitment in the Register
maintained by the Agent pursuant to Section 10.08(c) (such Lender's
"Commitment"), or the equivalent thereof, as such amount may be reduced
pursuant to Section 2.04. As of the date hereof, the aggregate of all
Lenders' Commitments is TWENTY MILLION AND 00/100 DOLLARS
($20,000,000.00) from and including the date hereof through and
including November 11, 1999, FIFTEEN MILLION AND 00/100 DOLLARS
($15,000,000.00) from and including November 12, 1999 through and
including April 19, 2000, TWELVE MILLION AND 00/100 DOLLARS
($12,000,000.00) from and including April 20, 2000 through and
including May 11, 2000 and SIX MILLION AND 00/100 DOLLARS
($6,000,000.00) from and including May 12, 2000 through and including
the Termination Date."
(b) Section 2.04(b) of the Credit Agreement is deleted in its entirety
and the following new Section 2.04(b) is inserted in lieu thereof:
"Pursuant to the terms of this Agreement the respective Commitments
shall automatically be reduced as set forth on Schedule 9 hereto on May
12, 2000."
(c) Section 2.05 of the Credit Agreement is deleted in its entirety and
the following new Section 2.05 is inserted in lieu thereof: "The Borrower shall
repay the principal amount of all Advances on the Termination Date.
Notwithstanding the foregoing, on November 12, 1999, Borrower shall repay any
outstanding Advances greater than FIFTEEN MILLION AND 00/100 DOLLARS
($15,000,000.00), on April 19, 2000, Borrower shall repay and outstanding
Advances greater than TWELVE MILLION AND 00/100 DOLLARS ($12,000,000.00) and on
May 12, 2000, Borrower shall repay any outstanding advances greater than SIX
MILLION AND 00/100 DOLLARS ($6,000,000.00), as provided in this Agreement."
<PAGE>
(d) Section 7.04 of the Credit Agreement is deleted in its entirety and
the following new Section 7.04 is inserted in lieu thereof:
"SECTION 7.04. Fixed Charge Coverage Ratio. The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis, at
all times, a Fixed Charge Coverage Ratio of not less than 3.00:1.00.
For the purpose of calculating Fixed Charge Coverage Ratio, the Fixed
Charge Coverage Ratio for the fiscal quarter ending September 30, 1999
shall not be applicable; the Fixed Charge Coverage Ratio for the fiscal
quarter ending December 31, 1999 shall consist of the quarter ending
December 31, 1999; the Fixed Charge Coverage Ratio for the fiscal
quarter ending March 31, 2000 shall consist of the cumulative of the
quarter ending December 31, 1999 and the quarter ending March 31, 2000;
and the Fixed Charge Coverage Ratio for the fiscal quarter ending June
30, 2000 shall consist of the cumulative of the quarter ending December
31, 1999, the quarter ending March 31, 2000 and the quarter ending June
30, 2000. After the quarter ending June 30, 2000, the Fixed Charge
Coverage Ratio for each fiscal quarter shall be measured at the end of
such fiscal quarter on the basis of the period of the four consecutive
quarters then ended."
(e) Schedule 9 attached to the Credit Agreement is replaced by Schedule
9 attached to this Fourth Amendment as Exhibit A hereto.
(f) Notwithstanding any term, provision, definition or section
contained in the Credit Agreement, any other Loan Document or any Other
Document, and notwithstanding the satisfaction of any condition contained in the
Credit Agreement, any other Loan Document or any Other Document, from and after
the Effective Date (as defined in Paragraph 4 below), (i) all Advances shall be
Base Rate Advances, (ii) the rate of interest on Advances shall be a rate per
annum equal at all times to the Base Rate plus 2.0%, (iii) the definition of
"Base Rate" means a fluctuating interest rate per annum as shall be in effect
from time to time which rate per annum shall at all times be equal to the Prime
Rate (as defined in the Credit Agreement) in effect from time to time, (iv)
Eurocurrency Advances are not permitted, (v) any currently outstanding
Eurocurrency Advance shall be automatically converted at the end of the now
existing Interest Period to a Base Rate Advance and (vi) Advances in any
Alternate Currency are prohibited, all Advances, therefore, being in Dollars.
3. Representations and Warranties. The Borrower and each Guarantor
-------------------------------
hereby represent and warrant as follows (with the effectiveness of this Fourth
Amendment being further conditioned upon all such representations and warranties
being true and correct in all material respects on the Effective Date (as
defined below)):
<PAGE>
(a) The execution, delivery and performance by the Borrower and each
Guarantor of this Fourth Amendment has been duly authorized by all necessary
corporate action;
(b) This Fourth Amendment, the Credit Agreement, each of the other Loan
Documents and each of the Other Documents, as amended hereby, to which the
Borrower or a Guarantor is a party constitute legal, valid and binding
obligations of the Borrower and each Guarantor, respectively, enforceable
against it in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, equitable
remedies and other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies is subject to the discretion
of the court before which such remedies are sought;
(c) The representations and warranties contained in Article IV of the
Credit Agreement and set forth in the Second Amendment are correct as of the
Effective Date, except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement, the Loan Documents and the
Other Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse as reasonably determined
by the Lenders and Agent, or to the extent that such representations or
warranties relate expressly to an earlier date; and
(d) No other event has occurred and is continuing which constitutes a
Default (as defined in the Credit Agreement) or an Event of Default.
4. Conditions Precedent. (a) For purposes of Section 10.01 of the
Credit Agreement, each of the Lenders and the Agent hereby consents and agrees,
as of the Effective Date referred to below, to the terms and provisions of this
Fourth Amendment subject to the Agent's receipt of (and the effectiveness of
this Fourth Amendment shall be conditioned upon such receipt by the Agent of)
the Subparagraph 4(b) Documents (as defined below) in the manner and on the date
specified in subparagraph 4(b) below.
(b) For purposes hereof, the Agent shall receive on the date of the
execution and delivery of this Fourth Amendment by all parties hereto (the
"Effective Date") the following documents in form and substance satisfactory to
the Agent and the Lenders and other items (collectively, the "Subparagraph 4(b)
Documents") either as copies thereof via telecopy with the originals delivered
to the Agent promptly after the Effective Date or as originals:
(i) Duly executed counterpart of this Fourth Amendment signed by
the Agent, the Lenders, the Guarantors and the Borrower;
(ii) Duly executed counterparts of all agreements, certificates,
affidavits, financing statements and other agreements, instruments
and writings set forth on the checklist attached hereto as Exhibit
B (the "Checklist"), such items to be in form and substance
reasonably satisfactory to Agent and Lenders;
(iii) Unless waived by the Agent and Lenders in writing, all other
documents and items set forth in the attached Checklist not
included in paragraph 4(b)(ii) above in form and substance
reasonably satisfactory to Lenders and Agents;
(iv)(A) a check in the amount of $34,180.00 payable to the order of
Thacher Proffitt & Wood on account of the reasonable Agent's legal
fees and disbursement to date incurred in connection with this
Fourth Amendment and other matters in connection therewith, (B) a
check in the amount of $6,300.00 payable to the order of The Chase
Manhattan Bank to reimburse Chase for the reasonable allocated
costs of its internal counsel to date incurred in connection with
this Fourth Amendment and other matters in connection therewith and
(C) a check in the amount of $1,700.00 payable to the order of
Finn, Dixon & Herling LLP, on account of Fleet's reasonable legal
fees to date in connection with this Fourth Amendment and other
matters in connection therewith.
(c) If requested, in writing, by the Borrower, Agent shall confirm, in
writing, the satisfactory receipt by Agent of the items set forth in paragraph
4(b) above, promptly upon Agent's receipt of all such items.
5. Costs, Expenses and Taxes. The Borrower and each Guarantor agrees to
pay on demand all reasonable fees and expenses of the Agent and the Lenders in
connection with the preparation, negotiation, execution, delivery,
administration, modification and amendment of this Fourth Amendment and the
other instruments and documents to be delivered hereunder, including without
limitation, those documents described in Paragraphs 4(b)(ii) and 4(b)(iii), the
reasonable fees and expenses of counsel for the Agent and the Lenders with
respect thereto and with respect to advising the Agent and the Lenders as to
their respective rights and responsibilities hereunder and thereunder. The
Borrower and each Guarantor further agrees to pay on demand all reasonable costs
and expenses, if any (including without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Fourth Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, reasonable fees and expenses of counsel in connection with the
enforcement of rights under the Credit Agreement, the other Loan Documents, the
Other Documents and the documents set forth in the Checklist (the "Additional
Collateral Documents"). In addition, the Borrower and each Guarantor shall pay
any mortgage tax and filing and recording fees payable or determined to be
payable in connection with the execution and delivery and recording of this
Fourth Amendment and/or any Additional Collateral Document and agrees to save
the Agent and Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes,
recording or filing fees (except any such delay or omission caused by the gross
negligence or willful misconduct of the Agent or the Lenders, as applicable).
6. Default. The Borrower and each Guarantor expressly acknowledges and
agrees that failure to perform any term or provision contained in this Fourth
Amendment or in any Additional Collateral Document, shall, in addition to all
other Events of Default be an Event of Default under the Credit Agreement, and
the Agent and/or the Lenders may exercise remedies as provided in the Credit
Agreement, other Loan Documents, the Other Documents and the Additional
Collateral Documents.
7. Agreement; Waiver. Except as specifically amended hereby, the Credit
Agreement, the other Loan Documents and the Other Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Nothing in this Fourth Amendment contained or implied herein
shall be construed as a waiver or amendment of any provisions of the Credit
Agreement, any other Loan Document, Other Document or any Additional Collateral
Document other than as expressly set forth in this Fourth Amendment.
<PAGE>
8. Release of Agent and Lenders. By execution of this Fourth Amendment,
the Borrower and each Guarantor, jointly and severally, acknowledge and confirm
that they do not have any actions, causes of action, suits, debts,
controversies, damages, offsets, defenses, claims or counterclaims against the
Agent or either Lender, or any of their respective subsidiaries, affiliates,
officers, agents, directors, employees, attorneys, successors, and assigns, both
present and former (collectively, the "Related Affiliates") whether asserted or
unasserted, in law or in equity (collectively, the "Claims"), and to the extent
any Claim does exist, jointly and severally, release and forever discharge the
Agent and Lenders and any Related Affiliates of and from such Claim.
9. No Future Commitments. The Borrower and each Guarantor acknowledge
and agree that the execution and delivery of this Fourth Amendment or any
previous amendment and or waiver does not manifest a course of dealing with the
Borrower and or Guarantors leading to an expectation by Borrower and/or
Guarantors of any future waivers and/or amendments.
10. Counterparts. This Fourth Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
11. Governing Law. This Fourth Amendment shall be governed by, and
construed and enforced in accordance with, the internal, substantive laws of the
State of New York without giving effect to the conflict of law rules thereof.
[NO FURTHER TEXT ON THIS PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties to this Fourth Amendment have caused
their signatures to be affixed hereto the date above first written.
LECROY CORPORATION
By:/s/ Raymond Kunzmann
-------------------------------
Name: Raymond Kunzmann
Title:Vice President - Finance
THE CHASE MANHATTAN BANK,
as Agent
By: /s/ C. William Cosgrove
-------------------------------
Name: C. William Cosgrove
Title: Vice President
THE CHASE MANHATTAN BANK,
as Lender
By: /s/ C. William Cosgrove
-------------------------------
Name: C. William Cosgrove
Title: Vice President
FLEET NATIONAL BANK (formerly
known as BankBoston, N.A.),
as Lender
By: /s/ Andrew H. Harris
-------------------------------
Name: Andrew H. Harris
Title: Vice President
<PAGE>
ACCEPTED AND AGREED TO:
VIGILANT NETWORKS, INC.
Guarantor
By: /s/ Raymond Kunzmann
- -------------------------------
Name: Raymond Kunzmann
Title: Vice President - Finance
DIGITECH INDUSTRIES, INC. (Guarantor)
By: /s/ Raymond Kunzmann
- -------------------------------
Name: Raymond Kunzmann
Title: Vice President - Finance
PREAMBLE INSTRUMENTS, INC.
By: /s/ Raymond Kunzmann
- -------------------------------
Name: Raymond Kunzmann
Title: Vice President - Finance
<PAGE>
EXHIBIT A
SCHEDULE 9
COMMITMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Period from and
Period from March after Apr. 20, 2000
31, 1999 through and Period from Nov. 12, through and Period from and
including Nov. 11, 1999 through and including May 11, after May 12,
Lender 1999 including Apr. 19, 2000 2000 2000
- -------------------------- ---------------------- -------------------------- --------------------- -----------------
THE CHASE MANHATTAN BANK $13,400,000 $10,050,000 $8,040,000 $4,020,000
- -------------------------- ---------------------- -------------------------- --------------------- -----------------
FLEET NATIONAL BANK $ 6,600,000 $ 4,950,000 $3,960,000 $1,980,000
- -------------------------- ---------------------- -------------------------- --------------------- -----------------
</TABLE>
<PAGE>
EXHIBIT B
SEE ATTACHED CHECKLIST
<PAGE>
Counsel's File No.
17200-0130
CLOSING CHECKLIST
Relating to $6,000,000 Loan secured by a first mortgage lien
on the Property (described below) granted by LeCroy
Corporation (the "Borrower") to The Chase Manhattan
Bank ("Chase"),
as agent (the "Agent") for the benefit of Chase, as lender
and Fleet National Bank ("Fleet"), as lender and an amendment to the existing
$12,000,000 revolving credit facility evidenced by the Amended and Restated
Multicurrency Credit Agreement, as amended from time to time
among
Chase, as lender and as agent, Fleet (formerly known as
BankBoston, N.A. , as lender) and Borrower with both being facilities
guarantied by Vigilant Networks, Inc., f/k/a LeCroy NEWCO Corporation
("Vigilant"), Digitech Industries, Inc. ("Digitech") and
Preamble Instruments, Inc.("Preamble")
Property: 700 Chestnut Ridge Road
702 Chestnut Ridge Road
750 Chestnut Ridge Road
Chestnut Ridge, New York
Closing Date: May 12, 2000
<TABLE>
<CAPTION>
Lender's Counsel Borrower's Counsel
- -----------------------------------------------------------------------------------------------------
<S> <C>
Michael J. Vitolo, Esq. Christopher R. Smith, Esq./David J. Murphy, Esq.
Thacher Proffitt & Wood Richard A. Toelke, Esq.
50 Main Street Bingham Dana LLP
White Plains, New York 10606 150 Federal Street
Tel. # (914) 421-4118 Boston, MA 02110-1726
Fax # (914) 421-4150 Tel.# (617) 951-8748 (Smith) 8263(Murphy)
email: [email protected] Tel.# (617) 951-8830 (Toelke)
Fax # (617) 951-8736
email:
[email protected]
[email protected]
[email protected]
T = Thacher Proffitt & Wood to prepare or obtain
B = Borrower's counsel to obtain
T/B = Thacher Proffitt & Wood to Prepare, Borrower's counsel to obtain
A/B = Agent to obtain at Borrower's expense
W/A = Waived by Agent
N/A = Not Applicable
U = Undertaking
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------- --------------- ------------------------------------------------------------------------- --------------
No. Res. Document Status
- ----------- --------------- ------------------------------------------------------------------------- --------------
ORGANIZATIONAL DOCUMENTS
- ----------- --------------- ------------------------------------------------------------------------- --------------
<S> <C> <C> <C>
1. B Certificate of Incorporation and all amendments thereto, certified as
filed by Secretary of State where incorporated, for:
a) Borrower W/A
b) Vigilant W/A
c) Digitech W/A
d) Preamble W/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. B By-laws and all amendments for and certified by the Secretary of:
a) Borrower
b) Vigilant X
c) Digitech X
d) Preamble X
X
- ----------- --------------- ------------------------------------------------------------------------- --------------
3. B Long Form Certificate of Good Standing/Existence/Authority issued by
the Secretary of State where incorporated and where doing business for:
a) Borrower (NY)
(Del) W/A
b) Vigilant (Del) W/A
(MA) W/A
c) Digitech (Del) W/A
(CT) W/A
d) Preamble (Del) W/A
(Ore) W/A
W/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
4. T/B Secretary Certificate regarding resolutions, incumbency and other
matters (including certification no changes to organizational documents
since September, 1999) for:
a) Borrower U
b) Vigilant U
c) Digitech U
d) Preamble U
- ----------- --------------- ------------------------------------------------------------------------- --------------
5. T/B Resolution/ Unanimous written consent of Board of Directors for:
a) Borrower
b) Vigilant U
c) Digitech U
d) Preamble U
U
- ----------- --------------- ------------------------------------------------------------------------- --------------
APPRAISAL AND ENVIRONMENTAL
- ----------- --------------- ------------------------------------------------------------------------- --------------
1. B Appraisal of Property W/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. B Environmental Audit Satisfactory to Lender W/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
ZONING, USE AND OCCUPANCY
- ----------- --------------- ------------------------------------------------------------------------- --------------
1. B Board of Fire Underwriters Certificates N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. B Permanent Certificates of Occupancy X
- ----------- --------------- ------------------------------------------------------------------------- --------------
3. B Other licenses, permits and approvals required for the use and
operation of the Property N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------- --------------- ------------------------------------------------------------------------- --------------
LEASES
- ----------- --------------- ------------------------------------------------------------------------- --------------
<S> <C> <C> <C>
1. B Copies of leases, if any affecting any portion of any Property N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. T/B Tenant Estoppel Certificates with subordinations from all tenants, if
any N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
3. T/B Subordination Agreements, if necessary N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
TITLE INSURANCE, SEARCH REPORTS, SURVEY
- ----------- --------------- ------------------------------------------------------------------------- --------------
1. B Title Commitments on each Property X
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. B Copies of all recorded easements, rights of way, restrictive covenants X
and other instruments of record
- ----------- --------------- ------------------------------------------------------------------------- --------------
3. B Real estate tax search on each Property X
- ----------- --------------- ------------------------------------------------------------------------- --------------
4. B Municipal departmental violation searches, including environmental lien
search on each Property X
- ----------- --------------- ------------------------------------------------------------------------- --------------
5. B Municipal Approvals/Resolution, if required N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
6. B ALTA Policy insuring title on each Property with
affirmative insurance and/or endorsements as
required by Fleet, Chase and Agent X
- ----------- --------------- ------------------------------------------------------------------------- --------------
7. B UCC-1 Financing Statement searches for Secretary of State and county
where the following do business (may be updated from searches provided
in 1999):
a) Borrower (NY) X
(Rockland Co.) X
b) Vigilant (NY) X
(Rockland Co.) X
(MA) X
(Ayer) X
(Burlington) X
c) Digitech (NY) X
(Rockland Co.) X
(CT) X
d) Preamble (NY) X
(Rockland Co.) X
(Ore) X
e) LeCroy Merger Corporation
(NY) X
(Rockland Co.) X
(CT) X
f) LeCroy NEWCO Corporation
(NY) X
(Rockland Co.) X
(MA) X
(Ayer) X
(Burlington) X
g) Preamble Acquisition Corporation
(NY) X
(Rockland Co.) X
(Ore)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------- --------------- ------------------------------------------------------------------------- --------------
<S> <C> <C> <C>
8. B Judgment, Bankruptcy and Tax Lien searches for Secretary of State and
county where the following do business:
a) Borrower (NY and Rockland Co.) X
b) Vigilant (Del)
(MA) X
(Ayer) X
(Burlington) X
(NY) X
(Rockland) X
c) Digitech (Del)
(NYS of State) X
(Rockland County) X
(CT) X
d) Preamble (Del)
(Ore) X
(NY X
(Rockland) X
- ----------- --------------- ------------------------------------------------------------------------- --------------
9. B Survey on each Property, updated, as required by Agent, Fleet and Chase
X
- ----------- --------------- ------------------------------------------------------------------------- --------------
10. B Patent search at U.S. Patent Office as to
specified patents and applications as determined by
Agent X
- ----------- --------------- ------------------------------------------------------------------------- --------------
EXISTING LIENS
- ----------- --------------- ------------------------------------------------------------------------- --------------
1. B Termination of existing UCC filings and satisfaction of existing
mortgages, grant of security interest in patents and other items on
record, if any (as required by Agent, Fleet and Chase) for:
a) Borrower (UCCs & Property) X(N/AUCCS)
b) Vigilant (UCCs only) N/A
c) Digitech (UCCs only) N/A
d) Preamble (UCCs only) N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
INSURANCE
- ----------- --------------- ------------------------------------------------------------------------- --------------
1. B All Risk insurance (fire, theft, casualty) Insurance Policies covering
the Property of Borrower, with endorsement naming Agent, as additional
insured, loss payee and mortgagee and containing a 30 day cancellation
clause. Policies to be in amounts acceptable to Fleet, Chase and Agent. X
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. B Public Liability Insurance X
- ----------- --------------- ------------------------------------------------------------------------- --------------
3. A/B Flood Hazard Certification for each Property X
- ----------- --------------- ------------------------------------------------------------------------- --------------
4. B Flood Insurance policy, if required N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
FINANCIAL STATEMENTS
- ----------- --------------- ------------------------------------------------------------------------- --------------
1. T Confirmation of receipt by each lender of financial statements
satisfactory to each of them
a) Chase X
b) Fleet X
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------- --------------- ------------------------------------------------------------------------- --------------
LOAN DOCUMENTS
- ----------- --------------- ------------------------------------------------------------------------- --------------
<S> <C> <C> <C>
1. T/B Fourth Amendment to Amended and Restated Multicurrency Credit Agreement X
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. T/B $4,020,000 Note payable to Chase X
- ----------- --------------- ------------------------------------------------------------------------- --------------
3. T/B $1,980,000 Note payable to Fleet X
- ----------- --------------- ------------------------------------------------------------------------- --------------
4. T/B Term Loan Agreement X
- ----------- --------------- ------------------------------------------------------------------------- --------------
5. T/B Mortgage and Security Agreement X
- ----------- --------------- ------------------------------------------------------------------------- --------------
6. T/B Assignment of Leases and Rents X
- ----------- --------------- ------------------------------------------------------------------------- --------------
7. T/B Affidavit with respect to Section 255 of the New
York Tax Law with respect to the Assignment of X
Leases and Rents
- ----------- --------------- ------------------------------------------------------------------------- --------------
8. T/B 1) Separate Amended and Restated Security Agreements executed by
Borrower in favor of Chase and Fleet X
2) Separate Confirmation of Amended and Restated Security Agreements
executed by Borrower X
- ----------- --------------- ------------------------------------------------------------------------- --------------
9. T/B Assignments of Patents (in blank) X
- ----------- --------------- ------------------------------------------------------------------------- --------------
10. T/B Amended and Restated Inter-Creditor Agreement X
- ----------- --------------- ------------------------------------------------------------------------- --------------
11. T/B Amended and Restated Guaranty Agreements executed by Vigilant, Digitech
and Preamble in favor of:
a) Chase X
b) Fleet X
- ----------- --------------- ------------------------------------------------------------------------- --------------
12. T/B UCC-1 Financing Statements to be filed with NY
Secretary of State and Rockland County naming
Borrower, as Debtor and Agent, as Secured Party X
- ----------- --------------- ------------------------------------------------------------------------- --------------
13. T/B UCC-3 Financing Statements to be filed where
previous filings were made to amend collateral
description to include specific Patents. N/A
- ----------- --------------- ------------------------------------------------------------------------- --------------
14. T/B Confirmation of filing at U.S. Patent and Trademark Office
- ----------- --------------- ------------------------------------------------------------------------- --------------
15. T/B Affidavit of Title X
- ----------- --------------- ------------------------------------------------------------------------- --------------
16. T/B Hazardous Materials Indemnity Agreement X
- ----------- --------------- ------------------------------------------------------------------------- --------------
17. T Title Company receipt letter X
- ----------- --------------- ------------------------------------------------------------------------- --------------
18. T/B Certificate regarding representations, warranties and defaults from
Borrower, Vigilant, Digitech and Preamble X
- ----------- --------------- ------------------------------------------------------------------------- --------------
19. T/B Opinion of Counsel in form and substance satisfactory addressed and
satisfactory to Agent and Lenders regarding organization, power and
authority to execute, enforceability, and other matters for Borrower,
Vigilant, Digitech and Preamble U
- ----------- --------------- ------------------------------------------------------------------------- --------------
20. T/B Solvency Certificates from Vigilant, Digitech and Preamble X
- ----------- --------------- ------------------------------------------------------------------------- --------------
21. T/B Undertaking letter if necessary X
- ----------- --------------- ------------------------------------------------------------------------- --------------
22. T Letter to Chase from TPW regarding documents
- ----------- --------------- ------------------------------------------------------------------------- --------------
PAYMENTS
- ----------- --------------- ------------------------------------------------------------------------- --------------
1. B Payment of attorney fees X
- ----------- --------------- ------------------------------------------------------------------------- --------------
2. B Payment of other fees X
- ----------- --------------- ------------------------------------------------------------------------- --------------
3. T/B Disbursement/authorization letter from Borrower X
- ----------- --------------- ------------------------------------------------------------------------- --------------
4. B Payment of title insurance premiums, mortgage tax, past due taxes, if X
any
- ----------- --------------- ------------------------------------------------------------------------- --------------
</TABLE>
<PAGE>
EXHIBIT 10.27
FIFTH AMENDMENT TO AMENDED
AND RESTATED MULTICURRENCY CREDIT AGREEMENT
THIS FIFTH AMENDMENT (the "Fifth Amendment") is made as of the 18th day
of May, 2000 by and among LECROY CORPORATION (the "Borrower"), a corporation
organized and existing under the laws of the State of Delaware, THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation, as agent (the "Agent")
for the Lenders (defined below) under the Credit Agreement (defined below) and
as a Lender thereunder and FLEET NATIONAL BANK, a national banking association,
formerly known as BankBoston, N.A. ("Fleet"), as a Lender under the Credit
Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Chase and Fleet (formerly known as BankBoston,
N.A.) (Chase and Fleet, collectively, the "Lenders" and each individually, a
"Lender") and the Agent are parties to a certain Amended and Restated
Multicurrency Credit Agreement dated as of March 31, 1999, as amended by the
First Amendment to Amended and Restated Multicurrency Credit Agreement dated
June 12, 1999, the Second Amendment to Amended and Restated Multicurrency Credit
Agreement (the "Second Amendment") dated as of September 7, 1999, the Third
Amendment and Waiver (the "Third Amendment") dated as of April 19, 2000 and the
Fourth Amendment (the "Fourth Amendment") dated as of May 12, 2000
(collectively, the "Credit Agreement");
WHEREAS, the maximum principal amount of the Commitments (as defined in
the Credit Agreement) under the Credit Agreement is SIX MILLION AND 00/100
DOLLARS ($6,000,000) with Chase's Commitment, as a Lender, not to exceed FOUR
MILLION TWENTY THOUSAND AND 00/100 DOLLARS ($4,020,000) and Fleet's Commitment
not to exceed ONE MILLION NINE HUNDRED EIGHTY THOUSAND AND 00/100 DOLLARS
($1,980,000); and
WHEREAS, the Agent, the Lenders and Borrower desire to amend certain
terms and provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, receipt of which is hereby
acknowledged and upon the execution and delivery of this Fifth Amendment by each
party hereto and the satisfaction of the conditions set forth in Paragraph 4
below, the Borrower, Chase, as Agent and Lender, and Fleet agree as follows:
1. Capitalized Terms. All capitalized terms used in this Fifth
Amendment and not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
2. Amendment. (a) Section 5.01(h) (xvi) of the Credit Agreement
is deleted in its entirety and the following new Section 5.01(h)(xvi) is
inserted in lieu thereof:
<PAGE>
"(xvi) on the last Business Day of each week, verbal status updates
acceptable to the Lenders and Agent from the chief financial officer of
the Borrower or other officer reasonably acceptable to the Agent and
Lenders regarding Borrower's LAN division section of its business;"
(b) Section 5.01(h)(xviii) of the Credit Agreement is deleted in its
entirety and the following new Section 5.01(h) (xviii) is inserted in lieu
thereof:
"(xviii) within five (5) Business Days of a verbal or written request
by the Agent, such other information respecting the business, condition
(financial or otherwise), operations, business plans or financing plans of the
Borrower or any of its Subsidiaries as any Lender, through the Agent, or the
Agent may from time to time request."
(c) Section 7.04 of the Credit Agreement is deleted in its entirety and
the following new Section 7.04 is inserted in lieu thereof:
"SECTION 7.04. Fixed Charge Coverage Ratio. The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis, (a)
at all times (except as waived in writing by the Lenders and the Agent)
through and including the fiscal quarter ending March 31, 2000, a Fixed
Charge Coverage Ratio of not less than 3.00:1.00, (b) for the fiscal
quarter ending June 30, 2000, a Fixed Charge Coverage Ratio of not less
than -5.00:1.00 and (c) at all times from and after July 1, 2000, a
Fixed Charge Coverage Ratio of not less than 3.00:1.00. For the purpose
of calculating Fixed Charge Coverage Ratio, the Fixed Charge Coverage
Ratio for the fiscal quarter ending September 30, 1999 shall not be
applicable; the Fixed Charge Coverage Ratio for the fiscal quarter
ending December 31, 1999 shall consist of the quarter ending December
31, 1999; the Fixed Charge Coverage Ratio for the fiscal quarter ending
March 31, 2000 shall consist of the cumulative of the quarter ending
December 31, 1999 and the quarter ending March 31, 2000; and the Fixed
Charge Coverage Ratio for the fiscal quarter ending June 30, 2000 shall
consist of the cumulative of the quarter ending December 31, 1999, the
quarter ending March 31, 2000 and the quarter ending June 30, 2000.
After the quarter ending June 30, 2000, the Fixed Charge Coverage Ratio
for each fiscal quarter shall be measured at the end of such fiscal
quarter on the basis of the period of the four consecutive quarters
then ended."
(d) Section 7.07 of the Credit Agreement is deleted in its entirety and
the following new Section 7.07 is inserted in lieu thereof:
"SECTION 7.07 No Net Loss. The Borrower and its Consolidated
Subsidiaries shall not incur a net loss, on a consolidated basis, for any Fiscal
Year. Notwithstanding the foregoing, for the Fiscal Year ending June 30, 2000
only, the Borrower and its Consolidated Subsidiaries may incur a net loss,
before taxes, of not more than $3,250,000.00."
(e) Section 7.08 of the Credit Agreement is deleted in its entirety and
the following new Section 7.08 is inserted in lieu thereof:
<PAGE>
"SECTION 7.08. Minimum EBITDA Requirement. (a) The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis,
EBITDA (as defined below in this Section 7.08(a)), to be measured at
the end of each fiscal quarter, of not less than (i) $N/A for the
quarter ending September 30, 1999; (ii) $1,700,000.00 for the quarter
ending December 31, 1999; (iii) $4,300,000.00 for the quarter ending
March 31, 2000; (iv) $1,200,000.00 for the quarter ending June 30,
2000; (v) $3,500,000.00 for the quarter ending September 30, 2000; (vi)
$8,600,000.00 for the quarter ending December 31, 2000; (vii)
$13,800,000.00 for the quarter ending March 31, 2001; (viii)
$19,500,000.00 for the quarter ending June 30, 2001; (ix) $3,850,000.00
for the quarter ending September 30, 2001; and (x) $9,600,000.00 for
the quarter ending December 31, 2001. For purpose of this Section
7.08(a), "EBITDA" shall mean earnings before interest, taxes,
depreciation, and amortization as determined in accordance with GAAP;
provided, however, the gain on the sale of Iwatsu Electric Company
stock shall be excluded from the earnings component of the definition
of EBITDA. For the purpose of calculating EBITDA in this Section
7.08(a), EBITDA for a fiscal quarter ending September 30 in any year,
shall consist solely of the one quarter then ended; EBITDA for a fiscal
quarter ending December 31 in any year, shall consist of the cumulative
of the preceding quarter ending September 30 and the preceding quarter
ending December 31; EBITDA for a fiscal quarter ending March 31 in any
year, shall consist of the cumulative of the preceding quarter ending
September 30, the preceding quarter ending December 31, and the
preceding quarter ending March 31; and EBITDA for a fiscal quarter
ending June 30 in any year, shall consist of the cumulative of the
preceding quarter ending September 30, the preceding quarter ending
December 31, the preceding quarter ending March 31, and the preceding
quarter ending June 30.
(b) The Borrower and its Consolidated Subsidiaries shall maintain, on a
consolidated basis, EBITDA (as defined below in this Section 7.08(b)),
to be measured at the end of each fiscal quarter, of not less than (i)
$N/A for the quarter ending September 30, 1999; (ii) $1,700,000.00 for
the quarter ending December 31, 1999; (iii) $2,350,000.00 for the
quarter ending March 31, 2000; (iv) -$1,800,000.00 for the quarter
ending June 30, 2000; (v) $3,500,000.00 for the quarter ending
September 30, 2000; (vi) $3,950,000.00 for the quarter ending December
31, 2000; (vii) $4,200,000.00 for the quarter ending March 31, 2001;
(viii) $4,600,000.00 for the quarter ending June 30, 2001; (ix)
$3,850,000.00 for the quarter ending September 30, 2001; and (x)
$4,400,000.00 for the quarter ending December 31, 2001. For purposes of
this Section 7.08(b), "EBITDA" shall mean earnings before interest,
taxes, depreciation, and amortization as determined in accordance with
GAAP; provided, however, the gain on the sale of Iwatsu Electric
Company stock shall be excluded from the earnings component of the
definition of EBITDA. For the purposes of calculating EBITDA in this
Section 7.08(b), EBITDA shall consist solely of the quarter then
ended."
3. Representations and Warranties. The Borrower and each Guarantor
hereby represent and warrant as follows (with the effectiveness of this Fifth
Amendment being further conditioned upon all such representations and warranties
being true and correct in all material respects on May 18, 2000):
(a) The execution, delivery and performance by the Borrower and each
Guarantor of this Fifth Amendment has been duly authorized by all necessary
corporate action;
(b) This Fifth Amendment, the Credit Agreement, each of the other Loan
Documents and each of the Other Documents, as amended hereby, to which the
Borrower or a Guarantor is a party constitute legal, valid and binding
obligations of the Borrower and each Guarantor, respectively, enforceable
against it in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, equitable
remedies and other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies is subject to the discretion
of the court before which such remedies are sought;
<PAGE>
(c) The representations and warranties contained in Article IV of the
Credit Agreement and set forth in the Second Amendment are correct as of May 18,
2000, except to the extent of changes resulting from transactions contemplated
or permitted by the Credit Agreement (as amended by this Fifth Amendment), the
Loan Documents and the Other Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse as
reasonably determined by the Lenders and Agent, or to the extent that such
representations or warranties relate expressly to an earlier date; and
(d) No event has occurred and is continuing which has not been waived
by the Agent and Lenders which constitutes a Default (as defined in the Credit
Agreement) or an Event of Default.
4. Conditions Precedent. (a) For purposes of Section 10.01 of the
Credit Agreement (as amended by this Fifth Amendment), each of the Lenders and
the Agent hereby consents and agrees, as of May 18, 2000, to the terms and
provisions of this Fifth Amendment subject to the Agent's receipt of (and the
effectiveness of this Fifth Amendment shall be conditioned upon such receipt by
the Agent of) the Subparagraph 4(b) Documents (as defined below) in the manner
and on the date specified in subparagraph 4(b) below.
(b) For purposes hereof, the Agent shall receive, no later than May 18,
2000, the following documents in form and substance satisfactory to the Agent
and the Lenders and other items (collectively, the "Subparagraph 4(b)
Documents") either as copies thereof via telecopy with the originals delivered
to the Agent promptly after May 18, 2000 or as originals:
(i) Duly executed counterpart of this Fifth Amendment signed by the
Agent, the Lenders, the Guarantors and the Borrower; and
(i)(A) a check in the amount of $13,570.00 payable to the order of
Thacher Proffitt & Wood on account of the reasonable Agent's legal
fees and disbursement to date incurred in connection with this
Fifth Amendment and other matters in connection therewith, (B) a
check in the amount of $875.00 payable to the order of The Chase
Manhattan Bank to reimburse Chase for the reasonable allocated
costs of its internal counsel to date incurred in connection with
this Fifth Amendment and other matters in connection therewith and
(C) a check in the amount of $___________ payable to the order of
Finn, Dixon & Herling LLP, on account of Fleet's reasonable legal
fees to date in connection with this Fifth Amendment and other
matters in connection therewith.
(c) If requested, in writing, by the Borrower, Agent shall confirm, in
writing, the satisfactory receipt by Agent of the items set forth in paragraph
4(b) above, promptly upon Agent's receipt of all such items.
<PAGE>
5. Costs, Expenses and Taxes. The Borrower and each Guarantor agrees to
pay on demand all reasonable fees and expenses of the Agent and the Lenders in
connection with the preparation, negotiation, execution, delivery,
administration, modification and amendment of this Fifth Amendment and the other
instruments and documents to be delivered hereunder, including without
limitation, the reasonable fees and expenses of counsel for the Agent and the
Lenders with respect thereto and with respect to advising the Agent and the
Lenders as to their respective rights and responsibilities hereunder and
thereunder. The Borrower and each Guarantor further agrees to pay on demand all
reasonable costs and expenses, if any (including without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Fifth Amendment and the
other instruments and documents to be delivered hereunder, including, without
limitation, reasonable fees and expenses of counsel in connection with the
enforcement of rights under the Credit Agreement, as amended by this Fifth
Amendment, the other Loan Documents, the Other Documents and the Additional
Collateral Documents.
6. Default. The Borrower and each Guarantor expressly acknowledges and
agrees that failure to perform any term or provision contained in this Fifth
Amendment shall, in addition to all other Events of Default be an Event of
Default under the Credit Agreement, and the Agent and/or the Lenders may
exercise remedies as provided in the Credit Agreement, other Loan Documents, the
Other Documents and the Additional Collateral Documents.
7. Agreement; Waiver. Except as specifically amended hereby, the Credit
Agreement, as amended by this Fifth Amendment, the other Loan Documents and the
Other Documents are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed. Nothing in this Fifth Amendment
contained or implied herein shall be construed as a waiver or amendment of any
provisions of the Credit Agreement, as amended by this Amendment, any other Loan
Document, Other Document or any Additional Collateral Document other than as
expressly set forth in this Fifth Amendment.
8. Release of Agent and Lenders. By execution of this Fifth Amendment,
the Borrower and each Guarantor, jointly and severally, acknowledge and confirm
that they do not have any actions, causes of action, suits, debts,
controversies, damages, offsets, defenses, claims or counterclaims against the
Agent or either Lender, or any of their respective subsidiaries, affiliates,
officers, agents, directors, employees, attorneys, successors, and assigns, both
present and former (collectively, the "Related Affiliates") whether asserted or
unasserted, in law or in equity (collectively, the "Claims"), and to the extent
any Claim does exist, jointly and severally, release and forever discharge the
Agent and Lenders and any Related Affiliates of and from such Claim.
9. No Future Commitments. The Borrower and each Guarantor acknowledge
and agree that the execution and delivery of this Fifth Amendment or any
previous amendment and/or waiver does not manifest a course of dealing with the
Borrower and or Guarantors leading to an expectation by Borrower and/or
Guarantors of any future waivers and/or amendments.
10. Counterparts. This Fifth Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE>
11. Governing Law. This Fifth Amendment shall be governed by, and
construed and enforced in accordance with, the internal, substantive laws of the
State of New York without giving effect to the conflict of law rules thereof.
[NO FURTHER TEXT ON THIS PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties to this Fifth Amendment have caused
their signatures to be affixed hereto the date above first written.
LECROY CORPORATION
By:
--------------------------------
Name: Raymond F. Kunzmann
Title: Vice President - Finance
THE CHASE MANHATTAN BANK,
as Agent
By:
--------------------------------
Name: C. William Cosgrove
Title: Vice President
THE CHASE MANHATTAN BANK,
as Lender
By:
--------------------------------
Name: C. William Cosgrove
Title: Vice President
FLEET NATIONAL BANK
(formerly known as BankBoston,
N.A.), as Lender
By:
--------------------------------
Name: Andrew H. Harris
Title: Vice President
<PAGE>
ACCEPTED AND AGREED TO:
VIGILANT NETWORKS, INC.
Guarantor
By:
- --------------------------------
Name: Raymond F. Kunzmann
Title: Vice President - Finance
DIGITECH INDUSTRIES, INC. (Guarantor)
By:
- --------------------------------
Name: Raymond F. Kunzmann
Title: Vice President - Finance
PREAMBLE INSTRUMENTS, INC.
By:
- --------------------------------
Name: Raymond F. Kunzmann
Title: Vice President - Finance
<PAGE>
State of New York )
ss:
County of Rockland )
On the ___ day of May in the year 2000 before me, the undersigned, personally
appeared Raymond F. Kunzmann, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his capacity, and that by his signature on the instrument, the individual, or
the person upon behalf of which the individual acted, executed the instrument.
- ----------------------------
Signature and Office of Individual
taking acknowledgment
State of New York )
ss:
County of Rockland )
On the ___ day of May in the year 2000 before me, the undersigned, personally
appeared C. William Cosgrove, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.
- ----------------------------
Signature and Office of Individual
taking acknowledgment
<PAGE>
State of Connecticut)
ss:
County of Fairfield )
On the ___ day of May in the year 2000 before me, the undersigned, personally
appeared Andrew H. Harris personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument and
that such individual made such appearance before the undersigned in the City of
Stamford, Connecticut.
- ----------------------------
Signature and Office of Individual
taking acknowledgment
<PAGE>
EXHIBIT 10.28
TERM LOAN AGREEMENT
Dated as of May 12, 2000
Among
LECROY CORPORATION
as Borrower
and
THE LENDERS NAMED HEREIN
as Lenders
and
THE CHASE MANHATTAN BANK
as Agent
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1
SECTION 1.01. Certain Defined Terms. 2
SECTION 1.02. Computation of Time Periods. 11
SECTION 1.03. Accounting Terms. 11
ARTICLE II AMOUNT OF LOANS 11
SECTION 2.01. The Loan 11
SECTION 2.02. Intentionally Omitted 12
SECTION 2.03. Intentionally Omitted 12
SECTION 2.04. Intentionally Omitted 12
SECTION 2.05. Repayment of the Loans. 12
SECTION 2.06. Interest on the Loans; Default Interest. 12
SECTION 2.07. Intentionally Omitted. 12
SECTION 2.08. Intentionally Omitted. 12
SECTION 2.09. Prepayments. 13
SECTION 2.10. Intentionally Omitted. 13
SECTION 2.11. Payments and Computations. 13
SECTION 2.12. Taxes. 14
SECTION 2.13. Sharing of Payments, Etc. 18
SECTION 2.14. Evidence of Debt. 18
SECTION 2.15. Intentionally Omitted. 19
SECTION 2.16. Intentional Omitted. 19
SECTION 2.17. Intentional Omitted. 19
SECTION 2.18. Agent's Fees. 19
SECTION 2.19. Use of Proceeds. 19
ARTICLE III CONDITIONS OF THE LOAN 19
SECTION 3.01. Condition Precedent to the Loan. 19
(a) Note. 19
(b) Certificate of Corporate Action. 19
(c) Incumbency and Signature Certificate. 20
(d) Intentionally Omitted. 20
(e) Fourth Amendment. A duly executed Fourth
Amendment, in form and substance
satisfactory to the Lenders and Agent. 20
(f) Opinion of Counsel for Borrower and Guarantors. 20
(g) Mortgage. A duly executed Mortgage (the "Mortgage")
and Security 20
(h) Security Agreement. 20
(i) Amended and Restated Guaranty Agreement. 20
(j) Assignment of Leases and Rents; Hazardous
Materials Indemnity Agreements. 20
(k) Insurance 20
(l) Searches 21
(m) Fees 21
(n) Other Documents 21
SECTION 3.02. Additional Conditions Precedent. 21
<PAGE>
ARTICLE IV REPRESENTATIONS AND WARRANTIES 21
SECTION 4.01. Representations and Warranties of the Borrower. 21
(a) Due Incorporation. 21
(b) Compliance with Other Agreements, Etc. 22
(c) Validity of Obligations. 22
(d) No Pending Litigation. 22
(e) Financial Statements. 23
(f) Title to Assets. 23
(g) Taxes. 23
(h) ERISA. 24
(i) Subsidiaries. 24
(j) Indebtedness. 24
(k) Licenses, Permits. 24
(l) Judgments. 25
(m) Other Agreements. 25
(n) Labor Disputes, Acts of God. 25
(o) Investment Company. 25
(p) Partner in a Partnership. 25
(q) Compliance with Law. 25
ARTICLE V AFFIRMATIVE COVENANTS 26
SECTION 5.01. Affirmative Covenants. 26
(a) Corporate Existence. 26
(b) Conduct of Business. 26
(c) Preservation of Properties. 26
(d) Maintenance of Records. 26
(e) Maintenance of Insurance. 26
(f) Compliance with Law. 27
(g) Examination of Records. 27
(h) Financial Reporting. 27
(i) Further Acts. 31
(j) Environmental Laws. 31
ARTICLE VI NEGATIVE COVENANTS 33
SECTION 6.01. Negative Covenants. 33
(a) Debt. 33
(b) Intentionally Omitted. 34
(c) Liens. 34
(d) Leases. 37
(e) Investments. 37
(f) Restricted Payments. 37
(g) Sale of Assets. 38
(h) Intentionally Omitted. 38
(i) Transactions with Affiliates. 38
(j) Mergers, Acquisitions, Etc. 39
ARTICLE VII FINANCIAL COVENANTS 39
SECTION 7.01. Current Ratio. 39
SECTION 7.02. Intentionally omitted. 39
SECTION 7.03. Intentionally omitted. 39
SECTION 7.04. Fixed Charge Coverage Ratio. 39
SECTION 7.05. Leverage Ratio. 40
SECTION 7.06. Capital Expenditures. 40
SECTION 7.07. No Net Loss. 40
SECTION 7.08. Minimum EBITDA Requirement 40
<PAGE>
ARTICLE VIII EVENTS OF DEFAULT 41
SECTION 8.01. Events of Default. 41
ARTICLE IX THE AGENT 44
SECTION 9.01. Authorization and Action. 44
SECTION 9.02. Agent's Reliance, Etc. 44
SECTION 9.03. Chase and Affiliates. 45
SECTION 9.04. Lender Credit Decision 45
SECTION 9.05. Indemnification. 45
SECTION 9.06. Successor Agent. 46
ARTICLE X MISCELLANEOUS 47
SECTION 10.01. Amendments, Etc. 47
SECTION 10.02. Notices, Etc. 47
SECTION 10.03. No Waiver, Remedies 47
SECTION 10.04. Costs, Expenses and Taxes 48
SECTION 10.05. Right of Set-off. 48
SECTION 10.06. Intentionally Omitted. 49
SECTION 10.07. Binding Effect. 49
SECTION 10.08. Assignments and Participation. 49
SECTION 10.09. Consent to Jurisdiction. 52
SECTION 10.10. Governing Law. 53
SECTION 10.11. Execution in Counterparts. 53
SECTION 10.12. Captions. 53
SECTION 10.13. WAIVER OF JURY TRIAL. 53
SECTION 10.14. Intentionally Omitted. 53
SECTION 10.15. Intentionally Omitted. 53
SECTION 10.16. Intentionally Omitted. 53
SECTION 10.17. Confidentiality. 54
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Compliance Certificate
Exhibit C Form of Replacement Promissory Note
Exhibit D Form of Opinion of Counsel
SCHEDULES
Schedule 1 Schedule of Lending Offices (Domestic and Eurocurrency)
Schedule 2 Schedule of Pending Litigation
Schedule 3 Schedule of Existing Debt and Guarantees
Schedule 4 Schedule of Existing Liens
Schedule 5 Schedule of Existing Investments
Schedule 6 Schedule of Transactions with Affiliates
Schedule 7 Schedule of Subsidiaries and Ownership
Schedule 8 Intentionally Omitted
Schedule 9 Schedule of Commitments
<PAGE>
TERM LOAN AGREEMENT (the "Agreement") dated as of May 12, 2000 by and
among LECROY CORPORATION, a Delaware corporation (the "Borrower"), THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation, as agent for the
Lenders (defined below) under this Agreement and as a Lender hereunder and FLEET
NATIONAL BANK, a national banking association ("Fleet"), as a Lender under this
Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Chase and Fleet (formerly known as BankBoston,
N.A.) (Chase and Fleet, collectively, the "Lenders" and each individually, a
"Lender") and the Agent are parties to a certain Amended and Restated
Multicurrency Credit Agreement dated as of March 31, 1999, as amended by the
First Amendment to Amended and Restated Multicurrency Credit Agreement dated
June 12, 1999, the Second Amendment to Amended and Restated Multicurrency Credit
Agreement (the "Second Amendment") dated as of September 7, 1999 and the Third
amendment and Waiver dated as of April 19, 2000 (the "Third Amendment")
(collectively, the "Credit Agreement");
WHEREAS, the Borrower, the Lenders and the Agent have agreed to further
amend the Credit Agreement (the "Fourth Amendment")so as to, among other things,
reduce the aggregate of Lenders' Commitments (as defined in the Credit
Agreement) and amend certain other provisions of the Credit Agreement;
WHEREAS, simultaneously with the execution of the Fourth Amendment to
the Credit Agreement, the Borrower, Lenders and the Agent intend to execute and
deliver this Agreement and Borrower shall use the proceeds of the terms loans
described herein to reduce in part the outstanding advances under the Credit
Agreement;
WHEREAS, the term loans shall be evidenced by mortgage notes (the
"Notes", as defined below) executed in connection herewith;
WHEREAS, the Notes shall be secured by a first mortgage lien on
Borrower=s property located in Chestnut Ridge, New York in favor of the Agent
for the benefit of the Lenders.
NOW, THEREFORE, in consideration of the mutual promises set forth in
this Agreement, the parties to this Agreement agree as follows:
-1-
<PAGE>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accounts" shall mean those accounts arising out of the sale
or lease of goods or the rendition of services by the Borrower or any
of its Consolidated Subsidiaries.
"Acquisition" means any transaction pursuant to which the
Borrower or any of its Subsidiaries (a) acquires equity securities (or
warrants, options or other rights to acquire such securities) of (i)
any corporation other than the Borrower or (ii) any corporation which
is then a Subsidiary of the Borrower, pursuant to a solicitation of
tenders therefor, or in one or more negotiated block, market or other
transactions not involving a tender offer, or a combination of any of
the foregoing, or (b) makes any corporation a Subsidiary of the
Borrower, or causes any such corporation to be merged into the Borrower
or any of its Subsidiaries, in any case pursuant to a merger, purchase
of assets or any reorganization providing for the delivery or issuance
to the holders of such corporation's then outstanding securities, in
exchange for such securities, of cash or securities of the Borrower or
any of its Subsidiaries, or a combination thereof, or (c) purchases all
or substantially all of the business or assets of any corporation.
"Affiliate" means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with, the
Borrower or any of its Subsidiaries; (b) which directly or indirectly
beneficially owns or holds 5% or more of any class of voting stock of
the Borrower or any such Subsidiary; or (c) 5% or more of the voting
stock of which is directly or indirectly beneficially owned or held by
the Borrower or such Subsidiary. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
"Agent" means Chase, its successors and/or permitted assigns
pursuant to Article IX hereof, as agent for the Lenders hereunder in
accordance with Article IX hereof.
"Agreement" has the meaning given such term in the opening
paragraph of this Agreement.
-2-
<PAGE>
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Agent, in substantially the form of Exhibit A hereto.
"Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time which rate per annum shall at all
times be equal to the Prime Rate in effect from time to time.
"Borrower" has the meaning given such term in the opening
paragraph of this Agreement.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City.
"Capital Expenditures" means for any period, the Dollar amount
of gross capital expenditures determined in accordance with GAAP.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Cash Flow" means, for any accounting period, the sum of (i)
profit before taxes as reflected in the financial statements prepared
in accordance with the terms of Sections 5.01(h)(i) and (iii), plus
(ii) depreciation, plus (iii) foreign exchange losses, minus Capital
Expenditures.
"Chase" means The Chase Manhattan Bank, N.A.
"Closing Date" means the date on which this Agreement shall be
signed and delivered by all parties hereto.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commitment" has the meaning specified in Section 2.01.
"Confidential Information" means information received under
Sections 5.01(g) or 5.01(h) and all other information that the Borrower
furnishes to the Agent or any Lender on a confidential basis, but does
not include any such information that is or becomes generally available
to the public or that is or becomes available to the Agent or such
Lender from a source other than the Borrower other than in violation of
any applicable confidentiality requirements.
-3-
<PAGE>
"Consolidated Capital Expenditures" means Capital Expenditures
of the Borrower and its Consolidated Subsidiaries on a consolidated
basis, as determined in accordance with GAAP.
"Consolidated Current Assets" means Current Assets of the
Borrower and its Consolidated Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Consolidated Current Liabilities" means Current Liabilities
of the Borrower and its Consolidated Subsidiaries on a consolidated
basis, as determined in accordance with GAAP.
"Consolidated Liabilities" means liabilities of the Borrower
and its Consolidated Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary whose accounts
are or are required to be consolidated with the accounts of the
Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means Tangible Net Worth of
the Borrower and its Consolidated Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
"Consolidated Total Assets" means Total Assets of the Borrower
and its Consolidated Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Credit Agreement" has the meaning given in the first
"Whereas" clause above, as amended by the Fourth Amendment and as
amended from time to time among Borrower, Agent and the Lenders.
"Current Assets" means all assets treated as current assets in
accordance with GAAP, excluding, however, from the determination of
current assets: loans to insiders; and amounts due from Subsidiaries
and Affiliates.
-4-
<PAGE>
"Current Liabilities" means all liabilities treated as current
liabilities in accordance with GAAP, including without limitation (a)
all obligations payable on demand or within one year after the date in
which the determination is made, and (b) installment and sinking fund
payments required to be made within one year after the date on which
determination is made, but excluding: all such liabilities or
obligations which are renewable or extendable at the option of the
Borrower to a date more than one year from the date of determination,
loans owed to insiders, and amounts due to Subsidiaries and Affiliates.
For purposes of calculating the Current Ratio only, outstanding
Advances under the Credit Agreement shall be included in the definition
of Current Liabilities.
"Current Ratio" means the ratio obtained by dividing (a)
Consolidated Current Assets, by (b) Consolidated Current Liabilities.
"Debt" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services, (iv) obligations as lessee under leases which
shall have been or should be, in accordance with GAAP, recorded as
Capital Leases, and (v) obligations under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred
to in clauses (i) through (iv) above.
"Default" means any of the events specified in Sections
8.01(a) through 8.01(g), whether or not any requirement for the giving
of notice, the lapse of time, or both has been satisfied.
"Dollars" and the sign "$" each means lawful money of the
United States of America.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule 1 hereto or in the Assignment and
Acceptance pursuant to which it became a Lender, or such other office
of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.
"EBITDA" has the meaning assigned to such term in Section
7.08(a), except that for purposes of Section 7.08(b), EBITDA shall have
the meaning assigned to such term in Section 7.08(b).
-5-
<PAGE>
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, having total
assets of not less than $1,000,000,000.00, (ii) a savings and loan
association or savings bank organized under the laws of the United
States, or any State thereof, and having total assets of not less than
$250,000,000.00; and (iii) a commercial bank organized under the laws
of any other country which is a member of the OECD, or a political
subdivision of any such country and having total assets of not less
than $1,000,000,000.00; provided that such bank is acting through a
branch or agency located in the United States.
"Environmental Laws" has the meaning assigned to such term in
Section 5.01(j)(iii).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Borrower or is under
common control (within the meaning of Section 414(c) of the Code) with
the Borrower.
"ERISA Event" means (i) the occurrence with respect to a Plan
of a reportable event, within the meaning of Section 4043 of ERISA,
unless the 30-day notice requirement with respect thereto has been
waived by the PBGC, (ii) the provision by the administrator of any Plan
of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (iii) the cessation
of operations at a facility of the Borrower or any ERISA Affiliate in
the circumstances described in Section 4062(e) of ERISA; (iv) the
withdrawal by the Borrower or an ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (v) the conditions
set forth in Section 302(f)(1)(A) and (B) of ERISA to the creation of a
lien upon property or rights to property of the Borrower or any ERISA
Affiliate for failure to make a required payment to a Plan are
satisfied; (vi) the adoption of an amendment to a Plan requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA;
or (vii) the institution by the PBGC of proceedings to terminate a
Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event
or condition described in Section 4042 of ERISA that constitutes
grounds for the termination of, or the appointment of a trustee to
administer, a Plan.
"Event of Default" means any Default, provided that each
applicable requirement for the giving of notice, the lapse of time, or
both has been satisfied.
-6-
<PAGE>
"Fiscal Year" means each period of 52 (or 53, as applicable)
consecutive calendar weeks ending on the Saturday closest to June 30 of
each year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio
obtained by dividing (i) Cash Flow by (ii) Fixed Charges.
"Fixed Charges" means, for any period, accrued interest (other
than on Subordinated Indebtedness) and scheduled, required principal
payments (other than of Subordinated Indebtedness), plus, without
duplication, capital lease payments and dividend payments.
"Fleet" means Fleet National Bank.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect on the applicable reporting date
with respect to any particular set of financial statements.
"General Intangibles" has the meaning assigned to such term in
the Uniform Commercial Code, as adopted in the State of New York, and
shall include, without limitation, patents, trademarks, copyrights and
substantially similar intellectual property rights.
"Guarantor" means, jointly and severally, Vigilant Networks,
Inc., a Delaware corporation, Digitech Industries, Inc., a Delaware
corporation and Preamble Instruments, Inc., a Delaware corporation.
"Indemnified Party" has the meaning specified in Section
10.04(c).
"Hazardous Substance" has the meaning assigned to such term in
Section 5.01(j)(iii).
"Informal Borrowing Base Certificate" means a completed
certificate in the form of Exhibit B annexed hereto, signed by the
Chief Financial Officer of the Borrower.
"Lenders" means the lenders listed on the signature pages
hereof and each Eligible Assignee that shall become a party hereto
pursuant to Section 10.08.
"Leverage Ratio" means, at any time of determination, the
ratio obtained by dividing (i) Consolidated Liabilities, by (ii)
Consolidated Tangible Net Worth.
-7-
<PAGE>
"Lien" means any lien (statutory or otherwise), security
interest, mortgage, deed of trust, priority, pledge, charge,
conditional sale, title retention agreement, financing lease or other
encumbrance or similar right of others, or any agreement to give any of
the foregoing.
"Loan" means the loan made by a Lender to the Borrower
pursuant to Article II.
"Loan Documents" means this Agreement, each Note, and each
other document executed by the Borrower or a Guarantor in connection
with this Agreement or the transactions contemplated by this Agreement
as each such agreement, instrument or document may be amended from time
to time.
"Majority Lenders" means at any time (i) Lenders owed at least
75% of the aggregate unpaid principal amounts of the Loan then
outstanding or (ii) if there are two and only two Lenders, both of such
Lenders.
"Materially Adverse Effect" means (i) with respect to the
Borrower and its Subsidiaries, any materially adverse change in the
business, operations, condition (financial or otherwise), or assets of
the Borrower and its Subsidiaries taken as a whole, or (ii) any fact or
circumstance as to which singly or in the aggregate, the Borrower has
reason to believe there is a reasonable possibility of (a) a materially
adverse change described in clause (i), or (b) the inability of the
Borrower to perform in any material respect its obligations hereunder
or under the other Loan Documents.
"Maturity Date" means the earlier to occur of (i) January 31,
2002 and (ii) the date all obligations under the Credit Agreement are
paid in full and the Credit Agreement is terminated.
"Mortgage" has the meaning specified in Section 3.01(g).
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions, such plan being maintained pursuant
to one or more collective bargaining agreements.
-8-
<PAGE>
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for
employees of the Borrower or an ERISA Affiliate and at least one Person
other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
"New Lending Office" has the meaning specified in Section
2.12(k).
"Non-U.S. Lender" has the meaning specified in Section
2.12(e).
"Note" or "Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit C hereto, payable to the order of
the respective Lenders.
"Obligations" means the obligations of the Borrower arising
under this Agreement or the other Loan Documents.
"OECD" means the Organization for Economic Cooperation and
Development.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Payment Office" means the principal office of Agent in New
York City, located on the date hereof at 270 Park Avenue, New York, New
York 10017.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Indebtedness" has the meaning assigned to such term
in Section 6.01(a).
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture, limited liability company,
or other entity, or a government or any political subdivision or agency
thereof.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower
or any ERISA Affiliate and which is covered by Title IV of ERISA or to
which Section 412 of the Code applies.
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<PAGE>
"Prime Rate" means that rate of interest from time to time
announced by Chase at its principal office as its prime commercial
lending rate.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Real Property" has the meaning assigned to such term in
Section 5.01(j)(i).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented
from time to time.
"Register" has the meaning specified in Section 10.08(c).
"Remedial Work" has the meaning assigned to such term in
Section 5.01(j)(ii).
"Required Financial Statement" has the meaning assigned to
such term in Section 2.06(c).
"Restricted Payment" means any payment or prepayment of
principal or interest on account of Subordinated Indebtedness or any
purchase, defeasance, redemption, retirement or acquisition of any
principal or interest on such Subordinated Indebtedness except for,
other than during the continuance of an Event of Default, regularly
scheduled payments (or regularly scheduled redemptions, as the case may
be) of principal and interest on account of Subordinated Indebtedness
in accordance with the terms of a subordinated debt indenture or
agreement or substantially similar document previously consented to in
writing by the Majority Lenders.
"Second Amendment" has the meaning specified in the first
"Whereas" clause.
"Subordinated Indebtedness" means all unsecured Indebtedness
of the Borrower which shall have been subordinated to all Indebtedness
of the Borrower hereunder and under the Notes and to all other
Indebtedness owed to the Lenders pursuant to a subordinated debt
indenture or agreement or substantially similar document signed by the
holder of such Indebtedness upon and otherwise containing terms and
conditions reasonably satisfactory to the Majority Lenders.
-10-
<PAGE>
"Subsidiary" means, as to any Person, any corporation or other
entity of which at least a majority of the securities or other
ownership interests having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by such
Person.
"Tangible Net Worth" means the excess of total assets over
total liabilities, excluding, however, from the determination of total
assets: goodwill; patents, copyrights and trademarks; trade names;
licenses; organizational expenses; and unamortized debt discount, all
as determined in accordance with GAAP.
"Taxes" has the meaning specified in Section 2.12(a).
"Total Assets" means all assets treated as assets in
accordance with GAAP.
"Unfunded Vested Liabilities" means, with respect to any Plan,
the amount (if any) by which the present value of all vested benefits
under the Plan exceeds the fair market value of all Plan assets
allocable to such benefits, as determined on the most recent valuation
date of the Plan and in accordance with the provisions of ERISA for
calculating the potential liability of the Borrower or any ERISA
Affiliate to PBGC or the Plan under Title IV of ERISA.
"United States" and "U.S." each means United States of America.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" the words "to" and "until" each
means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.
ARTICLE II
AMOUNT OF LOANS
SECTION 2.01. The Loan . Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a Loan (the "Loan") to the
Borrower on the Closing Date in an amount set forth opposite such Lender's name
on Schedule 9 hereto (such Lender's "Commitment"). As of the date hereof, the
aggregate of all Lenders' Commitments is SIX MILLION AND 00/100 DOLLARS
($6,000,000.00).
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SECTION 2.02. INTENTIONALLY OMITTED
SECTION 2.03. INTENTIONALLY OMITTED
SECTION 2.04. INTENTIONALLY OMITTED
SECTION 2.05. Repayment of the Loans. The Borrower shall repay
the principal amount of the Loans on the Maturity Date. Notwithstanding the
foregoing, no payment of principal, whether or not scheduled, shall be permitted
under this Agreement until all amounts due and payable under the Credit
Agreement, Loan Documents (as defined in the Credit Agreement), the Other
Documents (as defined in the Credit Agreement) or the Additional Collateral
Documents (as defined in the Credit Agreement) have been paid and the
Commitments (as defined in the Credit Agreement) have been terminated.
SECTION 2.06. Interest on the Loans; Default Interest. (a) The
Borrower shall pay to each Lender, in arrears, interest on the unpaid principal
amount of each Loan made by such Lender from the Closing Date until such
principal amount shall be paid in full at a rate per annum equal at all times to
the Base Rate in effect from time to time plus two percent (2%) payable
quarterly, in arrears, on the last day of each March, June, September and
December and on the earlier to occur of the date the Loans are paid in full or
the Maturity Date.
(b) The Borrower shall pay interest on the unpaid principal
amount of each Loan that is not paid on or before the date when due and on the
unpaid amount of all interest, fees and other amounts payable hereunder that is
not paid on or prior to the 15th day following the date when due, payable on
demand, at a rate per annum equal at all times to (i) in the case of any amount
of principal, 3% per annum above the rate per annum required to be paid on such
Loan immediately prior to the date on which such amount became due and (ii) in
the case of all other amounts, 5% per annum above the Base Rate in effect from
time to time.
SECTION 2.07. Intentionally Omitted.
SECTION 2.08. Intentionally Omitted.
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SECTION 2.09. Prepayments. The Borrower may prepay the Loans,
in aggregate multiples of $100,000.00 on notice provided not later than 11 A.M.
New York City time on the day of the prepayment (each of which notices may be
given by facsimile transmission), provided that the Borrower shall pay all sums
required to be paid pursuant to Section 10.04(b) together with each such
principal prepayment, and provided further, all amounts due and payable under
the Credit Agreement, the Other Documents (as defined in the Credit Agreement),
the Loan Documents (as defined in the Credit Agreement) and the Additional Loan
Documents (as defined in the Credit Agreement) have been paid in full and the
Commitments (as defined in the Credit Agreement) and the Credit Agreement have
been permanently terminated. Any notice of prepayment shall be binding on the
Borrower and irrevocable, and the Borrower shall make such prepayment on the day
set forth in the notice of prepayment, which shall be a Business Day.
SECTION 2.10. Intentionally Omitted.
SECTION 2.11. Payments and Computations. (a) The Borrower
shall make each payment hereunder not later than 11:00 A.M. (New York City time)
on the day when due in Dollars to the Agent in same day funds by deposit of such
funds to the Agent's account maintained at the Payment Office for Dollars in New
York City. The Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or ratably, in the proportion
that such Lender's Loans to which the payment applies bears to the total of all
Lenders' Loans to which the payment applies, (other than amounts payable
pursuant to Section 2.12) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording of
the information contained therein in the Register pursuant to Section 10.08(d),
from and after the effective date specified in such Assignment and Acceptance,
the Agent shall make all payments hereunder in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder, to charge
from time to time against any or all of the Borrower's accounts with such Lender
any amount so due. Each such Lender shall promptly notify the Borrower of any
such action, provided however, that failure to so notify shall not affect the
validity of such action.
(c) All computations of interest shall be made by the Agent on
the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable. Each determination by the Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
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(d) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
or the Agent hereunder shall be made, in accordance with Section 2.11, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding,
(i) taxes, levies, imposts, duties, charges,
deductions or withholdings imposed on or with respect to the
net income of the Agent or any Lender and (ii) franchise or
doing business taxes, levies, imposts, duties, charges,
deductions or withholdings imposed on the Agent or any Lender,
in each case by any jurisdiction under the laws of which the
Agent or such Lender or its Applicable Lending Office is
organized, managed, controlled or otherwise subject to tax
other than as a result of the transactions contemplated
hereunder or by any other Loan Document (or any political
subdivision of any such jurisdiction),
(ii) in the case of any assignment by a
Lender to an Eligible Assignee pursuant to Section 10.08, or
any change by a Lender of an Applicable Lending Office in one
jurisdiction to an Applicable Lending Office in another
jurisdiction, any excess in the withholding tax applicable to
such Eligible Assignee, or such new Applicable Lending Office,
over the withholding tax (other than any withholding tax
excluded from the definition of Taxes under clause (i) or this
clause (ii) of Section 2.12(a)) applicable to the former
Lender, or the former Applicable Lending Office, in each case
as determined under laws (including, without limitation, any
treaty, law, rule, regulation or determination) applicable to
the former Lender and such Eligible Assignee, or the former
Applicable Lending Office and such new Applicable Lending
Office, and in effect on the date of such assignment, or such
change in Applicable Lending Office, but not including any
increase in withholding tax resulting from any subsequent
change in such laws (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If the Borrower or
the Agent shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to any Lender or the
Agent, (i) the sum payable by the Borrower shall be increased
as may be necessary so that after the Borrower or the Agent
has made all required deductions (including deductions
applicable to additional sums payable under this Section 2.12)
such Lender or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or the Agent shall
make such deductions and (iii) the Borrower or the Agent shall
pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable
law.
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(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made by the Borrower or by the
Agent hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement (hereinafter referred to as "Other Taxes").
(c) The Borrower will within thirty days after demand,
indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.12) paid by such Lender or
the Agent (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This indemnification
shall be made within 30 days from the date such Lender or the Agent (as the case
may be) makes written demand therefor. The applicable Lender shall furnish to
Borrower a certificate, in reasonable detail, setting forth such Lender's
calculation as to the amount of Taxes or Other Taxes paid by such Lender, which
certificate shall effect a rebuttable presumption as to the accuracy thereof.
(d) Within 30 days after the date of any payment by the
Borrower of Taxes, the Borrower will furnish to the Agent, at its address
referred to in Section 8.02, the original or a certified copy of a receipt
evidencing payment thereof. If no Taxes are payable in respect of payments by
the Borrower hereunder, the Borrower will furnish to the Agent, at such address,
documentary evidence reasonably satisfactory to Agent, demonstrating that such
payment is exempt from or not subject to Taxes. In the event of a change in
circumstances or law affecting the conclusions stated in any such documentary
evidence, further documentary evidence reasonably acceptable to the Agent shall
be delivered to the Agent by the Borrower.
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(e) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Non-U.S. Lender"), on or prior to the date of its
execution and delivery of this Agreement in the case of each initial Lender and
on the date of the Assignment and Acceptance pursuant to which it becomes a
Lender in the case of each other Lender, and from time to time thereafter if
requested in writing by the Borrower (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower with Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States. If the form provided by
a Lender at the time such Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from "Taxes" as
defined in Section 2.12(a).
(f) For any period with respect to which a Lender has failed
to provide the Borrower with the appropriate form described in Section 2.12(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided, or if such form
otherwise is not required under the first sentence of subsection (e) above),
such Lender shall not be entitled to indemnification under Section 2.12(a) with
respect to Taxes imposed by the United States; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as the Lender shall reasonably
request at no expense to the Borrower to assist the Lender to recover such
Taxes.
(g) In the event that a Lender that originally provided such
form as may be required under Section 2.12(e) thereafter ceases to qualify for
complete exemption from United States withholding tax, such Lender may, subject
to Section 10.08, assign its interest under this Agreement to any assignee and
such assignee shall be entitled to the same benefits under this Section 2.12
(and subject to the terms of Sections 2.12(a)(ii), 2.12(e), 2.12(f), 2.12(i),
2.12(j) and 2.12(k)) as the assignor provided that the rate of United States
withholding tax applicable to such assignee shall not exceed the rate then
applicable to the assignor.
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(h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.12 shall survive the payment in full of principal
and interest hereunder.
(i) Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Applicable Lending Office or Payment Office) to
avoid the imposition of any Taxes or payments hereunder; provided, however, that
such efforts shall not cause the imposition on such Lender of any additional
costs or legal or regulatory burden or require any change in such Lender's tax
planning and management policies.
(j) If the Borrower makes any additional payment to any Lender
pursuant to this Section 2.12 in respect of any Taxes, and such Lender
determines that it has received (i) a refund of such Taxes or (ii) a credit
against or relief or remission for, or a reduction in the amount of, any tax or
other governmental charge solely as a result of any deduction or credit for any
Taxes with respect to which it has received payments under this Section 2.12,
such Lender shall, to the extent that it can do so without prejudice to the
retention of such refund, credit, relief, remission or reduction, pay to the
Borrower such amount as such Lender shall have determined to be attributable to
the deduction or withholding of such Taxes. If such Lender later determines that
it was not entitled to such refund, credit, relief, remission or reduction to
the full extent of any payment made pursuant to the first sentence of this
Section 2.12(j), the Borrower shall upon demand of such Lender promptly repay
the amount of such overpayment. Any determination made by such Lender pursuant
to this Section 2.12(j) shall in the absence of bad faith or manifest error
effect a rebuttable presumption as to the accuracy thereof, and nothing in this
Section 2.12(j) shall be construed as requiring the Lender to conduct its
business or to arrange or alter in any respect its tax or financial affairs so
that it is entitled to received such a refund, credit or reduction or as
allowing any person to inspect any records, including tax returns, of any
Lender.
(k) The Borrowers shall not be required to pay any additional
amounts to any Non-U.S. Lender in respect of United States Federal withholding
tax pursuant to this Section 2.12 to the extent that (i) the obligation to
withhold amounts with respect to United States Federal withholding tax existed
on the date such Non-U.S. Lender became a party to this Agreement or, with
respect to payments to a different lending office designated by the Non-U.S.
Lender as its applicable lending office (a "New Lending Office"), the date such
Non-U.S. Lender designated such New Lending Office with respect to any portion
of a Loan; provided, however, that this clause (k) shall not apply to any
transferee or New Lending Office as a result of an assignment, transfer or
designation made at the request of the Borrower; and provided further, however,
that this clause (k) shall not apply to the extent the indemnity payment or
additional amounts any transferee, or Lender through a New Lending Office, would
be entitled to received without regard to this clause (k) do not exceed the
indemnity payment or additional amounts that the Person making the assignment or
transfer to such transferee, or Lender making the designation of such New
Lending Office, would have been entitled to receive in the absence of such
assignment, transfer or designation; or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender to comply with the provisions of Section 2.12(e).
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SECTION 2.13. Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Loan made by it (other than
pursuant to Section 2.12) in excess of its ratable share of payments on account
of the Loan made by all the Lenders, such Lender shall forthwith purchase from
the other Lenders such participation in the Loan owing to them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably,
in the proportion that such Lender's Loan to which the payment applies bears to
the total of all Loans to which the payment applies, with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.14. Evidence of Debt. (a) Each Lender shall hold its
respective Note or Notes evidencing the Loan and shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Borrower to such Lender resulting from the Loan owing to such Lender from
time to time, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.
(b) The Register maintained by the Agent pursuant to Section
10.08(c) shall include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of the Loan, (ii) the terms of each Assignment and Acceptance delivered
to and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
and (iv) the amount of any sum received by the Agent from the Borrower hereunder
and each Lender's share thereof.
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(c) The entries made in the Register shall effect a rebuttable
presumption as to the accuracy thereof. Each Lender's account entries with
respect to the Loan shall also effect a rebuttable presumption as to the
accuracy thereof.
SECTION 2.15. Intentionally Omitted.
SECTION 2.16. Intentional Omitted.
SECTION 2.17. Intentional Omitted.
SECTION 2.18. Agent's Fees. The Borrower shall pay to the
Agent for its own account $10,000.00 per annum, payable on the first day of
January of each year.
SECTION 2.19. Use of Proceeds. The proceeds of the Loan shall
be used solely to reduce the outstanding Advances (as defined in the Credit
Agreement) pursuant to the Credit Agreement.
ARTICLE III
CONDITIONS OF THE LOAN
SECTION 3.01. Condition Precedent to the Loan. The obligation
of each Lender to make its Loan is subject to the condition precedent that the
Agent shall have received on or before the Closing Date the following, each
dated the Closing Date, in form and substance reasonably satisfactory to the
Agent and in sufficient copies (other than the Notes, which shall be executed in
original only) for each Lender:
(a) Note. Each Note duly executed by the Borrower in favor of
a Lender, dated the Closing Date;
(b) Certificate of Corporate Action. A certificate of an
officer of the Borrower and each Guarantor, dated the Closing Date, attesting to
all corporate action taken by the Borrower and each Guarantor, respectively,
including resolutions of its Board of Directors authorizing the execution,
delivery and performance of this Agreement, the Notes, the other Loan Documents
and each other document to be delivered pursuant to this Agreement;
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(c) Incumbency and Signature Certificate. A certificate of an
officer of the Borrower and each Guarantor, respectively, dated the Closing
Date, certifying the names and true signatures of the officers of the Borrower
and each Guarantor, respectively authorized to sign this Agreement, the Notes,
the other Loan Documents and the other documents to be delivered by the Borrower
and each Guarantor, respectively under this Agreement.
(d) Intentionally Omitted.
(e) Fourth Amendment. A duly executed Fourth Amendment, dated
the Closing Date in form and substance satisfactory to the Lenders and Agent.
(f) Opinion of Counsel for Borrower and Guarantors. Favorable
opinion of Bingham Dana LLP, counsel for the Borrower and each Guarantor, dated
the Closing Date, in substantially the form of Exhibit D.
(g) Mortgage. A duly executed Mortgage and Security Agreement
(the AMortgage"), dated the Closing Date, in form and substance satisfactory to
the Lenders and Agent granting a first mortgage lien to the Agent for the
benefit of the Lenders on all Borrower's real property and improvements located
in Chestnut Ridge, New York.
(h) Security Agreement. Duly executed Amended and Restated
Security Agreements, dated the Closing Date, in favor of each Lender in form and
substance satisfactory to the Lenders and Agent amending and restating grants of
security interest in Borrower and each Guarantor's assets, including patent
collateral (as defined therein) now or hereafter existing and now or hereafter
existing and wherever located.
(i) Amended and Restated Guaranty Agreement. Duly executed
Amended and Restated Guaranty Agreements, dated the Closing Date, in form and
substance satisfactory to the Lenders and Agent.
(j) Assignment of Leases and Rents; Hazardous Materials
Indemnity Agreements. Duly executed Assignment of Leases and Rents, dated the
Closing Date, and Hazardous Materials Indemnity Agreements, dated the Closing
Date, each in form and substance satisfactory to the Lenders and Agent relating
to the Real Property subject to the Mortgage and executed by Borrower and
Guarantors, as applicable.
(k) Insurance. Evidence satisfactory to Agent of all risk,
extended coverage insurance and public liability insurance, issued in amounts,
and by carriers, reasonably satisfactory to Agent.
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(l) Searches. Lien searches, patent searches, judgment
searches, bankruptcy searches and similar searches deemed appropriate by Agent's
counsel, in form and substance reasonably satisfactory to Agent.
(m) Fees. Payment of all fees due to the Agent.
(n) Other Documents. The other Loan Documents duly executed by
Borrower and each Guarantor, and such other documents, affidavits, certificates,
agreements and writings, as the Agent and the Lenders may reasonably require.
SECTION 3.02. Additional Conditions Precedent. The obligation
of each Lender to make its Loan shall be subject to the further conditions
precedent that on the Closing Date:
(a) the following statements shall be true:
(i) The representations and warranties contained in
Article IV of this Agreement and the Credit Agreement are correct on
and as of the Closing Date, before and after giving effect to the Loans
and to the application of the proceeds therefrom; and
(ii) No event has occurred and is continuing, or
would result from the making of the Loans or from the application of
the proceeds therefrom, which constitutes a Default or Event of Default
(in each case under either this Agreement or the Credit Agreement); and
(b) the Agent shall have received such other approvals,
opinions or documents as any Lender through the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) Due Incorporation. Each of the Borrower and each
Subsidiary which is a corporation is duly incorporated, validly existing and in
corporate good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged, and is duly
qualified as a foreign corporation and in good standing under the laws of each
other jurisdiction in which such qualification is required, except where the
failure to so qualify in such other jurisdiction would not result in a
Materially Adverse Effect.
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(b) Compliance with Other Agreements, Etc. The execution,
delivery and performance by the Borrower of the Loan Documents have been duly
authorized by all necessary corporate action and do not and will not: (i)
require any further consent or approval of its stockholders; (ii) contravene its
charter or by-laws; (iii) violate any provision of, or require any filing,
registration, consent or approval under, any law, rule, regulation (including,
without limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrower
or any of its Subsidiaries or affiliates; (iv) result in a material breach of or
constitute a default or require any consent under any material indenture or loan
or credit agreement or any other material agreement, lease or instrument to
which the Borrower is a party or by which it or its properties may be bound
after giving effect to the application of the Loan; (v) result in, or require,
the creation or imposition of any Lien, upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower; or (vi) cause the
Borrower (or any Subsidiary or Affiliate, as the case may be) to be in default
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such material indenture, agreement, lease or
instrument after giving effect to the application of the Loan, except for
defaults which would not result in a Materially Adverse Effect.
(c) Validity of Obligations. Each Loan Document which is
executed by the Borrower is, or when delivered under this Agreement will be, a
legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, equitable
remedies and other similar laws affecting creditors' rights generally and except
as the availability of equitable remedies is subject to the discretion of the
court before which such remedies are sought.
(d) No Pending Litigation. Except as set forth on Schedule 2,
there are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened, against or affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator, which may, in
any one case or in the aggregate, result in a Materially Adverse Effect.
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(e) Financial Statements. The consolidated and consolidating
balance sheet of the Borrower and its Consolidated Subsidiaries as at June 30,
1999, and the related consolidated and consolidating income statement and
statement of cash flows and statement of changes in stockholders' equity of the
Borrower and its Consolidated Subsidiaries for the Fiscal Year then ended, and
the accompanying footnotes, together with the opinion thereon, of Ernst & Young,
independent certified public accountants, and the interim consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as at December 31, 1999,
and the related consolidated and consolidating income statement for the fiscal
quarter then ended, certified by the Borrower's Chief Financial Officer are
complete and correct and fairly present the financial condition of the Borrower
and its Consolidated Subsidiaries as at such dates and the results of the
operations of the Borrower and its Consolidated Subsidiaries for the periods
covered by such statements, all in accordance with GAAP consistently applied
(subject to year end adjustments and absence of footnote disclosures in the case
of the interim financial statements). There are no liabilities of the Borrower
or any of its Consolidated Subsidiaries, fixed or contingent, which are material
and are required by GAAP to be reflected but are not reflected in the financial
statements referred to above or in the notes thereto, other than liabilities
arising in the ordinary course of business since March 31, 2000. No material
information, exhibit or report furnished by the Borrower to the Agent in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not materially misleading. Since March
31, 2000, there have been no material adverse changes in the condition
(financial or otherwise), business, or operations of the Borrower or any of its
Subsidiaries which have not previously been disclosed, in writing, to Lenders
and the Agent.
(f) Title to Assets. Each of the Borrower and its Consolidated
Subsidiaries has title to, or valid leasehold interests in, all of its material
properties and assets, real and personal, including the properties and assets,
and leasehold interests reflected in the financial statements referred to in
Section 4.01(e) (other than any properties or assets disposed of in the ordinary
course of business), and none of the material properties and assets owned by the
Borrower or any of its Subsidiaries and none of its leasehold interests is
subject to any Lien, except as disclosed in such financial statements or as may
be permitted hereunder.
(g) Taxes. Each of the Borrower and its Subsidiaries has filed
all tax returns (federal, state and local) required to be filed as of the date
hereof and has paid all taxes, assessments and governmental charges and levies
shown thereon to be due, including interest and penalties. The federal income
tax liability of the Borrower and its Subsidiaries has been audited by the
Internal Revenue Service and has been finally determined and satisfied for all
taxable years up to and including the taxable year ended June 30, 1999.
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(h) ERISA. Each of the Borrower and its Subsidiaries is in
compliance in all material respects with all applicable provisions of ERISA.
Neither an ERISA Event nor a Prohibited Transaction has occurred with respect to
any Plan; no notice of intent to terminate a Plan has been filed nor has any
Plan been terminated; no circumstance exists which constitutes grounds under
Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate,
or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings; neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer
Plan; each of the Borrower and each of its ERISA Affiliates has met its minimum
funding requirements under ERISA with respect to all of its Plans and there are
no Unfunded Vested Liabilities; and neither the Borrower nor any ERISA Affiliate
has incurred any liability to the PBGC under ERISA.
(i) Subsidiaries. Schedule 7 is a complete and accurate list
of the Subsidiaries of the Borrower, showing the jurisdiction of incorporation
or organization of each Subsidiary and showing the percentage of the Borrower's
ownership of the outstanding stock or other interest of each such Subsidiary.
All of the outstanding capital stock or other interest of each such Subsidiary
has been validly issued, is fully paid and nonassessable and is owned by the
Borrower free and clear of all Liens other than liens permitted by this
Agreement.
(j) Indebtedness. Schedule 3 is a complete and correct list of
all material credit agreements, indentures, purchase agreements, guaranties,
Capital Leases and other material investments, agreements and arrangements
presently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrower or any of its
Subsidiaries is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, outstanding and
which can be outstanding, are correctly stated in such Schedule, and all
material Liens of any nature given or agreed to be given as security therefor
are correctly described or indicated in such Schedule.
(k) Licenses, Permits. Each of the Borrower and its
Subsidiaries possesses all material licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct its
business substantially as now conducted and as presently proposed to be
conducted, and neither the Borrower nor any of its Subsidiaries is in violation
of any valid rights of others with respect to any of the foregoing except to the
extent that any such violation will not result in a Materially Adverse Effect.
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(l) Judgments. Each of the Borrower and its Subsidiaries has
satisfied all judgments that may result in a Materially Adverse Effect and
neither the Borrower nor any of its Subsidiaries is in default with respect to
any judgment, writ, injunction, decree, rule or regulation of any court,
arbitrator or federal, state, municipal or other governmental authority,
commission, board, bureau, agency or instrumentality, domestic or foreign that
may result in a Materially Adverse Effect.
(m) Other Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any material indenture, loan or credit agreement or
any material lease or other material agreement or instrument or subject to any
charter or corporate restriction which could have a Materially Adverse Effect.
Neither the Borrower nor any of its Subsidiaries is in default in any respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument material to its business
to which it is a party except defaults which would not result in a Materially
Adverse Effect.
(n) Labor Disputes, Acts of God. Neither the business nor the
properties of the Borrower or of any of its Subsidiaries are subject to any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which could have a Materially
Adverse Effect.
(o) Investment Company. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the United States
Investment Company Act of 1940.
(p) Partner in a Partnership. Neither the Borrower nor any of
its Subsidiaries is a partner in any partnership.
(q) Compliance with Law. The Borrower and its Subsidiaries are
in compliance in all material respects with all applicable laws, rules and
regulations as promulgated or issued by any and all governmental or
quasi-governmental bodies, including, without limitation, all Environmental Laws
except to the extent that any violation shall not result in a Materially Adverse
Effect.
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ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Affirmative Covenants. So long as the Loans
shall remain unpaid, the Borrower shall, unless the Majority Lenders shall
otherwise consent in writing:
(a) Corporate Existence. Preserve and maintain, and cause each
of its Subsidiaries to preserve and maintain, its corporate existence and
corporate good standing in the jurisdiction of its incorporation, except that
the Borrower may dissolve any inactive Subsidiary which has no material assets,
and except as permitted pursuant to Section 6.01(g) or Section 6.01(j), and
qualify and remain qualified, and cause each of its Subsidiaries to qualify and
remain qualified, as a foreign corporation in each jurisdiction in which such
qualification is required except where the failure to so qualify shall not
result in a Materially Adverse Effect.
(b) Conduct of Business. Continue, and cause each of its
Subsidiaries to continue, to engage in lines of business of the same general
type as conducted by it on the date of this Agreement.
(c) Preservation of Properties. Maintain, keep and preserve,
and cause each of its Subsidiaries to maintain, keep and preserve, all of its
material properties (tangible and intangible), necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
(d) Maintenance of Records. Keep, and cause each of its
Subsidiaries to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all material financial
transactions of the Borrower and its Subsidiaries.
(e) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof.
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(f) Compliance with Law. Comply in all material respects, and
cause each of its Subsidiaries to comply, in all material respects with all
applicable laws, rules, regulations and orders, except for noncompliance which
shall not result in a Materially Adverse Effect, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property,
provided that the Borrower may, with the exercise of due diligence and through
appropriate proceedings, contest any tax, provided further that such contest
shall not result in the imposition of a lien on any assets of the Borrower and
its Subsidiaries and the Borrower shall maintain adequate reserves against all
such contested taxes.
(g) Examination of Records. At any reasonable time and from
time to time on reasonable prior notice, permit the Agent or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
any of its Subsidiaries, and to discuss the affairs, finances and accounts of
the Borrower and any such Subsidiary with any of their respective officers and
directors and the Borrower's independent certified public accountants, provided
that any such examinations and discussions shall be conducted subject to the
terms of Section 10.17.
(h) Financial Reporting. Furnish to the Agent:
(i) As soon as available and in any event within 120
days after the end of each Fiscal Year of the Borrower, a consolidated
and consolidating balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Year and a consolidated and
consolidating income statement and statement of cash flows and
statement of changes in stockholders' equity of the Borrower and its
Consolidated Subsidiaries for such Fiscal Year, all in reasonable
detail and stating in comparative form the respective consolidated and
consolidating figures for the corresponding date and period in the
prior Fiscal Year and all prepared in accordance with GAAP and as to
the consolidated statements accompanied by an unqualified audit opinion
thereon acceptable to the Agent by Ernst & Young or other independent
accountants of national standing selected by the Borrower;
(ii) not later than 60 days following the close of
each Fiscal Year, a copy of the Borrower's annual budget, reasonably
detailed for each fiscal quarter, for the following Fiscal Year.
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(iii) As soon as available and in any event within 45
days after the end of each of the first three quarters of each Fiscal
Year of the Borrower, an unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such
quarter and a consolidated income statement of the Borrower and its
Consolidated Subsidiaries for the period commencing at the end of the
previous Fiscal Year and ending with the end of such quarter, all in
reasonable detail and stating in comparative form the respective
consolidated figures for the corresponding date and period in the
previous Fiscal Year and all prepared in accordance with GAAP and
certified by the chief financial officer of the Borrower (subject to
year-end adjustments and absence of footnote disclosures);
(iv) Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any of its Subsidiaries by
independent certified public accountants in connection with examination
of the financial statements of the Borrower or any such Subsidiary made
by such accountants;
(v) Simultaneously with the delivery of the financial
statements referred to in (i) and (iii) above, a certificate of the
Chief Financial Officer or President of Borrower (x) certifying that to
the best of his knowledge no Default or Event of Default has occurred
and is continuing or, if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action
which is proposed to be taken with respect thereto, and (y) with
computations demonstrating compliance with the covenants contained in
Article VII;
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(vi) Simultaneously with the delivery of the annual
financial statements referred to in subparagraph 5.01(h)(i) above, a
certificate of the independent public accountants who audited such
statements to the effect that, in making the examination necessary for
the audit of such statements, they have obtained no knowledge of any
condition or event which constitutes a Default or Event of Default, or
if such accountants shall have obtained knowledge of any such condition
or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(vii) Promptly after the commencement thereof, notice
of all material actions, suits, and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any of
its Subsidiaries which, if determined adversely to the Borrower or such
Subsidiary, could have a Materially Adverse Effect.
(viii) As soon as possible and in any event within 10
days after the Borrower or an executive officer thereof becomes aware
(or reasonably should be expected to have become aware of) the
occurrence of each Default or Event of Default a written notice setting
forth the details of such Default or Event of Default and the action
which is proposed to be taken by the Borrower with respect thereto;
(ix) Promptly after the filing or receiving thereof,
copies of all reports, including annual reports, and notices which the
Borrower or any Subsidiary files with or receives from the PBGC or the
U.S. Department of Labor under ERISA with respect to a Plan; and as
soon as possible and in any event within 10 days after the Borrower or
any of its Subsidiaries knows or has reason to know that any ERISA
Event or Prohibited Transaction has occurred with respect to any Plan
or that the PBGC or the Borrower or any such Subsidiary has instituted
or will institute proceedings under Title IV of ERISA to terminate any
Plan, the Borrower will deliver to the Agent a certificate of the chief
financial officer of the Borrower setting forth details to the best of
his knowledge as to such ERISA Event or Prohibited Transaction or Plan
termination and the action the Borrower proposes to take with respect
thereto;
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(x) Promptly after the furnishing thereof, copies of
any statement or report furnished to any other party pursuant to the
terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
clause of this Section 5.01(h);
(xi) Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports which
the Borrower or any of its Subsidiaries sends to its stockholders, and
copies of all regular, periodic and special reports, and all
registration statements which the Borrower or any such Subsidiary files
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national
securities exchange;
(xii) within 20 days after the end of each month,
commencing with the month ending June 30, 2000, an Informal Borrowing
Base Certificate (modified to reflect monthly reporting);
(xiii) During the continuance of any Default or Event
of Default, the Agent may require an audit of the Borrower's accounts
receivable and inventory at the Borrower's reasonable expense; for this
purpose the Borrower shall utilize independent accountants or other
qualified professionals reasonably satisfactory to the Majority
Lenders;
(xiv) Upon the conclusion of any audit of the type
described in subparagraph (xiii), a detailed report of the results of
such audit;
(xv) on the last Business Day of each month
commencing May 31, 2000, written, consolidating three (3) month cash
flow projections of the Borrower and each Guarantor on schedules in
form and substance reasonably satisfactory to the Agent and the Lenders
(which projections shall include, but not be limited to, projections
showing expected weekly and monthly cash, inventory and receivables and
anticipated liquidity needs for the applicable three (3) month
reporting period) and be certified as true, accurate and complete by
the chief financial officer of the Borrower;
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(xvi) on the last Business Day of each week, verbal
status updates acceptable to the Lenders and Agent from the chief
financial officer of the Borrower or other officer reasonably
acceptable to the Agent and Lenders regarding (A) Borrower's LAN
division section of its business and (B) Borrower's efforts and
progress toward (1) replacing the current Lenders in the Credit
Agreement with other financial institutions and/or repaying all
outstanding Advances owed to the Lenders under the Credit Agreement,
the other Loan Documents and the Other Documents and terminating the
Commitments and (2) replacing the Agent with a new substitute agent;
(xvii) a written compliance certificate,
substantially in the form attached as Exhibit B to the Third Amendment
and Waiver dated as of April 19, 2000 among the Borrower, Guarantors,
Agent and Lenders, no later than the last Business Day of the fiscal
quarter ending June 30, 2000, with respect to projected compliance with
the Financial Covenants set forth in Article VII of the Credit
Agreement as of and for such fiscal quarter and showing whether
compliance with the Financial Covenants will or will not be achieved;
and
(xviii) Such other information respecting the
condition or operations, financial or otherwise, of the Borrower or any
of its Subsidiaries as any Lender, through its Agent, may from time to
time reasonably request.
(i) Further Acts. At its reasonable cost and expense, upon
request of any Lender (upon notice to the Agent), duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of such Lender to carry out more effectually the provisions
and purposes of this Agreement.
(j) Environmental Laws.
(i) Subject to the terms of Section 5.01(j)(ii), keep
and maintain all real property owned or leased by it ("Real Property")
in compliance in all material respects with all Environmental Laws (as
defined below) except where failure to comply would not result in a
Materially Adverse Effect and would not cause any Lender to incur
liability as a result thereof.
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(ii)Notwithstanding the foregoing, in the event that
any investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature (the "Remedial
Work") with respect to the Real Property is required to be performed by
the Borrower under any applicable local, state or federal law or
regulation, any judicial order, or by any governmental or
nongovernmental entity or Person because of, or in connection with, the
current or future presence, suspected presence, release or suspected
release of a Hazardous Substance (as defined below) in or into the air,
soil, ground-water, surface water or soil vapor at, on, about under or
within the Real Property (or any portion thereof), the Borrower shall
within thirty (30) days after written demand for performance thereof by
the Agent (or such shorter period of time as may be required under any
applicable law, regulation, order or agreement), commence and
thereafter diligently prosecute to completion, all such Remedial Work
in accordance with the requirements of applicable law. Notwithstanding
the foregoing, provided that the Borrower shall deliver to the Agent a
Phase I (and upon the Agent's reasonable request a Phase II)
environmental audit reasonably satisfactory to Agent in all respects,
and provided that Borrower shall deliver to Agent such legal opinions
or other documentary evidence as Agent may reasonably require
demonstrating that any consent delivered by Agent in the manner
hereinafter set forth shall not result in the imposition or potential
imposition of any liability upon Agent or any Lender, and provided
further that Borrower shall maintain adequate reserves for compliance
with all Environmental Laws, Agent shall not unreasonably withhold its
consent to a contest by the Borrower (with the exercise of due
diligence and appropriate proceedings) of any order or governmental
requirement concerning Remedial Work rather than performing such
Remedial Work. Such contest, if instituted, shall be instituted
promptly after the Borrower obtains actual knowledge of an action,
suit, proceeding, or governmental order or directive which asserts any
obligation or liability affecting all or any portion of the Real
Property relating to Hazardous Substances and requiring such Remedial
Work and diligently prosecuted until a final resolution is obtained.
Remedial Work shall be instituted promptly following an unsuccessful
nonappealable completion of the contest and shall be diligently
prosecuted until the Remedial Work is completed.
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(iii) As used in this Section 5.01(j) (x)
"Environmental Law" means any federal, state or local law, statute,
ordinance, or regulation pertaining to health, industrial hygiene, or
the environmental conditions on, under or about the Real Property, and
(y) the term "Hazardous Substance" means those substances included
within the definitions of "hazardous substances", "hazardous
materials", "toxic substances", or "solid waste" under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended 42 U.S.C. = 9601 et seq., the Resource Conservation
and Recovery Act of 1976, 42 U.S.C. = 6901 et seq. and the Hazardous
Materials Transportation Act, 49 U.S.C. " 1801 et seq., and in the
regulations promulgated pursuant to said laws, and such other
substances, materials and wastes which are or become regulated under
applicable local, state or federal law, or which are classified as
hazardous or toxic under federal, state or local laws or regulations.
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Negative Covenants. So long as the Loan shall
remain unpaid the Borrower shall not without the Majority Lenders' prior written
consent (or, in the case of Subsection 6.01(f), not without the prior written
consent of all of the Lenders):
(a) Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist any Debt,
except (each of the following being referred to herein as "Permitted
Indebtedness"):
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(i) Debt of the Borrower under this Agreement, the
Credit Agreement or the Notes;
(ii)Subordinated Indebtedness;
(iii) accounts payable to trade creditors for goods
or services which are not more than 90 days past due and current
operating liabilities (other than for borrowed money) which are not
more than 90 days past due, in each case incurred in the ordinary
course of business and paid within the specified time, unless contested
in good faith and by appropriate proceedings;
(iv)Debt of the Borrower or any such Subsidiary
secured by purchase money Liens or pursuant to Capital Leases, in each
case as permitted by Section 6.01(c);
(v) Contingent liabilities which are unsecured
(including, without limitation, obligations in respect of letters of
credit) up to an aggregate amount not to exceed $3,000,000;
(vi)Debt set forth in Schedule 3 (including
subsequent borrowings thereunder up to the maximum facility
amount set forth on Schedule 3), and renewals thereof (but not
any increase thereof);
(vii) Intentionally omitted;
(viii)Debt owed by a Subsidiary to the Borrower or
another Subsidiary or Debt owed by the
Borrower to a Subsidiary;
(ix)(x) Guaranties in favor of any Lender, guaranties
by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, (y) Guaranties
set forth in Schedule 3 and (z) guaranties of Permitted Indebtedness
and any replacements thereof.
(b) Intentionally Omitted.
(c) Liens. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on
any real or personal, tangible or intangible, assets, except:
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(i) Liens in Favor of the Lenders or the Agent;
provided that if Liens are granted in favor of the Lenders, the Liens
must be equal in scope to the Lenders.
(ii)Liens for taxes or assessments or other
government charges or levies if not yet due and payable or if due and
payable if they are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained;
(iii) Liens imposed by law, such as mechanic's
materialmen's, landlord's, warehousemen's and carrier's Liens, and
other similar Liens, securing obligations incurred in the ordinary
course of business which are not past due for more than 30 days, or
which are being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established;
(iv)Liens under workmen's compensation, unemployment
insurance, social security or similar legislation;
(v) Liens, deposits or pledges to secure the
performance of bids, tenders, contracts (other than contracts for the
payment of money), leases (permitted under the terms of this
Agreement), public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
(vi)judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or other
enforcement of such Liens is effectively stayed and the claims secured
thereby are being actively contested in good faith and by appropriate
proceedings;
(vii) easements, rights-of-way, restrictions and
other similar encumbrances which, in the aggregate, do not materially
interfere with the occupation, use and enjoyment by the Borrower or any
such Subsidiary of the property or assets encumbered thereby in the
normal course of its business or materially impair the value of the
property subject thereto;
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(viii) Liens securing obligations of such a
Subsidiary to the Borrower or another such Subsidiary or
obligations of the Borrower to any Subsidiary;
(ix) purchase money Liens on any property hereafter
acquired or the assumption of any Lien on property existing at
the time of such acquisition, or a Lien incurred in connection
with any conditional sale or other title retention agreement
or a Capital Lease; provided that:
a. any property subject to any of the
foregoing is acquired by the Borrower or any such
Subsidiary in the ordinary course of its business and
the Lien on any such property is created
contemporaneously or within 180 days after such
acquisition;
b. the obligation secured by any Lien so
created, assumed or existing shall not exceed 100% of
the lesser of cost or fair market value as of the
time of acquisition of the property covered thereby
to the Borrower or such Subsidiary acquiring the
same;
c. each such Lien shall attach only to the
property so acquired and fixed improvements thereon;
d. the Debt secured by all such Liens shall
not exceed $7,500,000.00 at any time outstanding in
the aggregate;
e. the obligations secured by such Lien are
permitted by the provisions of Section 6.01(a) and
the related expenditure is permitted under Section
7.06.
(x) Liens set forth on Schedule 4 hereto, and
renewals thereof, provided that no additional assets or
property are encumbered as a result of any such renewal;
(xi) Intentionally omitted;
(xii) Intentionally omitted;
(xiii) Licenses and similar rights to use technology,
patents and trademarks granted by the Borrower to customers in
the ordinary course of business, and not for the purpose of
securing any obligation; and
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(xiv) For those exceptions shown in any title
insurance policy insuring the Lien granted to a Lender or the
Agent covering real property located in Chestnut Ridge, New
York.
(d) Leases. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except: (a) leases existing on the date of this Agreement and any extensions or
renewals thereof; (b) leases (other than Capital Leases) which do not in the
aggregate require the Borrower and its Subsidiaries on a consolidated basis to
make payments (including taxes, insurance, maintenance and similar expense which
the Borrower or any Subsidiary is required to pay under the terms of any lease)
in any Fiscal Year of the Borrower in excess of $7,500,000.00; and (c) Capital
Leases permitted by Section 6.01(c).
(e) Investments. Make, or permit any of its Subsidiaries to
make, any loan or advance to any Person or purchase or otherwise acquire, or
permit any such Subsidiary to purchase or otherwise acquire, any capital stock,
assets, obligations or other securities of, make any capital contribution to, or
otherwise invest in, or acquire any interest in, any Person, in excess of
$750,000.00 in the aggregate at any time outstanding, except: (a) direct
obligations of the United States of America or any agency thereof with
maturities of one year or less from the date of acquisition; (b) commercial
paper of a domestic issuer rated at least "A-1" by Standard & Poor's Corporation
or "P-1" by Moody's Investors Service, Inc.; (c) certificates of deposit with
maturities of one year or less from the date of acquisition issued by any
commercial bank operating within the United States of America having capital and
surplus in excess of $100,000,000.00; (d) for stock, obligations or securities
received in settlement of debts (created in the ordinary course of business)
owing to the Borrower or any such Subsidiary; (e) investments set forth on
Schedule 5, and any renewal thereof (but not any increase thereof); (f)
investments permitted pursuant to Section 6.01(j) or; (g) investments by the
Borrower in any Subsidiary, including, without limitation, a newly formed
Subsidiary, investments by any Subsidiary in the Borrower, or investments by any
Subsidiary in another Subsidiary.
(f) Restricted Payments. Make any Restricted Payment.
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(g) Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, assign, transfer
or otherwise dispose of, substantially all (meaning 25% in value or greater at
the time of such sale, lease, assignment, transfer or other disposition) of its
now owned or hereafter acquired material assets (including, without limitation,
shares of stock and indebtedness of such Subsidiaries, receivables and leasehold
interests); except: (i) for inventory disposed of in the ordinary course of
business; (ii) the sale or other disposition of assets no longer used or useful
in the conduct of its business; (iii) the sale, lease, assignment or transfer of
assets by any such Subsidiary to the Borrower or to another Subsidiary and the
sale, lease, assignment or transfer of assets by Borrower to any Subsidiary;
(iv) sales of equipment immediately made subject to a Capital Lease permitted by
Section 6.01(c); and (v) grants to customers, which are not for the purpose of
securing any obligation, of licenses and similar rights to use technology,
patents or trademarks in the ordinary course of business.
(h) Intentionally Omitted.
(i) Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate or permit any of its Subsidiaries
to enter into any transaction, including, without limitation, the purchase, sale
or exchange of property or the rendering of any service, with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
the Borrower's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm's length transaction with a Person not an Affiliate, and except
for arrangements set forth on Schedule 6, and except for payment of management
fees to stockholders of Borrower not to exceed in the aggregate $150,000 per
Fiscal Year, and except as permitted pursuant to the terms of Subsections
6.01(e), (f), (g), and (j) and except for transactions between the Borrower and
one or more of its Subsidiaries or between one or more of the Borrower's
Subsidiaries.
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(j) Mergers, Acquisitions, Etc. Except as permitted pursuant
to Section 6.01(g) merge (except for mergers of a Subsidiary into the Borrower
or another Subsidiary) or consolidate with, or acquire all or substantially all
of the assets or the business of any Person (or enter into any agreement to do
any of the foregoing), or permit any of its Subsidiaries to do so, or make any
Acquisition except that, provided that no Event of Default is continuing, the
Borrower may make any Acquisition of an entity engaged in a line of business of
the same general type as conducted by the Borrower on the date of this Agreement
provided that, (1) no Acquisition may be made for a purchase price or
consideration in excess of 15% of Consolidated Total Assets at the time of such
Acquisition, and (2) not more than $7,500,000 of Advances outstanding under the
Credit Agreement and outstanding principal of Loans in the aggregate outstanding
at any time shall be permitted for the purpose of financing any Acquisition or
to refinance the cost thereof.
ARTICLE VII
FINANCIAL COVENANTS
So long as either Note shall remain unpaid:
SECTION 7.01. Current Ratio. For the period between January 1, 1999 and
December 31, 2000, the Borrower and its Consolidated Subsidiaries shall
maintain, at all times, on a consolidated basis, a Current Ratio of not less
than 1.25:1.0, to be measured at the end of each fiscal quarter. For the period
commencing January 1, 2001, up to and including the Maturity Date, the Borrower
and its Consolidated Subsidiaries shall maintain, at all times, on a
consolidated basis, a Current Ratio of not less than 1.50:1.0, to be measured at
the end of each fiscal quarter. For purposes of calculating the Current Ratio,
outstanding Advances (as defined under the Credit Agreement) and the outstanding
principal under the Loans shall be included in the definition of Current
Liabilities.
SECTION 7.02. Intentionally omitted.
SECTION 7.03. Intentionally omitted.
SECTION 7.04. Fixed Charge Coverage Ratio. The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis, at all times,
a Fixed Charge Coverage Ratio of not less than 3.00:1.00. For the purpose of
calculating Fixed Charge Coverage Ratio, the Fixed Charge Coverage Ratio for the
fiscal quarter ending March 31, 2000 shall consist of the cumulative of the
quarter ending December 31, 1999 and the quarter ending March 31, 2000; and the
Fixed Charge Coverage Ratio for the fiscal quarter ending June 30, 2000 shall
consist of the cumulative of the quarter ending December 31, 1999, the quarter
ending March 31, 2000 and the quarter ending June 30, 2000. After the quarter
ending June 30, 2000, the Fixed Charge Coverage Ratio for each fiscal quarter
shall be measured at the end of such fiscal quarter on the basis of the period
of the four consecutive quarters then ended.
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SECTION 7.05. Leverage Ratio. The Borrower and its Consolidated
Subsidiaries shall maintain on a consolidated basis, a Leverage Ratio, to be
measured at the end of each fiscal quarter, not to exceed: a) 1.5:1.0 for the
quarters terminating March 31, 1999 and June 30, 1999; b) 1.25:1.0 for the
quarters terminating September 30, 1999, December 31, 1999, March 30, 2000 and
June 30, 2000; c) 1.10:1.0 for the quarter terminating September 30, 2000; and
d) 1.0:1.0 for the quarters terminating December 31, 2000 and thereafter.
SECTION 7.06. Capital Expenditures. The Borrower and its Consolidated
Subsidiaries, on a consolidated basis, shall not incur Capital Expenditures in
excess of $10,000,000 during any Fiscal Year.
SECTION 7.07. No Net Loss. The Borrower and its Consolidated
Subsidiaries shall not incur a net loss on a consolidated basis for any Fiscal
Year. Notwithstanding the foregoing, for the fiscal year ending June 30, 1999
only, the Borrower and its Consolidated Subsidiaries may incur a net loss after
taxes, which shall not exceed $4,000,000.00.
SECTION 7.08. Minimum EBITDA Requirement. (a) The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis, EBITDA (as
defined below in this Section 7.08(a)), to be measured at the end of each fiscal
quarter, of not less than (i) $9,200,000.00 for the quarter ending June 30,
2000; (ii) $3,500,000.00 for the quarter ending September 30, 2000; (iii)
$8,600,000.00 for the quarter ending December 31, 2000; (iv) $13,800,000.00 for
the quarter ending March 31, 2001; (v) $19,500,000.00 for the quarter ending
June 30, 2001; (vi) $3,850,000.00 for the quarter ending September 30, 2001; and
(vii) $9,600,000.00 for the quarter ending December 31, 2001. For purpose of
this Section 7.08(a), AEBITDA" shall mean earnings before interest, taxes,
depreciation, and amortization as determined in accordance with GAAP; provided,
however, the gain on the sale of Iwatsu Electric Company stock shall be excluded
from the earnings component of the definition of EBITDA. For the purpose of
calculating EBITDA in this Section 7.08(a), EBITDA for a fiscal quarter ending
September 30 in any year, shall consist solely of the one quarter then ended;
EBITDA for a fiscal quarter ending December 31 in any year, shall consist of the
cumulative of the preceding quarter ending September 30 and the preceding
quarter ending December 31; EBITDA for a fiscal quarter ending March 31 in any
year, shall consist of the cumulative of the preceding quarter ending September
30, the preceding quarter ending December 31, and the preceding quarter ending
March 31; and EBITDA for a fiscal quarter ending June 30 in any year, shall
consist of the cumulative of the preceding quarter ending September 30, the
preceding quarter ending December 31, the preceding quarter ending March 31, and
the preceding quarter ending June 30.
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(b) The Borrower and its Consolidated Subsidiaries shall maintain, on a
consolidated basis, EBITDA (as defined below in this Section 7.08(b)), to be
measured at the end of each fiscal quarter, of not less than (i)$4,000,000.00
for the quarter ending June 30, 2000; (ii) $3,500,000.00 for the quarter ending
September 30, 2000; (iii) $3,950,000.00 for the quarter ending December 31,
2000; (iv) $4,200,000.00 for the quarter ending March 31, 2001; (v)
$4,600,000.00 for the quarter ending June 30, 2001; (vi) $3,850,000.00 for the
quarter ending September 30, 2001; and (vii) $4,400,000.00 for the quarter
ending December 31, 2001. For purposes of this Section 7.08(b), AEBITDA" shall
mean earnings before interest, taxes, depreciation, and amortization as
determined in accordance with GAAP; provided, however, the gain on the sale of
Iwatsu Electric Company stock shall be excluded from the earnings component of
the definition of EBITDA. For the purposes of calculating EBITDA in this Section
7.08(b), EBITDA shall consist solely of the quarter then ended.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. If any of the following events (each,
an "Event of Default") shall occur and be continuing:
(a) The Borrower shall: (i) fail to pay the principal of any Note or
any Note (as defined in the Credit Agreement) or in any Other Document (as
defined in the Credit Agreement or in any Additional Collateral Document (as
defined in Credit Agreement) as and when due and payable; (ii) fail for five
Business Days after notice to pay interest on any Note or any Note (as defined
in the Credit Agreement) or pay any fee or other amount due hereunder as and
when due and payable; or (iii) fail to pay interest on any Note for Note (as
defined in the Credit Agreement) or pay any fee or other amount due hereunder as
and when due and payable more than two times during any period of twelve
consecutive months;
(b) (i) Any material representation or warranty made or deemed made by
the Borrower in this Agreement, the Credit Agreement or in any other Loan
Document (as defined this Agreement or the Credit Agreement) or in any Other
Document (as defined in this Credit Agreement) or in any Additional Collateral
Document (as defined in the in Credit Agreement) or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with any Loan Document (as defined in this Agreement
or the Credit Agreement) shall prove to have been incorrect in any material
respect on or as of the date made or deemed made or (ii) an Event of Default
under the Credit Agreement exists and is continuing;
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(c) The Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Articles VI or VII of this Agreement or the
Credit Agreement; or (ii) fail to perform or observe any term, covenant or
agreement on its part to be performed or observed (other than the obligations
specifically referred to elsewhere in this Section 8.01 of this Agreement or the
Credit Agreement) in any Loan Document (as defined in this Agreement or the
Credit Agreement), any Other Document (as defined in the Credit Agreement) or
any Additional Collateral Document (as defined in the Credit Agreement) and such
failure shall continue for 30 consecutive days after notice from the Agent;
(d) The Borrower or any of its Subsidiaries shall: (i) fail to pay any
Debt in excess of $500,000 (other than the payment of Obligations described in
Section 8.01(a) above), of the Borrower or such Subsidiary, as the case may be,
or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise); (ii) fail to perform or
observe any term, covenant or condition on its part to be performed or observed
under any agreement or instrument relating to any Debt in excess of $500,000
(other than the payment of Obligations described in Section 8.01(a) above), when
required to be performed or observed, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration at such time of the
maturity of such Debt, unless such failure to perform or observe shall be
permanently waived in writing by the holder of such Debt; or (iii) have any Debt
in excess of $500,000 (other than the payment of Obligations described in
Section 8.01(a) above) be declared due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment or, in the case of
Permitted Indebtedness other than Subordinated Indebtedness any prepayment which
is or becomes required by the terms thereof other than due to a default
thereunder), prior to the stated maturity thereof in whole;
(e) The Borrower or any of its Subsidiaries: (i) shall generally not,
or be unable to, or shall admit in writing its inability to, pay its debts as
such debts become due as such term is construed from time to time in accordance
with applicable bankruptcy law; or (ii) shall make an assignment for the benefit
of creditors, petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets; or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which such an appointment is made or order for relief
is entered, or which petition, application or proceeding remains undismissed for
a period of 60 days or more; or (v) by any act or omission shall indicate its
consent to, approval of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
trustee for all or any substantial part of its property; or (vi) shall suffer
any such custodianship, receivership or trusteeship to continue undischarged for
a period of 60 days or more;
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(f) One or more judgments, decrees or orders for the payment of money
in excess of $500,000.00 in the aggregate shall be rendered against the Borrower
or any of its Subsidiaries and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of 60 consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal; or
(g) Any of the following events shall occur or exist with respect to
the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving
any Plan; (ii) any ERISA Event shall occur with respect to any Plan; (iii) the
filing under Section 4041 of ERISA of a notice of intent to terminate any Plan
or the termination of any Plan; (iv) any event or circumstance exists which
would constitute grounds entitling the PBGC to institute proceedings under
Section 4042 of ERISA for the termination of, or for the appointment of a
trustee to administer, any Plan, or the institution by the PBGC of any such
proceedings; (v) complete or partial withdrawal under Section 4201 or 4204 of
ERISA from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, could in the
reasonable opinion of the Agent subject the Borrower to any tax, penalty, or
other liability to a Plan, Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or may exceed $500,000.00;
Then, and in any such event, the Agent shall at the request, or may with the
consent, of Lenders owed at least 75% (or 100% if at such time there are two and
only two Lenders) of the aggregate unpaid principal amount of the Loans then
outstanding by notice to the Borrower, declare the Loans then outstanding, all
interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Loans then
outstanding, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that in the event of an Event of Default under Section
8.01(e), the Notes, all such interest and such amounts due thereunder shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
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ARTICLE IX
THE AGENT
SECTION 9.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Debt resulting
from the Loans), the Agent shall not be required to exercise any discretion to
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be binding
upon all Lenders; provided, however, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees to give to each
Lender prompt notice of each notice given to it by the borrower pursuant to the
terms of this Agreement.
SECTION 9.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable to any Lender
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(i) may treat the Lender that made the Loan as the holder of the Debt resulting
therefrom until the Agent receives and accepts an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 10.08; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
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SECTION 9.03. Chase and Affiliates. With respect to the Loan
made by Chase or any of its affiliates, Chase and each such affiliate shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent or an affiliate thereof; and
the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include Chase and each such affiliate in its individual capacity. Chase and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower,
any of its subsidiaries and any Person who may do business with or own
securities of the Borrower or any such subsidiary, all as if Chase were not the
Agent and without any duty to account therefor to the Lenders.
SECTION 9.04. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 4.01(e) and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 9.05. Indemnification. The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Borrower), ratably according to
the respective aggregate principal amount of the Loans then owing to each of
them, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements or any
kind of nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or any
action taken or omitted by the Agent under this agreement, provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Agent is not reimbursed for such expenses by the Borrower.
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SECTION 9.06. Successor Agent. The Agent may resign at any
time by giving thirty (30) days prior written notice thereof to the Lenders and
the Borrower. Upon any such resignation, the Majority Lenders shall have the
right to appoint a successor Agent. Such successor Agent shall be reasonably
acceptable to the Borrower. If no successor Agent shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within fifteen
(15) days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a financial institution having a senior debt rating of not less than A
or its implied equivalent by Standard & Poor's Corporation. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder, except for accrued
obligations to the extent not assumed by the successor Agent. After any retiring
Agent's resignation, the provisions of this Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Borrower and the Majority Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders, do any of the following:
(a) waive any of the conditions specified in Section 3.01 or 3.02, (b) subject
the Lenders to any additional obligations, (c) reduce the principal of, or
interest on, the Loans or any fees or other amounts payable hereunder, (d)
postpone any date fixed for any payment of principal of, or interest on, the
Loans or any fees or other amounts payable hereunder, (e) change the aggregate
unpaid principal amount of the Loans, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action hereunder, (f) amend
this Section 10.01, (g) reduce any rate of accrual of interest or the amount of
any accrued interest, (h) increase the aggregate of all Lenders' Commitments
beyond $6,000,000, (i) change the definition of the term "Majority Lenders" or
(j) modify or delete any term or provision of this Agreement which term or
provision provides for the vote or consent of all the Lenders; and provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement.
SECTION 10.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including facsimile
transmission) and mailed, sent by facsimile transmission or delivered, if to the
Borrower, at its address at 700 Chestnut Ridge Road, Chestnut Ridge, New York
10977, (or at facsimile number (914) 425-8967) Attention: Chief Financial
Officer; if to any Lender originally a party hereto, at its Domestic Lending
Office specified opposite its name on Schedule 1 hereto; if to any other Lender,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Agent, at its address at 400
Rella Boulevard, Suffern, New York 10901, (or at facsimile number (914)
368-2366) Attention: Mr. C. William Cosgrove; or, as to the Borrower or the
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Borrower and the
Agent. All such notices and communications shall, when mailed, or sent by
facsimile transmission, be effective on the third Business Day after deposited
in the mails, or on receipt of a written confirmation of a completed facsimile
transmission, respectively, except that notices and communications to the Agent
pursuant to Article II or V shall not be effective until received by the Agent
and notices to the Borrower shall not be effective unless actually received by
the Borrower in complete, legible form, provided that a signed return receipt
delivered by the U.S. Postal Service or a signed receipt obtained by an
overnight courier of national standing shall constitute presumptive evidence of
such receipt.
SECTION 10.03. No Waiver, Remedies. No failure on the part of
any Lender or the Agent (or, except as expressly provided to the contrary
herein, the Borrower) to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
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SECTION 10.04. Costs, Expenses and Taxes. (a) The Borrower
agrees to pay on demand all reasonable costs and expenses in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement and the other documents to be delivered hereunder (except that
the Borrower shall not pay the costs of Lenders other than Agent with respect to
their review, negotiation or execution of this Agreement and any amendments
hereto except as set forth below), including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto
and with respect to advising the Agent as to its rights and responsibilities
under this Agreement. The Borrower further agrees to pay on demand all
reasonable costs and expenses, if any (including, without limitation, reasonable
counsel fees and expenses) of the Lenders, in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Agreement
and the other documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 10.04(a) and the reasonable costs of
documentation prepared in connection with the administration, "workout", or
modification of this Agreement during the continuance of an Event of Default.
(b) Intentionally Omitted.
(c) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and their directors, officers, employees and agents (each,
an "Indemnified Party") from and against any and all losses, claims, damages,
liabilities and reasonable costs and expenses incurred by the Indemnified Party,
including, without limitation, reasonable attorneys fees, arising out of claims
made by any Person in any way relating to the transactions contemplated hereby,
but excluding therefrom all costs, expenses, losses, claims, damages and
liabilities arising out of or resulting from the gross negligence or willful
misconduct of an Indemnified Party.
SECTION 10.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 8.01 to authorize
the Agent to declare the Loan due and payable pursuant to the provisions of
Section 8.01, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such lender to or for the
credit or the account of the Borrower against any and all of the obligations of
the Borrower now or hereafter existing under this Agreement, whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
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SECTION 10.06. Intentionally Omitted.
SECTION 10.07. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Agent and
when the Agent shall have been notified by each Lender that such Lender has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective permitted successors
and assigns (but not, except as expressly provided to the contrary herein, to
the benefit of any third party beneficiary), except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders.
SECTION 10.08. Assignments and Participation. (a) Upon the
prior consent of the Borrower, such consent not to be unreasonably withheld or
delayed (it being understood that, without limitation, withholding of such
consent to be deemed reasonable if such assignment is to a Non-U.S. Lender and
would subject Borrower to any United States Federal withholding tax as a result
thereof or if such assignment would, at the time thereof, cause additional
expense to Borrower under Sections 2.10(a) or 2.10(b)), each Lender may assign
to one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Loans owing to it and the Note or Notes held by it); provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all of the assigning Lender's rights and obligations
under this Agreement, (ii) the amount of the Loan of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $1,000,000, (iii) each such assignment shall be to an Eligible
Assignee, (iv) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and a
processing and recordation fee of $2,500, (v) no Assignment and Acceptance shall
result in any increased cost to Borrower and (vi) the Agent shall, after giving
effect to each Assignment and Acceptance, be owed not less than 50% of the
aggregate unpaid principal amounts of the Loans then outstanding. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least 10 Business Days after the execution thereof, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its further obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
-49-
<PAGE>
(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
section 4.01(e) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by its as a Lender.
-50-
<PAGE>
(c) The Agent shall maintain at its address referred to in
Section 10.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders, and principal amount of the Loan owing to, each Lender from time to
time (the "Register"). The entries in the Register shall effect a rebuttable
presumption as to the accuracy thereof, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Subject to the other terms of this Section 10.08, upon its
receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, consented to by the
Borrower to the extent required by Section 10.08(a), together with any Note or
Notes subject to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, and (ii) record the
information contained therein in the Register. Within five Business Days after
the Borrower has consented to the Assignment and Acceptance, the Borrower, at
its own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note or Notes a new Note to the order of such Eligible Assignee in
an amount equal to the portion of the Loan assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a portion of
the Loan, a new Note to the order of the assigning Lender in an amount equal to
the portion of the Loan retained by it hereunder. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit C hereto.
-51-
<PAGE>
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Loan
owing to it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (iv) the sale of such participation shall
not result in any increased cost to Borrower.
(f) Subject to Section 10.17, any Lender may, in connection
with any assignment or participation or proposed assignment or participation
pursuant to this Section 10.08, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that, prior
to any such disclosure, the assignee or participant or proposed assignee or
participant shall agree, for the benefit of the Borrower, to preserve the
confidentiality of any confidential information relating to the Borrower
received by it from such Lender, on the terms set forth in Section 10.17.
(g) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Loan owing to it and the Notes held by it) in favor of any Federal Reserve Bank
in accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
SECTION 10.09. Consent to Jurisdiction. (a) The Borrower
hereby irrevocably submits to the jurisdiction of any New York State or Federal
court sitting in New York City and any appellate court from any thereof in any
action or proceeding arising out of or relating to this Agreement, and the
Borrower hereby irrevocably agrees that all claims in respect of any such action
or proceeding may be heard and determined in such New York State or in such
Federal court. The Borrower hereby irrevocably waives, to the fullest extent
that it may effectively do so, the defense of an inconvenient forum to the
maintenance of any such action or proceeding. The Borrower irrevocably consents
to the service of any and all process in any such action or proceeding by the
mailing of copies of such process to the Borrower at its address specified in
Section 10.02. The Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive, subject to all applicable rights of appeal, and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
-52-
<PAGE>
(b) Nothing in this Section 10.09 shall affect the right of
the Agent or any Lender to serve legal process in any other manner permitted by
law or affect the right of the Agent or any Lender to bring any action or
proceeding against the Borrower or its property in the courts of any other
jurisdictions including the Federal and State courts sitting in the State of New
York.
SECTION 10.10. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 10.11. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 10.12. Captions. The captions and headings of the
various sections and subsections of this Agreement are provided for convenience
only and shall not be construed to modify the meaning of such sections or
subsections.
SECTION 10.13. WAIVER OF JURY TRIAL. EACH LENDER, THE AGENT
AND THE BORROWER AGREE THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A)
SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION
BASED UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY
COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR
(B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE
BEEN FULLY DISCUSSED BY THE LENDERS, THE AGENT AND THE BORROWER, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER THE LENDERS, THE AGENT NOR
THE BORROWER HAS AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
SECTION 10.14. Intentionally Omitted.
SECTION 10.15. Intentionally Omitted.
SECTION 10.16. Intentionally Omitted.
-53-
<PAGE>
SECTION 10.17. Confidentiality. Neither the Agent nor any
Lender shall disclose any Confidential Information to any Person without the
consent of the Borrower, other than (a) to the Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and to
actual or prospective Eligible Assignees and participants, and then only on a
confidential basis as provided in Section 10.08(f), (b) as required by any law,
governmental rule or regulation or judicial process and (c) as requested or
required by any state, federal or foreign authority or examiner regulating banks
or banking.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
LECROY CORPORATION
By: /s/
-----------------------------------
Name: Raymond Kunzmann
Title: Vice President - Finance
THE CHASE MANHATTAN BANK, as Agent and
Lender
By: /s/
-----------------------------------
Name: C. William Cosgrove
Title: Vice President
FLEET NATIONAL BANK, as Lender
By: /s/
-----------------------------------
Name: Andrew H. Harris
Title:
--------------------------------
Vice President
<PAGE>
EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
Dated ______________, 20___
Reference is made to the Term Loan Agreement dated as of _____________,
20__ (the "Agreement") among LECROY CORPORATION, a Delaware corporation (the
"Borrower"), the Lenders (as defined in the Term Loan Agreement) and
_________________, as Agent for the Lenders (the "Agent"). Terms defined in the
Agreement are used herein with the same meaning.
________________________ (the "Assignor") and ___________________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the interest specified
on Schedule 1 hereto in and to all of the Assignor's rights and obligations
under the Agreement as of the date hereof which represents the percentage
interest specified on Schedule 1 of all outstanding rights and obligations under
the Agreement, including, without limitation, such interest in the Assignor's
Loan owing to the Assignor, and the Note held by the Assignor. After giving
effect to such sale and assignment, the amount of Loan owing to the Assignee
will be as set forth in Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim; (ii) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Agreement or
any other instrument or document furnished pursuant thereto; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under the Agreement or any other instrument
or document furnished pursuant thereto; and (iv) attaches the Note referred to
in paragraph 1 above and requests that the Agent exchange such Note for a new
Note payable to the order of the Assignee in an amount equal to the portion of
the Loan assumed by the Assignee pursuant hereto or new Notes payable to the
order of the Assignee in an amount equal to the portion of the Loan assumed by
the Assignee pursuant hereto and the Assignor in an amount equal to the portion
of the Loan retained by the Assignor under the Agreement, respectively, as
specified on Schedule 1 hereto.
<PAGE>
3. Following the execution of this Assignment and Acceptance by the Assignor and
the Assignee, it will be delivered to the Agent for acceptance by the Agent. The
effective date of this Assignment and Acceptance shall be the date of acceptance
thereof by the Agent, unless otherwise specified on Schedule 1 hereto (the
"Effective Date").
4. Upon such acceptance by the Agent, as of the Effective Date, (i) the Assignee
shall, in addition to the rights and obligations under the Agreement held by it
immediately prior to the Effective Date, have the rights and obligations under
the Agreement that have been assigned to it pursuant to this Assignment and
Acceptance and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its right and be released from its
obligations under the Agreement.
5. Upon such acceptance by the Agent, from and after the Effective Date, the
Agent shall make all payments under the Agreement and the Notes in respect of
the interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
6. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
[ASSIGNEE]
By:
----------------------------
Name:
--------------------------
Title:
--------------------------
[ASSIGNEE]
By:
-----------------------------
Name:
--------------------------
Title:
--------------------------
<PAGE>
EXHIBIT B
COMPLIANCE CERTIFICATE EXHIBIT B, PAGE 1 OF 2
FOR THE FISCAL PERIOD ENDING
[_________] [__], 200[___]
<TABLE>
<CAPTION>
Q Q Q Q
__, ___ Rolling __, ___ Rolling __, ___ Rolling __, ___ Rolling
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS
Operating Profit (PBT) $ $ $ $ $ $ $ $
Depreciation
Foreign Exchange
Capital Expenditures
Additions to ERP Project
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL CASH FLOWS $ $ $ $ $ $ $ $
======== ======== ======== ======== ======== ======== ======== ========
FIXED CHARGES
Interest Expense $ $ $ $ $ $ $ $
======== ======== ======== ======== ======== ======== ======== ========
TANGIBLE NET WORTH
Total Assets $ $ $ $ $ $ $ $
Less Patents and Trademarks
Less Manufacturing & Distribution
Less Goodwill and Technology
Less Consolidated Liabilities
-------- -------- -------- -------- -------- -------- -------- --------
TANGIBLE NET WORTH $ $ $ $ $ $ $ $
======== ======== ======== ======== ======== ======== ======== ========
EBITDA $ $ $ $ $ $ $ $
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
COMPLIANCE CERTIFICATE EXHIBIT B, PAGE 2 OF 2
FOR THE FISCAL PERIOD ENDING
[_________] [__], 200[___]
<TABLE>
<CAPTION>
Q
-----
<S> <C>
SECTION 7.01
Current Assets
--------------
Current Liabilities (As defined)
Calculated Ratio
Bank Covenant
Compliance
SECTION 7.04 - FIXED CHARGE COVERAGE RATIO
Cash Flows
----------
Fixed Charges
Calculated Ratio
Bank Covenant
Compliance
SECTION 7.05 - LEVERAGE RATIO
Consolidated Liabilities
------------------------
Consolidated Tangible Net Worth
Calculated Ratio
Bank Covenant
Compliance
SECTION 7.06 - CAPITAL EXPENDITURES
Capital Expenditures FY (Estimate)
Bank Covenant (Limit)
Compliance
SECTION 7.07 - NET LOSS
Net Income FY
Bank Covenant (Minimum)
Compliance
INDIVIDUAL QUARTERLY EBITDA W/O IWATSU
Calculated
Bank Covenant
Compliance
CUMULATIVE EBITDA W/O IWATSU
Calculated
Bank Covenant
Compliance
</TABLE>
I, __________________________, the __________________ of LECROY CORPORATION
hereby certify that the information contained herein is true and correct and no
Default has occurred and is continuing on the date hereof.
Date: _________ __, 200_
<PAGE>
EXHIBIT C
SEE ATTACHED NOTES
<PAGE>
EXHIBIT D
SEE ATTACHED FORM OF OPINION LETTER OF COUNSEL
<PAGE>
SCHEDULE 1
LECROY CORPORATION
Term Loan Agreement dated as of May 12, 2000 among LeCroy Corporation, as
Borrower, and the Lenders named therein, as Lenders, and The Chase Manhattan
Bank, as Agent
<TABLE>
<CAPTION>
Name of Lender Domestic Lending Office
-------------- -----------------------
<S> <C>
The Chase Manhattan Bank 400 Rella Boulevard
Suffern, New York 10901
Phone: (914) 368-2272
Fax: (914) 368-2366
Attention: C. William Cosgrove
Fleet National Bank One Landmark Square,
2nd Floor, Mail Stop CT FD KO2A
Stamford, Connecticut 06901
Phone: (203) 964-4829
Fax: (203) 964-4850
Attention: Andrew H. Harris
</TABLE>
<PAGE>
SCHEDULE 2
LeCroy Corporation
Litigation
None
<PAGE>
SCHEDULE 3
LECROY CORPORATION
Existing Debt and Guaranties
<TABLE>
<CAPTION>
$000 $000
$000 Guaranty (by LeCroy Local Currency
Name/Address of Entity Credit Line Corporation) Currency Credit Line Lending Institution
---------------------- ----------- ------------ -------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
LeCroy Japan Corporation, K.K. 921 921 JPY 100,000 Dai-ichi Kanngyo Bank
16-3, 3-Chrome, Tarumicho, Suite City 461 461 JPY 50,000 Mitsubishi Bank
Osaka, 564, Japan ----- ----- -------
1,382 1,382 150,000
===== ===== =======
LeCroy, S.R.L.
325 Via Concesto
Roma, 00188, Italy 92 92 LIT 200,000 Cassa di Risparimo
di Venezia
Totals 1,474 1,474
===== =====
</TABLE>
<PAGE>
SCHEDULE 4
LeCroy Corporation
Existing Liens
<TABLE>
<CAPTION>
Secured Jurisdiction File Number Date Filed Collateral Comments
------- ------------ ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
---------- ------------ ----------- ---------- ---------- --------
---------- ------------ ----------- ---------- ---------- --------
---------- ------------ ----------- ---------- ---------- --------
---------- ------------ ----------- ---------- ---------- --------
---------- ------------ ----------- ---------- ---------- --------
---------- ------------ ----------- ---------- ---------- --------
---------- ------------ ----------- ---------- ---------- --------
</TABLE>
<PAGE>
SCHEDULE 5
LECROY CORPORATION
Investments
Iwatsu Electric Co. - 1,000,000 shares - original cost - 235,379,347 yen - owned
by LeCroy S.A.
<PAGE>
SCHEDULE 6
LECROY CORPORATION
Transactions with Affiliates
None
<PAGE>
SCHEDULE 7
LECROY CORPORATION
Schedule of Subsidiaries and Ownership
<PAGE>
SCHEDULE 8
Intentionally Omitted
<PAGE>
SCHEDULE 9
Commitments
Commitments totaling $6,000,000.00
<TABLE>
<CAPTION>
Lenders Commitment
------- ----------
<S> <C>
THE CHASE MANHATTAN BANK $4,020,000.00
FLEET NATIONAL BANK, N.A. 1,980,000.00
------------
TOTAL $6,000,000.00
</TABLE>
<PAGE>
EXHIBIT 10.29
FIRST AMENDMENT TO TERM LOAN AGREEMENT
THIS FIRST AMENDMENT (the "First Amendment") is made as of the 18th day
of May, 2000 by and among LECROY CORPORATION (the "Borrower"), a corporation
organized and existing under the laws of the State of Delaware, THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation, as agent (the "Agent")
for the Lenders (defined below) under the Term Loan Agreement (defined below)
and as a Lender thereunder and FLEET NATIONAL BANK, a national banking
association ("Fleet"), as a Lender under the Term Loan Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, Chase and Fleet (Chase and Fleet, collectively,
the "Lenders" and each individually, a "Lender") and the Agent are parties to a
certain Term Loan Agreement dated as of May 12, 2000 (the "Term Loan
Agreement");
WHEREAS, pursuant to the Term Loan Agreement the Lenders made an
aggregate term loan (the "Loan") in the principal amount of SIX MILLION AND
00/100 DOLLARS ($6,000,000) with Chase making a term loan, as a Lender, in the
amount of FOUR MILLION TWENTY THOUSAND AND 00/100 DOLLARS ($4,020,000) and Fleet
making a term loan in the amount of ONE MILLION NINE HUNDRED EIGHTY THOUSAND AND
00/100 DOLLARS ($1,980,000);
WHEREAS, the Loan is secured by a first mortgage lien on Borrower's
property in Chestnut Ridge, New York in the aggregate principal amount of
$6,000,000 pursuant to a mortgage and security agreement executed by Borrower in
favor of the Agent for the benefit of the Lenders; and
WHEREAS, the Agent, the Lenders and Borrower desire to amend certain
terms and provisions of the Term Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, receipt of which is hereby
acknowledged and upon the execution and delivery of this First Amendment by each
party hereto and the satisfaction of the conditions set forth in Paragraph 4
below, the Borrower, Chase, as Agent and Lender, and Fleet agree as follows:
1. Capitalized Terms. All capitalized terms used in this First
Amendment and not otherwise defined herein shall have the meanings ascribed
thereto in the Term Loan Agreement.
2. Amendment. (a) Section 5.01(h)(xvi)of the Term Loan Agreement
is deleted in its entirety and the following new Section 5.01(h) (xvi) is
inserted in lieu thereof:
"(xvi) on the last Business Day of each week, verbal status updates
acceptable to the Lenders and Agent from the chief financial officer of
the Borrower or other officer reasonably acceptable to the Agent and
Lenders regarding Borrower's LAN division section of its business;"
(b) Section 5.01(h)(xviii) of the Term Loan Agreement is deleted in its
entirety and the following new Section 5.01(h) (xviii) is inserted in lieu
thereof:
"(xviii) within five (5) Business Days of a verbal or written request
by the Agent, such other information respecting the business, condition
(financial or otherwise), operations, business plans or financing plans of the
Borrower or any of its Subsidiaries as any Lender, through the Agent, or the
Agent may from time to time request."
<PAGE>
(c) Section 7.04 of the Term Loan Agreement is deleted in its entirety
and the following new Section 7.04 is inserted in lieu thereof:
"SECTION 7.04. Fixed Charge Coverage Ratio. The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis, (a)
at all times (except as waived in writing by the Lenders and the Agent)
through and including the fiscal quarter ending March 31, 2000, a Fixed
Charge Coverage Ratio of not less than 3.00:1.00, (b) for the fiscal
quarter ending June 30, 2000, a Fixed Charge Coverage Ratio of not less
than -5.00:1.00 and (c) at all times from and after July 1, 2000, a
Fixed Charge Coverage Ratio of not less than 3.00:1.00. For the purpose
of calculating Fixed Charge Coverage Ratio, the Fixed Charge Coverage
Ratio for the fiscal quarter ending September 30, 1999 shall not be
applicable; the Fixed Charge Coverage Ratio for the fiscal quarter
ending December 31, 1999 shall consist of the quarter ending December
31, 1999; the Fixed Charge Coverage Ratio for the fiscal quarter ending
March 31, 2000 shall consist of the cumulative of the quarter ending
December 31, 1999 and the quarter ending March 31, 2000; and the Fixed
Charge Coverage Ratio for the fiscal quarter ending June 30, 2000 shall
consist of the cumulative of the quarter ending December 31, 1999, the
quarter ending March 31, 2000 and the quarter ending June 30, 2000.
After the quarter ending June 30, 2000, the Fixed Charge Coverage Ratio
for each fiscal quarter shall be measured at the end of such fiscal
quarter on the basis of the period of the four consecutive quarters
then ended."
(d) Section 7.07 of the Term Loan Agreement is deleted in its entirety
and the following new Section 7.07 is inserted in lieu thereof:
"SECTION 7.07 No Net Loss. The Borrower and its Consolidated
Subsidiaries shall not incur a net loss, on a consolidated basis, for any Fiscal
Year. Notwithstanding the foregoing, for the Fiscal Year ending June 30, 2000
only, the Borrower and its Consolidated Subsidiaries may incur a net loss,
before taxes, of not more than $3,250,000.00."
<PAGE>
(e) Section 7.08 of the Term Loan Agreement is deleted in its entirety
and the following new Section 7.08 is inserted in lieu thereof:
"SECTION 7.08. Minimum EBITDA Requirement. (a) The Borrower and its
Consolidated Subsidiaries shall maintain on a consolidated basis,
EBITDA (as defined below in this Section 7.08(a)), to be measured at
the end of each fiscal quarter, of not less than (i) $N/A for the
quarter ending September 30, 1999; (ii) $1,700,000.00 for the quarter
ending December 31, 1999; (iii) $4,300,000.00 for the quarter ending
March 31, 2000; (iv) $1,200,000.00 for the quarter ending June 30,
2000; (v) $3,500,000.00 for the quarter ending September 30, 2000; (vi)
$8,600,000.00 for the quarter ending December 31, 2000; (vii)
$13,800,000.00 for the quarter ending March 31, 2001; (viii)
$19,500,000.00 for the quarter ending June 30, 2001; (ix) $3,850,000.00
for the quarter ending September 30, 2001; and (x) $9,600,000.00 for
the quarter ending December 31, 2001. For purpose of this Section
7.08(a), "EBITDA" shall mean earnings before interest, taxes,
depreciation, and amortization as determined in accordance with GAAP;
provided, however, the gain on the sale of Iwatsu Electric Company
stock shall be excluded from the earnings component of the definition
of EBITDA. For the purpose of calculating EBITDA in this Section
7.08(a), EBITDA for a fiscal quarter ending September 30 in any year,
shall consist solely of the one quarter then ended; EBITDA for a fiscal
quarter ending December 31 in any year, shall consist of the cumulative
of the preceding quarter ending September 30 and the preceding quarter
ending December 31; EBITDA for a fiscal quarter ending March 31 in any
year, shall consist of the cumulative of the preceding quarter ending
September 30, the preceding quarter ending December 31, and the
preceding quarter ending March 31; and EBITDA for a fiscal quarter
ending June 30 in any year, shall consist of the cumulative of the
preceding quarter ending September 30, the preceding quarter ending
December 31, the preceding quarter ending March 31, and the preceding
quarter ending June 30.
(b) The Borrower and its Consolidated Subsidiaries shall maintain, on a
consolidated basis, EBITDA (as defined below in this Section 7.08(b)),
to be measured at the end of each fiscal quarter, of not less than (i)
$N/A for the quarter ending September 30, 1999; (ii) $1,700,000.00 for
the quarter ending December 31, 1999; (iii) $2,350,000.00 for the
quarter ending March 31, 2000; (iv) -$1,800,000.00 for the quarter
ending June 30, 2000; (v) $3,500,000.00 for the quarter ending
September 30, 2000; (vi) $3,950,000.00 for the quarter ending December
31, 2000; (vii) $4,200,000.00 for the quarter ending March 31, 2001;
(viii) $4,600,000.00 for the quarter ending June 30, 2001; (ix)
$3,850,000.00 for the quarter ending September 30, 2001; and (x)
$4,400,000.00 for the quarter ending December 31, 2001. For purposes of
this Section 7.08(b), "EBITDA" shall mean earnings before interest,
taxes, depreciation, and amortization as determined in accordance with
GAAP; provided, however, the gain on the sale of Iwatsu Electric
Company stock shall be excluded from the earnings component of the
definition of EBITDA. For the purposes of calculating EBITDA in this
Section 7.08(b), EBITDA shall consist solely of the quarter then
ended."
3. Representations and Warranties. The Borrower and each Guarantor
hereby represent and warrant as follows (with the effectiveness of this First
Amendment being further conditioned upon all such representations and warranties
being true and correct in all material respects on May 18, 2000):
(a) The execution, delivery and performance by the Borrower and each
Guarantor of this First Amendment has been duly authorized by all necessary
corporate action;
(b) This First Amendment, the Term Loan Agreement and each of the other
Loan Documents to which the Borrower or a Guarantor is a party constitute legal,
valid and binding obligations of the Borrower and each Guarantor, respectively,
enforceable against it in accordance with their respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, equitable remedies and other similar laws affecting creditors'
rights generally, and except that the availability of equitable remedies is
subject to the discretion of the court before which such remedies are sought;
<PAGE>
(c) The representations and warranties contained in Article IV of the
Term Loan Agreement are correct as of May 18, 2000, except to the extent of
changes resulting from transactions contemplated or permitted by the Term Loan
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse as
reasonably determined by the Lenders and Agent, or to the extent that such
representations or warranties relate expressly to an earlier date; and
(d) No event has occurred and is continuing which has not been waived
by the Agent and Lenders which constitutes a Default (as defined in the Term
Loan Agreement) or an Event of Default.
4. Conditions Precedent. (a) For purposes of Section 10.01 of the Term
Loan Agreement (as amended by this First Amendment), each of the Lenders and the
Agent hereby consents and agrees, as of May 18, 2000, to the terms and
provisions of this First Amendment subject to the Agent's receipt of (and the
effectiveness of this First Amendment shall be conditioned upon such receipt by
the Agent of) the Subparagraph 4(b) Documents (as defined below) in the manner
and on the date specified in subparagraph 4(b) below.
(b) For purposes hereof, the Agent shall receive, no later than May 18,
2000, the following documents in form and substance satisfactory to the Agent
and the Lenders and other items (collectively, the "Subparagraph 4(b)
Documents") either as copies thereof via telecopy with the originals delivered
to the Agent promptly after May 18, 2000 or as originals:
(i) Duly executed counterpart of this First Amendment signed by
the Agent, the Lenders, the Guarantors and the Borrower; and
(i) Duly executed counterpart of a Fifth Amendment (the "Fifth
Amendment") to Amended and Restated Multicurrency Credit
Agreement dated as of date of this First Amendment among the
Borrower, Lenders and the Agent and acknowledged by the
Guarantors together with the Subparagraph 4(b) Documents (as
defined in the Fifth Amendment) required by the Fifth
Amendment.
(c) If requested, in writing, by the Borrower, Agent shall confirm, in
writing, the satisfactory receipt by Agent of the items set forth in paragraph
4(b) above, promptly upon Agent's receipt of all such items.
5. Costs, Expenses and Taxes. The Borrower and each Guarantor agrees to
pay on demand all reasonable fees and expenses of the Agent and the Lenders in
connection with the preparation, negotiation, execution, delivery,
administration, modification and amendment of this First Amendment and the other
instruments and documents to be delivered hereunder, including without
limitation, the reasonable fees and expenses of counsel for the Agent and the
Lenders with respect thereto and with respect to advising the Agent and the
Lenders as to their respective rights and responsibilities hereunder and
thereunder. The Borrower and each Guarantor further agrees to pay on demand all
reasonable costs and expenses, if any (including without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this First Amendment and the
other instruments and documents to be delivered hereunder, including, without
limitation, reasonable fees and expenses of counsel in connection with the
enforcement of rights under the Term Loan Agreement and the other Loan
Documents.
<PAGE>
6. Default. The Borrower and each Guarantor expressly acknowledges and
agrees that failure to perform any term or provision contained in this First
Amendment shall, in addition to all other Events of Default be an Event of
Default under the Term Loan Agreement, and the Agent and/or the Lenders may
exercise remedies as provided in the Term Loan Agreement and the other Loan
Documents.
7. Agreement; Waiver. Except as specifically amended hereby, the Term
Loan Agreement and the other Loan Documents are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Nothing
in this First Amendment contained or implied herein shall be construed as a
waiver or amendment of any provisions of the Term Loan Agreement, as amended by
this Amendment, or any other Loan Document other than as expressly set forth in
this First Amendment.
8. Release of Agent and Lenders. By execution of this First Amendment,
the Borrower and each Guarantor, jointly and severally, acknowledge and confirm
that they do not have any actions, causes of action, suits, debts,
controversies, damages, offsets, defenses, claims or counterclaims against the
Agent or either Lender, or any of their respective subsidiaries, affiliates,
officers, agents, directors, employees, attorneys, successors, and assigns, both
present and former (collectively, the "Related Affiliates") whether asserted or
unasserted, in law or in equity (collectively, the "Claims"), and to the extent
any Claim does exist, jointly and severally, release and forever discharge the
Agent and Lenders and any Related Affiliates of and from such Claim.
9. No Future Commitments. The Borrower and each Guarantor acknowledge
and agree that the execution and delivery of this First Amendment or any
previous amendment and/or waiver between the Borrower and the Lenders and the
Agent does not manifest a course of dealing with the Borrower and or Guarantors
leading to an expectation by Borrower and/or Guarantors of any future waivers
and/or amendments.
10. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11. Governing Law. This First Amendment shall be governed by, and
construed and enforced in accordance with, the internal, substantive laws of the
State of New York without giving effect to the conflict of law rules thereof.
IN WITNESS WHEREOF, the parties to this First Amendment have caused
their signatures to be affixed hereto the date above first written.
<PAGE>
LECROY CORPORATION
By:
------------------------------
Name: Raymond F. Kunzmann
Title: Vice President - Finance
THE CHASE MANHATTAN BANK,
as Agent
By:
------------------------------
Name: C. William Cosgrove
Title: Vice President
THE CHASE MANHATTAN BANK,
as Lender
By:
------------------------------
Name: C. William Cosgrove
Title: Vice President
FLEET NATIONAL BANK, as Lender
By:
------------------------------
Name: Andrew H. Harris
Title: Vice President
<PAGE>
ACCEPTED AND AGREED TO:
VIGILANT NETWORKS, INC.
Guarantor
By:
- ------------------------------
Name:Raymond F. Kunzmann
Title: Vice President - Finance
DIGITECH INDUSTRIES, INC. (Guarantor)
By:
- ------------------------------
Name: Raymond F. Kunzmann
Title: Vice President - Finance
PREAMBLE INSTRUMENTS, INC.
By:
- ------------------------------
Name: Raymond F. Kunzmann
Title: Vice President - Finance
<PAGE>
State of New York )
ss:
County of Rockland)
On the ___ day of May in the year 2000 before me, the undersigned, personally
appeared Raymond F. Kunzmann, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his capacity, and that by his signature on the instrument, the individual, or
the person upon behalf of which the individual acted, executed the instrument.
- ----------------------------
Signature and Office of Individual
taking acknowledgment
State of New York )
ss:
County of Rockland)
On the ___ day of May in the year 2000 before me, the undersigned, personally
appeared C. William Cosgrove, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.
- ----------------------------
Signature and Office of Individual
taking acknowledgment
<PAGE>
State of Connecticut)
ss:
County of Fairfield )
On the ___ day of May in the year 2000 before me, the undersigned, personally
appeared Andrew H. Harris personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument and
that such individual made such appearance before the undersigned in the City of
Stamford, Connecticut.
- ----------------------------
Signature and Office of Individual
taking acknowledgment
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-Q for the nine months ended March 31, 2000
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 6284
<SECURITIES> 2454
<RECEIVABLES> 28762
<ALLOWANCES> 587
<INVENTORY> 31763
<CURRENT-ASSETS> 69042
<PP&E> 41775
<DEPRECIATION> 25723
<TOTAL-ASSETS> 102082
<CURRENT-LIABILITIES> 42679
<BONDS> 0
0
8406
<COMMON> 78
<OTHER-SE> 50919
<TOTAL-LIABILITY-AND-EQUITY> 102082
<SALES> 88806
<TOTAL-REVENUES> 94154
<CGS> 46180
<TOTAL-COSTS> 46180
<OTHER-EXPENSES> 50459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 666
<INCOME-PRETAX> 128
<INCOME-TAX> 540
<INCOME-CONTINUING> (412)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (412)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
