EXHIBIT 10.3
FIRST AMENDED AND RESTATED EXTENSION AGREEMENT
THIS FIRST
AMENDED AND
RESTATED
EXTENSION
AGREEMENT
is made and
entered
into
as
of
October
6,
2005,
by
and
among
LYNCH
SYSTEMS,
INC.
("Borrower"),
a
South
Dakota
corporation;
LYNCH
CORPORATION,
an
Indiana
corporation
("Guarantor");
and SUNTRUST
BANK
("Lender"),
a Georgia
banking
corporation.
RECITALS:
Lender and
Borrower
entered
into a certain
Amended and
Restated
Credit
Agreement
dated
June 10,
2002 (as at any time
amended,
the
"Credit
Agreement"),
pursuant
to which
Lender made
available a revolving
credit and
letter of credit
facility to
Borrower,
which
revolving
credit and letter of
credit
facility
is
secured
by
security
interests
in and liens upon all or
substantially
all of the assets of Borrower and are guaranteed
unconditionally
by Guarantor.
Lender made a term loan (the "Term
Loan") to Borrower as
evidenced
by a certain
Term Loan
Promissory
Note,
dated August 4, 2003 in the original
principal amount of $498,000 (as at any time amended, the "Term
Note"),
payment
of which is secured by, among other
things,
a lien upon and security
title to
certain real
property of Borrower
pursuant to the terms of a certain
Security
Deed and Agreement made as of March 30, 2001, between Borrower and
Lender (as at
any time amended, the "Security Deed"; together with the Term Note
and all other
agreements
and
instruments
executed in connection
therewith,
the "Term Loan
Documents").
Events of Default
under (and as
defined
in) the Credit
Agreement
exist
and are
continuing,
in
consequence
of which
Lender
is
entitled
to
terminate
further advances to Borrower,
to declare the entire balance owing to
it from
Borrower to be
immediately
due and payable,
to enforce its liens and
security interests in the collateral
securing its claims against Borrower,
and
to enforce its claims against Guarantor.
All of the liabilities and
obligations
under the Credit
Agreement
and the Term Note became due and payable on May 31, 2005.
Borrower,
Guarantor and Lender entered into an Extension
Agreement
dated as of June 24, 2005, and a First Amendment to Extension
Agreement dated as
of
August
25,
2005
(collectively,
and as at any time
amended,
the
"Prior
Agreement"). Borrower and Guarantor desire that Lender accept
partial payment of
the
obligations
owed to Lender in exchange
for a partial
release of Lender's
security
interests
and
extend
the due date for
repayment
of the
remaining
Obligations to the Termination Date (as hereinafter defined).
Lender is willing
to extend
the due date for
repayment
of the
Obligations
under the terms and
conditions of this Agreement.
NOW,
THEREFORE,
for
TEN
DOLLARS
($10.00)
in hand
paid
and in
consideration
of the premises and the mutual covenants
herein
contained,
the
parties hereto, intending to be legally bound hereby, agree to
amend and restate
the
Prior
Agreement
so that as so
amended
and
restated,
it shall
read as
follows:
1. DEFINITIONS; RULES OF CONSTRUCTION.
(a) Capitalized
terms used in this Agreement,
unless
otherwise
defined,
shall have the meaning ascribed to such terms in the Credit
Agreement.
In
addition,
as used
herein,
the
following
terms
shall have the
meanings
ascribed to them:
"ACCEPTABLE
COMMITMENT
LETTER"
shall mean a commitment
letter
that is issued by a bank or other financial
institution
acceptable
to Lender, provides for Take-Out Financing on or before the last
day
of the Extension Period and has no due diligence, credit approval
or
other
conditions
precedent
to
funding
other
than
customary
conditions relating to documentation and closing.
"AGREEMENT" shall mean this First Amended and Restated
Extension
Agreement, as at any time amended.
"APPLICABLE
LAW"
shall
mean all laws,
rules
and
regulations
applicable
to the Person,
conduct,
transaction,
covenant or Loan
Document
in
question,
including
all
applicable
common
law and
equitable
principles;
all
provisions
of
all
applicable
state,
federal and foreign constitutions,
statutes, rules, regulations and
orders of governmental bodies; and all orders, judgments and
decrees
of all courts and arbitrators.
"BB&T" shall mean Branch Banking and Trust Company.
"COLLECTIONS" shall mean all proceeds received from a sale, lease
or other disposition of any of the Collateral, including payments
by
Borrower's
customers and any proceeds of insurance
relating to any
of the Collateral.
"EXPENSE REIMBURSEMENT" shall mean $2,305, to be paid by Borrower
to
Lender
by wire
transfer,
which
shall
be used by
Lender
to
reimburse
it for
legal
fees and
expenses
incurred
by Lender in
August,
September, and October (through the date of this Agreement)
of 2005. The amount of the Expense
Reimbursement as provided herein
is only an estimate,
and Lender
reserves the right to recover from
Obligors and the Collateral
all costs,
fees and expenses for which
Borrower
has
agreed
to
indemnify
Lender
pursuant
to the
Loan
Documents.
"EXTENSION
CONDITIONS"
shall mean the
conditions
to
Lender's
extension of the due date of the
Obligations set forth in Section 4
of this Agreement.
"EXTENSION
PERIOD" shall mean the period
commencing on the date
of this
Agreement
and ending at 5:00
o'clock p.m. on the close of
business on December 31, 2005.
"INSOLVENCY PROCEEDING" shall mean any action, case or proceeding
commenced by or against a Person,
or any
agreement of such Person,
for (a) the entry of an order for
relief
under any
chapter of the
Bankruptcy Code or other
insolvency or debt adjustment law (whether
state,
federal or
foreign);
(b) the
appointment
of a
receiver,
trustee,
liquidator or other
custodial for such Person or any part
of its property; (c) an assignment or trust mortgage for the
benefit
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of creditors of such Person; or (d) the liquidation,
dissolution or
winding up of the affairs of such Person.
"LOAN
DOCUMENTS"
shall mean the Credit
Documents
and the Term
Loan Documents.
"NEW LC" shall mean an original
executed
Irrevocable
Letter of
Credit,
together with a form of Sight Draft, issued by BB&T for the
benefit of Lender, in the form of or under the terms provided in
the
document attached hereto as EXHIBIT A.
"OBLIGATIONS"
shall
mean
all
liabilities,
indebtedness
and
obligations at any time owing by Borrower to Lender,
whether direct
or indirect,
absolute or contingent,
due or to become due, secured
or unsecured or
liquidated
or
unliquidated,
including all of the
Revolver Obligations and all of the Term Loan Obligations.
"OBLIGORS" shall mean Borrower and Guarantor.
"PAID IN FULL" shall mean, with reference to the Obligations, the
full,
final
and
indefeasible
payment
in
full
of all
of
such
Obligations,
the
termination
of all
commitments
and
any
other
obligations
that Lender may have under any of the Credit
Documents
to
extend
or renew
credit,
and the
depositing
with
Lender
by
Borrower of cash in an amount equal to 102% of the aggregate
undrawn
amount of all Letters of Credit outstanding and all other
contingent
obligations at the time due and owing Lender.
"PARTIAL PAYMENT" shall mean a payment by wire transfer from
BB&T
to Lender, for the benefit of (and as an advance to) Borrower, in
an
amount not less than $760,752.17.
"PARTIAL
RELEASE"
shall
mean a
UCC-3
Amendment
in the
form
attached hereto as EXHIBIT B.
"REVOLVER
OBLIGATIONS" shall mean all of the "Obligations" under
(and as defined in) the Credit Agreement.
"STIPULATED DEFAULTS" shall mean the Events of Default referenced
in Section 2(c) of this Agreement.
"TAKE-OUT
FINANCING"
shall mean financing
procured by Borrower
from a third-party financing source in an amount sufficient to
cause
all of the
Obligations
to be Paid in Full at or before
the end of
the Extension Period.
"TERMINATION
DATE"
shall
mean the
sooner to occur of (a) 5:01
o'clock p.m. on the last day of the Extension Period or (b) the
date
on which the Extension Period terminates as provided in Section 5
of
this Agreement.
"TERM LOAN OBLIGATIONS" shall mean all indebtedness,
liabilities
and
obligations at any time owed by Borrower to Lender under any of
the Term Loan Documents.
-3-
(b) The terms
"herein,"
"hereof" and "hereunder" and other words
of similar
import refer to this
Agreement as a whole and not to any particular
section, paragraph or subdivision. Any pronoun used shall be deemed
to cover all
genders.
All references to statutes and related
regulations
shall include any
amendments of same and any
successor
statutes and
regulations;
to any of the
Loan Documents shall include any and all
modifications
thereto and any and all
restatements,
extensions
or
renewals
thereof;
to any Person
shall mean and
include the successors and permitted
assigns of such Person; to "including" and
"include" shall be understood to mean "including,
without limitation" (and, for
purposes of this Agreement and each other Loan Document,
the parties agree that
the
rule of
EJUSDEM
GENERIS
shall
not be
applicable
to
limit
a
general
statement,
which is
followed by or
referable
to an
enumeration
of specific
matters to matters
similar to the matters
specifically
mentioned);
or to the
time of day
shall
mean
the
time of day on the day in
question
in
Atlanta,
Georgia, unless otherwise expressly provided in this Agreement.
2.
ACKNOWLEDGMENTS
AND
STIPULATIONS
BY
OBLIGORS.
Each
Obligor
acknowledges,
stipulates
and agrees
that (a) as of the opening of business on
October 3, 2005, the aggregate
principal balance of Loans
outstanding
totaled
$756,096.50,
the
aggregate
undrawn
amount of Letters
of Credit
outstanding
totaled $281,690,
and the unpaid principal balance of the Term Loan Obligations
totaled $389,405.53, in each case exclusive of interest, fees,
other charges and
attorneys' fees at any time payable by Borrower under any of the
Loan Documents;
(b) all of the Obligations
(other than contingent
obligations
with respect to
the
undrawn
amount of Letters of Credit)
are
absolutely
due and
payable by
Obligors to Lender without any defense,
deduction, offset or counterclaim (and,
to the extent Obligors had any defense, deduction, offset or
counterclaim on the
date hereof, the same is hereby waived); (c) Events of Default have
occurred and
now exist under the Credit
Documents and are continuing by reason of Borrower's
failure
to
cause
the
Obligations
to be Paid in
Full on May 31,
2005,
and
Borrower's
breach of its obligations under Section 8.07 of the Credit
Agreement
(and,
such Event of Default under the Credit
Agreement is also a default under
the Term Note); (d) the Loan Documents executed by Borrower are
legal, valid and
binding
obligations
of
Borrower
and
are
enforceable
against
Borrower
in
accordance with their terms; (e) the security
interests and other liens granted
by Borrower
to Lender in the
Collateral
are duly
perfected,
first
p
