Execution Version

 

AMENDMENT NO. 1 TO CREDIT AND GUARANTY AGREEMENT

 

This AMENDMENT NO. 1 TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”), dated
as of May 24, 2012, is entered into by and among AEROFLEX INCORPORATED, a
Delaware corporation (the “Borrower”), AEROFLEX HOLDING CORP. (“Holdings”),
certain Subsidiaries of the Borrower as Guarantors (the “Guarantors”) thereto,
the Lenders party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent
(the “Administrative Agent”).

 

RECITALS:

 

A.           The Borrower, Holdings, the Guarantors, the Lenders and the
Administrative Agent, have heretofore entered into that certain Credit and
Guaranty Agreement dated as of May 9, 2011 (the “Credit Agreement”). Capitalized
terms used herein without definition have the meanings given such terms in the
Credit Agreement.

 

B.           The Borrower has requested that the Credit Agreement be amended as
described herein.

 

C.           Section 10.5(a) of the Credit Agreement provides that the Credit
Agreement and the other Credit Documents may be amended with the consent of the
Credit Parties, the Requisite Lenders and the Administrative Agent.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1   Amendment. Effective as of the Amendment No. 1 Effective Date (as
defined below) the Credit Agreement is hereby amended as follows:

 

(a)          The definition of “Applicable Margin” in the Credit Agreement is
hereby deleted in its entirety and replaced with the following:

 

“Applicable Margin” means for Tranche B Term Loans, Revolving Loans and Swing
Line Loans a percentage per annum equal to (i) until delivery of financial
statements and a related Compliance Certificate for the first fiscal quarter
ending after the Amendment No. 1 Effective Date pursuant to Section 5.1(d), (A)
for Eurodollar Rate Loans 4.50% and (B) for Base Rate Loans 3.50% and (ii)
thereafter, the percentages per annum set forth in the table below, based upon
the Total Leverage Ratio as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 5.1(c):

 

Amendment No. 1 to Credit Agreement

 

 

 

 

Pricing
Level  Total
Leverage Ratio  Base Rate for
Tranche B Term
Loans and 
Revolving Loans
(including Swing
Line Loans)   Eurodollar Rate for
Tranche B Term
Loans and
Revolving
Loans  I  ≥ 4.00   3.50%   4.50% II  < 4.00   3.25%   4.25%

 

No change in the Applicable Margin shall be effective until one Business Day
after the date on which Administrative Agent shall have received the applicable
financial statements and a Compliance Certificate pursuant to Section 5.1(c)
calculating the Total Leverage Ratio. At any time Borrower has not submitted to
Administrative Agent the applicable information as and when required under
Section 5.1(c), the Applicable Margin with respect to the Tranche B Term Loans
and Revolving Loans shall be determined as if the Total Leverage Ratio were in
excess of 4.00:1.00. Within one Business Day of receipt of the applicable
information under Section 5.1(c), Administrative Agent shall give each Lender
notice of the Applicable Margin in effect from such date. In the event that any
financial statement or certificate delivered pursuant to Section 5.1 is shown to
be inaccurate (at a time when this Agreement is in effect and unpaid Obligations
under this Agreement are outstanding (other than indemnities and other
contingent obligations not yet due and payable)), and such inaccuracy, if
corrected, would have led to the application of a higher Applicable Margin for
any period (an “Applicable Period”) than the Applicable Margin applied for such
Applicable Period, then (i) Borrower shall immediately deliver to Administrative
Agent a correct certificate required by Section 5.1 for such Applicable Period,
(ii) the Applicable Margin shall be determined using the applicable Total
Leverage Ratio calculated in such correct certificate delivered pursuant to
clause (i) above and (iii) Borrower shall immediately pay to Administrative
Agent the accrued additional interest owing as a result of such increased
Applicable Margin for such Applicable Period. Nothing in this paragraph shall
limit the right of Administrative Agent or any Lender under Section 2.10 or
Section 8.

 

(b)          The definition of “Mortgage Property” in the Credit Agreement is
hereby deleted in its entirety and replaced with the following:

 

“Mortgaged Property” shall mean (a) each Material Real Estate Asset identified
as a Mortgaged Property on Schedule 5.11 and (b) each Material Real Estate
Asset, if any, which shall be subject to a Mortgage delivered after the Closing
Date pursuant to Section 5.11.”

 

(c)          Section 2.13(c) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

 

Amendment No. 1 to Credit Agreement

 

 

 

 

“(c)          In the event that the Tranche B Term Loans are repaid in whole or
in part pursuant to Section 2.13(a) on or after the Amendment No. 1 Effective
Date but on or prior to the first anniversary of the Amendment No. 1 Effective
Date with the proceeds of other loans with a Yield that is lower than the Yield
of the Tranche B Term Loan, Borrower shall pay to each Tranche B Term Loan
Lender a prepayment premium of 1.00% of the amount of such Lender’s Tranche B
Term Loan so repaid.”

 

(d)          The table set forth in Section 2.14(d) of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:

 

 

Senior Secured Leverage Ratio  Prepayment %  >4.00:1.00   75%       

< 4.00:1.00

> 3.25:1.00

   50%       

< 3.25:1.00

> 2.75:1.00

   25%        < 2.75:1.00   0%

 

 

(e)          Clause 1(D) of the first proviso in Section 2.23 of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:

 

“(D) if such removal is in connection with a reduction in the interest rates or
fees payable with respect to the Tranche B Term Loans prior to the first
anniversary of the Amendment No. 1 Effective Date, a fee equal to 1% of the
principal amount of such Terminated Lender’s Tranche B Term Loan;”

 

(f)          Section 6.7 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

 

Section 6.7           Maximum Total Leverage Ratio.Holdings shall not permit the
Total Leverage Ratio as of the last day of any Fiscal Quarter, beginning with
the Fiscal Quarter ending June 30, 2012, to exceed the correlative ratio
indicated:

 

Fiscal Quarter   Total Leverage Ratio   June 30, 2012   5.75:1.00   September
30, 2012   5.75:1.00   December 31, 2012   5.75:1.00   March 31, 2013  
5.50:1.00   June 30, 2013   5.50:1.00   September 30, 2013   5.25:1.00  
December 31, 2013   5.25:1.00   March 31, 2014   5.00:1.00   June 30, 2014  
4.50:1.00   September 30, 2014   4.00:1.00   December 31, 2014   3.75:1.00  
March 31, 2015 and each Fiscal Quarter thereafter   3.50:1.00  

 

Amendment No. 1 to Credit Agreement

 

 

 

 

SECTION 2   Conditions Precedent to the Effectiveness of this Amendment. This
Amendment shall become effective upon the date of the satisfaction of all of the
conditions set forth in this Section 2 (the “Amendment No. 1 Effective Date”),
with any documents delivered to the Administrative Agent dated the Amendment No.
1 Effective Date unless otherwise noted:

 

2.1.          Execution of Amendment. The Administrative Agent shall have
received this Amendment, duly executed and delivered by each of the Credit
Parties, the Lenders constituting the Requisite Lenders and the Administrative
Agent.

 

2.2.          Fees and Expenses.

 

(a)          As consideration for the execution of this Amendment (and provided
that all of the other conditions set forth in this Section 2 are satisfied), the
Borrower agrees to pay to the Administrative Agent for the account of each
Lender for which the Administrative Agent shall have received (by facsimile or
otherwise) an executed Amendment by 2:30 p.m. New York time on May 22, 2012, a
consent fee equal to 0.25% of (i) with respect to each Term Loan Lender, such
Term Loan Lender’s outstanding Term Loans as of the Amendment No. 1 Effective
Date and (ii) with respect to each Revolving Lender, such Revolving Lender’s
Revolving Commitments in effect as of the Amendment No. 1 Effective Date;
provided, that each Lender executing this Amendment acknowledges and consents to
the payment of such consent fee to the Administrative Agent for the benefit of
such Lender.

 

(b)          The Borrower shall have paid to J.P. Morgan Securities LLC all fees
and expense reimbursement required to be paid to them on the Amendment No. 1
Effective Date as separately agreed in writing by the Borrower and J.P. Morgan
Securities LLC.

 

2.3.          Officer’s Certificate. The Administrative Agent shall have
received a certificate, dated the Amendment No. 1 Effective Date and signed by
an Authorized Officer on behalf of the Borrower, confirming that the
representations and warranties contained in Section 3 hereof are true and
correct as of the Amendment No. 1 Effective Date.

 

SECTION 3   Representations and Warranties. On and as of the Amendment No. 1
Effective Date, after giving effect to this Amendment, each Credit Party hereby
represents and warrants to each Lender as follows:

 

Amendment No. 1 to Credit Agreement

 

 

 

 

(a)            This Amendment has been duly authorized, executed and delivered
by each Credit Party and constitutes a legal, valid and binding obligation of
each Credit Party enforceable against each Credit Party, as applicable, in
accordance with its terms, and the Credit Agreement after giving effect to this
Amendment constitutes the legal, valid and binding obligation of each Credit
Party, enforceable against each Credit Party, in accordance with its terms (in
each case, except to the extent that the enforceability hereof or thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors’ rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law));

 

(b)            the representations and warranties contained in the Credit
Agreement and in the other Credit Documents shall be true and correct in all
material respects on and as of the date hereof to the same extent as though made
on and as of that date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such earlier date; and

 

(c)            no Default or Event of Default has occurred and is continuing.

 

SECTION 4   References to and Effect on the Credit Agreement.

 

4.1.          This Amendment shall constitute a Credit Document. On and after
the Amendment No. 1 Effective Date, each reference to the Credit Agreement in
the Credit Documents delivered in connection with the Credit Agreement shall
mean and be a reference to the Credit Agreement as amended hereby.

 

4.2.          Except as specifically amended above, the other Credit Documents
shall remain in full force and effect and are hereby ratified and confirmed by
each Credit Party after giving effect to this Amendment.

 

4.3.          The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Lenders or the Administrative Agent under the Credit
Agreement, the Credit Documents or the Ancillary Documents.

 

SECTION 5 Post-Closing Covenant. Within sixty (60) days after the Amendment No.
1 Effective Date, unless extended in writing by the Collateral Agent in its sole
discretion, with respect to the Mortgaged Property, the Borrower shall deliver,
or shall cause the applicable Credit Party to deliver, to the Collateral Agent
the following:

 

(a)          with respect to each existing Mortgage, (i) a title search
demonstrating that such applicable Mortgaged Property is free and clear of all
Liens except for Permitted Liens and (ii) if a Mortgage Amendment is required, a
modification endorsement to the existing Mortgage Policy which shall be in form
and substance reasonably satisfactory to the Collateral Agent;

 

(b)          with respect to each Mortgaged Property, such affidavits,
certificates, information and instruments of indemnification as shall be
required to induce the title insurance company to issue the title search and the
endorsement to the Mortgage Policy contemplated in subparagraph (a) of this
Section 5 and evidence of payment of all applicable title insurance premiums,
search and examination charges, mortgage recording taxes and related charges
required for the issuance of the title search and the endorsement to the
Mortgage Policy contemplated in subparagraph (a) of this Section 5; and either:

 

Amendment No. 1 to Credit Agreement

 

 

 

  

(1)         written confirmation, in form and substance reasonably satisfactory
to the Collateral Agent, from local counsel in the jurisdiction in which the
Mortgaged Property is located substantially to the effect that:

 

(A)         the recording of the existing Mortgage is the only filing or
recording necessary to give constructive notice to third parties of the lien
created by such Mortgage as security for the Obligations, including the
Obligations evidenced by the Credit Agreement, as amended pursuant to this
Amendment, and the other documents executed in connection therewith, for the
benefit of the Secured Parties; and

 

(B)         no other documents, instruments, filings, recordings, re-recordings,
re-filings or other actions, including, without limitation, the payment of any
mortgage recording taxes or similar taxes, are necessary or appropriate under
applicable law in order to maintain the continued enforceability, validity or
priority of the lien created by such Mortgage as security for the Obligations,
including the Obligations evidenced by the Credit Agreement, as amended pursuant
to this Amendment, and the other documents executed in connection therewith, for
the benefit of the Secured Parties; or

 

(2)         such other documentation with respect to the Mortgaged Property, in
each case in form and substance reasonably acceptable to the Collateral Agent,
as shall confirm the enforceability, validity and perfection of the lien in
favor of the Secured Parties, including, without limitation:

 

(A)         an executed amendment to the existing Mortgage (the “Mortgage
Amendment” and the existing Mortgage, as amended by such Mortgage Amendment, if
any, a “Mortgage”); and

 

(B)         evidence of payment by the Borrower of all search and examination
charges, escrow charges and related charges, mortgage recording taxes, fees,
charges, costs and expenses required for the recording of the Mortgage Amendment
referred to above.

 

SECTION 6           Miscellaneous.

 

6.1.          Execution in Counterparts. This Amendment may be executed in one
or more counterparts, each of which, when executed and delivered, shall be
deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same document with the same force and effect as if
the signatures of all of the parties were on a single counterpart, and it shall
not be necessary in making proof of this Amendment to produce more than one (1)
such counterpart. Delivery of an executed signature page to this Amendment by
telecopy or electronic (pdf) transmission shall be deemed to constitute delivery
of an originally executed signature page hereto.

 

Amendment No. 1 to Credit Agreement

 

 

 

 

 

6.2.          Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES THEREOF.

 

6.3.          Headings. Headings used in this Amendment are for convenience of
reference only and shall not affect the construction of this Amendment.

 

6.4.          Integration. This Amendment, the other agreements and documents
executed and delivered pursuant to this Amendment and the Credit Agreement
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof.

 

6.5.          Binding Effect. This Amendment shall be binding upon and inure to
the benefit of and be enforceable by each Credit Party and the Administrative
Agent and the Lenders and their respective successors and assigns. Except as
expressly set forth to the contrary herein, this Amendment shall not be
construed so as to confer any right or benefit upon any Person other than each
Credit Party, the Administrative Agent and the Lenders and their respective
successors and permitted assigns.

 

6.6.          Consent to Jurisdiction; Waiver of Jury Trial.

 

The provisions of Section 10.15 and Section 10.16 of the Credit Agreement shall
apply to the Lenders, the Administrative Agent and the Credit Parties with
respect to this Amendment to the same extent as such Sections are applicable to
the Credit Agreement.

 

[Signature Page Follows]

 

Amendment No. 1 to Credit Agreement

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

  AEROFLEX HOLDING CORP.       By: /s/ John Adamovich   Name:  John Adamovich  
Title:  Senior Vice President and   Chief Financial Officer          AEROFLEX
INCORPORATED       By: /s/ John Adamovich     Name:  John Adamovich     Title:
Senior Vice President and       Chief Financial Officer         AEROFLEX /
INMET, INC.         By: /s/ John Adamovich     Name: John Adamovich     Title:
Vice President

 

Amendment No. 1 to Credit Agreement

 

 

 

  AEROFLEX PLAINVIEW, INC.,   AEROFLEX COLORADO SPRINGS, INC.,   AEROFLEX
SYSTEMS GROUP INC.,   AEROFLEX WICHITA, INC.,   IFR SYSTEMS, INC.,   IFR
FINANCE, INC.,   AEROFLEX MICROELECTRONIC SOLUTIONS, INC.,   AEROFLEX CONTROL
COMPONENTS, INC.,   AEROFLEX / METELICS, INC.,   AEROFLEX / WEINSCHEL, INC.,  
AEROFLEX BLOOMINGDALE, INC.,   MCE ASIA, INC.,   AIF CORP.,   AEROFLEX RAD,
INC.,   AEROFLEX ACQUISITION ONE, INC.,   AEROFLEX ACQUISITION TWO, INC.,  
AEROFLEX ACQUISITION THREE, INC.,

 

  By: /s/ John Adamovich     Name:  John Adamovich     Title:    Vice President

 

Amendment No. 1 to Credit Agreement

 

 

 

 

  JPMORGAN CHASE BANK, N.A.,   as Administrative Agent         By: /s/ Justin B.
Kelley   Name: Justin B. Kelley   Title:  Vice President 

 

Amendment No. 1 to Credit Agreement