**Exhibit10.50**

 

 

SECOND AMENDMENT TOREVOLVING CREDIT AND TERM LOAN AGREEMENT

 

 

This SecondAmendment to Revolving Credit and Term Loan Agreement (the “Amendment”) is madeas of the      th day of March, 2002 byand among

 

MFICCorporation  (the “Borrower”), aDelaware corporation with its principal executive offices at 30 Ossipee Road,Newton, Massachusetts 02464; and

 

PNC Bank, N.A., anational banking association (the “Lender”) with a place of business at 70 East55th Street, 14th floor, New York,  New York 10022;

 

 

in consideration of themutual covenants herein contained and benefits to be derived herefrom.

 

 

W I T N E S S E TH:

 

WHEREAS, theBorrower and National Bank of Canada (“NBC”) entered into a certain RevolvingCredit and Term Loan Agreement dated as of February 28, 2000 (as amended ineffect,  the “Loan Agreement”); and

 

WHEREAS,  NBC has assigned all of its right, title andinterest in and to the Loan Agreement and the documents, instruments andagreements executed and delivered in connection therewith to the Lender; and

 

WHEREAS,  certain Events of Default have occurredunder the Loan Agreement, and the Borrower has requested that the Lender waivesuch Events of Default and otherwise modify and amend certain provisions of theLoan Agreement; and

 

WHEREAS, theLender has agreed to waive such Events of Default and otherwise modify andamend certain provisions of the Loan Agreement on the terms and  conditions set forth herein.

 

NOW, THEREFORE, itis hereby agreed as follows:

 

# 1.                                       Definitions.

 

## (a)                                  All capitalized terms used herein and nototherwise defined shall have the same meanings herein as in the Loan Agreement.

 

## (b)                                 Section 1 of the Loan Agreement is herebyamended by inserting the following definition therein:

 

“**ConsolidatedPre-Tax Net Income (or Deficit**).  With respect to any fiscal period, the consolidated net income(or deficit) of the Borrower and its Subsidiaries, after deduction of all ex­pensesand other proper charges, but prior to the deduction of all taxes, determinedin accor­dance with Generally Accepted Accounting Principles.”

 

“**ImpairmentCharge**. The amount to be determined by the Borrower which shallnot be less than $2,200,000.00 and not greater than $2,700,000.00, whichconstitutes the loss recognized by the Borrower as a result of  the adjustment by the Borrower of thecarrying amount of 

 

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goodwill to itsnew accounting basis, which impairment charge shall be taken by the Borrowerone-time and no later than the end of the Borrower’s second quarter of fiscalyear 2002.”

 

“**ApplicableProfit Margin**” means, for any fiscal quarter of theBorrower,  that amount equal to fiftypercent (50%) of the Borrower’s Consolidated Net Income (but in no event lessthan zero (0) dollars) for such fiscal quarter.”

 

# 2.                                       Waiver of Event of Default. The Borrower has advised the Lenderthat the Borrower is in default of (w) the Consolidated Tangible Net WorthCovenant set forth in Section 8.1 of the Loan Agreement for the Borrower’sfiscal quarter ending December 31, 2001, (x) the Liabilities to Worth(Leverage) Ratio set forth in Section 8.2 of the Loan Agreement for theBorrower’s fiscal quarter ending December 31, 2001, (y) the Consolidated NetIncome Covenant set forth in Section 8.3 of the Loan Agreement  for the Borrower’s fiscal quarter endingDecember 31, 2001, and (z) the Minimum Debt Service Covenant set forth inSection 8.4 of the Loan Agreement for the Borrower’s fiscal quarter endingDecember 31, 2001.  The Borrower hasrequested that the Lender waive the Events of Default which have arisen byvirtue of the Borrower’s failure to have complied with the foregoing covenantsas of  December 31, 2001.  The Lender is willing to, and does hereby,waive the Events of Default occasioned thereby as of December 31,  2001, subject to the following:

 

## (a)                                  The waiver of the Borrower’s compliancewith (w) the Consolidated Tangible Net Worth Covenant set forth in Section 8.1of the Loan Agreement for the Borrower’s fiscal quarter ending December 31,2001, (x) the Liabilities to Worth (Leverage) Ratio set forth in Section 8.2 ofthe Loan Agreement for the Borrower’s fiscal quarter ending December 31, 2001,(y) the Consolidated Net Income Covenant set forth in Section 8.3 of the LoanAgreement  for the Borrower’s fiscalquarter ending December 31, 2001, and (z) the Minimum Debt Service Covenant setforth in Section 8.4 of the Loan Agreement for the Borrower’s fiscal quarterending December 31, 2001 are a one-time waiver, and shall not be deemed toconstitute a waiver of those covenants with respect to any other fiscal periodsof the Borrower.  Further, nothingcontained herein shall be deemed to constitute a waiver of any other Event ofDefault which may exist as of the date hereof.

 

## (b)                                 The payment by the Borrower of a waiverfee in the amount of $5,000.00 (the “Waiver Fee”).  The Waiver Feeshall be fully earned as of the date hereof and is non-refundable and shall notbe applied by the Lender in reduction of the Liabilities.

 

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# 3.                                       Amendments to Section 8.

 

## (a)                                  Section 8.1 of the Loan Agreement(Consolidated Tangible Net Worth)  ishereby amended by deleting the following portion of the table therefrom:

 

| **Fiscal  2002** |
|------------------|
| **Quarter End**  |   | **$ Amount** |
| 3/31/02          |   | 3,500,000 |
| 6/30/02          |   | 3,600,000 |
| 9/30/02          |   | 3,700,000 |
| 12/31/02         |   | 3,950,000 |

 

and substitutingthe following table in its stead:

 

 

| **Fiscal  2002** |
|------------------|
| **Quarter End**  |   | **$ Amount** |
| 3/31/02          |   | $1,900,000 plus the  Applicable Profit Margin |
| 6/30/02          |   | the required  Consolidated Tangible Net Worth for the previous quarter plus the Applicable Profit  Margin. |
| 9/30/02          |   | the required  Consolidated Tangible Net Worth for the previous quarter plus the Applicable  Profit Margin. |
| 12/31/02         |   | the required  Consolidated Tangible Net Worth for the previous quarter plus the Applicable  Profit Margin. |

 

TheBorrower and the Lender acknowledge and agree that the foregoing covenant shallbe calculated exclusive of the Impairment Charge for the fiscal quarter inwhich the Borrower recognizes the Impairment Charge.

 

 

## (b)                                 Section 8.2 of the Loan Agreement(Liabilities to Worth (Leverage) Ratio) is hereby amended by deleting the table therefrom and substituting thefollowing  in its stead:

 

“§8.2  Intentionally Omitted”

 

## (c)                                  Section 8.3 of the Loan Agreement(Consolidated Net Income) is hereby deleted in its entirety, and the followingsubstituted in its stead:

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§8.3  Consolidated Pre-Tax Net Income. Asof December 31, 2002, the Borrower shall achieve the aggregate of (x)Consolidated Pre-Tax Net Income (or Deficit) plus (y) the Impairment Charge, inan amount of not less than $500,000.00.

 

## (d)                                 Section 8.4 of the Loan Agreement(Minimum Debt Service)  is herebyamended by deleting the following portion of table therefrom

 

   

| **Fiscal  2002** |
|------------------|
| **Quarter End**  |   | **Ratio** |
| 3/31/02          |   | 1.75 : 1.0 |
| 6/30/02          |   | 1.75 : 1.0 |
| 9/30/02          |   | 1.75 : 1.0 |
| 12/31/02         |   | 2.00 : 1.0 |

 

and substitutingthe following table in its stead:

 

| **Fiscal  2002** |
|------------------|
| **Quarter End**  |   | **Ratio** |
| 3/31/02          |   | 1.50 : 1.0 |
| 6/30/02          |   | 1.50 : 1.0 |
| 9/30/02          |   | 1.50 : 1.0 |
| 12/31/02         |   | 1.50 : 1.0 |

 

TheBorrower and the Lender acknowledge and agree that the foregoing covenant shallbe calculated exclusive of the Impairment Charge for the fiscal quarter inwhich the Borrower recognizes the Impairment Charge.

 

## (e)                                  Section 8.5 of the Loan Agreement(Maximum Capital Expenditures) is hereby amended by deleting the followingthere from:

 

“$200,000.00”

 

and substitutingthe following in its stead:

 

“$250,000.00”

 

# 4.                                       Conditions to Effectiveness. This Amendment shall not be effective until each of the followingconditions precedent have been fulfilled to the satisfaction of the Lender:

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## (a)                                  This Amendment shall have been dulyexecuted and delivered by the respective parties hereto and, shall be in fullforce and effect and shall be in form and substance satisfactory to the Lender.

 

## (b)                                 All action on the part of the Borrowernecessary for the valid execution, delivery and performance by the Borrower ofthis Amendment shall have been duly and effectively taken and evidence thereofsatisfactory to the Lender shall have been provided to the Lender. The Lendershall have received from the Borrower true copies of the resolutions adopted byits board of directors authorizing the transactions described herein, certifiedby the Borrower’s secretary to be true and complete.

 

## (c)                                  The Borrower shall have paid the WaiverFee.

 

## (d)                                 The Borrower shall have paid to theLender all fees and expenses then due and owing pursuant to the Agreement,including, without limitation, the Lender’s attorneys’ fees and expenses.

 

## (e)                                  No Default or Event of Default shall haveoccurred and be continuing.

 

## (f)                                    The Borrower shall have provided suchadditional instruments and documents to the Lender as the Lender and theLender’s counsel may have reasonably requested.

 

# 5.                                       Ratification of Loan Documents. Except as provided herein, all terms and conditions of the LoanAgreement and the other Loan Documents remain in full force and effect.  The Borrower hereby ratifies, confirms, andreaffirms all representations, warranties, and covenants contained therein andacknowledges and agrees that the Liabilities, are and continue to be secured bythe Collateral.  The Borrower furtheracknowledges and agrees that Borrower does not have any offsets, defenses, orcounterclaims against the Lender thereunder, and to the extent that any suchoffsets, defenses, or counterclaims may exist, the Borrower hereby waives andreleases the Lender therefrom.

 

# 6.                                       Miscellaneous.

 

## (a)                                  This Amendment may be executed in severalcounterparts and by each party on a separate counterpart, each of which when soexecuted and delivered shall be an original, and all of which together shallconstitute one instrument.

 

## (b)                                 This Amendment expresses the entireunderstanding of the parties with respect to the transactions contemplatedhereby.  No prior negotiations ordiscussions shall limit, modify, or otherwise affect the provisions hereof.

 

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IN WITNESSWHEREOF, the undersigned have hereunto executed this Amendment as a sealedinstrument as of the date first above written.

 
|   | MFIC CORPORATION |
|--------|------------------|
|   |             |
| By:    |             |
|   | Name:            |
|   | Title:           |
|   |             |
|   | PNC BANK, N.A.   |
|   |             |
| By:    |             |
|   | Name:            |
|   | Title:           |

 

 

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