LGL GROUP INC — Capital/Financing Update 2005

Oct 11, 2005

8-K 1 form8k03725_10102005.htm sec document UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 6, 2005 --------------- LYNCH CORPORATION -------------------------------------------------------------------------------- (Exact Name of Registrant as specified in Charter) Indiana 1-106 38-1799862 -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 140 Greenwich Avenue, 4Th Floor, Greenwich, CT 06830 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (203) 622-1150 -------------- -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below): || Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) || Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) || Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) || Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. LOAN AGREEMENT WITH BRANCH BANKING AND TRUST COMPANY. On September 29, 2005, effective October 6, 2005, Lynch Systems, Inc. ("Lynch Systems") a wholly-owned subsidiary of Lynch Corporation (the "Registrant"), entered into a loan agreement (the "Loan Agreement") with Branch Banking and Trust Company ("BB&T"), which is filed as Exhibit 10.1 to this Current Report on Form 8-K. The Loan Agreement provides for a line of credit in the maximum principal amount of $3,500,000. This line of credit replaces the working capital revolving loan that Lynch Systems had with SunTrust Bank, which loan expired by its terms on September 30, 2005. Borrowings under the Loan Agreement bear interest at the One Month LIBOR Rate plus 2.75% and accrued interest is payable on a monthly basis, with the principal balance due to be paid on the first anniversary of the Loan Agreement. Borrowings under the Loan Agreement are secured by liens on accounts receivable and inventory. The Loan Agreement contains a variety of affirmative and negative covenants of types customary in an asset-based lending facility, including those relating to reporting requirements, maintenance of records, properties and corporate existence, compliance with laws, incurrence of other indebtedness and liens, restrictions on certain payments and transactions and extraordinary corporate events. The Loan Agreement also contains financial covenants relating to maintenance of levels of minimal tangible net worth, a debt to worth ratio, and restricting the amount of capital expenditures. In addition, the Loan Agreement provides that the following will constitute events of default thereunder, subject to certain grace periods: (i) payment defaults; (ii) failure to meet reporting requirements; (iii) breach of other obligations under the Loan Agreement; (iv) default with respect to other material indebtedness; (v) final judgment for a material amount not discharged or stayed; and (vi) bankruptcy or insolvency. Pursuant to a Guaranty Agreement, filed as Exhibit 10.2 to this Current Report on Form 8-K, the Registrant guaranteed to BB&T the payment and performance of the obligations of Lynch Systems under the Loan Agreement and ancillary agreements and instruments. EXTENSION AGREEMENT WITH SUNTRUST BANK On October 6, 2005, Lynch Systems entered into an Extension Agreement by and among Lynch Systems, the Registrant and SunTrust Bank ("SunTrust"), to extend until December 31, 2005 the due date of all remaining indebtedness of Lynch Systems to SunTrust. After giving effect to the refinancing described in the previous paragraph, such indebtedness aggregated $389,406, which represents the unpaid principal balance under the term loan. The Extension Agreement is filed as Exhibit 10.3 to this Current Report on Form 8-K. Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits NUMBER EXHIBIT 10.1 Loan Agreement, by and among Lynch Corporation, Lynch Systems and BB&T, dated September 29, 2005, effective October 6, 2005. 10.2 Guaranty Agreement for Payment and Performance by and between Lynch Corporation and BB&T, dated September 29, 2005, effective October 6, 2005. 10.3 Extension Agreement by and among Lynch Corporation, Lynch Systems and BB&T, dated October 6, 2005. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized. LYNCH CORPORATION By: /s/ Eugene Hynes -------------------------------- Eugene Hynes Vice President October 11, 2005