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EXHIBIT 10.7
April 19, 1996
To the Signatories of
This Letter Agreement
Letter Agreement Amending December 22, 1995 Loan and
Security Agreement and Facility Letter Issued Pursuant
Thereto
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The purpose of this letter agreement is to amend that certain Loan and
Security Agreement, dated December 22, 1995 (the "Loan Agreement"), and the
Facility Letter issued pursuant thereto in order to change the definition of
those non-U.S. accounts that cannot qualify as eligible collateral under the
Facility Letter, to extend to the Facility Letter the unused line fee charged
in connection with U.S. commitments under the Loan Agreement, to modify the
terms on which a permanent cash advance will be made by ADI U.K. to Xxxxxxxxxxx
Security, and to provide for reserves against the European Borrowing Base
pending the making of the permanent cash advance. For convenience, capitalized
terms used in this letter agreement and not defined herein are to have the
meanings provided in the Loan Agreement.
For TEN DOLLARS ($10.00) and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, each of the
parties signing this letter agreement hereby agrees as follows:
1. As of the Closing Date, the Facility Letter shall be deemed to
have been amended to include the following new section 7:
7. Unused Line Fee. From and after the Closing
Date, European Borrowers will pay to Lender the
Unused Line Fee monthly in arrears on the first day
of the month following the Closing Date and on the
first day of each month thereafter. For the purposes
of this Section 7, the Unused Line Fee shall be an
amount equal to (i) U.S. $5,000,000 less the Dollar
Equivalent of the average daily balance of the
aggregate of the European Revolver Loans and the
average face amount of any Letters of Credit issued
for the account of the European Borrowers, during the
preceding month, multiplied by (ii)
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three-eights of one percent (0.375%) per annum
(calculated on the basis of a 360-day year for the
actual number of days elapsed).
2. As of the Closing Date, the Facility Letter shall be deemed to
have been amended to modify the definition of "Eligible European
Account" to delete in its entirety subsection (iv) thereof and to
insert therefor the following subsection (iv), reading as follows:
"(iv) it is due for payment more than thirty (30) days after the
original invoice date or it is unpaid more than sixty (60) days after
the original invoice date."
3. As of the Closing Date, the Facility Letter shall be deemed to
have been amended to delete in its entirety the definition of
"European Revolver Borrowing Base" and to insert therefor the
following definition, reading as follows:
"European Revolver Borrowing Base - at any date of
determination thereof, an amount determined by reference to
the latest timely-filed European Borrowing Base Certificate
and equal to:
(1) the lesser of:
(a) the Dollar Equivalent of (i) $5,000,000;
minus (ii) the face amount of any Letters of Credit issued for
the account of the European Borrowers and outstanding at such
date; or
(b) the Dollar Equivalent of (i) seventy-five
percent (75%) (or such lesser percentage as Lender may in its
sole and absolute discretion determine from time to time) of
the net amount of Eligible European Accounts outstanding and
reflected in the most current European Borrowing Base
Certificate; minus (ii) $500,000 (minus the Dollar amount of
any Account excluded from the U.S. Revolver Borrowing Base
pursuant to clause (iv) of paragraph (b) of the definition of
U.S. Revolver Borrowing Base, in the amount so excluded up to
an aggregate of $500,000); minus (iii) an amount equal to
fifteen percent (15%) of the face amount of all Accounts owed
to ADI Germany; and minus (iv) an amount equal to the sum of
(A) any amounts which European Borrowers are obligated to pay
but do not pay when due and which Lender pays pursuant to any
of the Loan Documents for the account of European Borrowers,
(B) the face amount of any Letters of Credit issued for the
account of the European Borrowers outstanding at such date,
and (C) such reserves as Lender in its sole discretion elects
to establish from time to time; minus
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(2) for so long as the Permanent Advance shall not have been
made, the Dollar Equivalent of $1,000,000.
For purposes hereof, the net amount of Eligible European
Accounts at any time shall be the face amount of such Eligible
European Accounts less any and all returns, rebates, discounts
(which may, at Xxxxxx's option, be calculated on shortest
terms), credits, allowances, sales or excise taxes of any
nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such
Accounts at such time."
4. As of the Closing Date, the Facility Letter shall be deemed to
have been amended to modify section 6 to delete in its entirety the
introductory clause of subsection (i) thereof and to insert therefor
the following introductory clause, reading as follows: "Maintain at
all times for European Guarantor and European Borrowers (consolidated
only as to such parties) Adjusted Tangible Net worth during the
fiscal year ending December 31, 1996 of not less than Dollar
Equivalent $800,000 and, during each fiscal year thereafter, of not
less than the sum of...."
5. As of the Closing Date, the Facility Letter shall be deemed to
have been amended to modify section 6 to delete in its entirety
subsection (iv) thereof.
6. As of the Closing Date, the Facility Letter shall be deemed to
have been amended to modify section 6 to delete in its entirety
subsection (v) thereof and to insert therefor the following subsection
(v), reading as follows: "(v) Maintain at all times for European
Guarantor and Subsidiaries an Adjusted Tangible Net Worth (computed on
a consolidated basis) of not less than its Adjusted Tangible Net Worth
as of January 1, 1996."
7. As of the Closing Date, the Loan Agreement shall be deemed to
have been amended to delete in its entirety the definition of
"Permanent Advance" contained in Section 1.1 thereof and to insert
therefor the following definition, reading as follows:
"Permanent Advance - the one million Dollar (U.S.
$1,000,000) cash advance from ADI U.K. to Xxxxxxxxxxx Security
to be made immediately upon the request of Lender or prior to
such request by Xxxxxx, at the discretion of European
Borrowers."
8. As of the Closing Date, the Loan Agreement shall be deemed to
have been amended to modify Section 6.3(B) to delete the first clause
thereof and to insert therefor the following clause, reading as
follows:
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"(B) U.S. Holdings Guarantor (on a consolidated basis) to
maintain at each Fiscal Period-end a ratio of (i) average
Funded Indebtedness for the immediately preceding thirteen
(13) Fiscal Periods (provided that during the fiscal year
ending December 31, 1996, such calculation shall be based upon
the cumulative monthly average for such fiscal year) to (ii)
EBIDAT for the immediately preceding thirteen (13) Fiscal
Periods (provided that during the fiscal year ending December
31, 1996, such calculation shall be based upon the cumulative
monthly average annualized for such fiscal year), of not
greater than the ratio shown below for the period
corresponding thereto:"
9. As of the Closing Date, the Loan Agreement shall be deemed to
have been amended to modify paragraph 5 of the Financial and
Contingency Schedule thereto to delete subparagraph (e) thereof in its
entirety and to insert therefor the following subparagraph (e),
reading as follows: "(e) Outstanding Loan to Xxxxxxxxxxx Investments,
Inc., having an outstanding principal balance of $7,740."
10. Except for the changes specifically made by this letter
agreement, all of the terms of the Loan Agreement, the Facility Letter
and the Loan Documents shall remain in full force and effect. Without
limiting the generality of the foregoing, Lender hereby confirms that
throughout the term of the Loan Agreement that its customary practice
for applying checks or items deposited in a Controlled Disbursement
Account at Bank shall continue to be that such checks or items, upon
deposit in the Controlled Disbursement Account, shall work an
immediate reduction in the Obligations in the amount of such checks or
items (subject to reversal if returned or not finally collected) and
such checks or items shall be deemed for the purpose of interest
calculation only to have been received (subject to reversal if
returned or not finally collected) on the first Business Day after
deposit of such checks or items in the Controlled Disbursement
Account.
This letter agreement, together with the Loan Agreement (as modified
by this letter agreement), the Loan Documents and the agreements related
thereto, reflects the entire understanding of the parties with respect to the
subject matter contained herein and supersedes any prior agreements, whether
written or oral.
This letter agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which, when
so executed
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and delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument.
Yours very truly,
FIRST UNION COMMERCIAL
CORPORATION
By: /s/
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IN WITNESS WHEREOF, the parties hereto, by and through their duly
authorized officers, have executed this Agreement under seal as of the day and
year first above written.
XXXXXXXXXXX SECURITY, INC.
By: /s/
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Its:
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XXXXXXXXXXX, INC.
By: /s/
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Its:
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ADI U.K. LIMITED
By: /s/
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Its:
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AVIATION DEFENCE INTERNATIONAL
GERMANY LIMITED
By: /s/
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Its:
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XXXXXXXXXXX HOLDINGS LIMITED
By: /s/
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Its:
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THE ADI GROUP LIMITED
By: /s/
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Its:
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