EXHIBIT 10.6
Amendment to Loan and Security Agreement dated June 29, 2001
THIS MODIFICATION AGREEMENT, dated as of June 29, 2001 by and between
BUSINESS ALLIANCE CAPITAL CORP., a Delaware Corporation, with a place of
business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, hereinafter
called "BACC," and K-TRONIK INT'L CORPORATION a Nevada corporation, with
its chief executive office at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, hereinafter called "Borrower."
RECITALS
WHEREAS, BACC and Borrower entered into a Loan and Security
Agreement dated as of September 17, 1998 as heretofore modified (the
"Loan Agreement") which sets forth the terms and conditions of a
$1,500,000.00 revolving loan facility by BACC to Borrower; and
WHEREAS, Borrower has applied to BACC for an extension to June 30,
2002 of the term of said revolving credit facility, and for other
modifications to the terms set forth in the Loan Agreement; and
WHEREAS, BACC has approved the application of the Borrower on the
terms and condition set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto adopt the above recitals and
agree as follows:
1. Capitalized terms not defined herein but defined in the Loan
Agreement shall have the same meanings ascribed to such terms in the
Loan Agreement.
2. The definition of Termination Date in section 1.1 of the Loan
Agreement is hereby modified to read as follows:
Termination Date means (a) June 30, 2002 unless such date is
extended pursuant to section 3.1 hereof, and if so extended on one or
more occasions the last date of the last such extension, or (b) if
earlier terminated by BACC pursuant to section 9.1 hereof, the date of
such termination.
3. Sections 2.1(A), 2.8, 3.1 and 3.2 of the Loan Agreement are hereby
modified to read as follows:
2.1 (A) Revolving Advances; Advance Limit. (A) Revolving
Loans. Upon the request of Borrower, made at any time or from time to
time during the Term and so long as no Event of Default has occurred and
is continuing, BACC may, in its sole and absolute discretion, make
Advances in an amount up to (a) (i) eighty percent (80%) of the aggregate
outstanding amount of Eligible Accounts or (ii) eighty five percent (85%)
of the aggregate outstanding amount of Eligible Accounts if Borrower has
in place credit insurance, which BACC in writing deems satisfactory,
covering Borrower's Accounts and BACC is the beneficiary of the
applicable credit insurance policies, plus (b) the lesser of (1) twenty
five percent (25%) of the value of the Eligible Inventory or (2) Two
Hundred Fifty Thousand Dollars ($250,000.00); provided, however, that (a)
in no event shall the aggregate amount of the outstanding Advances be
greater than, at any time, the amount of One Million Five Hundred
Thousand Dollars ($1,500,000.00) (the Advance Limit) and provided further
that (b) the maximum amount of Advances against Eligible Inventory shall
not exceed twenty five percent (25%) of the total Advances.
2.8 Servicing Fee. Borrower shall pay BACC a fee in an
amount equal to one half of one percent (.5%) of the daily average
outstanding balance of the Advances during each month on or before the
first (1st) day of each calendar month in respect of BACC's services for
the preceding calendar month, during the Term, including each Renewal
Term, or so long as the Obligations are outstanding. Notwithstanding
anything to the contrary contained in the Loan Documents, the Servicing
Fee shall be based on a minimum daily average outstanding balance of
Advances of Two Hundred Thousand Dollars ($200,000.00).
3. TERM
3.1 Term and Renewal Date. This Agreement shall become
effective upon execution by BACC and continue in full force through June
30, 2002 and from year to year thereafter (a "Renewal Term") if BACC, at
its option, in writing agrees to extend the term for one (1) year from
the then Termination Date, provided that Borrower has not exercised its
termination right in accordance with this section 3.1. Borrower may
terminate the Term on the then Termination Date by giving BACC at least
thirty (30) days prior written notice by registered or certified mail,
return receipt requested. In addition, BACC shall have the right to
terminate this Agreement immediately at any time upon the occurrence of
an Event of Default. No such termination shall relieve or discharge
Borrower of its duties, Obligations and covenants hereunder until all
Obligations have been paid and performed in full, and BACC's continuing
security interest in the Collateral shall remain in effect until the
Obligations have been fully and irrevocably paid and satisfied in cash
or cash equivalent. On the Termination Date of this Agreement, the
Obligations shall be immediately due and payable in full.
3.2 Early Termination Fee. If the Term is terminated by
BACC upon the occurrence of an Event of Default, or is terminated by
Borrower except as provided in Section 3.1, in view of the
impracticability and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of
BACC's lost profits as a result thereof, Borrower shall pay BACC upon
the effective date of such termination a fee in an amount equal to four
percent (4.0%) of the Advance Limit if such termination occurs on or
prior the expiration of the Termination Date. Such fee shall be
presumed to be the amount of damages sustained by BACC as the result of
an early termination and Borrower acknowledges that it is reasonable
under the circumstances currently existing. The fee provided for in
this Section 3.2 shall be deemed included in the Obligations.
Notwithstanding the foregoing, there shall be no termination fee if
Borrower terminates the facility from funds obtained through a public
offering as to Borrower or its parent corporation Eiger Technology, Inc.
(formerly known as Alexa Ventures, Inc.). Notwithstanding the foregoing
if after the date hereof Borrower obtains a bonafide commitment or offer
of a commitment from a commercial bank (which shall not include a
commercial finance company owned by a commercial bank) for replacement
financing of the revolving credit facility provided for herein, Borrower
shall apply to BACC for financing on the same terms and conditions of
said commitment or offer and shall furnish to BACC a copy thereof (the
"Offer"). BACC shall have twenty (20) days within which to accept or
decline said application. If BACC declines said application, Borrower
may consummate the financing with the third party who made the Offer on
the same terms as set forth in said Offer and terminate the Term without
payment of a termination fee.
4. Borrower acknowledges it has no defense, set-off or counterclaim
against payment of any sums owing under the Loan Documents or the
enforcement of any of the terms of the Loan Agreement or other Loan
Documents.
5. Borrower represents that:
(a) each and every representation heretofore made by Borrower in
the Loan Agreement is true and correct as of the date of this
Modification Agreement,
(b) no consent or approval of, or exemption by any Person is
required to authorize, or is otherwise required in connection with the
execution and delivery of this Modification Agreement and the other Loan
Documents provided for herein, which has not been obtained and which
remains in full force and effect,
(c) Borrower has the power to execute, deliver and carry out
this Modification Agreement and all documents executed in connection
herewith, and this Modification Agreement and such other documents are
valid, binding and enforceable as against Borrower in accordance with
their terms,
(d) no material adverse change in the financial condition of
Borrower has occurred since the date of the most recent financial
statements of Borrower submitted to BACC, and the information contained
in said statements and reports is true and correctly reflects the
financial condition of Borrower and such Obligors as of the dates of the
statements and reports, and such statements and reports have been
prepared in accordance with GAAP and do not contain any material
misstatement of fact or omit to state any facts necessary to make the
statements contained therein not misleading, and
(e) No Default or Event of Default exists under the Loan
Agreement except as waived as set forth below.
6. Borrower hereby confirms the security interests and liens granted
by Borrower to BACC in and to the Collateral in accordance with the Loan
Agreement and other Loan Documents as security for its Obligations to
BACC.
7. In consideration of BACC entering into this Modification Agreement
Borrower shall pay to BACC contemporaneous with the execution hereof a
fee of $15,000.00.
8. Borrower agrees to pay any and all expenses, including reasonable
counsel fees and disbursements, incurred by BACC in connection with the
preparation and execution of this Modification Agreement and all other
documents executed in connection herewith.
9. This Modification Agreement is intended to supplement and modify
the Loan and Security Agreement dated as of September 17, 1998 between
BACC and Borrower as heretofore modified and the rights and obligations
of the parties under said Loan and Security Agreement shall not in any
way be vacated, modified or terminated except as herein provided. All
terms and conditions contained in each and every agreement or promissory
note or other evidence of indebtedness of Borrower to BACC are
incorporated herein by reference. If there is a conflict between any of
the provisions heretofore entered into and the provisions of this
Modification Agreement, then the provisions of this Modification
Agreement shall govern.
10. This Modification Agreement shall be construed in accordance with
the substantive laws of the State of New Jersey without regard to
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Modification Agreement to be executed and delivered as of the day and
year first above written.
K-TRONIK INT'L CORPORATION
By:
name:
title:
BUSINESS ALLIANCE CAPITAL CORP.
By:
name:
title:
