AMENDMENT NO. 5 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT ("Amendment") is made
and entered into as of January 22, 2007 by and between ELECTROGLAS, INC., a
Delaware corporation ("Borrower"), and COMERICA BANK ("Bank").
RECITALS
A. Borrower and Bank have entered into that certain Loan and Security
Agreement dated as of July 16, 2004, as amended by Amendment No. 1 to Loan and
Security Agreement dated as of January 24, 2005, Amendment No. 2 to Loan and
Security Agreement dated as of July 13, 2005, Amendment No. 3 to Loan and
Security Agreement dated as of April 25, 2006, and Amendment No. 4 to Loan and
Security Agreement dated as of September 6, 2006 (collectively, the "Loan
Agreement") pursuant to which Bank has agreed to extend and make available to
Borrower certain credit facilities.
B. Borrower desires that Bank amend the Loan Agreement upon the terms and
conditions more fully set forth herein.
C. Subject to the representations and warranties of Borrower herein and
upon the terms and conditions set forth in this Amendment, Bank is willing to so
amend the Loan Agreement.
D. This Amendment, the Loan Agreement and the other Loan Documents (as
defined in the Loan Agreement), together with all other documents entered into
or delivered pursuant to any of the foregoing, in each case as originally
executed or as the same may from time to time be modified, amended,
supplemented, restated or superseded, are hereinafter collectively referred to
as the "Loan Documents."
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, Borrower and Bank hereby agree to amend the Loan Agreement as
follows:
1. Definitions. Unless otherwise defined herein, all terms defined in the
Loan Agreement have the same meaning when used herein.
2. Amendments to Loan Agreement.
a. Section 6.7 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"6.7 Financial Covenants. Borrower shall as of the last day of each fiscal
quarter of Borrower maintain the financial ratio and covenant set forth in
subsection (a) below and shall at all times maintain the financial covenant set
forth in subsection (b) below:
(a) Adjusted Quick Ratio. A ratio of Cash plus net billed trade
accounts receivable (provided such accounts receivable are "Eligible Accounts")
to all Indebtedness to Bank of at least (i) 1.50 to 1.00 through May 31, 2007,
provided that the amount of Cash necessary to comply with the foregoing ratio
shall not be less than $5,000,000, and (ii) 2.50 to 1.00 thereafter.
(b) Minimum Cash. A balance of Cash in a Bank money market
account or a Bank deposit account of not less than (i) $3,000,000 through May
31, 2007 and (ii) $2,500,000 thereafter."
b. Clause (a) of the definition of "Eligible Accounts" contained in
Exhibit A to the Loan Agreement is hereby amended and restated in its entirety
to read as follows:
"Accounts that the account debtor has failed to pay in full within (i) one
hundred twenty (120) days of invoice date through May 31, 2007 and (ii) ninety
(90) days of invoice date thereafter;"
c. The definition of "Eligible Foreign Accounts" contained in
Exhibit A to the Loan Agreement is hereby amended and restated in its entirety
to read as follows:
"'Eligible Foreign Accounts' means Accounts with respect to which the
account debtor does not have its principal place of business in the United
States and that are (i) supported by one or more letters of credit in an amount
and of a tenor, and issue by a financial institution, acceptable to Bank, (ii)
insured by the Export Import Bank of the United States or covered by other
credit insurance acceptable to Bank, (iii) generated by an account debtor with
its principal place of business in Canada, provided that the Bank has perfected
its security interest in the appropriate Canadian province, (iv) Accounts with
respect to which the account debtor is any of ST Microelectronics NV, Philips
Semiconductor (subsidiary of Royal Philips electronics - Netherlands), or
DongbuAnam Semiconductor, Inc., or a foreign subsidiary of any of the following:
National Semiconductor, Seagate Technologies, International Rectifier
Corporation, Atmel Corporation, Intel Corporation, or Amkor Technology, (v) with
respect to Accounts existing on or prior to May 31, 2007, Accounts supported by
at least one year of satisfactory payment history from an account debtor that is
acceptable to Bank, or (vi) approved by Bank on a case-by-case basis. All
Eligible Foreign Accounts must be calculated in U.S. Dollars; provided however,
that on or prior to May 31, 2007 Eligible Foreign Accounts shall not exceed
$3,000,000.
d. Exhibit E to the Loan Agreement (Borrowing Base Certificate) is
hereby deleted and replaced with Exhibit E in the form attached to this
Amendment.
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3. Ratification and Reaffirmation of Liens. Borrower hereby ratifies and
reaffirms the validity and enforceability of all of the liens and security
interests heretofore granted pursuant to the Loan Documents, as collateral
security for the Obligations, and acknowledge that all of such liens and
security interests, and all Collateral heretofore pledged as security for the
Obligations, continues to be and remains Collateral for the Obligations from and
after the date hereof.
4. Representations And Warranties. Except as set forth on the Amendment to
Schedule attached hereto, Borrower represents and warrants that its
representations and warranties in the Loan Documents (as amended hereby)
continue to be true and complete in all material respects as of the date hereof
after giving effect to this Amendment (except to the extent such specifically
relate to another date) and that the execution, delivery and performance of this
Amendment are duly authorized, do not require the consent or approval of any
governmental body or regulatory authority and are not in contravention of or in
conflict with any law or regulation or any term or provision of any other
agreement entered into by Borrower. Borrower further represents and warrants
that, as of the date hereof after giving effect to this Amendment, no Event of
Default has occurred and is continuing.
5. Full Force And Effect; Entire Agreement. Except to the extent expressly
provided in this Amendment, the terms and conditions of the Loan Agreement and
the other Loan Documents shall remain in full force and effect. This Amendment
and the other Loan Documents constitute and contain the entire agreement of the
parties hereto and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications between the parties, whether
written or oral, respecting the subject matter hereof. The parties hereto
further agree that the Loan Documents comprise the entire agreement of the
parties thereto and supersede any and all prior agreements, negotiations,
correspondence, understandings and other communications between the parties
thereto, whether written or oral respecting the extension of credit by Bank to
Borrower and/or its affiliates. Except as expressly set forth herein, the
execution, delivery and performance of this Amendment shall not operate as a
waiver of, or as an amendment of, any right, power or remedy of Bank under the
Loan Agreement or any other Loan Document as in effect prior to the date hereof.
6. Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts, each of which when so delivered shall be deemed an
original, but all such counterparts taken together shall constitute but one and
the same instrument. This Amendment is effective as of the date first above
written; provided that, as a condition precedent to the effectiveness of this
Amendment, (i) there shall have been no material adverse change in the business
operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole, no material impairment of the prospect of
repayment of any portion of the Obligations owing to Bank, and no material
impairment of the value or priority of the security interest in the Collateral
and (ii) Bank shall have received, in form and substance satisfactory to Bank,
the following:
(a) this Amendment, duly executed by Borrower;
(b) payment of the fees and Bank Expenses then due specified in
Section 2.5 of the Loan Agreement, as amended hereby; and
(c) such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed and delivered by its duly authorized officer as of the date first
written above.
BORROWER:
ELECTROGLAS, INC.
By: /s/Xxx Xxxxxxx
Title: CFO
BANK:
COMERICA BANK
By: /s/Xxxxxx Xxxxx
Title: Senior Vice President
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EXHIBIT E
BORROWING BASE CERTIFICATE
Borrower: Electroglas, Inc. Lender: Comerica Bank
Commitment Amount: $7,500,000
ACCOUNTS RECEIVABLE*
1. Accounts Receivable Book Value as of ___ $___________
2. Additions (please explain on reverse) $___________
3. TOTAL ACCOUNTS RECEIVABLE $___________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)*
4. Amounts over 120 days (through 5/31/07) and amounts over 90
days (after 5/31/07)
of invoice date $___________
5. Balance of 25% (40% in the case of ST
Microelectronics NV) over 90 day accounts $___________
6. Concentration Limits $___________
7. Ineligible Foreign Accounts $___________
8. Governmental Accounts $___________
9. Contra Accounts $___________
10. Demo Accounts $___________
11. Intercompany/Employee Accounts $___________
12. Other (please explain on reverse) $___________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________
14. Eligible Accounts (#3 minus #13) $___________
15. LOAN VALUE OF ACCOUNTS (80% of #14) $___________
BALANCES
16. Revolving Line minus Non-Formula Amount $___________
17. Total Funds Available [Lesser of #16 or #15] $___________
18. Advances in excess of Non-Formula Amount $___________
19. Outstanding under Letter of Credit Sublimit $___________
20. RESERVE POSITION (#17 minus #18 and #19) $___________
* As determined in accordance with the Loan and Security Agreement dated as
of July 16, 2004 between Borrower and Lender, as amended.
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The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Comerica Bank.
ELECTROGLAS, INC.
By:
-------------------------------------------------
Authorized Signer
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