Exhibit 10.24
EX-10.24 Fifth Amendment to Loan Agreement by and between the Company and
CommerceBank, N.A. dated as of August 15, 2003.
FIFTH AMENDMENT
TO LOAN AGREEMENT
THIS FIFTH AMENDMENT to LOAN AGREEMENT is entered into as of the 15th
day of August, 2003, by and between AESP, INC. (formerly known as Advanced
Electronic Support Products, Inc.), a Florida corporation (the "Borrower") and
COMMERCEBANK, N.A. (the "Bank").
RECITALS:
A. Borrower and Bank entered into that certain loan agreement (the "Loan
Agreement") dated September 23, 1999 under the terms of which Bank
agreed to lend Borrower $3,500,000.
B. Borrower and Bank executed and delivered that certain First Amendment
to Loan Agreement (the First Amendment") dated September 2, 2000
between them. In connection with the First Amendment, Borrower executed
and delivered to Bank that certain Renewal Promissory Note dated
September 2, 2000 (the "Renewal Note") in the original principal amount
of $3,500,000.
C. Borrower and Bank executed and delivered that certain Second Amendment
to Loan Agreement (the Second Amendment") dated March 16, 2001 between
them. In connection with the Second Amendment, Borrower executed and
delivered to Bank that certain Renewal Promissory Note dated March 16,
2001 (the "Second Renewal Note") in the original principal amount of
$4,000,000.
D. Borrower and Bank executed and delivered that certain Third Amendment
to Loan Agreement (the Third Amendment") dated September 21, 2001
between them. In connection with the Third Amendment, Borrower executed
and delivered to Bank that certain Renewal Promissory Note dated
September 21, 2001 (the "Third Renewal Note") in the original principal
amount of $4,000,000.
E. Borrower and Bank executed and delivered that certain Extension Letter
Agreement (the "Letter Agreement") dated September 18, 2002 between
them, which, among other things, extended the term of the Line of
Credit until January 23, 2003 and reduced the Maximum Line of Credit
Amount to $1,900,000.
F. Borrower and Bank executed and delivered that certain Fourth Amendment
to Loan Agreement (the Fourth Amendment") dated January 17, 2003
between them. In connection with the Fourth Amendment, Borrower
executed and delivered to Bank that certain Renewal Promissory Note
dated January 17, 2003 (the "Fourth Renewal Note") in the original
principal amount of $1,900,000.
F. Borrower and Bank desire to amend certain terms of the Loan Agreement,
as amended, pursuant to the terms hereof to among other things extend
the term of the Line of Credit.
NOW, THEREFORE, in consideration of the agreements set forth herein and
other good and valuable consideration, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein shall have
the same meanings as used in Section 1 of the Loan Agreement, unless otherwise
defined in this Fifth Amendment.
SECTION 2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby
amended in the following respects:
(a) PERMANENT REDUCTION AND TERMINATION OF LINE OF CREDIT. The
existing section 2.9 of the Loan Agreement shall be deleted and replaced by the
following:
"2.9 Permanent Reduction and Termination of Line of
Credit. (a) Borrower shall be make a principal payment on or
before September 30, 2003 of not less than One Million Dollars
($1,000,000). If Borrower obtains a new lending arrangement to
enable it to make such principal payment, all of the available
credit under such financing arrangement shall be utilized to
make such principal payment. Such prepayment shall permanently
reduce the Maximum Line of Credit Amount by the amount of such
prepayment. In the event that the Borrower makes the minimum
prepayment described above, but fails to pay the Line of
Credit in full by September 30, 2003, Borrower shall pay to
Lender an extension fee of Ten Thousand Dollars ($10,000) by
September 30, 2003. Bank agrees to consider in good faith any
request from Borrower for the Bank to release it's lien on
Receivables; provided that (1) Borrower provides Bank with
copies of all documentation associated with such financing in
advance to facilitate Bank's credit evaluation of such
transaction and the final documentation for such transaction
shall be satisfactory to Bank, (2) the Receivables being
released are being pledged to a lender who is providing
financing to enable Borrower to make the payments required by
this Section 2.9, (3) Bank 's internal credit committee is
satisfied in its sole and absolute discretion with the terms
of such new transaction and it' s impact on the Borrower's
credit position with the Bank, and (4) Borrower agrees to
execute and deliver to Bank any amendments, documents or
certificates deemed necessary by Bank as a result of such
transaction.
(b) On or before December 1, 2003 Borrower shall
satisfy all outstanding Obligations to Lender under the Line
of Credit. On the earlier to occur of a prepayment of all
Obligations hereunder or December 1, 2003, the Lender's
obligations to make Advances under the Line of Credit shall be
terminated, the Maximum Line of Credit Amount shall be reduced
to zero ($0), and all of Borrower's Obligations under the Loan
Agreement shall be immediately due and payable. Borrower
acknowledges that Borrower's obligations under this section
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are not dependent on the availability of any particular form
of credit or any other condition.
(b) INVENTORY LIMITATION. Section 2.1(b)(ii)(1) of the Loan
Agreement shall be amended by deleting "Six Hundred Thousand ($600,000)" and
inserting "Five Hundred Thousand ($500,000)" as a replacement.
(c) FINANCIAL COVENANTS. Sub-sections 5.14 (a) and (b) of the
Loan Agreement shall be amended and restated as follows:
"(a) Debt to Tangible Net
Worth. As of the end of each quarter, the
Borrower shall have a debt to Tangible Net
Worth ratio of not more than 3:1. For the
quarters ending June 30, 2003 and September
30, 2003, the Borrower shall have a debt to
Tangible Net Worth ratio of not more than
3.25:1.00. Such ratio shall be tested
quarterly based on the Borrower's financial
statements.
(b) Tangible Net Worth.
Borrower shall at all times maintain a
Tangible Net Worth of not less than
$3,250,000. For the quarters ending June 30,
2003 and September 30, 2003, Borrower shall
at all times maintain a Tangible Net Worth
of not less than $2,850,000"
(d) OTHER CONFORMING CHANGES: The Loan Agreement is
amended as follows:
(i) Definition of Line of Credit Note. The
definition of Line of Credit Note shall be amended and
restated to read as follows:
"Line of Credit Note" shall mean that certain Fifth
Renewal Promissory Note, dated August 15, 2003, of
Borrower to Lender in the aggregate principal amount
of One Million Nine Hundred Thousand Dollars
($1,900,000) which Fifth Renewal Promissory Note
amended, renewed and updated that certain Fourth
Renewal Promissory Note, dated January 17, 2003
executed by Borrower, in favor of Lender.
(ii) Definition of Line of Credit Maturity
Date. The definition of Line of Credit Maturity Date shall be
amended and restated to read as follows:
"Line of Credit Maturity Date" shall mean September
30, 2003, or such earlier date as payment of the Line
of Credit shall be due and payable in full, whether
by mandatory prepayment, acceleration or otherwise;
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provided, that such date shall be extended to
December 1, 2003 if Borrower makes the minimum
principal payment described in Section 2.9(a) of this
Agreement and an Event of Default shall not have
otherwise occurred and be continuing.
(iii) Definition of Loan Documents. The
definition of the term "Loan Documents" in the Loan Agreement
shall include this Fifth Amendment, the Fourth Amendment, the
Letter Agreement, the Third Amendment, the Second Amendment,
the First Amendment, the Line of Credit Note, The Fifth
Renewal Note, the Security Agreement, the Commitment Letter
and all other documents executed and delivered by the parties
which evidence, secure or otherwise relate to the transaction
contemplated by this Fifth Amendment.
(iv) Definition of Maximum Line of Credit
Amount. The definition of Maximum Line of Credit Amount shall
be amended and restated to read as follows:
"Maximum Line of Credit Amount" shall mean One
Million Nine Hundred Thousand Dollars ($1,900,000),
subject to reduction as described in Section 2.9 of
this Agreement".
(v) Addition to Events of Default. Add the
following to Section 6.1 of the Loan Agreement:
"(m) Borrower's failure to make the prepayments
required under Section 2.9 of the Loan Agreement
SECTION 3. NO EVENT OF DEFAULT. Borrower hereby certifies to Bank that
(a) it has kept, observed, performed and fulfilled each and every covenant,
provision and condition of the Loan Agreement and the other Loan Documents on
its part to be performed, (b) that all representations and warranties of the
Borrower made in the Loan Agreement are true and correct as of the date hereof
except for those representations and warranties which are made as of a
particular date, which such representations and warranties are true and correct
as of such date, (c) that no Event of Default or event which, with the passage
of time or the giving of notice or both, would constitute an Event of Default
has occurred and is continuing under the Loan Agreement, both before and after
giving effect to the amendment contemplated hereby, except any Event of Default
that has previously occurred and which has been specifically waived in writing
by the Bank, and (d) as of the date of this Fifth Amendment, Borrower has no
defenses or counterclaims with respect to Bank's rights to collect all amounts
due to it under the Loan Documents.
SECTION 4. LOAN AGREEMENT CONFIRMED. The Loan Agreement, as amended
hereby, is reaffirmed and restated herein by Borrower and Bank, and said Loan
Agreement is hereby incorporated herein by reference as fully as if set forth in
its entirety in this Fifth Amendment.
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SECTION 5. CONDITIONS PRECEDENT TO BANK'S OBLIGATIONS. Banks
obligations under this Fifth Amendment shall be subject to the satisfaction of
each of the following conditions precedent:
(a) Borrower shall have executed and deliver this Fifth
Amendment, the Fifth Renewal Note and all other documents requested by Bank and
all Loan Documents shall be in full force and effect.
(b) Bank shall have received (i) a certificate of the
secretary of Borrower certifying that attached thereto are true and correct
copies of (A) the bylaws of Borrower, as amended through the date of such
certification and (B) resolutions duly adopted by Borrower' s board of directors
authorizing the execution, delivery and performance of the Loan Documents to
which Borrower is a party, which resolutions have not been altered or amended in
any respect and remain in full force and effect, (ii) the names of each of the
officers of Borrower authorized to execute and deliver the Loan Documents; (iii)
a certificate of the applicable State authority, dated as of a recent date, as
to the good standing of Borrower; and (iv) a certificate of the Florida
Department of State, dated as of a recent date, certifying that attached are
true and correct copies of the articles of incorporation of the Borrower filed
with such agency.
(c) Borrower shall cause to be delivered to Bank such other
documents, certificates or affidavits as may be reasonably requested by Bank in
connection with consummating the transaction evidenced by this Fifth Amendment.
(d) An opinion of counsel from counsel to Borrower in a form
reasonably satisfactory to Lender.
(e) Borrower shall pay to lender an extension fee in the
amount of Fifteen Thousand Dollars ($15,000) on the date of this Fifth
Agreement.
SECTION 6. MISCELLANEOUS.
(a) INVALIDITY. In the event that any one or more of the
provisions contained in this Fifth Amendment shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Fifth Amendment.
(b) COUNTERPARTS. This Fifth Amendment may be executed in
several counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(c) REFERENCE. From and after the effective date hereof, all
references to the Loan Agreement shall be deemed to be references to the Loan
Agreement as amended by this Fifth Amendment.
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(d) GOVERNING LAW. THIS Fifth AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF FLORIDA
WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAW PRINCIPLES.
(e) GOVERNING DOCUMENT. In the event of a conflict between the
terms and conditions of this Fifth Amendment and the Commitment Letter, the
terms and conditions of this Fifth Amendment shall control in all respects.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to Loan
Agreement to be duly executed and delivered by their respective representatives
thereunto duly authorized as of the date first above written.
Borrower:
AESP, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
Its: Vice President
Bank:
COMMERCEBANK, N.A.
By: /s/ Xxxx X. Hills
-------------------------------------
Name: Xxxx X. Hills
Its: Vice President
