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EXHIBIT 10.03
LIMITED WAIVER AND AMENDMENT
This Limited Waiver and Amendment (this "Agreement") is made as of April 1,
1998 by and between JALATE, LTD., a California corporation ("Client") and XXXXXX
FINANCIAL, INC., a Delaware corporation ("Xxxxxx"). This Agreement is made with
reference to that certain Collection Date Factoring Agreement dated June 30,
1997 by and between Client and Xxxxxx (as amended from time to time, the
"Factoring Agreement"). All capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Factoring
Agreement.
Whereas, Client and Xxxxxx entered into the Factoring Agreement; and
Whereas, Client and Xxxxxx desire to enter into a limited waiver regarding
certain terms of the Factoring Agreement as set forth below; and
Whereas, Client and Xxxxxx also desire to enter into an amendment regarding
certain terms of the Factoring Agreement as set forth below;
Now, Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. LIMITED WAIVER
Subsection 4.11 of the Factoring Agreement provides that for the period
beginning September 30, 1997 through March 30, 1998, Client shall at all times
maintain Tangible Net Worth of at least $4,000,000. Xxxxxx has been informed by
Client that as of December 31, 1997, Client's Tangible Net Worth was $621,000.
Client has requested that Xxxxxx waive compliance with subsection 4.11 of the
Factoring Agreement with respect to Client's failure to maintain Tangible Net
Worth of at least $4,000,000 as of December 31, 1997.
Subsection 4.12 of the Factoring Agreement provides that as of September
30, 1997 and at all times thereafter, Client shall maintain a ratio of total
Liabilities to Tangible Net Worth no greater than 1.40:1.0. Xxxxxx has been
informed by Client that as of December 31, 1997, Client's ratio of total
Liabilities to Tangible Net Worth was 9.78:1.0. Client has requested that Xxxxxx
waive compliance with subsection 4.12 of the Factoring Agreement with respect to
Client's failure to maintain a ratio of total Liabilities to Tangible Net Worth
no greater than 1.40:1.0 as of December 31, 1997.
Subsection 4.13 of the Factoring Agreement provides that Client shall at
all times maintain a Current Ratio of at least 1.25:1.0. Xxxxxx has been
informed by Client that as of December 31, 1997, Client's Current Ratio was
0.87:1.0. Client has requested that Xxxxxx waive compliance with subsection 4.13
of the Factoring Agreement with respect to Client's failure to maintain a
Current Ratio of at least 1.25:1.0 as of December 31, 1997.
Subsection 4.14 of the Factoring Agreement provides that Client shall at
all times maintain Working Capital of at least $2,000,000. Xxxxxx has been
informed by Client that as of December 31, 1997, Client's Working Capital was
($769,000). Client has requested that Xxxxxx waive compliance with subsection
4.14 of the Factoring Agreement with respect to Client's failure to maintain
Working Capital of at least $2,000,000 as of December 31, 1997.
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Xxxxxx hereby waives compliance with (1) subsection 4.11 of the Factoring
Agreement with respect to Client's failure to maintain Tangible Net Worth of at
least $4,000,000 as of December 31, 1997; (2) subsection 4.12 of the Factoring
Agreement with respect to Client's failure to maintain a ratio of total
Liabilities to Tangible Net Worth no greater than 1.40:1.0 as of December 31,
1997; (3) subsection 4.13 of the Factoring Agreement with respect to Client's
failure to maintain a Current Ratio of at least 1.25:1.0 as of December 31,
1997; and (4) subsection 4.14 of the Factoring Agreement with respect to
Client's failure to maintain Working Capital of at least $2,000,000 as of
December 31, 1997.
In consideration of Xxxxxx'x agreement to waive Client's compliance with
certain terms of the Factoring Agreement as set forth above, Client agrees to
pay Xxxxxx, or Xxxxxx may charge Client's account with, a waiver fee of $30,000,
which is due and payable in full on the date of this Agreement but which may be
paid by Client in three (3) equal installments of $10,000 each, payable on April
1, May 1 and June 1, 1998, respectively.
Client understands and agrees that this Agreement shall be effective only
with respect to the specific facts set forth above. This Agreement shall not be
deemed to constitute a waiver of any other term, provision or condition of the
Factoring Agreement or to prejudice any right or remedy that Xxxxxx may now have
or may have in the future under or in connection with the Factoring Agreement.
SECTION 2. AMENDMENT
2.1 Section 4 of the Factoring Agreement is hereby amended (a) by deleting
subsections 4.11, 4.12, 4.13 and 4.14 in their entireties and substituting the
following subsections 4.11, 4.12, 4.13 and 4.14 and (b) by adding the following
new subsections 4.16 and 4.17:
4.11 From January 1, 1998 through June 29, 1998, Client shall at all
times maintain Tangible Net Worth of at least $500,000. From June 30, 1998
through September 29, 1998, Client shall at all times maintain Tangible Net
Worth of at least $1,000,000. On September 30, 1998 and at all times thereafter,
Client shall at all times maintain Tangible Net Worth of at least $1,750,000.
4.12 From January 1, 1998 through June 29, 1998, Client shall at all
times maintain a ratio of total Liabilities to Tangible Net Worth no greater
than 9.50:1.0. From June 30, 1998 through September 29, 1998, Client shall at
all times maintain a ratio of total Liabilities to Tangible Net Worth no greater
than 6.00:1.0. On September 30, 1998 and at all times thereafter, Client shall
at all times maintain a ratio of total Liabilities to Tangible Net Worth no
greater than 5.00:1.0.
4.13 From January 1, 1998 through September 29, 1998, Client shall
at all times maintain a Current Ratio of at least 0.75:1.0. On September 30,
1998 and at all times thereafter, Client shall at all times maintain a Current
Ratio of at least 0.85:1.0.
4.14 From January 1, 1998 through June 29, 1998, Client shall at all
times maintain Working Capital of at least ($700,000). From June 30, 1998
through September 29, 1998, Client shall at all times maintain Working Capital
of at least ($550,000). On September 30, 1998 and at all time thereafter, Client
shall at all times maintain Working Capital of at least $0.
4.16 From January 1, 1998 through June 29, 1998, Client shall at all
times maintain Tangible Net Worth (excluding the equity in net loss from
Airshop) of at least $750,000. From June 30, 1998 through September 29, 1998,
Client shall at all
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times maintain Tangible Net Worth (excluding the equity in net loss from
Airshop) of at least $1,250,000.
4.17 From January 1, 1998 through June 29, 1998, Client shall at all
times maintain a ratio of total Liabilities to Tangible Net Worth (excluding the
equity in net loss from Airshop) no greater than 7.00:1.0. From June 30, 1998
through September 29, 1998, Client shall at all times maintain a ratio of total
Liabilities to Tangible Net Worth (excluding the equity in net loss from
Airshop) no greater than 4.50:1.0.
2.2 Section 8 of the Factoring Agreement is hereby amended by deleting
subpart (c) of the first paragraph thereof and by substituting the following
subpart:
(c) if Client commits any breach of any of the terms,
representations, warranties, covenants, conditions or provisions of this
Agreement (including subsections 4.11, 4.12, 4.13, 4.14, 4.16, 4.17 and 6.7), or
of any present or future supplement or amendment hereto or of any other
agreement between Xxxxxx and Client;
2.3 Section 12 of the Factoring Agreement is hereby amended by adding the
following new definition of "Airshop":
"Airshop"-Airshop Ltd., a corporation which is duly organized and
existing in good standing under the laws of the state of New York and which is a
subsidiary of Client.
SECTION 3. RATIFICATION OF FACTORING AGREEMENT
3.1 To induce Xxxxxx to enter into this Agreement, Client represents and
warrants that after giving effect to this Agreement no violation of the terms of
the Factoring Agreement exist and all representations and warranties contained
in the Factoring Agreement are true, correct and complete in all material
respects on and as of the date hereof except to the extent such representations
and warranties specifically relate to an earlier date in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
3.2 Except as expressly set forth in this Agreement, the terms, provisions
and conditions of the Factoring Agreement are unchanged, and said agreement
shall remain in full force and effect and is hereby confirmed and ratified.
SECTION 4. COUNTERPARTS; EFFECTIVENESS
This Agreement may be executed in any number of counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument. Signature pages may be detached from counterpart documents and
reassembled to form duplicate executed originals. This Agreement shall become
effective as of the date hereof upon the execution of the counterparts hereof by
Client, Guarantor and Xxxxxx.
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SECTION 5. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
Witness the execution hereof by the respective duly authorized officers or
individuals undersigned as of the date first written above.
XXXXXX FINANCIAL, INC. JALATE, LTD.
By: /s/ (SIG) By: /s/ Xxxxxxxxx X. Xxxxxxx
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Title: V.P. Title: V.P. Finance
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