Exhibit 10.1
EIGHTH LOAN MODIFICATION AGREEMENT
This Eighth Loan Modification Agreement (this "Loan Modification
Agreement') is entered into as of May 10, 2005, by and between SILICON
VALLEY BANK, a California-chartered bank, with its principal place of
business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a
loan production office located at One Newton Executive Park, Suite 200,
0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, doing business under
the name "Silicon Valley East" ("Bank") and PARLEX CORPORATION, a
Massachusetts corporation, with offices at Xxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxxxxxx, 00000, PARLEX DYNAFLEX CORPORATION, a California
corporation, with offices at Xxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx
00000, and POLY-FLEX CIRCUITS, INC., a Rhode Island corporation, with
offices at 00 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxx Xxxxxx 00000 (jointly and
severally, individually and collectively, "Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among
other indebtedness and obligations which may be owing by Borrower to Bank,
Borrower is indebted to Bank pursuant to a loan arrangement dated as of
June 11, 2003, evidenced by, among other documents, a certain Loan and
Security Agreement dated as of June 11, 2003 between Borrower and Bank, as
amended from time to time (as amended, the "Loan Agreement"). Capitalized
terms used but not otherwise defined herein shall have the same meaning as
in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is
secured by the Collateral as described in the Loan Agreement and certain
Intellectual Property Security Agreements each dated June 11, 2003 (the "IP
Agreements") (together with any other collateral security granted to Bank,
the "Security Documents").
Hereinafter, the Security Documents, together with all other
documents evidencing or securing the Obligations shall be referred to as
the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
Modification to Loan Agreement.
A. Section 5a. of the Schedule to the Loan Agreement is
hereby amended by deleting same in its entirety and
substituting the following therefor:
"Borrower shall have EBITDA of no less than (i) $1.00,
tested on a monthly basis, as of the periods ending April
30, 2005 and May 31, 2005, and (ii) $750,000.00, tested
on a trailing three month basis, as of the period ending
June 30, 2005 and as of the last day of each month
thereafter."
B. Section 5b. of the Seventh Loan Modification Agreement
dated as of December 22, 2004 entered into between
Borrower and Bank is hereby amended by deleting the text
"March 31, 2005" appearing therein and substituting the
text "August 31, 2005" therefor.
4. FEES. Borrower shall pay to Bank a modification fee equal to
Seven Thousand Five Hundred Dollars ($7,500.00) which shall be due on the
date hereof and shall be deemed fully earned as of the date hereof. In
addition, Borrower shall reimburse Bank for all reasonable legal fees and
expenses incurred in connection with this amendment to the Existing Loan
Documents.
5. WAIVER. The Bank hereby waives the Event of Default arising
from Borrower's failure to comply with the "Minimum EBITDA" covenant set
forth in Section 5a. of the Schedule to the Loan Agreement for the period
ending March 31, 2005. The Bank's waiver of Borrower's compliance with said
foregoing affirmative covenant shall apply only to the foregoing specified
period and shall not be deemed to constitute a continuing waiver and shall
not be deemed to constitute a waiver of any other Event of Default, whether
now existing or hereafter arising.
6. RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENTS.
Borrower hereby ratifies, confirms, and reaffirms, all and singular, the
terms and conditions of the IP Agreements and acknowledges, confirms and
agrees that the IP Agreements contain an accurate and complete listing of
all Intellectual Property.
7. RATIFICATION OF PERFECTION CERTIFICATES. Borrower hereby
ratifies, confirms, and reaffirms, all and singular, the terms and
disclosures contained in certain Perfection Certificates delivered to the
Bank on or about June 11, 2003, and acknowledges, confirms and agrees the
disclosures and information provided therein has not changed, as of the
date hereof.
8. CONSISTENT CHANGES. The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.
9. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies,
confirms, and reaffirms all terms and conditions of all security or other
collateral granted to the Bank, and confirms that the indebtedness secured
thereby includes, without limitation, the Obligations.
10. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and
agrees that Borrower has no offsets, defenses, claims, or counterclaims
against the Bank with respect to the Obligations, or otherwise, and that if
Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against the Bank, whether known or unknown, at law or in
equity, all of them are hereby expressly WAIVED and Borrower hereby
RELEASES the Bank from any liability thereunder.
11. CONTINUING VALIDITY. Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower's
representations, warranties, and agreements, as set forth in the Existing
Loan Documents. Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain
unchanged and in full force and effect. Bank's agreement to modifications
to the existing Obligations pursuant to this Loan Modification Agreement in
no way shall obligate Bank to make any future modifications to the
Obligations. Nothing in this Loan Modification Agreement shall constitute
a satisfaction of the Obligations. It is the intention of Bank and
Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will
be released by virtue of this Loan Modification Agreement.
12. COUNTERSIGNATURE. This Loan Modification Agreement shall
become effective only when it shall have been executed by Borrower and
Bank.
[remainder of page intentionally left blank]
2
This Loan Modification Agreement is executed as a sealed instrument
under the laws of the Commonwealth of Massachusetts as of the date first
written above.
BORROWER:
PARLEX CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
PARLEX DYNAFLEX CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
POLY-FLEX CIRCUITS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: Treasurer
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
3
