FOURTH AMENDMENT AGREEMENT
THIS FOURTH AMENDMENT AGREEMENT (this "Fourth Amendment") is entered into
as of July 31, 2006 by and among Xxxxxx Electronics, Inc., a New York
corporation ("Borrower"), and Xxxxxxx Business Credit Corporation ("Lender").
Introduction
Borrower and Lender are parties to a Loan and Security Agreement dated as
of November 21, 2003 (as amended through the date hereof and as further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lender has agreed to make revolving credit loans
and to provide certain other financial accommodations to Borrower.
Borrower has requested certain amendments and waivers to the Loan
Agreement. Lender is willing to effect the amendments and waivers of the Loan
Agreement requested by Borrower on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Amendments to the Loan Agreement. Upon the date that this Fourth
Amendment shall have been executed by each of the parties hereto and all
conditions set forth in Section 3 of this Fourth Amendment have been satisfied,
Borrower and Lender agree that the Loan Agreement shall be amended as follows:
(a) Section 1.1 (Definitions) of the Loan Agreement is hereby amended by
adding the following definitions alphabetically therein:
"Borrowing Base Overadvance(s)" means an amount up to $300,000.
"Borrowing Base Overadvance Interest Rate" means an interest rate
equal to the Base Rate plus 1.0%.
"Borrowing Base Overadvance Termination Date" means the first to occur
of (i) a Default or Event of Default and (ii) September 30, 2006, provided,
in the case of the foregoing clause (ii), that the Borrowing Base
Overadvance Termination Date may be extended by the Borrower to a date (not
beyond the Maturity Date) if (i) the Trinity Investment has closed, and
(ii) the Borrower has delivered proceeds of the Trinity Investment to the
Lender to cash collateralize on one hundred percent (100%) of the maximum
amount of the Borrowing Base Overadvances.
"Trinity Investment" means an investment by [Trinity] in the Borrower
in the form of equity or subordinated debt, in either instance on terms and
conditions satisfactory to the Lender in it Permitted Discretion, in the
minimum amount of $4,000,000.
(b) Section 2.2 of the Loan Agreement is hereby amended by deleting such
section in its entirety, and inserting in lieu thereof the following:
2.2 Borrowing Base advances.
Subject to the terms and conditions of this Agreement, including
Section 3.3 hereof, at any time when Availability is $0.00, the Borrower
may request Borrowing Base Overadvances in an amount at any one time
outstanding not to exceed $300,000, provided, that in no event will the
aggregate outstanding principal amount of Advances and Borrowing Base
Overadvances exceed the Maximum Revolver Amount. Borrowing Base
Overadanvces shall accrue interest at the Borrowing Base Overadvance
Interest Rate, and may be requested by the Borrower, repaid and reborrowed
(up to the Borrowing Base Overadvance Termination Date) in the same manner
as Advances hereunder. Borrowing Base Overadvances shall constitute
Obligations hereunder, and shall be secured by and entitled to the benefits
of the Collateral for all purposes hereunder.
(c) Section 4.7 of the Loan Agreement is hereby amended by deleting
subsections (b) and (c) therefrom in their entireties, and inserting in lieu
thereof the following:
(b) Lender may from time to time obtain or conduct (in all events, at
Borrower's expense) appraisals conducted by such appraisers as are
satisfactory to Lender in its Permitted Discretion; provided that prior to
the occurrence of an Event of Default, Borrower shall only be required to
pay for such appraisals once per each 120-day period.
(c) Lender may from time to time conduct commercial finance audits (in
each event, at the Borrower's expense) of Borrower's Books; provided that
Borrower shall only be required to pay for such audits once per each
120-day period unless an Event of Default has occurred or Borrower has
failed to maintain an Excess Availability of at least $1,000,000 at all
times, in which case such audits shall be conducted in Lender's Permitted
Discretion (in each case at Borrower's expense).
2. Lender's Rights. Lender expressly reserves the full extent of its rights
under the Loan Agreement, the other Loan Documents and applicable law with
respect to any Default or Event of Default existing on the date hereof, other
than the Identified Event of Default (defined below).
3. Conditions Precedent to Fourth Amendment. The satisfaction of each of
the following, unless waived or deferred by Lender in its Permitted Discretion
constitute conditions precedent to the effectiveness of this Fourth Amendment
(except that item 3(e)(ii) below shall be a condition subsequent):
(a) Lender shall have received this Fourth Amendment, duly executed by
Borrower;
(b) the representations and warranties in this Fourth Amendment, the Loan
Agreement, as amended hereby, and the other Loan Documents shall be true and
correct in all respects on and as of the date hereof, as though made on such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
(c) after giving effect to this Fourth Amendment, no Default or Event of
Default shall have occurred and be continuing on the date hereof, and no Default
or Event of Default shall result from the consummation of the transactions
contemplated herein;
(d) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any court or
other governmental authority against Borrower or Lender; and
(e) Lender shall have received payment in full of (i) $5,000 upon the
effective date of this Fourth Amendment, (ii) $5,000 upon the first funding of a
Borrowing Base Overadvance, and (iii) its out-of-pocket expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the Loan
Agreement and this Fourth Amendment.
4. Waiver. Lender hereby waives the Event of Default arising under Section
7.21(b) of the Loan Agreement solely to the extent resulting from the Borrower
having allowed EBITDA for the three month period ended June 30, 2006 to vary
negatively by more than $330,000 from the EBITDA projected for such three month
period in the Business Plan in effect on the date thereof (the "Identified Event
of Default"). The foregoing provisions of this Section 4 relate solely to the
Identified Event of Default and shall in no way be deemed or construed as a
waiver by Lender of any other Default or Event of Default under the Loan
Agreement or any other Loan Document, known or unknown, now existing or
occurring subsequent to the date of this Fourth Amendment. Lender expressly
reserves the full extent of its rights under the Loan Agreement, the other Loan
Documents and applicable law with respect to any Default or Event of Default
existing on the date hereof and not specified herein as the Identified Event of
Default.
5. Representations and Warranties. Borrower hereby represents and warrants
to the Lender that:
(a) the execution, delivery, and performance of this Fourth Amendment, the
Loan Agreement and the other Loan Documents (i) are within Borrower's corporate
powers, (ii) have been duly authorized by all necessary corporate action, (iii)
do not require any approval or consent of any Person under any contractual
obligation of the Borrower and (iv) do not contravene (A) any law, rule, or
regulation, or any order, judgment, decree, writ or injunction, or award of any
arbitrator, court, or Governmental Authority, (B) the terms of its charter,
bylaws or other operative or formative documents or (C) any contract or
undertaking to which it is a party or by which any of its properties may be
bound or affected;
(b) this Fourth Amendment has been duly executed and delivered by Borrower;
(c) this Fourth Amendment and the Loan Agreement and the other Loan
Documents, each as previously amended and as amended hereby, constitute
Borrower's legal, valid, and binding obligations, enforceable against Borrower
in accordance with their respective terms;
(d) Borrower is in compliance with all of the terms and provisions set
forth in the Loan Agreement and each of the other Loan Documents, each as
previously amended and as amended hereby, on its part to be observed or
performed on or prior to the date hereof; and
(e) after giving effect to this Fourth Amendment, no Default or Event of
Default has occurred and is continuing under the Loan Agreement or any other
Loan Document.
6. Reaffirmation. Borrower further reaffirms all of its obligations under
the Loan Agreement and the other Loan Documents, each as previously amended and
as amended hereby.
7. Effect on Loan Agreement. Except as expressly provided herein, the
execution, delivery, and performance of this Fourth Amendment shall not operate
as a waiver or an amendment of any right, power, or remedy of the Lender under
the Loan Agreement or any other Loan Document. Except to the extent expressly
amended hereby, the Loan Agreement and all other Loan Documents shall be
unaffected hereby, shall continue in full force and effect, are hereby in all
respects ratified and confirmed, and shall constitute the legal, valid, binding
and enforceable obligations of Borrower to the Lender.
8. No Novation; Entire Agreement. This Fourth Amendment evidences solely
the amendment of certain terms and provisions of Borrower's obligations under
the Loan Agreement expressly set forth herein and is not a novation or discharge
thereof. There are no other understandings, express or implied, between Lender
and Borrower regarding the subject matter hereof.
9. Choice of Law. The validity of this Fourth Amendment, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by, and construed in accordance with the laws of
The Commonwealth of Massachusetts without regard to conflicts of laws
principles.
10. Definitions and Construction.
(a) Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to such terms in the Loan Agreement, as amended
hereby.
(b) Upon and after the effectiveness of this Fourth Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Loan Agreement, and each
reference in the other Loan Documents to "the Loan Agreement", "thereunder",
"therein", "thereof", or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as amended hereby.
11. Counterparts; Telefacsimile Execution. This Fourth Amendment may be
executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Fourth Amendment by facsimile shall be as effective as delivery of a manually
executed counterpart of this Fourth Amendment. Any party delivering an executed
counterpart of this Fourth Amendment by facsimile also shall deliver a manually
executed counterpart of this Fourth Amendment but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, and
binding effect of this Fourth Amendment.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, Borrower and Lender caused this Fourth Amendment to be
executed as of the date first above written.
BORROWER:
XXXXXX ELECTRONICS, INC.
By:/s/Xxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxxx
Executive Vice President and
Chief Financial Officer
LENDER:
XXXXXXX BUSINESS CREDIT CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: AVP, Account Executive
