February 10, 1999
Xxxxx Xxxxxx Corporation
000 Xxxxx 00 Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Re: Waiver and Amendment to Financing Agreement
Gentlemen:
Reference is made to the financing arrangements between
Congress Financial Corporation ("Lender") and Xxxxx Corona
Corporation ("Borrower") pursuant to the terms of the Loan and
Security Agreement, dated as of February 28, 1997, between
Borrower and Lender (the "Loan Agreement" and, together with any
supplements thereto and all other agreements, documents and
instruments between Borrower and Lender relating thereto, as the
same have heretofore been amended, or as same have
contemporaneously been or may be hereafter amended, modified,
supplemented, extended, renewed, restated or replaced,
collectively, the "Financing Agreements"). Capitalized terms
used herein shall have the meanings ascribed thereto in the Loan
Agreement and in the other Financing Agreements, unless otherwise
defined herein.
In consideration of the mutual agreements and covenants
contained herein and other good and valuable consideration, the
parties hereto agree as follows:
1. Adjusted Net Worth. Lender hereby waives the default
by Borrower under Section 9.13 of the Loan Agreement ("Adjusted
Net Worth") until and including the date immediately prior to the
date hereof. Effective as of the date hereof, existing Section
9.13 of the Loan Agreement shall be deleted and the following
inserted in its stead:
"9.13 Adjusted Net Worth. Borrower shall, at all
times, maintain Adjusted Net Worth of not less than (a)
one ($1.00) dollar until June 29, 1999, and (b)
$2,000,000 at June 30, 1999 and at all times
thereafter."
2. Inventory Advance Rate. Section 2.1(a)(ii) of the
Loan Agreement shall be and is hereby amended by (a) deleting both
references to "fifty (50%) percent" therein and inserting "forty-
five (45%) percent" in their stead, and (b) inserting the
following provision immediately after clause (B) thereof and
before the words "provided, however":
"or (C) eighty (80%) percent of the amount equal to the
product of the cost of Eligible Inventory multiplied by
the percentage of the net orderly liquidation value to
the cost of the various types of such Eligible
Inventory as set forth in the most recent appraisal
received by Lender pursuant to Section 7.3(d) of this
Agreement,".
3. Letter of Credit. Section 2.2(c)(i) of the Loan
Agreement shall be and is hereby amended by deleting the
reference to "fifty (50%) percent" therein and inserting "fifty-
five (55%) percent" in its stead. Section 2.2(d) shall be and is
hereby amended by deleting the figure of "$10,000,000" and
inserting "$5,000,000" in its stead.
4. Appraisals. Section 7.3(d) of the Loan Agreement
shall be and is hereby amended by deleting the words "once in any
calendar year" and inserting the words "twice in any calendar
year" in their stead.
5. SOHO Inventory. Borrower's inventory consisting of
cordless telephones, voice recorders, headsets, teleassistants
and telecopy machines and similar small office/home office types
of goods and components thereof ("SOHO Inventory") shall not be
deemed to be Eligible Inventory, except in Lender's sole
discretion, but nevertheless shall be part of the Collateral;
provided, however, SOHO Inventory shall not be deemed to include
Inventory consisting of headset and multi-handset phone systems
and, except in Lenders' sole discretion, the aggregate
outstanding Loans available to Borrower in respect of such
Inventory shall not exceed $600,000.
6. Waiver and Amendment Fee. In consideration of the
foregoing and Lender's agreements hereunder, Borrower shall pay
to Lender a waiver and amendment fee in the amount of $25,000,
which shall be fully earned and due and payable on the date
hereof, and which may be charged by Lender to Borrower's Loan
account with Lender.
7. Representations, Warranties and Covenants. In
addition to the continuing representations, warranties and covenants
heretofore or hereafter made by Borrower to Lender pursuant to
the Financing Agreements, Borrower hereby represents, warrants
and covenants with and to Lender as follows (which
representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof and shall be
incorporated into and made a part of the Financing Agreements):
(a) No Event of Default exists or has occurred and
is continuing on the date hereof, after giving effect to the terms
of this Waiver and Amendment.
(b) This Waiver and Amendment has been duly executed
and delivered by Borrower and is in full force and effect as of
the date hereof, and the agreements and obligations of Borrower
contained herein constitute the legal, valid and binding
obligations of Borrower enforceable against Borrower in
accordance with their terms.
8. Effect of this Waiver and Amendment. This Waiver and
Amendment shall be effective upon execution by Lender and
Borrower and contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes all
correspondence, memoranda, communications, discussions and
negotiations with respect thereto. No existing defaults or
Events of Default and no rights or remedies of Lender have been
or are being waived hereby and no changes or modifications to the
Financing Agreements have been or are being made or are intended
hereby, except as expressly set forth herein, and in all other
respects the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of the
date hereof. In the event that any term or provision of this
Waiver and Amendment conflicts with any term or provision of the
Financing Agreements, the term or provision of this Waiver and
Amendment shall control.
9. Counterparts. This Waiver and Amendment may be
executed and delivered in counterparts.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxx Xxxxxx
Title: Asst. Vice President
AGREED AND ACCEPTED:
XXXXX CORONA CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Title: Sr. Vice President
Chief Financial Officer
