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EXHIBIT 10.1
SIXTH MODIFICATION AGREEMENT
DATE: April 5, 1999
PARTIES: Borrower: WHITE ELECTRONIC DESIGNS CORPORATION,
an Indiana corporation, formerly known as Xxxxxx
Instrument Corporation
Lender: BANK ONE, ARIZONA, NA,
a national banking association
RECITALS:
A. Pursuant to that Loan Agreement dated August 28, 1995 (the "Loan
Agreement"), as amended by the modification documents described below, Lender
has extended to Borrower the following credit facilities (the "Loans"):
1. A revolving line of credit (the "RLC") in the principal
amount of $4,000,000.00, evidenced by the Revolving Promissory Note,
dated August 28, 1995, as amended, and subsequently increased to
$6,000,000.00 ("RLC Note"). The unpaid principal of the RLC as of April
5, 1999 was $1,729,361.24.
2. A term loan (the "Term Loan") in the principal amount of
$4,200,000.00, evidenced by the Promissory Note (Term Note), dated
August 28, 1995 ("Term Note"), as amended. The unpaid principal of the
Term Note as of the date hereof is $2,807,065.54.
B. The Loans are secured by, among other things, the following:
1. Mortgage, Security Agreement, Assignment of Rents and
Fixture Filing, dated August 28, 1995 (the "Indiana Mortgage"), by
Borrower, as debtor, in favor of Lender, as secured party, covering
real property located in Xxxxx County, Indiana.
2. Security Agreement dated August 28, 1995 (the "Security
Agreement"), by Borrower, as debtor, in favor of Lender, as secured
party, covering the personal property described therein.
The agreements, documents, and instruments securing the Loans are referred to
individually and collectively as the "Security Documents."
C. Lender and Borrower have previously executed a Modification
Agreement dated April 26, 1996, a Second Modification dated August 9, 1996, a
Third Modification Agreement dated March 28, 1997, a Modification of Mortgage
(Indiana) dated March 28, 1997, a Fourth Amendment
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to Credit Agreement dated March 16, 1998, and a Promissory Note Modification
dated March 16, 1998, a Fifth Amendment to Credit Agreement dated November 1,
1998 (collectively, the "Modifications"), modifying the terms of the Loans, the
RLC Note, the Term Note, the RLT Note, the Loan Agreement and/or the Security
Documents. The RLC Note, and the Term Note are sometimes referred to
individually and collectively as the "Note." The Note, the Loan Agreement, the
Security Documents, any arbitration resolution, any environmental certification
and indemnity agreement, and all other agreements, documents, and instruments
evidencing, securing, or otherwise relating to the Loans, as modified by the
Modifications, are sometimes referred to individually and collectively as the
"Loan Documents." Hereinafter, "Note," "Loan Agreement," and each "Security
Document," shall mean such document as modified in the Modifications.
D. Borrower has requested that Lender modify certain provisions in the
Loan Documents as provided herein. Lender is willing to extend to Borrower such
additional loan and so modify the Loan Documents, subject to the terms and
conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender agree as follows:
SECTION 1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATION OF LOAN DOCUMENTS; OTHER AGREEMENTS.
2.1 As used in this Note:
"Maturity Date" means February 28, 2000.
2.1 The following definitions are set forth in Section 1.1 of the Loan
Agreement and are hereby amended in their entirety to read as follows:
"CMLTD" means current maturities of long term debt (excluding
the RLC) plus capital lease payments, Distributions, interest, and
payments to former employees.
"Debt Coverage Ratio" means the ratio of EBITDA to the sum of
CMLTD.
"Distributions" means all preferred dividends and other
distributions made by Borrower to its shareholders, partners, owners or
members, as the case may be, other than salary, bonuses, and other
compensation for services expended in the current accounting period.
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"EBITDA" means the sum of Borrower's aggregate pretax income
or loss for a period, plus interest expense, depreciation expense,
amortization expense, and a non-cash allowance of $2,173,000.00
(non-cash allowance to expire October 3, 1999) recognized in the
computation of Borrower's aggregate net income or loss for such period,
as determined in accordance with GAAP.
2.2 Section 10.8 of the Loan Agreement is hereby amended in its
entirety to read as follows:
10.8 Financial Covenants. It will not permit:
(a) Its Current Ratio to be less than 1.3 to 1.0 at
the end of any quarterly accounting period of Borrower.
(b) The ratio of Total Funded Debt to EBITDA to be
greater than 3.0 to 1.0 at the end of any fiscal year end of
Borrower, commencing with the fiscal year ending October 3,
1999.
(c) Its Tangible Net Worth to be less than
$16,000,000.00 at the end of any quarterly accounting period
of Borrower.
(d) Its Owner's Equity Percentage to be less than
forty percent (40%) at the end of any quarterly accounting
period of Borrower.
(e) Its Debt Coverage Ratio to be greater than 1.25
to 1.0 at the end of any quarterly accounting period of
Borrower commencing with the fiscal year ending October 3,
1999. The Debt Coverage Ratio shall be calculated on a rolling
four-quarter basis.
2.3 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein is materially incomplete, incorrect, or misleading
as of the date hereof.
2.4 Each reference in the Loan Documents to any of the Loan Documents
is hereby amended to be a reference to such document as modified herein and in
any modification of mortgage executed in connection herewith.
SECTION 3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
The Loan Documents are ratified and affirmed by Borrower and shall
remain in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the
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Loan Documents shall remain as security for the Loans and the obligations of
Borrower in the Loan Documents.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender:
4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Lender in connection with the Loans from the most recent financial
statement received by Lender.
4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loans or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
SECTION 5. BORROWER COVENANTS.
Borrower covenants with Lender:
5.1 Borrower shall execute, deliver, and provide to Lender such
additional agreements, documents, and instruments as reasonably required by
Lender to effectuate the intent of this Agreement.
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5.2 Borrower fully, finally, and absolutely and forever releases and
discharges Lender and its present and former directors, shareholders, officers,
employees, agents, representatives, successors and assigns, and their separate
and respective heirs, personal representatives, successors and assigns, from any
and all actions, causes of action, claims, debts, damages, demands, liabilities,
obligations, and suits, of whatever kind or nature, in law or equity of
Borrower, whether now known or unknown to Borrower, and whether contingent or
matured, (i) in respect of the Loans, the Loan Documents, or the actions or
omissions of Lender in respect of the Loans or the Loan Documents and (ii)
arising from events occurring prior to the date of this Agreement.
5.3 A documentation fee of $500.00.
SECTION 6. CONDITIONS PRECEDENT.
The agreements of Lender and the modifications contained herein shall
not be binding upon Lender until Lender has executed and delivered this
Agreement and Lender has received, at Borrower's expense, all of the following,
all of which shall be in form and content satisfactory to Lender and shall be
subject to approval by Lender:
6.1 An original of this Agreement fully executed by the Borrower
6.2 If Borrower or EDI a corporation, limited liability company,
partnership or trust, such resolutions or authorizations and such other
documents as Lender may require relating to the existence and good standing of
that corporation, partnership or trust, and the authority of any person
executing this Agreement or other documents on behalf of that corporation,
limited liability company, partnership or trust; and
6.3 Payment of all the internal and external costs and expenses
incurred by Lender in connection with this Agreement (including, without
limitation, a documentation fee in the amount of $300.00 and outside attorneys,
appraisal, appraisal review, processing, title, filing and recording costs,
expenses, and fees).
SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION,
OR WAIVER.
The Loan Documents as modified herein contain the complete
understanding and agreement of Borrower and Lender in respect of the Loans and
supersede all prior representations, warranties, agreements, arrangements,
understandings, and negotiations. No provision of the Loan Documents as modified
herein may be changed, discharged, supplemented, terminated, or waived except in
a writing signed by the parties thereto.
SECTION 8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall
inure to the benefit of Borrower and Lender and their successors and assigns and
the executors, legal administrators, personal representatives, heirs, devisees,
and beneficiaries of Borrower, provided, however,
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Borrower may not assign any of its right or delegate any of its obligation under
the Loan Documents and any purported assignment or delegation shall be void.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of law
principles.
SECTION 10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
WHITE ELECTRONIC DESIGNS
CORPORATION, an Indiana corporation, formerly
known as Xxxxxx Instrument Corporation
By: /s/ Xxxxxx X. Xxxxxx Xx.
Name: Xxxxxx X. Xxxxxx Xx.
Title: Vice President
BORROWER
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Xxxxx: V.P.
LENDER
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