SECOND AMENDMENT TO
REVOLVING CREDIT AGREEMENT
This Second Amendment to the Revolving Credit Agreement (the "Amendment")
is made as of October 6, 1997, by and among Eltrax Systems, Inc., a Minnesota
Corporation ("Eltrax") having its principal place of business at 0000 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, each of the wholly owned
subsidiaries of Eltrax, as their names appear on the signature page of this
Amendment (individually a "Borrower" and collectively, the "Borrowers") and
State Street Bank and Trust Company (the "Bank"), a Massachusetts Trust Company
with its principal offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Borrowers and the Bank have previously executed a Revolving
Credit Agreement dated as of October 31, 1996, as amended (the "Credit
Agreement"); and
WHEREAS, the Borrower and the Bank executed a First Amendment to Revolving
Credit Agreement on August 14, 1997, which increased the Revolving Line of
Credit to $5,500,000; and
WHEREAS, the Borrowers desire that the Bank increase the Revolving Line of
Credit by an additional $2,500,000, to a total of $8,000,000, and make certain
other modifications, and the Bank is willing to make available to the Borrowers
this increase in the Revolving Line of Credit along with the requested
modifications, on the terms and conditions set forth therein.
NOW THEREFORE, the Borrowers, jointly and severally, and the Bank hereby
agree as follows:
1. Section 1(a) of the Credit Agreement, which defines the phrase
COMMITMENT AMOUNT, is deleted in its entirety and substituted with the
following:
"COMMITMENT AMOUNT : $8,000,000"
2. Section 1(a) of the Original Agreement, which defines the phrase
BORROWING BASE, is deleted in its entirety and substituted with the following:
"BORROWING BASE: An amount equal to the sum of
eighty (80%) percent of the Eligible Accounts plus
the lesser of (a) $2,000,000 and (b) thirty (30%)
percent of the Eligible Inventory."
3. Section 1(a) of the Credit Agreement, which defines the phrase
MATURITY DATE, is deleted in its entirety, and substituted with the following:
"MATURITY DATE: October 31, 1999."
4. Section 2(a)(iii) of the Credit Agreement is hereby amended by
deleting the first sentence thereof and inserting the following:
"The Revolving Credit Loan shall be evidenced by
an Amended and Restated Commercial Promissory
Note in the original principal amount of
$8,000,000 in substantially the form of EXHIBIT I
hereto (the "Revolving Credit Note"), dated as of
the date of the Second Amendment to the Credit
Agreement, and completed with appropriate
insertions, which Revolving Credit Note shall be
due and payable in full on the Maturity Date."
5. Section 2(d), Paragraph (i) of the Credit Agreement is deleted in its
entirety and substituted with the following:
"COMMITMENT FEE. At all times prior to
termination of the Commitment, the Borrowers
shall pay to the Bank, a Commitment Fee of one-
fourth of one percent (1/4%) per annum of the
difference between the amount of the Commitment
Amount and the sum of the daily average
principal amount of the Revolving Credit Loans
outstanding from time to time. The Commitment
Fee shall be calculated on the last day of each
calendar quarter and on any other date the
Commitment is terminated. The Commitment Fee
shall be due and payable on the last day of each
quarter."
6. Section 6(s) of the Credit Agreement, FINANCIAL COVENANTS, is deleted
in its entirety, and substituted with the following:
"Financial Covenants. The Borrowers shall comply with
the following Financial Covenants, measured on a
consolidated basis:
(i) MINIMUM CURRENT RATIO. On and prior to
December 31, 1997, the Borrowers shall not permit
the ratio of their Current Assets to Current
Liabilities to be less than 1.00:1.00 at any
time. Beginning January 1, 1998, the ratio of
Current Assets to Current Liabilities shall not
be less than 1.1 to 1.0 at any time, and
commencing January 1, 1999, the ratio of Current
Assets to
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Current Liabilities shall not be less than 1.5 to
1.0 at any time.
(ii) MAXIMUM INDEBTEDNESS TO NET WORTH. On
and prior to December 31, 1997, the Borrowers
shall not permit the ratio of their Indebtedness
to Net Worth to be greater than 1.5:1.0 at any
time. Beginning January 1, 1998, the ratio of
Indebtedness to Net Worth shall not be greater
than 1.3 to 1.0 at any time, and commencing
January 1, 1999, the ratio of Indebtedness to Net
Worth shall not be greater than 1.2 to 1.0 at any
time.
(iii) POSITIVE EBITDA. For the quarter
ending December 31, 1997, the Borrowers'
consolidated EBITDA shall be positive, and for
any individual month in such quarter, shall not
be a loss of more than $100,000. For the months
ending January 31, 1998 and February 28, 1998,
the Borrowers' consolidated EBITDA for the three
month period ending with such month shall be
positive. Commencing with the month ending March
31, 1998, and at the end of each subsequent
month, the Borrowers' consolidated EBITDA for the
three month period ending with such month shall
not be less than $350,000.
(iv) MAXIMUM CAPITAL EXPENDITURE. The
Borrowers shall not permit their Capital
Expenditures to exceed $750,000 during the year
ending December 31, 1997, and $500,000 for any
subsequent fiscal year."
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7. CHANGES OF NAME, MERGERS, ETC. None of the Borrowers shall merge
with or into any Person, including any of the Borrowers, change its name or
change its principal place of business without giving the bank at least 15
days prior written notice thereof, and executing and delivering to the bank
such Uniform Commercial Code Financing Statements, Landlord's Waivers and any
other documents the Bank may reasonably request in order to more fully
evidence and document the Bank's continuing security interest in the
Collateral of any such Borrower, after giving effect to any such name change,
merger or other transaction.
8. CLOSING FEE. Simultaneous with the execution and delivery of this
Amendment, the Borrowers will pay to the Bank a Closing Fee of $30,000.
9. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers jointly and
severally represents and warrants to the Bank as follows:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 4 of the Credit Agreement and in each Instrument of
Adherence (Credit Agreement) executed and delivered by one or more of the
Borrowers to the Bank (the "Instrument of Adherence"), were true and correct
in all material respects when made. Except to the extent that such
representations and warranties expressly relate to a specific date or were
based on facts which have changed in the ordinary course of business, which
changes either singly or in the aggregate, have not been materially adverse,
the representations and warranties contained in Section 4 of the Credit
Agreement and the Instruments of Adherence, after giving effect to this
Amendment, are true and correct on the date hereof.
(b) ENFORCEABILITY. The execution and delivery by each of the
Borrowers of this Amendment, and the performance by each of the Borrowers of
the Amendment and the Credit Agreement, as amended hereby, are within the
corporate authority of such Person and have been duly authorized by all
necessary corporate proceedings. This Amendment and the Credit Agreement, as
amended hereby, are valid and legally binding obligations of each of the
Borrowers, enforceable in accordance with their terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to the enforcement of creditors' rights in general.
(c) NO DEFAULT. Except as set forth in the Compliance Certificate
attached hereto, no Default or Event of Default has occurred and is
continuing, and no Default or Event of Default will exist after the execution
and delivery of this Amendment.
(d) OTHER AGREEMENT. The execution and delivery by each of the
Borrowers of this Amendment, and the performance by each of the Borrowers of
this Amendment and the Credit Agreement, as amended hereby, will not conflict
with, or result in a breach of any term, condition or provision of, or
constitute a default under, such Borrower's charter or by-laws as presently
in effect or any other agreement, trust, deed, indenture, mortgage or other
instrument to which such Person is a party or by which such Person or any of
the property of such Person is bound or affected.
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10. AFFIRMATION OF THE BORROWERS. Each of the Borrowers hereby affirms
its absolute and unconditional, joint and several promise to pay to the Bank
the Loans and all other amounts due under the Credit Agreement on the
Maturity Date provided in the Credit Agreement, as amended hereby.
11. WAIVER OF DEFAULT. The Bank waives any and all Events of Default
under the Agreement which have occurred for any period on or prior to August
31, 1997.
12. EFFECTIVENESS. The effectiveness of this Amendment shall be
conditioned upon receipt by the Bank of this Amendment, executed by each of
the Borrowers and the Bank. Execution of this Amendment by the Bank does not
constitute a waiver by the Bank of any defaults, notices of default or rights
of the Bank under the Credit Agreement, as amended hereby, all of which are
unaffected hereby and remain in full force and effect.
13. MISCELLANEOUS PROVISIONS.
(a) Except as otherwise expressly provided by this Amendment, all of
the terms, conditions and provisions of the Credit Agreement shall remain the
same. It is declared and agreed by each of the parties hereto that the
Credit Agreement, as amended hereby, is and shall continue in full force and
effect, and that this Amendment and such Credit Agreement shall be read and
construed as one instrument.
(b) This Amendment is intended to take effect as an agreement under
seal and shall be construed according to and governed by the laws of the
Commonwealth of Massachusetts.
(c) This Amendment may be executed in any number of counterparts, but
all such counterparts shall together constitute but one instrument. In making
proof of this Amendment it shall not be necessary to produce or account for
more than one counterpart signed by each party hereto by and against which
enforcement is sought.
(d) Each of the Borrowers hereby jointly and severally agrees to pay to
the Bank, on demand by the Bank, all reasonable out-of-pocket costs and
expenses incurred or sustained by the Bank in connection with the preparation
of this Amendment and the documents referred to herein (including reasonable
legal fees).
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IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as a
sealed instrument as of the date first above written.
ELTRAX SYSTEMS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
Xxxxxxxx X. Xxxxx
Its: Treasurer
NORDATA, INC. (D/B/A DATATECH)
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------
Xxxxxxxx X. Xxxxx
Its: Treasurer
ATLANTIC NETWORK SYSTEMS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------
Xxxxxxxx X. Xxxxx
Its: Treasurer
EJG TECHLINE INCORPORATED
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------
Xxxxxxxx X. Xxxxx
Its: Treasurer
FOUR CORNERS TECHNOLOGY, INC.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------
Xxxxxxxx X.Xxxxx
Its: Treasurer
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HI-TECH CONNECTIONS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------
Xxxxxxxx X. Xxxxx
Its: Treasurer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxxxxxxx Xxxxxxx
-----------------------------
Xxxxxxxx Xxxxxxx
Its: Vice President
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