EXHIBIT 10.4
AMENDMENT TO BUSINESS CREDIT AND SECURITY AGREEMENT
(Amendment No. 3)
THIS AMENDMENT TO BUSINESS CREDIT AND SECURITY AGREEMENT ("Amendment") is
entered into as of the 31st day of March, 1999 by and among Elcom Services
Group, Inc. ("Elcom Services"), Deutsche Financial Services Corporation ("DFS")
and xxxxx.xxx, inc., a Delaware corporation ("xxxxx.xxx"), having a principal
place of business located at 00 Xxxxxx Xxx, Xxxxxxx, XX 00000.
RECITALS: DFS and Elcom Services are parties to that certain Business
Credit and Security Agreement executed as of March 1, 1997, as amended ("BCSA").
Capitalized terms shall have the same meaning as defined in the BCSA unless
otherwise indicated. DFS, Elcom Services and xxxxx.xxx now desire to add
xxxxx.xxx as a "Borrower" under and pursuant to the terms of the BCSA.
FOR VALUE RECEIVED, DFS, Elcom Services and xxxxx.xxx agree as follows:
1. The BCSA shall be amended to add xxxxx.xxx as a "Borrower" party to the
same extent as if xxxxx.xxx had been an original signatory thereto. The term
"Borrower" is hereby amended to mean Elcom Services and xxxxx.xxx, individually
and/or collectively. xxxxx.xxx, jointly and severally with Elcom Services, and
each hereby assumes all of the Obligations and duties under the BCSA and the
other Loan Documents as a Borrower, and agrees to all of the terms and
conditions thereof and of any of the other Loan Documents, including but not
limited to, the provisions of Section 3.15 of the BCSA. Within forty-five (45)
days of the date of this Amendment, xxxxx.xxx shall enter into a lockbox
agreement with a financial institution and in form and substance satisfactory to
DFS ("Lockbox Agreement") (and the Lockbox Agreement shall be a Loan Document)
and xxxxx.xxx shall direct all of its Account Debtors to make payment thereunder
to the lockbox established under the terms of the Lockbox Agreement. Prior to
the establishment of the Lockbox Agreement, xxxxx.xxx shall deposit all
collections from its Account Debtors in to the lockbox approved by DFS which is
used by Elcom Services for the deposit of its collections from Account Debtors.
All of the representations, warranties, covenants and agreements set forth
in the BCSA and the other Loan Documents are hereby made by xxxxx.xxx in favor
of DFS, all of which Elcom Services also hereby reaffirms as of the date hereof.
xxxxx.xxx agrees and confirms that its Collateral secures the Obligations. In
connection with the foregoing, xxxxx.xxx hereby delivers to DFS the Secretary's
Certificate attached hereto. Nothing herein, however, shall in any manner be
deemed a release of Elcom Services' obligations to DFS under the BCSA or any
other Loan Document.
2. The BCSA shall be further amended by incorporating the following as if
fully and originally set forth therein:
"Common Credit Facility. xxxxx.xxx is a wholly-owned subsidiary of Elcom
Services, both of which do business among each other and with third parties
substantially as an integrated family of companies, and accordingly, each
Borrower desires to have the availability of one common credit facility
instead of separate credit facilities. Each Borrower has requested that DFS
extend such a common credit facility on the terms set forth herein. Each
Borrower acknowledges that DFS will be lending against, and relying on a
lien upon, substantially all of Borrower's assets even though the proceeds
of any particular advance made hereunder may not be advanced directly to
such Borrower, and that such Borrower will nevertheless benefit by the
making of all such advances by DFS and the availability of a single credit
facility of a size greater than each might independently warrant.
Appointment of Elcom Services as Agent. xxxxx.xxx hereby appoints Elcom
Services as its agent and attorney-in-fact to take any action or execute
any document or instrument necessary or appropriate for the administration
of the Collateral hereunder and under the other Loan
Documents. Without limiting the generality of the foregoing, Elcom Services
shall prepare and deliver to DFS all reports concerning the Accounts and
other Collateral required by this Agreement, whether such Collateral is
owned by Elcom Services or xxxxx.xxx, and xxxxx.xxx shall be fully bound by
the statements and actions of Elcom Services. In addition, Elcom Services
shall be the only Borrower from whom DFS shall recognize requests for
advances hereunder, whether such advance request is for the benefit of
Elcom Services or xxxxx.xxx. DFS shall be entitled to rely absolutely and
without duty of inquiry or investigation upon any agreement, request,
communication or other notice given by Elcom Services hereunder.
Joint and Several Liability. Notwithstanding anything herein to the
contrary, each Borrower is primarily and jointly and severally liable for
all Obligations. If and to the extent a Borrower shall be deemed a
guarantor of the other Borrower hereunder, such Borrower's joint liability
for any Obligations of such other Borrower shall be deemed to be a guaranty
of payment and performance, and not of collection. A Default by one
Borrower shall be deemed a Default by the other Borrower."
3. Conditions Precedent. Notwithstanding the foregoing, this Amendment
shall not be effective unless and until satisfaction of the following terms and
conditions, each as acceptable to DFS, in its sole discretion:
(a) execution and delivery of this Amendment by all parties hereto.
(b) execution of a Collateralized Guaranty by Elcom International, Inc.
("EII") of all of the obligations of xxxxx.xxx to DFS.
(c) a reaffirmation of EII's existing guaranty of the obligations of Elcom
Services to DFS.
(d) File stamped UCC financing statements on xxxxx.xxx, in form and
substance acceptable to DFS, in all relevant jurisdictions to ensure DFS'
valid first priority, fully perfected security interest in the Collateral
of xxxxx.xxx.
(e) UCC lien searches on xxxxx.xxx and "Elcom Systems, Inc." in all
relevant jurisdictions evidencing filing of the aforementioned UCC
financing statements and no prior filers other than those acceptable to
DFS, or in the event such prior filers appear in such searches,
subordinations and/or releases in form and substance acceptable to DFS.
(f) Revised and/or replacement insurance certificates and lender loss payee
endorsements, in the form currently required under the existing financing
agreements with DFS, to include xxxxx.xxx.
(g) the written consent of DFS' participant in these credit facilities.
(h) such other and further documents and agreements as DFS may determine in
connection with any of the foregoing.
All other terms and provision of the BCSA, to the extent consistent with
the foregoing, are hereby ratified and will remain unchanged and in full force
and effect.
IN WITNESS WHEREOF, Elcom Services, xxxxx.xxx and DFS have each executed
this Amendment as of the date first above written.
THIS AMENDMENT, THE BCSA AND ALL OF THE OTHER LOAN DOCUMENTS CONTAIN
BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE WAIVER PROVISIONS, WHICH
EACH PARTY, BY THEIR SIGNATURE BELOW, HEREBY ACKNOWLEDGES AND ACCEPTS.
ELCOM SERVICES GROUP, INC.
Attest:
By: /s/ X. X. Xxxxxxx
Name: X. X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxx Title: Chief Financial Officer
(Assistant) Secretary
xxxxx.xxx, inc.
Attest:
By: /s/ X. X. Xxxxxxx
Name: X. X. Xxxxxxx
/s/ Xxxxxxx X. XxXxxxxxx Title: Chief Financial Officer
(Assistant) Secretary
DEUTSCHE FINANCIAL SERVICES CORPORATION
BY: /s/ M. B. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Regional Branch Manager
PARTICIPANT CONSENT AND AGREEMENT
---------------------------------------
The undersigned ("Participant") is a party to that certain First Amended
and Restated Participation Agreement with DFS dated as of February 14, 1997 (as
amended, the "Participation Agreement"), concerning its participation in credit
facilities extended to Elcom Services Group, Inc. by DFS. The undersigned hereby
(i) acknowledges and agrees to the terms of the foregoing Amendment to Business
Credit and Security Agreement (Amendment No. 3), and does hereby ratify and
confirm its Participation Agreement in all respects, and (ii) agrees that the
Participation Agreement shall be amended in all respects to add xxxxx.xxx, Inc.
to the definition of "Borrower" therein.
BANKBOSTON, N.A.
By: /s/ X. X. Xxxxxx
Name: D. E. Bryant
Title: Division Executive
Date: Xxxxx 00, 0000
Xxxxxxxxx Consent and Agreement
The undersigned Guarantor hereby acknowledges and consents to the terms of the
foregoing Amendment to Business Credit and Security Agreement (Amendment No. 3),
and does hereby ratify and confirm each and every guaranty of Borrower
(inclusive of xxxxx.xxx) in all respects.
ELCOM INTERNATIONAL, INC.
By: /s/ X. X. Xxxxxxx
Print Name: X. X. Xxxxxxx
Title: Chief Financial Officer
Date: March 31, 1999
AMENDMENT TO BUSINESS CREDIT AND SECURITY AGREEMENT
(Amendment No. 4)
This Amendment to Business Credit and Security Agreement ("Amendment") is made
by and among Deutsche Financial Services Corporation ("DFS"), Elcom Services
Group, Inc. ("Elcom Services"), and xxxxx.xxx, inc. ("xxxxx.xxx") (Elcom
Services and xxxxx.xxx are referred to herein collectively as "Borrower").
WHEREAS, DFS and Borrower are parties to that certain Business Credit and
Security Agreement dated March 1, 1997, as amended ("Agreement"); and
WHEREAS, DFS and Borrower desire to amend the Agreement as provided herein.
NOW, THEREFORE, for and in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, DFS and Borrower agree as follows:
1. Total Credit Facility. The first sentence of Section 3.1 is hereby
deleted in its entirety and replaced with the following:
"In consideration of Borrower's payment and performance of its
Obligations and subject to the terms and conditions contained in
this Agreement, DFS agrees to provide, and Borrower agrees to
accept, an aggregate credit facility (the "Credit Facility") of
up to Eighty Million Dollars ($80,000,000) ("Total Credit
Limit")."
2. Floorplan Inventory Loan Facility. The first sentence of Section 3.2 is
hereby deleted in its entirety and replaced with the following:
"Subject to the terms of this Agreement, DFS may provide to
Borrower floorplan financing for the acquisition of Inventory
from vendors approved by DFS in DFS' reasonable credit judgment
(each advance being a "Floorplan Inventory Loan"), up to an
aggregate unpaid principal amount at any time not to exceed
Thirty-Five Million Dollars ($35,000,000) (collectively, the
"Floorplan Inventory Loan Facility")."
3. Total Working Capital Credit Limit.
3.1 Total Working Capital Credit Limit. The first sentence of Section
3.3 is hereby deleted in its entirety and replaced with the following:
"Subject to the terms of this Agreement, DFS agrees, for so long
as no Default exists, to provide to Borrower, and Borrower agrees
to accept, working capital financing (each advance being a
"Working Capital Loan") on Eligible Accounts and Eligible
Inventory in the maximum aggregate unpaid principal amount at any
time equal to the lesser of (i) the Borrowing Base and (ii)
Forty-Three Million Dollars ($43,000,000) ("Total Working Capital
Credit Limit")."
3.2 Eligible Accounts. Section 3.3(a) of the Agreement is hereby
deleted in its entirety and replaced with the following:
"(a) Eligible Accounts. On receipt of each Borrowing Base
Certificate in form and substance acceptable to DFS (the
"Borrowing Base Certificate"), DFS will credit Borrower with
eighty-five percent (85%) ("Eligible Accounts Advance Rate") of
the net amount of the Eligible Accounts which are, absent error
or other discrepancy, listed in such Borrowing Base Certificate
("Eligible Account Availability"); provided, however,
that DFS may reduce the Eligible Accounts Advance Rate to eighty
percent (80%) at any time and from time to time upon DFS'
determination that the aging of the Eligible Accounts has
increased. For purposes hereof, the net amount of Eligible
Accounts at any time shall be the face amount of such Eligible
Accounts less any and all returns, discounts (which may, at DFS'
option, be calculated on shortest terms), credits, rebates,
allowances, or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or
payable in connection with such Accounts at such time."
3.3 Interest. Section 3.3(c) of the Agreement is hereby deleted in its
entirety and replaced with the following:
"(c) Interest. Borrower agrees to pay interest to DFS, on the
Daily contract Balance owed under Borrower's Working Capital
Loans at a rate that is equal to the Prime Rate minus one-half of
one percentage point (0.5%) per annum ("Base Working Capital Loan
Interest Rate"); subject to the following periodic adjustments:
(1) the Base Working Capital Loan Interest Rate shall be
increased by one quarter of one percentage point (0.25%)
effective on the first day of the Borrower's fiscal quarter
immediately following each of Borrower's fiscal quarters
that Elcom (or Borrower, if Borrower's financial statements
are not consolidated with Elcom) shall evidence a before tax
loss, excluding any expense charges relating to the
Intangibles, as determined in accordance with GAAP ("Before
Tax Loss"), during such fiscal quarter;
(2) if during the fiscal quarter immediately following an
increase in the Base Working Capital Loan Interest Rate as
provided in Section 3.3(c)(1) above, Borrower's financial
statements do not evidence a cumulative Before Tax Loss and
provided that Borrower is not in Default, then the interest
rate applicable to Working Capital Loans shall be reduced by
one quarter of one percentage point (0.25%), but in no event
shall the interest rate applicable to Working Capital Loans
ever be less than the Base Working Capital Loan Interest
Rate; and
(3) if Borrower shall be in compliance with all Financial
Covenants set forth in Section 9.3.1 as of the last day of
Borrower's fiscal year, and provided that Borrower is not in
Default, then effective on the first day of the immediately
following fiscal year the applicable interest rate on the
Daily Contract Balance owed under Borrower's Working Capital
Loans shall be the Base Working Capital Loan Interest Rate,
subject to increases in the Base Working Capital Loan
Interest Rate as a result of subsequent Before Tax Losses as
described in this Section 3.3(c).
Each change in the Base Working Capital Loan Interest Rate
shall be applied retroactively to the effective date of
change. Any change to the Base Working Capital Loan Interest
Rate shall not be deemed to be a waiver of DFS' rights under
the Agreement, including, but not limited to, the right to
declare Borrower in Default as a result of Before Tax Losses
that constitute a Default under the Agreement."
4. Overadvance Facility.
4.1 Introductory Clause. The introductory clause of Section 3.4 is
hereby deleted in its entirety and replaced with the following:
"Subject to the terms of this Agreement, DFS agrees, for so long
as no Default exists, to provide borrower, and Borrower agrees to
accept, overadvance financing for the
purposes described herein (each advance being an "Overadvance
Loan"), up to an aggregate unpaid principal amount not to exceed
at any time Two Million Dollars ($2,000,000), on and subject to
the following terms and conditions (the "Overadvance Facility"):"
4.2 Total Outstanding Principal. The second to last sentence of
Section 3.4 is hereby deleted in its entirety and replaced with the
following:
"Notwithstanding anything else herein, the total outstanding
principal amount of all Loans under this Agreement shall not at
any time exceed $80,000,000.00."
5. Financial Covenant Default Forbearance Fee. A new Section 9.3.3 is
incorporated into the Agreement as follows:
"9.3.3 Financial Covenant Default/Forbearance Fee. If Borrower is
in Default under the Agreement solely as a result of Borrower's
breach of one or more of the Financial Covenants set forth in
Section 9.3.1, and is not otherwise in Default, Borrower may
request that DFS' forbear from enforcing its rights and remedies
as a result of such Default. DFS in its sole discretion shall
determine whether to grant to Borrower such forbearance, with
such forbearance memorialized in a writing in form and substance
satisfactory to DFS (each a "Forbearance Letter"), and further
provided that Borrower pays to DFS a fee of $25,000.00 for such
forbearance ("Forbearance Fee"). Tender of the Forbearance Fee by
Borrower to DFS shall not obligate DFS to grant its forbearance.
Any Forbearance Letter provided by DFS to Borrower shall not be
deemed a waiver of DFS' rights and remedies under the Agreement
and DFS may issue any number of Forbearance Letters from time to
time with respect to the same or similar types of Defaults
without impairing DFS' rights under the Agreement."
6. Conditions Precedent. Notwithstanding the foregoing, this Amendment
shall not be effective unless and until satisfaction of the following terms
and conditions, each as acceptable to DFS, in its sole discretion:
(a) execution and delivery of this Amendment by all parties
hereto.
(b) a reaffirmation of Elcom International, Inc. existing
guaranties of the obligations of Borrower to DFS.
(c) execution of an amendment to the Participation Agreement
dated February 14, 1997, as amended, between DFS and BankBoston,
N.A. ("BankBoston"), in form and substance acceptable to each
party thereto.
(d) the written consent of BankBoston to this Amendment.
(e) satisfaction of all of the conditions precedent in that
certain Amendment to Business Credit and Security Agreement
making xxxxx.xxx a party to the Agreement.
(f) satisfaction of all of the conditions precedent in that
certain waiver letter delivered by DFS to Borrower.
(g) such other and further documents and agreements as DFS may
determine in connection with any of the foregoing.
7. No Other Modifications. Except as expressly modified or amended herein,
all other terms and provisions of the Agreement shall remain unmodified and
in full force and effect and the Agreement, as hereby amended, is ratified
and confirmed by DFS and Borrower.
8. Capitalized Terms. Except as otherwise defined herein, all capitalized
terms will have the same meanings set forth in the Agreement.
IN WITNESS WHEREOF, DFS, Elcom Services and xxxxx.xxx have executed this
Amendment as of the 31st day of March, 1999.
ELCOM SERVICES GROUP, INC.
ATTEST:
Print Name: X. X. Xxxxxxx
Title: Chief Financial Officer
/s/ Xxxxxx X. Xxxxxx By: /s/ X. X. Xxxxxxx
(Assistant) Secretary
XXXXX.XXX, INC.
ATTEST: Print Name: X. X. Xxxxxxx
Title: Chief Financial Officer
/s/ Xxxxxxx X. XxXxxxxxx By: /s/ X. X. Xxxxxxx
(Assistant) Secretary
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By: /s/ M. B. Xxxxxxx
Print Name: Xxxx X. Xxxxxxx
Title: Regional Branch Manager
Participant Consent and Agreement
The undersigned ("Participant") is a party to that certain First Amended
and Restated Participation Agreement with DFS dated as of February 14, 1997, as
amended (the "Participation Agreement"), concerning its participation in credit
facilities extended to Elcom Services Group, Inc. and xxxxx.xxx, inc. by DFS.
The undersigned hereby acknowledges and agrees to the terms of the foregoing
Amendment to Business Credit and Security Agreement (Amendment No. 4), and does
hereby ratify and confirm its Participation Agreement in all respects.
BANKBOSTON, N.A.
By: /s/ X. X. Xxxxxx
Name: D. E. Bryant
Title: Division Executive
Date: 03/31/99
Guarantor Consent and Agreement
The undersigned Guarantor hereby acknowledges and consents to the terms of the
foregoing Amendment to Business Credit and Security Agreement (Amendment No. 4),
and does hereby ratify and confirm each and every guaranty of Borrower
(inclusive of xxxxx.xxx) in all respects.
ELCOM INTERNATIONAL, INC.
By: /s/ X. X. Xxxxxxx
Print Name: X. X. Xxxxxxx
Title: Chief Financial Officer
Date: March 31, 1999
