EXHIBIT 10.1
XXXXXXX XXXXX COMMERCIAL FINANCE CORP.
000 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
[GRAPHIC OMITTED]
XXXXXXX XXXXX
Xxxx Easter, Vice President
TEL: (000) 000-0000
November 19,2009
Orbit International Corp
00 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Re: Amendedment to Loan Documents
Dear Gentlemen:
This Amendment ("Amendment") is by and between XXXXXXX XXXXX COMMERCIAL FINANCE
CORP. ("MLCFC") and Orbit International Corp. ("Customer") and will serve to
confirm certain agreements with respect to the following documents:
(i) WCMA LOAN AND SECURITY AGREEMENT NO. 885-07587 dated January 28,
2003 by and between MLCFC and Customer, as thereafter supplemented, modified,
renewed, extended or amended (the " WCMA Loan Agreement");
(ii) TERM LOAN AND SECURITY AGREEMENT dated April 4, 2005 by and
between MLCFC and Customer, as thereafter supplemented, modified, renewed,
extended or amended (the " Term Loan Agreement A");
(iii) COLLATERAL INSTALLMENT NOTE dated April 4, 2005 by and between MLCFC
and Customer, as thereafter supplemented, modified, renewed, extended or amended
(the " Note A");
(iv) TERM LOAN AND SECURITY AGREEMENT June 5, 2007 by and between MLCFC and
Customer, as thereafter supplemented, modified, renewed, extended or amended
(the " Term Loan Agreement B");
(v) COLLATERAL INSTALLMENT NOTE dated April 4, 2005 by and between MLCFC
and Customer, as thereafter supplemented, modified, renewed, extended or amended
(the " Note B");
(vi) TERM LOAN AND SECURITY AGREEMENT December 19, 2007 by and between
MLCFC and Customer, as thereafter supplemented, modified, renewed, extended or
amended (the " Term Loan Agreement C");
(vii) COLLATERAL INSTALLMENT NOTE dated April 4, 2005 by and between MLCFC
and Customer, as thereafter supplemented, modified, renewed, extended or amended
(the " Note B");
(viii) UNCONDITIONAL GUARANTIES (i) dated December 31, 2007 given to MLCFC
by Integrated Consulting Services, Inc. and (ii) dated April 4, 2005 and June
5, 2007, given to MLCFC jointly by TDL Manufacturing, Inc., Tulip Development
Laboratory, Inc., Orbit Instrument of California, and Xxxxxxx Electronics,
Inc.(collectively, the "Business Guarantors" )
(ix) all other agreements between MLCFC and Customer, or any other party who
at any time has guaranteed or provided collateral, or will hereinafter guarantee
or provide collateral, for Customer's obligations to MLCFC in connection
therewith (the "Additional Agreements")
For purposes of this Amendment, (i) Customer and Business Guarantors are
collectively referred to as the "Obligors", and (ii) the WCMA Loan Agreement,
Term Loan Agreement A, Note A, Term Loan Agreement B, Note B, Term Loan
Agreement C, Note C, the Guaranties, and the Additional Agreements are
collectively referred to as the "Loan Documents".
Capitalized terms used herein and not defined herein shall have the same meaning
as set forth in the Loan Documents.
I. LIMITED WAIVER OF FINANCIAL COVENANTS
---------------------------------------------
Obligors acknowledge that for the period ended September 30, 2009, they are in
violation of the following covenants under the Loan Documents (the "Identified
Defaults"):
FIXED CHARGE COVERAGE RATIO COVENANT
FUNDED DEBT TO EBITDA COVENANT
Obligors have requested, and, subject to the terms and conditions hereof, MLCFC
has agreed to waive the default for the period ended September 30, 2009.
Nothing in this letter shall be construed as a waiver of any other term or
condition of the Loan Documents, nor shall this letter be construed as a
commitment on the part of MLCFC to waive any other term or condition set forth
in the Loan Documents. This waiver is expressly limited to the covenant
referenced above, for the period referenced above. In all other respects and
except as expressly amended hereby, the terms and conditions of the Loan
Documents remain in full force and effect.
II. AMENDMENT TO LOAN DOCUMENTS.
-------------------------------
A. WCMA LOAN AGREEMENT. The WCMA Loan Agreement is hereby amended as follows:
1. Definitions. The following terms set forth in Subsection 1.1 entitled
"Specific Terms" shall be amended and restated as follows:
"APPLICABLE MARGIN" shall be amended by deleting the percentage "3.50%" and
inserting the percentage "4.00%" in lieu thereof.
"MAXIMUM WCMA LINE OF CREDIT" shall mean (X) prior to December 31, 2009, the
lesser of: (A) $2,000,000.00 or (B) the sum of (i) 85% of the aggregate of
Customer and Business Guarantors Eligible A/R , plus (ii) the lesser of (a) 50%
of the aggregate of Customer and Business Guarantors raw materials Inventory as
shown on its regular books and records or b) 500,000.00; and (Y) on and after
December 31, 2009 the lesser of: A) $1,500,000.00 or (B) the sum of (i) 85% of
the aggregate of Customers and Business Guarantors Eligible A/R , plus (ii) the
lesser of (a) 50% of the aggregate of Customers and Business Guarantors raw
materials Inventory as shown on its regular books and records or (b) 500,000.00.
For purposes hereof the term "Eligible A/R" shall mean the aggregate Accounts
and Chattel Paper of Customer as shown on its regular books and records,
excluding (i) Accounts over 90 days old from date of invoice, Chattel Paper with
installments or other sums more than 60 days past due (90 days from invoice
date), (ii) all amounts from any account debtor not having its principal place
of business in the United States or not domiciled in the United States, (iii)
Accounts and Chattel Paper and any other amounts directly or indirectly from any
account debtor who is an affiliated entity of either Customer or any Business
Guarantor, (iv) Accounts deemed as ineligible by MLCFC, (v) any bonded
receivables, retainage, and (vi) and Accounts where the account debtor with
respect to which is not any foreign government, the United States of America,
any State, political subdivision, department, agency or instrumentality thereof,
unless, if such account debtor is the United States of America, or any
department, agency or instrumentality thereof, the Federal Assignment of Claims
Act of 1940, as amended, has been complied with in a manner satisfactory to
MLCFC.
"MATURITY DATE" shall mean June 30, 2010.
1. 2. FIXED CHARGE COVERAGE RATIO. Subsection 3.3(i) entitled "Fixed Charge
Coverage Ratio" shall be deleted in its entirety.
2. 3. OTHER COVENANTS. Subsection 3.3(h) entitled "Total Funded Debt to
EBITDA" shall be amended and restated as follows and a new Subsection 3.3(i)
entitled "Debt Service Coverage Ratio" shall be added as follows:
3.3(h) Total Funded Debt to EBITDA. Commencing December 31, 2009 and continuing
quarterly on a trailing 12-month basis thereafter, the Consolidated Entities
"Total Funded Debt to EBITDA" ratio shall not exceed 3.00 to 1.00.
For purposes hereof "Total Funded Debt to EBITDA" shall mean the ratio of (a)
all debt for borrowed money including all outstandings (excluding unused
availability) under any revolving credit facility, and including debt to MLCFC,
to (b) income before interest (including payments in the natureof interest under
capital leases) taxes, depreciation, amortization, and other similar non-cash
charges; all as determined on a trailing 12month basis as set forth in the
Consolidated Entities regular quarterly financial statements prepared in
accordance with GAAP.
"3.3(i) Debt Service Coverage Ratio. Commencing the quarterly period ending
December 31, 2009, the Consolidated Entities "Debt Service Coverage Ratio" shall
exceed 1.50 to 1.00; and
On March 31, 2010 and continuing quarterly on a trailing 12-month basis the
Consolidated Entities "Debt Service Coverage Ratio" shall at all times exceed
1.00 to 1.00."
For purposes hereof, "Debt Service Coverage Ratio" shall mean the ratio of (a)
income before interest (including payments in the nature of interest under
capital leases), taxes, depreciation, amortization, and other similar non-cash
charges, to (b) the sum of (i) any dividends and other distributions paid or
payable to shareholders, any taxes paid in cash, and interest expense, plus (ii)
any principal paid during the prior 12-month period and any rental under capital
leases scheduled to be paid or accrued over the next 12-month period; all as
determined on a trailing 12-month basis as set forth in the Consolidated
Entities quarterly financial statements prepared in accordance with GAAP.
B. Term Loan Agreement A. Term Loan Agreement A is hereby amended as follows:
1. 1. FIXED CHARGE COVERAGE RATIO. Subsection 3.3(m) entitled "Fixed Charge
Coverage Ratio" shall be deleted in its entirety.
2. 2. OTHER COVENANTS. Subsection 3.3(l) entitled "Total Funded Debt to
EBITDA" shall be amended and restated as follows and a new Subsection 3.3(m)
entitled "Debt Service Coverage Ratio" shall be added as follows:
3.3(l) Total Funded Debt to EBITDA. Commencing December 31, 2009 and continuing
quarterly on a trailing12-month basis thereafter, the Consolidated Entities
"Total Funded Debt to EBITDA" ratio shall not exceed 3.00 to 1.00.
For purposes hereof "Total Funded Debt to EBITDA" shall mean the ratio of (a)
all debt for borrowed money including all outstandings (excluding unused
availability) under any revolving credit facility, and including debt to MLCFC,
to (b) income before interest (including payments in the natureof interest under
capital leases) taxes, depreciation, amortization, and other similar non-cash
charges; all as determined on a trailing 12month basis as set forth in the
Consolidated Entities regular quarterly financial statements prepared in
accordance with GAAP.
"3.3(m) Debt Service Coverage Ratio. Commencing the quarterly period ending
December 31, 2009, the Consolidated Entities "Debt Service Coverage Ratio" shall
exceed 1.50 to 1.00; and
On March 31, 2010 and continuing quarterly on a trailing 12-month basis the
Consolidated Entities "Debt Service Coverage Ratio" shall at all times exceed
1.00 to 1.00."
For purposes hereof, "Debt Service Coverage Ratio" shall mean the ratio of (a)
income before interest (including payments in the nature of interest under
capital leases), taxes, depreciation, amortization, and other similar non-cash
charges, to (b) the sum of (i) any dividends and other distributions paid or
payable to shareholders, any taxes paid in cash, and interest expense, plus (ii)
any principal paid during the prior 12-month period and any rental under capital
leases scheduled to be paid or accrued over the next 12-month period; all as
determined on a trailing 12-month basis as set forth in the Consolidated
Entities quarterly financial statements prepared in accordance with GAAP.
C. Note A. Note A is hereby amended as follows:
1. DEFINITIONS. The defined term set forth as Subsection 1(a)(iii) entitled
"Interest Rate" shall be amended as follows:
1(a)
(iii) "Applicable Margin" shall be amended by deleting the percentage "3.50%"
and inserting the percentage "4.00%" in lieu thereof.
D. Term Loan Agreement B. Term Loan Agreement B is hereby amended as follows:
1. 1. FIXED CHARGE COVERAGE RATIO. Subsection 3.3(m) entitled "Fixed Charge
Coverage Ratio" shall be deleted in its entirety.
2. 2. OTHER COVENANTS. Subsection 3.3(l) entitled "Total Funded Debt to
EBITDA" shall be amended and restated as follows and a new Subsection 3.3(m)
entitled "Debt Service Coverage Ratio" shall be added as follows:
3.3(l) Total Funded Debt to EBITDA. Commencing December 31, 2009 and continuing
quarterly on a trailing12-month basis thereafter, the Consolidated Entities
"Total Funded Debt to EBITDA" ratio shall not exceed 3.00 to 1.00.
For purposes hereof "Total Funded Debt to EBITDA" shall mean the ratio of (a)
all debt for borrowed money including all outstandings (excluding unused
availability) under any revolving credit facility, and including debt to MLCFC,
to (b) income before interest (including payments in the natureof interest under
capital leases) taxes, depreciation, amortization, and other similar non-cash
charges; all as determined on a trailing 12month basis as set forth in the
Consolidated Entities regular quarterly financial statements prepared in
accordance with GAAP.
"3.3(m) Debt Service Coverage Ratio. Commencing the quarterly period ending
December 31, 2009, the Consolidated Entities "Debt Service Coverage Ratio" shall
exceed 1.50 to 1.00; and
On March 31, 2010 and continuing quarterly on a trailing 12-month basis the
Consolidated Entities "Debt Service Coverage Ratio" shall at all times exceed
1.00 to 1.00."
For purposes hereof, "Debt Service Coverage Ratio" shall mean the ratio of (a)
income before interest (including payments in the nature of interest under
capital leases), taxes, depreciation, amortization, and other similar non-cash
charges, to (b) the sum of (i) any dividends and other distributions paid or
payable to shareholders, any taxes paid in cash, and interest expense, plus (ii)
any principal paid during the prior 12-month period and any rental under capital
leases scheduled to be paid or accrued over the next 12-month period; all as
determined on a trailing 12-month basis as set forth in the Consolidated
Entities quarterly financial statements prepared in accordance with GAAP.
E. Note B. Note B is hereby amended as follows:
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1. DEFINITIONS. The defined term set forth as Subsection 1(a)(iii) entitled
"Interest Rate" shall be amended as follows:
1(a)
(iii) "Applicable Margin" shall be amended by deleting the percentage "3.50%"
and inserting the percentage "4.00%" in lieu thereof.
F. Term Loan Agreement C. Term Loan Agreement C is hereby amended as follows:
1. 1. FIXED CHARGE COVERAGE RATIO. Subsection 3.3(n) entitled "Fixed Charge
Coverage Ratio" shall be deleted in its entirety.
2. 2. OTHER COVENANTS. Subsection 3.3(m) entitled "Total Funded Debt to
EBITDA" shall be amended and restated as follows and a new Subsection 3.3(n)
entitled "Debt Service Coverage Ratio" shall be added as follows:
3.3(m) Total Funded Debt to EBITDA. Commencing December 31, 2009 and continuing
quarterly on a trailing12-month basis thereafter, the Consolidated Entities
"Total Funded Debt to EBITDA" ratio shall not exceed 3.00 to 1.00.
For purposes hereof "Total Funded Debt to EBITDA" shall mean the ratio of (a)
all debt for borrowed money including all outstandings (excluding unused
availability) under any revolving credit facility, and including debt to MLCFC,
to (b) income before interest (including payments in the natureof interest under
capital leases) taxes, depreciation, amortization, and other similar non-cash
charges; all as determined on a trailing 12month basis as set forth in the
Consolidated Entities regular quarterly financial statements prepared in
accordance with GAAP.
"3.3(n) Debt Service Coverage Ratio. Commencing the quarterly period ending
December 31, 2009, the Consolidated Entities "Debt Service Coverage Ratio" shall
exceed 1.50 to 1.00; and
On March 31, 2010 and continuing quarterly on a trailing 12-month basis the
Consolidated Entities "Debt Service Coverage Ratio" shall at all times exceed
1.00 to
1.00.
For purposes hereof, "Debt Service Coverage Ratio" shall mean the ratio of (a)
income before interest (including payments in the nature of interest under
capital leases), taxes, depreciation, amortization, and other similar non-cash
charges, to (b) the sum of (i) any dividends and other distributions paid or
payable to shareholders, any taxes paid in cash, and interest expense, plus (ii)
any principal paid during the prior 12-month period and any rental under capital
leases scheduled to be paid or accrued over the next 12-month period; all as
determined on a trailing 12-month basis as set forth in the Consolidated
Entities quarterly financial statements prepared in accordance with GAAP.
G. Note C. Note C is hereby amended as follows:
1. DEFINITIONS. The defined term set forth as Subsection 1(a)(iii) entitled
"Interest Rate" shall be amended as follows:
1(a)
(iii) "Applicable Margin" shall be amended by deleting the percentage "3.50%"
and inserting the percentage "4.00%" in lieu thereof.
III. Other Agreements.
Audit/Appraisal. If the Obligations owed under the Loan Documents are not
refinanced by another lender on or before March 31, 2010, Customer shall, at its
own expense, permit a field examination of Customers and Business Guarantors
books, records and/or property and an appraisal of Customers and Business
Guarantors machinery and equipment to commence no later than April 19, 2010.
The results of such examination shall be acceptable to MLCFC in its sole
discretion,
Covenant Waiver Fees.
----------------------
.. (i) To induce MLCFC to grant a waiver of the Identified Defaults and enter
into this Amendment, Customer shall, contemporaneously with the execution of
this Amendment, pay MLCFC a covenant waiver fee in the amount of Fifteen
Thousand Dollars 00/100 ($15,000.00), ("Covenant Waiver Fee"). The Covenant
Waiver Fee shall be drawn on a non-Xxxxxxx Xxxxx bank account and shall be
deemed fully earned by MLCFC upon receipt.
.. (ii) To induce MLCFC to grant a waiver of the Identified Defaults and
enter into this Amendment, Customer agrees to provide MLCFC with a commitment
letter from another lender on or before February 28, 2010 to finance the
outstanding indebtedness under the Loan Documents (the "Take-Out Commitment").
Such commitment letter shall be sent to the attention of Xxxx Xxxxxx via fax no.
(000) 000-0000 or e-mail at xxxx.x.xxxxxx@xxxx.xxx.
In the event Customer fails to provide a Take-Out Commitment on or before such
date there shall be due an additional fee of $35,000.00. Such fee shall be
drawn on a non-Xxxxxxx Xxxxx bank account and shall be deemed fully earned at
5:00 PM central time on February 28, 2010.
Customer and Guarantor hereby confirm that (a) each of the warranties of
Customer in the Loan Documents are true and correct as of the date hereof and
shall be deemed remade as of the date hereof and on the effective date; (b)
neither Customer nor Guarantor have any claim against MLCFC arising out of or in
connection with the Loan Documents or any other matter whatsoever; and do each
hereby release and forever discharge MLCFC and their parents, and affiliates of
and from any and all causes of action, claims, or demands whatsoever, in law or
in equity arising from the conduct of MLCFC.
By their execution of this Amendment, the below-named Guarantors do hereby
consent to the foregoing amendment to the Loan Documents, and agree that the
obligations under the Guaranty shall extend to and include the Obligations of
Customer under the Loan Documents, as amended hereby.
Although each of the undersigned Guarantors has been informed of the matters set
forth herein and has acknowledged and agreed to same, such Guarantor understands
that MLCFC has no obligation to inform any Guarantor of such matters in the
future or to seek any Guarantor's acknowledgment or agreement to future
consents, waivers or amendments, and nothing herein shall create such a duty.
This Amendment shall become effective upon execution and delivery by Obligors of
the executed document together with the following, provided however, if the
Effective Date of this Amendment has not occurred within five (5) Business Days
from the date hereof, then this Amendment will, at the sole option of MLCFC, be
void and no effect.
SIGNATURE PAGES FOLLOW:
Very truly yours,
XXXXXXX XXXXX COMMERCIAL FINANCE CORP.
By: /s/ Xxxx Xxxxxx
-------------------
Xxxx Xxxxxx
Vice President
Accepted:
ORBIT INTERNATIONAL CORP.
By: /s/ Xxxxxx Sunshine
---------------------
Name: Xxxxxx Sunshine
Title: President, CEO
Approved:
INTEGRATED CONSULTING SERVICES, INC.
By: /s/ Xxxxxxx X. Ice
-------------------------
Xxxxxxx X. Ice, President
By: /s/ Xxxxx X. XxXxxxxxx
-------------------------
Xxxxx X. XxXxxxxxx, Secretary
TDL MANUFACTURING, INC.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------
Xxxxxxxx Xxxxxx, Vice President
By: /s/ Xxxxx Xxxxxxx
-----------------------
Xxxxx Xxxxxxx, Controller
TULIP DEVELOPMENT LABORATORY, INC.
By: /s/ Xxxxxxxx Xxxxxx
----------------------
Xxxxxxxx Xxxxxx, Vice President
By: /s/ Xxxxx Xxxxxxx
----------------------
Xxxxx Xxxxxxx, Controller
ORBIT INSTRUMENT OF CALIFORNIA, INC.
By: /s/ Xxxxxxxx Xxxxxx
----------------------
Xxxxxxxx Xxxxxx, Vice President
By: /s/ Xxxxxx Sunshine
----------------------
Xxxxxx Sunshine, President
XXXXXXX ELECTRONICS, INC,
By: /s/ Xxxx Xxxxxxxx
-------------------
Xxxx Xxxxxxxx, President
By: /s/ Xxxxxxxx Xxxxxx
-------------------
Xxxxxxxx Xxxxxx, Vice President
