FIRST AMENDMENT AND WAIVER AGREEMENT
THIS FIRST AMENDMENT AND WAIVER AGREEMENT (this "First Amendment") is
entered into as of September 13, 2005 by and among Xxxxxx Electronics, Inc., a
New York corporation ("Borrower"), and Xxxxxxx Business Credit Corporation
("Lender").
Introduction
Borrower and Lender are parties to a Loan and Security Agreement dated as
of November 21, 2003 (as amended through the date hereof and as further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lender has agreed to make revolving credit loans
and to provide certain other financial accommodations to Borrower.
Borrower has requested certain amendments to the Loan Agreement and that
Lender grant certain waivers under the Loan Agreement. Lender is willing to
grant the waivers under and effect the amendments of the Loan Agreement
requested by Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Amendments to the Loan Agreement. Upon the date that this First
Amendment shall have been executed by each of the parties hereto and all
conditions set forth in Section 3 of this First Amendment have been satisfied,
Borrower and Lender agree that the Loan Agreement shall be amended as follows:
(a) Section 7.21 of the Loan Agreement is hereby amended by deleting such
Section 7.21 in its entirety and inserting in lieu thereof the following new
Section 7.21:
"7.21. Financial Covenants.
(a) Minimum EBITDA. Have an EBITDA loss, measured as of the last day
of each period set forth in the table below, greater than the amount set
forth in the table below for such period.
------------------------------------------------------------------------
Period: Applicable Amount:
------------------------------------------------------------------------
One month period ending August 31, 2005 $(461,000)
Two month period ending September 30, 2005 $(500,000)
Three month period ending October 31, 2005 $(600,000)
------------------------------------------------------------------------
(b) Capital Expenditures. Make capital expenditures in any fiscal year
in excess of $1,800,000.
(c) Covenant levels with respect to EBITDA and capital expenditures
for periods beyond those set forth in the foregoing subsections (a) and (b)
will be set at a later date and based upon the applicable Business Plans
approved by Lender. Borrower shall submit each such Business Plans in
accordance with Section 6.3(c). If Borrower fails to deliver a Business
Plan or if Borrower and Lender are unable to mutually agree upon covenant
levels with respect to EBITDA and capital expenditures by October 15 of any
fiscal year, the minimum Excess Availability at all times thereafter shall
be no less than $1,500,000."
(b) Q4 Business Plan. Borrower has delivered to Lender a business plan and
set of Projections for its fiscal quarter ending October 31, 2005, a copy of
which is attached hereto as Exhibit A (the "Q4 Business Plan"). For the period
from the date that this First Amendment is effective through October 31, 2005,
the term "Business Plan" shall mean the Q4 Business Plan for all purposes of the
Loan Agreement (as amended hereby).
2. Waivers. Lender hereby waives the Events of Default arising under (a)
Section 7.21(a) of the Loan Agreement solely to the extent resulting from the
Borrower's having allowed EBITDA for the one month period ended July 30, 2005
and the three month period ended July 30, 2005 to be more than $250,000 and
$500,000,respectively, less than the EBITDA projected for such one month and
three month periods in the Business Plan in effect immediately prior to the
effectiveness of this First Amendment and (b) Section 7.21(b) of the Loan
Agreement solely to the extent resulting from Borrower having made capital
expenditures in fiscal year 2005 in excess of the maximum amount permitted under
Section 7.21(b) for such fiscal year (collectively, the "Identified Events of
Default"). The foregoing provisions of this Section 2 relate solely to the
Identified Events of Default and shall in no way be deemed or construed as a
waiver by Lender of any other Default or Event of Default under the Loan
Agreement or any other Loan Document, known or unknown, now existing or
occurring subsequent to the date of this First Amendment. Lender expressly
reserves the full extent of its rights under the Loan Agreement, the other Loan
Documents and applicable law with respect to any Default or Event of Default
existing on the date hereof and not specified herein as an Identified Event of
Default.
3. Conditions Precedent to First Amendment. The satisfaction of each of the
following, unless waived or deferred by Lender in its Permitted Discretion
constitute conditions precedent to the effectiveness of this First Amendment:
(a) Lender shall have received this First Amendment, duly executed by
Borrower;
(b) the representations and warranties in this First Amendment, the Loan
Agreement, as amended hereby, and the other Loan Documents shall be true and
correct in all respects on and as of the date hereof, as though made on such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
(c) no Event of Default (other than the Identified Events of Default) shall
have occurred and be continuing on the date hereof, and no Default or Event of
Default shall result from the consummation of the transactions contemplated
herein;
(d) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any court or
other governmental authority against Borrower or Lender;
(e) Lender shall have received a first amendment fee of $5,000, which first
amendment fee shall be fully-earned and payable on the date hereof; and
(f) Lender shall have received payment in full of its out-of-pocket
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the Loan Agreement and this First Amendment.
4. Representations and Warranties. Borrower hereby represents and warrants
to the Lender that:
(a) the execution, delivery, and performance of this First Amendment, the
Loan Agreement and the other Loan Documents (i) are within Borrower's corporate
powers, (ii) have been duly authorized by all necessary corporate action, (iii)
do not require any approval or consent of any Person under any contractual
obligation of the Borrower and (iv) do not contravene (A) any law, rule, or
regulation, or any order, judgment, decree, writ or injunction, or award of any
arbitrator, court, or Governmental Authority, (B) the terms of its charter,
bylaws or other operative or formative documents or (C) any contract or
undertaking to which it is a party or by which any of its properties may be
bound or affected;
(b) this First Amendment has been duly executed and delivered by Borrower;
(c) this First Amendment and the Loan Agreement and the other Loan
Documents, each as previously amended and as amended hereby, constitute
Borrower's legal, valid, and binding obligations, enforceable against Borrower
in accordance with their respective terms;
(d) Borrower is in compliance with all of the terms and provisions set
forth in the Loan Agreement and each of the other Loan Documents, each as
previously amended and as amended hereby, on its part to be observed or
performed on or prior to the date hereof; and
(e) after giving effect to this First Amendment, no Default or Event of
Default has occurred and is continuing.
5. Reaffirmation. Borrower further reaffirms all of its obligations under
the Loan Agreement and the other Loan Documents, each as previously amended and
as amended hereby.
6. Effect on Loan Agreement. Except as expressly provided herein, the
execution, delivery, and performance of this First Amendment shall not operate
as a waiver or an amendment of any right, power, or remedy of the Lender under
the Loan Agreement or any other Loan Document. Except to the extent expressly
amended hereby, the Loan Agreement and all other Loan Documents shall be
unaffected hereby, shall continue in full force and effect, are hereby in all
respects ratified and confirmed, and shall constitute the legal, valid, binding
and enforceable obligations of Borrower to the Lender.
7. No Novation; Entire Agreement. This First Amendment evidences solely
Lender's waiver of the Identified Events of Default and the amendment of the
terms and provisions of Borrower's obligations under the Loan Agreement and is
not a novation or discharge thereof. There are no other understandings, express
or implied, between Lender and Borrower regarding the subject matter hereof.
8. Choice of Law. The validity of this First Amendment, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by, and construed in accordance with the laws of
The Commonwealth of Massachusetts without regard to conflicts of laws
principles.
9. Definitions and Construction.
(a) Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to such terms in the Loan Agreement, as amended
hereby.
(b) Upon and after the effectiveness of this First Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Loan Agreement, and each
reference in the other Loan Documents to "the Loan Agreement", "thereunder",
"therein", "thereof", or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as amended hereby.
10. Counterparts; Telefacsimile Execution. This First Amendment may be
executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
First Amendment by facsimile shall be as effective as delivery of a manually
executed counterpart of this First Amendment. Any party delivering an executed
counterpart of this First Amendment by facsimile also shall deliver a manually
executed counterpart of this First Amendment but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, and
binding effect of this First Amendment.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, Borrower and Lender caused this First Amendment to be
executed as of the date first above written.
BORROWER:
XXXXXX ELECTRONICS, INC.
By:/s/Xxxxxx X. Xxxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxxx
Executive Vice President
LENDER:
XXXXXXX BUSINESS CREDIT CORPORATION
By:/s/Xxxxxxxxxxx X'Xxxxxx
--------------------------
Xxxxxxxxxxx X'Xxxxxx
Executive Vice President
