May 11, 2007 Alliance Distributors Holding, Inc. Bronx NY 10462 Ladies and Gentlemen:
EXHIBIT
10.03
May
11,
2007
Alliance
Distributors Holding, Inc.
0000
Xxxxxxxx Xxxxxx
Xxxxx
XX
00000
Ladies
and Gentlemen:
We
refer
to the (i) Financing Agreement, dated November 11, 2004, (the “Financing
Agreement”); (ii) the Inventory Security Agreement, dated December 9, 2003 (the
“Inventory Security Agreement”); and (iii) the Equipment Security Agreement,
dated November 11, 2004 (the “Equipment Security Agreement”), in each case
executed or assumed by you and as supplemented and amended.
This
shall confirm that, effective as of May 11, 2007:
| 1. |
Section
1.14 of the Financing Agreement shall be amended so as to read in its
entirety as follows:
|
““Margin”
shall mean three quarters percent (3/4%) per annum”
| 2. |
Section
1.15 of the Financing Agreement shall be amended so as to read in its
entirety as follows:
|
““Maximum
Credit Facility” shall mean, during the three month period commencing on
November 1 and ending on January 31 of each year, $17,500,000 and at all other
times, $15,000,000”
| 3. |
Section
1.16 of the Financing Agreement shall be amended so as to read in its
entirety as follows
|
““Maximum
Inventory Loan” shall mean $6,000,000”
| 4. |
The
third sentence of Section 2.1 of the Financing Agreement shall be amended
so as to read in its entirety as follows:
|
“The
Inventory Availability shall mean an amount which is equal to the lesser of
(a)
fifty-five percent (55%) of the lower of cost or market value of Eligible
Inventory in which Lender holds a perfected security interest pursuant to the
terms hereof ranking prior to all interests, claims and rights of others; (b)
80% of the orderly liquidation value, as determined from time to time by an
appraiser selected by Lender and retained at Borrower’s expense, of Eligible
Inventory in which Lender holds a perfected security interest pursuant to the
terms hereof ranking prior to all interests, claims and rights of others; and
(c) the Maximum Inventory Loan.”
| 5. |
Section
3.2 of the Financing Agreement shall be amended so as to read in its
entirety as follows:
|
“On
May
31 of each year, commencing May 31, 2008, Borrower shall pay to Lender an annual
facility fee in the amount of one quarter of one percent (.25%) of the Maximum
Credit Facility in effect on such date.”
| 6. |
Section
6.9 of the Financing Agreement shall be amended so as to read in its
entirety as follows:
|
“Borrower
shall until payment in full of all Obligations to Lender and termination of
this
Agreement, cause Tangible Net Worth and Working Capital to be maintained in
the
amounts set forth on the attached Schedule 6.9 and as of the dates set forth
on
such Schedule, and shall cause its ratio of total debt to Tangible Net Worth
to
be no greater than the amounts set forth on such Schedule and as of the dates
set forth on such Schedule.”
| 7. |
Section
8.1(f) of the Financing Agreement shall be amended so as to read in
its
entirety as follows:
|
“(f)
if
Xxx Xxxxxx shall cease to be both the chief executive officer of Borrower and
the owner and holder of at least 10% of all of the issued and outstanding voting
stock of Borrower;”
| 8. |
The
first sentence of Section 9.1 of the Financing Agreement shall be amended
so as to read in its entirety as follows
|
“This
Agreement shall become effective upon acceptance by Lender at its office in
the
State of New York, and shall continue in full force and effect until May 31,
2010 (the "Renewal Date") and from year to year thereafter, unless sooner
terminated as herein provided.”
| 9. |
You
agree that you shall pay to us a facility fee concurrently with execution
of this letter agreement, in the amount of $25,000, representing a
proration of the facility fee payable under the Financing Agreement
for
2007.
|
| 10. |
The
Financing Agreement shall be deemed amended to replace the references
to
your former chief executive office at 00-00 000xx
Xxxxxx, Xxxxxxx Xxxxx, XX with references to your current chief executive
office set forth above.
|
| 11. |
The
Inventory and Equipment Security Agreements shall be deemed amended
to
replace the references to your former chief executive office at 00-00
000xx
Xxxxxx, Xxxxxxx Xxxxx, XX and to your former location at 00-00
000xx
Xxxxxx, Xxxxxxx Xxxxx, XX 00000, with references to your current chief
executive office set forth above and to a second office of yours located
at 0000 XX 000xx
Xxxxx, Xxxxx XX 00000.
|
Except
as
hereinabove provided, the Financing Agreement, the Inventory Security Agreement
and the Equipment Security Agreement shall remain unmodified and in full force
and effect.
2
Please
sign below to confirm your agreement with the foregoing.
Very
truly yours,
XXXXXXXXX
& XXXXXXXXX, INC.
By:
_________
Title:
_______
AGREED:
ALLIANCE
DISTRIBUTORS HOLDING, INC.
By:
_________
Title:
_______
3
Schedule
6.9 to
Financing
Agreement between
Xxxxxxxxx
& Xxxxxxxxx, Inc., as Lender
And
Alliance
Distributors Holding, Inc., as Borrower
|
Date
|
Tangible
Net Worth
|
Working
Capital
|
Ratio
of Total Debt to Tangible Net Worth
|
|||||||
|
March
31, 2007
|
$
|
2,000,000
|
$
|
1,000,000
|
5.5
|
|||||
|
June
30, 2007
|
$
|
2,000,000
|
$
|
1,000,000
|
5.5
|
|||||
|
September
30, 2007
|
$
|
2,000,000
|
$
|
1,000,000
|
5.5
|
|||||
|
December
31, 2007
|
$
|
2,900,000
|
$
|
2,000,000
|
6.5
|
|||||
|
Each
March 31, June 30 and September 30 after December 31, 2007
|
$
|
2,500,000
|
$
|
1,600,000
|
5.5
|
|||||
|
Each
December 31 after December 31, 2007
|
$
|
2,900,000
|
$
|
2,000,000
|
6.5
|
|||||
4
