Amendment No. 6 to Business Credit and Security Agreement among Deutsche Financial Services Corporation, Elcom Services Group, Inc., and elcom.com, inc.

Summary

This amendment updates the Business Credit and Security Agreement between Deutsche Financial Services Corporation (DFS), Elcom Services Group, Inc., and elcom.com, inc. It revises financial reporting requirements, financial covenants, and default provisions, and adds new conditions for the agreement to take effect. The amendment requires weekly financial reports, sets minimum financial thresholds, and mandates that Elcom International, Inc. pledge certificates of deposit as collateral. The amendment is effective only after all specified conditions are met and is ratified by all parties, including the guarantor, Elcom International, Inc.

EX-10.4 3 0003.txt DFS AMENDMENT Exhibit 10.4 AMENDMENT TO BUSINESS CREDIT AND SECURITY AGREEMENT (Amendment No. 6) 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 elcom.com, inc. ("elcom.com") (Elcom Services and elcom.com are referred to herein collectively as "Borrower"). This Amendment hereby supercedes and replaces in its entirety any prior Amendment No. 6 dated the date hereof. 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. Definitions/Elcom Group. The following definition shall be added to the Agreement as if originally set forth therein: "Elcom Group" shall mean Elcom and all of the subsidiaries of Elcom including, without limitation, Elcom Services, elcom.com, Elcom International Limited, a corporation organized and existing under the laws of the United Kingdom, and all of the subsidiaries of Elcom International Limited. 2. Reports. Section 3.12(a) is hereby deleted in its entirety and replaced with the following: "(a) Weekly Reports. Borrower agrees to provide DFS with a report each week, or more frequently if requested by DFS, in such form as is satisfactory to DFS, including supporting information regarding, but not limited to, a Borrowing Base Certificate, the current value of Borrower's liquid assets and the current amounts outstanding under each of Borrower's lines of credit (including the Credit Facility) (the "Weekly Report"). The Weekly Report will be received by DFS each Thursday after the date of the Agreement by noon (in the event that DFS is not open for business on a Thursday then the Weekly Report will be due by noon of the next business day that DFS is open for business), or more frequently if so requested by DFS." 3. Financial Covenants. Sections 9.3.1(a), 9.3.1(b) and 9.3.1(c) are hereby deleted in their entirety and replaced with the following: (a) Borrower agrees that on a consolidated basis with the Elcom Group, it will at all times maintain the following: (i) a Tangible Net Worth plus Subordinated Debt in the combined amount of not less than Thirty-Five Million Dollars ($35,000,000.00); (ii) a ratio of Debt to Tangible Net Worth plus Subordinated Debt of not more than Three and one-half to one (3.5:1.0); (b) Borrower agrees that on a consolidated basis with the Elcom Group, it will achieve, as of each fiscal quarter-end commencing with the fiscal quarter ending March 31, 2001, before tax income, excluding any expense charges relating to the Intangibles, as determined in accordance with GAAP, of not less than one dollar ($1.00); and (c) Borrower agrees that it will achieve before tax income in the amounts set forth in the letter agreement between Borrower and DFS dated as of June 12, 2000. The paragraph beginning "For purposes of this paragraph" shall remain unchanged. 4. Default/Remedies. The following subsections (v) and (w) shall be added to Section 10 of the Agreement as if originally set forth therein: (v) Elcom Group Limited is in default to Deutsche Financial Services (UK) Limited pursuant to the terms of the Standard Conditions for the Sale and Purchase of Debts dated as of December 3, 1997, as amended, or pursuant to any other agreement entered into by and between Deutsche Financial Services (UK) Limited and Elcom Group Limited. (w) Elcom International, Inc. ("Guarantor") shall fail to have pledged to DFS certificate(s) of deposit valued at not less than $15,000,000 (the "Collateral") pursuant to that certain Collateral Pledge Agreement and Limited Power of Attorney between DFS and Guarantor (the "Collateral Agreement"), or shall otherwise be in default under the Collateral Agreement. 5. 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. 2 (b) a reaffirmation of Guarantor's existing guaranties of the obligations of Borrower to DFS. (c) execution and delivery of the Collateral Agreement by Guarantor, in form and substance acceptable to DFS. (d) execution and delivery of an Incumbency Certificate and Officer's Certificate by Guarantor certifying as to the adoption of certain resolutions of the Board of Directors attached thereto, in form and substance acceptable to DFS. (e) delivery to DFS of the certificates constituting the Collateral, properly endorsed in favor of DFS. (f) receipt of an agreement from Fleet Bank to waive its rights of offset in the Collateral, in form and substance acceptable to DFS. (g) execution of an amendment to Standard Conditions for the Sale and Purchase of Debts between Elcom Group Limited and Deutsche Financial Services (UK) Limited, in form and substance acceptable to each party thereto. (h) such other and further documents and agreements as DFS may determine in connection with any of the foregoing. 6. 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. 7. 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 elcom.com have executed this Amendment as of the 12th day of June, 2000. ELCOM SERVICES GROUP, INC. ATTEST: /s/ Paul Mueller By: /s/ Peter Rendall (Assistant) Secretary Print Name: Peter Rendall Title: Chief Financial Officer 3 ELCOM.COM, INC. ATTEST: /s/ Paul Mueller By: /s/ Peter Rendall (Assistant) Secretary Print Name: Peter Rendall Title: Chief Financial Officer DEUTSCHE FINANCIAL SERVICES CORPORATION By: /s/ Greg Ledington Print Name: Greg Ledington Title: Vice President of Operations 4 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. 6), and does hereby ratify and confirm each and every guaranty of Borrower (inclusive of elcom.com) in all respects. ELCOM INTERNATIONAL, INC. By: /s/ Peter Rendall Print Name: Peter Rendall Title: Chief Financial Officer Date: June 12, 2000 5 AMENDMENT TO BUSINESS CREDIT AND SECURITY AGREEMENT (Amendment No. 5) 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 elcom.com, inc. ("elcom.com") (Elcom Services and elcom.com 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 Fifty Million Dollars ($50,000,000) ("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 Twenty-Five Million Dollars ($25,000,000) (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 1 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) Twenty-Five Million Dollars ($25,000,000) ("Total Working Capital Credit Limit")." 3.2 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 plus one-quarter of one percentage point (0.25%) per annum ("Base Working Capital Loan Interest Rate")." 4. Overadvance Facility. Section 3.4 is hereby deleted in its entirety and replaced with the following: "This Section has been intentionally left blank." 5. Term of Agreement. The first paragraph of Section 4.1 is hereby deleted in its entirety and replaced with the following: "4.1 Termination. Commencing March 1, 2000, this Agreement may be terminated by either party hereto upon not less than one hundred twenty (120) days prior written notice to the other party (except that it may be terminated by DFS in the exercise of its rights and remedies upon default by Borrower). Upon termination by Borrower, Borrower must (a) make payment to DFS of all Obligations and (b) make payment to DFS of the fee described in Section 4.3 below. No termination shall relieve Borrower from any Obligations to DFS arising out of Loans made prior to the date of termination." 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. 2 (e) satisfaction of all of the conditions precedent in that certain waiver letter delivered by DFS to Borrower. (f) 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 elcom.com have executed this Amendment as of the 10 day February, 2000. ELCOM SERVICES GROUP, INC. ATTEST: /s/ L.F. Mulhern By: /s/ Peter A. Rendall (Assistant) Secretary Print Name: Peter A. Rendall Title: Chief Financial Officer ELCOM.COM, INC. ATTEST: /s/ L.F. Mulhern By: /s/ Peter A. Rendall (Assistant) Secretary Print Name: Peter A. Rendall Title: Chief Financial Officer DEUTSCHE FINANCIAL SERVICES CORPOPRATION By: /s/ Arthur Hartford Print Name: Arthur Hartford Title: Vice President, General Manager 3 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 elcom.com, inc. by DFS. The undersigned hereby acknowledges and agrees to the terms of the foregoing Amendment to Business Credit and Security Agreement (Amendment No. 5), and does hereby ratify and confirm its Participation Agreement in all respects. FLEET NATIONAL BANK By: /s/ Thomas F. McNamara Name: Thomas F. McNamara Title: Senior Vice President Date: March 17, 2000 4 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. 5), and does hereby ratify and confirm each and every guaranty of Borrower (inclusive of elcom.com) in all respects. ELCOM INTERNATIONAL, INC. By: /s/ Peter A. Rendall Print Name: Peter A. Rendall Title: Chief Financial Officer Date: February 10, 2000 5