Limited Covenant Waiver and Amendment Agreement between Merrill Lynch Commercial Finance Corp. and Orbit International Corp.

Summary

Merrill Lynch Commercial Finance Corp. and Orbit International Corp., along with certain guarantors, have agreed to a limited waiver and amendment to their existing loan agreements. Merrill Lynch is waiving specific financial covenant defaults by Orbit for the period ending June 30, 2009, but requires strict compliance going forward. The agreement also amends the applicable interest margin to 3.50% and adjusts the maximum line of credit. Orbit must pay a $10,000 fee for the waiver. All other terms of the original loan documents remain in effect.

EX-10.1 2 covenantwaiver.txt LIMITED COVENANT WAIVER AND AMENDMENT EXHIBIT 10.1 MERRILL LYNCH COMMERCIAL FINANCE CORP. 222 North LaSalle Street 17th Floor Chicago, Illinois 60601 [GRAPHIC OMITTED] MERRILL LYNCH Anne Easter TEL: (312) 499-3044 August 17,2009 Orbit International Corp 80 Cabot Court Hauppauge, NY 11788 Re: Limited Covenant Waiver and Amendment to Loan Documents Dear Gentlemen: This amendment and limited waiver (the "Amendment") is dated August 17, 2009, by --------- and among MERRILL LYNCH 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 and/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 and/or amended (the "Term Loan Agreement A"); ------------------------ (iii) TERM LOAN AND SECURITY AGREEMENT dated June 5, 2007 by and between MLCFC and Customer, as thereafter supplemented, modified, renewed, extended and/or amended (the "Term Loan Agreement B"); ------------------------ (iv) TERM LOAN AND SECURITY AGREEMENT dated December 19, 2007 by and between MLCFC and Customer, as thereafter supplemented, modified, renewed, extended and/or amended (the "Term Loan Agreement C"); ------------------------ (v) UNCONDITIONAL GUARANTIES (the "Guaranties") dated December 31, 2007 and ---------- given to MLBFS by Integrated Consulting Services, Inc. and those dated April 4, 2005 and June 5, 2007 and given to MLCFC in both cases by each of TDL Manufacturing, Inc., Tulip Development Laboratory, Inc., Orbit Instrument of California, Inc. and Behlman Electronics, Inc, (collectively, the "Business -------- Guarantors"); and - ---------- (vi) 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", (ii) the WCMA Loan Agreement, Term -------- Loan Agreement A, Term Loan Agreement B and Term Loan Agreement 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 EXISTING FINANCIAL AND OTHER COVENANTS. Obligors --------------------------------------------------------------- acknowledge that for the period ending June 30, 2009 they are in violation of the following covenants under the Loan Documents ("Identified Defaults"): ------------------- FIXED CHARGE COVERAGE RATIO TOTAL FUNDED DEBT TO EBITDA Obligors have requested, and, subject to the terms and conditions hereof, MLCFC has agreed to waive the default for only the period ending June 30, 2009. This is a limited waiver. Strict compliance with each of these covenants shall be required going forward. Furthermore, 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 subsequent violation of the same or any other term or condition set forth in the Loan Documents. This waiver is expressly limited to the covenants 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 OF LOAN DOCUMENTS. Obligors and MLCFC have agreed to the ------------------------------ following amendments to the Loan Documents: A. WCMA LOAN AGREEMENT. The WCMA Loan Agreement is amended and restated as ---------------------- applicable as follows: 1. Applicable Margin. The definition of "Applicable Margin" shall be ------------------ amended as follows: "Applicable Margin shall mean 3.50%." 2. Maximum WCMA Line of Credit. The definition of "Maximum WCMA Line of ------------------------------ Credit" shall be amended as follows: "Maximum WCMA Line of Credit" shall mean, as of any date of determination thereof through October 30, 2009, an amount equal to the lesser of: (A) $2,500,000.00 or (B) 85% of Customer's and Business Guarantors' Accounts and Chattel Paper, as shown on its regular books and records (excluding Accounts over 90 days past the invoice date, Accounts directly or indirectly due from any person or entity not domiciled in the United States, Accounts arising out of bonded jobs, retainage or from any shareholder, officer or employee of Customer or any affiliated entity, Accounts deemed as ineligible by MLCFC, 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 compiled with in a manner satisfactory to MLCFC), and 50% of Customer's raw material Inventory as shown on its regular books and records up to a maximum of $1,000,000.00. Beginning October 31, 2009 and thereafter, the "Maximum WCMA Line of Credit" shall mean, as of any date of determination thereof, an amount equal to the lesser of: (A) $2,000,000.00 or (B) 85% of Customer's and Business Guarantors' Accounts and Chattel Paper, as shown on its regular books and records (excluding Accounts over 90 days past the invoice date, Accounts directly or indirectly due from any person or entity not domiciled in the United States, Accounts arising out of bonded jobs, retainage or from any shareholder, officer or employee of Customer or any affiliated entity, Accounts deemed as ineligible by MLCFC, 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 compiled with in a manner satisfactory to MLCFC), and 50% of Customer's raw material Inventory as shown on its regular books and records up to a maximum of $1,000,000.00" B. TERM LOAN AGREEMENT A. Term Loan Agreement A is amended and restated as ------------------------- applicable as follows: 1. Applicable Margin. The definition of "Applicable Margin" shall be ------------------ amended as follows: "Applicable Margin shall mean 3.50%." C. TERM LOAN AGREEMENT B. Term Loan Agreement B is amended and restated as ------------------------- applicable as follows: 1. Applicable Margin. The definition of "Applicable margin" shall be ------------------ amended as follows: "Applicable Margin shall mean 3.50%." D. TERM LOAN AGREEMENT C. Term Loan Agreement C is amended and restated as ------------------------ applicable as follows: 1. Applicable Margin. The definition of "Applicable Margin" shall be amended as ----------------- follows: "Applicable Margin shall mean 3.50%." III. ADDITIONAL AGREEMENTS. ----------------------- 1. Covenant Waiver Fee. In consideration of these limited covenant waivers by --------------------- MLCFC of the Identified Defaults, Obligors shall pay a covenant waiver fee in the amount of Ten Thousand Dollars 00/100 ($10,000.00) (the "Covenant Waiver Fee"). Obligors hereby authorize MLCFC to charge the WCMA Line of Credit the Covenant Waiver Fee. The Covenant Waiver Fee is non-refundable and shall be deemed fully earned by MLCFC upon charge. 2. Field Audit. Obligors agree that MLCFC shall retain the services of a third ------------ party firm (said third party firm(s) shall be selected by MLCFC in its sole and absolute discretion) for the purpose of conducting a field examination/asset based audit. Obligors agree that the field audit shall commence on a date no later than September 14, 2009. Obligors understand and unconditionally agree that any such field examination or audit of the Collateral shall be for the sole benefit of MLCFC. Furthermore, the Obligors agree and understand that the Obligors shall be solely responsible for the cost of conducting said field examination/asset based audit Collateral (the "Audit Expense"). The Obligors agree that MLCFC (and/or its authorized representatives) shall be given full access to the Customer's properties (both real and personal), operations, Location(s) of Tangible Collateral. 3. Termination of WCMA Line of Credit No. 885-02776. Obligors agree that the --------------------------------------------------- WCMA loans made by MLCFC to Integrated Consulting Services, Inc. pursuant to the WCMA Loan and Security Agreement No. 885-02776 dated as of December 31, 2007 between Integrated Consulting Services, Inc. and MLCFC shall be repaid and the WCMA Line of Credit terminated. The Unconditional Guaranty and Security Agreement dated as of December 31, 2007 provided by Integrated Consulting Services, Inc. to MLCFC will remain in full force and effect. Except as expressly amended hereby, the Loan Documents shall continue in full force and effect upon all of their terms and conditions. Customer and Business 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 Business Guarantors 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 Letter Amendment, the below-named Business Guarantors do hereby consent to the foregoing amendment to the Loan Documents, and agree that the obligations under the Guaranties shall extend to and include the Obligations of Customer under the Loan Documents, as amended hereby. In consideration for MLCFC waiving the Identified Defaults, Customer hereby certifies to MLCFC that no Event of Default, or event (other than the Identified Defaults) which with the giving of notice, passage of time, or both, would constitute an Event of Default, has occurred or is continuing and that no material adverse change in the financial condition of Customer or each Business Guarantor has occurred or is continuing (other than what will be publicly disclosed by Customer in its Form 10-Q for the period ending June 30, 2009). Customer and Business Guarantors hereby confirm that (a) each of the warranties 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 Business Guarantors have any claim against MLBFS or MLCFC arising out of or in connection with the Loan Documents or any other matter whatsoever; and (c) neither Customer, nor any Business Guarantor, has any defense to payment of any amounts owing, or any right of counterclaim for any reason under the Loan Documents. This Amendment shall become effective upon execution and delivery by Obligors of the executed document together, 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. Very truly yours, MERRILL LYNCH COMMERCIAL FINANCE CORP. By: /s/ Anne Easter ------------------- Anne Easter Vice President Accepted: ORBIT INTERNATIONAL CORP. By: /s/ Dennis Sunshine --------------------- Name: Dennis Sunshine Title: President, CEO Approved: INTEGRATED CONSULTING SERVICES, INC. By: /s/ Mitchell Binder ---------------------- Printed Name: Mitchell Binder Title: Executive VP and CFO TDL MANUFACTURING, INC. By: /s/ Mitchell Binder ----------------------- Printed Name: Mitchell Binder Title: Vice President and CFO TULIP DEVELOPMENT LABORATORY, INC. By: /s/ Mitchell Binder ---------------------- Printed Name: Mitchell Binder Title: Vice President and CFO ORBIT INSTRUMENT OF CALIFORNIA, INC. By: /s/ Mitchell Binder ---------------------- Printed name: Mitchell Binder Title: Vice President and CFO BEHLMAN ELECTRONICS, INC, By: /s/ Mark Tublisky ------------------- Printed Name: Mark Tublisky Title: President MERRILL LYNCH COMMERCIAL FINANCE CORP. 222 North LaSalle Street 17th Floor Chicago, Illinois 60601 [GRAPHIC OMITTED] MERRILL LYNCH Anne Easter TEL: (312) 499-3044 August 17,2009 Integrated Consulting Services, Inc. 163 Rochester Drive Louisville, KY 40214 Re: Limited Waiver Dear Gentlemen: This limited waiver is dated August 17, 2009, by and among MERRILL LYNCH COMMERCIAL FINANCE CORP. ("MLCFC") and INTEGRATED CONSULTING SERVICES, INC. ----- ("Customer") and will serve to confirm certain agreements with respect to the -------- following documents: (i) WCMA LOAN AND SECURITY AGREEMENT NO. 885-02776 dated December 31, 2007 by and between MLCFC and Customer, as thereafter supplemented, modified, renewed, extended and/or amended (the " WCMA Loan Agreement"); --------------------- (ii) UNCONDITIONAL GUARANTY (the "Guaranty") dated December 31, 2007 and given --------- to MLCFC by Orbit International Corp. (the "Business Guarantor"); and ------------------- (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 limited waiver, (i) Customer and Business Guarantor are collectively referred to as the "Obligors", and (ii) the WCMA Loan and Security Agreement, Guaranty and 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, and the Loan Documents are hereby amended in all respects to effectuate such change. I. LIMITED WAIVER OF EXISTING FINANCIAL AND OTHER COVENANTS. Obligors --------------------------------------------------------------- acknowledge that for the period ending June 30, 2009 they are in violation of the following covenants under the Loan Documents ("Identified Defaults"): ------------------- FIXED CHARGE COVERAGE RATIO TOTAL FUNDED DEBT TO EBITDA Obligors have requested, and subject to the terms and conditions hereof, MLCFC has agreed to waive the default for only the period ending June 30, 2009. This is a limited waiver. Strict compliance with each of these covenants, as amended by this Amendment shall be required going forward. Furthermore, 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 subsequent violation of the same or any other term or condition set forth in the Loan Documents. This waiver is expressly limited to the covenants 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. Except as expressly amended hereby, the Loan Documents shall continue in full force and effect upon all of their terms and conditions. Customer and Business 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 Business 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. In consideration for MLCFC waiving the Identified Defaults, Customer hereby certifies to MLCFC that no Event of Default (other than the Identified Defaults), or event which with the giving of notice, passage of time, or both, would constitute an Event of Default, has occurred or is continuing and that no material adverse change in the financial condition of Customer or Business Guarantor has occurred or is continuing (other than what will be publicly disclosed by Business Guarantor in their Form 10-Q for the period ending June 30, 2009). Customer and Business Guarantor hereby confirm that (a) each of the warranties 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 Business Guarantor have any claim against MLCFC arising out of or in connection with the Loan Documents or any other matter whatsoever; and (c) neither Customer, nor Business Guarantor, has any defense to payment of any amounts owing, or any right of counterclaim for any reason under the Loan Documents. Very truly yours, MERRILL LYNCH COMMERCIAL FINANCE CORP. By: /s/ Anne Easter ------------------ Anne Easter Vice President Accepted: INTEGRATED CONSULTING SERVICES, INC. By: /s/ Mitchell Binder ---------------------- Name: Mitchell Binder Title: Executive VP and CFO Approved: ORBIT INTERNATIONAL CORP. By: /s/ Dennis Sunshine ----------------------- Printed Name: Dennis Sunshine Title: President,CEO