Waiver Letter for Financial Covenant Breach between Bank of Montreal and Pioneer Power Solutions, Inc.
This letter is an agreement between Bank of Montreal and Pioneer Power Solutions, Inc. (including its Canadian subsidiary) regarding a breach of a financial covenant under their credit agreement. The bank agrees to waive the requirement for a minimum current ratio for the fiscal year ending December 31, 2016, after the borrowers reported a ratio below the required threshold. The waiver applies only to this specific breach and period, and does not set a precedent for future waivers. All other terms of the credit agreement remain unchanged.
Pioneer Power Solutions, Inc. 10-K
EXHIBIT 10.55
March 6, 2017
Pioneer Power Solutions, Inc.; and
Pioneer Electrogroup Canada Inc.
400 Kelby Street, 9th Floor
Fort Lee, New Jersey
USA 07024
Attention:
Mr. Thomas Klink, CFO
Subject:
Financial Covenant Waiver
Dear Mr. Klink,
Under the terms and conditions of the credit facilities extended by Bank of Montreal (the ”Lender”) to Pioneer Electrogroup Canada Inc (the ”Canadian Borrower”) under the Amended and Restated Credit Agreement dated April 29, 2016; and to Pioneer Power Solutions, Inc. (the “U.S. Borrower”), the Canadian Borrower and the U.S. Borrower must maintain at fiscal year-end December 31/2016 on a consolidated basis, a current ratio which shall not be less than 1.10:1.
The Canadian Borrower and the U.S. Borrower have advised the Lender that based on in house financial statements as of December 31, 2016, the current ratio is 1.07:1, in breach of this financial covenant. The Lender hereby agrees to waive application of the covenant listed above for the fiscal year end reporting date of December 31, 2016. The waiver is granted with respect to the December 31, 2016 breach only and for the duration of one year plus one day thereof.
The waiver of the foregoing covenant is only applicable for the period indicated above and shall not apply to or be construed as a waiver of any future or other breaches, defaults or events of default, nor shall it give rise to any obligation on the part of the Lender to provide a similar waiver in future. All terms, conditions and remedies contained in or available under the Agreements remain unchanged and in full force and effect.
BANK OF MONTREAL
Per: /s/ Doreen Peters
Doreen Peters, Account Manager
Tel: 514 ###-###-#### Fax: 514 ###-###-####
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