Eastern Bank
Logo Appears Here
May 20, 1999
International Electronics, Inc.
427 Turnpike Street
Canton, Massachusetts 02021
Attn: John Waldstein, President and Treasurer
Gentlemen:
Reference is made to our Demand Loan and Security Agreement Accounts
Receivable and Inventory dated February 28, 1997, together with all amendments
and additions thereto (hereinafter called the "AGREEMENT"). Notwithstanding the
provisions of the Agreement, it is agreed, effective immediately, that the
Agreement shall be amended as follows:
1. Section 5.A. of the Agreement is hereby stricken in its entirety and
the following new Section 5.A. substituted therefor:
"A. Subject to the terms and provisions of this Agreement, the Bank
hereby establishes a discretionary revolving line of credit in Borrower's
favor in the amount set forth below, as determined by Bank from time to
time hereafter. Bank may make such loans to Borrower, based upon such
facts and circumstances existing at the time of the request, as from time
to time Bank elects to make which are secured by Borrower's Inventory,
Accounts and all other Collateral and the proceeds thereof. Without
limiting the discretionary nature of Bank's obligation to make loans
hereunder, or the demand feature of any loans that Bank does make
hereunder, Borrower agrees that the aggregate unpaid principal of all
direct loans plus the sum of the aggregate amount undrawn on all letters of
credit and acceptances shall not exceed the sum of One Million
($1,000,000.00) Dollars. All such loans shall bear interest and at the
option of Bank shall be evidenced by demand notes in form satisfactory to
Bank, but in the absence of notes shall be conclusively evidenced by the
Bank's record of disbursements and repayments and shall be payable ON
DEMAND. Interest will be charged to Borrower at a fluctuating rate which
is the daily equivalent to the Base Rate in effect from time to time, or at
such other rate agreed on from time to time by the parties, upon any
balance owing to Bank at the close of each day and shall be payable
monthly in arrears, on the first day of each month, until the Bank makes
demand. The rate of interest payable by Borrower shall be changed
effective as of that date in which a change in the Base Rate becomes
effective. Interest shall be computed on the basis of the actual number of
days
elapsed over a year of three hundred sixty (360) days. The term "BASE
RATE" as used herein and in any supplement and amendment hereto shall mean
the rate of interest announced from time to time by Bank, at its head
office, as its Base Rate, it being understood that such rate is a reference
rate and not necessarily the lowest rate of interest charged by the Bank.
The Base Rate on the date hereof is agreed to be eight and one-quarter (8
1/4%) percent."
2. Section 6 of the Agreement is hereby stricken in its entirety and the
following new Section 6 substituted therefor:
"6. DEFINITIONS OF QUALIFIED ACCOUNT. This section has been
intentionally reserved."
3. Section 7 of the Agreement is hereby stricken in its entirety and the
following new Section 7 substituted therefor:
"7. DEFINITION OF ELIGIBLE INVENTORY. This section has been
intentionally reserved."
4. Section 13(d) of the Agreement is hereby stricken in its entirety and
the following new Section 13(d) substituted therefor:
"(d) Borrower will at all times keep accurate and complete records of
Borrower's Inventory, Accounts and other Collateral, and Bank, or any of
its agents, shall have the right to call at Borrower's place or places of
business at intervals to be determined by Bank, and without hindrance or
delay, to inspect, audit, check, and make extracts from any copies of the
books, records, journals, orders, receipts, correspondence which relate to
Borrower's Accounts, and other Collateral or other transactions, between
the parties thereto and the general financial condition of the Borrower and
Bank may remove any of such records temporarily for the purpose of having
copies made thereof. Absent the occurrence of an Event of Default which is
continuing, Borrower shall not be obligated to pay Bank an audit fee in
connection with any such audit or inspection."
5. Section 14(a) of the Agreement is hereby stricken in its entirety and
the following new Section 14(a) substituted therefor:
"(a) (Debt to Worth) permit the aggregate amount of its indebtedness
to be more than one and one-half (1 1/2) times the amount of its tangible
net worth on the last day of any fiscal year beginning with the fiscal year
ending August 31, 1998, or the last day of the month of February, 1999,
commencing February 28, 1999;"
6. The Agreement is hereby amended by adding the following new Section
14(m) thereto:
"(m) (Minimum Net Earnings) permit the net after tax earnings of
Borrower for the six (6) month period ending on the last day of February of
each year or the twelve (12) month period ending on the last day of August
of each year to be less than One ($1.00) Dollar."
Kindly note that the alterations contained herein do not in any way alter,
release or change any other sections contained in the Agreement.
Please acknowledge your agreement to the foregoing by signing the enclosed
copy of this letter and returning the same to the undersigned.
Very truly yours,
EASTERN BANK
By: /s/ Alan Roberts
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Alan Roberts, Vice President
UNDERSTOOD AND AGREED TO:
INTERNATIONAL ELECTRONICS, INC.
By: /s/ John Waldstein
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John Waldstein, President and Treasurer