FIRST AMENDMENT AND WAIVER AGREEMENT
THIS FIRST
AMENDMENT AND WAIVER AGREEMENT (this "First Amendment") is
entered into as of September 13, 2005 by
and among Harvey
Electronics, Inc.,
a
New York corporation ("Borrower"), and Webster Business Credit Corporation
("Lender").
Introduction
Borrower and
Lender are parties to a Loan and Security Agreement dated as
of November 21, 2003 (as amended through
the date hereof and as further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lender has
agreed to make revolving credit loans
and to provide certain other financial
accommodations to Borrower.
Borrower has
requested certain
amendments to the Loan
Agreement and that
Lender grant certain waivers under the Loan Agreement. Lender is willing to
grant the waivers under and effect the amendments of the Loan Agreement
requested by Borrower on the terms and
conditions hereinafter set forth.
NOW, THEREFORE,
in consideration of
the foregoing and the mutual covenants
herein contained, and for other good and
valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Amendments to the Loan Agreement. Upon the date that this First
Amendment shall have been executed by each of the parties hereto and all
conditions set forth in Section 3 of this
First Amendment have
been satisfied,
Borrower and Lender agree that the Loan
Agreement shall be amended as follows:
(a) Section 7.21
of the Loan Agreement
is hereby amended by
deleting such
Section 7.21 in its entirety and
inserting in lieu
thereof the following
new
Section 7.21:
"7.21. Financial
Covenants.
(a) Minimum EBITDA.
Have an EBITDA loss,
measured as of the last day
of each period
set forth in the table
below, greater
than the amount
set
forth in the
table below for such period.
------------------------------------------------------------------------
Period:
Applicable Amount:
------------------------------------------------------------------------
One month period ending August 31, 2005
$(461,000)
Two month period ending September 30, 2005
$(500,000)
Three month period ending October 31, 2005
$(600,000)
------------------------------------------------------------------------
(b) Capital Expenditures. Make capital expenditures in any fiscal
year
in excess of
$1,800,000.
(c) Covenant levels
with respect to EBITDA
and capital
expenditures
for periods
beyond those set forth in the foregoing subsections (a) and (b)
will be set at a
later date and based upon the applicable Business Plans
approved
by Lender.
Borrower shall submit each such Business Plans in
accordance
with Section
6.3(c). If Borrower fails to deliver a Business
Plan or if
Borrower and Lender are unable to mutually agree upon covenant
levels with
respect to EBITDA and capital expenditures by October 15 of any
fiscal year, the
minimum Excess
Availability at all times thereafter shall
be no less than $1,500,000."
(b) Q4 Business
Plan. Borrower has
delivered to Lender a business plan and
set of Projections for its fiscal quarter ending October 31, 2005, a copy
of
which is attached hereto as Exhibit A (the
"Q4 Business Plan").
For the period
from the date that this First Amendment is effective
through October 31,
2005,
the term "Business Plan" shall mean the Q4
Business Plan for all purposes of the
Loan Agreement (as amended hereby).
2. Waivers.
Lender hereby waives the Events of
Default arising under
(a)
Section 7.21(a) of the Loan Agreement
solely to the extent
resulting from the
Borrower's having allowed EBITDA for the one month period
ended July 30, 2005
and the three month period ended July 30, 2005 to be more
than $250,000
and
$500,000,respectively, less than the EBITDA projected for such one month and
three month periods in the Business Plan in effect immediately prior to the
effectiveness of this First Amendment and (b) Section 7.21(b) of the Loan
Agreement solely to the extent resulting from Borrower having made capital
expenditures in fiscal year 2005 in excess
of the maximum amount permitted under
Section 7.21(b) for such fiscal year
(collectively,
the "Identified
Events of
Default"). The foregoing provisions of this Section 2 relate solely to the
Identified Events of Default and shall in no way be deemed or
construed as a
waiver by Lender of any other Default or Event of Default under the Loan
Agreement or any other Loan Document, known or unknown, now e
