EIGHTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS EIGHTH
AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “
Amendment ”), dated as of July ___, 2008, is
entered into among WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN),
a California corporation formerly known as Congress Financial
Corporation (Western) (“ Agent ”), as
administrative and collateral agent for the Lenders party to the
Loan Agreement (as defined below) from time to time (“
Lenders ”), WACHOVIA CAPITAL FINANCE CORPORATION
(WESTERN), a California corporation formerly known as Congress
Financial Corporation (Western), as a Lender (“
Wachovia ”), and ROCKFORD CORPORATION, an Arizona
corporation (“ Borrower Agent ”).
A. Agent,
Wachovia, Wachovia Bank, National Association, as arranger,
Borrower Agent and Audio Innovations, Inc., an Oklahoma corporation
(“ AII ”) have previously entered into that
certain Loan and Security Agreement dated March 29, 2004 as
amended by the First Amendment to Loan and Security Agreement and
Conditional Default Waiver dated as of June 10, 2004, the
Second Amendment to Loan and Security Agreement dated as of
December 30, 2004, the Third Amendment to Loan and Security
Agreement dated as of August 31, 2005, the Fourth Amendment to
Loan and Security Agreement and Consent dated as of March 21,
2006, the Fifth Amendment to Loan and Security Agreement dated as
of August 31, 2006, the Sixth Amendment to Loan and Security
Agreement dated as of March 7, 2007 and the Seventh Amendment
to Loan and Security Agreement dated as of November 28, 2007
(the “ Loan Agreement ”), pursuant to which
Wachovia has made certain loans and financial accommodations
available to Borrower Agent and AII. Terms used herein without
definition shall have the meanings ascribed to them in the Loan
Agreement.
B. AII has
since dissolved.
C. Borrower
Agent has requested Agent and Wachovia to amend the Loan Agreement
in certain respects, and Agent and Wachovia are willing to
accommodate such request on the terms and conditions set forth
herein.
D. Borrower
Agent is entering into this Amendment with the understanding and
agreement that, except as specifically provided herein, none of
Agent’s or Lenders’ rights or remedies as set forth in
the Loan Agreement is being waived or modified by the terms of this
Amendment.
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, the
parties hereby agree as follows:
1.
Amendments to Loan Agreement .
(a)
Capital Stock . The following proviso is hereby added at the
end of Section 9.11:
“;
provided , that , Borrower Agent may repurchase or
redeem its Capital Stock so long as (i) the aggregate sum of
the payments made on account of such repurchases and redemptions do
not exceed Two Million Dollars ($2,000,000), (ii) the Excess
Availability (before giving effect to the Permanent Reserve) was
not less than Two Million Dollars ($2,000,000) at any time during
the thirty (30) days immediately preceding the date of any
such repurchase or redemption, and will not be less than Two
Million Dollars ($2,000,000) on that date after giving effect to
such repurchase or redemption, (iii) at least five (5)
Business Days before any such repurchase or redemption, Borrower
Agent furnishes Agent with a liquidity projection in form and
substance satisfactory to Agent demonstrating that the Excess
Availability (before giving effect to the Permanent Reserve) will
not be less than Two Million Dollars ($2,000,000) at any time
during the thirty (30) days immediately following the date of
such repurchase or redemption, and (iv) no Default or Event of
Default has occurred and is continuing. The failure to maintain
Excess Availability (before giving effect to the Permanent Reserve)
of at least Two Million Dollars ($2,000,000) at all times during
the thirty (30) days immediately following the date of any
such repurchase or redemption shall be deemed an Event of Default
hereunder.”
The repurchases
and redemptions permitted under the foregoing proviso shall be in
addition to those consented to in Section 2(a) of the Seventh
Amendment to Loan and Security Agreement dated as of
November 28, 2007.
(b)
EBITDA . Section 9.17.1 of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
“9.17.1
EBITDA . Borrowers and their Subsidiaries, on a consolidated
basis, shall earn EBITDA, during each period of twelve
(12) consecutive months ending on the last day of any fiscal
quarter, of not less than $3,000,000. Notwithstanding the
foregoing, if on the last day of any of the foregoing periods, the
Excess Availability before giving effect to the Permanent Reserve,
minus the sum of (a) all of the Borrowers’ trade
payables that are then more than thirty (30) days past due,
plus (b) all of the Borrowers’ obligations and
liabilities (other than trade payables) that are then past due,
exceeds $2,000,000, then Borrowers will not be required to comply
with the foregoing minimum consolidated EBITDA covenant for the
specific period then ending.
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