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
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and among MERRILL LYNCH COMMERCIAL
FINANCE CORP. ("MLCFC") and ORBIT
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INTERNATIONAL CORP. ("Customer") and will serve
to confirm certain agreements
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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");
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(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");
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(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");
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(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");
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(v) UNCONDITIONAL GUARANTIES (the
"Guaranties") dated December 31, 2007 and
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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
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(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
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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".
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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
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acknowledge that for the period ending June 30,
2009 they are in violation of
the following covenants under the
Loan Documents ("Identified Defaults"):
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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
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following amendments to the Loan
Documents:
A. WCMA LOAN AGREEMENT. The
WCMA Loan Agreement is amended and restated as
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applicable as follows:
1. Applicable Margin.
The definition of "Applicable Margin" shall
be
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amended as follows:
"Applicable Margin shall
mean 3.50%."
2. Maximum WCMA
Line of Credit. The definition of "Maximum WCMA Line of
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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
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applicable as follows:
1. Applicable Margin.
The definition of "Applicable Margin" shall
be
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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
