EXHIBIT 10.1
AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Amendment to Loan and Security Agreement is entered into as of April
9, 1997 (this "Amendment"), by and between Silicon Valley Bank ("Bank") and
Quest Electronic Hardware, Inc. ("Borrower").
RECITALS
Borrower and Bank are parties to that certain Loan and Security Agreement
dated as of March 31, 1995, as amended from time to time, including, without
limitation, the Amendment No. 1 to Loan and Security Agreement dated May 31,
1995, the Amendment No. 1 to Loan and Security Agreement dated November 16,
1995, the Amendment to Loan and Security Agreement dated March 31, 1996, and
the Amendment to Loan and Security Agreement dated September 30, 1996
(collectively, the "Agreement"). The parties desire to amend the Agreement in
accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following definitions in Section 1.1 are hereby amended
to read as follows:
"Committed Line" means Three Million Dollars ($3,000,000).
"Guarantor" means Questron Technology, Inc.
"Guaranty" means the Unconditional Guaranty dated September
26, 1996 executed by Guarantor in favor of Bank.
"Letters of Credit" means a letter of credit or similar undertaking
issued by Bank pursuant to Section 2.1.2.
"Revolving facility Maturity Date" means March 30, 1999, as
extended from time to time in Bank's sole discretion pursuant to
Section 2.1, provided that the Revolving Facility Maturity Date
shall be March 30, 1998 if Bank gives Borrower notice not later
than December 31, 1997 that Borrower has not complied with the
terms of the Agreement to Bank's reasonable satisfaction.
"Total Liabilities" means as of any applicable date, any date as of
which the amount thereof shall be determined, all obligations that
should, in accordance with GAAP be classified as liabilities on the
consolidated balance sheet of Borrower, including in any event all
Indebtedness.
2. The first paragraph of Section 2.1 is amended to read as follows:
2 .1 Advances. Subject to and upon the terms and conditions of
this Agreement, Bank agrees to make Advances to Borrower in an
aggregate amount not to exceed (a) the lesser of the Committed Line
or the Borrowing Base, minus (b) the face amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of
Credit). For purposes of this Agreement, "Borrowing Base" shall
mean an amount equal to (I) seventy-five percent (75%) of Eligible
Accounts plus (ii) (x) if the value of Borrower's total Inventory
is equal to or greater than Four Million Two Hundred Fifty Thousand
Dollars ($4,250,000), then the lesser of twenty-five percent (25%)
of the value of Borrower's Eligible Inventory or One Million
Dollars ($1,000,000), or (y) if the value of Borrower's total
Inventory is less than Four Million Two Hundred Fifty Thousand
Dollars ($4,250,000) but greater than or equal to Two Million Five
Hundred Thousand Dollars ($2,500,000), then the lesser of
twenty-five percent (25%) of the value of Borrower's Eligible
Inventory or Seven Hundred Fifty Thousand Dollars ($750,000), or
(z) if the value of Borrower's total Inventory is less than Two
Million Five Hundred Thousand Dollars ($2,500,000), then the lesser
of twenty-five percent (25%) of the value of Borrower's Eligible
Inventory or Five Hundred Thousand Dollars ($500,000). Subject to
the terms and conditions of this Agreement, amounts borrowed
pursuant to this Section 2.1 may be repaid and reborrowed at any
time prior to the Revolving Facility Maturity Date.
3. The Section numbers set forth in Amendment No. 1 to Loan and
Security Agreement dated May 31, 1995, for the sections titled "Letters of
Credit" and "Letter of Credit Reimbursement; Reserve" shall hereby be amended
to Section 2.1.2 for the "Letters of Credit" and Section 2.1.3 for the "Letter
of Credit Reimbursement; Reserve."
4. Sections 6.9, 6.10 and 6.12 are hereby amended to read as follows:
6.9 Debt-Tangible Net Worth. Borrower shall maintain, as of the
last day of each calendar month, commencing with the calendar month
ending on March 31, 1997, a ratio of Total Liabilities less Subordinated
Debt to Tangible Net Worth plus Subordinated Debt of not more than 1.25
to 1.0.
6.10 Tangible Net Worth. Borrower shall maintain, as of the last
day of each calendar month, commencing with the calendar month ending on
March 31, 1997, a Tangible Net Worth of not less than Four Million Five
Hundred Thousand Dollars ($4,500,000), plus fifty percent (50%) of
Borrower's net income in the subsequent years of this Agreement,
6.12 Debt Service Coverage. Borrower shall maintain, as of the last
day of each calendar month, commencing with the calendar month ending on
March 31, 1997, a Debt Service Coverage Ratio of at least 1.75 to 1.0 for
each month from March through November, and at least 1.50 to 1.0 for each
month from December through February.
5. Section 6.11 is hereby deleted in its entirety.
6. The borrowing base certificate and the compliance certificate
attached to the Agreement as Exhibit C and Exhibit D, respectively, are hereby
replaced by Exhibit "C" and Exhibit "D", respectively, attached hereto.
7. In order to secure prompt repayment of any and all Obligations and
in order to secure prompt performance by Borrower of each of its covenants and
duties under the Loan Documents, Borrower hereby pledges to Bank all the shares
of capital stock of Comp Xxxx, Inc. which Borrower now owns or hereafter
acquires an interest, by executing concurrently herewith a Stock Pledge
Agreement and taking such further actions requested by Bank that are necessary
to effect such pledge.
8. As a condition to the effectiveness of this Amendment, Borrower
shall pay Bank a per annum fee of Twenty Two Thousand Five Hundred Dollars
($22,500), plus a cost of capital fee of Twenty Five Thousand Dollars
($25,000), plus all Bank Expenses (including reasonable attorneys' fees)
incurred through the date of this Amendment, which fees and expenses become
nonrefundable and fully earned on the date of this Amendment.
9. The effectiveness of this Amendment is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:
a. this Amendment duly executed by Borrower;
b. a certificate of secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Amendment;
c. the Stock Pledge Agreement duly executed by Borrower;
d. the Affirmation of Guaranty duly executed by Questron
Technology, Inc.;
e. the Affirmation of Stock Pledge Agreement duly executed by
Questron Technology, Inc.;
f. evidence of corporate authority and incumbency as Bank shall
require from all third parties entering into agreements in connection with this
Amendment;
g. payment of the fees and Bank Expenses then due specified in
Paragraph 6 hereof; and
h. such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.
10. Unless other-wise defined, all capitalized terms in this Amendment
shall be as defined in the Agreement. Except as amended, the Agreement remains
in full force and effect.
11. Borrower represents and warrants that the Representations and
Warranties contained in the Agreement are true and correct as of the date of
this Amendment (except such representations and warranties to be expressly true
as of a specific date), and that no Event of Default has occurred and is
continuing.
12. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written.
QUEST ELECTRONIC HARDWARE, INC.,
a Delaware corporation
By: Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: Chairman and CEO
SILICON VALLEY BANK
By: Xxxxx Xxxxxxxxx
-----------------------------
Asst. Vice-President
EXHIBIT C
BORROWING BASE CERTIFICATE
-------------------------------------------------------------------------------
Borrower: Quest Electronic Hardware, Inc. Lender: Silicon Valley Bank
Commitment Amount: $3,000,000.00
-------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of $______________
2. Additions (please explain on reverse) $______________
3. TOTAL ACCOUNTS RECEIVABLE $______________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $______________
5. Balance of 50% over 90 day accounts $______________
6. Concentration Limits $______________
7. Foreign Accounts $______________
8. Governmental Accounts $______________
9. Contra Accounts $______________
10. Promotion or Demo Accounts $______________
11. Intercompany/Employee Accounts $______________
12. Other (please explain on reverse) $______________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $______________
14. Eligible Accounts (#3 minus #13) $______________
15. LOAN VALUE OF ACCOUNTS (75% of #14) $______________
INVENTORY
16. Value of Inventory $______________
17. LOAN VALUE OF INVENTORY (lesser of (a) 25% of #16,
(b) $1,000,000 if #16 is greater than $4,250,000,
(c) $750,000 if #16 is greater than $2,500,000 but less
$4,250,000, or (d) $500,000 if #16 is less than $2,500,000 $______________
BALANCES
18. Maximum Loan Amount $ 3,000,000.00
19. Total Funds Available [Lesser of #18 or (#15 plus #17)] $______________
20. Present balance owing on Line of Credit $______________
21. Face amount of all outstanding Letters of Credit $______________
22. RESERVE POSITION (#19 minus #20 minus 21) $______________
The undersigned represents and warrants that the foregoing is true, complete
and correct,, and that the information reflected in this Borrowing Base
Certificate complies with the representations and warranties set forth in the
Loan and Security Agreement between the undersigned and Silicon Valley Bank.
---------------------------------
COMMENTS: | |
| BANK USE ONLY |
| ------------- |
| Rec'd By: |
| -------------------- |
Quest Electronic Hardware, Inc. | Auth. Signer |
| |
| Date: |
| ------------------------ |
| |
By: | Verified: |
---------------------------- | -------------------- |
Authorized Signer | Auth. Signer |
| |
| Date: |
| ------------------------ |
| |
---------------------------------
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: QUEST ELECTRONIC HARDWARE, INC.
The undersigned authorized officer of Quest Electronic Hardware, Inc.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i)
Borrower is in complete compliance for the period ending ____________________
with all required covenants except as noted and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING
YES/NO UNDER "COMPLIES"COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
A/R & A/P Agings Monthly within 20 days Yes No
A/R Audit Initial and Semi-Annual Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio 0.50:1.0 :1.0 Yes No
Minimum Tangible Net Worth $4,500,000 plus $ Yes No
50% of Net Income
Maximum Debt/Tangible Net Worth 1.25:1.0 :1.0 Yes No
Debt Service Coverage 1.75:1.0 for March :1.0 Yes No
through Nov.;
1.50:1.0 for Dec.
through Feb.
COMMENTS REGARDING EXCEPTIONS: See Attached.
---------------------------------
| |
| BANK USE ONLY |
Sincerely, | ------------- |
| Received by: |
---------------------------------- | ----------------- |
SIGNATURE | AUTHORIZED SIGNER |
| |
---------------------------------- | Date: |
TITLE | ------------------------ |
| |
---------------------------------- | Verified: |
DATE | -------------------- |
| AUTHORIZED SIGNER |
| |
| Date: |
| ------------------------ |
| Compliance Status: Yes No |
---------------------------------
