Exhibit 10.1
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment"), executed as of June 29, 2001, is made and entered into between
BANK ONE, NA, a national banking association with its main office in Chicago,
Illinois, successor by merger to Bank One, Texas, N.A. ("Lender"), and WHITE
ELECTRONIC DESIGNS CORPORATION, an Indiana Corporation ("Borrower").
RECITALS
A. Lender and Borrower entered into that certain Loan and
Security Agreement, dated January 7, 2000 and amended on June
30, 2000 (the "Loan Agreement").
B. Lender and Borrower desire to further amend the Loan Agreement
as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same definitions
assigned to such terms in the Loan Agreement, as amended hereby.
ARTICLE II
Amendments to the Loan Agreement
Section 2.01 Amendment to Definitions. From and after the date hereof;
Section 1.01 of the Loan Agreement is amended by (i) the addition of the
definition of "Panelview" set forth below, and (ii) the replacement of the
definition of "Permitted Investments" with the definition set forth below.
"Panelview" means Panelview, Incorporated, an Oregon Corporation.
"Permitted Investments" means Investments of Borrower in: (a)
negotiable certificates of deposit issued by Lender, (b) any direct obligation
of the United States of America or any agency or instrumentality thereof which
has a remaining maturity at the time of purchase of not more than one year and
repurchase agreements relating to the same, (c) EDI, which shall not exceed at
any time outstanding the amount of availability resulting from Collateral of EDI
as shown on the most recent Borrowing Base Report, and (d) Panelview, which
shall not exceed $3,000,000 outstanding at any time. The amount of the
Investments that are outstanding to each of EDI and Panelview shall be the
remainder of (A) the sum of all disbursements to, and other Investments by
Borrower in, EDI or Panelview, as appropriate, minus (B) all receipts by
Borrower of accounts of EDI or Panelview, as appropriate.
Section 2.02 Amendment to Article V. From and after the date hereof,
Section 5.1(c) of the Loan Agreement is deleted in its entirety and replaced
with a new Section 5.1(c) which shall read as follows:
"(c) Subsidiaries; Ownership. Each of EDI and
Panelview is a subsidiary of Borrower. Borrower has no
subsidiaries other than EDI and Panelview. Neither EDI nor
Panelview has any subsidiaries. The outstanding stock of
Borrower has been duly and validly issued and is fully paid
and nonassessable and the number and owners of such shares of
capital stock are set forth on SCHEDULE 5.1(C)."
Section 2.03 Amendment to Article VI. From and after the date hereof,
Sections 6.2 and 6.3 and Sections 6.5 through 6.11 of the Loan Agreement are
deleted in their entirety and replaced with new Sections 6.2 and 6.3 and
Sections 6.5 through 6.11 which shall read as follows:
"Section 6.2 Collection of Accounts.
(a) Borrower shall, and shall cause EDI to, cause all
moneys, checks, notes, drafts and other payments relating to
or constituting proceeds of accounts, or of any other
Collateral, to be forwarded to a Lockbox for deposit in (i)
the Collection Account, if such Lockbox is maintained pursuant
to a Lockbox agreement with Lender, and (ii) a Blocked
Account, if such Lockbox is maintained with a Collecting Bank
pursuant to a Blocked Account Agreement, in accordance with
the procedures set out in the corresponding Blocked Account
Agreement. In particular, Borrower shall, and shall cause EDI
to, (i) advise each Account Debtor to address to a Lockbox
specified by Lender all remittances with respect to amounts
payable on all accounts, and (ii) stamp all invoices relating
to any such amounts with a legend satisfactory to Lender
indicating that payment is to be made to Borrower or EDI, as
appropriate, via such specified Lockbox.
(b) Borrower shall cause Panelview to cause all
moneys, checks, notes, drafts and other payments relating to
or constituting proceeds of accounts, and of all other
Collateral provided by Panelview, to be deposited in, or
forwarded to, the Collection Account not less often than
weekly. Upon request of Lender, Borrower shall cause Panelview
to cause all such proceeds to be deposited in a Blocked
Account for forwarding to the Collection Account.
(c) Borrower and Lender shall (and Borrower shall
cause EDI to) cause all balances in each Blocked Account to be
transmitted daily to the Collection Account by wire transfer
or depository transfer check or Automated Clearing House
transfer in accordance with the procedures set forth in the
corresponding Blocked Account Agreement. Deposits in the
Collection Account that represent proceeds of accounts of
Borrower or of EDI shall be credited, subject to final
payment, to the payment of the Obligations TWO DAYS after the
date of actual receipt and deposit into the Collection Account
by Lender. Deposits in the Collection Account that represent
proceeds of accounts of
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Panelview shall be credited, subject to final payment, to the
payment of the Obligations on the date of actual receipt and
deposit into the Collection Account by Lender. The delay in
applying funds held in the Collection Account to the
Obligations shall in all respects be limited so that interest
on the Obligations is at all times less than interest
calculated at the Maximum Rate.
(d) Borrower shall, and shall cause EDI and Panelview
to, hold any payments which are received by Borrower, EDI or
Panelview (including any payment evidenced by a promissory
note or other instrument) in trust for Lender. Borrower shall,
and shall cause EDI and Panelview to, cause all such payments
to be (1) deposited in the Collection Account, or (ii)
delivered to Lender, as promptly as possible in the exact form
received, together with any necessary endorsements.
Section 6.3 Verification and Notification. Lender shall have
the right at any time at Borrower's expense (a) to verify the validity,
amount or any other matter relating to any accounts of Borrower, EDI or
Panelview, and (b) to notify Account Debtors of Borrower, EDI and
Panelview to make payment of all amounts directly to Lender and enforce
collection of any such accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner as Borrower, EDI and
Panelview.
Section 6.5 Invoices. Upon request, Borrower shall, and shall
cause EDI and Panelview to, deliver to Lender, copies of customers'
invoices or the equivalent, original shipping and delivery receipts or
other proof of delivery, customers' statements, the original copy of
all documents, including, without limitation, repayment histories and
present status reports, relating to accounts and such other documents
and information relating to the accounts as Lender shall specify.
Section 6.6 Ownership; Defense of Title.
(a) Borrower shall, and shall cause EDI and Panelview
to, defend its title in and to the Collateral and shall defend
the security interest of Lender in the Collateral against the
claims and demands of all Persons.
(b) Borrower shall, and shall cause EDI and Panelview
to, (i) protect and preserve all properties material to its
business, including Intellectual Property, and maintain all
tangible property in good and workable condition in all
material respects, with reasonable allowance for wear and
tear, and (ii) from time to time make or cause to be made all
needed and appropriate repairs, renewals, replacements and
additions to such properties necessary for the conduct of its
business.
Section 6.7 Location of Offices and Collateral. Neither
Borrower nor EDI or Panelview shall change the location of its place of
business (or, if it has more than one place of business, its chief
executive office) or the place where it keeps its books and records
relating to the Collateral or change its name, identity or corporate
structure without giving Lender at least thirty (30) days' prior
written notice thereof. All inventory
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of Borrower, other than inventory in transit to any such location, and
all equipment, other than motor vehicles, shall at all times be kept by
Borrower at one of the locations set forth in SCHEDULES 5.1(O) and (P).
All inventory of EDI, other than inventory in transit to any such
location, and all equipment, other than motor vehicles, shall at all
times be kept by EDI at one of the locations set forth in the Schedule
to the Security Agreement executed by EDI. All inventory of Panelview,
other than inventory in transit to any such location, and all
equipment, other than motor vehicles, shall at all times be kept by
Panelview at one of the locations set forth in the Schedule to the
Security Agreement executed by Panelview,
Section 6.8 Records Relating to Collateral.
(a) Borrower shall, and shall cause EDI and Panelview
to, at all times keep and maintain (i) complete and accurate
records of inventory on a basis consistent with past practices
of Borrower, EDI or Panelview, as appropriate, itemizing and
describing the kind, type and quantity of inventory of
Borrower, EDI and Panelview, the cost therefor and a current
price list for such inventory, (ii) complete and accurate
records of all other Collateral, (iii) a list of all customers
of each of Borrower, EDI and Panelview, with names, addresses
and phone numbers, (iv) a list of all distributors for each
product line included in each of Borrower's, EDI's or
Panelview's inventory, (v) a current customer open order
report against current inventory, and (vi) a current list of
all salesmen and employees of each of Borrower, EDI and
Panelview. Data bases containing the foregoing shall at all
times be accessible and available to Lender.
(b) Borrower shall, and shall cause EDI and Panelview
to, conduct a physical count of all inventory, wherever
located, at least annually and make adjustments to its books
and records to reflect the findings of such count and such
adjustments shall be immediately reported to Lender.
Section 6.9 Inspection. Lender (by any of its officers,
employees or agents) shall have the right at any time or times to (a)
visit the properties of each of Borrower, EDI and Panelview, inspect
the Collateral and the other assets of each of Borrower, EDI and
Panelview and inspect and make extracts from the books and records of
each of Borrower, EDI and Panelview, all during customary business
hours, (b) discuss each of Borrower's, EDI's and Panelview's business,
financial condition, results of operations and business prospects with
their respective, (i) principal officers, (ii) independent accountants
and other professionals providing services to Borrower, EDI or
Panelview, and (iii) any other Person (except that any such discussion
with any third parties shall be conducted only in accordance with
Lender's standard operating procedures relating to the maintenance of
confidentiality of confidential information of borrowers), (c) verify
the amount, quantity, value and condition of, or any other matter
relating to, any of the Collateral and in this connection to review,
audit and make extracts from all records and files related to any of
the Collateral, and (d) access and copy the records, lists, reports and
data bases referred to in SECTION 6.8. Borrower shall, and shall cause
EDI and Panelview to, deliver to the Lender upon request any instrument
necessary to authorize an independent accountant or other professional
to have discussions of the type outlined
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above with the Lender or for the Lender to obtain records from any
service bureau maintaining records on behalf of Borrower, EDI or
Panelview,
Section 6.10 Maintenance. Borrower shall, and shall cause EDI
and Panelview to, maintain all equipment of each of Borrower, EDI and
Panelview in good and working order and condition, reasonable wear and
tear accepted.
Section 6.11 Power of Attorney. Borrower, EDI and Panelview
each hereby appoints Lender as its attorney-in-fact, with power (a) to
endorse the name of Borrower, EDI or Panelview, as appropriate, on any
cheeks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into Lender's possession, and (b) to
sign the name of Borrower, EDI or Panelview, as appropriate, on any
invoice or xxxx of lading relating to any accounts, inventory or other
Collateral."
ARTICLE III
Conditions Precedent
Section 3.01 Conditions Precedent. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by Lender:
(a) The representations and warranties contained herein
and in all other Loan Documents shall be true and correct as of the
date hereof as if made on the date hereof.
(b) No Default or Event of Default shall have occurred
and be continuing.
(c) Borrower, EDI and Panelview shall have executed and
delivered to Lender this Amendment.
(d) All corporate proceedings taken in connection with
the transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel in their sole discretion.
ARTICLE IV
Ratifications, Representations, and Warranties
Section 4.01 Ratification by Borrower. The terms and provisions set
forth in this Amendment modify and supersede all inconsistent terms and
provisions set forth in the Loan Agreement and, except as expressly modified and
superseded by this Amendment, the terms and provisions of the Loan Agreement are
ratified and confirmed and continue in full force and effect. The Loan Agreement
as amended by this Amendment shall continue to be legal, valid, binding and
enforceable in accordance with its terms.
Section 4.02 Renewal and Extension of Security Interests and Liens.
Borrower hereby renews and affirms the liens and security interests created and
granted in Loan Documents.
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Borrower agrees that this Amendment shall in no manner affect or impair the
liens and security interests securing the Obligations, and that such liens and
security interests shall not in any manner be waived, the purposes of this
Amendment being to modify the Loan Agreement as herein provided, and to carry
forward all liens and security interest securing same, which are acknowledged by
Borrower to be valid and subsisting.
Section 4.03 Representations and Warranties. Borrower represents and
warrants to Lender as follows: (i) the execution, delivery and performance of
this Amendment and any and all Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and Will not violate the articles or bylaws of Borrower or
any agreement to which Borrower is a party; (ii) the representations and
warranties contained in the Loan Agreement as amended hereby and in each of the
other Loan Documents are true and correct on and as of the date hereof as though
made on and as of the date hereof; (iii) no Event of Default under the Loan
Agreement has occurred and is continuing; and (iv) Borrower is in full
compliance with all covenants and agreements contained in the Loan Agreement, as
amended hereby.
ARTICLE V
Miscellaneous
Section 5.01 Survival of Representations and Warranties. All
representations and warranties made in the Loan Agreement or any other Loan
Document, including without limitation, any Loan Document furnished in
connection with this Amendment, shall survive the execution and delivery of this
Amendment and the other Loan Document, and no investigation by Lender or any
closing shall affect such representations and warranties or the right of Lender
to rely thereon.
Section 5.02 Reference to Loan Agreement. Each of the Loan Documents
and the Loan Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Loan Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Loan Agreement shall
mean a reference to the Loan Agreement as amended hereby.
Section 5.03 Expenses of Lender. Borrower agrees to pay on demand all
reasonable costs and expenses incurred by Lender directly in connection with the
preparation, negotiation and execution of this Amendment and the other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limitation, the costs and fees of
Lender's legal counsel, and all costs and expenses incurred by Lender in
connection with the enforcement or preservation of any rights under the Loan
Agreement, as amended hereby, or any other Loan Document, including, without
limitation, the reasonable costs and fees of Lender's legal counsel.
Section 5.04 Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
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SECTION 5.05 APPLICABLE LAW. THIS AMENDMENT SHALL BE DEEMED TO HAVE
BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 5.06 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, executors, and legal representatives, except that
none of the parties hereto other than Lender may assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.
Section 5.07 Counterparts. This Amendment may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument.
Section 5.08 Effect of Waiver. No consent or waiver, express or
implied, by Lender to or for any breach of or deviation from any covenant,
condition or duty by either Borrower, shall be deemed a consent to or waiver of
any other breach of the same or any other covenant, condition or duty.
Section 5.09 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 5.10 Conflicting Provisions. If any provision of the Loan
Agreement as amended hereby conflicts with any provision of any other Loan
Document, the provision in the Loan Agreement shall control.
SECTION 5.11 ENTIRE AGREEMENT. THIS AMENDMENT, THE LOAN AGREEMENT AND
ALL OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH AND PURSUANT
TO THIS AMENDMENT AND THE LOAN AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first written above.
LENDER:
Bank One, NA
/s/ Xxxxx Xxxxxxxxx
By: _______________________________________
Xxxxx Xxxxxxxxx, Vice President
BORROWER:
White Electronic Designs Corporation
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/s/ Xxxxx X. Xxxxxxxxxx
By: ________________________________________
Xxxxx X. Xxxxxxxxxx, President and CEO
Confirmation by Guarantor
The undersigned hereby (i) consents, acknowledges, and agrees to the
execution, delivery, and performance by Borrower of this Amendment, (ii)
acknowledges and agrees that this Amendment does not affect, diminish, waive, or
release his obligations under the Unlimited Guaranty executed by it and dated
January 7, 2000, (iii) ratifies and confirms its obligations pursuant to such
Unlimited Guaranty, and (iv) covenants, acknowledges, and agrees that it
guaranties the repayment of the Guaranteed Indebtedness, as provided in such
Unlimited Guaranty.
Electronic Designs, Inc.
/s/ Xxxxx X. Xxxxxxxxxx
By: ________________________________________
Xxxxx X. Xxxxxxxxxx, President and CEO
Panelview has reviewed the Loan Agreement and the amendments thereto,
including this Amendment, and executes this Amendment to acknowledge its
agreement to be bound by the terms of Article VI of the Loan Agreement, as
amended.
Panelview, Inc.
/s/ Xxxxx X. Xxxxxxxxxx
By: ________________________________________
Xxxxx X. Xxxxxxxxxx, CEO
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