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Exhibit 10.40.1
M0DIFICATION TO LOAN & SECURITY AGREEMENT
This First Modification to Loan & Security Agreement (Accounts and
Inventory) (this "Modification") is entered into by and between SSE Telecom,
Inc. ("Borrower") and Comerica Bank--California ("Bank") as of this 14th day of
August 1998, at San Jose, California.
RECITALS
A. Bank and Borrower have previously entered into or are concurrently
herewith entering into a Loan & Security Agreement (the "Agreement") (Accounts
and Inventory) dated October 21, 1997.
B. Borrower has requested, and Bank has agreed, to modify the Agreement as
set forth below.
AGREEMENT
For good and valuable consideration, the parties agree as set forth below:
Incorporation by Reference. The Agreement as modified hereby and the
Recitals are incorporated herein by this reference.
SECTION 1.5 "Borrowing Base" as used in this Agreement means the sum of: (1)
seventy five percent (75.00%) of the net amount of Eligible
Accounts after deducting therefrom all payments, adjustments and
credits applicable thereto ("Accounts Receivable Borrowing Base");
(2) the amount, if any, of the advances against Inventory agreed
to be made pursuant to any Inventory Rider ("Inventory Borrowing
Base"), or other rider, amendment or modification to this
Agreement, that may now or hereafter be entered into by Bank and
Borrower.
SECTION 2.1 Upon the request of Borrower, made at any time and from time to
time during the term hereof, and so long as no Event of Default
has occurred, Bank shall lend to Borrower an amount equal to the
Borrowing Base; provided, however, that in no event shall Bank be
obligated to make advances to Borrower under this Section 2.1
whenever the Daily Balance exceeds, at any time, either the
Borrowing Base or the sum of Three Million and 00/100 Dollars
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($3,000,000.00), such amount being referred to herein as an
"Overadvance".
SECTION 2.2 Except as hereinbelow provided, the Credit shall bear interest, on
the Daily Balance owing, at a rate of One and One Quarter (1.25%)
percentage points per annum above the Base Rate (the "Rate"). The
Credit shall bear interest, from and after the occurrence of an
Event of Default and without constituting a waiver of any such
Event of Default, on the Daily Balance owing, at a rate three (3)
percentage points per annum above the Rate. All interest
chargeable under this Agreement that is based upon a per annum
calculation shall be computed on the basis of a three hundred
sixty (360) day year for actual days elapsed.
The Base Rate as of the date of this Agreement is Eight and a One
Half percent (8.50%) per annum. In the event that the Base Rate
announced is, from time to time hereafter, changed, adjustment in
the Rate shall be made and based on the Base Rate in effect on the
date of such change. The Rate, as adjusted, shall apply to the
Credit until the Base Rate is adjusted again. The minimum interest
payable by the Borrower under this Agreement shall in no event be
less than n/a per month. All interest payable by Borrower under
the Credit shall be due and payable on the first day of each
calendar month during the term of this Agreement and Bank may, at
its option, elect to treat such interest and any and all Bank
Expenses as advances under the Credit, which amounts shall
thereupon constitute Obligations and shall thereafter accrue
interest at the rate applicable to the Credit under the terms of
the Agreement.
SECTION 6.16
(c) In addition to the financial statements requested above, the
Borrower agrees to provide Bank with the following schedules:
Accounts Receivable Agings on a monthly basis within 15 days
of month end;
Accounts Payable Agings on a monthly basis within 15 days of
month end;
Borrowing Base Certificates on a monthly basis
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within 15 days of month end;
Inventory Report on a monthly basis
within 15 days of month end;
10Q reports on a quarterly basis within
45 days of quarter end.
10K reports within 90 days of fiscal year end.
Copies of all SEC filings
SECTION 6.17
(b) A Tangible Net Worth in an amount not less than $12,000,000.00 to
increase to $14,000,000.00 on August 31, 1998 and by 75% of
quarterly profits and 100% of new equity. Monitored monthly.
(d) A quick ratio of cash plus securities plus Receivables to Current
Liabilities of not less than 0.40:1.00 steps up to 0.6:1.00 on
August 31, 1998 and to 0.70:1.00 on December 31, 1998. Monitored
monthly.
(e) A ratio of Total Liabilities (less debt subordinated to Bank) to
Tangible Effective Net Worth of less than 1.50:1.00, decreasing
to 1.00:1.00 on October 31, 1998. Measured monthly.
(f) A ratio of Cash Flow to Fixed Charges of not less than 1.50:1.00,
measured quarterly, beginning the quarter ending March 31, 1999
applies to term loan only.
(g) Net Income after taxes of greater than ($2,400,000.00) for
quarter ending September 30, 1998 and greater than
($1,500,000.00) for the quarter ending December 31, 1998.
(l) Annual Accounts Receivable and CED audits
(m) Without Bank's prior written approval Borrower will not: Pledge
assets other than to Bank except for purchase money transactions
(leases);
Enter into direct borrowing or guaranties except for normal trade
credit;
Enter into any merger or acquisitions;
Declare or pay any cash dividends
Repurchase stock
Invest more than an additional $250,000.00 a month in Media 4
through September 1998.
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Legal Effect. Except as specifically set forth in this Modification, all of
the terms and conditions of the Agreement remain in full force and effect.
Integration. This is an integrated Modification and supersedes all prior
negotiations and agreements regarding the subject matter hereof. All amendments
hereto must be in writing and signed by the parties.
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
COMERICA BANK-CALIFORNIA
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Vice President
SSE TELECOM, INC.
By: /s/ R.I. Xxxxxx
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Its: Chief Financial Officer
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