EXHIBIT 10.64
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
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THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of December 7, 1998, is entered into by and between SANWA BUSINESS
CREDIT CORPORATION, a Delaware corporation ("Lender"), and each of XXXXXX MEDIA
SALES, INC., a Texas corporation ("Xxxxxx"), EDUCATIONAL INDUSTRIAL SALES,
INCORPORATED, a California corporation ("EISI"), X. XXXXXXXXXXXX ENTERPRISES,
INC., a Texas corporation ("Xxxxxxxxxxxx"), and INTELLISYS GROUP, INC., a
Delaware corporation ("Intellisys," and collectively with Xxxxxx, EISI,
Higginbotham, the "Borrowers"), with reference to the following facts:
RECITALS
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A. EISI, Alford, Higginbotham, and Electronic Integrated Solutions, a
California corporation (the "Parent," and collectively with Xxxxxx, XXXX, and
Xxxxxxxxxxxx, the "Original Borrowers") and Lender were parties to that certain
Loan and Security Agreement, dated as of September 3, 1998 (the "Original Loan
Agreement," as such agreement previously has been and may hereafter be amended,
renewed, extended, supplemented or otherwise modified, the "Loan Agreement"),
pursuant to which Lender has provided the Original Borrowers with certain credit
facilities on a joint and several liability basis.
B. The Original Loan Agreement has been amended pursuant to that certain
First Amendment to Loan and Security Agreement, entered into by and between
Lender and each of EISI, Alford, Higginbotham, and EIS Merger Subsidiary, Inc.,
a Delaware corporation, successor by merger to Parent ("Subsidiary"), dated as
of October 14, 1998, to provide for Lender's consent to Parent's reincorporation
in Delaware by means of (i) the establishment and chartering of Subsidiary as a
wholly-owned subsidiary of Parent in Delaware and (ii) the merger of the Parent
with and into Subsidiary, with Subsidiary being the resulting entity of such
merger (the "Parent Reincorporation").
C. Concurrently with the completion of the Parent Reincorporation, the
name of Subsidiary was changed to Intellisys Group, Inc. ("Intellisys").
D. The parties hereto wish to amend the Loan Agreement to provide for
this Borrower's name change from EIS Merger Subsidiary, Inc. to Intellisys
Group, Inc. and to provide for modifications to the Change in Control and
Capital Expenditure provisions (collectively, the "Modifications).
E. Lender is willing to agree to the Modifications on the terms and
conditions set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Defined Terms. All initially capitalized terms used in this Amendment
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without definition shall have the respective meanings assigned thereto in the
Loan Agreement.
2. Increase in Capital Expenditures Limit. Section 10.2(m) of the Loan
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Agreement is hereby amended to read in full as follows:
"(m) Make capital expenditures, including capital leases and operating
leases which, in the aggregate, exceed Two Million Dollars ($2,000,000);
provided that for Borrowers' fiscal year 1999, this amount shall be
increased to an amount not to exceed Two Million Five Hundred Thousand
Dollars ($2,500,000).
3. Modification of Change in Control Provision. Section 10.8 of the Loan
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Agreement is hereby amended by deleting the reference therein to "twenty-five
percent (25%)" and by substituting therefor a reference to "twenty-eight percent
(28%)."
4. Provision for Intellisys as a Borrower. Intellisys Group, Inc., a
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Delaware corporation, hereby acknowledges and agrees that it is a "Borrower" for
all purposes under the Loan Agreement and all other related loan documents
executed by the Original Borrowers or Borrowers. Without limiting the
foregoing, Intellisys hereby acknowledges and agrees that it is jointly and
severally liable with the other Borrowers for all of the Liabilities. The
Borrowers hereby acknowledge and agree that all references to the term
"Borrower" or "Borrowers" appearing in the Loan Agreement or in any of the other
related loan documents are hereby deemed to be amended to include Intellisys.
5. Modification of Notice Provision. Section 13.10 of the Loan Agreement
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is hereby amended by deleting the reference therein to "c/o Electronic
Integrated Solutions, Inc." and by substituting therefor a reference to "c/o
Intellisys Group, Inc."
6. Further Assurances. Borrowers hereby agree to execute and deliver to
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Lender any and all financing statements and other agreements, documents or
instruments which Lender may reasonably request in order to give effect to the
inclusion of Intellisys hereunder as a Borrower.
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7. Conditions Precedent. The effectiveness of this Amendment shall be
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subject to the prior satisfaction of each of the following conditions:
a) Execution and Delivery of this Amendment. Lender shall have
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received this Amendment, duly executed by each of the Borrowers,
including Intellisys;
b) Constituent Documents of Intellisys. Lender shall have received a
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true and correct copy of the Certificate of Incorporation and the
Bylaws of Intellisys;
c) Opinion Letter. Lender shall have received an opinion letter of
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counsel to the Borrowers in form and substance acceptable to Lender,
confirming that the Parent Reincorporation has been consummated and
addressing such other matters as Lender may reasonably request; and
d) Acknowledgment of Guarantor. The Guarantor shall have confirmed
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the continuing validity and effectiveness of his guaranty of the
Obligations by executing the Acknowledgment of Guarantor attached to
this Amendment.
8. No Other Amendments. Except as expressly amended hereby, the Loan
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Agreement shall remain unaltered and in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment by their
respective duly authorized officers as of the date first set forth above.
LENDER:
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SANWA BUSINESS CREDIT CORPORATION,
a Delaware corporation
By /s/ Xxxxxxx Xxxxxx
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Title: First Vice President
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BORROWERS:
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XXXXXX MEDIA SALES, INC.,
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a Texas corporation
By /s/ Xxxxxx X. Xxxxxx
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Title: President
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EDUCATIONAL INDUSTRIAL
SALES, INCORPORATED,
a California corporation
By /s/ Xxxxxx X. Xxxxxx
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Title: President
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X. XXXXXXXXXXXX ENTERPRISES, INC.,
a Texas corporation
By: /s/ Xxxxxx X. Xxxxxx
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Title: President
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INTELLISYS GROUP, INC.,
a Delaware corporation
By /s/ Xxxxxx X. Xxxxxx
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Title: President
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ACKNOWLEDGMENT OF GUARANTOR
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The undersigned hereby (i) ratifies and reaffirms all of his obligations to
Lender under the Continuing Guaranty dated as of September 3, 1998, executed by
the undersigned in favor of Lender (the "Guaranty"), (ii) consents to the
execution and delivery by Borrowers of the attached Amendment, and (iii)
confirms that the Guaranty remains in full force and effect notwithstanding
Borrowers' execution of the attached Amendment. The undersigned agrees that the
execution of this Acknowledgment of Guarantor is not necessary for the continued
validity and enforceability of the Guaranty, but it is executed to induce Lender
to enter into the Amendment.
Dated: December 7, 1998 XXXXXX X. XXXXXX,
an individual
/s/ Xxxxxx X. Xxxxxx
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