EXHIBIT 10.1
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
AND WAIVER OF DEFAULTS
THIS SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER OF
DEFAULTS, dated as of March 30, 1999, is made by and between P.G. DESIGN
ELECTRONICS, INC., a Delaware corporation (the "Borrower"), and NORWEST BUSINESS
CREDIT, INC., a Minnesota corporation (the "Lender").
RECITALS:
The borrower and the Lender have entered into a Credit and Security
Agreement dated as of December 31, 1998, as amended (the "Credit Agreement").
Capitalized terms used in these recitals have the meanings given to them in the
Credit Agreement unless otherwise specified.
The Borrower has requested that certain amendments be made to the Credit
Agreement, which the lender is willing to make pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment which are
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defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein.
2. Amendment to Section 6.12. Section 6.12 of the Credit Agreement is
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amended to read as follows:
(a) from February 1, 1999 through June 29, 1999, a minimum Combined
Book Net Worth of not less than the Combined Book Net Worth as of
January 31, 1999 minus One Hundred Fifty Thousand Dollars ($150,000);
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(b) as of June 30, 1999, a minimum Combined Book Net Worth of not less
than the Combined Book Net Worth as of December 31,1 998 plus Five
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Hundred Thousand Dollars ($500,000);
(c) from July1, 1999 through December 30, 1999, a minimum Combined Book
Net Worth of not less than the Combined Book Net Worth as of June 30,
1999;
(d) as of December 31, 1999, a minimum Combined Book Net Worth of not
less than both (i) the Combined Net Worth as of December 31, 1998 plus
One Million Dollars ($1,000,000) and (ii) the Combined Book Net Worth
as of June 30, 1999 plus Five Hundred Thousand Dollars ($500,000);
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(e) thereafter, a minimum Combined Book Net Worth during each fiscal
period from January 1 through December 30 of not less than the Combined
Book Net Worth as of the end of the preceding fiscal year;
(f) as of each June 30 after June 30, 1999, a minimum Combined Book Net
Worth of not less than the Combined Book Net Worth as of the preceding
fiscal year end plus One Million Dollars ($1,000,000);
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(g) thereafter, a minimum Combined Book Net Worth during each fiscal
period from July 1 through December 30 of not less than the Combined
Book Net Worth as of the preceding June 30;
(h) as of the end of each fiscal year after December 31, 1999, a
minimum Combined Book Net Worth of not less than both (i) the Combined
Book Net Worth as of the prior fiscal year end plus Two Million Five
----
Hundred Thousand Dollars ($2,500,000), and (ii) the Combined Book Net
Worth as of the preceding June 30 plus One Million Five Hundred
----
Thousand Dollars ($1,500,000); and
(i) as of March 31, 2000, a minimum Combined Book Net Worth of not less
than the Combined Book Net Worth as of December 31, 1999 plus Five
----
Hundred Thousand Dollars ($500,000).
3. No Other Changes. Except as explicitly amended by this Amendment, all
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of the terms and conditions of the Credit Agreement shall remain in full force
and effect and shall apply to any advance or letter of credit thereafter.
4. Waiver of Defaults. Prior to giving effect to this Amendment, the
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Borrower is in default of the Credit Agreement on account of its failure to
satisfy the minimum Combined Book Net Worth requirements set forth in Section
6.12 (b) (the "Defaults"):
Upon the terms and subject to the conditions set forth in this Amendment,
the Lender hereby waives the Defaults. This waiver shall be effective only in
this specific instance and for the specific purpose for which it is given, and
this waiver shall not entitle the Borrower to any other or further waiver in any
similar or other circumstances.
5. Amendment Fee. The Borrower shall pay the Lender as of the date hereof
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a fully earned, non-refundable fee in the amount of Two Thousand Five Hundred
Dollars ($2,500) in consideration of the Lender's execution of this Amendment.
6. Conditions Precedent. This Amendment, and the waiver set forth in
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Paragraph 4 hereof, shall be effective when the Lender shall have received an
executed original hereof, together with each of the following, each in substance
and form acceptable to the Lender in its sole discretion:
(a) The Acknowledgment and Agreement of Guarantors set forth at the end
of this Amendment, duly executed by each Guarantor.
(b) Payment of the fee described in Paragraph 5.
(c) Such other matters as the Lender may require.
7. Representation and Warranties. The Borrower hereby represents and
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warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to execute this
Amendment and to perform all of its obligations hereunder, and this
Amendment has been duly executed and delivered by the Borrower and
constitutes the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of this
Amendment have been duly authorized by all necessary corporate action and
do not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the articles
of incorporation or by-laws of the Borrower, or (iii) result in a breach of
or constitute a default under any indenture or loan or credit agreement or
any other agreement lease or instrument to which the Borrower is a party or
by which it or its properties may be bound or affected.
(c) All of the representations and warranties contained in Article V
of the Credit Agreement are correct on and as of the date hereof as though
made on and as of such date, except to the extent that such representations
and warranties relate solely to an earlier date.
8. References. All references in the Credit Agreement to "this Agreement"
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shall be deemed to refer to the Credit Agreement as amended hereby; and any and
all references in the Security Documents to the Credit Agreement shall be deemed
to refer to the Credit Agreement as amended hereby.
9. No Other Waiver. Except as set forth in Paragraph 4 hereof, the
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execution of this Amendment and acceptance of any documents related hereto shall
not be deemed to ve a waiver of any Default or Event of Default under the Credit
Agreement or breach, default or event of default under any Security Document or
other document held by the Lender, whether or not known to the Lender and
whether or not existing on the date of this Amendment.
10. Release. The Borrower, and each Guarantor by signing the Acknowledgment
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and Agreement of Guarantors set forth below, each hereby absolutely and
unconditionally releases and forever discharges the Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower or such Guarantor has had, now has or has made claim to have against
any such person or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
11. Costs and Expenses. The Borrower hereby reaffirms its agreement under
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the Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Security Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its
sole discretion and without further authorization by the Borrower, make a loan
to the Borrower under the Credit Agreement, or apply the proceeds of any loan,
for the purpose of paying such fees, disbursements, costs and expenses and the
fee required under paragraph 6 thereof.
12. Miscellaneous. This Amendment and the Acknowledgment and Agreement of
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Guarantors may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
NORWEST BUSINESS CREDIT, INC. P. G. DESIGN ELECTRONICS, INC.
By: Xxxxxx Xxx By: Xxxxxxxx Xxxxxxx
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Its: Vice President Its: Vice President - General Counsel
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned, each a guarantor of the indebtedness of P.G. Design
Electronics, Inc. (the "Borrower") to Norwest Business Credit, Inc. (the
"Lender") pursuant to a separate Guaranty each dated as of December 31, 1998
(each, a "Guaranty"), hereby (i) acknowledges receipt of the foregoing
Amendment; (ii) consents to the terms (including without limitation the release
set forth in paragraph 11 of the Amendment) and execution thereof; (iii)
reaffirms its obligations to the Lender pursuant to the terms of the Guaranty;
and (iv) acknowledges that the Lender may amend, restate, extend, renew or
otherwise modify the Credit Agreement and any indebtedness or agreement of the
Borrower, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned
and without impairing the liability of the undersigned under its Guaranty for
all of the Borrower's present and future indebtedness to the Lender.
HEARTLAND TECHNOLOGY, INC.
By: Xxxxxxxx Xxxxxxx
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Its: Vice President - General Counsel
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ZECAL CORP.
By: Xxxxxxxx Xxxxxxx
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Its: Vice President - General Counsel
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