Page 1
Exhibit 10.4
FIRST AMENDMENT TO SECURITY AND LOAN AGREEMENT
AND ADDENDUM, EXHIBIT "A," THERETO
This first Amendment ("Amendment") amends that certain Security and Loan
Agreement dated May 8, 1995, between Imperial Bank ("Bank") and Overland Data,
Inc.("Borrower") and the Addendum, Exhibit "A" (the "Addendum") thereto, of even
date, (collectively herein the Security and Loan Agreement and the Addendum are
referred to as the "Agreement") as follows:.
1. Paragraph 2.b. is amended by deleting the date "February 28, 1995" and
substituting the date "November 30, 1996."
2. Paragraph 3.b. is amended by deleting the date "February 28, 1995" and
substituting "November 30, 1996."
3. Paragraph 7.f. is amended by deleting the date "11/1/95" and substituting
the date "May 1, 1997."
4. Paragraph 7.g. is deleted in its entirety and the following is substituted
therefor:
"g. FIXED CHARGE COVERAGE RATIO. Maintain EBITDA less CAPEX less cash
taxes, as calculated for the prior 12 month period, to CPLTD plus
interest expense (actually incurred in the current quarter,
annualized) of not less than 1.80:1.
For purposes of this Section, EBITDA is defined as earnings before
interest expense, provision for taxes, depreciation and amortization
for the prior 12 month period. CAPEX is defined as amounts paid, or
indebtedness incurred by Borrower, in connection with the purchase or
lease by the Borrower of fixed assets with useful lives of greater
than one year. As used in the Fixed Charge Coverage Ratio, CAPEX will
exclude those purchases or leases financed by outside creditors as
otherwise permitted in this Agreement. CPLTD is defined as those
current maturities of long term debt and capital leases which are due
within the succeeding 12 month period."
5. Paragraph 7.n. is added to read in its entirety as follows:
"Within 15 days from each month-end, deliver to Bank an accounts receivable
aging reconciled to the general ledger of Borrower, a detailed accounts
payable aging reconciled to the Borrower's general ledger and setting forth
the amount of any book overdraft or the amount of checks issued but not
sent. All the foregoing will be in form satisfactory to the Bank."
6.* Paragraph 9.b. is amended by deleting "two percent" and substituting "five
percent" therefore and is further amended by adding a new paragraph to read
in its entirety as follows:
"If any installment payment, interest payment, principal payment or
principal balance payment due hereunder is delinquent ten or more days,
Borrower agrees to pay Bank a late charge in the amount of 5% of the
payment so due and unpaid, in addition to the payment; but nothing in this
paragraph is to be construed as any obligation on the part of Bank to
accept payment of any payment past due or less than the total unpaid
principal balance after maturity. All payments shall be applied first to
any late charges owing, then to interest and the remainder, if any, to
principal."
Page 2
Amendment to Exhibit A
Page 2
7. Except as provided above, the Agreement remains unchanged.
8. This Amendment is effective as of January 3, 1997, and the parties hereby
confirm that the Agreement as amended is in full force and effect.
OVERLAND DATA, INC. "BORROWER"
By: /s/ V. A. LoForti
-------------------------
Title: VP & CFO
--------------
IMPERIAL BANK "Bank"
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------
Title: Vice President
------------------
* This change applies only to the new $2 million term loan. The original $5
million revolving credit agreement remains at the 2% delinquency rate.
Page 3
IMPERIAL BANK
MEMBER FDIC
CORPORATE RESOLUTION REGARDING CREDIT
OFFICE: San Diego Regional ADDRESS: 000 X Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
RESOLVED, that OVERLAND DATA, INC. borrow from IMPERIAL BANK,
hereinafter referred to as "Bank", from time to time, such sums of money as, in
the judgement of the officer or officers hereinafter authorized, this
corporation may require; provided that the aggregate amount of such borrowing,
pursuant to this resolution, shall not at any one time exceed the principal sum
of **Seven Million and Zero Cents** DOLLARS ($7,000,000.00), in addition to
such amount as may be otherwise authorized;
RESOLVED FURTHER, that any 2 of the following named officers
---
XXXXX XXXXXXXXX the PRESIDENT/CEO
XXXXXX X. XXXXXXX the VICE PRESIDENT/CFO
XXXXXX X. XXXX the SECRETARY
of this corporation (the officer or officers acting in combination, authorized
to act pursuant hereto being hereinafter designated as "authorized officers"),
be and they are hereby authorized, directed and empowered, for and on behalf and
in the name of this corporation (1) to execute and deliver to the Bank such
notes or other evidences of indebtedness of this corporation for the monies so
borrowed, with interest thereon, as the Bank may require, and to execute and
deliver, from time to time, renewals or extensions of such notes or other
evidences of indebtedness; (2) to grant a security interest in, transfer, or
otherwise hypothecate or deed in trust for Bank's benefit and deliver by such
instruments in writing or otherwise as may be demanded by the Bank, any of the
property of this corporation as may be required by the Bank to secure the
payment of any notes or other indebtedness of this corporation or third parties
to the Bank, whether arising pursuant to this resolution or otherwise; and (3)
to perform all acts and execute and deliver all instruments which the Bank may
deem necessary to carry out the purposes of this resolution;
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized and empowered, and that any one of said authorized officers be and
he/she is hereby authorized and empowered (1) to discount with or sell to the
Bank conditional
Page 4
sales contracts, notes, acceptances, drafts, bailment agreements, leases,
receivables and evidences of indebtedness payable to this corporation, upon such
terms as may be agreed upon by them and the Bank, and to endorse in the name of
this corporation said notes, acceptances, drafts, bailment agreements, leases,
receivables and evidences of indebtedness so discounted, and to guarantee the
payment of the same to the Bank, and (2) to apply for and obtain from the Bank
letters of credit and in connection therewith to execute such agreement,
applications, guarantees, indemnities and other financial undertakings as Bank
may require;
RESOLVED FURTHER, that said authorized officers are also authorized to
direct the disposition of the proceeds of any such obligation, and to accept or
direct delivery from the Bank of any property of this corporation at any time
held by the Bank;
RESOLVED FURTHER, that the authority given hereunder shall be deemed
retroactive and any and all acts authorized hereunder performed prior to the
passage of this resolution are hereby ratified and affirmed;
RESOLVED FURTHER, that this resolution will continue in full force and
effect until the Bank shall receive official notice in writing from this
corporation of the revocation thereof by a resolution duly adopted by the Board
of Directors of this corporation, and that the certification of the Secretary of
this corporation as to the signatures of the above named persons shall be
binding on this corporation.
I XXXXXX X. XXXX , Secretary of the above named corporation, duly
organized and existing under the laws of the State of CALIFORNIA, do hereby
certify that the foregoing is a full, true and correct copy of a resolution of
the Board of Directors of said corporation, duly and regularly passed and
adopted by the Board of Directors of said corporation.
I further certify that said resolution is still in full force and effect
and has not been amended or revoked, and that the specimen signatures appearing
below are the signatures of the officers authorized to sign for this corporation
by virtue of said resolution.
EXECUTED ON
AUTHORIZED SIGNATURES
Signature /s/ Xxxxx XxXxxxxxx /s/ Xxxxxx X. Xxxx
------------------- ------------------
Xxxxx XxXxxxxxx (Secretary)
Xxxxxx X. Xxxx
Signature /s/ V.A. LoForti
----------------
Xxxxxx X. XxXxxxx
Signature /s/ Xxxxxx X. Xxxx
------------------
Xxxxxx X. Xxxx
Signature
Page 5
IMPERIAL BANK
MEMBER FDIC
AGREEMENT TO PROVIDE INSURANCE
(REAL OR PERSONAL PROPERTY)
TO: IMPERIAL BANK Date: January 3, 1997
701 "B" Street Borrower: Overland Data Inc.
Xxx Xxxxx, Xxxxxxxxxx 00000
In consideration of a loan in the amount of $ 7,000,000.00, secured by all
tangible personal property including inventory and equipment.
I/We agree to obtain adequate insurance coverage to remain in force during the
term of the loan.
I/We also agree to advise the below named agent to add Imperial Bank as loss
payee on the new or existing insurance policy, and to furnish Bank at above
address with a copy of said policy/endorsements and any subsequent renewal
policies.
I/We understand that the policy must contain:
1. Fire and extended coverage in an amount sufficient to cover:
a) The amount of the loan, OR
b) All existing encumbrances, whichever is greater,
But not in excess of the replacement value of the improvements on the
real property.
2. Lender's "Loss Payable" Endorsement Form 438 BFU in favor of Imperial
Bank, or any other form acceptable to Bank.
INSURANCE INFORMATION
Insurance Co./ Agent BARNEY & BARNEY Telephone No: (000) 000-0000
Agent's Address: 0000 XXXX XXXXXX XXXXX, XXXXX 000
XXX XXXXX, XX 00000
OVERLAND DATA INC.
Signature of Obligor: By: /s/ V.A. LoForti
---------------------
Signature of Obligor: By: /s/ Xxxxx XxXxxxxxx
------------------------
Page 6
IMPERIAL BANK
MEMBER FDIC
ITEMIZATION OF AMOUNT FINANCED
DISBURSEMENT INSTRUCTIONS
Name(s): OVERLAND DATA INC. Date: January 03, 1997
$ paid to you directly by Cashiers Check No.
$ 2,000,000.00 credited to deposit account No. 00-000-000 when requested in
minimum increments of $50,000.00 from Undisbursed loan
proceeds
$ paid on Loan(s) No.
Amounts paid to others on your behalf:
$ to Title Insurance Company
$ to Public Officials
$ to
$ to
$ to
$ to
$ 2,000,000.00 SUBTOTAL (NOTE AMOUNT)
LESS$ 0.00 Prepaid Finance Charge (Loan Fee(s))
$ 2,000,000.00 TOTAL (AMOUNT FINANCED)
Upon consummation of this transaction, this document will also serve as the
authorization for Imperial Bank to disburse the loan proceeds as stated above.
OVERLAND DATA INC.
BY /s/ V.A. LoForti
----------------
Signature Signature
BY /s/ Xxxxx XxXxxxxxx
-------------------
Signature Signature
Page 7
IMPERIAL BANK
MEMBER FDIC
NOTE
$ 2,000,000 San Diego, California January 03, 1997
On January 15, 2002, and as hereinafter provided, for value received, the
undersigned promises to pay to IMPERIAL BANK ("Bank"), a California banking
corporation, or order, at its San Diego Regional Office, the principal sum of
$ 2,000,000 or such sums up to the maximum if so stated, as the Bank may now or
hereafter advance to or for the benefit of the undersigned in accordance with
the terms hereof, together with interest from date of disbursement or N/A ,
whichever is later, on the unpaid principal balance __ at the rate of % per
year X at the rate of 1.000 % per year in excess of the rate of interest
which Bank has announced as its prime lending rate (the "Prime Rate"), which
shall vary concurrently with any change in such Prime Rate, or $ 250.00 ,
whichever is greater. Interest shall be computed at the above rate on the basis
of the actual number of days during which the principal balance is outstanding,
divided by 360, which shall, for interest computation purposes, be considered
one year.
Interest shall be payable X monthly quarterly included with
principal X in addition to principal ____ beginning February 15, 1997
, and if not so paid shall become a part of the principal. All payments shall
be applied first to any late charges owing, then to interest and the remainder,
if any, to principal. X (if checked), Principal shall be payable in
installments of $ * ,or more, each installment on the 15th day of each
QUARTER , beginning April 15, 1998. Advances not to exceed any unpaid balance
owing at any one time equal to the maximum amount specified above, may be made
at the option of Bank.
Any partial prepayment shall be applied to the installments, if any in
inverse order of maturity. Should default be made in the payment of principal
or interest when due, or in the performance or observance, when due, of any
item, covenant or condition of any deed of trust, security agreement or other
agreement (including amendments or extensions thereof) securing or pertaining to
this note, at the option of the holder hereof and without notice or demand, the
entire balance of principal and accrued interest then remaining unpaid shall (a)
become immediately due and payable, and (b) thereafter bear interest, until paid
in full, at the increased rate of 5% per year in excess of the rate provided for
above, as it may vary from time to time.
Defaults shall include, but not be limited to, the failure of the maker(s)
to pay principal or interest when due; the filing as to each person obligated
hereon, whether as maker, co-maker, endorser or guarantor (individually or
collectively referred to as the "Obligor") of a voluntary or involuntary
petition under the provisions of the Federal Bankruptcy Act; the issuance of any
attachment or execution against any asset of any Obligor; the death of any
Obligor; or any deterioration of the financial condition of any Obligor which
results in the holder hereof considering itself, in good faith, insecure.
If any installment payment, interest payment, principal payment or
principal balance payment due hereunder is delinquent ten or more days, Obligor
agrees to pay Bank a late charge in the amount of 5% of the payment so due and
unpaid, in addition to the payment; but nothing in this paragraph is to be
construed as any obligation on the part of the holder of this note to accept
payment of any payment past due or less than the total unpaid principal balance
after maturity.
If this note is not paid when due, each Obligor promises to pay all costs
and expenses of
Page 8
collection and reasonable attorneys fees incurred by the holder hereof on
account of such collection, plus interest at the rate applicable to principal,
whether or not suit is filed hereon. Each Obligor shall be jointly and
severally liable hereon and consents to renewals, replacements and extensions of
time for payment hereof, before, at, or after maturity; consents to the
acceptance release or substitution of security for this note; and waives demand
and protest and the right to assert any statute of limitations. Any married
person who signs this note agrees that recourse may be had against separate
property for any obligations hereunder. The indebtedness evidenced hereby shall
be payable in lawful money of the United States. In any action brought under or
arising out of this note, each Obligor, including successor(s) or assign(s)
hereby consents to the application of California law, to the jurisdiction of any
competent court within the State of California, and to service of process by any
means authorized by California law.
No single or partial exercise of any power hereunder, or under any deed of
trust, security agreement or other agreement in connection herewith shall
preclude other or further exercises thereof or the exercise of any other such
power. The holder hereof shall at all times have the right to proceed against
any portion of the security for this note in such order and in such manner as
such holder may consider appropriate, without waiving any rights with respect to
any of the security. Any delay or omission on the part of the holder hereof in
exercising any right hereunder, or under any deed of trust, security agreement
or other agreement, shall not operate as a waiver of such right, or of any other
right, under this note or any deed of trust, security agreement or other
agreement in connection herewith. *see Addendum attached.
OVERLAND DATA INC.
BY /s/ V. A. LoForti
-----------------
BY /s/ Xxxxx XxXxxxxxx
----- ---------------
Page 9
Disbursements under the Note, to be made in minimum increments of $50,000.00, up
to 80% of the invoice amount, shall be available through January 15, 1998. On
said date, the outstanding balance of the disbursements under the Note shall be
converted to an amortizing loan payable in sixteen (16) equal quarterly payments
of principal commencing April 15, 1998, with accrued interest to continue to be
paid on a monthly basis.
All principal and accrued but unpaid interest shall in any event be due and
payable on January 15, 2002.
OVERLAND DATA INC.
by: /s/ Xxxxx XxXxxxxxx
----------------------
by: /s/ V. A. LoForti
--------------------
Page 10
IMPERIAL BANK AUTOMATIC DEBIT AUTHORIZATION
INNOVATIVE BUSINESS BANKING
Member FDIC
TO: IMPERIAL BANK
RE: LOAN # 711015108
------------
You are hereby authorized and instructed to charge account
No. 00000000 in the name of OVERLAND DATA, INC. for principal and
interest payments due on above referenced loan as set forth below and credit the
loan referenced above.
Debit each interest payment as it becomes due according to the terms of the
note and any renewals or amendments thereof.
Debit each principal payment as it becomes due according to the terms of
the note and any renewals or amendments thereof.
The Authorization is to remain in full force and effect until revoked in
writing.
Borrower Signature OVERLAND DATA INC.
By: /s/ V.A. LoForti Date: 1/27/97
---------------- --------------
By: /s/ Xxxxx XxXxxxxxx Date: 1/27/97
------------------- --------------
