EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement, dated as of the
23rd day of July, 1999, is made by and between Accom, Inc. ("Borrower") and
LaSalle Business Credit, Inc. ("LaSalle") for the purpose of amending the Loan
and Security Agreement executed between them as of December 10, 1998, as it has
previously been amended (the "Agreement").
For valuable consideration, receipt and sufficiency of which are
acknowledged, Borrower and LaSalle agree as follows:
1. The definition of "Inventory Advance Rate" is hereby amended to read
as follows:
"Inventory Advance Rate shall mean twenty-five
percent (25%); provided, however, that the Inventory Advance
Rate will be increased after LaSalle's receipt of Borrower's
December 31, 1999 audited fiscal year-end financial statement
to the lesser of (i) forty percent (40%) or (ii) eighty-five
percent (85%) of the net liquidation value of Eligible
Inventory as determined by the Appraisal, but such increase
will occur only if no Default or Event of Default then exists
and Borrower is then in full compliance with all covenants in
this Agreement. LaSalle may require that a new appraisal be
performed, at Borrower's expense, by an appraiser acceptable
to LaSalle before the Inventory Advance Rate is increased.
2. The definition of "Revolving Loan Facility" is amended to read as
follows:
"Revolving Loan Facility shall mean the sum of
$4,000,000."
3. Paragraph 2(b) of the Agreement is amended in its entirety to read
as follows:
"(b) LaSalle agrees to make Revolving Loans to
Borrower up to the lesser of the following amounts, the amount
calculated pursuant to subparagraph (i) below being the
"Borrowing Base":
(i) an amount equal to the sum of:
(A) the applicable A/R Advance Rate
applied to the face amount of Eligible
Accounts plus,
(B) the lesser of two million
dollars ($2,000,000) or the sum of
(x) the Inventory Advance Rate
applied to the value of Eligible
Inventory other than Rotational
Inventory, calculated on the lower
of cost or market value on a
first-in, first-out basis; plus
(y) the lesser of (1) the Inventory
Advance Rate for Eligible Inventory
which is Rotational Inventory
applied to the value of such
Rotational Inventory, calculated on
the lower of cost or market value
on a first-in, first-out basis or
(2) five hundred thousand dollars
($500,000), less
(C) the amount of all Letter of
Credit Obligations, less
(D) such reserves as LaSalle in its
sole discretion may from time to time
establish in determining the Borrowing Base
to reflect events, conditions, contingencies
or risks which may affect the Collateral,
the business, business prospects or
financial condition of Borrower, the
security interests of LaSalle, or the
security of the Loans, including but not
limited to a five hundred thousand dollar
($500,000) reserve to be maintained until
LaSalle has received and approved the
Appraisal and the Inventory Advance Rate has
been adjusted in LaSalle's reasonable credit
judgment based on the Appraisal, or
(ii) the Revolving Loan Facility, less the
amount of all Letter of Credit Obligations."
4. The second sentence of paragraph 5(a) of the Agreement is amended to
read as follows:
"Interest shall accrue on the principal amount of the
Revolving Loans made to Borrower outstanding at the end of
each day at a fluctuating rate per annum equal to one and
three-quarters percent (1.75%) above the Prime Rate."
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5. Paragraph 14(n)(i) of the Agreement is hereby amended in its
entirety to read as follows:
"(i) Consolidated Tangible Net Worth. Borrower and
its Subsidiaries, on a consolidated basis, shall maintain as
of the end of (A) the month ending September 30, 1999 a
Tangible Net Worth of not less than $3,200,000 (the "Base
Amount") and (B) each month thereafter, a Tangible Net Worth
of not less than the sum of (1) the Base Amount and (2) an
aggregate amount equal to ninety percent (90%) of the net
income after taxes of Borrower and its Subsidiaries, on a
consolidated basis, for each fiscal quarter ending subsequent
to September 30, 1999 (provided, however, that such aggregate
amount shall not be reduced by the amount of any net loss
before taxes of Borrower and its Subsidiaries, on a
consolidated basis, for any fiscal quarter)."
6. Paragraph 14(n)(ii) of the Agreement is hereby amended in its
entirety to read as follows:
"(ii) Cash Flow. Borrower and its Subsidiaries, on a
consolidated basis, shall have Cash Flow of no less than
$1,500,000 for the 12-month period ending December 31, 1999
and for each 12-month period ending as of the end of each
fiscal quarter thereafter."
7. Paragraph 14(n)(v) of the Agreement is hereby amended in its
entirety to read as follows:
"(v) Consolidated Capital Expenditures. Borrower and
its Subsidiaries, on a consolidated basis, shall not make
Capital Expenditures in any fiscal year in an aggregate amount
which exceeds the sum of three hundred fifty thousand dollars
($350,000); provided, however, that they may make Capital
Expenditures in an aggregate amount of up to $550,000 in
fiscal year 1999."
8. The following new paragraph 14(n)(vi) is hereby added to the
Agreement:
"(vi) Maximum Loss. Borrower and its Subsidiaries, on
a consolidated basis, shall not incur a fiscal year-to-date
pre-tax loss, calculated in accordance with GAAP, in excess of
$525,000 as of September 30, 1999."
9. The following sentence is added to paragraph 14(t) of the Agreement:
"LaSalle will have the right to have Borrower's Inventory
appraised at any time, at Borrower's expense, by an appraiser
acceptable to LaSalle; provided, however, that in the absence
of an
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Event of Default, LaSalle will not require such appraisals
more often than twice a year."
10. Subject to execution of this Amendment and to LaSalle's receipt of
copies of written waivers executed by Scitex Digital Video, Inc. ("Scitex") and
American Bankers Insurance Group, Inc. ("ABIG") and certain other holders of
Borrower's 6% Senior Subordinated Convertible Notes (the "Senior Notes") waiving
any and all defaults of Borrower with respect to Borrower's obligations to
Scitex, ABIG and such holders, LaSalle waives, through the date hereof,
Borrower's (a) default of the covenant in paragraph 14(m) not to amend its
organizational documents, as a result of Borrower's amendment to its Bylaws
dated as of May 26, 1999, amendment to its Bylaws dated as of July 20, 1999, and
amendment to its Certificate of Incorporation dated as of July 20, 1999, copies
of which have been provided to LaSalle; (b) default of the Consolidated Tangible
Net Worth covenant in paragraph 14(n)(i) as such covenant existed prior to this
Amendment, (c) default of the Cash Flow covenant in paragraph 14(n)(ii) as such
covenant existed prior to this Amendment; and (d) default which has occurred
under paragraph 16(i) as a result of Borrower's default under its subordinated
promissory note in favor of Scitex and under its Senior Notes dated as of March
12, 1999. Upon the effective date of LaSalle's waiver, Borrower may make payment
to Scitex of all principal and interest accrued under the subordinated
promissory note and up to $1,015,000 representing principal which was scheduled
to be paid in June 1999, provided that all conditions for such payment under
paragraph 14(u) of the Agreement are satisfied and Scitex waives any and all
other defaults by Borrower through the date of payment.
11. Borrower shall pay all expenses, including attorney fees, which
LaSalle incurs in connection with the preparation of this Amendment and any
related documents. All such fees and expenses may be charged against Borrower's
loan account.
12. To induce LaSalle to enter into this Amendment, Borrower makes the
following representations and warranties:
(a) Each recital, representation and warranty contained in
this Amendment, in the Agreement as amended by this Amendment and in the Other
Agreements, are true and correct as of the date of this Amendment and do not
omit to state a material fact required to make those recitals, representations
and warranties not misleading, except to the extent the defaults described in
paragraph 10(d) affect such representations and warranties.
(b) Except as set forth in paragraph 10, no event has occurred
and is continuing which constitutes or would, with the giving of notice, the
passage of time or both, constitute an Event of Default under the Agreement or
any of the Other Agreements.
13. Except as specifically provided above, the Agreement and the Other
Agreements remain fully valid, binding and enforceable according to their terms.
14. Borrower hereby waives any and all defenses, claims, counterclaims
and offsets against LaSalle which may have arisen or accrued through the date of
this Amendment. Borrower acknowledges that LaSalle and its employees, agents and
attorneys have made no representations or promises except as specifically
reflected in this Amendment and in the written agreements which have been
previously executed.
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15. Each party represents and warrants to the other party that this
Amendment has been approved by all necessary corporate action, and the
individuals signing below represent and warrant that they are fully authorized
to do so.
ACCOM, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------
(Xxxxxx X. XxXxxxxx)
Title: Senior Vice President, Finance and
Chief Financial Officer
LASALLE BUSINESS CREDIT, INC.
By: /s/ XXXX X. XXXXXXX
------------------------------------
(Xxxx X. Xxxxxxx)
Title: Vice President
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