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EXHIBIT 10.12
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") made and
entered into as of this 4th day of October, 1994, by and between ULTRAK, INC.,
a Colorado corporation ("Ultrak" or "Borrower"), with its principal office and
mailing address at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx 00000,
and PETRUS FUND, L.P., a Texas limited partnership, with offices at 0000
Xxxxxxxx Xxxxxx, 00000 Xxxxx Xxxxx, Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
(hereinafter called the "Lender").
R E C I T A L S
1. Ultrak, CCTV SOURCE INTERNATIONAL, INC., a Texas
corporation ("CCTV"), and LOSS PREVENTION ELECTRONICS CORPORATION, a
Colorado corporation ("Loss Prevention") (Ultrak, CCTV, and Loss
Prevention being referred to as the "Prior Borrowers"), and Lender
have made and entered into that certain Loan Agreement dated July 20,
1992 (as amended, the "Loan Agreement"), pursuant to which Lender
agreed to make available to Prior Borrowers a $3,000,000 line of
credit in accordance with the terms and conditions of the Loan
Agreement and pursuant to the provisions set forth therein.
2. Pursuant to the terms of that certain First Amendment
to Loan Agreement, Prior Borrowers and Lender amended the Loan
Agreement to, among other things: (a) increase the line of credit
from $3,000,000 to $6,000,000, (b) modify the rate of interest
accruing on funds outstanding under the line of credit, (c) modify
certain provisions pertaining to the Warehouseman's Agreement
(including substitution of representatives of Borrower for the bonded
warehouseman), and (d) extend the Drawdown Termination Date from
January 20, 1995 to April 4, 1996.
3. Pursuant to the Agreement and Plan of Merger, made
and entered into as of December 20, 1993, among Ultrak, Loss
Prevention and CCTV, Loss Prevention and CCTV were merged with and
into Ultrak, with Ultrak being the surviving corporation.
4. Ultrak has requested that Lender agree to a second
amendment to the Loan Agreement to, among other things: (1) increase
the line of credit from $6,000,000 to $7,000,000, and (2) further
increase the line of credit from $7,000,000 to $8,000,000, subject to
achievement, during two consecutive fiscal quarters, of total net
income, before taxes, in excess of $3,000,000.
5. Lender has agreed to Borrower's requests, subject to
the terms and conditions set forth in this Amendment.
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W I T N E S S E T H
For and in consideration of the mutual covenants and agreements herein
contained and of the loans and commitment hereinafter referred to, the Borrower
and Lender agree as follows:
ARTICLE I
DEFINITIONS
As used in this Amendment, capitalized terms not otherwise defined in
this Amendment shall have the meanings given them in the Loan Agreement.
ARTICLE II
AMENDMENTS
2.01. Amendments to Definitions. Section 1.02 of the Loan Agreement
is amended by restating certain of the defined terms set forth in Section 1.02
to read in full as follows:
"Borrowing Base" shall mean at any time an amount not to
exceed the lesser of: (a) the Maximum Loan Amount, or (b) the
Inventory Advance Amount determined as of the date the Borrower Base
is calculated.
"Inventory Advance Amount" shall mean at any time an amount
equal to the lesser of:
(a) the Maximum Loan Amount, or
(b) the product of all Eligible Inventory of the
Borrower (excluding Eligible Inventory that is subject to a
Letter of Credit Arrangement) times the Inventory Percentage.
"Revolving Credit Note" shall mean the promissory note of the
Borrower described in subsection 2.01 hereof and being in the form of
note attached as Exhibit A-2 to the Second Amendment, and all
renewals, extensions, modifications and rearrangements thereof.
2.02. Additional Definitions. Section 1.02 of the Loan Agreement is
further amended by adding the defined terms set forth in Section 1.02 to read
in full as follows:
"Maximum Loan Amount" shall mean the following:
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(a) beginning on the date of the Second
Amendment, the Maximum Loan Amount shall be Seven Million and
No/100 Dollars ($7,000,000.00); and
(b) from and after Borrower's written request for
an increase thereto, the Maximum Loan Amount shall be Eight
Million and No/100 Dollars ($8,000,000.00), so long as the
following conditions have been satisfied:
(1) Borrower has achieved, during any
period of two (2) consecutive fiscal quarters, net
income, before taxes, in excess of Three Million
Dollars ($3,000,000), as evidenced and certified by
financial statements provided to Lender, pursuant to
Section 4.01(b) of this Agreement;
(2) Borrower has paid to Lender the
Commitment Fee applicable to the increased Maximum
Loan Amount, as calculated in accordance with Section
2.11 of this Agreement; and
(3) No Event of Default has occurred and
is continuing under this Agreement as of the time of
borrower's request for the increase to the Maximum
Loan Amount."
"Second Amendment" shall mean that certain Second
Amendment to Loan Agreement, dated October 4, 1994, executed
by and among Borrower and Lender.
2.03. Commitment Fee. Section 2.11 of the Loan Agreement is amended
and restated to read in full as follows:
"Section 2.11 Commitment Fee. Borrower shall pay to Lender
at execution and delivery of the Second Amendment, and on each
anniversary date of the Second Amendment (i.e., October 4 of each
year, beginning October 4, 1995), a commitment fee (the "Commitment
Fee"), calculated on the following basis:
(a) if the Maximum Loan Amount is $7,000,000,
then the Commitment Fee shall be Fifty Thousand and No/100
Dollars ($50,000.00) per annum, and
(b) if the Maximum Loan Amount is $8,000,000,
then the Commitment Fee shall be Fifty-Five Thousand and
No/100 Dollars ($55,000.00) per annum, and
in any event, pro-rated over the then remaining term of the
Commitment, if less than a full year. These fees shall be
consideration paid to Lender in exchange for Lender's agreement to
make the total amount of the Commitment available
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to Borrower, subject to the terms of this Agreement. The Commitment
Fee will be non-refundable. Nevertheless, if Lender exercises its
right under Section 2.10(b) to terminate its Commitment, then Borrower
shall be entitled to a refund o the Commitment Fee, pro-rated on the
basis of the remaining portion, as of the effective date of
termination, of the annual period for which the Commitment Fee was
paid (i.e., beginning October 4 of one year and ending October 3 of
the following year). In the event that any Indebtedness remains owing
to Lender as of the effective date of Lender's termination of the
Commitment underSection 2.10(b), Lender, at Lender's option, may
credit the Indebtedness in the amount of the portion of the Commitment
Fee to which Borrower is entitled as a refund."
2.04. Limitation on Compensation. Section 5.15 of the Loan
Agreement is amended and restated to read in full as follows:
"Section 5.15 Limitation on Compensation. So long as no
Event of Default has occurred, neither the Borrower nor any Subsidiary
will pay Xxxxxx X. Xxxxxx directly or indirectly any salary, bonus or
any other form of compensation in excess of Three Hundred Fifty
Thousand and No/100 Dollars ($350,000.00) per annum in the aggregate,
without the Lender's prior written consent. After an Event of Default
has occurred, this amount shall be decreased to Two Hundred
Twenty-Five Thousand and No/100 Dollars ($225,000.00)."
2.05. Current Ratio. Section 6.01 of the Loan Agreement is amended
and restated to read in full as follows:
"Section 6.01 Current Ratio. During the term of this
Agreement, Borrower will not permit or suffer at any date the ratio of
(a) its consolidated Current Assets, to (b) its consolidated Current
Liabilities, to be less than 1.20 to 1.0."
2.06. Leverage Ratio. Section 6.02 of the Loan Agreement is amended
and restated to read in full as follows:
"Section 6.02 Leverage Ratio. During the term of this
Agreement, Borrower shall not permit or suffer at any date the ratio
of (a) the consolidated total liabilities of Borrower, determined
according to generally accepted accounting principles, to (b)
Borrower's consolidated Tangible Net Worth, to be greater than the
ratio of 2.75 to 1."
2.07. Warrants, Stock Options, Etc. Schedule II of the Loan
Agreement is replaced in its entirety by Schedule II-2 to this Amendment.
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ARTICLE III
MISCELLANEOUS
3.01. Effectiveness. Except as specified herein, all terms and
conditions of the Loan Agreement shall remain unmodified and in full force and
effect. Further, each Borrower hereby ratifies and reaffirms such Borrower's
obligations and agreement under the Security Instruments, agrees that the
Security Instruments shall remain in full force and effect, notwithstanding
execution of this Amendment, and agrees that the Security Instruments shall
continue to be the legal, valid and biding obligations of each Borrower, as
applicable, enforceable in accordance with the terms therein.
3.02. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas.
3.03. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing
any such counterpart.
3.04. NO ORAL AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS CONSTITUTE A WRITTEN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE LOAN.
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IN WITNESS WHEREOF, the parties hereby have caused this instrument to
be duly executed as of the date first above written.
BORROWER:
ULTRAK, INC.
By: /s/ XXX X. XXXXX
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Xxx X. Xxxxx
Chief Financial Officer
PETRUS FUND, L.P.
By: XXXXX INVESTMENTS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
President
Exhibit:
A-2 - Revolving Credit Note
Schedule:
II-2 - Stock, Warrants, Etc.
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