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EXHIBIT 10.1
AMENDMENT NO. 2
TO
LOAN AND SECURITY AGREEMENT
This Amendment to Loan and Security Agreement is entered into as of March
23, 1998, by and between Silicon Valley Bank ("Bank"), with its principal place
of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 and with a loan
production office located at Wellesley Office Park, 00 Xxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxx, XX 00000, doing business under the name "Silicon Valley East",
and Electronic Designs, Inc. ("Borrower").
RECITALS
Borrower and Bank are parties to that certain Loan and Security Agreement
dated as of October 23, 1996, as amended from time to time (the "Agreement").
Borrower and Bank desire to extend the term of the Agreement in accordance with
the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following definitions in Section 1.1 of the Agreement are amended
to read as follows:
"Revolving Facility" means the facility under which Borrower may
request Bank to issue cash advances in a principal amount not to exceed Three
Million Dollars ($3,000,000), as specified in Section 2.1 hereof.
"Revolving Maturity Date" means January 21, 1999.
2. The second sentence of Section 2.1 is amended to read as follows:
For purposes of this Agreement, "Borrowing Base" shall mean an amount equal
to seventy-five percent (75%) of Eligible Accounts minus the Term Amount.
3. The reference in Section 2.1.1 to "Five Million Dollars ($5,000,000)
is amended to read "Two Million Dollars ($2,000,000)".
4. Sections 6.8, 6.9, 6.10 and 6.11 are amended to read as follows:
6.8 QUICK RATIO. Borrower on a consolidated basis shall maintain, as
of the last day of each calendar quarter, a ratio of Quick Assets to Current
Liabilities of not less than 1.00 to 1.00.
6.9 DEBT SERVICE COVERAGE. Beginning June 30, 1998, borrower on a
consolidated basis shall maintain, as of the last day of each calendar quarter,
a Debt Service Ratio of not less than 1.25 to 1.00. "Debt Service Coverage"
means the sum of Borrower's net profits, depreciation, amortization and interest
for the preceding calendar quarter, divided by the interest and principal
payments due on Indebtedness of Borrower for such calendar quarter.
6.10 DEBT-TANGIBLE NET WORTH RATIO. Borrower on a consolidated basis
shall maintain as of the last day of each calendar quarter, a maximum ratio of
Total Liabilities less Subordinated Debt to Tangible Net Worth plus Subordinated
Debt of not more than 1.25 to 1.00.
6.11 TANGIBLE NET WORTH. Borrower on a consolidated basis shall
maintain, as of the last day of each fiscal quarter, a Tangible Net Worth plus
Subordinated Debt of not less than Ten Million Dollars ($10,000,000) plus Fifty
Percent (50%) of Borrower's aggregate net profits (with no deduction for losses)
from each subsequent quarter.
5. Section 6.12 is deleted from the Agreement.
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6. Exhibits C and D are amended to read in the form attached hereto.
7. Unless otherwise defined, all capitalized terms in this Amendment
shall be as defined in the Agreement. Except as amended, the Agreement remains
in full force and effect. Borrower represents and warrants that the
Representations and Warranties contained in the Agreement are true and correct
as of the date of this Amendment, and that no Event of Default has occurred and
is continuing. This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one instrument. As a condition to the effectiveness of this Amendment, Bank
shall receive a fee of Fifteen Thousand Dollars ($15,000) and an amount equal to
the Bank Expenses incurred in connection with this Amendment.
8. This Amendment to Loan and Security Agreement shall be effective only
when it shall have been executed by Borrower and Bank, provided in no event
shall it become effective until signed by an officer of Bank in California.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
first date above written.
ELECTRONIC DESIGNS, INC. SILICON VALLEY BANK, doing business as
Silicon Valley East
By By
----------------------------------- ------------------------------------
Title Title
-------------------------------- ---------------------------------
SILICON VALLEY BANK
By
------------------------------------
Title
---------------------------------
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EXHIBIT C
BORROWING BASE CERTIFICATE
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Borrower: Electronic Designs, Inc.
Commitment Amount: $3,000,000
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ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ___
(includes foreign Accounts) $___________
2. Additions (please explain on reverse) $___________
3. TOTAL ACCOUNTS RECEIVABLE $___________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $___________
5. Balance of 50% over 90 day accounts $___________
6. Concentration Limits $___________
7. Governmental Accounts $___________
8. Contra Accounts $___________
9. Promotion or Demo Accounts $___________
10. Intercompany/Employee Accounts $___________
11 Other (please explain on reverse) $___________
12. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________
13. Eligible Accounts (#3 minus #12) $___________
14. LOAN VALUE OF ACCOUNTS (75% of #13) $___________
15. Outstanding Term Amount $___________
16. LOAN VALUE OF ACCOUNTS LESS
TERM AMOUNT (#14 minus #15) $___________
BALANCES
17. Maximum Loan Amount $___________
18. Total Funds Available [Lesser of #16 or #17] $___________
19. Present balance owing on Line of Credit $___________
20. Outstanding under Sublimits ( ) $___________
21. RESERVE POSITION (#16 minus #17, #18 and #19) $___________
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Amended and
Restated Loan and Security Agreement between the undersigned and Silicon Valley
Bank.
COMMENTS: BANK USE ONLY
Electronic Designs, Inc. Rec'd by_____________
Auth. Signer
BY_________________________ Date:________________
____________________________ Verified:____________
Authorized Signer Auth. Signer
Date:________________
_____________________
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EXHIBIT 10.1
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ELECTRONIC DESIGNS, INC.
The undersigned authorized officer of Electronic Designs, Inc. hereby
certifies that in accordance with the terms and conditions of the Amended and
Restated Loan and Security Agreement between Borrower and Bank (the
"Agreement"), (i) Borrower is in complete compliance for the period ending March
29, 1998 with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct in all material respects as of the date hereof. Attached herewith are
the required documents supporting the above certification. The officer further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in accompanying letter or footnotes.
Please indicate compliance status by circling Yes/No under "Complies"
column.
Reporting Covenant Required Complies
------------------ -------- --------
Monthly Financial Statement Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
A/R & A/P Agings Monthly within 20 days Yes No
A/R Audit Initial and Semi-Annual Yes No
Form 10K Annually within 5 days Yes No
Form 10Q Quarterly within 5 days Yes No
Financial Covenant Required Actual Complies
------------------ -------- ------ --------
Maintain on a Quarterly Basis:
Minimum Quick Ratio 1.00:1.00 ____:1.0 Yes No
Minimum TNW + Sub Debt $10,000,000 +
50% profits $______ Yes No
Maximum Debt/Tangible Net Worth 1.25:1:00 _____:1.0 Yes No
Minimum Debt Service Ratio 1..25:1.0 _____:1.0 Yes No
Comments Regarding Exceptions: See Attached.
Sincerely, BANK USE ONLY
Received by:_____________________
__________________________ AUTHORIZED SIGNER
SIGNATURE(S)
Date:____________________________
__________________________ Verified:________________________
TITLE(S) AUTHORIZED SIGNED
Date:____________________________
__________________________ Compliance Status: Yes No
DATE
