Exhibit 10.3
FOURTH AMENDMENT AND WAIVER TO
THE LOAN AND SECURITY AGREEMENT
THIS AMENDMENT AND WAIVER is made effective as of this 28th day of
September, 1998, between P.G. DESIGN ELECTRONICS, INC. (formerly known as PG
Newco Corp.), a Delaware corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender").
Recitals
Lender and Borrower are parties to that certain Loan and Security
Agreement dated as of May 29, 1997 (as amended, the "Loan Agreement'), pursuant
to which Lender has agreed to make loans from time to time to Borrower in
accordance with the terms and conditions thereof. Borrower has requested that
Lender waive certain Events of Default described below, and Borrower and Lender
desire to amend the Loan Agreement, in each case in accordance with the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Borrower and Lender do
hereby agree that all capitalized terms used herein shall have the meanings
ascribed thereto in the Loan Agreement (except as otherwise expressly defined or
limited herein) and do hereby further agree as follows:
Statement of Terms
1. Waiver. Lender hereby waives the Events of Default existing on
the date hereof arising solely from (i) Borrower's failure to have a Fixed
Charge Coverage Ratio of at least 1.20 for the four Fiscal Quarter period ended
June 30, 1998, and (ii) Borrower's failure to have a Tangible Net Worth of at
least $4,237,000 as of June 30, 1998. The foregoing waiver shall not constitute
a waiver of any other Event of Default that may now or hereafter exist
(including, without limitation, a waiver of any Event of Default arising as a
result of a breach of the Fixed Charge Coverage Ratio or Tangible Net Worth
covenant for any period ending or date after June 30, 1998).
2. Amendments.
(a) Section 5(d) of the Loan Agreement is amended and restated to
read as follows:
"(d) enter into any lending, borrowing or other commercial transaction with
any of its employees, directors, Affiliates (including Zecal Corp.), any
other Credit Party or MLC (including upstreaming and downstreaming of cash
and intercompany advances) other than the MLC Loan and the advances to Zecal,
Inc. that were permitted by the Consent dated March 11, 1998 by Lender in
favor of Borrower which are being assumed by Zecal Corp. (provided such
advances do not exceed $619,000 and were made prior to September 28, 1998);
provided, that Borrower may pay a $40,000 management fee to Heartland
Technology, Inc. each month and Borrower may make additional advances to
Zecal Corp. after September 28, 1998 in an aggregate amount not exceeding
$500,000 so long as at the time of each such payment and advance (i) no
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Default or Event of Default has occurred and is continuing or would arise
after giving effect to such payment or advance, (ii) the amount of advances
to Zecal Corp. made in any month does not exceed $200,000, and (iii) after
giving effect to such payment and/or advance, as applicable, Borrower would
be permitted by the terms this Agreement to borrow an additional $500,000
of Revolving Credit Advances."
(b) Paragraph 1 of Schedule G to the Loan Agreement is hereby amended
by deleting "1.20" and replacing it with "1.10".
(c) Paragraph 2 of Schedule G to the Loan Agreement is hereby amended
to change the required Minimum Tangible Net Worth as of the end of each Fiscal
Quarter commencing with the Fiscal Quarter ending September 30, 1998 to the
amount set forth below opposite such Fiscal Quarter:
As of the Fiscal Minimum Tangible
Quarter Ending Net Worth
September 30, 1998 $4,750,000
December 31, 1998 $5,600,000
March 31, 1999 $6,050,000
June 30, 1999 $6,650,000
September 30, 1999 $7,475,000
December 31, 1999 $8,400,000
March 31, 2000 $8,750,000
(d) Paragraph 3 of Schedule G to the Loan Agreement is hereby amended
by deleting the phrase "in excess of $1,000,000 for the Fiscal Year 1997 and in
excess of $500,000 for any Fiscal Year thereafter" and replacing it with "in any
Fiscal Year in excess of $1,000,000".
(e) Section 3 of the Loan Agreement is amended by adding the
following Section 3.31 at the end of Section 3:
3.31 Zecal Projections. By October 31, 1998 Borrower will
deliver to Lender downside projections for Zecal Corp. together with a
plan of action for Zecal Corp.'s operations, in each case satisfactory
to Lender.
3. No Other Waivers or Amendments. Except for the amendments and
waivers expressly set forth and referred to in Sections 1 and 2 above, the Loan
Agreement shall remain unchanged and in full force and effect and this Amendment
and Waiver shall be limited to precisely as drafted and shall not be construed
as an amendment or a waiver of any other terms or provisions of the Loan
Agreement. Nothing in this Amendment and Waiver is intended, or shall be
construed, to constitute a novation or an accord and satisfaction of any of
Borrower's indebtedness under or in connection with the Loan Agreement or any
other indebtedness to Lender.
4. Representations and Warranties. To induce Lender to enter into
this Amendment and Waiver, Borrower does hereby warrant, represent and covenant
to Lender that: (a) each representation or warranty of Borrower set forth in the
Loan Agreement is hereby restated and reaffirmed as true and correct on and as
of the date hereof as if such representation or warranty were made on and as of
the date hereof (except to the extent that any such representation or warranty
expressly relates to a prior specific date or period in which case it is true
and correct as of such prior date or period), and no Default or Event of Default
has occurred and is continuing as of this date under the Loan Agreement after
giving effect to this Amendment and Waiver; and (b) Borrower has
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the power and authority and is duly authorized to enter into, deliver and
perform this Amendment and Waiver and this Amendment and Waiver is the legal,
valid and binding obligation of such Borrower enforceable against it in
accordance with its terms.
5. Conditions Precedent to this Amendment and Waiver.
The effectiveness of this Amendment and Waiver is subject to the fulfillment of
the following conditions precedent:
(a) Lender shall have receive one or more counterparts of this
Amendment and Waiver duly executed and delivered by Borrower;
(b) Zecal Corp. shall have consented to the execution, delivery and
performance of this Amendment and Waiver and all of the transactions
contemplated hereby by signing one or more counterparts of this Amendment and
Waiver in the appropriate space indicated below and returning same to Lender;
(c) Borrower shall have delivered to Lender an Officer's Certificate
attaching the resolutions of the Board of Directors of Borrower authorizing
Borrower to execute this Amendment and Waiver and certifying that no other
consents, licenses or approvals are required in connection with Borrower's
execution of this Amendment and Waiver;
(d) Borrower shall have paid to Lender an amendment fee of $1,500;
and
(e) Lender shall have received one or more counterparts of the First
Amendment and Waiver to the Loan and Security Agreement dated as of April 29,
1998 between Zecal Corp. and Lender.
6. Counterparts. This Amendment and Waiver may be executed in
multiple counterparts, each of which shall be deemed to be an original and all
of which when taken together shall constitute one and the same instrument.
7. GOVERNING LAW. THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed and delivered as of the day and year first set forth
above.
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P.G. DESIGN ELECTRONICS, INC.
By...................................
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By...................................
Name: Xxxxx Xxxxxxxxxxx
Title: Duly Authorized Signatory
CONSENTED TO:
ZECAL CORP.
By...................................
Its..................................
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