EXHIBIT 99.2
THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT, dated as of November
_____, 1999, is made by and between P. G. DESIGN ELECTRONICS, INC., a Delaware
corporation (the "Borrower"), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota
corporation formerly known as Norwest Business Credit, Inc. (the "Lender").
R E C I T A L S:
The Borrower and the Lender have entered into a Credit and Security
Agreement dated as of December 31, 1998, as amended (the "Credit Agreement").
Capitalized terms used in these recitals have the meanings given to them in the
Credit Agreement unless otherwise specified.
The Borrower has requested that the Lender make a special accommodation
advance to the Borrower, which the Lender is willing to make pursuant to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment which are defined
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in the Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein. In addition, Section 1.1 of the Credit Agreement is
amended by adding or amending, as the case may be, the following definitions:
"Borrowing Base" means, at any time the lesser of:
(a) the Maximum Line; or
(b) subject to change from time to time in the Lender's
discretion, the sum of:
(i) the lesser of (A) 85% of Eligible Accounts or (B)
$10,500,000; plus
----
(ii) the lesser of (A) 32% of Eligible Inventory, which
percentage shall continue to be reduced (1) on the
first day of each month by 1% per month commencing on
December 1, 1999 and (2) on the fifteenth day of each
month by 2.5% per month commencing on December 15,
1999, or (B) $1,400,000, which amount shall continue
to be reduced on the fifteenth day of each month by
$100,000 commencing on December 15, 1999; minus
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(iii) the Zecal Reserve; plus
----
(iv) the outstanding amount of the Special Accommodation.
"Floating Rate" means an annual rate equal to the sum of the Prime
Rate plus one fourth percent (.25%), which annual rate shall change when
----
and as the Prime Rate changes.
"Prime Rate" means the rate of interest publicly announced from time
to time by Xxxxx Fargo Bank, N. A. as its "prime rate" or, if such bank
ceases to announce a rate so designated, any similar successor rate
designated by the Lender.
"Special Accommodation" has the meaning given in Section 2.1(c).
Further, Section 1.1 of the Credit Agreement is amended by deleting the
definition for "Base Rate."
4. Amendment to Section 2.1. Section 2.1 of the Credit Agreement is amended by
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adding part (c) to read as follows:
(c) On or after November _____, 1999 the Lender will make a Special
Accommodation (the "Special Accommodation") of up to Two Hundred Thousand
Dollars ($200,000), which Special Accommodation shall be secured by the
Collateral as provided in Article III hereof. The unpaid principal of the
Special Accommodation shall be due and payable in full on December 30,
1999.
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5. No Other Changes. Except as explicitly amended by this Amendment, all of
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the terms and conditions of the Credit Agreement shall remain in full force and
effect and shall apply to any Advance or Letter of Credit thereunder.
Notwithstanding the above revisions to the definition of "Floating Rate," the
Borrower hereby acknowledges that interest under the Credit Agreement is
currently accruing and will hereafter, so long as the current Default Period is
in effect, continue to accrue at the Default Rate (the Floating Rate plus three
----
percent (3%)).
6. Accommodation Fee. In consideration of the Lender's execution of this
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Amendment, the Borrower hereby agrees to pay to the Lender a fully earned,
nonrefundable fee in the amount of Two Thousand Dollars ($2,000).
7. Conditions Precedent. This Amendment shall be effective when the Lender
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shall have received an executed original hereof, together with each of the
following, each in substance and form acceptable to the Lender in its sole
discretion:
(a) A Certificate of the Secretary of the Borrower certifying as to (i) the
resolutions of the board of directors of the Borrower approving the execution
and delivery of this Amendment, (ii) the fact that the articles of incorporation
and bylaws of the Borrower, which were certified and delivered to the Lender
pursuant to the Certificate of Authority of the Borrower's secretary or
assistant secretary dated as of December 31, 1999 continue in full force and
effect and have not been amended or otherwise modified except as set forth in
the Certificate to be delivered, and (iii) setting forth the sample signatures
of each of the officers and agents of the Borrower authorized to execute and
deliver this Amendment and all other documents, agreements and certificates on
behalf of the Borrower.
(b) The Acknowledgment and Agreement of Guarantors set forth at the end of
this Amendment, duly executed by each Guarantor.
(c) Evidence of an additional contribution of capital or loan to the
Borrower by Heartland of not less than Two Hundred Thousand Dollars ($200,000).
(d) Such other matters as the Lender may require.
8. Representations and Warranties. The Borrower hereby represents and
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warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to execute this
Amendment and to perform all of its obligations hereunder, and this Amendment
has been duly executed and delivered by the Borrower and constitutes the legal,
valid and binding obligation of the Borrower, enforceable in accordance with its
terms.
(b) The execution, delivery and performance by the Borrower of this
Amendment have been duly authorized by all necessary corporate action and do not
(i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
the Borrower, or the articles of incorporation or by-laws of the Borrower, or
(iii) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected.
(c) All of the representations and warranties contained in Article V of the
Credit Agreement are correct on and as of the date hereof as though made on and
as of such date, except to the extent that such representations and warranties
relate solely to an earlier date.
9. References. All references in the Credit Agreement to "this Agreement"
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shall be deemed to refer to the Credit Agreement as amended hereby; and any and
all references in the Security Documents to the Credit Agreement shall be deemed
to refer to the Credit Agreement as amended hereby.
10. No Waiver. The execution of this Amendment and acceptance of any documents
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related hereto shall not be deemed to be a waiver of any Default or Event of
Default under the Credit Agreement or breach, default or event of default under
any Security
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Document or other document held by the Lender, whether or not known to the
Lender and whether or not existing on the date of this Amendment.
11. Release. The Borrower, and each Guarantor by signing the Acknowledgment
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and Agreement of Guarantors set forth below, each hereby absolutely and
unconditionally releases and forever discharges the Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower or such Guarantor has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
12. Costs and Expenses. The Borrower hereby reaffirms its agreement under the
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Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Security Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the
accommodation fee pursuant to Paragraph 6 hereof.
13. Miscellaneous. This Amendment and the Acknowledgment and Agreement of
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Guarantors may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
Credit and Security Agreement to be duly executed as of the date first written
above.
XXXXX FARGO BUSINESS CREDIT, INC. P. G. DESIGN ELECTRONICS, INC.
By: ______________________________ By: ______________________________
Its: ______________________________ Its: ______________________________
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned, each a guarantor of the indebtedness of P. G. Design
Electronics, Inc. (the "Borrower") to Xxxxx Fargo Business Credit, Inc.,
formerly known as Norwest Business Credit, Inc. (the "Lender"), pursuant to a
separate Guaranty each dated as of December 31, 1998 (each, a "Guaranty"),
hereby (i) acknowledges receipt of the foregoing Amendment; (ii) consents to the
terms (including, without limitation, the release set forth in Paragraph 11 of
the Amendment) and execution thereof; (iii) reaffirms its obligations to the
Lender pursuant to the terms of its Guaranty; and (iv) acknowledges that the
Lender may amend, restate, extend, renew or otherwise modify the Credit
Agreement and any indebtedness or agreement of the Borrower, or enter into any
agreement or extend additional or other credit accommodations, without notifying
or obtaining the consent of the undersigned and without impairing the liability
of the undersigned under its Guaranty for all of the Borrower's present and
future indebtedness to the Lender.
HEARTLAND TECHNOLOGY, INC.
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By: ______________________________
Its: ______________________________
ZECAL CORP.
By: ______________________________
Its: ______________________________
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