Exhibit 10.4
FIRST AMENDMENT AND WAIVER
TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT AND WAIVER is made effective as of this 28th day of September,
1998, between ZECAL 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 April 29, 1998 (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 and Lender desire to amend the Loan Agreement
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 Event of Default existing on the date
hereof arising solely from Borrower's failure to have a Fixed Charge Coverage
Ratio of at least 0.90 for the period from May 1, 1998 through June 30, 1998.
The foregoing waiver shall not constitute a waiver of any other Event of Default
that may now or hereafter exist.
2. Amendment.
(a) The second to last sentence of Section 1.13 of the Loan Agreement is
amended and restated to read as follows:
Without limiting the foregoing, Lender shall establish a reserve in the amount
of $500,000.
(b) Section 5(c)(iv) of the Loan Agreement is amended to read as follows:
(iv) Indebtedness of up to $1,119,000 to P.G. Design to the extent such
Indebtedness is subordinated to the Obligations in a manner satisfactory to
Lender (provided that except for the $619,000 Indebtedness that was incurred or
outstanding on the Closing Date, Indebtedness to P.G. Design may not be incurred
in amounts greater than $200,000 in the aggregate in any one month).
(c) Paragraph 1 of Schedule G to the Loan Agreement is amended and restated
to read as follows:
1. EBITDA. Borrower shall not have EBITDA of (a) less than negative
$500,000 for the period commencing September 1, 1998 and ending December 31,
1998, or (b) less than zero for any Fiscal Quarter ending after December 31,
1998.
As used in this Agreement (including this Schedule G), the following terms shall
have the following meanings:
"EBITDA" shall mean, for any period, the Net Income (Loss) of Borrower and its
Subsidiaries on a consolidated basis for such period, plus interest expense, tax
expense, amortization expense, depreciation expense and extraordinary losses and
minus extraordinary gains, in each case, of Borrower and its Subsidiaries on a
consolidated basis for such period determined in accordance with GAAP to the
extent included in the determination of such Net Income (Loss).
"Net Income (Loss)" shall mean with respect to any Person and for any period,
the aggregate net income (or loss) after taxes of such Person for such period,
determined in accordance with GAAP.
(d) Paragraph 2 of Schedule G is deleted.
(e) Paragraph 3 of Schedule G to the Loan Agreement is amended and restated
to read as follows:
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3. Capital Expenditures. Borrower and its Subsidiaries on a consolidated
basis shall not make aggregate Capital Expenditures in excess of $100,000 in any
Fiscal Year.
(f) Section 3 of the Loan Agreement is amended by adding the following
Section 3.31 at the end of Section 3:
3.27 Borrower's Projections. By October 31, 1998 Borrower will deliver to
Lender downside projections for Borrower together with a plan of action for
Borrower's operations, in each case satisfactory to Lender.
3. No Other Amendments or Waiver. Except for the amendments and waivers
expressly set forth and referred to in Section 1 and Section 2 above, the Loan
Agreement shall remain unchanged and in full force and effect and this Amendment
and Waiver shall be limited precisely as drafted and shall not be construed as
an amendment, consent 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 the Lender.
4. Representation 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 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 Effectiveness of 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 received one or more counterparts of this Amendment and
Waiver duly executed and delivered by Borrower;
(b) Lender shall have received a $1,500 amendment fee from Borrower;
(c) Lender shall have received one or more counterparts of the Fourth
Amendment and Waiver to the Loan and Security Agreement dated as of May 29, 1997
duly executed and delivered by P.G. Design Electronics, Inc.;
(d) P.G. Design Electronics, Inc. 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;
(e) Lender shall have received from Borrower 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;
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.
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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.
ZECAL CORP.
By..................................
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By..................................
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Duly Authorized Signatory
CONSENTED TO:
P.G. DESIGN ELECTRONICS, INC.
By..................................
Its.................................
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