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Exhibit 10.27
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement ("Second
Amendment") is entered into by and between The Provident Bank ("Bank") and
Universal Electronics Inc., a Delaware corporation ("Borrower").
RECITALS
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A. On November 21, 1995, Borrower and Bank entered into a Loan and
Security Agreement (the "Loan Agreement"). Under and subject to the terms and
conditions of the Loan Agreement, Bank agreed to provide a credit facility to
Borrower in the original maximum aggregate principal amount of Twenty Two
Million Dollars ($22,000,000).
B. On July 31, 1996, Borrower and Bank entered into the First Amendment
to Loan and Security Agreement, which amended the Loan Agreement.
C. Borrower and Bank desire to again amend the Loan Agreement to, among
other things, waive certain covenant defaults as of December 31, 1996, amend
certain covenants and increase certain rates.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is acknowledged, it
is hereby agreed as follows:
1. DEFINED TERMS. Except to the extent otherwise set forth in this
Second Amendment, all terms used in this Second Amendment which are defined in
the Loan Agreement are used in this Second Amendment with the same meanings
given them in the Loan Agreement.
2. AMENDMENT. The Loan Agreement is amended by adding Section 1.17
reading as follows: "1.17 On and after the date of this Second Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder" and "hereof"
and words of like import referring
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to the Loan Agreement shall mean and refer to the Loan Agreement as
amended by this Second Amendment."
3. REVOLVING LINE OF CREDIT. Commencing on the date hereof and
continuing through December 31, 1997, Borrower's revolving line of credit with
Bank will accrue and pay interest at the rate of Bank's "Prime Rate" plus 1/4%.
The current pricing matrix will be reinstated upon Bank's receipt of audited
financial statements from Borrower evidencing that Borrower is in compliance
with all financial and other covenants contained in the Loan Agreement.
4. FINANCIAL COVENANTS. The first sentence of Section 5.15(a) of the
Loan Agreement is revised in its entirety to read as follows:
"Consolidated Tangible Net Worth of not less than $43,600,000
less the aggregate amount expended by Borrower to repurchase its capital
stock as previously agreed to by Bank, which minimum shall increase by
seventy-five percent (75%) of net income, if positive, on December 31,
1997 and on December 31 of each year thereafter."
The Interest Coverage Ratio provided for in Section 5.15(b) of the Loan
and Security Agreement will not be tested until December 31, 1997.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. To induce Bank
to enter into this Second Amendment and to make (i) future advances, and (ii)
other financial accommodations under the Loan Agreement, Borrower represents and
warrants to Bank that:
(a) Borrower has the right and power and is duly authorized and
empowered to enter into, execute, deliver and perform its obligations
under this Second Amendment and every other document required to be
delivered by it pursuant to this Second Amendment. This Second Amendment
and every other document required to be delivered by Borrower pursuant
to this
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Second Amendment and to which Borrower is a party have each been duly
authorized and approved by the Board of Directors of Borrower and are
the valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms. The execution,
delivery and performance of this Second Amendment and every other
document required to be delivered by Borrower pursuant to this Second
Amendment and to which Borrower is a party will not conflict with nor
result in any breach of the provisions of, or constitute a default
under, or result in the creation of any lien (other than permitted
liens) upon any asset or property of Borrower under the provisions of
the Restated Certificate of Incorporation, as amended, or the Amended
and Restated Bylaws of Borrower or any material indenture, agreement or
other instrument to which Borrower is a party or by which its assets or
properties are bound.
(b) The representations, warranties and covenants set forth in
this Second Amendment, as well as all representations, warranties and
covenants in the Loan Agreement (except to the extent that all such
representations, warranties and covenants relate to terms or documents
that have been amended or deleted, as the case may be) shall continue in
effect and shall be binding on Borrower under, and shall survive the
execution of, this Amendment, for the term set forth in Section 4.19 of
the Loan Agreement.
6. CONTINUED EFFECTIVENESS. Notwithstanding anything contained herein,
the terms of this Amendment are not intended to and do not serve to effect a
novation of the Loan Agreement, the Notes or any of the other Loan Documents.
The parties hereto expressly do not intend to extinguish the Loan Agreement, the
Notes or any of the other Loan Documents. Instead, it is the express intention
of the parties hereto to reaffirm the existence of the indebtedness created
under the Loan Agreement, the Notes and the other Loan Documents. Except as
otherwise expressly provided herein or in any of the
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documents delivered hereunder, the Loan Agreement, as amended by this Second
Amendment, and each of the Loan Documents related thereto, remains in full force
and effect. The execution, delivery, and effectiveness of this Second Amendment
shall not operate as a waiver of any right, power or remedy of Bank under the
Loan Agreement or any of the other Loan Documents to which Bank is a party, nor
constitute a waiver of any provision in, or Event of Default (now or hereafter
existing) under, the terms of the Loan Agreement or any of the other Loan
Documents, except to the extent that any such term is amended or deleted.
7. CONDITIONS PRECEDENT. Borrower acknowledges that the effectiveness of
this Second Amendment is subject to the satisfaction of the following conditions
and receipt by Bank on the date hereof, in form and substance reasonably
satisfactory to Bank and its counsel, of the following documents:
(a) Where applicable, the Schedules and Exhibits to Loan
Agreement replacing Schedules and Exhibits delivered at the closing.
(b) A certificate signed by the Treasurer of Borrower and dated
the date of this Second Amendment, stating that (i) the representations
and warranties set forth in Section 5 of this Second Amendment are true
and correct on and as of such date, (ii) such Borrower is on such date
in compliance with all of the terms and provisions set forth in this
Second Amendment, and (iii) on such date no event or condition has
occurred or is continuing which with the giving of notice, the lapse of
time, or both, would constitute an Event of Default.
(c) A certificate of the Secretary of Borrower, dated the date
of this Second Amendment, certifying that (a) attached thereto is a true
and complete copy of the resolutions, in form reasonably satisfactory to
Bank, adopted by the Board of Directors of Borrower, authorizing
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the execution, delivery and performance of this Second Amendment and
every other document required to be delivered by Borrower pursuant to
this Second Amendment and the consummation of the transactions
contemplated hereby and thereby and that said resolutions are all of the
resolutions adopted with respect to said subject matter and remain in
full force and effect without modification, and (b) that neither the
Borrower's Restated Certificate of Incorporation, as amended, nor the
Borrower's Amended and Restated By-laws, copies of which were provided
to the Bank on November 21, 1995, has been amended and each of them
remain in effect on the date of this certificate and that neither of
them has been further amended.
(d) Good standing certificates for Borrower issued by the
Secretary of State of Delaware, and every other jurisdiction in which
the qualification of any of Borrower is required hereunder.
(e) There shall have occurred no material adverse changes to the
other facts and circumstances upon which Bank has based its credit
analysis and approval of which Borrower has knowledge.
(f) Borrower shall have paid or shall pay all fees and expenses
referred to in Section 8 below.
8. FEES AND EXPENSES. Borrower acknowledges and agrees that the fees and
expenses of Bank incurred in connection with this Second Amendment, all
documents executed and delivered in connection with this Second Amendment and
the consummation of the transactions contemplated hereby, including, without
limitation, reasonable attorneys' and paralegals' fees and disbursements (which
amount shall not exceed $2,500), will be payable by Borrower to Bank, or as Bank
may otherwise direct, on the date of
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this Second Amendment, and are additional Obligations under the Loan Agreement
secured by the Collateral pursuant to the Loan Agreement.
9. APPLICABLE LAW. This Second Amendment shall be deemed to be a
contract under the laws of the State of Ohio and for all purposes shall be
construed in accordance with the laws of such state.
10. COUNTERPARTS. This Second Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and either of the parties hereto may execute this Second Amendment by
signing any such counterpart.
IN WITNESS WHEREOF, the parties have executed this Second Amendment by
their duly authorized officers effective as of the 24th day of January, 1997
THE PROVIDENT BANK UNIVERSAL ELECTRONICS INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxx Xxxxxx
------------------------- ------------------------------
Senior Vice President, Chief
Financial Officer and Treasurer
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SCHEDULE 4.8
TO THE SECOND AMENDMENT TO THE
LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
LITIGATION
PHILIPS ELECTRONICS CORPORATION OF NORTH AMERICA V. UNIVERSAL ELECTRONICS INC.,
APPEAL NO.: 96-1475 IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL
CIRCUIT. Appeal by Philips from the order of the U.S. District Court for the
District of Delaware (Judge XxXxxxxx) (Civil Action No. CA 94-392-RPM) ruling in
favor of Borrower in a patent infringement matter in which Philips claimed
Borrower infringed Philips' United States patent number 4,703,359. In January
1997, this matter was settled by the parties and Philips dismissed this appeal
with prejudice.
UNIVERSAL ELECTRONICS INC. V. XXX XXXXXX XXXXXX, 0&0000 IN THE UNITED STATES
COURT OF APPEALS FOR THE FEDERAL CIRCUIT. Appeal by Borrower from the order of
the United States Court of International Trade (Judge Xxxxxxxx) (Consolidated
Court No. 93-11-00740) ruling in favor of the Government's classification of
universal infrared remote controls (Slip Opinion 96-48).
UNIVERSAL ELECTRONICS INC. Prior Disclosure Administrative Matter brought to the
attention of US Customs by Borrower regarding incorrect classification of
earlier entries. Action reactivated due to recent decision by United States
Court of international Trade in United States v. Snuggles, Inc. (Slip Opinion
96-141) decided on August 20, 1996.
XXXXXX X. XXXXXX V. UNIVERSAL ELECTRONICS INC, APPEAL CASE NO.: 18071 IN THE
NINTH DISTRICT COURT OF APPEAL, SUMMIT COUNTY, OHIO. Appeal by Xxxxxx (an
ex-employee of Borrower), from order of the Court of Common Please, Summit
County, Ohio (Judge Xxxxxxxx) granting Borrower's motion for summary judgment
(entered on August 6, 1996) in Xxxxxx'x claims against Borrower and Messrs.
Xxxxxxxxxx and Xxxxxxx (Case No. CV 95072602 in the Court of Common Pleas,
Summit County, Ohio) alleging unlawful employment discrimination and wrongful
discharge because of age and acts of conspiracy against Xx. Xxxxxx. Xxxxxx had
earlier dismissed, with prejudice, his claims against Messrs. Xxxxxxxxxx and
Xxxxxxx.
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SCHEDULE 4.8
TO THE SECOND AMENDMENT TO THE
LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
LITIGATION
(CONTINUED)
JASCO PRODUCTS CO., INC. V. UNIVERSAL ELECTRONICS INC. CIV-95-1988T IN THE
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (CONSOLIDATED
WITH UNIVERSAL ELECTRONICS INC. V. JASCO PRODUCTS CO., INC. CASE NO. 5:96CV0029
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO). Action
by Jasco against Borrower alleging breach of contract, generally, and
counterclaim by Borrower against Jasco also alleging breach of contract,
generally. In January 1997, Borrower amended its claims against Jasco by
alleging the Jasco defrauded Borrower in connection with and in addition to
breaching its agreement with Borrower.
SENTRY SWITCH INC. V. UNIVERSAL ELECTRONICS INC. A-96-04394 IN THE COURT OF
COMMON PLEAS, XXXXXXXX COUNTY, OHIO. Claim by Sentry Switch against Borrower
alleging breach of contract, generally.
Various other administrative claims for workers' compensation and unemployment.
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SCHEDULE 4.9
TO THE SECOND AMENDMENT TO THE
LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
COMPLIANCE WITH LAWS
In the event that Borrower is found liable under any of the litigation matters
to which Borrower is a party (see Schedule 4.8 - Litigation attached to the
Second Amendment to the Loan and Security Agreement), Borrower would be deemed
to have violated the applicable laws related to the claims made in connection
with such matters.
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SCHEDULE 4.10
TO THE SECOND AMENDMENT TO THE
LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
NO DEFAULT
In the event that Borrower is found liable under any of the litigation matters
to which Borrower is a party (see Schedule 4.8 - Litigation attached to the
Second Amendment to the Loan and Security Agreement), Borrower would be deemed
to be in default of the various contracts related to the claims made in
connection with such matters.
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SCHEDULE 4.11
TO THE SECOND AMENDMENT TO THE
LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
LISTS OF
PLACES OF BUSINESS;
LOCATIONS OF COLLATERAL; AND
BUSINESS AND TRADE NAMES UNDER WHICH BORROWER DOES BUSINESS
Places of Business
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0000 Xxxxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
0000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Note: Effective approximately 4/1/97 Borrower's California office
will move. The new address is:
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Borrower also has employee sales representatives living in various States
operating out of their homes.
See also Schedule 1.2
Locations of Collateral
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BORROWER'S LOCATIONS
0000 Xxxxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
0000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Note: Effective approximately 4/1197 Borrower's California office
will move. The new address is:
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
See also Schedule 1.2
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REVISED
SCHEDULE 4.11
TO THE LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
LISTS OF
PLACES OF BUSINESS;
LOCATIONS OF COLLATERAL; AND
BUSINESS AND TRADE NAMES UNDER WHICH BORROWER DOES BUSINESS
(CONT.)
Locations of Collateral (cont.)
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THIRD PARTY'S LOCATIONS
APSCO
0000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxx 00000
AMROS
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Project Packaging
000 X. 000xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Akron Storage
0000 Xxxxxxxxx Xxxx
(aka 0000 Xxxxxx Xxxxxxxx X)
Xxxxx, Xxxx
Kimex Electronics Co.
0000 Xxxxxx Xxxx, Xxxxxxx-Xx
Xxxxx, Xxxxx
WKK Industries Limited
Manufacturing Division
x/x Xxxxxxx Xxxx'x Xxxxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxxxx Xxxxxx
Shajing District
Guangdong Province
Peoples Republic of China
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REVISED
SCHEDULE 4.11
TO THE LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
LISTS OF
PLACES OF BUSINESS;
LOCATIONS OF COLLATERAL; AND
BUSINESS AND TRADE NAMES UNDER WHICH BORROWER DOES BUSINESS
(CONT.)
Locations of Collateral (cont.)
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THIRD PARTY'S LOCATIONS (CONT.)
X-l0 Electronics (Shenzhen) Co., Ltd.
X-10 Building, Labour Industrial District
Xixiang Town, Baoan County
Shenzhen
Peoples Republic of China
N.V. Philips Industrial Act.
Remote Control Systems
Xxxxxxxxxxxxxxx 00-00
X-0000 Xxxxxx Xxxxxxxx
Xxxxxxx
Bleckmann Cargo BV
Xxxxxxxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Xx Xxxxxxx
N. Xxxxxxxxxxxxxxx 0
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Computime Ltd.
99 How Ming St. 7/Fl
Xxxx Xxxx
Kwonloon, Hong Kong
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REVISED
SCHEDULE 4.11
TO THE LOAN AND SECURITY AGREEMENT
BETWEEN
THE PROVIDENT BANK
AND
UNIVERSAL ELECTRONICS INC.
LISTS OF
PLACES OF BUSINESS;
LOCATIONS OF COLLATERAL; AND
BUSINESS AND TRADE NAMES UNDER WHICH BORROWER DOES BUSINESS
(CONT.)
Locations of Collateral (cont.)
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THIRD PARTY'S LOCATIONS (CONT.)
Cablevision Technologies
Xxxx 000, Xxxxx XXXX 0
Xxxxxx Xxxxxx Industrial Est.
Kedah Darulaman, Malaysia
Jobap Assembly Inc.
X.X. Xxx 000
Xxxxxx, Xxxx 00000
Wynnewood Corp. Ltd.
63 Xxx Xxx Road
Xxxx Xxxxxx Xxxxxxxx, 00X
Xxxx Xxxx, Xxxx Xxxx
Presikhaaf Verpakicingen
Xxxxxxxxxx 00
0000 XX arnhem
The Netherlands
Shelter Storage BV
Enschedesedtraat 6
7575 Ab Oldemzaal
The Netherlands
Business and Trade Names under which Borrower does Business
-----------------------------------------------------------
Borrower transacts business under its corporate name "Universal
Electronics Inc.", and sometimes under the names "Universal" and/or "Universal
Electronics", none of which have been
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registered as a trade name or Trademark. In addition, Borrower's corporate name
is extremely common, with a variety of unrelated and unaffiliated companies
incorporated and operating under names substantially similar to Borrower's
corporate name. This has caused Borrower to qualify to do business in Ohio,
California and Florida under names different than Borrower's corporate name. In
Ohio, Borrower is qualified to do business under the name One For All, Inc.; in
California, Borrower is qualified to do business under the name Delaware
Universal Electronics, Inc.; and in Florida, Borrower is qualified to business
under the name Universal Electronics of Delaware, Inc. (with the restructuring,
Borrower no longer maintains an office in Florida).
Additionally, in July 1990, an unrelated and unaffiliated corporation
was incorporated in Delaware and qualified to do business under the name "One
For All Incorporated". In Europe, Borrower transacts business through itself and
through its wholly-owned subsidiaries (see Schedule 1.2 - List of Affiliates).
