EXHIBIT 10.1
ADDENDUM TO LOAN AND SECURITY AGREEMENT
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THIS ADDENDUM, dated as of August 13, 1999, by and between COMPUTER
COMPONENTS CORPORATION, a Texas corporation (the "Borrower") which maintains its
chief executive office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, and
FOOTHILL CAPITAL CORPORATION, a California corporation (the "Lender") whose
mailing address is ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, Post Office ▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, provides:
1. Recitals:
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(a) The Borrower and the Lender have entered into a Loan and
Security Agreement (the "Loan Agreement") dated the date hereof pursuant to
which the Lender, subject to the terms of the Loan Agreement and this Addendum,
has agreed to make loans to the Borrower up to a maximum of $3,000,000.00
secured by the Collateral described in the Loan Agreement.
(b) The Purpose of this Addendum is to amend the Loan Agreement
as set forth below.
2. Definitions. All capitalized words and terms used in this Addendum
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which are defined in the Loan Agreement shall have the meanings assigned to them
in the Loan Agreement unless otherwise defined herein, which meanings shall be
equally applicable to the singular and the plural forms of the words and terms
defined.
3. Amendments. The Loan Agreement is amended as set forth in the
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following paragraphs.
(a) Section 1.7 is amended in the following respects:
(1) Clause (xi) is amended to read as follows:
"(xi) the Account Debtor is not an officer, employee or
Affiliate of the Borrower."
(2) Clause (xii) is amended by inserting the following
parenthetical before the semicolon at the end thereof:
"(unless the Receivables of such Account Debtor are
insured by a company acceptable to the Lender or backed
by an acceptable irrevocable letter of credit confirmed
by a domestic bank)"
(3) The following new sentence is inserted immediately after
the penultimate sentence thereof:
"In addition, the Receivables of any Account Debtor,
more than 50% of which are aged more than 90 days from
invoice date, shall be ineligible, and if an individual
Receivable of an Account Debtor exceeds 10% of the
aggregate Eligible Receivables, only 10% of the
Receivables of that Account Debtor shall be eligible
without the prior written approval of the Lender."
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(b) Section 2 is amended in the following respects:
(1) By inserting "provided, that an Inventory record keeping
system acceptable to the Lender must be in place before the Lender will make any
advances against Inventory" after the comma and before "and" in Section 2.1(b);
(2) By inserting "last day of the period" in place of "date"
in the last line of Section 2.2(g).
(3) By inserting "and the Unused Line Fee" after "Service
Fee" in line 5 and changing "mailing" to "receipt" in the last line of Section
2.2(i).
(4) By adding the following as new subsection U) at the
end of Section 2.2:
"(j) The Borrower shall pay the Lender an unused
line fee equal to the amount set forth in Schedule A
attached hereto (the "Unused Line Fee"). The Unused
Line Fee shall be paid monthly in arrears and shall be
calculated on the difference between the average amount
of Revolving Loans outstanding during each calendar
month and the Revolving Loans Maximum Principal set
forth in Schedule A."
(5) By inserting "for the account of the Lender, a letter of
credit fee equal to the amount set forth on Schedule A attached hereto (the
"Letter of Credit Fee") and after "Lender" in the first line of Section 2.4(b).
(c) Section 4.1 is amended in the following respects:
(1) By deleting the first two sentences and substituting
the following therefor:
"The Borrower hereby agrees to establish a lockbox
(the "Lockbox") for the account of the Borrower with a
bank acceptable to the Lender and to enter into a
Lockbox Agreement for the deposit and processing of all
Payments on Receivables. The Borrower further agrees to
instruct all Account Debtors on the face of its
invoices to mail or deliver all such Payments directly
to the Lockbox address."
(2) By deleting "Depository Account or the" and capitalizing
"Lockbox" in clause(i) in the third sentence and in the fourth sentence of that
Section.
(d) Section 6 is amended in the following respects:
(1) By inserting "certified to be accurate and complete in
all material respects by the Borrower's President or chief financial officer" in
place of "prepared by the Borrower's chief financial officer" in paragraph(a) of
Section 6.3.
(2) By adding the following new paragraph (f) at the end of
Section 6.3:
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"(f) Annually, copies of the Forms 1OQ and 10K
filed by Tech Electro Industries, Inc. with the
Securities and Exchange Commission."
(3) By adding the following new Sections 6.30, 6.31 and
6.32 at the end thereof:
"6.30 Report at the end of each calendar quarter, based
on year-to-date results, earnings before interest,
taxes, depreciation and amortization ("EBITDA") of not
less than 80% of EBITDA set forth in the Borrower's
projections furnished to the Lender."
"6.31 Report at the end of each calendar quarter a
tangible net worth of not less than $1,700,000.00. For
purposes of this covenant "tangible net worth" means at
any date the net worth minus goodwill and other similar
intangible assets of the Borrower determined in
accordance with generally accepted accounting
principles at such date."
"6.32 Maintain at all times excess availability under
the Revolving Loans of $400,000.00."
(e) Section 7.4 is amended by changing the period to a comma and
inserting the following at the end thereof:
"and provided further that, so long as no Event of
Default exists,the Borrower may make cash distributions
or loans to Tech Electro Industries, Inc. in an
aggregate amount not to exceed $350,000.00 annually."
(f) Section 7.7 is amended by inserting the following
parenthetical after "trade name" in line one:
"(other than Universal Battery Corporation and ▇▇▇▇▇▇
Associates, Inc.)."
(g) Section 8.1 is amended as follows:
(1) By adding the following after the word "executed"
in paragraph (b):
"and the executed Addendum to Loan and Security
Agreement, dated the date of this Agreement."
(2) By adding the following new paragraph at the end
thereof:
(y) As of the closing, the Borrower shall have
excess availability under the Revolving Loans of
$400,000.00 after taking into account (i) payment of
any outstanding Texas Central Bank loans and
overdrafts, all loans secured by liens on the
Borrower's Collateral and all accounts payable more
than 60 days past due and (ii) all closing costs and
fees."
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(h) Section 9 is amended by deleting "dies," after "Obligations"
in line two of Section 9.1(j).
4. Expenses. The Borrower agrees to pay, upon demand, all expenses
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(including attorneys' fees, filing fees and costs) incurred by the Lender in
connection with the preparation of this Addendum and the other closing documents
and instruments contemplated hereby, and the closing of the transactions
hereunder.
5. Incorporation by Reference, Merger and Ratification. All of the
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terms and provisions of the Loan Agreement are incorporated herein by this
reference and are binding on the parties hereto to the same extent as if set
forth in full herein. To the extent that any provision of this Addendum is
materially different from or inconsistent with any provision of the Loan
Agreement, the provision of this Addendum shall control. This Addendum and the
Loan Agreement, together with all schedules and exhibits hereto and thereto,
shall constitute and be construed as a single agreement and instrument.
6. Modification; Benefit. No provision of this Addendum including the
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provisions of this section may be modified, deleted or amended in any manner
except by agreement in writing executed by the parties hereto. All terms of this
Addendum shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective successors and assigns.
7. Construction. This Addendum is executed and delivered in Richmond,
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Virginia, and shall be construed and enforced in accordance with the laws of the
Commonwealth of Virginia without regard to its rules with respect to conflicts
of laws. All references in this Addendum to the singular number and neuter
gender shall be deemed to mean and include the plural number and all genders and
vice-versa, unless the context shall otherwise require.
8. Counterparts. This Addendum may be executed in more than one
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counterpart, each of which shall be deemed an original.
The Borrower and the Lender have each caused this Addendum to be duly
executed and delivered by its proper and duly authorized officer as of the day
and year first above written.
COMPUTER COMPONENTS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: President
FOOTHILL CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Its: Vice President
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