THIRD AMENDMENT TO LOAN AGREEMENT (REVOLVER) AND FIRST AMENDMENT TO
LOAN AGREEMENT (TERM LOAN)
These AMENDMENTS, dated the 26th day of July, 1996 between Zycon Corporation
(herein referred to as the "Borrower") and COMERICA BANK-California (herein
referred to as the "Bank").
WlTNESSETH:
WHEREAS, the Bank and the Borrower on March 31, 1994 entered a certain Loan
Agreement as amended (herein referred to as the "Revolver Agreement"), a certain
Revolving Credit Master Note (the "Revolving Credit Note"), a certain Term Note,
a Security Agreement (Inventory and Accounts Receivable), and a certain Security
Agreement (Equipment); and
WHEREAS, the Bank and the Borrower on December 31, 1995 entered a certain Loan
Agreement as amended (herein referred to as the "Term Loan Agreement"), and a
certain Term Note; and
WHEREAS, the modifications to the Revolver Agreement and the Term Loan Agreement
contemplated hereby are in the best interest of, and will mutually benefit, the
parties hereto; and
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
contained, the Borrower and the Bank agree to amend the Revolver Agreement and
the Term Loan Agreement in the manner and to the extent hereinafter set forth:
1. In Section 1.1 of the Revolver Agreement titled "Defined Terms.", replace the
definition of "Commitment Amount (Revolving Loans)" with the following:
"'Commitment Amount (Revolving Loans)' shall mean for any applicable period of
determination, Twenty Eight Million Dollars ($28,000,000)."
2. In Section 1.1 of the Revolver Agreement titled "Defined Terms.", replace the
definition of "Termination Date" with the following: "'Termination Date' shall
mean July 1, 1998 (or such earlier date on which the Borrower shall permanently
terminate the Bank's commitment under Section 2.8 of this Agreement), provided,
however, if the Bank notifies Borrower fewer than 90 days before July 1, 1998,
that the period of financing under the Agreement will not be extended, and no
Event of Default then exists under this Agreement, then the Termination Date
will for this Agreement be deemed postponed to the date 90 days after delivery
of such notice from Bank to Borrower."
3. In Section 1.1 of the Revolver Agreement titled "Defined Terms.", replace the
definition of "Borrowing Base" with the following: "'Borrowing Base' shall mean
as of any applicable date of determination, eighty percent (80%) of the sum of
(a) the aggregate outstanding principal balance of the Borrower's Eligible
Accounts plus (b) the aggregate outstanding principal balance of the Eligible
Accounts of Zycon Alternate Circuits, Inc."
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4. Replace the content of Section 6.1.4 of the Revolver Agreement and Section
6.1.3 of the Term Loan Agreement both titled "Aging of Accounts Certificate."
with the following: "Furnish to the Bank monthly by the 10th of each month the
following: (1) an aging as of the end of the preceding month of Borrower's
Accounts Receivable and accounts payable in a form satisfactory to the Bank; and
(2) an aging of Accounts Receivable and accounts payable of Zycon Alternate
Circuits, Inc. as of the end of the preceding month in a form satisfactory to
the Bank."
5. Replace the content of Section 6.5 of the Revolver Agreement titled "Maintain
Tangible Net Worth." with the following: "At the date of each Financial
Statement provided to the Bank pursuant to Section 6.1 of the Agreement, on a
consolidated and non-consolidated basis, maintain a Tangible Net Worth for it of
not less than the amounts specified during the periods specified below:
(a) $42,000,000 from December 31, 1995 until September 30, 1996,
(b) the sum of the minimum Tangible Net Worth required at the
commencement of the preceding calendar quarter plus fifty percent
(50%) of the Borrower's Net Income (but only if such Net Income is a
positive number greater than zero dollars ($0.00) for the preceding
calendar quarter from October 1, 1996 until the Indebtedness is paid
in full and the Borrower has performed all of its obligations
hereunder."
6. Replace the content of Section 6.7 of the Revolver Agreement titled "Maintain
Current Ratio." with the following: "At the date of each Financial Statement
provided to the Bank pursuant to Section 6.1 of the Agreement, on a consolidated
and non-consolidated basis, maintain the ratio of its Current Assets to Current
Liabilities at not less than 1.1 to 1.0, at all times from the date of this
Agreement until the Indebtedness is paid in full and the Borrower has performed
all of its obligations hereunder."
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7. Replace the content of Section 6.8 of the Revolver Agreement titled "Maintain
Fixed Charges Ratio." with the following: "At the date of each Financial
Statement provided to the Bank pursuant to Section 6.1 of the Agreement, on a
consolidated and non-consolidated basis, maintain the ratio of (i) its Cash
Flow, calculated on an annualized basis, to (ii) its Fixed Charges at not less
than 1.35 to 1.0, at all times from the date of this Agreement until the
Indebtedness is paid in full and the Borrower has performed all of its
obligations hereunder."
8. Add the following Section to the Revolver Agreement:
"6.14 Zycon Corporation Sdn. Bhd. Profitability. Ensure that the Net Income
of Zycon Corporation Sdn. Bhd, calculated in accordance with GAAP shall be a
positive number greater than zero dollars ($0.00) for each fiscal year beginning
with the fiscal year ending December 31, 1998, until the Indebtedness is paid in
full and the Borrower has performed all of its obligations hereunder."
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9. Add the following Section to the Revolver Agreement:
"7.1 Transfers to Subsidiary. Make loan advances to, extend credit to,
guaranty the Debt of, purchase the stock of, or otherwise make Transfers (herein
defined as, every mode, direct or indirect, absolute or conditional, voluntary
or involuntary, of disposing or parting with property or with an interest in
property.) to or for the benefit of Zycon Corporation Sdn. Bhd., which, in the
aggregate, at any time, exceed thirty-three million dollars ($33,000,000.00)."
10. Replace the content of Section 6.6 of the Term Loan Agreement and the
Revolver Agreement both titled "Maintain Debt Ratio." with the following: "At
the date of each Financial Statement provided to the Bank pursuant to Section
6.1 of the Agreement, on a consolidated and non-consolidated basis, maintain the
ratio of its Debt to Tangible Net Worth at not more than 1.60 to 1.0, at all
times from the date of this Agreement until the Indebtedness is paid in full and
the Borrower has performed all of its obligations hereunder."
11. Replace the content of Section 2.4(a) of the Term Loan Agreement titled
"Interest - Draw Period Note." with the following: "During the Draw Period, the
Draw Period Note shall bear interest on the principal balance outstanding
thereunder at a rate equal to the Prime Rate plus three-eights of one percent
(.3750%) per annum, but in no event to exceed the Legal Rate. Such rate of
interest shall change as and when the Prime Rate changes. During the Draw
Period, accrued interest on the Draw Period Note shall be payable monthly on the
twenty-first day of each consecutive calendar month, beginning with the
twenty-first day of the first month following the first Disbursement Date until
the Termination Date (unless sooner accelerated pursuant to the terms of this
Agreement), and from and after such date, on demand."
12. Replace the content of Section 2.4(b)(i) of the Term Loan Agreement titled
"Interest - Fixed Rate Note and Variable Rate Note - Variable Rate Note." with
the following: "Commencing with the Termination Date, the Variable Rate Note
shall bear interest on the principal balance outstanding thereunder at the Prime
Rate plus three-eights of one percent (.3750%) per annum until the Maturity
Date, and thereafter at a rate equal to two percent (2%) per annum plus the rate
otherwise prevailing hereunder, but in no event to exceed the Legal Rate (the
"Prime Rate Option"). Such rate of interest shall change as and when the Prime
Rate changes. Interest shall be payable to the extent then accrued on the
twenty-first day of the first month following the Termination Date until the
Maturity Date, and from and after the Maturity Date, on demand;"
IN WITNESS WHEREOF, the parties hereto have caused these AMENDMENTS to the
Revolver Agreement and the Term Loan Agreement to be executed and delivered by
their duly authorized officers on the day and year first written above.
Zycon Corporation COMERICA BANK-California
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxx Xxxx X. Xxxxxxxx
Its: President Its: Assistant Vice President
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