1
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Sixth Amendment to Loan and Security Agreement ("Sixth
Amendment") is made as of July __, 1995 by and between SANWA BUSINESS CREDIT
CORPORATION ("Lender") and Rexon Incorporated, a Delaware corporation
("Rexon"), Rexon/Tecmar, Inc., a California corporation, Sytron Corporation, a
Delaware corporation ("Sytron"), WangDAT, Inc., a California corporation, and
Wangtek, Inc., a California corporation (each a "Borrower", collectively, the
"Borrowers").
WHEREAS, Lender and Borrowers entered into a Loan and Security
Agreement dated as of October 5, 1994, as amended by the First Amendment to
Loan and Security Agreement dated as of October 17, 1994, the Second Amendment
to Loan and Security Agreement dated as of December 27, 1994, the Third
Amendment to Loan and Security Agreement dated as of March 24, 1995, the
Fourth Amendment to Loan and Security Agreement dated as of April 15, 1995, the
Fifth Amendment to Loan and Security Agreement dated as of May 15, 1995 and
that certain Waiver Letter dated June 28, 1995 from Bank to Borrowers
(collectively, the "Loan Agreement") pursuant to which Lender is making certain
loans or other credit facilities available to Borrowers upon the terms and
conditions set forth in the Loan Agreement and the related Ancillary
Agreements; and
WHEREAS, Borrowers have requested that Lender consent to the sale
of certain of the assets of Sytron Corporation to Arcada Software, Inc.
("Arcada") for the sum of Four Million Five Hundred Thousand Dollars, Lender
has agreed, subject to the terms and conditions herein, to consent to the sale
and to certain additional modifications and amendments to the Loan Agreement as
set forth in this Sixth Amendment.
NOW, THEREFORE, in consideration of the terms and conditions
herein, and of any loans or other credit facilities heretofore, now or
hereafter made to or for the benefit of Borrowers by Lender, the parties hereto
agree to the following amendments and modifications to the Loan Agreement:
1. CONSENT. Subject to (a) the receipt by Lender of the
proceeds of the sale in a cash amount equal to the outstanding amount of
advances made by Lender against the Accounts of Sytron as determined by Lender,
(b) the Borrowers' agreement that the financial covenants shall be adjusted as
set forth in Section 3 below, and (c) the full and satisfactory performance of
the terms and conditions contained in this Sixth Amendment, Lender hereby
consents to the sale of the assets of Sytron Corporation, with the assets to be
excluded from the sale as set forth on Exhibit A hereto, to Arcada for the sum
of Four Million Five Hundred Thousand Dollars and No/100 ($4,500,000.00), which
consent shall expire on July 31, 1995 if the sale transaction is not
consummated on or before that date.
-1-
2
2. AMENDMENTS TO LOAN AGREEMENT.
a. TOTAL FACILITY. The first sentence of the second paragraph
of Section 2.1 of the Loan Agreement is hereby amended and restated in its
entirety as follows:
"A revolving line of credit consisting of advances against Eligible
Accounts and Eligible Foreign Accounts with a subline letter of credit support
facility (the "Revolving Loan" in an aggregate principal amount not to exceed,
at any time outstanding, the lesser of (i) Twenty Three Million and No/100
Dollars ($23,000,000.00) or (ii) the outstanding amount of Collateral
Availability."
b. COLLATERAL AVAILABILITY. Effective August 23, 1995, the
second sentence of the second paragraph of Section 2.1 of the Loan Agreement is
hereby amended and restated in its entirety as follows:
". . . As used in this Agreement, Collateral Availability shall mean, and at
any particular time and from time to time, be equal to, the sum of up to
eighty percent (80%) of the net amount (after deduction of such reserves as
Lender deems proper and necessary) of Eligible Accounts, plus up to sixty
percent (60%) of the aggregate value of Eligible Foreign Accounts (after
deduction of such reserves as Lender deems proper and necessary), provided
that Collateral Availability as to Eligible Foreign Accounts shall not at
any time exceed Seven Million Five Hundred Thousand Dollars and No/100
($7,500,000)."
c. AFFIRMATIVE COVENANTS. Section 10.1(k) is hereby amended
and restated in its entirety as follows:
"(k) Guaranty. Provide Lender with and maintain in effect guaranties in
form and substance satisfactory to Lender and executed by each of Rexon
Europe, Inc., Rexon International Sales Corporation, Rexon International
Service Co., Rexon Singapore Pte, Ltd., Sytron U.K., Inc. and Wangtek Puerto
Rico, Inc.;"
3. FINANCIAL COVENANTS. Lender and Borrowers agree that upon
the sale of the Sytron assets and the receipt by Lender of Borrowers' monthly
financial report for the month ending July 2, 1995, that adjustments to certain
of the Financial Tests set forth in Section 10.1(a) of the Loan Agreement shall
be made, subject to approval by Lender of the new covenant amounts, in the
exercise of Lender's sole discretion. In no event, however, shall (a) Tangible
Net Worth be less than $10,900,000, (b) the ratio of Indebtedness minus
Subordinated Debt to Tangible Net Worth be greater than 5.50:1.00, (c)
quarterly Net Profit Before Taxes be less than ($4,300,000), or (d) Borrowers'
quarterly Net Profit Before Taxes be less than ($3,967,500).
4. REPRESENTATIONS AND WARRANTIES. Borrowers represent and
warrant as follows:
-2-
3
(a) Each of the representations and warranties contained in the
Loan Agreement is hereby reaffirmed as of the date hereof, each as if set forth
herein;
(b) The execution, delivery and performance of this Sixth
Amendment are within Borrowers' powers, have been duly authorized by all
necessary action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restrictions binding on Borrowers;
(c) None of the assets being sold to Arcada are assets
belonging to any Borrower or Guarantor other than Sytron or Sytron U.K. Inc.,
and the sale of the Sytron assets shall not materially impair or affect the
business or operations of any Borrower or Guarantor other than Sytron or Sytron
U.K. Inc.
(d) This Sixth Amendment is a legal, valid and binding
obligation of Borrowers, enforceable against Borrowers in accordance with its
terms; and
(e) No event has occurred and is continuing or would result
from this Sixth Amendment which constitutes a Default under the Loan Agreement,
as amended and modified hereby, or under any other agreement to which any
Borrowers are a party.
5. CONDITIONS. The effectiveness of this Sixth Amendment is
conditioned upon the full satisfaction by Borrowers of each of the following
conditions or their waiver in writing by Lender:
(a) this Sixth Amendment and the Guarantor's Consent shall have
been executed by duly authorized signatories of the Borrowers and Guarantors
and delivered to Lender;
(b) The list of assets of Sytron to be transferred pursuant to
the sale shall be satisfactory to Lender in its sole discretion; and
(c) Lender shall have been paid, in immediately available
funds, the an amount equal to the outstanding amount of advances made by Lender
against the Accounts of Sytron.
6. MISCELLANEOUS. This Sixth Amendment shall be part of the
Loan Agreement, the terms of which are incorporated herein, and the breach of
any representation, warranty or covenant contained herein or the failure to
observe or comply with any term or agreement contained herein, shall constitute
a Default under the Loan Agreement and Lender shall be entitled to exercise all
rights and remedies it may have under the Loan Agreement and applicable law.
Borrowers agree to pay all costs, expenses and attorneys' fees incurred by
Lender in connection with the negotiation and preparation of this Sixth
Amendment and any other documents in connection herewith and in carrying out or
enforcing the terms of this Sixth Amendment. Lender is not waiving any rights
-3-
4
under the Loan Agreement and, except as expressly provided herein or as
previously modified in a writing signed by Lender, all of the terms, covenants,
and conditions of the Loan Agreement remain unmodified and in full force and
effect. Capitalized terms used herein and not otherwise defined shall have the
same meaning as set forth in the Loan Agreement. This Sixth Amendment may be
executed in counterparts, which counterparts, when so executed and delivered,
shall together constitute but one original.
IN WITNESS WHEREOF, the parties hereto have executed this Sixth
Amendment to be effective as of the first date above written.
BORROWERS:
---------
REXON INCORPORATED, SYTRON CORPORATION,
a Delaware corporation a Delaware Corporation
By______________________________ By______________________________
Title___________________________ Title___________________________
REXON/TECMAR, INC., WANGDAT, INC.,
a California corporation a California corporation
By______________________________ By______________________________
Title___________________________ Title___________________________
WANGTEK, INC.,
a California corporation
By______________________________
Title___________________________
LENDER:
------
SANWA BUSINESS CREDIT CORPORATION
By_______________________________
Title____________________________
-4-
5
EXHIBIT A
ASSETS TO BE RETAINED BY SYTRON
-5-
6
GUARANTORS' CONSENT
The undersigned Guarantors hereby acknowledge and consent to the foregoing
Sixth Amendment and reaffirm their respective guaranties, security agreements
and other documents executed by the undersigned in connection with the Loan
Agreement and agree that all such guaranties, security agreements and documents
are in full force and of effect.
"GUARANTORS"
REXON EUROPE, INC., a
Delaware corporation
By______________________________
Title___________________________
REXON INTERNATIONAL SALES CORPORATION,
a California corporation
By______________________________
Title___________________________
REXON INTERNATIONAL SERVICE CO.,
a Delaware corporation
By______________________________
Title___________________________
REXON SINGAPORE PTE LTD.,
a Singapore corporation
By______________________________
Title___________________________
-6-
7
SYTRON U.K., INC.,
a corporation
By______________________________
Title___________________________
WANGTEK PUERTO RICO, INC.,
a Delaware corporation
By______________________________
Title___________________________
-7-