EXHIBIT 10(Q)
AMENDMENT NO. 5
TO LOAN AND SECURITY AGREEMENT
This Amendment dated as of OCTOBER 31, 1997, is entered into by and between
Pico Macom, Inc., a Delaware corporation ("Debtor"), and HSBC Business Loans,
Inc., a Delaware corporation, as successor to Marine Midland Business Loans,
Inc. ("Secured Party"), with reference to the following facts:
RECITALS
A. Secured Party is extending various secured financial accommodations to
Debtor upon the terms of that certain Loan and Security Agreement dated as of
May 25, 1994, as amended (the "Loan Agreement").
B. Debtor and Secured Party desire to amend the Loan Agreement upon the
terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and for the other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged
by each party hereto, Debtor and Secured Party hereby agree as follows:
1. DEFINED TERMS. Unless otherwise specified herein, any capitalized
terms defined in the Loan Agreement shall have the same respective meanings as
used herein.
2. FINANCIAL COVENANTS. With respect to Section 10.15 of the Loan
Agreement and Item 26 of the Schedule thereto, Debtor shall maintain the
following levels of financial performance:
(a) Net Working Capital of not less than $3,000,000.00 as of the end
of each fiscal quarter ending on or after October 31, 1997;
(b) Working Capital Ratio of not less than 1.20:1 as of the end of
each fiscal quarter ending on or after October 31, 1997;
(c) Tangible Net Worth of not less than $3,500,000.00 as of the end
of each fiscal
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quarter ending on or after October 31, 1997;
(d) Debt to Tangible Net Worth ratio of not more than 4.5:1 as of the
end of each fiscal quarter ending on or after October 31, 1997;
and
(e) Net Income Before Taxes of not less than $750,000.00 during each
fiscal year ending on or after July 31, 1998.
3. AMENDMENT FEE. In consideration of this Amendment,
Debtor shall pay Secured Party an amendment fee equal to $1,500.00
upon the effectiveness hereof.
4. REPRESENTATIONS AND WARRANTIES. Debtor reaffirms that the
representations and warranties made to Secured Party in the Loan Agreement and
other Transaction Documents are true and correct in all material respects as of
the date of this Amendment as though made as of such date and after giving
effect to this Amendment. In addition, Debtor makes the following
representations and warranties to Secured Party, which shall survive the
execution of this Amendment:
(a) The execution, delivery and performance of this Amendment are within
Debtor's powers, have been duly authorized by all necessary actions, have
received all necessary governmental approvals, if any, and do not contravene any
law or any contractual restrictions binding on Debtor.
(b) This Amendment is the legal, valid and binding obligation of Debtor,
enforceable against Debtor in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, moratorium and other similar laws
affecting the rights of creditors generally.
(c) No event has occurred and is continuing, or would result from the
execution, delivery and/or performance of this Amendment, which constitutes an
unwaived Event of Default under the Loan Agreement or any other of the
Transaction Documents, or would constitute such an Event of Default but for the
requirement that notice be given or time elapse or both.
5. CONTINUING EFFECT OF LOAN DOCUMENTS. To the extent of any
inconsistencies between the terms of this Amendment and the Loan Agreement, this
Amendment shall govern. In all other respects, the Loan Agreement and other
Transaction Documents shall remain in full force and effect and are hereby
ratified and confirmed.
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6. REFERENCES. Upon the effectiveness of this Amendment, each reference
in any Transaction Document to "the Agreement", "hereunder, "herein," "hereof,"
or of like import referring to the Loan Agreement shall mean and be a reference
to the Loan Agreement as amended hereby.
7. GOVERNING LAWS. This Amendment, upon becoming effective, shall be
deemed to be a contract made under, governed by, and subject to, and shall be
construed in accordance with, the internal law of the State of California.
8. CONDITIONS PRECEDENT. This Amendment shall become effective if, and
only if, Secured Party shall have received a counterpart of this Amendment duly
executed by Debtor and acknowledged by the guarantor indicated hereinbelow, and
a Subordination Agreement duly executed by Pico Macom, Pico Macom Taiwan ' Pico
CATV Division, Pico St. Kitts, Pico Products Asia, Pico Bermuda, Pico Siam, Pico
Corporate, Pico St. Vincent and Pico Cargo in form and substance satisfactory to
Secured Party, together with such other documents, instruments or agreements as
Secured Party or its legal counsel may reasonably request, all on or before
November 12, 1997.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Amendment as of the date first set forth above, to
become effective in the manner set forth above.
PICO MACOM, INC.
By /s/ Jack Brucker
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Name Jack Brucker
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Title Executive Vice President,
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Finance and Administration
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HSBC BUSINESS LOANS, INC.
By /s/ William Field
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Name William Field
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Title Vice President
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CONSENT OF GUARANTOR
The undersigned, as guarantor of the Indebtedness of Pico Macom, Inc. to HSBC
Business Loans, Inc. pursuant to that certain Unlimited Continuing Guaranty
dated as of May 25, 1994 (the "Guaranty"), hereby acknowledges receipt of a copy
of the foregoing Amendment No. 5 and acknowledges, consents and agrees that (i)
the Guaranty remains in full force and effect, and (ii) the execution and
delivery of the foregoing Amendment No. 5 and any and all documents executed in
connection therewith shall not alter, amend, reduce or modify its obligations
and liabilities under the Guaranty.
Dated: OCTOBER 31, 1997
PICO PRODUCTS, INC.
By /s/ Jack Brucker
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Name Jack Brucker
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Title EXECUTIVE VICE PRESIDENT,
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FINANCE AND ADMINISTRATION
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