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EXHIBIT NO. 10.32
AMENDMENT NUMBER FOUR TO SECOND
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amendment Number Four To Second Amended and Restated Loan
and Security Agreement ("Amendment") is entered into as of May 30, 2000, by and
between CONGRESS FINANCIAL CORPORATION (WESTERN), a California corporation
("Congress"), on the one hand, and SENSORY SCIENCE CORPORATION a Delaware
corporation (aka Go-Video, Inc.) ("Sensory"), and CALIFORNIA AUDIO LABS, LLC, a
California limited liability company ("Cal-Audio", together with Sensory, each a
"Borrower" and collectively the, "Borrowers") on the other hand, in light of the
following:
FACT ONE: Borrowers and Congress have previously entered into
that certain Second Amended and Restated Loan and Security Agreement, dated as
of August 19, 1998, (as amended from time to time, the "Agreement").
FACT TWO: Borrowers and Congress desire to further amend the
Agreement as provided for and on the conditions herein.
NOW, THEREFORE, Borrowers and Congress hereby amend and
supplement the Agreement as follows:
1. DEFINITIONS. All initially capitalized terms used in this
Amendment shall have the meanings given to them in the Agreement unless
specifically defined herein.
2. AMENDMENTS.
3.(i) The definition of "Interest Rate" in Section
1.21 of the Agreement is amended in its entirety to read as follows:
"Interest Rate" shall mean, effective as of May 30,
2000: as to Prime Rate Loans, a rate of 0.50% per
annum (or 2.50% pre annum with respect to the portion
of Prime Rate Loans consisting of Bridge Loans) in
excess of the Prime Rate and, as to Eurodollar Rate
Loans, a rate of 2.75% per annum (or 3.00% per annum
at any time when Sensory's consolidated pre-tax net
income (as determined by GAAP) for the most recently
completed fiscal year is less than $1,500,000) in
excess of the Adjusted Eurodollar Rate (based on the
Eurodollar Rate applicable for the Interest Period
selected by Borrowers as in effect three (3) Business
Days after the date of receipt by Lender of the
request of Borrowers for such Eurodollar Rate Loans
in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously
quoted to Borrowers); provided, that, the Interest
Rate shall mean the rate of 2.50% per annum (or 4.50%
per annum with respect to the portion of Prime
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Rate Loans consisting of Bridge Loans) in excess of
the Prime Rate, and the rate of 5.00% per annum in
excess of the Adjusted Eurodollar Rate as to
Eurodollar Rate Loans, at Lender's option, without
notice, (a) for the period (i) from and after the
date of termination or non-renewal hereof until
Lender has received full and final payment of all
obligations (notwithstanding entry of a judgment
against either Borrower) and (ii) from and after the
date of the occurrence of an Event of Default for so
long as such Event of Default is continuing as
determined by Lender, and (b) on the Revolving Loans
at any time outstanding in excess of the amounts
available to Borrowers under Section 2 (whether or
not such excess(es), arise or are made with or
without Lender's knowledge or consent and whether
made before or after an Event of Default)."
(ii) The definition of "Loans" in Section 1.27 of
the Agreement is amended in its entirety to read as follows:
"Loans" means the Revolving Loans (including the
Bridge Loans)."
(iii) The following definitions are added to Section
1 of the Agreement:
"Bridge Loans", means those Loans advanced pursuant
to Section 2.1(iv).
"Bridge Limit", means $1,500,000 beginning on May 30,
2000 through and including August 31, 2000;
$1,000,000 beginning on September 1, 2000 through and
including October 31, 2000; and $0 at all times after
October 31, 2000."
"Bridge Period" means the period beginning on May 30,
2000 through and including October 31, 2000."
(iv) Paragraph (a) of Section 2.1 of the Agreement is
hereby amended in its entirety to read as follows:
"Subject to, and upon the terms and
conditions contained herein, Lender agrees to make Loans to
Borrowers from time to time in amounts requested by Borrowers
up to the amount equal to the sum of:
(i) eighty (80%) percent of the Net Amount
of Eligible Accounts, plus
(ii) the least of: (A) the Applicable
Inventory Advance Rate times the Value of Eligible Inventory,
or (B) 80% of the Orderly Liquidation Value of such Eligible
Inventory, or (C) the amount equal to: (1) $15,000,000, minus
(2) the aggregate Inventory Letter of Credit Reserve amount
for all outstanding Letter of Credit Accommodations, plus
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(iii) so long as Sensory's consolidated
pre-tax net income (as determined by GAAP) for the most
recently completed fiscal year was not less than $1,500,000,
an amount equal to the lesser of: (A) (y) (i) 10% (from and
including October 1 of each year through and including January
14 of the following year), (ii) 5% (from and including January
15 of each year through and including January 31 of such
year), or (iii) at all other times, zero (0) times (z) the Net
Amount of Eligible Accounts; or (B) $2,000,000; plus
(iv) up to the Bridge Limit; provided,
however, that Loans will only be made under this clause (d) during the Bridge
Period, less;
(v) any Availability Reserves.
In no event shall there be more than: (1) $9,000,000 advanced
at any one time against Eligible Inventory that is in transit
to Borrowers; (2) $15,000,000 in the aggregate of advances at
any one time against Eligible Inventory and outstanding Letter
of Credit Accommodations; (3) $1,500,000 of advances at any
one time against Eligible Accounts and Eligible Inventory of
Cal-Audio; (4) $750,000 of advances at any one time against
Eligible Inventory of Cal-Audio; or (5) $600,000 of advances
at any one time against Eligible Inventory of Sensory's
Security Products division carrying the "Go-Video" or "GVI"
brands."
(v) The last sentence of Section 3.1(b) of the
Agreement is amended in its entirety to read as follows:
"Notwithstanding anything to the contrary contained herein,
(x) Prime Rate Loans consisting of Bridge Loans shall not be
eligible for conversion to Eurodollar Rate Loans and (y)
Lender and Reference Bank shall not be required to purchase
United States Dollar deposits in the London interbank market
or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Lender and Reference Bank had purchased
such deposits to fund the Eurodollar Rate Loans."
4. REPRESENTATIONS AND WARRANTIES. Borrowers hereby affirm to
Congress that all of Borrowers' representations and warranties set forth in the
Agreement are true, complete and accurate in all respects as of the date hereof.
5. NO DEFAULTS. Borrowers hereby affirm to Congress that no
Event of Default has occurred and is continuing as of the date hereof.
6. CONDITION PRECEDENT. The effectiveness of this Amendment
is expressly conditioned upon receipt by Congress of an executed copy of
this Amendment.
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7. COSTS AND EXPENSES. Borrowers shall pay to Congress all of
Congress's out-of-pocket costs and expenses (including, without limitation, the
fees and expenses of its counsel, which counsel may include any local counsel
deemed necessary, search fees, filing and recording fees, documentation fees,
appraisal fees, travel expenses, and other fees) arising in connection with the
preparation, execution, and delivery of this Amendment and all related
documents.
8. LIMITED EFFECT. In the event of a conflict between the
terms and provisions of this Amendment and the terms and provisions of the
Agreement, the terms and provisions of this Amendment shall govern. In all other
respects, the Agreement, as amended and supplemented hereby, shall remain in
full force and effect.
9. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which when so executed and delivered shall be deemed to be an original.
All such counterparts, taken together, shall constitute but one and the same
Amendment. This Amendment shall become effective upon the execution of a
counterpart of this Amendment by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first set forth above.
CONGRESS FINANCIAL CORPORATION
(WESTERN), a California corporation
By: /s/ Bruce Laughton
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Title: Vice President
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SENSORY SCIENCE CORPORATION, a
Delaware corporation (fka Go-Video, Inc.)
By: /s/ Thomas E. Linnen
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Title: Executive Vice President and CFO
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CALIFORNIA AUDIO LABS, LLC,
a California limited liability company
By: /s/ Thomas E. Linnen
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Title: Executive Vice President and CFO
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REAFFIRMATION OF GUARANTEE
Each of the undersigned has executed the Guarantee, dated August 19,
1998 (the "Guarantee") in favor of Congress Financial Corporation (Western), a
California corporation ("Congress") respecting the obligations of Sensory
Science Corporation, a Delaware corporation (fka Go-Video, Inc.) ("Sensory"),
and California Audio Labs, LLC, a California limited liability company ("Cal
Audio" together with Sensory, collectively the "Borrower") owing to Congress.
Each undersigned acknowledges the terms of Amendment Number Four to Second
Amended and Restated Loan and Security Agreement, dated December May 30, 2000,
and reaffirms and agrees that (a) the Guarantee remains in full force and
effect, (b) nothing in such Guarantee obligates Congress to notify the
undersigned of any changes in the financial accommodations made available to
Borrower or to seek reaffirmations of the Guarantee and (c) no requirement to so
notify the undersigned or to seek reaffirmations in the future shall be implied
by the execution of the reaffirmation.
SENSORY SCIENCE CORPORATION,
a Delaware corporation
By: /s/ Thomas E. Linnen
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Name: Thomas E. Linnen
Title: Executive Vice President and CFO
CALIFORNIA AUDIO LABS, LLC,
a California limited liability company
By: /s/ Thomas E. Linnen
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Name: Thomas E. Linnen
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Title: Executive Vice President and CFO
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Dated: May 30, 2000
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