SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is entered into as of April 30, 2003, by and between XXXXXXX
BUSINESS SERVICES, INC., a Maryland corporation ("Borrower"), and XXXXX FARGO
BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
A. Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Amended and Restated Credit Agreement between
Borrower and Bank dated as of September 2, 2002, as amended from time to time
("Credit Agreement").
B. Pursuant to the Credit Agreement, Borrower remains indebted to Bank
under a line of credit in the maximum principal amount of Eleven Million Dollars
($11,000,000.00) (the "Prior Line of Credit"), which is evidenced by that
certain Revolving Line of Credit Note dated September 2, 2002, as modified from
time to time (the "Prior Line of Credit Note"). The Line of Credit Note shall
mature and become due and payable in full on April 30, 2003 and as of April 10,
2003, the outstanding principal balance under the Prior Line of Credit is
$1,370,307.89, plus accrued but unpaid interest.
C. Pursuant to the Credit Agreement, Borrower remains indebted to Bank
under a term loan in the original principal amount of Six Hundred Ninety-three
Thousand Seven Hundred Fifty Dollars ($693,750.00) (the "Term Loan"), which is
evidenced by that certain Promissory Note dated August 12, 1993, as modified
from time to time (the "Term Note"). The Term Note shall mature and become due
and payable in full on August 1, 2003 and as of April 10, 2003, the outstanding
principal balance under the Term Loan is $329,706.75, plus accrued but unpaid
interest.
D. Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend the Credit
Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, subject to the terms and conditions described
herein, the parties hereto agree that the Credit Agreement shall be amended as
follows; provided, however, that nothing shall terminate any security interests,
or other documents in favor of Bank, all of which shall remain in full force and
effect unless expressly amended hereby:
1. Amendment to Section 1.1(a). The first and second sentences of Section
1.1(a) of the Credit Agreement are hereby deleted in their entirety, and the
following substituted therefore:
"(a) Line of Credit. Subject to the terms and
conditions of this Agreement, Bank hereby agrees to make advances to
Borrower from time to time up to and including March 31, 2004 not to
exceed at any time the aggregate principal amount of Eight Million
Dollars ($8,000,000.00) ("Line of Credit"), the proceeds of which shall
be used to pay in full the Prior Line of Credit and to
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finance Borrower's working capital requirements. Borrower's obligation to
repay advances under the Line of Credit shall be evidenced by a promissory
note substantially in the form of Exhibit A attached hereto ("Line of
Credit Note"), all the terms of which are incorporated herein by this
reference."
2. Amendment to Section 1.1(b). The first sentence of section 1.1(b) of the
Credit Agreement is hereby deleted in its entirety and the following is
substituted therefore:
"(b) Limitation on Borrowings. Outstanding borrowings
under the Line of Credit, to a maximum of the principal amount set forth
above, shall not at any time exceed an aggregate of: (i) eighty-five
percent (85%) of the Borrower's eligible billed accounts receivable,
plus (ii) sixty-five percent (65%) of Borrower's eligible unbilled
accounts receivable (not to exceed $1,500,000.00), plus (iii) only until
June 30, 2003 seventy-five percent (75%) of the appraised value of
Borrower's real property collateral granted to Bank (in Section 1.5
Collateral below) minus amount outstanding under the Term Note."
3. Amendment to Section 1.1(c). The number "Five Million Five Hundred
Thousand Dollars ($5,500,000.00)" in Section 1.1(c) of the Credit Agreement is
hereby deleted and "Five Million Dollars ($5,000,000.00)" is hereby substituted
therefore.
4. Amendment to Section 4.3(a). The following is hereby added to Section
4.3(a) of the Credit Agreement after the word Commission: ", provided however
that the audited financial statements of Borrower for the 2002 fiscal year end
shall be delivered to Bank on or before April 30, 2003".
5. Amendment to Sections 4.3(e) and (f). Section 4.3(e) of the Credit
Agreement is hereby deleted in its entirety with no substitution and Section
4.3(f) of the Credit Agreement is hereby renumbered as Section 4.3(e).
6. Amendment to Section 4.9. Section 4.9 of the Credit Agreement is hereby
deleted in its entirety, and the following is substituted therefor:
"SECTION 4.9. FINANCIAL CONDITION. Maintain
Borrower's financial condition as follows using generally accepted
accounting principles consistently applied and used consistently with
prior practices (except to the extent modified by the definitions
herein):
(a) Current Ratio not at any time less than 1.10 to
1.0 from the date hereof through June 29, 2003 and Current Ratio not at
any time less than 1.15 to 1.0 from and after June 30, 2003, with
"Current Ratio" defined as total current assets divided by total current
liabilities.
(b) EBITDA not less than negative $700,000.00 as of
fiscal quarter ending March 31, 2003, not less than negative $350,000.00
as of fiscal quarter ending June 30, 2003; not less than $250,000.00 as
of fiscal quarter ending September 30, 2003, and not less than
$1,500,000.00 as of the fiscal quarter ending December 31, 2003
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and thereafter, measured on a trailing four-quarter basis, with "EBITDA"
defined as net profit before tax plus interest expense (net of
capitalized interest expense), depreciation expense and amortization
expense.
(c) Funded Debt to EBITDA Ratio not more than 4.0 to
1.0 as of September 30, 2003 and not more than 2.25 to 1.0 as of
December 31, 2003 and thereafter, measured on a rolling four-quarter
basis with "Funded Debt" defined as all borrowed funds plus the amount
of all capitalized lease obligations of Borrower, "EBITDA" as defined
above and "Funded Debt to EBITDA Ratio" defined as Funded Debt divided
by EBITDA.
(d) EBITDA Coverage Ratio not less than 1.0 to 1.0 as
of September 30, 2003 and not less than 1.75 to 1.0 as of December 31,
2003, with "EBITDA" defined as net profit before tax plus interest
expense (net of capitalized interest expense), depreciation expense and
amortization expense, and with "EBITDA Coverage Ratio" defined as EBITDA
divided by the aggregate of total interest expense plus the prior period
current maturity of long-term debt and the prior period current maturity
of subordinated debt."
7. Restructuring Fee. In consideration of the changes set forth herein and
as a condition to the effectiveness hereof, immediately upon signing this
Amendment Borrower shall pay to Bank a non-refundable fee of $36,667.00 (the
"Restructuring Fee").
8. Conditions Precedent. The obligation of Bank to amend the terms and
conditions of the Credit Agreement as provided herein, is subject to the
fulfillment to Bank's satisfaction of all of the following conditions by no
later than April 30, 2003:
(a) Bank shall have received, in form and substance satisfactory to Bank,
each of the following, duly executed:
(i) This Amendment.
(ii) Line of Credit Note with attached addendum.
(iii)Two Modifications to Deeds of Trust.
(iv) Such other documents as Bank may require under
any other section of this Amendment.
(b) Restructuring Fee. Bank shall have received the Restructuring Fee in
immediately available funds.
(c) Title. Bank shall have received datedown endorsements to its original
policies of title insurance, insuring that the priority and enforceability of
each of Bank's Mortgage or Deed of Trust is unaffected by this Amendment and
shall remain in full force and effect, subject only to such exceptions as Bank
shall approve in its discretion and issued by a title company acceptable to
Bank, with the cost of such endorsements to be paid by Borrower.
(d) Other Fees and Costs. In addition to Borrower's obligations under the
Credit
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Agreement and the other Loan Documents, Borrower shall have paid to Bank the
full amount of all costs and expenses, including reasonable attorneys' fees
(including the allocated costs of Bank's in-house counsel) expended or incurred
by Bank in connection with the negotiation and preparation of this Amendment,
for which Bank has made demand.
(d) Interest. Interest under the Line of Credit Note shall have been paid
current.
(e) Interest and Principal. Interest and principal under the Term Note
shall have been paid current.
(f) Letters of Credit. Outstanding standby letters of credit issued under
the Line of Credit shall have been retired and or reduced such that aggregate
amount of standby letters of credit issued under the Line of Credit shall be
$5,000,000.00 or less.
9. General Release. In consideration of the benefits provided to Borrower
under the terms and provisions hereof, Borrower hereby agrees as follows
("General Release"):
(a) Borrower, for itself and on behalf of its successors and assigns, does
hereby release, acquit and forever discharge Bank, all of Bank's predecessors in
interest, and all of Bank's past and present officers, directors, attorneys,
affiliates, employees and agents, of and from any and all claims, demands,
obligations, liabilities, indebtedness, breaches of contract, breaches of duty
or of any relationship, acts, omissions, misfeasance, malfeasance, causes of
action, defenses, offsets, debts, sums of money, accounts, compensation,
contracts, controversies, promises, damages, costs, losses and expenses, of
every type, kind, nature, description or character, whether known or unknown,
suspected or unsuspected, liquidated or unliquidated, each as though fully set
forth herein at length (each, a "Released Claim" and collectively, the "Released
Claims"), that Borrower now has or may acquire as of the later of: (i) the date
this Amendment becomes effective through the satisfaction (or waiver by Bank) of
all conditions hereto; (ii) the date that Borrower has executed and delivered
this Amendment to Bank (hereafter, the "Release Date"), including without
limitation, those Released Claims in any way arising out of, connected with or
related to any and all prior credit accommodations, if any, provided by Bank, or
any of Bank's predecessors in interest, to Borrower, and any agreements, notes
or documents of any kind related thereto or the transactions contemplated
thereby or hereby, or any other agreement or document referred to herein or
therein.
(b) Borrower hereby acknowledges, represents and warrants to Bank that it
agrees to assume the risk of any and all unknown, unanticipated or misunderstood
defenses and Released Claims which are released by the provisions of this
General Release in favor of Bank, and Borrower hereby waives and releases all
rights and benefits which it might otherwise have under any state or local laws
or statutes with regard to the release of such unknown, unanticipated or
misunderstood defenses and Released Claims.
(c) Each person signing below on behalf of Borrower acknowledges that he or
she has read each of the provisions of this General Release. Each such person
fully understands that this General Release has important legal consequences,
and each such person realizes that they are releasing any and all Released
Claims that Borrower may have as of the Release Date. Borrower hereby
acknowledges that it has had an opportunity to obtain a lawyer's advice
concerning the legal consequences of each of the provisions of this General
Release.
(d) Borrower hereby specifically acknowledges and agrees that: (i) none of
the provisions of this General Release shall be construed as or constitute an
admission of any
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liability on the part of Bank; (ii) the provisions of this General Release shall
constitute an absolute bar to any Released Claim of any kind, whether any such
Released Claim is based on contract, tort, warranty, mistake or any other
theory, whether legal, statutory or equitable; and (iii) any attempt to assert a
Released Claim barred by the provisions of this General Release shall subject
Borrower to the provisions of applicable law setting forth the remedies for the
bringing of groundless, frivolous or baseless claims or causes of action.
10. Miscellaneous. Except as specifically provided herein, all terms and
conditions of the Credit Agreement shall remain in full force and effect,
without waiver or modification. All terms defined in the Credit Agreement shall
have the same meaning when used in this Amendment. This Amendment and the Credit
Agreement shall be read together, as one document. This Amendment may be
executed in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original, and all of which when taken
together shall constitute one and the same Amendment.
11. Reaffirmation; Certification. Borrower hereby remakes all
representations and warranties contained in the Credit Agreement and reaffirms
all covenants set forth therein. Borrower further certifies that as of the date
of this Amendment there exists no Event of Default as defined in the Credit
Agreement, nor any condition, act or event which with the giving of notice or
the passage of time or both would constitute an Event of Default.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.
XXXXX FARGO BANK,
XXXXXXX BUSINESS SERVICES, INC. NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Day
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Title: Vice President-Finance Xxxxxxx X. Day
Vice President
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