FOURTH AMENDMENT AND MODIFICATION TO AMENDED AND
RESTATED LOAN AGREEMENT
THIS FOURTH AMENDMENT AND MODIFICATION TO AMENDED AND RESTATED LOAN
AGREEMENT ("Amendment") is made effective as the 19th day of December, 1996, by
and among INTERTEC DESIGN, INC. ("Intertec"), CATARACT, INC., formerly known as
CI Acquisition Corp. ("CI"), THE CONSORTIUM ("Consortium"), THE CONSORTIUM OF
MARYLAND, INC., a Pennsylvania corporation, formerly known as Sort Acquisition
Corp. ("Consortium-MD") and MELLON BANK, N.A. ("Bank"). Intertec, CI, Consortium
and Consortium-MD are sometimes hereinafter collectively or individually
referred to as "Borrowers" or "Borrower", respectively.
BACKGROUND
A. Intertec, CI, Consortium, Consortium-MD and Bank have previously entered into
a certain Amended and Restated Loan and Security Agreement dated August 31,
1995, as amended by amendments dated March 13, 1996 and May 29,1996 (the "Loan
Agreement") pursuant to which Bank agreed, subject to the terms and conditions
stated therein, to extend to Intertec, CI, Consortium and Consortium-MD a line
of credit up to the maximum principal amount of Ten Million Dollars
($10,000,000.00).
B. Intertec, CI, Consortium and Consortium-MD have requested that Bank further
amend the Loan Agreement, which Bank is willing to do on the terms set forth in
this Amendment.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto agree
as follows:
1. LINE OF CREDIT. Section 1.1 of the Loan Agreement is amended to read, in
its entirety, as follows:
"1.1 Line of Credit. (a) Bank will establish for Borrowers for and during the
period from the date hereof and until June 30, 1999 (the "Contract Period"),
subject to the terms and conditions hereof, a revolving demand line of credit
(the "Line") pursuant to which Bank will from time to time make loans or other
extensions of credit to Borrowers in an aggregate amount not exceeding at any
time the lesser of: (i) an amount up to eighty- five percent (85%) of the amount
of Borrowers' Eligible Receivables, or (ii) Twenty Million Dollars
($20,000,000.00). Bank, at its sole discretion, may require that certain
reserves be established against certain Eligible Receivables from time to time.
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Within the limitations set forth above, Borrowers may borrow, repay and reborrow
under the Line. The Line shall be subject to all terms and conditions set forth
in all of the Loan Documents (as hereafter defined) which terms and conditions
are incorporated herein. Borrowers' obligation to repay the loans and extensions
of credit under the Line shall be evidenced by Borrowers' amended and restated
promissory note (the "Note") in the face amount of Twenty Million Dollars
($20,000,000.00), which shall be in the form attached hereto as Exhibit "A",
with the blanks appropriately filled in. The Line shall be subject to review and
renewal, at the sole discretion of Bank.
The obligation of Borrowers to repay advances under the Prior Amended and
Restated Loan Agreement previously evidenced by a certain promissory note from
(i) Intertec payable to the order of Bank dated June 30, 1993 in the original
face amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00), (ii)
Borrowers payable to the order of Bank dated August 31, 1995 in the original
face amount of Six Million Dollars ($6,000,000.00), and (iii) Borrowers payable
to the order of Bank dated May 29, 1996 in the original face amount of Ten
Million Dollars ($10,000,000.00) (collectively, the "Prior Notes") remains
outstanding as of the date hereof and such advances shall continue to be secured
by the Collateral and the Loan Documents. The Note (1) supersedes the Prior
Notes; (2) re-evidences the Indebtedness previously evidenced by the Prior
Notes; (3) is given in substitution of, and not in payment of, the Prior Notes;
and (4) is in no way intended to constitute a novation of the Prior Notes. It
will be noted on the Prior Notes that the Prior Notes have been superseded by
the Note.
(b) In addition to the sums available to Borrowers under the formula set
forth in Section 1.1(a) above and subject to the terms and conditions set forth
below, for the period through and including December 19, 1997 only, provided
that no Event of Default or event which with the giving of notice or the passage
of time or both would constitute an Event of Default shall have occurred,
Borrowers may borrow on a non-revolving basis an aggregate amount not to exceed
Four Hundred Fifty Thousand Dollars ($450,000.00) (the "Permitted Out-of-Formula
Facility"). The outstanding principal balance under the Line, including the
aggregate principal balance of all advances under the Permitted
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Out-of-Formula Facility, shall at no time exceed Twenty Million Dollars
($20,000,000.00).
Advances under the Permitted Out-of-Formula Facility will be made only
during the Initial Period. All advances under the Permitted Out-of-Formula
Facility shall be repaid in full in six (6) equal and consecutive monthly
installments, commencing on the first day following the expiration of the
Initial Period and continuing on the same day of each of the next five (5)
consecutive months.
As used herein, the term "Initial Period" shall mean the period commencing
on the date of the first advance under the Permitted Out-of-Formula Facility and
ending on the thirtieth (30th) day thereafter."
2. INTEREST RATE. Section 2.1 of the Loan Agreement is amended to read, in
its entirety, as follows:
"2.1 (a) Interest Rate Options on the Line. Provided that no Event of Default
shall have occurred, interest on the unpaid principal balance of the Line will
accrue from the date of advance until final payment thereof, at a rate or rates
selected by Borrowers from one of the two (2) interest rate options set forth
below, subject to the restrictions and in accordance with the procedures set
forth in this Agreement:
(i) Prime Rate (such rate to change automatically with any change in the
Prime Rate); or (ii) LIBOR Rate.
(b) Request for Prime Rate. If the Borrowers desire that the Prime Rate
shall apply to all or part of the principal balance under the Line, Borrowers
shall give Bank a Prime Rate Notification. Upon delivery by Borrowers to Bank of
a Prime Rate Notification, the principal balance under the Line identified in
such Prime Rate Notification shall accrue interest at the Prime Rate as follows:
(i) with respect to the principal amount of any new advance under the Line, from
the date of such advance until the effective date of another interest rate
chosen for such amount in accordance with the terms of this Agreement; and/or
(ii) with respect to the principal amount of any portion of the Line
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outstanding and accruing interest at the LIBOR Rate at the time of the
Prime Rate Notification related to such principal amount, from the expiration of
the then current Rate Period related to such principal amount until the
effective date of another interest rate option chosen for such amount in
accordance with the terms of this Agreement.
(c) Request for LIBOR Rate. If the Borrowers desire that all or part of the
principal balance under the Line accrue interest at the LIBOR Rate, Borrowers
shall give Bank a LIBOR Rate Notification. Upon delivery by Borrowers to Bank of
a LIBOR Rate Notification, that portion of the principal balance outstanding
under the Line identified in such LIBOR Rate Notification shall accrue interest
at the LIBOR Rate as follows: (i) with respect to the principal amount of any
new advance under the Line, from the date of such advance until the end of the
Rate Period specified in such LIBOR Rate Notification; and/or (ii) with respect
to the principal amount of any portion of the Line outstanding and accruing
interest at another LIBOR Rate at the time of the LIBOR Rate Notification
related to such principal amount, from the expiration of the then current Rate
Period related to such principal amount until the end of the Rate Period
specified in such LIBOR Rate Notification; and/or (iii) with respect to all or
any portion of the principal amount of the Line outstanding and earning interest
at the Prime Rate at the time of such LIBOR Rate Notification, from the date set
forth in such LIBOR Rate Notification until the end of the Rate Period specified
in such LIBOR Rate Notification.
(d) Certain Provisions Concerning Line Interest Rates. Borrowers understand
and agree that: (i) subject to the provisions of this Agreement, the interest
rates set forth in Section 2.1(a) above may apply simultaneously to different
portions of the outstanding principal of the Line, (ii) the LIBOR Rate may apply
simultaneously to various portions of the outstanding principal of the Line for
various Rate Periods, (iii) the LIBOR Rate applicable to any portion of the
outstanding principal of the Line may be different from the LIBOR Rate
applicable to any other portion of the outstanding principal of the Line, (iv)
Bank shall have the right to terminate any Rate Period and the interest rate
applicable thereto, prior to the maturity of such Rate Period, if Bank
determines in good faith (which determination shall be conclusive) that
continuance of such interest rate has been made
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unlawful by any law, statute, rule or regulation to which Bank may be subject,
in which event the principal amount to which such terminated Rate Period relates
shall thereafter earn interest at the Prime Rate, (v) advances under the Line
accruing interest at the LIBOR Rate must be in increments of at least One
Hundred Thousand Dollars ($100,000.00), and (vi) no more than four (4) advances
under the Line accruing interest at the LIBOR Rate may be outstanding at any one
time.
(e) Prime Rate Fall Back For the Line. After expiration of any Rate Period,
any principal portion of the Line corresponding to such Rate Period which has
not been converted or renewed in accordance with the terms of this Agreement
shall accrue interest automatically at the Prime Rate from the date of
expiration of such Rate Period until paid in full, unless and until the Borrower
requests a conversion to the LIBOR Rate in accordance with the terms of this
Agreement.
(f) Interest on Permitted Out-of-Formula Facility. Interest on the unpaid
principal balance of all advances under the Permitted Out-of-Formula Facility
will accrue from the date of advance until final payment thereof, at a per annum
rate equal to the Prime Rate of Bank in effect from time to time (such rate to
change automatically with any change in the Prime Rate)."
3. PAYMENTS AND FEES. Section 3 of the Loan Agreement is amended as
follows:
(a) By amending Sections 3.4, 3.5 and 3.6 to read as
follows: "3.4 Usage Fee. So long as the Line is outstanding and has not
been terminated, and the Bank Indebtedness has not been satisfied in full,
Borrowers shall unconditionally pay to Bank a fee equal to one quarter of one
percent (.25%) per annum of the daily unused portion of the Line (which shall be
calculated as the difference between Twenty Million Dollars ($20,000,000.00) or
such greater amount if the maximum committed amount of the Line is ever
increased), minus the outstanding principal balance of advances under the Line
at the close of business on the date such calculation is made, which fee shall
be computed on a monthly basis in arrears and shall be due and payable on the
first day of
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each month commencing on the first day of the first full month after the
date hereof."
"3.5 Collateral Management Fee. So long as the Line has not been terminated
pursuant to the terms hereof, and the Bank Indebtedness has not been satisfied
in full, Borrowers shall unconditionally pay to Bank a nonrefundable annual
Collateral Management Fee of Fifteen Thousand Dollars ($15,000.00). If any Bank
Indebtedness continues outstanding after the expiration of the Contract Period,
such fee shall be as Bank may require but in no event will such fee be less than
Fifteen Thousand Dollars ($15,000.00) per annum. All such fees shall be paid
annually in advance on July 1st of each year."
"3.6 Termination of Line and Termination Fee. Borrowers may terminate the
Line prior to the expiration of the Contract Period, only upon sixty (60) days
written notice to Bank. In the event that (a) the Line is terminated by
Borrowers for any reason, including, without limitation, repayment or
refinancing of the Line with another lender, or (b) Borrowers' default under the
Line and the Line is terminated, Borrowers shall pay the Bank a termination fee
calculated as follows:
(i) Two percent (2%) of the maximum amount available under the Line if such
termination occurs at any time prior to June 30, 1997; (ii) One and one-half
percent (1.5%) of the maximum amount available under the Line if such
termination occurs on or after June 30, 1997 but prior to June 30, 1998; and
(iii) One percent (1%) of the maximum amount available under the Line if such
termination occurs on or after June 30, 1998."
(b) By adding the following new sections: "3.12 Minimum Borrowing Fee. In
any month during the term of the Contract Period for which the average
outstanding principal balance under the Line is less than Two Million Dollars
($2,000,000.00), Borrowers shall pay to Bank a fee as calculated by Bank equal
to the difference between the interest which (a)
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actually accrued during such month on the outstanding principal balance of
the Line, and (b) would have accrued during such month assuming that the average
outstanding principal balance under the Line for such month was Two Million
Dollars ($2,000,000.00). Such fee shall be due and payable on the first day of
each month as calculated for the last preceding month and Bank is hereby
authorized to deduct such fee on such date from any account of any Borrower
maintained with Bank."
"3.13 Indemnity for LIBOR Portion. Borrowers shall indemnify Bank against
any loss or expense (including loss of margin) which Bank has sustained or
incurred as a consequence of (a) payment, prepayment or conversion of any LIBOR
Rate Portion on a day other than the last day of the corresponding Rate Period
(whether or not any such payment is pursuant to demand by Bank and whether or
nor any such payment, prepayment or conversion is consented to by Bank, unless
Bank shall have expressly waived such indemnity in writing); or (b) attempt by
Borrowers to revoke in whole or in part any irrevocable LIBOR Rate Notification
pursuant to this Agreement.
If Bank sustains any such loss, it shall from time to time notify Borrowers
of the amount determined in good faith by Bank (which determination shall be
conclusive) to be necessary to indemnify Bank for such loss or expense. Such
amount shall be due and payable by Borrower on demand and Bank is hereby
authorized to deduct any such amount from any account of any Borrower maintained
with Bank."
4. ADDITIONAL FACILITY FEE. In consideration of Bank entering into this
Amendment, Borrowers shall pay to Bank a fee in the amount of Sixty Thousand
Dollars ($60,000.00). Such fee shall be payable (a) Thirty Thousand Dollars
($30,000.00) contemporaneously with the execution hereof, and (b) Thirty
Thousand Dollars ($30,000.00) on May ____, 1997. Bank is authorized to deduct
such payments when due from any account of any Borrower maintained with Bank.
5. FINANCIAL COVENANTS. Sections 7.1, 7.2, 7.3, 7.4, 7.5 7.6, 7.7 and 7.8
are amended to read, in their entirety, as follows:
"7.1 Net Income. Borrowers will have Net Income determined on a combined
basis in accordance with GAAP of not less than (a) Two Hundred Fifty Thousand
Dollars ($250,000.00) for the twelve (12) month period ending October 31, 1995;
(b) Five Hundred
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Thousand Dollars ($500,000.00) for the twelve (12) month period ending
October 31, 1996; (c) One Million Four Hundred Thousand Dollars ($1,400,000.00)
for the twelve (12) month period ending October 31, 1997, unless prior to the
end of such fiscal year, Borrowers have not acquired PAMI (as defined below), in
which event the minimum Net Income for the twelve (12) month period ending
October 31, 1997 shall be One Million Two Hundred Thousand Dollars
($1,200,000.00); and (d) One Million Five Hundred Thousand Dollars
($1,500,000.00) for each twelve (12) month period ending thereafter."
"7.2 Effective Net Worth. Borrowers shall maintain Effective Net Worth
determined on a combined basis of not less than (a) Three Million Three Hundred
Ninety-Six Thousand Dollars ($3,396,000.00) as of November 1, 1994 and at all
times thereafter until October 30, 1995; (b) Three Million Six Hundred Fifty
Thousand Dollars ($3,650,000.00) as of October 31, 1995 and at all times
thereafter until October 30, 1996; (c) Four Million One Hundred Fifty Thousand
Dollars ($4,150,000.00) as of October 31, 1996 and at all times thereafter until
October 30, 1997; (d) Three Million Four Hundred Forty-Nine Thousand Dollars
($3,449,000.00) as of October 31, 1997 and at all times thereafter until October
30, 1998; and (e) Five Million Four Hundred Forty-Nine Thousand Dollars
($5,449,000.00) as of October 31, 1998 and at all times thereafter.
Notwithstanding the foregoing, upon consummation of the acquisition by
Borrowers of Programming Alternatives of Minnesota, Inc. ("PAMI"), the Effective
Net Worth covenant shall be as follows for the applicable periods:
(a) Two Million Three Hundred Twenty-Nine Thousand Dollars ($2,329,000.00)
as of January 31, 1997 and at all times thereafter until April 29, 1997; (b) Two
Million Eight Hundred Fifty-Three Thousand Dollars ($2,853,000.00) as of April
30, 1997 and at all times thereafter until July 30, 1997; and (c) Three Million
Three Hundred Thirty-Four Thousand Dollars ($3,334,000.00) as of July 31, 1997
and at all times thereafter until October 30, 1997. After October 30, 1997, the
Effective Net Worth covenant shall be as provided for above."
"7.3 Working Capital. Borrowers will maintain Working Capital determined on
a combined basis in accordance with GAAP
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of not less than (a) Three Million Fifty Thousand Dollars ($3,050,000.00)
as of October 31, 1994 and at all times thereafter until October 30, 1995; (b)
Three Million Two Hundred Thousand Dollars ($3,200,000.00) as of October 31,
1995 and at all times thereafter until October 30, 1996; (c) Three Million Seven
Hundred Thousand Dollars ($3,700,000.00) as of October 31, 1996 and at all times
thereafter until October 30, 1997; (d) Three Million Dollars ($3,000,000.00) as
of October 31, 1997 and at all times thereafter until October 30, 1998; and (d)
Three Million Three Hundred Thousand Dollars ($3,300,000.00) as of October 31,
1998 and at all times thereafter."
Notwithstanding the foregoing, upon consummation of the acquisition by
Borrowers of PAMI, the Working Capital covenant shall be as follows for the
applicable periods:
(a) Two Million One Hundred Thousand Dollars ($2,100,000.00) as of January
31, 1997 and at all times thereafter until April 29, 1997; (b) Two Million Five
Hundred Thousand Dollars ($2,500,000.00) as of April 30, 1997 and at all times
thereafter until July 30, 1997; and (c) Two Million Seven Hundred Thousand
Dollars ($2,700,000.00) as of July 31, 1997 and at all times thereafter until
October 30, 1997. After October 30, 1997, the Working Capital covenant shall be
as provided for above.
"7.4 Senior Indebtedness to Effective Net Worth Ratio. Borrowers will
maintain a ratio of Senior Indebtedness to Effective Net Worth determined on a
combined basis in accordance with GAAP of not more than (a) 1.7 to 1.0 as of the
date hereof and at all times thereafter until October 30, 1997; (b) 3.5 to 1.0
as of October 31, 1997 and at all times thereafter until October 30, 1998; and
(c) 3.0 to 1.0 as of October 31, 1998 and at all times thereafter.
Notwithstanding the foregoing, upon consummation of the acquisition by
Borrowers of PAMI, the Senior Indebtedness to Effective Net Worth ratio shall be
as follows for the applicable periods:
(a) 4.70 to 1.0 as of January 31, 1997 and at all times thereafter until
April 29, 1997; (b) 4.25 to 1.0 as of April 30, 1997 and at all times thereafter
until July 30, 1997; and (c) 3.5 to 1.0 as of July 31, 1997 and at all times
thereafter until October 30, 1997.
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After October 30, 1997, the Senior Indebtedness to Effective Net Worth
ratio shall be as provided for above."
"7.5 Capital Expenditures. Borrowers will not cause, suffer or permit
Borrowers' aggregate annual Capital Expenditures to exceed (a) One Hundred
Thousand Dollars ($100,000.00) for any fiscal year through and including
Borrowers' fiscal year ending October 31, 1996; and (b) One Hundred Fifty
Thousand Dollars ($150,000.00) for any fiscal year thereafter."
"7.6 Current Ratio. Borrowers will maintain a ratio of Current Assets to
Current Liabilities determined on a combined basis in accordance with GAAP of
not less than (a) 1.35 to 1.0 as of the date hereof and at all times thereafter
until October 30, 1996; (b) 1.6 to 1.0 as of October 31, 1996 and at all times
thereafter until October 30, 1997; (c) 1.10 to 1.0 as of October 31, 1997 and at
all times thereafter until October 30, 1998; and (d) 1.25 to 1.0 as of October
31, 1998 and at all times thereafter."
Notwithstanding the foregoing, upon consummation of the acquisition by
Borrowers of PAMI, the Current Ratio covenant shall be as follows for the
applicable periods:
(a) 1.10 to 1.0 as of January 31, 1997 and at all times thereafter until
April 29, 1997; (b) 1.15 to 1.0 as of April 30, 1997 and at all times thereafter
until July 30, 1997; and (c) 1.20 to 1.0 as of July 31, 1997 and at all times
thereafter until October 30, 1997. After October 30, 1997, the Current Ratio
covenant shall be as provided for above.
"7.7 Consolidated Working Capital. Borrowers and the Guarantor will
maintain Working Capital determined on a consolidated basis in accordance with
GAAP of not less than (a) Three Million Fifty Thousand Dollars ($3,050,000.00)
as of October 31, 1994 and at all times thereafter until October 30, 1995; (b)
Three Million Two Hundred Thousand Dollars ($3,200,000.00) as of October 31,
1995 and at all times thereafter until October 30, 1996; (c) Three Million Seven
Hundred Thousand Dollars ($3,700,000.00) as of October 31, 1996 and at all times
thereafter until October 30, 1997; (d) Three Million Dollars ($3,000,000.00) as
of October 31, 1997 and at all times thereafter until October 30, 1998; and (e)
Three Million Three
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Hundred Thousand Dollars ($3,300,000.00) as of October 31, 1998 and at all
times thereafter."
Notwithstanding the foregoing, upon consummation of the acquisition by
Borrowers of PAMI, the Consolidated Working Capital covenant shall be as follows
for the applicable periods:
(a) Two Million One Hundred Thousand Dollars ($2,100,000.00) as of January
31, 1997 and at all times thereafter until April 29, 1997; (b) Two Million Five
Hundred Thousand Dollars ($2,500,000.00) as of April 30, 1997 and at all times
thereafter until July 30, 1997; and (c) Two Million Seven Hundred Thousand
Dollars ($2,700,000.00) as of July 31, 1997 and at all times thereafter until
October 30, 1997. After October 30, 1997, the Consolidated Working Capital
covenant shall be as provided for above.
"7.8 Consolidated Tangible Net Worth. Borrowers and the Guarantor will
maintain Tangible Net Worth determined on a consolidated basis in accordance
with GAAP of not less than (a) Three Million Three Hundred Ninety-Six Thousand
Dollars ($3,396,000.00) as of November 1, 1994 and at all times thereafter until
October 30, 1995; (b) Three Million Six Hundred Fifty Thousand Dollars
($3,650,000.00) as of October 31, 1995 and at all times thereafter until October
30, 1996; (c) Four Million One Hundred Fifty Thousand Dollars ($4,150,000.00) as
of October 31, 1996 and at all times thereafter until October 30, 1997; (g)
Three Million Four Hundred Forty-Nine Thousand Dollars ($3,449,000.00) as of
October 31, 1997 and at all times thereafter until October 30, 1998; and (h)
Five Million Four Hundred Forty-Nine Thousand Dollars ($5,449,000.00) as of
October 31, 1998 and at all times thereafter.
Notwithstanding the foregoing, upon consummation of the acquisition by
Borrowers of PAMI, the Consolidated Tangible Net Worth covenant shall be as
follows for the applicable periods:
(a) Two Million Three Hundred Twenty-Nine Thousand Dollars ($2,329,000.00)
as of January 31, 1997 and at all times thereafter until April 29, 1997; (b) Two
Million Eight Hundred Fifty-Three Thousand Dollars ($2,853,000.00) as of April
30, 1997 and at all times thereafter until July 30, 1997; and (c) Three Million
Three Hundred Thirty-Four Thousand Dollars ($3,334,000.00) as of July
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31, 1997 and at all times thereafter until October 30, 1997. After October
30, 1997, the Consolidated Tangible Net Worth covenant shall be as provided for
above."
6. DEFINITIONS. Section 14 of the Loan Agreement is amended to add the
following defined terms:
"Applicable Margin" shall mean initially two hundred twenty-five (225)
basis points. Provided that no Event of Default or event which with the giving
of notice or the passage of time or both would become an Event of Default shall
have occurred, and further provided that Borrowers meet the financial covenant
and minimum availability requirements as set forth below, the Applicable Margin
shall reduce to (a) two hundred (200) basis points as of the date which is ten
(10) days after the receipt by Bank of Borrowers' annual audited financial
statements for Borrowers' fiscal year ending October 31, 1997 and shall remain
at such amount until the change provided for in (b) below, and (b) one hundred
seventy-five (175) basis points as of the date which is ten (10) days after
receipt by Bank of Borrowers' annual audited financial statements for Borrowers'
fiscal year ending October 31, 1998 and shall remain at such amount thereafter.
Borrowers' compliance with the financial covenants set forth below shall be
determined based on Borrowers' annual audited financial statements delivered to
Bank pursuant to Section 8.1 above. Senior Indebtedness Minimum Availability to
Effective Net Cash Flow For Advances Worth Ratio Coverage Ratio Under the Line
Not greater than Not less than $1,000,000 for the
3.0 to 1.0 for 2.0 to 1.0 for the 30-day period through
the 12-month period 12-month period and including the date on
through and includ- through and includ- which Bank receives Borrowers'
ing October 31, ing October 31, annual financial statements for
1997 and October 1997 and October October 31, 1997 and October 31,
31, 1998, respect- 31, 1998, 1998, respectively
ively respectively
"Good Business Day" means any day when banks in Pennsylvania
and London, England are open for business.
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"Cash Flow Coverage Ratio" shall mean the ratio of (a) the sum of
Borrowers' consolidated Net Income, plus depreciation and amortization, less
Capital Expenditures and long-term debt repayments to (b) the sum of unfunded
Capital Expenditures, plus long-term debt repayments.
"LIBOR Rate" for any day for any proposed or existing LIBOR Rate Portion of
the Line corresponding to a Rate Period shall mean the rate per annum determined
by Bank to be the rate per annum obtained by dividing (the resulting quotient to
be rounded upward to the nearest 1/100 of 1%) (a) the rate of interest (which
shall be the same for each day in such Rate Period) estimated in good faith by
Bank in accordance with its usual procedures (which determination shall be
conclusive) to be the average of the rates per annum for deposits in United
States dollars offered to major money center banks in the London interbank
market at approximately 11:00 a.m., London time, two Good Business Days prior to
the first day of such Rate Period for delivery on the first day of such Rate
Period in amounts comparable to such LIBOR Rate Portion (or, if there are no
such comparable amounts actively traded, the smallest amounts actively traded)
and having maturities comparable to such Rate Period by (b) a number equal to
1.00 minus the LIBOR Rate Reserve Percentage for such day, and then adding to
such rate the Applicable Margin.
"LIBOR Rate Notification" means an irrevocable written notice requesting
the LIBOR Rate which must be provided to Bank prior to 2:00 p.m. Philadelphia
time on a Business Day which is at least two (2) Good Business Days prior to the
date on which such rate is requested to take effect, specifying:
(a) The principal amount which is to accrue interest at such rate; (b) The
date on which such rate is to take effect; and (c) Whether such principal
amount is a new advance, a conversion from
another interest rate, a renewal of another interest rate or a combination
thereof.
"LIBOR Rate Portion" shall mean at any time the part, including the whole,
of the unpaid principal amount of the Line bearing interest at such time at the
LIBOR Rate.
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"LIBOR Rate Reserve Percentage" for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by Bank
(which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for member banks of the
Federal Reserve System with respect to eurocurrency funding (currently referred
to as "Eurocurrency liabilities") of any maturity. Each LIBOR Rate shall be
adjusted automatically as of the effective date of any change in the LIBOR Rate
Reserve Percentage.
"Prime Rate Notification" means an irrevocable written notice requesting
the Prime Rate which must be provided to Bank prior to 2:00 p.m. Philadelphia
time on the Business Day on which such rate is requested to take effect,
specifying:
(a) The principal amount which is to accrue interest at such rate; (b) The
date on which such rate is to take effect; and (c) Whether such principal
amount is a new advance, a conversion from
another interest rate option or a combination thereof.
"Prime Rate Portion" shall mean at any time the part, including the whole,
of the unpaid principal amount of the Line bearing interest at such time at the
Prime Rate.
"Rate Period" shall mean for any portion of the Line for which the
Borrowers elect the LIBOR Rate, the period of time for which such rate shall
apply to such principal portions. The Rate Period for the LIBOR Rate shall be
for periods of thirty (30), sixty (60) or ninety (90) days.
7. AMENDED AND RESTATED NOTE. Contemporaneously with its execution hereof,
the Borrowers shall execute and deliver to Bank an Amended and Restated Note
(the "Amended and Restated Note") in the form attached hereto as Exhibit "A",
evidencing the Borrowers' obligation to repay the Line. Hereafter, all
references in the Loan Agreement or any of the other Loan Documents to the
"Note" shall be deemed to be references to the Amended and Restated Note. The
indebtedness, if any, evidenced by any prior Notes remains outstanding as of the
date hereof. The Borrowers and Guarantor acknowledge and agree that the Amended
and Restated Note merely re-evidences the indebtedness evidenced by any prior
Notes increasing the face amount thereof and is given in substitution and not in
payment of such prior Notes.
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8. SUBORDINATION AGREEMENTS. Borrowers and Guarantor have executed and
delivered to Bank various Subordination Agreements in Bank's favor. Borrowers
and Guarantor acknowledge and agree that the term "Senior Debt" as used in such
Subordination Agreements shall include the Line as increased by this Amendment.
9. CONTRIBUTION AGREEMENT. Borrowers have executed a certain Third Amended
and Restated Contribution Agreement. Borrowers acknowledge and agree that the
term "Bank Indebtedness" as used in the Third Amended and Restated Contribution
Agreement shall include the Line as increased by this Amendment.
10. FURTHER AGREEMENTS AND REPRESENTATIONS. Borrowers and Guarantor do
hereby:
(a) ratify, confirm and acknowledge that, as amended hereby, the Loan
Agreement, the Note and all other Loan Documents, as such term is defined in the
Loan Agreement, are valid, binding and in full force and effect;
(b) covenant and agree to perform all obligations of Borrowers and
Guarantor contained herein, in the Loan Agreement and in the other Loan
Documents, as amended hereby;
(c) acknowledge and agree that as of the date hereof, Borrowers and
Guarantor have no defense, set-off, counterclaim or challenge against the
payment of any sums owing under the Bank Indebtedness or the enforcement of any
of the terms of the Loan Agreement, or any of the other Loan Documents, as
amended;
(d) represent and warrant that no Event of Default, as defined in the Loan
Agreement, as amended, exists or will exist upon the delivery of notice, passage
of time or both;
(e) acknowledge and agree that nothing contained herein and no actions
taken pursuant to the terms hereof is intended to constitute a novation of the
Loan Agreement or any of the other Loan Documents, and does not constitute a
release, termination or waiver of any of the liens, security interests, rights
or remedies granted to the Bank therein, which liens, security interests, rights
and remedies are hereby ratified, confirmed, extended and continued as security
for the Bank Indebtedness as amended hereby; and
(f) acknowledge and agree that Borrowers' and Guarantor's failure to comply
with or perform any of its covenants, agreements or obligations contained in
this Amendment shall constitute an Event of Default under the Loan Agreement and
each of the Loan Documents as amended.
11. ADDITIONAL DOCUMENTS; FURTHER ASSURANCES. Borrowers and Guarantor
further covenant and agree to execute and deliver to the Bank, or to cause to be
executed and delivered to the Bank, at the sole cost and expense of Borrowers
and Guarantor, from time to time, any and all other documents, agreements,
statements, certificates and information as Bank shall reasonably request to
evidence or effect the terms of the Loan Agreement, as amended, or any of the
other Loan Documents, as amended, or to enforce or
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protect Bank's interest in all collateral. All such documents, agreements,
statements, certificates and information shall be in form and content acceptable
to Bank in its sole discretion.
12. FEES, COSTS, EXPENSES AND EXPENDITURES. Borrowers and Guarantor agree
to pay all of Bank's expenses in connection with the review, preparation,
negotiation, documentation and closing of this Amendment and the consummation of
the transactions contemplated hereunder, including, without limitation, fees,
disbursements, expenses and disbursements of counsel retained by Bank and all
fees related to filings, recording of documents and searches, whether or not the
transactions contemplated hereunder are consummated.
13. AMENDED AND RESTATED NOTE. Contemporaneously with its execution hereof,
the Borrowers shall execute and deliver to Bank an Amended and Restated Note
(the "Amended and Restated Note") in the form attached hereto as Exhibit "A",
evidencing the Borrowers' obligation to repay the Line. Hereafter, all
references in the Loan Agreement or any of the other Loan Documents to the
"Note" shall be deemed to be references to the Amended and Restated Note. The
indebtedness, if any, evidenced by the prior Note remains outstanding as of the
date hereof. The borrowers acknowledge and agree that the Amended and Restated
Note merely re-evidences the indebtedness evidenced by the prior Note while
adding Consortium as a co-maker and is given in substitution and not in payment
of such prior Note.
14. INTERRELATEDNESS OF BORROWERS. The business operations of each Borrower
are interrelated and complement one another, and such entities have a common
business purpose. To permit their uninterrupted and continuous operations, such
entities now require and will from time to time hereafter require funds and
credit accommodations for general business purposes. The proceeds of advances
under the Line and other credit facilities extended under the Loan Agreement
will directly or indirectly benefit each Borrower, severally and jointly,
regardless of which Borrower requests or receives part or all of the proceeds of
such advances.
15. JOINT AND SEVERAL LIABILITY. The obligations of each Borrower under the
Loan Agreement and the Loan Documents shall be joint and several.
16. CONFIRMATION OF COLLATERAL. Borrowers and Guarantor hereby confirm,
acknowledge and agree that none of the collateral securing any obligations of
Borrowers or Guarantor to Bank shall be impaired by anything contained in this
Amendment, and such collateral shall continue to secure all of the obligations
of Borrowers and Guarantor to Bank under the Loan Agreement and the Loan
Documents.
17. NO WAIVER. Nothing herein shall constitute a waiver by Bank of
Borrowers' or Guarantor's compliance with the terms of the Loan Agreement or the
Loan Documents nor any of Bank's rights in connection therewith, nor shall
anything contained herein constitute an agreement by Bank to enter into any
further agreements with Borrowers or Guarantor.
18. INCONSISTENCIES. To the extent of any inconsistency between the terms
and conditions of this Amendment and the terms and conditions of the Loan
Agreement or the Loan Documents, the terms and conditions of this Amendment
shall prevail. All terms and conditions
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of the Loan Agreement and Loan Documents not inconsistent herewith shall
remain in full force and effect and are hereby ratified and confirmed by
Borrowers.
19. CONSTRUCTION. Any capitalized terms used in this Amendment not
otherwise defined shall have the meaning as set forth in the Loan Agreement, as
amended. All references to the Loan Agreement therein or in any of the other
Loan Documents shall be deemed to be a reference to the Loan Agreement as
amended hereby.
20. BINDING EFFECT. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns.
21. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
22. HEADINGS. The headings of the Articles, Sections, paragraphs and
clauses of this Amendment are inserted for convenience only and shall not be
deemed to constitute a part of this Amendment.
23. WAIVER OF RIGHT TO TRIAL BY JURY. BORROWERS, GUARANTOR AND BANK
WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(a) ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWERS, GUARANTOR OR BANK WITH
RESPECT TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWERS, GUARANTOR AND BANK AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWERS,
GUARANTOR AND BANK TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. BORROWERS AND
GUARANTOR ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL
REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND
EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS
SECTION.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed effective as of the day and year first above written.
INTERTEC DESIGN, INC.
By:
Xxxx Xxxxx, President
(CORPORATE SEAL)
Attest:
Xxxxxxx Xxxxx, Secretary
CATARACT, INC., formerly known as CI
Acquisition Corp.
By:
Xxxx Xxxxx, President
(CORPORATE SEAL)
Attest:
Xxxxxxx Xxxxx, Secretary
THE CONSORTIUM
By:
Xxxx Xxxxx, President
(CORPORATE SEAL)
Attest:
Xxxxxxx Xxxxx, Secretary
THE CONSORTIUM OF MARYLAND, INC.
By:
Xxxx Xxxxx, President
(CORPORATE SEAL)
Attest:
Xxxxxxx Xxxxx, Secretary
MELLON BANK, N.A.
By:
Name/Title:
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The undersigned, intending to be legally bound, hereby join in the
representations and warranties and consent to and agree to be bound by the
terms, conditions and covenants applicable to the undersigned as set forth in
the foregoing Amendment.
RCM TECHNOLOGIES, INC.
By:
Xxxx Xxxxx, President
[CORPORATE SEAL]
Attest:
Xxxxxxx Xxxxx, Secretary
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