Exhibit 10.39
AMENDMENT NO. 5 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 5, dated as of March 8, 1999, to the LOAN AND
SECURITY AGREEMENT, dated as of March 31, 1998, (the "LOAN AND SECURITY
AGREEMENT"), between FOOTHILL CAPITAL CORPORATION, a California corporation,
with a place of business located at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000 ("FOOTHILL"), and COMPUTRON SOFTWARE, INC., a
Delaware corporation, with its chief executive offices located at 000 Xxxxx 00
Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "BORROWER").
PREAMBLE
The Borrower has requested Foothill to amend the Loan and
Security Agreement to (i) extend the termination date of the Loan and Security
Agreement to Xxxxx 00, 0000, (xx) change the amount set forth in the Loan and
Security Agreement as a limitation on loans and advances permitted to be made by
the Borrower to its wholly owned Subsidiaries, (iii) revise the Financial
Covenants in Section 7.20 of the Loan and Security Agreement, and (iv) increase
the amount of the term loan and amend the amortization schedule of the term
loan. Accordingly, the Borrower and Foothill hereby agree as follows:
1. DEFINITIONS. All terms used herein which are defined in the
Loan and Security Agreement and not otherwise defined herein are used herein as
defined therein.
2. TERM. Section 3.4 of the Loan and Security Agreement is
hereby amended to change the Renewal Date from March 31, 2001 to March 31, 2002.
3. INVESTMENTS. Section 7.13(b) of the Loan and Security
Agreement is hereby amended as follows:
"(ii) loans and advances by Borrower made after the
Closing Date to its wholly-owned Subsidiaries (and (A)
Subsidiaries in which Borrower owns all but director
qualifying shares or a nominal ownership interest required to
be held by other Persons due to foreign law ownership
requirements and (B) the joint venture involving Computron
Canada, either before or after it is no longer a wholly-owned
Subsidiary of the Borrower) not to exceed $7,000,000 in the
aggregate over the term of this Agreement, so long as at the
time of making any such loan or advance no Default or Event of
Default shall have occurred and be continuing, and provided
further that, commencing January 1, 1999, no more than
$1,300,000 is invested by the Borrower in the proposed joint
venture involving Computron Canada between the Borrower and
Resource Management Group, a company incorporated in the
United Kingdom."
4. FINANCIAL COVENANTS. Sections 7.20 (a) and (b) of the Loan
and Security Agreement are hereby amended to read in their entirety as follows:
"(a) OPERATING INCOME. Operating Income of at least the
following amounts, measured on a cumulative basis for the period from the
beginning of a calendar year to each calendar quarter end set forth below:
3/31/99 ($4,500,000)
6/30/99 ($6,000,000)
9/30/99 ($7,100,000)
12/31/99 ($6,400,000)
provided that, thereafter, upon receipt of the financial projections required to
be delivered to Foothill pursuant to Section 6.3 (fourth paragraph) hereof for
each fiscal year, the Borrower and Foothill shall negotiate in good faith to
determine the minimum Operating Income as of the end of each fiscal quarter
covered by such financial projections and, in the event that the Borrower and
Foothill are unable to agree upon the amounts of such Operating Income on or
before the date that is 30 days after the date that Foothill has received such
projections, the Operating Income at the end of each fiscal quarter of the
fiscal year covered by such financial projections shall not be less than the
amount set forth for the corresponding fiscal quarter end set forth above PLUS
10% of such amount.
(b) TANGIBLE NET WORTH. Tangible Net Worth of at least
the following amounts, measured on a fiscal quarter-end basis, as of the
following dates:
3/31/99 ($10,600,000)
6/30/99 ($12,100,000)
9/30/99 ($13,200,000)
12/31/99 ($12,500,000)
provided that, thereafter, upon receipt of the financial projections required to
be delivered to Foothill pursuant to Section 6.3 (fourth paragraph) hereof for
each fiscal year, the Borrower and Foothill shall negotiate in good faith to
determine the minimum Tangible Net Worth as of the end of each fiscal quarter
covered by such financial projections and, in the event that the Borrower and
Foothill are unable to agree upon the amounts of such Tangible Net Worth on or
before the date that is 30 days after the date that Foothill has received such
projections, the Tangible Net Worth at the end of each fiscal quarter of the
fiscal year covered by such financial projections shall not be less than the
amount set forth for the corresponding quarter end set forth above PLUS 10% of
such amount."
5. TERM LOAN. Sections 2.3 (a), (b), (c) and (d) of the Loan
and Security Agreement are hereby amended in their entirety to read as follows:
"2.3 TERM LOAN. (a) On the Closing Date, Foothill
made a term loan (the "Initial Term Loan") to Borrower in the original
principal amount of $5,000,000, of which $3,472,222.22 is outstanding
as of March 8, 1999. On March 8, 1999, Foothill will make available an
additional term loan (the "Additional Term Loan" and together with the
Initial Term Loan, the "Term Loan") to Borrower in the original
principal amount of the lesser of (i) $1,000,000 and (ii) the
applicable Net Lendable Value (as hereinafter defined).
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For drawings made by the Borrower between and including (i) March 8,
1999 and March 31, 2000, "Net Lendable Value" shall mean 50% of the
Eligible Recurring Maintenance Revenues at the time of such drawing,
(ii) April 1, 2000 and March 31, 2001, "Net Lendable Value" shall mean
40% of the Eligible Recurring Maintenance Revenues at the time of such
drawing, and (iii) April 1, 2001 and September 30, 2001, "Net Lendable
Value" shall mean 30% of the Eligible Recurring Maintenance Revenues at
the time of such drawing.
(b) The Additional Term Loan shall be made upon
Borrower's request (pursuant to the terms of SECTION 2.9), at any time
on or after March 8, 1999 but before October 1, 2001, specifying (i)
the amount of the requested Additional Term Loan, which must be in
increments of at least $500,000; (ii) the requested funding date of the
Additional Term Loan; (iii) whether the Additional Term Loan is to
constitute a Eurodollar Rate Loan or a Reference Rate Loan; and (iv) if
the Additional Term Loan is to constitute a Eurodollar Rate Loan, the
requested Interest Period therefor; provided, however, that such
request shall be irrevocable except as set forth in SECTION 2.12. If
the requested Additional Term Loan constitutes a Eurodollar Rate Loan,
such request must be delivered to Foothill no later than 11:00 a.m.
(California time) 10 Business Days prior to the requested funding date
therefor.
(c) The aggregate outstanding principal amount of the
Term Loan shall be repaid in equal monthly installments of principal
plus accrued interest over the remaining term of the Loan and Security
Agreement. Each such installment shall be due and payable on the first
day of each month commencing on May 1, 1998 and continuing on the first
day of each succeeding month until and including the date on which the
aggregate unpaid balance of the Term Loan is paid in full. In the event
that, and on each occasion that, the Term Loan is prepaid and
reborrowed pursuant to paragraph (e) of this Section 2.3, the aggregate
outstanding principal amount of the Term Loan shall be repaid in equal
monthly installments of principal plus accrued interest commencing on
the first day of the month following the date of reborrowing and
continuing on the first day of each month thereafter until and
including March 31, 2002, the date on which the aggregate unpaid
principal amount of the Term Loan and all accrued interest thereon
shall be paid in full. In any event, the outstanding principal balance
and all accrued and unpaid interest under the Term Loan shall be due
and payable upon the termination of this Agreement, whether by its
terms, by prepayment, by acceleration, or otherwise. Except upon the
termination of this Agreement and as provided in paragraph (d) below,
the unpaid principal balance of the Term Loan may not be prepaid in
whole or in part. All amounts outstanding under the Term Loan shall
constitute Obligations.
(d) Notwithstanding anything herein to the contrary,
if the aggregate outstanding principal amount of the Term Loan exceeds
(i) from and after March 8, 1999 until and including March 31, 2000, an
amount equal to 50% of Eligible Recurring Maintenance Revenues at such
time, (ii) from and after April 1, 2000 until and including March 31,
2001, an amount equal to 40% of Eligible Recurring Maintenance Revenues
at such time, and (iii) from and after April 1, 2001 until and
including September 30, 2001, an amount equal to 30% of Eligible
Recurring Maintenance Revenues at such time, then the Borrower shall
prepay the principal amount of the Term Loan in an amount sufficient to
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cause the aggregate principal amount of the Term Loan to be less than
or equal to the relevant amounts set forth in clauses (i) through (iii)
above. All such prepaid amounts shall be applied to the installments
due on the Term Loan in the inverse order of their maturity; PROVIDED
that, if the aggregate principal amount of the Term Loan outstanding
prior to giving effect to such prepayment is less than $3,000,000 then
such prepaid amounts shall be applied to the installments due on the
Term Loan in the order of their maturity."
6. FEE. Section 2.11 of the Loan and Security Agreement is
hereby amended by adding the following new paragraph (f): "(f) TERM LOAN DRAWING
FEE. On the date of each advance of the Term Loan after March 8, 1999, a fee in
an amount equal to 1% of the amount of each such advance shall be charged to the
Borrower."
7. CONDITIONS. This Amendment shall become effective (and the
covenants set forth in Section 2 above shall be applicable as of the date of
this Amendment) only upon satisfaction in full of the following conditions
precedent (the date upon which all such conditions have been satisfied being
herein called the "Effective Date"):
(a) The representations and warranties contained in this
Amendment and in Section 5 of the Loan and Security Agreement and each other
Loan Document, after giving effect to this Amendment, shall be correct on and as
of the Effective Date as though made on and as of such date (except where such
representations and warranties relate to an earlier date in which case such
representations and warranties shall be true and correct as of such earlier
date); no Default or Event of Default shall have occurred (assuming Sections
7.13 and 7.20 are amended as set forth above) and be continuing on the Effective
Date or result from this Amendment becoming effective in accordance with its
terms.
(b) Foothill shall have received a counterpart of this
Amendment, duly executed by the Borrower.
(c) All legal matters incident to this Amendment shall
be satisfactory to Foothill and its counsel.
8. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to Foothill as follows:
(a) The Borrower (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (ii) has all requisite corporate power, authority and legal right to
execute, deliver and perform this Amendment, and to perform the Loan and
Security Agreement, as amended hereby.
(b) The execution, delivery and performance of this
Amendment by the Borrower, and the performance by the Borrower of the Loan and
Security Agreement, as amended hereby (i) have been duly authorized by all
necessary corporate action, (ii) do not and will not contravene its charter or
by-laws or any applicable law, and (iii) except as provided in the Loan
Documents, do not and will not result in the creation of any Lien upon or with
respect to any of its respective properties.
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(c) This Amendment and the Loan and Security Agreement,
as amended hereby, constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(d) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority is required in
connection with the due execution, delivery and performance by the Borrower of
this Amendment and the performance by the Borrower of the Loan and Security
Agreement as amended hereby.
(e) The representations and warranties contained in
Section 5 of the Loan and Security Agreement and each other Loan Document, after
giving effect to this Amendment, are correct on and as of the Effective Date as
though made on and as of the Effective Date (except to the extent such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties shall be true and correct as of such earlier
date), and no Default or Event of Default has occurred and is continuing on and
as of the Effective Date or will result from this Amendment becoming effective
in accordance with its terms.
9. CONTINUED EFFECTIVENESS OF THE LOAN AND SECURITY AGREEMENT
AND LOAN DOCUMENTS. The Borrower hereby (i) confirms and agrees that each Loan
Document to which it is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects except that on and
after the Effective Date of this Amendment all references in any such Loan
Document to "the Loan and Security Agreement", the "Agreement", "thereto",
"thereof", "thereunder" or words of like import referring to the Loan and
Security Agreement shall mean the Loan and Security Agreement as amended by this
Amendment; and (ii) confirms and agrees that to the extent that any such Loan
Document purports to assign or pledge to Foothill, or to grant a security
interest in or Lien on, any collateral as security for the obligations of the
Borrower from time to time existing in respect of the Loan and Security
Agreement and the Loan Documents, such pledge, assignment and/or grant of the
security interest or Lien is hereby ratified and confirmed in all respects.
10. MISCELLANEOUS.
(a) This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
(b) Section and paragraph headings herein are included
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
(c) This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New York.
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(d) The Borrower will pay on demand all reasonable fees,
costs and expenses of Foothill in connection with the preparation, execution and
delivery of this Amendment including, without limitation, reasonable fees
disbursements and other charges of Xxxxxxx Xxxx & Xxxxx LLP, counsel to
Foothill.
COMPUTRON SOFTWARE, INC.,
a Delaware corporation
By: XXXXXXX XXXXXXXXX
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EVP & CFO
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: XXXX XXXXXX
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VICE PRESIDENT
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