EXHIBIT 10.63
Second Amendment to Loan And Security Agreement
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This Second Amendment to Loan and Security Agreement ("Amendment") entered
into as of May 29, 1998, by and among Capital Associates, Inc. and Capital
Associates International, Inc. (each a Borrower and collectively "Borrowers"),
First Union National Bank, successor by merger to CoreStates Bank, N.A., a
national banking corporation, in its capacity as agent ("Agent") and as lender
and Issuing Bank and each of the lenders listed on the signature pages hereof
and Schedule A attached to the Loan Agreement, in their capacity as lenders
(singly, each is a "Lender" and collectively, all are "Lenders").
Background
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A. On or about November 26, 1997, Borrowers, Agent and Lenders entered
into a certain Loan and Security Agreement, as amended by that certain First
Amendment to Loan and Security Agreement dated as of April 7, 1998
(collectively, the "Loan Agreement"), pursuant to which Lenders agreed to make
advances to Borrowers up to a maximum aggregate amount of $60,000,000, evidenced
by Borrowers' delivery of certain Notes to Lenders.
B. The Acquisition Term Loan (as defined in the Loan Agreement) has not
been advanced to Borrowers due to a change in circumstances which has resulted
in the inability of Borrowers to satisfy certain conditions precedent to the
making of such Acquisition Term Loan.
C. Borrowers have requested that Lenders and Agent amend the Loan
Agreement to increase the Term Loan by the anticipated amount of the Acquisition
Term Loan pursuant to the terms hereof and Agent and Lenders have agreed to do
so subject to the terms hereof.
D. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.
Now, Therefore, with the foregoing background incorporated by reference,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. Amendment To Loan Agreement:
a. Due to a change in circumstances which has resulted in certain
conditions precedent to the making of the Acquisition Term Loan not being able
to be satisfied, Borrowers have requested, and Agent and Lenders have consented,
that the amount of the Term Loan be increased by $1,200,000 (the anticipated
amount of the Acquisition Term Loan) and that the repayment terms of the Term
Loan be modified to reflect a revised amortization. Upon effectiveness of this
Amendment, each Lender shall advance to Borrowers an amount equal to its Pro
Rata Percentage of the $1,200,000 increase in the Term Loan such that the
aggregate principal balance, as of the effective date of this Amendment, of the
Term Loan shall be $3,825,000.
The Term Loan shall be repaid in successive quarterly
installments in accordance with the terms of the Amended and Restated Term Note
(as defined below). Each quarterly payment under the Term Loan shall be due and
payable on the last Business Day of each fiscal quarter, commencing on the last
Business Day of May, 1998. The Term Loan shall be repaid in full on the earlier
of the Maturity Date or the last Business Day of November, 1999 and shall be
secured by all of the Collateral. Borrowers shall execute and deliver their
promissory note to each Lender for the total principal amount of such Lender's
Pro Rata Percentage of the Term Loan (collectively as may be amended, modified
or replaced from time to time, the "Amended and Restated Term Loan Notes"). The
Amended and Restated Term Loan Notes shall evidence Borrowers' joint and
several, absolute and unconditional obligation to repay such Lender for its Pro
Rata Percentage of the Term Loan made by such Lender under the Credit Facility,
with interest as herein and therein provided. The Term Loan shall be deemed
evidenced by the Amended and Restated Term Loan Notes, which are deemed
incorporated herein by reference and made a part hereof.
b. All references in the Loan Documents to "Acquisition Term
Note(s)" and "Acquisition Term Loan" shall be deemed to refer, unless context
indicates otherwise, to the "Amended and Restated Term Loan Note(s)" and the
"Term Loan" respectively. Accordingly, without limitation, Section 2.7(d)(ii) of
the Loan Agreement shall remain in full force and effect, provided however, that
all payments owing under such subsection shall be applied to the Term Loan.
c. All references in the Loan Documents to "Term Loan Note(s)"
shall be deemed to refer to "Amended and Restated Term Note(s)."
d. Connecting Point has changed its name and is now known as
Capital Associates Technology Group, Inc. Therefore, all references in the Loan
Documents to Connecting Point shall be deemed to also refer to Capital
Associates Technology Group, Inc. For the purpose of this Amendment, Capital
Associates Technology Group, Inc. may also be referred to as "CATG ".
e. Section 1.1 of the Loan Agreement is hereby amended by
deleting the definition of "Sureties" in its entirety and replacing it with the
following:
SURETIES - Collectively, CAI Equipment Leasing II Corp., CAI Equipment
Leasing III Corp., CAI Equipment Leasing IV Corp., CAI Partners
Management Company, Capital Equipment Corporation, CAI Equipment
Leasing V Corp., CAI Equipment Leasing VI Corp., CAI Leasing Canada,
Ltd., CAI-Mexico, Whitewood Equipment Corporation f/k/a Whitewood
Credit Corporation, CAI Securities Corporation and CAI Lease
Securitization I Corp., and Capital Associates Technology Group, Inc.
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f. Section 7.1 of the Loan Agreement is hereby amended by
inserting a new Subsection 7.1(c) as follows:
7.1(c) Notwithstanding anything to the contrary contained herein, under
no circumstances shall either Borrower or any Surety enter into any
merger, consolidation, reorganization or recapitalization with Capital
Associates Technology Group, Inc."
g. Section 7.2 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
7.2 LIENS AND ENCUMBRANCES: Neither Borrower nor any Surety shall:
(i) execute a negative pledge agreement with any Person covering any of
the Collateral, or (ii) cause or permit or agree or consent to cause or
permit in the future (upon the happening of a contingency or otherwise)
the Collateral, whether now owned or hereafter acquired, to be subject
to a Lien or be subject to any claim except for Permitted Liens. As
used herein, "Permitted Liens" means (A) Liens securing taxes,
assessments or governmental charges or levies or the claims or demands
of mate rialmen, mechanics, carriers, warehousemen, landlords, and
other like persons, provided the payment thereof is not at the time
required by Section 6.1, (B) Liens on Securitization Certificates
securing only the corresponding Securitization Residual Financing, (C)
such Liens as are described on Exhibit 7.2 attached hereto and made a
part hereof, and (D) Liens granted in favor of Deutsche Financial
Services Corporation with respect to certain assets of Capital
Associates Technology Group, Inc."
h. Section 7.3 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
7.3 NEGATIVE PLEDGE: Neither Borrower shall pledge, grant or permit any
Lien to exist on the common stock of its Subsidiaries except with
respect to the Liens granted hereunder to Agent for the benefit of
Lenders and with respect to subordinated Liens on the stock of Capital
Associates Technology Group, Inc. granted to Connecting Point Sellers.
i. Section 7.5 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
7.5 GUARANTEES: Except with respect to the obligations of Borrowers
described on Exhibit 5.10 and with respect to Borrowers' subordinated
guaranty of the Deutsche Financial Services Corporation credit facility
established for the benefit of Capital Associates Technology Group,
Inc.
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and, excepting the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection, neither Borrower
shall become or be liable, directly or indirectly, primary or
secondary, matured or contingent, in any manner, whether as guarantor,
surety, accommodation maker, or otherwise, for the existing or future
indebtedness of any kind of any Person.
j. Section 7.6(b) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
(b) Neither Borrower shall borrow money from, or incur indebtedness to,
any Person other than in the form of Nonrecourse Debt or pursuant to a
Securitization Residual Financing or pursuant to an anticipated public
subordinated debt offering in a maximum amount not to exceed Twenty-
Four Million ($24,000,000.00) Dollars through Xxxx Xxxxx Xxxx Xxxxxx,
Inc. pursuant to terms and conditions satisfactory to Agent and Lenders
in their sole discretion.
2. Before each Lender shall advance to Borrowers an amount equal to its
Pro Rata Percentage of the $1,200,000 increase in the Term Loan, Borrowers will
deliver to Agent the following (dated and signed) in form and substance
satisfactory to Agent and its counsel:
a. A surety agreement pursuant to which CATG agrees to guaranty,
as surety, all of the Obligations under the Loan Agreement ("CATG Surety
Agreement");
b. A security agreement pursuant to which CATG shall grant to
Agent for the benefit of Lenders and Issuing Bank, a security interest in all
its then-owned and thereafter acquired assets which Lien shall be a first Lien
except with respect to a first Lien granted in favor of Deutsche Financial
Services Corporation with respect to certain assets ("CATG Security Agreement").
The Lien shall secure all of CATG's obligations under the CATG Surety Agreement
and the CATG Security Agreement shall also contain, inter alia, an agreement
that no other party (other than Deutsche Financial Services Corporation) shall
be granted a Lien on any of CATG's assets;
c. A subordination agreement in favor of Agent for the benefit of
Lenders from the Connecting Point Sellers subordinating their interest in CATG
stock to the first Lien granted in favor of Agent for the benefit of Lenders;
d. A subordination agreement from Deutsche Financial Services
Corporation with respect to the guaranty by Borrowers, or either of them, of the
indebtedness owed by CATG to Deutsche Financial Services Corporation;
e. An Amended and Restated Term Note in favor of each Lender
properly executed;
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f. Certified copies of (A) Resolution of CATG's Board of
Directors authorizing execution and delivery of the CATG Surety Agreement and
the CATG Security Agreement and the performance by it of all transactions
contemplated thereby, (B) CATG's Bylaws and Articles of Incorporation, and (C)
an Incumbency Certificate of CATG;
g. Good Standing Certificate of CATG issued by the Secretary of
State or other appropriate official of CATG's jurisdiction of incorporation and
each jurisdiction where the conduct of CATG's business activities or the
ownership of its Properties necessitates qualification;
h. The favorable written opinion of Borrowers' counsel in
connection with the CATG acquisition opining that the acquisition has been
consummated and the enforceability and authorization of the Loan Documents to
which it is a party;
i. The fully executed Acquisition Agreement with all completed
schedules;
j. An Officer's Certificate from the Borrowers certifying
compliance with the terms and conditions of the Loan Agreement, that no material
adverse change has occurred since November 26, 1997, that no Event of Default or
Unmatured Event of Default has occurred under the Loan Agreement and that all of
the representations and warranties contained in the Loan Agreement remain true
and correct in all material respects;
k. Evidence that CATG has insurance coverage as is otherwise
required for Borrowers as set forth in Section 6.2 of the Loan Agreement and a
certificate naming Agent, for the benefit of Lenders, as Lender Loss Payee;
l. UCC, state and federal tax lien and judgment searches
against CATG and any and all necessary UCC-3 Termination Statements
corresponding to existing filings against CATG;
m. A collateral assignment of rights and representations under
the Acquisition Agreement;
n. A certified copy of the subordinated promissory note issued in
favor of the Connecting Point Sellers, as sellers under the Acquisition
Agreement and the Subordination Agreement from the Connecting Point Sellers; and
o. Evidence that the transactions contemplated by Acquisition
Agreement have been consummated.
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3. Each Surety, parties to a certain Surety Agreement dated as of
November 27, 1997 in favor of Agent for the benefit of the Lenders, by execution
hereof in their capacity as Sureties, hereby consent to the amendments set forth
in this Amendment, and acknowledge that the Surety Agreement remains in full
force and effect and that each remain, jointly and severally liable for
Obligations of Borrowers to Lenders.
4 a. Borrowers represent and warrant that as of the date hereof no
Event of Default or Unmatured Event of Default has occurred or is existing under
the Loan Documents.
b. The execution and delivery by each Borrower of this Amendment
and performance by it of the transactions herein contemplated (i) are and will
be within its powers, (ii) have been authorized by all necessary corporate
action, and (iii) are not and will not be in contravention of any order of any
court or other agency of government, of law or any other indenture, agreement or
undertaking to which such Borrower is a party or by which the Property of such
Borrower is bound, or be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under any such indenture,
agreement or undertaking or result in the imposition of any lien, charge or
encumbrance of any nature on any of the properties of such Borrower.
c. This Amendment, each Amended and Restated Term Note and each
other agreement, instrument or document executed and/or delivered in connection
herewith, shall be valid, binding and enforceable in accordance with its
respective terms.
5. This Amendment shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
6. Except as expressly provided herein, all terms and conditions of the
Loan Documents remain in full force and effect, unless such terms or conditions
are no longer applicable by their terms. To the extent the provisions of this
Amendment are expressly inconsistent with the provisions of the Loan Documents,
the provisions of this Amendment shall control.
7. This Amendment may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same respective agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the day and year first above written.
BORROWERS:
Capital Associates, Inc.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal) Secretary
Fed. Tax ID No. 00-0000000
Capital Associates International, Inc.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal) Secretary
Fed. Tax ID No. 00-0000000
AGENT:
First Union National Bank, Successor by
Merger to CoreStates Bank, N.A.
By: /s/Xxxx X. Xxxxxxxx
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Title: Vice President
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LENDERS:
First Union National Bank, Successor by
Merger to CoreStates Bank, N.A., as Lender
and Issuing Bank
By: /s/Xxxx X. Xxxxxxxx
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Title: Vice President
Norwest Bank Colorado, N.A.
By: /s/Xxxxx X. Xxxx
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Title: Vice President
BankBoston, N.A.
By: /s/Xxxxxxx X. Xxxxxxx
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Title: Vice President
European American Bank
By: /s/Xxxxxxxxxxx X. Xxxxx
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Title: Vice President
U.S. Bank National Association, f/k/a
Colorado National Bank
By: /s/Xxxxx X. Xxxxxxxx
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Title: Vice President
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SURETIES:
CAI Equipment Leasing II Corp.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
CAI Equipment Leasing III Corp.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
CAI Equipment Leasing IV Corp.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
CAI Equipment Leasing V Corp.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
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CAI Partners Management Company
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
Capital Equipment Corporation
By: /s/Xxxxxxx X. XxXxxxx
------------------------------------
Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
------------------------------------
(Corporate Seal)
Fed. Tax ID No.: 00-0000000
CAI Equipment Leasing VI Corp.
By: /s/Xxxxxxx X. XxXxxxx
------------------------------------
Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
------------------------------------
(Corporate Seal)
Fed. Tax ID No.: 00-0000000
CAI Lease Securitization I Corp.
By: /s/Xxxxxxx X. XxXxxxx
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Title: President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
10
CAI Leasing Canada, Ltd.
By: /s/Xxxxxxx X. XxXxxxx
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Title: President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
Capital Associates International de Mexico
S. de X.X. de C.V.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: N/A
Whitewood Equipment Corporation, f/k/a
Whitewood Credit Corporation
By: /s/Xxxxxxx X. XxXxxxx
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Title: President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
CAI Securities Corporation
By: /s/Xxxxxxx X. XxXxxxx
-------------------------------------
Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
-------------------------------------
(Corporate Seal)
Fed. Tax ID No.: 00-0000000
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Capital Associates Technology Group, Inc.
By: /s/Xxxxxxx X. XxXxxxx
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Title: Senior Vice President
Attest: /s/Xxxxxx X. Xxxxxx
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(Corporate Seal)
Fed. Tax ID No.: 00-0000000
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