Exhibit 4(U)
NINTH AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AND LIMITED WAIVER
This Ninth Amendment to that certain Amended and Restated Loan and Security
Agreement ("AMENDMENT") is dated as of July 8, 1998, by and among Unitel Video,
Inc. ("BORROWER"), R Squared, Inc. ("CORPORATE GUARANTOR"), and Xxxxxx
Financial, Inc., as a Lender and as Agent for Lenders ("AGENT").
WHEREAS, Agent, Lenders, Corporate Guarantor and Borrower are parties to a
certain Amended and Restated Loan and Security Agreement dated December 12, 1995
and all amendments thereto (the "AGREEMENT"); and
WHEREAS, an Event of Default is in existence under 8.1(C) of the Agreement
as a result of Borrower's breach of the Tangible Net Worth covenant contained in
subsection 6.1 for the month ended March 31, 1998 (the "Existing Event of
Default"); and
WHEREAS, the parties desire to amend the Agreement as hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual conditions and agreements set
forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such term in the
Agreement.
2. AMENDMENTS. Subject to the conditions set forth below, the Agreement
is amended as follows:
(A) Subsection 5 is amended by adding the following subsections
immediately after subsection 5.17:
5.18 PROJECTIONS. On or before July 15, 1998, Borrower shall have
delivered to Agent Projections for Fiscal Year 1999.
5.19 PROPOSAL FOR NEW CAPITAL. On or before June 30, 1998, Borrower
shall have delivered to Agent a proposal or letter of intent, in form and
substance satisfactory to Agent and Lenders, from a third party source of
new capital in the amount of at least $5,000,000 resulting from (i) the
sale and leaseback of Borrower's real estate, (ii) a conventional mortgage
on Borrower's real estate or (iii) Borrower's obtaining additional
subordinated debt with subordination provisions acceptable to Agent and
Lenders (the "New Capital"). If Agent has not received such proposal or
letter of intent, as more full described above, by June 30, 1998, then, in
addition to any other rights or remedies set forth in this Agreement,
Borrower shall pay to Agent a fee in the amount of $30,000.
5.20 COMMITMENT LETTER FOR NEW CAPITAL. On or before July 31, 1998,
Borrower shall have delivered to Agent a commitment letter, in form and
substance satisfactory to Agent and Lenders, from the source of the New
Capital. If Agent does not receive such commitment letter, as more fully
described above, by July 31, 1998, then, in addition to any other rights or
remedies set forth in this Agreement, Borrower shall pay to Agent a fee,
which shall be fully earned and payable on such date, in the amount of
$30,000.
5.21 NEW CAPITAL. On or before August 31, 1998, the third party
source of the New Capital shall have paid the New Capital to Agent to repay
Term Loan D in full and to reduce the outstanding balance of the Revolving
Loan. If such New Capital is not paid to Agent by August 31, 1998 then, in
addition to any other rights or remedies set forth in this Agreement: (i) a
complete orderly liquidation value appraisal of Borrower's Equipment at
Borrower's expense and in form and substance acceptable to Agent shall be
completed and delivered to Agent by October 15, 1998, and (ii) effective
September 1, 1998, the Interest Rate for all Base Rate Loans and all LIBOR
Loans shall be increased by 100 basis points above the existing rate.
(b) Subsection 6.1 is amended by deleting said subsection in its
entirety and replacing it with the following:
6.1 TANGIBLE NET WORTH. Borrower shall at all times during the
periods set forth below maintain Tangible Net Worth plus Subordinated Debt
of not less than the amounts set forth opposite such periods:
Period Amount
------ ------
April 1, 1998 - June 30, 1998 $11,000,000
July 1, 1998 - July 31, 1998 $13,000,000
August 1, 1998 - August 31, 1998 $13,000,000
September 1, 1998 - November 30, 1998 $19,500,000
December 1, 1998 and at all times $20,000,000
thereafter
(c) Subsection 6.2 is amended by deleting said subsection in its
entirety and replacing it with the following:
6.2 CAPITAL EXPENDITURE LIMITS. The aggregate amount of all Capital
Expenditures of Borrower and its Subsidiaries (excluding trade-ins,
excluding Capital Expenditures in respect of replacement assets to the
extent funded with casualty insurance proceeds and excluding Capital
Expenditures that consist of commitments or contracts to make Capital
Expenditures which have not created a cash obligation so long as such
amount does not exceed $500,000 in the aggregate at any time outstanding)
will not exceed the amounts set forth below during the periods set forth
below.
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Period Amount
------ ------
For 12 month period ended $5,764,000.00
August 31, 1998
For the 12 month period commencing $2,000,000.00
September 1, 1998 and ending August
31, 1999 and all 12 month periods thereafter
In the event that Borrower or any of its Subsidiaries enters into a Capital
Lease or other contract with respect to fixed assets, for purposes of
calculating Capital Expenditures under this subsection only, the amount of the
Capital Lease or contract initially capitalized on Borrower's or any
Subsidiary's balance sheet prepared in accordance with GAAP shall be considered
expended in full on the date that Borrower or any of its Subsidiaries enters
into such Capital Lease or contract.
(d) Subsection 6.3 is amended by deleting said subsection in its
entirety and replacing it with the following:
6.3 FIXED CHARGE COVERAGE. Borrower shall not permit its Fixed
Charge Coverage to be less than (a) .75 to 1.00 for the three fiscal
quarters ending May 31, 1998, (b) 1.00 to 1.00 for the four fiscal quarters
ending August 31, 1998 and (c) 1.00 to 1.00 for each fiscal quarter
thereafter, calculated on a rolling four quarter basis.
For purposes of the covenant calculations under this subsection 6.3,
Operating Cash Flow shall exclude financed Capital Expenditures utilized by
Borrower to finance its construction of mobile teleproduction units with
the proceeds of industrial revenue bonds to be issued by the Allegheny
County Industrial Development Authority.
(e) Subsection 6.4 is amended by deleting said subsection in its
entirety and replacing it with the following:
6.4 LEVERAGE RATIO. Borrower shall not permit its Leverage Ratio at
all times during each period set forth below to be greater than the ratio set
forth below for such period:
Period Ratio
------ -----
From September 1, 1997
through and including May 31, 1998 5.30:1.0
From September 1, 1997
through and including June 31, 1998 5.30:1.0
From September 1, 1997
through and including July 31, 1998 3.75:1.0
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From September 1, 1997
through and including August 31, 1998 3.75:1.0
On the last day of each fiscal quarter thereafter
(calculated on a rolling four fiscal quarter basis) 2.75:1.0
(f) Subsection 6.5 is amended by deleting said subsection in its
entirety and replacing it with the following:
6.5 INTEREST COVERAGE. During each fiscal period when Borrower's
Fixed Charge Coverage is less than 1.00 to 1.00, Borrower shall not permit
the ratio of (a) Operating Cash Flow to (b) Interest Expense to be less
than (i) 1.50 to 1.00 for the three fiscal quarters ending May 31, 1998,
(ii) 1.80 to 1.00 for the four fiscal quarters ending August 31, 1998, and
(iii) 1.30 to 1.00 for each fiscal quarter thereafter, calculated on a
rolling four quarter basis.
For purposes of the covenant calculations under this subsection 6.5,
Operating Cash Flow shall exclude financed Capital Expenditures utilized by
Borrower to finance its construction of mobile teleproduction units with
the proceeds of industrial revenue bonds to be issued by the Allegheny
County Industrial Development Authority.
(g) Subsection 8.1(C) is amended by deleting said subsection in its
entirety and replacing it with the following:
(C) BREACH OF CERTAIN PROVISIONS. Failure of any Loan Party to
perform or comply with any term or condition contained in subsections
5.1(A), (B) or (C), 5.3, 5.5, 5.6, 5.18, 5.19, 5.20 or 5.21 or contained in
Section 6 or section 7; or
3. WAIVER. Agent and Lenders hereby waive the Existing Event of
Default. This is a limited waiver and shall not be deemed to constitute a waiver
of any other Event of Default or any future breach of the Agreement or any of
the other Loan Documents.
4. CONDITIONS. The effectiveness of this Amendment is subject to the
following conditions precedent (unless specifically waived in writing by Agent
and Lenders):
(a) Borrower shall have executed and delivered such other documents
and instruments as Agent may require;
(b) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to Agent and its legal counsel;
(c) No Default or Event of Default other than the Existing Events of
Default shall have occurred and be continuing; and
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(d) Borrower shall have paid Agent an amendment fee in the amount of
$35,000, which shall be fully earned, due and payable and which Agent may charge
to the Revolving Loan on the date hereof.
5. CORPORATE ACTION. The execution, delivery, and performance of this
Amendment has been duly authorized by all requisite corporate action on the part
of Borrower and Corporate Guarantor and this Amendment has been duly executed
and delivered by Borrower and Corporate Guarantor.
6. SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
7. REFERENCES. Any reference to the Agreement contained in any document,
instrument or agreement executed in connection with the Agreement, shall be
deemed to be a reference to the Agreement as modified by this Amendment.
8. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.
9. RATIFICATION. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the
Agreement, and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Agreement. Except as expressly modified
and superseded by this Amendment, the terms and provisions of the Agreement are
ratified and confirmed and shall continue in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
XXXXXX FINANCIAL, INC.,
as Lender and Agent
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxxxx
Title: Vice President
UNITEL VIDEO, INC.,
as Borrower
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Title: President
R SQUARED, INC., as Corporate Guarantor
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Title: President
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