EXHIBIT 10.5(b)
COAST
EXTENSION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS
BORROWER: XXXX SYSTEMS, INC.
ADDRESS: 000 XXXX XXXXXXX XX.
XXXXXXX XXXX, XXXXXXXXXX
DATE: AUGUST 18, 1995
THIS EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS is entered
into between COASTFED BUSINESS CREDIT CORPORATION ("Coast"), whose address is
00000 Xxxxxxxx Xxxx., Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx and the borrower
named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them,
dated October 11, 1994 (as amended by the First Amendment to Loan and
Security Agreement dated October 11, 1994 and as the same may have been
otherwise amended, the "Loan Agreement"), and that certain Accounts
Collateral Security Agreement between them, dated October 11, 1994 (as
amended by the First Amendment to Loan and Security Agreement dated October
11, 1994 and as the same may have been otherwise amended, the "Accounts
Agreement"), as set forth herein. (This Amendment, the Loan Agreement, the
Accounts Agreement, any prior written amendments to said agreements signed by
Coast and the Borrower, and all other written documents and agreements
between Coast and the Borrower are referred to herein collectively as the
"Loan Documents". Capitalized terms used but not defined in this Amendment,
shall have the meanings set forth in the Loan Agreement.)
1. EXTENSION OF MATURITY DATE. The Maturity Date "October 31, 1995"
set forth in Section 8 of the Loan Agreement is amended to read as follows:
"October 31, 1997".
2. ADVANCE RATE.
2.1 MAINTENANCE RECEIVABLES. Section B of the First Amendment to
Loan and Security Agreement dated October 11, 1994, which states that after
payment in full of the payments referred to therein, the Maintenance Accounts
(as defined therein) will no longer constitute Accounts that qualify for
Loans, is hereby deleted.
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2.2 MAINTENANCE RECEIVABLES SUBLIMIT. Section 2.1 of the Accounts
Agreement is amended by replacing the first sentence thereof, which presently
reads "Provided no Event of Default has occurred, CoastFed agrees to make
Loans to Borrower, repayable on demand, in amounts up to 75% of the Net
Amount of each Account, which CoastFed in its sole and absolute discretion
deems eligible for borrowing." with the following:
"Provided no Event of Default has occurred, CoastFed agrees to make
Loans to Borrower, repayable on demand, in amounts up to 75% of the
Net Amount of each Account, which CoastFed in its sole and absolute
discretion deems eligible for borrowing; provided, however, that:
"(a) Commencing September 1, 1995, in no event may the outstanding
Loans with respect to Accounts representing 'Maintenance Receivables'
exceed the 'Maintenance Receivables Sublimit'. As used herein,
'Maintenance Receivables' means receivables arising from invoices
presented to Borrower's customers for future services that Borrower may
render, on account of future maintenance, to such customers. As used
herein, 'Maintenance Receivables Sublimit' shall mean the sum of
$4,000,000, subject to adjustment as follows: The 'Maintenance
Receivables Sublimit' shall be adjusted as of the end of each of
Borrower's fiscal quarters, commencing with the fiscal quarter ending
September 30, 1995, to an amount equal to the Borrower's total revenues
during the four fiscal quarters ended on such date, divided by
$71,265,000, and multiplying the resulting number by $4,000,000;
provided that
(i) the Maintenance Receivables Sublimit shall not be less
than $4,000,000 and
(ii) the Maintenance Receivables Sublimit shall not be
greater than:
$5,000,000 during the period from November 1, 1995 to
October 31, 1996; or
$6,000,000 during the period from November 1, 1996 to
October 31, 1997.
The Borrower shall provide to CoastFed the information necessary to
compute the adjustment to the Maintenance Receivables Sublimit at the
time Borrower submits to CoastFed its quarterly and annual financial
statements under Section 3.8 of the Loan Agreement, and the adjustment
to the Maintenance Receivables Sublimit shall go into effect on
CoastFed's completion of its review of said financial statements (which
shall be completed by CoastFed within five business days after receipt
of the same).
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"(b) CoastFed shall have the right to reserve from Loans which
would otherwise be available to the Borrower in each month an amount
equal to the maximum amount payable to Argonaut Information Systems of
California, Inc. ("Argonaut") during the following month, under the
Intercreditor Agreement among Borrower, CoastFed and Argonaut dated as of
June 30, 1995.
"All Loans pursuant hereto are subject to the credit limit set forth in
the last sentence of Section 1.1 of the Loan Agreement."
2.3 REMOVAL OF TIME LIMIT ON PERMITTED OVERADVANCE. The asterisk
portion of Section 2.1 of the Accounts Agreement is hereby amended by
deleting the phrase "provided that the Overadvance shall remain outstanding
during not more than 15 calendar days in each calendar month".
3. CHANGE IN INTEREST RATE. Section 1.2 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"1.2 INTEREST. Unless specifically provided to the contrary in any
Collateral Agreement, all Loans shall bear interest at a rate equal to
the "Prime Rate" (as hereinafter defined), plus 3% per annum,
calculated on the basis of a 360-day year for the actual number of days
elapsed, subject to the following adjustments:
"(a) The interest rate shall be decreased by 0.50% for each
$500,000 of net income realized by Borrower in any fiscal quarter,
commencing with the fiscal quarter ending September 30, 1995, but
in no event shall the interest rate be decreased as a result of this
subsection (a) by more than 1% in any fiscal quarter (on a
noncumulative basis).
"(b) The interest rate shall be increased by 0.50% for each
$500,000 of net loss incurred by Borrower in any fiscal quarter,
commencing with the fiscal quarter ending September 30, 1995, but
in no event shall the interest rate be increased as a result of this
subsection (b) by more than 1% in any fiscal quarter (on a
noncumulative basis), and in no event shall the interest rate be
increased as a result of this subsection (b) to more than the Prime
Rate plus 3% per annum.
"(c) The interest rate shall be decreased by 0.50% for each
$3,000,000 of cash equity capital received by Borrower in any
fiscal quarter, commencing with the fiscal quarter ending September
30, 1995, but in no event shall the interest rate be decreased as a
result of this subsection (c) by more than 1% in any fiscal quarter
(on a noncumulative basis).
"(d) In no event shall the total of the interest rate decreases
under subsections (a) and (c) above, combined, be more than 1.5% in
any
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fiscal year. In no event shall the total of the interest rate
increases under subsection (b) above, combined, be more than 1.5%
in any fiscal year.
"(e) Notwithstanding the above provisions, in no event shall the
interest rate be reduced to below a rate equal to the Prime Rate
plus 1% per annum.
"(f) Notwithstanding the above provisions, in the event
Borrower's shareholder equity is, at any fiscal quarter end, less
than $12,064,000, then the interest rate shall be increased to a
rate equal to the Prime Rate plus 3% per annum.
"(g) Interest rate adjustments under subsections (a) and (b)
and (f) shall go into effect on the first day of the month
following the date the applicable financial statements have been
delivered to CoastFed. Interest rate adjustments under subsection
(c) shall go into effect on the first day of the month following
the month in which the cash equity capital was received by Borrower.
"The interest rate applicable to all Loans shall be adjusted monthly as
of the first day of each month, and the interest to be charged for that
month shall be based on the highest "Prime Rate" in effect during said
month, but in no event shall the rate of interest charged on any Loans
in any month be less than 8% per annum. "Prime Rate" is defined as the
actual "Reference Rate" or the substitute therefor of the Bank of
America NT & SA ("B of A") whether or not that rate is the lowest
interest rate charged by B of A. If the Prime Rate, as defined, is
unavailable, "Prime Rate" shall mean the highest of the prime rates
published in the Wall Street Journal on the first business day of the
month, as the base rate on corporate loans at large U.S. money center
commercial banks."
4. REDUCTION IN TERMINATION FEE. Section 8 of the Loan Agreement is
hereby amended by replacing the sentence which presently reads "If termination
occurs under subparagraph (b), (c) or (d) above, Borrower shall pay to
CoastFed a termination fee in an amount equal to $10,000 for each month (or
portion thereof) from the effective date of termination to the date which
would have been the next renewal date had this Loan Agreement not been
terminated." with the following:
"If termination occurs under subparagraph (b), (c) or (d) above, Borrower
shall pay to CoastFed a termination fee in an amount equal to $10,000
for each month (or portion thereof) from the effective date of
termination to the date which would have been the next renewal date
had this Loan Agreement not been terminated, provided that if the total
$200,000 loan fee under the Extension Agreement and Amendment to Loan
Documents between Borrower and CoastFed dated as of August 18, 1995 has
been paid in full by Borrower, then the following limitations on the
termination
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fee shall apply; if termination is effective during the month of
November 1996, the termination fee shall be a total of $20,000, if
termination is effective during the month of December 1996, the
termination fee shall be a total of $10,000, and if termination is
effective after December 31, 1996, there shall be no termination fee.
5. TERM NOTE INCREASE. The original principal amount of the Secured
Promissory Note dated October 11, 1994 ("Note"), made by the Borrower to
Coast, which is presently $450,000, is hereby increased to $500,000, and the
number "$450,000" wherever it appears in the Note is hereby amended to read
"$500,000". All other terms and conditions of the Note remain the same,
including without limitation the monthly principal payment of $12,500 per
month. Coast shall, substantially concurrently, advance to the Borrower an
additional amount sufficient to bring the unpaid principal balance of the
Note to $500,000.
6. FEE. In consideration for Coast entering into this Extension and
Amendment, the Borrower shall pay Coast a fee in the amount of $200,000,
which shall be non-refundable and in addition to all interest and other fees
payable to Coast under the Loan Documents. Said fee shall be payable $100,000
on 11/1/95 and $100,000 on the earlier of November 1, 1996 or termination of
the Loan Agreement. Coast is authorized to charge said fee to Borrower's loan
account.
7. REPRESENTATIONS TRUE. Borrower represents and warrants to Coast
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
8. GENERAL PROVISIONS. This Amendment, the Loan Agreement, and the
other Loan Documents set forth in full all of the representations and
agreements of the parties with respect to the subject matter hereof and
supersede all prior discussions, representations, agreements and
understandings between the parties with respect to the subject hereof. Except
as herein expressly amended, all of the terms and provisions of the Loan
Agreement and the other Loan Documents shall continue in full force and
effect and the same are hereby ratified and confirmed.
Borrower: Coast:
XXXX SYSTEMS, INC. COASTFED BUSINESS CREDIT
CORPORATION
By /s/ Selby F. Little III By /s/ [Illegible]
----------------------------- -----------------------------
President or Vice President Title Senior Vice President
-----------------------------
By /s/ Xxxx Xxxxxxxx
-----------------------------
Secretary or Ass't Secretary
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CONSENT
The undersigned, guarantor, acknowledges that its consent to the
foregoing Agreement is not required, but the undersigned nevertheless does
hereby consent to the foregoing Agreement and to the documents and agreements
referred to therein and to all future modifications and amendments thereto,
and any termination thereof, and to any and all other present and future
documents and agreements between or among the foregoing parties. Nothing
herein shall in any way limit any of the terms or provisions of the Guarantee
of the undersigned, which is hereby ratified and affirmed.
XXXX SYSTEMS (UK) LIMITED
By /s/ Selby F. Little III
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Title Director
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42,931-3
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