EXHIBIT 10.4
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT (the "Amendment") made as of June 19, 1997 by and
among SAFEGUARD SCIENTIFICS, INC. ("SSI" or a "Borrower"), SAFEGUARD SCIENTIFICS
(DELAWARE) INC. ("SSD" or a "Borrower"), PNC BANK, NATIONAL ASSOCIATION and the
other lending institutions that are parties hereto (collectively, the "Lenders"
and singly, a "Lender"), PNC BANK, NATIONAL ASSOCIATION, as issuer of letters of
credit under the Credit Agreement (as herein defined) (in such capacity,
"Issuer") and PNC BANK, NATIONAL ASSOCIATION, as administrative and collateral
agent for the Issuer and Lenders under the Credit Agreement (in such capacity,
"Agent").
B A C K G R O U N D
The parties, other than the Additional Lenders (as herein defined), are
parties to that certain Credit Agreement dated as of September 13, 1996 (as
amended to date, the "Credit Agreement"), and desire to amend the Credit
Agreement in the manner hereinafter set forth. All capitalized terms used in
this Amendment but which are not defined herein shall have the respective
meanings given thereto in the Credit Agreement. Except to the extent otherwise
set forth herein to the contrary, all of the terms hereof are effective as of
the date hereof.
NOW THEREFORE, the parties, INTENDING TO BE LEGALLY BOUND, agree as
follows:
1. Additional Lenders. Each of Wilmington Trust of Pennsylvania and
First Union National Bank (each an "Additional Lender") hereby joins in the
Credit Agreement for the purpose of becoming a "Lender" thereunder.
Accordingly:
a. Each Additional Lender shall constitute a "Lender" for all
purposes of the Credit Agreement, and the term "Lenders", as defined in the
Credit Agreement, shall include, collectively with PNC Bank, National
Association, CoreStates Bank, N.A., Mellon Bank, N.A. and First Bank National
Association, each Additional Lender.
b. Schedule "A" to the Credit Agreement, setting forth each Lender's
"Pro Rata Percentage", is hereby replaced by Schedule "A" attached hereto.
2. Revolving Loan Commitment. The definition of "Revolving Loan
Commitment" set forth in Section 1.1 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
" "Revolving Loan Commitment" - $150,000,000, as the same may be reduced
pursuant to Section 2.2 hereof."
3. Commitment Termination Date. The definition of "Commitment
Termination Date" set forth in Section 1.1 of the Credit Agreement is hereby
amended to mean May 31, 2001.
4. Collateral Coverage. The definitions of "Collateral Coverage Base"
and "Collateral Coverage Securities" set forth in Section 1.1 of the Credit
Agreement are hereby amended and restated in their entirety as follows:
"Collateral Coverage Base" - a dollar amount equal to the following
percentages of the value of the Collateral Coverage Securities, in no event,
however, to exceed the lesser of (i) as to Collateral Coverage Securities which
constitute "margin stock" pursuant to Regulation U of the Board of Governors of
the Federal Reserve System, 12 C.F.R. 221 et seq. ("Regulation U"), 50% (or the
then maximum "loan value" for margin stock pursuant to Regulation U) of the
value of such Collateral Coverage Securities, and (ii) the following dollar
maximum specified for each type of Collateral Coverage Securities, provided that
the following dollar maximum for such Collateral Coverage Securities will be
inapplicable at such time as Borrowers own (directly or indirectly) less than
15% of the applicable issuing corporation's securities which have ordinary
voting power for the election of directors (with an "N/A" designation in the
"Maximum $" column below constituting Borrowers' representation to Lenders that
Borrowers presently own less than 15% of the applicable issuing corporation's
securities which have ordinary voting power for the election of directors):
Securities % Maximum $
-------------- ----------- ---------------
CompuCom 33.33% $75 Million
Cambridge 50% $75 Million
Sybase 50% N/A
Coherent 50% $75 Million
Tangram 25% $10 Million
USDATA 33.33% $25 Million
National Media 33.33% N/A
ISCG 33.33% N/A
Xxxxxxx 25% $25 Million
Brandywine 25% N/A
Diamond 25% N/A
New Public 25% $25 Million
Companies
"Collateral Coverage Securities" - Pledged Securities consisting of common
stock issued by one or more of the following corporations but only as long as
(A) such securities are traded on a recognized national securities exchange, on
the NASDAQ national or small-cap market or on the over-the-counter market and
(B) such
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securities are not Restricted Securities;
(i) CompuCom Systems, Inc. ("CompuCom")
(ii) Cambridge Technology Partners, Inc.
(iii) Sybase, Inc. ("Sybase")
(iv) Integrated Systems Consulting Group, Inc. ("ISCG")
(v) Coherent Communications Systems Corporation
(vi) Tangram Enterprise Solutions, Inc. ("Tangram")
(vii) USDATA Corporation ("USDATA")
(viii) National Media Corporation ("National Media")
(ix) Xxxxxxx Computer Associates, Inc. ("Xxxxxxx")
(x) Brandywine Real Estate Trust ("Brandywine")
(xi) Diamond Technology Partners Incorporated
("Diamond")
(xii) New Public Companies
5. Interest. Each reference in Section 2.8(c)(i)(B) of the Credit
Agreement to "1.75 percentage points" is hereby amended by replacing each such
reference with "1.25 percentage points", effective as of the date hereof for
outstanding principal presently accruing interest at the LIBOR Rate as well as
for LIBOR Rate elections hereafter made.
6. Covenant Amendments.
a. Tangible Net Worth. Effective as of March 31, 1997, Section 6.8
of the Credit Agreement is amended and restated in its entirety as follows:
"The Borrowers shall have and maintain Tangible Net Worth of
not less than $190,000,000 as of March 31, 1997, increasing
by 75% of after tax earnings for all periods after March 31,
1997 (determined on a cumulative basis), tested as set forth
in Section 1.3 hereof."
b. Guaranties. Effective as of January 1, 1997, Section 6.5(c) of
the Credit Agreement is hereby amended by replacing the reference made therein
to "Thirty Five Million ($35,000,000)" with "Fifty Million Dollars
($50,000,000)". Each Lender hereby waives noncompliance by Borrowers with the
replaced covenant during the period commencing January 1, 1997 through the date
hereof.
c. Investments and Loans. Section 6.6(a)(i) of the Credit Agreement
is hereby amended and restated in its entirety as follows:
"(a) (i) The aggregate of all Investments may not
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exceed $200,000,000 in the aggregate for Borrowers'
fiscal years 1997 and 1998 and may not exceed $50,000,000
for each fiscal year thereafter."
7. Consent of Lenders. Section 8.15(b) of the Credit Agreement is hereby
amended by adding at the end thereof the following additional clause:
"or (ix) knowingly waive or fail to enforce any Event of
Default under Section 7.6(a) hereof, or fail to terminate
all obligations of Lenders to make any further loans or
other credit extensions under the Revolving Loan at any
time after the occurrence of any Event of Default under
Section 7.6(a) hereof or of any Default which with the
lapse of time referred to in Section 7.6(a) hereof would
constitute an Event of Default under Section 7.6(a)."
8. Conditions. Concurrently herewith and as a condition to the
effectiveness hereof, the Borrowers shall deliver the following (all documents
to be in form and substance acceptable to the Lenders):
a. Borrowers will execute and deliver to each Lender, including each
Additional Lender, a promissory note in the face amount of such Lender's Pro
Rata Percentage of the Revolving Loan Commitment, each of which promissory notes
shall constitute one of the "Notes" for all purposes of the Credit Agreement;
and
b. The Borrowers shall deliver to Agent a certified copy of a
Resolution of such Borrower's Board of Directors authorizing the execution and
delivery of this Amendment and the other documents to be executed pursuant
hereto.
9. Reaffirmation. Except to the extent specifically modified hereby, the
terms and conditions of the Credit Agreement shall remain unchanged and in full
force and effect, and Borrowers hereby ratify and reaffirm all of their
Obligations to each Lender (including the Additional Lenders) and to the Agent
and the Issuer, and agree that the same are owing without setoff, counterclaim
or other defense of any nature whatsoever.
10. Counterparts. This Amendment may be executed in counterparts, each
which shall be deemed to be an original but all of which together shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
PNC BANK, NATIONAL ASSOCIATION, as Agent,
Lender and Issuer
By: /s/ Xxxxxx X. Xxxxx, V.P.
-------------------------------------
CORESTATES BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxxx, V.P.
-------------------------------------
Address: Great Valley Corporate Center
00 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, VP
Facsimile No: 000-000-0000
FIRST BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------------
Address: 0xx Xxxx Xxxxx
000 0xx Xxxxxx Xxxxx, 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxxxxxx Xxxxxx, CBO
Facsimile No: 000-000-0000
MELLON BANK, N.A.
By: /s/ Xxxxxx Xxxxxxx, Xx., First V.P.
-------------------------------------
Address: Xxxxxx Xxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, 0xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Facsimile No: (000) 000-0000
[Signatures continued on next page]
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[Signatures continued from previous page]
WILMINGTON TRUST OF PENNSYLVANIA
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Address: 0000 XxXxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
With copy to:
Banking Legal
Wilmington Trust Co.
0000 X. Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxxxxx X. Cherrny
-------------------------------------
Address: 000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Facsimile No.: (000) 000-0000
SAFEGUARD SCIENTIFICS, INC., a
Pennsylvania corporation
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Attest: /s/ Xxxx X. Xxxxxx
---------------------------------
SAFEGUARD SCIENTIFICS (DELAWARE) INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Attest: /s/ Xxxx X. Xxxxxx
---------------------------------
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Schedule "A"
Lender Pro Rata Percentage
------ -------------------
PNC Bank, National Association 55/150
CoreStates Bank, N.A. 25/150
Mellon Bank, N.A. 25/150
First Bank National Association 15/150
Wilmington Trust of Pennsylvania 15/150
First Union National Bank 15/150
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