RBC Centura FIFTH MODIFICATION AGREEMENT (KBI)
Exhibit
99.1
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Customer
No.
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Loan
No.
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RBC
Centura
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FIFTH
MODIFICATION AGREEMENT
(KBI)
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This
FIFTH
MODIFICATION AGREEMENT
(“Agreement”)
is
made, entered and effective as of the 31st day of May, 2006 by and between
ETRIALS,
INC.,
a
Delaware corporation, formerly known as etrials Worldwide, Inc. (“Borrower”),
ETRIALS
WORLDWIDE, INC., a
Delaware corporation, formerly known as CEA Acquisition Corporation
(“Worldwide
US”),
and
ETRIALS
WORLDWIDE LIMITED,
a
corporation organized under the laws of the United Kingdom (“Worldwide
UK”,
and
together with Worldwide US, collectively, “Guarantors”),
and
RBC
CENTURA BANK,
a North
Carolina banking corporation (“Bank”).
RECITALS
A. Borrower
made and delivered a Commercial Promissory Note dated February 1, 2005 in
the
original principal amount of up to One Million Dollars ($1,000,000.00) (as
such
Note has or may have been amended, modified, replaced or restated, the
“Revolving
Note”),
and a
Commercial Promissory Note dated February 1, 2005 in the original principal
amount of up to Three Hundred Thousand Dollars ($300,000.00) (as such Note
has
or may have been amended, modified, replaced or restated, the “Equipment
Note”,
and
together with the Revolving Note, collectively, the “Notes”),
each
in favor of Bank, its successors or assigns. Borrower’s payment and performance
under the Notes is guaranteed by Worldwide UK pursuant to the terms of that
certain Unconditional Guaranty Agreement dated February 1, 2005 (as such
Unconditional Guaranty Agreement has or may have been amended, modified,
replaced or restated, the “UK Guaranty”)
and
Worldwide US pursuant to the terms of that certain Unconditional Guaranty
Agreement dated February 14, 2006 (as such Unconditional Guaranty Agreement
has
or may have been amended, modified, replaced or restated, the “US Guaranty”)
and
the Notes are secured by, among other things, a Loan and Security Agreement
dated February 1, 2005 by and between Borrower and Bank (as such Loan and
Security Agreement has or may have been amended, modified, replaced or restated,
the “Loan
Agreement”),
and
by such other financing statements, agreements, documents, pledges and/or
instruments between Borrower, Guarantors and Bank, or from Borrower and/or
Guarantors to Bank and relating to the payment and performance of the Notes
(collectively, including the Notes, UK Guaranty, US Guaranty, Loan Agreement,
First Modification Agreement, Second Modification Agreement, Third Modification
Agreement and Fourth Modification Agreement, as the same may be amended,
modified, replaced or restated from time to time, the “Loan
Documents”).
The
loans made pursuant to the Loan Documents are collectively referred to herein
as
the “Loan”.
B. The
Loan
was modified pursuant to a Modification Agreement dated as of June 6, 2005
by
and between Borrower, Worldwide UK and Bank (the “First
Modification Agreement”),
a
Second Modification Agreement dated as of January 13, 2006 by and between
Borrower, Worldwide UK and Bank (the “Second
Modification Agreement”),
a
Third Modification Agreement dated as of March 17, 2006 by and between Borrower,
Worldwide UK, Worldwide US and Bank (the “Third
Modification Agreement”)
and a
Fourth Modification Agreement dated as of April 21, 2006 by and between
Borrower, Worldwide UK, Worldwide US and Bank (the “Fourth
Modification Agreement”).
C. Borrower
has requested that Bank agree to further modify the Loan as set forth herein,
and Bank has agreed to do so at the present time provided (i) Bank is not
required to, nor will by virtue of such modification be deemed to, waive
any
known or unknown default under the Loan, and (ii) Borrower timely complies
with
the terms and conditions of this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
promises set forth in this Agreement and other good and valuable consideration,
the receipt and independent sufficiency of which are hereby acknowledged,
the
parties agree as follows:
1. Incorporation
of Recitals and Exhibits.
The
foregoing
Recitals are hereby incorporated in this Agreement.
2. Modification.
The
Loan Documents shall be, and the same are, modified as follows:
(a) Modification
to Revolving Note; Conforming Changes to Loan Documents.
Borrower has executed simultaneously herewith an Amended and Restated Commercial
Promissory Note, incorporated herein, which amends and restates in its entirety
the Revolving Note, and which, among other things, increases the original
principal amount available thereunder and extends the maturity date thereof.
In
furtherance thereof:
(i) The
term
“Committed Revolving Line”, as defined in Exhibit
A
to the
Loan Agreement, is hereby modified to be and mean Credit Extensions of up
to Two
Million Dollars ($2,000,000.00).
(ii) The
term
“Revolving Maturity Date”, as defined in Exhibit
A
to the
Loan Agreement, is hereby modified to be and mean May 31, 2007.
(b) Modification
to Reporting Requirements.
(i) Monthly
Financials.
Section
6.4(a)(i) of the Loan Agreement is hereby deleted in its entirety and a new
Section 6.4(a)(i) is inserted in lieu thereof, reading as follows:
(i) As
soon as
available, but in any event within forty-five (45) days after the end of
each
calendar quarter, Borrower shall deliver to Bank an unaudited consolidated
balance sheet and a statement of income and retained earnings prepared in
accordance with GAAP (not including footnotes required by GAAP), consistently
applied, covering Borrower’s consolidated operations during such period, in a
form acceptable to Bank and certified by a Responsible Officer.
(ii) Borrowing
Base and Aged Listings Reports.
Section
6.4(b) of the Loan Agreement is hereby deleted in its entirety and a new
Section
6.4(b) is inserted in lieu thereof, reading as follows:
(b) Within
thirty
(30) days after the last day of each month, Borrower shall deliver to Bank
a
Borrowing Base Certificate dated and signed by a Responsible Officer in
substantially the form of Exhibit
D
hereto,
together with aged listings of accounts receivable and accounts
payable.
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(iii) Compliance
Certificate.
Section
6.4(c) of the Loan Agreement is hereby deleted in its entirety and a new
Section
6.4(c) is inserted in lieu thereof, reading as follows:
(c) Within
forty-five (45) days after the last day of each calendar quarter, Borrower
shall
deliver to Bank with the quarterly financial statements a Compliance Certificate
signed by a Responsible Officer in substantially the form of Exhibit
E
hereto.
(c) Modification
to Financial Covenants.
Section
6.8 of the Loan Agreement is hereby deleted in its entirety and a new Section
6.8 is inserted in lieu thereof, reading as follows:
6.8 Financial
Covenants.
Borrower shall maintain, as of the last day of each calendar quarter unless
stated otherwise, and Borrower shall fully and timely comply with, each and
every one of the financial maintenance covenants set forth in this Section
and
others that may be contained in this Agreement and the other Loan
Documents.
(a) Current
Ratio.
Borrower shall maintain a ratio of (i) Current Assets to (ii) Current
Liabilities of at least 2.00 to 1.00.
(b) Net
Worth.
Borrower shall maintain a Net Worth of at least $20,000,000.00.
(d) Modification
of Borrowing Base.
The
definition of “Borrowing Base” as contained in Exhibit
A
of the
Loan Agreement is hereby deleted in its entirety and a new definition is
inserted in lieu thereof, reading as follows:
“Borrowing
Base” means an amount equal to 80% of Eligible Accounts, as determined by Bank
with reference to the most recent Borrowing Base Report delivered by
Borrower.
(e) Modification
of Limitation on Capital Expenditures.
Section
7.3 of the Loan Agreement is hereby deleted in its entirety and a new Section
7.3 is inserted in lieu thereof, reading as follows:
7.3 Mergers
or Acquisitions; New Subsidiary; Capital Expenditures.
Borrower shall not merge or consolidate, or permit any of its Subsidiaries
to
merge or consolidate, with or into any other business organization, or acquire,
or permit any of its Subsidiaries to acquire, all or substantially all of
the
capital stock or property of another person (other than acquisitions in exchange
for shares of stock in Borrower). Borrower shall not create or cause to be
created or to come into existence any new subsidiary after the Closing Date,
without the prior written consent of the Bank. Borrower shall not enter into
any
transactions on account of the purchase or other acquisition of capital assets
either directly or indirectly which in the aggregate equal or exceed Five
Hundred Thousand Dollars ($500,000.00) annually, provided that acquisitions
of
Intellectual Property and/or other assets in exchange for shares of stock
in
Borrower shall not constitute a purchase or acquisition of capital assets
for
the purposes of this Section.
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(f) Additional
Provisions.
(i) Unused
Line Fee.
The
following new Section 2.5(c) is hereby added to the Loan Agreement, reading
as
follows:
(c) Revolving
Facility Unused Line Fee.
Borrower shall pay to Bank an unused line fee equal to twenty-five hundredths
of
one percent (0.25%) per annum of the average difference, during the calendar
quarter just ended (or a portion thereof, as applicable) between (i) the
Committed Revolving Line and (ii) the unpaid principal balance of the Revolving
Facility, which fee shall be paid in arrears on the first Business Day of
each
calendar quarter beginning September 1, 2006, until the Revolving Maturity
Date,
and on the first Business Day following the Revolving Maturity
Date.
(ii) Control
Agreements.
The
following new Section 6.12 is hereby added to the Loan Agreement, reading
as
follows:
6.12 Control
Agreements.
Borrower hereby grants to Bank a perfected security interest in all accounts
maintained by Borrower with RBC Xxxx Xxxxxxxx and Xxxxxx Brothers. Borrower
shall, by or before July 1, 2006, execute and deliver, and shall cause the
above
institutions to execute and deliver, to Bank such blocked account or control
agreements as Bank and its counsel deem reasonably necessary or appropriate
to
grant and maintain a perfected first priority security interest in such
accounts.
(g) New
Equipment Loan.
A new
Section 2.1(c) is hereby added to the Loan Agreement, reading as
follows:
Second
Equipment Facility.
Subject
to the terms of the Second Equipment Note, Borrower may request and Bank
agrees
to make Equipment Advances to Borrower for use by Borrower in purchasing
Equipment and Software Products for use in its business - and for no other
purpose. The aggregate amount of Equipment Advances under the Second Equipment
Facility shall not exceed the Second Equipment Line; and, Equipment Advances,
once repaid, may not be reborrowed. Each Equipment Advance shall be equal
to or
less than one hundred percent (100%) of the Invoice Amount of the Equipment
or
Software Products being purchased; provided,
however,
that
financing for taxes, shipping, warranty charges, freight discounts and
installation expense shall be limited to One Hundred Twenty-Five Thousand
Dollars ($125,000.00) in the aggregate. No Equipment Advances shall be made
for
any Equipment or Software Products purchased more than ninety (90) days prior
to
the date of Bank’s receipt of a request for an Equipment Advance with respect to
such purchase. Notwithstanding the foregoing, Borrower may seek reimbursement
in
the first Equipment Advance under the Second Equipment Line for any Equipment
or
Software Products purchased on or after December 1, 2005.
(h) New
Definitions.
The
following definitions are hereby added to Exhibit
A
of the
Loan Agreement, reading as follows:
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“Net
Worth” means Shareholders’ Equity plus Subordinated Debt.
“Second
Equipment Facility” means the facility under which Borrower may request Bank to
issue Equipment Advances, as specified in Section 2.1(c).
“Second
Equipment Note” means the Promissory Note executed by Borrower in favor of Bank
evidencing the Second Equipment Facility.
“Second
Equipment Line” means Credit Extensions of up to Five Hundred Thousand Dollars
($500,000.00)
(i) Definition
of Credit Facilities; Modification.
The
term “Credit Facilities”, as defined in Exhibit
A
of the
Loan Agreement and referred to in Section 2.1 of the Loan Agreement, is hereby
modified to include the Second Equipment Facility in addition to the Revolving
Facility and the Equipment Facility.
3. Non-Waiver
of Events of Default; Continued Priority.
Borrower and Guarantors do hereby reaffirm their obligations under the Loan
Documents. Neither this Agreement, nor Bank’s execution of this or any other
documents or instruments, nor Bank’s prior or subsequent conduct, communications
or agreements relating in any way to the Loan, the payment and performance
of
the Loan or the parties’ conduct, shall be deemed to be a waiver of or consent
to any now or hereafter existing defaults under any of the Loan Documents.
Notwithstanding any contrary provision contained in this Agreement, in any
other
writing or agreement from or between any of the parties hereto, or demonstrated
by any prior action or inaction of any of the parties hereto, Borrower and
Guarantors hereby consent to and agree that Bank’s agreement herein set forth
shall be specifically construed, and shall not be, nor be deemed to be, a
waiver, release or approval of any default or condition that with the passage
of
time, giving of notice, or both, would become a default under the Loan
Documents, nor consent to any facts or circumstances known or unknown to
Bank,
nor establish a course of conduct or dealing between the parties. Nothing
set forth herein shall affect the priority or extent of the lien of any of
the
Loan Documents, nor, except as expressly set forth herein, release or change
the
liability of any party who may now be or after the date of this Agreement
become
liable, primarily or secondarily, under the Loan Documents. Borrower and
Guarantors hereby expressly waive, to the full extent it may lawfully do
so, any
rights which it may now or at any time hereafter have by virtue of North
Carolina General Statutes Sections 26-7, et.
seq.
and
45-45-1, et.
seq.
It is
expressly understood and agreed that: (i) except as expressly modified hereby,
the Notes and other Loan Documents shall remain in full force and this Agreement
shall have no effect on the priority or validity of any liens set forth in
the
Loan Documents nor impair any security now held for the indebtedness evidenced
by the Notes, nor waive, annul, vary or affect any provision, condition,
covenant or agreement contained in any of the Loan Documents, except as may
be
specifically modified herein, nor affect or impair any of Bank’s rights, powers
or remedies under the Loan Documents; and (ii) except as stated herein, the
Bank
expressly reserves all rights as to recourse on the Notes. Bank’s consent to the
matters herein contained is not intended to be and shall not be construed
as a
consent to any subsequent modifications or amendments to the Loan Documents.
4. Conditions
Precedent to Modification.
Bank’s
agreement to make the foregoing modifications and amendments is subject in
all
respects to the occurrence and/or satisfaction of each of the following
conditions:
(a) Payment
of Cost, Fees, etc.
Borrower’s payment of: (i) all accrued but unpaid interest at and as of the date
of this Agreement; (ii) a commitment fee of Thirteen Thousand Seven Hundred
Fifty Dollars ($13,750.00); and (iii) all costs and expenses incurred or
suffered by Bank in connection with this Agreement, including, without
limitation, reasonable attorneys’ fees.
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(b) Amended
and Restated Revolving Note.
Bank’s
receipt of a promissory note executed by Borrower evidencing the Revolving
Facility (as modified) in the form attached hereto as Attachment
1.
(c) Second
Equipment Note.
Bank’s
receipt of a promissory note executed by Borrower evidencing the Second
Equipment Line in the form attached hereto as Attachment
2.
5. Representations
and Warranties.
Borrower and Guarantors represent and warrant to Bank as of the date of this
Agreement, that: (a) it has no claim or counterclaim against Bank under,
right
of setoff against or defense to the enforcement of any of the Notes or the
other
Loan Documents. (b) Borrower and Guarantors have the power, authority and
the
legal right to make, deliver and perform this Agreement and the Loan Documents,
and have taken any and all action to authorize this Agreement, to authorize
the
performance of the Loan Documents and to pledge or mortgage their property
as
contemplated by this Agreement and the Loan Documents. This Agreement has
been
duly executed and delivered by Borrower and Guarantors and constitutes the
legal, valid and binding obligation of Borrower and Guarantors, enforceable
in
accordance with its terms and not subject to rescission, invalidation,
nullification or other avoidance. (c) There is not now pending against Borrower
or Guarantors any petition for relief, whether voluntary or otherwise, any
assignment for the benefit of creditors, any petition seeking reorganization
or
arrangements under the federal bankruptcy laws of the United States or the
laws
of any state thereof, nor has any other action been brought against any of
Borrower or Guarantors under the aforesaid bankruptcy laws or other laws.
6. Representations
and Warranties - Anti-Terrorism.
Borrower and Guarantors each represent, warrant and covenant to Bank as follows:
(i) it (a) is not and shall not become a person whose property or interest
in
property is blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg.
49079 (2001)), (b) does not engage in and shall not engage in any dealings
or
transactions prohibited by Section 2 of such executive order, and is not
and
shall not otherwise become associated with any such person in any manner
violative of Section 2, (c) is not and shall not become a person on the list
of
Specially Designated Nationals and Blocked Persons, and (d) is not and shall
not
become subject to the limitations or prohibitions under any other U.S.
Department of Treasury’s Office of Foreign Assets Control regulation or
executive order; (ii) it shall remain in compliance, in all material respects,
with (a) the Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) the Uniting And Strengthening America
By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism
(USA
Patriot Act of 2001); and (iii) it has not and shall not use all or any part
of
the extension of credit evidenced by the Notes, directly or indirectly, for
any
payments to any governmental official or employee, political party, official
of
a political party, candidate for political office, or anyone else acting
in an
official capacity, in order to obtain, retain or direct business or obtain
any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended.
7. Additional
Documents.
Borrower and Guarantors agree to deliver documents to Bank and take action
Bank
requests to evidence the agreements herein contained, including Borrower’s and
Guarantors’ continuing and unconditional obligation to repay the indebtedness
evidenced by the Notes, to secure the Notes, and to perform all obligations
under the Loan Documents.
8. Joinder
by Guarantors.
Guarantors, by their execution of this Agreement, hereby agree to the terms,
covenants, conditions and provisions contained in this Agreement. The aforesaid
agreements of Guarantors shall be in addition to and not in lieu of the
covenants, agreement and obligations of such Guarantors set forth in the
US
Guaranty, the UK Guaranty and the other Loan Documents.
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9. Usury.
Bank
does not intend to and shall not reserve, charge and collect interest, fees
and
charges under the Loan Documents, as herein modified, in excess of the maximum
rates and amounts permitted by applicable law. If any interest, fees and
charges
are reserved, charged and collected in excess of the maximum rates and amounts,
it shall be construed as a mutual mistake, appropriate adjustments shall
be made
by Bank and to the extent paid, the excess shall be returned to the person
making such a payment.
10. Waiver
of Jury Trial.
Borrower and Guarantors, to the extent permitted by law, each waive any right
to
a trial by jury in any action arising from or related to this Agreement and
waive any right to a trial by jury in any action or proceeding arising from
or
related to the Loan Documents, as herein modified.
11. Miscellaneous.
(a)
This Agreement shall be construed according to and governed by the laws of
the
State of North Carolina without regard to its conflicts of law principles.
(b)
If any provision of this Agreement is adjudicated to be invalid, illegal
or
unenforceable, in whole or in part, it will be deemed omitted to that extent
and
all other provisions of this Agreement will remain in full force and effect.
(c)
No change or modification of this Agreement, or waiver of any term or provision
hereof, shall be valid unless the same is in writing and signed by all parties
hereto. (d) The captions contained in this Agreement are for convenience
of
reference only and in no event define, describe or limit the scope or intent
of
this Agreement or any of the provisions or terms hereof. (e) This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective heirs, legal representatives, successors and assigns, provided,
however,
that
neither Borrower nor Guarantors shall assign this Agreement, any of the Loan
Documents or any of its rights, interests, duties or obligations hereunder
or
thereunder in whole or in part without the prior written consent of Bank
and
that any such assignment (whether voluntary or by operation of law) without
said
consent shall be void. (f) This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the
same
document. All such counterparts shall be construed together and shall constitute
one instrument, but in making proof hereof it shall only be necessary to
produce
one such counterpart. (g) This Agreement and the other Loan Documents, as
amended, represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements. There are no unwritten agreements between the parties. (h) It
is the
intention of the parties that this Agreement and the Loan Documents be
interpreted in a consistent manner; provided, however, in the event of any
irreconcilable conflict in the provisions of this Agreement and the provisions
of any of the other Loan Documents, the provisions of this Agreement shall
control.
(Signatures
Contained On Next Page)
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IN
WITNESS WHEREOF, this Agreement is executed under seal as of the date first
written above.
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WITNESS:
/s/
Xxxx X. Xxxxx
Print
Name: Xxxx X. Xxxxx
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BORROWER:
ETRIALS,
INC.,
A
Delaware Corporation
(formerly
known as etrials Worldwide, Inc.)
By: /s/
Xxxxx X. Xxxxx, Xx.
Print
Name: Xxxxx X. Xxxxx, Xx.
Title:
Treasurer & Chief Financial Officer
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/s/
Xxxx X. Xxxxx
Print
Name: Xxxx X. Xxxxx
/s/
Xxxx X. Xxxxx
Print
Name: Xxxx X. Xxxxx
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GUARANTORS:
ETRIALS
WORLDWIDE LIMITED,
A
Corporation organized under the laws of the UK
By:
/s/
Xxxxx X. Xxxxx, Xx.
Print
Name: Xxxxx X. Xxxxx, Xx.
Title:
Director & Chief Financial Officer
ETRIALS
WORLDWIDE, INC.,
A
Delaware Corporation
(formerly
known as CEA Acquisition Corporation)
By: /s/
Xxxxx X. Xxxxx, Xx.
Print
Name: Xxxxx X. Xxxxx, Xx.
Title:
Chief Financial Officer
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BANK:
RBC
CENTURA BANK,
A
North Carolina Banking Corporation
By:
/s/
Xxxxxx X. Bear
Print
Name: Xxxxxx X. Bear
Title:
Senior Account Manager - KBI
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8
Attachment
1
Form
of Amended and Restated Revolving Note
Attached.
9
Attachment
2
Form
of Promissory Note evidencing Second Equipment Line
Attached.
10
