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EXHIBIT 10.3
SECOND MODIFICATION TO AMENDED AND RESTATED BUSINESS LOAN AND
SECURITY AGREEMENT
THIS SECOND MODIFICATION TO AMENDED AND RESTATED BUSINESS LOAN AND
SECURITY AGREEMENT (this "Modification") is made as of the 24th day of June,
1998, by and among (i) NATIONSBANK, N.A., a national banking association
("NationsBank"), having an office at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx,
Xxxxxxxx 00000; (ii) FLEET CAPITAL CORPORATION, a Rhode Island corporation
("Fleet"), having an office at 000 Xxxxxxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000; (iii) each other person or entity hereafter becoming a
"Lender" pursuant to the hereinafter defined Loan Agreement; (iv) NATIONSBANK,
N.A., a national banking association (acting in its capacity as Agent for the
Lenders), having an office at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx
00000; (v) BTG, INC., a Virginia corporation; BTG TECHNOLOGY SYSTEMS, INC., a
Virginia corporation formerly known as BDS, Inc.; DELTA RESEARCH CORPORATION, a
Virginia corporation; CONCEPT AUTOMATION, INC. OF AMERICA, a Virginia
corporation; and NATIONS, INC., a New Jersey corporation (collectively, the
"Borrowers"); all having principal offices at 0000 Xxxxxxx Xxxxx Xxxx, 0X,
Xxxxxxx, Xxxxxxxx 00000-0000; and (vi) each other person or entity hereafter
executing a "Joinder Agreement" pursuant to the Loan Agreement. Capitalized
terms used but not defined herein shall have the meanings attributed to such
terms in the Loan Agreement.
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms and conditions of that certain Amended
and Restated Business Loan and Security Agreement dated October 31, 1997 and as
modified by that certain First Modification to Amended and Restated Business
Loan and Security Agreement dated as of February 24, 1998 (as the same may be
hereafter amended or modified, the "Loan Agreement"), by and among the Agent,
Borrowers, Lenders and Crestar Bank (acting in its capacity as a Lender), the
Borrowers obtained a loan (the "Loan") from the Lenders in the original
aggregate maximum principal amount of One Hundred Ten Million and No/100 Dollars
($110,000,000.00), which aggregate maximum principal amount has been reduced to
Eighty-five Million Dollars ($85,000,000), but continues to be evidenced by two
(2) separate Replacement Revolving Promissory Notes (as defined in Exhibit A),
in the aggregate original maximum principal amount of Ninety-five Million
Dollars ($95,000,000), and which Loan is secured by, among other things, certain
collateral more fully described in Article III, Section 1 of the Loan Agreement;
and
WHEREAS, the Borrowers have requested that the Agent and the Lenders
consent to the modification of certain definitions and financial covenants
provisions set forth in the Loan Agreement; and
WHEREAS, subject to the terms of this Modification, the Agent and the
Lenders have agreed to such modifications, as hereinafter provided.
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NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. The foregoing recitals are hereby incorporated herein by this
reference and made a part hereof, with the same force and effect as if fully set
forth herein.
2. The definition of "Average Funded Debt" set forth in the "Certain
Definitions" section of the Loan Agreement is hereby deleted in its entirety.
The following definition of "Funded Debt" is hereby added to the "Certain
Definitions" section:
""FUNDED DEBT" shall have the meaning assigned to such term
in Section 15(c) of Article VI of this Agreement."
3. The definitions of "Consolidated EBITDA" and "Consolidated Fixed
Charges" set forth in the "Certain Definitions" section of the Loan Agreement
are hereby deleted in their entirety and the following substituted in lieu
thereof:
""CONSOLIDATED EBITDA" shall have the meaning assigned to
such term in Section 15(c) of Article VI of this Agreement.
"CONSOLIDATED FIXED CHARGES" shall mean, as of the date of
the particular determination, interest expenses, plus
current maturities of long term debt, plus current
maturities of capitalized leases, plus cash payments for
taxes for the fiscal quarter of the Borrowers most recently
ended, calculated on a consolidated basis in accordance with
GAAP."
4. Section 15(a) of Article VI of the Loan Agreement is hereby
deleted in its entirety and the following substituted in lieu thereof:
"(a) Tangible Net Worth. The Borrowers, on a consolidated
basis, will maintain at all times during the following
periods, Tangible Net Worth of not less than the following
amounts:
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Periods Required Tangible Net Worth
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From June 30, 1998 through $21,000,000.00
September 29, 1998
From September 30, 1998 $21,500,000.00
through December 30, 1998
From December 31, 1998 $23,750,000.00
through March 30, 1999
From March 31, 1999 through $25,750,000.00
the Maturity Date
For purposes of this Agreement, "Tangible Net Worth" shall
mean all capital stock, paid in capital and retained
earnings, less all treasury stock, amounts due from
officers, directors, stockholders and members of their
immediate families, amounts due from affiliates (to the
extent such amounts are part of the Borrowers' consolidated
net worth), investments in non-marketable securities, notes
receivable of affiliates (to the extent that such amounts
are part of the Borrowers' consolidated net worth),
leasehold improvements, goodwill, non-competition
agreements, capitalized organization and development costs,
capitalized expenses, loan costs, patents, trademarks,
copyrights, franchises, licenses and other intangible
assets."
5. Section 15(b) Article VI is hereby deleted in its entirety and
the following substituted in lieu thereof:
"(b) Current Ratio. The Borrowers, on a consolidated basis,
will at all times during the following periods, maintain a
Current Ratio of at least the following:
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Period Ratio
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From June 30, 1998 through 1.15 to 1.00
September 29, 1998
From September 30, 1998 1.25 to 1.00
through December 30, 1998
From December 31, 1998 1.25 to 1.00
through March 30, 1999
From March 31, 1999 through 1.50 to 1.00
the Maturity Date
For the purposes of this Agreement, the Current Ratio shall
be calculated by dividing current assets by current
liabilities."
6. Section 15(c) of Article VI is hereby deleted in its entirety and
the following substituted in lieu thereof:
"(c) Funded Debt to Consolidated EBITDA Ratio. The Borrowers
will maintain on a consolidated basis, a ratio of Funded
Debt to Consolidated EBITDA as follows:
For the Fiscal Quarter Ended Not Greater than:
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June 30, 1998 14.10 to 1.00
September 30, 1998 6.50 to 1.00
December 31, 1998 4.25 to 1.00
March 31, 1999 and each fiscal 2.75 to 1.00
quarter end thereafter
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For purposes hereof, "Funded Debt" shall mean the
outstanding principal balance of borrowed funds pursuant to
this Agreement (including, without limitation, the face
amount of outstanding Letters of Credit), plus all other
interest bearing obligations of the Borrowers as of the date
of determination.
For the purposes hereof, "Consolidated EBITDA" shall mean as
of the date of the particular determination, earnings before
interest, taxes, depreciation and amortization calculated on
a consolidated basis in accordance with GAAP, excluding all
non-operating results (including, but not limited to, the
results of Government Technology Services, Inc. as included
in the Borrowers' consolidated income statement and the
profit or loss from the sale of Cisco Systems, Inc. stock.)
Consolidated EBITDA shall be calculated for the periods
described below according to the corresponding method
described below:
For Fiscal Quarter Ended Calculation
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June 30, 0000 XXXXXX for the fiscal quarter
ending June 30, 1998 multiplied
by four (4)
September 30, 1998 the sum of EBITDA for the
fiscal quarters ending June 30,
1998 and September 30, 1998
multiplied by two (2)
December 31, 1998 the sum of EBITDA for the
fiscal quarters ending June 30,
1998, September 30, 1998 and
December 31, 1998 multiplied
by four-thirds (4/3)
March 31, 1999 and for EBITDA on a rolling four (4)
each fiscal quarter end quarter basis"
thereafter
7. Section 15(d) of Article VI of the Loan Agreement is hereby
deleted in its entirety and the following substituted in lieu thereof:
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"(d) Maintenance of Fixed Charge Coverage. The Borrowers
shall not permit the ratio of (i) Consolidated EBITDA to
(ii) Consolidated Fixed Charges, measured as of each date
set forth below to be less than the ratio set forth below:
For Fiscal Quarter Ended Ratio
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June 30, 1998 0.4 to 1.0
September 30, 1998 1.6 to 1.0
December 31, 1998 1.4 to 1.0
March 31, 1999 1.6 to 1.0"
and the last day of each fiscal
quarter thereafter
8. Section 10 of Article VII of the Loan Agreement is hereby deleted
in its entirety and the following substituted in lieu thereof:
"10. CAPITAL EXPENDITURES. On a consolidated basis make
any cash investment or cash capital expenditure, including
but not limited to, expenditures for leasehold improvements
or the acquisition of the assets of any other firm, person,
company, corporation or enterprise, during any of the
Borrowers' fiscal year in excess of One Million Four Hundred
Thousand Dollars ($1,400,000.00);"
9. Section 11 of Article VII of the Loan Agreement is hereby
deleted in its entirety and the following substituted in lieu thereof:
"11. CONTINUED PROFITABILITY. Incur, on a consolidated
basis, a net loss for any fiscal quarter ending on or after
September 30, 1998; and/or"
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10. Line (c) iii of EXHIBIT 6 to the Loan Agreement is hereby deleted
in its entirety and the following is substituted in lieu thereof: ---------
"iii. Funded Debt to EBITDA: _____________ to 1.00."
11. Notwithstanding anything contained in the Loan Agreement, the
Libor Interest Election option shall not be available until and unless Borrowers
receive written notification from the Agent.
12. Each Borrower hereby acknowledges, agrees, represents and
warrants that, as of the date hereof (i) there are no set-offs or defenses
against the Notes, the Loan Agreement or any other Loan Document; (ii) except as
specifically amended hereby, all of the terms and conditions of the Notes, the
Loan Agreement and the other Loan Documents shall remain unmodified and in full
force and effect; (iii) the Notes, the Loan Agreement (as modified hereby) and
the other Loan Documents are hereby expressly approved, ratified and confirmed;
and (v) the execution, delivery and performance by each Borrower of this
Modification (a) is within its corporate powers, (b) has been duly authorized by
all necessary corporate action, and (c) does not require the consent or approval
of any other person or entity.
13. Concurrent with the execution of this Modification, the Borrowers
shall pay all of the Agent's costs and expenses associated with this
Modification and the transactions referenced herein or contemplated hereby,
including, without limitation, the Agent's reasonable legal fees and expenses.
14. This Modification shall be governed by the laws of the
Commonwealth of Virginia and shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
15. This Modification may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall be
deemed one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have signed, sealed and delivered
this Modification on the day and year first above written.
BORROWERS:
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[Corporate Seal] BTG, INC.,
ATTEST: a Virginia corporation
By: /s/ XXXXXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President and CEO
[Corporate Seal] BTG TECHNOLOGY SYSTEMS, INC.,
ATTEST: a Virginia corporation
By: /s/ XXXXXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President
[Corporate Seal] DELTA RESEARCH CORPORATION,
ATTEST: a Virginia corporation
By: /s/ XXXXXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: CEO
[Corporate Seal] CONCEPT AUTOMATION, INC. OF
ATTEST: AMERICA, a Virginia corporation
By: /s/ XXXXXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: CEO
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Corporate Seal] NATIONS, INC.,
ATTEST: a New Jersey corporation
By: /s/ XXXXXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President and CEO
AGENT:
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NATIONSBANK, N.A., a
national banking association, acting in its
capacity as Agent
By: /s/ XXXXXXX X. XXXXX
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Name: Xxxxxxx X. Xxxxx
Title: Vice President
LENDER(S):
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NATIONSBANK, N.A., a
national banking association
By: /s/ XXXXXXX X. XXXXX
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Name: Xxxxxxx X. Xxxxx
Title: Vice President
FLEET CAPITAL CORPORATION, a
Rhode Island corporation
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
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