SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Agreement")
is entered into as of December 22, 1997, by and among SILICON VALLEY BANK, a
California-chartered bank ("Bank") with its principal place of business at 0000
Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office
located at One Central Plaza, 00000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx,
Xxxxxxxx 00000 ("Bank") and SKY ALLAND RESEARCH, INC., a Maryland corporation
("Sky Alland") and THE DATA GROUP II, INC., a Maryland corporation (each a
"Borrower" and collectively, the "Borrowers").
RECITALS.
A. Borrowers, MARCOM HOLDINGS, INC., a Maryland corporation ("Marcom")
and Bank have entered into that certain Loan and Security Agreement dated
February 14, 1997 (the "Original Loan Agreement"), pursuant to which Bank has
agreed to establish a line of credit in the amount of $2,250,000 and a committed
equipment line in favor of Borrowers in the maximum principal amount of
$750,000. The Original Loan Agreement was amended by that certain First
Amendment to Loan and Security Agreement dated September 1, 1997 (the "First
Amendment") by and among the Borrowers and the Bank (the Original Loan Agreement
as amended by the First Amendment is hereinafter called the "Loan Agreement").
Marcom was merged into Sky Alland on December 18, 1997, with Sky Alland being
the surviving corporation.
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B. Borrowers have failed to comply with the requirements of Sections
6.9 and 6.11 of the Loan Agreement and have requested that Bank forbear with
respect to Section 6.9 and temporarily waive the requirements of Section 6.11
and Bank has agreed on the condition, among others, that this Agreement be
executed and delivered by Borrowers to Bank.
C. Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings set forth in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrowers and Bank do hereby agree as follows:
1. RECITALS. The parties hereto acknowledge and agree that the above
Recitals are true and correct in all material respects and that the same are
incorporated herein and made a part hereof by reference.
2. ACKNOWLEDGMENTS OF BORROWERS. The Borrowers hereby acknowledge and
agree that the Borrowers are currently in default under the Loan Documents, for
among other reasons, the Borrowers' failure to comply with Section 6.9 and
Section 6.11 of the Loan Agreement. In addition, the Borrowers anticipate that
they will not be in compliance with the Debt-Net Worth requirement of Section
6.9 for the periods ending November 30, 1997, December 31, 1997 and January 31,
1998.
3. DEBT-NET WORTH RATIO. The Bank hereby waives the Borrowers'
compliance with the requirements of Section 6.9 for the periods ending August
31, 1997, September 30, 1997 and October 31, 1997. In addition, subject to the
terms and conditions of this Agreement, the
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Bank agrees to forbear from exercising any rights or remedies under the Loan
Agreement by virtue of the Borrowers' failure to comply with the requirements of
Section 6.9 for the periods ending November 30, 1997, December 31, 1997 and
January 31, 1998.
4. PROFITABILITY. The Bank hereby waives the Borrowers' compliance with
the requirements of Section 6.11 for the period ending September 30, 1997.
Notwithstanding anything in this Agreement to the contrary, commencing with the
fiscal quarter ending December 31, 1997 and at all times thereafter, Borrowers
shall be profitable on a consolidated basis.
5. CONDITIONS PRECEDENT. This Agreement shall become effective on the
date Bank receives the following documents, each of which shall be satisfactory
in form and substance to Bank:
(a) Proof that Borrowers have paid all costs and expenses to
Bank in connection with this Agreement, including but not limited to Bank's
reasonable attorneys fees; and
(b) Such other information, instruments, opinions, documents,
certificates and reports as Bank may deem necessary.
6. REPRESENTATIONS. Borrowers hereby confirm that:
(a) The covenants set forth in Section 5 of the Loan Agreement
as hereby amended, are true and correct as of the date hereof;
(b) The Borrowers have no defenses, rights of setoff, claims,
counterclaims, or causes of action of any kind or nature whatsoever against the
Bank or any agent, attorney, legal representative, predecessor-in-interest, or
affiliate of the Bank, directly or indirectly in any
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manner connected with, pursuant to, or by virtue of the Obligations or any of
the Loan Documents, and TO THE EXTENT ANY SUCH DEFENSES, RIGHTS OF SETOFF,
CLAIMS, COUNTERCLAIMS, OR CAUSES OF ACTION EXIST, SUCH DEFENSES, RIGHTS, CLAIMS,
COUNTERCLAIMS, AND CAUSES OF ACTION ARE HEREBY FOREVER WAIVED, DISCHARGED AND
RELEASED; and
(c) Other than the defaults described in Paragraph 2 above, no
defaults exist under the Loan Documents.
7. NO WAIVER OF RIGHTS OR REMEDIES. The parties hereto acknowledge and
agree that the Bank (i) shall retain all rights and remedies it may have with
respect to the Obligations under the Loan Documents and the Borrowers' failure
to honor or otherwise comply with said Obligations (collectively, "Default
Rights"), and (ii) shall have the right to exercise and enforce such Default
Rights upon termination of this Agreement. The parties further agree that the
exercise of any Default Rights by the Bank upon termination of this Agreement
shall not be affected by reason of this Agreement, and the Borrowers shall not
assert as a defense thereto the passage of time, estoppel, laches or any statute
of limitations to the extent that the exercise of any Default Rights was
precluded by this Agreement.
8. COUNTERPARTS. This Agreement may be executed in any number of
duplicate originals or counterparts, each of which duplicate original or
counterpart shall be deemed to be an original and all taken together shall
constitute one and the same instrument.
9. LOAN DOCUMENTS; GOVERNING LAW; ETC. This Agreement is one of the
Loan Documents defined in the Loan Agreement and shall be governed and construed
in accordance
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with the laws of the State of Maryland. The headings and captions in this
Agreement are for the convenience of the parties only and are not a part of this
Agreement.
10. ACKNOWLEDGMENTS. Borrowers hereby confirm to Bank the
enforceability and validity of each of the Loan Documents. In addition,
Borrowers hereby agree to the execution and delivery of this Agreement and the
terms and provisions, covenants or agreements contained in this Agreement shall
not in any manner release, impair, lessen, modify, waive or otherwise limit the
joint and several liability and obligations of Borrowers under the terms of any
of the Loan Documents, except as otherwise specifically set forth in this
Agreement. Borrowers issue, ratify and confirm the representations, warranties
and covenants contained in the Loan Documents.
11. MODIFICATIONS. This Agreement may not be supplemented, changed,
waived, discharged, terminated, modified or amended, except by written
instrument executed by the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
WITNESS OR ATTEST: SKY ALLAND RESEARCH, INC.
/s/ Xxxxxxx X. By: /s/ Xxxxxx X. Xxxxx (SEAL)
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Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
WITNESS OR ATTEST: THE DATA GROUP II, INC.
/s/ Xxxxxxx X. By: /s/ Xxxxxx X. Xxxxx (SEAL)
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Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
SILICON VALLEY BANK
By: /s/ Xxxx XxXxxxxx
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Xxxx XxXxxxxx
Assistant Vice President
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