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EXHIBIT 4.15
FIRST AMENDMENT TO REPAYMENT AGREEMENT
AND FOURTH AMENDMENT TO LOAN AGREEMENT
This First Amendment to Repayment Agreement and Fourth Amendment to
Loan Agreement ("First Amendment") is made as of the 1st day of December, 1998,
by and among KeyBank National Association, f/k/a Society Bank, Michigan, a
national banking association located at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000
("KeyBank" or "Bank"), Nematron Corporation, a Michigan corporation located at
0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx 00000 ("Borrower") and NemaSoft, Inc.,
a Michigan corporation located at 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx
00000 ("Guarantor"; Borrower and Guarantor together referred to as "Interested
Parties").
RECITALS
WHEREAS, Bank and the Interested Parties executed a certain Repayment
Agreement dated as of September 28, 1998 ("Repayment Agreement"); and
WHEREAS, capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Repayment Agreement; and
WHEREAS, the Line of Credit terminated, and the Amended Notes matured
on October 31, 1998, and have not been repaid; and
WHEREAS, the Interested Parties have asked that Bank reactivate
Borrower's Line of Credit on the terms described herein, to enable Borrower to
obtain subordinated debt or an equity infusion of not less than One Million
Dollars ($1,000,000.00), to which request Bank has acquiesced.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the agreements
and covenants herein, the parties agree as follows:
1. Recitals. The Recitals are incorporated herein by reference.
2. Restructure and Amendment of Loan Documents. Certain of the
Loan Documents shall be amended as follows:
i) Section 1 of the Repayment Agreement is amended by
deleting the definitions of "Amended and Restated Line Note" and
"Amended and Restated Term Note" and inserting the following in lieu
thereof:
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"Second Line Note" shall mean the Second Amended and
Restated Revolving Credit Note referred to in subsection 3(a)
of this Repayment Agreement and attached hereto as Exhibit B.
"Second Term Note" shall mean the Second Amended and
Restated Term Note referred to in subsection 3(c) of this
Repayment Agreement and attached hereto as Exhibit C.
ii) The Repayment Agreement is amended by deeming all
references to the Amended and Restated Line Note and the Amended and
Restated Term Note to be references to the Second Line Note and the
Second Term Note, respectively.
iii) The prefatory paragraph, and subsections (a), (b), (c) and
(e) of Section 3 of the Repayment Agreement are deleted, and the
following inserted in lieu thereof:
"3. Restructure and Amendment of Loan Documents. The
Obligations evidenced by the Original Notes, as same
may have been amended and/or amended and restated
from time to time, shall be restructured pursuant to
the terms of the Second Amended and Restated
Revolving Credit Note and the Second Amended and
Restated Term Note. The Amended Notes do not
constitute repayment or cancellation of all or any
portion of the Indebtedness evidenced by the Original
Notes. The Original Notes, and any amendment and/or
restatement thereof, shall remain in full force and
effect only for the purpose of evidencing any amounts
due in connection with the Original Notes and any of
the Loan Documents which for any reason in fact or in
law, do not become Obligations of Borrower under the
Amended Notes, as intended by the parties hereto. In
connection with the restructure of the Obligations,
the following amendments are hereby made to the Loan
Agreement:
a) Subsection 1.1.1 of the Loan Agreement is
deleted in its entirety, and the following inserted
in lieu thereof:
`1.1.1 Upon the request of Borrower,
made at any time or from time to time
between September 28, 1998 and October 31,
1998, inclusive, and between December 1,
1998 and January 30, 1999, inclusive, and so
long as no Event of Default under this
Agreement has occurred or is continuing,
Bank shall make cash advances to Borrower in
an amount up to:
(a) eighty percent (80%) of the
aggregate outstanding amount of
Eligible Domestic Accounts;
PLUS
(b) at Borrower's option, eighty percent
(80%) of the aggregate outstanding
amount of Eligible Foreign Accounts;
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PLUS
(c) thirty five percent (35%) of the
aggregate sum (not to exceed
$2,500,000) of (i) Eligible Raw
Inventory (valued at the lower of
Borrower's and NemaSoft's cost, or
market) and (ii) Eligible Finished
Inventory (valued at Borrower's and
NemaSoft's cost of production):
PLUS
(d) the Permitted Overadvance;
LESS
(e) the aggregate outstanding amount of
any issued and outstanding Letters
of Credit;
PROVIDED, HOWEVER, that in no event shall
the aggregate amount of outstanding cash
advances made pursuant to this Section 1.1.1
("BORROWING FORMULA") be, at any time,
greater than the sum of Five Million and
00/100 Dollars ($5,000,000.00). The amount
outstanding under the Line of Credit shall
be evidenced by a Second Amended and
Restated Revolving Credit Note dated as of
December 1, 1998 ("Note"). The terms of the
Note, and all renewals, modifications and
amendments thereto, are hereby incorporated
herein specifically by reference. Subject to
the foregoing limitations Borrower may
borrow, repay and reborrow under the Line of
Credit. During the period between October
31, 1998 and December 1, 1998, the Line of
Credit shall be suspended, and all funds
received by Bank through the mechanism
established by the Cash Collateral Agreement
executed in connection with the Repayment
Agreement may be, at Bank's option, applied
to reduce the indebtedness evidenced by the
Note.'
b) The Loan Agreement is amended by renumbering
existing subsection 1.2.8 as subsection
1.2.9, and adding new subsections 1.2.8 and
1.2.10 as follows:
`1.2.8 "Permitted Overadvance" means
an amount of up to (i) Seven Hundred
Fifty-Three Thousand Three Hundred
Forty-Five Dollars ($753,345) during the
period between September 28, 1998 and
October 31, 1998, (ii) Zero Dollars ($0)
during the period October 31, 1998 through
November 30, 1998, and (iii) One Million One
Hundred Thousand Dollars ($1,100,000) during
the period between December 1, 1998 and
January 31, 1999.
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1.2.10 "Repayment Agreement" means an
agreement, so called, among Borrower,
NemaSoft and Bank dated September 28, 1998,
as amended from time to time.'
c) Subsection 1.7 of the Loan Agreement is
deleted and the following inserted in lieu
thereof:
`1.7 Term Loan. Bank agrees to lend
Borrower the sum of One Million One Hundred
Seventy Thousand and 00/100 Dollars
($1,170,000.00) ("Term Loan"). The Term Loan
shall be evidenced by a Second Amended and
Restated Term Note dated as of December 1,
1998 ("Term Note") maturing on January 31,
1999, and containing other terms as set
forth therein.'
e) Article VI of the Loan Agreement is amended
by adding new subsections 6.9, 6.10, 6.11,
6.12 and 6.13 as follows:
`6.9 An Event of Default shall occur
under the Repayment Agreement, as
amended from time to time.
6.10 Borrower shall fail to obtain an
infusion of cash in the form of
convertible debt subordinated (in
form and substance acceptable to
Bank) to the repayment of all
indebtedness of Borrower to Bank, or
equity, of not less than One Million
Dollars ($1,000,000) between
November 26, 1998 and December
1, 1998.
6.11 Borrower shall fail to enter into an
arrangement for financing a
percentage of certain of Borrower's
purchase orders with a third party
on terms acceptable to Bank, and in
connection therewith, Borrower shall
have executed such amendments to the
Loan Documents as Bank shall
request, all by no later than
December 15, 1998.
6.12 Subsection 6.4 hereof
notwithstanding, Borrower shall fail
to comply in all respects with
subsections 3.5.4 and/or 3.5.10
hereof.
6.13 There shall occur a material adverse
change in Borrower's or NemaSoft's
financial condition or prospects,
from that disclosed in writing to
Bank prior to December 1, 1998, all
as determined by Bank in the
exercise of its reasonable business
judgment.'"
iv) Section 3 of the Repayment Agreement is
further amended by adding new subsections (f), (g) and (h) as follows:
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"f) Subsection 3.5.4 of the Loan Agreement is
deleted, and the following inserted in lieu
thereof:
` 3.5.4 within fifteen (15) days
after the last day of each month between
September 30, 1996 and November 30, 1998,
and on a daily basis thereafter, a Borrowing
Base Certificate, the form of which is
acceptable in the sole and absolute
discretion of the Bank, signed by an officer
of Borrower and NemaSoft certifying to its
correctness;'
g) Subsection 3.5.10 of the Loan Agreement is
renumbered as 3.5.11, and a new subsection
3.5.10 is inserted as follows:
`3.5.10 by the second business day of each week, a
rolling twelve week projection, acceptable
to Bank in the exercise of its reasonable
business judgment, of anticipated cash
receipts and disbursements, and showing that
Borrower will at all times be in compliance
with the Borrowing Formula, as well as an
actual statement of cash receipts and
disbursements for the immediately preceding
week.'
h) The Loan Agreement is amended by deleting
the monetary reference "$6,000,000" (whether
such reference is expressed numerically or
is written out) wherever it occurs, and
inserting in lieu thereof a monetary
reference of "$5,000,000"."
v) The Repayment Agreement is hereby
amended by deleting subsection 5(b) in its entirety and inserting the
following in lieu thereof:
"b) Amendment to Mortgage. On or before December
1, 1998, Borrower shall execute and deliver
to Bank a Second Amendment to Mortgage in
the form of Exhibit D attached hereto."
vi) The Repayment Agreement is hereby
amended by adding a new subsection 5(i) as follows:
"i) Subordination Agreements. On or before 12:00
p.m. on December 2, 1998, J. Xxxx Xxx, Xxxxx
X. Xxxxxxx, Globus Growth Group and Xxxxxxx
X. Xxxxxxxx & Co. and shall execute and
deliver to Bank Subordination Agreements in
the form of Exhibits I-1 through I-4
attached hereto."
vii) The Repayment Agreement is amended
by deleting the prefatory paragraph of Section 17, and inserting in
lieu thereof the following:
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Notices. Any notice, demand or communication required
or permitted to be given by any provision of
this Repayment Agreement will be in writing
and will be deemed to have been given when
delivered personally or by facsimile,
receipt confirmed, to the party designated
to receive such notice, or on the date
following the day sent by overnight courier,
or on the third (3rd) business day after the
same is sent by certified mail, postage and
charges prepaid, directed to the following
addresses or to such other or additional
addresses as any party might designate by
written notice to the other party; provided,
however, that in the event that Bank
determines to cease making advances under
Borrower's line of credit, Bank shall
undertake to promptly so notify Borrower by
both facsimile and overnight courier, though
Bank's determination to cease providing
advances shall be effective when made, and
shall not be dependent upon Borrower's
receipt of notice.
viii) The Repayment Agreement is amended by deleting
Exhibits B, C and D, and replacing them with Exhibits B, C and D
in the form of Annexes 1 through 3, respectively, attached
hereto.
ix) The Repayment Agreement is amended by adding new
Exhibits I-1 through I-4 in the form of Annex 4-A through 4-D
attached hereto.
3. Effective Date. The provisions of this First Amendment shall be
effective on December 1, 1998 ("Effective Date"), provided that (i) a fully
executed copy of this First Amendment, the Second Amended and Restated Revolving
Credit Note, the Second Amended and Restated Term Note, the Second Amendment to
Mortgage, and the four (4) Subordination Agreements are delivered to Bank on or
before 12:00 p.m. on December 2, 1998, and (ii) that all accrued interest on the
Amended and Restated Term Note dated September 28, 1998, is paid on December 1,
1998.
4. Loan Documents. Any reference in any of the Loan Documents to the
Repayment Agreement shall, from and after the Effective Date, be deemed to refer
to the Repayment Agreement as modified by this First Amendment. Any and all
references to the Amended Notes in the Repayment Agreement, the Loan Documents
and this First Amendment shall hereafter refer to the Amended Notes in the forms
of the new Exhibits C and D, copies of which are attached hereto as Annexes 1
and 2.
5. Conflicting Terms; No Other Modification. To the extent that any
of the terms and conditions of this First Amendment are inconsistent with the
terms of the Repayment Agreement, the conditions of this First Amendment shall
prevail. Otherwise, unless expressly modified or superseded herein, all of the
terms and conditions of the Repayment Agreement are ratified and confirmed and
shall remain unaffected and in full force and effect.
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6. Course of Dealing. The parties hereto recognize that Borrower has
not fully complied with the terms of the Loan Documents. No course of dealing
between the parties is established by virtue of Borrower's non-compliance
therewith and Bank's failure exercise its legal rights responsive thereto.
Interested Parties understand that the Loan Documents will be strictly enforced
going forward, and that Bank's failure to insist on strict performance to date
shall not be interposed as a defense to Bank's exercise of its legal rights, nor
shall it constitute a waiver of any thereof.
7. Release. Effective as of the date of the delivery of a fully
executed copy or original of this First Amendment, the Interested Parties
jointly and severally agree to release and hereby do release and discharge,
Bank, its shareholders, agents, servants, employees, directors, officers,
attorneys, affiliates, subsidiaries, successors and assigns and all persons,
firms, corporations, and organizations acting on their behalf ("Bank Parties")
of and from all damages, losses, claims, demands, liabilities, obligations,
actions and causes of action whatsoever that each Interested Party has or claims
to have against any Bank Party as of the date hereof and whether known or
unknown at the time of this release, and of every nature and extent whatsoever
on account of or in any way, directly or indirectly, touching, concerning,
arising out of or founded upon the Loan Documents, or the relationship
respecting any agreement between any Interested Party and any Bank Party.
8. Third-Party Beneficiaries/Entire Agreement. All the conditions
and obligations hereunder are imposed solely and exclusively for the benefit of
the parties hereto and their successors and assigns. No other person or entity
shall obtain any interest herein or require satisfaction of such conditions in
accordance with the terms hereof or be entitled to assume that any of the
parties hereto will enforce such conditions and obligations and no other person
shall, under any circumstances, be a beneficiary of such conditions. This First
Amendment embodies the entire agreement and understanding between the parties
hereto with respect to the subject matter of this First Amendment and supersedes
all prior and contemporaneous negotiations, agreements and understandings
relative to such subject matter.
9. Binding Effect; Governing Law. This First Amendment shall bind
and inure to the benefit of the parties hereto and their respective successors
and assigns and shall be governed by and construed in accordance with the laws
of the State of Michigan without regard to principles of conflict of laws.
10. Counterparts. This First Amendment may be executed in any number
of counterparts, each of which, when so executed and delivered, shall be an
original and all of which counterparts together shall constitute one and the
same fully executed instrument.
11. Consent and Reaffirmation of Guaranty. Guarantor, being guarantor
of the Obligations of Borrower pursuant to a Continuing Guaranty dated October
6, 1995, joins in and consents to the within First Amendment and agrees that the
provisions of such guaranty are ratified and confirmed and that the guaranty
remains in full force and effect.
12. Corporate Authority. Borrower and Guarantor hereby represent and
warrant to Bank that (a) Borrower and Guarantor have the legal power and
authority to execute and deliver this First Amendment; (b) the officials
executing this First Amendment have been duly authorized to execute and deliver
the same and bind Borrower and Guarantor with respect to the
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provisions hereof; (c) the execution and delivery hereof by Borrower and
Guarantor and the performance and observance by Borrower and Guarantor of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or Guarantor or any law applicable to Borrower or Guarantor or
result in a breach of any provision of or constitute a default under any other
agreement, instrument or document binding upon or enforceable against Borrower
or Guarantor; (d) this First Amendment constitutes a valid and binding
obligation of Borrower and Guarantor in every respect, enforceable in accordance
with its terms.
IN WITNESS WHEREOF, Interested Parties and Bank have caused this First
Amendment to be executed by their duly authorized officers as of the date first
written above.
Address: NEMATRON CORPORATION
0000 Xxxxxxxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
Xxx Xxxxx, Xxxxxxxx 00000 ----------------------------
Its:President
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Address: NEMASOFT, INC., Guarantor
0000 Xxxxxxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxx
Xxx Xxxxx, Xxxxxxxx 00000 ----------------------------
ITS: SECRETARY
----------------------------
Address: KEYBANK NATIONAL ASSOCIATION
000 X. Xxxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
X.X. Xxx 0 ----------------------------
Xxxxx Xxxx, Xxxxxxx 00000 Its: Senior vice President
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EXHIBITS
EXHIBIT B SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
EXHIBIT C SECOND AMENDED AND RESTATED TERM NOTE
EXHIBIT D SECOND AMENDMENT TO MORTGAGE
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