FIFTH AMENDMENT AND MODIFICATION TO
LOAN AND SECURITY AGREEMENT
by and between
MELLON BANK, N.A., as Agent
AND
RCM TECHNOLOGIES, INC. and ALL OF ITS SUBSIDIARIES, as Borrower
Dated: As of September _18, 2000
Prepared by: Xxxxx X. Xxxxxxxxxx, Esquire
Blank Rome Xxxxxxx & XxXxxxxx, LLP
a Pennsylvania LLP
000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
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FIFTH AMENDMENT AND MODIFICATION TO
LOAN AND SECURITY AGREEMENT
This FIFTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT
("Amendment") is dated as of September _18_, 2000, by and between RCM
TECHNOLOGIES, INC. ("RCM"), and ALL OF ITS SUBSIDIARIES (collectively referred
to as "Borrower") and MELLON BANK, N.A., a national banking association, in its
capacity as agent ("Agent") and MELLON BANK, N.A. ("Mellon"), MELLON BANK
CANADA, SUNTRUST BANK ATLANTA, FIRST UNION NATIONAL BANK (as successor by
assignment from ALLFIRST BANK (f/k/a THE FIRST NATIONAL BANK OF MARYLAND)), BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION and FLEET NATIONAL BANK, in
their capacity as lenders (collectively referred to as "Lender").
BACKGROUND
A. Pursuant to the terms of a certain Loan and Security Agreement dated August
19, 1998, between Borrower and Lender as same has been amended ("Loan
Agreement"), Lender made available to Borrower a revolving line of credit in the
aggregate amount of $75,000,000.00 (the "Revolving Credit").
B. The Revolving Credit is evidenced by certain Revolving Credit Notes dated
August 19, 1998, from Borrower to Lender in the aggregate amount of
$75,000,000.00 ("Revolving Credit Notes").
C. Borrower has requested that Lender modify certain covenants contained in the
Loan Agreement, and Lender has agreed to modify those certain covenants subject
to the terms and conditions of this Amendment.
All capitalized terms used herein without further definition shall have the
respective meaning set forth in the Loan Agreement and all other Loan Documents.
NOW, THEREFORE, with the foregoing Background incorporated by reference and
intending to be legally bound hereby, the parties agree as follows:
1. Loan Agreement. The following amendments and modifications shall be made to
the Loan Agreement and shall be effective upon execution hereof:
a. Certain definitions contained in Section 1.1 of the Loan Agreement shall be
amended as follows:
(1) Applicable LIBOR Rate Margin shall be deleted in its entirety and replaced
as follows:
Applicable LIBOR Rate Margin - the borrower shall pay interest on the amounts
borrowed under the Revolving Credit in accordance with the ratio of Borrowers
Total Funded Debt to EBITDA as set forth in the following matrix:
Total Funded Debt to EBITDA Revolving Credit
LIBOR Rate plus:
>=2.5x - 3.25x LIBOR plus 200 bp
>=2.0x - 2.50x LIBOR plus 162.5 bp
>=1.5x - 2.0x LIBOR plus 150 bp
< 1.5x LIBOR plus 125 bp
(2) EBITDA - The sum of Net Income before interest, taxes, depreciation,
amortization, Net Restructuring Charges (as defined below), and other non-cash
charges approved by Majority Lenders which approval will not be unreasonably
withheld.
(3) Interest Coverage shall be deleted in its entirety and replaced as follows:
Interest Coverage - EBITDA divided by interest expense.
(4) Minimum Net Worth shall be deleted in its entirety and replaced as follows:
Minimum Net Worth - RCM's consolidated Net Worth shall be $118,392,000 as of
June 30, 2000 plus seventy-five (75%) percent of Quarterly Net Income thereafter
with no credit for losses; provided, however, prior to December 31, 2000, RCM
may take a one time restructuring charge of up to $40,000,000.00 and RCM shall
be given credit for the net effect of such restructuring charge ("Net
Restructuring Charges").
(5) Revolving Credit Maturity Date shall be deleted in its entirety and replaced
as follows:
Revolving Credit Maturity Date - August 19, 2002
b. Fees. Section 2.5 of the Loan Agreement shall be amended as follows:
The Unused Line Fee pricing grid shall be replaced in its entirety as
follows:
Total Funded Debt to EBITDA Unused Total Line Fee
>=2.50x - 3.25x 35.0 bp
>=2.00x - 2.50x 30.0 bp
>=1.50x - 2.00x 25.0 bp
< 1.50x 20.0 bp.
c. Section 6.9(b) of the Loan Agreement shall be deleted in its entirety and
replaced as follows:
b. Total Funded Debt to EBITDA shall not exceed 3.25x beginning the date hereof
and until the 12/30/00 quarterly test, beginning with the 03/31/01 quarterly
test and for all quarterly tests thereafter Total Funded Debt to EBITDA shall
not exceed 3.00x;
d. Section 6.9(c) of the Loan Agreement shall be deleted in its entirety and
replaced as follows:
(c) Interest Coverage shall be maintained at a minimum of 3.75x;
e. Section 8.3(c) of the Loan Agreement shall be deleted in its entirety and
replaced as follows:
(c) Intentionally Deleted; and.
f. Schedule A of the Loan Agreement shall be superceded by the Schedule A
attached hereto.
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2. Affirmation of Collateral. Borrower covenants, confirms and agrees that as
security for the repayment of the Obligations, Lender has, or is hereby granted
and shall therefore have and continue to have, a continuing first priority lien
on and security interest in all of the Collateral, all whether now existing or
hereafter acquired, created or arising and all proceeds thereof, except to the
extent otherwise provided in the Loan Agreement. Borrower acknowledges and
agrees that nothing herein contained in any way impairs Lender's existing rights
or priority in the Collateral.
3. Representations and Warranties. Borrower warrants and represents to Lender
that:
a. Prior Representations. By execution of this Amendment, Borrower reconfirms
that all warranties and representations made to Lender under the Loan Agreement
and the other Loan Documents are true and correct in all material respects as of
the date hereof, all of which shall be deemed continuing until all of the
Obligations to Lender are paid and satisfied in full.
b. Authorization. The execution and delivery by Borrower of this Amendment and
the performance by Borrower of the transactions herein contemplated (i) are and
will be within its powers and (ii) are not and will not be in contravention of
any order of court or other agency of government, of law or of any indenture,
agreement or undertaking to which Borrower is a party or by which the property
of Borrower is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or undertaking, or result in the imposition of any lien,
charge or encumbrance of any nature on any of the properties
of Borrower.
c. Valid, Binding and Enforceable. This Amendment and any other instrument,
document or agreement executed and delivered in connection herewith, will be
valid, binding and enforceable in accordance with their respective terms subject
to bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and general equitable principles.
d. Costs. Upon execution hereof, Borrower shall pay all costs (including
attorneys' fees of Lender) attendant to this Amendment.
4. Ratification of Loan Documents. This Amendment is hereby incorporated into
and made a part of the Loan Agreement and all other Loan Documents respectively,
the terms and provisions of which, except to the extent modified by this
Amendment are each ratified and confirmed and continue unchanged in full force
and effect. Borrower acknowledges and agrees that it has no defenses, setoffs,
counterclaims or deductions of any nature with respect to its obligations to
Lender. Any reference to the Loan Agreement and all other Loan Documents
respectively in this or any other instrument, document or agreement related
thereto or executed in connection therewith shall mean the Loan Agreement and
all other Loan Documents respectively as amended by this Amendment. The Loan
Agreement and this Amendment shall be construed as integrated and complementary
of each other, and augmenting and not restricting Lender's powers, rights,
remedies and security. If, after applying the foregoing, an inconsistency still
exists, the provisions of this Amendment shall control.
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5. Effectiveness Conditions. This Amendment shall become effective upon the full
execution of this Amendment and the following:
a. Payment of the Agent's legal fees attendant to this Amendment;
b. Payment to Agent, fees as stipulated in that letter agreement dated August
17, 2000 between Agent and Borrower;
c. Any other documents reasonably required by Agent or Lenders.
6. Governing Law. This Amendment and all instruments, documents and
agreements and the rights and obligations of the parties hereto and thereto
shall be governed by and interpreted in accordance with the substantive
laws of the Commonwealth of Pennsylvania.
7. Severability. The invalidity or unenforceability of any provision of
this Amendment shall not affect the validity or enforceability of the
remaining provisions.
8. Modification. This Amendment may not be modified, amended or terminated
except by an agreement in writing executed by the parties hereto.
[INTENTIONALLY LEFT PARTIALLY BLANK]
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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
the day and year first above written.
BORROWER: RCM TECHNOLOGIES, INC.
By:/S/Xxxxxxx Remer________________
Name: _____________________________
Title:______________________________
CATARACT, INC.
By:/S/Xxxxxxx Remer________________
Name: _____________________________
Title: _____________________________
RCM TECHNOLOGIES (USA), INC.
By:By:/S/Xxxxxxx Remer_____________
Name: _____________________________
Title: _____________________________
PROGRAMMING ALTERNATIVES OF
MINNESOTA, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: _____________________________
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NORTHERN TECHNICAL SERVICES, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
GLOBAL TECHNOLOGY SOLUTIONS, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
SOFTWARE ANALYSIS & MANAGEMENT, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
PROCON, INC.
By:/S/Xxxxxxx Remer________________
Name: _____________________________
Title: ____________________________
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RCMT DELAWARE, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
RCMT NOVA SCOTIA COMPANY
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
RCMT CANADA COMPANY
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
MU-SIGMA ENGINEERING CONSULTANTS CO.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
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CONSTELLATION INTEGRATION SERVICES CO.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
THE FULCRUM GROUP, INC.
By:/S/Xxxxxxx Remer________________
Name: _____________________________
Title: ____________________________
BUSINESS SUPPORT GROUP OF MICHIGAN, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
SOLUTIONS THROUGH DATA-PROCESSING, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ___________________________
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PINNACLE CONSULTING, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
APPLICATION SOLUTIONS CORPORATION
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
DISCOVERY CONSULTING SOLUTIONS, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
MANAGEMENT SYSTEMS INTEGRATORS, INC.
By:/S/Xxxxxxx Remer_________________
Name: _____________________________
Title: ____________________________
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AGENT: MELLON BANK, N.A., as Agent
By:________________________________
Name: _____________________________
Title: ____________________________
LENDERS: MELLON BANK, N.A., as Lender
By:________________________________
Name: _____________________________
Title: ____________________________
MELLON BANK CANADA, as Lender
By:________________________________
Name: _____________________________
Title: ____________________________
SUNTRUST BANK, as Lender
By:________________________________
Name: _____________________________
Title: ____________________________
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FIRST UNION NATIONAL BANK (as successor by
assignment from ALLFIRST BANK (f/k/a The First
National Bank of Maryland)), as Lender
By:________________________________
Name: _____________________________
Title: ____________________________
BANK OF AMERICA N. A., as Lender
By:________________________________
Name: _____________________________
Title: ____________________________
FLEET NATIONAL BANK, as Lender
By:________________________________
Name: _____________________________
Title: ____________________________
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