EXHIBIT 10(S)
FIRST AMENDMENT AGREEMENT
-------------------------
This First Amendment Agreement made as of the 21st day of February, 2002,
by and between Pinnacle Data Systems, Inc. (the "Borrower") and KeyBank National
Association (the "Lender"):
WHEREAS, Borrower and Lender are parties to a certain Loan Agreement dated
August 10, 2000, as it may from time to time be amended, supplemented or
otherwise modified (the "Loan Agreement");
WHEREAS, Borrower and Lender desire to amend the Loan Agreement by
decreasing the amount of the line of credit and by modifying certain other
provisions thereof; and
WHEREAS, each term used herein shall be defined in accordance with the
Loan Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower and Lender
agree as follows:
1. The Loan Agreement is hereby amended by deleting the definition of
"Borrowing Base" in its entirety and by inserting in place thereof the
following:
The words "Borrowing Base" mean, as determined by Lender from time to
time, the lesser of: (a) $6,000,000.00 or (b) the sum of (i) 85.000% of the
aggregate amount of Eligible Accounts less than 90 days, plus (ii) 50.000% of
the aggregate amount of Eligible Inventory (not to exceed in corresponding Loan
amount, based on Eligible Inventory, $3,000,000.00).
2. The Credit Agreement is hereby amended by adding the following new
definitions to the section "Definitions":
"EBITDA" means the net earnings of Borrower plus the aggregate amounts
deducted in determining such net income in respect of interest expenses, taxes,
depreciation and amortization; but not, however, giving effect to extraordinary
losses or gains in calculating net income.
"Subordinated Debt" means Indebtedness and liabilities of Borrower which
have been subordinated by written agreement to Indebtedness owed by
Borrower to Lender in form and substance acceptable to Lender.
"Tangible Net Worth" means Borrower's total assets excluding all intangible
assets (i.e., goodwill, trademarks, patents, copyrights, organization expenses,
and similar intangible items, but including leaseholds and leasehold
improvements) less Total Debt.
"Total Debt" means all of Borrower's liabilities including Subordinated
Debt.
3. The Credit Agreement is hereby amended by adding the following
section "Financial Covenants":
Borrower covenants and agrees with Lender that while this Agreement is in
effect, Borrower shall:
A) Maintain a cumulative minimum EBITDA based upon the financial statements
of Borrower for the most recently completed four fiscal quarters which
shall be tested on a quarterly basis as follows:
As of Borrower's first fiscal quarter, March 31, 2002: **** $(340,000)
As of Borrower's second fiscal quarter, June 30, 2002: **** $250,000
B) Maintain a Total Debt to Tangible Net Worth ratio of greater than
or equal to 2.50 to 1.00 which shall be tested on a quarterly basis
based upon the financial statements of Borrower for the most
recently completed fiscal quarter.
4. Borrower hereby represents and warrants to Lender that (a) Borrower
has the legal power and authority to execute and deliver this First Amendment
Agreement; (b) officials executing this First Amendment Agreement have been duly
authorized to execute and deliver the same and bind Borrower with respect to the
provisions hereof; (c) the execution and delivery hereof by Borrower and the
performance and observance by Borrower of the provisions hereof do not violate
or conflict with the organizational agreements of Borrower or any law applicable
to Borrower 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; (d) no Event of Default exists under the Loan Agreement, nor
will any occur immediately after the execution and delivery of the First
Amendment Agreement or by the performance or observance of any provision hereof;
(e) neither Borrower (nor any subsidiary) has any claim or offset against, or
defense or counterclaim to, any of Borrower's (or any subsidiary's) obligations
or liabilities under the Loan Agreement or any Related Documents, and Borrower
(and each subsidiary) hereby waives and releases Lender from any and all such
claims, offsets, defenses and counterclaims of which Borrower (and any
subsidiary) is aware, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having consulted
legal counsel with respect thereto, and (f) this First Amendment Agreement
constitutes a valid and binding obligation of Borrower in every respect,
enforceable in accordance with its terms.
5. Each reference that is made in the Loan Agreement or any other writing
shall hereafter be construed as a reference to the Loan Agreement as amended
hereby. Except as herein otherwise specifically provided, all provisions of the
Loan Agreement shall remain in full force and effect and be unaffected hereby.
6. The rights and obligations of all parties hereto shall be governed
by the laws of the State of Ohio.
**** represents greater than or equal to.
2
7. JURY TRIAL WAIVER. BORROWER AND LENDER WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN BORROWER AND LENDER, ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND
OR MODIFY LENDER'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF
JUDGMENT OR COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT BETWEEN BORROWER AND LENDER.
Address: Pinnacle Data Systems, Inc. PINNACLE DATA SYSTEMS, INC.
0000 Xxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx By: Xxxxxxx X. Xxxxx
--------------
Its:Executive Vice President
------
Address: Key Bank National Association KEY BANK NATIONAL ASSOCIATION
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx By: Xxxx X. Xxxxxx
------------------------
Its: Vice President
------------------------
3
