EXHIBIT 10.75
FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This Fifth Amendment to Loan and Security Agreement ("Amendment")
entered into as of August 13, 1999, by and among CAPITAL ASSOCIATES, INC. and
CAPITAL ASSOCIATES INTERNATIONAL, INC. (each a "Borrower" and collectively
"Borrowers"), FIRST UNION NATIONAL BANK, SUCCESSOR BY MERGER TO CORESTATES BANK,
N.A., a national banking corporation, in its capacity as agent ("Agent") and as
lender and Issuing Bank and each of the lenders listed on the signature pages
hereof, in their capacity as lenders (singly, each is a "Lender" and
collectively, all are "Lenders").
BACKGROUND
A. On or about November 26, 1997, Borrowers, Agent and Lenders entered
into a certain Loan and Security Agreement, as amended by that certain First
Amendment to Loan and Security Agreement dated as of April 7, 1998, that certain
Second Amendment to Loan and Security Agreement dated as of May 29, 1998, that
certain Third Amendment to Loan and Security Agreement dated as of November 25,
1998 and that certain Fourth Amendment to Loan and Security Agreement dated as
of December 22, 1998 (collectively, the "Loan Agreement"), pursuant to which
Lenders agreed to make advances to Borrowers up to a maximum aggregate amount of
$71,250,000, evidenced by Borrowers' delivery of certain Notes to Lenders.
B. The Borrowers have requested the Loan Documents be modified in
certain respects. Agent, Lenders and Issuing Bank have consented to these
modifications subject to the terms and conditions set forth below.
C. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.
NOW, THEREFORE, with the foregoing background incorporated by
reference, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. ACKNOWLEDGMENT AND WAIVER. Borrowers hereby acknowledge that they
have not met the Interest Coverage Ratio covenant contained in Section 6.9(d) of
the Loan Agreement for the Borrowers' third fiscal quarter of 1999. Upon the
effectiveness of this Amendment, Lender shall be deemed to have waived such
non-compliance, provided that Lender's waiver shall not be deemed to be a waiver
of any subsequent non-compliance of the Interest Coverage Ratio covenant, nor a
waiver of any Events of Default (other than such non-compliance) which may have
occurred.
2. AMENDMENTS TO LOAN AGREEMENT:
a. The Loan Agreement is hereby amended by adding the following to
Section 1.1:
DOCUMENTATION AGENT - European American Bank, or any
successor thereto.
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b. The Loan Agreement is hereby amended by adding the following to
Section 1.1:
FIFTH AMENDMENT WAIVER FEE - That certain fee in the amount of
$89,062.50 paid by Borrowers to Agent for the ratable benefit of the Lenders in
connection with the execution of the Fifth Amendment to the Loan and Security
Agreement dated August 13, 1999.
c. The Loan Agreement is hereby amended by deleting the
definition of "Interest Coverage Ratio" in its entirety and replacing it with
the following to Section 1.1:
INTEREST COVERAGE RATIO - The ratio of EBIT to
interest expense (excluding any interest expense which is
otherwise characterized as Nonrecourse Debt), determined
in accordance with GAAP on a consolidated, rolling four
quarter basis; provided however that for purposes of
calculating and determining the Interest Coverage Ratio
for the fourth fiscal quarter of 1999, the first fiscal
quarter of 2000 and the second fiscal quarter of 2000
only, the Interest Coverage Ratio shall be the ratio of
the sum of EBIT (calculated, in the fourth fiscal quarter
of 1999 only, to exclude any reduction for the payment of
the Fifth Amendment Waiver Fee (as defined in the Fifth
Amendment to Loan and Security Agreement dated August 13,
1999) plus the amount by which the total principal amount
of the Officer Subordinated Debt (as defined in the Fifth
Amendment to the Loan and Security Agreement dated August
13, 1999) exceeds $350,000, to interest expense
(excluding any interest expense which is attributable to
the Officer Subordinated Debt and any interest expense
which is otherwise characterized as Nonrecourse Debt),
determined in accordance with GAAP on a consolidated,
rolling four quarter basis.
d. The Loan Agreement is hereby amended by adding the following to
Section 1.1:
OFFICER SUBORDINATED DEBT - Any indebtedness of
Borrowers, or either of them, made by MCC Financial
Corporation Executive Deferred Compensation Plan, the
James D. Walker account or MCC Financial Corporation
Executive Deferred Compensation Plan, the William
Buckland account, which is expressly subordinated to the
Obligations of the Borrowers to the Agent and/or Lenders,
on terms and conditions are satisfactory to Agent and
Lenders in their sole discretion. Officer Subordinated
Debt shall be deemed not to constitute a transaction with
an Affiliate within the meaning of Section 7.4.
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e. The Loan Agreement is hereby amended by adding the following to
Section 1.1:
SUBORDINATED DEBT - any indebtedness of the
Borrowers, or either of them, including without
limitation the Officer Subordinated Debt (as defined in
the Fifth Amendment to Loan and Security Agreement dated
August 13, 1999), which is subordinated to the
Obligations of the Borrowers to Agent and/or Lenders on
terms and conditions satisfactory to Agent and Lender in
their sole discretion.
f. The Loan Agreement is hereby amended by deleting Section 6.9(d)
in its entirety and replacing it with the following:
(d) Interest Coverage Ratio:
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(i) For the Borrower's fourth fiscal quarter of 1999, first fiscal
quarter of 2000 and second fiscal quarter of 2000, the Borrowers
shall have and maintain an Interest Coverage Ratio on a
consolidated basis, measured as of the last day of each fiscal
quarter, of not less than 1.10:1; provided that the Interest
Coverage Ratio on a stand alone basis calculated for, and based on
the financial results of, the second fiscal quarter of 2000, shall
be at least 1.20:1;
(ii) Beginning with the third fiscal quarter of 2000, and at all
times thereafter, Borrowers shall have and maintain at all times an
Interest Coverage Ratio on a consolidated basis, measured as of the
last day of each fiscal quarter, of not less than 1.20:1.
g. The Loan Agreement is hereby amended by deleting Section 6.9(b)
in its entirety and replacing it with the following:
(b) NET INCOME/LOSS: Borrowers shall not suffer an operating
loss and/or incur negative net income on a consolidated basis in
excess of $250,000 during any two consecutive fiscal quarters. For
the fourth fiscal quarter of 1999 only, Borrower's net income, for
the purposes of this covenant, shall be determined by adding the
principal amount of the Officer Subordinated Debt to Borrowers' net
income and excluding any reduction for the payment of the Fifth
Amendment Waiver Fee.
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h. The Loan Agreement is hereby amended by deleting Section 7.6(b)
in its entirety and replacing it with the following:
(b) Neither Borrower shall borrow money from, or
incur indebtedness to, any Person other than (i) in the
form of Nonrecourse Debt; (ii) pursuant to a
Securitization Residual Financing, or (iii) in the form
of any Subordinated Debt (as defined in the Fifth
Amendment to Loan and Security Agreement dated August13,
1999).
i. The Loan Agreement is hereby amended by deleting Section
9.15(c) in its entirety and replacing it with the following:
(c) Notwithstanding anything to the contrary contained in
subparagraph (a) above, Agent shall not, without the prior
written consent of the SuperMajority Lenders: (i) enter into
any written amendment to any of the Loan Documents; (ii) except
as set forth in the last sentence of this subsection (c), waive
Borrower's compliance with the terms and conditions of the Loan
Document or any Event of Default hereunder or thereunder; or
(iii) consent to Borrower taking any action which, if taken,
would constitute an Event of Default under this Agreement or
under any of the Loan Documents. Notwithstanding anything to
the contrary contained in clause (ii) above, Agent shall not,
without the prior written consent of the SuperMajority Lenders
and the Documentation Agent, waive Borrower's compliance with
the financial covenants set forth in Section 6.9 above.
3. WAIVER FEE: In consideration for Lenders agreeing to the waiver of
the Existing Default and the other modifications to the Loan Agreement contained
in this Amendment, Borrowers shall pay to Agent, for the ratable benefit of the
Lenders, contemporaneously with the execution hereof, a Fifth Amendment Waiver
Fee in the amount of $89,062.50. This Fifth Amendment Waiver Fee is fully earned
and non-refundable.
4. BORROWER'S RATIFICATION AND RECONFIRMATION: Borrowers agree that
they have no defense or set-offs against the Agent or Lenders, their respective
officers, directors, employees, agents or attorneys with respect to the
Revolving Credit Notes, the Working Capital Notes, the Term Loan Notes, the Loan
Agreement or related instruments, agreements or documents, all of which, except
as expressly modified herein, remain in full force and effect. Borrowers hereby
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ratify and confirm their Obligations under the Revolving Credit Notes, the
Working Capital Notes, the Term Loan Notes, the Loan Agreement and related
instruments, agreements and documents (each as amended hereby or in accordance
herewith) and agree that the execution and delivery of this Amendment does not
in any way diminish or invalidate any of their Obligations thereunder. As
security for their Obligations thereunder, Borrowers reconfirm the prior
security interest and lien in and to all of their right, title and interest in
and to the Collateral. Borrowers confirm that all of the Collateral and security
interests continue to secure the Obligations and nothing contained herein shall
in any way limit, alter or impair the validity, priority, enforceability or
perfection of Agent's liens and security interests.
5. REAFFIRMATION OF SURETIES: Each Surety party to that certain
Amended and Restated Surety Agreement dated as of December 22, 1998 in favor of
Agent for the benefit of the Lenders, by execution hereof in their capacity as
Sureties, hereby consents to the amendments set forth in this Amendment, and
acknowledges that the Amended and Restated Surety Agreement is in full force and
effect and that each remains, jointly and severally liable for Obligations of
Borrowers to Agent and Lenders under the Loan Documents, as amended hereby.
6. REPRESENTATIONS AND WARRANTIES:
a. Borrowers represent and warrant that, except as explicitly
described in Section 1 above, as of the date hereof no Event of Default or
Unmatured Event of Default has occurred or is existing under the Loan Documents.
b. The execution and delivery by each Borrower of this Amendment
and performance by it of the transactions herein contemplated (i) are and will
be within its powers, (ii) have been authorized by all necessary corporate
action, and (iii) are not and will not be in contravention of any order of any
court or other agency of government, of law or any other indenture, agreement or
undertaking to which such Borrower is a party or by which the Property of such
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 such Borrower.
c. This Amendment and each other agreement, instrument or document
executed and/or delivered in connection herewith, shall be valid, binding and
enforceable in accordance with its respective terms.
d. All warranties and representations made to Lender under the
Loan Agreement and any related documents are true and correct as of the date
hereof.
7. CONDITIONS TO EFFECTIVENESS: This Amendment shall be effective
upon satisfaction of each of the following conditions (all documents to be in
form and substance satisfactory to Agent and Agent's counsel):
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a. Execution and delivery by the Borrowers and the Sureties of
this Amendment to the Agent;
b. Execution and Delivery of the Subordination Agreements from MCC
Financial Corporation Executive Deferred Compensation Plan, the
James D. Walker account and MCC Financial Corporation Executive
Deferred Compensation Plan, the William Buckland account,
subordinating the Officer Subordinated Debt to the Obligations owed
to the Lenders under the Loan Agreement.
c. Delivery of an updated Exhibit 5.10 (relating to guarantees,
investments and borrowing).
d. True and correct copies of the promissory notes evidencing the
Officer Subordinated Debt.
e. Such other agreements, documents and instruments as Agent may
reasonably request; and
f. Payment of the Fifth Amendment Waiver Fee.
8. MISCELLANEOUS:
a. This Amendment shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
b. Except as expressly provided herein, all terms and conditions
of the Loan Documents remain in full force and effect, unless such terms or
conditions are no longer applicable by their terms. To the extent the provisions
of this Amendment are expressly inconsistent with the provisions of the Loan
Documents, the provisions of this Amendment shall control.
c. This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same respective agreement.
d. Signatures by facsimiles shall bind the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the day and year first above written.
BORROWERS:
CAPITAL ASSOCIATES, INC.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
CAPITAL ASSOCIATES INTERNATIONAL, INC.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
AGENT:
FIRST UNION NATIONAL BANK, Successor by
Merger to CoreStates Bank, N.A.
By: /s/Hugh Connelly
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Hugh Connelly
Title: Vice President
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LENDERS:
FIRST UNION NATIONAL BANK, Successor by
Merger to CoreStates Bank, N.A., as Lender
and Issuing Bank
By: /s/Hugh Connelly
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Hugh Connelly
Title: Vice President
BANKBOSTON, N.A.
By: /s/Dierdre Holland
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Dierdre Holland
Title: Vice President
EUROPEAN AMERICAN BANK
By: /s/Chris Czaja
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Chris Czaja
Title: Vice President
NORWEST BANK COLORADO, N.A.
By: /s/Carol A. Ward
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Carol A. Ward
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/Ralph P. Atkinson
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Ralph P. Atkinson
Title: Vice President
SURETIES:
CAI EQUIPMENT LEASING III CORP.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
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CAI EQUIPMENT LEASING IV CORP.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
CAI EQUIPMENT LEASING V CORP.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
CAI EQUIPMENT LEASING VI CORP.
By: /s/Anthony M. DiPaolo
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Anthony M. DiPaolo
Title:
CAI LEASE SECURITIZATION I CORP.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
CAI LEASING CANADA, LTD.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
CAI SECURITIES CORPORATION
By: /s/Anthony M. DiPaolo
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Anthony M. DiPaolo
Title:
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CAPITAL ASSOCIATES INTERNATIONAL DE
MEXICO S. DE R.L. DE C.V.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
CAPITAL ASSOCIATES TECHNOLOGY GROUP, INC.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
CAPITAL EQUIPMENT CORPORATION
By: /s/David Sislowski
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David Sislowski
Title: Vice President
NAME BRAND COMPUTER OUTLET, INC.
By: /s/David Sislowski
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David Sislowski
Title: Vice President
WHITEWOOD EQUIPMENT CORPORATION,
f/k/a WHITEWOOD CREDIT CORPORATION
By: /s/David Sislowski
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David Sislowski
Title: Vice President
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