Exhibit 4(D)
FIRST AMENDMENT AND LIMITED WAIVER
TO LOAN AND SECURITY AGREEMENT
This First Amendment and Waiver to Loan and Security Agreement
("Amendment") is dated November 26, 1996, and entered into by and among
HELLER FINANCIAL, INC., as Agent ("Agent") and Lender ("Lender"), UNITEL
VIDEO, INC. ("Borrower") and R Squared, Inc. ("Corporate Guarantor").
WHEREAS, Agent, Lender, Borrower and Corporate Guarantor have entered into
a Loan and Security Agreement (the "Agreement") dated December 12, 1995;
and
WHEREAS, Events of Default are in existence under subsection 8.1(C) of
the Agreement as a result of Borrower's breach of (i) the Tangible Net Worth
covenant contained in subsection 6.1 for the fiscal quarter ending August
31, 1996, (ii) the Fixed Charge Coverage covenant contained in subsection 6.3
for the three fiscal quarters ending August 31, 1996 and (iii) the Leverage
Ratio covenant contained in subsection 6.4 for the fiscal quarter ending
August 31, 1996 (collectively, the "Existing Events of Default"); and
WHEREAS, Borrower and Corporate Guarantor have requested that Agent and
Requisite Lenders waive the Existing Events of Default and amend the
covenants set forth above; and
WHEREAS, Borrower and Corporate Guarantor have requested that Agent and
Requisite Lenders defer the payment due date of Term Loan B from October
31, 1996 to December 31, 1996; and
WHEREAS, Agent and Requisite Lenders have agreed to waive the Existing
Events of Default, amend the Tangible Net Worth, Fixed Charge and Leverage
Ratio covenants and defer the payment due date of Term Loan B until
December 31, 1996, subject to the following terms and conditions;
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. DEFINITIONS. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in
the Agreement, as amended hereby.
ARTICLE II. AMENDMENTS
Section 2.01. AMENDMENT TO SUBSECTION 1.1 "CERTAIN DEFINED TERMS."
Subsection 1.1 shall be, and the same is hereby amended by adding the
following new definitions, in proper alphabetical order, to said subsection:
"Excess Availability" means, as of any date, the amount (if any) by
which the Maximum Revolving Loan Amount exceeds the outstanding principal
balance of the Revolving Loan.
"Special Reserve" means a reserve in the amount of $500,000, which shall
be in effect until the earlier to occur of (a) the repayment in full of
Term Loan B or (b) Agent's receipt of equipment appraisals, which in
Agent's sole discretion, reflect equipment values sufficient to adequately
collateralize the Term Loans.
Section 2.02. AMENDMENT TO SUBSECTION 2.1(A)(2) "TERM LOAN
B". Subsection 2.1(A)(2) shall be, and the same is hereby amended by
deleting the defined term "Scheduled Installment of Term Loan B" appearing
in the second paragraph of said subsection and substituting the following
therefor:
"Scheduled Installment of Term Loan B" means the principal installment in
an amount equal to $6,581,452.70, payable, subject to the provisions of
subsection 2.4(B), on or before December 31, 1996 or earlier to occur of
(i) the Termination Date or (ii) the acceleration of the Obligations in
accordance with the provisions of subsection 8.3, at which time the entire
unpaid principal amount thereof plus accrued interest thereon shall be due
and payable.
Section 2.03. AMENDMENT TO SUBSECTION 2.1(B) "REVOLVING LOAN",
Subsection 2.1(B) shall be, and the same is hereby amended by deleting the
definition of "Maximum Revolving Loan Amount" appearing in paragraph (1) in
its entirety and substituting the following therefor.
"Maximum Revolving Loan Amount" means, as of any date of determination,
the lesser of (a) the Revolving Loan Commitment MINUS the Letter of
Credit Reserve.
Section 2.04. AMENDMENT TO SUBSECTION 6.1 "TANGIBLE NET
WORTH". Subsection 6.1 shall be, and the same is hereby deleted in its
entirety and the following substituted therefor:
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Borrower shall at all times maintain Tangible Net Worth plus Subordinated
Debt of at least $18,000,000.
Section 2.05. AMENDMENT TO SUBSECTION 6.3 "FIXED CHARGE
COVERAGE". Subsection 6.3 shall be, and the same is hereby deleted in
its entirety and the following substituted therefor:
Borrower shall not permit its Fixed Charge Coverage to be less than the
ratios set forth below for the periods set forth below:
PERIOD RATIO
------ -----
The fiscal quarter ending 2/29/96 1.0:1.0
The 2 fiscal quarters ending 5/31/96 1.0:1.0
The 3 fiscal quarters ending 8/31/96 1.0:1.0
The fiscal quarter ending 11/30/96 .8:1.0
The 2 fiscal quarters ending 2/28/97 .8:1.0
The 3 fiscal quarters ending 5/31/97 .8:1.0
The 4 fiscal quarters ending 8/31/97 1.0:1.0
and each fiscal quarter thereafter,
on a rolling four quarter basis
Section 2.06. AMENDMENT TO SUBSECTION 6.4 "LEVERAGE RATIO".
Subsection 6.4 shall be, and the same is hereby amended by deleting the table
appearing in said subsection and the substituting the following therefor:
PERIOD RATIO
------ -----
Closing Date and on the last day of each 3.25 to 1.00
fiscal quarter thereafter, through
and including 8/31/96
The fiscal quarter ending 11/30/96 4.00 to 1.00
The fiscal quarter ending 2/28/97 3.75 to 1.00
The fiscal quarter ending 5/31/97 3.50 to 1.00
The fiscal quarter ending 8/31/97 3.25 to 1.00
On the last day of each fiscal quarter 2.75 to 1.00
thereafter
Section 2.07. AMENDMENT TO SECTION 6 "FINANCIAL COVENANTS".
A new subsection 6.5, entitled "Excess Availability" shall be added to
section 6 immediately after subsection 6.4, as follows:
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6.5 "EXCESS AVAILABILITY". Borrower shall not permit at any
time its Excess Availability to be less than $250,000 for the period
commencing September 1, 1996 and ending May 31, 1997.
ARTICLE III. LIMITED WAIVER
Section 3.01. WAIVER OF FINANCIAL COVENANT DEFAULTS. Agent and
Requisite Lenders hereby waive the Existing Events of Default. This is a
limited waiver and shall not be deemed to contribute a waiver of any other
existing Events of Default or any future breach of the Agreement or any of
the other Loan Documents (including, without limitation, a breach of the
covenants causing the Existing Events of Default for any periods other than
those specified herein).
ARTICLE IV. MISCELLANEOUS
Section 4.01. CONDITIONS. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent (unless
specifically waived in writing by Agent and Requisite Lenders):
(a) there shall have occurred no material adverse change in the business,
operations, financial conditions, profits or prospects, or in the
Collateral of the Borrower;
(b) Borrower and Corporate Guarantor shall have executed and delivered such
other documents and instruments as Agent may require;
(c) all corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other
legal matters incident thereto shall be satisfactory to Agent and its
legal counsel.
Section 4.02 RATIFICATION. The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Agreement and, except as expressly modified and
superseded by this Amendment, the terms and provisions of the Agreement, are
ratified and confirmed and shall continue in full force and effect.
Section 4.03 CORPORATE ACTION. The execution, delivery and
performance of this Amendment have been authorized by all requisite
corporate action on the part of Borrower and Corporate Guarantor and will
not violate the Articles of Incorporation or Bylaws of either Borrower or
Corporate Guarantor.
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Section 4.04 SEVERABILITY. Any provision of this Amendment held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confirmed to the provision so held to be invalid or unenforceable.
Section 4.05 SUCCESSORS AND ASSIGNS. This Amendment is binding
upon and shall inure to the benefit of Agent, Lender, Borrower and Corporate
Guarantor and their respective successors and assigns.
Section 4.06 COUNTERPARTS. This Amendment may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
HELLER FINANCIAL, INC.,
as Agent and Lender
By: /s/Jerry Sepich
Title: Vice President
UNITEL VIDEO, INC.,
as Borrower
By: /s/Barry Knepper
Title: CEO
R SQUARED, INC.,
as Corporate Guarantor
By /s/Barry Knepper
Title: CEO