Exhibit 4(A)
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND LIMITED
WAIVER
This Second Amendment to Loan and Security Agreement ("Amendment") is dated
as of February 24, 1997, 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 (as amended, the "Agreement") dated
December 12, 1995; and
WHEREAS, certain Events of Default are in existence under the Agreement
as set forth in (i) that certain letter from Agent to Borrower dated January
2, 1997 and (ii) that certain letter from Agent to Borrower dated January 7,
1997 (the "Existing Events of Default") and, as a result of such Events of
Default, Agent and Lenders have, among things, commenced charging the Default
Rate on the Obligations; and
WHEREAS, Borrower and Corporate Guarantor have requested that Agent and
Requisite Lenders waive the Existing Events of Default; and
WHEREAS, Borrower and Corporate Guarantor have requested that Agent and
Requisite Lenders amend the Agreement to, among other things, defer the
principal payment due date of Term Loan B from December 31, 1996 to February
28, 1997, and Agent and Requisite Lenders have agreed to do so, subject to
the following terms and conditions; and
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 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 in its entirety and substituting the following
therefor:
"Scheduled Installment of Term Loan B" means the principal
installment in an amount equal to $4,934,410.27, payable, subject
to the provisions of subSection 2.4(B), on or before February 28,
1997 or the 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 2.02. 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 (i) the Letter of Credit Reserve and (ii) the Special
Reserve and (b) the Borrowing Base minus (i) the Letter of Credit
Reserve and (ii) the Special Reserve.
Section 2.03. Amendment to Subsection 5.1(F) "Borrowing Base
Certificates". Subsection 5.1(F) shall be, and the same is hereby amended by
deleting the first sentence of said subsection in its entirety and
substituting the following therefor:
"As early as possible each week, but in no event later than by
12:00 (noon) (Chicago time) on the fifth Business Day of each
Week, Borrower shall deliver to Agent a Borrowing Base
Certificate updated to reflect the most recent sales and
collections of Borrower and an assignment schedule of all
Accounts created by Borrower for the prior week."
ARTICLE III. LIMITED WAIVER
Agent and Lender hereby waive the Existing Events of Default (which
waiver shall be deemed effective as of November 30, 1996), conditioned on the
following: (i) that for the period between January 24, 1997 through January
30, 1997, the outstanding principal amount of the Revolving Loan shall not
exceed the Maximum Revolving Loan Amount by an amount greater than
$545,781.50; (ii) for the period between January 31, 1997 through February 6,
1997, the outstanding principal amount of the Revolving Loan shall not exceed
the Maximum Revolving Loan Amount by an amount greater than $195,781.50;
(iii) on and after February 7, 1997, the Maximum Revolving Loan Amount shall
be greater than or equal to the outstanding principal amount of the Revolving
Loan and (iv) for so long as the outstanding principal amount of the
Revolving Loan exceeds the Maximum Revolving Loan Amount, (A) the Loans and
all other Obligations shall bear interest at a rate equal to two percent (2%)
plus the applicable Interest Rate and (B) Borrower may not request any LIBOR
Rate Loans and Borrower may not convert any Base Rate Loans into LIBOR Rate
Loans. Borrower's compliance with the terms above, shall not be deemed to
constitute a commitment by Agent or Lenders to provide advances under the
Revolving Loan that exceed the Maximum Loan Amount. This limited waiver
shall not be
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deemed to constitute 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, any subsequent breach of the covenants described in the
letters referenced above for any subsequent period).
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) Borrower shall have paid to Agent, for the benefit of
Lenders, a fee in the amount of $10,000, which fee shall have
been fully earned upon payment.
(d) 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.
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 confined 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.
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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/ Jerome 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
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