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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 24, 2005
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(March 21, 2005)
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Manchester Technologies, Inc.
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(Exact Name of Registrant as Specified in Charter)
New York 0-21695 11-2312854
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
50 Marcus Boulevard, New York 11788
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (631) 951-8100
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
/_/ Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
/_/ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
/_/ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
/_/ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
On March 21, 2005, Manchester Technologies, Inc. (the "Company") and certain
wholly-owned subsidiaries (the "Guarantors") entered into a Loan Agreement with
Citibank, N.A. (the "Loan Agreement"). The Loan Agreement provides the Company
with access to revolving credit loans and letters of credit not to exceed an
aggregate of $15 million outstanding at any one time and replaces the loan
facility which expired on March 18, 2005, which was on substantially the same
terms and conditions as the Loan Agreement. Unless terminated earlier, the Loan
Agreement will mature on January 31, 2008. Borrowings bear interest at a rate
chosen by the Company which shall be either the prime rate or a rate equal to
LIBOR plus a percentage ranging from .75% to 1.50% depending on the Company's
funded debt to EBITDA ratio. Borrowings are prepayable in whole or in part upon
applicable notice without penalty, Each of the Guarantors has entered into a
Guaranty whereby it guarantees the obligations incurred by the Company or other
Guarantors under the Loan Agreement.
The Loan Agreement contains covenants, including, without limitation, those that
place conditions on the Company and the Guarantor's ability to (a) incur certain
additional debt other than debt incurred or permitted under the Loan Agreement,
(b) create or permit liens on properties, or (c) engage in mergers,
consolidations or acquisitions. The Credit Agreement also (y) requires the
Company and the Guarantors to maintain on a consolidated basis, to be tested at
the end of each fiscal quarter, (i) a funded debt to EBITDA ratio of not greater
than 3.00 to 1.00, (ii) a quick asset ratio of not less than 1.00 to 1.00, (iii)
an interest coverage ratio of not less than 2.50 to 1.00, and (iv) a
consolidated tangible net worth of $32 million and (z) forbids consolidated
capital expenditures, exclusive of amounts allocated to capital assets pursuant
to a permitted acquisition, in excess of $3 million in the aggregate during any
fiscal year. Among the events of default under the Loan Agreement are (A) the
failure of Barry Steinberg, the Company's Chairman and Chief Executive Officer,
to cease to own an amount of voting stock of the Company equal to the greater of
25% of such voting stock or the amount of such voting stock owned by any other
person or entity and (B) Barry Steinberg no longer being retained in a
reasonably active capacity in the management of the Company, unless such failure
is due to his death or disability.
A copy of the Loan Agreement and Form of Guaranty are attached hereto as
Exhibits 99.1 and 99.2 respectively.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 of this report is hereby incorporated into
this Item 2.03.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Credit Agreement dated as of March 21, 2005.
99.2 Form of Guaranty
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 24, 2005
Manchester Technologies, Inc.
By: /s/ Seth Collins
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Seth Collins
President
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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99.1 Credit Agreement dated March 21, 2005
99.2 Form of Guaranty