April 16, 1998
Unitel Video, Inc.
555 West 57th Street
New York, NY 10019
Attn: George Horowitz
Re: Financial Covenants
Dear Mr. Horowitz:
Reference is made to that certain Amended and Restated Loan and Security
Agreement dated as of December 12, 1995 (as amended, the "Agreement") among
Unitel Video, Inc., as Borrower, R Squared, Inc., as Corporate Guarantor, and
Heller Financial, Inc., as Agent and Lender ("Heller"). Capitalized terms used
herein and not otherwise defined, shall have the meanings ascribed to them in
the Agreement.
This letter will confirm that Borrower and Heller have agreed to amend the
financial covenants contained in Section 6 of the Agreement to the amounts set
forth below for the periods set forth below:
Quarter
Covenant Ended Amount
Tangible Net Worth 11/30/97 $12,500,000
(Section 6.1) 02/28/98 $12,500,000
05/31/98 $13,000,000
08/31/98 $13,000,000
Capital Expenditure Limits 11/30/97 $ 3,322,000
(Section 6.2) 02/28/98 $ 799,000
05/31/98 $ 658,000
08/31/98 $ 985,000
Fixed Charge Coverage* 11/30/97 <0.50 : 1.0>
(Section 6.3) 02/28/98 0.25 : 1.0
05/31/98 0.75 : 1.0
08/31/98 1.00 : 1.0
* calculated on a cumulative quarter basis until 8/31/98, then calculated on a
rolling four-quarter basis
Leverage Ratio 11/30/97 5.00 : 1.0
(Section 6.4) 02/28/98 5.00 : 1.0
05/31/98 3.75 : 1.0
08/31/98 3.75 : 1.0
Interest Coverage Ratio 11/30/97 <0.72 : 1.0>
(Section 6.5) 02/28/97 1.00 : 1.0
05/31/98 1.50 : 1.0
08/31/98 1.80 : 1.0
The Agreement will be amended to reflect the foregoing covenant levels.
Very truly yours,
Heller Financial, Inc.
/s/ Shyam Amladi
- ---------------------------------
Shyam Amladi
Senior Vice President