EIGHTH AMENDMENT
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This EIGHTH AMENDMENT ("Amendment") is entered into as of February
12, 1998, by and among UNITEL VIDEO, INC., a Delaware corporation having its
principal place of business at 555 West 57th Street, New York, New York 10019
("Borrower"), R SQUARED, INC., a California Corporation having its principal
place of business at 729 North Highland, Los Angeles, California 90038
("Corporate Guarantor") and HELLER FINANCIAL, INC., a Delaware corporation
having an office at 500 West Monroe Street, Chicago, Illinois 60661, as agent
("Agent") for Lender (as hereafter defined).
BACKGROUND
Borrower, Corporate Guarantor, Agent and Heller Financial, Inc.
("Lender") are parties to an Amended and Restated Loan and Security Agreement
dated as of December 12, 1995 (as amended, supplemented or otherwise modified
from time to time, the "Loan Agreement") pursuant to which Lender provides
Borrower with certain financial accommodations.
Borrower has requested that Lender amend the Loan Agreement and
Lender is willing to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrower by Lender,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the
conditions of effectiveness set forth in Section 3 below, the Loan Agreement is
hereby amended as follows:
(a) Section 1.1 of the Loan Agreement is hereby amended by
adding the following defined terms in their appropriate alphabetical order:
"Eighth Amendment Effective Date" means February 12, 1998.
"Excess Cash Flow" means, for a any period, the greater of (A)
zero (0); or (B) without duplication, the total of the
following for Borrower and its
Subsidiaries on a consolidated basis, each calculated for such
period: (1) EBITDA; plus (2) tax refunds actually received;
less (3) Capital Expenditures (to the extent actually made in
cash and/or due to be made in cash within such period but in
no event more than the amount permitted by subsection 6.2
hereof); less (4) income and franchise taxes; less (5)
decreases in deferred income taxes resulting from payments of
deferred taxes accrued in prior periods; less (6) Interest
Expenses paid or accrued; less (7) scheduled amortization of
Indebtedness actually paid in cash and/or due to be paid in
cash within such period and permitted under subsections 7.1
and 7.5; less (8) voluntary prepayments and mandatory
prepayments made under subsection 2.4(B)(2), but only to the
extent that the transaction that precipitated the mandatory
prepayment increased EBITDA.
(b) The second paragraph of Section 2.1(A)(1) of the Loan Agreement
is hereby amended to provide as follows:
"Scheduled Installment of Term Loan A" means the principal
amount equal to $9,000,000, payable, subject to the provisions
of subsection 2.4(B), (a) in fifty-six (56)monthly principal
installments, the first fifty-five (55) of which shall be in
an amount equal to $100,000 and the last installment of which
shall be in an amount equal to the then outstanding principal
balance thereof, commencing on June 1, 1997 and on the first
day of each month thereafter with the final installment
thereof payable on December 12, 2001 (it being understood that
Borrower may prepay Term Loan A, in whole or in part, from
time to time) or (b) the earlier to occur of (i) the
Termination Date or (ii) acceleration of the Obligations in
accordance with the provisions of subsection 8.3 at which time
the entire unpaid principal amount of Term Loan A plus accrued
interest thereon shall be due and payable. Notwithstanding the
foregoing, no Scheduled Installment of Term Loan A shall be
due and payable on each of February 1, 1998, March 1, 1998 and
April 1, 1998 (the "Term Loan A Moratorium Period"); provided,
however, interest on the outstanding principal balance of Term
Loan A shall continue to be paid by Borrower during the Term
Loan A Moratorium Period in accordance with the provisions of
subsection 2.2(C).
(c) Section 2.1(A)(5) of the Loan Agreement is hereby amended as
follows:
(i) the third sentence of the first paragraph thereof is
hereby amended to provide as follows:
"Term Loan D shall bear interest from the date such Loan
is made to the date paid in full at a rate per annum equal to
the interest rate set forth in Section 2.2(A) applicable to
Term Loan B; provided, however, in the event the entire
outstanding balance of Term Loan D is not paid in full
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in cash on or prior to May 31, 1998, then commencing on June
1, 1998 Term Loan D shall bear interest at a rate per annum
equal to (a) with respect to Base Rate Loans, the Base Rate
plus one and one-half percent (1.50%) and (b) with respect to
LIBOR Rate Loans, the LIBOR Rate plus three and one-quarter
percent (3.25%)."
(ii) The second paragraph thereof is hereby amended to provide
as follows:
"Scheduled Installment of Term Loan D" means the
principal installment in an amount equal to $2,500,000,
payable, subject to the provisions of subsection 2.4(B), (a)
in eighteen (18) consecutive monthly principal installments,
the first seventeen (17) of which shall be in an amount equal
to $140,000 and the last installment of which shall be in an
amount equal to the then outstanding principal balance
thereof, commencing on May 1, 1998 and on the first day of
each month thereafter (it being understood that Borrower may
prepay Term Loan D, in whole or in part, from time to time) or
(b) the earlier to occur of (i) the Termination Date or (ii)
acceleration of the Obligations in accordance with the
provisions of subsection 8.3 at which time the entire unpaid
principal amount of Term Loan D plus accrued interest thereon
shall be due and payable.
(d) Section 2.3 of the Loan Agreement is hereby amended by adding
new subsections "(G)" and "(H)" to provide as follows:
"(G) Term Loan D Premium. Borrower hereby acknowledges that,
in accordance with Section 2.1(A)(5) of the Sixth Amendment to
this Agreement (the "Sixth Amendment"), Agent is permitted to
charge Borrower's loan account in an amount equal to $100,000
as a premium payable to Agent (the "Term Loan D Premium") for
Borrower's failure to pay the entire outstanding balance of
Term Loan D in full in cash on or prior to January 31, 1998.
Agent and Borrower hereby acknowledge that notwithstanding
anything contained in the Sixth Amendment to the contrary, the
Term Loan D Premium shall be payable in four (4) consecutive
weekly installments each in an amount equal to $25,000,
payable on each of February 3, 1998, February 10, 1998,
February 17, 1998 and February 24, 1998, which such amounts
may be charged by Agent to Borrower's loan account as a
Revolving Loan when due."
"(H) Eighth Amendment Restructuring Fee. In consideration of
Agent's agreement to enter into an Eighth Amendment to this
Agreement, Borrower hereby acknowledges that it shall pay to
Agent a restructuring fee in an amount equal to $80,000 (the
"Restructuring Fee"), which shall be payable in four (4)
consecutive monthly installments each in an amount equal to
$20,000, payable on each of February 28, 1998, March 31, 1998,
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April 30, 1998 and May 31, 1998, which such amounts may be
charged by Agent to Borrower's loan account as a Revolving
Loan when due; provided, however, in the event the entire
outstanding balance of Term Loan D is paid in full in cash
prior to May 31, 1998 (a "Payment Event") then that portion of
the Restructuring Fee payable to Agent solely for those months
occurring subsequent to the month in which the Payment Event
occurred, if any, shall be deemed waived."
(e) Section 2.4(B) of the Loan Agreement is hereby amended by adding a new
subsection "(5)" to provide as follows:
"(5) Prepayments from Excess Cash Flow. Within one hundred and
five (105) days after the end of each Fiscal Year, Borrower
shall prepay Term Loan D in an amount equal to twenty-five
percent (25%) of Excess Cash Flow for such prior Fiscal Year
calculated on the basis of the audited financial statements
for such Fiscal Year delivered to Agent pursuant to subsection
5.1(B). All such prepayments from Excess Cash Flow shall be
applied to the outstanding principal balance of Term Loan D in
inverse order of maturity thereof. Concurrently with the
making of any such payment, Borrower shall deliver to Agent a
certificate or Borrower's chief executive officer or chief
financial officer demonstrating its calculation of the amount
required to be paid."
3. Conditions of Effectiveness. This Amendment shall become
effective when and only when Agent shall have received (a) four (4) copies of
this Amendment executed by Borrower and Corporate Guarantor and (b) such other
certificates, instruments, documents, agreements and opinions of counsel as may
be required by Agent or its counsel, each of which shall be in form and
substance satisfactory to Lender and its counsel.
4. Representations and Warranties. Borrower hereby represents and
warrants as follows:
(a) This Amendment and the Agreement, as amended hereby, constitute
legal, valid and binding obligations of Borrower and are enforceable against
Borrower in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, Borrower hereby
reaffirms that all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not specifically amended hereby are correct
in all material respects and agrees that all covenants, representations and
warranties shall be deemed to have been remade as of the effective date of this
Amendment.
(c) No Event of Default or Default has occurred and is continuing or
would exist after giving effect to this Amendment.
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(d) Borrower has no defense, counterclaim or offset with respect to
the Loan Agreement or the Obligations thereunder.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in
the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) Except as specifically amended herein, the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of Agent or Lender,
nor constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
6. Governing Law. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
7. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which taken together shall be deemed to constitute one and the same
agreement. Any signature received by facsimile transmission shall be deemed an
original signature hereto.
[SIGNATURE LINES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first written above.
UNITEL VIDEO, INC., as Borrower
By: /s/ Barry Knepper
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Name: Barry Knepper
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Title: Chief Executive Officer
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R SQUARED, INC., as
Corporate Guarantor
By: /s/ Barry Knepper
--------------------------------------
Name: Barry Knepper
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Title: President
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HELLER FINANCIAL, INC., as Agent
and Lender
By: /s/ Venkat Venkatesan
--------------------------------------
Name: Venkat Venkatesan
------------------------------------
Title: Vice President
-----------------------------------