Exhibit 10.24
ASTEA INTERNATIONAL INC.
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT ("Modification Agreement") dated as of
June 30, 1997, by and among ASTEA INTERNATIONAL INC. ("Borrower"), PNC BANK,
NATIONAL ASSOCIATION, successor by merger to Midlantic Bank, N.A. ("Bank") and
PNC LEASING CORP. ("PNC").
BACKGROUND
Borrower and Bank entered into a certain Amended and Restated Loan and
Security Agreement dated as of April 24, 1995 (as amended to date, the "Loan
Agreement"), the terms of which are incorporated herein by reference. Borrower
and PNC have entered into a certain Master Lease Agreement ("Master Lease")
dated October 30, 1996, Lease No. 937, and, in connection therewith, have from
time to time executed various Schedules, and Supplements to Schedules (said
Master Lease, together with all Schedules and Supplements heretofore and
hereafter executed in connection therewith, being hereinafter collectively
referred to as the "Lease").
Borrower has advised Bank of the occurrence of certain Events of Default
under and as defined in the Loan agreement, including, specifically, Borrower's
failure to comply with the financial covenants set forth in the Loan Agreement.
By reason of Sections 20 and 22 (g) of the Master Lease, an Event of Default has
occurred under the Lease.
Borrower has requested that Bank and PNC waive the said Events of Default,
and each of bank and PNC is willing to do so on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the parties, INTENDING TO BE LEGALLY BOUND, agree as
follows:
1. The parties hereby confirm the recitation of facts set forth in the
Background provisions hereof, and, without limitation, Borrower hereby confirms
the occurrence of the Events of Default as described therein.
2. Effective as of June 30, 1997, Section 6.01 (B) of the Loan Agreement is
hereby amended and restated in its entirety as follows:
"(B) Borrower shall at all times comply with the following financial
ratios, determined in accordance with GAAP:
(1) Borrower shall maintain a Ratio of Indebtedness to Tangible Net
Worth of not more than 3.35 to 1.0 as of June 30, 1997, 2.88 to 1.0 as of
September 30, 1997, 2.27 to 1.0 as of December 31, 1997 and 2.0 to 1.0 as
of the end of each fiscal quarter thereafter.
(2) Borrower shall maintain a Debt Service Ratio of not less than
1.1 to 1.0 as of June 30, 1998 and as of the end of each fiscal quarter
thereafter, determined on the basis of the four fiscal quarters then ended.
(3) Borrower shall have a Net Profit (net income after taxes) of
not less than $500,000 per fiscal quarter, commencing with fiscal quarter
ending September 30, 1997.
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Subject to satisfaction of all conditions as set forth in Section 3 hereof, each
of Bank and PNC hereby waive the outstanding Events of Default based on
Borrower's noncompliance as of March 31, 1997 with the financial covenants as
presently set forth in Section 6.01 (B) of the Loan Agreement.
3. As a condition to the effectiveness of this Modification Agreement,
including Bank's agreement to waive outstanding Events of default as set forth
in Section 2 hereof:
a. Borrower shall, concurrently herewith, pledge with Bank cash in the
amount of $2,000,000, to be held by Bank, or an affiliate of Bank, as collateral
security for all of Borrower's present and future liabilities and obligations to
Bank and PNC. In order to more fully effect the intent hereof, Borrower hereby
grants to each of Bank and PNC a security interest in said cash and in all
Investment Property (as defined in the Pennsylvania Uniform Commercial Code) in
which such cash may from time to time be invested, including any custodial or
other investment account now or hereafter maintained with Bank or any affiliate
of Bank, and in all proceeds thereof. If invested through any custodial or other
investment account maintained with Bank or any affiliate of Bank, Borrower
agrees that, without Bank's prior written consent, Borrower will have no right
to liquidate or otherwise withdraw any investment or cash with respect to such
account until all of Borrower's liabilities and obligations to Bank and PNC have
been paid in full and Bank and PNC have no further commitments to Borrower,
notwithstanding anything to the contrary contained in any custodial or other
agreement at any time executed in connection with such custodial, or other
investment account. If requested by Bank, Borrower will deliver to Bank such
further documents or instruments required by Bank in order to more fully grant,
perfect and protect the foregoing pledge and security interest, including
without limitation, an agreement, inform and substance satisfactory to Bank,
duly executed by any person or entity with whom such cash is invested by which
such person or entity confirms that it holds the same subject to the lien
thereon created in favor of PNC and Bank and agrees to take instructions and
entitlement orders with respect to such investment from Bank and/or PNC;
b. Borrower shall, concurrently herewith, execute and deliver to Bank
a Cross-Collateralization Agreement in the form of Exhibit "A" hereto;
c. Borrower shall deliver to Bank resolutions of Borrower's Board of
Directors authorizing the execution and delivery of this Modification Agreement
and the other documents to be executed pursuant hereto.
4. Subject to satisfaction of all conditions as set forth in Section 3
hereof, the Revolving Credit Termination Date, as defined in the Loan Agreement,
is hereby extended to June 1, 1998.
5. Borrower hereby ratifies and reaffirms all of its obligations and
liabilities to each of PNC and Bank agrees that the same are owing without
offset, counterclaim or other defense of any nature. Borrower specifically
ratifies and reaffirms all confession of judgment and waiver of jury trial
provisions set forth in any document or instrument executed in connection with
or otherwise evidencing such obligations or liabilities. Borrower specifically
releases each of Bank and PNC, their respective present and future officers,
employees and legal counsel, from any and all matter of claims, liabilities,
suits, actions, causes of action and damages of any kind or nature whatsoever,
at law or in equity, which Borrower has arising from or relating to any act or
omission by Bank or PNC and/or any such officer, employee or legal counsel,
through and including the date hereof in connection with the consideration,
negotiation, consummation, administration and/or enforcement of Borrower's
liabilities and obligations to PNC or Bank, including the Loan Agreement, the
Lease and this Modification Agreement.
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IN WITNESS WHEREOF, the parties have executed this Modification Agreement
on the date first above written.
ASTEA INTERNATIONAL INC.
By: /s/ John G. Phillips
John G. Phillips
Attest: /s/ Michael Gresko
Michael Gresko
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Joseph A. Serianni
Joseph A. Serianni
PNC LEASING CORP.
By:
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