FIRST AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("First Amendment") dated as of September , 2000, by and among DIRECTRIX,
INC., a Delaware corporation (the "Borrower"), and J. ROGER FAHERTY and DONALD
J. MCDONALD, JR. (collectively, the "Original Lenders"), MARLIN CAPITAL CORP.
("Marlin"), LELAND H. NOLAN and NEW HORIZONS INVESTMENT CORP., N.V. (the "2nd
Round Lenders") and Newbridge Investment, N.V. ("Newbridge") and those other
persons whose names and addresses appear on attached Schedule 1, as such
schedule may be amended from time to time as provided for herein (the "New
Lenders").
RECITALS
The Borrower and the Original Lenders are parties to a Loan and
Security Agreement dated as of March 15, 1999, as amended, (the "Original Loan
Agreement") that provided for the Original Lenders to loan up to $1.1 million to
the Borrower. The Borrower granted to the Original Lenders warrants to purchase
an aggregate of 33,000 shares of Directrix Common Stock in consideration of
their making the loans and financial accommodations to the Borrower. The
Original Lenders loaned an aggregate amount equal to the Original Maximum Amount
to the Borrower.
The "2nd Round Lenders, the Original Lenders and the Borrower entered
into an Amended and Restated Loan and Security Agreement dated as of February
16, 2000 (the "Loan Agreement") which superseded the Original Loan Agreement.
(All defined terms not otherwise defined herein shall have the same meaning as
in the Loan Agreement; all Section references are to the Loan Agreement.) The
Loan Agreement provided, among other things, for the 2nd Round Lenders to loan
an aggregate amount of up to $2.4 million to the Borrower increasing the total
amount available to $3.5 million. The Borrower granted to the 2nd Round Lenders
warrants to purchase an aggregate of 72,000 shares of Directrix Common Stock in
consideration of their making the loans and financial accommodations to the
Borrower. One of the 2nd Round Lenders, Leland H. Nolan, who had committed to
provide $400,000 of the $2.4 million committed to by the 2nd Round Lenders,
transferred a $166,700 Note to Alberto Antebi (41.675% of Nolan's commitment)
who became a 2nd Round Lender.
The Borrower is seeking to increase the maximum amount available
under the Loan Agreement by $1 million. The Original Lenders, Marlin and the
New Lenders (collectively, the "3rd Round Lenders") have agreed to make up to
$1 million of additional financing ("Additional Credit Facility") available
provided the Borrower agrees to the amendment of certain of the provisions
of the Loan Agreement. The 3rd Round Lenders have agreed to provide, as of the
date hereof, $650,000 of the Additional Credit Facility. The Borrower will be
seeking additional New Lenders to agree to provide the balance of the
Additional Credit Facility.
All the Lenders are amenable to the foregoing on the following terms
and conditions.
NOW THERFORE, the parties agree as follows:
Terms of Agreement
1. Additional New Lenders; Increase in Credit Facility.
1.1 The New Lenders are Newbridge and those persons whose
names and addresses are listed on attached Schedule 1 as such schedule may be
amended from time to time for up to 90 days after the date hereof. Schedule 1
shall include the name, address and the amount of each New Lender's commitment
to make New Advances (as that term is defined in Section 1.2). As provided for
in Section 1.2, Newbridge has committed to make $250,000 of New Advances and the
Borrower will be seeking other New Lenders to make Advances aggregating up to
$350,000 of New Advances. The New Lenders and the Borrower shall execute
counterpart copies of this Agreement and the Loan Agreement.
1.2 The 3rd Round Lenders hereby severally agree to make New
Advances to the Borrower in the aggregate amount up to the Additional Credit
Facility ("New Advances"), increasing the New Maximum Amount to $4.5 million,
assuming the full amount of the Additional Credit Facility is secured. The Loan
Agreement shall be hereby amended to reflect the New Maximum Amount as provided
FOR HEREIN. EACH 3RD Round Lenders' obligation to make New Advances shall be as
follows:
<TABLE>
<CAPTION>
<S> <C>
3rd Round Lender Amount of New Advances
---------------------------------------------- --------------------------
J. Roger Faherty $200,000
Donald J. McDonald, Jr. $100,000
Marlin Capital Corp. $100,000
Newbridge Investment, N.V. $250,000
Other New Lenders Up to $350,000
Total Up to $1,000,000
</TABLE>
The procedures for requesting and making Advances and repayment thereof set
forth in Loan Agreement Sections 1.03 And 1.04 shall apply to the New Advances.
The New Advances shall be reflected in the Notes as provided for in Section 1.02
and recorded by the Borrower as contemplated by Section 1.06. Notwithstanding
any provision of the Loan Agreement to the contrary, the Original Lenders shall
be obligated to make their share of the New Advances prior to the other 3rd
Round Lenders. The balance of the New Advances shall made in relative proportion
to each remaining 3rd Round Lender's obligation to make New Advances.
2. Modification of Financial Covenants. Loan Agreement Section
3.10.1 and 3.10.2 shall be deleted in their entirety and the following
substituted therefore:
"3.10.1 Stockholders' Equity. The Borrower will not fail to maintain
Stockholders' Equity of at least $3 million at the end of each fiscal year prior
to the Maturity Date commencing with the fiscal year ending March 31, 2001."
4. Grant of Additional Warrants for Additional Credit Facility. In
consideration of the 3rd Round Lenders' agreement to provide the Additional
Credit Facility as provided for in Section 1, the Borrower shall grant to each
3rd Round Lender a warrant to purchase shares of Directrix Common Stock
("Warrants") on the basis of a Warrant to acquire 6,000 shares for each 3rd
Round Lender's commitment to make $100,000 of New Advances. The form of the
Warrants is attached as Exhibit A.
5. Grant of Additional Warrants for Modification of Covenants. In
consideration of the Original and 2nd Round Lenders' agreement to the
modification of the financial covenants as provided for in section 2 and
consenting to the 3rd Round Lenders' providing the additional credit facility,
the Borrower shall grant to each Original Lender and each 2nd Round Lender a
Warrant to acquire the number of shares of common Stock set forth below:
<TABLE>
<CAPTION>
<S> <C>
No. Shares of Common Stock
Lender covered by warrant
-------------------------------------------------------------- --------------------------------
J. Roger Faherty 5,400
Donald J. McDonald, Jr. 1,200
Marlin Capital Corp. 3,000
Leland H. Nolan 1,400
Alberto Antebi (as assignee of a portion of Nolan's Note) 1,000
New Horizons Investment Corp. 9,000
Total 21,000
</TABLE>
6. Conversion Right; Mandatory Prepayment.
6.1 If the Borrower has not sold or otherwise transferred its
option ("EMI Option") to acquire the assets or stock of Emerald Media, Inc. by
March 31, 2001, then the Lenders shall have the option to convert their Notes
into Directrix Common Stock on the same terms as the most recent placement of
Directrix Common Stock or, if there has been no placement of Directrix Common
Stock, on terms to be negotiated, in good faith, by the Borrower and the
Lenders.
6.2 If the Borrower sells, assigns or otherwise transfers the
EMI Option for consideration payable in cash, the Borrower shall apply the cash
consideration in excess of the receivable owed to Directrix by EMI, to prepay
the Notes held by the Second Round Lenders. The prepayment shall be made among
the 2nd Round Lenders in relative proportion to the amount of Advances made by
each 2nd Round Lender to the aggregate Advances made by the 2nd Round Lenders
and taking into account the transfer by Nolan to Antebi. The Borrower shall be
entitled to reborrow any such prepayment as provided for in the Loan Agreement.
7. Reduction in New Maximum Amount. If one or both of the Original
Lenders converts all or a portion of their Notes into Directrix Common
Stock, the New Maximum Amount shall be reduced by the principal amount of the
Notes so converted and the Borrower may not re-borrow the amount converted from
the Original Lenders
8. Effectiveness of this First Amendment. The Lenders must have
received the following items, in form and content acceptable to Lenders, before
this Agreement is effective.
8.1 Agreement. This First Amendment fully executed by the
Borrower and the 3rd Round Lenders in a sufficient number of counterparts for
distribution to the Lenders and Borrower.
8.2 Other Lenders. The Lenders other than the 3rd Round Lenders
shall have a copy of this First Amendment consenting to the provisions of
Section 2 hereof.
8.3 Other Required Documentation. All other documents and
legal matters in connection with the transactions contemplated by this First
Amendment shall have been delivered or executed or recorded and shall be in form
and substance satisfactory to the Lenders.
9. Reservation of Rights. Except as, and to the extent, set forth
herein: (a) the Lenders hereby reserve all remedies, powers, rights, and
privileges that the Lenders may have under the Loan Agreement at law (including
under the Code), in equity, or otherwise; and (b) all terms, conditions, and
provisions of the Loan Agreement are and shall remain in full force and effect
and nothing herein shall operate as a consent to or a waiver, amendment, or
forbearance in respect of any other or further matter (including any Event of
Default) or any other right, power, or remedy of the Lenders under the Loan
Agreement.
10. Representations and Warranties. The Borrower represents and
warrants as follows:
10.1 Authority. The Borrower has the requisite corporate power
and authority to execute and deliver this First Amendment and to perform its
obligations hereunder and under the Loan Agreement (as amended or modified
hereby). The execution, delivery and performance by the Borrower of this First
Amendment, and the performance by the Borrower of the Loan Agreement (as amended
or modified hereby) has been duly approved by all necessary corporate action of
the Borrower and no other corporate proceedings on the Borrower's part are
necessary to consummate such transactions.
10.2 Enforceability. This First Amendment has been duly
executed and delivered by the Borrower. This First Amendment and the Loan
Agreement (as amended or modified hereby) is the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms, and is in full force and effect.
10.3 Representations and Warranties. The representations and
warranties contained in the Loan Agreement (other than any such representations
or warranties that, by their terms, are specifically made as of a date other
than the date hereof) are correct on and as of the date hereof as though made on
and as of the date hereof.
10.4 No Default. No event has occurred and is continuing that
constitutes an Event of Default.
11. Choice of Law. The validity of this First Amendment, its
construction, interpretation and enforcement, the rights of the parties
hereunder, shall be determined under, governed by, and construed in accordance
with the laws of the State of New York governing contracts only to be performed
in that State.
12. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this First Amendment by facsimile
shall be effective as delivery of a manually executed counterpart of this First
Amendment.
13. Ratification. Borrower hereby restates, ratifies and reaffirms
each and every term and condition set forth in the Loan Agreement effective as
of the date hereof.
IN WITNESS WHEREOF, each of the parties hereto have caused this
First Amendment to be executed as of the date first above written.
<PAGE>
DIRECTRIX, INC.
By:_________________________________
J. Roger Faherty, Chairman & CEO
ORIGINAL LENDERS
____________________________________
J. ROGER FAHERTY
____________________________________
DONALD J. MCDONALD, JR.
2ND ROUND LENDERS
MARLIN CAPITAL CORP
By:_________________________________
Mark Egen, President
NEW HORIZONS INVESTMENT CORP., N.V.
By:_________________________________
Russell Molina, Attorney-In-Fact
____________________________________
Leland H. Nolan
____________________________________
Alberto Antebi
NEW LENDERS
NEWBRIDGE INVESTMENT N.V.
By:_________________________________
Russell Molina, Attorney-In-Fact
<PAGE>
SCHEDULE 1
Newbridge Investment, N.V. 4900 Woodway, Suite 650,
Houston, Texas 77056
