Exhibit 10.2
EXECUTION
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
July 1, 2000
Quad Systems Corporation
2405 Maryland Road
Willow Grove, Pennsylvania 19090-1710
Gentlemen:
Congress Financial Corporation, a Delaware corporation (together with its
successors and assigns, "Lender") and Quad Systems Corporation, a Delaware
corporation ("Borrower") have entered into certain financing arrangements
pursuant to which Lender has made and may make loans and advances and provide
other financial accommodations to Borrower as set forth in the Loan and Security
Agreement, dated January 7, 2000, by and between Lender and Borrower (as the
same now exists, is amended hereby and may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement") and various other agreements documents and instruments executed
and/or delivered in connection therewith or related thereto (together with the
Loan Agreement, collectively, the "Financing Agreements").
Borrower has requested certain amendments to the Loan Agreement and Lender
is willing to agree to such amendments subject to the terms and conditions
contained herein. By this Amendment, Lender and Borrower desire and intend to
evidence such amendments. All capitalized terms used herein and not otherwise
defined herein shall have the meanings given to them in the Loan Agreement.
In consideration of the foregoing, the mutual agreements, and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows;
1. Amendments to Loan Agreement.
1.1 Interest Rate. Section 1.45 of the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor.
"1.45 "Interest Rate" shall mean:
(a) subject to clauses (b) and (c) below, as to Prime Rate Loans, a
rate of three-quarters (3/4%) percent per annum in excess of the
Prime Rate and as to
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Eurodollar Rate Loans a rate of three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate
(based on the Eurodollar Rate applicable for the Interest Period
selected by Borrower as in effect three (3) Business Days after
the date of receipt by Lender of the request of Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any Eurodollar Rate
previously quoted to Borrower); provided, that;
(b) subject to clause (c) below, the interest Rate as to Prime Rate
Loans shall be reduced to a rate of one-quarter (1/4%) percent
per annum in excess of the Prime Rate and the Interest Rate as to
Eurodollar Rate Loans shall be reduced to a rate of two and
three-quarters (2 3/4%) percent per annum in excess of the Prime
Rate, effective as of the first day of the month after each of
the following conditions is satisfied as determined by Lender:
(i) (A) For the first six months of the fiscal year ending on
September 30, 2001 (such six month period ending on March 31,
2001), or (B) for any fiscal year to date period during the
fiscal year ending on September 30, 2001, the Pre-Tax Income of
Borrower and its Subsidiaries as set forth in the consolidated
financial statements of Borrower and its Subsidiaries for such
month delivered to Lender, in accordance with Section 9.6 hereof,
shall equal or exceed the Pre-Tax Income for such period set
forth to Schedule 1.45(b) annexed hereto and (ii) no Event of
Default or act, condition or event which with notice or passage
of time would constitute an Event of Default shall exist or have
occurred, and be continuing; and
(c) notwithstanding anything to the contrary contained herein, the
Interest Rate, as to Prime Rate Loan and Eurodollar Rate Loans,
shall mean the rate two (2%) percent per annum more than the
otherwise then applicable Interest Rate, at Lenders option,
without notice, (1) either (a) for the period from and after the
date of termination or non-renewal hereof until Lender has
received full and final payment of all obligations
(notwithstanding entry of a judgment as Borrower) or (b) from and
after the date of the occurrence of an Event of Default for so
long as such Event of Default is continuing as determined by
Lender, and (2) on the Loans to any Borrower at any time
outstanding in excess of the amounts available to such Borrower
under Section 2 (whether or not such excess(es), arise or are
made with or without Lender's knowledge or consent and whether
made before or after an Event of Default)."
1.2 Special Availability Reserve. Section 2 of the Loan
Agreement is hereby amended by adding the following new Section 2.3
thereto;
"2.3 Special Availability Reserve. Without limiting any
other rights or remedies of Lender under this Agreement or any of
the other Financing Agreements with respect
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to the establishment of Reserves or otherwise, Lender may on the date
hereof establish at special Reserve reducing the amount of Loans and Letter
of Credit Accommodations otherwise available to Borrower in an amount equal
to $500,000 (the "Special Availability Reserve"). The term "Reserves" as
used herein shall include; without limitations the Special Availability
Reserve."
1.3 Inventory Covenants. Section 7.3(d)(iv)(B)(2) of the Loan Agreement is
hereby amended by deleting "$3,000,000" and substituting "$4,000,000" therefor.
1.4 Adjusted Tangible Net Worth. Section 9.18 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
"9.18 Adjusted Tangible Net Worth. Borrower shall as of the end of
each month have Adjusted Tangible Net Worth of not less than the
amount for such month set forth below:
Minimum Adjusted
Month Tangible Net Worth
----- ------------------
September 2000 $10,500,000
December 2000 $11,000,000
March 2001 $11,000,000
June 2001 $11,500,000
September 2001 and for $12,500,000"
each month thereafter
1.5 Schedules. The Schedules to the Loan Agreement are hereby supplemented
by adding Schedule 1.45(b) thereto, which schedule is attached hereto as Exhibit
A. Such schedule is incorporated into and made a part of the Loan Agreement in
all respects.
2. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrower to Lender pursuant to the Loan Agreement and the other
Financing Agreements. Borrower hereby represents, warrants and covenants with
and to Lender as follows (which representations, warranties and covenants are
continuing and shall survive the execution and delivery hereof and shall be
incorporated into and made a part of the Loan Agreement and the other Financing
Agreements):
(1) No Event of Default, or event which with the giving of notice or
passage of time, or both, would constitute an Event of Default,
exists on the date of this Amendment.
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(2) This Amendment has been duly executed and delivered by Borrower
and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein
constitute the legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective
terms.
3. Amendment Fee. In addition to all other fees, charges, interest and
expenses payable by Borrower to Lender, Borrower shall pay to Lender a fee for
entering into this Amendment in the amount equal to $25,000, which fee is fully
earned and payable as of the date hereof and may be charged directly to the loan
account of Borrower maintained by Lender.
4. Conditions Precedent. The effectiveness of the amendments contained
herein shall only be effective upon the satisfaction of each of the following
conditions precedent in a manner satisfactory to Lender:
(1) no Event of Default shall have occurred and be continuing and no
event shall have occurred or condition be existing and continuing
which, with notice or passage of time or both, would constitute
an Event of Default; and
(2) Lender shall have received an original of this Amendment, duly
authorized, executed and delivered by Borrower.
5. Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Loan Agreement and the other Financing
Agreements are intended or implied and in all other respects, the Loan Agreement
and the other Financing Agreements are hereby specifically ratified restated and
confirmed by all parties herein as of the effective date hereof. To the extent
of any conflict between the terms of this Amendment and the Loan Agreement and
the other Financing Agreements, the terms of this Amendment shall control.
6. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
7. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by, interpreted and determined in accordance
with the laws of the State of New York.
8. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
9. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
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Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Lender, shall become
a binding agreement between Borrower and Lender.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: /s/ Tomas Martin
Title: Asst. Vice President
ACKNOWLEDGED AND AGREED:
QUAD SYSTEMS CORPORATION
By: /s/ Anthony R. Drury
Title: Sr. VP Finance and CFO
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