CoActive Marketing Group Inc. Contracts
Sample Business Contracts
Loan Documents [Amendment No. 3] - PNC Bank NA, Inmark Enterprises Inc., U.S. Concepts Inc., Inmark Services Inc. and Optimum Group Inc.
THIRD AMENDMENT TO LOAN DOCUMENTS
THIS THIRD AMENDMENT TO LOAN AGREEMENT; SECURITY AGREEMENT; and PLEDGE
AGREEMENT (this "Amendment") is made as of June 30, 1999 among PNC Bank National
Association ("Lender") having offices at One Garret Mountain Plaza, West
Paterson, New Jersey 07424, Inmark Enterprises, Inc., a Delaware corporation
("Enterprises"), U.S. Concepts, Inc., a Delaware corporation, ("USC"), Inmark
Services, Inc. a Delaware corporation ("Services"), and Optimum Group, Inc., an
Ohio corporation (formerly, OG Acquisition Corp.) ("New OGI" and together with
Services and USC, the "Borrower"). Enterprises, USC, Services, and New OGI are
collectively referred to herein as the "Inmark Group".
PRELIMINARY STATEMENT:
A. Lender, Enterprises, Services and New OGI entered into a Loan
Agreement dated as of March 31, 1998 ((i) as amended by a First Amendment to
Loan Documents dated as of December 29, 1998, to which USC became a party, (ii)
as amended by a Second Amendment to Loan Documents dated as of January 14, 1999,
and (iii) as amended hereby and as further amended, supplemented or otherwise
modified from time to time, the "Agreement"), pursuant to which, among other
things, Lender agreed to make (i) Revolving Loans to Borrower in the aggregate
principal amount at any one time outstanding not to exceed $7,000,000 and (ii) a
term loan to Borrower in the principal amount of $5,000,000, all upon the terms
and subject to the conditions set forth therein.
B. The Inmark Group has requested that Lender waive the non-compliance
by Borrower of certain of its covenants under Sections 4.5(c), 6.1, 6.2 and 6.4
of the Agreement (such waivers as expressly described and limited herein shall
be referred to collectively as "Waivers").
C. Lender has agreed to the Waivers upon the condition, among others,
that each member of the Inmark Group agrees to the amendments set forth herein
and executes and delivers this Amendment.
AGREEMENT:
1. Definitions. Capitalized terms used in this Amendment shall have the same
meanings given them in the Agreement, unless otherwise defined herein.
2. Section 1.1(a). Section 1.1(a) of the Agreement is hereby amended to delete
"$7,000,000" in the sixth line and substitute "$5,000,000" therefor.
3. Section 3.8. The Lender hereby acknowledges that the events described in the
letter dated June 30, 1999 from counsel to the Inmark Group to counsel to the
Lender and attached hereto as Exhibit A relative to Agreement of Sublease dated
November 8, 1995 between Ketchum Communications, Inc., and USC, as assignee of
U.S Concepts, Inc., a New York corporation (the "Sublease") solely for the
purposes of Section 3.8 of the Agreement do not constitute a default under the
Sublease which individually or in the aggregate has a Material Adverse Effect on
USC.
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4. Section 4.5(c). The Lender hereby grants a waiver of Borrower's
non-compliance with Section 4.5(c) of the Agreement, solely in respect of
Borrower's failure to deliver the required monthly financial statements and
Accounts aging report and account payable aging reports in respect of the months
ended April 30,1999 (the "April 1999 Report") and May 31,1999 (the "May 1999
Report"), and of the Event of Default that would otherwise result from a
violation of that Section, solely by reason of such non-compliance. The Inmark
Group agrees that failure to submit the April 1999 Report and May 1999 Report to
Lender on or before July 15,1999 and July 31, 1999 respectively shall constitute
a breach of the Agreement, retroactive to the date of Borrower's initial
non-compliance with Section 4.5(c).
5. Section 6.1.
a. Waiver. The Lender hereby grants a waiver of Borrower's
non-compliance with Section 6.1 of the Agreement, solely in respect of the
quarter ended March 31, 1999, and of the Event of Default that would otherwise
result from a violation of that Section, solely by reason of such
non-compliance.
b. Amendment. Section 6.1 of the Loan Agreement is hereby amended to
replace the Minimum EBITDA amounts corresponding to the following dates with the
respective adjusted amounts set forth below:
Quarter Ended Minimum EBITDA
June 30, 1999 $2,050,000
September 30, 1999 $3,210,000
December 31, 1999 $3,450,000
6. Section 6.2.
a. Waiver. The Lender hereby grants a waiver of Borrower's
non-compliance with Section 6.2 of the Agreement, solely in respect of the
quarter ended March 31, 1999, and of the Event of Default that would otherwise
result from a violation of that Section, solely by reason of such
non-compliance.
b. Amendment. Section 6.2 of the Loan Agreement is hereby amended to
replace the Maximum Senior Debt Leverage Ratio corresponding to the following
dates with the respective adjusted ratios set forth below:
Quarter Ended Maximum Senior Debt
Leverage Ratio
June 30, 1999 4.15:1
September 30, 1999 2.75:1
December 31, 1999 2.50:1
7. Section 6.4 The Lender hereby grants a waiver of Borrower's non-compliance
with Section 6.4 of the Agreement, solely in respect of the quarter ended March
31, 1999, and of the Event of Default that would otherwise result from a
violation of that Section, solely by reason of such non-compliance.
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8. Applicable Margin. The "Applicable Margin," as defined in Section 1.1 of
Exhibit A, is hereby amended to replace the rates applicable for the
corresponding Total Leverage Ratio with the following adjusted rates set forth
below:
Applicable Margin for Applicable Margin
Senior Debt Leverage Ratio Eurodollar Rate Loans for Base Rate Loans
less than 1.5:1 1.50% 0.00%
less than 2.0:1 but greater 2.00% 0.50%
than or equal to 1.5:1
less than 3.0:1 but greater 2.50% 1.00%
than or equal to 2.0:1
greater than or equal to 3.0:1 3.00% 1.50%
9. Interest Period. The portion of the second sentence of the definition of
"Interest Period," in Section 1.1 of Exhibit A, up to the colon, is hereby
amended and restated as follows:
"The duration of each such Interest Period shall be three months,
provided that:"
The portion of such second sentence following the colon shall remain
unchanged.
10. Other Covenants. Each member of the Inmark Group, jointly and severally,
covenants and agrees that it shall furnish to the Lender in form and substance
satisfactory to Lender:
a. As soon as available, but in no event later than 45 calendar days
after the end of the quarters ending June 30, 1999, September 30, 1999 and
December 31, 1999, at the Inmark Group's sole cost and expense, a report in form
and substance reasonably acceptable to Lender that includes (i) a cover letter
from KPMG LLP pertaining to its review of the financial statements of the Inmark
Group and (ii) a special report from KPMG LLP pertaining to its testing of not
less than 75 percent of the revenue recognized in the applicable quarter by
Services -- it being agreed that such report shall include KPMG LLP's review and
analysis of, among other things, Services' following of its corporate policies
for revenue recognition, Services' matching of expenses and accruals in
accordance with GAAP and such other matters customarily found in reports of this
type from accounting firms; and
b. No later than July 31, 1999, a written plan, prepared and approved
by the management of the Inmark Group, that sets forth in reasonable detail
(together with estimated time frames) to address (and cure) the issues raised in
the management letter, dated June 10, 1999, from KPMG LLP to the Inmark Group.
11. Additional Fees. The Inmark Group acknowledges and agree that if the Maximum
Senior Debt Leverage Ratio is not reduced below 2.0:1 in respect of the quarter
ended December 31, 1999, Borrower shall pay to Lender an additional fee of
$25,000, as soon as practicable, but in no case later than January 15, 2000.
12. Collection of Receivables. If requested by Lender, Borrower shall establish
and maintain at an office of Lender a lockbox (the "Lockbox"), pursuant to
Lender's form of Lockbox Agreement (the "Lockbox Agreement"), for the collection
of payments in respect of Accounts. When such Lockbox is
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established, Borrower will direct each Account debtor to remit all payments in
respect of Accounts directly into the Lockbox. If, notwithstanding such
instructions, the borrower receives the proceeds of any Accounts, it shall
receive them as the Lender's trustee, shall not commingle them with Borrower's
other funds and shall immediately deliver such payments to the Lender in their
original form, duly endorsed in blank or shall deposit them into a payment
account, as the Lender may direct. Each deposit of any such proceeds of Accounts
shall be accompanied by information describing the source of the funds. Lender
may, at any time, notify Account debtors that the Accounts have been assigned to
the Lender and may collect them directly and charge Borrower for the costs and
expenses of collection. Borrower, at Lender's request, shall execute and deliver
to the Lender the Lockbox Agreement, any documents contemplated by the Lockbox
Agreement and such other documents as Lender shall require in connection with
the foregoing. For the avoidance of doubt, the Lockbox Agreement, if executed,
shall be considered a "Loan Document."
13. Certain Representations and Warranties.
a. In order to induce the Lender to enter into this Amendment, each
member of the Inmark Group hereby represents and warrants to the Lender that
after giving effect to the Waivers and the amendments contemplated by this
Amendment that:
(1) no Event of Default, or any event which, with the giving of notice,
the lapse of time, or both, or the occurrence of any other condition, would
constitute an Event of Default, has occurred and is continuing;
(2) the Agreement, the Security Agreement, the Pledge Agreement and
each of the other Loan Documents (as amended by this Amendment), after giving
effect to this Amendment, continue to be in full force and effect and to
constitute the legal, valid and binding obligations of each member of the Inmark
Group that is a party thereto, enforceable against each member of the Inmark
Group in accordance with their respective terms;
(3) the representations and warranties made by each member of the
Inmark Group in or pursuant to the Agreement, the Security Agreement, the Pledge
Agreement or any other Loan Document (in each case as amended by this
Amendment), or which are contained in any certificate, document or financial or
other statement furnished at any time under or in connection herewith or
therewith, are each true and correct in on and as of the date hereof, as though
made on and as of such date;
(4) the "draft" quarterly financial statements for the Inmark Group for
the quarter ended March 31, 1999 and delivered to Lender were prepared in
accordance with GAAP and fairly present the financial condition and operating
results of the Inmark Group as of that date;
(5) the "draft" financial statements for year ended March 31, 1999 for
the Inmark Group delivered to Lender were prepared in accordance with GAAP and
fairly present the financial condition and operating results of the Inmark Group
as of that date; and the KPMG LLP audited financial statements for the Inmark
Group for the same period will not reflect any modification from such draft
(other than non-material modifications).
14. Conditions to Effectiveness of this Amendment. This Amendment shall become
effective upon the satisfaction of the following conditions:
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a. Mandatory Prepayment. Borrower shall have prepaid the
outstanding principal amount of the Term Loan in an amount equal to $1,340,000.
b. Note. In exchange for the Second Amended and Restated
Revolving Note, Lender shall have received a Third Amended and Restated
Revolving Note, payable to the order of Lender, conforming to the requirements
hereof and executed by (a) duly authorized officer(s) of Borrower.
c. Fees and Expenses. The Inmark Group shall have paid all
expenses of Lender, including, without limitation, (i) an amendment fee in the
amount of $25,000 and (ii) reasonable fees and expenses of counsel, in
connection with the preparation, execution and delivery of this Amendment and
all other documents and instruments to be executed and delivered pursuant hereto
or in connection herewith, and the transactions contemplated hereby.
d. Recordings and Filings; Other Actions. Any documents
(including, without limitation, financing statements and an assignment of
registered intellectual property) required to be filed, registered or recorded
(and that have not already been so filed, registered or recorded) in order to
create, in favor of Lender a perfected Lien against the Collateral thereunder
with respect to which a Lien may be perfected by a filing under the Uniform
Commercial Code or any other applicable law shall have been delivered to Lender
duly executed by the appropriate member of the Inmark Group and shall be in
proper form to be filed, registered or recorded in each office in each
jurisdiction required in order to create in favor of Lender a perfected Lien on
the respective Collateral described therein having the priority purported to be
granted thereby. Lender shall have also received evidence that all necessary
filing fees and all taxes or other expenses related to such filings,
registrations or recordings will be paid in full. Lender shall have received
evidence that all other actions necessary or, in the opinion of Lender,
desirable to perfect the Liens created by the Loan Documents have been taken.
e. No Legal Restraints. There shall be no (i) litigation,
investigation or other proceeding of or before any Governmental Authority
pending or, to the best of knowledge of each member of the Inmark Group,
threatened against any member of the Inmark Group or any of its properties or
revenues that could have a Material Adverse Effect or (ii) injunction, writ,
restraining order or any order of any nature issued by any Governmental
Authority directing that the transactions provided for in this Amendment not be
consummated as therein provided.
f. Additional Matters. Lender shall have received such other
certificates, opinions, documents and instruments relating to the transactions
contemplated by this Amendment as it may have reasonably requested, and all
corporate and other proceedings and all other documents (including, all
documents referred to herein and not appearing as exhibits hereto) and legal
matters in connection with the transactions contemplated by this Amendment shall
be satisfactory in form and substance to Lender and its counsel.
15. Condition Subsequent. This Amendment shall become automatically void and of
no force and effect if on or prior to July 1, 1999 Lender shall not have
received a certificate from the Secretary or an Assistant Secretary of each
member of the Inmark Group, dated the Closing Date, certifying (as applicable)
that or as to (i) attached to each such certificate is a true, complete and
correct copy of the resolutions of the Board of Directors of such member of the
Inmark Group authorizing among other things the execution, delivery and
performance of this Amendment and (ii) such resolutions have not been amended,
modified,
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revoked or rescinded since the dates on which they were adopted and (iii) the
incumbency and signature of each officer signing this Amendment and any other
certificate or other document to be delivered pursuant hereto (and another
officer of such member of the Inmark Group shall certify as to the incumbency of
such Secretary or Assistant Secretary).
16. Counterparts. This Amendment may be executed in several counterparts, each
of which, when executed and delivered, shall be deemed an original, and all of
which together shall constitute one agreement.
17. Governing Law. This Amendment shall be governed by and construed and
interpreted in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law.
18. Effect of Amendment. From and after the effectiveness hereof, all references
to the Agreement, the Security Agreement, the Pledge Agreement in the other Loan
Documents shall mean the Agreement, the Security Agreement, the Pledge
Agreement, respectively, as amended and modified by this Amendment.
19. Ratification; Effect of Waivers. Except as amended and otherwise modified by
this Amendment, the Agreement, the Security Agreement, the Pledge Agreement and
the other Loan Documents shall remain in full force and effect in accordance
with their respective terms. Except as expressly described above, the Waivers
shall not constitute (i) a modification or an alteration of the terms,
conditions or covenants of the Agreement, the Security Agreement, the Pledge
Agreement or any other Loan Document or (ii) a waiver, release or limitation
upon the Lender's exercise of any of its rights and remedies thereunder, which
are hereby expressly reserved. The Waivers shall not relieve or release any
member of the Inmark Group or any guarantor in any way from any of its
respective duties, obligations, covenants or agreements under the Agreement, the
Security Agreement, the Pledge Agreement or the other Loan Documents or from the
consequence of any Event of Default thereunder, except as expressly described
above. The Waivers shall not obligate the Lender, or be construed to require the
Lender, to waive any other Events of Default or defaults, whether now existing
or which may occur after the date of this Amendment.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
PNC BANK NATIONAL ASSOCIATION
By: /s/ Charles W. Jones
--------------------
Name/Title: Charles W. Jones
Vice President
INMARK ENTERPRISES, INC.
By: /s/ Donald A. Bernard
---------------------
Name/Title: Donald A. Bernard
Executive Vice President
U.S. CONCEPTS, INC.
(a Delaware corporation)
By: /s/ Donald A. Bernard
---------------------
Name/Title: Donald A. Bernard
Executive Vice President
INMARK SERVICES, INC.
By: /s/ Donald A. Bernard
---------------------
Name/Title: Donald A. Bernard
Executive Vice President
OPTIMUM GROUP, INC.
By: /s/ Donald A. Bernard
---------------------
Name/Title: Donald A. Bernard
Executive Vice President
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