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Exhibit 10.3
AMENDMENT NUMBER FOUR TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT, dated as of
July 28, 1999 (this "Amendment"), amends that certain Loan and Security
Agreement, dated as of April 23, 1998 (as the same has been amended from time to
time, the "Loan Agreement"), among MAI SYSTEMS CORPORATION, a Delaware
corporation ("MAI") and HOTEL INFORMATION SYSTEMS, INC., a Delaware corporation
("Hotel") (MAI and Hotel are each a "Borrower" and collectively the
"Borrowers"), on the one hand, and COAST BUSINESS CREDIT, a division of Southern
Pacific Bank, a California corporation ("Coast"), on the other hand. All
initially capitalized terms used in this Amendment shall have the meanings
ascribed thereto in the Loan Agreement unless specifically defined herein.
RECITALS
WHEREAS, Borrowers and Coast wish to amend the Loan Agreement pursuant
to the terms and provisions set forth in this Amendment; and
NOW, THEREFORE, the parties hereto agree as follows:
AMENDMENT
Section 1. AMENDMENT TO SECTION 1 OF THE LOAN AGREEMENT. Section 1 of
the Loan Agreement is hereby amended by adding the following definition:
"BRIDGE Loan" has the meaning set forth in Section 2 of the Schedule.
"Debt Service Coverage Ratio" means the ratio, in any fiscal quarter,
whose numerator is EBITDA minus cash capital expenditures minus cash
tax expenses, and whose denominator is all principal payments on Debt
plus all interest payments on Debt plus all capital lease payments.
"EBITDA" means, in any fiscal period, Borrowers' consolidated net
income or net loss (other than extraordinary or non-recurring gains of
Borrower for such period), plus (i) the amount of all interest expense,
income tax expense, depreciation expense and amortization expense of
Borrower for such period, on a consolidated basis, and plus or minus
(as the case may be) (ii) any other non-cash charges which have been
added or subtracted, as the case may be, in calculating Borrowers'
consolidated net income for such period."
Section 2. AMENDMENT TO SECTION 2 OF THE SCHEDULE. Section 2 of the
Schedule to the Loan Agreement is hereby amended by deleting such Section in its
entirety and replacing it with the following:
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"Loans in a total amount at any time outstanding not to exceed the lesser of (i)
the sum of (a) and (b) below or (ii) Six Million Dollars ($6,000,000) (the
"Maximum Dollar Amount"):
(a) Loans in a total amount at any time outstanding not to exceed two
(2) times Borrowers' aggregate monthly collections received by Coast,
measured on a trailing twelve (12) month average, arising out of
Receivables generated from Borrowers' software and hardware service and
maintenance contracts, subject to audit, appraisal and a review of such
contracts; and
(b) A Bridge Loan in the amount of Two Million Dollars ($2,000,000)
evidenced by that certain Secured Promissory Note (the "Bridge Loan")
dated as of July 28, 1999, and payable interest only on the first of
each month, with all accrued and unpaid principal and interest due on
the earlier of (i) June 30, 2000, or (ii) the date on which Borrower
receives a debt or equity cash infusion of at least Ten Million Dollars
($10,000,000)."
Section 3. AMENDMENT TO SECTION 3.1 OF THE SCHEDULE. Section 3.1 of the
Schedule to the Loan Agreement is hereby amended by deleting such Section in its
entirety and replacing it with the following:
"A rate equal to the Prime Rate plus 2.25% per annum with respect to
all Loans and a rate equal to the Prime Rate plus 5% per annum with
respect to the Bridge Loan, each calculated on the basis of a 360 day
year for the actual number of days elapsed. The interest rate
applicable to the Loans and the Bridge Loan shall be adjusted monthly
as of the first day of each month, and the interest to be charged for
each month shall be based on the highest Prime Rate in effect during
the prior month, but in no event shall the rate of interest charged on
either the Loans or the Bridge Loan in any month be less than 9% per
annum."
Section 4. AMENDMENT TO SECTION 3.2 OF THE SCHEDULE. Section 3.2 of the
Schedule to the Loan agreement is hereby amended by adding the following
language:
"Section 3.2 - Bridge Loan Fee:
Seventy-Five Thousand Dollars ($75,000) fully earned and payable upon
the execution of Amendment Number Four to the Loan and Security
Agreement."
Section 5. AMENDMENT TO SECTION 5.13 OF THE SCHEDULE. Section 5.13 of
the Schedule to the Loan Agreement is hereby amended by adding the following
language:
"8. Warrant to Coast for 33,000 shares of MAI (the "Warrant") in the
form set forth as Exhibit A hereto."
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Section 6. AMENDMENT TO SECTION 8.1 OF THE SCHEDULE. Section 8.1 of the
Schedule to the Loan Agreement is hereby amended by adding the following
language after the third paragraph:
"Borrower shall maintain a Debt Service Coverage Ratio, measured
quarterly beginning with the fiscal quarter ending September 30, 1999,
of no less then 1.50:1.00."
Section 7. AMENDMENT TO SECTION 9.1 OF THE SCHEDULE. Section 9.1 of the
Schedule to the Loan Agreement is hereby amended by deleting such Section in its
entirety and replacing it with the following:
"April 30, 2003, subject to automatic renewal as provided in Section
9.1 of the Agreement, and early termination as provided in Section 9.2
of the Agreement."
Section 8. CONDITION PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon the receipt by Coast of (i) an executed copy of this
Amendment duly executed by Borrower, (ii) receipt by Coast of the Bridge Loan
Fee, (iii) an executed copy of Amendment Number One to Pledge and Security
Agreement duly executed by Gaming Systems International, and (iv) receipt by
Coast of the Warrant, duly executed by MAI.
Section 9. ENTIRE AGREEMENT. The Loan Agreement, as amended hereby,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof. Borrower represents, warrants and agrees that in entering into
the Loan Agreement and consenting to this Amendment, it has not relied on any
representation, promise, understanding or agreement, oral or written, of, by or
with, Coast or any of its agents, employees, or counsel, except the
representations, promises, understandings and agreements specifically contained
in or referred to in the Loan Agreement, as amended hereby.
Section 10. CONFLICTING TERMS. In the event of a conflict between the
terms and provisions of this Amendment and the terms and provisions of the Loan
Agreement, the terms of this Amendment shall govern. In all other respects, the
Loan Agreement, as amended and supplemented hereby, shall remain in full force
and effect.
Section 11. MISCELLANEOUS. This Amendment shall be governed by and
construed in accordance with the laws of the State of California. This Amendment
may be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute this Amendment by
signing such counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as
of the date first above written.
BORROWER:
MAI SYSTEMS CORPORATION,
a Delaware corporation
By /s/ Xxxxx X. Xxxxxxx
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By
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Secretary
HOTEL INFORMATION SYSTEMS, INC,
a Delaware corporation
By /s/ Xxxxx X. Xxxxxxx
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By
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Secretary
COAST:
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
By /s/ Xxxx Xxxxxxx
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Title Vice President
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