EXHIBIT 10.4.4
AMENDMENT TO TERM LOAN AGREEMENT
This Amendment to Term Loan Agreement ("Amendment") is made this Fourth day
of December, 1995 among QUAD SYSTEMS CORPORATION, a Delaware corporation (the
"Borrower"), CORESTATES BANK, N.A., a national banking association and UNITED
JERSEY BANK ("UJB"), a New Jersey state bank (individually a "Bank" and
collectively the "Banks") and CORESTATES BANK, N.A., as agent for the Banks
hereunder (in such capacity the "Agent").
WHEREAS, the Borrower and the Banks entered into a Term Loan Agreement
dated as of January 24, 1995 (the "Agreement");
WHEREAS, the Borrower and the Banks desire to amend certain provisions of
the Agreement.
NOW THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. All capitalized words used herein shall have the meaning ascribed
to them in the Agreement unless such terms are defined herein in which case
they shall have the meaning ascribed to them herein.
2. The Agreement is hereby amended by adding the definition of
"Capital Leases" under Section 1.01 to read as follows:
"`Capital Leases' means all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP".
3. The Agreement is hereby amended by adding the definition of
"Domestic Subsidiaries" under Section 1.01 to read as follows:
"`Domestic Subsidiaries' means all Subsidiaries of the Borrower,
all Subsidiaries of the Borrower's Subsidiaries, and all Subsidiaries
of the Subsidiaries of the Borrower's Subsidiaries organized and
existing under the laws of a state of the United States of America."
4. The Agreement is hereby amended by adding the definition of
"Foreign Subsidiaries" under Section 1.01 to read as follows:
"`Foreign Subsidiaries' means Quad Foreign Sales Corporation,
Quad Systems Holding Limited, SM Tech Limited and Quad Europe Limited
and any other Subsidiaries of Quad, Subsidiaries of the Borrower's
Subsidiaries and Subsidiaries of the Subsidiaries of the Borrower's
Subsidiaries organized under the laws of any country or subdivision
thereof other than the laws of the United States of America or any
state thereof."
5. The Agreement is hereby amended by adding the definition of
"Guarantor" under Section 1.01 to read as follows:
"`Guarantor(s)' means Hitech Finance Company, Trimark Investment
Corp. And Quad Leasing Corp."
6. The Agreement is hereby amended by adding the definition of
"Guaranty Agreement" to Section 1.01 to read as follows:
"`Guaranty Agreements' means the unconditional guarantee of each
Guarantor of the obligations of the Borrower to the Banks
substantially in the form of Exhibit B hereto".
7. The Agreement is amended by changing the definition of Loan
Document(s) under Section 1.01 to read in its entirety as follows:
"`Loan Document(s)' means this Agreement, the Notes, and the
Guaranty Agreements."
8. The Agreement is hereby amended by deleting the definition of
"Pledgor" under Section 1.01.
9. Clause (3) of Section 2.19 ("Prepayment Indemnification" ) is
hereby restated to correct two typographical errors.
"(3) Any payment or prepayment of the Term Loans (including a
Term Loan made pursuant to Section 2.22 hereof) on a date or in an
amount other than on the installment dates and in the amounts provided
for herein and in the Term Notes including but not limited to any
payment or prepayment pursuant to acceleration of said Loan by the
Banks under Section 8.01."
10. Section 2.21 of the Agreement ("Security for the Loans") is hereby
amended to read in its entirety as follows:
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"SECTION 2.21. Security for the Loans. As security for the Loans and
for all amounts payable hereunder and under the Notes as well as for
all other existing and future liabilities, whether absolute or
contingent, due or to become due of the Borrower to the Bank under any
other loans or extensions of credit by the Banks to the Borrower,
including without limitation, the Loan Agreement dated December 4, 1995
between the Borrower and the Guarantors and the Banks, with United
Jersey Bank Acting as agent for the Banks, ("UJB Loan Agreement"), for
the Banks shall have the unlimited guarantees of the Guarantors.
To the foregoing ends, the Borrower will contemporaneously with the
execution and delivery of the Amendment procure the execution and
delivery of the Guaranty Agreement by the Guarantors."
11. New Section 2.22 ("Fixed Rate Term Loans") is added to the
Agreement to read as follows:
"SECTION 2.22. Fixed Rate Term Loans. Upon the request of the Borrower
and agreement of the Banks, all outstanding types of Loans may be
converted to two Term Loans which bear interest at a per annum fixed
rate of interest agreed to by the Borrower and the Banks and such Term
Loans shall be evidenced by and repaid in accordance with replacement
Term Notes substantially in the form of Exhibit A attached hereto."
12. Section 4.04. ("Financial Statements; Accuracy of Information") is
hereby amended to read in its entirety to read as follows:
"(1) The consolidated and consolidating balance sheet of the
Borrower and its Domestic and Foreign Subsidiaries as of September 30,
1994, and the related consolidated and consolidating statements of
income and retained earnings and cash flows of the Borrower and its
Domestic and Foreign Subsidiaries for the fiscal year then ended, and
the accompanying footnotes, together with the opinion thereon, dated
September 30, 1994 of Ernst & Young, independent certified public
accountants, copies of which have been furnished to each Bank, fairly
present the financial condition of the Borrower and its Domestic and
Foreign Subsidiaries as of such date and the results of the operations
of the Borrower and its Domestic and Foreign Subsidiaries for the
periods covered by such statements, all in accordance with GAAP
consistently applied, and since September 30, 1994, there has been no
material adverse change in the financial condition, business, or
operations of the Borrower and its Domestic and Foreign Subsidiaries.
There are no liabilities of the Borrower and its Domestic and Foreign
Subsidiaries, fixed or contingent, which are material but are not
reflected in the financial statements or in the notes thereto, other
than liabilities arising in the ordinary course of business since
September 30, 1994.
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(2) All information, financial statements, exhibits and reports
furnished by the Borrower and the Guarantors to the Banks in
connection with this Agreement and the borrowings contemplated hereby
are, and all such information, financial statements, exhibits and
reports hereafter furnished by the Borrower and the Guarantors to the
Banks in such connection will be true and correct in every material
respect on the date furnished to the Banks, and no such information,
financial statements, exhibits or reports contain or will contain any
material misstatement of fact or omit or will omit to state a material
fact or any fact necessary to make the statement contained therein not
materially misleading."
13. Paragraphs (1) and (2) under Section 5.08 ("Reporting
Requirements") are hereby amended to read in their entirety to read as
follows:
"(1) As soon as available and in any event within sixty (60) days
after the end of each quarter of each fiscal year of the Borrower,
consolidated and consolidating balance sheets of the Borrower as of
the end of such quarter, Consolidated and Consolidating statements of
income and retained earnings of the Borrower for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, a consolidated statement of cash flow of the Borrower for the
portion of the fiscal year ended with the last day of such quarter,
and an accounts receivable aging report for the Borrowers and the
Guarantors, all in reasonable detail and stating in comparative form
the respective consolidated and consolidating figures for the
corresponding date and period in the previous fiscal year and all
prepared in accordance with GAAP consistently applied and certified by
the chief financial officer of the Borrower (subject to year-end
adjustments);
(2) As soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower, a consolidated and
consolidating balance sheet of the Borrower as of the end of such
fiscal year, a consolidated and consolidating statement of income and
retained earnings of the Borrower for such fiscal year, and a
consolidated statement of cash flow of the Borrower for such fiscal
year, all in reasonable detail and stating in comparative form the
respective consolidated and consolidating figures for the
corresponding date and period in the prior fiscal year and all
prepared in accordance with GAAP consistently applied and as to the
consolidated statements accompanied by an opinion thereon acceptable
to the Banks by Ernst & Young or other independent accountants
selected by the Borrowers and acceptable to the Agent;"
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14. Sections 7.01 through 7.06 are hereby amended to read in their
entirety as follows:
"Article VIIA
Financial Covenants of Consolidated Group
So long as either of the Notes shall remain unpaid:
SECTION 7A.01. Minimum Tangible Net Worth. Quad and its Domestic and
Foreign Subsidiaries will maintain at all times a Consolidated Tangible Net
Worth of not less than:
Period Amount
------ ------
9/30/95 - 9/29/96 $20 million
9/30/96 - 9/29/97 $23 million
9/30/97 and thereafter $28 million
SECTION 7A.02. Capital Expenditures. Quad and its Domestic and Foreign
Subsidiaries will not permit any Consolidated expenditures for fixed or capital
assets, including additional Capital Leases which would cause the aggregate of
all such expenditures when added to investments permitted under Section 6.8
(excluding investments under 6.08(1) - (4) to exceed One Million Five Hundred
Thousand Dollars ($1,500,000) during any fiscal year.
SECTION 7A.03. Leverage Ratio. Quad and its Domestic and Foreign
Subsidiaries will maintain at all times (as tested quarterly) a ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth of not greater
than 1.00 to 1.00.
SECTION 7A.04. Cash Flow Ratio. Quad and its Domestic and Foreign
Subsidiaries will maintain at all times (as tested quarterly) a ratio of the sum
of earnings before taxes, depreciation, amortization and interest expense to the
sum of all current maturities of indebtedness for borrowed money and interest
expense (including Capital Lease payments of not less than 1.75 to 1.00 for the
prior four quarters.
SECTION 7A.05. Current Ratio. Quad and its Domestic and Foreign
Subsidiaries will maintain at all times (as tested quarterly) a current ratio of
2.00 to 1.00.
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SECTION 7A.06. Intercompany Transfers. Notwithstanding anything to the
contrary contained herein, net transfers from the Borrower and the Guarantors to
Non-Borrower Subsidiaries shall not exceed Two Million Dollars ($2,000,000)
during any twelve month period.
ARTICLE VIIB
Financial Covenants of Borrower Group
So long as either of the Notes shall remain unpaid:
Section 7B.01. Minimum Tangible Net Worth. The Borrower and the Guarantors
will maintain at all times (as test quarterly) a Tangible Net Worth excluding
investments in and receivables from non-Guarantor Subsidiaries of not less than:
Period Amount
------ ------
9/30/95 - 9/29/96 $15 million
9/30/96 - 9/29/97 $17 million
9/30/97 and thereafter $19 million
Section 7B.02. Minimum Working Capital. The Borrower and the Guarantors
will maintain at all times (as tested quarterly) Working Capital excluding from
current assets all receivables from non-Guarantor Subsidiaries of not less than:
Period Amount
------ ------
9/30/95 - 9/29/96 $15 million
9/30/96 - 9/29/97 $16 million
9/30/97 and thereafter $17.5 million
Section 7B.03. Cash Flow Ratio. The Borrower and the Guarantors will
maintain at all times (as tested quarterly) a ratio of the sum of earnings
before taxes, depreciation, amortization and interest expense to the sum of all
current maturities of indebtedness for borrowed money and interest expense
(including Capital Lease payments) of not less than 1.5 and 1.0 for the prior
four quarters."
15. Subsection (3) of Section 8.01 ("Events of Default") is hereby amended
to read in its entirety as follows:
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"(3) The Borrower or any Guarantor shall fail to perform or observe
any term, covenant, or agreement contained in any Loan Document (other than
the Notes) to which it is a party on its part to be performed or observed;"
Subsection (6) of Section 8.01 ("Events of Default") is hereby
amended in its entirety to read as follows:
"(F) One or more judgments, decrees, or orders for the
payment of money in excess of One million Dollars ($1,000,000) in
the aggregate shall be rendered against the Borrower or any
Guarantor and such judgments, decrees, or orders shall continue
unsatisfied and in effect for a period of sixty (60) consecutive
days without being vacated, discharged, satisfied or bonded
pending appeal; or"
16. Subsection (8) of Section 8.01 ("Events of Default") is hereby amended
to read in its entirety as follows:
"(8) Any Guaranty Agreements shall, at any time after its execution
and delivery and for any reason, cease to be in full force and effect or
shall be declared null and void, or the validity or enforceability thereof
shall be contested by any Pledgor, or any Pledgor shall deny it has any
further liability or obligation under or shall fail to perform its
obligations under a Collateral Pledge Agreement; or"
17. Section 10.2 ("Notice, Etc.") under the caption if to CoreStates Bank
is amended to read as follows:
"If to CoreStates Bank, N.A.: 0000 Xxxxxx Xxxx
or the Agent at: Xxxxx 000
Xxxxxxxx Xxxxxxx, XX x0000
Attn: Xxxxxxx X. Xxxxxx
Vice President
Fax# (000) 000-0000"
18. This Amendment shall become effective as of the date first above
written.
19. The execution of this Amendment by the duly authorized officers of the
Borrower shall be deemed to represent and warrant the following to the Bank:
(a) The representations and warranties set forth in Article IV of the
Term Loan Agreement are true and correct as of the date of this Amendment
(references to financial statements of the Borrower shall be deemed to be
references to the latest financial statements of the Borrower and
references to the Pledgors shall be deemed to be references to the
Guarantors);
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(b) No Event of Default under the Term Loan Agreement, as amended, and
no event which with the giving of notice or the passage of time or both,
would become such an Event of Default, has occurred as of such date;
(c) Except as previously disclosed to the Bank there has been no
material adverse change in the financial condition, business or prospects
of the Borrower since the date of the Term Loan Agreement; and
(d) Borrower has full corporate power and authority to execute,
deliver and perform this Amendment to Term Loan Agreement and all necessary
approvals have been obtained authorizing the execution, delivery and
performance of this Amendment to Term Loan Agreement.
20. Borrower shall deliver to the Bank on or before the date hereof:
(a) This Amendment duly executed;
(b) The Guaranty Agreement of each Guarantor;
(c) A certified copy of resolutions of the Board of Directors of
Borrower authorizing the execution, delivery and performance of this
Amendment;
(d) A certificate of the Secretary or Assistant Secretary of Borrower
as to the incumbency and specimen signatures of the officers signing this
Amendment;
(e) A certified copy of resolutions of the Board of Directors each
Guarantor authorizing the Guaranty Agreement of each Guarantor;
(f) A certificate of the Secretary or Assistant Secretary of each
Guarantor as to the incumbency and specimen signatures of the officers
signing each Guaranty Agreement;
(g) A favorable written opinion of outside counsel the Guarantors
dated as of the date hereof and substantially in the form of Exhibit C
hereto; and
(h) Bank agrees, subject to compliance by the Borrower with the
conditions contained in Section 20 hereof, to cancel the Intercreditor
Agreement dated January 24, 1995 among CoreStates Bank, N.A., United Jersey
Bank and Quad Systems Corporation and to cancel the Collateral Pledge
Agreement and return the shares pledged pursuant thereto to Borrower.
21. Except as expressly modified and amended hereby, the Term Loan
Agreement is and shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
QUAD SYSTEMS CORPORATION
By: _____________________________________________
UNITED JERSEY BANK
By: _____________________________________________
CORESTATES BANK, N.A. for itself and as Agent
By: _____________________________________________
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