Grant of Collateral. In the event that (a) after giving effect to a requested Revolving Credit Loan on or after the First Amendment Effective Date (a "Requested Loan") the aggregate Revolving Credit Loans then outstanding under the Revolving Credit Commitment would exceed the Revolving Credit Loan Cap or (b) the Company incurs a Net Loss in excess of $500,000 (x) for the fiscal quarter ending September 30, 2000 (calculated with respect to such fiscal quarter only), (y) for the fiscal quarter ending December 31, 2000 (calculated with respect to such fiscal quarter alone and with respect to the two fiscal quarters ending December 31, 2000) or (z) for the fiscal quarter ending March 31, 2001 (calculated with respect to such fiscal quarter alone and with respect to the three fiscal quarters ending March 31, 2001), then (1) the Company and each Guarantor shall grant to the Lender a first priority perfected security interest in all present and future accounts receivable of each such entity and in connection therewith, shall promptly execute and deliver to the Lender security agreements, UCC-1 financing statements, a legal opinion in form and substance satisfactory to the Lender as to the due execution, delivery and enforceability of such documents and such other matters as the Lender may reasonably request, and all such other documentation as shall be reasonably required by the Lender (all of the foregoing documentation to be in form and substance satisfactory to the Lender in all respects) in order to enable the Lender to obtain and perfect a first priority security interest in such collateral, with all expenses relating thereto (including, without limitation, the reasonable fees and expenses of counsel to the Lender in connection with the preparation of such documentation and UCC search and filing fees) to be paid by the Company and the Guarantor and (2) the Company and the Lender shall execute an amendment, in form and substance satisfactory to the Lender, to the Agreement pursuant to which the aggregate outstanding amount of all Revolving Credit Loans and the Term Loan shall thereafter be required to be equal to or less than a borrowing base to be determined with respect to accounts receivable of the Company, such borrowing base formula and all aspects of such borrowing base arrangement including, but not limited to, the advance rate to be applied to eligible accounts receivable, the definition of eligible accounts receivable, reporting requirements and the requirement for periodic field audits to be performed by the Lender at the expense of the Company, shall be satisfactory to the Lender in its sole discretion. The Company shall promptly notify the Lender of the incurrence of a Net Loss in excess of $500,000 during the periods set forth in subsection (b) of the first sentence of this Section 6.16. Notwithstanding anything to the contrary herein, the Lender shall have no obligation to fund a Requested Loan until satisfaction by the Company of its obligations pursuant to this Section 6.16." 5. Amendment to ARTICLE VII NEGATIVE COVENANTS SECTION 7.13. Financial Covenants.
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Grant of Collateral. In 16. of the Agreement is hereby amended by inserting the following phrase immediately following the phrase "Net Loss" contained in the fifth line thereof as follows: " (calculated, with regard to any period encompassing the fiscal quarter ended September 30, 2000, exclusive of a non-cash charge incurred by the Company in such fiscal quarter up to $75,000 in the aggregate relating to the extension of the exercise period of certain options previously granted by the Company)". This SECOND AMENDMENT shall be construed and enforced in accordance with the laws of the State of New York without reference to principles of conflicts of law. Capitalized terms used herein and not otherwise defined herein shall have the same meanings as defined in the Agreement. Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with the original terms thereof and is ratified and confirmed. The agreements herein contained are limited specifically to the matters set forth above and do not constitute directly or by implication an amendment or waiver of any other provision of the Agreement or any Default or Event of Default which may occur or may have occurred under the Agreement. The Company hereby represents and warrants that, after giving effect to this SECOND AMENDMENT, (1) no Default or Event of Default exists under the Agreement or any other related document and (2) the representations and warranties contained in Article IV. of the Agreement are true and correct as of the date hereof as if made on the date hereof (unless limited to an earlier date, in which event that (athey shall be true as of such earlier date) after giving effect to this SECOND AMENDMENT. Please be advised that should there be a requested Revolving Credit Loan on need for further amendments or after the First Amendment Effective Date (a "Requested Loan") the aggregate Revolving Credit Loans then outstanding under the Revolving Credit Commitment would exceed the Revolving Credit Loan Cap or (b) the Company incurs a Net Loss in excess of $500,000 (x) for the fiscal quarter ending September 30, 2000 (calculated waivers with respect to such fiscal quarter only)these covenants or any other covenants, (y) for the fiscal quarter ending December 31, 2000 (calculated with respect to such fiscal quarter alone and with respect to the two fiscal quarters ending December 31, 2000) or (z) for the fiscal quarter ending March 31, 2001 (calculated with respect to such fiscal quarter alone and with respect to the three fiscal quarters ending March 31, 2001), then
(1) the Company and each Guarantor shall grant to the Lender a first priority perfected security interest in all present and future accounts receivable of each such entity and in connection therewith, shall promptly execute and deliver to the Lender security agreements, UCC-1 financing statements, a legal opinion in form and substance satisfactory to the Lender as to the due execution, delivery and enforceability of such documents and such other matters as the Lender may reasonably request, and all such other documentation as those requests shall be reasonably required evaluated by the Lender (when formally requested, in writing, by the Company. This SECOND AMENDMENT may be executed in one or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one SECOND AMENDMENT. This SECOND AMENDMENT shall become effective when duly executed counterparts hereof which, when taken together, bear the foregoing documentation to be in form and substance satisfactory to signatures of each of the Lender in all respects) in order to enable the Lender to obtain and perfect a first priority security interest in such collateral, with all expenses relating thereto (including, without limitation, the reasonable fees and expenses of counsel to the Lender in connection with the preparation of such documentation and UCC search and filing fees) to be paid by the Company and the Guarantor and (2) the Company and the Lender parties hereto shall execute an amendment, in form and substance satisfactory have been delivered to the Lender, to the Agreement pursuant to which the aggregate outstanding amount of all Revolving Credit Loans and the Term Loan shall thereafter be required to be equal to or less than a borrowing base to be determined with respect to accounts receivable of the Company, such borrowing base formula and all aspects of such borrowing base arrangement including, but not limited to, the advance rate to be applied to eligible accounts receivable, the definition of eligible accounts receivable, reporting requirements and the requirement for periodic field audits to be performed by the Lender at the expense of the Company, shall be satisfactory to the Lender in its sole discretion. The Company shall promptly notify the Lender of the incurrence of a Net Loss in excess of $500,000 during the periods set forth in subsection (b) of the first sentence of this Section 6.16. Notwithstanding anything to the contrary herein, the Lender shall have no obligation to fund a Requested Loan until satisfaction by the Company of its obligations pursuant to this Section 6.16."
5. Amendment to ARTICLE VII NEGATIVE COVENANTS SECTION 7.13. Financial Covenants.
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