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AMENDMENT NO. 2 TO FIRST
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS
AMENDMENT NO. 2 TO FIRST AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT is made as of October 31, 2006 (this “
Amendment ”) by and among Fifth Third
Bank , an Ohio banking corporation (together with its
successors and assigns, the “ Lender ”),
and Zanett, Inc. , a Delaware corporation (“
Parent ”), and each of Parent’s direct
and indirect Subsidiaries identified on the signature pages hereof
(such Subsidiaries, together with Parent, are referred to
hereinafter each individually as a “ Borrower
”, and individually and collectively, jointly and severally,
as the “ Borrowers ”), with respect to
the First Amended and Restated Loan and Security Agreement entered
into as of December 30, 2005 by the Lender and the Borrowers, as
amended, supplemented, restated, or otherwise modified from time to
time (the “ Agreement ”). Capitalized
terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
R E
C I T A
L S
WHEREAS,
the Borrowers and the Lender have entered into the Agreement;
and
WHEREAS,
the Lender has made Advances to the Borrowers pursuant to the terms
of the Agreement; and
WHEREAS,
the Borrowers have requested that the Lender agree to certain
amendments to the Agreement, and the Lender is willing to agree to
the amendments requested by the Borrowers on the terms and
conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section
1. Amendments to the Agreement .
(a)
Section 2.1(a) of the Agreement is hereby deleted and
the following inserted in its place:
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(a) Subject
to the terms and conditions of this Agreement, and until November
30, 2006 (the “ Revolving Credit Maturity Date
”), the Lender agrees to make revolving credit Advances (the
“ Revolving Credit Advances ”) to the
Borrowers in an amount at any one time outstanding not to exceed an
amount equal to the lesser of (i) the Maximum Revolver
Amount, or (ii) the Borrowing Base. For purposes of this Agreement,
“ Borrowing Base ,” as of any date of
determination, shall mean the result of:
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(x) 75%
of the amount of Eligible Accounts, plus
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(y) 90%
of the amount of collected cash balances in the Concentration
Account, minus
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(z) the
aggregate amount reserves, if any, established by the Lender under
Section 2.1(b) .
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Notwithstanding
anything to the contrary in this Agreement or in any of the other
Loan Documents, no Revolving Credit Advances shall hereafter be
made, and no funds or other assets shall hereafter be advanced by
any of the other Borrowers, to Delta Communications Group, Inc., a
Delaware corporation, without the prior specific written consent of
the Lender, which the Lender may grant or withhold in its sole
discretion.
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(b)
Section 2.9 of the Agreement is hereby deleted and
the following inserted in its place:
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2.9
Fees . The Borrowers shall pay to the Lender the
following fees and charges, which fees and charges shall be
non-refundable when paid (irrespective of whether this Agreement is
terminated thereafter):
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(a) Audit Charges . For the account of the
Lender, audit fees and charges as follows, (i) a fee of $750.00 per
day, per auditor, plus out-of-pocket expenses for each financial
audit of any or all of the Borrowers performed by personnel
employed by the Lender and (ii) the actual charges paid or incurred
by the Lender if it elects to employ the services of one or more
third Persons to perform financial audits of any or all of the
Borrowers. As long as no Default or Event of Default has occurred,
the Lender will not conduct more than 2 financial audits of the
Borrowers per calendar year and, assuming that each Borrower
forwards to the executive offices of the Administrative Borrower
all information requested by or on behalf of the Lender for the
conduct of such audits, such audits will be conducted at the
Administrative Borrower’s executive offices.
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(b) Amendment Fee . An amendment fee in
the aggregate amount of $10,000.
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Section
2 . Representations and Warranties . The Borrowers
hereby represent and warrant to the Lender that:
(a) no
Default or Event of Default has occurred and is continuing on and
as of the date hereof;
2
(b) the
representations and warranties of each of the Borrowers contained
in the Agreement and the other Loan Documents are true and correct
on and as of the date hereof as if made on and as of the date
hereof, except to the extent that such representations and
warranties expressly relate to a different date; and
(c) the
execution and delivery by the Borrowers of this Amendment and the
performance by the Borrowers of all of their respective agreements
and obligations under this Amendment, the Agreement as amended
hereby, and the other Loan Documents, respectively, are within the
power and authority of the Borrowers and have been duly authorized
by all necessary action on the part of the Borrowers, and the
execution and delivery by the Borrowers of this Amendment, and the
performance by them of the transactions contemplated hereby, do not
and will not contravene any term or condition set forth in any
agreement or instrument to which any Borrower is a party or by
which any Borrower is bound.
Section
3. Effectiveness and Conditions Precedent . This
Amendment shall become effective upon the Lender’s receipt
of: (a) counterparts of this Amendment executed and delivered by
the Borrowers; (b) a Third Amended and Restated Revolving Note in
form and substance satisfactory to the Lender that has been duly
executed and delivered by the Borrowers; (c) certificates of
officers of the Borrowers (in form and substance satisfactory to
the Lender in its sole discretion) certifying to the incumbency of
the officers executing this Amendment and related instruments and
to the resolutions of the Boards of Directors of the Borrowers
authorizing the execution of this Amendment and related instruments
and consummation of the transactions contemplated hereby; and (d)
the amendment fee referenced at Section 2.9(b) of the
Agreement that has been paid by the Borrowers.
Section
4. Status of Loan Documents; Additional
Representations and Warranties .
&n
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