AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT
(this
“
Amendment ”)
dated as of
MARCH 31, 2008 ,
will serve to set forth the terms of the financing transactions by
and among
PLAINSCAPITAL BANK ,
a Texas state bank (together with its successors and assigns,
“
Lender ”)
and
AVATAR SYSTEMS, INC. ,
a Texas corporation (“
Debtor ”).
RECITALS
WHEREAS ,
Debtor and Lender entered into a
LOAN AND SECURITY AGREEMENT dated
as of
AUGUST 16, 2006 (as
amended, renewed and restated from time to time, the “
Agreement ”),
pursuant to which Lender agreed to make certain credit facilities
available to Debtor on the terms and conditions set forth
therein;
NOW THEREFORE ,
for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1.
Definitions .
Capitalized terms used in this Amendment, to the extent not
otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
2.
Amendments .
(a)
Amendment to Section 9(b) .
Section 9(b) is hereby amended in its entirety to read as
follows:
(b)
Adjusted Debt/Tangible Net Worth
. Debtor will maintain, as of
MARCH 31, 2008 ,
a ratio of (1) Adjusted Debt, to (2) Tangible Net Worth of not
greater than 2.50 to 1.00.
(b)
Amendment to Section 9(c) .
Section 9(c) of
the Agreement is hereby amended in its entirety to read as
follows:
(c)
Minimum Free Cash Flow to Certain Fixed Cost
.
Debtor will maintain, as of
MARCH 31, 2008 ,
a ratio of (i) Free Cash Flow, to (ii) Current Maturities of
Long-Term Indebtedness
plus interest
expense and rent payments for such period (“
Fixed Costs ”)
equal to or greater than 1.25 to 1.00.
(c)
Amendment to Section 9(d) .
Section 9(d) of
the Agreement is hereby amended in its entirety to read as
follows:
(d)
Current Ratio .
Debtor will maintain, as of
MARCH 31, 2008 ,
a ratio of (i) current assets, to (ii) current liabilities of not
less than 1.15 to 1.00.
3.
Conditions Precedent .
The obligations of Lender under this Amendment shall be subject to
the condition precedent that Debtor shall have executed and
delivered to Lender this Amendment and such other documents and
instruments incidental and appropriate to the transaction provided
for herein as Lender or its counsel may reasonably
request.
4.
Waiver .
Debtor hereby acknowledges, confirms and agrees that Debtor is
currently in default under
Section 13(b) of
the Agreement by reason of Debtor’s failure to comply with
the provisions of
Sections 9 (b-d) of
the Agreement (the “
Existing Defaults ”).
Debtor acknowledges and agrees that certain other Events of Default
or events which with notice and/or the passage of time would be an
Event of Default may exist and are continuing and that this
Agreement relates only to the Existing Defaul ts.
In consideration of and expressly conditioned upon Debtor’s
timely and strict compliance with the Loan Documents to which
Debtor is a party and the terms and conditions set forth herein,
Lender agrees to waive the Existing Defaults.
AMENDMENT
TO LOAN AND SECURITY AGREEMENT - PAGE 1
PLAINSCAPITAL
BANK - AVATAR SYSTEMS, INC.
5.
Ratifications .
Except as expressly modified and superseded by this Amendment, the
Loan Documents are ratified and confirmed and continue in full
force and effect. The Loan Documents, as modified by this
Amendment, continue to be legal, valid, binding and enforceable in
accordance with their respective terms. Without limiting the
generality of the foregoing, Debtor hereby ratifies and confirms
that all liens heretofore granted to Lender were intended to, do
and continue to secure the full payment and performance of the
advances under the Note
and
all obligations under the Loan Documents. Debtor agrees to perform
such acts and duly authorize, execute, acknowledge, deliver, file
and record such additional assignments, security agreements,
modifications or agreements to any of the foregoing, and such other
agreements, documents and instruments as Lender may reasonably
request in order to perfect and protect those liens and preserve
and protect the rights of Lender in respect of all present and
future Collateral.
6.
Representations, Warranties and
Confirmations .
Debtor hereby represents and warrants to Lender that (a) this
Amendment and any other Loan Documents to be delivered under this
Amendment have been duly executed and del
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