Exhibit 10.1
AMENDMENT TO
REVOLVING CREDIT AND SECURITY
AGREEMENT
THIS AMENDMENT TO REVOLVING
CREDIT AND SECURITY AGREEMENT (this “ Amendment ”) made as
of March 31, 2009 among PNC BANK, NATIONAL ASSOCIATION
(“ Lender ” or “ PNC ”), and
FRANKLIN ELECTRONIC PUBLISHERS, INC. , a Pennsylvania
corporation (“ Franklin Inc. ”); FRANKLIN
ELECTRONIC PUBLISHERS (EUROPE) LTD. , a United Kingdom
corporation (“ Franklin Ltd. ”) and FRANKLIN
ELECTRONIC PUBLISHERS (DEUTSCHLAND) GMBH , a German corporation
(“ Franklin GmbH ”) (Franklin Inc., Franklin
Ltd. and Franklin GmbH are referred to herein collectively as
“ Borrowers ”, and individually as “
Borrower ”).
W I T N E S S E T
H
A. Lender and Borrowers
have previously entered into a commercial lending relationship in
accordance with the terms and conditions of a Revolving Credit and
Security Agreement dated December 7, 2004, as amended by a
First Amendment to Revolving Credit and Security Agreement dated
December 29, 2005, an Amendment to Loan Documents dated
December 22, 2006, an Amendment to Loan Documents dated
March 30, 2007, an Amendment to Loan Documents dated as of
December 7, 2007, Letter of Extension dated March 4, 2008
and Letter of Extension dated May 6, 2008, an Amendment to
Revolving Loan and Security Agreement dated May 19, 2008, an
Amendment to Loan Documents dated October 31, 2008, and
Amendment Revolving Credit and Security Agreement dated
December 31, 2008, as such has been further amended,
supplemented or otherwise modified from time to time (the “
Agreement ”) pursuant to which Lender agreed to make
certain extensions of credit to Borrowers on a secured basis and
Borrowers have agreed to repay same, all upon the terms and subject
to the conditions set forth herein;
B. Borrowers have requested
Lender and Lender has agreed to amend and waive certain covenants
and definitions as set forth in the Loan Agreement, and to document
such other amendments as have been approved by the
Lender.
C. Lender is willing to
make such amendments and to make such other waivers, upon the terms
and subject to the conditions set forth below in this
Amendment.
NOW THEREFORE
, in consideration of the premises
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Capitalized terms used
in this Amendment shall have the same meanings given them in the
Agreement, unless otherwise defined herein.
2. The term
“Agreement”, as defined in the preamble to the
Agreement, shall be deemed to include any amendments, supplements
or other modifications made thereto from time to time (including,
without limitation, pursuant to this Amendment).
3. The definition of
“ Base Rate ” is hereby amended to read as
follows:
“ Base Rate ”
shall mean the highest of (A) the Prime Rate, and (B) the
sum of the Federal Funds Open Rate plus fifty
(50) basis points (.50%), and (C) the sum of the Daily
LIBOR Rate plus one hundred (100) basis points (1.0%),
so long as a Daily LIBOR Rate is offered, ascertainable and not
unlawful.”
4. The definition of
“ Borrowing Base Certificate ” is hereby deleted
in its entirety.
5. Section 1.2 is
hereby amended to include the definition of “ Daily LIBOR
Rate ” as follows:
“ Daily LIBOR Rate
” shall mean, for any day, the rate per annum determined by
the Lender by dividing (x) the Published Rate by (y) a
number equal to 1.00 minus the LIBOR Reserve
Percentage.”
6. The definition of
“ Eligible Inventory ” is hereby deleted in its
entirety.
7. The definition of
“ Eligible Receivables ” is hereby deleted in
its entirety.
8. The definition of
“ Federal Funds Open Rate ” is hereby amended to
read as follows:
“ Federal Funds Open
Rate ” shall mean, for any day, the rate per annum (based
on a year of 360 days and actual days elapsed) which is the daily
federal funds open rate as quoted by ICAP North America, Inc. (or
any successor) as set forth on the Bloomberg Screen BTMM for that
day opposite the caption “OPEN” (or on such other
substitute Bloomberg Screen that displays such rate), or as set
forth on such other recognized electronic source used for the
purpose of displaying such rate as selected by the Lender (an
“Alternate Source”) (or if such rate for such day does
not appear on the Bloomberg Screen BTMM (or any substitute screen)
or on any Alternate Source, or if there shall at any time, for any
reason, no longer exist a Bloomberg Screen BTMM (or any substitute
screen) or any Alternate Source, a comparable replacement rate
determined by the Lender at such time (which determination shall be
conclusive absent manifest error); provided however, that if such
day is not a Business Day, the Federal Funds Open Rate for such day
shall be the “open” rate on the immediately preceding
Business Day. The rate of interest charged shall be adjusted as of
each Business Day based on changes in the Federal Funds Open Rate
without notice to the Borrowers.”
9. Section 1.2 is
hereby amended to include the definition of “KEP” as
follows:
“ KEP ” shall
mean, Kreutzfeldt Electronic Publishing GmbH, a corporation
organized under the laws of Germany.
10. Section 1.2 is hereby amended
to include the definition of “ LIBOR Reserve
Percentage ” as follows:
“ LIBOR Reserve
Percentage ” shall mean the maximum effective percentage
in effect on such day as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the
reserve requirements (including, without limitation, supplemental,
marginal and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as “Eurocurrency
liabilities”).
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11. The definition of “ Maximum
Revolving Advance Amount ” is hereby amended to read as
follows:
“ Maximum Revolving Advance
Amount ” shall mean $8,500,000 with sublimits of
$1,500,000 for Letters of Credit, $500,000 for foreign currency
borrowings and $5,000,000 for acquisitions provided Borrowers have
given evidence satisfactory to Lender, in its sole discretion, that
Funded Debt to EBITDA is less than 2.25.
12. Section 1.2 is hereby amended
to include the definition of “ Minimum Margin Request
” as follows:
“Each Borrower may request an
Advance, so long as at such time an Advance is made such Borrower
provide evidence to Lender of compliance with the Minimum Margin
Requirements.”
13. Section 1.2 is hereby amended
to include the definition of “ Minimum Margin
Requirements ” as follows:
“Any Advance made to Borrowers
shall, at all times, be fully secured by all cash, all money market
accounts, all certificates of deposit and/or all similar investment
accounts held by, in the possession of, deposited with or in the
custody of the Lender, in accordance with the margin percentages
set forth under Exhibit A attached hereto. Upon
Lender’s request, Borrowers shall deposit additional cash
into an account or similar investment held by the Lender in
accordance with the security requirements established herein.
Borrowers’ failure to, at all times, comply with the security
requirements established herein shall constitute an Event of
Default under Section 10.5 of the Agreement.”
14. Section 1.2 is hereby amended
to include the definition of “ Prime Rate ” as
follows:
“ Prime Rate ”
shall mean the rate publicly announced by the Lender from time to
time as its prime rate. The Prime Rate is determined from time to
time by the Lender as a means of pricing some loans to its
borrowers. The Prime Rate is not tied to any external rate of
interest or index, and does not necessarily reflect the lowest rate
of interest actually charged by the Lender to any particular class
or category of customers.
15. The definition of “
Receivables Advance Rate ” is hereby deleted in its
entirety.
16. The definition of “
Revolving Interest Rate ” is hereby substituted by the
term “ Rate of Interest ” in each instance in
which it appears under the Agreement and shall read as
follows:
“ Rate of Interest
” shall mean the interest rate determined as
follows:
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Each advance outstanding under the
Note will bear interest at a rate or rates per annum as may be
selected by the Borrower from the interest rate options set forth
below (each, an “ Option ”):
(i) Base Rate Option. A rate of
interest per annum which is at all times equal to the Base Rate. If
and when the Base Rate (or any component thereof) changes, the rate
of interest with respect to any advance to which the Base Rate
Option applies will change automatically without notice to the
Borrower, effective on the date of any such change. There are no
required minimum interest periods for advances bearing interest
under the Base Rate Option.
(ii) LIBOR Option. A rate per annum
equal to (A) LIBOR plus (B) two hundred (200) basis
points (2.00%), for the applicable LIBOR Interest
Period.
17. Section 2.1 is hereby amended
to read as follows:
“Each Borrower may make a
Minimum Margin Request for an Advance so long as at such time a
Minimum Margin Request is made such Borrower provide evidence to
Lender of compliance with the Minimum Margin Requirement, such
evidence shall include, but shall not limited to, such documents as
may be requested by Lender in form and substance reasonably
satisfactory to Lender.”
18. Section 2.12 is hereby amended
to read as follows:
“2.12 Use of Proceeds
Borrowers shall apply the proceeds of Advances to (i) pay fees
and expenses relating to this transaction, (ii) to provide for
its working capital needs and other reasonable needs for
corporation purposes (which shall not include the purchase of
Borrower’s common stock) and (iii) provide cash advance
not to exceed $5,000,000 to be used for acquisitions provided
Borrowers have obtained Lender’s express written consent to
any such acquisition and have given evidence satisfactory to
Lender, in its sole discretion , that Funded Debt to EBITDA is less
than 2.25.”
19. Section 6.7 entitled Fixed
Charge Coverage Ratio is hereby amended to read as
follows:
“6.7 Fixed Charge Coverage
Ratio . Maintain at the end of each fiscal quarter, on a
rolling four-quarter basis, a minimum Fixed Charge Coverage Ratio
of no less than 1.25x to 1.0, provided however, that for the fiscal
quarter ending March 31, 2009
