RENEWAL AND MODIFICATION AGREEMENT

 

 

 

1.	Financial Covenants.

 

1.1           Minimum Tangible Net Worth.   Borrower shall maintain at all times a Tangible Net Worth of the Borrower on a consolidated basis of not less than Thirty Five Million and 00/100 Dollars ($35,000,000.00) through the fiscal period ending December 31, 2015 and Fifty Million and 00/100 Dollars ($50,000,000.00) thereafter, measured as of the last day of each of Borrower’s quarter end.

 

For the purpose of this financial covenant, "Tangible Net Worth" is defined as the excess of total assets over total liabilities, determined in accordance with United States generally accepted accounting principles,  with the following adjustments: (A) there shall be excluded from assets (i) notes, accounts receivable and other obligations owing to the Borrower from its officers, members, partners or Affiliates, and (ii) all assets which would be classified as intangible assets under generally accepted accounting principles, including goodwill, licenses, patents, trademarks, trade names, copyrights, capitalized software and organizational costs, licenses and franchises; and (B) there shall be excluded from liabilities all indebtedness which is subordinated to the Obligations under a subordination agreement in form specified by Lender or by language in this instrument evidencing the indebtedness which is acceptable to Lender in its discretion.

 

1.2           No Additional Indebtedness.  Without prior written consent of the Lender, Borrower shall not directly or indirectly incur indebtedness for borrowed money during the term of this Agreement, excluding (i) debts owing by Borrower as of the date of this Agreement that were previously disclosed in writing to Lender (other than those that are being paid substantially concurrently with the funding of the Revolving Loan), (ii) other borrowing from the Lender , and  (iii) unsecured debt incurred in the normal course of business.

 

1.3           Debt Service Coverage Ratio. Borrower shall maintain a Debt Service Coverage Ratio of the Borrower on a consolidated basis of not less than 1.50:1 which shall be measured quarterly as of the last day of the fiscal quarter on a 4-quarter rolling basis.

 

For purposes of this Section, the term “Debt Service Coverage Ratio” is defined as a ratio of EBITDA plus any non-cash expense related to restricted stock units granted to employees less any dividends paid, to the sum of interest expense of the Term Loans and the Revolver Loan for the prior 12 months and total principal due under the Term Loan within the following 12 months.  EBITDA shall mean “Net income before Interest, Taxes, Depreciation and Amortization.

 

1.4           Deposit Accounts. At all times, the following entities shall maintain deposit accounts with Lender into which will be deposited all proceeds of Lender’s Collateral subject to the provisions of one or more security agreements:  Greenhill Capital Partners, LLC and Greenhill & Co., LLC.

 

1.5           Minimum Liquidity.  At the time of each advance under the Revolving Loan Agreement, Borrower shall maintain minimum Liquidity of the Borrower on a consolidated basis of $20,000,000.00.

 

For purposes of this financial covenant, "Liquidity” shall include the following: “Liquid Assets: (i) unencumbered  cash and certificates of deposit, (ii) treasury bills and other obligations of the U.S. Federal Government, and (iii) readily marketable securities (including commercial paper, but excluding restricted stock and stock subject to the provisions of Rule 144 of the Securities and Exchange Commission) (unless such stock can be sold without regard to the “volume limitations” under Rule 144).”

 

1.6           Liquidity.  Borrower shall maintain unencumbered Liquid Assets of the Borrower on a consolidated basis equal to at least one (1.00) times the current principal outstanding balance of the Revolving Loan for a minimum of 30 consecutive days during each of Borrower’s fiscal years, verified annually.

 

 

 

For purposes of this financial covenant, "Liquid Assets" shall mean the following assets (i) cash and certificates of deposit, (ii) treasury bills and other obligations of the U.S. Federal Government, and (iii) readily marketable securities (including commercial paper, but excluding restricted stock and stock subject to the provisions of Rule 144 of the Securities and Exchange Commission). (AF30)

 

 

2.	Reporting Covenants.

 

2.1           Financial Statements.   Borrower shall deliver to Lender annual consolidating company-prepared financial statements, including balance sheet and income statements, within one hundred twenty (120) days after the end of each of Borrower’s fiscal years, which financial statements shall be certified by Borrower’s chief financial officer or another officer or representative acceptable to Lender.

 

2.2           Accounts Receivable Aging Statement.   Borrower shall deliver to Lender quarterly accounts receivable aging statements, in form and content reasonably acceptable to Lender, within forty-five (45) days after the end of each quarter certified by Borrower’s chief financial officer or another officer or representative of Borrower acceptable to Lender.

 

2.3           SEC Filings (10-K). Within ten (10) days of filing, Borrower shall deliver copies of CPA audited SEC filings (10-K) annual financial statements.

 

2.4           SEC Filings (10-Q). Within ten (10) days of filing, Borrower shall deliver copies of company prepared SEC filings (10-Q) quarterly financial statements. Quarterly SEC filings (10-Q) to be delivered for the first three (3) fiscal quarters.

 

 

3.	Additional Covenants.

 

3.1           Not Applicable.