-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SRnG0xUBU/USIYkRG2i0iJrBN4q3ktzpKTeDDVLnAfJGtDYXHYcmcWkrqXiAp+vA FgODtKgG78yCuu/LMiofBA== 0001005477-98-001261.txt : 19980421 0001005477-98-001261.hdr.sgml : 19980421 ACCESSION NUMBER: 0001005477-98-001261 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980420 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITEL VIDEO INC/DE CENTRAL INDEX KEY: 0000740103 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ALLIED TO MOTION PICTURE PRODUCTION [7819] IRS NUMBER: 231713238 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08654 FILM NUMBER: 98597370 BUSINESS ADDRESS: STREET 1: 555 WEST 57TH STREET STREET 2: 12TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2122653600 MAIL ADDRESS: STREET 1: 555 WEST 57TH STREET STREET 2: 12FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1998 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ____________________ Commission file number 1-8654 ------ Unitel Video, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 23-1713238 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 555 West 57th Street - New York, New York 10019 - -------------------------------------------------------------------------------- (Address of principal executive offices) (212) 265-3600 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months and (2) has been subject to such requirements for the past 90 days. Yes |X| No |_| APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 2,674,665 Common shares outstanding as of April 20, 1998. (Number of shares) (Date) UNITEL VIDEO, INC. FORM 10-Q QUARTER ENDED FEBRUARY 28, 1998 Page INDEX Number Part I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets February 28, 1998 (Unaudited) and August 31, 1997 3-4 Consolidated Statements of Operations February 28, 1998 (Unaudited) and February 28, 1997 (Unaudited) 5 Consolidated Statements of Cash Flows February 28, 1998 (Unaudited) and February 28, 1997 (Unaudited) 6-7 Notes to Consolidated Financial Statements (Unaudited) 8-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-14 Item 3. Quantitive and Qualitative Disclosure About Market Risk 15 Part II. OTHER INFORMATION Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 2 UNITEL VIDEO, INC. FORM 10-Q QUARTER ENDED FEBRUARY 28, 1998 Part 1. FINANCIAL INFORMATION ITEM 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------- February 28, 1998 August 31, 1997 ----------------- --------------- (Unaudited) (Note) ASSETS - ------ Current Assets: Cash $ 89,000 $ 137,000 Accounts receivable, less allowance for doubtful accounts of $575,000 and $412,000 5,949,000 5,139,000 Other receivables 207,000 19,000 Prepaid income taxes 107,000 75,000 Prepaid expenses 708,000 564,000 Deferred tax asset 495,000 495,000 ------------ ------------ Total current assets 7,555,000 6,429,000 Property and equipment - at cost Land, buildings and improvements 21,260,000 20,799,000 Video equipment 81,338,000 87,745,000 Furniture and fixtures 2,065,000 2,591,000 ------------ ------------ 104,663,000 111,135,000 Less accumulated depreciation 52,391,000 59,228,000 ------------ ------------ 52,272,000 51,907,000 Deferred tax asset 1,974,000 1,974,000 Goodwill 1,652,000 1,721,000 Other assets 1,696,000 1,052,000 ------------ ------------ $ 65,149,000 $ 63,083,000 ============ ============ Note: The balance sheet at August 31, 1997 has been taken from the audited consolidated financial statements at that date. See notes to consolidated financial statements. 3 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED BALANCE SHEETS (Continued)
February 28, 1998 August 31, 1997 ----------------- --------------- (Unaudited) (Note) LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 7,873,000 $ 6,754,000 Accrued expenses 1,099,000 998,000 Payroll, benefits and related taxes 1,069,000 2,038,000 Current maturities of long-term debt 4,300,000 3,530,000 Current maturities of subordinated debt 1,057,000 1,167,000 Current maturities of capital lease obligations 1,820,000 1,946,000 ------------ ------------ Total current liabilities 17,218,000 16,433,000 Deferred rent 123,000 121,000 Long-term debt, less current maturities 30,550,000 26,525,000 Subordinated debt, less current maturities 1,682,000 1,770,000 Long-term leases, less current maturities 2,837,000 3,666,000 Accrued retirement 1,111,000 1,176,000 Stockholders' equity: Common stock, par value $.01 per share Authorized 5,000,000 shares Issued 3,540,954 and 3,540,954 shares respectively, and outstanding 2,674,665 and 2,674,665 shares respectively 27,000 27,000 Additional paid-in capital 27,367,000 27,367,000 Accumulated deficit (7,792,000) (6,028,000) Common stock held in treasury, at cost (866,289 shares) (7,974,000) (7,974,000) ------------ ------------ Total stockholders' equity 11,628,000 13,392,000 ------------ ------------ $ 65,149,000 $ 63,083,000 ============ ============
Note: The balance sheet at August 31, 1997 has been taken from the audited consolidated financial statements at that date. See notes to consolidated financial statements. 4 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended ------------------ ---------------- February 28, February 28, February 28, February 28, 1998 1997 1998 1997 ---- ---- ---- ---- Sales $ 12,429,000 $ 15,000,000 $ 26,197,000 $ 31,370,000 Cost of sales: Production costs 8,784,000 10,228,000 18,063,000 20,944,000 Depreciation 2,190,000 2,258,000 4,341,000 4,309,000 ------------ ------------ ------------ ------------ 10,974,000 12,486,000 22,404,000 25,253,000 ------------ ------------ ------------ ------------ Gross profit 1,455,000 2,514,000 3,793,000 6,117,000 Operating expenses: Selling 406,000 509,000 769,000 994,000 General and administrative 1,484,000 1,751,000 3,104,000 3,121,000 Interest 946,000 933,000 1,845,000 1,774,000 ------------ ------------ ------------ ------------ 2,836,000 3,193,000 5,718,000 5,889,000 ------------ ------------ ------------ ------------ Earnings (loss) from operations (1,381,000) (679,000) (1,925,000) 228,000 Other income 73,000 76,000 163,000 154,000 ------------ ------------ ------------ ------------ Earnings (loss) before income taxes (1,308,000) (603,000) (1,762,000) 382,000 Income taxes -- (31,000) 2,000 19,000 ------------ ------------ ------------ ------------ Net earnings (loss) available to common stockholders $ (1,308,000) $ (572,000) $ (1,764,000) $ 363,000 ============ ============ ============ ============ Earnings (loss) Per Common Share - Basic and Diluted $ (.49) $ (.21) $ (.66) $ .13 ============ ============ ============ ============ Weighted average of common and common equivalent shares outstanding 2,675,000 2,695,000 2,675,000 2,694,000 ============ ============ ============ ============
See notes to consolidated financial statements. 5 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended ---------------- February 28, 1998 February 28, 1997 ----------------- ----------------- Cash Flows From Operating Activities: Net income (loss) $(1,764,000) $ 363,000 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 4,374,000 4,505,000 Net gain on disposal of equipment (33,000) (196,000) Deferred financing costs (395,000) -- Amortization of deferred financing costs 137,000 74,000 Deferred rent 2,000 (215,000) Accrued retirement expense (65,000) (64,000) Deferred advisory and legal costs (326,000) -- Decrease (Increase) in: Accounts receivable (973,000) 2,020,000 Allowance for doubtful accounts 163,000 (277,000) Other receivables (188,000) 147,000 Prepaid expenses (144,000) (5,000) Prepaid taxes (32,000) 2,000 Other assets (60,000) (88,000) Increase (Decrease) in Accounts payable 1,119,000 (683,000) Accrued expenses 101,000 (483,000) Payroll and related taxes (969,000) (1,228,000) ----------- ----------- Total adjustments 2,711,000 3,509,000 ----------- ----------- Net cash provided by operating activities 947,000 3,872,000 Cash Flows From Investing Activities: Capital expenditures (4,670,000) (3,422,000) Proceeds from disposal of equipment 33,000 2,204,000 ----------- ----------- Net cash used in investing activities (4,637,000) (1,218,000) (Continued) 6 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Six Months Ended ---------------- February 28, 1998 February 28, 1997 ----------------- ----------------- Cash Flows From Financing Activities: Proceeds from long-term financing 11,257,000 2,091,000 Proceeds from issuance of common stock -- 39,000 Repayment of loan to ESOP -- (91,000) Principal repayments (7,615,000) (4,931,000) Release of ESOP quarterly shares -- 78,000 ------------ ------------ Net cash (used) provided by financing activities 3,642,000 (2,814,000) ------------ ------------ Net (Decrease)/Increase in Cash (48,000) (160,000) Cash Beginning of Year 137,000 192,000 ------------ ------------ Cash End of Six Months $ 89,000 $ 32,000 ============ ============ Schedule of income taxes and interest paid: Income Taxes Paid $ -0- $ 17,000 Interest Paid 1,639,000 1,757,000 ------------ ------------ $ 1,639,000 $ 1,774,000 ============ ============ See notes to consolidated financial statements. 7 UNITEL VIDEO, INC. FORM 10-Q SIX MONTHS ENDED FEBRUARY 28, 1998 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Consolidated Financial Statements The condensed consolidated balance sheet as of February 28, 1998, the consolidated statements of operations for the six months and quarters ended February 28, 1998 and February 28, 1997, and the consolidated statements of cash flows for the six months then ended have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at February 28, 1998 and for all periods presented have been made. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto in the Company's August 31, 1997 Form 10-K filed with the Securities and Exchange Commission. The results of operations for the six months ended February 28, 1998 are not necessarily indicative of the operating results for the full year. 2. Stockholders' Equity During the six months ended February 28, 1998, stockholders' equity decreased due to a net loss of ($1,764,000). 3. Per Share Data Per share data for the quarter and six months ended February 28, 1998 and February 28, 1997 is based on the weighted average number of common shares outstanding. In the quarter and six months ended February 28, 1997 unreleased Employee Stock Ownership Plan shares are not considered outstanding for earnings per share calculations. (See Note 4). There were no unreleased employee stock ownership shares in the quarter and six months ended February 28, 1998. 4. 401(k) Employee Savings and Stock Ownership Plan The Company sponsors a 401(k) savings and stock ownership plan (the "Plan") which requires the Company to match employee contributions to the 401(k) portion of the Plan in shares of the Company's Common Stock up to the maximum amount set forth in the Plan. Effective September 1, 1994, the Company has adopted the provisions of Statement of Position 93-6, "Employer's Accounting for Employee Stock Ownership Plans" ("SOP 93-6"). 8 The Company reports compensation expense based on the dollar value of the 401(k) match expense. The Plan's compensation expense was $35,000 and $70,000 for the quarter and six months ended February 28, 1998. 5. Impairment and Restructuring Charges In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("FASB Statement No. 121") which provides guidance on when to assess and how to measure impairment of long-lived assets, certain intangibles and goodwill related to those assets to be held and used, and for long-lived assets and certain identifiable intangibles to be disposed of. The Company adopted FASB Statement No. 121 as of August 31, 1995. In fiscal 1995 the Company determined to focus its resources toward providing services to the entertainment and corporate communications areas, which represent the Company's strength, and decided to sell its three Editel divisions which did not specialize in these areas. The Company recorded the carrying value of the assets related to these divisions as net assets held for sale, and a corresponding impairment charge, since these assets were no longer needed for the current and future operations of the Company. In fiscal 1996 the Company began marketing these divisions to potential buyers. In the first six months of fiscal 1996 the Company recorded an impairment charge of $1,739,000 relating to the assets at all three Editel divisions. The impairment charge recorded represented management's estimate of the decrease in value of these assets during the period such assets were held for sale based upon the depreciation method which the Company has found to be reasonable and appropriate. In February 1996 the Company closed its Editel Chicago division, distributed the majority of its assets to other divisions throughout the Company and sold the remaining assets at an auction held in May 1996. Also in May 1996, after reevaluating the potential of the Editel Los Angeles division and primarily due to increasing sales and profitability at that division, the Company decided to retain and expand the Editel Los Angeles division. In August 1996 the Company closed its Editel New York division and distributed the majority of its editorial and computer graphics assets throughout the Company. In November 1996 the Company sold the majority of this division's remaining net assets held for sale of $1,587,000 to an unrelated third party for $1,400,000. The balance of the assets were redeployed throughout the Company or disposed of through an auction. Proceeds from the sale of these assets were used by the Company to repay outstanding debt. In June 1997 the Company determined that a single facility in California would significantly reduce its costs and adequately meet the demand for its services in that location and, accordingly, the Company merged its Unitel Hollywood and Editel Los Angeles divisions in the Company's owned Editel Los Angeles facility. A significant portion of the equipment from Unitel Hollywood was moved to the Editel Los Angeles location. Additionally, a portion of the equipment was transferred to the Company's New York Post Production division for future use. The balance of the equipment was sold and the proceeds, in the amount of $1,700,000, were used to repay outstanding debt. The positive result of the decision to merge the Editel Los Angeles and Unitel Hollywood divisions is reflected in the results of operations for the merged operation in the six months ended February 28, 9 1998. As a result of the merger and sale, the Company recorded a restructuring charge of $1,055,000 in the third quarter of 1997. The restructuring charge consisted primarily of the write off of assets sold and the costs of moving equipment and personnel to Editel Los Angeles. Severance and related payroll costs were expensed as incurred. There is no continuing liability in connection with the closure of the Unitel Hollywood division. Additionally, after a reassessment of its New York post production assets, the Company recorded an impairment charge of $300,000 in the fourth quarter of 1997 with respect to those assets. 6. Stock Based Compensation Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock Based Compensation," provides companies a choice in the method of accounting used to determine stock-based compensation. Companies may account for such compensation either by using the intrinsic value-based method provided by APB Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to Employees," or the fair market value based method provided in SFAS No. 123. This statement was adopted by the Company during its fiscal year ending August 31, 1997. The Company intends to use the intrinsic value-based method provided in APB No. 25 to determine stock-based compensation. The sole effect of the adoption of SFAS No. 123 is the obligation imposed on the Company to comply with the new disclosure requirements provided thereunder. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources The Company is committed to keeping pace with technological developments as well as taking advantage of new business opportunities in the video communications industry. Capital expenditures were $4,670,000 during the six months ended February 28, 1998, and primarily consisted of video equipment for the company's two new digital mobile teleproduction units as well as the purchase of production, post production and graphics equipment for use throughout the Company. Net cash provided by operating activities during the six months ended February 28, 1998 was $947,000 and during the six months ended February 28, 1997 was $3,872,000. Net cash provided by operating activities for the six months ended February 28, 1998 was offset by $4,637,000 of cash used in investing activities, which consisted of capital expenditures (net of proceeds from asset dispositions of $33,000), and was supplemented by net cash provided by financing activities of $11,257,000 on new debt financing less $7,615,000 of debt repayments, resulting in a net decrease in cash available of $48,000. In December 1995, the Company entered into a $26 million revolving credit and term loan agreement with a financial institution, consisting of an $11 million revolving credit facility and two $7.5 million term loans (Term Loans A and B). In May 1997, Term Loan A was revised by the inclusion of $2,500,000 of the original Term Loan B and the advance of $518,000 of new funds, resulting in a revised Term Loan A balance of $9,000,000. Term Loan A is payable in fifty two (52) equal monthly principal installments of $100,000 plus interest, with the balance of $3,800,000 due December 2001. In November 1997 Term Loan B was repaid, in part from the proceeds of a new Term Loan D in the amount of $2,500,000. $3,742,000 of the original Term Loan B was repaid from sales of equipment from the Company's Editel Chicago, Editel New York and Unitel Hollywood divisions. In February 1998 Term Loan D was extended and is payable in eighteen (18) monthly installments of $140,000 commencing May 1, 1998. In July 1997 the credit facility was further amended by the issuance of a $5,080,000 letter of credit (the "Letter of Credit") to secure payment of principal and interest on $5,000,000 principal amount of Allegheny County (Pennsylvania) Industrial Development Authority Variable Rate Demand Revenue Bonds (the "Bonds"). The proceeds from the sale of the Bonds were loaned to the Company and were used by the Company, together with other available funds, to build a new digital mobile teleproduction unit. The Letter of Credit requires quarterly principal payments of $179,000 commencing August 1998 to be applied to the redemption in equal principal amount of the Bonds. The Bonds mature on July 1, 2009 and, to the extent not previously redeemed in full as provided in the prior sentence, are required to be repaid by the Company on that date. In December 1997 the credit facility was further amended by increasing the Letter of Credit to $8,636,000 to secure payment of principal and interest on an additional $3,500,000 principal amount of Allegheny County (Pennsylvania) Industrial Development Authority Variable Rate Demand Revenue Bonds ("the Additional Bonds"). The proceeds from the sale of the Additional Bonds were loaned to the Company and were used by the 11 Company, together with other available funds, to build a second new digital mobile teleproduction unit. The amended Letter of Credit requires additional quarterly principal payments of $125,000 commencing February 1999 to be applied to the redemption in equal principal amount of the Additional Bonds. The Additional Bonds mature on July 1, 2009 and, to the extent not previously redeemed in full as provided in the prior sentence, are required to be repaid by the Company on that date. The Company is currently in negotiations to refinance or sell certain of its owned real estate and anticipates using the proceeds of the refinancing or sale to repay certain of its outstanding debt, including the mortgages on the subject properties, with the balance used for working capital purposes. The terms of the overall credit facility with the financial institution provide that the lender receive a first lien on all property and equipment and accounts receivable that are not encumbered by another lender. In addition, under certain circumstances the Company is required to prepay the loans under the credit facility from funds generated by the sale of assets and to prepay Term Loan D from excess cash flow. The Company has at certain times not been in compliance with the tangible net worth, fixed charge coverage, leverage ratio and interest coverage ratio financial covenants (the "Financial Covenants") in the credit facility and the lender has waived such non-compliance and is currently revising the Financial Covenants to a level such that it is expected that the Company will be in compliance with the Financial Covenants on a going forward basis. It is not expected that in the future the Financial Covenants will be revised to their initial levels on the date of execution of the credit facility. The Company anticipates that funds generated from operations together with funds available under its existing credit facility and proceeds from the refinancing or sale of certain of its owned real estate currently being negotiated and noted above in this item will be sufficient to meet the Company's anticipated working capital and investing needs in fiscal 1998. Results of Operations Sales were $12,429,000 and $15,000,000 for the quarters ended February 28, 1998 and February 28, 1997, respectively. Sales were $26,197,000, and $31,370,000 for the six months ended February 28, 1998 and February 28, 1997, respectively. The decrease in sales in the six month period ending February 28, 1998 was due primarily to the merger of the Company's Unitel Hollywood and Editel Los Angeles divisions in fiscal 1997. The Company's Mobile division commenced operating its two newest and most sophisticated mobile teleproduction units during the six months ended February 1998. However, sales for the Mobile division were flat during such period as compared to the same period of the prior year as a result of delays in the completion of such mobile units. The completion of the units was delayed in order to incorporate technical design changes made to maximize the flexibility and capability of the units to take advantage of new Interstate Commerce Commission regulations regarding length and weight. Uncertainly as to the completion date made premarketing of the units difficult, since mobile units are typically booked several months in advance. Sales for the Company's Studio division were lower during the six months ended February 28, 1998 as compared with the six months ended February 28, 1997 due to the non-renewal of the "Gordon Elliott" and "Rolanda" shows. This loss was partially offset by revenues from the addition of the "Chris Rock" show. Sales for the Company's New York Post Production division were lower during the six months ended February 28, 1998 as compared with the six months ended February 28, 1997 as a result of a continuing industry wide decline in revenues and profitability from analog editing. 12 The Company is currently reducing its New York post production assets and is repurposing the related space for use in its New York Studio division. An auction of excess analogue equipment will be held in April 1998. The merger of the Editel Los Angeles and Unitel Hollywood divisions in fiscal 1997 resulted in a significant decrease in sales during the six months ended February 28, 1998. However, the Editel Los Angeles division's merged operations resulted in a profit during the six months ended February 28, 1998 as compared to a substantial operating loss for the two divisions during the six months ended February 28, 1997. The Company's net loss for the quarter ended February 28, 1998 was $(1,308,000), compared to the net loss of ($572,000) for the comparable quarter of fiscal year 1997. The Company's net loss was $(1,764,000) for the six months ended February 28, 1998, compared with net income of $363,000 for the same period of the prior fiscal year. The second quarter of the fiscal year has historically been the slowest. The comparative increase in net loss of approximately ($736,000) and ($2,127,000) for the quarter and six months ended February 28, 1998 compared to the quarter and six months ended February 28, 1997 is principally due to a decrease in sales in the Company's New York Studio and Post Production divisions and an increase in expenses in the Mobile division. The increase in expenses in the Mobile division is primarily due to a new field shop in Montreal, Canada, promotional expenses in connection with the new digital mobile teleproduction units, as well as increased depreciation and interest expense generated by the new units. Production costs, the main component of cost of sales, consist primarily of direct labor, equipment maintenance expenses and occupancy costs. The Company's production costs, as a percentage of sales, were 70.7% for the quarter ended February 28, 1998, as compared to 68.2% for the quarter ended February 28, 1997. Although production expenses decreased during the quarter ended February 28, 1998 as compared with the quarter ended February 28, 1997, the percentage to sales was higher due to the substantial portion of fixed costs that do not decrease when sales decrease. Depreciation, as a percentage of sales, was 17.6% and 15.1% for the quarters ended February 28, 1998 and 1997, respectively, and 16.6% and 13.7% for the six months ended February 28, 1998 and February 28, 1997, respectively. The increase in the quarter and six months ended February 28, 1998 compared to the same periods in the prior year was a result of depreciation on the Mobile division's newest digital mobile teleproduction units introduced in the six months ended February 28, 1998 and increased depreciation resulting from additions to property and equipment at other divisions during fiscal 1997. This increase was offset by a reduction in depreciation on the Editel Los Angeles division resulting from the merger of the Editel Los Angeles and Unitel Hollywood divisions in fiscal 1997. Since sales were down and depreciation was approximately the same in the quarter and six months ended February 28, 1998, depreciation as a percentage of sales increased for such periods. Selling expenses, as a percentage of sales, for the quarters ended February 28, 1998 and February 28, 1997 were 3.3% and 3.4%, respectively, and 2.9% and 3.2% for the six months ended February 28, 1998 and February 28, 1997, respectively. The percent of sales in the quarter and six months ended February 28, 1998 was comparable to the prior year periods since selling expense as well as sales decreased proportionately. The decrease in selling expenses in the quarter and six months ended February 28, 1998 as 13 compared to the same periods in the prior year is mainly due to a decrease in sales staff resulting from the merger of the Unitel Hollywood and Editel Los Angeles divisions in fiscal 1997. General and administrative expenses, as a percentage of sales, for the quarters ended February 28, 1998 and February 28, 1997 were 11.9% and 11.7%, respectively, and 11.8% and 9.9% for the six months ended February 28, 1998 and February 28, 1997, respectively. The decrease in general and administrative expenses is primarily due to the merger of the Company's Editel Los Angeles and Unitel Hollywood divisions. Also included in the decrease in general and administrative expenses from the comparable period in the prior year is the impact of the reduction of certain cost estimates related to the closure of the Editel New York and Editel Chicago divisions. Since sales decreased in the periods ended February 28, 1998, the percentage to sales remained constant in the quarter and increased in the six months ended February 28, 1998, respectively. Interest expense, as a percentage of sales, for the quarters ended February 28, 1998 and February 28, 1997 was 7.6% and 6.2%, respectively, and 7.0% and 5.7% for the six months ended February 28, 1998 and February 28, 1997. The level of outstanding debt in the first six months of fiscal 1998 increased compared with the same period of the prior year and sales decreased in the first six months of fiscal 1998, resulting in an increase in interest expense as a percentage of sales in fiscal 1998 when compared with the same periods of the prior year. The Company's effective tax rate was 0% and 5% for the first six months of fiscal years 1998 and 1997, respectively. The effective tax rate for the first six months of fiscal 1998 and 1997 is less than the federal statutory rate of 34% due to the utilization of net operating loss carryforwards generated by the losses incurred in fiscal 1995, 1996 and 1997. As previously announced, the Company has received unsolicited expressions of interest in acquiring the Company. The Company has incurred $326,000 of deferred advisory and legal fees in connection with its evaluation of these expressions of interest. Year 2000 The Company has been actively reviewing all of its financial and operational software for Year 2000 issues. In discussions with the vendors of such software the Company has been assured that all Year 2000 issues will be addressed in a timely manner without significant cost to the Company. 14 Item 3. Quantitative and Qualitative Disclosure About Market Risk. Not applicable. PART II OTHER INFORMATION Item 5. Other Information This report contains certain forward-looking statements which are based upon current expectations and involve certain risks and uncertainties. Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, readers are cautioned that these statements may be impacted by several factors, and, accordingly, the Company's actual performance and results may vary from those stated herein. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits required to be filed by Item 601 of Regulation S-K. 1. Exhibit 4(A). Sixth Amendment to Amended and Restated Loan and Security Agreement, dated as of November 13, 1997, among Unitel Video, Inc., R Squared, Inc. and Heller Financial, Inc. 2. Exhibit 4(B). Letter Agreement amending Amended and Restated Loan and Security Agreement, dated December 11, 1997, from Heller Financial, Inc. 3. Exhibit 4(C). Seventh Amendment to Amended and Restated Loan and Security Agreement, dated as of December 15, 1997, among Unitel Video, Inc., R Squared, Inc. and Heller Financial, Inc. 4. Exhibit 4(D). Eighth Amendment to Amended and Restated Loan and Security Agreement, dated as of February 12, 1998, among Unitel Video, Inc., R Squared, Inc. and Heller Financial, Inc. 5. Exhibit 4(E). Loan Agreement, dated October 27, 1997, between Unitel Video, Inc. and the Commonwealth of Pennsylvania. 6. Exhibit 4(F). First Supplemental Loan Agreement, dated as of December 15, 1997, between the Allegheny County Industrial Development Authority and Unitel Video, Inc. 7. Exhibit 4(G). First Amendment to Pledge Agreement, dated as of December 15, 1997, among Unitel Video, Inc., Heller Financial, Inc. and PNC National Bank, National Association. 8. Exhibit 4(H). First Amendment to Reimbursement Agreement, dated as of December 15, 1997, between Unitel Video, Inc. and Heller Financial, Inc. 9. Exhibit 10(A). Amendment to Lease, dated February 16, 1998 between Unitel Video Canada, Inc. and Olymbec Construction Inc. 10. Exhibit 27. Financial Data Schedule. (b) There were no reports filed on Form 8-K during the quarter ended February 28, 1998. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITEL VIDEO, INC. By: /s/ Barry Knepper ------------------------------------------ Barry Knepper President and Chief Executive Officer By: /s/ George Horowitz ------------------------------------------ George Horowitz Chief Financial Officer Dated: April 20, 1998 16 EX-4.(A) 2 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT SIXTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT This SIXTH AMENDMENT ("Amendment") is entered into as of November 13, 1997, by and among UNITEL VIDEO, INC., a Delaware corporation having its principal place of business at 555 West 57th Street, New York, New York 10019 ("Borrower"), R SQUARED, INC., a California Corporation having its principal place of business at 729 North Highland, Los Angeles, California 90038 ("Corporate Guarantor") and HELLER FINANCIAL, INC., a Delaware corporation having an office at 500 West Monroe Street, Chicago, Illinois 60661, as agent ("Agent") for Lender (as hereafter defined). BACKGROUND Borrower, Corporate Guarantor, Agent and Heller Financial, Inc. ("Lender") are parties to an Amended and Restated Loan and Security Agreement dated as of December 12, 1995 (as amended, supplemented or otherwise modified from time to time, the "Loan Agreement") pursuant to which Lender provides Borrower with certain financial accommodations. Borrower has requested that Lender amend the Loan Agreement and Lender is willing to do so on the terms and conditions hereafter set forth. NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrower by Lender, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement. 2. Amendment to Loan Agreement. Subject to satisfaction of the conditions of effectiveness set forth in Section 3 below, the Loan Agreement is hereby amended as follows: (a) Section 1.1 of the Loan Agreement is hereby amended by: (i) adding the following defined terms in their appropriate alphabetical order: "Canadian Subsidiary" means Unitel Video Canada, Inc., an Ontario corporation and a wholly-owned Subsidiary of Borrower. "Department" means the Commonwealth of Pennsylvania, acting by and through the Department of Community and Economic Development. "Department Documentation" means the Loan Agreement dated October 27, 1997 by and between Borrower and the Department, the Security Agreement dated October 27, 1997 by and between Borrower and the Department, the promissory note dated October 27, 1997 in the original principal amount of $500,000 made by Borrower in favor of the Department and all other documents, instruments and agreements executed in connection therewith, as each may be amended, modified and supplemented from time to time. "Intercreditor Agreement" means the Intercreditor Agreement dated as of October 27, 1997 between Agent and the Department. "Permitted Subordinated Debt Modifications" means those modifications to the Subordinated Notes consented to in writing by Agent on the Sixth Amendment Effective Date. "Revolving Overadvance Amount" means $1,617,136.53. "Sixth Amendment Effective Date" means November 13, 1997. "Specified Department Collateral" means (a) one SMS 7000 Production Router (Textronix), Serial No. B23655, (b) one 4000-3 Dig Production Switcher (Textronix), Serial No. A89063, (c) one Dveous Digital Equipment (Scitex Digital Video), Serial No. 5100SY14390177 and (d) one Wolf Coach Motor Vehicle, VIN No. 1R1C5323VK970517, Title No. 51076985201UN. "Specified Sale Leaseback Transaction" means one or more sale leaseback transactions entered into by Borrower, in accordance with the terms and provisions of subsection 7.3(A)(iii), with respect to the real property located at 515 West 57th Street, New York, New York 10019, 433 West 53rd Street, New York, New York 10019 and 729 North Highland, Hollywood, California 90038-7771, as applicable. "Term Note" means each promissory note of Borrower in substantially the form of Exhibits 2.1(A)(1), (A)(2), (A)(3) and (A)(5) issued in connection with the Term Loans referenced in Section 2.1(A). (ii) amending the following defined terms in their entirety to provide as follows: "Permitted Subsidiaries" means Corporate Guarantor and Canadian Subsidiary. "Required Canadian Documentation" means (a) all such documentation as shall be required by Agent and its counsel to perfect in favor of Agent a first priority security interest in all now owned and hereafter created Accounts of the Canadian Subsidiary (the "Canadian Receivables"), (b) a guaranty agreement in favor of and in form and substance satisfactory to Agent executed by the Canadian Subsidiary, pursuant to which the Canadian Subsidiary guaranties to Agent and Lenders the payment and performance of all of Borrower's Obligations under the Loan Documents, (c) all such documentation as shall be required by Agent to establish a lockbox and blocked account in favor of Agent with respect to the Canadian Receivables, (d) corporate resolutions of the Canadian Subsidiary authorizing the transactions contemplated by the Required Canadian Documentation, (e) an opinion of the Canadian Subsidiary's counsel covering such matters as Agent and its counsel shall reasonably request, (f) a certified certificate of incorporation for the Canadian Subsidiary, (g) bylaws of the Canadian Subsidiary and (h) good standing certificates and authorizations to do business with respect to the Canadian Subsidiary for its jurisdiction of incorporation and for each jurisdiction where the conduct of its business requires such authorization. "Term Loan Commitment" means (a) as to any Lender, the commitment of such Lender to make a portion of the Term Loans in the amount set forth on the signature page of the Sixth Amendment to this Agreement under such Lender's signature or in the most recent Lender Addition Agreement, if any, executed by such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to make the Term Loans. "Term Loan D" means advances made pursuant to subsection 2.1(A)(5). "Term Loans" mean advances made pursuant to subsections 2.1(A)(1), (A)(2), (A)(3) and (A)(5). (iii) amending the defined term "Permitted Encumbrances" by: (1) deleting the word "and" immediately preceding clause "(h)" thereof; (2) deleting the period at the end of clause "(h)" thereof and replacing the same with a semi-colon; and (3) adding a new clause "(i)" thereto to provide as follows: "(i) Liens on the Specified Department Collateral in favor of the Department, the lien priorities with respect to which are set forth in the Intercreditor Agreement." (iv) deleting the defined term "Amended and Restated Term Note" or "Amended and Restated Term Notes". (b) A new Section 2.1(A)(5) is hereby added to the Loan Agreement to provide as follows: "(A)(5) Term Loan D. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrower herein set forth, each Lender, severally, agrees to lend to Borrower, upon Borrower's request therefor in accordance with the borrowing procedures for Revolving Loan requests set forth in Section 2.1(D) hereof, its Pro Rata Share of Term Loan D in an aggregate amount not to exceed $2,500,000. Amounts borrowed under this subsection 2.1(A)(5) and repaid may not be reborrowed. Borrower shall make a principal payment in the amount of the applicable Scheduled Installment of Term Loan D (or such lesser principal amount of Term Loan D as shall then be outstanding) on the date and in the amount set forth below. Term Loan D shall bear interest from the date such Loan is made to the date paid in full at a rate per annum equal to the interest rate set forth in Section 2.2(A) applicable to Term Loan B. Borrower hereby authorizes Agent, on the Sixth Amendment Effective Date, to (a) debit Borrower's loan account as a Term Loan D advance in an amount equal to the Revolving Overadvance Amount and (b) apply the proceeds thereof to the Revolving Loan such that after giving effect to such application the Revolving Overadvance Amount shall equal zero ($0). "Scheduled Installment of Term Loan D" means the principal installment in an amount equal to $2,500,000, payable, subject to the provisions of subsection 2.4(B), on or before January 31, 1998, together with all accrued interest thereon (it being understood that Borrower may prepay Term Loan D, in whole or in part, from time to time), or the earlier to occur of (i) the Termination Date or (ii) acceleration of the Obligations in accordance with the provisions of subsection 8.3 at which time the entire unpaid principal amount of Term Loan D plus accrued interest thereon shall be due and payable. In the event the Scheduled Installment of Term Loan D is not paid in full in cash when due, then Borrower shall pay to Agent (which amount Agent may charge to Borrower's loan account as a Revolving Loan) a premium in an amount equal to $100,000; provided, however, Borrower's failure to pay the Scheduled Installment of Term Loan D when due shall constitute an Event of Default hereunder and shall entitle Agent to exercise all rights and remedies available to Agent under this Agreement the Loan Documents and applicable law, notwithstanding payment of the aforementioned premium. (c) Clause "(i)" of the first sentence of Section 2.1(E) of the Loan Agreement is hereby amended to provide as follows: "(i) the Term Notes to evidence such Lender's portion of the Term Loans, such notes to be in the principal amount of the respective Term Loan Commitments of such Lender and with other appropriate insertions and" (d) Section 2.4(B) of the Loan Agreement is hereby amended by: (i) deleting subsection "(2)" thereof and replacing the same with the following: "(2) Proceeds of Asset Dispositions. (i) Subject to the provisions of subsection 2.4(B)(4), immediately upon receipt by Borrower or any of its Subsidiaries of the net proceeds of any Asset Disposition, Borrower shall prepay the Obligations in an amount equal to such net proceeds in accordance with the provisions of this subsection 2.4(B)(2). So long as no Default or Event of Default shall exist and Borrower reasonably expects the net proceeds of any Asset Disposition to be reinvested within 180 days to repair or replace such assets with like assets, Borrower shall deliver the net proceeds to Agent to be applied to the Revolving Loan, and Borrower may, so long as no Default or Event of Default shall have occurred and be continuing, reborrow such net proceeds only for such repair or replacement. If Borrower fails to reinvest such net proceeds within 180 days, such net proceeds shall be applied as set forth below. Notwithstanding anything contained in this subsection 2.4(B)(2) to the contrary, Borrower shall not be eligible to utilize the foregoing reinvestment option (a) with respect to any individual Asset Disposition in the event the net proceeds generated therefrom are greater than $50,000, (b) with respect to any individual Asset Disposition in the event Borrower shall have previously utilized during the Fiscal Year in which such Asset Disposition shall have occurred at least $200,000 in net proceeds generated from all Asset Dispositions during such Fiscal Year and (c) in the event the net proceeds arise out of a Specified Sale Leaseback Transaction. Subject to the provisions of subsection 2.4(B)(4), Borrower shall remit, or cause its Subsidiaries to remit, all such net proceeds to Agent's Account for application to the Obligations in accordance with the provisions of this subsection 2.4(B)(2). (ii) In the event any such net proceeds arise out of an Asset Disposition (other than a Specified Sale Leaseback Transaction), Agent shall apply such net proceeds first to repay Term Loan D in the inverse order of maturity thereof, second to repay Term Loan A in the inverse order of maturity thereof and then to the remaining Obligations in such order as Agent shall elect. (iii) In the event any such net proceeds arise out of a Specified Sale Leaseback Transaction, Agent shall apply such net proceeds to the Obligations in accordance with the provisions of subsection 2.4(B)(4). (iv) During the existence of a Default or an Event of Default, all net proceeds of any Asset Disposition shall be applied by Agent first to all fees, costs and expenses then owing to Agent and Lender under subsection 10.1, second to repay Term Loan D in the inverse order of maturity thereof, third to repay Term Loan A in the inverse order of maturity thereof and fourth to the remaining Obligations in such order as Agent shall elect. (ii) adding a new subsection "(4)" to provide as follows: "(4) Prepayments of Term Loan D. Immediately upon consummation of each Specified Sale Leaseback Transaction, Borrower shall direct the purchaser/lessor with respect thereto to remit the net proceeds generated therefrom to Agent in immediately available funds, which such net proceeds shall be applied by Agent first to repay Term Loan D in the inverse order of maturity thereof and second to the Revolving Loan; provided, however, in the event a Default or Event of Default shall be in existence at the time of any such prepayment, Agent shall apply such net proceeds to the Obligations in such order as Agent shall elect." (e) The first sentence of Section 2.4(C) of the Loan Agreement is hereby amended by adding the following immediately preceding the reference to "2.1(B)": "2.1(A)(5)". (f) Section 5.1(F) of the Loan Agreement is hereby amended to provide as follows: "(F) Borrowing Base Certificates. On each Tuesday of each week, Borrower shall deliver to Agent (i) a Borrowing Base Certificate updated to reflect the most recent sales and collections of Borrower for the immediately preceding week and (ii) an assignment schedule of all Accounts created by Borrower for the immediately preceding week." (g) Section 5.6 of the Loan Agreement is hereby amended by: (i) deleting the first two lines thereof and replacing the same with the following: "Each Loan Party and Agent shall establish lockboxes and". (ii) deleting the eleventh line thereof and replacing the same with the following: "Each Loan Party, and any of its Affiliates," (h) Section 5.7 of the Loan Agreement is hereby amended by deleting the first sentence thereof and replacing the same with the following: "Each Loan Party hereby constitutes and appoints Agent and all Persons designated by Agent for that purpose as such Loan Party's true and lawful attorney-in-fact, with power to endorse such Loan Party's name to any of the items of payment or proceeds described in subsection 5.6 above and all proceeds of Collateral that come into Agent's possession or under Agent's control." (i) Section 7.1 of the Loan Agreement is hereby amended by adding after clause "(b)(vi)" thereof a new clause "(b)(vii)" to provide as follows: "and (vii) Indebtedness incurred under the Department Documentation, which Indebtedness may be paid only in accordance with the terms of such documentation as in effect on the Sixth Amendment Effective Date or as subsequently modified with the prior written consent of Agent." (j) Section 7.3(A) of the Loan Agreement is hereby amended by: (i) deleting the parenthetical in clause "(i)" thereof and replacing the same with the following: "(other than Specified Fixed Asset Dispositions and Specified Sale Leaseback Transactions, as applicable); (ii) deleting the word "and" immediately preceding clause "(ii)" thereof; and (iii) adding the word "and" at the end of clause "(ii)(2)" thereof; and (iv) adding a new clause "(iii) thereto to provide as follows: "(iii) enter into Specified Sale Leaseback Transactions if all of the following conditions are met: (1) the purchaser/lessor in each such Specified Sale Leaseback Transaction is directed to remit all net proceeds generated therefrom to Agent for application to the Obligations in accordance with the provisions of subsection 2.4(B)(4); (2) the purchaser/lessor with respect to each such Specified Sale Leaseback Transaction shall have delivered to Agent a landlord waiver covering the real property subject to such Specified Sale Leaseback Transaction, which shall in form and substance be satisfactory to Agent and its counsel, (3) no Default or Event of Default shall then be in existence or shall exist after giving effect to each such Specified Sale Leaseback Transaction and (4) Agent shall have received copies of all documentation to be entered into by Borrower in connection with each such Specified Sale Leaseback Transaction, the terms of which shall be reasonably acceptable to Agent." (k) Section 7.4 of the Loan Agreement is hereby amended by: (i) deleting the word "and" immediately preceding clause "(c)" thereof and replacing the same with a comma; and (ii) adding a new clause "(d)" thereto to provide as follows: "(d) loans to and investments in the Canadian Subsidiary not to exceed $1,000,000 in the aggregate at any time outstanding." (l) Section 7.5 of the Loan Agreement is hereby amended by deleting clause "(b)" thereof and replacing the same with the following: "(b)" Borrower (i) may make regularly scheduled payments of principal and interest on the Subordinated Debt in accordance with the terms of the Subordinated Notes; provided, however, until such time as Term Loan D is paid in full in cash, the aggregate amount of regularly scheduled principal and interest payments which shall be permitted to be made on the Subordinated Debt, during the period commencing on the Sixth Amendment Effective Date and ending on the date Term Loan D is paid in full in cash, shall not exceed $350,000, and (ii) may prepay the Subordinated Notes (other than the Subordinated Note referenced in subsection "(1)" of the defined term "Subordinated Notes") in full provided that prior to any such prepayment (1) Term Loan D shall have been paid in full in cash, (2) at the time of and immediately after giving effect to such prepayment, no Event of Default shall exist or would have existed if such payment were, on a pro forma basis (x) included in the calculation of the prior quarterly covenant measuring period or (y) included in management's written best good faith calculation for the next quarterly covenant measuring period, and (3) immediately after giving effect to such prepayment, Undrawn Availability shall equal or exceed $3,000,000," (m) Section 7.7 of the Loan Agreement is hereby amended by deleting the word "Change" on the first line thereof and replacing the same with the following: "Other than the Permitted Subordinated Debt Modifications, change". (n) New subsections 8.1(W), (X), (Y) and (Z) are hereby added to the Loan Agreement to provide as follows: "(W) Cross Default to Department Documentation. An event of default shall occur and be continuing under any Department Documentation which is not cured within any applicable grace period." "(X) Canadian Documentation. Failure of Borrower to cause the Canadian Subsidiary to deliver to Agent the Required Canadian Documentation on or prior to December 12, 1997." "(Y) Cash Dominion. Failure of Borrower to have entered into all such documentation as shall be required by Agent to grant to Agent full dominion and control over all proceeds of Borrower's Accounts on or prior to December 12, 1997." "(Z) Department Proceeds. Failure of Borrower to immediately (but in no event later than two Business Days after Borrower's receipt thereof) deliver to Agent the loan proceeds generated from the transactions contemplated by the Department Documentation, which such proceeds shall aggregate no less than $500,000." (o) Exhibit 2.1(A)(5) to this Amendment is hereby added to the Loan Agreement as Exhibit 2.1(A)(5). 3. Conditions of Effectiveness. This Amendment shall become effective when and only when Agent shall have received (a) four (4) copies of this Amendment executed by Borrower and Corporate Guarantor, (b) an amendment fee for Agent's account in an amount equal to $75,000, which may be charged by Agent to Borrower's account (the "Amendment Fee"), (c) fully executed copies of all Department Documentation, (d) the Intercreditor Agreement executed by the Department and Borrower and (e) such other certificates, instruments, documents, agreements and opinions of counsel as may be required by Agent or its counsel, each of which shall be in form and substance satisfactory to Lender and its counsel. 4. Representations and Warranties. Borrower hereby represents and warrants as follows: (a) This Amendment and the Agreement, as amended hereby, constitute legal, valid and binding obligations of Borrower and are enforceable against Borrower in accordance with their respective terms. (b) Upon the effectiveness of this Amendment, Borrower hereby reaffirms that all covenants, representations and warranties made in the Loan Agreement to the extent the same are not specifically amended hereby are correct in all material respects and agrees that all covenants, representations and warranties shall be deemed to have been remade as of the effective date of this Amendment. (c) No Event of Default or Default has occurred and is continuing or would exist after giving effect to this Amendment, other than a Default or Event of Default occurring solely by reason of Borrower's failure to make certain payments on the Subordinated Debt (the "Subordinated Debt Defaults"); provided, however, that Borrower shall use its best efforts to cause the Permitted Subordinated Debt Modifications to be executed and delivered promptly after the Sixth Amendment Effective Date and shall otherwise make payments under the Subordinated Debt in accordance with the terms and provisions of Section 7.5 of the Loan Agreement which actions shall cause the Subordinated Debt Defaults to be no longer outstanding. (d) Borrower has no defense, counterclaim or offset with respect to the Loan Agreement or the Obligations thereunder. 5. Effect on the Loan Agreement. (a) Upon the effectiveness of Section 2 hereof, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Loan Agreement as amended hereby. (b) Except as specifically amended herein, the Loan Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent or Lender, nor constitute a waiver of any provision of the Loan Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith. 6. Governing Law. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York. 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 8. Counterparts. This Amendment may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same agreement. Any signature received by facsimile transmission shall be deemed an original signature hereto. [SIGNATURE LINES ON FOLLOWING PAGE] IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first written above. UNITEL VIDEO, INC., as Borrower By: /s/ Barry Knepper ----------------------------------------------- Name: Barry Knepper --------------------------------------------- Title: Chief Executive Officer -------------------------------------------- R SQUARED, INC., as Corporate Guarantor By: /s/ Barry Knepper ----------------------------------------------- Name: Barry Knepper --------------------------------------------- Title: President -------------------------------------------- HELLER FINANCIAL, INC., as Agent and Lender By: /s/ Venkat Venkatesan ----------------------------------------------- Name: Venkat Venkatesan --------------------------------------------- Title: Vice President -------------------------------------------- Term Loan A Commitment: $9,000,000 ($8,400,000 of which is outstanding as of the Sixth Amendment Effective Date) Term Loan B Commitment: $0 Term Loan C Commitment: $0 Term Loan D Commitment: $2,500,000 EXHIBIT 2.1(A)(5) TERM NOTE D $2,500,000 New York, New York November __, 1997 This Term Note D is executed and delivered under and pursuant to the terms of that certain Amended and Restated Loan and Security Agreement dated as of December 12, 1995 (as amended, supplemented or modified from time to time, the "Loan Agreement") among Unitel Video, Inc., a Delaware corporation with its principal place of business at 555 West 57th Street, New York, New York 10019 ("Borrower"), R Squared, Inc., a California corporation with its principal place of business at 3300 Cahuenga Boulevard West, Los Angeles, California 90068, Heller Financial, Inc. ("Heller"), each of the other financial institutions named in or which hereafter become a party to the Loan Agreement (Heller and such other financial institutions, collectively, "Lenders") and Heller as agent for Lenders (Heller, in such capacity, "Agent"). Capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement. FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of Heller at its offices located at 500 West Monroe, 18th Floor, Chicago, Illinois 60661 or at such other place as holder may from time to time designate to Borrower in writing: (i) the principal sum of TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($2,500,000.00) payable, subject to acceleration upon the occurrence of an Event of Default under the Loan Agreement or earlier repayment as required by the Loan Agreement; and (ii) interest on the principal amount of this Note from time to time outstanding, payable at the Interest Rate set forth in Section 2.1(A)(5) of the Loan Agreement. Upon the occurrence and during the continuance of an Event of Default and notice thereof by Agent to Borrower (except that no notice shall be required upon the occurrence of an Event of Default under subsection 8.1(G) or 8.1(H) of the Loan Agreement), interest may at Agent's election be payable at the Default Rate. In no event, however, shall interest hereunder exceed the maximum interest rate permitted by law. This Note is the Term Note D referred to in the Loan Agreement and is secured by the Liens granted pursuant to the Loan Agreement and the Loan Documents, is entitled to the benefits of the Loan Agreement and the Loan Documents and is subject to all of the agreements, terms and conditions therein contained. This Note is subject to mandatory prepayment and may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Loan Agreement. If an Event of Default under Sections 8.1(G) or (H) of the Loan Agreement shall occur, then this Note shall immediately become due and payable, without notice, together with reasonable attorneys' fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof. If any other Event of Default shall occur and be continuing under the Loan Agreement or any of the Loan Documents, which is not cured within any applicable grace period, then this Note may, as provided in the Loan Agreement, be declared to be immediately due and payable, with notice to the extent provided in the Loan Agreement, together with reasonable attorneys' fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof. This Note shall be governed by and construed in accordance with the laws of the State of New York. Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Loan Agreement. UNITEL VIDEO, INC. By: ---------------------------------- Its: --------------------------------- STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK) On the ____ day of November, 1997, before me personally came Barry Knepper, to me known, who being by me duly sworn, did depose and say that he is the ___________________ of Unitel Video, Inc., the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by order of the board of directors of said corporation. ------------------------------- Notary Public EX-4.(B) 3 LETTER April 16, 1998 Unitel Video, Inc. 555 West 57th Street New York, NY 10019 Attn: George Horowitz Re: Financial Covenants Dear Mr. Horowitz: Reference is made to that certain Amended and Restated Loan and Security Agreement dated as of December 12, 1995 (as amended, the "Agreement") among Unitel Video, Inc., as Borrower, R Squared, Inc., as Corporate Guarantor, and Heller Financial, Inc., as Agent and Lender ("Heller"). Capitalized terms used herein and not otherwise defined, shall have the meanings ascribed to them in the Agreement. This letter will confirm that Borrower and Heller have agreed to amend the financial covenants contained in Section 6 of the Agreement to the amounts set forth below for the periods set forth below: Quarter Covenant Ended Amount Tangible Net Worth 11/30/97 $12,500,000 (Section 6.1) 02/28/98 $12,500,000 05/31/98 $13,000,000 08/31/98 $13,000,000 Capital Expenditure Limits 11/30/97 $ 3,322,000 (Section 6.2) 02/28/98 $ 799,000 05/31/98 $ 658,000 08/31/98 $ 985,000 Fixed Charge Coverage* 11/30/97 <0.50 : 1.0> (Section 6.3) 02/28/98 0.25 : 1.0 05/31/98 0.75 : 1.0 08/31/98 1.00 : 1.0 * calculated on a cumulative quarter basis until 8/31/98, then calculated on a rolling four-quarter basis Leverage Ratio 11/30/97 5.00 : 1.0 (Section 6.4) 02/28/98 5.00 : 1.0 05/31/98 3.75 : 1.0 08/31/98 3.75 : 1.0 Interest Coverage Ratio 11/30/97 <0.72 : 1.0> (Section 6.5) 02/28/97 1.00 : 1.0 05/31/98 1.50 : 1.0 08/31/98 1.80 : 1.0 The Agreement will be amended to reflect the foregoing covenant levels. Very truly yours, Heller Financial, Inc. /s/ Shyam Amladi - --------------------------------- Shyam Amladi Senior Vice President EX-4.(C) 4 AMENDMENT SEVENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT THIS SEVENTH AMENDMENT ("Amendment") is entered into as of December 15, 1997 by and among UNITEL VIDEO, INC., a Delaware corporation having its principal place of business at 555 West 57th Street, New York, New York 10019 ("Borrower"), R SQUARED, INC., a California Corporation having its principal place of business at 729 North Highland Avenue, Hollywood, California 90038 ("Corporate Guarantor") and HELLER FINANCIAL, INC., a Delaware corporation having an office at 500 West Monroe Street, Chicago, Illinois 60661, as agent ("Agent") for Lender (as hereafter defined). BACKGROUND Borrower, Corporate Guarantor, Agent and Heller Financial, Inc. ("Lender") are parties to an Amended and Restated Loan and Security Agreement dated as of December 12, 1995 (as amended, supplemented or otherwise modified from time to time, the "Loan Agreement") pursuant to which Lender provides Borrower with certain financial accommodations. At Borrower's request, Agent has caused the issuance of an irrevocable letter of credit (the "Original Bond Letter of Credit") in favor of PNC Bank, National Association, as trustee, in connection with the issuance by the Allegheny County Industrial Development Authority of $5,000,000 in aggregate principal amount of its Variable Rate Demand Revenue Bonds, Series 1997 (Unitel Mobile Video Project)(the "First Series Bonds") to finance Borrower's costs of constructing up to two mobile video television production units to be based at Borrower's Allegheny County office (the "Project"). Borrower has requested that Agent cause the Original Bond Letter of Credit to be amended to provide credit and liquidity support for an additional series of bonds in an aggregate principal amount of $3,500,000 to be designated as the Allegheny County Industrial Development Authority Variable Rate Demand Revenue Bonds, Series B of 1997 (Unitel Mobile Video Project) (the "Series B Bonds")to further finance the Project. Agent is willing to do so provided that the Loan Agreement is amended by the terms and conditions hereafter set forth. NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrower by Lender, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement. 2. Amendment to Loan Agreement. Subject to satisfaction of the conditions precedent set forth in Section 3 below, the Loan Agreement is hereby amended as provided in this paragraph 2. (a) Section 1.1 of the Loan Agreement is hereby amended by amending the following defined terms in their entirety to provide as follows: "Bond Amortizing Availability Amount" means $8,636,931.51 less (1) $178,571 on August 5, 1998 and November 5, 1998 and (2) $303,571 per quarter commencing on February 5, 1999 and on the fifth day of each quarter thereafter. "Bond Letter of Credit" means the Amended and Restated Irrevocable Letter of Credit No. ____________, dated December 30, 1997, in the original face amount of $8,636,931.51 issued by Bank of America National Trust and Savings Association in favor of the Trustee and any Bond Letter of Credit caused to be issued by Agent in replacement thereof. "Bond Letter of Credit Note" means the promissory note of Borrower in substantially the form of Exhibit 2.1(A)(4) to this Amendment. "Bond Loan Agreement" means the Loan Agreement dated as of July 1, 1997 by and between Borrower and the Issuer, as amended by First Supplemental Loan Agreement dated as of December 15, 1997 and as it may be further amended, modified or supplemented from time to time with the prior written consent of Agent. "Bonds" means, collectively, the Issuer's Variable Rate Demand Revenue Bonds, Series 1997 (Unitel Mobile Video Project) in the original principal amount of Five Million Dollars ($5,000,000) and the Issuer's Variable Rate Demand Revenue Bonds, Series B of 1997 (Unitel Mobile Video Project) in the original principal amount of Three Million Five Hundred Thousand Dollars ($3,500,000). "Bond Pledge Agreement" means the Pledge Agreement dated as of July 1, 1997 among Borrower, the Trustee, as escrow agent, and Agent, as amended by the First Amendment to Pledge Agreement dated as of December 15, 1997 and as it may be further amended, modified and supplemented from time to time. "Bond Trust Indenture" means the Trust Indenture dated as of July 1, 1997 between the Issuer and the Trustee, as amended by the First Supplemental Indenture dated as of December 15, 1997, and as it may be further amended, modified or supplemented from time to time with the prior written consent of Agent. "Purchase Contract" means, collectively, the Private Placement Agreement dated July 23, 1997 relating to the First Series Bonds and the Private Placement Agreement dated December 29, 1997 relating to the Series B Bonds, in each case among the Issuer, Borrower and RRZ Public Markets, Inc. as underwriter for the Bonds, as amended, modified or supplemented from time to time with the prior written consent of Agent. "Reimbursement Agreement" means the Reimbursement Agreement dated as of July 1, 1997 between Borrower and Agent, as amended by the First Amendment to Reimbursement Agreement dated as of December 15, 1997, and as it may be further amended, modified and supplemented from time to time. 2 "Remarketing Agreement" means the Remarketing Agreement dated as of July 1, 1997 among the Issuer, the Borrower, the Trustee and the Remarketing Agent, as amended by the First Supplemental Remarketing Agreement dated as of December 15, 1997, and as it may be further amended, modified or supplemented from time to time with the prior written consent of Agent. (b) Exhibit 2.1(A)(4) to the Loan Agreement is hereby replaced with Exhibit 2.1(A)(4) to this Amendment. 3. Conditions of Effectiveness. This Amendment shall become effective when and only when Agent shall have received (a) four (4) copies of this Amendment executed by Borrower and Corporate Guarantor and one (1) copy of the Private Placement Agreement dated December 29, 1997 relating to the Series B Bonds; (b) a fully executed copy of the first amendment or supplement to each of the following documents: (i) the Reimbursement Agreement, (ii) the Bond Pledge Agreement, (iii) the Bond Trust Indenture, (iv) the Remarketing Agreement and (iv) the Bond Loan Agreement, (c) an executed Bond Letter of Credit Note, (d) all documents set forth in Section 3(b) of the first amendment to the Reimbursement Agreement, (e) a fee in the amount of $60,000.00 and (f) such other certificates, instruments, documents, agreements and opinions of counsel as may be required by Agent or its counsel, each of which shall be in form and substance satisfactory to Agent and its counsel. 4. Representations and Warranties. Borrower hereby represents and warrants as follows: (a) This Amendment and the Loan Agreement, as amended hereby, constitute legal, valid and binding obligations of Borrower and are enforceable against Borrower in accordance with their respective terms. (b) Upon the effectiveness of this Amendment, Borrower hereby reaffirms that all covenants, representations and warranties made in the Loan Agreement to the extent the same are not specifically amended hereby or otherwise notified to Lender in writing, are correct in all materials respects and agrees that all covenants, representations and warranties shall be deemed to have been remade as of the effective date of this Amendment. (c) No Event of Default or Default under the Loan Agreement has occurred and is continuing or would exist after giving effect to this Amendment. (d) Borrower has no defense, counterclaim or offset with respect to the Loan Agreement or the Obligations thereunder. 5. Effect on the Loan Agreement. (a) Upon the effectiveness of Section 2 hereof, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Loan Agreement as amended hereby. (b) Except as specifically amended herein, the Loan Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. 3 (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent or Lender, nor constitute a waiver of any provision of the Loan Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith. (d) Notwithstanding anything to the contrary in this Amendment, at such time as the Bond Letter of Credit shall be of no further force and effect and all Bond Letter of Credit Reimbursement Obligations shall have been paid in full, the provisions of this Amendment which require the consent of Agent or any other action by Agent with respect to the Bond Documentation or the Bonds shall be of no force and effect. 6. Governing Law. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York. 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 8. Counterparts. This Amendment may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same agreement. Any signature received by facsimile transmission shall be deemed an original signature hereto. SIGNATURE LINES ON FOLLOWING PAGE 4 IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first written above. UNITEL VIDEO, INC., as Borrower By: /s/ Barry Knepper ----------------------------------------- Name: Barry Knepper --------------------------------------- Title: Chief Executive Officer -------------------------------------- R SQUARED, INC., as Corporate Guarantor By: /s/ Barry Knepper ----------------------------------------- Name: Barry Knepper --------------------------------------- Title: President -------------------------------------- HELLER FINANCIAL, INC., as Agent and Lender By: /s/ Venkat Venkatesan ----------------------------------------- Name: Venkat Venkatesan --------------------------------------- Title: Vice President -------------------------------------- EX-4.(D) 5 AMENDMENT EIGHTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT This EIGHTH AMENDMENT ("Amendment") is entered into as of February 12, 1998, by and among UNITEL VIDEO, INC., a Delaware corporation having its principal place of business at 555 West 57th Street, New York, New York 10019 ("Borrower"), R SQUARED, INC., a California Corporation having its principal place of business at 729 North Highland, Los Angeles, California 90038 ("Corporate Guarantor") and HELLER FINANCIAL, INC., a Delaware corporation having an office at 500 West Monroe Street, Chicago, Illinois 60661, as agent ("Agent") for Lender (as hereafter defined). BACKGROUND Borrower, Corporate Guarantor, Agent and Heller Financial, Inc. ("Lender") are parties to an Amended and Restated Loan and Security Agreement dated as of December 12, 1995 (as amended, supplemented or otherwise modified from time to time, the "Loan Agreement") pursuant to which Lender provides Borrower with certain financial accommodations. Borrower has requested that Lender amend the Loan Agreement and Lender is willing to do so on the terms and conditions hereafter set forth. NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrower by Lender, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement. 2. Amendment to Loan Agreement. Subject to satisfaction of the conditions of effectiveness set forth in Section 3 below, the Loan Agreement is hereby amended as follows: (a) Section 1.1 of the Loan Agreement is hereby amended by adding the following defined terms in their appropriate alphabetical order: "Eighth Amendment Effective Date" means February 12, 1998. "Excess Cash Flow" means, for a any period, the greater of (A) zero (0); or (B) without duplication, the total of the following for Borrower and its Subsidiaries on a consolidated basis, each calculated for such period: (1) EBITDA; plus (2) tax refunds actually received; less (3) Capital Expenditures (to the extent actually made in cash and/or due to be made in cash within such period but in no event more than the amount permitted by subsection 6.2 hereof); less (4) income and franchise taxes; less (5) decreases in deferred income taxes resulting from payments of deferred taxes accrued in prior periods; less (6) Interest Expenses paid or accrued; less (7) scheduled amortization of Indebtedness actually paid in cash and/or due to be paid in cash within such period and permitted under subsections 7.1 and 7.5; less (8) voluntary prepayments and mandatory prepayments made under subsection 2.4(B)(2), but only to the extent that the transaction that precipitated the mandatory prepayment increased EBITDA. (b) The second paragraph of Section 2.1(A)(1) of the Loan Agreement is hereby amended to provide as follows: "Scheduled Installment of Term Loan A" means the principal amount equal to $9,000,000, payable, subject to the provisions of subsection 2.4(B), (a) in fifty-six (56)monthly principal installments, the first fifty-five (55) of which shall be in an amount equal to $100,000 and the last installment of which shall be in an amount equal to the then outstanding principal balance thereof, commencing on June 1, 1997 and on the first day of each month thereafter with the final installment thereof payable on December 12, 2001 (it being understood that Borrower may prepay Term Loan A, in whole or in part, from time to time) or (b) the earlier to occur of (i) the Termination Date or (ii) acceleration of the Obligations in accordance with the provisions of subsection 8.3 at which time the entire unpaid principal amount of Term Loan A plus accrued interest thereon shall be due and payable. Notwithstanding the foregoing, no Scheduled Installment of Term Loan A shall be due and payable on each of February 1, 1998, March 1, 1998 and April 1, 1998 (the "Term Loan A Moratorium Period"); provided, however, interest on the outstanding principal balance of Term Loan A shall continue to be paid by Borrower during the Term Loan A Moratorium Period in accordance with the provisions of subsection 2.2(C). (c) Section 2.1(A)(5) of the Loan Agreement is hereby amended as follows: (i) the third sentence of the first paragraph thereof is hereby amended to provide as follows: "Term Loan D shall bear interest from the date such Loan is made to the date paid in full at a rate per annum equal to the interest rate set forth in Section 2.2(A) applicable to Term Loan B; provided, however, in the event the entire outstanding balance of Term Loan D is not paid in full - 2 - in cash on or prior to May 31, 1998, then commencing on June 1, 1998 Term Loan D shall bear interest at a rate per annum equal to (a) with respect to Base Rate Loans, the Base Rate plus one and one-half percent (1.50%) and (b) with respect to LIBOR Rate Loans, the LIBOR Rate plus three and one-quarter percent (3.25%)." (ii) The second paragraph thereof is hereby amended to provide as follows: "Scheduled Installment of Term Loan D" means the principal installment in an amount equal to $2,500,000, payable, subject to the provisions of subsection 2.4(B), (a) in eighteen (18) consecutive monthly principal installments, the first seventeen (17) of which shall be in an amount equal to $140,000 and the last installment of which shall be in an amount equal to the then outstanding principal balance thereof, commencing on May 1, 1998 and on the first day of each month thereafter (it being understood that Borrower may prepay Term Loan D, in whole or in part, from time to time) or (b) the earlier to occur of (i) the Termination Date or (ii) acceleration of the Obligations in accordance with the provisions of subsection 8.3 at which time the entire unpaid principal amount of Term Loan D plus accrued interest thereon shall be due and payable. (d) Section 2.3 of the Loan Agreement is hereby amended by adding new subsections "(G)" and "(H)" to provide as follows: "(G) Term Loan D Premium. Borrower hereby acknowledges that, in accordance with Section 2.1(A)(5) of the Sixth Amendment to this Agreement (the "Sixth Amendment"), Agent is permitted to charge Borrower's loan account in an amount equal to $100,000 as a premium payable to Agent (the "Term Loan D Premium") for Borrower's failure to pay the entire outstanding balance of Term Loan D in full in cash on or prior to January 31, 1998. Agent and Borrower hereby acknowledge that notwithstanding anything contained in the Sixth Amendment to the contrary, the Term Loan D Premium shall be payable in four (4) consecutive weekly installments each in an amount equal to $25,000, payable on each of February 3, 1998, February 10, 1998, February 17, 1998 and February 24, 1998, which such amounts may be charged by Agent to Borrower's loan account as a Revolving Loan when due." "(H) Eighth Amendment Restructuring Fee. In consideration of Agent's agreement to enter into an Eighth Amendment to this Agreement, Borrower hereby acknowledges that it shall pay to Agent a restructuring fee in an amount equal to $80,000 (the "Restructuring Fee"), which shall be payable in four (4) consecutive monthly installments each in an amount equal to $20,000, payable on each of February 28, 1998, March 31, 1998, - 3 - April 30, 1998 and May 31, 1998, which such amounts may be charged by Agent to Borrower's loan account as a Revolving Loan when due; provided, however, in the event the entire outstanding balance of Term Loan D is paid in full in cash prior to May 31, 1998 (a "Payment Event") then that portion of the Restructuring Fee payable to Agent solely for those months occurring subsequent to the month in which the Payment Event occurred, if any, shall be deemed waived." (e) Section 2.4(B) of the Loan Agreement is hereby amended by adding a new subsection "(5)" to provide as follows: "(5) Prepayments from Excess Cash Flow. Within one hundred and five (105) days after the end of each Fiscal Year, Borrower shall prepay Term Loan D in an amount equal to twenty-five percent (25%) of Excess Cash Flow for such prior Fiscal Year calculated on the basis of the audited financial statements for such Fiscal Year delivered to Agent pursuant to subsection 5.1(B). All such prepayments from Excess Cash Flow shall be applied to the outstanding principal balance of Term Loan D in inverse order of maturity thereof. Concurrently with the making of any such payment, Borrower shall deliver to Agent a certificate or Borrower's chief executive officer or chief financial officer demonstrating its calculation of the amount required to be paid." 3. Conditions of Effectiveness. This Amendment shall become effective when and only when Agent shall have received (a) four (4) copies of this Amendment executed by Borrower and Corporate Guarantor and (b) such other certificates, instruments, documents, agreements and opinions of counsel as may be required by Agent or its counsel, each of which shall be in form and substance satisfactory to Lender and its counsel. 4. Representations and Warranties. Borrower hereby represents and warrants as follows: (a) This Amendment and the Agreement, as amended hereby, constitute legal, valid and binding obligations of Borrower and are enforceable against Borrower in accordance with their respective terms. (b) Upon the effectiveness of this Amendment, Borrower hereby reaffirms that all covenants, representations and warranties made in the Loan Agreement to the extent the same are not specifically amended hereby are correct in all material respects and agrees that all covenants, representations and warranties shall be deemed to have been remade as of the effective date of this Amendment. (c) No Event of Default or Default has occurred and is continuing or would exist after giving effect to this Amendment. - 4 - (d) Borrower has no defense, counterclaim or offset with respect to the Loan Agreement or the Obligations thereunder. 5. Effect on the Loan Agreement. (a) Upon the effectiveness of Section 2 hereof, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Loan Agreement as amended hereby. (b) Except as specifically amended herein, the Loan Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent or Lender, nor constitute a waiver of any provision of the Loan Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith. 6. Governing Law. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York. 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 8. Counterparts. This Amendment may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same agreement. Any signature received by facsimile transmission shall be deemed an original signature hereto. [SIGNATURE LINES ON FOLLOWING PAGE] - 5 - IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first written above. UNITEL VIDEO, INC., as Borrower By: /s/ Barry Knepper -------------------------------------- Name: Barry Knepper ------------------------------------ Title: Chief Executive Officer ----------------------------------- R SQUARED, INC., as Corporate Guarantor By: /s/ Barry Knepper -------------------------------------- Name: Barry Knepper ------------------------------------ Title: President ----------------------------------- HELLER FINANCIAL, INC., as Agent and Lender By: /s/ Venkat Venkatesan -------------------------------------- Name: Venkat Venkatesan ------------------------------------ Title: Vice President ----------------------------------- EX-4.(E) 6 LOAN AGREEMENT LOAN AGREEMENT THIS LOAN AGREEMENT, MADE this 27th day of October, 1997, BY AND BETWEEN UNITEL VIDEO, INC., a Delaware corporation, with its principal offices at 555 West 57th Street, New York, New York 10019 (the "Borrower") and the COMMONWEALTH OF PENNSYLVANIA, acting by and through the DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, having its principal place of business at Room 433 Forum Building, Harrisburg, Pennsylvania 17120 (the "Department"). WITNESSETH THAT: WHEREAS, the Borrower has established a project consisting of the constructing and equipping of two mobile video television production units to be based at its Allegheny County, Pennsylvania facilities (the "Project"); and WHEREAS, in concert with the establishment of the Project, the Borrower has purchased or intends to purchase certain equipment for use in the Project as more fully described on Exhibit A and which is incorporated herein by reference and made a part hereof (the "Equipment"); and WHEREAS, pursuant to the authority granted the Department by virtue of the Machinery and Equipment Loan Fund ("MELF") Act, Act 120 of 1988, P.L. 1050 (the "Act"), the Department has approved the Borrower's application for a loan not to exceed the principal amount of $500,000 (the "Loan") to be used exclusively to defray a part of the cost of purchasing the Equipment (the "Cost") or to reimburse Borrower for a portion of the Cost; and WHEREAS, the Department is willing to make the Loan upon the terms and subject to the conditions hereinafter set forth; NOW, THEREFORE, the parties hereto, in consideration of the mutual promises herein contained and intending to be legally bound hereby, covenant and agree as follows: Section 1. The Loan. Subject to the conditions set forth herein, the Department agrees to make the Loan to the Borrower for the purpose of defraying or reimbursing a portion the Cost of purchasing the Equipment described in Exhibit A. Section 2. The Note. The Loan shall be evidenced by a note (the "Note") of even date herewith given by the Borrower to the Department. Section 3. Security. a. The Equipment. Payment of the Note and satisfaction of all obligations of the Borrower hereunder and under the Note shall be secured by a security interest in the Equipment given by the Borrower to the Department under a security agreement of even date herewith (the "Security Agreement"). The Security Agreement shall be dated the date of the Note and shall create a first lien upon the Equipment. HELLER FINANCIAL, INC., a Delaware corporation, as agent and lender under a certain Amended and Restated Loan and Security Agreement dated as of December 12, 1995 (the "Credit Agreement") agreed to lend Borrower funds which are secured, in part, by the Equipment. Pursuant to an Intercreditor Agreement of even date between the Department and HELLER FINANCIAL, INC. (the "Intercreditor Agreement"), the lien of HELLER FINANCIAL, INC. in the Equipment shall be subordinate to the Department's lien. b. The Motor Vehicle Mobile Unit. Payment of the Note and satisfaction of all obligations of the Borrower hereunder and under the Note shall be secured by a subordinate lien in a certain motor vehicle Pennsylvania VIN No. Vin No. 1 R1C25323VK970517, subject to the prior lien of HELLER FINANCIAL, INC. Section 4. Prepayments. Prepayments of the outstanding principal amount of the Loan shall be as set forth in and governed by the terms of the Note. Section 5. Representations and Warranties of the Borrower. To induce the Department to enter into this Agreement and to make the Loan, the Borrower represents and warrants that: (a) the Borrower is a corporation, duly organized and validly existing and in good standing under the laws of the State of Delaware; (b) the Borrower has all necessary corporate power and authority to purchase, own, encumber and sell Borrower's property and to carry on Borrower's business as now being conducted, and to carry out the transactions contemplated by this Agreement; (c) the execution and delivery of this Agreement, consummation of the transactions herein contemplated and compliance with the terms and provisions hereof and of the Note and Security Agreement will not conflict with, or result in a breach of, any of the terms, conditions or provisions of the Articles of Incorporation or By-Laws of the Borrower or of any agreement, indenture or other instrument to which the Borrower is a party or by which Borrower is bound or to which Borrower or Borrower's property is subject, or constitute a default thereunder, and will not result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever (except those contemplated by the Security Agreement) upon any of the property of the Borrower pursuant to the terms of any such agreement, indenture or other instrument; (d) the execution, delivery and performance of this Agreement, the performance of the transactions contemplated by the provisions hereof, and the execution, issuance and delivery of the Note and the Security Agreement in accordance with the provisions hereof have each been duly authorized by all necessary corporate action on the part of the Borrower; 2 (e) this Agreement has been duly and validly executed and delivered by the Borrower and constitutes a valid and legally binding obligation of the Borrower, enforceable in accordance with the terms of this Agreement and the Note and Security Agreement, when executed and delivered in accordance with the terms thereof, will be valid and legally binding obligations of the Borrower, enforceable in accordance with the respective terms of each; (f) there is no material litigation or governmental proceeding pending or, to the knowledge of the Borrower or Borrower's officers, threatened against the Borrower other than that which has been previously disclosed to the Department in writing. If such litigation or proceeding exists, Borrower shall set forth in an exhibit information regarding the amount of the claim, the forum in which the claim was filed, the date for the same, all of which shall be attached hereto and made a part hereof; (g) the Borrower has filed all required federal, state and local tax returns and has paid all taxes shown on such returns as such taxes have become due, except for those being contested in good faith and by appropriate proceedings diligently pursued and for which such reserves or other appropriate provisions as may be required by GAAP shall have been made therefor; and (h) no consent or approval to the execution and performance of this Agreement and the transactions contemplated hereby not already obtained is required to be obtained by the Borrower from any governmental body, authority, agency, court or other person or entity, public or private, other than the Department. All of the representations and warranties of the Borrower set forth herein shall survive and continue until the Loan is paid in full and all of the Borrower's obligations hereunder have been satisfied. Section 6. General Conditions of Lending. The obligation of the Department to make the Loan hereunder is subject to the fulfillment of the following conditions by the Borrower to the satisfaction of the Department: (a) concurrently with, or prior to, the disbursement of the Loan and dated the date of such disbursement, the Borrower shall have furnished to the Department in form and substance satisfactory to the Department's Counsel a favorable written opinion of Borrower's counsel; (b) there shall have been delivered to the Department a certificate executed by the Secretary of the Borrower, dated the date of the initial disbursement under the Loan, setting forth the corporate action taken by the Borrower in connection with the Loan and the authorization of the Borrower, or authorized representatives of the Borrower to execute, deliver and perform pursuant to the terms and conditions of this Agreement, and the execution by the Borrower of the Note, the Security Agreement and all related documentation; such certificates shall include all excerpts from minutes of meetings of the Board of Directors of the Borrower (and, where appropriate, from minutes of meetings of the shareholders of the Borrower), their By-Laws and Articles of Incorporation as the Department's counsel shall deem appropriate; (c) all legal matters incident or related to the Loan shall be in form and substance satisfactory to counsel for the Department; (d) the Note and the Security Agreement and related financing statements shall have been duly executed and delivered to the Department or delivered for recording, as appropriate; 3 (e) compliance with such other conditions as shall be required by the Department. Section 7. Covenants of the Borrower. Until the Loan has been entirely repaid and all of Borrower's obligations to the Department in connection therewith and herewith have been satisfied, the Borrower hereby covenants that: (a) the Borrower shall use the proceeds of the Loan solely for the purpose of defraying a portion of the Cost or reimbursing Borrower for a portion of the Cost; (b) the Borrower shall preserve Borrower's corporate existence, rights, privileges and franchises, and maintain Borrower's authority to do business under the laws of Pennsylvania; (c) the Borrower shall comply with all laws, regulations and orders of any court or governmental body having jurisdiction over the Project; (d) the Borrower shall, upon request by the Department, provide financial information and other information concerning Borrower in form reasonably satisfactory to the Department, including at least the following: (i) a certificate of an authorized officer of the Borrower setting forth the number of employees and their respective job classifications (skilled, semi-skilled and unskilled) employed during the previous year at the Borrower's facility in Allegheny County, Pennsylvania; and (ii) financial statements of the Borrower for its most recent fiscal year, including its balance sheet and income statement; (e) the Borrower shall comply with all of the terms and conditions of this Agreement, the Note, and the Security Agreement; (f) the Borrower shall not create any additional debt secured by the Equipment except in favor of HELLER FINANCIAL, INC. as set forth in Section 3; (g) the Borrower shall not discriminate against any employee or against any applicant for employment because of race, religion, color, national origin, sex or age (including, but not limited to, employment upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship). The Borrower hereby accepts and agrees to be bound by the nondiscrimination provisions as set forth in Exhibit "B" attached hereto; (h) the Borrower shall comply with the contractor integrity provisions as set forth in Exhibit "C" attached hereto; (i) the Borrower shall comply with the contractor responsibility provisions as set forth in Exhibit "D" attached hereto; (j) the Borrower shall pay all the costs of filing and any other costs that may be incurred pursuant to the closing and administration of the Loan; (k) the Borrower shall provide proper facilities at all times for inspection of the Equipment by the Department and its authorized representatives, and shall afford full and free access to the Project to such 4 persons as may from time to time be designated by the Department, in each case at reasonable times and with reasonable prior notice; (l) without the prior written consent of the Department, the Borrower shall not merge or consolidate with any other corporation or dispose of all or any substantial portion of its assets, except in the ordinary course of business, unless the Borrower or surviving corporation, as the case may be, shall have a tangible net worth (after giving effect to such merger, consolidation or sale of assets) not less than that shown in the most recent audited financial statements for the Borrower delivered to the Department prior to approval of the Loan, and, if a corporation different from the Borrower, shall have expressly assumed the obligations of the Borrower hereunder. (m) The Borrower will not change its name without notice to the Department; and (n) the Borrower shall comply with the Americans With Disabilities Act Provisions as set forth in Exhibit "E" attached hereto. Section 8. Events of Default. The following shall each constitute an event of default hereunder (an "Event of Default"): (a) Failure to pay any installment of principal or interest under the Note, when due, and such failure shall continue for a period of thirty (30) days; (b) any representation or warranty made herein, in the application to the Department made by the Borrower in connection with the Loan, or in any certificate or financial or other statement furnished pursuant to the provisions hereof or as a part of such application, shall have been false or misleading in any material respect as of the time made or furnished; (c) the Borrower shall (i) become insolvent, (ii) admit Borrower's inability to pay Borrower's debts as they come due, (iii) make an assignment to the benefit of Borrower's creditors, (iv) be adjudicated bankrupt or insolvent, (v) voluntarily initiate proceedings under any bankruptcy or reorganization law either now or hereafter in effect, (vi) become the subject of any involuntary proceedings under any bankruptcy or reorganization law either now or hereafter in effect that shall not have been discharged within sixty (60) days of the initiation thereof, or (vii) seek to take advantage of any moratorium law either now or hereafter in effect; (d) a receiver, liquidator or trustee shall be appointed for the Borrower and shall not have been discharged within sixty (60) days; (e) an Event of Default under the Security Agreement or any other instrument relating to the Loan shall occur and be continuing; (f) a material failure to comply by the Borrower with any other covenant, condition or provision of this Agreement, including, but not limited to, the failure to provide job information, insurance information, and annual financial statements required by the Department, shall occur and be continuing after written notice of such failure has been given to Borrower, for thirty (30) days or, if such failure shall not be capable of being cured within thirty (30) days, and curative action shall have been initiated within such thirty (30) day period and pursued diligently thereafter, for such time period after notice of such failure has been given to Borrower, as shall, in the good faith judgment of the Department, which shall be conclusive, be required for such cure; 5 (g) (i) the Borrower shall fail to pay when due insurance premiums, and taxes (except if such taxes are being contested in good faith and by appropriate proceeding diligently pursued and for which such reserves or other appropriate provisions as may be required by GAAP shall have been made therefor; and (ii) if the Collateral (as defined in the Security Agreement) shall be seized or levied upon under any legal or governmental process against the Borrower or against the Collateral; or (h) Borrower shall fail to create the number of employment opportunities or jobs specified in Borrower's application, the interest rate of the Loan shall, at the sole discretion of the Secretary, be increased to a fixed rate equal to two (2) percentage points greater than the current prime interest rate as defined in Section 5.10 (relating to "Penalty") of the MELF Statement of Policy, unless the penalty is waived by the Secretary because the failure of such compliance is due to circumstances beyond the control of the Borrower.] Immediately and without further notice to the Borrower, upon the occurrence and during the continuance of an Event of Default hereunder (except for an Event of Default under (h) (relating to job creation), the Department, or any subsequent holder of the Note, may declare the Note and interest accrued thereon and all liabilities of the Borrower thereunder to be immediately due and payable, and the same shall thereupon become and be due and payable, without presentment, demand, protest or notice of any kind to the Borrower, all of which are hereby expressly and knowingly waived, and any funds remaining in the Escrow Account shall be returned to the Department and applied towards repayment of the Loan. In addition, upon the occurrence of an Event of Default hereunder (including under (h) relating to job creation) other than the non-payment of the Loan, the Department shall have the right to raise the rate of interest on the Loan up to twelve and one-half percent (12-1/2%) per annum, applied retroactively to the date of the first occurrence of the Event of Default until such time as the Event of Default is cured. Section 9. Miscellaneous. (a) No delay or failure on the part of the Department in exercising any right, power or privilege hereunder shall affect such right, power or privilege; nor shall any single or partial exercise thereof or any abandonment, waiver, or discontinuance of steps to enforce such a right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies of the Department hereunder are cumulative and concurrent and not exclusive of any rights or remedies which the Department might otherwise have. The Department shall have the right at all times to enforce the provisions of this Agreement, the Note, the Security Agreement, and all related documentation in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of the Department in refraining from so doing at any time or times. The failure of the Department at any time or times to enforce the Department's rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or any such documentation or as having in any way or manner modified or waived the same. (b) Any permit, consent or approval of any kind or character on the part of the Department under this Agreement, and any waiver of any provision or condition of this Agreement, must be in writing and executed by the Department and shall be effective only to the extent specifically set forth in such writing. 6 (c) All covenants and agreements of the Borrower contained herein or made in writing in connection herewith shall survive and continue until the Loan is entirely paid and all of the Borrower's obligations hereunder have been entirely satisfied. (d) This Agreement, the Commitment Letter accepted by Borrower on May 21, 1997, the Note, and the Security Agreement and all other agreements delivered pursuant hereto shall be deemed to be contracts made under the laws of the Commonwealth of Pennsylvania and, for all purposes, shall be construed in accordance with the laws of such Commonwealth. (e) This Agreement may be executed in as many counterparts as may be deemed necessary and convenient and each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. (f) This Agreement, the Note, and the Security Agreement constitute the entire agreement between the Department and the Borrower. Such instruments may be modified only by a written instrument duly executed by the Department and the Borrower. (g) Any notices or consents required or permitted by this Agreement shall be deemed sufficient if in writing and addressed to the Borrower or the Department, as applicable, and shall be deemed to be delivered if delivered in person or sent by certified or registered mail, postage prepaid, return receipt requested, addressed to the Borrower or the Department, as applicable, at the addresses set forth at the beginning of this Agreement. Notice shall be effective on delivery if delivered in person or on the fifth business day following mailing if mailed. (h) The terms and provisions of this Agreement are severable. In the event of the unenforceability or invalidity of any one or more of the terms, covenants, conditions or provisions of this Agreement under federal, state or other applicable law, such unenforceability or invalidity shall not render any other term, covenant, condition or provision hereof unenforceable or invalid. (i) This Agreement shall take effect as an instrument under seal. (j) The Borrower, from time to time, shall execute such further instruments as the Department may reasonably request to further confirm and assure the interests and rights created or intended to be created in favor of the Department hereunder or under the Security Agreement or the Note. (k) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Department and their respective successors and assigns, except that the Borrower may not assign or transfer its rights hereunder without the prior written consent of the Department. (l) The parties do not intend the benefits of this Agreement to inure to any third party. No portion of the Department's commitment to make the Loan will, at any time, be subject to attachment or levy by any creditor of the Borrower or by any contractor, subcontractor, materialman or supplier or any creditor of any such contractor, subcontractor, materialman or supplier. Notwithstanding anything contained herein or in the Note, the Security Agreement, or any other document executed in connection with this transaction, or any conduct or course of conduct by any of the parties hereto, before or after signing this Agreement or any of the other aforesaid documents, this Agreement shall not be construed as creating any rights, claims, or 7 causes of action against the Department, in favor of any contractor, subcontractor, supplier of labor or materials, or any of their respective creditors, or any other person or entity other than the Borrower. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. WITNESS: COMMONWEALTH OF PENNSYLVANIA, acting by and through the DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT /s/ Mark Zearfaus By /s/ Emily J. White - ------------------------ -------------------------------------------------- Secretary of Community and Economic Development (OFFICIAL SEAL) ATTEST: UNITEL VIDEO, INC., a Delaware corporation /s/ Karen Ceil Lapidus By /s/ Barry Knepper - ------------------------- ------------------------------------------------- Secretary President (CORPORATE SEAL) 8 EXHIBIT "A" EQUIPMENT One (1) SMS 7000 Production Router (Textronix) Serial No. B23655 One (1) 4000-3 Dig. Production Switcher (Textronix) Serial No. A89063 One (1) Dveous Digital Equipment (Scitex digital Video) Serial No. 5100SY14390177 9 EXHIBIT "B" NONDISCRIMINATION CLAUSE During the term of this contract, the Borrower agrees as follows: l. the Borrower shall not discriminate against any employe, applicant for employment, independent contractor or any other person because of race, color, religious creed, ancestry, national origin, age or sex. The Borrower shall take affirmative action to insure that applicants are employed, and that employes or agents are treated during employment, without regard to their race, color, religious creed, ancestry, national origin, age or sex. Such affirmative action shall include, but is not limited to: employment, upgrading, demotion or transfer, recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training. The Borrower shall post in conspicuous places, available to employes, agents, applicants for employment and other persons, a notice to be provided by the contracting agency setting forth the provisions of this nondiscrimination clause. 2. the Borrower shall in advertisements or requests for employment placed by it or on its behalf, state that all qualified applicants will receive consideration for employment without regard to race, color, religious creed, ancestry, national origin, age, or sex. 3. the Borrower shall send each labor union or workers' representative with which they have a collective bargaining agreement or other contract or understanding, a notice advising said labor union or workers' representative of their commitment to this nondiscrimination clause. Similar notice shall be sent to every other source of recruitment regularly utilized by the Borrower. 4. it shall be no defense to a finding of noncompliance with this nondiscrimination clause that the Borrower had delegated some of its employment practices to any union, training program or other source of recruitment which prevents it from meeting its obligations. However, if the evidence indicates that the Borrower was not on notice of the third-party discrimination or made a good faith effort to correct it, such factor shall be considered in mitigation in determining appropriate sanctions. 5. where the practices of a union or of any training program or other source of recruitment will result in the exclusion of minority group persons, so that the Borrower will be unable to meet its obligations under this nondiscrimination clause, the Borrower shall then employ and fill vacancies through other nondiscriminatory employment procedures. 6. the Borrower shall comply with all state and federal laws prohibiting discrimination in hiring or employment opportunities. In the event of the Borrower's noncompliance with the nondiscrimination clause of this contract or with any such laws, this contract may be terminated or suspended, in whole or in part, and the Borrower may be declared temporarily ineligible for further Commonwealth contracts, and other sanctions may be imposed and remedies invoked. 7. upon request, the Borrower shall furnish all necessary employment documents and records to, and permit access to its books, records and accounts by, the contracting agency and the Office of Administration, Bureau of Affirmative Action, for purposes of investigation to ascertain compliance with the provisions of this clause. If the Borrower does not possess documents or records reflecting the necessary information requested, it shall furnish such information on reporting forms supplied by the contracting agency or the Bureau of Affirmative Action. 8. the Borrower shall actively recruit minority subcontractors or subcontractors with substantial minority representation among its employes. 9. the Borrower shall include the provisions of this nondiscrimination clause in every subcontract, so that such provisions will be binding upon each subcontractor. 10 10. the Borrower obligations under this clause are limited to the Borrower's facilities within Pennsylvania or, where the contract is for purchase of goods manufactured outside of Pennsylvania, the facilities at which such goods are actually produced. 11 EXHIBIT "C" CONTRACTOR INTEGRITY PROVISIONS 1. Definitions. a. Confidential information means information that is not public knowledge, or available to the public on request, disclosure of which would give an unfair, unethical, or illegal advantage to another desiring to contract with the Commonwealth. b. Consent means written permission signed by a duly authorized officer or employee of the Commonwealth, provided that where the material facts have been disclosed, in writing, by prequalification, bid, proposal, or contractual terms, the Commonwealth shall be deemed to have consented by virtue of execution of this Agreement. c. Commonwealth means the Commonwealth of Pennsylvania Acting by and Through its Department of Community and Economic Development and any agencies and instrumentalities of the Commonwealth of Pennsylvania for which the Department of Community and Economic Development provides staff services (including without limitation the Pennsylvania Industrial Development Authority, Pennsylvania Economic Development Financing Authority, Pennsylvania Energy Development Authority, and Pennsylvania Minority Business Development Authority). d. Contractor means the individual or entity that has entered into an agreement with the Commonwealth, assumed the obligations of another to repay moneys to the Commonwealth, or is the intended beneficiary of, and has knowingly received benefits under, an agreement between the Commonwealth and a financial intermediary or educational institution, including directors, officers, partners, managers, key employees, and owners of more than a 5% interest. e. Financial Interest means: (1) ownership of more than a 5% interest in any business; or (2) holding a position as an officer, director, trustee, partner, employee, or the like, or holding any position of management. f. Gratuity means any payment of more than nominal monetary value in the form of cash, travel, entertainment, gifts, meals, lodging, loans, subscriptions, advances, deposits of money, services, employment, or contracts of any kind. 2. The Contractor shall take no action in violation of state or federal laws, regulations, or other requirements that govern contracting with the Commonwealth. 3. The Contractor shall not, in connection with this or any other agreement with the Commonwealth, directly or indirectly offer, confer, or agree to confer any pecuniary benefit on anyone as consideration for the decision, opinion, recommendation, vote, other exercise of discretion, or violation of a known legal duty by any officer or employee of the Commonwealth. 4. The Contractor shall not, in connection with this or any other agreement with the Commonwealth, directly or indirectly offer, give, or agree or promise to give to anyone any gratuity for the benefit of or at the direction or request of any officer or employee of the Commonwealth. 5. Except with the consent of the Commonwealth, the Contractor shall not have a financial interest in any other contractor, subcontractor, or supplier providing services, labor, or material on this project. 12 6. The Contractor, upon being informed that any violation of these provisions has occurred or may occur, shall immediately notify the Commonwealth in writing. 7. The Contractor, by execution of this Agreement and by the submission of any bills or invoices for payment pursuant thereto, certifies and represents that he has not violated any of these provisions. 8. The Contractor, upon the inquiry or request of the Inspector General of the Commonwealth or any of that official's agents or representatives, shall provide, or if appropriate, make promptly available for inspection or copying, any information of any type or form relevant to the Contractor's compliance with this Agreement (including without limitation these provisions relating to Contractor integrity). Such information shall be retained by the Contractor for a period of three years beyond the termination of the contract unless provided by law. 9. For violation of any of the above provisions, the Commonwealth may declare an event of default hereunder, subject to applicable notice and cure provisions, and debar and suspend the Contractor from doing business with the Commonwealth, including without limitation participation in its financial assistance programs. These rights and remedies are cumulative, and the use or nonuse of any one shall not preclude the use of all or any other. These rights and remedies are in addition to those the Commonwealth may have under law, statute, regulation, or otherwise. 13 EXHIBIT "D" CONTRACTOR RESPONSIBILITY PROVISIONS 1. The Contractor certifies that it is not currently under suspension or debarment by the Commonwealth, any other state, or the federal government, and if the Contractor cannot so certify, then it agrees to submit along with the bid/proposal a written explanation of why such certification cannot be made. 2. If the Contractor enters into any subcontracts or employs under this contract any subcontractors/individuals who are currently suspended or debarred by the Commonwealth or the federal government or who become suspended or debarred by the Commonwealth or federal government during the term of this contract or any extensions or renewals thereof, the Commonwealth shall have the right to require the Contractor to terminate such subcontracts or employment. 3. The Contractor agrees to reimburse the Commonwealth for the reasonable costs of investigation incurred by the Office of Inspector General for investigations of the Contractor's compliance with terms of this or any other agreement between the Contractor and the Commonwealth which result in the suspension or debarment of the Contractor. Such costs shall include, but not be limited to, salaries of investigators, including overtime; travel and lodging expenses; and expert witness and documentary fees. The Contractor shall not be responsible for investigative costs for investigations which do not result in the Contractor's suspension or debarment. 4. The Contractor may obtain the current list of suspended and debarred contractors by contacting the: Department of General Services Office of Chief Counsel 603 North Office Building Harrisburg, PA 17125 Telephone No. (717) 783-6472 Fax No. (717) 787-9138 14 EXHIBIT "E" AMERICANS WITH DISABILITIES ACT PROVISIONS During the term of this contract, the Contractor agrees as follows: 1. Pursuant to federal regulations promulgated under the authority of The Americans With Disabilities Act, 28 C.F.R. ss.35.101 et seq., the Contractor understands and agrees that no individual with a disability shall, on the basis of the disability, be excluded from participation in this contract or from activities provided for under this contract. As a condition of accepting and executing this contract, the Contractor agrees to comply with the "General Prohibitions Against Discrimination," 28 C.F.R. ss.35.130, and all other regulations promulgated under Title II of The Americans With Disabilities Act which are applicable to the benefits, services, programs, and activities provided by the Commonwealth of Pennsylvania through contracts with outside contractors. 2. The Contractor shall be responsible for and agrees to indemnify and hold harmless the Commonwealth of Pennsylvania from all losses, damages, expenses, claims, demands, suits, and actions brought by any party against the Commonwealth of Pennsylvania as a result of the Contractor's failure to comply with the provisions of paragraph 1 above. 3. "Contractor" means the individual or entity that has entered into this Agreement with the Commonwealth. 15 EX-4.(F) 7 FIRST SUPPLEMENTAL LOAN AGREEMENT FIRST SUPPLEMENTAL LOAN AGREEMENT THIS FIRST SUPPLEMENTAL LOAN AGREEMENT, dated as of December 15, 1997 (the "Supplemental Agreement"), amending the Loan Agreement (the "Original Agreement," and as supplemented by this Supplemental Agreement, the "Agreement") dated as of July 1, 1997 between the ALLEGHENY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the "Authority"), a body corporate and politic duly organized, existing and in good standing under the laws of the Commonwealth of Pennsylvania (the "Commonwealth") and UNITEL VIDEO, INC., a for-profit corporation organized under the laws of the State of Delaware (the "Corporation"). WITNESSETH: WHEREAS, the Authority is a body corporate and politic existing under the laws of the Commonwealth of Pennsylvania pursuant to the Economic Development Financing Law, amended December 17, 1993, P.L. 490, No. 74, as amended (hereinafter called the "Act"), having been duly organized by the County of Allegheny, Pennsylvania (hereinafter called the "County"); and WHEREAS, the Corporation has, by duly authorized resolution, undertaken a project consisting of constructing and equipping up to two mobile video television production units to be based at its Allegheny County, Pennsylvania offices (the "Project"); and WHEREAS, the Authority is authorized under the Act to issue its bonds for the purposes of (i) financing all or a portion of the costs of the Project and (ii) paying all or a portion of the costs of issuance of the Bonds (defined hereinafter) and the Authority has determined that the public interest will be best served and that the purposes of the Act can be more advantageously obtained by the Authority's issuance of bonds in order to obtain funds to loan to the Corporation for the foregoing purposes; and WHEREAS, in order to accomplish such purposes the Authority previously issued its revenue bonds in an aggregate principal amount of $5,000,000, which have been designated as the Allegheny County Industrial Development Authority Variable Rate Demand Revenue Bonds, Series 1997 (Unitel Mobile Video Project) (the "1997A Bonds"), under the Trust Indenture dated as of July 1, 1997 (the "Original Indenture,") by and between the Authority and PNC Bank, National Association, as trustee (the "Trustee"); and WHEREAS, Section 201(b) of the Original Indenture authorizes the issuance of a second tranche of Bonds in an aggregate principal amount not to exceed $3,500,000 upon the satisfaction of certain conditions set forth in Section 201(b) of the Original Indenture; and WHEREAS, the Authority and the Corporation have on the date hereof executed their Joint Written Request (as defined in the Original Indenture) requesting the issuance of a second tranche of revenue bonds to be issued under the Original Indenture, as supplemented by a First Supplemental Indenture, dated as of December 15, 1997 (the "Supplemental Indenture," and together with the Original Indenture, the "Indenture"), in an aggregate principal amount of $3,500,000 and designated as the Allegheny County Industrial Development Authority Variable Rate Demand Revenue Bonds, Series B of 1997 (Unitel Mobile Video Project) (the "1997B Bonds," and together with the 1997A Bonds, the "Bonds"); and WHEREAS, the Authority and the Corporation desire to enter into this Supplemental Agreement to clarify certain provisions regarding the 1997B Bonds; NOW, THEREFORE, in consideration of the promises and of the mutual representations, covenants and agreements herein set forth, the Authority and the Corporation, each intending to legally bind themselves and their respective successors and assigns, do mutually promise, covenant and agree as follows: SECTION 1. PURPOSE. This Supplemental Agreement is being executed and delivered for the purpose of supplementing the Original Agreement to provide for the issuance of the 1997B Bonds in accordance with sections 201(b) and 1001(n) of the Original Indenture. SECTION 2. DEFINITIONS. All terms which are used and not otherwise defined herein shall have the meanings set forth in the Indenture. All references to the Bonds in the Original Agreement shall refer to both the 1997A Bonds and the 1997B Bonds, collectively, unless the context clearly requires otherwise. SECTION 3. LOAN OF BOND PROCEEDS. The Authority will concurrently with the issuance of the 1997B Bonds lend the proceeds from the sale of the 1997B Bonds to the Corporation for the purpose of financing the Project. All proceeds received from the sale of the 1997B Bonds shall be deposited by the Authority in trust with the Trustee in accordance with the requirements of the Indenture, for the benefit, however, of the Corporation, and in consideration of such issuance, sale and delivery of the 1997B Bonds, and such deposit, the Corporation shall apply such finds to the costs of the Project and of the issuance of the 1997B Bonds, as provided in the Indenture and the Agreement and shall make the payments specified in Article IV of the Original Agreement and in Section 4 hereof. SECTION 4. REPAYMENT OF LOAN. The Corporation hereby covenants and agrees that it shall repay the Loan to the Authority by making installment payments, in the manner and at the times set forth in Article IV of the Original Agreement, in sums sufficient to pay the principal of, premium, if any, and interest payable on both the 1997A Bonds and the 1997B Bonds, and to pay all other amounts payable by the Corporation under the terms of the Agreement. All references to the Bonds in Section 4.02 of the Original Agreement shall refer to the 1997A Bonds and the 1997B Bonds, collectively. 2 Section 4.02(g) of the Original Agreement is hereby amended and restated as follows: (h) Authority's Annual Administrative Fee. (i) The Corporation shall pay an initial closing fee with respect to the 1997A Bonds in the amount of $5,000 together with a legal fee in the amount of $2,500 on the Closing Date applicable to the 1997A Bonds (July 24, 1997). (ii) The Corporation shall pay an initial closing fee with respect to the 1997B Bonds in the amount of $3,500 together with a first annual administrative fee in the amount of $510 (representing seven months from the Closing Date until July 24, 1998, the first anniversary of the closing date for the 1997A Bonds) on the Closing Date (December 30, 1997). Commencing on August 1, 1998 and on August 1 of each year thereafter while the Bonds remain Outstanding, an amount equal to the Administrative Fee of the Authority shall be payable by (and not subject to refund) the Corporation. The Administrative Fee shall be in the amount of $2,125, together with any other administrative expenses (including reasonable legal fees) reasonably incurred by the Authority in connection with inquiring into, or enforcing, the performance by the Corporation of its obligations hereunder. The payment of any such administrative expenses shall be due within 30 days of receipt of an itemized statement from the Authority. SECTION 7. AMENDMENT TO ORIGINAL AGREEMENT. Section 5.01(g) of the Original Agreement is hereby amended and restated as follows: (g) The Corporation has filed all federal, state and local tax returns which are required to be filed by the Corporation or has received extensions for filing the same and has paid all taxes as shown on such returns as they have become due, with the exception of any such taxes the payment of which is being contested in good faith and by proper proceedings. No claims have been assessed and are unpaid with respect to such taxes. SECTION 6. COUNTERPARTS. This Supplemental Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 7. GOVERNING LAW. This Supplemental Agreement shall be governed exclusively by and construed in accordance with the laws of the Commonwealth. 3 SECTION 8. ORIGINAL AGREEMENT AND SUPPLEMENTAL AGREEMENT AS ONE DOCUMENT. As supplemental by this Supplemental Agreement, the Original Agreement is in all respects ratified and confirmed, and the Original Agreement and this Supplemental Agreement shall be read, taken and construed as one and the same instrument. IN WITNESS WHEREOF, the ALLEGHENY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY and UNITEL VIDEO, INC. have caused this First Supplemental Loan Agreement to be duly executed as of the day and year first above written. ATTEST: ALLEGHENY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY By: /s/ James M. Edwards By: /s/ James Marsh ----------------------------------- ----------------------------------- Authorized Designate (Vice) Chairman ATTEST: UNITEL VIDEO, INC. By: /s/ Karen C. Lapidus By: /s/ Barry Knepper ----------------------------------- ----------------------------------- Authorized Officer Authorized Officer 4 EX-4.(G) 8 FIRST AMENDMENT TO PLEDGE AGREEMENT FIRST AMENDMENT TO PLEDGE AGREEMENT This FIRST AMENDMENT TO PLEDGE AGREEMENT (this "Amendment") dated as of December 15, 1997 among UNITEL VIDEO, INC. (the "Pledgor"), PNC BANK, NATIONAL ASSOCIATION, as escrow agent (in its capacity as such, the "Escrow Agent") and HELLER FINANCIAL, INC., as agent ("Agent"). W I T N E S S E T H : WHEREAS, at the request of the Pledgor, the Allegheny County Industrial Development Authority (the "Issuer") previously issued and sold $5,000,000 aggregate principal amount of its Variable Rate Demand Revenue Bonds Series 1997 (Unitel Mobile Video Project) (the "First Series of Bonds"), issued pursuant to a Trust Indenture, dated as of July 1, 1997 (the "Original Indenture") between the Issuer and PNC Bank, National Association, as trustee (in its capacity as such, the "Trustee"), and loaned the principal amount of the First Series of Bonds to the Pledgor to finance a portion of the costs of constructing up to two mobile video television production units to be based at the Pledgor's Allegheny County office (the "Project"); WHEREAS, in order to provide for payment when due of the principal of, and interest on, the First Series of Bonds, and to provide for the payment of the purchase price of the First Series of Bonds tendered or required to be tendered pursuant to the Original Indenture, the Pledgor, pursuant to a Reimbursement Agreement dated as of July 1, 1997 (the "Original Reimbursement Agreement") between the Pledgor and Agent, requested Agent to cause Bank of America National Trust and Savings Association (the "Letter of Credit Bank") to issue a letter of credit (the "Original Letter of Credit"), in the initial amount of $5,080,547.95 to support payments of principal of, and interest on, the First Series Bonds and the purchase price of the First Series Bonds so tendered or required to be tendered and Agent has caused the issuance of the Original Letter of Credit under the Original Reimbursement Agreement; WHEREAS, Pledgor has requested the Issuer to issue and sell an additional $3,500,000 aggregate principal amount of its Variable Rate Demand Revenue Bonds Series B of 1997 (Unitel Mobile Video Project) (the "Series B Bonds" and, together with the First Series of Bonds, the "Bonds") issued pursuant to a First Supplemental Indenture dated as of December 15, 1997 (as amended the Original Indenture is hereinafter, the "Indenture"), to further finance the Project; WHEREAS, in order to provide for payment when due of the principal of and interest on, the Series B Bonds, and to provide for the purchase of the Series B Bonds tendered or required to be tendered pursuant to the Indenture, the Pledgor, pursuant to a First Amendment to Reimbursement Agreement dated as of December 15, 1997 (as amended the Original Reimbursement Agreement is hereinafter, the "Reimbursement Agreement") has requested Agent to cause the Letter of Credit Bank to issue an amended and restated Letter of Credit, (the "Amended Letter of Credit") in place of the Original Letter of Credit, in an aggregate stated amount of $8,636,931.51 to support payments of principal of, and interest on, all of the Bonds and the purchase price of Bonds tendered or required to be tendered and not remarketed; and WHEREAS, Agent is willing to cause the Letter of Credit Bank to issue the Amended Letter of Credit pursuant to the Reimbursement Agreement provided that the Pledge Agreement among Pledgor, the Escrow Agent and Agent is amended on the terms and conditions hereafter set forth. NOW THEREFORE, the Pledgor, the Escrow Agent and Agent hereby agree as follows: 1. Amendment to Pledge Agreement. By this Amendment, the parties intend to amend the Pledge Agreement solely to provide for the issuance of the Series B Bonds and the Amended Letter of Credit. Accordingly, the Pledge Agreement is hereby amended as follows: (i) to include both the First Series of Bonds and the Series B Bonds in the definition of "Bonds" for all purposes of the Pledge Agreement; and (ii) to replace the recitals in the Original Pledge Agreement with the recitals in this Amendment. 2. Effect on Pledge Agreement. Except as specifically amended herein, the Pledge Agreement shall remain in full force and effect and is hereby ratified and conformed. 3. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. 4. Counterparts. This Amendment may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same agreement. Any signature received by facsimile transmission shall be deemed an original signature hereto. SIGNATURE LINES ON FOLLOWING PAGE 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as of the day and year first above written. The Agent: HELLER FINANCIAL, INC. as Agent By: /s/ Venkat Venkatesan --------------------------------- Title: Vice President ------------------------------ 500 West Monroe Chicago, Illinois 60661 Attn: HBC Portfolio Manager Telecopy: (312) 441-7026 The Pledgor: UNITEL VIDEO, INC. By: /s/ Barry Knepper --------------------------------- Title: Chief Executive Officer ------------------------------ 555 West 57th Street New York, New York 10019 Attn: Barry Knepper, President Telecopy: (212) 581-7748 The Escrow Agent: PNC BANK, NATIONAL ASSOCIATION By: /s/ Robert Ernst --------------------------------- Title: Vice President ------------------------------ One Oliver Plaza, 27th Floor Pittsburgh, Pennsylvania 15265 Attn: Corporate Trust Division Telecopy: (412) 762-8226 3 EX-4.(H) 9 FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT This FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT is entered into as of December 15, 1997 between UNITEL VIDEO, INC., a Delaware corporation (the "Company"), and HELLER FINANCIAL, INC. ("Heller"), as agent for the financial institutions party to the Credit Agreement (as hereafter defined). W I T N E S S E T H: WHEREAS, the Company and Heller have entered into a Reimbursement Agreement dated as of July 1, 1997 (the "Original Reimbursement Agreement); and WHEREAS, the Company and Heller have agreed to amend the Original Reimbursement Agreement on the terms set forth herein (the Original Reimbursement, as amended by this Amendment, and as it may be further amended, supplemental or otherwise modified from time to time, the "Reimbursement Agreement"). NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Definitions. Capitalized terms used herein and undefined shall have therespective meanings specified in the Reimbursement Agreement. SECTION 2. Amendment to Reimbursement Agreement. (a) Section 1(b) of the Reimbursement Agreement is hereby amended by amending the following defined terms in their entirety to provide as follows: "Bonds" means, collectively, the Issuer's Variable Rate Demand Revenue Bonds, Series 1997 (Unitel Mobile Video Project) in the original principal amount of $5,000,000 (the "First Series Bonds") and the Issuer's Variable Rate Demand Revenue Bonds, Series B of 1997 (Unitel Mobile Video Project) in the original principal amount of $3,500,000 (the "Series B Bonds"). "Company Agreement" means the Loan Agreement, dated as of July 1, 1997, between the Company and the Issuer as amended by the First Supplement to Loan Agreement dated as of December 15, 1997, and as the same may from time to time be further amended, supplemented or modified. "Indenture" means the Trust Indenture, dated as of July 1, 1997, between the Issuer and PNC Bank, National Association, as trustee, as amended by the First Supplemental Indenture dated as of December 15, 1997, and as the same may from time to time be further amended, supplemented or modified. "Letter of Credit" means the Amended and Restated Irrevocable Letter of Credit No. ______ dated December 30, 1997 in the original face amount of $8,636,931.51 issued by Bank of America National Trust and Savings Association in favor of PNC Bank, National Association, as trustee, as the same may from time to time be amended, supplemented or modified. "Letter of Credit Amount" means $8,636,931.51, as reduced and reinstated as provided in the Letter of Credit. "Letter of Credit Bank" means Bank of America National Trust and Savings Association. "Pledge Agreement" means the Pledge Agreement, dated as of July 1, 1997, among the Company, PNC Bank, National Association, as escrow agent, and Agent, as amended by the First Amendment to Pledge Agreement, dated as of December 15, 1997, as the same may from time to time be further amended, supplemented or modified. "Preliminary Private Placement Memorandum" means, collectively, the Preliminary Private Placement Memorandum dated July 18, 1997 relating to the First Series Bonds and the Preliminary Private Placement Memorandum dated December 23, 1997 relating to the Series B Bonds (including any documents incorporated therein by reference and any amendments or supplements thereto). "Private Placement Memorandum" means, collectively, the Private Placement Memorandum dated July 23, 1997 relating to the First Series Bonds and the Private Placement Memorandum dated December __, 1997 relating to the Series B Bonds (including any documents incorporated therein by reference and any amendments or supplements thereto). "Purchase Contract" means, collectively, the Private Placement Agreement dated July 23, 1997 relating to the First Series Bonds and the Private Placement Agreement dated December 29, 1997 relating to the Series B Bonds, in each case among the Issuer, the Company and RRZ Public Markets, Inc., as the same may from time to time be amended, supplemented or modified. "Remarketing Agreement" means the Remarketing Agreement, dated as of July 1, 1997, among the Issuer, the Company, the Trustee and the Remarketing Agent, as amended by the Supplemental Remarketing Agreement dated as of December 15, 1997, and as the same may from time to time be further amended, supplemented or modified. (b) Section 1(b) of the Reimbursement Agreement is hereby further amended by adding the following defined terms in their appropriate alphabetical order: "First Amendment Effective Date" means the date on which this Amendment is executed and delivered by the Company and Heller. "First Amendment Effective Date Related Documents" means those Related Documents (or amendments or supplements thereto) executed and delivered on the First Amendment Effective Date. (c) Section 4(a) of the Reimbursement Agreement is hereby amended to read in its entirety as follows: "(b)(i) The initial term of the letter of credit (the "Initial Letter of Credit") issued under the Reimbursement Agreement on July 24, 1997 commenced on July 24, 1997. The Initial Letter of Credit is being surrendered and replaced by the Letter of Credit being issued contemporaneously with this 2 Amendment. The initial term of the Letter of Credit shall commence on December 30, 1997 and, subject to the occurrence of any of the events referred to in the definition of "Termination Date", end on July 24, 1999 (the "Stated Expiration Date"). Notwithstanding the foregoing, the Stated Expiration Date may be extended as provided in paragraph (ii) below." SECTION 3. Issuance of the Letter of Credit; Conditions Precedent to Issuance. It is understood that the provisions of Section 3 of the Original Reimbursement Agreement applied solely with respect to the issuance of the Initial Letter of Credit delivered contemporaneously with the execution and delivery of the Original Reimbursement Agreement. Accordingly, the terms of this Section 3 shall apply with respect to the issuance of the Letter of Credit being issued on the First Amendment Effective Date. (a) Upon satisfaction of the conditions precedent set forth in subsections (b) and (c)of this Section, Agent shall cause the Letter of Credit Bank to issue on the date requested by the Company (the "Date of Issuance") the Letter of Credit in the initial aggregate amount equal to the initial Letter of Credit Amount, effective on the Date of Issuance and expiring on the Termination Date. (b) As a condition precedent to Agent's causing the Letter of Credit Bank to issue the Letter of Credit, Agent shall have received on or before the Date of Issuance the following, each dated such date, in form and substance satisfactory to Agent: (i) an opinion of Karen Ceil Lapidus, Esq., General Counsel of the Company, in form and substance satisfactory to Agent; (ii) an opinion of Klett Lieber Rooney & Schorling, bond counsel, in form and substance satisfactory to Agent; (iii) a copy of the resolutions of the Company's Board of Directors authorizing the execution, delivery and performance by the Company of this Amendment and each First Amendment Effective Date Related Document to which the Company is, or is to be, a party, as the case may be, certified by the Secretary or an Assistant Secretary of the Company (which certificate shall state that such resolutions are in full force and effect on the Date of Issuance); (iv) certified copies of all approvals, authorizations, or consents of, or notices to or registrations with, any Governmental Authority required for the Company to enter into this Amendment and the First Amendment Effective Date Related Documents to which it is, or is to be, a party; (v) a certificate of a Secretary or Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to sign this Amendment and the other documents to be delivered by the Company pursuant hereto; (vi) executed copies (or duplicates thereof) of the First Amendment Effective Date Related Documents, each of which shall be in form and substance satisfactory to Agent; and (vii) such other documents, instruments, approvals (and, if requested by Agent, certified duplicates of executed copies thereof) or opinions as Agent may reasonably request. 3 (c) On or before the Date of Issuance: (i) the Company shall have paid or caused to be paid all accrued costs and expenses of Agent, including the reasonable fees and expenses of its counsel in connection with the preparation, execution and delivery of this Amendment and the First Amendment Effective Date Related Documents and the consummation of the transactions contemplated thereby; (ii) the Issuer shall have duly adopted resolutions authorizing the execution, delivery and performance by the Issuer of the Series B Bonds, this Amendment and of the First Amendment Related Documents to which the Issuer is, or is to be, a party and certified copies of such resolutions shall have been delivered to Agent; (iii) the Issuer and the Trustee shall have duly authorized and executed the first supplement to the Indenture and the Indenture shall be in full force and effect; (iv) all conditions precedent to the issuance of the Series B Bonds (and to their purchase under the Purchase Contract relating to the Series B Bonds as specified therein) shall have occurred; and (v) the Issuer shall have duly executed, issued and delivered the Series B Bonds. SECTION 4. Representations and Warranties; No Default. The Company represents and warrants to Agent and Lenders as follows: (a) This Amendment and the Reimbursement Agreement, as amended hereby, constitute legal, valid and binding obligations of the Company and are enforceable against the Company in accordance with their respective terms. (b) That all covenants, representations and warranties (excluding only that set forth in paragraph (d) of Section 6 of the Reimbursement Agreement) made in the Reimbursement Agreement, to the extent the same are not otherwise notified to Agent in writing, are correct in all material respects and agrees that after giving effect to the expanded definition of "Related Documents" in this Amendment, all covenants, representations and warranties shall be deemed to have been remade as of the First Amendment Effective Date. (c) No Event of Default or Default has occurred and is continuing or would exist after giving effect to this Amendment. SECTION 5. Effect on the Reimbursement Agreement. (a) Upon the execution on delivery of this Amendment, each reference in the Reimbursement Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Reimbursement Agreement as amended hereby. (b) Except as specifically amended herein, the Reimbursement Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. 4 (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent or Lender, nor constitute a waiver of any provision of the Reimbursement Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith. SECTION 6. Governing Law. This Amendment shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. SECTION 7. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same agreement. SIGNATURE LINES ON FOLLOWING PAGE 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. UNITEL VIDEO, INC. By: /s/ Barry Knepper ------------------------------- Title: Chief Executive Officer ---------------------------- HELLER FINANCIAL, INC., as Agent By: /s/ Venkat Venkatesan ------------------------------- Title: Vice President ---------------------------- EX-10.(A) 10 AGREEMENT - AMENDMENT TO LEASE Exhibit 10(A) AGREEMENT - AMENDMENT TO LEASE February 16, 1998 BETWEEN: OLYMBEC CONSTRUCTION INC. 5584 Cote de Liesse, Suite 208 Town of Mount Royal, Quebec, H4P 1A9 (the "Lessor") AND: UNITEL VIDEO CANADA INC. 3540 Griffith Street City of Saint-Laurent, Quebec, H4T 1A7 (the "Lessee") RE: Amendment to the Lease for the premises measuring approximately 8,000 square feet and located at 3540 Griffith Street, Saint-Laurent, Quebec, H4T 1A7 (the "Premises") The present Agreement - Amendment to Lease shall form an integral part of the Lease. THE PARTIES HEREBY CONFIRM THE FOLLOWING: WHEREAS in virtue of a lease signed in June 1997 (the "Lease"), the Lessor leased to the Lessee the Premises for a term of five (5) years and one (1) month, commencing June 1, 1997 and terminating June 30, 2002, the whole, at terms and conditions more fully described in the Lease. WHEREAS in virtue of Lessee's December 15, 1997 letter to the Lessor (the "Letter"), the Lessee requested certain amendments to the Lease, the whole, as more fully described in the Letter. WHEREAS as a result of the Letter, the Lessor agrees to make certain amendments to the Lease, the whole, as more fully described hereinafter. IN WITNESS WHEREOF, THE PARTIES MUTUALLY AGREE TO THE FOLLOWING AMENDMENTS TO THE LEASE: 1. Name of Lessee, Unitel Video Canada Inc. The name of the Lessee, "Unitel", shall be amended as follows: "Unitel Video Canada Inc." 2. Default, Article 18(c) of the Lease The following section of Article 18(c) shall be deleted from the Lease: "....or should the Lessee or any other person at any time during the term of this Lease remove or try to remove from the Premises, without the written consent of the Lessor, any of the moveable property of the Lessee, except during the ordinary course of its activities or when replacement or renovation work is being done..." 3. Lessor's Legal Hypothec, Article 36 of the Lease Article 36 shall be deleted from the Lease. 4. Security Deposit, Article 41.1 of the Lease Article 41,1 of the Lease reads as follows: "The Lessor and Lessee acknowledge that the Lessee has deposited and honored a cheque payable to Royal Lepage Commercial Inc. "in trust" in the sum of $9,496.23, including G.S.T. and P.S.T., which said cheque amount shall be applied towards the minimum rental, surtax and taxes to become due for the first and last months of the Term." The following paragraph shall be added to Article 41.1 of the Lease: "As a result of the amendments to the Lease contained herein, Lessee shall provide Lessor with an additional sum of $9,585.42, including G.S.T. and P.S.T., which said sum shall be included in the Security Deposit. The sum of $9,585.42, including G.S.T. and P.S.T., is payable immediately. The total amount of the Security Deposit, namely $19,081.65, including G.S.T. and P.S.T., shall be applied towards the minimum rental, surtax and taxes to become due for the first and last three months of the Term." The parties acknowledge having expressly required that this agreement and all writings relating thereto be drawn up in English. Les parties declarent avoir expressement requis que cette entente et tous les documents s'y rapportant soient rediges en anglais. IN WITNESS WHEREOF WE HAVE SIGNED THIS ___ DAY OF ________, 199____. OLYMBEC CONSTRUCTION INC. PER: /s/Richard Stern - --------------------------------- --------------------------------------- Witness LESSOR: Richard Stern UNITEL VIDEO CANADA INC. PER: /s/ Brian Harty - --------------------------------- --------------------------------------- Witness LESSEE: Brian Harty 2 EX-27 11 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNITEL VIDEO, INC. FORM 10-Q FOR THE QUARTER AND SIX MONTHS ENDED FEBRUARY 28, 1998. 0000740103 Unitel Video, Inc. 1,000 6-MOS AUG-31-1997 SEP-01-1997 FEB-28-1998 89 0 6,524 575 0 7,555 104,663 52,391 65,149 17,218 42,246 0 0 27 11,601 65,149 26,197 26,197 22,404 22,404 5,718 163 1,845 (1,762) 2 (1,764) 0 0 0 (1,764) (.66) (.66)
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