Section 7.6 of the Credit Agreement is hereby amended by inserting a new subsection (d) as follows:
"(d) in connection with the issuance of Ownership Interests resulting in net cash proceeds to the Borrower of at least Thirty Five Million Dollars ($35,000,000) and after repayment in full all Loans then outstanding, the Borrower may use any remaining net cash proceeds of such issuance for the purchase, redemption, retirement, cancellation or termination of capital stock or other equity interest or of any option, warrant or other right to acquire any such capital stock or other equity interest held by Lightyear; provided, however, that the Borrower may not, at any time, use proceeds of the Revolving Credit Loan for such purposes."
Yeah, the $1.75 million loan is unsecured - so, some restrictions on its use is to be expected. The banks want to make sure that their money isn't simply siphoned off as dividends or to buy back stock :-). However, I'm impressed by the favorable interest rate that PBIZ has gotten (choice of libor + 3% or prime rate). The banks' perception of risk that the business will fail seems to have gone down significantly. Lynn Boggs seems to have done a good job articulating his vision and making the banks comfortable. Hopefully, there isn't an under-the-table quid-pro-quo of PBIZ providing services to these same banks at less than cost.