Exhibit 10(ac)
SECOND AMENDMENT
TO
INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT
This ("Amendment") to the INVENTORY AND WORKING CAPITAL FINANCING
AGREEMENT is made as of July __, 2000 by and between CompuCom Systems, Inc., a
Delaware corporation ("Customer") and IBM Credit Corporation, a Delaware
corporation ("IBM Credit").
RECITALS:
WHEREAS, Customer and IBM Credit have entered into that certain Inventory
and Working Capital Financing Agreement dated as of May 11, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Agreement"); and
WHEREAS, Customer has requested and IBM Credit has agreed to amend the
Agreement as set forth herein and subject to the conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the premises set forth herein, and for
other good end valuable consideration, the value and sufficiency of which is
hereby acknowledged, the parties hereto agree that the Agreement is amended as
follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Amendment. The Agreement is hereby amended as follows:
A) Section 1.1 of the Agreement is hereby amended by adding the following
definitions each in its proper alphabetical order:
"Designated Account Debtor": as set forth on Attachment A.
"Designated Account Term": as set forth on Attachment A.
B) Subsections 3.1 (A), (B) and (C) of the Agreement are amended by deleting
such subsections in their entirety and substituting, in lieu thereof, the
following:
"(A) Accounts created from the sale of goods and/or performance of
services to an Account debtor which is not a Designated Account Debtor if such
Accounts are on non-standard terms or allow for payment to be made more than
thirty (30) days from the date of such sale or performance of services;
(B) Accounts unpaid more than (i) the Designated Account Term if the
Account Debtor is a Designated Account Debtor; or (ii) ninety (90) days from
date of invoice for all other Account debtors;
(C) Accounts payable by an Account debtor if fifty percent (50%) or more
of the aggregate outstanding balance of all such Accounts remain unpaid for more
than ninety (90) days from the date of invoice except for Account payable by a
Designated Account Debtor which shall be deemed ineligible if fifty percent
(50%) or more of the aggregate outstanding balance from such Designated Account
Debtor is unpaid at the expiry of the Designated Account Term applicable to such
Designated Account Debtor;"
C) Attachment A to the Agreement is hereby amended by deleting such Attachment A
in its entirety and substituting, in lieu thereof, the Attachment A attached
hereto. Such new Attachment A shall be effective as of the date specified in the
new Attachment A. The changes contained in such new Attachment A include,
without limitation, the establishment of eligibility for Accounts arising from
Designated Account Debtors.
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Section 3. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York.
Section 4. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, this Amendment has been executed by duly authorized
representatives of the undersigned as of the day and year first above written.
IBM CREDIT CORPORATION COMPUCOM SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxx
----------------------------------- ---------------------------------
Print Name: Xxxxxx X. Xxxxxxx Print Name: Xxxxxx Xxxxxx
--------------------------- -------------------------
Title: MGR Com and Specialty Financing Title: Treasurer
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ATTACHMENT A, EFFECTIVE DATE JULY 1, 2000 ("IWCF ATTACHMENT A")
TO INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT ("IWCF AGREEMENT")
DATED MAY 11, 1999
Customer: CompuCom Systems, Inc.
I. Fees, Rates and Repayment Terms:
(A) Credit Facilities: The aggregate of the following:
Inventory Financing Availability of One Hundred Sixty-Five Million
Dollars ($165,000.000) plus
Working Capital Financing ("Revolver") Availability of One Hundred
and Seventy-Five Million ($175,000,000)
(B) Borrowing Base:
(i) 60% of the amount equal to the amount of Customer's Eligible
Accounts other than Concentration Accounts as of the date of
determination as reflected in the Customer's most recent Collateral
Management Report minus the outstanding amount of the Series 1990-1
Certificateholders' Interest and any other outstanding interest In
the Trust as of the same date;
(ii) a percentage, determined from time to time by IBM Credit in its
sole discretion, of the amount of Customer's Concentration Accounts
for a specific Concentration Account Debtor as of the date of
determination as reflected in the Customer's most recent Collateral
Management Report; unless otherwise notified by IBM Credit, in
writing, the percentage for Concentration Accounts for a specific
Concentration Account Debtor shall be the same as the percentage set
forth in paragraph (IA) or (IBi) as applicable of the Borrowing
Base;
Notwithstanding the terms of Section 3.1(W) of the Agreement. Accounts
arising from incentive payments, rebates, discounts and refunds which are
(i) verifiable by Authorized Suppliers, and (ii) payable by Authorized
Suppliers by check to the Lockbox will be deemed to be Eligible Accounts.
(iii) 100% of verifiable receivables due from IBM and IBM Credit
which are less than 90 days from the date of invoice:
(iv) 100% of the Customer's inventory in the Customer's possession
as of the date of determination as reflected in the Customer's most
recent Collateral Management Report constituting Products (other
than service parts) financed through a Product Advance by IBM
Credit, provided, however, IBM Credit has a first priority security
interest in such Products and such Products are in new and in
un-opened boxes. The value to be assigned to such inventory shall be
based upon the Authorized Supplier's invoice price to Customer for
Products net of all applicable price reduction credits;
(v) 50% of eligible inventory not financed by IBM Credit and
unencumbered by liens;
(vi) 85% of verifiable vendor credits from Hewlett-Packard Company
and Compaq Computer Corporation which credits shall be payable in
cash through Customer's Lockbox, not subject to offset, and shall be
less than 90 days from date of invoice; and
(vii) 20% of unencumbered fixed assets net of leasehold improvements
thereon.
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(viii) Designated Account Debtors and Designated Account terms:
DESIGNATED ACCOUNT DEBTOR DESIGNATED ACCOUNT TERM
---------------------------------------------------------------
Xxxxxxx-Xxxxx Squibb Company and the 105 Days
following subsidiaries and/or divisions:
Clairol Incorporated 105 Days
Convatec Limited 105 Days
Matrix Essentials, Inc. 105 Days
Xxxx Xxxxxxx & Company 105 Days
Xxxxxx Limited 000 Xxxx
Xxxxx xx Xxxxxxxxxx & various agencies, 120 Days
cities, departments and school districts.
Xxxxxx Broadcasting System, Inc. 000 Xxxx
Xxxx xx Xxxxxx, Xxxxx 120 Days
(C) Collateral Insurance Amount: Two Hundred and Fifty
Million Dollars
($250,000,000.00)
(D) A/P Finance Charge:
(i) PRO Advance Charge: LIBOR Rate plus 1.75%
(ii) WCO Advance Charge: LIBOR Rate plus 1.75%
(iii) Takeout Advance Charge: LIBOR Rate plus 1.75%
(E) Delinquency Fee Rate: Prime Rate plus 6.50%
(F) Shortfall Transaction Fee: shortfall Amount multiplied by
0.30%
(G) Free Financing Period Exclusion Fee: For each Product Advance made
by IBM Credit pursuant to Customers financing plan where there is no
Free Financing Period associated with such Product Advance there
will be a fee equal to the Free Financing Period Exclusion Fee. For
a 30 day payment plan when Prime Rate is 7.75% the Free Financing
Period Exclusion Fee is 1.0675% of the invoice amount. This fee will
vary by .0125% with each .25% change in Prime Rate (e.g. Prime Rate
of 7.25%, the charge is 1.0425% of the invoice amount). The fee
accrues as of the Date of the Note and is payable as stated in the
billing Statement.
(H) Other Charges:
(i) Unused Facility Fee: 0.25% per annum on the daily
average unused portion of
the Revolver payable
quarterly in arrears.
(ii) Annual Facility Fee: $50,000.00
(iii) Closing Fee; $1,075,000.00
(iv) Commitment Fee: $50,000.00
(v) Prepayment Fee: In the event that the Customer
Units sole discretion terminates the Revolver prior to the third
anniversary of the closing date, a fee in an amount equal to the
amount of the Revolver in effect as at the date of notice of
termination, multiplied by (x) from the first anniversary thereof to
the second anniversary thereof, one half percent (0.50%), and (y)
thereafter, one quarter of one percent (0.25%).
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II. Bank Account
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III. Financial Covenants:
Definitions: The following terms shall have the following respective meanings in
this Attachment A. All amounts shall be determined in accordance with generally
accepted accounting principles (GAAP).
"Current" shall mean within the on-going twelve month period.
"Current Assets" shall mean assets that are cash or expected to become
cash within the on-going twelve months.
"EBITDA" for any period shall mean Net Profit after Tax adjusted by adding
thereto the amount of Interest Charges and all amortization of
intangibles, taxes, depreciation, extraordinary losses, and other non-cash
charges that were deducted in arriving at Net Income for such period and
deducting any extraordinary gains that were included in arriving at Net
Income after Tax.
"Current Liabilities" shall mean payment obligations resulting from past
or current transactions that require settlement within the on-going twelve
month period. All indebtedness to IBM Credit other than amounts
outstanding pursuant to the Revolver shall be considered a Current
Liability for purposes of determining compliance with the Financial
Covenants.
"Long Term" shall mean beyond the on-going twelve month period.
"Long Term Assets" shall mean assets that take longer than a year to be
converted to cash. They are divided into four categories: tangible assets,
investments, intangibles and other.
"Long Term Debt" shall mean payment obligations of indebtedness which
mature more than twelve months from the date of determination, or mature
within twelve months from such date but are renewable or extendible at the
option of the debtor to a date more than twelve months from the date of
determination and specifically including all amounts outstanding to IBM
Credit pursuant to the Revolver.
"Net Profit after Tax" shall mean Revenue plus all other income, minus all
costs, including applicable taxes.
"Revenue" shall mean the monetary expression of the aggregate of products
or services transferred by an enterprise to its customers for which said
customers have paid or are obligated to pay, plus other income as allowed.
"Subordinated Debt" shall mean Customer's indebtedness to third parties
which in accordance with its terms shall rank junior in priority to the
indebtedness of Customer to IBM Credit.
"Tangible Net Worth" shall mean:
Total Net Worth minus;
(a) goodwill, organizational expenses, pre-paid expenses, deferred
charges, research and development expenses, software development
costs, leasehold expenses, trademarks, trade names, copyrights.
patents, patent applications, privileges, franchises, licenses and
rights in
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any thereof, and other similar intangibles (but not including
contract rights) and other current and non-current assets as
identified in Customer's financial statements; and
(b) all accounts receivable from employees, officers, directors,
stockholders and affiliates; and
(c) all callable/redeemable preferred stock,
"Total Assets" shall mean the total of Current Assets and Long Term
Assets.
"Total Liabilities" shall mean the Current Liabilities and Long Term Debt
less Subordinated Debt resulting from past or current transactions, that
require settlement in the future.
"Total Net Worth" (the amount of owner's or stockholder's ownership in an
enterprise) is equal to Total Assets minus Total Liabilities plus
Subordinated Debt.
"Working Capital" shall mean Current Assets minus Current Liabilities.
Customer will be required to maintain the following financial ratios,
percentages and amounts as of the last day of the fiscal quarter under review
by IBM Credit.
(a) Current Assets to Current Liabilities ratio equal to or greater than
1.25:1.0;
(b) Net Profit after Tax to Revenue percentage equal to or greater than
0.7% for each reportable fiscal quarter on a trailing four quarter
basis provided that the Net Profit after Tax to Revenue percentage
for each of those four quarters shill be equal to or greater than
0.0%;
(c) Tangible Net Worth equal to or greater than $110 Million Dollars
plus 75% of Net Profit after Tax plus 100% of the proceeds received
from the placement of additional equity;
(d) Loans to officers shall at no time exceed the aggregate amount of
$7,000,000.
(e) Capital expenditures shall not exceed the aggregate amount of
$15,000.000 in any one fiscal year; and
(f) Permitted Investments shall not exceed from the date hereof the
aggregate amount of $5,000,000 plus equity investments held by
Customer as of the date hereof In; E-Certify. Inc., Global Serve
Computer Services, Ltd., and Gateway 2000 Corporation.
IV. Additional Conditions Precedent Pursuant to Section 5.1 (K) of the
Agreement:
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