THIRD AMENDMENT TO FORBEARANCE LETTER AGREEMENT
AND AMENDMENT AGREEMENT
This Third Forbearance and Amendment Agreement (the "Third Amendment")
is dated as of August 27, 1999 (the "Third Amendment Closing Date") and is made
and entered into by and among First Union National Bank, as Collateral Agent,
Administrative Agent and Issuing Lender (in all such capacities, the "Agent"),
First Union Commercial Corporation, as Swingline Lender and Lender (the
"Swingline Lender"), Fleet Bank, N.A., as Lender, State Street Bank and Trust
Company, as Lender and Mellon Bank, N.A., as Lender (all of the foregoing,
individually, a "Lender," and collectively, the "Lender Group") and Condor
Technology Solutions, Inc., Computer Hardware Maintenance Company, Inc.,
Corporate Access Inc., Decision Support Technology, Inc., Federal Computer
Corporation, Global Core Strategies Acquisition, Inc., Interactive Software
Systems Incorporated, Inventure Group, Inc., LINC Systems Corporation, Xxxxxx
Associates, Inc., Management Support Technology Corp., MIS Technologies, Inc.,
Powercrew, Inc., Titan Technologies Group L.L.C., U.S. Communications, Inc. and
Condor System Solutions, Inc., as Borrowers (collectively, the "Borrowers").
BACKGROUND
A. Pursuant to various loan agreements and documents, the Lender Group has
extended certain Revolving Loans (the "Revolving Credit Facility"), Swingline
Loans (the "Swingline Loan Facility), and a Term Loan Facility (the "Term Loan
Facility" and, together with the Revolving Credit Facility and the Swingline
Loan Facility, the "Facilities") to the Borrowers. Such loan agreements and
documents (collectively, the "Existing Loan Documents") include, without
limitation, the following:
1. that certain Credit Agreement dated as of April 16, 1999 by and among
the Borrowers, the Lenders (including First Union National Bank, as Lender)
referred to therein and the Agent (as amended from time to time prior to the
Third Amendment Closing Date, the "Existing Credit Agreement," and as amended
hereby and from time to time hereafter, the "Credit Agreement");
2. that certain Collateral Agreement dated as of April 16, 1999, by the
Borrowers, as Grantors, in favor of the Agent (the "Collateral Agreement");
3. those certain Revolving Credit Notes each dated April 16, 1999, by the
Borrowers in favor of each of the Lenders (collectively, the "Revolving Credit
Notes");
4. that certain Swingline Note dated April 16, 1999, by the Borrowers in
favor of the Swingline Lender (the "Swingline Credit Note");
5. that certain Term Note dated April 16, 1999, by the Borrowers in favor
of First Union National Bank (the "Term Note," and together with the Revolving
Credit Notes and the Swingline Note, the "Notes");
1
6. various Uniform Commercial Code financing statements, corporate
authorization documents, and other loan and security documents executed and
delivered by any one or more of either the Lenders or the Borrowers in
connection with the Facilities prior to the Third Amendment Closing Date; and
7. that certain Forbearance Letter Agreement dated as of July 23, 1999 (the
"Forbearance Letter Agreement"), as amended by the First Amendment to
Forbearance Letter Agreement dated as of July 30, 1999, by and among the
Borrowers and the Lenders party thereto, and the Second Amendment to Forbearance
Letter Agreement dated as of August 13, 1999, as amended, by and among the
Borrowers and the Lenders party thereto, and this Third Amendment.
As used herein, the term "Loan Documents" shall mean this Third Amendment, the
other Forbearance Documents (hereinafter defined), the Existing Loan Documents,
and all other documents now or hereafter entered into by and among the Lenders,
the Borrowers and/or any of them and/or any guarantors, mortgagors or pledgors
to evidence and/or secure the Facilities and/or any of the other Obligations
(hereinafter defined). All capitalized terms contained herein which are not
otherwise defined shall have the definitions set forth in the Credit Agreement.
B. The Lender Group has determined that the following circumstances have
occurred which allow the Lender Group to cease making Revolving Credit Loans and
Swingline Loans and to cease issuing Letters of Credit under the Credit
Agreement (the "Existing Events"): (i) the failure of the Borrowers to maintain
Minimum Pro Forma EBITDA for their fiscal quarter ending June 30, 1999 as
required by Section 10.5 of the Credit Agreement; (ii) the failure of the
Borrowers to maintain Minimum Net Worth for their fiscal quarter ending June 30,
1999 as required by Section 10.4 of the Credit Agreement; (iii) the occurrence
of defaults or events of default under the Agreement for Wholesale Financing
dated April 15, 1998, by and among Deutsche Financial Services Corporation
("Deutsche"), Computer Hardware Maintenance Company, Inc., Corporate Access,
Inc., U.S. Communications, Inc., LINC Systems Corporation and Federal Computer
Corporation (the "Deutsche Default"); and (iv) all defaults and events of
default which have occurred under the Loan Documents as a result of the Deutsche
Default. The Borrowers agree that the Lender Group is entitled to cease making
Revolving Credit Loans and Swingline Loans and to cease issuing new Letters of
Credit under the Credit Agreement.
C. Following the occurrence of the Existing Events, the Lender Group and
the Borrowers entered into the Forbearance Letter Agreement dated July 23, 1999,
by and among the Borrowers and the Lender Group (as amended, the "Forbearance
Letter Agreement"), pursuant to which the Lender Group agreed to implement a
limited forbearance period which commenced on the date thereof and continued
until the earlier to occur of the following (as the case may be, the "First
Forbearance Termination Date"): (i) August 27, 1999; or (ii) at the Lender
Group's option, the occurrence of a Forbearance Event of Default.
D. In order to provide the Borrowers with a period of time within which to
implement a business plan and take such actions as may be necessary or
appropriate to address
2
the Borrowers' current financial difficulties, the Borrowers have requested that
the Lender Group: (i) forbear from taking action with respect to the Existing
Events for the period from the First Forbearance Termination Date through
November 15, 1999; and (ii) amend certain provisions of the Existing Loan
Documents. Subject to the terms and conditions of this Third Amendment, the
Lender Group has agreed to this request.
E. All terms capitalized but not otherwise defined herein shall have the
meanings ascribed to them in the Forbearance Letter Agreement, as amended, or in
the Credit Agreement, as applicable.
AGREEMENT
NOW THEREFORE, incorporating the Background herein, and for other good
and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Lender Group
and the Borrowers agree as follows:
ARTICLE I - ACKNOWLEDGMENTS
1.1 ACKNOWLEDGMENT OF EXISTING EVENTS; EXISTING LOAN DOCUMENTS; WAIVER OF
DEFENSES. The Borrowers acknowledge that: (a) the Existing Events currently
exist; (b) the Existing Events are material in nature; and (c) the Existing Loan
Documents are valid and enforceable against the Borrowers in every respect and
all of the terms and conditions thereof are binding upon the Borrowers. The
Borrowers further acknowledge and agree that, as a result of the Existing
Events, the Lender Group is entitled immediately, and without further notice or
declaration to the Borrowers or any other Person, to accelerate the Obligations
and to exercise the Lender Group's rights and remedies under the Loan Documents
or otherwise. To the extent that any of the Loan Documents require notification
by the Lender Group to the Borrowers of the existence of a default and an
opportunity for the Borrowers to cure such a default, such notice and period for
cure have been properly given by the Lender Group or are hereby waived by the
Borrowers. To the extent that the Borrowers have any defenses, setoffs, claims,
or counterclaims to repayment of the Obligations or against the Lender Group,
such defenses, setoffs, claims, or counterclaims are hereby waived.
1.2 ACKNOWLEDGMENT OF CURRENT OUTSTANDING OBLIGATIONS. As of August 27,
1999, the Borrowers are indebted to the Lender Group in an aggregate amount
equal to the principal sum (including the face amount of outstanding letters of
credit) of $52,119,572.84 apportioned as follows:
Revolving Credit Facility $22,000,000.00
Term Loan Facility 24,937,500.00
Letters of Credit 5,182,072.84
3
plus accrued but unpaid interest, plus the costs and expenses associated with
the Facilities incurred by any Lender and/or the Lender Group, including,
without limitation, reasonable attorneys' fees incurred by any Lender and/or the
Lender Group in the negotiation and preparation of the Loan Documents, this
Third Amendment and the documents related hereto (the foregoing amounts are
hereafter collectively referred to as the "Current Outstanding Obligations"),
all without offset, counterclaims or defenses of any kind. Nothing contained
herein shall alter, amend, modify or extinguish the obligation of the Borrowers
to repay the Obligations, and neither this Third Amendment nor any of the other
Forbearance Documents constitutes a novation of any of the Existing Loan
Documents.
1.3 ACKNOWLEDGMENT OF LIENS AND PRIORITY. Except for Permitted Liens,
pursuant to the Existing Loan Documents, to the best of Borrowers' knowledge,
the Lender Group holds first priority, perfected security interests in and liens
upon the Borrowers' assets, wherever located, including assets now owned or
hereafter acquired, and as more specifically described in the Existing Loan
Documents. Such security interests and liens secure all of the Obligations now
or hereafter incurred, including, without limitation, the Current Outstanding
Obligations and all other amounts now or hereafter owed by the Borrowers to the
Lender Group under the Existing Loan Documents. For purposes of this Third
Amendment, the word "Obligations" shall mean any and all obligations and
liabilities of the Borrowers to the Lender Group, of every kind and description,
direct and indirect, absolute and contingent, sole, joint, several, or joint and
several, primary or secondary, due or to become due, now existing or hereafter
arising, regardless of how they arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument and
includes obligations to perform acts and refrain from taking actions as well as
obligations to pay money, and also includes the Current Outstanding Obligations.
1.4 REAFFIRMATION OF SECURITY INTERESTS; CROSS-COLLATERALIZATION. All of
the assets of the Borrowers pledged, assigned, conveyed, mortgaged, hypothecated
or transferred to the Lender Group pursuant to the Loan Documents including,
without limitation, all goods, accounts, chattel paper, contracts, deposit
accounts, documents, equipment, general intangibles, instruments, intellectual
property, inventory, investment property, all other property not otherwise
described above, all books and records pertaining to the foregoing and, to the
extent not otherwise included, all proceeds and products of any and all of the
foregoing and all collateral security and guarantees given by any person with
respect to any of the foregoing (collectively, the "Collateral") constitute
collateral security for all of the Obligations. The Borrowers hereby grant to
the Lender Group and reaffirm their prior conveyance to the Lender Group of a
continuing security interest in and lien on the Collateral as well as a security
interest in and lien on any and all funds and/or monies of the Borrowers
contained in accounts located at the Lender Group or at any of the Lender
Group's subsidiaries or affiliates.
ARTICLE II - AMENDMENTS TO LOAN DOCUMENTS
2.1 Paragraph 11 of the Forbearance Letter Agreement is hereby amended and
restated in its entirety as follows:
4
"11. Subject to the terms and conditions of this Forbearance
Letter Agreement, and without waiving the Existing Events, the
Lender Group agrees to forbear from enforcing its remedies under
the Loan Documents and applicable law as a result of the Existing
Events until the earlier to occur of the following (as the case
may be, the "Forbearance Termination Date"): (i) November 15,
1999; or (ii) at the Lender Group's option, the occurrence of a
Forbearance Event of Default (as defined herein)."
2.2 Paragraph 12 of the Forbearance Letter Agreement is hereby amended by
adding the following:
"(d) ACTIONS BY OTHER CREDITORS. Any action to declare an event of
default by any creditor referred to in Section 3.1(c) of the Third
Amendment and/or any failure of the Borrower to provide the waivers
required in Section 3.1(c) of the Third Amendment within five (5) or seven
(7) Business Days of the Third Amendment Closing Date, as applicable."
2.3 The following new definitions are hereby added to Section 1.1 of the
Existing Credit Agreement in appropriate alphabetical order:
"Cash Flow Statement" shall mean that certain statement of cash flow
provided by the Borrowers to the Lenders on August 26, 1999, attached
to the Third Amendment as Exhibit A.
"CIT" means Canterbury Information Technology, Inc., a Pennsylvania
corporation.
"Consulting Solutions Division" shall mean LINC Systems Corporation,
Management Support Technology Corp., MIS Technologies, Inc. and
Decision Support Technology, Inc.
"Deutsche" shall mean Deutsche Financial Services Corporation, a
Nevada corporation.
"Deutsche Letter of Credit" shall mean that certain Letter of Credit
Number S151471 issued by First Union National Bank for the benefit of
Deutsche in the aggregate amount of $4,500,000, as amended.
"EPS Division" shall mean Global Core Strategies Acquisition, Inc.,
Powercrew, inc. and Titan Technologies Group LLC.
5
"Forbearance Documents" shall mean the Forbearance Letter Agreement
and each of the other documents, instruments, and agreements executed
and/or delivered in connection therewith.
"Forbearance Event of Default" shall have the meaning given to such
term in the Forbearance Letter Agreement.
"Forbearance Extension Fee" means, collectively, a fee of (a) $90,000
paid to the Lenders with Revolving Credit Commitments and (b) $60,000
paid to the Lender with the Term Loan.
"Forbearance Letter Agreement" shall mean that certain Forbearance
Letter Agreement dated as of July 23, 1999, by and among the Borrowers
and the Lender Group, as amended by the First Amendment to Forbearance
Letter Agreement dated as of July 30, 1999, by and among the Borrowers
and the Lenders party thereto, and the Second Amendment to Forbearance
Letter Agreement dated as of August 13, 1999, as amended by the First
Amendment to Second Amendment to Forbearance Letter Agreement dated as
of August 20, 1999, by and among the Borrowers and the Lenders party
thereto, and the Third Amendment.
"Forbearance Period" shall mean the period of time from August 27,
1999, until the Forbearance Termination Date.
"Forbearance Termination Date" shall mean the earlier of (i)
November 15, 1999, or (ii) at the Lender Group's option, the
occurrence of a Forbearance Event of Default.
"Government Solutions Division" shall mean Xxxxxx Associates, Inc.,
Federal Computer Corporation and Inventure Group, Inc.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement and Subordination Agreement dated as of April 23, 1999, by
and between the Administrative Agent and Deutsche.
"ISSI" shall mean Interactive Software Systems Incorporated, a
Colorado corporation.
"Third Amendment" shall mean that certain Third Amendment to
Forbearance Letter Agreement and Amendment Agreement dated as of
August 27, 1999 by and among the Borrowers and the Lender Group.
6
"Third Amendment Closing Date" means August 27, 1999.
2.4 The definition of "Revolving Credit Commitment" as set forth in Section
1.1 of the Existing Credit Agreement is hereby deleted in its entirety and a new
definition of "Revolving Credit Commitment" is hereby added in its place as
follows:
"Revolving Credit Commitment" means (a) as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the
account of the Borrowers hereunder in an aggregate principal amount at
any time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 1 hereto as such amount may be reduced or
modified at any time or from time to time pursuant to the terms hereof
and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Revolving Credit Loans to the Borrowers pursuant to Section 2.3
in an outstanding aggregate principal amount, inclusive of the
outstanding L/C Commitment, not to exceed at any time $35,000,000.
2.5 The definition of "Swingline Maturity Date"as set forth in Section 1.1
of the Existing Credit Agreement is hereby deleted in its entirety and a new
definition of "Swingline Maturity Date" is hereby added in its place as follows:
"Swingline Maturity Date" shall mean the Third Amendment Closing Date.
2.6 As a result of the amendment of the Swingline Maturity Date to the
Third Amendment Closing Date, the individual obligation of any Lender to make
advances under the Swingline Loans and the refunding obligations of any Lender
under the Swingline Loan, as such obligations are set forth in Sections
2.2(b)(i) and (iii) and 2.3(b)(ii), are hereby eliminated. Accordingly, Sections
2.2(b)(i) and (iii) are hereby amended and restated in their entirety as
follows:
"(b)(i) RESERVED FOR FUTURE USE.
"(b)(iii) RESERVED FOR FUTURE USE."
Further, Section 2.3(b) is hereby amended and restated in its entirety as
follows:
"(b) DISBURSEMENT OF REVOLVING CREDIT AND SWINGLINE LOANS. Not later
than 2:00 p.m. (Philadelphia time) on the proposed borrowing date each
Lender will make available to the Administrative Agent, for the
account of the Borrowers, at the office of the Administrative Agent in
funds immediately available to the Administrative Agent, such Lender's
Revolving Credit
7
Commitment Percentage of the Revolving Credit Loans to be made on such
borrowing date."
2.7 Pursuant to the Forbearance Letter Agreement, as of August 20, 1999,
the interest rate accruing on both the Revolving Credit Loan and the Term Loan
shall be the Prime Rate plus one and three-quarters percent (1 3/4%).
Accordingly, the Borrowers reaffirm and confirm that the definition of "Base
Rate" as set forth in Section 1.1 of the Existing Credit Agreement is hereby
deleted in its entirety and a new definition of "Base Rate" is hereby added in
its place as follows:
"Base Rate" means the Prime Rate plus one and three-quarters percent
(1 3/4%).
2.8 The definition of "Commitment Fee Rate" as set forth in Section 1.1 of
the Existing Credit Agreement is hereby deleted in its entirety and a new
definition of "Commitment Fee Rate" is hereby added in its place as follows:
"Commitment Fee Rate" has the meaning set forth in Section 5.3;
provided, however, that notwithstanding anything in Section 5.3 to the
contrary, the Commitment Fee Rate shall be based upon a Revolving
Credit Commitment of $35,000,000, not $75,000,000.
2.9 The definition of "Loan Documents" as set forth in Section 1.1 of the
Existing Credit Agreement is hereby amended to include, in addition to all other
documents referenced therein, this Third Amendment and each of the other
Forbearance Documents.
2.10 The definition of "Term Loan Maturity Date" as set forth in Section
1.1 of the Existing Credit Agreement is hereby deleted in its entirety and a new
definition of "Term Loan Maturity Date" is hereby added in its place as follows:
"Term Loan Maturity Date" means the first to occur of (a) the
Forbearance Termination Date, and (b) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section
12.2(a).
2.11 Section 2.7 of the Existing Credit Agreement is hereby amended and
restated in its entirety as follows:
"SECTION 2.7 TERMINATION OF REVOLVING CREDIT FACILITY. The Revolving
Credit Facility shall terminate on the earliest of (a) the Forbearance
Termination Date, (b) the date of termination by the Borrowers
pursuant to Section 2.6(a), and (c) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section
12.2(a)."
2.12 Pursuant to the Forbearance Letter Agreement, as of August 20, 1999,
the interest rate accruing on both the Revolving Credit Loan and the Term Loan
shall be the Prime Rate plus one and three-quarters percent (1 3/4%).
Accordingly, the Borrowers reaffirm and confirm that the definition of Section
5.1(a) of the Existing Credit Agreement is hereby amended and restated in its
entirety as follows:
"SECTION 5.1 INTEREST.
(a) INTEREST RATE. Subject to the provisions of this SECTION 5.1,
effective as of August 20, 1999, the aggregate principal balance of
(i) the Revolving Credit Loans shall bear interest at the Base Rate,
and (ii) the Term Loans shall bear interest at the Base Rate."
2.13 Section 5.1(b) of the Existing Credit Agreement is hereby amended and
restated in its entirety as follows:
"(b) RESERVED FOR FUTURE USE."
2.14 Section 5.1(c) of the Existing Credit Agreement is hereby amended and
restated in its entirety as follows:
"(c) RESERVED FOR FUTURE USE."
2.15 Section 5.1(d) of the Existing Credit Agreement is hereby amended by
adding the following as the last sentence of Section 5.1(d):
"Notwithstanding any provision in this Section 5.1(d) or in this
Agreement to the contrary, upon the occurrence and continuation of any
Forbearance Event of Default, all outstanding Loans shall bear
interest at a rate per annum of two percent (2%) in excess of the Base
Rate, as modified pursuant to the Third Amendment."
2.16 Section 5.1(e) of the Existing Credit Agreement is hereby amended by
adding the following as the last sentence of Section 5.1(e):
"Notwithstanding anything in this Section 5.1(e) to the contrary,
commencing on September 1, 1999 and continuing until the all
Obligations under the Credit Facility have been irrevocably paid in
full, interest on both the Revolving Credit Loan and the Term Loan
will be payable monthly in arrears.
2.17 Section 8.1 of the Existing Credit Agreement is hereby amended by
adding the following:
8
"(d) BUSINESS PLANS. The Borrowers shall provide (i) by October 12,
1999, business plans (including monthly balance sheets, monthly income
statements and cash flows and all plan assumptions) for the Consulting
Solutions Division, EPS Division, Government Solutions Division, and
for any other division or any other Borrower which is not a member of
any of the foregoing divisions, through the period ended December
2000, (ii) by October 12, 1999, income statements for each separate
legal entity which is a Borrower under the Agreement, and (iii) as
soon as possible, opening balance sheets, as of July, 31, 1999, for
each separate legal entity which is a Borrower under the Agreement, to
the extent reasonably available. All of foregoing shall be analyzed,
challenged and prepared with the assistance of Xxxxxxxx & Xxxxx.
(e) CASH REPORTS. The Borrowers shall submit reports of cash receipts
and cash disbursements and reconciliations of actual cash flow to the
Borrowers' ninety (90) day cash flow projections, delivered every
Tuesday for the prior week, commencing on the Tuesday immediately
following the Third Amendment Closing Date and continuing until the
Forbearance Termination Date.
(f) CASH FLOW FORECAST. The Borrowers shall submit a rolling weekly
ninety (90) day cash flow forecast, delivered weekly on Tuesday
commencing on the Tuesday immediately following the Third Amendment
Closing Date and continuing until the Forbearance Termination Date
with such cash flow forecasts referentially based upon the Cash Flow
Forecast.
(g) BILLABILITY AND UTILIZATION REPORT. Within five (5) Business Days
of the Third Amendment Closing Date, the Borrowers shall submit a
report of projected billability, utilization and other leading
indicators used to assess the success and trends of the Consulting
Solutions, Government Solutions and EPS Divisions which supports the
revenue plans for the third and fourth quarters of 1999. Such revenue
plans, in addition to revenues from non-service sources and collection
of existing accounts receivables, were the basis for operational cash
receipts in the 90-day rolling cash flows delivered to the Lenders
pursuant to Section 8.1(f) hereof. Thereafter, the Borrowers will
provide a monthly reconciliation of actual billability, utilization
and other leading indicators to projected billability, utilization and
other leading indicators, by division, along with a report of any
change, when and as made, in any assumptions about or projections
about billability, utilization and other leading indicators. This
billability, utilization and other leading indicators information,
along with
9
monthly consolidated and consolidating balance sheets, statements of
operations and consolidated cash flows, will be (i) provided for all
months commencing with August 1999, and (ii) delivered to the Lenders
within 25 calendar days of month end for all month ends except August
1999, for which such statements will be prepared within 40 calendar
days of month end. All of the foregoing shall be in form and substance
satisfactory to the Lenders.
(h) EARNOUT DOCUMENTATION. Within five (5) Business Days of the Third
Amendment Closing Date, the Borrowers shall provide copies of all
earnout agreements, copies of all documents and information concerning
earnout escrows and escrows established in connection with
acquisitions, and reconciliation of all earnout payments made during
the second quarter of 1999.
(i) DEPOSIT ACCOUNTS. Within five (5) Business Days of the Third
Amendment Closing Date, the Borrowers shall provide a report of all
deposit accounts of the Borrowers and their subsidiaries and
affiliates (including account number, name and address of deposit
institution where account is located, legal owner of account, purpose
of the account and balance as of the date of delivery of the report
provided in this Section 8.1(i)) at any bank."
2.18 The existing final sentence of Section 2.1 of the Existing Credit
Agreement is hereby amended and restated in its entirety as follows:
"Subject to the terms and conditions hereof, the Borrowers may borrow,
repay and reborrow Revolving Credit Loans hereunder until the
Revolving Credit Termination Date; PROVIDED, HOWEVER, that the
Revolving Credit Facility may not be used to finance Permitted
Acquisitions."
2.19 Article IX Affirmative Covenants of the Existing Credit Agreement is
hereby amended by adding the following:
"SECTION 9.15. APPOINTMENT OF RECEIVER. At any time after the
occurrence of an Event of Default related to payment of principal or
interest (as the case may be, a "Payment Event of Default"), in the
event that the Borrowers fails to cure such Payment Event of Default
following three (3) Business Days written notice of such Payment Event
of Default from the Agent to the Borrowers, then following seven (7)
Business Days additional notice of the Lender Group's intent to
require the appointment of a receiver, each respective Borrowers and
each other obligor under the Credit Agreement, without requiring proof
either of inadequacy
10
of the Collateral or insolvency of any Borrower or any other obligor,
shall be deemed to have waived such proof and consented to the
appointment of a receiver to manage, operate and preserve all of the
property (real, personal and mixed) owned by each respective Borrower
wherever located.
SECTION 9.16. ACQUISITION OF DIMENSIONAL SYSTEMS LLC. With respect to
the acquisition of Dimensional Systems LLC: (i) upon consummation of
the acquisition of Dimensional Systems LLC, the Borrowers shall cause
Dimensional Systems LLC to execute such documentation as is necessary
to grant a valid, perfected and first priority Lien in favor of the
Collateral Agent, for the ratable benefit of all Lenders, in all
property (real, personal and mixed) owned by Dimensional Systems LLC,
and (ii) Dimensional Systems LLC shall not request, and the Lenders
shall have no obligation to make, any advances for the benefit of
Dimensional Systems LLC during the Forbearance Period.
SECTION 9.17. 1998 TAX FILING. The Borrowers shall file when due those
documents necessary to amend all tax returns submitted by the
Borrowers to any Federal or state taxing authority for the period
January 1, 1998 through December 31, 1998.
SECTION 9.18. 1999 TAX FILING. The Borrowers shall file as promptly as
possible and, if permissible, on a "hardship" basis, those documents
necessary to validly claim a refund of 100 percent of all estimated
tax payments remitted by the Borrowers to any Federal or state taxing
authority through the Third Amendment Closing Date for the period
January 1, 1999 through December 31, 1999.
SECTION 9.19. CORPORATE REORGANIZATION. Prior to September 20, 1999,
the Borrowers shall provide to the Lenders information regarding any
proposed reorganization of each separate legal entity which is a
Borrower under the Agreement including, but not limited to, the
proposed merger of any such entities into divisions, and shall obtain
the Lenders' written approval, in accordance with the Agreement, prior
to consummating all or any part of any such proposed reorganization.
In no event will the Borrowers consummate any such reorganization
without providing such information to the Lenders and without
obtaining the Lenders' prior written approval."
2.20 Section 10.4 of the Existing Credit Agreement is hereby amended by
deleting the final sentence of Section 10.4.
11
2.21 Article X Financial Covenants of the Existing Credit Agreement is
hereby amended by adding the following:
"SECTION 10.6 SALE OF U.S. COMMUNICATIONS, INC. So long as there is no
Forbearance Termination Event, no new Event of Default, and the
Borrowers are in compliance with the terms of the Agreement, as the
sole condition to the Lenders' consent to the sale of U.S.
Communications, Inc., minimum gross proceeds for U.S. Communications,
Inc. must be $850,000, payable in restricted, unregistered common
stock of a publicly-held company, with respect to which a registration
statement on Form S-3 will be filed pursuant to the terms of the
agreement for the purchase and sale of U.S. Communications, Inc.,
which agreement shall require that such registration statement shall
be filed within thirty (30) Business Days of the closing of the sale
of U.S. Communications, Inc., and which will have a trading value
equivalent in value to the value of the assets being sold. The market
value of such stock will be established based on the trading price of
such class of stock on the day prior to the closing. Such stock will
be immediately pledged to the Agent for the benefit of the Lenders. If
CIT exercises its right to acquire CIT stock, the Lenders will release
the pledged stock if the proceeds from the sale of U.S.
Communications, Inc. are paid to the Lenders as a permanent reduction
of the Revolving Credit Loans. No other sales of the pledged stock are
permitted. Notwithstanding anything in this Section 10.6, in the
Credit Agreement or any other Loan Document to the contrary, any
assets of U.S. Communications, Inc. excluded from the sale of U.S.
Communications, Inc. shall remain subject to Liens in favor of the
Collateral Agent for the ratable benefit of the Lenders.
SECTION 10.7 SALE OF CORPORATE ACCESS, INC. So long as there is no
Forbearance Termination Event, no new Event of Default and the
Borrowers are in compliance with the terms of the Agreement, as the
sole conditions to the Lenders' consent to the sale of Corporate
Access, Inc., (a) minimum net proceeds for Corporate Access, Inc. must
be $1,750,000 in cash and (b) any note or other document evidencing
indebtedness owed by the purchaser of Corporate Access, Inc. to any
Borrower received by any Borrowers with respect to the sale of
Corporate Access, Inc. shall be immediately pledged in favor of, and
the Borrowers shall cause the note or other document to be immediately
placed in the physical custody of, the Agent. The net proceeds for
Corporate Access, Inc. will permanently reduce the Revolving Credit
Commitment dollar-for-dollar. If the Revolving Credit
12
Commitment is fully drawn as of the date of the sale of Corporate
Access, Inc., the Borrowers must pay the proceeds of the sale of
Corporate Access, Inc. to the Lenders as a permanent repayment of the
Revolving Credit Loans.
SECTION 10.8 REDUCTION IN DEUTSCHE LETTER OF CREDIT. To the extent
that the sale of either U.S. Communications, Inc. or Corporate Access,
Inc., pursuant to the provisions of Section 10.6 and 10.7 hereof,
diminish, in whole or in part, the need of any Borrower for the
Deutsche Letter of Credit, the Borrowers shall use their best efforts
to reduce the Deutsche Letter of Credit and agree that such a
reduction shall constitute a permanent reduction in the L/C Commitment
and the Revolving Credit Commitment.
SECTION 10.9 CUMULATIVE RECEIPTS AND EXPENSES. The Borrowers must have
cumulative actual receipts and expenses, on a cumulative four week
basis, measured every two weeks, equal to Borrowers' projected
receipts and expenses on the ninety (90) day cash flow so that net
cash inflows/outflows for trailing four weeks have a variation of not
more than $1,000,000 below projections.
SECTION 10.10 NO NEW ADVANCES. The Borrowers will not make any new
requests for advances under the Revolving Credit Facility during the
Forbearance Period and will not request or require the issuance of any
new Letters of Credit during the Forbearance Period except for
renewals of existing Letters of Credit in amounts which separately do
not exceed the separate amount of each individual existing Letter of
Credit."
2.22 Section 11.6(e) of the Existing Credit Agreement is hereby amended and
restated in its entirety as follows:
"(e) RESERVED FOR FUTURE USE."
2.23 Section 11.6 of the Existing Credit Agreement is hereby amended by
adding the following sentence as the final sentence of Section 11.6:
"Notwithstanding anything in this Section 11.6 or in any other Loan
Document to the contrary, there shall be no sale of all or
substantially all of the assets of any Borrower during the Forbearance
Period without the consent of the Lenders; PROVIDED, HOWEVER, that the
Borrowers may sell or otherwise dispose of U.S. Communications, Inc.
and/or Corporate Access, Inc. subject to the provisions of Sections
10.6 and 10.7 hereof."
13
2.24 Section 11.4(c) of the Existing Credit Agreement is hereby deleted in
its entirety and a new Section 11.4(c) is hereby added in its place as follows:
"(c) as of the Third Amendment Closing Date, there are no Permitted
Acquisitions, except for the final remaining payment for the
acquisition of Dimensional Systems LLC in the maximum amount of
$130,000, which amount shall be paid from cash flow of the Borrowers
as set forth on the Cash Flow Statement."
2.25 Section 12.1 of the Existing Credit Agreement is hereby amended by
adding the following:
"(o) DEFAULT IN PERFORMANCE UNDER FORBEARANCE DOCUMENTS.
Notwithstanding any provision in this Agreement to the contrary, the
Borrowers, or any other obligor, or any one or more of them shall fail
to perform or observe any covenant, term, agreement or condition of
the Third Amendment or any other Forbearance Document."
2.26 Section 12.2 of the Existing Credit Agreement is hereby amended by
adding the following:
"(d) Notwithstanding anything in this Section 12.2 or in any Loan
Document to the contrary, the Borrowers agree that the Lenders shall
have the right to exercise all of their rights and remedies under the
Loan Documents upon the Forbearance Termination Date, regardless of
whether a Forbearance Event of Default has occurred or is continuing."
2.27 Section 14.1(b) of the Existing Credit Agreement is hereby deleted in
its entirety and a new Section 14.1(b) is hereby added in its place as follows:
"(b) Addresses for Notices. Notices to any party shall be sent to it
at the following addresses, or any other address as to which all the
other parties are notified in writing.
If to the Borrowers:
Condor Technology Solutions, Inc.
Xxxxxxxxx Xxxxxx Xxxxx
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
14
With copies to:
Gratch, Xxxxxx & Xxxxxxx PC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esquire
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to First Union as Administrative Agent or as Collateral Agent:
First Union National Bank
One South Penn Square
Xxxxxxx Xxxxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Vice President
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to:
Duane, Morris & Heckscher LLP
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esquire
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to any Lender:
To the Addresses set forth on SCHEDULE 1 hereto"
2.28 Schedule 1 of the Existing Credit Agreement is hereby replaced in its
entirety by Schedule 1 to this Third Amendment.
2.29 Section 14.6 of the Existing Credit Agreement is hereby amended by
adding the following:
"(d) WAIVER OF CERTAIN DAMAGES. EXCEPT AS PROHIBITED BY LAW WHICH
CANNOT BE WAIVED, EACH BORROWER HEREBY WAIVES ANY RIGHT THAT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION OR PROCEEDING REFERRED TO
IN THIS SECTION 14.6 ANY SPECIAL, EXEMPLARY, PUNITIVE
15
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES."
ARTICLE III - ADDITIONAL COVENANTS OF BORROWERS
The Borrowers jointly and severally, covenant and agree that from the
date hereof and until the satisfaction of the Obligations, unless the Lender
Group shall otherwise consent in writing:
3.1 4DOCUMENTS AND OTHER ITEMS TO BE DELIVERED TO THE LENDER GROUP. The
Borrowers shall deliver or cause to be delivered to the Lender Group, in form
and substance satisfactory to the Lender Group and its counsel, the following
(collectively, the "Forbearance Documents"):
(a) On the Third Amendment Closing Date, this Third Amendment duly
executed by the Borrowers;
(b) in accordance with the time periods provided in Section 3.10 of
the Third Amendment, originals of each of the Pledge Agreements
for each account pledged pursuant to Section 3.10 of the Third
Amendment duly executed by the pledgors thereof;
(c) copies of all financing and credit agreements with the following:
i. Deutsche Financial Services Corporation;
ii. IBM Credit Corporation;
iii. Crestar Bank;
iv. Merisel, Inc.;
x. Xxxxxx Micro Incorporated;
vi. Bank of New York;
vii. any other secured creditor of the Borrowers; and
viii. written waivers of or forbearance from
events of default thereunder from all of the
foregoing for a term at least as long as the
term provided in the Third Amendment
delivered within five (5) Business Days of
the Third Amendment Closing Date (except
that waivers or forbearance from Deutsche
Financial Services Corporation may be
delivered within seven (7) Business Days of
the Third Amendment Closing Date);
(d) on or before September 30, 1999, Subordination agreements from
Xxxxxx Micro, Inc., Merisel,
Crestar Bank, Bank of New York
and any other creditor identified
in Section 3.1(c);
16
(e) within ten (10) Business Days of the Third Amendment Closing
Date, originals of each of the Assignments of Federal Income Tax
Refunds, executed by the applicable Borrower in favor of the
Agent, with the Lenders to obtain acceptance by the Internal
Revenue Service of the Assignments of Federal Income Tax Refunds;
(f) within ten (10) Business Days of the Third Amendment Closing
Date, each Borrower will execute and deliver an Assignment of
each contract with any department of the United States Government
and each such Borrower shall use its best efforts to obtain the
necessary consents from the applicable department of the United
States Government as soon as possible;
(g) on the Third Amendment Closing Date, opinion of Condor's In-house
Counsel as to non-contravention, required consents, approvals,
and the due authorization, and due execution and validity of the
Forbearance Documents;
(h) on the Third Amendment Closing Date, Certifications of Secretary
executed by the Secretaries of Condor Technology Solutions, Inc.
and Condor System Solutions, Inc., certifying the incumbency and
signature of the officers of such Borrowers executing this Third
Amendment and all other documents to be delivered by them
pursuant hereto, together with evidence of the incumbency of such
Secretary;
(i) on or before August 30, 1999, a Certification of Secretary
executed by the Secretary of each of the Borrowers other than
Condor Technology Solutions, Inc. and Condor System Solutions,
Inc., certifying the incumbency and signature of the officers of
such Borrowers executing this Third Amendment and all other
documents to be delivered by them pursuant hereto, together with
evidence of the incumbency of such Secretary;
(j) on or before September 3, 1999, any Borrower, as applicable,
shall execute any necessary landlord waivers and shall,
thereafter, use its reasonable best efforts to cause the
execution thereof by any landlord; PROVIDED, HOWEVER, that on or
before August 30, 1999, any Borrower, as applicable, shall
execute any landlord waiver applicable to any premises leased by
such Borrower and located at Xxxxxxxxx Xxxxxx Xxxxx, 000 Xxxxxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxx 00000;
(k) such Uniform Commercial Code Financing Statements and other
security documents as shall be presented by the Lender Group on
the Third Amendment Closing Date;
17
(l) on the Third Amendment Closing Date, payment of each Lender's and
the Lender Group's legal fees, costs and expenses as provided in
Sections 3.2 and 3.3 hereof;
(m) all fees due to the Lenders as of the Third Amendment Closing
Date including, but not limited to, the Forbearance Extension
Fee, shall have been irrevocably paid in full to the Lenders on
the date(s) such fees were due;
(n) on the Third Amendment Closing Date, a general release in favor
of the Lender Group, duly executed by the Borrowers and the
Lender Group, in the form attached hereto as Exhibit B; and
(o) such other documents as may be reasonably required by the Lender
Group.
3.2 PAYMENT OF LENDER GROUP'S LEGAL FEES. On or before the Third Amendment
Closing Date, the Borrowers shall pay to the Lender Group the amount of the
Lender Group's legal fees, expenses and costs including, without limitation, any
stamp or documentary tax or other similar taxes and any filing, recording or
lien search fees, incurred through the Third Amendment Closing Date in
connection with the Existing Events, the Loan Documents, this Third Amendment,
and all documents executed and negotiations undertaken in connection with any of
the foregoing. Each Borrower hereby agrees, and to the extent provided in the
Loan Documents, reaffirms its joint and several obligation under the Loan
Documents, to reimburse each of the Lenders for the following incurred in
connection with the Credit Facility: (a) legal fees and expenses, and (b) fees
and expenses of any appraisers or other professionals retained by counsel to the
Lenders. Any fees and expenses paid in accordance with this Section 3.2 will be
added to the $1,000,000 variation provided in Section 10.9 of the Credit
Agreement. The Borrowers shall pay to the Lender Group the legal fees and
expenses incurred from and after the Third Amendment Closing Date and fees and
expenses of appraisers and other professionals retained by counsel to Lenders
after Third Amendment Closing Date. The foregoing fees and expenses will be
reimbursed upon submission by Agent. All Obligations provided for in this
Section 3.2 shall survive any termination of this Third Amendment.
3.3 PAYMENT OF FEES AND COSTS. On or before the Third Amendment Closing
Date, or upon two (2) Business Days written notice by any Lender to the extent
that such Lender is unable to provide to the Borrowers on or before the Third
Amendment Closing Date a statement of fees and costs, the Borrowers shall pay to
each Lender and to the Lender Group the amount of each Lender's and the Lender
Group's fees and costs, including, without limitation, legal fees, expenses and
costs incurred by such Lender or the Lender Group in connection with this Third
Amendment and the other Loan Documents, if any. All Obligations provided for in
this Section 3.3 shall survive any termination of this Third Amendment.
18
3.4 EXECUTION OF OTHER DOCUMENTS. At the Lender Group's request, within two
Business Days of submission thereof by the Lender Group, the Borrowers, or any
of them, shall execute and deliver to the Lender Group such other documents and
instruments, including, without limitation, Uniform Commercial Code financing
statements and documentation necessary for filing documents with the United
States Patent and Trademark Office, as the Lender Group, in its sole discretion,
deems necessary or convenient to carry out the terms of this Third Amendment and
the other Loan Documents.
3.5 EXISTING COVENANTS. Unless otherwise provided herein, the Borrowers
shall comply with each of their respective covenants set forth in the Loan
Documents.
3.6 COOPERATION WITH LENDERS. The management of the Borrowers will be
available to meet generally with the Lender Group and answer questions, and the
Borrowers shall use their best efforts to cause professionals employed by the
Borrowers, particularly Xxxxxxxx & Xxxxx, to meet generally with the Lender
Group, answer questions and provide such written materials as may be reasonably
requested, subject to the request of any Borrower to withhold documents,
materials or other information on the grounds of attorney-client privilege or
attorney work product communications consistent with the provisions of Rule
26(b)(5) of the Federal Rules of Civil Procedure.
3.7 CERTIFICATES OF GOOD STANDING. On or before August 31, 1999, the
Borrowers shall provide to the Lenders a listing of the states in which they are
duly authorized and in good standing; and on or before September 15, 1999, the
Borrowers shall provide to the Lender Group good standing certificates for their
respective states of incorporation and evidence that they are duly authorized to
do business and are duly qualified as foreign corporations in all jurisdictions
wherein the nature of their businesses or properties make such qualification
necessary.
3.8 LETTERS OF INTENT. The Borrowers will provide, within two (2) Business
Days of execution thereof, copies of any letter of intent and agreement of sale
for Corporate Access, Inc. and U.S. Communications, Inc.
3.9 LETTERS OF ENGAGEMENT. The Borrowers will provide, within two (2)
Business Days of execution thereof, copies of any engagement letter entered into
by and between any Borrower and any investment bank. The Borrowers shall use
their best efforts to ensure that the Borrowers' investment bankers will be
available to meet with and answer any questions from all of the Lenders at
periodic meetings or conference calls for the entire Lender Group and to cause
such investment bankers to provide to the Lenders any documents and/or materials
reasonably requested by the Lenders; provided, however, that the Borrowers may
withhold documents or other materials which the Borrowers reasonably believe are
subject to confidentiality restrictions and/or applicable securities laws.
Except as provided in new Sections 10.6 and 10.7 of the Existing Credit
Agreement, the Lenders reserve the right to refuse to release their liens on any
assets proposed to be sold unless the Obligations are paid in full. The
Borrowers will notify the Lenders of all offers prior to any decision to accept
or reject any offer.
3.10 All accounts of any Borrower and each Subsidiary or Affiliate thereof,
identified on the report to be delivered to the Lenders in accordance with
Section 8.1(i) of the Credit
19
Agreement, will be either (i) maintained with one of the Lenders, (ii) closed
with the Borrowers to provide to the Lender Group, within five (5) Business Days
of the Third Amendment Closing Date, evidence of the request for the closure of
such accounts in form and substance satisfactory to the Lender Group, so long as
the balance of such accounts, in the aggregate, do not have balances of more
than $1,000, or (iii) subject to an account pledge agreement in favor of the
Lenders (which account pledge agreements will be delivered by the applicable
Borrower to the Agent within five (5) days of receipt by the applicable Borrower
from the Lenders of such account pledge agreements). Any Borrower delivering
such account pledge agreements agrees that it will use its reasonable best
efforts to obtain the consent of the depository bank as soon as possible.
ARTICLE IV - FORBEARANCE BY THE LENDER GROUP
Subject to the terms and conditions of this Third Amendment, and without
waiving the Existing Events and the right to exercise rights and remedies, the
Lender Group agrees to forbear from enforcing its remedies under the Loan
Documents or applicable law as a result of the Existing Events until the earlier
to occur of either one of the following (as the case may be, the "Forbearance
Termination Date"): (i) November 15, 1999; or (ii) the occurrence of an Event of
Default (other than the Existing Events) under the Credit Agreement.
ARTICLE V - REQUIREMENTS FOR THE THIRD AMENDMENT
The Third Amendment is binding upon due execution thereof by all parties
thereto and the delivery of all documents required to be delivered at closing.
Any future deliveries required under the Third Amendment, the Credit Agreement
or any other Loan Document which are not made when due shall constitute an event
of default under the applicable document.
5.1 DOCUMENTS TO BE DELIVERED TO THE LENDER GROUP. The Borrowers shall
deliver or cause to be delivered to the Lender Group, in form and substance
satisfactory to the Lender Group and its counsel, on the Third Amendment Closing
Date, this Third Amendment duly executed by the Borrowers; PROVIDED, HOWEVER,
that the Borrowers shall deliver Schedule 6.1 of the Third Amendment on or
before September 1, 1999.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
To induce the Lender Group to enter into this Third Amendment and as
partial consideration for the terms and conditions contained herein, the
Borrowers make the following representations and warranties to the Lender Group,
each and all of which shall survive the execution and delivery of this Third
Amendment and all of the other documents executed in connection herewith:
6.1 ORGANIZATION AND LOCATION.
20
(a) The Borrowers are corporations duly incorporated, organized,
validly existing and in good standing under the laws of their respective
states of incorporation, and are duly authorized to do business and are
duly qualified as foreign corporations in all jurisdictions wherein the
nature of their businesses or properties make such qualification necessary,
and have the corporate power to own their respective properties and to
carry on their respective businesses as now conducted;
(b) The Borrowers have the requisite corporate power and authority to
deliver and perform this Third Amendment and all of the documents executed
by them in connection herewith;
(c) Every fictitious name, trade name, division or style under which
any Borrower or any other obligor (collectively with the Borrowers, the
"Obligors") conducts any business has been disclosed to the Lender Group in
writing together with the names of each and every jurisdiction in which the
same are utilized, and are included herein on the Security Agreement
Questionnaire (the "Security Agreement Questionnaire") attached hereto and
incorporated by reference herein as "Schedule 6.1."
(d) Every joint venture, partnership, enterprise or stock ownership
involvement of each Obligor has been disclosed to the Lender Group herein
on the Security Agreement Questionnaire;
(e) Each affiliate and subsidiary of each of the Borrowers is named on
the Security Agreement Questionnaire; and
(f) The information contained on each of the Security Agreement
Questionnaires is true, complete and accurate as of the Third Amendment
Closing Date.
6.2 AUTHORIZATION; VALID AND BINDING AGREEMENT. All corporate action
required to be taken by the Borrowers and their respective officers, directors
and stockholders and all actions required to be taken by the principals of the
Borrowers for the authorization, execution, delivery and performance of this
Third Amendment and other documents contemplated hereby have been taken. Each
person executing this Third Amendment on behalf of any of the Borrowers is an
authorized officer of such Borrower. This Third Amendment is, and each of the
documents executed pursuant hereto will be, legal, valid, and binding
obligations of the party or parties thereto, enforceable against each such party
in accordance with their respective terms, subject only to bankruptcy,
insolvency, reorganization, moratorium and other laws or equitable principles
affecting creditors' rights generally.
6.3 LOCATION OF ASSETS OF BORROWERS. The locations of all of the Borrowers'
inventory, equipment, warehouses, sales offices, main offices, and product
distribution centers are listed on the Security Agreement Questionnaire hereto.
6.4 REAL PROPERTY. None of the Borrowers owns any real property.
21
6.5 COMPLIANCE WITH LAWS. Each of the Borrowers is in compliance in all
material respects with all laws, regulations and requirements applicable to its
business, and has not received, and has no knowledge of, any order or notice of
any governmental investigation or of any violations or claims of violation of
any law, regulation or any governmental requirement.
6.6 NO CONFLICT; GOVERNMENT APPROVALS. The execution, delivery and
performance by the Borrowers of this Third Amendment and the other documents
executed in connection herewith will not:
(a) conflict with, violate or result in the breach of any provisions
of any applicable law, rule, regulation or order; or
(b) conflict with or result in the breach of any provision of their
respective Articles of Incorporation, operating agreements, charters, and/or
by-laws. No authorization, consent or approval of, or other action by, and no
notice of or filing with, any governmental authority or regulatory body is
required to be obtained or made by any of the Borrowers for the due execution,
delivery and performance of this Third Amendment.
6.7 THIRD PARTY CONSENTS. The execution, delivery and performance by the
Borrowers of this Third Amendment and the documents related hereto will not:
(a) require any consent or approval of any person or entity which has
not been obtained prior to, and which is not in full force and effect as of, the
date of this Third Amendment;
(b) result in the breach of, default under, or cause the acceleration
of any obligation owed under any loan, credit agreement, note, security
agreement, lease indenture, mortgage, loan document or other agreement by which
any of them are bound or affected; or
(c) result in, or require the creation or imposition of, any
lien or encumbrance on any of their respective properties other than those liens
or security interests in favor of the Lender Group or the liens or security
interests disclosed to the Lender Group in the Loan Documents.
6.8 FINANCIAL STATEMENTS; REPORTING.
(a) Except as otherwise disclosed in writing (including by the
delivery of financial statements) to the Lender Group prior to the Third
Amendment Closing Date, all balance sheets, reports, Borrowing Base
certificates, budgets, reconciliations, accounts receivable reports, and other
financial information supplied to the Lender Group with respect to the Borrowers
have been, if applicable, in conformity with GAAP, and present fairly the
financial condition and results of operations for the period covered thereby of
the Borrowers. All balance sheets, reports, Borrowing Base certificates,
budgets, reconciliations, accounts receivable reports, and other financial
information to be supplied to the Lender Group with respect to the Borrowers
22
will be prepared in form acceptable to the Lender Group and, if applicable, in
conformity with GAAP, and will present fairly the financial condition and
results of operations for the period covered thereby of the Borrowers.
(b) None of the Borrowers has actual knowledge of any facts, other
than those already disclosed in writing to the Lender Group that materially
adversely affect or, in so far as can be foreseen, will materially adversely
affect any Borrower's ability to perform such Borrower's obligations under this
Third Amendment and other Loan Documents. After the Third Amendment Closing
Date, the Borrowers will notify the Lender Group of any facts which became known
to the Borrowers on or after the Third Amendment Closing Date which may
materially adversely affect any Borrower's ability to perform such Borrower's
obligations under this Third Amendment and other Loan Documents.
6.9 LITIGATION AND CONTINGENT LIABILITIES. Except as set forth on Schedule
6.10 attached hereto, no action, suit, litigation, administrative or
governmental proceeding is pending, or to the knowledge of any officer of any of
the Borrowers, is threatened against any of the Borrowers or any of their
respective properties in which the amount involved exceeds $100,000.00 in the
aggregate. Schedule 6.9 contains a list of all litigation. The Borrowers will
provide Lenders copies of all pleadings in such actions and will make counsel
for any Borrower available to answer inquiries, subject to the request of any
Borrower to withhold documents, materials or other information on the grounds of
attorney-client privilege or attorney work product communications consistent
with the provisions of Rule 26(b)(5) of the Federal Rules of Civil Procedure.
6.10 EXCLUSIVE AND FIRST PRIORITY PERFECTED LIEN. Subject to the
Intercreditor Agreement granting certain Lien priorities in favor of Deutsche,
the best of the Borrowers' knowledge and except for Permitted Liens, the Lender
Group has, as of the date of this Third Amendment, and shall continue to have,
until all of the Obligations are paid in full, first priority, valid perfected
liens upon and security interests in all of the Collateral to secure the payment
and performance of all of the Obligations.
6.11 NO UNTRUE OR MISLEADING STATEMENTS. Neither this Third Amendment nor
any other document executed in connection herewith contains any untrue statement
of a material fact or omits any material fact necessary in order to make the
statement made, in light of the circumstances under which it was made, accurate.
6.12 NO EVENTS OF DEFAULT. Other than the Existing Events, no default or
Event of Default has occurred as of the date hereof under any of the Loan
Documents.
6.13 OTHER REPRESENTATIONS AND WARRANTIES. The Borrowers hereby reaffirm
all of their representations and warranties to the Lender Group contained in the
Loan Documents, and warrant that such representations and warranties, not
otherwise rendered untrue by the Existing Events as disclosed by the Borrowers
herein, are true and correct as of the date of this Third Amendment.
23
ARTICLE VII - REMEDIES
In addition to the rights and remedies set forth in the Existing Loan
Documents, the Lender Group shall also be entitled to exercise the following
remedies as indicated:
7.1 LOAN DOCUMENTS; APPLICABLE LAW. Upon and following the Forbearance
Termination Date, the Lender Group may, in its sole discretion, enforce any or
all of its rights under this Third Amendment, the Loan Documents, and/or
applicable law, against any one or more of the Borrowers, guarantors, pledgors
or mortgagors. Without limiting the foregoing, upon the occurrence of the
Forbearance Termination Date, without notice to the Borrowers, all Obligations
shall automatically accelerate and immediately become due and payable without
notice.
7.2 RIGHT OF SET-OFF.
If any of the Obligations shall be due and payable or the Forbearance
Termination Date shall have occurred, the Lender Group shall have the right, in
addition to all other rights and remedies available to it, without notice to the
Borrowers, to apply toward and set-off against and apply to the then unpaid
balance of the Obligations any items or funds held by the Lender Group or any
affiliates of the Lender Group, any and all deposits (whether general or
special, time or demand, matured or unmatured, fixed or contingent, liquidated
or unliquidated) now or hereafter maintained by the Borrowers or any of them
with the Lender Group or with an affiliate of the Lender Group, and any other
indebtedness at any time held or owing by the Lender Group or an affiliate of
the Lender Group to or for the credit or the account of the Borrowers or any of
them. For such purpose the Lender Group shall have, and the Borrowers hereby
grant to the Lender Group, a first lien on all such deposits. The Lender Group
is hereby authorized to charge any such account or indebtedness for any amounts
due to the Lender Group. If the right of set-off is exercised by any one Lender,
the exercise of such right shall be for the benefit of all of the Lenders and
any proceeds realized as a result of the set-off by the Lender exercising the
right of set-off shall be distributed PRO RATA to each Lender. EACH BORROWER
ACKNOWLEDGES THAT EACH LENDER SHALL BE REQUIRED TO SHARE PRO RATA SUCH SET-OFF
PROCEEDS AND AGREES THAT IT SHALL NOT OBJECT TO THE DISTRIBUTION OF SUCH
PROCEEDS. Such right of set-off shall exist whether or not the Lender Group
shall have made any demand under this Third Amendment, the Notes or any other
Loan Document and whether or not the Notes and the other Obligations are matured
or unmatured. The Borrowers hereby confirm the Lender Group's lien on such
accounts and the Lender Group's rights of set-off, and nothing in this Third
Amendment shall be deemed any waiver or prohibition of such lien and rights of
set-off.
24
ARTICLE VIII - MISCELLANEOUS
8.1 CONTINUING EFFECT. Except as amended hereby, all of the Loan Documents
including, but not limited to, the Forbearance Letter Agreement as the same has
been amended from time to time, shall remain in full force and effect and bind
and inure to the benefit of the parties thereto and are hereby ratified and
confirmed.
8.2 SUBMISSION TO JURISDICTION; SELECTION OF FORUM. The Borrowers submit to
the jurisdiction of the state and federal courts located in Mecklenburg County,
North Carolina, and in New York, New York. The Borrowers further stipulate and
acknowledge that venue is proper in any state or federal court located in
Mecklenburg County, North Carolina, or in New York, New York, and waive personal
service of process and agree that a summons and complaint commencing an action
or proceeding in any such court shall be properly served and shall confer
personal jurisdiction if served by registered or certified mail, return receipt
requested, in accordance with the notice provisions of this Third Amendment.
8.3 JUDICIAL PROCEEDINGS. Each Lender and each Borrower agrees that any
suit, action or proceeding, whether claim or counterclaim, brought or instituted
by the Lender Group or the Borrowers or any of their respective successors or
assigns, on or with respect to this Third Amendment, or the dealings of the
parties with respect hereto, shall be tried only by a court and not by a jury.
THE LENDERS AND EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.
Further, each Borrower (but not any Lender) waives any right it may have to
claim or recover, in any such suit, action or proceeding, any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. THE LENDERS AND EACH BORROWER ACKNOWLEDGE AND AGREE
THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS THIRD AMENDMENT AND
THAT THE LENDERS WOULD NOT ENTER INTO THIS THIRD AMENDMENT WITH THE BORROWERS IF
THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS THIRD AMENDMENT.
8.4 COOPERATION; OTHER DOCUMENTS. At all times following the execution of
this Third Amendment, the Borrowers shall execute and deliver to the Lender
Group, or shall cause to be executed and delivered to the Lender Group, and
shall do or cause to be done all such other acts and things as the Lender Group
may reasonably deem to be necessary or desirable to assure the Lender Group of
the benefit of this Third Amendment and the documents comprising or relating to
this Third Amendment. The Borrowers and all Subsidiaries and Affiliates will
execute, deliver and file any and all documents reasonably necessary or
convenient to maintain continuously perfected the first priority liens and
security interests of the Agent, for the benefit of the Lender Group, in each
Borrower's and its respective Subsidiary's and Affiliate's assets. Each Borrower
and each of its respective Subsidiaries and Affiliates will procure from third
parties all documents reasonably necessary or convenient to effectuate
subordinations of any permitted liens on any assets on which the Agent, for the
benefit of the Lender Group, or any Lender has liens, on terms acceptable to the
Lender Group, and to effectuate landlord waivers in any leased locations where
assets are located on which the Agent, for the benefit of the Lender Group, has
25
liens. For documents which also require joinder or consent by third parties,
each Borrower agrees to use its best efforts to cause the joinder/consent to be
delivered to the Lender Group as soon as possible. Such documents will be
executed and delivered within 30 calendar days of the Third Amendment Closing
Date (other than third party consents and joinders, for which each such Borrower
will use its best efforts).
8.5 REMEDIES CUMULATIVE; NO WAIVER. The respective rights, powers and
remedies of the Lender Group in this Third Amendment and in the other Loan
Documents are cumulative and not exclusive of any right, power or remedy
provided in the Loan Documents, by law or equity and no failure or delay on the
part of the Lender Group in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy preclude any other or further exercise thereof, or the
exercise of any other right, power or remedy.
8.6 NOTICES. Any notice given pursuant to this Third Amendment or pursuant
to any document comprising or relating to this Third Amendment or any of the
other Loan Documents shall be in writing, including telecopies. Notice given by
telecopy or other electronic mail shall be deemed to have been given and
received when sent. Notice given by overnight mail courier shall be deemed to
have been given and received one (1) day after the date delivered to such
overnight courier by the party sending such Notice. Notice by mail shall be
deemed to have been given and received three (3) days after the date deposited,
when sent by first class certified mail, postage prepaid, and addressed as
follows:
To the Borrowers:
Condor Technology Solutions, Inc.
Annapolis Office Plaza
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, CFO
Telecopy: 000-000-0000 or 8400
With a copy to:
Gratch, Xxxxxx & Xxxxxxx PC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esquire
Telecopy: 000-000-0000
To the Lender Group:
First Union National Bank
One South Penn Square
Xxxxxxx Xxxxxxxx, 0xx Xxxxx
00
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Vice President
Telecopy: 000-000-0000
With a copy to:
Duane, Morris & Heckscher LLP
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esquire
Telecopy: 000-000-0000
A party may change his or its address by giving written notice of the changed
address to the other parties, as specified herein.
8.7 INDEMNIFICATION.
If, after receipt of any payment of all or any part of the Obligations,
the Lender Group is compelled to surrender such payment to any person or entity
for any reason (including, without limitation, a determination that such payment
is void or voidable as a preference or fraudulent conveyance, an impermissible
setoff, or a diversion of trust funds), then this Third Amendment and the other
Loan Documents shall continue in full force and effect, and the Borrowers shall
be jointly and severally liable for, and shall indemnify, defend and hold
harmless the Lender Group with respect to the full amount so surrendered. The
provisions of this section shall survive the termination of this Third Amendment
and the other Loan Documents and shall be and remain effective notwithstanding
the payment of the Obligations, the cancellation of the Notes, the release of
any lien, security interest or other encumbrance securing the Obligations or any
other action which the Lender Group may have taken in reliance upon its receipt
of such payment. Any cancellation of the Notes, release of any such encumbrance
or other such action shall be deemed to have been conditioned upon any payment
of the Obligations having become final and irrevocable.
8.8 COSTS, EXPENSES AND ATTORNEYS' FEES. The Borrowers agree to pay all
reasonable out-of-pocket costs and expenses incurred by the Lender Group,
including, without limitation, all reasonable fees and out-of-pocket expenses of
counsel for the Lender Group, any stamp or documentary tax or other similar
taxes and any filing, recording or lien search fees. All Obligations provided
for in this Section shall survive any termination of this Third Amendment.
8.9 RELEASE. The Borrowers, on behalf of themselves, and all persons and
entities claiming by, through, or under any one or more of them, hereby jointly
and severally release, waive and forever discharge each Lender, and each
Lender's officers, directors, attorneys, agents, affiliates, and successors and
assigns, of, from, and with respect to any and all manner of action and actions,
cause and causes of actions, suits, disputes, claims, counterclaims and/or
liabilities, cross claims, defenses, and any claims for avoidance or other
remedies available to a debtor, its
27
estate or any trustee or representatives thereof, whether now known or unknown,
suspected or unsuspected, past or present, asserted or unasserted, contingent or
liquidated, whether or not well founded in fact or law, whether in contract, in
tort or otherwise, at law or in equity, based upon, relating to or arising out
of any and all transactions, relationships or dealings with or loans made to the
Borrowers pursuant to the Loan Documents which the Borrowers had or now have,
claim to have had, now claim to have or hereafter can, shall or may claim to
have against any Lender, for or by reason of any cause, matter, or thing
whatsoever arising from the beginning of the world through the date hereof.
8.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Borrowers contained in this Third Amendment and in all other
documents and instruments executed in connection herewith or otherwise relating
to this Third Amendment shall survive the execution of this Third Amendment and
are material and have been or will be relied upon by the Lender Group,
notwithstanding any investigation made by any person, entity or organization on
the Lender Group's behalf. No implied representations or warranties are created
or arise as a result of this Third Amendment or the documents comprising or
relating to this Third Amendment.
8.11 HEADINGS. The headings and underscoring of articles, sections and
clauses have been included herein for convenience only and shall not be
considered in interpreting this Third Amendment.
8.12 GOVERNING LAW. This Third Amendment and all documents and instruments
executed in connection herewith or otherwise relating to this Third Amendment
shall be construed in accordance with and governed by the internal laws of the
State of New York without reference to conflict of laws principles.
8.13 INTEGRATION. This Third Amendment and all documents and instruments
executed in connection herewith or otherwise relating to this Third Amendment,
including, without limitation, the Loan Documents, constitute the sole agreement
of the parties with respect to the subject matter hereof and thereof and
supersede all oral negotiations and prior writings with respect to the subject
matter hereof and thereof.
8.14 AMENDMENT AND WAIVER. No amendment of this Third Amendment, and no
waiver, discharge or termination of any one or more of the provisions thereof,
shall be effective unless set forth in writing and signed by all of the parties
hereto.
8.15 SUCCESSORS AND ASSIGNS. This Third Amendment and the other Loan
Documents: (i) shall be binding upon the Lender Group, the Borrowers, and upon
their respective heirs, nominees, successors and assigns, and (ii) shall inure
to the benefit of the Lender Group and the Borrowers; provided, however, that
neither the Borrowers nor any of them may assign any rights hereunder or any
interest herein without obtaining the prior written consent of the Lender Group,
and any such assignment or attempted assignment shall be void and of no effect
with respect to the Lender Group.
28
8.16 SEVERABILITY OF PROVISIONS. Any provision of this Third Amendment that
is held to be inoperative, unenforceable, void or invalid in any jurisdiction
shall, as to that jurisdiction, be ineffective, unenforceable, void or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability or validity of that provision in any other
jurisdiction, and to this end the provisions of this Third Amendment are
declared to be severable.
8.17 CONFLICTING PROVISIONS. To the extent that any of the terms in this
Third Amendment contradict any of the terms contained in any of the other Loan
Documents including, but not limited to, the Credit Agreement, the terms of this
Third Amendment shall control.
8.18 JOINT AND SEVERAL LIABILITY. The obligations and liabilities of the
Borrowers hereunder and under the other Loan Documents are joint and several.
8.19 COUNTERPARTS; EFFECTIVENESS. This Third Amendment may be executed in
any number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Third
Amendment. This Third Amendment shall be deemed to have been executed and
delivered when the Lender Group has received counterparts hereof executed by all
parties listed on the signature pages hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
29
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Third Amendment to be executed as of the date first
above written.
CONDOR TECHNOLOGY
SOLUTIONS, INC., COMPUTER
HARDWARE MAINTENANCE
COMPANY, INC., CORPORATE
ACCESS, INC., DECISION
SUPPORT TECHNOLOGY, INC.,
FEDERAL COMPUTER
CORPORATION, GLOBAL CORE
STRATEGIES ACQUISITION,
INC., INTERACTIVE SOFTWARE
SYSTEMS INCORPORATED,
INVENTURE GROUP, INC., LINC
SYSTEMS CORPORATION, XXXXXX
ASSOCIATES, INC.,
MANAGEMENT SUPPORT
TECHNOLOGY CORP., MIS
TECHNOLOGIES, INC.,
POWERCREW, INC., TITAN
TECHNOLOGIES GROUP L.L.C.,
U.S. COMMUNICATIONS, INC.,
as Borrowers
by: /S/ XXXXXXX X.XXXXXXX
_____________________________
Xxxxxxx X. Xxxxxxx
Vice President and
Chief Financial Officer
CONDOR SYSTEM SOLUTIONS, INC.,
as Borrower
By: /S/ XXXXXXX X. XXXXXXX
_____________________________
Xxxxxxx X. Xxxxxxx
President
30
FIRST UNION NATIONAL BANK,
as Collateral Agent,
Administrative Agent and
Issuing Lender
By: /S/ XXXX X. XXXX
_____________________________
Xxxx X. Xxxx
Vice President
FIRST UNION COMMERCIAL CORPORATION,
as Swingline Lender
By: /S/ XXXXX X. XXXXXX
_____________________________
Name: XXXXX X. XXXXXX
Title: SENIOR VICE PRESIDENT
STATE STREET BANK AND TRUST COMPANY,
as Lender
By: /S/ XXXXXXX X. XXXXXX
_____________________________
Xxxxxxx X. Xxxxxx
Vice President
31
FLEET BANK, N.A., as Lender
By: /S/ XXXXXX X. XXXXXX
__________________________
Xxxxxx X. Xxxxxx
Vice President
MELLON BANK, N.A., as Lender
By: /S/ GREEN E. DIM
Green E. Dim
First Vice President
32
SCHEDULE 1
(LENDERS AND COMMITMENTS)
------------------------------------ ------------------- ---------- --------------- ---------------
REVOLVING REVOLVING TERM LOAN TERM LOAN
CREDIT CREDIT COMMITMENT COMMITMENT
LENDER COMMITMENT COMMITMENT PERCENTAGE
PERCENTAGE
------------------------------------ ------------------- ---------- ---------------- --------------
------------------------------------ ------------------- ---------- ---------------- --------------
------------------------------------ ------------------- ---------- ---------------- --------------
First Union National Bank and
First Union Commercial
Corporation
One South Penn Square $14,000,000.00 40% $24,937,500.00 100%
Xxxxxxx Xxxxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Telephone No: (000) 000-0000
Telecopy No: (000) 000-0000
------------------------------------ ------------------- ---------- ---------------- --------------
------------------------------------ ------------------- ---------- ---------------- --------------
Fleet Bank, N.A.
111 Westminster
Mail Stop: RI MOM 20A $7,000,000.00 20% - -
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telephone No: (000) 000-0000
Telecopy No: (000) 000-0000
------------------------------------ ------------------- ---------- ---------------- --------------
------------------------------------ ------------------- ---------- ---------------- --------------
State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx, XXX-0
Xxxxxx, XX 00000-0000 $7,000,000.00 20% - -
Attention: Xxxxxx X. X'Xxxxxx
Telephone No: (000) 000-0000
Telecopy No: (000) 000-0000
------------------------------------ ------------------- ---------- ---------------- --------------
------------------------------------ ------------------- ---------- ---------------- --------------
Mellon Bank, X.X.
Xxxxxx Bank Center
0000 Xxxxxx Xxxxxx, 0xx Xx. $7,000,000.00 20% - -
Xxxxxxxxxxxx, XX 00000
Attention: Green E. Dim
Telephone No: (000) 000-0000
Telecopy No: (000) 000-0000
------------------------------------ ------------------- ---------- ---------------- --------------
------------------------------------ ------------------- ---------- ---------------- --------------
TOTALS $35,000,000.00 100% $24,937,500.00 100%
------------------------------------ ------------------- ---------- ---------------- --------------
33
