EXHIBIT 10(ah)
FIFTH AMENDMENT TO
INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT
This ("Amendment") to the INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT
is made as of September 30. 2001 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 that IBM Credit modify certain terms set
forth on Attachment A to the Agreement; and
WHEREAS, IBM Credit has agreed to modify certain terms of the Agreement as
set forth on Attachment A and to amend the Agreement accordingly 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 and 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 by deleting 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: (i) a change in the amount of the Credit Facility from an
aggregate of Two Hundred Twenty - Five Million Dollars ($225,000,000) to One
Hundred Fifty Million Dollars ($150,000,000), (ii) a change in the Financial
Covenants concerning Tangible Net Worth and the limit for capital expenditures
more fully set forth in Attachment A, and (iii) a change in the Collateral
Insurance Amount from Two Hundred Fifty Million Dollars ($250,000,000) ,to One
Hundred Fifty Million Dollars ($150,000,000).
Section 3. Ratification of Agreement. Except as specifically amended hereby, all
the provisions of the Agreement shall remain in full force and effect.
Section 4. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York.
Section 5. 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.
Page 1 of 2 November 1, 2001
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: By: /s/ XXXXXX XXXXXX, X.X.XXXXXXX
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Print Name: Print Name: XXXXXX XXXXXX
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Title: Title: V. X.XXXXXXX
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Page 2 of 2 November 1, 2001
ATTACHMENT A, EFFECTIVE DATE AS OF SEPTEMBER 30, 2001 ("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 Million Dollars
($100,000,000)
Plus
Working Capital Financing ("Revolver") Availability of Fifty Million
($50,000,000)
(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 1999-1
and the Series 2000-1 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) Designated Account Debtors and Designated Account terms:
Page 1 of 5 October 31, 2001
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 105 Days
Motorola, Inc. 90 Days
State of California & 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: One Hundred and Fifty Million Dollars
($150,000,000.00)
(D) A/R Finance Charge:
(i) PRO Advance Charge: LIBOR Rate plus 2.50%
(ii) WCO Advance Charge: LIBOR Rate plus 2.50%
(iii) Takeout Advance Charge: LIBOR Rate plus 2.50%
(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 Customer's 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 in its
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 of 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%).
Page 2 of 5 October 31, 2001
II. Bank Account
As set forth in Section 3(C) of the Fourth Amendment:
Mellon Bank, X.X.
Xxxxx Fargo Bank N.A.
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 specifically including all cumulative, convertible
preferred stock minus;
(a) goodwill, organizational expenses, pre-paid expenses, deferred
charges, research and development expenses, software development
Page 3 or 5 October 31, 2001
costs, leasehold improvements, trademarks, trade names, copyrights,
patents, patent applications, privileges, franchises, licenses and
rights in any thereof, and other similar intangibles (but not
including contract rights) and other current and non-current assets,
deferred commitment or financing fees, current and non-current Federal
Income Taxes Due, deferred service costs and security deposits as
identified in Customer's financial statements; and
(b) all accounts receivable from employees, officers, directors,
stockholders and affiliates.
"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) The percentage derived by dividing the aggregate Net Profit/(Loss)
after Tax for each of the four successive fiscal quarters end with the
quarter for which the determination is made by the aggregate of
Revenue for the same four successive fiscal quarters which percentage
shall be at all times equal to or greater than 0.1%, provided,
however, that the results of no fiscal quarter ending prior to July 1,
2000 shall be used to calculate the foregoing percentage, and further
provided that there shall occur no Net Loss after Tax in any of two
successive fiscal quarters ending after July 1, 2000.
(c) Tangible Net Worth equal to or greater than $95 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: (i) the aggregate amount of
$20,000,000 for the fiscal year ending December 31, 2001, (ii) and
$15,000,000 in any one fiscal year thereafter.
(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:
[This section intentionally left blank]
V. Additional Condition Precedent Pursuant to Section 3(E) of the fourth
Amendment to the Agreement:
Page 4 of 5 October 31, 2001
None
Page 5 of 5 October 31, 2001
