EXHIBIT 10.26
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THIRD AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
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Third Amendment dated as of November 24, 1998 to Revolving Credit
Agreement (the "Third Amendment"), by and among ANSWERTHINK CONSULTING GROUP,
INC (the "Borrower"), BANKBOSTON, N.A. and the other lending institutions listed
on SCHEDULE 1 to the Credit Agreement (as hereinafter defined) (the "Banks"),
amending certain provisions of the Revolving Credit Agreement dated as of
November 7, 1997 (as amended and in effect from time to time, the "Credit
Agreement") by and among the Borrower, the Banks and BankBoston, N.A. as agent
for the Banks (the "Agent"). Terms not otherwise defined herein which are
defined in the Credit Agreement shall have the same respective meanings herein
as therein.
WHEREAS, the Borrower and the Banks have agreed to modify certain terms
and conditions of the Credit Agreement as specifically set forth in this Third
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
/section/1. AMENDMENT TO SECTION 1 OF THE CREDIT AGREEMENT. Section 1.1
of the Credit Agreement is hereby amended as follows:
(a) the definition of "Applicable Margin" is hereby amended by deleting
the table which appears in such definition and substituting in place thereof the
following table:
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TIER LEVERAGE RATIO BASE RATE LOANS LIBOR RATE LOANS
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1 Less than or equal to 0.00% 1.25%
1.50:1.00
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2 Greater than 1.50:1.00 but 0.00% 1.50%
less than or equal to
2.00:1.00
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3 Greater than 2.00:1.00 but 0.00% 1.75%
less than or equal to
2.50:1.00
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4 Greater than 2.50:1.00 0.25% 2.25%
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(b) the definition of "Loan Documents" is hereby amended by deleting
the words "the Security Documents" and substituting in place thereof the words
"the Guaranty";
(c) the definitions of "Capital Assets", "Capital Expenditures",
"Collateral", "Commitment Increase Date", "Consolidated Current Liabilities",
"Consolidated Operating Cash Flow", "Consolidated Quick Assets", "Life Insurance
Assignment", "Life Insurance Policy", "Perfection Certificate", "Security
Agreements", "Security Documents", "Stock Pledge Agreement", "Total Debt
Service" and "Trademark Assignments" are each hereby deleted in their entirety;
and
(d) by inserting the following definitions in the appropriate
alphabetical order:
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CONSOLIDATED TANGIBLE NET WORTH. The excess of Consolidated
Total Assets over Consolidated Total Liabilities, and less the sum of:
(a) the total book value of all assets of the Borrower
and its Subsidiaries properly classified as
intangible assets under generally accepted accounting
principles, including such items as good will, the
purchase price of acquired assets in excess of the
fair market value thereof, trademarks, trade names,
service marks, brand names, copyrights, patents and
licenses, and rights with respect to the foregoing;
plus
(b) all amounts representing any write-up in the book
value of any assets of the Borrower or its
Subsidiaries resulting from a revaluation thereof
subsequent to the Balance Sheet Date, excluding
adjustments to translate foreign assets and
liabilities for changes in foreign exchange rates
made in accordance with Financial Accounting
Standards Board Statements No. 52; plus
(c) to the extent otherwise includable in the computation
of Consolidated Tangible Net Worth, any subscriptions
receivable,
PROVIDED, HOWEVER, for purposes of calculating compliance with
/section/9.2 hereof, the goodwill of any Person acquired in a Permitted
Acquisition and any writedowns of purchased research and development
relating to any Permitted Acquisition which would otherwise be required
to be deducted from Consolidated Tangible Net Worth shall not be
deducted for purposes of /section/9.2 of this Credit Agreement.
CONSOLIDATED TOTAL ASSETS. The sum of (a) all assets
("consolidated balance sheet assets") of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with
generally accepted accounting principles, plus (b) without duplication,
all assets leased by the Borrower or any Subsidiary as lessee under any
"synthetic lease" referred to in clause (f) of the definition of the
term "Indebtedness" to the extent that such assets would have been
consolidated balance sheet assets had the synthetic lease been treated
for accounting purposes as a Capitalized Lease, plus (c) without
duplication, all sold receivables referred to in clause (g) of the
definition of the term "Indebtedness" to the extent that such
receivables would have been consolidated balance sheet assets had they
not been sold.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the
Borrower and its Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles and classified
as such on the consolidated balance sheet of the Borrower and its
Subsidiaries, and all other Indebtedness of the Borrower and its
Subsidiaries, whether or not so classified; provided, however,
Consolidated Total Liabilities shall not include any Subordinated Debt.
INTEREST EXPENSE REFERENCE PERIOD. The period of four (4)
consecutive fiscal quarters of the Borrower ending on the relevant
date; provided, however, until four full fiscal quarters of the
Borrower have elapsed after December 31, 1997, such shorter period of
three consecutive fiscal quarters as has elapsed since December 31,
1997.
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SUBORDINATED DEBT. Unsecured Indebtedness of the Borrower or
any of its Subsidiaries that is expressly subordinated and made junior
to the payment and performance in full of the Obligations, and
evidenced by a written instrument containing subordination provisions
in form and substance approved by the Banks in writing.
/section/2. AMENDMENT TO SECTION 2 OF THE CREDIT AGREEMENT. Section 2
of the Credit Agreement is hereby amended as follows:
(a) Section 2.1.2 of the Credit Agreement is hereby amended by deleting
such section in its entirety; and
(b) Section 2.2 of the Credit Agreement is hereby amended by deleting
the words "one-half of one percent (1/2%) which appears in the first sentence of
/section/2.2 and substituting in place thereof the number ".375%"
/section/3. AMENDMENT TO SECTION 5 OF THE CREDIT AGREEMENT. Section 5
of the Credit Agreement is hereby amended by deleting /section/5 in its entirety
and restating it as follows:
5. GUARANTIES. The Obligations shall be guaranteed pursuant to
the terms of the Guaranty.
/section/4. AMENDMENT TO SECTION 6 OF THE CREDIT AGREEMENT. Section
6.14 of the Credit Agreement is hereby amended by deleting the text of
/section/6.14 and substituting in place thereof the words "Intentionally
Omitted".
/section/5. AMENDMENT TO SECTION 7 OF THE CREDIT AGREEMENT. Section 7
of the Credit Agreement is hereby amended as follows:
(a) Section 7.4 (a) and (b) of the Credit Agreement is hereby amended
by deleting all references therein to consolidating balance sheets and
consolidating statements of income;
(b) Section 7.4(c) of the Credit Agreement is hereby amended by
deleting the text thereof and substituting in place thereof the words
"Intentionally Omitted";
(c) Section 7.5.3. of the Credit Agreement is hereby amended by
deleting the text thereof and substituting in place thereof the words
"Intentionally Omitted";
(d) Section 7.7.2. of the Credit Agreement is hereby amended by
deleting the text thereof and substituting in place thereof the words
"Intentionally Omitted";
(e) Section 7.9.2. of the Credit Agreement is hereby amended by
deleting the text thereof and substituting in place thereof the words
"Intentionally Omitted"; and
(f) Section 7.14. of the Credit Agreement is hereby amended by deleting
the last sentence of /section/7.14 in its entirety.
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/section/6. AMENDMENT TO SECTION 8 OF THE CREDIT AGREEMENT. Section 8
of the Credit Agreement is hereby amended as follows:
(a) Section 8.1 of the Credit Agreement is hereby amended as follows:
(i) Section 8.1(c) of the Credit Agreement is hereby amended
by deleting the amount "$2,000,000" which appears in /section/8.1(c)
and substituting in place thereof the amount "$3,000,000";
(ii) Section 8.1(f) of the Credit Agreement is hereby amended
by (1) deleting the amount "$250,000" which appears in /section/8.1(f)
and substituting in place thereof the amount "$500,000"; and (2)
deleting the word "and" which appears at the end of /section/8.1(f);
(iii) Section 8.1(g) of the Credit Agreement is hereby amended
by (1) deleting the amount "$500,000" which appears in /section/8.1(g)
and substituting in place thereof the amount "$2,000,000"; and (2)
deleting the period which appears after the end of the text of
/section/8.1(g) and substituting in place thereof a semicolon and the
word "and"; and
(iv) Section 8.1 of the Credit Agreement is further amended by
inserting immediately after the end of the text of /section/8.1(g) the
following:
(h) the Subordinated Debt; PROVIDED, HOWEVER, that
the aggregate principal amount of all such Subordinated Debt
of the Borrower and its Subsidiaries shall not exceed the
aggregate amount of $3,000,000 at any one time.
(b) Section 8.2 of the Credit Agreement is hereby as follows:
(i) The preamble to Section 8.2 is hereby amended by deleting
the words "other than in favor of the Agent for the benefit of the
Banks and the Agent under the Loan Documents" which appears in
paragraph (f) of the preamble to /section/8.2; and
(ii) Section 8.2(i) of the Credit Agreement is hereby amended
by deleting the text of /section/8.2(i) in its entirety and
substituting in place thereof the words "Intentionally Omitted".
(c) Section 8.3 of the Credit Agreement is hereby amended by inserting
a period after the end of the text of /section/8.3(g) and deleting the semicolon
and the remainder of the text of /section/8.3;
(d) Section 8.5.1(iv) of the Credit Agreement is hereby amended by
inserting immediately after the words "(other than Indebtedness expressly
permitted pursuant to /section/8.1 hereof)" the words ", and the purchase price
for any single acquisition or series of related acquisitions to be paid in any
form of consideration other than the capital stock of the Borrower does not
exceed $20,000,000, and the aggregate purchase price for all acquisitions made
during the term of this Credit Agreement which are to be paid in any form of
consideration other than the capital stock of the Borrower does not exceed
$50,000,000.";
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(e) Section 8.11 of the Credit Agreement is hereby amended deleting
/section/8.11 in its entirety and restating it as follows:
8.11. CHANGE IN TERMS OF EMPLOYMENT AGREEMENTS. The Borrower
will not, and will not permit any of its Subsidiaries to, amend,
supplement or modify, or consent to any such amendment, supplement or
modification to, any provisions of the Employment Agreement pertaining
to (a) non competition and non solicitation requirements; and (b) the
assignability by the Borrower of such agreements without the prior
written consent of the Agent, unless such amendment, supplement or
modification is of an immaterial and ministerial nature and would not
have a material adverse effect on the assets, business or financial
condition of the Borrower or such Subsidiary.
(f) Section 8.16 of the Credit Agreement is hereby amended deleting
/section/8.16 in its entirety and restating it as follows:
8.16. CHARTER AMENDMENTS. The Borrower will not, nor will it
permit any of its Subsidiaries to, amend its certificate of
incorporation or by-laws, or similar organizational documents, if such
change could reasonably be expected to have a material adverse effect
on any Bank's or the Agents rights hereunder or the Borrower's or such
Subsidiary's ability to perform any of its obligations hereunder.
/section/7. AMENDMENT TO SECTION 9 OF THE CREDIT AGREEMENT. Section 9
of the Credit Agreement is hereby amended by deleting /section/9 in its entirety
and restating it as follows:
9. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan or Revolving Credit Note is outstanding or any Bank has any
obligation to make any Revolving Credit Loans:
9.1. LEVERAGE RATIO. The Borrower will not permit the Leverage
Ratio at any time to exceed 3.00:1.00.
9.2. MINIMUM TANGIBLE NET WORTH. Commencing with the fiscal
quarter ending September 30, 1998, the Borrower will not permit
Consolidated Tangible Net Worth at any time to be less than the sum of
(a) Consolidated Tangible Net Worth on June 30, 1998, less $5,000,000,
PLUS (b) on a cumulative basis, 50% of positive Consolidated Net Income
for each fiscal quarter beginning with the fiscal quarter ending
September 30, 1998, PLUS (c) 50% of the proceeds of any sale by the
Borrower of (i) equity securities issued by the Borrower, and (ii)
warrants or subscription rights for equity securities issued by the
Borrower, plus (d) 50% of the proceeds of Subordinated Debt.
9.3. EBITDA TO TOTAL INTEREST EXPENSE. The Borrower will not,
during any fiscal quarter, permit the ratio of (a) EBITDA for the
Interest Expense Reference Period to (b) Consolidated Total Interest
Expense for such period, to be less than 2.75:1.00
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/section/8. AMENDMENT TO SECTION 12 OF THE CREDIT AGREEMENT. Section 12
of the Credit Agreement is hereby amended as follows:
(a) Section 12.1(i) of the Credit Agreement is hereby amended by
deleting the amount "$1,000,000" in each place in which it appears in
/section/12.1(i) and substituting in each such place the amount "$2,000,000";
(b) Section 12.1(j) of the Credit Agreement is hereby amended by
deleting the words "or the Agent's security interests, mortgages, or liens in a
substantial portion of the Collateral shall cease to be perfected, or shall
cease to have the priority contemplated by the Security Documents";
(c) Section 12.1(m) of the Credit Agreement is hereby amended by
deleting the words "there shall occur any material damage to, or loss, theft or
destruction of, any Collateral if such Collateral is not insured, or "; and
(d) Section 12.4 of the Credit Agreement is hereby amended by deleting
the text of /section/12.4 and substituting in place thereof the words
"Intentionally Omitted".
/section/9. AMENDMENT TO SECTION 14 OF THE CREDIT AGREEMENT. Section
14..11 of the Credit Agreement is hereby amended by deleting the /section/14.11
in its entirety.
/section/10. CONDITIONS TO EFFECTIVENESS. This Third Amendment shall
not become effective until the Agent receives a counterpart of this Third
Amendment, executed by the Borrower, the Guarantors and the Banks.
/section/11. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
repeats, on and as of the date hereof, each of the representations and
warranties made by it in /section/6 of the Credit Agreement, and such
representations and warranties remain true as of the date hereof (except to the
extent of changes resulting from transactions contemplated or permitted by the
Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties relate
expressly to an earlier date), PROVIDED, that all references therein to the
Credit Agreement shall refer to such Credit Agreement as amended hereby. In
addition, the Borrower hereby represents and warrants that the execution and
delivery by the Borrower of this Third Amendment and the performance by the
Borrower of all of its agreements and obligations under the Credit Agreement as
amended hereby are within the corporate authority of each the Borrower and has
been duly authorized by all necessary corporate action on the part of the
Borrower.
/section/12. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Loan Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Third Amendment shall be read and construed as a
single agreement. All references in the Credit Agreement or any related
agreement or instrument to the Credit Agreement shall hereafter refer to the
Credit Agreement as amended hereby.
/section/13. NO WAIVER. Nothing contained herein shall constitute a
waiver of, impair or otherwise affect any Obligations, any other obligation of
the Borrower or any rights of the Agent or the Banks consequent thereon.
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/section/14. COUNTERPARTS. This Third Amendment may be executed in one
or more counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.
/section/15. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
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IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as a document under seal as of the date first above written.
ANSWERTHINK CONSULTING GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Executive Vice President,
Strategic Planning and Acquisitions
BANKBOSTON, N.A.
By: /s/ Xxx X. Massimo
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Xxx X. Massimo, Director
RATIFICATION OF GUARANTY
Each of the undersigned guarantors hereby acknowledges and consents to
the foregoing Third Amendment as of November __, 1998, and agrees that the
Guaranty dated as of November 7, 1997 and May 20, 1998 from the undersigned
Guarantors remains in full force and effect, and each Guarantor confirms and
ratifies all of its obligations thereunder.
THE XXXXXXX GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Vice President and Secretary
LEGACY TECHNOLOGY, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Vice President
