EXHIBIT 10.19
ASSIGNMENT OF CREDIT FACILITIES AND FINANCING DOCUMENTS
THIS ASSIGNMENT OF CREDIT FACILITIES AND FINANCING DOCUMENTS (the
"Assignment") is made by and among BANK OF AMERICA, N.A., a national banking
association ("Assignor"), TECHTEAM RETAIL, LLC, a Michigan limited liability
company ("Assignee"), CYNTERGY CORPORATION, a Delaware corporation (the
"Borrower"), XXXXXX X. XXXXXX and his wife XXXX XXXXXX, each residents of the
State of Maryland (collectively, the "Guarantors" and individually, a
"Guarantor") and CYNTERGY EMEA, LTD (f/k/a Strategic Technology Services
International, Ltd.), a Delaware corporation (the "Pledgor").
R E C I T A L S
A. Pursuant to that certain Financing and Security Agreement dated
January 29, 1999 (as amended, restated, renewed, supplemented or otherwise
modified from time to time, the "Financing Agreement"), by and between Assignor
and the Borrower, Assignor agreed to make available to the Borrower (i) a line
of credit for term loans in the maximum aggregate principal amount of One
Million Five Hundred Thousand Dollars ($1,500,000) (the "Equipment Line"), to be
used by the Borrower to finance and/or refinance the purchase of equipment, and
(ii) a revolving credit facility in the maximum principal amount of Six Million
Dollars ($6,000,000) (the "Revolving Loan"), to be used by the Borrower for
working capital. Assignor has also made available to the Borrower a term loan in
the original principal amount of One Hundred Sixty Nine Thousand Eight Hundred
Seventy Six and 00/100 Dollars ($169,876) (the "Additional Term Loan"). The
Equipment Line, the Revolving Loan, and the Additional Term Loan are hereinafter
called collectively the "Credit Facilities".
B. The Revolving Loan is evidenced by a Revolving Promissory Note
dated January 29, 1999 issued by the Borrower and made payable to the order of
Assignor (as amended, restated, renewed, supplemented or otherwise modified from
time to time, the "Revolving Note"). Advances under the Equipment Line are
evidenced by seven (7) separate term notes issued by the Borrower made payable
to the order of Assignor (as amended, restated, renewed, supplemented or
otherwise modified from time to time, the "Term Notes"). The Additional Term
Loan is evidenced by a Promissory Note dated February 5, 1999 issued by the
Borrower and made payable to the order of Assignor (as amended, restated,
renewed, supplemented or otherwise modified from time to time, the "Additional
Term Note"). The Revolving Note, the Term Notes and the Additional Term Note are
sometimes hereinafter called collectively the "Notes."
C. The Borrower's obligations in connection with the Credit
Facilities are secured by the Collateral (as defined in the Financing Agreement)
and are guaranteed by the Guarantors pursuant to and to the extent set forth in
(i) a Guaranty of Payment Agreement dated January 29, 1999 given by Xxxxxx X.
Xxxxxx in favor of Assignor (as amended, restated, renewed, supplemented or
otherwise modified from time to time, the "Unlimited Guaranty"), and (ii) a
Limited Recourse Guaranty of Payment Agreement dated January 29, 1999 given by
Xxxx
Xxxxxx to Assignor (as amended, restated, renewed, supplemented or otherwise
modified from time to time, the "Limited Guaranty") (the Unlimited Guaranty and
the Limited Guaranty being hereinafter called collectively the "Guaranties").
The Financing Agreement, the Notes, the Guaranties, and all other documents now
or hereafter executed and delivered by the Borrower, the Guarantors, or any
other party or parties to evidence, secure, or guarantee, or otherwise in
connection with, the Credit Facilities are hereinafter called collectively the
"Financing Documents." As used herein, the term "Obligations" shall mean the
unpaid principal balance of the Credit Facilities, together with all accrued and
unpaid interest thereon and all of the other obligations owed by the Borrower
and/or the Guarantors to Assignor under and pursuant to the Financing Documents.
D. On or about March 1, 2000, Assignor notified the Borrower that
advances under the Revolving Loan exceeded availability under the Borrowing Base
by $2,677,882 (the amount of such excess being hereinafter called the
"Over-Advanced Amount") and that such circumstance constituted a default under
the Financing Agreement. Subsequent thereto, the Borrower requested that
Assignor waive such default as well as certain other defaults then existing on
the condition that the Borrower agree, among other things, to modify certain of
the terms of the Financing Documents, to cancel all remaining availability under
the Equipment Line, to increase the rate of interest payable on the
Over-Advanced Amount and to use its best efforts to raise additional equity
and/or obtain subordinated debt, mezzanine financing or other sums acceptable to
Assignor, the proceeds of which were to be used to repay the Borrower's
outstanding obligations. Accordingly, on or about June 29, 2000, the Borrower,
the Guarantors and Assignor entered into an Agreement (the "June 29th
Agreement") pursuant to which (a) the parties agreed to amend certain provisions
of the Financing Documents, and (b) Assignor agreed to forbear temporarily from
exercising its various rights and remedies under the Financing Documents,
subject to the terms and conditions set forth in the June 29th Agreement.
E. As provided in the June 29th Agreement, Assignor agreed to
extend the maturity date of the Revolving Loan until the earlier of June 30,
2000 (the "Revolving Loan Maturity Date") or the occurrence of a default under
either the June 29th Agreement or the Financing Documents. Assignor further
agreed that in the event the Borrower delivered to Assignor, on or prior to June
30, 2000, a commitment or expression of interest (acknowledged by third parties
where appropriate) of additional equity, subordinated debt, mezzanine financing
or other collateral or guarantees satisfactory to Assignor sufficient to repay,
guarantee or secure at least $1,500,000 of such Over-Advanced Amount, Assignor
would further extend the Revolving Loan Maturity Date until the earlier of
September 30, 2000 or the occurrence of a new default under the June 29th
Agreement or the other Financing Documents.
F. On December 31, 2000, the Revolving Note matured. As a result
thereof, as of said date, the Borrower owed Assignor in excess of $5,215,532
under the Revolving Note. Notwithstanding, the Borrower failed to pay to
Assignor the amounts then due.
G. By virtue of the Borrower's failure to comply with its
obligations under the Revolving Note, the Borrower defaulted on its obligations
under the other Notes and, as a result thereof, all sums due under said Notes
became immediately due and payable.
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H. Subsequently thereto, the Borrower and the Guarantors again
requested that Assignor extend the maturity date of the Credit Facilities, waive
the existing defaults and refrain until at least March 31, 2001 from exercising
its other rights and remedies to give them time in which to either (i) find
alternative financing and/or (ii) sell the stock and/or assets of the Borrower
in order to satisfy their Obligations to Assignor. Assignor agreed to grant such
request, subject to and upon the terms and conditions set forth in that certain
Modification and Waiver Agreement dated as of February 9, 2001 (the "First
Modification").
I. Simultaneously with the execution of the First Modification, (i)
the Guarantors executed and delivered to Assignor a Stock Pledge Agreement
pursuant to which the Guarantors pledged to Assignor all of their stockholdings
in CynterCorp, Inc. (the "CynterCorp Stock Pledge"); (ii) the Pledgor and Xxxxxx
X. Xxxxxx executed and delivered to Assignor a Stock Pledge Agreement pursuant
to which they pledged to Assignor all of their stockholdings in Cyntergy (EMEA)
Limited (the "Cyntergy UK Stock Pledge") and (iii) Cyntergy (EMEA) Limited
executed and delivered to Assignor a Stock Pledge Agreement pursuant to which
Cyntergy (EMEA) Limited pledged to Assignor its stockholdings in Cyntergy UK
Limited, a UK limited liability company (the "Cyntergy UK Stock Pledge") (the
CynterCorp Stock Pledge, the EMEA UK Stock Pledge, and the Cyntergy UK Stock
Pledge being hereinafter called collectively the "Stock Pledges").
J. On or about March 6, 2001, the Borrower entered into a letter of
intent with Technology Facility Management Plc of Oxfordshire, England ("TFM"),
pursuant to which TFM offered to purchase from the Pledgor and Xxxxxx X. Xxxxxx
their stockholdings in Cyntergy (EMEA) Limited.
K. Subsequent thereto, following protracted negotiations with TFM,
said parties entered into a stock purchase agreement (the "Stock Purchase
Agreement"), pursuant to which the Pledgor and Xxxxxx X. Xxxxxx sold to TFM
their stockholdings in Cyntergy (EMEA) Limited for $950,000, subject to certain
adjustments, if any, provided for therein. In consideration of Assignor's
consent to such sale and to release its security interest in the shares of
Cyntergy (EMA) Limited, Xxxxxx X. Xxxxxx and Cyntergy EMA Ltd. assigned to
Assignor the net proceeds realized from such sale as well as their interest in
the two promissory notes issued and delivered by TFM in payment of the balance
of the purchase price thereof.
L. On or about August 26, 2001, Borrower, Guarantors, EMEA Delaware
and EMEA UK entered into a Forbearance Agreement with Assignor, which provides
for forbearance from action under the Loan Documents until the later of the full
repayment of the Obligations and September 30, 2001.
M. Recently, the Borrower informed Assignor that Assignee may be
interested in purchasing Assignor's interest in its various Credit Facilities
to, and Financing Documents with, the Borrower.
N. Following numerous discussions between Assignor and Assignee and
their respective counsel, Assignee has now offered to purchase from Assignor all
of its rights, title and interest in and to the Credit Facilities, the Notes and
other Financing Documents, and to assume all obligations thereunder, all upon
and subject to the terms and conditions hereinafter set forth.
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NOW, THEREFORE, for and in consideration of the premises, the covenants
herein set forth, together with other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
A G R E E M E N T
1. Assignment. (a) Effective as of the date that the conditions
precedent set forth in Section 3 below have been satisfied or waived in writing
by the parties hereto (the "Effective Date"), Assignor SELLS, NEGOTIATES,
ASSIGNS, ENDORSES, TRANSFERS, GRANTS, CONVEYS, and DELIVERS unto Assignee (i)
all of Assignor's right, title, interest and benefit to, in and under and
pursuant to the Financing Agreement, the Notes and other Financing Documents and
all sums payable thereunder, and (ii) all of Assignor's obligations and
liabilities under and pursuant to the Financing Agreement, the Notes and other
Financing Documents (all of the foregoing being hereinafter collectively called
the "Assigned Assets"), all without recourse, representations or warranties,
express or implied, of any kind whatsoever other than those expressly set forth
herein, to have and to hold the same, together with all rights, titles,
interests, privileges, claims, demands and equities existing and to exist in
connection therewith to Assignee, its successors and assigns forever, all upon
the terms and conditions set forth herein.
(b) Assignor hereby further ASSIGNS and TRANSFERS to
Assignee any and all rights that it may have now or in the future to establish
or enforce any lien or security interest, securing payment of the indebtedness
arising pursuant to the Credit Facilities. Assignor directs that all payments
due and to become due under the Financing Agreement, the Notes and other
Financing Documents subsequent to the Effective Date be made directly to
Assignee and any amounts received by Assignor on or after the Effective Date in
contravention of the provisions hereof shall be held in trust by Assignor and
promptly paid over by Assignor to Assignee.
2. Conditions Precedent. (a) The obligation of Assignor to
transfer, assign, and convey to Assignee the Assigned Assets is subject to the
fulfillment of the following conditions precedent on or before September 28,
2001:
Payment of Purchase Price. Assignee shall pay to Assignor, in
U.S. Dollars and in immediately available funds, the sum of
$1,050,000 (the "Purchase Price").
(b) The obligation of Assignee to purchase the Assigned
Assets and assume all obligations and duties of Assignor thereunder is subject
to the delivery by Assignor to Assignee, following Assingor's receipt of the
Purchase Price, of the following documents:
(i) the Financing Agreement;
(ii) the Notes;
(iii) the Guaranties;
(iv) the June 29th Agreement;
(v) the First Modification;
(vi) the CynterCorp Stock Pledge, the shares
referenced therein and stock powers delivered in
connection therewith;
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(vii) a copy of the Stock Purchase Agreement, between
TFM, Xxxxxx X. Xxxxxx and the Pledgor; and
(viii) the two Promissory Notes issued by TFM to Xxxxxx
X. Xxxxxx and the Pledgor jointly, duly assigned
to Assignor (collectively, the "TFM Notes").
In addition to the foregoing documents, Assignor shall execute such pleadings or
other documents as may be required to substitute Assignee for Assignor in a
confession of judgment action filed against Borrower.
3. Representations of Assignor. Assignor hereby represents to
Assignee that:
(a) Assignor is the sole owner and holder of the Notes and
other Financing Documents, free and clear of all liens
and encumbrances;
(b) Assignor has not sold or participated its interest in
the Notes or other Financing Documents to anyone;
(c) as of the date hereof, the Borrower owes Assignor (i)
pursuant to the Revolving Note $5,156,144.05, consisting
of $5,031,432.86 in principal, $114,381.07 in accrued
but unpaid interest, $10,330.12 in late charges, plus
legal fees and other expenses, (ii) pursuant to the Term
Notes $949,062.90 consisting of $945,485.26 in
principal, $3,577.64 in accrued but unpaid interest,
plus legal fees and other expenses and (iii) pursuant to
the Additional Term Note $90,356.77 consisting of
$90,801.86 in principal, $445.09 in accrued but unpaid
interest, plus legal fees and other expenses; and
(d) Assignor has all the requisite corporate power and
authority to transfer to Assignee, pursuant to the terms
hereof, the Assigned Assets.
4. Disclaimer of Representations. Except as otherwise specifically
set forth in this Assignment, Assignor specifically disclaims any warranty,
guaranty or representation, oral or written, past, present or future with
respect to the Borrower, the Guarantors, the Pledgor, the Financing Documents,
and/or the Assigned Assets, including, without limitation:
(a) the validity, existence, perfection or priority of any
lien or security interest securing the Borrower's,
either of Guarantor's or the Pledgor's Obligations;
(b) the existence or basis for any claim, counterclaim,
defense or offset relating to the Credit Facilities;
(c) the financial condition or ability of the Borrowers or
any of the Guarantors to pay or perform any of their
obligations under the Financing Documents;
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(d) the compliance of the Credit Facilities with any laws,
ordinances or regulations of any government or other
body; or
(e) the condition of any collateral securing the Credit
Facilities.
Assignee acknowledges and represents to Assignor that, having been given
the opportunity to undertake its own investigation and review of the
Credit Facilities and the Financing Documents, Assignee is relying
solely on its own investigation and review of the Financing Agreement,
other Financing Documents, the Collateral, and the financial condition
of the Borrower and the Guarantors, and not on any information provided
or to be provided by Assignor. The sale of the Financing Agreement, the
Notes, the other Financing Documents and the rights related thereto as
provided for herein is made on an "AS IS", "WHERE IS" basis, with all
faults, and Assignee, by acceptance of this Assignment, expressly
acknowledges that ASSIGNOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, OR ARISING BY OPERATION OF LAW, RELATING TO THE BORROWER,
THE GUARANTORS, THE PLEDGOR, THE TFM NOTES, OR THE FINANCING DOCUMENTS,
EXCEPT AS SPECIFICALLY SET FORTH HEREIN.
5. Assumption and Agreement by Assignee. Assignee hereby assumes
all of Assignor's obligations under the Financing Documents arising on or after
the Effective Date. Assignee hereby agrees to indemnify and hold Assignor, its
officers, directors, agents and employees, harmless from and against any and all
claims, liabilities, damages, expenses or obligations (including reasonable
attorney's fees and expenses) of any kind or character in connection with the
Financing Documents arising as a result of Assignee's actions or inactions on or
after the Effective Date with respect thereto. Assignee represents to Assignor
that it has all the requisite power and authority to execute and to deliver this
Assignment, and to perform all of its obligations under this Assignment.
6. Endorsement. Assignor hereby covenants and agrees to execute,
without recourse, an endorsement to the Notes, substantially in the forms
attached hereto as Exhibit A, B, C respectively, endorsing the same to the order
of Assignee, and to execute such further documents as shall be reasonably
necessary to effect the purposes of this Assignment, provided that any such
documents shall be prepared, executed and delivered at no cost or expense to
Assignor. In addition, Assignor agrees to assign, without recourse, to Assignee
all of its rights, title and interest in and to the TFM Notes.
7. Agreements of the Borrower and Guarantors. The Borrower and each
of the Guarantors hereby agree that this Assignment is being entered into for
their benefit. In consideration thereof, the Borrower and each of the Guarantors
hereby covenants and agrees with, and represents and warrants to, Assignor and
Assignee, as follows:
(a) as of the date hereof, they owe Assignor the various
sums set forth in Paragraph 4(c) hereof;
(b) said sums are currently due and payable and that they
have no defenses,
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affirmative or otherwise, rights of offset, rights of recoupment, claims,
counterclaims, actions or causes of action of any kind or nature whatsoever
against Assignor or any agent, affiliate, employee, director or officer of
Assignor, directly or indirectly, arising out of, based upon, or in any manner
connected with, any transaction, event, circumstance, action, failure to act, or
occurrence of any sort or type, whether known or unknown, which occurred,
existed, was taken, permitted or began prior to the Effective Date in accordance
with, pursuant to, or by virtue of, any of the terms or conditions of the
Financing Documents;
(c) they jointly and severally covenant and agree to
indemnify, protect, defend, and hold Assignor and Assignee, their respective
officers, directors, agents and employees, harmless from any claims, charges,
obligations and liabilities arising out of the Financing Agreement and other
Financing Documents and the obligations secured thereby arising from acts,
occurrences or omissions prior to the Effective Date; and
(d) they further covenant and agree to pay any fees,
charges, or taxes payable in connection with this Assignment, or with respect to
the Financing Documents, to the extent provided therein.
8. Counterparts. This Assignment may be executed in a number of
multiple identical counterparts which, when taken together, shall constitute
collectively one assignment, but in making proof of this assignment it shall not
be necessary to produce or account for more than one such counterpart executed
by the party to be charged.
9. Survival. The provisions of this Assignment shall survive the
execution hereof and the sale, transfer and delivery of the Financing Documents
to Assignee.
10. Governing Law. This Assignment shall be construed in accordance
with, and governed by, the laws of the State of Maryland excluding any conflict
of laws provisions.
11. Cooperation. Assignor shall execute and deliver, at Assignee's
expense, such further documents and take such further steps as may be necessary
to effectuate the assignment contemplated in this Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands and affixed
their seals to this Assignment effective as of the 28th day of September, 2001.
BANK OF AMERICA, N.A.
By:
-----------------------------------
Xxxxx X. Xxxxx
Senior Vice President
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CYNTERGY CORPORATION CYNTERGY EMEA LTD.
By: By:
--------------------------------- ----------------------------------
Xxxxxx X. Xxxxxx
President
------------------------------------ -------------------------------------
Xxxxxx X. Xxxxxx Xxxx Xxxxxx
Accepted and Agreed:
TECHTEAM RETAIL, LLC
By:
---------------------------------
Xxxxxxx Xxxxx
Manager
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Exhibit A
ENDORSEMENT TO REVOLVING CREDIT NOTE
WITHOUT RECOURSE AND WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND
OTHER THAN AS SET FORTH IN THAT CERTAIN ASSIGNMENT OF CREDIT FACILITIES AND
FINANCING DOCUMENTS DATED SEPTEMBER __, 2001 BY AND AMONG BANK OF AMERICA, N.A.,
_____________, CYNTERGY CORPORATION, XXXXXX X. XXXXXX, XXXX XXXXXX AND CYNTERGY
EMEA LTD., PAY TO THE ORDER OF ________________________________.
BANK OF AMERICA, N.A.
By:
---------------------------------------
Xxxxx X. Xxxxx
Senior Vice President
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Exhibit B
ENDORSEMENT TO TERM NOTE
WITHOUT RECOURSE AND WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND
OTHER THAN AS SET FORTH IN THAT CERTAIN ASSIGNMENT OF CREDIT FACILITIES AND
FINANCING DOCUMENTS DATED SEPTEMBER __, 2001 BY AND AMONG BANK OF AMERICA, N.A.,
_____________, CYNTERGY CORPORATION, XXXXXX X. XXXXXX, XXXX XXXXXX AND CYNTERGY
EMEA LTD., PAY TO THE ORDER OF ________________________________.
BANK OF AMERICA, N.A.
By:
---------------------------------------
Xxxxx X. Xxxxx
Senior Vice President
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Exhibit C
ENDORSEMENT TO ADDITIONAL TERM NOTE
WITHOUT RECOURSE AND WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND
OTHER THAN AS SET FORTH IN THAT CERTAIN ASSIGNMENT OF CREDIT FACILITIES AND
FINANCING DOCUMENTS DATED SEPTEMBER __, 2001 BY AND AMONG BANK OF AMERICA, N.A.,
_____________, CYNTERGY CORPORATION, XXXXXX X. XXXXXX, XXXX XXXXXX AND CYNTERGY
EMEA LTD., PAY TO THE ORDER OF ________________________________.
BANK OF AMERICA, N.A.
By:
---------------------------------------
Xxxxx X. Xxxxx
Senior Vice President
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