AMENDED AND RESTATED FINANCIAL COVENANTS AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit
10.2
AMENDED
AND RESTATED FINANCIAL COVENANTS AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT
This
Amended and Restated Financial Covenants Amendment to Amended and Restated
Credit Agreement (“Amendment”) effective as of the 31st
day of August 2007
(the “Effective Date”), amends and restates that certain Financial
Covenant Amendment to Amended and Restated Credit Agreement, amending that
certain Amended and Restated Credit Agreement entered into by and between INX,
INC. (“Dealer”) and CASTLE PINES CAPITAL LLC (“CPC”) on April 30,
2007, as amended on August 1, 2007 (“Agreement”).
WHEREAS,
Reseller has requested that CPC extend credit to permit Reseller to
effect an Approved Acquisition pursuant to the Agreement; and
WHEREAS,
CPC is willing to accommodate such request for credit upon and subject to the
terms, conditions and provisions of this Amendment and the
Agreement;
NOW,
THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, CPC and Reseller agree that the following paragraphs are
incorporated into the Agreement as if fully and originally set forth therein
(capitalized terms shall have the same meaning as defined in the Agreement
unless otherwise indicated) and replace, in their entirety, such similarly
entitled paragraphs in the Agreement:
1. “Current
Ratio. Reseller will at all times maintain on a
consolidated basis a ratio of current assets to Current Liabilities of at least
1.10:1.0.
For
purpose of this paragraph: :‘Current Liabilities’ includes (a)
all obligations classified as current liabilities under generally accepted
accounting principles, plus (b) all principal amounts outstanding under
revolving lines of credit, whether classified as current or long-term, which
are
not already included under (a) above; provided, however, that only scheduled
principal payments in connection with the CPC Acquisition Loan for any 12 month
period shall be deemed to be Current Liabilities for the purposes of compliance
with this Current Ratio covenant and (ii) ‘CPC Acquisition Loan” means
the acquisition loan made by CPC to Reseller on August 31, 2007 in the aggregate
principal amount of Six Million Dollars ($6,000,000). This ratio will
be calculated at the end of each fiscal quarter, using fiscal year-to-date
results on an annualized basis.”
2. “Tangible
Net Worth. Reseller will at all times maintain on a
consolidated basis tangible net worth equal to at least Six Million Dollars
($6,000,000) through December 30, 2007 and at least Eight Million Dollars
($8,000,000) thereafter.
For
purpose of this paragraph: (i) ‘Tangible Net Worth’ means as
of any date the sum of Resellers’ (i) net worth as reflected on its last
twelve-month consolidated fiscal financial statements, plus (ii) net
earnings since the end of such fiscal year, both after provision for taxes
and
with Inventory determined on a first in, first out basis, plus (iii)
Subordinated Debt, minus the sum of Reseller’s (A) intangible assets,
including, without limitation, deposits, unamortized leasehold improvements,
goodwill, deferred income taxes, franchises, licenses, patents, trade names,
copyrights, service marks, brand names, covenants not to compete and any other
asset which would be treated as an intangible under generally accepted
accounting principles, plus (B) prepaid expenses (however such item shall
not include prepaid inventory), plus (C) franchise fees, plus (D)
notes, Accounts and other amounts owed to it by any Guarantor, affiliate or
employee of any Reseller plus (E) losses since the end of such fiscal
year, plus (F) interest in the cash surrender value of officer’s or
shareholder’s life insurance policies; and (ii) ‘Subordinated Debt’ means
liabilities subordinated to the Reseller’s obligations to CPC in a manner
acceptable to CPC, using CPC’s standard form. This covenant will be
tested at the end of each fiscal quarter.”
3. “Minimum
Working Capital. Reseller will at all times
maintain a minimum working capital of Six Million Five Hundred Thousand Dollars
($6,500,000). Working Capital shall be defined as Current Assets
minus Current Liabilities.
For
purposes of this paragraph: (i) ‘Current Assets’ includes all
obligations classified as current assets under generally accepted accounting
principles and (iii) ‘Current Liabilities’ includes (a) all obligations
classified as current liabilities under generally accepted accounting
principles, plus (b) all principal amounts outstanding under revolving lines
of
credit, whether classified as current or long-term, which are not already
included under (a) above; provided, however, that only scheduled principal
payments in connection with the CPC Acquisition Loan for any 12 month period
shall be deemed to be Current Liabilities for the purposes of compliance with
this Current Ratio covenant, (ii) ‘CPC Acquisition Loan’ means the
acquisition loan made by CPC to Reseller on August 31, 2007 in the aggregate
principal amount of Six Million Dollars ($6,000,000). This ratio will
be calculated at the end of each INX Accounting Period.”
4. “Total
Liabilities to Tangible Net Worth Ratio. Reseller will
at all times maintain on a consolidated basis a ratio of Total Liabilities
(excluding liabilities subordinated to the Reseller’s obligations to CPC in a
manner acceptable to CPC, using CPC’s standard form) to Tangible Net Worth not
exceeding 8.50 to 1.00 through December 30, 2007 and not exceeding 6.00:1.00
thereafter.
For
purpose of this paragraph: (i) ‘Total Liabilities’ means the
sum of current liabilities plus long term liabilities; and (ii) ‘Tangible Net
Worth’ means as of any date the sum of Resellers’ (i) net worth as reflected
on its last twelve-month consolidated fiscal financial statements, plus
(ii) net earnings since the end of such fiscal year, both after provision for
taxes and with Inventory determined on a first in, first out basis, plus
(iii) Subordinated Debt, minus the sum of Reseller’s (A) intangible
assets, including, without limitation, deposits, unamortized leasehold
improvements, goodwill, deferred income taxes, franchises, licenses, patents,
trade names, copyrights, service marks, brand names, covenants not to compete
and any other asset which would be treated as an intangible under generally
accepted accounting principles, plus (B) prepaid expenses (however such
item shall not include prepaid inventory), plus (C) franchise fees,
plus (D) notes, Accounts and other amounts owed to it by any Guarantor,
affiliate or employee of any Reseller plus (E) losses since the end of
such fiscal year, plus (F) interest in the cash surrender value of
officer’s or shareholder’s life insurance policies. This ratio will
be calculated at the end of each fiscal quarter, using fiscal year-to-date
results on an annualized basis.”
Reseller
waives notice of CPC’s acceptance of this Financial Covenants
Amendment. All other terms and provisions of the Agreement, to the
extent not inconsistent with the foregoing, are ratified and remain unchanged
and in full force and effect.
(Signature
Page(s) to Follow)
IN
WITNESS WHEREOF, Reseller and CPC have executed this Amended and Restated
Financial Covenants Amendment on this 31st day of
August,
2007.
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INX,
INC.
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By: /s/
Xxxxx Xxxxxxx
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Name:
Xxxxx Xxxxxxx
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Title:
Vice President and
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Chief
Financial Officer
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CASTLE
PINES CAPITAL LLC
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By: /s/
Xxxx Xxxxxxx
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Name:
Xxxx Xxxxxxx
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Title:
Managing Partner
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