ACQUISITION FACILITY AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit
10.2
ACQUISITION
FACILITY AMENDMENT TO
AMENDED
AND RESTATED CREDIT AGREEMENT
This
Acquisition Facility Amendment to Amended and Restated Credit Agreement is
made
as of August 1, 2007, amending that certain Credit Agreement (as defined below)
between CASTLE PINES CAPITAL LLC, a Delaware limited liability company
(“CPC”), having its chief executive office located at 0000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 and INX INC., a Delaware
corporation, (“INX” or “Reseller”), having its chief executive
office located at 0000 Xxxxx Xxxx Xxxxxxx, Xxxxxxx,
Xxxxx 00000.
WHEREAS,
Reseller and CPC have entered in to the Credit Agreement originally dated
December 27, 2005, as amended and restated pursuant to that certain Amended
and
Restated Credit Agreement dated April 30, 2007 (the “Credit Agreement”)
between CPC and Reseller, providing the availability for credit to finance
inventory on behalf of Reseller (the “Credit Facility”); and
WHEREAS,
Reseller has requested that CPC extend credit to permit Reseller to
effect Approved Acquisitions; and
WHEREAS,
CPC is willing to accommodate such request for credit upon and subject to the
terms, conditions and provisions of this Acquisition Amendment and the
Documents;
NOW,
THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Reseller and CPC hereby mutually covenant and agree as
follows:
SECTION
1. Definitions. All
capitalized terms not otherwise defined herein shall have the meanings given
to
such terms in the Credit Agreement.
SECTION
2. Amendments to Credit
Agreement.
A. Section
2 of the Credit Agreement, Financing Terms, is amended by inserting
the
following new subsection (h)
“Approved Acquisition Facility”:
“(h) Approved
Acquisition Facility.
(i) Subject
to the terms and conditions set forth in this Agreement and so long as no
Default has occurred and is continuing, during the Acquisition Period, CPC
agrees to make loans to Reseller (individually, an “Acquisition Loan” and
collectively, the “Acquisition Loans”) as Reseller may from time to time
request for Approved Acquisitions for an amount not to exceed 80% of the
Purchase Price of each proposed Target. The Acquisition Commitment is
in addition to the Line of Credit provided for in Section 1 of the Agreement
and
has no effect upon Reseller’s ability to borrower under such Line of
Credit. Within the limits set forth in this Agreement, Reseller may
borrow under this Section 2.(h)(i), pay under Section 2.(h)(vii),
(viii) and (ix), and reborrow at any time during the Acquisition Period
under this Section 2.(h). All Acquisition Loans not paid prior
to the last day of the Acquisition Period, together with all accrued and unpaid
interest thereon and all fees and other amounts owing by Reseller to CPC shall
be due and payable on the Termination Date.
(ii) If
the Acquisition Commitment on any date should be less than the total Acquisition
Loans outstanding on such date (other than by reason of the termination of
the
Acquisition Commitment or failure to renew such Acquisition Commitment),
Reseller shall be automatically required (without demand or notice of any kind
by the Lender, all of which are hereby expressly waived by the Reseller) to
immediately repay the Acquisition Loans in an amount sufficient to reduce the
amount of the Total Acquisition Loans outstanding to an amount equal to or
less
than the total Acquisition Commitment.
(iii) Reseller
may, in its sole discretion, at any time or from time to time upon three (3)
Business Days' prior written notice to CPC, terminate the Acquisition Commitment
in its entirety or reduce the Acquisition Commitment by a minimum amount of
$25,000 or any larger multiple of $25,000 of the unused portions of the
Acquisition Commitment provided, however, that any such termination or reduction
shall be permanent and Reseller shall have no right to thereafter reinstate
or
increase, as the case may be, the Acquisition
Commitment. Simultaneously with each reduction of the Acquisition
Commitment pursuant to this Section 2.(h)(iii), the aggregate amount of
such reduction shall be automatically applied to any outstanding indebtedness
consisting of Acquisition Loans as may be requested by Reseller.
(iv) Unless
previously terminated, the Acquisition Commitment shall terminate on the
Termination Date.
(v) The
Reseller shall give notice to CPC by 10:00 a.m. (Colorado time) on the Business
Day of each Acquisition Loan to be made to Reseller to finance an Approved
Acquisition, previously approved, and which request shall be irrevocable and
shall specify the following:
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(A) The
date of such
Acquisition Loan, which must be a Business Day during the Acquisition
Period;
(B) The
location and
number of the Reseller’s account or account of seller of Target to which funds
are to be disbursed; and
(C) A
reasonably
detailed calculation of the financial covenants, if any, applicable to the
Reseller after giving effect to such Acquisition Loan.
(vi) So
long as no Default has occurred and is continuing, each Acquisition Loan shall
bear interest on the outstanding principal amount thereof for each day until
the
maturity of the Acquisition Loan (whether by reason of acceleration or
otherwise) at a rate per annum equal to the Prime Rate plus 2%, which interest
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last
day). Such interest shall be due and payable monthly in arrears on
the last Business Day of each month, commencing the first month after the
extension of each Acquisition Loan, and ending at the earlier of (i) the
maturity of each Acquisition Loan or (ii) the Termination Date. From
and after the maturity of the Acquisition Loan, whether by reason of
acceleration or otherwise, all unpaid amounts of such Acquisition Loan shall
bear interest, due and payable on demand, for each day until paid at a rate
per
annum equal to the Default Rate.
(vii) Principal
on each Acquisition Loan shall be due and payable in such
consecutive monthly installments as shall be determined by CPC in
conjunction with each funding and in any event will not be less than 36 months
and not more than 48 months, commencing on the thirteenth month after such
Acquisition Loan and continuing for such time as is determined by CPC, but
in no
event, later than the Termination Date, upon which all outstanding principal
and
interest together with any unpaid fees shall be remitted to CPC.
(viii) Reseller
may prepay all at any time or any portion from time to time of the unpaid
principal balance of all or any Acquisition Loan prior to maturity provided
that
contemporaneously with each such prepayment, the Reseller shall pay all accrued
and unpaid interest due as of such date of prepayment.
(ix) In
addition to the regularly scheduled payments due on the Acquisition Loan
provided for in Section 2(h)(vii) above and any voluntary prepayments
made by the Reseller under Section 2.(h)(viii) above, the Reseller hereby
covenants and agrees to pay to CPC as mandatory prepayments on each Acquisition
Loan in inverse order of maturity, within one hundred twenty (120) days after
the end of each fiscal year of Reseller (commencing with the fiscal year of
Reseller ending December 31, 2008), an amount equal to Twenty-Five Percent
(25%)
of Reseller’s Excess Cash Flow (if any) for such fiscal year. All
such amounts paid by Reseller pursuant to this subsection (ix) shall be applied
first against any interest that may be delinquent and if no interest in then
delinquent, then to any principal outstanding under such Acquisition
Loans.
(x) CPC
agrees to use commercially reasonable best efforts to issue a determination
to
Reseller as to whether each proposed Acquisition will be approved as a potential
Approved Acquisition within 10 Business Days of CPC’s receipt of a request by
Reseller.
(xi) Reseller
agrees to pay CPC (A) a non-refundable Acquisition Commitment fee of one-eighth
of one percent of the Acquisition Commitment which will be due and payable
in
full upon the execution of the Acquisition Amendment, and (B) a non-refundable
fee of seven-eighths of one percent of each Acquisition Loan which will be
due
and payable in full upon CPC’s extension of each Acquisition Loan.
(xii) Notwithstanding
any provision contained in this Agreement to the contrary, CPC shall have no
obligation to make any Acquisition Loan under this Agreement with respect to
an
Approved Acquisition unless CPC shall have received all or any portion of the
following as may be designated by CPC with respect to each Acquisition
Loan:
(A) written
notice requesting an Acquisition Loan as provided in subsection (v)
above;
(B) a
payoff letter (including wire transfer instructions and release of security
interests and liens upon receipt of payment) with respect to obligations of
the
Reseller to the seller of the Target;
(B) the
Target Information Package;
(C) a
duly executed a Collateral Assignment of Contract Rights with respect to each
Purchase Agreement (which must be in form and substance satisfactory to CPC)
in
which Reseller assigns it rights in such Purchase Agreement to CPC and is duly
executed by the Reseller;
(D) evidence
satisfactory to CPC that the Property to be acquired as a result of the Approved
Acquisition shall be subject to CPC’s first priority security interest in all
such Property (including but not limited to a separate security agreement to
be
executed by any Subsidiary created by Reseller or a Subsidiary of Reseller
with
respect to the proposed Target and results of searches of UCC records under
name
of seller and of the Target);
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(E) a
guaranty duly executed by any Person with respect to the proposed Target as
may
be required by CPC;
(F) such
amendments to the Credit Agreement as may be required by CPC and WFDF, including
but not limited to revision of existing financial covenants or addition of
new
financial covenants by Reseller or any Subsidiary;
(G) evidence
satisfactory to CPC that the performance by the Reseller of its obligations
under each Purchase Agreement shall not (1) violate any of its organizational
documents, (2) violate any applicable law, statute, rule or regulation or (3)
conflict with, or result in a default or event of default under, any material
agreement of the Reseller;
(H) pro
forma income statements and balance sheets of Reseller and each Subsidiary
as of
the closing date of the Approved Acquisition after giving effect to the
Acquisition then contemplated for the twelve month period immediately following
the closing date of the Approved Acquisition;
(I) evidence
satisfactory to CPC that the Reseller has received all requisite governmental,
regulatory, corporate, and required third party authorization, consents and
approvals necessary to execute and deliver the Purchase Agreement and consummate
the transactions contemplated thereunder;
(J) completion
by CPC of its field audits of the Reseller and the Subsidiaries, with the
results of such field audit being satisfactory to CPC;
(K) evidence
sufficient to CPC to determine that all material financial, accounting, and
tax
aspects of the transaction contemplated by this Agreement are acceptable to
CPC
in its sole discretion;
(L) evidence
satisfactory to CPC that no extraordinary judicial relief such as an injunction
or temporary restraining order has been entered which, in the judgment of CPC,
would prohibit the making of the Acquisition Loan hereunder, as well as the
absence of any litigation or other governmental proceeding that could reasonably
be expected to result in such prohibition or otherwise have a Material Adverse
Effect;
(M) evidence
satisfactory to CPC that no Material Adverse Effect shall have occurred since
the most recent financial statements delivered to CPC by Reseller;
(N) evidence
reasonably satisfactory to CPC that all material documents to be executed and
delivered in connection with the acquisition of each Target shall have been
delivered to CPC in final form which shall be reasonably satisfactory to CPC
and
that the acquisition of each Target shall have closed (subject only to the
funding of the acquisition consideration);
(O) evidence
satisfactory to CPC that both immediately before and immediately after giving
effect to such Acquisition Loan, no Default or Event of Default under this
Agreement shall have occurred and be continuing; and
(P) evidence
satisfactory to CPC that all of the representations and warranties made by
Reseller under this Agreement shall be true and correct in all material respects
on and as of the date of such Acquisition Loan as if made on and as of the
date
of such Acquisition Loan.
B. Section
17 of the Credit Agreement, Terms and Termination, is amended by
deleting the existing Section 17 in its entirety and replacing same with the
following:
“Terms
and Termination. The term of this Agreement, unless sooner
terminated in accordance with this Agreement, shall terminate on August 1,
2009
(subject to renewal as provided below, the “Termination Date”), provided,
however, that (a) this Agreement shall automatically renew for one (1) year
periods from year to year thereafter unless terminated by the Reseller upon
written notice at least 90 days prior to the current Termination Date; (b)
CPC
may terminate this Agreement immediately (i) by written notice to Reseller
if
Reseller shall lose or relinquish any right to sell or deal in any Financed
Inventory or (ii) upon a Default; or (c) CPC may terminate (i) the Inventory
Facility and the Revolving Credit Facility at any time by at least 60 days
prior
written notice by CPC to Reseller, and (ii) the Approved Acquisition Facility
at
any time by at least 120 days prior written notice by CPC to Reseller; provided
however, where Reseller requests further time be provided within either the
60
day notice period or 120 day notice period, as applicable, CPC will agree to
an
extension of 30 more days. Upon termination of this Agreement, all
Indebtedness owed to CPC shall become immediately due and payable without notice
or demand. Upon any termination, Reseller shall remain liable to CPC
for all Indebtedness to CPC, including without limitation interest, fees,
charges and expenses arising prior to or after the effective date of
termination, and all of CPC's rights and remedies and its security interest
shall continue until all Indebtedness to CPC is indefeasibly paid in full and
all obligations of Reseller are performed.”
C. Section
25 of the Credit Agreement, Definitions, is amended by inserting
the following new definitions in appropriate alphabetical order:
“Acquisition
means any transaction or series of related transactions, consummated on or
after
the date of this Agreement, by which a Person directly or indirectly (a)
acquires all or substantially all of the assets comprising one or more business
units of any other Person, whether through purchase of assets, merger or
otherwise or (b) acquires (in one transaction or as the most recent transaction
in a series of transactions) at least (i) a majority (in number of votes) of
the
stock and/or other securities of a corporation having ordinary voting power
for
the election of directors (other than stock and/or other securities having
such
power only by reason of the happening of a contingency), (ii) a majority (by
percentage of voting power) of the outstanding membership interests of a limited
liability company, (iii) a majority (by percentage of voting power) of the
outstanding general partnership interests and majority of limited partnership
interests of a partnership or (iv) a majority of the ownership interests in
any
organization or entity other than a corporation, limited liability company
or
partnership.
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Acquisition
Amendment means that certain Acquisition Facility Amendment to Amended and
Restated Credit Agreement dated August 1, 2007, between CPC and Reseller
pursuant to which CPC has agreed to provide the Acquisition Commitment to
Reseller.
Acquisition
Commitment means the extension of credit by CPC to Reseller up to a maximum
aggregate amount of Ten Million Dollars ($10,000,000).
Acquisition
Periodmeans the period commencing on the date of this Acquisition Amendment
and ending on the Termination Date.
Approved
Acquisition means a proposed Acquisition by Reseller which enables Reseller
to fund the acquisition cost for one hundred percent (100%) of the equity or
substantially all of the assets of a Person (each, a “Target”) from a
third party seller which meets the following conditions and
criteria:
(a) all
material aspects of the Target must be acceptable to CPC in its sole
discretion;
(b) the
total purchase price due at closing of a Purchase Agreement, which includes
all
cash stock and all tangible property paid at closing pursuant to such Purchase
Agreement and not any delayed payment, if any (the “Purchase Price”) of
the Target shall not exceed a multiple of six times the EBITDA of such Target
(as may be adjusted based upon the agreement of the Reseller and CPC) for the
twelve month period immediately preceding the anticipated closing date for
such
Acquisition;
(c) Reseller
shall have delivered to CPC an analysis and a copy of any report presented
to
the equity holders of Reseller (the “Target Information Package”), which
Target Information Package shall include, but not be limited to (i) a history
of
the Target, (ii) biographies of such members of the management of the Target
as
may be requested by CPC, (iii) copies of the Purchase Agreement in draft and
execution form, (iv) a summary of all liabilities of the Target (including
contingent liabilities) both before and as anticipated at the closing of the
Acquisition of such Target, (v) an analysis of Property of the Target, including
but not limited to such UCC, tax and judgment lien searches as may be requested
by CPC, (vi) projections of the anticipated business and financial performance
of the Target, updated as may be requested by CPC, and (vii) such other
information as may be requested by CPC.
EBITDA
means, for the period in question, the sum of (a) Net Income during such period
plus (b) to the extent deducted in determining such Net Income, the sum
of (i) Interest Expense during such period, plus (ii) any Federal, state,
local and/or foreign income taxes paid by such Person in cash during such
period, plus (iii) all depreciation and amortization expenses of such
Person during such period, plus (iv) any extraordinary losses during such
period, plus (vi) any losses from the sale or other disposition of
Property other than in the ordinary course of business during such period
minus (c) to the extent added in determining such Net Income, the sum of
(i) any extraordinary gains during such period and (ii) any gains from the
sale
or other disposition of Property other than in the ordinary course of business
during such period, all determined in accordance with GAAP.
Excess
Cash Flow means, for the period in question, the sum of (a) EBITDA during
such period minus (b) the sum of (i) all federal, state, local and/or foreign
income taxes paid or payable by Reseller and its Subsidiaries in cash during
such period, (ii) all obligations for interest paid or payable by Reseller
and
its Subsidiaries on all indebtedness in cash during such period (including,
without limitation, the interest portion of capitalized lease obligations paid
or payable in cash and the interest portion of any deferred payment obligation
paid or payable in cash during such period), (iii) the aggregate amount of
all
principal payments required to be made by Reseller and its Subsidiaries on
all
indebtedness during such period (including the principal portion of payments
in
respect of capitalized leases but excluding principal payments on the
Acquisition Loans), (iv) capital expenditures made by Reseller and its
Subsidiaries during such period (net of any indebtedness incurred by Reseller
or
any such Subsidiary (other than Acquisition Loans) to finance such capital
expenditure), and (v) the aggregate amount of all voluntary principal
prepayments made by Reseller and its Subsidiaries on any long term indebtedness
during such period (excluding principal payments on the Acquisition Loans),
all
determined on a consolidated basis and in accordance with GAAP.
Interest
Expense means, for the period in question, without duplication, all gross
interest expense of such Person (including, without limitation, all commissions,
discounts and/or related amortization and other fees and charges owed by such
Person with respect to letters of credit, the net costs associated with any
Swap
Contract of such Person, capitalized interest expense and the interest portion
of any deferred payment obligation) for such period, all determined in
accordance with GAAP.
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Net
Income means, for the period in question, the after-tax net income (or loss)
of such Person during such period, determined in accordance with
GAAP.
Property
means any interest in any kind of property or asset, whether real, personal
or
mixed, or tangible or intangible. Properties mean the plural
of Property. For purposes of the Credit Agreement as amended, the
Reseller and each Subsidiary shall be deemed to be the owner of any Property
which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the Property
has
been retained by or vested in some other Person for security
purposes.
Purchase
Agreement shall mean each asset purchase agreement, merger agreement or
equity purchase agreement between the seller of a Target and the
Reseller.
Purchase
Price has the meaning set forth within the definition of Approved
Acquisition.
Swap
Contract shall mean (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps
or
options, bond or bond price or bond index swaps or options or forward bond
or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts or any other similar transactions
or any combination of any of the foregoing (including any options to enter
into
any of the foregoing), whether or not any such transaction is governed by or
subject to any master agreement, and (b) any and all transactions of any kind,
and the related confirmations, which are subject to the terms and conditions
of,
or governed by, any form of master agreement published by the International
Swaps and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement, or any other master agreement (any such master agreement,
together with any related schedules, a ‘Master Agreement’), including any
such obligations or liabilities under any Master Agreement.
Target
has the meaning set forth within the definition of Approved
Acquisition.”
D. Section
25 of the Credit Agreement, Definitions, is amended by deleting
the existing definition, Indebtedness, and replacing it with the following
in
appropriate alphabetical order:
“Indebtedness
means all present and future indebtedness and obligations of Reseller to CPC
arising under this Agreement as amended, including but not limited to the
Acquisition Amendment, of whatever kind, now due or to become due, absolute
or
contingent, and whether joint, several or join and several.”
SECTION
3.Full Force and Effect. Except as specifically
amended hereby, all of the terms and conditions of the Credit Agreement as
amended, the Documents, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain in full force
and effect, and the same are hereby ratified and confirmed. This
Acquisition Amendment, the Credit Agreement, and the other Documents constitute
legal, valid and binding obligations of Reseller and are enforceable against
Reseller in accordance with their respective terms.
SECTION 4.Counterparts. This
Acquisition Amendment may be executed in one or more counterparts, each of
which
shall be deemed to be an original, and all of which shall constitute together
but one and the same agreement.
SECTION 5.Governing
Law. This Acquisition Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of Colorado.
[signature
page(s) to follow]
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IN
WITNESS WHEREOF, the Reseller has caused this Acquisition Amendment to
Credit Agreement to be executed by its authorized officers as of the day and
year first above written.
ATTEST:
By: _/s/
Xxxxx
Fontana___________
__/s/
Xxxxxx X.
Horzepa_________
Name: Xxxxx Xxxxxxx
Xxxxxx
X.
Xxxxxxx,
Secretary Title:
Vice-President - CFO
ATTEST:
_/s/
Xxxxx X. Long_________________
Xxxxx
X.
Xxxx, Chief Executive Officer
CASTLE
PINES CAPITAL
LLC
By: _/s/
Xxxxxxx
Gallagher____________
Name: Xxxxxxx
Xxxxxxxxx
Title:
Managing Partner
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