EX-10.1
First Amendment to Credit Agreement
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT ("Amendment") is made and entered
into effective as of August 29, 2001, by and between OAO TECHNOLOGY SOLUTIONS,
INC., a Delaware corporation (the "Company"), O.A.O. SYSTEMS, INC., an Illinois
corporation ("OAO Systems"), OAO SERVICES, INC., a District of Columbia
corporation ("OAO Services"), OAO CANADA LIMITED, a company organized under the
law of New Brunswick, Canada ("OAO Canada"), CANADIAN RESOURCE MANAGEMENT, LTD.,
a company organized under the laws of British Columbia, Canada ("Canadian
Resource Management"), CANADIAN NETWORK RESOURCES, LTD., a company organized
under the laws of New Brunswick, Canada ("Canadian Network Resources"),
ENTERPRISE TECHNOLOGY GROUP, INC., a Delaware corporation ("Enterprise
Technology"), OAO HEALTHCARE SOLUTIONS, INC., a California corporation ("OAO
Healthcare Solutions"), OAO/ICOR UK LTD., a United Kingdom corporation
("OAO/ICOR UK") and OAO TRANSITION, LLC, a Delaware limited liability company
("Transition LLC"), OAO HEALTH SERVICES PROCESSING, INC., a Delaware corporation
("OAO Health Services"), OAO TECHNOLOGY SOLUTIONS EUROPE, B.V., a Netherlands
corporation ("OAO Europe-BV"), OAO TECHNOLOGY SOLUTIONS ITALIA SRL., an Italian
corporation ("OAO Italia") (the Company, OAO Systems, OAO Services, OAO Canada,
Canadian Resource Management, Canadian Network Resources, Enterprise Technology,
OAO Healthcare Solutions, OAO/ICOR UK, Transition LLC, OAO Health Services, OAO
Europe-BV and OAO Italia are each a "Borrower" and together the "Borrowers"),
each of the lending entities which is a party hereto (as evidenced by the
signature pages of this Agreement) or which may from time to time become a party
hereto as a lender or any successor or assignee thereof (individually, a
"Lender" and, collectively, the "Lenders"), and BANK OF AMERICA, N.A., a
national banking association, successor in interest to NationsBank, N.A., as
Administrative Agent for itself and the other Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
RECITALS:
A. Pursuant to that certain Credit Agreement dated as of June 30, 1999, by
and among the Borrowers (except for Transition LLC) and the Lenders (as amended,
the "Credit Agreement"), the Lenders agreed to make available to the Borrowers a
revolving line of credit for loans and letters of credit in an amount not to
exceed $15,000,000 and to make term loans to the Borrowers in the aggregate
principal amount of $20,000,000 and which extensions of credit the Borrowers
intended to use for working capital needs and general business purposes. All
capitalized terms used in this Amendment and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
B. In connection with the acquisition of certain assets of Quadramed
Corporation and its affiliates used to conduct its "EZ-CAP" software business,
the Borrowers have selected to have the availability of the Revolving Loans
subject to the Borrowing Base in accordance with subparagraph (c) of Section 2.1
of the Credit Agreement, and have requested that the Administrative Agent and
the Lenders add Transition LLC, OAO Health Services, OAO Europe-BV and OAO
Italia as Borrowers, revise certain provisions of the Loan Documents in
connection with the credit facilities contemplated by the parties to be subject
to the Credit Agreement, and for certain other purposes, and the Borrowers and
the Administrative Agent and the Lenders have agreed, subject to the terms and
conditions of this Amendment, to so amend the Credit Agreement and the Loan
Documents.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and mutual covenants and
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:
1. Terms Defined. Unless otherwise defined or stated in this Amendment,
each capitalized term used in this Amendment has the meaning given to such term
in the Credit Agreement (as amended by this Amendment).
2. Amendments. The Credit Agreement and the other Loan Documents are,
effective as of the date hereof, and subject to the satisfaction of the terms
and conditions set forth herein, hereby amended as follows:
(a) The following terms and definitions set forth in Section 1.1. of the
Credit Agreement are hereby amended and restated to read in their entirety as
follows:
"Applicable Commitment Fee Rate" means, for the period commencing with the
Closing Date and thereafter, the rate per annum set forth in the table below
that corresponds to the ratio of (i) Total Debt as of the date of the relevant
financial statements referred to below to (ii) EBITDA for the four fiscal
quarters of the Company and its Subsidiaries then most recently ended as of the
date of such financial statements, calculated in accordance with Section 1.4:
Applicable
Total Debt to Commitment Fee
EBITDA Ratio Rate
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* Less than or equal to
2.0 to 1.0 0.375%
* Greater than 2.0 to 1.0 0.500%
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The Applicable Commitment Fee Rate shall be calculated on each Calculation Date
in arrears based upon the preceding table and the financial statements delivered
by the Borrowers pursuant to Section 8.1(b) and the certificate delivered by the
Borrowers pursuant to Section 8.1(j) (which may be delivered by telecopy);
provided, that if the Borrowers fail to deliver to the Administrative Agent such
financial statements or certificate on or before the relevant Calculation Date,
the Applicable Commitment Fee Rate shall be deemed to be the percentage
reflected in the preceding table as if the ratio of Total Debt to EBITDA were
greater than 2.0 to 1.0 until the date such statements and certificate are
received by the Lender, after which the Applicable Commitment Fee Rate shall be
determined as otherwise provided herein
"Applicable Margin" means, for the period commencing with the Closing Date
and thereafter, the rate set forth in the table below that corresponds to the
ratio of (i) Total Debt as of the date of the relevant financial statements
referred to below to (ii) EBITDA for the four fiscal quarters of the Company and
its Subsidiaries then most recently ended as of the date of such financial
statements, calculated in accordance with Section 1.4:
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Applicable Margin Applicable Margin for
for LIBOR Loans Base Rate Loans
---------------------------------------------
Revolver and Term Revolver and Term Loan
Total Debt to Loan
EBITDA Ratio
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* Less than or equal to 200 bps 50 bps
2.0 to 1.0
* Less than or equal to
2.5 to 1.0 but greater 240 bps 90 bps
than 2.0 to 1.0
* Less than or equal to
3.0 to 1.0 but greater 275 bps 125 bps
than 2.5 to 1.0
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The Applicable Margin shall be calculated on each Calculation Date based upon
the preceding table and the financial statements delivered by the Borrowers
pursuant to Section 8.1(b) and the certificate delivered by the Borrowers
pursuant to Section 8.1(j) (which may be delivered by telecopy); provided, that
if the Borrowers fail to deliver to the
Administrative Agent such financial statements or certificate on or before the
relevant Calculation Date, the Applicable Margin shall be deemed to be the
percentage reflected in the preceding table as if the ratio of Total Debt to
EBITDA were greater than 2.50 to 1.00 until the date such statements and
certificate are received by the Lender, after which the Applicable Margin shall
be determined as otherwise provided herein.
"Borrowing Base" means, at any date of determination, an amount equal to
the sum of (a) 85% of Eligible Receivables plus (b) 50% of Eligible Unbilled
Receivables; provided, however, that Revolving Loans outstanding against
Eligible Unbilled Receivables shall at no time exceed $3,500,000, less (c) a
$2,000,000 reserve associated with concentration risks relating to the IBM and
Compaq contracts, as those terms are understood between the parties, less (d)
Letters of Credit issued, it being understood that that such percentages are
subject to the results of the Field Examinations performed by the Lender from
time to time.
"Closing Date" means, with respect to matters anticipated to occur on or
after August 29, 2001, August 29, 2001, the date of this Amendment. For all
other matters, "Closing Date" means June 29, 1999, the date of the Credit
Agreement.
"EBITDA" means, as to the Company and its Consolidated Subsidiaries (and
all approved acquisitions) and for any period, without duplication, the sum of
the following for such Persons for such period determined on a consolidated
basis in accordance with GAAP: (a) Adjusted Net Income plus (b) Consolidated
Interest Expense plus (c) income and franchise taxes to the extent deducted in
determining Adjusted Net Income, plus (d) depreciation and amortization expense
and other non-cash, non-tax items to the extent deducted in determining Adjusted
Net Income, minus (e) non-cash income and charges, except for the non-cash write
down of accounts receivable and software licenses incurred in the fiscal quarter
ended June 30, 2001 (the June 30, 2001 non-cash charges will not be excluded
from EBITDA), minus (f) earn out payments minus (g) cash taxes to the extent
included in determining Adjusted Net Income minus (h) non-financed capital
expenditures.
"Obligations" means any and all (a) indebtedness, liabilities and
obligations of the Borrowers or any other Loan Party to the Administrative Agent
and the Lenders, or any of them, evidenced by and/or arising pursuant to any of
the Loan Documents (including, without limitation, this Agreement, the Letter of
Credit Agreement and the Notes), now existing or hereafter arising, whether
direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, including, without
limitation, (i) the obligations of the Borrowers or any other Loan Party to
repay the Loans, to pay the Reimbursement Obligations, to pay interest on the
Loans (including, without limitation, interest accruing after any, if any,
bankruptcy, insolvency, reorganization or other similar filing) and to pay all
fees, indemnities, costs and expenses (including attorneys' fees) provided for
in the Loan Documents; (ii) the indebtedness constituting the Loans and such
interest, fees, indemnities, and reasonable costs and expenses, and (b)
indebtedness, liabilities and obligations of the Borrowers or any other Loan
Party under any and all Interest Rate Protection Agreements that it may enter
into with any Lender with the written consent of the Administrative Agent and
the Required Lenders; and (iii) the indebtedness owed under any Swap Contract or
any document, instrument or agreement between the Borrowers and the
Administrative Agent and the Lenders, or any of them, now existing or entered
into in the future, relating to an interest rate swap transaction, forward rate
transaction, interest rate cap, floor or collar transaction, any similar
transaction, any option to enter into any of the foregoing, and any combination
of the foregoing, which agreement may be oral or in writing, including, without
limitation, any master agreement relating to or governing any or all of the
foregoing and any related schedule or confirmation, each as amended from time to
time.
"Revolving Loans Maturity Date" means September 30, 2003.
"Term Loans Facility Share" means, in the aggregate, no more than Nine
Million Dollars ($9,000,000), and, as to any Lender, the pro rata share of such
Lender in Term Loans made or continued hereunder in an aggregate principal
amount up to but not exceeding the amount, if any, set forth opposite the name
of such Lender on the signature pages hereto under the heading "Term Loans
Facility Share" or, if such Lender is a party to an Assignment and Acceptance,
the amount of the "Term Loans Facility Share" set forth in the most recent
Assignment and Acceptance of such Lender, as the same may be reduced or
terminated pursuant to Section 2.13 or 11.2, and "Term Loans Facility Shares"
means such obligations of all Lenders; provided, however, that the Term Loans
Facility Shares shall automatically be reduced to zero on the Term Loans
Facility Termination Date.
"Term Loans Maturity Date" means September 30, 2006.
"Type" means any type of variable rate Loan (i.e., a Base Rate Loan or
LIBOR Loan).
(b) The following new terms are hereby added to Subsection 1.1 of the
Credit Agreement in appropriate alphabetical order:
"Excess Cash Flow" means, for each fiscal year end beginning December 31,
2002, the sum of (i) EBITDA minus (ii) the sum of (A) Interest Expense, (B) cash
taxes paid (or dividends required to cover tax obligations of shareholders), (C)
scheduled current maturities of Funded Debt, (D) cash Capital Expenditures, (F)
optional prepayments of Debt, and (G) any "earn-out" payments."
"Interest Period" means, as to any LIBOR Rate Loan, the period commencing
on the Funding Date of such Loan or on the Conversion/Continuation Date on which
the Loan is converted into or continued as a LIBOR Rate Loan, and ending on the
date one, two, or three months thereafter as selected by the Borrowers in a
Notice of Borrowing, Continuation or Conversion; provided that:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following Business
Day unless the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated Termination
Date.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan, the
next Business Day following the last day of each calendar month and the last day
of each Interest Period applicable to such Loan.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans, the rate of interest per annum determined pursuant to the following
formula:
LIBOR Rate = Offshore Base Rate
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1.00 - Reserve Percentage
Where,
"Offshore Base Rate" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period.
Telerate Page 3750 means the British Bankers Association Libor Rates
(determined as of 11:00 a.m. London time) that are published by Dow
Xxxxx Telerate, Inc. If for any reason such rate is not available, the
Offshore Base Rate shall be, for any Interest Period, the rate per
annum appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates. If for any reason none of the foregoing rates is
available, the Offshore Base Rate shall be, for any Interest Period,
the rate per annum determined by Agent as the rate of interest at
which dollar deposits in the approximate amount of the LIBOR Rate Loan
comprising part of such Borrowing would be offered by the Agent's
London Branch to major banks in the offshore dollar market at
their request at or about 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable
to such Interest Period; and
"Reserve Percentage" means, for any day during any Interest
Period, the total of the maximum reserve percentages for determining
the reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency Liabilities, as defined in Federal Reserve
Board Regulation D, rounded upward to the next 1/100th of 1%. The
percentage will be expressed as a decimal and will include, but not be
limited to, marginal, emergency, supplemental, special and other
reserve percentages.
"LIBOR Rate Loans" means, collectively, the LIBOR Revolving Loans and the
LIBOR Term Loans.
"LIBOR Revolving Loans" means a Revolving Loan during any period in which
it bears interest based on the LIBOR Rate.
"LIBOR Term Loans" means any portion of a Term Loan during any period in
which such portion bears interest based on the LIBOR Rate.
"Purchase Agreement" means the agreement governing the acquisition of
certain assets of Quadramed Corporation and Quadramed Operating Corporation and
all schedules and exhibits thereto.
"Stated Termination Date" means the later of (a) the Revolving Loans
Maturity Date or (b) the date upon which the final installment of principal is
due under the Term Loans.
"Swap Contract" means " any document, instrument or agreement between
Debtor and Secured Party or any affiliate of Secured Party, now existing or
entered into in the future, relating to an interest rate swap transaction,
forward rate transaction, interest rate cap, floor or collar transaction, any
similar transaction, any option to enter into any of the foregoing, and any
combination of the foregoing, which agreement may be oral or in writing,
including, without limitation, any master agreement relating to or governing any
or all of the foregoing and any related schedule or confirmation, each as
amended from time to time.
"Total Debt" means all Funded Debt of the Borrowers.
(c) Subsection (d) of Section 2.1, entitled "Continuation and Conversion of
Loans" of the Credit Agreement is replaced in its entirety with the following
provision:
(d) Continuation and Conversion of Loans. Subject to the terms and
conditions of this Agreement, the Borrowers may borrow the Loans as Base Rate
Loans or LIBOR Loans and, until the Revolving Loans Maturity Date, the Borrowers
may Continue LIBOR Loans or Convert Loans of one Type into Loans of the other
Type.
(d) Subsection (b) of Section 2.3, entitled "Repayment of Term Loans" of
the Credit Agreement is replaced in its entirety with the following provision:
(b) Repayment of Term Loans. The Borrowers shall pay to the Administrative
Agent, for the account of each Term Loans Lender, the principal of each of the
Term Loans outstanding at any time on or after the Term Loans Amortization
Commencement Date for such Term Loan (and the principal of each of the Term
Loans outstanding at any time on or after the Term Loans Amortization
Commencement Date for such Term Loan shall be due and payable) in sixty (60)
monthly installments, commencing on the first Monthly Date after the Closing
Date, and continuing on each Monthly Date thereafter through and including the
Term Loans Maturity Date for such Term Loan, each of which installments shall be
in an amount equal to 1.667% of the principal amount of such Term Loan on the
Closing Date. In addition, the Borrowers shall pay to the Administrative Agent
for the account of each Term Loans Lender all outstanding principal of the Term
Loans (and all outstanding principal of the Term Loans shall be due and payable)
on the Term Loans Maturity Date for such Term Loan.
(e) Subsection (a) of Section 2.4, entitled "Revolving Loans Interest Rate"
of the Credit Agreement is replaced in its entirety with the following
provision:
(a) Revolving Loans Interest Rate. The Borrowers shall pay to the
Administrative Agent for the account of each Lender interest on the unpaid
principal amount of each Revolving Loan made by such Lender (or deemed made by
such Lender with respect to a Revolving Loan assigned to such Lender after the
making of such Revolving Loan) to the Borrowers for the period commencing on the
date of such Revolving Loan to, but excluding, the date such Revolving Loan
shall be paid in full, at the following rates per annum:
(i) during the periods such Revolving Loan is a Base Rate Loan, the
lesser of (A) the Base Rate plus the Applicable Margin or (B) the Maximum
Rate; and
(ii) during the periods such Revolving Loan is a LIBOR Loan, the
lesser of the Adjusted LIBOR Rate plus the Applicable Margin or (B) the
Maximum Rate;
(f) Subsection (b) of Section 2.4, entitled "Term Loans Interest Rate" of
the Credit Agreement is replaced in its entirety with the following provision:
(b) Term Loans Interest Rate. The Borrowers shall pay to the
Administrative Agent for the account of each Lender interest on the unpaid
principal amount of each Term Loan made by such Lender (or deemed made by such
Lender with respect to a Term Loan assigned to such Lender after the making of
such Term Loan) to the Borrowers, at the following rates per annum:
(i) during the periods such Term Loan is a Base Rate Loan, the lesser
of (A) the Base Rate plus the Applicable Margin or (B) the Maximum Rate;
and
(ii) during the periods such Term Loan is a LIBOR Loan, the lesser of
(A) the Adjusted LIBOR Rate plus the Applicable Margin or (B) the Maximum
Rate;
(g) Subsection (c) of Section 2.4, entitled "Payment Dates" of the Credit
Agreement is replaced in its entirety with the following provision:
(c) Payment Dates. Accrued interest on the Loans shall be due and
payable as follows:
(i) in the case of Base Rate Loans and each LIBOR Loan not having a
designated Interest Period, on each Monthly Date;
(ii) in the case of each LIBOR Loan having a designated Interest
Period , on the last day of the Interest Period with respect thereto and,
in the case of an Interest Period greater than three months, at three-month
intervals after the first day of such Interest Period;
(iii) upon the payment or prepayment (whether mandatory or optional)
of any such Loan or the Conversion of any such Loan to a Loan of the other
Type (but only on the principal amount so paid, prepaid or Converted); and
(iv) with respect to each Term Loan, on the Term Loans Maturity Date
for such Term Loan and, with respect to the Revolving Loans, on the
Revolving Loans Maturity Date.
(h) Section 2.6, entitled "Optional Prepayments, Conversions and
Continuations of Loans" of the Credit Agreement is replaced in its entirety with
the following provision:
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans.
Subject to Section 2.7, the Borrowers shall have the right from time to time to
prepay the Loans in whole or in part, to Convert all or part of a Loan of one
Type into a Loan of another Type or to Continue LIBOR Loans; provided that: (a)
the Borrowers shall give the Administrative Agent notice of each such
prepayment, Conversion or Continuation as provided in Section 2.9, (b) LIBOR
Loans having a designated Interest Period may be Converted on the last day of
the Interest Period and any prepayment of LIBOR Loans having a designated
Interest Period on any day other than the last day of the Interest Period shall
be subject to payment of the additional compensation specified in Section 4.5,
(c) except for Conversions of LIBOR Loans into Base Rate Loans, no Conversions
or Continuations shall be made while a Default has occurred and is continuing,
and (d) optional prepayments of the Loans shall be applied first to the
principal of the Term Loans in the inverse order of maturities of the then
remaining installments of such Term Loans (until such Loans are paid in full)
and then to the principal of the Revolving Loans. Except for prepayments of the
Revolving Loans which may be reborrowed in accordance with this Agreement, no
amounts prepaid pursuant to this Section 2.6 may be reborrowed.
(i) Subsection (c) of Section 2.7, entitled "Mandatory Prepayments" of the
Credit Agreement is replaced in its entirety with the following provision:
(c) Proceeds of Equity Issuance/Excess Cash Flow. The Borrowers shall,
within five Business Days after the Company receives proceeds after the date
hereof from any Equity Issuance, prepay the Loans in the amount of the Net
Proceeds of such Equity Issuance. Similarly, the Borrowers shall, on an annual
basis, for the year ending December 31, 2002, prepay the Loans in the amount of
fifty percent (50%) of Excess Cash Flow.
(j) Subsection (c) of Section 2.8, entitled "Minimum Amounts" of the Credit
Agreement is replaced in its entirety with the following provision:
Section 2.8 Minimum Amounts. Except for Conversions and prepayments
pursuant to Section 2.7 and Article 4, each borrowing, each Conversion and each
optional prepayment of principal of the Loans shall be in an amount at least
equal to $250,000 or an integral multiple of $100,000 in excess thereof
(borrowings, prepayments or Conversions of or into Loans of different Types or,
in the case of LIBOR Loans, having different Interest Periods at the same time
hereunder shall be deemed separate borrowings, prepayments and Conversions for
purposes of the foregoing, one for each Type or Interest Period).
(k) Subsection (c) of Section 2.9, entitled "Certain Notices" of the Credit
Agreement is amended to replace all references to the term "Eurodollar Loans"
with the term "LIBOR Loans."
(l) Subsection (b) of Section 2.11, entitled "Fees" of the Credit Agreement
is amended to increase the annual administrative fee from $7,500 to $15,000.
(m) Subsection (a) of Section 2.14, entitled "Letters of Credit" of the
Credit Agreement is replaced in its entirety with the following provision:
(a) Subject to the terms and conditions of this Agreement, the
Borrowers may utilize the Revolving Loans Commitment by requesting that the
Issuing Bank issue Letters of Credit; provided, that the aggregate amount of
outstanding Letter of Credit Liabilities shall not at any time exceed
$2,000,000.
(n) All references to the terms "Eurodollar," "Eurodollar Rate," "Adjusted
Eurodollar Rate," and "Eurodollar Loans" in Article 4 of the Credit Agreement
shall be replaced with the terms "LIBOR," "LIBOR Rate," "Adjusted LIBOR Rate,"
and "LIBOR Loans," respectively, to the extent applicable. The following
additional provisions are added to Article 4 of the Credit Agreement and, if any
inconsistencies exist between the Credit Agreement and the following additional
paragraphs, the Administrative Agent, in its sole and absolute discretion, shall
decide which provisions shall control:
4.8 Basis for Determining LIBOR Rate Inadequate or Unfair. If with respect
to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being offered
to the Lender in the relevant market for such Interest Period, or the Lender
otherwise reasonably determines (which determination shall be binding and
conclusive on the Borrowers) that by reason of circumstances affecting the
London interLender market adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate; or
(b) the Lender reasonably determines that the LIBOR Rate will not
adequately and fairly reflect the cost to the Lender of making or maintaining
the Loans for such Interest Period, or that the making or maintaining of the
Loans has become impracticable as a result of an event occurring after the date
of this Agreement which in the opinion of the Lender materially affects the
Loans; then the Lender shall promptly notify the Borrowers in writing thereof
and the Lender and the Borrowers shall attempt to agree upon an alternative rate
that would otherwise compensate the Lender for the cost of making or maintaining
the Loans. In the event the parties cannot agree on an alternative rate, then,
within sixty (60) days thereafter, the Borrowers shall either: (a) prepay the
Loans, together with all accrued interest thereon, Breakage Fees, if any, and
all other sums due hereunder; or (b) request the Lender to convert the interest
rate applicable to the Loans from a rate based on the LIBOR Rate to the
Prime-Based Rate effective on the last day of the current Interest Period. The
Lender shall agree to modify the terms of the Notes reflecting the change in the
applicable interest rate so long as no Default or Event of Default has the
occurred.
4.9 Changes in Law Rendering Maintenance of the Loans Unlawful, etc. In the
event that any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental authority, central Lender or comparable agency
charged with the
administration thereof, should make it unlawful for the Lender to make or
maintain the Loans, then the Lender shall promptly notify the Borrowers of such
change and the Lender and the Borrowers shall attempt to restructure the Loans
on terms on which the Lender could make or maintain the Loans and which
preserves and maintains the Lender's anticipated rate of return. The Borrowers
shall be responsible for all out-of-pocket costs and expenses incurred by the
Lender in connection with such restructuring and relating to any required
modifications to the Loan Documents. If, however, the parties cannot agree or if
the Loans cannot be restructured on a basis on which the Lender could make or
maintain the Loans, then, within sixty (60) days thereafter, the Borrowers shall
prepay the Loans, together with all accrued interest thereon, Breakage Fees, if
any, and all other sums due hereunder.
4.10 Funding Losses. The Borrowers hereby agrees that upon demand by the
Lender (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount claimed) the Borrowers will indemnify the
Lender against any net loss or out-of-pocket expense (collectively, the
"Breakage Fees") which the Lender may sustain or incur (including, without
limitation, any net loss or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by the Lender to fund or
maintain the Loans), as reasonably determined by the Lender, as a result of any
prepayment of any amounts due under the Notes other than at the end of an
Interest Period.
4.11 Discretion of Lender as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, the Lender shall be entitled to
fund and maintain its funding of all or any part of the Loans in any matter it
sees fit.
4.12 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements issued by the Lender pursuant to the provisions hereof shall be
conclusive absent demonstrable error. The Lender may use reasonable averaging
and attribution methods in determining compensation under this Section, and the
provisions of such Section shall survive repayment of the Loans, cancellation of
the Notes and any termination of this Agreement.
(o) The Credit Agreement is amended to add the following new section 2.16:
Section 2.16 Foreign Exchange Trades and Interest Rate Xxxxxx.
(a) Subject to the terms and conditions of the Credit Agreement, the
Borrowers may utilize the Revolving Loans Commitment by requesting advances for
foreign exchange trades and interest rate xxxxxx; provided, that the aggregate
amount of outstanding foreign exchange trades (for all Borrowers) shall not at
any time exceed $1,500,000 and the aggregate amount credit exposure associated
with interest rate xxxxxx (for all Borrowers) shall not at any time exceed
$500,000.
(b) The Borrowers assume all risks of the acts or omissions with respect to
its use of such credit facilities. Neither the Administrative Agent, the Lender
nor any of their respective officers or directors shall have any responsibility
or liability to the Borrowers or any other Person in such regard.
(p) Section 10.1. of the Credit Agreement is amended to read in its
entirely as follows:
Section 10.1 Minimum Net Worth. The Company and its Consolidated
Subsidiaries will at all times maintain Net Worth in an amount equal to not less
than the sum of (a) $35,000,000 at September 30, 2001 plus (b) 75% of each
quarter's Net Income, if positive (with no reduction for losses), for each
fiscal quarter beginning with the fiscal quarter ending December 31, 2001 plus
(c) 100% of all Net Proceeds of each Equity Issuance which occurs after the
Closing Date. In addition, for purposes of this Section 10.1, the Company may
add back certain charges deducted in accordance with GAAP to determine Net
Worth, including charges related to research and development in process,
goodwill, equity adjustments relative to comprehensive income, such as foreign
exchange translation effect and deferred compensation arising from the issuance
of stock options to employees. Certain other non-recurring charges deducted in
accordance with GAAP to determine Net Worth may, with the prior consent of the
Required Lenders deliverable in their sole discretion, be added back to
determine Net Worth.
(q) Section 10.2 of the Credit Agreement is amended to read in its entirely
as follows:
Section 10.2 Fixed Charge Coverage. Beginning with the fiscal quarter ended
December 31, 2001, and continuing on a rolling four quarter basis, the Company
will not permit the ratio of (a) EBITDA at the end of any fiscal quarter for the
period of the four prior fiscal quarters plus rent expense for such period to
(b) Consolidated Fixed Charges for the four fiscal quarter period ending on such
date plus rent expense for such period, to be not less than 1.20 to 1.00.
(r) Section 10.3 of the Credit Agreement is amended to read in its entirely
as follows:
Section 10.3 Funded Debt to EBITDA. Beginning with the fiscal quarter ended
December 30, 2001, the Company will not permit the ratio of (a) total Funded
Debt outstanding at the end of any of the fiscal quarter to (b) EBITDA at the
end of such fiscal quarter for the period of the four prior fiscal quarters, to
exceed (i) through December 31, 2001, 3.00 to 1.00; (ii) from January 1, 2002
through December 31, 2002, 2.75 to 1.00; (iii) from January 1, 2003 thereafter,
2.5 to 1.00, all as measured as of each fiscal quarter end.
3. Conditions Precedent. The effectiveness of this Amendment is subject to
the satisfaction of each of the following conditions precedent, all of which
conditions precedent must be satisfied on or before August 29, 2001 (unless a
different deadline is specified):
(a) The Lender shall have received all of the following, each dated
(where applicable and unless otherwise indicated) the date of this Amendment, in
form and substance satisfactory to the Lender:
(i) Amendment Documents. This Amendment as executed by the parties
hereto and any other agreement, document, instrument or certificate
reasonably required by the Lender to be executed or delivered by the
Borrowers in connection with this Amendment (collectively, the "Amendment
Documents");
(ii) Resolutions/Certificates. Resolutions of the Board of Directors
of the Borrowers certified by its Secretary or an Assistant Secretary which
authorize the execution, delivery and performance by the Borrowers of this
Amendment and the other Amendment Documents to which any of the Borrowers
is or is to be a party, as well as certificates as to the financial
condition and solvency of the Borrowers after giving effect to the
transactions contemplated by this Amendment;
(iii) Origination Fee/Other Fees, Costs and Expenses. An origination
fee equal to 50 basis points of the sum of the entire $24,000,000 credit
facilities contemplated by this Amendment and the Loan Documents executed
concurrently herewith, or One Hundred Twenty Thousand Dollars ($120,000),
which origination fee shall be deemed earned upon receipt, as well as all
fees, costs and expenses (including, without limitation, attorneys' fees
and expenses) incurred by the Lender incident to this Amendment or required
to be paid in accordance with the Credit Agreement shall have been paid in
full by the Borrowers;
(iv) Opinion of Counsel. The Lender shall have received the executed
legal opinion of counsel for the Borrowers in form and substance
satisfactory to the Lender and covering such matters incident to the
transactions contemplated by this Amendment as the Lender may reasonably
require;
(v) Review and Execution of Purchase Agreement. The Lender shall have
received and reviewed to its satisfaction the Purchase Agreement, and the
same shall have been executed by the parties thereto in the identical form
as it was provided to the Lender
(vi) Committed Financing. The Lender shall have received and reviewed
to its satisfaction information that shows that the amount of committed
financing available to the Borrowers shall be sufficient to meet the
ongoing financing needs of the Borrowers after giving effect to the
transactions contemplated by this Amendment, and that there shall be not
less than $2,000,000 of excess availability under the Revolving Loans at
the Closing Date, as a counter to the Borrowers' concentrated receivables
in IBM and Compaq.
(vii) Financial Information. The Lender shall have received and
reviewed to its satisfaction the consolidated financial statements for the
Borrowers for the fiscal years ended 1998, 1999 and 2000, including balance
sheets, income and cash flow statements audited by independent public
accountants of recognized national standing and prepared in conformity with
GAAP, and such other financial information as the Lender may reasonably
request. The Lender shall have further received and reviewed information
regarding litigation, tax, accounting, labor, insurance, pension
liabilities (actual or contingent), real estate leases, material contracts,
debt agreements, property ownership, environmental matters, contingent
liabilities and management of the Borrowers.
(viii) Swap Agreement. The Borrowers shall enter into a Swap Agreement
in form and substance satisfactory to the Lender and providing coverage in
an amount equal to at least $5,000,000 and for a duration of at least three
(3) years from the date hereof, which Swap Agreement shall be executed and
delivered on or before one hundred twenty (120) days from the date hereof;
(ix) Field Examination. The Borrowers shall, at its own expense,
cooperate fully with a written audit of the accounts receivable, inventory,
payables, controls and systems of the Borrowers, to occur as soon as
possible and in no event later than ninety (90) days from the date hereof.
Thereafter, such field examinations shall occur on a semi-annual basis, and
all costs, expenses and charges associated with such field examinations
shall be the responsibility of the Borrowers, and shall constitute
Obligations.
(x) Material Adverse Change/Litigation. The absence of any material
adverse change in the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the
Borrowers since June 30, 2001 or in the facts and information regarding the
Borrowers as represented to the Lender prior to the date of this Amendment.
Similarly, the absence of any action, suit, investigation or proceeding
pending or
threatened in any court or before any arbitrator or governmental authority
that purports (i) to materially affect any the Borrowers, or (b) to affect
the transactions contemplated by this Amendment or of the ability of the
Borrowers to perform under this Amendment and the other Loan Documents.
(xi) Material Disruption. The absence of any material disruption of or
a material adverse change in conditions in the financial, banking or
capital markets which the Lender, in its sole discretion, deems material in
connection with the transaction contemplated by this Amendment; and
(xii) Additional Information. The Lender shall have received such
additional agreements, documents, instruments and information as the Lender
or its legal counsel, Ober, Kaler, Xxxxxx & Xxxxxxx, a Professional
Corporation, may reasonably request to effect the transactions contemplated
hereby;
(b) The representations and warranties contained herein and in all other
Loan Documents, as amended hereby, shall be true and correct as of the date
hereof as if made again on and as of the date hereof (except if and to the
extent that such representations and warranties are or were expressly made only
as of another specific date);
(c) No Default or Event of Default shall have occurred and be
continuing; and
(d) All corporate proceedings taken in connection with this Amendment
and the other Amendment Documents, and all legal matters incident thereto, shall
be reasonably satisfactory to the Lender and its legal counsel, Ober, Kaler,
Xxxxxx & Xxxxxxx, a Professional Corporation.
4. Representations and Warranties. Each of the Borrowers hereby jointly and
severally represent and warrant to, and agrees with, the Lender that, as of the
date of and after giving effect to this Amendment, (a) the execution, delivery
and performance of this Amendment and any and all other Amendment Documents
executed and/or delivered in connection herewith have been authorized by all
requisite corporate action on the part of the Borrowers and will not violate the
Borrowers' corporate charters or bylaws; (b) all representations and warranties
set forth in the Credit Agreement and in the Security Documents are true and
correct as if made again on and as of such date (except if and to the extent
that such representations and warranties were expressly made only as of another
specific date); (c) no Default or Event of Default has occurred and is
continuing; and (d) there is not any action, suit, investigation or proceeding
pending or threatened in any court or before any arbitrator or governmental
authority that purports (i) to materially affect the Borrowers, or (b) to affect
the transactions contemplated by this Amendment or of the ability of the
Borrowers to perform under this Amendment and the other Loan Documents.
5. Governing Law. This Amendment and the rights and obligations of the
parties hereunder shall be deemed to have been made in the Commonwealth of
Virginia and shall be governed by, and construed in accordance with, the laws of
the Commonwealth of Virginia.
6. Counterparts. This Amendment may be executed in any number of
counterparts, all of which when taken together shall constitute one agreement,
and any of the parties hereto may execute this Amendment by signing any such
counterpart.
7. No Oral Agreements. THIS AMENDMENT, TOGETHER WITH THE CREDIT AGREEMENT
AND THE OTHER LOAN DOCUMENTS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS BETWEEN
AND AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN (A) THE BORROWERS AND (B) THE BANK.
8. Credit Agreement Remains in Effect; No Waiver. Except as expressly
provided herein, all terms and provisions of the Credit Agreement and the other
the Loan Documents shall remain unchanged and in full force and effect and are
hereby ratified and confirmed. No waiver by the Lender of any Default or Event
of Default shall be deemed to be a waiver of any other Default or Event of
Default. No delay or omission by the Lender in exercising any power, right or
remedy shall impair such power, right or remedy or be construed as a waiver
thereof or an acquiescence therein, and no single or partial exercise of any
such power, right or remedy shall preclude other or further exercise thereof or
the exercise of any other power, right or remedy under the Agreement, the Loan
Documents or otherwise.
9. Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Loan Document shall survive the
execution and delivery of this Amendment and the other Loan Documents, and no
investigation by the Lender or any closing shall affect the representations and
warranties or the right of the Lender to rely upon such representations and
warranties.
10. Reference to Credit Agreement. This Amendment shall constitute a Loan
Document. Each of the Loan Documents, including the Credit Agreement, the
Amendment Documents and any and all other agreements, documents or instruments
now or hereafter executed and/or delivered pursuant to the terms hereof or
pursuant to the terms of the Credit Agreement as amended hereby, are (if and to
the extent necessary) hereby amended so that any reference in such Loan
Documents to the Credit Agreement shall mean a reference to the Credit Agreement
as amended hereby.
11. Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
12. Successors and Assigns. This Amendment is binding upon and shall inure
to the benefit of the Administrative Agent, the Lender, the Borrowers and the
other Loan Parties and their respective successors and assigns; provided,
however, that the Borrowers may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Lender.
13. Confirmation of Selection of Borrowing Base/No Request to Select
Reversal of Selection. The Borrowers hereby confirm that, pursuant to subsection
(c) of Section 2.1 of the Credit Agreement, the Borrowers have irrevocably
selected to have the availability of Revolving Loans subject to the Borrowing
Base, and further confirm that the Borrowers hereby agree not to request
reversal of such selection, i.e. that the Lenders approve the availability of
Revolving Loans be subject to the covenants related to Funded Debt contained in
the Credit Agreement.
14. Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers effective as of the day
and year first above written.
"BORROWERS:"
OAO TECHNOLOGY SOLUTIONS, INC.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Vice President - Finance,
Chief Financial Officer
OAO SYSTEMS, INC.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
OAO SERVICES, INC.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
OAO CANADA, LTD.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
CANADIAN NETWORK
RESOURCES, LTD.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
CANADIAN RESOURCE
MANAGEMENT, LTD.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
OAO/ICOR (UK), LTD.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
OAO HEALTHCARE SOLUTIONS INC.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
ENTERPRISE TECHNOLOGY
GROUP, INC.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Chief Financial Officer
OAO TRANSITION, LLC
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Authorized Representative
OAO HEALTH SERVICES PROCESSING, INC.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Authorized Representative
OAO TECHNOLOGY SOLUTIONS EUROPE B.V.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Authorized Representative
OAO TECHNOLOGY SOLUTIONS ITALIA SRL.
By: (SEAL)
----------------------------------------------
Name: J. Xxxxxxx Xxx
Title: Authorized Representative
Address for All Notices:
OAO Technology Solutions, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: J. Xxxxxxx Xxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.,
A national banking association
as Administrative Agent
By: (SEAL)
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Vice President
Address for Notices:
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
LENDERS:
Revolving Loans
Commitment: $15,000,000
BANK OF AMERICA, N.A.,
A national banking association
Term Loans
Facility Share: $9,000,000
By: (SEAL)
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Vice President
Address for Notices:
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000