Exhibit 10.8
AMENDMENT NO. 1 TO ACCOUNTS RECEIVABLE AND
INVENTORY FINANCING AGREEMENT
Amendment No. 1 to Accounts Receivable and Inventory Financing Agreement
dated as of Jan 22nd, 2002, by and between Transamerica Commercial Finance
Corporation ("TCFC") and Pacific Magtron, Inc. ("Dealer 1") and Pacific Magtron
(GA), Inc. ("Dealer 2") (Dealer 1 and Dealer 2 shall hereinafter be individually
referred to as a "Dealer" and collectively as the "Dealer").
PREAMBLE
Pursuant to that certain Accounts Receivable and Inventory Financing
Agreement dated as of July 13, 2001 by and among TCFC and Dealer (the "Financing
Agreement"), TCFC made certain financing available to Dealer. Dealer has
requested TCFC to modify certain terms and provisions of the Financing
Agreement. TCFC has agreed to do so, upon the terms and conditions of this
Amendment.
NOW, THEREFORE, in consideration of the premises which are incorporated
herein by this reference and constitute an integral part of this Amendment, the
execution and delivery of this Amendment and the mutual covenants and agreements
hereafter set forth, the parties hereto agree as follows:
1. The reference to the "UCC" in Section 1.1 of the Financing Agreement
shall mean the Uniform Commercial Code as enacted and amended in the State of
Illinois, and as may be further amended from time to time.
2. The following are added as new defined terms in Section 1.3 of the
Financing Agreement:
"GE" - GE Capital Commercial Services, Inc."
"GE Factoring Agreement" - that certain Non-Notification Factoring
Contact and Security Agreement dated as of Dec 7th, 2001, by and
between Dealer and GE, a copy of which is attached as Schedule 1.3-1."
"GE Intercreditor Agreement" - that certain Intercreditor Agreement
dated as of March 27, 2002 by and between TCFC and GE, a copy of which
is attached hereto as Exhibit 1.3-2."
3. The following is added to the end of Section 3.11 of the Financing
Agreement:
"Without limitation of the foregoing, each Dealer (i) shall
authenticate such financing statements and such other instruments and
documents when and as reasonably requested by TCFC; and (ii) hereby
authorizes TCFC through any of TCFC's employees, agents or attorneys
to file any and all financing statements, including, without
limitation, any continuations, transfers or amendments thereof
required to perfect TCFC's security interest and liens in the
Collateral under the UCC without authentication or execution by any
Dealer."
4. Schedule 6.9 to the Financing Agreement is amended in the form of
Schedule 6.9 attached to this Amendment.
5. Section 7.2 of the Financing Agreement is amended to read as follows:
"7.2 Indebtedness. Such Dealer shall not (i) incur or permit to exist
any indebtedness except for Liabilities to TCFC, deferred taxes,
current accounts payable arising in the ordinary course of business
and not overdue, non-current accounts payable which such Dealer is
contesting in good faith by appropriate
proceedings and indebtedness due to GE pursuant to the GE Factoring
Agreement; or (ii) guaranty, endorse or become responsible for
obligations of any other Person or incur any contingent obligation
other than endorsements of negotiable instruments for collection in
the ordinary course of business."
6. Section 7.3 of the Financing Agreement is amended to read as follows:
"7.3 Disposal of Collateral. Dealer shall not sell, lease, transfer,
assign or otherwise dispose of any of the Collateral or any other
asset except for (A) the sale (not subject to repurchase obligation or
return right) of finished inventory in the ordinary course of business
to persons other than other Dealers; and (B) sales or transfers of
Inventory to other dealers (but not to Affiliates who are not also
Dealers) subject to the other provisions of this Agreement; and (C)
the assignment of Accounts to GE pursuant to the GE Factoring
Agreement. Such Dealer shall not sell Inventory to an Affiliate except
to other Dealers as permitted in the preceding sentence."
7. Schedule 7.5 is amended to read in the form of Schedule 7.5 to this
Amendment.
8. Schedule 7.8 is added to the Financing Agreement in the form of Schedule
7.8 attached hereto.
9. The period at the end of Section 9.1(j) of the Financing Agreement is
amended to read "; or" and the following is added to the end of Section 9.1 of
the Financing Agreement.
"(k) any event or event of default (howsoever such terms are defined)
shall occur at any time under the GE Factoring Agreement."
10. All representations and warranties made to TCFC in the Financing
Agreement and all agreements, documents and instruments relating to the
Financing Agreement are hereby restated to TCFC and all of such representations
and warranties remain true and correct as of the date of this Amendment.
11. All of the pledges, assignments, transfers, conveyances, mortgages and
grants of security interest of any property given to TCFC by any Dealer pursuant
to the Financing Agreement and all agreements, documents and instruments
relating to the Financing Agreement, including, but not limited to, pursuant to
Section Three of the Financing Agreement, have constituted and shall and
hereinafter do continue to constitute pledges, assignments, transfers,
conveyances, mortgages and grants of security interests of property to secure
the Liabilities.
12. TCFC's obligation to enter into this Amendment is subject to the
fulfillment of each and every one of the following conditions prior to, or
contemporaneously with the execution and delivery of this Amendment:
A. All of the conditions precedent set forth in the Financing
Agreement shall have been met; and
B. TCFC shall have received such instruments, agreements and documents
in form and manner satisfactory to TCFC and its counsel as Lender may reasonably
request and where applicable, duly executed and recorded, including, but not
limited to, the following:
(i) Certificates of the Secretaries of Dealers certifying as to (a)
all corporate actions taken and consents made by Dealers to
authorize the transactions provided for or contemplated under
this Amendment and the execution, delivery and performance of
this Amendment and all agreements, documents and instruments
relating to this Amendment; and (b) the names of the officers or
employees of Dealers authorized to sign this Amendment and all
agreements, documents and instruments relating to this Amendment,
together with a sample of the true
signature of each such person. (TCFC may conclusively rely on
such certificates until formally advised by a like certificate of
any changes therein);
(ii) Acknowledgement copies from the appropriate governmental
authority of all Uniform Commercial Code financing statements
required to perfect the TCFC's security interests in the
Collateral;
(iii) Confirmations of all guaranties given by the Guarantors;
(iv) Certificates of good standing for Dealers in the jurisdiction of
their incorporation, in the principal places in which they
conduct business and in places in which they own real estate
and/or Collateral;
(v) Such other instruments or documents as TCFC may reasonably
request.
C. No Default shall have occurred and be continuing, may occur with
the giving of notice, the passage of time or both.
D. There shall have been no material adverse change in the business of
any Dealer or the financial conditions of any Dealer from the most recent
financial statements submitted by Dealers to TCFC.
13. All references to the Financing Agreement in the Financing Agreement
and all agreements, documents and instruments relating to the Financing
Agreement shall mean the Financing Agreement, as amended by this Amendment and
as may be further amended and/or restated from time to time.
14. Dealers agree to pay all reasonable fees and out-of-pocket expenses of
TCFC (including, but not limited to, outside counsel to TCFC and paralegals) in
connection with the preparation of this Amendment and all agreements, documents
and instruments relating to this Amendment.
15. The Financing Agreement (as amended by this Amendment), contains the
entire agreement between the parties hereto with respect to the transactions
contemplated herein and supersede all prior representations, agreements,
covenants and understandings, whether oral or written, related to the subject
matter of the Financing Agreement. Except as specifically set forth in the
Agreement, TCFC makes no covenants to any Dealer, including, but not limited to,
any other commitments to provide any additional financing to any Dealer.
16. This Amendment may be executed in any number of counterparts, each of
which counterpart, once they are executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute but one
in the same amendment.
17. Except as specifically amended and modified by this Amendment, (A) the
Financing Agreement shall remain in full force and effect and is hereby restated
and incorporated herein by this reference; and (B) all terms defined in the
Financing Agreement shall have the same meanings herein as therein.
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TRANSAMERICA COMMERCIAL FINANCE
CORPORATION
By: /s/ Xxxxxxxxxxx X. Meals
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Its: Vice President - Credit
-----------------------------
PACIFIC MAGTRON, INC.
By: /s/ Xxxxxxxx X. Xx
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Its: President
-----------------------------
PACIFIC MAGTRON (GA), INC.
By: /s/ Xxxxxxxx X. Xx
------------------------------
Its: Sec.
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SCHEDULE 6.9
Additional Affirmative Covenants
AUDITED FINANCIAL STATEMENTS. In addition to any other financial statements,
Dealer is required to furnish TCFC with a compilation of Dealer's year-end
consolidated audited financial statements performed by an independent certified
public accounting firm selected by Dealer and approved by TCFC, within 90 days
following the end of the fiscal year to which they pertain.
TRANSFER OF ACCOUNTS TO GE. Contemporaneously with any assignment, sale or
transfer of any Accounts by any Dealer to GE pursuant to the GE Factoring
Agreement, such Dealer shall provide TCFC written notice of any such Accounts so
assigned, sold or transferred.
PAYMENTS BY GE. Each Dealer shall at all times require that all payments to such
Dealer pursuant to the GE Factoring Agreement to be paid by GE to the following
Lock Box Accounts, or as otherwise directed in writing by TCFC:
The Northern Trust Bank
Account #: 57010
ABA #: 000000000
Reference #: 01-9150
So long as no Default has occurred or will occur with the giving of notice, the
passage of time, or both, all monies received in such Lock Box Accounts shall be
delivered to Dealer within 2 business days from receipt of said monies by TCFC.
GE FACTORING AGREEMENT REPORTS. Each Dealer shall furnish to TCFC copies of all
reports required to be delivered to GE pursuant to Section 2.4(a) of the GE
Factoring Agreement contemporaneously with the delivery of such reports to GE.
Upon the written request of TCFC to Dealers, Dealers shall deliver to TCFC any
other report or financial information required to be delivered by any Dealer to
GE pursuant to the GE Factoring Agreement.
SCHEDULE 7.5
PERMITTED LIENS
(i) Liens to secure payment of taxes which are not yet due and payable.
(ii) Purchase money Liens for the acquisition of Equipment.
(iii) Deposits under workmen's compensation, unemployment insurance, social
security and other similar laws, or to secure statutory or performance
bonds in the ordinary course of business.
(iv) Liens which, in TCFC's sole determination, do not materially impair the
use or lessen the value of the Collateral.
(v) Lien in Accounts in favor of GE pursuant to the GE Factoring Agreement,
PROVIDED HOWEVER, that Clause (v) shall only be applicable so long as both
the GE Intercreditor Agreement and the GE Factoring Agreement are in force
and effect in form and manner satisfactorily to TCFC.
SCHEDULE 7.8
ADDITIONAL NEGATIVE COVENANTS
GE FACTORING AGREEMENT. No Dealer shall permit or agree to any amendment,
modification, restatement or cancellation of the GE Factoring Amendment without
the prior written consent of TCFC.
TRANSFER OF ACCOUNTS TO GE. No Dealer shall assign, sell or transfer any
Accounts to GE pursuant to the GE Factoring Agreement unless such Accounts so
assigned, sold or transferred (a) are at least 90 days past due from the invoice
date of such Accounts or (b) is no longer in business, or (c) has filed for
bankruptcy.
