EXHIBIT 10.9
SECOND AMENDMENT AND WAIVER TO
CREDIT AGREEMENT
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This Second Amendment and Waiver to Credit Agreement (this "Second
Amendment") is made as of April 30, 1999 by and between Law Office Information
Systems, Inc., an Arkansas corporation (the "Borrower"), and Fleet National
Bank, a national banking association (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a Credit Agreement dated
as of August 20, 1998, as amended by a First Amendment To Credit Agreement dated
as of December 31, 1998 (as amended, the "Credit Agreement"); and
WHEREAS, the Borrower has requested that the Bank amend the Credit
Agreement to, among other things, (i) increase the maximum permitted amount of
SBLC line of Credit Advances and (ii) modify the dates on which the SBLC Line of
Credit Advances shall convert to term notes and begin to amortize; and
WHEREAS, the Borrower has also requested that the Bank waive the Borrower's
obligation to comply with certain financial covenants set forth in the Credit
Agreement for the fiscal period ended December 31, 1998; and
WHEREAS, the Bank is willing to amend and waive certain provisions of the
Credit Agreement, on the terms and conditions more fully set forth in this
Second Amendment;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. All references in the Credit Agreement to the "Agreement" shall from
and after the date hereof mean the Credit Agreement as amended by the First
Amendment to Credit Agreement and by this Second Amendment.
2. The term "Notes" as defined in Section 1.01 of the Credit Agreement is
hereby amended to read as follows:
"Notes" shall mean collectively, the Revolving Credit Note, the
Equipment Line of Credit Note and each Equipment Line of Credit Term
Note, the $500,000 SBLC Line of Credit Note, the $3,500,000 SBLC Line
of Credit Term Note and all other SBLC Line of Credit Notes, SBLC Line
of Credit Term Notes and other notes which may be issued by the
Borrower to the Bank pursuant to this Agreement, and all substitutions
and replacements of any of the foregoing.
3. Sections 2.04, 2.05(a) and 2.06 and Exhibits 2.04(b) and 2.04(d) of
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the Original Credit Agreement are hereby amended by deleting said Sections and
Exhibits in their entirety and substituting therefore the following:
Section 2.04. SBLC Line of Credit.
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(a) General Terms. Subject to the terms and conditions hereof, the
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Bank has established a $7,000,000 SBLC Line of Credit in favor of the
Borrower, pursuant to which the Bank has (i) made advances (each an "SBLC
Line of Credit Advance" and collectively, the "SBLC Line of Credit
Advances") directly to the Borrower in the aggregate principal amount as of
April __, 1999 of $3,500,000 (the "$3,500,000 Outstanding SBLC Line of
Credit Advances") to finance the development of the Borrower's law library
databases; (ii) agreed to make up to $500,000 in aggregate principal amount
of additional SBLC Line of Credit Advances (the $500,000 Additional SBLC
Line of Credit Advances") to the Borrower during the period from April __,
1999 through the Additional SBLC Line of Credit Advance Expiration Date (as
hereinafter defined) to finance additional developments of the Borrower's
law library databases, and (iii) issued, and agreed to issue, from time to
time through and until June 30, 1999 for the account of the Borrower,
standby letters of credit pursuant to Section 2.05; provided, however, that
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the aggregate of (A) all outstanding SBLC Line of Credit Advances
(including both the $3,500,000 Outstanding SBLC Line of Credit Advances and
the $500,000 Additional Line of Credit Advances), and (B) the maximum
aggregate liability of the Bank under all outstanding letters of credit
issued by the Bank under Section 2.05 and under all outstanding letters of
credit listed on Schedule 2.04 attached hereto ("L/C Obligations") shall at
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no time exceed $7,000,000 (the "Maximum SBLC Line of Credit"). The Borrower
may not reborrow SBLC Line of Credit Advances once repaid and (i) to the
extent that the Borrower has not borrowed the entire $500,000 of Additional
SBLC Line of Credit Advances by the Additional SBLC Line of Credit Advance
Expiration Date, the Borrower shall have no further right to borrow SBLC
Line of Credit Advances under this Section 2.04. In addition, the Borrower
shall have no further right to request L/C's under Section 2.05 after June
30, 1999.
As used herein, the term "Additional SBLC Line of Credit Advance
Expiration Date" shall mean the earlier of (i) May 15, 1999 or (ii) the
date on which the Borrower receives proceeds from the issuance and/or sale
of any of its debt or equity securities or interests.
(b) The SBLC Line of Credit Note. All amounts owed by the Borrower
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with respect to the $500,000 Additional SBLC Line of Credit Advances shall
be evidenced by a SBLC line of credit note in substantially the form
attached hereto as Exhibit 2.04(b) (the "SBLC Line of Credit Note"), in the
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original principal amount of $500,000, dated the date hereof and due and
payable in full (together with all accrued and unpaid interest thereon) on
the Additional SBLC Line of Credit Advance Expiration Date. Interest shall
be payable on the SBLC Line of Credit Note as provided in Section 2.04(e).
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(c) SBLC Line of Credit Payments. If at any time the aggregate amount
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of outstanding SBLC Line of Credit Advances (including both the $3,500,000
Outstanding SBLC Line of Credit Advances and the $500,000 Additional SBLC
Line of Credit Advances) and L/C Obligations exceeds the Maximum SBLC Line
of Credit, then the Borrower shall immediately pay such excess to the Bank,
and the Bank may, without prior notice to the Borrower, charge any of
Borrower's accounts with the Bank in order to effect such payment.
(d) The SBLC Line Credit Term Note. All amounts owed by the Borrower
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with respect to the $3,500,000 Outstanding SBLC Line of Credit Advances
shall be evidenced by a SBLC line of credit term note in substantially the
form attached hereto as Exhibit 2.04(d) (the "SBLC Line of Credit Term
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Note"), in the original principal amount of $3,500,000, dated the date
hereof and due and payable in thirty-two (32) equal monthly installments,
each in the amount of $109,375, payable on the first day of each month
commencing on May 1, 1999, with a final installment in the amount of the
entire unpaid principal balance of the $3,500,000 Outstanding SBLC Line of
Credit Advances (together with all accrued and unpaid interest thereon),
due and payable on February 1, 2002. Interest shall be payable on the SBLC
Line of Credit Term Note as provided in Section 2.04(e).
(e) Interest. All SBLC Line of Credit Advances made by the Bank
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(including all amounts outstanding under the SBLC Line of Credit Note and
under the SBLC Line of Credit Term Note) shall bear interest prior to the
occurrence of an Event of Default or maturity (computed on the basis of
actual number of days elapsed over a 360-day year) on the unpaid principal
balance outstanding from time to time at a fluctuating rate per annum equal
to the aggregate of (i) the Prime Rate, plus (ii) one and one-half percent
(1.5%). From and after the occurrence and during the continuation of an
Event of Default or maturity (whether by demand, acceleration or
otherwise), the unpaid principal balance of the SBLC Line of Credit
(including all amounts outstanding under the SBLC Line of Credit Note and
under the SBLC Line of Credit Term Note) shall bear interest at a
fluctuating rate per annum equal to four percent (4%) above the rate of
interest otherwise payable with respect to the SBLC Line of Credit.
Interest shall be payable monthly in arrears on the first day of the next
succeeding month commencing September 1, 1998. The effective rate of
interest shall change on each date on which the Prime Rate shall change.
(f) Requests for Advances. Subject to the conditions of Section
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2.04(a), each SBLC Line of Credit Advance to the Borrower shall be made on
a Banking Day on notice given by the Borrower to the Bank prior to 11:00
a.m. Boston time on the date of the proposed borrowing. Each request for
an SBLC Line of Credit Advance shall be made to the Bank in writing
(including by facsimile) or by telephone by a duly authorized
representative of the Borrower, and the Bank may rely upon any telephone
request which it reasonably believes is made by such a representative, and
shall specify the amount of such SBLC Line of Credit Advance (which must be
a minimum of $100,000). The Borrower agrees to indemnify and hold the Bank
harmless for any action, including the making of SBLC Line of Credit
Advances hereunder, or loss or expense, taken or incurred by the Bank in
good faith reliance upon such telephone request. At the time of
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the initial request for a SBLC Line of Credit Advance made under this
Section 2.04(f), the Borrower shall have provided the Bank with a
Compliance Certificate in the form required by Section 5.09(c) hereof. The
Borrower hereby agrees (i) that the Bank shall be entitled to rely upon the
most recent Compliance Certificate in its possession until it is superseded
by another Compliance Certificate, and (ii) that each request for a SBLC
Line of Credit Advance, whether by telephone or in writing or otherwise,
shall constitute a confirmation of the representations and warranties
contained in the most recent Compliance Certificate then in the Bank's
possession.
(g) Expiration of SBLC Line of Credit. The SBLC Line of Credit shall
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expire (i) with respect to direct borrowings of SBLC Line of Credit
Advances on the Additional SBLC Line of Credit Advance Expiration Date, and
(ii) with respect to letters of credit under Section 2.05, on June 30,
1999, whereupon no further advances may be made thereunder.
Section 2.05. Letters of Credit.
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(a) Issuance procedures. The Borrower may request, and the Bank will
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arrange to issue standby letters of credit (individually, an "L/C", and
collectively, with all outstanding letters of credit listed on Schedule
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2.04 attached hereto which shall be deemed to have been requested under
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this Section 2.05, the "L/C's") for the account of the Borrower; provided
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that after giving effect to all such L/C's the L/C Obligations at such time
shall not exceed $7,000,000 less (i) the aggregate principal amount of all
SBLC Line of Credit Advances outstanding at such time (including the
principal amount of the SBLC Line of Credit Note and the SBLC Line of
Credit Term Note). All L/C's shall have an expiration date not later than
June 30, 2001. The Company shall deliver to the Bank an L/C application
and L/C agreement together with the proposed form of such L/C (which,
together with all schedules and exhibits thereto, shall be in form and
substance satisfactory to the Bank and its counsel) and such other
certificates, documents and other papers and information as the Bank may
reasonably request. Any foreign beneficiary must be satisfactory to the
Bank. Within five Banking Days following receipt of the above-described
documents in satisfactory form, the Bank shall issue such L/C, provided
that immediately prior to the issuance of such L/C and after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing.
Section 2.06. Method of Payment.
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All payments and prepayments of principal and interest due under the
Notes and of fees due hereunder shall be made by the Borrower to the Bank
in lawful money of the United States in immediately available funds.
Payments received by the Bank after 11:00 a.m. Boston time shall be deemed
received on the next succeeding Banking Day. All payments of principal,
interest or fees to be made to the Bank may be effected by the Bank
debiting accounts of the Borrower with the Bank. If a Default or Event of
Default has occurred or is continuing, all payments and prepayments made by
the Borrower to the Bank hereunder shall apply first to all outstanding
fees and expenses of the Bank, second to pay all interest and fees due in
respect of the SBLC Line of Credit Note, the SBLC Line of Credit Term Note
and the L/C's, third to pay all principal due under the SBLC
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Line of Credit Note, fourth to pay all principal due under the SBLC Line of
Credit Term Note, and fifth toward any reimbursement obligations of the
Borrower to the Bank in respect of L/C's.
4. The Borrower has indicated to the Bank that as of December 31, 1998,
the Borrower was not in compliance with the minimum annual revenue, minimum
quick ratio, minimum tangible capital base and maximum quarterly net loss
covenants set forth in Sections 5.28, 5.29, 5.30 and 5.32 of the Credit
Agreement. Based upon the representations and warranties of the Borrower set
forth herein, and subject to the terms and conditions of this Second Amendment,
the Bank hereby waives the Events of Default resulting from the Borrower's
failure to comply with the financial covenants set forth in Sections 5.28, 5.29,
5.30 and 5.32 of the Credit Agreement as at December 31, 1998. The foregoing
waiver shall apply only to those specific Sections of the Credit Agreement
referenced above and only as of December 31, 1998, and nothing herein shall be
deemed to constitute an amendment, modification or waiver of any other covenant
set forth in the Credit Agreement.
5. The Borrower hereby represents and warrants that after giving effect
to this Second Amendment, (a) all representations and warranties made by the
Borrower in the Credit Agreement and the Security Documents are true and correct
as of the date hereof (except for those representations which relate to a
specific date which are true and correct on such date), and (b) the Borrower has
performed and complied with all covenants and agreements required to be
performed and complied with by it under the Credit Agreement and the Security
Documents.
6. Except as amended by this Second Amendment to Credit Agreement, all
provisions of the Credit Agreement, the Security Documents and all other
documents referred to therein shall remain in full force and effect after giving
effect to this Second Amendment.
7. The Obligations (as defined in the Security Documents executed and
delivered by the Borrower and the Guarantor) of Borrower and the Guarantor to
the Bank secured by its respective Security Documents shall be deemed to include
any and all additional obligations of the respective parties created by the
terms of this Second Amendment. The Borrower hereby grants in favor of the
Bank, and confirms its prior grant in favor of the Bank, pursuant to the
Security Documents, of security interests in substantially all of the Borrower's
property and assets as security for the prompt payment and performance of all of
the Obligations, including, without limitation, all obligations of the Borrower
under this Second Amendment.
8. Except as otherwise expressly set forth in paragraph 4 of this Second
Amendment, the execution of this Second Amendment does not constitute a waiver
by the Bank of, and does not in any way relieve the Borrower from any liability
caused by, any breaches or defaults by the Borrower prior to the date hereof of
any representations, warranties and covenants (including any financial
covenants) contained in, the Credit Agreement, and the Bank expressly reserves
any and all rights and remedies it may have in connection therewith or with
respect thereto.
9. The amendments and waiver set forth in this Second Amendment shall not
be effective, and the Bank shall not be obligated to make any additional SBLC
Line of Credit Advances or to issue any additional L/C's under the Credit
Agreement, or otherwise amend,
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modify or alter the Original Credit Agreement unless and until all of the
following conditions shall have been fulfilled or waived by the Bank:
(a) Execution of Notes. The Borrower shall have executed and
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delivered to the Bank the SBLC Line of Credit Note and the SBLC Line of
Credit Term Note, in each case in the form attached to this Second
Amendment.
(b) Officer's Certificate for Borrower. The Borrower shall have
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delivered to the Bank a certificate substantially in the form of attached
to the Credit Agreement with attached corporate resolutions authorizing the
transactions contemplated by this Second Amendment.
(c) Acknowledgment by Guarantor. Capital Resource Lenders III, L.P.,
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the Guarantor under that certain Limited Guaranty dated as of August 20,
1998, shall have acknowledged in writing that the Limited Guaranty shall
remain in full force and effect after giving effect to this Second
Amendment and all references in the Limited Guaranty (i) to the SBLC Line
of Credit Note shall be deemed to refer to both the SBLC Line of Credit
Note and the SBLC Line of Credit Term Note and (ii) to SBLC Line of Credit
Advances shall be deemed to refer to all SBLC Line of Credit Advances made
under the Credit Agreement, as amended by this Second Amendment.
(d) Acknowledgment of Purchasers under the Subordinated Note and
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Securities Purchase Agreement and under the Subordination and Intercreditor
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Agreement. Capital Resources Lenders III, L.P., CRP Investment Partners
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III, L.L.C. and Xxxxxxx Xxxxxxxx, the Purchasers under that certain
Subordinated Note and Securities Purchase Agreement dated as of November
24, 1997, as amended (as so amended, the "Purchase Agreement") and under
that certain Subordination and Intercreditor Agreement dated as of August
20, 1998 (the "Subordination and Intercreditor Agreement"), shall have
acknowledged in writing that the Purchase Agreement and the Subordination
and Intercreditor Agreement shall remain in full force and effect after
giving effect to this Second Amendment, all references in the Purchase
Agreement and the Subordination and Intercreditor Agreement to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended by
this Second Amendment, and all references in the Purchase Agreement to the
CRL III Guaranty shall be deemed to refer to the Limited Guaranty referred
to in paragraph 9(c) of this Second Amendment, after giving effect to this
Second Amendment.
10. The Borrower represents and warrants to the Bank that the Borrower has
full power and authority and has taken all required corporate and other action
necessary to permit it to execute and deliver and perform all of its obligations
contained in this Second Amendment, and to borrow under the Credit Agreement,
and none of such actions will violate any provision of law applicable to, or of
the charter or by-laws of, the Borrower, or result in the breach of or
constitute a default under any agreement or instrument to which the Borrower is
a party or by which it is bound. This Second Amendment has been duly authorized
and validly executed and is the valid and binding obligation of the Borrower
enforceable in accordance with its respective terms. Neither the execution or
delivery by the Borrower of this Second Amendment nor the performance by the
Borrower of its respective obligations under this Second Amendment, the
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Credit Agreement or the Security Documents, requires the consent, approval or
authorization of any person or governmental authority.
11. Promptly upon receipt of an invoice therefor, the Borrower will pay
all legal fees of the Bank's counsel in connection with the preparation,
negotiation, execution and delivery of this Second Amendment.
12. This Second Amendment represents the entire agreement among the
parties thereto relating to the amendment to the Credit Agreement effected
hereby, and supersedes all prior understandings and agreements among the parties
relating to the subject matter of this amendment to the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
LAW OFFICE INFORMATION SYSTEMS, INC.
/s/ Xxxx X. Xxxxxx
By:______________________________________
Name: Xxxx X. Xxxxxx
Title: President
FLEET NATIONAL BANK
/s/ Xxxxx X. Xxxxxxxx
By:______________________________________
Name: Xxxxx X. Xxxxxxxx
Title: Vice President, High Technology Division
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ACKNOWLEDGMENT OF GUARANTOR
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The undersigned, Capital Resource Lenders III, L.P., the Guarantor under
that certain Limited Guaranty dated as of August 20, 1998, hereby acknowledges
that such Limited Guaranty remains in full force and effect after giving effect
to the foregoing Second Amendment and Waiver to Credit Agreement and all
references in such Limited Guaranty (i) to the SBLC Line of Credit Note shall be
deemed to refer to both the SBLC Line of Credit Note and the SBLC Line of Credit
Term Note and (ii) to SBLC Line of Credit Advances shall be deemed to refer to
all SBLC Line of Credit Advances made under the Credit Agreement, as amended by
the foregoing Second Amendment and Waiver to Credit Agreement.
Dated: April __, 1999 CAPITAL RESOURCE LENDERS III, L.P.
By: Capital Resource Partners III, L.L.C.,
its general partner
By:_________________________________
Name:
Title:
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ACKNOWLEDGMENT OF PURCHASERS
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The undersigned, Capital Resources Lenders III, L.P., CRP Investment
Partners III, L.L.C. and Xxxxxxx Xxxxxxxx, the Purchasers under that certain
Subordinated Note and Securities Purchase Agreement dated as of November 24,
1997, as amended (as so amended, the "Purchase Agreement"), and under that
certain Subordination and Intercreditor Agreement dated as of August 20, 1998
(the "Subordination and Intercreditor Agreement"), hereby acknowledge that the
Purchase Agreement and the Subordination and Intercreditor Agreement remain in
full force and effect after giving effect to the foregoing Second Amendment and
Waiver to Credit Agreement, all references in the Purchase Agreement and the
Subordination and Intercreditor Agreement to the Credit Agreement shall be
deemed to refer to the Credit Agreement as amended by the foregoing Second
Amendment and Waiver to Credit Agreement, and all references in the Purchase
Agreement to the CRL III Guaranty shall be deemed to refer to the Limited
Guaranty dated as of August 20, 1998 from Capital Resource Lenders III, L.P. in
favor of the Bank, after giving effect to the foregoing Second Amendment and
Waiver to Credit Agreement.
Dated: April __, 1999 CAPITAL RESOURCE LENDERS III, L.P.
By: Capital Resource Partners III, L.L.C.,
its general partner
By:_________________________________
Name:
Title:
Dated: April __, 1999 CRP INVESTMENT PARTNERS III, L.L.C.
By:_________________________________
Name:
Title:
Dated: April __, 1999 ____________________________________
Xxxxxxx Xxxxxxxx
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