SECOND AMENDMENT TO
CREDIT FACILITIES AGREEMENT AND WAIVER OF DEFAULTS
This SECOND AMENDMENT TO CREDIT FACILITIES AGREEMENT AND WAIVER OF DEFAULTS
(this "Agreement") is entered into and effective as of _______ ___, 2002, by and
among Xxxxxxx Computer Resources, Inc., Xxxxxxx Select Integration Solutions,
Inc., Xxxxxxx Select Advisory Services, Inc., Xxxxxxx Computer Resources Sales
Company, Inc., Xxxxxxx Computer Resources Holding Company, Inc., Xxxxxxx
Computer Resources Operations, LLP, Technology Integration Financial Services,
Inc., T.I.F.S. Advisory Services, Inc., TheLinc, LLC and Val Tech Computer
Systems, Inc. (collectively and separately referred to as, "Borrower"), and
Deutsche Financial Services Corporation ("DFS"), as Administrative Agent, and
DFS and the other lenders listed on the signature pages and Exhibit 3 to the
Original Loan Agreement (as defined below) and their respective successors and
permitted assigns, as "Lenders" (the "Lenders").
RECITALS:
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A. Borrower, Administrative Agent and Lenders are party to that certain Credit
Facilities Agreement dated as of June 28, 2001, as amended by the First
Amendment to Credit Facilities Agreement dated as of November 13, 2001 (the
"Original Loan Agreement").
B. Lenders and Borrower have agreed to the provisions set forth herein on the
terms and conditions contained herein.
AGREEMENT
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Therefore, in consideration of the mutual agreements herein and other
sufficient consideration, the receipt of which is hereby acknowledged, Borrower,
Administrative Agent and the Lenders hereby agree as follows:
1. DEFINITIONS. All references to the "Agreement" or the "Loan Agreement" in the
Original Loan Agreement and in this Agreement shall be deemed to be references
to the Original Loan Agreement as it may be amended, restated, extended,
renewed, replaced, or otherwise modified from time to time. Capitalized terms
used and not otherwise defined herein have the meanings given them in the
Original Loan Agreement.
2. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective as of
________ ___, 2002 (except for: (A) Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, and
5.9 of this Agreement, which shall become effective as of September 21, 2001;
and (B) Section 5.11 which shall become effective as of January 6, 2002), but
only if this Agreement has been executed by Borrower, Administrative Agent and
the Lenders, and only if all of the documents listed on Exhibit A to this
Agreement have been delivered and, as applicable, executed, sealed, attested,
acknowledged, certified, or authenticated, each in form and substance
satisfactory to Administrative Agent and the Lenders, and only if the amendment
fee described in Section 3 of this Agreement has been paid in full in cash.
3. AMENDMENT FEE. Borrower shall pay to Administrative Agent a non-refundable
amendment fee of $100,000, to be shared among the Lenders in accordance with
their pro-rata shares as set forth on Exhibit 3 to the Loan Agreement.
4. WAIVER OF DEFAULTS. Borrower has notified Administrative Agent that Borrower
has violated the Minimum Net Income After Tax covenant contained in Section 15.5
as of the end of Borrower's fiscal quarter ended January 5, 2002. Under Section
16.1.7, Borrower's violation of the referenced financial covenant constitutes an
Event of Default. Borrower has requested that the Required Lenders waive such
Event of Default. The Required Lenders hereby waive the Event of Default arising
under Section 16.1.7 due to Borrower's violation of the Minimum Net Income After
Tax covenant contained in Section 15.5 as of the end of Borrower's fiscal
quarter ended January 5, 2002. The waivers contained in this Section 4 are
specific in intent and are valid only for the specific purposes for which given.
Nothing contained herein obligates Administrative Agent or any Lender to agree
to any additional waivers of any provisions of any of the Loan Documents,
including but not limited to Sections 15.5 and 16.1.7. The waivers contained in
this Section are waivers of known Events of Default only, and shall not operate
as a waiver of Administrative Agent's or any Lender's right to exercise remedies
resulting from (i) existing and/or continuing Defaults or Events of Default of
which Administrative Agent or such Lender is not actually aware, or (ii) other
future Defaults or Events of Default, whether or not of a similar nature and
whether or not known to Administrative Agent or any Lender.
5. AMENDMENTS. The Original Loan Agreement is hereby amended as follows:
5.1. RESERVE AGAINST AVAILABILITY. Section 3.1.2 of the Original
Loan Agreement is amended by replacing the final sentence thereof (which defines
the term "Maximum Available Amount") with the following sentences: "The "Maximum
Available Amount" (which can be a negative number) on any date shall be a Dollar
amount equal to (i) the lesser of (A) the amount of the Aggregate Revolving Loan
Commitment and (B) the Borrowing Base on such date, minus (ii) the sum of (a)
the Swingline Loan, (b) the Floorplan Shortfall, and (c) a reserve against
availability in the amount of $4,700,000.00 (the "Availability Reserve").
Administrative Agent may increase or decrease the Availability Reserve from time
to time in its sole reasonable discretion. Notwithstanding the foregoing
sentence, Administrative Agent will increase or decrease the Availability
Reserve from time to time at the direction of the Required Lenders."
5.2. PRIME INCREMENTS AND LIBOR INCREMENTS. The table in Section
4.7 of the Original Loan Agreement is deleted in its entirety and replaced with
the following:
"TOTAL FUNDED REVOLVING TERM LOANS BASE RATE BASE RATE
INDEBTEDNESS TO EBITDA LOANS AND AND FLOORPLAN INCREMENT FOR INCREMENT FOR
SWINGLINE LOANS LIBOR LOANS LIBOR REVOLVING TERM LOANS
INCREMENT INCREMENT LOANS AND AND FLOORPLAN
SWINGLINE LOANS
LOANS
---------------------------- ---------------------- -------------- -------------- --------------
greater than 3.50:1.00 3.75%% 4.00% 0.80% 1.05%
---------------------------- ---------------------- -------------- -------------- --------------
less than or equal to 3.50% 3.75% 0.55% 0.80%
3.50:1.00 but greater than
3.00:1.00
---------------------------- ---------------------- -------------- -------------- --------------
less than or equal to 3.25% 3.50% 0.30% 0.55%
3.00:1.00 but greater than
2.50:1.00
---------------------------- ---------------------- -------------- -------------- --------------
less than or equal 2.50:1.00 3.00% 3.25% 0.05% 0.30%
but greater than or equal to
2.00:1.00
---------------------------- ---------------------- -------------- -------------- --------------
less than 2.00:1.00 2.75% 3.00% -0.20% 0.05%"
---------------------------- ---------------------- -------------- -------------- --------------
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5.3. CAPITALIZATION. Section 11.13 of the Original Loan Agreement is
deleted in its entirety and replaced with the following:
"11.13. CAPITALIZATION. Each Covered Person's authorized capital stock,
partnership interests and membership interests and issued and outstanding
capital stock, partnership interests and membership interests is as
described in section 11.13 of the Disclosure Schedule (which Borrower shall
update with respect to a new Subsidiary created in connection with a
Permitted Acquisition (without the necessity of obtaining Required Lender
consent) if Borrower complies with the terms of Section 14.21 hereof), and
all issued and outstanding shares, partnership interests and membership
interests of each Covered Person are validly issued and outstanding, fully
paid and non-assessable, and are owned beneficially and of record by the
Persons listed."
5.4. SUBSIDIARIES. Section 11.38 of the Original Loan Agreement is
deleted in its entirety and replaced with the following:
"11.38. SUBSIDIARIES AND AFFILIATES. Borrower has no Subsidiaries and has
no Affiliates who are not individuals, except those Persons listed in
section 11.38 of the Disclosure Schedule (which Borrower shall update with
respect to a new Subsidiary created in connection with a Permitted
Acquisition or a Subsidiary created incident to the reorganization of a
Subsidiary acquired in connection with a Permitted Acquisition (without the
necessity of obtaining Required Lender consent) if Borrower complies with
the terms of Section 14.21 hereof)."
5.5. PERMITTED INDEBTEDNESS. Section 14.2.5 of the Original Loan
Agreement is deleted in its entirety and replaced with the following:
"14.2.5. Indebtedness (except for bona fide inter-company sales of
Inventory) of any Borrower or Subsidiary to any other Borrower or
Subsidiary provided that (i) complete and accurate records of such
Indebtedness are maintained by each such Borrower, (ii) such Indebtedness,
if it is in excess of $5,000,000 in the aggregate in any given case, at the
option of the Administrative Agent, shall be evidenced by a promissory note
and collaterally assigned and pledged to the Administrative Agent for the
benefit of the Lenders pursuant to documents satisfactory to Administrative
Agent, and (iii) if at any time such Indebtedness is evidenced by a
promissory note, it shall be immediately collaterally assigned and pledged
to the Administrative Agent for the benefit of the Lenders."
5.6. INDIRECT OBLIGATIONS. Section 14.5 of the Original Loan Agreement
is deleted in its entirety and replaced with the following:
"14.5 INDIRECT OBLIGATIONS. Create, incur, assume or allow to exist any
Indirect Obligations except Indirect Obligations existing on the Execution
Date and disclosed on section 11.21 of the Disclosure Schedule and except
Indirect Obligations of a Borrower with respect to Indebtedness of another
Borrower (other than Technology Integration Financial Services, Inc.)
incurred in connection with a Permitted Acquisition and otherwise
constituting Permitted Indebtedness or any other Permitted Indebtedness of
another Borrower (other than Technology Integration Financial Services,
Inc.)."
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5.7. DISPOSAL OF PROPERTY. Section 14.9 of the Original Loan
Agreement is deleted in its entirety and replaced with the following:
"14.9 DISPOSAL OF PROPERTY. Sell, transfer, exchange, or otherwise dispose
of any of its assets. Notwithstanding the foregoing (i) any Borrower may
transfer any assets or equity interest or assign any Permitted Indebtedness
to any other Borrower (other than to Technology Integration Financial
Services, Inc.) that it acquires or assumes, as the case may be, in a
Permitted Acquisition, and (ii) unless a Default or Event of Default has
occurred and is continuing (in which case any of the following shall be
prohibited), Borrower may sell, transfer or otherwise dispose of Inventory
or equipment in the ordinary course of business consistent with past
practice, provided that all proceeds of such sales, transfers or other
dispositions shall be deposited into the Lockboxes."
5.8. CHANGE OF CONTROL. The last sentence of Section 14.12 of the
Original Loan Agreement is deleted in its entirety and replaced with the
following:
"In the case of any Covered Person other than Xxxxxxx Computer Resources,
Inc., merge or consolidate with or into another Person, provided, however,
that a Covered Person may merge into or with a Borrower if (i) such
Borrower is the surviving entity (except no Covered Person may merge with
or into Technology Integration Financial Services, Inc.) and (ii)
simultaneously with such merger or consolidation, Administrative Agent has
a first priority Security Interest on all of the equity interests of the
surviving entity and all of such entity's assets (except for Permitted
Security Interests on any such assets); or in the case of any Covered
Person other than Xxxxxxx Computer Resources, Inc., permit any Person or
Group, other than one or more other Borrowers, to become the record or
beneficial owner, directly or indirectly, on a fully diluted basis, of any
securities representing any of the voting power of such Covered Person or
any of such Covered Person's then outstanding capital stock or other equity
interests, or to acquire the power to elect any Person to the Board of
Directors (or other management position in the case of Covered Persons
which are not corporation) of such Covered Person."
5.9. CAPITAL STRUCTURE; EQUITY SECURITIES. Section 14.13 of the
Original Loan Agreement is deleted in its entirety and replaced with the
following:
"14.13. CAPITAL STRUCTURE; EQUITY SECURITIES. Except as permitted by the
last sentence of Section 14.12 hereof, make any change in the capital
structure of any Covered Person; change any Charter Documents of any
Covered Person which has or is reasonably likely to have a Material Adverse
Effect on any Covered Person or which will or is reasonably likely to cause
a Default or Event of Default; or issue or create any stock or other equity
interest (or class or series thereof), or non-equity interest that is
convertible into stock or other equity interest (or class or series
thereof), in any Covered Person, except stock, membership interests,
partnership interests or other equity interests (or class or series
thereof) that are subordinated in right of payment to all the Loan
Obligations in a manner satisfactory to Administrative Agent."
5.10. BORROWING BASE CERTIFICATE. Exhibit 13.15.1 to the Original Loan
Agreement (the form of Borrowing Base Certificate) is amended by inserting a new
line immediately below the line with the "90%" figure as follows:
"Less the Dollar amount of any reserve as set forth in Section 3.1.2
$__________".
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5.11. MINIMUM NET INCOME AFTER TAX. Section 15.5 of the Loan
Agreement is deleted in its entirety and replaced with the following:
"15.5. MINIMUM NET INCOME AFTER TAX. Each Borrower covenants that its Net
Income as a percentage of net sales as set forth in its income statement,
calculated as of the last day of each fiscal quarter for the four fiscal
quarter period then ended, shall be no less than (i) 0.75%, for the fiscal
quarters ending April 5, 2002, July 5, 2002, and October 5, 2002, and (ii)
2.00% for the fiscal quarter ending January 5, 2003 and for each fiscal
quarter ending thereafter."
6. REPRESENTATIONS AND WARRANTIES OF BORROWER. Each Borrower hereby represents
and warrants to Administrative Agent and the Lenders that (i) such Borrower's
execution of this Agreement has been duly authorized by all requisite action of
such Borrower; (ii) no consents are necessary from any third parties for such
Borrower's execution, delivery or performance of this Agreement, (iii) this
Agreement, the Loan Agreement, and each of the other Loan Documents, constitute
the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their terms, except to the extent that the
enforceability thereof against Borrower may be limited by bankruptcy, insolvency
or other laws affecting the enforceability of creditors rights generally or by
equity principles of general application, (iv) except as disclosed on the
supplemental disclosure schedule attached hereto as Exhibit B and the disclosure
schedule attached to the Original Loan Agreement, all of the representations and
warranties contained in Section 11 of the Loan Agreement are true and correct
with the same force and effect as if made on and as of the date of this
Agreement, and (v) after giving effect to this Agreement, there is no Existing
Default.
7. REAFFIRMATION. Each Borrower hereby acknowledges and confirms that (i) the
Loan Agreement and the other Loan Documents remain in full force and effect,
(ii) such Borrower has no defenses to its obligations under the Loan Agreement
and the other Loan Documents, (iii) the Security Interests of the Administrative
Agent under the Security Documents secure all the Loan Obligations under the
Loan Agreement, continue in full force and effect, and have the same priority as
before this Agreement, and (iv) such Borrower has no claim against
Administrative Agent or any Lender arising from or in connection with the Loan
Agreement or the other Loan Documents.
8. GOVERNING LAW. This Agreement has been executed and delivered in St. Louis,
Missouri, and shall be governed by and construed under the laws of the State of
Missouri without giving effect to choice or conflicts of law principles
thereunder.
9. SECTION TITLES. The section titles in this Agreement are for convenience of
reference only and shall not be construed so as to modify any provisions of this
Agreement.
10. COUNTERPARTS; FACSIMILE TRANSMISSIONS. This Agreement may be executed in one
or more counterparts and on separate counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument. Signatures to this Agreement may be given by facsimile or other
electronic transmission, and such signatures shall be fully binding on the party
sending the same.
11. INCORPORATION BY REFERENCE. Administrative Agent, Lenders and Borrower
hereby agree that all of the terms of the Loan Documents are incorporated in and
made a part of this Agreement by this reference.
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12. NOTICE-ORAL COMMITMENTS NOT ENFORCEABLE. The following notice is given
pursuant to Section 432.045 of the Missouri Revised Statutes; nothing contained
in such notice shall be deemed to limit or modify the terms of the Loan
Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING
SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES IMMEDIATELY
FOLLOWS}
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
XXXXXXX COMPUTER RESOURCES, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXX SELECT INTEGRATION SOLUTIONS, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXX SELECT ADVISORY SERVICES, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXX COMPUTER RESOURCES SALES COMPANY, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXX COMPUTER RESOURCES HOLDING COMPANY, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXX COMPUTER RESOURCES OPERATIONS, LLP, AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
Signature Page 1 of 3
TECHNOLOGY INTEGRATION FINANCIAL SERVICES, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
T.I.F.S. ADVISORY SERVICES, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
THELINC, LLC, AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
VAL TECH COMPUTER SYSTEMS, INC., AS A BORROWER
By:_____________________________________
Name:___________________________________
Title:__________________________________
Signature Page 2 of 3
DEUTSCHE FINANCIAL SERVICES CORPORATION,
as Administrative Agent and a Lender
By:_____________________________________
Name: Xxxxxxx XxxXxxxxx
Title: Vice President
FIRSTAR BANK, NATIONAL ASSOCIATION, AS A LENDER
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONAL CITY BANK, AS A LENDER
By:_____________________________________
Name:___________________________________
Title:__________________________________
IBM CREDIT CORPORATION, AS A LENDER
By:_____________________________________
Name:___________________________________
Title:__________________________________
UPS CAPITAL CORPORATION, AS A LENDER
By:_____________________________________
Name:___________________________________
Title:__________________________________
FIFTH THIRD BANK, NORTHERN KENTUCKY, INC., AS A LENDER
By:_____________________________________
Name:___________________________________
Title:__________________________________
Signature Page 3 of 3
EXHIBIT A
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DOCUMENTS AND REQUIREMENTS
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1. Second Amendment to Credit Facilities Agreement and Waiver of Defaults
executed by Borrower and each of the Lenders.
2. Certified Resolutions of each Borrower authorizing the execution and
delivery of the Second Amendment to Credit Facilities Agreement and Waiver
of Defaults.
3. Payment of amendment fee described in Section 3 of this Agreement.
4. UCC search results satisfactory to Administrative Agent with respect to
Ballantyne Consulting Group, Inc. and System 5 Technologies, Inc.
5. Payment to Administrative Agent of all fees, expenses and other amounts
owing to Administrative Agent and the Lenders under the Loan Agreement and
the other Loan Documents.
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EXHIBIT B
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DISCLOSURE SCHEDULE
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None, if nothing listed.
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