EXHIBIT 10.1
THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
AND
FIRST AMENDMENT TO COLLATERAL PLEDGE AGREEMENT
This Amendment, dated as of March 30, 2001, is made by and among LUMINANT
WORLDWIDE CORPORATION, a Delaware corporation, LWC OPERATING CORP., a Delaware
corporation, LWC MANAGEMENT CORP., a Delaware corporation, POTOMAC I HOLDINGS,
INC., a Delaware corporation, MULTIMEDIA I HOLDINGS, INC., a Delaware
corporation, RSI GROUP, INC., a Texas corporation, ALIGN SOLUTIONS CORP., a
Delaware corporation, POTOMAC PARTNERS MANAGEMENT CONSULTING, LLC, a Delaware
limited liability company, MULTIMEDIA RESOURCES, LLC, a New York limited
liability company, INTERACTIVE8, INC., a New York corporation, BD ACQUISITION
CORP., a Delaware corporation, RESOURCE SOLUTIONS INTERNATIONAL, LLC, a Texas
limited liability company, INTEGRATED CONSULTING, INC., a Texas corporation,
FREE RANGE MEDIA, INC., a Washington corporation, ALIGN-FIFTH GEAR ACQUISITION
CORPORATION, a Delaware corporation, and ALIGN-SYNAPSE ACQUISITION CORPORATION,
a Texas corporation (collectively, the "Borrowers" and each a "Borrower"), and
XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation, (the "Lender").
RECITALS
The Borrowers and the Lender have entered into a Credit and Security
Agreement dated as of April 5, 2000 as amended by a First Amendment to Credit
and Security Agreement dated as of August 31, 2000, a letter amendment dated as
of September 21, 2000, and a Second Amendment to Credit and Security Agreement
dated as of December 28, 2000 (as amended to date, the "Credit Agreement").
Parent Borrower executed and delivered the Pledge Agreement on December 28,
2000, thereby subjecting its general brokerage account no. 00000000, to which
the Pledged Securities had been credited, to a security interest in favor of the
Lender. Contemporaneously, with the consent of Parent Borrower, the Lender
notified Xxxxx Fargo Brokerage Services, LLC (the "Brokerage") that the account
was subject to the Lender's security interest, and the Brokerage agreed to
comply with buy, sell and withdrawal orders initiated by the Lenderand permitted
under the terms of the Pledge Agreement.
The Borrowers have requested that the Lender agree to waive certain Events
of Default and that certain amendments be made to the Credit Agreement. The
Lender wishes to clarify and confirm certain matters in connection with the
Pledge Agreement. Accordingly, the parties have agreed to amend the Credit
Agreement and the Pledge Agreement in the manner set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the receipt and sufficiency of which
are hereby acknowledged, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment which are
defined
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in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the
following definitions:
"'Fixed Charge Coverage' means as of any date, EBITDA LESS the sum of
(a) principal payments on Permitted Indebtedness, (b) unfinanced Capital
Expenditures, (c) cash payments of Contingent Consideration, (d) reductions
in the Borrowers' reserves for bad debt, and (e) collections with respect
to accounts receivable charged off in prior periods, in each case, for the
calendar year-to-date period ending on such date on a consolidated basis."
"'Permitted Indebtedness' means indebtedness permitted under Section
7.2."
"'Pledged Securities' means those Qualified Pledged Securities and
other securities owned by certain of the Borrowers, subject to the Pledge
Agreement."
"'Qualified Pledged Securities' means any securities owned by any
Borrower that evidence obligations of the United States government or
securities owned by the Borrowers that are rated "A-1" by Standard & Poors
Corporation or "P-1" by Xxxxx'x Investors Service, and are pledged to the
Lender under the Pledge Agreement."
2. LANDLORD LETTER OF CREDIT. Xxxxx Fargo Bank, National Association
("Xxxxx Fargo Bank") has issued Letter of Credit No. NZS337627, dated
November 12, 1999, in favor of 000 Xxxx 00xx Xxxxxx Associates, L.P. and
for the account of Parent Borrower (the "Existing Credit"). Parent Borrower
has granted a security interest in its account no. 00000000 to secure the
obligation to reimburse Xxxxx Fargo Bank for draws under the Existing
Credit. Parent Borrower has requested that the Lender cause an Issuer to
issue a Letter of Credit to replace the Existing Credit (such new Letter of
Credit being referred to herein as the "Landlord Letter of Credit"). The
advantages to Parent Borrower will be (i) that the Landlord Letter of
Credit can be in a lesser face amount than the Existing Credit, and (ii)
that Parent Borrower will be able to consolidate all of its investment
property into its account no. 00000000 maintained with the Brokerage.
Accordingly, the Lender and Parent Borrower hereby agree to cooperate with
one another in order to accomplish the following necessary steps as soon as
possible, but in no event later than April 30, 2001: (A) obtain the
agreement of 000 Xxxx 00xx Xxxxxx Associates, L.P. to accept the Landlord
Letter of Credit in substitution for the Existing Credit; (B) cause an
Issuer to issue the Landlord Letter of Credit; (C) cause Xxxxx Fargo Bank
to cancel the Existing Credit; and (D) transfer all of the financial assets
in Parent Borrower's account no. 00000000 into its account no. 00000000
maintained with the Brokerage, whereupon such assets shall be subject to
the security interest created under the Pledge Agreement. By way of
clarification, the Landlord Letter of Credit shall be a "Letter of Credit"
as such term is defined in the Credit Agreement.
3. AMENDMENTS TO PLEDGE AGREEMENT, ETC. The Pledge Agreement is hereby
amended as follows:
(a) The Debtor's correct name in the heading is "Luminant Worldwide
Corporation."
(b) The correct description of property owned by the Debtor and held by
the Secured Party is "General Brokerage Account at Xxxxx Fargo
Brokerage Services, LLC, titled Luminant Worldwide Corporation account
# 00000000, together with all rights in connection with such property
(herein called the "Collateral")."
(c) Section 2(a) is hereby amended in it entirety to be and read as
follows:
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"(a) Debtor will join with Secured Party in taking any action
reasonably required by Secured Party and consistent with the terms
herein in order to perfect the Security Interest and protect the
rights and priorities of the Secured Party with respect to the
Collateral."
Parent Borrower hereby confirms that the existing agreement between the Lender
and the Brokerage was made with its consent, and agrees that it will, if
requested, join with the Lender in executing any instructions to or agreements
with the Brokerage in accordance with revised section 2(a) of the Pledge
Agreement.
4. FINANCIAL COVENANTS. Sections 6.12, 6.13, 6.14 and 7.11 of the
Credit Agreement are hereby amended in their entirety to read as follows:
"Section 6.12 - RESERVED."
"Section 6.13 - RESERVED."
"Section 6.14 MINIMUM FIXED CHARGE COVERAGE. The Borrowers will
collectively maintain at all times during each period set forth below,
Fixed Charge Coverage of not less than the amount set forth opposite such
period (negative numbers are indicated by parentheses):
PERIOD MINIMUM FIXED CHARGE COVERAGE
------ -----------------------------
January 1, 2001 through March 30, 2001 $(2,500,000)
March 31, 2001 through June 29, 2001 ($3,000,000)
June 30, 2001 through September 29, 2001 ($2,500,000)
September 30, 2001 through December 30, 2001 ($2,000,000)
December 31, 2001 $1,000,000
January 1, 2002 through March 30, 2002 ($1,000,000)
March 31, 2002 ($1,000,000)"
"Section 7.11 CAPITAL EXPENDITURES. The Borrowers will not incur or
contract to incur Capital Expenditures of more than $4,500,000 during the
fiscal year ending on December 31, 2001, and not more than $1,500,000
during the period from January 1, 2002 through March 31, 2002."
5. ACQUISITIONS. Section 7.8 of the Credit Agreement is amended to
read as follows:
"Section 7.8 CONSOLIDATION AND MERGER; ASSET ACQUISITIONS. Without the
prior written consent of the Lender, no Borrower will, nor will it permit
any controlled Affiliate to, consolidate with or merge into any Person, or
permit any other Person to merge into it, or acquire (in a transaction
analogous in purpose or effect to a consolidation or merger) all or
substantially all the assets of any other Person."
6. EVENTS OF DEFAULT. Section 8.1 of the Credit Agreement is amended
by deleting the word "or" at the end of subjection (n), changing the final
period in subjection (o) to "; or" and adding the following new subjection
(p):
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"(p) The aggregate market value of Qualified Pledged Securities as of
the close of business on any Banking Day shall be less than $7,500,000
prior to issuance of the Landlord Letter of Credit or less than $7,800,000
upon or following issuance of the Landlord Letter of Credit.
7. COMPLIANCE CERTIFICATE. Exhibit B to the Credit Agreement is
replaced by Exhibit A to this Amendment.
8. NO OTHER CHANGES. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in
full force and effect and shall apply to any advance or letter of credit
thereunder.
9. WAIVER OF DEFAULTS. The Borrowers are in default of Section 6.1(b)
of the Credit Agreement which requires the Borrowers to deliver to the
Lender certain financial reports and a compliance certificate within 30
days after the end of each month that is not a quarter end. The Lender did
not receive such reports and certificate for the month ended January 31,
2001, and the Borrowers have indicated to the Lender that the reports and
certificate for the month ended February 28, 2001, will be delivered late.
The Lender agrees to waive these Events of Default provided it receives all
such reports before April 30, 2001. This waiver shall be effective only in
this specific instance and for the specific purpose for which it is given,
and this waiver shall not entitle the Borrowers to any other or further
waiver in any similar or other circumstances. As of the date hereof, the
Lender has no knowledge of any Defaults or Events of Default other than the
Events of Default expressly set forth herein.
10. CONDITIONS PRECEDENT. This Amendment, and the waiver set forth in
Paragraph 9 hereof, shall be effective when the Lender shall have received
an executed original hereof, together with such other matters as the Lender
may reasonably require; provided that Lender shall forward to Borrowers
written confirmation when all of the conditions precedent in this paragraph
have been satisfied.
11. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby represent and
warrant to the Lender as follows:
(a) The Borrowers have all requisite power and authority to execute
this Amendment and to perform all of their obligations hereunder, and this
Amendment has been duly executed and delivered by the Borrowers and
constitutes the legal, valid and binding obligation of the Borrowers,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights
generally and by general equitable principles.
(b) The execution, delivery and performance by the Borrowers of this
Amendment have been duly authorized by all necessary corporate or limited
liability company action and do not (i) require any authorization, consent
or approval by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (ii) violate any provision
of any law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrowers, or the articles
of incorporation, by-laws or comparable organizational documents of the
Borrowers, or (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower is a party or by which it or its
properties may be bound or affected
(c) All of the representations and warranties contained in Article V
of the Credit Agreement are correct in all material respects on and
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as of the date hereof as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier
date.
12. REFERENCES. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby; and any and all references in the Security Documents to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended
hereby.
13. NO OTHER WAIVER. Except as set forth in Paragraph 9 hereof, the
execution of this Amendment and acceptance of any documents related hereto
shall not be deemed to be a waiver of any Default or Event of Default under
the Credit Agreement or breach, default or event of default under any
Security Document or other document held by the Lender, whether or not
known to the Lender and whether or not existing on the date of this
Amendment.
14. RELEASE. Each Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants,
parent corporations, subsidiary corporations, affiliated corporations,
insurers, indemnitors, successors and assigns thereof, together with all of
the present and former directors, officers, agents and employees of any of
the foregoing, from any and all claims, demands or causes of action of any
kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which that
Borrower has had, now has or has made claim to have against any such person
for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
15. COSTS AND EXPENSES. The Borrowers hereby reaffirm their agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Security Documents and all other documents contemplated
thereby, including without limitation all reasonable fees and disbursements
of legal counsel. Without limiting the generality of the foregoing, the
Borrowers specifically agree to pay all reasonable fees and disbursements
of counsel to the Lender for the services performed by such counsel in
connection with the preparation of this Amendment and the documents and
instruments incidental hereto. The Borrowers hereby agree that the Lender
may, at any time or from time to time in its sole discretion and without
further authorization by the Borrowers, make an Advance to the Borrowers
under the Credit Agreement, or apply the proceeds of any Advance, for the
purpose of paying any such fees, disbursements, costs and expenses.
16. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed
an original and all of which counterparts, taken together, shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. LUMINANT WORLDWIDE CORPORATION
By /s/ XXXXXX X. XXXXXXX By /s/ XXXXX X. XXXXX
Its Vice President Its Chief Executive Officer and President
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LWC OPERATING CORP. LWC MANAGEMENT CORP.
By /s/ XXXXX X. XXXXX By /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
POTOMAC I HOLDINGS, INC. MULTIMEDIA I HOLDINGS, INC.
By /s/ XXXXX X. XXXXX By /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
RSI GROUP, INC. ALIGN SOLUTIONS CORP.
By /s/ XXXXX X. XXXXX By /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
POTOMAC PARTNERS MANAGEMENT CONSULTING, LLC MULTIMEDIA RESOURCES, LLC
By /s/ XXXXX X. XXXXX By /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
INTERACTIVE8, INC. BD ACQUISITION CORP.
By /s/ XXXXX X. XXXXX By /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
RESOURCE SOLUTIONS INTERNATIONAL, LLC INTEGRATED CONSULTING, INC.
By /s/ XXXXX X. XXXXX By /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
FREE RANGE MEDIA, INC. ALIGN-FIFTH GEAR ACQUISITION CORPORATION
By /s/ XXXXX X. XXXXX By /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
ALIGN-SYNAPSE ACQUISITION
CORPORATION
By /s/ XXXXX X. XXXXX
---------------------------------
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Exhibit A to Third Amendment to
Credit and Security Agreement
Exhibit B to Credit and Security
Agreement
COMPLIANCE CERTIFICATE
To: Xxxxxx X. Xxxxxxx
Xxxxx Fargo Business Credit, Inc.
Date: __________________, 2001
Subject: Luminant Worldwide Corporation, LWC Operating Corp., LWC
Management Corp., Potomac I Holdings, Inc., Multimedia I
Holdings, Inc., RSI Group, Inc., Align Solutions Corp., Potomac
Partners Management Consulting, LLC, Multimedia Resources, LLC,
Interactive8, Inc., BD Acquisition Corp., Resource Solutions
International, LLC, Integrated Consulting, Inc., Free Range
Media, Inc., Align-Fifth Gear Acquisition Corporation, and
Align-Synapse Acquisition Corporation
Financial Statements
In accordance with our Credit and Security Agreement dated as of April 5,
2000, as amended (as amended, the "Credit Agreement"), attached are the
consolidated financial statements of Luminant Worldwide Corporation (the "Parent
Borrower") as of and for ________________, 200__ (the "Reporting Date") and the
year-to-date period then ended (the "Current Financials"). All terms used in
this certificate have the meanings given in the Credit Agreement.
I certify that the Current Financials have been prepared in accordance with
GAAP, subject to year-end audit adjustments (and with respect to all Current
Financials which are interim financials, except for the absence of footnotes),
and fairly present the Borrowers' financial condition and the results of its
operations as of the date thereof.
EVENTS OF DEFAULT. (Check one):
|_| The undersigned does not have knowledge of the occurrence of a Default
or Event of Default under the Credit Agreement.
|_| The undersigned has knowledge of the occurrence of a Default or Event
of Default under the Credit Agreement not previously reported in
writing to the Lender and attached hereto is a statement of the facts
with respect to thereto. The Borrowers acknowledge that pursuant to
Section 2.13(d) the Lender may impose the Default Rate at any time
during the resulting Default Period.
FINANCIAL COVENANTS. I further hereby certify as follows:
1. MINIMUM FIXED CHARGE COVERAGE. Pursuant to Section 6.14 of the
Credit Agreement, for the year-to-date period ending on the Reporting Date,
the Borrowers' Fixed Charge Coverage was $_______________ which |_|
satisfies |_| does
not satisfy the requirement that such amount be not less than
$________________ for such period as set forth in the table below (negative
numbers are indicated by parentheses):
PERIOD MINIMUM FIXED CHARGE COVERAGE
------ -----------------------------
January 1, 2001 through March 30, 2001 $(2,500,000)
March 31, 2001 through June 29, 2001 ($3,000,000)
June 30, 2001 through September 29, 2001 ($2,500,000)
September 30, 2001 through December 30, 2001 ($2,000,000)
December 31, 2001 $1,000,000
January 1, 2002 through March 30, 2002 ($1,000,000)
March 31, 2002 ($1,000,000)"
2. CAPITAL EXPENDITURES. Pursuant to Section 7.11 of the Credit
Agreement, for the year-to-date period ending on the Reporting Date,
the Borrowers have expended or contracted to expend for Capital
Expenditures, $__________________ in the aggregate which |_| satisfies
|_| does not satisfy the requirement that such expenditures not exceed
$4,500,000 in the aggregate during the fiscal year ending December 31,
2001, or $1,500,000 in the aggregate during the period from January 1,
2002 to March 31, 2002.
Attached hereto are all relevant facts in reasonable detail to evidence, and the
computations of the financial covenants referred to above. These computations
were made in accordance with GAAP.
LUMINANT WORLDWIDE CORPORATION
By ____________________________
Its Chief Financial Officer
M1:732310.07
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