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EXHIBIT 10.33
THE CERPLEX GROUP, INC.
THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is
dated as of April 9, 1997 and entered into by and among THE CERPLEX GROUP, INC.,
a Delaware corporation ("COMPANY"), the FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF ("LENDERS") and XXXXX FARGO BANK, NATIONAL BANK, as
administrative agent for Lenders ("ADMINISTRATIVE AGENT"), and, for purposes of
Section 7 hereof, CERTECH Technology, Inc., Cerplex Mass., Inc., Cerplex
Limited, Apex Computer Company, Cerplex Subsidiary, Inc., Peripheral Computer
Support, Inc., Modcomp/Cerplex L.P., Modcomp Joint Venture, Inc., Modular
Computer Services, Inc., Modular Computer Systems GmbH and Modcomp France S.A.
(collectively, "GUARANTORS"), and is made with reference to that certain Credit
Agreement dated as of October 12, 1994, as amended by that certain First
Amendment to Credit Agreement and Limited Waiver dated as of April 15, 1996 and
that certain Second Amendment to Credit Agreement and Limited Waiver dated as of
November 30, 1996 (the "CREDIT AGREEMENT"), by and among Company, Lenders,
Administrative Agent and Guarantors. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
SECTION 1.1 AMENDMENTS TO SECTION 1: DEFINITIONS.
A. Subsection 1.1 of the Credit Agreement is hereby amended by amending
the definition of "ACCEPTABLE CONTROL PERSON," "BUSINESS DAY," "COMMITMENT
TERMINATION DATE," "COMPANY COLLATERAL DOCUMENTS," "CONSOLIDATED CURRENT
LIABILITIES," "CONSOLIDATED TANGIBLE NET WORTH," "LETTER OF CREDIT," "LOAN
DOCUMENTS," "NET PROCEEDS AMOUNT," "NET SECURITIES PROCEEDS," "NOTES,"
"OBLIGATIONS" and "REQUISITE LENDERS" contained therein to read in their
entirety as follows:
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"`ACCEPTABLE CONTROL PERSON' means any entity identified in
Schedule 1.1 annexed hereto, any individual identified in Schedule 1.1 annexed
hereto, any spouse, issue or adopted children or other relative of any such
individual and any trust for the exclusive benefit of any such individual or his
or her spouse, issue or adopted children or other relatives; provided, in the
case of any such trust, that the existing beneficiaries or trustee(s) and/or
grantor(s) of such trust have the power to act with respect to the trust's
assets without court approval."
"`BUSINESS DAY' means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of California or is
a day on which banking institutions located in such state are authorized or
required by law or other governmental action to close."
"`COMMITMENT TERMINATION DATE' means May 1, 1998."
"`COMPANY COLLATERAL DOCUMENTS' means the Company Pledge
Agreement, the Company Security Agreement and the Charge."
"`CONSOLIDATED CURRENT LIABILITIES' means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, including, without limitation, the aggregate principal
amount of all outstanding Revolving Loans as of such date."
"`CONSOLIDATED TANGIBLE NET WORTH' means, as at any date of
determination, the sum of the capital stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit) of Company and its Subsidiaries
plus all Subordinated Indebtedness less (i) the aggregate amount of all treasury
stock, (ii) Consolidated Intangible Assets, and (iii) the aggregate amount of
all obligations owing to Company or any of its Subsidiaries from any
stockholder, employee or Affiliate of Company or any of its Subsidiaries, all of
the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP."
"`LETTER OF CREDIT' means any letter of credit issued for the
account of Company pursuant to this Agreement prior to the Third Amendment
Effective Date."
"`LOAN DOCUMENTS' means this Agreement, the Notes, the Guaranty
and the Collateral Documents."
"`NET PROCEEDS AMOUNT' has the meaning assigned to that term in
subsection 2.4A(iii)(i)."
"`NET SECURITIES PROCEEDS' has the meaning assigned to that
term in subsection 2.4A(iii)(b)."
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"`NOTES' means one or more of the Term Notes, Revolving Notes
or any combination thereof."
"`OBLIGATIONS' means all obligations of every nature of Company
or any other Loan Party from time to time owed to Administrative Agent, Lenders
or any of them under any of the Loan Documents, whether for principal, interest,
fees, expenses, indemnification or otherwise."
"`REQUISITE LENDERS' means two or more Lenders having or
holding 51% or more of the sum of (i) the aggregate Term Loan Exposure of all
Lenders plus (ii) the aggregate Revolving Loan Exposure of all Lenders."
B. Subsection 1.1 of the Credit Agreement is hereby amended by adding
the following definitions in appropriate alphabetical order:
"`APPLIED AMOUNT' has the meaning assigned to that term in
subsection 2.4A(iv)(b)."
"`BORROWING BASE' means an amount equal to 75% of Eligible
Accounts."
"`BORROWING BASE CERTIFICATE' means a certificate substantially
in the form of Exhibit XVII annexed hereto delivered to Administrative Agent and
Lenders by Company pursuant to subsection 6.1(xxii), with appropriate
insertions, and all related reports and supporting documentation as reasonably
requested by Lenders."
"`CONSOLIDATED ACCOUNTS RECEIVABLE' means, as at any date of
determination, all Accounts Receivable of Company and its Subsidiaries as of
such date as determined in accordance with GAAP."
"`CONSOLIDATED INVENTORY' means, as at any date of
determination, the value (calculated as the lower of cost or market) of all
Inventory of Company and its Subsidiaries as of such date as determined in
accordance with GAAP."
"`ELIGIBLE ACCOUNTS RECEIVABLE' means, as at any date of
determination, all Accounts Receivable of Company and any of its Subsidiaries
(other than PCS) other than any Account Receivable:
(i) which does not represent a bona fide sale or lease
and delivery of goods of or rendition of services by Company in the
ordinary course of Company's business, or which is not for a liquidated
amount payable by the account debtor thereon on the terms set forth in
the invoice therefor;
(ii) which is (a) not owed by an account debtor whose
principal place of business and chief executive office is located in
the United States of
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America, (b) not payable in the United States of America or (c) not
payable in Dollars;
(iii) which represents a progress billing;
(iv) which represents a sale on a xxxx-and-hold,
guaranteed sale, sale and return, sale on approval, consignment,
repurchase or return basis;
(v) which is evidenced by a promissory note or other
instrument or by chattel paper;
(vi) which is due no more than 30 days from the
transaction date and with respect to which more than 60 days have
elapsed since the original due date therefor or, if earlier, 180 days
have elapsed since the date of the original invoice therefor;
(vii) which is due more than 30 days from the
transaction date and with respect to which more than 30 days have
elapsed since the original due date therefor or, if earlier, 180 days
have elapsed since the date of the original invoice therefor;
(viii) which is not evidenced by an invoice rendered
to the account debtor;
(ix) owed by an account debtor which is a director,
officer, employee, Affiliate or stockholder of Company or any of its
Subsidiaries;
(x) if the aggregate dollar amount of all Accounts
Receivable owed by the account debtor thereon exceeds 25% of the
aggregate amount of all Accounts Receivable at such time, but only to
the extent of such excess;
(xi) which is owed by an account debtor which, at the
time of any determination of Eligible Accounts Receivable, owes any
amount with respect to any Account Receivable that has been outstanding
more than 60 days since the original due date therefor or 180 days
since the date of the original invoice therefor, other than amounts
which in total do not exceed (a) 50% of the aggregate of all Accounts
Receivable owing by any such account debt set forth on Schedule 1.2
annexed hereto or (b) 20% of the aggregate of all Accounts Receivable
owing by any other such account debtor;
(xii) which is owed by the government of the United
States of America, any department, agency, public corporation, or
state, municipality, or other political subdivision thereof;
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(xiii) as to which either the perfection,
enforceability, or validity of the security interest in such Account
Receivable, or Administrative Agent's right or ability to obtain direct
payment to Administrative Agent of the proceeds of such Account
Receivable, is governed by any federal, state, or local statutory
requirements other than those of the Uniform Commercial Code;
(xiv) with respect to which, in whole or in part, a
check, promissory note, draft, trade acceptance or other instrument for
the payment of money has been received, presented for payment and
returned uncollected for any reason;
(xv) which is owed by an account debtor to which
Company is indebted in any way unless the account debtor has entered
into an agreement acceptable to Administrative Agent in its
commercially reasonable judgment to waive setoff rights; or if the
account debtor thereon has disputed liability, asserted a right of
setoff or made any claim with respect to such Account Receivable; but
in each such case only to the extent of such indebtedness, setoff,
dispute or claim;
(xvi) as to which any one or more of the following
events has occurred with respect to the account debtor on such Account
Receivable: death or judicial declaration of incompetency of an account
debtor who is an individual; the filing by or against the account
debtor of a request or petition in a proceeding that is then pending
for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as a bankrupt, winding-up, or other relief under the
bankruptcy, insolvency, or similar laws of the United States of
America, any state or territory thereof, or any foreign jurisdiction,
now or hereafter in effect; the making of any general assignment by the
account debtor for the benefit of creditors in a proceeding that is
then pending; the appointment of a receiver or trustee for the account
debtor or for any of the assets of the account debtor, including the
appointment of or taking possession by a "custodian," as defined in the
Bankruptcy Code in a proceeding that is then pending; the institution
by or against the account debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States of America
or otherwise) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding
up of affairs of, the account debtor in a proceeding that is then
pending; the nonpayment generally by the account debtor of its debts as
they become due; or the cessation of the business of the account debtor
as a going concern;
(xvii) if Administrative Agent believes in its
commercially reasonable judgment that the prospect of collection of
such Account Receivable is impaired or that the Account Receivable may
not be paid by reason of the account debtor's financial inability to
pay;
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(xviii) on which Administrative Agent does not have a
first priority lien; and
(xix) which represents a rebilling of an account
debtor for a discount or other adjustment inappropriately applied to an
Account Receivable by such account debtor."
"`PCS' means Peripheral Computer Support, Inc."
"`REVOLVING LOAN COMMITMENT' means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection 2.1A(ii), and
"REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders in the
aggregate."
"`REVOLVING LOAN EXPOSURE' means, with respect to any Lender as
of any date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the aggregate outstanding
principal amount of the Revolving Loans of that Lender."
"`REVOLVING LOANS' means the Loans made by Lenders to Company
pursuant to subsection 2.1A(ii)."
"`REVOLVING NOTES' means (i) the promissory notes of Company
issued pursuant to subsection 2.1D(ii) on the Third Amendment Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Revolving Loan Commitments and
Revolving Loans of any Lenders, in each case substantially in the form of
Exhibit IV- B annexed hereto, as they may be amended, supplemented or otherwise
modified from time to time."
"`TERM LOAN COMMITMENT' means the commitment of a Lender to
make a Term Loan to Company pursuant to subsection 2.1A(i), and "TERM LOAN
COMMITMENTS" means such commitments of all Lenders in the aggregate."
"`TERM LOAN EXPOSURE' means, with respect to any Lender as of
any date of determination (i) prior to the funding of the Term Loans, that
Lender's Term Loan Commitment and (ii) after the funding of the Term Loans, the
outstanding principal amount of the Term Loan of that Lender."
"`TERM LOAN MATURITY DATE' means May 1, 1998."
"`TERM LOANS' means the Loans made by Lenders to Company
pursuant to subsection 2.1A(i)."
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"`TERM NOTES' means (i) the promissory notes of Company issued
pursuant to subsection 2.1D(i) on the Third Amendment Effective Date and (ii)
any promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Term Loan Commitments
and Term Loans of any Lenders, in each case substantially in the form of Exhibit
IV-A annexed hereto, as they may be amended, supplemented or otherwise modified
from time to time."
"`THIRD AMENDMENT EFFECTIVE DATE' means April 9, 1997."
"`TOTAL BANK INDEBTEDNESS' means, as at any date of
determination, all Indebtedness of Company and its Subsidiaries owed to Lenders
determined on a consolidated basis."
C. Subsection 1.1 of the Credit Agreement is hereby amended to delete
the definitions of "ADJUSTED EURODOLLAR RATE," "AFFECTED LENDER," "AFFECTED
LOANS," "CASH FLOW FROM CORPORATE OVERHEAD," "CASH FLOW FROM NORTH AMERICAN
OPERATIONS," "COLLATERAL ACCOUNT AGREEMENT," "COMMERCIAL LETTER OF CREDIT,"
"CORPORATE OVERHEAD," "EURODOLLAR RATE LOANS," "INTEREST PAYMENT DATE,"
"INTEREST PERIOD," "ISSUING LENDER," "LETTER OF CREDIT USAGE," "LOAN EXPOSURE,"
"NOTICE OF ISSUANCE OF LETTER OF CREDIT," "PAST DUE ACCOUNTS RECEIVABLE,"
"STANDBY LETTER OF CREDIT" and "TOTAL UTILIZATION OF COMMITMENTS" contained
therein.
SECTION 1.2 AMENDMENTS TO SECTION 2: AMOUNTS AND TERMS OF COMMITMENTS AND
LOANS.
A. Subsection 2.1A of the Credit Agreement is hereby amended to read in
its entirety as follows:
"A. COMMITMENTS. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
Company herein set forth, each Lender hereby severally agrees to make
the Loans described in subsections 2.1A(i) and 2.1A(ii).
(i) Term Loans. Each Lender severally agrees to
convert Loans outstanding on the Third Amendment Effective Date
and the amount of all unreimbursed drawings under letters of
credit issued hereunder prior to the Third Amendment Effective
Date in an aggregate amount not exceeding its Pro Rata Share of
the aggregate amount of the Term Loan Commitments to be used
for the purposes identified in subsection 2.5A. The amount of
each Lender's Term Loan Commitment is set forth opposite its
name on Schedule 2.1 annexed hereto and the aggregate amount of
the Term Loan Commitments is $38,869,975.02; provided that the
Term Loan Commitments of Lenders shall be adjusted to give
effect to any assignments of the Term Loan Commitments
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pursuant to subsection 10.1B. Amounts borrowed under this
subsection 2.1A(i) and subsequently repaid or prepaid may not
be reborrowed.
(ii) Revolving Loans. Each Lender severally agrees,
subject to the limitations set forth below with respect to the
maximum amount of Loans permitted to be outstanding from time
to time, to lend to Company from time to time during the period
from the Third Amendment Effective Date to but excluding the
Commitment Termination Date an aggregate amount not exceeding
its Pro Rata Share of the aggregate amount of the Commitments
to be used for the purposes identified in subsection 2.5A. On
the Third Amendment Effective Date, outstanding Loans in the
aggregate principal amount of $6,000,000 shall be deemed to be
Revolving Loans. The original amount of each Lender's
Commitment as of the Third Amendment Effective Date is set
forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate original amount of the Commitments is $6,000,000;
provided that the Commitments of Lenders shall be adjusted to
give effect to any assignments of the Commitments pursuant to
subsection 10.1B; and provided, further that the amount of the
Commitments shall be reduced from time to time by the amount of
any reductions thereto made pursuant to subsections 2.4A. Each
Lender's Commitment shall expire on the Commitment Termination
Date and all Loans and all other amounts owed hereunder with
respect to the Loans and the Commitments shall be paid in full
no later than that date. Amounts borrowed under this subsection
2.1A(ii) may be repaid and reborrowed to but excluding the
Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments
shall be subject to the limitation that (i) during the period from the
Third Amendment Effective Date to and excluding the date of the
consummation of the sale of PCS, in no event shall the Total
Utilization of Revolving Loan Commitments at any time exceed the
Revolving Loan Commitments then in effect and (ii) thereafter in no
event shall the Total Utilization of Revolving Loan Commitments at any
time exceed the lesser of (a) the Revolving Loan Commitments then in
effect and (b) the Borrowing Base then in effect."
B. Subsection 2.1B of the Credit Agreement is hereby amended to read in
its entirety as follows:
"B. BORROWING MECHANICS. Loans made on any Funding Date shall
be in an aggregate minimum amount of $25,000 and integral multiples of
$25,000 in excess of that amount. Whenever Company desires that Lenders
make Loans it shall give Administrative Agent telephonic notice of any
proposed
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borrowing under this subsection 2.1B and shall deliver to
Administrative Agent by telefacsimile or courier service a Notice of
Borrowing no later than 10:00 A.M. (Los Angeles time) at least one
Business Day in advance of the proposed Funding Date. The Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a
Business Day) and (ii) the amount of Loans requested. Any Notice of
Borrowing delivered to Administrative Agent by telefacsimile shall be
confirmed by delivery by United States mail of an originally executed
Notice of Borrowing to Administrative Agent postmarked the date
telephonic notice of such proposed borrowing is given.
Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to
above that Administrative Agent believes in good faith to have been
given by a duly authorized officer or other person authorized to borrow
on behalf of Company or for otherwise acting in good faith under this
subsection 2.1B, and upon funding of Loans by Lenders in accordance
with this Agreement pursuant to any such telephonic notice Company
shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding
of any Loans in the event that any of the matters to which Company is
required to certify in the applicable Notice of Borrowing is no longer
true and correct as of the applicable Funding Date, and the acceptance
by Company of the proceeds of any Loans shall constitute a
re-certification by Company, as of the applicable Funding Date, as to
the matters to which Company is required to certify in the applicable
Notice of Borrowing."
C. Subsection 2.1C of the Credit Agreement is hereby amended by
amending the fourth sentence thereof to read in its entirety as follows:
"Upon satisfaction or waiver of the conditions precedent
specified in subsections 4.1 (in the case of Loans made on the Closing
Date) and 4.2 (in the case of all Loans), Administrative Agent shall
make the proceeds of such Loans available to Company on the applicable
Funding Date by causing an amount of same day funds in Dollars equal to
the proceeds of all such Loans received by Administrative Agent from
Lenders to be credited to the account of Company at the Funding and
Payment Office."
D. Subsection 2.1D of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Company shall execute and deliver to each Lender (or to
Administrative Agent for that Lender) on the Third Amendment Effective
Date (i) a Term Note, substantially in the form of Exhibit IV-A annexed
hereto, to evidence that Lender's Term Loan, in the principal amount of
that Lender's Term Loan and with other appropriate insertions and (ii)
a Revolving
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Note, substantially in the form of Exhibit IV-B annexed hereto, to
evidence that Lender's Revolving Loans, in the principal amount of that
Lender's Revolving Loan Commitment and with other appropriate
insertions."
E. Subsection 2.2A of the Credit Agreement is hereby amended to read in
its entirety as follows:
"A. RATE OF INTEREST. Subject to the provisions of subsections
2.6 and 2.7, (i) each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether
by acceleration or otherwise) at the sum of the Base Rate plus 2.25%
per annum and (ii) each Term Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether
by acceleration or otherwise) at the sum of the Base Rate plus 3.125%
per annum."
F. Subsection 2.2C of the Credit Agreement is hereby amended to read in
its entirety as follows:
"C. INTEREST PAYMENTS. Subject to the provisions of subsection
2.2E, interest on each Loan shall be payable in arrears on and to the
last day of each month, upon any prepayment of that Loan (to the extent
accrued on the amount being prepaid) and at maturity (including final
maturity)."
G. Subsection 2.2D of the Credit Agreement is hereby amended to read in
its entirety as follows:
"[intentionally omitted]"
H. Subsection 2.3A of the Credit Agreement is hereby amended to read in
its entirety as follows:
"A. COMMITMENT FEES. Company agrees to pay to Administrative
Agent, for distribution to each Lender in proportion to that Lender's
Pro Rata Share, commitment fees from and including the Third Amendment
Effective Date equal to the average of the daily excess of the
Revolving Loan Commitments over the aggregate principal amount of
Revolving Loans outstanding multiplied by 1.0% per annum. All such
commitment fees are to be calculated on the basis of a 360-day year and
the actual number of days elapsed and to be payable quarterly in
arrears on each March 31, June 30, September 30 and December 31 of each
year, commencing on the first such date to occur after the Third
Amendment Effective Date, and on the Commitment Termination Date."
I. Subsection 2.3 of the Credit Agreement is hereby amended by adding
the following as subsection C thereof:
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"C. RESTRUCTURE FEE. Company agrees to pay to Administrative
Agent, for distribution to each Lender in proportion to that Lender's
Pro Rata Share, a restructure fee in the amount of $250,000, payable in
quarterly installments of $62,500 each on April 11, June 30, September
30 and December 31 of each year, with the first such payment due on
April 11, 1997."
J. Subsection 2.4 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN COMMITMENTS; GENERAL
PROVISIONS REGARDING PAYMENTS.
"A. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon not less
than one Business Day's prior notice, at any time and from time
to time prepay, without penalty, any Loans on any Business Day
in whole or in part in an aggregate minimum amount of $100,000
and integral multiples of $100,000 in excess of that amount.
Company shall give Administrative Agent telephonic notice of
any proposed prepayment under this subsection 2.4A(i) and shall
confirm such notice by telefacsimile or courier service no
later than 10:00 A.M. (Los Angeles time) on the date required.
Any notice of proposed prepayment delivered to Administrative
Agent by telefacsimile shall be confirmed by delivery by United
States mail of an originally executed notice of prepayment
postmarked the date telephonic notice of such proposed
prepayment is given. Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in such
notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be
applied as specified in subsection 2.4A(iv).
(ii) Voluntary Reductions of Revolving Loan
Commitments. Company may, upon not less than five Business
Days' prior notice, at any time and from time to time,
terminate in whole or permanently reduce in part, without
premium or penalty, the Revolving Loan Commitments in an amount
up to the amount by which the Revolving Loan Commitments exceed
the aggregate principal amount of Revolving Loans outstanding
at the time of such proposed termination or reduction; provided
that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $500,000
and integral multiples of $500,000 in excess of that amount.
Company shall give Administrative Agent telephonic notice of
any proposed Revolving Loan Commitment reduction under this
subsection 2.4A(ii) and shall confirm such notice by
telefacsimile or courier service
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no later than 10:00 A.M. (Los Angeles time) on the date
required. Any notice of proposed Revolving Loan Commitment
reduction delivered to Administrative Agent by telefacsimile
shall be confirmed by delivery by United States mail of an
originally executed notice of Revolving Loan Commitment
reduction postmarked the date telephonic notice of such
proposed Revolving Loan Commitment reduction is given.
Company's notice to Administrative Agent shall designate the
date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such
termination or reduction of the Revolving Loan Commitments
shall be effective on the date specified in Company's notice
and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions
of Revolving Loan Commitments. The Loans shall be prepaid, and
the Revolving Loan Commitments shall be permanently reduced, in
the amounts and under the circumstances set forth below, all
such prepayments and reductions to be applied as specified in
subsection 2.4A(iv).
(a) Prepayments and Reductions From Net Asset
Sale Proceeds. On the date of receipt by Company or any of its
Subsidiaries of any Net Asset Sale Proceeds in respect of any
Asset Sale (other than (1) any Asset Sale described in clauses
(d) through (f) and (2) the sale of the stock of On Command
Video and the sale of end-of-life Inventory), Company shall
prepay the Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to 66-2/3% of
such Net Asset Sale Proceeds.
(b) Prepayments and Reductions Due to Issuance
of Securities. On the date of receipt by Company of the Cash
proceeds (any such proceeds net of underwriting discounts and
commissions and other reasonable costs and expenses associated
therewith, being "NET SECURITIES PROCEEDS") from the issuance
of any Securities of Company after the Third Amendment
Effective Date, Company shall prepay the Loans, and the
Revolving Loan Commitments shall be permanently reduced, in an
aggregate amount equal to 25% of such Net Securities Proceeds.
Any such mandatory prepayments shall be applied as specified in
subsection 2.4A(iv).
(c) Prepayments From Cash Flow From Operating
Activities. On or before March 1, 1998, Company shall prepay
the Loans, and the Revolving Loan Commitments shall be
permanently reduced, in an aggregate amount equal to the amount
by which 66-2/3% of "Net Cash Provided (Used) by Operating
Activities" during such
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period, as set forth on the internally prepared consolidated
cash flow statement of Company and its Subsidiaries for the
Fiscal Year ending December 31, 1997, exceeds $9,000,000.
(d) Prepayments from the Sale of Modcomp. On
the date of receipt by Company or any of its Subsidiaries of
any Net Asset Sale Proceeds from any Asset Sale relating to
Modcomp or its Subsidiaries, Company shall prepay the Loans,
and/or the Revolving Loan Commitments shall be permanently
reduced, in an aggregate amount equal to (1) 66% of such Net
Asset Sale Proceeds in the event the sale occurs prior to
September 30, 1997 and (2) 80% of such Net Asset Sale Proceeds
in the event the sale occurs on or after September 30, 1997.
(e) Prepayments from the Sale of PCS. On the
date of receipt by Company or any of its Subsidiaries of any
Net Asset Sale Proceeds from any Asset Sale relating to PCS or
its Subsidiaries, Company shall prepay the Loans, and/or the
Revolving Loan Commitments shall be permanently reduced, in an
aggregate amount equal to the greater of (1) $8,000,000 or (2)
62.26% of such Net Asset Sale Proceeds. In addition, on the
date of receipt by Company or any of its Subsidiaries of any
Net Asset Sale Proceeds from any Asset Sale relating to PCS or
its Subsidiaries as a result of a payment from any holdback or
reserve established by the purchaser, Company shall prepay the
Loans, and/or the Revolving Loan Commitments shall be
permanently reduced, in an aggregate amount equal to 100% of
such Net Asset Sale Proceeds.
(f) Prepayment from the Sale of Pen
Interconnect Stock. On the date of receipt by Company or any of
its Subsidiaries of any Net Asset Sale Proceeds from the sale
of the stock of Pen Interconnect, Company shall prepay the
Loans, and/or the Revolving Loan Commitments shall be
permanently reduced, in an amount equal to 100% of such Net
Asset Sale Proceeds.
(g) Prepayments from Royalties. On the date of
receipt by Company thereof, Company shall prepay the Loans,
and/or the Revolving Loan Commitments shall be permanently
reduced, in an amount equal to 100% of the royalties and
dividend payments paid by Cerplex SAS. Such prepayments in
respect of such royalty payments shall be in an amount not less
than $275,000 each fiscal quarter and shall be made on the
earlier of (1) the date any such payment is received by Company
and (2) January 31, April 30, July 31 and October 31 of each
year and such prepayments in respect of such dividend payments
shall be in an amount not less than $400,000 each
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Fiscal Year and shall be made on the earlier of (1) the date
any such payment is received by Company and (2) July 31 of each
year.
(h) Mandatory Prepayments and Termination of
Commitments. On the 5th day after the occurrence of a Change in
Control, or on any earlier day after the occurrence of a Change
in Control if requested by Administrative Agent with the
consent of Requisite Lenders, (a) Company shall prepay, subject
to subsection 2.6D, all of the outstanding Loans and (b) the
Revolving Loan Commitments and the obligation of each Lender to
make any Loan shall be terminated as of such date.
(i) Calculations of Net Proceeds Amounts;
Additional Prepayments and Reductions Based on Subsequent
Calculations. Concurrently with any prepayment of the Loans
and/or reduction of the Revolving Loan Commitments pursuant to
subsections 2.4A(iii)(a)-(f), Company shall deliver to Agent an
Officers' Certificate demonstrating the calculation of the
amount (the "NET PROCEEDS AMOUNT") of the applicable Net Asset
Sale Proceeds, Net Securities Proceeds, or Net Cash Provided
(Used) by Operating Activities, as the case may be, that gave
rise to such prepayment and/or reduction. In the event that
Company shall subsequently determine that the actual Net
Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Company shall promptly make an
additional prepayment of the Loans (and/or, if applicable, the
Revolving Loan Commitments shall be permanently reduced) in an
amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an
Officers' Certificate demonstrating the derivation of the
additional Net Proceeds Amount resulting in such excess.
(j) Prepayments Due to Restrictions on
Revolving Loan Commitments. Company shall from time to time
prepay the Revolving Loans to the extent necessary to give
effect to the limitations set forth in subsection 2.1A(ii).
(k) Reductions of Commitments Not Limited to
Amount of Loans Outstanding. The amount of any required
reduction of the Revolving Loan Commitments pursuant to any
provision of this subsection 2.4A(iii) shall not be affected by
the fact that the outstanding principal amount of Loans at the
time of such reduction is less than the amount of such
reduction.
(iv) Application of Prepayments and Unscheduled
Reduction of Revolving Loan Commitments.
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(a) Application of Voluntary Prepayments by
Type of Loans. Any voluntary prepayments pursuant to subsection
2.4A(i) shall be applied as specified by Company in the
applicable notice of prepayment; provided that in the event
Company fails to specify the Loans to which any prepayment
shall be applied, such prepayment shall be applied first to
repay outstanding Term Loans to the full extent thereof, and
second to repay outstanding Revolving Loans to the full extent
thereof.
(b) Application of Mandatory Prepayments by
Type of Loans. Any amount (the "APPLIED AMOUNT") required to be
applied as a mandatory prepayment of the Loans and/or a
reduction of the Revolving Loan Commitments pursuant to
subsections 2.4A(iii)(a)-(d) and (f)-(h) shall be applied first
to prepay the Term Loans to the full extent thereof, second, to
the extent of any remaining portion of the Applied Amount, to
prepay the Revolving Loans to the full extent thereof and to
permanently reduce the Revolving Loan Commitments by the amount
of such prepayment, and third, to the extent of any remaining
portion of the Applied Amount, to further permanently reduce
the Revolving Loan Commitments to the full extent thereof. Any
Applied Amount required to be applied as a mandatory prepayment
of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsection 2.4A(iii)(e) shall be
applied first to prepay the Revolving Loans in the amount of
$1,500,000, second to prepay the Term Loans to the full extent
thereof, third, to the extent of any remaining portion of the
Applied Amount, to prepay the Revolving Loans to the full
extent thereof and to permanently reduce the Revolving Loan
Commitments by the amount of such prepayment, and fourth, to
the extent of any remaining portion of the Applied Amount, to
further permanently reduce the Revolving Loan Commitments to
the full extent thereof.
"B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 10:00 A.M. (Los
Angeles time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Administrative Agent after that
time on such due date shall be deemed to have been paid by Company on
the next succeeding Business Day. Company hereby authorizes
Administrative Agent to charge its accounts with Administrative Agent
in order to cause timely payment to be made to Administrative Agent of
all principal, interest, fees and expenses due
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hereunder (subject to sufficient funds being available in its accounts
for that purpose).
(ii) Application of Payment to Principal and Interest. All
payments in respect of the principal amount of any Loan shall, to the
extent required by subsection 2.2C, include payment of accrued interest
on the principal amount being repaid and all such payments shall,
except as otherwise required by subsection 2.2C, be applied to the
payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding Loans to
which such payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Administrative Agent shall promptly
distribute to each Lender, at its primary address set forth below its
name on the appropriate signature page hereof or at such other address
as such Lender may request, its Pro Rata Share of all such payments
received by Administrative Agent and the commitment fees of such Lender
when received by Administrative Agent pursuant to subsection 2.3.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business
Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the
payment of interest hereunder or of the commitment fees hereunder, as
the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has
been paid; provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit
or otherwise affect the obligations of Company hereunder or under such
Note with respect to any Loan or any payments of principal or interest
on such Note."
K. Subsection 2.6 is hereby amended to read in its entirety as follows:
"[intentionally omitted]"
L. Subsection 2.9 is hereby amended to read in its entirety as follows:
"[intentionally omitted]"
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SECTION 1.3 AMENDMENTS TO SECTION 3: LETTERS OF CREDIT.
A. Section 3 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"[intentionally omitted]"
SECTION 1.4 AMENDMENTS TO SECTION 4: CONDITIONS TO LOANS AND LETTERS OF CREDIT.
A. Subsection 4.3 is hereby amended to read in its entirety as follows:
"[intentionally omitted]"
SECTION 1.5 AMENDMENTS TO SECTION 6: COMPANY'S AFFIRMATIVE COVENANTS.
A. Subsection 6.1(i) of the Credit Agreement is hereby amended by
deleting the reference to "50 days" contained therein and substituting "42 days"
therefor.
B. Subsection 6.1(iii) of the Credit Agreement is hereby amended by
adding the phrase "and clause (xxi) below" after the phrase "clauses (i) and
(ii) above" contained therein.
C. Subsection 6.1(xvi) of the Credit Agreement is hereby amended to
read in its entirety as follows:
"(xvi) Agings. as soon as possible and within 20 days after the
end of each month a summary of all Accounts Receivable and a summary of
accounts payable agings."
D. Subsection 6.1(xxi) of the Credit Agreement is hereby amended to
read in its entirety as follows:
"(xxi) Monthly Financials: as soon as available and in any
event within 30 days after the end of each month, the consolidated
balance sheet of Company and its Subsidiaries as at the end of such
month, the related consolidated statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such month,
and an income statement for such month showing the results of
operations for each division of Company and its Subsidiaries, all in
reasonable detail and certified by the chief financial officer of
Company that they fairly present the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments; and"
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E. Subsection 6.1 of the Credit Agreement is hereby further amended by
(i) redesignating clause (xxii) thereof as clause (xxiii) thereof; and (ii)
adding the following as new clause (xxii) thereof;
"(xxii) Borrowing Base Certificates: as soon as available and
in any event within 20 days after the last day of each month, a
Borrowing Base Certificate dated as of the last day of such month,
together with any additional schedules and other information as
Administrative Agent may reasonably request; provided, however, that in
the event the aggregate principal amount of outstanding Revolving Loans
exceeds the Borrowing Base for any two consecutive months, a Borrowing
Base Certificate shall be required to be delivered as of the last day
of each two-week period within 20 days of the end of such period; and"
F. Subsection 6.16 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Company shall hire a new chief executive officer no later than
May 30, 1997. In addition, Company shall continue to retain the
services of a financial advisor, satisfactory to Lenders, through the
Commitment Termination Date."
G. Section 6 of the Credit Agreement is hereby amended by adding the
following as new subsections 6.17 and 6.18 thereof:
"6.17 WARRANTS. On or before April 30, 1997, Lenders, Company
and the other parties thereto shall enter into a Fifth Amendment to
Registration Rights Agreement in form and substance satisfactory to
Lenders. On or before May 15, 1997, Company shall file a Post-Effective
Amendment to its Registration Statement on Form S-3, or shall file a
Registration Statement on Form S-3, with respect to the shares of the
common stock of Company underlying the 750,000 warrants issued to
Lenders on the Third Amendment Effective Date, and shall use its best
efforts to cause such Post-Effective Amendment or Registration
Statement to become effective as soon as possible thereafter. On or
prior to July 15, 1997, Company shall receive the approval of the
stockholders of Company, and shall amend its Certificate of
Incorporation, to increase the authorized shares of the common stock of
Company from 30,000,000 to 50,000,000 shares.
"6.18. POST-CLOSING DELIVERIES. On or before April 30, 1997,
Company shall have delivered to Lenders:
(i) originally executed copies of one or more
favorable written opinions of counsel for each foreign Subsidiary of
Company, in form and substance reasonably satisfactory to
Administrative Agent and its counsel,
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dated as of a recent date as to such matters as Administrative Agent
acting on behalf of Lenders may reasonably request;
(ii) originally executed copies of one or more
favorable written opinions of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel
for Company in form and substance reasonably satisfactory to
Administrative Agent and its counsel with respect to the perfection of
Administrative Agent's security interests;
(iii) certified copies of the organizational documents
of each of its foreign Subsidiaries, together with a good standing
certificate from the jurisdiction of its incorporation, each dated a
recent date; and
(iv) resolutions of the Board of Directors of each of
its foreign Subsidiaries approving and authorizing the execution,
delivery, and performance of the Third Amendment to Credit Agreement
dated as of April 9, 1997, certified as of a recent date by the
corporate secretary or an assistant secretary of such Subsidiary as
being in full force and effect without modification or amendment.
In addition, Company agrees that, on or before April 30, 1997,
Company will execute and deliver all instruments and documents, and take all
other actions, that Administrative Agent reasonably requests, in order to
perfect and protect any security interest granted or purported to be granted to
Lenders pursuant to the Collateral Documents with respect to any Collateral
acquired by Company or any of its Domestic Subsidiaries since the Closing Date
or as a result of any changes in the location of any such Collateral or in the
principal place of business or location of records of Company or any of its
Domestic Subsidiaries."
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SECTION 1.6 AMENDMENTS TO SECTION 7: COMPANY'S NEGATIVE COVENANTS.
A. Subsection 7.1(vi) of the Credit Agreement is hereby amended to read
in its entirety as follows:
"[intentionally omitted]"
B. Subsections 7.4(i) and 7.4(vi) of the Credit Agreement are hereby
amended to read in their entirety as follows:
"[intentionally omitted]"
C. Subsection 7.6 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"7.6 FINANCIAL COVENANTS.
"A. LIQUIDITY RATIO. Company shall not permit the ratio of (i)
Consolidated Current Assets to (ii) Consolidated Current Liabilities as
of the last day of any fiscal quarter of Company set forth below to be
less than the correlative amount indicated:
PERIOD MINIMUM LIQUIDITY RATIO
------ -----------------------
Fiscal quarter ended March 31, 1997 0.66:1.00
Fiscal quarter ended June 30, 1997 0.71:1.00
Fiscal quarter ended September 30, 1997 0.69:1.00
Fiscal quarter ended December 31, 1997 0.72:1.00
Fiscal quarter ended March 31, 1998 and thereafter 0.74:1.00
"B. MINIMUM WORKING CAPITAL RATIO. Company shall not permit the
ratio of (a) Consolidated Accounts Receivable plus Consolidated
Inventory to (b) Total Bank Indebtedness as of the last day of any
fiscal quarter of Company set forth below to be less than the
correlative amount indicated:
PERIOD MINIMUM WORKING CAPITAL RATIO
------ -----------------------------
Fiscal quarter ended March 31, 1997 0.73:1.00
Fiscal quarter ended June 30, 1997 0.71:1.00
Fiscal quarter ended September 30, 1997 0.71:1.00
Fiscal quarter ended December 31, 1997 0.74:1.00
Fiscal quarter ended March 31, 1998 and thereafter 0.75:1.00
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"C. MAXIMUM LEVERAGE RATIO. Company shall not permit the ratio
of Consolidated Total Liabilities as of the last day of any fiscal
quarter of Company to Consolidated Tangible Net Worth for the period
set forth below then ended to be greater than (i.e., less negative but
not positive) the correlative amount indicated:
PERIOD MAXIMUM LEVERAGE RATIO
------ ----------------------
Fiscal quarter ended March 31, 1997 -13.00:1.00
Fiscal quarter ended June 30, 1997 -39.00:1.00
Fiscal quarter ended September 30, 1997 -35.00:1.00
Fiscal quarter ended December 31, 1997 -60.00:1.00
Fiscal quarter ended March 31, 1998 and thereafter -120.00:1.00
"D. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Company shall not
permit Consolidated Tangible Net Worth at any time during any period
set forth below to be less than the correlative amount indicated plus
100% of any Net Securities Proceeds from the issuance of any Securities
of Company after the Third Amendment Effective Date:
MINIMUM CONSOLIDATED TANGIBLE
PERIOD NET WORTH
------ ---------
March 31, 1997 through June 29, 1997 ($9,566,000)
June 30, 1997 through September 29, 1997 ($3,112,000)
September 30, 1997 through December 30, 1997 ($3,254,000)
December 31, 1997 through March 30, 1998 ($2,013,000)
March 31, 1998 and thereafter ($1,113,000)
"E. MINIMUM PROFITABILITY. Company shall not permit
Consolidated Net Income (excluding any gain on the sale of PCS) for any
period set forth below to be less than the correlative amount
indicated:
PERIOD MINIMUM PROFITABILITY
------ ---------------------
Fiscal quarter ended March 31, 1997 ($5,537,000)
Fiscal quarter ended June 30, 1997 (3,570,000)
Fiscal quarter ended September 30, 1997 (641,000)
Fiscal quarter ended December 31, 1997 857,000
Fiscal quarter ended March 31, 1998 900,000
"F. MINIMUM PROFITABILITY FROM NORTH AMERICAN AND CORPORATE
OPERATIONS. Company shall not permit Consolidated Net Income From North
American and Corporate Operations for any period set forth below to be
less than the correlative amount indicated:
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PERIOD MINIMUM PROFITABILITY
------ ---------------------
Fiscal quarter ended March 31, 1997 ($7,023,000)
Fiscal quarter ended June 30, 1997 (4,308,000)
Fiscal quarter ended September 30, 1997 (2,128,000)
Fiscal quarter ended December 31, 1997 (1,099,000)
Fiscal quarter ended March 31, 1998 (900,000)"
D. Subsection 7.8 of the Credit Agreement is hereby amended to read
in its entirety as follows:
"Company shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures in an amount exceeding
(i) $5,500,000 in the aggregate during the Fiscal Year ending December
31, 1997 or (ii) $750,000 in the aggregate during any fiscal quarter
thereafter."
SECTION 1.7 AMENDMENTS TO SECTION 8: EVENTS OF DEFAULT.
A. Subsection 8.1 is hereby amended to read in its entirety as follows:
"Failure by Company to pay any installment of
principal of any Loan when due, whether at stated maturity, by
acceleration, by notice of voluntary prepayment, by mandatory
prepayment or otherwise; or failure by Company to pay any interest on
any Loan or any fee or any other amount due under this Agreement within
five days after the date due; or"
B. Subsection 8.3 of the Credit Agreement is hereby amended by
inserting the phrase ", 6.1(iii)" after the phrase "2.5" contained therein and
by adding the phrase ", 6.17" after the phrase "6.10" contained therein.
C. Section 8 of the Credit Agreement is hereby amended by (i) adding
the word "or" at the end of subsection 8.13 thereof and (ii) adding the
following as new subsection 8.14 thereof:
"8.14. Sale of Assets; Repayment of Loans.
Company shall fail to consummate the sale of PCS on or
prior to April 15, 1997 or to receive cash proceeds on or prior to such
date in connection with such sale in an amount equal to at least
$12,850,000; or Company shall fail to consummate the sale of the Pen
Interconnect stock held by Company on or prior to June 30, 1997; or the
sum of (a) the Revolving Loan Commitments and (b) the aggregate
principal amount of the Term Loans then outstanding shall exceed
$36,500,000 as of December 31, 1997;"
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D. The three paragraphs of the THEN clause following new subsection
8.14 are hereby amended to read in their entirety as follows:
"THEN (i) upon the occurrence of any Event of Default described in subsection
8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on
the Loans and (b) all other Obligations shall automatically become immediately
due and payable, without presentment, demand, protest or other requirements of
any kind, all of which are hereby expressly waived by Company, and the
obligation of each Lender to make any Loan hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (b) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan hereunder shall thereupon terminate.
Notwithstanding anything contained in the preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
such paragraph Company shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than as a result of
such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection 10.6, then Lenders having or holding 80% of the aggregate Loan
Exposure of all Lenders, by written notice to Company, may at their option
rescind and annul such acceleration and its consequences; but such action shall
not affect any subsequent Event of Default or Potential Event of Default or
impair any right consequent thereon. The provisions of this paragraph are
intended merely to bind Lenders to a decision which may be made at the election
of such Lenders and are not intended to benefit Company and do not grant Company
the right to require Lenders to rescind or annul any acceleration hereunder,
even if the conditions set forth herein are met."
SECTION 1.8 AMENDMENTS TO SECTION 10: MISCELLANEOUS.
A. Subsection 10.6(ix) of the Credit Agreement is hereby amended to
read in its entirety as follows:
"(ix) changes the payment dates of interest payable hereunder;"
B. Subsections 10.6(ii), 10.6(x) and 10.6(xii) of the Credit Agreement
are hereby amended to read in their entirety as follows:
"[intentionally omitted]"
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SECTION 1.9 AMENDMENTS TO EXHIBITS AND SCHEDULES.
A. Schedule 1.1 of the Credit Agreement is hereby deleted and Schedule
1.1 hereto substituted therefor.
B. Schedule 1.2 hereto is hereby added as Schedule 1.2 of the Credit
Agreement.
C. Schedule 2.1 of the Credit Agreement is hereby deleted and Schedule
2.1 hereto substituted therefor.
D. Exhibit IV of the Credit Agreement is hereby deleted and Exhibits
I-A and I-B hereby substituted therefor.
E. Exhibit V of the Credit Agreement is hereby deleted and Exhibit II
hereto substituted therefor.
F. Exhibit III hereto is hereby added as Exhibit XVII to the Credit
Agreement.
G. Exhibit VIII of the Credit Agreement is hereby deleted and Exhibit
IV hereto substituted therefor.
H. Exhibit III of the Credit Agreement is hereby deleted.
SECTION 2. CONSENT
Lenders hereby consent to (a) the release of their Liens on the
assets and capital stock of PCS provided the proposed sale by Company of PCS is
consummated or prior to April 15, 1997 and Company receives cash proceeds on or
prior to such date in connection with such sale in an amount equal to at least
$12,850,000, which proceeds are applied to prepayment of the Loans in accordance
with subsection 2.4 and (b) the release of their Liens on the Pen Interconnect
stock held by Company provided the proposed sale by Company of such stock is
consummated on or prior to June 30, 1997 and Company receives cash proceeds on
or prior to such date in connection with such sale in an amount equal to the
market price per share of such stock, which proceeds are applied to prepayment
of the Loans in accordance with subsection 2.4. Lenders hereby authorize
Administrative Agent to take such action as may be necessary to (i) release the
Lien of Lenders on the stock and assets of PCS in connection with any such sale
of PCS and to release PCS from its obligations under the Subsidiary Guaranty and
the Collateral Documents to which PCS is a party and (ii) release the Lien of
Lenders on the stock of Pen Interconnect in connection with any such sale of
such stock.
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SECTION 3. WAIVER
Subject to the terms and conditions set forth herein and in
reliance on the representations and warranties of Company herein contained,
Lenders hereby waive compliance with the provisions of:
(a) subsection 6.11 of the Credit Agreement with respect to the
real property leases and subleases of Company and its Subsidiaries set forth on
Schedule 3 hereto for the period from and including January 31, 1997 to and
including April 30, 1997;
(b) subsection 8.2(i) of the Credit Agreement with respect to
the failure of Company to pay the promissory note payable to Lucent Technology,
Inc. for the period from and including March 31, 1997 to and including May 1,
1998, provided that Company makes no payments in connection with any settlement
of the pending dispute with respect to the payment of such note; and
(c) subsection 8.5 of the Credit Agreement with respect to the
failure of Company to comply with subsection 6.11 of the Credit Agreement for
the period from and including January 31, 1997 to and including April 30, 1997.
SECTION 4. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "THIRD AMENDMENT
EFFECTIVE DATE"):
A. On or before the Third Amendment Effective Date, Company shall
deliver to Lenders (or to Administrative Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Third Amendment Effective
Date:
1. Certified copies of its Certificate of Incorporation,
together with a good standing certificate from the Secretary of State
of the State of Delaware, each dated a recent date prior to the Third
Amendment Effective Date;
2. Copies of its Bylaws, certified as of the Third Amendment
Effective Date by its corporate secretary or an assistant secretary;
3. Resolutions of its Board of Directors approving and
authorizing the execution, delivery, and performance of this Amendment
the Pledge Amendment dated as of April 9, 1997 (the "PLEDGE AMENDMENT")
and the WARRANT AGREEMENT, certified as of the Third Amendment
Effective Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
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4. Signature and incumbency certificates of its officers
executing this Amendment, the Pledge Amendment and the Warrant
Agreement;
5. Executed copies of this Amendment and the Pledge Amendment;
and
6. Executed copies of the Notes.
B. On or before the Third Amendment Effective Date, Company shall
deliver to Lenders (or to Administrative Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Third Amendment Effective
Date:
1. Certified copies of the organizational documents of each of
its Domestic Subsidiaries, together with a good standing certificate
from the jurisdiction of its incorporation, each dated a recent date
prior to the Third Amendment Effective Date;
2. Resolutions of the Board of Directors of each of its
Domestic Subsidiaries approving and authorizing the execution,
delivery, and performance of this Amendment, certified as of the Third
Amendment Effective Date by the corporate secretary or an assistant
secretary of such Subsidiary as being in full force and effect without
modification or amendment;
3. Signature and incumbency certificates of the officers of
each of its Subsidiaries executing this Amendment; and
4. Executed copies of this Amendment.
C. On or before the Third Amendment Effective Date, and in
consideration for the concessions made by Lenders in connection with this Third
Amendment, Administrative Agent and Lenders shall have received duly executed
copies of the Amended and Restated Warrant Agreement, dated as of April 9, 1997,
between Company and Lenders (the "WARRANT AGREEMENT"), in form and substance
satisfactory to Lenders. On or before the Third Amendment Effective Date,
Company shall have issued to Lenders Warrants for 875,000 shares of the common
stock, $0.01 par value per share, of Company (the "COMMON STOCK"), in form and
substance satisfactory to Lenders, pursuant to the Warrant Agreement with an
exercise price per share equal to the market price of a share of the Common
Stock on April 4, 1997 in exchange for the 125,000 Warrants currently held by
Lenders.
D. Lenders and their respective counsel shall have received originally
executed copies of one or more favorable written opinions of Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, counsel for Company, in form and substance reasonably satisfactory
to Administrative Agent and its counsel, dated as of the Third Amendment
Effective
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Date and setting forth substantially the matters in the opinions designated in
Exhibit V to this Amendment and as to such other matters as Administrative Agent
acting on behalf of Lenders may reasonably request.
E. On or before the Third Amendment Effective Date, Administrative
Agent and Lenders shall have received duly executed copies of the Amended and
Restated Note Purchase Agreement, in form and substance satisfactory to
Administrative Agent and Lenders. Such Amended and Restated Note Purchase
Agreement shall provide, among other things, that interest thereunder shall be
payable on February 19 and August 19 of each year.
F. On or before the Third Amendment Effective Date, Company shall have
delivered to Administrative Agent and Lenders a Borrowing Base Certificate
prepared as of March 31, 1997. Such Borrowing Base Certificate shall reflect a
Borrowing Base of at least $4,500,000.
G. On or before the Third Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel
shall be satisfactory in form and substance to Administrative Agent and such
counsel, and Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.
SECTION 5. CONDITIONS SUBSEQUENT
On or before April 11, 1997, Administrative Agent, on behalf of
Lenders, shall have received the portion of the restructuring fee from Company
payable on such date and Administrative Agent shall have received the agent's
fee for the period from and including March 31, 1997 to and excluding May 1,
1998.
SECTION 6. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly
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authorized by all necessary corporate action on the part of Company, as the case
may be.
C. NO CONFLICT. The execution and delivery by Company of this Amendment
and the performance of the Amended Agreement do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to
Company or any of its Subsidiaries, the Certificate or Articles of Incorporation
or Bylaws of Company or any of its Subsidiaries or any order, judgment or decree
of any court or other agency of government binding on Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Company or any of its Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of Company or any of
its Subsidiaries (other than any Liens created under any of the Loan Documents
in favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement have
been duly executed and delivered by Company and are the legally valid and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
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SECTION 7. ACKNOWLEDGEMENT AND CONSENT
Company is a party to the Company Collateral Documents, in each
case as amended through the Third Amendment Effective Date, pursuant to which
Company has created Liens in favor of Administrative Agent on certain Collateral
to secure the Obligations. Guarantors are a party to the Guaranty and the
Subsidiary Collateral Documents, in each case as amended through the First
Amendment Effective Date, pursuant to which each Guarantor has (i) guarantied
the Obligations and (ii) created Liens in favor of Administrative Agent on
certain Collateral to secure the obligations of such Guarantor under the
Guaranty. Company and Guarantors are collectively referred to herein as the
"CREDIT SUPPORT PARTIES", and the Guaranty, the Company Collateral Documents and
the Subsidiary Collateral Documents are collectively referred to herein as the
"CREDIT SUPPORT DOCUMENTS".
Each Credit Support Party hereby acknowledges that it has
reviewed the terms and provisions of the Credit Agreement and this Amendment and
consents to the amendment of the Credit Agreement effected pursuant to this
Amendment. Each Credit Support Party hereby confirms that each Credit Support
Document to which it is a party or otherwise bound and all Collateral encumbered
thereby will continue to guaranty or secure, as the case may be, to the fullest
extent possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as such
terms are defined in the applicable Credit Support Document), including, without
limitation, the payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Company now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of
the Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Third Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
Each Credit Support Party (other than Company) acknowledges and
agrees that (i) notwithstanding the conditions to effectiveness set forth in
this Amendment, such Credit Support Party is not required by the terms of the
Credit Agreement or any other Loan Document to consent to the amendments to the
Credit Agreement effected pursuant to this Amendment and (ii) nothing in the
Credit
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Agreement, this Amendment or any other Loan Document shall be deemed to require
the consent of such Credit Support Party to any future amendments to the Credit
Agreement.
SECTION 8. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
1. On and after the Third Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the
"Credit Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement shall mean and be a reference to the
Amended Agreement.
2. Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
3. Without limiting the generality of the provisions of
subsection 10.6 of the Credit Agreement, the waiver set forth above
shall be limited precisely as written and relates solely to the
noncompliance by Company with the provisions of subsections 6.11,
8.2(i) and 8.5 of the Credit Agreement in the manner and to the extent
described above. Nothing in this Waiver shall be deemed to:
(i) constitute a waiver of compliance by Company with
respect to (i) subsections 6.11, 8.2(i) or 8.5 of the Credit
Agreement in any other instance or (ii) any other term,
provision or condition of the Credit Agreement or any other
instrument or agreement referred to therein; or
(ii) prejudice any right or remedy that Administrative
Agent or any Lender may now have (except to the extent such
right or remedy was based upon existing defaults that will not
exist after giving effect to the waiver set forth above) or may
have in the future under or in connection with the Credit
Agreement or any other instrument or agreement referred to
therein.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
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C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
THE CERPLEX GROUP, INC.
By:
----------------------------------------------
Title:
--------------------------------------------
CERTECH TECHNOLOGY, INC. (for purposes
of Section 7 only) as a Credit Support Party
By:
----------------------------------------------
Title:
--------------------------------------------
CERPLEX MASS., INC. (for purposes of
Section 7 only) as a Credit Support Party
By:
----------------------------------------------
Title:
--------------------------------------------
CERPLEX LIMITED (for purposes of Section 7
only) as a Credit Support Party
By:
----------------------------------------------
Title:
--------------------------------------------
APEX COMPUTER COMPANY (for purposes
of Section 7 only) as a Credit Support Party
By:
----------------------------------------------
Title:
--------------------------------------------
S-1
33
CERPLEX SUBSIDIARY, INC. (for purposes of
Section 7 only) as a Credit Support Party
By:
----------------------------------------------
Title:
--------------------------------------------
PERIPHERAL COMPUTER SUPPORT, INC.
(for purposes of Section 7 only) as a Credit
Support Party
By:
----------------------------------------------
Title:
--------------------------------------------
MODCOMP/CERPLEX L.P. (for purposes of
Section 7 only) as a Credit Support Party
By:Cerplex Subsidiary, Inc., as general partner
By:
----------------------------------------------
Title:
--------------------------------------------
MODCOMP JOINT VENTURE, INC. (for
purposes of Section 7 only) as a Credit Support
Party
By:
----------------------------------------------
Title:
--------------------------------------------
MODULAR COMPUTER SERVICES, INC. (for
purposes of Section 7 only) as a Credit Support
Party
By:
----------------------------------------------
Title:
--------------------------------------------
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MODULAR COMPUTER SYSTEMS GMBH
(for purposes of Section 7 only)
as a Credit Support Party
By: /s/ Xxxxxxx Xxxxx
------------------------------------------
Title:
---------------------------------------
MODCOMP FRANCE S.A. (for purposes of
Section 7 only) as a Credit Support Party
By: /s/ Xxxxxxx Xxxxx
------------------------------------------
Title: Director General
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, INDIVIDUALLY AND AS
ADMINISTRATIVE AGENT
By: /s/ Xxxxxxx Xx
------------------------------------------
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT, AS A
LENDER
By: /s/ Xxxx X. XxXxxxxxx
------------------------------------------
Title: Vice President
By: /s/ Xxxx Xxxxxxx
------------------------------------------
Title: Vice President
CITIBANK, N.A., AS A LENDER
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Title: Vice President
S-3
