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EXHIBIT 10.46
ADDENDUM TO AGREEMENT FOR WHOLESALE FINANCING
This Addendum is made to that certain Agreement for Wholesale Financing
entered into by and between Government Technology Services, Inc. ("Dealer") and
Deutsche Financial Services Corporation ("DFS") as of June 27, 1996, as amended
("Agreement").
FOR VALUE RECEIVED, Dealer and DFS agree that the following paragraph shall
be incorporated into the Agreement as if fully and originally set forth therein:
"Financial Covenants." Dealer agrees that it will:
(a) at all times maintain a Tangible Net Worth plus Subordinated Debt in
the combined amount of not less than the amount shown below for the
period corresponding thereto:
Period Amount
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Calendar quarter ending 12/31/99 $40,000,000
Calendar quarter ending 3/31/00 $40,000,000
Calendar quarter ending 6/30/00 $40,000,000
Calendar quarter ending 9/30/00 $40,000,000;
(b) at all times maintain a ratio of Debt minus Subordinated Debt to
Tangible Net Worth plus Subordinated Debt of not more than the amount
shown below for the period corresponding thereto:
Period Ratio
------ ------
Calendar quarter ending 12/31/99 4.0 to 1.0
Calendar quarter ending 3/31/00 4.0 to 1.0
Calendar quarter ending 6/30/00 4.0 to 1.0
Calendar quarter ending 9/30/00 7.0 to 1.0;
(c) at all times maintain a ratio of Current Assets to current
liabilities of not less than the amount shown below for the period
corresponding thereto:
Period Ratio
------ ------
Calendar quarter ending 12/31/99 1.2 to 1.0
Calendar quarter ending 3/31/00 1.2 to 1.0
Calendar quarter ending 6/30/00 1.2 to 1.0
Calendar quarter ending 9/30/00 1.1 to 1.0; and
Prior to September 30, 2000, DFS and Dealer shall renegotiate the above
financial covenants for application to any subsequent periods of this
Agreement. If on or prior to September 30, 2000, the parties fail to
execute a written amendment to this Agreement providing for such revised
financial covenants for any subsequent periods of this Agreement, then
the above financial covenants in effect for the calendar quarter ending
June 30, 2000, shall be and remain in effect, until such amendment is
executed and in full force and effect.
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(d) for the fiscal year of Dealer ending December 31, 1999, Dealer shall
achieve net income, before giving effect to provisions for income taxes,
of at least One Million Dollars ($1,000,000.00). For the fiscal year of
Dealer ending December 31, 2000, and each fiscal year thereafter, Dealer
shall achieve net income, before giving effect to provisions for income
taxes, of at least Two Million Dollars ($2,000,000.00)."
For purposes of this paragraph: (i) "Tangible Net Worth" means the book
value of Dealer's assets less liabilities (including as liabilities all recorded
reserves for contingencies and other potential liabilities), excluding from such
assets all Intangibles; (ii) Intangibles" means and includes general
intangibles (as that term is defined in the UCC); accounts receivable and
advances due from officers, directors, member, owner, employees, stockholders
and affiliates; leasehold improvements net of depreciation; licenses; good will;
prepaid expenses (except for those determined by Agent, in its sole discretion,
not to be Intangible); escrow deposits (except for those determined by Agent, in
its sole discretion, not to be Intangible); covenants not to compete; the excess
of cost over book value of acquired assets; franchise fees; organizational
costs; finance reserves held for recourse obligations; capitalized research and
development costs; and such other similar items as DFS may from time to time
determine in DFS' sole discretion; (iii) "Debt" means all of Dealer's
liabilities and indebtedness for borrowed money of any kind and nature
whatsoever, whether direct or indirect, absolute or contingent, and including
obligations under capitalized leases, guaranties or with respect to which Dealer
has pledged assets to secure performance, whether or not direct recourse
liability has been assumed by Dealer; (iv) "Subordinated Debt" means all
of Dealer's Debt which is subordinated to the payment of Dealer's liabilities to
the Lenders by an agreement in form and substance satisfactory to Agent; and (v)
"Current Assets" means Dealer's current assets. The foregoing terms will
be determined in accordance with GAAP consistently applied, and, if applicable,
on a consolidated basis."
IN WITNESS WHEREOF, the parties hereto have executed this Addendum on this
23rd day of November, 1999.
GOVERNMENT TECHNOLOGY SERVICES, INC.
ATTEST:
By: /S/
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Title:
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/S/
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(Assistant) Secretary
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: /S/
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Title:
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