1
EXHIBIT 10.1
NEXTERA ENTERPRISES, INC.
000 XXXXXXXX XXXXXX, XXXXX 0000
XXXXXX, XX 00000
As of Xxxxx 00, 0000
Xxxxx National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Bank of America
0000 Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
RE: FOURTH AMENDMENT TO CREDIT AGREEMENT
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated December 30, 1999, as
amended ("Credit Agreement") and all promissory notes, mortgages, guaranties,
agreements, documents and instruments entered into by Nextera Enterprises, Inc.
("Company") and any other person or obligor pursuant thereto (collectively, the
"Credit Documents") with or for the benefit of Fleet National Bank (f/k/a
BankBoston, N.A.), as agent ("Agent") for itself and the other lenders
(collectively "Lenders") or for the benefit of any other Lender. Except as
otherwise defined herein, capitalized terms used herein shall have the meanings
given them in the Credit Agreement. This Fourth Amendment to Credit Agreement is
referred to as the "Fourth Amendment" and supercedes and replaces the Third
Amendment to Credit Agreement dated as of December 31, 2000.
Company has requested, among other things, that the Agent and Lenders
amend certain provisions contained in the Credit Agreement and the Agent and
Lenders are willing to do so on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Company by Lenders,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Amendments to the Credit Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 18 below, the Credit Agreement is
hereby amended as follows:
(a) Section 1 of the Credit Agreement is hereby amended to add
the following definitions in their appropriate alphabetical order:
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Bank of America
As of March 30, 2001
Page 2
"Consolidated EBITA" means, for any period, the total of:
(a) Consolidated Net Income;
plus
(b) all amounts deducted in computing such Consolidated
Net Income in respect of:
(i) amortization and other non-cash charges
(excluding depreciation);
(ii) interest expense;
(iii) taxes based upon or measured by net income;
(iv) special charges for non-recurring
compensation expense, reductions in force,
excess space, and asset write-downs,
including goodwill; and
(v) the Limited Waiver Fee and fees and costs
associated with the Lenders' Consultant.
"Fourth Amendment to Credit Agreement" means the Fourth
Amendment to this Agreement dated as of March 30, 2001.
"Fourth Amendment to Credit Agreement Effective Date"
means the date on which all of the conditions precedent
contained in Section 18 of the Fourth Amendment to Credit
Agreement are satisfied.
(b) "Consolidated EBITDA" means, for any period, the total of:
(a) Consolidated Net Income;
plus
(b) all amounts deducted in computing such Consolidated
Net Income in respect of:
(i) depreciation, amortization and other
non-cash charges;
(ii) interest expense;
(iii) taxes based upon or measured by net income;
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Bank of America
As of March 30, 2001
Page 3
(iv) special charges for non-recurring
compensation expense, reductions in force,
excess space, and asset write-downs,
including goodwill; and
(vi) the Limited Waiver Fee and fees and costs
associated with the Lenders' Consultant.
(c) Section 2.3.5 of the Credit Agreement is hereby deleted in
its entirety and replaced as follows:
"2.3.5 Reimbursement of Letter of Credit Disbursement. At
such time as a Letter of Credit Issuer makes any
disbursement on a draft presented or accepted under a
Letter of Credit ("Letter of Credit Disbursement") the
Company shall pay to such Letter of Credit Issuer in
immediately available funds the amount of such Letter of
Credit Disbursement. Notwithstanding anything in this
Section 2.3.5 or otherwise, the reimbursement obligations
described in this Section 2.3.5 shall not apply to the
Guarantor L/C (as defined in Section 18 of the Fourth
Amendment to Credit Agreement)."
(d) Section 2.5 of the Credit Agreement is hereby deleted in its
entirety and replaced as follows:
"2.5 Option to Extend Maturities of Credits. So long as no
Default then exists, the Company may request, by notice to
the Lenders at least 90 days and not more than 120 days
prior to the Maturity Date, that the Maturity Date be
extended for an additional period not longer than 12
months, but in no event to a date later than March 29,
2003. The Lenders shall consider, and may deny such
request in their sole and absolute discretion, and if they
choose to approve such request, may propose additional
terms, including any changes in the interest rates, as a
condition to any extension. The Lenders shall provide a
written response to the Company not later than 45 days
after receipt of such request. In no event shall the
Maturity Date be extended hereunder without the consent of
each of the Lenders (giving effect to any Replacement
Lender under Section 11.3). In the event the Lenders offer
to extend the Maturity Date pursuant to this Section 2.5,
the Company may accept such offer by written notice
received by the Agent not later than 30 days after receipt
by the Company of such offer."
(e) Section 4.2 of the Credit Agreement is hereby amended to
add, after the end of Section 4.2.5 the following Section 4.2.6 as
follows:
"4.2.6. Excess Consolidated EBITA. In addition to, and not
in substitution of the foregoing, Company shall pay to
Agent, for the benefit
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 4
of Lenders, an amount equal to 50% of Company's Excess
Consolidated EBITA (as defined below) during each fiscal
quarter for the year to date period, which shall be
payable sixty (60) days following the end of such fiscal
quarter. The amount of Excess Consolidated EBITA shall be
determined by the Company in accordance with GAAP (and
shall be subject to review and approval by the Lenders) on
or prior to the thirtieth (30th) day after the end of each
fiscal quarter. The Company's obligation to make such
payments shall be in addition to and not in substitution
of the scheduled principal amortization required under
Section 7 of the Fourth Amendment to Credit Agreement.
The term "Excess Consolidated EBITA" shall mean, with
respect to each of the fiscal quarters set forth below the
amount by which the Company's Consolidated EBITA exceeds
the Trigger Amount (as set forth below) for the
corresponding periods measured on a cumulative basis for
the year to date period. By way of illustration only, if
the Company's Consolidated EBITA for the period ending
June 30, 2001 equals $2,855,000, then the split shall be
50-50. If the Consolidated EBITA for the period ending
September 30, 2001 equals $8,095,000, there shall be no
split taking into account the payment made to the Lenders
for the prior quarter.
---------------------------------------------------------
Commencing April 1, 2001
and Ending: Trigger Amount
---------------------------------------------------------
June 30, 2001 $2,755,000
---------------------------------------------------------
September 30, 2001 $7,995,000
---------------------------------------------------------
December 31, 2001 $13,828,000
---------------------------------------------------------
Any amounts received pursuant to this Section 4.2.6 shall
be applied by the Lenders to reduce the principal balance
of the Loans (and shall be applied against the scheduled
principal amortization required under Section 7 of the
Fourth Amendment to Credit Agreement by a like amount in
the inverse order of maturity and thereafter applied to
the Loans then outstanding in such order and manner as
Agent shall determine in its sole discretion)."
2. Section 6.5 of the Credit Agreement is hereby amended to delete
Section 6.5.5 in its entirety.
3. Financial Statements and Other Documents. In addition to the other
reports required by any Credit Agreement, Company shall furnish or cause to be
furnished to Agent and Lenders (each in such form and containing such detail as
are satisfactory to Agent):
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 5
(a) Cash Flow Report. A weekly report, to be provided no later
than the third Business Day of each week, which sets forth Company's
actual cash flow activity for the prior week and a reconciliation of
actual cash activity to projected cash activity for such week;
(b) Projections. A weekly report, to be provided no later than
the third Business Day of each week, which sets forth Company's updated
13-week rolling cash activity projection;
(c) Backlog Report. A monthly report, to be provided no later
than the fifteenth day of each calendar month, which sets forth an
updated backlog report;
(d) Miscellaneous Investments. A monthly report, to be provided
no later than the fifteenth day of each calendar month, which sets forth
a schedule of all investment and other property received or expected to
be received from customers or otherwise, as partial payment for services
or otherwise, and evidencing compliance (or non-compliance) with all
actions requested by Agent and Lenders to provide Agent and Lenders with
a continued perfected first priority lien on all such property;
(e) Financial Statements. A monthly report, to be provided no
later than the twenty-fifth day of each calendar month, which sets forth
a comprehensive and operational report for the prior month containing
such items as payable and receivable agings, an internally prepared
Consolidated balance sheet of Company and its Subsidiaries, and
Consolidated statements of income and cash flows of Company and its
Subsidiaries, together with other financial reporting items in
substantially the form of Company's internal reports;
(f) Intellectual Property. A monthly report, to be provided no
later than the fifteenth day of each calendar month, which sets forth an
updated schedule of all intellectual property owned or used by the
Company; and
(g) Financial Covenants. A report, for the fiscal quarter ended
June 2001, twenty-five days after the end of such fiscal quarter, and
thereafter monthly, no later than the twenty-fifth calendar day of each
month, which demonstrates the Company's compliance (or non-compliance)
with the financial tests set forth in Section 17 of this Fourth
Amendment.
4. Ratification of Credit Documents. Except as modified in this Fourth
Amendment or in any other instruments or documents executed in connection
herewith, (a) all terms and conditions of the Credit Documents shall remain in
effect in accordance with their original tenor; and (b) nothing contained herein
shall constitute a waiver by the Agent and Lenders or of any of the Agent's and
Lenders' rights and remedies (including, without limitation, any of Agent's and
Lenders' rights or remedies as to, or any obligations owing to Agent and Lenders
of, any person who may be liable to Agent and Lenders on account of any of the
obligations, whether or not such person is a party hereto), all of which rights
and remedies are expressly reserved and not waived. Each agreement, covenant,
representation and warranty of any Obligors hereunder shall
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 6
be deemed to be in addition to, and not in substitution for, the agreements,
covenants, representations and warranties previously made by Obligors. In the
event that there shall be any inconsistency between any provisions of this
Fourth Amendment and a provision set forth in any other Credit Document, the
provision most favorable to Agent and Lenders and most restrictive as to Company
shall govern.
5. Release of Claims. Company hereby releases, waives and forever
relinquishes all claims, demands, obligations, liabilities and causes of action
of whatever kind or nature, whether known or unknown, which it has, may have, or
might assert now or in the future against Agent and Lenders and/or their
affiliates, participants, affiliates, officers, directors, employees, agents,
attorneys, accountants, consultants, successors and assigns, directly or
indirectly, arising out of, based upon, or in any manner connected with (i) any
transaction, event, circumstance, action, failure to act or occurrence of any
sort or type, whether known or unknown, which occurred, existed, was taken,
permitted or begun prior to the execution of this Fourth Amendment with respect
to the obligations, the Credit Documents and/or the administration thereof or
the obligations created thereby; (ii) any discussions, commitments,
negotiations, conversations or communications with respect to the refinancing,
restructuring or collection of any obligations; or (iii) any thing or matter
related to any of the foregoing. The inclusion of this paragraph in this Fourth
Amendment, and the execution of this Fourth Amendment by Agent and Lenders, does
not constitute an acknowledgment or admission by Agent and Lenders of liability
for any matter, or a precedent upon which liability may be asserted.
6. Limited Waivers; Limited Waiver Period.
(a) Consolidated Pro Forma Debt to Consolidated Pro Forma EBITDA.
Subject to satisfaction of the conditions precedent set forth in Section
18 below, Lenders hereby waive any Event of Default that occurred under
Section 6.5.1 of the Credit Agreement as a result of Company's failure
to maintain a ratio of Consolidated Total Debt to Consolidated Pro Forma
EBITDA not in excess of 300% for the periods ending September 30, 2000,
December 31, 2000 and March 31, 2001; such waiver shall not apply to any
other provision of the Credit Agreement, shall be limited precisely as
written and shall only be effective from November 14, 2000 through
January 2, 2002 (the "Limited Waiver Period"). The Lenders expressly
reserve all rights and remedies available to them (a) after the end of
the Limited Waiver Period, and (b) as a result of non-specified Defaults
or Events of Default. Company expressly acknowledges and agrees that,
upon the expiration of the Limited Waiver Period (and absent further
waivers by Lender as to the foregoing covenant, which further waivers
Lenders may grant or deny in their absolute discretion), Company shall
at such time be in default of the Credit Agreement as to such covenant
and Lenders shall have available to them, and be able to exercise, all
of the rights and remedies accorded under the Credit Agreement
including, without limitation, with respect to Defaults or Events of
Default under Section 6.5.1 of the Credit Agreement.
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 7
(b) Consolidated Pro Forma EBITDA minus Capital Expenditures to
Consolidated Pro Forma Interest Expense. Subject to satisfaction of the
conditions precedent set forth in Section 18 below, Lenders hereby waive
any Event of Default that occurred under Section 6.5.2 of the Credit
Agreement as a result of Company's failure to maintain a Consolidated
Pro Forma EBITDA minus Capital Expenditures to Consolidated Pro Forma
Interest Expense ratio equal to or in excess of 3.00 to 1.00 for the
periods ending September 30, 2000, December 31, 2000, and March 31,
2001. Such waiver shall not apply to any other provision of the Credit
Agreement, shall be limited precisely as written and shall only be
effective during the Limited Waiver Period. The Lenders expressly
reserve all rights and remedies available to them (a) after the end of
the Limited Waiver Period, and (b) as a result of non-specified Defaults
or Events of Default. Company expressly acknowledges and agrees that
upon the expiration of the Limited Waiver Period (and absent further
waivers by Lender as to the foregoing covenant, which further waivers
Lenders may grant or deny in their absolute discretion), Company shall
at such time be in default of the Credit Agreement as to such covenant
and Lenders shall have available to them, and be able to exercise, all
of the rights and remedies accorded under the Credit Agreement
including, without limitation, with respect to Defaults or Events of
Default under Section 6.5.2 of the Credit Agreement.
7. Loans.
(a) Borrowing Requests. The Company hereby acknowledges and
agrees that during the Limited Waiver Period, the Company will not make,
and the Agent and Lenders need not honor, any borrowing requests (or
requests for the issuance, renewal, rollover or replacement of any
Letters of Credit) under the Acquisition Loans, Revolving Loans or
otherwise.
(b) Acquisition Loans. Notwithstanding any applicable Maturity
Date set forth in the Credit Agreement at Sections 2.2.1, 2.5 or
otherwise, or in the Acquisition Notes with respect to the Acquisition
Loans, the Company hereby acknowledges and agrees that the Maximum
Amount of Acquisition Credit shall be permanently reduced as follows:
(i) to the principal balance outstanding as of March 30, 2001 (which is
conclusively deemed to be $26,346,180.65); and (ii) thereafter by
further reductions totaling $8,050,000 in the aggregate and in the
amounts and on the dates set forth in the 2001 principal amortization
schedule ("Acquisition Loan 2001 Principal Amortization Schedule")
below:
Acquisition Loan 2001 Principal Amortization Schedule
DATE REDUCTION OF PRINCIPAL AMOUNT
---- -----------------------------
April 30, 2001 $250,000
May 31, 2001 $350,000
June 29, 2001 $450,000
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 8
July 31, 2001 $ 650,000
August 31, 2001 $ 850,000
September 28, 2001 $1,000,000
October 31, 2001 $1,500,000
November 30, 2001 $1,500,000
December 31, 2001 $1,500,000
and (iii) after December 31, 2001, principal on the Acquisition Loan shall
continue to amortize as is set forth in the Credit Documents.
Notwithstanding the foregoing, if Company reimburses Letter of Credit
Issuer for a draw made on a Standby Letter of Credit within one (1) Business Day
of such draw, or if any Standby Letter of Credit is returned undrawn, then the
Lenders shall reduce the scheduled principal amortization required under the
Acquisition Loan 2001 Principal Amortization Schedule set forth above in this
Section 7 by a like amount in the inverse order of maturity.
(c) Letters of Credit. Although the Company will not make, and
the Lenders need not honor, any borrowing requests under the Revolving
Loans or otherwise during the Limited Waiver Period, the Lenders shall
continue to honor proper and timely draws on Letters of Credit which are
currently outstanding in accordance with their terms and the Credit
Agreement.
(d) Revolving Credit. Company further acknowledges and agrees
that the Maximum Amount of Revolving Credit is hereby permanently
reduced to the principal balance outstanding as of March 30, 2001
(inclusive of outstanding Letters of Credit as of March 30, 2001).
Company further acknowledges and agrees that the Maximum Amount of
Revolving Credit shall be permanently reduced by the face amount of any
returned or cancelled Letters of Credit, and such returned or cancelled
Letters of Credit shall not create availability under the Maximum Amount
of Revolving Credit or otherwise.
(e) LIBOR. Notwithstanding the foregoing, LIBOR Pricing Options
will not be available during the Limited Waiver Period; provided that,
Loans that are currently subject to a LIBOR Pricing Option shall convert
to Base Rate borrowings at the end of their current respective LIBOR
Interest Periods.
(f) Reduction of Commitment Fees. The Lenders agree that the
Acquisition Credit Commitment Fee and the Revolving Credit Commitment
Fee shall reflect the foregoing permanent reductions in the Maximum
Amount of Acquisition Credit and the Maximum Amount of Revolving Credit,
respectively.
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 8
8. Interest. Notwithstanding anything in the Credit Agreement, Credit
Documents, Revolving Notes, Acquisition Notes or elsewhere to the contrary, the
Loans shall bear interest, to be paid on the first day of each month, at a rate
per annum equal to the sum of the Base Rate plus 3.50%, of which 2% (the
"Incremental Accrued Portion") will be accrued and paid on January 2, 2002. The
Agent and the Lenders agree that the Company's obligation to pay such
Incremental Accrued Portion shall be waived if the Credit Obligations are paid
indefeasibly in full in cash or other immediately available funds and the
Agent's and Lenders' commitment to provide Loans or other financial
accommodations are terminated on or before December 15, 2001.
9. Lenders' Consultant. Company hereby acknowledges that the Lenders
have elected in their own discretion to retain, at the Company's expense, The
Recovery Group as their consultant ("Lenders' Consultant"). During the Limited
Waiver Period, Company agrees to continue to grant complete access and
cooperation to Lenders' Consultant during normal business hours. Fees and
expenses of Lenders' Consultant shall be paid as invoiced (provided, however,
that the Lenders acknowledge that they do not intend to incur Lenders'
Consultant fees in excess of $150,000 during the Limited Waiver Period, but
reserve the right to do so in their discretion). Any Lenders' Consultant fees
shall be supported by the name of the individual providing the service, their
respective billing rate, and the hourly fee by week.
10. Consultant; Professional Advisors. The Company hereby acknowledges
and agrees that it shall engage and, thereafter, that it shall continue to
retain a consultant reasonably acceptable to Lenders to assist with the
development and implementation of a business plan, which plan shall be delivered
to Lenders on or before May 15, 2001. The Company will also continue to retain
all presently engaged professional advisors, or for each such professional
advisor a replacement that is reasonably acceptable to Lenders.
11. Limited Waiver Fee: As additional consideration to enter into this
Fourth Amendment, Company shall pay to the Lenders a fee ("Limited Waiver Fee")
(which shall be in addition to all other amounts to be paid by the Company)
which shall be earned by the delivery of the Lenders' signatures hereto and
comprised of two components as follows:
(a) $900,000 paid in immediately available funds as set forth
below:
(i) $100,000 as of the date Lenders deliver their
signatures hereto; and
(ii) $800,000 payable in installments of $100,000 on
the first day of each month commencing May 1,
2001; provided that, the Company's obligation to
pay such amounts as are described in this
Section 11(a)(ii) shall be applied as a
dollar-for-dollar reduction of the Credit
Obligations if the Credit Obligations are paid
indefeasibly in full in cash or other
immediately available funds and the Agent's and
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 10
Lenders' commitment to provide loans or other
financial accommodations are terminated on or
before December 15, 2001; and
(b) on or before April 23, 2001, and in form and substance
satisfactory to Agent and Lenders and their counsel, (i) warrants to
purchase 1,418,351 shares of the Company's Class A Common Stock at an
exercise price of $0.86 per share, exercisable at Lenders' sole
discretion at any time prior to 18 months after payment in full of all
Credit Obligations; and together with (ii) a written agreement between
Lenders and the Company that upon the sale or other disposition (or any
series of sale or dispositions) by the Company of any of the Company's
assets with gross proceeds, in the aggregate, in excess of $10,000,000,
Lenders can elect in their sole discretion to return such warrants in
exchange for an additional $500,000 cash payment by the Company (except
to the extent prohibited by a non-waiveable applicable law or
regulation), which payment may be made out of any asset sale or other
proceeds; and providing for a call right that can be exercised by the
Company in exchange for an additional $750,000 cash payment by the
Company, which payment may only be made from new financing sources
(i.e., from sources other than the Company).
12. Joinder Of Wholly Owned Subsidiaries. Pursuant to Section 2.9 of the
Guarantee and Security Agreement ("Guarantee and Security Agreement") dated as
of December 30, 1999 and Section 9.1 of the Subordination Agreement
("Subordination Agreement") dated as of December 30, 1999, each Wholly Owned
Subsidiary that is not already a party to the Joined Agreements (as defined
below) shall promptly initiate all corporate or other proceedings and obtain all
consents, approvals and authorizations ("Joinder Prerequisites") that are
required to permit each Wholly Owned Subsidiary to join in and become a party
(as fully as if the Wholly Owned Subsidiary had been an original signatory
thereto) to (a) the Credit Agreement and any amendments thereto as a Company,
(b) the Guarantee and Security Agreement as a Guarantor and Obligor thereunder
and (c) the Subordination Agreement as defined thereunder (the agreements
described in subsections (a), (b) and (c) are collectively referred to herein as
the "Joined Agreements"). Effective as of the date on which all of the Joinder
Prerequisites are satisfied (and in no event later than April 23, 2001), each
Wholly Owned Subsidiary that is not already a party to the Joined Agreements
shall join in and become a party to the Joined Agreements; subject, however, to
the same conditions, limitations and qualifications listed in Section 2.9 of the
Guarantee and Security Agreement, except that such conditions, limitations and
qualifications shall apply to both existing and future Wholly Owned
Subsidiaries. Each Company and each Wholly Owned Subsidiary shall also
immediately pledge and deliver to the Lenders its stock certificates or other
ownership interests as to each other business enterprise in which it has an
interest and any other investment property; provided, however, that in the event
that such a pledge by any Company or any Wholly Owned Subsidiary is prohibited
by any valid law, statute, rule or
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 11
regulation or if a pledge of the stock of any Foreign Subsidiary would result in
a deemed repatriation of foreign earnings under the Internal Revenue Code of
1986 (including the "deemed dividend" provisions of Section 956), such pledge
will be limited to the extent necessary to comply with such prohibition or to
prevent such repatriation of foreign earnings.
13. Acquisitions and Indebtedness. Notwithstanding Sections 6.6 and 6.9
of the Credit Agreement or any other provision in any Credit Document, Company
shall not during the Limited Waiver Period incur any Indebtedness of the type
described at the following Sections of the Credit Agreement: 6.6.1, 6.6.2,
6.6.6, 6.6.12 (and shall not, without limitation of the foregoing, request any
Acquisition Loans).
14. Prohibition on Leases. Company hereby acknowledges and agrees that
it shall not enter into any new operating leases and/or capital leases; except
for (a) renewals of existing leases, (b) operating leases and/or capital leases
of Lexecon, Inc. for which amounts on account of such leases at least equal to
such lease payments are billed to and collected from customers, and (b) capital
leases, subject, however, to the maximum Capital Expenditure covenant described
in Section 17 of this Fourth Amendment.
15. Certain Obligations. Company hereby acknowledges and agrees that it
shall not make any payments, including but not limited to regularly scheduled
payments of principal, interest or other charges, on account of any subordinated
debt, management fees to affiliates, dividends, bonus compensation to officers,
including but not limited to special incentive bonuses, retention or other
programs or charges, and whether or not such programs, bonuses or charges were
previously announced, except for bonus compensation set forth in the schedule
below with respect to the corresponding period (the, "Certain Obligations"):
Certain Obligations
-----------------------------------------------------------
Period Bonus Compensation
-----------------------------------------------------------
April 1, 2001 to June 30, 2001 $2,600,000
-----------------------------------------------------------
April 1, 2001 to September 30, 2001 $5,800,000
-----------------------------------------------------------
April 1, 2001 to December 31, 2001 $7,400,000
-----------------------------------------------------------
The Company agrees that it shall not pay Certain Obligations in excess of the
amounts set forth above for the corresponding period set forth above unless the
Lenders have issued their prior written consent. The Company further
acknowledges and agrees that all Certain Obligations shall be and are expressly
subordinated and junior in right of payment and exercise of remedies as set
forth in the Credit Agreement.
16. Junior Creditor Acknowledgement. The undersigned Junior Creditor
hereby acknowledges and agrees that it shall not take any action or assert any
claim with respect to the Subordinated Indebtedness (as defined in the
Subordination Agreement) during the Limited Waiver Period; provided, however
that the Junior Creditor and the Company may restructure, exchange or convert
Subordinated Indebtedness into any equity or debt securities of the
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Fleet National Bank
Bank of America
As of March 30, 2001
Page 12
Company that are subordinated in priority and payment to the Loans. Except as
permitted in the foregoing sentence, the Junior Creditor shall not during the
Limited Waiver Period assert, collect, or enforce the Subordinated Indebtedness
or any part thereof or take any action to foreclose or realize on the
Subordinated Indebtedness, and the Junior Creditor will hold in trust and
immediately pay over to the Lenders in the same form of payment received, with
appropriate endorsements, any payment that the Company makes to the Junior
Creditor with respect to the Subordinated Indebtedness; provided, however, that
the Company may make Distributions of PIK Interest (but not in the form of cash
or other securities or other property of any type) on the Subordinated
Indebtedness in accordance with its terms.
17. Financial Tests. In addition to and not in lieu of the financial
tests performed under Section 6 of the Credit Agreement, the Company shall be
subject to the following financial tests during the Limited Waiver Period:
(a) Fixed Charge Coverage Ratio. The Company shall not permit
for any period set forth below the ratio of (a) the sum of (i)
Consolidated EBITDA for such period set forth below minus (ii) cash
taxes paid divided by (b) cash interest payable to the Lenders
(excluding the Incremental Accrued Portion described in Section 8 of
this Fourth Amendment) plus debt amortization and the Limited Waiver Fee
payable to the Lenders during such period (the "Fixed Charge Coverage
Ratio") to be less than the ratio corresponding to such period in the
table below. Such ratio for each period shall be calculated on a
cumulative basis for the period commencing April 1, 2001 and ending on
the date set forth in the table, with the first such calculation being
made for the three month period ending June 30, 2001.
--------------------------------------------------------------------------------------
Period Commencing on April 1, 2001 and Ending: Fixed Charge Coverage Ratio
--------------------------------------------------------------------------------------
June 30, 2001 1.50:1.00
--------------------------------------------------------------------------------------
July 31, 2001 1.44:1.00
--------------------------------------------------------------------------------------
August 31, 2001 1.52:1.00
--------------------------------------------------------------------------------------
September 30, 2001 1.51:1.00
--------------------------------------------------------------------------------------
October 31, 2001 1.43:1.00
--------------------------------------------------------------------------------------
November 30, 2001 1.38:1.00
--------------------------------------------------------------------------------------
December 31, 2001 1.33:1.00
--------------------------------------------------------------------------------------
(b) Cash Interest Coverage Ratio. Company shall not permit for
any period set forth below the ratio of Consolidated EBITA divided by
cash interest payable to the Lenders for any period set forth below to
be less than the ratio corresponding to such period in the table below.
Such ratio for each period shall be calculated on a cumulative basis for
the period commencing April 1, 2001 and ending on the date set forth in
the table, with the first such calculation being made for the three
month period ending June 30, 2001.
---------------------------------------------------------------------------------------
Period Commencing on April 1, 2001 and Ending: Cash Interest Coverage Ratio
---------------------------------------------------------------------------------------
June 30, 2001 1.76:1.00
---------------------------------------------------------------------------------------
July 31, 2001 1.89:1.00
---------------------------------------------------------------------------------------
00
Xxxxx Xxxxxxxx Xxxx
Xxxx xx Xxxxxxx
As of March 30, 2001
Page 13
---------------------------------------------------------------------------------------
August 31, 2001 2.32:1.00
---------------------------------------------------------------------------------------
September 30, 2001 2.59:1.00
---------------------------------------------------------------------------------------
October 31, 2001 2.80:1.00
---------------------------------------------------------------------------------------
November 30, 2001 2.96:1.00
---------------------------------------------------------------------------------------
December 31, 2001 3.06:1.00
---------------------------------------------------------------------------------------
(c) Minimum Consolidated EBITA. Company shall not for any period
set forth below permit its cumulative Consolidated EBITA to be less than
the amount corresponding to such period in the table below. Such
comparison for each period shall be calculated on a cumulative basis for
the period commencing April 1, 2001 and ending on the date set forth in
the table, with the first such calculation being made for the three
month period ending June 30, 2001.
-----------------------------------------------------------------------------
Period Commencing on April 1, 2001 and Ending: Consolidated EBITA
-----------------------------------------------------------------------------
June 30, 2001 $2,480,000
-----------------------------------------------------------------------------
July 31, 2001 $3,514,000
-----------------------------------------------------------------------------
August 31, 2001 $5,355,000
-----------------------------------------------------------------------------
September 30, 2001 $7,195,000
-----------------------------------------------------------------------------
October 31, 2001 $8,992,000
-----------------------------------------------------------------------------
November 30, 2001 $10,783,000
-----------------------------------------------------------------------------
December 31, 2001 $12,455,000
-----------------------------------------------------------------------------
(d) Capital Expenditures. Company shall not make or incur during
any period set forth below cumulative Capital Expenditures in excess of
the amount set forth below corresponding to such period. Such comparison
for each period shall be calculated on a cumulative basis for the period
commencing April 1, 2001 and ending on the date set forth in the table,
with the first such calculation being made for the three month period
ending June 30, 2001.
-----------------------------------------------------------------------------------
Period Commencing on April 1, 2001 and Ending: Capital Expenditures
-----------------------------------------------------------------------------------
June 30, 2001 $2,675,000
-----------------------------------------------------------------------------------
July 31, 2001 $4,075,000
-----------------------------------------------------------------------------------
August 31, 2001 $4,500,000
-----------------------------------------------------------------------------------
September 30, 2001 $5,000,000
-----------------------------------------------------------------------------------
October 31, 2001 $5,500,000
-----------------------------------------------------------------------------------
November 30, 2001 $5,650,000
-----------------------------------------------------------------------------------
December 31, 2001 $5,800,000
-----------------------------------------------------------------------------------
(e) Investments. During the Limited Waiver Period, Company shall
not make or incur Investments; except for (i) Investments arising from
operation of Company's customary
14
Fleet National Bank
Bank of America
As of March 30, 2001
Page 14
cash management systems (i.e. the so-called "sweep account"), and (ii)
Investments permitted under Sections 6.9.1, 6.9.2 and 6.9.3 of the
Credit Agreement.
18. Conditions Precedent. Notwithstanding any other provision of this
Fourth Amendment or any of the other Credit Documents, and without affecting in
any manner the rights of Agent and Lenders under the other sections of this
Fourth Amendment, this Fourth Amendment shall not be effective as to the Agent
and Lenders unless and until each of the following conditions has been and
continues to be satisfied:
(a) Documentation. On or before April 17, 2001, the Agent and
Lenders shall have received, in form and substance satisfactory to Agent
and Lenders and their counsel, a duly executed copy of the following:
(i) this Fourth Amendment;
(ii) Limited Guaranty in the form of Exhibit A
hereto;
(iii) A Standby Letter of Credit to secure the Limited
Guaranty described in this Section 18 of this
Fourth Amendment, in substantially the form of
Exhibit B hereto and issued by a domestic
national bank or state-chartered banking
institution rated "A" or better by Standard &
Poor's Corporation (or, if such ratings are no
longer published, with a similar or better
(effective) rating by a similar independent
company) (the "Guarantor L/C"); and
(iv) such additional documents, instruments and
certificates as the Agent and Lenders and their
counsel shall reasonably require in connection
therewith, all in form and substance
satisfactory to the Agent and Lenders and their
counsel.
(b) Payment of Expenses. Payment of all accrued but unpaid
interest and all accrued but unreimbursed expenses, fees and other
charges incurred by Lenders through the closing date, including, without
limitation, attorneys' fees and expenses.
(c) Receipt of Limited Waiver Fee. The Lenders shall have
received $100,000 in payment of the first installment of the cash
portion of the Limited Waiver Fee described in Section 11 hereof.
(d) No Default. No Default or Event of Default shall exist
except as previously disclosed and as consented to herein by the
Lenders.
(e) No Litigation. Except as set forth on Schedule A hereto and
consented to by the Lenders, there is no litigation, arbitration,
proceeding or investigation pending, or to the knowledge of Company's
officers, threatened against Company that, if adversely
15
Fleet National Bank
Bank of America
As of March 30, 2001
Page 15
determined would result in a material judgment not fully covered by
insurance or that would otherwise have a material adverse effect on the
assets, business or prospects of Company.
19. Conditions Subsequent. In addition to the foregoing, the Company
hereby agrees that it shall satisfy all of the conditions set forth in this
Section 19. A failure to satisfy any of the conditions contained in this Section
19 on or before the dates set forth below shall immediately constitute an Event
of Default under the Credit Documents.
(a) Unqualified Opinion. On or before April 19, 2001, Company
shall deliver to Agent and Lenders a report of an independent certified
public accountant of recognized national standing satisfactory to Agent
and Lenders (e.g., Ernst & Young LLP), containing no material
qualification, to the effect that they have audited the Consolidated
financial statements of the Company and its Subsidiaries in accordance
with generally accepted auditing standards and that such Consolidated
financial statements present fairly, in all material respects, the
financial position of the Company and its Subsidiaries covered thereby
at the dates thereof and the results of their operations for the periods
covered thereby in conformity with GAAP.
(b) Leasehold. On or before April 23, 2001, Company shall
deliver to Agent and Lenders a fully executed (by all lessee(s) and
lessor(s)) collateral assignment of lease and landlord's acknowledgement
and consent with respect to Company's Boston, Massachusetts facility, in
form and substance satisfactory to the Lenders.
(c) Warrant. On or before April 23, 2001, Company shall deliver
to Agent and Lenders the warrant described in Section 11 of this Fourth
Amendment, together with the documentation described in Section 11 of
this Fourth Amendment.
(d) Junior Participation Agreement. On or before April 24, 2001,
a Junior Participation Agreement in form and substance satisfactory to
Agent and Lenders.
(e) Cash Management Arrangements: On or before April 24, 2001,
the Company will provide Agent and Lenders with a schedule of all bank
accounts maintained by it and its Subsidiaries. On or before thirty (30)
days after the Company's receipt of written request by Agent, the
Company and its Subsidiaries shall enter into cash management
arrangements acceptable to Agent and Lenders, and at the Agent's and
Lenders' direction Company shall provide that the proceeds of all
receivables and other collateral (other than proceeds arising from any
Foreign Subsidiary that would result in a deemed repatriation of foreign
earnings under the Internal Revenue Code of 1986, including the "deemed
dividend" provisions of Section 956) shall be paid into a "concentration
account" maintained with the Agent.
(f) List of Equity Investments. On or before April 24, 2001,
Company shall deliver to Agent and Lenders an updated list of all equity
holdings and/or investments taken in lieu of fees.
16
Fleet National Bank
Bank of America
As of March 30, 2001
Page 16
(g) ACH Services. The Company acknowledges that the Agent and
Lenders intend to reduce and hereby confirm and reserve the right to
terminate or require prefunding with respect to ACH services presently
provided to the Company. The Company hereby agrees that it shall furnish
to the Agent and Lenders its plan to either terminate or prefund such
ACH services within 15 days of the delivery of the Company's signature
hereto, which plan shall be on terms acceptable to the Agent and
Lenders.
(h) Cash Collateral for Standby Letters of Credit. On or before
January 15, 2002, Company shall deliver cash collateral in the amount of
103% of the face amount of all outstanding Letters of Credit to secure
Company's reimbursement obligations with respect to those Letters of
Credit.
20. Representations and Warranties. To induce the Agent and
Lenders to enter into this Fourth Amendment, Company warrants,
represents and covenants to the Lenders that:
(a) Organization and Qualification. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation. Company is duly qualified or is
authorized to do business and is in good standing as a foreign
corporation in all states and jurisdictions in which the failure of
Company to be so qualified would have a material adverse effect on the
financial condition, business or properties of the Company.
(b) Corporate Power and Authority. Company is duly authorized and
empowered to enter into, execute, deliver and perform this Fourth
Amendment and each of the Credit Documents to which it is a party. The
execution, delivery and performance of this Fourth Amendment and each of
the other Credit Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or
approval of the stockholders of Company; (ii) contravene Company's
charter or by-laws; (iii) violate, or cause Company to be in default
under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to Company; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other
material agreement, lease or instrument to which Company is a party or
by which Company's properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than liens
permitted under Section 6.8 of the Credit Agreement) upon or with
respect to any of the properties now owned or hereafter acquired by
Company.
(c) Legally Enforceable Agreement. This Fourth Amendment and each
of the other Credit Documents when delivered under this Fourth Amendment
will be, a legal, valid and binding obligation of Company, enforceable
against Company in accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
17
Fleet National Bank
Bank of America
As of March 30, 2001
Page 17
(d) No Material Adverse Change. Since the date of the last
financial statements provided by the Company to the Lenders, there has
been no Material Adverse Change in the condition, financial or
otherwise, of Company as shown on the consolidated balance sheet as of
such date and no change in the aggregate value of equipment and real
property owned by Company, except changes in the ordinary course of
business, none of which individually or in the aggregate would
constitute a Material Adverse Change.
(e) Continuous Nature of Representations and Warranties. Each
representation and warranty contained in the Credit Agreement and the
other Credit Documents remains accurate, complete and not misleading in
any material respect on the date of this Fourth Amendment, except for
representations and warranties that explicitly relate to an earlier date
and changes in the nature of Company's business or operations that would
render the information in any exhibit attached thereto either
inaccurate, incomplete or misleading, so long as the Lenders have
consented to such changes or such changes are permitted by the Credit
Agreement.
21. Acknowledgement of Obligations. Company hereby (1) reaffirms and
ratifies all of the promises, agreements, covenants and obligations to Lenders
under or in respect of the Credit Agreement and other Credit Documents as
amended hereby and (2) acknowledges that it is unconditionally liable for the
punctual and full payment of all obligations, including, without limitation, all
charges, fees, expenses and costs (including, without limitation, costs of
collection and attorneys' fees and expenses) under the Credit Documents, as
amended hereby, and that it has no defenses, counterclaims or set offs with
respect to full, complete and timely payment and performance of all of the
Credit Obligations.
22. Confirmation of Liens. Company acknowledges, confirms and agrees
that the Credit Documents, as amended hereby, are effective to grant to Agent
and Lenders duly perfected, valid and enforceable first priority security
interests and liens in the Credit Security described therein and that the
locations for such Credit Security specified in the Credit Documents have not
changed. Company further acknowledges and agrees that all obligations of Company
are and shall be secured by all such Credit Security.
23. Miscellaneous. Except as set forth herein, the undersigned confirms
and agrees that the Credit Documents remain in full force and effect without
amendment or modification of any kind. The execution and delivery of this Fourth
Amendment by Lenders shall not, except as specifically stated herein, be
construed as a waiver by the Lenders of any Default or Event of Default under
the Credit Documents. This Fourth Amendment, together with the Credit Agreement
and other Credit Documents, constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior dealings,
correspondence, conversations or communications between the parties with respect
to the subject matter hereof. This Fourth Amendment and the transactions
hereunder shall be deemed to be consummated in the Commonwealth of Massachusetts
and shall be governed by and interpreted in accordance with the laws of that
state. This Fourth Amendment and the agreements, instruments and
18
Fleet National Bank
Bank of America
As of March 30, 2001
Page 18
documents entered into pursuant hereto or in connection herewith shall be
"Credit Documents" under and as defined in the Credit Agreement.
19
Fleet National Bank
Bank of America
As of March 30, 2001
Page 19
Executed under seal on the date set forth above.
ATTEST: NEXTERA ENTERPRISES, INC.
/s/ Xxxxxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------ -------------------------------
Corporate Controller Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
20
Fleet National Bank
Bank of America
As of March 30, 2001
Page 20
Accepted in Boston, Massachusetts as of March 30, 2001
FLEET NATIONAL BANK, as Agent and Lender
By: /s/ Xxxxxxx X. X'Xxxxx
----------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
BANK OF AMERICA, N.A. as Lender
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
21
Fleet National Bank
Bank of America
As of March 30, 2001
Page 21
Accepted as to Sections 16, 18 and 19 hereof in Boston, Massachusetts as of
March 30, 2001
KNOWLEDGE UNIVERSE CAPITAL CO. LLC,
AS JUNIOR CREDITOR
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Secretary
22
Fleet National Bank
Bank of America
As of March 30, 2001
Page 22
SCHEDULE A
(Litigation)
Two former employees of the Company whose employment with the Company
was recently terminated have informed the Company of their belief that they are
entitled to consideration from the Company with respect to claims they have made
in connection with their employment. No formal legal actions have been filed to
date to the Company's knowledge.
A software vendor has claimed that the Company owes it approximately
$245,000 for the purchase of software. An attorney for the software vendor has
contacted the Company seeking payment, however no formal legal action has been
filed to date to the Company's knowledge. The Company disputes the validity of
this claim and intends to vigorously defend itself in the event any legal action
is taken.
23
Fleet National Bank
Bank of America
As of March 30, 2001
Page 23
EXHIBIT A
(Limited Guaranty)
24
Fleet National Bank
Bank of America
As of March 30, 2001
Page 24
EXHIBIT B
(Standby Letter Of Credit/Guarantor L/C)
