EXHIBIT 99.1
February 11, 2000
Cotelligent, Inc.
Cotelligent USA, Inc.
X. Xxxx Business Systems Consulting, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
Executive Vice President, Chief Financial Officer, and Treasurer
Dear Xx. Xxxxxxx:
Reference is made to an Amended and Restated Senior Secured Credit
Agreement among Cotelligent, Inc., the Co-Borrowers listed therein, the Lenders
listed therein, BankBoston, N.A., as Administrative Agent and arranged by
BancBoston Xxxxxxxxx Xxxxxxxx, Inc. with Bank of America, N.A. as Documentation
Agent , Fleet National Bank as Syndication Agent, and US Bank as Co-Agent dated
March 12, 1999 (as amended and in effect, the "Credit Agreement"). All
capitalized terms used herein and not otherwise defined shall have the same
meaning herein as in the Credit Agreement.
Events of Default have arisen under the Credit Agreement by virtue of the
breach of the following provisions of the Credit Agreement:
(a) Section 5.15 (Junior Capital Transaction and Revised Earnout Payment
Schedule). On or before January 7, 2000, the Borrowers (i) failed to have
obtained a binding commitment letter for a Junior Capital Transaction, and (ii)
failed to enter into a written agreement with each Selling ISR Stockholder
whereby each such Selling ISR Stockholder agreed to the Revised Earnout Payment
Schedule.
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February 11, 2000
Page 7
(b) Section 6.5 (Financial Covenants). As of the period ending December 31,
1999, the Borrowers (i) failed to comply with the provisions of Section 6.5.4 of
the Credit Agreement (Maximum Net Losses, Minimum EBIT and Minimum Net Income),
and (ii) failed to comply with the provisions of Section 6.5.5 of the Credit
Agreement (Minimum Quarterly EBITDA).
The Borrowers have requested that the Lender Parties waive the foregoing
Events of Default. The Lender Parties are prepared to temporarily waive such
Events of Default, subject to, and on, the following conditions:
1. The Lender Parties hereby waive any Events of Default under Section 5.15 of
the Credit Agreement described above through March 31, 2000 only.
2. The Lender Parties hereby waive any Events of Default under Section 6.5 of
the Credit Agreement described above through March 31, 2000 only, provided
that such waiver is only with respect to the period ending December 31,
1999 and not for any other period.
3. The waiver of the provisions of the Credit Agreement provided herein
relates only to the specific occurrences described in this letter, is a
one-time waiver and shall not be deemed to constitute a continuing waiver
of the provisions of the Credit Agreement or a waiver of the provisions of
the Credit Agreement with respect to any other occurrences or for any other
period. Further, the waivers provided herein shall expire on March 31, 2000
unless the Required Lenders otherwise agree in writing; upon expiration of
the waivers provided herein, the Events of Default so temporarily waived
shall be reinstated and the Lender Parties may exercise all of their rights
and remedies as a result of the existence of such Events of Default.
4. The waiver of the provisions of the Credit Agreement provided herein are
contingent upon the Borrowers' agreement to the following amendments to the
Credit Agreement and other Loan Documents:
a. The provisions of the Credit Agreement are hereby amended to provide
that the Borrowers shall not be entitled to request or receive, and
the Lenders shall not be obligated to make, any Revolving Acquisition
Loans at any time after the date hereof. In that regard and without
limiting the generality of the foregoing, the provisions of Section
2.1.2.1 shall be deemed deleted in their entirety, the Revolving
Acquisition Stated Termination Date shall be deemed to be January 31,
2000 and the Revolving Acquisition Commitments shall be deemed
terminated as of January 31, 2000.
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February 11, 2000
Page 8
b. Notwithstanding anything to the contrary contained in the Credit
Agreement and the other Loan Documents, the Borrowers shall (i) upon
the execution hereof, deliver all cash presently held by the Borrowers
to the Agent, and (ii) hereafter deliver all proceeds of and from the
Collateral to the Agent daily. (The Agent acknowledges that certain
proceeds are directed to a lockbox at US Bank and that the funds
deposited therein will be forwarded from US Bank to the Agent). All
amounts so delivered to the Agent shall be applied to the Obligations
in accordance with the provisions of Section 2.9.3.3 of the Credit
Agreement. In that regard, if requested by the Agent, the Borrowers
shall establish a lock box or blocked account into which all such
proceeds will be directed. Any amounts so delivered to the Agent may
be reborrowed by the Borrowers, subject to the terms and limitations
set forth in the Credit Agreement.
c. From and after the date hereof, the Borrowers shall not be entitled to
elect LIBOR Rate Loans. All existing LIBOR Rate Loans shall convert to
Base Rate Loans at the end of the Interest Period therefor.
5. In addition to the foregoing amendments, the waivers set forth herein are
also subject to the following:
a. The Borrowers hereby confirm that (i) any payment to the Selling ISR
Stockholders may not be made directly or indirectly from the proceeds
of Working Capital Revolving Loans, and (ii) the Borrowers shall not
utilize the cash now or hereafter in their possession (which cash
constitutes proceeds of the Lenders' Collateral) to make any payments
to the Selling ISR Stockholders; rather any payments to the Selling
ISR Stockholders may be made only from the proceeds of a Junior
Capital Transaction or other third party sources.
b. The proceeds of any Junior Capital Transaction shall be utilized to
pay the Selling ISR Stockholders the amounts due them in full and may
be used to make payments with respect to the MDT Earnout. The proceeds
of any Junior Capital Transaction not utilized to pay the Selling ISR
Stockholders or to make payments with respect to the MDT Earnout shall
be used solely for working capital purposes and not to fund any
Permitted Acquisitions or any other acquisitions.
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February 11, 2000
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c. On or before March 5, 2000, the Borrowers shall, subject to the
provisions of Paragraph 5(a) above, pay in full all amounts due to the
Selling ISR Stockholders under the Information System Resources
Agreement.
d. In consideration of the Lender Parties' waiver of the Events of
Default and amendment of the Credit Agreement, as provided herein,
upon the execution hereof, the Borrowers shall pay to the Agent for
the ratable benefit of the Lenders, an amendment fee in the sum of
$50,000.00. In addition, upon the execution hereof, the Borrowers
shall pay all reasonable costs and expenses, including reasonable
attorneys' fees, heretofore incurred by the Lender Parties in
connection with the Borrowers' loan arrangements with the Lender
Parties.
e. The Borrowers shall meet with the Lender Parties in order to attempt
to negotiate a mutually acceptable forbearance agreement, which shall
be documented and executed by March 31, 2000. The Borrowers
acknowledge that the Lender Parties' willingness to meet and negotiate
such an agreement shall not be deemed to constitute a modification or
waiver of the Lender Parties' rights during such negotiation period or
the Lender Parties' agreement to forbear during such negotiation
period.
f. In addition to any other financial reports required to be delivered to
the Lender Parties, the Borrowers shall furnish the Lender Parties
with semi-monthly reporting of revenues, head counts, utilization
rates, and a trend of "bench players", provided that the Lenders
acknowledge that the reports furnished by the Borrowers on a
semi-monthly basis may be subject to adjustment but in all events
shall be the good faith estimate of the Borrowers as to the
information contained therein.
g. The Borrowers acknowledge that the Lender Parties may, at their
option, engage a consultant to review and verify the Borrowers'
business plan and such other matters as the Lender Parties may
require. The Borrowers shall cooperate with such consultant and shall
promptly reimburse the Lender Parties for the reasonable costs and
expenses of such consultant.
With the exception of the limited waivers and amendments to the Credit
Agreement granted herein, all terms and conditions of the Credit Agreement and
all other Loan Documents remain in full force and effect.
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February 11, 2000
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Please indicate your agreement with the terms of this letter by indicating your
assent below.
Very truly yours,
BANKBOSTON, N.A., As Agent, LC Issuer
and Lender
By: /S/ C. Xxxxxxxxxxx Xxxxx
------------------------
Name: /S/ C. Xxxxxxxxxxx Xxxxx
------------------------
Title: Vice President
--------------
FLEET NATIONAL BANK, As Lender
By: /S/ C. Xxxxxxxxxxx Xxxxx
------------------------
Name: /S/ C. Xxxxxxxxxxx Xxxxx
------------------------
Title: Banking Officer
---------------
US BANK, As Co-Agent and Lender
By: /S/ Xxxxxxx Xxxx
----------------
Name: Xxxxxxx Xxxx
------------
Title: Vice President
--------------
BANK OF AMERICA, N.A., As Documentation
Agent and Lender
By: /S/ Xxxxx Xxxxxxx-Xxxx
----------------------
Name: Xxxxx Xxxxxxx-Xxxx
------------------
Title: Vice President
--------------
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February 11, 2000
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Title: Vice President
BANQUE NATIONAL DE PARIS, As Lender
By:________________________
Name:______________________
Title:_______________________
AGREED:
"BORROWERS"
COTELLIGENT, INC.
By: /S/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
----------------
Title: Chairman, Chief Executive Officer & President
---------------------------------------------
COTELLIGENT USA, INC.
By: /S/ Xxxxxxxx X. Xxxx
--------------------
Name: Xxxxxxxx X. Xxxx
----------------
Title: Vice President, General Counsel & Secretary
-------------------------------------------
X. XXXX BUSINESS SYSTEMS CONSULTING, INC.
By: /S/ Xxxxxxxx X. Xxxx
--------------------
Name: Xxxxxxxx X. Xxxx
----------------
Title: Secretary
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