EXECUTION VERSION
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AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT
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This AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT, dated as of May 2, 2003
(this "Amendment"), is by and among MCSi, Inc., a Maryland corporation, which is
the successor by merger to Miami Computer Supply Corporation, an Ohio
corporation (herein, together with its successors and assigns, the "Borrower");
the financial institutions listed on the signature pages hereof (the "Lenders");
NATIONAL CITY BANK, a national banking association, as a Lender and as
Documentation Agent; and PNC BANK, NATIONAL ASSOCIATION, a national banking
association, as a Lender, the Swing Line Lender, a Letter of Credit Issuer, the
Collateral Agent and Administrative Agent (the "Administrative Agent") for the
Lenders under the Credit Agreement.
PRELIMINARY STATEMENTS
1. The Borrower, the Lenders, and the Administrative Agent entered into the
Amended and Restated Credit Agreement, dated as of December 1, 1998 (as amended,
the "Credit Agreement").
2. The Borrower has failed to, or anticipates that it will fail to, perform
or observe certain covenants and agreements contained in the Credit Agreement,
which failures have resulted or will result in Events of Default under the
Credit Agreement.
3. The parties hereto entered into a Forbearance Agreement dated as of
April 4, 2003 (the "Forbearance Agreement"), pursuant to which the Lenders
conditionally agreed to forbear from exercising their rights and remedies
available to them under the Credit Agreement and the other Loan Documents until
May 2, 2003. Capitalized terms used herein and not otherwise defined herein have
the meanings provided in the Credit Agreement and the Forbearance Agreement, as
the case may be.
4. The Borrower has requested that the Lenders conditionally extend the
Forbearance Period until May 30, 2003, and the Lenders, subject to and based
upon the agreements, representations, terms and conditions herein, agree to such
request.
AGREEMENT
In consideration of the mutual agreements contained in this Amendment, and
other good and valuable consideration the receipt and sufficiency of which are
acknowledged, the parties to this Amendment agree as follows:
SECTION 1 AMENDMENTS AND AGREEMENTS.
1.1 Forbearance. Effective as of the Amendment Effective Date, clause (iii)
of the second sentence of Section 2.1 of the Forbearance Agreement is hereby
amended and restated in its entirety to read as follows:
(iii) the "Termination Date" means the earlier of (a) May 30, 2003, and (b)
the date the Forbearance Period is terminated upon the occurrence of any of
the events described in Section 2.2 below.
1.2 Definitions - Special Financial Covenants. Effective as of the
Amendment Effective Date, Section 4.1 of the Forbearance Agreement is hereby
amended by amending and restating the following definitions in their entirety to
read as follows:
"Cash Budget" shall mean (i) on or before May 2, 2003, the
Consolidated Cash Flow Projections of the Borrower for the period March 24,
2003 through May 2, 2003, a copy of which is attached hereto as Exhibit A,
and (ii) from and after May 2, 2003, the Consolidated Cash Flow Projections
of the Borrower for the period May 3, 2003 through May 30, 2003, a copy of
which is attached to Amendment No. 1 to the Forbearance Agreement as
Exhibit A.
"Measurement Date" means each of the following dates: (i) April 4,
2003, (ii) April 18, 2003, (iii) May 2, 2003, (iv) May 16, 2003, and (v)
May 30, 2003.
1.3 Definitions - Special Financial Covenants. Effective as of the
Amendment Effective Date, paragraphs (a), (b) and (c) of Section 4.1 of the
Forbearance Agreement are hereby amended and restated in their entirety to read
as follows:
(a) Total Operating Disbursements. During the Forbearance Period, the
Borrower shall not permit Total Operating Disbursements in the aggregate to be
in excess of the amount set forth below for the periods set forth below ending
on the Measurement Date set forth below:
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Measurement Date Total Operating Disbursements
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For the two weeks ending April 4, 2003 $20,645,784
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For the four weeks ending April 18, 2003 $37,048,731
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For the six weeks ending May 2, 2003 $56,633,241
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For the two weeks ending May 16, 2003 $15,046,446
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For the four weeks ending May 30, 2003 $31,973,277
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(b) Cumulative Other Expenditures. During the Forbearance Period, the
Borrower shall not permit Cumulative Other Expenditures in the aggregate to be
in excess of the amount set forth below for the periods set forth below ending
on the Measurement Date set forth below:
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Measurement Date Cumulative Other Expenditures
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For the two weeks ending April 4, 2003 $3,927,500
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For the four weeks ending April 18, 2003 $7,227,500
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For the six weeks ending May 2, 2003 $8,427,500
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For the two weeks ending May 16, 2003 $6,969,842
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For the four weeks ending May 30, 2003 $6,969,842
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In addition to the foregoing, the Borrower shall not permit at any time
Cumulative Other Expenditures as would be reflected on the Cash Budget computed
from and after March 24, 2003 to be in excess of $8,427,500 in the aggregate
during the Forbearance Period.
(c) Cumulative Operating Cash. During the Forbearance Period, the Borrower
shall not permit the Cumulative Operating Cash to be in less than the amount set
forth below for the periods set forth below ending on the Measurement Date set
forth below:
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Measurement Date Cumulative Operating Cash
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For the two weeks ending April 4, 2003 ($3,693,360)
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For the four weeks ending April 18, 2003 ($9,014,011)
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For the six weeks ending May 2, 2003 ($10,581,405)
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For the two weeks ending May 16, 2003 ($2,191,905)
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For the four weeks ending May 30, 2003 ($3,703,591)
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1.4 Loans; Interest Rates. Effective as of the Amendment Effective Date,
Section 4.5 of the Forbearance Agreement is hereby amended and restated in its
entirety to read as follows:
4.5 Loans; Interest Rates. Notwithstanding anything to the contrary in
the Credit Agreement, during the Forbearance Period and thereafter, the
Borrower may only borrow Prime Rate Loans; provided that the Eurodollar
Loan in the principal amount of $30 million outstanding on the Effective
Date may remain outstanding so long as the Hedge Agreement to which it
relates is outstanding but may not be renewed as a Eurodollar Loan.
Notwithstanding anything to the contrary in the Credit Agreement, during
the Forbearance Period and thereafter, all Prime Rate Loans will bear
interest at a rate equal to (i) the Prime Rate, plus (ii) the highest
Applicable Prime Rate Margin set forth on the Pricing Grid, plus (iii) 200
basis points. The Lenders acknowledge and agree that such interest includes
default interest payable under Section 2.7(d) of the Credit Agreement.
1.5 Acknowledgments and Consents. Effective as of the Amendment Effective
Date, Section 4.12 of the Forbearance Agreement is hereby amended and restated
in its entirety to read as follows:
The Borrower will cause the Subsidiary Guarantors to execute and
deliver to the Lenders the Acknowledgment and Consent of the Subsidiary
Guarantors relating to the Forbearance Agreement and Amendment No. 1
thereto substantially in the form attached to the Forbearance Agreement as
soon as reasonably practicable after the date of such amendment.
1.6 Amendment to Credit Agreement - General Revolving Loan Commitment. The
General Revolving Loan Commitments of the Lenders are hereby, effective as of
the Amendment Effective Date, decreased to $110,000,000.00 in the aggregate, and
the General Revolving Loan Commitments of the Lenders set forth on Annex I of
the Credit Agreement are hereby amended to reflect such decrease as follows (as
the same may be further decreased as provided in the Forbearance Agreement as
amended by this Amendment and in the Credit Agreement):
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Lender General Revolving Loan Commitment
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PNC Bank, National Association $17,187,500.00
National City Bank $17,187,500.00
LaSalle Bank, National Association $17,187,500.00
US Bank, National Association $17,187,500.00
Fifth Third Bank $10,312,500.00
The Huntington National Bank $17,187,500.00
The Provident Bank $13,750,000.00
Total $110,000,000.00
1.7 Agreements Concerning Diversified Data Products. Notwithstanding
anything to the contrary contained in the Credit Agreement and the Forbearance
Agreement, the Lenders hereby consent to the sales and dispositions of assets
and the winding down of Diversified Data Products, Inc. as contemplated by that
certain Employment Agreement dated as of April 18, 2003 by and between the
Borrower and Xxxxxx X. Hollendshead, III and that Asset Purchase Agreement dated
as of April ___, 2003, provided that commencing May 3, 2003 and thereafter upon
the receipt of Cash Proceeds from any such sale or disposition of assets, not
later than the second Business Day following the date of receipt of any Cash
Proceeds from such asset sales and dispositions, the Borrower makes a mandatory
prepayment as contemplated by Section 5.2(d) of the Credit Agreement and the
General Revolving Commitments shall be reduced as provided in Section 4.3(c) of
the Credit Agreement, it being expressly understood and agreed by the parties
hereto that such transactions constitute an Asset Sale within the meaning of the
Credit Agreement.
SECTION 2 REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into this Amendment,
the Borrower represents and warrants to the Administrative Agent and the Lenders
that:
2.1 Due Authorization; No Conflict; No Lien; Enforceable Obligation. The
execution, delivery and performance by the Borrower of this Amendment are within
its corporate powers, have been duly authorized by all necessary corporate
action, have received all necessary governmental, regulatory or other approvals
(if any are required) and do not and will not contravene or conflict with any
provision of (i) any law, (ii) any judgment, decree or order, or (iii) the
Borrower's articles or certificate of incorporation or by-laws (or other
organizational documents), and do not and will not contravene or conflict with,
or cause any lien to arise under any provision of any material agreement or
instrument binding upon the Borrower or upon any of its property. This
Amendment, the Forbearance Agreement and the Credit Agreement are the legal,
valid and binding obligations of the Borrower, enforceable against the Borrower
in accordance with their respective terms.
2.2 No Claims, etc. Neither the Borrower nor any other Credit Party has any
claim or offset against, or defense or counterclaim to, any of their respective
obligations or liabilities under the Credit Agreement, the Forbearance
Agreement, this Amendment or any other Credit Document, or the Administrative
Agent and each of the Lenders and their respective directors,
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officers, employees, attorneys, representatives, parents, affiliates,
subsidiaries, predecessors, successors and assigns.
SECTION 3 CONDITIONS PRECEDENT.
This Amendment shall become effective on the date first written above (the
"Amendment Effective Date") provided that the following conditions shall have
been satisfied:
3.1 Documents. The Administrative Agent has received all of the following,
each duly executed, as applicable, and dated as of the Amendment Effective Date
(or such other date as is satisfactory to the Administrative Agent) and in form
and substance satisfactory to the Administrative Agent:
(a) this Amendment;
(b) certified copies of the resolutions of the Borrower authorizing this
Amendment; and
(c) the Borrower will have paid all fees and expenses incurred by the
Administrative Agent and the Lenders in connection with the preparation of this
Amendment to the extent invoiced on or prior to the date hereof.
3.2 Representations and Warranties. The representations and warranties of
the Borrower set forth in this Amendment are true and correct.
SECTION 4 MISCELLANEOUS.
4.1 Captions. The recitals to this Amendment and the section captions used
in this Amendment are for convenience only and do not affect the construction of
this Amendment.
4.2 Governing Law; Severability. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO, NOTWITHSTANDING ITS
CONFLICTS OF LAWS PRINCIPLES. Wherever possible, each provision of this
Amendment will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment is prohibited by or
invalid under such law, such provision will be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Amendment.
4.3 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart will be deemed to be an original, but all such counterparts together
constitute but one and the same Agreement.
4.4 Successors and Assigns. This Amendment is binding upon the Borrower,
the Lenders and the Administrative Agent and their respective successors and
assigns, and inures to the sole benefit of the Borrower, the Lenders and the
Administrative Agent and their respective successors and assigns. The Borrower
has no right to assign its rights or delegate its duties under this Amendment.
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4.5 Continued Effectiveness. Notwithstanding anything contained in this
Amendment or the Forbearance Agreement, the terms of this Amendment and the
Forbearance Agreement are not intended to and do not serve to effect a novation
as to the Credit Agreement or any other Credit Document. The parties to this
Amendment expressly do not intend to extinguish the Credit Agreement or any
other Credit Document. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Forbearance Agreement and the Credit Agreement, as the case may be, and
except as expressly modified and superseded by this Amendment, the terms and
provisions of the Forbearance Agreement and the Credit Agreement are ratified
and confirmed and shall continue in full force and effect.
4.6 Release. The Borrower fully releases, remises, acquits, irrevocably
waives and forever discharges each of the Lenders and Administrative Agent,
together with their respective predecessors, successors, assigns, subsidiaries,
affiliates and agents and all of their respective past, present and future
officers, directors, shareholders, employees, contractors and attorneys and the
predecessors, heirs, successors and assigns of each of them, from and with
respect to any and all actions and causes of action, suits, disputes,
controversies, claims, debts, sums of money, offset rights, defenses to payment,
agreements, promises, notes, bonds, bills, covenants, losses, damages,
judgments, executions and demands of whatever nature, known or unknown, whether
in contract, in tort or otherwise, at law or in equity, for money damages or
dues, recovery of property, or specific performance, in respect of the
Forbearance Agreement, this Amendment, the Credit Agreement, the other Credit
Documents and the transactions contemplated thereby, all the foregoing being
with full knowledge and understanding of the circumstances and effect thereof
and after having consulted legal counsel with respect thereto.
4.7 Revival Of Obligations. If all or any part of any payment under or on
account of the Credit Agreement, the other Credit Documents, the Forbearance
Agreement as amended by this Amendment or any agreement, instrument or other
document executed or delivered by Borrower in connection with this Amendment is
invalidated, set aside, declared or found to be void or voidable or required to
be repaid to the issuer or to any trustee, custodian, receiver, conservator,
master, liquidator or any other person pursuant to any bankruptcy law or
pursuant to any common law or equitable cause then, to the extent of such
invalidation, set aside, voidness, voidability or required repayment, such
payment would be deemed to not have been paid, and the obligations of the
Borrower in respect thereof would be immediately and automatically revived
without the necessity of any action by the Lenders.
4.8 JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE FORBEARANCE
AGREEMENT, THE CREDIT AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN
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INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS PARAGRAPH.
[Remainder of page intentionally blank; signature pages follow.]
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of
the date first written above.
MCSi, Inc., PNC BANK, NATIONAL ASSOCIATION,
a Maryland corporation which is individually as a Lender, a
the successor by merger to Miami Letter of Credit Issuer,
Computer Supply Corporation, an the Swing Line Lender and as
Ohio corporation Administrative Agent
By: /s/ D. Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxx X. XxXxxx
Name: Xxxxxx Xxxxxxxxxx Name: Xxxxxx X. XxXxxx
Title: President and CEO Title: Senior Vice President
NATIONAL CITY BANK, LASALLE BANK, NATIONAL ASSOCIATION
individually as a Lender and
as Documentation Agent
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President Title: Group Senior Vice President
THE PROVIDENT BANK US BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxx By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxx Name: Xxxxxxx X. Xxxxxx
Title: Vice President Title: Vice President
FIFTH THIRD BANK THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx Xxxxx Name: Xxxxx X. Xxxxx
Title: Vice President Title: Senior Vice President
EXHIBIT A
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