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Exhibit 10.1
FIRST AMENDMENT TO THE
AMENDED AND RESTATED SCHEDULE TO THE
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AGREEMENT is entered into as of April __, 2000 by and among
Teamstaff, Inc., Teamstaff Solutions, Inc., DSI Staff Connxions Northeast, Inc.,
DSI Staff Connxions Southwest, Inc., Teamstaff Rx, Inc., Teamstaff VI, Inc.,
Teamstaff I, Inc., Teamstaff II, Inc., Teamstaff III, Inc., Teamstaff IV, Inc.,
Teamstaff V, Inc., Teamstaff IX, Inc., Teamstaff Insurance Services, Inc.,
Teamstaff VII, Inc., and Employer Support Services, Inc., having the addresses
as set forth in the Schedule (as hereinafter defined) (collectively, "Borrower")
and FINOVA Capital Corporation, whose address is 000 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 ("FINOVA").
RECITALS
Whereas, the Borrower and FINOVA entered into an "Amended And Restated
Loan And Security Agreement" dated January 25, 1999 (as same is being and may be
further modified or extended, the "Loan Agreement"); and
Whereas, in addition to and as part of the Loan Agreement, the Borrower
and FINOVA entered into an "Amended And Restated Schedule To Amended And
Restated Loan And Security Agreement" dated January 25, 1999 (as same is being
and may be further modified or extended, the "Schedule"); and
Whereas, Borrower and FINOVA have agreed to modify the terms of the
Loan Agreement and the Schedule as set forth in this agreement ("Agreement").
Now, therefore, in consideration of FINOVA's continued extension of
credit and the agreements contained herein, the parties agree as follows:
AGREEMENT
1) ACKNOWLEDGMENT OF BALANCE. Borrower acknowledges that the most recent
statement of account sent to Borrower with respect to the Obligations
is correct.
2) MODIFICATIONS. The Schedule be and hereby is modified as follows:
(A) The following definition is hereby added to the Section of the
Schedule entitled "Definitions (Section 1)":
"Loan Year" shall mean each individual year during the life of
this credit facility, with the first Loan Year commencing on
the Closing Date and ending one year thereafter, and with the
subsequent Loan Years commencing on each anniversary of the
Closing Date and ending one year thereafter.
(B) The Total Facility set forth in the Section of the Schedule
entitled "Total Facility (Section 2.1)" be and hereby is amended to be
$12,500,000.00.
(C) The "Revolving Credit Loans" Subsection contained within the
Section of the Schedule entitled "Loans (Section 2.2)" be and hereby is
amended to read as follows:
REVOLVING CREDIT LOANS: A revolving line of credit,
terminating upon the expiration of the Initial Term (or, if
applicable, at the expiration of the last Renewal Term, if
any) consisting of loans against Borrower's Eligible
Receivables ("REVOLVING CREDIT Loans") in an aggregate
outstanding principal amount not to exceed the lesser of (a)
or (b) below:
(a) THREE MILLION FIVE HUNDRED THOUSAND
DOLLARS($3,500,000.00) (the "REVOLVING
CREDIT LIMIT"), less the aggregate undrawn
face amount of all Letters of Credit issued
under Section 2.4 of this Agreement; less
any Loan Reserves, or
(b) the sum of an amount equal to (i) 85% of
the aggregate net amount of Eligible
Receivables of all Borrowers, less (ii) the
aggregate undrawn face amount of all Letters
of Credit issued under Section 2.4 of this
Agreement; less any Loan Reserves. ----
(D) Subparagraph "3." of the "Term Loans" Subsection contained
within the Section of the Schedule entitled "Loans (Section 2.2)", is
deleted, and is replaced with new Subparagraph 3, to read as follows:
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3. TERM LOAN C
A term loan ("TERM LOAN C") in the original principal amount of
Four Million Dollars ($4,000,000.00); provided, that Term Loan C
shall be on such terms as are set forth on the separate promissory
note of the Borrowers in the form attached hereto as Exhibit
2.2(c).
(E) Subparagraph "(ii)" of the "Term Interest Rate" Subsection
contained within the Section of the Schedule entitled
"Interest And Fees (Section 2.6)", is deleted, and is replaced
by new Subparagraph (ii), to read as follows:
(ii) Term Loan C: Three percent (3%) in excess of the
Prime Rate.
(F) Subparagraph "3." of the "Success Fee" Subsection contained
within the Section of the Schedule entitled "Interest And Fees
(Section 2.6)", is deleted, and is replaced by new
Subparagraph 3, to read as follows:
3. TERM LOAN C.
$1,500,000.00, of which $500,000.00 shall be deemed fully earned
as of the beginning of each Loan Year and shall be payable at the
earlier of (a) the end of each such Loan Year or (b) the
prepayment of Term Loan C.
(G) The "Debt to Net Worth" Subsection of the Section of the
Schedule entitled "Financial Covenants (Section 6.1.13)" be
and hereby is amended to read as follows:
Debt to Net Worth. DSI and its subsidiaries shall maintain a
ratio of Indebtedness For Borrowed Money to Net Worth of not
greater than the ratio set forth for such period below:
Period Ratio
------ -----
March 1, 2000 - February 28, 2001 1.0 to 1.0
March 1, 2001 - February 28, 2002 0.71 to 1.0
March 1, 2002 and thereafter 0.5 to 1.0
(H) The "Debt Service Coverage Ratio" Subsection of the Section of
the Schedule entitled "Financial Covenants (Section 6.1.13)"
be and hereby is amended to read as follows:
Debt Service Coverage Ratio: As of the last day of each fiscal
quarter ending on each December 31, March 31, June 30, and
September 30, the ratio of Operating Cash Flow/Actual for the
consecutive 12-month period ending as of such last day to
Total Contractual Debt Service for such 12-month period must
be not less than the ratio set forth below for such period:
Measurement Date Ratio
---------------- -----
June 30, 2000 1.4 to 1.0
September 30, 2000 1.4 to 1.0
December 31, 2000 1.5 to 1.0
March 31, 2001 1.5 to 1.0
June 30, 2001 1.5 to 1.0
September 30, 2001 1.5 to 1.0
December 31, 2001 and thereafter 1.6 to 1.0
provided however, that, all such determinations shall be made
on a consolidated basis.
(I) The "Capital Expenditures" Subsection of the Section of the
Schedule entitled "Negative Covenants (Section 6.2)" be and
hereby is amended to read as follows:
Capital Expenditures: No Borrower shall make or incur any
Capital Expenditure if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by the Borrowers
in any fiscal year would exceed $500,000.00.
(J) The "Indebtedness " Subsection of the Section of the Schedule
entitled "Negative Covenants (Section 6.2)" be and hereby is
amended to read as follows:
Indebtedness: Borrower shall not create, incur, assume or
permit to exist any Indebtedness for Borrowed Money (including
Indebtedness For Borrowed Money in connection with Capital
Lease) in excess of $500,000.00 other that the Indebtedness
permitted by Section 6.2.11.
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(K) The Promissory Notes previously attached to the Schedule as
Exhibits 2.2(a), 2.2(b) and 2.2(c) are deleted and replaced by
the Second Amended And Restated Secured Promissory Note A, the
Amended And Restated Secured Promissory Note B, and the
Secured Promissory Note C annexed hereto, which are now deemed
to be Exhibits 2.2(a), 2.2(b) and 2.2(c) to the Schedule,
respectively.
(L) "Loan Reserves" shall include an incrementally increasing
reserve commencing on May 15, 2000 in the amount of $100,000,
and increasing by $100,000 monthly on the last day of each
month thereafter through April 30, 2001. Such a reserve shall
be eliminated upon satisfactory proof to FINOVA that Borrower
has paid Outsource International, Inc., Synadyne I, Inc.,
Synadyne II, Inc., Synadyne III, Inc., Synadyne IV, Inc.,
Synadyne V, Inc., Guardian Employer East, LLC, and Guardian
Employer West, LLC all sums due to them pursuant to the Asset
Purchase Agreement dated on or about the date hereof.
3) ACKNOWLEDGMENTS. Borrower acknowledges and represent that:
(A) The Term Loan C which was initially referenced in the Schedule
has been repaid in full and terminated prior to the date
hereof, and is replaced with a new Term Loan C.
(B) the Loan Agreement, the Schedule, and other Loan Documents, as
amended hereby, are in full force and effect without any
defense, claim, counterclaim, right or claim of set-off;
(C) after giving effect to this Agreement, no Default or Event of
Default under the Loan Documents has occurred;
(D) no default by FINOVA in the performance of its duties under
the Loan Agreement, the Schedule, or the other Loan Documents
has occurred;
(E) all representations and warranties contained herein and in the
other Loan Documents are true and correct as of this date;
(F) Borrower has taken all necessary action to authorize the
execution and delivery of this Agreement; and
(G) this Agreement is a modification of an existing obligation and
is not a novation.
4) COLLATERAL. Borrower acknowledges and confirms that there have been no
changes in the ownership of any collateral pledged and/or mortgaged to
secure the Obligations (the "Collateral") since the Collateral was
originally pledged and/or mortgaged; that FINOVA has existing, valid
first priority security interests and liens in the Collateral; and that
such security interests and liens shall secure the Borrower's
Obligations to FINOVA, including those due under and/or as a result of
the Term Loan C Note, and all future modifications, extensions,
renewals and/or replacements thereof, hereof, or of the Loan Documents.
5) PRECONDITIONS. As a precondition to the effectiveness of any of the
modifications contained herein, the Borrower agrees to:
(A) provide FINOVA with a resolution, in form and substance
acceptable to FINOVA, which approves the transaction
contemplated hereby.
(B) execute and deliver the Second Amended And Restated Secured
Promissory Note A, the Amended And Restated Secured Promissory
Note B, The Secured Promissory Note C, and the Request for
Disbursement.
(C) Cause the execution and delivery of the Reaffirmation of
Support Agreement by Xxxxxx X. Xxxxx.
(D) Cause the execution and delivery of the Opinion Letter of
Xxxxxxxxx & XxXxxxx, LLP, counsel to the Borrowers, in form
and substance satisfactory to FINOVA.
(E) Cause the execution and delivery of the Certificate of Chief
Financial Officer of Digital Solutions, Inc.
(F) provide all documentation required by the Closing Agenda dated
on or about the date hereof, prepared by counsel for FINOVA in
connection with this transaction.
(G) provide proof of $1,500,000.00 in excess availability after
giving effect to the transactions contemplated hereby and/or
conducted concurrently herein.
(H) pay FINOVA a closing fee of $50,000.00.
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(I) pay all fees and costs incurred by FINOVA in entering into
this Agreement and the other documents executed in connection
herewith.
6) MISCELLANEOUS. This Agreement shall be construed in accordance with and
governed by the laws of the applicable state as originally provided in
the Loan Documents, without reference to that state's conflicts of law
principles. This Agreement and the other Loan Documents constitute the
sole agreement of the parties with respect to the subject matter
thereof and supersede all oral negotiations and prior writings with
respect to the subject matter thereof. No amendment of this Agreement,
and no waiver of any one or more of the provisions hereof shall be
effective unless set forth in writing and signed by the parties hereto.
The illegality, unenforceability or inconsistency of any provision of
this Agreement shall not in any way affect or impair the legality,
enforceability or consistency of the remaining provisions of this
Agreement or the other Loan Documents. This Agreement and the other
Loan Documents are intended to be consistent. However, in the event of
any inconsistencies among this Agreement and any of the Loan Documents,
the terms of this Agreement, then the Loan Agreement and Schedule,
shall control. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed an original, but all such
counterparts shall together constitute one and the same agreement.
Terms used in this Agreement which are capitalized and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Loan Documents.
7) DEFINITIONS. The terms used herein and not otherwise defined or
modified herein shall have the meanings ascribed to them in the Loan
Agreement. The terms used herein and not otherwise defined or modified
herein or defined in the Loan Agreement shall have the meanings
ascribed to them by the Uniform Commercial Code as enacted in New
Jersey.
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement the
day and year first above written.
ATTEST: TEAMSTAFF, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, President
ATTEST: TEAMSTAFF SOLUTIONS, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, President
ATTEST: DSI STAFF CONNXIONS NORTHEAST, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, President
ATTEST: DSI STAFF CONNXIONS SOUTHWEST, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, President
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ATTEST: TEAMSTAFF RX, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, President
ATTEST: TEAMSTAFF VI, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: TEAMSTAFF I, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: TEAMSTAFF II, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: TEAMSTAFF III, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: TEAMSTAFF IV, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: TEAMSTAFF V, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: TEAMSTAFF IX, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
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ATTEST: TEAMSTAFF INSURANCE SERVICES, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: TEAMSTAFF VIII, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
ATTEST: EMPLOYER SUPPORT SERVICES, INC.
______________________________ BY:___________________________________
C. Xxxxxx Xxxxx, Secretary Xxxxxx Xxxxxxx, Chairman
FINOVA CAPITAL CORPORATION
BY:___________________________________
Xxxxx Xxxxxx, Vice President
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GUARANTOR'S RATIFICATION
Each of the undersigned Guarantors hereby reaffirms their continuing
obligations under the terms of their Continuing Corporate Guaranty agreements
dated as of April 28, 1998, and acknowledge that (i) they have read this First
Amendment To The Amended And Restated Schedule To The Amended And Restated Loan
And Security Agreement, (ii) the Obligations and advances described herein are
secured by their guaranty agreements, and (iii) they make such reaffirmation
with full knowledge of the terms hereof including without limitation the
increased obligations of the Borrower to FINOVA.
ATTEST: DSI INSURANCE SERVICES, INC.
____________________________ By:_________________________________
_______________, Secretary _______________, President
