Exhibit 10.18
THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
AND
FIRST AMENDMENT TO COLLATERAL PLEDGE AGREEMENT
This Amendment, dated as of March 30, 2001, is made by and among
LUMINANT WORLDWIDE CORPORATION, a Delaware corporation, LWC OPERATING CORP., a
Delaware corporation, LWC MANAGEMENT CORP., a Delaware corporation, POTOMAC I
HOLDINGS, INC., a Delaware corporation, MULTIMEDIA I HOLDINGS, INC., a
Delaware corporation, RSI GROUP, INC., a Texas corporation, ALIGN SOLUTIONS
CORP., a Delaware corporation, POTOMAC PARTNERS MANAGEMENT CONSULTING, LLC, a
Delaware limited liability company, MULTIMEDIA RESOURCES, LLC, a New York
limited liability company, INTERACTIVE8, INC., a New York corporation, BD
ACQUISITION CORP., a Delaware corporation, RESOURCE SOLUTIONS INTERNATIONAL,
LLC, a Texas limited liability company, INTEGRATED CONSULTING, INC., a Texas
corporation, FREE RANGE MEDIA, INC., a Washington corporation, ALIGN-FIFTH
GEAR ACQUISITION CORPORATION, a Delaware corporation, and ALIGN-SYNAPSE
ACQUISITION CORPORATION, a Texas corporation (collectively, the "Borrowers"
and each a "Borrower"), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota
corporation, (the "Lender").
RECITALS
The Borrowers and the Lender have entered into a Credit and Security
Agreement dated as of April 5, 2000 as amended by a First Amendment to Credit
and Security Agreement dated as of August 31, 2000, a letter amendment dated
as of September 21, 2000, and a Second Amendment to Credit and Security
Agreement dated as of December 28, 2000 (as amended to date, the "Credit
Agreement").
Parent Borrower executed and delivered the Pledge Agreement on
December 28, 2000, thereby subjecting its general brokerage account no.
00000000, to which the Pledged Securities had been credited, to a security
interest in favor of the Lender. Contemporaneously, with the consent of
Parent Borrower, the Lender notified Xxxxx Fargo Brokerage Services, LLC (the
"Brokerage") that the account
was subject to the Lender's security interest, and the Brokerage agreed to
comply with buy, sell and withdrawal orders initiated by the Lender and
permitted under the terms of the Pledge Agreement.
The Borrowers have requested that the Lender agree to waive certain
Events of Default and that certain amendments be made to the Credit Agreement.
The Lender wishes to clarify and confirm certain matters in connection with
the Pledge Agreement. Accordingly, the parties have agreed to amend the
Credit Agreement and the Pledge Agreement in the manner set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the receipt and sufficiency of
which are hereby acknowledged, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment which
are defined in the Credit Agreement shall have the same
meanings as defined therein, unless otherwise defined herein.
In addition, Section 1.1 of the Credit Agreement is amended by
adding or amending, as the case may be, the following
definitions:
"`Fixed Charge Coverage' means as of any date, EBITDA LESS the
sum of (a) principal payments on Permitted Indebtedness, (b) unfinanced
Capital Expenditures, (c) cash payments of Contingent Consideration,
(d) reductions in the Borrowers' reserves for bad debt, and (e)
collections with respect to accounts receivable charged off in prior
periods, in each case, for the calendar year-to-date period ending on
such date on a consolidated basis."
"`Permitted Indebtedness' means indebtedness permitted under
Section 7.2."
"`Pledged Securities' means those Qualified Pledged Securities
and other securities owned by certain of the Borrowers, subject to the
Pledge Agreement."
"`Qualified Pledged Securities' means any securities owned by
any Borrower that evidence obligations of the United States government
or securities owned by the Borrowers that are rated "A-1" by Standard&
Poors Corporation or "P-1" by Xxxxx'x Investors Service, and are
pledged to the Lender under the Pledge Agreement."
2. LANDLORD LETTER OF CREDIT. Xxxxx Fargo Bank, National
Association ("Xxxxx Fargo Bank") has issued Letter of Credit
No. NZS337627, dated November 12, 1999, in favor of 000 Xxxx
00xx Xxxxxx Associates, L.P. and for the account of Parent
Borrower (the "Existing Credit"). Parent Borrower has granted
a security interest in its account no.00000000 to secure the
obligation to reimburse Xxxxx Fargo Bank for draws under the
Existing Credit. Parent Borrower has requested that the
Lender cause an Issuer to issue a Letter of Credit to replace
the Existing Credit (such new Letter of Credit being referred
to herein as the "Landlord Letter of Credit"). The advantages
to Parent Borrower will be (i) that the Landlord Letter of
Credit can be in a lesser face amount than the Existing
Credit, and (ii) that Parent Borrower will be able to
consolidate all of its investment property into its account
no.00000000 maintained with the Brokerage. Accordingly, the
Lender and Parent Borrower hereby agree to cooperate with one
another in order to accomplish the following necessary steps
as soon as possible, but in no event later than April30, 2001:
(A) obtain the agreement of 000 Xxxx 00xx Xxxxxx Associates,
L.P. to accept the Landlord Letter of Credit in substitution
for the Existing Credit; (B) cause an Issuer to issue the
Landlord Letter of Credit; (C) cause Xxxxx Fargo Bank to
cancel the Existing Credit; and (D) transfer all of the
financial assets in Parent Borrower's account no.00000000 into
its account no.00000000 maintained with the Brokerage,
whereupon such assets shall be subject to the security
interest created under the Pledge Agreement. By way of
clarification, the Landlord Letter of Credit shall be a
"Letter of Credit" as such term is defined in the Credit
Agreement.
3. AMENDMENTS TO PLEDGE AGREEMENT, ETC. The Pledge Agreement is
hereby amended as follows:
(a) The Debtor's correct name in the heading is "Luminant
Worldwide Corporation."
(b) The correct description of property owned by the Debtor and
held by the Secured Party is "General Brokerage Account at Xxxxx Fargo
Brokerage Services, LLC, titled Luminant Worldwide Corporation account
#00000000, together with all rights in connection with such property
(herein called the "Collateral")."
(c) Section 2(a) is hereby amended in it entirety to be and read as
follows:
"(a) Debtor will join with Secured Party in taking any
action reasonably required by Secured Party and consistent with
the terms herein in order to perfect the Security Interest and
protect the rights and priorities of the Secured Party with
respect to the Collateral."
Parent Borrower hereby confirms that the existing agreement between the Lender
and the Brokerage was made with its consent, and agrees that it will, if
requested, join with the Lender in executing any instructions to or agreements
with the Brokerage in accordance with revised section 2(a) of the Pledge
Agreement.
4. FINANCIAL COVENANTS. Sections 6.12, 6.13, 6.14 and 7.11 of
the Credit Agreement are hereby amended in their entirety to
read as follows:
"Section 6.12 - RESERVED."
"Section 6.13 - RESERVED."
"Section 6.14 MINIMUM FIXED CHARGE COVERAGE. The Borrowers
will collectively maintain at all times during each period set forth
below, Fixed Charge Coverage of not less than the amount set forth
opposite such period (negative numbers are indicated by parentheses):
PERIOD MINIMUM FIXED CHARGE
COVERAGE
January 1, 2001 through March 30, 2001 $(2,500,000)
March 31, 2001 through June 29, 2001 ($3,000,000)
June 30, 2001 through September 29, 2001 ($2,500,000)
September 30, 2001 through December 30, 2001 ($2,000,000)
December 31, 2001 $1,000,000
January 1, 2002 through March 30, 2002 ($1,000,000)
March 31, 2002 ($1,000,000)"
"Section 7.11 CAPITAL EXPENDITURES. The Borrowers will not
incur or contract to incur Capital Expenditures of more than
$4,500,000 during the fiscal year ending on December 31, 2001, and not
more than $1,500,000 during the period from January 1, 2002 through
March 31, 2002."
1. ACQUISITIONS. Section 7.8 of the Credit Agreement is amended to read
as follows:
"Section 7.8 CONSOLIDATION AND MERGER; ASSET ACQUISITIONS.
Without the prior written consent of the Lender, no Borrower will, nor
will it permit any controlled Affiliate to, consolidate with or merge
into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a
consolidation or merger) all or substantially all the assets of any
other Person."
2. EVENTS OF DEFAULT. Section 8.1 of the Credit Agreement is amended by
deleting the word "or" at the end of subjection (n), changing the
final period in subjection (o) to "; or" and adding the following new
subjection (p):
"(p) The aggregate market value of Qualified Pledged
Securities as of the close of business on any Banking Day shall be
less than $7,500,000 prior to issuance of the Landlord Letter of
Credit or less than $7,800,000 upon or following issuance of the
Landlord Letter of Credit.
7. COMPLIANCE CERTIFICATE. Exhibit B to the Credit Agreement is replaced
by Exhibit A to this Amendment.
8. NO OTHER CHANGES. Except as explicitly amended by this Amendment, all
of the terms and conditions of the Credit Agreement shall remain in
full force and effect and shall apply to any advance or letter of
credit thereunder.
9. WAIVER OF DEFAULTS. The Borrowers are in default of Section 6.1(b) of
the Credit Agreement which requires the Borrowers to deliver to the
Lender certain financial reports and a compliance certificate within
30 days after the end of each month that is not a quarter end. The
Lender did not receive such reports and certificate for the month
ended January 31, 2001, and the Borrowers have indicated to the Lender
that the reports and certificate for the month ended February 28,
2001, will be delivered late. The Lender agrees to waive these Events
of Default provided it receives all such reports before April 30,
2001. This waiver shall be effective only in this specific instance
and for the specific purpose for which it is given, and this waiver
shall not entitle the Borrowers to any other or further waiver in any
similar or other circumstances. As of the date hereof, the Lender has
no knowledge of any Defaults or Events of Default other than the
Events of Default expressly set forth herein.
10. CONDITIONS PRECEDENT. This Amendment, and the waiver set forth in
Paragraph 9 hereof, shall be effective when the Lender shall have
received an executed original hereof, together with such other matters
as the Lender may reasonably require; provided that Lender shall
forward to Borrowers written confirmation when all of the conditions
precedent in this paragraph have been satisfied.
11. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby represent and
warrant to the Lender as follows:
(a) The Borrowers have all requisite power and authority to execute this
Amendment and to perform all of their obligations hereunder, and this
Amendment has been duly executed and delivered by the Borrowers and
constitutes the legal, valid and binding obligation of the Borrowers,
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general equitable principles.
(b) The execution, delivery and performance by the Borrowers of this
Amendment have been duly authorized by all necessary corporate or
limited liability company action and do not (i) require any
authorization, consent or approval by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or
of any order, writ, injunction or decree presently in effect, having
applicability to the Borrowers, or the articles of incorporation,
by-laws or comparable organizational documents of the Borrowers, or
(iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower is a party or by which it or its
properties may be bound or affected.
(c) All of the representations and warranties contained in Article V of the
Credit Agreement are correct in all material respects on and as of the
date hereof as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an
earlier date.
12. REFERENCES. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby; and any and all references in the Security Documents to the
Credit Agreement shall be deemed to refer to the Credit Agreement as
amended hereby.
13. NO OTHER WAIVER. Except as set forth in Paragraph 9 hereof, the
execution of this Amendment and acceptance of any documents related
hereto shall not be deemed to be a waiver of any Default or Event of
Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the
Lender, whether or not known to the Lender and whether or not existing
on the date of this Amendment.
14. RELEASE. Each Borrower hereby absolutely and unconditionally releases
and forever discharges the Lender, and any and all participants,
parent corporations, subsidiary corporations, affiliated corporations,
insurers, indemnitors, successors and assigns thereof, together with
all of the present and former directors, officers, agents and
employees of any of the foregoing, from any and all claims, demands or
causes of action of any kind, nature or description, whether arising
in law or equity or upon contract or tort or under any state or
federal law or otherwise, which that Borrower has had, now has or has
made claim to have against any such person for or by reason of any
act, omission, matter, cause or thing whatsoever arising from the
beginning of time to and including the date of this Amendment, whether
such claims, demands and causes of action are matured or unmatured or
known or unknown.
15. COSTS AND EXPENSES. The Borrowers hereby reaffirm their agreement
under the Credit Agreement to pay or reimburse the Lender on demand
for all costs and expenses incurred by the Lender in connection with
the Credit Agreement, the Security Documents and all other documents
contemplated thereby, including without limitation all reasonable fees
and disbursements of legal counsel. Without limiting the generality
of the foregoing, the Borrowers specifically agree to pay all
reasonable fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation
of this Amendment and the documents and instruments incidental hereto.
The Borrowers hereby agree that the Lender may, at any time or from
time to time in its sole discretion and without further authorization
by the Borrowers, make an Advance to the Borrowers under the Credit
Agreement, or apply the proceeds of any Advance, for the purpose of
paying any such fees, disbursements, costs and expenses.
16. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be
deemed an original and all of which counterparts, taken together,
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. LUMINANT WORLDWIDE CORPORATION
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ Its _____________________________
Its Vice President
LWC OPERATING CORP. LWC MANAGEMENT CORP.
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ _________________________________
POTOMAC I HOLDINGS, INC. MULTIMEDIA I HOLDINGS, INC.
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ _________________________________
RSI GROUP, INC. ALIGN SOLUTIONS CORP.
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ _________________________________
POTOMAC PARTNERS MANAGEMENT MULTIMEDIA RESOURCES, LLC
CONSULTING, LLC
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ _________________________________
INTERACTIVE8, INC. BD ACQUISITION CORP.
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ _________________________________
RESOURCE SOLUTIONS INTERNATIONAL, LLC INTEGRATED CONSULTING, INC.
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ _________________________________
FREE RANGE MEDIA, INC. ALIGN-FIFTH GEAR ACQUISITION CORPORATION
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxx
_________________________________ _________________________________
_________________________________ _________________________________
ALIGN-SYNAPSE ACQUISITION CORPORATION
By /s/ Xxxxx X. Xxxxx
_________________________________
_________________________________
Exhibit A to Third Amendment to
Credit and Security Agreement
Exhibit B to Credit and Security
Agreement
COMPLIANCE CERTIFICATE
To: Xxxxxx X. Xxxxxxx
Xxxxx Fargo Business Credit, Inc.
Date: __________________, 2001
Subject: Luminant Worldwide Corporation, LWC Operating Corp., LWC Management
Corp., Potomac I Holdings, Inc., Multimedia I Holdings, Inc., RSI
Group, Inc., Align Solutions Corp., Potomac Partners Management
Consulting, LLC, Multimedia Resources, LLC, Interactive8, Inc., BD
Acquisition Corp., Resource Solutions International, LLC, Integrated
Consulting, Inc., Free Range Media, Inc., Align-Fifth Gear Acquisition
Corporation, and Align-Synapse Acquisition Corporation
Financial Statements
In accordance with our Credit and Security Agreement dated as of April
5, 2000, as amended (as amended, the "Credit Agreement"), attached are the
consolidated financial statements of Luminant Worldwide Corporation (the
"Parent Borrower") as of and for ________________, 200__ (the "Reporting
Date") and the year-to-date period then ended (the "Current Financials"). All
terms used in this certificate have the meanings given in the Credit Agreement.
I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments (and with respect to all
Current Financials which are interim financials, except for the absence of
footnotes), and fairly present the Borrowers' financial condition and the
results of its operations as of the date thereof.
EVENTS OF DEFAULT. (Check one):
/ / The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement.
/ / The undersigned has knowledge of the occurrence of a Default
or Event of Default under the Credit Agreement not previously
reported in writing to the Lender and attached hereto is a
statement of the facts with respect to thereto. The Borrowers
acknowledge that pursuant to Section 2.13(d) the Lender may
impose the Default Rate at any time during the resulting Default
Period.
FINANCIAL COVENANTS. I further hereby certify as follows:
1. MINIMUM FIXED CHARGE COVERAGE. Pursuant to Section 6.14 of
the Credit Agreement, for the year-to-date period ending on the
Reporting Date, the Borrowers' Fixed Charge Coverage was
$_______________ which satisfies does not satisfy the
requirement that such amount be not less than $________________
for such period as set forth in the table below (negative
numbers are indicated by parentheses):
PERIOD MINIMUM FIXED CHARGE
COVERAGE
January 1, 2001 through March 30, 2001 $(2,500,000)
March 31, 2001 through June 29, 2001 ($3,000,000)
June 30, 2001 through September 29, 2001 ($2,500,000)
September 30, 2001 through December 30, 2001 ($2,000,000)
December 31, 2001 $1,000,000
January 1, 2002 through March 30, 2002 ($1,000,000)
March 31, 2002 ($1,000,000)"
2. CAPITAL EXPENDITURES. Pursuant to Section 7.11 of the Credit
Agreement, for the year-to-date period ending on the Reporting
Date, the Borrowers have expended or contracted to expend for
Capital Expenditures, $__________________ in the aggregate
which satisfies does not satisfy the requirement that such
expenditures not exceed $4,500,000 in the aggregate during the
fiscal year ending December 31, 2001, or $1,500,000 in the
aggregate during the period from January 1, 2002 to March 31,
2002.
Attached hereto are all relevant facts in reasonable detail to evidence, and
the computations of the financial covenants referred to above. These
computations were made in accordance with GAAP.
LUMINANT WORLDWIDE CORPORATION
By ____________________________
Its Chief Financial Officer
