EXHIBIT 10.16
SECOND AMENDMENT
TO REVOLVING CREDIT AGREEMENT
AND LIMITED WAIVER
Second Amendment and Limited Waiver dated as of September 30, 1999 to
Revolving Credit Agreement (the "Second Amendment"), by and among AZTEC
TECHNOLOGY PARTNERS, INC., a Delaware corporation (the "Borrower"), BANKBOSTON,
N.A. and the other lending institutions listed on SCHEDULE 1 to the Credit
Agreement (as hereinafter defined) (the "Banks"), amending certain provisions of
the Revolving Credit Agreement dated as of July 27, 1998 (as amended and in
effect from time to time, the "Credit Agreement") by and among the Borrower, the
Banks and BankBoston, N.A. as agent for the Banks (the "Agent"). Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, the Borrower has requested that the Banks amend certain
provisions contained in the Credit Agreement and waive a covenant contained
therein; and
WHEREAS, the Banks have agreed with the Borrower, subject to the terms
and conditions contained herein, to modify certain terms and conditions of the
Credit Agreement and grant such waiver as specifically set forth in this Second
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. WAIVER. The Borrower has informed the Agent and the Banks
that the Leverage Ratio for the period of July 1, 1999 through September 30,
1999 (the "Third Quarter") exceed 3.50:1.00 during such Third Quarter and, as
such, the Borrower has failed to comply with Section 11.1 of the Credit
Agreement during the Third Quarter. The Borrower has requested that the Banks
waive, to the limited extent necessary to permit such noncompliance for the
Third Quarter, the provisions of Section 11.1 of the Credit Agreement. Subject
always to compliance by the Borrower with the terms and provisions of the Credit
Agreement (as amended hereby) and the other Loan Documents and the terms and
conditions contained herein (including, without limitation, Section 2 hereof),
and subject to the Borrower having an EBITDA (as calculated pursuant to the
revised definition set forth in Section 3(b) of this Second Amendment) for the
fiscal quarter ended September 30, 1999 of not less than $5,200,000, from and
after the Effective Date (as defined in Section 14 hereof) the Banks hereby
waive the provisions of Section 11.1 of the Credit Agreement solely to the
extent necessary to permit the above-referenced noncompliance, and only with
respect to the determination of compliance for the Third Quarter.
SECTION 2. LIMITATIONS ON NEW ACQUISITION LOANS. Notwithstanding
anything to the contrary contained in the Credit Agreement, the Borrower hereby
agrees that from and after the Effective Date through and including the
Acquisition Loan Maturity Date (the "Acquisition Loan Period"), it will not
borrow any Advances or Acquisition Loans other than the Acquisition
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Loans outstanding on November 8, 1999 (the "Current Acquisition Loans"), and the
Total Acquisition Commitment shall be permanently reduced to an amount equal to
the Current Acquisition Loans. To the extent the Borrower repays all or any
portion of the Current Acquisition Loans, the Borrower agrees that during the
Acquisition Loan Period it will not borrow any new Acquisition Loans. The
parties hereto hereby agree that from and after the Effective Date through and
including the Acquisition Loan Maturity Date, the Banks shall have no obligation
to make any Advances or Acquisition Loans.
SECTION 3. AMENDMENT TO SECTION 1 OF THE CREDIT AGREEMENT. Section 1.1
of the Credit Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by
deleting the definitions of "Adjustment Date", "Applicable
Margin", "Commitment Fee Rate" and "Rate Adjustment Period" in
their entirety.
(b) the definition of "EBITDA" is hereby amended by deleting such
definition in its entirety and restating it as follows:
EBITDA. With respect to the Borrower and its Subsidiaries for
any fiscal period, an amount equal to Consolidated Net Income for such
period, PLUS, to the extent deducted in the calculation of Consolidated
Net Income and without duplication, (a) depreciation and amortization
for such period, (b) other noncash charges for such period, including
(i) the noncash restructuring charge taken by the Borrower in the
fiscal quarter ended September 30, 1999 in an aggregate amount of
approximately $9,000,000 and (ii) the noncash charge associated with
the writedown of goodwill at PCM, Inc. taken by the Borrower in the
fiscal quarter ended September 30, 1999 in the aggregate amount of
approximately $35,000,000, (c) the cash restructuring charge taken by
the Borrower in the fiscal quarter ended September 30, 1999 in an
aggregate amount of not more than $4,000,000, (d) additional accruals
for the fiscal quarter ended September 30, 1999 in an amount not to
exceed $2,200,000 representing the writeoff of inventory and accounts
receivable in such period and accruals for legal expenses and other
activities in such period, (e) income tax expense for such period, and
(f) Consolidated Total Interest Expense for such period, and minus, to
the extent added in computing Consolidated Net Income and without
duplication, all noncash gains (including income tax benefits) for such
period, all as determined in accordance with generally accepted
accounting principles.
(c) Section 1.1 of the Credit Agreement is hereby amended by inserting
the following definitions in the appropriate alphabetical order:
ACCOUNTS RECEIVABLE. All rights of the Borrower or any of its
Subsidiaries to payment for goods sold, leased or otherwise marketed in
the ordinary course of business and all rights of the Borrower or any
of its Subsidiaries to payment for services rendered in the ordinary
course of business and all sums of money or other proceeds due thereon
pursuant to transactions with account debtors,
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except for that portion of the sum of money or other proceeds due
thereon that relate to sales, use or property taxes in conjunction
with such transaction, recorded on the books of account in accordance
with generally accepted accounting principles.
AGENCY ACCOUNT AGREEMENT. See Section 9.18.1.
BKB CONCENTRATION ACCOUNT. See Section 9.18.1.
BORROWING BASE. At the relevant time of reference thereto, an
amount determined by the Agent by reference to the most recent
Borrowing Base Report delivered to the Agent and the Banks pursuant to
Section 9.4(g), as adjusted pursuant to the provisions below, which is
equal to the sum of:
(a) 80% of Eligible Accounts Receivable for which
invoices have been issued and are payable; PLUS
(b) $45,000,000.
The Agent may, in its discretion, from time to time, upon [ten (10)]
days' prior notice to the Borrower, reduce the lending formula with
respect to Eligible Accounts Receivable to the extent that the Agent
reasonably and in good faith determines that the results of any
commercial finance examination or a review of any Accounts Receivable
aging report delivered to the Agent indicate a material deterioration
in the Borrower's and its Subsidiaries' Eligible Accounts Receivable
(taken as a whole) from November 8 1999 or from the date of the most
recent Accounts Receivable aging report delivered to the Agent, such
that a lower advance rate for Eligible Accounts Receivables is
warranted.
BORROWING BASE REPORT. A Borrowing Base Report signed by the
chief financial officer of the Borrower in substantially the form of
EXHIBIT H hereto.
ELIGIBLE ACCOUNTS RECEIVABLE. The aggregate of the unpaid
portions of Accounts Receivable (net of any credits, rebates, offsets,
holdbacks or other adjustments or commissions payable to third parties
that are adjustments to such Accounts Receivable) (a) that the Borrower
reasonably and in good faith determines to be collectible; (b) that are
with account debtors or other obligors that (i) are not Affiliates of
the Borrower, (ii) purchased the goods or services giving rise to the
relevant Account Receivable in an arm's length transaction, and (iii)
are not insolvent or involved in any case or proceeding, whether
voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation
or similar law of any jurisdiction; (c) that are in payment of
obligations that have been fully performed, do not consist of progress
xxxxxxxx or xxxx and hold invoices and, if subject to dispute or any
other similar claims that would reduce the cash amount payable
therefor, that
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portion of such Account Receivable so subject to such dispute or claim
shall be excluded from being an Eligible Account Receivable; (d) that
are not subject to any pledge, restriction, security interest or other
lien or encumbrance other than those created by the Loan Documents;
(e) in which the Agent has a valid and perfected first priority
security interest; (f) that are not outstanding for more than ninety
(90) days past the date of the respective invoices therefor; (g) that
are not due from an account debtor or other obligor located in
Minnesota unless the Borrower (i) has received a certificate of
authority to do business and is in good standing in such state or (ii)
has filed a notice of business activities report with the appropriate
office or agency of such state for the current year; (h) that are not
due from any single account debtor or other obligor if more than
fifteen percent (15%) of the aggregate amount of all Accounts
Receivable owing from such account debtor or other obligor would
otherwise not be Eligible Accounts Receivable; (i) that are payable in
Dollars; (j) that are not payable from an office outside of the United
States; and (k) that are not secured by a letter of credit unless the
Agent has a prior, perfected security interest in such letter of
credit.
INTERIM CONCENTRATION ACCOUNT. See Section 9.18.1.
LOCAL ACCOUNT. See Section 9.18.1
NET CASH SALE PROCEEDS. The gross cash proceeds received by
the Borrower and/or any of its Subsidiaries in respect of any Asset
Sale, less the sum of (a) all reasonable out-of-pocket fees,
commissions and other expenses incurred in connection with such Asset
Sale, including the amount (estimated in good faith by such Person and
approved by the Agent) of income, franchise, sales and other applicable
taxes required to be paid by such Person in connection with such Asset
Sale, and (b) the aggregate amount of cash so received by such Person
which is used to retire (in whole or in part) any Indebtedness (other
than under the Loan Documents) of such Person permitted by this Credit
Agreement that was secured by a lien or security interest (if any)
permitted by this Credit Agreement having priority over the liens and
security interests (if any) of the Agent, for the benefit of the Banks,
with respect to such assets transferred, and which is required to be
repaid in whole or in part (which repayment, in the case of any other
revolving credit arrangements or multiple advance arrangements, reduces
the commitment thereunder) in connection with such Asset Sale.
OPERATING ACCOUNT. See Section 2.6.2.
SETTLEMENT. The making or receiving of payments, in
immediately available funds, by the Banks, to the extent necessary to
cause each Bank's actual share of the outstanding amount of Revolving
Credit Loans (after giving effect to any Loan Request) to be each to
such Bank's Commitment Percentage of the outstanding amount of such
Revolving Credit Loans (after giving effect to any Loan Request), in
any case where, prior to such event or action, the actual share is not
so equal.
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XXXXXXXXXX XXXXXX. See Section 2.9.1.
SETTLEMENT DATE. (a) The Drawdown Date relating to any Loan
Request, (b) Friday of each week, or if a Friday is not a Business Day,
the Business Day immediately following such Friday, (c) at the option
of the Agent, on any Business Day following a day on which the account
officers of the Agent active upon the Borrower's account become aware
of the existence of an Event of Default, (d) at the option of the
Agent, one Business Day after making any advance pursuant to Section
2.6.2, (e) any Business Day on which the amount of Revolving Credit
Loans outstanding from BKB plus the amount of the Acquisition Loan
outstanding from BKB plus BKB's Commitment Percentage of the sum of the
Maximum Drawing Amount and any Unpaid Reimbursement Obligations is
equal to or greater than BKB's Commitment Percentage of the Total
Commitment, (f) the Business Day immediately following any Business Day
on which the amount of Revolving Credit Loans outstanding increase or
decreases by more than $500,000 as compared to the previous Settlement
Date, (g) any day on which any conversion of a Base Rate Loan to a
LIBOR Rate Loan occurs, or (h) any Business Day on which (i) the amount
of outstanding Revolving Credit Loans decreases and (ii) the amount of
the Agent's Revolving Credit Loans outstanding equals zero Dollars
($0).
SETTLING BANK. See Section 2.9.1.
TRIGGER DATE. The date which is ten (10) days after the Agent
has delivered written notice to the Borrower of the Majority Banks' or
the Agent's election to apply the funds in the BKB Concentration
Account in accordance with Section 2.10.2(b).
SECTION 4. AMENDMENT TO SECTION 2 OF THE CREDIT AGREEMENT.
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Section 2 of the Credit Agreement is hereby amended as follows:
(a) Section 2.1 of the Credit Agreement is hereby amended by deleting
the words "PROVIDED, that the sum of the outstanding amount of the Revolving
Credit Loans (after giving effect to all amounts requested) PLUS the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not at any time
exceed the Total Commitment" which appear in the first sentence of Section 2.1
and substituting in place thereof the words "PROVIDED, that the sum of the
outstanding amount of the Revolving Credit Loans (after giving effect to all
amounts requested) PLUS the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the lesser of (a) the Total Commitment
and (b) the Borrowing Base and, provided, further, that the sum of the
outstanding amount of the Revolving Credit Loans (after giving effect to all
amounts requested) PLUS the outstanding amount of the Acquisition Loans, PLUS
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall not at
any time exceed the lesser of (a) the sum of the Total Commitment and the Total
Acquisition Commitment and (b) the Borrowing Base".
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(b) Section 2.2 of the Credit Agreement is hereby amended by deleting
the words "a commitment fee calculated at the applicable Commitment Fee Rate on
the" and substituting in place thereof the words "a commitment fee calculated at
the rate of one half of one percent (1/2%) per annum on the".
(c) Section 2.3 of the Credit Agreement is hereby amended by deleting
Section 2.3.2 in its entirety.
(d) Section 2.5 of the Credit Agreement is hereby amended by (i)
deleting the words "rate per annum equal to the Base Rate PLUS the Applicable
Margin with respect to Base Rate Loans" which appears in Section 2.5(a) and
substituting in place thereof the words "rate of one and one-half percent (1
1/2%) per annum above the Base Rate"; and (ii) deleting the words "rate per
annum equal to the LIBOR Rate determined for such Interest Period PLUS the
Applicable Margin with respect to LIBOR Rate Loans" which appears in Section
2.5(b) and substituting in place thereof the words "rate of three percent (3%)
per annum above the LIBOR Rate determined for such Interest Period".
(e) Section 2.6 of the Credit Agreement is hereby amended by deleting
Section 2.6 in its entirety and restating it as follows:
2.6. REQUESTS FOR REVOLVING CREDIT LOANS.
2.6.1. GENERAL. The Borrower shall give to the Agent written
notice in the form of EXHIBIT B hereto (or telephonic notice confirmed
in a writing in the form of EXHIBIT B hereto) of each Revolving Credit
Loan requested hereunder (a "Loan Request") no less than (a) one (1)
Business Days prior to the proposed Drawdown Date of any Base Rate Loan
and (b) three (3) LIBOR Business Days prior to the proposed Drawdown
Date of any LIBOR Rate Loan. Each such notice shall specify (i) the
principal amount of the Revolving Credit Loan requested, (ii) the
proposed Drawdown Date of such Revolving Credit Loan, (iii) the
Interest Period for such Revolving Credit Loan and (iv) the Type of
such Revolving Credit Loan. Promptly upon receipt of any such notice,
the Agent shall notify each of the Banks thereof. Each Loan Request
shall be irrevocable and binding on the Borrower and shall obligate the
Borrower to accept the Revolving Credit Loan requested from the Banks
on the proposed Drawdown Date. Each Loan Request shall be in a minimum
aggregate amount of $1,000,000 or an integral multiple thereof of
$500,000 in excess thereof.
2.6.2. SWING LINE. Notwithstanding the notice and minimum
amount requirements set forth in Section 2.6.1 but otherwise in
accordance with the terms and conditions of this Credit Agreement, the
Agent may, in its sole discretion and without conferring with the
Banks, after the occurrence of the Trigger Date, make Revolving Credit
Loans to the Borrower by entry of credits to the Borrower's operating
account (No. 00000000) (the "Operating Account") with the Agent to
cover checks or other charges which the Borrower has drawn or made
against such account. The Borrower hereby requests and authorizes the
Agent to
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make from time to time such Revolving Credit Loans by means of
appropriate entries of such credits sufficient to cover checks and
other charges then presented for payment from the Operating Account.
The Borrower acknowledges and agrees that the making of such Revolving
Credit Loans shall, in each case, be subject in all respects to the
provisions of this Credit Agreement as if they were Revolving Credit
Loans covered by a Loan Request including, without limitation, the
limitations set forth in Section 2.1 and the requirements that the
applicable provisions of Section 12 (in the case of Revolving Credit
Loans made on the Closing Date) and Section 13 be satisfied. All
actions taken by the Agent pursuant to the provisions of this Section
2.6.2 shall be conclusive and binding on the Borrower and the Banks
absent the Agent's gross negligence or willful misconduct. Revolving
Credit Loans made pursuant to this Section 2.6.2 shall be Base Rate
Loans until converted in accordance with the provisions of the Credit
Agreement and, prior to a Settlement, such interest shall be for the
account of the Agent.
(f) Section 2 of the Credit Agreement is further amended by inserting
immediately after the text of Section 2.8 the following new Section Section 2.9,
2.10, 2.11 and 2.12:
2.9. SETTLEMENTS.
2.9.1. GENERAL. On each Settlement Date, the Agent shall, not
later than 11:00 a.m. (Boston time), give telephonic or facsimile
notice (a) to the Banks and the Borrower of the respective outstanding
amount of Revolving Credit Loans made by the Agent on behalf of the
Banks from the immediately preceding Settlement Date through the close
of business on the prior day and the amount of any LIBOR Rate Loans to
be made (following the giving of notice pursuant to Section 2.6.1(b))
on such date pursuant to a Loan Request and (b) to the Banks of the
amount (a "Settlement Amount") that each Bank (a "Settling Bank") shall
pay to effect a Settlement of any Revolving Credit Loan. A statement of
the Agent submitted to the Banks and the Borrower or to the Banks with
respect to any amounts owing under this Section 2.9 shall be PRIMA
FACIE evidence of the amount due and owing. Each Settling Bank shall,
not later than 3:00 p.m. (Boston time) on such Settlement Date, effect
a wire transfer of immediately available funds to the Agent in the
amount of the Settlement Amount for such Settling Bank. All funds
advanced by any Bank as a Settling Bank pursuant to this Section 2.9
shall for all purposes be treated as a Revolving Credit Loan made by
such Settling Bank to the Borrower and all funds received by any Bank
pursuant to this Section 2.9 shall for all purposes be treated as
repayment of amounts owed with respect to Revolving Credit Loans made
by such Bank. In the event that any bankruptcy, reorganization,
liquidation, receivership or similar cases or proceedings in which the
Borrower is a debtor prevent a Settling Bank from making any Revolving
Credit Loan to effect a Settlement as contemplated hereby, such
Settling Bank will make such dispositions and arrangements with the
other Banks with respect to such Revolving Credit Loans, either by way
of purchase of participations, distribution, PRO TANTO assignment of
claims, subrogation or otherwise as shall result in each Bank's share
of the outstanding Revolving Credit Loans being
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equal, as nearly as may be, to such Bank's Commitment Percentage of
the outstanding amount of the Revolving Credit Loans.
2.9.2. FAILURE TO MAKE FUNDS AVAILABLE. The Agent may, unless
notified to the contrary by any Settling Bank prior to a Settlement
Date, assume that such Settling Bank has made or will make available to
the Agent on such Settlement Date the amount of such Settling Bank's
Settlement Amount, and the Agent may (but it shall not be required to),
in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Settling Bank makes available to the Agent
such amount on a date after such Settlement Date, such Settling Bank
shall pay to the Agent on demand an amount equal to the product of (a)
the average computed for the period referred to in clause (c) below, of
the weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(b) the amount of such Settlement Amount, times (c) a fraction, the
numerator of which is the number of days that elapse from and including
such Settlement Date to the date on which the amount of such Settlement
Amount shall become immediately available to the Agent, and the
denominator of which is 360. A statement of the Agent submitted to such
Settling Bank with respect to any amounts owing under this Section
2.9.2 shall be prima facie evidence of the amount due and owing to the
Agent by such Settling Bank. If such Settling Bank's Settlement Amount
is not made available to the Agent by such Settling Bank within three
(3) Business Days following such Settlement Date, the Agent shall be
entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving
Credit Loans as of such Settlement Date.
2.9.3. NO EFFECT ON OTHER BANKS. The failure or refusal of any
Settling Bank to make available to the Agent at the aforesaid time and
place on any Settlement Date the amount of such Settling Bank's
Settlement Amount shall not (a) relieve any other Settling Bank from
its several obligations hereunder to make available to the Agent the
amount of such other Settling Bank's Settlement Amount or (b) impose
upon any Bank, other than the Settling Bank so failing or refusing, any
liability with respect to such failure or refusal or otherwise increase
the Commitment of such other Bank.
SECTION 2.10. REPAYMENTS OF REVOLVING CREDIT LOANS PRIOR TO
EVENT OF DEFAULT.
2.10.1. CREDIT FOR FUNDS RECEIVED IN CONCENTRATION ACCOUNT.
Prior to the occurrence of an Event of Default as to which the
account officers of the Agent active upon the Borrower's account have
actual knowledge, (a) all funds and cash proceeds in the form of money,
checks and like items received in the BKB Concentration Account as
contemplated by Section 9.18 shall be credited, on the same Business
Day on which the Agent determines that good collected funds have been
received, and, prior to the receipt of good collected
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funds, on a provisional basis until final receipt of good collected
funds, and applied as contemplated by Section 2.10.2, (b) all funds
and cash proceeds in the form of a wire transfer received in the BKB
Concentration Account as contemplated by Section 9.18 shall be
credited on the same Business Day as the Agent's receipt of such
amounts (or up to such later date as the Agent determines that good
collected funds have been received), and applied as contemplated by
Section 2.10.2, and (c) all funds and cash proceeds in the form of an
automated clearing house transfer received in the BKB Concentration
Account as contemplated by Section 9.18 shall be credited, on the next
Business Day following the Agent's receipt of such amounts (or up to
such later date as the Agent determines that good collected funds have
been received), and applied as contemplated by Section 2.10.2. For
purposes of the foregoing provisions of this Section 2.10.1, the Agent
shall not be deemed to have received any such funds or cash proceeds
on any day unless received by the Agent before 2:30 p.m. (Boston time)
on such day. The Borrower further acknowledges and agrees that any
such provisional credits or credits in respect of wire or automatic
clearing house funds transfers shall be subject to reversal if final
collection in good funds of the related item is not received by, or
final settlement of the funds transfer is not made in favor of, the
Agent in accordance with the Agent's customary procedures and
practices for collecting provisional items or receiving settlement of
funds transfers.
2.10.2. APPLICATION OF PAYMENTS PRIOR TO EVENT OF DEFAULT.
(a) Prior to the occurrence of the Trigger Date, and
so long as no Event of Default has occurred of which the
account officers of the Agent active on the Borrower's account
have knowledge, all funds transferred to the BKB Concentration
Account and for which the Borrower has received credits shall
be, except as otherwise required by Section 5.2(b) and (c),
applied to the Operating Account and made available to the
Borrower.
(b) After the occurrence of the Trigger Date and
prior to the occurrence of an Event of Default of which the
account officers of the Agent active on the Borrower's account
have knowledge, all funds transferred to the BKB Concentration
Account and for which the Borrower has received credits shall
be applied to the Obligations as follows:
(i) first, to pay amounts then due and
payable under this Credit Agreement, the Notes and
the other Loan Documents;
(ii) second, to reduce Revolving Credit
Loans made by the Agent pursuant to Section 2.6.2 and
for which Settlement has not then been made;
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(iii) third, to reduce other Revolving
Credit Loans which are Base Rate Loans;
(iv) fourth, to reduce Revolving Credit
Loans which are LIBOR Rate Loans; and
(v) fifth, except as otherwise required by
Section 5.2(b) and (c), to the Operating Account.
(c) All prepayments of LIBOR Rate Loans prior to the
end of an Interest Period shall obligate the Borrower to pay
any breakage costs associated with such LIBOR Rate Loans in
accordance with Section 6.10. Prior to the occurrence of an
Event of Default, the Borrower may elect to avoid such
breakage costs by providing to the Agent cash in an amount
sufficient to cash collateralize such LIBOR Rate Loans, but in
no event shall the Borrower be deemed to have paid such LIBOR
Rate Loans until such cash has been paid to the Agent for
application to such LIBOR Rate Loans. The Agent may elect to
cause such cash collateral to be deposited into either (i) a
cash collateral account pursuant to the terms of a cash
collateral agreement executed by the Borrower and the Agent
and in form and substance satisfactory to the Agent or (ii)
the Borrower's Operating Account with appropriate instructions
prohibiting the Borrower's withdrawal of such funds so long as
they remain cash collateral. In each such case, the Borrower
agrees to execute and deliver to the Agent such instruments
and documents, including Uniform Commercial Code financing
statements and agreements with any third party depository
banks, as the Agent may request.
(d) All prepayments of the Revolving Credit Loans
pursuant to this Section 2.10.2 shall be allocated among the
Banks making such Revolving Credit Loans, in proportion, as
nearly as practicable, to the respective unpaid principal
amount of such Revolving Credit Loans outstanding, with
adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion. Prior to any
Settlement Date, however, all prepayments of the Revolving
Credit Loans shall be applied in accordance with this Section
2.10.2, first to outstanding Revolving Credit Loans of the
Agent.
2.11. REPAYMENTS OF REVOLVING CREDIT LOANS AFTER
EVENT OF DEFAULT. Following the occurrence and during the
continuance of an Event of Default of which the account
officers of the Agent active on the Borrower's account have
knowledge, all funds transferred to the BKB Concentration
Account and for which the Borrower has received credits shall
be applied to the Obligations in accordance with Section 14.4.
2.12. CHANGE IN BORROWING BASE. The Borrowing Base
shall be determined monthly (or at such other interval as may
be specified
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pursuant to Section 9.4(g)) by the Agent by reference to the
Borrowing Base Report, commercial finance and collateral audit
reports and other information obtained by or provided to the
Agent. The Agent shall give to the Borrower written notice of
any change in the Borrowing Base determined by the Agent. In
the case of a reduction in the lending formula with respect to
Eligible Accounts Receivable, such notice shall be effective
ten (10) days after its receipt by the Borrower, and in the
case of any change in the general criteria for Eligible
Accounts Receivable, such notice shall be effective upon its
receipt by the Borrower.
SECTION 5. AMENDMENT TO SECTION 3 OF THE CREDIT AGREEMENT. Section 3.2
of the Credit Agreement is hereby amended by deleting the words "exceeds the
Total Commitment" which appear in the first sentence of Section 3.2 and
substituting in place thereof the words "exceeds the lesser of (a) the Total
Commitment and (b) the Borrowing Base or if at any time the sum of the
outstanding amount of the Revolving Credit Loans, the Acquisition Loan, the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds the
lesser of (a) the sum of the Total Commitment and the Total Acquisition
Commitment and (b) the Borrowing Base".
SECTION 6. AMENDMENT TO SECTION 4 OF THE CREDIT AGREEMENT. Section 4
of the Credit Agreement is hereby amended as follows:
(a) Section 4.1.1. of the Credit Agreement is hereby amended by
inserting immediately after the words "PROVIDED, that each Bank's Acquisition
Loan shall not exceed its Acquisition Commitment" the words "and provided that
the sum of the outstanding amount of the Acquisition Loan (after giving effect
to all amounts requested) shall not at any time exceed the lesser of (a) the
Total Acquisition Commitment and (b) the Borrowing Base and, PROVIDED, FURTHER,
that the sum of the outstanding amount of the Revolving Credit Loans (after
giving effect to all amounts requested) PLUS the outstanding amount of the
Acquisition Loans, PLUS the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the lesser of (a) the sum of the Total
Commitment and the Total Acquisition Commitment and (b) the Borrowing Base"
(b) Section 4.2 of the Credit Agreement is hereby amended by deleting
the words "a commitment fee calculated at the applicable Commitment Fee Rate on
the" and substituting in place thereof the words "a commitment fee calculated at
the rate of one half of one percent (1/2%) per annum on the".
(c) Section 4.5.1 of the Credit Agreement is hereby amended by (i)
deleting the words "rate per annum equal to the Base Rate PLUS the Applicable
Margin with respect to Base Rate Loans" which appears in Section 4.5.1(a) and
substituting in place thereof the words "rate of one and one-half percent (1
1/2%) per annum above the Base Rate"; and (ii) deleting the words ""rate per
annum equal to the LIBOR Rate determined for such Interest Period PLUS the
Applicable Margin with respect to LIBOR Rate Loans" which appears in Section
4.5.1(b) and substituting in place thereof the words "rate of three percent (3%)
per annum above the LIBOR Rate determined for such Interest Period".
-12-
(d) Section 4.8 of the Credit Agreement is hereby amended by deleting
Section 4.8 in its entirety and restating it as follows:
4.8. MANDATORY REPAYMENTS OF ACQUISITION LOAN.
4.8.1. GENERAL. If at any time the sum of the outstanding
amount of the Advances for Acquisition Loans exceeds the lesser of (a)
the Total Acquisition Commitment and (b) the Borrowing Base, or if at
any time the sum of the outstanding amount of the sum of the
outstanding Acquisition Loans, the outstanding Revolving Credit Loans,
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations
exceeds the lesser of (a) the sum of the Total Acquisition Commitment
and the Total Commitment and (b) the Borrowing Base , then the Borrower
shall immediately pay the amount of such excess to the Agent for the
respective accounts of the Banks for application to the Acquisition
Loan, to be applied, in the absence of instruction by the Borrower,
first to the principal of Base Rate Loans and then to the principal of
LIBOR Rate Loans. Each prepayment of the Acquisition Loan shall be
allocated among the Banks, in proportion, as nearly as practicable, to
the respective unpaid principal amount of each Bank's Acquisition Note,
with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
4.8.2. PROCEEDS OF ASSET SALES. In the event the Borrower or
any of its Subsidiaries receives any Net Cash Sale Proceeds from any
Asset Sale permitted by Section 10.5.2 or otherwise consented to in
writing by the Majority Banks (or, in the event such a sale constitutes
a sale of all or substantially all of the Collateral, then all the
Banks), the Borrower shall, immediately upon receipt thereof, make a
prepayment of principal on the Acquisition Loan in the amount of such
proceeds, with the Total Acquisition Commitment also being permanently
reduced by such amount. To the extent the Acquisition Loans have been
repaid in full, then the Borrower shall make a prepayment of principal
on the Revolving Credit Loans in an amount of such Net Cash Sale
Proceeds (or such portion which is remaining after repaying any
remaining Acquisition Loans), with the Total Commitment also being
permanently reduced by such amount. All prepayments of LIBOR Rate Loans
prior to the end of an Interest Period shall obligate the Borrower to
pay any breakage costs associated with such LIBOR Rate Loans in
accordance with Section 6.10. Prior to the occurrence of an Event of
Default, the Borrower may elect to avoid such breakage costs by
providing to the Agent cash in an amount sufficient to cash
collateralize such LIBOR Rate Loans, but in no event shall the Borrower
be deemed to have paid such LIBOR Rate Loans until such cash has been
paid to the Agent for application to such LIBOR Rate Loans. The Agent
may elect to cause such cash collateral to be deposited into either (i)
a cash collateral account pursuant to the terms of a cash collateral
agreement executed by the Borrower and the Agent and in form and
substance satisfactory to the Agent or (ii) the Borrower's Operating
Account with appropriate instructions prohibiting the Borrower's
withdrawal of such funds so
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long as they remain cash collateral. In each such case, the Borrower
agrees to execute and deliver to the Agent such instruments and
documents, including Uniform Commercial Code financing statements and
agreements with any third party depository banks, as the Agent may
request.
SECTION 7. AMENDMENT TO SECTION 5 OF THE CREDIT AGREEMENT. Section 5
of the Credit Agreement is hereby amended as follows:
(a) Section 5.1.1. of the Credit Agreement is hereby amended by
deleting the words "the amount of all Revolving Credit Loans outstanding shall
not exceed the Total Commitment" which appears in Section 5.1.1.(iii) and
substituting in place thereof the words "the amount of all Revolving Credit
Loans outstanding shall not exceed the lesser of (a) the Total Commitment and
(b) the Borrowing Base and (c) the sum of the Maximum Drawing Amount, all Unpaid
Reimbursement Obligations, the amount of all Revolving Credit Loans outstanding
and the amount of all Acquisition Loans outstanding shall not exceed the lesser
of (i) the sum of the Total Commitment and the Total Acquisition Commitment and
(ii) the Borrowing Base".
(b) Section 5.6 of the Credit Agreement is hereby amended by deleting
the words "the rate of the Applicable Margin for letter of credit fees" in each
place in which such words appear in Section 5.6 and substituting in each place
the words "three percent (3%)".
SECTION 8. AMENDMENT TO SECTION 8 OF THE CREDIT AGREEMENT. Section 8 of
the Credit Agreement is hereby amended by inserting the following immediately
after the end of the text of Section 8.24:
8.25. BANK ACCOUNTS. SCHEDULE 8.25 sets forth the account
numbers and locations of all Local Accounts, Interim Concentration
Accounts and other bank accounts of the Borrower or any of its
Subsidiaries.
SECTION 9. AMENDMENT TO SECTION 9 OF THE CREDIT AGREEMENT. Section 9
of the Credit Agreement is hereby amended as follows:
(a) Section 9.4(c) of the Credit Agreement is hereby amended by
inserting immediately prior to the beginning of the text of Section 9.4(c) the
words "in addition, as soon as practicable, but in any event within thirty (30)
days after the end of each month in each fiscal year of the Borrower, unaudited
monthly consolidated financial statements of the Borrower and its Subsidiaries
for such month and unaudited monthly consolidating financial statements of the
Borrower and its Subsidiaries for such month (which monthly statements shall
including a consolidated and consolidating profit and loss statement and
statement of cash flow), each prepared in accordance with generally accepted
accounting principles, together with a certification by the principal financial
or accounting officer of the Borrower that the information contained in such
financial statements fairly presents the financial condition of the Borrower and
its Subsidiaries on the date thereof (subject to year-end adjustments) and, in
addition,".
(b) Section 9.4(e) of the Credit Agreement is hereby amended be
deleting the word "and" which appears at the end of Section 9.4(e).
-14-
(c) Section 9.4(f) of the Credit Agreement is hereby amended by
deleting the period which appears at the end of the text of Section 9.4(f) and
substituting in place thereof a semicolon.
(d) Section 9.4 of the Credit Agreement is further amended by inserting
immediately after the end of the text of Section 9.4(f) the following:
(g) within twenty (20) days after the end of each calendar
month or at such earlier time as the Agent may reasonably request, a
Borrowing Base Report setting forth the Borrowing Base as at the end of
such calendar month or other date so requested by the Agent; and
(h) within twenty (20) days after the end of each calendar
month, an Accounts Receivable aging report.
(e) Section 9.9 of the Credit Agreement is hereby amended by inserting
immediately after the end of the text of Section 9.9.2 the following:
9.9.3. COLLATERAL REPORTS. No more frequently than four times
during each calendar year, or more frequently as determined by the
Agent if an Event of Default shall have occurred and be continuing,
upon the request of the Agent, the Borrower will obtain and deliver to
the Agent, or if the Agent so elects, will cooperate with the Agent in
the Agent's obtaining a report of an independent collateral auditor
satisfactory to the Agent (with may be affiliated with one of the
Banks) with respect to the Accounts Receivable component included in
the Borrowing Base, which report shall indicate whether or not the
information set forth in the Borrowing Base Report most recently
delivered is accurate and complete in all material respects based upon
a review by such auditors of the Accounts Receivable (including
verification with respect to the amount, aging, identity and credit of
the respective account debtors and the billing practices of the
Borrower or its applicable Subsidiary).
(f) Section 9 of the Credit Agreement is further amended by inserting
the following immediately after the end of the text of Section 9.17:
9.18. BANK ACCOUNTS.
9.18.1. GENERAL. On or prior to November 30, 1999, the
Borrower will, and will cause each of its Subsidiaries to, (a)
establish a depository account (the "BKB Concentration Account") under
the control of the Agent for the benefit of the Banks and the Agent, in
the name of the Borrower and (b) instruct all account debtors and other
obligors, pursuant to notices of assignment and instruction letters in
form and substance satisfactory to the Agent, to remit all cash
proceeds of Accounts Receivable to the BKB Concentration Account or
local depository accounts ("Local Accounts") or concentration
depository accounts ("Interim Concentration Accounts") with other
financial institutions. On or prior to January 1, 2000, the Borrower
will, and will cause each of its Subsidiaries to (a)
-15-
deliver to the Agent evidence satisfactory to the Agent that the
financial institutions in which such Local Accounts and Interim
Concentration Accounts are located have entered into agency account
agreements and, if applicable, lock box agreements (collectively,
"Agency Account Agreements") in form and substance satisfactory to the
Agent, (b) direct all depository institutions with Local Accounts to
cause all funds held in each such Local Account to be transferred no
less frequently than once each day to, and only to, an Interim
Concentration Account or the BKB Concentration Account, (c) direct all
depository institutions with Interim Concentration Accounts to cause
all funds of the Borrower and its Subsidiaries held in such Interim
Concentration Accounts to be transferred daily to, and only to, the
BKB Concentration Account, and (d) at all times ensure that
immediately upon the Borrower's or any of its Subsidiaries' receipt of
any funds constituting or cash proceeds of any Collateral, all such
amounts shall have been deposited in a Local Account, an Interim
Concentration Account or the BKB Concentration Account.
9.18.2. ACKNOWLEDGMENT OF APPLICATION. The Borrower hereby
agrees that all amounts received by the Agent in the BKB Concentration
Account will be the sole and exclusive property of the Agent, for the
accounts of the Banks and the Agent, to be applied in accordance
Section 2.10 or Section 2.11 as applicable.
9.19. CONSULTANT. The Borrower hereby agrees that it shall
engage the services of a professional consultant to, among other
things, visit the Borrower's and any Subsidiary's corporate offices at
such times and with such frequency as the consultant deems appropriate,
discuss the Borrower's or any Subsidiary's financial matters with its
officers, examine any of the Borrower's or any Subsidiary's books or
other financial records and advise the Banks as to the business,
operations and financial condition of the Borrower and its
Subsidiaries. All reasonable fees and expenses of the consultant shall
be borne by the Borrower and shall be included as an Obligation.
SECTION 10. AMENDMENT TO SECTION 10 OF THE CREDIT AGREEMENT. Section
10.5.1 of the Credit Agreement is hereby amended by deleting Section 10.5.1 in
its entirety and restating it as follows:
10.5.1. MERGERS AND ACQUISITIONS. The Borrower will not, and
will not permit any of its Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition or
stock acquisition except, so long as no Default or Event of Default has
occurred and is continuing or would exist after giving effect thereto
the Borrower or any Subsidiary shall be permitted to merge or
consolidate one or more of the Subsidiaries of the Borrower with and
into the Borrower or a Guarantor hereunder, provided the Borrower or
the Guarantor, as the case may be, has taken or caused to be taken all
action necessary to grant to the Agent a first priority perfected
security interest in the Borrower's or such other Guarantor's assets
after such merger or consolidation to the same extent as in the assets
of parties to the merger prior thereto.
-16-
In the event any new Domestic Subsidiary is formed or
otherwise comes into existence, such new Domestic Subsidiary shall,
immediately upon its creation or formation, execute and deliver to the
Agent for the benefit of the Agent and the Banks, an Instrument of
Adherence in substantially the form of EXHIBIT F hereto (an "Instrument
of Adherence") and the Loan Documents shall be amended and/or
supplemented as necessary to make the terms and conditions of the Loan
Documents applicable to such Domestic Subsidiary. Such Domestic
Subsidiary shall become a Guarantor hereunder and shall become party to
the Guaranty and the Security Agreement and shall execute and deliver
to the Agent any and all other agreements, documents, instruments and
financing statements necessary to grant to the Agent a first priority
perfected lien in such Subsidiary's assets to the extent required by
the Loan Documents. The Borrower and its Subsidiaries shall,
immediately upon the creation or formation of such Subsidiary, pledge
all of such Subsidiary's capital stock to the Agent for the benefit of
the Agent and the Banks.
SECTION 11. AMENDMENT TO SECTION 11 OF THE CREDIT AGREEMENT. Section
11.2 of the Credit Agreement is hereby amended by deleting Section 11.2 in its
entirety and restating it as follows:
11.2. CAPITAL EXPENDITURES. The Borrower will not make, or
permit any Subsidiary of the Borrower to make, Capital Expenditures in
any fiscal year that exceed, in the aggregate, (a) $6,000,000 for the
Borrower's 1999 fiscal year and (b) $4,000,000 for each fiscal year
ending thereafter.
SECTION 12. AMENDMENT TO SECTION 14 OF THE CREDIT AGREEMENT. Section
14.1(c) of the Credit Agreement is hereby by inserting immediately after the
reference to "9.16" a comma and the references "9.18".
SECTION 13. AMENDMENT TO THE CREDIT AGREEMENT. The Credit Agreement is
further amended by including as part of the Schedules referenced therein the
SCHEDULE 8.25 attached hereto.
SECTION 14. CONDITIONS TO EFFECTIVENESS. This Second Amendment shall
become effective (the "Effective Date") only upon the satisfaction of the
following conditions on or prior to November 8, 1999:
(a) this Second Amendment shall have been executed by the Company, each
Guarantor, the Banks and the Agent; and
(b) the Agent shall have received from the Company a waiver fee in the
amount of $210,750, which fee shall be for the PRO RATA accounts of the Banks.
SECTION 15. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
repeats, on and as of the date hereof, each of the representations and
warranties made by it in Section 8 of the Credit Agreement, and such
representations and warranties remain true as of the date hereof (except to the
extent of changes resulting from transactions contemplated or permitted by the
Credit
-17-
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse,
and to the extent that such representations and warranties relate expressly to
an earlier date), PROVIDED, that all references therein to the Credit Agreement
shall refer to such Credit Agreement as amended hereby. In addition, the
Borrower hereby represents and warrants that the execution and delivery by the
Borrower and each Guarantor of this Second Amendment and the performance by the
Borrower and each Guarantor of all of its agreements and obligations under the
Credit Agreement as amended hereby and the other Loan Documents are within the
corporate authority of each of the Borrower and each Guarantor and has been duly
authorized by all necessary corporate action on the part of the Borrower and
each Guarantor.
SECTION 16. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Second Amendment shall be read and construed as a
single agreement. All references in the Credit Agreement or any related
agreement or instrument to the Credit Agreement shall hereafter refer to the
Credit Agreement as amended hereby.
SECTION 17. NO WAIVER. Nothing contained herein shall constitute a
waiver of, impair or otherwise affect any Obligations, any other obligation of
the Borrower or any rights of the Agent or the Banks consequent thereon.
SECTION 18. COUNTERPARTS. This Second Amendment may be executed in one
or more counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.
SECTION 19. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as a document under seal as of the date first above written.
AZTEC TECHNOLOGY PARTNERS, INC.
By:
------------------------------------
Title:
BANKBOSTON, N.A.
By:
------------------------------------
Title:
CITIZENS BANK OF MASSACHUSETTS
By:
------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By:
------------------------------------
Name:
Title:
THE FUJI BANK, LIMITED
By:
------------------------------------
Name:
Title:
NATIONAL CITY BANK OF KENTUCKY
By:
------------------------------------
Name:
Title:
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LASALLE NATIONAL BANK
By:
------------------------------------
Name:
Title:
PEOPLE'S BANK
By:
------------------------------------
Name:
Title:
RATIFICATION OF GUARANTY
Each of the undersigned guarantors hereby acknowledges and consents to
the foregoing Second Amendment as of September 30, 1999, and agrees that the
Guaranty dated as of (a) July 27, 1998; (b) September 17, 1998; and (c) October
2, 1998 from each of the undersigned Guarantors remain in full force and effect,
and each of the Guarantors confirms and ratifies all of its obligations
thereunder.
AZTEC INTERNATIONAL LLC
By:
---------------------------------------------
Title:
AZTEC TECHNOLOGY PARTNERS OF NEW ENGLAND LLC
(F/K/A BAY STATE COMPUTER GROUP LLC)
By:
---------------------------------------------
Title:
COMPEL LLC
By:
---------------------------------------------
Title:
ENTRA COMPUTER CORP.
By:
---------------------------------------------
Title:
FORTRAN CORP.
By:
---------------------------------------------
Title:
-2-
XXXXX COMMUNICATIONS CORPORATION
By:
--------------------------------------------
Title:
OFFICE EQUIPMENT SERVICE, INC.
By:
---------------------------------------------
Title:
PCM, INC.
By:
---------------------------------------------
Title:
PROFESSIONAL COMPUTER SOLUTIONS, INC.
By:
---------------------------------------------
Title:
PROFESSIONAL NETWORK SERVICES, INC.
By:
---------------------------------------------
Title:
XXXXXXXX, XXXXXX & CO., INC.
By:
---------------------------------------------
Title:
SOFTECH COMMUNICATIONS, INC.
By:
---------------------------------------------
Title:
SOLUTIONS E.T.C. INC.
By:
---------------------------------------------
Title:
