Exhibit 10.4
AMENDMENT NO. 11 AND WAIVER TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 11 AND WAIVER, dated as of December 27, 2001 (this
"Amendment"), to the LOAN AND SECURITY AGREEMENT, dated as of September 30, 1998
(as amended by AMENDMENT NO. 1, dated as of September, 1999, AMENDMENT NO. 2 AND
WAIVER, dated as of September, 1999, AMENDMENT NO. 3, dated as of December 13,
1999, AMENDMENT NO. 4, dated as of January 12, 2000, AMENDMENT NO. 5, dated as
of March 24, 2000, AMENDMENT NO. 6, dated as of May 26, 2000, AMENDMENT NO. 7,
dated as of July 17, 2000, AMENDMENT NO. 8 AND WAIVER, dated as of August 11,
2000, AMENDMENT NO. 9, dated as of March 30, 2001 and AMENDMENT NO. 10, dated as
of June 30, 2001, as hereafter modified, amended and/or restated from time to
time, the "Loan and Security Agreement"), between FOOTHILL CAPITAL CORPORATION,
a California corporation ("Foothill") and TEKINSIGHT SERVICES, INC., a Delaware
corporation, as successor in interest to DATA SYSTEMS NETWORK CORPORATION, a
Michigan corporation ("Borrower").
Preamble
Pursuant to the Loan and Security Agreement, Foothill established a
revolving line of credit for the benefit of Borrower. Borrower has entered into
(i) the Agreement and Plan of Reorganization, dated as of April 25, 2001, as
amended by the First Amendment to the Agreement and Plan of Reorganization,
dated as of July 9, 2001, the Second Amendment to the Agreement and Plan of
Reorganization, dated as of October 26, 2001, the Third Amendment to the
Agreement and Plan of Reorganization, dated as of November 30, 2001 and the
Fourth Amendment to the Agreement and Plan of Reorganization, dated as of
December 27, 2001 (as so amended, the "Reorganization Agreement"), by and among
DynCorp, a Delaware corporation ("DynCorp"), DynCorp Management Resources Inc.,
a Virginia corporation ("DynCorp Management"), XxxXxxxxxx.Xxx, Inc., a Delaware
corporation ("Parent"), and Borrower as assignee of Newport Acquisition Corp., a
Delaware corporation ("Newport") and (ii) an Agreement and Plan of Merger, dated
as of December 27, 2001 (the "Plan of Merger", together with the Reorganization
Agreement, the "Merger Documents"), by and among DynCorp, DynCorp Management,
Parent, and Borrower. Pursuant to the Merger Documents, DynCorp Management has
agreed to merge with and into Borrower, with Borrower to continue as the
surviving corporation (the "DynCorp Management Merger"). In connection with the
DynCorp Management Merger, Borrower will change its name to "DynTek Services,
Inc." Borrower has requested that Foothill consent to, and waive any Event of
Default that would otherwise arise under, the Loan and Security Agreement solely
by virtue of the consummation of the DynCorp Management Merger and such change
in Borrower's name. Foothill is willing to consent to the DynCorp Management
Merger and such corporate name change, subject to the terms and conditions set
forth herein. Accordingly, Borrower and Foothill hereby agree as follows:
1. Definitions. All capitalized terms used herein which are defined in the
Loan and Security Agreement and not otherwise defined herein are used herein as
defined therein.
2. Preamble. The preamble to the Loan and Security Agreement is hereby
amended in its entirety to read as follows:
"THIS LOAN AND SECURITY AGREEMENT (this "Agreement"),
is entered into as of September 30, 1998, between FOOTHILL
CAPITAL CORPORATION, a California corporation ("Foothill"),
with a place of business located at Xxx Xxxxxx Xxxxx, 00xx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 and TEKINSIGHT SERVICES,
INC., a Delaware corporation ("Borrower"), with its chief
executive office located at 00000 Xxx Xxxxxx Xxxxxx, Xxxxx
000, Xxxxxx, Xxxxxxxxxx 00000.
The parties agree as follows:"
3. Changes to Definitions.
----------------------
(a) The definition of the term "Borrower" in Section 1.1 of the Loan and
Security Agreement is hereby amended in its entirety to read as follows:
"'Borrower' has the meaning set forth in the preamble to this Agreement."
(b) The definition of the term "New Borrower" in Section 1.1 of the Loan
and Security Agreement is hereby amended in its entirety to read as follows:
"'New Borrower' means TekInsight Services, Inc., a Delaware corporation
and a wholly-owned Subsidiary of the Parent."
(c) The definition of the term "Code" in Section 1.1 of the Loan and
Security Agreement is hereby amended in its entirety to read as follows:
"'Code' means the Uniform Commercial Code as in
effect from time to time in the State of New York (for
purposes of clarification, any reference to a section of the
Code shall mean any successor or replacement section
thereof)."
4. Representations and Warranties. Section 5.7 of the Loan and Security
Agreement is hereby amended in its entirety to read as follows:
"5.7 Location of Chief Executive Office; FEIN;
Organizational Identification Number. The chief executive
office of Borrower is located at the address indicated in the
preamble to this Agreement and Borrower's FEIN is 00-0000000.
Borrower's organizational identification number is 3048062."
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5. Notice. The address for each of Foothill and Borrower in Section 13 of
the Loan and Security Agreement is hereby amended in its entirety to read as
follows:
"If to Borrower: TEKINSIGHT SERVICES, INC.
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Fax No. (000) 000-0000
with copies to: XXXXX XXXXXXX LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax No. (000) 000-0000
If to Foothill: FOOTHILL CAPITAL CORPORATION
Xxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. (000) 000-0000
with copies to: XXXXXXX XXXX & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No. (000) 000-0000
6. Waiver.
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(a) Pursuant to the request of Borrower and in accordance with Section 16.6
of the Loan and Security Agreement, Foothill hereby consents to, and waives any
Event of Default that would otherwise arise under Section 8.2 of the Loan and
Security Agreement by reason of, the following:
(i) any noncompliance with (A) Section 7.3 of the Loan and Security
Agreement (solely by reason of the execution, delivery and performance of
the Merger Documents and the consummation of the DynCorp Management
Merger), (B) Section 7.9 of the Loan and Security Agreement (solely by
reason of the indirect Change of Control caused by the issuance of Class B
Common Stock of Parent to DynCorp as consideration for the DynCorp
Management Merger) or (C) Sections 7.13(a) and (c) of the Loan and Security
Agreement (solely by reason of the execution, delivery and performance of
the Merger Documents and the consummation of the DynCorp Management
Merger); and
(ii) any noncompliance with Section 7.5 of the Loan and Security
Agreement solely by reason of Borrower changing its name to "DynTek
Services, Inc."
(b) Notwithstanding the foregoing, the waivers and consents set forth in
paragraph (a)(i) above shall be automatically rescinded without any further
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action by Foothill, with the same effect as if such waivers and consents had not
been granted, if the DynCorp Management Merger shall not be consummated by
Monday, December 31, 2001.
(c) This waiver and consent shall be effective only in the specific
instances and for the specific purposes set forth herein and does not allow any
other or further departure from the terms and conditions of the Loan and
Security Agreement and other Loan Documents, which terms shall continue in full
force and effect. Without limiting the generality of the foregoing, it is
understood and agreed that nothing in this Amendment No. 11 and Waiver shall be
deemed a waiver of any other Event of Default or Default, whether known or
unknown by Foothill and whether now existing or hereafter arising.
7. Conditions and Covenants.
------------------------
(a) This Amendment shall become effective only upon satisfaction in full of
the following conditions precedent (the first date upon which all such
conditions have been satisfied being herein called the "Effective Date"):
(i) The representations and warranties contained in this Amendment and
in Section 5 of the Loan and Security Agreement and each other Loan
Document shall be correct on and as of the Effective Date as though made on
and as of such date (except where such representations and warranties
relate to an earlier date in which case such representations and warranties
shall be true and correct as of such earlier date); no Default or Event of
Default shall have occurred and be continuing on the Effective Date or
result from this Amendment becoming effective in accordance with its terms.
(ii) Foothill shall have received two (2) counterparts of this
Amendment, duly executed by Borrower and Parent.
(iii) All legal matters incident to this Amendment shall be reasonably
satisfactory to Foothill and its counsel.
(iv) Foothill shall have received a UCC-3 amendment, duly executed by
Borrower, substantially in the form of Exhibit A.
(v) Foothill shall have received a copy of the resolutions adopted by
the Board of Directors of Borrower and Parent, each certified by an
appropriate officer thereof, authorizing the execution, delivery and
performance by Borrower and Parent, as applicable, of the Merger Documents
and of the other documents to be delivered in connection therewith.
(vi) Foothill shall have received a letter from Citicorp USA, Inc.
authorizing the filing of the UCC-3 termination statements for all UCC-1
financing statements filed by any Person and covering any portion of the
Collateral and any other agreements, instruments, approvals, and other
documents as may be necessary or desirable or that Foothill may reasonably
request in order to perfect and preserve the security interest purported to
be created by the Loan and Security Agreement and evidence reasonably
satisfactory to it that there does not exist any liens, security interests,
charges or other encumbrances on the assets or stock of DynCorp Management,
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including, without limitation, a copy of the Release Agreement, dated as of
December 27, 2001, duly executed by Citicorp USA, Inc. and DynCorp
Management.
(vii) Foothill shall have received duly executed copies of the Merger
Documents, which shall be in form and substance reasonably satisfactory to
Foothill.
(viii) Foothill shall have received a nonrefundable fee of $10,000 in
consideration of the execution and delivery by Foothill of this Amendment.
(b) Borrower covenants to provide the following to Foothill:
(i) Within three Business Days after the filing thereof, (i) a change
of name certificate, if any, filed with the Delaware Secretary of State and
(ii) a copy of the charter of Borrower, together with all amendments
thereto, in each case certified by an appropriate official of the State of
Delaware and indicating that the name of the Borrower has been changed to
"DynTek Services, Inc."
(ii) Immediately upon the Borrower's change of name from "TekInsight
Services, Inc." to "DynTek Services, Inc.", an acknowledgement and consent
in the form of Exhibit B attached hereto, duly executed by the Borrower.
(iii) Within three Business Days after the DynCorp Management Merger,
a copy of the amended and restated charter of Parent, together with all
amendments thereto, certified by an appropriate official of the State of
Delaware and indicating that the name of Parent has been changed to
"DynTek, Inc."
(iv) Immediately upon the Parent's change of name from
"XxxXxxxxxx.Xxx, Inc." to "DynTek, Inc.", an acknowledgement and consent in
the form of Exhibit C attached hereto, duly executed by the Parent.
(v) Within three Business Days after the DynCorp Management Merger, a
copy of the Certificate of Merger with respect to the DynCorp Management
Merger, certified by an appropriate official of the State of Delaware.
(vi) Such other agreements, instruments, approvals, opinions and other
documents, each reasonably satisfactory to Foothill in form and substance,
as Foothill may reasonably request.
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(c) Borrower agrees to cause Parent to raise at least $3,000,000 in equity
no later than 30 days after the consummation of the Dyncorp Management Merger.
(d) Borrower agrees not to amend, restate, supplement or otherwise modify
the Merger Documents.
(e) The covenants set forth in Section 7(b), 7(c) and 7(d) above shall
constitute covenants of the Loan and Security Agreement and the failure to
perform any of such covenants shall constitute an Event of Default under the
Loan and Security Agreement.
8. Representations and Warranties. Borrower hereby represents and warrants to
Foothill as follows:
(a) Borrower (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and (ii) has all requisite
corporate power, authority and legal right to execute, deliver and perform this
Amendment, and to perform the Loan and Security Agreement, as amended hereby.
(b) The execution, delivery and performance of this Amendment by Borrower,
and the performance by Borrower of the Loan and Security Agreement, as amended
hereby (i) have been duly authorized by all necessary corporate action, (ii) do
not and will not contravene its charter or by-laws or any applicable law, and
(iii) except as provided in the Loan Documents, do not and will not result in
the creation of any Lien upon or with respect to any of its respective
properties.
(c) This Amendment and the Loan and Security Agreement, as amended hereby,
constitute the legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with its terms.
(d) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or other Person is required in
connection with the due execution, delivery and performance by Borrower of this
Amendment and the performance by Borrower of the Loan and Security Agreement, as
amended hereby.
(e) The representations and warranties contained in Section 5 of the Loan
and Security Agreement and each other Loan Document are correct on and as of the
Effective Date as though made on and as of the Effective Date (except to the
extent such representations and warranties expressly relate to an earlier date
in which case such representations and warranties shall be true and correct as
of such earlier date) and no Default or Event of Default has occurred and is
continuing on and as of the Effective Date or will result from this Amendment
becoming effective in accordance with its terms.
(f) After the Borrower's change of name, (i) there shall be no change in
the Borrower's FEIN, organizational identification number, jurisdiction of
incorporation, corporate structure or legal identity other than the Borrower's
change of name to "DynTek Services, Inc." and (ii) any and all references to the
term "Borrower" in any Loan Document shall refer to "DynTek Services, Inc."
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(g) After the Parent's change of name or consummation of the DynCorp
Management Merger and the transactions related thereto, (i) there shall be no
change in the Borrower's or the Parent's FEIN, organizational identification
number, jurisdiction of incorporation, corporate structure or legal identity
other than the Borrower's change of name to "DynTek Services, Inc." and the
Parent's change of name to "DynTek, Inc." and (ii) any and all references to the
terms "Borrower" and "Parent" in any Loan Document shall refer to "DynTek
Services, Inc." and to "DynTek, Inc.", respectively.
9. Continued Effectiveness of the Loan and Security Agreement and Loan
Documents. Borrower hereby (i) confirms and agrees that each Loan Document to
which it is a party is, and shall continue to be, in full force and effect and
is hereby ratified and confirmed in all respects except that on and after the
Effective Date of this Amendment all references in any such Loan Document to
"the Loan and Security Agreement", the "Agreement", "thereto", "thereof",
"thereunder" or words of like import referring to the Loan and Security
Agreement shall mean the Loan and Security Agreement as amended by this
Amendment, (ii) confirms and agrees that to the extent that any such Loan
Document purports to assign or pledge to Foothill, or to grant a security
interest in or Lien on, any collateral as security for the obligations of
Borrower from time to time existing in respect of the Loan and Security
Agreement and the Loan Documents, such pledge, assignment and/or grant of the
security interest or Lien is hereby ratified and confirmed in all respects, and
(iii) confirms that Foothill is authorized, at its option, without prior notice
to Borrower, to charge any fees payable by Borrower pursuant to Section 7(a)(v)
of this Amendment to Borrower's Loan Account.
10. Miscellaneous.
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(a) This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original but all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment.
(b) Section and paragraph headings herein are included for convenience of
reference only and shall not constitute a part of this Amendment for any other
purpose.
(c) This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New York.
(d) Borrower will pay on demand all reasonable fees, costs and expenses of
Foothill in connection with the preparation, execution and delivery of this
Amendment including, without limitation, reasonable fees disbursements and other
charges of Xxxxxxx Xxxx & Xxxxx LLP, counsel to Foothill.
(e) Borrower hereby acknowledges that the Final Installment (as defined in
Amendment No. 9 to Loan and Security Agreement) of the Accommodation Fee (as
defined in Amendment No. 9 to Loan and Security Agreement) shall be payable on
March 31, 2002 unless waived by Foothill in Foothill's sole discretion in
accordance with the terms of Amendment No. 9 to Loan and Security Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date set forth on the first page hereof.
TEKINSIGHT SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name:Xxxxx Xxxxxxx
Title:Chief Financial Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------------
Name: Xxxxxxx X. XxXxxx
Title:Vice President
Acknowledged and Agreed upon
as of this 27 day of December, 2001
XXXXXXXXXX.XXX, INC.
a Delaware corporation, as Guarantor
By: /s/Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
EXHIBIT A
FORM OF UCC-3 AMENDMENT
FLORIDA UCC-3
EXHIBIT B
FORM OF ACKNOWLEDGEMENT OF BORROWER
ACKNOWLEDGEMENT AND CONSENT
Reference is hereby made to the Loan and Security Agreement, dated as of
September 30, 1998 (as amended by Amendment No. 1, dated as of September, 1999,
Amendment No. 2 and Waiver, dated as of September, 1999, Amendment No. 3, dated
as of December 13, 1999, Amendment No. 4, dated as of January 12, 2000,
Amendment No. 5, dated as of March 24, 2000, Amendment No. 6, dated as of May
26, 2000, Amendment No. 7, dated as of July 17, 2000, Amendment No. 8 and
Waiver, dated as of August 11, 2000, Amendment No. 9, dated as of March 30,
2001, Amendment No. 10, dated as of June 30, 2001 and Amendment No. 11 and
Waiver, dated as of December 27, 2001 (the "Eleventh Amendment") (as hereafter
modified, amended and/or restated from time to time, the "Loan Agreement and
Security Agreement"), among Foothill Capital Corporation, a California
corporation ("Foothill") and TekInsight Services, Inc., a Delaware corporation,
as successor in interest to Data Systems Network Corporation, a Michigan
corporation ("Borrower"). All terms used herein which are defined in the Loan
and Security Agreement have the same meanings herein as set forth in the Loan
and Security Agreement.
The undersigned hereby confirms and agrees that notwithstanding the
undersigned's name change from "TekInsight Services, Inc." to "DynTek Services,
Inc." (a) each Loan Document to which it is a party is, and shall continue to
be, in full force and effect and is hereby ratified and confirmed in all
respects except that on and after the Effective Date (as defined in the Eleventh
Amendment) all references in any such Loan Document to "the Loan and Security
Agreement", the "Agreement", "thereto", "thereof", "thereunder" or words of like
import referring to the Loan and Security Agreement shall mean the Loan and
Security Agreement as amended by the First through Eleventh Amendments,
inclusive, (b) any references to the terms "Borrower" and "Parent" shall refer
to "DynTek Services, Inc." and to "DynTek, Inc.", respectively, and (c) to the
extent that any such Loan Document purports to assign or pledge to Foothill, or
to grant to Foothill a security interest in or Lien on, any collateral as
security for the Obligations of Borrower from time to time existing in respect
of the Loan and Security Agreement and the Loan Documents, such pledge,
assignment and/or grant of the security interest or Lien is hereby ratified and
confirmed in all respects.
This Acknowledgement and Consent shall be construed under and governed by
the laws of the State of New York. Delivery of an executed counterpart of this
Acknowledgement and Consent by telefacsimile shall be equally effective as
delivery of a manually executed counterpart.
Dated: as of December 27, 2001
DYNTEK SERVICES, INC.
By:/s/ Xxxxx Xxxxxxx
-----------------------------
Name:Xxxxx Xxxxxxx
Title:Chief Financial Officer
EXHIBIT C
FORM OF ACKNOWLEDGEMENT OF PARENT
ACKNOWLEDGEMENT AND CONSENT
Reference is hereby made to the Loan and Security Agreement, dated as of
September 30, 1998 (as amended by Amendment No. 1, dated as of September, 1999,
Amendment No. 2 and Waiver, dated as of September, 1999, Amendment No. 3, dated
as of December 13, 1999, Amendment No. 4, dated as of January 12, 2000,
Amendment No. 5, dated as of March 24, 2000, Amendment No. 6, dated as of May
26, 2000, Amendment No. 7, dated as of July 17, 2000, Amendment No. 8 and
Waiver, dated as of August 11, 2000, Amendment No. 9, dated as of March 30,
2001, Amendment No. 10, dated as of June 30, 2001 and Amendment No. 11 and
Waiver, dated as of December 27, 2001 (the "Eleventh Amendment") (as hereafter
modified, amended and/or restated from time to time, the "Loan Agreement and
Security Agreement"), among Foothill Capital Corporation, a California
corporation ("Foothill") and TekInsight Services, Inc., a Delaware corporation,
as successor in interest to Data Systems Network Corporation, a Michigan
corporation ("Borrower"). All terms used herein which are defined in the Loan
and Security Agreement have the same meanings herein as set forth in the Loan
and Security Agreement.
The undersigned is a party to the Guaranty in which the undersigned
unconditionally guarantees the prompt payment by Borrower, as and when due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), of all amounts, at any time arising, in respect of the
Loan and Security Agreement or any other Loan Document.
The undersigned hereby confirms and agrees that notwithstanding the
undersigned's name change from "XxxXxxxxxx.Xxx, Inc." to "DynTek, Inc." (a) each
Loan Document to which it is a party is, and shall continue to be, in full force
and effect and is hereby ratified and confirmed in all respects except that on
and after the Effective Date (as defined in the Eleventh Amendment) all
references in any such Loan Document to "the Loan and Security Agreement", the
"Agreement", "thereto", "thereof", "thereunder" or words of like import
referring to the Loan and Security Agreement shall mean the Loan and Security
Agreement as amended by the First through Eleventh Amendments, inclusive, (b)
any references to the terms "Borrower" and "Parent" shall refer to "DynTek
Services, Inc." and to "DynTek, Inc.", respectively, and (c) to the extent that
any such Loan Document purports to assign or pledge to Foothill, or to grant to
Foothill a security interest in or Lien on, any collateral as security for the
Obligations of Borrower from time to time existing in respect of the Loan and
Security Agreement and the Loan Documents, such pledge, assignment and/or grant
of the security interest or Lien is hereby ratified and confirmed in all
respects.
This Acknowledgement and Consent shall be construed under and governed by
the laws of the State of New York. Delivery of an executed counterpart of this
Acknowledgement and Consent by telefacsimile shall be equally effective as
delivery of a manually executed counterpart.
Dated: as of December 27, 2001
DYNTEK, INC.
By:/s/Xxxxx Xxxxxxx
---------------------
Name:Xxxxx Xxxxxxx
Title: Chief Financial Officer
