Exhibit 10
"TERM LOAN AMENDMENT"
to
ADDENDUM TO AGREEMENT TO WHOLESALE FINANCING
This Amendment ("Amendment") to the Addendum to Agreement for Wholesale
Financing ("AWF") and the Addendum to Addendum to Agreement for Wholesale
Financing - Flexible Payment Plan ("FPP") is made as of October 27, 1995 by
and between Intelligent Electronics, Inc. ("IE"), CS Computers, Inc., CS
Computers of California, Inc., Intelevest Holdings, Inc., Intellicom
Solutions, Inc., Intelligent Advanced Systems, Inc., Intelligent Distribution
Services, Inc., Intelligent SP, Inc., Intelligent Systems Group, Inc.,
Intellinet, Ltd., Missing Link Communications, Inc., RND, Inc. and The Future
Now, Inc. (each a "Dealer" and collectively, the "Dealers") and IBM Credit
Corporation ("IBM Credit").
RECITALS:
A. Dealers and IBM Credit have entered into that certain Addendum to
Agreement for Wholesale Financing dated as of January 29, 1992, and the
Addendum to Addendum to Agreement for Wholesale Financing - Flexible Payment
Plan dated January 29, 1992 (both as amended, supplemented or otherwise
modified from time to time, the "Existing Agreement").
B. Dealers have requested that IBM Credit extend a term loan of
seventy-five million dollars ($75,000,000.00) to Dealers to expire as set
forth below.
C. The parties have agreed to modify the Existing Agreement as more
specifically set forth below, upon and subject to the terms and conditions
set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual agreements provided for
below and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Existing Agreement.
Section 2. Modifications to the Existing Agreement. The following
modifications are made to the Existing Agreement, and shall be effective as
of the date of the Term Loan (as defined herein) unless specified otherwise.
The date of the Term Loan shall be the date of this Amendment ( the "Loan
Date").
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(A) The FPP is hereby amended by deleting the Exhibit A thereto in its
entirety and substituting, in lieu thereof, the Exhibit A attached hereto.
(B) Paragraph 6 of the Letter Agreement dated January 25, 1994 between
IBM Credit, IE, et. al. (the "Letter Agreement"), which Letter Agreement
amended the then current Addendum to Agreement for Wholesale Financing and
the then current Addendum to Addendum to Agreement for Wholesale Financing -
Flexible Payment Plan, is hereby amended by inserting immediately following
subparagraph (a) of such paragraph the following new subparagraphs (b) and
(c):
"(b) Term Loan.
An advance shall be made hereunder to Dealers on the Loan Date in
the principal amount of $75,000,000.00 (the "Term Loan") the
proceeds of which shall be used to repay $75,000,000.00 of WCO
Advances owed to IBM Credit hereunder. The Term Loan shall
constitute a single advance and shall be in the form of a WCO
Advance. Except as set forth in this subparagraph, the Term Loan
shall be subject to all of the terms and provisions applicable to
other WCO Advances. Notwithstanding any other term or provision of
this Agreement applicable to WCO Advances, provided no Event of
Default has occurred and is continuing: (i) the Term Loan shall
accrue a finance charge each month equal to the product of the Term
Loan Rate, as defined herein, multiplied by the average daily
balance of the outstanding Term Loan for the applicable period,
(ii) the principal amount of the Term Loan shall be due and payable
the earlier of (x) the date that the Existing Agreement is
terminated and (y) February 3, 1997 (the "Loan End Date"), (iii)
subject to the following sentence, in the event that Dealers repay
any portion of the principal amount of the Term Loan before the
Loan End Date, Dealers shall pay to IBM Credit along with such
repayment a pre-payment fee of $50,000 ("Pre-Payment Fee"), (iv) if
on any date the principal balance of the Term Loan exceeds the Term
Loan Maximum Amount, the Term Loan shall be prepaid on such date in
an amount equal to such excess, and (v) repayments of the Term Loan
may not be reborrowed. Provided, however, if Dealers repay such
Term Loan pursuant to subsection (c) below, such Pre-Payment Fee
shall be waived by IBM Credit. For purposes of this subparagraph,
"Term Loan Rate" shall be the greater of (x) Prime Rate plus 1.875%
and (y) the Base Rate plus 1.0%." For purposes of this
subparagraph Term Loan Maximum Amount shall mean 80% of Eligible
Accounts."
"(c) Capital Infusions.
At any time prior to the Loan End Date, if Dealers receive proceeds
from an equity investment, debt issue or a capital infusion from
any source, 100% of such proceeds shall be immediately paid to IBM
Credit. Such proceeds shall be applied to reduce the principal
outstanding on the Term Loan."
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(C) Notwithstanding anything in the Existing Agreement, Dealers' total
outstanding indebtedness to IBM Credit shall not exceed the Qualifying
Collateral.
Section 3. Loan Fee. Dealers agree to pay to IBM Credit a fee of $25,000
promptly after the Loan Date.
Section 4. Conditions Precedent. The effectiveness of this Amendment is
subject to the prior or simultaneous satisfaction by Dealers of the following
conditions:
(A) IBM Credit shall have received counterparts of this Amendment
executed by a duly authorized officer of each Dealer;
(B) IBM Credit shall have delivered to Dealers counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
Section 5. Representations and Warranties. Dealers make to IBM Credit the
following representations and warranties all of which are material and are
made to induce IBM Credit to enter into this Amendment.
5.1 Violation of Other Agreements. The execution and delivery of this
Amendment does not violate or cause Dealers not to be in compliance with the
terms of any agreement to which Dealers are a party.
5.2 Litigation. Except as has been disclosed by Dealers to IBM Credit
in writing, there is no litigation, proceeding, investigation or labor
dispute pending or threatened against Dealers, which if adversely determined,
would materially adversely affect the ability of Dealers to perform their
obligations under the Existing Agreement, and the other documents,
instruments and agreements executed in connection therewith or pursuant
hereto.
5.3 Enforceability of Amendment. This Amendment has been duly
authorized, executed and delivered by Dealers and is enforceable against
Dealers in accordance with its terms.
Section 6. Rights and Remedies. IBM Credit reserves any and all rights and
remedies that IBM Credit now has or may have in the future with respect to
Dealers including any and all rights and remedies which it may have as a
result of Dealers failure to comply with its financial covenants to IBM
Credit. Except to the extent specifically waived herein neither this
Amendment, any of IBM Credit's actions or IBM Credit's failure to act shall
be deemed to be a waiver of any such rights or remedies.
Section 7. Ratification of Agreement. Except as specifically amended
hereby, all the provisions of the Existing Agreement shall remain in full
force and effect. Dealers hereby ratify, confirm and agree that the Existing
Agreement, as amended hereby, represents a valid and enforceable obligation
of Dealers, and is not subject to any claims, offsets or defenses.
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Section 8. Governing Law. This Amendment shall be governed by and
interpreted in accordance with the laws of the State of Illinois, without
reference to the conflict of laws principles thereof.
Section 9. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, this Amendment has been executed by the duly
authorized officers of the undersigned as of the day and year first above
written.
Acknowledged and agreed as of the
date set forth above
IBM Credit Corporation Intelligent Electronics, Inc.
By: /s/ X.X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------- --------------------------------
Name: X. X. Xxxxxxxxx NAME: Xxxxxxx X. Xxxxxxx
Title: Director, Remarketer Financing Title: Chairman of the Board
Support Chief Executive Officer
Acknowledged and agreed as of the Acknowledged and agreed as of the
date set forth above date set forth above
CS Computers, Inc. CS Computers of California, Inc.
By: /s/ X.X. Xxxxxx By: /s/ X.X. Xxxxxx
-------------------------------- --------------------------------
Print Name: X. X. Xxxxxx Print Name: X. X. Xxxxxx
Title: V.P., CFO & Assistant Title: V.P., CFO & Assistant
Secretary Secretary
Acknowledged and agreed as of the Acknowledged and agreed as of the
date set forth above date set forth above
Intelevest Holdings, Inc. IntelliCom Solutions, Inc.
By: /s/ Xxxx Xxxxxxx By: /s/ X.X. Xxxxxx
-------------------------------- --------------------------------
Print Name: Xxxx Xxxxxxx Print Name: X. X. Xxxxxx
Title: V.P., Treasurer Title: V.P., CFO & Assistant
Secretary
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Acknowledged and agreed as of the Acknowledged and agreed as of the
date set forth above date set forth above
Intelligent Advanced Systems, Inc. Intelligent Distribution
Systems, Inc.
By: /s/ X.X. Xxxxxx By: /s/ X.X. Xxxxxx
-------------------------------- --------------------------------
Print Name: X. X. Xxxxxx Print Name: X. X. Xxxxxx
Title: V.P., CFO & Assistant Title: V.P., CFO & Assistant
Secretary Secretary
Acknowledged and agreed as of the Acknowledged and agreed as of the
date set forth above date set forth above
Intelligent SP, Inc. Intelligent Systems Group, Inc.
By: /s/ X.X. Xxxxxx By: /s/ X.X. Xxxxxx
-------------------------------- --------------------------------
Print Name: X. X. Xxxxxx Print Name: X. X. Xxxxxx
Title: V.P., CFO & Assistant Title: V.P., CFO & Assistant
Secretary Secretary
Acknowledged and agreed as of the Acknowledged and agreed as of the
date set forth above date set forth above
Intellinet, Ltd. Missing Link Communications, Inc.
By: /s/ X.X. Xxxxxx By: /s/ Xxxxxxxxx Xxxxx
-------------------------------- --------------------------------
Print Name: X. X. Xxxxxx Print Name: Xxxxxxxxx Xxxxx
Title: V.P., CFO & Assistant Title: V.P., Secretary & Treasurer
Secretary
Acknowledged and agreed as of the Acknowledged and agreed as of the
date set forth above date set forth above
RND, Inc. The Future Now, Inc.
By: /s/ X.X. Xxxxxx By: /s/ Xxxxxxxxx Xxxxx
-------------------------------- --------------------------------
Print Name: X. X. Xxxxxx Print Name: Xxxxxxxxx Xxxxx
Title: V.P., CFO & Assistant Title: V.P., Secretary & Treasurer
Secretary
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Addendum to Agreement for Wholesale Financing Flexible Payment Plan
Exhibit A
CUSTOMER: Intelligent Electronics, Inc.
Commencement Date: January 1, 1992 Effective Date: October 27, 1995
1. FPP Fees, Rates and Repayment and Terms
(a) FPP Credit Line: $180.0 Million, plus a $90.0 Million seasonal uplift
(i) 100% on IBM Inventory
(ii) 80% on Eligible Accounts except for Accounts generated by
The Future Now, Inc.
(iii) 60% on Eligible Accounts generated by The Future Now, Inc. sales
Note: The above calculations for Qualifying Collateral will be reduced by
40% of the Total Amount Financed by IBM Credit Corporation under the Term
Lease Master Agreement between Customer and IBM Credit Corporation.
(b) Payment due dates: 5th, 15th, and 25th of each month
(c) Monthly Service Fee: $4,000.00
(d) Base Period (BP) Repayment Term:
- 130 days from date of invoice for product invoices purchased by IBM
Credit from the IBM Personal Computer Company and Lexmark
International, Inc.
(e) BP Non-Fee Period: 45 Days
(f) Interest Rate after BP Non-Fee Period ("Base Rate"):
- Prime Rate plus 0.875%
(g) Working Capital Loan Option (WCO) Terms: 180 Days
- WCO Interest Rate: Base Rate
(h) Payment Reschedule Option (PRO) Term: 30 Days
- PRO Interest Rate: Base Rate
(i) Cash Advance Option (CAO) Term: N/A
- CAO Interest Rate: N/A
(j) Delinquency Fee Rate: Prime Rate Plus 6.5%
2. Definitions
The following terms shall have the following respective meanings in this FPP
Exhibit. All amounts shall be determined in accordance with generally
accepted accounting principles (GAAP).
"Current Assets" means, as of any date of determination, the consolidated
assets of Dealer that would be classified as current assets in accordance
with GAAP.
"Current Liabilities" means, as of any date of determination, the
consolidated liabilities of the Dealer, that would be classified as current
liabilities in accordance with GAAP, including, without limitation, all
indebtedness of the Dealer payable on demand or maturing within one year of
such date, or renewable at the option of the Dealer for a period of not more
than one year from such date, and all serial maturity and periodic or
installment payments (including, without limitation, sinking fund payments)
on any indebtedness, to the extent such payments are required to be made
within one year from such date.
"Net Profit After Tax" means, for any period in respect of which the amount
thereof shall be determined, the aggregate of the consolidated net income
after taxes for such period (taken as a cumulative whole) of the Dealer all
as determined in accordance with GAAP.
"Revenue" means, for any period in respect of which the amount thereof shall
be determined, the aggregate of the consolidated total or gross income or
sales for such period (taken as a cumulative whole) of the Dealer as
determined in accordance with GAAP.
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"Tangible Net Worth" means, as of any date of determination, Total Net Worth
minus:
(a) goodwill, organizational expenses, research and development
expenses, software development costs, trademarks, names, trade
names, copyrights, patents, patent applications, privileges,
franchises, licenses and rights in any thereof, and other similar
intangibles (but not including contract rights);
(b) all deferred charges or unamortized debt discounts and expenses;
and
(c) all accounts receivable from officers, directors and stockholders;
and
(d) all callable/redeemable preferred stock
"Total Liabilities" means, as of any date of determination, consolidated
liabilities of the Dealer at such date, determined in accordance with GAAP.
"Total Net Worth" means, as of any date of determination, the consolidated
stockholders' equity of the Dealer as determined in accordance with GAAP.
3. Dealer's Financial Covenants
(a) Dealer agrees to maintain the following financial covenants at all times:
(i) Total Liabilities to Tangible Net Worth ratio equal to or less than
6.5 to 1, provided that Tangible Net Worth must be greater than
zero;
(ii) Current Assets to Current Liabilities ratio greater than or equal
to 1.05 to 1;
(iii) Tangible Net Worth greater than or equal to $60 million;
(b) Dealer agrees to maintain the Net Profit After Tax to Revenue (in each
case without regard to amounts attributable to discontinued operations)
ratio greater than or equal to 0.5%, for each fiscal quarter commencing
with the fiscal quarter ending October 28, 1995 and thereafter.
Dealer understands and agrees that its failure to maintain the preceding
financial covenants shall be an event of Default.
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4. Tier Periods
As used in the definitions of "Tier I Period", "Tier II Period" and "Tier III
Period" below, a "period" shall mean an interval of time commencing from the
date Dealers deliver to IBM Credit financial statements with respect to a
fiscal period and ending on the date Dealers deliver to IBM Credit financial
statements with respect to the immediately succeeding fiscal period. As used
in the preceding sentence, a "fiscal period" means (i) in the case of each of
the first three fiscal quarters of a fiscal year, such fiscal quarter and
(ii) in the case of the fourth fiscal quarter of a fiscal year, such fiscal
year. Dealers' failure to deliver the above referenced financial reports
within the number of days specified in the Agreement will constitute a
default under the Agreement.
"Tier I Period" means each period with respect to which (i) the ratio of
Dealer's Total Liabilities to Tangible Net Worth (the "Leverage Ratio")
during the immediately preceding fiscal period is greater than zero and is
less than or equal to 5.5 to 1, (ii) the ratio of Dealer's Current Assets to
Dealer's Current Liabilities (the "Current Ratio") during such fiscal period
is greater than or equal to 1.15 to 1, (iii) Tangible Net Worth during such
fiscal period is greater than or equal to $70 million and (iv) the ratio of
Dealer's Net Profit After Tax to Dealers Revenue (in each case determined
without regard to amounts attributable to discontinued operations) (the "NAT
Ratio") as of such fiscal quarter is greater than or equal to 1.0%.
"Tier II Period" means each period (x) with respect to which (i) the Leverage
Ratio during the immediately preceding fiscal period is greater than zero and
is less than or equal to 6.0 to 1, (ii) the Current Ratio during such fiscal
period is greater than or equal to 1.10 to 1, (iii) Tangible Net Worth during
such fiscal period is greater than or equal to $65 million and (iv) the NAT
Ratio as of such fiscal quarter is greater than or equal to 0.5% and (y)
which is not a Tier I Period.
"Tier III Period" means each period which is not a Tier I Period or a Tier II
Period.
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