FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND RELATED LOAN DOCUMENTS
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND
RELATED LOAN DOCUMENTS (this "AMENDMENT") is made and entered into as of
November 15, 1996, by and between SBS TECHNOLOGIES, INC. (formerly known as
SBS Engineering, Inc.), a New Mexico corporation ("BORROWER"), and
NATIONSBANK OF TEXAS, N.A., a national banking association ("LENDER"), and is
acknowledged and consented to by ▇▇▇▇ SYSTEMS INTERNATIONAL, INC., a
California corporation ("▇▇▇▇"), GREENSPRING COMPUTERS, INC., a California
corporation ("GREENSPRING"), LOGICAL DESIGN GROUP, INC., a North Carolina
corporation ("LDG"), and Bit 3 Computer Corporation, a Minnesota corporation
("BIT 3").
W I T N E S S E T H:
I. Borrower and Lender have previously executed and entered into that
certain Amended and Restated Credit Agreement (as modified or amended from
time to time, the "CREDIT AGREEMENT"), dated as of April 26, 1996 related to
a $6,750,000 term loan and a $2,500,000 revolving line of credit as therein
described. The Credit Agreement was executed in amendment and restatement of
that certain Credit Agreement dated April 28, 1995, executed by and between
Borrower and Lender. Each capitalized term used in this Amendment and not
otherwise defined herein shall have the meaning ascribed thereto in the
Credit Agreement.
II. Borrower has acquired (the "LDG ACQUISITION") 100% of the issued
and outstanding capital stock of LDG in accordance with the terms of that
certain Pooling Agreement dated August 19, 1996, executed by and between
Borrower, as purchaser, and LDG and certain individuals, as seller.
III. Borrower has acquired (the "BIT 3 ACQUISITION") 100% of the issued
and outstanding capital stock of Bit 3 in accordance with the terms of that
certain Pooling Agreement dated October 8, 1996, executed by and between
Borrower, as purchaser, and Bit 3 and certain individuals, as seller.
IV. Borrower requested Lender's consent to the LDG Acquisition and the
Bit 3 Acquisition (sometimes hereinafter referred to collectively as the
"ACQUISITIONS") prior to the consummation thereof since the Acquisitions are
not permitted under the terms of the Credit Agreement. As a condition to
Lender's consent to each of the Acquisitions, Borrower and Lender agreed to
modify and amend the Credit Agreement and the other Loan Documents in certain
respects, and agreed that LDG and Bit 3 would each guarantee the entire
Obligation under the Loan.
V. In connection with the Bit 3 Acquisition, Borrower incurred no
$11,000,000 charge for purchased Research and Development originating from
the Bit 3 Acquisition. Borrower has
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 1
AND RELATED LOAN DOCUMENTS
requested that such charge not be included for purposes of calculating
certain financial covenants under the Loan Agreement in order to maintain
compliance with such covenants.
VI. SBS desires to sell substantially all of the assets of its
Interactive Computerized Arms Trainer (ICAT) Judgmental Use of Force division
(the "ICAT Division") to Firearms Training Systems, Inc. ("FTS") in
accordance with the Purchase Agreement dated June 26, 1997, executed by and
between SBS and FTS (the "ICAT Purchase Agreement"), and has requested
Lender's consent to the sale of such assets.
VII. Borrower and Lender desire to amend the Credit Agreement and all
of the other Loan Documents as herein provided, and LDG, Bit 3, ▇▇▇▇ and
GreenSpring desire to acknowledge and consent to the same.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), the covenants and agreements set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged and confessed, the parties hereto hereby covenant and
agree as follows:
1. MODIFICATIONS TO CREDIT AGREEMENT AND LOAN DOCUMENTS.
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(a) From and after the respective effective date of the LDG Acquisition
and the Bit 3 Acquisition, each of LDG and Bit 3 shall for all purposes be a
Guarantor and a Subsidiary under, and as such terms are defined in, the
Credit Agreement, and all references to such terms in the credit Agreement
and all of the other Loan Documents shall refer to and include LDG and Bit 3,
in addition to ▇▇▇▇ and GreenSpring. Notwithstanding anything to the contrary
in the foregoing sentence or in any of the Loan Documents, including without
limitation the Collateral Documents. LDG and Bit 3 will not be required to
execute a security agreement in favor of Lender covering their respective
assets, and the assets of LDG and Bit 3 will not be subject to Lender's liens
and security interests securing the Loan.
(b) The following Exhibits to the Credit Agreement are hereby deleted
in their entirety and replaced with the corresponding Exhibits attached
hereto as Schedule I and Schedule II and incorporated herein and in the
Credit Agreement for all purposes: Exhibit G (Description of Existing Debt)
and Exhibit H (List of Subsidiaries).
(c) Any and all of the terms and provisions of the Credit Agreement,
the Notes and any and all other Loan Documents are hereby amended and
modified wherever necessary, and even though not specifically addressed
herein, so as to conform to the amendments and modifications set forth herein.
(d) Any and all of the terms and provisions of the Credit Agreement,
the Notes and any and all other Loan Documents shall, except as modified and
amended hereby, remain in full force
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 2
AND RELATED LOAN DOCUMENTS
(e) The full name of the entity defined as "JAMS" in Section 9.11(a) of
the Credit Agreement is hereby changed to "ENDISPUTE, INC. D/B/A/
J.A.M.S.ENDISPUTE".
2. CERTAIN REQUIREMENTS. Borrower shall deliver, or cause to be
delivered, to Lender all of the following items as a condition to the
effectiveness of this Amendment:
(a) LDG and Bit 3 shall each execute and deliver to Lender a Guaranty
Agreement related to the Credit Facility substantially in the form of the
guaranty agreement executed by each of ▇▇▇▇ and GreenSpring guaranteeing the
Loan.
(b) The following corporate documents related to LDG and Bit 3:
(i) Complete copies of the Certificate of Incorporation or
Articles of Incorporation and all amendments thereto, of LDG and bit 3,
certified to be true and correct by an authorized officer of the respective
corporations;
(ii) Copies of the Bylaws of LDG and bit 3 certified to be true
and correct by an authorized officer of the respective corporation;
(iii) Copies of certified corporate resolutions of each of LDG and
Bit 3 approving the terms of this Amendment, the Credit Agreement, its
respective Guaranty Agreement, the modifications to certain of the Loan
Documents, and each other Loan Documents, the granting of any and all liens
contained therein, and the due execution of all the applicable Loan Documents
by authorized officers of LDB or Bit 3, as the case may be;
(iv) Certificates of incumbency for the respective officers of LDG
and Bit 3; and
(v) Certificates of good standing and existence issued by the
state of incorporation of LDG and Bit 3 and from the appropriate governmental
authority of each state in which LDG and Bit 3 are required by applicable law
to be qualified.
(c) The following corporate documents related to Borrower, ▇▇▇▇ and
GreenSpring:
(i) A certificate of the Secretary of Assistant Secretary of
Borrowing certifying (A) that, except as indicated therein, there has been no
change to the articles of incorporation or bylaws of Borrower, ▇▇▇▇ or
GreenSpring since the same were furnished to Lender in connection with the
execution of the Credit Agreement, 9B) as to the name and title of the
officers of Borrower, ▇▇▇▇ and GreenSpring and the authority of such officers
to execute the agreements required by this Amendment and the Consent Letter,
and (C) true, correct and complete resolutions of the Board of Directors of
Borrower authorizing the execution of this Amendment and all of the other
documents executed respectively by such parties in connection herewith; and
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 3
AND RELATED LOAN DOCUMENTS
(ii) Certificates of good standing and existence issued by the
state of incorporation of Borrower, ▇▇▇▇ and GreenSpring, as applicable, and
from the appropriate governmental authority of each state in which Borrower
is required by applicable law to be qualified.
(d) Lender must receive, in form and substance satisfactory to Lender,
such other documents and instruments as Lender may reasonably request in
connection with this Amendment, including without limitation a copy of the
stock purchase agreements and related documents and UCC search certificates
related to the Acquisitions and a copy of the final, executed ICAT Purchase
Agreement.
3. MODIFICATION OF FINANCIAL COVENANTS. For purposes of determining
compliance with the financial covenants applicable to Borrower set forth in
Sections 6.7, 6.8 and 6.9 of the Loan Agreement, the $11,000,000 one-time
non-cash charge taken by Borrower for "Research and Development in Process"
associated with the Bit 3 Acquisition, as reflected in Borrower's second
quarter 1997 financial statements submitted to Lender, shall not be taken
into account in the calculation of such covenants for the applicable quarter
and 1997 fiscal year periods. No exclusions or waivers for additional charges
or for other periods shall be inferred or permitted from the foregoing.
4. SALE OF ICAT DIVISION. Lender consents to the sale by Borrower of
all or substantially all of the assets included in its INCAT Division
according to Borrower's books and as shown in the ICAT Purchase Agreement, on
the terms set forth in the ICAT Purchase Agreement, and agrees that such sale
in and of itself shall not be a default under the Loan Documents.
5. REPRESENTATION AND WARRANTIES. Borrower hereby represents and
warrants to Lender.
(a) No Default or Event of Default is in existence under the Loan
Documents, and all of the representations and warranties contained in ARTICLE
VII of the Credit Agreement and in the other Loan Documents are true and
correct in all material respects.
(b) Each of Borrower; ▇▇▇▇, GreenSpring, LDG and Bit 3 have taken all
requisite corporate action necessary for each of them to enter into and
perform their respective agreements set forth in this Amendment and all the
documents executed in connection herewith, and each of the signatories below
has been duly authorized by all necessary corporate action to make and enter
into this Amendment as the duly authorized act and deed of each such entity.
6. COSTS AND EXPENSES. Borrower shall pay all costs and expenses,
including reasonable attorneys' fees, of Lender in connection with the
drafting, negotiation and closing of this Amendment and the documents to be
executed and delivered pursuant hereto and the recordation and filing of any
such documents in connection therewith.
7. CONTINUING LIENS. This Amendment shall in no manner effect or
impair the liens or security interests securing payments of the Obligation,
and, except as provided in Paragraph 1(a)
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 4
AND RELATED LOAN DOCUMENTS
hereof, such liens and security interests shall not in any manner be waived,
which liens are acknowledged by each of Borrower, ▇▇▇▇, GreenSpring, LDG and
Bit 3 to be valid and subsisting.
8. GUARANTOR ACKNOWLEDGMENTS; COMMON ENTERPRISES. Each of LDG, Bit 3,
▇▇▇▇ and GreenSpring (collectively, "Guarantors") is executing this Amendment
in order to acknowledge and consent to the terms and conditions hereof.
Borrower and Guarantors are engaged in related businesses as set forth in
Borrower's Financial Statements. These operations require financing on a
basis such that the credit supplied can be made available from time to time
to Borrower and Guarantors, as required for the continued successful
operation of Borrower and Guarantors. Borrower has requested that Lender make
the Advances under the Credit Agreement available primarily for the purposes
of financing the operations of Borrower and Guarantors. Borrower and
Guarantors expect to derive benefit (and the boards of directors or other
governing body of each of Borrower and Guarantors may reasonably be expected
to derive benefit), directly or indirectly, from Advances under the Credit
Agreement, both in their separate capacities and as members of the group of
companies, since the successful operation and condition of Borrower and each
Guarantor is dependent on the continued successful performance of the
functions of the group as a whole.
9. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon, and
shall inure to the benefit of, the parties and their respective
representatives, successors and assigns.
10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
11. FINAL AGREEMENT. THIS WRITTEN AMENDMENT, TOGETHER WITH THE OTHER
WRITTEN MODIFICATION DOCUMENTS AND THE LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE MATTERS ADDRESSED
HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES HERETO. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.
12. COUNTERPARTS. This Amendment may be executed in any number of
original counterparts, each of which when so executed and delivered shall be
deemed an original, and all of which, collectively, shall constitute one
agreement, it being understood and agreed that the signature pages may be
detached from one of such counterparts and combined with the signature pages
from any other counterpart in order that one or more fully executed originals
may be assembled.
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEEMENT Page 5
AND RELATED LOAN DOCUMENTS
IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the date first above written.
BORROWER:
SBS TECHNOLOGIES, INC. (formerly
known as SBS Engineering, Inc.),
a New Mexico corporation
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
LENDER:
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: Vice President
-----------------------------
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEEMENT Page 6
AND RELATED LOAN DOCUMENTS
CONSENT AND AGREEMENT OF LOGICAL DESIGN GROUP, INC.
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LDG hereby consents and agrees to the terms and provisions of the Credit
Agreement and this Amendment, including without limitation the addition of
LDG as a Guarantor and a Subsidiary, and agrees to be bound by the provisions
thereof relating to LDG in either such capacity.
LOGICAL DESIGN GROUP, INC.,
a New Mexico corporation
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Title: President
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CONSENT AND AGREEMENT OF BIT 3 COMPUTER CORPORATION
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Bit 3 hereby consents and agrees to the terms and provisions of the
Credit Agreement and this Amendment, including without limitation the
addition of Bit 3 as a Guarantor and a Subsidiary, and agrees to be bound by
the provisions thereof relating to Bit 3 in either such capacity.
BIT 3 COMPUTER CORPORATION,
a Minnesota corporation
By: /s/ ▇.▇. ▇▇▇▇▇
----------------------
Name: ▇.▇. ▇▇▇▇▇
--------------------
Title: Secretary/Treasurer
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FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEEMENT Page 7
AND RELATED LOAN DOCUMENTS
CONSENT OF EXISTING GUARANTORS
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Each of the undersigned Subsidiaries hereby acknowledges and agrees to
the modifications of the Credit Agreement and other Loan Documents made
and/or contemplated in this Amendment, and in particular to the provisions of
Paragraph 8 of this Amendment, and further acknowledges and agrees that it's
Guaranty Agreement, as modified by this Amendment and the documents executed
in connection herewith, is and remains in full force and effect.
▇▇▇▇ SYSTEMS INTERNATIONAL, INC., a
California corporation
By: /s/ ▇.▇. ▇▇▇▇▇
--------------
Name: ▇.▇. ▇▇▇▇▇
------------
Title: Treasurer
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GREENSPRING COMPUTERS, INC., a California
Corporation
By: /s/ ▇.▇. ▇▇▇▇▇
--------------
Name: ▇.▇. ▇▇▇▇▇
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Title: Secretary
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FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEEMENT Page 8
AND RELATED LOAN DOCUMENTS
SCHEDULE I
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EXHIBIT "G"
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TO CREDIT AGREEMENT
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DESCRIPTION OF EXISTING DEBT
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1. Unsecured obligation to ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ under Non-Compete Covenant
executed August 20, 1992, with unpaid balance of $129,982 as of April 26,
1996.
2. Promissory note (purchase money note for software) payable to The CIT
Group dated September 27, 1993, with unpaid principal balance of $11,372
as of April 26, 1996.
3. Capital equipment lease payable to The CIT Group dated September 27,
1993, with unpaid principal balance of $10,851 as of April 26, 1996.
SCHEDULE I TO FIRST AMENDMENT TO AMENDED AND RESTATED Page 1
CREDIT AGREEMENT AND RELATED LOAN DOCUMENTS
SCHEDULE II
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EXHIBIT "H"
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TO CREDIT AGREEMENT
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LIST OF SUBSIDIARIES
--------------------
SUBSIDIARY % OF STOCK OWNED BY BORROWER
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▇▇▇▇ Systems International, Inc. 100%
GreenSpring Computers, Inc. 100%
Logical Design Group, Inc. 100%
Bit 3 Computer Corporation 100%
SCHEDULE II TO FIRST AMENDMENT TO AMENDED AND RESTATED Page 1
CREDIT AGREEMENT AND RELATED LOAN DOCUMENTS