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EXHIBIT 10.20
Table of Contents
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING 1
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W I T N E S S E T H 1
A G R E E M E N T 2
1 Line of Credit 2
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2. Reporting Requirements 3
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3. Payment Terms 7
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4. High Turnover Option 12
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5. Statements Regarding Borrower's Account 12
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6. Security 12
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7. Location of Collateral and Inspection Rights 14
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8. Use of Collateral 15
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9. Insurance of Collateral 15
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10. Issues Involving Quality of Products 16
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ll. Additional Warranties, Representations and Covenants 16
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12. Financial Covenants 29
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13. Events of Default; Power of Attorney 31
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14. Warranty of Collateral 37
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15. Term; Termination 37
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16. Confidentiality Statement 38
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17. Fees and Expenses; Indemnity 39
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18. Miscellaneous 39
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19. Definitions - General 41
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20. Accounting Terms and Determinations 51
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21. Other Defined Terms 22
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22. Conditions Precedent to the Effectiveness of this Agreement 52
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23. Conditions Precedent to Each Advance 54
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24. Amendment and Restatement; Etc. 54
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25. SUBMISSION AND CONSENT TO JURISDICTION 55
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26. GOVERNING LAW 55
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27. JURY TRIAL WAIVER 55
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Exhibits 57
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EXHIBIT A 58
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AUTHORIZED SUPPLIER CLAIMS REPORT 58
EXHIBIT B 59
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LOCKBOX BANK BALANCES 59
EXHIBIT C 60
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Additional Reporting Requirements 60
EXHIBIT D 62
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Locations Where Collateral Will Be Kept 62
EXHIBIT E 63
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Intellectual Property 63
EXHIBIT F-A 64
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Existing Secured Indebtedness 64
EXHIBIT F-B 65
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Other Existing Indebtedness 65
EXHIBIT G 66
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Existing Investments 66
EXHIBIT H 67
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UCC Financing Statement Filing Locations 67
EXHIBIT I 68
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List of Authorized Suppliers 68
EXHIBIT J 69
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COMPLIANCE CERTIFICATE 69
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THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A CERTAIN AMENDED AND RESTATED
INTERCREDITOR AGREEMENT DATED AS OF APRIL 21, 1995 AMONG IBM CREDIT CORPORATION,
DEUTSCHE FINANCIAL SERVICES CORPORATION, FORMALLY KNOWN AS ITT COMMERCIAL
FINANCE CORP., CITIBANK N.A., HEWLETT-PACKARD COMPANY, FINOVA CAPITAL
CORPORATION, AND ENTEX HOLDINGS, INC., AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, AS THE SAME HAS BEEN AND MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE
MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH ITS TERMS, AND THE OTHER
AGREEMENTS AS DEFINED THEREIN.
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
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This Fourth Amended and Restated Agreement for Wholesale Financing (hereinafter
referred to as this "Agreement") is hereby made as of the 15 day of September,
1995 by and between IBM CREDIT CORPORATION, a Delaware corporation (hereinafter
referred to, together with its successors, as "IBM Credit"), and ENTEX
Information Services, Inc., a Delaware corporation, with its principal place of
business located at Six ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(hereinafter referred to, together with its successors, as "Borrower").
W I T N E S S E T H:
WHEREAS, IBM Credit Corporation and Borrower are parties to that certain Third
Amended and Restated Agreement for Wholesale Financing dated as of August 6.
1993 (together with all amendments, addenda and supplements thereto executed
through the date hereof being referred to, collectively, as the "Existing
Agreement");
WHEREAS, this Agreement amends and restates the Existing Agreement in
full and in its entirety;
WHEREAS, in the course of Borrower's operation, Borrower purchases
products manufactured or sold by or bearing the trade name or trademark of the
companies listed in Exhibit I attached hereto an of the Effective Date of this
Agreement (together with their successors and any other Person which
manufactures, sells or distributes products purchased by Borrower that are
approved for financing under this Agreement by IBM Credit in writing, in each
case so long as Borrower is not notified in writing to the contrary by IBM
Credit in its sole discretion, are hereinafter referred to as, the "Authorized
Suppliers") (products approved for purposes of this Agreement by IBM Credit in
writing and in respect of which IBM Credit advances or commits to advance funds
to the applicable Authorized Supplier in connection with Borrower's acquisition
thereof, the "Financed Products") for distribution throughout the United States;
and
WHEREAS, Borrower has requested that IBM Credit finance
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the purchase by Borrower of the Financed Products from the Authorized Suppliers
and provide financing for other corporate purposes and IBM Credit is willing to
provide such financing to Borrower subject to the terms and conditions set forth
in this Agreement;
A G R E E M E N T:
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained in this Agreement, Borrower and IBM Credit
hereby agree as follows:
l. Line of Credit. IBM Credit hereby extends to Borrower a line of
credit ("Line of Credit") pursuant to which IBM Credit will make Advances (as
hereinafter defined) during the Revolving Period (as hereinafter defined), on
the terms and subject to the conditions set forth in this Agreement, in
connection with (i) purchases by Borrower of Financed Products from the
Authorized Suppliers and (ii) Working Capital Advances (as hereinafter defined).
The amount of the Line of Credit shall be $275,000,000 on any day, of which (x)
not more than $10,500,000 shall be available for ▇▇▇▇▇▇ Micro Advances (as
hereinafter defined) and (y) not more than $264,500,000 shall be available for
all other Advances (as hereinafter defined).] "▇▇▇▇▇▇ Micro Advances" are
defined as the aggregate outstanding principal amount of all Advances made in
respect of Financed Products purchased or to be purchased by Borrower from
▇▇▇▇▇▇ Micro. IBM Credit may at any time or from time to time in its sole
discretion reduce the amount of the Line of Credit upon sixty (60) days' prior
written notice to Borrower. Notwithstanding the foregoing, IBM Credit may
discontinue making Advances without notice to Borrower at any time following the
occurrence of an Event of Default (as defined in Section 13) or any event or
condition which, with the giving of notice or lapse of time or both, would,
unless cured or waived, become an Event of Default (a "Default"). For purposes
of this Agreement, "Advance" shall mean any loan or other extension of credit by
IBM Credit Agreement to Borrower pursuant to this Agreement and shall include
(x) any advance of funds made or committed to be made by IBM Credit to an
Authorized Supplier in respect of an invoice delivered by such Authorized
Supplier to IBM Credit describing Financed Products purchased or to be purchased
by Borrower, (y) all "Advances" to Borrower outstanding as of the date hereof
and (z) Working Capital Advances. Borrower hereby authorizes and directs IBM
Credit to pay the proceeds of Advances (other than any Working Capital Advances)
directly to Authorized Suppliers in respect of such invoices and acknowledges
that each such Advance constitutes a loan by IBM Credit to Borrower pursuant to
this Agreement. In no event shall IBM Credit be obligated to make any advance or
extend credit under the Line of Credit if, after giving effect to such advance
or extension of credit, the conditions precedent set forth in Section 23 are not
satisfied.
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2. Reporting Requirements.
(a) Borrower shall forward to IBM Credit by the twentieth (20th) day
of each month for the previous month end reporting period a report in form and
detail satisfactory to IBM Credit (it being understood that the degree of detail
provided in Exhibit A is satisfactory) which will disclose all claims for
rebates, discounts, credits, warranties and incentive payments which Borrower
has submitted to an Authorized Supplier or to Hewlett-Packard Company but for
which Borrower has not been paid (any such claims submitted to any Authorized
Supplier or to Hewlett-Packard Company being herein referred to as "Authorized
Supplier Claims") and in which IBM Credit has a valid, perfected, first priority
security interest under this Agreement. All Authorized Supplier Claims, except
for warranty claims, shall be submitted to the applicable Authorized Supplier by
the end of the prior month. Warranty claims will be included if received by the
applicable Authorized Supplier before the twenty-fifth (25th) day of the prior
month.
(b) Borrower shall provide the following reports to IBM Credit as
indicated:
(i) On each Business Day, a report, substantially in the form
attached to this Agreement as in form and detail satisfactory to IBM
Credit (it being understood that the form and degree of detail provided
in Exhibit B, attached hereto as an example, is satisfactory) listing as
of the end of the immediately preceding Business Day the balance of each
of Borrower's lockbox bank accounts. Upon request, Borrower shall
provide IBM Credit copies of all bank statements received by Borrower in
respect of such lockbox bank accounts.
(ii) Together with the quarterly and annual financial statements
required to be delivered pursuant to Section 2(c), a certification of an
authorized officer of Borrower that they have been prepared in
accordance with generally accepted accounting principles as in effect
from time to time ("GAAP") consistently applied (except, in the case of
any monthly or quarterly financial statements, for the absence of
notes), that they fairly present the financial condition of Borrower
and/or its consolidated Subsidiaries, as the case may be, (subject, in
the case of any monthly or quarterly financial statements, to normal
year-end adjustments) and that no condition or event exists, of which
such officer is aware, which would constitute a Default or an Event of
Default hereunder. A schedule shall also be included to show the
computations used by Borrower in determining compliance with the
financial covenants contained in Section 12.
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(iii) Together with the annual financial statements required to
be delivered pursuant to Section 2(c), an unqualified opinion of the
Auditors, which opinion shall be in scope and substance satisfactory to
IBM Credit (it being understood that such opinion shall not cover
comparative figures for the preceding fiscal year and budgeted
projections for the fiscal year then ended), and the Auditors' related
"Management Letter" to Borrower. A schedule (not audited by Auditors)
shall also be included to show the computations used by Borrower in
determining compliance with the financial covenants contained in Section
12.
(iv) (A) no later than thirty (30) days after the end of each
fiscal year of Borrower, the projected annual budget, balance sheet,
income statement, and cash flow of Borrower for the new fiscal year of
Borrower.
(v) Promptly upon the earlier of the mailing, filing or receipt
thereof, (A) copies of all ▇▇-▇▇, ▇▇-▇▇, ▇-▇▇, proxy statements, annual
reports, quarterly reports, registration statements and any other
filings made by Borrower or any of its Subsidiaries with the Securities
Exchange Commission from time to time, and (B) copies of all other
communications between or among Borrower and any of its creditors with
respect to borrowed money (other than communications relating to
ministerial matters under the related documents or requests for
information from any such creditor to Borrower) when such communications
involve matters that could materially affect the lending relationship
between Borrower and such creditor.
(vi) (A) Promptly and in any event within two (2) Business Days
after obtaining actual knowledge of the occurrence of a Default or Event
of Default, a certificate of the Chief Executive Officer, Chief
Financial Officer, or Vice President & Treasurer of Borrower specifying
the nature thereof and within five (5) Business Days after obtaining
actual knowledge of such occurrence, Borrower's proposed response
thereto, each in reasonable detail and (B) promptly and in any event
within two (2) Business Days after becoming aware of the existence of
any condition or event which would result in Borrower's failure to
satisfy the conditions precedent to Advances set forth in Section 23, a
certificate of the chief executive officer, chief financial officer, or
Vice President & Treasurer of Borrower specifying the nature of such
condition or event.
(vii) From time to time, such further information regarding the
Collateral, business affairs and financial condition of Borrower or any
of its Subsidiaries as IBM
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Credit may reasonably request.
(c) In addition to the information and reports required pursuant to
sections 2(a) and 2(b), Borrower shall deliver to IBM Credit:
(i) within (x) ninety (90) days after the end of each of
Borrower's fiscal years, the following financial statements, unaudited,
and (y) one hundred twenty (120) days after the end of each of
Borrower's fiscal years, the following financial statements, audited, in
each case for the fiscal year then ended, which financial statements
shall set forth in comparative form figures for the preceding fiscal
year and the budgeted projections for the fiscal year then ended:
(A) a consolidated balance sheet on a consolidated basis;
(B) a consolidated statement of cash flow consisting
of sources and uses of funds; and
(C) reasonably detailed consolidated profit and loss
statements for such fiscal year;
together with:
(I) a schedule prepared by the Chief Financial Officer or Vice President &
Treasurer of Borrower setting forth in reasonable detail all acquisitions and
locations of other businesses occurring during the fisal year then ended; and
(II) a schedule prepared by the Chief Financial Officer or Vice President &
Treasurer of Borrower setting forth in reasonable detail the amount and type of
each class of current and long-term assets to the extent that such assets would
be included under the heading "Other Assets" on the balance sheet of Borrower;
(ii) within forty five (45) days after the end of each
fiscal quarter, the following unaudited financial statements for the fiscal
quarter then ended which financial statements shall set forth in comparative
form figures for the comparable period in the immediately preceeding fiscal year
and the budgeted projections for the fiscal quarter then ended:
(A) a reasonably detailed consolidated balance sheet on a
consolidated basis;
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(B) a consolidated statement of cash flow consisting or
sources and uses of funds;
(C) reasonably detailed consolidated profit and loss
statements for such fiscal quarter; and
(D) a statement, if applicable, of any event since the end of
the prior fiscal quarter of Borrower that in the reasonable
opinion of Borrower could reasonably be expected to have a
Material Adverse Effect;
together with:
(I) in the case of the financial statements covering the matters referred to in
clauses (A), (B) and (C), a statement prepared by the Chief Financial Officer or
Vice President & Treasurer of Borrower stating that such financial statements
have been prepared in accordance with GAAP consistently applied by Borrower and
that there has not occurred during such Fiscal Quarter any Default or Event of
Default, whether or not the same is then continuing;
(II) a schedule prepared by the Chief Financial Officer or Vice President &
Treasurer of Borrower setting forth in reasonable detail all acquisitions and
locations of other businesses occuring during the fiscal quarter then ended; and
(III) a schedule prepared by the Chief Financial Officer or Vice President &
Treasurer of Borrower setting forth in reasonable detail the amount and type of
each class of current and long-term assets to the extent such assets would be
included under the heading "Other Assets" on the balance sheet of Borrower;
(iii) within thirty (30) days after the end of each calendar
month, the following unaudited financial statement for the calendar
month then ended:
(A) a consolidated balance sheet on a consolidated basis;
(B) reasonably detailed consolidated profit and loss
statements for such fiscal month;
(C) a consolidated statement of cash flows consisting of
sources and uses of funds;
together with:
(I) in the case of the financial statements covering the matters referred to in
clauses (A), (B) and (C), a statement prepared by the Chief Financial Officer or
Vice President & Treasurer of Borrower stating that such financial statements
are true and
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accurate in all material respects (subject to normal year-end adjustments), and
have been prepared in accordance with GAAP consistently applied by Borrower and
that there has not occurred during such calendar month any Default or Event of
Default, whether or not the same is then continuing.
3. Payment Terms.
(a) So long as there is no Shortfall Amount, and subject to the other
provisions of this Agreement, Borrower shall repay each Advance (other than the
Working Capital Advances) not later than the earlier of (x) the Common Due Date
approximating the one hundred eightieth (180th) day from and including the date
of the invoice in respect of which such Advance was made and (y) the last day of
the Revolving Period.
"Common Due Date" shall mean any of the fifth (5th), fifteenth (15th) and
twenty-fifth (25th) days of each month and, with respect to each Advance, shall
be determined on the basis of a year of twelve 30 day months. Each Advance for
Financed Products shall accrue a finance charge on the unpaid principal amount
thereof, for each day commencing on the day after the Free Financing Period, if
any, for such Advance ends, or if no such Free Financing Period shall be in
effect, from the date of invoice for such Advance, in each case, until the date
such Advance is due pursuant to the preceding sentence, at a rate per annum (the
"Base Finance Charge") equal to the sum of the Prime Rate for such day plus
0.875% (or such other rate Borrower and IBM Credit may agree to from time to
time). For Working Capital Advances, such finance charge will be as specified in
Section 3(d).
Borrower shall also pay IBM Credit: (i) a service charge in the amount
of $4,000 per month (or such other amount as Borrower and IBM Credit may agree
to from time to time), (ii) a flat fee of nine (9) basis points on the amount of
each invoice financed by IBM Credit when payments by Borrower to IBM Credit are
made via check (there shall be no such flat fee when payments by Borrower to IBM
Credit are made via wire transfer) and (iii) a fee equal to .25% of the amount
of each unpaid Shortfall Amount (including any unpaid Daily Shortfall Amount)
payable to IBM Credit. The charges due for such advances, including but not
limited to the service charge and the other fees referenced above, if
applicable, will be due and payable on the 10th day of the month following the
date of the IBM Credit invoice for such charges.
"Prime Rate" shall mean, for any day during any month, a rate per annum
equal to the greater of (x) 5.75% and (y) the average of the rates of interest
then most recently announced by Citibank, N.A., The Chase Manhattan Bank, N.A.
and Bank of America National Trust and Savings Association (or any successor
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banking organizations) as being its prime, or base, rate on and as of the last
Business Day of the preceding month. If the full amount of any amounts owed
under this Agreement is not paid by its due date, including but not limited to
any amounts due under Section 3(b) or as a result of the acceleration of the
obligations, the unpaid amount will bear interest from its due date until IBM
Credit receives payment thereof, at a per annum rate equal to the Prime Rate
plus 6.5%. The aforesaid interest rate will be applied to the average daily
balance of the outstanding payment(s) due for the delinquent time period. Such
finance charges shall be calculated based upon a year of 360 days and actual
days elapsed.
IBM Credit may apply payments to reduce interest first and then to the
principal amount owed by Borrower. IBM Credit may apply principal payments to
the oldest (earliest) invoices (and related Advances) first, unless otherwise
directed by Borrower, but, in every case, all principal payments made by
Borrower will be applied in respect of outstanding Advances made for the
Financed Products which have been sold by Borrower or in respect of outstanding
Working Capital Advances. Payments in respect of Authorized Supplier Claims
received by IBM Credit from Authorized Suppliers will be applied to outstanding
Advances unless they are clearly related to Financed Products as to which
Advances are no longer outstanding, in which case such payments shall be paid to
Borrower; provided, however, if an Event of Default shall have occurred and be
continuing IBM Credit may apply such payments against any of the Advances, or
any other obligations outstanding under this Agreement as IBM Credit may
determine in its sole discretion. IBM Credit will notify Borrower of how
payments are applied when no remittance instruction has been submitted by
Borrower. Advances with due dates that fall on a Saturday must be paid the prior
Business Day while Advances with due dates that fall on a Sunday or holiday must
be paid by the following Business Day.
(b) If as of the end of business on any Business Day, Borrower's
total outstanding indebtedness under this Agreement exceeds Value, as defined in
Section 3(c) below, as of such Business Day (any such excess being the
"Shortfall Amount"), Borrower shall promptly pay to IBM Credit such Shortfall
Amount no later than the end of business on the second succeeding Business Day
(the "Daily Shortfall Payment Date"). No Event of Default shall arise hereunder
as a result of Borrower's failure to make a payment pursuant to the immediately
preceding sentence if (i) Borrower has made a good faith determination based on
formulas or other methods approved in writing by IBM Credit, and Borrower
believes in good faith, that as of the end of business on such Business Day, no
Shortfall Amount existed and (ii) Borrower pays to IBM Credit any Shortfall
Amount determined to exist as of the end of business on the next day as of which
a collateral management report disclosing Value is required to be
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prepared pursuant to Exhibit C Of this Agreement, such payment to be made no
later than the end of business on the second succeeding Business Day (a
"Shortfall Payment Date"). An Event of Default shall arise hereunder if,
pursuant to the immediately preceding sentence, Borrower fails to make a payment
on a Shortfall Payment Date.
(c) "Value" shall mean at any time with respect to the items
specified below (i) which are owned by (and in the possession or under the
control of) Borrower and located in a jurisdiction in the United States in which
the Uniform Commercial Code has been adopted and (ii) except for the HP Special
Accounts Collateral (as defined below), as to which IBM Credit has a valid,
perfected first priority security interest, the sum of each percentage specified
opposite each such item of (x) in the case of any item of Eligible Ingram
Non-Financed Products, Financed Products, HP Special Inventory Collateral (as
defined below) or other inventory, the lower of such item's cost and fair market
value (in each case, net of applicable reserves), provided that the aggregate
Value of all Eligible Ingram Non-Financed Products shall not exceed $15,000,000,
and (y) in the case of Eligible Receivables, HP Special Accounts Collateral and
Authorized Supplier Claims described below, the outstanding face amount thereof;
provided, however, that the aggregate Value of the HP Special Inventory
Collateral and the HP Special Accounts Collateral shall be reduced by the
aggregate outstanding amount owing at such time by Borrower to Hewlett-Packard
Company. For purposes of this Agreement, (i) "HP Special Inventory Collateral"
at any time shall mean all inventory (x) which is owned by (and in the
possession or under the control of Borrower) and located in Borrower's Erlanger,
Kentucky; Canton, Massachusetts; Issaquah, Washington; or Golden Valley,
Minnesota warehouse, (y) as to which IBM Credit has a valid, perfected, first
priority security interest, and (z) which is eligible for repurchase by
Hewlett-Packard Company pursuant to an enforceable purchase or repurchase
agreement between IBM Credit and Hewlett-Packard Company in form and substance
satisfactory to IBM Credit in its sole discretion, in each case, at such time,
and (ii) "HP Special Accounts Collateral" at any time shall mean the accounts of
Borrower originated by the Washington D.C.-Federal division of Borrower which
satisfy the requirements of clauses (i) through (xi) of the definition of
"Eligible Receivables" and as to which Hewlett-Packard Company has a valid first
priority perfected security interest and IBM Credit has a valid second priority
perfected security interest.
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A. Financed Products and other inventory located in the Erlanger,
Kentucky; Canton, Massachusetts; Issaquah, Washington; or Golden Valley
Minnesota warehouse (or, in the case of IBM Products consisting of
"service parts" ("IBM Service Parts"), the PDC warehouse)
Obsolete or defective IBM Service Parts.............................. 0%
IBM Service Parts which are neither obsolete nor defective........... 25%
Financed Products on display for demonstration purposes.............. 0%
Financed Products constituting clearance or returned goods........... 0%
All other Financed Products.......................................... 100%
Eligible Ingram Non-Financed Products................................ 50%
NOTE: the total Value for Eligible Ingram Non-Financed Products
shall not exceed $15,000,000
HP Special Inventory Collateral...................................... 100%*
Other inventory...................................................... 20%
B. Financed Products and other inventory located outside of the Erlanger,
Kentucky; Canton, Massachusetts; Issaquah, Washington; or Golden Valley,
Minnesota warehouse (and, in the case of IBM Service parts, located
outside of the PDC warehouse)
IBM Service Parts ................................................... 0%
Financed Products on display for demonstration purposes.............. 0%
Financed Products constituting clearance or returned goods........... 0%
All other Financed Products.......................................... 80%
Eligible Ingram Non-Financed Products (other than ▇▇▇▇▇▇ Micro
Products)......................................................... 0%
Other inventory...................................................... 3%
C. Eligible Receivables..................................................... 80%
D. HP Special Accounts Collateral.......................................... 80%*
E. Authorized Supplier Claims............................................... 100%
* The combined Value of Special Inventory Collateral and HP Special Accounts
Collateral to be included in Borrower's total Value shall be the Value of HP
Special Inventory Collateral PLUS the Value of HP Special Accounts Collateral
MINUS the
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aggregate outstanding amount owing at such time by
Borrower to Hewlett Packard Company
IBM Credit may change any of the above listed Value calculations (1) with sixty
(60) days written notice to Borrower or (2) if an Event of Default has occurred
and is continuing and such Event of Default has not been cured within thirty
(30) days after it has occurred. It is understood that the course of action
detailed in item (2) in the immediately preceding sentence is in addition to
those actions IBM Credit may take upon the occurrence of and Event of Default as
detailed in Section 13(b).
IBM Credit may, in its sole discretion, include other assets of Borrower
satisfying the conditions described in clauses (i) and (ii) of the foregoing
definition of "Value" in the calculation of Value, and the Value of such other
assets shall be such percentage of the value of such other assets as determined
by IBM Credit in its sole discretion. No value shall be given to any products
which are rented or leased.
(d) Provided no Default or Event of Default has occurred and is
continuing, Borrower may request a cash advance ("Working Capital Advance") to
be made on a' specific date ("Working Capital Advance Date") with a payment due
date of no later than the earlier of (x) the Common Due Date approximating the
one hundred eightieth (180th) day following the Working Capital Advance Date
("Working Capital Advance Period") and (y) the last day of the Revolving Period.
If at the end of the Working Capital Advance Period no Default or Event of
Default shall have occurred and be continuing and on or prior to one Business
Day prior to the end of such Working Capital Advance Period neither Borrower nor
IBM Credit shall have provided written notice to the other that the Working
Capital Advance corresponding to such Working Capital Advance Period shall not
be reborrowed, Borrower shall have been deemed to have made a request for a
Working Capital Advance pursuant to this Section 3(d) in an amount equal to the
Working Capital Advance then due and payable. In the event that Borrower
requests a Working Capital Advance IBM Credit shall receive a written
notification from Borrower's Treasurer or Chief Financial Officer of Borrower's
election under this Section 3(d), which notification shall specify the amount of
the requested Working Capital Advance and the requested Working Capital Advance
Date and shall certify to IBM Credit that, to the beat of such officer's
knowledge and belief, no Default or Event of Default shall have occurred and be
continuing and no Shortfall Amount currently exists and, immediately after
giving effect to such Working Capital Advance, will exist. If the amount of the
Working Capital Advance is $5,000,000 or greater the written notification must
be received by IBM Credit no later than 10 a.m. (Stamford, CT time) on the
Working Capital Advance Date. If such amount is for less than $5,000,000, the
written notification must be received by IBM Credit no later than 2 p.m.
(Stamford, CT time) on the Working Capital Advance Date. If these time
requirements are not met, the Working Capital Advance Date shall be the Business
Day immediately following the date the written notification is
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received by IBM Credit. Without the prior written approval of IBM Credit, the
total amount of Working Capital Advances outstanding may not exceed the lesser
of (i) one hundred percent (100%) of the Line of Credit and (ii) the most
recently reported amount, if any, by which Value exceeds Borrower's total
outstanding Indebtedness (other than Working Capital Advances) under this
Agreement. In the event that Borrower utilizes Working Capital Advances,
Borrower shall pay IBM Credit a finance charge equal to the product of the Base
Finance Charge multiplied by the average daily balance of the outstanding
Working Capital Advance for the applicable payment period. Such finance charges
shall be calculated based upon a year of 12 thirty-day months and actual days
elapsed.
4. High Turnover Option. IBM Credit currently makes available a "High
Turnover Option" ("HTO") to its customers with respect to Financed Products. The
HTO currently permits such customers to reduce their obligations with respect to
each invoice for inventory financed by IBM Credit by a percentage of the invoice
price based upon (x) the Prime Rate and (y) the applicable Free Financing
Period, if any, if the full invoice price for such an invoice is paid within
fifteen (15) days of the date of invoice. The available HTO discount will be set
forth in writing from time to time by IBM Credit. Borrower agrees and
acknowledges that the "HTO" may be changed or eliminated by IBM Credit from time
to time in its sole discretion upon written notice from IBM Credit. For payment
to be eligible for consideration under the HTO Borrower must indicate on the
accompanying remittance advice form that it is paying under the HTO.
5. Statements Regarding Borrower's Account. IBM Credit will send
statements of transactions as well as monthly billing statements to Borrower
with respect to Advances and other charges due on Borrower's account with IBM
Credit. Each statement of transaction and monthly billing statement shall be
deemed to be conclusive with respect to each amount or transaction described
therein unless Borrower notifies IBM Credit in writing within twenty-five (25)
days following the postmarked date of such statement of transaction or billing
statement that such amount or transaction is incorrectly described therein. Any
statement may be adjusted by IBM Credit at the end of each month to conform to
applicable law and this Agreement.
6. Security. (a) To secure the payment of all of Borrower's obligations
to IBM Credit whether now existing or hereafter incurred under this Agreement
(including, without limitation, the Advances), and any other agreement between
IBM Credit and Borrower, whether direct or contingent, including any obligations
of Borrower to IBM credit pursuant to any leases (the "Secured Obligations"),
Borrower grants to IBM Credit a security interest in all of Borrower's right,
title and interest in and to the following property, in each case whether now
owned or hereafter acquired or existing: (a) all inventory, equipment and
fixtures located in the United States and its possessions, and all attachments,
returns, exchanges, parts, accessions,
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accessories and replacements thereto, products thereof and documents therefor;
(b) all accounts, chattel paper, contract rights, instruments, reserves,
documents of title, deposit accounts, general intangibles and other obligations
of any kind, and all rights in or to all contracts and other property securing
or otherwise relating to any of the same ("Accounts"), and all rebates, refunds,
discounts, credits, warranties and incentive payments that are or may become due
to Borrower with respect to any inventory or equipment as to which a security
interest has been granted in clause (a) above, (c) all intellectual property,
including, without limitation, patents, patent applications, trademarks,
trademark applications, service marks, service ▇▇▇▇ applications, trade names,
technical knowledge and processes, formal or informal licensing arrangements
which are permitted to be assigned or pledged, blueprints, technical
specifications, computer software (including proprietary software), copyrights,
copyright applications and other trade secrets, and all embodiments thereof, and
rights thereto, and all of Borrower's rights to use the patents, trademarks,
service marks, or other property of the aforesaid nature of other Persons now or
hereafter licensed to Borrower, together with the goodwill of the business
symbolized by or connected with Borrower's trademarks, service marks, licenses
and the other rights referred to in this clause (c), and (d) all substitutions
and replacements for all of the foregoing, all books and records related to the
foregoing, all proceeds and insurance proceeds of all of the foregoing and all
proceeds of business interruption insurance (such property described in this
sentence should be hereinafter referred to as the "Collateral"). For purposes of
this Agreement, the term "First Lien Collateral" means all Financed Products and
all other Collateral (other than Collateral in which IBM Credit has expressly
subordinated its security interest in writing). Subject to the rights of third
parties who have senior security interests in certain of the Collateral and
proceeds thereof, Borrower will hold in trust for IBM Credit and immediately
remit to IBM Credit all Collateral and proceeds of the Collateral in accordance
with the terms of this Agreement, until Borrower has paid in full in cash all of
the Secured Obligations. IBM Credit's title or Lien shall not be impaired by
payments, either of the invoice price or any other amount Borrower may make to
the seller of any item of Collateral or anyone else, or by Borrower's failure or
refusal to account to IBM Credit for proceeds. Where permitted by law, IBM
Credit may perfect its security interest in the Collateral by filing a financing
statement signed only by IBM Credit. Borrower further agrees that a carbon,
photographic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement.
(b) Without limiting the generality of the foregoing, to secure the
payment and performance of the Secured Obligations, Borrower hereby assigns to
IBM Credit any and all claims (including all Authorized Supplier Claims), monies
and/or credits due to Borrower from any Authorized Supplier. Borrower hereby
authorizes IBM Credit, upon the occurrence and during the continuance of an
Event of Default, to offset such items against amounts owing by Borrower to IBM
Credit and authorizes and
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directs each Authorized Supplier to pay such claims, monies and/or credits
directly to IBM Credit. IBM Credit shall give notice to Borrower of any such
offsetting.
7. Location of Collateral and Inspection Rights. (a) The inventory,
equipment and other tangible Collateral shall be kept or sold at the addresses
as set forth in form and detail satisfactory to IBM Credit (it being understood
that the form and degree of detail provided in Exhibit D, attached hereto as an
example, is satisfactory) and said locations shall be certified quarterly to IBM
Credit. Borrower's principal place of business is located at Six ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. Borrower shall give IBM Credit at least
ten (10) days' prior notice of any change in Borrower's identity, name or form
of ownership and of any change in Borrower's principal place of business or
Borrower's registered agent, or any additions of other business locations in the
United States and its possessions in which the Uniform Commercial Code is
adopted. Borrower shall notify IBM Credit of any discontinuances of other
business locations in the United States and its possessions in which the Uniform
Commercial Code is adopted within thirty (30) days of such discontinuance.
Further, Borrower represents and warrants that it keeps and maintains all of its
books and records at its principal place of business as designated above and
maintains all of its books and records pertaining to accounts at its Canton,
Massachusetts location, and agrees to give IBM Credit at least ten (10) days'
prior written notice before moving any such books and records to any other
location. In addition, IBM Credit shall have the right to request that Borrower
perform monthly audits as set forth below (which coincide with anticipated
monthly cycle accounts) of any location where such Collateral is kept or sold,
and Borrower shall perform such audits at Borrower's expense; provided, however,
that IBM Credit may not request an audit of Collateral representing more than
ten percent (10%) of the total inventory value in any month. IBM Credit shall
have the right to have its representatives accompany Borrower on the audit of
each location in order to:
(i) Examine the Collateral;
(ii) Appraise them as security;
(iii) Verify their condition;
(iv) Verify that all Collateral has been properly
accounted for and that this Agreement has been
complied with; and
(v) Examine, check, and make copies of the books,
records and files of Borrower relating to the
Collateral.
Upon IBM Credit's request, Borrower shall provide IBM Credit the name, address
and phone number of a contact person with respect to each obligor of an account
receivable of Borrower. All communication by IBM Credit to each obligor shall be
made through Borrower except (i) following an occurrence of an Event of Default
or (ii) with the consent of Borrower (which consent shall not be unreasonably
withheld).
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(b) In addition to the rights granted to IBM Credit under Section
7(a) above, (i) IBM Credit shall have the right to inspect the books and records
of Borrower and the Collateral at such times and as frequently as IBM Credit
shall determine, such inspections to be performed by IBM Credit or, if IBM
Credit shall so determine in its sole discretion, by an independent third party
auditor designated by IBM Credit with the expenses thereof to be shared equally
by Borrower and IBM Credit and (ii) IBM Credit or its agents may enter upon the
premises of Borrower at any time and from time to time, during normal business
hours and upon reasonable notice under the circumstances, and at any time at all
on and after the occurrence and during the continuance of an Event of Default
for the purposes of (A) inspecting the Collateral, (B) inspecting and/or copying
(at Borrower's expense) any and all records pertaining thereto, (C) discussing
the affairs, finances and business of Borrower with any officers, employees and
directors of Borrower or with the Auditors and (D) verifying Eligible Accounts,
Financed Products or other Collateral.
8. Use of Collateral. Borrower will pay all taxes, levies, license fees,
assessments and charges on the Collateral when due. If Borrower shall lend any
inventory, equipment or other tangible Collateral to a third party as permitted
by Section 11(c)(x) hereof, such Collateral will be identified on the Perpetual
Finished Goods Inventory Reconciliation Reports described on Exhibit C and will
be treated as sold by Borrower. Borrower shall pay any mortgage recording tax,
recording fee and other charge payable in connection with the filing and
recording of any documents, instruments and statements reasonably needed to be
filed to perfect IBM Credit's security interest in the Collateral when such tax,
fee or charge or any combination thereof for an individual filing and/or
recording is equal to or greater than $5,000.
9. Insurance of Collateral.
Borrower will be responsible for any loss of Collateral for my reason
whatsoever. Borrower will keep the Collateral insured for the greater of the
Line of Credit and the aggregate replacement cost of the Collateral against
fire, theft and for combined additional coverages, including vandalism and
malicious mischief, and those other risks and amounts as may be mutually agreed
upon, including earthquake damage where specified, in companies mutually
acceptable to IBM Credit and Borrower, with a lender's loss payable endorsement
or mortgagee clause in form and substance satisfactory to IBM Credit designating
that any loss payable thereunder with respect to the First Lien Collateral be
payable to IBM Credit. In addition, all policies covering the Collateral and all
liability policies maintained by Borrower are to name IBM Credit as an
additional insured. Borrower shall cause each insurer to agree, by endorsement
upon the applicable policy or by independent instrument furnished to IBM Credit,
that such insurer shall give IBM Credit at least thirty (30) days written notice
before any policy shall be altered or cancelled and that no act or default by
Borrower, or any other Person,
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shall affect IBM Credit's right to recover under such policy. If Borrower fails
to pay any cost, charges or any insurance premiums, or if Borrower fails to
insure the tangible Collateral, IBM Credit may pay such costs, charges, or any
insurance premiums. Any amounts paid by IBM Credit hereunder shall be considered
an additional debt owed by Borrower to IBM Credit and are due and payable upon
rendering of an invoice by IBM Credit. Borrower will promptly notify IBM Credit
of any loss, theft or destruction of, or damage to any of the Collateral.
Borrower shall diligently file and prosecute its claim or claims for any award
or payment in connection with any such loss, theft, destruction of, or damage
to, Collateral. Borrower shall, upon demand of IBM Credit, make, execute and
deliver any and all assignments and other instruments sufficient for the purpose
of assigning any such award or payment to IBM Credit, free and clear of any
encumbrance of any kind or nature whatsoever.
10. Issues Involving Quality of Products. Borrower will indemnify and
hold IBM Credit harmless from and against any claims or demands asserted against
it by any buyer of the Collateral arising out of any misrepresentation made
about the Collateral by any representative of Borrower or otherwise arising as a
result of any act, or failure to act, by Borrower. The aforesaid indemnity shall
not impair or jeopardize any rights or claims which Borrower may have against
any Authorized Supplier or any of their respective Affiliates except IBM Credit.
11. Additional Warranties, Representations and Covenants.
(a) Borrower hereby represents and warrants to IBM Credit as follows:
(i) Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and has
all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business
as now being conducted. Borrower is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify could
reasonably be expected to have a Material Adverse Effect.
(ii) The execution, delivery and performance by Borrower of this
Agreement and each other Credit Document to which it is a party is
within the corporate powers of Borrower, has been duly authorized by all
necessary corporate action, requires no action by or in respect of, or
filing with (other than the filing of UCC financing statements, which
have been made prior to the date hereof), any governmental body, agency
or official and does not contravene or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon Borrower or
(except for the Liens created
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pursuant to this Agreement) result in the creation or imposition of any
Lien on any asset of Borrowers.
(iii) This Agreement and each of the other Credit Documents to
which Borrower is a party constitutes a valid and binding agreement of
Borrower, enforceable in accordance with its terms, except as (i) the
enforceability hereof may be limited by bankruptcy, insolvency, or
similar laws relating to creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability.
(iv) There is no action, suit or proceeding pending against, or
to the knowledge of Borrower threatened against or affecting, Borrower
before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable possibility of an adverse
decision which could have a Material Adverse Effect.
(v) Since July 3, 1994, there has occurred no change or
development or, to the best of Borrower's knowledge, event involving a
prospective change, which in any such case, has had or could reasonably
be expected to have a Material Adverse Effect.
(vi) All information heretofore furnished by Borrower to IBM
Credit for purposes of or in connection with this Agreement, any of the
other Credit Documents or any transaction contemplated hereby or thereby
is, and all such information hereafter furnished by Borrower to IBM
Credit will be, true and accurate in all material respects on the date
as of which such information is stated or certified. To the best of
Borrower's knowledge, Borrower has disclosed to IBM Credit (which
disclosure from and after the date hereof, shall have been made either
in writing or orally to either the Director of Remarketing Financing
Support of IBM Credit or the Director of Remarketer Financing Portfolio
of IBM Credit) any and all facts which could reasonably be expected to
have a Material Adverse Effect.
(vii) To the best of Borrower's knowledge, all taxes due pursuant
to all United States Federal income tax returns and all other material
tax returns required to be filed by Borrower and any other Person for
which Borrower may be liable with respect to taxes owing by such Person
or pursuant to any assessment received by Borrower or any such Person
have been paid, all taxes due pursuant to all United States Federal
income tax returns and all other material tax returns required to be
filed by Borrower and any other Person for which Borrower may be liable
with respect to taxes owing by such Person (other than, with respect to
any taxes due, or any returns to be filed, after August 6, 1993 by JWP
Inc. or any subsidiary of JWP Inc.) or pursuant to any assessment
received by Borrower or any such Person (other than assessments received
by JWP Inc. or any subsidiary of JWP Inc. after August 6, 1993 for
periods
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prior to August 6. 1993) have been paid, other than taxes contested in
good faith pursuant to appropriate proceedings. The charges, accruals
and reserves on the books of Borrower in respect of taxes or other
governmental charges are, in the opinion of Borrower, adequate, No tax
liens have been filed against Borrower or any of its property.
(viii) Borrower has good and marketable title to all of the
Collateral, free and clear of any Lien other than the Liens created
pursuant to, or Liens which do not cause a default under, this Agreement
or any of the other Credit Documents. The security interest granted
pursuant to this Agreement constitutes a valid security interest under
the Uniform Commercial Code. IBM Credit's security interest in the First
Lien Collateral constitutes a valid, perfected first priority security
interest in such property.
(ix) All financial statements relating to Borrower which have
been or may hereafter be delivered by or for Borrower to IBM Credit have
been and will be prepared in accordance with GAAP (in the case of any
interim financial statements, except for the absence of notes and
subject to normal year-end adjustments).
(x) Borrower is not aware of the existence of any default by
Borrower in the payment of any principal, interest or other charges
relating to any Indebtedness of Borrower and no event has occurred under
the terms or provisions of any agreement, instrument or other document
relating to any such Indebtedness or under any other Material Contract
which, with or without the passage of time and/or the giving of notice,
constitutes or would constitute an event of default thereunder.
(xi) Borrower has no direct or indirect Subsidiaries other than
Erlanger Land Co., Inc., a Delaware corporation, ENTEX Information
Services International, Limited, an Ireland corporation, ENTEX
Information Services of Michigan, Inc., a Michigan corporation, ENTEX
Services, Inc., a Delaware corporation and ENTEX Acquisition Corp., a
Colorado corporation.
(xii) Borrower and each other Credit Party has obtained all
authorizations, approvals and consents of, and has made all filings and
registrations with, any governmental authority or any other Person
necessary for the consummation of the transactions contemplated by the
grant of the Liens pursuant to this Agreement and the other Credit
Documents, the continuing operations of Borrower, and the execution,
delivery, performance, validity or enforceability of this Agreement or
the other Credit Documents.
(xiii) Borrower has not used any corporate or fictitious name
during the five (5) years preceding the date of this Agreement other
than the name "IS Management Acquisition Corp.".
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(xiv) There are no disputes pending or, to the best of Borrower's
knowledge after diligent inquiry, threatened between Borrower and any of
its employees which could reasonably be expected to have a Material
Adverse Effect.
(xv) Borrower and each ERISA Affiliate have fulfilled all
obligations related to the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan, are in compliance with
the currently applicable provisions of ERISA and of the internal Revenue
Code and have not incurred any liability (other than routine liability
for premiums) under Title IV of ERISA. No Termination Event has occurred
nor has any other event occurred that may result in a Termination Event.
No event or events have occurred in connection with which Borrower, any
ERISA Affiliate, any fiduciary of a Plan or any Plan, directly or
indirectly, could be subject to any liability, individually or in the
aggregate, under ERISA, the Internal Revenue Code or any other law or
under any agreement, instrument, statute, rule of law or regulation
pursuant to or under which any such entity has agreed to indemnify or is
required to indemnify any Person against liability incurred under, or
for a violation or failure to satisfy the requirements of, any such
statute, regulation or order.
(xvi) (A) The operations of Borrower comply in all material
respects with all applicable federal, state or local environmental,
health and safety statutes, regulations, directions, ordinances,
criteria and guidelines; (B) other than for those notices for which
Borrower has provided reasonable description, in the sole judgement of
IBM Credit, as to why the proceeding is wrongful, Borrower has not
received any written notice and no officer or director of Borrower has
received any oral notice, that any of its operations is the subject of
any judicial or administrative proceeding alleging the violation of any
federal, state or local environmental, health or safety statute,
regulation, direction, ordinance, criteria or guideline; (C) to the best
of Borrower's knowledge, none of the operations of Borrower is the
subject of any federal or state investigation evaluating whether
Borrower disposed of any hazardous or toxic waste, substance or
constituent or other substance at any site that may require remedial
action, or any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any hazardous or
toxic waste, substance or constituent, or other substance into the
environment; (D) Borrower has not filed any notice under any federal or
state law indicating past or present treatment, storage or disposal of a
hazardous waste or reporting a spill or release of a hazardous or toxic
waste, substance or constituent, or other substance into the
environment; and, (E) Borrower does not have any contingent liability of
which Borrower has knowledge or reasonably should have knowledge in
connection with any release of any hazardous or toxic
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waste, substance or constituent, or other substance into the
environment, nor has Borrower received any notice, letter or other
indication of potential liability arising from the disposal of any
hazardous or toxic waste, substance or constituent or other substance
into the environment.
(xvii) Borrower possesses such assets, licenses, patents, patent
applications, copyrights, service marks, trademarks and trade names as
are necessary to continue to conduct its present and proposed business
activities. All of Borrower's patents, patent applications, trademarks,
trademark applications, service marks, service ▇▇▇▇ applications, trade
names, copyrights, copyright applications and rights to any of the
foregoing are listed on Exhibit E hereto.
(xviii) Borrower is not (A) an investment company or a company
controlled by an investment company within the meaning of the Investment
Company Act of 1940, as amended, (B) a holding company or a Subsidiary
company of a holding company, or an Affiliate of a holding company or of
a Subsidiary company of a holding company, within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or (C) subject
to any other law which purports to regulate or restrict its ability to
borrow money or to consummate the transactions contemplated by this
Agreement or the other Credit Documents or to perform its obligations
hereunder or thereunder.
(xix) Borrower has no obligation under any tax sharing agreement
or agreement regarding payments in lieu of taxes other than such
agreements entered into by Borrower with the prior written consent of
IBM Credit.
(xx) no assets included in Value, as defined in Section 3(c) is
owned by ENTEX Information Services of Michigan, Inc. or ENTEX Services,
Inc..
(b) Until termination of the Line of Credit and the indefeasible
payment and satisfaction of all Secured Obligations, Borrower, will:
(i) (A) Maintain its corporate existence, maintain in full force
and effect all licenses, bonds, franchises, leases and qualifications to
do business, and all contracts and other rights necessary or advisable
to the profitable conduct of its business and (B) continue in, and limit
its operations to, the same general lines of business as presently
conducted by it.
(ii) Maintain a system of accounting in accordance with GAAP.
(iii) Comply in all material respects with all laws, rules and
regulations (including, without limitation, all environmental and health
and occupational safety,
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regulations, directions, ordinances, criteria, guidelines, requirements
and permits and ERISA) applicable to or binding on Borrower or any of
its property or to the operation of its business.
(iv) Establish and maintain at all times Lockboxes (as defined
below) as provided in the Blocked Account Agreement and shall instruct
all obligors on the Accounts to remit all payments to one of its
Lockboxes. All amounts received by Borrower from any such obligor, in
addition to all other cash received from any other source, shall upon
receipt be deposited into an account in accordance with terms and
provisions of the Blocked Account Agreement and Borrower shall at all
times comply with the terms and conditions set forth in the Blocked
Account Agreement. "Lockboxes" shall mean the lockboxes of Borrower in
place and identified to IBM Credit as of the date of this Agreement and
such other lockboxes as are added in accordance with the terms of the
Blocked Account Agreement. "Blocked Account Agreement" shall mean that
certain letter agreement by and among Citibank as lender, Global Cash
Management (a division of Citibank) as depository, and IBM Credit as the
same may be amended, supplemented, restated or otherwise modified from
time to time. Borrower will also obtain IBM Credit's written permission
prior to changing the bank with which it has a Lockbox that is subject
to this Agreement and assist IBM Credit as required in entering into a
Blocked Account Agreement with any such new bank.
(v) Pay, when due, all taxes lawfully levied or assessed against
Borrower or any of the Collateral before any penalty or interest accrues
thereon; provided, however, that, unless such taxes have become a tax or
ERISA Lien on any of the assets of Borrower, no such tax need be paid if
the same is being contested, in good faith, by appropriate proceedings
promptly instituted and diligently conducted and if an adequate reserve
or other appropriate provision shall have been made therefor as required
in order to be in conformity with GAAP.
(vi) Maintain its fiscal year as a year ending on the Sunday
closest to June 30 unless required by law, in which case Borrower will
give IBM Credit at least thirty (30) days prior written notice thereof.
(vii) Do and cause to be done all things necessary to preserve
and keep in full force and effect all registrations of patents,
copyrights, trademarks, service marks and other marks, trade names or
other trade rights necessary or advisable for the profitable conduct of
its business. Promptly after obtaining any federal registration of any
patent, copyright, trademark, trade name or other trade right or the
filing of any application therefor, Borrower shall deliver to IBM Credit
a collateral assignment with respect to each such registration and
application, in form and substance satisfactory to IBM Credit.
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(viii) Keep all property useful and necessary to its respective
businesses in good working order and condition (ordinary wear and tear
excepted) in accordance with its past operating practices and not commit
or suffer any waste with respect to any of its properties.
(ix) Deliver to IBM Credit, at Borrower's expense, the following
information at the times specified below:
(A) within ten (10) Business Days after Borrower or any
ERISA Affiliate knows or has reason to know that a Termination
Event has occurred, a written statement of the chief financial
officer of Borrower describing such Termination Event and the
action, if any, which Borrower or any ERISA Affiliate has taken,
is taking or proposes to take with respect thereto, and when
known, any action taken or threatened by the Internal Revenue
Service, DOL or PBGC with respect thereto;
(B) within ten (10) Business Days after Borrower or any
ERISA Affiliate knows or has reason to know that a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the
Internal Revenue Code) has occurred which will result in any
liability being imposed directly, through any indemnification
obligation, or otherwise, a statement of the chief financial
officer of Borrower describing such transaction and the action
which Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto;
(C) within three (3) Business Days after the filing
thereof with the Internal Revenue Service, a copy of each funding
waiver request filed with respect to any Benefit Plan and all
communications received by Borrower or any ERISA Affiliate with
respect to such request;
(D) within ten (10) Business Days after the occurrence
thereof, notification of any increase in the benefits of any
existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which Borrower or
any ERISA Affiliate was not previously contributing;
(E) within three (3) Business Days after receipt by
Borrower or any ERISA Affiliate of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice;
(F) within ten (10) Business Days after receipt by
Borrower or any ERISA Affiliate of any favorable or unfavorable
determination letter from the Internal Revenue Service regarding
the qualification of a Plan
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under Section 401(a) of the Internal Revenue Code, copies of each
such letter;
(G) within ten (10) Business Days after receipt by
Borrower or any ERISA Affiliate of a notice regarding the
imposition of withdrawal liability under Section 4201 of ERISA,
copies of each such notice;
(H) within ten (10) Business Days after Borrower or any
ERISA Affiliate fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code
on or before the due date for such installment or payment, a
notification of such failure; and
(I) within three (3) Business Days after Borrower or any
ERISA Affiliate knows (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or
(c) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multiemployer Plan, a
written statement setting forth any such event or information.
(x) At Borrower's reasonable expense, execute, deliver, file and
record any statement, assignment, instrument, document, agreement or
other paper and take any other action (including, without limitation,
any filings of financing or continuation statements under the Uniform
Commercial Code) that from time to time may be necessary or desirable,
or that IBM Credit may request, in order to create, preserve, upgrade in
rank (to the extent required by the provisions of this Agreement),
perfect, confirm or validate any security interest granted hereunder or
under any other Credit Document or to enable IBM Credit to obtain the
full benefits of this Agreement, or to enable IBM Credit to exercise and
enforce any of its rights, powers and remedies hereunder or under any
other Credit Document with respect to any of the Collateral.
(xi) Borrower will provide, when required by IBM Credit, a copy
of the Commercial Revolving Loan and Security Agreement and all
documents, instruments and agreements executed in connection therewith,
the Commercial Revolving Loan and Security Agreement and all such other
documents, instruments and agreements to be satisfactory in form and
substance to IBM Credit;
(xii) Borrower will provide, when required by IBM Credit, a copy
of all documents, instruments and agreements evidencing, or executed in
connection with, the Acquisition Subordinated Debt, all such documents,
instruments and agreements (including the terms of subordination,
interest rate, maturities and sinking fund requirements, covenants and
defaults) to be in form and substance satisfactory to IBM Credit;
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(c) Until termination of the Line of Credit and the indefeasible
payment and satisfaction of all Secured Obligations, Borrower, and with respect
to (xvii) of this Section 11(c), Borrower, ENTEX information Services of
Michigan, Inc. and ENTEX Services, Inc., will not:
(i) Store any of the Collateral with a bailee, warehouseman, or
similar party without the prior written consent of IBM Credit. In the
event IBM Credit shall so consent, Borrower will, concurrently with
delivery to such party, cause any such party to issue and deliver to IBM
Credit, in a form acceptable to IBM Credit, warehouse receipts in the
name of IBM Credit evidencing the storage of such Collateral if such
Collateral is First Lien Collateral.
(ii) Create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except: (A) Liens securing the
Secured Obligations, (B) Liens securing the Indebtedness to
Hewlett-Packard Company, (C) Liens existing on the date of this
Agreement securing obligations outstanding under the Commercial
Revolving Loan and Security Agreement in an aggregate principal amount
not exceeding $32,500,000, (D) Liens securing the Indebtedness listed on
Exhibit F-A hereto, (E) in the case of any asset not constituting First
Lien Collateral, any Lien on any such asset securing Indebtedness
incurred or assumed for the purpose of financing all or any part of the
cost of acquiring such asset, (F) in the case of any asset not
constituting First Lien Collateral, any Lien existing on any such asset
prior to the acquisition thereof by Borrower and not created in
contemplation of such acquisition, (G) in the case of any asset not
constituting First Lien Collateral, Liens arising in the ordinary course
of its business which (1) do not secure Indebtedness, (2) do not secure
obligations which in the aggregate exceed $10,000,000 and (3) do not in
the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business and
(H) other Liens consented to in writing by IBM Credit and which, in the
case of any such Liens on any of the First Lien Collateral, are
subordinated pursuant to agreements in form and substance satisfactory
to IBM Credit in its sole discretion, provided, that with respect to
Liens securing Indebtedness permitted to be incurred pursuant to Section
11(c) (ix), such consent will not be unreasonably withheld.
(iii) (A) Declare, pay or accrue any dividend, royalty or other
distribution of assets, properties, cash, rights, obligations, warrants
or securities on account of the shares of any class of its capital stock
or declare, pay or accrue any management fees or (B) purchase, redeem,
retire or otherwise acquire for value any shares of any class of its
capital stock or any warrants, rights or options to acquire any such
shares now or hereafter outstanding, or return any capital in respect of
any such
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shares to any stockholder as such. In the case of (B) in the immediately
preceding sentence, Borrower may purchase from employees of Borrower who
are leaving the employ of Borrower, shares of its capital stock that
were purchased under an employee stock plan or similar plan of Borrower
as long as such purchase amount does not exceed $1,000,000 in any fiscal
year.
(iv) Merge (other than as a reincorporation or where Borrower
shall be the surviving entity) or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or a
series of transactions) all or substantially all of its assets (whether
now or hereafter acquired) to any Person.
(v) If it will cause Borrower to fail to meet any financial
covenants specified in Section 12 of this Agreement, prepay, redeem,
defease (whether actually or in substance) or purchase in any manner,
make any payment in respect of principal of, or interest on, any
Long-term Debt (including the BLI Subordinated Debentures and the
Acquisition Subordinated Debt). "Long-term Debt" shall be defined herein
as all Indebtedness of Borrower which matures more than one year from
the date of determination or matures within one year from such date but
is renewable or extendible at the option of Borrower to a date more than
one year from such date.
(vi) Form, establish or otherwise permit to exist any Subsidiary
other than (A) Erlanger Land Co., Inc. ("Erlanger") or permit Erlanger
to engage in any business or other activity other than the ownership of
the property currently owned by it in Erlanger, Kentucky and activities
incidental thereto, (B) ENTEX Information Services International Limited
("International"), provided, that Borrower's total investment in
International does not exceed $1,500,000, (C) ENTEX Information Services
of Michigan, Inc., (D) ENTEX Services, Inc., (E) ENTEX Acquisition
Corp., and (F) Random Access, Inc. (to be renamed ENTEX Information
Services of Colorado, Inc.) and subsidiaries thereof ("Random"),
provided, that the acquisition of Random is done in accordance with IBM
Credit's consent and commitment letters dated May 8, 1995 and the
Supplementary Letter Agreement of even date.
(vii) Acquire any material assets of any Person (other than
inventory acquired in the ordinary course of business).
(viii) Move, relocate or otherwise transfer any of its property
or assets constituting First Lien Collateral, or any interest therein,
to any office of, or operated by, its Washington D.C.-Federal division,
including without limitation, the offices of such division located in
Washington D.C. unless after such movement, relocation or transfer (A)
IBM Credit shall continue to have a perfected
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first priority security interest in such assets (excluding Accounts
constituting proceeds arising from the sale of Financed Products with
respect to which Accounts IBM Credit has subordinated its security
interest therein to the security interest of Hewlett-Packard Company
therein), (B) Borrower shall have delivered to IBM Credit such financing
statements, documents and other agreements as IBM Credit may request to
maintain its first priority perfected security interest in such
Collateral and (C) in the case of any such movement, relocation or other
transfer not consistent with Borrower's past practice, Borrower shall
have notified IBM Credit of such event,
(ix) Directly or indirectly, incur, create, assume or suffer to
exist any Indebtedness other than:
(A) Indebtedness arising under this Agreement and the
other Credit Documents;
(B) Indebtedness secured by Liens expressly permitted by
Section 11(c)(ii) (C) through (H) not to exceed $195,000,000 in
the aggregate outstanding at any one time;
(C) the BLI Subordinated Debentures; and
(D) Indebtedness listed on Exhibit F-B and any refinancing
of such Indebtedness; provided that any such Indebtedness created
to refinance existing Indebtedness shall not exceed the principal
amount of the Indebtedness so refinanced and shall contain terms
(including maturities) substantially equivalent to (or more
favorable to Borrower than) the terms of the Indebtedness being
refinanced, so long as such refinancing will not otherwise result
in a violation of any of the covenants contained in Section 12.
(x) Directly or indirectly, sell, lease, assign, transfer or
otherwise dispose of any assets other than (A) sales of inventory in the
ordinary course of business and short term rental of inventory as
demonstrations in amounts not material to Borrower, (B) individual items
of Collateral with a book value of less than $5,000,000 in the aggregate
during any fiscal year, (C) obsolete or worn out property disposed of in
the ordinary course of business and (D) other dispositions of assets,
provided that (1) such dispositions are for fair value, (2) the
aggregate consideration (whether in the form of cash, promissory notes
or other instruments) for such dispositions does not exceed $5,000,000
in the aggregate for any fiscal year and (3) such consideration is
either reinvested in the business of Borrower or used to repay the
Secured Obligations.
(xi) Directly or indirectly, make any Investment in any Person,
whether in cash, securities, or other property of any kind including,
without limitation, any
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Affiliate of Borrower, other than:
(A) advances or loans to officers and directors of
Borrower in an amount not to exceed $50,000 outstanding at any
one time to any one Person and $500,000 in the aggregate to all
such officers and directors outstanding at any one time;
(B) Cash Equivalents;
(C) Interest-bearing demand or time deposits (including
certificates of deposit) which are insured by the Federal Deposit
Insurance Corporation ("FDIC") or a similar federal insurance
program; provided, however, that Borrower may, in the ordinary
course of its business, maintain in their disbursement accounts
from time to time amounts in excess of then applicable FDIC or
other program insurance limits;
(D) Investments of Borrower existing on the date of this
Agreement and set forth on Exhibit G hereto;
(E) Investments by Borrower in the form of loans made to
Parent to enable Parent, upon the death, disability or
involuntary termination of employment without cause of an
employee of Borrower, to repurchase shares of the Parent's common
stock owned by such employee for cash pursuant to a management
stock incentive program so long as the aggregate amount of loans
shall not exceed $50,000 in any one year and $100,000 in the
aggregate, provided that any such loans to Parent shall not be
subordinated in right of payment to any other indebtedness or
obligations of Parent; and
(F) Such other Investments as IBM Credit may approve in
its sole discretion.
(xii) Except as otherwise expressly permitted by this Agreement,
directly or indirectly, enter into any transaction with or for the
benefit of, including, without limitation, the purchase, sale or
exchange of property or the rendering of any service to, any Affiliate
of Borrower except upon fair and reasonable terms no less favorable to
Borrower than could be obtained in a comparable arm's-length transaction
with an unaffiliated Person; provided that (A) any Affiliate of Borrower
who is an individual may serve as a director, officer or employee of
Borrower and receive reasonable compensation or indemnification in
connection with his or her services in such capacity and (B) Borrower
may enter into any other transaction with or for the benefit of any
Affiliate of Borrower so long as the aggregate amount of all amounts
required to be paid to and other consideration permitted to be received
by all such Affiliates pursuant to such other transactions shall not
exceed $3,000,000 in the aggregate in any fiscal year of Borrower.
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(xiii) Directly or indirectly:
(A) Engage, or permit any ERISA Affiliate to engage, in
any prohibited transaction which could result in a civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code being imposed directly, through any
indemnification obligation, or otherwise, on the Borrower or any
ERISA Affiliate, for which a statutory or class exemption is not
available or a private exemption has not been previously obtained
from the DOL;
(B) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of
ERISA and 412 of the Internal Revenue Code), whether or not
waived;
(C) fail, or permit any ERISA Affiliate to fail, to timely
pay required contributions or annual installments due with
respect to any waived funding deficiency to any Benefit Plan;.
(D) terminate, or permit any ERISA Affiliate to terminate,
any Benefit Plan where such event would result in any liability
of Borrower or any ERISA Affiliate under Title IV of ERISA;
(E) fail, or permit any ERISA Affiliate to fail, to make
any required contribution or payment to any Multiemployer Plan;
(F) fail, or permit any ERISA Affiliate to fail, to pay
any required installment or any other payment required under
Section 412 of the Internal Revenue Code on or before the due
date for such installment or other payment;
(G) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability for the plan year
such that Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Internal
Revenue Code;
(H) withdraw, or permit any ERISA Affiliate to withdraw,
from any Multiemployer Plan where such withdrawal may result in
any liability of any such entity under Title IV of ERISA; or
(I) allow any representation made in Section 11(a)(xiv) to
be untrue at any time during the term of this Agreement.
(xiv) Directly or indirectly, (A) amend, modify, or permit the
amendment, modification, of its Certificate of
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Incorporation when such amendment or modification would materially
affect Customer's ability to fulfill its obligations and
responsibilities under this Agreement (it being understood that Customer
will notify IBM Credit within thirty (30) days after making or
permitting to be made any other amendment or modification to its
Certificate of Incorporation not included in (A)), (B) cancel or
terminate or permit the cancellation or termination of its Certificate
of incorporation, or (C), without prior written notice to IBM Credit,
amend, modify, cancel or terminate or permit the amendment,
modification, cancellation or termination of any instrument or agreement
governing or relating to any Indebtedness of Borrower, the Commercial
Revolving Loan and Security Agreement provided, however, that Borrower
may amend or otherwise modify the terms relating to compensation paid to
the provider of any such Indebtedness without notice to IBM Credit.
(xv) Directly or indirectly, create or otherwise cause or suffer
to exist or become effective, (A) any prohibition or restriction
(including any agreement to provide equal and ratable security to any
other Person in the event a Lien is granted to or for the benefit of IBM
Credit) on the creation or existence of any Lien upon the assets of
Borrower (other than those restrictions set forth in the agreements
relating to the Indebtedness set forth on Exhibit F-A as in effect on
the date of this Agreement), (B) any contractual obligation which may
restrict or inhibit IBM Credit's rights or ability to sell or otherwise
dispose of the Collateral or any part thereof after the occurrence of an
Event of Default or (C) any encumbrance or restriction on the ability of
any of the Subsidiaries of Borrower to (1) pay dividends or make any
other distributions on such Subsidiary's capital stock or pay any
Indebtedness owed to Borrower or a Subsidiary of Borrower, (2) make
loans or advances to Borrower or a Subsidiary of Borrower or (3)
transfer any of its properties or assets to Borrower.
(xvi) Move or otherwise relocate any computer equipment or
systems located in Borrower's facilities in Canton, Massachusetts or
Erlanger, Kentucky.
(xvii) Transfer or sell any assets included in the calculation of
Value as defined in Section 3(c) to ENTEX Information Services of
Michigan, Inc. or ENTEX Services, Inc. without obtaining IBM Credit's
prior written consent.
12. Financial Covenants. Borrower shall hold quarterly business reviews
of the following financial covenants with IBM Credit. Borrower covenants and
agrees with IBM Credit that:
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(a) Borrower shall at all times maintain a ratio of current assets to
current liabilities equal to at least 1.01 to 1 during Borrower's fiscal year
ending on June 30, 1996 or for any fiscal year thereafter.
(b) Borrower shall at all times maintain a ratio of (i) total
liabilities minus the aggregate outstanding principal amount of Subordinated
Debt to (ii) the sum of Tangible Net Worth and the aggregate outstanding
principal amount of Subordinated Debt of not more than 20 to 1 during Borrower's
fiscal year ending on June 30, 1996 or for any fiscal year thereafter.
(c) Borrower shall not permit the sum of Tangible Net Worth and the
aggregate outstanding principal amount of Subordinated Debt at any time to be
less than twenty-one million dollars ($21,000,000) at any time during Borrower's
fiscal year ending on June 30, 1996 or for any fiscal year thereafter.
(d) Borrower shall not permit, at the end of any fiscal quarter
beginning on or after the date hereof, the ratio of EBIT to Interest Expense for
the period of two consecutive fiscal quarters then ended to be less than 1.1 to
1 during Borrower's fiscal year ending on June 30, 1996 or for any fiscal year
thereafter.
(e) Beginning on or after the date hereof, Borrower shall not permit its
Consolidated Net Income for any Fiscal Quarter to be less than 0.2% of sales
during such Fiscal Quarter in Borrower's fiscal year ending on June 30, 1996 or
for any fiscal year thereafter.
(f) Borrower shall not permit the aggregate amount of Capital
Expenditures made in any fiscal year to exceed $10,000,000 net of dispositions
related to such Capital Expenditures.
(g) Borrower shall at all times maintain Working Capital of not less
than (i) thirteen million dollars ($13,000,000) at any time from and including
the date hereof to and including the last day of Borrower's second 1996 Fiscal
Quarter, (ii) thirteen million dollars ($13,000,000) PLUS seventy-five percent
(75%) of Borrower's net income after taxes earned by Borrower during Borrower's
second 1996 Fiscal Quarter ("Third 1996 Quarter W/C Minimum") at all times
during Borrower's third 1996 Fiscal Quarter, (iii) Third 1996 Quarter W/C
Minimum PLUS seventy-five percent (75%) of Borrower's net income after taxes
earned during Borrower's third 1996 Fiscal Quarter ("Fourth 1996 Quarter W/C
Minimum") at all times during Borrower's fourth 1996 Fiscal Quarter, (iv) the
greater of (a) seventeen million dollars ($17,000,000) and (b) the Fourth 1996
Quarter W/C Minimum PLUS seventy-five percent (75%) of Borrower's net income
after taxes earned in Borrower's fourth 1996 Fiscal Quarter ("First 1997 Quarter
W/C Minimum"), and (v) for each succeeding Borrower's Fiscal Quarter, the
minimum Working Capital for the immediately preceding Fiscal Quarter PLUS
seventy-five percent (75%) of Borrower's net income after taxes earned by
Borrower during such preceding Fiscal Quarter. "Working Capital" as of any date
shall mean current assets minus current liabilities, in each case as of such
date.
Borrower agrees that at such quarterly review with IBM Credit, Borrower
will provide a Compliance Certificate, in substantially the form of Exhibit J
hereto, signed by its Chief Executive Officer, Chief Financial Officer or Vice
President & Treasurer, that no default under this Agreement exists or if such
default exists, specifying the nature thereof.
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13. Events of Default; Power of Attorney. (a) There shall be an "Event
of Default" if:
(i) Borrower fails to pay (x) any principal amount or any finance
charges referred to in Section 3 payable to IBM Credit when due and (y)
any other amount within two (2) days of such other amount coming due; or
(ii) Borrower fails to comply with or observe any term, covenant
or agreement contained in Section 6, Section 11(a), 11(b)(iii) or (iv),
11(c) or Section 12 of this Agreement; or
(iii) Borrower or any of its Affiliates party to a Credit
Document (collectively, the "Credit Parties" and, individually a "Credit
Party") shall fail to perform or observe any term, covenant or agreement
contained in any Credit Document (other than this Agreement) or any
other document, instrument, or agreement evidencing or governing
obligations equal to or in excess of $3,000,000 in the aggregate by and
between IBM Credit or any Authorized Supplier (or any subsidiary of such
Authorized Supplier) and, or executed for the benefit of IBM Credit or
any Authorized Supplier (or any subsidiary of such Authorized Supplier)
by, Borrower or any such Credit Party (other than those terms, covenants
and agreements referred to in clauses (i) and (ii) above) and in the
sole opinion of IBM Credit, such failure is not susceptible to cure; or
(iv) Borrower or any other Credit Party shall fail to comply with
or observe any term, covenant or agreement contained in this Agreement,
any other Credit Document or any other document, instrument or agreement
evidencing or governing obligations equal to or in excess of $1,000,000
in the aggregate by and between IBM Credit or any Authorized Supplier
(or any subsidiary of such Authorized Supplier) and, or executed for the
benefit of IBM Credit or IBM Corporation (or any subsidiary of IBM
Corporation) by, Borrower or any such Credit Party (other than those
terms, covenants and agreements referred to in clauses (i), (ii) and
(iii) above), and such failure shall continue to unremedied for twenty
(20) days; or
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(v) any representation, warranty, certification or statement made
by Borrower or any other Credit Party in this Agreement or any other
Credit Document proves to have been incorrect in any material respect
when made (or deemed made); or
(vi) Borrower, Parent or any other Credit Party shall generally
not pay its debts as such debts become due, become or otherwise declare
itself insolvent, file a voluntary petition for bankruptcy protection,
have filed against it any involuntary bankruptcy petition which remains
undismissed for a period of forty-five (45) days, cease to do business
as a going concern, make any assignment for the benefit of creditors,
consent to the appointment of a custodian, receiver, trustee,
liquidator, administrator or person with similar powers or have any of
its properties seized or attached, or take any action to authorize, or
for the purpose of effectuating, any of the foregoing; or
(vii) under any agreement or instrument for borrowed money, trade
credit or other credit accommodation having a principal amount
outstanding in excess of $3,000,000 to which Borrower, Parent or any
other Credit Party is a party (A) there shall occur any payment default
by Borrower, Parent or any other Credit Party, (B) any non-payment
default by Borrower, Parent or any other Credit Party shall have
occurred and shall have been declared a default or event of default by
the creditor under such agreement or instrument, trade credit or other
credit accommodation, or (C) the principal amount of any such
indebtedness shall not be paid in full by Borrower, Parent or any such
Credit Party at its maturity; or
(viii) any Credit Party shall terminate, revoke, rescind,
disaffirm or fail to honor any of its obligations under any Credit
Document to which it is a party or any Credit Party shall assert in
writing its intention to take any of the aforementioned actions, any
Lien granted under any Collateral Document shall cease to have the
priority purported to be created thereby or by any subordination or
intercreditor agreement, or any Person party to a subordination or
intercreditor agreement with IBM Credit pursuant to which such Person
subordinates its Lien in any Collateral to the Lien of IBM Credit
granted pursuant to the Credit Documents shall terminate, revoke,
rescind, disaffirm or fail to honor any of its obligations under any
such agreement or any such Person shall assert in writing its intention
to take any of the aforementioned actions; or
(ix) any final judgment or final order for the payment of money,
shall be rendered against Borrower, Parent or any other Credit Party and
such judgment or order is in an amount in excess of $3,000,000 and
either (A) enforcement proceedings shall have been commenced upon such
judgment or order or (B) there shall be any period of ten (10)
consecutive days during which a stay of such enforcement of
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such judgment or order, including, but not by way of limitation, by
reason of a pending appeal or otherwise shall not be in effect; or
(x) (A) Dort ▇. ▇▇▇▇▇▇▇ III shall cease to own and/or control,
directly or indirectly, at least 60% of the issued and outstanding
capital stock of Parent, (B) Parent shall cease to own and/or control at
least 90% of the aggregate principal amount of Acquisition Subordinated
Debt outstanding at any time provided that, if Parent receives financing
from a creditor using the Senior Secured Note as collateral, such
creditor will be advised by Parent and will agree that such creditor's
security interest in the Senior Secured Note will be junior to IBM
Credit's security interest in such Note, (C) any Lien shall be granted,
or shall otherwise exist, on any of the capital stock of Borrower, or
Parent shall cease to own and/or control 100% of the issued and
outstanding capital stock of Borrower or (D) Parent shall engage in any
activity or business other than (x) holding such capital stock of
Borrower or (y) owning in part or in whole companies whose sole business
is providing information services training and/or computer training to
other companies unless IBM Credit approves such other activity or
business in advance and in writing; or
(xi) an event or circumstance occurs which could reasonably be
expected to have a Material Adverse Effect.
(b) Upon the occurrence of an Event of Default, IBM Credit may,
without notice to or demand upon Borrower or any other Credit Party, do any one
or more of the following:
(i) Declare all or any part of the Advances to be due and payable
immediately, together with all finance charges accrued thereon and all
court costs and other costs and expenses of IBM Credit's repossession
and collection activity, including reasonable attorney's fees and the
other fees and expenses specified in Sections 13(d) and 17; provided,
however, that all such amounts shall become immediately due and payable
without prior notice upon the occurrence of an Event of Default
specified in Section 13(a)(vi), In any such case, Borrower shall hold
and keep the Collateral in trust in good order and repair for the
benefit of IBM Credit and shall not exhibit or sell the Collateral
without the prior written consent of IBM Credit.
(ii) Exercise any or all of the rights and remedies provided for
by the applicable Uniform Commercial Code, specifically including,
without limitation, the right to recover the fees and expenses incurred
by IBM Credit in connection with the enforcement of this Agreement and
the other Credit Documents or in connection with Borrower's redemption
of the Collateral, including fees, expenses and disbursements of
attorneys and paralegals (including the allocated costs of inside
counsel).
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(iii) Require Borrower to assemble the Collateral or any part
thereof and make it available at one or more places as IBM Credit may
designate and deliver possession of the Collateral or any part thereof
to IBM Credit, who shall have full right to enter upon any or all of
Borrower's premises and property to exercise IBM Credit's rights
hereunder and under the other Credit Documents.
(iv) Use, manage, operate and control the Collateral and
Borrower's business and property to preserve the Collateral or its
value, including, without limitation, the rights to take possession of
all of the Collateral, to exclude any third parties from Borrower's
premises and property.
(v) Enforce one or more remedies hereunder and under the other
Credit Documents, successively or concurrently, and such action shall
not operate to estop or prevent IBM Credit from pursuing any other or
further remedy which it may have, and any repossession or retaking or
sale of the Collateral pursuant to the terms hereof shall not operate to
release Borrower from its obligations hereunder.
(vi) Proceed by an action or actions at law or in equity to
foreclose this Agreement or any of the other Credit Documents and sell
the Collateral, or any portion thereof, pursuant to a judgment or decree
of a court or courts of competent jurisdiction.
(vii) Terminate the Line of Credit as provided in Section 15
hereof.
(c) For the purpose of enabling IBM Credit to exercise its rights
and remedies under this Agreement, and for no other purpose, Borrower hereby
grants to IBM Credit, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to
Borrower) to use, assign, license or sub-license any of the Collateral
consisting of intellectual property rights (including, without limitation,
copyrights, trademarks, trade names, trade secrets, patents and all rights and
other property relating thereto or arising therefrom) now owned or hereafter
acquired by Borrower, wherever the same may be located, including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof. Upon the payment in full of all Secured Obligations and
cancellation or termination of the Line of Credit or earlier release of the
Collateral, the license granted by Borrower pursuant to the immediately
preceding sentence shall be terminated,
(d) Upon the occurrence and during the continuance of an Event of
Default, IBM Credit shall have the right at any time to make any payments and do
any other acts IBM Credit may deem necessary to protect its security interests
in the Collateral, including, without limitation, the rights to pay, purchase,
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contest or compromise any encumbrance, charge or lien which, in the judgment of
IBM Credit, appears to be prior to or superior to the security interests granted
hereunder, and appear in and defend any action or proceeding purporting to
affect its security interests in, and/or the value of, the Collateral.
(e) Borrower hereby agrees to reimburse IBM Credit for all
payments made and expenses incurred under this Agreement and the other Credit
Documents including fees, expenses and disbursements of attorneys and paralegals
(including the allocated costs of inside counsel) acting for IBM Credit,
including any of the foregoing payments under or acts taken to protect its
security interests in the Collateral, which amounts shall be secured under this
Agreement and the other Credit Documents, and agrees it shall be bound by any
payment made or act taken by IBM Credit hereunder absent IBM Credit's gross
negligence or willful misconduct. IBM Credit shall have no obligation to make
any of the foregoing payments or perform any of the foregoing acts.
(f) Borrower hereby irrevocably authorizes and appoints IBM
Credit, or any Person or agent IBM Credit may designate, as Borrower's
attorney-in-fact, at Borrower's cost and expense, to exercise, to the extent
permitted by applicable law, all of the following powers, which being coupled
with an interest, shall be irrevocable until all of the Secured Obligations have
been paid and satisfied in full:
(i) Upon the occurrence and during the continuance of an Event of
Default, to receive, take, endorse, negotiate, sign, assign and deliver,
all in the name of IBM Credit or Borrower, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(ii) To request, at any time from customers indebted on Accounts,
verification of information concerning the Accounts and the amounts
owing thereon;
(iii) Upon the occurrence and during the continuance of an Event
of Default, to receive, open and dispose of all mail addressed to
Borrower and to notify postal authorities to change the address for
delivery thereof to such address as IBM Credit may designate;
(iv) Upon the occurrence and during the continuance of an Event
of Default, to give customers indebted on Accounts notice of IBM
Credit's interest therein, and/or to instruct such customers to make
payment directly to IBM Credit for Borrower's account;
(v) Upon the occurrence and during the continuance of an Event of
Default, to file and prosecute any claim or claims of Borrower for any
award or payment in connection with any loss, theft, destruction of, or
damage to, any of the Collateral and to collect and receive any such
award or payment;
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(vi) Upon the occurrence and during the continuance of an Event
of Default, to demand, ▇▇▇ for, collect, receive and give acquaintance
for any and all other monies due or to become due on any Collateral or
by virtue thereof;
(vii) Upon the occurrence and during the continuance of an Event
of Default, to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any of the Collateral;
(viii) Upon the occurrence and during the continuance of an Event
of Default, to sell, transfer, assign or otherwise deal in or with any
of the Collateral, as fully and effectually as if IBM Credit were the
absolute owner thereof; and
(xi) Upon the occurrence and during the continuance of an Event
of Default, to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto.
IBM Credit's authority under this Section 13(f) shall include, without
limitation, the authority to execute and give receipt for any certificate of
ownership or any document, transfer title to any item of Collateral, sign
Borrower's name on all financing statements or any other documents deemed
necessary or appropriate to preserve protect or perfect the security interest in
the Collateral and to file the same, prepare, file and sign Borrower's name on
any notice of lien, assignment or satisfaction of lien or similar document in
connection with any of the Collateral and prepare, file and sign Borrower's name
on a proof of claim in bankruptcy or similar document against any customer of
Borrower, and to take any other actions arising from or incident to the powers
granted to IBM Credit in this Agreement and the other Credit Documents. Borrower
hereby ratifies all that IBM Credit shall lawfully do or cause to be done by
virtue of this Section 13(f).
(g) IBM Credit shall have and be entitled to exercise all powers
hereunder which are specifically granted to IBM Credit by the terms hereof,
together with such powers as are reasonably incident thereto. IBM Credit may
perform any of its duties hereunder or in connection with the Collateral by or
through agents or employees and shall be entitled to retain counsel and to act
in reliance upon the advice of counsel concerning all such matters. Neither IBM
Credit nor any director, officer, employee, attorney or agent of IBM Credit
shall be liable to Borrower or any other Credit Party for any action taken or
omitted to be taken by it or them hereunder, except for its or their own gross
negligence or willful misconduct, nor shall IBM Credit be responsible for the
validity, effectiveness or sufficiency of this Agreement, any other Credit
Document or of any other document or security furnished pursuant hereto or
thereto. IBM Credit and its directors, officers, employees, attorneys and agents
shall be entitled to rely on any communication, instrument
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or document reasonably believed by it or them to be genuine and correct and to
have been signed or sent by the proper Person or Persons.
(h) In connection with any public or private sale under the applicable
Uniform Commercial Code, IBM Credit shall give Borrower at least ten days' prior
written notice of the time and place of any public sale of the Collateral or of
the time after which any private sale or other intended disposition thereof may
be made, which shall be deemed to be reasonable notice of such sale or other
disposition.
(i) If IBM Credit recovers possession of all or any part of the
Collateral pursuant to a writ of possession or other judicial process, whether
prejudgment or otherwise, IBM Credit may thereafter retain, sell or otherwise
dispose of such Collateral in accordance with this Agreement or the applicable
Uniform Commercial Code, and following such retention, sale or other
disposition, IBM Credit may voluntarily dismiss without prejudice the judicial
action in which such writ of possession or other judicial process was issued.
Borrower hereby consents to the voluntary dismissal by IBM Credit of such
judicial action, and Borrower further consents to the exoneration of any bond
that IBM Credit files in such action.
14. Warranty of Collateral. Borrower acknowledges that IBM Credit does
not warrant the Collateral. Borrower will be obligated to pay to IBM Credit in
full even if the Collateral is defective or fails to conform to the warranties
extended by the supplier. The obligations of Borrower to IBM Credit will not be
affected by any dispute Borrower may have with any manufacturer or distributor.
Borrower will not assert against IBM Credit any claim or defense which it may
have against any manufacturer or distributor.
15. Term; Termination. The Line of Credit may be terminated by either
Borrower or IBM Credit upon sixty (60) days' prior written notice to the other
party, which termination shall be effective on the sixtieth (60th) day after the
non-terminating party receives such notice unless earlier terminated as
otherwise provided in this Section 15. During said sixty (60) day period between
notice and the effective date of termination, IBM Credit shall continue to
finance the purchase by Borrower of Financed Products in accordance with the
terms and conditions set forth in this Agreement. Notwithstanding the foregoing,
the Line of Credit shall terminate on the last day of the Revolving Period. Upon
termination of the Line of Credit and provided that no Event of Default has
occurred, all of the indebtedness of Borrower to IBM Credit hereunder shall be
paid in accordance with the payment terms set forth in this Agreement. If any
party terminates the Line of Credit pursuant to this Section, neither party
hereunder shall be relieved from any obligation to the other with respect to
transactions under this Agreement which occur or are committed to before the
effective date of termination. In addition to the foregoing, IBM Credit may
terminate the Line of Credit immediately without prior notice if an Event of
Default has
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occurred; provided, however, that the Line of Credit shall automatically
terminate, and all outstanding indebtedness owing from Borrower to IBM Credit
under this Agreement shall become immediately due and payable, upon the
occurrence of an Event of Default specified in Section 13(a)(vi). After the
termination of the Line of Credit all Advances (if any) made by IBM Credit
pursuant to this Agreement shall be at IBM Credit's sole discretion.
16. Confidentiality Statement. (a) IBM Credit and Borrower acknowledge
that this Agreement, and any further exhibits, addendums or amendments thereto,
or any information disclosed under this Agreement, are strictly confidential,
and neither IBM Credit nor Borrower shall reproduce or disclose to any third
party any or all of such confidential matters unless the other party hereto
consents in writing to such reproduction or disclosure or except as required by
law including required filings with the Securities and Exchange Commission;
provided that the foregoing limitations shall not apply to information which (i)
is or becomes available to the general public other than as a result of a
disclosure by Borrower, (ii) was already in IBM Credit's possession on a
non-confidential basis prior to its disclosure by Borrower or (iii) becomes
available to IBM Credit on a non-confidential basis from a source other than
Borrower. Notwithstanding the foregoing, neither IBM Credit nor Borrower will be
prevented from disclosing confidential matters (i) to its legal counsel and
independent auditors, (ii) to any potential holder of a participating interest,
assignment or other interest in the obligations of Borrower under this Agreement
or any Person that provides or may provide credit insurance or similar service
to IBM Credit which, in each case, agrees in writing to maintain the
confidentiality of such information on terms, considered as a whole, no less
protective than those contained herein, (iii) to the extent reasonably required
in connection with any litigation to which IBM Credit or Borrower may be a
party, (iv) to the extent reasonably required in connection with the exercise of
any remedy hereunder or (v) upon the order of any court or administrative
agency. In addition to the foregoing, Borrower may provide a copy of this
Agreement to its creditors upon the request of any such creditor.
(b) In the event that IBM Credit or Borrower, as the case may be,
is requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or other process)
to disclose any information subject to the provisions of Section 16(a), it is
agreed that such party will provide the other party with prompt notice of any
such request or requirement so that the other party may seek an appropriate
protective order or waive compliance with the provisions of this Agreement. If,
failing the entry of a protective order or the receipt of a waiver hereunder,
the party from whom disclosure is being requested or required is, in the opinion
of its counsel, compelled to disclose such confidential matters, such party may
disclose that portion of such confidential matters which its counsel advises
such party that such party is compelled to disclose,
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17. Fees and Expenses; Indemnity
(a) Borrower hereby agrees to pay to IBM Credit, promptly upon
demand therefor, all costs and expenses (including, without limitation, the fees
and disbursements of counsel including in-house counsel of IBM Credit) incurred
by IBM Credit from time to time in connection with the preparation, execution,
delivery, administration and enforcement of this Agreement, each of the other
Credit Documents and any other agreement, document or instruments executed in
connection herewith or therewith, the actions and transaction provided for
herein and therein or contemplated hereby or thereby.
(b) Borrower hereby agrees to indemnify and hold harmless IBM Credit
and its shareholders, officers, directors, agents, employees, legal
representatives, successors assigns and Affiliates (each an "indemnitee")
against any losses, claims, damages, liabilities or other expenses ("Losses") to
which any of them may become subject insofar as such Losses arise out of or are
based upon any event, circumstance or condition occurring or existing on or
before the date of this Agreement or relating to the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby or thereby, except that such indemnity obligations shall not
apply to any Loss to the extent such Loss arises from the gross negligence or
willful misconduct of the indemnitee seeking indemnification.
18. Miscellaneous.
(a) IBM Credit's failure to take action whenever Borrower defaults
shall not prevent IBM Credit from taking action or waive IBM Credit's right to
take action as to any default or any later default.
(b) Borrower waives to the extent permitted by law any and all
rights of set-off it may have against IBM Credit for any reason whatsoever.
Borrower further waives to the extent permitted by law presentment, demand and
protest, and, except as herein expressly provided, notices of nonpayment,
nonperformance, any right of contribution, dishonor, amount of indebtedness
outstanding, any other demands, and notices required by law.
(c) Borrower acknowledges that it may not assign this Agreement
without the prior written consent of IBM Credit. This Agreement shall protect
and bind the permitted successors and assigns of Borrower and the successors and
assigns of IBM Credit and any of the existing or future Affiliates of IBM Credit
that may extend credit to Borrower. Without limiting the generality of the
foregoing, IBM Credit may grant participating interests (without the consent of
Borrower) to one or more Persons in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Line of Credit, the Advances and/or the Term Loan owing to it);
provided that (i) IBM Credit's obligations under this Agreement shall remain
unchanged, (ii) IBM Credit shall remain solely responsible to Borrower for the
performance of such obligations
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(iii) Borrower shall continue to deal solely and directly with IBM Credit in
connection with IBM Credit's rights and obligations under this Agreement;
provided that the foregoing shall not limit IBM Credit's ability to transfer,
grant, assign or sell any participating interest in respect of which the
participant shall have rights to approve any amendment or waiver of this
Agreement. Notwithstanding the foregoing, IBM Credit hereby agrees that it will
not grant any such participating interests to any direct competitor of Borrower
or any other entity known by IBM Credit to be an Affiliate of any such
competitor.
(d) This Agreement can be varied only by a document signed by the
authorized representatives of Borrower and IBM Credit. If any provision of this
Agreement or its duplication is invalid, or unenforceable, the remainder of this
Agreement will not be affected.
(e) Any notice or other communication required or desired to be
given under this Agreement shall be in writing and mailed, by certified or
registered mail, return receipt requested, postage prepaid, if to Borrower as
follows:
ENTEX Information Services, Inc.
Six International Drive
Bye Brook, 10573-1058
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Vice President, Treasurer
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
or if to IBM Credit as follows:
IBM Credit Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Director of Remarketing
Financing Support
Director of Remarketer
Financing Portfolio
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇/5727
▇▇▇-▇▇▇-▇▇▇▇
or, in each such case, to such other address as either party may from time to
time in writing designate to the other. All such notices (except a notice of
change of address which shall be effective when actually received or when
delivery is refused) shall be deemed received when such receipt can be
documented, or, at the latest, on the fifth (5th) regular mail delivery date
following the postmark date it bears, unless this Agreement shall otherwise
provide for effectiveness of notice upon actual receipt of such notice.
(f) For any of the Collateral that is located in Louisiana, Borrower
agrees that IBM Credit will have a vendor's privilege granted under Louisiana
law to the fullest extent as if IBM Credit had actually sold the Collateral to
Borrower.
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(g) IBM Credit has and will at all times possess all the rights and
remedies of a secured party under law and its rights and remedies as such and
hereunder are and will always be cumulative. Borrower agrees that a private sale
by IBM Credit following the occurrence of an Event of Default of any of the
Collateral to a dealer in those types of goods is a commercially reasonable
sale. Further, Borrower agrees that following the occurrence of an Event of
Default, IBM Credit's delivery of any Financed Products to any Authorized
Supplier with a request that it repurchase those goods, as provided in any
repurchase agreement with IBM Credit, is a commercially reasonable disposition.
(h) Borrower waives any statutory right to notice of hearing prior
to IBM Credit's attachment, repossession or seizure of the Collateral to the
maximum extent permitted by law.
(i) IBM Credit hereby notifies Borrower that it will endorse any
checks for payments received from any Authorized Supplier.
(j) Borrower hereby waives any right to notice and hearing under
Chapter 903a of the Connecticut General Statutes, or as otherwise allowed by any
state or federal law, with respect to any prejudgment remedy which IBM Credit
may elect to pursue in the event of the occurrence of an Event of Default.
(k) Regardless of any other document, agreement or instrument
executed by or for the benefit of Borrower, Borrower hereby agrees that it shall
not receive from any Authorized Supplier or IBM Credit (or any Affiliate of any
of them) any price protection credits at any time unless (i) IBM Credit shall be
satisfied that Borrower has made all appropriate adjustments to its inventory
valuation appropriate in connection with such price protection credit, (ii) no
Shortfall Amount shall exist hereunder, and (iii) no Default or Event of Default
shall have occurred and be continuing.
(1) IBM Credit and Borrower agree that the intent of this Agreement
is to amend and restate the Existing Agreement in its entirety to set forth the
terms and conditions under which IBM Credit may hereafter make Advances to
Borrower. It is the intent of IBM Credit and Borrower that, commencing as of the
date hereof, this Agreement replace in its entirety the Existing Agreement and
that, from and after the date hereof, all rights accrued under the Existing
Agreement, to the extent not previously extinguished through payment, shall
continue in full force and effect under this Agreement.
19. Definitions - General. The following terms, as used herein, have the
following meanings or are defined in the Sections referred to below:
"Accounts" -- Section 6(a).
"Acquisition Subordinated Debt" - shall mean the
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Indebtedness of Borrower evidenced by that certain Senior Secured Note dated
August 6, 1993 made by Borrower and payable to Parent in the original principal
amount equal to $10,000,000.
"Advance" -- Section 1(a).
"Affiliate" shall mean, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with, such Person and, if such Person is an individual, any member of
the immediate family (including parents, siblings, spouse, children,
step-children, nephews, nieces and grandchildren) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. For purposes of this definition, "control" shall mean the possession,
directly or indirectly, of power to direct or cause the direction of management
and policies of a business, whether through the ownership of securities or other
ownership interests, by contract or otherwise and either alone or in conjunction
with others or any group; provided that, in any event with respect to Borrower,
any Person which owns directly or indirectly, alone or in conjunction with
others or any group, 5% or more of the securities having ordinary voting power
for the election of directors or other governing body of Borrower or 5% or more
of the securities or other ownership interests of Borrower (including warrants
to acquire such ownership interests, whether or not then exercisable), and any
Affiliate of such Person, will be deemed to control Borrower. Notwithstanding
the foregoing, no individual shall be deemed to be an Affiliate of a corporation
solely by reason of his or her being an officer or director of such corporation.
"Agreement" - Preamble.
"Auditors" shall mean any nationally recognized firm of independent
public accountants selected by Borrower and satisfactory to IBM Credit in its
reasonable discretion.
"Authorized Supplier Claims" -- Section 2(a).
"Authorized Suppliers" Recitals.
"Base Finance Charge" Section 3(a).
"Base Financial Statements" -- Section 20.
"Benefit Plan" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) for which Borrower or any ERISA
Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"BLI Subordinated Debentures" shall mean 5.5% Convertible Subordinated
Debentures issued by Business Land, Inc. and due 2007 which have been assumed by
Borrower.
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"Blocked Account Agreement" -- Section 11(b)(iv),
"Borrower" -- Preamble.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which commercial banks are not required or authorized to close in
New York, New York,
"Capital Expenditures" shall mean, for any period, the sum of (a) all
expenditures capitalized for financial statement purposes in accordance with
GAAP plus, without duplication, (b) the entire principal amount of any
Indebtedness (including obligations under capitalized leases) assumed or
incurred in connection with any such expenditures; provided that Capital
Expenditures shall in any event include the purchase price paid in connection
with the acquisition of any Person (including through the purchase of a majority
of the capital stock or other ownership interests of such Person or through
merger or consolidation) to the extent allocable to property, plant or
equipment, Proceeds of insurance applied to the repair or replacement of the
property affected by a casualty loss shall not constitute Capital Expenditures.
"Cash Equivalents" shall mean (i) securities issued, guaranteed or
insured by the United States or any of its agencies with maturities of less than
one year from the date acquired; (ii) certificates of deposit with maturities of
less than one year from the date acquired issued by a U.S. federal or state
chartered commercial bank of recognized standing, which has capital and
unimpaired surplus in excess of $200,000,000 and which bank or its holding
company has a short-term commercial paper rating of at least A-1 or the
equivalent by Standard & Poor's Corporation and at least P-1 or the equivalent
by ▇▇▇▇▇'▇ Investors Services, Inc.; (iii) reverse repurchase agreements with
terms of not more than seven days from the date acquired, for securities of the
type described In (i) above and entered into only with commercial banks having
the qualifications described in (ii) above; (iv) commercial paper, other than
commercial paper issued by Borrower or any of its Affiliates, issued by any
Person incorporated under the laws of the United States or any state thereof and
rated at least A-1 or the equivalent thereof by Standard & Poor's Corporation or
at least P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc., in
each case with maturities of less than one year from the date acquired; and (v)
investments in money market funds registered under the Investment Company Act of
1940, which have net assets of at least $200,000,000 and at least eighty-five
percent (85%) of whose assets consist of securities and other obligations of the
type described in clauses (i) through (iv) above.
"Collateral -- Section 6(a).
"Collateral Documents" shall mean all contracts, instruments and other
documents now or hereafter executed and delivered in connection with this
Agreement and the transactions contemplated hereby, pursuant to which liens and
security
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interests are granted to IBM Credit in property of any Person party thereto
and/or the obligations of Borrower hereunder are guaranteed to IBM Credit and
any document pursuant to which any creditor of Borrower subordinates its rights
with respect to all or any portion of the Indebtedness or other obligations
owing to, or the Liens granted to, such creditor to the rights of IBM Credit
hereunder or to the Liens granted to IBM Credit in connection herewith.
"Commercial Revolving Loan and Security Agreement" shall mean that
certain Commercial Loan and Security Agreement dated as of November 8, 1993, as
amended through the date of this Agreement among Borrower and, as Lender and
Agent, Citibank, N.A.
"Common Due Date" -- Section 3(a).
"Consolidated Net Income" shall mean for any period the consolidated net
income of Borrower and its consolidated Subsidiaries for such period as
determined in accordance with GAAP applied on a basis consistent with prior
practices.
"Credit Documents" shall mean, collectively, this Agreement, each of the
Collateral Documents, and all other documents, agreements, instruments,
guaranties opinions and certificates now or hereafter executed and delivered in
connection herewith or therewith, as the same may be modified, amended,
extended, restated or supplemented from time to time.
"Credit Parties" -- Section-13(a).
"DFS" shall mean Deutsche Financial Services Corporation.
"Daily Shortfall Amount" -- Section 3(b).
"Daily Shortfall Payment Date" -- Section 3(b).
"Default" -- Section l(a).
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"EBIT" shall mean, with respect to any fiscal period, the Consolidated
Net Income (other than extraordinary items) for such period, plus (i) the amount
of all Interest Expense and income tax expense of Borrower and its consolidated
Subsidiaries for such period and less (ii) gains and losses attributable to any
fixed asset sales by Borrower and its consolidated Subsidiaries during such
period.
"Eligible Ingram Non-Financed Products" at any time shall mean all
inventory (excluding IBM Service Parts and Financed Products) (i) which is owned
by (and in the possession or under the control Of Borrower) and located in
Borrower's Erlanger, Kentucky; Canton, Massachusetts; Issaquah, Washington; or
Golden Valley, Minnesota warehouse, (ii) as to which IBM
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Credit has a valid, perfected first priority security interest and (iii) which
is eligible for repurchase by ▇▇▇▇▇▇ Micro pursuant to the ▇▇▇▇▇▇ Micro Purchase
Agreement, in each case, at such time.
"Eligible Ingram Non-Financed Products Value" -Section 3(c).
"Eligible Receivables" shall mean the accounts of Borrower, provided,
however, the following accounts of Borrower will be deemed ineligible for the
purpose of this Agreement:
(i) accounts created from the sale of goods and services on
nonstandard terms and/or that allow for payment to be made more
than (x) sixty (60) days from the date of sale to any State of
California department or agency and (y) forty-five (45) days from
date of sale to any other account obligor to Borrower;
(ii) accounts unpaid more than ninety (90) days from date of invoice;
(iii) accounts owing by any obligor if fifty percent (50%) or more of
the aggregate amount of all accounts owing by such obligor to
Borrower remain unpaid for more than ninety (90) days from the
date of invoice;
(iv) accounts with respect to which the obligor is an officer,
employee, agent, parent, subsidiary or Affiliate of Borrower or
has common shareholders, officers, or directors with Borrower;
(v) consignment sales;
(vi) accounts with respect to which the payment by the obligor is or
may be conditional;
(vii) accounts with respect to which the obligor is not a resident of
the United States;
(viii) accounts owing by any obligor to which Borrower is liable for
goods sold or services rendered by such obligor to Borrower and
which Borrower's obligations to the obligor is greater than ten
percent (10%) of the amount of such accounts;
(ix) accounts in respect of goods purchased for a personal, family or
household purpose;
(x) accounts in respect of goods which have been used for
demonstration purposes or loaned by Borrower to another party;
(xi) accounts which are progress payment accounts or
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contra accounts;
(xii) accounts upon which IBM Credit does not have a valid, perfected,
first priority security interest;
(xiii) accounts as to which the obligor thereon has not been instructed
to remit the proceeds thereof to one of the Lockboxes referred to
in Section 11(b)(iv) hereof;
(xiv) accounts originated by the Washington D.C.-Federal division of
Borrower (or designated as branch no. 115 or by offices of
Borrower located in (a) Westport, Connecticut (or designated as
branch No. 103), (b) Oakbrook Terrace, Illinois (or designated as
branch #107), (c) Chicago, Illinois (or designated as branch No.
107), (d) Elmhurst, Illinois (or designated as branch No. 107),
(e) Pembroke Pines, Florida (or designated as branch ▇▇. ▇▇▇
▇▇▇/▇▇ ▇▇▇), (▇) Pittsburgh, Pennsylvania (or designated as
branch No. 111), (g) Philadelphia, PA (or designated as branch
No. 109), or New York, NY (or designated as branch No. 112) or
any successor office or branch;
(xv) accounts payable by an account debtor that Borrower knows is or
will become, subject to proceedings under United States
Bankruptcy Law or other law for the relief of debtors; and
(xvi) any and all other accounts which IBM Credit deems, in good faith,
to be ineligible; provided, however, that IBM Credit will provide
Borrower with ten (10) days' notice that IBM Credit has
classified a type of Account to be ineligible for purposes of
this Section;
provided, that, the aggregate unpaid balance of the accounts owing by any one
obligor (including all Affiliates of such obligor) which would otherwise qualify
as Eligible Receivables hereunder shall be limited (in inverse chronological
order) to the extent necessary so as to not exceed (y) $20,000,000 for obligors
who are rated BAA or better by ▇▇▇▇▇'▇ Investor Service or are state government
entities and (z) three percent (3%) of the Eligible Receivables for all other
obligors.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute thereto and all final or
temporary regulations promulgated thereunder and published generally applicable
rulings entitled to precedential effect,
"ERISA Affiliate" shall mean any entity required at any relevant time to
be aggregated with Borrower under Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code.
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"Event of Default" -- Section 13(a).
"Financed Products" -- Recitals.
"First Lien Collateral" -- Section 6(a).
"Fiscal Months" shall mean, with respect to each Fiscal Quarter, each of
the first two consecutive four-week periods beginning on the first day of each
Fiscal Quarter and the immediately succeeding consecutive five-week period
thereafter in such Fiscal Quarter, as each such period may be adjusted to
conform to the end of such Fiscal Quarter.
"Fiscal Quarters" shall mean the first thirteen-week period beginning on
each July 1 of each fiscal year and each of the three consecutive thirteen-week
periods thereafter in such fiscal year, as each such period may be adjusted to
conform to a June 30 fiscal year end.
"Free Financing Period" shall mean for each Advance for a Financed
Product, the period, if any, in which IBM Credit does not charge Borrower a
financing charge. IBM Credit shall calculate the Borrower's Free Financing
Period utilizing a methodology that is consistent with the methodologies used
for similarly situated customers of IBM Credit. Borrower understands that
certain Authorized Supplier may not offer or may cease to offer a free financing
period for Borrower's purchase of Financed Products.
"GAAP" -- Section 2(b).
"HP Special Accounts Collateral" -- Section 3(c).
"HP Special Inventory Collateral" -- Section 3(c).
"IBM" -- IBM Corporation together with any of its Affiliates.
"IBM Claims" -- Section 2(a).
"IBM Corporation" -- International Business Machines Corporation, a New
York Corporation.
"IBM Credit" -- Preamble,
"IBM Products" -- Recitals.
"IBM Service Parts" -- Section 3(c).
"Indebtedness" shall mean, with respect to any Person, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than unsecured trade liabilities incurred
in the ordinary course of business and payable in accordance with customary
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital
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leases, (c) all obligations of such Person in respect of letters of credit,
banker's acceptances or similar obligations issued or created for the account of
such Person, (d) liabilities arising under Interest Rate Agreements of such
Person, (e) all obligations under guaranties of such Person, (f) all obligations
of such Person to redeem or otherwise retire any of its capital stock or any
other ownership interest, including, without limitation, any warrant or other
right to acquire any such capital stock or other ownership interest and (g) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof.
"indemnitee" -- Section 17(b).
"▇▇▇▇▇▇ Micro" -- ▇▇▇▇▇▇ Micro Inc., together with its successors and
assigns,
"▇▇▇▇▇▇ Micro Advances" -- Section 1
"▇▇▇▇▇▇ Micro Purchase Agreement" shall mean a purchase or repurchase
agreement between IBM Credit and ▇▇▇▇▇▇ Micro, in form and substance
satisfactory to IBM Credit in its sole discretion, pursuant to which ▇▇▇▇▇▇
Micro agrees to purchase or repurchase certain inventory of Borrower.
"Interest Expense" shall mean, for any period, the aggregate
consolidated interest expense of Borrower during such period in respect of
Indebtedness, determined on a consolidated basis in accordance with GAAP,
including, without limitation, amortization of original issue discount on any
Indebtedness and of all fees payable in connection with the incurrence of such
Indebtedness (to the extent included in interest expense), the interest portion
of any deferred payment obligation and the interest component of any capital
lease obligations.
"Interest Rate Agreement" shall mean any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge or arrangement under which
Borrower is a party or beneficiary.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute thereto and all final or
temporary rules and regulations promulgated thereunder and published, generally
applicable rulings entitled to precedential effect to the extent such rules,
regulations or rulings are effective and applicable hereto.
"Investment" shall mean all expenditures made and all liabilities
incurred (contingently or otherwise) for or in connection with the acquisition
of stock or indebtedness of, or for loans, advances, capital contributions or
transfers of property to, or in respect of any guaranties (or other commitments
as described under Indebtedness) of obligations of, any Person. In determining
the aggregate amount of Investments outstanding at any particular time, (i) the
amount of any
48
52
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be deducted in respect of each such Investment any amount received as a
return of capital (but only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (iii) there shall not be
deducted in respect of any Investment any amounts received as earnings on such
Investment, whether as dividends, interest or otherwise; and (iv) there shall
not be deducted from the aggregate amount of Investments any decrease in the
market value thereof.
"Lien" shall mean any lien, claim, charge, pledge, security interest,
deed of trust, mortgage, other encumbrance or, other arrangement having the
practical effect of the foregoing and shall include the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.
"Line of Credit" -- Section 1(a).
"Lockboxes" -- Section 11(b)(iv).
"Long-term Debt" -- Section 11(c)(v).
"Losses" -- Section 17(b).
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of Borrower, (ii) the value of the
Collateral or the amount which IBM Credit would be likely to receive (after
giving consideration to delays in payment and costs of enforcement) in the
liquidation of such Collateral, (iii) Borrower's ability to perform its
obligations under the Credit Documents to which it Is a party, or (iv) the
rights and remedies of IBM Credit under any Credit Document.
"Material Contract" shall mean any contract or other arrangement, (other
than the Credit Documents), whether written or oral, to which Borrower is a
party as to which the breach, nonperformance, cancellation or failure to renew
by any party thereto could have a Material Adverse Effect.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA and (i) which is, or within the immediately
preceding six (6) years was, contributed to by Borrower or any ERISA Affiliate
or (ii) with respect to which Borrower may incur any liability.
"Parent" shall mean ENTEX Holdings, Inc., a Delaware corporation and the
owner of 100% of the issued and outstanding capital stock of Borrower,
"PBGC" shall mean the Pension Benefit Guaranty
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53
Corporation and any Person succeeding to the functions thereof,
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency or
department thereof), and, as applicable, the successors, heirs and assigns of
each.
"Plan" shall mean any employee benefit plan, program or arrangement,
whether oral or written, maintained or contributed to by Borrower, or with
respect to which Borrower may incur liability.
"Prime Rate" -- Section 3(a).
"Reportable Event" shall mean any of the events described in Section
4043 of ERISA and the regulations thereunder.
"Revenue" -- shall mean, 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 Borrower as
determined in accordance with GAAP, exclusive of the write-up of any asset.
"Revolving Period" shall mean the period from and including the
effective date of this Agreement to and including the first anniversary of date
of this Agreement, the date first set forth above, (or if such date is not a
Business Day, the next succeeding Business Day), or such later date as IBM
Credit and Borrower may agree to in writing.
"Secured Obligations" -- Section 6(a).
"Shortfall Amount" -- Section 3(b).
"Shortfall Payment Date" -- Section 3(b).
"Subordinated Debt" shall mean, collectively, the Acquisition
Subordinated Debt and the BLI Subordinated Debentures,
"Subsidiary" shall mean as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Tangible Net Worth" shall mean as to Borrower, (i) the excess of the
total assets over total liabilities of such Person
50
54
(such assets and liabilities being determined by reference to the book value) of
such Person; plus (ii) the BLI Subordinated Debentures; plus (iii) the ENTEX
Holdings, Inc. subordinated note due August 2000; (iv) but excluding from the
determination of such assets: (A) goodwill; (B) expenses and charges relating to
or arising from the purchase of customer accounts or other similar expenses,
trademarks, names, trade names, copyrights, patents, patent applications,
privileges, franchises, licenses and rights in any thereof, and other similar
intangibles; (C) any write-up in the book value of any asset; (D) all accounts
receivable from officers, directors and stockholders of such Person; and (E) any
other assets as IBM Credit, in its sole discretion, deems to exclude; all of the
foregoing being determined in accordance with GAAP.
"Termination Event" shall mean (i) a Reportable Event with respect to
any Benefit Plan or Multiemployer Plan; (ii) the withdrawal of Borrower or any
ERISA Affiliate from a Benefit Plan during a plan year in which such entity was
a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the institution by the
PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan; (v) any
event or condition (a) which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
Borrower or any ERISA Affiliate from a Multiemployer Plan.
"Value" -- Section 3(c).
"Working Capital" -- Section 12(g).
"Working Capital Advance Date" -- Section 3(d)
"Working Capital Advance Option" Section 3(d)
"Working Capital Advance Period" Section 3(d)
20. Accounting Terms and Determinations. Unless otherwise defined or
specified herein, all accounting terms used herein shall have the meanings
customarily given in accordance with GAAP, and all financial computations
(including computation of reserves) to be made under this Agreement shall,
unless otherwise specifically provided herein, be made in accordance with GAAP
applied on a basis consistent in all material respects with the financial
statements of Borrower for the period ending July 3, 1994 previously delivered
to IBM Credit (the "Base Financial Statements"). All accounting determinations
for purposes of determining compliance with the covenants set forth in Section
12 shall be made in accordance with GAAP as in effect on the date of this
Agreement and applied on a basis consistent in all material respects with the
Base Financial Statements. The financial
51
55
statements required to be delivered hereunder from and after the date hereof and
all financial records shall be maintained in accordance with GAAP as in effect
as of the date of the Base Financial Statements, or, if GAAP shall change from
the basis used in preparing the Base Financial Statements, the certificates
required to be delivered pursuant to Section 2 demonstrating compliance with the
covenants contained herein shall include calculations setting forth the
adjustments necessary to demonstrate how Borrower is in compliance with the
financial covenants based upon GAAP as in effect on the date of the Base
Financial Statements. If Borrower shall change its method of inventory
accounting from the first-in-first-out method to the last-in-first-out method,
all calculations necessary to determine compliance with the covenants contained
herein shall be made as if such method of inventory accounting had not been so
changed,
21. Other Defined Terms. Terms not otherwise defined herein which are
defined in the Uniform Commercial Code as in effect in the State of New York
(the "Code") shall have the meanings given them therein. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and references to Article, Section, Annex, Schedule, Exhibit and
like references are references to this Agreement unless otherwise specified. An
Event of Default shall "continue" or be "continuing" until such Event of Default
has been waived in writing by IBM Credit.
22. Conditions Precedent to the Effectiveness of this Agreement. The
effectiveness of this Agreement is subject to the satisfaction (or waiver
thereof by IBM Credit in its sole discretion) of the following conditions
precedent:
(a) IBM Credit shall have received on or prior to the date hereof
each of the following:
(i) (A) certified copies of the resolutions of the Board
of Directors of Borrower authorizing the execution, delivery and
performance of this Agreement and each other document executed and
delivered in connection herewith, and (B) a certificate of the Secretary
or an Assistant Secretary of Borrower, in form and substance
satisfactory to IBM Credit, certifying (1) the names and true signatures
of the officers of Borrower authorized to sign this Agreement and such
other documents and (2) that the Certificate of Incorporation and
by-laws of Borrower have not changed from the Certificate of
Incorporation and by-laws delivered by Borrower to IBM Credit with the
Existing Agreement;
(ii) certificates dated as of a recent date from the
Secretary of State or other appropriate authority evidencing the good
standing of Borrower in the jurisdiction of its organization and in each
other jurisdiction where the ownership or lease of its property or the
conduct of its business requires it to qualify to do business and where
the
52
56
failure so to qualify could reasonably be expected to have a Material
Adverse Effect;
(iii) the favorable opinion(s) of counsel to Borrower, in
form and substance satisfactory to IBM Credit and its counsel;
(iv) copies of all approvals and consents from any Person,
in each case in form and substance satisfactory to IBM Credit, which are
required to enable any Credit Party to authorize, or are required in
connection with, (A) the execution, delivery or performance of each
Credit Document executed in connection herewith to which such Credit
Party is a party, or (B) the legality, validity, binding effect or
enforceability of each such Credit Document;
(v) loss payable endorsements in favor of IBM Credit as
required pursuant to Section 9;
(vi) acknowledgment copies not previously provided (or
other evidence of presentation for filing) of UCC-1 financing statements
naming IBM Credit as secured party and signed by Borrower as secured
party and filed in the jurisdictions set forth on Exhibit H and UCC-3
financing statements signed by Borrower amending all financing
statements on file as of the date hereof filed against Borrower and its
predecessors in favor of IBM Credit;
(vii) evidence in form and substance satisfactory to IBM
Credit that the ownership and control of all Lockboxes and the related
lockbox accounts have been transferred to IBM Credit, and Citibank, N.A.
pursuant to agreements in form and substance satisfactory to IBM Credit;
(viii) a certificate executed by the president, chief
financial officer or vice president treasurer of Borrower certifying
that, as of the date of this Agreement, (A) the representations and
warranties contained in this Agreement and in each other Credit Document
are true and correct, (B) no Default or Event of Default has occurred
and is continuing, and (C) no Shortfall Amount exists.
(ix) to the extent not previously provided by Borrower to
IBM Credit, a copy, if any, of all documents, instruments and agreements
evidencing or executed in connection with the loans and obligations made
by and owing to each of DFS and Hewlett-Packard Company;
(x) all such other statements, certificates, documents,
instruments, landlord and mortgagee waivers, financing statements,
agreements and other information with respect to the matters
contemplated by this Agreement as IBM Credit shall have reasonably
requested.
(b) All mortgage recording taxes, recording fees and
53
57
other charges payable in connection with the filing and recording of the Credit
Documents have either been paid in full by Borrower or arrangements for the
payment of such amounts satisfactory to IBM Credit shall have been made.
(c) Completion satisfactory to IBM Credit of all filings and other
actions, including, without limitation the execution of intercreditor agreements
in form and substance satisfactory to IBM Credit and the filing of the financing
statements referred to in Section 22(a)(x), necessary or advisable for the
purpose of ensuring that IBM Credit has a valid perfected security interest in
all Collateral and a first priority security interest in all First Lien
Collateral.
(d) IBM Credit shall have received all fees and expenses owing to it
under the terms of this Agreement and arrangements for such other compensation
as Borrower or any of its Affiliates and IBM Credit shall have agreed.
23. Conditions Precedent to Each Advance. On the date of the making of
any Advance both before and after giving effect thereto and to the application
of the proceeds therefrom, the following statements shall be true to the
satisfaction of IBM Credit (and each request for an Advance or the acceptance by
Borrower of the proceeds or benefit of such Advance and such Term Loan, shall be
deemed to be a representation and warranty by Borrower that on the date of such
Advance, both before and after giving effect thereto and to the application of
the proceeds thereof, such statements are true):
(a) The representations and warranties contained in this Agreement
and in each other Credit Document are true and correct on and as of the date of
such Advance, as the case may be, as though made on and as of such date, except
to the extent that such representations and warranties expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing;
and
(c) Both before and after giving effect to the making of such
Advance, no Shortfall Amount exists.
24. Amendment and Restatement; Etc. (a) Notwithstanding anything
contained in any document to the contrary, it is understood and agreed by
Borrower and IBM Credit that the claims of IBM Credit arising hereunder and
existing as of the date hereof constitute continuing claims arising out of the
obligations of the Existing Agreement. Borrower acknowledges and agrees that the
Indebtedness represented by the Advances outstanding as of the date hereof has
not been satisfied or discharged and that this Agreement is not intended to
effect a novation of the obligations of Borrower which were evidenced by the
Existing Agreement,
54
58
(b) Borrower acknowledges and agrees that IBM Credit shall have no
responsibility for the truth, accuracy or completeness of any representation,
warranty or other statement made for the performance of any party thereto of its
obligations thereunder. Borrower has made its own investigation of the foregoing
matters and is not relying in any respect on IBM Credit with respect thereto.
25. SUBMISSION AND CONSENT TO JURISDICTION. BORROWER HEREBY IRREVOCABLY
AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NONEXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK AND APPELLATE COURTS FROM ANY THEREOF.
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME.
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 18(g) OR AT SUCH OTHER ADDRESS OF WHICH IBM CREDIT
SHALL HAVE BEEN NOTIFIED PURSUANT THERETO.
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO ▇▇▇ IN ANY OTHER JURISDICTION.
(e) WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY
NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT.
26. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
27. JURY TRIAL WAIVER. EACH OF IBM CREDIT AND BORROWER WAIVES THE RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDINGS (INCLUDING ANY COUNTERCLAIM) OF
ANY TYPE IN WHICH BORROWER AND IBM CREDIT ARE PARTIES AS TO ALL MATTERS ARISING
DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, OR ANY DOCUMENT, INSTRUMENT OR
AGREEMENT EXECUTED IN CONNECTION HEREWITH.
(Signature Page Follows]
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59
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the date first written above.
ENTEX INFORMATION SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Treasure
IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: CREDIT MANAGER
56
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Exhibits
--------
Exhibit A Authorized Suppliers Claims Support
Exhibit B Lockbox Bank Report
Exhibit C Additional Reporting Requirements
Exhibit D Locations of Collateral
Exhibit E Intellectual Property
Exhibit F-A Existing Secured Indebtedness
Exhibit F-B Other Existing Indebtedness
Exhibit G Existing Investments
Exhibit H UCC Financing Statement Filing Locations
Exhibit I List of Authorized Suppliers
Exhibit J Compliance Certificate
57
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EXHIBIT A
---------
AUTHORIZED SUPPLIER CLAIMS REPORT
Summary Report: providing, at a minimum, the following detail:
--------------
For IBM and Lexmark:
Balance of uncollected claims as of the date of the report
Less: Amount of claims greater than 90 days old
Plus: Product Returns filed with Proof of Delivery
Adjusted Balance as of the date of the report
For all other Authorized Suppliers:
Balance of uncollected claims as of the date of the report
Less: Amount of claims greater than 90 days old
Adjusted Balance as of the date of the report
PLUS
Detail Report: itemizing each claim included in the Summary Report, grouped by
Authorized Supplier.
58A
62
EXHIBIT A (PART 1) [NOT SHOWN]
58B
63
EXHIBIT A (PART 2) [NOT SHOWN]
58C
64
EXHIBIT B
LOCKBOX BANK BALANCES
(NOT SHOWN)
59A
65
EXHIBIT C
---------
Additional Reporting Requirements
Document
-Daily Collections Report
-Weekly and Month-end Perpetual Finished Goods Inventory Reconciliation by
Warehouse and IBM Credit UCC Filing Location
-Weekly Inventory Valuation Detail Report, including detail of all Eligible
Ingram Non-Financed Products
-Weekly and Month-end
Collateral Management Report for Borrower
-Monthly and Weekly Accounts Receivables Aging Report for Borrower
-Monthly IBM Accounts
Receivable Aging Report
Due to IBM Credit
Each Business Day
For each week, prepared as of the close of business on the last day (i.e.,
Saturday) of such week and delivered by the second Business Day of the following
week. For each Fiscal Month, prepared as of the last day of such Fiscal Month
and delivered by the 20th day of the following Fiscal Month,
For each week prepared, by the first Business Day of the following week
For each week, prepared as of the close of business on the last day (i.e.,
Saturday) of such week and delivered by the second Business Day of the following
week. For each Fiscal Month, prepared as of the last day of such Fiscal Month
and delivered by the 20th day of the following Fiscal Month.
For each Fiscal Month, by the 20th day of the following Fiscal Month For each
week, by the second Business Day of the following week
For each Fiscal Month, by the 20th day of the following Fiscal Month
60
66
Exhibit C (cont)
Financial Reports
-----------------
DOCUMENT Due
-------- ----
Annual
------
Auditors Opinion 120 Days after fiscal year
end
Auditory Management Letter (same)
Balance Sheet, Profit & Loss, (same)
Cash Flow (Actual vs Budget
List of all acquisitions (same)
Other Asset Detail (Current/ (same)
Long Term)
Exhibit A 20th day of each month for
the prior month's claims
Warranty Claims to be included in Exhibit A
are those claims submitted
to Authorized Suppliers by
the 25th day of the prior
month
Quarterly
Balance Sheet, Profit & Loss, 45 days after end of Qtr
Cash Flow
Statement of Adverse Effect (same)
Statement that financial (same)
statement according to GAAP
List of all Acquisitions (same)
Other Assets Detail (current vs (same)
long term)
Monthly
Balance Sheet, Profit & Loss, 30 days after the calendar
Cash Flow month
Statement that financial statement (same)
according to GAAP
61
67
EXHIBIT D
---------
Locations Where Collateral Will Be Kept
(NOT SHOWN)
62
68
EXHIBIT E
Intellectual Property
Registered Trademarks -- Federal
Solution Line
Solution Link
Technology Summit
Registered Trademarks - California
California Computer Source
Pending Federal Applications/Common Law Trademarks
Advanced Client Services
CAC-Corporate Account Center
Desktop Vision
ENTEX
ENTEX Excelerated Solutions Plus Design ENTEX Information Services ENTEX
Information Services Plus Design ENTEX Plus Design Excelerated Solution Network
NTS Plus Serviceline System Builder Technology Lifecycle The Enterprise
Technology Company ▇▇▇ ▇▇-▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇▇ ▇-▇
ENTEX Information Services, Inc.
Schedule of Secured Indebtedness
As of August 27,1995
Amount
Secured Party Outstanding Type of Financing
------------- ----------- -----------------
IBM Credit Corp $273,233 Inventory, A/R and
Working Capital Loan
Deutsche Financial Services 40,660 Inventory Only
Citibank N.A. 31,261 Accounts Receivable Only
FINOVA Capital Corp. 53,753 Inventory Only
ENTEX Holding, Inc. 10,000 Inventory, A/R and
--------
Working Capital Loan
Total $408,907
========
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EXHIBIT F-B
ENTEX Information Services, Inc.
Schedule of Other Indebtedness
As of August 27,1995
Amount of
Party Indebtedness Type of Indebtedness
----- ------------ ---------------------
BusinessLand, Inc. 5.5% 43,172 Subordinated Convertible
Subordinated Convertible Debentures
Debentures
Erlanger Land Co. 5,725 Mortgage
65
71
EXHIBIT G
Existing Investments
NONE
66
72
Exhibit H
ENTEX Information Services, Inc.,
IBM CREDIT CORPORATION UCC-1 FILINGS
------------------------------------
Jurisdiction File Number Date of Filing
----------- ----------- --------------
▇▇▇▇▇▇▇▇ - ▇▇▇. ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 7/2/93
Arkansas - Pulaski County 93 49783 7/27/93
Arizona - Sec. of State 752366 7/27/93
California - Sec. of State 93149233 7/27/93
Colorado - Sec. of State 932055999 7/27/93
Connecticut - Sec. of State 1022164 7/27/93
District of Columbia 12812 7/27/93
Delaware - Sec. of State 310046 7/27/93
Florida - Sec. of State 930000156759 7/27/93
Georgia - DeKalb County 93 05987 8/2/93
Georgia - ▇▇▇▇▇▇ County 000796140 7/27/93
Georgia - Gwinnett County 93-5496 7/27/93
▇▇▇▇ - ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 7/27/93
Illinois - Sec. of State 3148717 7/27/93
Indiana - Sec. of State 1860143 7/27/93
Kansas - Sec. of State 1932292 7/27/93
Kentucky - Sec. of State 133786 7/27/93
Kentucky - ▇▇▇▇▇ County (fixture filing) 205679 7/28/93
Kentucky - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 7/23/93
▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 7/27/93
Kentucky - Jefferson County 93 06710 7/27/93
Kentucky - ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7/27/93
Louisiana - Caddo Parish 09-915135 7/27/93
▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇▇▇▇▇ 7/27/93
Massachusetts - Sec. of State 176104 7/27/93
Massachusetts - City of Boston 368340 7/29/93
Massachusetts - Norfolk County (fixture filing) 46717 7/27/93
Massachusetts - Town of Needham 157 7/27/93
Massachusetts - Town of Norwood 491710 8/05/93
Massachusetts - Town of Canton 5009 7/27/93
Massachusetts - Town of Framingham 12964 7/27/93
Maryland - Sec. of State 132088451 7/27/93
Maryland - City of Baltimore 538072 7/27/93
▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 8/4/93
Maryland - ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7/30/93
Michigan - Sec. of State 33681B 7/27/93
Minnesota - Sec. of State 1604838 7/27/93
Missouri - Sec. of State 2292306 7/27/93
Missouri - Jackson County J324080 7/27/93
Missouri -St. Louis Independent City 4206 7/27/93
Missouri - ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7/27/93
North Carolina - Sec. of State 019635 7/27/93
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7/27/93
Nebraska - Sec. of State 593346 7/27/93
New Jersey - Sec. of State 1522644 7/27/93
New Mexico - Sec. of State 930727054 7/27/93
Nevada - Sec. of State 93-07796 7/27/93
▇▇▇ ▇▇▇▇ - ▇▇▇. ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 7/26/93
▇▇▇ ▇▇▇▇ - ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 7/26/93
New York - Monroe County 93-5060 7/27/93
▇▇▇ ▇▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 7/28/93
67B
74
New York - Suffolk County 12903 7/27/93
▇▇▇ ▇▇▇▇ - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 7/28/93
Ohio -Sec. of State 005163 7/27/93
Ohio - Cuyahoga County 1255979 7/27/93
Ohio - ▇▇▇▇▇▇▇▇ County 93-128770 7/27/93
Oklahoma - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7/27/93
Oregon - Sec. of State R65672 7/27/93
Pennsylvania - Sec. of State 22210183 7/27/93
Pennsylvania - ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 7/27/93
Pennsylvania - ▇▇▇▇▇▇▇ County ST93 1805 7/27/93
Pennsylvania - Philadelphia County 93 3574 7/27/93
▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇. ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 7/27/93
South Carolina. - Sec. of State 930727-150737A. 7/27/93
Tennessee - Sec. of State 218182 7/27/93
Texas - Sec. of State 143525 7/27/93
Utah - Sec. of State 367526 7/27/93
Virginia - Sec. of State 930727 7702 7/27/93
Virginia - ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 7/27/93
Virginia - Fairfax County 93-006898 7/28/93
Virginia - Richmond Independent City 93-1754 7/27/93
Washington - Sec. of State ▇▇-▇▇▇-▇▇▇▇ 7/27/93
Wisconsin - Sec. of State 1369725 7/27/93
67C
75
EXHIBIT I
---------
List of Authorized Suppliers
3 Com Corporation
Advanced Logic Research, Inc.
CMS Enhancements, Inc.
Centon Electronics, Inc.
Digital Equipment Corporation
▇▇▇▇▇▇ Marketing Associates, Inc. d/b/a Graphics Technology, Inc.
▇▇▇▇▇▇ Micro Inc.
International Business Machines Corporation
Kingston Technology Corporation
Lexmark International, Inc.
Megahertz Corporation
Merisel, Inc.
Merisel FAB, Inc.
Micronet Technology, Inc.
NEC Technologies, Inc.
Procom Technology, Inc.,
QMS, Inc.
Radius, Inc.
Simple Technology Incorporated
Sony Electronics, Inc.
Storage Dimensions, Inc.
Toshiba American Informations Systems, Inc.
Zenith Data Systems
68
76
EXHIBIT J
---------
COMPLIANCE CERTIFICATE
TO: IBM CREDIT CORPORATION
[INSERT RFC ADDRESS]
The undersigned authorized officers of ENTEX Information Services, Inc.
(the "Customer") hereby certify, with respect to the Agreement for Wholesale
Financing executed by and between the Customer and IBM Credit Corporation ("IBM
Credit") on _______________ __, 199_, as amended from time to time (the
"Agreement"), that (A) the Customer has been in compliance for the period
from_____________________ to_________________ with the financial covenants set
forth in Section 12 of the Agreement, as demonstrated below, and (B) no Default
has occurred and is continuing as of the date hereof, except, in either case, as
set forth below. All capitalized terms used herein and not otherwise defined
shall have the meanings assigned to them in the Agreement.
I. Financial Covenants
-------------------
FINANCIAL COVENANT REQUIRED (Fiscal Year) ACTUAL
----------------- ------- ------------ ------
Current Assets to = or greater than 1.00 to 1 (1995)
Current Liabilities = or greater than 1.01 to I (after 1995)
Total Liabilities minus = or less than 20 to 1 (any)
Subord. Debt to Tangible = or less than 20 to 1
Net Worth plus Subord.
Debt
Tangible Net Worth plus = or greater than $18M (1995)
Subordinated Debt = or greater than $21M (after 1995)
EBIT to Interest Exp. less than 1.1 to 1 (any)
less than 1.1 to 1
Consolidated Net Income = or greater than 2% of Sales (any)
for the Fiscal Quarter = or greater than 2% of Sales
Capital Expenditures = or less than $10M (any)
Working Capital (see Section 12(g) Agreement) (any)
69
77
Exhibit J (cont)
Attached hereto are Financial Statements as of and for the end of the
fiscal_________ ended on the applicable date, as required by Section 2(c) of the
Agreement for Wholesale Financing.
Submitted by:
ENTEX Information Services. Inc.
By:_________________________________
Print Name:_________________________
Title:______________________________
70
78
AMENDMENT NO. 1 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amendment to the Fourth Amended and Restated Agreement for Wholesale
Financing (this "Amendment") is made as of September 19, 1995 by and between
Entex Information Services, Inc., a Delaware corporation ("Borrower") and IBM
Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995,
(as amended, supplemented or otherwise modified from time to time, the
"Agreement").
B. Borrower and IBM Credit have entered into that certain letter agreement
dated May 8, 1995 (the "Letter Agreement") and Borrower, ENTEX Holdings, Inc.
and IBM Credit have entered into that certain supplementary letter agreement to
the Letter Agreement, also dated May 8, 1995, (the "Supplementary Letter
Agreement") whereby IBM Credit agreed to make the Credit Facility, as defined in
the Letter Agreement, available to Borrower, based on certain terms and
conditions accepted by Borrower and ENTEX Holdings, Inc. contained in the Letter
Agreement and the Supplementary Letter Agreement, as applicable, for the purpose
of Borrower's purchase of Random Access, Inc.
C. The parties have agreed to modify the 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 Agreement.
Section 2. Modifications to Agreement. The following modifications are made to
the Agreement, effective on the date the Loan, as defined in Section 3(e), is
advanced to Borrower (the "Loan Date") unless specified otherwise.
(A) Section 3(a) of the Agreement is hereby amended by increasing the Base
Finance Charge from the sum of the Prime Rate for such day Plus 0.875% to the
sum of the Prime Rate for such day plus 1.125%.
(B) Section 3(c) C. of the Agreement is hereby amended by increasing the
percentage specified for Eligible Receivables from 80% to 85%.
Page 1 of 7
79
(C) Section 3 of the Agreement is hereby amended by inserting immediately
following paragraph (d) of such section the following new paragraph (e):
"(e) The loan to Borrower for the purpose of acquiring Random Access, Inc.
(the "Loan") shall be a single Advance and shall be in the form of a
Working Capital Advance. The Loan, however, shall accrue a finance charge
at a rate per annum equal to the Prime Rate plus 2.50% on the average
daily principal amount of the Loan outstanding during the applicable
payment period. The Working Capital Advance for the Loan will be
automatically renewed at the end of its then Working Capital Advance
Period, as defined in Section 3(d) of the Agreement, and, unless otherwise
agreed to by IBM Credit in writing, Borrower agrees to not pay any
principal of the Loan unless there are no other outstanding interest
bearing Advances under this Agreement. Notwithstanding the preceding
sentence, Borrower may pay down the Loan (i) in part by making a payment
of not more that one forty-eighth of the original principal amount of the
Loan per month for the first twelve months after the date of the loan and
(ii) in part or in full with any of the following: (A) proceeds from the
sale of any long term assets, such as buildings, (B) proceeds from the
retirement of any other non-current assets, and (C) funds received as a
result of an equity investment not contemplated by this Agreement;"
(D) Section 11(a) is hereby amended by deleting paragraph (xi) in its
entirety and substituting, in lieu thereof, the following paragraph (xi):
"(xi) Borrower has no direct or indirect Subsidiaries other than Erlanger
Land Co., Inc., a Delaware corporation, ENTEX Information Services
International, Limited, an Ireland corporation, ENTEX Information Services
of Michigan, Inc., a Michigan corporation, ENTEX Services, Inc., a
Delaware corporation, Random Access, Inc., a Colorado corporation to be
renamed ENTEX Information Services of Colorado, Inc., Total Access Limited
Liability Company, a Wyoming limited liability company, R.A. Holdings,
Inc. a Colorado corporation, and Network Access, Inc., a Colorado
corporation."
(E) Section 11(a) is hereby amended by deleting paragraph (xx) in its
entirety and substituting, in lieu thereof, the following paragraph (xx):
"(xx) no assets included in Value, as defined in Section 3(c) are owned by
ENTEX Information Services of Michigan, Inc., ENTEX Services, Inc., Random
Access, Inc., to be renamed ENTEX Information Services of Colorado, Inc.,
R.A. Holdings, Inc. or Network Access, Inc.
(F) Section 11(a) of the Agreement is hereby amended by inserting
immediately following paragraph (xx) of such section the following new paragraph
(xxi):
Page 2 of 7
80
"(xxi) R.A. Holdings, Inc., and Network Access, Inc., which are
subsidiaries of Random Access, Inc., to be renamed ENTEX Information
Services of Colorado, Inc., do not have any assets included in Value, as
defined in Section 3(c) and are not conducting business."
(G) Section 11(c) is hereby amended by deleting the introductory clause
thereto and substituting, in lieu thereof, the following introductory clause:
"(c) Until termination of the Line of Credit and the indefeasible payment
and satisfaction of all Secured Obligations, Borrower (1) shall not, and
with respect to (xvii) of this Section 11(c) Borrower shall cause each of
Random Access, Inc., to be renamed and ENTEX Information Services of
Colorado, Inc., ENTEX Information Services of Michigan, Inc. and ENTEX
Services, Inc., and (2) with respect to (xviii) of this Section 11(c)
shall cause each of R.A. Holdings, Inc. and Network Access, Inc., not to:"
(H) Section 11(c) is hereby amended by deleting paragraph (xvii) thereof
in its entirety and substituting, in lieu thereof, the following paragraph
(xvii):
"(xvii) Transfer or sell any assets included in the calculation of Value
as defined in Section 3(c) to ENTEX Information Services of Michigan,
Inc., ENTEX Services, Inc., Random Access, Inc., to be renamed ENTEX
Information Services of Colorado, Inc., R.A. Holdings, Inc., or Network
Access, Inc. without obtaining IBM Credit's prior written consent."
(I) Section 11(c) of the Agreement is hereby amended by inserting
immediately following clause (xvii) thereof the following new clause (xviii):
"(xviii) conduct business or obtain any assets included in Value as
defined in Section 3(c) without IBM Credit's prior written consent."
(J) Section 12 of the Agreement is hereby amended as follows:
(a) Deleting paragraph (b) in its entirety and substituting, in lieu
thereof, the following paragraph (b):
"(b) Borrower shall at all times maintain a ratio of (i) total liabilities
minus the aggregate outstanding principal amount of Subordinated Debt to
(ii) the sum of Tangible Net Worth and the aggregate outstanding principal
amount of Subordinated Debt of not more than (A) 25 to 1 through
Borrower's second 1996 Fiscal Quarter and (B) 20 to 1 thereafter."
Page 3 of 7
81
(b) Deleting paragraph (c) in its entirety and substituting, in lieu
thereof, the following paragraph (c):
"(c) Borrower shall not permit the sum of Tangible Net Worth and the
aggregate outstanding principal amount of Subordinated Debt at any
time (the "Tangible Net Worth Minimum") to be less than (i)
$17,500,000 during Borrower's fiscal year ending on June 30, 1996,
(ii) $21,000,000 during Borrower's first 1997 Fiscal Quarter ("First
1997 Fiscal Quarter Tangible Net Worth Minimum"), and (iii) for each
succeeding Borrower's Fiscal Quarter, the Tangible Net Worth Minimum
for the immediately preceding Fiscal Quarter plus fifty percent
(50%) of Borrower's net income after taxes earned by Borrower during
such preceding Fiscal Quarter."
(c) Deleting item (i) in paragraph (g) in its entirety and substituting,
in lieu thereof, the following item (i):
"(i) ten million dollars ($10,000,000) at any time from and
including the date hereof to and including the last day of
Borrower's second 1996 Fiscal Quarter,"
(K) Section 13(a) of the Agreement is hereby amended by inserting
immediately following clause (xi) thereof the following new clause (xii):
"(xii) Borrower makes any payment of principal of the Acquisition
Subordinated Debt to Parent prior to June 30, 1996, or Borrower makes any
payment of such principal after June 30, 1996 if before or after giving
effect to such payment,(l) a Default or Event of Default shall have
occurred and be continuing or (2) the ratio defined in Section 12(b) shall
be greater than 18 to 1. Notwithstanding the preceding sentence, to the
extent that payments relating to the amortization of principal on the
$5,000,000 loan from Citibank, N.A. to Parent are required and is
permitted to be made by Borrower to Parent under the existing
Subordination Agreement between IBM Credit and Parent dated August 6,
1993, such payments may be made in an amount equal to the lesser of the
amortization amount required by Citibank N.A. and $300,000."
Section 3. Loan Fee. Borrower agrees to pay to IBM Credit a fee of $50,000
promptly after the Loan Date.
Section 4. Conditions Precedent. The effectiveness of this Amendment and the
obligation of IBM Credit to make the Loan are subject to the prior or
simultaneous satisfaction by Borrower of the following conditions:
(A) IBM Credit shall have received counterparts of this Amendment executed
by a duly authorized officer of Borrower;
Page 4 of 7
82
(B) IBM Credit shall have delivered to Borrower counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
(C) IBM Credit shall have received the favorable opinions of counsel to
Borrower, in form and substance satisfactory to IBM Credit and its counsel;
(D) IBM Credit shall have received a Collateralized Guaranty executed by
Random Access, Inc., to the renamed ENTEX Information Services of Colorado,
Inc., in form and substance satisfactory to IBM Credit;
(E) The Agreement and Plan of Merger, dated as of May 15, 1995, as amended
June 27, 1995, (the "Merger Agreement"), by and among Borrower, ENTEX
Acquisition Corp., a Colorado corporation and a wholly owned subsidiary of
Borrower, and Random Access, Inc. and the transactions contemplated thereby
shall have been approved and adopted by the requisite vote of the shareholders
of Random Access, Inc. required by applicable law or by Random Access, Inc.'s
Articles of Incorporation or By-Laws and all other conditions precedent to the
Effective Time of the Merger (as defined in the Merger Agreement) shall have
been satisfied or waived by the applicable party thereto;
(F) Both before and after giving effect to the Loan, (i) no Default or
Event of Default shall have occurred and be continuing and (ii) no Shortfall
Amount shall exist;
(G) No litigation, inquiry, injunction or restraining order shall be
pending, entered or threatened (including any proposed statute, rule or
regulation) which, in the opinion of IBM Credit, would be reasonably likely to
have a material adverse effect on (i) the Merger or the business or financial
condition of Borrower, (ii) the ability of Borrower to perform its obligations
under the Agreement or (iii) the rights and remedies of IBM Credit;
(H) All governmental and third party approvals necessary in connection
with the Merger and the financing contemplated hereby shall have been obtained
and be in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which could restrain, prevent or otherwise impose material adverse conditions on
Borrower;
(I) IBM Credit shall not have become aware of any previously undisclosed
information with respect to any existing or hereafter arising event or
circumstance that would be reasonably likely to have a material adverse effect
on (i) the Merger or the business or financial condition of Borrower, both
before and after giving effect to the Merger, (ii) the ability of Borrower to
perform its obligations under the Agreement or (iii) the rights or remedies of
IBM Credit under the Agreement;
Page 5 of 7
83
(J) Deutsche Financial Services, Inc. , formally known as ITT Commercial
Finance Corp., terminates its security interest in Random Access, Inc.
Section 5. Name Change. Borrower agrees to change the name of Random Access,
Inc. to ENTEX Information Services of Colorado, Inc. within ten (10) days of the
execution of this Amendment by IBM Credit.
Section 6. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are
made to induce IBM Credit to enter into this Agreement.
6.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make the representations not
misleading.
6.2 Violation of Other Agreements. The execution and delivery of this
Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
6.3 Litigation. Except as has been disclosed by Borrower to IBM Credit in
writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect the ability of Borrower to perform its obligations
under the Agreement, and the other documents, instruments and agreements
executed in connection therewith or pursuant hereto.
6.4 Enforceability of Amendment. This Amendment has been duly authorized,
executed and delivered by Borrower and is enforceable against Borrower in
accordance with its terms.
Section 7. Ratification of Agreement. Except as specifically amended hereby, all
the provisions of the Agreement shall remain in full force and effect. Borrower
hereby ratifies, confirms and agrees that the Agreement, as amended hereby,
represents a valid and enforceable obligation of Borrower, and is not subject to
any claims, offsets or defenses.
Section 8. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York, 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.
Page 6 of 7
84
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.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President, Treasurer Title: Credit Manager
Page 7 of 7
85
ACKNOWLEDGEMENT, WAIVER AND AMENDMENT No. 2
TO
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Acknowledgement, Waiver and Amendment ("Amendment") to the Fourth
Amended and Restated Agreement for Wholesale Financing is made as of May __,
1996 by and between ENTEX Information Services, Inc., a Delaware corporation
("Borrower") and IBM Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
("AWF") (as amended, supplemented or otherwise modified from time to time, the
"Agreement").
B. Borrower is in default of one or more of its financial covenants
contained in the Agreement (as more specifically explained in Section 2 hereof).
C. IBM Credit is willing to waive such defaults subject to the conditions
set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the premises set forth herein, and for
other good and valuable consideration, the value and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Acknowledgement.
(A) Borrower acknowledges that the financial covenants set forth in
Section 12 or the Agreement, as amended by Amendment No. 1 to the Agreement
executed by and between Borrower and IBM Credit on September 19, 1995 are
applicable to the financial results of Borrower for the Fiscal Quarter ending
December 31, 1995, and Borrower was required to maintain such financial
covenants at all times. Borrower further acknowledges its actual attainment was
as follows:
Page 1 of 4
86
Covenant Covenant Covenant
-------- Requirement Actual
----------- --------
Ratio of total liabilities Equal to or less
minus the aggregate outstanding than 25 to 1.0 29.27 to 1.0
principal amount of Subordinated
Debt to the sum of Tangible
Net Worth and the aggregate
outstanding principal amount of
Subordinated Debt
Section 3. Waivers to Agreement. IBM Credit hereby waives the defaults of
Borrower with the terms of the Agreement to the extent such defaults are set
forth in Section 2 hereof.
Section 4. Amendment. The Agreement is hereby amended as follows:
(A) Section 12 of the Agreement is hereby amended as follows:
(a) Deleting paragraph (b) in its entirety and substituting, in lieu
thereof, the following paragraph (b):
"(b) Borrower shall at all times maintain a ratio of (i) total
liabilities minus the aggregate outstanding principal amount of
Subordinated Debt to (ii) the sum of Tangible Net Worth and the
aggregate outstanding principal amount of Subordinated Debt of not
more than (A) 28 to 1 for the period from March 31, 1996 through
June 29, 1996 (B) 27 to 1 for the period from June 30, 1996 through
September 29, 1996, (C) 24 to 1 for the period from September 30,
1996 through December 30, 1996 and (D) 20 to 1 as of December 31,
1996 and thereafter."
(b) Deleting paragraph (c) in its entirety and substituting, in lieu
thereof, the following paragraph (c):
"(c) Borrower shall not permit the sum of Tangible Net Worth and the
aggregate outstanding principal amount of Subordinated Debt at any
time (the "Tangible Net Worth Minimum") to be less than (i)
$17,000,000 for the period from March 31, 1996 through June 29,
1996, (ii) $20,000,000 for the period from June 30, 1996 through
September 29, 1996, (iii) $25,000,000 for the period from September
30, 1996 through December 30, 1996 and (iv) $30,000,000 as of
December 31, 1996 and thereafter."
Page 2 of 4
87
(c) Deleting paragraph (f) in its entirety and substituting, in lieu
thereof, the following paragraph (f):
"(f) Borrower shall not permit the aggregate of Capital Expenditures
made in any fiscal year to exceed $15,000,000 net of dispositions
related to such Capital Expenditures."
(d) Deleting paragraph (g) in its entirety and substituting, in lieu
thereof, the following paragraph (g):
"(g) Borrower shall at all times maintain Working Capital of not
less than (i) $6,000,000 for the period from March 31, 1996 through
June 29, 1996, (ii) $9,000,000 for the period from June 30, 1996
through September 29, 1996, (iii) $11,000,000 for the period from
September 30, 1996 through December 30, 1996 and (iv) $13,000,000 as
of December 31, 1996 and thereafter."
(B) For purposes of clarification, Section 24 of the Agreement is hereby
amended by inserting immediately following subsection 24(b) the following
paragraph as subsection 24(c):
"(c) Borrower and IBM Credit agree that all attachments, exhibits,
schedules and other addenda to this Agreement, including, without
limitation, Exhibits C and J, are specifically incorporated herein and
made a part of this Agreement."
Section 5. Rights and Remedies. Except to the extent specifically waived herein
IBM Credit reserves any and all rights and remedies that IBM Credit now has or
may have in the future with respect to Borrower, including any and all rights or
remedies which it may have in the future as a result of Borrower's 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 6. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior or simultaneous satisfaction by Borrower of the following
conditions:
(A) IBM Credit shall have received counterparts of this Amendment executed
by a duly authorized officer of Borrower;
(B) IBM Credit shall have delivered to Borrower counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
Section 7. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Agreement.
Page 3 of 4
88
7.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make the representations not
misleading.
7.2 Violation of Other Agreements. The execution and delivery of this
Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
7.3 Litigation. Except as has been disclosed by Borrower to IBM Credit in
writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect the ability of Borrower to perform its obligations
under the Agreement, and the other documents, instruments and agreements
executed in connection therewith or pursuant hereto.
7.4 Enforceability of Amendment. This Amendment has been duly authorized,
executed and delivered by Borrower and is enforceable against Borrower in
accordance with its terms.
Section 8. Ratification of Agreement. Except as specifically amended hereby, all
the provisions of the Agreement shall remain in full force and effect. Borrower
hereby ratifies, confirms and agrees that the Agreement, as amended hereby,
represents a valid and enforceable obligation of Borrower, and is not subject to
any claims, offsets or defenses.
Section 9. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York, without reference to the
conflict of laws principles thereof.
Section 10. 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 duly authorized
officers of the undersigned as of the day and year first above written.
ENTEX INFORMATION SERVICES, INC. IBM Credit Corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT, TREASURER Title: Credit Manager
Page 4 of 4
89
AMENDED AND RESTATED AMENDMENT NO. 3 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amended and Restated Amendment No. 3 to the Fourth Amended and
Restated Agreement for Wholesale Financing (this "Amendment") amends and
restates that certain Amendment No. 3 to the Fourth Amended and Restated
Agreement for Wholesale Financing between ENTEX Information Services, Inc., a
Delaware corporation ("Borrower") and IBM Credit Corporation, a Delaware
corporation ("IBM Credit") ("Amendment No. 3") and is made as of June 28, 1996
by and between Borrower and IBM Credit.
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995,
(as amended on September 19, 1995 and as further amended, supplemented or
otherwise modified from time to time, the "Agreement").
B. Concurrent with this Amendment, Borrower and ENTEX Holdings, Inc.
("Parent") have merged into one company with Borrower being the surviving
corporation in the merger (the "Merger").
C. Concurrent with, or prior to, the execution of this Amendment and the
Merger, Borrower has paid to Parent the amount of $4,161,271.12 as partial
satisfaction of the Senior Secured Note dated August 6, 1993 in the principal
amount of $10,000,000.00 (as amended by the Amendment and Waiver dated November
9, 1993 by and among Borrower, Parent and Citibank, N.A., the "Note").
Concurrent with, or prior to, the execution of this Amendment and the Merger,
Parent paid to Citibank, N.A. the amount of $4,161,271.12 as satisfaction in
full of the Citibank, N.A. Loan number ▇▇▇▇▇▇▇▇ (the "Citibank Loan"), which
such Citibank Loan is the entire amount owed to Citibank, N.A. for the Note.
Concurrent with the execution of this Amendment and the Merger, Borrower assumed
the obligations of Parent for two notes, in the aggregate principal amount of
$5,062,500.00, and payable to Airlie Associates and Airlie Associates II.
D. The parties have agreed to modify the Agreement as more specifically
set forth below, upon and subject to the terms and conditions set forth herein.
1
90
AGREEMENT
NOW THEREFORE, in consideration of the mutual agreements provided for
below and for other good and 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 Agreement.
Section 2. Waiver of Certain Financial Covenants.
(A) IBM Credit hereby waives compliance by Borrower with the financial
covenants set forth in Sections 12(b), 12(c), 12(d) and 12(e) for the fiscal
period ending June 30, 1996.
(B) IBM Credit hereby waives compliance by Borrower with the financial
covenants set forth in Section 12(d) of the Agreement during the Fiscal
Quarters ending September 30, 1996 and December 31, 1996.
Section 3. Modifications to Agreement. The following modifications are made to
the Agreement effective on the date of this Amendment unless indicated
otherwise:
(A) The term "Parent" is deleted wherever mentioned in the Agreement.
(B) Section 12(f) is hereby amended by deleting Section 12(f) in its
entirety and substituting, in lieu thereof, the following:
"(f) Borrower shall not permit the aggregate of Capital Expenditures
made in the fiscal year ending June 30, 1996 to exceed $16,500,000
net of dispositions related to such Capital Expenditures and shall
not permit the aggregate of Capital Expenditures made in any fiscal
year thereafter to exceed $15,000,000 net of dispositions related to
such Capital Expenditures."
(C) Section 13(a)(x) of the Agreement is hereby amended by deleting it
in its entirety and substituting, in lieu thereof, the following Section
13(a)(x):
"(x) (A) Dort ▇. ▇▇▇▇▇▇▇ III shall cease to own and/or control,
directly or indirectly, at least 35% of the issued and outstanding
capital stock of Borrower, (B) Dort ▇. ▇▇▇▇▇▇▇ III shall cease to
own and/or control at least 90% of the aggregate principal amount of
Acquisition Subordinated Debt outstanding at any time; provided
that, if Dort ▇. ▇▇▇▇▇▇▇ III receives financing from a creditor
using the Associates Notes as collateral, such creditor will be
advised by Dort ▇. ▇▇▇▇▇▇▇ III that the Associates Notes have been
ENTEX Amend & Restate 3 (6/96) 2
91
subordinated to IBM Credit and such creditor will agree that such
creditor's interest in the Associates Notes will be junior to IBM Credit's
interest in such Associates Notes, (C) any Lien shall be granted, or shall
otherwise exist, on any of the capital stock, of Borrower; or"
(D) Section 13(a)(xii) is hereby amended by deleting it in its entirety
and substituting, in lieu thereof, the following Section 3(a)(xii):
"(xii) Borrower makes any payment of principal of the Acquisition
Subordinated Debt after June 30, 1996 if before or after giving effect to
such payment, (1) a Default or Event of Default shall have occurred and be
continuing or (2) the ratio defined in Section 12(b) shall be greater than
18 to 1."
(E) Section 19 is hereby amended as follows:
(1) the definition of Acquisition Subordinated Debt is amended by deleting
it in its entirety and substituting in lieu thereof, the following:
"Acquisition Subordinated Debt" shall mean the Indebtedness of Borrower
evidenced by those notes executed on or about June 30, 1996 made by
Borrower and payable to Airlie Associates and Airlie Associates II in the
original aggregate principal amount of $5,062,500 (the "Associates
Notes")."
(2) the following definition is added in its appropriate alphabetical
order:
""Associates Notes" - See definition of Acquisition Subordinated Debt."
(3) the definition of "Parent" is deleted in its entirety;
(4) the definition of "Tangible Net Worth" is amended by deleting item
(iii) of such definition in its entirety and substituting, in lieu thereof,
the following:
"(iii) the notes owed to Airlie Associates and Airlie Associates II
in the aggregate amount of $5,062,500 (the "Associates Notes"), provided
however, that such Associates Notes shall not be so added if, at any time after
July 31, 1996, the interests by the owners of such Associates Notes are not
satisfactorily, as determined by IBM Credit, subordinated to the interests of
IBM Credit;"
ENTEX Amend & Restate 3 (6/96) 3
92
Section 4. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior or simultaneous satisfaction by Borrower of the following
conditions:
(A) IBM Credit shall have received counterparts of this Amendment executed
by a duly authorized officer of Borrower;
(B) IBM Credit shall have delivered to Borrower counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
(C) IBM Credit shall have received evidence satisfactory to it that the
Merger has been completed.
Section 5. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Agreement.
5.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make the representations not
misleading.
5.2 Violation of Other Agreements. The execution and delivery of this
Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
5.3 Litigation. Except as has been disclosed by Borrower to IBM Credit in
writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect the ability of Borrower to perform its obligations
under the Agreement, and the other documents, instruments and agreements
executed in connection therewith or pursuant hereto.
5.4 Enforceability of Amendment. This Amendment has been duly authorized,
executed and delivered by Borrower and is enforceable against Borrower in
accordance with its terms.
5.5 Assumption of Parent's Obligations. Borrower has not assumed any
obligations of Parent that could reasonably be expected to have a Material
Adverse Effect.
Section 6. Ratification of Agreement. Except as specifically amended hereby, all
the provisions of the Agreement shall remain in full force and effect. Borrower
hereby ratifies, confirms and agrees that the Agreement, as amended hereby,
represents a valid and enforceable obligation of Borrower, and is not subject to
any claims, offsets or defenses.
4
93
Section 7. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York, without reference to the
conflict of laws principles thereof.
Section 8. 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.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT, TREASURER Title: Credit Manager
--------------------------
5
94
AMENDMENT NO. 4 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amendment to the Fourth Amended and Restated Agreement for
Wholesale Financing (this "Amendment") is made as of July 11, 1996 by and
between Entex Information Services, Inc., a Delaware corporation ("Borrower")
and IBM Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995,
(as amended on September 19, 1995 and as further amended, supplemented or
otherwise modified from time to time, the "Agreement").
B. Borrower has requested that certain Financial Covenants as defined in
the Agreement, be modified.
C. The parties have agreed to modify the 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 good and 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 Agreement.
Section 2. Waiver of Certain Financial Covenants. IBM Credit hereby waives
compliance by Borrower with the financial covenants set forth in Sections 12(b)
and 12(c) of the Agreement for and during the Fiscal Quarter ending September
30, 1996 and through November 30, 1996.
Section 3. Amendment. Section 11(c)(vi) shall be amended to add a new subsection
(G) at the end of such section which shall read as follows:
"(G) Acquisition Subsidiary, Inc., a Delaware corporation
established for the purposes of acquiring FCP Technologies, Inc., a Delaware
corporation."
Section 4. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior or simultaneous satisfaction by Borrower of the following
conditions:
1
95
(A) IBM Credit shall have received counterparts of this Amendment executed
by a duly authorized officer of Borrower;
(B) IBM Credit shall have delivered to Borrower counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
(C) IBM Credit shall have received evidence satisfactory to it that the
Merger has been completed.
Section 5. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Agreement.
5.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make the representations not
misleading.
5.2 Violation of Other Agreements. The execution and delivery of this
Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
5.3 Litigation. Except as has been disclosed by Borrower to IBM Credit in
writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect the ability of Borrower to perform its obligations
under the Agreement, and the other documents, instruments and agreements
executed in connection therewith or pursuant hereto.
5.4 Enforceability of Amendment. This Amendment has been duly authorized,
executed and delivered by Borrower and is enforceable against Borrower in
accordance with its terms.
Section 6. Ratification of Agreement. Except as specifically amended hereby, all
the provisions of the Agreement shall remain in full force and effect. Borrower
hereby ratifies, confirms and agrees that the Agreement, as amended hereby,
represents a valid and enforceable obligation of Borrower, and is not subject to
any claims, offsets or defenses.
Section 7. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York, without reference to the
conflict of laws principles thereof.
2
96
Section 8. 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.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT, TREASURER Title: Credit Manager
3
97
AMENDMENT NO. 5 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
THIS AMENDMENT to the Fourth Amended and Restated Agreement for Wholesale
Financing (this "Amendment") is made as of the 9th day of August, 1996, by and
between ENTEX Information Services, Inc., a Delaware corporation ("Borrower"),
ENTEX Information Services of Michigan, a Michigan corporation and a wholly
owned subsidiary of Borrower ("ENTEX of Michigan"), and IBM Credit Corporation,
a Delaware corporation ("IBM Credit").
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
(as amended, supplemented or otherwise modified from time to time, the
"Agreement").
B. In connection with the execution and delivery of the Agreement, ENTEX
of Michigan executed and delivered to IBM Credit a Collateralized Guarantee
dated as of September 15, 1995 (the "Michigan Collateralized Guarantee"),
pursuant to which, among other things, ENTEX of Michigan has irrevocably and
unconditionally guaranteed the obligations of Borrower under the Agreement,
and has granted to IBM Credit a security interest in all property of ENTEX of
Michigan that would constitute "Collateral", as defined in the Agreement.
C. Borrower desires to assign and transfer to ENTEX of Michigan all
of its right, title and interest in and to all Intellectual Property (as
hereinafter defined) owned by Borrower, free and clear of all liens, claims,
charges and encumbrances, and IBM Credit has agreed to consent to such transfer,
on the terms and subject to the conditions set forth herein.
D. The parties have agreed to modify and amend the Agreement as
specifically set forth herein, upon and subject to the terms and conditions set
forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Agreement.
Section 2. Consent to Transfer of Intellectual Property. IBM Credit
hereby consents to the assignment, transfer
98
and conveyance by Borrower to ENTEX of Michigan of all of Borrower's right,
title and interest in and to all intellectual property, including, without
limitation, patents, patent applications, trademarks, trademark applications,
service marks, service ▇▇▇▇ applications, trade names, technical knowledge and
processes, formal or informal licensing arrangements which are permitted to be
assigned, blueprints, technical specifications, computer software (including
proprietary software), copyrights, copyright applications and other trade
secrets, including, but not limited to, those set forth on Exhibit E to the
Agreement, and all of the rights of Borrower to use such patents, trademarks,
service marks or other property of the aforesaid nature of other persons now or
hereafter licensed to Borrower, together with the goodwill of the business
symbolized by or connected with the trademarks, service marks, licenses and
other rights (the "Intellectual Property"), free and clear of all liens, claims,
charges and encumbrances. Borrower has heretofore delivered to IBM Credit a copy
of the form of Assignment of Intellectual Property pursuant to which Borrower
intends to assign, transfer and convey the Intellectual Property to ENTEX of
Michigan.
Section 3. Consent to Release of Lien. IBM Credit hereby releases
the lien and security interest in the Intellectual Property granted pursuant to
Section 6(a) of the Agreement, and further agrees to execute and file, or
deliver to Borrower for filing, amendments to the financing statements on Form
UCC-1 of Borrower, reflecting such release.
Section 4. Amendment of Collateralized Guarantee. IBM Credit agrees
that notwithstanding any provision of the Collateralized Guarantee to the
contrary, the Intellectual Property transferred to ENTEX of Michigan pursuant to
Section 1 shall not constitute "Collateral" as such term is defined in the
Collateralized Guarantee, and shall not be subject to the lien and security
interest granted by ENTEX of Michigan to IBM Credit pursuant to the
Collateralized Guarantee, and ENTEX of Michigan and IBM Credit agree that the
Collateralized Guarantee shall be deemed to be hereby amended to give effect to
the provisions of this Section 4.
Section 5. Negative Pledge of Intellectual Property. Borrower and
ENTEX of Michigan each agree that, so long as any obligations of Borrower under
the Agreement remain outstanding, Borrower will cause ENTEX of Michigan not to
grant or permit to exist, and ENTEX of Michigan will not grant or permit to
exist, any lien on or security interest in any Intellectual Property transferred
to or hereafter acquired by ENTEX of Michigan, without the prior written consent
of IBM Credit.
Section 6. Negative Pledge of Stock. Borrower agrees that, so long
as any obligations of Borrower under the Agreement remain outstanding, Borrower
will not grant or permit to exist any lien on or security interest in the issued
and outstanding
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99
capital stock of ENTEX of Michigan, without the prior written consent of IBM
Credit.
Section 7. Conditions Precedent. The effectiveness of this Amendment
is subject to the prior or simultaneous satisfaction by Borrower of the
following conditions:
(a) IBM Credit shall have received counterparts of this Amendment
executed by a duly authorized officer of Borrower and ENTEX of Michigan;
(b) IBM Credit shall have delivered to Borrower and ENTEX of
Michigan counterparts of this Amendment executed by a duly authorized officer of
IBM Credit;
(c) IBM Credit shall have received a release by FINOVA Capital
Corporation of its lien on and security interest in the Intellectual Property,
in form and substance satisfactory to IBM Credit;
(d) IBM Credit shall have received a release by ENTEX Holdings, Inc.
of its lien on and security interest in the Intellectual Property, in form and
substance satisfactory to IBM Credit;
(e) Both before and after giving effect to the execution of this
Amendment, (i) no Default or Event of Default shall have occurred and be
continuing and (ii) no Shortfall Amount shall exist;
Section 8. Representations and Warranties. Borrower makes 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.
(a) Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make the representations not
misleading.
(b) Violation of Other Agreements. The execution and delivery of
this Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
(c) Enforceability of Amendment. This Amendment has been duly
authorized, executed and delivered by Borrower and ENTEX of Michigan and is
enforceable against Borrower and ENTEX of Michigan in accordance with its terms.
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100
Section 9. Ratification of Agreement. Except as specifically amended
hereby, all the provisions of the Agreement shall remain in full force and
effect. Borrower hereby ratifies, confirms and agrees that the Agreement, as
amended hereby, represents a valid and enforceable obligation of Borrower, and
is not subject to any claims, offsets or defenses.
Section 10. Governing Law. This Amendment shall be governed by and
interpreted in accordance with the laws of the State of New York, without
reference to the conflict of laws principles thereof.
Section 11. 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.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT, TREASURER Title: Credit Manager
ENTEX INFORMATION SERVICES
OF MICHIGAN, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT, TREASURER
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101
AMENDMENT NO. 6 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amendment to the Fourth Amended and Restated Agreement for Wholesale
Financing (this "Amendment") is made as of August 21, 1996 by and between ENTEX
Information Services, Inc., a Delaware corporation ("Borrower") and IBM Credit
Corporation, a Delaware corporation ("IBM Credit").
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
(as amended on September 19, 1995 and as further amended, supplemented or
otherwise modified from time to time, the "Agreement").
B. The parties have agreed to modify the 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 good and 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 Agreement.
Section 2. Modifications to Agreement. Section 19 of the Agreement is hereby
amended by deleting the definition of "Revolving Period" in its entirety and
substituting in lieu thereof, the following:
"Revolving Period" shall mean the period from and including the effective
date of this Agreement to and including September 15, 1997, or such later
date as IBM Credit and Borrower may agree in writing.
Section 3. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior or simultaneous satisfaction by Borrower of the following
conditions:
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102
(A) IBM Credit shall have received counterparts of this Amendment executed
by a duly authorized officer of Borrower;
(B) IBM Credit shall have delivered to Borrower counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
Section 4. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Agreement.
4.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make the representations not
misleading.
4.2 Violation of Other Agreements. The execution and delivery of this
Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
4.3 Litigation. Except as has been disclosed by Borrower to IBM Credit in
writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect the ability of Borrower to perform its obligations
under the Agreement, and the other documents, instruments and agreements
executed in connection therewith or pursuant hereto.
4.4 Enforceability of Amendment. This Amendment has been duly authorized,
executed and delivered by Borrower and is enforceable against Borrower in
accordance with its terms.
Section 5. Ratification of Agreement. Except as specifically amended hereby, all
the provisions of the Agreement shall remain in full force and effect. Borrower
hereby ratifies, confirms and agrees that the Agreement, as amended hereby,
represents a valid and enforceable obligation of Borrower, and is not subject to
any claims, offsets or defenses.
Section 6. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York, without reference to the
conflict of laws principles thereof.
Section 7. 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.
2
103
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.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT, TREASURER Title: Credit Manager
3
104
AMENDMENT NO. 7 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amendment to the Fourth Amended and Restated Agreement for Wholesale
Financing (this "Amendment") dated as of December 1, 1996 is made by and between
ENTEX Information Services, Inc., a Delaware corporation ("Borrower"), and IBM
Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
(as amended on September 19, 1995 and as further amended, supplemented or
otherwise modified from time to time the "Agreement");
B. As of the date hereof there exists a "Shortfall Amount" (as defined in
the Agreement) and Borrower has requested that IBM Credit convert Fifty Five
Million Dollars ($55,000,000.00) of the indebtedness represented by the
Shortfall Amount to a short-term loan; and
C. IBM Credit is willing to convert the indebtedness represented by the
Shortfall Amount to a short-term loan on the conditions and subject to the terms
set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual agreements
provided for below and for other good and 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 Agreement.
Section 2. Modifications to Agreement. The following modifications are made to
the Agreement effective as of the date hereof:
(A) Section 1 of the Agreement is hereby amended by deleting the second
sentence after the title "Line of Credit" of Section 1 in its entirety and
substituting in lieu thereof, the following:
"The amount of the Line of Credit shall be $525,000,000 on any day, of
which (x) not less than $10,500,000 shall be available for ▇▇▇▇▇▇ Micro
1
105
Advances (as hereinafter defined) and (y) not more than $514,500,000 shall
be available for all other Advances (as hereinafter defined)."
(B) Section 1 of the Agreement is hereby amended by inserting immediately
following the phrase "shall include" in the sixth sentence thereof the following
new clause (w), "(w) the Short Term Loan and the Special Working Capital
Advance,"
(C) Subsection 2(b) of the Agreement is hereby amended by inserting
immediately following paragraph (vii) thereof the following additional
paragraphs (viii) and (ix):
"(viii) On each Business Day, a report, substantially in the form attached
to this Agreement as Exhibit K listing the collateral status and loan
status as of the immediately preceding Business Day and certified by the
Controller and Chief Financial Officer of Borrower, or their designees
satisfactory to IBM Credit.
(ix) On each Business Day, a report, in form and detail satisfactory to
IBM Credit, of the sources and uses of cash of Borrower for the
immediately preceding Business Day."
(D) Subsection 3(a) of the Agreement is hereby amended effective as of
December 1, 1996 by (1) changing the definition of Base Finance Charge contained
in the second paragraph of such subsection 3(a) from "the sum of Prime Rate for
such day plus 0.25%" to "the sum of Prime Rate for such day plus 0.50%" and (2)
deleting from the second line of the third paragraph thereof the amount "$4,000"
and substituting, in lieu thereof, the amount "$10,000.00".
(E) Subsection 3(b) of the Agreement is hereby amended by inserting
immediately following the phrase "under this Agreement" the phrase, "other than
any indebtedness under the Short-Term Loan,".
(F) Subsection 3(c) of the Agreement is hereby amended by deleting items
(A) through (E) thereof in their entirety and substituting, in lieu thereof, the
following items:
"A. Financed Products and other inventory located in the Erlanger,
Kentucky; Canton, Massachusetts; Frederick, Maryland; Kent, Washington;
Atlanta, Georgia; Rio Rancho, New Mexico; Dupont, Oregon; Santa Clara,
California; Folsom, California; Sacramento, California; Chandler, Arizona;
Wichita, Kansas; or Redmond, Washington warehouse.
Obsolete or defective Service Parts 0%
IBM Service Parts which are neither
obsolete nor defective 50%
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106
Service parts which are neither IBM Service Parts
nor obsolete or defective 50%
Financed Products on display for
demonstration purposes 0%
Financed Product constituting
clearance or returned goods 0%
All other Financed Products 100%
Eligible Ingram Non-Financed Products 50%
Note: the total Value for Eligible Ingram Non-Financed Products
shall not exceed $15,000,000
HP Special Inventory Collateral 100%*
Other inventory 20%
B. Financed Products and other inventory located outside of the Erlanger,
Kentucky; Canton, Massachusetts; Frederick, Maryland; Kent, Washington;
Atlanta, Georgia; Rio Rancho, New Mexico; Dupont, Oregon; Santa Clara,
California; Folsom, California; Sacramento, California; Chandler, Arizona;
Wichita, Kansas; or Redmond, Washington warehouse
IBM Service Parts 0%
Financed Products on display for
demonstration purposes 0%
Financed Products constituting
clearance or returned goods 0%
All other Financed Products 80%
Eligible Ingram Non-Financed Products
(other than ▇▇▇▇▇▇ Micro Products) 0%
3
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Other inventory 3%
C. Eligible Receivables 90%
D. HP Special Accounts Collateral 80%*
E. Authorized Supplier Claims 100%
The combined Value of HP Special Inventory Collateral and HP Special
Accounts Collateral to be included in Borrower's total Value shall
be the Value of HP Special Inventory Collateral plus the Value of HP
Special Accounts Collateral minus the aggregate outstanding amount
owing at such time by Borrower to Hewlett-Packard Company."
(G) Subsection 3(d) of the Agreement is hereby amended effective as of
December 1, 1996 by deleting the penultimate sentence thereof in its entirety
and substituting, in lieu thereof, the following sentence:
"In the event that Borrower utilizes Working Capital Advances (other
than the Special Working Capital Advance), Borrower shall pay a
finance charge, equal to the product of the Base Finance Charge
multiplied by the average daily balance of such outstanding Working
Capital Advances for the applicable period."
(H) Section 3 of the Agreement is hereby amended by inserting immediately
following paragraph (e) thereof the following new paragraph (f):
"(f) Short Term Loan and Special Working Capital Advance. (1) For
purposes of restructuring the Short Fall Amount existing as of December 1,
1996, IBM Credit is hereby deemed to have made a Fifty Five Million Dollar
($55,000,000.00) Advance (the "Short Term Loan") to Borrower as of
December 1, 1996. Unless otherwise due at an earlier date (whether by
acceleration or otherwise), the principal balance of the Short Term Loan
shall be due and payable on the dates set forth in Exhibit L in the
amounts set forth opposite such dates. The Short Term Loan may be prepaid
in whole or in part at any time. Repayments of the Short Term Loan may not
be reborrowed. Except as otherwise expressly provided herein generally
with respect to Working Capital Advances and in particular with respect to
the Special Working Capital Advance (as hereinafter defined), and provided
that no Default or Event of Default shall have occurred and be continuing
or shall occur after giving effect to such application, all payments of
4
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principal made to IBM Credit with respect to Advances shall be applied
first to the next required installment payment of the Short Term Loan. The
proceeds of the Short Term Loan shall be deemed to be applied to Advances
outstanding under this Agreement as of December 1, 1996.
(2) IBM Credit is hereby deemed to have made a Twenty Million
Dollars ($20,000,000.00) Working Capital Advance (the "Special Working
Capital Advance") to Borrower as of December 1, 1996. Notwithstanding any
other term or provision of this Agreement or any other agreement between
Borrower and IBM Credit, the Special Working Capital Advance may not be
repaid by Borrower unless and until (i) the Short Term Loan shall have
been paid in full and (ii) Borrower's total outstanding indebtedness under
this Agreement after giving effect to such repayment shall be less than
Value, as Value was defined prior to giving effect to Amendment No. 7 to
this Agreement dated as of December 1, 1996. Unless otherwise due at an
earlier date (whether by acceleration or otherwise), the Special Working
Capital Advance shall be due and payable on the last day of the Revolving
Period. The proceeds of the Special Working Capital Advance shall be
deemed to be applied to Advances outstanding under this Agreement as of
December 1, 1996.
(3) The Short Term Loan and the Special Working Capital Advance
shall accrue a finance charge on the unpaid principal balance thereof from
December 1, 1996 through and including the date such principal is due and
owing, at a per annum rate equal to the lesser of (i) the Base Finance
Charge plus 2.00% and (ii) the highest rate from time to time permitted by
applicable law. If any portion of the Short Term Loan or the Special
Working Capital Advance is not paid on or prior to the date such payment
is due (including by way of acceleration), such unpaid principal amount
shall bear interest from the date such payment is due until IBM Credit
receives payment thereof at a per annum rate equal to the lesser of (i)
the Prime Rate plus 6.5% and (ii) the highest rate from time to time
permitted by applicable law. The aforesaid interest rates will be applied
to the average daily balance of the outstanding payments. Such finance
charges shall be calculated based upon a year of 360 days for the actual
days elapsed. If it is determined that amounts received from Borrower were
in excess of such highest rate, then the amount representing such excess
shall be considered reductions to principal of Advances."
5
109
(I) Section 11 of the Agreement is hereby amended by inserting immediately
following paragraph 11 (b)(xii) thereof, the following new paragraph (xiii):
"(xii) Deliver to IBM Credit on or prior to February 28, 1997, a report,
in form and detail satisfactory to IBM Credit, describing Borrower's plan
to recapitalize itself."
(J) Section 12 of the Agreement is hereby amended by deleting paragraphs
(a) through (g) thereof in their entirety and substituting, in lieu thereof, the
following paragraphs (a) through (g):
"(a) Borrower shall at all times maintain a ratio of current assets
to current liabilities during each period set forth below equal to or greater
than the ratio set forth opposite such period:
Period Ratio
------ -----
12/31/96 through 3/30/97 0.87:1.00
3/31/97 through 6/29/97 0.88:1.00
6/30/97 and thereafter 0.89:1.00
(b) Borrower shall maintain total liabilities minus the aggregate
outstanding principal amount of Subordinated Debt during each fiscal year in an
amount equal to or less then $800,000,000.00.
(c) Borrower shall not permit the sum of Tangible Net Worth plus the
aggregate outstanding principal amount of Subordinated Debt at any time during
each period set forth below to be less than the amount set forth opposite such
period:
Period Amount
------ ------
12/31/96 through 3/30/97 ($72,700,000.00)
3/31/97 through 6/29/97 ($67,800,000.00)
6/30/97 and thereafter ($58,600,000.00)
6
110
(d) Borrower shall not permit, at the end of any fiscal quarter
ending on a date during any period set forth below, the ratio of EBIT to
Interest Expense for the period of two consecutive fiscal quarters then ended to
be less than the ratio set forth opposite such period:
Period Ratio
------ -----
12/31/96 through 3/30/97 1.07:1.00
3/31/97 through 6/29/97 1.20:1.00
6/30/97 and thereafter 1.50:1.00
(e) Borrower shall not permit the ratio of Consolidated Net Income
for any Fiscal Quarter ending on a date during any period set forth below to
sales during such fiscal quarter to be less than the ratio set forth opposite
such period:
Period Ratio
------ -----
12/31/96 through 3/30/97 0.10:1.00
3/31/97 through 6/29/97 0.30:1.00
6/30/97 and thereafter 0.70:1.00
(f) Borrower shall not permit the aggregate amount of Capital
Expenditures made in any fiscal year to exceed $30,000,000.00 net of
dispositions related to such Capital Expenditures.
(g) Borrower shall at all times maintain Working Capital during each
period set forth below of not less than the amount set forth opposite such
period:
Period Amount
------ ------
12/31/96 through 3/30/97 ($88,000,000.00)
3/31/97 through 6/29/97 ($86,000,000.00)
6/30/97 and thereafter ($75,000,000.00)
"Working Capital" as of any date shall mean current assets minus current
liabilities, in each case as of such date.
7
111
Borrower agrees that at such quarterly review with IBM Credit, Borrower
will provide a Compliance Certificate, in substantially the form of
Exhibit J hereto, signed by its Chief Executive Officer, Chief Financial
Officer or Vice President & Treasurer, that no default under this
Agreement exists or if such default exists, specifying the nature
thereof."
(K) The Agreement is hereby amended by adding as Exhibit K and Exhibit L
to the Agreement, respectively, the Exhibit K and Exhibit L attached hereto.
(L) IBM Credit and Borrower agree that the Revolving Period (as defined in
the Agreement) shall end on September 15, 1997.
Section 3. Waiver. IBM Credit hereby waives any Default or Event of Default by
Borrower by reason of the existence of any Shortfall Amount not to exceed
Seventy Five Million Dollars ($75,000,000.00) or the failure by Borrower to
comply with the financial covenants set forth in Section 12 of the Agreement
through the effective date of this Amendment. Except as specifically set forth
in this Section 3, IBM Credit does not waive any other Default or Event of
Default that may have occurred and be existing on the date hereof.
Section 4. Reliance. Borrower hereby acknowledges that IBM Credit has relied on
and is relying on the financial information provided by Borrower in the
Collateral Report dated as of December 22, 1996 delivered to IBM Credit on
December 23, 1996 and the Business Plan of Borrower delivered to IBM Credit on
December 27, 1996 in entering into this Amendment and waiving the defaults as
set forth in Section 3 above. Borrower represents that such financial
information (other than (i) financial information contained in the Business Plan
constituting projections and (ii) historical financial information for periods
prior to June 30, 1996) is true and correct in all material respects and agrees
that the failure of such financial information to be true and correct in all
material respects shall constitute an Event of Default under the Agreement.
Borrower represents that the financial projections contained in the Business
Plan were prepared in good faith and upon a reasonable basis.
Section 5. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior or simultaneous satisfaction of the following conditions:
(A) IBM Credit shall have received counterparts of this Amendment executed
by a duly authorized officer of Borrower;
(B) IBM Credit shall have delivered to Borrower counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
(C) IBM Credit shall have received Pledge Agreements substantially in the
form attached hereto as Exhibit A executed by ▇▇▇▇ ▇▇▇▇▇▇▇, Entex Associates,
L.P., and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
8
112
Jr., pledging all of the capital stock and options to purchase capital stock of
Borrower, owned, directly or indirectly, by such Person;
(D) Borrower shall have paid to IBM Credit the documentation fees referred
to in the first sentence of Section 6 of this Amendment.
Section 6. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Agreement.
6.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make the representations not
misleading.
6.2 Violation of Other Agreements. The execution and delivery of this
Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
6.3 Litigation. Except as has been disclosed by Borrower to IBM Credit in
writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect the ability of Borrower to perform its obligations
under the Agreement, and the other documents, instruments and agreements
executed in connection therewith or pursuant hereto.
6.4 Enforceability of Amendment. This Amendment has been duly authorized,
executed and delivered by Borrower and is enforceable against Borrower in
accordance with its terms.
Section 7. Ratification of Agreement. Except as specifically amended hereby, all
the provisions of the Agreement shall remain in full force and effect. Borrower
hereby ratifies, confirms and agrees that the Agreement, as amended hereby,
represents a valid and enforceable obligation of Borrower, and is not subject to
any claims, offsets or defenses.
Section 8. Documentation Fees. Borrower agrees to pay IBM Credit on or prior to
January 10, 1997, a documentation Fee in an amount equal to Twenty Five Thousand
Dollars ($25,000.00). In addition, Borrower hereby agrees to pay to IBM Credit,
promptly upon demand therefor, all costs and expenses (including, without
limitation, reasonable fees and disbursements of out-side counsel) incurred by
IBM Credit in connection with the preparation, negotiation, execution, delivery,
and enforcement of this Amendment, the Pledge Agreements and any other
agreement, document or instrument executed in connection herewith or therewith,
the actions and transactions provided for herein and therein or contemplated
hereby or thereby.
9
113
Section 9. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York, without reference to the
conflict of laws principles thereof.
Section 10. 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.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Title: Vice President Finance
10
114
Section 9. Governing Law, This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York, without reference to the
conflict of laws principles thereof.
Section 10. 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.
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.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ Jr. By:
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ Jr. Name:
-------------------------------
Title: President Title: Vice President Finance
10
115
ENTEX INFORMATION SERVICES, INC.
EXHIBIT K
ACCOUNTS RECEIVABLE ("A/R") ADVANCE AUTHORIZATION FORM/
BORROWING CERTIFICATE ("BC")
Schedule #: 1 Accounts as of: 12/11/96 Report prepared: 12/12/96
GROSS NET
OTHER COLLATERAL COLLATERAL
COLLATERAL STATUS VALUES VALUE ADV. % VALUE
------ ---------- ------ -----------
1. Previous assigned A/R balance
(Prior line 4): $0.00
2. Additions to A/R (2A+B): $0.00
A. New ▇▇▇▇▇▇▇▇ $0.00
B. Other Additions $0.00
3. Deductions from A/R (3A+B+C): $0.00
A. Cash Receipts $0.00
B. Credits / other deductions $0.00
4. New assigned A/R balance (1+2-3): $0.00
5. Less Ineligible A/R: $0.00
A. 50% rule accounts $0.00
B. Other accounts over 90 $0.00
C. Maintenance/ Service (2.5%) $0.00
D. Other $0.00
6. Total A/R Eligible Collateral
(L4-L5 X Adv./R.): $0.00 85% $0.00
7. IBM Credit Financed Eligible Inventory
A. Financed Erlanger and other $0.00 100% $0.00
▇. ▇▇▇▇▇▇($15M): 1. Non-financed $0.00 50% $0.00
2. Other Inv. Erl. $0.00 50% $0.00
C. IBM Service Parts (PDC & ESP) $0.00 25% $0.00
D. Financed at Branch (Excludes C/R) $0.00 80% $0.00
E. Other Inventories (▇▇▇▇▇▇ at Branch) $0.00 3% $0.00
F. HP Net Collateral (F3+F4-F5): $0.00
1. HP Gross A/R $0.00
2. HP Ineligible A/R $0.00 HP Adv. Rate
------------
3. HP Net Eligible A/R (F1-F2X85%) $0.00 85% $0.00
4. HP Inventory at ERL $0.00
5. HP A/P Balance $0.00
8. Unpaid Claims: A. Returns $0.00 100% $0.00
B. Other Plans $0.00 100% $0.00
9. Total Net Eligible Collateral (6+7+8) $0.00
LOAN STATUS
10. Net IBM Credit Outstandings ("O/S") (10A-B-C-D): $0.00
▇. ▇▇▇▇▇ IBM Credit Outstandings (RFS) $0.00
B. Prior wires to IBM Credit(Unapplied) $0.00
C. QSAs $0.00
D. In Transit (6 Days) $0.00
11. Unavailable Funds in Lockbox (float): $0.00
12. O/S LOAN BALANCE (Line 10 - Line 11): $0.00
13. COLLATERAL S/F / EXCESS (Line 9 - Line 12): $0.00
14. Cash Advances from IBM Credit to Entex: $0.00
15. Today's wire from Entex to IBM Credit: $0.00
16. NEW COLLATERAL S/F EXCESS (LINE 13 - 14 + 15): $0.00
- Yesterday PM Lockbox wire to Entex $0.00
- Today AM Lockbox wire to Entex $0.00
SIGNATURES:
-------------------------- -----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Controller (Date) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, C.F.O. (Date)
The undersigned officers or delegated individuals of Entex Information Services,
Inc. certify that they are authorized to provide this information on behalf of
Entex Information Services, Inc.
116
EXHIBIT L
TO
FOURTH AMENDED AND RESTATED
AGREEMENT FOR WHOLESALE FINANCING
Date Amount
---- ------
March 31, 1997 Payment A Amount
April 30, 1997 $5,000,000.00
June 30, 1997 Payment B Amount
July 15, 1997 Unpaid Balance
For purposes of this Exhibit L, "Payment A Amount" shall mean
$5,000,000.00 plus the sum of (i) $2,500,000.00 plus (ii) an amount equal to
sixty percent (60%) of (a) Excess Cash Flow for the period from January 1, 1997
through and including March 31, 1997 minus (b) $2,500,000.00.
For purposes of this Exhibit L, "Payment B Amount" shall mean the sum of
(i) $6,000,000.00 plus (ii) an amount equal to sixty percent (60%) of (a) Excess
Cash Flow for the period from April 1, 1997 through and including June 30, 1997
minus (b) $6,000,000.00.
For purposes of this Exhibit L, "Excess Cash Flow" shall mean, with
respect to any period, EBIT of Borrower for such period plus the aggregate
consolidated amortization and depreciation expense of Borrower during such
period determined on a consolidated basis in accordance with GAAP, minus the
amount of all cash of Borrower and its consolidated Subsidiaries applied to
Interest Expense, Capital Expenditures and taxes of Borrower and its
consolidated Subsidiaries during such period.
117
ACKNOWLEDGMENT, WAIVER AND AMENDMENT NO. 8 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Acknowledgment, Waiver and Amendment No. 8 to the Fourth Amended
and Restated Agreement for Wholesale Financing, dated as of July 15, 1997 (this
"Amendment"), is made by and between ENTEX Information Services, Inc., a
Delaware corporation ("Borrower"), and IBM Credit Corporation, a Delaware
corporation ("IBM Credit").
RECITALS:
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
(as amended, supplemented or otherwise modified from time to time, the
"Agreement");
B. Pursuant to Amendment No. 7, dated as of December 1, 1996 ("Amendment
No. 7"), to the Fourth Amended and Restated Agreement For Wholesale Financing,
IBM Credit and Borrower agreed to restructure a "Shortfall Amount" (as defined
in the Agreement) in the amount of Fifty Five Million Dollars ($55,000,000.00)
(the "Original Shortfall Amount");
C. Pursuant to Amendment No. 7, Borrower has repaid Twenty Two Million
Five Hundred Thousand Dollars ($22,500,000.00) of the Original Shortfall Amount
(including the payment of $4,000,000.00 on July 15, 1997 referred to in the
following recital) and Thirty Two Million Five Hundred Thousand Dollars
($32,500,000.00) shall remain due and payable as of close of business on July
15, 1997;
D. Borrower has informed IBM Credit that it shall be able to repay only
Four Million Dollars ($4,000,000.00) of the outstanding balance of the Original
Shortfall Amount on July 15, 1997;
E. IBM Credit is willing to restructure the payment terms of the
remaining balance of the Original Shortfall Amount on the conditions and subject
to the terms set forth herein;
F. Borrower is in default of certain terms and conditions of the
Agreement and Borrower has requested that IBM Credit waive such defaults;
G. IBM Credit is willing to waive certain of such defaults (as more
specifically described in Section 2 hereof) subject to the terms and conditions
set forth herein.
ENTEX Amd 8 (7/96) 1
118
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual agreements
provided for below and for other good and 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 Agreement.
Section 2. Acknowledgment.
(A) Borrower acknowledges that on February 3, 1997 a Shortfall Amount of
$7,386,000 was identified and that Borrower was required to pay such Shortfall
Amount on the Daily Shortfall Payment Date of February 5, 1997. Borrower further
acknowledges that such Shortfall Amount was not paid until March 27, 1997.
(B) Borrower further acknowledges that the following defaults occurred:
Term Requirement Default
---- ----------- -------
(a) Financial Reports As required in Section 2(B)(ii), submit Certification was not
financial statements within 45 days from received with 1st, 2nd
the end of each fiscal quarter together & 3rd quarter 1996
with a certification of an authorized financial statements
officer
(b) Financial Reports As required in Section 2(B)(ii), submit Financial Statement
financial statements within 45 days from for fiscal third quarter
the end of each fiscal quarter 1996 received later
than 45 days after end
of fiscal quarter
(c) Financial Reports As required in Section 2(C)(ii)(I), submit Statement not
statement prepared by CFO or Vice- received with 1st, 2nd
President & Treasurer along with quarterly & 3rd quarter 1996
financial statements financial statements
(d) Financial Reports As required in Section 2(C)(ii)(III), Schedule was not
submit schedule prepared by CFO or received with 1st, 2nd
Vice-President and Treasurer along with & 3rd quarter 1996
quarterly financial statements financial statements
ENTEX Amd 8 (7/96) 2
119
(e) Collateral Reports As required in Section 2(B)(viii), on each Certification was not
Business Day, submit collateral report received with
certified by the Controller and CFO or collateral reports
designees prior to June 1, 1997
(f) Business Plan As required in Section 4 of Amendment Historical financial
No. 7, submit Business Plan information in
containing true and correct Business Plan for
financial information for periods after periods after June
June 30, 1996 and Collateral Report 30, 1996, and in
dated December 23, 1996 containing Collateral Report
true and accurate financial information were not correct in all
material respects to
the extent notified by
Borrower on or prior
to the date hereof
(g) Recap Plan As required in Section 11(b)(xiii), submit recapitalization plan
a recapitalization plan on or prior to not delivered
February 28, 1997
(C) Borrower acknowledges that the financial covenants set forth in
Section 12 of the Agreement are applicable to the financial results of Borrower
for the fiscal quarter ending December 29, 1996, and Borrower was required to
maintain such financial covenants at all times. Borrower further acknowledges
its actual attainment was as follows:
Covenant Covenant
Covenant Requirement Actual
-------- ----------- --------
Current Assets to Equal to or greater 0.86:1.00
Current Liabilities than 0.87:1.00
EBIT to Interest Expense Ratio Not less than 0.73:1.00
1.07:1.00
Consolidated Net Income Not less than (1.54):1.00
0.10:1.00
Working Capital Not less than ($93,725,000.00)
($88,000.000.00)
▇▇▇▇▇ ▇▇▇ ▇ (▇/▇▇) ▇
▇▇▇
(▇) ▇▇▇▇▇▇▇▇ acknowledges that the financial covenants set forth in Section
12 of the Agreement are applicable to the financial results of Borrower for the
fiscal quarter ending March 28, 1997, and Borrower was required to maintain such
financial covenants at all times. Borrower further acknowledges its actual
attainment was as follows:
Covenant Covenant
Covenant Requirement Actual
-------- ----------- --------
Current Assets to Equal to or greater 0.85:1.00
Current Liabilities than 0.87:1.00
Tangible Net Worth plus Not less than ($79,645,000.00)
plus Subordinated Debt ($72,700,000.00)
EBIT to Interest Expense Ratio Not less than 0.20:1.00
1.07:1.00
Consolidated Net Income Not less than (0.94)%
0.10%
Working Capital Not less than ($100,911,000.00)
($88,000,000.00)
(E) Borrower acknowledges that the financial covenants set forth in
Section 12 of the Agreement are applicable to the financial results of Borrower
for the fiscal quarter ending June 29, 1997, and Borrower was required to
maintain such financial covenants at all times. Borrower further acknowledges
its actual attainment was as follows:
Covenant Covenant
Covenant Requirement Actual
-------- ----------- --------
Current Assets to Equal to or greater 0.86:1.00
Current Liabilities than 0.88:1.00
Working Capital Not less than ($90,828,000.00)
($86,000,000.00)
(F) Borrower acknowledges that Section 11(b)(iii) of the Agreement
requires, among other things, that Borrower comply with all laws applicable to
or binding upon Borrower, and that the failure of Borrower to timely file with
the Securities Exchange Commission ("SEC") periodic reports required to be filed
under Section 12(g) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, would constitute a failure by Borrower to
comply with the requirements of Section 11(b)(iii) of the Agreement, however,
Borrower has not filed any such periodic reports with the SEC on or prior to the
date hereof.
ENTEX Amd 8 (7/96) 4
121
Section 3. Waivers to Agreement; Forbearance. IBM Credit hereby waives the
defaults of Borrower with the terms of the Agreement to the extent such defaults
are set forth in Section 2 hereof. Except as specifically set forth in this
Section 3, IBM Credit reserves its rights with respect to, and does not waive,
any Default or Event of Default that may be existing on the date hereof,
including, without limitation, as a result of Borrower's defaults with Microsoft
Corporation under the Warrant Purchase Agreement and Note dated June 21, 1996
(the "Microsoft Default"). Notwithstanding the foregoing sentence, IBM Credit
hereby agrees that it shall not enforce or exercise any rights or remedies
available to it as a result of the Microsoft Default unless and until such time
as Microsoft Corporation takes any action arising out of or as a result of the
Microsoft Default, but in any event no sooner than November 1, 1997.
Section 4. Modifications to Agreement. The following modifications are made to
the Agreement effective as of the date hereof:
(A) Section 3(a) of the Agreement is hereby amended by deleting the second
sentence of the third paragraph thereof in its entirety and substituting, in
lieu thereof, the following two sentences:
"If the full amount of any amounts owed under this Agreement
is not paid by its due date, excluding any amounts due under
Section 3(b) at any one time not to exceed Five Million
Dollars ($5,000,000.00) but including any amounts due under
Section 3(b) at any one time in excess of Five Million Dollars
($5,000,000.00), and including as a result of the acceleration
of the obligations, the unpaid amount will bear interest from
its due date until IBM Credit receives payment thereof, at a
per annum rate equal to the Prime Rate plus 6.5%. If any
amount due under Section 3(b), at any one time not to exceed
Five Million Dollars ($5,000,000.00), is not paid when due,
such unpaid amount will bear interest from its due date until
IBM Credit receives payment thereof, at a per annum rate equal
to the Prime Rate plus 2.5%."
(B) Section 3(f) of the Agreement is hereby amended by deleting the second
sentence of paragraph (2) thereof in its entirety and substituting, in lieu
thereof, the following sentence:
"Notwithstanding any other term or provision of this Agreement
or any other agreement between Borrower and IBM Credit, so
long as any other amounts are owing to IBM Credit by Borrower,
the Special Working Capital Advance may not be repaid by
Borrower unless and until (i) the Short Term Loan shall have
been paid in full, (ii) Borrower's total outstanding
indebtedness under this Agreement after giving effect to such
repayment shall be less than Value, as Value was defined prior
to giving effect to Amendment No. 7 to this Agreement
ENTEX Amd 8 (7/96) 5
122
dated as of December 1, 1997, and (iii) Borrower shall have executed an
amendment to this Agreement, in form and substance satisfactory to IBM
Credit in its reasonable discretion, (1) modifying the definition of Value
to be substantially the same as Value was defined prior to giving effect to
Amendment No. 7 and (2) modifying the financial covenants set forth in
Section 12 of this Agreement following the consummation of any equity
investment or capital infusion in, or debt issuance by, Borrower."
(C) Section 3(f) of the Agreement is hereby amended by inserting
immediately following paragraph (3) thereof, the following new paragraph (4):
"(4) In addition to the scheduled payments set forth on Exhibit L, the
Short Term Loan shall be prepaid on the fifteenth (15th) calendar day of
each second month beginning on September 15, 1997 in an amount equal to the
average amount by which Value exceeds the sum of (i) Borrower's total
outstanding indebtedness (excluding the Short Term Loan) under this
Agreement for the two calendar months preceding such date plus (ii)
Seventeen Million Dollars ($17,000,000.00). Furthermore, the Short Term
Loan shall be prepaid on the date of the consummation of any equity
investment or capital infusion in, or debt issuance by, Borrower in an
amount equal to the proceeds thereof, net of reasonable and customary
expenses associated therewith. Any such mandatory prepayment shall be
applied to the scheduled payments set forth on Exhibit L, in the inverse
order of their maturity."
(D) Section 12 of the Agreement is hereby amended by deleting paragraphs
(a), (c), (d), (e) and (g) thereof in their entirety and substituting, in lieu
thereof, the following paragraphs (a),(c),(d),(e) and (g), respectively:
"(a) Borrower shall at all times maintain a ratio of current assets to
current liabilities during each period set forth below equal to or greater
than the ratio set forth opposite such period:
Period Ratio
------ ----
Fiscal quarter ending December 1996 0.87:1.00
Fiscal quarter ending March 1997 0.87:1.00
Fiscal quarter ending June 1997 0.88:1.00
ENTEX Amd 8 (7/96) 6
123
Fiscal quarter ending September 1997 0.83:1.00
Fiscal quarter ending December 1997 0.83:1.00
Fiscal quarter ending March 1998 0.83:1.00
Fiscal quarter ending June 1998 and thereafter 0.83:1.00"
"(c) Borrower shall not permit the sum of Tangible Net Worth plus the
aggregate outstanding principal amount of Subordinated Debt at any time
during each period set forth below to be less than the amount set forth
opposite such period:
Period Amount
------ ------
Fiscal quarter ending December 1996 ($72,700,000.00)
Fiscal quarter ending March 1997 ($72,700,000.00)
Fiscal quarter ending June 1997 ($67,800,000.00)
Fiscal quarter ending September 1997 ($68,000,000.00)
Fiscal quarter ending December 1997 ($60,000,000.00)
Fiscal quarter ending March 1998 ($48,200,000.00)
Fiscal quarter ending June 1998 and thereafter ($38,700,000.00)"
"(d) Borrower shall not permit, at the end of any fiscal quarter
ending on a date during any period set forth below, the ratio of EBIT to
Interest Expense for the period of two consecutive fiscal quarters then
ended to be less than the ratio set forth opposite such period:
Period Ratio
------ ----
Fiscal quarter ending December 1996 1.07:1.00
Fiscal quarter ending March 1997 1.07:1.00
ENTEX Amd 8 (7/96) 7
124
Fiscal quarter ending June 1997 1.20:1.00
Fiscal quarter ending September 1997 1.10:1.00
Fiscal quarter ending December 1997 1.40:1.00
Fiscal quarter ending March 1998 1.60:1.00
Fiscal quarter ending June 1998 and thereafter 1.70:1.00"
"(e) Borrower shall not permit the percentage of Consolidated
Net Income for any Fiscal Quarter ending on a date during any
period set forth below to sales during such fiscal quarter to
be less than the percentage set forth opposite such period:
Period Percentage
------ ----------
Fiscal quarter ending December 1996 0.10%
Fiscal quarter ending March 1996 0.10%
Fiscal quarter ending June 1997 0.30%
Fiscal quarter ending September 1997 0.40%
Fiscal quarter ending December 1997 0.70%
Fiscal quarter ending March 1998 1.00%
Fiscal quarter ending June 1998 and thereafter 1.00%"
"(g) Borrower shall at all times maintain Working Capital
during each period set forth below of not less than the amount
set forth opposite such period:
Fiscal quarter ending December 1996 ($88,000,000.00)
Fiscal quarter ending March 1997 ($88,000,000.00)
ENTEX Amd 8 (7/96) 8
125
Fiscal quarter ending June 1997 ($86,000,000.00)
Fiscal quarter ending September 1997 ($105,000,000.00)
Fiscal quarter ending December 1997 ($100,500,000.00)
Fiscal quarter ending March 1998 ($92,300,000.00)
Fiscal quarter ending June 1998 and thereafter ($83,800,000.00)"
"Working Capital" as of any date shall mean current assets
minus current liabilities, in each case as of such date.
Borrower agrees that at such quarterly review with IBM Credit,
Borrower will provide a Compliance Certificate, in
substantially the form of Exhibit J hereto, signed by its
Chief Executive Officer, Chief Financial Officer or Vice
President & Treasurer, that no default under this Agreement
exists or if such default exists, specifying the nature
thereof."
(E) Section 19 of the Agreement is hereby amended by deleting the
definition of "Revolving Period" in its entirety and substituting in lieu
thereof, the following:
"Revolving Period" shall mean the period from and including
the effective date of this Agreement to and including
September 15, 1998, or such later date as IBM Credit and
Borrower may agree in writing."
(F) Exhibit L to the Agreement is hereby amended by deleting such
Exhibit L in its entirety and substituting, in lieu thereof, the Exhibit L
attached hereto.
Section 5. Documentation Fee. As additional consideration for the preparation,
negotiation and execution by IBM Credit of this Amendment, Borrower agrees to
pay to IBM Credit a documentation fee in the amount of Thirty Thousand Dollars
($30,000.00) on or prior to November 1, 1997.
Section 6. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior or simultaneous satisfaction of the following conditions:
(A) IBM Credit shall have received counterparts of this Amendment executed
by a duly authorized officer of Borrower;
ENTEX Amd 8 (7/96) 9
126
(B) IBM Credit shall have delivered to Borrower counterparts of this
Amendment executed by a duly authorized officer of IBM Credit;
(C) IBM Credit shall have received a Warrant Agreement in form and
substance satisfactory to IBM Credit granting IBM Credit warrants to buy shares
of common stock of Borrower.
Section 7. Representations and Warranties. Borrower makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Agreement.
7.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true, accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof (except
to the extent any representation is not true, accurate and complete as a result
of Borrower's defaults with Microsoft Corporation under the Warrant Purchase
Agreement and Note entered into in June 1996), and do not fail to disclose any
material fact necessary to make the representations not misleading.
7.2 Violation of Other Agreements. The execution and delivery of this
Agreement do not violate or cause Borrower not to be in compliance with the
terms of any agreement to which Borrower is a party.
7.3 Litigation. Except as has been disclosed by Borrower to IBM Credit
in writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect the ability of Borrower to perform its obligations
under the Agreement, and the other documents, instruments and agreements
executed in connection therewith or pursuant hereto.
7.4 Enforceability of Amendment. This Amendment has been duly
authorized, executed and delivered by Borrower and is enforceable against
Borrower in accordance with its terms.
Section 8. Ratification of Agreement. Except as specifically amended or waived
hereby, all the provisions of the Agreement shall remain in full force and
effect. Borrower hereby ratifies, confirms and agrees that the Agreement, as
amended hereby, represents a valid and enforceable obligation of Borrower, and
is not subject to any claims, offsets or defenses.
Section 9. Governing Law. This Amendment shall be governed by and interpreted
in accordance with the laws of the State of New York, without reference to the
conflict of laws principles thereof.
10
127
Section 10. 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 duly executed by the duly
authorized officers of the undersigned as of the day and year first above
written.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------- ------------------------------------
Name: Name: ▇▇▇▇ ▇▇▇▇▇▇
-------------------------- ----------------------------------
Title: Title: Manager, Credit Selected Accounts
------------------------- ---------------------------------
ENTEX Amd 8 (7/96) 11
128
Section 10. Counterparts. This Amendment may 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 duly executed by the duly
authorized officers of the undersigned as of the day and year first above
written.
ENTEX INFORMATION SERVICES, INC. IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. By:
---------------------------- ------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Name:
-------------------------- ----------------------------------
Title: President Title:
------------------------- ---------------------------------
ENTEX Amd 8 (7/96) 11
129
EXHIBIT J
COMPLIANCE CERTIFICATE
TO: IBM CREDIT CORPORATION
[INSERT RFC ADDRESS]
The undersigned authorized officers of ENTEX Information Services, Inc.
(the "Customer") hereby certify, with respect to the Agreement for Wholesale
Financing executed by and between the Customer and IBM Credit Corporation ("IBM
Credit") on _______________ __, 199_, as amended from time to time (the
"Agreement"), that (A) the Customer has been in compliance for the period from
________________________ to __________________ with the financial covenants set
forth in Section 12 of the Agreement, as demonstrated below, and (B) no Default
has occurred and is continuing as of the date hereof, except, in either case, as
set forth below. All capitalized terms used herein and not otherwise defined
shall have the meanings assigned to them in the Agreement.
I. Financial Covenants
FINANCIAL COVENANT REQUIRED (Fiscal Year) ACTUAL
------------------ -------- ------------ ------
Current Assets to = or > 1.00 to 1 (1995)
Current Liabilities = or > 1.01 to 1 (after 1995)
Total Liabilities minus = or < 20 to 1 (any)
Subord. Debt to Tangible = or < 20 to 1
Net Worth plus Subord.
Debt
Tangible Net Worth plus = or > $18M (1995)
Subordinated Debt = or > $21M (after 1995)
EBIT to Interest Exp < 1.1 to 1 (any)
< 1.1 to 1
Consolidated Net Income = or > 2% of Sales (any)
for the Fiscal Quarter = or > 2% of Sales
Capital Expenditures = or < $10M (any)
Working Capital (see Section 12(g) (any)
Agreement)
69
130
Exhibit J (cont)
Attached hereto are Financial Statements as of and for the end of the
fiscal ___________ ended on the applicable date, as required by Section 2(c) of
the Agreement for Wholesale Financing.
Submitted by:
ENTEX Information Services, Inc.
By:
-------------------------------
Print Name:
-----------------------
Title:
----------------------------
70
131
EXHIBIT L
To Fourth Amended and Restated
Agreement for Wholesale Financing
Effective Date: July 15, 1997
Date Amount
---- ------
March 31, 1997 $7,500,000.00
April 30, 1997 $5,000,000.00
June 30, 1997 $6,000,000.00
July 15, 1997 $4,000,000.00
July 30, 1997 $3,000,000.00
August 29, 1997 $2,000,000.00
September 30, 1997 $2,000,000.00
October 31, 1997 $3,000,000.00
November 28, 1997 $3,000,000.00
December 31, 1997 $3,000,000.00
January 30, 1998 $3,000,000.00
February 28, 1998 $3,000,000.00
March 31, 1998 Unpaid Balance
For purposes of this Exhibit L, "Unpaid Balance" shall mean any unpaid principal
balance of the Short Term Loan.
12
132
AMENDMENT NO. 9 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amendment No. 9 to the Fourth Amended and Restated Agreement for Wholesale
Financing (this "Amendment") is made as of September 26, 1997 by and between
ENTEX Information Services, Inc., a Delaware corporation ("Borrower") and IBM
Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
(as amended on September 19, 1995 and as further amended, supplemented or
otherwise modified from time to time, the "Agreement").
B. Borrower has requested that IBM Credit provide an Irrevocable Standby
Letter of Credit in favor of Mellon Bank, N.A. ("Bank") to secure certain
contingent obligations of Borrower to Bank.
C. IBM Credit is willing to establish the Irrevocable Standby Letter of
Credit subject to the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and IBM Credit hereby agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Modification of Agreement
A. Subsection 2(b) of the Agreement is hereby amended by inserting
immediately following the first sentence of paragraph (viii) thereof the
following sentence:
"The Net Outstandings set forth in such report shall at all times include
the Amount of Credit as of the date of such report."
B. Subsection 3 (b) of the Agreement is hereby amended by:
(a) inserting on the second line thereof immediately prior to the
phrase "Borrower's total outstanding indebtedness under this
Agreement, other than any indebtedness under the Short-Term Loan,"
the new phrase "the sum of"; and
page 1 of 4
133
(b) inserting on the second line thereof Immediately following the
phrase "Borrowers total outstanding indebtedness under this
Agreement, other than any indebtedness under the Short-term Loan,"
the new phrase "plus the Amount of Credit as of the date thereof".
C. Subsection 3(d) of the Agreement is hereby amended by:
(a) inserting in the seventh sentence thereof immediately following
the phrase "Line of Credit" the new phrase "less the Amount of
Credit as of the date thereof"; and
(b) inserting in the seventh sentence thereof immediately following
the word "Indebtedness" the new phrase ", including the Amount of
Credit as of the date thereof,".
D. Agreement is hereby amended by inserting immediately following Section
3 thereof the following new Section 3A:
"3A. Irrevocable Standby Letter of Credit. Borrower hereby covenants
and agrees with IBM Credit as follows:
(a) IBM Credit shall issue an Irrevocable Standby Letter of Credit
No. 42127-01 dated as of September 25, 1997 in favor of Bank for the
account of Borrower (the letter of credit together with any
amendments or replacement letters of credit, the "ILOC"). Borrower
shall pay to IBM Credit a monthly fee (the "ILOC Fee") equal to
0.125% of the Amount of Credit (as defined in the ILOC or such other
amount as may be agreed to by IBM Credit, in writing, from time to
time). The ILOC Fee shall be set forth in Borrower's next monthly
billing statement following the date the ILOC is executed by IBM
Credit and in each monthly billing statement thereafter. The ILOC
Fee shall be due and payable by Borrower on the fifteenth (15th) day
of the month the billing statement is received by Borrower and each
month thereafter until all obligations, including contingent
obligations of IBM Credit, under such ILOC are terminated.
(b) Borrower shall upon the request of IBM Credit, during the
continuation of an Event of Default or following a termination of
the Line of Credit, establish an escrow account with IBM Credit in
an amount equal to the Amount of Credit of the ILOC (or such other
amount as may be agreed to by Borrower and IBM Credit, in writing,
from time to time). In the event Borrower fails to establish such
escrow account within thirty (30) days of such request, IBM Credit
shall have the right but not the obligation to establish such escrow
account on behalf of Borrower and make an Advance for the account of
Borrower to fund such escrow account.
page 2 of 4
134
(c) Borrower acknowledges that Bank may make demand under the ILOC
for amounts for which Borrower may claim it is not liable. Borrower covenants
and agrees that, not withstanding any such dispute between Bank and Borrower,
any payments made by IBM Credit pursuant to the ILOC (including any amount paid
by IBM Credit to fund the escrow account) that is not immediately reimbursed by
Borrower shall constitute Working Capital Advances hereunder that shall be due
and payable by Borrower in accordance with the terms hereof."
E. Subsection 13(i) of the Agreement is hereby amended by inserting in the
second line thereof immediately following the phrase "in Section 3" the new
phrase "or Section 3A".
F. Section 19 of the Agreement is hereby amended by inserting immediately
following the definition of "Agreement" the following new definition "Amount of
Credit":
"Amount of Credit" shall mean the aggregate amount of credit under
all letters of credit issued by IBM Credit for the account of
Borrower set forth in each such letter of credit as the "Amount of
Credit".
Section 3. Representations and Warranties. Borrower makes 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.
Section 3.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true and accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make representations not
misleading.
Section 3.2 Violation of Other Agreements. The execution and delivery of this
Amendment and the performance and observance of the covenants to be performed
and observed hereunder do not violate or cause Borrower not to be in compliance
with the terms of any agreement to which Borrower is a party.
Section 3.3 Litigation. Except as has been disclosed by Borrower to IBM Credit
in writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect Borrower's ability to perform Borrower's obligations
under the Agreement and the other documents, instruments and agreements executed
in connection therewith or pursuant hereto.
page 3 of 4
135
Section 3.4 Enforceability of Amendment. This Amendment has been duly
authorized, executed and delivered by Borrower and is enforceable against
Borrower in accordance with its terms.
Section 4. Ratification of Agreement. Except as specifically amended hereby,
all of the provisions of the Agreement shall remain unamended and in full force
and effect. Borrower hereby, ratifies, confirms and agrees that the Agreement,
as amended hereby, represents a valid and enforceable obligation of Borrower,
and is not subject to any claims, offsets and defense.
Section 5. Governing Law. This Amendment shall be governed by and interpreted
in accordance with the laws of the State of New York.
Section 6. 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 duly executed by the authorized
officers of the undersigned as of the day and year first above written.
ENTEX INFORMATION SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Title: VP Treasurer
Accepted and Agreed:
IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: Manager Credit-Selected Accounts
page 4 of 4
136
IBM Credit Corporation In All Correspondence Phone: ▇▇▇-▇▇▇-▇▇▇▇
Remarketer Financing Center Quote Our Reference No.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
IRREVOCABLE STANDBY | PLACE AND DATE OF ISSUE:
LETTER OF CREDIT NO. 42127-01 | WHITE PLAINS NY/SEPTEMBER 29, 1997
--------------------------------------------------------------------------------
***BENEFICIARY*** | ***APPLICANT***
|
MELLON BANK, N.A. | ENTEX INFORMATION SERVICES, INC.
Three Mellon Bank Center | SIX ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ | ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
--------------------------------------------------------------------------------
***EXPIRY DATE/PLACE*** | ***AVAILABLE AT/BY***
EXPIRES ON SEPTEMBER 25, 1998 | OUR OFFICE ONLY BY PRESENTATION
FOR PRESENTATION AT OUR OFFICE | OF DOCUMENTS(S) REQUIRED AND YOUR
| DRAFT(S) DRAWN AT SIGHT.
--------------------------------------------------------------------------------
AMOUNT OF CREDIT: NOT TO EXCEED, IN THE AGGREGATE $500,000.00 U.S. DOLLARS
(FIVE HUNDRED THOUSAND AND 00/100 U.S. DOLLARS)
--------------------------------------------------------------------------------
GENTLEMEN,
AT THE REQUEST AND FOR THE ACCOUNT OF THE ABOVE NAMED APPLICANT, WE HEREBY
ESTABLISH OUR IRREVOCABLE LETTER OF CREDIT IN YOUR FAVOR WHICH IS AVAILABLE AS
INDICATED ABOVE AGAINST PRESENTATION OF YOUR DRAFT(S) DRAWN ON IBM CREDIT
CORPORATION, WHEN ACCOMPANIED BY EITHER OF THE FOLLOWING DOCUMENTS:
---DOCUMENTS REQUIRED---
A DATED STATEMENT BEARING AN ORIGINAL SIGNATURE PURPORTING TO BE AN AUTHORIZED
SIGNER FOR MELLON BANK, N.A. (INDICATING THE NAME AND TITLE/CAPACITY OF THE
SIGNER), READING AS FOLLOWS:
"WE HEREBY CERTIFY THAT THE AMOUNT OF $(SPECIFY) DRAWN UNDER IBM CREDIT
CORPORATION LETTER OF CREDIT 42127-01, AS EVIDENCED BY OUR DRAFT ACCOMPANYING
THIS STATEMENT IS PAYABLE TO MELLON BANK, N.A. BECAUSE ENTEX INFORMATION
SERVICES, INC. IS IN DEFAULT UNDER THE TERMS OF THAT CERTAIN (SPECIFY) AGREEMENT
DATED (SPECIFY) BETWEEN OURSELVES AND ENTEX INFORMATION SERVICES, INC."
OR A DATED STATEMENT BEARING AN ORIGINAL SIGNATURE PURPORTING TO BE AN
AUTHORIZED SIGNER FOR MELLON BANK, N.A. (INDICATING THE NAME AND TITLE/
CAPACITY OF THE SIGNER), READING AS FOLLOWS:
"WE HEREBY CERTIFY THAT THE AMOUNT OF $(SPECIFY) DRAWN UNDER THE IBM CREDIT
CORPORATION LETTER OF CREDIT 42127-01, AS EVIDENCED BY OUR DRAFT ACCOMPANYING
THIS STATEMENT IS PAYABLE TO MELLON BANK BECAUSE SUCH LETTER OF CREDIT IS SET
TO EXPIRE IN LESS THAN THIRTY DAYS FROM THE DATE OF OUR DRAFT AND SUCH LETTER
OF CREDIT HAS NEITHER BEEN RENEWED NOR REPLACED."
---OTHER CONDITIONS---
PARTIAL DRAWINGS ARE PERMITTED.
THIS LETTER OF CREDIT SHALL EXPIRE ON THE EXPIRY DATE SET FORTH ABOVE.
THE ORIGINAL OF THIS LETTER OF CREDIT MUST BE RETURNED TO US WITH ANY
DRAWING(S) HEREUNDER FOR OUR ENDORSEMENT OF ANY PAYMENT EFFECTED. WE UNDERTAKE
TO RETURN SAID ORIGINAL LETTER OF CREDIT TO YOU (UNLESS FULLY UTILIZED OR
EXPIRED) TOGETHER WITH OUR ADVICE OF SETTLEMENT. EACH DRAWING HONORED BY US
UNDER THIS LETTER OF CREDIT SHALL IMMEDIATELY REDUCE THE AMOUNT OF CREDIT BY
THE AMOUNT OF THE DRAWING.
EACH DRAFT DRAWN HEREUNDER MUST BE MARKED "DRAWN UNDER IBM CREDIT CORPORATION
LETTER OF CREDIT NO. 42127-01".
IF A DRAWING IS MADE BY YOU HEREUNDER AT OR PRIOR TO 12:00 NOON (ATLANTA, GA
TIME) ON A BUSINESS DAY (AS HEREINAFTER DEFINED), AND PROVIDED THAT SUCH DRAWING
AND THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH CONFORM TO THE TERMS AND
CONDITIONS HEREOF, PAYMENT SHALL BE MADE TO YOU IN IMMEDIATELY AVAILABLE FUNDS,
NOT LATER THAN 3:00 PM (ATLANTA, GA TIME) ON THE NEXT SUCCEEDING BUSINESS DAY.
IF A DRAWING IS MADE BY YOU HEREUNDER AFTER 12:00 NOON (ATLANTA, GA TIME) ON A
BUSINESS DAY AND PROVIDED THAT SUCH DRAWING AND THE DOCUMENTS PRESENTED IN
CONNECTION THEREWITH CONFORM TO THE TERMS AND CONDITIONS HEREOF, PAYMENTS SHALL
BE MADE TO YOU IN IMMEDIATELY AVAILABLE FUNDS, NOT LATER THAN 3:00 PM (ATLANTA,
GA TIME) ON THE SECOND SUCCEEDING BUSINESS DAY. AS USED HEREIN, "BUSINESS DAY"
SHALL MEAN ANY DAY OTHER THAN A SATURDAY, SUNDAY, PUBLIC HOLIDAY OR OTHER DAY ON
WHICH IBM CREDIT CORPORATION IS CLOSED.
UNLESS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS SUBJECT TO
THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, 1993 REVISION, ICC
PUBLICATION NO. 500 (THE "UCP"). AS TO MATTERS NOT COVERED BY THE UCP, THIS
LETTER OF CREDIT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
---ENGAGEMENT---
WE HEREBY AGREE WITH YOU THAT DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED UPON PRESENTATION AND DELIVERY OF THE
DOCUMENTS AS SPECIFIED HEREIN IF PRESENTED TO THIS OFFICE ON OR BEFORE THE
EXPIRY DATE INDICATED ABOVE.
VERY TRULY YOURS,
IBM CREDIT CORPORATION
/s/ Signature Unreadable /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ---------------------------
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
137
AMENDMENT NO. 10 TO THE
FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
This Amendment No. 10 to the Fourth Amended and Restated Agreement for Wholesale
Financing (this "Amendment") is made as of October 14, 1997 by and between ENTEX
Information Services, Inc., a Delaware corporation ("Borrower") and IBM Credit
Corporation, a Delaware corporation ("IBM Credit").
RECITALS
A. Borrower and IBM Credit have entered into that certain Fourth Amended
and Restated Agreement for Wholesale Financing dated as of September 15, 1995
(as amended on September 19, 1995 and as further amended, supplemented or
otherwise modified from time to time, the "Agreement").
B. Borrower has requested that IBM Credit provide Irrevocable Standby
Letters of Credit in favor of certain creditors (each a "Creditor"), to secure
certain contingent obligations of Borrower.
C. IBM Credit is willing to establish such Irrevocable Standby Letters of
Credit subject to the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and IBM Credit hereby agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Modification of Agreement
Agreement is hereby amended by deleting Section 3A in its entirety, and
substituting, in lieu thereof, the following Section 3A:
"3A. Irrevocable Standby Letters of Credit. Borrower hereby covenants and
agrees with IBM Credit as follows:
(a) IBM Credit may, from time to time in its sole and absolute
discretion, issue an Irrevocable Standby Letter of Credit in favor of a Creditor
for the account of Borrower (each such letter of credit together with any
amendments or replacement letters of credit, an "ILOC"). Borrower shall pay to
IBM Credit a monthly fee for such ILOC equal to the percentage of the Amount of
Credit set forth in Exhibit M attached hereto (the "ILOC Fee") or such other
amount as may be agreed to by IBM Credit, in writing, from time to time. The
ILOC Fee shall accrue beginning the month in which such ILOC is issued by IBM
Credit and each month thereafter until all obligations, including contingent
obligations of IBM Credit, under such ILOCs is terminated. The ILOC Fee shall be
set forth in Borrower's monthly billing statement and shall be due and payable
on the fifteenth (15th) day of each month.
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138
(b) Borrower shall upon the request of IBM Credit, during the
continuation of an Event of Default or following a termination of the Line of
Credit, establish an escrow account with IBM Credit in an amount equal to the
Amount of Credit of the ILOCs (or such other amount as may be agreed to by
Borrower and IBM Credit, in writing, from time to time). In the event Borrower
fails to establish such escrow account within thirty (30) days of such request,
IBM Credit shall have the right but not the obligation to establish such escrow
account on behalf of Borrower and make an Advance for the account of Borrower to
fund such escrow account.
(c) Borrower acknowledges that a Creditor may make a demand under an
ILOC for amounts for which Borrower may claim it is not liable. Borrower
covenants and agrees that, not withstanding any such dispute between such a
Creditor and Borrower, any payments made by IBM Credit pursuant to such an ILOC
(including any amount paid by IBM Credit to fund the escrow account) that is not
immediately reimbursed by Borrower shall constitute Working Capital Advances
hereunder that shall be due and payable by Borrower in accordance with the terms
hereof."
Section 3. Representations and Warranties. Borrower makes 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.
Section 3.1 Accuracy and Completeness of Warranties and Representations. All
representations made by Borrower in the Agreement were true and accurate and
complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make representations not
misleading.
Section 3.2 Violation of Other Agreements. The execution and delivery of this
Amendment and the performance and observance of the covenants to be performed
and observed hereunder do not violate or cause Borrower not to be in compliance
with the terms of any agreement to which Borrower is a party.
Section 3.3 Litigation. Except as has been disclosed by Borrower to IBM Credit
in writing, there is no litigation, proceeding, investigation or labor dispute
pending or threatened against Borrower, which if adversely determined, would
materially adversely affect Borrower's ability to perform Borrower's obligations
under the Agreement and the other documents, instruments and agreements executed
in connection therewith or pursuant hereto.
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139
Section 3.4 Enforceability of Amendment. This Amendment has been duly
authorized, executed and delivered by Borrower and is enforceable against
Borrower in accordance with its terms.
Section 4. Ratification of Agreement, Except as specifically amended hereby, all
of the provisions of the Agreement shall remain as unamended and in full force
and effect. Borrower hereby, ratifies, confirms and agrees that the Agreement,
as amended hereby, represents a valid and enforceable obligation of Borrower,
and is not subject to any claims, offsets or defense.
Section 5. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York.
Section 6. 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 duly executed by the authorized
officers of the undersigned as of the day and year first above written.
ENTEX INFORMATION SERVICES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title:
--------------------------------
Accepted and Agreed:
IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Title: Manager Credit Selected Accounts
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140
EXHIBIT M
TO FOURTH AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING
Effective Date of this Exhibit M: October 14, 1997
This is Exhibit M to that certain Fourth Amended and Restated Agreement for
Wholesale Financing dated September 15, 1995, by and between ENTEX Information
Services, Inc.
("Borrower") and IBM Credit Corporation ("IBM Credit").
This Exhibit M supplements that certain Fourth Amended and Restated Agreement
for Wholesale Financing referred to above, and supersedes any other Exhibit M,
dated or undated, to such Agreement.
Description of Irrevocable Letters of Credit ("ILOC")
Monthly
Name of Amount of ILOC Date of Date of
Beneficiary Credit Fee Issuance Expiration
----------- ------ --- -------- ----------
Mellon Bank $500,000 0.125% 09/29/97 09/25/98
▇▇▇▇▇▇▇▇▇▇▇▇▇
Properties,
Inc. XXI $125,000 0.125% 10/15/97 10/14/98
IN WITNESS WHEREOF, the duly authorized representatives of IBM Credit and
Borrower have executed this Exhibit M, on the date set forth above.
IBM CREDIT CORPORATION ENTEX INFORMATION SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Manager Credit Selected Accounts Title:
-------------------------
page 4 of 4
141
IBM CREDIT CORPORATION IN ALL CORRESPONDENCE
REMARKETER FINANCING CENTER QUOTE OUR REFERENCE NO.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
TELEPHONE: [▇▇▇-▇▇▇-▇▇▇▇] FAX: [▇▇▇-▇▇▇-▇▇▇▇]
-------------------------------------------------------------------------------
IRREVOCABLE STANDBY | PLACE AND DATE OF ISSUE: LETTER OF
CREDIT NO. 42127-02 | WHITE PLAINS, NY/OCTOBER 15, 1997
-------------------------------------------------------------------------------
***BENEFICIARY*** | ***APPLICANT***
▇▇▇▇▇▇▇▇▇▇▇▇▇ PROPERTIES, INC. XX1 | ENTEX INFORMATION SERVICES, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | SIX INTERNATIONAL DRIVE
SEVENTH FLOOR | ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
-------------------------------------------------------------------------------
***EXPIRY DATE/PLACE*** | ***AVAILABLE AT/BY:***
EXPIRES ON OCTOBER 14, 1998 | OUR OFFICE ONLY BY PRESENTATION
FOR PRESENTATION AT OUR OFFICE | OF DOCUMENT(S) REQUIRED BY YOUR
(UNLESS EXTENDED AS PROVIDED | DRAFT(S) DRAWN AT SIGHT.
HEREIN)
-------------------------------------------------------------------------------
AMOUNT OF CREDIT: NOT TO EXCEED, IN THE AGGREGATE $125,000 U.S. DOLLARS (ONE
HUNDRED TWENTY-FIVE THOUSAND DOLLARS AND NO CENTS)
-------------------------------------------------------------------------------
GENTLEMEN,
AT THE REQUEST AND FOR THE ACCOUNT OF THE ABOVE NAMED APPLICANT, WE HEREBY
ESTABLISH OUR IRREVOCABLE LETTER OF CREDIT IN YOUR FAVOR WHICH IS AVAILABLE AS
INDICATED ABOVE AGAINST PRESENTATION OF YOUR DRAFT(S) DRAWN ON IBM CREDIT
CORPORATION, WHEN ACCOMPANIED BY THE FOLLOWING DOCUMENTS:
--DOCUMENTS REQUIRED--
A SIGHT DRAFT DRAWN HEREUNDER IDENTIFIED TO THE LETTER OF CREDIT AS HEREAFTER
SET FORTH.
A DATED STATEMENT BEARING AN ORIGINAL SIGNATURE PURPORTING TO BE AN AUTHORIZED
REPRESENTATIVE OF ▇▇▇▇▇▇▇▇▇▇▇▇▇ PROPERTIES, INC. XX1, A NEW YORK CORPORATION,
READING AS FOLLOWS:
"WE HEREBY CERTIFY THAT THE AMOUNT OF $(SPECIFY) AS EVIDENCED BY THE
ACCOMPANYING DRAFT DRAWN UNDER IBM CREDIT CORPORATION LETTER OF CREDIT NO.
42127-02 IS PAYABLE TO ▇▇▇▇▇▇▇▇▇▇▇▇▇ PROPERTIES, INC. XXI ("KPI") BECAUSE ENTEX
INFORMATION SERVICES, INC. ("TENANT") HAS FAILED TO PAY RENT OR PERFORM ONE OR
MORE OF ITS OBLIGATIONS UNDER THAT CERTAIN LEASE AGREEMENT AND ADDENDUM DATED
SEPTEMBER 12, 1997 AS AMENDED BY A FIRST LEASE MODIFICATION AGREEMENT DATED AS
OF OCTOBER 14, 1997 (THE "LEASE") EXECUTED BY AND BETWEEN TENANT AND KPI, OR IF
TENANT HAS FAILED TO REPLACE THIS LETTER OF CREDIT AT LEAST THIRTY (30) DAYS
PRIOR TO THE EXPIRY DATE SET FORTH ABOVE OR IF TENANT HAS FILED FOR RELIEF OR
CONSENTED TO RELIEF UNDER THE UNITED STATES BANKRUPTCY CODE.
142
IBM CREDIT CORPORATION
REMARKETER FINANCING CENTER
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
TELEPHONE: [▇▇▇-▇▇▇-▇▇▇▇]
OUR REF. NO. 42127-02
IN ALL CORRESPONDENCE
QUOTE OUR REFERENCE NO.
FAX: [▇▇▇-▇▇▇-▇▇▇▇]
PAGE 2
---OTHER CONDITIONS----
PARTIAL DRAWINGS ARE PERMITTED UNDER THIS LETTER OF CREDIT.
THIS LETTER OF CREDIT TERMINATES ON THE EARLIER OF (1) EXPIRY DATE SHOWN ABOVE
AND (2) THE DATE ANY PAYMENT BY US OF A DRAFT UNDER THIS LETTER OF CREDIT CAUSES
THE AVAILABLE AMOUNT TO EQUAL ZERO.
THE ORIGINAL OF THIS LETTER OF CREDIT MUST BE RETURNED TO US WITH ANY DRAWING(S)
HEREUNDER FOR OUR ENDORSEMENT OF ANY PAYMENT EFFECTED. WE UNDERTAKE TO RETURN
SAID ORIGINAL LETTER OF CREDIT TO YOU (UNLESS FULLY UTILIZED OR EXPIRED)
TOGETHER WITH OUR ADVICE OF SETTLEMENT.
EACH DRAFT DRAWN HEREUNDER MUST BE MARKED "DRAWN UNDER IBM CREDIT CORPORATION
LETTER OF CREDIT NO. L/C NO.42127-02 DATED OCTOBER 15, 1997."
IF A DRAWING IS MADE BY YOU HEREUNDER, TO OUR OFFICE LOCATED AT ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ATTENTION ACCOUNT OPERATIONS MANAGER AT OR
PRIOR TO 12:OONOON (ATLANTA, GA TIME) ON A BUSINESS DAY (AS HEREINAFTER
DEFINED), AND PROVIDED THAT SUCH DRAWING AND THE DOCUMENTS PRESENTED IN
CONNECTION THEREWITH CONFORM TO THE TERMS AND CONDITIONS HEREOF, PAYMENT SHALL
BE MADE TO YOU IN IMMEDIATELY AVAILABLE FUNDS, NOT LATER THAN 3:00PM (ATLANTA,
GA TIME ) ON THE NEXT SUCCEEDING BUSINESS DAY. IF A DRAWING IS MADE BY YOU
HEREUNDER AFTER 12:OONOON (ATLANTA, GA TIME) ON A BUSINESS DAY AND PROVIDED THAT
SUCH DRAWING AND THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH CONFORM TO THE
TERMS AND CONDITIONS HEREOF, PAYMENT SHALL BE MADE TO YOU IN IMMEDIATELY
AVAILABLE FUNDS NOT LATER THAN 3:00PM (ATLANTA, GA TIME) ON THE SECOND
SUCCEEDING BUSINESS DAY. AS USED HEREIN, "BUSINESS DAY" SHALL MEAN ANY DAY OTHER
THAN A SATURDAY, SUNDAY, PUBLIC HOLIDAY OR OTHER DAY ON WHICH IBM CREDIT
CORPORATION IS CLOSED.
THIS LETTER OF CREDIT MAY BE TRANSFERRED OR ASSIGNED BY YOU, UPON RECEIVING
WRITTEN NOTICE THAT YOU HAVE TRANSFERRED ALL OF YOUR RIGHTS IN THIS LETTER OF
CREDIT, AND UPON PRESENTATION TO US OF THIS ORIGINAL LETTER OF CREDIT, WE WILL
REISSUE THIS LETTER OF CREDIT IN THE REMAINING UNDRAWN AMOUNT OF THIS LETTER OF
CREDIT NAMING THE TRANSFEREE AS BENEFICIARY.
OUR OBLIGATION UNDER THIS LETTER OF CREDIT SHALL NOT BE AFFECTED BY ANY
CIRCUMSTANCES, CLAIM OR DEFENSE, REAL OR PERSONAL, OF ANY PARTY AS TO THE
ENFORCEABILITY OF THE LEASE BETWEEN YOU AND TENANT, IT BEING UNDERSTOOD THAT OUR
OBLIGATION SHALL BE THAT OF A PRIMARY OBLIGOR AND NOT THAT OF A SURETY,
GUARANTOR OR ACCOMMODATION MAKER.
UNLESS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS SUBJECT TO
THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, 1993 REVISION, ICC
PUBLICATION NO. 500 (THE "UCP"). AS TO MATTERS NOT COVERED BY UCP, THIS LETTER
OF CREDIT SHALL BE GOVERNED BY THE STATE OF NEW YORK.
143
IBM CREDIT CORPORATION
REMARKETER FINANCING CENTER
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
TELEPHONE: [▇▇▇-▇▇▇-▇▇▇▇]
OUR REF. NO. 42127-02
IN ALL CORRESPONDENCE
QUOTE OUR REFERENCE NO.
FAX [▇▇▇-▇▇▇-▇▇▇▇]
PAGE 3
----ENGAGEMENT----
WE HEREBY AGREE WITH YOU THAT DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS CREDIT WILL BE DULY HONORED UPON PRESENTATION AND DELIVERY OF THE
DOCUMENTS AS SPECIFIED HEREIN IF PRESENTED TO THIS OFFICE ON OR BEFORE THE
EXPIRY DATE INDICATED ABOVE.
VERY TRULY YOURS,
/s/ ▇▇▇▇ ▇▇▇▇▇▇ 10/14/97 /s/ signature unreadable 10-14-97
AUTHORIZED SIGNATURE DATE AUTHORIZED SIGNATURE DATE