EXHIBIT 10.73
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This Fourth Amendment to Loan and Security Agreement ("Amendment")
entered into as of December 22, 1998, by and among CAPITAL ASSOCIATES, INC. and
CAPITAL ASSOCIATES INTERNATIONAL, INC. (each a "Borrower" and collectively
"Borrowers"), FIRST UNION NATIONAL BANK, SUCCESSOR BY MERGER TO CORESTATES BANK,
N.A., a national banking corporation, in its capacity as agent ("Agent") and as
lender and Issuing Bank and each of the lenders listed on the signature pages
hereof, in their capacity as lenders (singly, each is a "Lender" and
collectively, all are "Lenders").
BACKGROUND
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A. On or about November 26, 1997, Borrowers, Agent and Lenders entered
into a certain Loan and Security Agreement, as amended by that certain First
Amendment to Loan and Security Agreement dated as of April 7, 1998, that certain
Second Amendment to Loan and Security Agreement dated as of May 29, 1998 and
that certain Third Amendment to Loan and Security Agreement dated as of November
25, 1998 (collectively, the "Loan Agreement"), pursuant to which Lenders agreed
to make advances to Borrowers up to a maximum aggregate amount of $60,000,000,
evidenced by Borrowers' delivery of certain Notes to Lenders.
B. The Borrowers have requested that the Maximum Credit Limit be
increased and to otherwise amend the Loan Documents. Agent, Lenders and Issuing
Bank have consented to the foregoing subject to the terms and conditions set
forth below.
C. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.
NOW, THEREFORE, with the foregoing background incorporated by
reference, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. EXTENSION OF THE CURRENT TERM: The Current Term of the Credit
Facility is hereby extended from December 24, 1998 through November 26, 2000. In
addition, Section 2.1(e) of the Credit Agreement is hereby amended by deleting
the second sentence thereof and replacing it with the following:
The Credit Facility may nonetheless, be renewed annually
commencing on November 26, 1999, in Lenders' sole discretion
(without any obligation to do so), for additional one year
periods such that the Current Term shall be extended to a
date two years from the date of such renewal, provided
Borrowers request such renewal at least sixty days prior to
November 26 of each calendar year.
2. ADDITIONAL AMENDMENTS TO LOAN AGREEMENT:
a. The Loan Agreement is hereby amended by deleting the
definition of "Applicable Coverage Ratio" in its entirety and replacing it with
the following:
APPLICABLE COVERAGE RATIO - With respect to the Collateral
Coverage Ratio, at all times, 1.75:1.
b. The Loan Agreement is hereby amended by deleting the
definition of "Credit Policy Manual" in its entirety and replacing it with the
following:
CREDIT POLICY MANUAL - The Lease Underwriting Standards
of Parent, dated as of December, 1998.
c. The Loan Agreement is hereby amended by deleting the
definition of "Eligible Warehouse Leases" in its entirety and replacing it with
the following:
ELIGIBLE WAREHOUSE LEASES - Those Leases which have
been designated by Borrower for inclusion in the
Warehouse Borrowing Base and which are otherwise Eligible
Leases and which may include Progress Payments which meet
all of the specifications of an Eligible Lease except
that the Lease has not yet commenced, provided that such
Progress Payments may only be included in the Warehouse
Borrowing Base for a period not to exceed 180 days, and
provided that Leases (i) with a Lessee who has a
designated Credit Rating of either 1 or 2, and (ii) with
a stated term of greater than 84 months but less than 120
months, but which otherwise would constitute Eligible
Warehouse Leases, may be included in the Borrowing Base
so long as the aggregate payments due under all such
Leases do not exceed the lesser of (A) 10% of the
aggregate payments due under all Eligible Warehouse
Leases, or (B) $5,000,000.
d. The Loan Agreement is hereby amended by deleting the
definition of "Issuing Bank" in its entirety and replacing it with the
following:
ISSUING BANK - First Union National Bank, or its
successors and assigns.
e. The Loan Agreement is hereby amended by deleting the
definition of "Maximum Credit Limit" in its entirety and replacing it with the
following:
MAXIMUM CREDIT LIMIT - The sum of the Pro Rata
Shares, which at the time of Closing equals Seventy One
Million Two Hundred and Fifty Thousand Dollars
($71,250,000).
f. The Loan Agreement is hereby amended by adding Name Brand
Computer Outlet, Inc. to the definition of "Sureties."
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g. The Loan Agreement is hereby amended by deleting the
definition of "Tangible Net Worth" in its entirety and replacing it with the
following:
TANGIBLE NET WORTH - At any time means, with
respect to Borrowers on a consolidated basis, the amount
of stockholders equity (excluding trademarks, goodwill,
covenants not to compete, deferred closing costs in
conjunction with this Agreement and all other intangible
assets as that term is defined under GAAP).
h. The Loan Agreement is hereby amended by deleting the
definition of "Warehouse Sublimit" in its entirety and replacing it with the
following:
WAREHOUSE SUBLIMIT - an amount equal to $61,250,000.
i. The Loan Agreement is hereby amended by deleting the
definition of "Working Capital Sublimit" in its entirety and replacing it with
the following:
WORKING CAPITAL SUBLIMIT - an amount equal to $6,900,000.
j. The third sentence of Section 2.1(a)(i) is hereby amended by
deleting it in its entirety and replacing it with the following:
In addition, the aggregate outstanding balance of
all Working Capital Loans plus the outstanding balance of
the Term Loan shall not exceed $10,000,000 and the
Collateral Coverage Ratio shall at all times be at least
equal to the Applicable Coverage Ratio.
k. Section 5.18(d) is hereby amended by deleting it in its
entirety and replacing it with the following:
(d) (i) Except as otherwise consented to by
Agent and all Lenders in writing, no more than the
following aggregate availability under both Borrowing
Bases shall be attributable to Leases and/or Progress
Payments with same Lessee based on the Lessee's
Designated Credit Rating:
Designated Aggregate Borrowing
Credit Rating Base Lessee Concentration
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1 17,500,000
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2 12,500,000 (except that such
concentration limitation
shall be $15,000,000 for
Leases where General
Motors, Inc. is the
Lessee)
3a 7,500,000 (provided that the
Lessee concentration
shall not exceed
$5,000,000 for Leases
where the Borrowers do
not have a firm
commitment for the sale
of such Leases to a
third party)
3b 5,000,000 (provided that the
Lessee concentration
shall not exceed
$3,000,000 for Leases
where the Borrowers do
not have a firm
commitment for the sale
of such Leases to a
third party)
3c 3,000,000 (provided that the
Lessee concentration
shall not exceed
$1,000,000 for Leases
where the Borrowers do
not have a firm
commitment for the sale
of such Leases to a
third party)
In addition, no more than $1,000,000 of the aggregate
availability under both Borrowing Bases shall be
attributable to all Leases and/or Progress Payments where
the Lessees have a Designated Credit Rating of 4;
(ii)A. Except as otherwise consented to by
Agent and all Lenders in writing, the aggregate
availability under both Borrowing Bases attributable to
the designated equipment types described below shall not
exceed the corresponding concentration limitation,
determined as a percentage of the total amount
outstanding under the Credit Facility:
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Equipment Type Concentration Limitation
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Lift Trucks 40%
Machine Tools, manufacturing
and printing 40%
Furnitures, fixtures and
equipment 25%
Semiconductors 25%
Other equipment types
(not otherwise described above
but limited to no more than 10
additional categories) 15%
B. Except as otherwise consented to by
Agent and all Lenders in writing, (x) the aggregate
availability under the Warehouse Borrowing Base
attributable to personal computers and office automation
equipment shall not exceed 40% of the total amount
outstanding of all Revolving Credit Loans, and (y) the
aggregate availability under the Working Capital
Borrowing Base attributable to personal computers and
office automation equipment shall not exceed 33.3% of the
total amount outstanding of all Working Capital Loans.
(iii) Except as otherwise consented to by
Agent and SuperMajority Lenders in writing, no more than
$7,500,000 of the aggregate availability under both
Borrowing Bases shall be attributable to Progress
Payments, provided that no more than $5,000,000 of such
availability shall be attributed to Progress Payments
relating to the same Lessee, and provided further that no
more than $3,000,000 in the aggregate of such
availability shall be attributable to Progress Payments
relating to Lessees with a Designated Credit Rating of 3a
and that no more than $0.00 in the aggregate of such
availability shall be attributable to Progress Payments
relating to Lessees with a Designated Credit Rating lower
than 3a.
l. Section 6.9(a) is hereby amended by deleting it in its
entirety and replacing it with the following:
(a) TANGIBLE NET WORTH: Borrowers shall have
and maintain a Tangible Net Worth on a consolidated
basis, measured quarterly as of the last day of each
fiscal quarter, of not less than the amount equal to
$23,000,000 minus the amount of Permitted Stock
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Repurchases (as defined in Section 7.6 of the Agreement,
as modified by Section 2(p) of the Fourth Amendment to
Loan and Security Agreement); provided that such Tangible
Net Worth covenant shall increase annually by an amount
equal to 75% of Borrowers' Net Income for the immediately
preceding fiscal year, beginning with fiscal year
commencing on June 1, 1998.
m. Section 6.9(b) is hereby amended by deleting it in its
entirety and replacing it with the following:
(b) NET INCOME/LOSS: Borrowers shall not suffer
an operating loss and/or incur negative net income on a
consolidated basis in excess of $250,000 during any two
consecutive fiscal quarters.
n. Section 6.9(c) is hereby amended by deleting it in its
entirety and replacing it with the following:
(c) LIABILITIES TO TANGIBLE NET WORTH RATIO:
Borrowers shall have and maintain a Liabilities to
Tangible Net Worth Ratio on a consolidated basis,
measured quarterly as of the last day of each fiscal
quarter, of not greater than 4.0:1.
o. Section 6.10(a)(iii) is hereby amended by deleting it in its
entirety and replacing it with the following:
(iii) within thirty-five (35) days of the
end of each calendar month, Borrowers' Lease receivables
aging report and inventory aging report, the Working
Capital Borrowing Base Certificate and Collateral
Coverage Ratio calculations and such other reports as
Agent reasonably deems necessary, certified by Borrowers'
chief financial officer or chief administrative officer
as true and correct;
p. Section 7.6(a) is hereby amended by deleting it in its
entirety and replacing it with the following:
(a) Parent shall not declare or pay or make any
forms of Distribution to its shareholders, their
successors or assigns, other than so long as no Event of
Default or Unmatured Event of Default has occurred, the
repurchase of shares of stock of Capital Associates, Inc.
in an aggregate amount not to exceed $1,150,000
("Permitted Stock Repurchases").
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3. NOTES: Contemporaneously with the execution hereof, each Borrower
shall execute and deliver to Agent to be distributed to each respective Lender a
new Amended and Restated Revolving Credit Note, Amended and Restated Working
Capital Note and Second Amended and Restated Term Loan Note to evidence
Borrowers' joint and several obligation to repay to each Lender, such Lenders'
Pro Rata Share of the Maximum Credit Limit.
4. AMENDED SCHEDULE A: The Schedule A to the Loan Agreement is hereby
deleted in its entirety and the First Amended Schedule A attached to this
Amendment and made a part hereof, is substituted therefor.
5. BORROWER'S RATIFICATION: Borrowers agree that they have no defense
or set-offs against the Agent or Lenders, their respective officers, directors,
employees, agents or attorneys with respect to the Revolving Credit Notes, the
Working Capital Notes, the Term Loan Notes, the Loan Agreement or related
instruments, agreements or documents, all of which, except as expressly modified
herein, remain in full force and effect. Borrowers hereby ratify and confirm
their Obligations under the Revolving Credit Notes, the Working Capital Notes,
the Term Loan Notes, the Loan Agreement and related instruments, agreements and
documents (each as amended hereby or in accordance herewith) and agree that the
execution and delivery of this Amendment does not in any way diminish or
invalidate any of their Obligations thereunder.
6. REAFFIRMATION OF SURETIES: Each Surety, parties to that certain
Amended and Restated Surety Agreement of even date herewith in favor of Agent
for the benefit of the Lenders, by execution hereof in their capacity as
Sureties, hereby consent to the amendments set forth in this Amendment, and
acknowledge that the Amended and Restated Surety Agreement is in full force and
effect and that each remains, jointly and severally liable for Obligations of
Borrowers to Agent and Lenders under the Loan Documents, as amended hereby.
7. REPRESENTATIONS AND WARRANTIES:
a. Borrowers represent and warrant that as of the date hereof
no Event of Default or Unmatured Event of Default has occurred or is existing
under the Loan Documents.
b. The execution and delivery by each Borrower of this Amendment
and performance by it of the transactions herein contemplated (i) are and will
be within its powers, (ii) have been authorized by all necessary corporate
action, and (iii) are not and will not be in contravention of any order of any
court or other agency of government, of law or any other indenture, agreement or
undertaking to which such Borrower is a party or by which the Property of such
Borrower is bound, or be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under any such indenture,
agreement or undertaking or result in the imposition of any lien, charge or
encumbrance of any nature on any of the properties of such Borrower.
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c. This Amendment and each other agreement, instrument or
document executed and/or delivered in connection herewith, shall be valid,
binding and enforceable in accordance with its respective terms.
8. CONDITIONS TO EFFECTIVENESS: This Amendment and the increase in
the Maximum Credit Limit shall be effective upon satisfaction of each of the
following conditions (all documents to be in form and substance satisfactory to
Agent and Agent's counsel):
a. delivery of a fully executed Amendment;
b. delivery of duly executed Notes in favor of
each of the Lenders in the principal amounts
corresponding to the respective Pro Rata Percentages
of the Warehouse Facility Sublimit, Working Capital
Sublimit and Term Loan;
c. Corporate resolutions from Borrower
authorizing the increase in the Maximum Credit Limit
and the execution and compliance with the terms of this
Amendment;
d. Corporate resolutions, incumbency
certificate, articles of incorporation and by-laws from
Name Brand Computer Outlet, Inc. authorizing the
execution of the Amended and Restated Surety Agreement,
along with a Good Standing Certificate from its state of
incorporation and the location of its principal place of
business;
e. delivery of a fully executed Amended and
Restated Surety Agreement;
f. delivery of a fully executed Collateral
Pledge Agreement and Assignment Separate from
Certificate with respect to 100% of the issued and
outstanding shares of stock of Name Brand Computer
Outlet, Inc. and the original share certificates;
g. An updated opinion of Borrowers' and
Sureties' counsel with respect to the effectiveness of
the terms of this Amendment, the Note, the Amended and
Restated Surety Agreement and the other instruments,
agreements and documents executed and/or delivered in
connection herewith;
h. Such other agreements, documents and
instruments as Agent may reasonably request.
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9. DISSOLUTION OF CERTAIN SURETIES: Borrowers have informed Agent and
Lenders of the intention to effectuate a dissolution of two Sureties, CAI
Equipment Leasing II Corp. and CAI Partners Management Company, and by execution
hereof the parties consent to such dissolution.
10. MISCELLANEOUS:
a. This Amendment shall be governed by, construed and enforced
in accordance with the laws of the Commonwealth of Pennsylvania.
b. Except as expressly provided herein, all terms and
conditions of the Loan Documents remain in full force and effect, unless such
terms or conditions are no longer applicable by their terms. To the extent the
provisions of this Amendment are expressly inconsistent with the provisions of
the Loan Documents, the provisions of this Amendment shall control.
c. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement.
d. Signatures by facsimiles shall bind the parties hereto.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the day and year first above written.
BORROWERS:
CAPITAL ASSOCIATES, INC.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAPITAL ASSOCIATES INTERNATIONAL, INC.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
AGENT:
FIRST UNION NATIONAL BANK, Successor by
Merger to CoreStates Bank, N.A.
By: /s/Joseph A. Romano
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Title: Commercial Officer
LENDERS:
FIRST UNION NATIONAL BANK, Successor by
Merger to CoreStates Bank, N.A., as Lender
and Issuing Bank
By: /s/Joseph A. Romano
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Title: Commercial Officer
NORWEST BANK COLORADO, N.A.
By: /s/Carol A. Ward
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Title: Vice President
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BANKBOSTON, N.A.
By: /s/Deirdre M. Holland
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Title: Vice President
EUROPEAN AMERICAN BANK
By: /s/Christopher M. Czaja
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Title:
U.S. BANK NATIONAL ASSOCIATION, f/k/a
Colorado National Bank
By: /s/Ralph P. Atkinson
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Title: Vice President
SURETIES:
CAI EQUIPMENT LEASING II CORP.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAI EQUIPMENT LEASING III CORP.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAI EQUIPMENT LEASING IV CORP.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAI EQUIPMENT LEASING V CORP.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAI PARTNERS MANAGEMENT COMPANY
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
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CAPITAL EQUIPMENT CORPORATION
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAI EQUIPMENT LEASING VI CORP.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAI LEASE SECURITIZATION I CORP.
By: /s/Anthony M. DiPaolo
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Title: President
CAI LEASING CANADA, LTD.
By: /s/Anthony M. DiPaolo
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Title: President
CAPITAL ASSOCIATES INTERNATIONAL DE MEXICO
S. DE R.L. DE C.V.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
WHITEWOOD EQUIPMENT CORPORATION, f/k/a
Whitewood Credit Corporation
By: /s/Anthony M. DiPaolo
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Title: President
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CAI SECURITIES CORPORATION
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
CAPITAL ASSOCIATES TECHNOLOGY GROUP, INC.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
NAME BRAND COMPUTER OUTLET, INC.
By: /s/Anthony M. DiPaolo
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Title: Senior Vice President
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