FOURTH AMENDMENT AND WAIVER
FOURTH AMENDMENT AND WAIVER (the "Amendment"), dated as of February 15,
2000, among INACOM CORP., a Delaware corporation (the "Borrower"), the Banks
party to the Credit Agreement referred to below, IBM CREDIT CORPORATION, as
Documentation Agent, BANQUE NATIONALE DE PARIS, as Syndication Agent and
DEUTSCHE BANK AG, NEW YORK BRANCH, as Administrative Agent. Unless otherwise
defined herein, capitalized terms used herein shall have the meanings assigned
to them in the Credit Agreement referred to below.
RECITALS
WHEREAS, the Borrower, the Banks, the Documentation Agent, the
Syndication Agent and Administrative Agent are parties to a certain Credit
Agreement, dated as of April 9, 1999 (as amended, modified or supplemented
through, but not including, the date hereof, the "Credit Agreement") pursuant to
which the Banks have agreed to extend credit to the Borrower; and
WHEREAS, the Borrower has requested that the undersigned Banks
provide certain waivers, and the parties hereto have agreed to amend the Credit
Agreement, in each case on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Waiver.
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(a) The Banks hereby waive any Event of Default pursuant to
Section 9.04 of the Credit Agreement that has occurred as a result of any
termination, liquidation, unwind or similar event under the Amended and Restated
Nesbitt Burns Receivables Purchase Facility.
(b) The Banks hereby waive compliance with the covenant
contained in Section 8.14(ii) of the Credit Agreement to the extent that there
is an increase in the collateralization under the IBM Inventory Finance Facility
pursuant to Section 8.03(r) of the Credit Agreement.
2. Amendments.
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(a) Section 6.10(c) of the Credit Agreement is hereby amended
to read in its entirety at follows:
"(c) Since November 27, 1999, nothing has occurred that has
had or could reasonably be expected to have a Material Adverse Effect
(it being understood that the Banks acknowledge having been informed by
the Borrower that (i) the Borrower incurred an EBITDA loss during
January, 2000 of approximately $23,000,000, (ii) the Borrower intends
to take two charges in the fourth quarter of fiscal year 1999, one of
which is expected to be a $100-150 million special charge which will be
primarily non-cash, and the other of which is expected to relate to a
$80-100 million write-off of accounts receivable, and (iii) the
Borrower is currently experiencing strained relations with its vendors
as a result of its liquidity problems)."
(b) Section 7 of the Credit Agreement is hereby amended by
inserting at the end thereof the following new Section 7.15:
"7.15 Lock-Box Arrangement. Within 60 days following the
Fourth Amendment Effective Date, (i) the Borrower and its Subsidiaries
shall enter into a lock-box arrangement with one or more lock-box banks
relating to all of their receivables subject to the Security Documents,
which arrangement (and the documentation governing such arrangement)
shall be reasonably satisfactory in form and substance to the
Collateral Agent and (ii) all lock-box banks shall enter into
agreements with the Collateral Agent relating to all amounts deposited
into the respective lock-box account on terms and conditions reasonably
satisfactory to the Collateral Agent."
(c) Section 8.03 of the Credit Agreement is hereby amended by
(i) deleting the word "and" contained at the end of clause (p) thereof, (ii)
deleting the period appearing at the end of clause (q) thereof and inserting ";
and" in lieu thereof and (iii) inserting therein immediately following clause
(q) thereof the following clause (r):
"(r) (i) Liens on the assets subject to the Security
Documents in favor of the lenders under the Compaq Credit
Facility, provided that such Liens shall be subordinated (on a
passive or "silent" basis) to the Liens on such assets in
favor of the Secured Creditors and (ii) Liens on the assets
subject to the Security Documents in favor of the lenders
under the IBM Inventory Finance Facility, provided that such
Liens shall be subordinated (on a passive or "silent" basis)
to the Liens on such assets in favor of the Secured Creditors
and the lenders under the Compaq Credit Facility (to the
extent there are outstanding loans under such Facility) (it
being understood and agreed that the Liens permitted under
this clause (r) may be created pursuant to the Security
Documents (as a result of amendments thereto or amendments and
restatements thereof) or other security agreements and related
intercreditor agreements, in each case in form and substance
reasonably satisfactory to the Collateral Agent)."
(d) Section 8.04 of the Credit Agreement is hereby amended by
(i) deleting the word "and" contained at the end of clause (l) thereof, (ii)
deleting the period appearing at the end of clause (m) thereof and inserting ";
and" in lieu thereof and (iii) inserting therein immediately following clause
(m) thereof the following new clause (n):
"(n) Indebtedness incurred pursuant to the Compaq
Credit Facility in an aggregate principal amount not to exceed
$55,500,000."
(e) Section 8.06(iv) of the Credit Agreement is hereby amended
by inserting therein, immediately following the phrase "in an amount" appearing
therein, the phrase "(net of income taxes)".
(f) Section 8.09 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"8.09 Net Worth. The Borrower shall not permit Net
Worth at any time to be less than the sum of (i) $185,000,000
plus (ii) 75% of net income, if positive for the period from
and after December 25, 1999 to the last day of the then most
recently ended fiscal quarter, plus (iii) 100% of the
aggregate Net Issuance Proceeds received by the Borrower from
the issuance or sale of its capital stock (including any
preferred stock) from and after the Fourth Amendment Effective
Date, plus (iv) 100% of the principal amount of any
Indebtedness (including, without limitation, any Subordinated
Debt and the Trust Preferred Related Subordinated Debt), which
is converted into equity after the Fourth Amendment Effective
Date (in each case on and after the date of such conversion);
such covenant to be calculated as of the end of each fiscal
quarter."
(g) Section 8.11 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"8.11 Leverage Ratios. (a) The Borrower shall not
permit the ratio of (a) the aggregate principal amount of
Funded Senior Debt outstanding at any time of the Borrower and
its Subsidiaries to (b) EBITDA for the Test Period then most
recently ended to exceed (i) at any time on and after the last
day of the Borrower's fiscal quarter ending on or about March
31, 2001 to but excluding the last day of the Borrower's
fiscal quarter ending on or about June 30, 2001, 2.15:1.00,
and (ii) at any time thereafter, 1.95:1.00.
(b) The Borrower shall not permit the ratio of (a) the
aggregate principal amount of Funded Debt outstanding at any
time of the Borrower and its Subsidiaries to (b) EBITDA for
the Test Period then most recently ended to exceed (i) at any
time on and after the last day of the Borrower's fiscal
quarter ending on or about March 31, 2001 to but excluding the
last day of the Borrower's fiscal quarter ending on or about
June 30, 2001, 5.20:1.00, and (ii) at any time thereafter,
4.65:1.00."
(h) Section 8.12 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"8.12 EBITDA to Interest Expense Ratio. The Borrower
shall not permit the ratio of EBITDA for any Test Period set
forth below to Interest Expense for such Test Period to be
less than the ratio set forth opposite such Test Period below:
Test Period ending on or about Ratio
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March 31, 2001 5.50:1.00
Thereafter 6.00:1.00
(i) Section 8.10 of the Credit Agreement is hereby amended by
deleting the ratio "1.00:1.00" appearing therein and by inserting in lieu
thereof the ratio "0.95:1.00".
(j) Section 8.14 of the Credit Agreement is hereby amended by
(i) deleting the word "or" appearing at the end of clause (iii) thereof, (ii)
deleting the period appearing at the end of clause (iv) thereof and inserting ";
or" in lieu thereof and (iii) inserting therein the following new clause (v)
immediately following clause (iv) thereof:
"(v) amend, modify, or permit the amendment or
modification of, any provision of the Compaq Credit Facility."
(k) Section 8.24 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"8.24 Minimum EBITDA. The Borrower will not permit
EBITDA for the fiscal quarter ending on or about each date set
forth below to be less than the amount set forth opposite such
fiscal quarter below:
Fiscal Quarter Ending on or about Amount
--------------------------------- ------
June 30, 2000 ($20,000,000)
September 30, 2000 ($ 6,000,000)
December 31, 2000 $ 7,000,000
March 31, 2001 $15,000,000"
(l) Section 8.26 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"8.26 Maximum Funded Debt. The Borrower will not
permit the aggregate principal amount of Funded Debt of the
Borrower and its Subsidiaries outstanding at any time during
any fiscal quarter ending on or about a date set forth below
to exceed the amount set forth opposite such fiscal quarter
below:
Fiscal Quarter Ending on or about Amount
--------------------------------- ------
March 31, 2000 $600,000,000
June 30, 2000 $575,000,000
September 30, 2000 $525,000,000
December 31, 2000 $500,000,000
March 31, 2001 $450,000,000"
(m) Section 8 of the Credit Agreement is hereby further amended
by inserting at the end thereof the following new Section 8.27:
"8.27 Trust Preferred Securities. Notwithstanding
anything to the contrary contained in this Agreement
(including, without limitation, in Section 8.06 hereof), the
Borrower will not, and will not permit any of its Subsidiaries
(including, without limitation, Vanstar Corporation) to make
any interest payments on any Trust Preferred Related
Subordinated Debt in cash, and the Borrower will take or cause
its Subsidiaries to take all action necessary under Section
312 of the indenture governing the Trust Preferred Related
Subordinated Debt to defer the obligation to pay such cash
interest; provided that the Borrower or its respective
Subsidiaries may make such cash interest payments any time
after January 1, 2001, if at the time of such payment (i) all
commitments under the Compaq Credit Facility have been
terminated and all outstanding amounts thereunder have been
paid in full, (ii) no Default or Event of Default shall exist
or result therefrom, (iii) the Borrower shall be in compliance
with Section 8.25 of this Agreement (determined for this
purpose only without giving effect to clause (iv) of the
definition of Borrowing Base) and (iv) for the most recently
ended four consecutive quarter period ending prior to such
payment, (A) EBITDA less (B) Interest Expense less (C) the
proposed cash interest payment to be made on the Trust
Preferred Related Subordinated Debt (determined as if such
payment was made during such period) is greater than 0."
(n) Section 9 of the Credit Agreement is hereby amended by (i)
inserting the word "or" at the end of Section 9.12 thereof and (ii) inserting
therein immediately following Section 9.12 thereof the following new Section
9.13:
"9.13 Compaq Agreements." (a) Compaq shall default in
the observance or performance of or deny or disaffirm its
obligations under the Compaq Commitment Letter and Term Sheet
or, after the execution thereof, the Compaq Credit Facility or
(b) the Compaq Commitment Letter and Term Sheet shall expire
or terminate other than as a result of the execution of the
Compaq Credit Facility;".
(o) The definition of the term "Applicable Margin" contained
in Section 10 of the Credit Agreement is hereby amended by inserting the
following phrase immediately following the phrase "then in effect," appearing
therein:
", provided that on and after January 1, 2001 each of the
percentages set forth below (other than the Commitment Fee
percentage) shall be increased by 0.25%".
(p) The definition of the term "Borrowing Base" contained in
Section 10 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"Borrowing Base" shall mean, as at any date on which
the amount thereof is being determined, an amount equal to the
sum of (i) 60% of Eligible Inventory, plus (ii) 85% of
Eligible Receivables plus (iii) 50% of the outstanding
principal amount of the Nesbitt Burns Residual Notes, each as
determined from the Borrowing Base Certificate most recently
delivered pursuant to Section 7.01(l) plus (iv) for the period
(and only for the period) from the Fourth Amendment Effective
Date to and including September 30, 2001, $25,000,000."
(q) Section 10 of the Credit Agreement is hereby further
amended by inserting therein the following new defined terms in appropriate
alphabetical order:
"Compaq" shall mean Compaq Computer Corporation, a
corporation organized under the laws of the State of Delaware.
"Compaq Commitment Letter and Term Sheet" shall mean
the Commitment Letter, dated February 15, 2000, between the
Borrower and Compaq, together with the Summary of Terms and
Conditions attached thereto.
"Compaq Credit Facility" shall mean that credit
agreement and related guaranties and ancillary documents
entered into by the Borrower, the Subsidiary Guarantors and
Compaq, having terms and conditions substantially the same as
those set forth in the Compaq Commitment Letter and Term Sheet
(and as to matters not covered by the Compaq Commitment Letter
and Term Sheet, having terms and conditions that are
reasonably satisfactory to the Administrative Agent), as the
same may be amended, supplemented or modified from time to
time in accordance with the terms thereof and hereof.
"Fourth Amendment Effective Date" shall mean the
Amendment Effective Date under, and as defined in, the Fourth
Amendment and Waiver, dated as of February 15, 2000, to this
Agreement.
3. Representations and Warranties. The Borrower hereby represents
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and warrants to the Administrative Agent and the Banks that:
(a) After the effectiveness of this Amendment, no Default or
Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Borrower of
this Amendment has been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to or action by, any Person in order to be effective and
enforceable. The Credit Agreement as amended by this Amendment constitutes the
legal, valid and binding obligation of the Borrower, enforceable against it in
accordance with its respective terms.
(c) All representations and warranties of the Borrower
contained in the Credit Agreement or in the other Credit Documents are true and
correct as of the date hereof and as of the Amendment Effective Date with the
same effect as though made on the date hereof or thereof and as though applied
to the Credit Agreement as herein amended.
(d) The Borrower is entering into this Amendment on the basis
of its own investigation and for its own reasons, without reliance upon the
Administrative Agent and the Banks or any other Person.
4. Amendment Effective Date. This Amendment shall become
effective as of the date (the "Amendment Effective Date") when (i) counterparts
(or if elected by the Administrative Agent, an executed facsimile copy) of this
Amendment have been executed and delivered to the Administrative Agent by the
Borrower and the Required Banks, and each Subsidiary Guarantor shall have
executed and delivered to the Administrative Agent a Guarantor Acknowledgment
and Consent (the "Acknowledgment") in the form attached hereto, (ii) the
Commitment Letter from Compaq to the Borrower, substantially in the form of the
2/15/00 draft distributed to the Banks, shall have been executed by the Borrower
and Compaq and shall be in full force and effect, (iii) the asset sale
contemplated by the Compaq Asset Purchase Agreement (as defined in the Third
Amendment and Waiver) shall have been consummated substantially on the same
terms set forth in the 12/30/99 draft of such Agreement delivered to the
Administrative Agent (as amended by the first amendment thereto substantially in
the form of the 2/10/00 draft of such amendment delivered to the Administrative
Agent) and (iv) all accrued but unpaid fees, costs and disbursements of White &
Case LLP, counsel to the Administrative Agent, incurred in connection with the
Credit Agreement shall have been paid in full.
5. Reservation of Rights. The Borrower acknowledges and agrees
that the execution and delivery by the Administrative Agent and the Banks of
this Amendment shall not be deemed (i) to create a course of dealing or
otherwise obligate the Administrative Agent or the Banks to forebear or execute
similar amendments under the same or similar circumstances in the future, or
(ii) to amend, relinquish or impair any right of the Administrative Agent or the
Banks to receive any indemnity or similar payment from any Person or entity as a
result of any matter arising from or relating to this Amendment.
6. Miscellaneous.
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(a) Except as herein expressly amended, all terms, covenants
and provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Amendment. This Amendment shall
be deemed incorporated into, and a part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. No
third party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of New York.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each of
the parties hereto understands and agrees that this document (and any other
documents required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Administrative Agent of a facsimile transmitted document
purportedly bearing the signature of a Bank or the Borrower shall bind such Bank
or the Borrower, respectively, with the same force and effect as the delivery of
a hard copy original. Any failure by the Administrative Agent to receive the
hard copy executed original of such document shall not diminish the binding
effect of receipt of the facsimile transmitted executed original of such
document of the party whose hard copy page was not received by the
Administrative Agent.
(e) This Amendment, together with the Credit Agreement and the
Credit Documents, contains the entire and exclusive agreement of the parties
hereto with reference to the matters discussed herein and therein. This
Amendment supersedes all prior drafts and communications with respect thereto.
This Amendment may not be amended except in accordance with the provisions of
Section 12.12 of the Credit Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Credit Agreement, respectively.
(g) The Borrower covenants to pay to or reimburse the
Administrative Agent, upon demand, for all reasonable costs and expenses
(including allocated costs of in-house counsel) actually incurred by the
Administrative Agent in connection with the development, preparation,
negotiation, execution and delivery of this Amendment.
(h) The Borrower (and each Guarantor by execution of the
Acknowledgment) confirms that the Security Documents secure the Obligations
under the Credit Agreement as amended hereby. Each Guarantor by execution of the
Acknowledgment confirms that the Subsidiary Guaranty applies to all Obligations
under the Credit Agreement as amended hereby.
(i) The undersigned Banks each hereby consent to the amendment
and/or modification to the Security Documents and/or the execution of any other
security agreements and intercreditor agreements to incorporate terms and
conditions of the Credit Agreement as amended by this Amendment, in each case on
such terms and conditions as shall be satisfactory to the Collateral Agent.
* * *
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment as of the date first above written.
INACOM CORP.
By: /s/ Thomas Fitzpatrick
Title: Executive Vice President and
Chief Financial Officer
DEUTSCHE BANK AG, NEW YORK
BRANCH, as Administrative Agent
By: /s/ Robert Wood
Title: Director
By: /s/ Ira Lubinsky
Title: Vice President
DEUTSCHE BANK AG, NEW YORK
BRANCH AND/OR CAYMAN ISLAND BRANCH
By: /s/ Robert Wood
Title: Director
By: /s/ Ira Lubinsky
Title: Vice President
IBM CREDIT CORPORATION, Individually and as
Documentation Agent
By: /s/ Sal Grasso
Title: Manager of Credit Operations
BANQUE NATIONALE DE PARIS,
Individually and as Syndication Agent
By:
Title:
By:
Title:
COMERICA BANK
By: /s/ Timothy O'Rourke
Title: Vice President
CREDIT LYONNAIS
CHICAGO BRANCH
By:
Title:
THE BANK OF NOVA SCOTIA
By: /s/ F. C. B. Ashby
Title: Senior Manager Loan Operations
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Merryll M. Hales
Title: Vice President
FLEET NATIONAL BANK
By:
Title:
MERCANTILE BANK, N.A.
By: /s/ Joseph L. Sooter, Jr.
Title: Vice President
ABN AMRO BANK, N.V.
By: /s/ Lee-Lee Miao
Title: Group Vice President
By: /s/ Paul S. Faust
Title: Vice President
TRANSAMERICA COMMERCIAL
FINANCE CORPORATION
By:
Title:
ML CLO XIX STERLING (CAYMAN) LTD.
By:
Sterling Asset Manager, L.L.C.,
as its Investment Advisor
Title:
FINOVA CAPITAL CORP.
By:
Title:
FIRST NATIONAL BANK OF OMAHA
By: /s/ Charles H. Fries, Jr.
Title: Senior Vice President
GUARANTOR ACKNOWLEDGMENT AND CONSENT
The undersigned, each a guarantor or third party pledgor with respect
to the Borrower's obligations to the Administrative Agent and the Banks under
the Credit Agreement, each hereby (i) acknowledge and consent to the execution,
delivery and performance by the Borrower of the foregoing Fourth Amendment and
Waiver to Credit Agreement (the "Amendment"), and (ii) reaffirm and agree that
the respective guaranty, third party pledge or security agreement to which the
undersigned is party and all other documents and agreements executed and
delivered by the undersigned to the Administrative Agent and the Banks in
connection with the Credit Agreement are in full force and effect, without
defense, offset or counterclaim. (Capitalized terms used herein have the
meanings specified in the Amendment).
GUARANTORS
INACOM TENNESSEE, INC.
INACOM COMMUNICATIONS, INC.
INACOMP FINANCIAL SERVICES, INC.
INACOM INTERNATIONAL, INC.
INACOM SOLUTIONS, INC.
PERIGEE COMMUNICATIONS, INC.
GORHAM CLARK, INC.
KURE ASSOCIATES, INC.
NETWORKS, INC.
BOSTON COMPUTER EXCHANGE
CORPORATION
PC TECHNICAL SERVICES, INC.
INACOM PROFESSIONAL SERVICES, INC.
INACOM FINANCE CORP.
OFFICE PRODUCTS OF MINNESOTA, INC.
VANSTAR CORPORATION
INACOM LATIN AMERICA
COMPUTERLAND INTERNATIONAL DEVELOPMENT, INC.
COMPUTER PORT WORLD TRADE, INC.
VANSTAR INTERNATIONAL CORPORATION
VST WEST, INC.
VST ILLINOIS, INC.
VSTNC, INC.
CIAND TEX, INC.
INACOM GOVERNMENT SYSTEMS, INC.
CONTRACT DATA, INC.
COMPUTER PROFESSIONALS, INC.
VANSTAR PROFESSIONAL TECHNICAL RESOURCES, INC.
Dated as of: February 15, 2000 By:
Title: