EXHIBIT 10.18(e)
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND
MODIFICATION TO OTHER LOAN DOCUMENTS
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND
MODIFICATION TO OTHER LOAN DOCUMENTS (the "Amendment"), dated as of November 30,
2001, is among SOFTWARE SPECTRUM, INC., a corporation duly organized and validly
existing under the laws of the State of Texas (the "Borrower"), NATIONAL CITY
BANK, KENTUCKY ("National City"), each of the other banks or other lending
institutions which is a signatory hereto (individually, a "Bank" and,
collectively, the "Banks"), JPMORGAN CHASE BANK (as the successor in interest by
merger to The Chase Manhattan Bank), individually as a Bank, as administrative
agent for itself and the other Banks (in its capacity as administrative agent,
together with its successors in such capacity "Administrative Agent") and
JPMORGAN CHASE BANK (as the successor in interest by merger to The Chase
Manhattan Bank, the successor in interest to Chase Bank of Texas, National
Association, formerly known as Texas Commerce Bank National Association) as
collateral agent for itself and the other Banks (in its capacity as collateral
agent, together with its successors in such capacity, the "Collateral Agent").
RECITALS:
The Borrower, the Administrative Agent, certain of the Banks and Chase
Bank of Texas, National Association (now JPMorgan Chase Bank) as the Collateral
Agent have entered into that certain Amended and Restated Credit Agreement dated
as of March 11, 1998 (as amended or otherwise modified by that certain First
Amendment to Amended and Restated Credit Agreement dated as of August 15, 1998,
that certain Assignment and Acceptance dated December 28, 1998 among Wells Fargo
Bank, N.A., Foothill Capital Corporation and The Chase Manhattan Bank, that
certain Second Amendment to Amended and Restated Credit Agreement dated as of
June 23, 1999, that certain Consent, Waiver and Third Amendment to Amended and
Restated Credit Agreement dated as of July 31, 2000, that certain consent letter
dated September 22, 2000, that certain waiver letter dated December 4, 2000 and
that certain Waiver and Fourth Amendment to Amended and Restated Credit
Agreement dated as of December 12, 2000, collectively the "Agreement").
National City has determined not to participate as a "Bank" under the
Agreement. The Borrower, the Banks, the Administrative Agent and the Collateral
Agent desire to amend the Agreement to remove National City as a Bank and to
otherwise change the terms thereof and of certain other Loan Documents (as that
term is defined in the Agreement) as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows, effective as of the
date hereof (the "Effective Date"):
ARTICLE 1
Definitions
Section 1.1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
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ARTICLE 2
Amendments
Section 2.1 Amendment to the Term "Bank"; Termination of the
Commitments of the National City. The term "Bank" as used is the Agreement is
amended to exclude National City. The Borrower agrees that the Revolving
Commitment of National City in effect under the Agreement prior to the Effective
Date is terminated as of the Effective Date. Upon receipt by National City of
all amounts owed to it under the Agreement on the Effective Date, National City
agrees to its removal from the Agreement on the Effective Date as herein
contemplated, agrees that it is no longer a party to the Agreement as of the
Effective Date and agrees that the Agreement may be amended or otherwise
modified without its consent or agreement after the Effective Date. On the
Effective Date, the Banks shall make advances, the proceeds of which shall be
utilized to repay the principal amount of the Revolving Loans owed National
City, such advances to be in amounts sufficient so that after giving effect
thereto, the Revolving Loans shall be held by the Banks pro rata according to
the respective Revolving Commitments. Advances made by a Bank under the
foregoing sentence shall be Revolving Loans and Base Rate Accounts.
Section 2.2 Amendment to Existing Definitions in Section 1.1. The
definitions of the following terms set forth in Section 1.1 of the Agreement are
amended in their respective entireties to read as follows:
"Borrowing Availability" means, at any date of determination,
the amount by which (x) exceeds the Outstanding Credit Agreement
Obligations, where (x) equals the lesser of (i) the Revolving
Commitments or (ii) the sum of the Borrowing Base minus all of the
Obligations described in clauses (iv) and (v) of the definition of the
term "Obligation" and any other Obligation relating thereto (i.e., the
deposit and cash management obligations) to the extent not already
prefunded in a manner satisfactory to the Administrative Agent.
"Daily Collection Event" means the occurrence of a Default or
the occurrence of any event that would cause the amount of the
Borrowing Availability to be less than Ten Million Dollars
($10,000,000) for any five (5) consecutive Business Days.
"Obligation" or "Obligations " means all obligations,
indebtedness, and liabilities of the Borrower or any Subsidiary to the
Agents, the Banks, any of their respective Affiliates or any of them
arising pursuant to:
(i) any of the Loan Documents;
(ii) any interest rate swap, interest rate caps,
interest rate collars, or other similar agreements entered
into by either Agent, any Bank or any of their respective
Affiliates, with the Borrower or any Subsidiary enabling
Borrower or a Subsidiary to fix or limit its interest expense;
(iii) any foreign exchange, currency hedging, or
other agreement entered into by either Agent, any Bank or any
of their respective Affiliates with the Borrower or any
Subsidiary enabling Borrower or a Subsidiary to limit the
market risk of holding currency in either the cash or futures
markets;
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(iv) any deposit accounts maintained by Borrower or
any of its Subsidiaries with either Agent, any Bank or any of
their respective Affiliates;
(v) any cash management services or treasury
administration services provided by either Agent, any Bank or
any of their respective Affiliates;
(vi) any documentation relating to any of the
foregoing; and
(vii) any services or transactions relating to any of
the foregoing,
whether, in each case set forth above, such obligations, indebtedness, and
liabilities now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several,
or joint and several. The term "Obligation" includes without limitation, the
following: all obligations of the Borrower to repay the Revolving Loans; the
Reimbursement Obligations; interest on the Revolving Loans and Reimbursement
Obligations; all fees, costs, and expenses (including attorneys' fees and
expenses) provided for in the documentation evidencing or governing any of the
foregoing obligations, indebtedness or liabilities; any daylight overdraft
exposure; and all obligations to reimburse either Agent, any Bank or any of
their respective Affiliates for any credit extended on uncollected funds or the
amount of any item (including checks and automated clearing house credits)
credited to an account but which is subsequently returned unpaid or returned for
any other reason.
"Outstanding Revolving Credit" means, at any time of determination,
the sum of (a) the aggregate amount of Revolving Loans then outstanding; plus
(b) the aggregate amount of Letter of Credit Liabilities (or when calculated
with respect to a Bank, including either Agent as a Bank, such Bank's
participation or other interest in such Letter of Credit Liabilities); plus (c)
the aggregate amount of all accrued and unpaid interest and fees and all amounts
due under Sections 13.1 and 13.2; plus (d) all of the Obligations described in
clauses (iv) and (v) of the definition of the term "Obligations" and any other
Obligation relating thereto (i.e., the deposit and cash management obligations)
to the extent not already prefunded in a manner satisfactory to the
Administrative Agent.
"Revolving Commitment" means, as to each Bank, the obligation of such
Bank to make advances of funds and purchase participation interests in Letters
of Credit in an aggregate principal amount at any one time outstanding up to but
not exceeding the amount set forth opposite the name of such Bank on Schedule
1.1(a) under the heading "Revolving Commitment" or, if applicable, in such
Bank's most recent Assignment and Acceptance, as the same may be reduced or
terminated pursuant to Sections 2.6 or 11.2 or subsection 13.8(c). The aggregate
amount of the Revolving Commitments of all Banks as of November 30, 2001 equals
Seventy-Five Million Dollars ($75,000,000).
"Revolving Termination Date" means November 30, 2004 or such earlier
date on which the Revolving Commitments terminate as provided in this Agreement
or such earlier date on which the Revolving Commitments terminates as provided
in Section 2.6.
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Section 2.3 Amendment to the "Borrowing Base" Definition. The
definition of the term "Borrowing Base" in Section 1.1 of the Agreement is
amended as follows:
(a) Clause (c) of the term "Borrowing Base" is amended in its
entirety to read as follows:
(c) the outstanding principal amount of any Short
Term Bank Debt; minus
(b) the following sentence is added to the end of the
definition of the term "Borrowing Base":
If any Subsidiary becomes a Domestic Granting Subsidiary under
the terms of Section 8.10(b), such Domestic Granting
Subsidiary's Eligible Accounts shall not be included in the
Borrowing Base until the Administrative Agent shall have
performed an audit of the accounts receivable of such Domestic
Granting Subsidiary reasonably satisfactory in form and
substance to the Administrative Agent and the Banks.
Section 2.4 Addition of New Defined Terms to Section 1.1. The following
defined terms are added to Section 1.1 of the Agreement to read in their
respective entireties as follows:
"Funded Debt" means, without duplication, all Debt of the type
identified in clauses (a), (b), (c), (d) and (g) of the definition of
"Debt" in Section 1.1 of this Agreement.
"Outstanding Credit Agreement Obligations" means, at any time
of determination, the sum of (a) the aggregate amount of Revolving
Loans then outstanding; plus (b) the aggregate amount of Letter of
Credit Liabilities (or when calculated with respect to a Bank,
including either Agent as a Bank, such Bank's participation or other
interest in such Letter of Credit Liabilities); plus (c) the aggregate
amount of all accrued and unpaid interest and fees and all amounts due
under Sections 13.1 and 13.2.
Section 2.5 Amendment to Section 2.1. The "provided, however" clause of
the first sentence of Section 2.1 of the Agreement is amended in its entirety to
read as follows:
provided, however, (a) the Outstanding Credit Agreement Obligations
applicable to a Bank (except, with respect to the Administrative Agent
as a Bank, as may otherwise result from the operation of Section 4.6)
shall not at any time exceed such Bank's Revolving Commitment; (b) the
Outstanding Credit Agreement Obligations shall not at any time exceed
the lesser of (i) the aggregate Revolving Commitments or (ii) the
Borrowing Base; and (c) the Outstanding Revolving Credit shall never
exceed the Borrowing Base.
Section 2.6 Amendment to Sections 2.5 and 2.6. Sections 2.5 and 2.6 of
the Agreement are amended in their respective entireties to read as follows:
Section 2.5 Revolving Commitment Fee. The Borrower agrees to
pay to the Administrative Agent for the account of each Bank a
commitment fee on the daily average unused amount of such Bank's
Revolving Commitment for the period from and including the date hereof
to and including the Revolving Termination Date, at a rate
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equal to three-eighths of one percent (0.375%) per annum calculated
based on a year of 360 days and the actual number of days elapsed
(including the first day but excluding the last day). For the purpose
of calculating the commitment fee hereunder, the Revolving Commitments
shall be deemed utilized by the Outstanding Credit Agreement
Obligations. Accrued commitment fees under this Section 2.5 shall be
payable in arrears on the first day of April, July, October and January
of each year, beginning January 1, 2002 and on the Revolving
Termination Date.
Section 2.6 Reduction or Termination of Revolving Commitments;
Early Termination Fee. The Borrower shall have the right to terminate
or reduce in part the unused portion of the Revolving Commitments at
any time and from time to time, provided that: (a) the Borrower shall
give notice of each such termination or reduction as provided in
Section 4.3; (b) each partial reduction shall be in an aggregate amount
at least equal to Five Million Dollars ($5,000,000); and (c) in the
event the Revolving Commitments are voluntarily terminated in full on
or before November 30, 2002, the Borrower agrees to pay to the
Administrative Agent for the benefit of each Bank a prepayment fee for
each Bank equal to one percent (1.00%) of the Revolving Commitments
held by such Bank as calculated immediately prior to giving effect to
such termination. The Revolving Commitments may not be reinstated after
they have been terminated or reduced.
Section 2.7 Amendment to Section 2.7. The "provided, however" clause of
the first sentence of Section 2.7(a) of the Agreement is amended in its entirety
to read as follows:
provided, however, (i) the aggregate amount of outstanding Letter of
Credit Liabilities shall not at any time exceed Twenty-Five Million
Dollars ($25,000,000); (ii) the Outstanding Credit Agreement
Obligations shall not at any time exceed the lesser of (A) the
aggregate Revolving Commitments or (B) the Borrowing Base; (iii) the
Outstanding Credit Agreement Obligations applicable to a Bank shall not
at any time exceed such Bank's Revolving Commitment (except, with
respect to the Administrative Agent as a Bank, as may otherwise result
from the operation of Section 4.6); and (iv) the Outstanding Revolving
Credit shall never exceed the Borrowing Base.
Section 2.8 Amendment to Section 3.2. Section 3.2 of the Agreement is
amended in its entirety to read as follows:
Section 3.2 Determinations of Margins and Fees. The margins
identified in Section 3.1 and the fees payable under subsection 2.7(c)
shall be defined and determined as follows:
"Base Margin" shall mean (i) during the period
commencing on November 30, 2001 and ending on but not
including the first Adjustment Date (as defined below), zero
percent (0%) per annum and (ii) during each period from and
including one Adjustment Date to but excluding the next
Adjustment Date (herein a "Calculation Period"), the percent
per annum set forth in the table below in this Section 3.2
under the heading "Base Margin" opposite the Interest Coverage
Ratio which corresponds to the Interest Coverage Ratio set
forth in, and as calculated in accordance with, the applicable
Compliance Certificate.
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"LC Fee Rate " shall mean (i) during the period
commencing on November 30, 2001 and ending on but not
including the first Adjustment Date, one and three quarters of
one percent (1.75%) per annum and (ii) during each Calculation
Period, the percent per annum set forth in the table below
under the heading "LC Fee" opposite the Interest Coverage
Ratio which corresponds to the Interest Coverage Ratio set
forth in, and as calculated in accordance with, the applicable
Compliance Certificate.
"Libor Rate Margin" shall mean (i) during the period
commencing on November 30, 2001 and ending on but not
including the first Adjustment Date, one and three quarters of
one percent (1.75%) per annum and (ii) during each Calculation
Period, the percent per annum set forth in the table below
under the heading Libor Margin opposite the Interest Coverage
Ratio which corresponds to the Interest Coverage Ratio set
forth in, and as calculated in accordance with, the applicable
Compliance Certificate.
<Table>
<Caption>
Libor Margin
Interest Coverage Ratio Base Margin and LC Fee
----------------------- ----------- ------------
Greater than or equal to 4.50 0.00% 1.75%
Greater than or equal to 4.00 but less
than 4.50 0.25% 2.00%
Greater than or equal to 3.00 but less
than 4.00 0.50% 2.25%
Greater than or equal to 2.00 but less
than 3.00 0.75% 2.50%
Less than or equal to 2.00 1.00% 2.75%
</Table>
Upon delivery of the Compliance Certificate pursuant to subsection
8.1(c) in connection with the financial statements of the Borrower and
the Subsidiaries required to be delivered pursuant to Section 8.1(b) at
the end of each Fiscal Quarter commencing with such Compliance
Certificate delivered at the end of the Fiscal Quarter ending on
October 31, 2001 and provided no Default exists, the Base Margin, the
Libor Rate Margin and the LC Fee Rate shall automatically be adjusted
in accordance with the Interest Coverage Ratio set forth therein and
the table set forth above, such automatic adjustment to take effect as
of the first Business Day after the receipt by the Administrative Agent
of the related Compliance Certificate pursuant to Section 8.1(c) (each
such Business Day when such margins or fees change pursuant to this
sentence or the next following sentence, herein an "Adjustment Date").
If the Borrower fails to deliver such Compliance Certificate which so
sets forth the Interest Coverage Ratio within the period of time
required by subsection 8.1(c) or if a Default otherwise exists: (i) the
Base Margin shall automatically be adjusted to one percent (1.00%) per
annum; (ii) the Libor Rate Margin shall automatically be adjusted to
two and three-quarters of one percent (2.75%) per annum; and (iii) the
LC Fee Rate shall automatically be adjusted to two and three-quarters
percent (2.75%) per annum, such automatic adjustments to take effect as
of the first Business Day after the last day on which the Borrower was
required to deliver the applicable Compliance Certificate in accordance
with Section 8.1(c) or, with respect to the occurrence of any other
Default, on the date the Administrative Agent gives notice thereof to
the Borrower and to remain in effect until subsequently adjusted in
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accordance with the terms hereof with the delivery of a Compliance
Certificate when no Default exists.
Section 2.9 Amendment to Section 8.1(b). Clause (b) of Section 8.1 of
the Agreement is amended in its entirety to read as follows:
(b) Quarterly and Monthly Financial Statements. As soon as
available, and in any event:
(i) within forty-six (46) days after the end of each
Fiscal Quarter beginning with the Fiscal Quarter ending
October 31, 2001, a copy of an unaudited financial report of
the Borrower and the Subsidiaries as of the end of such Fiscal
Quarter and for the portion of the Fiscal Year then ended
containing, on a consolidated and (except with respect to the
statement of cash flow) consolidating basis, a balance sheet
and statements of income, retained earnings, and cash flow, in
each case (except in the case of the consolidating statements)
setting forth in comparative form the figures for the
corresponding periods of the preceding Fiscal Year, all in
reasonable detail certified by the chief financial officer or
chief operating officer of the Borrower to have been prepared
in accordance with GAAP but presented in accordance with the
interim reporting rules and regulations of the Securities and
Exchange Commission and to fairly present (subject to year-end
audit adjustments) the financial condition and results of
operations of the Borrower and the Subsidiaries, on a
consolidated and consolidating basis, at the date and for the
periods indicated therein; and
(ii) within twenty-five (25) days after the end of
each month ending during any Monthly Reporting Period, a copy
of an unaudited financial report of the Borrower and the
Subsidiaries as of the end of such month and for the portion
of the Fiscal Year then ended containing, on a consolidated
basis, a balance sheet and statements of income and retained
earnings, in each case setting forth in comparative form the
figures for the corresponding periods of the preceding Fiscal
Year, all in reasonable detail certified by the chief
financial officer or chief operating officer of the Borrower
to have been prepared in accordance with GAAP but presented in
accordance with the interim reporting rules and regulations of
the Securities and Exchange Commission and to fairly present
(subject to year-end audit adjustments and quarter ended
adjustments) the financial condition and results of operations
of the Borrower and the Subsidiaries, on a consolidated basis,
at the date and for the periods indicated therein (as used
herein the term "Monthly Reporting Period" means any period
from: (i) the date that the Administrative Agent notifies the
Borrower that the Borrowing Availability has dropped below
Twenty Million Dollars ($20,000,000) for any five (5)
consecutive Business Days as determined by the Administrative
Agent to (ii) the date the Administrative Agent advises the
Borrower that monthly reporting is no longer necessary (which
notice the Administrative Agent agrees to deliver if no
Default exists and the Borrowing Availability has exceeded
Twenty Million Dollars ($20,000,000) and could not reasonably
be expected to drop below that
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amount for any five (5) consecutive Business Days in the
foreseeable future as determined by the Administrative Agent
in its discretion). The Administrative Agent may give notice
of the commencement of a Monthly Reporting Period at any time
and from time to time in accordance with the foregoing
provisions and as a result, more than one Monthly Reporting
Period may be established hereunder),
Section 2.10 Amendment to Section 8.1(e). Clause (e) of Section 8.1 of
the Agreement is amended in its entirety to read as follows:
(e) Receivable Reporting. If a Daily Collection Event occurs
and the Administrative Agent requests, the Borrower shall furnish to
the Administrative Agent the Receivables Reports (i) once each week if
the Borrowing Availability drops below Ten Million Dollars
($10,000,000) as of any date of determination or (ii) on each Business
Day if the Borrowing Availability at any time drops below Five Million
Dollars ($5,000,000) for any three (3) consecutive Business Days as
determined by the Administrative Agent. Once Daily Collection
Procedures have been established, they shall remain in effect until the
Administrative Agent determines in its discretion that they are no
longer necessary. The Receivables Reports delivered under this clause
(e) shall be prepared as of the preceding Business Day prior to the
date of the delivery of such reports, or in the case of weekly
reporting, for the period since the last weekly report;
Section 2.11 Amendment to Section 9.2. Section 9.2 of the Agreement is
amended to add the following to the end thereof:
The issuance of a letter of credit for the account of Borrower or a
Subsidiary to secure Debt or other obligations of the Borrower or a
Subsidiary shall not be deemed to be the granting of a Lien for
purposes of this Section 9.2.
Section 2.12 Amendment to Section 9.3. Clauses (iii) and (iv) of
Section 9.3 of the Agreement are amended in their respective entireties to read
as follows:
(iii) the Borrower or any Subsidiary (the "Acquiring Company") may
acquire all or substantially all of the assets of any Subsidiary (a
"Transferring Subsidiary") if the Acquiring Company assumes all the
Transferring Subsidiary's liabilities, including without limitation,
all liabilities of the Transferring Subsidiary under the Loan Documents
to which it is a party (and, following such assignment and assumption,
such Transferring Subsidiary may wind up, dissolve and liquidate); and
(iv) Borrower or a Subsidiary may acquire (directly or through a merger
in which the Borrower or Subsidiary is the surviving Person) one
hundred percent (100%) of the equity interests issued by a Person or
all or a substantial part of a Person's assets (a Person who is, or
whose assets are, to be acquired under this subsection 9.3(iv), herein
a "Target") if such transaction is approved by the Required Banks (with
the determination by a Bank whether to approve such a transaction not
to be unreasonably withheld) or if all of the following conditions are
satisfied:
(a) No Default exists or would result therefrom.
(b) The Target is involved in the type of business
activities described in Section 9.9.
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(c) If the proposed acquisition is an acquisition of
the stock of a Target, the acquisition will be structured so
that the Target will become a wholly-owned Subsidiary directly
owned by Borrower. If the proposed acquisition is an
acquisition of assets, the acquisition will be structured so
that Borrower or a wholly-owned Subsidiary directly owned by
Borrower will acquire all or substantially all of the assets
of the Target.
(d) The Purchase Price for the proposed acquisition
does not exceed Ten Million Dollars ($10,000,000) and the sum
of the Purchase Price for the proposed acquisition plus the
aggregate amount of the Purchases Prices paid during the most
recently completed twelve (12) month period prior to the date
of the closing of the proposed acquisition for all other
acquisitions under the permissions of this Section 9.3 does
not exceed Ten Million Dollars ($10,000,000) (the term
"Purchase Price" means, as of any date of determination and
with respect to a proposed acquisition, the purchase price to
be paid for the Target or its assets, including all cash
consideration paid (whether classified as purchase price,
noncompete or consulting payments or otherwise), the Dollar
amount of all Debt to be paid or assumed by the purchaser and
the Dollar value of all other assets to be transferred by the
purchaser in connection with such acquisition to the seller
(including any stock issued to the seller) all valued in
accordance with the applicable purchase agreement).
(e) The obligations arising under subsection 8.10(b)
shall be fulfilled simultaneously with the closing of the
acquisition in question.
(f) The average daily balance of the sum of
Borrower's cash, cash equivalents and the Borrowing
Availability for the thirty (30) days preceding the date of
the closing of the acquisition and calculated as if the
acquisition occurred on the first (1st) day of such period
equals or exceeds Twenty-Five Million Dollars ($25,000,000).
(g) The ratio of (x) to (y), calculated on a pro
forma basis as of the end of the most recently completed
Fiscal Quarter prior to the proposed date of the acquisition
(assuming the consummation of the acquisition in question,
that the incurrence or assumption of any Debt in connection
therewith occurred on the first day of such period and, to the
extent such Debt bears interest at a floating rate, that the
rate in effect for the entire period of calculation was the
rate in effect at the time of calculation) shall be not be
greater than 3.00 to 1.00, where:
(x) equals the sum of (1) the total Funded
Debt outstanding as of such Fiscal Quarter end
(excluding the Revolving Loans) plus (2) the daily
average outstanding Revolving Loans over the four
consecutive Fiscal Quarter periods ending on the date
of calculation; and
(y) equals the Adjusted EBITDA calculated
for the four Fiscal Quarters then ended.
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The term "Adjusted EBITDA" means, for any period (the "Subject
Period"), the total of the following calculated without
duplication for such period: (a) Borrower's EBITDA; plus (b),
on a pro forma basis, the pro forma EBITDA of the Target and
each Prior Target or, as applicable, the EBITDA of the Target
and a Prior Target attributable to the assets acquired from
such Target and Prior Target, for any portion of such Subject
Period occurring prior to the date of the acquisition of each
such Target, Prior Target or the related assets but only to
the extent such EBITDA can be established based on financial
statements prepared in accordance with GAAP and only to the
extent the same has been calculated in a manner satisfactory
to the Administrative Agent and the Banks. The term "Prior
Target" means all Targets acquired or whose assets have been
acquired in an acquisition permitted by this Section 9.3.
(h) The proposed acquisition shall have been approved
by the Target's board of directors or other authorized
governing body of the Target and the required percentage of
the Target's shareholders or other equity holders.
(i) Borrower shall provide the Administrative Agent
fifteen (15) Business Days prior to the consummation of the
acquisition the following: (1) notice of the acquisition, (2)
the most recent financial statements of the Target that the
Borrower has available, (3) such other documentation and
information relating to the Target and the acquisition as the
Administrative Agent may reasonably request, and (4) evidence
certified by the chief executive, chief operating or chief
financial officer of the Borrower of compliance with clauses
(d), (f), and (g) of this Section 9.3 and that on a pro forma
basis for the period of four consecutive Fiscal Quarters most
recently ended (assuming the consummation of the acquisition
in question, that the incurrence or assumption of any Debt in
connection therewith occurred on the first day of such period
and, to the extent such Debt bears interest at a floating
rate, that the rate in effect for the entire period of
calculation was the rate in effect at the time of
calculation), Borrower shall be in compliance with the
covenants contained in Article 10.
Section 2.13 Amendment to Section 9.4. Clauses (i), (ii) and (iii) of
Section 9.4 of the Agreement are amended in their respective entireties to read
as the following clauses (i) and (ii):
(i) Subsidiaries of the Borrower may make, declare, and pay
dividends and make other distributions to Borrower or to other
Subsidiaries with respect to their capital stock or other equity
interests in the ordinary course of business and to allow Borrower to
pay dividends permitted hereunder; and
(ii) The Borrower may pay cash dividends or repurchase its
capital stock provided that after giving effect to the dividends paid
or the stock repurchased: (A) no Default exists or would result
therefrom; (B) the average daily balance of the sum of Borrower's cash,
cash equivalents and the Borrowing Availability for the thirty (30)
days preceding the date of payment and calculated as if the stock
repurchased occurred on the first (1st) day of such period equals or
exceeds Twenty-Five Million Dollars
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 10
($25,000,000); (C) the sum of the aggregate cash dividends and the
aggregate purchase price of the stock repurchased under this clause
(ii): (1) in any twelve (12) month period shall not exceed Ten Million
Dollars ($10,000,000) and (2) during the period from November 30, 2001
through the Revolving Termination Date shall not exceed Twenty Million
Dollars ($20,000,000); (D) the ratio of (x) to (y), calculated on a pro
forma basis as of the end of the most recently completed Fiscal Quarter
prior to the proposed date of dividend or repurchase and as if the
dividend or repurchase occurred on the first day of the four Fiscal
Quarter period then ended, shall be not be greater than 3.00 to 1.00,
where:
(x) equals the sum of (1) the total Funded Debt
outstanding as of such Fiscal Quarter end (excluding the
Revolving Loans) plus (2) the daily average outstanding
Revolving Loans over the four consecutive Fiscal Quarter
periods ending on the date of calculation and
(y) equals the Borrower's EBITDA calculated for the
four Fiscal Quarters then ended; and
(E) the Borrower shall, within twenty-five (25) days after the end of
any month during which it has paid any cash dividends or repurchased
any capital stock, provide the Administrative Agent evidence, certified
by the chief executive, chief operating or chief financial officer of
the Borrower, of its compliance with clause (A), (B), (C) and (D) of
this subsection 9.4(ii) with respect to each such dividends or
repurchase; and
Section 2.14 Amendment to Section 9.8. Clause (a) of Section 9.8 is
amended in its entirety to read as follows:
(a) dispositions of inventory in the ordinary course of business and
other dispositions of assets to the extent permitted by clauses (ii)
and (iii) of Sections 9.3 and clauses (h) and (i) of Section 9.5;
Section 2.15 Amendment to Section 10.1. Section 10.1 of the Agreement
is deleted therefrom.
Section 2.16 Amendment to Section 10.2. The definition of the term "Net
Income" in Section 10.2 of the Agreement is amended in its entirety to read as
follows:
"Net Income" means, for any period and any Person, such
Person's consolidated net income (or loss) determined in conformity
with GAAP, but excluding the following, without duplication, in the
calculation thereof: (a) the income of any other Person (other than its
subsidiaries) in which such Person or any of its subsidiaries has an
ownership interest, unless received by such Person or its subsidiary in
a cash distribution; (b) any after-tax gains attributable to fixed
asset dispositions; provided that, in connection with any fixed asset
disposition in the ordinary course of business, if the gain realized
therefrom is in an amount equal to or less than Fifty Thousand Dollars
($50,000), then such gain shall not be excluded from the calculation of
net income during such period but if the gain from any such fixed asset
disposition exceeds Fifty Thousand Dollars ($50,000), the total amount
of the related after-tax gain shall be excluded from the calculation of
net income; (c) to the extent not included in clauses (a) and (b)
above, any after-tax extraordinary or non-cash gains; and (d) when
calculating Net Income for the Borrower, any non-cash deductions
arising from the write down in the value of goodwill as required under
Financial Accounting Standards Board Statement 142.
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 11
Section 2.17 Amendment to Section 12.10. Section 12.10 of the Agreement
is amended in its entirety to read as follows:
Section 12.10 Agent Fee. The Borrower agrees to pay to the
Administrative Agent, on December 1, 2001 and on each Monthly Payment
Date thereafter, the administrative fee set forth in the letter dated
September 20, 2001 from J.P. Morgan Business Credit Corporation to the
Borrower.
Section 2.18 Amendment to Exhibits "B" and "D". "Exhibits "B" and "D"
to the Agreement are each amended in their respective entireties to read as set
forth on Exhibits "B" and "D" to this Amendment, respectively.
Section 2.19 Amendment to Schedule 1.1(a). Schedule 1.1(a) to the
Agreement is amended in its entirety to read as set forth on Schedule 1.1(a) to
this Amendment.
Section 2.20 Amendment to Borrower Security Agreement. Schedule 1 to
the Borrower Security Agreement is amended in its entirety to read as set forth
on Exhibit "E" hereto.
Section 2.21 Amendment to Subsidiary Security Agreement. The reference
to 7107-C Intermodal Drive in Section 3.5 of the Subsidiary Security Agreement
executed by Spectrum Integrated Services, Inc. is deleted therefrom and Schedule
1 thereto is amended in its entirety to read as set forth on Exhibit "F" hereto.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions. The effectiveness of Article 2 of this
Amendment is subject to the satisfaction of the following conditions precedent:
(a) Administrative Agent shall have received all of the
following, each dated (unless otherwise indicated) the date of this
Amendment, in form and substance satisfactory to the Administrative
Agent:
(i) Authorization. Evidence that the Borrower and
each Obligated Party are authorized to execute, deliver and
perform this Amendment.
(ii) Projections. Projected profit and loss
statements, balance sheets and cash flow statements for the
Borrower and the Subsidiaries all prepared on a consolidated
basis, on a quarterly basis for the Fiscal Year ending 2002
and on an annual basis for the Fiscal Years ending 2003 and
2004. The projections shall be accompanied by appropriate
supporting details and narrative statements of underlying
assumptions and shall be prepared in sufficient detail to
determine the underlining financial statistics including but
not limited to fixed and variable costs.
(iii) Fee. The arrangement fees due the
Administrative Agent under that terms of that certain proposal
letter dated September 20,
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 12
2001 between J.P. Morgan Business Credit Corporation and the
Borrower and evidence that the costs and expenses (including
attorneys' fees) referred to in Section 4.4 hereof, to the
extent incurred, shall have been paid in full by Borrower.
(iv) Additional Information. Administrative Agent
shall have received such additional documentation and
information as Administrative Agent may request.
(b) After giving effect to this Amendment, the representations
and warranties contained herein and in all other Loan Documents, as
amended hereby, shall be true and correct in all material respects as
of the date hereof as if made on the date hereof, except for such
representations and warranties limited by their terms to a specific
date;
(c) After giving effect to this Amendment, no Default shall
have occurred and be continuing; and
(d) All proceedings taken in connection with this Amendment
and all documentation and other legal matters incident thereto shall be
satisfactory to Administrative Agent.
ARTICLE 4
Miscellaneous
Section 4.1 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Borrower, the Banks and the Agents agree that the Agreement as amended
hereby and the other Loan Documents shall continue to be legal, valid, binding
and enforceable in accordance with their respective terms. For all matters
arising prior to the effective date of this Amendment (including, without
limitation the accrual and payment of interest and commitment and other fees),
the terms of the Agreement (as unmodified by this Amendment) shall control and
are hereby ratified and confirmed.
Section 4.2 Representations and Warranties. Borrower hereby represents
and warrants to Administrative Agent and the Banks as follows: (a) after giving
effect to this Amendment, no Default has occurred and is continuing; (b) after
giving effect to this Amendment, the representations and warranties set forth in
the Loan Documents are true and correct in all material respects on and as of
the date hereof with the same effect as though made on and as of such date
except with respect to any representations and warranties limited by their terms
to a specific date; (c) the execution, delivery and performance of this
Amendment has been duly authorized by all necessary action on the part of
Borrower and each Obligated Party and does not and will not: (1) violate any
provision of law applicable to Borrower or any Obligated Party, the certificate
of incorporation, bylaws, partnership agreement, membership agreement, or other
applicable governing document of Borrower or any Obligated Party or any order,
judgment, or decree of any court or agency of government binding upon Borrower
or any Obligated Party; (2) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of Borrower or any Obligated Party; (3) result in or
require the creation or imposition of any material lien upon any of the assets
of Borrower or any Obligated Party; or (4) require any approval or consent of
any Person under any material contractual obligation of Borrower or any
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 13
Obligated Party; (d) except as previously disclosed to Administrative Agent, the
articles of incorporation, bylaws, partnership agreement, certificate of limited
partnership, membership agreement, articles of organization or other applicable
governing document of the Borrower and each Obligated Party, resolutions of the
Borrower attached as Exhibit B to its Secretary's Certificate dated as of March
6, 1998, and resolutions of Spectrum Integrated Services, Inc. attached as
Exhibit B to its Secretary's Certificate dated as of March 6, 1998, have not
been modified or rescinded since March 6, 1998, and remain in full force and
effect, and the officers identified in each such Secretary's Certificate
continue to hold the offices set forth in such certificate; and (e) the
projections described in Section 3.1(a)(ii) were prepared by Borrower based on
the most recent financial statements of Borrower in light of the past operations
of Borrower and were prepared on a basis consistent with GAAP, with only such
adjustments thereto as would be required in accordance with GAAP and such
projections represent, as of the date thereof, the good faith estimate of
Borrower and its senior management concerning the projected performance of
Borrower's business based on the supporting details and assumptions set forth in
such projections after giving effect to the transactions contemplated hereby.
The Banks acknowledge that the projections are estimates and that the Borrower's
actual results can differ from those set forth in such projections. IN ADDITION,
TO INDUCE THE ADMINISTRATIVE AGENT AND THE BANKS TO AGREE TO THE TERMS OF THIS
AMENDMENT, BORROWER AND EACH OBLIGATED PARTY (BY ITS EXECUTION BELOW) REPRESENT
AND WARRANT THAT AS OF THE DATE OF ITS EXECUTION OF THIS AMENDMENT THERE ARE NO
CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER
THE LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH IT WAIVES ANY AND ALL SUCH
CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING
PRIOR TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT.
Section 4.3 Reference to Agreement. Each of the Loan Documents,
including the Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Agreement as amended hereby, are hereby amended
so that any reference in such Loan Documents to the Agreement shall mean a
reference to the Agreement as amended hereby.
Section 4.4 Expenses of Agents. As provided in the Agreement, Borrower
agrees to pay on demand all costs and expenses incurred by Administrative Agent
or Collateral Agent in connection with the preparation, negotiation, and
execution of this Amendment and the other Loan Documents executed pursuant
hereto, including without limitation, the costs and fees of Administrative
Agent's legal counsel.
Section 4.5 Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 4.6 Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.
Section 4.7 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the Banks, National City, the Agents and Borrower
and their respective successors and assigns, except Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks.
Section 4.8 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
agreement.
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 14
Section 4.9 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
Section 4.10. ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
BORROWER:
SOFTWARE SPECTRUM, INC.
By: /s/ KEITH R. COOGAN
-------------------------------------
Keith R. Coogan
President & Chief Operating Officer
ADMINISTRATIVE AGENT:
JPMORGAN CHASE BANK (as the successor in
interest by merger to The Chase Manhattan
Bank), individually as a Bank, as the
Administrative Agent and the Collateral
Agent
By: /s/ GINA HOLLOWAY
--------------------------------------
Gina Holloway, Senior Vice President
OTHER BANKS AND NATIONAL CITY:
NATIONAL CITY BANK, KENTUCKY
By: /s/ STEPHEN BASSETT
--------------------------------------
Name: Stephen Bassett
---------------------------------
Title: Account Officer
--------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ SUNNIE M. KIM
--------------------------------------
Name: SUNNIE M. KIM
---------------------------------
Title: ASST. VICE PRESIDENT
--------------------------------
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 15
FOOTHILL CAPITAL CORPORATION
By: /s/ JUAN BARRERA
--------------------------------------
Name: Juan Barrera
---------------------------------
Title: Assistant Vice President
--------------------------------
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 16
ACKNOWLEDGMENT
The undersigned hereby consents and agrees to this Amendment
(including, without limitation, Section 2.21 and Section 4.2), and hereby
ratifies and confirms each of the Loan Documents to which it is a party and
agrees that such Loan Documents continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
Witness due execution hereof by the undersigned as of the date first
written above.
SPECTRUM INTEGRATED SERVICES, INC.
By: /s/ KEITH R. COOGAN
--------------------------------------
Keith R. Coogan, President,
Executive Vice President and Assistant
Secretary
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND MODIFICATION TO
OTHER LOAN DOCUMENTS - Page 17
LIST OF EXHIBITS AND SCHEDULES
Exhibit "B" Borrowing Base Certificate
Exhibit "D" Compliance Certificate
Exhibit "E" Schedule 1 to Borrower Security Agreement
Exhibit "F" Schedule 1 to Subsidiary Security Agreement
Schedule 1.1(a) Revolving Commitments
LIST OF EXHIBITS, Solo Page
EXHIBIT "B"
TO
SOFTWARE SPECTRUM, INC.
FIFTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
Borrowing Base Certificate
EXHIBIT "B", Cover Page
BORROWING BASE CERTIFICATE
TO: JPMorgan Chase Bank,
as administrative agent
600 Fifth Avenue, 4th Floor
New York, New York 10020
with a copy to each Bank
Ladies/Gentlemen:
This Borrowing Base Report for the month ending ____________________,
20___, is executed and delivered by SOFTWARE SPECTRUM, INC. (the "Borrower") to
JPMorgan Chase Bank ("Administrative Agent"), pursuant to that certain Amended
and Restated Credit Agreement (the "Credit Agreement") dated as of March 11,
1998, among the Borrower, The Chase Manhattan Bank, Chase Bank of Texas,
National Association, as Collateral Agent, and the banks named therein. All
terms used herein shall have the meanings assigned to them in the Credit
Agreement.
The Borrower represents and warrants to the Administrative Agent and
the Banks that all information contained herein is true, correct, and complete,
and that the total Eligible Accounts referred to below represent the Eligible
Accounts that qualify for purposes of determining the Borrowing Base under the
Credit Agreement. The Borrower further represents and warrants to the Lender
that attached are the following Receivable Reports, all for the Borrower and the
Granting Subsidiaries for the month ending ____________, 20__: (A) a list of all
accounts receivable showing all accounts aged in 30, 60, 90 and 120 day
intervals (reflecting all journal entries and adjustments, including all
customer credits and debits), (B) all contra calculations, specifying, among
other items, the accounts payable balances owed to its top ten vendors, (C) a
collections report, (D) the lockbox statements, and (E) inventory designations.
<Table>
1. Accounts Receivable of Borrower and Domestic Granting
Subsidiaries as of the date of the last submitted Borrowing
Base (note: lines 1(a), (b) and (c) to be completed only upon
Administrative Agent's request) $___________
(a) + Sales $___________
(b) - Collections $___________
(c) - Credits $___________
(d) Gross Accounts Receivable of Borrower and Domestic
Granting Subsidiaries as of _____________ (detail of
the conversion calculation of Canadian dollar accounts
to U.S. dollars to be attached as a schedule) $___________
</Table>
Accounts Receivable Aging of Borrower and Domestic Granting
Subsidiaries as of ___________
<Table>
<Caption>
Domestic
Total A/R Current 31-60 61-90 91-120 Over 120
--------- ------- ----- ----- ------ --------
$ $ $ $ $ $
</Table>
BORROWING BASE CERTIFICATE, Page 1
<Table>
2. Less: Ineligible Accounts of Borrower and the Domestic
Granting Subsidiaries (determined pursuant to the
definition of Eligible Account in the Credit Agreement,
without duplication)
(a) Accounts not due and payable within 120 days ............... $__________
(b) Accounts outstanding for more than 120 days past the
original date of invoice.................................... $__________
(c) Accounts created outside of the ordinary course of
business ................................................... $__________
(d) Accounts relating to unenforceable contracts or
contracts which do not represent complete bona fide
transactions ............................................... $__________
(e) Accounts from sales on bill-and-hold, guaranteed
sale, sale-and-return, or similar basis .................... $__________
(f) Accounts subject to, or arising from the sale of goods
subject to, a Lien other than Liens held by the
Collateral Agent............................................ $__________
(g) Accounts as to which the Collateral Agent does not
have first priority Lien or which are not directed to be
remitted to a Lockbox Account .............................. $__________
(h) Accounts subject to set-off, dispute, etc................... $__________
(i) Accounts owed by account debtors subject to
bankruptcy or that are insolvent ........................... $__________
(j) Accounts evidenced by chattel paper or instruments ......... $__________
(k) Accounts owed by foreign account debtors (other than
Approved Foreign Account Debtors) not supported by
an acceptable letter of credit or insurance ................ $__________
(l) Any U.S. Federal or Canadian Government Accounts
unless the applicable assignment of claims laws shall
have been complied with .................................... $__________
(m) Accounts owed by Affiliates etc. ........................... $__________
(n) Accounts not payable in Dollars or Canadian dollars ........ $__________
(o) Accounts that do not comply with laws, etc ................. $__________
(p) Accounts backed by performance, completion or other
bonds or performance subcontracted (unless waived in
writing by the Administrative Agent) ....................... $__________
(q) Accounts written off per GAAP .............................. $__________
(r) Accounts for which required notices have not been
filed ...................................................... $__________
(s) Excluded Accounts .......................................... $__________
(t) Accounts subject to 50% past due rule ...................... $__________
(u) Contra accounts owed to the account debtors ................ $__________
3. Total Ineligible Accounts of Borrower and the Domestic
Granting Subsidiaries (total of 2(a) through (u))............... $__________
4. Total Eligible Accounts of Borrower and the Domestic
Granting Subsidiaries (1(d) minus 3) ........................... $__________
5. Advance Percent of line 4 ...................................... $___________
</Table>
BORROWING BASE CERTIFICATE, Page 2
<Table>
6. Accounts Receivable of Software Spectrum Canada as of
the date of the last submitted Borrowing Base (note: lines
6 (a), (b) and (c) to be completed only upon
Administrative Agent's request)................................. $__________
(a) + Sales .................................................... $__________
(b) - Collections .............................................. $__________
(c) - Credits .................................................. $__________
(d) Gross Accounts Receivable of Software Spectrum
Canada as of _____________ (detail of conversion
calculation to U.S. dollars to be attached as a
schedule)................................................... $__________
</Table>
<Table>
<Caption>
Domestic
Total A/R Current 31-60 61-90 91-120 Over 120
--------- ------- ----- ----- ------ --------
$ $ $ $ $ $
</Table>
<Table>
7. Less: Ineligible Accounts of Software Spectrum Canada
(a) Accounts not due and payable within 120 days .................. $___________
(b) Accounts outstanding for more than 120 days past the
original date of invoice....................................... $___________
(c) Accounts created outside of the ordinary course of
business ...................................................... $___________
(d) Accounts relating to unenforceable contracts or
contracts which do not represent complete bona fide
transactions .................................................. $___________
(e) Accounts from sales on bill-and-hold, guaranteed
sale, sale-and-return, or similar basis ....................... $___________
(f) Accounts subject to, or arising from the sale of goods
subject to, a Lien other than Liens held by the
Collateral Agent............................................... $___________
(g) Accounts as to which the Collateral Agent does not
have first priority Lien or which are not directed to be
remitted to a Lockbox Account ................................. $___________
(h) Accounts subject to set-off, dispute, etc...................... $___________
(i) Accounts owed by account debtors subject to
bankruptcy or that are insolvent .............................. $___________
(j) Accounts evidenced by chattel paper or instruments ............ $___________
(k) Accounts owed by foreign account debtors (other than
Approved Foreign Account Debtors) not supported by
an acceptable letter of credit or insurance ................... $___________
(l) Any U.S. Federal or Canadian Government Accounts
unless the applicable assignment of claims laws shall
have been complied with ....................................... $___________
(m) Accounts owed by Affiliates etc. ..............................
(n) Accounts not payable in Dollars or Canadian dollars ........... $___________
</Table>
BORROWING BASE CERTIFICATE, Page 3
<Table>
(o) Accounts that do not comply with laws, etc ............... $___________
(p) Accounts backed by performance, completion or other
bonds or performance subcontracted (unless waived in
writing by the Administrative Agent) ..................... $___________
(q) Accounts written off per GAAP ............................ $___________
(r) Accounts for which required notices have not been
filed .................................................... $___________
(s) Excluded Accounts ........................................ $___________
(t) Accounts subject to 50% past due rule .................... $___________
(u) Contra accounts owed to the account debtors .............. $___________
(v) Accounts not purchased by Borrower........................ $___________
8. Total Software Spectrum Canada Ineligible Accounts
(total 7(a) through (v)) $___________
9. Total Eligible Accounts relating to Software Spectrum
Canada (6 minus 8) ........................................... $___________
10. Advance Percent of Line 9..................................... $___________
11. Market value of cash and cash equivalents held in Cash
Collateral Account (market value detailed on Schedule 2
hereto) ...................................................... $___________
12. Outstanding Short Term Bank Debt ............................. ($___________)
13. Reserves ..................................................... ($___________)
14. Borrowing Base: Line 5 plus Line 10 plus line 11 minus
line 12 minus line 13 ........................................ $___________
15. Outstanding Credit Agreement Obligations
(a) Revolving Loans .......................................... $___________
(b) Letter of Credit Liabilities ............................. $___________
(c) Accrued and unpaid interest and fees and other
amounts due .............................................. $___________
(d) Total..................................................... $___________
16. Outstanding Revolving Credit:
(a) Deposit and cash management obligations (to the
extent not prefunded) ........................................ $___________
(b) Outstanding Credit Agreement Obligations(from line
15(d))........................................................ $___________
(c) Total..................................................... $___________
</Table>
BORROWING BASE CERTIFICATE, Page 4
<Table>
17. The "Borrowing Availability" as defined in the Credit
Agreement:
(i) the Revolving Commitments .......................... $___________
(ii) line 14 (i.e., the Borrowing Base) minus .......... $___________
(iii) line 16(a) (the deposit and cash management
obligations, to the extent not prefunded) .............. ($___________)
(iv) total of line 17 (ii) minus line 17 (iii) ......... $___________
(v) lesser of line (i) or (iv) ......................... $___________
(vi) Line 15(d) (i.e., the Outstanding Credit Agreement
Obligations) ........................................... ($___________)
(vii) Line 17 (v) minus line 17(vi) .................... $___________
18. Does Line 16(c) exceed line 14? (i.e., Outstanding
Revolving Credit can not exceed the Borrowing Base) Yes No
</Table>
The Borrower represents and warrants to the Banks that the
representations and warranties of the Borrower contained in Article 7 of the
Credit Agreement and the other Loan Documents are true and correct on and as of
the date of this Borrowing Base Report as if made on and as of the date hereof
except to the extent that such representations and warranties speak to a
specific date, and that no Default has occurred and is continuing.
Date: , .
---------- -----
BORROWER:
SOFTWARE SPECTRUM, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
BORROWING BASE CERTIFICATE, Page 5
EXHIBIT "D"
to
SOFTWARE SPECTRUM, INC.
FIFTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
Compliance Certificate
EXHIBIT "D", Cover Page
COMPLIANCE CERTIFICATE
for the
quarter ending ,
-------- -- ----
To: JPMorgan Chase Bank,
as administrative agent
600 Fifth Avenue, 4th Floor
New York, New York 10020
and each Bank
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being delivered
pursuant to Section 8.1(c) of that certain Amended and Restated Credit Agreement
(as amended, the "Agreement") dated as of March 11, 1998 among SOFTWARE
SPECTRUM, INC. (the "Borrower"), The Chase Manhattan Bank (now JPMORGAN CHASE
BANK), as administrative agent and Chase Bank of Texas, National Association
Bank (now JPMorgan Chase Bank) as collateral agent and the Banks named therein.
All capitalized terms, unless otherwise defined herein, shall have the same
meanings as in the Agreement. All the calculations set forth below shall be made
pursuant to the terms of the Agreement.
The undersigned, an authorized financial officer of the Borrower, does
hereby certify to the Agent and the Banks that:
1. DEFAULT.
No Default has occurred and is continuing or if a Default has occurred
and is continuing, I have described on the attached Exhibit "A" the
nature thereof and the steps taken or proposed to remedy such Default.
<Table>
<Caption>
Compliance or
Response to
Question
-------------
2. SECTION 8.1 - FINANCIAL STATEMENTS AND RECORDS
(a) Annual audited financial statements of Borrower on or
before 91 days after the end of each Fiscal Year. Yes No N/A
(b) Quarterly unaudited financial statements of Borrower
on a consolidated and consolidating basis within 46
days of each Fiscal Quarter end. Yes No N/A
(c) Borrowing Base Report together with the Receivables
Reports within 20 days of each month end or within 20
days of any other date required by the Administrative
Agent. Yes No N/A
(d) If Daily Collection Event occurs, Receivable Reports Yes No N/A
(i) weekly or
(ii) daily
(e) Projections within 30 days before the start of each Yes No N/A
Fiscal Year.
</Table>
COMPLIANCE CERTIFICATE - Page 1
<Table>
3. SECTION 8.10 - COLLATERAL MATTERS
(a) Aggregate book value of inventory held by third
parties $__________
(b) Limit $ 2,500,000 Yes No
(c) Collateral perfection/protection required? Yes No
(d) Material Subsidiary created or acquired? Yes No
(e) If line (d) is yes, have 8.10(b) and (c) collateral
measures been taken? Yes No
4. SECTION 9.1 - DEBT No Additional Debt except:
(a) Purchase money not to exceed: $ 5,000,000 Yes No
Actual Outstanding $__________
(b) Guaranties of surety and other bonds not to exceed: $ 4,000,000 Yes No
Actual Outstanding $__________
(c) Outstanding Guaranties of permitted Debt of Foreign
Subs and Foreign Ventures $__________ Yes No
(d) Outstanding Loans, advances, other extensions of
credit, investments and contributions to Foreign Subs
(excluding Software Spectrum Canada in an amount
up to the gross Dollar amount of receivables of
Software Spectrum Canada) and Foreign Ventures $__________ Yes No
(e) Total Foreign Subsidiary Obligations (line 4(c) plus
4(d)) $__________ Yes No
(f) Foreign Subsidiary Limit
(i) $30,000,000 plus $__________
(ii) if 9.1(e)(ii) test satisfied $10,000,000 Yes No
(g) Acquisition Debt incurred in any Fiscal Year not to
exceed: $10,000,000
Actual incurred in current Fiscal Year(note: Incurrence
Test must also be met) $__________ Yes No
(h) Unsecured Vendor Debt not to exceed: $20,000,000
Actual Outstanding(note : Incurrence Test must also be
met) $__________ Yes No
(i) Unsecured Short Term Bank Debt not to exceed: $ 5,000,000
Actual Outstanding: $__________ Yes No
5. SECTION 9.3 - MERGERS, ETC
(a) Has acquisition been consummated since last
Compliance Certificate? Yes No
(b) If line (a) yes, Purchase Price $__________
</Table>
COMPLIANCE CERTIFICATE - Page 2
<Table>
(c) Aggregate Purchase Prices from prior acquisitions
under 9.3 in last 12 months. $__________ N/A
(d) Aggregate Purchase Price Limit per 12 month period $10,000,000 Yes No N/A
(e) Were the conditions in clauses (vii) of Section 9.3
satisfied with respect to each acquisition? Yes No N/A
6. SECTION 9.4 - DIVIDENDS AND STOCK REPURCHASES
(a) Stock repurchases and dividends for last 12 months not
to exceed: $10,000,000
Actual repurchases and dividends during the last 12
months $__________ Yes No
(b) Stock repurchases and dividends for period from
10/31/02 to Revolving Credit Termination Date not to
exceed: $20,000,000
Actual repurchase and dividends during such period: $__________ Yes No
7. SECTION 9.8 - DISPOSITION ASSETS:
(a) Book Value of asset disposed of in sale leaseback
transaction within the last 12 months $__________ Yes No N/A
Actual not to exceed: $ 500,000
(b) Book value of assets disposed of within the last 12
months $__________ Yes No N/A
Actual not to exceed $ 500,000
8. SECTION 9.10 - PREPAYMENT OF DEBT
No prepayment of Debt except:
(a) Obligations
(b) Foreign Sub Debt Guaranteed
(c) Prepayment of other Debt limited in any Fiscal Year to: $ 500,000
(d) Aggregate amount of other Debt so prepaid in current
Fiscal Year $__________ Yes No N/A
9. SECTION 10.2 - INTEREST COVERAGE
(a) Net Income for applicable period
(i) net income or loss $__________
(ii) minus income of others ($__________)
(iii) minus after-tax gains from asset dispositions ($__________)
(iv) minus other after-tax extraordinary or
non-cash gains ($__________)
</Table>
COMPLIANCE CERTIFICATE - Page 3
<Table>
(v) plus non-cash deductions arising from the
write down in the value of goodwill $__________
(vi) total of (i) through (v) $__________
(b) Plus net provisions for tax $__________
(c) Plus Interest Expense $__________
(d) Plus amortization and depreciation $__________
(e) Borrower EBITDA: 9(a) plus 9(b), 9(c) and 9(d) $__________
(f) Unfinanced Capital Expenditures $__________
(g) (line 9(e) minus line 9(f)) $__________
(h) Interest Expense $__________
(i) Interest Coverage (line 9(g) divided by line 9(h)) ___ to 1.00
(j) Minimum Interest Coverage ___ to 1.00 Yes No
10. SECTION 10.3 - CAPITAL EXPENDITURE LIMITS
(a) Capital Expenditure limit for the period $__________
(b) Actual Capital Expenditures $__________ Yes No
11. SECTION 10.4 - NET INCOME
(a) Net Income for (current Fiscal Quarter)
(i) net income or loss $__________
(ii) minus income of others ($__________)
(iii) minus after-tax gains from asset dispositions ($__________)
(iv) minus other after-tax extraordinary or
non-cash gains ($__________)
(v) plus non-cash deductions arising from the
write down in the value of goodwill $__________
(vi) total of (i) through (v) $__________
(b) line (a)(v) less than -$2,500,000 Yes No
(c) Net Income (previous Fiscal Quarter)
(i) net income or loss $__________
(ii) minus income of others ($__________)
(iii) minus after-tax gains from asset dispositions ($__________)
(iv) minus other after-tax extraordinary or
non-cash gains ($__________)
(v) plus non-cash deductions arising from the
write down in the value of goodwill $__________
</Table>
COMPLIANCE CERTIFICATE - Page 4
<Table>
(vi) total of (i) through (v) $__________
(d) 11(a)(v) plus 11(b)(v) less than - $3,000,000 Yes No
12. DETERMINATION OF MARGIN AND FEES
(a) Borrower EBITDA: From 9(e) $__________
(b) All Capital Expenditures (financed and unfinanced) $__________
(c) Actual technical support contract Capital Expenditures
not to exceed $1,500,000 incurred in the period
through the Fiscal Quarter ending January 31, 1999 $__________
(d) (line 12(a) minus the positive sum of (i) line 12(b)
minus (ii), if calculated for a period prior to February
1, 1999, line 12(c)) $__________
(e) Interest Expense $__________
(f) Interest Coverage Ratio (line 12(d) divided by line
12(e)) ___:1.00 Yes No
(g) Adjustment to margin and fees required by Section
3.2?
(h) If adjustment required, set forth below new margins
and fees in accordance with Section 3.2:
(i) Base Margin _______%
(ii) Libor Rate Margin and LC Fee _______%
</Table>
13. ATTACHED SCHEDULES
Attached hereto as schedules are the calculations supporting the computation
set forth above in this Certificate. All information contained herein and on
the attached schedules is true and correct.
14. FINANCIAL STATEMENTS
The unaudited financial statements attached hereto were prepared in
accordance with GAAP but presented in accordance with the interim reporting
rules and regulations of the Securities and Exchange Commission and fairly
present (subject to year end audit adjustments) the financial conditions and
the results of the operations of the Persons reflected thereon, at the date
and for the periods indicated therein.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective this _______ day of ____________, _______.
SOFTWARE SPECTRUM, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
COMPLIANCE CERTIFICATE - Page 5
EXHIBIT "E"
to
SOFTWARE SPECTRUM, INC.
FIFTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
EXHIBIT "E", Cover Page
Schedule 1
to
Borrower Security Agreement
Locations of Collateral
I. ASSUMED NAMES
Software Spectrum
Software Spectrum, Inc. changed its name from The Software Store, Inc.
in May 1991.
II. BUSINESS LOCATIONS (including locations of Inventory)
<Table>
<Caption>
Name and Address of Landlord or
Address Lease/Own Mortgagee of Premises (if any)
------- --------- -------------------------------------
Software Spectrum, Inc.
Corporate Headquarters Trammell Crow Dallas/Ft. Worth
2140 Merritt Drive 2200 Ross Avenue, Suite 3700
Garland, Texas 75041 Lease Dallas, Texas 75201
Software Spectrum, Inc.
Corporate Headquarters Compass Management and Leasing, Inc.
2220 Merritt Drive 12377 Merritt Drive, Suite 1400
Garland, Texas 75041 Lease Dallas, Texas 75251
Software Spectrum, Inc. Spokane Teacher's Credit Union
1620 North Signal Drive 1620 North Signal Drive
Liberty Lake, Washington 99019 Lease Liberty Lake, WA 99019
SDS Properties Liberty Lake LLC
Software Spectrum, Inc. c/o SDS Realty
22820 East Appleway 202 East Trent, Suite 202
Liberty Lake, WA 99019 Lease Spokane, WA 99202
</Table>
SCHEDULE 1 TO BORROWER SECURITY AGREEMENT, Solo Page
EXHIBIT "F"
to
SOFTWARE SPECTRUM, INC.
FIFTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
EXHIBIT "F", Cover Page
Schedule 1
to
Security Agreement
Locations of Inventory
I. ASSUMED NAMES
Spectrum Contract Services
Software Spectrum
Software Spectrum Technology Services Group
Info-Pro, Inc.
Computer Rental Associates
II. LOCATIONS
<Table>
<Caption>
Name and Address of Landlord or
Address Lease/Own Mortgagee of Premises (if any)
------- --------- -------------------------------------
Trammell Crow Dallas/Ft. Worth
2140 Merritt Drive 2200 Ross Avenue, Suite 3700
Garland, Texas 75041 Lease Dallas, Texas 75201
Compass Management and Leasing, Inc.
2220 Merritt Drive 12377 Merritt Drive, Suite 1400
Garland, Texas 75041 Lease Dallas, Texas 75251
6302 East Martin Luther King Blvd. Highwoods/Florida Holdings L.P.
Suite 200 9720 Princess Palm Avenue, Suite 140
Tampa, FL 33610 Lease Tampa, FL 33619
Spokane Teacher's Credit Union
1620 North Signal Drive 1620 North Signal Drive
Liberty Lake, Washington 99019 Lease Liberty Lake, WA 99019
SDS Properties Liberty Lake LLC
c/o SDS Realty
22820 East Appleway 202 East Trent, Suite 202
Liberty Lake, WA 99019 Lease Spokane, WA 99202
</Table>
SCHEDULE 1 TO SECURITY AGREEMENT, Solo Page
SCHEDULE 1.1(a)
TO
SOFTWARE SPECTRUM, INC.
CREDIT AGREEMENT
Revolving Commitments
<Table>
<Caption>
Bank Revolving Commitment
---- --------------------
a. JPMorgan Chase Bank $25,000,000.00
b. Foothill Capital Corporation $25,000,000.00
c. PNC Bank, National Association $25,000,000.00
--------------
Total $75,000,000.00
</Table>
SCHEDULE 1.1(a) - Revolving Commitments, Solo Page