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EXHIBIT 10.8(e)
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as
of March 31, 1997 is among SOFTWARE SPECTRUM, INC. (the "Borrower"), each of
the banks or other lending institutions which are a party hereto (individually
a "Bank" and collectively, the "Banks") and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually as a Bank (in its individual capacity and not as
agent, herein "TCB") and as agent for itself and the other Banks (in such
capacity as agent, together with its successors in such capacity, the "Agent").
RECITALS:
A. Borrower, TCB and the Agent have entered into that certain
Credit Agreement dated May 3, 1996 (as amended by that certain First Amendment
to Credit Agreement and Master Assignment and Acceptance dated as of June 28,
1996, that certain Second Amendment to Credit Agreement dated as of June 28,
1996, that certain Amendment Letter dated as of September 30, 1996, and that
certain Fourth Amendment to Credit Agreement dated as of December 31, 1996,
herein the "Agreement").
B. Pursuant to Section 14.8 of the Agreement, TCB assigned
certain of its rights and obligations under the Agreement and the other Loan
Documents to the other Banks.
C. The Borrower, the Banks and the Agent desire to amend 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:
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.
ARTICLE 2
Amendments
Section 2.1 Amendment to Section 1.1. Effective as of the date
hereof, the following definitions in Section 1.1 of the Agreement are amended
in their entirety to read as follows:
FIFTH AMENDMENT TO CREDIT AGREEMENT - Page 1
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"Fiscal Quarters" means the four (4) periods falling in each
Fiscal Year, each such period being three calendar months in duration
with the first such period in any Fiscal Year beginning on the first
day of May and the last such period in any Fiscal Year ending on the
last day of April.
"Fiscal Year" means the twelve (12) month period beginning on
the first day of May and ending on the last day of April of the
following year.
Section 2.2 Amendments to Article 5. Effective as of the date
hereof, (a) the reference to "March 31, 1997," in Section 5.4(a)(ii) of the
Agreement is replaced with "April 30, 1997 and (b) the following is hereby
added to the end of Section 5.12 of the Agreement:
For purposes of any calculation under this Section 5.12 prior
to October 31, 1997, the term "Fiscal Quarter" shall mean only the
three month periods ending December 31, 1996, March 31, 1997 and July
31, 1997.
Section 2.3 Amendments to Section 9.1(c). Effective as of the date
hereof, Section 9.1 (c) of the Agreement is amended in its entirety to read as
follows:
(c) Compliance Certificate. Within forty-five (45) days after
the end of each Fiscal Quarter of each Fiscal Year beginning with the
Fiscal Quarter ending July 31, 1997 or with respect to the last Fiscal
Quarter of each Fiscal Year beginning with the Fiscal Quarter ending
April 30, 1998, within ninety (90) days of the end of such Fiscal
Quarter, within sixty (60) days after March 31, 1997 and within
forty-five (45) days after June 30, 1997, a Compliance Certificate
and, with respect to the Compliance Certificate delivered as of March
31, 1997 and June 30, 1997 only, financial reports of the type
described in Section 9.1 (b) but prepared with respect to the three
(3) month period then ended;
Section 2.4 Amendment to Section 10.1(c). Effective as of the
date hereof, Section 10.1(c) of the Agreement is amended in its entirety to
read as follows:
(c) Debt (other than Capital Lease Obligations) not to exceed One
Million Dollars ($1,000,000.00) in the aggregate at any time
outstanding secured by purchase money liens permitted by Section 10.2;
Section 2.5 Amendment to Section 11.1(b). Effective as of the date
hereof, Section 11.1 of the Agreement is amended as follows: (i) Clause (b) is
amended in its entirety to read as follows:
(b) fifty percent (50%) of the sum of (i) the Borrower's Net Income
for the month ended April 30, 1996 plus (ii) one of the following:
(A) if determined as of March 31, 1997, the Borrower's
Net Income for the period from (but excluding) April 30, 1996 through
March 31, 1997;
FIFTH AMENDMENT TO CREDIT AGREEMENT - Page 2
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(B) if determined as of June 30, 1997, the Borrower's Net
Income for the period from (but excluding) April 30, 1996 through June
30,1997;
(C) if determined as of July 31, 1997, the sum of the
Borrower's Net Income for the Fiscal Year ending April 30, 1997 plus
the Borrower's Net Income for the Fiscal Quarter ending July 31, 1997,
or
(D) if determined as of any Fiscal Quarter ending after
July 31, 1997, the sum of the amount determined in accordance with
clause (C) plus the Borrower's Net Income for each Fiscal Quarter to
have completely elapsed since July 31, 1997;
and (ii) the second to last sentence is amended to read in its entirety as
follows: "If Net Income for a period of calculation described in this Section
11.1 is zero or less, no adjustment to the requisite level of Consolidated Net
Worth shall be made."
Section 2.6 Amendment to Section 11.2. Effective as of the date
hereof, Section 11.2 of the Agreement is amended in its entirety to read as
follows:
Section 11.2 Funded Debt to EBITDA. The Borrower shall not
permit the ratio of its outstanding Funded Debt to its Annualized
EBITDA to exceed 4.00 to 1.00 as of March 31, 1997. For the
calculation set forth above, outstanding Funded Debt shall be
calculated as of the date of determination. The term "Annualized
EBITDA" means a Dollar amount calculated by determining the Adjusted
EBITDA for the period from (but excluding) June 30, 1996 through March
31, 1997 and multiplying the amount thereof by four-thirds (4/3). The
Borrower shall not permit the ratio of its Funded Debt outstanding on
the date of determination to Adjusted EBITDA for the twelve (12) month
period then ending to exceed (i) 4.00 to 1.00 as of June 30, 1997,
July 31, 1997 and October 31, 1997, and (ii) 3.50 to 1.00 as of each
Fiscal Quarter end thereafter.
Section 2.7 Amendment to Section 11.3. Effective as of the date
hereof, Section 11.3 of the Agreement is amended in its entirety to read as
follows:
Section 11.3 Fixed Charge Coverage. As of March 31, 1997,
the Borrower shall not permit the ratio of Cash Flow to Fixed Charges
to be less than 0.75 to 1.00, computed on the basis of the Cash Flow
and Fixed Charges for the period from and including July 1, 1996
through March 31, 1997. As of each date identified below, the
Borrower shall not permit the ratio of Cash Flow to Fixed Charges
computed on the basis of the Cash Flow and Fixed Charges for the
twelve (12) month period then ended to be less than the ratio set
forth in the table below opposite the applicable date:
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Date Ratio
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June 30, 1997 2.75
July 31, 1997 2.25
October 31, 1997 2.25
January 31, 1997 2.25
April 30, 1998 2.25
July 31, 1998 and each Fiscal Quarter end 2.00
thereafter
The phrase "Cash Flow" means, for any period, the total of the
following for the Borrower and the Subsidiaries calculated on a
consolidated basis without duplication for such period: (A) Adjusted
EBITDA; minus (B) any provision for (or plus any benefit from) cash
income or franchise taxes included in determining Net Income. The
phrase "Fixed Charges" means, for any period, the total of the
following for the Borrower and the Subsidiaries calculated on a
consolidated basis without duplication for such period: (A) Interest
Expense; plus (B) scheduled amortization of Debt paid or payable
(excluding, to the extent included, nonpermanent principal repayments
under the Revolving Loans); plus (C) if calculating Fixed Charges for
the period ending March 31, 1997 only, the actual Capital Expenditures
for such period; plus (D) cash dividends and other cash distributions
made by Borrower on account of its capital stock.
Section 2.8 Capital Expenditure Limits. Effective as of the date
hereof, Section 11.4 is added to Article 11 of the Agreement to read in its
entirety as follows:
Section 11.4 Capital Expenditure Limits. The Borrower
shall not permit the aggregate amount of the Calculated Capital
Expenditures (a) for the period from April 1, 1997 through March 31,
1998 to exceed Seven Million Five Hundred Thousand Dollars
($7,500,000.00); (b) for the period from April 1, 1997 through the
Fiscal Year ended April 30, 1998 to exceed Eight Million One Hundred
Twenty-Five Thousand Dollars ($8,125,000.00); (c) for the Fiscal Year
ended April 30, 1999 to exceed Eight Million Five Hundred Thousand
Dollars ($8,500,000.00); (d) for the Fiscal Year ended April 30, 2000
to exceed Nine Million Five Hundred Thousand Dollars ($9,500,000.00);
and (e) for the Fiscal Year ended April 30, 2001 and each Fiscal Year
thereafter to exceed Ten Million Five Hundred Thousand Dollars
($10,500,000.00) per Fiscal Year. The term "Calculated Capital
Expenditures" means, for any period, the sum of (a) the actual Capital
Expenditures for such period minus (b) any proceeds from the issuance
by Borrower of its equity securities received during the period.
Section 2.9 Compliance Certificate. Effective as of the date
hereof, Exhibit "I" of the Agreement is amended in its entirety to read as set
forth on Annex 1 attached hereto.
FIFTH AMENDMENT TO CREDIT AGREEMENT - Page 4
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ARTICLE 3
Miscellaneous
Section 3.1 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, Spectrum Integrated Services, Inc. (by its execution below),
the Banks and Agent 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.
Section 3.2 Reference to Agreement. Each of the Loan Documents,
including the Agreement, 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 3.3 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 3.4 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 3.5 Successors and Assigns. This Amendment is binding upon
and shall inure to the benefit of Borrower, Agent, the Banks 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 3.6 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.
Section 3.7 Headings. The headings, captions, and arrangements
used in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 3.8 ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL,
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE 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
FIFTH AMENDMENT TO CREDIT AGREEMENT - Page 5
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DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
Section 3.9 Bank Fee. Borrower agrees to pay each Bank that has
executed this Amendment on or before the close of business on April 2, 1997 an
amendment fee of Two Thousand Dollars ($2,000.00). The amendment fee will be
paid to each such Bank on or before April 7, 1997.
Executed as of the date first written above.
BORROWER:
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SOFTWARE SPECTRUM, INC.
By: /s/ DEBORAH A. NUGENT
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Deborah A. Nugent
Vice President
Accepted and agreed to:
SPECTRUM INTEGRATED SERVICES, INC.
By: /s/ DEBORAH A. NUGENT
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Deborah A. Nugent
Secretary/Treasurer
AGENT:
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TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually as a Bank
and as the Agent
By:
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Name:
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Title:
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FIFTH AMENDMENT TO CREDIT AGREEMENT - Page 6
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OTHER BANKS:
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BANQUE PARIBAS
By:
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Name:
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Title:
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By:
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Name:
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Title:
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NATIONAL CITY BANK, KENTUCKY
By:
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Name:
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Title:
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COMERICA BANK
By:
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Name:
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Title:
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PNC BANK, N.A.
By:
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Name:
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Title:
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WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
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Name:
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Title:
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NBD BANK
By:
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Name:
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Title:
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FIFTH AMENDMENT TO CREDIT AGREEMENT - Page 7
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ANNEX 1
to
SOFTWARE SPECTRUM, INC.
FIFTH AMENDMENT TO
CREDIT AGREEMENT
Compliance Certificate
9
COMPLIANCE CERTIFICATE
for the
quarter ending ______________ __, ____
To: Texas Commerce Bank
National Association, as agent
1111 Fannin, 9th Floor MS46
Houston, Texas 77002
with a copy to
2200 Ross Avenue, 3rd Floor
Dallas, Texas 75201
and each Bank
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being delivered
pursuant to Section 9.1 (c) of that certain Credit Agreement (as amended, the
"Agreement") dated as of May 3, 1996 among SOFTWARE SPECTRUM, INC. (the
"Borrower"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as 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.
Compliance
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2. SECTION 9.1 - FINANCIAL STATEMENTS AND RECORDS
(a) Annual audited financial statements of Borrower on or Yes No N/A
before 90 days after the end of each Fiscal Year.
(b) In accordance with Section 9.1(c), unaudited financial Yes No N/A
statements of Borrower on a consolidated basis and each
Foreign Subsidiary within 45 days (or 60 days for the
period ending 3/31/97) of period end
COMPLIANCE CERTIFICATE - Page 1
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(c) Borrowing Base Report together Yes No N/A
with an aging of accounts
receivables within 30 days
of each month end.
3. SECTION 10.1 - DEBT
No Additional Debt except:
(a) Purchase money not to exceed: $1,000,000
Actual Outstanding: $_________ Yes No
(b) Guaranties of surety and other
bonds not to exceed: $1,000,000
Actual Outstanding: $_________ Yes No
(c) Outstanding Guaranties of permitted Debt of Foreign
Subs and Foreign Ventures
(i) Outstanding Loans, advances and other extensions
of credit to Foreign Subs and Foreign Ventures $_________
(ii) Letters of Credit backing Foreign Sub debt $_________
(iii) Limit: $30,000,000 minus (c)(i) and (c)(ii) $_________
(d) Other Debt not to exceed $5,000,000 Yes No
Actual Outstanding: $_________
4. SECTION 10.5 - INVESTMENTS
(a) Outstanding Loans, advances and extensions of
credit to Foreign Subs and Foreign Ventures $_________
(i) Outstanding Guaranties of permitted Foreign Subs
and Foreign Ventures $_________
(ii) Letters of Credit backing Foreign Sub debt $_________
(iii) Limit: $30,000,000 minus (a)(i) and (a)(ii) $_________ Yes No
(b) Consolidated Net Worth (from 5(h)) $_________
(c) 15% of 4(b) $_________
(d) Investments and capital contributions in Foreign Subs and Foreign
Ventures (limited to 4(c)) $_________ Yes No
(e) Other investments limited to $ 100,000 Yes No
(f) Actual book value $_________
5. SECTION 11.1 - CONSOLIDATED NET WORTH
(a) $ (i.e., 90% of 3/31/96 Consolidated Net Worth) $_________
(b) Aggregate Net Income for periods since 3/31/96 $_________
(c) 50% of 5(b) = $_________
(d) Net proceeds of the sale of all capital stock of Borrower received
since 3/31/96 $_________
(e) Required Consolidated Net Worth: 5(a) plus 5(c) plus 5(d) $_________
(f) Actual Consolidated Net Worth $_________ Yes No
COMPLIANCE CERTIFICATE - Page 2
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6. SECTION 11.2 -FUNDED DEBT TO ADJUSTED EBITDA OR ANNUALIZED EBITDA
(a) Debt for borrowed money $_________
(b) Debt evidenced by bond, notes, etc. $_________
(c) Capital Lease Obligations $_________
(d) Letters of Credit $_________
(e) Total Funded Debt (sum of (a) through (d)) $_________
(f) Net Income for applicable period $_________
(g) Plus provisions for tax $_________
(h) less benefit from tax $_________
(i) Plus Interest Expense $_________
(j) Plus amortization $_________
(k) Plus depreciation $_________
(1) Borrower EBITDA: 6(f) plus 6(g), 6(i), 6(j) and 6(k) less 6(h) $_________
(m) Nonrecurring Charges $_________
(n) Adjusted EBITDA (line 6(l) plus line 6(m) $_________
(o) Annualized EBITDA (line 6(n) x 4/3) $_________
(p) 6(e) divided by 6(n) (or if applicable 6(o)) = :1.00
(q) Maximum Funded Debt to Adjusted EBITDA (or if, applicable, Annualized
EBITDA) _____:1.00 Yes No
(r) Has the Average Funded Debt to Adjust EBITDA ratio been less
than 2.00 to 1.00 for the last 2 Fiscal Quarters for purposes of and
as calculated in accordance with Section 5.12? Yes No
7. SECTION 11.3 - FIXED CHARGE COVERAGE
(a) Cash Flow for last 12 month period or since 6/30/96, if less $_________
(i) Adjusted EBITDA (from 6(n)) $_________
(ii) minus cash federal and state income or franchise taxes paid $_________
(iii) 7(a)(i) minus 7(a)(ii) $_________
(b) Fixed Charges for last 12 month period or since 6/30/96, if less $_________
(i) Interest Expense $_________
(ii) Scheduled amortization of Debt $_________
(iii) Cash dividends and distributions $_________
(iv) If as of 3/31/97 only, actual Capital Expenditures $_________
(v) Total 7(b)(i) plus 7(b)(ii) plus 7(b)(iii) plus 7(b)(iv) $_________
(c) Actual Fixed Charge Coverage: 7(a)(iii) divided by 7(b)(v)= :1:00
(d) Minimum Fixed Charge Coverage for the period _____:1:00 Yes No
8. SECTION 11.4 - CAPITAL EXPENDITURE LIMITS
(a) Capital Expenditure limit for the period $_________
(b) Actual Capital Expenditures $_________
(c) Equity proceeds $_________
(d) Calculated Capital Expenditures (8(b)-8(c)) $_________ Yes No
COMPLIANCE CERTIFICATE - Page 3
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9. DETERMINATION OF MARGIN AND FEES
(a) Funded Debt to EBITDA Ratio (from 6(p)) ____:1.00
(b) Adjustment to margin and fees required by Section 4.2? Yes No
(c) If adjustment required, set forth below new margins and fees in
accordance with Section 4.2:
(i) Base Margin ________%
(ii) Commitment Fee Rate ________%
(iii) Libor Rate Margin ________%
10. 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.
11. FINANCIAL STATEMENTS
The unaudited financial statements attached hereto were prepared in accordance
with GAAP (or the generally accepted accounting principles of the jurisdiction
of organization of the applicable Person) 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 ______, 199_.
SOFTWARE SPECTRUM, INC.
BY:
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Name:
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Title:
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COMPLIANCE CERTIFICATE - Page 4