EXHIBIT 10.7
International Network Services
Addendum to the Credit Terms and Conditions
Dated as of 6/26/97
1. CREDIT FACILITY
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A $10,000,000 Revolving Line of Credit for working capital purposes and for
the purchase of capital equipment.
2. MATURITY
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June 25, 1998.
3. TERMS
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Interest payable monthly, principal at maturity.
Upon maturity, at Borrower's option, outstandings under the Credit Facility
related to capital equipment purchases, up to a maximum of $5,000,000 may
be termed out in 36 equal monthly principal payments, plus interest. The
equipment financed must have been purchased after 12/31/96.
4. COLLATERAL
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Bank to have a blanket first priority security interest perfected by a UCC
filing on all assets of Borrower including all present and future
inventory, chattel paper, accounts, contract rights, unencumbered
equipment, general intangibles, and fixtures and the product thereof.
5. BORROWING FORMULA
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Revolving Credit Advances: None.
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Equipment-related advances: 100% of the cost of equipment, excluding
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taxes, freight, other taxes, and other soft costs. Equipment to include
business & office machinery & equipment and other personal property which
is resalable and removable. Advances must be supported by documentation
evidencing purchase of equipment, in form and content satisfactory to the
Bank.
International Network Services
Addendum to the Credit Terms and Conditions
Dated as of June 26, 1997
Page 2 of 4
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6. PRICING
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Interest Rate:
Revolving Credit: Bank's Prime Rate per annum.
Equipment-related outstandings after 6/25/98: Bank's Prime Rate +
annum.
Facility Fee: None.
7. COVENANTS
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A. Borrower to maintain on a quarterly basis, beginning with the fiscal
quarter ending 6/30/97:
1) Minimum Quick Ratio/1/ of 1.50 to 1.00.
2) Minimum Tangible Net Worth/2/ of $50,000,000.
3) Maximum Total Liabilities/3/ to Tangible Net Worth/2/ of 1.00 to
1.00.
Definitions:
/1/ Quick Ratio is cash plus accounts receivable divided by current
liabilities.
/2/ Tangible Net Worth is the financial statement net worth of the
Borrower prepared according to generally accepted accounting
principles less intangible assets, plus indebtedness fully
subordinated to the debt due to the Bank.
/3/ Total Liabilities are all the Borrower's liabilities except
for indebtedness fully subordinated to the debt due to the Bank.
B. Borrower to provide to Bank:
1) Unqualified audited financial statements within 120 days after
each fiscal year end.
2) Quarterly financial statements (10Q) and Compliance Certificate
within 45 days after quarter end.
3) Budgets, sales projections, operating plan, or other financial
exhibits which Bank may reasonably request.
C. Other Covenants:
1) Borrower's primary operating banking accounts to be maintained at
Bank.
International Network Services
Addendum to the Credit Terms and Conditions
Dated as of June 26, 1997
Page 3 of 4
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2) Without Bank's prior approval, Borrower shall not:
a. Enter into any mergers or acquisitions or major debt
agreements, except for equipment leases.
b. Pay cash dividends or repurchase stock.
c. Hypothecate assets.
d. Loan money or guarantee loans of others.
e. Incur outside indebtedness.
3) Borrower shall notify Bank in writing of any legal action
commenced against it which may result in damages over
$500,000. Borrower shall provide Bank with such notice
immediately upon Borrower's receipt of notice of such legal
action.
4) Borrower shall provide Bank proof of insurance on all tangible
corporate assets and a Lender's Loss Payable Clause with Bank as
loss payee.
8. OTHER CONDITIONS
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A. Initial collateral audit waived. However, Bank may at its discretion
conduct annual collateral audits by Bank's designated agent at
Borrower's expense, with results satisfactory to Bank.
B. Prior the closing of the Credit Facility, Borrower shall execute and
deliver to Bank any and all documents required by Bank. Borrower to
pay to Bank $250.00 for loan documentation preparation, due at
closing,
Accepted and agreed to:
INTERNATIONAL NETWORK SERVICES
By:
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Title:
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Date:
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