FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment"), dated as of August 15, 1998, is among SOFTWARE SPECTRUM, INC.,
a corporation duly organized and validly existing under the laws of the State
of Texas (the "Borrower"), each of the banks or other lending institutions
which is a signatory hereto (individually, a "BANK" and, collectively, the
"BANKS"), THE CHASE MANHATTAN BANK, individually as a Bank and 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 CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(formerly known as Texas Commerce Bank National Association), individually as
a Bank and 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:
Borrower, the Banks, the Administrative Agent and the Collateral Agent
have entered into that certain Amended and Restated Credit Agreement (the
"Agreement") dated as of March 11, 1998. Borrower, the Banks, the
Administrative Agent and the Collateral Agent now 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 8.1. Effective as of March 11, 1998,
clause (b) of Section 8.1 of the Agreement is amended in its entirety to read
as follows:
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available,
and in any event within forty-six (46) days after the end of each
Fiscal Quarter beginning with the Fiscal Quarter ending January 31,
1998, a copy of an unaudited financial report of the Borrower and
the Subsidiaries as of the end of such Fiscal Quarter and for
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 1
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;
Section 2.2 AMENDMENT TO SECTION 9.4. Effective as of August 10, 1998,
clause (ii) of Section 9.4 of the Agreement is amended in its entirety to read
as follows:
(ii) Borrower may repurchase its capital stock as follows: (A) prior
to January 31, 1999, in one or more transactions pursuant to its stock
repurchase program in existence on the Closing Date if at the time of each
such purchase and after giving effect thereto no Default exists or would
result therefrom and the aggregate purchase price paid for all such
repurchases under this clause (A) since the Closing Date (including the
repurchase in question) shall not exceed One Million Seven Hundred Fifty
Thousand Dollars ($1,750,000); and (B) prior to January 31, 2000, in one or
more transactions pursuant to a stock repurchase program approved by its
board of directors in July of 1998 if at the time of each such purchase and
after giving effect thereto no Default exists or would result therefrom and
the aggregate purchase price paid for all such repurchases under this
clause (B) (including the repurchase in question but excluding those made
pursuant to clause (A) of this clause (ii)) shall not exceed Three Million
Dollars ($3,000,000); and
Section 2.3 AMENDMENT TO EXHIBITS. Effective as of March 11, 1998,
Exhibits "B" and "D" of the Agreement are each amended to read in their
entirety as set forth on Exhibits "B" and "D" of this Amendment.
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, 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.
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 2
Section 3.2 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 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 the Banks, 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 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 DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 3
Executed as of the date first written above.
BORROWER:
SOFTWARE SPECTRUM, INC.
By: /s/ Robert D. Graham
-----------------------------------------------
Robert D. Graham, Vice President & General Counsel
ADMINISTRATIVE AGENT:
THE CHASE MANHATTAN BANK, individually as a
Bank and as the Administrative Agent
By:
-----------------------------------------------
Jeffrey Ackerman
Vice President
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 4
Executed as of the date first written above.
BORROWER:
SOFTWARE SPECTRUM, INC.
By:
-----------------------------------------------
Robert D. Graham, Vice President & General Counsel
ADMINISTRATIVE AGENT:
THE CHASE MANHATTAN BANK, individually as a
Bank and as the Administrative Agent
By:/s/ Jeffrey Ackerman
-----------------------------------------------
Jeffrey Ackerman
Vice President
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 4
COLLATERAL AGENT
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(formerly known as Texas Commerce Bank
National Association), individually as a Bank
and as the Collateral Agent
By: /s/ Jeffrey A. Stern
-----------------------------------------------
Jeffrey A. Stern,
Vice President
OTHER BANKS:
NATIONAL CITY BANK, KENTUCKY
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 5
COLLATERAL AGENT
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(formerly known as Texas Commerce Bank
National Association), individually as a Bank
and as the Collateral Agent
By:
-----------------------------------------------
Jeffrey A. Stern,
Vice President
OTHER BANKS:
NATIONAL CITY BANK, KENTUCKY
By: /s/ Tom Garbach
-----------------------------------------------
Name: Tom Garbach
---------------------------------------
Title: Vice President
---------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 5
COLLATERAL AGENT
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(formerly known as Texas Commerce Bank
National Association), individually as a Bank
and as the Collateral Agent
By:
-----------------------------------------------
Jeffrey A. Stern,
Vice President
OTHER BANKS:
NATIONAL CITY BANK, KENTUCKY
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Michael D. Shover
-----------------------------------------------
Name: Michael D. Shover
---------------------------------------
Title: Bank Officer
---------------------------------------
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 5
COLLATERAL AGENT
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(formerly known as Texas Commerce Bank
National Association), individually as a Bank
and as the Collateral Agent
By:
-----------------------------------------------
Jeffrey A. Stern,
Vice President
OTHER BANKS:
NATIONAL CITY BANK, KENTUCKY
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Michael P. Baranowski
-----------------------------------------------
Name: Michael P. Baranowski
---------------------------------------
Title: Vice President
---------------------------------------
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 5
ACKNOWLEDGMENT
The undersigned hereby consents and agrees to this Amendment 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/ Robert D. Graham
------------------------------------------------
Robert D. Graham, Vice President & General Counsel
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT-Page 6
EXHIBIT "B"
TO
SOFTWARE SPECTRUM, INC.
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
BORROWING BASE CERTIFICATE
EXHIBIT B, Cover Page
BORROWING BASE CERTIFICATE
TO: THE CHASE MANHATTAN 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 ____________________,
19___, is executed and delivered by SOFTWARE SPECTRUM, INC. (the "Borrower")
to THE CHASE MANHATTAN BANK (the "Administrative Agent"), pursuant to that
certain Amended and Restated Credit Agreement (the "Credit Agreement") dated
as of March 11, 1998, among the Borrower, the Administrative Agent, 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 _____________,
19___: (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.
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) . . . . . . $________
BORROWING BASE CERTIFICATE-Page 1
- -----------------------------------------------------------------------------------------------------------
Accounts Receivable Aging of Borrower and Domestic Granting Subsidiaries as of_________
Domestic
Total A/R Current 31-60 61-90 91-120 Over 120
--------- ------- ----- ----- ------ --------
$ $ $ $ $ $
- -----------------------------------------------------------------------------------------------------------
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. . . . . . . . . . . . . . . . $__________
BORROWING BASE CERTIFICATE-Page 2
(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 . . . . . . . . . . . . . . . . . . . . $__________
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) . . . . . . . . . $__________
- -----------------------------------------------------------------------------------------------------------
Accounts Receivable Aging of Software Spectrum Canada as of_________
Total A/R Current 31-60 61-90 91-120 Over 120
--------- ------- ----- ----- ------ --------
$ $ $ $ $ $
- -----------------------------------------------------------------------------------------------------------
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
BORROWING BASE CERTIFICATE-Page 3
(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. . . . . . . . . $__________
(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. Short Term Bank Debt (if available or outstanding). . . . . . . . ($5,000,000)
13. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . ($________)
14. Borrowing Base: Line 5 plus Line 10 plus line 11 minus
line 12 minus line 13 . . . . . . . . . . . . . . . . . . . . . . $__________
15. Outstanding Revolving Credit
(a) Revolving Loans. . . . . . . . . . . . . . . . . . . . . . . $__________
BORROWING BASE CERTIFICATE-Page 4
(b) Letter of Credit Liabilities . . . . . . . . . . . . . . . . $__________
(c) Accrued and unpaid interest and fees and other
amounts due. . . . . . . . . . . . . . . . . . . . . . . . . $__________
(d) TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
16. Borrowing Availability [(the lesser of the amount of the
Revolving Commitments or line 14 minus line 15(d)]. . . . . . . . $__________
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.
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
COMPLIANCE CERTIFICATE
EXHIBIT D, Cover Page
COMPLIANCE CERTIFICATE
for the
quarter ending __________, ____
To: The Chase Manhattan 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, as
administrative agent, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, 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.
Compliance
----------
2. SECTION 8.1 - FINANCIAL STATEMENTS AND RECORDS
(a) Annual audited financial statements of Borrower on or Yes No N/A
before 91 days after the end of each Fiscal Year.
(b) Quarterly unaudited financial statements of Borrower on Yes No N/A
a consolidated and consolidating basis within 46 days of
each Fiscal Quarter end.
(c) Borrowing Base Report together with the Receivables Yes No N/A
Reports within 20 days of each month end or within 20
days of any other date required by the Administrative
Agent.
COMPLIANCE CERTIFICATE-Page 1
(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 Fiscal Yes No N/A
Year.
3. SECTION 8.10 - COLLATERAL MATTERS
(a) Aggregate book value of inventory held by third parties $__________
(b) Limit $ 2,500,000
(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
Actual Outstanding: $__________ Yes No
(b) Guaranties of surety and other bonds not to exceed: $ 4,000,000
Actual Outstanding: $__________ Yes No
(c) Outstanding Guaranties of permitted Debt of Foreign
Subs and Foreign Ventures $__________
(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 $__________
(e) Total Foreign Subsidiary Obligations (line 4(c) plus
4(d)) $__________
(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
COMPLIANCE CERTIFICATE-Page 2
5. SECTION 9.3 - MERGERS ETC.
(a) Has acquisition been consummated since last
Compliance Certificate? Yes No
(b) If line (a) yes, Purchase Price $__________
(c) Aggregate Purchase Prices from prior acquisitions under
9.3 in current Fiscal Year $__________
(d) Purchase Price Limit per transaction $ 5,000,000 Yes No N/A
(e) Aggregate Purchase Price Limit per Fiscal Year $10,000,000 Yes No N/A
(f) Were the conditions in clauses (a) through (e) of Section
9.3(iv) satisfied with respect to each acquisition? Yes No N/A
6. SECTION 9.4 - DIVIDENDS
(a) Stock repurchases pursuant to stock repurchase program
in existence at closing date not to exceed (note: no
further stock repurchases permitted under this clause (a)
after 1/31/99) $ 1,750,000
Actual such repurchases since Closing Date: $__________ Yes No N/A
(b) Stock repurchases pursuant to 7/98 stock repurchase
program not to exceed (note: no further stock
repurchases permitted under this clause (b) after
1/31/2000) $ 3,000,000
Actual such repurchases since 8/31/98 (excluding those
included in clause (a)) $__________ Yes No
(c) Attach as schedule evidence of compliance with Section
9.4(iii) with respect to dividends and other stock
repurchases Yes No N/A
7. SECTION 9.8 - DISPOSITION ASSETS
(a) Book Value of asset disposed of in sale leaseback
transaction within the last 12 months $__________
Actual not to exceed: $ 500,000 Yes No N/A
(b) Book value of assets disposed of within the last 12 $__________
months
Actual not to exceed: $ 500,000 Yes No N/A
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
COMPLIANCE CERTIFICATE-Page 3
9. SECTION 10.1 - CONSOLIDATED NET WORTH
(a) Required Consolidated Net Worth $72,000,000
(b) Actual Consolidated Net Worth
(i) shareholders equity $__________
(ii) treasury stock $__________
(iii) 9(a) minus 9(b) $__________ Yes No N/A
10. SECTION 10.2 - INTEREST COVERAGE
(a) Net Income for applicable period $__________
(b) Plus net provisions for tax $__________
(c) Plus Interest Expense $__________
(d) Plus amortization and depreciation $__________
(e) Borrower EBITDA: 10(a) plus 10(b), 10(c) and 10(d) $__________
(f) Unfinanced Capital Expenditures $__________
(g) (line 10(e) minus line 10(f)) $__________
(h) Interest Expense $__________
(i) Interest Coverage (line 10(g) divided by line 10(h)) ___:1.00
(j) Minimum Interest Coverage ___:1.00 Yes No
11. SECTION 10.3 - CAPITAL EXPENDITURE LIMITS
(a) Capital Expenditure limit for the period $__________
(b) Actual Capital Expenditures $__________ Yes No
12. SECTION 10.4 - NET INCOME
(a) Net Income (most recent Fiscal Quarter) $__________
(b) less than - $2,500,000? Yes No
(c) Net Income (previous Fiscal Quarter) $__________
(d) 12(a) plus 12(c) less than - $3,000,000? Yes No
13. DETERMINATION OF MARGIN AND FEES
(a) Borrower EBITDA: From 10(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 13(a) minus the positive sum of (i) line 13(b) minus
(ii), if calculated for a period prior to February 1, 1999, $__________
line 13(c))
(e) Interest Expense $__________
(f) Interest Coverage Ratio (line 13(d) divided by line 13(e)) ___:1.00
(g) Adjustment to margin and fees required by Section 3.2? Yes No
(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 ____%
(iii) Commitment Fee ____%
COMPLIANCE CERTIFICATE-Page 4
14. 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.
15. 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