EXHIBIT 10.9
AMENDMENT #2 TO THE INTELLIGENT ELECTRONICS, INC.
AMENDED AND RESTATED INVENTORY
AND WORKING CAPITAL FINANCING AGREEMENT
THIS AMENDMENT dated as of October __, 1996 (this "Amendment"), hereby
amends that certain Amended and Restated Inventory and Working Capital Financing
Agreement by and among Intelligent Electronics, Inc., a Pennsylvania corporation
("IE"), various direct and indirect subsidiaries of IE who are signatories
thereto, and IBM Credit Corporation, a Delaware corporation ("IBM Credit").
W I T N E S S E T H
WHEREAS, the Existing Borrowers (as defined below) and IBM Credit have
entered into that certain Amended and Restated Inventory and Working Capital
Financing Agreement dated as of April 5, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Agreement");
WHEREAS, the Agreement was amended by that certain Acknowledgment, Waiver
and Amendment No. 1 dated September __, 1996, by and among the Customer and IBM
Credit (the "Waiver");
WHEREAS, the Existing Borrowers and the Restricted Subsidiaries (as defined
below) have requested that IBM Credit finance the working capital requirements
of the Restricted Subsidiaries, all indirect subsidiaries of IE, by allowing the
Restricted Subsidiaries to become co-borrowers with the Existing Borrowers under
the Agreement;
WHEREAS, the Existing Borrowers and the Restricted Subsidiaries will
receive substantial direct and indirect benefit if IBM Credit provides such
financing on such terms; and
WHEREAS, IBM Credit has agreed to allow the Restricted Subsidiaries to
become co-borrowers under the Agreement and to extend such financing to the
Restricted Subsidiaries on the terms and subject to the conditions set forth in
the Agreement and this Amendment.
NOW, THEREFORE, in consideration of the premises set forth above and the
mutual agreements provided for herein and for other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Customer (as defined
below) and IBM Credit hereby agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Agreement.
(a) "Restricted Subsidiary" or "Restricted Subsidiaries" shall mean
individually or collectively, as the context shall require, XLConnect
Solutions, Inc., XLConnect Systems, Inc. and XLConnect Services, Inc.
(b) "Existing Borrowers" shall mean IE, The Future Now, Inc., an Ohio
corporation, XLSource, Inc. (formerly known as The Future Now, Inc. of
Arkansas), an Arkansas corporation, Intelligent Advanced Systems, Inc., a
Delaware corporation, Intelligent Express, Inc., a Pennsylvania
corporation, RND, Inc., a Colorado corporation, Intellinet, Ltd., a
Pennsylvania corporation, Intelligent Distribution Services, Inc., a
Delaware corporation, Intelligent SP, Inc., a Colorado corporation,
XLConnect Services, Inc. (formerly, Intellicom Solutions, Inc.), a
Pennsylvania corporation, and Entre Computer Centers of New York, Inc.
(c) "Customer" shall mean, without duplication, the Existing Borrowers
and the Restricted Subsidiaries, jointly and severally.
Section 2. Acknowledgment of Agreement; Conflict. Subject to the terms and
conditions set forth herein, the Restricted Subsidiaries acknowledge and agree
to all terms and conditions of the Agreement, as the same may be modified
hereby, as if such Restricted Subsidiaries had executed the Agreement on the
date thereof; provided, however, that the Restricted Subsidiaries'
acknowledgement and agreement with the representations set forth in the
Agreement shall be made as of the date hereof. Any conflict between the terms of
the Agreement and this Amendment shall be governed by this Amendment.
Section 3. Acknowledgment and Grant of Security Interest. To secure the
Existing Borrower's and the Restricted Subsidiaries' full and punctual payment
and performance of the Obligations when due (whether at the stated maturity, by
acceleration or otherwise), the Existing Borrowers reaffirm the security
interest granted to IBM Credit in the Agreement and the Restricted Subsidiaries
hereby grant IBM Credit a security interest in all the Restricted Subsidiaries'
right, title and interest in and to the following property, whether now owned or
hereafter acquired or existing and wherever located:
(a) all inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents
therefor;
(b) all accounts, contract rights, chattel paper, instruments, deposit
accounts, obligations of any kind owing to the Existing Borrowers and the
Restricted Subsidiaries, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services and all books,
invoices, documents and other records in any form evidencing or relating to
any of the foregoing;
(c) general intangibles;
(d) all rights now or hereafter existing in and to all mortgages,
security agreements, leases or other contracts securing or otherwise
relating to any of the foregoing; and
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(e) all substitutions and replacements for all of the foregoing, all
proceeds of all of the foregoing and, to the extent not otherwise included,
all payments under insurance or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of
the foregoing.
The Existing Borrowers and the Restricted Subsidiaries covenant and agree
with IBM Credit that: (a) the security interest granted pursuant to the
Agreement and this Amendment is in addition to any other security from time to
time held by IBM Credit and (b) the security interest hereby created is a
continuing security interest and will cover and secure the payment of all
Obligations both present and future of Customer to IBM Credit pursuant to the
Agreement, this Amendment and the Other Documents, to the extent provided
herein.
Section 4. Attachment A. Attachment A, dated April 5, 1996 (the "First
Attachment A"), to the Agreement shall be replaced with the Attachment A dated
the date hereof and attached hereto. The attached Attachment A shall modify the
First Attachment A as follows:
(a) Credit Line.
(i) availability under the Credit Line for the Existing Borrowers
shall be equal to $225 million minus any outstanding indebtedness
directly borrowed by the Restricted Subsidiaries plus other
obligations attributed to the Restricted Subsidiaries including, but
not limited to, interest, fees and costs;
(ii) the Credit Line for the Restricted Subsidiaries shall be equal
to $20 million minus the excess, if any, of the Existing Borrowers'
outstanding Obligations minus $205 million.
(b) Borrowing Base. The Borrowing Base for the Existing Borrowers and
the Restricted Subsidiaries shall be as presently set forth in the First
Attachment A, provided, however; that the Borrowing Base for the Existing
Borrowers and the Borrowing Base for the Restricted Subsidiaries shall be
calculated separately.
Section 5. Conditions Precedent to the Effectiveness of this Amendment. The
effectiveness of this Amendment is subject to receipt by IBM Credit of, or
waiver in writing by IBM Credit of compliance with, the following conditions
precedent:
(a) this Amendment executed and delivered by Customer and IBM Credit;
(b) (i) copies of the resolutions of the Board of Directors of each
Restricted Subsidiary certified by the secretary or assistant
secretary of each Restricted Subsidiary authorizing the execution,
delivery and performance of this Amendment and acknowledging and
agreeing to each and every term and condition in the Agreement (as
amended by this Amendment)
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and each of the Other Documents executed and delivered in connection with
the Agreement and this Amendment; and
(ii) a certificate of the secretary or an assistant secretary of
each Restricted Subsidiary authorized to sign this Amendment, and
(iii) copies of the articles of incorporation and by-laws of each
Restricted Subsidiary certified by the secretary or assistant
secretary of each Restricted Subsidiary;
(c) certificates dated as of a recent date from the Secretary of State
or other appropriate authority evidencing the good standing of each
Restricted Subsidiary in the jurisdiction of its organization and in each
other jurisdiction where the ownership or lease of its property or the
conduct of its business requires it to qualify to do business;
(d) copies of all approvals and consents from any Person, in each case
in form and substance satisfactory to IBM Credit, which are required to
enable each Restricted Subsidiary to authorize, or are required in
connection with, (a) the execution, delivery or performance of the
Agreement and this Amendment, and (b) the legality, validity, binding
effect or enforceability of the Agreement, this Amendment and each of the
Other Documents;
(e) a favorable opinion of counsel for the Restricted Subsidiaries in
substantially the form of Attachment I;
(f) intercreditor agreements, if any, in form and substance satisfactory
to IBM Credit, executed by each other secured creditor of each Restricted
Subsidiary;
(g) UCC-1 financing statements for each jurisdiction reasonably
requested by IBM Credit executed by each Restricted Subsidiary and each
guarantor whose guaranty to IBM Credit is intended to be secured by a
pledge of its assets;
(h) the statements, certificates, documents, instruments, financing
statements, agreements and information set forth in Attachment A and
Attachment B to the Agreement;
(i) all such other statements, certificates, documents, instruments,
financing statements, agreements and other information with respect to the
matters contemplated by the Agreement and this Amendment as IBM Credit
shall have reasonably requested; and
(j) receipt by IBM Credit of a $15,000 closing fee.
Section 6. Affirmative Covenant. In addition to the affirmative covenants
in Section 7 of the Agreement, and until termination of the Agreement and the
indefeasible payment and satisfaction of all Obligations,
(a) the Restricted Subsidiaries shall:
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(i) as soon as possible and in any event prior to December 15, 1996,
establish one or more lockbox agreements to be executed by each
Restricted Subsidiary and each Bank, in form and substance
satisfactory to IBM Credit;
(ii) as soon as possible and in any event prior to December 15,
1996, establish a contingent blocked account agreement to be
executed by each Restricted Subsidiary and each Bank in form and
substance satisfactory to IBM Credit.
(b) the Existing Borrowers shall:
(i) as soon as possible and in any event prior to December 15, 1996,
establish one or more lockbox agreements to be executed by the
Existing Borrowers and each Bank, in form and substance satisfactory
to IBM Credit;
(ii) as soon as possible and in any event prior to December 15,
1996, establish a contingent blocked account agreement to be
executed by the Existing Borrowers and each Bank in form and
substance satisfactory to IBM Credit.
(c) the Customer shall, prior to January 1, 1997, provide a favorable
follow-up opinion of counsel for Customer in form and substance
satisfactory to IBM Credit.
Section 7. Negative Covenants. IE, as indirect owner of substantially all
the issued and outstanding capital stock of XLConnect Solutions, Inc.
immediately prior to the XLConnect Solutions, Inc. Initial Public Offering,
shall at all times maintain ownership of not less than 51% of the outstanding
shares of XLConnect Solutions, Inc. Common stock and will not permit its
ownership interest to be reduced below 51% without IBM Credit's prior written
consent.
Section 8. Representations and Warranties. Customer makes to IBM Credit the
following representations and warranties all of which are material and are made
to induce IBM Credit to enter into this Agreement.
8.1. Accuracy and Completeness of Warranties and Representations.
The representations and warranties contained in the Agreement are true and
correct in all material respects on and as of the date of this Amendment except
to the extent waived by IBM Credit in writing.
8.2. Violation of Other Agreements. The execution and delivery of
this Amendment and the performance and observance of the covenants to be
performed and observed under the Agreement as amended by the Amendment do not
violate or cause Customer not to be in compliance with the terms of any material
agreement to which Customer is a party.
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8.3. Enforceability of Amendment. This Amendment has been duly
authorized, executed and delivered by Customer and is enforceable against
Customer in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws now or hereafter in effect relating to creditors'
rights generally.
Section 9. Joint and Several Guaranty. Customer acknowledges that the
transactions contemplated by this Amendment confer a substantial direct and
indirect benefit to the Existing Borrowers and the Restricted Subsidiaries and
that IBM Credit is relying on the joint and several guaranty of Customer in
executing this Amendment. The Restricted Subsidiaries explicitly acknowledge and
agree to be bound by Section 7.17 of the Agreement (Joint and Several Guaranty).
Notwithstanding the foregoing, it is understood that the guaranty by the
Restricted Subsidiaries of the Obligations of the Existing Borrowers shall not
exceed the principal sum of Twenty Million Dollars ($20,000,000) minus the
amount of funds, if any, borrowed by the Restricted Subsidiaries under the
Credit Line established in this Amendment (such outstanding Obligations directly
borrowed by or attributed to the Restricted Subsidiaries shall be referred to
herein as the "Primary Obligations"). Such amount guaranteed shall be exclusive
of interest, fees, and expenses of collection, it being expressly understood and
agreed that the Restricted Subsidiaries shall be liable for the same. It is
understood that the Obligations may from time to time exceed $20,000,000,
without impairing or affecting the guaranty. The Restricted Subsidiaries'
guaranty of the Obligations of the Existing Borrowers shall terminate upon the
receipt by IBM Credit of (1) the payment by the Restricted Subsidiaries for all
of the Primary Obligations, as provided in Section 14 hereof, and (2) the
payment by the Existing Borrowers of any existing Shortfall (as defined in the
Agreement) attributed to the Existing Borrowers.
Section 10. Modifications to Agreement.
10.1. Collateral Management Report. Customer acknowledges and
agrees that the term "Collateral Management Report" as used in Sections 1.1,
6.20, 7.1(K), 7.1(L) and any other sections of the Agreement shall mean a
separate Collateral Management Report for the Existing Borrowers and the
Restricted Subsidiaries.
10.2. Compliance Certificate. Customer acknowledges and agrees that
the term "Compliance Certificate" as used in Sections 7.1(A), 7.1(B), 7.1(c) and
any other sections of the Agreement shall mean a separate Compliance Certificate
for the Existing Borrowers and the Restricted Subsidiaries.
Section 11. Waiver. The Waiver is hereby specifically incorporated herein
by reference and made a part of this Amendment.
Section 12. Affiliate Transactions. Exhibit A hereto sets forth certain
agreements entered into or contemplated between the Existing Borrowers and the
Restricted Subsidiaries. IBM Credit hereby acknowledges and consents to the
transactions contemplated by such agreements.
Section 13. Ratification of Agreement. Except as specifically amended
hereby, all of the provisions of the Agreement shall remain unamended and in
full force and effect.
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Customer hereby ratifies, confirms and agrees that the Agreement, as amended
hereby, represents a valid and enforceable obligation of Customer, and is not
subject to any claims, offsets or defenses, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws now or hereafter in effect relating to creditors'
rights generally.
Section 14. Termination. This Amendment shall remain in force until the
earlier of (1) the date the Agreement expires or is terminated for any reason,
and (2) April 4, 1997. Upon the date that this Amendment expires or is
terminated, all of the Primary Obligations shall be immediately due and payable
in their entirety, even if they are not yet due under their terms, and the
Existing Borrowers shall continue to borrow pursuant to the terms and conditions
set forth in the Agreement.
Section 15. Appointment of Agent. XLConnect Solutions, Inc. and XLConnect
Systems, Inc. hereby appoint XLConnect Services, Inc. as agent for each of them
to request Advances from IBM Credit under the Agreement and hereunder and to
direct the bank account into which funds are to be disbursed.
Section 16. Government Law. This Amendment shall be governed by and
interpreted in accordance with the laws of the State of New York.
Section 17. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement. This Amendment may be delivered via telecopy or other
similar facsimile transmission pursuant to Section 10.12 of the Agreement;
provided, however, that if this Amendment is delivered via facsimile
transmission, the original executed document shall be deposited, postage
pre-paid, with an overnight courier on the date of such facsimile delivery with
instructions for next day delivery.
IN WITNESS WHEREOF, this Amendment has been executed by the duly authorized
officers of the undersigned as of the day and year first above written.
IBM CREDIT CORPORATION INTELLIGENT ELECTRONICS, INC.
By:____________________________ By:_____________________________________
Name:______________________ Name:________________________________
Title:_____________________ Title:_______________________________
THE FUTURE NOW, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
[EXECUTIONS CONTINUED]
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INTELLIGENT ADVANCED SYSTEMS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
INTELLIGENT EXPRESS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
RND, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
INTELLINET, LTD.
By:_____________________________________
Name:________________________________
Title:_______________________________
INTELLIGENT DISTRIBUTION SERVICES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
INTELLIGENT SP, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
[EXECUTIONS CONTINUED]
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ENTRE COMPUTER CENTERS OF NEW
YORK, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
XLSOURCE, INC. (formerly known as THE
FUTURE NOW, INC. OF ARKANSAS)
By:_____________________________________
Name:________________________________
Title:_______________________________
XLCONNECT SERVICES, INC. (formerly known
as INTELLICOM SOLUTIONS, INC.)
By:_____________________________________
Name:________________________________
Title:_______________________________
XLCONNECT SOLUTIONS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
XLCONNECT SYSTEMS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
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