NBD Bank
701 First National Building
Detroit, Michigan 48226
Phone 0 00-000-0000
FAX 000-000-0000
Xxxx Xx X. Xxxxxx
Vice President
NBD Business Finance
November 1, 1996
Data Systems Network Corporation
00000 X. Xxxxxx Xxxx Xxxx
Suite 300
Farmington Hills, MI 48331
Gentlemen:
This letter will constitute an amendment to our Restated Business
Financing Agreement-Secured Credit Agreement (Accounts Receivable
and Inventory) dated as of June 30, 1992 and amended by that certain
letter agreement dated February 1, 1995. Paragraph 2 reads, in part,
as follows: "...Lender, in its sole discretion, will lend to Borrower, on the
terms described in this Agreement, up to the principal sum of- (a) up to
85% of the net amount of "eligible" receivables (as determined in
accordance with Paragraph 9 below); and (b) up to 25% of the lesser
of the cost or market value, or whatever other reasonable valuation is
set by Lender, of "eligible" Inventory (as determined in accordance with
Paragraph 9 below). The maximum principal amount to be advanced
to Borrower under this line of credit will not exceed $7,500,000 at any
one time outstanding, of which the maximum principal amount to be
advanced against the security of eligible Inventory will not exceed
$2,250,000, and of which the maximum principal amount to be
advanced against the security of "eligible" Inventory constituting
software will not exceed $300,000 at any one time outstanding.".
Effective this date, Paragraph 2 is amended, in part, to read as follows:
"...Lender, in its sole discretion, will led to Borrower, on the terms
described in this Agreement, up to the principal sum of.- (a) up to 85%
or the net amount of "eligible" receivables (as determined in
accordance with Paragraph 9 below)-, and (b) up to the sum of (i) 75%
of the lesser of the cost or market value, or whatever other reasonable
valuation is set by Lender, of "eligible" Inventory that is subject to
repurchase by the seller thereof under written repurchase agreements
satisfactory to Lender (as determined in accordance with Paragraph 9
below ("Repurchase Inventory); (ii) up to 35% of the lesser of the cost
or market value, or whatever Subsidiary of First Chicago NBD
Corporation
Data Systems Network Corporation November 1, 1996 other
reasonable valuation is set by Lender, of "eligible" software Inventory
(as determined in accordance with Paragraph 9 below) ("Software
Inventory") and (iii) up to 35% of the lesser of the cost or market value
of all other "eligible" Inventory (as determined in accordance with
Paragraph 9 below and after deducting from inventory an amount
equal to the amount Borrower owes to IBM Credit and its affiliates and
Borrower's Inventory reserve ("Other Inventory"). The maximum
principal amount to be advanced to Borrower under this line of credit
will not exceed $15,000,000 at any one time outstanding, of which the
maximum principal amount to be advanced against the security of'
eligible Inventory will not exceed $3,750,000, and of this $3,750,000
amount, the maximum principal amount to be advanced against the
security of all types of "eligible" Inventory consisting of Repurchase
Inventory will not exceed $2,500,000 at any one time outstanding, and
the maximum principal amount to be advanced against the security of
"eligible" Inventory consisting of Software Inventory will not exceed
$300,000 at any one time outstanding, and the maximum principal
amount to be advanced against the security of "eligible" Inventory
consisting or Other Inventory will not exceed $2,500,000 at any one
time outstanding.".
Effective this date, the following Paragraph 2A is added immediately
after Paragraph 2 and before Paragraph 3: "...2A Letter of Credit
Facility. Xxxxxx agrees, in its sole discretion, to issue,, from time to
time, Standby Letters of Credit ("S/L/C's") for Xxxxxxxx's account. The
total face amount of the S/I./C's may not exceed $ 1 00,000 in the
aggregate at ally one time outstanding. ]'he amount of all outstanding
S/L/C plus the amount of outstanding advances under Paragraph 2,
plus the amount of all draws under S/L/C's that have not been
reimbursed to Lender, may not exceed the lesser of (i) $15,000,000
and (ii) the borrowing base provided in Paragraph 2 above, less the
face amount of all outstanding SLC's and the amount of all draws
under SLC's that have not been reimbursed to Lender. Borrower must
execute I-ender standard documentation relating to S/L/C's ("SLC
documents"). Each S/L/C must have an expiry date of not later than
November 1, 1997. Each S/L/C will accrue a commission at the per
annum rate of 1.25% of the face amount of each S/L/C, payable in
advance at the time of each issuance or extension. In addition,
Borrower must also pay all other usual and Customary fees charged by
Lender in connection with the issuance of, amendments to, and draws
under the S/L/C's. All of Xxxxxxxx's present and future obligations to
Lender in connection with SLC's are secured by all collateral security
heretofore, simultaneously herewith, or hereafter granted to Lender by
Borrower for the purpose of securing any of Borrower's present or
future obligations to Lender. This collateral includes but is not limited
to Receivables and Inventory. If Borrower fails to make any payment
due Lender under this
Agreement or the SLC documents, Xxxxxx may charge Xxxxxxxx's loan
account under the line of credit set forth in Paragraph 2 above or may
debit such amounts from any of Borrower's accounts at Lender.".
Effective this date, Paragraph 3 reads, in part, as follows: "...The rate
of interest to be charged on all advances, whether under this
Agreement, any supplement, or otherwise ("Interest Rate") will be 3/4
of one percentage point per annum higher than the prime per annum
rate of interest adjusted on a daily basis.".
Effective this date, Paragraph 3 is amended, in part, to read as follows:
" ...The rate of interest to be charged on all advances, whether under
this Agreement, any supplement, or otherwise ("Interest Rate") will be
1/4 of one percentage point per annum higher than the prime per
annum rate of interest adjusted on a daily basis.".
Paragraph 6 reads, in part, as follows: "...Furthermore, all reasonable
cost and expenses incurred by Lender or its agents in connection with
this Agreement, including the preparation and review of this
Agreement and all related agreements and documents and all other
obligations to Lender, shall be part of Borrower's obligations......
Effective this date, Paragraph 6 is amended, in part, to read as follows:
"...Furthermore, all reasonable costs and expenses incurred by Lender
or its agents in connection with this Agreement, including the
preparation and review of this Agreement and all related agreements
and documents, annual collateral monitoring fee of $3,000 payable
semiannually, and all other obligations to Lender, shall be part of
Borrower's obligations..."
Effective this date, Paragraph 9 (b) (ii) is amended in its entirety to
read as follows: "...if 50% or more of the total Receivables from a
Customer are more than 90 days old (based on the billing date) or if
50% or more of the total Receivables from the State of Michigan are
more than 120 days old (based on the billing date); ".
Effective this date, Paragraph 15 is amended by the inclusion of 0)
which will read as follows: "...if Borrower does not maintain its Tangible
Net Worth, defined as all assets which, under GAAP would appear on
its balance sheet, but excluding intangible items such as goodwill,
treasury shares, reserves, patents, trademarks, research and
development expenses and the like, and excluding any write-up or
increase in the book value of assets resulting from a reevaluation
thereof (except with respect to inventory on account of the standard
costing system), a change in accounting methods, standards, practices
or rules, or for any other reason, less total liabilities, at not less than
$1,900,000 and increasing by $500,000 at each fiscal year thereafter.".
Paragraph 18 reads, in part, as follows: "...The Borrower shall be
obligated to pay a prepayment premium if Borrower makes a
prepayment of all or substantially all (more than 50%) of the principal
then outstanding, accrued interest and other obligations due Lender by
Borrower at any time other than the anniversary of this Agreement
Effective this date, Paragraph 18 is amended, in part, to read as
follows: " The Borrower shall be obligated to pay a prepayment
premium if Borrower makes a prepayment of all of the principal then
outstanding, accrued interest and other obligations due Lender by
Borrower at any time other than the anniversary of this Agreement.".
Simultaneously with the execution of this letter, Borrower must pay
NBD Bank a $ 1 0,000 facility fee.
All other provisions and covenants contained in the Restated Business
Financing Agreement Secured Credit Agreement ( Accounts
Receivable and Inventory) and all related loan documents remain in full
force and effect and unchanged.
Kindly acknowledge your acceptance of the foregoing by signing in the
space provided below and return two copies of this letter to the
undersigned.
Very truly yours,
Xxxx Xx Xxxxxx Xxxx X. Xxxxxxxx
Vice President First Vice President
The foregoing is hereby
acknowledged and
agreed to:
DATA SYSTEMS
NETWORK
CORPORATION
By: Xxxxxx X. Xxx
Vice President Finance
Chief Financial Officer
