AMENDMENT #6 TO VANSTAR CORPORATION
SECOND AMENDED AND RESTATED FINANCING PROGRAM AGREEMENT
This Amendment to Vanstar Corporation Second Amended and Restated
Financing Program Agreement (this "Amendment") is made as of December 20,
1996, by and between Vanstar Corporation, a Delaware corporation ("Borrower")
and IBM Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS
A. Borrower and IBM Credit have entered into that certain Vanstar
Corporation Second Amended and Restated Financing Program Agreement dated as
of April 30, 1995 (as amended by Amendment #1 dated as of September 15, 1995,
Amendment #2 dated as of October 26, 1995, Amendment #3 dated as of November
10, 1995, Amendment #4 dated as of July 24, 1996, Amendment #5 dated as of
September 25, 1996, and as the same may be further amended, supplemented or
as otherwise modified from time to time, the "Agreement").
B. Borrower proposes to enter into the Securitization Transaction (as
such term is defined in Section 3.Z. of this Amendment), with sufficient
proceeds from the sale of the initial portion of receivables sold by Borrower
pursuant to the Securitization Transaction being used to reduce Borrower's
outstanding indebtedness to IBM Credit under the Agreement such that Borrower
is thereafter in compliance with the provisions of the Agreement. Borrower
has requested IBM Credit to consent to the consummation of the Securitization
Transaction and to enter into this Amendment in order to amend the Agreement
to reflect the consummation thereof, which IBM Credit is willing to do on the
basis set forth herein.
C. The parties have agreed to modify the Agreement as more
specifically set forth below, upon and subject to the terms and conditions
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower 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.
Section 2. CONSENT. IBM Credit hereby consents to the consummation by
Borrower of the Securitization Transaction. At the closing of the
Securitization Transaction, Borrower shall promptly remit to IBM Credit, for
application to Borrower's outstanding indebtedness to IBM Credit under the
Agreement, sufficient proceeds of the sale of the initial portion of the
receivables sold by Borrower pursuant to the Securitization Transaction such
that Borrower shall at all times be in compliance with the provisions of the
Agreement.
AMENDMENT #6 - PAGE 1
Section 3. AMENDMENTS. Each of the following amendments shall be
effective upon the closing of the Securitization Transaction, provided such
closing occurs on or prior to January 8, 1997:
A. Section 1 of the Agreement is hereby amended by (i) deleting
from the third and fourth lines thereof the amount "Three Hundred Million
Dollars ($300,000,000)" and substituting, in lieu thereof, the amount of Two
Hundred Fifty Million Dollars ($250,000,000)" and (ii) deleting the following
clause from the 10th through the 14th lines thereof:
"(x) the aggregate outstanding principal amount of all Advances,
other than Advances made in respect of Xxxxxx Micro Products
purchased or to be purchased by Borrower shall not exceed the
amount of the Line of Credit at such time less $11,500,000 and
(y)"
B. Section 2(A) of the Agreement is hereby amended by amending
the last sentence of such section to read as follows:
"Notwithstanding any other provision of this Agreement, Borrower
shall not be required to furnish to IBM Credit any financial
statements of VFT or, except as set forth in Section 11(b)(xxvi),
VFC."
C. Section 2(A)(i)(IX) of the Agreement is hereby amended by
adding the clause ", including any management letter prepared in connection
with an audit of VFC's financial statements" at the end of such subsection
(IX).
D. Section 2(B)(ii) of the Agreement is hereby amended to read in
its entirety as follows:
"(ii) [this section intentionally omitted]"
E. Section 2(B)(iii) of the Agreement is hereby amended by
deleting from the second and third lines thereof the clause "reports similar
to those described in (ii) above" and inserting the following in lieu thereof:
"reports setting forth a listing of all of Borrower's and the
Guarantor Subsidiaries' IBM Product Inventory (excluding
inventory in transit but not yet received by Borrower)"
F. Section 2(B)(viii) of the Agreement is hereby amended to read
in its entirety as follows:
"(viii) on or prior to the fifteenth (15) day of each calendar
month, a report setting forth for and as of the last day of the
immediately preceding calendar month a listing of all of
Borrower's and the Guarantor Subsidiaries' IBM Product inventory,
in form and substance satisfactory to
AMENDMENT #6 - PAGE 2
IBM Credit, including for each model or product (1) the quantity
of products unsold, (2) the type, model and version of each model
or product, (3) the quantity of each model or product unsold and
(4) the extended cost of all such unsold models or products;"
G. Section 2(B)(x) of the Agreement is hereby amended to read in
its entirety as follows:
"(x) [this section intentionally omitted]"
H. Section 2(C) of the Agreement is hereby amended to read in its
entirety as follows:
"(C) Notwithstanding anything to the contrary contained in this
Agreement, Borrower shall report Supplemental Collateral,
Secondary Inventory and Secondary Accounts Receivable (as such
terms are defined in Section 3(d) of the Agreement) pursuant to
the provisions of Section 2(B)(iii), (ix) and (xi) of this
Agreement, and shall categorize Collateral as either Supplemental
Collateral, Secondary Inventory, Secondary Accounts Receivable or
Primary Collateral. IBM Credit reserves the right, upon written
notice to Borrower, to require Borrower to report Supplemental
Collateral, Secondary Inventory and Secondary Accounts Receivable
pursuant to the provisions of Section 2(B)(ii), (viii) and (x),
and upon receipt of such notice, Borrower shall categorize and
report Collateral as either Supplemental Collateral, Primary
Collateral, Secondary Inventory or Secondary Accounts Receivable
pursuant to such provisions. Notwithstanding any other provision
of the Section 2, with regard to inventory and accounts
receivable not constituting Collateral, Borrower shall not be
required to furnish any reports other than summaries showing
total amounts of such inventory and accounts receivable, except
upon the reasonable request of IBM Credit for more detailed
reports."
I. Section 3(a) of the Agreement is hereby amended by deleting
the words "one hundred fiftieth (150th)" where they appear in subsections
(ii), (iii) and (iv) thereof and inserting the words "one hundred twentieth
(120th)" in lieu thereof.
J. Section 3(d) of the Agreement is hereby amended by deleting
items (i) through (xiv) in their entirety and substituting, in lieu thereof,
the following:
"PRIMARY COLLATERAL
Primary Inventory
(i) All Financed Products constituting Collateral
(other than service parts, Financed Products on
display for demonstration purposes and
AMENDMENT #6 - PAGE 3
Financed Products constituting clearance or returned
goods) and Eligible Xxxxxx Micro Inventory (excluding
Excess Eligible Xxxxxx Micro Inventory) 100%
(ii) Compaq Financed Inventory 100%
Primary Accounts Receivable
(iii) Eligible Merisel Receivables 100%
(iv) Eligible IBM Receivables 100%
(v) Eligible Leasing Receivables 100%
(vi) as to IBM Eligible Credits as defined in sub-item
(x) of the 1st sentence of the definition in this
Agreement of IBM Eligible Credits
(A) 0 to 90 days from the date of such return 100%
(B) 91 to 180 days from the date of such return 85%
(C) over 180 days from the date of such return 0%
(vii) as to IBM Eligible Credits as defined in sub-item
(y) of the 1st sentence of the definition in this
Agreement of IBM Eligible Credits 100%
SUPPLEMENTAL COLLATERAL
(viii) Service parts which are neither obsolete
nor defective 40%
SECONDARY INVENTORY
(ix) as to any other inventory constituting Collateral
(including any Xxxxxx Micro Product not included
in clause (i) and any Compaq Product not included
in clause (ii) above) 50%
SECONDARY ACCOUNTS RECEIVABLE
(x) Eligible Receivables constituting Collateral
(other than Eligible Merisel Receivables and
Eligible IBM Receivables) 85%
AMENDMENT #6 - PAGE 4
(xi) Equity in VFC 85%
For purposes of this Section 3(d), "Equity in VFC" shall mean, on
any date, an amount equal to the accounts receivable that would
constitute Eligible Receivables on such date but for the sale of
such accounts receivable pursuant to the Receivables Documents
LESS an amount equal to the Investment at such date plus the
accrued Discount (as such terms are defined in the Receivables
Documents) on such date. Notwithstanding any other provision of
this Agreement (a) the percentage set forth above for Equity in
VFC ("VFC Advance Rate") shall be immediately reduced to zero in
the event that Borrower ceases to be the Servicer under the
Receivables Purchase Agreement or any of the Receivables
Documents are amended or modified in any material respect without
Borrower having first given 10 days prior written notice of such
amendment or modification to IBM Credit and (b) IBM Credit shall
have the right to at any time reduce the VFC Advance Rate as it
may determine in its sole discretion. Each request for an
advance under this Agreement and each report of Value shall set
forth the Equity in VFC as of such date.
K. Section 3 of the Agreement is hereby amended by adding a new
Section 3(e) thereto to read in its entirety as follows:
"Notwithstanding any other provisions of this Section 3, the
interest rate applicable to Product Advances and Working Capital
Advances shall be (i) with respect to advances made with respect
to Primary Inventory and Secondary Inventory, an annual
percentage rate of interest equal to the Prime Rate, (ii) with
respect to advances made with respect to Primary Accounts
Receivable and Secondary Accounts Receivable, an annual
percentage rate of interest equal to the Prime Rate minus .80%,
and (iii) with respect to advances made with respect to
Supplemental Collateral, an annual percentage rate of interest
equal to the Prime Rate plus 1.50%; PROVIDED, HOWEVER, (x) in the
event that there is not sufficient Primary Accounts Receivable
and Secondary Accounts Receivable available on the applicable
advance date to support such advance, the applicable annual rate
of interest for that portion of such advance in excess of the
Value of the Primary Accounts Receivable and Secondary Accounts
Receivable, shall be equal to the Prime Rate and (y) in the event
that there is not sufficient Primary Inventory and Secondary
Inventory on the applicable advance date to support such advance,
the applicable annual rate of interest for that portion of such
advance in excess of the Value of the Primary Inventory and
Secondary Inventory shall be equal to the Prime Rate plus 1.50%."
AMENDMENT #6 - PAGE 5
L. Section 6 of the Agreement is hereby amended as follows:
(1) by adding a new sentence at the end of Section 6(a) to read in
its entirety as follows:
"In addition, pursuant to a pledge agreement to be executed by
Borrower for the benefit of IBM Credit, Borrower shall, in order
to secure payment of all of Borrower's Obligations, grant a
security interest in, subject to the Intercreditor Agreement, (x)
all capital stock of VFC now or hereafter owned by Borrower and
all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of
or in exchange for any of such capital stock and (y) the VFC
Company Note and all amendments, renewals and modifications
thereof.";
(2) by amending Section 6(c) to read in its entirety as follows:
(c) For purposes of this Agreement, the term "First Lien
Collateral" means all Collateral of Borrower and the Guarantor
Subsidiaries (other than Collateral in which IBM Credit has
expressly subordinated its security interest in writing).
Subject to the rights of third parties who have senior security
interests in certain of the Collateral and proceeds thereof,
Borrower will and will cause each Guarantor Subsidiary to hold in
trust for IBM Credit and immediately remit to IBM Credit all
Collateral and proceeds of the same in accordance with the terms
of this Agreement, until Borrower has paid in full in cash all of
the Obligations. IBM Credit's title or Lien shall not be
impaired by payments, either of the invoice price or any other
amount, Borrower or any Guarantor Subsidiary may make to the
seller of any item of Collateral or Guarantor Subsidiary
Collateral, as the case may be, or anyone else, or by Borrower's
or any Guarantor Subsidiary's failure or refusal to account to
IBM Credit for proceeds thereof to the extent included in the
Collateral. Where permitted by law, IBM Credit may perfect its
security interest in the Collateral and the Guarantor Subsidiary
Collateral by filing a financing statement signed only by IBM
Credit. Borrower further agrees that a carbon, photographic or
other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement Borrower hereby
authorizes IBM Credit, upon the occurrence and during the
continuance of an Event of Default, to apply any rebates,
discounts, credits and incentive payments that are or may become
due to Borrower with respect to any and all inventory or
equipment as to which a security interest has been granted to IBM
Credit against amounts owing by Borrower to IBM Credit and
authorizes and directs each Authorized Supplier to pay such
claims, monies and/or credits directly to IBM Credit. IBM Credit
shall give notice to Borrower of any such application."; and
AMENDMENT #6 - PAGE 6
(3) by adding a new Subsection 6(d) to such section to read in its
entirety as follows:
"Subject to the terms of the Intercreditor Agreement, IBM
Credit's Security Interest in the Transferred Assets shall be
automatically and irrevocably terminated upon each sale,
purported sale, contribution, transfer, conveyance or assignment
of such Transferred Assets to VFC. In this regard, and
notwithstanding any other provision of this Agreement, the terms
"Collateral," "Accounts" and "First Lien Collateral" as used in
this Agreement shall not include the Transferred Assets, whether
now existing or hereafter created or arising."
M. Section 11(a)(xi) of the Agreement is hereby amended by
amending the second sentence of such section to read as follows:
"Other than the Guarantor Subsidiaries, VFT and VFC (none of
which shall in any event be a Guarantor Subsidiary), Borrower has
no direct or indirect subsidiaries that own, lease or possess any
assets or conduct any business."
N. Section 11(b)(ii) of the Agreement is hereby amended by adding a
new sentence at the end thereof to read as follows:
"Borrower shall also permit IBM Credit representatives to
discuss the financial condition of VFC with Borrower's
independent certified public accountants."
O. Section 11(b)(v) of the Agreement is hereby amended by adding the
words "evidencing Accounts" at the end of the second sentence thereof.
P. A new Section 11(b)(xxvi) is hereby added to the Agreement to
read as follows:
"(xxvi) Deliver to IBM Credit (A) immediately upon the
occurrence thereof, written notice of any Termination Event or
Purchase and Contribution Termination Event under any of the
Receivables Documents or the receipt by Borrower of any notice of
the occurrence of any Termination Event, Purchase and
Contribution Termination Event, Unmatured Termination Event or
[UNMATURED] Purchase and Contribution Event under any of the
Receivables Documents, (B) written notice of any material
amendment or modification of any of the Receivables Documents not
later than ten days before the entering into of such amendment or
modification, and (C) concurrently with any such notice, copies
of all reports, financial statements, or notices furnished by
Borrower or received by Borrower under the Receivables Documents
in connection therewith."
AMENDMENT #6 - PAGE 7
Q. A new Section 11(b)(xxvii) is hereby added to the Agreement to
read in its entirety as follows:
"(xxvii) Borrower shall at all times maintain ownership,
directly or through a wholly-owned subsidiary, of 100% of the
outstanding equity securities of VFC."
R. Section 11(c)(iv) of the Agreement is hereby amended by adding
a new sentence at the end thereof to read as follows:
"This subsection (iv) shall not prohibit the sale of Transferred
Assets by Borrower or VFC pursuant to the Securitization
Transaction."
S. Section 11(c)(vi) of the Agreement is hereby amended by
amending subsection (B) thereof to read in its entirety as follows:
"(B) permit any Subsidiary other than the Guarantor Subsidiaries
set forth in Part II of Schedule 3, VFC (to the extent necessary
to carry out the transactions described in the Receivables
Documents) and VFT (to the extent necessary to carry out the
transactions described in the Offering Circular), to own, lease
or possess any assets or conduct any business;"
T. Section 11(c)(ix) of the Agreement is hereby amended by
deleting the clause "and (D) other dispositions of assets," where it appears
in the 10th line of such subsection and inserting the following clause in the
place thereof:
", (D) the sale of Pool Receivables and Related Security by
Borrower or VFC pursuant to the Securitization Transaction and
(E) other dispositions of assets,"
U. Section 11(c)(x) of the Agreement is hereby amended by adding
a new subsection (I) at the end thereof to read as follows:
"(I) any Investment by Borrower in VFC pursuant to the
Securitization Transaction."
V. Section 11(c)(xi) of the Agreement is hereby amended by
amending the clause at the beginning of such section to read as follows:
"Except for the VFT Transaction as described in the Offering
Circular and the Securitization Transaction and"
W. Section 11(c)(xiv) of the Agreement is hereby amended by
adding (a) the clause "except in connection with the Securitization
Transaction" at the end of clause (A) of such subsection (xiv) and (b) the
clause "(other than VFC in connection with the Securitization
AMENDMENT #6 - PAGE 8
Transaction") after the word "Borrower" in the second line of such clause (B)
of such subsection (xiv).
X. A new Section 13(a)(xi) is hereby added to the Agreement to
read in its entirety as follows:
"(xi) a Termination Event or Purchase and Contribution
Termination Event shall have occurred under any of the
Receivables Documents and shall be continuing."
Y. Section 13(f) of the Agreement is hereby amended by adding the
words "with respect to the Collateral" after the words "following powers" in
the fifth line of such subsection.
Z. Section 19 of the Agreement is hereby amended as follows:
(1) by amending the following definition to read in its entirety
as follows:
"Accounts" shall mean "accounts" as defined in the Uniform
Commercial Code which are included in the Collateral";
(2) by adding the following clause at the end of the definition
of "Indebtedness":
", it being understood that Receivables Program Obligations
shall not be considered Indebtedness hereunder"; and
(3) by adding the following definitions thereto:
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of December 20, 1996, executed and delivered by IBM
Credit, Par Accounts Receivable Capital Corporation, Xxxxxxx
Xxxxx Securities Inc., Borrower and VFC, as the same may from
time to time be amended or modified.
"Pool Receivables" has the meaning assigned to such
term in the Intercreditor Agreement.
"Purchase Agreement" shall mean the agreement described in
clause (i) of the definition of "Receivables Documents."
"Receivables Documents" means (i) the Purchase and
Contribution Agreement dated as of December 20, 1996 between
Borrower and VFC, (ii) the Receivables Purchase Agreement dated
as of December 20, 1996,
AMENDMENT #6 - PAGE 9
among VFC, Borrower, Pooled Accounts Receivable Capital Corporation,
and Xxxxxxx Xxxxx Securities Inc., (iii) such other agreements and
documents executed or delivered under or in connection with the
aforementioned agreements, as any such agreement referred to in
clauses (i) and (ii) above may be amended, supplemented or otherwise
modified from time to time.
"Receivables Program Obligations" means (a) all notes,
undivided interests, and other interests representing the right
to be paid a specified principal amount from the Transferred
Assets, and (b) related obligations of Borrower and VFC
(including, without limitation, rights in respect of interest or
yield, breach of warranty claims and expense reimbursement and
indemnity provisions).
"Receivables Purchase Agreement" shall mean the agreement
described in clause (ii) of the definition of "Receivables
Documents."
"Related Security" has the meaning assigned to such term in
the Intercreditor Agreement.
"Securitization Transaction" means the transactions
contemplated by the Receivables Documents.
"Transferred Assets" has the meaning assigned to such term
in the Intercreditor Agreement.
"VFC" shall mean Vanstar Finance Co., a Delaware
corporation.
"VFC Company Note" shall mean the "Company Note" payable by
VFC to Borrower provided for in Section 3.2 of the Purchase
Agreement.
AA. Schedule 3 to the Agreement is hereby amended to add VFC as a
Subsidiary of Borrower in Part 1 thereof.
Section 4. REPRESENTATIONS AND WARRANTIES. Borrower makes IBM Credit
the following representations and warranties all of which are material and
are made to induce IBM Credit to enter into this Amendment.
Section 4.1 ACCURACY AND COMPLETENESS OF WARRANTIES AND REPRESENTATIONS.
All representations made by Borrower in the Agreement were true and accurate
and complete in every respect as of the date made, and, as amended by this
Amendment, all representations made by Borrower in the Agreement are true,
accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make representations not
misleading.
AMENDMENT #6 - PAGE 10
Section 4.2 VIOLATION OF OTHER AGREEMENTS. The execution and delivery
of this Amendment and the performance and observance of the covenants to be
performed and observed hereunder do not violate or cause Borrower not to be
in compliance with the terms of any agreement to which Borrower is a party.
Section 4.3 LITIGATION. Except as has been disclosed by Borrower to IBM
Credit in writing, there is no litigation, proceeding, investigation or labor
dispute pending or threatened against Borrower, which if adversely
determined, would materially adversely affect Borrower's ability to perform
Borrower's obligations under the Agreement and the other documents,
instruments and agreements executed in connection therewith or pursuant
hereto.
Section 4.4 ENFORCEABILITY OF AMENDMENT. This Amendment has been duly
authorized, executed and delivered by Borrower and is enforceable against
Borrower in accordance with its terms.
Section 5. RATIFICATION OF AGREEMENT. Except as specifically amended
hereby, all of the provisions of the Agreement shall remain unamended and in
full force and effect. Borrower hereby, ratifies, confirms and agrees that
the Agreement, as amended hereby, represents a valid and enforceable
obligation of Borrower, and is not subject to any claims, offsets and or
defense.
Section 6. GOVERNING LAW. This Amendment shall be governed by and
interpreted in accordance with the laws of the State of California.
Section 7. 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.
Section 8. CONFIDENTIALITY. All information contained in this
Amendment regarding the Securitization Transaction shall be maintained in
confidence by IBM Credit and shall not be publicly disclosed to any person or
entity.
IN WITNESS WHEREOF, this Amendment has been duly executed by the
authorized officers of the undersigned as of the day and year first above
written.
VANSTAR CORPORATION
By: /s/ Xxxx X. Xxxxxxx, Xx.
--------------------------------
Title: Treasurer
-----------------------------
ACCEPTED AND AGREED:
IBM CREDIT CORPORATION
By: /s/ Illegible
--------------------------------
Title: Manager--Credit Operations
-----------------------------
AMENDMENT #6 - PAGE 11
