FORBEARANCE AGREEMENT IN REGARDS TO CREDIT FACILITIES AGREEMENT

 

E.                                      As a result of the Existing Defaults, Administrative Agent and the Lenders have the legal right to repossess the Collateral and take all other legal actions against Borrowers and the Collateral.

 

F.                                      Borrowers have requested that Administrative Agent and the Lenders temporarily forbear from enforcing their respective rights and remedies.

 

G.                                     In exchange for Borrowers’ agreements, representations, covenants, releases and confirmations contained and referenced herein, Administrative Agent and the Lenders are, subject to the terms and conditions contained herein, willing to forbear as requested.

 

J.                                        Borrowers acknowledge and agree that Administrative Agent and the Lenders have performed all obligations on their part to be performed under the Loan Documents and Borrowers have no offsets or defenses to the payment of the sums due Administrative Agent and the Lenders nor do Borrowers have any claims against Administrative Agent and the Lenders of any kind or nature.

 

Agreement

 

Therefore, in consideration of the mutual agreements herein and other sufficient consideration, the receipt of which is hereby acknowledged, GTSI, TLI, Administrative Agent and the Lenders hereby agree as follows:

 

1.             Definitions.  All references to the “Agreement” or the “Credit Agreement” in the Original Credit Agreement and in this Agreement shall be deemed to be references to the Original Credit Agreement as it may be amended (by this Agreement and others), restated, extended, renewed, replaced, or otherwise modified from time to time. Capitalized terms used and not otherwise defined herein have the meanings given them in the Original Credit Agreement.

 

2.             Effectiveness of Agreement.  This Agreement shall become effective as of the date first written above, but only if this Agreement has been executed by each of GTSI, TLI, Administrative Agent and the Required Lenders, and only if all of the documents listed on Exhibit A to this Agreement have been delivered and, as applicable, executed, sealed, attested, acknowledged, certified, or authenticated, each in form and substance satisfactory to Administrative Agent and the Lenders, by each of GTSI, TLI, and/or GTSI Financial Services, Inc. (“GTSIFS”), as applicable and the fees required hereunder are paid in full in cash by the Borrowers and all fees and expenses of Administrative Agent have been fully reimbursed as requested by Administrative Agent. This Agreement and each document, note, certificate or agreement listed on Exhibit A and signed by GTSI, TLI, or GTSIFS, as applicable, is and shall be deemed (together with all prior documents, notes, certificates and other agreements defined as Loan Documents in the Original Credit Agreement) to be a “Loan Document.”

 

3.             No Waiver of Default.  The Borrowers hereby acknowledge and agree that (i) Events of Default exist under the terms of the Loan Documents and such Events of Default will continue for as long as the Loan Obligations remain unpaid in full in cash, notwithstanding Administrative Agent’s and the Lenders’ agreement to forbear as set forth herein, and (ii) Administrative Agent’s and the Lenders’ agreement to forbear is not, and shall not be construed as, a waiver of the Existing Defaults or of any subsequent Defaults or Events of Default and, except as specifically provided herein, Administrative Agent’s and the Lenders’ agreement to forbear in no way impairs Administrative Agent’s and the Lenders’ right to enforce its remedies for such Existing Defaults and subsequent Defaults or Events of Default. The Existing Defaults remain Events of Default.

 

4.             Lenders “Terminating Lender” Notice; Notice of Non-Renewal of Aggregate Facilities. Borrowers, Administrative Agent, and each Lender acknowledges and agrees: (i) All Lenders have

 

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provided timely notice to Administrative Agent and Administrative Agent has provided timely notice to each Borrower and each other Lender (all in accordance with the Original Credit Agreement and that certain Letter Agreement, dated February 14, 2006 among Borrowers, Administrative Agent and Lenders) that each Lender has elected to terminate the Aggregate Facilities and their respective Commitment as of the Initial Maturity Date, and be deemed a Terminating Lender, pursuant to the provisions of Section 3.7 of the Original Credit Agreement; (ii) Administrative Agent has delivered timely written notice to each Borrower and each Lender that none of the Aggregate Facilities, including, but not limited to the Aggregate Revolving Loan Facility, will be renewed automatically, and that except as otherwise provided by the Original Credit Agreement or this Agreement, the earlier of the Forbearance Termination Date and the Initial Maturity Date will be the date upon which all Loan Obligations are due and payable in full; and (iii) Pursuant to Section 3.7 of the Original Credit Agreement, no existing Lender is required to assume the pro rata share of the Aggregate Facilities of any other Lender.

 

5.             Forbearance. In exchange for the releases (including specifically, Borrowers’ releases contained in Section 13 below), promises and covenants (including, without limitation, Borrowers’ covenants in this Section 5 and Section 11 of this Agreement), warranties, representations and conditions stated herein and in the Loan Documents, Administrative Agent and the Lenders agree, subject to the terms and conditions in this Agreement, until the Forbearance Termination Date (as such term is defined below in Section 7):

 

5.1. Administrative Agent and the Lenders will forbear from exercising its rights and remedies against the Borrowers and the Collateral under this Agreement, the Original Credit Agreement and the other Loan Documents.

 

5.2. Administrative Agent and the Lenders will continue to advance funds to Borrowers as set forth herein and in the Original Credit Agreement, as amended by this Agreement.

 

6.             Borrowers’ Additional Covenants. In addition to any and all covenants and agreements of Borrowers contained herein, in the Original Credit Agreement and in the Loan Documents, each Borrower unconditionally agrees as follows:

 

6.1. Upon execution of this Agreement, Borrowers shall pay to Administrative Agent, for the pro rata account of each Lender, a forbearance fee of $225,000 in consideration of Administrative Agent’s and the Lenders’ agreement to forbear as set forth herein, and Borrowers acknowledge and agree that the foregoing forbearance fee paid to Administrative Agent for the pro rata benefit of each Lender will be earned by Administrative Agent and the Lenders upon execution of this Agreement and will not be refundable to Borrowers for any reason or under any circumstance, and shall not be applied to any of the Loan Obligations (including principal and interest). Borrowers shall promptly pay to Administrative Agent an amount equal to all fees, costs and expenses incurred by the Administrative Agent (including all attorneys fees and expenses) in connection with the preparation, negotiation, execution and delivery of this Agreement, the earlier proposed Eighth Amendment to Credit Facilities Agreement which was not executed, and any further documentation which may be required in connection herewith or therewith.

 

6.2. Administrative Agent shall retain the Collateral to secure repayment of the Loan Obligations until such time as the Loan Obligations are paid in full in cash.

 

6.3. Until the Loan Obligations are repaid in full in cash, each Borrower shall allow Administrative Agent and its attorneys, the Advisor, accountants, agents, consultants and representatives or other Persons authorized by and acting on behalf of Administrative Agent to perform, and Borrowers shall fully cooperate with Administrative Agent in connection therewith, inventory reviews, appraisals, inspections, and examinations of Borrowers and the Collateral as often as Administrative Agent determines in its sole and absolute discretion. All inventory reviews, appraisals, inspections, and

 

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examinations shall be at Borrowers’ sole cost and expense, including but not limited to a fee of $525 per auditor per day plus travel expenses, and Borrowers shall reimburse Administrative Agent, on demand, for all of its fees, costs and expenses (including, without limitation, allocated internal charges and overheads and travel expenses) incurred by Administrative Agent or its attorneys, accountants, agents, consultants and representatives or other Persons authorized by and acting on behalf of Administrative Agent in connection with all inventory reviews, appraisals, inspections and examinations. Notwithstanding the foregoing, and effective only after the date of this Agreement, Borrower shall be responsible for costs and expenses related to not more than four (4) separate examination engagements per calendar year. Administrative Agent, and its attorneys, accountants, agents, consultants and representatives or other Persons authorized by and acting on behalf of Administrative Agent may make copies or abstracts of any books and records of any Borrower or its auditors, and discuss the affairs, finances, Collateral, and books and records of any Borrower with its auditors, officers, directors, consultants and employees. Borrowers will deliver to Administrative Agent any instrument necessary for Administrative Agent to obtain records from any service bureau maintaining records for Borrowers.

 

6.4. Until the Loan Obligations are repaid in full in cash, each Borrower shall allow Administrative Agent, its attorneys, and any of their representatives, consultants, and agents to have their employees and representatives at Borrower’s corporate headquarters location and any of Borrower’s other locations (owned or leased) at all times, with full access to all Collateral, facilities, books and records (including, without limitation, books and records relating to financial statements and accounting matters, disbursements, collections and deposits), and all of Borrower’s employees, officers and directors as well as Borrower’s independent outside auditing firm.

 

6.5.         On or before March 13, 2006, Borrowers shall have engaged a nationally recognized restructuring advisor to, among other things, evaluate Borrowers’ financial restructuring plan and alternatives (“Advisor”). The identity of the Advisor and the scope of the engagement of the Advisor, must be satisfactory to Administrative Agent in its reasonable discretion. Advisor will commence its on-site work with the Borrowers as soon as possible after Advisor has been retained, but not later than March 15, 2006. Borrowers shall provide to Administrative Agent and Lenders copies of all reports prepared by Advisor pursuant to the engagement. Advisor shall, on or about April 14, 2006, make a presentation to Administrative Agent and Lenders which details Advisor’s progress to date, its interim findings, its recommendations to Borrowers, and the schedule of work yet to be completed. The presentation by Advisor shall take place at mutually convenient time and location. Borrowers shall be responsible for and pay all costs, expenses and fees of such Advisor. Borrowers shall at all times provide Advisor with reasonable access to Borrowers’ personnel and financial restructuring plans and projections and all financial books and records of Borrowers. Advisor shall be included in the list of those Persons with whom Administrative Agent shall have access to and may discuss the business, operations, revenues, financial condition, or business prospects of Borrowers, all as set forth in Section 13.27 of the Original Credit Agreement. Borrowers failure to timely hire the Advisor, pay the costs, fees and expenses of the Advisor or to otherwise comply with the terms of this Agreement shall be deemed an Event of Default under the Loan Documents.

 

6.6.Each Borrower shall provide to Administrative Agent promptly upon Administrative Agent’s request such other financial and operation information relating to such Borrower and its operations as Administrative Agent may request from time to time. Furthermore, each Borrower shall, at Borrower’s sole cost and expense, promptly retain such consultants as Administrative Agent or the Required Lenders require.

 

7.             Expiration of Forbearance. Administrative Agent may and may direct the Lenders, and at the direction of the Required Lenders shall, immediately, without notice or demand to Borrowers, any Guarantor or any other Person liable for the Loan Obligations, cease making Advances to Borrowers,

 

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proceed to enforce any and all remedies available to them under the Loan Documents, the Original Credit Agreement or under Law or at equity, and Administrative Agent and the Lenders shall be entitled to take such lawful action as they deem appropriate for the purpose of collecting the Loan Obligations, including enforcement of their Security Interests and liens in the Collateral, upon the earlier to occur of (the date of the occurrence of any of the following, being the “Forbearance Termination Date”): (A) May 31, 2006; (B) the date on which a Borrower fails to make any payments due under this Agreement, the Original Credit Agreement or the Loan Documents when due; (C) other than the Existing Defaults specifically referenced in Recital C to this Agreement, the occurrence of any breach or default by a Borrower of any covenant or agreement or representation of a Borrower under this Agreement, the Original Credit Agreement or the other Loan Documents; (D) any warranty or representation made by a Borrower in this Agreement or in the Loan Documents is discovered to be false or misleading in any respect or was false or misleading in any respect at the time made; (E) the occurrence of any Event of Default other than the Existing Defaults; or (F) the date on which any of the following events occur: (i) the entry of a decree or order by a judge of competent jurisdiction for relief with respect to Borrowers (or any one of them) under Title XI of the United States Code, as now constituted or hereinafter amended, or any other applicable federal, state or foreign bankruptcy law or other similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator, or similar official of the Borrowers (or any one of them) or of any substantial part of their property, or ordering the winding up of or liquidation of the affairs of the Borrowers (or any one of them), (ii) the filing by the Borrowers (or any one of them) or against the Borrowers (or any one of them) of a petition or answer or consent seeking relief under Title XI of the United States Code, as now constituted or hereinafter amended, or any other applicable federal, state or foreign bankruptcy law, or other similar law, or (iii) the consent by the Borrowers (or any one of them) to the institution of proceedings thereunder or to the filing of any such petition or the appointment or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator (or other similar official) of the Borrowers (or any one of them) or of any substantial portion of their property. The occurrence of the Forbearance Termination Date shall be an immediate Event of Default, default and breach under each and every Loan Document without the benefit of any cure periods, and without the necessity of providing any notice or demand to Borrowers, and Borrowers hereby waive any right to receive any notice or demand of any Default or acceleration of the Loan Obligations.

 

8.             Amendment to Credit Agreement.The Original Credit Agreement is hereby amended as follows, subject to the terms and provisions of this Agreement which are controlling in all respects:

 

8.1.         Replacement Exhibit 3.Exhibit 3 of the Original Credit Agreement is hereby deleted and replaced with the new Exhibit 3 attached hereto.

 

8.2.         Revolving Loan.The first sentence of Section 3.1.1 of the Original Credit Agreement is deleted and replaced with the following:

 

“3.1.1.    Aggregate Amount.            Subject to the limitations in Sections 3.1.2 and 3.5 and elsewhere herein, each Lender shall make available to Borrower, such Lender’s pro-rata share (as listed on Exhibit 3, as applicable) of an “Aggregate Revolving Loan Facility” that is Forty Million Dollars ($40,000,000) through Maturity, by funding such Lender’s pro-rata share of Revolving Loan Advances made from time to time by Administrative Agent as provided herein.”

 

8.3.         Limitations on Revolving Loan Advances; Conversion to Discretionary Facility.Section 3.1.2 of the Original Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

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“3.1.2.    Limitations on Revolving Loan Advances; Conversion to Discretionary Facility. No Revolving Loan Advance will be made which would result in either: (i) the Aggregate Revolving Loan exceeding the Maximum Available Amount; or (ii) the Lenders’ Exposure exceeding the Total Aggregate Facility Limit. No Revolving Loan Advance will be made on or after the effective date of any termination of the Aggregate Revolving Loan Facility. Lenders may, however, in their absolute discretion make such Revolving Loan Advances, but shall not be deemed by doing so to have increased the Maximum Available Amount or the Total Aggregate Facility Limit and shall not be obligated to make any such Revolving Loan Advances thereafter. The “Maximum Available Amount” (which can be a negative number) on any date shall be a Dollar amount equal to the lesser of (i) the amount of the Aggregate Revolving Loan Facility and (ii) the Borrowing Base, on such date, minus the sum of (a) the Aggregate Revolving Loan, (b) the Swingline Loan, (c) the Other Creditor Indebtedness (unless an Intercreditor Agreement has been executed between Administrative Agent and the holders of such Other Creditor Indebtedness), (d) the GSA Fee, and (e) the Letter of Credit Exposure on such date (except to the extent that a Revolving Loan Advance will be used immediately to reimburse Letter of Credit Issuer for unreimbursed draws on a Letter of Credit).

 

Borrowers, Administrative Agent and Lenders each acknowledge and agree that, notwithstanding anything to the contrary in the Credit Agreement, (i) on February 28, 2006, the Aggregate Revolving Loan Facility shall convert to and thereafter remain an uncommitted, discretionary credit facility, (ii) from and after February 28, 2006 that the Aggregate Revolving Loan Facility shall not be deemed a Commitment by Lenders to lend money and shall be a discretionary facility, and (iii) on and after February 28, 2006, neither Administrative Agent or the Lenders shall be deemed to have given Borrowers, nor shall they be deemed to have, a Commitment to make Revolving Loan Advances under the Aggregate Revolving Loan Facility; provided, however, that if Administrative Agent elects, in its absolute discretion to make a Revolving Loan Advance or a Swingline Advance from time to time, each Lender shall make its pro-rata share of such Advances available to Borrowers in accordance with the Credit Agreement, including but not limited to Section 3.1.1 thereof.”

 

8.4.         Borrowing Base. Section 3.1.4 of the Original Credit Agreement is hereby deleted and replaced with the following:

 

“3.1.4.    Borrowing Base. The “Borrowing Base” on any date shall be 85% of the total outstanding principal balance of all Eligible Accounts (i) as of the close of business on such date, or (ii) as certified in the Borrowing Base Certificate most recently furnished to Administrative Agent as required in Section 13.15.1, whichever is less; minus the Floorplan Shortfall, minus the Collateral Reserve, minus the Borrowing Base Reserve and, minus (to the extent not deducted from Eligible Accounts pursuant to Section 3.1.5) the Dollar amount, if any, of Inventory that Borrower has been requested (orally or in writing) to repurchase under any repurchase agreement or similar arrangement, including the Textron Agreement.”

 

8.5.         Floorplan Loan. The first sentence of Section 3.2.1 of the Original Credit Agreement is deleted and replaced with the following:

 

“3.2.1.    Floorplan Loan Facility Generally.  Each Lender may, subject to the terms and conditions hereof, make available to Borrower such Lender’s pro-rata share (as listed on Exhibit 3) of an “Aggregate Floorplan Loan Facility” that is Seventy-Five Million

 

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Dollars ($75,000,000) from February 28, 2006 through Maturity, by funding such Lender’s pro-rata share thereof as provided for herein.”

 

8.6.         Total Aggregate Facility Limit. Section 3.5 of the Original Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

“3.5.       Total Aggregate Facility Limit. Notwithstanding the Facilities herein, Borrower, Administrative Agent and each Lender acknowledge and agree that at no time shall the Aggregate Revolving Loan Facility, the Swingline Loan Facility, the Aggregate Floorplan Loan Facility, the Interim Floorplan Loan Facility, all unfunded Approvals, and the Letter of Credit Exposure exceed in the aggregate, Seventy-Five Million Dollars ($75,000,000) from February, 28, 2006 through Maturity (the “Total Aggregate Facility Limit”).”

 

8.7.         LIBOR Increment. The LIBOR Increment set forth in Section 4.8 of the Original Credit Agreement is hereby changed from 1.75% per annum to 3.00% per annum.

 

8.8.         Maturity.Section 6.1.2.3 of the Original Credit Agreement is deleted in its entirety and replaced with the following:

 

“6.1.2.3.                Maturity.               Borrower shall repay the entire amount of the Aggregate Revolving Loan (and all other Loan Obligations) on the earlier of: (A) May 31, 2006 (the “Initial Maturity Date”); and (ii) the Forbearance Termination Date. Borrower shall repay the amount of the Swingline Loans on demand. From and after February 28, 2006, the Aggregate Revolving Loan Facility is discretionary. Each of the Aggregate Floorplan Loan Facility, the Interim Floorplan Loan Facility and the Swingline Facility are discretionary and may be terminated at any time as set forth herein, with or without notice or demand as set forth herein; provided, however, if Borrowers or the Required Lenders shall give notice of termination of the Aggregate Revolving Loan Facility as provided herein, then such notice shall be deemed to be notice of termination for all Facilities in which case Borrowers shall pay the entire amount of the outstanding Loan Obligations upon the effective date of such notice of termination, including payment of cash collateral satisfactory to Administrative Agent as security for Borrower’s obligation to reimburse Administrative Agent or the Letter of Credit Issuer, as the case may be, for 105% of all draws and expenses under all outstanding Letters of Credit and 100% of any unfunded Approvals, in which case such Approvals shall be otherwise paid in pursuant to the applicable Statements of Transaction.”

 

8.9.         Notice of Vendor Cancellation. A new Section 13.10.15 is hereby added to the Credit Agreement as follows:

 

“13.10.15.             Borrower shall notify Administrative Agent promptly in writing of any cancellation or material change in the open account terms that Borrower then has with any vendor which for the year ended December 31, 2005 was one of Borrower’s ten (10) largest vendors, regardless of whether such cancellation or material change was at the election or direction of Borrower or such vendor.”

 

8.10.       Monthly Financial Statements. Section 13.14.3 (Monthly Financial Statements) is hereby deleted in its entirety and replaced with the following:

 

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“13.14.3.               Monthly Financial Statements. Within 30 days after the end of each fiscal month of Borrower, management-prepared unaudited financial statements of Borrower and every Subsidiary of a Borrower for the fiscal months not covered by the latest year-end financial statements, in each case containing a balance sheet, income statement, complete trial balance and unaudited consolidated financial statements of Borrower and its Subsidiaries, accompanied by a Compliance Certificate of Borrower.”

 

8.11.       Disclosure of Open Account Vendor Terms. The following sentence is added to the end of the last paragraph of Section 13.14 (Financial Statements):  “In addition, Borrowers shall set forth on each Compliance Certificate delivered to Administrative Agent, the names and a description in reasonable detail of the credit terms that a Borrower receives as an Account Debtor from each of its three largest open Account vendors, as measured by the amounts owed such vendors by Borrowers.”

 

8.12.       Borrowing Base Certificates. Section 13.15.1 (Periodic Borrowing Base Certificates) is hereby deleted in its entirety and replaced with the following:

 

“13.15.1.               Periodic Borrowing Base Certificates. On the Effective Date, and on each Business Day thereafter, a Borrowing Base Certificate completed and signed by the Chief Financial Officer or other Borrowing Officer. Each Borrowing Base Certificate shall substantially be in the form of Exhibit 13.15.1. With each Borrowing Base Certificate, Borrower shall notify Administrative Agent of any pending unsatisfied request of a third Person that Borrower repurchase Inventory under a repurchase agreement or similar arrangement, including the Textron Agreement, unless such notice was previously provided by Borrower to Administrative Agent pursuant to Section 13.10.14.”

 

8.13.       Semimonthly Reports.  Sections 13.15.5, 13.5.6 and 13.5.7 are hereby deleted in their entirety and replaced with the following:

 

“13.15.5.               Semimonthly Detailed Accounts Aging, Inventory and Account Payable Reports. Within seven (7) Business Days after the 15th of each month and the end of each month, a Schedule of Accounts (including lease receivables, each presented on a summary and detailed basis), a Schedule of Inventory, and accounts payable aging for such period.

 

13.15.6.                 Semimonthly Locations of Inventory Report. Within five (5) Business Days after the 15th of each month, and the end of each month, a listing, by address of the locations of Inventory.

 

13.15.7.                 Semimonthly Cash Receipts Journal and Credit Memo Entries. Within five (5) Business Days after the 15th of each month and the end of each month, a report showing cash receipts on Accounts, cash receipts not on Accounts and summary of credit memo entries.”

 

8.14.       Weekly Cash Flow Projections; Over 90 Day Account Collection Activity. A new Section 13.15.9 is hereby added to the Credit Agreement as follows:

 

“13.15.9.               Weekly Cash Flow Projections; Over 90 Day Account Collection Activity. Commencing on March 10, 2006, and as of the end of each week thereafter, a report showing Borrowers’ projected cash and borrowing needs for the then following thirteen (13) week period, together with a listing of the fifteen (15) largest Accounts over

 

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ninety (90) days past due with a description of the collection efforts most recently taken in connection with each such Account .”

 

8.15.       Monthly Inventory In-Transit Account Report. A new Section 13.15.10 is hereby added to the Credit Agreement as follows:

 

“13.15.10.             Monthly Inventory In-Transit Account Report. Commencing on March 3, 2006, and as of the end of each month thereafter, within five (5) Business Days of the end of each month, a report listing the balance and the detail which comprises the Borrowers balance sheet asset account labeled “Inventory In-Transit”.”

 

8.16.       Distributions. Section 14.10 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

“14.10.   Distributions. Borrowers shall not directly or indirectly, declare or make, or incur any liability to make, any Distribution to any Person. For purposes of this Section, a “Distribution” means and includes (i) any cash dividend or payment (but excluding any cash dividend or payment by TLI or GTSIFS to GTSI), (ii) any acquisition or redemption of any outstanding stock or other equity interest of Borrower or a Covered Person, (iii) any retirement or prepayment of debt securities before their regularly scheduled Maturity dates, other than as expressly permitted by this Agreement, and (iv) any loan or advance to a shareholder, partner, or member other than split-dollar life insurance policies and advances for travel or similar expenses made in the ordinary course of business.”

 

8.17.       Severance Payments. A new Section 14.28 is hereby added to the Original Credit Agreement as follows:

 

“14.28. Severance to M. Dendy Young. M. Dendy Young’s severance shall not exceed $1,092,000 in the aggregate and shall be paid over a twelve (12) month period beginning August 15, 2006, subject to applicable deductions, and with $364,000, less applicable deductions, paid on August 15, 2006, and the balance of $728,000 paid to Mr. Young on a twice a month basis over the ensuing twelve (12) month period, consistent with Borrower’s normal payroll schedule for this time period, which such payments may be pro rated if necessary at the end of such twelve (12) month period; provided, however, if there is a change in control as referenced in Section 16.1.21 hereof, then any unpaid amounts referenced in this sentence may be paid to Mr. Young if and only if all of the Loan Obligations have first been paid in full in cash.”

 

8.18.       Minimum Tangible Net Worth. Section 15.2 of the Original Credit Agreement is deleted and replaced with the following:

 

“15.2      Minimum Tangible Net Worth. Borrower covenants that consolidated Tangible Net Worth on the last day of each fiscal month shall be not less than Fifty Million Dollars ($50,000,000).”

 

8.19.       Maximum Total Liabilities to Tangible Net Worth. Section 15.3 of the Original Credit Agreement is deleted and replaced with the following:

 

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“15.3      Maximum Total Liabilities to Tangible Net Worth. Borrower covenants that the ratio of Total Liabilities minus Subordinated Indebtedness to Tangible Net Worth plus Subordinated Indebtedness calculated as of the last day of each fiscal month specified in the table below, shall not be more than the ratio specified in such table opposite said fiscal month: