Exhibit 10.3
WAIVER AND SIXTH AMENDMENT TO
CREDIT AGREEMENT
THIS WAIVER AND SIXTH AMENDMENT
TO CREDIT AGREEMENT (this
“ Amendment ”), dated as of August 26,
2008, is entered into by and among the Lenders signatory hereto,
WELLS FARGO FOOTHILL, INC. , a California corporation, in
its capacity as Agent for the Lenders and Bank Product Providers
(in such capacity, “ Agent ”), and SUMTOTAL
SYSTEMS, INC. , a Delaware corporation (“ Borrower
”). Terms used herein without definition shall have the
meanings ascribed to them in the Credit Agreement defined
below.
RECITALS
A. The Lenders, Agent and Borrower
have previously entered into that certain Credit Agreement dated as
of October 4, 2005, as amended as of October 21, 2005,
August 11, 2006, November 13, 2006, June 19,
2007 and August 17, 2007 (as so amended, and as further
amended, modified and supplemented from time to time, the “
Credit Agreement ”), pursuant to which the Lenders
have made certain loans and financial accommodations available to
Borrower.
B. The Borrower has informed Agent
that it desires to transfer up to US$7 million in cash to SumTotal
Systems Netherlands B.V., a besloten vennootschap organized
under the laws of the Netherlands (“ SumTotal
Netherlands ”) and a Subsidiary of the Borrower, which
cash (the “ Netherlands Investment ”) shall be
contributed by SumTotal Netherlands to its wholly-owned subsidiary,
SumTotal Systems U.K. Ltd., a private limited company organized
under the laws of the United Kingdom (“ SumTotal UK
”) (such cash contribution to SumTotal UK being the “
UK Investment ”), in order (i) to recapitalize
SumTotal UK and (ii) permit the repayment by SumTotal UK of
certain of its obligations to the Borrower of up to US$7 million
(the “ SumTotal UK Loan ”).
Section 6.7 of the Credit Agreement prohibits the
prepayment of certain Indebtedness of Subsidiaries of the Borrower;
Section 6.12 restricts Borrower’s ability to make
Investments in certain Subsidiaries; Section 6.12(b)
prohibits SumTotal UK from holding more than US$1 million of cash
in a deposit account that is not subject to a Control Agreement;
and Section 6.13 of the Credit Agreement restricts
Borrower’s and its Affiliates’ ability to enter into
certain transactions with one another.
C. The Borrower has requested that
the Lenders and the Agent agree to certain additional amendments to
the Credit Agreement, and the Lenders and the Agent have agreed to
such request, subject to the terms and conditions
hereof.
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as
follows:
1. Amendments to Credit
Agreement . Subject to and upon the conditions hereof, the
Credit Agreement is hereby amended, effective as of the date of
satisfaction of the conditions set forth in Section 3 ,
as follows:
(a) Section 2.6(a) of
the Credit Agreement is hereby amended by deleting in their
entirety the second and third sentences thereof (which state in
their entirety: “The foregoing notwithstanding, at no time
shall any portion of the Obligations (other than Bank Product
Obligations) bear interest on the Daily Balance thereof at a per
annum rate less than 6.00%. To the extent that interest accrued
hereunder at the rate set forth herein would be less than the
foregoing minimum daily rate, the interest rate chargeable
hereunder for such day automatically shall be deemed increased to
the minimum rate.”).
(b) Section 5.5 of the
Credit Agreement is hereby amended by amending and restating the
first sentence thereof as follows:
“At any time when (i) the
amount of Revolver Usage is positive or (ii) any Default or
Event of Default is continuing, permit Agent, each Lender, and each
of their duly authorized representatives or agents to visit any of
its properties and inspect any of its assets or books and records,
to examine and make copies of its books and records, and to discuss
its affairs, finances, and accounts with, and to be advised as to
the same by, its officers and employees at such reasonable times
and intervals as Agent or any such Lender may designate and, so
long as no Default or Event of Default exists, with reasonable
prior notice to Borrower and during normal business
hours.”
(c) Section 5.26 of the
Credit Agreement is hereby amended and restated in its entirety as
follows:
5.26 Certain Control
Accounts . No later than twenty (20) days from the
date of satisfaction of all conditions precedent to effectiveness
of that certain Waiver and Sixth Amendment to Credit Agreement
among the Lender parties thereto, Agent, and Borrower, Borrower
shall transfer Investments in an amount not less than US$25,000,000
into Deposit Accounts or Securities Accounts at Wells Fargo Bank,
N.A. or its affiliates and, at all times thereafter (tested on a
monthly basis), shall maintain in such Deposit Accounts or
Securities Accounts Investments in an amount equal to, at such
time, at least 50% of the total aggregate amount of
Borrower’s invested cash and Cash Equivalents (excluding
operating cash) held in the United States at such time.
(d) Section 6.10 of the
Credit Agreement is hereby amended by deleting the phrase
“August 19, 2008” where it appears in the last sentence
thereof and replacing it with the phrase “the Maturity
Date”.
2. Consent and Waiver
.
(a) Subject to and upon the
conditions hereof, the Agent and the Lenders hereby consent to
(i) Borrower’s Investment in SumTotal Netherlands in the
form of a single contribution of the Netherlands Investment (and
waive the application of Section 6.12 of the Credit
Agreement thereto), (ii) SumTotal UK’s holding of cash
in an amount equal to the Netherlands Investment, in a deposit
account not subject to a Control Agreement (and waive the
application of Section 6.12(b) of the Credit Agreement
thereto) and (iii) SumTotal UK’s prepayment in full in
cash to Borrower of all outstanding obligations under the SumTotal
UK Loan (and waive the application of Section 6.7 of
the Credit Agreement thereto) (items (i) through (iii),
collectively, the “ Investments and Prepayment
”), so long as the Investments and Prepayment shall be
completed in no more than 14 days from the date of the Netherlands
Investment.
(b) The Agent and Lenders hereby
waive the application of Section 6.13 of the Credit
Agreement, and any other applicable provision of the Credit
Agreement,
