Document:

Exhibit

Exhibit 10.36

AMENDMENT NO. 1 TO CONSULTING SERVICES AGREEMENT
This AMENDMENT NO. 1 TO CONSULTING SERVICES AGREEMENT (this “Amendment”) is made as of the 21st day of December, 2017, by and among Surgery Partners, Inc., a Delaware corporation (the “Company”), Michael T. Doyle (“Doyle”) and MD Healthcare Partners, LLC, a Florida limited liability company (“MDHC,” and together with Doyle and the Company, the “Parties”). 
WHEREAS, the Company, Surgery Partners, LLC and Doyle are parties to that certain Termination and Release Agreement, dated as of September 7, 2017 (the “Termination Agreement”), pursuant to which such parties mutually agreed to terminate their employment relationship under the terms and conditions set forth therein;
WHEREAS, the Company and Doyle are parties to that certain Consulting Services Agreement, dated as of September 7, 2017 (the “Consulting Agreement”), pursuant to which Doyle agreed to provide certain consulting services to the Company for a period of six months following the cessation of Doyle’s employment;
WHEREAS, Doyle desires to provide the Services through MDHC, Doyle’s wholly-owned affiliate;
WHEREAS, the Consulting Agreement may be amended by the mutual written agreement of the Company and Doyle; and  
WHEREAS, the Parties desire to amend the Consulting Agreement as set forth herein. 
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties hereto agree as follows:
1.    Definitions. Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Consulting Agreement. All references in this Amendment to definitions and sections shall be deemed references to definitions and sections in the Consulting Agreement, except as explicitly stated herein. 
2.    Addition of Parties.  MDHC is hereby added a party to the Consulting Agreement, as set forth in this Amendment. For the avoidance of doubt, Doyle shall remain a party to the Consulting Agreement, as set forth herein. 
3.    Amendment to Definition of Consultant. The definition of “Consultant” in the Consulting Agreement is hereby amended by deleting the words “Michael T. Doyle” and replacing them with “MD Healthcare Partners, LLC, a Florida limited liability company.” All references in the Consulting Agreement to “he,” “him,” “his,” “himself” and words of similar import are hereby deleted and replaced with references to “the Consultant,” “itself,” and words of similar import, as appropriate. 
4.    Amendment to Definition of Termination Agreement.  The reference to “the Consultant” in the definition of “Termination Agreement” in the Consulting Agreement is hereby replaced with a reference to “Michael T. Doyle (“MTD”)”, such that the first recital of the Consulting Agreement reads as follows:
“WHEREAS, the Company and Michael T. Doyle (“MTD”), an affiliate of the Consultant, are parties to that certain Termination and Release Agreement, dated as of September 7, 2017 (the “Termination Agreement”);” 
5.    Amendment to Section 5 – Restrictive Covenants.  Section 5 of the Consulting Agreement, “Restrictive Covenants,” is hereby amended in its entirety to read as follows: 
“MTD hereby reaffirms, and the Consultant hereby agrees to be bound by (mutatis mutandis), the rights and obligations contained within Sections 5 through 8 of that certain Employment Agreement (the “Employment Agreement”), dated September 17, 2015, by and among the Company, Surgery Partners, LLC and MTD, as 

1

modified by Section 3 of the Termination Agreement. The Company acknowledges and agrees that the services to be provided hereunder are non-exclusive and, as such, as long as MTD and the Consultant comply with Section 7(a) of the Employment Agreement, as modified by Section 3 of the Termination Agreement, the Consultant and MTD are free to provide services to any other person or entity during the Term. For the avoidance of doubt, the Consultant agrees to be bound by Section 3 of the Termination Agreement mutatis mutandis.”
6.    Insertion of New Section 6 – Certain Provisions Relating to the Consultant and MTD. A new Section 6, entitled “Certain Provisions Relating to the Consultant and MTD” is hereby added to the Consulting Agreement as set forth below, and the remaining sections, “Governing Law” and “Entire Agreement,” shall be deemed renumbered accordingly:
“The Consultant and MTD hereby jointly and severally represent, warrant, covenant and agree as follows: (i) MTD is the sole beneficial and record owner of 100% of the membership and voting interests of the Consultant, and the sole “manager” thereof, (ii) none of the Consultant or MTD shall transfer the membership or voting interests of the Consultant at any time that the Consulting Agreement remains in effect and (iii) MTD hereby guarantees to the Company the due and punctual performance by the Consultant of all of the obligations and liabilities of the Consultant under or in respect of the Consulting Agreement, including any obligations or liabilities of the Consultant arising from any breach of the Consulting Agreement by the Consultant, and warrants, covenants and agrees that such guarantee is absolute, unconditional, irrevocable and continuing and that his obligations hereunder shall not be released or discharged, in whole or in part, or otherwise affected by the failure or delay on the part of the Company to assert any claim or demand or to enforce any right or remedy hereunder or by any insolvency, bankruptcy, reorganization or other similar proceeding instituted by or against the Consultant.”

7.    Miscellaneous. 
(a)    Continuation of Agreement.  Except as amended hereby, all terms and conditions of the Consulting Agreement shall remain in full force and effect. Any reference to the Consulting Agreement, whether in the Consulting Agreement or in any other agreement, document or instrument, shall be a reference to the Consulting Agreement (including any schedules or exhibits attached thereto) as amended by this Amendment.
(b)    Entire Agreement; No Waiver; Conflicts.  The Consulting Agreement, as amended hereby, constitutes the entire agreement by and among the Parties with regard to the subject matter hereof, and supersedes any prior discussions hereon.  Except as expressly provided herein, this Amendment shall not be deemed to be a waiver or modification of any term, condition or covenant of the Consulting Agreement. In the event of a conflict between the terms of the Consulting Agreement and this Amendment, the terms of this Amendment shall control. 
(c)    Incorporation by Reference. The provisions of Section 6 of the Consulting Agreement, “Governing Law,” are hereby incorporated by reference in and made applicable to this Amendment, mutatis mutandis.
(d)    Counterparts.  This Amendment may be executed in two or more counterparts (including by facsimile or PDF signature pages), each of which is deemed to be an original and all of which taken together shall constitute one and the same agreement.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.  
SURGERY PARTNERS, INC.

	
		
	By:
	/s/ Teresa F. Sparks

	 
	Name:   Teresa F. Sparks

	 
	Title:   Executive Vice President, Chief 
             Financial Officer

	
	
	/s/ Michael T. Doyle

	Michael T. Doyle

MD HEALTHCARE PARTNERS, LLC

	
		
	By:
	/s/ Michael T. Doyle

	 
	Name:   Michael T. Doyle

	 
	Title:     Manager

	 
	 

[Signature Page to Amendment No. 1 to Consulting Services Agreement]pfsw-ex1077_35.htm

 

Exhibit 10.77

 

AMENDMENT NO. 19

TO

AGREEMENT FOR INVENTORY FINANCING

 

This Amendment No. 19 ("Amendment") to the Agreement for Inventory Financing is made as of January 24, 2018 by and among IBM Credit LLC, a Delaware limited liability company ("IBM Credit"), Business Supplies Distributors Holdings, LLC, a limited liability company duly organized under the laws of the state of Delaware (“Holdings”), Supplies Distributors, Inc., a corporation duly organized under the laws of the state of Delaware ("Borrower"), Priority Fulfillment Services, Inc., a corporation duly organized under the laws of the state of Delaware (“PFS”) and PFSweb, Inc., a corporation duly organized under the laws of the state of Delaware (“PFSweb”) (Borrower, Holdings, PFS, PFSweb, and any other entity that executes this Agreement or any Other Document, including without limitation all Guarantors, are each individually referred to as a “Loan Party” and collectively referred to as “Loan Parties”).

 

RECITALS:

 

A.Each Loan Party and IBM Credit have entered into that certain Agreement for Inventory Financing dated as of March 29, 2002 (as amended, modified, restated or supplemented from time to time, the "Agreement"); and

 

B.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, the other Loan Parties 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.  Amendment.

 

A.Section 8.14 of the Agreement is hereby amended by amending this Section to read in its entirety as follows:

 

“8.14. Loans. Neither Borrower nor Holdings will make any loans, advances, contributions or payments of money or goods to any Subsidiary, Affiliate or parent company or to any officer, director or stockholder of such Loan Party or of any such company (except for compensation for personal services actually rendered), except for transactions which comply with the terms of this Agreement and short term loans not to exceed $2,000,000.00 from Borrower to PFS”.

 

B.Attachment A to the Agreement is hereby amended by deleting such Attachment A in its entirety and substituting, in lieu thereof, the Attachment A attached hereto.  Such new Attachment A shall be effective as of the date specified in the new Attachment A.  The changes contained in the new Attachment A include, without limitation, the following:

  

(i) Section II. Fees, Rates and Repayment Terms, subsection (A) is amended and restated in its entirety to read as follows:

 

	
 
	
(A)
	
Credit Line:  Eleven Million Dollars ($11,000,000.00);

 

 

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Exhibit 10.77

 

(ii) Section II. Fees, Rates and Repayment Terms, subsection (E) is amended and restated in its entirety to read as follows:

 

		
	
(E)
	
Collateral Insurance Amount: Eleven Million Dollars ($11,000,000.00)     

 

Section 3. Conditions of Effectiveness of Amendment. This Amendment shall become effective upon the receipt by IBM Credit of: (i) this Amendment which shall have been authorized, executed and delivered

by each of the parties hereto and IBM Credit shall have received a copy of a fully executed Amendment, and (ii) a subordinated demand note issued in favor of IBM Credit, in form and substance satisfactory to IBM Credit, in the amount of One Million Dollars ($1,000,000.00).

 

Section 3.1  Representations and Warranties. Each Loan Party 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 Amendment.

 

Section 3.2  Accuracy and Completeness of Warranties and Representations. All representations made by the Loan Party 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 the Loan Party 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.

 

Section 3.3  Violation of Other Agreements and Consent. The execution and delivery of this Amendment and the performance and observance of the covenants to be performed and observed hereunder (a) do not violate or cause any Loan Party not to be in compliance with the terms of any agreement to which such Loan Party is a party, and (b) require the consent of any Person.

 

Section 3.4  Litigation. Except as has been disclosed by the Loan Parties to IBM Credit in writing, there is no litigation, proceeding, investigation or labor dispute pending or threatened against any Loan Party, which, if adversely determined, would materially adversely affect the Loan Party's ability to perform such Loan Party's obligations under the Agreement and the other documents, instruments and agreements executed in connection therewith or pursuant hereto.

 

Section 3.5  Enforceability of Amendment. This Amendment has been duly authorized, executed and delivered by each Loan Party and is enforceable against each Loan Party in accordance with its terms.

 

Section 4.  Ratification of Agreement. Except as specifically amended hereby, all of the provisions of the Agreement shall remain unamended and in full force and effect. Each Loan Party hereby ratifies, confirms and agrees that the Agreement, as amended hereby, represents a valid and enforceable obligation of such Loan Party, and is not subject to any claims, offsets or defenses.

 

Section 5.  Ratification of Guaranty and Notes Payable Subordination Agreement. Each of Holdings, PFSweb and PFS hereby ratify and confirm their respective guaranties in favor of IBM Credit and agree that such guaranties remain in full force and effect and that the term “Liabilities”, as used therein include, without limitation the indebtedness liabilities and obligations of the Borrower under the Agreement as amended hereby.  

 

Section 6.  Governing Law.  This Amendment shall be governed by and interpreted in accordance with the laws which govern the Agreement.

 

Section 7.Counterparts and Electronic Copies.  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. Customer acknowledges that IBM Credit may maintain a copy of this Amendment in electronic form and agrees that a copy reproduced from such electronic form or any other reliable means (for example, photocopy, image or facsimile) shall in all respects be considered equivalent to an original. 

 

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Exhibit 10.77

 

 

IN WITNESS WHEREOF, each Loan Party has read this entire Amendment, and has caused its authorized representatives to execute this Amendment and has caused its corporate seal, if any, to be affixed hereto as of the date first written above.

 

		
	
IBM Credit LLC
	
Supplies Distributors, Inc.

	
 

By: /s/ Leticia Campos______________________
	
 

By: /s/ Thomas J. Madden___________________

	
 

Print Name: Leticia Campos_________________
	
 

Print Name: Thomas J. Madden______________

	
 

Title: Commercial Financing Operations Manager
	
 

Title: Chief Financial Officer__________________

	
 

 

 

 

 
	
 

	
 

Business Supplies Distributors Holdings, LLC
	
 

Priority Fulfillment Services, Inc.

	
 

By: __________________ as Managing Member
	
 

	
 

By: /s/ Thomas J. Madden___________________
	
 

By: /s/ Thomas J. Madden___________________

	
 

Print Name: Thomas J. Madden______________
	
 

Print Name: Thomas J. Madden______________

	
 

Title: Chief Financial Officer__________________
	
 

Title: Chief Financial Officer__________________

	
 
	
 

	
 
	
 

PFSweb, Inc.

	
 
	
 

	
 
	
By: /s/ Thomas J. Madden___________________

	
 
	
 

Print Name: Thomas J. Madden______________

	
 
	
 

Title: Chief Financial Officer__________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 10.77

 

Attachment A (“Attachment A") TO 

AGREEMENT FOR INVENTORY FINANCING 

DATED MARCH 29, 2002

 

 

EFFECTIVE DATE OF THIS ATTACHMENT A: January 24, 2018

 

SECTION I.    BORROWER/LOAN PARTIES:

 

    (A)  BORROWER: ORGANIZATION NO. (Assigned by State of Org).

 

          Supplies Distributors, Inc.     3416326

 

    (B)  ADDITIONAL LOAN PARTIES:            

        

         Business Supplies Distributors Holdings, LLC3410894         

         Priority Fulfillment Services, Inc.               2606094

         PFSweb, Inc.3062550

 

SECTION II.   FEES, RATES AND REPAYMENT TERMS:

 

			
	
 
	
(A)
	
Credit Line:  Eleven Million Dollars ($11,000,000.00);    

 

	
 
	
(B)
	
Borrowing Base:

	
 
	
 
	
(i)  100% of the Borrower's inventory in the Borrower's possession as of the date of determination as reflected in the Borrower's most recent Collateral Management Report constituting Products (other than service parts) financed through a Product Advance by IBM Credit, so long as (1) IBM Credit has a first priority security interest in such Products and (2) such Products are in new and un-opened boxes;

 

	
 
	
 
	
(ii)  80% of price protection payments, credits, discounts, incentive payments, rebated and refunds relating to IBM Products (“Accounts”) in the aggregate not to exceed Two Million Five Hundred Thousand Dollars ($2,500,000.00) provided that (i) Borrower obtains (and provides to IBM Credit along with the monthly Collateral Management Report required under Section 7.1 (O)) from IBM written confirmation (a) acknowledging the obligation of IBM to pay such amount or that they have received the billing from the Borrower, (b) stating the date the amount is due to be paid and (c) IBM waiving its right to setoff such amounts owed to Borrower with any amount Borrower may owe to IBM, (ii) such Accounts do not remain unpaid for more than sixty (60) days from the date the obligation of IBM occurred; and (iii) such Accounts are delivered directly to IBM Credit.

 

	
 
	
(C)
	
Product Financing Charge: Prime Rate plus 0.50%

	
 
	
(D)
	
Product Financing Period: 90 days

	
 
	
(E)
	
Collateral Insurance Amount: Eleven Million Dollars ($11,000,000.00)     

	
 
	
(F)
	
PRO Finance Charge:              Prime Rate plus 0.50%

	
 
	
(G)
	
Delinquency Fee Rate:             Prime Rate plus 6.500%

	
 
	
(H)
	
Free Financing Period Exclusion Fee:    Product Advance multiplied by 0.25%

	
 
	
(I)
	
Other Charges:

	
 
	
 
	
(i)  Monthly Service Fee:             $1,000.00

	
 
	
 
	
 

	
 
	
 
	
 

 

 

SECTION III.   FINANCIAL COVENANTS:

 

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Exhibit 10.77

 

 

(A) Definitions:  The following terms shall have the following respective meanings in this Attachment.  All amounts shall be determined in accordance with generally accepted accounting principles (GAAP).

 

“Consolidated Net Income” shall mean, for any period, the net income (or loss), after taxes, of Borrower on a consolidated basis for such period determined in accordance with GAAP.

 

“Current” shall mean within the ongoing twelve month period.

 

“Current Assets” shall mean assets that are cash, restricted cash applicable to cash received into a lockbox from collections of trade accounts receivable or expected to become cash within the ongoing twelve months.

 

“Current Liabilities” shall mean payment obligations resulting from past or current transactions that require settlement within the ongoing twelve month period.  All indebtedness to IBM Credit and Congress shall be considered a Current Liability for purposes of determining compliance with the Financial Covenants.  All subordinated indebtedness shall not be considered current liabilities.

 

“EBITDA” shall mean, for any period (determined on a consolidated basis in accordance with GAAP), (a) the Consolidated Net Income of Borrower for such period, plus (b) each of the following to the extent reflected as an expense in the determination of such Consolidated Net Income: (i) the Borrower's provisions for taxes based on income for such period; (ii) Interest Expense for such period; and (iii) depreciation and amortization of tangible and intangible assets of Borrower for such period.

 

“Fixed Charges” shall mean, for any period, an amount equal to the sum, without duplication, of the amounts for such as determined for the Borrower on a consolidated basis, of (i) scheduled repayments of principal of all Indebtedness (as reduced by repayments thereon previously made), (ii) Interest Expense, (iii) capital expenditures (iv) dividends, (v) leasehold improvement expenditures and (vi) all provisions for U.S. and non U.S. Federal, state and local taxes.

 

“Fixed Charge Coverage Ratio” shall mean the ratio as of the last day of any fiscal period of (i) EBITDA as of the last day of such fiscal period to (ii) Fixed Charges.

 

“Interest Expense” shall mean, for any period, the aggregate consolidated interest expense of Borrower during such period in respect of Indebtedness determined on a consolidated basis in accordance with GAAP, including, without limitation, amortization of original issue discount on any Indebtedness and of all fees payable in connection with the incurrence of such Indebtedness (to the extent included in interest expense), the interest portion of any deferred payment obligation and the interest component of any capital lease obligations.

 

“Long Term” shall mean beyond the ongoing twelve month period.

 

“Long Term Assets” shall mean assets that take longer than a year to be converted to cash.  They are divided into four categories: tangible assets, investments, intangibles and other.

 

“Long Term Debt” shall mean payment obligations of indebtedness which mature more than twelve months from the date of determination, or mature within twelve months from such date but are renewable or extendible at the option of the debtor to a date more than twelve months from the date of determination.

 

“Net Profit after Tax” shall mean Revenue plus all other income, minus all costs, including applicable taxes.

 

 

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Exhibit 10.77

 

 “Revenue” shall mean the monetary expression of the aggregate of products or services transferred by an enterprise to its customers for which said customers have paid or are obligated to pay, plus other income as allowed.

 

“Subordinated Debt” shall mean Borrower's indebtedness to third parties as evidenced by an executed Notes Payable Subordination Agreement in favor of IBM Credit.

 

“Tangible Net Worth” shall mean Total Net Worth minus goodwill.

 

“Total Assets” shall mean the total of Current Assets and Long Term Assets.  For the purpose of  

calculating Total Assets for Borrower, the accumulated earnings and foreign currency translation adjustments applicable to Borrower’s Canadian and European subsidiaries are excluded.

 

“Total Liabilities” shall mean the Current Liabilities and Long Term Debt less Subordinated Debt, resulting from past or current transactions, that require settlement in the future.

 

“Total Net Worth” (the amount of owner's or stockholder's ownership in an enterprise) is equal to Total Assets minus Total Liabilities.  For the purpose of calculating Total Net Worth of Borrower, following shall be excluded (i) accumulated earnings and unrealized foreign currency translation adjustments applicable to Borrower’s Canadian and European subsidiaries and (ii) all income and losses applicable to foreign currency adjustments for each period but not excluding such foreign currency adjustments for annual periods that must comply with GAAP. 

 

“Working Capital” shall mean Current Assets minus Current Liabilities.

 

(B) 1. Borrower will be required to maintain the following financial ratios, percentages and amounts as of the last day of the fiscal period under review (quarterly, annually) by IBM Credit:

 

			
	
 
	
 

Covenant
	
 

Covenant Requirement

	
(i)
	
Revenue on an Annual Basis* (i.e. the current

fiscal year-to-date Revenue annualized)

to Working Capital
	
Greater than Zero and

Equal to or Less than 37.0:1.0

	
 
	
* Annualized Revenue from intercompany sales are excluded from this calculation.
	
 

	
(ii)
	
Net Profit after Tax to Revenue** 
	
Equal to or Greater than 

0.10 percent

	
 
	
**Excluding all income and losses applicable to (a) 100% ownership in Canadian and European subsidiaries and (b) foreign currency adjustments for each period but not excluding such foreign currency adjustments for annual periods that must comply with GAAP and excluding revenue from intercompany sales.
	
 

	
(iii)
	
Total Liabilities to Tangible Net Worth***
	
Greater than Zero and

Equal to or Less than 7.0:1.0

	
 
	
***Accumulated earnings and unrealized foreign currency translation adjustments applicable to Borrower’s Canadian and European subsidiaries are excluded from calculation of Borrower’s Total Assets and Total Net Worth.
	
 

 

 

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Exhibit 10.77

 

2.Business Supplies Distributors Holdings, LLC will be required to maintain the following financial ratios, percentages and amounts as of the last day of the fiscal period under review (quarterly, annually) by IBM Credit:

 

			
	
 
	
 

Covenant
	
 

Covenant Requirement

	
(i)
	
Revenue on an Annual Basis (i.e. the current

fiscal year-to-date Revenue annualized)

to Working Capital
	
Greater than Zero and

Equal to or Less than 37.0:1.0

	
(ii)
	
Net Profit after Tax to Revenue*

 

*Excluding all (a) income and losses applicable to foreign currency adjustments for each period but not excluding such foreign currency adjustments for annual periods that must comply with GAAP and (b) revenue from intercompany sales.
	
Equal to or Greater than 

0.10 percent

	
(iii)
	
Total Liabilities to Tangible Net Worth
	
Greater than Zero and

Equal to or Less than 7.0:1.0

 

 

 

 

 

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