EIGHTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Exhibit 10.5
EIGHTH AMENDMENT TO FIRST AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT
THIS EIGHTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (herein called
this “Amendment”) made as of the 25th day of March, 2010 by and between Priority
Fulfillment Services, Inc. (“Borrower”) and Comerica Bank (“Bank”),
WITNESSETH:
WHEREAS, Borrower and Bank have entered into that certain First Amended and Restated Loan and
Security Agreement dated as of December 29, 2004 (as from time to time amended or modified, the
“Original Agreement”) for the purposes and consideration therein expressed, pursuant to which Bank
became obligated to make loans to Borrower as therein provided; and
WHEREAS, Borrower and Bank desire to amend the Original Agreement to provide for term loans
and for the other purposes set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained herein and in the Original Agreement, in consideration of the loans which may hereafter
be made by Bank to Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
§ 1.1 Terms Defined in the Original Agreement. Unless the context otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in this Amendment.
§ 1.2 Other Defined Terms. Unless the context otherwise requires, the following terms when used in this Amendment shall
have the meanings assigned to them in this § 1.2.
“Amendment” means this Eighth Amendment to First Amended and Restated Loan and
Security Agreement.
“Loan Agreement” means the Original Agreement as amended hereby.
ARTICLE II.
Amendment to Original Agreement
§ 2.1 Defined Terms.
(a) The definition of “Permitted Distribution” in Exhibit A to the Original Agreement
is hereby amended in its entirety to read as set forth below:
“Permitted Distribution” means any cash dividend or cash distribution by
Borrower to any entity that is an Affiliate of Borrower, provided that such cash
dividend or cash distribution is made from Inflow Transfer received by Borrower
after March 31, 2010, in excess of $4,150,000.
(b) Clauses (e) and (f) of the definition of “Permitted Investment” in Exhibit A to the
Original Agreement are hereby amended in their entirety to read as follows:
| (e) | Advances by Borrower to Supplies Distributor, Inc. pursuant to the Subordinated Demand Note, so long as (1) the aggregate outstanding principal amount of such Indebtedness does not exceed $5,500,000 (excluding accrued and unpaid interest) at any time, and (2) before and after giving effect to such advances no Event of Default has occurred and is continuing; | ||
| (f) | Incremental cash Investments by Borrower in or cash advances to SPRL PFSweb B.V., Priority Fulfillment Services of Canada, Inc., eCOST Philippine Services LLC, PFSM, LLC and xXXXX.xxx, not to exceed $250,000, provided that (1) the aggregate amount of all Inflow Transfers after January 1, 2010 and prior to April 30, 2010 equals or exceeds $500,000, and (2) at the time of each such incremental cash Investment and after giving effect thereto, no Event of Default has occurred and is continuing. |
(c) The definition of “Revolving Maturity Date” in Exhibit A to the Original Agreement
is hereby amended in its entirety to read as follows:
“Revolving Maturity Date” means March 30, 2011.
(d) The definition of “Tangible Net Worth” in Exhibit A to the Original Agreement is
hereby amended in its entirety to read as follows:
“Tangible Net Worth” means, with respect to any Person, at any date as of which
the amount thereof shall be determined: (a) the total assets of such Person and its
properly consolidated Subsidiaries minus the total liabilities of such
Person and its properly consolidated Subsidiaries, minus (b) goodwill.
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§ 2.2 Fees. Section 2.5(a) of the Original Agreement is hereby amended in its entirety to read as follows:
(a) Facility Fee. A facility fee in the aggregate amount of $50,000 to be paid
on March 25, 2010.
§ 2.3 Financial Statements, Reports, Certificates.
(a) The due date for the financial statements due for the calendar month of January
2010 under Section 6.2(a) of the Original Agreement is hereby extended to March 31, 2010.
(b) Section 6.2(j) of the Original Agreement is hereby amended to read as follows:
(j) within 30 days after the last day of each month, Borrower shall deliver to
Bank a Borrowing Base Certificate signed by a Responsible Officer, together with
aged listings by invoice date of accounts receivable and accounts payable;
(c) The due date for the Compliance Certificate due for the calendar month of January
2010 under Section 6.2(k) of the Original Agreement is hereby extended to March 31, 2010.
§ 2.4 EBITDA. Section 6.7(d) of the Original Agreement is hereby amended in its entirety to read as
follows:
(d) EBITDA. As of the last day of each calendar month, the variance, if
negative, then expressed as a positive number, between Borrower’s EBITDA and the EBITDA set
forth in the Approved Projections for the twelve (12) calendar month period ending on such
date, shall not exceed $350,000. As used herein, “EBITDA” shall mean, for any period of
calculation, Borrower’s earnings for such period before interest and taxes plus
depreciation, amortization and non-cash stock compensation accruals to the extent deducted
in the calculation of such earnings. “Approved Projections” means for the 2010 calendar
year, the projections for such period that have been reviewed by Borrower’s Board of
Directors and delivered to Bank on or about March 22, 2010.
§ 2.5 Affirmative Covenants. Section 6.12 of the Original Agreement is hereby amended in its entirety to read as
follows:
6.12 Inflow Transfers. Borrower shall receive not less than $4,900,000 in
aggregate Inflow Transfers during the period beginning March 31, 2010 and ending on July 5,
2010.
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§ 2.6 Negative Covenants. Section 7.12 of the Original Agreement is hereby amended in its entirety to read as follows:
7.12 Capital Expenditures. Make capital expenditures in an aggregate amount
greater than $4,000,000 in each fiscal year of Borrower, provided that the aggregate amount
of such expenditures purchased with cash (and not financed) shall not exceed $600,000;
provided further, that any capital expenditures made by Borrower exclusively from the
proceeds of Permitted Distributions shall not be subject to the foregoing limitations. As
used herein, the term “capital expenditures” does not include (i) any software that is
internally developed by Borrower, whether or not Borrower capitalized the development costs,
and (ii) any equipment ordered, but not yet accepted or paid for, by Borrower.
ARTICLE III.
Conditions of Effectiveness
§ 3.1 Effective Date. This Amendment shall become effective as of the date first above written when and only when Bank
shall have received, at Bank’s office, (a) a counterpart of this Amendment executed and delivered
by Borrower and the attached Consent and Agreement executed and delivered by Guarantor, (b) the
facility fee required pursuant to Section 2.5(a) of the Agreement, and (c) an officer’s certificate
of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of
this Amendment and the other Loan Documents.
ARTICLE IV.
Representations and Warranties
§ 4.1 Representations and Warranties of Borrower. In order to induce Bank to enter into this Amendment, Borrower represents and warrants to Bank
that:
(a) The representations and warranties contained in Article 5 of the Original Agreement
are true and correct at and as of the time of the effectiveness hereof, except to the extent
such representations or warranties relate to an earlier date in which case such
representation or warranty shall be true and correct as of such earlier date and except as
otherwise set forth in a written schedule delivered to the Bank concurrently herewith.
(b) Borrower is duly authorized to execute and deliver this Amendment and is and will
continue to be duly authorized to borrow and to perform its obligations under the Loan
Agreement. Borrower has duly taken all corporate action necessary to authorize the execution and delivery of this Amendment and to authorize the performance of the
obligations of Borrower hereunder.
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(c) The execution and delivery by Borrower of this Amendment, the performance by
Borrower of its obligations hereunder and the consummation of the transactions contemplated
hereby do not and will not conflict with any provision of law, statute, rule or regulation
or of the organizational documents of Borrower, or of any material agreement, judgment,
license, order or permit applicable to or binding upon Borrower, or result in the creation
of any lien, charge or encumbrance upon any assets or properties of Borrower. Except for
those which have been duly obtained, no consent, approval, authorization or order of any
court or governmental authority or third party is required in connection with the execution
and delivery by Borrower of this Amendment or to consummate the transactions contemplated
hereby.
(d) When duly executed and delivered, each of this Amendment and the Loan Agreement
will be a legal and binding instrument and agreement of Borrower, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency and similar laws applying to
creditors’ rights generally and by principles of equity applying to creditors’ rights
generally.
ARTICLE V.
Miscellaneous
§ 5.1 Ratification of Agreements. The Original Agreement as hereby amended is hereby ratified and confirmed in all respects. Any
reference to the Loan Agreement in any Loan Document shall be deemed to be a reference to the
Original Agreement as hereby amended. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy
of Bank under the Loan Agreement or any other Loan Document nor constitute a waiver of any
provision of the Loan Agreement or any other Loan Document.
§ 5.2 Survival of Agreements. All representations, warranties, covenants and agreements of Borrower herein shall survive the
execution and delivery of this Amendment and the performance hereof, including without limitation
the making or granting of the Advances, and shall further survive until all of the Obligations are
paid in full. All statements and agreements contained in any certificate or instrument delivered
by Borrower hereunder or under the Loan Agreement to Bank shall be deemed to constitute
representations and warranties by, or agreements and covenants of, Borrower under this Amendment
and under the Loan Agreement.
§ 5.3 Loan Documents. This Amendment is a Loan Document, and all provisions in the Loan Agreement pertaining to Loan
Documents apply hereto.
§ 5.4 Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of
California and any applicable laws of the United States of America in all respects, including
construction, validity and performance.
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§ 5.5 Counterparts. This Amendment may be separately executed in counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to constitute one and the
same Amendment.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
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IN WITNESS WHEREOF, this Amendment is executed as of the date first above written.
| PRIORITY FULFILLMENT SERVICES, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| COMERICA BANK |
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| By: | ||||
| Name: | ||||
| Title: | ||||
CONSENT AND AGREEMENT
PFSWEB, INC., a Delaware corporation, hereby consents to the provisions of this Amendment and
the transactions contemplated herein, and hereby ratifies and confirms the Guaranty dated as of
December 29, 2004, made by it for the benefit of Bank, and agrees that its obligations and
covenants thereunder are unimpaired hereby and shall remain in full force and effect.
| PFSWEB, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
