THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
EXHIBIT 10.3
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and
entered into as of the ___ day of June, 2005 by and between CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), a Texas corporation (“Lender”), and SUPPLIES DISTRIBUTORS, INC., a Delaware
corporation (“Borrower”).
WHEREAS, Borrower and Lender are parties to that certain Loan and Security Agreement dated as
of March 29, 2002 as amended by that certain First Amendment to Loan and Security Agreement dated
as of April 20, 2004 and by that certain Second Amendment to Loan and Security Agreement dated as
of December 21, 2004 (as amended from time to time, the “Loan Agreement”);
WHEREAS, Borrower and Lender desire to amend the Loan Agreement in the manner provided below;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent
not otherwise defined herein, shall have the same meaning as in the Loan Agreement, as amended
hereby.
ARTICLE II.
AMENDMENTS
Section 2.01. Amendment to Section 9.11(c) of the Loan Agreement. Effective as of the
date hereof, Section 9.11(c) of the Loan Agreement is hereby amended and restated in its
entirety to read as follows: “(c) the aggregate amount of all such dividends does not exceed (i)
$800,000 per year for any year other than 2005, and $1,000,000 per year for 2005, plus (ii) an
amount equal to the proceeds received by Borrower related to the liquidation of Business Supplies
Distributors Europe BV, plus (iii) an amount equal to any cash dividends received by Borrower from
Supplies Distributors SA.”
ARTICLE III.
NO WAIVER
Section 3.01. No Waiver. Nothing contained in this Amendment shall be construed as a
waiver by Lender of any covenant or provision of the Loan Agreement, the other documents and
agreements relating hereto or thereto (hereinafter individually referred to as a “Loan
Document” and collectively referred to as the “Loan Documents”), this Amendment, or of
any other contract or instrument between Borrower and Lender, and the failure of Lender at any time
or times
hereafter to require strict performance by Borrower of any provision thereof shall not waive,
affect or diminish any right of Lender to thereafter demand strict compliance therewith. Lender
hereby reserves all rights granted under the Loan Agreement, the other Loan Documents, this
Amendment and any other contract or instrument between Borrower and Lender.
ARTICLE IV.
CONDITIONS PRECEDENT
Section 4.01. Conditions. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent, unless specifically waived by Lender:
(a) Lender shall have received, in form and substance satisfactory to Lender in its
sole discretion, (i) this Amendment, duly executed by Borrower and each of the attached
Consent, Ratification and Releases duly executed by the Guarantors, and (ii) such
additional documents, instruments and information as Lender or its legal counsel may
request;
(b) The representations and warranties contained herein, in the Loan Agreement, as
amended hereby, and/or in the other Loan Documents shall be true and correct as of the date
hereof as if made on the date hereof;
(c) No default shall have occurred under the Loan Agreement and be continuing and no
default shall exist under the Loan Agreement unless such default has been specifically
waived in writing by Lender; and
(d) All corporate proceedings taken in connection with the transactions contemplated by
this Amendment and all documents, instruments and other legal matters incident thereto shall
be satisfactory to Lender and its legal counsel, Xxxxxx Xxxxx LLP.
ARTICLE V.
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 5.01. Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement
and except as expressly modified and superseded by this Amendment, the terms and provisions of the
Loan Agreement are ratified and confirmed and shall continue in full force and effect.
Section 5.02. Representations and Warranties. Borrower hereby represents and warrants
to Lender that (i) the execution, delivery and performance of this Amendment and any and all other
Loan Documents executed and/or delivered in connection herewith have been authorized by all
requisite corporate action on the part of Borrower and will not violate the Articles of
Incorporation or Bylaws of Borrower, (ii) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any other Loan Document are true and correct on and as of the
date hereof as though made on and as of the date hereof, (iii) Borrower is in full compliance with
all covenants and agreements contained in the Loan Agreement, as amended hereby, and (iv) Borrower
has not amended its Articles of Incorporation or Bylaws since March 29, 2002.
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ARTICLE VI.
MISCELLANEOUS
Section 6.01. Survival of Representations and Warranties. All representations and
warranties made in the Loan Agreement or any other document or documents relating thereto,
including, without limitation, any Loan Document furnished in connection with this Amendment, shall
survive the execution and delivery of this Amendment and the other Loan Documents, and no
investigation by Lender or any closing shall affect the representations and warranties or the right
of Lender to rely upon them.
Section 6.02. Reference to Loan Agreement. Each of the Loan Documents, including the
Loan Agreement and any and all other agreements, documents or instruments now or hereafter executed
and delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement as
amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan
Agreement shall mean a reference to the Loan Agreement as amended hereby.
Section 6.03. Expenses of Lender. As provided in the Loan Agreement, Borrower agrees
to pay all reasonable costs and expenses incurred by Lender in connection with the preparation,
negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto
and any and all amendments, modifications, and supplements thereto, including without limitation
the reasonable costs and fees of Lender’s legal counsel, and all reasonable costs and expenses
incurred by Lender in connection with the enforcement or preservation of any rights under the Loan
Agreement, as amended hereby, or any other Loan Document, including without limitation the
reasonable costs and fees of Lender’s legal counsel.
Section 6.04. Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder
of this Amendment and the effect thereof shall be confined to the provision so held to be invalid
or unenforceable. Furthermore, in lieu of each such invalid or unenforceable provision there shall
be added automatically as a part of this Amendment a valid and enforceable provision that comes
closest to expressing the intention of such invalid or unenforceable provision.
Section 6.05. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN DALLAS, TEXAS AND SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 6.06. Successors and Assigns. This Amendment is binding upon and shall inure
to the benefit of Lender and Borrower and their respective successors and assigns, except Borrower
may not assign or transfer any of its rights or obligations hereunder without the prior written
consent of Lender.
Section 6.07. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original, but all of which
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when taken together shall constitute one and the same instrument.
Section 6.08. Effect of Waiver. No consent or waiver, express or implied, by Lender
to or for any breach of or deviation from any covenant or condition of the Loan Agreement shall be
deemed a consent or waiver to or of any other breach of the same or any other covenant, condition
or duty.
Section 6.09. Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 6.10. NO ORAL AGREEMENTS. THE LOAN AGREEMENT 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 BETWEEN THE PARTIES.
Section 6.11. RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE
ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE “OBLIGATIONS” OR TO
SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY
AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES,
COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN
WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY,
AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR
REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY “LOANS”, INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR
OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, this Amendment has been duly executed by Borrower and Lender to be
effective as of the date first above written.
| LENDER: |
BORROWER: |
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| CONGRESS FINANCIAL CORPORATION (SOUTHWEST) | SUPPLIES DISTRIBUTORS, INC., | |||||
By:
|
By: | |||||
Name:
|
Name: | |||||
Title:
|
Title: | |||||
| Address: | Chief Executive Office: | |||||
| 0000 XXX Xxxxxxx, Xxxxx 0000 | 000 Xxxxx Xxxxxxx Xxxxxxxxxx, 0xx Xxxxx | |||||
| Xxxxxx, Xxxxx 00000 | Xxxxx, Xxxxx 00000 | |||||
CONSENT, RATIFICATION AND RELEASE
Each of the undersigned hereby consents to the terms of the within and foregoing Amendment,
confirms and ratifies the terms of that certain Secured Guarantee dated March 29, 2002 and that
certain General Security Agreement dated March 29, 2002 each as amended from time to time and as
executed by the undersigned for the benefit of Lender (the “Guaranty Documents”), and
acknowledges that the Guaranty Documents are in full force and effect and ratifies the same, that
the undersigned has no defense, counterclaim, set-off or any other claim to diminish the
undersigned’s liability under such documents, that the undersigned’s consent is not required to the
effectiveness of the within and foregoing Amendment, and that no consent by the undersigned is
required for the effectiveness of any future amendment, modification, forbearance or other action
with respect to the Obligations, the Collateral, or any of the other Loan Documents. THE
UNDERSIGNED HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW
OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED,
WHICH THE UNDERSIGNED MAY NOW OR HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF
CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY “LOANS”,
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT.
| PRIORITY FULFILLMENT SERVICES, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| BUSINESS SUPPLIES DISTRIBUTORS HOLDINGS, LLC | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
CONSENT, RATIFICATION AND RELEASE
The undersigned hereby consents to the terms of the within and foregoing Amendment, confirms
and ratifies the terms of that certain Guarantee dated March 29, 2002 as amended from time to time
and as executed by the undersigned for the benefit of Lender (the “Guaranty Documents”),
and acknowledges that the Guaranty Documents are in full force and effect and ratifies the same,
that the undersigned has no defense, counterclaim, set-off or any other claim to diminish the
undersigned’s liability under such documents, that the undersigned’s consent is not required to the
effectiveness of the within and foregoing Amendment, and that no consent by the undersigned is
required for the effectiveness of any future amendment, modification, forbearance or other action
with respect to the Obligations, the Collateral, or any of the other Loan Documents. THE
UNDERSIGNED HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW
OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED,
WHICH THE UNDERSIGNED MAY NOW OR HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF
CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY “LOANS”,
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT.
| PFSWEB, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
