EXHIBIT 10.42
FIRST AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the
"Amendment"), dated as of June 9, 2000, is entered into between CONGRESS
FINANCIAL CORPORATION (WESTERN), a California corporation ("Lender") and
WAREFORCE INCORPORATED, a California corporation ("Borrower").
RECITAL
Borrower and Lender have previously entered into that certain Amended and
Restated Loan and Security Agreement dated as of April 25, 2000 (the "Loan
Agreement"), pursuant to which Lender has made certain loans and financial
accommodations available to Borrower. Terms used herein without definition shall
have the meanings ascribed to them in the Loan Agreement.
Borrower has informed Lender that it intends to purchase certain assets of
Pacific Online Computers, Inc., a California corporation ("POCI"), pursuant to
the terms and conditions of a Voluntary Surrender dated June 8, 2000 between
POCI and Duetsche Financial Services Corporation ("Deutsche"), a Xxxx of Sale
dated June 9, 2000 between Deutsche and Borrower and a Promissory Note dated
June 9, 2000 by Borrower in favor of Deutsche (the Voluntary Surrender, the Xxxx
of Sale and the Promissory Note are collective called the "POCI Purchase
Agreements".
Pursuant to the terms of the Loan Agreement, Borrower has requested that Lender
consent to such purchase and in connection therewith amend the Loan Agreement to
provide financing under the existing credit facility of new receivables acquired
pursuant to such purchase. Lender is willing to give such consent and amend the
Loan Agreement under the terms and conditions set forth in this Amendment.
Borrower is entering into this Amendment with the understanding and agreement
that, except as specifically provided herein, none of Lender's rights or
remedies as set forth in the Loan Agreement is being waived or modified by the
terms of this Amendment.
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:
Consent to POCI Acquisition. Subject to the terms and conditions set forth
herein, including, without limitation the conditions set forth in
paragraph 4 below, and provided that the purchase is financed by capital
contributions to Borrower and not by intercompany indebtedness or using
the proceeds of any loan under the Loan Agreement, Lender hereby
consents to the purchase by Borrower of certain assets of POCI pursuant
to the POCI Purchase Agreements, the terms and conditions of which shall
be satisfactory to Lender. Borrower hereby acknowledges that Lender has
relied upon information furnished by Borrower to Lender as of the date
hereof in granting the foregoing consent. In the event Congress after
the date hereof shall discover that any such information was materially
incorrect or shall discover additional relevant facts that cause the
information furnished by Borrower to have been materially incorrect,
Lender hereby reserves the right to amend, modify or revoke the consent
set forth herein as Lender shall determine.
1. Consent to New Collateral Locations. Subject to the terms and
conditions set forth herein, Lender hereby consents to the Borrower acquiring
new locations in Irvine, California, San Diego, California and Bakersfield,
California.
2. Financing of New Receivables. Lender hereby agrees to provide
financing with respect to the Accounts created under the trade names of Online
Connecting Point and CoreTek Information Technology Resources only to the extent
that such Accounts constitute Eligible Accounts.
3. Amendments to Loan Agreement.
(a) The following is hereby added to the end of Section 9.10 of the
Loan Agreement as paragraph (j):
"(j) indebtedness of Borrower to Deutsche in an amount not to exceed
One Million Two Hundred Thousand Dollars ($1,200,000) as evidenced by
that certain Promissory Note by Borrower in favor of POCI dated as of
June ___, 2000;"
4. Effectiveness of this Amendment. Lender must have received the
following items, in form and content acceptable to Lender, before this Amendment
is effective and before Lender is required to extend any credit to Borrower as
provided for by this Amendment. The date on which all of the following
conditions have been satisfied is the "Closing Date".
(a) Amendment. This Amendment fully executed in a sufficient number
of counterparts for distribution to Lender and Borrower.
(b) Authorizations. Evidence that the execution, delivery and
performance by Borrower and each guarantor or subordinating creditor of this
Amendment and any instrument or agreement required under this Amendment have
been duly authorized.
(c) Representations and Warranties. The representations and
warranties set forth in the Loan Agreement must be true and correct.
(d) POCI Purchase Agreements. Evidence that the POCI Purchase
Agreements have been duly executed and delivered by and to the appropriate
parties thereto and the transactions contemplated thereunder have been
consummated simultaneously with the Closing Date.
(e) Termination of Existing Financing and Security Interests. All
releases and terminations and such other documents as Lender may request to
evidence and effectuate the termination by the existing lender or lenders of
POCI of their respective financing arrangements with POCI and the termination
and release by it or them, as the case may be, of any interest in and to any
assets and properties acquired by Borrower pursuant to the POCI Purchase
Agreements, duly authorized, executed and delivered by it or each of them,
including, but not limited to (i) UCC termination statements for all UCC
financing statements previously filed by it or any of them or their
predecessors, as secured party and POCI or Borrower, as debtor, and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
debt by POCI in favor of such existing lender or lenders, in form acceptable for
recording in the appropriate government office.
(f) First Priority Lien. Evidence that Lender has valid, perfected
and first priority security interests in and liens upon the assets acquired by
Borrower pursuant to the POCI Purchase Agreements and any other property which
is intended as security for the Obligations or the liability of any Obligor in
respect thereto, subject only to the security interests and liens permitted in
the Loan Agreement or the other Financing Agreements.
(g) Third Party Consents. All consents, waivers and acknowledgments
and other agreement from third persons which Lender may deem necessary or
desirable in order to permit, protect and perfect its security interests in and
liens upon the assets acquired by Borrower pursuant to the POCI Purchase
Agreements or to effectuate the provisions or purposes of the Loan Agreement and
the other Financing Agreements, including, without limitation, acknowledgements
by lessors, mortgagees and warehousemen of Lender's security interests in such
assets, waivers by such persons of any security interests, liens or other claims
by such persons to such assets and agreements permitting Lender access to, and
the right to remain on, the premises to exercise its rights and remedies and
otherwise deal with such assets.
(h) Pro-Forma Balance Sheet. A pro-forma balance sheet of Borrower
reflecting the transaction contemplated hereunder, including, but not limited
to, (i) the consummation of the acquisition of the assets to be purchased by
Borrower from POCI and the other transactions contemplated by the POCI Purchase
Agreements and (ii) the Loans provided by Lender to Borrower on the Closing Date
and the use of the proceeds of such Loans as provided herein, accompanied by a
certificate dated of even date herewith of the chief financial officer of
Borrower stating that such pro-forma balance sheet represents the reasonable,
good faith opinion of such officer as to the subject matter thereof as of the
date of such certificate.
(i) Consent. The Consent appended hereto (the "Consent") executed by
Xxxx Xxxxxxxx (together with the Borrower, a "Loan Party").
(j) Other Required Documentation. All other documents and legal
matters in connection with the transactions contemplated by this Amendment shall
have been delivered or executed or recorded and shall be in form and substance
satisfactory to Lender.
(k) Payment of Amendment Fee. Lender shall have received from
Borrower an amendment fee of Ten Thousand Dollars ($10,000) for the processing
and approval of this Amendment.
(l) Deutsche Bank Agreement. An agreement between Deutsche and Lender
determining the rights of each party with respect to the Accounts of POCI and
Borrower, in form and substance acceptable to Lender.
(m) Capital Contribution. Evidence that Xxxxxxxxx.Xxx has provided to
Borrower a capital contribution in the amount of One Million Three Hundred
Thousand Dollars ($1,300,000) and will make additional capital contributions to
fund payments under the Promissory Note and any other amounts due from Borrower
to Deutsche under the Xxxx of Sale.
5. Representations and Warranties. The Borrower represents and warrants
as follows:
(a) Authority. The Borrower and the Loan Party has the requisite
corporate power and authority to execute and deliver this Amendment or the
Consent, as applicable, and to perform its obligations hereunder and under the
Financing Agreements (as amended or modified hereby) to which it is a party. The
execution, delivery and performance by the Borrower of this Amendment and the
Loan Party of the Consent, and the performance by the Loan Party of each Loan
Document (as amended or modified hereby) to which it is a party have been duly
approved by all necessary corporate action of the Loan Party and no other
corporate proceedings on the part of the Loan Party are necessary to consummate
such transactions.
(b) Enforceability. This Amendment has been duly executed and
delivered by the Borrower. The Consent has been duly executed and delivered by
each Guarantor. This Amendment and each Loan Document (as amended or modified
hereby) is the legal, valid and binding obligation of the Loan Party hereto or
thereto, enforceable against the Loan Party in accordance with its terms, and is
in full force and effect.
(c) Acquisition of Purchased Assets.
(i) The POCI Purchase Agreements and the transactions
contemplated thereunder have been duly executed, delivered and
performed in accordance with their terms by the respective parties
thereto in all respects, including the fulfillment (not merely the
waiver, except as may be disclosed to Lender and consented to in
writing by Lender) of all conditions precedent set forth therein and
giving effect to the terms of the POCI Purchase Agreements and the
assignments to be executed and delivered by POCI (or any of its
affiliates or subsidiaries) thereunder, Borrower acquired and has
good and marketable title to the assets purchased pursuant to the
POCI Purchase Agreements, free and clear of all claims, liens,
pledges and encumbrances of any kind, except as permitted hereunder.
(ii) All actions and proceedings, required by the POCI Purchase
Agreements, applicable law or regulation (including, but not limited
to, compliance with the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act
of 1976, as amended, or applicable laws dealing with bulk transfers)
have been taken and the transactions required thereunder have been
duly and validly taken and consummated.
(iii) No court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits
consummation of the transactions described in the POCI Purchase
Agreements and no governmental or other action or proceeding has been
threatened or commenced, seeking any injunction, restraining order or
other order which seeks to void or otherwise modify the transactions
described in the POCI Purchase Agreements.
(iv) Borrower has delivered, or caused to be delivered, to
Lender, true, correct and complete copies of the POCI Purchase
Agreements.
(d) Representations and Warranties. The representations and
warranties contained in each Loan Document (other than any such representations
or warranties that, by their terms, are specifically made as of a date other
than the date hereof) are correct on and as of the date hereof as though made on
and as of the date hereof.
(e) No Default. No event has occurred and is continuing that
constitutes an Event of Default.
(f) Inter-Company Indebtedness. Borrower has not incurred
indebtedness to any subsidiary, parent company, or other affiliated entity as a
result of the transactions contemplated in the POCI Purchase Agreements, except
for the capital contribution by Xxxxxxxxx.Xxx in the amount of One Million Three
Hundred Thousand Dollars ($1,300,000).
6. Condition Subsequent to Amendment. Borrower shall deliver or cause to
delivered to Lender, within the time periods specified below, the following
items, and Borrower's failure to deliver any such item within the time specified
for it's delivery shall constitute an Event of Default:
(a) On or before the date on which Borrower is required to file its
Quarterly Report on Form 10-Q with the Securities and Exchange Commission,
Borrower shall deliver to Lender an opening balance sheet of Borrower after
giving effect to the transactions contemplated hereunder and under the POCI
Purchase Agreements, together with a report by independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Borrower and reasonably acceptable to Lender, of their review of the opening
balance sheet confirming that such opening balance sheet has been prepared in
accordance with GAAP and presents fairly the financial condition of Borrower as
of such date; and
(b) Within sixty (60) days after the date of this Amendment, Borrower
shall deliver to Lender Landlord Agreements with respect to the premises of
Borrower located in San Diego, California, Irvine, California and Bakersfield,
California, in form and substance acceptable to Lender.
7. Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of California governing contracts only to be performed in that
State.
8. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment or the Consent by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Amendment or such Consent.
9. Due Execution. The execution, delivery and performance of this
Amendment are within the power of Borrower, have been duly authorized by all
necessary corporate action, have received all necessary governmental approval,
if any, and do not contravene any law or any contractual restrictions binding on
Borrower.
10. Reference to and Effect on the Loan Documents.
(a) Upon and after the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Loan Agreement, and each reference in the
other Loan Documents to "the Loan Agreement", "thereof" or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as modified and amended hereby.
(b) Except as specifically amended above, the Loan Agreement and all
other Loan Documents, are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed and shall constitute the
legal, valid, binding and enforceable obligations of Borrower to Lender.
(c) 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 Lender under any of the Loan Documents, nor constitute
a waiver of any provision of any of the Loan Documents.
(d) To the extent that any terms and conditions in any of the Loan
Documents shall contradict or be in conflict with any terms or conditions of the
Loan Agreement, after giving effect to this Amendment, such terms and conditions
are hereby deemed modified or amended accordingly to reflect the terms and
conditions of the Loan Agreement as modified or amended hereby.
11. Ratification. Borrower hereby restates, ratifies and reaffirms each
and every term and condition set forth in the Loan Agreement, as amended hereby,
and the Loan Documents effective as of the date hereof.
12. Estoppel. To induce Lender to enter into this Amendment and to
continue to make advances to Borrower under the Loan Agreement, Borrower hereby
acknowledges and agrees that, after giving effect to this Amendment,
as of the date hereof, there exists no Event of Default and no right of offset,
defense, counterclaim or objection in favor of Borrower as against Lender with
respect to the Obligations.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.
"BORROWER"
WAREFORCE INCORPORATED,
a California corporation
By: /s/ Xxxx Xxxxxxxx
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Title: CEO
"LENDER"
CONGRESS FINANCIAL CORPORATION (WESTERN),
a California corporation
By: /s/ Xxxx Xxxxx
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Title: Vice President
"BORROWER"
WAREFORCE INCORPORATED,
a California corporation
By: /s/ Xxx Xxxxxxxx
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Title: VP, General Counsel & Secretary
"LENDER"
CONGRESS FINANCIAL CORPORATION (WESTERN),
a California corporation
By: /s/ Xxxx Xxxxx
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Title: Vice President
CONSENT
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Dated as of June 9, 2000
The undersigned XXXX XXXXXXXX, an individual ("Xxxxxxxx"), in consideration of
the continued extension of credit to Wareforce Incorporated by Congress
Financial Corporation (Western) ("Congress"), hereby consents and agrees to the
foregoing First Amendment to Amended and Restated Loan and Security Agreement
(the "Amendment") and hereby confirms and agrees that its Guarantee dated August
27, 1999 in favor of Congress is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects except that, upon
the effectiveness of, and on and after the date of the Amendment, each reference
in the Guarantee to the Loan Agreement (as defined in the Amendment),
"thereunder", "thereof" or words of like import referring to the "Loan
Agreement", shall mean and be a reference to the Loan Agreement as amended or
modified by the Amendment. Although Congress has informed Xxxxxxxx of the
matters set forth above, and Xxxxxxxx has acknowledged the same, Xxxxxxxx
understands and agrees that Congress has no duty under the Loan Agreement,
Guarantee or any other agreement with Xxxxxxxx to so notify Xxxxxxxx or to seek
such an acknowledgement, and nothing contained herein is intended to or shall
create such a duty as to any advances or transaction hereafter.
/s/ Xxxx Xxxxxxxx
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XXXX XXXXXXXX, an individual
