Exhibit 10.62
SEVENTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Amendment"), dated as of July 3, 2001, is entered into by and
between CONGRESS FINANCIAL CORPORATION (WESTERN), a California corporation
("Lender"), and WAREFORCE INCORPORATED, a California corporation ("Borrower").
RECITALS
A. Borrower and Lender have previously entered into that certain
Amended and Restated Loan and Security Agreement dated as of April 25, 2000, as
amended by that certain First Amendment to Amended and Restated Loan and
Security Agreement, dated as of June 9, 2000, by that certain Second Amendment
to Amended and Restated Loan and Security Agreement, dated as of July 21, 2000,
by that certain Third Amendment to Amended and Restated Loan and Security
Agreement, dated as of August 25, 2000, by that certain Fourth Amendment to
Amended and Restated Loan and Security Agreement, dated as of January 29 2001,
by that certain Fifth Amendment to Amended and Restated Loan and Security
Agreement, dated May 24, 2001, and by that certain Sixth Amendment to Amended
and Restated Loan and Security Agreement, dated June 28, 2001 (as amended, the
"Loan Agreement"), pursuant to which Lender has made certain loans and financial
accommodations available to Borrower. Capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Loan Agreement.
B. Lender and Borrower wish to further 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.
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:
20. Amendments to Loan Agreement.
(a) Section 1.31 is hereby amended and restated in its
entirety to read as follows:
"1.31 "Maximum Credit shall mean, with reference to the
revolving Loans and the Letter of Credit Accommodations, the
amount of Twenty-Eight Million Dollars ($28,000,000); provided
that, (a) on July 31, 2001, such amount shall be permanently
reduced to Twenty-Five Million Dollars ($25,000,000) and (b) on
September 30, 2001, such amount shall be permanently reduced
further to Twenty Million Dollars ($20,000,000)."
(b) The first sentence of Section 2.2(e) is hereby amended to
read as follows:
"Except in Lender's discretion, the amount of all outstanding
Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Lender in connection therewith
shall not at any time exceed Fifteen Million Dollars
($15,000,000); provided, however, (i) on July 31, 2001, such
amount shall be permanently reduced to Thirteen Million Dollars
($13,000,000) and (ii) on September 30, 2001, such amount shall
be permanently reduced further to Ten Million Dollars
($10,000,000)."
(c) Section 3.1(a) is hereby amended and restated to read in
its entirety as follows:
"(a) Borrower shall pay to Lender interest on the
outstanding principal amount of the non-contingent Obligations at
a rate of two percent (2.0%) per annum in excess of the Prime
Rate, except that Borrower shall pay to Lender interest, at
Lender's option, without notice, at the rate of three percent
(3.0%) per annum in excess of the Prime Rate after the occurrence
and during the continuation of an Event of Default."
(d) Section 9.21 is hereby amended and restated to read in its
entirety as follows:
"9.21 Minimum EBITDA. Borrower shall maintain a minimum EBITDA,
measured monthly, of One Hundred Thousand Dollars ($100,000) for
each of the months of
August 2001 and September 2001. Furthermore, Borrower shall
maintain a minimum EBITDA, for each three (3) month period ending
on the date set forth below, of not less than the amount set
forth opposite each period:
Three Months Ending Minimum EBITDA
------------------- --------------
October 31, 2001 $400,000
November 30, 2001 $425,000
December 31, 2001 $450,000
January 31, 2002 $475,000
February 28, 2002 $575,000
March 31, 2002 $650,000
April 30, 2002 $700,000
May 31, 2002 $750,000
Failure to comply with this Section 9.21 shall not be deemed an
Event of Default until thirty (30) days shall have expired from
the date of such failure (during which thirty-day period Borrower
may provide to Lender such information and documentation, whether
financial or otherwise, as requested by Lender and shall take
such remedial measures, whether business, financial or otherwise,
as necessary to satisfy Lender as to the continued
credit-worthiness of Borrower, all of which may be considered by
Lender, though none of which shall be determinative in Lender's
decision to declare an Event of Default in its sole discretion)
and a written waiver of such default is not then granted by
Lender."
(e) Section 9.17(g) is hereby amended and restated to read in
its entirety as follows:
"(g) all out-of-pocket expenses and costs heretofore and
from time to time hereafter incurred by Lender's examiners in the
conduct of their periodic field examinations of the Collateral
and Borrower's operations, plus a per diem charge at the rate of
Seven Hundred Fifty Dollars ($750) per person per day for
Lender's examiners in the field and office."
(f) The first sentence of Section 12.1(a) is hereby amended to
read as follows:
"This Agreement shall become effective upon satisfaction of all
the conditions set forth in Section 4.1 hereof (unless waived by
Lender) and together with the other Financing Agreements shall
continue in full force and effect for a term ending on the
earlier of (i) May 31, 2002 or (ii) the termination of that
certain Agreement for Wholesale Financing, dated as of August 24,
2000 by and between Deutsche Financial Services Corporation and
Borrower without a satisfactory replacement of such financing
arrangement, including a satisfactory intercreditor arrangement
between Lender and such replacement financing entity, each as
determined by Lender in its sole discretion (such date being the
"Termination Date")."
(g) The first sentence of Section 12.1(c) is hereby amended to
read as follows:
"If for any reason this Agreement is terminated prior to the end
of the then current term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual
damages and by mutual agreement of the parties as to a reasonable
calculation of Lender's lost profits as a result thereof,
Borrower agrees to pay to Lender, upon the effective date of such
termination, an early termination fee in the amount of one half
percent (0.5%) of the then applicable Maximum Credit."
21. Amendment Fee. Borrower shall pay Lender an extension and
amendment fee in the amount of Two Hundred Thousand Dollars ($200,000) for the
extension of the Loan Agreement and processing and approval of this Amendment,
which fee will be due and fully earned upon the execution of this Amendment.
Such fee shall be due in four (4) equal installments of Fifty Thousand Dollars
($50,000) with each installment to be paid on the following dates: (i) the
execution of this Amendment (ii) August 15, 2001, (iii) September 15, 2001, and
(iv) October 15, 2001.
22. 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.
(a) Amendment. This Amendment and the attached Guarantor's
Consent fully executed in a sufficient number of counterparts for distribution
to Lender and Borrower.
(b) Amendment to Intercreditor Agreement. An amendment to that
certain Intercreditor and Subordination Agreement, dated August 25, 2000, by and
between Deutsche Financial Services Corporation ("DFS") and Lender (the
"Intercreditor Agreement"), executed by DFS and acknowledged by Borrower,
pursuant to which DFS shall agree to continue extending credit to Borrower under
the Flooring Line (as defined in the Intercreditor Agreement) until October 3,
2001.
(c) Representations and Warranties. The representations and
warranties set forth herein and in the Loan Agreement must be true and correct.
(d) Other Required Documentation. All other documents and
legal matters in connection with the transaction contemplated by this Amendment
shall have been delivered or executed or recorded and shall be in form and
substance satisfactory to Lender.
23. Conditions Subsequent to the execution of this Amendment.
(a) Delivery of Note Receivable. Within sixty (60) days of the
date hereof, Borrower shall deliver to Lender the original Promissory Note,
dated May 23, 1997, made by Xxxx Xxxxxxxx ("Xxxxxxxx"), an individual, in favor
of Borrower, in the original principal amount of Ninety Thousand Two Hundred
Forty Three Dollars and Seventy Four Cents ($90,243.74); the original Promissory
Noted, dated February 18, 1998, made by Xxxxxxxx, in favor of Borrower, in the
original principal amount of Two Million Dollars and No Cents ($2,000,000.00);
and the original Promissory Note, dated May 23, 1997, made by Xxxxx Xxxxxxx, an
individual, in favor of the Borrower and subsequently assumed by Xxxxxxxx, in
the original principal amount of Seventy Two Thousand Three Hundred Five Dollars
and Seventy Seven Cents ($72,305.77) each endorsed by Borrower to the order of
Lender. Lender agrees not to exercise its rights under such notes unless an
Event of Default occurs, is continuing and is not cured within the applicable
cure period;
provided however, Borrower may accept regularly scheduled payments of principal
and interest so long as no Event of Default has occurred, is continuing and is
not cured within the applicable cure period. Lender further agrees to endorse
(without recourse, warranty or representation of any kind) each of such notes to
Borrower once all obligations of Borrower to Lender under the Financing
Agreements have been satisfied in full and the Loan Agreement has been
terminated.
(b) Assignment of Promissory Note. Within sixty (60) days of
the date hereof, Borrower shall assign to Lender (in a manner satisfactory to
Lender) all of Borrower's rights to payment under that certain Promissory Note,
dated June 18, 2001, made by IMPRES Technology Solutions, Inc. ("IMPRES") in
favor of Borrower in the original principal amount of One Hundred Sixty-Five
Thousand Dollars ($165,000), along with all other rights to payment Borrower may
have under that certain Asset Purchase Agreement, dated as of June 18, 2001, by
and between Borrower and IMPRES. Lender agrees not to exercise its rights under
such notes unless an Event of Default occurs, is continuing and is not cured
within the applicable cure period; provided however, Borrower may accept
regularly scheduled payments of principal and interest so long as no Event of
Default has occurred, is continuing and is not cured within the applicable cure
period. Lender further agrees to endorse (without recourse, warranty or
representation of any kind) such note to Borrower once all obligations of
Borrower to Lender under the Financing Agreements have been satisfied in full
and the Loan Agreement has been terminated.
24. Representations and Warranties. The Borrower represents and
warrants as follows:
(a) Authority. The Borrower has the requisite corporate power
and authority to execute and deliver this Amendment, 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 have been duly approved 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. No other
corporate proceedings are necessary to consummate such transactions.
(b) Enforceability. This Amendment has been duly executed and
delivered by the Borrower. This Amendment and each
Financing Agreement (as amended or modified hereby) is the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, and is in full force and effect.
(c) Representations and Warranties. The representations and
warranties contained in each Financing Agreement (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.
(d) No Default. After giving effect to this Amendment, no
event has occurred and is continuing that constitutes an Event of Default and by
entering into this Amendment, Lender is not waiving and shall not be deemed to
have waived any Event of Default that may exist.
25. 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.
26. 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 by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Amendment.
27. Reference to and Effect on the Financing Agreements.
(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 Financing Agreements 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 Financing Agreements, 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 without defense, offset, claim or
contribution.
(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 Financing Agreements, nor
constitute a waiver of any provision of any of the Financing Agreements.
(d) To the extent that any terms and conditions in any of the
Financing Agreements 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.
28. Ratification. Borrower hereby restates, ratifies and reaffirms
each and every term and condition set forth in the Loan Agreement, as amended
hereby, and the Financing Agreements effective as of the date hereof.
29. 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.
WAREFORCE INCORPORATED,
a California corporation
By: /s/ Xxx Xxxxxx
-------------------------------------
Name: Xxx Xxxxxx
Title: CFO
CONGRESS FINANCIAL CORPORATION (WESTERN),
a California corporation
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
GUARANTOR'S CONSENT
Dated as of July 3, 2001
The undersigned ("Guarantor"), in consideration of the continued
extension of credit to Wareforce Incorporated by Congress Financial Corporation
(Western) ("Congress"), hereby consents and agrees to the foregoing Seventh
Amendment to Amended and Restated Loan and Security Agreement (the "Amendment")
and hereby confirms and agrees that his Guarantee dated August 27, 1999 in favor
of Congress (the "Guarantee") 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 Guarantor of the
matters set forth above, and Guarantor has acknowledged the same, Guarantor
understands and agrees that Congress has no duty under the Loan Agreement, the
Guarantee or any other agreement with Guarantor to so notify Guarantor 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
-------------------------------------
XXXX XXXXXXXX, an individual
