EXHIBIT 10.5(a)
COAST
EXTENSION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS
BORROWER: XXXX SYSTEMS, INC.
ADDRESS: 000 XXXX XXXXXXX XX.
XXXXXXX XXXX, XXXXXXXXXX
DATE: MARCH 21, 1997
THIS EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS is entered into
between COAST BUSINESS CREDIT, a division of Southern Pacific Thrift & Loan
Association ("Coast"), whose address is 00000 Xxxxxxxx Xxxx., Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx and the borrower named above (the "Borrower").
The Parties agree to amend, effective as of the date hereof the
following: (1) the Loan and Security Agreement between them, dated October
11, 1994 (as amended by the First Amendment to Loan and Security Agreement
dated October 11, 1994, by the Extension Agreement and Amendment to Loan
Documents dated August 18, 1995 and as the same may have been otherwise
amended, the "Loan Agreement"); (2) that certain Accounts Collateral Security
Agreement between them, dated October 11, 1994 (as amended by the First
Amendment to Loan and Security Agreement dated October 11, 1994, by the
Extension Agreement and Amendment to Loan Documents dated August 18, 1995 and
as the same may have been otherwise amended, the "Accounts Agreement"); and
(3) that certain Secured Promissory Note dated October 11, 1994, as amended
by that by the Extension Agreement and Amendment to Loan Documents dated
August 18, 1995 (the "Note"), as set forth herein. (This Amendment, the Loan
Agreement, the Accounts Agreement, the Note, any prior written amendments to
said agreements signed by Coast and the Borrower, and all other written
documents and agreements between Coast and the Borrower are referred to
herein collectively as the "Loan Documents". Capitalized terms used but not
defined in this Amendment, shall have the meanings set forth in the Loan
Agreement.)
1. REFERENCES TO COASTFED. All references to CoastFed Business
Corporation in the Loan Documents are hereby amended to be references to
Coast Business Credit, a division of Southern Pacific Thrift & Loan
Association (formerly known as CoastFed Business Corporation); and the
defined term of CoastFed in all the Loan Documents is hereby amended to be
"Coast."
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2. INCREASE IN CREDIT LINE AMOUNT. The last sentence of Section 1.1 of
the Loan Agreement which now reads "Notwithstanding anything herein or in any
Collateral Agreement to the contrary, in no event shall the Borrower permit
the total balance of all Loans and all other Obligations outstanding at any
one time to exceed $10,000,000; and, if for any reason they do, Borrower
shall immediately pay the amount of such excess to Coast in immediately
available funds." is hereby deleted and replaced with the following:
"Notwithstanding anything herein or in any Collateral Agreement to the
contrary, in no event shall the Borrower permit the total balance of all
Loans and all other Obligations outstanding at any one time to exceed
$15,000,000; and, if for any reason they do, Borrower shall immediately
pay the amount of such excess to Coast in immediately available funds."
3. EXTENSION OF MATURITY DATE. The Maturity Date "October 31, 1997"
set forth in Section 8 of the Loan Agreement is amended to read as follows:
"October 31, 2000".
4. MODIFIED SECTION 2.1. Section 2.1 of the Accounts Agreement is
hereby amended in its entirety to read as follows:
"2.1 AMOUNT OF LOANS. Provided no Event of Default has occurred, Coast
agrees to make Loans to Borrower, repayable on demand, in amounts up to
(I) 75% of the Net Amount of each Account, which Coast in its sole and
absolute discretion deems eligible for borrowing PLUS (II) the lesser
of 75% of the Net Amount of each UK Account (as defined below and with
respect to which Coast in its sole and absolute discretion deems
eligible for borrowing) or $1,000,000 outstanding at any one time;
PROVIDED, HOWEVER, that:
(a) In no event may the outstanding Loans with respect to Accounts
representing 'Maintenance Receivables' exceed the 'Maintenance
Receivables Sublimit'. As used herein, 'Maintenance Receivables' means
receivables arising from invoices presented to Borrower's customers for
future services that Borrower may render, on account of future
maintenance, to such customers outstanding no more than 120 days from
their due date. As used herein, 'Maintenance Receivables Sublimit'
shall be, as of the end of each of Borrower's fiscal quarters, equal to
the lesser of (I) $7,000,000 or (II) Borrower's total revenues during
the four fiscal quarters ended on such date, divided by $71,265,000,
and then multiplying the resulting number by $4,000,000.
The Borrower shall provide to Coast the information necessary to compute
the adjustment to the Maintenance Receivables Sublimit at the time
Borrower submits to Coast its quarterly and annual financial statements
under Section 3.8 of the Loan Agreement, and the adjustment to the
Maintenance Receivables Sublimit shall go into effect on Coast's
completion of its review of
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said financial statements (which shall be completed by Coast within five
business days after receipt of the same).
(b) Coast shall have the right to reserve from Loans which would
otherwise be available to the Borrower in each month an amount equal to
the maximum amount payable to Argonaut Information Systems of
California, Inc. ("Argonaut") during the following month, under the
Intercreditor Agreement among Borrower, Coast and Argonaut dated as of
June 30, 1995. The term "Net Amount" of an Account, as used herein,
shall mean the gross amount of the Account, minus all applicable sales,
use, excise and other similar taxes and minus all discounts, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed.
(c) Without limitation that the determination regarding which Accounts
are deemed eligible for borrowing purposes hereunder is in sole
discretion of Coast, Accounts (other than UK Accounts) outstanding for
greater than 120 days from their due date shall not be considered
eligible for borrowing purposes hereunder. Further, if more than 25% of
the Accounts owing from an account debtor are outstanding more than 120
days from their due date (without regard to unapplied credits) or are
otherwise not eligible Accounts, then all Accounts owing from that
account debtor will be deemed ineligible for borrowing.
(d) Without limitation that the determination regarding which UK
Accounts are deemed eligible for borrowing purposes hereunder is in sole
discretion of Coast, UK Accounts outstanding for greater than 60 days
from their due date shall not be considered eligible for borrowing
purposes hereunder. Further, if more than 25% of the UK Accounts owing
from an account debtor are outstanding more than 60 days from their due
date (without regard to unapplied credits) or are otherwise not
eligible UK Accounts, then all UK Accounts owing from that account
debtor will be deemed ineligible for borrowing.
(d) As used herein the term "UK Accounts" shall mean those accounts,
contract rights, chattel paper, and instruments, and all other
obligations now or hereafter owing to Xxxx Systems (UK) Limited.
(e) All Loans pursuant hereto are subject to the credit limit set forth
in the last sentence of Section 1.1 of the Loan Agreement.
5. UK ACCOUNTS. Borrower hereby acknowledges and agrees that all
representations, warranties and covenants set forth in the Accounts Agreement
with respect to Accounts are hereby deemed made by the Borrower as to the UK
Accounts, with the understanding that such representations, warranties and
covenants are considered modified (a) to refer to obligations owing to Xxxx
Systems (UK) Limited rather than obligations owing to the Borrower and (b)
that the account debtors relating thereto may be located outside of the
United States.
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6. CHANGE IN INTEREST RATE. Section 1.2 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"1.2 INTEREST. Unless specifically provided to the contrary in any
Collateral Agreement, all Loans shall bear interest at a rate equal to
the "Prime Rate" (as hereinafter defined), plus 2% per annum,
calculated on the basis of a 360-day year for the actual number of days
elapsed.
The interest rate applicable to all Loans shall be adjusted monthly as
of the first day of each month, and the interest to be charged for that
month shall be based on the highest "Prime Rate" in effect during said
month, but in no event shall the rate of interest charged on any Loans
in any month be less than 9% per annum. "Prime Rate" is defined as the
actual "Reference Rate" or the substitute therefor of the Bank of
America NT & SA ("B of A") whether or not that rate is the lowest
interest rate charged by B of A. If the Prime Rate, as defined, is
unavailable, "Prime Rate" shall mean the highest of the prime rates
published in the Wall Street Journal on the first business day of the
month, as the base rate on corporate loans at large U.S. money center
commercial banks."
7. TERMINATION FEE. Section 8 of the Loan Agreement is hereby amended
by replacing the sentence which presently reads "If termination occurs under
subparagraph (b), (c) or (d) above, Borrower shall pay to Coast a termination
fee in an amount equal to $10,000 for each month (or portion thereof) from
the effective date of termination to the date which would have been the next
renewal date had this Loan Agreement not been terminated, provided that if
the total $200,000 loan fee under the Extension Agreement and Amendment to
Loan Documents between Borrower and Coast dated as of August 18, 1995 has
been paid in full by Borrower, then the following limitations on the
termination fee shall apply: if termination is effective during the month of
November 1996, the termination fee shall be a total of $20,000, if
termination is effective during the month of December 1996, the termination
fee shall be a total of $10,000, and if termination is effective after
December 31, 1996, there shall be no termination fee." with the following:
"If termination occurs under subparagraph (b), (c) or (d) above,
Borrower shall pay to Coast a termination fee in an amount equal to
$10,000 for each month (or portion thereof) from the effective date of
termination to the date which would have been the next renewal date had
this Loan Agreement not been terminated, provided that if the total of
$300,000 in loan fees (that is, each of the three fees of $100,000)
under section 9 of the Extension Agreement and Amendment to Loan
Documents between Borrower and Coast dated as of March 21, 1997 has
been paid in full by Borrower, then the following limitations on the
termination fee shall apply: if termination is effective during the
month of November 1999, the termination fee shall be a total of
$20,000, if termination is effective during the month of December 1999,
the termination fee shall be a total of $10,000,
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and if termination is effective after December 31, 1999, there shall be
no termination fee."
8. NOTE MODIFICATION. The second paragraph of the Secured Promissory
Note dated October 11, 1994 ("Note"), made by the Borrower to Coast, as
amended, is hereby deleted and replaced with the following:
"This Note shall bear interest on the unpaid principal balance hereof
from time to time outstanding at a rate equal to the "Prime Rate" (as
hereinafter defined) plus 2% per annum, but in no event shall the
interest rate in any month be less than 9% per annum. Interest shall be
calculated on the basis of a 360-day year for the actual number of days
elapsed. As used herein, the term "Prime Rate" shall mean the actual
"Reference Rate" or the substitute therefor of the Bank of America NT &
SA whether or not that rate is the lowest interest rate charged by said
bank. The interest rate applicable to this Note shall be adjusted
monthly, as of the first day if each month, and the interest rate
charged during each month shall be based on the highest Prime Rate in
effect during said month. If the Prime Rate is unavailable, "Prime Rate"
shall mean the highest of the prime rates published in the Wall Street
Journal on the first business day of the month, as the base rate of
corporate loans at large U.S. money center banks. Accrued interest
shall be payable monthly, in addition to the principal payments provided
above, commencing on March 31, 1997, and continuing on the last day of
each succeeding month."
All other terms and conditions of the Note shall remain the same.
9. FEE. In consideration for Coast entering into this Extension and
Amendment, the Borrower shall pay Coast an annual loan fee in the amount of
$100,000, which shall be non-refundable and in addition to all interest and
other fees payable to Coast under the Loan Documents. Said fee shall be
payable on November 1, 1997, November 1, 1998 and November 1, 1999. Coast is
authorized to charge said fee to Borrower's loan account.
10. REPRESENTATIONS TRUE. Borrower represents and warrants to Coast
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
11. GENERAL PROVISIONS. This Amendment, the Loan Agreement, and the
other Loan Documents set forth in full all of the representations and
agreements of the parties with respect to the subject matter hereof and
supersede all prior discussions, representations, agreements and
understandings between the parties with respect to the
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subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement and the other Loan Documents shall continue
in full force and effect and the same are hereby ratified and confirmed.
Borrower: Coast:
XXXX SYSTEMS, INC. COAST BUSINESS CREDIT
CORPORATION, a division of Southern
Pacific Thrift & Loan Association
By /s/ Xxxxx X. Xxxxxx By /s/ [Illegible]
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President or Vice President Title
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By /s/ Xxxxx X. Xxxxx
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Secretary or Ass't Secretary
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CONSENT
The undersigned, guarantor, acknowledges that its consent to the
foregoing Agreement is not required, but the undersigned nevertheless does
hereby consent to the foregoing Agreement and to the documents and agreements
referred to therein and to all future modifications and amendments thereto,
and any termination thereof, and to any and all other present and future
documents and agreements between or among the foregoing parties. Nothing
herein shall in any way limit any of the terms or provisions of the Guarantee
of the undersigned, which is hereby ratified and affirmed.
XXXX SYSTEMS (UK) LIMITED
By /s/ Xxxxx X. Xxxxxx
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Title Director
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