Exhibit 10.10
FIRST AMENDMENT TO
REVOLVING LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT TO REVOLVING LOAN AND SECURITY AGREEMENT is
entered into as of August 9, 2002 (this "Amendment") by and between COMERICA
BANK-CALIFORNIA ("Bank"), a California banking corporation and XXXX, XXXXXX &
ASSOCIATES, INC., a Delaware corporation ("Borrower").
RECITALS
WHEREAS, Borrower and Bank have previously entered into that certain
Revolving Loan and Security Agreement dated June 21, 2002 (the "Loan
Agreement"); and
WHEREAS, OnStaff Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Borrower ("Buyer") will purchase certain assets (the
"Acquisitions") of OnStaff, a California corporation, Healthcare Staffing
Resources, Inc., a California corporation, and Xxxxxxxxxxxx.xxx, a California
corporation (collectively, "Sellers") pursuant to the terms of those certain
Asset Purchase Agreements dated as of August 9, 2002 (as the same may be further
amended, modified or supplemented from time to time the "Acquisition
Agreements") by and among Borrower and Buyer, on the one hand, and Sellers,
Xxxxxxx X. Xxxxx, an individual, Xxxxxxx Xxxxxxxx Grantor Retained Annuity Trust
dated 4/23/01, Xxxxx Xxxxxx Xxxxxxxx Grantor Retained Annuity Trust dated
4/23/01, Xxxxxxx and Xxxxx Xxxxxxxx 2001 Irrevocable Gift Trust dated 4/23/01,
Xxxxxxxx Living Trust dated 3/27/01, and Xxxxxxx Xxxxxxxx, as a representative
of the Seller (the "Seller Parties") on the other hand. The Acquisition
Agreements and each schedule, exhibit, document, instrument and certificate
incorporated therein or delivered in connection therewith, are referred to as
the "Acquisition Documents"; and
WHEREAS, pursuant to Section 10.2 of the Loan Agreement, the
Acquisitions require the consent of Bank; and
WHEREAS, Bank is willing to consent to the Acquisitions, subject to the
terms and conditions of this Amendment; and
WHEREAS, in addition to Bank's consent for the Acquisitions, Borrower
is requesting a sublimit for letters of credit and modification to certain
financial covenants, and Bank has agreed to provide the sublimit for letters of
credit and modification to certain financial covenants pursuant to certain terms
and conditions, as set forth more completely herein.
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AGREEMENT
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Incorporation by Reference; Definitions. The foregoing Loan
Agreement and the Recitals are incorporated
herein by this reference as though set forth in full herein. Any term
not defined herein shall have the meaning
given in the Loan Agreement.
2. Amendment to the Loan Agreement. The Loan Agreement is hereby
modified as set forth below.
2.1 Amendment to Section 1.1 of the Loan Agreement.
Section 1.1 of the Loan Agreement is hereby amended by adding the following new
definitions:
"Held Cash Balances" mean any cash balances of Borrower
maintained at Bank for which Bank has placed a hold."
"Letter of Credit" means any trade letter of credit issued
by Bank at the request of or for the account of Borrower pursuant to
Section 2.11.
"Letter of Credit Obligations" shall mean at any date of
determination, the sum of (a) the aggregate undrawn amount of all
Letters of Credit issued and outstanding; (b) the aggregate face
amount of all Letters of Credit requested but not yet issued as of
such date; and (c) all obligations of Borrower to reimburse Bank for
amounts paid by Bank in respect of drawings under Letters of Credit as
of such date.
2.2 Amendment to Section 2 of the Loan Agreement.
Section 2 of the Loan Agreement is hereby amended by adding the following new
Section 2.11:
"2.11 Letters of Credit.
2.11.1 Issuance. Subject to, and upon the terms
and conditions contained herein, at the request of Borrower, Bank
agrees from time to
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time during the term of this Agreement to issue Letters of Credit for
the account of Borrower containing terms and conditions acceptable to
Bank provided, however that no Letter of Credit shall have an
expiration date beyond one hundred eighty (180) days.
(a) Letters of Credit. Borrower may request Bank to issue a
Letter of Credit by delivering to Bank, Bank's form of Letter of Credit
Application (the "Letter of Credit Application") completed to the
satisfaction of Bank; and, each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit Agreement
and related documents, if any, required by Bank in connection with the
issuance thereof (each, a "Letter of Credit Agreement") together with
such other certificates, documents and other papers and information as
Bank may reasonably request.
2.11.2 Sublimit. No Letters of Credit shall be issued unless, on
the date of the proposed issuance of any Letter of Credit, the Advances
available to Borrower under the Revolving Facility are equal to one
hundred percent (100%) of the face amount of such Letters of Credit.
Except in Bank's discretion, the aggregate amount of all Letter of
Credit Obligations shall not at any time exceed One Million and 00/100
Dollars ($1,000,000.00).
2.11.3 Reimbursement. Each draft paid by Bank under a Letter of
Credit shall be deemed an Advance under the Revolving Facility and
shall be repaid by Borrower in accordance with the terms and conditions
of this Agreement applicable to such Advances; provided, however, that
if the Revolving Facility is not available, for any reason whatsoever,
at the time any draft is paid by Bank, or if Advances are not available
under the Revolving Facility at such time due to any limitation on
borrowings set forth herein, then the full amount of such draft shall
be immediately due and payable, together with interest thereon, from
the date such amount is paid by Bank to the date such amount is fully
repaid by Borrower, at the rate of
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interest applicable to Advances. In such event, Borrower agrees that
Bank, at Bank's sole discretion, may debit Borrower's deposit account
with Bank for the amount of any such draft. In addition, Bank is hereby
irrevocably authorized, in its sole discretion, to make Advances from
time to time, or to charge any deposit account of Borrower, to pay any
Letter of Credit for which payment is due, or at any time after the
occurrence of an Event of Default to fund cash collateral for any
outstanding Letter of Credit.
2.11.4 Letter of Credit Fees. Borrower shall pay to Bank
fees upon the issuance or amendment of each Letter of Credit and upon
the payment by Bank of each draft under any Letter of Credit determined
in accordance with Bank's standard fees and charges in effect at the
time any Letter of Credit is issued or amended or any draft is paid.
2.3 Amendment to Section 9.1 of the Loan Agreement. Section
9.1 of the Loan Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:
"9.1 Current Ratio. Borrower shall maintain, as of the last day
of each fiscal quarter of Borrower, a ratio of current assets to
current liabilities of at least 1.05:1.00; provided, however that as of
December 31, 2002, Borrower shall maintain, as of the last day of each
fiscal quarter of Borrower, a ratio of current assets to current
liabilities of at least 1.25:1.00."
2.4 Amendment to Section 2.1.1 of the Loan Agreement. Section
2.1.1 of the Loan Agreement is hereby amended by deleting it in its entirety and
replaced with the following:
2.1.1 Borrowing Base. Borrowing Base shall mean an amount equal
to the sum of: (a) Eighty percent (80%) of the Net Amount of Eligible
Accounts; plus (b) the aggregate amount of Held Cash Balances; less (c)
any Availability Reserves.
2.5 Amendment to Section 9.2 of the Loan Agreement. Section
9.2 of the Loan Agreement is hereby amended by deleting the term "Forty
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One Million Five Hundred Thousand and 00/100 Dollars ($41,500,000.00)" and
replacing it with the term "Twenty Four Million and 00/100 Dollars
($24,000,000.00)".
2.6 Amendment to Section 9.5 of the Loan Agreement. Section
9.5 of the Loan Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:
"9.5 Profitability. Commencing July 1, 2002 and ending December
31, 2003, Borrower shall have a minimum Net Income of One and 00/100
Dollars ($1.00) for each of Borrower's fiscal quarters during said
period; provided, however, that commencing December 31, 2003, and for
each fiscal year of Borrower thereafter, Borrower shall have a minimum
Net Income of One and 00/100 Dollars ($1.00) measured on a fiscal year
to date basis."
2.7 Amendment to Section 9 of the Loan Agreement. Section 9 of
the Loan Agreement is hereby amended by adding new Section 9.6 as follows:
9.6 Cash Balances. Borrower and its Subsidiaries shall
maintain a minimum aggregate cash balance with Bank of Twelve Million
and 00/100 Dollars ($12,000,000.00); provided, however that if Borrower
is profitable in its third (3rd) and fourth (4th) fiscal quarters for
fiscal year 2002, then Borrower and its Subsidiaries shall maintain a
minimum aggregate cash balance with Bank of Ten Million and 00/100
Dollars ($10,000,000.00)."
3. Hold on Cash Balances. As additional security for the
Obligations, Borrower shall pledge and Bank shall place a hold on Two Million
and 00/100 Dollars ($2,000,000.00) of Borrower's cash balances held at Bank in
money market account #1892-272293, which hold shall be released on November 15,
2002. The hold on such funds is in addition to and does not affect or impair the
security interest in Borrower's deposit accounts granted to Bank by Borrower
under the Loan Agreement.
4. Conditions Precedent. Bank's consent to this Amendment and the
Acquisitions is subject to satisfaction of all of the conditions set forth
below.
4.1 Financial Condition. Borrower shall have
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delivered to Bank, within thirty (30) Business Days after the closing of the
Acquisitions, the unaudited consolidated balance sheet of Borrower and its
Subsidiaries as of July 31 giving effect to the Acquisitions together with a
certificate of Borrower, executed by the chief financial officer of Borrower in
such Person's capacity as an officer of Borrower, in form and substance
satisfactory to Bank certifying that, after giving effect to the Acquisitions,
the fair saleable value of the assets of Borrower, on a going concern basis,
will exceed the probable liability on its debts, that Borrower will be able to
pay its debts as they mature and that Borrower will not have unreasonably small
capital to conduct its business, together with attachments demonstrating the
basis of such conclusions.
4.2 Seller Financial Statements. Borrower shall deliver to
Bank, the balance sheet of each Seller as of the end of such Seller's two (2)
previous fiscal years, together with the related statements of income and
retained earnings for such fiscal years, and the statements of changes in
financial position, all in reasonable detail and standing in comparative form
and all prepared in accordance with GAAP. Upon the completion of the audit of
the Seller's consolidated financial statements for fiscal year ending 2001, and
for the period ending June 30, 2002, Borrower shall promptly deliver an opinion
thereon acceptable to Bank by independent accountants, together with such
financial statements.
4.3 Acquisition. The Acquisitions shall have been consummated
in accordance with the terms of the Acquisition Documents.
4.4 Acquisition Documents. Within ten (10) Business Days after
the closing of the Acquisitions, Bank (a) shall have received true and complete
executed or conformed copies of the Acquisition Documents and any amendments
thereto; (b) the Acquisition Documents shall be in full force and effect and no
material term or condition thereof shall have been amended, modified or waived
after the execution thereof (other than solely to extend the date by which the
Acquisitions are required to occur or waivers of closing requirements that are
not material); (c) neither any Seller, Buyer, Borrower or any of the Seller
Parties shall have failed to perform any material obligation or covenant
required by the Acquisition Documents to be performed or complied with by it on
or before the date hereof, other than waivers of closing requirements that are
not material; and (d) Bank shall have received a certificate of Borrower and
Buyer, executed by Borrower's and Buyer's chief executive or chief financial
officer in such Person's capacity as an officer of Borrower or Buyer, to the
effect set forth in clauses (a), (b) and (c) above.
4.5 Security Interests, UCC Filings and Stock Certificates.
Bank shall have received satisfactory evidence that Bank has a valid and
perfected first priority security interest as of the date hereof in the
Collateral, subject only to liens permitted under the Loan Agreement. Borrower
shall have delivered to or caused to be delivered to Bank executed documents
(including
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financing statements under the UCC and other applicable documents under the laws
of any jurisdiction with respect to the perfection of liens) as Bank may deem
necessary to perfect its security interests in the Collateral. Borrower,
pursuant to the stock pledge agreements, shall have delivered or caused to be
delivered to Bank certificates (which certificates shall be properly endorsed in
blank for transfer or accompanied by irrevocable undated stock powers duly
endorsed in blank) representing all of the capital stock of Borrower and each
Subsidiary of Borrower whose capital stock is subject to the stock pledge
agreements.
4.6 Termination of Liens. Bank shall have received, duly
executed, such UCC-3 termination statements, mortgage releases and other
instruments, in form and substance satisfactory to Bank, as shall be necessary
to terminate and satisfy all liens except permitted encumbrances on the
Collateral.
4.7 Assumption Agreement. Buyer shall execute and deliver to Bank
an assumption agreement in the form attached hereto as Exhibit A.
4.8 First Amendment to Stock Pledge Agreement. Borrower shall
execute and deliver to Bank the First Amendment to Stock Pledge Agreement in the
form attached hereto as Exhibit B.
4.9 Borrower Documents. Borrower shall deliver or cause to be
delivered to Bank the documents listed below, each, unless otherwise noted,
dated the date hereof, duly executed, in form and substance satisfactory to
Bank:
(a) this Amendment;
(b) payment by Borrower of Bank's attorneys' fees and costs
incurred in the preparation of this Amendment and the documents executed
pursuant thereto; and
(c) a certificate of the secretary of Borrower with respect
to (a) resolutions of the Board of Directors of Borrower approving and
authorizing the execution, delivery and performance of this Amendment and the
documents executed pursuant thereto to which Borrower is to be a party; and (b)
the signature and incumbency of the officers of Borrower executing such
documents;
(d) a certificate of the secretary of Buyer with respect to
(a) resolutions of the Board of Directors of Buyer approving and authorizing the
execution, delivery and performance of the documents executed pursuant hereto to
which Buyer is to be a party; and (b) the signature and incumbency of the
officers of Buyer executing such documents; such other and further documents,
and completion of such other and further matters, as Bank may
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reasonably deem necessary or appropriate.
5. Consent. Subject to the terms and conditions herein, Bank
hereby consents to the Acquisition.
6. No Amendment of Other Obligations; No Effect on Collateral.
Except as is otherwise specifically set forth herein or in any document executed
in connection herewith, the Loan Agreement and the Loan Documents are and shall
remain unmodified and in full force and effect. Borrower ratifies and reaffirms
the Obligations, without setoff, defense, or counterclaim, and agrees fully and
faithfully to pay, perform and discharge, as and when payment, performance and
discharge are due, all of the Obligations under the Loan Agreement, as amended
hereby. Nothing herein shall be deemed to affect in anyway the Collateral that
secures the obligations under the Loan Agreement (as modified by this Amendment)
or under any other agreement now or in the future.
7. Conflicts. If any conflict exists between the provisions of
the Loan Documents and the provisions of this Amendment, the provisions of this
Amendment shall control.
8. Ratification of the Guaranties and Security Therefor. By
executing this Amendment below where indicated, Guarantors acknowledge and agree
that they have read and are familiar with, and consent to, all of the terms and
conditions of this Amendment. In light of the foregoing, by executing this
Amendment, Guarantors further confirm and agree that all of the terms and
provisions of the Guaranty and the Guarantor Security Agreement are ratified and
reaffirmed, and that the Guaranty and Guarantor Security Agreement shall and
does continue in full force and effect. Although Bank has informed Guarantors of
the terms of this Amendment, Guarantors understand and agree that Bank has no
duty whatsoever to do so, nor to seek this or any future acknowledgment,
consent, or reaffirmation, and that nothing contained herein is intended to, or
shall create, such a duty on the part of Bank as to any transactions hereafter.
9. Further Assurances. Borrower agrees to make and execute such
other documents and/or take such other action and/or provide such further
assurances as may be requested by Bank in connection with the Obligations or as
may be necessary or required to effectuate the terms and conditions of this
Amendment and any documents executed in connection herewith.
10. Future Amendments. Neither this Amendment nor any document
executed herein entitles, or implies any consent or agreement to, any further or
future modification of, amendment to, waiver of, or consent with respect to any
provision of the Amendment or the Loan Documents. Any modifications hereto or to
the Loan Documents shall be in writing and signed by the parties.
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11. Integration. This Amendment and any documents executed in
connection herewith are integrated agreements, and supersede all negotiations
and agreements regarding the subject matter hereof and thereof, and taken
together with the Loan Documents and any documents executed in connection
herewith, constitute the final agreement of the parties with respect to the
subject matter hereof and thereof.
12. Severability. In the event any one or more of the provisions
contained in this Amendment is held to be invalid, illegal or unenforceable in
any respect, then such provision shall be ineffective only to the extent of such
prohibition or invalidity, and the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
13. Interpretation. This Amendment and all agreements relating to
the subject matter hereof are the product of negotiation and preparation by and
among each party and its respective attorneys, and shall be construed
accordingly. The parties waive the provisions of California Civil Code (S) 1654.
14. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. Delivery of an executed counterpart of
the signature page to this Amendment by telefacsimile shall be effective as
delivery of a manually executed counterpart of this Amendment, and any party
delivering such an executed counterpart of the signature page to this Amendment
by telefacsimile to any other party shall thereafter also promptly deliver a
manually executed counterpart of this Amendment to such other party, provided
that the failure to deliver such manually executed counterpart shall not affect
the validity, enforceability, or binding effect of this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Revolving Loan and Security Agreement to be executed as of the date
first above written.
XXXX, XXXXXX & ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Title: CFO
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COMERICA BANK - CALIFORNIA
/s/ Xxxx X. Xxxxx
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By: Xxxx X. Xxxxx
Its: Assistant Vice President
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ACCEPTED AND AGREED TO:
ICPLANET,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Its:
______________________________
HUNTINGTON ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Its:
______________________________
INTERACTIVE ACQUISITION CORPORATION
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------
Its:
______________________________
TKO PERSONNEL INC.
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------
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Its:
______________________________
GROUP-IPEX, INC.
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Its:
______________________________
TKI ACQUISITION CORPORATION
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Its:
______________________________
TA ACQUISITION CORPORATION
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Its:
______________________________
