NINTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Exhibit 10.5
NINTH AMENDMENT TO FIRST AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT
THIS NINTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (herein called
this “Amendment”) made as of the 31st day of March, 2011 by and between Priority Fulfillment
Services, Inc. (“Borrower”) and Comerica Bank (“Bank”),
WITNESSETH:
WHEREAS, Borrower and Bank have entered into that certain First Amended and Restated Loan and
Security Agreement dated as of December 29, 2004 (as from time to time amended or modified, the
“Original Agreement”) for the purposes and consideration therein expressed, pursuant to which Bank
became obligated to make loans to Borrower as therein provided; and
WHEREAS, Borrower and Bank desire to amend the Original Agreement to extend the Revolving
Maturity Date and for the other purposes set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained herein and in the Original Agreement, in consideration of the loans which may hereafter
be made by Bank to Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
§ 1.1 Terms Defined in the Original Agreement. Unless the context otherwise requires or
unless otherwise expressly defined herein, the terms defined in the Original Agreement shall have
the same meanings whenever used in this Amendment.
§ 1.2 Other Defined Terms. Unless the context otherwise requires, the following terms when
used in this Amendment shall have the meanings assigned to them in this §1.2:
“Amendment” means this Ninth Amendment to First Amended and Restated Loan and
Security Agreement.
“Loan Agreement” means the Original Agreement as amended hereby
[Ninth Amendment]
ARTICLE II.
Amendment to Original Agreement
§ 2.1 Defined Terms.
(a) The definition of “Committed Revolving Line” in Exhibit A to the Original Agreement
is hereby amended in its entirety to read as follows:
“Committed Revolving Line” means a Credit Extension of up to (i) $10,000,000
during the period of March 31, 2011 to and including October 31, 2011, (ii)
$12,500,000 during the period of November 1, 2011 to and including March 31, 2012,
and (iii) $10,000,000 from April 1, 2012 and thereafter, in each case inclusive of
any amounts outstanding and the aggregate limits of the corporate credit cards
issued to Borrower under the Letter of Credit and Credit Card Sublimit.
(b) The definition of “Permitted Distribution” in Exhibit A to the Original Agreement
is hereby amended in its entirety to read as set forth below:
“Permitted Distribution” means any cash dividend or cash distribution by
Borrower to any entity that is an Affiliate of Borrower, provided that such cash
dividend or cash distribution is made from Inflow Transfers received by Borrower
after March 31, 2011, in excess of $2,150,000 and that the aggregate amount of any
such cash dividends or cash distributions shall not exceed $400,000 until the
aggregate Inflow Transfers received by Borrower after March 31, 2011 exceed
$2,550,000.
(c) Clauses (e) and (f) of the definition of “Permitted Investment” in Exhibit A to the
Original Agreement are hereby amended in their entirety to read as follows:
| (e) | Advances by Borrower to Supplies Distributor, Inc. pursuant to the Subordinated Demand Note, so long as (1) the aggregate outstanding principal amount of such Indebtedness does not exceed $5,000,000 (excluding accrued and unpaid interest) at any time, and (2) before and after giving effect to such advances no Event of Default has occurred and is continuing. | ||
| (f) | Incremental cash Investments by Borrower in or cash advances to SPRL PFSweb B.V., Priority Fulfillment Services of Canada, Inc., PFSweb Philippine Services, LLC (f/k/a eCOST Philippine Services LLC), PFSM, LLC and PFSweb Retail Connect, Inc. (f/k/a xXXXX.xxx, Inc.), not to exceed $400,000, provided that (1) the aggregate amount of all Inflow Transfers after January 1, 2011 and prior to April 30, 2011 equals or exceeds $750,000, and (2) at the time of each such incremental cash Investment and after giving effect thereto, no Event of Default has occurred and is continuing. |
[Ninth Amendment]
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(d) The definition of “Revolving Maturity Date” in Exhibit A to the Original Agreement
is hereby amended in its entirety to read as follows:
“Revolving Maturity Date” means September 30, 2012.
(e) The definition of “Letter of Credit Sublimit” in Exhibit A to the Original
Agreement is hereby amended in its entirety to read as set forth below:
“Letter of Credit and Credit Card Sublimit” means a sublimit for Letters of
Credit and corporate credit cards under the Committed Revolving Line not to exceed
$2,500,000.
§ 2.2 Fees. Section 2.5(a) of the Original Agreement is hereby amended in its entirety to
read as follows:
(a) Facility Fee. A facility fee in the aggregate amount of $30,000 to be paid
on March 31, 2011.
§ 2.3 EBITDA. Section 6.7(d) of the Original Agreement is hereby amended in its
entirety to read as follows:
(d) EBITDA. As of the last day of each calendar month, the variance, if
negative, then expressed as a positive number, between Borrower’s EBITDA and the EBITDA set
forth in the Approved Projections for the twelve (12) calendar month period ending on such
date, shall not exceed $350,000. As used herein, “EBITDA” shall mean, for any period of
calculation, Borrower’s earnings for such period before interest and taxes plus
depreciation, amortization and non-cash stock compensation accruals to the extent deducted
in the calculation of such earnings. “Approved Projections” means for the 2011 calendar
year, the projections for such period that have been reviewed by Borrower’s Board of
Directors and delivered to Bank on or about March 9, 2011.
§ 2.4 Affirmative Covenants. Section 6.12 of the Original Agreement is hereby amended
in its entirety to read as follows:
6.12 Inflow Transfers. Borrower shall receive not less than $2,550,000 in
aggregate Inflow Transfers during the period beginning March 31, 2011 and ending on July 5,
2011.
§ 2.5 Negative Covenants. Section 7.12 of the Original Agreement is hereby amended in its
entirety to read as follows:
7.12 Capital Expenditures. Make capital expenditures in an aggregate amount
greater than $4,500,000 in each fiscal year of Borrower, provided that the aggregate amount
of such expenditures purchased with cash (and not financed) shall not exceed $1,500,000;
provided further, that any capital expenditures made by Borrower exclusively from the
proceeds of Permitted Distributions shall not be subject to the foregoing limitations. As
used herein, the term “capital expenditures” does not include
[Ninth Amendment]
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(i) any software that is
internally developed by Borrower, whether or not Borrower capitalized the development
costs, and (ii) any equipment ordered, but not yet accepted or paid for, by Borrower.
§ 2.6 Global Amendment. Each reference to the “Letter of Credit Sublimit” in the
Original Agreement is hereby amended to refer to the “Letter of Credit and Credit Card Sublimit”.
§ 2.7 Consent. Sections 6.2(a) and (q) of the Original Agreement provide that
Borrower will deliver to Bank Guarantor’s consolidated monthly financial statements and a
Compliance Certificate within 45 days after the end of each calendar month. Bank hereby consents
to Borrower delivering the financial statements and Compliance Certificate for the period ending
January 31, 2011 on March 31, 2011, and waives any Event of Default arising from such delayed
delivery of such financial statements and Compliance Certificate.
ARTICLE III.
Conditions of Effectiveness
§ 3.1 Effective Date. This Amendment shall become effective as of the date first above
written when and only when Bank shall have received, at Bank’s office, (a) a counterpart of this
Amendment executed and delivered by Borrower and the attached Consent and Agreement executed and
delivered by Guarantor, and (b) the facility fee required pursuant to Section 2.5(a) of the
Agreement.
ARTICLE IV.
Representations and Warranties
§ 4.1 Representations and Warranties of Borrower. In order to induce Bank to enter into
this Amendment, Borrower represents and warrants to Bank that:
(a) The representations and warranties contained in Article 5 of the Original Agreement
are true and correct at and as of the time of the effectiveness hereof, except to the extent
such representations or warranties relate to an earlier date in which case such
representation or warranty shall be true and correct as of such earlier date and except as
otherwise set forth in a written schedule delivered to the Bank concurrently herewith.
(b) Borrower is duly authorized to execute and deliver this Amendment and is and will
continue to be duly authorized to borrow and to perform its obligations under the Loan
Agreement. Borrower has duly taken all corporate action necessary to authorize the
execution and delivery of this Amendment and to authorize the performance of the obligations
of Borrower hereunder.
(c) The execution and delivery by Borrower of this Amendment, the performance by
Borrower of its obligations hereunder and the consummation of the
[Ninth Amendment]
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transactions contemplated
hereby do not and will not conflict with any provision of law, statute, rule or regulation
or of the organizational documents of Borrower, or of any material agreement, judgment,
license, order or permit applicable to or binding upon Borrower, or result in the creation
of any lien, charge or encumbrance upon any assets or properties of Borrower. Except for
those which have been duly obtained, no consent, approval, authorization or order of any
court or governmental authority or third party is required in connection with the execution
and delivery by Borrower of this Amendment or to consummate the transactions contemplated
hereby.
(d) When duly executed and delivered, each of this Amendment and the Loan Agreement
will be a legal and binding instrument and agreement of Borrower, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency and similar laws applying to
creditors’ rights generally and by principles of equity applying to creditors’ rights
generally.
ARTICLE V.
Miscellaneous
§ 5.1 Ratification of Agreements. The Original Agreement as hereby amended is hereby
ratified and confirmed in all respects. Any reference to the Loan Agreement in any Loan Document
shall be deemed to be a reference to the Original Agreement as hereby amended. 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 Bank under the Loan Agreement or any other
Loan Document nor constitute a waiver of any provision of the Loan Agreement or any other Loan
Document.
§ 5.2 Survival of Agreements. All representations, warranties, covenants and agreements of
Borrower herein shall survive the execution and delivery of this Amendment and the performance
hereof, including without limitation the making or granting of the Advances, and shall further
survive until all of the Obligations are paid in full. All statements and agreements contained in
any certificate or instrument delivered by Borrower hereunder or under the Loan Agreement to Bank
shall be deemed to constitute representations and warranties by, or agreements and covenants of,
Borrower under this Amendment and under the Loan Agreement.
§ 5.3 Loan Documents. This Amendment is a Loan Document, and all provisions in the Loan
Agreement pertaining to Loan Documents apply hereto.
§ 5.4 Governing Law. This Amendment shall be governed by and construed in accordance with
the laws of the State of California and any applicable laws of the United States of America in all
respects, including construction, validity and performance.
§ 5.5 Counterparts. This Amendment may be separately executed in counterparts and by the
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to constitute one and the same Amendment.
[Ninth Amendment]
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THIS AMENDMENT 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 OF THE PARTIES.
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[Ninth Amendment]
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IN WITNESS WHEREOF, this Amendment is executed as of the date first above written.
| PRIORITY FULFILLMENT SERVICES, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| COMERICA BANK |
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| By: | ||||
| Name: | ||||
| Title: | ||||
[Ninth Amendment — Signature Page]
CONSENT AND AGREEMENT
PFSWEB, INC., a Delaware corporation, hereby consents to the provisions of this Amendment and
the transactions contemplated herein, and hereby ratifies and confirms the Guaranty dated as of
December 29, 2004, made by it for the benefit of Bank, and agrees that its obligations and
covenants thereunder are unimpaired hereby and shall remain in full force and effect.
| PFSWEB, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
[Ninth Amendment]
