Exhibit 10(m)
AMENDMENT TO LOAN DOCUMENTS AND FORBEARANCE AGREEMENT
This Amendment to Loan Documents and Forbearance Agreement (the
"Agreement") is entered into as of January 10, 2001 between Silicon Valley Bank
('Silicon') and NetPlex Systems, Inc. ("Borrower") with respect to the
following:
A. Silicon and the Borrower are parties to that certain Loan and Security
Agreement dated July 31, 2000 (as amended, the "Loan Agreement"). Capitalized
terms used in this Agreement, which are not defined herein, shall have the
meanings set forth in the Loan Agreement The Loan Agreement and all other
present and future documents, 'instruments and agreements relating thereto are
referred to herein collectively as the 'Loan Documents'.
B. Material Events of Default have occurred and are continuing under the
Loan Documents, including without limitation the following: Borrower's failure
to meet the Tangible Net Worth financial covenant set forth in the Loan
Documents for the month ending September 30, 2000.
C. Borrower has requested that Silicon defer, taking action by reason of
the Existing Event of Default (as defined below) and continue to provide
financing to the Borrower for a limited time. Silicon is willing to do so for
the term and on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Forbearance.
1.1 Default. As of the date hereof, the Borrower has failed to comply
with the Tangible Net Worth financial covenant set forth in the Loan Documents
for the month ending September 30, 2000. Accordingly, an Event of Default has
occurred under the Loan Documents (the 'Existing Event of Default'), which
Borrower acknowledges.
1.2 Forbearance. Subject to the terms and conditions hereof, Silicon
agrees to forbear from exercising its rights and remedies under the Loan
Documents by reason of the Existing Event of Default until March 31, 2001 (the
'Forbearance Period'); provided no Additional Default shall occur. If an
Additional Default shall occur, Silicon shall be free to proceed to exercise its
rights and remedies by reason of the Existing Event of Default, without further
notice. In agreeing to forbear from exercising its rights and remedies, Silicon
is not waiving the Existing Event of Default or any rights or remedies in
connection therewith, all of which are expressly reserved. Upon expiration of
the Forbearance Period, Silicon shall be free to proceed to exercise its rights
and remedies by reason of the Existing Event of Default, without further notice.
1.3 Waiver of Compliance. Silicon and Borrower hereby agree that
Borrower does not need to comply with the Tangible Net Worth financial covenant
set forth in the Loan Documents for the months ending October 31, 2000 through
March 31, 2001; provided no Additional Default shall occur. It is understood by
the Borrower and Silicon,
however, that such waiver of compliance does not constitute a waiver of any
other provision or term of the Loan Agreement or any related document nor an
agreement to waive in the future compliance with these covenants or any other
provision or term of the Loan Agreement or any related document.
1.4 Additional Default. 'Additional Default' as used herein means (i)
an Event of Default under a Loan Document, other than the Existing Event of
Default, or (ii) a breach of any of Borrower's obligations under this Agreement.
2. Fee. In consideration for Silicon entering into this Agreement,
Borrower shall concurrently pay Silicon a forbearance fee in the amount of
$5,000, which shall be fully earned on the date hereof, shall be in addition to
all interest and. all other fees and shall be nonrefundable. Silicon is
authorized to charge said fee to Borrower's loan. account.
3. Non-Renewal of Loan Agreement. Although not required under the. Loan
Agreement or any of the Loan Documents, Silicon nonetheless wishes to advise
Borrower (and each Guarantor) that Silicon will not RENEW OR extend the Loan
Agreement beyond the Maturity Date, as amended herein (the "Termination Date"),
As provided in the Loan Agreement, all of the `Obligations" (as defined in the
Loan Agreement) are to be paid in full on the Termination Date (or any earlier
effective date of termination), and termination does not in any way affect or
impair any of Silicon's rights or remedies, nor does termination relieve
Borrower (or any Guarantor) of any Obligation to Silicon until all of the
Obligations have been paid and performed in full.
4. Amendment to Credit Limit. Section 1 of the Schedule to Loan and
Security Agreement entitled 'CREDIT LIMIT' is hereby amended in its entirety to
read as follows:
"1. CREDIT LIMIT (Section 1.1): An amount not to exceed the lesser
of:
(i) $5,000,000 at any one time outstanding (the "Maximum
Credit Limit); or
(ii) the sum of:
(a) 40% of the amount of Borrower's Eligible
Receivables (as defined in Section 8 above), plus
(b) the Permitted Overadvance Amount (as defined
below).
As used herein, the term "Permitted Overadvance Amount"
means, as of any date of determination, an amount equal to:
(1) during the lst day through the 16th day of any month,
$500,000; (2) during the 17th day through the 22nd day of
any month $-0- (the "Clean-Up Period"); and (3) during the
23rd
day through the last day of any month, $500,000, PROVIDED,
HOWEVER, that from and after the Permitted Overadvance
Termination Date (as defined below), the Permitted
Overadvance Amount shall at all times mean an amount equal
to $-0-. As used herein, the term "Permitted Overadvance
Amount Termination Date means first date, IF ever, that
Borrower fails to comply with the Clean-Up Period.'
Borrower hereby acknowledges that Silicon has applied the CD security to the
amount of the outstanding Obligations.
5. Amendment to Interest. -Section 2 of the Schedule to Loan and Security
Agreement entitled "INTEREST" is hereby amended in its entirety to read as
follows:
"2. INTEREST
Interest Rate (Section 1.2):
A rate equal to the 'Prime Rate in effect from time to time,
plus 2.5% per annum. Interest shall be calculated on the
basis of a 360-day year for the actual number of days
elapsed. "Prime Rate" means the rate announced from time to
time by Silicon as its "prime rate;" it is a base rate upon
which other rates charged by Silicon are based, and it is
not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on
each date there is a change in the Prime Rate."
6. Amendment to Maturity Date. Section 4 of the Schedule to Loan and
Security Agreement is hereby amended to read as follows:
"4. MATURITY DATE (Section 6. 1): March 31, 2001."
7. Amendment to Financial Covenants. Section 5 of the Schedule to Loan and
Security Agreement entitled "FINANCIAL COVENANTS (Section 5.1)" is hereby
amended by adding the following financial covenant:
"Performance to Plan: Borrower's parent, The NetPlex Group, Inc.,
on a consolidated basis, shall operate
within ten percent (10%) of its projected
quarterly 'Net Income/(Loss)' as set forth
on that certain "NetPlex Group, Inc. and
Contractor's Resources Consolidated
Statements of Operations Year 2000" and
"NetPlex Group, Inc. and Contractor's
Resources Consolidated Statements of
Operations Year 2001" attached hereto as
Exhibit A."
8. Covenant Regarding Stock of Contractors Resources, Inc. The Borrower
shall cause America's WORK Exchange, Inc. (AWE) to immediately deliver to
Silicon the Securities (as defined in that certain Pledge Agreement dated July
31, 2000 and executed by AWE in favor of Silicon (the 'Pledge Agreement)),
together with duly executed instruments of assignment thereof.
9. Covenant Regarding Copyrights. By March 31, 2001, if all Obligations
have not been paid and performed in full by Borrower and if Borrower, The
NetPlex Group, Inc. or Contractors Resources, Inc. has any unregistered
copyrights, then each of Borrower, The NetPlex Group, Inc. and Contractors
Resources, Inc., as applicable, shall have (i) caused all of its; unregistered
copyrights to be filed for registration with the United States copyright Office
(the "Copyrights"), (ii) executed and delivered to Silicon a Collateral
Assignment, Patent Mortgage and Security Agreement on Silicon's standard form
(the "IP Agreement), (iii) caused the IP Agreement to be filed in the United
States Copyright Office, and (iv) provided evidence of such recordation to
Silicon.
10. Release. In consideration for Silicon entering into this Agreement, the
Borrower hereby irrevocably releases and forever discharges Silicon, and its
successors, assigns, agents, shareholders, directors, officers, employees,
agents, attorneys, parent corporations, subsidiary corporations, affiliated
corporations, affiliates, participants, and each of them, from any and all
claims, debts, liabilities, demands, obligations, costs, expenses, actions and
causes of action, of every nature and description, known and unknown, which
Borrower now has or at any time may hold, by reason of any matter, cause or
thing occurred, done, ornitted or suffered to be done prior to the date of this
Agreement. Borrower hereby irrevocably waives the benefits of California Civil
Code Section 1542 which provides: "A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which ff known by him must have materially affected his
settlement with the debtor." This release is fully effective on the date hereof.
11. General Provisions.
11.1 Integration; Amendment This Agreement and the other Loan Documents
set forth in full the terms of agreement between the parties and are intended as
the full, complete and exclusive contract governing the relationship between the
parties. This Agreement and the other Loan Documents supersede all other
discussions, promises, representations, warranties, agreements, and
understandings between the parties. All of the Obligations, and all of the Loan
Documents and all terms and provisions thereof shall continue in full force and
effect and the same are hereby ratified and confirmed. This Agreement may not be
modified or amended, nor may any rights hereunder be waived, except in a writing
signed by the party against whom enforcement of the modification, amendment or
waiver is sought. Nothing herein limits any of the covenants, agreements,
representations OR warranties in the Loan Agreement or any of the other Loan
Documents.
11.2 Waivers. Any waiver of any condition in, or breach of, this
Agreement or any of the other Loan Documents in a particular instance shall be
only made by a specific
written waiver signed by a duly authorized officer of Silicon and Borrower, and
any such waiver shall not operate as a waiver of other or subsequent conditions
or breaches of -the same or a different kind. Silicon's exercise or failure to
exercise any rights under this Agreement or any of the other Loan Documents in a
particular instance shall not operate as a waiver of its right to exercise the
same or different rights in subsequent instances.
11.3 Other General Provisions. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns, provided, however, that
Borrower may not assign or transfer any rights hereunder without the prior
written consent of Silicon. This Agreement does not create, and shall not be
construed as creating any rights enforceable by any person not a party to this
Agreement. Time is of the essence of each of the obligations of the parties
under, and each of the provisions of, this Agreement. The headings in this
Agreement are solely for convenience and shall be given no effect in the
construction or interpretation of this Agreement. This Agreement may be executed
in any number of counterparts, which together shall constitute one and the same
agreement. If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, the remaining provisions
of this Agreement shall nevertheless remain in full force and effect. Borrower
shall reimburse Silicon, for all of the reasonable costs, fees and expenses
(including without limitation reasonable attorneys' fees) which Silicon has
incurred or hereafter incurs in connection with the negotiation, drafting or
enforcement of this Agreement, or otherwise in connection with this Agreement or
the other Loan Documents, whether or not there is any litigation between the
parties hereto.
11.4 Governing Law, Forum Selection. This Agreement shall be governed
by the laws of the State of California. As a material part of the consideration
to the parties for entering into this Agreement, each party (1) agrees that, at
the option of Silicon, all actions and proceedings based upon, arising out of or
relating in any way directly or indirectly to, this Agreement shall be litigated
exclusively in courts located within Santa Xxxxx County, California, (2)
consents to the jurisdiction of any such court and consents to the service of
process in any such action or proceeding by personal delivery, first-class mail,
or any other method permitted by law, and (3) waives any and all rights to
transfer or change the venue of any such action or proceeding to any court
located outside Santa Xxxxx County, California.
11.5 MUTUAL WAYVER OF RIGHT TO JURY TRIAL. EACH PARTY TO THIS AGREEMENT
HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACMON OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS; OR (II) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR
AGREEMENT BETWEEN OR AMONG THENT OR (III) ANY CONDUCT, ACTS OR OMISSIONS OF ANY
PARTY TO THIS AGREEMENT OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH THEM; IN EACH OF THE.FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
Borrower: Silicon:
NETPLEX SYSTEMS, INC. SILICON VALLEY BANK
By Xxxxx X. Xxxxx By Milad Harena
Title Sr. VP & CFO Title Senior Vice President
By
Title
CONSENT AND RELEASE
Each of the undersigned acknowledges that its consent to the foregoing
Amendment to Loan Documents and Forbearance Agreement is not required, but the
undersigned nevertheless does hereby consent to the foregoing Amendment and
Forbearance 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 Continuing Guarantee or any other Loan Document of the
undersigned, all of which are hereby ratified and affirmed.
Each of the undersigned hereby irrevocably releases and forever discharges
Silicon, and its successors, assigns, agents, shareholders, directors, officers,
employees, agents, attorneys, parent corporations, subsidiary corporations,
affiliated corporations, affiliates, participants, and each of them, from any
and all claims, debts, liabilities, demands, obligations, costs, expenses,
actions and causes of action, of every nature and description, known and
unknown, which each of the undersigned now has or at any time may hold, by
reason of any matter, cause or thing occurred, done, omitted or suffered to be
done prior to the date of this Agreement., Each of the undersigned hereby
irrevocably waives the benefits of California Civil Code Section 1542 which
provides: "A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor." This release is fully effective on the date hereof.
THE NETPLEX GROUP, INC.
By: Xxxxx X. Xxxxx
Title: Sr. VP & CFO
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
AMERICA'S WORK EXCHANGE, INC.
By: Xxxxx X. Xxxxx
Title: Sr. VP & CFO
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
CONTRACTORS RESOURCES, INC.
By: Xxxxx X. Xxxxx
Title: Sr. VP & CFO
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
