TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
EXHIBIT 99.1
TENTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS
TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of
July 25, 2008, by and among COMMERCE ENERGY, INC., a California corporation
(“Borrower”), COMMERCE ENERGY GROUP, INC., a Delaware corporation (“Parent”),
the financial institutions from time to time party to the Loan Agreement (as
defined below) as lenders (collectively, the “Lenders”), WACHOVIA CAPITAL
FINANCE CORPORATION (WESTERN), in its capacity as agent (in such capacity,
“Agent”) for itself and the other Lenders.
W I T N E S S E T H :
WHEREAS,
Borrower, Parent, Agent and Lenders have entered into financing arrangements
pursuant to which Agent and Lenders may make loans and advances and provide
other financial accommodations to Borrower as set forth in the Loan and Security
Agreement, dated as of June 8, 2006, by and among Borrower, Parent, Agent and
Lenders (as the same now exists, is amended hereby and may hereafter be further
amended, modified, supplemented, extended, renewed, restated or replaced the
“Loan Agreement”) and the other agreements, documents and instruments referred
to therein or at any time executed or delivered in connection therewith or
related thereto (all of the foregoing, together with the Loan Agreement, as all
of the same now exist and may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, collectively, the “Financing
Agreements”);
WHEREAS,
Borrower and Parent have requested that Agent and Lenders agree to make certain
amendments to the Loan Agreement, and Agent and Lenders are willing to agree to
such request, subject to the terms and conditions contained herein;
and
WHEREAS,
Borrower, Parent, Agent and Lenders desire to enter into this Amendment to
evidence and effectuate such amendments, subject to the terms and conditions and
to the extent set forth herein.
NOW,
THEREFORE, in consideration of the foregoing, the mutual agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Interpretation. For
purposes of this Amendment, unless otherwise defined herein, all capitalized
terms used herein which are defined in the Loan Agreement shall have the
respective meanings ascribed to such terms in the Loan Agreement.
2. Waiver.
(a) Subject
to the terms and conditions of this Amendment, Agent and Lenders hereby waive
the Event of Default arising as a result of the failure of Borrower to obtain,
on or before July 25, 2008, subordinated financing of at least $10,000,000 (the
“Existing Default”) as required by Section 3 of the Ninth Amendment to Loan and
Security Agreement, dated as of July 21, 2008, by and among Agent, Lenders,
Borrower and Parent; provided, that, other than the
Existing Default, Agent and Lenders have not waived, are not by this Amendment
waiving, and have no intention of waiving any Default and/or Event of Default
which may have
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occurred
on or prior to the date hereof or which may occur after the date hereof, whether
the same or similar to the Existing Default.
(b) The
foregoing waivers shall not be construed as a bar to or a waiver of any other or
further Default and/or Event of Default on any future occasion, whether similar
in kind or otherwise and shall not constitute a waiver, express or implied, of
any of the rights and remedies of Agent and Lenders arising under the terms of
the Loan Agreement or any other Financing Agreements on any future occasion or
otherwise.
3. Pacific Summit Payment
Deferral. Borrower and Parent represent and warrant that
Borrower has obtained from Pacific Summit Energy LLC (“Pacific”) a payment
deferral, through August 15, 2008, in an amount equal to $5,500,000 (the
“Initial Pacific Payment Deferral”).
4. Amendments.
(a) Letter of Credit
Limit. Section 1.64 of the Loan Agreement is hereby deleted in
its entirety and the following substituted therefor:
“1.64 “Letter
of Credit Limit” shall mean $35,500,000.
(b) Loan
Reduction.
(i) As of the
close of business on August 7, 2008, the aggregate outstanding principal amount
of Loans shall not exceed $7,000,000.
(ii) As of the
close of business on August 15, 2008, the aggregate outstanding principal amount
of Loans shall not exceed $0; provided, that, after August
15, 2008, Agent and Lenders may continue to make Loans to Borrower in accordance
with the terms of the Loan Agreement if Borrower has satisfied the requirements
of Sections 4(b)(ii) and 4(c) of this Amendment, as determined by Agent, and no
Default or Event of Default exists or is continuing.
(c) Additional
Financing. On or before the close of business on August 18,
2008, Borrower shall have obtained, on terms and conditions acceptable to Agent,
(i) Additional Financing (as defined below) of at least $15,000,000 or (ii)
Additional Financing of at least $10,000,000 and an additional
payment deferral from Pacific (or other supplier acceptable to Agent) in an
amount equal to the difference between $15,000,000 and the amount of Additional
Financing obtained by Borrower pursuant to this Section 4(c)(ii). For
purposes of this Amendment, the term “Additional Financing” shall mean
additional financing obtained by Borrower, on terms and conditions and from a
Person acceptable to Agent, whether in the form of loans, letters of credit,
equity contributions or otherwise, repayment of which shall be subordinate in
all respects to the prior repayment in full of all Obligations owing by Borrower
to Agent and Lenders and which shall be subject to a subordination agreement in
form and substance acceptable to Agent.
(d) Additional
Reporting.
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(i) Borrowers
have prepared and delivered to Agent and Lenders an initial business forecast
(the “Forecast”), a copy of which is annexed as Exhibit A hereto. The
initial Forecast sets forth for the periods covered thereby, among other things,
projected daily cash receipts, disbursements and loan balance (collectively, the
"Projected Information"). On a weekly basis or with such other
frequency as Agent may determine, Borrower shall furnish to Agent, in form and
substance satisfactory to Agent, a report that sets forth for the immediately
preceding week a comparison of the actual cash receipts, cash disbursements and
loan balance to the Projected Information.
(ii) Borrower
shall deliver to Agent, on a weekly basis or with such other frequency as Agent
may determine, (1) billing information of Borrower for each market individually
and in the aggregate for all markets collectively, to the extent such
information exists and is reasonably available, (2) a report of Borrower’s
unbilled revenue, to the extent such a report exists and is reasonably
available, (3) a report of Borrower’s accounts payable by supplier based on the
accounts payable subsidiary ledger, (4) a report of Borrower’s accounts
receivable agings by market based on the accounts receivable subsidiary ledger,
and (5) a report of Borrower’s inventory.
(iii) Borrower
shall deliver to Agent, on a monthly basis, a reconciliation of month end
reports based on the detailed subsidiary ledger and the published financial
statements of Borrower and Parent.
(e) Letter of
Intent. Borrower and Parent shall use their good faith efforts
to deliver to Agent and Lenders, not later than August 7, 2008, a letter of
intent from either a private investor, a major commodity bank or other person to
provide Borrower with additional financing.
5. Additional
Default. Borrower and Parent hereby acknowledge, confirm and
agree that the failure of Borrower or Parent to comply with the terms and
conditions of this Amendment shall constitute an additional Event of Default
under the Loan Agreement and the other Financing Agreements.
6. Amendment
Fee. Borrower shall pay to Agent, for the benefit of Lenders
based upon their respective Pro Rate Shares, an amendment fee in an amount equal
to (a) $75,000, which shall be fully earned and payable as of the date of this
Amendment plus
(b) $50,000 (the “Deferred Amendment Fee”), which shall be fully earned and
payable as of the close of business on August 18, 2008; provided, that, in the event
that Borrower satisfies Section 4 of this Agreement, the Deferred Amendment Fee
shall not be due or payable and Borrower shall not be required to pay the
Deferred Amendment Fee.
7. Representations, Warranties
and Covenants. In addition to the continuing representations,
warranties and covenants at any time made by Borrower and Parent to Agent and
Lenders pursuant to the Loan Agreement and the other Financing Agreements,
Borrower and Parent hereby jointly and severally represent, warrant and covenant
with and to Agent and Lenders as follows (which representations, warranties and
covenants are continuing and shall survive the execution and delivery
hereof):
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(a) this
Amendment has been duly authorized, executed and delivered by all necessary
action on the part of Borrower and Parent, and the agreements and obligations of
Borrower and Parent contained herein constitute legal, valid and binding
obligations of Borrower and Parent, enforceable in accordance with their
respective terms;
(b) all of
the material representations and warranties set forth in the Loan Agreement and
the other Financing Agreements, each as amended hereby, are true and correct in
all material respects on and as of the date hereof as if made on the date
hereof, except to the extent any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct in all material respects as of such date; and
(c) as of the
date of this Amendment and after giving effect hereto, no Default or Event of
Default exists or has occurred and is continuing.
8. Conditions
Precedent. The effectiveness of this Amendment shall be
subject to receipt by Agent of a true, correct and complete copy of this
Amendment duly authorized, executed and delivered by Borrower, Parent and
Lenders.
9. Further Assurances.
Borrower and Parent shall execute and deliver such additional documents and take
such additional action as may be requested by Agent to effectuate the provisions
and purposes of this Amendment.
10. Governing
Law. The validity, interpretation and enforcement of this
Amendment and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of California but excluding any principles of
conflicts of law or other rule of law that would cause the application of the
law of any jurisdiction other than the laws of the State of
California.
11. Binding
Agreement. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
12. Effect of this
Agreement. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied and
in all other respects the Financing Agreements are hereby specifically ratified,
restated and confirmed by all parties hereto as of the date
hereof. To the extent of conflict between the terms of this Amendment
and the other Financing Agreements, the terms of this Amendment shall
control.
13. Counterparts. This
Amendment may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Amendment by
telefacsimile or other method of electronic transmission shall have the same
force and effect as the delivery of an original executed counterpart of this
Amendment. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties thereto.
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1079275.5
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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed on
the day and year first above written.
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AGENT
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BORROWER
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WACHOVIA
CAPITAL FINANCE CORPORATION (WESTERN)
By: /s/
Xxxxxx Xxxxxx
Title: Director
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COMMERCE
ENERGY, INC.
By: /s/ C.
Xxxxxxx Xxxxxxxx
Title: Chief Financial
Officer
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LENDERS
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PARENT
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WACHOVIA
CAPITAL FINANCE CORPORATION (WESTERN)
By: /s/
Xxxxxx Xxxxxx
Title: Director
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By: /s/ C.
Xxxxxxx Xxxxxxxx
Title: Chief Financial
Officer
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XXXXX
FARGO FOOTHILL, LLC
By: /s/ Xxxx
Xxxxxxx
Title: Vice
President
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1079275.5
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EXHIBIT
A
[See
attached]
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1079275.5
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