EXHIBIT 10.4
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
made and entered into as of the 20th day of April, 2004 by and between CONGRESS
FINANCIAL CORPORATION (SOUTHWEST), a Texas corporation ("Lender"), and SUPPLIES
DISTRIBUTORS, INC., a Delaware corporation ("Borrower").
WHEREAS, Borrower and Lender are parties to that certain Loan and Security
Agreement dated as of March 29, 2002 (as amended from time to time, the "Loan
Agreement");
WHEREAS, Borrower and Lender desire to amend the Loan Agreement in the
manner provided below;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meaning as in the
Loan Agreement, as amended hereby.
ARTICLE II.
AMENDMENTS
Section 2.01. Amendment to Section 1 of the Loan Agreement. Effective as
of the date hereof, the definitions of "Interest Rate" and "Revolving Loans
Permanent Reserve" contained in Section 1 of the Loan Agreement are hereby
amended and restated in their entirety to read as follows:
"`Interest Rate' shall mean,
(a) Subject to clause (b) of this definition below:
(i) as to Prime Rate Loans, a rate per annum equal to the sum
of the "Applicable Prime Rate Margin" if the Excess Availability for
the Borrower is at or within the amounts indicated for such
percentage (set forth below), plus the Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate per annum equal to
the sum of the corresponding "Applicable Eurodollar Rate Margin" if
the Excess Availability is at or within the amounts indicated from
such percentage (set forth below), plus the Adjusted Eurodollar Rate
(in each case, based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower, as in effect three (3)
Business Days after the date of
First Amendment to Loan and Security Agreement
receipt by Lender of the request of Borrower for such Eurodollar
Rate Loans in accordance with the terms hereof, whether such rate is
higher or lower than any rate previously quoted to Borrower).
Applicable Prime Applicable Eurodollar
Excess Availability Rate Margin Rate Margin
- ------------------- ----------- -----------
$3,000,001 or more 0% 2.25%
$1,000,000 to $3,000,000 0% 2.50%
less than $1,000,000 .25% 2.75%
(b) Notwithstanding anything to the contrary contained in clause (a)
of this definition, the Interest Rate shall mean the rate of two and
one-quarter percent (2.25%) per annum in excess of the Prime Rate as to
Prime Rate Loans and the rate of five percent (5.00%) per annum in excess
of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at Lender's
option, without notice, (i) either (A) for the period on and after the
date of termination or non-renewal hereof until such time as all
Obligations are indefeasibly paid and satisfied in full in immediately
available funds, or (B) for the period from and after the date of the
occurrence of any Event of Default, and for so long as such Event of
Default is continuing as determined by Lender and (ii) on the Revolving
Loans to at any time outstanding in excess of the amounts available to
Borrower under Section 2 (whether or not such excess(es) arise or are made
with or without Lender's knowledge or consent and whether made before or
after an Event of Default).
`Revolving Loans Permanent Reserve' shall mean the applicable amount
during the corresponding time period as set forth below:
April 1, 2004 through and $500,000
including April 30, 2004
May, 2004 through and $450,000
including May 31, 2004
June 1, 2004 through and $400,000
including June 30, 2004
July 1, 2004 through and $350,000
including July 31, 2004
August 1, 2004 through and $300,000
including August 31, 2004
September 1, 2004 through and $250,000
including September 30, 2004
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October 1, 2004 through and $200,000
including October 31, 2004
November 1, 2004 through and $150,000
including November 30, 2004
December 1, 2004 through and $100,000
including December 31, 2004
January 1, 2005 and thereafter $ 0"
Section 2.02. Amendment to Section 3.3 of the Loan Agreement. Effective as
of the date hereof, Section 3.3 of the Loan Agreement is hereby amended by
deleting the amount "$2,000" contained therein and replacing such amount with
"$1,000".
Section 2.03. "Amendment to Section 3.4 of the Loan Agreement. Effective
as of the date hereof, Section 3.4 of the Loan Agreement is hereby amended by
deleting the amount "$20,000,000" contained therein and replacing such amount
with "$15,000,000".
Section 2.04. Amendment to Section 9.14 of the Loan Agreement. Effective
as of the date hereof, Section 9.14 of the Loan Agreement is hereby amended and
restated in its entirety as follows:
"9.14 Net Worth
(a) Borrower shall maintain, as of the last day of each fiscal
quarter, Net Worth of not less than zero.
(b) Borrower shall maintain, as of the last day of each fiscal
quarter, a Modified Net Worth of not less than $1,100,000."
Section 2.05. Amendment to Section 12.1(a)(i) of the Loan Agreement.
Effective as of the date hereof, Section 12.1(a)(i) of the Loan Agreement is
hereby amended and restated in its entirety as follows:
"(i) March 29, 2007, or"
Section 2.06. Amendment to Section 12.1(c) of the Loan Agreement.
Effective as of the date hereof, Section 12.1(c) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
"(c) If for any reason this Agreement is terminated prior to the end
of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and
by mutual agreement of the parties as to a reasonable calculation of
Lender's lost profits as a result
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thereof, Borrower agrees to pay to Lender, upon the effective date of such
termination, an early termination fee in the amount set forth below if
such termination is effective in the period indicated:
Amount Period
(1) 1.0% of Maximum Credit From April 20, 2004 to and including
March 29, 2005
(2) 0.5% of Maximum Credit From March 30, 2005 to and including
March 29, 2006
(3) 0.25 % of Maximum From March 30, 2006 and
Credit thereafter
Such early termination fee shall be presumed to be the amount of
damages sustained by Lender as a result of such early termination and
Borrower agrees that it is reasonable under the circumstances currently
existing. In addition, Lender shall be entitled to such early termination
fee upon the occurrence of any Event of Default described in Sections
10.1(g) and 10.1(h) hereof, even if Lender does not exercise its right to
terminate this Agreement, but elects, at its option, to provide financing
to Borrower or permit the use of cash collateral under the United States
Bankruptcy Code. The early termination fee provided for in this Section
12.1 shall be deemed included in the Obligations. Notwithstanding anything
contained herein to the contrary, the early termination fee shall not
apply to any early termination as the result of a complete refinancing of
the Loans by First Union National Bank."
ARTICLE III.
NO WAIVER
Section 3.01. No Waiver. Nothing contained in this Amendment shall be
construed as a waiver by Lender of any covenant or provision of the Loan
Agreement, the other documents and agreements relating hereto or thereto
(hereinafter individually referred to as a "Loan Document" and collectively
referred to as the "Loan Documents"), this Amendment, or of any other contract
or instrument between Borrower and Lender, and the failure of Lender at any time
or times hereafter to require strict performance by Borrower of any provision
thereof shall not waive, affect or diminish any right of Lender to thereafter
demand strict compliance therewith. Lender hereby reserves all rights granted
under the Loan Agreement, the other Loan Documents, this Amendment and any other
contract or instrument between Borrower and Lender.
ARTICLE IV.
CONDITIONS PRECEDENT
Section 4.01. Conditions. The effectiveness of this Amendment is subject
to the
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satisfaction of the following conditions precedent, unless specifically waived
by Lender:
(a) Lender shall have received, in form and substance satisfactory
to Lender in its sole discretion, (i) this Amendment, duly executed by
Borrower and each of the attached Consent, Ratification and Releases duly
executed by the Guarantors, and (ii) such additional documents,
instruments and information as Lender or its legal counsel may request;
(b) Borrower shall pay to Lender an amendment fee in the amount of
$30,000, which shall be fully earned as of and payable on the date hereof;
(c) The representations and warranties contained herein, in the Loan
Agreement, as amended hereby, and/or in the other Loan Documents shall be
true and correct as of the date hereof as if made on the date hereof;
(d) No default shall have occurred under the Loan Agreement and be
continuing and no default shall exist under the Loan Agreement unless such
default has been specifically waived in writing by Lender; and
(e) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents, instruments
and other legal matters incident thereto shall be satisfactory to Lender
and its legal counsel, Patton Boggs LLP.
ARTICLE V.
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 5.01. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Loan Agreement are ratified and
confirmed and shall continue in full force and effect.
Section 5.02. Representations and Warranties. Borrower hereby represents
and warrants to Lender that (i) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the Articles of Incorporation or
Bylaws of Borrower, (ii) the representations and warranties contained in the
Loan Agreement, as amended hereby, and any other Loan Document are true and
correct on and as of the date hereof as though made on and as of the date
hereof, (iii) Borrower is in full compliance with all covenants and agreements
contained in the Loan Agreement, as amended hereby, and (iv) Borrower has not
amended its Articles of Incorporation or Bylaws since March 29, 2002.
ARTICLE VI.
MISCELLANEOUS
Section 6.01. Survival of Representations and Warranties. All
representations and warranties made in the Loan Agreement or any other document
or documents relating thereto,
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including, without limitation, any Loan Document furnished in connection with
this Amendment, shall survive the execution and delivery of this Amendment and
the other Loan Documents, and no investigation by Lender or any closing shall
affect the representations and warranties or the right of Lender to rely upon
them.
Section 6.02. Reference to Loan Agreement. Each of the Loan Documents,
including the Loan Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Loan Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Loan Agreement shall
mean a reference to the Loan Agreement as amended hereby.
Section 6.03. Expenses of Lender. As provided in the Loan Agreement,
Borrower agrees to pay all reasonable costs and expenses incurred by Lender in
connection with the preparation, negotiation and execution of this Amendment and
the other Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including without limitation the
reasonable costs and fees of Lender's legal counsel, and all reasonable costs
and expenses incurred by Lender in connection with the enforcement or
preservation of any rights under the Loan Agreement, as amended hereby, or any
other Loan Document, including without limitation the reasonable costs and fees
of Lender's legal counsel.
Section 6.04. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable. Furthermore,
in lieu of each such invalid or unenforceable provision there shall be added
automatically as a part of this Amendment a valid and enforceable provision that
comes closest to expressing the intention of such invalid or unenforceable
provision.
Section 6.05. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN DALLAS, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
Section 6.06. Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Lender and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.
Section 6.07. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
Section 6.08. Effect of Waiver. No consent or waiver, express or implied,
by Lender to or for any breach of or deviation from any covenant or condition of
the Loan Agreement shall be deemed a consent or waiver to or of any other breach
of the same or any other covenant,
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condition or duty.
Section 6.09. Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 6.10. NO ORAL AGREEMENTS. THE LOAN AGREEMENT 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 BETWEEN THE PARTIES.
Section 6.11. RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS
AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF
CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM
ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING,
TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST
LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN
AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT.
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First Amendment to Loan and Security Agreement 7
IN WITNESS WHEREOF, this Amendment has been duly executed by Borrower and
Lender to be effective as of the date first above written.
LENDER: BORROWER:
CONGRESS FINANCIAL CORPORATION SUPPLIES DISTRIBUTORS, INC.,
(SOUTHWEST)
By:________________________________ By:_____________________________________
Name:______________________________ Name:___________________________________
Title:_____________________________ Title:__________________________________
ADDRESS: CHIEF EXECUTIVE OFFICE:
5001 LBJ Freeway, Suite 1050 500 North Central Expressway, 5th Floor
Dallas, Texas 75244 Plano, Texas 75074
First Amendment to Loan and Security Agreement
CONSENT, RATIFICATION AND RELEASE
Each of the undersigned hereby consents to the terms of the within and
foregoing Amendment, confirms and ratifies the terms of that certain Secured
Guarantee dated March 29, 2002 and that certain General Security Agreement dated
March 29, 2002 each as amended from time to time and as executed by the
undersigned for the benefit of Lender (the "Guaranty Documents"), and
acknowledges that the Guaranty Documents are in full force and effect and
ratifies the same, that the undersigned has no defense, counterclaim, set-off or
any other claim to diminish the undersigned's liability under such documents,
that the undersigned's consent is not required to the effectiveness of the
within and foregoing Amendment, and that no consent by the undersigned is
required for the effectiveness of any future amendment, modification,
forbearance or other action with respect to the Obligations, the Collateral, or
any of the other Loan Documents. THE UNDERSIGNED HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE UNDERSIGNED MAY NOW
OR HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF
THIS AMENDMENT.
PRIORITY FULFILLMENT SERVICES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
BUSINESS SUPPLIES DISTRIBUTORS HOLDINGS,
LLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
First Amendment to Loan and Security Agreement
CONSENT, RATIFICATION AND RELEASE
The undersigned hereby consents to the terms of the within and foregoing
Amendment, confirms and ratifies the terms of that certain Guarantee dated March
29, 2002 as amended from time to time and as executed by the undersigned for the
benefit of Lender (the "Guaranty Documents"), and acknowledges that the Guaranty
Documents are in full force and effect and ratifies the same, that the
undersigned has no defense, counterclaim, set-off or any other claim to diminish
the undersigned's liability under such documents, that the undersigned's consent
is not required to the effectiveness of the within and foregoing Amendment, and
that no consent by the undersigned is required for the effectiveness of any
future amendment, modification, forbearance or other action with respect to the
Obligations, the Collateral, or any of the other Loan Documents. THE UNDERSIGNED
HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH THE UNDERSIGNED MAY NOW OR HEREAFTER HAVE AGAINST LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING,
WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING
OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER
AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
PFSWEB, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
First Amendment to Loan and Security Agreement