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Exhibit 10.74  


 
 

SECOND AMENDMENT
  TO LOAN AND SECURITY AGREEMENT    
  


        THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Second Amendment") is made as of March 18, 2003, by and between  FOOTHILL CAPITAL
CORPORATION, a California corporation ("Lender"), and QAD INC., a Delaware
corporation ("Borrower"), with reference to the following facts: 


        A.
The parties hereto have entered into that certain Loan and Security Agreement, dated as of September 8, 2000, as amended (as amended the "Loan Agreement"), and other Loan
Documents. (Capitalized terms, which are used herein but not defined herein, shall have the meanings ascribed to them in the Loan Agreement.) 


        B.
The parties wish to make certain modifications to the Loan Documents, all on the terms and conditions set forth herein. 


        NOW,
THEREFORE, the parties hereto agree as follows: 



        1.    Amendments to Loan Agreement.    Effective as of the Effective Date (as defined below), the Loan Agreement shall
be amended as follows: 



        1.1  The
following is added to Section 1.1 of the Loan Agreement: 



"Effective
Cash Position" means, as of any date of determination, the sum of (a) unrestricted cash and Cash Equivalents in Borrower's Securities Account, subject to a Control Agreement, as
required by Section 7.19, and (b) Excess Availability." 




        1.2  The
following is added as a new Section 7.20(a)(v) to the Loan Agreement: 



"(v)
Minimum Cash Coverage. (i) As of the last day of each of Borrower's fiscal quarters, maintain an Effective Cash Position equal to no less
than 120% of the outstanding principal balance of and accrued interest on the Term Loan; and (ii) at all other times, maintain an Effective Cash Position equal to no less than 85% of the
outstanding principal balance of and accrued interest on the Term Loan." 




        1.3  The
Compliance Certificate, the form of which is attached as Exhibit C-1 to the First Amendment to
Loan Documents, dated as of December 13, 2001, is replaced by Exhibit C-1 hereto. 




        2.    Limited One-Time Consent.    



        (a)  Borrower
seeks to repurchase no more than $15,000,000 of its common Stock by no later than January 31, 2004 (the "Repurchase"). 


        (b)  Section 7.11 of the Loan Agreement prohibits the repurchase by Borrower of any of Borrower's Stock. 


        (c)  Borrower
has requested Lender's consent to the Repurchase, and Lender is willing to consent to the Repurchase, provided that Borrower complies with the conditions
precedent set forth in Section 3 of this Second Amendment (collectively, the "Conditions") no later than March 19, 2003, time being of the essence. 



        (d)  Subject
to the satisfaction of the Conditions, Lender hereby consents to the Repurchase; provided, however, that this consent is not a consent to any repurchase of Stock
in any other instance or a waiver of any provision of the Loan Agreement, nor is it a consent to any other 



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current or future transaction prohibited by the Loan Documents. Lender is not obligated to provide this consent. 




        3.    Conditions to Effectiveness.    The effectiveness of this Second Amendment is subject to the receipt by Lender
of the following, and the date on which Lender receives all of the following shall be the "Effective Date:" 



        3.1  Counterparts
of this Second Amendment, executed by each of the parties hereto; and 


        3.2  Borrower
agrees to pay Lender all of Lender's attorneys' fees and costs as described in Section 4.8 hereof. 




        4.    Miscellaneous.    



        4.1    Loan Documents Confirmed.    Except as expressly amended hereby, the Loan Agreement and the other Loan
Documents shall remain unchanged and in full force and effect. This Second Amendment is hereby incorporated into the Loan Agreement. 


        4.2    Choice of Law.    EXCEPT AS OTHERWISE EXPRESSLY PROVIDED, THIS SECOND AMENDMENT AND ALL OTHER DOCUMENTS BEING
EXECUTED CONCURRENTLY HEREWITH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. 


        4.3    Sole Parties.    This Second Amendment is made exclusively for the benefit of and solely for the protection of
the parties hereto, and no other person or persons shall have the right to enforce the provisions hereof by action or legal proceedings or otherwise. 


        4.4    Interpretation.    Whenever the context so requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other gender. The headings used in this Second Amendment are inserted solely for the convenience of reference and are not part
of, nor intended to govern, limit or aid in the construction of, any term or provision hereof. 


        4.5    Counterparts.    This Second Amendment may be executed in one or more counterparts, each of which shall be an
original but all of which shall constitute one and the same instrument. 


        4.6    Further Assurances.    From time to time, each party will execute and deliver in recordable form, if necessary,
such further instruments and will take such other action as the other party reasonably may
request in order to discharge and perform their obligations and agreements under this Second Amendment. 


        4.7    Time of Essence.    Time is of the essence in this Second Amendment. 


        4.8    Attorneys' Fees and Costs.    The Borrower agrees that all of Lender's attorneys' fees and costs in drafting
and negotiating this Second Amendment are part of the Obligations and are payable on demand. 



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        IN
WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above. 



	 	 	FOOTHILL CAPITAL CORPORATION,

a California corporation
	

 	
 	

By:	
 	

/s/  JOHN NOCITA      

	

 	
 	

Title:	
 	

John Nocita, Vice President

	

 	
 	

Date:	
 	

March 19, 2003

	

 	
 	
QAD INC.,

a Delaware corporation
	

 	
 	

By:	
 	

/s/  KATHLEEN M. FISHER      

	

 	
 	

Title:	
 	

Kathleen M. Fisher, EVP and Chief Financial Officer

	

 	
 	

Date:	
 	

March 19, 2003





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   EXHIBIT C-1  


Amended Compliance Certificate  


FORM OF AMENDED COMPLIANCE CERTIFICATE  


[on Borrower's letterhead] 


	To:
	Foothill
Capital Corporation

2450 Colorado Avenue, Suite 3000 West

Santa Monica, California 90404

Attn: Business Finance Division Manager



	Re:
	Compliance
Certificate dated            






Ladies
and Gentlemen: 


        Reference
is made to that certain Loan and Security Agreement, dated as of September 8, 2000, as amended (the "Loan Agreement")
between QAD Inc., a Delaware corporation ("Borrower") and Foothill Capital Corporation, a California corporation
("Lender"). Capitalized terms used in this Compliance Certificate have the meanings set forth in the Loan Agreement unless specifically defined herein. 


        Pursuant
to Section 6.3 of the Loan Agreement, the undersigned officer of Borrower hereby certifies that: 


        1.    The
financial information of Borrower furnished in Schedule 1 attached hereto, has been prepared in accordance with
GAAP (except for year-end adjustments and the lack of footnotes, in the case of financial statements delivered under Section 6.3(a)  of the Loan Agreement) and fairly presents the financial
condition of Borrower. 


        2.    Such
officer has reviewed the terms of the Loan Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions
and condition of Borrower during the accounting period covered by the financial statements delivered pursuant to Section 6.3 of the Loan
Agreement. 


        3.    Such
review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any event
or condition that constitutes a Default or Event of Default, except for such conditions or events listed on Schedule 2 attached hereto,
specifying the nature and period of existence thereof and what action Borrower has taken, is taking, or proposes to take with respect thereto. 


        4.    Borrower
is in timely compliance with all representations, warranties, and covenants set forth in the Loan Agreement and the other Loan Documents, except as set forth on  Schedule 2 attached hereto. Without
limiting the generality of the foregoing, Borrower is in compliance with the covenants contained in
Section 7.20 of the Loan Agreement as demonstrated on Schedule 3 hereof. 


        IN
WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this            day
of                        , 20    . 



	 	 	QAD Inc.,

a Delaware corporation

as Borrower
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	Name:	 	 
	 	 	 	 	

	 	 	Title:	 	 
	 	 	 	 	





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SCHEDULE 1  





SCHEDULE 2  





SCHEDULE 3  


        1.    Minimum EBITDA.    


        Borrower's
EBITDA for the            ending                        ,
            is $                        , which amount [is/is
not] greater than or equal to the amount set forth in Section 7.20(a)(i) of the Loan Agreement for the corresponding period. 


        2.    Minimum Tangible Net Worth.    



        (a)  The
Tangible Net Worth of Borrower, as of the last day of the fiscal quarter ending                        ,
            , is $                        , which amount
[is/is not] greater than or equal to the amount set forth in Section 7.20(a)(ii) of the Loan Agreement for the
corresponding period. 




        3.    Maximum Deferred Maintenance Revenue.    


        The
ratio of (A) consolidated Deferred Maintenance Revenue of Borrower and its Subsidiaries to (B) Borrower's and the Subsidiaries' consolidated Maintenance Revenue as of
the fiscal quarter ended            , is            :1.0, which [is/is not] greater
than or equal to the ratio set forth
in Section 7.20(a)(iii) of the Loan Agreement for the corresponding period. 


        4.    Maximum Covered Revenues.    



        (a)  The
Revenues of Borrower derived from software owned by Borrower, for which copyright registrations have been made with the Copyright Office and for which copies thereof
have been delivered to Lender, as of the last day of the fiscal quarter ending                        ,
            , is calculated as follows: 



          (i)  Borrower's
License Revenues derived from software owned by Borrower: 




        $                  




        (ii)  Borrower's
License Revenues derived from software owned by Borrower, for which copyright registrations have been made with the Copyright Office and for which copies
thereof have been delivered to Lender: 




        $                  




        (iii)  Item
(ii) divided by Item (i) ("Ratio")
                                         
                                          
             %
 




        (b)  The
Ratio set forth above [is/is not] greater than or equal to the percentage set forth in
Section 7.20(a)(iv) of the Loan Agreement. 




        5.    Minimum Cash Coverage.    



        (a)  As
of                        , 20            : 



          (i)  the
outstanding principal of the Term Loan is $                        . 


        (ii)  Accrued
interest on the Term Loan is $                        . 


        (iii)  The
sum of (i) and (ii) is $                        . 


        (iv)  The
aggregate unrestricted cash and Cash Equivalents in the Borrower's Security Account, subject to a Control Agreement, is
$                        . 


        (v)  Excess
Availability is $                        . 


        (vi)  The
sum of (iv) and (v) is $                        . 




        (b)  The
amount set forth in (a)(vi) above [is/is not] greater than
[85%/120%] of the amount set forth in (a)(iii) above. 




        6.    Maximum Capital Expenditures.    



        (a)  The
aggregate amount of capital expenditures made or committed to be made to date in the current fiscal year is
$                        . 







        (b)  The
aggregate amount set forth above [is/is not] less than or equal to the amount set forth in
Section 7.20(b)(i) of the Loan Agreement for the corresponding period. 










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SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT