Exhibit 10.1


 


As of April 28, 2004


QAD Inc.


6450 Via Real


Carpinteria, California 93102


Attn: Daniel Lender, Chief Financial Officer


 


Re:          Sixth Amendment to Loan and Security Agreement


 


Dear Mr. Lender:


 


Reference is made to that
certain Loan and Security Agreement, dated as of September 8, 2000, by and
between Wells Fargo Foothill, Inc. (formerly known as Foothill Capital
Corporation) (“Lender”) and QAD Inc. (“Borrower”), as amended (said Loan and
Security Agreement, as so amended, hereinafter referred to as the “Loan
Agreement”).  Capitalized terms, which
are used herein but not defined herein, shall have the meanings ascribed to
them in the Loan Agreement.


 


Borrower has requested that
Lender (i) amend the Loan Agreement with respect to certain covenants of
Borrower pertaining to Borrower’s fiscal year ending January 31, 2005, and (ii)
waive the formation of certain foreign Subsidiaries of Borrower without a pledge to Lender of 66% of
the outstanding Stock of such foreign Subsidiaries, which pledge is otherwise
required pursuant to Section 7.13(B) of the Loan Agreement.


 


Subject to the satisfaction
of the conditions set forth herein, Lender is willing to so consent to the
amendment of the Loan Agreement as herein provided.


 


NOW, THEREFORE, Lender and
Borrower hereby agree to the following:


 


1.             Section
7.20(a)(i) of the Loan Agreement is hereby amended and restated in its
entirety as follows:


 


“Minimum
EBITDA.  EBITDA, measured on
a fiscal quarter-end basis, of not less than the required amount set forth in
the following table for the applicable period set forth opposite thereto:


 


	
  Applicable Amount

  	
   

  	
  Applicable
  Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $19,120,000

  	
   

  	
  For the 12
  month period ending April 30, 2004

  	
   

  
	
  $21,280,000

  	
   

  	
  For the 12
  month period ending July 31, 2004

  	
   

  
	
  $22,000,000

  	
   

  	
  For the 12
  month period ending October 31, 2004

  	
   

  
	
  $24,720,000

  	
   

  	
  For the 12
  month period ending January 31, 2005”

  	
   

  



 


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2.             Section 7.20(a)(ii)
of the Loan Agreement is hereby amended and restated in its entirety as
follows:


 


“Tangible Net Worth. 
Net Worth of at least the required amount set forth in the following
table as of the applicable date set forth opposite thereto:


 


	
  Applicable Amount

  	
   

  	
  Applicable
  Date

  
	
   

  	
   

  	
   

  
	
  $16,700,000

  	
   

  	
  April 30,
  2004

  
	
  $22,300,000

  	
   

  	
  July 31,
  2004

  
	
  $26,700,000

  	
   

  	
  October 31,
  2004

  
	
  $31,500,000

  	
   

  	
  January 31,
  2005”

  



 


3.             Lender grants to Borrower a
limited one-time waiver of Section 7.13(B) of the Loan Agreement as a
result of the formation of QAD
NZ Limited, a New Zealand Corporation, and QAD Korea Limited, a Korean
Corporation, each a foreign Subsidiary of Borrower, without a pledge to Lender of 66% of the outstanding Stock of
such foreign Subsidiaries.  This
waiver is not a waiver of any subsequent Default or Event of Default of the
same provisions of the Loan Agreement, nor is it a waiver of any other current
or future Default or Event of Default. Lender is not obligated to provide this
or any other waiver of its default rights.


 


4.             The satisfaction of each of the
following shall constitute conditions precedent to the effectiveness of this
letter agreement and each and every provision hereof:


 


(a)           The representations and warranties of
the Loan Agreement and the other Loan Documents shall be true and correct in
all respects on and as of the date hereof, as though made on such date (except
to the extent that such representations and warranties relate solely to an
earlier date);


 


(b)           No Default or Event of Default shall
have occurred and be continuing; and


 


(c)           No injunction, writ, restraining
order, or other order of any nature prohibiting, directly or indirectly, the
consummation of the transactions contemplated herein shall have been issued and
remain in force by any Governmental Authority against Borrower or Lender.


 


5.             This letter agreement constitutes
an amendment to the Loan Agreement. 
Except as expressly set forth herein, the Loan Documents shall remain in
full force and effect.


 


6.             Borrower agrees that all of
Lender’s attorneys’ fees and costs in drafting and negotiating this letter
agreement are part of the Lender Expenses and are payable on demand.


 


7.             This letter agreement may be
executed in any number of counterparts and by different parties on separate
counterparts.  Each of such counterparts
shall be deemed to be an original, and all of such counterparts, taken
together, shall constitute but one and the same agreement.  Delivery of an executed counterpart of this
letter agreement by telefacsimile shall be equally effective as delivery of a
manually executed counterpart.


 


2

















 


Please indicate your
agreement to the foregoing by executing a copy of this letter in the space
below.


 


	
   

  	
  WELLS FARGO FOOTHILL,
  INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KURT DUERFELDT

  	
   

  
	
   

  	
  Name:

  	
    Kurt Duerfeldt

  	
   

  
	
   

  	
  Title:

  	
  SVP

  	
   

  
	
   

  	
   

  
	
  CONSENTED
  AND AGREED TO:

  	
   

  
	
   

  	
   

  
	
  QAD INC.

  	
   

  
	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
      /s/
  DANIEL LENDER

  	
   

  	
   

  
	
  Name:

  	
    Daniel
  Lender

  	
   

  	
   

  
	
  Title:

  	
  EVP & CFO

  	
   

  	
   

  
										



 


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