Document:

exv10w77

 

EXHIBIT 10.77

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

     THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of
March 28, 2007 (the “Amendment Date”), by and between WACHOVIA BANK, NATIONAL ASSOCIATION
(formerly known as Congress Financial Corporation (Southwest), a Texas corporation)
(“Lender”), and SUPPLIES DISTRIBUTORS, INC., a Delaware corporation (“Borrower”).

RECITALS

     WHEREAS, Borrower and Lender are parties to that certain Loan and Security Agreement dated as
of March 29, 2002 as amended by that certain First Amendment to Loan and Security Agreement dated
as of April 20, 2004 and by that certain Second Amendment to Loan and Security Agreement dated as
of December 21, 2004, and by that certain Third Amendment to Loan and Security Agreement dated as
of June 24, 2005, and by that certain Fourth Amendment to the Loan and Security Agreement dated as
of April 17, 2006 (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, in consideration of the premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, do
hereby amend the Loan Agreement as follows:

AGREEMENT

ARTICLE I

DEFINITIONS

     1.01 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 by this Amendment.

ARTICLE II

AMENDMENTS TO THE LOAN AGREEMENT

     Effective as of the date hereof, the Loan Agreement is hereby amended and supplemented as
follows:

     2.01 Amendment to Section 1.1; Addition of Defined Terms. The following new
definitions shall be added to Section 1.1 of the Loan Agreement in their appropriate
alphabetical order:

          ‘Amendment
Closing Date’ shall mean, March 28, 2007.

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     ‘Capital Expenditures’ shall mean with respect to any Person for any period,
the aggregate of all expenditures by such Person during such period that in accordance with
GAAP are or should be included in “property, plant and equipment” or in a similar fixed
asset account on its balance sheet, whether such expenditures are paid in cash or financed
and including all liabilities and obligations in respect of Capital Leases paid or payable
during such period; provided, however, Capital Expenditures shall not
include any expenditures made with proceeds of condemnation or eminent domain proceedings
affecting real property.

     ‘Capital Leases’ shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or mixed) by such
Person as lessee which in accordance with GAAP, is required to be reflected as a liability
on the balance sheet of such Person.

     ‘EBITDA’ shall mean, at any date of determination, and for the applicable
period, without duplication, the total of the following for Borrower and its subsidiaries on
a consolidated basis calculated for such period: Net Income plus, to the extent deducted in
determining Net Income, interest expense, taxes, depreciation, amortization, other
non-recurring loss or expenses, amortization of intangibles and organization costs, any
non-cash losses or expenses and losses attributable to foreign currency adjustments, minus
all non-cash items increasing Net Income for such period and income attributable to foreign
currency adjustments for such period, all determined in accordance with GAAP.

     ‘Fixed Charges’ shall mean, for any period, the sum, without duplication, of
the amounts determined for any Person during such period equal to (i) total cash interest
expense (including that portion attributable to Capital Leases that is treated as interest
in accordance with GAAP and capitalized interest), net of cash interest income, of such
Person with respect to all outstanding Indebtedness, (ii) scheduled payments of principal on
indebtedness of such Person, excluding payments of principal made hereunder, under the
Agreement for Inventory Financing or under any credit facility that replaces the Agreement
for Inventory Financing, (iii) the total unfinanced portion of Capital Expenditures of such
Person and (iv) total distributions made to equity holders of such Person actually paid in
cash (other than any dividends or distributions permitted pursuant to Section 9.9
and Section 9.11 hereof).

     ‘Net Income’ shall mean, for any period, the amount that should, in accordance
with GAAP, be reflected on Borrower’s income statement as net income for that period.”

     2.02
Amendment to definition of “Eligible Borrower Accounts”. Clause (m) of
the definition of “Eligible Borrower Accounts” contained in Section 1.1 of the Loan
Agreement shall be deleted in its entirety and the following new clause (m) shall be
substituted therefor:

     “(m) such Accounts of a single account debtor or its affiliates do not constitute more
than thirty-five (35%) percent of all otherwise Eligible Accounts (but the portion of the
Accounts not in excess of such percentage may be deemed Eligible Borrower

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     Accounts);”

     2.03 Amendment to definition of “Interest Rate”. The definition of “Interest Rate”
contained in Section 1.1 of the Loan Agreement shall be deleted in its entirety and the
following new definition shall be substituted therefor:

          ‘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 average Excess
Availability for the immediately preceding four (4) fiscal quarters
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 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
	 	 	 	 	Applicable Prime	 	Eurodollar
	Pricing Level	 	Excess Availability	 	Rate Margin	 	Rate Margin
	I
	 	$3,000,001 or more	 	0%	 	1.75%
	II
	 	$1,000,000 to	 	0%	 	2.00%
	 
	 	$3,000,000	 	 	 	 
	III
	 	less than $1,000,000	 	0%	 	2.25%

Any increase or decrease in the Interest Rate resulting from a change in
average Excess Availability for the immediately preceding four (4) fiscal
quarters shall become effective as of the first Business Day immediately
following the end of a fiscal quarter of Borrower; provided,
however, that if average Excess Availability for the immediately
preceding four (4) fiscal quarters cannot be determined, Pricing Level III
shall apply as of the first Business Day immediately
following the end of a fiscal quarter of Borrower until such time as average
Excess Availability is determined. In addition, at all times (i) either (A)
during the period on and after the date of termination or non-renewal hereof
until such time as all Obligations are

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indefeasibly paid and satisfied in
full in immediately available funds, or (B) during 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) when the
Revolving Loans are 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), Pricing Level III shall apply.

     (b) Notwithstanding anything to the contrary contained in clause
(a) of this definition, the Interest Rate shall mean the rate of two
percent (2.00%) per annum in excess of the Prime Rate as to Prime Rate Loans
and the rate of four and one-quarter percent (4.25%) 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).”

     2.04 Amendment to Section 3.3. Section 3.3 of the Loan Agreement shall be
deleted in its entirety and the following shall be substituted therefor:

          “Servicing Fee. Borrower shall pay to Lender quarterly, a servicing fee in an
amount equal to $2,000 in respect of Lender’s services for each fiscal quarter (or part
thereof) while the Loan Agreement remains in effect and for so long thereafter as any of the
Obligations are outstanding, which fee shall be fully earned as of and payable in advance on
the first day of every fiscal quarter hereafter.”

     2.05 Amendment to Section 3.4. Section 3.4 of the Loan Agreement shall be
deleted in its entirety and the following shall be substituted therefor:

          “Unused Line Fee. Borrower shall pay to Lender monthly an unused line fee at a
rate equal to one-quarter of one percent (0.25%) per annum calculated upon the amount by
which $17,500,000 exceeds the average daily principal balance of the outstanding Revolving
Loans during the immediately preceding month (or part thereof) while this Agreement is in
effect and
for so long thereafter as any of the Obligations are outstanding, which fee shall be payable
on the first day of each month in arrears.”

     2.06 Amendment to Section 9.9. The amount “$6,500,000” contained in Section
9.9(g) of the Loan Agreement shall be deleted and the amount “$5,500,000” shall be substituted

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therefor.

     2.07 Amendment to Section 9.11(a). Subsection (a) of Section 9.11 shall be
deleted in its entirety and the following new subsection (a) shall be substituted therefor:

          “(a) Excess Availability shall be not less than $1,000,000,”.

     2.08 Amendment to Section 9.11(c). Subsection (c) of Section 9.11 shall be
deleted in its entirety and the following new subsection (c) shall be substituted therefor:

          “(c) the aggregate amount of all such dividends does not exceed (i) $1,400,000 per
year, plus (ii) an amount equal to any cash dividends received by Borrower from Business
Supplies Distributors Europe BV, plus (iii) an amount equal to any cash dividends received
by Borrower from Supplies Distributors SA, plus (iv) an amount equal to any cash dividends,
up to $800,000 in any year, received by Borrower from Supplies Canada.”

     2.09 Amendment to Section 9.14. Section 9.14 shall be deleted in its entirety
and the following shall be substituted therefor:

          Section 9.14 ‘Minimum Fixed Charge Coverage Ratio’ As of the last day
of each quarter, beginning with the quarter ending on March 31, 2007, the ratio of (i)
EBITDA for the immediately preceding twelve (12) calendar months minus the unfinanced
portion of Capital Expenditures made by Borrower during such period to (ii) Fixed Charges of
Borrower for such period shall not be less than 1.0 to 1.0.

     2.10 Amendment to Section 12.1. The following subsections of Section 12.1 of
the Loan Agreement are hereby amended as follows:

     The first sentence of Section 12.1(a) of the Loan Agreement shall be deleted in its
entirety and the following new sentence shall be substituted therefor:

     “(a): This Agreement and the other Financing Agreements shall become effective as of
the Closing Date and shall continue in full force and effect for a term ending on the
earlier to occur of (i) March 29, 2009, or (ii) the date on which the parties to the IBM
Master Distributor Agreement (or any similar agreement reached with Infoprint Solutions
Company LLC (“Infoprint”)) shall no longer operate under the terms of such agreement and/or
IBM or Infoprint, as applicable, no longer supplies products pursuant to such agreement to
Borrower (the “Renewal Date”), and from year to year thereafter, unless sooner terminated
pursuant to the terms hereof;”

     Subsection (c) of Section 12.1 shall be deleted in its entirety and the following new
subsection shall be substituted therefor:

          “(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

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reasonable calculation of Lender’s lost profits as a result 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)

	 	0.50% of Maximum Credit
	 	From the Amendment Date, to and
including March 29, 2008
	 
	 	 	 	 
	(2)

	 	0.25% of Maximum Credit
	 	From March 30, 2008 and 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) of the
Loan Agreement, 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 Wachovia Bank, N.A.”

ARTICLE III.

NO WAIVER

     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

     4.01 Conditions to Effectiveness. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent, in a manner satisfactory to Lender, unless
specifically waived in writing by Lender:

          (a) Lender shall have received a closing fee the amount of $25,000, which shall be
fully earned and payable on the Amendment Date.

          (b) Lender
shall have received, in form and substance satisfactory to Lender

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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;

     (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

     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. The Borrower and Lender
agree that the Loan Agreement, as amended hereby, shall continue to be legal, valid, binding, and
enforceable in accordance with their respective terms.

     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 (except to the extent any such
representation or warranty is by its terms expressly limited to a certain date or dates, in which
case it remains true, accurate and correct as of such date or
dates and except as otherwise disclosed to Lender pursuant to the Loan Documents prior to 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 the Closing Date of the Loan Agreement.

ARTICLE VI

MISCELLANEOUS PROVISIONS

     6.01 Survival of Representations and Warranties. All representations and warranties
made in the Loan Agreement or any other document or documents relating thereto, including, without
limitation, any Loan Document furnished in connection with this

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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.

     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.

     6.03 Expenses of Lender. As provided in the Loan Agreement, Borrower agrees to pay on
demand 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.

     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.

     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.

     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.

     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.

     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, condition or duty.

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     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.

     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.

     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.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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     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:
	 
	 	 	 	 	 	 	 	 
	WACHOVIA BANK, NATIONAL

ASSOCIATION	 	 	 	SUPPLIES DISTRIBUTORS, INC.,
	 
	 	 	 	 	 	 	 	 
	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

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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:	 	 	 	 
	 

	 	 	 	 

	 	 

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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:	 	 	 	 
	 

	 	 	 	 

	 	 

Fifth
Amendment to Loan and Security Agreement

1exv10w78

 

Exhibit 10.78

AMENDMENT 7

TO

AMENDED AND RESTATED PLATINUM PLAN AGREEMENT (WITH INVOICE DISCOUNTING)

     This Amendment 7 (“Amendment”) dated March 28, 2007 is made to the AMENDED AND RESTATED
PLATINUM PLAN AGREEMENT (WITH INVOICE DISCOUNTING) by and among IBM BELGIUM FINANCIAL SERVICES
S.A., with a registered number of R.C. Brussels 451.673 with an address of Avenue du Bourget 42,
BE- 1130 Brussels VAT BE 424300467 (“IBM GF” or
“us”), Suppliers Distributors S.A. with a
registered number of RC Liege 208795 with an address of Rue Louis Blériot 5, B-4460
Gráce-Hollogne, Belgium (“SDSA”), and Business Supplies Distributors Europe BV a Netherlands
company registered in Maastricht with a Netherlands trade registration number of HR Maastricht
14062763 with an address of Dalderhaag 13, 6136 KM Sittard, The Netherlands (“BSDE”) (SDSA and BSDE
collectively, “you”), PFS Web B.V. SPRL a company registered in The Netherlands, having the
statutory seat in Amsterdam under the number 17109541, and having the administration and direction
seat in Grace Hollogne, with a Belgian trade registration number of R.C. Liege 204162, VAT BE
466681054 (“PFS Web B.V. ”) (SDSA, BSDE and PFS Web B.V. collectively, the “Loan Parties”)

RECITALS:

     A. The Loan Parties and IBM GF have entered into that certain AMENDED AND RESTATED PLATINUM
PLAN AGREEMENT (WITH INVOICE DISCOUNTING) dated as of March 29, 2002 (as amended and modified from
time to time, the “Agreement”);

     B. The Loan Parties have requested and IBM GF has agreed to extend the Agreement for twelve
months;

     C. The Loan Parties agree to certain financial covenants revisions by IBM GF; and

     D.
 The parties have agreed to modify the Agreement as more specifically set forth
below,

     upon and subject to the terms and conditions set forth herein.

AGREEMENT

     NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, IBM GF and the Loan Parties hereby agree
as follows:

Section 1. Definitions. All capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Agreement.

Section 2. Amendment. Subject to Section 4 hereof, the Agreement is hereby amended as follows:

     A. The Agreement is hereby amended as follows:

     (a) Section 1.1 is hereby amended by adding the following definition:

“Termination Date”: means March 31, 2008 or such other date as to
which IBM GF and the Loan Parties may agree from time to time.

     (b) Section 8.2.7 is hereby amended by deleting it in its entirety and substituting, in lieu
thereof, the following:

					
	 	 	 	 	 
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” Financial Covenants

You agree to comply with the Financial Covenants, if any, set out in the relevant supplements
or the Schedule. You also agree that you will not, without our consent, make any of the following
payments (“Restricted Payments”) without our prior written consent (i) declare or pay any dividend
(other than dividends payable solely in common stock of BSDE and/or SDSA and the aggregate amount
of such dividends under this Agreement and the AIF does not cause you or Holdings to violate such
Financial Covenants on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of capital stock of BSDE and/or SDSA or any warrants, options or rights to
purchase any such capital stock or Equity Interests, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly, whether in cash or
property or in obligations of BSDE and/or SDSA ; or (ii) make any optional payment or prepayment on
or redemption (including, without limitation, by making payments to a sinking or analogous fund) or
repurchase of any Indebtedness (other than the Obligations)), except as permitted by the Amended
and Restated Notes Payable Subordination Agreement. However, as long as you are not in violation
with any such Financial Covenants prior to or subsequent to the following transactions, (i) BSDE
may pay cash dividends to Supplies Distributors, Inc. up to an amount not to exceed BSDE’s
liquidation value, and (ii) SDSA may pay cash dividends in an amount not to exceed 407,000 euros to
Supplies Distributors, Inc. in fiscal year 2007.”

(c) Section 10.1 is hereby amended by deleting it in its entirety and substituting,
in lieu thereof, the following:

“This Agreement will remain in force until the Termination Date. However
following the occurrence of an Event of Default that we have not waived in
writing we may by notice with immediate effect terminate this Agreement.
Upon any termination of this Agreement we shall have all the rights and
remedies set out in Clause 9.2 until the complete discharge of all the Loan
Parties’ obligations to us. Any such termination shall not affect any
right we have in relation to the IBM Reimbursables and IBM Receivables or
the Receivables Rights and the Supplier Obligations and the Product Rights.

     B. The Schedule to the Agreement is hereby amended by deleting such Schedule in its entirety
and substituting, in lieu thereof, the Schedule attached hereto. Such new Schedule shall be
effective as of the date specified in the new Schedule. The changes contained in the new Schedule
include, without limitation, the following:

Credit Line:          €12,500,000

VAT Receivables:            Deleted from Collateral Valuation

Prepayment Percentage:           (i) 80% of Eligible IBM Reimbursables (1) and (ii) 80% of Eligible

 IBM Receivables

					
	 	 	 	 	 
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Collateral Value of Stock-in-Trade: (A) 100% of paid for IBM Printing Systems Division or
InfoPrint Solution Company inventory (other than (a) machines which IBM Printing Systems Division
or Infoprint Solution Company has declared obsolete at least 60 days prior to the date of
determination and (b) service parts) which (i) we have purchased the associated Supplier Invoice
from the Authorised Supplier
on or after the Closing Date (ii) purchased directly from IBM or InfoPrint Solution Company prior
to the Closing Date and not subject to retention of title, provided, however, we have a first
priority security interest in such inventory, (iii) is repurchasable under a repurchase agreement
with the Authorized Supplier and (iv) is secured and managed through a pledge with Disposition,
with coverage percentage acceptable to us (such acceptable percentage to be determined by us within
60 days of the date this Schedule is executed)The value to be assigned to such inventory shall be
based upon the Supplier Invoice net of all applicable credit notes.

In the event that products currently supplied by IBM Printing Systems Division (“InfoPrint
Products”) cease to be sold to you by an entity that is wholly owned by IBM Corporation, on the
date of such cessation :

	•	 	Any InfoPrint Products then forming part of the Collateral shall continue to be Collateral;
	 
	•	 	Any InfoPrint Products supplied by any other legal entity (as part of the InfoPrint Solutions Company group) thereafter
shall only form part of the Collateral from the date on which IGF has established arrangements and entered into
agreements acceptable to it with such supplier and you for the continued financing of the InfoPrint Products.

     Financial Covenant Definitions: Changed for net Profit After Tax, Revenue and Working Capital
Turnover.

FINANCIAL COVENANTS

SDSA and BSDE will be required, on a consolidated basis, to maintain the following
financial ratios, percentages and amounts on a year to date basis as of the last day of
the fiscal period under review (quarterly and annually) by us and IBM Credit:

	 	 	 	 	 
	 	 	Covenant	 	Covenant Requirement
	(i)

	 	Debt to Tangible Net Worth
	 	Greater than Zero and
	 

	 	 	 	Less than 7.0:1.0
	(ii)

	 	Net Profit after Tax to Revenue
	 	Greater than 0.10 percent
	(iii)

	 	Working Capital Turnover (WCTO)
	 	Greater than Zero and
	 

	 	 	 	Less than 43.0:1.0

PFSweb, Inc. will be required to maintain the following financial ratios,
percentages and amounts as of the last day of the fiscal period under review
(quarterly and annually) by IBM Credit:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Covenant	 	 
	 	 	Covenant	 	Requirement	 	Date as of
	(i)

	 	Minimum Tangible Net Worth
	 	$	18,000,000.00	 	 	03/31/07 and beyond

					
	 	 	 	 	 
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Section 3. Conditions of Effectiveness of Consent and Amendment. This Amendment shall have been
authorized, executed and delivered by each of the parties hereto and IBM GF shall have received a
copy of a fully executed Amendment.

Section 4. Representations and Warranties. Each Loan Party makes to IBM GF the following
representations and warranties all of which are material and are made to induce IBM GF to enter
into this Amendment.

Section 4.1 Accuracy and Completeness of Warranties and Representations. All representations made
by the Loan Party in the Agreement were true and accurate and complete in every respect as of the
date made, and, as amended by this Amendment, all representations made by the Loan Party in the
Agreement are true, accurate and complete in every material respect as of the date hereof, and do
not fail to disclose any material fact necessary to make representations not misleading.

Section 4.2 Violation of Other Agreements. The execution and delivery of this Amendment and the
performance and observance of the covenants to be performed and observed hereunder do not violate
or cause any Loan Party not to be in compliance with the terms of any agreement to which such Loan
Party is a party.

Section 4.3 Litigation. Except as has been disclosed by the Loan Party to IBM GF in writing, there
is no litigation, proceeding, investigation or labor dispute pending or threatened against any Loan
Party, which, if adversely determined, would materially adversely affect the Loan Party’s ability
to perform such Loan Party’s obligations under the Agreement and the other documents, instruments
and agreements executed in connection therewith or pursuant hereto.

Section 4.4 Enforceability of Amendment. This Amendment has been duly authorized, executed and
delivered by each Loan Party and is enforceable against each Loan Party in accordance with its
terms.

Section 5. Ratification of Agreement. Except as specifically amended hereby, all of the provisions
of the Agreement shall remain unamended and in full force and effect. Each Loan Party hereby
ratifies, confirms and agrees that the Agreement, as amended hereby, represents a valid and
enforceable obligation of such Loan Party, and is not subject to any claims, offsets or defenses.

Section 6. Ratification of Guaranty. Each of Holdings, SDI, PFSweb and PFS hereby ratify and
confirm their respective guaranties in favor of IBM GF and agree that such guaranties remain in
full force and effect and that the term “Liabilities”, as used therein include, without limitation
the indebtedness liabilities and obligations of SDSA and BSDE under the Agreement as amended
hereby. SDI hereby ratifies and confirms its Notes Payable Subordination Agreement executed by SDI
on March 29, 2002 and confirms such Notes Payable Subordination Agreement remains in full force and
effect.

Section 7. Governing Law. This Amendment shall be governed by and interpreted in accordance with
the laws which govern the Agreement.

Section 8. Counterparts. This Amendment may be executed in any number of counterparts, each of
which shall be an original and all of which shall constitute one agreement.

					
	 	 	 	 	 
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     IN WITNESS WHEREOF, each Loan Party has read this entire Amendment, and has caused its
authorized representatives to execute this Amendment and has caused its corporate seal, if any, to
be affixed hereto as of the date first written above.

	 	 	 	 	 	 	 	 	 	 	 
	IBM BELGIUM FINANCIAL SERVICES S.A.	 	SUPPLIERS DISTRIBUTORS S.A.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	Print Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BUSINESS SUPPLIES DISTRIBUTORS EUROPE BV	 	PFS WEB B.V. SPRL
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	Print Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	The following parties agree to Section 6 as applicable to them.
	 
	 	 	 	 	 	 	 	 	 	 
	SUPPLIES DISTRIBUTORS, INC.	 	PRIORITY FULFILLMENT SERVICES, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	Print Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BUSINESS SUPPLIES
DISTRIBUTORS HOLDINGS, LLC	 	
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

					
	 	 	 	 	 
	SDSA Amd 7 Amended & Restated Plat Plan
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