Document:

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”

  	
   

  

 

1

 

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

  	
   

  	
   

  
										

 

3Exhibit 4.7

 

MEMORANDUM

 

	
  TO:

  	
   

  	
  Members of the Quanex Bank Group

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
  Bill Murdock

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
  April 7, 2004

  
	
   

  	
   

  	
   

  
	
  RE:

  	
   

  	
  Requested Extension to the Revolving Credit Maturity Date under the
  Quanex Corporation Revolving Agreement dated as of November 26, 2002 (as
  amended, the “Credit Agreement”)

  

 

Ladies and Gentlemen:

 

As you are all aware, the Company has exercised its right under and in
accordance with Section 2.15 of the Credit Agreement to request that the
Banks extend the Revolving Credit Maturity Date to February 28, 2007
(“Extension”).

 

As a condition to the requisite Banks’ consent to the Extension, the
Company has agreed to pay to each Bank that consents to the Extension on or
before April 9, 2004, a consent fee equal to seven and one half basis points
on such Bank’s existing commitment. 

 

Please confirm your consent to the Extension by signing the Consent in
the space provided below and returning your signature, by fax, to me at
313-222-9434.  Comerica Bank, in its
capacity as a Bank (and not as Agent) has approved the extension.

 

Should you have any questions, please contact me at 313-222-5594.

 

We and the Company thank you for your cooperation in connection with
this request.

 

 

CONSENT

 

The undersigned Bank hereby confirms its consent to the extension of
the Revolving Credit Maturity Date to February 28, 2007.

 

This Consent shall not be deemed to amend or alter in any respect the
terms and conditions of the Credit Agreement, including without limitation all
conditions and requirements for Advances) or any of the other Loan Documents,
or to constitute a waiver or release by any of the Banks or the Agent or any
right, remedy, Default or Event of Default under the Credit Agreement or any of
the other Loan Documents, except to the extent specifically set forth in the
Memorandum.

 

	
   

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
  Date:    April      ,
  2004

  

 

2Exhibit 4.8

 

EXECUTION COPY

 

April 9, 2004

 

QUANEX CORPORATION

Suite 1500

1900 West Loop South

Houston, Texas 77027

 

Re:                               Consent and Third
Amendment (“Consent and Amendment”) under the Quanex Corporation Revolving
Credit Agreement dated as of November 26, 2002 (as amended, the “Credit
Agreement”) by and among Quanex Corporation (“Company”), Comerica Bank and such
other financial institutions which are or may from time to time become parties
to the Credit Agreement (the “Banks”), and Comerica Bank in its capacity as
Agent for the Banks (“Agent”)

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement.  Except a specifically defined to the contrary herein, capitalized
terms used in this Consent and Amendment shall have the meanings given them in
the Credit Agreement.  This Consent and
Amendment shall not become effective unless and until countersigned by the
Company and returned to the Agent.

 

The Company has proposed to issue up to $150,000,000 aggregate
principal amount of senior unsecured debentures (the “Debentures”) in an
offering under Rule 144A promulgated by the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the “Offering”), on
substantially the terms set forth in Description of Debentures which is attached
hereto as Attachment 1 (the “Description of Debentures”) (the Offering and the
incurrence of the Debt evidenced by the Debentures are referred to herein as
the (“Transactions”).

 

Based on the Agent’s receipt of the approval of the requisite Banks and
subject to the terms and conditions of this letter, this letter will confirm
that the Banks hereby consent to Transactions on the terms set forth in the
Description of Debentures, subject to the Company’s agreement and
acknowledgement of the modifications to the Credit Agreement as follows:

 

(a)                                  The
following definitions are added to Section 1 of the Credit Agreement as
follows:

 

“Indenture” shall mean an indenture among the Company and the trustee
named therein entered into in connection with the issuance of the Debentures.

 

“Debentures” shall mean the senior unsecured debentures issued by the
Company pursuant to the Indenture in an aggregate amount not to exceed
$150,000,000.

 

(b)                                 Clause
(f) of Section 6.2 is redesignated as clause (g); and the following is added
as new clause (f) of Section 6.2:

 

“(f) such other financial and other reports as delivered to the holders
of the Debentures pursuant to the Indenture;”

 

 

(c)                                  The
following is added to the Credit Agreement as new Section 7.17:

 

“7.17  Amendment of
Debentures. Amend, modify or otherwise alter any of the material terms and
conditions of the Indenture, the Debentures or any such other documents or
instruments evidencing or otherwise related to the Debt evidenced by the
Debentures (collectively, the “Restricted Items”), or waive (or permit to be
waived) any provision thereof in any material respect, without the prior
written approval of requisite Banks, provided that, without limitation, any of
the following shall be deemed to be a change to a material terms or condition
of the Restricted Items:  (i) any
increase in the interest rate or other amounts payable with respect to the
Debentures; (ii) any change in the dates upon which payments of principal,
interest or other amounts are due on the Debentures or change the principal
amount of the Debentures (other than changes that would extend the maturity
date of such principal, interest or other amounts or reduce the amount of such
payment); and (iii) any change to add or make more restrictive any Event of Default
or covenant with respect to the Restricted Items.”

 

(d)                                 Clause
(m)(i) of Section 8.1 is amended and restated as follows:

 

“(m)(i) If there shall occur an occurrence of a Change of Control, a
“fundamental change” or comparable term or event under any of the Subordinated
Debt Documents or the Indenture;”

 

As an additional condition to the requisite Banks’ consent to the
Transactions, the Company shall pay to each Bank which consents to the issuance
of the Debentures in an aggregate amount of at least $125,000,000 and to the
other Transactions or before the Agent’s close of business on April 9,
2004, a consent fee equal to two basis points on such Bank’s existing
commitment.

 

The Company acknowledges that this Consent and Amendment will be deemed
ineffective and the Company will be required to obtain additional consents from
the Banks if the terms of the Transactions should change or differ
substantially from those set forth in the Description of Debentures attached to
this Consent and Amendment.  In addition,
the Company hereby agrees to deliver to the Agent and the Banks copies of the
Debentures and the Indenture within five (5) days after the original issuance
thereof.

 

Except as set forth in this Consent and Amendment, this Consent and
Amendment shall not be deemed to amend or alter in any respect the terms and
conditions of the Credit Agreement, any of the Notes issued thereunder, or any
of the other Loan Documents, or to constitute a waiver by Agent or any Bank of
any right or remedy under the Credit Agreement, any of the Notes issued
thereunder or any of the other Loan Documents. 
Nor shall this Consent and Amendment constitute an undertaking or
agreement by any Bank to increase the stated dollar amount of its existing
commitment under the Credit Agreement.

 

 

 

By signing and returning a counterpart of this letter to the Agent, the
Company acknowledges its acceptance of the terms of this letter.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                   ,
  as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Accepted

  as of April 13, 2004

  	
   

  
	
   

  	
   

  
	
  QUANEX CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  

 

 

AUTHORIZATION AND CONSENT

 

The undersigned Bank hereby consents to the issuance of the Debentures
in an amount not to exceed $150,000,000 and to the other Transactions on the
terms and conditions set forth above, and authorizes the Agent to issue the
foregoing Consent and Amendment to the Company.

 

 

	
   

  	
  Harris Trust and Savings Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date: April 9, 2004

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