Exhibit 10.9
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT AND
WAIVER
THIS THIRD AMENDMENT TO LOAN AND
SECURITY AGREEMENT AND WAIVER (this “ Amendment
”), dated March 15, 2007, is entered into among COMMERCE
ENERGY, INC., a California corporation (“ Borrower
”), COMMERCE ENERGY GROUP, INC., a Delaware corporation
(“ Parent ”), WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN), a California corporation, as Agent and
Lender (“ Agent ”), and THE CIT GROUP/BUSINESS
CREDIT, INC., a New York corporation, as co-Lender (“
Co-Lender ”).
RECITALS
A. Borrower, Parent and Agent
have previously entered into that certain Loan and Security
Agreement dated June 8, 2006 (the “ Loan
Agreement ”) as amended by the First Amendment to Loan
and Security Agreement and Waiver dated September 20, 2006
(the “ First Amendment ”) and the Second
Amendment to Loan and Security Agreement and Waiver dated
October 26, 2006 (the “ Second Amendment
”), pursuant to which Agent and Co-Lender, as assignee of a
portion of Agent’s original rights and obligations under the
Loan Agreement, have made certain loans and financial
accommodations available to Borrower. Terms used herein without
definition shall have the meanings ascribed to them in the Loan
Agreement.
B. The following Events of
Default have occurred and are continuing under the Loan Agreement:
(i) Parent and its Subsidiaries failed to maintain a Fixed
Charge Coverage Ratio of not less than 1.1 to one for the period of
nine (9) consecutive months ended November 30, 2006, as
required by Section 9.17 of the Loan Agreement (as amended by
the Second Amendment); and (ii) during the period from
January 25, 2007 through January 31, 2007 (inclusive),
Borrowers failed to maintain Excess Availability of not less than
$5,000,000 as required by Section 9.17.1 of the Loan Agreement
(as added by the Second Amendment). The foregoing Events of Default
will collectively be referred to herein as the “ Known
Existing Defaults ”.
C. Borrower has requested that
Agent and Co-Lender waive the Known Existing Defaults and amend the
Loan Agreement on the terms and conditions set forth herein.
D. Borrower and Parent are
entering into this Amendment with the understanding and agreement
that, except as specifically provided herein, none of Agent’s
and Co-Lender’s rights or remedies as set forth in the Loan
Agreement is being waived or modified by the terms of this
Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as
follows:
1. Amendment to Loan
Agreement . Section 9.17.1 of the Loan Agreement (as added
by the Second Amendment) is hereby amended and restated to read in
its entirety as follows:
“9.17.1
Excess Availability . Borrowers shall, at all times during
each of the periods set forth below, maintain Excess Availability
of not less than the amount set forth opposite such period:
| |
|
|
| Periods |
|
Amounts |
| 2/1/07 through 7/31/07 |
|
$5,000,000 |
| On and after 8/1/07 |
|
$10,000,000” |
2. Consents .
(a)
Sale/Leaseback Transaction . Borrower now desires to enter
into a sale/leaseback transaction for certain Equipment with a
value of approximately $1,000,000 (the “
Sale/Leaseback ”), which would be prohibited by
Section 9.7(b) of the Loan Agreement (the Borrower having
already sold assets during the current fiscal year with a value of
approximately $900,000, which when added to the value of the
Equipment in the Sale/Leaseback, would exceed the maximum aggregate
sum permitted in clause (vi) of Section 9.7(b) of the
Loan Agreement). Agent and Co-Lender hereby consent to the
Sale/Leaseback and agree that the Sale/Leaseback will not
constitute a Default or Event of Default under the Loan
Agreement.
(b)
Bond Indemnity . Parent now desires to enter into an
Agreement of Indemnity in favor of International Fidelity Insurance
Company (“ Surety ”), in the form previously
supplied to Agent, with respect to a certain bond to be issued by
Surety in the amount of $300,000 (the “ Indemnity
Agreement ”) and to grant Surety a security interest in
the personal property and fixtures of Parent as provided in the
Indemnity Agreement, which would be prohibited by Sections 9.8
and 9.9 of the Loan Agreement. Agent and Co-Lender hereby consent
to the Indemnity Agreement (including such security interest) and
agree that the Indemnity Agreement (including such security
interest) will not constitute a Default or Event of Default under
the Loan Agreement, provided that Surety duly executes and
delivers a subordination agreement in form and substance
satisfactory to Agent with respect to such security interest.
(c)
Limitations on Consents . The foregoing consents shall apply
only to the Sale/Leaseback and the Indemnity Agreement as
specifically described above, and in all other respects, Agent and
Co-Lender reserve and preserve their rights to require the strict
compliance by Borrower and Parent with Sections 9.7, 9.8, and
9.9 of the Loan Agreement and all of the other terms and provisions
of the Financing Agreements.
3. Waiver of Known Existing
Defaults . Each of Agent and Co-Lender hereby waives the Known
Existing Defaults and waives enforcement of its rights against
Borrower and Parent arising from the Known Existing Defaults;
provided , however , nothing herein shall be deemed a
waiver with respect to any failure of Borrower or Parent to comply
fully with Section 9.17 of the Loan Agreement as to periods
ending after Novem
